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Jepsen's low-profile crusades

By Paul Choiniere

Publication: The Day

Published July 28. 2013 4:00AM

Connecticut Attorney General George Jepsen is taking on some of the most powerful corporate interests on this planet, and having some success. But unlike his predecessor, who would call frequent news conferences to crow about his legal fights for truth and justice, Jepsen goes about his business with quiet earnestness.

Even when asked about the stark differences between him and former attorney general, now senator, Richard Blumenthal, Jepsen chose understatement.

"I would agree, as a factual observation, that I have a lower-key approach to press opportunities," Jepsen said.

That is akin to saying that as a factual observation an F-15 Eagle fighter plane (1,875 mph) is faster than a real eagle. These guys could not be more different. Blumenthal is never more comfortable than when verbally firing away in front of a bank of cameras. Jepsen's press conferences are few. In a Tuesday meeting with The Day's editorial board his responses were measured, careful and full of qualifiers.

Yet while his delivery may be boring and painstakingly deliberate, his passion to correct injustices seems genuine enough.

Under the direction of his office, Connecticut is a leader in the fight to stop price fixing in the ebook market. Penguin books paid $75 million to settle, while the publisher MacMillan anted up $12 million. All told, 49 states (Oklahoma sat it out) have collected $164 million. Consumers who bought ebooks at jacked-up prices have or should soon receive claim forms to seek reimbursements from the settlement money. Visit www.ebookagsettlements.com for more information.

The big hold out is Apple Inc. Earlier this month Judge Denise L. Cote of the U.S. District Court for the Southern District of New York ruled that Apple had played a central role in the price fixing. The trial now moves to damages, and Jepsen expects them to be massive. "I don't know why they kept fighting," he wondered aloud.

Jepsen became the most animated - by Jepsen standards - concerning a lawsuit against Standard & Poor's Financial Services, LLC.

"We're the lead state in suing Standard & Poor's for its allegedly rating mortgage-backed securities as Triple A in the '05, '06, '07 lead up to the 2008 crash when, we believe, they were junk," Jepsen said.

Connecticut is now joined by 16 others states and the District of Columbia - "At the press conference it was just me and (U.S. Attorney General) Eric Holder," recalled Jepsen - each invoking the unfair trade practice rules in their respective states.

In 2008, when it turned out many of these securities were as worthless as the failing mortgages on which they were constructed, the markets collapsed, destroying the economy, costing millions of jobs and devastating retirement savings.

S&P contended its ratings were objective and not subject to outside influence. They lied, Jepsen said

"Standard & Poor's systematically altered its algorithms by which these tranches of mortgage holdings were being rated to always create a Triple A rating," Jepsen told the editorial board. "Why? Because if they didn't rate them Triple A the Wall Street banks would have went somewhere else, because the Wall Street banks can't sell a product that's Triple B," Jepsen said.

"By early '07 they knew the real estate market nationally was going down the toilet and they continued to rate these securities Triple A when they knew for a fact they were going to collapse," he said.

That sounds like a crime, I said, of intentional fraud.

The cautious Jepsen resurfaced. His office has no criminal authority, he noted.

But did he have an opinion?

"Beyond a reasonable doubt is a very high standard and you have to show actual criminal intent," said the attorney general. "And that is hard to do."

Well at least make them pay up in civil court, Mr. Jepsen. Then call a press conference.

Paul Choiniere is editorial page editor.

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