Loan Sharks - Creditoris Squaliformes

When will someone actually do something about Bank of America? - Again

2011-08-21T22:08:00.000-04:00

Mr. Moynihan, once again, have you no shame?

Yet another example of BofA's sociopathic culture

Where does the buck stop, Mr. Moynihan?

And how long will it take for the board's tacit acceptance of this kind of abuse to finally poison any remaining shareholder confidence?

One can only hope the media begins to shine a more focused light on this ruthless enterprise.

When will someone actually do something about Bank of America?

2011-08-04T20:12:00.000-04:00

If you're not already sickened by BofA's utter disregard for even the most fundamental tenets of right and wrong, maybe yet another story of a sociopathic corporate culture will finally make even a few of those kow-towing to K-Street rethink their own sense of humanity; or not.

According to Courthouse News, BofA (actually, its renamed, notoriously predatory Countrywide adopted child), did what its all-too-well-known for - acted as if it were above the law in a most egregious way.

Crabtree v. BofA

The TBTF rescuer of the toxic Countrywide has been struggling with the impact the acquisition has had on shareholder value, but the leadership of the company has been unwilling to take steps to change the absurdly obnoxious and illegal behavior so endemic to the Countrywide culture.

Public pronouncements by BofA's CEO and various corporate mouthpieces have been predictably obtuse and carefully crafted to avoid admissions of wrongdoing even in light of incredibly reckless and illegal behavior.

They can get away with that because, for the protected class BofA's executives are members of, they have no personal liability to anyone; the company is TBTF, the DOJ won't act, shareholders are powerless (or marginalized) and for some reason, customers of the bank aren't morally outraged enough to take their business elsewhere.

So it's time to out the Board of Directors of this pathologically corrupt, morally bankrupt enterprise.

According to the BofA web site - these are the people who are willing to sit back and tacitly approve the kind of behaviors involved in the operation of BofA:

Charles O. Holliday, Jr., (63), Chairman of the Board, Bank of America Corporation
Mukesh D. Ambani, (54), Chairman and Managing Director, Reliance Industries Ltd.
Susan S. Bies, (64), Former Member, Board of Governors of the Federal Reserve System
Frank P. Bramble, Sr. (63), Former Executive Officer, MBNA Corporation
Virgis W. Colbert, (71), Senior Advisor, MillerCoors Company
Charles K. Gifford, (68), Former Chairman, Bank of America Corporation
D. Paul Jones, Jr., (68), Former Chairman, CEO and President, Compass Bancshares, Inc.
Monica C. Lozano, (55), Chief Executive Officer, ImpreMedia, LLC
Thomas J. May, (64), Chairman, President and Chief Executive Officer, NSTAR
Brian T. Moynihan, (51), Chief Executive Officer, Bank of America Corporation
Donald E. Powell, (70), Former Chairman, Federal Deposit Insurance Corporation (FDIC)
Charles O. Rossotti, (70), Senior Advisor, The Carlyle Group
Robert W. Scully, (61), Former Member of the Office of the Chairman, Morgan Stanley

Corporate corruption of the kind routinely displayed at BofA cannot exist in a company with a board of directors that won't tolerate it. Granted, Holliday, Gifford and Moynihan are hopelessly in league with the "we've done nothing wrong" faction and before you get the idea that you can simply write a letter to one of them, consider this advice from the site:

Persons seeking to communicate with the Board of Directors, any director, non-management members of the Board as a group or any committee of the Board should send a letter to the Corporate Secretary at Bank of America Corporation, 214 N. Tryon St., NC1-027-20-05, Charlotte, NC 28255. The letter should indicate to whom the communication is intended. The Corporate Secretary or the secretary of the designated committee may sort or summarize the communications as appropriate. Communications that are commercial solicitations, customer complaints, incoherent or obscene will not be communicated to the Board or any director or committee of the Board.

Nice how they've insulated themselves from "customer complaints."

But how about a few thousand good-old-fashioned letters to the BofA board referencing the Crabtree case, asking the simple question: "Have you no shame?"

On second thought, we already know the answer.

The Honorable Judge Roy Bean

False hopes and dreams of justice

2011-07-08T15:36:00.000-04:00

In case you're not old enough to recognize the TV star and character at left, he is none other than Robert Stack (January 13, 1919 – May 14, 2003) appearing in his role as Elliot Ness in the Untouchables series that ran from 1959 until 1963.

Hard-nosed and dedicated to his work, Ness went after the mob in Chicago, specifically Al Capone's operation, eventually destroying or disabling a significant portion of the organization's ability to function in terms of violations of the Volstead Act (prohibition). Capone, of course, went to prison for income tax problems.

We who are old enough to have seen the legend on the small, black-and-white screen over the years, also grew up with other similarly strong, self-assured and do-what-is-right types like Perry Mason, Sergeant Joe Friday and even less famous enforcers like Lt. Frank Ballinger (Lee Marvin in M Squad).

Some of this exposure probably inculcated an expectation of swift (half-hour or an hour at the most) justice where wrong-doers are not only identified, they're captured and prosecuted.

Maybe those expectations are too high in today's more complex and sophisticated world; now, some fifty years later, a more enlightened sense of justice has emerged, one where who you are and your position where you work means you aren't subject to the same kind of risks as ordinary individuals.

Unlike ordinary people who commit crimes, corporations are given a number of special considerations, specifically, according to the Department of Justice, prosecutors (among other things) are supposed to evaluate "... collateral consequences, including disproportionate harm to shareholders, pension holders and employees not proven personally culpable and impact on the public arising from the prosecution."

This makes sense if and when a rogue employee engages in an illegal act that the shareholders and many of the other employees weren't aware of or couldn't prevent, but when widespread breaking of the law is present those considerations shouldn't be a factor.

Frankly, if shareholders are stupid enough to invest in a predator, I have little sympathy for them. As for employees not involved, I have some sympathy if they were truly ignorant. As far as impact on the public - that's absurd on its face; the impact is worse if the laws aren't enforced.

But such is the state of our Department of Justice and the evidence that has emerged is the same "too big to fail" treatment of Wall Street firms and entities in the mortgage meltdown got from the other players in Washington.

Instead of investigating crimes, in the last decade or so the Department of Justice has taken a "wink wink, nod nod" approach to a protected class of well-connected companies and executives. In this 21st century version of justice, a corporation is given a chance to investigate itself and take remedial action if need be. The term "deferred prosecution" is often used to refer to this approach.

The largest extant example of this practice surrounds Goldman Sachs. One notable analyst downplays any potential risk to the firm in the alleged on-going SEC investigation by pointing out this reality:

"With approximately 17 percent of the ownership in the hands of current and former partners, this control group has ample motivation to make amends with politicians and the public in order to reduce the threat to its franchise.Brad Hintz, Sanford C. Bernstein & Co.

With one notable exception (Lee Farkas obviously wasn't well-connected enough to make amends with politicians to reduce the threat to his franchise), Washington, more specifically, the Department Of Justice, no longer has the stomach for actually prosecuting the protected class.

But this deliberate hands-off approach has had one very important benefit for the perpetrators of the mortgage debacle - the crimes that were committed late in the last decade and earlier in this one are rapidly aging beyond not only the statutes of limitation but are becoming compromised by the sheer unreliability or availability of credible witnesses.

Now comes the hoopla over robo-signing, LPS/DocX, fraudulent foreclosures and forgery and where is the Department of Justice?

Sitting on its hands while most of the Attorneys General of the fifty states negotiate with the perpetrators and Congress wrings its hands over mortgage servicing instead of doing something about their friends in the protected class.

Elliot Ness would be rolling over in his grave.

The Honorable Judge Roy Bean

Are the Journalists Just Ignorant?

2010-10-12T22:34:00.002-04:00

With all the news about the foreclosure mess anyone who actually knows anything about it has to be asking themselves why the media seems so surprised?

I keep seeing articles, blog posts and even tweets from the supposedly-informed reporters who are either incompetent to actually write about a subject or are simply in such a hurry to get the next word out that they don't want to take the time to do anything but sort-of-copy someone else in the feeding frenzy.

An even cursory look into the scams would reveal the major players like Fidelity and DocX and that, of course, would lead to how far back they've been doing the exact same thing.

If a REAL journalistic investigation were to keep digging (and there is still hope they will not be driven off by He Who Has the Gold) they'd find there are people now being set up to take the fall for the major corporate entities and foreclosure mills that designed, colluded, conspired and perpetrated the giant garbage disposal operation for the lending industry.

Any writer that asserts this is some kind of new thing simply demonstrates how the news media players have been much like the lap-dogs at the FTC; as long as "those people" (you know, the ones with supposedly damaged credit or that can't afford their homes or that made bad choices, etc., etc., or that were minorities), letting the industry break the law and take advantage of "them" was OK.

And instead of holding the criminal investigative agencies' feet to the fire and not letting them sweep the scam under the rug, the reporters are content to interview business executives who see all kinds of gloom-and-doom for the economy if the fraudsters are actually penalized.

He Who Has the Gold is obviously making the rules for the coverage of the story and their partners in these crimes, the foreclosure mills, are so above the law they're not even worried.

Any bets on whether there will be disciplinary actions taken against the foreclosure mills? Don't count on it; that would jeopardize too many foreclosure opportunities and only open more doors to challenges from their victims.

The Honorable Judge Roy Bean

Get Ready for a Legislative Rescue for Foreclosure Perpetrators

2010-10-09T22:42:00.002-04:00

He who has the gold is not going to sit idly by after their last-gasp (and only recently failed) attempt to thwart the ability to foreclose without regard to standing.

There are probably millions of people out there who have been energized by the false hope that because their homes were (from a purely legal process standpoint) stolen from them they might somehow be entitled to redress.

The reality of life is they're still screwed.

The justice system doesn't work that way, as perverse as it might seem to the victims. Courts don't go back and fix the damage they allowed to happen.

The victims have no recourse against the court system. All they can do is file suit against the perpetrators of the fraudulent foreclosure if they even still exist. That takes money; lots and lots of money.

Do you see the pattern repeating here - perpetrators of a perfectly-conceived scam not having to worry because victims don't have the resources to go after them even after it's proven to be a scam?

We have what we have because we keep re-electing the people who are content to watch it happen and they're going to let the squaliformes prevail yet again.

The Honorable Judge Roy Bean.

AG's Leap Into Action! LOL!

2010-10-07T22:51:00.006-04:00

If you ever want to see politics at work, just monitor what the various AG's around the country leap into when there's an opportunity to make it look like they're standing watch to protect the citizens of their state.

For over a decade now, the mortgage industry has taken advantage of their relentlessly effective garbage disposal (foreclosure mills) to hide their culpability in shedding themselves of those nasty sub-prime mortgages that they were more than happy to originate but don't want to have to answer for.

Even with tens and even hundreds of millions of dollars worth of judgments and settlements, the Squaliformes were still making so much money that they just couldn't help themselves and had to keep on feeding the foreclosure machine rather than modify loans and keep people in homes.

The dirty "secrets" (which were never really a secret among victims or a handful of determined counsel who would challenge the system) are the convenient "affidavit of lost note" documents that courts were more than happy to accept because the law firms tossing them into the garbage disposal supposedly had a signature and a notary's seal on them.

Now, of course in hindsight, a bunch of people who have been asleep at the switch for so long are supposedly aghast that such things have been going on for years.

Hmmm . . . could it be there's an election just 'round the corner?

If you want to see a political animal at work just look at the Attorney General in any given state.

Imagine having a job that only requires you to do something if some awful thing finally reaches a catastrophic level; one that gives you the opportunity to step in and take advantage of so that you can appear effective and advance your opportunity to higher office.

What a great job! How can you lose?

And the media is thrilled to see them in action! AG does this, AG does that. AG takes perpetrator to task, gets a few million here and there . . . oh, but wait - perpetrator admits no wrongdoing and is still in business.

In other words, the perpetrators of crimes against the citizens of states do little more than pay a pittance for what they did and the AG gets the publicity for the upcoming campaign.

Ain't it just grand?

The Honorable Judge Roy Bean

Wells Fargo Whacked for Debit Posting Scam

2010-08-14T16:31:00.002-04:00

Uber-Squaliforme Wells Fargo has been hit by the US District Court in California for raking in billions of overdraft fees by manipulating the posting dates and times of debit card charges to ensure they would collect multiple overdraft fees.

The suit, which has been grinding its way through Judge William Alsup's* court since 2007, is a class-action claim that could affect millions of customers, including former ones that they have to help track down.

Wells will not only pay $203 Million in restitution, they have to cease the practice by the end of November.

Now the question remains, will the rest of the industry simply re-write their cardholder agreements to tell customers they do it or will they do the right thing and process the debits in the proper order?

The Honorable Judge Roy Bean.

*(If the name of the Judge sounds familiar to readers here, he is the same Judge that heard the Dorean Group trial and sentenced Johnson and Heineman to twelve years.)

Don't touch that dial!

2010-07-12T12:07:00.002-04:00

If you don't realize it already, radio air time is not always what it's cracked up to be. Almost anyone with the money to buy thirty or sixty minutes of airtime on a local station can "host" a "talk show" and pretty much say anything they want - and omit things about themselves.

It's a lot cheaper than television time but it's still expensive. You may have to find your own advertisers to help defray the costs or, more commonly the show is a simply a platform to attract customers to call a number and/or register for a seminar.

The effort to make the show seem like it's not really advertising knows almost no limits. Staged calls (some so badly crafted that you can tell the person asking the question is reading it) are common - and almost always wind up telling the shill to call the toll-free number to talk to someone who can "help" them with their particular situation.

In Colorado there's going to be one less of these yahoos. Something called "Real Talk Network, Inc. (aka Real Talk LLC) is a guy - David Burke. He has one sales guy, Eric Sale (no, I'm not making that up). The show Burke has had on several Colorado stations since sometime in 2008 is basically used to invite people to call and sign up for "free seminars" that are essentially high-pressure sales pitches for a $3,500 program to allegedly help people manage their debts.

Of course you can't run this kind of thing without a web site, and because it's now been taken down (more on that later), you wouldn't be able to see the typical hype these kinds of people produce - such as:

Real Talk Presents: The New Banking and Credit Event
0% INTEREST ON CREDIT CARDS AND MORTGAGES? IS IT POSSIBLE? Join us for a discussion and training on eliminating the interest in your life. Are you tired of losing money? If you are paying any interest on credit cards or your mortgage, you are losing. Come learn how to win in today's opportunistic market.

EXPLODE YOUR CREDIT SCORE AND GET CASH:
Learn the secrets to your credit score from the creator of the FICO scoring model. Put $1,000-$3,000 in your bank account in 45 days using the strategies you will learn in this webinar. Boost you score instantly and much much more.

ELIMINATE YOUR CONSUMER DEBT AND RETIRE SAFELY:
Learn and practice advance financial methodologies to wipe out all of your consumer debt and increase your monthly cash flow. Learn how to get up to a 40% raise in your household income.

Wipe out your debt NOW!
•Credit Cards
•Mortgages
•Auto Loans
•Medical Loans

The reason you won't find that on Burke's web site any more is that Burke and Sale have been charged by the Colorado Attorney General's office with violations of various acts, including the Colorado Consumer Protection Act, the Uniform Consumer Credit Code, the Colorado Credit Services Organization Act and the Federal Credit Repair Organizations Act.

David Burke describes himself as a nationally-syndicated talk show host and financial expert. Of course, you wouldn't pay money for a program to just anybody, would you? Hey, why not trust a "nationally-syndicated talk show host and financial expert?"

And wouldn't you trust a graduate of USC who has a large ranch in Montana? And especially if he just came out of years of retirement to "help save American families in this time of crisis," and that he has coached the House of Representatives and "a bunch of media figures?"

What about if he's just another guy who never graduated from USC and has filed for bankruptcy twice in the last thirteen years? And instead of being "syndicated" Burke buys his infomercial time on several radio stations in Colorado.

Burke told his audience at a March 29, 2010 seminar that, "Our methodologies, math, access, tools, all that stuff is not dependent upon income, believe it or not, it doesn't matter what your income is - it simply works for everybody, regardless of your income - your income means nothing."

Even better - with Burke's program you wouldn't have to change your lifestyle - and, if you had a bankruptcy RTN could even get it removed from your credit report!

The charges filed don't enumerate exactly how many people in Colorado and California have been duped into this scheme but in one part of the complaint it points out they were signing up between thirty and fifty consumers per week. In other words, in nearly two years Burke has been on the air he's probably fleeced over a thousand people out of more than $3.5 Million dollars.

Amazingly enough, the radio stations involved were happy to take Burke's money, despite having a BBB rating of F from 116 complaints.

Keeping scammers off the airwaves isn't easy.

Squaliformes Can't Change Their Nature

2010-02-24T14:48:00.002-04:00

The Indiana Court of Appeals gets a thumbs up for seeing what the trial court decided to ignore - but there's a cautionary tale here so I'm including the full text of the Court of Appeals Order:

(See my comments, below.)

MARILYN L. ELLIOTT and MICHAEL S. ELLIOTT, Appellants-Defendants,
v.
JPMORGAN CHASE BANK, as Trustee on Behalf of the Registered Certificate Holders of GSAMP Trust 2004-SEA2, Mortgage Pass-Through Certificates, Series 2004-SEA2, Appellee-Plaintiff.

No. 30A01-0907-CV-356.

Court of Appeals of Indiana.

February 3, 2010.

THOMAS E.Q. WILLIAMS, Greenfield, Indiana, ATTORNEY FOR APPELLANTS.

SARAH A. OKRZYNSKI, Reisenfeld & Associates Cincinnati, Ohio, ATTORNEY FOR APPELLEE.

OPINION

BAKER, Chief Judge.

The Kafkaesque character of this litigation is difficult to deny. Having failed to receive a summons that may have been improperly served upon them, Marilyn and Michael Elliott learned that a default judgment had been entered against them, foreclosing on their home because of a mortgage that was allegedly in default. The home was sold in a sheriff's sale to the lending bank. Feeling confused and suspicious, they turned to the Indiana Attorney General, who directed them to file a complaint with the Comptroller of the Currency. The Comptroller's investigation revealed that Chase Bank, the ostensible plaintiff herein, is entirely unaware of the foreclosure proceeding. Moreover, Chase's records show that the mortgage was paid in full in 2001. Chase, therefore, executed and recorded a satisfaction of mortgage. Notwithstanding the satisfaction of mortgage, Chase's loan servicer—Ocwen Bank—continued to prosecute this action in Chase's name, attempting to force the Elliotts out of their home even though there has never been a trial and the lending bank has declared that the mortgage was paid in full. Finding this situation untenable, we reverse and remand for trial.

Appellants-defendants Marilyn L. Elliott and Michael S. Elliott appeal the trial court's order denying their motion for relief from judgment on the foreclosure complaint of JPMorgan Chase Bank (Chase). The Elliotts raise two issues, one of which we find dispositive: that they are entitled to relief from judgment pursuant to Trial Rule 60(B) because, during the pendency of this litigation, Chase executed and recorded a satisfaction of the mortgage. Finding that the Elliotts are entitled to relief from judgment, we reverse and remand for trial.

FACTS

On April 30, 1999, Dorothy Elliott took out a mortgage (Mortgage) in the principal amount of $90,625. Bank One was the lender and Mortgage holder. At some point, Chase became Bank One's successor-in-interest on the Mortgage, as trustee on behalf of certain registered certificate holders. At some point, Chase hired Ocwen Bank (Ocwen) as a loan servicer[ 1 ] for the Mortgage. Dorothy died on January 24, 2006, and her daughter, Marilyn, and grandson, Michael, became the joint owners of and titleholders to Dorothy's residence in Greenfield.[ 2 ]

On July 20, 2006, Chase filed a complaint against the Elliotts, seeking to foreclose the Mortgage. The complaint alleged that $85,315.60 plus interest was due on the Mortgage. The Elliotts were served with the summons and complaint when the Sheriff left a copy of the document at the Greenfield residence on July 26, 2006. The Elliotts later testified that they never received and were never aware of the complaint. There is no evidence in the record that the Sheriff sent a copy of the summons via first class mail.

On November 28, 2006, Chase filed a motion for default judgment, which the trial court granted the next day. On December 27, 2006, Chase filed for a Sheriff's sale of the Elliotts' home. The Sheriff's sale took place on February 7, 2007, and Chase has since received and recorded a Sheriff's deed to the property. On June 11, 2007, Chase filed a writ of assistance with the trial court, seeking aid in removing the Elliotts from their residence.

At some point in December 2006, the Elliotts had received the judgment and decree of foreclosure. Having received that information, they "immediately" contacted the Indiana Attorney General, suspecting that fraud had occurred. Reply Br. p. 9. The Attorney General referred the Elliotts to the Comptroller of the Currency (the Comptroller) in September 2007.

On September 17, 2007, the Elliotts filed a consumer complaint with the Comptroller, which opened a file and began an investigation. As the Comptroller conducted its investigation, Marilyn continued to try to sort out the underlying details of her situation. To that end, she opened a correspondence with Chase. On November 27, 2007, Chase sent Marilyn a letter stating, in pertinent part, as follows:

After a review of Ms. And Mr. Elliott's account, we found that this account was paid off on October 4, 2001. Chase Home Finance ("Chase) has no record of a foreclosure action on this account. If you have documentation of a foreclosure action executed by Chase, please forward it to my attention in the enclosed return envelope. . . . Additionally, Chase has processed a Satisfaction of Mortgage for the [Elliotts' home in Greenfield]. I am enclosing a copy of the Satisfaction of Mortgage for your review. . . .

Appellants' App. p. 46. Chase executed the satisfaction on November 21, 2007, and later recorded it. On April 23, 2008, the Comptroller sent a final letter to the Elliotts, stating as follows:

. . . We recontacted [Chase] regarding your concerns [about foreclosure] and their review determined that the loan servicer is Ocwen Bank. Ocwen Bank would have all loan origination records and should be able to address any concerns you have regarding the origination of the loan. Ocwen Bank initiated the foreclosure; [Chase] is the Trustee and did not initiate the foreclosure. They advised you to direct all future correspondence to [the attorneys] representing Ocwen Bank regarding this action. . . .

This office answers questions and assists consumers in resolving complaints against national banks and complaints against credit card and mortgage company subsidiaries of national banks. A national bank is a bank that has the word, National or the letters, N.A. in its official name.

As your complaint is against an entity that does not fall under the jurisdiction of our office, we are referring your letter to the appropriate supervisory agency, which is the State of Florida Department of Financial Services. . .
.

Id. at 65-66.

On April 30, 2008, within a week of receiving the letter from the Comptroller, the Elliotts filed a cross-complaint to set aside the mortgage with jury demand, motion to set aside judgment of foreclosure and sheriff's sale, and motion to withdraw order of possession. The Elliotts later clarified that they were seeking, among other things, relief from the judgment pursuant to Indiana Trial Rule 60(B), arguing that inasmuch as Chase had released the mortgage and denied knowledge of the foreclosure action, the underlying judgment was void. The trial court held a hearing on the motion for relief from judgment on April 23, 2009,[ 3 ] and summarily denied the Elliotts' motion on June 19, 2009. The Elliotts now appeal.

DISCUSSION AND DECISION

I. Relief From Judgment

The Elliotts argue that the trial court erred by denying their request for relief from judgment pursuant to Trial Rule 60(B). A Trial Rule 60(B) motion for relief from judgment "`affords relief in extraordinary circumstances which are not the result of any fault or negligence on the part of the movant.'" Dillard v. Dillard, 889 N.E.2d 28, 34 (Ind. Ct. App. 2008) (quoting Goldsmith v. Jones, 761 N.E.2d 471, 474 (Ind. Ct. App. 2002)). We review the denial of such a motion for an abuse of discretion, which occurs when the denial is clearly against the logic and effect of the facts and inferences supporting the judgment for relief. Dillard, 889 N.E.2d at 33. The movant bears the burden of demonstrating that relief is necessary and just. Id.

In pertinent part, Trial Rule 60(B) provides as follows:

On motion and upon such terms as are just the court may relieve a party or his legal representative from a judgment, including a judgment by default, for the following reasons:

***

(6) the judgment is void;

(7) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or

(8) any reason justifying relief from the operation of the judgment, other than those reasons set forth in sub-paragraphs (1), (2), (3), and (4).

The motion shall be filed within a reasonable time for reasons (5), (6), (7), and (8) . . . . A movant filing a motion for reasons (1), (2), (3), (4), and (8) must allege a meritorious claim or defense. . . .

The Elliotts argue that they are entitled to relief from judgment pursuant to subsection (6), (7), and/or (8). We choose to focus on the catch-all provision of subsection (8).

Here, the Elliotts have tendered evidence that Chase's records indicate that the Mortgage was fully paid in 2001.[ 4 ] Furthermore, Chase has executed and recorded a full satisfaction of the Mortgage. By tendering this evidence, the Elliotts implicitly averred that an accord and satisfaction has taken place. See Mominee v. King, 629 N.E.2d 1280, 1282 (Ind. Ct. App. 1994) (explaining that accord and satisfaction is a method of discharging a contract or settling a cause of action by substituting for such contract or dispute an agreement for satisfaction). We find this evidence to constitute a reason justifying relief from judgment, and we also conclude that this evidence suffices to allege a meritorious defense to the foreclosure complaint.

As for the requirement that the motion for relief from judgment be filed "within a reasonable time," we note that as soon as the Elliotts learned of the foreclosure complaint and sheriff's sale, they contacted the Indiana Attorney General. The Indiana Attorney General reviewed their complaint and referred them to the Comptroller, which opened its investigation in September 2007. Its investigation continued until April 23, 2008, when the Comptroller informed the Elliotts that it could offer them no further assistance, inasmuch as Ocwen is not a national entity. Within one week, the Elliotts filed the motion for relief from judgment.

While it could be argued that they should have injected themselves into the litigation earlier, they were relying on the advice of professionals from the Attorney General's and Comptroller's offices. There is no evidence in the record that the Elliotts were ever advised to hire an attorney and challenge the default judgment. In other words, it is evident that they were not sitting idly by. Instead, they were using the resources at their disposal to attempt to figure out exactly what the complaint was alleging and whether or not there was merit to Chase's allegations. Under these circumstances, we find that the Elliotts filed the motion within a reasonable time. Therefore, they are entitled to relief from the default judgment.

II. Summons Service

The Elliotts also argue that service of the summons on them was improper and that, consequently, the default judgment is void as a matter of law. See Grabowski v. Waters, 901 N.E.2d 560, 563 (Ind. Ct. App. 2009) (explaining that ineffective service of process prohibits a trial court from having personal jurisdiction over a defendant and that a judgment rendered without personal jurisdiction over a defendant violates due process and is void), trans. denied. Trial Rule 4.1 provides as follows:

(A) In General. Service may be made upon an individual, or an individual acting in a representative capacity, by:

(1) sending a copy of the summons and complaint by registered or certified mail or other public means by which a written acknowledgment of receipt may be requested and obtained to his residence, place of business or employment with return receipt requested and returned showing receipt of the letter; or

(2) delivering a copy of the summons and complaint to him personally; or

(3) leaving a copy of the summons and complaint at his dwelling house or usual place of abode; or

(4) serving his agent as provided by rule, statute or valid agreement.

(B) Copy Service to Be Followed With Mail. Whenever service is made under Clause (3) or (4) of subdivision (A), the person making the service also shall send by first class mail, a copy of the summons without the complaint to the last known address of the person being served, and this fact shall be shown upon the return.

(Emphasis added.)

Here, the summons included in the record bears a stamp from the Hancock County Sheriff's Office that states as follows: "On this 26 day of July 2006 I served this writ as commanded by leaving a true copy of the last and usual place of residence of M. Elliott[.]"[ 5 ] Nothing on the summons indicates that the Sheriff's Deputy who served a copy of the summons and complaint on the Elliotts also sent a copy of the summons by first class mail as required by Trial Rule 4.1(B). Furthermore, neither of the parties discusses the mailing requirement in their briefs, the trial court did not ask at the hearing whether a copy of the summons was mailed, and in the order entering default judgment in Chase's favor, the trial court merely found that the Elliotts were served "by Sheriff Copy," without stating that the summons was also mailed to their address. Appellants' App. p. 96.

At the very least, this record leaves us with a significant question of fact regarding the sufficiency of service. We need not decide this issue, inasmuch as we have already found in the Elliotts' favor as stated above, but we caution practitioners, trial courts, and law enforcement personnel to be mindful of the requirements of Trial Rule 4.1(B) in the future.

The judgment of the trial court is reversed and remanded for trial.

FRIEDLANDER, J., and DARDEN, J., concur.

If you think this was just some kind of simple error on the part of counsel for Ocwen, you're seriously confused. Here's the perfect opportunity - an uninformed, stressed homeowner without counsel and a ton of equity to be seized in a hurry. Fortunately, they obtained counsel for the appeal, Thomas E. Q. Williams of Greenfield, Indiana.

The most distressing thing about this whole thing is the how the Judge in the original cause (30C01-0607-MF-570) in the Hancock Circuit Court, one Honorable Richard D. Culver, couldn't see this for what it was. Fortunately, he didn't allow Ocwen to kick the Elliots out pending the appeal.

But here's the cautionary tale in this apparent success - Ocwen asserts that JP Morgan Chase's records were in error and that Chase filed the satisfaction of mortgage in error. According to Ocwen's counsel, the Elliots still owe $80,000, so Judge Culver, as the trier of fact, will now have to rule on that.

The skulduggery that could now go on between Ocwen and Chase is going to be more than just a little interesting. You can almost predict what statements and affidavits are going to be tossed in to force the Elliots into producing the evidence that the loan was actually paid off. One can only hope that the court recognizes what has been going on for what it is and sanctions Ocwen's counsel.

The Honorable Judge Roy Bean

Letting yourself become a victim

2009-11-17T23:49:00.002-04:00

Over the last few months there has been very little in the way of progress in terms of real consumer protections - he who has the gold is timing the dribble of rules to ensure it doesn't seriously impede their control; most of what is going on is window dressing in preparation for the 2010 elections.

But I've finally reached a boiling point with messages from people who are literally letting themselves be abused by completely bogus debt collection schemes. If I had time to respond to them I'd need a staff.

Let me make this simple: You have no legal obligation to answer your phone. That seemingly all-powerful need to respond to the ringing of a phone is nothing more than a tool of predators.

What is it that drives people to need to not only answer the phone, but have an answering machine?

This isn't legal advice but I haven't found any case law that says an allegedly unanswered phone call has any legitimate bearing on the facts of a collection case. In fact, when no verbal exchange occurs between the alleged parties any allegedly recorded attempt at a call to you is meaningless. Any collection scammer can produce a supposedly computer-generated list of their system's alleged calls to phone numbers.

Given today's communication environment, the solution to NOT being harassed is available to anyone - don't answer the damn phone and don't have an answering machine. If you think you need to get calls from really important people set up a system where you only answer or respond within a minute or two to their calls - this isn't rocket science, folks.

In fact, to make it perfectly simple, connect a fax machine to the phone line. Or forward your primary phone (busy or no answer) to a fax machine somewhere - anywhere. Who cares where it goes? The predators are using machines to call you and when no human answers they will eventually move on.

Yes, if you owe a debt you owe it, but given the utterly specious and insidious nature of a huge percentage of alleged debts and the vultures that try to scam people into paying what they really don't owe, letting them put you in a position of being distressed via the phone is only preying on your long-held conditioned discomfort of letting the damn thing ring.

You don't have to be a slave to a noise.

Not to keep kicking a dog on the ground but . . .

2009-07-30T22:49:00.004-04:00

Senator Dodd is putting up a well-crafted "talking points" smokescreen about his involvement in the Countrywide "Friends of Angelo" fiasco with the almost effective feint that he wouldn't jeopardize his long-standing service to his constituents with some kind of influence scandal. But he's following a dog that won't hunt. He's getting more bad advice.

And that's not the worst of it.

It's still nothing more than an elaborate feint; the real issue is how a Senator, especially a committee chair with the kind of power he wielded in financial legislation could be so utterly dense in regard to the millions of people (including his constituents) that were being abused by Countrywide over the years.

It's simply beyond belief that he wasn't aware of what Countrywide was doing to consumers; you'd have to be in a cave somewhere to not know what was happening. Thus, if he was actually ignorant, his staff should be summarily dismissed and he should resign for having kept them on the government payroll. If he wasn't ignorant, he's not only utterly incompetent to serve as a senator on a committee that deals with mortgage issues, he's nothing more than a criminal enabler (or worse) and he should resign.

Why his he still a Senator?

The Honorable Judge Roy Bean

Senator Dodd is shocked - shocked I tell you!

2009-07-16T14:01:00.002-04:00

One of the chief architects of the mortgage disaster has the chutzpa to feign surprise at the dismal results from the administration's much ballyhooed mortgage modification program.

"This is disgraceful," he said. "Why am I still reading about lost files, under-staffed and under-trained servicers, and hours spent on hold on the phone?"

If it weren't so blatantly disingenuous it might be funny as he attempts to ignore the history of predatory mortgage servicing.

Dodd wants us to believe the same people running predatory servicing operations are going to be able to change their modus operandi just because they've told him (wink, wink, nodd, nodd) that they'll modify bad loans to try and avoid foreclosures.

News flash for the Senator: The reason you're still reading about lost files, understaffed and under-trained servicers and hours spent on hold on the phone should be obvious to anyone other than the people who have supposedly been overseeing the financial services industry: They do what is in their best interests, nothing more.

Treasury's Herbert Allison said at Dodd's committee hearing that the servicers who are [allegedly] participating have extended 325,000 loan modification offers and have 160,000 three-month trial adjustments underway. Of course what isn't known (and wasn't asked) is how many of the alleged 325,000 offers were viable, let alone acceptable. Nor do we know if the 160,000 are part of the 325,000. And of course no mention is made of the servicers who aren't participating.

What Dodd and his little band of actors don't want to admit is that the program is nothing more than window dressing for one very big reason - if it doesn't make financial sense for them to offer a forbearance agreement (which is what these "modifications" really are) they won't, and they are the only ones who have a say in that process.

Dodd also doesn't want to admit that he and everyone else knows that the real purpose for most of these newly-named forbearance agreements is to indemnify the servicer from any potential liability for any actions they've taken or will take.

So, Senator Dodd - spare us the shocked act.

The Honorable Judge Roy Bean

Another collection Squaliforme gets a slap on the wrist

2009-07-07T13:40:00.003-04:00

So much for enforcement having any effect.

Richard and Peter Pinto along with Charles Harris run something called "Oxford Management Services" which to their victims is known as "Oxford Collection Agency."

All collection Squaliformes need an attorney, and Salvatore Spinelli, Esq., was caught in the FTC's net along with Oxford. Spinelli allegedly can't pay his half of the $2.12M penalty so it was suspended. The Pintos and Harris allegedly can't pay their half either, so the FTC let them off by suspending all but $225,000.

And while the FTC will supposedly be keeping an eye on Oxford, the typical abuses by other collectors will go on - in part because of settlements like this.

The "new" FTC just put up the surrender flag.

The Honorable Judge Roy Bean

Is anybody sick of this yet?

2009-06-25T23:53:00.003-04:00

Making homes affordable?

Just so no record of the absurdity gets disposed of, there’s a list of the squaliforme mortgage servicers who are getting money to allegedly modify loans – while they’re really doing little more than luring people into signing agreements that indemnify the servicer from ANY wrongdoing.

Here’s the breakdown of our tax dollars going to ensure these giant squaliformes can get away with covering their legal liabilities by allegedly modifying loans:

The amounts below are incentive payments for mortgage modifications as part of the administration's Making Home Affordable program.

B of A (Countrywide) $5.2 billion
Chase Home Finance $3.6 billion
Wells Fargo Bank, NA $2.4 billion
CitiMortgage $1.1 billion
GMAC Mortgage $1 billion
Bank of America, NA $804.4 million
Credit Suisse (Select Portfolio Servicing) $660.6 million
Morgan Stanley (Saxon Mortgage Servicing) $632 million
Ocwen Financial Corporation $553.4 million
Lehman Brothers (Aurora Loan Services) $459.6 million
Wilshire Credit Corporation $453.1 million
Home Loan Services, Inc. $447.3 million

So the administration would have us believe that these billions are actually keeping people in homes?

Sorry. Reality will eventually catch up to the media reporting. These alleged “modifications” are failing at disasterous levels.

Why? Because they're not really modifications. They're barely concealed forbearance agreements. The whole strategy is to conceal wrongdoing and indemnify the parties involved – and the government’s program is pouring BILLIONS of dollars into allowing predatory servicers to lure people into giving up their rights to sue the perpetrators of schemes.

Just another example of “change” you can believe in.

Nothing has changed except how more tax dollars are spread around to keep the right people in positions of power and influence.

The Honorable Judge Roy Bean

The new Government Motors product direction!

2009-05-29T16:21:00.005-04:00

The Honorable Judge Roy Bean

So you decide to buy a Goverment Motors vehicle ... "Doh!"

2009-05-27T22:16:00.004-04:00

Hey - want to take a chance?

Looking for a real bargain?

How 'bout ol' Bean offers you a truck deal you can't refuse? How 'bout you run right down to your (for now) local GM dealer and get in on a steal of a deal. Hey - how can you go wrong if you're buying a vehicle from none other than the United States Government?

You know, the people in Washington who can't find their ass with both hands? Hey - take advantage of the situation before the next election. They'll never find you if you do it right - but there are some things you might want to check into when you walk into a GM dealer.

First, when was the last time you bought anything from the United States Government?

Chances are if you're the average consumer looking for a vehicle you've never bought anything from Uncle Sam. There are good reasons for this. Uncle Sam isn't accustomed to being paid based on what something is really worth. In fact, Uncle Sam will take $5.00 dollars one day and $5,000.00 the next for the very same thing. It all depends on - well, no one really knows what it depends on.

So when you walk in to what used to be a General Motors dealership and want one of the cars on the lot that seems to be what you're looking for, you're going to be faced with some things that no other car buyer in the history of United States commerce has had to deal with.

First, you used to be able to rely on the warranty terms and conditions that were specified in the proposed sales agreement. Well, sorry, those might not really apply because the government may not even have to honor contracts that they didn't offer you. See, there's this really creative gibberish that will eventually override your purchase contract because the United States is about to become the majority stockholder in General Motors and will, of course, control the Board of Directors and guess what - you can't sue the United States without their permission. Wanna gamble on who loses in that game?

And let's not forget how the innumerable state "lemon law" statutes will soon become meaningless. After all, a federally-owned company cannot be subject to state laws.

I hate to say it, but current GM dealers should kiss the marque goodbye. Anyone who spends a dime on advertising the sale of Government Motors vehicles is tossing good money after bad. Not to mention anyone who accepts a dime of advertising - which means the next step from the administration will be to subsidize advertising of their brand so the media keeps the scam going.

The Honorable Judge Roy Bean

He Who Has the Gold isn't going to take it lying down

2009-05-19T19:38:00.006-04:00

With all the cheering going on among the consumer advocates you'd think the new credit card law is the answer to borrower's prayers.

It is, but it isn't. Washington would love us to believe they're standing up to He Who Has the Gold but the reality of the current show of force is that we're all going to be paying for it, one way or the other.

In the first place, the law doesn't go into affect for nine months. The Squaliformes have plenty of time to slap consumers and Washington around a bit.

Consumers will be pounded with more and more fees, usurious interest and manufactured situations that punish even responsible customers. And why would they do that? Why would they try to drive off customers?

Because they're patient. It's their money and it will go elsewhere until their minions in Washington snap out of their giddy victory swoon.

See, a huge chunk of the US economy is retail driven. When He Who Has the Gold balks at retail credit under the new rules next year, all those retailers who have handed their highly profitable CC operations off to He Who Has the Gold are going to find armies of irate FORMER customers.

Here's a graphic of what's going to be happening:

We're going to be transitioning back to an economic model that requires more and more consumers to have the money to buy something before they actually acquire it. In a sense, that's a good thing - but not for the Squaliformes or the economy as a whole. But instead of letting the lenders suck huge percentages of the economy onto their balance sheets as receivables, consumers will accumulate (as in, save) their own funds to acquire things at a future date.

And what will the Squaliformes do in order to prevent this from lasting too long or letting it get too far out of their control?

Simple - hold their breath and stomp their feet. They'll continue to hold back credit for all kinds of commercial needs. They will toss back the TARP and PPIP money. The economy will stagnate further and eventually this new administration and the socialists on the hill will return to their rightful place at the feet of the Squaliformes or face being run out of office because of utter economic stupidity.

If we could ride this out to the point where there is actually competition among Squaliformes and they really need consumers to trust them, we'll regain the upper hand. But we'll need an entirely new set of faces in Washington to make that happen.

The Honorable Judge Roy Bean

New York Squaliforme enabler faces criminal charges

2009-04-14T16:51:00.004-04:00

Attorney's General have a tendency to take action on behalf of consumers when there is a political opportunity in the making, and New York's have been famous for it.

Andrew Cuomo is sure to be running for Governor of New York and he's decided to get tough with a company called American Legal Process and its CEO William Singler.

The process server was hired by debt collection mills in New York to serve summons and complaint papers to notify individuals that they were being sued. Problem is, a large number of those alleged servings were not performed, leaving the field ripe for law firms to obtain default judgments as fast as they could be processed.

Some victims didn't even know they had been sued until their wages were garnished or their bank accounts raided. Stories include victims suddenly not being able to get money out of their ATM or use their debit cards.

Singler also covered up his scheme by falsifying documents that were filed in courts across the state, swearing that proper legal notification had been duly served upon the victims. The AG's investigation uncovered instances where ALP's servers falsified dates and times, including being stupid enough to report serving papers at four different addresses at the same moment and having somehow traveled over 10,000 miles in a single day.

ALP and Singler now face civil and criminal charges including criminal possession of a forged instrument, offering a false instrument for filing, operating a scheme to defraud and committing fraud through being a notary public.

Better yet, Cuomo's office is also going after one of ALP’s largest customers, Forster & Garbus, who used ALP to serve over 28,000 summons and complaints even though it knew or should have known they hadn't been properly served.

All in all, Cuomo's office believes 98,000 people in New York were probably denied their right to respond to a suit against them between January of 2007 and October of 2008. No one knows at this point in time what percentage of those cases were utterly bogus. There's the smell of a class-action suit in the air.

Problem is, that's the tip of the iceberg; one state over a period of just twenty-two months.

The Honorable Judge Roy Bean

Stefancik / Beringer scam loses on appeal

2009-03-17T13:07:00.002-04:00

John Stefancik's "Wealth Without Boundaries" book and his multi-thousand dollar training program on how to get rich in private real estate mortgage notes have taken another, perhaps final blow.

The FTC charged him with deceptive trade practices and last year obtained an injunction as well as a fine of over $17M. Stefancik appealed and as of this month the 9th Circuit has upheld the ruling of the lower court.

Stefancik, using a sales organization out of Salt Lake City, convinced nearly 8,000 people to buy the book. Some number of those were sold the additional training materials and engaged in trying the program. The investigator found that the notes showed 153 customers had submitted deals to potential paper buyers. Out of that total, 68 had their deals rejected, 77 did not have conclusive comments regarding either acceptance or rejection, and only 8 customers had successfully completed a deal.

Like so many of these kinds of businesses, the chances of success for anyone but the promoter are slim.

The Honorable Judge Roy Bean

Jim Cramer just doesn't get it.

2009-03-05T19:39:00.002-04:00

Jim Cramer has come out and complained about the way he’s being assailed by the Obama faithful for his telling the truth on live morning television (NBC) about the administration’s advancement of wealth destruction as a lever to advance the socialist agenda.

The problem is, Cramer is a major Democrat supporter – including financially (until recent contract limitations precluded any further donations). He admits to six figure contributions. He voted for Obama and admits that he wants most of what Obama is all about, just not while the stock market is in such bad shape.

You can’t have it both ways, Jim. At the risk of using a catch phrase, elections have consequences, and your political mindset is ludicrous given your alleged dogmatic support for stockholders and their financial well-being.

Jim, what part of socialism do you believe contributes to accumulation of wealth for individuals? And why, if you support the Obama agenda would anyone believe what you have to say about stocks – other than you predicted the earlier declines? Given the realization on the part of investors that Obama was going to be the next President, the declines were a no-brainer. And right after the election there was another collapse. Then come the stories about just how far into a managed economy the Democrats are willing to let Obama take us and here we all are. Knowledgeable wealth has fled the stock market and regular folks, the ones you so adamantly claim to want to protect, are facing the consequences of not getting out or being agile enough to get out in time.

Methinks you doth protest too much.

The Honorable Judge Roy Bean

Be Prepared for a Backlash - Part II.

2009-02-28T20:49:00.002-04:00

He who has the gold is not going to view the “produce the note” defensive maneuvers of borrowers lightly, and because in so many cases the additional legal expenses cannot be recovered, the rules are going to have to change. And if (more likely when) the BK rules allow judges to modify loans, the squaliformes will use the onslaught of filings as a rationale for pushing their changes. The quid-pro-quo for allowing Washington to change the rules will include getting things like:

- More aggressive action to get more states into the “non-judicial” foreclosure camp and to prevent those with non-judicial processes from bowing to local pressure to make it more difficult to foreclose.

- Less interference from regulators looking into abusive servicing practices that are designed to eliminate the modified loans as rapidly as possible.

- Accommodation of document imaging technology for mortgage notes just as the industry has done with checks.

- Efforts to limit or impede the use of MERS will be legislated out of existence.

- Blackballing anyone using bankruptcy to force a modification. BK filers will become a financial pariah. If you thought it was hard restoring your credit score post-discharge, this new scarlet letter will at least ensure you will never get back into debt.

Finally, and worst of all, we’re seeing the media rally to the squaliforme's backlash against anyone who is having trouble with their mortgage no matter who caused the trouble. The squaliforme’s professionally-managed media strategy has succeeded in twisting public opinion against people who have been abused instead of focusing attention on the abusers and the responsible parties in Washington. Certain politicians are more than happy to let the squaliformes handle this for them and things will only worsen as victims are assigned more and more blame for everyone’s declining circumstances.

As I have recommended on another forum, I suggest everyone should pull that old copy of George Orwell's Animal Farm off the shelf and read it.

The Honorable Judge Roy Bean

Be Prepared for a Backlash - Part I.

2009-02-24T13:12:00.003-04:00

For those jumping up and down in glee hollering about the “produce the note” strategy I would like to first say use it if you think you can pull it off. It can and will buy you some time in some circumstances. Chances are there will be some people who find several months of breathing room.

But I would offer a word of caution – remember “The Golden Rule:” He who has the gold makes the rules. And as legitimate as this emerging strategy is, He who has the gold is not going to sit by and let a handful of what will be painted as “squatters” turn the system upside-down and keep it that way. The creditor's bar can and will learn from their mistakes in most cases unless trial counsel is a complete buffoon.

If you believe you’re judgment-proof (no equity, no assets or no income that could be garnished) you may not have a lot to worry about except for some research, writing and trips to the courthouse. But if you do have some equity you’re trying to protect and are working, any additional costs they face in a prolonged court battle (some utterly contrived but some, such as their cost of a bond if required by the court) are going to be slapped onto a judgment against you if you lose. And if a court sees your defense as nothing but an abuse of the process to keep you in a home without paying for it, you may get an ugly surprise at the end.

He who has the gold isn’t liking having the ugly mess behind the hide-the-note scheme brought to light, and you can bet there will be some cases put up to be lessons to borrowers.

And there's more going on behind the scenes - more on that later.

The Honorable Judge Roy Bean

The Saga of Missing Notes Continues

2009-02-16T15:40:00.002-04:00

A tip of the gavel to "Prof" at the Quatloos forums (Click the title to see the original post), a paper to be presented at the American Bankruptcy Institute annual meting this April:

WHERE’S THE NOTE, WHO’S THE HOLDER: ENFORCEMENT OF PROMISSORY NOTE SECURED BY REAL ESTATE

HON. SAMUEL L. BUFFORD
UNITED STATES BANKRUPTCY JUDGE
CENTRAL DISTRICT OF CALIFORNIA
LOS ANGELES, CALIFORNIA

(FORMERLY HON.) R. GLEN AYERS
LANGLEY & BANACK
SAN ANTONIO, TEXAS

AMERICAN BANKRUPTCY INSTUTUTE
APRIL 3, 2009
WASHINGTON, D.C.

WHERE’S THE NOTE, WHO’S THE HOLDER

INTRODUCTION

In an era where a very large portion of mortgage obligations have been securitized, by assignment to a trust indenture trustee, with the resulting pool of assets being then sold as mortgage backed securities, foreclosure becomes an interesting exercise, particularly where judicial process is involved. We are all familiar with the securitization process. The steps, if not the process, is simple. A borrower goes to a mortgage lender. The lender finances the purchase of real estate. The borrower signs a note and mortgage or deed of trust. The original lender sells the note and assigns the mortgage to an entity that securitizes the note by combining the note with hundreds or thousands of similar obligation to create a package of mortgage backed securities, which are then sold to investors.

Unfortunately, unless you represent borrowers, the vast flow of notes into the maw of the securitization industry meant that a lot of mistakes were made. When the borrower defaults, the party seeking to enforce the obligation and foreclose on the underlying collateral sometimes cannot find the note. A lawyer sophisticated in this area has speculated to one of the authors that perhaps a third of the notes “securitized” have been lost or destroyed. The cases we are going to look at reflect the stark fact that the unnamed source’s speculation may be well-founded.

UCC SECTION 3-309

If the issue were as simple as a missing note, UCC §3-309 would provide a simple solution. A person entitled to enforce an instrument which has been lost, destroyed or stolen may enforce the instrument. If the court is concerned that some third party may show up and attempt to enforce the instrument against the payee, it may order adequate protection. But, and however, a person seeking to enforce a missing instrument must be a person entitled to enforce the instrument, and that person must prove the instrument’s terms and that person’s right to enforce the instrument. §3-309 (a)(1) & (b).

WHO’S THE HOLDER

Enforcement of a note always requires that the person seeking to collect show that it is the holder. A holder is an entity that has acquired the note either as the original payor or transfer by endorsement of order paper or physical possession of bearer paper. These requirements are set out in Article 3 of the Uniform Commercial Code, which has been adopted in every state, including Louisiana, and in the District of Columbia. Even in bankruptcy proceedings, State substantive law controls the rights of note and lien holders, as the Supreme Court pointed out almost forty (40) years ago in United States v. Butner, 440 U.S. 48, 54-55 (1979).

However, as Judge Bufford has recently illustrated, in one of the cases discussed below, in the bankruptcy and other federal courts, procedure is governed by the Federal Rules of Bankruptcy and Civil Procedure. And, procedure may just have an impact on the issue of “who,” because, if the holder is unknown, pleading and standing issues arise.

BRIEF REVIEW OF UCC PROVISIONS

Article 3 governs negotiable instruments – it defines what a negotiable instrument is and defines how ownership of those pieces of paper is transferred. For the precise definition, see § 3-104(a) (“an unconditional promise or order to pay a fixed amount of money, with or without interest . . . .”) The instrument may be either payable to order or bearer and payable on demand or at a definite time, with or without interest.

Ordinary negotiable instruments include notes and drafts (a check is a draft drawn on a bank). See § 3-104(e).

Negotiable paper is transferred from the original payor by negotiation. §3-301. “Order paper” must be endorsed; bearer paper need only be delivered. §3-305. However, in either case, for the note to be enforced, the person who asserts the status of the holder must be in possession of the instrument. See UCC § 1-201 (20) and comments.

The original and subsequent transferees are referred to as holders. Holders who take with no notice of defect or default are called “holders in due course,” and take free of many defenses. See §§ 3-305(b).

The UCC says that a payment to a party “entitled to enforce the instrument” is sufficient to extinguish the obligation of the person obligated on the instrument. Clearly, then, only a holder – a person in possession of a note endorsed to it or a holder of bearer paper – may seek satisfaction or enforce rights in collateral such as real estate.

NOTE: Those of us who went through the bank and savings and loan collapse of the 1980’s are familiar with these problems. The FDIC/FSLIC/RTC sold millions of notes secured and unsecured, in bulk transactions. Some notes could not be found and enforcement sometimes became a problem. Of course, sometimes we are forced to repeat history. For a recent FDIC case, see Liberty Savings Bank v. Redus, 2009 WL 41857 (Ohio App. 8 Dist.), January 8, 2009.

THE RULES

Judge Bufford addressed the rules issue this past year. See In re Hwang, 396 B.R. 757 (Bankr. C. D. Cal. 2008). First, there are the pleading problems that arise when the holder of the note is unknown. Typically, the issue will arise in a motion for relief from stay in a bankruptcy proceeding.

According F.R.Civ. Pro. 17, “[a]n action must be prosecuted in the name of the real party in interest.” This rule is incorporated into the rules governing bankruptcy procedure in several ways. As Judge Bufford has pointed out, for example, in a motion for relief from stay, filed under F.R.Bankr.Pro. 4001 is a contested matter, governed by F. R. Bankr. P. 9014, which makes F.R. Bankr. Pro. 7017 applicable to such motions. F.R. Bankr. P. 7017 is, of course, a restatement of F.R. Civ. P. 17. In re Hwang, 396 B.R. at 766. The real party in interest in a federal action to enforce a note, whether in bankruptcy court or federal district court, is the owner of a note. (In securitization transactions, this would be the trustee for the “certificate holders.”) When the actual holder of the note is unknown, it is impossible – not difficult but impossible – to plead a cause of action in a federal court (unless the movant simply lies about the ownership of the note). Unless the name of the actual note holder can be stated, the very pleadings are defective.

STANDING

Often, the servicing agent for the loan will appear to enforce the note. Assume that the servicing agent states that it is the authorized agent of the note holder, which is “Trust Number 99.” The servicing agent is certainly a party in interest, since a party in interest in a bankruptcy court is a very broad term or concept. See, e.g., Greer v. O’Dell, 305 F.3d 1297, 1302-03 (11th Cir. 2002). However, the servicing agent may not have standing: “Federal Courts have only the power authorized by Article III of the Constitutions and the statutes enacted by Congress pursuant thereto. ... [A] plaintiff must have Constitutional standing in order for a federal court to have jurisdiction.” In re Foreclosure Cases, 521 F.Supp. 3d 650, 653 (S.D. Ohio, 2007) (citations omitted).

But, the servicing agent does not have standing, for only a person who is the holder of the note has standing to enforce the note. See, e.g., In re Hwang, 2008 WL 4899273 at 8.

The servicing agent may have standing if acting as an agent for the holder, assuming that the agent can both show agency status and that the principle is the holder. See, e.g., In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008) at 520.

A BRIEF ASIDE: WHO IS MERS?

For those of you who are not familiar with the entity known as MERS, a frequent participant in these foreclosure proceedings:

MERS is the “Mortgage Electronic Registration System, Inc. “MERS is a mortgage banking ‘utility’ that registers mortgage loans in a book entry system so that ... real estate loans can be bought, sold and securitized, just like Wall Street’s book entry utility for stocks and bonds is the Depository Trust and Clearinghouse.” Bastian, “Foreclosure Forms”, State. Bar of Texas 17th Annual Advanced Real Estate Drafting Course, March 9-10, 2007, Dallas, Texas. MERS is enormous. It originates thousands of loans daily and is the mortgagee of record for at least 40 million mortgages and other security documents. Id.

MERS acts as agent for the owner of the note. Its authority to act should be shown by an agency agreement. Of course, if the owner is unknown, MERS cannot show that it is an authorized agent of the owner.

RULES OF EVIDENCE – A PRACTICAL PROBLEM

This structure also possesses practical evidentiary problems where the party asserting a right to foreclose must be able to show a default. Once again, Judge Bufford has addressed this issue. At In re Vargas, 396 B.R. at 517-19. Judge Bufford made a finding that the witness called to testify as to debt and default was incompetent. All the witness could testify was that he had looked at the MERS computerized records. The witness was unable to satisfy the requirements of the Federal Rules of Evidence, particularly Rule 803, as applied to computerized records in the Ninth Circuit. See id. at 517-20. The low level employee could really only testify that the MERS screen shot he reviewed reflected a default. That really is not much in the way of evidence, and not nearly enough to get around the hearsay rule.

FORECLOSURE OR RELIEF FROM STAY

In a foreclosure proceeding in a judicial foreclosure state, or a request for injunctive relief in a non-judicial foreclosure state, or in a motion for relief proceeding in a bankruptcy court, the courts are dealing with and writing about the problems very frequently.

In many if not almost all cases, the party seeking to exercise the rights of the creditor will be a servicing company. Servicing companies will be asserting the rights of their alleged principal, the note holder, which is, again, often going to be a trustee for a securitization package. The mortgage holder or beneficiary under the deed of trust will, again, very often be MERS.

Even before reaching the practical problem of debt and default, mentioned above, the moving party must show that it holds the note or (1) that it is an agent of the holder and that (2) the holder remains the holder. In addition, the owner of the note, if different from the holder, must join in the motion.

Some states, like Texas, have passed statutes that allow servicing companies to act in foreclosure proceedings as a statutorily recognized agent of the noteholder. See, e.g., Tex. Prop. Code §51.0001. However, that statute refers to the servicer as the last entity to whom the debtor has been instructed to make payments. This status is certainly open to challenge. The statute certainly provides nothing more than prima facie evidence of the ability of the servicer to act. If challenged, the servicing agent must show that the last entity to communicate instructions to the debtor is still the holder of the note. See, e.g., HSBC Bank, N.A. v. Valentin, 2l N.Y. Misc. 3d 1123(A), 2008 WL 4764816 (Table) (N.Y. Sup.), Nov. 3, 2008. In addition, such a statute does not control in federal court where Fed. R. Civ. P. 17 and 19 (and Fed. R. Bankr. P. 7017 and 7019) apply.

SOME RECENT CASE LAW

These cases are arranged by state, for no particular reason.

Massachusetts, In re Schwartz, 366 B.R.265 (Bankr. D. Mass. 2007)
Schwartz concerns a Motion for Relief to pursue an eviction. Movant asserted that the property had been foreclosed upon prior to the date of the bankruptcy petition. The pro se debtor asserted that the Movant was required to show that it had authority to conduct the sale. Movant, and “the party which appears to be the current mortgagee…” provided documents for the court to review, but did not ask for an evidentiary hearing. Judge Rosenthal sifted through the documents and found that the Movant and the current mortgagee had failed to prove that the foreclosure was properly conducted.

Specifically, Judge Rosenthal found that there was no evidence of a proper assignment of the mortgage prior to foreclosure. However, at footnote 5, Id. at 268, the Court also finds that there is no evidence that the note itself was assigned and no evidence as to who the current holder might be.

Nosek v. Ameriquest Mortgage Company (In re Nosek), 286 Br. 374 (Bankr D Mass. 2008).
Almost a year to the day after Schwartz was signed, Judge Rosenthal issued a second opinion. This is an opinion on an order to show cause. Judge Rosenthal specifically found that, although the note and mortgage involved in the case had been transferred from the originator to another party within five days of closing, during the five years in which the chapter 13 proceeding was pending, the note and mortgage and associated claims had been prosecuted by Ameriquest which has represented itself to be the holder of the note and the mortgage. Not until September of 2007 did Ameriquest notify the Court that it was merely the servicer. In fact, only after the chapter 13 bankruptcy had been pending for about three years was there even an assignment of the servicing rights. Id. at 378.

Because these misrepresentations were not simple mistakes: as the Court has noted on more than one occasion, those parties who do not hold the note of mortgage do not service the mortgage do not have standing to pursue motions for leave or other actions arising form the mortgage obligation. Id at 380.

As a result, the Court sanctioned the local law firm that had been prosecuting the claim $25,000. It sanctioned a partner at that firm an additional $25,000. Then the Court sanctioned the national law firm involved $100,000 and ultimately sanctioned Wells Fargo $250,000. Id. at 382-386.

In re Hayes, 393 B.R. 259 (Bankr. D. Mass. 2008).
Like Judge Rosenthal, Judge Feeney has attacked the problem of standing and authority head on. She has also held that standing must be established before either a claim can be allowed or a motion for relief be granted.

Ohio

In re Foreclosure Cases, 521 F.Supp. 2d (S.D. Ohio 2007).
Perhaps the District Court’s orders in the foreclosure cases in Ohio have received the most press of any of these opinions. Relying almost exclusively on standing, the Judge Rose has determined that a foreclosing party must show standing. “[I]n a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time that the complaint was filed.” Id. at 653.

Judge Rose instructed the parties involved that the willful failure of the movants to comply with the general orders of the Court would in the future result in immediate dismissal of foreclosure actions.

Deutsche Bank Nat’l Trust Co. v. Steele, 2008 WL 111227 (S.D. Ohio) January 8, 2008.
In Steele, Judge Abel followed the lead of Judge Rose and found that Deutsche Bank had filed evidence in support of its motion for default judgment indicating that MERS was the mortgage holder. There was not sufficient evidence to support the claim that Deutsche Bank was the owner and holder of the note as of that date. Following In re Foreclosure Cases, 2007 WL 456586, the Court held that summary judgment would be denied “until such time as Deutsche Bank was able to offer evidence showing, by a preponderance of evidence, that it owned the note and mortgage when the complaint was filed.” 2008 WL 111227 at 2. Deutsche Bank was given twenty-one days to comply. Id.

Illinois

U.S. Bank, N.A. v. Cook, 2009 WL 35286 (N.D. Ill. January 6, 2009).
Not all federal district judges are as concerned with the issues surrounding the transfer of notes and mortgages. Cook is a very pro lender case and, in an order granting a motion for summary judgment, the Court found that Cook had shown no “countervailing evidence to create a genuine issue of facts.” Id. at 3. In fact, a review of the evidence submitted by U.S. Bank showed only that it was the alleged trustee of the securitization pool. U.S. Bank relied exclusively on the “pooling and serving agreement” to show that it was the holder of the note. Id.

Under UCC Article 3, the evidence presented in Cook was clearly insufficient.

New York

HSBC Bank USA, N.A. v. Valentin, 21 Misc. 3D 1124(A), 2008 WL 4764816 (Table) (N.Y. Sup.) November 3, 2008. In Valentin, the New York court found that, even though given an opportunity to, HSBC did not show the ownership of debt and mortgage. The complaint was dismissed with prejudice and the “notice of pendency” against the property was cancelled.

Note that the Valentin case does not involve some sort of ambush. The Court gave every HSBC every opportunity to cure the defects the Court perceived in the pleadings.

California

In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008)

and

In re Hwang, 396 B.R. 757 (Bankr. C.D. Cal. 2008)

These two opinions by Judge Bufford have been discussed above. Judge Bufford carefully explores the related issues of standing and ownership under both federal and California law.

Texas

In re Parsley, 384 B.R. 138 (Bankr. S.D. Tex. 2008)

and

In re Gilbreath, 395 B.R. 356 (Bankr. S.D. Tex. 2008)
These two recent opinions by Judge Jeff Bohm are not really on point, but illustrate another thread of cases running through the issues of motions for relief from stay in bankruptcy court and the sloppiness of loan servicing agencies. Both of these cases involve motions for relief that were not based upon fact but upon mistakes by servicing agencies. Both opinions deal with the issue of sanctions and, put simply, both cases illustrate that Judge Bohm (and perhaps other members of the bankruptcy bench in the Southern District of Texas) are going to be very strict about motions for relief in consumer cases.

SUMMARY

The cases cited illustrate enormous problems in the loan servicing industry. These problems arise in the context of securitization and illustrate the difficulty of determining the name of the holder, the assignee of the mortgage, and the parties with both the legal right under Article 3 and the standing under the Constitution to enforce notes, whether in state court or federal court.

Interestingly, with the exception of Judge Bufford and a few other judges, there has been less than adequate focus upon the UCC title issues. The next round of cases may and should focus upon the title to debt instrument. The person seeking to enforce the note must show that:

(1) It is the holder of this note original by transfer, with all necessary rounds;
(2) It had possession of the note before it was lost;
(3) If it can show that title to the note runs to it, but the original is lost or destroyed, the holder must be prepared to post a bond;
(4) If the person seeking to enforce is an agent, it must show its agency status and that its principal is the holder of the note (and meets the above requirements).

Then, and only then, do the issues of evidence of debt and default and assignment of mortgage rights become relevant.

Not to say I told you so, but....

2009-01-16T19:08:00.002-04:00

If anyone really believes the squaliformes are making some kind of massive effort to actually modify existing loans, Countrywide's response in a New Hampshire lawsuit should finally put an end to the mythology that ol' Bean has been hollering about. (Click on the title link, above to see MSNBC's coverage.)

Loan "modifications" aren't being done. Period. Additional agreements primarily designed to protect lenders are being foisted on desperate borrowers in a public-relations effort to protect a handful of key players and the Congresspeople and Senators who are desperately trying to avoid taking responsibility.

So let's see this for what it really is - squaliformes are getting billions from the funny-farm that is Washington who let the squaliformes get away with murder in the first place. And instead of doing the right thing and punishing those responsible, they're waiting for the squaliformes to act responsibly. And lying through their teeth about how much good they're doing. And asking for more. And trying to shift the blame elsewhere.

I'll be up at the Fort Worth Stock Show for a few days; the air there smells a lot less like BS than what's coming out of Washington. FYI - if you can, join us to watching the bull riding; a friend's son-in-law is in the competition.

Finally, the holidays are over

2009-01-10T23:36:00.002-04:00

With work and family schedules the months of November and December are almost impossible to conduct court business 'round these parts.

But obviously, that doesn't stop the scammers and squaliformes from working harder than ever, especially with all the doom and gloom hype from the media putting people in a panic.

The major networks and their kin need to take some responsibility for making this the greatest market ever for the promoters of scams - some of which are in the guise of stopping the squaliformes. In the mean time, the squaliformes are getting billions of tax dollars to keep their schemes in operation, supposedly to keep the economy afloat.

They are so powerful and so arrogant that they have pulled the strings of Congress to keep their seats at the gaming tables using OUR TAX DOLLARS and our children and grandchildren's financial futures.

As I have often said, their power is unchecked, and this maneuvering is simply another demonstration of the power they hold over Washington.

And while Washington dances to the tune of Wall Street, less and less attention will be paid to not only the known squaliformes in the financial services industry but the people who keep promoting utterly bogus quick-fixes for the victims of the lenders.

And the lenders are touting their own "self-preservation" loan modifications - more on that shortly, other than to say DON'T SIGN SOMETHING THAT TAKES AWAY YOUR LEGAL RIGHTS! They are using the loan mod programs to shield themselves from being held responsible for illegal acts against consumers.

And there's more to come on this utterly bogus maneuver to make bankruptcy the appropriate place to force lenders and servicers to modify loans - it's yet another way to cover their collective *sses.

In short, 2009 is going to be even worse for the typical, uninformed consumer and borrower, but court will be back in session soon.

The Honorable Judge Roy Bean

Barney and Company Should Be More Cautious

2008-10-31T15:43:00.004-04:00

The recent trend in squaliforme political influence buying might reverse if Barney and Company bite the hands that have been feeding them. From data compiled by the Center for Responsive Politics, the picture is pretty telling - Da Boss knows where to spend money.

Source:

They're Outraged!

2008-10-27T15:44:00.005-04:00

Well it did get out - and Chairman Frank is "outraged" at Da Boss.

So outraged that he and several other members of the committee are going to hold hearings.

Oh great. More hearings. Every time we have more hearings we get what?

More Hearings.

Like the one before the Fannie Mae and Freddie Mac melt down. (Click the YouTube video at left to see what good hearings do.)

Hope Now Meets Da Boss

2008-10-24T15:08:00.005-04:00

Buried toward the back of the New York Times is an article that some people in Washington and especially some from Wall Street are going to find a bit uncomfortable.

It deals with a warning from some hedge funds who are prepared to take action against servicers that are participating in renegotiating loans without their permission.

William Frey of Greenwich Financial is quoted: “Any investor in mortgage-backed securities has the right to insist that their contract be enforced.”

Frey reportedly said he was aware of two other funds in addition to his and Braddock Financial that sent similar letters to lenders.

David Myers of Braddock Financial trotted out the industry-standard warning about how credit would dry up, saying "...if mortgage servicing firms did not strictly follow those contracts, it would delay the recovery of the credit market because investors would be less willing to buy securities in the future."

And as this kind of thing continues to leak out, maybe someone will wake up and see that Hope Now is mostly window dressing intended to get troubled borrowers to contact their servicer and jump on the fast train to foreclosure.

The Honorable Judge Roy Bean

For cryin' out loud, where's the damn remote?

2008-10-10T09:58:00.000-04:00

I know it's 'round here somewhere....it's a big one....huge, actually. It's the only one that has a "NEWS" button. Without it, I can't block the nitwit voyeurs and their panicky messages about the stock market and the talking-heads who are fascinated with voter polls.

It also has a "POL" button that turns off all political advertising. The only problem with that function is nothing appears on the screen for about thirty minutes every hour.

If I have both of them set most of what I see are ads for TV programs.

But I really, really need to find it. Soon.

The Honorable Judge Roy Bean

What really needs to happen in Washington

2008-09-30T16:30:00.000-04:00

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

The Empire Starts Up?

2008-09-21T11:55:00.000-04:00

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

Another data mining victim class action suit

2008-09-17T09:36:00.001-04:00

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):

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
SANDRA JEAN CORTEZ on behalf of herself and all others similarly situated
Plaintiff,
vs.

ACCUITY, FORMERLY, THOMSON FINANCIAL PUBLISHING
AND SOURCEMEDIA, INC.
Defendants

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
LARRY P. SMITH & ASSOCIATES, LTD.
LARRY P. SMITH
120 W. Madison
10th Floor
Chicago IL 60602
(312) 222-9028

FRANCIS & MAILMAN, P.C.
JAMES A. FRANCIS
JOHN SOUMILAS
Land Title Building, 19th Floor
100 South Broad Street
Philadelphia, PA 19110
(215) 735-8600

DONOVAN SEARLES, LLC
DAVID A. SEARLES
1845 Walnut Street, Suite 1100
Philadelphia, PA 19103
(215) 732-6067

AmeriDebt and DebtWorks case being resolved – sort of

2008-09-11T17:48:00.000-04:00

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

When your debit card becomes a credit card

2008-09-08T13:49:00.000-04:00

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

What goes ‘round comes ‘round

2008-08-20T13:34:00.000-04:00

When a uber-squaliforme like C-BASS/Litton Loan is allegedly being scammed using some of the exact same kinds of maneuvers it perpetrates against borrowers, this Judge has to grit my teeth and bite my tongue – sort of.

In what has been going on for many months in the Texas Federal District Court (Southern), a read of some of the pleadings and claims reveals what’s now left of C-BASS (something called “Pledged Properties II”) doesn’t see the irony of having someone do to them what they had Litton do to borrowers all these years.

It’s far too complex to explain the intricacies of property and transfer tax liens here, but suffice it to say, what’s left of C-BASS was making RICO claims against a number of parties that allegedly obtained a foreclosed property with some fast legal(?) footwork that seems to have some of the footprints of how Litton operates against borrowers.

The story starts with a condo owner’s association foreclosure sale in July of 2007 and it degenerates into thousands of pages of legal wrangling over who did or didn’t do what and when. I hope I’m not the only one who see’s the irony in some of these pleadings by counsel for C-BASS:

“In addition, neither Plaintiffs, nor Plaintiffs’ counsel could obtain the payoff information on the transferee tax lien held by (Defendant “D”).”

“By preventing Plaintiffs from obtaining the payoff amount and paying off the transferee tax lien, (Defendant “D”) was able to foreclose the Real Property as a result of the (Defendant “T”)’s “failure” to pay the attorney’s fees and costs within five (5) days. At the foreclosure sale, (Defendant “D”) received $106,500.00 from (Defendant “I”), which equates to a net profit of $94,131.05 from (Defendant “D”)’s wrongful foreclosure.

“Additionally, once (Defendant “D”) sold the Real Property at the [tax lien] foreclosure sale, Plaintiffs’ only hope to redeem the Real Property from (Defendant “I”) was to pay (Defendant “I”) 125 percent of the purchase price or $133,160.00 within 180 days of (Defendant “I”)’s deed being recorded in the Real Property Records of Harris County. See Tex. Tax. Code Ann. § 32.06(k), (k-1). Here, (Defendant “I”) would make a net profit of $26,632.00 by and through the wrongful foreclosure, and Plaintiffs are out $133,160.00 as a result of the entire scheme. Unfortunately, Plaintiffs’ last day to redeem the Real Property has passed during the course of this litigation.”

It’s going to get interesting if and when there is a ruling on this one. If the defendants are anywhere near as clever as C-BASS’ counsel alleges, this won’t be the only case like it, in fact, they infer among the pleadings that the practice is being used against other mortgage holders.

The Honorable Judge Roy Bean

More trouble from insider selling of data – Countrywide

2008-08-19T16:41:00.000-04:00

One of Countrywide’s senior financial analysts was arrested last month for selling the private information of 2 million Countrywide customers and applicants. Rene Rebollo, Jr., stole the data in 20,000 name increments, pocketing what investigators say is over $70,000 for the data.

One of Rebollo’s customers was paid $4,000 to get 38,000 names from Rebollo, but the ultimate buyer turned out to be an FBI plant that was put on the trail after Countrywide discovered the scheme.

The worst part of this recent breach is that it included not just social security numbers but loan application information, including credit report data. Most of the data was being sold to people in the mortgage industry to use as leads for new loans.

A class-action suit has been filed in the Central District of California (Federal Court) by Finkelstein Thompson, LLP's San Fransisco office on behalf of Edmond and Michelle C. Moses (lead plaintiffs).

As ol' Bean always says, anything you want to know can be bought somewhere.

Blaming the Passengers

2008-07-28T14:36:00.000-04:00

I’m starting to get more than just a little annoyed at the holier-than-thou crowd and Monday morning quarterbacks in the "news" media who are buying the industry-driven mantra that the problems in the debt markets and the economic fallout are because of mortgage lending to people who shouldn’t have gotten loans.

Trust me – it’s their PR machine at work, diligently trying to shape public opinion and point the finger at the consumers as opposed to the perpetrators. The stakes are high - as in trillions, so you can’t expect the folks who actually run Washington to shy away from getting the media to help them in pointing fingers at easy targets.

And it’s starting to work. Alleged “news” pieces are starting to appear in places other than chatrooms, forums and blogs, citing complaints from people about a bailout – as if the bailout was for the real victims. And lo and behold, “experts” are being drawn on to get the word out in the mainstream news.

But the reality is, any bailout is for the industry and the investors – NOT the borrowers. Most individual borrowers have one home to lose. The industry is facing trillions of dollars of rapidly vaporizing wealth they created for themselves and are reluctant to see stop coming their way.

Tossing ordinary people who have been taken advantage of under the bus is sickening. The industry’s well-crafted defense is taking hold in the media – people are supposedly to blame for taking out loans they didn’t qualify for and then not being able to pay for them.

But those who are hopping on the blame-game bandwagon won’t admit that the majority of people who were taken advantage of were led into adjustable rate mortgages for one reason and one reason only: There was yet another loan in the making; either the borrower would have to refi before the ratchet up or it would explode and be foreclosed on and yet another loan would be created for that property. To keep that machine churning required monumental fraud.

Spare me the “they’re just irresponsible” paintbrush. Yes, some borrowers are. But given who the squaliformes targeted and lured into the sausage machine it is nothing more than financial bigotry to simply say “they shouldn’t have signed that.” Guess what, in a lot of cases they didn’t even sign anything that was legally viable. But that didn’t stop servicers from turning the crank on the manufactured default/rapid foreclosure process, without which the machine would have clogged up and ground to a halt.

And worse, the majority of Americans who didn’t need to worry about fighting the credit scoring debacle sat back and enjoyed artificially low interest rates while the sub-prime victims (many of which should never have been there) drove profits into the stratosphere for the squaliformes and made millionaires among the legalized gamblers on Wall Street.

So give the whining about allegedly irresponsible subprime borrowers a rest - you’re blaming the passengers on the train for the sleeping engineer and the resulting crash.

The Honorable Judge Roy Bean

Jerry Brown is "Shocked!" Yea, Right.

2008-07-25T15:53:00.001-04:00

Is it their political position and isolation from the real world that causes Attorney’s General to make sudden discoveries of old news? Or are we just supposed to assume they are running a few years behind the rest of us when it comes to the Squaliformes operating, or even based, in their state?

After filing suit against Countrywide in June, California’s Attorney General Jerry Brown put on a new song and dance about Bank of America’s newly-owned company just last week – he was “shocked.”

Shocked? Yes: "These shocking new details provide further evidence of Countrywide's dangerous lending practices,” Brown said. He was so “shocked” that he added twenty new charges to the suit.

But what he didn't mention was his sister's position on the CW board.

Shocking!

In 2001, while Mayor of Oakland, referring to the “Don’t Borrow Trouble” educational program Brown said: “Predatory lending is a reprehensible practice. This educational campaign will equip Oaklanders to make better financial decisions.”

Guess what, Jerry - that was PR fluff that you and a bunch of politicians got roped into.

Back in March of 2007, Gareth Lacy, Brown’s spokesman, said the attorney general has an “active and open investigation” that’s a continuation of probes into predatory lending practices that began a couple of years ago – as in 2005. And now, here we are in 2008 and Jerry Brown is “shocked.”

Yea, right. On this side of the Pecos, we'd wire up the ol' 'lectric fence and wrap this allegedly shocked nimrod in it to let 'im find out what a real jolt is.

The Honorable Judge Roy Bean

The Obama/Prtizker PR Machine Fires Back (with Blanks)

2008-07-22T09:33:00.000-04:00

The PR machines and political supporters are busy, scrounging the net and blogs for anything that might be detrimental to a political candidate or a powerful Squaliforme.

Take the first published comment to the previous post. Then take the blog the author points to for what it's worth - they're firing blanks.

Let’s dissect this flimsy public-relations exercise:

Claim 1: “Penny Pritzker had no ownership in Superior. She did not profit or receive compensation, except minimal directors' fees. She and her extended family lost a great deal of money from this investment.”

OK, let’s see just how that works – “[she] and her extended family lost a great deal of money from this investment,” yet Penny Pritzker allegedly had “no ownership in Superior"??? Unfortunately, the author of this fluff piece misses the dichotomy, especially when claim 2 is made:

“She and her extended family agreed to pay the largest amount in the history of U.S. banking to the federal government: $460 million although they owned just 50% of the bank.”

You can’t have it both ways – the Pritzkers either did or didn’t own 50% of the bank and Penny is, after all, part of that “extended family” that “lost a great deal of money from this investment.” If we are supposed to be concerned that they, as half owner, paid while the other half didn't, that was their decision, which brings me to,

Claim 2: “They made the agreement because "it was the right thing to do."

Wrong again – they made the agreement so they would not have to spend years in court and expose themselves and the bank’s management to civil and potentially criminal liability. It wasn't quite the 'get out of jail free' card they expected; it would have been a nearly $40 Million dollar windfall if their and the FDIC's legal strategy against Ernst & Young had worked out the way they had planned.

“Because of these payments, uninsured depositors are expected to receive 80% of their uninsured funds.”

And we are to conclude what from that? Eventually those uninsured depositors are expected to “only” lose 20% of their deposited funds.

And let’s take another look at claim 3: “When Penny Pritzker was chairman of the Superior Bank board of directors, Superior received high ratings from the Office of Thrift Supervision.”

Wow. That’s a relief. The people asleep at the switch were consistently asleep at the switch.

“Her primary focus as chair was to ensure that poor performing commercial loans Superior inherited from its predecessor, Lyons Savings & Loan, were cleaned up."

My “so what” light is blinking, and if anyone believes a Chairman's focus was that narrow I have some ocean-front property over here on this side of the Pecos I'd like you make an offer on before you get to see it. And they didn't 'inherit' poor performing loans - they BOUGHT Lyons and those poor performing loans with their eyes wide open.

"When this was completed in 1994, she left the bank board but did continue as a member of the board of directors of the bank holding company.”

The "so what" light is still blinking. If anyone believes there isn't any control exercised by a holding company over the executives of the companies it owns, I have another one of those ocean-front properties available. Holding company ownership has protections AND privileges, including picking up the phone and holding people you know on a first-name basis accountable for things.

“Superior Bank was required to comply with applicable federal and state fair lending laws and practices. This was the bank's policy."

Ah, yes, the PR mantra of the squaliforme - "we're so regulated we couldn't do anything wrong."

"In addition, the bank's operating philosophy insofar as directors were aware was to follow ethical business practices. Loans and loan policies were overseen by the bank's management, officers, and employees.”

(Emphasis added 1): The magic "I didn't know" defense. I wonder which member of the legal team came up with that one!

(Emphasis added 2): In other words – "we’re not responsible for the people in the company we owned." What part of Board of Directors and holding company oversight responsibilities do you believe they should get a pass on?

“Board members of the holding company, Coast to Coast, were responsible to shareholders; Superior board members and officers were responsible for the bank.”

Now my BS detector is on full. This is one of the stupidest ploys I've seen in corporate PR dances in a long time. Let's see, the holding company owners were responsible to whom? Uh, just themselves. Sure. That makes more sense. And the people they as owners put on the Superior board were responsible for the bank. The owners were more than happy to risk hundreds of millions of dollars and not bother to keep an eye on what was going on. They trusted the Superior board and the officers - they must have; they bailed them out and protected them from further investigation and prosecution via the settlement. Now comes the PR slam, that it was the Superior board members and the bank officers that were responsible. Not the owners.

“Losses related to Superior subprime (whether through foreclosures or to bond investors through securitizations) were minimal compared with losses of other subprime lenders after 2001.”

Allow me to translate: "Someone else got caught and lost more than we did so we're not to blame. Besides, we didn't do anything wrong anyway, remember?"

“Unlawful lending has been widely investigated; no regulatory body has alleged Superior violated fair lending practices.”

That's clever - 'no regulatory body has...' that we know of, of course because of the terms of the settlement which bar any such investigation. But at least one court has. Check out the New York Supreme Court summary judgment ruling in favor of a borrower, noting that LaSalle had engaged in predatory lending. (LaSalle Bank N.A. v. Shearon Case (No.100255/2007, 2008 WL 268449).

Unlawful lending was not widely investigated in the Superior meltdown. It was hardly being investigated at all at that time. It was widely complained of, particularly in inner-city and minority communities but not much was actually being done. It was simply one tip of one iceberg the regulators were refusing to do anything about as the subprime heyday was ramping up and the money flowed into Washington.

“In 2004, Penny Pritzker was named as a director of LaSalle Bank Corporation and federal regulators did not object to her serving on the board of a national bank.”

Wow. Penny got on board with another major Squaliforme (not long before it was purchased by BofA) and the lap-dog regulators didn’t object. We should all be more impressed, eh?

Granted, the authors of the alleged 'facts' about Superior Bank blog are simply doing their job on behalf of the Obama campaign, but until the people who want to be elected to office rid themselves of the wealthy sub-prime squaliforme friends and supporters, they deserve nothing but scorn and even more exposure.

As the title of my previous post says, "....More Need to Go."

The Honorable Judge Roy Bean

One Down, More Need to Go

2008-07-21T09:59:00.000-04:00

Well Squaliforme champion Phil Gramm's mouth finally did him in, which should improve McCain's chances of being elected this fall. In a typical 'let them eat cake' moment, the Godfather of predatory lending and bank deregulation spoke a partial truth - but it wasn't well crafted enough and revealed the mind-set that permeates the Washington lobby culture. Gramm will have to go back and suffer in his role at UBS.

Now the Obama campaign needs to step up to the plate and dump Penny Pritzker - legendary former owner of the sup-prime predatory lending squaliforme Superior Bank. Pritzker and Dworman (the owners) are still handing out multi-million dollar payments every year to the FDIC (part of the deal where no one had to admit any wrongdoing at Superior).

But the settlement was a pretty good gamble for the Pritzkers. The FDIC went after the auditors, Ernst & Young for compensatory damages in excess of $500 million and $1.5 billion in punitive damages. If the FDIC had gotten two billion dollars, Pritzker and Dworman would have been entitled to almost $500 million under their settlement agreement with the FDIC - without having to spend anything in chasing Ernst in court.

But their strategy fell apart when the courts decided the FDIC (as receiver) and Ernst were bound to settle their issue in arbitration. Instead of $500 Million, Pritzker and Dworman wound up getting only $30 Million back.

$460 Million sounds like a lot of money. But it was $100 Million there in 2001 and the rest of over 14 years, or roughly $25.7 Million per year - minus the $30 Million from Ernst. I won't bore you with the time-value-of-money view but you can bet they did.

But the FDIC paid out roughly $700 Million in the fiasco. And over a thousand depositors in the bank had amounts of more than the $100,000 threshold that weren't covered, so they're out of luck to the tune of $40 Million - their suit against the owners and managers was dismissed in 2004.

So if you feel sorry for the Pritzkers and Dwormans having to pay $25+ Million per year for a few years, imagine how quickly you'd be be behind bars if you ran a company that did what Superior Bank did.

Until regulators and prosecutors show some backbone in the all-too-cozy game of not having to admit wrongdoing, none of this kind of abuse is going to stop.

The Honorable Judge Roy Bean

A Letter to Washington

2008-07-13T17:50:00.000-04:00

Dear Congressman/Senator ________________:

I see in news reports that there is great consternation on the hill over the financial industry.

Sorry, but you’re more than a decade late. You had your chance. You’ve been told over and over again that the house of cards was just that. You were content to ignore and even take advantage of the situation.

The people you turned into multi-millionaires were more than happy to help keep you in office all these years while the rest of us have been taken advantage of. Ordinary people funded the whole sordid mess with usurious interest rates and shockingly egregious fees and charges that created jobs and incomes for millions of ancillary company employees. The mutation sucked billions of dollars from people who thought they were supposed to own a home and did little more than lure them into paying more in interest than any other part of their budget.

Others have now lost whatever equity they may have had.

Now when the perpetrators of this scheme are whining you want our tax dollars to bail out the crooks you helped put in business? The chutzpah is staggeringly blatant.

It isn’t and never really was about the “American dream of home ownership.” It was the largest debt-creation and wealth-transfer scheme in the history of the world, and it naturally attracted those who knew how to take even further advantage and used their influence to keep the game going.

Now your creation has been exposed for what it really is and everyone who has anything to do with it is going to be running for cover and pointing fingers. That is if they’re still in the country.

And when the smoke clears and everybody who was on the inside breathes a sigh of relief that the Justice Department decided yet again to look the other way for 99.999% of the perpetrators, the lobbyists will take their checks and their marching orders and will go forth. The game will begin yet again.

Unless we all wake up and toss your sorry asses into the dustbin of political history.

The Honorable Judge Roy Bean

The way it is...

2008-07-09T18:28:00.001-04:00

If you want to see the true nature of the Squaliformes, here’s another smoking gun:

From SEC investigations into the rating agencies, an email has surfaced that pretty much sums up the whole sordid sub-prime origination, securitization, rating and servicing mess - an email from an employee found in an agency's CDO group quoted his manager as saying that the rating agencies continue to create an "even bigger monster — the CDO market. Let's hope we are all wealthy and retired by the time this house of cards falters."

The Honorable Judge Roy Bean

Dorean Group Guru About to Be Smacked with More Criminal Charges

2008-06-19T16:13:00.000-04:00

Kurt Johnson's loopy tirade against anyone and everyone involved (or not!) in his prosecution took on a really stupid approach by filing bogus UCC documents back in July of 2007, including a "UCC Financing Statement" that described a huge list of individuals as "debtors." From the most recent case (08-02325), the US Attorney's office wants to start by getting an injunction to stop at least some of Johnson's nonsense filings, for example - from the complaint:

14. The UCC Financing Statement purports to encumber “assets, land, consumer goods, farm products, inventory, equipment, money, investment property, commercial tort claims, letters of credit, letter-of-credit rights, insurance policies, bonds, chattel paper, instruments, equities, deposit accounts, accounts, documents, security interest, licenses, privileges, beneficial interest, retirement accounts, and general intangibles, and all Debtor’s rights in all such foregoing property, under strict foreclosure rights to the creditor though currently held in Debtor’s possession, at
$10,000,000.00 per actor/debtor and $50,000,000.00 per account to the current indebtedness of $1,230,000,000.00.”

15. Upon information and belief, the UCC Financing Statement was sent to the California Secretary of State through the U.S. Mail.

There was another similar one, but if we skip further down in the complaint, the relevant part is:

23. The UCC Financing Statement and the UCC Financing Statement Amendments were filed by defendant Johnson in an effort to establish invalid liens against employees of the United States and to wrongly and maliciously compel the payment of money by these employees.

24. In order to file a UCC Financing Statement, a debt must be owed to the filer and the debtor must authorize the filing of the UCC Financing Statement. See Cal. Com. Code §§ 9502(a), 9509(a)(1).

And he's apparently not done:

28. The UCC Financing Statement and the Financing Statement Amendment pose an immediate and irreparable injury upon the United States of America by impeding, obstructing and impairing the execution of the official duties of its employees or officers.

29. Upon information and belief, unless enjoined, Defendant will continue to file and record false and fraudulent liens and other documents against employees of the United States. For example, the Bureau of Prisons recently intercepted an additional UCC Financing Statement Amendment prepared by Defendant, which lists additional purported debtors, which was contained in an envelope addressed to the Clerk of the United States District Court for the Northern District of California.

And now, drum roll please....

32. Defendant’s conduct, as described herein, constitutes violations of 18 U.S.C. § 1341 (mail fraud) in that he has formed a scheme or artifice to defraud the United States employees identified above and the public by making material misrepresentations, including but not limited to misrepresentations that the employees are indebted to Defendant, have granted Defendant a lien in their property, and have authorized the filing of a UCC Financing Statement. Defendant has used the U.S. mails and commercial interstate carriers to further his fraudulent scheme. Defendant has used the mails in furtherance of his fraudulent scheme with the specific intent to deceive or defraud.

Johnson got an extension of time to reply and that should be as laughable as the other filings he's cobbled together, but all in all it indicates there will probably be more mail fraud indictments soon, and the best part is the case got attached so Alsup will be hearing it!

Yep, Johnson's got 'em right where he wants 'em - again.

The Honorable Judge Roy Bean

Could not resist...

2008-06-16T11:21:00.000-04:00

Note from the Clerk of the Court:
His Honor is still vacationing but issued an order requiring the posting of this image.

Wells Fargo Caught Pulling Fairbanks Trick

2008-04-21T13:42:00.000-04:00

For those who’ve been ‘round the predatory mortgage servicing bay very long, we recall the infamous “BPO” (Broker’s Price Opinion) became more than just an expense to be passed on to Fairbanks’ victims. In fact, not only was it marked up, many of them came from a Fairbanks subsidiary of another name – Residential Real Estate Review and were then marked up by Fairbanks as if they had actually paid someone for it.

Those fraudulent practices must have garnered the attention of giant squaliforme Wells Fargo, because a class-action suit was filed last week in the Louisiana Federal Court for fraudulently created charges for BPO’s (among a few other typically predatory things like mishandling payments).

Given this squaliformes’ size, if a class is certified for trial, one can only guess how many current and former borrowers could see some form of restitution when the settlement is reached.

For those not familiar with how mortgage servicing squaliformes play the fee-stacking game, consider a typical example of how this works and why it works:

BPO’s are authorized in almost all loan documents and can be charged in a situation where the loan is in default, typically when the loan is 30 days late. A payment received past the “grace period” might wind up in suspense while the notice is sent to the borrower, or the servicer may even send the payment back.

In any event, when and if the loan gets to the 30 day late term, it is typically in default and an order to get a BPO is almost automatically generated and a fee charged to the borrower.

Legally speaking, and this can’t be considered legal advice, the servicer can’t mark-up the fees it pays to a third party and thus profit from them, but in practice, they have two ways to get around these laws. First, they can pay the bill as invoiced by the service provider and then for all the business they generate for that provider, they get a kickback, or, as in the Fairbanks and Wells cases, they own the service provider and don’t disclose the fact that they aren’t paying anything on a cash-out per-service-act basis.

This one could be hard for Wells to defend on a fact basis; a Bankruptcy Court Judge has already ruled that Well’s has been charging bogus, inflated fees “disguised as third party costs” in bankruptcy filings, including the rather damning comment that their “management practices are questionable.”

How far back this could reach is going to be something only the court or the settlement can determine; were the case presented here, every penny they ever charged for a BPO would be distributed to the class as should the $1,000 per RESPA violation plus the attorney’s fees.

Then we’d get a rope.

The Honorable Judge Roy Bean

Ohio is Doomed

2008-04-08T11:18:00.002-04:00

Y'all up north sure have some odd ducks in charge of stuff.

Ohio’s “Compact to Help Ohioans Preserve Homeownership” is being promoted as a first of it’s kind in the US by none other than Governor Ted Strickland; it is indeed a first of it’s kind but the guv is seriously confused about this bit of public-relations fluff.

In the first place, while admitting it’s not legally enforceable, they like to call it “a cooperative step.” Strickland defended any lack of legal standing by claiming: "These companies are putting their honor and prestige on the line."

Newsflash, guv – they didn’t put anything on the line. You can't put up what you don't have. Whoever wrote that for you may actually believe those companies are honorable and have any prestige. That either gullible or ignorant staffer needs to find another occupation – one that doesn’t put his or her leader in a position of playing the fool in press conferences.

The servicers (among them some of the most-predatory companies in the industry and notably without uber-squaliforme EMC Mortgage) crossed their fingers and signed up to “work with the state in making every possible attempt to prevent default loans and foreclosures in Ohio.”

Wink-wink, nod-nod and (drum-roll please) here’s what they will supposedly do:

1. Engage in a substantial and large-scale loan modification effort for adjustable-rate mortgage resets and subprime mortgages.

2. Identify, evaluate and make good-faith attempts to contact at-risk or defaulting borrowers as soon as possible.

3. Modify loans to the extent permissible within fiduciary, contractual or other legal obligations and in accordance with prudent mortgage lending and servicing practices.

4. Create incentives for staff and foreclosure counsel to modify loans rather than foreclose.

5. Report progress to the Ohio Department of Commerce.

6. Enter into a nonbinding agreement with the state for a defined period of time. The agreements extend to June 30, 2009.

Well, let ol’ Judge Bean take a look at those one by one:

Number one is nothing more than meaningless blah-blah-blah-blah.
Question: "What the hell is “a substantial and large-scale loan modification effort?”
Answer: Anything the servicer says it is.

Number two is something they’re supposedly already doing – the hiccup is that pesky thing known as “good faith.” They indeed may make a good-faith effort to contact the at-risk borrower, but many at-risk borrowers know who they're dealing with and may not want to jump into the water with the squaliforme while they're bleeding from fresh injuries. And of course, if they do make contact, whether the servicer will then act in "good-faith" in trying to prevent a foreclosure is supposedly but inadequately addressed in number three.

Three is where the alleged agreement becomes a complete nullity. That little phrase “in accordance with prudent mortgage lending and servicing practices,” is the problem; the companies are the sole determinants of what those practices are or should be, and prudence dictates staying in business and maximizing returns for the ownership of the company, which among the predatory and opportunistic servicers means defaults and expeditious foreclosures when they alone, deem them appropriate.

Four is interesting because someone is letting it slip that the previous incentives weren’t geared toward what the servicers have been claiming they have been doing all along – trying to maintain borrowers in their homes.

Five is another one of those meaningless statements because there isn’t even an attempt to determine what “progress” is; but whatever they say it is will have to be reported.

"Dear Ohio Department of Commerce:

Progress is good.

Regards,

Servicer."

And the non-binding agreement has an oxymoronic term limitation of a little over a year.

Finally, consider the clause that Litton Loan 's agreement has:

"... is not intended to convey, and does not convey, any beneficiary rights to any person, entity, government or regulatory authority, including, without limitation, borrowers, lenders, investors, counselors or advocacy groups."

If this isn’t just a late April Fool’s blunder, Ohioans should be concerned that their Governor is either a simpleton when it comes to making agreements on behalf of the citizenry or he is a simpleton when it comes to selecting staff members to make agreements on behalf of the citizenry.

The Honorable Judge Roy Bean

The Washington Post Wakes Up - Maybe

2008-04-02T21:23:00.000-04:00

How long this will remain up and available is subject to speculation, but in order to preserve the Post's rather remarkable exploration of "Big Brother" already at work, consider this old news presented as something new:

Centers Tap Into Personal Databases
State Groups Were Formed After 9/11

By Robert O'Harrow Jr.
Washington Post Staff Writer
Wednesday, April 2, 2008

Intelligence centers run by states across the country have access to personal information about millions of Americans, including unlisted cellphone numbers, insurance claims, driver's license photographs and credit reports, according to a document obtained by The Washington Post.

One center also has access to top-secret data systems at the CIA, the document shows, though it's not clear what information those systems contain.

Dozens of the organizations known as fusion centers were created after the Sept. 11, 2001, terrorist attacks to identify potential threats and improve the way information is shared. The centers use law enforcement analysts and sophisticated computer systems to compile, or fuse, disparate tips and clues and pass along the refined information to other agencies. They are expected to play important roles in national information-sharing networks that link local, state and federal authorities and enable them to automatically sift their storehouses of records for patterns and clues.

Though officials have publicly discussed the fusion centers' importance to national security, they have generally declined to elaborate on the centers' activities. But a document that lists resources used by the fusion centers shows how a dozen of the organizations in the northeastern United States rely far more on access to commercial and government databases than had previously been disclosed.

Those details have come to light at a time of debate about domestic intelligence efforts, including eavesdropping and data-aggregation programs at the National Security Agency, and whether the government has enough protections in place to prevent abuses.

The list of information resources was part of a survey conducted last year, officials familiar with the effort said. It shows that, like most police agencies, the fusion centers have subscriptions to private information-broker services that keep records about Americans' locations, financial holdings, associates, relatives, firearms licenses and the like.

Centers serving New York and other states also tap into a Federal Trade Commission database with information about hundreds of thousands of identity-theft reports, the document and police interviews show.

Pennsylvania buys credit reports and uses face-recognition software to examine driver's license photos, while analysts in Rhode Island have access to car-rental databases. In Maryland, authorities rely on a little-known data broker called Entersect, which claims it maintains 12 billion records about 98 percent of Americans.

In its online promotional material, Entersect calls itself "the silent partner to municipal, county, state, and federal justice agencies who access our databases every day to locate subjects, develop background information, secure information from a cellular or unlisted number, and much more."

Police officials said fusion center analysts are trained to use the information responsibly, legally and only on authorized criminal and counterterrorism cases. They stressed the importance of secret and public data in rooting out obscure threats.

"There is never ever enough information when it comes to terrorism" said Maj. Steven G. O'Donnell, deputy superintendent of the Rhode Island State Police. "That's what post-9/11 is about."

Government watchdogs, along with some police and intelligence officials, said they worry that the fusion centers do not have enough oversight and are not open enough with the public, in part because they operate under various state rules.

"Fusion centers have grown, really, off the radar screen of public accountability," said Jim Dempsey, vice president for public policy at the Center for Democracy and Technology, a nonpartisan watchdog group in the District. "Congress and the state legislatures need to get a handle over what is going on at all these fusion centers."

Fusion centers were formed in the wake of revelations that counterterrorism and law enforcement authorities missed or neglected evidence that the Sept. 11 attackers were in the United States while preparing to strike.

Because they are organized by the states, the centers have developed in different ways. Some are small operations focused on crime, while others are full-fledged criminal and counterterrorism operations. From 2004 to 2007, state and local governments received $254 million from the Department of Homeland Security in support of the centers, which are also supported by employees of the FBI and other federal law enforcement agencies. In some cases, they work with the U.S. Northern Command, the Pentagon operation involved in homeland security.

The centers have been criticized for being secretive, but authorities said that this is largely for security reasons. Activists want to know more about their activities, the kinds of information they collect and how the information is being used.

The Electronic Privacy Information Center filed a lawsuit in Virginia last month seeking the release of records about communication among state fusion center officials and the departments of Homeland Security and Justice. Marc Rotenberg, the privacy center's executive director, said his group was responding to a proposed state law that would sharply limit access to records about the fusion centers' activity.

Sue Reingold, deputy program manager in the Information Sharing Environment office, a federal operation with a mandate to improve information sharing, said state and local officials "must have access to a broad array of classified and unclassified information" to perform their mission. But Reingold said that an "important part of this is appropriate training and oversight that is well understood and transparent to the public."

"Fusion centers are vital to state and local efforts to fight crime, including terrorism," she said.

The list includes a wide variety of data resources along with software that finds patterns and displays links among people.

Most of the centers have subscriptions to Accurint, ChoicePoint's Autotrack or LexisNexis. These information brokers are Web-based services that deliver instant access to billions of records on individuals' homes, cars, phone numbers and other information.

Some of the centers link to records of currency transactions and almost 5 million suspicious-activity reports filed by financial institutions with the Treasury Department's Financial Crimes Enforcement Network.

Massachusetts and other states rely on LocatePlus, an information broker that claims that it provides "the most comprehensive cell phone, unlisted and unpublished phone database in the industry." The state also taps a private system called ClaimSearch that includes a "nationwide database that provides information on insurance claims, including vehicles, casualty claims and property claims," the document said.

The center in Ohio has access, through authorized users, to an FBI "secret level repository," the document said.

Rhode Island reported that it has access, also through the FBI, to "Top Secret resources" such as "Proton, which allows queries of CIA databases," the document shows. Officials at the Rhode Island State Police, FBI and CIA declined to discuss the system and the kinds of information it contains.

In addition to databases run by Entersect, Maryland fusion center analysts have access to wage and property records, corporate charters, utility records and a host of government files, including criminal justice information and traffic tickets. Jason Luckenbaugh, the center's chief of staff, acknowledged concern about the government's ability to tap into new sources of information. But he said the databases enable analysts to fight crime and protect against terrorism, and help local authorities do the same. "We're not trying to threaten them in any way," he said.

Once again, we can say goodbye personal privacy. This tip-of-the-iceberg realization by the Post is far too little too late to stem the tide.

The Honorable Judge Roy Bean

News Flash!

2008-04-01T11:37:00.001-04:00

JRB Newswire
4.1.2008
Washington, D.C.

In response to the deepening problems of the investment banking industry, the nation’s top economic thinkers issued a formal set of proposed “Economic Recovery, Realignment and Operating Rule Standards,” promulgated by the President’s recent series of “International Debt, Interest and Optimized Trade Summits.”

Secretary Paulsen, who sent key staff members to the hastily-gathered meetings of major investment bank leaders and market experts, was quick to praise the results, saying, “The ERRORS will send a message to the financial community around the world that this country is stronger than the press would have everyone believe.”

He added that there will be another series of IDIOTS “…sometime in January of 2009.”

Animal Rights (and Wrongs) on Wall Street

2008-03-17T14:08:00.001-04:00

What is admiration worth?

No less than Forbes magazine used to rate Bear Stearns among the “most admired” businesses in the country.

How that most-admired status became worth only $2 per share is going to be made more clear in the future, and a good part of it is going to come out in the conflagration of lawsuits that are only now being ignited as angry shareholders howl and lick their wounds.

To say that Cayne (CEO) and his henchmen didn’t see this coming is ludicrous; yet apparently they didn’t take steps with their own holdings to avoid massive personal paper-wealth hits and the company didn’t have golden parachutes for major players.

But as one of the key enablers in subprime mortgage securities, and in owning one of the truly predatory mortgage servicers (EMC Mortgage), Cayne and the directors had to know their scheme could only run so long. Or did they?

We may eventually get answers to the classic: What did they know and when did they know it?

Let’s face it, in 2005, 2006 and 2007, EMC Mortgage’s management was reporting something up through the ranks to Bear’s management. There had to be either signals of impending doom or over-confident fluff moving up the food chain about how quickly the toxic waste dumps could be cleaned up through aggressive loss-mitigation (read: rapid foreclosure) practices. Clearly, while not all of Bear’s portfolios were serviced by EMC, being among the most predatory of special servicers, they should have provided Bear with insight into what could or couldn’t be accomplished by the handful of companies that do the highly-profitable waste-disposal servicing in the subprime arena.

And it may have had that insight. But it seems more likely that the board was getting the fluff version of the story from within the ranks. Either that or we would have seen a lot more action on Bear’s shares from the major players who were in the know.

And that version of the theory makes sense when you consider the culture that has been allowed to thrive at servicers like EMC: Never, ever admit a mistake.

The sudden and stunning collapse of Bear’s value may indeed reflect that culture was being rewarded right up until the bitter end.

The Honorable Judge Roy Bean

Bernanke’s Principal Blunder

2008-03-14T17:25:00.000-04:00

What we can learn from the Fed Chairman’s recent calls for reductions in the principal of troubled mortgage loans is that he knows little or nothing about the reality of life faced by subprime borrowers.

Hello, Ben – the problem isn’t the principal – it’s the interest.

You’ve adopted the theory that being upside down in a loan makes it so a borrower will want to walk away because they think there’s no equity to lose.

Hello, Ben – the problem is they can’t afford the payments because of the interest rates they got slammed with. They would like to stay living in the house. It is their home. You’re not helping them keep it and foreclosure is the servicer's best financial option.

Have you played with an amortization calculator lately, Ben?

Try a simple one, just to learn how people in the real world see things:

$150,000.00 ARM loan, 360 months 5.5% interest rate for 24 months = $851.68 per month.

After 24 months at that rate, $4,155.25 has been paid into principal. $16,285.16 has been paid in interest. The principal balance is now $145,844.75.

Then the ARM’s interest rate jumps to 11%, so the new payment zooms to $1,379.68, which is $528.00 more per month for the borrower who is already trapped or would have refinanced.

Let’s say Ben’s goofy idea to lower the principal is acceptable to the noteholder (if you can find one!). And let’s knock off 20% of the principal ($145,844.75 becomes $125,844.75). Guess what the payment is now? $1,189.22, which is still $337.54 more the borrower would have to pay per month that they probably don’t have.

And worse, at 11% APR, the borrower is now faced with over $303,000 in interest for their $150,000 loan instead of $130,000. That's still a good deal for the investor, Ben.

Wake up, Ben. The problem isn’t principal. The problem is USURY. Plain and simple. Subprime lending is a usurious, predatory scam, Ben and until you admit that the interest rates are the problem, you’re only perpetuating it.

But anyone with a subprime loan should be able to figure this out too. Anyone who has half a brain should walk away because they’re being scammed by usurious interest rates, not because they’re upside down or close to it.

And if enough of the victims do the smart thing and walk, the subprime industry and your friends on Wall Street will get even more of what they’re getting, and they richly deserve it.

The Honorable Judge Roy Bean

Now wait just a damn minute...

2008-03-05T18:00:00.000-04:00

Back in January of this year the New York City Comptroller, William Thompson and the New York State Comptroller, Thomas P. DiNapoli and the New York City Pension Funds became lead plaintiffs in a class-action suit against Countrywide and certain officers (as well as a host of other related defendants) alleging that Countrywide misstated and omitted information regarding its lending practices and other business information, resulting in the artificial inflation of its stock price. Well, we all know what has happened to Countrywide and it's stock value. And a lot of us cheered.

But given the amount of information that is, was and has been out there about Countrywide’s predatory lending and servicing practices over the last several years, what on earth were Thompson and DiNapoli and their pension funds thinking?

Something tells this Judge that NY's participation in the suit should be thrown out under the doctrine of unclean hands; anyone who invested in Countrywide had to have been deliberately ignoring the enormous public outcry regarding subprime predatory lending. And the only possible reasons to have done that are either opportunistic gambling with NY pension funds in Countrywide’s routine abuse of borrower consumers or alternatively, gross ignorance and incompetence. There really can’t be any other position from which to complain, and either one means Thompson and DiNapoli should have nothing to do with managing anything more complex than a lemonade stand.

Any pension fund or investment manager that touches the stock of companies like Countrywide deserves whatever happens to them.

The Honorable Judge Roy Bean.

Thank You, Mr. Gramm

2008-02-08T17:19:00.000-04:00

If there is any one thing that is more irritating than fire-ants, it’s the obvious lack of understanding on the part of news media reporters and their willingness to parrot the public-relations line of the financial industry and certain politicans.

Over and over again, the “problem” of subprime lending is defined as something that must be laid at the feet of “borrowers with less than perfect credit.”

This magical reversal of the laws of reason is akin to being able to push a rope and have something happen at the other end. For those who can’t seem to make this journalistic alchemy work for them, it is more than just frustrating to see Washington, the US Attorneys Offices and Attorneys General throughout the nation get very excited about CDOs, SIVs, hedge funds and the losses on Wall Street while deliberately ignoring the millions of civilian victims of this massive scheme.

The media is more than happy to keep ignoring the real victims. They like to differentiate themselves from the “people with credit problems” by repeating the discriminatory smear as if it were fact.

The fact is, some number of people who shouldn’t have gotten abusive loans got them. A small percentage of those knew they were on thin financial ice but went ahead anyway. But the vast majority of them were set up to pay usurious amounts of interest and are still, even as I write this, making their payments. And they're suffering as a result.

What we’re really seeing is what I call “wealth recapture.” It’s reverse wealth-distribution; Washington likes to take from the rich and give to the poor. In response, the rich figured out how to get it back from the lower-middle and middle classes through the mortgage and credit-card industry and a hopelessly-fraudulent credit-scoring schema that was used to artificially inflate interest rates. There were enough people in Washington who were willing to see the duplicitous nature of the system but not do anything about it.

What most people don’t realize is the roots of this problem can be found with just a little research. Once the industry succeeded in getting rid of usury laws, the game began. And any potential interference was quickly thwarted by among others, one very powerful Senator, Phil Gramm of Texas. With all the warning flags being raised about predatory lending years back, it was Senator Gramm that blocked any meaningful controls with his ‘you can’t regulate it because you can’t define it’ nonsense.

That effectively cleared the playing field of any defenders and the birth of the monster was at hand. The money flowed like water and large amounts of it went to Washington in both campaign contributions and lobbying expenses.

Millionaires were created by the thousands. All while the average person loaded themselves up with exorbitant interest debt because, conveniently, the game was rigged to provide a tax deduction for it, and still is in terms of the mortgage industry.

There was so much money made so quickly that they got even more creative with it. Too creative. And this creativity has come home to roost – for the gamblers who thought they had the game rigged, that is.

But they couldn’t have rigged the game if folks like Phil Gramm hadn’t been willing to protect them early on and folks like Bob Ney weren’t there to cheer them on in the early part of this decade. (Gramm is now with UBS Investment bank and is an economic advisor to John McCain. Ney is serving time.)

Yet we still have the news fools lapping up the industry PR flack’s line about “loose lending standards” being the root cause of the debacle, without finishing the sentence, which should read: “Loose lending standards designed to entrap as many people as possible."

Then there’s the “call your lender if you think you’re going to have trouble with your payment,” dogma. What that provides for most people who’ve already been abused is a quicker ticket to hell. Instead of a bus, you’ll be on the next plane to moving out of your home. First, the servicer they’re supposed to call is the only party who stands to actually make money in the foreclosure process. Everyone else loses, especially the borrower. Worse yet, the alleged workout deals will effectively shield the lender and servicer’s illegal and fraudulent acts.

“You want a lower payment?”

“Yes.”

“Here, sign this.”

“But it says I can’t sue you for the violations of the law you’ve already engaged in or might engage in in the future.”

“You want a lower payment?”

“We, well, we, yes."

“Then sign it.”

Neat system, eh Mr. Gramm?

The Honorable Judge Roy Bean

Re-re-re-re-re-reruns - A Guide to Debt Elimination Schemes

2008-01-09T17:37:00.000-04:00

Sometimes along side the aforementioned (below) band of ignorant (or deliberately foolish) tax protesters and dodgers are their less risk-taking, like-minded, self-interested brothers and sisters who choose to go unarmed into battle with various financial entities with what really are nonsense theories. A lot of these share the same fundamental theoretical roots but there are fewer convicted perpetrators.

What they think they’re armed with, the sure-fire “process,” to get out of debts without paying the creditor is rarely anything more than a revamping of old schemes that have never worked before. Apparently they seem to sound impressive in new prose, but attempting to use any of them dooms what might be an actually defrauded borrower from prevailing in a legal setting. And frequently, they steer actual victims away from legitimate legal counsel.

All of these schemes share some commonalities, including several legal mythologies and various forms of allegedly complex conspiracies mixed with secrets the public isn’t supposed to know. Stir in some suspicion for the evil motives of the powers-that-be, add a pinch of questionably interpreted legal lexicon and you have a product for a receptive target market.

Another thing the schemes share is a sort-of family-tree of promoters, some of which are associates or acolytes of convicted criminals and others that just haven’t gotten into the range of the prosecutor’s radar. Their like-minded genealogy can be traced to the disaffected, conspiracy-driven, anti-establishment community which includes the more radical so-called “patriot” movements and some seriously dangerous even further-out-there groups.

Those foolish enough to take on the IRS are the most exposed to prosecution and their names show up in newspaper stories from time to time while few of the debt-elimination scammers warrant anything other than being outed and derided on the Internet, or in the case of the Dorean Group, a handful of articles in trade news outlets.

Few of the participants are doubly-stupid in today’s information-rich environment, thus we probably won’t see another attempt to use a “UCC / strawman /ALL CAPS NAME / redemption” scheme to thwart the IRS unless someone is working from a really outdated hardcopy source they found among someone’s dusty piles of cheaply produced self-published books. But credit card companies, as utterly abusive and out-of-control as they are, probably get dozens of nonsense letters every day from rookies who Googled their way into a trying (or worse, paying someone for) a process for getting out from under their crushing debt without having to actually pay it. Instead of winding up with no debt, the hopeful debtor learns a harder, more costly and disappointing lesson in how the law really works. And if they had the misfortune to have paid one of the scammers, they eventually discover the doctrine of unclean hands prevents them from bringing any kind of viable civil action.

Because of the Internet, there seems to be no end in sight to the reuse of the same root mythologies, half-truths, tortured logic and context-mangling cut and paste quotes and citations. Web sites are so easy to launch and links to others so easy to implement that anyone with average skills can put themselves into the debt elimination business almost overnight. All you really have to do is blend some number of the old theories into a slightly different, seemingly-coherent message as if there’s a new and improved theory to get paid for.

Finding a new angle will help to differentiate you but plowing overly-creative new ground will take inordinate amounts of your time. And keep in mind there are limits to the beneficial effects of being really creative. Some who peddle nonsense like Paul Andrew Mitchell, David Wynn Miller, David Merrill Van Pelt and Shaini Goodwin have wandered so far off into lala land that even the less-than-knowledgeable reader will shake their head and worry about all the people in this country who can’t get proper medical attention. Others like David Icke are clearly selling nothing more than an entertainment product and are compellingly goofy enough to even get overnight radio promotion time. So making new stuff up, while seemingly easy, can backfire in terms of the numbers of prospective paying customers for a debt elimination scheme.

So, here are Judge Bean’s tips for setting up a debt-elimination scheme:

- It’s probably a little too soon to revive some of the scams, so do your research. For example, mimicking the Dorean Group's highly-complex scheme would be problematic; they’ll be sentenced about the time you get your first web pages published. But there are parts of it that sound so mysterious that it will easily fool some people. Also, the Bill Of Exchange (BOE) thing is a little too hot for a while what with Barton Buhtz 's recent conviction. The private arbitration company thing has proven to be a major loser, too. Then again, your customer base probably doesn’t know or believe any of that, but choose carefully or wait until the stories die off into Google’s later pages before you ressurect another one of those.

- As far as content goes, first and foremost, you need to establish a shared evil opponent, so you have to include mysteries about banks, money and the Federal Reserve. If you don’t like the ones that are out there, feel free to embellish or even rewrite history. Adding things about the IMF and the NWO is nice fluff to fill out some space.

- Try to avoid addressing the issue of accepting FRN’s even though you have to say they aren’t real money.

- Remember “international bankers” sounds more devious than just “banks.”

- Spin in plenty of legal-sounding phrases about promissory notes, bank credit, assets, balance sheets, GAAP and the all-important “wet-ink" signature.

- Assert that you have a team. You have experts in, well, whatever suits your fancy just as long as there are initials after their names that imply credibility.

- Dig up the Credit River myth or at least provide a link to a site that does, but make sure you choose a web site that doesn’t include the whole story.

- Sovereignty isn’t really a big attraction for your average, apolitical, non-fringe element borrower in trouble, but it does give you street cred with the protest-minded. If you decide to tap into that market, remember to use the word “jurisdiction” a lot.

- Be sure to include statements throughout your site that comfort the prospective customer/co-conspirator’s conscience, i.e., assure them your process is “moral.” But don’t stoop to the “it’s moral because the bank screwed you” ploy; you’ll scare off some number of viable prospects. If you’re really creative and your customer base is really gullible, you might try some version of Freedom Club USA ’s “everybody wins” theme.

- Save yourself some time and just replicate one of the UCC strawman packages – the stuff about the ALL CAPS name. (Don’t worry about copyright issues; those will be the least of your problems.)

- Toss in something about why attorneys can’t be trusted because they and the Judges are all part of the BAR.

- If you’ve got the time, resources and verbal delivery skills, have weekly one-way conference calls where you can sell by expounding on the wonders of the plan and the progress being made. It’s a long-distance call for them, so keep it short and sweet.

- If you’re really slick and fast on your feet, “open” the above-referenced call up to questions but be sure you’ve authored them and they’re presented by trusted parties. Try to use people who can ask them without sounding like they’re reading.

- You will need to make up a number of anecdotal and impossible to disprove testimonials from allegedly satisfied, debt-free customers. Don’t make them extravagant but don’t worry about misrepresentations; the FTC would have to have thousands of complaints about you to even look at your website.

- If you really want to have credibility with the furthest fringes of the gullible, mention things about Admiralty and the gold fringed flag (no pun intended).

- If you’re going to use it in your process, at least try to be original with the words you put in front of “Administrative Remedy.” Private and international have been overused and putting in the Admiralty after it has lost a lot of allure.

- Use an invisible hit-counter for your own information but put up your own self-set numerical display to show huge and growing numbers of visitors.

- Now, if you’re really trying to tap into the truly zany realms, you’ll have to put in some links to the other-worldly kinds of nonsense.

- If you’re into the MLM thing and can lead others into it, you might be able to put together a network marketing scheme to get other people to sell for you. At least with this angle, you can get some initial revenue for setting up a web site for each of your marketers and their down-lines.

- Don’t get greedy; this is a business that lasts between a few months and maybe three years if you’re really slick and careful. Better to take the money and disappear than to wait too long and lose it all.

- Finally, get ready to do battle on Internet forums to promote your program, trash your competitors and demean web sites like Quatloos.com and Scam.com. You’ll need to be able to pose as completely different posters; some people, including moderators, can smoke out shills and spammers who don’t know how to conceal their writing style. You need to be creative in broaching the subject on a forum for the first time. Most rookies come off looking really lame with the “Has anyone heard anything about the XYZ program?” kind of thing. Having multiple IP addresses is critical for this part of the business. You may want to revive that old dial-up thingy and sign up with a couple of low-cost ISP’s. Anonymizers aren’t all they’re cracked up to be and some sites won’t let you post if you’re using proxy servers.

Which brings me to the Internet playground known as suijuris, more specifically, the forum. This is a two-edged sword but you’re probably going to have to deal with it. “The Law Research Group” maintains the web forum and many of the visitors are among your target demographic, but many are also more than willing to share snippets and advice that will conflict with your sales opportunities or steer prospects away from paying for your program. A few visitors will be people who are in the middle of a financial death spiral who get all kinds of goofy advice and wind up bemoaning the corruption of the courts and attorneys when what they were doing was tossed out of court for perfectly legitimate reasons they will refuse to understand.

But the suijuris forum can be highly instructional in developing your version of the scheme. Some posters will unintentionally reveal flaws in some process and other visitors will chime in and explain what they did wrong.

There you go! Have fun boys and girls! (Can’t wait to see your new-fangled super-duper hottest-thing-since whatever process show up on Google.)

The Honorable Judge Roy Bean

Wesley and Willie

2008-01-07T13:13:00.000-04:00

It’s that time of year again, and the scammers are poised to sell their tax nonsense to another batch of offended and angry taxpayers and non-payers.

Despite the serious risks associated with demonstrating contempt for the tax laws, and the fact that the promoters who sell the alleged “secrets” are routinely convicted and imprisoned, some people will simply refuse to accept reality. Then when confronted with it, they’ll attempt to pose themselves in the light of being a victim of a scam.

But a now-famous cite from a Federal case appellate ruling pretty much says it all:

“Some people believe with great fervor preposterous things that just happen to coincide with their self-interest. ” Coleman v. CIR, 791 F2d 68, 69 (7CA 1986)

Note the date of the ruling – 1986. Over twenty years ago, Judge Easterbrook, writing for the 7th Circuit court of appeals, tossed Norman Coleman’s appeal of his frivolous tax-protest case, yet more and more disgruntled people seem to find their way to some Internet site and hang on to yet another shop-worn batch of nonsense.

The distribution of a politically-whacko propaganda movie only has served to stir interest among people who may have been nothing more than annoyed or mildly curious. Thus, the “show me the law” movement seems to have gained ground during 2007, and for some of those who want to believe in preposterous things that coincide with their self-interest, they may not look much beyond the façade of the web sites, books and the movie.

I’m guessing the Wesley Snipes case will finally attract the attention of the major media outlets to the ridiculousness of the kind of tax scam Eddie Kahn has apparently gotten him into. Unlike the widely-reported stories of Willie Nelson’s tax sheltering maneuvers that resulted in the auctioning of, among other things, his fishing camp, Snipes fell in with lunatic fringe tax protestors and apparently isn’t willing to deal with reality. Trial is set for this month.

Maybe Hollywood will get the writer’s strike over in time to spin up a plot line that Willie and Wesley can star in - one about the costs of falling for really bad advice.

The Honorable Judge Roy Bean

Turbulence

2007-10-20T22:46:00.000-04:00

It shouldn't surprise anyone that the players and robber barons from Wall Street are raising a stink about mortgage backed securities. And the weeping and wailing and gnashing of teeth from people being let go is getting louder and louder.

All this Judge can say is "QUIT WHINING!"

If you think anyone is stupid enough to think hedge fund managers believed what the likes of Fitch, Moody's and S&P were shoveling on behalf of their customers, you need to invest in Nigerian 419 scams.

The power players and raters knew exactly what was going on. So did employees. Some of them just didn't get their exit strategy timed correctly. They knew the reality of dishonesty being portrayed in countless court actions, foreclosures, bankruptcies and news stories would catch up to them, they just didn't know when to pull the plug.

No, instead they buried their collective heads up their collective asses and kept raking in the dough, stashing it away in other less risky gambling endeavours as fast as it kept coming in.

And it did come in. And it did go out. And there won't be any serious accounting of the billions of dollars that were taken from everyday people and ground through the machine into accounts held by the people who knew how to play the system without risk of prosecution.

It's a question of timing. You're at the table. You're ahead 200%, maybe even 300%. You see six months of mortgage payments in your grasp. Do you sit and play? Or do you think your run of luck is over and go find a more honest job?

For the employees of the scam artist companies who continued playing beyond rational expectations, it's not a pleasant scenario. They were in it for a few thousand a year in bonuses. For the executives in on the scam early enough, it's a simple bump in the road and the 7-figure lifestyle isn't really going to take a huge hit, unless of course all those political friends they stroked don't want to be seen with you. That can be painful to the ego. Just ask Ken Lay about what a night in the Lincoln Bedroom turned out to be worth.

But the properties, corporate jets, yachts, vacation destinations, casino nights, fine wines and gourmet meals are still within their grasp. They've got lots of people to blame and unlike Lay, their connections run much deeper than just the White House. None of them risk prosecution. They've paved the way to "no admission of wrongdoing" long ago with their influence on K street.

So to the industry workers who've lost their jobs, quit whining already. You went to work with these crooks. You deserve anything that happens to you. Find honest work.

And contact your local FBI office if you want to be able to sleep better at night.

The Meltdown Continues

2007-08-30T21:34:00.000-04:00

Note from the Clerk of the Court: An industry source passed this to us and His Honor simply cannot resist letting others in on the fun:

http://www.youtube.com/watch?v=ljHjZpC7bnc

Amazing what employees who have come to grips with the reality of their jobs can come up with.

Merger-mania will make things worse for borrowers

2007-02-12T13:58:00.000-04:00

If you have a sub-prime mortgage loan and aren’t keeping close track of what your mortgage servicer is doing, you better start. As the lenders scramble to buy up failing originators, loans will be moving in and out of the hands of servicers like cards in a game of gin rummy.

Even if you’re not facing foreclosure (like nearly 20% of recent sub-prime loans), get ready for the tsunami of transferred and messed-up mortgage accounts, and keep in mind the servicer who obtains your loan will believe anything and everything on the computer, no matter how screwed up it is. On top of that, the search for profitability will lead to adventures in fee creation as well as opportunistic equity recovery in order to balance out the really upside-down loans in a portfolio.

Contrary to what some industry observers have said, the servicers aren’t exactly in a panic about the 2+ million coming foreclosures of bad loans. In fact, the real predators are positioning themselves to take advantage of the mess, bargaining behind closed doors to divide up the spoils and offer troubled lenders a way out of their servicing-related overhead.

The industry would like Washington to believe that the closing of doors and shrinking profits are evidence of a market that can and will rid itself of bad or weak players. A few of the sub-prime lenders who made bad loans are going out of business and that seems to satisfy the Mortgage Bankers Association’s Chief Economist, Douglas G. Duncan. This is the same person who, in his prepared testimony before the Senate Committee on Banking, had the gall to claim: “The primary reason for defaults are family and economic difficulties – not product choices.” To support this half-truth, he points to a Freddie Mac study that looked at reasons for delinquency based on data from their “Workout Prospector® system.” Here’s what his table of reasons looks like:

Unemployment or curtailment of Income 41.5%
Illness or Death in Family 22.8%
Excessive Obligation 10.4%
Marital Difficulties 8.4%
Extreme Hardship 3.3%
Property Problem or Casualty Loss 2.1%
Inability to sell or rent property 1.6%
Employment Transfer or Military Service 0.9%
All Other Reasons 9.0%

Of course the data is from 2002 through 2005 and doesn’t touch the 2006 disaster – but that’s not the disingenuous part. What isn’t going to be one of the options the users of “Workout Prospector®” can enter into the system would be things like “Predatory Loan,” “Borrower Scammed by Lender,” “Illegally constructed loan,” or “Opportunistic Servicer.” And let's not forget, most sub-prime loans aren't touched by either Freddie or Fannie, so the data is even more misleading.

Duncan goes on to promote the “everyone loses in a foreclosure” mythology, conveniently ignoring the fact that the home being foreclosed on is going to be sold to someone, and that someone is probably going to get a new loan to buy it.

He even put this jewel in his prepared testimony: “Servicers do not have an incentive to intentionally cause foreclosures, because profitability rests in keeping loans current and, as such, the interests of borrowers and lenders are mostly aligned.”

His duplicity is glaring; “profitability” for servicers involves far more than keeping loans current and a substantial portion of it comes from fees and charges (legitimate or otherwise). Not to mention the discounted acquisition price some servicers pay for loans the previous servicer doesn’t want to handle.

So at least in Senate Committee testimony, the industry is as fundamentally sly as they are in the loan origination process.

Which brings me back to the original point – the troubles in the sub-prime lending marketplace are going to land in the laps of the borrowers, not the lenders and servicers. Trust me, these predators are not going to slink back under a rock somewhere and not try to minimize their losses.

Washington is going be dancing to the tune of the lobbyists, and the lending industry will spend millions in the coming election year to make sure they don’t have too much interference. And in the mean time, they’re going to grind as many of the garbage loans into mulch as fast as they can.

Anyone with a sub-prime loan best be equipped to prove every stinkin’ payment and stay on top of every little detail in their loan every month. And you’d better at least find an attorney and get him or her ready, because you are a target, especially if you have equity in your home.

The Honorable Judge Roy Bean

Y’all put stupid in the water or somethin’?

2007-01-15T18:44:00.000-04:00

Leave it to the news media in the Lone Star State to turn a blind eye to things that affect Texas consumers. Two major legal cases are brewing, one that affects anyone who bought or buys a car in Texas and the other that shows just how ignorant the state is when it comes to identity-theft issues.

First, after years and years of legal wrangling, it looks like a settlement is going to be worked out on a case involving most, if not all of the members of the auto dealers association in Texas. Clever folks they are, they crafted a conspiracy to gouge car buyers by making it appear something called a “vehicle inventory tax” was a tax applied to the buyer at the time the car was sold.

The really crafty part was that the VIT is a tax the dealer pays – in effect, property taxes on their inventory, and there’s nothing that says that expense is to be itemized and specifically paid by the buyer at the time of sale. It’s simply part of the dealer’s business overhead. In a competitive environment, that tax may or may not have any effect on the price someone pays for a car. The ruse effectively made it look like the price was non-negotiable. Therein lies the rub. Gene Fondren, President of the Texas Auto Dealers Association circled the wagons back in 1994 and everyone in the association has been tacking on the VIT and making it look like it was something the state required the buyer to pay on the purchase documentation. It’s a bit like the dealer putting a line item on the sales documentation that shows the salesperson’s Social Security withholding for the deal and telling the buyer that the law required the buyer to pay it on top of the price of the car.

Along comes the suit way back in 1997 charging violations of the Clayton Act and the Sherman Act, and it crawled its way through the courts until a recent proposed settlement with most of the defendants. This Judge’s guess is they’ll wind up giving consumers a refund and stop showing it as a “tax” that the buyer is required to pay.

Over the last thirteen years, car buyers in Texas have been gouged – a little bit at a time, yes, but it adds up. And where’s the news coverage? Try doing a Google News search on “Texas Auto Dealers.” Zip. Nada. If the power of the auto industry ad budget isn’t alarming, it should be.

Much as no one in the Texas news media wants to look into the practices of some of the lending predators based in Texas, none of the news outlets wants to tackle the auto dealers and their millions of advertising dollars.

Wake up Texans - when you sign for a car, cross out the VIT and change the total. If they don't like it, get up and leave.

Then comes some skullduggery by some Texas corporations in obtaining drivers license and motor-vehicle data illegally. Instead of complying fully with the spirit of federal privacy laws, Texas will sell personal information to someone who claims they have a legitimate use for it. The gist of a recently-filed class-action suit is that when the Department of Public Safety or Department of Motor Vehicles sells information, they sell the whole database – without regard as to whether or not a person doesn’t want their private information sold or used.

The suit seeks damages from the companies that bought the data for all 20-million+ Texans in the database, and the statutory amount for each violation is $2,500.00. There are twelve defendants. All told, that could be $600 Billion. This ought to be fun.

Looking at the defendants makes it interesting to think about why they would want the personal information on all Texans who own and operate motor vehicles.

ACS State and Local Solutions is a division of Dallas-based automation outsourcing and services giant ACS. Part of what the company does is child support payment collections.

Fedchex is a payment processing and recovery/collections operation based in Irvine, CA.

Gila Corporation, dba Municipal Services Bureau is essentially a collection agent focusing on handling collections for municipalities. Gila is headquartered in Austin, TX.

Global 360 BGS, based in Dallas, provides technology services to a variety of public entities, including public retirement entities.

Centerpoint Energy, American Electric Power, TXU Business Services, Reliant Energy and Houston Electric Power are utilities or utility-related companies.

Southwestern Bell (SBC is becoming AT&T) is the major local phone company in Texas.

The Texas Motor Transportation Association is the state trucking industry trade group/lobbying organization, based in Austin.

The Industrial Foundation of America calls itself a “trade association” and operates under non-profit status. Based in Boerne, TX (near San Antonio), IFA is a data gathering and reporting entity that few, if any consumers or employees know of and only member companies (mostly energy and exploration related) use. Among the things IFA does: Pre-employment screening, accident history reports, criminal reports, motor vehicle reports, education verifications and credit reports.

There are 23 plaintiff’s listed in the suit and of course everyone in the Texas DMV and DPS databases is said to be a potential member of the class. But despite the case being filed January 10th, is there any word of any of this in the Texas press? Zip. Nada.

Given the amount of money energy companies are spending on advertising in the new "less-regulated" utilities market, it isn't any wonder the media isn't helping spread the word.

So at least in other parts of Texas, it appears to this court that all you have to do to avoid being exposed is make sure you spend a lot of money on advertising.

The Honorable Judge Roy Bean

Mortgage-servicing Squaliforme takes yet another swing

2006-12-13T16:52:00.000-04:00

The seemingly-endless legal saga of Robert John Wright passed another milestone on Tuesday, December 12th, more than 10 years since Bank of America and EMC Mortgage began their relentless and apparently illegal pursuit of his home.

Looking at what’s available in the court records, one can discern that Wright has not only done a lot of his own work over the years (including an appeal to the Supreme Court) but he’s also had a number of attorneys from time to time over the years, including Washington DC’s “Pro bono lawyer of the year,” Rawle Andrews. As it turns out, looking at the case histories in the Dallas courthouse, he’s even been represented by one of the area’s most prestigious firms – for a while, that is.

That’s what probably tripped him up in the long run. The more EMC spent the more they couldn’t afford to lose. They have to spend everything it takes, and obviously will; a precedent ruling against EMC in these cases could attract the plaintiff’s bar in very large numbers.

In one facet of the on-going brush war, Michael Swartzendruber of Fulbright and Jaworski’s Dallas office testified EMC brought F&J in because of who was representing Wright at that time, one Bobby Rubbarts of Hughes and Luce. Good lawyerin’ costs big bucks in that part of Texas.

But Wright, of course, was penniless (he more recently has filed an indigency motion to obtain a transcript of his trial, so that status apparently hasn’t changed), and Rubbarts must have thought there was plenty of fire under all the smoke being generated by EMC’s counsel of record at that time.

Rubbarts took on the Wright case pro bono in 2003, EMC added F&J to their team and the trial actually got going in early December of 2004. After the Judge appeared to run out of patience and time during the trial, she ordered them back into a third settlement conference which took place just before Christmas of '04.

They apparently reached an accord but Wright was disputing that in later filings. According to the property tax rolls, EMC obtained the property in January of 2005. According to the msfraud.com forum, Wright has apparently been in the house since then and is now out.

What went wrong with the settlement is the subject of yet another round of motions and hearings that surfaced in late 2005 and have crawled along ever since, with one of the appeals ending in a rather bizarre scenario if one reads the appeals court ruling – he apparently didn’t pay the fee at the time he filed the appeal. The court record of the dismissal says he was notified twice but given the stakes involved it’s hard to imagine he’d have come this far and then simply let it drop by not paying the fee. But stranger things have happened in this case.

Wright also filed a bankruptcy petition (pro se), late in October, apparently in part to stave off the earlier massive legal-expense ruling he lost. EMC won a round that is still destined for appeal and went after Wright for F&J’s legal expenses. We’re talking well into six-figures in legal expenses for just F&J’s team which is led by Swartzendruber.

EMC, through F&J of course, filed and obtained a lift of the automatic stay after a hearing. Turns out, though, Wright isn’t the owner any more and hasn’t been since January of 2005. To make a long story shorter, EMC apparently obtained a Writ of Possession a few weeks ago.

Now, to say EMC was stupid in this case is an understatement. All told, in ten years, this squaliforme has probably poured out nearly a half-million dollars in legal expenses alone, knowing full well it will never recoup them. At a time where lenders are allegedly worried about the growth in foreclosures, they were willing to spend anything to get this house (which is on the tax rolls for $240,340). Even the $6M loss to the Starks hasn't persuaded them to change the way they play the equity-theft game.

From this distance, it seems All EMC would have had to have done is fix some rather simple accounting screw-ups that Bank of America made when EMC bought the loan. But that isn’t what EMC is in the business to do. In most cases, they get the property and equity much faster. As with most cases that actually involve a lawsuit, they decided to try and spend Wright into oblivion, and when they ran up against attorneys willing to put up a fight, they had to keep spending and spending. Which means there is plenty to hide. Stealing people’s homes can be expensive business and is best done out of the light of day.

Something tells me it ain’t over.

The Honorable Judge Roy Bean

The action actor plays the fool

2006-12-09T18:27:00.000-04:00

The recent media coverage of the "plight" of action-star Wesley Snipes has shed a little mainstream-news light on the schemers who lure people into the legal mythology sometimes referred to as the "patriot" or "sovereign" movement.

In this through-the-looking glass legal lalla-land, old conspiracies seem to gain new life every few years. They get ressurected and thrive on gullible people who really want to believe in them, and the operators of schemes have learned how to put the right spin on some very old and very tired (but completely legally debunked) mythology, including not having to pay income taxes.

There are too many of these crazies to list here (but at the left you can find most of them at the Quatloos site), and in the grand scheme of things, they really don't have a statistically-significant army of followers who will do anything other than read and comment as opposed to act on the recommendations. Some of the promoters are in prison or about to be or are under investigation. Others exhibit simple confused ramblings or completely incoherent and bizarre theories. They argue (colorfully sometimes) among themselves about who has the most successes. A few try to make a living off convincing people they can get out of everything from traffic tickets to income taxes.

Somehow, Snipes found himself listening to an acolyte/promoter of one of the anti-IRS "don't have to pay tax" schemes, one Eddie Kahn. Another long-term promoter of legal nonsense, Barton Buhtz, is being roped in with Eddie and their "defense" is studded with the typical legal absurdities so common to these myths.

In order to understand how far out of reality these promoters operate, one has to step into the realm of believing a long string of utterly absurd conspiracy theories that tie non-existent events together into a tangle of legal nonsense. You also have to ignore competent legal advice and assume the entire judicial structure of the US doesn't really have any authority over you if you just do and say the right things.

A combination of ignorance (in part due to lack of educational focus), an innate desire to believe in conspiracies and of course the Internet itself have created a fertile field for scheme promoters. Years ago, they sold a few books and cassette tapes through word-of-mouth and might have even sold seats in seminars. Now they have the Internet and find a new audience every day.

And it's all just "educational material," and protected free speech, right up until some poor fool winds up trying their new, super-duper-secret strategy in a real legal setting. They make themselves appear not only guilty, but in a few cases even mentally unfit to stand trial. As one Judge put it, the defendant might as well have tried to convince the court that the earth was flat. The defendant wasn't happy about that at all; the "attorney in black robes" was supposed to have simply rolled over and played dead and dismissed the charges under the onslaught of legal accumen. After all, that's what all those guys who post their stories on various forums say happened when they used whoever's method.

Some are less dangerous than others. Some admit they haven't actually tried their techniques in court but of course have heard of lots of successes (which for privacy reasons, they really can't list the actual case cite). One David Van Pelt of Colorado Springs goes by the name of David Merrill (in part to disassociate himself with a prior federal conviction in the Montana Freeman fiasco). He wanders in and out of coherent thought on various Internet forums and on sites he maintains. A short review of his writings, methods and strategies is enough to convince the vast majority of readers that he is truly delusional or at most, just a harmless nut. But someone who doesn't have much common sense or hasn't studied some of the more bizarre nonsense may be lured into trying things that result in being prosecuted.

Of course, Van Pelt risks nothing in trying to get people to try and discern what he's talking about long enough to try his methods; few of these kinds of fiction writers ever do face suit or prosecution unless one of their client/followers (like Snipes) raises their theory to the level of doing things like defrauding the government based on what they have advised.

And a fool willing to try these kinds of things in civil matters (like debt collections or foreclosure) will have unclean hands trying to go after the author/promoter when they lose their case.

So all one can hope to do is warn reasonable folks that taking advice from people who promote unsound and irrational conspiracy-driven legal nonsense is the path to more trouble, not less.

Just ask Wesley Snipes - in a few months.

The Honorable Judge Roy Bean

Bank of America’s “Higher Standards”

2006-08-31T14:46:00.000-04:00

Before you walk in to your “friendly neighborhood” BofA branch to deposit a check, you better beware that at least in California, if they decide to have you falsely arrested and jailed, you can’t sue them for what they did.

A San Fransisco man found that out the hard way when he went into a BofA with a check made out to him – a check that turned out to be written by an unauthorized party on a company account. Matthew Shinnick thought he had sold his bicycles on Craigslist and didn’t want to deposit the check in his own account just in case it might bounce and hit his account with yet another creative bank fee. So he asked the teller to verify that it would clear and after a few moments, she told him it would.

Shinnick’s primary mistake was deciding to cash it instead of just depositing it. Maybe he thought having the cash in hand was better than risking a stop-payment some days in the future (and yet another bank fee). Maybe he thought that because the bank said the check wouldn’t bounce that it was good.

Either way, what he didn’t know was what the bank knew. Yes, there was money in the account to cover the check, but the check itself was bogus. The account the check was drawn on was actually flagged for potential fraudulent use. He endorsed it and the teller took it to her manager.

Four police officers soon had him in handcuffs and later led him away to jail where he spent twelve hours as a guest of the City of San Francisco crowded into a tiny holding cell with way too many other men.

And of course the charges were eventually dropped and a Judge has taken the steps to expunge all records of the case, but Shinnick and anyone else who raises the eyebrows of BofA branch employees and gets arrested for it can’t sue for false arrest. Turns out the California Supreme Court decided that criminal reports are privileged communication. Basically, institutions aren’t liable for reporting suspected crimes. (Hagberg v. California Federal Bank.)

With all the check-scamming going on, especially the typical Nigerian 419-style tricks, any time you get a check from someone you don’t know very well, don’t take it into a California bank, especially a BofA.

And even if you do just endorse it and deposit it, don’t assume that just because the money shows up as being in your account that they can’t come back and take it if it turns out to be bogus some days down the road. You might find yourself in the hole. That's still a better hole than the one the Police will put you in, though!

The Honorable Judge Roy Bean

Well, a hopeful message for borrowers – maybe

2006-08-07T20:55:00.000-04:00

The Squaliformes' bought-and-paid-for congressional committee chair, Bob Ney has finally seen the light and won’t be running for reelection. Hopefully his pro-Squaliforme agenda will see less influence in the coming legislative sessions.

Amazingly, the blame is being put on the Abramoff scandal instead of the more devious but blatant efforts to undermine consumer protections at the behest of predatory lenders and servicers.

Abramoff pleaded guilty in January to federal corruption charges. Ney received gifts and other benefits in exchange for legislative action to benefit his clients, but unlike Abramoff, the lending industry’s massive campaign contributions and lobbyist's influence (including actually writing his legislative efforts) are seemingly above investigation.

At least there is some satisfaction in the public exposure that the Squaliformes knew quite well who they could effectively manipulate in their cultivation of Ney.

The Honorable Judge Roy Bean

The thing that wouldn't die

2006-07-26T16:12:00.000-04:00

As the Dorean Group saga grinds on in seeming perpetuity through the court, the "victims" of the scheme are also facing the music. Consider the judgment against Greg Poppin, of California, who got a trust set up in Johnson & Heineman's swindle for a property in Grass Valley.

After ordering the bogus Dorean documents cancelled, rendered void and expunged from the county records, the judge left it up to the Plaintiff (lender) as to whether they could go ahead and foreclose, or in addition, collect damages jointly and severally against Heineman, Johnson and Poppin in the amount of nearly $390,000 (plus interest) and over $16,000 in attorney's fees and costs. All of which stands there and collects interest until paid. With the perpetrators incarcerated and facing long sentences, Poppin (the client) was left to face the music.

So another one of the faithful falls on the Dorean sword, while Johnson (or at least someone who purports to be him) posts ever-more bizarre religious dogma on his blog. In between pumping up the martyr angle, he languishes in a California jail generating hundreds of pages of legal drivel with his partner on government-supplied notebook computers.

A lot of what Johnson and Heineman rail on about contains little more than plagiarized cut and paste nonsense from die-hard radicals who have tried for decades to convince their merry band of sycophants they really aren't who they are, the law isn't the law and the whole US Government is bogus, including the court system. If one believes Johnson, Christ has sent angels to burn down judge's homes and continues to counsel him.

This kind of nonsense is even a profitable venture for some. For a few, it's not much more than a notably silly hobby, complete with inane ramblings on multiple web sites that typically espouse almost every conspiracy they can allude to and some that are truly delusional and even completely imaginary. Some of it is quite possibly a strange on-line laboratory experiment; a game of wits vs. half-wits where someone is testing to see just how gullible people can be.

A lot of it is so far out even the late-night AM radio bastion of whacky theories (the Art Bell "Coast to Coast" show) won't give them credence - and that is telling. Thus they're relegated to the Internet, CD's, books and DVD's, group meetings and a handful of hysterically funny public demonstrations. And let us not forget the laughable court filings.

In this culture of self-induced paranoia, the arguments don't evolve; they mutate. Context be damned. Definitions of words can be argued for days, weeks, months. The cycle of lunacy repeats itself when a theory dies under its own weight of stupidity but someone new (or under another name) comes along later and dredges up an old post or link and fans the flames once again.

Proponents and authors of such crap sometimes wind up in actual trouble with the law. Then they often find themselves ruled against in the very courts they've been telling people don't have jurisdiction over them. I suppose we're forced to chalk that one up to deeper and more sinister conspiracies among the Judges and the attorneys.

A lot of the courts are just too damn sympathetic with these nut balls. The amount of time invested in reading some of the voluminous BS and writing some of the more detailed rulings is astonishing. And because it's available on the Internet, the garbage proliferates and shows up in other cases.

I, on the other hand, have freed my court of such burdens. There's a setting on the ol' Acme cattle-prod from 1 to 5. The more pages of loony drivel I have to read, the higher the setting gets. (On "5" the spark can go clean through several pages on its way through the fool's buttock.)

I'm thinking of sending my backup unit to the Northern District of California. Judge Alsup may be able to persuade Johnson and Heineman to move things along a bit.

Data Schemers Get Nipped at by FTC

2006-05-12T19:38:00.000-04:00

As pointed out some time ago by placing him among those on my Squaliformes “Hall of Shame” list, Jay Patel’s hunger for private information to sell about other people is seemingly endless.

He may have to go on a little bit of a data-diet. Not to worry for Jay and his gang, the toothless FTC won't put him (or them) out of business; that would send a signal to all data whores that the Feds are serious about privacy, and doing that wouldn't sit well with the movers and shakers in Washington.

It looks like the FTC has moved to act against Patel and his firm (AccuSeach / Abika) by charging him and four other Squaliforme enablers with violations of the 1996 Telecommunications Act.

The FTC says they were using or causing others to use, “false pretenses, fraudulent statements, fraudulent or stolen documentation or other misrepresentations, including posing as a customer of a telecommunications carrier, to induce officers, employees, or agents of telecommunications carriers to disclose confidential customer phone records."

Joining in on the scheme and being outed in the FTC suits are also “77 Investigations,” run by Reg Kimbro (in either Upland, California or Broomfield, Colorado), David Kacala’s Baltimore-based “Information Search,” “Integrity Security and Investigation Services” in Yorktown, VA, and last but not least, Scott Joseph’s “CEO Group”(Check Em Out) out of Ft. Lauderdale.

Half the fun will be the FTC’s effort to get the money they all made from the scheme. In that little dance, maybe the FTC might even find out who was buying the information and keeping these crooks in business.

'Round here, that would be only a good start. But with the FTC playing the sleeping-dog role in so many information privacy issues when financial services firms are at the controls in Congress, it's unlikely the penalty will actually put anyone out of business. So the settlements, like so many other alleged prosecutions, will simply show the rest of them how to navigate the waters.

The Honorable Judge Roy Bean

Wounded Squaliforme Changes Course - Sort Of

2006-05-03T13:44:00.000-04:00

Mega-Squaliforme Ameriquest's parent company has cut thousands of Ameriquest employees and closed its retail office storefront lending operations.

That's the good news. Hundreds of thousands of consumers are in slightly less danger for the time being.

The bad news is there are now at least a thousand ex-Ameriquest loan agents who may start showing up at the doorsteps of other, less unscrupulous lenders. It will be interesting to see what companies are willing to jepoardize their own already-dubious reputations by letting some of these people stay in the lending industry.

'Round here, any former Ameriquest employee is not to be trusted, let alone hired. After all, you have to be really flexible in terms of moral turpitude to stay working for a Squaliforme of that magnitude.

The Honorable Judge Roy Bean

Sales 101

2006-04-10T11:14:00.000-04:00

Imagine ol’ Bean could offer you a product at very low cost that would instantly generate incremental (that’s over and above existing for the accounting challenged) revenue and profits for your business.

What if this very low-cost product would more than pay for itself in the first month you bought it? And that every month after the first month, the increased revenue is guaranteed to keep coming in? And unlike some products, you won’t have to add staff, rent more space, buy more phones, fax machines or copiers – none of that.

It’s the salesperson’s dream product – the prospect can’t say “no.”

How could you not buy this product? You’d be crazy not to; your board of directors and the stockholders would toss your dumbass out if you didn’t buy that product. If you found some mid-level manager in your company who decided not to buy this product, you’d have some serious “evaluating” to do with that manager’s department head – right after getting the product ordered.

No doubt about it. No senior decision-level executive is going to let an opportunity like this get by – especially the squaliformes.

The sleeping watchdogs over at the FTC are looking at yet another mortgage-related scam involving how PMI (Private Mortgage Insurance) rates are being jacked up by insurers who happen to buy a product from the credit-reporting squaliformes – without telling the consumer, of course.

This handy-dandy product just happens to be information that may or may not be accurate, but it sure does give the insurer’s revenue and profits a nice boost, and since the consumer has no clue as to what was in the product, they are simply stuck with the inflated insurance premium.

Now we can rest assured the squaliformes will attempt to imply that negative credit information means their risk is raised so they should be able to raise premiums. But one only has to ask the question if anyone’s premiums were ever lowered because of looking for improved credit data?

Hmmmm. That’s just not one of the products available – probably because it’s never been asked for. After all, who would buy a product that reduces revenue and profits?

The Weird-scam Capitol of the US

2006-03-15T17:43:00.000-04:00

Far be it from this Honorable Court to pick on other, less fortunately endowed territories, but there comes a time when even this Judge’s favorite ski destination must take a hard look in the mirror.

Granted, on a per-square mile basis, there aren’t a lot of people who live in most of Utah, but among those that do, there are some of the oddest of the kooks, and this most recent series of incidents indicates, at least to this court, that the inmates are soon to be in control of the asylum.

Not content to be just the home of the whacky polygamist splinter-faction of the Mormon church (a shared “distinction” with Arizona), Utah is home to some of the fastest-growing financial scams ever devised. Anything to do with “affinity marketing” seems to work in Utah so just by living there you can count on being a neighbor to a serial MLM’er.

And garden-variety silliness in the legal lalla-land seems to have found a home in Utah.

Take for example, something called the “Western Arbitration Council,” who set up shop in Sandy, Utah (which appears on maps as a suburb to the Capitol, Salt Lake City).

Scammers have used the WAC to pull all kinds of stupid pet tricks, including one couple in Kansas who pulled one of these worthless “awards” against the insurance company that bonds the bankruptcy Trustee overseeing their Chapter 7 filing. They got sentenced to 18 months for mail and bankruptcy fraud.

Another whacko in California, one Curtis Richmond, has been dancing a rain dance in multiple Federal courts with alleged arbitration awards from the WAC, including one for over fifteen-million against Citibank. His similar scam against EFS Bank has landed him in a contempt hearing after being ordered to stop filing stupid motions and letters in the case he lost with prejudice. He really gets around – he has an “award” against the Colorado Supreme Court, too and is filing yet another action in an Arizona court to get yet another body to read even more gibberish about the Citibank case.

And what do these all have in common, other than the bogus WAC “awards?”

It only gets “WACkier”. Turns out Richmond fancies himself as a member of something called the “Wampanoag Nation, Tribe of Grayhead, Wolf Band.”* One Dale Stevens of Vernal, Utah, is not only Chief, he’s also a “Supreme Court Judge.” And yet another nutball from that area of the State, one Thomas Smith, is a member of the tribe as well as the Chief Tribal Judge – AND – director of arbitration for the WAC.

Another of Vernal’s band of fools, tribe member James Burbank, doesn’t believe the law about license plates and driver’s licenses applies to him because of his membership in the “tribe.” When the state impounded his vehicle he, too, got an “award” from the WAC against the county officials.

And if that isn’t fun enough, out in Hawaii, one outfit known as “Americorp International LLC,” was before the Hawaii Real Estate Commission trying to get approved, but there was this little hang-up: A little IRS matter involving one Bruce Travis, who seemed to be trying to convince the Commission (unsuccessfully, by the way) that the WAC had issued an judgment against the IRS on his behalf, essentially voiding a $247,000 assessment. But only recently, Travis has changed tactics, and is now suing the IRS (again) on the basis that they never provided him with legitimate assessments for taxes since 1996. His prior, similar suit was dismissed and of interest is the fact that it’s an almost identical copy of about twelve other suits from tax protesters around the country.

This court has to wonder if the source of their “legal expertise” came out of Utah.

The Honorable Judge Roy Bean

*Not to be confused with the legitimate Wampanoa Tribe of Gay Head http://www.wampanoagtribe.net

Big Squaliformes Must Eat in Volume

2006-02-26T14:35:00.000-04:00

You can’t make the numbers (and a career) at Ameriquest without some really heavy origination volume. So much so that when the going gets tough, the typical hyper-motivated (greedy) Ameriquest brokers swing into their creativity act.

A recent Utah case filed in Federal Court is yet another stunning example of how far these Squaliformes will go in luring victims into loans they know are going to result in foreclosure, AND, of course, yet another opportunity for the REO and lending industry as a whole.

Marian Paul fell into the Ameriquest maw in March of 2005, after being lured by mailers into calling to get information about a mortgage loan to repay a $4,000 debt.

Very late one evening, only a few days after receiving several calls from Ameriquest, two of the Squaliformes’ employees showed up unannounced at her Salt Lake City home.

They not only lied to her about the terms of the deal (telling her she was saving a lot of money compared to what she could get at her credit union), when she told them she wanted to wait to let her daughter read over the terms, they told her she had to sign that night because they couldn’t come back.

Paul ended up with a $60,000.00 Ameriquest loan that paid off her lower-interest credit union loan and her auto loan – without her knowledge.

The fact that she is a 73 year old widow with cataracts, has little or no formal education and does not read English well must have been the icing on the cake for the daring team of Ameriquest employees who set this one into action.

Predictably, in November of 2005, another Squaliforme bought the predatory loan, (Deutsche Bank National Trust), and immediately put the loan in default.

Given the giant sub-prime Squaliformes’ well-deserved reputation for sleazy lending practices, this one will probably never make it all the way to a jury trial. But, hopefully the court records will reveal who the individual perpetrators of this one are prior to the settlement and closing of the case.

In this court, there won’t be any privacy for the likes of these scum.

The Honorable Judge Roy Bean

It’s Taxpayer “Hunting Season” over at H&R Block/HSBC

2006-02-10T17:21:00.000-04:00

Hurry, hurry – get those tax filings in – and it’s soooooo easy to get your refund fast with electronic filing through H&R Block.

But before you fall victim to HSBC’s heavily promoted program to basically loan you your tax return early, consider what one poster at the creditinfocenter forums (see link at left) discovered by taking the time to read the fine print:

By clicking I AGREE below I am indicating that I have read, understand and agree to the Application, including but not limited to: (a) [b] Section 9 in which I agree that HSBC may use amounts received from my tax refund to pay delinquent debts I owe HSBC or others.
Clever these Squaliformes are, eh? I particularly like the "or others" end of the scheme. Wonder how "the others" are getting notified that people are filing their taxes and getting refunds? Maybe a little too much cooperation.

The Honorable Judge Roy Bean

Dodging Responsibility - How the Game is Played, NY Style.

2006-01-20T12:25:00.000-04:00

A news item out of New York, home to none other than alleged consumer-advocate but mostly presidential-wannabe Eliot Spitzer, caught the Court’s attention only briefly, but after a few nights sleep, the Court is hereby convened in the case of the People v. The New York Consumer Protection Board and the New York State Bar Association.

Without elaborating in the case style, the complaint now before this Court is:

Whereas, instead of aggressively enforcing state laws and bar association tenets regarding the actions of debt collectors and their law firms, the Board (with the apparent blessing of the Bar Association) is engaging in an effort to combat abusive debt-collection practices by educating consumers.

According to a quote in the story, agency spokesman John Sorensen said: "People who owe money have to repay debts, but they should also know they have rights under the law."

So to avoid the hard, dirty work of confronting bottom-feeding law firms and the Echeneidae Collectoris they front for, the Board will spend tax dollars to put on a show for various community groups around the state to inform them about their rights.

The court has seen in camera a pre-release version of the training video, and submits a transcript of it into evidence to wit:

New York: “See the man with the gun?”

Consumer/victim: “Uhh, that one?”

New York: “Yes, that one. The one with the loaded gun pointed at
you.”

Consumer/victim: “Yes, I see him.”

New York: “Good. Keep an eye on him. You have rights.”

Consumer/victim: “Why is he pointing the gun at me?”

New York: “He wants something from you.”

Consumer/victim: “What does he want?”

New York: “Probably money.”

Consumer/victim: “But I don’t even know him.”

New York: “That doesn’t matter. He says he knows you. In fact, he knows all about you.”

Consumer/victim: “I didn’t think you could own a handgun in New York.”

New York: “You can’t.”

Consumer/victim: “But he can?”

New York: “Nope. And we’re warning you that it’s illegal to own a handgun.”

Consumer/victim: “But you won’t do anything to him?”

New York: “He’s an attorney. And he hasn’t used it yet, has he?”

Consumer/victim: “Well, sort of. I think he’s threatening me with it.”

New York: “But he hasn’t shot you, has he?”

Consumer/victim: “Not yet. I guess he won’t shoot if I give him what he wants.”

New York: “Probably not. If he does, be sure to dial 911.”

Consumer/victim: “I hope someone will.”

New York: “Consider yourself informed. Our work here is done.”

Not exactly how we'd handle it 'round here. Any member of the aforesaid Board who sets foot on this side of the Pecos is in for a rude and short grand-tour of the jail follwed by a week's hard labor over at the county dump.

And for members of the NY Bar Association, don't expect to appear pro hac vice in my court until you clean up your own house up there.

A special admonishment to Mr. Spitzer's office is in order here. In the same news article, a spokeswoman for the AG indicated that there are two investigations going on into the actions of the Echeneidae Collectoris operating in New York.

The court admonishes the AG's office for abject failure to perform it's role - only two out of the thousands of Echeneidae Collectoris skulking around in New York are being investigated? That's a major blunder on the part of the spokesperson for revealing that absurdly low number, when even the BBB (another toothless watchdog) indicates collection complaints are number three on its list. But of course, in the eyes of the BBB anyone complaining about Echeneidae Collectoris has to be some kind of deadbeat trying to get out of paying what they owe.

Perhaps as the presidential election approaches, Mr. Spitzer's office will find room for a few more announcements about investigations, even if they never turn into actual prosecutions with real penalties.

Hint to the NY AG: Do a Google Search on "Orazio Lembo." The folks over there in NJ have a long list of Echeneidae Collectoris and their NY law firms who willingly participated.

The Honorable Judge Roy Bean.

Abramoff – Not the First, Certainly Not the Last

2006-01-16T12:05:00.000-04:00

The smell up yonder in Washington finally got strong enough for somebody to kick someone's ass to do something, and what'ya know - they’ve found the perfect deep-pocketed, well-connected fall-guy, Jack Abramoff.

And hopefully, there are going to be some members of Congress and the Senate dragged into the light of day for not only dealing with Abramoff, but with other lobbyists who basically pave the streets with money, dealing in favors and perks for the powerful.

At the top of the list of tainted lawmakers, scurrying now like roaches when the light comes on, is none other than the man identified as “Number 1” in the investigation, Bob Ney, Republican Congressman from Ohio.

What most of the news media is swarming around is the Congressman’s position as Chairman of the House Administration Committee, all the while being led in that direction because of Ney’s handling of election reform issues the committee deals with. That, it seems, will always get the media’s attention because the news media believes it, not the average person, should steer elections and their results.

But under that umbrella, Ney’s far more profound impact on the average consumer will probably be kept out of the rain of publicity it so richly deserves.

As will his other cozy lobbyist pal, Wright Andrews of the Butera Andrews “law” firm, a lobbying powerhouse for many of the financial services firms and their associations. Saying Andrews is a Squaliforme promoter doesn’t do him, or them justice. Suffice it to say, nothing that Andrews and the Squaliformes don’t like will end up in a bill that comes out of Ney’s Financial Services Sub-committee.

In the guise of standardizing the patchwork of laws that have cropped up because of deliberate stalling of real lending reform efforts, Andrews has Ney promoting something called the “Responsible Lending Act,” which is little more than a nation-wide license for Squaliformes to supersede state laws that protect consumers.

Having stepped down (as in, ousted) from the House Administration Chairmanship, it isn’t yet clear whether or not Ney will get to keep his Chairmanship of the Financial Services Committee.

Hopefully, Andrews’ key to the kingdom and shepherd of the Squaliformes’ “Responsible Lending Act” will be forced from office and more appropriate pro-consumer legislation can find its way out of the stranglehold the industry has had on the committee.

The Honorable Judge Roy Bean

A note from the Clerk of the Court

2006-01-07T14:28:00.000-04:00

His Honor wishes to advise all in the surrounding environs that he has recovered from his extended vacation and Court will resume in normal fashion, er, well, let's just say shortly.

Oh, and a prosperous New Year to all - with the exception of the Squaliformes and scammers out there; to those, y'all are in for a rough year.

Sallie Mae's Arrow Financial Gets a Wrist Slap

2005-11-29T16:41:00.000-04:00

It's nice to have friends in high places, especially when you're a slime-ball collector who violates the law.

Good 'ol Sallie Mae bought Niles, Illinois-based Arrow Financial Services about a year ago. Arrow is one of the junk-debt Squaliforme Echeneidae. They've been under investigation over the last two years in Minnesota for little tricks like calling employers and talking to co-workers about debtors, taking more money out of checking accounts than was authorized, failing to respond to the investigators, etc.

Apparently, up there in Minnesota, Commissioner Glenn Wilson of the Commerce Department is still wondering why this type of stuff goes on. Well, a quick look at the measly fines they dish out with Wilson claiming "The violations are serious and we cannot and will not tolerate this type of activity in Minnesota," puts a little more light on why.

According to a news article, Wilson's department regulates 879 licensed collection agencies and nearly 31,000 individual collectors. But in the last 33 months, they've only taken action against 33 collection agencies and individual debt collectors - that's only about one a month.

And with those 33 actions, they've taken in about $300,000 in penalties. You do the math. Wilson's math isn't all that good - the fine for Arrow is $125,000 for 15 violations, and it's apparently a record fine.

I suppose what Wilson and the folks at Sallie Mae would love everyone to believe is that this strong (?) enforcement will somehow make the other 878 licensed agencies and 31,000 individual collectors sit up and take notice when they're harassing citizens of Minnesota.

Sure. They're all simply terrified.

For dragging a simple investigation out over two years and then letting Arrow off with a wrist slap, Wilson and his minions in Minnesota get the Sleeping-Watch-Dog award for November.

The Honorable Judge Roy Bean

Just When You Thought it was Safe

2005-11-04T17:34:00.000-04:00

With the Dorean Group mortgage-elimination scam head honchos as dishonored guests in the hoosegow facing both state and Federal prison terms, you’d think things would kinda point people in the general direction of reality when it comes to these schemes and their promoters.

Well, if you thought that, you’d be wrong. Like a bad case of the creeping gomboo, Dorean’s scheme is creeping back into the victim luring business. It’s being re-re-re-re-tooled with the help of some of the founder’s old friends – and apparently even family.

I guess there’s just too damn much money to be made to let a scam die under the weight of the threat of going to jail for running it - no matter how many victims you create in the process.

The Dorean wannabees include good-ol’ Bill Julian (not so fresh from his losses in court), along with Bob Knupp. They apparently tied themselves in with Bob Locke, the infamous scammer behind yet another debt elimination program aimed primarily at credit card users.

This band of mental light-weights was roundly denounced by none other than Farrel “Foul Mouth” LeCompte, former high-and-mighty purveyor of his own version of legal and banking reality while defending Johnson and company on just about every forum known to man.

Of course, the incriminating material on Farrel’s ccrescam web site finally became too hot to keep up there; either that or someone finally convinced the knucklehead he was violating the court order. So while apparently trying to cooperate with the authorities he so fearlessly denigrated and dismissed as nothing to worry about in the past, he now is letting all the web site owners go-it-alone. And all that great "educational material" (read: evidence of the scam) is gone – he wishes (damn those web-caching servers!).

And what has to be a real hit in the gut for LeCompte and Santeramo is that the great one, none other than “Dr.” Fred Johnson, has apparently joined with the Julian and Knupp crowd. After all, while Kurt and Scott are just not quite able to bully and pontificate their way over the courts, why not let another gang of fools take advantage of all that legal brain power – and of course, all those new DVD’s?

Now if they were only operating ‘round here. We’re in need of some cheap labor and Bubba’s kinda tired a bein' the only one in the jail. He's sayin' there's parts of him that are starting to itch.

HSBC Following Fairbanks Footsteps

2005-10-21T12:05:00.000-04:00

Utilizing a similar legal stand as the Curry v. Fairbanks class action case, Rebecca Turner-Freely of Philadelphia has filed a class action case against HSBC, the Squaliforme that swallowed one of the most dangerous of all Squaliformes, Household Financial.

Typical of the schemes perpetrated in predatory mortgage servicing, Turner-Freely's suit claims: “Defendant has uniformly engaged in a scheme of illegal, unfair, unlawful and deceptive business practices that violate contract and state law in the servicing of home-secured loan transactions and in the provision of certain related services.”

Sounds like HSBC hasn’t been reading the Curry v. Faribanks playbook, er, settlement.

The key difference in this case is that while the mortgages involved allow the addition of attorney’s fees for foreclosure purposes, the language of the HSBC-serviced mortgages apparently doesn’t allow for “fee shifting” of legal expenses in dealing with borrower bankruptcies – something that HSBC has routinely tried to shove down the throats of bankruptcy filers - even after their discharge.

Of course, once any predatory servicer starts saying a borrower owes more than they actually do, the spiral down toward foreclosure is predictable. HSBC even attempted to charge the plaintiff for a Sheriff’s sale that never took place, nor was it ever even advertised.

Obviously, this isn’t an isolated incident, therefore the class could be large. The firm handling the case is McCullough & Eisenberg, P.C., of Warminster, PA. Stuart Eisenberg’s phone number is 215-957-6411.

The real question is, and will always be, will a win permanently change their behavior or the behavior of other servicers?

In this court, it would. Partly 'cause they'd be behind bars long enough.

The Honorable Judge Roy Bean

Katz Cops a Plea Bargain - Dodges Real Punishment

2005-10-06T15:52:00.000-04:00

Clever as ever, Howard Katz pulled a fast one by pleading "no contest" to the charges against him. Instead of going to trial and facing an almost certain guilty verdict, and instead of just pleading guilty, the maneuver will prevent the civil lawsuits against him from being able to point to a conviction as evidence of his scamming.

Not that he got off completely, but damn close to it compared to what he should have gotten which would have him in the hoosegow for most of the rest of his life.

On top of two years of not being able to practice law and six months of home confinement (boy, that's a drag), Katz is supposed to cough up about $100,000 in fines and costs plus almost $44,000 in restitution to some of his Lincoln Park victims.

Hopefully the Michigan Attorney General, Mike Cox, will do more than just put out some pretty PR piece about an investigation based on information from the Michigan court's own inquiry into Katz's practices.

But this Honorable Court questions why the firm he heads is still allowed to do business?

Special prosecutor John Gillooly originally talked tough prior to the trial, but he now says he's happy with the plea agreement. Well, he didn't have to actually go to trial so maybe that's good in his eyes. But then he tries to put lipstick on the pig: "When you and I are able to leave our residences freely and do what we want to do on weekends, Mr. Katz isn't going to be able to do that for several months."

Bailiff, break out the tissues - I can see the tears welling up from here.

Katz & Katz is nothing more than an on-going criminal enterprise with the resources to avoid having to actually pay for their crimes. And others who operate in the same deliberately abusive manner apparently have little to really fear in these cases if just one of the perpetrators pays a fine and gets a court-imposed vacation from work.

'Round here we have a slightly different view of where criminals should end up, and "no-contest" isn't one of the options.

The Honorable Judge Roy Bean

Crime Does Pay

2005-09-20T11:59:00.000-04:00

A touch of historical perspective: For citizens of the territory not familiar with mortgage servicing scofflaws, one of the prominent positions on the Squaliformes Hall of Shame belongs to one Thomas Basmajian, founder/perpetrator and former head of what came to be known as the poster-child for mortgage servicing abuse, Fairbanks Capital (nka Select Portfolio Servicing which was recently acquired by CSFB).

The slap on the wrist given Fairbanks included a little zinger for Basmajian, to the tune of $400,000.00. It also barred him from working in the financial services business without the approval of the court.

Word was that the big house in swanky Park City was long gone at the time of the settlement. But before you go worrying about the poor Basmajians, consider that according to CA property records, their golf-course residence in ultra-swanky Pebble Beach was purchased just three months before the settlement was announced. And just so you'll know, even a little low-end bungalow thereabouts is over $1M.

But good old Tom apparently decided to stay in business in Salt Lake City. Word is he is involved in a business he knows a lot about – distressed residential real estate. You know, foreclosed homes. But instead of creating foreclosures, he's working the other end of the schemes and letting the other servicers generate the products, using what they learned from the settlement.

Things must be going pretty well. Foreclosure stats are up for SLC.

And just consider the $1.3M home in SLC’s also-swanky Cottonwood area he purchased late last year (Blogger's alleged image upload "service" isn't actually working as advertised, so to see dear ol' Tom's house you'll have to click on the URL below):

http://www.imgplus.net/pict.php?ad=0&id=2dd1761467

(Aint property records on the Internet fun?)

So while tens of thousands of just-plain folks got scammed, even lost their homes or were forced into bankruptcy, good old Tom Basmajian still seems to be doing quite well.

Yep. Just think how rough it’s been not having the private jet to get back and forth.

The Honorable Judge Roy Bean

More Experian Skullduggery

2005-09-16T11:10:00.000-04:00

Experian's Metronet "File One Phone Search" Exposed

For $50.00 a month plus $0.35 per search, Experian customers will get unlisted and cellular numbers – and where do you suppose some of those come from?

Well, how about that toll-free number you call to “opt out” of the mailed offer deluge from the data brokers and credit card companies or to ask for your "free" credit report?

What people don’t realize is that calls to toll-free numbers (800, 866, 877) also include a data stream that includes the calling party number, even if you block your caller ID (different system). The Squaliformes are more than happy to correlate your SSAN with a phone number you call from and then sell it.

So much for paying the phone company for a supposedly “unlisted” number.

And if you think calling from your place of business or work is a good idea, think of all the Echeneidae Collectoris out there who would just love to know where you work and could care less about bending or breaking the law about contacting you there. Or at any number you just happened to use.

The Honorable Judge Roy Bean

Katz Story Continues to Unfold

2005-09-09T16:22:00.000-04:00

Michigan Judge Sets Trial Date for Echeneidae Collectoris

As we earlier reported almost exactly one month ago, Howard Katz got caught sneaking bogus collections cases through the Michigan courts (not much new there in terms of what those kinds of lawfirms will try to get away with).

But one of the courts finally got fed up with the smell, and now Judge David Bajorek has ruled Katz is to be tried later this month on contempt charges - as in 308 counts of filing fraudulent documents and affidavits.

It's not the nature of the cases or the contempt charges - what's worrying the creditor's bar right now is the magnitude of the prospective penalties. Judge Bajorek's view is that Katz faces 30 days in jail and a $250 fine for each of the counts, mainly because he agreed with prosecutor John Gillooly that Katz did it as a "continuing practice."

That's a little more than 25 years. That might just get their attention, although the $77,000 probably won't keep any of them up at night and it's unlikely Katz (at the age of 60) will spend the rest of his life in prison.

But the case has gotten the attention of other Michigan courts who are digging into Katz's filings. And we can hope the civil suits will follow shortly and in sufficient numbers to put the Katz operation out of business permanently.

One Echeneidae Collectoris nearly down, many to go.

The Honorable Judge Roy Bean

Can we have a little fun while we’re at it?

2005-09-09T11:12:00.000-04:00

Hear ye, hear ye! Residents, denizens and all persons of the territory and surrounding environs (and anybody who just happens to drop by):

Be it known that from this date forward, recipients of unsolicited mail purporting to offer various and sundry forms of credit, loans, insurance or other financial gobbledegook are hereby ordered to no longer simply dispose of same without opening.

Recipients are further instructed to remove the “return mail” (i.e., “business reply mail”) envelope and insert in it a blank piece of paper (appropriately folded to fit). This item is then to be deposited in the recipient’s outgoing mail receptacle or delivered to the appropriate United States Postal Service facility for return to the Squaliformes at their sole expense.

Be it so ordered.
The Clerk of This Honorable Court

[(Note from the Clerk of the Court: His honor wishes to recuse himself from this particular matter in that he does not want to take credit for the idea and thus he offers himself the defense of plausible deniability for any outcome.)]

Another Breed of Squaliforme Surfaces - Eric McDougal

2005-08-27T10:20:00.000-04:00

Just when you thought it couldn’t get any worse, now comes a new breed, a mortgage lender/broker who works in collusion in advance with the Echeneidae Collectoris.

Offering kick-backs to collectors for referrals for high-interest loans, one Eric McDougal, a Sacramento-based mortgage broker, is ever the self-promoter. Finding his way on to a web site forum for collections “professionals” he touted his “services” to the crowd:

What are "anyones" feeling on referring out the debtor to a mortgage company to help pay off the debt within a 2 week period and making your EOM (end of month)?

I can help. I am a loan officer in California and have been working with collectors for the past 3 years. I can do lending in all 50 states, so there's no need to be looking for a broker in each and every state. I keep in constant contact with my clients and my collectors and will never ask to settle a referred debt.

Please contact me at xxx.xxx.xxx and I will explain more and what we can do for each other.

Thanks,
Eric McDougal

One of the more savvy Echeneidae mentioned there can be problems with the TILA-required 3-day rescission option - and Eric’s response?

Well, let me explain what I do in the case of the 3 day recision....... Are you ready.... this is pretty big.... I will do a check by phone, out of my own accout and then be remburised by the title company.

2. Checks will NEVER be cut directly to the debtor, I have my title company do a direct wire into your companies accout.

3. I am self employeed... If I don't close, I don't eat. I am NOT a direct lender, I am a mortgage broker. Therefore I can use many many lenders to push loans thru. From manufacter homes to Texas loans with a hundred head of cattle on 100 acres.

Now, on the question for credit scores. There is one lender that will go down to 475 fico. Unfortantly that will only come with a 65-70% LTV (loan to value). I like to stick to 500 and above in which I can get a loan secured at 80% LTV (as long as there are no mortgage lates) and with some of the lender's that I use, I can get an extra 5% exception, if needed.

ALSO, I like to put on contests within the office.. Some of the collection agencies that I have worked with will allow me to give away Mexico Trips or other kind of incentives for the collector that funds the most loans.

I agree with you, a lot of lender's CAN'T close a window, but I like to work hand in hand with the collector to put the fear of God into the debtors and keeping in constant communications.

Give me a shot, you won't be disappointed.

What'll you bet the borrower doesn't realize they're not getting a check for the amount they were expecting until after they sign at the closing? And isn't it a great idea to be working with a mortgage broker who likes to work hand in hand to put the fear of God in you?

When dealing with someone with an apparent 5th grade education and spelling skills, one should expect to be at least disappointed. And as to another question about having the consumer's credit reports fixed:

100% of my pipeline is collection referrals.

You are correct in thinking that the "smarter" consumers are going to request that their neg. tradelines be deleted, but the honest answer is.... they don't.

These are consumers that, well, had a bad month and decided to "charge it" with hopes that money would be coming in the prior month. The only thing I've ran into with a knowledgable consumer is refinancing fees, in which I will work those out with them until we become in agreement, but, the negotiations can only last so long with the collecter calling and calling with the threat of legal actions. At that
point, the debtor just wants to get it over with.

Notice there is never any concern that the debt might be completely invalid? Doesn't matter to guys like Eric McDougal.

Again, converting unsecured debt (valid or not) into secured debt is just one of the industry’s goals and the low-lifes like Eric are out there beating the drum to collude and put people further into jeopardy while spreading the wealth with kick-backs off of what might be completely invalid debt.

And you don't suppose the lenders stepping into these scams are of the high-caliber, upstanding variety, now do you? Sure they are. And it don't rain in Indianapolis in the summertime.

What we see happening is taking a few thousand dollars of possible debt, turning it into a predatory refi loan that's secured by the victim's property, and then handing that off to one of the sub-prime servicer Squaliformes.

If you ever talk to a mortgage broker out of California by the name of Eric McDougal, hang up and don't return further calls.

McDougal better not show his sorry arse in these parts. We have places for people like him. Cold as all get-out in the winter; hotter'n hell rest of the time. I'd recommend a new line of work but most require honesty and moral turpitude.

Unchecked Power Demonstrated Once Again.

2005-08-16T22:00:00.000-04:00

As noted here previously, “freecreditreport.com” has been a scam from the get-go, luring consumers into alleged credit scoring for free, all the while only setting people up to find out they aren’t getting what they really need unless they pay. Worse yet, even setting them up into paying for a $79.95 per year charge (in advance, of course) if they didn't realize they had to cancel the bogus "service" within 30 days.

Well leave it to the FTC to belatedly go after the schemers and finally make it look like they’re doing their best to protect the millions of victims of the credit scoring cabal.

Under the guise of things like “consumerinfo.com” and its subsidiaries Qspace and Ispace, none other than data broker Experian had found yet another way to fleece consumers.

But once again, the toothless FTC is getting zip compared to the damage done and business goes on as usual.

And like most FTC announcements, this one plays to the supposed diligence of the FTC:

"Consumers paid the price for ordering free credit reports from freecreditreport.com," said Lydia Parnes, director of the FTC's Bureau of Consumer Protection. "It's unfair and deceptive to promise consumers something for free and then trick them into paying for products they didn't want in the first place."

So why the paltry $950K fine? And why did it take more than three years to bring the practice to a halt?

Well, you can only chalk another one up to the unmitigated power Experian has in the halls of Washington.

On this side of the Pecos, letting the perps get away with it this long and with a meaningless fine would get Ms. Parnes fired and then some.

The Honorable Judge Roy Bean.

One to Keep an Eye On up in Michigan

2005-08-08T14:28:00.000-04:00

The Katz & Katz "law firm" scam in Michigan has caught the eye of at least one other judge who apparently doesn’t like the status quo.

Turns out Katz and Katz got caught pulling one of the typical bogus-notification schemes against alleged debtors, then walking away with uncontested judgments when the defendant didn’t show up to a hearing they didn’t even know was taking place. Howard Katz is facing 300+ criminal contempt charges for getting caught filing bogus documents in the 25th District court (in nearby Lincoln Park).

To his credit, Judge Stephen Cooper (46th District over in Southfield) has now turned to the Michigan District Judges Association and pointed out that things weren’t fair for average people. (DUH!) Like anyone who's observed these schemes in action, he’s seen things like multiple suits against the same party for the same alleged debt or the typical trick of going after people who have no connection to the debt. And he apparently has “serious concerns…about the validity” of some of the filings the scammers try to pass through the system - and there are about 500 per month in Southfield alone. Cooper's clerk refused to accept 75 cases and tossed them back into Katz's lap when the scammer said he wouldn't try to justify the inexplicable fees and charges he had piled on, so there's going to be more court action on that front.

The good news is Cooper's apparently not the only one who thinks the stench is getting too strong. If he gets enough support from his fellow jurists and can get the State Supreme Court to make some changes, some of the more blatant collection scams might be harder to pull off - at least in Michigan.

The bad news is the Echeneidae Collectoris will eventually try to find other ways around any new rules that are implemented unless the fines and penalties actually put a few of them out of business and some law licenses get pulled.

The Honorable Judge Roy Bean

Well, the Washington Post gets at least part of it right!

2005-08-01T09:44:00.000-04:00

http://www.washingtonpost.com/wp-dyn/content/article/2005/07/27/AR2005072702473.html

The Court hereby notes that Warren Dedrick, head of Marlin Integrated Capital gets the “Squaliforme PR Bozo of the Month Award" for July, with this inanity as quoted by the above-linked article’s author, Caroline E. Mayer:

"In every sector, there are bad apples, but 95 percent of all debt buyers are good, nice business people. I believe hardly any debt buyers break the law, but on the other hand, if you're talking to a consumer once a week for six weeks, it's going to do nothing but alienate the consumer base."

Interesting way the industry is trying so hard to change its image by renaming themselves as "debt buyers" instead of what they really are.

95 percent are “good, nice business people?” "...hardly any debt buyers break the law?" Warren, doesn't that really mean you're trying to cover up the fact that debt buyers are still the same old debt collectors who ROUTINELY BREAK THE LAW?

Coming from the species who lie, cheat, steal and intimidate people, this Court sentences Dedrick to three nights in one of our already occupied cells for making a knowingly false public utterance.

[(Note from the Clerk of the Court: Mr. Dedrick, don’t mind Bubba. He’s a bit weird and testy as all get-out from time to time. You’ll be better off not waking him.)]

Bidding for the Movie Rights?

2005-07-22T17:01:00.000-04:00

The long, sad saga of the Dorean Group is entering a new chapter, with the two principal perpetrators now in custody and hundreds of panicked "client" victims left to wonder what will happen to them.

Maybe a movie? How about "The Three Stooges Go to Jail?"

In addition to the three key players (more on #3 in a moment), they'll need lots of co-stars and a huge number of walk-on actors to represent the victims. There are still a number of accomplices out there who lured people into the scheme (most of the URL's tie back to the ccresource site and some cannot be identified with specific individuals):

1kperday.net, 86yourmortgage.com, abao.us, advancedvalues.com, allamericansolutions.com, allisbright.net, amgdebtfree.com, b-homefree.com, barneshelp4u.com, befreedebtfree.com, byebyemortgage.net, cashandhome.com, ccresource.com (Farrel LeCompte, TX), ccrsteamboat.com, chrysalisinvestmentgroup.com, cleardeed.net, coachsvision.com, countriesforsale.com, crownmortgagefree.com, debtcrusher.net, debtfreecolorado.com, debtfreehome.com, debtfreepeople.com, debtfreepromisedland.com, debtfree2morrow.com, deletemortgages.com (Eduardo Bicierro, WA), didyoueverthink.com, domortgagesright.com, doubleyourwealth.com, dueprocess.org, easymortgagefree.com, erasemymortgage.com, ezmortgagefree.com, fazon.us, fiatcapitalresources.com, financialfreedlom123.net, freeandclear123.com, freedom101online.com, freedomfinancialconsultants.com (Byron Gashler, IA), freedomforyou.net, freehometrust.com, freehousenow.com, freethefarm.com, futurefreedomnow.com, gomortgagefree.com, goodby-mortgage.com (Art Schaefer, CA), goodtradewinds.com, helpeliminate.com, homedebtfree.net, homefree123.net, homefreewithme.com, homewardboundgroup.info (Bill Julian, Rodney Austin), honestbanks.com, honsestmortgage.org, ifyoucould.net, jamesdevine.net (James Devine), jblessing.com, jfreedom.com, joedebt.net, johncanhelp.org (Alan Johnson), karenkunz.com (Karen Kunz), knhservices.com, loanfreehomes.net, loanviolations.com, mortgageelimination.org (Todd Clark, GA), mortgagefreedom.biz, mortgage-free-us.com, mortgagefreeandclear.net, mortgagefreeatlast.com, mortgagefreeforever.com, mortgagefreeforme.com (Israel Perl, NY), mortgagefreegroup.com, mortgagefreein60days.com, mortgagefreelifestyle.com, mortgagefreetoday.com, mortgagefreetruth.com, mortgagefreetitle.com, mortgagefreeus.com, mortgagegone4ever.com, mortgageisgone.com, mortgageremoval.com (David L. Cossak), mortgageremover.com, mortgages-elimination.com, mortgageterminated.com, mortgagevictory.com, mst101.com, myhomepaid4.com, nfins.com, nodebtatall,com, nohomeloan.com, nohousepayment.net, nomorenote.com, nomomortgage.com, nomortgageforme.com, nomortgageloan.com, patjohn.com, pcmsolutions.org, postmortgage.com, ptdebtfree.com (“Crown Financial Group”), puredebt.com, rcalibertymortgage.com, releasemyfortgage.com, removeyourmortgage.com, rjtdebtfree.com, seemedebtfree.com, speedymortgageretirement.com, stophomeloan.com, stophousepayments.com (Darlene Sundstrom, CO), stopmortgagedebt.com, stopyourmortgage.com, terminate123.com (Tamazi Gogadze, CA), themortgagetriangle.com, theobsidianconnective.com, thesamuelsgroup.com, thom15.com, todaysolution.com, treasureinheaven.net, truthinlending.us, underyourroof.com, voidmortgages.com, wealthadvancement.org, whatifitstrue.com, wipeoutyourmortgage.com, wisdom2elminination.com, wmag.us (Wealth Management Advisory Group - Mark C. Roy), yourhomefreeandclear.net, yourlastpayment.com, zapmortgages.net, zeromortgage123.com.

As the disaster caseload picks up around the country, there is a third someone who is showing up as a common-denominator behind or at least along-side the two key perpetrators in the legal filings they attempt to foist on the courts. And this isn't all that new.

In Citibank (South Dakota), N.A. v. Argiro, Rockingham, New Hampshire, Superior Court - Docket # 03-C595. the court ruled:

The defendant filed an affidavit from someone named Todd-Ellis; Swanson (sic) who is alleged to be a certified public accountant residing in Greenville, South Carolina. A review of this multi-paged document suggests that the affiant espouses ‘voodoo economics.’ If the subject matter were not so serious, the affidavit would have to be considered laughable. Its reasoning is akin to a current astronomer offering evidence to prove that the world is flat. The Court rejects the affidavit out-of-hand.

Even a couple of years later, attorney's can get caught up with these theories. Bill Julian's case (note the name of one of the above listed Dorean Group web site promoters) was similarly derailed with an attempt to use a Swanson affidavit, as was JED Lambeth's. The attorney in both of those more recent cases was allegedly taken in by the scam and is now seeking to withdraw from further procedings in the Julian case as well as avoid sanctions the court is considering bringing against him for the debacle. He apparently thought there was going to be a major opportunity in representing cases backed up by the Swanson theories.

So if the victims are counting on the brain-trust of Swanson/Heinemann/Johnson to save their homes in the coming weeks and months, they're in for another nasty surprise.

The Honorable Judge Roy Bean

Honor Among Theives?

2005-07-15T17:31:00.000-04:00

Ya gotta love scam artists, in a way. All of us at one time or another have cheered on the likes of the characters in “The Sting,” or perhaps more recently, “Ocean’s Eleven” (and Twelve). Something about scamming the rich, the powerful or especially the greedy seems downright appropriate.

So when we see scams pulled by the little guy against a bigger guy, we may even have some sympathy for the scammer. Call it the "Robin Hood" syndrome.

But what if the little guy is only appearing to be scamming the big guy? What if the supposed little guy is actually scamming a bunch of his supposed-fellow little guys? And what if those little guys are actually victims of the kind of financial schemes this Court so adamantly opposes and routinely chastises herein? Victims desperately looking for help.

Scamming those who have been taken advantage of is lower than low. The perpetrators of these things can get in any room they want without even opening the door.

Comes now before this Court the principals and purveyors of various debt-elimination schemes, specifically persons associated with The Dorean Group and related entities. The Court recognizes half of the brain-trust behind this thing is now incarcerated in California; the other half (a former convicted felon) is hiding from an arrest warrant and supposedly blogging away to fan the fires of what has now seemingly mutated into quasi-religious fervor among some of the faithful.

The main player's circumstances don’t stop their minions from defending them and still promoting the illegal program, although one would think it would be pretty hard to sell it to anyone who has Internet access and a search engine.

From all appearances, it now appears they are positioning themselves for martyrdom, if not outright sainthood among the deluded crowd.

It is interesting to see how these folks are connected and networked together; they share a common conspiratorial theme (which are various versions of a long-held mythology so the Court won’t dwell on it) but they also have another commonality – they position themselves as having extremely valuable, secret knowledge a consumer/borrower can buy and use to save themselves thousands, even tens or hundreds of thousands of dollars.

What a wonderful concept! And the only loser in the program is the Squaliforme?

Were it only true. The losers are those who paid money for the programs. Two time losers are the ones who actually tried to use them. Soon to be three time losers are the victims when the legal system puts them through the meat grinder and takes their property. And surprise, surprise, there’s nobody from the scammers ‘round to help out.

And when looking at those participating, it is illustrative to look at the case of one “Jed” (Joyce Earl Delancy) Lambeth.

Mr. Lambeth is by all accounts a man of many interests, including being interested in various debt-elimination schemes, one of them being the Dorean Group, with which he was named in an action taken by the North Carolina Attorney General which resulted in a court order barring them from doing what they were doing to anyone else, let alone promoting it in NC.

Now, if that one won’t work, perhaps being a partner in something called “The Liberty Group,” will keep Lambeth’s attention, seeings how they have their own mortgage elimination scheme as well as links to at least three other scams and one MLM scheme:

A “loss-mitigation” foreclosure-rescue scheme that preys on mortgage victims about to lose their homes – which you can also become an agent for to make money while doing it);
One (of two) car-loan elimination scams “Jed” promotes (more on the other one in a moment);
A link to the New Leaf Associates debt-elimination scheme for which Jed is an agent;
And last but not least, his partner's health and wellness MLM business

Jed also promotes the Echard & Burnham Global Freedom Solutions tax dodge program, where you can learn more of those little-known secrets of why you don’t have to pay income taxes – oh and you can buy a website to make money misleading people too.

If those and the Dorean thing aren’t enough, Jed is also an agent for another car-loan debt elimination scam set up by one David Echard [( does that name "Echard" ring any bells? )] dba “D&H Associates.” There are currently ten or so other “agents” who paid for the privilege of having a web site to lure people into a run-of-the-mill DE scam. Lord only knows how many got recruited, then paid then found out they were duped.

D&H Associates was none other than one David Echard (and a woman who will go back to being anonymous for the time being), who were themselves at one time, down-line agents for an MLM scam that had it’s home in Canada: United Financial Consumers. Back in 2003, these folks started marketing an “equity recovery” scheme that the RCMP stepped in, er, onto:

“We have just been informed by the Winnipeg Commercial Crime Division of the Royal Canadian Mounted Police (RCMP), of a clever scam being perpetrated by several people across Canada against life and health insurers, mutual fund companies, banks and possibly other types of
financial institutions. In this case, the company receives a well crafted 19-page contract entitled an "Agreement for the restoration of the equities including Promissory Note and Security Agreement" together with a $10 Postal Money Order representing the contract's monetary consideration. The action of any employee or agent of the company on the money order would become forensic evidence of the acceptance of the agreement which amounts to accepting liability for a debt of $2,604,810 plus all sorts of costs, including legal costs.”

Clever, eh? Well, it was for a time.

Maybe the highly-publicized demise of the Dorean Group will help dissuade victims from grasping for the lead-lined life-preservers these scammers are selling.

If only we could round them all up...I could have this one over in about an hour. Not enough cells to go 'round; they'll have to double bunk some. Then again, we could use some hard labor help 'round here.

The Honorable Judge Roy Bean

Here We Go Again; FTC Lets Another Scammer Deny Wrongdoing

2005-07-11T15:55:00.000-04:00

This latest case is a perfect example of why the species continues to proliferate.

Some people may have already heard about the Alyon scam, but for those unfamiliar with it, one very clever Stephane Touboul set up a web site back in 2003 that when a consumer clicked on a button, a download ensued which the consumer supposedly had agreed to.

So far, so good, right? People download stuff all the time.

But Alyon’s program was also a Trojan horse; it disconnected the user’s normal Internet connection then unknowingly reconnected them on a $4.99 per minute dial-up network link to the service they had signed up with. Clever these ‘net schemers are, eh?

Needless to say, a lot of the consumers found the ridiculous scam charges on their phone bills and challenged them. Some rightfully refused to pay.

Enter Echeneidae Collectoris – TelCollect, Inc., who took over the collections of the illegally-charged accounts as if they were legitimately past due, sending out thousands of letters and going after people who were victims of a scam.

Over a year later, in December 2004, the FTC finally got them to drop $17M in bogus charges.

Gosh – what a deal. Now Alyon is barred from billing a consumer unless it has “verification that the consumer is an adult who has expressly agreed to purchase the services…” as well as being barred from “planting software on consumers’ computers without their consent.”

As for the Echeneidae Collectoris? The stipulated order is similar: TelCollect is “…permanently barred from billing a consumer for any videotext services unless it has verification that the consumer is an adult who has expressly agreed to purchase the services…” Oh, and the real supposed “teeth” of this order: “The defendant is also required to obtain written agreement from each vendor it works with that the vendor will comply with the terms…” And they’re supposed to "investigate consumer complaints and take appropriate action." Right.

Once again, the FTC let’s them both off the hook: “Note: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation.”

Y'all in Washington know how many minutes it takes to get a few million scammed bucks stashed away into a Caribbean bank? Trust me, it aint a year. And letting them off without them having to admit they broke the law only makes it easier for the next one.

Had they pulled this ILLEGAL crap on this side of the Pecos, neither company would have survived 2003, let alone still be operating in 2005. Oh, and while we were at it, we’d a found the money. The Court could use a little beach time.

The Honorable Judge Roy Bean

Time is Short; The Squaliformes are Hungry

2005-07-05T07:55:00.000-04:00

As predicted here back in November of 2004, the Squaliformes have been drooling and are about to get what they’ve long coveted:

What most people don't realize, but more will as we age and come into contact with the healthcare delivery system in this country, medical records are an almost un-tapped ocean of personal information from which the squaliformes can make judgments about you.

Demographic profiling of medical records will allow them to analyze new risk factors and develop scores based on things like lifestyle choices, illnesses, even dietary patterns. And the data is already being collected and analyzed for the life and medical insurance Squaliformes by MIB (formerly known as the Medical Information Bureau).

So if you go to your doctor and get treated for say, alcoholism, don't you think your auto insurer would be interested in that? You bet your a** they are. And with health insurance reform coming down the pike in Washington this next session, don't be surprised if you wake up one morning and find out they've already started sharing MIB reporting data on you for things other than medical insurance claims fraud detection.

The Squaliformes are ready to trade almost anything to get around the limits on actually using the information they already have and continue to collect. It's too late to stop the collection (your medical records are routinely sent to MIB), so now it all comes down to trying to keep them from using it for something other than the purposes they say they use it for.
The Honorable Judge Roy Bean
The FACT Act turned the sensitive issue of what to do about formerly private medical information over to the agencies responsible for making the rules. But of course, the Squaliformes have been holding the hands of the sleeping watchdogs in Washington for decades, and they're essentially writing those rules for the obtaining, sharing and use of medical information in credit eligibility decisions and more.

The “interim final rules” from the OCC, FRB, FDIC, OTS and the NCUA have been published and the public (read: future victims) have until only until July 11th of this month to comment.

The sleeping watchdogs’ view of the “Let the Squaliformes Hunt as They See Fit” rules and how to comment about them are here:

http://www.federalreserve.gov/boarddocs/press/bcreg/2005/20050606/attachment.pdf

It’s big – 110 pages, but it doesn't take a lot of time to download. (Nothing like making the victims work under a deadline to try to save themselves.)

A quick summary (quoting now):

“The interim final rules create exceptions to the statute's general prohibition on creditors obtaining or using medical information pertaining to a consumer in connection with any determination of the consumer's eligibility, or continued eligibility, for credit for all creditors. The exceptions permit creditors to obtain or use medical information in connection with credit eligibility determinations where necessary and appropriate for legitimate purposes, consistent with the Congressional intent to restrict the use of medical information for inappropriate purposes. The interim final rules also create limited exceptions to permit affiliates to share medical information with each other without becoming consumer reporting agencies.”

Legitimate? Necessary? Appropriate? They're making their own definitions.

The pages and the industry’s guidance in the design of the rules are the road map to the final destination: The destruction of the last vestiges of personal privacy.

Unfortunately, we’ve sat back and let them compile everything they ever wanted and are suddenly waking up to the fact that it is now probably too late to stop them. Not only is our personal financial information now bantered about without any real penalty to the perpetrators, that information blended with our medical history will be so valuable that no amount of supposed protection is going to keep it out of determined hands.

This onerous step is being taken to simply gut the FACT Act and establish a profiling system that has already been modeled for demonstration purposes.

Within that ponderous 110 pages are the legal definitions of what the Squaliformes want to be authorized to do; but we know from experience they will step far beyond the rules when it suits their purposes - especially when they get to define the purposes.

And we know any penalties for misuse (covert or otherwise) will be so infinitesimal as to not make them worry about it.

And if you think fixing a Squaliforme-enabler data broker’s contaminated credit database is unnerving and costly, wait until you find out you didn’t get a job because of the prescriptions you were supposedly issued.

If you don’t think it’s worth your time to respond, This Court hopes you are one of the very blessed few who never have a health problem.

The Honorable Judge Roy Bean

When His Honor Stops Laughing...

2005-06-30T08:21:00.000-04:00

[(Note from the Clerk of the Court: His Honor, after much struggle to regain his normal dignity and serious comportment, has authorized me to notify all within the environs of his jurisdiction that the court will be closed until July 5th. Hopefully, by that date, he will have ceased to find the news item below as amusing as he did this morning. We have coffee stains all over the place and one of the horses is easily spooked by hysterical laughing fits. She is still off her feed this afternoon.)]

The head of the sleeping-watchdog FTC, Deborah Platt Majoras got one of those letters from DSW. Her credit card information has been stolen.

Double Whammy - Our Tax Dollars at Waste

2005-06-27T17:34:00.000-04:00

Talk about dumber than a box of rocks!

The IRS has decided to award notoriously leaky Squaliforme data broker ChoicePoint a contract as it's public record provider.

The firm that has routinely demonstrated its gluttony for snooping-and-selling also announced it wasn't going to be making as much money from selling private information about everyone to some of its previous client base. About $20M less.

Instead, and almost simultaneously, the announcement of the IRS contract comes out. And guess how much that contract is worth? $20M.

Nice for ChoicePoint to have friends in high places in Washington. Friends with almost unlimited power and of course, lots and lots of OUR money to play with so they can have instant access to dig around into our formerly private lives.

Even if they are dumber than a box of rocks, they sure knew when to come to the rescue of a wounded Squaliforme.

The Honorable Judge Roy Bean

More Squaliforme Collections Lawyer Buffoonery

2005-06-20T12:46:00.000-04:00

Well, despite the FACT Act "safeguards" the geniuses in Washington said were going to help protect personal information, yet another example of just how careless all the Squaliforme relatives are has cropped up in Columbia, Missouri.

The "law firm" of Farber and Brand has been caught bungling the disposal of sensitive personal information - information they probably shouldn't have had in the first place ended up being found by a citizen at a recycling center.

The latest version of the Fair and Accurate Credit Transaction Act can be a problem for firms who don't destroy documents and computer files. There can be fines of $2,500 for each violation.

According to the newspaper account, partner Bart Brand said disposing of sensitive documents in a public recycling bin was against company policy. He said the firm takes all the necessary precautions to protect debtors’ personal information. However, he declined to say how the company disposes of sensitive data.

“We make every effort to comply with obligations, and we will continue to look into matter,” Brand said.

“I don’t know whether somebody that worked here made a mistake or somebody got into our office,” he said. “I don’t know what happened.”

Well, Bart, let's just hope there weren't a thousand people's information dumped into that recycling bin. At $2.5K per violation that might be real money for even a collections Squaliforme.

The Honorable Judge Roy Bean

Slow [In]Justice for Squaliforme Victims

2005-06-13T09:46:00.000-04:00

Gotta hand it to the lawyers and PR folk for the mortgage servicing Squaliformes Fairbanks Capital (kka SPS - Select Portfolio Servicing) and Homecomings (the GMAC/RFC sub-prime servicer).

After scamming hundreds of people in West Virginia out of their homes, the two Squaliformes have forgiven some $11M in debt and handed out about $750K in what West Viginia AG Darrell McGraw, Jr. says is "restitution."

And yet again, these two get away without having to admit they did anything wrong!

Homecomings' Stephen Dupont had the unmitigated gall to say the company "...did not initiate wrongful foreclosures nor did it engage in mortgage servicing abuses."

Speaking out of both sides of your mouth is an art form among these companies. Scam, get caught, fight against any meaningful punishment in the settlement, pay back a tiny fraction of the damage done to people, lie about the scam and keep on going!

Where's my cattle prod? And somebody get a rope. Make that several ropes. We'll do this all at once.

The Honorable Judge Roy Bean.

Squaliformes Fighting Among Themselves

2005-06-06T11:02:00.000-04:00

What goes around eventually comes around - sort of.

Squaliforme mortgage lender Loan Giant (World Wide Financial Services) has fallen on hard times and is being threatened with foreclosure and eviction by GE Commercial Finance.

Of course, being of the same general species, there are certain "professional courtesies" being observed, including discussions, despite the problem having been going on for years.

Loan Giant even managed to piss off a real giant - GMAC RFC in some dealings in Minnesota last year that resulted in a lawsuit because of some falsified loan application documents.

Even the FHA finally had to drop them from the approval list in 2004.

On top of that, since last year the State of Michigan has been doing some much-needed Squaliforme-hunting in an effort to revoke their license for the kinds of schemes that usually end up leaving the home-buyer/borrower hung out to dry.

But, of course the mortgage industry will point to these incidents as anomalies and keep their dancing-bear show going in Washington to try and block any further intrusions into their ability to take advantage of consumers.

I hereby offer the services of this Honorable Court to conduct the bankruptcy proceedings. (FYI, 'round here we have less "professional courtesy" available for Squaliformes.)

The Honorable Judge Roy Bean.

A Squaliforme by any other name

2005-06-03T18:25:00.000-04:00

One of the tricks of the trade used in collections is to scare ordinary folks into thinking there are dire legal consequences facing them when some third-party Squaliforme collector's lawyer starts harassing them over a debt they may not even owe.

The implication these low-lifes present is that because a letter or a phone call comes from an attorney's office, the victim should be afraid of being sued, or worse yet in some of the more ruthless cases, even arrested.

They also prey on the fact that most people don't realize that some of the Squaliformes will buy and then try to collect on debts that have gone far past the statute of limitations. The stupid part of this is, they can legally TRY to do that - as long as they don't threaten legal action.

Using this trickery, Squaliforme law firm Riddle and Associates, on behalf of CAMCO (Capital Acquisitions and Management Company), kept threatening legal action against someone for an MBNA debt that was over ten years old. The victim, Gilbert Gervais, sued - and won in U.S. District Court in Connecticut.

The real message here is that if these bottom-feeder lawyers even imply they are going to take you to court to collect something you legally don't owe any more, they are making a "false, deceptive or misleading representation," in their effort to collect, and having multiple phone calls and letters from the law firm regarding a "legal matter" is enough to imply they were going to sue.

Finally, a small victory for consumers!

Course, 'round here, we'd a had a quick trial and introduced these Squaliformes to the inside of one of our cells for a few weeks for pulling the stunt. Up there, they just spent a fortune on lawyerin' to try and keep their sorry asses from havin' to follow the law.

The Honorable Judge Roy Bean.

Credit Data Squaliforme Experian Objects!

2005-05-31T19:33:00.000-04:00

Whaaaaaaaaaa. Whaaaaaaa. Whaaaaaaa.

Can you hear the whining? All the way from Vermont!

Squaliforme data broker Experian is all broken up about an Attorney General using the all-too-kindly label of "data broker" in describing them.

Julie Brill, assistant AG up there in Vermont said in testimony that "data brokers" needed more regulation (which we heartily endorse). But Squaliforme cheerleader Tony Hadley (VP of propaganda, er, "Government Affairs," for one of the biggest Squaliforme data manglers) objected.

Order! Order! Pardon this Court while the laughter dies down.

She was much too kind, Tony.

Here 'bouts we call 'em as we see 'em, and you can put lipstick on that pig all you want, but folks aren't convinced.

Your company is profiteering at the expense of consumers, Tony. Be glad someone at the AG level isn't telling it like it really is.

The Honorable Judge Roy Bean.

More fun and games with Seisint & the Federal Snoops

2005-05-26T14:47:00.000-04:00

Want a quick, low cost credit and background records check on someone? Apparently somebody does - or at least they're being told they do.

Want to see how Kurt Sanford (LexisNexis CEO) lies about what information Seisant has, sells and in particular, shares about people? You know, the part about the security breach where he claims credit information wasn't accessed in the now-infamous leak that was supposedly just a little one, then the truth came out. (See the March archives.)

Well, sure enough, there's a trade organization for just about every business in this great country. And what do you know, there's even an association of "self-storage" rental places, known as the "Self Storage Association." They've been around a long time; 30 years, according to their web site, and they represent some 2,750 companies with nearly 47,000 properties.

And wouldn't you know it, Seisint (the home to the MATRIX scheme) has set up a really slick, low-cost credit and background check service for these folks. It's one of those "member benefits" that they call an "id verification program" on their web site. No mention of the credit score part. No mention of the bankruptcy check they can run on existing tenants or the notification they can get if you move or file for bankruptcy. No mention of the criminal background check, either.

Now this Court understands why a storage landlord needs this information. After all, you don't want to have some low-life stashing stuff in your property, right? So your going to take the word of a computer system in Florida that is broadly contaminated with bogus information from undefined sources and mixed in with an equally-faulty credit score.

With a clever marketing scheme and a catchy name that bespeaks the protection of the country in this time of terrorist threats (ssacountermeasures), Seisint tugs at the hearts (and a little at the wallets) of storage rental landlords by asking them what it's worth, "Knowing you're doing everything in your power to help fight international terrorism right here at home." Wow, don't we all feel better.

But what no one seems to realize is that Seisint is offering this service on their custom-made and supported (just for SSA) web site at BELOW COST. $7.95 per hit for the credit-included snooping and $4.95 if no credit information is wanted. (But golly, Kurt, you said there weren't credit records available?!?)

But a better question, Kurt - why so cheap? Simple - because Seisint allows law enforcement and skip-tracing and collections companies to snoop around in people's personal business (and with this new offering, where they keep things) for, of course, a profit.

It's not what you might have in the storage space - although one has to wonder how long before that "feature" is added; if you are a tenant (or even apply to be one), you're now on Seisint's national list of suspects (or should we say "persons of interest?") because you have a storage rental unit if the landlord SSA member signs up for the service and checks on you.

And - you may not even know they checked you out. They can do it right at the desk before hand, or they can check you out later.

Not 'round here. On this side of the Pecos, citizens are hereby advised to find another place to stash their junk if the landlord starts acting inquisitive. Better yet, if you see the SSA logo on the door, ask if they use the privacy invasion system BEFORE you give them your name.

The Honorable Judge Roy Bean.

The Smell of the Lembo case is starting to spread.

2005-05-23T20:11:00.000-04:00

Much as this Court predicted on the 15th of this month, the banks involved in the Orazio Lembo scheme are being forced to admit the disaster is far bigger than they wanted everyone to think.

Now word has leaked that there are at least forty law firms and collection Squaliformes on the list of willing participants that have been found thus far.

Stand by for them to play deaf, dumb and blind while they try to pin the whole thing on Lembo.

And don't count on the news media to go after and expose the lawyers who are actually behind the scheme (and have been for years). No telling how much credit/financial damage could be done to a reporter (or blogger) who outs these Squaliformes.

One other prediction: The industry lap-dogs at the FTC will tsk-tsk and make a lot of noise but won't put a single one of the firms out of business.

If they appear in this court, they'd be strung up after their assets had been liquidated and the proceeds distributed to the victims.

The Honorable Judge Roy Bean.

Clever These Squaliformes Become They Do!

2005-05-20T15:55:00.000-04:00

[Nods to Yoda - The movie was great!]

You folks in Irvine California ought to keep an eye out for one Mr. Darren Charest, president of US Tracers.

This low-life offers his fellow Squaliformes (the Collectoris variety in particular) all kinds of handy information – including a database of unlisted phone numbers.

WARNING: If you get a “free,” unsolicited calling card, or anyone you know gets one, DON’T USE IT!

From their web site:

"The key to the Calling Cards are their ability to locate skips or develop leads by:

- Tracing the "From Numbers" (Incoming Calls) where the cards are used
- Determine called "To Numbers" (Outgoing Numbers) that calls are placed to

Our Calling Cards were developed to pin down mobile skips that utilize various techniques to avoid being located. Calling Cards are in use to overcome the following common skip techniques (by no means complete):

- using mail drops and/or General Delivery addresses
- cohabitating with 3rd parties (girlfriends/boyfriends, spouses, relatives, friends, etc.).
- communicating using only cellular phones, payphones, or pagers
- communicating only through 3rd parties who are uncooperative
- falsifying social security numbers to avoid detection
- moving repeatedly
- living overseas

Cards are delivered in attractive packaging encouraging skips and/or their associates to use them. As the cards are used, critical location information is reported to the customer on a regular basis. Many unsolved cases can be brought to a close with minimal effort and expense."

REPEAT WARNING: If you get a “free,” unsolicited calling card, or anyone you know gets one, DON’T USE IT!

Have a little fun at their expense; leave the card at a payphone at an airport.

The Honorable Judge Roy Bean.

Minnesota Bench Blunder

2005-05-20T08:28:00.000-04:00

Lordy it must be the long winters up there.

In Minnesota at least, the auto dealerships can mark-up the interest rates on loans and don't have to tell the customer when they do it.

So "Truth In Lending" doesn't have to be the truth and jacking up interest rates on car loans without telling people is OK in Minnesota.

According to Judge Randolph Peterson of the Minnesota Court of Appeals, the 4.75% markup Walser Automotive Group tacked on to a 15% Ford Motor Credit loan was not material to the loan.

Huh?

Y'all up there know you elect these bufoons, right?

The Honorable Judge Roy Bean.

Dumbest Squaliforme of the Month Award

2005-05-18T17:25:00.000-04:00

This Court has come across what has to be the dumbest Squaliforme legal case in history.

A Bear Stearns subsidiary, EMC Mortgage, of Irving, Texas (on the other side of the Pecos, thank you), has been dragging one Robert John Wright through various courts up yonder in Dallas for EIGHT YEARS. The source posting on a web site for Elliot Spitzer (don’t ask why – it’s politics) says 3,000 days. A quick look around elsewhere tells me at least part of this case went all the way up to the US Supreme Court (and they weren’t interested) but that was with Bank of America a few years back. Even a quick read and I'm pretty damn sure they're connected.

Now, I’m not sure about what the average property up there is worth, but let’s say Mr. Wright’s house is above the national average and is worth a quarter-million.

EIGHT YEARS of litigation and they still haven’t won? To go after a property for EIGHT YEARS that MIGHT get them a house worth a quarter-million if they do win?

According to the post, Wright’s apparently penniless now so they’re not going to get their attorney fees or costs even if they win. (I’ll bet a good bottle of whiskey and a box of 12Ga. Shells they’re not accepting his payments even if he could make them.)

Now, I know up there they pay barristers pretty damn well (it’s always big $ in Big D), so simple math says EIGHT YEARS of litigation they’re into it well over a half-million just in lawyers and they’re not taking in anything from him. If Wright’s still actually in the house this story could be scripted as “The Three Stooges Play Lawyer.”

Sure ‘nuff, this EMC Squaliforme is the same outfit that’ll be paying $6 MILLION+interest to a Missouri couple (the now-infamous Starks case) and then they got their hands slapped with a $10K censure from a bankruptcy Judge just a few months ago.

Given their parent company’s historically dismal ethical performance and massive financial penalties, this Court can only assume they sent the guys responsible that weren’t already jailed for their previous dimwitted scams down to do pennance in the wastelands of Irving.

Either they haven’t got a case against him and just don’t want to admit it, or they’ve got something to hide, or they’re still dumber than a box of rocks. Probably all three.

If Wright can get his case moved to this side of the Pecos, we’ll have this thing wrapped up in under an hour. Save everybody a lot of time and money. Knowing who they are and what they do, EMC best bring cash, and lots of it. We don't accept checks from Squaliformes.

The Honorable Judge Roy Bean.

[(Note from the clerk of the Court: His Honor didn’t mention it but he doesn’t hang people for stupidity very often. Attempts to correct the condition are made utilizing the cattle prod.)]