TD Bank executives oversee $670 billion drug money laundering scheme and avoid prison

On March 7, 2024, Attorney General Merrick Garland stated, Speaking of which delivered an impassioned monologue at the American Bar Association’s 39th Annual White Collar Institute on the importance of prosecuting individual corporate executives for serious corporate crimes:

[O]Our top priority in the area of ​​white-collar crime is to prosecute individual perpetrators… All of us in this room know that the actions of corporations are really the actions of individuals. All of us in this room who have advised companies – and I did so very early in my career – know that the greatest deterrent to white collar crime is the fear of individual prosecution of executives and companies. But the most important element is the rule of law. That people realize that when a corporate executive is held accountable or in prison for a corporate crime, people are treated the same, that there are no different rules and that like circumstances are treated the same. This increases respect for the rule of law, and conversely, people’s respect for the rule of law decreases in every respect.

On October 10, 2024, Garland held one press conference and disclosed that TD Bank had illegally laundered over $670 million in drug money. “By making its services convenient for criminals, TD Bank has become one,” Garland explained. According to Garland, TD Bank admitted that “senior executives, including the person appointed as the bank’s top anti-money laundering officer, knew at various times that there were serious problems with the bank’s anti-money laundering program “But “failed to correct it.” Garland said TD Bank “put profit over compliance.”

The criminal information The lawsuit filed by the Department of Justice (DOJ) provided further details on the involvement of senior executives. The DOJ found that management failed to “adequately fund the bank’s anti-money laundering operations.” [anti-money laundering] The program…resulted in a deliberately deficient AML program that enabled three money laundering networks to exploit the bank.” Over a period of 11 years, “TD Bank’s senior leadership was made aware of certain concerns identified by… regulators and auditors “ in relation to the bank’s ability to monitor transactions.

Deputy Treasury Secretary Wally Adeyemo, alongside Garland, emphasized that TD Bank’s crimes hurt real people. “I want to make clear that these systemic failures have not only created hypothetical vulnerabilities, but have actually resulted in material harm to American citizens and communities,” Adeyemo said. “Unlike its competitors, TD Bank has consistently prioritized growth and profits over compliance.”

Although Garland and the DOJ documented the involvement of top TD Bank executives in serious crimes, Garland did not announce criminal charges against any of the TD Bank executives. Instead, the company pleaded guilty to “conspiracy to violate the Bank Secrecy Act and to commit money laundering.” agreed to pay a fine of around $3 billion. The only people charged were two lower-level bank employees.

The announcement contradicts not only Garland’s comments from March 2024, but also official Justice Department policy. Accordingly Section 9-28.210 of the DOJ Justice Manual:

Criminal prosecution of a company is not a substitute for prosecuting offenders within or outside the company. Because a corporation can only act through individuals, criminal liability of individual wrongdoers may provide the strongest deterrent against future corporate misconduct. Provable individual criminal charges should be pursued, particularly when they involve high-level corporate officers, even if a company offers an admission of guilt…

This is perhaps why Garland emphasized during his announcement: “[o]“Our criminal investigations into individual employees at all levels of TD Bank are active and ongoing.” However, close observers of corporate prosecutions are highly skeptical that individual prosecutions will occur.

Jesse Eisinger, journalist at ProPublica and author of The Chickenshit Club: Why the Justice Department Fails to Prosecute Executivestold Popular Information that Garland’s claim that executive investigations are ongoing is “a textbook example” and “one of those empty statements they often offer.” According to Eisinger, the fine was high but can be covered by TD Bank as a “cost of doing business.”

In one opinionTD Bank CEO Bharat Masrani said TD Bank has “taken full responsibility for the failure of our U.S. AML program.” Masrani said the “mistakes occurred under my watch as CEO and I apologize to all our stakeholders.” But although Masrani oversaw the bank when it became a money laundering hub and expressed regret, he will not face any consequences threaten. In September, he announced his intention to retire next April after 10 years as CEO of TD Bank. Bharat received $10 million in compensation in 2023, will receive a retirement package and will remain a paid consultant with the company through at least October 2025.

“This settlement clears bad bank managers for allowing TD Bank to be used as a criminal slush fund,” Senator Elizabeth Warren (D-MA) said. “The Department of Justice and the Office of the Comptroller of the Currency must do a better job enforcing our anti-money laundering laws.”

How did TD Bank negotiate a settlement that allowed it to pay a fine and, in all likelihood, avoid criminal prosecution of its executives? It hired a lawyer who was intimately familiar with the inner workings of the DOJ: former Attorney General Loretta Lynch.

Lynch is currently a partner at the renowned corporate law firm Paul Weiss, where she “advises clients on complex government and internal investigations as well as high-risk litigation, including those involving significant regulatory enforcement issues, which involve significant reputational issues, and so on continue.” are internationally oriented.” Top partners of Paul Weiss are reportedly filing charges:$2,000 per hour or more.”

Because the Justice Department lacks sufficient resources, prosecutors often rely on internal investigations overseen by the defendant’s attorney — in this case, Lynch. The plea agreement describes aspects of TD Bank’s internal investigation and its assistance in the DOJ case.

Eisinger argues that “[o]“One of the biggest problems in prosecuting American corporate crimes and white-collar defense attorneys is that the Justice Department has become a training ground for future white-collar defense attorneys.” He called the involvement of a former attorney general “very pleasant” and “very…” lucrative for Loretta Lynch.

TD Bank is not an anomaly. Corporate executives are rarely prosecuted for corporate crimes.

In 2016, Warren published one report titled “Ripulated Justice: How Weak Enforcement Makes It Easy for Corporate Criminals.” The report documents that people who commit corporate crimes often escape punishment, even though people in a company that violates the law are also liable for the violations . Warren’s report examined 20 criminal and civil cases from 2015 and concluded that the federal government “failed to demand meaningful accountability from major companies or their executives who engaged in misconduct.”

Prosecuting corporate executives presents real challenges. Sally Yates, who served as deputy attorney general under Lynch, said in a May 2016 statement speech that “it’s not easy to figure out who did what in a huge corporate structure – to see whether someone had the requisite knowledge and intent.” Yet Yates claimed that the Justice Department was doing “everything we can to overcome the hurdles…and hold accountable those responsible for corporate misconduct.”

But as the TD Bank case shows, little progress has been made. A 2017 article by Duke Law’s Andrew Park states that prosecutors investigating corporate crimes “Generally, they only bring cases that they believe they can win.” Because of the complexity of corporate prosecutions and the DOJ’s limited resources, a victory against a high-ranking corporate executive is rarely assured. Therefore it rarely happens.