Business
* DOJ says could not meet criminal burden of proof
* Decision follows more than a year of investigation
* Senator Levin had asked for criminal investigation
By David Ingram and Aruna Viswanatha
WASHINGTON, Aug 9 (Reuters) - The U.S. Justice Departmentsaid it will not pursue criminal charges against Goldman SachsGroup Inc or its employees related to accusations thatthe firm bet against the same subprime mortgage securities itwas selling to clients.
The decision not to prosecute Goldman, a firm held up bycritics as a symbol of Wall Street greed during the 2007-2009financial crisis, highlights the difficulty in prosecutingcrisis-related cases.
Few expected the bank to face criminal charges, but in April2011, U.S. Senator Carl Levin asked for a criminal investigationafter the subcommittee he leads spent more than a year lookinginto Goldman.
The accusations were aired in a heated 2010 Congressionalhearing in which Levin grilled Goldman Chief Executive LloydBlankfein for hours about whether it was morally correct for thefirm to sell its clients products described internally as"crap".
"The department and investigative agencies ultimatelyconcluded that the burden of proof to bring a criminal casecould not be met based on the law and facts as they exist atthis time," the Justice Department said in a statement late onThursday.
The DOJ does not typically make public statements when itconcludes an investigation.
Neil Barofsky, a former watchdog for the U.S. government'sfinancial system bailout in 2008, said the announcement was astark reminder that no individual or institution had been heldmeaningfully accountable for their role in the financial crisis.
"Without such accountability, the unending parade ofmegabanks scandals will inevitably continue," said Barofsky, whohas been an outspoken critic of the government's response to thefinancial crisis.
In a brief statement emailed to Reuters, a Goldman Sachsspokesman said: "We are pleased that this matter is behind us."
A Levin aide had no immediate comment.
In a related civil case, Goldman settled with the U.S.Securities and Exchange Commission for $550 million in July2010, without admitting wrongdoing.
The SEC, in one of its premier financial crisis cases, saidGoldman failed to tell investors the Paulson & Co hedge fundhelped choose and bet against the subprime mortgage-backedsecurities underlying an investment product named Abacus.
The SEC is still pursuing a civil complaint against FabriceTourre, a Goldman vice president involved in the Abacus deal.
Separately on Thursday, Goldman said the SEC had dropped aninvestigation into the firm's role in selling a different $1.3billion subprime mortgage-related deal arranged in 2006.
TARNISHED REPUTATION
The Abacus deal was a major focus of the televised hearingsheld by Levin's subcommittee in 2010. The hearings and afollowing report from Levin's Permanent Subcommittee onInvestigations weighed on Goldman's shares as the firm suffereda reputational hit from the unwelcome spotlight.
Goldman -- dubbed a "great vampire squid" in a 2009 articlein Rolling Stone magazine -- has continued to be dogged bycriticism, including from its own ranks.
A Goldman Sachs banker in March published a witheringresignation letter in the New York Times, calling the WallStreet titan a "toxic" place.
In its release on Thursday, the Justice Department saidthere was "not a viable basis to bring a criminal prosecution"against Goldman. If new or additional evidence emerged, it couldmake a different determination, it said.
Prosecuting financial fraud would continue to be a toppriority and it highlighted other investigations, including itsprobe into banks' alleged manipulation of Libor, a widely usedbenchmark for interest rates.
The SEC has brought a handful of high-profile cases relatedto the financial crisis, including against former CountrywideFinancial Chief Executive Angelo Mozilo and its case againstGoldman. But the Justice Department has struggled to bringcriminal charges.
The frustration, in part, has been because such chargesinvolve securing evidence that shows beyond a reasonable doubt adefendant intended to break the law.
For example, a federal jury in 2009 acquitted two formerBear Stearns hedge fund managers accused of continuing to pushsouring investments as sound.
Jurors said prosecutors did not prove the case, which reliedon e-mail evidence, beyond a reasonable doubt. Since then, theJustice Department has brought few major prosecutions tied tothe subprime crisis.
In January, President Barack Obama announced a new taskforce to investigate misconduct that fueled the financialcrisis, and the Justice Department has said it has issued morethan a dozen civil subpoenas and has multiple inquiriesunderway.
So far, no cases have come out of that effort, and somecritics have dismissed the task force as an election-year stunt.
