Judge gives HSBC two-week extension on money-laundering report
A Brooklyn federal judge on Tuesday extended by two weeks the deadline for UK bank HSBC to redact portions of a potentially explosive anti-money-laundering report.
Judge John Gleeson. who has already rejected requests from the Justice Department and HSBC to keep the report sealed, will also give the bank time to appeal his decision to make the report public.
The report was written by a federal monitor appointed to oversee how well HSBC was complying with anti-money-laundering regulations.
HSBC agreed to pay a $1.9 billion fine — and to have a monitor installed for five years — after it violated US money-laundering laws and was called by prosecutors the “preferred financial institution” of Mexican drug cartels.
The report was never intended to be made public — and never would have reached this stage — if not for the extraordinary efforts of a Philadelphia-area man caught in a mortgage snafu with HSBC.
From a nine-year-old mortgage modification beef with HSBC, Hubert Dean Moore, Jr., a chemist, pressed to have the report unsealed because it contained information about HSBC’s mortgage practices.
Moore’s efforts started out quietly, but have now reached the highest levels of Washington and the legal community.
His efforts, almost complete, would result in what people believe would be the first such confidential report on a bank to be made public.
Moore initially sought the modification because his wife, Ann-Marie, had breast cancer at the time, and the two needed extra money each month to help raise their four kids.
But after he spent years submitting paperwork for a modification and talking to representatives at HSBC, things weren’t going anywhere.
“This is what really spurred this entire issue,” Moore told The Post in his first-ever interview about the case.
“This one particular day I got four individual, separate letters from the mailbox, all dated the same day. One was, ‘we’ve received everything,’ ” he said of his loan modification paperwork. “The second one was, ‘we received it but you’re missing parts two and three.’ The next letter says ‘you’re missing parts six and seven.’ And the final letter said, ‘sorry, time’s out.’ On the same day!”
The Justice Department, Moore said, is “supposed to represent the people. They are not. They are siding with a criminal organization under wraps, under seal, under the veil of secrecy.”
This is where Moore came in. In November, he filed a letter claiming that that report, prepared by former prosecutor Michael Cherkasky, is relevant to his case because it touches on failures in HSBC’s mortgage department.
That report hasn’t been totally made public, though it has led to the demotion of a senior banker, Patrick Nolan, The Post first reported last year.
Since then, however, he’s filed letters essentially accusing the bank and the DOJ of colluding to keep the report private, and accused the two sides of an “incestuous” relationship motivated by DOJ lawyers wanting a job at a high-powered law firm. He also claims that five days after he filed his letter, HSBC sold off his mortgage without telling him, potentially violating the law.
The Justice Department, he said, is “supposed to represent the people. They are not. They are siding with a criminal organization under wraps, under seal, under the veil of secrecy.”
“Who benefits from this DPA?” he said. “The people don’t benefit. It’s the bank, and the DOJ.”
Last week, Judge Gleeson unexpectedly ruled that Moore is right and ordered the bank and the DOJ to submit the report for release by Feb. 12. Soon after, the bank and the DOJ asked for a 30-day delay to submit their own redactions. Moore wanted it out immediately.
Judge Gleeson—who, as a former prosecutor, put away John Gotti—split the difference, giving HSBC and the DOJ to submit to him what they think should be redacted. After that, he plans on submitting a sealed order of what he thinks should be left out of a public version of the report.
Since HSBC has already appealed Judge Gleeson’s motion to make any part of the report public, he expects that the New York appeals court would then rule on whether it should be made public.