A few months into his first real job, Everett Stern lay awake one night and wondered what to do.
A money-laundering investigator at global banking giant HSBC Holdings, Stern was alarmed when he saw transactions flowing through HSBC accounts from Africa to a Middle Eastern entity labeled a terrorist organization by the U.S. government. And he was disturbed when his bosses at HSBC waved off his concerns.
After tossing and turning, Stern decided, “I won’t be able to sleep unless I report it.”
So Stern resolved to become a whistleblower. He started by emailing tips to the CIA. He later approached the FBI and the Securities and Exchange Commission, and Stern finally launched a media campaign that has seen him quoted by publications as varied as Rolling Stone, The American Banker and Reuters.
An intense 29-year-old who describes himself as a patriot and a political conservative, Stern said he spotted hundreds of millions of dollars in suspicious transactions that HSBC refused to stop. One recipient was Hezbollah, a Lebanese group that the U.S. government considers a terrorist organization.
“They have the blood of American soldiers on their hands,” Stern said during a recent interview. “The whole thing is disgusting.”
HSBC spokesman Rob Sherman declined to respond directly to Stern’s allegations.
“Our focus is on continually strengthening reforms and controls, and putting in place high global standards to protect against current and future threats of financial crime,” Sherman said in a statement.
Stern grew up in Palm Beach County, graduating from Wellington High School and Florida Atlantic University. He dreamed of working as an international spy, but after the CIA rejected him, Stern turned to a career in business.
Stern earned an MBA from Stetson University in DeLand, then took a job at London-based HSBC’s office in New Castle, Del. Stern knew that HSBC was the target of a money-laundering probe by federal and state authorities. Regulators found HSBC had transferred billions of dollars on behalf of such suspect entities as Iran, which was under international sanctions, and Mexican drug cartels. HSBC ultimately would pay $1.9 billion to settle the inquiry, the largest sum ever in a money-laundering case.
Stern started the job, which paid just under $55,000 a year, with high hopes.
“I was part of the crew to clean everything up,” Stern said.
Stern knew nothing about money laundering, and he was surprised that HSBC seemed in no hurry to train him. So he went to the University of Delaware library to check out books about money laundering.
“I wanted to do my job,” Stern said. “I would get up at 4 a.m. and just read and read and read. I took it very seriously.”
The image of Stern doing homework comes as no surprise to Valerie Hall, a Palm Beach County teacher who tutored Stern for a year.
“He’s such a dedicated person,” said Hall, whom Stern has asked to co-author a book about his experiences at HSBC. “When he decides on something, he goes full-force.”
At HSBC, Stern found plenty of dubious transactions. He spotted a pattern of money moving from African retailer Karaiba to its Middle Eastern parent Tajco, a company known to back Hezbollah.
In some transactions, the names would be changed slightly to fool HSBC’s filters, Stern said. For instance, Tajco would become Taj.co.
“This was very blatant and apparent stuff,” Stern said.
Stern said he would investigate suspicious transactions, mostly through Internet research but also through old-fashioned sleuthing. He called one HSBC customer and hinted that he was an arms dealer.
But, Stern said, his bosses weren’t interested.
“I saw very quickly that they did not want to do anything,” Stern said. “When I reported suspicious activity, it was just, ‘Get rid of it.’”
Convinced HSBC didn’t want to stop its clients’ money laundering, Stern went to the government. Because he couldn’t print out documents from HSBC’s computer system, Stern would sit in his cubicle and take handwritten notes about the suspicious transaction on his screen.
“I spied on them for a year,” Stern said.
Federal authorities have taken no public action against HSBC as a result of Stern’s allegations, but he said investigations are pending. Stern quit his job at HSBC and started a Pennsylvania-based research and investigative company.
Meanwhile, Stern has stepped up his publicity campaign. This summer, he slammed HSBC during an Occupy Wall Street protest. A video of his speech made the rounds on liberal blogs.
Stern is shopping his story as a movie plot, and he said a whistleblower payday might be in his future. But he called patriotism his real motivation.
“I don’t care about the movie, the money,” Stern said. “The main goal is the security of the country.”