Deutsche Bank whistleblower rejects reward, cites collusion between bank and regulators By Gabriel Black August 25th 2016

Deutsche Bank whistleblower rejects reward, cites collusion between bank and regulators

By Gabriel Black
25 August 2016

A Deutsche Bank whistleblower turned down his share of a $16.5 million Security and Exchange Commission (SEC) award last Thursday in protest of the SEC’s refusal to target Deutsche Bank executives for fraudulent accounting practices.

Writing in the Financial Times, Eric Ben-Artzi, a former vice-president in Deutsche Bank’s market-risk department, charges the SEC with colluding with top executives of Deutsche Bank who were themselves former leading members of the SEC.

“This goes beyond the typical revolving door story,” Ben-Artzi writes. “In this case, top SEC lawyers had held senior posts at the bank, moving in and out of top positions at the regulator even as the investigations into malfeasance at Deutsche were ongoing.”

Ben-Artzi states that “the bank’s shareholders and its rank-and-file employees who are now losing their jobs in droves are the primary victims.”

He continues, “Meanwhile, top executives retired with multimillion-dollar bonuses based on the misrepresentation of the bank’s balance sheet. It is therefore especially disappointing that in 2015, after a lengthy investigation helped by multiple whistleblowers, the SEC imposed a fine on Deutsche’s shareholders instead of the managers responsible.”

Ben-Artzi was one of three whistleblowers at Deutsche Bank who alerted the SEC to the bank’s attempt to hide the real value of its toxic $120 billion credit derivative portfolio. In late 2008 and early 2009, the bank did not update the market value of many of its credit default swaps, allegedly to hide growing losses that the SEC later estimated to be in the billions.

Ben-Artzi first brought the issue to the attention of Robert Rice, chief lawyer of Deutsche Bank’s 2011 internal investigation into its derivative practices. Ben-Artzi was then fired after he refused Rice’s directive that any discussion they have be subject to “client-attorney” confidentiality. Rice would move on from Deutsche Bank to become the SEC’s chief counsel in 2013.

Following an investigation, the SEC fined Deutsche Bank $55 million in 2015 to settle the allegation that the bank had defrauded investors by cooking its books. The settlement, however, did not require the bank to admit to fraud and did not bring charges or raise any suspicions of wrongdoing, civil or criminal, against its senior executives.

In his open letter, Ben-Artzi notes that at a much smaller firm, Trinity Capital, the SEC charged five executives over similar but smaller-scale violations. (The SEC allowed the CEO to settle and pay a fine.)

Ben-Artzi writes, “So why did the SEC not go after Deutsche’s executives? The most obvious concern is that Deutsche’s top lawyers ‘revolved’ in and out of the SEC before, during and after the illegal activity at the bank.”

Ben-Artzi calls attention to several prominent members of Deutsche Bank who had a revolving-door relationship with the SEC.

As stated previously, Rice, who oversaw Deutsche Bank’s internal investigation in 2011 as head lawyer, was hired in 2013 by the SEC as chief counsel. Ben-Artzi calls attention to two other members in his letter: Robert Khuzami and Richard Walker. Khuzami was Deutsche Bank’s highest-ranking lawyer in the United States from 2004 to 2009. He was then appointed in 2009 to chair the SEC. Meanwhile, Richard Walker, Deutsche Bank’s top lawyer from 2001 to 2016, was at different times the boss of both Rice and Khuzami. Walker, too, served at the SEC and recommended Khuzami for his job there.

Ben-Artzi lays the final blame with Mary Jo White, the current chair of the SEC. He says that this revolving-door relationship between Deutsche Bank and the SEC “took place on the watch of Mary Jo White…whose relationship with Mr. Khuzami and Mr. Rice dates back 20 years. She bears ultimate responsibility for the Deutsche fine.”

This case underscores the criminal relationship between Wall Street and the US government. The massive fraud committed by the major banks during and after the 2008 financial crisis has gone virtually unpunished by the SEC and Department of Justice. These agencies’ refusal to prosecute the criminals in charge of the world’s major banks is not an oversight, it is a policy. As the case with Deutsche Bank makes clear, these regulatory arms of the government are nothing of the sort. They are not separate from the banks, but rather are co-conspirators in the pursuit of criminal and, increasingly, reckless profits.




A 76-year-old military veteran killed himself outside a Long Island Veteran Affairs facility Sunday after being denied treatment. He was reportedly seeking help for mental health issues at the Northport Veterans Affairs Medical Center but was turned away, an unfortunately common experience plaguing veterans seeking healthcare in recent years.

According to the New York Times, two people connected to the hospital spoke about the incident on the condition of anonymity. They explained “he had been frustrated that he was unable to see an emergency-room physician for reasons related to his mental health,” the Times reported.

“He went to the E.R. and was denied service,” one anonymous source said. “And then he went to his car and shot himself.”

Peter A. Kaisen of Islip, New York, committed suicide in the parking lot of the Northport facility, where he had been a patient. He was in the parking lot outside Building 92, the facility’s nursing home, when he shot himself.

One of the Times’ anonymous sources questioned why Kaisen had not been referred to Building 64, the mental health center at Northport.

“The staff member said that while there was normally no psychologist at the ready in the E.R., one was always on call, and that the mental health building was open ‘24/7,’” the Times reported.

“Someone dropped the ball. They should not have turned him away,” the source said.
Christopher Goodman, a spokesman for the hospital, said there “was no indication that he presented to the E.R. prior to the incident,” and the Times was unable to determine whether there was an official record of his visit to the VA on Sunday.

The Northport center has faced heightened scrutiny since the Times reported on mismanagement at the facility in 2014, but the problems at Northport are problems of the entire system.

Just last month, an Iowa military veteran suffering from PTSD and substance abuse killed himself after being denied treatment by the VA. He reportedly made an appointment seeking treatment but eventually posted on social media that he was turned away “even though he requested it and explained to a doctor that he felt his safety and health were in jeopardy,”KWQC, a local news outlet reported.

One veteran who drove to a Seattle VA last year with a broken foot was denied assistance walking from his car to the hospital entrance, a distance of a few feet. He was told to call 911, instead. One gun-wielding veteran with PTSD was shot and killed by police in Maricopa County, Arizona, last year after he was turned away from the VA hospital when he sought treatment for a mental health emergency. He had routinely called suicide hotlines for help but never received the full attention he needed.

Veteran suicides in the United States are a chronic problem. Though some argue the relatively recent figure from the VA that 22 veterans kill themselves per day is inflated, veterans still face a suicide risk higher than the rest of the American population. As USA Today has noted:

“In 2014, veterans accounted for 18% of all suicides in the United States, but made up only 8.5% of the population. In 2010, veterans accounted for 22% of U.S. suicides and 9.7% of the population.”

Further, a more recent analysis by the VA found that in 2014, 20 veterans killed themselves per day. Politifact, an independent fact-checker, has confirmed this figure. While rates of veteran suicides appear to be declining, the figures are still troubling.

Even absent mental health issues like depression and PTSD, veterans are dying waiting for regular health care.A VA whistleblower revealed last year that 238,000 out of 847,000 veterans died after submitting requests for treatment they never received. An audit in 2014 found 57,000 veterans were waiting more than 90 days for an appointment with the VA.

The United States government, politicians, and the media often express compassion and gratitude for veterans.To their credit, some lawmakers recently attempted to allow veterans to use cannabis as an alternative treatment in an amendment to a budget bill — a move Congress ultimately blocked.

But in spite of failed and often unwieldy efforts to reform veterans’ health care, the VA’s systemic failures continue to leave veterans feeling ignored and abandoned by the very institutions that still claim to value them.

US “Health Care” CRIME

Country Life exectancy Health Spending per capita

United States 78.94 9,024.21 $

Switzerland 82.85 6,786.57 $

Norway 81.75 6,081.00 $

Netherlands 81.30 5,276.60 $

Germany 80.84 5,119.21 $

Sweden 81.96 5,065.16 $

Ireland 81.15 5,001.32 $

Austria 81.34 4,896.00 $

Denmark 80.55 4,857.03 $

Belgium 80.59 4,522.04 $

Canada 81.96 4,495.69 $

Luxembourg 82.21 4,478.97 $

France 82.37 4,366.99 $

Australia 82.25 4,206.85 $

Japan 83.59 4,152.37 $

United Kingdom 81.06 3,971.39 $

Iceland 82.06 3,896.93 $

Finland 81.13 3,871.39 $

New Zealand 81.40 3,537.26 $

Italy 82.69 3,206.83 $

Spain 83.08 3,053.07 $

Slovenia 80.52 2,598.91 $

Portugal 80.72 2,583.84 $

Israel 82.15 2,547.40 $

Czech Republic 78.28 2,386.34 $

South Korea 82.16 2,361.44 $

Greece 81.29 2,220.11 $

Slovakia 76.71 1,970.52 $

Hungary 75.87 1,796.60 $

Estonia 77.24 1,724.51 $

Lithuania 73.97 1,720.84 $

Chile 81.50 1,688.52 $

Poland 77.25 1,624.87 $

Costa Rica 79.40 1,393.95 $

Russia 70.37 1,368.75 $

Latvia 74.19 1,295.01 $

South Africa 57.18 1,146.47 $

Mexico 76.72 1,052.66 $

Turkey 75.16 990.19 $

Colombia 73.99 964.50 $

China 75.78 730.52 $

Indonesia 68.89 302.12 $

India 68.01 267.41 $

Proposed Bill AB1671 in California is 100% UNCONSTITUTIONAL

This bill is moving forward through the California legislature
It violates freedom of speech. Check it out and lets stop it
Date of Hearing: April 19, 2016
Counsel: Sandy Uribe


Reginald Byron Jones-Sawyer, Sr., Chair

1671 (Gomez) – As Amended April 12, 2016

As Proposed to be Amended in Committee

SUMMARY: Makes it a crime to intentionally disclose,
distribute, or attempt to disclose or distribute, in any manner,
and for any purpose, the contents of a confidential
communication after illegally obtaining it. Specifically, this

1)Provides that a person who illegally records a confidential
communication and then intentionally discloses or attempts to
disclose, or distributes or attempts to distribute, its
contents in any manner, in any form, including but not limited
to Internet Web sites and social media, is guilty of a crime.

2)Provides that a person who employs or directs another person
to unlawfully record a confidential communication, or to use
or disclose that communication shall also face criminal

3)Punishes the disclosure or publishing of illegally recorded
confidential communications, or the aiding and abetting
thereof, as follows:

a) For a first offense, the punishment is a fine not

exceeding $2,500 per violation, or imprisonment in a county
jail not exceeding one year, or in the state prison, or by
both that fine and imprisonment; and

b) For a second or subsequent conviction, the punishment is
a fine not exceeding $10,000 per violation, by imprisonment
in a county jail not exceeding one year, or in the state
prison, or by both that fine and imprisonment.

4)Defines “social media” as “an electronic service or account,
or electronic content, including, but not limited to, videos
or still photographs, blogs, video blogs, podcasts, instant
and text messaging, email, online services or accounts, or
Internet Web site profiles or locations.”

5)Clarifies that the fines for the crimes of illegal recording
of a confidential communication and the use or disclosure of
illegally recorded confidential communications apply per


1)Makes it a crime to intentionally and without the consent of
all parties to a confidential communication eavesdrop or
record that confidential communication. (Pen. Code, § 632,
subd. (a).)

2)Punishes eavesdropping or recording confidential
communications as an a fine of up to $2,500, or imprisonment
in the county jail for up to one year, or as a felony with
imprisonment in county jail under Realignment, or both. A
subsequent conviction can result in a fine of up to $10,000
and imprisonment in the state prison. (Pen. Code, § 632,
subd. (a).)

3)Defines “confidential communication” as “any communication
carried on in circumstances as may reasonably indicate that
any party to the communication desires it to be confined to
the parties thereto, but excludes a communication made in a
public gathering or in any legislative, judicial, executive or
administrative proceeding open to the public, or in any other
circumstance in which the parties to the communication may

reasonably expect that the communication may be overheard or
recorded.” (Pen. Code, § 632, subd. (c).)



1)Author’s Statement: According to the author, “AB 1671 updates
the law to account for the harm created by broad dissemination
over the internet. It aligns the law on unauthorized
recording of confidential communications with the law on
misappropriation of trade secrets. And it aligns California
law with the law of other states that prohibit interception
and disclosure of confidential wire, oral, or electronic

2)First Amendment Issues: The First Amendment gives the free
press the protection it must have to fulfill its essential
role in democracy. (New York Times Co. v. United States
(1971) 403 U.S. 713, 717.) Accordingly, “prior restraints on
speech and publication are the most serious and the least
tolerable infringement on First Amendment rights.” (Nebraska
Press Assn. v. Stuart (1976) 427 U.S. 539, 559.) “The damage
can be particularly great when the prior restraint falls upon
the communication of news and commentary on current events.”

In Bartniki v. Vopper (2001) 532 U.S. 514, the United States
Supreme Court held that the First Amendment provides
protection to speech that discloses the contents of an
illegally intercepted communication by parties who did not
participate in the illegal interception.

In Bartniki, an unknown person illegally recorded a phone call
between two union leaders about a teachers’ strike. Some
journalists obtained the recording and then published the
contents of the conversation. The labor leaders sued the
journalists under federal and state eavesdropping statutes.
(Id. at pp. 518-519.) The Supreme Court relieved the
journalists of liability. The Court noted that the parties
who made the disclosure to the public were not involved in the
illegal interception. Additionally, the media defendants

lawfully obtained the tapes even though they knew the
information was itself illegally intercepted. (Id. at pp.
524-525.) The Court also emphasized that the defendants
published truthful information about a matter of public
importance. (Id. at p. 525.) The Court concluded, “a
stranger’s illegal conduct does not suffice to remove the
First Amendment shield from speech about a matter of public
concern. (Id. at p. 535.)

This bill imposes criminal liability on a person who employs or
directs another to unlawfully record a confidential
communication, or on the subsequent distribution of that
unlawful recording. Does this leave the media vulnerable to
prosecution for distributing or reporting on the illegally
recorded communication? Should there be an explicit exception
for the media and for whistleblowers?