Did Preet Bharara make $4 billion for the federal government last year?
He seems to think so. As U.S. attorney in Manhattan, he runs an office that collected almost $4 billion in asset forfeitures in the 13 months that ended with January 2014, the Wall Street Journal reports . Almost half of that came from JPMorganChase, which forfeited $1.7 billion for not being a good enough cop in the Bernie Madoff case. (JPMorganChase is a bank, not a cop , but that’s another matter.) A smaller chunk came from SAC Capital, which was enmeshed in an insider-trading case; still smaller amounts came from other people.
“The Asset Forfeiture Unit’s work, simply in connection with JPMorgan and SAC, would be enough money (if the money came to us, which it doesn’t) to fund everything my Office does for 58 years,” Bharara complains in the Journal's account. “And I’m still unable to hire somebody.” That’s because, on the one hand, federal law doesn’t allocate all forfeited money to the U.S. attorney’s office that seizes it, and on the other hand, the Department of Justice had a hiring freeze on and off since 2011.
There are quite a few cases where one might want to defend a dynamic executive whose moneymaking organization can’t hire anyone because of federal laws and regulations. But, sorry, Mr. Bharara, you don’t qualify.
New York University law professor Jennifer Arlen may not see why. “This is one of the only areas of law enforcement that make a profit ,” she told the Journal. “Every corporate crime prosecutor you hire, their salary is more than made up for by the sanctions the DOJ and the SEC recovers.”
The latter part may be true, but the former is not. Profits come from making money, not taking it. JPMorgan, presumably, made the $1.7 billion Bharara’s office took from it. The same is presumably true of many of the other people and businesses Bharara forced to hand over money. And even if some of them took the money rather than making it, that wouldn’t change the fact that Bharara’s office didn’t make the money: some victim a prosecutor is supposed to help protect did.
In fairness, Bharara's formal statement puts the forfeitures in the context of removing incentives for lawbreaking and returning money to victims; there, he expresses pride in where the money goes rather than irritation that his office doesn't get more of it. But even there, he speaks as if he'd made a profit for the government: "It is fair to say the taxpayers have gotten a great return on their investment – almost 8,000% – as this $4 billion represents nearly 80 times the Office’s annual budget."
If Bharara’s organization had made $4 billion, and most of that money had been taken away by people who hadn’t made it, he’d have grounds for a complaint in justice. But in fact, taking money away from people who made it is something his office does. It’s not what the federal budget process does to him.
- Walter Donway, Crony Capitalism versus "Making" Money
- James J. Treacy, Feds Blame JPMorgan in Failure to Catch Madoff
- Alexander R. Cohen, Putting Kaley in Context