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European bank faces lawsuit over financial crisis

Washington companies that do business with Barclays may be dismayed to learn that on Dec. 22, the U.S. Department of Justice announced that it had filed a lawsuit against the British bank. The DOJ has claimed that the bank deceived investors by giving loans that were based on home appraisals that had been inflated and that the investors did not have the ability to repay.

Barclays is just one of several European banks that was under investigation for contributing to the 2008 global financial crisis. Other European banks facing similar lawsuits include Credit Suisse and Deutsche Bank. Several major U.S. banks, including JPMorgan Chase and Bank of America, have already settled with U.S. authorities. In Barclay's case, it was estimated that $31 billion worth of mortgage loans were pooled, and approximately half of the deals ended up defaulting.

A statement released on behalf of the British bank stated that the itwould defend against the claims and seek a dismissal against the suit. Regardless, the company's U.S. share price was down 1.7 percent after the announcement.

Fraud charges can be issued against companies as well as individuals, and the penalties that are assessed if the prosecution is able to obtain a conviction can be financially ruinous. As a result, the management of such an organization may want to meet with a criminal defense attorney who has experience with this type of white collar crime as soon as possible. An essential element of this crime that is necessary for conviction is the specific intent to defraud, and it might be difficult for a prosecutor to prove that it existed in a particular case.

Source: CNBC, "US sues Barclays for alleged mortgage securities fraud", Dec. 22, 2016

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