Alayne Fleischmann
Alayne Fleischmann | |
|---|---|
| Born | Terrace, British Columbia, Canada |
| Occupation | Attorney |
| Years active | 2000s–2010s |
| Known for | Whistleblower in JPMorgan Chase $13 billion settlement case |
Alayne Fleischmann, an attorney formerly with JPMorgan Chase, played a pivotal role in uncovering evidence that led to JPMorgan Chase reaching a $13 billion settlement with the United States Federal Government. This case ranks among the most notable instances of white-collar crime in American history.
Early life
Fleischmann grew up in Terrace, British Columbia, Canada. After relocating from Canada, she pursued legal studies at Cornell Law School and subsequently began her career on Wall Street. Prior to entering the financial sector, she was involved in human rights work.
Securities law
During her tenure in securities law, Fleischmann developed a keen interest in the area, viewing it as "highly respectable" and transparent. In 2006, after several years at a law firm, she joined Chase as a transaction manager responsible for quality assurance aimed at preventing the acquisition of poor-quality loans. Shortly after her arrival, a new leader took charge of the diligence team that reviewed and approved loans.
Fleischmann soon experienced difficulties with this new manager, who instructed employees to avoid email communications with him and would reprimand those who did not comply. She observed that this absence of written communication conflicted with the fundamental objectives of compliance and due diligence, raising significant concerns.
Home loans
Toward the end of 2006, Fleischmann and her diligence team were assigned to assess a $900 million portfolio of home loans originated by GreenPoint. They uncovered major issues, including loan dates that were unusually old—seven to eight months compared to the standard two to three months—indicating possible prior rejection or early payment defaults (EPDs).
Their analysis revealed that approximately 40% of these loans contained inflated income figures, greatly surpassing Chase’s acceptable threshold of 5%. Despite Fleischmann’s objections and initial analyst concerns, reports were modified to minimize perceived risks. The diligence group warned about probable defaults, and their findings were escalated to senior management. Nonetheless, the GreenPoint loan package received approval.
In February 2008, Fleischmann was laid off amid company-wide reductions.
Canada
In early 2012, Fleischmann returned to Canada during an ongoing SEC investigation into Chase. She volunteered detailed information regarding Chase's widespread fraudulent practices, particularly relating to GreenPoint; however, the SEC concentrated more on Chase’s interactions with WMC.
Between late 2012 and early 2013, civil litigators from the U.S. attorney’s office conducted interviews with her. Fleischmann supplied lead attorney Richard Elias with extensive evidence about instructions to avoid email correspondence, deliberate obstruction of due diligence efforts, workplace harassment, and ignored risk warnings. She anticipated this would lead to prosecution; however, planned civil-fraud charges against Chase were dropped in September 2013.
Reports suggest JPMorgan CEO Jamie Dimon reached out to Associate Attorney General Tony West to negotiate a settlement outside court. According to The New York Times, Dimon initially proposed $3 billion, which was declined, followed by higher offers that were also rejected. Fleischmann’s testimony contributed significantly to the Department of Justice securing a settlement offer near $9 billion from Dimon.
From 2012 through 2013, Fleischmann completed articling at a Calgary law firm as part of the requirements for practicing law in Canada.
External links
- Matt Taibbi, The $9 Billion Witness: Inside JPMorgan Chase's Most Formidable Adversary, November 6, 2014, Rolling Stone
- An Interview with Matt Taibbi and a Bank Whistleblower on JPMorgan Chase's Role in the Economic Collapse and Evasion of Accountability, November 7, 2014, Democracy Now!
- JP Morgan Chase Whale Trades: Examination of Derivatives Risks and Misconduct: Testimony before the Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, United States Senate, 113th Congress, First Session, March 15, 2013, Volume 1 Volume 2