Matt Weidner – Fighting For The American People

Posts Tagged ‘wall street fraud’

The Fix is in- From the WSJ

U.S. securities regulators are in preliminary discussions with several major Wall Street banks aimed at reaching settlements to resolve a broad investigation of their sales of mortgage-bond deals that helped unleash the financial crisis, according to people familiar with the matter.

The probe involves complex pools of mortgages and other loans called collateralized debt obligations, or CDOs, slices of which were sold to different investors.

Wall Street has come under intense fire from critics for its sale of the securities, seen as a central factor in the crisis. Settling the allegations would resolve one of the biggest law-enforcement threats hanging over leading banks.

The Securities and Exchange Commission, after issuing subpoenas for documents and interviewing officials from nearly every bank that was a major player in creating, selling or trading CDOs, has begun negotiating with the companies, these people said.

The talks are at early, informal stage and could fall apart, people with knowledge of them cautioned, especially as the banks and SEC wrangle over settlement terms.

Still, the move to try to work out deals with each bank is a sign of interest by all sides in ending the probe without a rerun of the public fight between the SEC and Goldman Sachs Group Inc. Goldman agreed in July to pay $550 million to settle SEC civil charges that it misled investors by not disclosing that it manufactured one CDO with input from a hedge-fund client that planned to bet against it.

Firms that received SEC subpoenas include Citigroup Inc., Deutsche Bank AG, J.P. Morgan Chase & Co., Morgan Stanley and UBS AG. None has been charged as a result of the investigation. A spokesman for the SEC wouldn’t comment.

Banks churned out more than $1 trillion of CDOs. They often created them at the request of investors who made bets against the deals. Some banks made their own bearish bets. Such bets paid off when the mortgage market crashed, though financial firms also suffered steep losses from CDOs stuck on their books.

Shortly after suing Goldman over a CDO deal in April, SEC enforcement director Robert Khuzami said the agency would look closely at deals similar to Abacus 2007-AC1, the one at the center of that suit. People close to the probe say it has become a top enforcement priority as the SEC pushes to show it is holding Wall Street accountable.

The investigation is homing in on a range of possible conflicts of interest. For instance, investigators are looking at how the assets in the CDOs were selected and valued, including how much influence particular hedge funds may have had in the selection, and when such funds may have been betting against those assets, people familiar with the matter said.

Among the CDOs being scrutinized are some invested in by Magnetar Capital, an Illinois hedge-fund firm. One of these is a $1.1 billion deal sold by J.P. Morgan in early 2007. Other CDOs being looked at include a $1 billion deal by Citigroup in 2007 called Class V Funding III.

Citigroup, J.P. Morgan, UBS, Deutsche and Morgan Stanley declined to comment. Magnetar, which like the banks hasn’t faced any charges in the probe, said it has cooperated with requests for information. “We are not aware that this inquiry is focused on any particular person or firm, or on any particular group of transactions,” a spokesman said.

The Goldman settlement fueled speculation it could be a template for an industry-wide deal. Goldman conceded a “mistake” in not disclosing the full role of Paulson & Co. in the Abacas CDO. Goldman also agreed to toughen oversight of mortgage securities and employees who create or sell them. Paulson wasn’t accused of any wrongdoing.

An industry-wide strategy was followed by regulators in their crackdown over the earlier mess involving auction-rate securities, long-term debt instruments whose interest rates are reset periodically at auctions.

After that market froze in the financial crisis, regulators alleged the investments were wrongly sold as safe and liquid, and later reached agreements with Citigroup, UBS and Merrill Lynch—now part of Bank of America Corp.—to buy back more than $36 billion of securities. Those deals became the framework for settlements with other banks.

But the practices used by banks in manufacturing and pitching CDOs aren’t similar enough to make an industry-wide settlement possible, say people familiar with the situation. Morgan Stanley disclosed when creating CDOs that its own traders could bet against the deals, people familiar with the bank said. That is a different situation from the conflict the SEC alleged in the Goldman suit, involving failure to disclose a hedge fund’s role.

The degree of disclosure varied between CDO deals, as did the role played by investors betting against the housing market. Because of the differences, SEC officials are aiming to reach individual settlements with banks, the people familiar with the situation said.

It isn’t clear when formal settlement talks could begin, or whether the SEC will demand fines or restitution to certain investors.

Also unclear is the potential effect of any settlements on a related criminal probe launched earlier this year by the U.S. Attorney’s office in Manhattan. Officials there declined to comment.

At least some companies under SEC scrutiny are inclined to settle because of the pounding Goldman’s shares took after suit against it was first filed, said people familiar with the matter. Goldman fought the case for three months, repeatedly saying it had done nothing wrong and would prevail if the lawsuit went to trial.

Some officials at other banks favor a settlement because any damage from a deal likely would be less-drawn out than the Goldman suit, according to people familiar with the situation. Goldman employee Fabrice Tourre still is battling civil-fraud charges filed against him by the SEC.

Another important factor in the probe is the concept of suitability—or the degree to which the CDO products were an appropriate investment for clients. In general, CDOs were sold more frequently to less-sophisticated investors as the market matured in 2006 and 2007.

—Dan Fitzpatrick, Aaron Lucchetti and Serena Ng contributed to this article.

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Courts Are Overwhelmed With Foreclosures

Across the country, circuit court judges and their staff are becoming overwhelmed and frustrated by the total avalanche of foreclosure cases that have been dumped in their courtrooms.  In Pinellas County, Circuit Court judges who used to handle like 400 foreclosure cases are now handling something like 3,000.These judges still have one judicial assistant and the same limited resources the had before the crisis.  When the judge’s loan JA sits down to start the day, they are bombarded with phone calls and mail and people in their face every single second….it’s chaos, its a burden and it is completely untenable for the long run.

Things have gotten so bad for the judges that I’m told Judges across the state are no longer hearing Motions to Dismiss filed by Defendants in foreclosure cases, and are just denying them without even having a hearing on the matter.  Now that’s one way to deal with the crisis.  It’s an unconstitutional, unfair and totally biased approach that completely ignores the law and the rights of the citizens these judges took an oath to serve, but it is one way to deal with the crisis. (Look for Appeals To Come If This Practice Really Begins to Take Hold.)

I know, Let’s Throw All The Rules Out The Window

Many of the Plaintiff’s attorneys that are working so hard to throw borrowers out of their home cannot rely on good, solid, honest legal work to accomplish their job.  As an attorney who sees the work of these firms every day, I am just astonished that the Courts continue to allow such horrendous practice to continue unchecked, but there seems to be little desire to try and force a correction of the behavior.  Just in case you think I’m overstating the problem, here is an excerpt from the Florida Supreme Court’s Task Force Report on Residential Mortgage Foreclosures

• Finally, it is critical that these firms be candid, clear, and truthful and accurate in connection with pleadings and affidavits filed with the Courts.  A leading plaintiff’s lawyer and a major plaintiff’s law firm have been the subject of a public reprimand and sanctions due to untruthful filings with the courts.  Judges continue to see affidavits of amounts due and owing signed by law firm employees, and cost affidavits charging very high service of process fees for process serving firms owned by the law firm principals.  To some extent, it is fair to be concerned whether the press of the case load is interfering with a judge’s ability to police the conduct of the firms before them in these usually uncontested, unopposed foreclosure cases.

The full report can be found here but the bottom line is this, the lenders and their law firms are lying, lying, lying.  They’re committing fraud on the courts on an unprecedented scale.  The report of the Supreme Court is a bit sanitized, but the firms are whipping out foreclosure cases so quickly that they’re not even bothering to get the proper documents that prove they have a correct basis to file a suit from the outset.  Some firms have ownership interests in the process servers who are supposed to personally hand the lawsuit to a defendant and they’re both charging exorbitant fees for this service and lying about whether proper service has been obtained or even attempted.  And finally, the biggie….they’re lying, lying, lying about the evidence they’re submitting to the court, these come primarily in the forms of Affidavits and Assignments submitted to support Summary Judgments of Foreclosure.

Affidavits and Assignments in Foreclosure, Liars Re-Telling Lies Re-created From Fiction

There are several areas where the lying is reduced to black and white and submitted to the court.

Assignment of Mortgage

First, when the foreclosing Plaintiff is not the original lender, there must be a formal Assignment of Mortgage executed which says, “The Original Lender Assigns This Mortgage to the Plaintiff in This Case.”  This document is needed to give the Plaintiff the proper legal basis to be suing the Defendant. Many of the originating lenders are no longer operating so getting a real assignment from a dissolved corporation would be difficult.  In other cases, the Plaintiff introduces an Assignment of Mortgage executed by “MERS” a shadowy, shifty, shady backroom dealer of mortgages.   The Assignment of Mortgage issue is problematic even when a mortgage was only assigned from an originating lender to the foreclosing Plaintiff, but in cases where a mortgage has changed hands many times, there should be an unbroken chain of properly executed assignments from originating lender straight through to foreclosing Plaintiff.  (In fact, this requirement of an unbroken chain of assignments was originally part of the foreclosure procedures in Pinellas County, but this requirement was stripped.)  The problem is these assignments are frequently fraudulent.  The lenders know this, their attorneys know this and the courts know this, but they’re all just going ahead and pretending like it’s not an issue. IT IS AN ISSUE!

Affidavit of Amounts Due and Owing

The second area of Affidavit Fraud is the Affidavit of Amounts Due and Owing which states, “Your Undersigned Affiant is an employee of the Plaintiff and I SWEAR Based on my PERSONAL KNOWLEDGE that the Plaintiff is Owed, $150,000″.   In a case where the original lender is the foreclosing Plaintiff, an employee of that lender could sign such an affidavit based on their review of the company’s accounting records.  In most of the foreclosure cases currently pending in courts around the country, the mortgages have changed hands many times and there is simply no basis whatsoever for any person to sign an affidavit stating that they have any knowledge whatsoever of who is owed any money whatsoever.  These affidavits are legally insufficient, they’re false and fraudulent.

Affidavit of Lost Note

The third area of Affidavit Fraud is the Affidavit of Lost Note which states, “Your Undersigned Affiant is an employee of the Plaintiff who had posession of the note when it was lost and while we looked long and hard to find the note, it’s just plain disappeared and we just will never find it.”  In cases where the Plaintiff cannot locate the original note, this Affidavit is required in order to “Re-establish The Lost Note”, a technical process which must be followed in order to successfully and honestly proceed with a foreclosure case.  There are two problems here.  First, in many cases, the Affidavit does not include the correct language wherein the Plaintiff asserts that it was in possession of the note when it was lost.  The affidavit states, “the note was in possession of someone (we don’t know who) when it was lost”.  The other variation of this is when the Plaintiff is in possession of the note but they don’t bother disclosing this to the court.

Laws and Rules Just Don’t Matter Anymore, Everyone Hop On Board The Fraud Train!

So if the Plaintiffs and their attorneys are engaging in massive and systemic fraud and the courts are totally aware of this and yet it’s going totally unpunished and unanswered why doesn’t everyone just get on the fraud train? I mean why not?  Well here’s one way that consumers and anarchists could engage in fraud that would totally throw the system into chaos.  If rebels and anarchists and people who just don’t care executed and recorded Satisfactions of Mortgages across the country, it would send the entire foreclosure system into collapse.  A Satisfaction of Mortgage is a one page document that costs $8.50 to record.  It can be produced on a home computer, filled out correctly then sent in along with a money order or cashier’s check.  The Clerk of Court is required to record it and there would be no way of ever knowing where these fraudulently produced satisfactions were coming from.   While the lenders were trying to figure out how to deal with this massive problem, they would have no choice but to stop the pursuit of the foreclosure cases.

Anarchy Is a Crime- Revolution is a Crime.

Make no mistake, doing this is wrong.  It is a crime. A serious crime.  I would not do it and I’m not seriously suggesting anyone should, especially for their own mortgage.  But what if? I mean what if some modern day Robin Hood or Paul Revere set out with a few hundred bucks and a few hours on a computer and started just sending in satisfactions?  And what if, at the same time these same band of anarchist Robin Hoods also filed with the courts “Notice of Voluntary Dismissal and Release of Lis Pendens”?  I mean when the law firms that are prosecuting these cases are so out of touch that they have no idea what’s happening with their files and they have no contact whatsoever with the lenders they claim to represent, it would take them months to figure out if their law office or their client really did dismiss the case or whether this was another one of those Anarchist Dismissals.

But if the system is so broken down that judges are engaging in systematic denial of a defendant’s rights and if the Supreme Court of Florida is acknowledging in writing

that they are aware of widespread and systemic fraud being perpetrated on courts across the country and they’re doing nothing to stop it,

isn’t a little bit of anarchy in order?

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As an attorney who defends consumers in mortgage foreclosure cases and who is helping consumers with mortgage modifications, I sometimes hear opponents or other parties argue that the people who ar in foreclosure should just be thrown out of their homes…who cares about any other issues about what the banks did wrong.  One consumer who gets the problem and is doing something about it is Paul Muckle, who filed a federal lawsuit, Muckle v. USA.  In this lawsuit, he sues Bush, Obama, Geithner, Paulson and the governors of all fifty states….but more on that later.

Widespread and Systemic Fraud

Problem is the individual foreclosures are just the tip of the iceberg.  The real issue is the systemic fraud that went from the top to the bottom of the entire world economic system.  Banks, mortgage companies, Wall Street, Washington DC and world financial centers all conspired to take billions of dollars in shift it from the general population and concentrate those billions in the hands of a few.  If the initial fraud and scheme wasn’t bad enough, the bailout and billions that are being poured right back into the system represent a second bajillion dollar heist.

It’s difficult to explain the intricacies of such a wide ranging systemic fraud, but here are the basics.

1.Mortgage brokers begin the fraud when they concocted information about income/assets and value of property on the individual loan applications. (Brokers pocket thousands on the individual loans.)

2. Mortgage lenders pool thousands of the fraudulent loans into packages then sell them to brokers on Wall Street. (Lenders pocket millions on the packages.)

3. Wall Street brokers sell the packages of mortgage loans to retirement funds and investment groups around the world. (Brokers pocket billions on the packages.)

4. The investors who purchased the packages discover the pools of loans are fraudulent. (Investors demand millions in refunds and some are made whole with US taxpayer dollars.)

5. The institutions and individuals that started and perpetuated the fraud are paid millions (billions?) allegedly to help correct the problems they created. (They shove millions in their pockets.)

MUCKLE V. USA

The link that appears here will take you to a 106 lawsuit that a private consumer filed that lays out in painstaking detail exactly how the fraud worked and explains a bit of the long term consequences.  It also makes a compelling argument against the continued pursuit of foreclosures that are part of the problems as explained above.  Give it a read, then contact me if you have any questions.

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SUE THE USA FOR THE MORTGAGE MESS!

Wow!  Every once in a while I read something truly mind blowing…totally off the wall and completely revolutionary.  I found that just a few minutes ago in a lawsuit filed by private citizen Paul L. Muckle and suing Barack Obama, George Bush, Timothy Geithner, Henry Paulson, Sarah Palin and the governors of all fifty states…that’s ballsy!

All 106 pages of this masterwork can be found here. Although it is drafted by a layperson, it really is brilliant and lays out quite remarkably a variety of causes of action that could (on a longshot) and probably should be pursued against all the elected and appointed leaders who were complicit from the very beginning in the financial fraud that brought this country to its knees.  As this crisis continues (and the truth of the matter is its quietly getting worse), we owe it to ourselves to read this lawsuit and at least understand some of the allegations.

Fraud, lies, conspiracy and treason!

The mess that is our current financial, banking and mortgage system is more than even the most sophisticated person can possibly comprehend.  I spend ten hours a day working on this problem and the deeper you dig, the more complex, convoluted and mysterious it becomes.

Take a moment to read it….staggering.

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