Tweet
heard that whistle blowin' in the middle of the night
when I got down to the station the train was clean out of sight
Mystery Train . . .
Paul Butterfield Blues Band
when I got down to the station the train was clean out of sight
Mystery Train . . .
Paul Butterfield Blues Band
Earlier today, we suggested that in the aftermath of the Greg "Muppets" Smith NYT OpEd, contrary to assumptions by Jim Cramer, a bevy of potential whistleblowers would step up to tell their tale of fraud and corruption across all walks of life - from Wall Street to, far more importantly, Washington, consequences be damned. This was paralleled by an alleged JPM whisteblower describing to the CFTC the firm's supposedly illegal activities in the precious metals space, which while we initially dismissed, we now admit there may be more to the story (stay tuned), even though we still have our doubts. What we are 100% certain of, however, is that yet another whistleblower has stepped up, this time one already known to the general public, and one that Zero Hedge covered just over a month ago: we refer to the case of former CBO worker, Lan T. Pham, who, as the WSJ described in early February, "alleges she was terminated [by the CBO] after 2½ months for sharing pessimistic outlooks for the banking and housing sectors in 2010" and who "alleges supervisors stifled opinions that contradicted economic fixes endorsed by some on Wall Street, including research from a Morgan Stanley economist who served as a CBO adviser. As part of the review, Sen. Grassley's staff is examining whether Wall Street firms or others exert influence that compromises the office's independence." As we observed in February, "what is most troubling is if indeed the CBO is nothing but merely another front for Wall Street to work its propaganda magic on the administration. Because at the core of every policy are numbers, usually with dollar signs in front of them, numbers which have to make sense and have to be projected into the future, no matter how grossly laughable the resultant hockeystick." As it turns out, somewhat expectedly, the WSJ version of events was incomplete. There is much more to this very important story, one which has major implications over "impartial" policy decisionmaking, and as a result, Ms. Pham has approached Zero Hedge to share her full story with the public. As we stated earlier, we will present any and every whistleblower's statement in its entirety, and without editing, and so we will, however we want to bring our readers' attention to several key aspects of Ms. Pham's termination from the CBO, because it may have substantial implications over the enacted $25 billion robosigning settlement. The reason for this is that Ms. Pham was fired because of her work voicing skepticism over precisely the same 'chain of title' validity issues that snarled foreclosure to a halt for much of 2011, which as Adam Levitin has said present a "potential systemic risk to the US economy" and which have necessitated the recently enacted Robosettlement to avoid massive losses for the banks (and in the process yet another shadow taxpayer bailout for the Too Big To Fail banks).
The bottom line is that the CBO was warned at least by Ms. Pham (and possibly others) over the dangers of precisely the issue that Attorneys General are scrambling to shove under the rug in exchange for a wristslap to all mortgage originators (i.e., the same banks that somehow are now getting bailed out by taxpayers and the GSEs on an annual basis). And just like every other issue that merely gets a cosmetic and very transitory liquidity facelift, nothing ever is actually fixed. As Ms. Pham says: "It is unclear how the recent State attorney generals’ agreement to a proposed yet unpublished terms of the $25 billion robo-signing settlement would repair the chain of title issues that continue to mutate. In January 2011, the Massachusetts Supreme Judicial Court reversed the foreclosure actions of two banks for lacking proof of clear title, followed by a decision in October 2011 that a buyer who purchased a house that was improperly foreclosed upon does not make the buyer the new owner of the house; the sale does not transfer the property."
While we are confident that even more contract laws will be terminally bent and broken simply to avoid some more balance sheet impairments for America's already insolvent financial system, the message here is clear: the CBO, and arguably other "impartial" policy advisors, will only focus on the established institutional opinion, preferably that set by Wall Street itself, and retaliate (in some cases with physical force) over anyone who provides a dissenting opinion.
Such as Ms. Pham.
http://www.zerohedge.com/news/termin...cts-impartial-
Foreclosure Whistleblower Wins $18 Million in Bank Accord
By Jef Feeley and David McLaughlin - Mar 16, 2012
Attorney Lynn Szymoniak had spent a career investigating insurance fraud when a bank moved to foreclose on her Florida home in 2008. Almost four years later, the fraud she said she uncovered by combing through mortgage documents earned her $18 million.
Szymoniak, 63, is among six whistle-blowers who will pocket $46.5 million as part of a $25 billion national foreclosure settlement that state and federal officials reached in February with five banks, including Bank of America Corp. and JPMorgan Chase & Co. (JPM), according to the U.S. Justice Department.
“When they did this to her, they picked the wrong person at the wrong time in the wrong place,” Richard Harpootlian, Szymoniak’s attorney in two whistle-blower cases, said in an interview. “They stuck their hand into the beehive.”
Szymoniak’s examination, in which she relied on her experience as an insurance-fraud investigator, led to her claims against banks for submitting fraudulent documents to the federal government asserting that they owned loans insured by the Federal Housing Administration, she said.
The national foreclosure settlement with the five banks, which resolves claims of abusive foreclosure practices, provides mortgage relief to borrowers, pays $1.5 billion to those who lost their homes to foreclosure, and sets standards for how the banks service mortgage loans.
Whistle-Blowers’ Share
As part of the agreement, whistle-blower claims are being settled for about $228 million, according to court papers filed in federal court in Washington. A group of six whistle-blowers will receive $46.5 million out of that amount, said Alisa Finelli, a Justice Department spokeswoman.
Szymoniak’s foreclosure case began in July 2008 when Deutsche Bank AG (DBK), as trustee for a mortgage securitization trust, sued to seize her Palm Beach Gardens, Florida, home, which was once worth $1.3 million. The bank couldn’t prove it owned her loan and claimed it had lost the mortgage note, she said.
John Gallagher, a spokesman for Frankfurt-based Deutsche Bank, declined to comment on Szymoniak’s foreclosure case.
Like many homeowners, Szymoniak said she was surprised by the subprime mortgage crisis and its effect on the U.S. real- estate market. She stopped making mortgage payments in 2008 after a battle with cancer wiped out her savings and she cut back on work to care for her mother, who was sick, she said in an interview.
‘Pretty Obvious’
Szymoniak said she was first alerted to problems in the paperwork on her foreclosure when Deutsche Bank said it acquired her mortgage note in October 2008, three months after the bank sued her over the loan.
“So I began doing what I’ve done for years -- go out and investigate,” she said. “It was pretty obvious to me that the paperwork was fraudulent.”
Her work quickly uncovered widespread document fraud in the mortgage industry, she said, and eventually led to the filing of her whistle-blower cases in 2010.
The whistle-blower claims resolved in the national settlement include a case filed in Atlanta in 2006 in which banks are accused of defrauding military veterans and the U.S. government.
The banks violated rules under a Department of Veterans Affairs program for refinancing mortgage loans by charging improper fees to veterans, according to the complaint. The banks hid those fees and obtained government guarantees on the loans, according to the complaint.
Veterans’ Settlement
The two whistle-blowers, Victor Bibby and Brian Donnelly, will split $11.7 million out of the $45 million JPMorgan agreed to pay to settle the veterans case, said Brandon Peak, a lawyer working on the case. Claims against other banks in the case are pending.
The settlement underscores the benefits provided to taxpayers from whistle-blowers and the incentives for those who expose fraud through so-called qui tam cases, Peak said.
“This is what qui tam actions are for -- to incentivize people to come forward and expose fraud,” he said. “The taxpayers actually receive this money back that they never would have received absent these whistle-blowers.”
Szymoniak said her review of mortgage documents uncovered the practice known as robo-signing, in which bank officials and contractors signed tens of thousands of foreclosure documents at a time without verifying any of the information. The same people also used various job titles on the forms, Szymoniak said.
Widespread Practices
It took her “less than five days” to figure out that the practices were widespread.
Szymoniak decided to approach law-enforcement officials with her suspicions that taxpayers may have been defrauded as the fraudulent documents were submitted to the U.S. Department of Housing and Urban Development by banks seeking to collect on government-insured loans, she said.
Her discoveries also prompted her to hire Harpootlian, who had retained Szymoniak in the past as an expert witness in a lawsuit against the insurer American International Group Inc., to file her whistle-blower claims.
Szymoniak was also represented by Ken Suggs, another South Carolina-based plaintiffs’ lawyer and Reuben Guttman, a Washington-based attorney who specializes in whistle-blower litigation.
Most whistle-blower cases are brought by company insiders who uncover wrongdoing within their own corporations or a competitor’s, said Joel Hesch, a former Justice Department lawyer who is now a professor at Liberty University Law School in Virginia. A person doesn’t have to be an insider to file a false-claims case, said Hesch, who spent 16 years litigating whistle-blower cases on behalf of the government.
80 Percent Rejected
The government turns down about 80 percent of whistle- blower cases it reviews as a required step in the litigation, Hesch said. If the government rejects the case, plaintiffs are free to press their claims on their own.
Szymoniak said she was prepared to do just that if the government failed to join her suit over mortgage-foreclosure practices.
Thomas Kelly, a spokesman for New York-based JPMorgan, declined to comment on the whistle-blower cases resolved as part the national foreclosure settlement. Shirley Norton, a spokeswoman for Charlotte, North Carolina-based Bank of America, didn’t return an e-mail seeking comment.
The three other lenders that agreed to the national settlement were Detroit-based Ally Financial Inc. (ALLY), San Francisco-based Wells Fargo & Co. (WFC) and Citigroup Inc. (C) Gina Proia, an Ally Financial spokeswoman, declined to comment. Wells Fargo spokeswoman Vickee Adams didn’t return an e-mail seeking comment.
‘No Systemic Issues’
Mark Rodgers, a Citigroup spokesman, also declined to comment on the claims. The New York-based bank has added resources to ensure foreclosures are processed correctly, he said in an e-mailed statement.
“The changes and safeguards implemented give Citigroup confidence that there are no systemic issues in its existing foreclosure processes,” he said.
Szymoniak said she’s unsure what she’ll do with the $18 million award. Deutsche Bank is proceeding with its foreclosure action against her home, she said.
“Even if I pay off the mortgage, I would own a house with no clear title, so I still couldn’t sell it,” she said.
The national foreclosure settlement case is U.S. v. Bank of America Corp. (BAC), 12-00361, U.S. District Court, District of Columbia (Washington).
To contact the reporters on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net; David McLaughlin in New York at dmclaughlin9@bloomberg.net
To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; John Pickering at jpickering@bloomberg.net
Comment