I was driving my daughter to her grandmother’s house today, and I heard a panel on WAMU’s Kojo Nnamdi Show waxing righteous about the rather meager charges against D.C. councilmember Kwame Brown. Now, I am not focused on Kwame Brown. He may indeed be a corrupt politician. He may be Jimmy Stewart in “Mr. Brown Goes To Washington” for all I know.
This isn’t about him.
The only federal charge that the U.S. Attorney’s Office in Washington could bring against Mr. Brown was for bank fraud. He falsified statements to a federally-insured bank while seeking a loan, claiming more income than he had received. A misdemeanor charge for violating campaign financing rules was also filed in local court, and Mr. Brown will apparently plead guilty. But the larger charge has nothing to do with his public function or with public business.
Now lying to a bank on a loan application or providing false information in a loan application is wrong of course. It is also wrong to give your child any money as a loan and then let the child claim those assets as his or her own income or saving to an FSLIC- or FDIC-backed institution in support of a loan application. Or to accept a loan from a parent and do so yourselves. The possible penalty for such an affront: Thirty years.
Federal prosecutors in Baltimore used to call this statute — and its overwhelming and intimidating penalty — the Head Shot. If the rest of your case was insubstantial, if you couldn’t make the case you wanted to make, but you were on the spot for investigating a high profile target, then check the loan documents on that sucker’s house first. See if he made a false claim. Even if he was paying off the bank loan, or had paid the loan, even if there was no actual monetary loss, check the loan documents. It’s amazing how many Americans put more than their best foot forward when they are trying to convince a bank to back their mortgage.
The federal prosecutor in Baltimore, a fellow named DiBiagio, really didn’t like the former police commissioner of Baltimore city. The commissioner, a fellow named Norris, had publicly criticized DiBiagio for his priorities, calling a press conference, telling television cameras that the federal prosecutor wasn’t bringing enough gun cases, wasn’t doing the necessary things to reduce crime in Baltimore. Norris made an enemy.
Later, after Norris quit to become state police superintendent, there was an audit of a discretionary fund assigned to the police commissioner’s office. City auditors found that Norris had seemingly spent a modest amount of the fund on items not connected to official business. In the end, after going item by item, Norris agreed to pay the city back somewhere in the neighborhood of $2000 — a figure that was totaled over several years as commissioner. End of story?
Nope. Mr. DiBiagio stepped in, announced a federal investigation of Mr. Norris over the matter of this $2000.
Many months and many headlines later, Mr. DiBiagio was worried. After all, Mr. Norris had repaid the disputed money as requested by the city. Moreover, lawyers for the former commissioner were arguing that there were no actual guidelines on what the discretionary fund could and couldn’t be used for. None whatsoever. Previous commissioners had used the account for myriad items. Defense attorneys were prepared to argue in court that Norris assumed the use of the fund was a perk of his post. They wanted a trial, and federal prosecutors did not want a trial; the case was a loser, an embarrassing, high-profile overreach into a very small matter and a very small amount of money.
What to do? Check the loan documents on the house where Mr. Norris lives! And lo and behold, he had borrowed money from his father and then claimed those assets as of his own origin in order to get his home loan. There had been no default on the bank loan. In terms of monetary loss, there was no victim. But Mr. Norris was exposed, for as much as thirty years: ”You go to trial,” a federal prosecutor told him, “you won’t see your kids grow up.”
Like Mr. Brown, Mr. Norris took a plea. He would not have a day in court to argue the original substance of the federal investigation, much to the relief of federal authorities in Baltimore. And the Head Shot is always in the arsenal for the government. It was there for Henry Cisneros. It’s been there in Wall Street investigations in which U.S. Attorneys have failed to prove substantial charges against financiers, and have instead, as leverage sent their sons to jail for bank fraud. In “The Wire,” we had a detective use the threat of a Head Shot to elicit information from a politician. An Assistant U.S. Attorney met me at a party a couple years later:
“Pretty funny how you used the Head Shot on Clay Davis.”
The point is not Mr. Brown. Or Mr. Norris. Or Clay Davis. And no — Mr. Brown will not get thirty years. The sentencing guidelines will not lead him into such draconian territory, although since those guidelines give and take away prison-time based on cooperation with federal prosecutors and a willingness to promptly admit guilt, the game is even further rigged, isn’t it?
The point is not which politician we want to see get got. The point is process.
Right now, millions of Americans could be in federal prison for the usual petty deceits and gamesmanship on their bank loan applications. Not just supposedly corrupt politicians. Not just fraud artists who had no intention of paying back the mortgage loans. But ordinary people who went too far in trying to establish sufficient credit for themselves or for family members to buy a home.
After I called in to comment, another WAMU listener e-mailed a response. Incredibly, he argued that when you have a corrupt politician, you use anything you have to try to get him, that a criminal investigation is a matter of strategy, that you employ whatever charge and whatever tactic you can find. Good to know. Given that we’re absolutely sure who the bad guys are — even before we gather actual evidence — it’s just grand that U.S. Attorneys, in addition to all their other formidable powers and authority, have the Head Shot.
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NOTE: In rereading this early this a.m., I noted that while writing quickly, I mistakenly credited money given and then misrepresented to bank officials as gifted money. In fact, it is loaned money that gets parents and others into trouble. Indeed, in the case of Ed Norris and others — the paying back of the loaned cash is one of the overt acts that gets them into trouble. In any event, the net effect is the same: By misrepresenting something as personal assets that is not in fact an asset, many Americans make themselves guilty of bank fraud, a statute that exposes a defendant to a potential 30-year term. Just as Mr. Brown, by misrepresenting his income, created a false asset that made bank officials more favorable to his loan. I’ve now corrected such. The dynamic that I am critiquing, and the critique itself, however, remains unchanged.
As we used to say on such occasions in newspapering, more or less, “The blogger regrets the error.”