For years, Wall Street and Main Street have kept their distance from one another. Financial corruption typically involved bank-on-bank offenses. Not anymore. With more and more allegations of corruption coming to light recently, the two have become much more intertwined than most originally thought
A recent case out of New York highlighted the growing corruption allegations on Wall Street that have had a direct impact on towns far removed from the big cities like New York. In United States of America v. Carollo employees from numerous banks, including GE Capital, J.P. Morgan Chase, and Bank of America paid off auctioneers to tip them off about what the highest interest rate bid was for a town's bond that was purchased to help pay for construction projects. The banks would then submit just a slightly higher bid to win the town's account depriving it of potentially millions of dollars in lost interest.
The practice was so common that the defendants discussed what they were doing over telephone conversations that they knew were being recorded. Defense attorneys in the case essentially made the argument that nobody would be dumb enough to knowingly talk about breaking the law over a recorded conversation. Still, federal prosecutors brought forwards thousands of phone calls in which the defendants were told what the highest bid currently was and what they were going to offer in order to beat it.
This is just one example in a string of allegedly manipulative tactics Wall Street has been taking part in. Dating back to the 1980's, those on Wall Street have been caught manipulating stocks and their prices. This can be done in multiple ways including making deceptive purchases and sales to give the impression of heavy trading. The result is an increase in the price of the stock and ultimately provides those in the know with an easy payday. Other times, investors can work together to drive the price of a stock down, known as a "bear raid", by selling a large volume of the company's stock then purchasing it with the expectation that it's value will increase later. While there is rarely definitive evidence that a bear raid has taken place, the impact of one can result in serious economic damage to the victimized company.
There are other cases currently pending around the country identical to Carollo. The results of these cases could potentially change the landscape of how the current bidding system operates and produce millions of dollars in extra interest to cities and towns nationwide. After 10-15 years of scamming towns and cities, Main Street is finally catching on to Wall Street's game.
If you or someone you know is under investigation for a financial or white-collar crime, find an experienced white-collar criminal defense attorney who can help navigate the maze of the criminal justice system.