NATIONAL REVIEW ONLINE
November 9, 2013 4:00 AM
Obama’s Massive Fraud
If he were a CEO in the private sector, he’d be prosecuted for such deception.
By Andrew C. McCarthy
‘If you like your health-care plan, you will be able to keep your health-care plan. Period.” How serious was this lie, repeated by Barack Obama with such beguiling regularity? Well, how would the Justice Department be dealing with it if it had been uttered by, say, the president of an insurance company rather than the president of the United States?
Fraud is a serious federal felony, usually punishable by up to 20 years’ imprisonment — with every repetition of a fraudulent communication chargeable as a separate crime. In computing sentences, federal sentencing guidelines factor in such considerations as the dollar value of the fraud, the number of victims, and the degree to which the offender’s treachery breaches any special fiduciary duties he owes. Cases of multi-million-dollar corporate frauds — to say nothing of multi-billion-dollar, Bernie Madoff–level scams that nevertheless pale beside Obamacare’s dimensions — often result in terms amounting to decades in the slammer.
Justice Department guidelines, set forth in the U.S. Attorneys Manual, recommend prosecution for fraud in situations involving “any scheme which in its nature is directed to defrauding a class of persons, or the general public, with a substantial pattern of conduct.” So, for example, if a schemer were intentionally to deceive all Americans, or a class of Americans (e.g., people who had health insurance purchased on the individual market), by repeating numerous times — over the airwaves, in mailings, and in electronic announcements — an assertion the schemer knew to be false and misleading, that would constitute an actionable fraud — particularly if the statements induced the victims to take action to their detriment, or lulled the victims into a false sense of security.
For a fraud prosecution to be valid, the fraudulent scheme need not have been successful. Nor is there any requirement that the schemer enrich himself personally. The prosecution must simply prove that some harm to the victim was contemplated by the schemer. If the victim actually was harmed, that is usually the best evidence that harm was what the schemer intended.
To be more illustrative, let’s say our schemer is the president of a health-insurance company, and that it was clearly foreseeable to him that his company’s clients would lose their current insurance plans if the company adopted his proposal of a complex new health-insurance framework. In fact, let’s assume that the schemer not only had analyses showing that clients would lose their plans but that he also had a history of openly favoring a “single-payer” insurance system — i.e., an unconcealed desire to move everyone from private to government-managed insurance arrangements.
Now, suppose the schemer nevertheless vowed to the company’s clients, to whom he bore fiduciary obligations, that they needn’t fear his proposed new insurance framework; under it, he promised time after time after time, if they liked their current plans, they would be able to keep those plans. And let’s say that, on the basis of that repeated vow, the clients supported the schemer’s reappointment as president and his proposed new framework. On these facts, the clients’ subsequent loss of their current insurance plans helps prove the schemer’s fraudulent intent. The schemer has committed not just a fraud but a carefully thought-out, fully successful fraud, replete with suffering victims.
The concept of fraudulent deception, like the concept of perjury and other forms of actionable false statement, often entails not only affirmative lies — e.g., the general manager who tells a baseball player, “I will not trade you if you sign the contract,” and then proceeds to trade the player after he signs; the concept also commonly involves the omission of material facts (what’s called “material omission”) — e.g., the general manager who tells the player, “I will not trade you if you sign the contract,” under circumstances where, unbeknownst to the player, the general manager has already made arrangements to trade him.
A material omission is the intentional failure to state any fact the communication of which would be necessary to ensure that statements already made are not misleading. The concept of material omission is a staple of fraud prosecutions. A good example is the Obama Justice Department’s ongoing and transparently political effort to portray financial institutions — as opposed to government policies — as the proximate cause of the mortgage-industry collapse that resulted in our national economic meltdown.
Attorney General Eric Holder’s minions have recently sued Bank of America and UBS. The complaints filed in court by prosecutors allege that these financial institutions defrauded investors in the sale of mortgage-backed securities by failing to disclose important facts about the underlying mortgages. Indeed, prosecutors asserted that financial institutions’ statements about these securities were both lies and, even where arguably true, material omissions. That’s because the statements withheld from investors the fact that the institutions well knew, based on internal analyses, that many of the mortgages backing the securities would go into default.
Recall that President Obama knew three years ago, based on internal analyses, that because of his administration’s own regulation-writing, millions of Americans would lose the health plans he nonetheless continued to promise they could keep. The president hid the data . . . just as did those financial institutions that his trusty attorney general has sued. Comparatively speaking, though, the financial institutions defrauded significantly fewer victims. Thus it is noteworthy that Holder is now demanding that the institutions pay hundreds of millions of dollars for their fraudulent misrepresentations.
Even that is not good enough for some prominent Democrats. Senator Carl Levin, for example, blasted the Justice Department for not pursuing a criminal fraud case against Goldman Sachs. Goldman had not made false statements in marketing the securities in dispute; but it did fail to disclose that it had shorted the same securities — i.e., it was quietly betting against the same securities it was selling. (I wrote sympathetically toward Goldman here, and Nicole Gelinas posted a characteristically smart rebuttal here.) Senator Levin railed at Holder’s decision not to file criminal charges, portraying it as an abdication in the face of behavior that was “deceptive and immoral.” Of course, if you want to talk about “deceptive and immoral,” Obama was snowing ordinary Americans, not savvy investors; and he was not just betting against the insurance plans he was promising to preserve; he was personally working to wipe them out.
The Justice Department is notoriously aggressive when it comes to material omissions by public corporations. Any public statement — not just in a required SEC filing but in any public context — may be deemed actionable if its purpose is to deceive the general public about a company’s condition. For example, as I’ve noted before, the Justice Department indicted Martha Stewart for fraud over press statements that did not disclose damaging information about her company.
Ms. Stewart, naturally, was fearful that truthful statements would send the stock price plummeting. Obama, by comparison, was not lying merely to prevent a company from losing value. His fraud was, first, to induce passage of a plan designed gradually to destroy the private health-insurance market — a plan that barely passed and never would have been enacted if he’d been honest. And later, his fraud was to procure his reelection and the guaranteed implementation of Obamacare; had he been honest, he would have been defeated and Obamacare forestalled.
Barack Obama is guilty of fraud — serial fraud — that is orders of magnitude more serious than frauds the Justice Department routinely prosecutes, and that courts punish harshly. The victims will be out billions of dollars, quite apart from other anxiety and disruption that will befall them.
The president will not be prosecuted, of course, but that is immaterial. As discussed here before, the remedy for profound presidential corruption is political, not legal. It is impeachment and removal. “High crimes and misdemeanors” — the Constitution’s predicate for impeachment — need not be indictable offenses under the criminal code. “They relate chiefly,” Hamilton explained in Federalist No. 65, “to injuries done immediately to the society itself.” They involve scandalous breaches of the public trust by officials in whom solemn fiduciary duties are reposed — like a president who looks Americans in the eye and declares, repeatedly, that they can keep their health insurance plans . . . even as he studiously orchestrates the regulatory termination of those plans; even as he shifts blame to the insurance companies for his malfeasance — just as he shifted blame to a hapless video producer for his shocking dereliction of duty during the Benghazi massacre.
It is highly unlikely that Barack Obama will ever be impeached. It is certain that he will never again be trusted. Republicans and sensible Democrats take heed: The nation may not have the stomach to remove a charlatan, but the nation knows he is a charlatan. The American people will not think twice about taking out their frustration and mounting anger on those who collaborate in his schemes.