Banking Law

This 'unassuming' career prosecutor developed the theory used to sue Wall Street banks

Justice Department officials are crediting a federal prosecutor in Los Angeles for developing the theory used to file civil suits against banks for practices blamed for the mortgage meltdown.

Leo “Lee” Weidman is “an unassuming 69-year-old career prosecutor, toiling away in anonymity 3,000 miles from Washington,” but his idea of using a once-obscure federal law against banks has been embraced by the Justice Department, the New York Times DealBook blog reports. The law—the Financial Institutions Reform, Recovery, and Enforcement Act of 1989—also helped the Justice Department reach a reported $13 billion tentative settlement with JPMorgan Chase.

The law, known as FIRREA, creates civil penalties for criminal violations such as wire or mail fraud, yet it does not require proof beyond reasonable doubt as in criminal cases. A preponderance of the evidence satisfies the statute. The law also gives prosecutors a generous 10-year statute of limitations.

Some defense lawyers argue the law is misused, but at least four judges have allowed government cases based on FIRREA to proceed.

Weidman has an undergraduate degree in physics and a law degree from Duquesne. He has been a federal prosecutor since his graduation from law school.

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