From midway!ncar!umigw!mthvax!mathrich Thu Jul 19 00:41:51 CDT 1990
Article: 824 of alt.activism
Xref: midway alt.activism:824 alt.conspiracy:440 misc.headlines:1571
Path: midway!ncar!umigw!mthvax!mathrich
From: mathrich@mthvax.cs.miami.edu (Rich Winkel)
Newsgroups: alt.activism,alt.conspiracy,misc.headlines
Subject: Sen. Conyers on H.R. 5111 (RICO amendment)
Message-ID: <1990Jul11.183836.2095@mthvax.cs.miami.edu>
Date: 11 Jul 90 18:38:36 GMT
Distribution: na
Organization: U of Miami Dept. of Math. and Computer Science, Coral Gables, FL 33124
Lines: 100

RICO REFORM: A SECOND WINDFALL FOR S & L CROOKS

By the Hon. John Conyers Jr.
The New York Times, Monday, 9 July 1990, p. A17

[John Conyers Jr., Democrat of Michigan, is chair of the House
Government Operations Committee.]

If the American people don't holler fast, the crooks who looted
the nation's savings and loans are going to get off very cheaply.

It is well known that the savings and loan collapse may be the
largest financial scandal in United States history.  It threatens
to cost as much as $500 billion and involve as many as 1,000
institutions.  Congressional studies indicate that in fully
three-quarters of the failed thrifts there was criminal activity
by insiders.  They had ample help from crooked appraisers, real
estate agents, lawyers and accountants who cooked the books.

Fortunately, in light of this flood of fraud, President Bush and
Congress are not just trying to fix political blame on each
other, but are quickly moving to protect us from the rising
waters, right?

Wrong!

Congress, with the full support of the Administration, is moving
swiftly toward circumscribing the most effective legal tool
prosecutors and victims have to combat sophisticated forms of
business fraud: the Racketeer Influenced and Corrupt
Organizations Act, known as RICO.

Enacted in 1970, RICO provides stiff criminal sanctions for
anyone who operates an illegal or legal business by a pattern of
fraud, corruption, violence or the provision of unlawful goods or
services.  Moreover, like antitrust laws, RICO grants triple
damages plus attorney fees to victims of civil fraud.  These
powerful remedies act as a deterrent to many would-be wrongdoers,
as well as allowing plaintiffs with modest financial resources to
pursue otherwise prohibitively expensive lawsuits to redress the
wrongs done to them.

Considering that the Government has recovered less than 2 percent
of the money lost to criminal fraud in thrift cases, the
importance of civil RICO in bringing the savings and loan crooks
to justice should be apparent.

Yet Congress, at the behest of powerful financial industries, is
set to weaken civil RICO.  Two separate bills, one introduced by
Senator Dennis DeConcini and the other by Representative William
Hughes, will, in different ways, severely reduce the ability of
plaintiffs to recover treble damages in civil fraud cases.

The bill introduced by Senator DeConcini would virtually
eliminate granting treble damages to future plaintiffs who have
proved fraud.  Representative Hughes's bill would not eliminate
treble damages, but it would put legal hurdles in the path of
recovering them.  Incredibly, however, it would be _retroactive_. 
It would allow judges to slash fraud penalties by two-thirds in
cases already filed.

Clearly, this retroactivity provision stands to benefit those who
are already defendants in civil fraud cases involving savings and
loan failures--including, for example, the former owners of
Lincoln Savings and Loan, Charles Keating and his cohorts.

The case against the Keating defendants is the best example of
civil RICO's importance in fighting thrift crime.  The case was
brought on behalf of 23,000 mostly elderly victims who allege
that they were defrauded into purchasing $250 million worth of
bonds from Mr. Keating's savings and loan.  Many of the victims
say they lost their life savings.

In a letter to Congress, the chief attorney for the bondholders
wrote of the Keating defendants: ``Not surprisingly, some [of the
defendants] have been leaders in the fight to eviscerate civil
RICO.  Why?  . . . They well know that [the bill's] retroactivity
provision directly benefits them and injures the victims of the
Keating scandal.''  Senator DeConcini has eliminated the
retroactivity provision in his bill that might have benefited Mr.
Keating, putting to rest the suggestion of conflict of interest.

Although I am sure it is not my colleagues' intention to provide
relief for swindlers, Representative Hughes's bill, as it stands,
will do just that.  This bill, backed by powerful special
interest lobbies--banking, thrift and accounting, to name but a
few--is now sailing through the House at an alarming speed.  When
the public becomes aware of this blatant favoritism, it will not
sit still for it.

It has been estimated that the savings and loan bailout could
cost every American household $5,000 when all is said and done. 
No further losses should be shifted away from the swindlers to
the households of America.

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