Hollingsworth: SEC officials need to shift focus to investigate United bankruptcy 

Now we know why so many Securities and Exchange Commission attorneys and accountants did little or nothing to prevent Wall Street bankers from playing musical chairs with toxic assets or stop Bernie Madoff and Allen Stanford from stealing billions from investors — they were too busy downloading porn on their government computers.

That also explains why the SEC didn’t bother to investigate serious allegations regarding the United Airlines bankruptcy and the largest corporate pension default in U.S. history.

When Chicago Chief Bankruptcy Judge Eugene Wedoff declared United bankrupt in 2006, the airline was allowed to dump all its pension liabilities on the federal Pension Benefit Guaranty Corp. But retired pilots claim the airline fraudulently listed its frequent flier Mileage Plus asset — worth an estimated $15 billion at the time — as a liability in documents submitted to the court and the PBGC.

Immediately afterward, James Sprayregan, United’s lead bankruptcy attorney, accepted a job at Goldman Sachs — one of the airline’s major creditors.

In an Oct. 18, 2007, letter to then-SEC Chairman Christopher Cox — which also was sent to then-Sen. Barack Obama, D-Ill., and a host of other federal officials — former United 777 Capt. Dan Hanley (now the national spokesman for the Whistleblowing Airline Employees Association) charged that Goldman Sachs helped United management falsify its financial records so the airline could dump its pension liabilities on taxpayers in violation of the Sarbanes-Oxley Act.

On Feb. 14, 2008, Hanley called the Chicago office of the FBI to file an official complaint, including a list of evidence and key witnesses. A year later, none of the witnesses had been interviewed by either the FBI or the SEC, so Hanley asked Attorney General Eric Holder to look into the matter. On June 17, 2009, he received an unsigned letter from the Justice Department Inspector General’s Office claiming it did not have jurisdiction in the matter.

Under Sarbanes-Oxley, SEC officials have the power to seek a court order temporarily suspending United management during an investigation. So far, that hasn’t happened.

In fact, United and Continental senior management just announced a merger that will make the new airline the largest in the world.

The Public Company Accounting Board, established under Sarbanes-Oxley to oversee the auditors of public companies to protect investors, likewise failed to prevent the destruction of billions of dollars worth of employee-owned stock during United’s bankruptcy.

After three years, SEC’s continued stonewalling is obscene.

Barbara F. Hollingsworth is The Examiner’s local opinion editor.

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