Donald Trump, Deutsche Bank
Photo credit: Adapted by WhoWhatWhy from North Charleston / Flickr (CC BY-SA 2.0) and JouWatch / Flickr (CC BY-SA 2.0)

International banking colossus Deutsche Bank has a track record of deploying illegal financial trading, money laundering, and shady offshore tax shelters in the service of the global elite. Should anyone be surprised that Deutsche is on Robert Mueller’s Trump-Russia investigation radar?

Editor’s Note: We publish this lengthy, in-depth, technical piece by a former IRS investigator, knowing it raises more questions than it provides answers. But we believe that is a very useful service, particularly in relation to a complex topic of considerable public import — one that may be a key component for special counsel Robert Mueller’s ongoing Trump-Russia investigation. We hope in the coming weeks to explore many of these questions in greater depth. And we welcome reader comments.

Martin J. Sheil is a retired branch chief of the IRS Criminal Investigation division.

Acronym Reference

DFS       DDepartment of Financial Services

LIBOR      London Interbank Offered Rate (calculates interest payments across the globe)

DOJ          US Department of Justice

SDNY       Southern District of New York

EDNY       Eastern District of New York

FinCEN    Financial Crimes Enforcement Network

OCCRP     Organized Crime and Corruption Reporting Project

President Donald J. Trump claims he has the “absolute right to do what I want to do with the Justice Department.” This chilling assertion invites speculation about just what the president has in mind. For clues to what may surface when investigators dig deeper, consider the pending prosecution of banking giant Deutsche Bank over money laundering activities involving Russia.

Recent media reports confirm that Deutsche Bank has been subpoenaed for records in relation to the ongoing Russia collusion investigation. This development immediately raises questions: Chiefly, what did a certain bankrupt but ambitious American real estate developer have in common with predatory Russian oligarchs who had been plundering their own country’s industry and generating vast currency flows out of their homeland since the 1990s?

Indeed, Deutsche Bank is a common thread in numerous probes of questionable financial activities — including tax evasion and money laundering — with ties to multiple oligarchs and their businesses in the US and abroad. So far the bank itself has suffered minimal consequences.

In all the flurry of media attention to the Russia collusion story, little attention has been paid to the Department of Justice’s (DOJ) criminal investigation of Deutsche Bank in Manhattan.

What are the ramifications for Deutsche of this potentially explosive investigation? For Donald Trump and his son-in-law, Jared Kushner? For the DOJ?

A recent CNN report noted that the DOJ’s money laundering section is participating in the investigation by the US Attorney’s Office for the Southern District of NY (SDNY). Who at Justice is supervising and coordinating its participation with SDNY? In addition to the money laundering investigation, is there an open criminal tax investigation into Deutsche Bank’s involvement in dicey tax shelters? Is the DOJ’s own tax division involved? Further, who is running the SDNY investigation on Deutsche?

Donald Trump Jr, Jared Kushner

Donald Trump Jr. and Jared Kushner (right). Photo credit: Gage Skidmore / Flickr (CC BY-SA 2.0) and Chairman of the Joint Chiefs / Flickr

On December 22, the New York Times reported that the US Attorney’s Office for the Eastern District of NY (EDNY) has requested records from Deutsche Bank relative to Jared Kushner and his companies. Is this investigation related to any investigations ongoing in the SDNY? Is it related to the investigation of Russian collusion in the 2016 election by special counsel Robert Mueller? Who is coordinating all of these investigations? Who will ultimately make the final decision on any prosecution? Why does it all matter? Does the fact that Deutsche Bank is currently on the hook for approximately $360 million in loans to Trump have any bearing on these questions?

We aim to examine all of these questions.

Deutsche Bank A.G. — An Introduction


Deutsche Bank was founded in 1870 as a specialist bank for foreign trade. It is considered one of the world’s largest financial institutions, with over 20 million clients and 70,000 employees. Its founding principle dictates that “the object of the company is to transact banking business of all kinds, in particular to promote and facilitate trade relations between Germany, other European countries and overseas markets.”

The American bank formerly known as Bankers Trust was folded into Deutsche in December 1998, becoming Deutsche Bank Trust Company Americas (DBTCA). As the New York Times pointed out in its article on the announcement of the takeover, there were no platitudes about a “merger of equals,” nor about the need for deference to cultural and institutional differences.”

Because of Deutsche’s actions, the bank’s elite US clients were able to report approximately $29.3 billion in bogus transactions on their tax returns. This allowed them to evade approximately $5.9 billion in individual income taxes on capital gains and ordinary income.

Deutsche Bank’s chairman, Rolf-Ernst Breuer, made clear the values and lines of authority that would shape Deutsche.

“We don’t believe in autonomy as an instrument of management and leadership, as far as it goes, we want a centralized management of the business,” Breuer told the Times.

Banking analyst Diane Glossman noted at the time that “the goals Deutsche Bank has set for itself — including an increase in per-share earnings of 10 to 15 percent by 2001 — are incredibly ambitious. … The greatest challenge for Deutsche Bank will be consolidating the cultures in a way that allows them to increase their earnings. That’s crucial, and it’s an area where Deutsche Bank has dropped the ball before.”

How prescient of Ms. Glossman!

Monetary Penalties, Toxic Mortgages, Interest Rate Manipulation, Tax Evasion


Before we explore the relationships between Deutsche Bank and Donald Trump, let us first review some of the enforcement difficulties regulatory agencies have had in confronting Deutsche Bank in just the past decade.

  • In December 2016, Deutsche Bank agreed to a $7.2 billion settlement with the DOJ over the sale of defective mortgage bonds. The settlement details the awarding of toxic home loans and the deceiving of investors during the period between 2005 and 2007. Deutsche was hardly alone in this business practice, but it played a significant role in the inglorious economic recession of 2008 and 2009.
  • In 2015, Deutsche agreed to pay a $2.5 billion fine to international regulators and the US Department of Justice through a deferred prosecution agreement over its role in a scheme to rig the London Interbank Offered Rate. The LIBOR is used to calculate interest payments across the globe. In June 2015, an International Monetary Fund report said the bank was one of the biggest “contributors to systemic risks in the global banking system.”
  • In November 2015, Deutsche was fined $258 million by New York Department of Financial Services and the US Federal Reserve for violation of US sanctions relative to Burma, Libya, Sudan, Iran and Syria.
  • The banking giant has had to deal with accusations of dodging regulatory concerns when it was accused of violating Dodd-Frank financial reforms aimed at tracking trades of financial instruments, known as swaps. The CTFC filed a civil complaint in SDNY in April 2016 charging Deutsche with multiple swap reporting violations and related supervision failures.
  • Deutsche also suffered civil penalties from two Federal Reserve enforcement actions announced on April 20, 2017, totaling $156.6 million. First, the Fed asserted a $136.9 million fine for Deutsche’s unsafe and unsound practices in the foreign exchange markets. Second, it applied a $19.7 million fine for failure to maintain an adequate Volcker Rule compliance program prior to March 30, 2016.

If all of that wasn’t enough, Deutsche has had multiple issues with regard to allegations of facilitating tax evasion. Deutsche settled one case in SDNY with US Attorney Preet Bharara regarding its involvement in questionable tax practices through their use of insolvent shell companies. This was paid off in January 2017 for $95 million. It was not Deutsche’s only issue with the IRS or SDNY, as Deutsche’s untethered pursuit of earnings in the lucrative field of tax shelters drew the government’s attention, both at the DOJ and the US Senate.

Non-Prosecution Agreement, SDNY, Basket Options, RenTec


According to a report by the Senate’s Permanent Subcommittee on Investigations, Deutsche was the subject of a series of investigations focused on its participation in abusive tax shelters from 1996 through 2002. These aided and abetted the process of evading an estimated $5.9 billion in unpaid US income taxes.

On December 21, 2010, Deutsche and Bharara executed a non-prosecution agreement related to the bank’s involvement with abusive tax shelters. This involvement included Deutsche Bank’s participation in approximately 15 tax shelters, engagement in at least 1,300 deals for over 2,100 customers, and implementation of over 2,300 financial transactions related to these shelters. Because of Deutsche’s actions, the bank’s elite US clients were able to report approximately $29.3 billion in bogus transactions on their tax returns. This allowed them to evade approximately $5.9 billion in individual income taxes on capital gains and ordinary income.

Deutsche Bank, flags

Deutsche Bank flags. Photo credit: Deutsche Bank / Flickr (CC BY-NC-ND 2.0)

Under the non-prosecution agreement (NPA), Deutsche paid $553 million to US regulators, while Bharara agreed not to criminally prosecute the bank for participating in abusive tax shelters benefiting its clients from 1997 to 2008, provided the bank met certain requirements.

During the multiple years in which the NPA was negotiated, Deutsche apparently made no mention to its independent monitor Bart Schwartz or anyone else about the “basket options” it began selling in 2000. Basket options are a financial instrument that allows for a highly leveraged investment on the front end, but most significantly, allows the company making use of the option to treat any capital gains as a long-term capital gain, instead of a short-term capital gain, cutting the tax due roughly in half. Basket options were found to have no real economic substance to them by the IRS and also the US Senate Subcommittee for Investigation.

After a Federal Reserve examination identified concerns in 2012, Deutsche, at the insistence of the Fed, brought the questionable product to the attention of the US Attorney in SDNY in August 2012, and engaged in several follow-up discussions and meetings. Aside from these contacts, the Senate Subcommittee was unaware of what, if any, actions were taken by the US Attorney’s office in SDNY as of July 22, 2014, while the NPA was still in effect.

The Mercers — American Oligarchs


Renaissance Technology is a well-known hedge fund. Its co-CEO, Robert Mercer, is an American oligarch who contributed over $20 million to Republican candidates and PACs during the 2016 election campaign. Between 2000 and 2012, RenTec purchased 29 basket options with a notional value of $46 billion and profits totaling $15.9 billion.

Deutsche Bank risk management executive William Broeksmit expressed his anxiety about the massive risk the bank was taking on relative to the basket options, known internally as “MAPs.” In August 2009, he sent an email to Anshu Jain, a leading executive at Deutsche Bank (along with a cc to Satish Ramakrishna, the Global Head of Risk and Pricing for Global Prime Finance at Deutsche Bank Securities in New York). This email effectively demonstrated that hedge funds, such as RenTec, got paid through a tricked-up basket option offered by the bank that magically turned millions of short-term trades into long-term capital gains, saving the hedge fund approximately half the rate of taxes owed on the short-term trades, some of which lasted only minutes.

The email, as well as other materials obtained from Deutsche Bank, were turned over to the Senate’s Permanent Subcommittee on Investigations, headed up at the time by Senator Carl Levin (D-Mich.). These documents demonstrate knowledge, early on, of the shaky nature of the basket options Deutsche Bank was promoting at the highest levels of executive management.

In 2010, the IRS issued its Generic Legal Advice Memo (GLAM), advising that basket options were not true options and could not be used to treat short-term trading profits as long-term capital gains. Two years later, the IRS sent a 60-day letter to RenTec notifying it of the intended disallowance of the RenTec basket option long-term capital gain treatment on its tax returns. RenTec protested, and as of July 2014, the position by the IRS Office of Appeals remains pending. Recent media articles referenced the likely RenTec tax liability at issue to be in the neighborhood of $7 billion.

“Deutsche Bank was structurally designed by management to allow corrupt individuals to commit fraud.”

The Senate subcommittee report noted that, although Deutsche established proprietary accounts for the basket options, those accounts actually functioned as if they were RenTec’s own prime brokerage accounts, with RenTec acting in the role of trader rather than option holder. The facts show that RenTec had active and total control over the trading strategy and execution. Senator Levin characterized basket options in June 2014, as “let’s pretend” options, since they had no tangible economic purpose.

Before Senator Levin’s issuance of his conclusion, his committee took testimony in 2013 from independent monitor Bart Schwartz. He was brought in to SDNY to monitor Deutsche Bank’s compliance with the non-prosecution agreement concerning the bank’s commitment to avoid sales of any pre-packaged tax shelter products. Schwartz testified that he was unaware of Deutsche’s promotion of basket options, which would have come under his purview as independent monitor. The promotion of basket options by Deutsche Bank was clearly an intentional violation of that 2010 deal with the SDNY.

The non-prosecution agreement required Deutsche Bank’s continued cooperation with the Department of Justice in its tax shelter prosecution. The NPA also banned Deutsche’s involvement with any pre-packaged tax products, which were the type of tax shelters that led to the criminal proceedings. Under the terms, the government was also authorized to prosecute the bank for any violation of the NPA.

Risk management exec Broeksmit committed suicide in January 2014, according to the London coroner. Broeksmit’s son, Val, characterized his father’s death as “suicide by extortion.” A personal doctor’s report read at the inquest indicated he had been “anxious” about ongoing investigations of the bank. The day after Broeksmit’s body was discovered, Eric Ben-Artzi, who is referenced elsewhere in this article, spoke at Auburn University. Ben-Artzi is a former risk analyst turned whistleblower at Deutsche Bank. He alleged that Deutsche Bank, with the knowledge of senior executives, had hid $12 billion in losses during the financial crisis. Ben-Artzi said the bank had effectively invented assets and hid losses.

Renaissance Technologies, SDNY

Renaissance Technologies LLC is a New York-based American hedge fund that trades on financial markets. The Southern District of New York is located in the Thurgood Marshall United States Courthouse in lower Manhattan (right). Photo credit: Robin Oldfield / Flickr (CC BY-NC-ND 2.0) and Eden, Janine and Jim / Flickr (CC BY 2.0)

The IRS will not disclose the audit results nor appeal results of RenTec. The SDNY has not responded to queries relative to whether or not criminal prosecution of Deutsche was ever contemplated over the bank’s evident violation of the NPA it entered into in 2010.

It is noted here that no permanent US Attorney has been appointed in SDNY since Preet Bharara was terminated in early March, 2017, when all other US Attorneys across the country that had been appointed by President Obama were asked to resign. According to a New York Times article, Bharara’s job appeared to be secure. He had met with President-elect Trump, Kushner and Bannon at Trump Tower in November, 2016, when it was widely reported that Bharara had been asked to stay on by the President-elect. Bharara was then fired after he refused to resign. It should be noted that Geoffrey Berman was appointed Interim US Attorney for the SDNY on January 3, 2018. Berman, who was a partner at the same firm that employed Rudy Giuliani, was selected after President Trump, in a clear violation of precedent and protocol, personally interviewed Berman — raising the question of DOJ independence.

It is also noted that the term of the IRS Commissioner at the time ended November 12, 2017. David Kautter was appointed Acting IRS Commissioner at this time. Kautter retained his political policy position as Assistant Treasury Secretary for Tax Policy when assuming his new position, which raised conflict of interest questions from some.

Several senators questioned Kautter closely at his confirmation hearing as to whether he was involved in a tax shelter scandal when he worked at global accounting services firm Ernst & Young around the turn of the century. The scandal concerned a team of employees at Ernst & Young who developed and sold tax products that allowed wealthy individuals to avoid $2 billion in taxes. The story ended with four people in jail and Ernst & Young paying the IRS $123 million in a settlement that allowed them to avoid criminal prosecution. The “team” began its work in 1998, and, in 2000, Kautter became the head of US national tax services at the company. He went on to say that, following his participation in the Senate investigation into the team’s actions, the group “greatly abused the trust that the firm had placed in them. Looking back, I should have been more active.”

How active will Mr. Kautter be in reviewing RenTec’s $7 billion tax shelter bill on appeal before the IRS?

It should be noted here that Secretary of Treasury Steve Mnuchin, who supervises both the IRS and the Financial Crimes Enforcement Network, was an investor in at least two Trump properties when he ran Dune Capital prior to the election.

With that in mind, it’s important to know who will be the new permanent IRS Commissioner. Who will select him? Will he or she aggressively pursue the flagrant multibillion dollar tax deficiency generated by RenTec and Deutsche Bank? Will the new US Attorney in SDNY reopen the non-prosecution agreement on Deutsche Bank over its sale of bogus tax shelters?

While the hundreds of millions of dollars in civil fines and penalties issued against Deutsche Bank make for nice headlines, no criminal prosecution has been brought by any of the countries affected by this nefarious $10 billion scheme.

The civil sanctions against Deutsche (several of which occurred in the SDNY), demonstrate a pronounced, aggressive attitude by Deutsche over its institutional risk management and compliance programs, as well as a distinct disdain for regulatory restraints that may threaten the bank’s earnings objectives. Accountability for individual executives has clearly been missing in action.

The German daily Sueddeutsche Zeitung reported in November 2016 that the bank was looking to reclaim tens of millions of Euros in bonuses from its three most recent CEOs — Josef Ackerman, who ran the bank from 2002-2012, and his successors, Anshu Jain and Jurgen Fitschen.

Money Laundering


The Federal Reserve Board announced on May 30, 2017, that a $41 million penalty and consent cease and desist order was asserted against Deutsche Bank to address unsafe and unsound practices in the firm’s domestic banking operations. The board identified failures by Deutsche’s US banking operations to maintain an effective program to comply with the Bank Secrecy Act and anti-money-laundering laws.

The consent order requires Deutsche to improve its senior management oversight and controls related to compliance with anti-money-laundering laws. This innocuous statement covers some of the same activities and period of time as does the record-breaking penalties asserted by the New York State Department of Financial Services and the United Kingdom’s Financial Conduct Authority. The lack of management oversight appears to be a theme when looked at in the context of the delineated litany of civil fines and penalties.

On January 30, 2017, DFS Superintendent Maria T. Vullo announced that Deutsche Bank AG and its New York branch were to pay a $425 million fine for violation of New York anti-money-laundering laws. These involved a “mirror trading” scheme among the bank’s Moscow, London and New York offices that laundered $10 billion out of Russia. The DFS’s investigation found that the bank missed numerous opportunities to detect, investigate and stop the scheme due to extensive compliance failures, allowing the scheme to continue for years. The DFS report went on to state that the Russian scheme “highlights what has been a pervasive culture at Deutsche of skirting regulations to pad profits and personal bonuses.”

At the same time, Britain’s FCA announced fines of $204 million in civil penalties against Deutsche Bank. It represented the largest financial penalty ever asserted by the FCA for failings of anti-money-laundering controls. In a damning report, it said Deutsche had failed to have proper controls to stop customers transferring billions from Russia to offshore bank accounts “in a manner that is highly suggestive of financial crime.”

“Deutsche had been unable to determine who many of its customers were, citing missing identification documents, lack of information about corporate ownership and poorly understood foreign-language paperwork,” the report said.

The above description of the mirror trades that occurred in Moscow represents the next step in the evolution of Russia-based money laundering techniques. Deutsche Bank is listed by the Organized Crime and Corruption Reporting Project (OCCRP) in its research into the top 50 global banks involved in activities described in their article as part of the “Russian Laundromat.”

Russian Laundromat


OCCRP explained that this money laundering technique starts with transactions involving two companies, one of them based in the UK. “The companies sign a bogus contract in which one agrees to lend the other large sums, although no money ever actually changes hands. It is likely that both companies are owned by the same owner but that ownership is hidden behind ‘proxy’ figures.”

One example cited by OCCRP concerns a UK-registered company owned by murky Belize-registered shareholders, with sums of $100m-800m in each transaction. “The contracts in each case stipulated that the debt was guaranteed by companies in the Russian Federation, almost always run by a Moldovan citizen. This Moldovan gave the operation access to the courts in Moldova, which would ultimately permit the movement of the dirty money into the legitimate banking system,” the report said.

Typically, intermediary banks would be used to transfer the money to a friendly bank in a European Union country such as Latvia, also known as “the Switzerland of Eastern Europe.” And once it is in Latvia, voila! It is in the European Union, backed by a court order and clean and ready to use,” the OCCRP said. Typically, once the money has moved into the EU it will continue on to larger banks such as Deutsche and move offshore to such havens as Belize, BVI, Cyprus and the Seychelles. Commercial Bank of San Francisco and Bank of New York were tied into this scheme at one point, and some notable individuals associated with those banks include Bruce Rappaport and Peter Berlin at BNY, Boris Avramovich Goldstein and Irakaly “Ike” Kaveladze with Commercial Bank of SF.  Senator Levin referred to “Ike” as a “poster boy for money laundering.”

Mirror Trades


The scheme’s intent was to facilitate the transfer of over $10 billion out of Russia for wealthy Russian clients. They did this with mirror trades (Russians use the term “konvert” when employing this scheme) carried out between 2011 and 2015. These trades allowed for the buying of Russian stocks in rubles for a client generally located in the Moscow area, and the near simultaneous selling of the identical value of a security for US dollars for a related customer located in London. DFS outlined a web of trades converting rubles into dollars through security trades that had “no economic purpose.” The players involved in these deals stretched from Moscow, London and New York to Cyprus and the British Virgin Islands.

The Department of Financial Services found that Deutsche’s Moscow traders facilitated the scheme, with most of the trades placed by a single trader representing both sides of the transaction. Traders did not question the suspicious trades because it made for easy commissions. The counterparties involved were closely related, and the trades were routinely cleared through Deutsche Bank. The selling counterparty was usually registered offshore and would be paid for its shares in US dollars.

mirror trades, dollar, ruble

Photo credit: Adapted by WhoWhatWhy from Central Bank of Russia / Wikimedia and US Mint / Wikimedia.

The practical effect of these large-scale mirror trades was to physically move a large volume of money out of Russia and away from predator plutocrats and regulatory entities, most significantly Russian tax authorities. Deutsche Bank played a key role in physically moving Russian money out of Russia to the UK, and facilitating Russian tax evasion in the process.

“I have a billion ruble today. … Will you be able to find a security for this size?” the DFS report cited one party to a deal as telling a Deutsche Bank trader in Moscow. The scheme centered on 12 Moscow brokers in Deutsche’s Moscow branch who hatched the plan for their wealthy Russian customers, essentially converting Russian currency into dollars.

Many of these dollar-based mirror transactions flowed through the office of Deutsche’s New York bank. This provided SDNY an avenue for the money laundering inquiry. More than $10 billion in laundered money was directed toward London and New York from Moscow, investigators found. DFS discovered that the Deutsche executives in Moscow had plenty of opportunities to crack down on the scheme, but did not. The department emphasized that Deutsche’s “Know Your Customer” screens, a crucial cog in its compliance department that analyzes the identity and intent of a prospective client, failed on numerous occasions.

Corrupt Surfer Dude May Be Easy Bait


Who was the Deutsche supervisor who allowed $10 billion of “konvert” to go through? An article in the New Yorker identifies Tim Wiswell, an American citizen, as the supervisor on the Moscow equities desk of Deutsche where the suspicious trades were made. According to the piece, Wiswell took millions in bribes to facilitate the scheme. Or, as DFS put it, one supervisor in the Moscow office of Deutsche Bank was paid $3.8 million for “consulting agreements” by the companies behind the trades. It further notes that Wiswell was last thought to be with his family in Indonesia, where no extradition treaty with US exists. He is apparently involved with TakeOff, a surf school run by Russians near Bali.

It is possible that a vigorous US Justice Department prosecutor might extend a deal to Mr. Wiswell that includes a plea to lesser criminal tax charges in exchange for his testimony against Deutsche executives and their likely Russian oligarch clients. Such a deal would allow Wiswell and his family to return to the US and face perhaps limited prison time. It also might allow US federal prosecutors to obtain direct testimony on any possible role by Deutsche executives, up to, and possibly including, such heavyweights as past CEO Josef Ackerman.

Should prosecutors be so fortunate to move up the food chain, what bigger fish could this bait reel in?

One potential target might be Igor Putin, believed to be related to Vladimir Putin as a second cousin. Igor served on the Board of Directors of Promsberbank, which the Central Bank of Russia characterized as being a “key conduit for mirror trades,” according to a recent Bloomberg article.

Tim Wiswell

Photo credit: Facebook

The Offshore Leaks Database of the International Consortium of Investigative Journalists (ICIJ) reveals some interesting links connecting Igor Putin to a British Virgin Island shell company called Parlomedia Corporation. (The Panama Papers are associated with the work of the ICIJ.) The database also documents Deutsche Bank’s links to more than 1,000 offshore accounts.

Project Square


Deutsche was so concerned about the breakdown of internal controls surrounding the mysterious mirror trades that its brass directed a full internal inquiry called Project Square. Initiated in February 2015, the inquiry was headed by the chairman of Deutsche’s supervisory board and partner at Shearman & Sterling, Georg Thoma. Thoma aggressively tracked and reported on over 2,000 questionable transactions emanating from the bank’s Moscow office. Deutsche executives cut his query short, however, and forced his resignation on May 28, 2016, a full two years before his contract was scheduled to end.

Various media reports, including a Bloomberg article, noted that Thoma was left isolated after pushing to investigate Chairman Paul Achleitner and mounting intensive inquiries into Deutsche Bank executives, people familiar with the investigation have said. Deputy Chairman Alfred Herling criticized Thoma for being “overzealous” and spending too much in probing potential wrongdoing. People familiar with the investigation observed that friction arose over Thoma’s interest in examining potential links between individual board members and legal cases starting in 2014. Did Thoma get too close? Could premature closure of a productive and revealing internal query provide evidence of executive misconduct, concealment of financial crimes and potential willful blindness of AML controls? Considering suppression of the above may have misled investors, were securities violations at play?

Whistleblower, Eric Ben-Artzi, a past Deutsche Bank employee, was quoted by Ed Caesar in an August 2016 New Yorker article that “there was a cultural criminality” at Deutsche. Ben-Artzi went on to say that “Deutsche Bank was structurally designed by management to allow corrupt individuals to commit fraud.”

While the hundreds of millions of dollars in civil fines and penalties issued against Deutsche Bank make for nice headlines, no criminal prosecution has been brought by any of the countries affected by this nefarious $10 billion scheme. Therefore, no deterrence with any bite has emerged that might truly inhibit Deutsche executives or executives of other major banks. The lack of corporate liability laws in Germany suggest that no criminal prosecution will ever be brought against executive management headquartered in Frankfurt.

Deutsche Bank

Deutsche Bank press conference. Photo credit: Deutsche Bank / Flickr (CC BY-NC-ND 2.0)

Harken back to Deutsche chairman Rolf-Ernst Breuer’s quote: “We don’t believe in autonomy as an instrument of management and leadership, as far as it goes, we want a centralized management of the business.”

A $10 billion money-laundering scheme was not run by some rogue cowboy (or surfer dude), but directed by centralized management with little regard to criminal liability. Furthermore, an aggressive internal inquiry was suppressed before executive responsibility could be determined. There have been some passing references in the media to an open criminal investigation by DOJ and the SDNY into the “mirror trading” schemes of Deutsche, but DOJ has refused comment. This lack of comment and activity has not sat well with everyone.

In the next installment, we’ll examine how Deutsche Bank’s brazen activities got on the radar of Congressional oversight committees. We’ll also take a look at Donald Trump’s association with the bank since 1998.

See here for Part 2.

Martin J. Sheil can be reached at via an encrypted Proton email address.

Related front page panorama photo credit: Adapted by WhoWhatWhy from Deutsche Bank (Björn Láczay / Flickr – CC BY-SA 2.0).


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