Goldman Sachs CEO hires criminal defense lawyer
Goldman Sachs Chief Executive Lloyd Blankfein has hired a prominent Washington criminal law attorney to defend him against any charges resulting from government investigations into the financial crisis.
Blankfein, one of the most prominent and successful figures on Wall Street, retained Reid Weingarten, an attorney known for representing clients in high-profile cases of alleged corporate wrongdoing. He has represented such former executives as WorldCom Inc. CEO Bernard J. Ebbers and former Tyco International Ltd. general counsel Mark Belnick.
Blankfein is not facing any criminal charges and is not even known to have spoken with criminal prosecutors. Goldman Sachs Group Inc. said the CEO reached out to Weingarten some months ago after the Senate’s Permanent Subcommittee on Investigations wrote a report about the financial crisis that accused Blankfein of lying to Congress — a report that was then handed on to the Department of Justice.
“As is common in such situations, Mr. Blankfein and other individuals who were expected to be interviewed in connection with the Justice Department’s inquiry into certain matters raised in the [Senate subcommittee] report hired counsel at the outset,” a spokesman for Goldman said in a statement.
The decision to bring on a top legal name such as Weingarten suggests how seriously Blankfein is taking the investigation and that there could be a new push to investigate the firm and its executives on criminal grounds. The move to hire an outside attorney was first reported by Reuters.
“He’s got an incredible amount to lose, and there’s a lot of anger out there,” said Philip Hilder, a criminal-defense attorney in Houston. “It signifies that the investigations are serious in tone and that he’s not taking them lightly.”
Given the high stakes, Blankfein had to make sure somebody is watching out for his personal interests, experts said.
“I would have been more surprised if he had not retained counsel,” said Terree Bowers, a partner at Arent Fox in Los Angeles.
Investors were rattled by news that Blankfein had hired a lawyer. Goldman shares, which had barely moved all day before the news, plunged and finished the day down $5.25, or 4.7% at $106.51. The stock fell further in after-hours trading.
Goldman, the most envied name on Wall Street, has been under intense public scrutiny since the financial crisis because of the record profit it generated at a time when the national economy was still struggling.
The firm has been dogged by investigations, but so far the cases have not involved criminal charges and have been settled without Goldman admitting to any wrongdoing.
Last summer, Goldman paid $550 million to the Securities and Exchange Commission to settle charges that it helped create low-quality mortgage-backed securities that it knew would fall in value.
The Senate subcommittee built on those findings and argued that the firm had made money at the expense of its clients.
But the subcommittee’s most explosive claim was that Blankfein and other executives had lied to investigators when asked about how much the firm had profited from the mortgage meltdown.
The panel’s chairman, Sen. Carl Levin (D-Mich.), said at the time that “Goldman clearly misled their clients and they misled the Congress.”
Goldman said then that “the testimony we gave was truthful and accurate.”
The subcommittee’s findings were passed along to the Department of Justice for further investigation. In addition, New York’s district attorney was reportedly looking into the issues raised by the report and had subpoenaed Goldman.
Weingarten did not return telephone calls for comment.
The biography on his firm’s website says Weingarten specializes in “cases involving public corruption, the Racketeer Influenced and Corrupt Organizations Act, bank fraud, bribery, government procurement fraud, antitrust, healthcare fraud, and tax and securities fraud.”
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