Reuters Legal interviewed Manatt's John Libby, co-chair of the firm's Corporate Investigations and White Collar Defense practice, for a special Q&A-style article on the U.S. Department of Justice's anti-fraud strategy known as Operation Choke Point, which has drawn fire from members of Congress, small businesses and community banks. The enforcement effort was aimed at stopping consumer fraud by targeting banks that served illegal businesses, but it quickly attracted criticism after legitimate businesses complained that their bank accounts were being closed.
When asked why the program was created, Libby said:
"The Department of Justice was looking at situations where payment processors, Internet companies and telemarketing companies were using bank facilities to essentially defraud consumers.
"I think the program became controversial because at least initially, the government cast a very wide net. Our information is that there were over 50 subpoenas issued in the spring of 2013 to banks, payment processors and other entities.
"I don't think it's any accident that we've only seen three settlements in the last two years. I think the Department of Justice has realized that it's very difficult to make a case against a bank that was in fact doing everything right and just happened to have one or two bad apples in its customer list."