“Spain Is Expected to Extradite Ex-Trader in JPMorgan Case”

October 2, 2013

The New York Times on October 1, 2013 released the following:

BY BEN PROTESS AND PETER LATTMAN

“Federal authorities expect that one of the former JPMorgan Chase employees facing criminal charges in connection with the bank’s multibillion-dollar trading loss in London will eventually be extradited to the United States, a senior prosecutor said on Tuesday.

The former trader, Javier Martin-Artajo, is living in Spain.

Although Mr. Martin-Artajo appears to be fighting extradition after briefly surrendering to police in Spain in August, Spanish authorities are expected to cooperate with prosecutors in New York.

“We have a pretty good extradition agreement with Spain,” Lorin L. Reisner, the chief of the criminal division at the United States attorney’s office in Manhattan, said on Tuesday. “I expect,” Mr. Reisner said, that Mr. Martin-Artajo “will return to the U.S. via the extradition process.”

Another former trader charged in the case, Julien Grout, could prove more elusive, Mr. Reisner said. After leaving JPMorgan’s London offices, Mr. Grout returned to his native France, which typically does not extradite its citizens.

“It’s more complicated,” Mr. Reisner said.

Mr. Reisner made his remarks at a conference in Midtown Manhattan on white-collar crime. The conference featured panels with leading government officials and criminal defense lawyers, as well as senior lawyers from the Securities and Exchange Commission, which under new leadership has tried to step up its enforcement. Some of those efforts are directed at JPMorgan, the nation’s biggest bank, which is the target of a wider legal crackdown.

The Justice Department is in settlement talks with JPMorgan and is seeking more than $11 billion from the bank over its sale of questionable mortgage securities. The bank also faces lingering investigations into its debt collection practices and its dealings with Bernard L. Madoff, the creator of a multibillion-dollar Ponzi scheme.

The investigation into JPMorgan’s trading loss in London reached a peak in August when the United States attorney’s office in Manhattan, along with the F.B.I., announced charges against the two. At the heart of the case was the contention that the two had deliberately “manipulated and inflated the value” of a derivatives bet to hide hundreds of millions of dollars in losses.

Both Mr. Martino-Artajo and Mr. Grout deny wrongdoing. Bruno Iksil, a third former trader, known as the “London Whale” for his role in the outsize derivatives trade, reached a nonprosecution deal with the government in exchange for testifying against his former colleagues.

Weeks after the charges, authorities took aim at JPMorgan for “lacking effective internal controls to detect” the traders’ conduct. The civil settlement — which resolved investigations from the Office of the Comptroller of the Currency, the Federal Reserve, the British Financial Services Authority and the S.E.C. — imposed $920 million in penalties on the bank. The deal also required the bank to admit wrongdoing.

At the legal industry conference on Tuesday, the co-head of the S.E.C’s enforcement unit trumpeted JPMorgan’s admission as evidence of a broader policy shift. For decades, the agency permitted defendants to settle cases without acknowledging their misconduct.

“We will demand admissions, and if the defendant isn’t prepared to agree, we will litigate at trial,” said Andrew Ceresney, the S.E.C. official, who gave the keynote address at the conference, run by the Practising Law Institute.

The change has already begun to “bear fruit,” Mr. Ceresney said, citing the JPMorgan case and a settlement with the hedge fund Harbinger Capital Partners. Like a guilty plea in a criminal case, an admission of wrongdoing is important to hold the defendant accountable and provides a form of catharsis to the investing public, he said.

Mr. Ceresney, a former defense lawyer at the law firm Debevoise & Plimpton, was recused from the JPMorgan case because he once defended the bank. He was hired by the agency’s new chairwoman, Mary Jo White, who also came from Debevoise. Both were federal prosecutors earlier in their careers.

Five months into the S.E.C. job, Mr. Ceresney argued that the new leadership had brought improvements to the agency, which was sharply criticized for missing financial frauds like the Madoff Ponzi scheme and failing to charge any top Wall Street executives tied to the financial crisis. “We wanted to bring the swagger back to the enforcement division, and I think we’re doing that,” he said.

The agency continues to face criticism. Even in the JPMorgan settlement, lawmakers and other critics questioned why the agency had charged the traders but declined to punish the bank’s leadership.

In one sign of change, however, the S.E.C. separately announced on Tuesday that it was paying more than $14 million to a whistle-blower who provided information that led to an enforcement action, by far the most significant payout in the two-year history of its whistle-blower office.

The agency did not identify the tipster or the case this person helped build. But under the whistle-blower program, created under the Dodd-Frank Act, tipsters can reap as much as 30 percent of the money the S.E.C. collects when imposing fines, suggesting that the relevant case was a big one.

The white-collar crime conference coincided with the first day of the government shutdown. Mr. Reisner, the federal prosecutor, described the shutdown as a “complete mess” for his already resource-constrained office.

He said that with 10 criminal trials under way in Federal District Court in Manhattan, he spent much of Monday seeking to prevent the government paralegals working on those cases from being furloughed.”

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Douglas McNabb – McNabb Associates, P.C.’s
International Extradition Lawyers Videos:

International Extradition – When the FBI Seeks Extradition

International Extradition – Wire Transfer – Email – Telephone Call

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We previously discussed the extradition treaty between the United States and Spain here.

We previously discussed the extradition treaty between the United States and France here.

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To find additional global criminal news, please read The Global Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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“Ex-JPMorgan Trader Released, Opposing U.S. Extradition”

August 28, 2013

Bloomberg on August 27, 2013 released the following:

By Charles Penty & Patricia Laya

“Former JPMorgan Chase & Co. (JPM) trader Javier Martin-Artajo was released from police custody after telling a Madrid court he opposed attempts by U.S. prosecutors to extradite him on charges he hid trading losses that cost the bank $6.2 billion.

The former trader turned himself in yesterday morning after being contacted by investigators, a Spanish police official said. He was released after a hearing in Madrid yesterday in which he said he was unwilling to be extradited, according to a spokeswoman for the National Court.

The U.S. this month charged Martin-Artajo, a Spanish citizen, and Julien Grout, a French citizen, with trying to hide the losses stemming from trades by Bruno Iksil, the Frenchman at the center of the case who became known as the London Whale. Grout and Martin-Artajo face up to 20 years in jail if convicted of the most serious counts, including conspiracy and wire fraud.

“The likelihood is fairly significant that he would go back,” said Ivan Mercado, managing partner at Mercado & Rengel, a law firm in Spain that works on U.S. extradition cases. “Spain and the U.S. have an extradition agreement. He can’t just say he doesn’t want to go.”

Bank’s Negotiations

JPMorgan’s losses prompted investigations on two continents, U.S. congressional hearings and an internal review that led to a 50 percent pay cut for Chief Executive Officer Jamie Dimon, who the board said bore some responsibility for lapses. Regulators in the U.K. and U.S. are preparing to impose fines on the bank as soon as mid-September, a person with direct knowledge of the matter said last week.

The bank is in talks with various authorities to settle its part of the case for about $500 million to $600 million combined, the Wall Street Journal reported, citing unidentified people close to the situation. Not all agencies have agreed to numbers and the total may end up outside that range, it said.

Martin-Artajo, 49, oversaw trading strategy for Iksil’s synthetic portfolio at JPMorgan’s chief investment office in London, while Grout was a trader who worked for him.

“The arrested person is presumed responsible for manipulating and inflating the value of positions in the synthetic credit portfolio of his firm with the aim of achieving specific objectives of daily losses and gains,” Spanish police said in a statement.

‘Fair Reconstruction’

Martin-Artajo’s lawyer, Lista Cannon, didn’t respond to a call seeking comment on his client yesterday. He “is confident that when a complete and fair reconstruction of these complex events is completed, he will be cleared of any wrongdoing,” a spokeswoman for his law firm said earlier this month. Jennifer Zuccarelli, a spokeswoman for JPMorgan, declined to comment.

At a hearing yesterday, Martin-Artajo’s lawyer filed documents in which his client denied the allegations, according to a court official who asked not to be identified because they weren’t authorized to speak publicly. The U.S. now has 40 days to file sworn statements in support of its extradition request.

Martin-Artajo will then be able to contest those arguments at a further hearing before a judge decides whether to grant the request, said Mercado, who isn’t involved in the case. The process can take up to several months, he added.

‘Very Difficult’

“When there is a bilateral agreement between two countries on certain crimes, it’s very difficult for a country to refuse extradition because the accord implies the crime is viewed comparably,” Carlos Vazquez, a criminal lawyer and partner at Vazquez & Vazquez in Madrid, said by telephone.

The spokeswoman for the court said Martin-Artajo’s passport has been confiscated. Another court official said that wasn’t the case, but that he can’t leave Spain without court approval.

Grout is living in France and isn’t a fugitive, his lawyer, Edward Little, a partner at Hughes Hubbard & Reed LLP in New York, said in an Aug. 12 interview, two days before his client was charged.

“He visited the U.S. last month with confidence he was not being indicted and moved to France to save money and look for a job,” Little said at the time. France has no obligation under its extradition treaty with the U.S. to send Grout to New York. Little declined to comment yesterday.

Martin-Artajo and Grout are charged with conspiring to falsify securities filings from March to May of 2012. The U.S. sought to keep the charges secret while arrests were attempted before unsealing them on Aug. 14. Jennifer Queliz, a spokeswoman for U.S. Attorney Preet Bharara, declined to comment.

‘Embarrassing Situation’

Dimon characterized the loss as “the stupidest and most embarrassing situation I have ever been a part of.” First disclosed in May 2012, the bad bets led to an earnings restatement, a U.S. Senate subcommittee hearing and probes by authorities including the Securities and Exchange Commission and U.K. Financial Conduct Authority.

Iksil, dubbed the “London Whale” because his portfolio was so large, signed a non-prosecution agreement with the U.S. in June, the government said. He pledged to cooperate with investigators as part of the deal. Martin-Artajo’s lawyer submitted documents with details of Iksil’s agreement with the U.S., the court official said yesterday.

The cases are U.S. v. Grout, 13-MAG-01976, and U.S. v. Martin-Artajo, 13-MAG-01975, U.S. District Court, Southern District of New York (Manhattan). The SEC case is Securities and Exchange Commission v. Martin-Artajo, 13-cv-05677, U.S. District Court, Southern District of New York (Manhattan).”

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Douglas McNabb – McNabb Associates, P.C.’s
International Extradition Lawyers Videos:

International Extradition – When the FBI Seeks Extradition

International Extradition – Wire Transfer – Email – Telephone Call

————————————————————–

We previously discussed the extradition treaty between the United States and Spain and the extradition treaty between the United States and France here.

————————————————————–

To find additional global criminal news, please read The Global Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

————————————————————–

International criminal defense questions, but want to be anonymous?

Free Skype Tel: +1.202.470.3427, OR

Free Skype call:

           Office Locations

Email: