The New York Times reports that Alayne Fleischmann, a former due diligence manager for JPMorgan who was laid off in 2008, says that she witnessed 'massive criminal securities fraud' in the bank’s mortgage operations during the period leading up to the financial crisis.
In 2012, Ms. Fleischmann began working with federal prosecutors in California who were pursuing a criminal inquiry. The bank was also facing a number of civil investigations into its mortgage practices.
Taibbi writes that the Justice Department used the threat of Ms. Fleischmann’s testimony to extract a $13 billion civil settlement last year. The penalty included $4 billion in relief for struggling homeowners, which Mr. Taibbi calls 'an accounting falsehood.' The New York Times reported at the time that 'the final $13 billion figure may be as much political theater as a real attempt to right wrongs.'
Ms. Fleischmann recounts a number of warnings she gave to JPMorgan executives.
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