Over the past ten months, the Securities and Exchange Commission (SEC) has failed to comply with a number of Freedom of Information Act (FOIA) requests relating to the agency's role in a seventy-four-billion-dollar municipal bond Ponzi scheme.  Government agencies like the Securities and Exchange Commission are required by law to comply with FOIA requests.  The SEC has repeatedly failed to comply with numerous FOIA requests relating to their role in the Puerto Rico municipal bond default — the largest such default in American history.  The SEC's failure to comply with the law has resulted in a federal lawsuit in the federal district court in Central California.  In court documents, the SEC claims that it had either no knowledge or insufficient knowledge of securities fraud related to the Puerto Rico bond default.  Unfortunately, in a FOIA request that the SEC complied with, the SEC is shown to have in its possession over 2,800 pages of information related to the Puerto Rico bonds detailing acts of securities fraud, mail fraud, wire fraud, extortion, bribery, theft, and government payoffs.  In all, the SEC had documents showing over sixty major felonies that caused the Puerto Rico bond default.  What is more concerning is the fact that the SEC's rank and file wrote over 268,000 internal emails (see below) that have the words "Puerto Rico bonds" and words like fraud, Ponzi scheme, fraudulent, criminal, and illegal within the same email.  So what is really going on, and what is the SEC trying to hide?

It is clear from the SEC's own records that the SEC knew that all the Puerto Rico bonds were part of a huge Ponzi scheme, similar to what Bernie Madoff was sent to prison for.  Their rank and file were begging the SEC leadership to let them act against this well-documented securities fraud but were stopped at every turn by the political appointees that run the SEC.  The fraudulent Puerto Rico bonds were sold to the American public by America's largest banks — Citibank, Wells Fargo, and Bank of America, along with a dozen more institutions.  If the SEC were to act against the major Wall Street banks, they would be liable for tens of billions of dollars in losses taken by American citizens.  According to the Federal Election Commission, in 2016 when this scheme appeared to be collapsing, the major Wall Street banks sent over one hundred and twenty million dollars to our United States senators.  In return, the senators made sure that the people they appointed to run the Department of Justice and the SEC killed all investigations, prosecutions, and regulatory action that could hurt their Wall Street campaign contributors.  By any standard, even that of the Washington D.C. swamp, this Ponzi scheme was one of the largest crimes in American history.  The campaign contributions were bribes, and the senators' actions made them participants in this criminal enterprise.  None of this is difficult to follow or prove.  Everyone's actions are trackable and well documented.  

The reason the SEC is fighting these FOIA requests is that it would uncover the SEC's active role in aiding and abetting these crimes under the direction of United States politicians.  The SEC has done and will continue to do whatever it can to deny access to these documents.  In early March, the Federal District Court will almost certainly issue court orders forcing the SEC to provide the requested documents.  The only question is, will the SEC comply with the courts?  Regardless of the outcome of this lawsuit, the SEC is facing two additional lawsuits claiming financial damages for their arguably criminal participation in this scheme.  With or without the SEC documents, the juries in these cases will be exposed to detailed information about the crimes, testimony from DoJ and SEC whistleblowers, and much more.  The SEC's reluctance to comply with the law on FOIA requests will just be additional evidence of their likely guilt in this whole criminal enterprise.      

Richard Lawless is an investigative journalist who has written articles for America's largest media outlets on complex financial crimes and government corruption. Mr. Lawless is the author of Capitol Hill's Criminal Underground, a non-fiction book that details Washington's participation in this bond fraud.   Mr. Lawless was a career banker and a graduate of Pepperdine University and holds a Master's degree in business and finance.

Image: SEC.