HSBC banker facing US charges nearly gets nod to go home to UK, even as prosecutors complain he might never come back

23 March 2017 12:02pm

3 March 2017. By Richard Vanderford.

A federal judge this week was barely talked down from letting a British HSBC banker fly to the UK on bail ahead of a financial crime trial, even as prosecutors warned that complicated immigration procedures meant they might not be able to get him back. If his pushback spawns a trend, transatlantic prosecutions might be harder to pull off.

Mark Johnson, accused of exploiting his position as HSBC's top exchange trader to enrich the bank at a client's expense, came within minutes of argument of being allowed to return home. He was among the first two individuals charged in a high-profile US Justice Department antitrust division probe of foreign exchange trading.

Johnson would be allowed to leave for England, US District Judge Nicholas Garaufis said at a meeting Thursday with prosecutors and the defense team in New York federal court. He isn't a risk of flight, and he'd put up his home to secure his bail, Garaufis said, conditions that would almost certainly guarantee a US-based defendant the freedom to await trial with his family.

"I think he wants to go back," Garaufis said. "I think I want him to go back."

Garaufis, a white-haired, normally amiable jurist, offered a firebrand response to prosecutors' complaints that they might not be able to convince immigration officers, in theory their colleagues in government, to let Johnson back in.

"Don't they have any lawyers over there?" Garaufis asked. "Are they all running around collecting people and deporting them? Don't they realize that he's agreed to stand trial?"

"Do they care any more over there?" he said.

An entreaty from Scott Dunn, an immigration specialist for the federal prosecutors' office in Brooklyn, convinced Garaufis to back down. Prosecutors get two weeks to try to come up with a solution.

Hearings on bail questions in federal court don't typically involve a judge extemporaneously sermonizing on immigration policy, but a steady hum of US charges against Europe-based bankers could lead to similar clashes. Courts must safeguard defendants' rights, including the right to bail, but prosecutors want to make sure they can actually try those defendants and currently lack a system to get suspected criminals through immigration.

Johnson was arrested at New York's John F. Kennedy International Airport in July. He and an HSBC colleague are accused of secretly trading ahead of a client's $3.5 billion transaction involving pounds sterling, cashing in at the client's expense.

Unlike in a movie-style dash to the airport, though, Johnson apparently wasn't tipped off about charges, and, much less dramatically, was in the process of moving his family to the US for an HSBC job in New York.

He has five young children and a more than $1.5 million home outside London that he's used to secure his bail. His lawyers had hoped he could return home to help his family and in part to celebrate the birthday of his wife, who has in recent months managed the family and household herself.

If Johnson's family lived in Los Angeles instead of London, he would probably be awaiting trial with them. US bail law dating to the 1960s orders judges to let defendants free ahead of trial unless they're dangerous or going to flee.

Prosecutors didn't raise either concern about Johnson Thursday.

Johnson's arrest and charges, though, canceled his work visa and made him ineligible for the relatively trouble-free passage through customs that British citizens normally enjoy. He has been back to the UK once and was able to return using a US Department of Homeland Security-issue permit called a "special public benefit parole," though the permit is normally reserved for witnesses in criminal cases, not defendants.

Three different units within Homeland Security, include US Immigration and Customs Enforcement, are involved in granting an SPBP, along with the FBI.

Prosecutors have argued that Johnson has no apparent right to leave the US while on bail. They've also said repeatedly that they can't guarantee an SPBP document will be issued.

Before agreeing to give the government its two weeks, Garaufis said, in effect, that he didn't care.

"That's their prerogative," he said. "My prerogative is to run this court and trial."

"Why is the government being put in this position?" Dunn asked.

"It's simple," Garaufis said. "Because the government doesn't have a system to prosecute a foreigner for a non-violent crime without forcing him to remain in the United States."

"I find it difficult to run this court by the maybes of what the secretary of Homeland Security and the administration might come up with," he said. "Because there's no structure."

If Johnson were to leave the US and not be allowed back in, the government would likely be forced to abandon its prosecution, a signature case for antitrust enforcers. A defendant has a constitutional right to be present at his trial.

An SPBP is the only way Johnson can get back in, prosecutors said in a letter.

Dunn's pleas, sometimes delivered over Garaufis' efforts to voice his own criticisms, eventually won out. Garaufis first, though, reminded Dunn that "I'm up here" on the bench, and have the final word.

The exchange encapsulates a dynamic that could play out in future clashes. Prosecutors have aggressively pursued alleged financial crime even by defendants who weren't in the US or working for US companies when the crime occurred, an approach that has already drawn questions from appeals court judges.

US courts have little reluctance to detain suspected arms dealers and drug bosses ahead of trial — recently extradited drug crime suspect Joaquin "El Chapo" Guzman now lives in a jail about two miles from Garaufis' court, for example.

But the prospect of separating non-violent bankers, who are presumed innocent, from their families for years as prosecutors prepare for complicated trials could provoke more reactions like Garaufis' unless the government can work out an immigration solution.

Garaufis concluded the hearing by saying he didn't want to be forced to issue an order that would pit him against the executive branch. But he didn't say that he would shy away from doing it.

"Tell them I'll issue an order with a scowl on my face," he said.

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