Update: – The Securities and Exchange Commission (SEC) finalized new rules so a George Demos situation will hopefully not happen again. The rules state that the SEC cannot “disclose information that could reasonably be expected to reveal the identity of a whistleblower.”
When Demos ran for Congress last November, his past performance as an SEC attorney remained in the shadows. The past I speak of is his betrayal of an SEC informant (Peter Sivere) after personally reassuring Mr. Sivere that his information would be kept confidential.
Mr. Sivere had evidence of his employer’s (JP Morgan) possible wrongdoing and released the information to the SEC after being reassured by Mr. Demos (the enforcement attorney for the SEC) that it would be kept confidential. Mr. Demos revealed the information to Mr. Sivere’s employer, JP Morgan, costing Mr. Sivere his job.
If one thing can be said of Mr. Demos, it is that he cannot be trusted with a confidence, a fatal flaw for a lawyer and for a Congressional candidate. It’s weaselly behavior and it needs to be investigated.
Mr. Sivere continues his fight for justice. The following information was on the POGO (Project on Government Oversight) website today:-“…This morning, Larry Doyle at Sense on Cents posted a letter from the Clerk of the New York State Supreme Court stating that the investigation has now been re-opened and transferred to a different department. The letter, dated June 1, 2011, states that “[t]he investigation was initially disposed of by the Grievance Committee for the Tenth Judicial District, but upon further review, it was decided that the matter should be re-opened but transferred to another department….in order to avoid the appearance of impropriety.”
Hopefully, a complete investigation will be conducted into the culpability of Mr. Demos in disclosing non-public information about Mr. Sivere.
In the meantime, as the SEC tries to convince more whistleblowers to come forward with information on securities law violations, it is imperative that SEC officials hold employees accountable for violating the rules of the whistleblower award program. As Sivere remarked in a public comment on the SEC’s initial proposed rules, ‘those entrusted with investigating tips of potential fraud from whistle blowers must have the fortitude to do the right thing, not the easy thing.’” Read here: Whistleblower fights for justice
Another important point made by a blogger, Larry Doyle, “The fact that Demos is promoting his involvement in the massive SEC failure of the Madoff scam is reason all by itself to doubt his intellect.” Mr. Doyle wrote about this issue to shed light on the Wall Street-Washington relationship, which he sees as incestuous. Read here: – The nature of the Wall St.-Washington Relationship
Original Story:- George Demos, former candidate for Long Island’s CD-1 congressional race is back , and his past needs to come back as well. I am a Republican supporter, but I believe this needs to be considered and Mr. Demos needs to be vetted honestly. Demos comes to most Republican events here on Long Island, but he does not appear to be an up-and-coming star, however, time will tell.
Mr. Demos left the SEC amid scandal, a fact quickly dismissed by his supporters. As a former enforcement lawyer for the SEC, George Demos, ran for Congress in Long Island’s CD-1 last year after renting an apartment on Long Island (he’s lived in NYC for much of his career but grew up in Shelter Island). His Demos for Congress site states that he is, Fighting for Freedom and Fighting Corporate Fraud. His site can be found here: George Demos for Congress Site
Lauding his (Demos) experience as an attorney with the SEC, the site further states that he had been involved in some of the most high profile cases at the SEC (such as the Bernie Madoff Ponzi scheme). What Demos left out was that he had improperly disclosed protected, nonpublic information about a whistleblower (Peter Sivere – former JP Morgan compliance officer) to the counsel for that whistleblower’s employer, a major Wall Street bank, JPMorgan Chase. Source article
Peter Sivere was fired and his career was ruined by the revelation (Source article). Peter Sivere, compliance officer for JP Morgan, gave SEC investigators an internal e-mail he came across that showed the bank was illegally giving hundreds of millions of dollars in credit to a firm “in the business of day trading mutual funds.” According to JP Morgan, Sivere allegedly sought payment from the SEC for this disclosure and was consequently fired by JP Morgan. More info on the actual case here: Peter Z Sivere vs. JP Morgan
It is apparently not uncommon for payment to be made to whistleblowers for information. While I believe whistleblowers need to be protected at all costs, I question paying them for the information. People should do it because it is the right thing to do. The Dodd-Frank Financial Bill offers payments to whistleblowers of up to $1 million dollars – sounds like another way to breed corruption to me. That was not the case here, however, and it appears that Mr. Sivere’s information was legitimate.
That being said, if it is common to provide payment (and now specifically stated in the law), a whistleblower should not be punished for it. This issue has become too political on both sides and the core issues of ethical responsibility and corruption are being lost.
The story goes like this according to the Project On Government Oversight. While the SEC was investigating JP Morgan, (the whistleblower and JP Morgan employee) Peter Sivere came into contact with George Demos. The whistleblower (Sivere) was outed and, as it turned out, he was outed by George Demos.
The SEC report revealing the betrayal had redacted the lawyer’s name, but the Project on Government Oversight (POGO, a non-profit, non-partisan watchdog organization based in DC) investigated and confirmed that Demos was the one who squealed. The information leaked by Demos was used against Sivere. Read the SEC report here: Report with Demos’ name redacted
The report states: “Conclusion: The OIG investigation uncovered testimonial evidence that definitively shows that SEC~YRO Staff Attomey C ~~ disclosed non-public information about an informant during the course of an ongoing Enforcement investigation. In addition, we uncovered evidence that ~~not only gave outside counsel for JPMorgan permission to use the non-public information about an informant against him, but actually encouraged such use. While the investigation determined that ~~was counseled by ~~ his supervisor about the importance of not disclosing non-public information in December 2005, we are referring this matter to management in light of the additional evidence for consideration of further disciplinary action.”
After it became clear that it was George Demos who ratted out Sivere, the case was referred to the SEC, but they declined to take action – could it have been the result of Demos political connections? Certainly, he’s connected himself to JP Morgan.
Fact is, Demos blew the whistle on the whistleblower, violating confidentiality. As a lawyer entrusted with privileged information, he is particularly blameworthy. Whether or not one is a fan of whistleblowers, the one fact that cannot be denied is that a lawyer, entrusted with confidentiality and who reveals privileged information has a questionable resume.
What’s worse is that Demos might have been protecting JP Morgan in a $130 million scandal. Demos was charged with fighting corruption – did he fight corruption or did he cover for JP Morgan, even to the point of exposing a whistleblower? A criminal defense attorney, David Schwartz (who allegedly worked for Chris Cox’ father at one point) was charged with investigating. He said he was looking into Demos but not the department.
Nothing came of the investigation. POGO, in their report, stated that the SEC Office of Inspector General (OIG) confirmed that George Demos did expose the whistleblower – who allegedly feared for his life and lost his livelihood. George Demos presented Politico.com with a brief letter clearing him of all charges, inexplicable in light of the fact that the SEC and POGO found Demos did indeed reveal the whistleblower’s name, despite regulations prohibiting it.
Demos does not deny the findings of POGO or the OIG. The letter clearing him states, “Dear Mr. Demos, On April 20, 2010, the grievance committee for the Tenth Judicial District considered the complaint filed against you by Peter Z. Sivere. After deliberation, it was decided that there was no breach of the Code of Professional Responsibility/Rules of Professional Conduct on your part, and the complaint is dismissed.” The letter (not exactly a ringing endorsement) can be seen here. Demos Cleared
It is not clear if the Tenth Judicial considered the SEC OIG’s (Office of Inspector General) investigation. It is clear that much of their findings were based on the fact that the SEC did not discipline Demos – a bit circuitous and flimsy to say the least.
The whistleblower conveyed his understanding that “the Grievance Committee relied on the SEC OIG Investigative Report and because the SEC did not discipline Demos they thought no further action was needed.”
NY Rules of Professional Conduct state that “a lawyer shall not knowingly reveal confidential information…or use such information to the disadvantage of a client or for the advantage of the lawyer or a third person.”
When questioned about this, Demos responded that the whistleblower’s “communications with the [SEC] were not subject to attorney-client privilege and he was owed no duty of confidentiality or loyalty by the Commission or me.” This is not what the SEC OIG or NY Rules of Conduct state and Demos seems to have presented a weak case. Read about it here: POGO
The single issue that has gained Demos some notoriety is his strong stance on behalf of the rebuilding of St. Nicholas Church near Ground Zero at a time when a certain Imam began planning his 9/11 Mosque. It is not clear how much Demos actually did besides guest appearances and a letter to President Obama however.
In Demos’ interviews on the subject, he implied that the Mosque and the church were connected and that the church was being blocked by the Port Authority. In reality, the site for the church was suffering the same complications attached to any building in the vicinity of Ground Zero. In the end, hopefully, the church will be rebuilt and Demos did bring the church’s plight to the fore.
After his failed election bid, Demos returned to NYC, but he’s back on Long Island now, gearing up for another run at Congress. His campaign should be interesting as Simon Cowell’s critiques are interesting.
I don’t know what Demos thinks of his Democratic opponent since he spent most of his time ripping apart fellow Republicans – his attack ads were strongly negative.
He currently works for LI law firm Tsunis, Gasparis, Lustig and is renting yet again – in the hamlet of Holbrook. It’s hard to know who Demos actually is. He doesn’t have a spouse, children and has ever-changing NYC-Long Island residences. He’s a bit of a mystery, except for his shifting dependability.