JPMorgan Chase Whistleblower Breaks Her Silence
In 2013, JPMorgan Chase paid a $9 billion settlement to the U.S. government over claims that before the 2008 financial crises the bank had fraudulently and knowingly overstated the quality of mortgages underlying it’s pooled mortgage-backed securities products. This settlement was the largest ever entered into between the U.S. Department of Justice (DOJ) and JPMorgan. However, former JPMorgan employee Alyne Fleischmann, the whistleblower who alerted federal authorities to JPMorgan’s illegal activities, believes that this settlement was actually a big disappointment that exhibits how financial institutions have emerged unscathed since the dust has settled from the very financial crises that they created. Now, Fleischmann has decided to take action and publicly denounce JPMorgan because of her frustration with the fact that no criminal charges have been filed against those connected to and involved in the mortgage-backed securities fraud.
The Tale of Whistleblower Alyne Fleischmann
In 2006, Fleischmann, a securities attorney joined the JPMorgan staff as a mortgage-backed securities deal manager. However, a few months into the job she began to feel uneasy about the a new due diligence manager’s imposition of a no-email policy. Fleischmann began to believe that this policy had been instituted in order to cover up evidence that the mortgages underlying the mortgage-backed securities sold by JPMorgan contained fraudulent information, including grossly overestimated income and property values, and that in reality most of the mortgages underlying the pooled securities were of little value and when pooled together created junk-bonds that also had minimal value nowhere near the value that was being presented to investors. However, these mortgage-backed securities were presented as having high credit ratings, which is typically indicative of a low possibility of default, thus making the securities more attractive to investors.
Fleischmann followed proper procedures when reporting her suspicions by presenting her concerns about fraud first to her superiors and then all the way up the JPMorgan chain of command. However, Fleischmann felt that at every step in her attempt to expose the fraud that was occurring, some powerful organization or persons kept getting in the way, manipulating the picture in order to conceal the truth of the fraudulent activities that had occurred at JPMorgan.
After nothing was done, she decided to write a letter to the DOJ, which was used as evidence in the case that was eventually settled with JPMorgan. In this case, Fleischmann was the DOJ’s main witness against JPMorgan and once the case was settled she entered into a binding agreement, also known as a “gag order,” which prohibited her from discussing the case. However, Fleischmann was compelled to break her silence after seeing how JPMorgan’s actions had been portrayed in the media as simple “mistakes” instead of a concerted and fraudulent effort to falsely inflate the values of the securities that were sold.
The conviction underlying Fleischmann’s decision to break her gag order is admirable, and even she has acknowledged the risks she is taking by speaking out against such a powerful financial institutions, stating that “I could be sued into bankruptcy…I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”
How JPMorgan and the federal government will respond to Fleischmann’s assertions remains to be seen. However, one has to wonder how the federal government can continue to expect employees to act as whistleblowers if these people are ignore and are not rewarded for performing an important function required to prevent mass banking fraud. If you need legal representation in a whistleblower issue or any other criminal defense matter, contact South Florida defense attorney Jeffrey Weiner, P.A. today.