For JPMorgan, California prosecutor is wild card

JPM's California problem

As JPMorgan Chase braces for an expected $13 billion settlement with the government over its mortgage-securities sales, it's keeping an eye on one key player: Benjamin Wagner, the U.S. attorney in Sacramento.

Wagner, a career Justice Department lawyer who has been overseeing California's Eastern District since 2009, has amassed nationwide evidence of fraudulent activity in the packaging of home loans by JPMorgan during the pre-crisis era, say people familiar with the matter.

Even though at least two-thirds of the mortgages now under scrutiny in various cases against JPMorgan were inherited from Bear Stearns and Washington Mutual— the companies JPMorgan acquired under duress in 2008—the securities Wagner has investigated were handled by legacy JPMorgan employees, these people add.