Feeds:
Posts
Comments

Posts Tagged ‘Financial Services’

I keep thinking about that.  Being told that it really isn’t as bad as I think.  Hell if it ain’t!

When I was a little girl, we walked to school.  We would get there in the morning, and there would be the morning prayer.  Right after that, we all said I Pledge Allegiance to the Flag, and they played the National Anthem.  I started to school when I was four (4).  By the time I was in fourth grade, it was like the second elementary school.  They did not say the morning prayer, or play the anthem, but by golly, the whole time I was in school, we Pledged Allegiance to the Flag.  We were proud to be Americans.

Now, you get suspended for wearing anything with a flag on it.  The Ten Commandments, Pledge of Allegiance, and anything having to do with our natural heritage is bad.  Christians are bad.  Americans are bad.  Christian Americans must be very, very bad.  And who the hell decided all that?  That is bullshit.  Plain and simple, bullshit.  Since when have other people gone to live in another country, and was allowed to claim they were offended by the customs of that country, and the country changed for the outsiders?  Someone tell me when.  That is bullshit!  Plain and simple bullshit.

Seems like it began several years ago… SuperTarget in our area, told the GoodWill people at Christmas, not to come there any more.  Of course, after that, we never went back to that store, and it closed shortly thereafter.  For some reason, outsiders that had moved to the United States, were offended by Christmas, Nativity scenes, and GoodWill ringing their little bells at Christmas.  Those dedicated, hardworking GoodWill employees, trying to make a difference to others at a very hard time of year.  They never asked anyone for anything.  Just stood, ringing the bell and smiling.  It was tradition.  Christmas trees, nativity scenes, GoodWill.

So, in order to not to offend those, who are not from here, America changed? Bullshit.  I say, if our traditions offends you, you came into this country, you know you can leave the same damned way!  Every time I turn around, someone is explaining that such and such offends them.  Screw it!  I am offended by what people do in other countries, but I don’t move there, then expect them to change their country for me.  That is bullshit.  Plain and simple bullshit.

Now, they tell us that our forefathers were terrorists.  Do what?  So what kind of History lessons are they giving kids now a days?  Speaking of kids.  Since when does the govt. have balls enough to tell parents what they are or not going to feed their kids for lunch during school?  The other thing about kids, is that they belong to the community, not their parents?  Bullshit!  Plain and simple bullshit!  And these idiots put up with that?  I sure as hell am glad that my Mama was who she was.  She would have not only told them what horse to get on, she would have had them direct that horse, on out of the country.  And my Daddy, lo and behold, I am glad that he is not here to see this shit.  Daddy was gung-ho Marine.  He is probably rolling in his grave right now.

And someone wants to tell me, that it ain’t as bad as I think it is?  Bullshit!  Plain and simple bullshit!!!

Read Full Post »

Report: “No one wants you to know how bad Fukushima might still be… gaining traction as the worst case of nuclear pollution in history” — Physician: “This is a global contamination of wide swaths of the biosphere” (VIDEO)

 
Published: August 21st, 2014 at 11:24 am ET
By
Email Article Email Article
125 comments

http://enenews.com/report-one-bad-fukushima-be-gaining-traction-worst-case-nuclear-pollution-history-physician-global-contamination-wide-swaths-biosphere-video
 

VICE News, Aug. 20, 2014: No One Wants You to Know How Bad Fukushima Might Still Be […] it’s hard to give TEPCO the benefit of the doubt when misinformation, lying, and a sub-par approach to safety culture have been central to this quagmire […] This is merely the abridged account of TEPCO’s backpedalling and PR shortfalls. It begs many questions, but the most perplexing one is: Why? Why has a crisis that is gaining traction as the worst case of nuclear pollution in history—worse, emission-wise, than Hiroshima, Nagasaki, or Chernobyl—being smothered with internal censorship? […] if it’s not money that lies beneath these multi-faceted attempts at obscuring information about Fukushima, it’s the fear of mass hysteria.

Speech by Dr. Andrew S. Kanter, MD*, Assistant Professor at Columbia University, *Due to Dr. Kanter’s illness, Physicians for Social Responsibility Board Member Alfred Meyer presented his speech, published by Cinema Forum Fukushima on July 30, 2014 (at 2:45 in): “We soon learned that [the Fukushima disaster] would have global implications. […] One thing is clear, this is a global contamination of wide swaths of the biosphere, creating sacrifice zones where people cannot live for hundreds or thousands of years.”

Watch the presentation here

Read Full Post »

Ok, I am going to go a little different direction with this post.  I have something to say, and cannot wait any longer.

Everyone in the Office World, is familiar with HON office furniture, chairs, task chairs in particular I speak of.  A while back, I ordered a chair to replace my old worn out chair that I spend 18-20 hours a day sitting in.  

Of course, I skimped on the chair, trying to watch the money.  Mainly because I didn’t have time to go around and check chairs out.  Yall know me, I order everything over the internet, and rarely see in person what it is that I am buying.  If I spend 18-20 hours a day at the computer, it leaves no time for shopping.

Anyway, I had always heard that HON chairs are “over-priced”, “not all that they are made out to be”, “not really all that comfortable”, you know… the kinds of things people say, when they cannot afford something.  We’ve all heard that kind of thing before.

Anyway, my bestest friend, the one that passed away at the first of the year, he was having a garage sale.  I don’t go to garage sales, but this particular day, I told James to come on and lets go out for a ride.  I know, don’t gasp at my boldness, leaving the house and all…  

Anyway, when I saw the HON, I immediately knew what it was.  I had no idea how much was invested in the chair, or how much they would want for it.  The cylinder was messed up and had slipped down and was digging into the ground.  One of the females over at Donnie’s had been going round and round and round, and said that it just slipped down. Other than that, it was in perfect shape.  I asked how much they wanted, and pointed out that the chair had issues.  Ten Dollars!

Done deal.  James did not quite understand the ramifications of such a chair.  Now he always tells me “Make sure you don’t do this, or don’t do that, you will probably never be able to buy such a chair again”.  

The other day, the cylinder had gotten to where it would not hold weight any longer.  James looked at everything.  This chair, let me tell you.  It has the height adjustment through the cylinder, and three other levers.  The seat tilts, it slides and tilts, the back is adjustable, and everything you can think of.  I love it!  Anyway, we determined that the cylinder had gone bad.  James told me that he did not know for sure, but that we could surely afford a new cylinder.

I pulled up HON on the internet, and oohed and aahed at all the task chairs similar to my own.  I was most impressed of course.  I could not determine how to get parts, so emailed.  That same day, they emailed me back.  I was so surprised that I almost deleted the email without realizing who it was from.  Long story short…  The warranty covered the cylinder.  A new one will be here 5-7 days, and they sent me instructions in the email letting me know about when to expect the cylinder.

Wow!  I just had to share this good news with someone.  I rarely have anything really good to say about anyone, especially companies nowadays.  HON has found a friend in me though.  I tell you what.  Their people over there, are some of the most friendly, personable people I have dealt with in many years.

So while you are listening to all the reasons not to buy a HON…know deep down inside why people are telling you those reasons.  I can tell you why you should.  Compared to any other chair that I have attempted to sit in for 18-20 hours a day, the HON is the one that don’t cause my legs and feet to swell nearly as bad; it is perfect for everything, with all those adjustments, you can get around being chair fatigued.  They are nice looking chairs.  The people at HON are wonderful to work with.  The complete chair, is also customizable.    Is that a word?  The speller in the computer says no, but we will go with it anyway.  

THANKS HON!!!

Read Full Post »

Japan experts warn of more quakes off Fukushima coast — Gov’t: There’s fear ‘relatively large’ ones will occur — Recent M6.8 a “delayed tectonic reaction” to M9.0 on 3/11 — “This is just one aftershock of several to come… could occur in next 2 weeks” (VIDEO)

Published: July 15th, 2014 at 4:37 am ET
By 
Email Article Email Article
157 comments

http://enenews.com/experts-warn-quakes-fukushima-coast-govt-fear-relatively-large-quakes-will-occur-recent-m68-delayed-tectonic-reaction-m90-311-one-aftershock-several-could-occur-next-2-weeks-video

AFP, July 11, 2014 (emphasis added): Japan braced for more aftershocks of giant 2011 quake— Seismologists said [the M6.8] earthquake that struck near Japan’s shuttered Fukushima nuclear site early Saturday was an aftershock of the tremor that sparked 2011′s deadly tsunami, and warned of more to come. […] Seismologist Yasuhiro Yoshida  of the Japan Meteorological Agency said it was a delayed tectonic reaction to the 9.0-magnitude quake which left the Fukushima nuclear power plant in a meltdown crisis […]

Inquisitr, July 12, 2014: […] experts warn that this is just one aftershock of several to come from 2011′s killer quake […] According to Japan Today, seismologists warn that the Fukushima earthquake was a delayed reaction to the monster quake from 2011. Seismologist Yasuhiro Yoshida of the Japan Meteorological Agency said, “There are fears that relatively large earthquakes will occasionally occur in the ocean area where aftershocks of the great earthquake continue […] The aftershock activity has been steadily declining on a long-term basis. But aftershocks, accompanied by tsunamis, will still occur.” Yoshida mentioned that aftershocks could occur in the next two weeks […]

IRIB, July 12, 2014: Experts warn of quake aftershocks in Japan — Experts have warned that Japan’s northeastern coast, where the Fukushima nuclear power plant lies, is prone to more aftershocks of the huge 2011 earthquake. The warning came after a quake measuring 6.8 on the Richter scale hit near the Fukushima nuclear site on Saturday morning.

Watch Press TV ‘s broadcast here

Do we look and act like a bunch of bumbling idiots, or what?  Three and a half years, Tepco has done nothing to fix their major fuck up @ Fukushima.  Now,  while they have no idea where the cores have managed to get to, and we face, geysers of radiation shooting up into the atmosphere, and Tepco still is doing nothing, and they warn of more major quakes.  Tepco will still do nothing.  Hell, at least Russia did what they had to do.  They did not leave the schools right beside the plant open, and send kids into the schools, with actual knowledge it would kill those kids.

Please, quit allowing the excuses.  Scientists and Professors in Japan has said they are being brainwashed, and the areas are not fit to live in.  I hope everyone has cancelled their plans to visit the Olympics!

Read Full Post »

Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Tuesday, November 19, 2013
Justice Department, Federal and State Partners Secure Record $13 Billion Global Settlement with JPMorgan for Misleading Investors About Securities Containing Toxic Mortgages
 

*CORRECTION: The release below previously stated that New York is receiving $613.8 million in this settlement, however, the number is $613.0 million. This correction notice was posted on Nov. 20, 2013.*

The Justice Department, along with federal and state partners, today announced a $13 billion settlement with JPMorgan – the largest settlement with a single entity in American history – to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009.  As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public – including the investing public – about numerous RMBS transactions.  The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country.  The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges.

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group. 

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder.  “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior.  The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over.  No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.  I want to personally thank the RMBS Working Group for its tireless work not only in this case, but also in the investigations that remain ongoing.”

The settlement includes a statement of facts, in which JPMorgan acknowledges that it regularly represented to RMBS investors that the mortgage loans in various securities complied with underwriting guidelines.  Contrary to those representations, as the statement of facts explains, on a number of different occasions, JPMorgan employees knew that the loans in question did not comply with those guidelines and were not otherwise appropriate for securitization, but they allowed the loans to be securitized – and those securities to be sold – without disclosing this information to investors.  This conduct, along with similar conduct by other banks that bundled toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.
                                    
“Through this $13 billion resolution, we are demanding accountability and requiring remediation from those who helped create a financial storm that devastated millions of Americans,” said Associate Attorney General Tony West.  “The conduct JPMorgan has acknowledged – packaging risky home loans into securities, then selling them without disclosing their low quality to investors – contributed to the wreckage of the financial crisis.  By requiring JPMorgan both to pay the largest FIRREA penalty in history and provide needed consumer relief to areas hardest hit by the financial crisis, we rectify some of that harm today.”

Of the record-breaking $13 billion resolution, $9 billion will be paid to settle federal and state civil claims by various entities related to RMBS.  Of that $9 billion, JPMorgan will pay $2 billion as a civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), $1.4 billion to settle federal and state securities claims by the National Credit Union Administration (NCUA), $515.4 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $4 billion to settle federal and state claims by the Federal Housing Finance Agency (FHFA), $298.9 million to settle claims by the State of California, $19.7 million to settle claims by the State of Delaware, $100 million to settle claims by the State of Illinois, $34.4 million to settle claims by the Commonwealth of Massachusetts, and $613 million to settle claims by the State of New York. 

JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual.  That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight.  An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations.  If JPMorgan fails to live up to its agreement by Dec. 31, 2017, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development. 

The U.S. Attorney’s Offices for the Eastern District of California and Eastern District of Pennsylvania and the Justice Department’s Civil Division, along with the U.S. Attorney’s Office for the Northern District of Texas, conducted investigations into JPMorgan’s, Washington Mutual’s and Bear Stearns’ practices related to the sale and issuance of RMBS between 2005 and 2008.

“Today’s global settlement underscores the power of FIRREA and other civil enforcement tools for combatting financial fraud,” said Assistant Attorney General for the Civil Division Stuart F. Delery, co-chair of the RMBS Working Group.  “The Civil Division, working with the U.S. Attorney’s Offices and our state and agency partners, will continue to use every available resource to aggressively pursue those responsible for the financial crisis.”

“Abuses in the mortgage-backed securities industry helped turn a crisis in the housing market into an international financial crisis,” said U.S. Attorney for the Eastern District of California Benjamin Wagner.  “The impacts were staggering.  JPMorgan sold securities knowing that many of the loans backing those certificates were toxic.  Credit unions, banks and other investor victims across the country, including many in the Eastern District of California, continue to struggle with losses they suffered as a result.  In the Eastern District of California, we have worked hard to prosecute fraud in the mortgage industry.  We are equally committed to holding accountable those in the securities industry who profited through the sale of defective mortgages.”
                                
“Today’s settlement represents another significant step towards holding accountable those banks which exploited the residential mortgage-backed securities market and harmed numerous individuals and entities in the process,” said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger.  “These banks packaged and sold toxic mortgage-backed securities, which violated the law and contributed to the financial crisis.  It is particularly important that JPMorgan, after assuming the significant assets of Washington Mutual Bank, is now also held responsible for the unscrupulous and deceptive conduct of Washington Mutual, one of the biggest players in the mortgage-backed securities market.”

This settlement resolves only civil claims arising out of the RMBS packaged, marketed, sold and issued by JPMorgan, Bear Stearns and Washington Mutual.  The agreement does not release individuals from civil charges, nor does it release JPMorgan or any individuals from potential criminal prosecution. In addition, as part of the settlement, JPMorgan has pledged to fully cooperate in investigations related to the conduct covered by the agreement.

To keep JPMorgan from seeking reimbursement from the federal government for any money it pays pursuant to this resolution, the Justice Department required language in the settlement agreement which prohibits JPMorgan from demanding indemnification from the FDIC, both in its capacity as a corporate entity and as the receiver for Washington Mutual.   

“The settlement announced today will provide a significant recovery for six FDIC receiverships.  It also fully protects the FDIC from indemnification claims out of this settlement,” said FDIC Chairman Martin J. Gruenberg.  “The FDIC will continue to pursue litigation where necessary in order to recover as much as possible for FDIC receiverships, money that is ultimately returned to the Deposit Insurance Fund, uninsured depositors and creditors of failed banks.”

“NCUA’s Board extends our thanks and appreciation to our attorneys and to the Department of Justice, who have worked closely together for more than three years to bring this matter to a successful resolution,” said NCUA Board Chairman Debbie Matz.  “The faulty mortgage-backed securities created and packaged by JPMorgan and other institutions created a crisis in the credit union industry, and we’re pleased a measure of accountability has been reached.”

“JPMorgan and the banks it bought securitized billions of dollars of defective mortgages,” said Acting FHFA Inspector General Michael P. Stephens.  “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from JPMorgan, Washington Mutual and Bear Stearns not knowing about those defects.  Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed  acts of fraud and deceit.  We are proud to have worked with the Department of Justice, the U.S. attorneys in Sacramento and Philadelphia and the New York and California state attorneys general; they have been great partners and we look forward to our continued work together.”

The attorneys general of New York, California, Delaware, Illinois and Massachusetts also conducted related investigations that were critical to bringing about this settlement.

“Since my first day in office, I have insisted that there must be accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said New York Attorney General Eric Schneiderman, Co-Chair of the RMBS Working Group.  “This historic deal, which will bring long overdue relief to homeowners around the country and across New York, is exactly what our working group was created to do.  We refused to allow systemic frauds that harmed so many New York homeowners and investors to simply be forgotten, and as a result we’ve won a major victory today in the fight to hold those who caused the financial crisis accountable.”

“JP Morgan Chase profited by giving California’s pension funds incomplete information about mortgage investments,” California Attorney General Kamala D. Harris said. “This settlement returns the money to California’s pension funds that JP Morgan wrongfully took from them.”

“Our financial system only works when everyone plays by the rules,” said Delaware Attorney General Beau Biden.  “Today, as a result of our coordinated investigations, we are holding accountable one of the financial institutions that, by breaking those rules, helped cause the economic crisis that brought our nation to its knees.  Even as the American people recover from this crisis, we will continue to seek accountability on their behalf.”

“We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” said Illinois Attorney General Lisa Madigan.  “Today’s settlement with JPMorgan will assist Illinois in recovering its losses from the dangerous and deceptive securities that put our economy on the path to destruction.”

“This is a historic settlement that will help us to hold accountable those investment banks that played a role in creating and exacerbating the housing crisis,” said Massachusetts Attorney General Martha Coakley.  “We appreciate the work of the Department of Justice and the other enforcement agencies in bringing about this resolution and look forward to continuing to work together in other securitization cases.”

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis.  The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. attorney’s offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.

The RMBS Working Group is led by five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Acting Assistant Attorney General for the Criminal Division Mythili Raman, Co-Director of the SEC’s Division of Enforcement George Canellos, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: http://www.stopfraud.gov. 

Related Material:

Read Full Post »

Settlement can be found at:

Click to access 471201471413656848428.pdf

This Settlement Agreement (“Agreement”) is entered into between the United States
acting through the United States Department of Justice (“Department of Justice”), along with the
States of California, Delaware, Illinois, and New York and the Commonwealth of Massachusetts,
acting through their respective Attorneys General (collectively, “the States”), and Citigroup Inc.
(“Citigroup”). The United States, the States, and Citigroup are collectively referred to herein as
“the Parties.”
RECITALS
A. The Department of Justice conducted investigations of the packaging, marketing,
sale, structuring, arrangement, and issuance of residential mortgage-backed securities (“RMBS”)
and collateralized debt obligations (“CDOs”) by Citigroup between 2006 and 2007. Based on
those investigations, the United States believes that there is an evidentiary basis to compromise
potential legal claims by the United States against Citigroup for violations of federal laws in
connection with the packaging, marketing, sale, structuring, arrangement, and issuance of RMBS
and CDOs.
B. The States, based on their independent investigations of the same conduct, believe
that there is an evidentiary basis to compromise potential legal claims by California, Delaware,
Illinois, Massachusetts, and New York against Citigroup for state law violations in connection
with the packaging, marketing, sale, structuring, arrangement, and issuance of RMBS and CDOs.
C. Citigroup has resolved claims filed by the Federal Deposit Insurance Corporation
as Receiver for Strategic Capital Bank, and the Federal Deposit Insurance Corporation as
Receiver for Colonial Bank (collectively, “FDIC”), alleging violations of federal and state
securities laws in connection with private-label RMBS issued, underwritten, and/or sold by
Citigroup. The terms of the resolution of those claims are memorialized in a separate agreement,
attached as Exhibit A.
D. Citigroup acknowledges the facts set out in the Statement of Facts set forth in
Annex 1, attached and hereby incorporated.
E. In consideration of the mutual promises and obligations of this Agreement, the
Parties agree and covenant as follows:
TERMS AND CONDITIONS
1. Payment. Citigroup shall pay a total amount of $4,500,000,000.00 to resolve pending
and potential legal claims in connection with the packaging, marketing, sale, structuring,
arrangement, and issuance of RMBS and CDOs by Citigroup (“Settlement Amount”). As set out
below, $4,000,000,000.00 of that amount will be deposited in the United States Treasury and the
remainder is paid to resolve the claims of the States and the FDIC, pursuant to the subsequent
provisions of this Paragraph 1.
A. Within fifteen business days of receiving written payment processing instructions
from the Department of Justice, Office of the Associate Attorney General, Citigroup shall pay
$4,208,250,000.00 of the Settlement Amount by electronic funds transfer to the Department of
Justice.
i. $4,000,000,000.00 of the Settlement Amount, and no other amount, is a civil
monetary penalty recovered pursuant to the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (“FIRREA”), 12 U.S.C. § 1833a. It will
be deposited in the General Fund of the United States Treasury.
ii. $208,250,000.00 and no other amount, is paid by Citigroup in settlement of the
claims of the FDIC identified in Recital Paragraph C, pursuant to the settlement
2
agreement attached hereto as Exhibit A, the terms of which are not altered or
affected by this Agreement.
B. $102,700,000.00, and no other amount, will be paid by Citigroup to the State of
California pursuant to Paragraph 6, below, and the terms of written payment instructions from
the State of California, Office of the Attorney General. Payment shall be made by electronic
funds transfer within fifteen business days of receiving written payment processing instructions
from the State of California, Office of the Attorney General.
C. $7,350,000.00, and no other amount, will be paid by Citigroup to the State of
Delaware pursuant to Paragraph 7, below, and the terms of written payment instructions from the
State of Delaware, Office of the Attorney General. Payment shall be made by electronic funds
transfer within fifteen business days of receiving written payment processing instructions from
the State of Delaware, Office of the Attorney General.
D. $44,000,000.00, and no other amount, will be paid by Citigroup to the State of
Illinois pursuant to Paragraph 8, below, and the terms of written payment instructions from the
State of Illinois, Office of the Attorney General. Payment shall be made by electronic funds
transfer within fifteen business days of receiving written payment processing instructions from
the State of Illinois, Office of the Attorney General.
E. $45,700,000.00, and no other amount, will be paid by Citigroup to the
Commonwealth of Massachusetts pursuant to Paragraph 9, below, and the terms of written
payment instructions from the Commonwealth of Massachusetts, Office of the Attorney General.
Payment shall be made by electronic funds transfer within fifteen business days of receiving
written payment processing instructions from the Commonwealth of Massachusetts, Office of the
Attorney General.
3
F. $92,000,000.00, and no other amount, will be paid by Citigroup to the State of
New York pursuant to Paragraph 10, below, and the terms of written payment instructions from
the State of New York, Office of the Attorney General. Payment shall be made by electronic
funds transfer within fifteen business days of receiving written payment processing instructions
from the State of New York, Office of the Attorney General.
2. Consumer Relief. In addition, Citigroup shall provide $2.5 billion worth of consumer
relief as set forth in Annex 2, attached and hereby incorporated as a term of this Agreement. The
value of consumer relief provided shall be calculated and enforced pursuant to the terms of
Annex 2. An independent monitor will be appointed to determine whether Citigroup has
satisfied the obligations contained in this Paragraph (such monitor to be Thomas J. Perrelli), and
any costs associated with said Monitor shall be borne by Citigroup.
3. Covered Conduct. “Covered Conduct” as used herein is defined as the creation,
pooling, structuring, arranging, formation, packaging, marketing, underwriting, sale, or issuance
prior to January 1, 2009 by Citigroup of the RMBS and CDOs identified in Annex 3, attached
and hereby incorporated. Covered Conduct includes representations, disclosures, or nondisclosures
to RMBS investors made in connection with the activities set forth above about the
underlying residential mortgage loans, where the representation or non-disclosure involves
information about or obtained during the process of originating, acquiring, securitizing,
underwriting, or servicing residential mortgage loans included in the RMBS identified in
Annex 3. Covered Conduct also includes representations, disclosures, or non-disclosures made
in connection with the activities set forth above about the CDOs identified in Annex 3, attached
and hereby incorporated. Covered Conduct does not include: (i) conduct relating to the
origination of residential mortgages, except representations or non-disclosures to investors in the
4
RMBS listed in Annex 3 about origination of, or about information obtained in the course of
originating, such loans; (ii) origination conduct unrelated to securitization, such as soliciting,
aiding or abetting borrower fraud; (iii) the servicing of residential mortgage loans, except
representations or non-disclosures to investors in the RMBS listed in Annex 3 about servicing, or
information obtained in the course of servicing, such loans; or (iv) representations or nondisclosures
made in connection with the trading of RMBS, except to the extent that the
representations or non-disclosures are in the offering materials for the underlying RMBS listed in
Annex 3.
4. Cooperation. Until the date upon which all investigations and any prosecution arising
out of the Covered Conduct are concluded by the Department of Justice, whether or not they are
concluded within the term of this Agreement, Citigroup shall, subject to applicable laws or
regulations: (a) cooperate fully with the Department of Justice (including the Federal Bureau of
Investigation) and any other law enforcement agency designated by the Department of Justice
regarding matters arising out of the Covered Conduct; (b) assist the Department of Justice in any
investigation or prosecution arising out of the Covered Conduct by providing logistical and
technical support for any meeting, interview, grand jury proceeding, or any trial or other court
proceeding; (c) use its best efforts to secure the attendance and truthful statements or testimony
of any officer, director, agent, or employee of any of the entities released in Paragraph 5 at any
meeting or interview or before the grand jury or at any trial or other court proceeding regarding
matters arising out of the Covered Conduct; and (d) provide the Department of Justice, upon
request, all non-privileged information, documents, records, or other tangible evidence regarding
matters arising out of the Covered Conduct about which the Department or any designated law
enforcement agency inquires.
5
5. Releases by the United States. Subject to the exceptions in Paragraph 12 (“Excluded
Claims”), and conditioned upon Citigroup’s full payment of the Settlement Amount (of which
$4 billion will be paid as a civil monetary penalty pursuant to FIRREA, 12 U.S.C. § 1833a), and
Citigroup’s agreement, by executing this Agreement, to satisfy the terms in Paragraph 2
(“Consumer Relief”) and Paragraph 4 (“Cooperation”), the United States fully and finally
releases Citigroup and each of its current and former subsidiaries and affiliated entities
(collectively, the “Released Entities”), and each of their respective successors and assigns from
any civil claim the United States has against the Released Entities for the Covered Conduct
arising under FIRREA, 12 U.S.C. § l833a; the False Claims Act, 31 U.S.C. §§ 3729, et seq.; the
Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801, et seq.; the Racketeer Influenced and
Corrupt Organizations Act, 18 U.S.C. §§ 1961, et seq.; the Injunctions Against Fraud Act, 18
U.S.C. § 1345; common law theories of negligence, payment by mistake, unjust enrichment,
money had and received, breach of fiduciary duty, breach of contract, misrepresentation, deceit,
fraud, and aiding and abetting any of the foregoing; or that the Civil Division of the Department
of Justice has actual and present authority to assert and compromise pursuant to 28 C.F.R.
§ 0.45.
6. Releases by the California Attorney General. Subject to the exceptions in
Paragraph 12 (Excluded Claims), and conditioned solely upon Citigroup’s full payment of the
Settlement Amount (of which $102,700,000.00 will be paid to the Office of the California
Attorney General, in accordance with written payment instructions from the California Attorney
General, to remediate harms to the State, pursuant to California Government Code §§ 12650-
12656 and 12658, allegedly resulting from unlawful conduct of the Released Entities), the
California Attorney General fully and finally releases the Released Entities from any civil or
6
administrative claim for the Covered Conduct that the California Attorney General has authority
to bring, including but not limited to: California Corporate Securities Law of 1968, Cal.
Corporations Code § 25000 et seq., California Government Code §§ 12658 and 12660 and
California Government Code §§ 12650-12656, common law theories of negligence, payment by
mistake, unjust enrichment, money had and received, breach of fiduciary duty, breach of
contract, misrepresentation, deceit, fraud and aiding and abetting any of the foregoing. The
California Attorney General executes this release in her official capacity and releases only claims
that the California Attorney General has the authority to release for the Covered Conduct. The
California Attorney General agrees that no portion of the funds in this paragraph is received as a
civil penalty or fine, including, but not limited to any civil penalty or fine imposed under
California Government Code § 12651. The California Attorney General and Citigroup
acknowledge that they have been advised by their attorneys of the contents and effect of Section
1542 of the California Civil Code (“Section 1542”) and hereby expressly waive with respect to
this Agreement any and all provisions, rights, and benefits conferred by Section 1542.
7. Releases by the State of Delaware. Subject to the exceptions in Paragraph 12
(Excluded Claims), and conditioned solely upon Citigroup’s full payment of the Settlement
Amount (of which $7,350,000.00 will be paid to the State of Delaware, in accordance with
written payment instructions from the State of Delaware, Office of the Attorney General, to
remediate harms to the State allegedly resulting from unlawful conduct of the Released Entities),
the Delaware Department of Justice fully and finally releases the Released Entities from any civil
or administrative claim for the Covered Conduct that it has authority to bring, including but not
limited to: 6 Del. C. Chapter 12 (the Delaware False Claims and Reporting Act), 6 Del. C.
§§ 2511 et seq. (the Delaware Consumer Fraud Act), 6 Del. C. Chapter 73 (the Delaware
7
Securities Act), and common law theories of negligence, payment by mistake, unjust enrichment,
money had and received, breach of fiduciary duty, breach of contract, misrepresentation, deceit,
fraud and aiding and abetting any of the foregoing. The State of Delaware agrees that no portion
of the funds in this paragraph is received as a civil penalty or fine, including, but not limited to
any civil penalty or fine imposed under 6 Del. C. § 1201 or § 2522.
8. Releases by the State of Illinois. Subject to the exceptions in Paragraph 12 (Excluded
Claims), and conditioned solely upon Citigroup’s full payment of the Settlement Amount (of
which $44,000,000.00 will be paid to the State of Illinois, Office of the Attorney General, in
accordance with the written payment instructions from the State of Illinois, Office of the
Attorney General, to remediate harms to the State allegedly resulting from unlawful conduct of
the Released Entities), the Illinois Attorney General of the State of Illinois fully and finally
releases the Released Entities from any civil or administrative claim for the Covered Conduct
that it has authority to bring, including but not limited to: Illinois Securities Law of 1953, 815
Ill. Comp. Stat. 5/1 et seq., and common law theories of negligence, payment by mistake, unjust
enrichment, money had and received, breach of fiduciary duty, breach of contract,
misrepresentation, deceit, fraud and aiding and abetting any of the foregoing. The State of
Illinois agrees that no portion of the funds in this paragraph is received as a civil penalty or fine.
9. Releases of the Commonwealth of Massachusetts. Subject to the exceptions in
Paragraph 12 (Excluded Claims), and conditioned solely upon Citigroup’s full payment of the
Settlement Amount (of which $45,700,000.00 will be paid to the Commonwealth of
Massachusetts, in accordance with the written payment instructions from the Commonwealth of
Massachusetts, to remediate harms to the Commonwealth allegedly resulting from unlawful
conduct of the Released Entities), the Attorney General of the Commonwealth of Massachusetts
8
fully and finally releases the Released Entities from any civil claim for the Covered Conduct that
she has authority to bring, including but not limited to: M.G.L. c. 93A, M.G.L. c. 12, and
common law theories of negligence, payment by mistake, unjust enrichment, money had and
received, breach of fiduciary duty, breach of contract, misrepresentation, deceit, fraud and aiding
and abetting any of the foregoing. The payment to the Commonwealth of Massachusetts shall be
made to a trustee chosen by the Commonwealth, which shall hold the monies and distribute them
as directed by the Massachusetts Office of the Attorney General for consumer relief,
compensation to the Commonwealth and its entities, and pursuant to M.G.L. c. 12 § 4A,
implementation of this Agreement and related purposes. Funds or portions of the funds
remaining in the trust after 90 days, at the discretion of the Massachusetts Office of the Attorney
General, may be transferred to the Massachusetts Treasury. The Commonwealth of
Massachusetts agrees that no portion of the funds in this paragraph is received as a civil penalty
or fine.
10. Releases by the State of New York. Subject to the exceptions in Paragraph 12
(Excluded Claims), and conditioned solely upon Citigroup’s full payment of the Settlement
Amount (of which $92,000,000.00 will be paid to the State of New York, in accordance with
written payment instructions from the State of New York, Office of the Attorney General, to
remediate harms to the State allegedly resulting from unlawful conduct of the Released Entities),
the State of New York, by Eric T. Schneiderman, Attorney General of the State of New York,
fully and finally releases the Released Entities from any civil or administrative claim for the
Covered Conduct that it has authority to bring, including but not limited to any such claim
under: New York General Business Law Article 23A, New York Executive Law § 63(12), and
common law theories of negligence, payment by mistake, unjust enrichment, money had and
9
received, breach of fiduciary duty, breach of contract, misrepresentation, deceit, fraud and aiding
and abetting any of the foregoing. The payment to the State of New York shall be used, to the
maximum extent possible, for purposes of redeveloping and revitalizing housing and home
ownership and rebuilding communities in the State, and for programs intended to avoid
preventable foreclosures, to ameliorate the effects of the foreclosure crisis, to provide funding for
housing counselors and legal assistance, housing remediation and anti-blight projects, for code
enforcement, and to enhance law enforcement efforts involving financial fraud or unfair or
deceptive acts or practices. The State of New York agrees that no portion of the funds in this
paragraph is received as a civil penalty or fine.
11. Releases by the FDIC. The release of claims by the FDIC is contained in a separate
settlement agreement with Citi, attached as Exhibit A. Any release of claims by the FDIC is
governed solely by that separate settlement agreement.
12. Excluded Claims. Notwithstanding the releases in Paragraphs 5-11 of this Agreement,
or any other term(s) of this Agreement, the following claims are specifically reserved and not
released by this Agreement:
a. Any criminal liability;
b. Any liability of any individual;
c. Any liability arising under Title 26 of the United States Code (the Internal
Revenue Code);
d. Any liability to or claims of the FDIC (in its capacity as a corporation, receiver, or
conservator), except as expressly set forth in the separate agreement with the
FDIC;
10
e. Any claim related to compliance with the National Mortgage Settlement
(“NMS”), or to compliance with the related agreements reached between the
settling banks and individual states;
f. Any liability to or claims of the United States of America, the Department of
Housing and Urban Development/Federal Housing Administration, the
Department of Veterans Affairs, or Fannie Mae or Freddie Mac relating to whole
loans insured, guaranteed, or purchased by the Department of Housing and Urban
Development/Federal Housing Administration, the Department of Veterans
Affairs, or Fannie Mae or Freddie Mac, except claims based on or arising from
the securitizations of any such loans in the RMBS or CDOs listed in Annex 1.
g. Any administrative liability, including the suspension and debarment rights of any
federal agency;
h. Any liability based upon obligations created by this Settlement Agreement;
i. Any liability for the claims or conduct alleged in the following qui tam actions,
and no setoff related to amounts paid under this Agreement shall be applied to any
recovery in connection with any of these actions:
(i) United States, et al. ex rel. Szymoniak v. American Home Mortgage
Servicing, Inc. et al., No. 0:10-cv-01465-JFA (D.S.C.), and United States
ex rel. Szymoniak v. ACE Securities Corp. et al., No. 13-cv-464-JFA
(D.S.C.); and
(ii) United States ex rel. [Sealed] v. [Sealed], as disclosed to Citigroup;
j. Claims raised in Commonwealth of Massachusetts v. Bank of America, N.A., et
al., Civ. No. 11-4363 (BLS1)(Massachusetts Suffolk Superior Court); and
11
k. Any claims related to the alleged manipulation of the London Interbank Offered
Rate or other currency benchmarks.
13. Releases by Citigroup. Citigroup and any current or former affiliated entity and any of
their respective successors and assigns fully and finally release the United States and the States,
and their officers, agents, employees, and servants, from any claims (including attorney’s fees,
costs, and expenses of every kind and however denominated) that Citigroup has asserted, could
have asserted, or may assert in the future against the United States and the States, and their
officers, agents, employees, and servants, related to the Covered Conduct and the investigation
and civil prosecution to date thereof.
14. Waiver of Potential FDIC Indemnification Claims by Citi. Citigroup hereby
irrevocably waives any right that it otherwise might have to seek (and in any event agrees that it
shall not seek) any form of indemnification, reimbursement or contribution from the FDIC in any
capacity, including the FDIC in its Corporate Capacity or the FDIC in its Receiver Capacity for
any payment that is a portion of the Settlement Amount set forth in Paragraph 1 of this
Agreement or of the Consumer Relief set forth in Paragraph 2 of this Agreement, including
payments to the United States and the States made pursuant to Paragraphs 1 and 2 of this
Agreement.
15. Waiver of Potential Defenses by Citigroup. Citigroup and any current or former
affiliated entity (to the extent that Citigroup retains liability for the Covered Conduct associated
with such affiliated entity) and any of their respective successors and assigns waive and shall not
assert any defenses Citigroup may have to any criminal prosecution or administrative action
relating to the Covered Conduct that may be based in whole or in part on a contention that, under
12
the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive
Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a remedy sought
in such criminal prosecution or administrative action.
16. Unallowable Costs Defined. All costs (as defined in the Federal Acquisition Regulation,
48 C.F.R. § 31.205-47) incurred by or on behalf of Citigroup, and its present or former officers,
directors, employees, shareholders, and agents in connection with:
a. the matters covered by this Agreement;
b. the United States’ audit(s) and civil investigation(s) of the matters covered by this
Agreement;
c. Citigroup’s investigation, defense, and corrective actions undertaken in response
to the United States’ audit(s) and civil and any criminal investigation(s) in
connection with the matters covered by this Agreement (including attorney’s
fees);
d. the negotiation and performance of this Agreement; and
e. the payment Citigroup makes to the United States pursuant to this Agreement, are
unallowable costs for government contracting purposes (hereinafter referred to as
“Unallowable Costs”).
17. Future Treatment of Unallowable Costs. Unallowable Costs will be separately
determined and accounted for by Citigroup, and Citigroup shall not charge such Unallowable
Costs directly or indirectly to any contract with the United States.
18. This Agreement is governed by the laws of the United States. The Parties agree that the
exclusive jurisdiction and venue for any dispute relating to this Agreement is the United States
District Court for the Eastern District of New York.
13
19. The Parties acknowledge that this Agreement is made without any trial or adjudication or
finding of any issue of fact or law, and is not a final order of any court or governmental
authority.
20. Each Party shall bear its own legal and other costs incurred in connection with this
matter, including the preparation and performance of this Agreement.
21. Each party and signatory to this Agreement represents that it freely and voluntarily enters
into this Agreement without any degree of duress or compulsion.
22. Nothing in this Agreement in any way alters the terms of the NMS, or Citigroup’s
obligations under the NMS.
23. Nothing in this Agreement constitutes an agreement by the United States concerning the
characterization of the Settlement Amount for the purposes of the Internal Revenue laws,
Title 26 of the United States Code.
24. For the purposes of construing the Agreement, this Agreement shall be deemed to have
been drafted by all Parties and shall not, therefore, be construed against any Party for that reason
in any dispute.
25. This Agreement constitutes the complete agreement between the Parties. This
Agreement may not be amended except by written consent of the Parties.
26. The undersigned counsel represent and warrant that they are fully authorized to execute
this Agreement on behalf of the persons and entities indicated below.
27. This Agreement may be executed in counterparts, each of which constitutes an original
and all of which constitute one and the same Agreement.
28. This Agreement is binding on Citigroup’s successors, transferees, heirs, and assigns.
14
29. All parties consent to the disclosure to the public of this Agreement, and information
about this Agreement, by Citigroup, the United States, the States, and the FDIC whose separate
settlement agreement is referenced herein and attached as an exhibit to this Agreement.
30. This Agreement is effective on the date of signature of the last signatory to the
Agreement (“Effective Date of this Agreement”). Facsimiles of signatures shall constitute
acceptable, binding signatures for purposes of this Agreement.
15
For the California Department of Justice:
California Attorney General
California Department of Justice
455 Golden Gate, Suite 1000
San Francisco, CA 941 02
Phone: (415) 703-5500
Dated: 7 I!J I/ [ I I

For the State of Illinois:
LISA MADIGAN
Attorney General State of Illinois
500 South Second Street .
Springfield, IL 62706
Phone: (217) 782-1090
Dated: -vr, I’1 I L1)’ 2A> /,,( —–f—-‘——–.,
For the Commonwealth of Massachusetts:
Office of the Attorney General
Attorney General Martha Coakley
GLENN KAPLAN
Assistant Attorney General
One Ashburton Place
Boston, MA 02108
Phone: (617)727-2200
Dated:
By:

Read Full Post »

Department of Justice

http://www.justice.gov/opa/pr/2014/July/14-ag-733.html

Office of Public Affairs

FOR IMMEDIATE RELEASE

Monday, July 14, 2014

Justice Department, Federal and State Partners Secure Record $7 Billion Global Settlement with Citigroup for Misleading Investors About Securities Containing Toxic Mortgages

Citigroup to Pay the Largest Penalty of Its Kind – $4 Billion

The Justice Department, along with federal and state partners, today announced a $7 billion settlement with Citigroup Inc. to resolve federal and state civil claims related to Citigroup’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) prior to Jan. 1, 2009.  The resolution includes a $4 billion civil penalty – the largest penalty to date under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).  As part of the settlement, Citigroup acknowledged it made serious misrepresentations to the public – including the investing public – about the mortgage loans it securitized in RMBS.  The resolution also requires Citigroup to provide relief to underwater homeowners, distressed borrowers and affected communities through a variety of means including financing affordable rental housing developments for low-income families in high-cost areas.  The settlement does not absolve Citigroup or its employees from facing any possible criminal charges.

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered $20 billion to date for American consumers and investors.  

“This historic penalty is appropriate given the strength of the evidence of the wrongdoing committed by Citi,” said Attorney General Eric Holder.  “The bank’s activities contributed mightily to the financial crisis that devastated our economy in 2008.  Taken together, we believe the size and scope of this resolution goes beyond what could be considered the mere cost of doing business.  Citi is not the first financial institution to be held accountable by this Justice Department, and it will certainly not be the last.”

 The settlement includes an agreed upon statement of facts that describes how Citigroup made representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors.  Contrary to those representations, Citigroup securitized and sold RMBS with underlying mortgage loans that it knew had material defects.  As the statement of facts explains, on a number of occasions, Citigroup employees learned that significant percentages of the mortgage loans reviewed in due diligence had material defects.  In one instance, a Citigroup trader stated in an internal email that he “went through the Diligence Reports and think[s] [they] should start praying . . . [he] would not be surprised if half of these loans went down. . . It’s amazing that some of these loans were closed at all.”  Citigroup nevertheless securitized the loan pools containing defective loans and sold the resulting RMBS to investors for billions of dollars.  This conduct, along with similar conduct by other banks that bundled defective and toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.                                  

“Today, we hold Citi accountable for its contributing role in creating the financial crisis, not only by demanding the largest civil penalty in history, but also by requiring innovative consumer relief that will help rectify the harm caused by Citi’s conduct,” said Associate Attorney General Tony West.  “In addition to the principal reductions and loan modifications we’ve built into previous resolutions, this consumer relief menu includes new measures such as $200 million in typically hard-to-obtain financing that will facilitate the construction of affordable rental housing, bringing relief to families pushed into the rental market in the wake of the financial crisis.”

Of the $7 billion resolution, $4.5 billion will be paid to settle federal and state civil claims by various entities related to RMBS: Citigroup will pay $4 billion as a civil penalty to settle the Justice Department claims under FIRREA, $208.25 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $102.7 million to settle claims by the state of California, $92 million to settle claims by the state of New York, $44 million to settle claims by the state of Illinois, $45.7  million to settle claims by the Commonwealth of Massachusetts, and $7.35 to settle claims by the state of Delaware.

Citigroup will pay out the remaining $2.5 billion in the form of relief to aid consumers harmed by the unlawful conduct of Citigroup.  That relief will take various forms, including loan modification for underwater homeowners, refinancing for distressed borrowers, down payment and closing cost assistance to homebuyers, donations to organizations assisting communities in redevelopment and affordable rental housing for low-income families in high-cost areas.  An independent monitor will be appointed to determine whether Citigroup is satisfying its obligations.  If Citigroup fails to live up to its agreement by the end of 2018,  it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.  

The U.S. Attorney’s Offices for the Eastern District of New York and the District of Colorado conducted investigations into Citigroup’s practices related to the sale and issuance of RMBS between 2006 and 2007.

“The strength of our financial markets depends on the truth of the representations that banks provide to investors and the public every day,” said U.S. Attorney John Walsh for the District of Colorado, Co-Chair of the RMBS Working Group.  “Today’s $7 billion settlement is a major step toward restoring public confidence in those markets.  Due to the tireless work by the Department of Justice, Citigroup is being forced to take responsibility for its home mortgage securitization misconduct in the years leading up to the financial crisis.  As important a step as this settlement is, however, the work of the RMBS working group is far from done, we will continue to pursue our investigations and cases vigorously because many other banks have not yet taken responsibility for their misconduct in packaging and selling RMBS securities.”

“After nearly 50 subpoenas to Citigroup, Trustees, Servicers, Due Diligence providers and their employees, and after collecting nearly 25 million documents relating to every residential mortgage backed security issued or underwritten by Citigroup in 2006 and 2007, our teams found that the misconduct in Citigroup’s deals devastated the nation and the world’s economies, touching everyone,” said U.S. Attorney of the Eastern District of New York Loretta Lynch.  “The investors in Citigroup RMBS included federally-insured financial institutions, as well as a host of states, cities, public and union pension and benefit funds, universities, religious charities, and hospitals, among others.  These are our neighbors in Colorado, New York and around the country, hard-working people who saved and put away for retirement, only to see their savings decimated.”

This settlement resolves civil claims against Citigroup arising out of certain securities packaged, securitized, structured, marketed, and sold by Citigroup.  The agreement does not release individuals from civil charges, nor does it release Citigroup or any individuals from potential criminal prosecution. In addition, as part of the settlement, Citigroup has pledged to fully cooperate in investigations related to the conduct covered by the agreement.

 Michael Stephens, Acting Inspector General for the Federal Housing Finance Agency said, “Citigroup securitized billions of dollars of defective mortgages, after which investors suffered enormous losses by purchasing RMBS from Citi not knowing about those defects. Today’s settlement is another significant step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit in the lead up to the financial crisis, and is a necessary step toward reviving a sound RMBS market that is crucial to the housing industry and the American economy.  We are proud to have worked with the Department of Justice, the U.S. Attorneys’ Offices in the Eastern District of New York and the District of Colorado. They have been great partners and we look forward to our continued work together.”

The underlying investigation was led by Assistant U.S. Attorneys Richard K. Hayes, Kevin Traskos, Lila Bateman, John Vagelatos, J. Chris Larson and Edward K. Newman, with the support of agents from the Office of the Inspector General for the Federal Housing Finance Agency, in conjunction with the President’s Financial Fraud Enforcement Task Force’s RMBS Working Group.

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis.  The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. Attorneys’ Offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state Attorneys General offices around the country.

The RMBS Working Group is led by its Director Geoffrey Graber and its five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Assistant Attorney General for the Criminal Division Leslie Caldwell, Director of the SEC’s Division of Enforcement Andrew Ceresney, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: http://www.stopfraud.gov .

Read Full Post »

After I read some posts on others’ blogs, I really do feel much better. Wanna know which ones I read? Here they are:

“NO ENDORSEMENT, NO NEGOTIATION–NO NEGOTIATION, NO SECURITIZATION” On Liberty Road Media: http://libertyroadmedia.wordpress.com/2014/06/20/no-endorsement-no-negotiation-no-negotiation-no-securitization/

and I read this and it helped too!:

Ineptocracy from here:
http://tomfernandez28.com/2014/06/20/ineptocracy-3/

Of course this Helped a lot!:

http://www.newser.com/story/188674/miss-usa-doesnt-know-her-state-capital.html
but I actually read that here:
https://wordpress.com/

Read Full Post »

It never ceases to amaze me.  With all these numerous govt. programs that are supposed to be helping Homeowners/Borrowers stay in their homes, I have to wonder just who the hell it is that they are allegedly helping.  A case in Colorado, that I have become aware of, the 83 year old woman is most likely going to be on the streets next week.  And guess who is putting her out of her home.?.  Freddie Mac.

For some stupid reason, I was under the impression that Fannie Mae, Freddie Mac, and others, along with all these billions of dollars from the robo-signing settlements, and the numerous entities alleging to be aiding those being foreclosed upon, and not one of them does a damned thing that I can see.  The propaganda they feed to everyone in the media, might sound good…You know that the housing market has picked up, foreclosures are down, new home buyers are up.?.  Yea right.  Somebody forgot to tell our neighborhood.  The vacant houses are still vacant.  Houses that should sale for $90,000, sell for $36,000.

But hey, the housing market has recovered.  RRRRiiiiiiiiiiiiggggggggggghhhhhhhhhhhhhtttttttttttttttt!!!  In your dreams.

Unless and until the someone steps in, slaps these foreclosure mill attorneys around, you know, the ones that make up the fictional documents in the County’s Land Records, throw their asses in jail for the forgery, fraud, perjury, that they are so used to committing,  they ain’t ever gonna stop.  

Has anyone other than myself noticed that the foreclosure mill attorneys, and other attorneys who on a regular basis have been foreclosing on Borrowers/Homeowner and manufacturing documents to use to foreclose with; sign the Assignments, Deeds Under Power, and lie to the Courts; an have been doing it so long now, yes, they have been breaking the law for so long now in foreclosure cases, it has spilled over to other types of cases.  No matter what kind of case it is, there are certain attorneys, who continue breaking the law as if they were working a foreclosure case.  And the worst part, is the judges let them.  WTF?  It is bad.  They are violating the RICO, committing fraud, forgery, theft, perjury, and God only knows what else.

Now you have the full swat teams going to evictions.  If the cops don’t like the way things are going, they just kill the homeowner.  It has gotten way out of hand.   Looks like if you fight the banks and win, you either go to jail, or die.

Be safe yall!

Read Full Post »

Judge rules secret FBI national security letters unconstitutional

fbiwarantless12z.jpg

Feb. 10, 2009: The main headquarters of the FBI, the J. Edgar Hoover Building, in Washington, DC.AP

A federal judge has struck down a set of laws allowing the FBI to issue so-called national security letters to banks, phone companies and other businesses demanding customer information.

U.S. District Judge Susan Illston said the laws violate the First Amendment and the separation of powers principles and ordered the government to stop issuing the secretive letters or enforcing their gag orders, The Wall Street Journal reported.

The FBI almost always bars recipients of the letters from disclosing to anyone — including customers — that they have even received the demands, Illston said in the ruling released Friday.

The government has failed to show that the letters and the blanket non-disclosure policy “serve the compelling need of national security,” and the gag order creates “too large a danger that speech is being unnecessarily restricted,” the San Francisco-based Illston wrote.

A Department of Justice spokesman told the Journal the department was “reviewing the order.”

FBI counter-terrorism agents began issuing the letters, which don’t require a judge’s approval, after Congress passed the USA Patriot Act in the wake of the Sept. 11, 2001, attacks.

The case arises from a lawsuit that lawyers with the Electronic Frontier Foundation filed in 2011 on behalf of an unnamed telecommunications company that received an FBI demand for customer information.

“We are very pleased that the court recognized the fatal constitutional shortcomings of the NSL statute,” EFF lawyer Matt Zimmerman said. “The government’s gags have truncated the public debate on these controversial surveillance tools. Our client looks forward to the day when it can publicly discuss its experience.”

Illston wrote that she was also troubled by the limited powers judges have to lift the gag orders.

Judges can eliminate the gag order only if they have “no reason to believe that disclosure may endanger the national security of the United States, interfere with a criminal counter-terrorism, or counterintelligence investigation, interfere with diplomatic relations, or endanger the life or physical safety of any person.”

That provision also violated the Constitution because it blocks meaningful judicial review.

Illston ordered the FBI to cease issuing the letters, but put her order on hold for 90 days so the U.S. Department of Justice can appeal to the 9th U.S. Circuit Court of Appeals.

Illston isn’t the first federal judge to find the letters troubling. The 2nd U.S. Circuit Court of Appeals in New York also found the gag order unconstitutional, but allowed the FBI to continue issuing them if it made changes to its system such as notifying recipients they can ask federal judges to review the letters.

Illston ruled Friday that it’s up to Congress, and not the courts, to tinker with the letters.

In 2007, the Justice Department’s inspector general found widespread violations in the FBI’s use of the letters, including demands without proper authorization and information obtained in non-emergency circumstances. The FBI has tightened oversight of the system.

The FBI made 16,511 national security letter requests for information regarding 7,201 people in 2011, the latest data available. The FBI uses the letters to collect unlimited kinds of sensitive, private information like financial and phone records.

The Associated Press contributed to this report.

Read Full Post »

Exclusive: NY Judge in Largest Bankruptcy Case in History Receives IRS & SEC Whistleblower Filing

24 APRIL 2014 63 COMMENTS

**WORLD EXCLUSIVE BREAKING STORY.** **MUST CREDIT INVESTIGATIVE JOURNALIST MARINKA PESCHMANN**

Creditor and Whistleblower evidence alleges securities fraud, income tax fraud and income tax evasion. Further investigation is necessary to protect millions of homeowners.

If you have not read this story, it is a must read!!!

Read it here:

http://www.marinkapeschmann.com/2014/04/24/exclusive-ny-judge-in-largest-bankruptcy-case-in-history-receives-irs-sec-whistleblower-filing/

 

Read Full Post »

Former FHFA Head DeMarco Targeted by Disgruntled Ex-COO

Handcuffs_Blue_Pic_05_07_14

Last week, Federal Housing Finance Agency (FHFA) Chief Operating Officer Richard Hornsby reportedly threatened to shoot the Agency’s former top official, Edward DeMarco. According to Bloomberg, the threat was made as part of a murder-suicide Hornsby had planned regarding Hornby’s job performance ratings as reported by DeMarco.

Hornsby was arrested April 29, charged with a single felony of threatening to kidnap or injure a person. DeMarco was taken to a secure location the following day. Hornsby has since been released as long as he does not assault, harass, threaten or stalk DeMarco. There is also a restraining order placed on Hornsby as a result of the threat.

The threat reportedly stems from a negative performance rating. This resulted in Hornsby making overtly threatening comments toward DeMarco at an accelerated rate. May 14 has been set as the date for when the next hearing is held for this case.

Hornsby began working at the FHFA in November 2011, after 25-plus years in various management roles at the Federal Reserve Bank of San Francisco. FHFA Head Mel Watt has named Eric Stein, a Treasury Department official who joined the FHFA in early 2014, as interim FHFA COO.

Read Full Post »

Have you ever been to Office Depot, where everyone wants to act like an idiot?

I sent someone to Office Depot today.  All he needed was three cover sheets printed onto 50-65# card stock.  He knows nothing about these things, and is from another country.

Anyway, the idiots in there told him that it would be 3-4 hours to make three copies on 50-65# card stock, because they have to change the paper?  What kind of bullshit is that?  3-4 Hours?  Hell, all they have to do, is take the three pieces of card stock over to the copier, stick those three blank pieces of card stock on top of the paper in the copier, and but the document to be copied onto the scanner, punch 3 for 3 copies, and hit enter.

How hard is that?  I swear Alex Jones and the others are absolutely right about us being “dumbed down”, that is about the dumbest thing I have ever heard.  3-4 hours for 3 copies.  I was in printing back before computers took over, and hell, you could wash up the printing press, put the new ink in, warm it up, install the plate on the drum, and get it registering, and print 3 sheets of card stock in 15 minutes tops.  And they are going to tell me that it will take 3-4 hours to change a copier over to print on card stock, when I know for a fact, it will print on that stock, without changing a damned thing.

Ok, Good Luck To All Out There Having to Get Something Printed on Card Stock at the Office Depot Memorial Drive Stone Mountain, GA!

Read Full Post »

NBC in Washington D.C. goes live with ‘Breaking News’ from Fukushima: “Troubling news out of Japan”; Fish showing high levels of radiation — and some of that radioactive contamination could actually be hitting the US in weeks (VIDEO)

 
Published: March 2nd, 2014 at 10:56 am ET 
By  
Email Article Email Article 
130 comments

NBC 4 Washington D.C., Feb. 28, 2014:

News 4′s Molette Green is following breaking news from the live desk. Molette…

Just getting some troubling news out of Japan. Fish caught off the coast of Fukushima are showing high levels of radiation. We’ve just learned this morning the amount exceeds Japan’s allowed limit. This information is coming in from the head of agriculture in Tokyo this morning. A new report just released days ago says some of that radioactive contamination from Japan’s nuclear disaster several years ago could actually reach the U.S. West Coast within weeks.

That’s the latest from the live desk.

See NHK’s report on the ‘High radioactive materials detected in fish’ here

 
Published: March 2nd, 2014 at 10:56 am ET 
By  
Email Article Email Article 
130 comments

Related Posts

  1. Fox News: Fukushima contamination is hitting California — “Humans are terrified” of eating it — “It’s an open question” about the risks — “You’re not scared? To me, if someone tells me there’s low levels of radioactivity in that fish…” (VIDEO) January 17, 2014
  2. NBC Nightly News: Worry at Fukushima plant — Scientist reveals “increased” amounts of radioactive groundwater have started flowing into ocean — Contamination levels in marine life to start rising — “Other countries are worried” (VIDEO) September 25, 2013
  3. ABC7: Breaking News — Oil tanker strikes tower of San Francisco’s Bay Bridge (VIDEO & PHOTO) January 7, 2013
  4. Scientist: Leading edge of Fukushima plume is now showing up on West Coast — Fish Market Owner: My customers have a lot of concerns about the nuclear contamination, they’re very smart and educated… I didn’t expect this much concern (AUDIO) November 29, 2013
  5. Seattle TV: “Fish and water have shown signs of Fukushima contamination” in U.S. Northwest — Officials to start radiation testing due to news from Japan — NOAA: Nuclear plant leaks “a surprise to everybody, we weren’t aware of it” (VIDEO) August 23, 2013

Read Full Post »

FHFA Settles With BofA for $5.83 Billion Over Countrywide Legacy Loans

http://nationalmortgageprofessional.com/news47937/FHFA-Settles-With-BofA-%245.83-Billion-Over-Countrywide-Legacy-Loans?utm_source=MadMimi&utm_medium=email&utm_content=NMP+Daily%3A+FHFA+Settles+With+BofA+for+%245_83+Billion+Over+Countrywide+Legacy+Loans+and+More+___&utm_campaign=20140327_m119753830_NMP+Daily%3A+FHFA+Settles+With+BofA+for+%245_83+Billion+Over+Countrywide+Legacy+Loans+and+More+___&utm_term=FHFA+Settles+With+BofA+for+_245_83+Billion+Over+Countrywide+Legacy+Loans

FHFA_Logo_04_13_12

The Federal Housing Finance Agency (FHFA) has announced it has reached a settlement in cases involving Bank of America, Countrywide Financial, Merrill Lynch, and certain named individuals totaling approximately $5.83 billion. Bank of America Corporation owns Countrywide and Merrill Lynch. The cases alleged violations of federal and state securities laws in connection with private-label, residential mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac between 2005 and 2007. Allegations of common law fraud were made in the Countrywide and Merrill Lynch cases.

The Agreement provides for an aggregate payment of approximately $9.33 billion by Bank of America that includes the litigation resolution as well as a purchase of securities by Bank of America from Fannie Mae and Freddie Mac.

“FHFA has acted under its statutory mandate to recover losses incurred by the companies and American taxpayers and has concluded that this resolution represents a reasonable and prudent settlement of these cases,” said FHFA Director Melvin L. Watt. “This settlement also represents an important step in helping restore stability to our broader mortgage market and moving to bring back the role of private firms in providing mortgage credit. Many potential homeowners will benefit from increasing certainty in the marketplace and that is very much the direction we should be taking.”

Of the 18 PLS suits filed in 2011, FHFA now has claims remaining in seven suits against various institutions and remains committed to satisfactory resolution of these pending actions.

The settlement agreement regarding private label securities claims between FHFA and Bank of America involves the following cases: Federal Housing Finance Agency v. Bank of America Corp., et al., No. 11 Civ. 6195 (DLC) (S.D.N.Y.); Federal Housing Finance Agency v. Countrywide Financial Corp., et al., No. 12 Civ. 1059 (MRP) (C.D. Cal.); Federal Housing Finance Agency v. Merrill Lynch & Co., Inc., et al., No. 11 Civ. 6202 (DLC) (S.D.N.Y.); as well as one Merrill Lynch security in Federal Housing Finance Agency v. First Horizon National Corp., No. 11 Civ. 6193 (DLC) (S.D.N.Y.).

Read Full Post »

JPMorgan Chase Bets $10.4 Billion on the Early Death of Workers

Monday, March 24, 2014 11:07

(Before It’s News)

Families of young JPMorgan Chase workers who have experienced tragic deaths over the past four months, have been kept in the dark on many details, including the fact that the bank most likely held a life insurance policy on their loved one – payable to itself. Banks in the U.S., as well as other corporations, are allowed to make multi-billion dollar wagers that their profits from life insurance policies on employees will outstrip the cost of paying premiums and other fees. Early deaths help those wagers pay off.

According to the December 31, 2013 financial filing known as the Call Report that JPMorgan made with Federal regulators, it has tied up $10.4 billion in illiquid, long term bets on the death of a large segment of its employees.

The program is known among regulators as Bank Owned Life Insurance or BOLI. Federal regulators specifically exempted BOLI in passing the final version of the Volcker Rule in December of last year which disallowed most proprietary trading or betting for the house. Regulators stated in the rule that “Rather, these accounts permit the banking entity to effectively hedge and cover costs of providing benefits to employees through insurance policies related to key employees.” We have italicized the word “key” because regulators know very well from financial filings that the country’s mega banks are not just insuring key employees but a broad-base of their employees.

Read more

Source: http://rinf.com/alt-news/breaking-news/jpmorgan-chase-bets-10-4-billion-early-death-workers/

Read Full Post »

 

Hearsay on Hearsay: Bank Professional Witnesses Using Business Records Exception as Shield from Truth

by Neil Garfield

Wells Fargo Manual “Blueprint for Fraud”

Well that didn’t take long. Like the revelations concerning Urban Lending Solutions and Bank of America, it is becoming increasingly apparent that the the intermediary banks were hell bent for foreclosure regardless of what was best for the investors or the borrowers. This included, fraud, fabrication, unauthorized documents and signatures, perjury and outright theft of money and identities. I understand the agreement between the Bush administration and the large banks. And I understand the reason why the Obama administration continued to honor the agreements reached between the Bush administration and the large banks. They didn’t have a clue. And they were relying on Wall Street to report on its own behavior. But I’m sure the agreement did not even contemplate the actual crimes committed. I think it is time for US attorneys and the Atty. Gen. of each state to revisit the issue of prosecution of the major Wall Street banks.

With the passage of time we have all had an opportunity to examine the theory of “too big to fail.” As applied, this theory has prevented prosecutions for criminal acts. But more importantly it is allowing and promoting those crimes to be covered up and new crimes to be committed in and out of the court system. A quick review of the current strategy utilized in foreclosure reveals that nearly all foreclosures are based on false assumptions, no facts,  and a blind desire for expediency that  sacrifices access to the courts and due process. The losers are the pension funds that mistakenly invested into this scheme and the borrowers who were used as pawns in a gargantuan Ponzi scheme that literally exceeded all the money in the world.

Let’s look at one of the fundamental strategies of the banks. Remember that the investment banks were merely intermediaries who were supposedly functioning as broker-dealers. As in any securities transaction, the investor places in order and is responsible for payment to the broker-dealer. The broker-dealer tenders payment to the seller. The seller either issues the securities (if it is an issuer) or delivers the securities. The bank takes the money from the investors and doesn’t deliver it to an issuer or seller, but instead uses the money for its own purposes, this is not merely breach of contract —  it is fraud.

And that is exactly what the investors, insurers, government guarantors and other parties have alleged in dozens of lawsuits and hundreds of claims. Large banks have avoided judgment based on these allegations by settling the cases and claims for hundreds of billions of dollars because that is only a fraction of the money they diverted from investors and continue to divert. This continued  diversion is accomplished, among other ways, through the process of foreclosure. I would argue that the lawsuits filed by government-sponsored entities are evidence of an administrative finding of fact that closes the burden of proof to be shifted to the cloud of participants who assert that they are part of a scheme of securitization when in fact they were part of a Ponzi scheme.

This cloud of participants is managed in part by LPS in Jacksonville. If you are really looking for the source of documentation and the choice of plaintiff or forecloser, this would be a good place to start. You will notice that in both judicial and non-judicial settings, there is a single party designated as the apparent creditor. But where the homeowner is proactive and brings suit against multiple entities each of whom have made a claim relating to the alleged loan, the banks stick with presenting a single witness who is “familiar with the business records.” That phrase has been specifically rejected in most jurisdictions as proving the personal knowledge necessary for a finding that the witness is competent to testify or to authenticate documents that will be introduced in evidence. Those records are hearsay and they lack the legal foundation for introduction and acceptance into evidence in the record.

So even where the lawsuit is initiated by “the cloud” and even where they allege that the plaintiff is the servicer and even where they allege that the plaintiff is a trust, the witness presented at trial is a professional witness hired by the servicer. Except for very recent cases, lawyers for the homeowner have ignored the issue of whether the professional witness is truly competent,  and especially why the court should even be listening to a professional witness from the servicer when it is hearing nothing from the creditor. The business records which are proffered to the court as being complete are nothing of the sort. There documents prepared for trial which is specifically excluded from evidence under the hearsay rule and an exception to the business records exception.

Lately Chase has been dancing around these issues by first asserting that it is the owner of a loan by virtue of the merger with Washington Mutual. As the case progresses Chase admits that it is a servicer. Later they often state that the investor is Fannie Mae. This is an interesting assertion which depends upon complete ignorance by opposing counsel for the homeowner and the same ignorance on the part of the judge. Fannie Mae is not and never has been a lender. It is a guarantor, whose liability arises after the loss has been completely established following the foreclosure sale and liquidation to a third-party. It is also a master trustee for securitized trusts. To say that Fannie Mae is the owner of the alleged loan is an admission that the originator never loaned any money and that therefore the note and mortgage are invalid. It is also intentional obfuscation of the rights of the investors and trusts.

The multiple positions of Chase is representative of most other cases regardless of the name used for the identification of the alleged plaintiff, who probably doesn’t even know the action exists. That is why I suggested some years ago that a challenge to the right to represent the alleged plaintiff would be both appropriate and desirable. The usual answer is that the attorney represents all interested parties. This cannot be true because there is an obvious conflict of interest between the servicer, the trust, the guarantor, the trustee, and the broker-dealer that so far has never been named. Lawsuits filed by trust beneficiaries, guarantors, FDIC and insurers demonstrate this conflict of interest with great clarity.

I wonder if you should point out that if Chase was the Servicer, how could they not know who they were paying? As Servicer their role was to collect payments and send them to the creditor. If the witness or nonexistent verifier was truly familiar with the records, the account would show a debit to the account for payment to Fannie Mae or the securitized trust that was the actual source of funds for either the origination or acquisition of loans. And why would they not have shown that?  The reason is that no such payment was made. If any payment was made it was to the investors in the trust that lies behind the Fannie Mae curtain.

And if the “investor” had in fact received loss sharing payment from the FDIC, insurance or other sources how would the witness have known about that? Of course they don’t know because they have nothing to do with observing the accounts of the actual creditor. And while I agree that only actual payments as opposed to hypothetical payments should be taken into account when computing the principal balance and applicable interest on the loan, the existence of terms and conditions that might allow or require those hypothetical payments are sufficient to guarantee the right to discovery as to whether or not they were paid or if the right to payment has already accrued.

I think the argument about personal knowledge of the witness can be strengthened. The witness is an employee of Chase — not WAMU and not Fannie Mae. The PAA is completely silent about  the loans. Most of the loans were subjected to securitization anyway so WAMU couldn’t have “owned” them at any point in the false trail of securitization. If Chase is alleging that Fannie Mae in the “investor” then you have a second reason to say that both the servicing rights and the right to payment of principal, interest or monthly payments in doubt as to the intermediary banks in the cloud. So her testimony was hearsay on hearsay without any recognizable exception. She didn’t say she was custodian of records for anyone. She didn’t say how she had personal knowledge of Chase records, and she made no effort to even suggest she had any personal knowledge of the records of Fannie and WAMU — which is exactly the point of your lawsuit or defense.
 

If the Defendant/Appellee’s argument were to be accepted, any one of several defendants could deny allegations made against all the defendants individually just by producing a professional witness who would submit self-serving sworn affidavits from only one of the defendants. The result would thus benefit some of the “represented parties” at the expense of others.

Their position is absurd and the court should not be used and abused in furtherance of what is at best a shady history of the loan. The homeowner challenges them to give her the accurate information concerning ownership and balance, failing which there was no basis for a claim of encumbrance against her property. The court, using improper reasoning and assumptions, essentially concludes that since someone was the “lender” the Plaintiff had no cause of action and could not prove her case even if she had a cause of action. If the trial court is affirmed, Pandora’s box will be opened using this pattern of court conduct and Judge rulings as precedent not only in foreclosure actions, disputes over all types of loans, but virtually all tort actions and most contract actions.

Specifically it will open up a new area of moral hazard that is already filled with debris, to wit: debt collectors will attempt to insert themselves in the collection of money that is actually due to an existing creditor who has not sold the debt to the collector. As long as the debt collector moves quickly, and the debtor is unsophisticated, the case with the debt collector will be settled at the expense of the actual creditor. This will lead to protracted litigation as to the authority of the debt collector and the liability of the debtor as well as the validity of any settlement.

Read Full Post »

         Foreclosure filings were reported on 124,419 U.S. properties in January 2014, an 8 percent increase from December but still down 18 percent from January 2013.  Foreclosure filings were reported on 1,361,795 U.S. properties in 2013, down 26 percent from 2012 and down 53 percent from the peak of 2.9 million properties with foreclosure filings in 2010.  But still, 9.3 million U.S. residential properties were deeply underwater representing 19 percent of all properties with a mortgage in December 2013, down from 10.7 million homes underwater in September 2013.[1] 

            In 2006 there were 1,215,304 foreclosures, 545,000 foreclosure filings and 268,532 Home Repossessions.  By 2007 foreclosures had almost doubled – up to 2,203,295 with 1,260,000 foreclosure filings and 489,000 Home Repossessions.  2008 saw an even further increase to 3,019,482 foreclosures, 2,350,000 Foreclosure filings and 679,000 Home Repossessions.  In 20093,457,643 foreclosures, 2,920,000 foreclosure filings, and 945,000 Home Repossessions.  2010:  3,843,548 foreclosures, 3,500,000 foreclosure filings, and 1,125,000 Home Repossessions.  2011:  3,920,418 foreclosures, 3,580,000 foreclosure filings, and 1,147,000 Home Repossessions.  Then January to September 20121,616,427 foreclosures 1,382,000 foreclosure filings and 572,844 Repossessions.  The remainder of 2012 – September through December saw an additional 2,300,000 foreclosures, 2,100,000 foreclosure filings and 700,000 Repossessions.  In other words, from 2006 through 2012, there were a total of  21,576,117 foreclosures; 17,637,000 foreclosure filings; 5,926,376 Home Repossessions.  The foreclosures added to the repossessions is equal to:  27,502,493[2].  The numbers are staggering.

            Many of the homes have been wrongfully foreclosed upon, where either the party had not been in default, or the foreclosing party lacked standing to foreclose.  It has become almost as lawless as the wildwest, or comparable to a shark feeding frenzy.


[1] All of the foreclosure figures came from RealtyTrac:  http://www.realtytrac.com/content/foreclosure-market-report

[2] http://www.statisticbrain.com/home-foreclosure-statistics/                                                                 Statistic Verification  Source: RealtyTrac, Federal Reserve, Equifax

Read Full Post »

Banks, Mortgage Companies Defrauded HUD, Veteran Whistleblower Says

FEB 5, 2014 1:30pm ET
 

A whistleblower with a track record of wresting large settlements from banks is suing 22 companies for allegedly filing fraudulent mortgage documents with the Department of Housing and Urban Development.

Lynn E. Szymoniak, famous for her 2011 “60 Minutes” interview on the robo-signing scandal, filed a lawsuit late Monday against the companies, including Deutsche Bank, Wells Fargo, JPMorgan Chase and Bank of America. The Palm Beach, Fla., plaintiff’s lawyer alleges the 22 banks, mortgage servicers, trustees, custodians and default management companies created fraudulent mortgage assignments and submitted tens of thousands of false claims to HUD.

The lawsuit is a stark reminder that banks still face massive litigation and potential settlements for wrongdoing from the mortgage boom and financial crisis. On Wednesday, JPMorgan Chase acknowledged that it violated the False Claims Act and agreed to pay $614 million to settle claimsthat it improperly approved Federal Housing Administration and Veterans Affairs loans that did not meet underwriting standards.

HUD oversees the FHA, which reimburses servicers for losses and fees when government-guaranteed loans go into foreclosure.

Banks can be held liable for treble damages under the False Claims Act if they are found to have “falsely certified” that mortgages met all FHA requirements. The act also gives whistleblowers the right to file suit on behalf of the government.

“It’s been very difficult to uncover how fraudulent documents were created and spread through the system,” says Reuben Guttman, Szymoniak’s attorney at the firm of Grant & Eisenhofer. “Lynn Szymoniak did the original analysis, looked at documents and put the pieces together in a way that nobody else did.”

The new lawsuit was filed in the U.S. District Court in South Carolina. Several of the defendants, including Deutsche Bank and Wells Fargo, said they are reviewing the lawsuit and could not immediately comment.

In 2012, Szymoniak helped the government recover $95 million from the top five mortgage servicers, as part of the $25 billion national mortgage settlement. She personally received $18 million for providing information on the filing of false claims on FHA loans.

The suit also seeks to recover damages and penalties on behalf of the federal government, 16 states, the District of Columbia and the cities of Chicago and New York for the financial harm incurred in the purchase of private-label mortgage-backed securities that allegedly used fraudulent documents in foreclosure filings since 2008.

As investors in mortgage bonds, the government and others paid fees and expenses for services such as reviewing all mortgage documents put into trusts that were supposed to be performed by trustees. The federal government bought mortgage-backed securities with missing or forged documents through several avenues, including the Federal Reserve’s direct purchases and Maiden Lane vehicles, and the Treasury Department’s purchases through public-private partnership investment funds, the suit states.

The complaint does not specify damages but Szymoniak says she expects them to total around $10 billion.

The fraudulent mortgage documents were created because the original loans documents either were never delivered to the securitization trusts, or they were lost or destroyed, the lawsuit states. Many of the documents were created years after the trusts’ closing dates and showed the trusts acquired the loans only after they were in default.

Servicers “devised and operated a scheme to replace the missing documents,” the lawsuit states, and to conceal the fact that the trusts and servicers never actually held the mortgage notes and assignments, which are needed to initiate a foreclosure.

Szymoniak was also instrumental in uncovering fraud and forged documents at DocX, a now-defunct subsidiary of Lender Processing Services. She worked with the Federal Bureau of Investigations and U.S. Attorney’s office in Jacksonville, Fla., that ultimately led to the conviction of an LPS executive, the closure of DocX, firm, and varioussettlements by LPS, which is now owned by Black Knight Financial Services.

 

Read Full Post »

My best friend, Donnie Johnson, living in Lithonia, Georgia, has died.

Grady Hospital in Atlanta, Ga, took a healthy, 64 year old male, with a hernia issue, ignored the hernia issue, put him on a ton of other medications, claiming not to know what was wrong with him, and now, after many months, has finally killed him.

I hope everyone who had their hand in the situation is happy!

Donnie, may God hold you in the palm of His Hand….You are sorely missed!

Read Full Post »

NEW LEGAL ISSUES COMING UP IN TRIAL AND APPELLATE COURTS

DECEMBER 16, 2013

With the release of the US Bank admissions per our post of November 6, 2013; the issuance of the opinions from the Supreme Courts of Oregon and Montana holding that MERS is not the “beneficiary”; and recent opinions from various jurisdictions which are now, finally, holding that securitization-related issues are relevant in a foreclosure, a host of new legal issues are about to be litigated in the trial and appellate courts throughout the country. It has taken six (6) years and coast-to-coast work to get courts to realize that securitization of a mortgage loan raises issues as to standing, real party in interest, and the alleged authority to foreclose, and that the simplistic mantra of the “banks” and servicers of “we have the note, thus we win” is no longer to be blindly accepted.

One issue which we and others are litigating relates to mortgage loans originated by Option One, which changed its name to Sand Canyon Corporation and thereafter ceased all mortgage loan operations. Pursuant to the sworn testimony of the former President of Sand Canyon, it stopped owning mortgage loans as of 2008. However, even after this cessation of any involvement with servicing or ownership of mortgage loans, we see “Assignments” from Option One or Sand Canyon to a securitization trustee bank or other third party long after 2008.

The United States District Court for the District of New Hampshire concluded, with the admission of the President of Sand Canyon, that the homeowner’s challenge to the foreclosure based on a 2011 alleged transfer from Sand Canyon to Wells Fargo was not an “attack on the assignment” which certain jurisdictions have precluded on the alleged basis that the borrower is not a party to the assignment, but is a situation where no assignment occurred because it could not have as a matter of admitted fact, as Sand Canyon could not assign something it did not have. The case is Drouin v. American Home Mortgage Servicing, Inc. and Wells Fargo, etc., No. 11-cv-596-JL.

The Option One/Sand Canyon situation is not unique: there are many originating “lenders” which allegedly “assigned” mortgages or Deeds of Trust long after they went out of business or filed for Bankruptcy, with no evidence of post-closing assignment authority or that the Bankruptcy court having jurisdiction over a bankrupt lender ever granted permission for the alleged transfer of the loan (which is an asset of the Bankruptcy estate) out of the estate. Such a transfer without proof of authority to do so implicates bankruptcy fraud (which is a serious crime punishable under United States criminal statutes), and fraud on the court in a foreclosure case where such an alleged assignment is relied upon by the foreclosing party.

As we stated in our post of November 6, the admission of US Bank that a borrower is a party to any MBS transaction and that the loan is governed by the trust documents means that the borrower is, in fact, a party to any assignment of that borrower’s loan, and should thus be permitted to seek discovery as to any alleged assignment and all issues related to the securitization of the loan. We have put this issue out in many of our cases, and will be arguing this position at both the trial and appellate levels beginning early 2014.

Jeff Barnes, Esq., http://www.ForeclosureDefenseNationwide.com

Read Full Post »

I was reading some information about the financial crisis in this country (USA), and ran across a paper written by US District Court Judge Jed S. Rakoff.  If we had more Judges with the mind of this one, we would not be in nearly as bad a shape as we are in.  I have not yet figured out how the Judges justify allowing foreclosures, when they know for a fact that the Banks and their attorneys are creating fraudulent documents, committing perjury in their Courtrooms, and are breaking so many laws, that it has become the norm…  

Read what Honorable Judge Jed S. Rakoff says:  http://www.ft.com/cms/cb1e43f2-4be6-11e3-8203-00144feabdc0.pdf

11/12/13
Why Have No High Level Executives Been Prosecuted In Connection With The Financial Crisis?
by Jed S. Rakoff
(U.S. District Judge)

Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope.

Who was to blame? Was it simply a result of negligence, of the kind of inordinate risk-taking commonly called a “bubble,” of an imprudent but innocent failure to maintain adequate reserves for a rainy day? Or was it the result, at least in part, of fraudulent practices, of dubious mortgages portrayed as sound risks and packaged into ever-more-esoteric financial instruments, the fundamental weaknesses of which were intentionally obscured?

If it was the former – if the recession was due, at worst, to a lack of caution – then the criminal law has no role to play in the aftermath. For, in all but a few circumstances (not here relevant), the fierce and fiery weapon called criminal prosecution is directed at intentional misconduct, and nothing less. If the Great Recession was in no part the handiwork of intentionally fraudulent practices by high-level executives, then to prosecute such executives criminally would be “scapegoating” of the most shallow and despicable kind.

But if, by contrast, the Great Recession was in material part the product of intentional fraud, the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years.Indeed, it would stand in striking contrast to the increased success that federal prosecutors have had over the past 50 years or so in bringing to justice even the highest level figures who orchestrated mammoth frauds. Thus, in the 1970’s, in the aftermath of the “junk bond” bubble that, in many ways, was a precursor of the more recent bubble in mortgage-backed securities, the progenitors of the fraud were all successfully prosecuted, right up to Michael Milken. Again, in the 1980’s, the so-called savings-and-loan crisis, which again had some eerie parallels to more recent events, resulted in the successful criminal prosecution of more than 800 individuals, right up to Charles Keating. And, again, the widespread accounting frauds of the 1990’s, most vividly represented by Enron and WorldCom, led directly to the successful prosecution of such previously respected C.E.O.’s as Jeffrey Skilling and Bernie Ebbers.

In striking contrast with these past prosecutions, not a single high level executive has been successfully prosecuted in  connection with the recent financial crisis, and given the fact that most of the relevant criminal provisions are governed by a five-year statute of limitations, it appears very likely that none will be. It may not be too soon, therefore, to ask why.

One possibility, already mentioned, is that no fraud was committed. This possibility should not be  discounted. Every case is different, and I, for one, have no opinion as to whether criminal fraud was committed in any given instance.

 But the stated opinion of those government entities asked to examine the financial crisis overall is not that no fraud was committed. Quite the contrary. For example, the Financial Crisis Inquiry Commission, in its final report, uses variants of the word “fraud” no fewer than 157 times in describing what led to the crisis, concluding that there was a “systemic breakdown,” not just in  accountability, but also in ethical behavior. As the Commission found, the signs of fraud were everywhere to be seen, with the number of reports of suspected mortgage fraud rising 20-fold between 1998 and 2005 and then doubling again in the next four years. As early as 2004, FBI Assistant Director Chris Swecker, was publicly warning of the “pervasive problem” of mortgage fraud, driven by the voracious demand for mortgagebacked securities. Similar warnings, many from within the financial community, were disregarded, not because they were  viewed as inaccurate, but because, as one high level banker put it, “A decision was made that ‘We’re going to have to hold our nose and start buying the product if we want to stay in business.’”

Without multiplying examples, the point is that, in the aftermath of the financial crisis, the prevailing view of many government officials (as well as others) was that the crisis was in material respects the product of intentional fraud. In a nutshell, the fraud, they argued, was a simple one. Subprime mortgages, i.e., mortgages of dubious creditworthiness, increasingly provided the sole collateral for highly-leveraged securities that were marketed as triple-A, i.e., of very low risk. How could this transformation of a sow’s ear into a silk purse be accomplished unless someone dissembled along the way?

While officials of the Department of Justice have been more circumspect in describing the roots of the financial crisis than have the various commissions of inquiry and other government agencies, I have seen nothing to indicate their disagreement with the widespread conclusion that fraud at every level permeated the bubble in mortgage-backed securities. Rather, their position has been to excuse their failure to prosecute high level individuals for fraud in connection with the financial crisis on one or more of three grounds:

First, they have argued that proving fraudulent intent on the part of the high level management of the banks and companies involved has proved difficult. It is undoubtedly true that the ranks of top management were several levels removed from those who were putting together the collateralized debt obligations and other securities offerings that were based on dubious mortgages; and the people generating the mortgages themselves were often at other companies and thus even further removed. And I want to stress again that I have no opinion as to whether any given top executive had knowledge of the dubious nature of the underlying mortgages, let alone fraudulent intent. But what I do find surprising is that the Department of Justice should view the proving of intent as so difficult in this context. Who, for example, were generating the so-called “suspicious activity” reports of mortgage fraud that, as mentioned, increased so hugely in the years leading up to the crisis? Why, the banks themselves. A top level banker, one might argue, confronted with increasing evidence from his own and other banks that mortgage fraud was increasing, might have inquired as to why his bank’s mortgage-based securities continued to receive triple-A ratings?  And if, despite these and other reports of suspicious activity, the executive failed to make such inquiries, might it be because he did not want to know what such inquiries would reveal?  

This, of course, is what is known in the law as “willful blindness” or “conscious disregard.” It is a well-established basis on which federal prosecutors have asked juries to infer intent, in cases involving complexities, such as accounting treatments, at least as esoteric as those involved in the events leading up to the financial crisis. And while some federal courts have occasionally expressed qualifications about the use of the willful blindness approach to prove intent, the Supreme Court has consistently approved it. As that Court stated most recently in Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2068 (2011), “The doctrine of willful blindness is well established in criminal law. Many criminal statutes require proof that a defendant acted knowingly or willfully, and courts applying the doctrine of willful blindness hold that defendants cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.” Thus, the Department’s claim that proving intent in the financial crisis context is particularly difficult may strike some as doubtful.

Second, and even weaker, the Department of Justice has sometimes argued that, because the institutions to whom mortgagebacked securities were sold were themselves sophisticated investors, it might be difficult to prove reliance. Thus, in  defending the failure to prosecute high level executives for frauds arising from the sale of mortgage-backed securities, the then head of the Department of Justice’s Criminal Division, told PBS that “in a criminal case … I have to prove not only that you made a false statement but that you intended to commit a crime, and also that the other side of the transaction relied on what you were saying. And frankly, in many of the securitizations and the kinds of transactions we’re talking about, in reality you had very sophisticated counterparties on both sides. And so even though one side may have said something was dark blue when really we can say it was sky blue, the other side of the transaction, the other sophisticated party, wasn’t relying at all on the description of the color.”

Actually, given the fact that these securities were bought and sold at lightning speed, it is by no means obvious that even a sophisticated counterparty would have detected the problems with the arcane, convoluted mortgage-backed derivatives they were being asked to purchase. But there is a more fundamental problem with the above-quoted statement from the former head of the Criminal Division, which is that it totally misstates the law.  In actuality, in a criminal fraud case the Government is never required to prove reliance, ever. The reason, of course, is that would give a crooked seller a license to lie whenever he was  dealing with a sophisticated counterparty.  The law, however, says that society is harmed when a seller purposely lies about a material fact, even if the immediate purchaser does not rely on that particular fact, because such misrepresentations create problems for the market as a whole. And surely there never was a situation in which the sale of dubious mortgage-backed securities created more of a huge problem for the marketplace, and society as a whole, than in the recent financial crisis.

The third reason the Department has sometimes given for not bringing these prosecutions is that to do so would itself harm the economy. Thus, Attorney General Holder himself told Congress that “it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute – if we do bring a criminal charge – it will have a negative impact on the national economy, perhaps even the world economy.” To a federal judge, who takes an oath to apply the law equally to rich and to poor, this excuse — sometimes labeled the “too big to jail” excuse – is disturbing, frankly, in what it says about the
Department’s apparent disregard for equality under the law.

In fairness, however, Mr. Holder was referring to the prosecution of financial institutions, rather than their
C.E.O.’s. But if we are talking about prosecuting individuals, the excuse becomes entirely irrelevant; for no one that I know of has ever contended that a big financial institution would collapse if one or more of its high level executives were prosecuted, as opposed to the institution itself.

Without multiplying examples further, my point is that the Department of Justice has never taken the position that all the top executives involved in the events leading up to the financial crisis were innocent, but rather has offered one or another excuse for not criminally prosecuting them – excuses that, on inspection, appear unconvincing. So, you might ask, what’s really going on here? I don’t claim to have any inside information about the real reasons why no such prosecutions have been brought, but I take the liberty of offering some speculations, for your consideration or amusement as the case may be.

At the outset, however, let me say that I totally discount the argument sometimes made that no such prosecutions have been brought because the top prosecutors were often people who previously represented the financial institutions in question and/or were people who expected to be representing such
institutions in the future: the so-called “revolving door.” In my experience, every federal prosecutor, at every level, is seeking to make a name for him-or-herself, and the best way to do that is by prosecuting some high level person. While companies that are indicted almost always settle, individual defendants whose careers are at stake will often go to trial. And if the Government wins such a trial, as it usually does, the prosecutor’s reputation is made.My point is that whatever small influence the “revolving door” may have in discouraging certain white-collar prosecutions is more than offset, at least in the case of prosecuting high-level individuals, by the career-making benefits such prosecutions confer on the successful prosecutor.  So, one asks again, why haven’t we seen such prosecutions growing out of the financial crisis? I offer, by way of speculation, three influences that I think, along with others, have had the effect of limiting such prosecutions.

First, the prosecutors had other priorities. Some of these were completely understandable. For example, prior to 2001, the FBI had more than 1,000 agents assigned to investigating financial frauds, but after 9/11 many of these agents were shifted to anti-terrorism work. Who can argue with that?  Eventually, it is true, new agents were hired for some of the vacated spots in fraud detection; but this is not a form of detection easily learned and recent budget limitations have only exacerbated the problem.

Of course, the FBI is not the primary investigator of fraud in the sale of mortgage-backed securities; that responsibility lies mostly with the S.E.C. But at the very time the financial crisis was breaking, the S.E.C. was trying to deflect criticism from its failure to detect the Madoff fraud, and this led it to concentrate on other Ponzi-like schemes, which for awhile were, along with accounting frauds, its chief focus. More recently, the S.E.C. has been hard hit by budget limitations, and this has not only made it more difficult to assign the kind of manpower the kinds of frauds we are talking about require, but also has led S.E.C. enforcement to focus on the smaller, easily resolved cases that will beef up their statistics when they go to Congress begging for money.

As for the Department of Justice proper, a decision was made around 2009 to spread the investigation of these financial fraud cases among numerous U.S. Attorney’s Offices, many of which had little or no prior experience in investigating and prosecuting sophisticated financial frauds. At the same time, the U.S. Attorney’s Office with the greatest expertise in these kinds of cases, the Southern District of New York, was just embarking on its prosecution of insider trading cases arising from the Rajaratnam tapes, which soon proved a gold mine of good cases that absorbed a huge amount of the attention of the securities fraud unit of that office. While I want to stress again that I have no inside information, as a former chief of that unit I would venture to guess that the cases involving the financial crisis were parceled out to Assistants who also had insider trading cases. Which do you think an Assistant would devote most of her attention to:  an insider trading case that was already nearly ready to go to indictment and that might lead to a highvisibility trial, or a financial crisis case that was just getting started, would take years to complete, and had no guarantee of even leading to an indictment? Of course, she would put her energy into the insider trading case, and if she was lucky, it would go to trial, she would win, and she would then take a job with a large law firm. And in the process, the financial fraud case would get lost in the shuffle.

Alternative priorities, in short, is, I submit, one of the reasons the financial fraud cases were not brought, especially cases against high level individuals that would take many years, many investigators, and a great deal of expertise to investigate.  But a second, and less salutary, reason for not bringing such cases is the Government’s own involvement in the underlying circumstances that led to the financial crisis.

On the one hand, the government, writ large, had a hand in creating the conditions that encouraged the approval of dubious mortgages. It was the government, in the form of Congress, that repealed Glass-Steagall, thus allowing certain banks that had previously viewed mortgages as a source of interest income to become instead deeply involved in securitizing pools of mortgages in order to obtain the much greater profits available from trading. It was the government, in the form of both the executive and the legislature, that encouraged deregulation, thus weakening the power and oversight not only of the S.E.C. but also of such diverse banking overseers as the O.T.S. and the O.C.C. It was the government, in the form of the Fed, that kept interest rates low in part to encourage mortgages. It was the government, in the form of the executive, that strongly encouraged banks to make loans to low-income persons who might have previously been regarded as too risky to warrant a mortgage. It was the government, in the form of the government-sponsored entities known as Fannie Mae and Freddie Mac, that helped create the fora-time insatiable market for mortgage-backed securities. And it was the government, pretty much across the board, that acquiesced in the ever greater tendency not to require meaningful documentation as a condition of obtaining a mortgage, often preempting in this regard state regulations designed to assure greater mortgage quality and a borrower’s ability to repay.

The result of all this was the mortgages that later became known as “liars’ loans.” They were increasingly risky; but what did the banks care, since they were making their money from the securitizations; and what did the government care, since they  were helping to boom the economy and helping voters to realize their dream of owning a home.

Moreover, the government was also deeply enmeshed in the aftermath of the financial crisis. It was the government that proposed the shotgun marriages of Bank of America with Merrill Lynch, of J.P. Morgan with Bear Stearns, etc. If, in the process, mistakes were made and liabilities not disclosed, was it not partly the government’s fault?

Please do not misunderstand me. I am not alleging that the Government knowingly participated in any of the fraudulent practices alleged by the Financial Inquiry Crisis Commission and others. But what I am suggesting is that the Government was deeply involved, from beginning to end, in helping create the conditions that could lead to such fraud, and that this would give a prudent prosecutor pause in deciding whether to indict a C.E.O. who might, with some justice, claim that he was only doing what he fairly believed the Government wanted him to do.

 The final factor I would mention is both the most subtle and the most systemic of the three, and arguably the most important, and it is the shift that has occurred over the past 30 years or more from focusing on prosecuting high-level individuals to focusing on prosecuting companies and other institutions. It is true that prosecutors have brought criminal charges against companies for well over a hundred years, but, until relatively recently, such prosecutions were the exception, and prosecutions of companies without simultaneous prosecutions of their managerial agents were even rarer. The reasons were obvious. Companies do not commit crimes; only their agents do. And while a company might get the benefit of some such crimes, prosecuting the company would inevitably punish, directly or indirectly, the many employees and shareholders who were totally innocent.   Moreover, under the law of most U.S. jurisdictions, a company cannot be criminally liable unless at least one managerial agent has committed the crime in question; so why not prosecute the agent who actually committed the crime?

 In recent decades, however, prosecutors have been increasingly attracted to prosecuting companies, often even without indicting a single individual. This shift has often been rationalized as part of an attempt to transform “corporate cultures,” so as to prevent future such crimes; and, as a result, it has taken the form of “deferred prosecution agreements” or even “non-prosecution agreements,” in which the company, under threat of criminal prosecution, agrees to take various prophylactic measures to prevent future wrongdoing. But in practice, I suggest, it has led to some lax and dubious behavior on the part of prosecutors, with deleterious results.    

If you are a prosecutor attempting to discover the individuals responsible for an apparent financial fraud, you go about your business in much the same way you go after mobsters or drug kingpins: you start at the bottom and, over many months or years, slowly work your way up. Specifically, you start by “flipping” some lower level participant in the fraud whom you can show was directly responsible for making one or more false material misrepresentations but who is willing to cooperate in order to reduce his sentence, and – aided by the substantial prison penalties now available in white collar cases – you go up the ladder. For a detailed example of how this works, I recommend Kurt Eichenwald’s well-known book The Informant, which describes how FBI agents, over a period of three years, uncovered the huge price-fixing conspiracy involving high-level executives at Archer Daniels, all of whom were successfully prosecuted.

But if your priority is prosecuting the company, a different scenario takes place. Early in the investigation, you invite in counsel to the company and explain to him or her why you suspect fraud. He or she responds by assuring you that the company wants to cooperate and do the right thing, and to that end the company has hired a former Assistant U.S. Attorney, now a partner at a respected law firm, to do an internal investigation. The company’s counsel asks you to defer your investigation until the company’s own internal investigation is completed, on the condition that the company will share its results with you. In order to save time and resources, you agree. Six months later the company’s counsel returns, with a detailed report showing that mistakes were made but that the company is now intent on correcting them. You and the company then agree that the company will enter into a deferred prosecution agreement that couples some immediate fines with the imposition of expensive but internal prophylactic measures. For all practical purposes the case is now over. You are happy because you believe that you have helped prevent future crimes; the company is happy because it has avoided a devastating indictment; and perhaps the happiest of all are the executives, or former executives, who actually committed the underlying misconduct, for they are left untouched. 

I suggest that this is not the best way to proceed. Although it is supposedly justified in terms of preventing future crimes, I suggest that the future deterrent value of successfully prosecuting individuals far outweighs the prophylactic benefits of imposing internal compliance measures that are often little more than window-dressing. Just going after the company is also both technically and morally suspect. It is technically suspect because, under the law, you should not indict or threaten to indict a company unless you can prove beyond a reasonable doubt  that some managerial agent of the company committed the alleged crime; and if you can prove that, why not indict the manager?  And from a moral standpoint, punishing a company and its many innocent employees and shareholders for the crimes committed by some unprosecuted individuals seems contrary to elementary notions of moral responsibility.

These criticisms take on special relevance, however, in the instance of investigations growing out of the financial crisis, because, as noted, the Department of Justice’s position, until at least very, very recently, is that going after the suspect institutions poses too great a risk to the nation’s economic recovery. So you don’t go after the companies, at least not criminally, because they are too big to jail; and you don’t go after the individuals, because that would involve the kind of years-long investigations that you no longer have the experience or the resources to pursue.

In conclusion, I want to stress again that I have no idea whether the financial crisis that is still causing so many of us so much pain and despondency was the product, in whole or in part, of fraudulent misconduct. But if it was — as various governmental authorities have asserted it was –- then, the failure of the government to bring to justice those responsible for such colossal fraud bespeaks weaknesses in our prosecutorial system that need to be addressed.

Read Full Post »

http://foreclosuredefensenationwide.com/?p=533

US BANK ADMITS, IN WRITING FROM THEIR CORPORATE OFFICE, THAT THE BORROWER IS A PARTY TO AN MBS TRANSACTION; THAT SECURITIZATION TRUSTEES ARE NOT INVOLVED IN THE FORECLOSURE PROCESS; HAVE NO ADVANCE KNOWLEDGE OF WHEN A LOAN HAS DEFAULTED; THAT THE “TRUE BENEFICIAL OWNERS” OF A SECURITIZED MORTGAGE ARE THE INVESTORS IN THE MBS; AND THAT THE GOAL OF A SERVICER IS TO “MAXIMIZE THE RETURN TO INVESTORS”                                                                                                                                                                                                 November 6, 2013

 We have been provided with a copy of U.S. Bank Global Corporate Trust Services’ “Role of the Corporate Trustee” brochure which makes certain incredible admissions, several of which squarely disprove and nullify the holdings of various courts around the country which have taken the position that the borrower “is not a party to” the securitization and is thus not entitled to discovery or challenges to the mortgage loan transfer process. The brochure accompanied a letter from US Bank to one of our clients which states: “Your account is governed by your loan documents and the Trust’s governing documents”, which admission clearly demonstrates that the borrower’s loan is directly related to documents governing whatever securitized mortgage loan trust the loan has allegedly been transferred to. This brochure proves that Courts which have held to the contrary are wrong on the facts. 

The first heading of the brochure is styled “Distinct Party Roles”. The first sentence of this heading states: “Parties involved in a MBS transaction include the borrower, the originator, the servicer and the trustee, each with their own distinct roles, responsibilities and limitations.” MBS is defined at the beginning of the brochure as the sale of “Mortgage Backed Securities in the capital markets”. The fourth page of the brochure also identifies the “Parties to a Mortgage Backed Securities Transaction”, with the first being the “Borrower”, followed by the Investment Bank/Sponsor, the Investor, the Originator, the Servicer, the Trust (referred to “generally as a special purpose entity, such as a Real Estate Mortgage Investment Conduit (REMIC)”), and the Trustee (stating that “the trustee does not have an economic or beneficial interest in the loans”). 

The second page sets forth that U.S. Bank, as Trustee, “does not have any discretion or authority in the foreclosure process.” If this is true, how can U.S. Bank as Trustee be the Plaintiff in judicial foreclosures or the foreclosing party in non-judicial foreclosures if it has “no authority in the foreclosure process”? 

The second page also states: “All trustees for MBS transactions, including U.S. Bank, have no advance knowledge of when a mortgage loan has defaulted.” Really? So when, for example, MERS assigns, in 2011, a loan to a 2004 Trust where the loan has been in default since 2008, no MBS “trustee” bank (and note that it says “All” trustees) do not know that a loan coming into the trust is in default? The trust just blindly accepts loans which may or may not be in default without any advanced due diligence? Right. Sure. Of course. LOL. 

However, that may be true, because the trustee banks do not want to know, for then they can take advantage of the numerous insurances, credit default swaps, reserve pools, etc. set up to pay the trust when loans are in default, as discussed below. 

The same page states that “Any action taken by the servicer must maximize the return on the investment made by the ‘beneficial owners of the trust’ — the investors.” The fourth page of the brochure states that the investors are “the true beneficial owners of the mortgages”, and the third page of the brochure states “Whether the servicer pursues a foreclosure or considers a modification of the loan, the goal is still to maximize the return to investors” (who, again, are the true beneficial owners of the mortgage loans). 

This is a critical admission in terms of what happens when a loan is securitized. The borrower initiated a mortgage loan with a regulated mortgage banking institution, which is subject to mortgage banking rules, regulations, and conditions, with the obligation evidenced by the loan documents being one of simple loaning of money and repayment, period. Once a loan is sold off into a securitization, the homeowner is no longer dealing with a regulated mortgage banking institution, but with an unregulated private equity investor which is under no obligation to act in the best interest to maintain the loan relationship, but to “maximize the return”. This, as we know, almost always involves foreclosure and denial of a loan mod, as a foreclosure (a) results in the acquisition of a tangible asset (the property); and (b) permits the trust to take advantage of reserve pools, credit default swaps, first loss reserves, and other insurances to reap even more monies in connection with the claimed “default” (with no right of setoff as to the value of the property against any such insurance claims), and in a situation where the same risk was permitted to be underwritten many times over, as there was no corresponding legislation or regulation which precluded a MBS insurer (such as AIG, MGIC, etc.) from writing a policy on the same risk more than once. 

As those of you know who have had Bloomberg reports done on securitized loans, the screens show loans which have been placed into many tranches (we saw one where the same loan was collateralized in 41 separate tranches, each of which corresponded to a different class of MBS), and with each class of MBS having its own insurance, the “trust” could make 41 separate insurance claims AND foreclose on the house as well! Talk about “maximizing return for the investor”! What has happened is that the securitization parties have unilaterally changed the entire nature of the mortgage loan contract without any prior notice to or approval from the borrower. 

There is no language in any Note or Mortgage document (DOT, Security Deed, or Mortgage) by which the borrower is put on notice that the entire nature of the mortgage loan contract and the other contracting party may be unilaterally changed from a loan with a regulated mortgage lender to an “investment” contract with a private equity investor. This, in our business, is called “fraud by omission” for purposes of inducing someone to sign a contract, with material nondisclosure of matters which the borrower had to have to make the proper decision as to whether to sign the contract or not. 

U.S. Bank has now confirmed, in writing from its own corporate offices in St. Paul, Minnesota, so much of what we have been arguing for years. This brochure should be filed in every securitization case for discovery purposes and opposing summary judgments or motions to dismiss where the securitized trustee “bank” takes the position that “the borrower is not part of the securitization and thus has no standing to question it.” U. S. Bank has confirmed that the borrower is in fact a party to an MBS transaction, period, and that the mortgage loan is in fact governed, in part, by “the Trust’s governing documents”, which are thus absolutely relevant for discovery purposes. 

Jeff Barnes, Esq.,

http://www.ForeclosureDefenseNationwide.com

Read Full Post »

New post on Livinglies’s Weblog

Fannie and Freddie Demand $6 Billion for Sale of “Faulty Mortgage Bonds”

by Neil Garfield

You read the news on one settlement after another, it sounds like the pound of flesh is being exacted from the culprits again and again. This time the FHFA, as owner of Fannie and Freddie, is going for a settlement with Bank of America for sale of “faulty mortgage bonds.” And most people sit back and think that justice is being done. It isn’t. $6 Billion is window dressing on a liability that is at least 100 times that amount. And stock analysts take comfort that the legal problems for the banks has basically been discounted already. It hasn’t.

For practitioners who defend mortgage foreclosures, you must dig a little deeper. The term “faulty mortgage bonds” is a euphemism. Look at the complaints there filed. When they are filed by agencies it means that after investigation they have arrived at the conclusion that something was. very wrong with the sale of mortgage bonds. That is an administrative finding that concluded there was at least probable cause for finding that the mortgage bonds were defective and potentially were criminal.

So what does “defective” or “faulty” mean? Neither the media nor the press releases from the agencies or the banks tell us what was wrong with the bonds. But if you look at the complaints of the agencies, they tell you what they mean. If you look at the investor lawsuits you see that they are alleging that the notes and mortgages were “unenforceable.” Both the agencies and the investors filed complaints alleging that the mortgage bonds were a farce, sham or in other words, a PONZI Scheme.

Why is that important to foreclosure defense? Digging deeper you will find what I have been reporting on this blog. The investors money was not used to fund the REMIC trusts. The unfunded trusts never had the money to buy or fund the origination of bonds. The notes and mortgages were never sold to the Trusts even though “assignments” were executed and shown in court. The assignments themselves were either backdated or violated the 90 day cutoff that under applicable law (the laws of the State of New York) are VOID and not voidable.

What to do? File Freedom of Information Act requests for the findings, allegations and names of investigators for the agency that were involved in the agency action. Take their deposition. Get documents. Find put what mortgages were looked at and which bond series were involved. Get a list of the mortgages and the bonds that were examined. Get the findings on each mortgage and each mortgage bond. Use the the investor allegations as lender admissions admissions in court — that the notes and mortgages are unenforceable.

There is a disconnect between what is going on at the top of the sham securitization chain and what went on in sham mortgage originations and sham sales of loans. They never happened in the real world, no matter how much paper you throw at it.

And that just doesn’t apply to mortgages in default — it applies to all mortgages, which is why all the mortgages that currently exist, and most of the deeds that show ownership of the property have clouded and probably “defective” and “faulty” titles. It’s clear logic that the government and the banks are seeking to avoid, to wit: that if the way in which the money was raised to fund the loans or purchase the loans were defective, then it follows that there are defects in the chain of title and the money trail that were obviously not disclosed, as per the requirements of TILA and Reg Z.

And when you keep digging in discovery you will find out that your client has some clear remedies to collect the profits and compensation paid to undisclosed recipients arising out of the closing of the “loan.” These are offsets to the amount claimed as due. If the loan was not funded by the Trust, then the false paper trail used by the banks in foreclosure is subject to successful attack. If the loans were in fact funded directly by the trust complying with the REMIC provisions of the Internal Revenue Code, then the payee on the note and the mortgagee on the mortgage would be the trust — or if the loan was actually purchased, the Trust would have issued money to the seller (something that never happened).

And lastly, for now, let us look at the capital structure of these banks. A substantial portion of their capital derives from assets in the form of mortgage bonds. This is the most blatant lie of all of them. No underwriter buys the securities issued by the company seeking financing through an offering to investors. It is an oxymoron. The whole purpose of the underwriter was to create securities that would be appealing to investors. The securities are only issued when you have a buyer for them, and then the investor is the owner of the security — in this case mortgage bonds.

The bonds are not issued to the investment bank as an asset of the investment bank. But they ARE issued to the investment bank in “street name.” That is merely to facilitate trading and delivery of certificates which in most cases in the mortgage bond market don’t exist. The issuance in street name does not mean the banks own the mortgage bonds any more than when you a stock and the title is issued in street name mean that you have loaned or gifted the investment to the investment bank.

If you follow the logic of the investment bank then the deposits of money by depository customers could be claimed as assets — without the required entry in the liabilities section of the balance sheet because every dollar on deposit is a liability to pay those monies on demand, which is why checking accounts are referred to as demand deposits.

Hence the “asset” has been entered on the investment bank balance sheet without the corresponding liability on the other side of their balance sheet. And THAT remains that under cover of Federal Reserve purchase of these bonds from the banks, who don’t own the bonds, the value of the bonds is 100 cents on the dollar and the owner is the bank — a living lies fundamental. When the illusion collapses, the banks are coming down with it. You can only go so far lying to the public and the investment community. Eventually the reality is these banks are underfunded, under capitalized and still being propped up by quantitative easing disguised as the purchase of mortgage bonds at the rate of $85 Billion per month.

We need to be preparing for the collapse of the illusion and get the other financial institutions — 7,000 community and regional banks and credit unions — ready to take on the changes caused by the absence of the so-called major banks who are really fictitious entities without a foundation related to economic reality. The backbone is already available — electronic funds transfer is as available to the smallest bank as it is to the largest. It is an outright lie that we need the TBTF banks. They have failed and cannot recover because of the enormity of the lies they told the world. It’s over.

Read Full Post »

http://beforeitsnews.com/alternative/2013/09/how-much-time-is-left-2777550.html

 “How Much Time Is Left?”

Friday, September 27, 2013 17:09

(Before It’s News) 

“How Much Time Is Left?”
by Karl Denninger

“There is an old truism: Revolution is a game for the young. It’s true. Look at the people who rose up in the Middle East. Or anywhere else for that matter.  It is rare to find a grizzled old man in the crowd, and women (of any age) are rare too. No, these sorts of things tend to require a fair bit of testosterone or, if you prefer a bit raunchier language, young and full of cum. The same dynamic is why military forces don’t draft 40 or 50 year old men. It’s not, in the world of technology, all about being able to hump a pack with no mechanical assistance, although certainly physical exertion is part of it. No, it’s the same thing – testosterone is an asset. 

So it is with alarm that I am watching this sort of display: “Senate Majority Leader Harry Reid went so far as to call one counterproposal “stupid.” The Senate is set to take up the bill shortly after noon on Friday. The package as currently written would defund ObamaCare while also funding the government past Sept. 30, though Democrats are planning to promptly strip the ObamaCare measure. If it passes the Senate, House Republicans will then have to decide whether to insist on including anti-ObamaCare provisions.” 

Not having a final set of prices yet for Florida’s “Obamacare” choices, I’m somewhat-guessing here since what I have at this point is preliminary. But what I’m seeing is alarming. It appears that if I choose to participate I can have one of these plans for less than my catastrophic plan costs now (which I’m sure will “go away”, although I have yet to be formally notified of that.) 

Here’s the problem: I’m in really good health. I have no conditions and take no medications. Zero. My blood sugar and weight are normal, I don’t smoke and I’m quite active physically. I’m the 25% guy (or less) in my age group (~50) and all I need to do to prove that is walk around any of the public watering holes or other gathering places. So if my price is going down but I will get more than I get now then for someone sicker than me their price is going down a lot. 

Who’s price is going up? The 20ish year old person. The young family. The people who have thus far chosen (wisely, at that) to go without. So once again, as we did to our kids with college “educations” and “student loans”, we’re now doing it again, except this time it’s even worse in that you can’t “opt out” or the goons in government will come and shove a gun up your ass (via the IRS.)

Let’s be clear about this folks: We deserve to be eaten.

Yes, I said eaten.

As in caused to assume room temperature.

Then skinned.

Then slathered in BBQ sauce (to cover the bad taste.)

Then grilled.

And consumed.

And the people who should do it to you?

Your children.

Now granted, that’s harsh. And no, I’m not advocating it, I’m saying we deserve it. The people of this nation have no right to the love and respect of their offspring. None. Quite the contrary, we deserve to treated as food.  We have managed to extract promises that cannot be kept and what’s worse the attempt to do so is guaranteed to essentially enslave our younger generation.

I have for a long time lamented that the younger folks in our country seem to be very unmotivated, striving only to do what they have to in order to get by rather than being innovators and making a true effort to excel. I no longer hold this against them. I understand it. Their response to these abuses is non-violent and cannot be assailed – it is in fact logical.

Let’s me ask you the obvious but damned uncomfortable question: Would you prefer the violent – yet still logical, considering what we’ve done to them – alternative?

We, the older people in this country who not only refused to act over the last two decades of financial fraud and abuse in both the private sector and government but in addition continue to refuse to act to stop it to this very day deserve it.

Even though this attitude and passive refusal by our youth will destroy our nation’s competitiveness, the root cause of it is our pig-headed acts and the demand to write checks we cannot cash, insisting that they cash them instead so we can feast while they starve.

We lose the fundamental right to do that with our offspring when our children reach 18 and no longer have a claim on our assets and earnings power in exchange for their sustenance and protection.  Note that from birth to 18 while the relationship may have an essentially parasitic character to it there is a quid-pro-quo that we return to our kids.  You can argue over whether this is just but not whether it’s necessary, since an infant is physically incapable of survival and growth without outside assistance.

That transition from a power relationship to one of equals, even friends, is one that is supposed to happen over time from birth to emancipation. It is in fact our jobs as parents – our only job – to execute on that.

But we’ve become pigs.

We’re not content to perform that task and discharge our responsibilities. When we discovered that we can’t force our now-18 year olds to mow the lawn any more in exchange for an allowance, we then passed laws that tax them to cover our health care after we chose to be gluttonous jackasses, poisoning our bodies and then demanding the latest, most-expensive medical care that we cannot pay for ourselves. Worse, we let government and the “educational monopoly” design a system that is utterly rapacious and designed to screw our youth through uneconomic options sold to them as the “essential” educational background necessary for success.

Sure, there are exceptions. Some can claim those exceptions personally, but damn few can claim them socially. While you may claim you don’t want to burden your children you still continue to vote for, support and allow government to continue to **** the next door neighbor’s kid to get what you claim you deserve.

And don’t tell me it matters if you’re Democrat, Republican, Libertarian or otherwise. It does not. The fact of the matter is that no government can exist without the consent of the governed and no government can issue debt successfully if the people refuse to labor and thus provide something that creditors can rely on for repayment.

By going on strike en-masse we have the ability to stop all of this stupidity, from top to bottom. But we won’t do it because we are afraid. And in response to that fear, instead of standing up to what we’ve done and accepting that we must take risk in order to right what the wrongs we committed we instead choose to financially ****** and enslave those young adults we brought into this world, as if we bred them to be our slaves from the outset.

If you’re wondering why I believe we deserve to be eaten – or our youth simply shut down and refuse to make their best effort – read the above paragraph as many times as you need to until it sinks in.

‘Nuff said.”

– http://market-ticker.org/

Source: http://coyoteprime-runningcauseicantfly.blogspot.com/2013/09/how-much-time-is-left.html

Read Full Post »

http://m.rollingstone.com/politics/news/looting-the-pension-funds-20130926/

// 2013-09-17T18:50:20Z
POLITICS (/POLITICS/)
Looting the Pension Funds
By MATT TAIBBI | Sep 26, 2013 AT 07:00AM

In the final months of 2011, almost two years before the city of Detroit would shock America by declaring bankruptcy in the face of what it claimed were insurmountable pension costs, the state of Rhode Island took bold action to avert what it called its own looming pension crisis. Led by its newly elected treasurer, Gina Raimondo – an ostentatiously ambitious 42-year-old Rhodes scholar and former venture capitalist – the state declared war on public pensions, ramming through an ingenious new law slashing benefits of state employees with a speed and ferocity seldom before seen by any local government.

Detroit’s Debt Crisis: Everything Must Go (http://m.rollingstone.com/politics/news/detroits-debt-crisis-everything-must-go- 20130620)

Called the Rhode Island Retirement Security Act of 2011, her plan would later be hailed as the most comprehensive pension reform ever implemented. The rap was so convincing at first that the overwhelmed local burghers of her little petri-dish state didn’t even know how to react. “She’s Yale, Harvard, Oxford – she worked on Wall Street,” says Paul Doughty, the current president of the Providence firefighters union. “Nobody wanted to be the first to raise his hand and admit he didn’t know what the fuck she was talking about.”

Soon she was being talked about as a probable candidate for Rhode Island’s 2014 gubernatorial race. By 2013, Raimondo had raised more than $2 million, a staggering sum for a still-undeclared candidate in a thimble-size state. Donors from Wall Street firms like Goldman Sachs, Bain Capital and JPMorgan Chase showered her with money, with more than $247,000 coming from New York contributors alone.  A shadowy organization called EngageRI, a public-advocacy group of the 501(c)4 type whose donors were shielded from public scrutiny by the infamous Citizens United decision, spent $740,000 promoting Raimondo’s ideas. Within Rhode Island, there began to be whispers that Raimondo had her sights on the presidency. Even former Obama right hand and Chicago mayor Rahm Emanuel pointed to Rhode Island as an example to be followed in curing pension woes.

What few people knew at the time was that Raimondo’s “tool kit” wasn’t just meant for local consumption. The dynamic young Rhodes scholar was allowing her state to be used as a test case for the rest of the country, at the behest of powerful out-of-state financiers with dreams of pushing pension reform down the throats of taxpayers and public workers from coast to coast. One of her key supporters was billionaire former Enron executive John Arnold – a dickishly ubiquitous young right-wing kingmaker with clear designs on becoming the next generation’s Koch brothers, and who for years had been funding a nationwide campaign to slash benefits for public workers.

Nor did anyone know that part of Raimondo’s strategy for saving money involved handing more than $1 billion – 14 percent of the state fund – to hedge funds, including a trio of well-known New York-based funds: Dan Loeb’s Third Point Capital was given $66 million, Ken Garschina’s Mason Capital got $64 million and $70 million went to Paul Singer’s Elliott Management. The funds now stood collectively to be paid tens of millions in fees every single year by the already overburdened taxpayers of her ostensibly flat-broke state. Felicitously, Loeb, Garschina and Singer serve on the board of the Manhattan Institute, a prominent conservative think tank with a history of supporting benefit-slashing reforms. The institute named Raimondo its 2011 “Urban Innovator” of the year.

The state’s workers, in other words, were being forced to subsidize their own political disenfranchisement, coughing up at least $200 million to members of a group that had supported anti-labor laws. Later, when Edward Siedle, a former SEC lawyer, asked Raimondo in a column for Forbes.com how much the state was paying in fees to these hedge funds, she first claimed she didn’t know. Raimondo later told the Providence Journal she was contractually obliged to defer to hedge funds on the release of “proprietary” information, which immediately prompted a letter in protest from a series of freaked-out interest groups. Under pressure, the state later released some fee information, but the information was originally kept hidden, even from the workers themselves. “When I asked, I was basically hammered,” says Marcia Reback, a former sixth-grade schoolteacher and retired Providence Teachers Union president who serves as the lone union rep on Rhode Island’s nine-member State Investment Commission. “I couldn’t get any information about the actual costs.”

This is the third act in an improbable triple-fucking of ordinary people that Wall Street is seeking to pull off as a shocker epilogue to the crisis era. Five years ago this fall, an epidemic of fraud and thievery in the financial-services industry triggered the collapse of our economy. The resultant loss of tax revenue plunged states everywhere into spiraling fiscal crises, and local governments suffered huge losses in their retirement portfolios – remember, these public pension funds were some of the most frequently targeted suckers upon whom Wall Street dumped its fraud-riddled mortgage-backed securities in the pre-crash years.

Today, the same Wall Street crowd that caused the crash is not merely rolling in money again but aggressively counterattacking on the public-relations front. The battle increasingly centers around public funds like state and municipal pensions. This war isn’t just about money. Crucially, in ways invisible to most Americans, it’s also about blame. In state after state, politicians are following the Rhode Island playbook, using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops – not bankers – as the budgetdevouring boogeymen responsible for the mounting fiscal problems of America’s states and cities.

Secrets and Lies of the Bailout (http://m.rollingstone.com/politics/news/secret-and-lies-of-the-bailout-20130104)

Not only did these middle-class workers already lose huge chunks of retirement money to huckster financiers in the crash, and not only are they now being asked to take the long-term hit for those years of greed and speculative excess, but in many cases they’re also being forced to sit by and watch helplessly as Gordon Gekko wanna-be’s like Loeb or scorched-earth takeover artists like Bain Capital are put in charge of their retirement savings.

It’s a scam of almost unmatchable balls and cruelty, accomplished with the aid of some singularly spineless politicians. And it hasn’t happened overnight. This has been in the works for decades, and the fighting has been dirty all the way.

How Wall Street Killed Financial Reform (http://m.rollingstone.com/politics/news/how-wall-street-killed-financial-reform-20120510)

There’s $2.6 trillion in state pension money under management in America, and there are a lot of fingers in that pie. Any attempt to make a neat Aesop narrative about what’s wrong with the system would inevitably be an oversimplification. But in this hugely contentious, often overheated national controversy – which at times has pitted private-sector workers who’ve mostly lost their benefits already against public-sector workers who are merely about to lose them – two key angles have gone largely unreported. Namely: who got us into this mess, and who’s now being paid to get us out of it.

The siege of America’s public-fund money really began nearly 40 years ago, in 1974, when Congress passed the Employee Retirement Income Security Act, or ERISA. In theory, this sweeping regulatory legislation was designed to protect the retirement money of workers with pension plans. ERISA forces employers to provide information about where pension money is being invested, gives employees the right to sue for breaches of fiduciary duty, and imposes a conservative “prudent man” rule on the managers of retiree funds, dictating that they must make sensible investments and seek to minimize loss. But this landmark worker-protection law left open a major loophole: It didn’t cover public pensions. Some states were balking at federal oversight, and lawmakers, naively perhaps, simply never contemplated the possibility of local governments robbing their own workers.

Politicians quickly learned to take liberties. One common tactic involved illegally borrowing cash from public retirement funds to finance other budget needs. For many state pension funds, a significant percentage of the kitty is built up by the workers themselves, who pitch in as little as one and as much as 10 percent of their income every year. The rest of the fund is made up by contributions from the taxpayer.

In many states, the amount that the state has to kick in every year, the Annual Required Contribution (ARC), is mandated by state law.

Chris Tobe, a former trustee of the Kentucky Retirement Systems who blew the whistle to the SEC on public-fund improprieties in his state and wrote a book called Kentucky Fried Pensions, did a careful study of states and their ARCs. While some states pay 100 percent (or even more) of their required bills, Tobe concluded that in just the past decade, at least 14 states have regularly failed to make their Annual Required Contributions. In 2011, an industry website called 24/7 Wall St. compiled a list of the 10 brokest, most busted public pensions in America. “Eight of those 10 were on my list,” says Tobe.

Among the worst of these offenders are Massachusetts (made just 27 percent of its payments), New Jersey (33 percent, with the teachers’ pension getting just 10 percent of required payments) and Illinois (68 percent). In Kentucky, the state pension fund, the Kentucky Employee Retirement System (KERS), has paid less than 50 percent of its ARCs over the past 10 years, and is now basically butt-broke – the fund is 27 percent funded, which makes bankrupt Detroit, whose city pension is 77 percent full, look like the sultanate of Brunei by comparison.

Here’s what this game comes down to. Politicians run for office, promising to deliver law and order, safe and clean streets, and good schools. Then they get elected, and instead of paying for the cops, garbagemen, teachers and firefighters they only just 10 minutes ago promised voters, they intercept taxpayer money allocated for those workers and blow it on other stuff. It’s the governmental equivalent of stealing from your kids’ college fund to buy lap dances. In Rhode Island, some cities have underfunded pensions for decades. In certain years zero required dollars were contributed to the municipal pension fund. “We’d be fine if they had made all of their contributions,” says evidence firefighters union. “Instead, after they took all that money, they’re saying we’re broke. Are you fucking kidding me?”

There’s an arcane but highly disturbing twist to the practice of not paying required contributions into pension funds: The states that engage in this activity may also be committing securities fraud. Why? Because if a city or state hasn’t been making its required contributions, and this hasn’t been made plain to the ratings agencies, then that same city or state is actually concealing what in effect are massive secret loans and is actually far more broke than it is representing to investors when it goes out into the world and borrows money by issuing bonds.

Some states have been caught in the act of doing this, but the penalties have been so meager that the practice can be considered quasisanctioned. For example, in August 2010, the SEC reprimanded the state of New Jersey for serially lying about its failure to make pension ontributions throughout the 2000s. “New Jersey failed to provide certain present and historical financial information regarding its pension funding in bond-disclosure documents,” the SEC wrote, in seemingly grave language. “The state was aware of . . . the potential   effects of the underfunding.” Illinois was similarly reprimanded by the SEC for lying about its failure to make its required pension contributions. But in neither of these cases were the consequences really severe. So far, states get off with no monetary fines at all. “The SEC was mistaken if they think they sent a message to other states,” Tobe says.

But for all of this, state pension funds were more or less in decent shape prior to the financial crisis of 2008. The country, after all, had been in a historic bull market for most of the 1990s and 2000s and politicians who underpaid the ARCs during that time often did so assuming that the good times would never end. In fact, prior to the crash, state pension funds nationwide were cumulatively running a surplus. But then the crash came, and suddenly states everywhere were in a real, no-joke fiscal crisis. Tax revenues went in the crapper, and someone had to take the hit. But who? Cuts to corporate welfare and a rolled-up-newspaper whack of new taxes on the guilty finance sector seemed a good place to start, but it didn’t work out that way. Instead, it was then that the legend of pension unsustainability was born, with the help of a pair of unlikely allies.

Most people think of Pew Charitable Trusts as a centrist, nonpartisan organization committed to sanguine policy analysis and agnostic number crunching. It’s an odd reputation for an organization that was the legacy of J. Howard Pew, president of Sun Oil (the future Sunoco) during its early 20th-century petro-powerhouse days and a kind of australopithecine precursor to a Tea Party leader.

Pew had all the symptoms: an obsession with the New Deal as a threat to free society, a keen appreciation for unreadable Austrian economist F.A. Hayek and a hoggish overuse of the word “freedom.” Pew and his family left nearly $1 billion to a series of trusts, one of which was naturally called the “Freedom Trust,” whose mission was, in part, to combat “the false promises of socialism and a planned economy.”

The Great American Bubble Machine (http://m.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405)

Still, for decades Pew trusts engaged in all sorts of worthy endeavors, including everything from polling to press criticism. In 2007, Pew began publishing an annual study called “The Widening Gap,” which aimed to use states’ own data to show the “gap” between present pension-fund levels and future obligations. The study quickly became a leading analysis of the “unfunded liability” question.

In 2011, Pew began to align itself with a figure who was decidedly neither centrist nor nonpartisan: 39-year-old John Arnold, whom CNN/Money described (erroneously) as the “second-youngest self-made billionaire in America,” after Mark Zuckerberg. Though similar in wealth and youth, Arnold presented the stylistic opposite of Zuckerberg’s signature nerd chic: He’s a lipless, eager little jerk with the jug-eared face of a Division III women’s basketball coach, exactly what you’d expect a former Enron commodities trader to look like.

Anyone who has seen the Oscar-winning documentary The Smartest Guys in the Room and remembers those tapes of Enron traders cackling about rigging energy prices on “Grandma Millie” and jamming electricity rates “right up her ass for fucking $250 a megawatt hour” will have a sense of exactly what Arnold’s work environment was like.

The People vs. Goldman Sachs (http://m.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511)

In fact, in the book that the movie was based on, the authors portray Arnold bragging about his minions manipulating energy prices, praising them for “learning how to use the Enron bat to push around the market.” Those comments later earned Arnold visits from federal investigators, who let him get away with claiming he didn’t mean what he said.

As Enron was imploding, Arnold played a footnote role, helping himself to an $8 million bonus while the company’s pension fund was vaporizing. He and other executives were later rebuked by a bankruptcy judge for looting their own company along with other executives.  Public pension funds nationwide, reportedly, lost more than $1.5 billion thanks to their investments in Enron.

In 2002, Arnold started a hedge fund and over the course of the next few years made roughly a $3 billion fortune as the world’s most successful natural-gas trader. But after suffering losses in 2010, Arnold bowed out of hedge-funding to pursue “other interests.” He had created the Arnold Foundation, an organization dedicated, among other things, to reforming the pension system, hiring a Republican lobbyist and former chief of staff to Dick Armey named Denis Calabrese, as well as Dan Liljenquist, a Utah state senator and future Tea Party challenger to Orrin Hatch.

Soon enough, the Arnold Foundation released a curious study on pensions. On the one hand, it admitted that many states had been undercontributing to their pension funds for years. But instead of proposing that states correct the practice, the report concluded that “the way to create a sound, sustainable and fair retirement-savings program is to stop promising a [defined] benefit.”

In 2011, Arnold and Pew found each other. As detailed in a new study by progressive think tank Institute for America’s Future, Arnold and Pew struck up a relationship – and both have since been proselytizing pension reform all over America, including California, Florida, Kansas, Arizona, Kentucky and Montana. Few knew that Pew had a relationship with a right-wing, anti-pension zealot like Arnold. “The centrist reputation of Pew was a key in selling a lot of these ideas,” says Jordan Marks of the National Public Pension Coalition. Later, a Pew report claimed that the national “gap” between pension assets and future liabilities added up to some $757 billion and dryly insisted the shortfall was unbridgeable, minus some combination of “higher contributions from taxpayers and employees, deep benefit cuts and, in some cases, changes in how retirement plans are structured and benefits are distributed.”

What the study didn’t say was that this supposedly massive gap could all be chalked up to the financial crisis, which, of course, had been caused almost entirely by the greed and wide-scale fraud of the financial-services industry – particularly with regard to state pension funds.

A study by noted economist Dean Baker at the Center for Economic Policy and Research bore this out. In February 2011, Baker reported that, had public pension funds not been invested in the stock market and exposed to mortgage-backed securities, there would be no shortfall at all. He said state pension managers were of course somewhat to blame, but only “insofar as they exercised poor judgment in buying the [finance] industry’s services.”

In fact, Baker said, had public funds during the crash years simply earned modest returns equal to 30-year Treasury bonds, then publicpension assets would be $850 billion richer than they were two years after the crash. Baker reported that states were short an additional $80 billion over the same period thanks to the fact that post-crash, cash-strapped states had been paying out that much less of their mandatory ARC payments.

So even if Pew’s numbers were right, the “unfunded liability” crisis had nothing to do with the systemic unsustainability of public pensions. Thanks to a deadly combination of unscrupulous states illegally borrowing from their pensioners, and unscrupulous banks whose mass sales of fraudulent toxic subprime products crashed the market, these funds were out some $930 billion. Yet the public was being told that the problem was state workers’ benefits were simply too expensive.

In a way, this was a repeat of a shell game with retirement finance that had been going on at the federal level since the Reagan years. The supposed impending collapse of Social Security, which actually should be running a surplus of trillions of dollars, is now repeated as a simple truth. But Social Security wouldn’t be “collapsing” at all had not three decades of presidents continually burgled the cash in the Social Security trust fund to pay for tax cuts, wars and God knows what else. Same with the alleged insolvencies of state pension programs. The money may not be there, but that’s not because the program is unsustainable: It’s because bankers and politicians stole the money.

Still, the public mostly bought the line being sold by Arnold, Pew and other anti-pension figures like the Koch brothers. To most, it didn’t matter who was to blame: What mattered is that the money was gone, and there seemed to be only two possible paths forward. One led to bankruptcy, a real-enough threat that had already ravaged places like Vallejo, California; Jefferson County, Alabama; and, this summer, Detroit. In Rhode Island, the tiny town of Central Falls went bust in 2011, and even after a court-ordered plan lifted the town out of bankruptcy in 2012, the “rescue” left pensions slashed as much as 55 percent. “You had guys who were living off $24,000, and now they’re getting $12,000,” says Day. Though Day and his fellow retirees are still fighting reform, he says other union workers might rather settle than file bankruptcy. Holding up an infamous local-newspaper picture of a retired Central Falls policeman in a praying posture, as though begging not to have his whole pension taken away, Day sighs. “Guys take one look at this picture and that’s it. They’re terrified.”

Such images chilled many public workers into accepting the second path – the kind of pension reform meagerly touted by one-percentfriendly politicians like Gina Raimondo. Anyone could see that “reform” meant giving up cash. But the other parts of these schemes were murkier. Most pension-reform proposals required that states must go after higher returns by seeking out “alternative investments,” which sounds harmless enough. But we are now finding out what that term actually means – and it’s a little north of harmless.

Looting Main Street: How the Nation’s Biggest Banks Are Ripping Us Off (http://m.rollingstone.com/politics/news/looting-mainstreet-20100331)

One of the most garish early experiments in “alternative investments” came in Ohio in the late 1990s, after the Republican-controlled state assembly passed a law loosening restrictions on what kinds of things state funds could invest in. Sometime later, an investigation by the Toledo Blade revealed that the Ohio Bureau of Workers’ Compensation had bought into rare-coin funds run by a GOP fundraiser named Thomas Noe. Through Noe, Ohio put $50 million into coins and “other collectibles” – including Beanie Babies.

The scandal had repercussions all over the country, but not what you’d expect. James Drew, one of the reporters who broke the story, notes that a consequence of “Coingate” was that states stopped giving out information about where public money is invested. “If they learned anything, it’s not to stop doing it, but to keep it secret,” says Drew.

Invasion of the Home Snatchers (http://m.rollingstone.com/politics/news/matt-taibbi-courts-helping-banks-screw-overhomeowners-20101110)

In fact, in recent years more than a dozen states have carved out exemptions for hedge funds to traditional Freedom of Information Act requests, making it impossible in some cases, if not illegal, for workers to find out where their own money has been invested.  The way this works, typically, is simple: A hedge fund will refuse to take a state’s business unless it first provides legal guarantees that information about its investments won’t be disclosed to the public. The ostensible justifications for these outrageous laws are usually that disclosing commercial information about hedge funds would place them at a “competitive disadvantage.”

In 2010, the University of California reinvested its pension fund with a venture-capital group called Sequoia Capital, which in turn is a backer of a firm called Think Finance, whose business is payday lending – a form of short-term, extremely high-interest rate lending that’s basically loan-sharking without the leg-breaking, and is banned in 15 states and D.C. According to American Banker, Think Finance partnered with a Native American tribe to get around state interest-rate caps; someone borrowing $250 in its “plain green loans” program would owe $440 after 16 weeks, for a tidy annual percentage rate of 379 percent. In a more recent case, the pension fund of L.A. County union workers invested in an Embassy Suites hotel that is trying to prevent janitors and other employees from organizing.

California passed a law in 2005 making hedge-fund investments secret.  The American Federation of Teachers this spring released a list of financiers who had been connected with lobbying efforts against defined-benefit plans. Included on that list was hedge-funder Loeb of Third Point Capital, who sits on the board of StudentsFirstNY, a group that advocates for an end to these traditional plans for public workers – that is, pensions that promise a guaranteed payout based on one’s salary and years of service. When Rhode Island union rep Reback complained about hiring funds whose managers had anti-labor histories, she was told the state couldn’t make decisions based on political leanings of fund managers. That same month, Rhode Island moved to disinvest its workers’ money from firearms distributors in the wake of the Sandy Hook shooting.

Hedge funds have good reason to want to keep their fees hidden: They’re insanely expensive. The typical fee structure for private hedgefund management is a formula called “two and twenty,” meaning the hedge fund collects a two percent fee just for showing up, then gets 20 percent of any profits it earns with your money. Some hedge funds also charge a mysterious third fee, called “fund expenses,” that can run as high as half a percent – Loeb’s Third Point, for instance, charged Rhode Island just more than half a percent for “fund expenses” last year, or about $350,000. Hedge funds will also pass on their trading costs to their clients, a huge additional line item that can come to an extra percent or more and is seldom disclosed. There are even fees states pay for withdrawing from certain hedge funds.

In public finance, hedge funds will sometimes give slight discounts, but the numbers are still enormous. In Rhode Island, over the course of 20 years, Siedle projects that the state will pay $2.1 billion in fees to hedge funds, private-equity funds and venture-capital funds. Why is that number interesting? Because it very nearly matches the savings the state will be taking from workers by freezing their Cost of Living Adjustments – $2.3 billion over 20 years.

“That’s some ‘reform,'” says Siedle.  “They pretty much took the COLA and gave it to a bunch of billionaires,” hisses Day, Providence’s retired firefighter union chief.

When asked to respond to criticisms that the savings from COLA freezes could be seen as going directly into the pockets of billionaires, treasurer Raimondo replied that it was “very dangerous to look at fees in a vacuum” and that it’s worth paying more for a safer and more diverse portfolio. She compared hedge funds – inherently high-risk investments whose prospectuses typically contain front-page disclaimers saying things like, WARNING: YOU MAY LOSE EVERYTHING – to snow tires. “Sure, you pay a little more,” she says. “But you’re really happy you have them when the roads are slick.”

Raimondo recently criticized the high-fee structure of hedge funds in the Wall Street Journal and told Rolling Stone that “‘two and twenty’ doesn’t make sense anymore,” although she hired several funds at precisely those fee levels back before she faced public criticism on the issue. She did add that she was monitoring the funds’ performance. “If they underperform, they’re out,” she says.

And underperforming is likely. Even though hedge funds can and sometimes do post incredible numbers in the short-term – Loeb’s Third Point notched a 41 percent gain for Rhode Island in 2010; the following year, it earned -0.54 percent. On Wall Street, people are beginning to clue in to the fact – spikes notwithstanding – that over time, hedge funds basically suck. In 2008, Warren Buffett famously placed a million-dollar bet with the heads of a New York hedge fund called Protégé Partners that the S&P 500 index fund – a neutral bet on the entire stock market, in other words – would outperform a portfolio of five hedge funds hand-picked by the geniuses at Protégé.

Five years later, Buffett’s zero-effort, pin-the-tail-on-the-stock-market portfolio is up 8.69 percent total. Protégé’s numbers are comical in comparison; all those superminds came up with a 0.13 percent increase over five long years, meaning Buffett is beating the hedgies by nearly nine points without lifting a finger.

Union leaders all over the country have started to figure out the perils of hiring a bunch of overpriced Wall Street wizards to manage the public’s money. Among other things, investing with hedge funds is infinitely more expensive than investing with simple index funds. On Wall Street and in the investment world, the management price is measured in something called basis points, a basis point equaling one hundredth of one percent. So a state like Rhode Island, which is paying a two percent fee to hedge funds, is said to be paying an upfront fee of 200 basis points.

How much does it cost to invest public money in a simple index fund? “We’ve paid as little as .875 of a basis point,” says William Atwood, executive director of the Illinois State Board of Investment. “At most, five basis points.”

So at the low end, Atwood is paying 200 times less than the standard two percent hedge-fund fee. As an example, Atwood says, the state of Illinois paid a fee of just $57,000 last year on $550 million of public money they put into an S&P 500 index fund, which, again, is exactly the sort of plain-vanilla investment that Warren Buffett used to publicly kick the ass of Wall Street’s cockiest hedge fund.

The fees aren’t even the only costs of “alternative investments.” Many states have engaged middlemen called “placement agents” to hire hedge funds, and those placement agents – typically people with ties to state investment boards – are themselves paid enormous sums, often in the millions, just to “introduce” hedge funds to politicians holding the checkbook.

Bank of America: Too Crooked to Fail (http://m.rollingstone.com/politics/news/bank-of-america-too-crooked-to-fail-20120314)

In Kentucky, Tobe and Siedle found that KRS, the state pension funds, had paid a whopping $14 million to placement agents between 2004 and 2009. In Atlanta, a member of the city pension board complained to the SEC that the city had hired a consultant, Larry Gray, who convinced the city pension fund to invest $28 million in a hedge fund he himself owned. Raimondo says she never hired placement agents, but the state did pay a $450,000 consulting fee to a firm called Cliffwater LLC.

Doughty says the endless system of highly paid middlemen reminds him of old slapstick comedies. “It’s like the Three Stooges,” he says.  “When you ask them what happened, they’re all pointing in different directions, like, ‘He did it!'”

How Wall Street Is Using the Bailout to Stage a Revolution (http://m.rollingstone.com/politics/news/how-wall-street-is-usingthe-bailout-to-stage-a-revolution-20090402)

Even worse, placement agents are also often paid by the alternative investors. In California, the Apollo private-equity firm paid a former CalPERS board member named Alfred Villalobos a staggering $48 million for help in securing investments from state pensions, and Villalobos delivered, helping Apollo receive $3 billion of CalPERS money. Villalobos got indicted in that affair, but only because he’d lied to Apollo about disclosing his fees to CalPERS. Otherwise, despite the fact that this is in every way basically a crude kickback scheme, there’s no law at all against a placement agent taking money from a finance firm. The Government Accountability Office has condemned the practice, but it goes on.

“It’s a huge conflict of interest,” says Siedle. So when you invest your pension money in hedge funds, you might be paying a hundred times the cost or more, you might be underperforming the market, you may be supporting political movements against you, and you often have to pay what effectively is a bribe just for the privilege of hiring your crappy overpaid money manager in the first place. What’s not to like about that? Who could complain?

Once upon a time, local corruption was easy. “It was votes for jobs,” Doughty says with a sigh. A ward would turn out for a councilman, the councilman would come back with jobs from city-budget contracts – that was the deal. What’s going on with public pensions is a more confusing modern version of that local graft. With public budgets carefully scrutinized by everyone from the press to regulators, the black box of pension funds makes it the only public treasure left that’s easy to steal. Politicians quietly borrow millions from these funds by not paying their ARCs, and it’s that money, plus the savings from cuts made to worker benefits in the name of
“emergency” pension reform, that pays for an apparently endless regime of corporate tax breaks and handouts.

A notorious example in Rhode Island is, of course, 38 Studios, the doomed video-game venture of blabbering, Christ-humping ex-Red Sox pitcher Curt Schilling, who received a $75 million loan guarantee from the state at a time when local politicians were pleading poverty. “This whole thing isn’t just about cutting payments to retirees,” says syndicated columnist David Sirota, who authored the Institute for America’s Future study on Arnold and Pew. “It’s about preserving money for corporate welfare.” Their study estimates states spend up to $120 billion a year on offshore tax loopholes and gifts to dingbats like Schilling and other subsidies – more than two and a half times as much as the $46 billion a year Pew says states are short on pension payments.

The bottom line is that the “unfunded liability” crisis is, if not exactly fictional, certainly exaggerated to an outrageous degree. Yes, we live in a new economy and, yes, it may be time to have a discussion about whether certain kinds of public employees should be receiving sizable benefit checks until death. But the idea that these benefit packages are causing the fiscal crises in our states is almost entirely a fabrication crafted by the very people who actually caused the problem. It’s like Voltaire’s maxim about noses having evolved to fit spectacles, so therefore we wear spectacles. In this case, we have an unfunded-pension-liability problem because we’ve been ripping retirees off for decades – but the solution being offered is to rip them off even more.

Everybody following this story should remember what went on in the immediate aftermath of the crash of 2008, when the federal government was so worried about the sanctity of private contracts that it doled out $182 billion in public money to AIG. That bailout guaranteed that firms like Goldman Sachs and Deutsche Bank could be paid off on their bets against a subprime market they themselves helped overheat, and that AIG executives could be paid the huge bonuses they naturally deserved for having run one of the world’s largest corporations into the ground. When asked why the state was paying those bonuses, Obama economic adviser Larry Summers said, “We are a country of law. . . . The government cannot just abrogate contracts.”

Is the SEC Covering Up Wall Street Crimes? (http://m.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817)

Now, though, states all over the country are claiming they not only need to abrogate legally binding contracts with state workers but also should seize retirement money from widows to finance years of illegal loans, giant fees to billionaires like Dan Loeb and billions in tax breaks to the Curt Schillings of the world. It ain’t right. If someone has to tighten a belt or two, let’s start there. If we’ve still got a problem after squaring those assholes away, that’s something that can be discussed. But asking cops, firefighters and teachers to take the first hit for a crisis caused by reckless pols and thieves on Wall Street is low, even by American standards.

This story is from the October 10th, 2013 issue of Rolling Stone.

Read Full Post »

Foreclosure Court: The Erosion of the Judiciary                                                                                                   http://www.stayinmyhome.com/foreclosure-court-the-erosion-of-the-judiciary/

Posted on September 2nd, 2013 by Mark Stopa 

I’m a big believer in the justice system.  In fact, that’s part of why I became a lawyer.  I believe in every litigant’s right to obtain a fair hearing and trial before a neutral judge and/or impartial jury.  It sounds cliché, but that’s what I do – help people navigate the judicial system in their time of need. 

In recent months, though, the judiciary in many parts of Florida (not all, but many) has turned into something I don’t recognize.  The change has been so sudden and so extreme that it’s altering the face of the judiciary and hindering that which I hold so dear – the right to fair hearings and due process.  Yes, what I consider the “core” of a fully-functioning judicial system is eroding. 

If you’re a Florida lawyer but you don’t handle foreclosure cases, you likely have no idea what I’m talking about.  After all, outside of foreclosure-world, Florida’s courts are operating like normal, business as usual.  Sure, the down economy has brought some minor changes, but all in all, our courts are functioning in a normal way. 

Foreclosure cases, though, are a totally different animal. 

I was chatting with a colleague the other day, an attorney who doesn’t handle foreclosure lawsuits, and he was shocked as I described the things I see in foreclosure court on a daily basis.  This is a seasoned attorney who was SHOCKED at what I see every day.  That made me realize … I’m not doing a good enough job of explaining the travesties I see every day in foreclosure-world. 

It’s a tough line to toe, frankly.  Bar rules prohibit me from disparaging any particular judge, so it’s sometimes difficult to explain what’s happening in foreclosure court without crossing that line.  In this blog, though, I’m going to toe that line.  Don’t misunderstand – I’m not criticizing anyone in particular.  Rather, my critique – and that’s what I see this as, a constructive critique, coupled with a hope that everyone will realize just how flawed our system has become – is aimed at the entire institution.  My concerns aren’t with any particular judge or any one ruling – they lie with the entire judicial system, the way the entire judiciary is operating right now, at least as it pertains to foreclosure cases. 

I know what you’re thinking.  I’m just a self-interested, foreclosure defense attorney who’s trying to delay foreclosures and let people live for free.  I’m upset because the courts are making that more difficult.  Right?

Before you blow off my concerns in that manner, you tell me.  Are my concerns legitimate?  Is this how a judicial system should operate?  You tell me … 

As a foreclosure defense lawyer, I’ve seen pro se homeowners attend hearings in their cases and not be allowed to speak.  Not one word.  It wasn’t that the judge didn’t hear the homeowner or didn’t realize he/she was present, either – the homeowner asked the judge to speak at a duly-noticed hearing and was not permitted to do so.  Homeowner loses, yet couldn’t say one word.  Isolated incident, you say?  I’ve personally seen it more than once. 

Not being permitted to speak has not been limited to pro se homeowners.  I have personally been threatened with criminal contempt – criminal contempt – for moving to disqualify a judge after striking my defenses without letting me say one word about those defenses.  Your defenses are stricken, you can’t talk, and if you complain about it, I’ll throw you in jail. 

In many parts of Florida, attorneys are not permitted to attend foreclosure hearings by phone – regardless of how insignificant or short the hearing may be.  Never mind that the Florida Supreme Court created a rule of judicial administration which requires phone appearances be permitted for hearings that are 15 minutes or less absent “good cause” – in many parts of Florida, attendance by phone is simply not permitted. 

I’ve heard some justify this procedure by explaining how it’s difficult to deal with phone appearances in foreclosure cases.  Really?  How is it any more difficult than in other types of cases?  Frankly, I can’t help but wonder if the prohibition on phone appearances is designed to make it harder for defense lawyers to appear in cases for homeowners, enabling the courts to push through those cases faster.  (Prohibiting phone appearances obviously makes it harder and more expensive to attend hearings, often making the difference in a homeowner’s ability to afford counsel.) 

That’s an absurd proposition, though, right?  Why would our courts care how quickly foreclosure lawsuits are litigated?  Judges are neutral arbiters – they don’t care how quickly the cases are adjudicated.  Do they? 

The answer to that question is at the heart of the problem.  In recent months, the Florida legislature has been putting immense pressure on Florida judges to clear the backlog of foreclosure lawsuits.  How much pressure?  Well, the legislature controls the amount of funding that goes to our courts – funding that is needed to retain new judges, senior judges, court staff, and clerks (basically, the funding necessary to keep all judges and JAs from being totally overwhelmed).  Unfortunately, the legislature has been giving these judges an ultimatum, kind of like parents do to their children regarding allowance.  Basically, it works like this … “if you don’t finish these foreclosure cases, we won’t give you more funding.”  As such, the legislature holds the judiciary hostage … if the judiciary doesn’t clear cases, then the legislature doesn’t give the judiciary the funding necessary to manage the many thousands of foreclosure lawsuits pending before it. 

Perhaps worse yet, and to my sheer disgust, I’m told the legislature recently cut the pay of Florida judges (for the first time in years), and the clear understanding was that it was done as a way to punish/blame the judges for not clearing up the backlog of foreclosure cases faster.  “You won’t enter judgments fast enough for our liking … we’ll cut your pay.” 

(The pay of Florida judges is public record, right?  Why is nobody talking about this?) 

The judicial system shouldn’t operate this way.  We all learned it in elementary school, how the three branches of government exist as “separate but equal” branches of government, employing a system of “checks and balances” to ensure a fully-functioning government.  But that’s not what’s happening right now, certainly not in foreclosure court.  In foreclosure-world, the legislature is king. 

You might think this is conjecture and speculation on my part.  It’s not.  I can’t go a week without hearing how the legislature is forcing judges to move cases.  Judges discuss it openly in open court, and not just to me – to everyone.  As a result of this dynamic – judges wanting to move cases – I see all sorts of crazy things I’d never see in any other area of law. 

I’ve mentioned the homeowners who can’t speak, the threats of incarcertaion, and the prohibition on phone appearances, but let’s get to some more egregious concerns. 

Judges sua sponte set trials in foreclosure cases (without a Notice of Trial having been filed, without a CMC or pretrial conference, and without discussing/clearing the date with an counsel).  This is now routine, virtually everywhere in the state. 

Judges sua sponte set trials in foreclosure cases where a motion to dismiss is outstanding and the defendant has not filed an answer. 

Judges sua sponte set trials with less than 30 days’ notice (such that, as defense counsel, you randomly receive a trial Order in the mail, reflecting you have a trial in 2 weeks).

 The sua sponte setting of trials dominates the landscape of foreclosure-world.  Banks often don’t want trials in foreclosure cases, but the judges will set them anyway.  Then, even when the plaintiffs are vocal about not wanting a trial in that particular case, judges often insist they go forward anyway.  Even stipulated/agreed Orders to continue a trial or vacate a trial Order often go unsigned. 

Sometimes, where trial has been set in violation of Rule 1.440, judges will recognize the error and fix it.  (The judges in Pinellas and Hillsborough in particular are good about this, striving to follow the law.)  In many others cases, though, judges will proceed with trial anyway.  In foreclosure circles, one county has become known for using a stamp – DENIED – right on the motion to vacate trial Order, without a hearing.  Case not at issue?  Doesn’t matter.  Less than 30 days’ notice?  Doesn’t matter.  Bank doesn’t want a trial?  Doesn’t matter.  We’re going to trial! 

Often, judges won’t proceed with trial where the defendant hasn’t filed an Answer but will essentially force the Answer to be filed forthwith.  How is this accomplished?  Easily – either deny the motion to dismiss (often without a hearing), or sua sponte set a CMC to ensure the case gets at issue.   Some courts use CMCs as a way to, in my view, browbeat parties into settling.  One county, for example, has started setting three CMCs at once – one per week for three consecutive weeks, requiring in-person attendance, at mass-motion calendars that last an hour or more, with no input from counsel on when the CMCs are scheduled.  You’re not available?  Too bad.  You don’t need a CMC three weeks in a row?  Yes, you do.  Your case will get at issue and it will be set for trial. 

Oh, and if you want to set a hearing in this county, you have to mail in a form – MAIL IN A FORM – and wait for them to respond to you, by mail, with a form that gives you a set hearing date, without any input from you on when that hearing takes place. 

What dominates the thinking from the judiciary – again, not my speculation, but something the judges openly discuss – is their desire to “close” cases.  That’s the monster that the legislature has created – evaluating the performance of judges not based on their work as judges but based on the results set forth in an Excel spreadsheet.  How many foreclosure lawsuits were filed in that county?  How many judgments have been entered?  If the ratio of judgments entered to cases filed is high enough, then the judges in that county are doing a good job and deserve more funding from the legislature.  If not, then those judges and JAs can all suffer through the many thousands of cases without more help. 

The dynamic is so perverse that I’ve seen judges refuse to cancel foreclosure sales even when both sides ask them to. 

Plaintiff’s lawyer:  “We don’t want this foreclosure sale to go forward, judge.” 

Defendant’s lawyer:  “We are living in this house.  We don’t want this foreclosure sale to go forward, judge.” 

Judge:  “Foreclosure sale will go forward as scheduled.” 

Huh? 

This dynamic is particularly difficult to take when the parties have reached a settlement.  For example, loan modifications sometimes happen after a judgment but before a sale.  That means, essentially, that both sides are willing to forego foreclosure with the homeowner resuming monthly mortgage payments.  Incredibly, based partly on their desire to “close” a case, some judges will force a foreclosure sale to go forward even when both parties don’t want it to, having settled their dispute via a loan modification.

 Plaintiff’s lawyer:  “We have agreed to a loan modification.  We want the foreclosure sale cancelled.” 

Defendant’s lawyer:  “We have agreed to a loan modification.  We want the foreclosure sale cancelled.” 

Judge:  “Foreclosure sale will go forward as scheduled.” 

Huh? 

Even when both sides are able to resolve disputes before trial, even then they sometimes can’t escape a dress-down from the judiciary.  For instance, I’ve watched judges threaten Bar grievances against lawyers – yes, Bar grievances – where they settled the lawsuit by consenting to a foreclosure judgment with a deficiency waiver and extended sale date.  Mind you, that’s a perfectly legitimate way to compromise and settle a foreclosure lawsuit – bank gets the house, homeowner avoids any further liability and gets to stay in the house longer so as to pack up and move – but the prospect of the sale date getting pushed out 4-5 months angers some judges.  “No, you can’t settle that way.  The sale has to happen sooner.”  Yes, I’ve seen settlements like this rejected with the sale set sooner than the parties agreed.

Huh? 

There’s absolutely no rule or law that requires a sale to happen sooner where the parties agree.  Unfortunately, the judges are motivated by having that case “closed” so the numbers on the spreadsheet look better for the legislature. 

My natural response is to lament the unfairness of it all.  After all, that homeowner gave up the chances of winning at trial predicated on getting more time in the house.  I find it terribly unfair that the homeowner gave up a right to trial in exchange for an extended sale date that the judge took away … right?  Some judges would scoff at that notion.  After all, I’ve heard several times, in open court, ”there is no defense to foreclosure,” or “I’ve never seen a valid defense to foreclosure,” or words of that ilk.  Never mind that I’ve had many dozens of foreclosure cases dismissed throughout Florida, including several at trial (25 different judges have dismissed a lawsuit of mine on paragraph 22 noncompliance, for example) … there is no valid defense to foreclosure and, hence, no reason for an extended sale date. 

Another county has become known for punishing any defendants who force a trial to proceed.  I personally observed the judge begin every hearing by telling the homeowners and their counsel that they “better” accept a 120-day extended sale date, as if that “offer” was rejected then it would be “off the table” after the trial.  The implication here was obvious to everyone in the room … You want to show up and force the bank to prove its case?  You’ll lose, and I’ll punish you by ruling against you and forcing you to move out sooner. 

Some would say that the way to deal with this madness is to appeal.  Easier said than done.  Homeowners facing foreclosure are often in no position to fund an appeal.  I’ve taken some appeals for free, but there’s only so many I can handle that way.  Oh, and even if you get beyond the issue of funding, go look for published decisions that are pro-homeowner in the First DCA, Third DCA, or Fifth DCA.  Many thousands of foreclosure cases have been adjudicated in those areas in the past several years.  How many favorable rulings do you think have come out of those jurisdictions during that time?  I’ll give you a hint – not many.  In many ways, appealing in those parts of the state is like standing at the bottom of Mount Everest and being told “climb.” 

Dealing with this dynamic has been very difficult in recent months.  It’s a hard pill to swallow.  It’s difficult to watch the judicial system bend at the direction of the legislature.  It’s tough to know the concept of “separation of powers” that we all learned in elementary school is being cast aside.  It’s hard to feel like the most fundamental concepts of due process are being sacrificed to push lawsuits faster when even the plaintiffs in those lawsuits don’t so desire.  It’s hard to feel like these procedures have made it impossible for me to help homeowners in certain parts of the state.  It’s frustrating that many reading this will be upset at the entire judiciary, not realizing there are many circuit judges – particularly in Hillsborough, Pinellas, and other areas within the ambit of Florida’s Second District – who are striving to be fair and follow the law notwithstanding all of the pressure from the legislature. 

Mostly, though, I’m disappointed.  I’m disappointed that such perverse procedures are happening in our courts every day yet nobody is talking about it – and many don’t even realize it’s happening.  I’m disappointed that the justice system I knew is eroding.  I’m not going to find a dictionary definition, but that’s what erosion is – a slow process of deterioration such that, before too long, that thing which previously existed is no more. 

I hope everyone shares this blog.  I hope my friends, colleagues, attorneys and homeowners all understand what’s happening in our courts.  I hope everyone stands up to the legislature and demands it stop this madness.  Most of all, I hope the erosion of our judiciary stops … soon.

Read Full Post »

New post on Livinglies’s Weblog

Federal Agent Misconduct in Favor of BofA and McCarthy Holthus and Levine law firm?

http://livinglies.wordpress.com/2013/09/03/federal-agent-misconduct-in-favor-of-bofa-and-mccarthy-holthus-and-levine-law-firm/

by Neil Garfield

HAS FORECLOSURE DEFENSE BECOME A TERROR THREAT?

WHO IS TERRIFIED HERE?

This is a story about abuse of power or abuse of apparent power. The object is to cover-up crimes that remain largely undetected because the complex maze created by the “Thirteen Banks.”The stakes could not be higher. Either the current major Banks will be sustained or they will come crashing down with a feeding frenzy on a carcass of a predator that stole tens of trillions of dollars from multiple countries, hundreds of millions of people, and millions of homes across the world that should, by all accounts under the Law, still belong to the owner who was displaced by foreclosure. The banks are willing to do anything and they are paying outsize fees and other legal expenses (topping $100 Billion now).

The agents involved — Mike Lum from Homeland Security, Tim Hines, FBI Agent, and Sean Locksa, FBI agent — were either moonlighting (the agents say they were acting in their official capacity) and using their badges in appropriately or they were sent to intimidate litigants with Bank of America represented by McCarthy Holthus and Levine. A few years back, I received reports that the law firm, and in particular attorney Levine, had sent letters to local prosecutors to request action against people who were defending their property from foreclosure. The agents admitted to Blomberg today that they received a “tip” and that “it” was “no longer” a criminal manner and that they had ended their investigation.

In one prior case I saw a letter and I believe I might have seen an affidavit signed by Levine. The result was a series of indictments against one individual that were later dismissed. I have no information on the other cases all dating back to around 2010. I know one of the people, the one who I know was indicted, spent the last bit of her money hiring a criminal attorney to defend her. The case was “settled with a dismissal.” She subsequently lost two homes that were previously unencumbered in a foreclosure where different parties stepped in to foreclose than the ones who asked for lift stay in her bankruptcy. None of the parties were creditors or properly identified.

I now believe I have enough information to connect the dots, and raise the question as to whether members of local, federal and state law enforcement are colluding (or are being wrongfully used by the suggestion of false information) with Bank of America and at least one law firm — McCarthy Holthus and Levine — in which litigants and perhaps witnesses are intimidated into submission to wrongful foreclosures. The information contained in this article relates primarily to Arizona and to a lesser degree, California. I have no information on any other such activity in any other state of the union.

It also appears as though Bank of America and McCarthy Holthus and Levine were taking advantage of some sloppiness at the Post Office, for which the Postmaster in Simi Valley has apologized and sent a refund to the complainant, Darrell Blomberg whose story can be read below. The interesting thing here is that Blomberg reports that McCarthy Holthus and Levine directly received a letter that was addressed to Celia Mora, a suspected robo signor who apparently lives in Simi Valley, according to the post office, but whose mail bears a San Diego postmark.

The joint terrorism task force supposedly represented by the three men identified above, will not answer calls relating to this matter. Thus we only have Blomberg’s report and my own information and analysis — and of course public record. We do have a callback received today by Blomberg who reports that the agents answered a limited number of questions.

The information contained in this report is substantially corroborated by another source who, like Blomberg I consider to have the highest integrity and who was also visited this past week by the same agents who visited Blomberg. Since no specific act was alleged in the interviews except the perfectly legal request to the post office to confirm an address of a potential witness and test mailings to see who was receiving the mailings, it is hard to conclude anything other than that these agents were being used officially or unofficially to intimidate litigants who have been successful at defending their homes in foreclosure for years, and to intimidate them into ceasing their factual and investigative help to other homeowners who are also being wrongfully foreclosed.

If these interviews were sanctioned by the terrorism task force, the FBI or Homeland security it clearly represents the use of Federal law enforcement authority for the benefit of gaining a civil advantage — a crime in most jurisdictions. How high the orders went in those organization I do not know. If there were no such orders and these agents were doing a “favor” then they are subject to discipline for misuse of their badge and deliberately misleading the persons interviewed into thinking that this was an official investigation. The agencies involved might be negligent in supervising the activity of these agents. Neither of the sources for this story have any mark on their record except the mark of distinction — one having worked for decades in law enforcement in economic crimes.

Was Darrel Blomberg getting too close to the truth?

In litigation, one of the points raised by Blomberg was that Celia Mora — allegedly signed an affidavit perhaps by herself and perhaps as a robo signor. The issue of forgery didn’t come up. There was a San Diego post mark same day as the affidavit was allegedly signed 160 miles away. Blomberg’s position was Mora had no actual authority no actual executive position or managerial position, and signed clerically under instruction without knowledge of the contents. That is it. The fact that McCarthy Holthus and Levine actually received the letter addressed to Mora through normal postal service leads one to believe that the affidavit may have been created at the law firm and perhaps even signed there in Arizona. Hence any criminal behavior suggested was not the work of Blomberg but could have been the work of the law firm or Bank of America. To my knowledge there is no investigation pending relating to the use of the mails, false documents, improper signatures, lack of authority or any of the issues presented by Blomberg.

From there it became a vague charge of harassment communicated by three Federal Agents. Harassment was the word used by the agents in the interview with Blomberg and the interview with my other source. But no specific act was stated even in passing as to what act would be investigated as harassment, no less a matter of national security. More telling, when the agents left both interviews, neither source was instructed or requested to stop any specific act. That leads to the question, if there was no conduct they sought to stop, why were they there at all?

Note that McCarthy Malthus and Levine has been replaced by the law firm of Bryan Cave since June, 2013 in Blomberg’s case. Generally speaking Greg Iannelli, Esq. handles the more sensitive pieces of litigation that could blow the lid off of the fraudulent scheme of securitization.

Read Blomberg’s account here —> 2013-08-29, Unexpected Visit from the National Joint Terrorism Task Force

Background and analysis: Why do the banks continue to use low paid clerical workers to sign affidavits and other documents for which they obviously lack authority or knowledge? Why won’t a true executive with true authority and actual personal knowledge based upon his or her own actual observation, investigation and analysis to make sure the foreclosure is proper as to the property, the persons, the balance due and the existence of a default — especially with reference to the actual creditor’s books of account?

Convenience doesn’t cover it. With legal costs topping $100 Billion it would be impossible to pass the giggle test on any explanation of convenience when it comes to the paperwork. My conclusion is that it is worth getting embarrassed in court as long as the number of times is small enough that the overall scheme is not toppled. The use of clerical personnel to sign and approve documents relating to foreclosure is akin to allowing teller’s decide whether you can have a loan on that new car or new house. It doesn’t happen. If it doesn’t happen when the “loan” goes out, then it is fair to assume that the same standards would apply when the loan turns bad and comes back in.

Think about it. The Banks are reporting record profits. U. S. Bank reported $42 Billion in just one quarter. They are attributing their profits to proprietary trading — something I have attributed to laundering the illicit retention of funds that should have been used to pay investors the principal and accrued interest that was due on the promise of investment banks when they issued bogus mortgage bonds. That money was received by the Banks as agents for the investors and therefore, whether paid or not, is a credit against the account receivable owned by the investors.

The Glaski appellate attorneys gratuitously admitted that the true owner of the debts will never be known. Yet the true relationship between the homeowners and the lenders is regarded as known and enforceable. In short, the position of the Banks is that we don’t know who this money belongs to but it must belong to someone so we are going to collect it and foreclose. We’ll get back to you later on what we did with the money. The Banks are required to take that idiotic position because (a) it is still working in court and (b) they get to avoid liability to investors, guarantors, insurers, borrowers and government agencies that could exceed $10 trillion. So $100 Billion in legal expenses is only 1% of their exposure. It is easy to see how the Math works. If the legal expenses were a far more significant portion of the money the Banks were holding then they would find another way to deal with it. 

If the false trading and laundering of money was properly entered on the books as merely repatriating money that was hidden, the investors would be spared the losses that threaten our pensions and cities. It would also alleviate or eliminate the corresponding account payable due from homeowners, city budgets and other “borrowers” who were the unwitting pawns in a scheme to defraud investors. The collateral damage to all citizens, all taxpayers, all consumers, all workers and all homeowners has been obvious since 2007.

The extraordinary story is aggravated by the knowledge that the legal expenses of the Banks has now topped $100 Billion. Like I said, think about it. Nobody spends $100 Billion unless it is worth it. It is worth the price because of the amount of liability they are avoiding, and the amount of money they stole that went offshore. The amount of the theft can be estimated in a variety of ways, and the results are always the same. They siphoned trillions of dollars from many countries. In the U.S. alone it appears that the total was in excess of $17 Trillion, which is $3 Trillion MORE than the total amount of lending on residential “loans.” Extrapolating the most recent profit report from U. S. Bank from a quarter (three months) to a year, that one Bank is reporting annual earnings from “proprietary” trading in excess of $160 Billion per year. That is one of 18 Banks that were involved in this crime against humanity. Do the math.

So the Banks retain money that they never legally earned at the expense of deceived investors, Cities and sovereign wealth funds AND at the expense of the “borrowers” in the “underlying” deals. And by not crediting the lenders, the corresponding reduction of the account payable from “Borrowers” is also absent. No consent for principal reduction is required because the balance has also been reduced or extinguished by payment. Follow the money trail and the results was astonish you. This is like organized crime with all the trimmings of governmental complicity.

Now I am reporting that based upon a pattern of conduct that appears particularly egregious in Arizona, this unholy alliance between the people who committed the wrongs and government is becoming apparent. Who would have imagined indictments and “investigations” of people litigating their cases against the Banks after the scale the crime became apparent in 2008-2009?

CAVEAT: The agents in the Blomberg interview insist they were acting in their official capacity and I take them at their word. My problem with that assumption is that it means the system is susceptible of manipulation by attorneys who have no problem playing dirty tricks to gain a civil advantage. Or, worse, it means that there are high level people in the system who are willing to look the other way when this behavior pops up.

By this point in the savings and loan scandal in the 1980’s more than 800 bank presidents and loan officers, along with mortgage brokers and originators had been convicted by a jury and were serving their sentences. This time the tally is zero. But the reverse is not true. Mortgage brokers and originators and investors who played the system against itself have been investigated, prosecuted and sentenced to prison. And even homeowners have been accused of crimes that were identical to the crimes committed by Banks on a much larger scale. Steal a million, go to jail. Steal a Trillion and get immunity because the finance system might not survive removing the criminals from our society. No longer a nation of laws we have become a nation of men, corrupt men, who continue to accumulate wealth and power as they channel their illicit gains into reported Bank “profits” and control over world natural resources.

For about three years I have been investigating an unholy alliance between a law firm, McCarthy Holthus and Levine, Bank of America, U.S. Bank and law enforcement. It appears as though they have some special influence and that local, state and Federal law enforcement agents are acting as collectors and intimidators outside the boundaries of the law. Prosecutors have followed this line of attack against those pro se litigants who are getting close to the truth that the foreclosures — all of them — were bogus, if they were based upon mortgages and deeds of trust carrying claims of securitization, arising from Assignment and Assumption Agreements, Pooling and Servicing Agreements, and false prospectuses to investors.

The attached report from Darrel Blomberg, a person of unparalleled integrity, tells the story of agents from the FBI who (whether they realized it or not) are clearly acting at the behest and for the benefit of Bank of America, who was represented by McCarthy Holthus and Levine. In the past week, the agents have been visiting at least two people based upon a “harassment” allegation. The agents declared themselves to be part of a joint terrorism task force. The act of harassment was a request for confirmation of address and confirmation of address that ended up both in the offices of Bank of America and the office of McCarthy Holthus and Levine. It was addressed to the U.S. Postmaster who apologized for gaffes in processing the requests and even refunded money to Blomberg. No investigation has been threatened by the U.S. Postal inspector against either the Bank or the law firm. And none has been threatened against Blomberg.

Having a few pages of the attempt to get address of a robo signor whose signature appears to have been forged, these agents have interviewed two people in Arizona that have been known to provide factual assistance to other homeowners and whose own cases have been spread out over many years as the Bank continues to fail in its attempt to claim ownership or verify the balance of the debt. These agents identified themselves as having been dispatched from the FBI, Homeland security and the joint task force. Whether they were merely moonlighting or were in fact dispatched by their superiors, it is clear that no criminal matter was under investigation, and that their purpose was to intimidate two people who fortunately are not easily intimidated. Based upon my investigation it appears as though that law Firm, McCarthy, Holthus and Levine who is frequently replaced by Bryan Cave, has been doing dirty work for the banks through contacts in law enforcement.

It is happening and this should be stopped before it becomes a commonplace act throughout the country.

In the final analysis the issue of ownership of the loan is going to unravel this mess because it is only then that we can look at the books of account and see what money is owed on the original account receivable for the creditor/investor/REMIC.

The analysis of ownership does not merely look to the agreements the parties entered into because the label parties give to a transaction does not determine its character. See Helvering v. Lazarus & Co. 308 U.S. 252, 255 (1939). The analysis must examine the underlying economics and the attendant facts and circumstances to determine who owns the mortgage notes for tax purposes. See id. The court in In re Kemp documents in painful detail how Countrywide failed to transfer possession of a note to the pool backing a Mortgage Backed Security (MBS) so that Countrywide failed to comply with the requirements necessary for the mortgage to comply with the REMIC rules. See In re Kemp, 440 F.R. 624 (Bkrtcy D.N.J. 2010). Defendant in this case has done exactly what was adjudicated in Kemp, failure to sufficiently show a timely transfer that complied with the strict language of the trusts’ Agreements.

As the Kemp court notes, “[f]rom the maker’s standpoint, it becomes essential to establish that the person who demands payment of a negotiable note, or to whom payment is made, is the duly qualified holder. Otherwise, the obligor is exposed to the risk of double payment, or at least to the expense of litigation incurred to prevent duplicative satisfaction of the instrument. These risks provide makers (Plaintiff in this case) with a recognizable interest in demanding proof of the chain of title” (specifically referring to the trust participants). 440 B.R. at 631 (quoting Adams v. Madison Realty & Dev., Inc., 853 F.2d 163, 168 (3d Cir. N.J. 1988). And because the originator did not comply with the legal niceties, the beneficial owner of the debt, the trustee, cannot file its proof of claim either. 

Read Full Post »

TUESDAY, JUN 18, 2013 07:45 AM EDT

Bank of America whistle-blower’s bombshell: “We were told to lie”

Bombshell: Bank of America whistle-blowers detail horrid schemes to fleece borrowers, reward foreclosures (UPDATED)

BY 

TOPICS: BANK OF AMERICAFORECLOSUREMORTGAGE CRISISMORTGAGE FRAUDMORTGAGEHAMP,WHISTLEBLOWERSEDITOR’S PICKSLOANSJP MORGAN CHASEWALL STREET

 

(Credit: Sashkin via Shutterstock/Salon)

Bank of America’s mortgage servicing unit systematically lied to homeowners, fraudulently denied loan modifications, and paid their staff bonuses for deliberately pushing people into foreclosure: Yes, these allegations were suspected by any homeowner who ever had to deal with the bank to try to get a loan modification – but now they come from six former employees and one contractor, whose sworn statements were added last week to a civil lawsuit filed in federal court in Massachusetts.

“Bank of America’s practice is to string homeowners along with no apparent intention of providing the permanent loan modifications it promises,” said Erika Brown, one of the former employees. The damning evidence would spur a series of criminal investigations of BofA executives, if we still had a rule of law in this country for Wall Street banks.

The government’s Home Affordable Modification Program (HAMP), which gave banks cash incentives to modify loans under certain standards, was supposed to streamline the process and help up to 4 million struggling homeowners (to date, active permanent modifications numberabout 870,000). In reality, Bank of America used it as a tool, say these former employees, to squeeze as much money as possible out of struggling borrowers before eventually foreclosing on them. Borrowers were supposed to make three trial payments before the loan modification became permanent; in actuality, many borrowers would make payments for a year or more, only to find themselves rejected for a permanent modification, and then owing the difference between the trial modification and their original payment. Former Treasury Secretary Timothy Geithner famously described HAMP as a means to “foam the runway” for the banks, spreading out foreclosures so banks could more readily absorb them.

These Bank of America employees offer the first glimpse into how they pulled it off. Employees, many of whom allege they were given no basic training on how to even use HAMP, were instructed to tell borrowers that documents were incomplete or missing when they were not, or that the file was “under review” when it hadn’t been accessed in months. Former loan-level representative Simone Gordon says flat-out in her affidavit that “we were told to lie to customers” about the receipt of documents and trial payments. She added that the bank would hold financial documents borrowers submitted for review for at least 30 days. “Once thirty days passed, Bank of America would consider many of these documents to be ‘stale’ and the homeowner would have to re-apply for a modification,” Gordon writes. Theresa Terrelonge, another ex-employee, said that the company would consistently tell homeowners to resubmit information, restarting the clock on the HAMP process.

Worse than this, Bank of America would simply throw out documents on a consistent basis. Former case management supervisor William Wilson alleged that, during bimonthly sessions called the “blitz,” case managers and underwriters would simply deny any file with financial documents that were more than 60 days old. “During a blitz, a single team would decline between 600 and 1,500 modification files at a time,” Wilson wrote. “I personally reviewed hundreds of files in which the computer systems showed that the homeowner had fulfilled a Trial Period Plan and was entitled to a permanent loan modification, but was nevertheless declined for a permanent modification during a blitz.” Employees were then instructed to make up a reason for the denial to submit to the Treasury Department, which monitored the program. Others say that bank employees falsified records in the computer system and removed documents from homeowner files to make it look like the borrower did not qualify for a permanent modification.

Senior managers provided carrots and sticks for employees to lie to customers and push them into foreclosure. Simone Gordon described meetings where managers created quotas for lower-level employees, and a bonus system for reaching those quotas. Employees “who placed ten or more accounts into foreclosure in a given month received a $500 bonus,” Gordon wrote. “Bank of America also gave employees gift cards to retail stores like Target or Bed Bath and Beyond as rewards for placing accounts into foreclosure.” Employees were closely monitored, and those who didn’t meet quotas, or who dared to give borrowers accurate information, were fired, as was anyone who “questioned the ethics … of declining loan modifications for false and fraudulent reasons,” according to William Wilson.

Bank of America characterized the affidavits as “rife with factual inaccuracies.” But they match complaints from borrowers having to resubmit documents multiple times, and getting denied for permanent modifications despite making all trial payments. And these statements come from all over the country from ex-employees without a relationship to one another. It did not result from one “rogue” bank branch.

Simply put, Bank of America didn’t want to hire enough staff to handle the crush of loan modification requests, and used these delaying tactics as a shortcut. They also pushed people into foreclosure to collect additional fees from them. And after rejecting borrowers for HAMP modifications, they would offer an in-house modification with a higher interest rate. This was all about profit maximization. “We were regularly drilled that it was our job to maximize fees for the Bank by fostering and extending delay of the HAMP modification process by any means we could,” wrote Simone Gordon in her affidavit.

It is a testament to the corruption of the federal regulatory and law enforcement apparatus that we’re only hearing evidence from inside Bank of America now, in a civil class-action lawsuit from wronged homeowners, when the behavior was so rampant for years. For example, the Treasury Department, charged with specific oversight for HAMP, didn’t sanction a single bank for failing to follow program guidelines for three years, and certainly did not uncover any of this criminal conduct. Steven Cupples, a former underwriter at Bank of America, explained in his statement how the bank falsified records to Treasury to make it look like they granted more modifications. But Treasury never investigated. Meanwhile, the Justice Department joined with state Attorneys General and other federal regulators to essentially bless this conduct in a series of weak settlements that incorporated other bank crimes as well, like “robo-signing” and submitting false documents to courts.

These affidavits, however, should return law enforcement to the case. William Wilson, the case management supervisor, alleges in his statement that this “ridiculous and immoral” conduct continued through August of 2012, when he was eventually fired for speaking up. That means Bank of America persisted with these activities for at least six months AFTER the main, $25 billion settlement to which they were a party. So state and federal regulators could sue Bank of America over this new criminal conduct, which post-dates the actions for which they released liability under the main settlement. Attorneys general in New York and Florida have accused Bank of America of violating the terms of the settlement, but they could simply open new cases about these new deceptive practices.

They would have no shortage of evidence, in addition to the sworn affidavits. According to Theresa Terrelonge, most loan-level representatives conducted their business through email; in fact, various email communications have already been submitted under seal in the Massachusetts civil case. State Attorneys General or US Attorneys would have subpoena power to gather many more emails.

And they would have very specific targets: the ex-employees listed specific executives by name who authorized and directed the fraudulent process. “The delay and rejection programs were methodically carried out under the overall direction of Patrick Kerry, a Vice President who oversaw the entire eastern region’s loan modification process,” wrote William Wilson. Other executives mentioned by name include John Berens, Patricia Feltch and Rebecca Mairone (now at JPMorgan Chase, and already named in a separate financial fraud case). These are senior executives who, if this alleged conduct is true, should face criminal liability.

Bank accountability activists have already seized on the revelations. “This is not surprising, but absolutely sickening,” said Peggy Mears, organizer for the Home Defenders League. “Maybe finally our courts and elected officials will stand with communities over Wall Street and prosecute, and then lock up, these criminals.”

Sadly, it’s hard to raise hopes of that happening. Past experience shows that our top regulatory and law enforcement officials are primarily interested in covering for Wall Street’s crimes. These well-sourced allegations amount to an accusation of Bank of America stealing thousands of homes, and lying to the government about it. Homeowners who did everything asked of them were nevertheless pushed into foreclosure, all to fortify profits on Wall Street. There’s a clear path to punish Bank of America for this conduct. If it doesn’t result in prosecutions, it will once again confirm the sorry excuse for justice we have in America.

Update: Read the full affidavits from the active court case here.

David Dayen is a freelance writer based in Los Angeles, CA. Follow him on Twitter at @ddayen.

Read Full Post »

Wall Street protest enters fourth day.

Peter Foley / EPA

New York police try to direct protesters marching on Wall Street Tuesday.

A protest called “Occupy Wall Street” entered its fourth day Tuesday as a loosely organized group of activists converged on lower Manhattan and clashed with police.

The protest began Saturday when several thousand people gathered in front of the New York Stock Exchange holding signs saying “We must end corporate tyranny and corruption” and “Debt is slavery.” By Tuesday, the crowd had dwindled to several hundred.

New York police have made a handful of arrests — two on Saturday when protesters tried to enter a Bank of America office and six more on Monday. At least four on Monday were held for wearing masks, which is illegal for groups of two or more, police said. A video posted on YouTube Monday appears to show police arresting at least one protester.

“The elite corporate power have hijacked democracy,” Alexander Penley, an international lawyer from New York, told Reuters. “The economic depression we are experiencing today has something to do with how Wall Street is run.”

Demonstrators have displayed other signs including “Commodity inflation causes starvation” and “I can’t afford a lobbyist.”

The idea for the protest apparently originated with a Vancouver-based magazine called Adbusters, which describes itself as “a not-for-profit, reader-supported, 120,000-circulation magazine concerned about the erosion of our physical and cultural environments by commercial forces.”

In a July 13 blog post, the magazine called on readers to emulate the “Arab Spring” uprisings that began in Tahrir Square in Cairo in January. The magazine called on readers to “flood into lower Manhattan, set up tents, kitchens, peaceful barricades and occupy Wall Street for a few months.” The purpose of the protest, according to the post, is to end “the influence money has over our representatives in Washington.”

“It’s time for DEMOCRACY NOT CORPORATOCRACY,” the post proclaimed. “We’re doomed without it.”

On Tuesday, police maintained a heavy presence in the Financial District, partitioning off areas of the sidewalk and slowing pedestrian traffic in a neighborhood that typically attracts heavy tourist traffic.

The demonstrators have vowed to stay for months.

Check out some great photos of the protest here.

All we need to do, is have the people that have been wrongfully foreclosed upon during this foreclosure hell plaguing the country, join in the protests, and the crowd would be big enough to make one hell of a statement!

Read Full Post »

Older Posts »

%d bloggers like this: