Federal prosecutor argues against including JPMorgan in fraud case

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A federal prosecutor today argued against a criminally charged attorney's subpoena of global financial institution JPMorgan Chase Bank.

The attorney, Arthur Smith, faces wire fraud, bank fraud, conspiracy, money laundering and tax charges, most of which are related to loan applications that he helped to present to units of JPMorgan.

Mr. Smith has argued that if JPMorgan was or is under federal investigation in relation to the loans, that might show that it knew the applications were flawed, and made the loans anyway.

"If JPMorgan Chase knew the facts, but knowing those facts, continued to process loans from these same actors, it's not fraud," said Mr. Smith's attorney, Stephen Stallings.

Either JPMorgan or U.S. Attorney David Hickton's office could have submitted an affidavit saying there are no documents reflecting any investigation, but neither has, said Mr. Stallings at a hearing before U.S. District Judge Nora Barry Fischer.

Assistant U.S. attorney Brendan Conway said that Mr. Stallings' inquiry "really has nothing to do with whether or not JPMorgan Chase is under investigation.

"It's about diverting the jury's attention from what's really important here," which is whether Mr. Smith meant to fool the bank, he continued. He summarized Mr. Stallings' strategy as, "Let's blame the banks. There's been so many newspaper articles about the banks. Let's blame the banks.

"You just can't blame the victim in a fraud case."

Attorney Nathan Andrisani, who represented JPMorgan by phone, said information on any investigation of the bank wouldn't be relevant, and added that it would be too much of a burden on the company to dig it up.

Judge Fischer asked Mr. Andrisani to put that in writing, and invited Mr. Stallings to submit briefs on why the existence of an investigation would be relevant to Mr. Smith's defense.

She did not ask whether there is or was a federal investigation of the bank's loans in Western Pennsylvania, and neither the bank nor the prosecutor offered that information.

Mr. Smith is expected to go to trial with alleged co-conspirators Dov Ratchkauskas, George Kubini and Sandra Svaranovic, with a pre-trial conference set for Nov. 8.

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Rich Lord: rlord@post-gazette.com, 412-263-1542 or Twitter @richelord.


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