Tuesday, September 28, 2021
Saturday, September 25, 2021
On Saturday Before North Korea Trial Virgil Griffith Dockets Motion About Ethereum GC
By Matthew Russell Lee, Pod Exclusive Patreon
BBC - Guardian UK - Honduras - The Source
SDNY COURTHOUSE, Sept 25 – Virgil Griffith, charged with violating North Korea sanctions in connection with a crypto-currency conference there, faced a bail review proceeding - in person - on July 20. He lost and was remanded. Inner City Press was there, and live tweeted, here and below (podcast here)
On September 14, in the run up to the trial scheduled to start on September 27, there was a final pre-trial conference replete with rulings. Inner City Press live tweeted it here and below.
On September 22, Judge Castel denied Griffith's sealed motion to depose the Ethereum Foundation's general counsel Tju Liang Chua, or to allow him to testify by video. Order on Patreon here. On other grounds - late produced discovery - Griffith's lawyers asked for a week continuance in the trial.
On September 23, initially without Griffith present, Judge Castel held a hearing then denied the request for delay. Inner City Press live tweeted it here and below.
On September 25, the Saturday before the trial starts on Monday, Griffith's lawyer belatedly docketed their motion for testimony from Ethereum's General Counsel including "Mr. Griffith then responds, asking for suggestions on dealing with sanctions issues, and asks CC-5 if she has a suggestion for a lawyer to address this issue. In the email to Mr. Chua, Mr. Griffith stated that he had been “exploring” putting an “Ethereum node” in the DPRK and further stated that he really wanted to do it,” but an Ethereum Foundation supervisor had said no, “unless the sanctions [could] be avoided.” Mr. Griffith further stated that he was “imagining shaping it as charitable work. I presume charities are allowed to give things to DPRK without issue."
Full 10 page motion on Patreon here.
Assistant US Attorney: There is no basis for an adjournment of the trial. They are not requesting to exclude, it seems. Judge Castel: The parties agreed the US would make trial exhibit available on a rolling basis up to Sept 17? AUSA: We did not agree to end then
It's 3:15 pm and... "It's the MCC, I have Virgil here."
Virgil: Hello. Judge Castel: Welcome.
Proceeding on ex #Ethereum developer Griffith's request to postpone his trial continues Griffith's lawyer: On August 29 we were told the discovery production would commence ASAP - and would conclude on Sept 17 with the actual exhibits. But giving us 100 exhibits after Sept 17 is not amending...
Assistant US Attorney: Earlier this week we asked for more documents from OFAC, and gave them to the defense. There is no Brady material in these documents.
Judge Castel: The defendant has moved for a postponement of trial for belated disclosure of OFAC documents... As the Court reads Section 3550, it is not empowered to order the government to produce this early. This is not civil litigation.
Judge Castel: From what I have seen here, the Government was careful, used caveats. I don't see gamesmanship here. It's just the chaos in the days leading up to a trial. It was sub-optimal but not wrong.
Judge Castel: If this transcript is ever read, I hope it's on a sunny day with face masks a thing of the past. We resumed jury trials on a limited basis less than a year ago. From now until December 2021 there is no date this can be adjourned to.
Judge Castel: Since Sept 29, 2020 we've had 60 jury trials. Here, I have a detained defendant. The application for an adjournment is denied. Griffith's lawyer: What about Jan 2022?
Judge Castel: I've ruled. See you Monday.
Watch this site.
On September 21 Griffith's lawyer submitted a proposed order that would allow them to access his Coinbase account for their fees. They argue that "the only reason the government ever articulated to deny Mr. Griffith access to his assets was the desire to mitigate flight risk, which cannot now be a concern given that Mr. Griffith is incarcerated. Indeed, transferring the balance of this account to counsel would further mitigate any such concern." Watch this site.
On September 17 the US Attorney's Office submitted sworn declaration of non-abuse of the Palantir platform from, among others, FBI Tactical Specialist Juliana Aragon, Investigative Analyst Alec Bugg, Supervisory Special Agent Matthew L. Charles, Special Agents Bradford Coyle, Caroline Jordan, Raymond Yi, Brandon Cavanaugh, SDNY paralegal specialists Charlotte Cooper, Shawn Milone, AUSAs Michael Krouse, Kimberly J. Ravener, and Kyle A. Wirshba.
From September 14: Judge Castel: The Grand Jury indicted him for participation in a conspiracy to violate IIEPA sanctions on North Korea, by providing services to the DPRK and evade requirements of US law in connection therewith. But the US want to get info in outside the time frame
Judge Castel: The US wants to get into evidence an email about openness to supporting the Ethereum Foundation. I'm going to have to reserve on that, and decide when it comes up. Griffith's statements would come in as party statements, and CC-5 for context
Judge Castel: The email says South Korea seems to be allowed to violate the sanctions... That comes in as a party statement. CC-5 replies, That's sensitive. I don't think that comes in. CC-5 has not been shown to be part of the conspiracy.
Judge Castel: Also Griffith's emails to a DPRK account about attending the conference, that comes in, subject to connection, subject to being stricken if the declarant was not a member of the conspiracy.
Judge Castel: Griffith's statements at the conference are direct proof of the conspiracy [Note: this is a rule that the statements come into evidence, not an indication of Judge Castel's view of the merits, which will be up to the jury in any event]
Judge Castel: Similarly Griffith's statements to law enforcement, they are party statement. The May exchange about 'you should get your taxes in order' normally would not come in, but for his response indicating consciousness of guilty...
Judge Castel: The statement about forgetting to file taxes in 2015 and 2018 is excluded, the probative value is outweighed by potential prejudice. That's where I am. I have some sympathy for the defense saying they don't know the full context. I could be persuaded
Judge Castel: What about NorthKorea's crypto currency capabilities? Griffith's lawyer: This trial is about the block chain in #NorthKorea. We want to show that DPRK had tremendous capability before Mr. Griffith visited
Judge Castel: Here's a hypothetical. Country A is subject to these sanctions. A technician there downloads a manual on how to repair a Dell laptop. 20 technicians learn out to do it. Thereafter a US citizen goes there to fix one - and that's still services
Griffith's lawyer: My client did not go to #NorthKorea and fix anything, physically. And the information he provided was publicly available. Judge Castel: I'm not deciding that at this time.
AUSA: We want to have an expert testify about Juche. Judge Castel: That seems allowable, I'm probably mis-pronouncing it, JuJu. AUSA: We are all working on pronouncing it. [Note: North
Korea's Juche was improvised in the 1950s]
Judge Castel: Griffith's statement, I'll try to become wealthy enough to pay my bail *is* relevant, I'm not going to exclude it. On TOR and the Dark Web, the government is not going to be permitted to wander there but some specifics, on his c.v., yes
Judge Castel: Griffith wrote an Ethereum colleague he would not work on a DPRK node because if he did the President would get a memo that Ethereum was helping #NorthKorea nukes. AUSA: But he went ahead and tried to get someone else to do it, using GoFundMe
Judge Castel: I'm going to exclude CC-3 sending Griffith a newspaper article about avoiding travel to North Korea due to the sixth nuclear test - it's prejudicial. Griffith's lawyer: Using the term nuclear would be like dropping a nuclear bomb in this courtroom
Judge Castel: If there's been misconduct, it could result in acquittal if he's convicted. If the prosecution did not access the material [on Palantir], I'm prepared to go forward with the trial.
Griffith's lawyer: We're also asking to suppress all the evidence that was put on Palantir -- Judge Castel: If you persuade me it's outrageous, I supposed I could jump to dismissing the indictment. Griffith's lawyer: We don't have to show outrageous conduct.
Virgil Griffith proceeding winds up with questions on how to get phones in, clothes while in jail, and attendance by his family, who would travel up from Alabama.
Inner City Press will cover the trial
On September 13, an order was docketed that has the potential to link Griffith's case to the type of prosecutorial actions criticized - and leaving to vacatur of conviction - in the US v. Nejad case: "ORDER as to Virgil Griffith: In connection with defendant's motion to dismiss emailed to the Court at 11:42 p.m. on Friday, September 10, 2021 the government is ORDERED as follows: 1. By September 17, 2021, file declarations from each member of the prosecution team, including AUSAs and agents, stating whether from after September 14, 2020 to the present the individual conducted or directed another to conduct a search of material deemed to be not pertinent to the search warrant and further whether the individual has knowledge of any other member of the prosecution team having done so. 2. By the close of business on September 13, 2021, provide the Court with copies of the initial report and any follow-up report made to Judge Nathan as directed in the Opinion & Order of February 22, 2021 in United States v Nejad, 18 cr 224 (AN). 3. By the close of business on September 13, 2021, set forth why the Court ought not order the government to produce the three categories of information and documents sought by the defense on pages 20-21 of its memorandum of law. (Signed by Judge P. Kevin Castel on 9/12/2021)." Watch this site.
On September 2 a sealed letter and proposed order, with account numbers and and monetary balances, was filed - but not available to the press or public. On September 3 Judge Castel ruled: "ORDER as to Virgil Griffith: The application to seal the letter of September 2, 2021, together with the proposed order, is granted in part and denied in part. The letter and proposed order are sealed but redacted versions of the letter and proposed order shall be filed forthwith by defendant on the public docket, redacting only unique identifiers and/or account numbers, date of birth and the believed balance in the account. SO ORDERED. (Signed by Judge P. Kevin Castel on 9/3/2021)."
Now a redacted letter by Griffith's lawyer, for permission to get paid from Griffith's Coinbase account.The US Attorney's Office is opposed.
Late on August 27 Griffith's lawyers filed his motions to limine, seeking to exclude evidence at trial including about his "purported personal wealth and cryptocurrency holdings.. involvement with Tor / 'Dark Web'... DPRK's nuclear program and any implication that Mr. Griffith was involved in said program." Watch this site.
On August 24 the US Attorney's Office acknowledged that at least four FBI agents not on the case accessed the search warrant returns from Griffith's accounts:
"(1) On May 4, 2020, a now-retired FBI agent conducted a search on the Platform and then, based on the returns from that search, viewed at least some portion of the Search Warrant Returns.
(2) On April 6, 2021, and April 19, 2021, an FBI analyst ran three searches on the Platform and viewed at least some portion of the Search Warrant Returns.
(3) On May 27, 2021, an FBI analyst conducted a search on the Platform and, as a result of that search, viewed at least some portion of the Search Warrant Returns.
(4) As described above, on August 11, 2021, an FBI analyst conducted a search in the Platform and viewed at least some portion of the Search Warrant Returns. She shared those results with, among others, an FBI agent also not on the prosecution team, who emailed them to the FBI case agent." Full letter on Inner City Press' DocumentCloud here.
On August 13, the US Attorney's Office filed its motions in limine, including that Griffith "forwarded CC-4's email to the co-founder of the Ethereum Foundation and Griffith's ultimate boss ('Individual-1') and another Ethereum Foundation leader." The US wants to use these individuals, and communications, against Griffith at trial. Watch this site.
From July 20: Judge Castel has entered: All rise. Two prosecutors, 1 pre-trial services officer. Griffith and 2 lawyers.
AUSA: The defendant tried to access his crypto accounts, using a 3d party, evading computer monitoring condition.
AUSA: His mother impersonated him. The defense counsel's involvement does not mitigate the risk of flight. "He's a millionaire with ties abroad."
Judge Castel: How much time might he face? AUSA: 20 years. Judge Castel: Were the funds frozen? AUSA: Coinbase said they would not release them... He was thrown out of hotel in LA, after bragging about North Korea and crypto, he told staff, Read about me.
AUSA: The defendant has violated his bail conditions. Judge Castel: Mr Klein?
Ms Axel: It's a misunderstanding. He's only banned from cold wallets. His father is here. [True: here in courtroom gallery with Inmer City Press]
Judge Castel hands out law of 2d Circuit on advice of counsel as a defense. [Note: There are no US Marshals in the courtroom now.]
Ms Axel seems to acknowledge that Mrs Griffith made it appear to Coinbase that she was her son. Judge Castel: Did he email Coinbase? Seems so. Judge Castel reads Judge Broderick's Jan 2, 2020 bond order. Axel: You modified it. Judge Castel: So it's my fault...
Axel cites Docket 92, allowing emails with non attorneys. Judge Castel: The no-crypto provision was not modified. You have a problem here, Ms. Axel.
Judge Castel: His mother's Internet use was on hid behalf, and in his name. Axel: His father put Virgil's name in his phone to get in today. Judge Castel: Is Ethereum paying for any of his defense? Klein: Not in public. [Sidebar with white noise]
Klein comes into gallery and whispers with Virgil's father, returns to sidebar with Judge Castel and prosecutors.
Axel: We spoke with pre-trial services officer Carl in Alabama... Virgil's parents are upstanding members of the Tuscaloosa community. Judge Castel: Pre-Trial works for the Court. Inner City Press @innercitypress · 54m Two US Marshals have come into the courtroom. One goes forward and sits directly behind Griffith. Axel is still talking.
Judge Castel: Last word to the government. AUSA: They knew accessing crypto currency accounts was forbidden. These are just post hoc justifications.
AUSA: He's told No, then tries to circumvent. He's an expert in the Dark Web, and searching it. On Aug 7, 2019 he said, The Americans let you get away with it once.
Judge Castel: I don't have to find a violation. This is a bail review. Axel: Dissidents use the Dark Web. He has PhD, he could do this. Doctor Evil does this with a burner from Starbucks, not through his mother.
Judge Castel: He's charged in a single IEEPA count. Trial is near. The circumstances have changed. Ether has gone up by ten times. It changes the calculus. Bond Paragraph 14 was violated.
Judge Castel: My concern is risk of flight. The defendant is remanded.
He is awaiting trial in September 2021 in the U.S. District Court for the Southern District of New York.
On July 9 the US Attorney's Office wrote to SDNY Judge P. Kevin Castel saying Griffith attempted to access one of his frozen cryptocurrency accounts containing assets of nearly $1 million. They went a hearing, and they want him remanded (jailed). Full letter on Patreon here.
On July 13, this: "MEMO ENDORSEMENT as to Virgil Griffith on re: [119] LETTER MOTION filed by USA addressed to Judge P. Kevin Castel from AUSAs Kimberly Ravener and Kyle Wirshba dated July 9, 2021 re: Violation of Bail Conditions. ENDORSEMENT: A bail review proceeding will be held on July 20, 2021 at 2:00 p.m. in Courtroom 11D. The defendant shall appear in person."
On July 16, Griffith's lawyers argued that his parents accessed Coinbase, given the run up in ETH price, to pay for counsel: "Given the impending trial date, Mr. Griffith may need to sell certain assets to fund his legal defense. Mr. Griffith consults closely with his family on financial matters and did so even prior to his arrest. In connection with their strategy to assess and access necessary resources to fund his defense, and after consulting counsel, his mother made an online request to access a U.S.- based and regulated cryptocurrency exchange, Coinbase... As the Court knows, Mr. Griffith was an employee of the Ethereum Foundation and was paid in Ether (ETH), a digital asset used on the Ethereum blockchain. At the time Mr. Griffith was arrested in November 2019, he held some ETH and some ETC (a related cryptocurrency) in a Coinbase account worth less than $100,000. Since then, one ETH has risen from about $150 to about $1,900. The government states that the account assets are currently worth almost $1 million. Neither Mr. Griffith nor any family member acting on his behalf has had access to that account since his arrest. With the September trial date quickly approaching, and given ETH’s current value, Mr. Griffith has wished to know the exact contents of his Coinbase account and the value of his assets, so he could consider transferring or selling all of part of his cryptocurrency held there to pay trialrelated expenses. As is their family culture, Mr. Griffith’s father, Dr. Robert Griffith, has been involved and consulted in matters regarding assets and plans to pay defense counsel." Full letter on Patreon here.
Griffith's lawyer have said the prosecutors tried to mislead Judge Castel by omitting from their quote of email to Coinbase the line that the company could contact Griffith's lawyer; they say this shows no risk of flight.
On February 11, Judge Castel held a proceeding about who knew what before and at the conference Griffith spoke at. A stipulation or agreement has been proposed, essentially that some people know, but the DPRK / Kim government as such did not. Inner City Press live tweeted the first proceeding, here.
And on February 23 the second proceeding, in two parts, here.
The case is US v. Griffith, 20-cr-15 (Castel).
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On OneCoin DOJ Admits Konstantin Lied of Laptop Inner City Press Filed to Unseal Here
By Matthew Russell Lee, Patreon Podcast Filing
BBC - Decrypt - LightRead - Vlog - Source
SDNY COURTHOUSE, Sept 25 -- For money laundering for scam crypto currency OneCoin, lawyer Mark Scott was convicted by a jury after testimony by Konstantin Ignatov and others but was allowed to remain free on bail pending sentencing. Sebastian Greenwood, meanwhile, is in detention and will wait (at least) a year for a trial.
On September 21, 2021 there was a proceeding on and with Greenwood and Inner City Press live tweeted it here and below (and podcast here)
Late on September 24, a month after Inner City Press filed to unseal it, Scott's counsel's allegation that Konstantin Ignatov lied that he threw away a laptop in Las Vegas, when he returned it to OneCoin, has been partially unsealed. Letter on Patreon here.
Scott's counsel's second letter refers to notes in an Exhibit A - still no provided even into September 25 - stating that Konstantin as recently as August 25, 2021 lied about returning the laptop to OneCoin because he didn't think the US Government would believe him... Letter on InnerCityPress' DocumentCloud here.
We asked, But where is Exhibit A? Where is the DOJ's information?
Now later on September 25, DOJ has filed some, including "Scott argues that he is entitled to a new trial under Rule 33 on the basis that cooperating witness Konstantin Ignatov testified falsely about throwing his laptop computer (the “Laptop”) into a trash bin in Las Vegas in February 2019. (Tr. 206). Scott further alleges that the Government purposefully withheld this information from the defense. To be clear, the prosecutors in this case first learned of these serious allegations only when Scott filed his Supplemental Motion. Since then, the Government has investigated the allegations raised by the letter. Specifically, the Government has spoken with Ignatov regarding the incident (who immediately admitted to the perjury) and to the U.K.-based law enforcement agent who first learned of the allegations against Ignatov. The Government immediately turned over the notes from those interviews to the defense. As explained below, Scott’s Supplemental Motion should be denied for two reasons: (1) the perjured testimony, amounting to only a small piece of Ignatov’s testimony and regarding an event that took place after the charged conspiracy and was unrelated to Scott’s guilt, was not material to the jury’s verdict; and (2) Ignatov’s full testimony had limited relevance to the key issue in dispute at trial, i.e., Scott’s knowing participation in the charged criminal conspiracies. The Government presented overwhelming independent evidence of Scott’s guilt, consisting of emails, chat messages, bank records, travel records, other witness testimony, and recordings, that supported the jury’s verdict on that issue (and all of the other elements of the charged offenses)." 32 pages on Patreon here.
More to follow.
From Sept 21: Assistant US Attorney Dimase: We have nearly completed providing discovery to Mr. Greenwood. Still to be produced is the dump of a cell phone recovered from Mr. Greenwood in jail. The gov't today received a 20 GB download from the phone.
Judge Ramos: After that, discovery will be complete?
AUSA Dimase: We may obtain more... We had discussions about a motion schedule in the first half of 2022, in the Spring with a trial in the summer or fall.
Greenwood's lawyer: We could come back in five months and update you, if we're done with our review of the discovery, with an eye on a Fall trial.
Courtroom Deputy Rivera: February 24 at 3:30 pm. AUSA Dimase: In person? Judge Ramos: I'm always hopeful.
Greenwood's lawyer: Thank you for your time. Judge Ramos: We are adjourned. Please stay well.
On May 24, 2021 Mark Scott's sentencing was again pushed back, this time from June 14 into September.
On August 24, Mark Scott's lawyers asked for yet another postponement of his sentencing, in a heavily redacted letter. The basis is a motion filed under seal, and a medical procedure "due to the COVID-19 situation in Florida."
On August 25, the US Attorney's Office opposed the request, but left the basis mysterious, writing: "The Government is in the process of investigating the allegations raised in the supplemental motion and will respond to the claims raised by the motion. Nonetheless, even the claims in the supplemental motion do not establish a basis for a new trial pursuant to Rule 33 under prevailing legal precedent."
And on August 25, Inner City Press filed a letter with Judge Ramos, cc-ing the prosecutors and Scott's counsel, formally asking that the motion be unsealed - still not docketed as of Aug 30, unlike the practice of other SDNY judges.
(Now on DocumentCloud, here; podcast here).
Vlog here.
On September 13, counsel for Mark Scott and for the US Attorney's Office were told by Judge Ramos' chambers (to its credit), "Judge Ramos directs the parties to response to this request."
On September 16, Scott's lawyer responded: "On September 10, 2021 the Government filed its opposition to Mr. Scott's Supplemental Motion for a New Trial, disclosing that Konstantin Ignatov perjured himself in the trial of Mark Scott and that an investigator with the Manhattan DA's Office, who was involved in the prosecution, received a credible report about this perjury in June and failed to take further action or disclose that information to the defense. Based on these revelations, Mr. Scott has made further information requests to the Government, which the parties are discussing. The parties propose advising the Court of a proposed schedule for a further submission by Mr. Scott on his application once the Government has addressed these requests. Separately, we have discussed with the Government a redacted version of the motion papers that could be publicly filed, relying on the Government’s assessment of what may be necessary to address concerns that initially led counsel for Mr. Scott to file his application under seal. We expect to transmit an agreed upon set of redacted materials to the Court shortly for the Court’s consideration and public filing."
At 10:33 am on September 24 Judge Ramos docketed: "MEMO ENDORSEMENT [407] LETTER MOTION addressed to Judge Edgardo Ramos from Arlo Devlin-Brown dated 9/16/2021...ENDORSEMENT...The following redacted materials are approved for public filing: (1) the government's version of Mr. Scott's August 23, 2021 letter motion; (2) Mr. Scott's August 26, 2021 letter; and (3) the government's September 10, 2021 opposition. (Signed by Judge Edgardo Ramos on 9/23/21)."
But by 10 pm on September 24, nothing... Watch this site.
On September 9, Sebastian Greenwood's September 10 proceeding was pushed back to September 21: "NOTICE OF HEARING as to Karl Sebastian Greenwood Status Conference set for 9/21/2021 at 10:30 AM before Judge Edgardo Ramos." Watch this site.
We note that since our August 25 filing, the US Attorney's Office has slipped into a footnote, "Scott's counsel informed the Government today that: 'In light of the Government's recent disclosure that its cooperating witness committed perjury and the lack of prior disclosure to the defense...". Can you say, Konstantin Ignatov? And why hasn't the request to appeal been acted on?
The August 25 letter: Dear Judge Ramos: This concerns, in the above-captioned criminal case that concerns money laundering for the OneCoin scheme, the request to entirely seal a judicial document requesting a new trial for the defendant. The filing(s) should be unsealed in full, or if the Court sees fit, in part. I have been covering the case for Inner City Press, see also, e.g., The Guardian (UK), November 25, 2019, "In testimony live-tweeted by the investigative journalism website Inner City Press, Ignatov reportedly referred to Abdulaziz as 'one of the main money launderers' involved in the scheme."
Yesterday, Scott's counsel filed a letter (Dkt 390) requesting a sentencing adjournment based on "the need for the Court to consider and address the Supplemental Rule 22 Motion (including the request for an evidentiary hearing) filed under seal on August 23, 2021." That motion is a judicial document, within the meaning of United States v. Aref, 533 F.3d 72, 81-83 (2d Cir. 2008) and Lugosch v. Pyramid Co., 435 F.3d 110 (2d Cir. 2006) - it should be made available.
It is not entirely clear to me if the letter has been docketed. There is an August 13 notation of a SEALED DOCUMENT placed in vault. This is a request to unseal that as well, and to review the redaction in Dkt 390. Judge Richard Sullivan, only today, ruled that a discussion of a defendant's COVID status was not entitled to sealing. See US v. Ernest Murphy, 18-cr-373 (Sullivan), dkt 857. This is a case of public import, and these are judicial documents.
Inner City Press routinely files requests to unseal in this District, and other Districts - including as cited in its March 31 request, here And Judge Broderick's docketing of Inner City Press' request to unseal in US v. Ashe / Piao, 15-cr-706, Dkt No 999 (Inner City Press letter) & Dkt 998 (ordering that sealing be justified or removed by April 9).
And see, regarding public access to allegedly confidential information, Judge Furman's recent grant of Inner City Press request to unseal in US v. Avenatti, 19-cr-374 (JMF), Docket No. 134. See also, July 27, 2021, NYLJ, "Judge Orders Release of Michael Avenatti's Financial Affidavits In Stormy Daniels Theft Case," "Journalist Matthew Russell Lee of Inner City Press had intervened, advocating for the affidavits' release."
(Now on DocumentCloud, here; podcast here).Watch this site.
Inner City Press back on March 13 asked the US Attorney's Office Press Office for its filings not yet in the public docket. Here is Inner City Press' Periscope video upon leaving the courthouse. The case is US v. Scott, 17-cr-630 (Ramos).
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After Investors Bank Hit With FDIC Conditions, CRA Protest Filed To Fed App by Citizens Bank
By Matthew Russell Lee, Patreon Story Order
BBC - Guardian UK - Honduras - ESPN
FEDERAL COURT / S Bronx, Sept 25 – Whether or not the U.S. Community Reinvestment Act will be again enforced until the new Administration and its regulators, particularly the Federal Reserve which already in essence runs the OCC and has its chair position in competition, is an open question. And the proposed acquisition of Investors Bank by Citizens Financial will be litmus test.
Investors Bank is one of the most disparate banks in New York State, where in 2020 it made only three mortgage loans to African Americans, while denying fully seven applications from African Americans. By contrast, it made 164 loans to whites while denying only 76 applications from whites.
Inner City Press raised the 2019 disparities to the FDIC - and on July 30 was contacted by the FDIC that it imposed rare conditions on Investors. Letter here. This has now been raised on Citizens' application, to the Federal Reserve, cc-ing Citizens:
"Re: Timely First Comment Opposing Citizens Financial Group's application to acquire Investors Bancorp, Inc. and thereby indirectly acquire Investors Bank
Dear Chair Powell, Secretary Misback and others in the FRS:
This is a timely first comment opposing and requesting an extension of the FRB's public comment period on the Applications by Citizens Financial Group's application to acquire Investors Bancorp, Inc. and thereby indirectly acquire Investors Bank
Before getting to the data, be aware that based on Fair Finance Watch's comments to the FDIC about Investors, it recently imposed a condition on Investors. Investors has yet to meaningfully implement the required improvements; this application should not be approved, much less at this time. The FDIC wrote:
"Matthew Lee, Esquire Executive Director Inner City Press/Fair Finance Watch Dear Mr. Lee: We are writing to inform you that the FDIC approved Investors Bank’s application to acquire eight branches from Berkshire Bank. As part of the application review process, we investigated the issues you raised in your e-mail dated January 19, 2019... The Bank will develop and Board approve an Action Plan within 60 days of the effective date of this Order to ensure that its home mortgage lending adequately addresses the credit needs of all segments of its market areas. The Action Plan should include, at a minimum, the following: a. The Bank will regularly monitor application and origination activity of home mortgage loans in majority-minority census tracts and from Blacks throughout the Bank’s assessment areas. b. The Bank will ensure marketing and outreach efforts are inclusive of all communities, including minority communities within all the Bank’s assessment areas. The marketing and outreach efforts should focus on home mortgage product awareness. Marketing activities should use materials and media that reflect the racial and ethnic composition of the targeted communities. The Bank should also have specific advertising and outreach goals, and the results of these efforts should be documented, monitored, and evaluated for effectiveness. 5. Upon Board approval of this Order, the Bank will provide a copy of the signed Order to the FDIC's New York Regional Office within 30 days. 6. Upon Board approval of such Action Plan, the Bank will provide a copy of the Plan to the FDIC’s New York Regional Office. 7. The Bank will provide the FDIC’s New York Regional Office with quarterly updates detailing its progress in meeting the goals listed in the Action Plan."
Citizens cannot, as of now, be allowed to acquire this hot mess. As noted: The applicant Citizens in 2020 in New York State based on its disparate marketing made 7183 mortgage loans to whites, with 3116 denials to whites -- while making only 323 loans to African Americans, with more than that in denials: 336.
Here's some of Investors' 2020 HMDA data: Investors Bank in 2020 in New York State based on its disparate marketing made 164 mortgage loans to whites, with 76 denials to whites -- while making only THREE loans to African Americans, with SEVEN denials. This is far out of keeping with the demographics, and other lenders, in NYS - this is outrageous.
This is a pattern. Investors Bank in 2020 in New Jersey based on its disparate marketing made 1580 mortgage loans to whites, with 281 denials to whites -- while making only 64 loans to African Americans, with 28 denials. This is far out of keeping with the demographics, and other lenders, in New Jersey. The comment period should be extended; evidentiary hearings should be held; and on the current record, the application should not be approved."
Watch this site.
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Your support means a lot. As little as $5 a month helps keep us going and grants you access to exclusive bonus material on our Patreon page. Click here to become a patron.