by Stephen Lendman
Goldman Sachs (GS) makes money the old-fashioned way by stealing it, scamming investors, defrauding them.
Its operations involve manipulative fraud on a massive scale, the way it's operated throughout its history.
When caught red-handed, slap-on-the-wrist punishment at most is imposed, management free to steal again through fraud, grand theft, market manipulation, front-running them, and scamming investors worldwide.
Its senior management officials operate like shadowy Mafia dons, a crime family, posing as an investment bank/financial services company, connected to others like it on Wall Street and corrupt politicians, complicit in the firm's shady operations in return for generous campaign contributions.
In 2010, an SEC civil suit charged GS with defrauding customers. It made billions from the scam, repaying $550 million. It was pocket change, the equivalent of a handful of revenue days.
None of its senior officials were ever held accountable for their manipulative activities. Former GS mortgage bond trader Fabrice Tourre was a rare exception on Wall Street, prosecuted for fraud - not his superiors, OKing how he defrauded investors.
GS is perhaps the most adept on Wall Street at amassing fortunes the old-fashioned way. Chairman Lloyd Blankfein earlier called company operations "doing God's work."
Manipulative activities include advising clients to buy assets the firm wants to dump, notably toxic ones, getting clients to assume dangerously speculative positions, things making GS the maximum profits - at the expense of scammed investors.
In 2002, the firm was largely responsible for Greece's debt crisis. A GS scam involved circumventing Eurozone rules in return for mortgaging assets.
Through creative accounting, debt was hidden in off-balance sheet accounts. Cross-currency swaps derivatives were used.
Government debt issued in dollars and yen was swapped for euros, then exchanged back into original currencies. Debt entrapment followed, Greece held hostage by Brussels to bankers to service and repay it.
GS profited hugely by scamming Greece, leaving most of its people impoverished. Its business model thrives on similar schemes globally - conniving, cheating, and profiting at the expense of scammed investors.
For years GS scammed the sovereign 1Malaysia Development Berhad (1MDB) wealth fund.
In 2015, US prosecutors began investigating Goldman's involvement in raising over $6 billion for 1MDB. In 2016, an investigation began into the firm's $3 billion bond deal for the fund.
Malaysia filed criminal charges against GS and two former officials over looting billions of dollars from the fund. Attorney General Tommy Thomas accused former GS Southeast Asia chairman Tim Leissner and former managing director Roger Ng of fraudulently deceiving the fund's management.
Other GS employees were also charged. Malaysian authorities want the company to repay $2.7 billion in misappropriated funds, along with $600 million in fees charged.
Prosecutors also demand up to 10 years imprisonment for the accused GS personnel, along with stiff fines assessed against them.
They were accused of using looted dollars to buy luxury mansions, yachts, a private jet, artwork, and other expensive items. Former prime minister Najob Razak may have been involved, perhaps bribed by GS to go along with the scam.
The UAE is suing Goldman over its alleged role in a bribery scam. In 2014, the Libyan Investment Authority (LIA) sued the firm after losing 98% of $1.3 billion LIA invested with GS in 2007.
GS made over $1 billion in derivatives trades with LIA funds, almost their entire value lost, Goldman earning around $350 million from its manipulation. A 2016 trial ruling was in the company's favor, showing how tough it is to hold the firm accountable.
In January 2016, GS was fined $15 million for arranging to borrow securities for short sales without authorization.
Goldman earlier was charged with manipulating the oil market, aiming to increase the commodity's price by speculating in oil futures.
GS and other Wall Street firms were also accused of manipulating other commodities, including aluminum.
In 2013, Goldman was subpoenaed as part of an investigation into complaints that company-owned metals warehouses "intentionally created delays and inflated the price of aluminum."
Along with JP Morgan Chase, GS was accused of violating US antitrust laws. Months later, Goldman sold its aluminum warehouses to Ruben Brothers.
The company is being investigated in various countries, including the US, for its manipulative practices.
Most often when caught red-handed, punishment, if any, is minor compared to huge profits made from dubious practices.
Earlier I compared Goldman to the fabled comic book Superman character, saying:
GS is faster than competitors, thanks to its proprietary software ability to front-run markets illegally and get away with it.
It's more powerful than the government it controls and manipulates advantageously to its bottom line; and
It's able to leap past competitors, given special status afforded the firm by Republicans and undemocratic Dems.
Economics Professor L. Randall Wray once explained that SEC laxity let Goldman "sleep through every bubble and bust in recent memory (it helped create) since it took over Washington during the Clinton years."
In his book titled "The Great Crash, John Kenneth Galbraith included a chapter on Goldman, explaining how the firm contributed to the Great Depression by selling risky investment trusts to unwary buyers.
They collapsed like a house of cards, the valuation of one dropping from a $104 per share price high to less than $2 at rock bottom.
Goldman made a fortune from the scam. Buyers lost their collective shirts. Things are much the same today.
Goldman's power and influence lets the firm and its management get away with all sorts of things that would land ordinary people behind bars longterm.