Two weeks ago, if you told me I’d be writing the above headline, I’d think I must have been hired by The Yes Men to do one of those “imagine the possible” fake New York Times articles. But no, this is actually happening:

The Securities and Exchange Commission has referred its investigation of Goldman Sachs to the Justice Department for possible criminal prosecution, less than two weeks after filing a civil securities fraud case against the firm, according to a source familiar with the matter.

Any probe by the Justice Department, if underway, would be in a preliminary stage. No Goldman Sachs employees involved in the mortgage-related transactions that are the focus of the SEC case have been interviewed by Justice Department prosecutors or the FBI agents who often conduct probes on behalf of prosecutors, according to a source familiar with the matter. The sources spoke on the condition of anonymity because they were not authorized to discuss the matter publicly.

The Justice Department usually investigates high-profile cases of securities fraud, but the threshold for criminal prosecution is significantly higher than that of civil cases. The SEC files only civil cases.

We’re talking about the germ of an idea of a criminal case. In the grand scheme of things, it could mean absolutely nothing. And this Justice Department has begun to collect a reputation for announcing inquiries without much follow-up (how are those torture investigations going?). The cynic would be justified in thinking this not much of a story.

But as the story goes on to note, even the threat of a criminal probe can cripple corporations, even ones with powerful friends – the storied accounting firm Arthur Andersen’s collapse after the Enron affair is a good example. And by the way, Goldman’s friends aren’t exactly advertising that relationship anymore.

What’s more, Steve Randy Waldman has the easiest to read summary of the Abacus deal, and “fraud” really does jump out as a good description of the situation. And as the Permanent Subcommittee on Investigations Hearing showed, Abacus was but one of the “really shitty deals” Goldman peddled.

So while the Justice Department probe isn’t even a seed yet, that doesn’t mean it cannot bloom.

Greg Gordon, who has been all over this story for McClatchy, has more.

David Dayen

David Dayen