Tuesday, August 26, 2014

Sacramento Federal Court Jury Acquits Four in Mortgage Fraud Case

“This is the first time that the overwhelming fraud at the banks has been discussed in a criminal courtroom by the person with the greatest expertise on the issue,
William Black,” said defense lawyer Toni White after the (NOT GUILTY) verdict.

Sacramento federal court jury acquits 4 in local mortgage fraud case
Published: Friday, Aug. 22, 2014 - 10:23 pm
Last Modified: Monday, Aug. 25, 2014 - 5:35 am
In an unprecedented trial, four people charged with mortgage fraud were acquitted Friday by a jury in Sacramento federal court after defense attorneys argued the real culprits are the so-called “victim lenders.”
According to experts, it is the first time in such a trial that a court has allowed the defense to present evidence that lenders ignored gaping holes and blatant lies in loan applications during the years leading up to the economic meltdown.
“The big banks and other lenders made as many loans based on patently false information as they could, packaged them as securities and passed them up the chain to Wall Street’s investment and management bankers, who peddled them to an unsuspecting public,” said defense lawyer Tim Pori after the verdict.
“No bank executives have been prosecuted,” Pori said. “Sure, there have been multibillion-dollar settlements with some big banks, but none of their officers – the ones who really pulled the strings – will ever see the inside of a cell.”
U.S. Attorney Benjamin Wagner, in a statement issued at The Sacramento Bee’s request, said:
“Criminal trials are inherently uncertain endeavors. We have had tremendous success in convicting scores of persons in mortgage fraud cases over the last several years, but it is unrealistic to expect that we will get the outcome we are seeking in every single case.
“We respect the criminal trial process, and accept the jury’s verdict in this case. It will not dissuade us from pressing forward in the many other mortgage fraud cases currently pending in this courthouse.”
An acquittal in Sacramento federal court is rare, regardless of the charges. But with respect to mortgage fraud, it is virtually unheard of.
There was little or no difference between the mail fraud charges against Yevgenity Charikov, Vitaliy Tuzman, Nadia Talybov and Juliet Romanishin and charges brought against hundreds of other defendants prosecuted by the U.S. attorney’s office in the Sacramento-based Eastern District of California.
The office has often described the Central Valley as “ground zero” for mortgage fraud, and noted it has been a national pacesetter in pursuing the perpetrators.
In this trial, U.S. District Judge Lawrence K. Karlton, over the government’s strenuous objection, allowed testimony meant to show that the lenders in the two transactions at issue – Aegis Wholesale Corp. and Greenpoint Mortgage Funding – didn’t care whether information on the applications was true or false.
Under those circumstances, the defense argued, the information was not material because, either way, the loan would have been approved.
“In the week when details of the United States government’s $16.5 billion civil settlement with Bank of America was disclosed, I hope the jury’s verdict causes the U.S. attorney’s office to readjust its priorities and investigate criminally the true culprits of our country’s financial collapse, the mortgage lenders’ officers who committed the real fraud – not those who allegedly lied on the industry’s ‘liar’s loans,’ ” said defense lawyer John Balazs.
Assistant U.S. Attorney Heiko Coppola argued in court papers filed before the trial that the defense’s contentions are not a defense to mail fraud. He said the defense lawyers “cannot argue that the victim, in this case the lender, is to blame. Argument or evidence concerning lender fault is irrelevant ... This case is about what the defendants did. It is not about what the lenders could have done or should have done.”
According to prosecutors’ filings, Charikov, a 42-year-old real estate agent who lives in West Sacramento, used straw buyers to purchase properties in a declining real estate market and then immediately resold them to another straw buyer at fraudulently inflated prices. To qualify for the mortgage loans, prosecutors contended, the defendants submitted fraudulent loan applications to lenders, falsely stating the straw buyer’s income, liabilities, and intent to occupy the home as a primary residence.
The indictment alleges that Charikov recruited his loan officer wife, Romanishin, 32, of West Sacramento; Tuzman, 42, of Citrus Heights; and Talybov, 32, of Antelope, as straw buyers in transactions involving the sale and purchase of two West Sacramento properties in 2006 and 2007.
After the first set of straw buyers obtained the proceeds from Talybov’s fraudulent purchases, they allegedly split the take with Charikov. Subsequently, Talybov defaulted on loans for both properties.
All four were charged with fraud that resulted in alleged losses to the lenders of at least $710,000. Charikov and Tuzman were also charged with laundering their ill-gotten gains.
William Black, who boasts long academic and regulatory careers, was a key expert witness for the defense, again over Coppola’s objection. Black is an associate professor of economics and law at the University of Missouri, Kansas City, and the “distinguished scholar in residence for financial regulation” at the University of Minnesota’s School of Law.
His testimony purportedly connected the fraud in the Sacramento case directly to the lenders, and he explained to the jury why the false information on the applications had no bearing on lending decisions.
“This is the first time that the overwhelming fraud at the banks has been discussed in a criminal courtroom by the person with the greatest expertise on the issue, William Black,” said defense lawyer Toni White after the verdict.
“Prosecutors have refused to criminally prosecute the elite bankers responsible for the mortgage crisis that decimated our economy. The jurors heard shocking testimony from ‘control fraud’ expert William Black that regular people who got loans they were unable to pay back did not (defraud) the banks. The elite bankers commit the fraud while prosecutors look the other way and prosecute the wrong people.”

Call The Bee’s Denny Walsh, (916) 321-1189.


Monday, August 25, 2014

Jamie Dimon’s $13 Billion Secret | The Nation

Jamie Dimon’s $13 Billion Secret | The Nation

In the end, the abject fear of Ben Wagner got Jamie Dimon to cave.

For much of 2013, Dimon, the chairman and chief executive of the
formidable JPMorgan Chase & Company, was telling anyone who would
listen that it was unfair and unjust for federal and state prosecutors
to blame him and his bank for the manufacture and sale of
mortgage-backed securities that occurred at Bear Stearns & Company
and at Washington Mutual in the years leading up to the financial
crisis. When JPMorgan Chase bought those two failing firms in 2008,
Dimon argued, he was just doing what Ben Bernanke, Hank Paulson and
Timothy Geithner had asked him to do. Why should his bank be held
financially accountable for the bad behavior at Bear and WaMu?

It was a clever argument—and wrong. Dimon’s relentless effort to spin
his patriotic story soon collided with the fact that Wagner, the US
Attorney for the Eastern District of California, had uncovered evidence
that JPMorgan itself was guilty of many of the same greedy and
irresponsible behaviors. Piles of subpoenaed documents and e-mails
revealed that JPMorgan bankers and traders had underwritten billions of
dollars’ worth of questionable mortgage-backed securities that Dimon had
been telling everyone had originated at Bear Stearns and WaMu. Worse,
the bad behavior had occurred on Dimon’s watch.

The likelihood that the Justice Department would file Wagner’s civil
complaint last fall—exposing publicly for the first time the litany of
wrongdoing at JPMorgan and threatening to push it off the perch that
Dimon had so artfully constructed for it over the years—ultimately
brought Dimon to the table. On September 26, just weeks after the
Justice Department shared a draft copy of Wagner’s complaint with Dimon,
the two sides arranged for a summit meeting between Dimon and Attorney
General Eric Holder. By mid-November, the bank had agreed to pay $13
billion in a comprehensive settlement of mortgage-related securities
claims with various branches of the federal government and a group of
states, led by the attorneys general of New York, California, Illinois,
Massachusetts and Delaware.

It was the largest financial settlement of all time, and it kept
Wagner’s complaint away from the prying eyes of the public. One thing is
clear: Dimon’s claim that his own bankers and traders had done nothing
wrong in the years leading up to the financial crisis wasn’t true. “The
investigators and the lawyers were uncovering very viable evidence,”
explains Associate Attorney General Tony West, who headed up the
settlement negotiations on behalf of the Justice Department. “I think
there was recognition that we had enough evidence there that would
support the complaint and would support a robust lawsuit.”

* * *
Although Wagner’s complaint remains unfiled—and, so far,
unobtainable—tantalizing hints of what it contains are available in a
sanitized “statement of facts” that was a required component of the
settlement. Unlike the complaint, the statement of facts doesn’t include
names and offers few specifics, but there is no mistaking the
wrongdoing. Among the

Mortgage Enforcement: Dot Those “i”s and Cross Those “t”s – Or Else

Mortgage Enforcement: Dot Those “i”s and Cross Those “t”s – Or Else

A chapter 13 debtor objected to the portion of a mortgagee’s claim consisting of expenses related to foreclosure of its mortgage. She argued that since the mortgagee failed to comply with notice requirements under the mortgage, the foreclosure expenses were not valid.
The debtor defaulted in June, and the mortgagee sent a notice of default in September. The notice stated: “If foreclosure is initiated, you have the right to argue that you did keep your promises and agreements under the Mortgage Note and Mortgage, and to present any other defenses that you may have.”
The debtor failed to cure, so the mortgagee accelerated the note and initiated foreclosure proceedings. Before the foreclosure sale took place, the debtor filed a chapter 13 bankruptcy petition.
The mortgagee filed a claim for ~$14,200. This included counsel fees, advertising costs and title costs of ~$2,000 relating to the foreclosure proceeding. The debtor objected to the foreclosure costs, arguing that the mortgagee failed to provide proper notice of default prior to acceleration, and thus was not entitled to recover the charges.
Specifically, paragraph 22 of the mortgage required the mortgagee to give notice of “the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale.” The debtor argued that the mortgagee was required to give her notice of the right to bring a court action as a condition precedent for exercising the power of sale to foreclose.
The mortgage also provided in paragraph 14 that the mortgagee could charge the borrower for services performed in connection with the borrower’s default, and the note provided that the borrower could be required to pay all costs and expenses in enforcing the note, including reasonable attorneys’ fees.
The mortgagee responded: (1) it was not required to use the exact language in the mortgage and it did advise the debtor of her right to dispute the default, (2) even if it did not comply with the notice provision, the mortgage and note entitled it to collect the costs, (3) any non-compliance was a technical failure that was a non-material breach, and (4) in any event several years earlier the debtor received numerous notices of default that did contain language regarding the right to bring a court action, so she was on notice.
The court noted that this was a question of state law. Under state law the note and mortgage constituted one agreement and must be read together since they were executed in the course of a single transaction to accomplish the same purpose (i.e., to obtain a loan). The court next determined that in reading the note and mortgage as an integrated contract it was clear that compliance with the notice requirement was a condition precedent to the right to accelerate and pursue foreclosure. The mortgagee was required to give notice of a right to bring court action. Since it did not, it was not entitled to accelerate the note and foreclose the mortgage.
Even if the court had determined that there was an ambiguity, it would have construed the contract against the drafter (i.e., mortgagee). Further it found that the mortgagee had an implied covenant of good faith and fair dealing. Thus, the mortgagee had a duty to comply with the terms of the mortgage, which included an obligation to inform the debtor of her right to bring court action. The actual language used in the notice of default – that the debtor had a right to argue defenses – did not make it clear to whom to present the argument and defenses.
The court then proceeded to reject each of the mortgagee’s arguments, including the argument that notices given approximately four years earlier were sufficient. The court felt those notices were completely irrelevant.
In sum, (1) the notice was defective in that it did not mention the right to court action, (2) proper notice was a condition precedent to the right to accelerate and foreclose, and (3) consequently the mortgagee was not entitled to recover the costs of the foreclosure process.
As this case amply illustrates, a lender should pay careful attention to the requirements of its loan documents. For notices this includes both the content of the notice and the method of delivery. Nine times out of ten (or even 99 times out of 100) minor errors don’t matter. But then there is the one time when they do.
Vicki R. Harding, Esq.

Friday, August 22, 2014


We have fought the good fight to save our homes from foreclosure for over five years. We marched in the streets.  We occupied the banks.  We brought the banks to their knees and made them tremble with fear.  We have stood before the legislative bodies across America and enacted homeowners bills of rights achieving protections for all homeowners.    We have uncovered and revealed the fraud, deceits and lies of the banks. We have risked everything and sued the banks in courtrooms far and wide. We have testified in the courts. We have won many battles and achieved victories through great effort.  However we have witnessed too many lost homes and deaths by foreclosure.
I call for a reunification of Spirit.
Let us keep sight of our goal to save every home from foreclosure.
Let us dive deep and gather a renewed strength and energy. 
Let us once more gather our forces and be victorious over each and every bank. 
Declare with me:

Through the Power & Presence of God 
moving through my financial and
legal affairs and acting on my behalf,
I declare here and now to you,
to myself, to the world, and to
JPMorgan Chase Bank NA:

The Victory of God is my victory.
 JPMorgan Chase Bank, I own you!

For this I do give thanks to the Lord for He is Good & His Love is eternal. Amen.