Tuesday, September 30, 2008

What really needs to happen in Washington

It ain’t pretty. Without allowing Congressional and Senate egomaniacs (many with squaliformes money falling out of their pockets) to put their imprimaturs on it there wasn’t a chance Paulsen’s proposal would wind up as law. And as noted earlier, it had all kinds of truck-sized holes in in.

Hell, if Ol’ Bean sent them the world’s greatest barbeque rib recipe we’d wind up with fourteen platters of mystery meat and avocado-mint ice cream to dip it in.

And there are lots and lots of news media people digging up lots and lots of economists to try and find something to say about all this. Therein lies the problem – economists. As I have told people before, economists are not scientists because economics is not a science at all. It’s a bastard child of statistics and social studies. Some really smart economists will be right some of the time. A gorilla throwing rotted fruit at zoo patrons may even hit someone, too. (Mainly because they both get plenty of chances.)

Richard Shelby (R. AL) even trotted out a list of eminent economists who apparently signed a letter that said the bailout was a bad idea. Most, if not all of them are professors at institutions of higher learning. I noted at least one Nobel Laureate. Shelby, of course, was the Chairman of the Senate Committee on Banking, Housing and Urban Affairs until the Democrats took power and he’s now the Ranking Member. There’s plenty of blame for this debacle that can be assigned to that Committee and now he’s trying to make it look like he’s against helping the squaliformes out of this predicament. It’s their predicament and they’re making it our predicament.

And they have them and us by the you-know-whats. The squaliformes have enough blatant leverage in Washington to literally force the hand of Congress and the Senate. Toss in some political intrigue in the last few weeks of the election cycle and interestingly enough, some of them are more worried about being reelected than they are about attempting to solve the immediate problem.

It will be a squaliforme win. Trust me. There will be fewer of them but the remaining ones will thrive. They always do. And we really don’t have a choice. They will sit on their money and simply refuse to lend it to anyone until Washington gets back in line. And if Washington doesn’t do something, it’s going to get really ugly out here; segments of the economy that have remained untouched by the predatory lending and securitization craze will begin to feel the effect of the squaliformes strangling of the credit market to get their way.

This quid-pro-quo will cost us $700B. If it was handled correctly, we could get some of that back. But then we need to clean house in Washington so they don’t get to come back and do it all again. Any member of Congress or the Senate who has served on the committees that were responsible for financial services legislation needs to do the honorable thing and resign.

The Honorable Judge Roy Bean

Sunday, September 21, 2008

The Empire Starts Up?

It’s déjà vu all over again. Washington rides to the rescue of Wall Street and their customers. The House and Senate are cobbling together another labyrinthine bureaucracy with only secretary Paulsen as Emperor. Only the players in the rarified air of high finance will know how to navigate – er, I mean manipulate this new Emperor's court.

And of course the finger-pointing is going on at election year warp speed, with the talking heads in the media doing their level best to spread fear, uncertainty and doubt while they try and make it look like they understand any of it.

Let Ol’ Bean make this short and simple – the folks who got incredibly wealthy and have taken this hit aren’t about to just walk away from the gaming tables they’ve been playing at over the years. If Washington wants to keep the financial services casino open (and they desperately do), then Washington will have to cover the gambler’s markers – again.

This legalized gambling-house they called securitization spread an incredible amount of wealth among the players. So much that there was soon more hubris than real wealth. Creativity finally got the better of them.

Now Paulsen thinks they’re going to hand him some “troubled loans” so they can get on with the business of making better loans.

What Paulsen is going to buy aren’t just “troubled loans.” He’s buying (with our money) pools of mortgages at a price that will have nothing to do with reality. And what no one wants to talk about is the fact that the really bad loans are already on the books of the special servicers at huge discounts from their face value. I can see where this will be going:

Paulsen: How much do you want for that pool?

Servicer: $50 million should do the trick.

Paulsen: Ah, well we have to know the cost basis – we’re working under the Credit Reform Act.

Servicer: $50 million. That’s what the pool is worth.

Paulsen: How much did you buy it for?

Servicer: None of your beeswax.

Paulsen: OK. Here’s the $50 million.

Servicer: Thanks, have a nice day.

A few months later Paulsen tries to sell the pool.

Paulsen: I have a deal for you. I have this pool of mortgages for sale.

Servicer: I know. One of the companies I worked for sold it to you.

Paulsen: We’re working under the Credit Reform Act rules for costing. I can sell this to you for $35 million.

Servicer: I’ll give you $10 million. Today only.

Paulsen: But we both know you got more than twice what it was worth when we bought it. You’ve already cleared $25 million.

Servicer: Aw, shucks.

Paulsen: OK. We’ll take the $10 million for it.

Servicer: Thanks, have a nice day.

It won’t take long to burn through $700 billion.

The Honorable Judge Roy Bean

Wednesday, September 17, 2008

Another data mining victim class action suit

More and more mis-information about everyone seems to be spreading as the data mining squaliformes obtain and peddle whatever they think has a value. Correct or not, as long as you have something to fulfill an information request and the victim can't reach out and find you it's gather, store and sell.

Well, maybe yet another giant leak in the hopelessly leaky dyke of privacy protection will be looked at in this case (08-cv-5250):

SANDRA JEAN CORTEZ on behalf of herself and all others similarly situated


1. This is a consumer class action based upon Defendant’s widespread violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x (FCRA). Defendants are Investcorp companies, an investment entity and hedge fund incorporated in the Kingdom of Bahrain. They have taken it upon themselves to supposedly identify -- for a fee -- terrorists, narcotics traffickers and money launderers with whom American businesses must have no dealings. Defendants assemble and maintain a private database of information purportedly about persons on certain U.S. government watch lists, including the list of suspected terrorists, narcotics traffickers and money launderers promulgated by the Office of Foreign Assets Control (OFAC list). Defendants regularly sell their own reports purportedly concerning such persons from their private database to third parties. The reports are used and are expected to be used in connection with ordinary consumer credit, employment, insurance and other transactions. Persons whom Defendants identify in their reports as being on the OFAC list are understood to be legally ineligible to conduct any business in the United States, cannot be employed, cannot receive any insurance or extension of credit, and may even be subject to arrest. Notwithstanding the fact that Defendants are in the business of regularly selling highly critical character and credit information in their reports to be used in daily consumer transactions within the United States, Defendants fail to assure the accuracy of this information or to comply with the FCRA in any respect. As a result, consumers such as Plaintiff Sandra Jean Cortez, who are not actually on the OFAC list or any government watch list, are routinely misidentified in Defendants’ reports as suspected terrorists, money launderers and narcotics traffickers, and thus are considered ineligible for credit or for conducting any business in the United States. Also due to Defendant’s noncompliance with the FCRA, innocent consumers wrongfully identified as being on the OFAC list have no means of discovering, disputing or correcting the erroneous information Defendants are selling about them. In this class action, Plaintiff seeks to represent consumers similarly situated to her who have been misidentified by Defendants in their reports to U.S. businesses as being on the OFAC list, when in fact they are not.

5. Defendant Accuity (Formerly TFP Thomson Financial Publishing) is an Investcorp business entity which maintains a principal place of business at 4709 Golf Road, Skokie, Illinois 60076.
6. Defendant SourceMedia, Inc. (SMI) is an Investcorp business entity which, like Accuity, maintains a principal place of business at 4709 Golf Road, Skokie, Illinois 60076, and whose corporate headquarters are located at One State Street Plaza, 27th Floor, New York, New York 10004.
7. Defendant SMI owns, operates and controls Defendant Accuity and its operations. Upon information and belief, the executives and employees at Accuity are employees and/or agents of SMI.

II Factual Allegations
A. Defendant’s Sale of Caution and Watch List Reports
8. Defendants assemble and maintain a series of caution and watch list screening databases. Through Accuity’s Global Watch List (GWL), Defendants maintain a comprehensive collection of information from all major legal sanctioning bodies, law enforcement agencies and financial regulators from around the world. Defendant Accuity’s database is purportedly comprised of the U.S. Treasury Department’s OFAC list, enhanced with some of the Defendant’s own proprietary sources. This service also includes the NS-PLC (Palestinian Legislative Counsel) list.
9. Pursuant to OFAC’s requirements and regulations there is a legal responsibility that financial institutions and businesses exercise due diligence to verify that they are not extending credit or employment, or doing any business with, individuals on the OFAC list.
10. Defendants sell reports to financial institutions and other businesses that purportedly help those entities to identify terrorists, narcotics traffickers and money launderers and to thus comply with OFAC’s requirements and regulations.
11. Defendants specifically sell OFAC list reports and information to institutions such as Trans Union, LLC, a national consumer reporting agency.
12. Defendants sell to Trans Union, LLC and other businesses an OFAC Advisor Alert pertaining to a particular individual, and identifying such individual as being a match to the OFAC list.
13. Defendants know that the OFAC Advisor Alert is used and expected to be used as part of a screening or credit background check in consumer transactions, such as credit, employment and insurance transactions.
14. By regularly selling such information for a fee with the anticipated or expected use of such reports by the entities referenced above, Defendants operate as “consumer reporting agencies” (CRAs), consumer reporting agencies “that compile and maintain files on consumers on a nationwide basis,” and national specialty consumer reporting agencies (NSCRAs) as defined by 15 U.S.C. § 1681a(f), a(p) and a(w), respectively.
15. Among other things, the FCRA regulates the collection, maintenance, and disclosure of consumer report information by CRAs and NSCRAs.
16. Despite the fact that Defendants assemble and compile consumer information for sale on a nationwide basis, Defendants will not disclose the same to the American public or the persons about whom they sell reports the contents of those reports.
17. Further Defendants do not maintain any toll-free telephone numbers or any other means available to consumers to dispute and correct any errors on the reports Defendants sell about them.
18. Importantly, Defendants do not comply with the FCRA’s requirement of following procedures that assure “maximum possible accuracy” concerning the information in their reports.
19. As a consequence of their failure to comply with the FCRA in any way, Defendants routinely make mistakes, misidentifying innocent consumers as being on the OFAC list, when in fact they are not on the OFAC list, and further have no procedure for correcting such harmful mistakes.

B. The Experience of The Representative Plaintiff
20. Plaintiff is but one innocent consumer who Defendants misidentified in a report as being on the OFAC list when in fact she was not on any such list.
21. Due to Defendants’ lack of any procedures to assure the accuracy of the information they sell in their reports, Representative Plaintiff Sandra Jean Cortez was unfortunately misidentified by Defendants in their reports as being on the OFAC list as a known narcotics trafficker.
22. Specifically, Defendants sold a detailed Advisor Alert report to Trans Union, LLC in connection with a credit transaction for an automobile that Plaintiff was seeking to purchase and also in a rental transaction for an apartment that Plaintiff was seeking to rent, among other transactions, stating in the reports, among other things, that Plaintiff was on the Government’s OFAC list.
23. This is grossly inaccurate as Ms. Cortez has never been designated as being on theOFAC list by the Treasury Department or otherwise, and her name and personal identifying information does not match the OFAC list.
24. Rather, there is a Columbian national and suspected narcotics trafficker with the name Sandra Cortes Quintero and a date of birth more than thirty years after Ms. Cortez’s, whose name does not appear on the OFAC list. Defendants’ standard and uniformly applied matching logic has resulted in incorrectly mixing up Plaintiff, and many other innocent Americans with a similar name to Plaintiff’s, with the Columbian national Sandra Cortes Quintero.
25. Because of Defendant’s failure to abide by the FCRA in any way, Ms. Cortez has been unable to obtain and review the information that the Defendants are reporting about her, dispute this gross inaccuracy with the Defendants, and ascertain all of the sources to whom Defendants have sold this information and the dates on which such information was sold.
26. Defendants do not notify or disclose to the American public or any of the individuals about whom they sell a report as being on their watch lists that they have reported such information. Neither Ms. Cortez nor any of the class members as set forth below are aware of the existence of the Defendants’ identity. It was only through Ms. Cortez’s retention of counsel that she came to learn of the Defendants.
27. Because of Defendants’ policy and practice of not accepting disputes or allowing corrections, Ms. Cortez was left without a means to have the Defendants cease reporting inaccurate information about her and has suffered credit, reputational and other harm.
28. At all times pertinent hereto, Defendants were acting by and through their agents, servants and/or employees who were acting within the course and scope of their agency or employment, and under the direct supervision and control of the Defendants herein.
29. At all times pertinent hereto, the conduct of the Defendants, as well as that of their agents, servants and/or employees, was malicious, intentional, willful, reckless, and in grossly negligent disregard for federal laws and the rights of the Plaintiff herein.

Attorneys for Plaintiff and the Class
120 W. Madison
10th Floor
Chicago IL 60602
(312) 222-9028

Land Title Building, 19th Floor
100 South Broad Street
Philadelphia, PA 19110
(215) 735-8600

1845 Walnut Street, Suite 1100
Philadelphia, PA 19103
(215) 732-6067

Thursday, September 11, 2008

AmeriDebt and DebtWorks case being resolved – sort of

The FTC’s case against Andris Pukke has netted over $12M in repayment to many of his victims, in part thanks to some diligent work on the part of the court receiver (Robb Evans & Associates) to hunt down assets he attempted to hide offshore as well as with friends and family. Pukke spent a month in prison in May of 2007 for contempt of court for the maneuvers.

But given the fact that the $12M is being divided up among about 287,000 of the nearly 460,000 victims, that means the average recovery is about $42 although the more they paid the more they are supposed to get. (According to an earlier state lawsuit filed in St. Louis, the average victim was charged about $327.)

What most people have forgotten about this monumental scam is that back in May of 1996, Pukke and his wife formed AmeriDebt in the same month he pleaded guilty to mail fraud charges involved in his previous scheme to defraud consumers by falsely promising “debt consolidation loans,” then not providing them. He was sentenced to probation.

In 2001 and 2002, his brother Eriks' company, Debticated Consumer Counseling, another nonprofit credit counseling operation in Huntington, N.Y., dolled out $5 million to DebtWorks. Debticated went out of business in 2003.

Pukke (shown above, at right being sworn in before testifying in Senate hearing in 2004) lived lavishly from the allegedly “not for profit” scheme. In addition to his home in Maryland, in 2005 he purchased a $6.4M home in Laguna Beach, California. At one time he was involved with a land development project in Belize.

If anyone is wondering why there are more and more of these kinds of things cropping up everywhere, one only has to consider the timeline of the Pukke case and the kind of lives they get to live during their run.

This particular Echeneidae Collectoris thrived off of a lot of people who were already victims, and the fact is there is still an endless supply of them being created every minute.

The Honorable Judge Roy Bean

Monday, September 08, 2008

When your debit card becomes a credit card

Wachovia has been caught with their hands in the pocketbooks of their checking account customers, this time playing fast and loose with when and in what order items are applied to accounts.

In the suit, filed in Florida seeking class-action status, the complaint demonstrates something most people have seen – when you have overdraft protection the bank will process the larger item(s) first in order to multiply the number of “service” or “convenience” fees.

For example, let’s say you pop the debit card into the machine one afternoon and it shows a balance of $205.00. You pull out $20.00. You then hit the gas station where you’re basically robbed at the pump of $65.00. You still have a balance today in your account of $120.00, right? At least you figure there will still be enough to cover than $95.00 automatic payment for your cable service.

Not really. What you don’t know is the bank is holding three of your smaller transactions (one for $19.50, one for $17.00 and another for 23.00) because the bank’s system knows you have that automatic bill-payment scheduled for $95.00 tomorrow. Rather than process and pay those three small ones and get one overdraft protection fee for the single $95.00 transaction, they will wait until the auto-pay one is done, leaving a balance of $25.00. Then come the three smaller ones which provide them with triple the “convenience fees” and all of a sudden you’re way in the hole. What it amounts to is usurious interest on the advanced funds they paid those three charges on.

Advice – don’t trust the balance you see at the ATM machine and don’t use an automated payment system!

And if you have a checking account at Wachovia and want to get in on the lawsuit, Google “Alters Boldt Brown Rash” the Florida law firm who filed the case.

The Honorable Judge Roy Bean