Attorney General Kamala Harris has joined the growing pile-on against Wells Fargo’s improper business dealings.

“California’s attorney general is conducting a criminal investigation into whether employees at San Francisco-based Wells Fargo bank stole customers’ identities in the sales practices scandal that rocked the bank and cost its CEO his job, newly released documents show,” the Associated Press reported. “A search warrant and affidavit released [Oct. 19] by the state Department of Justice show that agents sought evidence related to allegations that bank employees created up to 2 million bank and credit card accounts without customers’ approval in order to meet sales goals.”

The move reinforced both Harris’s bid for a national reputation as the presumptive successor to outgoing Sen. Barbara Boxer and the nationwide push for prosecution around Wells Fargo’s practices. “Harris, a Democrat who is running for U.S. Senate, joins a growing list of law enforcement officials looking into the company since Sept. 8, when regulators disclosed in a settlement that the bank fired 5,300 employees for allegedly opening more than 2 million deposit or credit card accounts since 2011 without customers’ knowledge or consent,” as the San Francisco Chronicle noted.

“Harris’ office is asking the San Francisco bank to provide wide-ranging customer account and other information to see whether it violated Sections 529 and 530.5 of the California penal code. The former makes it a crime to falsely impersonate someone, and the latter makes it a crime to use personal identifying information of another person for any unlawful purpose, including to obtain or attempt to obtain credit, goods, services, real property or medical information without that person’s consent. Convictions under both sections are punishable by a fine and/or imprisonment up to one year.” 

From bad to worse

With Harris as an adversary, Wells Fargo has faced a snowballing problem well in excess of a public relations challenge. “The investigation by Attorney General Kamala Harris’ office indicates Wells Fargo’s woes have moved beyond a tarnished image, consumer outrage and lost business opportunities, analysts said,” according to the San Jose Mercury News. “Ohio suspended Wells Fargo from doing business with state agencies and excluded the bank from participating in any state bond offerings. The announcement followed similar moves from California and Illinois and the cities of Seattle and Chicago.”

In fact, over less than two months, “15 investigations have been launched into Wells’ phony accounts scandal, including probes by the Justice Department, the Labor Department and the Office of the Comptroller of the Currency,” Kate Berry noted at Bank Investment Consultant. “Fitch Ratings downgraded Wells’ credit rating to negative, the Better Business Bureau cut off its accreditation, and more states suspended the bank from municipal bond underwriting. Top leaders of the bank’s hometown of San Francisco even went so far as to ask if the OCC should revoke Wells’ 160-year-old bank charter.”

California’s probe has already laid bare unflattering and worrisome customer stories about the way Wells Fargo did business. “State investigators interviewed four Southern California residents as part of their probe into the bank’s practices,” the Mercury News added. “Among the customers’ statements: Wells Fargo employees opened a $10,000 line of credit without permission for one person; set up multiple life insurance policies for another; and established unauthorized checking accounts for children. A 74-year-old woman said the bank opened multiple credit or debit card accounts in her name without her knowledge.”

Signaling reform

The bank has made moves in recent days to change the internal process that appears to have encouraged or allowed abuses. “Wells Fargo is changing how it refers to performance meetings for some wealth and investment management employees following the bank’s settlement last month over its retail sales practices,” the Charlotte Observer reported, citing internal communications obtained by the paper. “The communications suggest Wells’ efforts to overhaul its sales process might extend beyond its retail banking operations.”

On Monday, Brown nominated Leondra R. Kruger, a Yale Law School graduate, to fill a vacancy created by the retirement of Associate Justice Joyce L. Kennard, who left the court in April. If confirmed by the Commission on Judicial Appointments, Kruger would be Brown’s third appointee to the state’s highest court in as many years.

“Leondra Kruger is a distinguished lawyer and uncommon student of the law,” Brown said in a press release announcing the appointment. “She has won the respect of eminent jurists, scholars and practitioners alike.”

Born and raised in the Los Angeles area, Kruger has spent the past eight years working in various positions at the U.S. Department of Justice. Since 2013, Kruger has served as a Deputy Assistant Attorney General at the department’s Office of Legal Counsel, where she has earned high praise from the federal government’s top lawyer.

“Leondra is an extraordinarily talented attorney who has been a leader within the Justice Department’s Office of Legal Counsel and Office of the Solicitor General,” U.S. Attorney General Eric H. Holder Jr. said in a written statement on Kruger’s nomination. “Her remarkable judgment, tireless work ethic, and dedication to the highest ideals of public service have marked her as one of the foremost leaders of her profession.”

Brown remaking state Supreme Court

When Brown took office for his second stint as governor, all but one of the seven state Supreme Court justices were appointed by Republican governors. With Kruger’s confirmation, Democrats now would hold three seats on the court. One more Brown appointment over the his last term in office would give Democrats a four-member majority.

Earlier this year, Brown nominated Mariano-Florentino Cuellar, a 41-year-old Stanford law professor, to fill the vacancy created by Justice Marvin Baxter. In 2011, Brown tapped UC Berkeley law professor Goodwin Liu, who had been denied a seat on the 9th U.S. Circuit Court of Appeals.

If successfully confirmed, Kruger would be Brown’s 10th appointment to the state Supreme Court — more than any other governor in California’s history, according to CalWonk’s Phillip Ung. Kruger would be the only African American currently on the California Supreme Court.

“I am deeply honored by Governor Brown’s nomination,” Kruger said in a press release. “I look forward to returning home to California and, if confirmed, serving the people of California on our state’s highest court.”

Democratic lawmakers were quick to embrace Kruger’s nomination to the position, which pays $225,342 per year.

“This is another outstanding appointment Governor Brown has made to the California Supreme Court,” Assembly Speaker Toni Atkins, D-San Diego, said in a prepared statement. “I look forward to Ms. Kruger’s voice on the court as all three branches of our government work to ensure justice for all Californians.”

Kruger’s conflict with religious groups

The choice of Kruger is likely to draw the ire of religious groups that have battled with her over First Amendment rights. While at the Solicitor General’s office, Kruger represented the Obama administration in 12 cases before the U.S. Supreme Court, including Hosanna-Tabor Evangelical Lutheran Church and School vs. EEOC.

In Hosanna, Kruger argued that federal discrimination laws should be applied to religious organizations. Courts have long recognized a ministerial exception, which exempts religious institutions from anti-discrimination laws in hiring practices. Several justices openly scoffed at Kruger’s arguments to overturn the precedent.

“That’s extraordinary. That’s extraordinary,” Justice Antonin Scalia said in one exchange with Kruger during oral arguments. “We’re talking here about the Free Exercise Clause and about the Establishment Clause, and you say they have no special application.”

A unanimous Supreme Court ultimately upheld the school’s First Amendment right to exercise its religious beliefs.

“The interest of society in the enforcement of employment discrimination statutes is undoubtedly important,” Chief Justice John G. Roberts Jr. wrote in the court’s opinion. “But so too is the interest of religious groups in choosing who will preach their beliefs, teach their faith, and carry out their mission.”

Kruger quickly rose through Justice Department ranks

Kruger, who clerked for Supreme Court Justice John Paul Stevens from 2003 to 2004, worked as an associate at Wilmer, Cutler, Pickering, Hale and Dorr LLP from 2004 to 2006. While teaching at the University of Chicago Law School in 2007, Kruger was tapped to join the Bush administration’s Justice Department, where she quickly rose through the ranks.

“Get used to this name, Leondra Kruger,” the Wall Street Journal’s legal blog advised in 2010. “Say it again: Leondra Kruger. It’s a name in the world of law that you’re likely going to be hearing for years to come.”

At that time, Kruger was promoted to principal deputy solicitor general, a position that is considered the “political deputy” under the solicitor general. A prominent legal blog considered the appointment under Acting U.S. Solicitor General Neal Katyal “a surprise.” But, Katyal was impressed by Kruger’s legal expertise.

“Leondra Kruger is perhaps the most outstanding lawyer in America right now under the age of 40,” Katyal said of Kruger’s appointment to the California Supreme Court. “She is known for meticulous preparation before her arguments in the United States Supreme Court, her absolute dedication to candor and her unwavering commitment to fairness.”

In 2011, Kruger was honored by the National Law Journal as one of its “Minority 40 Under 40.” She was admitted to the State Bar of California in 2002, according to bar records, but is currently inactive.

Kruger must be confirmed by the Commission on Judicial Appointments, which consists of Chief Justice Tani Cantil-Sakauye, Attorney General Kamala D. Harris and senior presiding justice of the state Court of Appeal Joan Dempsey Klein.

If Kruger is confirmed, she would face a statewide confirmation vote in the 2016 general election.

Well, that didn’t take long. Multiple news outlets are reporting that the FBI and/or the U.S. Justice Department is looking at a San Diego scandal in which first-year Mayor Bob Filner’s administration conditioned a permit for a project on the developer’s gift of $100,000 to two of Filner’s pet causes. The U-T San Diego has details:

“Federal agents are asking questions about a $100,000 donation to the city made by a developer seeking San Diego Mayor Bob Filner’s approval for revisions to a project in Kearny Mesa.

“FBI officials visited more than one city official this week inquiring about the $100,000 in checks, which Filner said last week he returned to the developer, Sunroad Centrum Partners.

“The money was to go to two Filner pet projects, a veterans memorial in Ocean Beach and a daylong bicycling event. According to a voice mail obtained by U-T Watchdog last week, the developer made a connection between the donations and Filner’s support of an easement for the project at Kearny Villa Road and Lightwave Avenue.”

Filner’s Sgt. Schultz defense: I know nothing

But the mayor’s defense is that this was all news to him.

“On Friday, Filner told reporters he was unaware that a top-level administrator in his office had accepted the contribution as a consideration for the mayor’s support of the project changes. Filner said he thought it was just a good-faith gesture.

“’I thought they were offering a voluntary donation,’ Filner told reporters.

“The official, deputy chief of staff Allen Jones, is no longer with the city, over unrelated disagreements over Filner’s policies and management style.

“Jones [told the U-T] after Filner’s news conference that the mayor knew full well that the payment was given in consideration for approval of changes to a Kearny Mesa project. Jones said he had recommended the money go to parks in Kearny Mesa and did not know how or why the money changed purposes.”

Robin Hood shtick won’t shield mayor if his testimony is false

Will this scandal bring down Filner? Normally, I’d say no way. His Robin Hood shtick — he’s just pushing/prodding/forcing the rich to do what they should anyways — plays well with a lot of people. It’s especially potent in San Diego — a city where most insiders, including some Republicans, believe that downtown GOP-allied business interests have long had more influence over how City Hall works than one would expect, given the clear dominance of Democrats in voter registration.

But will Filner’s belligerent belief that the rules don’t apply to him come back to haunt him in the federal probe?

The chances seem unusually high. If, under oath, Filner continues to deny awareness of the shady deal with Sunroad, he could be in a world of trouble. Literally no one I have talked to in the five days since the mayor denied knowing about the shakedown believes Filner is telling the truth. It’s not just that he is a “notorious micromanager,” in the words of the Voice of San Diego. It’s that no one in his administration makes a big decision without his OK because they know that if it goes wrong — or even if it hits some minor speed bumps — they will be personally villified. It’s the Filner way.

So get ready for a stormy ride. We’ll see a few weeks of headlines that focus on the fact that the U.S. attorney for the San Diego region should recuse herself because of her past issues with Filner.

‘You don’t get free things’ comments hard to explain away

But sooner or later, Filner will be deposed under oath. And if he says that his aide engaged in a classic Filner maneuver — bullying someone without any leverage or power to stand up for themselves — without his knowledge, well, that could produce a political paroxysm in San Diego.

Last month, when the scandal broke, in an interview with 10 News San Diego, the mayor basically 99 percent admitted the Sunroad permit was a pay-for-play situation:

“When Filner was asked whether he was extorting money from developers, this is what he said: ‘That’s a ridiculous word. What we’re trying to do is make sure that people that get things from the city understand that they also have to give things back. You don’t get free things.'”

So it seems to me that the Sgt. Schultz act will be a hard sell with federal prosecutors. We shall see. But after Filner’s seven months of insanity at San Diego City Hall, what’s happened in recent days sure feels like karma.

“You don’t get free things.” Wow.

By Katy Grimes

The Associated Press found itself in an interesting juxtaposition yesterday when it had to report that the Obama Justice Department secretly obtained two months of AP’s own employees’ phone records.

In what can only be called strange, the Obama Justice Department has been secretly tapping the phone lines for 100 reporters and editors of the Associated Press, according to news reports just released yesterday.

This is a direct attack on the freedom of the press. Ironically however, this is the same press which has been in-the-bag for candidate, and now President Obama.

Also ironically, while the Patriot Act was being rammed through Congress, the press sat on their hands and did nothing. Now they are being spied on, ostensibly under the guise of the Patriot Act and national security.

According to the Associated Press, general phone lines for AP office numbers in New York, Washington and Hartford, Conn., and for the main number for the AP in the House of Representatives press gallery, were all tapped, according to attorneys for the AP.

The Justice Department, run by Attorney General Eric Holder, obtained two months of telephone records of reporters and editors for The Associated Press in what the news cooperative’s top executive called a “massive and unprecedented intrusion” into how news organizations gather the news.

“Chief Executive Officer Gary Pruitt said the government sought and obtained information far beyond anything that could be justified by any specific investigation,” the AP reported. “He demanded the return of the phone records and destruction of all copies.”

“There can be no possible justification for such an overbroad collection of the telephone communications of The Associated Press and its reporters. These records potentially reveal communications with confidential sources across all of the newsgathering activities undertaken by the AP during a two-month period, provide a road map to AP’s newsgathering operations and disclose information about AP’s activities and operations that the government has no conceivable right to know,” Pruitt said.

This is going to get interesting. The IRS has been targeting conservatives and pro-Israel groups, and no one has been fired. Now the same administration is attacking freedom of the press and spying on the AP. What Constitutional right will be violated next? And what are people willing to do about it?

On the Jewish blog, Boker tov, a reader left a thought-provoking comment: “The sheer stupidity of the Obama mob is beyond belief. This really is the gang that cannot shoot straight. Why in the world would they pull this caper on — of all the news agencies on the planet — the one news agency that has done probably more than any other to make Obama look like a Great American President? Whatever happened to such sage admonitions as “Don’t bite the hand that feeds you” and ‘Don’t kill the goose that lays golden eggs’? Will this be the straw that breaks the camel’s back? I wouldn’t bet on it; so far, the camel’s back has been as strong as Atlas’s. But if this is the straw that cripples the camel, Obama will have only his own and his henchmen’s stupidity to blame.”

By Joseph Perkins

Is one of every 186 cell phone users a criminal suspect?

One might think so in the wake of the revelation this week, in a congressional report,  that law enforcement requested data last year from Verizon, AT&T, Sprint, T-Mobile and other carriers on the calls, text messages and, perhaps most ominously, location of more  than 1.3 million of the nation’s 234 million cellular customers.

The growing threat to privacy rights posed by increased police use of secret and, in many cases, warrantless cell phone surveillance underscores the importance of legislation, the California Location Privacy Act, that would require law enforcement to secure a search warrant before accessing location information from any electronic device.

The measure, SB 1434, was approved last week by the Assembly Committee on Public Safety, which followed its approval back in May on the Senate floor. Particularly noteworthy is that the bill, authored by Sen. Mark Leno, the San Francisco liberal, won the support of not only his fellow Democrats, but also Republicans.

That may be attributable in part to questions that remain after the U.S. Supreme Court ruled this past January that law enforcement’s secret attachment of a GPS device on a vehicle constitutes a “search” and therefore requires a search warrant; but it left unsettled whether the same ruling applies to GPS location tracking by way of cell phone.

The U.S. Justice Department maintains that the high court’s ruling, United States v. Jones, does not apply to mobile devices “because there is no trespass or physical intrusion on a customer’s cell phone,” thus no need for law enforcement to obtain a warrant before asking wireless carriers to turn over customer data.

State action

Lawmakers in Sacramento see things differently. The majority believe that the constitutional protection against warrantless searches applies not only to cases of trespass or intrusion, but also to secret cell phone surveillance.

And they have codified that in the proposed California Location Privacy Act, which makes it clear to both “government entities” and wireless service providers that a probable cause warrant must be obtained before compromising a cell phone user’s privacy.

The measure would allow exceptions to be made in cases in which a cell phone user has requested emergency services or law enforcement reasonably believes there is immediate danger of death or serious injury to a person or persons.

The one major shortcoming of Leno’s otherwise laudable legislation is that imposes no requirement on cell phone carriers here in California to provide annual reports on the number of law enforcement requests the receive to spy on their cell phone customers.

CTIA-The Wireless Association, a trade group representing the wireless telecommunications industry, sent a letter to Leno this past April opposing such a requirement, arguing that it would “unduly burden wireless providers,” and that it was doubtful that compliance “would best serve wireless customers.”

Yet, the industry already keeps copious records on data requests for purposes of billing law enforcement for those requests. It could easily compile those records into an annual report to the state.

And as to what best serves wireless customers, reporting or not reporting annual law enforcement requests for cell phone records, most of us almost certainly would prefer transparency.

For while we understand that law enforcement needs certain latitude to apprehend criminals, including use of secret cell phone surveillance, safeguards must be in place to ensure that our privacy rights are not routinely trampled upon.