by Matt Taibbi
And if Eric Holder’s voice wasn’t the direct inspiration, the spirit of Collateral Consequences certainly moved Cyrus Vance, who sent subpoenas to many Wall Street firms but chose to indict only a small, globally nonconsequential Chinatown bank.
Abacus isn’t just the only bank in the entire country to face indictment since the financial crisis. It’s also the first company that we know of that was officially deemed small enough to destroy. Too-big-to-fail, meet small-enough-to-jail.
The case of Abacus Federal Savings showed everyone the outlines of the now obvious, but still unofficial, selective-leniency doctrine. The absurdity of its application in the world of white-collar crime was clear enough. We were letting major systemic offenders walk, bypassing the opportunity for important symbolic prosecutions, and instead committing the limited resources of the nation’s financial police to putting the smallest of small fry on the rack for negligible offenses.
But there was another major flaw in the new approach that nobody in charge had likely even bothered to consider.
It may have been unknown to the Ivy Leaguers like Holder and Tim Geithner who were crafting the new policy, or maybe they simply didn’t care, but the Collateral Consequences idea had been dreamed up at a time when local police departments all over the country were instituting new statistics-based street policing strategies that functioned according to logic that was exactly opposite that of the Holder memo.
These were programs like the infamous CompStat system and other lesser-known outgrowths of the celebrated “broken windows” urban policing strategies, programs whose effectiveness depended upon massive numbers of low-level arrests for minor violations.
All over America, indigents or the merely poor were being hauled in in ridiculous numbers, often detained even if just for a short time, given tickets, and searched. These cast-a-wide-net street-policing strategies were ostensibly designed to snag illegal guns or serious criminals with outstanding warrants, but they didn’t always work out that way. At exactly the time Holder was penning his famous memo in the late 1990s, the abjectly purposeless arrest was becoming more and more common, even as, perversely, the numbers of actual violent crimes committed had begun to drop precipitously.
And as every individual who’s ever been charged with a crime knows, anyone facing criminal arrest can expect collateral consequences. A single drug charge can ruin a person’s chances for obtaining a student loan or a government job. It can nix his or her chances of getting housing aid or a whole range of services—even innocent members of your family may lose access to government benefits. You can lose your right to vote and your access to financial aid. You can even have your children taken away.
But no police anywhere were officially asked to weigh the collateral consequences of arrests for prostitution, stealing cars, assault, selling weed, jumping turnstiles, even the simple offense of being homeless. There’s no memo in the Justice Department that wonders aloud what happens to the families of those sorts of arrestees. Instead, the new trend in policing is and has been to aggressively no longer care about any of it.
Indeed, it looked very much like someone was trying to implement Collateral Consequences in a vacuum. Well-heeled lawyers seemed to be working to make the traumatic consequences of arrest obsolete for the clients of other well-heeled lawyers, all the while pretending, or maybe asserting, that this could be done without considering the rapidly expanding role of the police and the criminal court system in the lives of ordinary people.
Whether they knew about it or cared about it, that’s what the new policy was turning out to be: For the small subset of offenders who are guilty of truly systemic, transformative, organized crime, for offenders to whom losing a big case could be politically embarrassing, let’s carefully consider the collateral consequences of criminal prosecution. But for everybody else, let’s ignore them more than ever before.
The architects of Collateral Consequences seemingly didn’t realize they were starting a revolution. They were accelerating a government-sponsored sorting of the entire population into arrestable and nonarrestable classes.
Sometime just after midnight on August 9, 2012, Tory Marone staggered across the West Side Highway in Manhattan toward the Hudson River. Smallish, white, with scruffy red hair and a red goatee, the twenty-six-year-old jammed his hands in the pockets of his sweatshirt and headed toward a pier, looking for a place to sleep it off.
Tory was drunk and high, which wasn’t unusual. What was unusual was not having a place to sleep. Tory was usually halfway homeless. When he didn’t have his own place or when his mother out in Long Island wasn’t letting him in, he’d move from here to there, crashing at one friend’s house for a few days, then moving on to another friend’s house, then maybe staying with his dad, a career drug dealer. Or he’d sell enough drugs himself to get a hotel room for a few days. Officially he lived nowhere, but he always had a roof over his head. That’s what it meant to be halfway homeless, and he’d been living that way for as long as he could remember.
But now it was 2012 and both his parents were dead. His mother was dead—he said it was of cancer. Her being sick was why the state had taken his two little sisters away back when he was eighteen and put them in foster homes. He hadn’t seen or heard from either of them since. That was eight years ago.
What Tory remembered about his father was that he mostly sold weed, but he’d hustle whatever he could get his hands on. Tory’s dad got sent upstate for four years on a dope-dealing charge when Tory was four years old, and then went back upstate for two years when Tory was ten. For later busts he did time in the city, at Rikers Island for instance, but those were shorter sentences, a year or less. According to Tory, he had died under mysterious circumstances—Tory hinted that he had been murdered—about a year before.
So in the summer of 2012 Tory was suddenly no longer halfway homeless, he was for-real homeless. So far it wasn’t so bad, except when it rained. One of the first things he learned about being for-real homeless is that if you get wet, you stay wet. And sometimes it was hard to find a place where you could sleep without being kicked, spat on, hassled. That was one of the things on his mind right now. He was wasted, and he had a really bad headache that just wouldn’t go away. He needed to just lie down in peace somewhere.
One of the places he’d discovered where he could sleep without too much trouble was a little grassed-over park across from Twenty-Fourth Street—right near Chelsea Piers, where during the day the yuppies hit golf balls toward New Jersey at an outdoor range and played pickup basketball on fancy indoor courts. During the night it’s quiet and green and there are a few benches near some trees. He crossed the highway and collapsed onto one of them. There was no one else around. He rubbed his head, then folded his arms and went to sleep.
Knock knock knock!
It was a few hours later. He woke up with a start.
“Come on, asshole, get up,” he heard a voice saying, and there was a flashlight in his face. “Let’s go, get up!”
Only one thing in the world sounds like that: police.
He was still out of it, but he got up, as quickly as he could. He couldn’t tell what time it was, except that it was still dark. The policeman’s paperwork would later say it was 4:49 a.m.
Tory hadn’t been homeless for long, but he already knew the deal. The sign at the edge of the pier said PARK CLOSES AT 1 A.M., and Tory knew he couldn’t be there, but he also knew how to act when he got rousted. Why would he argue with a police? What’s he going to do—win? He knew what he was supposed to do here.
“Okay,” said Tory, rubbing his eyes. “I’m getting up. Just let me walk out of the park. I’m going, I know.”
The police didn’t say anything to him. There were two of them, he could see, one big and one not so big—apart from that, he was still too messed up to distinguish much.
Tory asked again, “Can I go? I’ll walk out of the park. I’m not arguing, I’ll go right now.”
“Just shut up,” he was
told.
That’s when he saw that one of the two officers was writing in a pad.
Tory sobered up immediately. He wasn’t educated, but he knew this math cold: a cop writing something meant he was about to be handed a summons, which in turn meant a court appearance and then jail if he couldn’t pay the two-hundred-dollar fine or whatever it was, which he probably couldn’t. Or, more likely—he knew himself—he’d skip the court appearance, then it’d be a bench warrant, turning him into a fugitive.
He thought, Why all this hassle? I’m offering to walk out of the park. Why write me a ticket you know I can’t pay? I’m offering to leave.
Tory lost his cool.
“You’re writing me a ticket?” he protested. “What the fuck?”
One of the police reached over to grab Tory. “Come on,” the officer said. “Let’s go.”
“Go fuck yourself!” Tory shouted. He still couldn’t believe they were writing him up. Even as a corrupt way to make money, it made no sense. Tory didn’t have any money. If anything, they were losing on the deal—they’d end up having to feed him in jail. Plus, all the paperwork, and he knew how police hated paperwork. The street math of it didn’t work out for Tory. The not understanding started to make him panic.
Both officers grabbed Tory, who started to struggle. He screamed and swore as they dragged him off to a squad car. On the way into the car, he kicked a tire. In the three-count misdemeanor affidavit written up later on—Tory got charged with resisting, disorderly conduct, and loitering in city parks—Officer Marcus Rollins filed the following report:
Deponent further states that when he was placing the defendant under arrest for the offense described above, defendant refused to hold his arms out and repeatedly pulled away from deponent in an attempt to prevent deponent from placing handcuffs on deponent’s wrists, and shouted in substance: I HATE COPS. YOU’RE ALL PIGS. I HATE ALL OF YOU. YOU FAT MOTHERFUCKER.
They drove Tory away, threw him in jail for the night, then released him on his own recognizance, giving him a court date for a month or so later to answer the misdemeanor charges.
A month later Tory missed the court date.
The city issued a bench warrant.
Four months passed. Tory, now officially a fugitive, got better at being homeless, although the cold weather was starting to be a problem. He hung out mostly in Brooklyn and Lower Manhattan, although occasionally he would make his way out to Long Island. From time to time he saw his younger brother, his only real family, who had a job just south of Twenty-Third Street in Manhattan. One night in December, after seeing his brother at work, Tory was walking the streets. He was high again, maybe a little drunk, too. He crossed Eighth Avenue at around Twenty-First Street and once again got stopped by the police.
This time he hadn’t even had a chance to commit a crime yet; this time he was just walking around looking homeless and stoned. They stopped him, asked him for ID, searched him, no probable cause other than that he looked dirty and high. Classic use of New York’s stop-and-frisk program, with Tory being white the only thing weird about it.
In his pockets the police found half a joint, and there’s a funny thing about that. Way back in 1977, New York City decriminalized the possession of small amounts of marijuana, the law being that if you had less than 25 grams on you and smoked your weed in private, the police weren’t supposed to arrest you.
But then in the 1990s the city began implementing this stop-and-frisk program, where police could stop and search just about anyone for any reason. And stop-and-frisk provided the city police with a magic spell they could use to circumvent the lax marijuana law.
In 2011, the year before Tory got arrested, another year when exactly nobody on Wall Street was arrested for crimes connected to the financial crisis, New York City police stopped and searched a record 684,724 people. Out of those, 88 percent were black or Hispanic. The ostensible justification for the program is looking for guns, but they find guns in less than 0.02 percent of stops. More often, they make people empty their pockets and find nothing at all. Or sometimes, like in Tory’s case, you get your pockets emptied and suddenly you’re standing there on the corner of Eighth Avenue and Twenty-First Street with half a joint sitting in your open hand.
Now that’s not “private use” anymore. Now you’re “knowingly or unlawfully possessing marijuana and such is burning or open in public view.” Now you’ve got a chargeable offense and your arresting officer gets to make his summons pad one sheet thinner. Patrol cops in most precincts had to empty one pad a month, it turns out, part of their precinct-ordered “productivity goals,” or at least so say some sources.
The point is, Tory Marone went from privately having a joint in his pocket to publicly waving it around on Twenty-First Street with the help of one of New York’s finest, and he went off to jail once again.
A few days later he was being arraigned in the borough’s misdemeanor court, not far from the same sprawling Manhattan courthouse where TV-world actor Sam Waterston had expertly played a tough-talking prosecutor-with-a-heart-of-gold on Law & Order. The judge set bail at $1,500 on the resisting and $1,000 on the marijuana, but he might as well have said a million—Tory didn’t have a dollar.
The bail was probably that high because Tory had nineteen prior misdemeanor arrests, most all of them of similar character, although there were no felonies on his sheet.
A few days later the judge made it official and whacked his gavel, sentencing him to do his bid on Rikers Island, one of the most vicious and dangerous places in America. Once home to a thousand slashings and stabbings a year in the 1980s, there are still dozens of inmate-on-inmate crimes a month. Rumors of guard-sponsored “fight clubs” pitting inmates against each other have plagued the place for years.
I would meet Tory there a few days later. Officially, his sentence was for waving a joint around on Twenty-First Street and missing a court appearance. Unofficially, the explanation was a little bit different.
“Basically, he mouthed off to a cop,” explains a city public defender.
That, and he was a repeat offender. But then, not all repeat offenders are created equal.
At more or less exactly the same time that Tory Marone was being offered his deal to spend forty days at Rikers for half a joint that was all-the-way hidden in his pocket, the U.S. Department of Justice, in the person of still–assistant attorney general Lanny Breuer—Holder’s right-hand man, the head of the department’s Criminal Division, and ostensibly still the top crime-fighting official in the country—was making a historic announcement. The announcement took place just a stone’s throw from where Tory was waiting in jail, just across the East River, in Brooklyn.
Along with the head of the Justice Department’s Eastern District of New York office, Loretta Lynch, Breuer called a press conference to formally announce that the United States had decided to levy a record fine against the Hong Kong and Shanghai Banking Corporation, better known as HSBC, a pillar of British finance and the largest bank in Europe. The bank, which had a major U.S. subsidiary called HBUS, had been charged with committing an astonishing list of crimes—a laundry list that included pretty much every kind of crime a bank can possibly be charged with.
The bank admitted to laundering billions of dollars for drug cartels in Mexico and Colombia, washing money for terrorist-connected organizations in the Middle East, allowing rogue states under formal sanctions by the U.S. government to move money freely by the tens of billions through its American subsidiary, letting Russian mobsters wash money on a grand scale using a see-no-evil traveler’s checks program, and helping tax cheats and other crooks from Miami to Los Angeles to Peru hide hundreds of millions of dollars in nearly anonymous “bearer share” accounts.
Essentially, HSBC, as perhaps the biggest and most accessible “reputable” bank in Asia, Africa, Central America, and the Middle East, had enthusiastically opened its vaults, including its American vaults, for most every kind of antisocial and/or criminal organization on the plan
et, allowing mass murderers, human traffickers, and embezzlers unfettered access to the safety and comfort of U.S. dollars.
“You go down the list, they violated every goddamn law in the book,” says former Senate investigator Jack Blum, whose pursuit of Lockheed in a bribery case led to the passage of the Foreign Corrupt Practices Act. “They took in every imaginable form of illegal and illicit business.”
So what was the penalty for laundering up to $7 billion for Central American drug cartels? For allowing Russian “used car dealers” to deposit $500,000 a day for years in U.S. banks using traveler’s checks? For supplying the Al Rajhi Bank of Saudi Arabia, whose founder was revealed after 9/11 to have been one of the original twenty benefactors to al-Qaeda, with more than 1 billion U.S. dollars—a bank HSBC’s own compliance officers recommended abandoning after it was caught supplying Chechen extremists with traveler’s checks in 2005, but which it continued to do business with through 2010? For allowing 25,000 U.S. banking transactions totaling $19.4 billion with the sanctioned state of Iran over a six-year period, and allowing similar transactions from prohibited locales like North Korea and the Sudan?
Breuer couldn’t wait to tell the world the answer to that question. He flashed a prideful smile as the press settled to hear the announcement.
As a partner at Covington & Burling, Breuer had become well known in the legal community for representing rich, high-profile targets of congressional investigations—his clients ranged from Halliburton to Yahoo! to the aforementioned Roger Clemens.
Congressional aides to this day joke about Breuer, who was often the liaison between targets of congressional investigations and the young House and Senate aides who were crawling up his clients’ backsides. “The guy would call you up late at night and leave messages, and he’d talk in this really slow, whiny voice,” says one former House aide. “He’d be like, ‘Hi, this is Len-n-n-ny, we’ve, uh, got that document you were asking for.’ ”