Bill Daley's old employer engineered theft of hundreds of millions from cities, other government entities... So now he's working in Rahm Emanuel's old job while Rahm gets corporate America's nod to get the other Daley job -- mayor of Chicago

Within the next few years, the Chicago Board of Education stands to lose hundreds of millions of dollars because of derivatives investments the should never have been made, and the City of Chicago is losing hundreds of thousands of dollars daily because under Richard M. Daley the government privatized city parking in deals with Daley's brother's bank — J.P. Morgan Chase. Now Bill Daley is at the White House in Rahm Emanuel's old job, and the people who put Daley in the mayor's office are trying to put Emanuel there, while another Daley does Rahm's old job for Barack Obama.

CORE members picketed outside the Chicago Hyatt Hotel on June 19, 2009, against the Advance Illinois breakfast featuring Bill Daley and Arne Duncan. The pickets pointed out that the policies and people promoted by Advance Illinois were hurting Chicago and destroying public schools. Substance photo by George N. Schmidt.There are hundreds of examples of the criminal behavior of the nation's largest banks now becoming available since the financial crisis of 2008, but it looks like the President of the United States is going to shut down as many investigations as possible because of his misreading of the anger of the American people — and especially American teachers — following his financial and educational policies of the past three years.

Here is just one example of how J. P. Morgan Chase was operating during the years of the financial crisis. That's when William Daley was vice president there for midwest operations. The following press release came from the Securities and Exchange Commission two years ago. The question now is whether the SEC will be investigating the complex derivatives and swap transactions (as well as the privatization schemes) that took place in Chicago during the same years (beginning roughly in 2002) that the Jefferson County Alabama schemes were unfolding.

J.P. Morgan Settles SEC Charges in Jefferson County, Ala. Illegal Payments Scheme, SEC Separately Charges Two Former Managing Directors at Firm


Washington, D.C., Nov. 4, 2009 — The Securities and Exchange Commission today charged J.P. Morgan Securities Inc. and two of its former managing directors for their roles in an unlawful payment scheme that enabled them to win business involving municipal bond offerings and swap agreement transactions with Jefferson County, Ala. This is the SEC's second enforcement action arising from Jefferson County's bond offerings and swap transactions.

William Daley, co chair of Advance Illinois, was a vice president of J.P. Morgan Chase at the time of the June 2009 Advance Illinois propaganda breakfast at the Regency Hyatt Chicago. Substance photo by George N. Schmidt.J.P. Morgan Securities settled the SEC's charges and will pay a penalty of $25 million, make a payment of $50 million to Jefferson County, and forfeit more than $647 million in claimed termination fees.

The SEC alleges that J.P. Morgan Securities and former managing directors Charles LeCroy and Douglas MacFaddin made more than $8 million in undisclosed payments to close friends of certain Jefferson County commissioners. The friends owned or worked at local broker-dealer firms that performed no known services on the transactions. In connection with the payments, the county commissioners voted to select J.P. Morgan Securities as managing underwriter of the bond offerings and its affiliated bank as swap provider for the transactions.

J.P. Morgan Securities did not disclose any of the payments or conflicts of interest in the swap confirmation agreements or bond offering documents, yet passed on the cost of the unlawful payments by charging the county higher interest rates on the swap transactions.

"The transactions were complex but the scheme was simple. Senior J.P. Morgan bankers made unlawful payments to win business and earn fees," said Robert Khuzami, Director of the SEC's Division of Enforcement.

Signs carried by public school teachers picketing the Advance Illinois breakfast in June 2009 told the story. Privatization and the other policies promoted by Advance Illinois, and Arne Duncan, were destroying public education. Substance photo by George N. Schmidt.Glenn S. Gordon, Associate Director of the SEC's Miami Regional Office, added, "This self-serving strategy of paying hefty secret fees to local firms with ties to county commissioners assured J.P. Morgan Securities the largest municipal auction rate securities and swap agreement transactions in its history."

The SEC previously charged Birmingham Mayor Larry Langford and two others for undisclosed payments to Langford related to municipal bond offerings and swap agreement transactions that he directed on behalf of Jefferson County while serving as president of the County Commission. On Oct. 28, 2009, Langford was found guilty in a parallel criminal case on 60 counts of bribery, mail fraud, wire fraud and tax evasion. He currently awaits sentencing.

According to the SEC's complaint filed against LeCroy and McFaddin in U.S. District Court for the Northern District of Alabama, the two former managing directors demonstrated in taped telephone conversations that they knew the payments to local firms with ties to county commissioners were designed to obtain business for J.P. Morgan's broker-dealer and affiliated bank. LeCroy and MacFaddin referred to the payments as "payoffs," "giving away free money," and "the price of doing business."

The SEC alleges that the scheme began in July 2002, when LeCroy and MacFaddin solicited Jefferson County on behalf of J.P. Morgan Securities for a $1.4 billion sewer bond deal. LeCroy and MacFaddin knew several county commissioners wanted to complete the transaction before November, when two commissioners would leave office and lose their ability to funnel payments to their supporters' firms. LeCroy later boasted to MacFaddin in a taped telephone conversation about his efforts to persuade the two commissioners to select J.P. Morgan Securities for the deal, beating out a rival firm. LeCroy told MacFaddin that he said to the commissioners, "Whatever you want — if that's what you need, that's what you get — just tell us how much."

The Advance Illinois materials were prepared by the same firms that did corporate reports for the big corporations that were attacking the well being of Americans. J.P. Morgan Securities agreed to settle the SEC's charges without admitting or denying the allegations by paying $50 million to the county for the purpose of assisting displaced county employees, residents and sewer rate payers; forfeiting more than $647 million in termination fees it claims the county owes under the swap transactions; and paying a $25 million penalty that will be placed in a Fair Fund to compensate harmed investors and the county in the municipal bond offerings and the swap transactions. LeCroy and MacFaddin have not agreed to settle the SEC's charges.

The SEC's order instituting settled administrative proceedings against J.P. Morgan Securities finds that it violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, Section 15B(c)(1) of the Securities Exchange Act of 1934 and Municipal Securities Rulemaking Board (MSRB) Rule G-17. In addition to the monetary relief described above, the SEC's order censures J.P. Morgan Securities and directs it to cease-and-desist from committing or causing any further violations of the provisions charged.

The SEC charged LeCroy and MacFaddin with violations of Section 17(a) of the Securities Act, Sections 10(b) and 15B(c)(1) of the Exchange Act, and Rule 10b-5 thereunder, and violations of MSRB Rules G-17 and G-20. The SEC's complaint seeks judgments against LeCroy and MacFaddin providing for permanent injunctions and disgorgement with prejudgment interest.

# # #

For more information about this enforcement action, contact:

Glenn S. Gordon - Associate Regional Director, SEC's Miami Regional Office

(305) 982-6360

Robert Levenson - Regional Trial Counsel, SEC's Miami Regional Office

(305) 982-6341


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