Wednesday, August 27, 2014

Mortgage News: JPMorgan attacked by Russian computer hackers

Mortgage News: JPMorgan attacked by Russian computer hackers

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.

12-003 - USA V. CHARIKOV ET AL

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

AFFIRMING VICTORY: CHASE BANK, I OWN YOU



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.

Sunday, August 17, 2014

FOECLOSURE AUCTION HEARINGS BY USDOJ: Antitrust Division : Upcoming Public Hearings in Pending Cases

USDOJ: Antitrust Division : Upcoming Public Hearings in Pending Cases



 




Upcoming Public Hearings in Pending Cases

On this page:


Overview

Under the law, victims of Federal crimes such as antitrust
violations are entitled to certain rights. One of these is the right
to reasonable, accurate, and timely notice of any public court
proceeding.


This page lists named defendants (and products or industries
involved) in pending cases prosecuted by the Antitrust Division for
which public court proceedings are scheduled.


Note: Hearing dates and times are subject to
last-minute change. Although every effort has been made to provide
current information, before attending a hearing you may wish to phone
the court directly to confirm.




Hearings by Product or Service

Real estate foreclosure auctions
Tax liens

Hearing Details

Hearings are listed in alphabetical order by defendant name.

TURNING “MISERY INTO MONEY”: THE INJUSTICE INDUSTRY OF THE BANKS | LIBERTY ROAD MEDIA

TURNING “MISERY INTO MONEY”: THE INJUSTICE INDUSTRY OF THE BANKS | LIBERTY ROAD MEDIA

Thursday, August 14, 2014

California Foreclosure Warrior, Frank Swenson, Succumbs to Heart Failure

ANOTHER DEATH BY FORECLOSURE

In Memory
of
Frank Leland Swenson

November 14, 1945 - July 7, 2014
Resident of Oakland, California


Another man -- father, grandfather, friend, neighbor and contractor -- has given his life in his fight to save his homes from foreclosure by JPMorgan Chase Bank, NA.  On the evening of July 7, 2014 Frank's heart gave out.  The endless years of the foreclosure war with Chase Bank and their siege mentality proved be too much for Frank Leland Swenson of Oakland, California.


Over a five year span Chase foreclosed and auctioned off one home through various nefarious questionable schemes, lies, and tactics. Frank had managed to work out a short sale on a second home where an adult child had lived. Frank was in litigation on a third home where he lived and was found dead in his bathroom.

Days before Frank's heart failed him, we visited at Cole Coffee where we discussed various foreclosure cases where the homeowners were prevailing against Chase and their greed machine.  Though Frank appeared pale, thin and frail, his determination and will remained strong. 
Ironically seven weeks after Frank's death, Chase is discussing a loan modification with his son as Administrator of his father's estate.The foreclosure war has been handed down to a younger generation.

Jamie Dimon's (CEO of JPMC) ruthless foreclosure practices and policies brought about the early death of Frank Swenson who was a devoted father, a practicing Catholic, friend, and foreclosure fighter.  Dimon's dirty hands are clearly visible in this tragedy and thousands of others past, present and future.

Let us remember Frank and his struggle.
Nov. 14, 1945 - July 7, 2014
Resident of Oakland
A Memorial on Saturday, July 26th, 11am, at Roberts Park, 10570 Skyline Blvd., Oakland, CA. - See more at: http://www.legacy.com/obituaries/insidebayarea/obituary.aspx?pid=171776961#sthash.YUsP8e6G.dpuf

Frank Leland Swenson


1945 - 2014 | Obituary Condolences
Frank Leland Swenson Obituary
Frank Leland Swenson
Nov. 14, 1945 - July 7, 2014
Resident of Oakland
A Memorial on Saturday, July 26th, 11am, at Roberts Park, 10570 Skyline Blvd., Oakland, CA. All are welcome to attend.
Published in Inside Bay Area on July 20, 2014
- See more at: http://www.legacy.com/obituaries/insidebayarea/obituary.aspx?pid=171776961#sthash.YUsP8e6G.dpuf

Tuesday, August 12, 2014

Panel Addresses 'Bad Faith' in Foreclosure Negotiations | New York Law Journal

 Go to:



Panel Addresses 'Bad Faith' in Foreclosure Negotiations | New York Law Journal

JPMorgan Brings Foreclosure Case In Mortgage In Which It Was Just A Servicer, Court Finds Bank Committed Fraud | Zero Hedge

JPMorgan Brings Foreclosure Case In Mortgage In Which It Was Just A Servicer, Court Finds Bank Committed Fraud | Zero Hedge


An interesting development out of Jean Johnson, Circuit Judge in Duval Country, Florida, where in a case filed by JPMorgan/WaMu, as Plaintiff, and law firm of Shapiro and Fishman, attempted to evict defendants Hank and Marilyn Pocopanni. As basis for the legal case, WaMu had submitted an assignment of mortgage, which however the court just
found never actually belonged to WaMu, and instead was carried on the books of Fannie Mae. Once this was uncovered is where this case gets really interesting: In point 5 of the filing we read that the "plaintiff  predecessor counsel made "clerical errors" when it represented to the Court that the plaintiff was the owner and holder of the note and mortgage rather than the servicer for the owner."  Which means that only Fannie had the right to foreclose upon the Pocopannis, yet JPM, as servicer, decided to take that liberty itself.


And here the Judge got really angry: "The court finds WAMU, with the assistance of its previous counsel, Shapiro and Fishman, submitted the assignment when [they] knew that only Fannie Mae was entitled to foreclose on the Mortgage, and that WAMU never owned or held the note and Mortgage." And, oops, "the Court finds by clear and convincing
evidence that WAMU, Chase and Shapiro & Fishman committed fraud on this Court"
and that these "acts committed by WAMU, Chase and Shapiro amount to a "knowing deception intended to prevent the defendants from discovery essential to defending the claim" and are therefore fraud.



While the Judge in this case did not also find declaratory damages against the plaintiff, and while the case of the defendants is unclear (we would expect Fannie to file a foreclosure act on its own soon enough), the question of just how pervasive this form of "fraud" in the judicial system is certainly relevant. Because if JPM takes the liberty of
foreclosing on mortgages as merely servicer, when it has no legal ground for such an action, who knows how many such cases the legal system is currently clogged up with
. The implications for the REO and foreclosures track for banks could be dire as a result of this ruling, as this could severely impact the ongoing attempt by banks to hide as much excess inventory in their books in the quietest way possible.


Our advice to any party caught in a foreclosure process is to immediately go to www.fnma.com and use the Lookup Tool to see if Fannie is still mortgage owner of
record, if a foreclosure suit has been brought up by a plaintiff otherthan the GSE.


We are confident quite a few other such cases will promptly appear.

Tuesday, August 5, 2014

Another Settlement – JP Morgan Receives Slap On The Wrist Despite Years Of Fraudulent CFTC Data | Justice League

Another Settlement – JP Morgan Receives Slap On The Wrist Despite Years Of Fraudulent CFTC Data | Justice League


Moving along to today’s story, we learn that the CFTC will impose a meager $650,000 fine on JP Morgan, despite years of warnings about fraudulent data reports. The CFTC announced that:
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against J.P. Morgan Securities LLC (JPMS), a wholly-owned subsidiary of JPMorgan Chase & Co. and a CFTC-registered Futures Commission Merchant (FCM), for submitting inaccurate reports to the CFTC relating to the required reporting of positions held by certain large traders whose accounts are carried by JPMS. The reporting violations occurred despite the CFTC notifying JPMS of numerous errors in its reports. The CFTC Order requires JPMS to pay a $650,000 civil monetary penalty to address its unlawful conduct. The reports are known as the “large trader” reports and are used by the CFTC in order to evaluate potential market risks and monitor compliance with CFTC requirements.

Why Did the Banks Need to Falsify and Forge Fabricated Documents? | Livinglies's Weblog

Why Did the Banks Need to Falsify and Forge Fabricated Documents? | Livinglies's Weblog

JPMorgan Chase & Company's Washington Mutual Litigation for June 2014



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly report pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934




For the quarterly period ended
Commission file
June 30, 2014
number 1-5805

JPMorgan Chase & Co.
(Exact name of registrant as specified in its charter)


Note 23 – Litigation <excerpts>
 . . . .

LIBOR and Other Benchmark Rate Investigations and Litigation. JPMorgan Chase has received subpoenas and requests for documents and, in some cases, interviews, from federal and state agencies and entities, including the DOJ, the Commodity Futures Trading Commission (the “CFTC”), the Securities and Exchange Commission (the “SEC”) and various state attorneys general, as well as the EC, the U.K. Financial Conduct Authority (the “FCA”), Canadian Competition Bureau, Swiss Competition Commission and other regulatory authorities and banking associations around the world relating primarily to the process by which interest rates were submitted to the British Bankers Association (“BBA”) in connection with the setting of the BBA’s London Interbank Offered Rate (“LIBOR”) for various currencies, principally in 2007 and 2008. Some of the inquiries also relate to similar processes by which information on rates is submitted to the European Banking Federation (“EBF”) in connection with the setting of the EBF’s Euro Interbank Offered Rates (“EURIBOR”) and to the Japanese Bankers’ Association for the setting of Tokyo Interbank Offered Rates (“TIBOR”) as well as to other processes for the setting of other reference rates in various
 
parts of the world during similar time periods. The Firm is responding to and continuing to cooperate with these inquiries. In December 2013, JPMorgan Chase reached a settlement with the EC regarding its Japanese Yen LIBOR investigation and agreed to pay a fine of €80 million. Investigations by the EC with regard to other reference rates remain open. In May 2014, the EC issued a Statement of Objections outlining its case against the Firm (and others) as to EURIBOR. The Firm will file a response. In January 2014, the Canadian Competition Bureau announced that it has discontinued its investigation related to Yen LIBOR.
In addition, the Firm has been named as a defendant along with other banks in a series of individual and class actions filed in various United States District Courts, in which plaintiffs make varying allegations that in various periods, starting in 2000 or later, defendants either individually or collectively manipulated the U.S. dollar LIBOR, Yen LIBOR, Euroyen TIBOR and/or EURIBOR rates by submitting rates that were artificially low or high. Plaintiffs allege that they transacted in loans, derivatives or other financial instruments whose values are impacted by changes in U.S. dollar LIBOR, Yen LIBOR, Euroyen TIBOR or EURIBOR and assert a variety of claims including antitrust claims seeking treble damages.
The U.S. dollar LIBOR-related purported class actions have been consolidated for pre-trial purposes in the United States District Court for the Southern District of New York. In March 2013, the Court granted in part and denied in part the defendants’ motions to dismiss the claims in three lead class actions, including dismissal with prejudice of the antitrust claims, and the United States Court of Appeals for the Second Circuit dismissed the appeals for lack of jurisdiction. In September 2013, class plaintiffs in two of the three lead class actions filed amended complaints and others sought leave to amend their complaints to add additional allegations. Defendants moved to dismiss the amended complaints and opposed the requests to amend. In June 2014, the Court issued a further order granting in part and denying in part defendants’ motions to dismiss the remaining claims. In relation to the Firm, the Court has permitted certain claims under the Commodity Exchange Act and common law claims to proceed. With respect to the third lead class action, which the Court dismissed in its entirety, after plaintiff’s appeal was dismissed by the Second Circuit, plaintiff sought and obtained leave to appeal to the U.S. Supreme Court on the question whether its appeal could proceed before final resolution of the other consolidated class actions. To date, the other U.S. dollar LIBOR cases have been stayed.
The purported class action alleging manipulation of Euroyen TIBOR and Yen LIBOR was filed in the United States District Court for the Southern District of New York on behalf of plaintiffs who purchased or sold exchange-traded Euroyen futures and options contracts. In March 2014, the Court granted in part and denied in part the defendants’ motions to dismiss including dismissal of plaintiff’s antitrust and unjust enrichment claims. Defendants have filed


176


motions to reconsider, seeking dismissal of the remaining claims. Plaintiff filed a motion for leave to further amend the complaint to add additional parties and claims.
In March 2014, the Firm was added as a defendant in a putative class action pending in the United States District Court for the Southern District of New York relating to the interest rate benchmark EURIBOR.




177




Government Enforcement Investigations and Litigation. The Firm is responding to an ongoing investigation being conducted by the Criminal Division of the United States Attorney’s Office for the Eastern District of California relating to MBS offerings securitized and sold by the Firm and its subsidiaries. The Firm has also received other subpoenas and informal requests for information from federal and state authorities concerning the issuance and underwriting of MBS-related matters. The Firm continues to respond to these MBS-related regulatory inquiries.
In addition, the Firm is responding to and continuing to cooperate with requests for information from the U.S. Attorney’s Office for the District of Connecticut, subpoenas and requests from the SEC Division of Enforcement, and a


178



consumer credit card debt. The California and Mississippi Attorneys General have filed separate civil actions against JPMorgan Chase & Co., Chase Bank USA, N.A. and Chase BankCard Services, Inc. alleging violations of law relating to debt collection practices.
Washington Mutual Litigations. Proceedings related to Washington Mutual’s failure are pending before the United States District Court for the District of Columbia and include a lawsuit brought by Deutsche Bank National Trust Company, initially against the FDIC and amended to include JPMorgan Chase Bank, N.A. as a defendant, asserting an estimated $6 billion to $10 billion in damages based upon alleged breach of various mortgage securitization agreements and alleged violation of certain representations and warranties given by certain Washington Mutual affiliates in connection with those securitization agreements. The case includes assertions that JPMorgan Chase may have assumed liabilities for the alleged breaches of representations and warranties in the mortgage securitization agreements. The District Court denied as premature motions by JPMorgan Chase and the FDIC that sought a ruling on whether the FDIC retained liability for Deutsche Bank’s claims. The defendants have filed additional motions as to that issue.
An action filed by certain holders of Washington Mutual Bank debt against JPMorgan Chase, which alleges that JPMorgan Chase acquired substantially all of the assets of Washington Mutual Bank from the FDIC at a price that was allegedly too low, remains pending. JPMorgan Chase and the FDIC moved to dismiss this action and the District Court dismissed the case except as to the plaintiffs’ claim that JPMorgan Chase tortiously interfered with the plaintiffs’ bond contracts with Washington Mutual Bank prior to its closure. Discovery is ongoing.
JPMorgan Chase has also filed a complaint in the United States District Court for the District of Columbia against the FDIC in its capacity as receiver for Washington Mutual Bank and in its corporate capacity asserting multiple claims for indemnification under the terms of the Purchase & Assumption Agreement between JPMorgan Chase and the FDIC relating to JPMorgan Chase’s purchase of most of the assets and certain liabilities of Washington Mutual Bank.
* * *
In addition to the various legal proceedings discussed above, JPMorgan Chase and its subsidiaries are named as defendants or are otherwise involved in a substantial number of other legal proceedings. The Firm believes it has meritorious defenses to the claims asserted against it in its currently outstanding legal proceedings and it intends to defend itself vigorously in all such matters. Additional legal proceedings may be initiated from time to time in the future.
The Firm has established reserves for several hundred of its currently outstanding legal proceedings. In accordance with the provisions of U.S. GAAP for contingencies, the Firm accrues for a litigation-related liability when it is probable that such a liability has been incurred and the amount of the loss can be reasonably estimated. The Firm evaluates its
 
outstanding legal proceedings each quarter to assess its litigation reserves, and makes adjustments in such reserves, upwards or downward, as appropriate, based on management’s best judgment after consultation with counsel. The Firm incurred legal expense of $669 million and $678 million during the three months ended June 30, 2014 and 2013, respectively, and $707 million and $1.0 billion during the six months ended June 30, 2014 and 2013, respectively. There is no assurance that the Firm’s litigation reserves will not need to be adjusted in the future.
In view of the inherent difficulty of predicting the outcome of legal proceedings, particularly where the claimants seek very large or indeterminate damages, or where the matters present novel legal theories, involve a large number of parties or are in early stages of discovery, the Firm cannot state with confidence what will be the eventual outcomes of the currently pending matters, the timing of their ultimate resolution or the eventual losses, fines, penalties or impact related to those matters. JPMorgan Chase believes, based upon its current knowledge, after consultation with counsel and after taking into account its current litigation reserves, that the legal proceedings currently pending against it should not have a material adverse effect on the Firm’s consolidated financial condition. The Firm notes, however, that in light of the uncertainties involved in such proceedings, there is no assurance the ultimate resolution of these matters will not significantly exceed the reserves it has currently accrued; as a result, the outcome of a particular matter may be material to JPMorgan Chase’s operating results for a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of JPMorgan Chase’s income for that period.



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