The Divide: American Injustice in the Age of the Wealth Gap

by Matt Taibbi

  What this means is that the entire business model for something like Chase’s credit card business is not much more than a gigantic welfare fraud scheme. These companies borrow hundreds of billions of dollars from the Fed at rock-bottom rates, then turn around and lend it out to the world at 5, 10, 15, 20 percent, as credit cards and mortgages, boat loans and aircraft loans, and so on. If you pay it back, great, it’s a 500 percent or 1,000 percent or 4,000 percent profit for the bank. If you don’t pay it back, the company can put your name in the hopper to be sued. A $5,000 debt on a credit card for the now-defunct Circuit City, which was actually a Chase card, became a $13,000 or $14,000 debt by the time the bank finished applying fees and penalties. Just like a welfare application, you have to read the fine print. “They make more on lawsuits than they make on credit interest,” says Linda.

  Along the way, the bank gets to grease its accomplices with the fruits of that cheap government cash. You might wonder how it is that banks manage to get overworked sheriff’s departments in high-crime areas to actually detail deputies to evacuate foreclosed-upon houses. The answer is that every single one of those hundreds of thousands of credit judgments—be they foreclosures or credit card accounts—contains a line item with a court-mandated collection fee or other such payout to local law enforcement. When I went prospecting for robo-signed affidavits in the New Jersey court system, I found sheriff’s fees of five hundred, eight hundred, a thousand dollars in each and every judgment. In this way, the banks pay a kind of kickback to local police.

  In recent years, Chase has been caught in numerous wide-ranging systematic frauds, the Almonte incident being just one. In 2011 it paid a $211 million fine for rigging the bids for municipal bond offerings (yet another variety of fraud against the state). It agreed to a $722 million settlement (much of this “fine” was actually forgiveness of Chase-imposed fees) for its part in the Jefferson County, Alabama, disaster, in which officials in the city of Birmingham were literally bribed (with watches and new suits, among other things) into signing off on a deadly financing deal with the bank. Remember those letters involving service members that Linda said went into the shredder? Well, Chase ended up having to pay $27 million for defrauding active-duty military men and women by systematically overcharging them for their mortgages.

  Yet despite all this, Chase in 2011 surged to the top spot in the list of American banks winning government bond business, managing $35 billion in bond sales that year. It’s not just that there’s no criminal penalty for fraud on such a grand scale; your business doesn’t even have to suffer. You can defraud the state over and over again, and the state will still be happy to do business with you. You can still issue municipal bonds, and you can still be one of twenty-one banks given the privilege of being primary dealers of government debt.

  The crucial thing to understand is that if businesses like consumer credit cards are going to give cards away in the mail to everyone with a pulse, then the process almost by definition has to involve fraud. In a mass society where obtaining credit is as easy as it is, there’s probably no way to efficiently collect on delinquent accounts by writing real affidavits, filing legitimate, error-free lawsuits, and serving legitimate summonses in each and every individual case. Without the shortcuts, it doesn’t work. So techniques like robo-signing and sewer service are essential to the profitability of the business. Plenty of people—consumers and merchants both—are probably glad that so much credit is available, but they don’t realize that systematic fraud is part of what makes it available.

  Legally, there’s absolutely no difference between a woman on welfare who falsely declares that her boyfriend no longer lives in the home and a bank that uses a robo-signer to cook up a document swearing that he has kept regular records of your credit card account. But morally and politically, they’re worlds apart. When the state brings a fraud case against a welfare mom, it brings it with disgust, with rage, because in addition to committing the legal crime, she’s committed the political crime of being needy and an eyesore.

  Banks commit the legal crime of fraud wholesale; they do so out in the open, have entire departments committed to it, and have employees who’ve spent years literally doing nothing but commit, over and over again, the same legal crime that some welfare mothers go to jail for doing once. But they’re not charged, because there’s no political crime. The system is not disgusted by the organized, mechanized search for profit. It’s more like it’s impressed by it. And even when circumstances force the government to take notice, they act like Marcia Clark or Chris Darden in summation, apologizing for having the temerity to point a finger at lovable ol’ O.J.

  On the morning of March 23, 2011, a young white saxophonist and music teacher named Patrick Jewell woke up in Brooklyn in a good mood.

  Everything in his life was moving in the right direction. A few months earlier, he’d met a girl and fallen in love. Just that morning, as per their brand-new routine, he’d made her breakfast and walked her from her Brooklyn apartment to the subway stop on Marcy Avenue, where she left every morning to go to work in Manhattan. He watched her walk up the stairs to the elevated subway platform, leaned up against the stairs on street level, carefully rolled a cigarette of American Spirit pouch tobacco (in New York, where cigarette taxes are through the roof, rolling your own saves about four dollars a pack), and smiled. Life was good.

  Patrick was born in the heart of Bible-belt Kentucky—two hours south of Lexington. “In a dry county surrounded by eight other dry counties,” he says. He’d come to New York a few years before from Los Angeles, where he’d gotten a master’s degree in jazz studies at the California Institute of the Arts.

  Slightly built, bearded, likely to be dressed in a porkpie hat and clothes that are mellow and vintage, Patrick looks like what he is, a musical ascetic and a gentle soul. He’s a vegetarian who once went on a five-day seminar with the Dalai Lama to study compassionate living, a person who does cancer walks and studies tai chi and meditation. He volunteers at a homeless shelter. He describes his outlook on life as “Buddhish.” Staying in Southern California probably would have suited him just fine.

  But after finishing school in L.A. and beginning a career taking on students to put food on the table, things quickly got tight. The 2008 financial crash forced the move. “People there don’t stop driving BMWs and living in big houses when they lose money,” he says, laughing. “What they do is stop sending their kids to music lessons.”

  So in the summer of 2009, when he started to become even more broke than usual, he and about twenty of his musician friends packed up and made an exodus to New York, the city of Birdland and the Blue Note, to try to make it there.

  They didn’t have a lot of money, so they found a house in the one place they could afford: Bedford-Stuyvesant, living just a few avenues away from the war zone where Andrew Brown had lived his whole life. A racially mixed mobile commune of California musicians wasn’t the usual resident profile for Bed-Stuy, but they made it work. He would eventually move south to the less-imposing Lefferts Gardens area of Brooklyn, but some of his friends stayed in and around the old house in Bed-Stuy. One night he was back in that neighborhood when he met a girl who had moved in with some of his old friends.

  Her name was Lauren, and she was about ten years younger than he was (Patrick was thirty-two by then), but they took to each other immediately. They started making plans to live together. All that was missing was a steady job, and by March 2011, even that was coming around. He had just gotten a gig teaching nine- and ten-year-olds at after-school band practices for the Brooklyn Conservatory of Music.

  Patrick had no formal background in teaching so many different instruments. He’d spent his whole college and postgrad career studying to be a sax performer. But he’d learned how to do it in California the hard way. “Basically, I had to take an old trumpet home and kind of had to learn ‘Mary Had a Little Lamb,’ man,” he says.

  He was performing occasionally at some clubs in Manhattan, he was work
ing on an album, he had a new job, and he didn’t know it yet, but he’d just met the girl he was going to marry someday. Life was good. He had no reason not to stop and take it all in on the steps of the Marcy Avenue subway station over a rolled cigarette, early on the morning of March 23, 2011.

  Suddenly, someone grabbed him by the arm.

  “He was a short, stocky Hispanic guy, dressed in a black leather jacket, boots, and jeans,” Patrick says. “And I think he had a black fleece pullover.”

  The man grabbed him and dragged him toward a brick wall.

  “He said, ‘Come here, I want to talk to you,’ ” he recalls. Patrick shakes his head as he retells the story. “And I’m like a meek guy, and he’s a big, football-player-type guy.”

  The man was looking back and forth as he pushed Patrick up against a wall. He leaned up close to Patrick’s face and yelled at him: “What the fuck do you think you’re doing here?”

  Patrick is not a New Yorker. He had no experience here. He’d obviously been warned that he was hanging out in a dangerous neighborhood, but this was broad daylight, the morning, next to a subway station entrance.

  “What?” Patrick said in response. “What do you mean?”

  “What the fuck do you think you’re doing here?” the man repeated.

  Then, “out of nowhere,” Patrick recounts, two more men arrived. They were both stocky guys, wearing the same kind of getup: boots, jeans, leather jackets. They surrounded Patrick.

  By this time, Patrick was convinced he was being robbed. He reached to his pocket, to get out whatever money he had. “Look,” he said, the panic in his voice rising, “I’ve got about ten dollars—”

  The first man swatted Patrick’s hand away. “Don’t you put your fucking hand in your pocket!” he screamed, pushing Patrick up against the wall really hard.

  Now Patrick’s mind was racing. If they didn’t want money, what did they want? “Was I just about to get beaten up, or what?” he says. “I didn’t know.” He quickly looked around and saw a couple of people on the street. Plus, across the street, there was a brand-new apartment building, and he could see through the glass of the first floor a bunch of Hasidic women and their children.

  “Help me!” Patrick screamed. “Help! Help!”

  Nobody helped.

  He screamed toward the Hasidic women in particular: Help me, call the cops!

  Nothing.

  At this point, one of the three men pulled out a set of handcuffs. Patrick involuntarily flashed to a movie he had just seen days before, the absurd Liam Neeson B thriller Taken, and all he could think about was the strange plot about a young person being kidnapped and sold overseas into white slavery. He also suddenly remembered being on tour in Brazil and hearing stories about people being kidnapped for their organs.

  “To me, something bad was going to happen,” he says. “I thought a van would pull up, someone would throw me in it, and nobody would ever know what happened to me. My kidneys will be on eBay.”

  Patrick gamely tried to flee. The three men chased after him and knocked him to the ground. One of them reached under his shirt and pulled out a “badge,” but the badge was turned around, so all Patrick could see was the clasp pin on the reverse side of a piece of metal, a flimsy thing that made the whole contraption look homemade.

  “To me, it looked like a safety pin,” Patrick says. “I thought, ‘That shit’s fake.’ And I thought, ‘If these guys have a fake badge, then they’re some kind of professionals.’ So I got up and tried to run away.”

  They tackled him again and began slamming his head against the sidewalk. They hit him repeatedly, and blood started spouting from his head.

  Patrick managed to get up once or twice, preventing them from getting the second hand in cuffs. They had cuffed one hand by then. But finally he was tackled for the last time and put in a headlock by his first attacker. He heard the man say, “Don’t resist, it’ll be bad.” Then Patrick blacked out, or semi–blacked out.

  His next memory is sitting on the street, up against a wall, Indian style, his hands cuffed. And he saw a police car coming up. A uniformed cop popped out of the car, came up to him. Patrick had been crying, out of terror before, but now out of relief.

  “Oh, my God,” he said, almost in a begging tone. “Thank God you’re here, thank God you’re here. Help me! These guys, they were acting like cops—”

  The uniform cop leaned down to Patrick.

  “Shut the fuck up,” he said.

  Patrick nearly passed out in shock. It was the first time it had ever even occurred to him that his attackers might actually have been police. Now he realized, with a cold shiver, that he was in really serious trouble, though he didn’t know why.

  The uniformed officer looked at the three attackers—undercover officers, Patrick now realized—and said, “You guys got this?”

  Yeah, we got this, they said.

  The uniform walked down the street, leaving Patrick with his original attackers. From there, they started in on him. They picked him up, took his hat off, threw the hat on the ground, then started searching his pockets, tossing each item into the hat. They found the pouch of rolling tobacco. Then they looked on the ground and found the rolled cigarette Patrick had been smoking and pulled it apart—all tobacco.

  Undercover #1: “This wasn’t it, right?”

  Undercover #2: “No, that wasn’t it.”

  They threw the cigarette on the ground. Then the second man made a show of walking over toward the subway station entrance, reaching down to the space between the station entrance and the street, and “picking up” a third object. In fact, Patrick saw, he took the thing out of his pocket, rather than picking it up off the street.

  He tossed it into the hat.

  The uniform came back from down the street. Patrick shouted at him, “They’re trying to frame me! Do something!”

  The uniform looked back at him with expressionless eyes. “Why don’t you try to be a fucking man?” he said.

  Patrick squirmed over toward the hat close enough to see that there was a sort of pill bottle in it now, with something inside. It would later turn out that the object inside the bottle was an empty vial of what had once been crack.

  Patrick would spend much of the next years turning over the absurdity of the situation in his head. Who carries around an empty crack vial? “Was I going to get free refills?” he asks now.

  The next thing he knew, a marked police van showed up. They threw him in there, handcuffed tightly, and as the van pulled away, Patrick started to lose the feeling in his fingers.

  A new sort of panic came over him. He was a professional saxophonist; neurological damage to his fingers could ruin his life permanently. He started kicking and screaming.

  Finally the cop driving the van stopped, came around to the back, and opened the door. “I’m going to open these cuffs up a little bit,” he said. “But if you yell one more time, I’m going to put you in the hospital.”

  In the van, the undercovers started going through Patrick’s phone. They found texts from Lauren. They started asking questions. “What are you doing down here?” they asked.

  Patrick’s father, a country lawyer in Kentucky, would later admonish his son for opening his mouth at all during this sequence.

  But Patrick answered, “My girl lives down here.”

  “Oh, yeah?” said one, almost accusatorily. “What, are you dating a sister?”

  “No,” Patrick said. “She just moved here from Michigan.…”

  “Really?” said one of them. “What’s her address? We’ll go check on her sometime, if you like. We’ll go check and see how she’s doing.”

  Patrick froze. “No. That’s okay, I’m fine.”

  They took him back to a precinct house and threw him into a cell, where he waited by himself. He yelled: What’s going on?

  Finally, the first undercover, the man who attacked him, came into the cell and started talking. “I know what you’re doing,” he said. “You’re screaming
so you can get out of this. But we got you.”

  Patrick, genuinely confused, looked back. “Man, what did you get me for? I have no idea what I’ve been arrested for. Please, just tell me what I’ve been arrested for.”

  “Buddy,” he said, “we’ve got you for everything.”

  Everything?

  “We got you for crack. We got you for weed. And you reached for my belt. That’s a felony. You’re going to jail for three to six.”

  He left Patrick to stew on that for a few more hours. Finally they transferred him to central booking.

  “It was like a truck stop bathroom, with forty of your closest friends,” he says. He stayed there for twenty-four hours, during which time he was fingerprinted and photographed. A million things went through his mind. He spoke to his father by phone, who got him a private lawyer, who in turn got him arraigned and out of there.

  During the whole time he was in jail, everyone Patrick spoke to—police, other prisoners, even his own lawyer—said exactly the same thing to him. They told him not to worry, it’d be fine, but that they just “had to run him through the system.”

  Nobody so much as batted an eyelid about what had happened. This was just a thing that went on—he just had to go through the motions now and not get emotional about it. In fact, the number-one reaction he got from everyone he appealed to during this time was annoyance that he was making a big deal about it. Take your charge, take your medicine, and shut the hell up.