Anton Valukas is a Chicago attorney who as alternated stints as a federal attorney with the Justice Department prosecuting white collar criminals, with a law practice defending white collar criminals. He is well known for serving as court appointed bankruptcy examiner in the bankruptcy of Lehman Brothers. After an 18 month investigation, his team published a nine volume, 2200 page report.
Valukas carefully documents how Lehman Brothers engaged in Repo 105 & 108 transactions to improve the appearance of the company’s liquidity on its balance sheets. Valukas concludes that there are reasonable grounds for the government to purse litigation against Lehman Brothers executives. The State of New York has already filed a civil fraud lawsuit against Ernst & Young for its part in what is alleged as accounting fraud.
On Sunday, April 22, 2012, Steve Kroft interviewed Valukas on the popular CBS show, 60 Minutes. The following clip from the interview is a CBS teaser or advertisement for the show.
In the short clip, Valukas says the only reason for Lehman Brothers to engage in Repo 105 transactions was to impact the leverage numbers on the company’s balance sheet.
The entire 60 Minutes segment, “The Case Against Lehman Brothers,” can be viewed by clicking on the following link:
The transcript of the segment is available at the 60 Minutes site.
A key exchange between Kroft and Valukas is,
Steve Kroft: Did these quarterly reports represent to investors a fair, accurate picture of the company’s financial condition?
Anton Valukas: In our opinion, they did not.
Steve Kroft: And isn’t that against the law?
Anton Valukas: It certainly, in our opinion, was against civil law if you will. There were colorable claims that this was a fraud, yes.
By colorable claims Valukus means there is sufficient evidence for the Justice Department or the Securities and Exchange Commission to bring charges against top Lehman executives, including CEO Richard Fuld, for overseeing and certifying misleading financial statements, and against Lehman’s accountant, Ernst and Young, for failing to challenge Lehman’s numbers.
Anton Valukas: They’d fudged the numbers.
At the end of the segment, Kroft speculates that the reason the SEC has not filed any suits is because it does not have a winnable case, given that it had personnel on premise3s at Lehman, and these personnel were aware that Repo transactions were going on. Valukis wonders if the personnel had the expertise to fully comprehend what was going on.
Debit and credit- – David Albrecht