The arrest of financier Bernard Madoff Thursday for operating a "Ponzi scheme" costing investors $50 billion made the TV network news. Curiously, a lawsuit the same day against Clinton Treasury Secretary Robert Rubin for defrauding Citibank shareholders of more than $122 billion, also described as a "Ponzi scheme," got no airplay whatsoever.
As we shall see, Rubin, a Director of Citibank, profited from the shady practices that destroyed the financial system and sent the world's economies into a tailspin. Then, to repair the damage, he and his banker friends put the taxpayer on the hook for trillions.
Rubin didn't get the same publicity as Madoff because of his close connection to Barack Obama.
Robert Rubin's son Jamie was Obama's main Wall Street fundraiser and is now one of his principal advisers. More significant, Obama's economic team consists of Rubin's proteges including Timothy Geithner, Treasury Secretary, Lawrence Summers, Senior Economic Adviser and Peter Orszag, Budget Director. The Times of London has already dubbed them the "Robert Rubin Memorial All Stars."
Clearly, the media don't want people to realize that the candidate of "Change" chose the people responsible for this calamity to be his "economic team." While in the Clinton White House, Rubin, with Summers, helped tear down the regulatory walls between banks, brokerages and insurance companies and freed them to trade in unregulated and little-understood derivatives worth trillions of dollars.
THE LAW SUIT
In an article entitled "Ponzi Scheme at CITI," the New York Post reported: "A new Citigroup scandal is engulfing Robert Rubin and his former disciple Chuck Prince for their roles in an alleged Ponzi-style scheme that's now choking world banking.
Director Rubin and ousted CEO Prince - and their lieutenants over the past five years - are named in a federal lawsuit for an alleged complex cover-up of toxic securities that spread across the globe, wiping out trillions of dollars in their destructive paths.
Investor-plaintiffs in the suit accuse Citi management of overseeing the repackaging of unmarketable collateralized debt obligations (CDOs) that no one wanted - and then reselling them to Citi and hiding the poisonous exposure off the books in shell entities.
The lawsuit said that when the bottom fell out of the shaky assets in the past year, Citi's stock collapsed, wiping out more than $122 billion of shareholder value.
However, Rubin and other top insiders were able to keep Citi shares afloat until they could cash out more than $150 million for themselves in "suspicious" stock sales" calculated to maximize the personal benefits from undisclosed inside information," the lawsuit said.
The latest troubles for Rubin, Prince and others emerged in a 500-page investigation by Citigroup investors represented by law firm Kirby McInerney.
The probe was used to amend and add new details to a blanket investor lawsuit filed against Citigroup a year ago. The amended suit called the actions of Citi leaders "a quasi-Ponzi scheme" to hide troubles - and keep Citi stock afloat while insiders unloaded about 3 million shares between Jan. 1, 2004 and Feb. 22, 2008 for huge profits.
In addition to Citigroup, Rubin and Prince, the complaint names Vice Chairman Lewis Kaden, ex-CFO Sallie Krawcheck and her successor CFO Gary Crittenden.
Rubin cleared $30.6 million on his stock sales, while Prince got $26.5 million, former COO Robert Druskin got nearly $32 million and former Global Wealth Management unit chief Todd Thomson got $25.7 million, the suit said."
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