When U.S. Attorney Benjamin Wagner was a line prosecutor in Sacramento, the Internal Revenue Service loved him.
The agency goes after financial crimes, but they are often complex, hard to prove and time-consuming. Thus, many prosecutors shy away from them as not cost effective, given that white-collar crooks routinely get comparatively light sentences.
But Wagner always welcomed IRS agents and their loads of Byzantine evidence with open arms.
“If we don’t do them, nobody will,” he said in an interview Friday. “We have the resources, sophisticated equipment, specially trained investigators, and national jurisdiction.
“You can’t look just at the prison time. I personally believe these kinds of cases offer more opportunity for deterrence than other areas, such as street crime,” he added. “Just on a personal level, big, white-collar crime is the most challenging, the most interesting, and the psychology of the defendants is fascinating. It’s very rewarding.”
This viewpoint was recognized after President Barack Obama appointed Wagner in 2009 as U.S. attorney in the Sacramento-based Eastern District of California and he began to have more and more contact with the top brass at the Department of Justice in Washington, D.C.
His high standing there led to Wagner and his office taking on JPMorgan Chase & Co., the nation’s largest bank, over questionable mortgage securities it bundled and sold in the run-up to the financial crisis.
Word of a tentative $13 billion settlement between JPMorgan and various stakeholders leaked out a week ago, and the national press has waxed amazed that a prosecutor from Sacramento is spearheading the Obama administration’s move on the leviathan financial institution. Wagner was even called an “upstart” in one article.
But, when U.S. Attorney General Eric Holder set up a working group “to bring more resources to bear on the role of the big banks in the mortgage crisis,” Wagner was chosen as a member. The group is headed by Tony West, a Holder confidant and the third-ranking official in the department.
It became obvious last year, Wagner said, that “there weren’t enough attorneys in Washington and New York” qualified to investigate the labyrinthian business of the banks, and some U.S. attorneys who head larger offices were recruited for the task.
“I kinda put my hand up to take the JPMorgan case,” Wagner said. “They (Justice Department officials) have a lot of confidence in this office, so it was natural we would be asked to step up.”
A year ago, two assistant U. S. attorneys in Wagner’s office – Rich Elias and Colleen Kennedy – began digging into what was going on at JPMorgan prior to the economic meltdown.
On Sept. 23, Wagner flew to Washington prepared to announce the next day a multibillion-dollar civil suit against the bank. He and his two assistants had amassed what they saw as nationwide evidence of fraudulent activity in the packaging of home loans as securities by JPMorgan in the pre-crisis era.
But the next morning, JPMorgan CEO Jamie Dimon approached Holder with a new and higher settlement figure. The lawsuit was put on hold, and there was a resumption of negotiations involving the bank’s lawyers, West, Wagner and others from the Justice Department.
Those talks led to the reported $13 billion settlement, but it has not been announced and Wagner said Friday that he doesn’t expect it “for several days.”
As far as Wagner being a neophyte in the machinations of Wall Street, that is a myth.
He was born in Manhattan on Feb. 16, 1960, and spent much of his youth in Brooklyn, where he excelled academically and in soccer. His father, after working a number of years for the Agency of International Development, the federal entity primarily responsible for administering civilian foreign aid, joined JPMorgan and was there until he retired.
Wagner emphasized that his father was at the bank long before Chase bought it, and the coincidence has nothing to do with his heading the Justice Department’s investigation.
Wagner earned an undergraduate degree from Dartmouth College and a law degree from New York University. In 1986, he joined the Manhattan-based international law firm of Cahill Gordon & Reindel LLP, where he worked in the financial and corporate areas.
By 1992, Wagner had decided he wanted “more hands-on litigation experience,” plus friends had told him how interesting and fun it was at the Justice Department. His wife wanted to move back to her native California to be closer to her parents.
“I called around in California, and Sacramento had an opening,” he recalled.
He eventually became chief of special prosecutions and was at the center of many of the office’s high-profile cases targeting offshore tax evasion, phony trusts, bribery and public corruption, and hate crimes. Even as it became clear he was the heir apparent to the top job, he was leading a prosecution team in the lengthy trial of one of the country’s largest asylum fraud cases.
Charles “Chuck” Stevens, the U.S. attorney during some of those years, once remarked about Wagner, “I’d like to clone him.”