Documenting the Last Hurrah of Regulatory Enforcement

February 21st, 2017 by Phil Mattera

Since the beginning of 2010 the Equal Employment Opportunity Commission has resolved more than 200 cases of workplace discrimination based on race, religion or national origin and imposed penalties of more than $116 million on the employers involved.

During that same period, the Department of Housing and Urban Development — now in the hands of Ben Carson — settled more than two dozen discrimination cases against banks and mortgage companies, collecting more than $200 million in penalties.

The Occupational Safety and Health Administration has handled more than 50 cases of whistleblower retaliation since 2010. These have involved both cases in which workers complained about physically unsafe conditions as well as ones involving complaints about corporate financial misconduct. The latter, stemming from authority given to OSHA under the Sarbanes-Oxley Act, include cases brought against banks such as JPMorgan Chase and Bank of America.

Eight large pharmacy chains and drug distributors have been penalized more than $400 million by the Drug Enforcement Administration during the past seven years for various violations of the Controlled Substances Act.

These are examples of the kind of information that can be found in latest expansion of Violation Tracker, which adds case data from nine additional federal regulatory agencies, bringing the total to 39 agencies and the Justice Department.

In addition to the new agencies, the expansion includes updated information for the existing ones. That includes the final burst of cases seen during the closing weeks of the Obama Administration. Between election day and the inauguration, the Justice Department and agencies such as the Consumer Financial Protection Bureau announced several dozen case resolutions with total fines and settlements in excess of $20 billion.

These include 16 cases with penalties of $100 million or more; four in excess of $1 billion: Deutsche Bank ($7.2 billion), Credit Suisse ($5.3 billion), Volkswagen ($4.3 billion) and Takata ($1 billion).

Banks and other financial services companies account for the largest portion by far of the recent cases, racking up nearly $15 billion in fines and settlements with DOJ, the CFPB, the SEC and banking regulators. Automotive companies like Volkswagen and Takata are second with about $5.5 billion, while pharmaceutical and healthcare firms account for about $1.2 billion.

Given the Trump Administration’s focus on deregulation rather than enforcement, the Obama Administration’s final wave of settlements may represent Uncle Sam’s last hurrah against business misconduct for some time. The data in Violation Tracker, which show widespread misconduct and high levels of recidivism, should give pause to those pushing for less oversight.

With the update and coverage expansion, Violation Tracker now contains more than 120,000 entries with total penalties of more than $320 billion, most of that connected to some 2,300 large parent companies whose disparate individual entries are linked together in the database. Coverage currently begins in 2010 but will be extended back to 2000 later this year.

Individual entries include links to official online information sources. The new version of Violation Tracker supplements those with links to archival copies of those sources preserved on our server.

Having completed the update, the expansion and the creation of the archive, we will return to our effort to collect comprehensive data on wage theft cases — both those brought by the Labor Department’s Wage and Hour Division and related private litigation. We expect that to be ready later this year.

We can only wonder what will be left of the regulatory system by that point.

Trump’s Commerce Nominee Also Has Suspicious Russian Ties

February 16th, 2017 by Phil Mattera

While the spotlight is on Michael Flynn’s discussions with Russia about sanctions, little attention is being paid to the Russian connections of Trump’s Commerce Secretary nominee Wilbur Ross, who if confirmed would oversee an agency involved with enforcing those sanctions.

The 79-year-old Ross, who was an advisor to Trump’s presidential campaign, is best known as a vulture capitalist who made a fortune restructuring troubled steel, coal and textile companies and then selling them off. Yet he continues to have associations with a wide range of companies. Among those is the Bank of Cyprus, where Ross has served as vice chairman of the board of directors since leading a financial rescue of the institution in 2014.

According to reporting in late 2016 by McClatchy and Mother Jones, the Cypriot bank has close ties to wealthy Russian businessmen linked to Vladimir Putin. One of those is Viktor Vekselberg, whose Renova Group became the second largest shareholder in the bank. One of Renova’s executives, Maksim Goldman, was named to the bank’s board of directors and is now a vice chairman alongside Ross.

McClatchy also pointed out that the Bank of Cyprus was mentioned thousands of times in the Panama Papers in connection with the offshore activities of Putin’s cronies. And then there’s the fact that the chair of the bank Ross helped to install is Josef Ackermann, the retired chief executive of Deutsche Bank, which last month agreed to pay $425 million to resolve allegations by the New York State Department of Financial Services that it helped Russian clients engage in what amounted to money laundering through an international mirror-trading scheme.

What makes all of this more significant is that among the agencies Ross would oversee as Commerce Secretary is the Bureau of Industry and Security (BIS), which along with the Treasury Department’s Office of Foreign Assets Control, administers the sanctions against Russia imposed by the Obama Administration and which, for the moment, are still in effect.

The BIS portion of those sanctions includes restrictions on the ability of U.S. companies to export certain military and energy products to Russian parties whose names are on what is known as the Entity List. The latest Russian additions to the list were made in the final weeks of the Obama Administration in the wake of new sanctions imposed in response to Russian interference in the U.S. presidential election.

In his confirmation hearing last month, Ross was not interrogated about his views on Russian sanctions or how he might adjust the role of BIS. And Ross has defused much of the opposition to his nomination by vowing to divest from most (though not all) of his holdings.

Yet in light of the ongoing controversy over the Russian links of other figures in Trump’s campaign and his administration, Ross’s ties to the Putin network deserve a lot more scrutiny (as do his China connections).

Note: The Bureau of Industry and Security and the Office of Foreign Assets Control, along with the State Department’s Directorate of Defense Trade Controls, are among the agencies whose cases will be included in an update of Violation Tracker that will be posted next week.

Companies Fighting the Travel Ban Should Also Oppose the Labor Department Nominee

February 9th, 2017 by Phil Mattera

Trump’s scandal-ridden choice for Labor Secretary, Andrew Puzder, is yet another of this administration’s nominees who don’t believe in the mission of the agency they intend to lead.

The website through which he is promoting his nomination is headlined: “Job creation is what I stand for.” That’s fine but it has little to do with the primary purpose of the Department of Labor: worker protection. The rest of that website, which has nothing to say about that purpose, instead clearly signals that Puzder will seek to weaken or dismantle the regulations DOL is supposed to enforce.

We can expect that will include rollbacks in protections relating to occupational safety and wage theft, but in light of the current debates on discrimination, it is worth remembering that DOL is also home to the Office of Federal Contract Compliance Programs (OFCCP), the agency charged with fighting racial and other forms of bias in the workplaces of companies doing business with Uncle Sam.

OFCCP has long been targeted by the regulation-bashers, and now there are reports that an effort to abolish the agency that began during the Reagan Administration may get revived. This would go along with the move to reverse the Obama Administration executive order on Fair Pay and Safe Workplaces.

I’ve been thinking about the OFCCP because it is one of the agencies (along with the Equal Employment Opportunity Commission) included in an expansion of Violation Tracker that my colleagues and I will release soon. We’ll be including entries for the more than 200 cases OFCCP has resolved since the beginning of 2010. The companies involved, which together have paid fines or settlements of about $51 million, include well-known firms such as Tyson Foods (six cases), FedEx, Cargill, Bank of America, General Electric and Comcast.

In the case with the biggest settlement amount, FedEx had to pay $3 million in 2012 to settle allegations that  it engaged in discrimination on the bases of sex, race and/or national origin against specific groups identified at 23 facilities in 15 states.

The OFCCP has been showing a growing interest in the practices of high-tech companies. Last year it got Hewlett Packard Enterprise to pay $750,000 to settle allegations of racial discrimination in hiring at a facility in Arkansas. In the closing days of the Obama Administration, the OFCCP brought suit against Oracle for discriminatory practices shortly after it filed an action against Google for refusing to provide compensation data for its Silicon Valley headquarters during what the agency called a routine compliance evaluation.

Google is among the scores of high-tech companies that have come out in opposition to Trump’s travel ban. That is laudable, but if these companies are serious about their opposition to discrimination they should also make sure they are in compliance with the OFCCP and speak out just as forcefully against any effort to undermine the agency.

Note: A state court in California just postponed until June the starting date of a trial in a case in which Puzder’s company CKE Restaurants is accused of age and disability discrimination.

Trump’s Other Ban

February 2nd, 2017 by Phil Mattera

Trump’s travel ban and his rightwing Supreme Court pick are troubling in themselves, but they are also serving to deflect attention away from the plot by the administration and its Republican allies to undermine the regulation of business.

Surprisingly little is being said about Trump’s January 30 executive order instructing federal agencies to identify two prior regulations for elimination for each new rule they seek to issue. It also dictates that the total incremental cost of new rules (minus the cost of repealed ones) should not exceed zero for the year.

While Trump’s appointees will probably not propose much in the way of significant new rules that would have to be offset, the order amounts to a ban on additional regulation.  It boosts the long-standing effort by corporate apologists to delegitimize regulation by focusing on the number of rules and their supposed cost while ignoring their social benefits.

Meanwhile, the regulation bashers are also busy on Capitol Hill. Republicans have resurrected the rarely used Congressional Review Act as a mechanism for undoing the Obama Administration’s environmental regulations as well as its Fair Pay and Safe Workplaces executive order concerning federal contractors.

Both Trump and Congressional Republicans are also targeting the Dodd-Frank law that enhanced financial regulation after the 2008 meltdown. Calling the law a “disaster,” Trump recently said “we’re going to be doing a big number on Dodd-Frank,” adding: “The American dream is back.”

If Trump was referring to the aspirations of the wolves of Wall Street, then that dream may indeed be in for a resurgence. For much of the rest of the population, the consequences would be a lot less pleasant.

To take just one example, an attack on Dodd-Frank would certainly include an assault on the Consumer Financial Protection Bureau that was created by the law and which has aggressively gone after financial predators. As Violation Tracker shows, during the past five years the agency has imposed more than $7 billion in penalties in around 100 enforcement actions against banks, payday lenders, credit card companies and others. Its $100 million fine against Wells Fargo last September brought attention to the bank’s bogus-account scheme.

The CFPB has not let the election results impede its work. Since November 8 it has announced more than a dozen enforcement actions with penalties totaling more than $80 million. The largest of those involves Citigroup, two of whose subsidiaries were fined $28.8 million for keeping borrowers in the dark about options to avoid foreclosure and burdening them with excessive paperwork demands when they applied for foreclosure relief.

Citigroup, one of the companies that has the most to gain from restrictions on the CFPB and Dodd-Frank in general, has shown up often as I have been collecting data on recent enforcement cases from various agencies for a Violation Tracker update that will be released soon.

The Securities and Exchange Commission recently announced that Citigroup Global Markets would pay $18.3 million to settle allegations that it overcharged at least 60,000 investment advisory clients with unauthorized fees. In a separate SEC case, Citi had to pay $2.96 million to settle allegations that it misled investors about a foreign exchange trading program.

Around the same time, the Commodity Futures Trading Commission filed and settled (for $25 million) allegations that Citigroup Global Markets engaged in the illicit practice of spoofing — bidding or offering with the intent to cancel the bid or offer before execution — in U.S. Treasury futures markets and that it failed to diligently supervise the activities of its employees and agents in conjunction with the spoofing orders.

Citi’s record, along with that of other rogue banks, undermines the arguments of Dodd-Frank foes and in fact makes the case for stricter oversight. Yet the reality of financial misconduct is about to be overwhelmed by a barrage of alternative facts about the magic of deregulation.

Update: After this piece was written, Congress voted to repeal another provision of Dodd-Frank known as Cardin-Lugar or Section 1504, which required publicly traded extractive companies to report on payments to foreign governments in their SEC filings. The disclosure was meant as an anti-corruption measure. 

Aetna’s Deception and the ACA Crisis

January 26th, 2017 by Phil Mattera

One of the decisive moments in the 2016 election campaign came last summer, when major insurance companies cut back their involvement in the Affordable Care Act exchanges after claiming they were losing money in the market. This was seized on by Trump and other Republicans to further denigrate the ACA and argue the need for repeal and replace.

Evidence has now emerged suggesting that the insurers’ claims were more of the lies that tainted the whole campaign and that those lies were motivated by an attempt to influence the federal government’s policy on mergers.

What was often overlooked during discussions of the health insurance industry last year was that the biggest concern of the major firms was the fate of their attempt to capture greater market share through giant acquisitions. Aetna was seeking to acquire Humana, and Anthem wanted to join forces with Cigna. The two proposed deals, worth about $85 billion, would reduce the number of major players to three (the other being UnitedHealth).

The Obama Administration and multiple states challenged the mergers, which ended up in court. Recently a federal district court judge sided with the Justice Department in the Aetna-Humana case; another judge is expected to rule soon on the Anthem-Cigna deal.

In his 158-page ruling on the Aetna matter, U.S. District Judge John D. Bates cited evidence indicating that the company’s decision to leave ACA exchanges in 17 counties in three states (Florida, Georgia and Missouri) was designed to “improve its litigation position.” In other words, its main reason for dropping out was not the profitability of  those markets but rather the attempt to make it more likely that the Humana acquisition would be approved.

The opinion reveals (on p.125) that when Aetna met with officials at the Justice Department and the Department of Health and Human Services prior to the filing of the government’s complaint it “connected this lawsuit with its future participation in the exchanges” and threatened (p.126) to withdraw from those exchanges if the merger were not approved.

Also included in the opinion is an excerpt (p.127) from an e-mail in which Aetna CEO Mark Bertolini stated that “the administration has a very short memory, absolutely no loyalty and a very thin skin.” Asked in a deposition what he meant by that, Bertolini expressed resentment that the administration was opposing the merger despite Aetna’s role in supporting the ACA during the battle over its enactment.

The judge went on to cite (p.129) internal company e-mails in which, in the words of the opinion, “Aetna executives tried to conceal from discovery in this litigation the reasoning behind their recommendation to withdraw from the 17 complaint counties.” That effort was unsuccessful.

Overall, the court found that the exchange counties from which Aetna was withdrawing were a mix of profitable and unprofitable ones, thus undermining the claim that the move was purely a business decision.

While Aetna’s deception failed to sway the government or the lawsuit, it had a significant political impact amid a heated campaign. Now that the campaign is over and the ACA opponents prevailed, Aetna and the other insurance giants are staying silent as Republicans move to gut the law.

It’s unclear whether the firms expect the exchanges to survive in some form or they are rooting for a return to the old days of minimal regulation. In either event, it’s clear that companies like Aetna and Anthem are putting their desire for oligopolistic control above all else.

Obama’s Final Blows Against Corporate Crime

January 19th, 2017 by Phil Mattera

$335 billion: that’s what has been paid by companies in fines or settlements in cases brought by federal agencies and the Justice Department during the Obama Administration. The estimate comes from the amounts associated with entries already in Violation Tracker and an update that is in the works.

Preparing that update has proven to be a challenge because of the remarkable flurry of cases that the Obama Administration has resolved in the waning days of its existence. Since the election the penalty tally has risen by more than $30 billion, much of that coming this month alone. The past ten days have seen four ten-figure settlements: Deutsche Bank’s $7.2 billion toxic securities case; Credit Suisse’s $5.3 billion case in the same category; Volkswagen’s $4.3 billion case relating to emissions fraud; and Takata’s $1 billion case relating to defective airbag inflators.

Here are some of the next-tier cases that would normally get significant coverage but may have gotten lost in the stream of announcements:

  • Moody’s agreed to pay $864 million to resolve allegations relating to flawed credit ratings provided for mortgage-backed securities during the run-up to the financial crisis.
  • Western Union agreed to pay $586 million to settle charges that it failed to guard against the use of its system for money laundering.
  • Shire Pharmaceuticals agreed to pay $350 million to settle allegations that one of its subsidiaries violated the False Claims Act by paying kickbacks to healthcare providers.
  • Rolls-Royce agreed to pay $170 million to resolve foreign bribery criminal charges; the military contractor was offered a deferred prosecution agreement.
  • McKesson, a large pharmaceutical distribution, was fined $150 million by the Drug Enforcement Administration for failing to report suspicious bulk purchases of opioids.

Although a few of these cases — including Volkswagen, Takata and Western Union– have involved criminal charges, for the most part the Obama Justice Department has kept its focus on extracting substantial monetary penalties from corporate wrongdoers.

While this approach has served the purpose of highlighting the magnitude of business misconduct, it remains unclear whether it has done much to deter such behavior. One of the aims of Violation Tracker is to document the problem of ongoing recidivism among corporate offenders by listing their repeated transgressions. JPMorgan Chase, for example, has racked up $28 billion in penalties in more than 40 cases resolved since the beginning of 2010. The list is likely to continue growing.

The steady stream of big-ticket cases has provided a constant source of new content for Violation Tracker, but it would have been preferable if federal prosecutors and regulators had figured out a way to get the bank and others like it to behave properly.

The Obama Justice Department’s rush to complete the recent settlements seems to be based in part on uncertainty as to whether the Trump Administration will continue to give priority to the prosecution of corporate crime. Attorney General nominee Jeff Sessions has not said much on the subject, while the President-elect has been uncharacteristically silent — both during his campaign and since the election — about corporate scandals such as the Wells Fargo bogus-account case while being outspoken in his critique of regulation.

We may soon look back fondly at the Obama approach as the new administration takes an even weaker posture toward the ongoing corporate crime wave.

Corporate Crime and the Trump Administration

January 12th, 2017 by Phil Mattera

With all that’s happening in the chaotic Trump transition, less attention is being paid to the announcement that Volkswagen is pleading guilty to felony charges and paying more than $4 billion in penalties while a half dozen of its executives face individual criminal indictments.

A development of this sort should represent a turning point in the prosecutorial handling of the corporate crime wave that has afflicted the United States for years. Yet because of its timing, it may end up being no more than a parting gesture of an administration that has struggled for eight years to find an effective way of dealing with widespread and persistent misconduct by large companies. And it may be followed by a weakening of enforcement in a new administration led by a president whose attacks on regulation were a hallmark of his electoral campaign.

First, with regard to the Obama Administration: The treatment of Volkswagen is what should have been dished out against the banks that caused the financial meltdown, against BP for its role in the Deepwater Horizon disaster, against Takata for its production of deadly airbags, and against the other corporations involved in major misconduct ranging from large-scale oil spills and contracting fraud to market manipulation and wage theft.

Instead, the Obama Justice Department continued the Bush Administration’s practice of avoiding individual prosecutions and offering many corporations deferred and non-prosecution deals in which they essentially bought their way out of jeopardy, albeit at rising costs. These arrangements, which are catalogued in Violation Tracker, imposed a financial burden but appear to have had a limited deterrent effect.

In a few instances, companies did have to enter guilty pleas, but the impact was softened when, for examples, the large banks that had to take that step in a case involving manipulation of the foreign exchange market later got waivers from SEC rules that bar firms with felony convictions from operating in the securities business.

It remains to be seen how much VW’s guilty plea affects its ability to continue doing business as usual. Yet the bigger question is how corporate criminals will fare in the Trump Administration.

Trump the candidate said little or nothing about VW, Wells Fargo and the other big corporate scandals of the day and instead parroted Republican talking points about the supposedly intrusive nature of regulation. Corporations that have supposedly been put on notice about moving jobs offshore or seeking overly lucrative federal contracts apparently are to have a free hand when it comes to poisoning the environment, maiming their workers or defrauding customers.

Although some have speculated that Jeff Sessions will be tough on corporate crime, a Public Citizen report on his time as Alabama’s attorney general in the 1990s provides evidence strongly to the contrary.

While Sessions took pains during his confirmation testimony to claim that he would not be a “rubber stamp” for the new Administration, he has strong political ties to Trump and worked hard to legitimize some of his more extreme positions during the campaign. Trump is unlikely to pay much heed to the traditional independence of the Justice Department, and Sessions is unlikely to adopt policies that rub Trump the wrong way.

Despite the inclinations of Sessions, the appointment of anti-regulation foes to head many federal agencies will mean that fewer cases will get referred to the Justice Department. And if Trump’s deregulatory legislative agenda gets enacted, the enforcement pipeline will dry up even more.

Corporate misconduct may very well decline during the Trump era because much of that conduct will become perfectly legal.

Trump’s Real Message to Corporate America

January 5th, 2017 by Phil Mattera

Much has been made of President-elect Trump’s use of his bully Twitter pulpit to get companies such as Carrier and Ford Motor to adjust their investment plans and to warn military contractors about escalating costs. The Washington Post went so far as to publish a piece last month claiming that Corporate America is “unnerved” by Trump.

Any CEOs still feeling such anxiety have not caught on to the way Trump operates. These moves serve two purposes: to give his base the impression that he is promoting the interests of the working class while deflecting attention away from his larger agenda that caters to the corporate elite.

The latter has come through loud and clear in his cabinet nominees. Not only has Trump shunned the idea of including a token Democrat, the purported populist has not picked anyone for the cabinet who can in any way be construed as representing the interests of working people. Along with generals and right-wing zealots, the choices instead include a slew of billionaires, wealthy investors and corporate executives.

These individuals are not exactly from the corporate social responsibility wing of the business world. The man chosen to run the Labor Department, fast-food executive Andrew Puzder, openly promotes wage suppression, while the choice for Treasury Secretary, Steven Mnuchin, was responsible for thousands of dubious foreclosures after he took control of a struggling bank.

Yet perhaps the clearest signal that Trump is favoring the worst elements of big business is the decision to give prominent roles to individuals associated with two of the most controversial large corporations around: Exxon Mobil and Goldman Sachs.

By proposing Rex Tillerson as Secretary of State, Trump is implicitly endorsing the polices of a giant oil company which has long been a symbol of corporate irresponsibility. Exxon was widely condemned for its inadequate response to the disastrous 1989 accident in which one of its supertankers spilled 11 million gallons of crude oil off the coast of Alaska. During the past three decades, the company has been involved in a long series of other spills and accidents, and it became notorious for its refusal to acknowledge the climate impacts of fossil fuel production. Violation Tracker shows that since the beginning of 2010 it has racked up more than $80 million in federal regulatory penalties.

Another corporate pariah embraced by Trump is investment bank Goldman Sachs, the alma mater of several key figures in the new administration, including Mnuchin, chief strategist Steve Bannon and Gary Cohn, selected to head the National Economic Council.

Goldman became one of the leading symbols of the reckless behavior of financial institutions in the period leading up to the financial meltdown, thanks to its key role in packaging and distributing toxic securities. Rolling Stone reporter Matt Taibbi’s depiction of Goldman as “a giant vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money” and Greg Smith’s reference to Goldman as “toxic and destructive” in a New York Times op-ed announcing his departure from the firm were two of the most frequently quoted phrases about the financial crisis.

According to the Violation Tracker tally, Goldman has had to pay more than $9 billion in legal penalties since the beginning of 2010, putting it in eighth place among all companies.

While repeatedly being found in violation of financial regulations, Goldman has enjoyed taxpayer largesse. Like other big banks, it received vast amounts of support from the federal government, including a $10 billion TARP bailout loan and billions more from the Federal Reserve. It has also received large subsidies from state and local governments, including a $425 million package to keep its headquarters in lower Manhattan after 9-11.

By associating his cabinet so closely with the likes of Goldman and Exxon, Trump is sending a message that his administration is, despite the rhetoric of his campaign, embracing corporate cronyism and irresponsibility. Given Trump’s own checkered business record, this should come as no surprise.

If anyone should be unnerved by the way the Trump Administration is shaping up, it’s not big business but those voters who supported a man they thought would challenge the corporate elite but is instead giving it more power than ever before.

The 2016 Corporate Rap Sheet

December 22nd, 2016 by Phil Mattera

The two biggest corporate crime stories of 2016 were cases not just of technical lawbreaking but also remarkable chutzpah. It was bad enough, as first came to light in 2015, that Volkswagen for years installed “cheat devices” in many of its cars to give deceptively low readings on emissions testing.

Earlier this year it came out that the company continued to mislead U.S. regulators after they discovered the fraud. VW has agreed to pay out more than $15 billion in civil settlements but it is not yet clear what is going to happen in the ongoing criminal investigation.

Brazenness was also at the center of the revelation in August that employees at Wells Fargo, presumably under pressure from managers, created more than one million bogus accounts in order to generate fees from customers who had no idea what was going on. The story came out when the Consumer Financial Protection Bureau announced that the bank would pay $100 million to settle with the agency and another $85 million in related cases.

But that was just the beginning of the consequences for Wells. CEO John Stumpf was raked over the coals in House and Senate hearings, and he subsequently had to resign. Criminal charges remain a possibility.

The other biggest corporate scandal of the year involved drugmaker Mylan, which imposed steep price increases for its EpiPens, which deliver lifesaving treatment in severe allergy attacks. The increases had nothing to do with rising production costs and everything to do with boosting profits. The company’s CEO was also grilled by Congress, which however could do little about the price gouging.

Here are some of the other major cases of the year:

Toxic Securities. There is still fallout from the reckless behavior of the banks leading up to the 2008 financial meltdown. Goldman Sachs paid more than $5 billion to settle a case involving the packaging and sale of toxic securities, while Morgan Stanley paid $2.6 billion in a similar case.

Mortgage Fraud. Wells Fargo had to pay $1.2 billion to settle allegations that during the early 2000s it falsely certified that certain residential home mortgage loans were eligible for Federal Housing Administration insurance. Many of those loans later defaulted.

False Claims Act. Wyeth and Pfizer agreed to pay $784 million to resolve allegations that Wyeth (later acquired by Pfizer) knowingly reported to the government false and fraudulent prices on two of its proton pump inhibitor drugs.

Kickbacks. Olympus Corp. of the Americas, the largest U.S. distributor of endoscopes and related equipment, agreed to pay $623 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks to doctors and hospitals in the United States and Latin America.

Misuse of customer funds. Merrill Lynch, a subsidiary of Bank of America, agreed to pay $415 million to settle Securities and Exchange Commission allegations that it misused customer cash to generate profits for the firm and failed to safeguard customer securities from the claims of its creditors.

Price-fixing. Japan’s Nishikawa Rubber Co. agreed to plead guilty and pay a $130 million criminal fine for its role in a conspiracy to fix the prices of and rig the bids for automotive body sealing products installed in cars sold to U.S. consumers.

Accounting fraud. Monsanto agreed to pay an $80 million penalty and retain an independent compliance consultant to settle allegations that it violated accounting rules and misstated company earnings pertaining to its flagship product Roundup.

Consumer deception. Herbalife agreed to fully restructure its U.S. business operations and pay $200 million to compensate consumers to settle Federal Trade Commission allegations that the company deceived customers into believing they could earn substantial money selling diet, nutritional supplement, and personal care products.

Discriminatory practices. To resolve a federal discrimination case, Toyota Motor Credit Corp. agreed to pay $21.9 million in restitution to thousands of African-American and Asian and Pacific Islander borrowers who were charged higher interest rates than white borrowers for their auto loans, without regard to their creditworthiness.

Sale of contaminated products. B. Braun Medical Inc. agreed to pay $4.8 million in penalties and forfeiture and up to an additional $3 million in restitution to resolve its criminal liability for selling contaminated pre-filled saline flush syringes in 2007.

Pipeline spills. To resolve allegations relating to pipeline oil spills in Michigan and Illinois and 2010, Enbridge agreed to pay Clean Water Act civil penalties totaling $62 million and spend at least $110 million on a series of measures to prevent spills and improve operations across nearly 2,000 miles of its pipeline system in the Great Lakes region.

Mine safety. Donald Blankenship, former chief executive of Massey Energy, was sentenced to a year in prison for conspiring to violate federal mine safety standards in a case stemming from the 2010 Upper Big Branch disaster that killed 29 miners.

Wage theft. A Labor Department investigation found that Restaurant Associates and a subcontractor operating Capitol Hill cafeterias violated the Service Contract Act by misclassifying employees and paying them for lower-wage work than they actually performed. The workers were awarded more than $1 million in back pay.

False advertising. For-profit DeVry University agreed to pay $100 million to settle Federal Trade Commission allegations that it misled prospective students in ads touting the success of graduates.

Trump University. Shortly after being elected president, Donald Trump agreed to pay $25 million to settle fraud allegations made by the New York State Attorney General and others concerning a real estate investment training course.

Remember: thousands of such cases can be found in the Violation Tracker database my colleagues and I at the Corporate Research Project of Good Jobs First produce. Look for expanded coverage in 2017.

Trump and the Reverse Revolving Door

December 15th, 2016 by Phil Mattera

Late in his presidential campaign Donald Trump seized on the issue of government ethics, and since the election he has talked about putting stricter limits on the ability of federal officials to move into jobs with government contractors. That process, called the revolving door, creates the possibility that an official will skew decisions in favor of a future employer.

What Trump has not discussed is a related phenomenon that can also have a pernicious effect on federal policymaking: the appointment of lobbyists and corporate executives to public posts in which they are likely to pursue policy in a way that benefits their former (and probably future) employers and business interests. This is known as the reverse revolving door.

Not only has Trump not challenged that practice, he has embraced it with gusto — and personally embodies it. Along with retired generals and conservative zealots, his proposed cabinet includes hedge fund investor Steve Mnuchin as Treasury Secretary, vulture investor Wilbur Ross as Commerce Secretary and fast food executive Andy Puzder as Labor Secretary. And now comes the coup de grace: the nomination of ExxonMobil chief executive Rex Tillerson as Secretary of State.

Despite claims that Trump is breaking all the rules, his decision to include prominent private sector figures in his cabinet is far from novel. There are ample precedents for such an approach, especially but not exclusively in Republican administrations.

The pattern has been most pronounced with the Treasury Secretary. Over the past 60 years, that post has frequently been awarded to members of the financial and corporate  elite. Eisenhower, for example,  gave the job to George Humphrey of the steel company M.A. Hanna. Kennedy chose C. Douglas Dillon, who had been with the Wall Street firm Dillon, Read. Carter tapped W. Michael Blumenthal, who had headed the manufacturer Bendix International.

Clinton’s second Treasury Secretary was Robert Rubin of Goldman Sachs. Reagan’s first Treasury Secretary was Donald Regan, head of Merrill Lynch. George W. Bush turned to the corporate sector three times, choosing Paul O’Neill of Alcoa, John Snow of CSX and Henry Paulson of Goldman Sachs. Obama’s second Treasury Secretary was Jack Lew, who had worked at Citigroup.

While Trump has picked a retired general to run the Pentagon (a separate problem), the position of Secretary of Defense is another top cabinet post that has often been filled by corporate figures. Eisenhower’s choice was  Charles E. Wilson, the former General Motors president who in his confirmation hearing famously said: “For years I thought what was good for our country was good for General Motors, and vice versa. The difference did not exist.” Kennedy tapped Robert McNamara, who had just been named president of the Ford Motor Co. Reagan’s first Defense Secretary was Caspar Weinberger, who had joined the engineering giant Bechtel Corp. a few years earlier after a career in the public sector. George W. Bush chose Donald Rumsfeld, who had stints as chief executive of G.D. Searle and later General Instrument.

Looking at cabinets as a whole, it was during the Reagan Administration that an overall business presence first became quite pronounced. In addition to Regan and Weinberger, the corporate veterans in Reagan’s cabinet included Secretary of State Alexander Haig, who had become president of United Technologies after his military career. After Haig resigned in 1982, Reagan replaced him with George Shultz, who had headed Bechtel Corp. during the 1970s. Commerce Secretary Malcolm Baldridge had been chairman of Scovill Inc. Even the Secretary of Labor, Raymond Donovan, had a business background as an executive at a New Jersey construction company.

This pattern was repeated in 2001. The elevation of George W. Bush and Dick Cheney to the two highest posts in the land could itself be seen as a significant case of the reverse revolving door. Bush, after all, spent much of his career as a businessman in the oil & gas industry and then as a part-owner of the Texas Rangers baseball team. Bush had not risen to great heights in the corporate world before running for governor of Texas, but he had clearly been shaped by that world. Cheney had spent five years as the chief executive of the controversial Halliburton Co.

Bush chose as his chief of staff Andrew Card, who had been a vice president of General Motors and a lobbyist for the auto industry. In addition to selecting Alcoa CEO Paul O’Neill to head Treasury and one-time corporate executive Donald Rumsfeld to run Defense, Bush chose oil executive Donald Evans as Secretary of Commerce and Anthony Principi, an executive with a medical services company, to be Secretary of Veterans Affairs. Secretary of State Condoleezza Rice had not been a corporate executive but was on the board of Chevron, which had named an oil tanker after her.

Trump’s corporate cabinet picks may be in keeping with some past practices, but they are troubling nonetheless. As with Reagan and Bush II, the nominations are clearly intended to foster an attack on regulation and the promotion of corporate-friendly policies.

With Tillerson there an even bigger issue. The main problem with reverse revolving door appointments is the danger of conflicts between the interests of a particular corporation and the public interest on specific issues. A corporation of the size and influence of Exxon Mobil is not just another company — it is in effect a state unto itself.

Trump praises Tillerson for the extent of his dealings with foreign leaders. Yet he did not develop those relationships representing the interests of the United States. Exxon Mobil has its own foreign policy that has frequently gone in different directions than that of the country in which it is nominally base.

Much attention is being focused on Tillerson’s dealings with Russia, which are indeed disturbing. Yet those dealings are just one example of how Exxon Mobil pursues its business interests without regard to other considerations such as human rights — an issue in the U.S. Secretary of State is supposed to champion.

In the 1950s GM’s Charlie Wilson could get away with identifying the interests of his company with those of the country as a whole. Tillerson cannot do the same.

Note: This report draws on a chapter I wrote for a 2005 report published by the Revolving Door Working Group.