According to this Ripoff Report, it looks like they were promising to set up the victims with new corporations, and get them credit in the corporate name too, for just an extra $20,000 – $30,000:
Jacob Orona, Aide Orona, John Contreras, Prakashumar (“Kash”) Bhakta, Marcus Robinson, and David Boyd were indicted by a grand jury on 135 felony charges for operating a mortgage fraud scheme throughout Southern California and the Inland Empire, preying on homeowners facing foreclosure. Charges include conspiracy, grand theft, filing false or forged documents, and identity theft.
The scam artists promised homeowners who were underwater on their mortgages that they could provide legal remedies to avoid foreclosure, convincing homeowners to stop making mortgage payments and instead pay them $3,500 to start with an “administrative process,” plus $1,000 every month and separate amounts to allegedly file legal documents. The defendants filed bogus petitions and court pleadings and recorded false deeds in county recorders’ offices, causing over $4 million in loses while failing to halt any foreclosures. The fraud stretched through San Diego, Riverside, San Bernardino, and Los Angeles counties of California.
The indictment was delivered following a two-week special statewide grand jury convened in San Diego County. If convicted, Jacob and Aide Orona face over 90 years in prison; Contreras and Prakashkumar face over 70 years in prison; Robinson faces over 28 years in prison, and Boyd faces over 18 years in prison.
The indictment was announced by Attorney General Kamala D. Harris. The arrests and arraignments are the culmination of a joint investigation by the Federal Housing Finance Agency Office of the Inspector General (FHFAOIG), the Attorney General’s Financial Fraud and Special Prosecutions Section (FFSPS), the California Department of Justice Bureau of Investigation, and the Stanislaus County District Attorney’s Office, Real Estate Fraud Unit.
How they compare to Angelo Mozilo, who never spent a day in jail:
Mister Mozilo, a mortgage industry maverick who co-founded Countrywide in 1969, and nearly 30 years later co-founded the dramatically collapsed IndyMac Bank (now OneWest Bank), is widely regarded as one of the more Machiavellian sub-mortgage-men who helped march the U.S. (and global) economy straight off the cliff in the mid-Noughts. While Mister Mozilo and his mortgage-making army pushed and pedaled sub-prime home loans, he talked up the then-flourishing company’s stock price, earned hundreds of millions in compensation, and cashed out more than $400,000,000 worth of Countrywide stock, a large portion of it during the last couple of years of his tattered tenure as the king of Countrywide.
Alas, the sub-primed fueled real estate bubble burst sometime around 2007 and Mister Mozilo left Countrywide in 2008 after the crippled company was sold for $4.1 billion to Bank of America. In June 2009 the Securities and Exchange Commission (SEC) charged Mister Mozilo with insider trading and securities fraud and in September 2010 Mister Mozilo settled with the SEC and agreed to pay $67,500,000 in fines, $45,000,000 of which was paid by Bank of America. Despite the sizable payout, settlement terms allow Mister Mozilo to circumvent acknowledgement of any misconduct. We can’t vouch for or confirm it but online idle chatter says he has a net worth well in excess of half a billion dollars.
If I’m ever dragged into court for a financial fraud, I want to throw myself on the mercy of Judge Richard C. Wesley.
Wesley is the U.S. appeals court judge in New York who, with his colleagues Reena Raggi and Christopher F. Droney, found a loophole in federal fraud law big enough for the nation’s second-largest bank to fit through without even scratching a fender.
In a ruling written by Wesley and issued Monday, the three judges tossed out a $1.3-billion judgment against Bank of America for stuffing thousands of lousy mortgages into the portfolios of Fannie Mae and Freddie Mac in 2007 and 2008 by pretending they were high-quality loans. Their ruling turned on the curious question: “When is a fraud not a fraud, but just, sort of, a lie?”
Anyone concerned about white-collar crime should find the appellate court’s logic appalling. One who does is Dennis Kelleher, a former corporate lawyer who is now CEO of the financial watchdog group Better Markets.
“You wonder why the American people are so cynical,” he told me after the decision came down. “It’s because there’s an endless reservoir of ways to figure out how to hold no one accountable for illegal conduct.”
During the bust that followed last decade’s housing boom, hundreds of thousands of Californians lost their homes to foreclosure. It was a process later found to be rife with problems, such as overwhelmed bank employees who sometimes didn’t even read the foreclosure documents in front of them.
But challenging foreclosures on the basis of paperwork problems proved to be mostly futile, given California courts had ruled that borrowers who weren’t paying their mortgages didn’t suffer financial harm.
Now, a recent decision by the California Supreme Court will allow some of those former homeowners to pursue lawsuits and possibly win damages for wrongful foreclosure even if they were in default.
“They opened the courthouse doors,” said Katherine Porter, a law professor at UC Irvine and a former monitor for a national settlement over foreclosure abuses.
A statute of limitations of four years might mean that the decision won’t help most of the nearly 1 million California homeowners who were foreclosed upon from 2007 to 2012, according to real estate data provider CoreLogic.
Still, Porter estimated there may be tens of thousands of Californians who could conceivably argue for damages given inconsistencies in documents that transferred their loans.
Others are more skeptical.
George Lefcoe, a professor at the USC Gould School of Law, said it will be very difficult for borrowers to prove that the ownership of their loans was so muddled that the foreclosure process was fatally flawed.
And even if borrowers do win the argument, it’s unclear what damages they may receive, if any.
Rebecca Mairone scarcely deserves a mention in the annals of finance, except for this: She’s the only executive of a major U.S. mortgage lender found liable for her part in the 2008 financial crisis.
Mairone was chief operating officer for a division of Countrywide Financial Corp., the California giant that came to symbolize the excesses of the subprime era. While top executives there and elsewhere walked away, Mairone, now 48, was targeted in a civil case by federal prosecutors. In October 2013, a Manhattan jury found her liable for misrepresenting the quality of mortgages her company sold to Fannie Mae and Freddie Mac. U.S. District Judge Jed Rakoff called her testimony “implausible” and slapped her with a $1 million fine. Bloggers said she helped destroy the U.S. economy and should be jailed or worse.
Two years later, Mairone is heading back to court in an attempt to overturn that ruling and restore her reputation. As she has all along, she maintains she did nothing wrong. Years after the housing bust, her case reminds Americans yet again that not a single senior executive has been held accountable for a mortgage meltdown that cost millions of people their homes, livelihoods and savings.
“She’s not uniquely responsible,” said Brad Miller, a Democratic congressman from North Carolina from 2003 to 2013 who served on the House Financial Services Committee. “But the question isn’t whether there should’ve been a claim brought against Rebecca Mairone. It’s why weren’t a lot more brought?”
One mortgage in particular that sticks out in Fleischmann’s mind involved a manicurist who claimed to have an annual income of $117,000. Fleischmann figured that even working seven days a week, this woman would have needed to work 488 days a year to make that much. “And that’s with no overhead,” Fleischmann says. “It wasn’t possible.”
SAN DIEGO – A Ramona real estate agent who admitted taking part in an investment and mortgage fraud scheme that generated tens of millions of dollars in phony loans and illegal kickbacks was sentenced Friday to serve 15 months in federal custody.
During a hearing in downtown San Diego, U.S. District Judge John Houston also ordered Teresa Rose, 58, to pay more than half a million dollars in restitution to victims of the offenses.
Even after paying a $67 million settlement to the SEC and being banned from the mortgage industry Angelo Mozilo, founder and former president of Countrywide Financial Corp still says his company never made a loan “that we knew the borrower could not pay.”
Mozilo defended Countrywide in a deposition made last year in connection with a law suit by MBIA, Inc against Bank of America (BoA) which bought Countrywide in 2008. The deposition was filed in the New York Supreme Court earlier this week.
The MBIA lawsuit is one of many brought against Bank of America since it acquired Countrywide. It is estimated that the bank has so far spent more than $40 billion trying to clean up defective mortgages and improper foreclosures caused by the mortgage company’s lax lending standards.
But according to an article in Bloomberg, Mozilo said that he had no regrets about how he had run his firm, and denied that Countrywide had caused the housing crisis. “This is all about an unprecedented, cataclysmic situation, unprecedented in the history of this country. Values in this country dropped by 50 percent,” he said.
Mozilo contends he only agreed to the $67.5 million regulatory settlement in 2010 to protect his family. “It had nothing to do with anything that I did at Countrywide or anything I did in my personal life.” Relatives “were being harassed in school. My name was in the paper every day nationally and internationally, accusing me of things that were absolutely untrue. I could not have my family go through it anymore, and that’s why I settled.”
MBIA’s suit in the New York State Supreme Court is seeking judgments against BoA for home loans written by Countrywide between 2004 and 2007 which were later packaged into securities. MBIA guaranteed payments to investors who purchased the securities which the bond insurer maintains were riskier than promised. The suit claims that more than 56 percentof some 200,000 loans were materially defective; an amount plaintiff’s attorneys equate to $12.7 billion.
Bloomberg quotes Philippe Selendy, an attorney with Quinn Emanuel Urquhart & Sullivan which represents MBIA, as saying that the risk should never have been passed to the insurer; “The loans should have never been in there. The probability of default is exceptionally high.” He said the loan files were missing key documents and cited examples of loans where borrowers had substantially misrepresented their income.
Another spokesperson for MBIA told Bloomberg that the company has already paid more than $3 billion in claims to investors and that its claims against BoA total more than $4.5 billion. The firm is seeking $3 billion in damages and repurchase by BoA of more than $12 billion in loans.
The bank’s Countrywide division maintains that MBIA insured the securitizations even though they knew the lender’s loans were becoming riskier and did not do proper due diligence before doing so. “Rather than accepting responsibility for the insurance policies it wrote, MBIA seeks to walk away from its contracts,” a spokesperson for Countrywide said.
Mozilo, in his deposition, continues his long standing defense of his former company. “I have no regrets about how Countrywide was run,” Mozilo said. “We were a world-class company in every respect.“
“We never made a loan knowingly — and it would be stupid to do so — that we knew the borrower could not pay. Never,” Mozilo said. “All our loans had that one standard from 1968 to the end of my rein at Countrywide.”
His record $67.5 million payment settled an SEC claim that he had known about the deteriorating quality of loans made by Countrywide but continued to mislead investors even while his internal communications described some products as toxic. He was accused also of insider trading, accelerating his stock sales to make a reported $140 million. He admitted no wrongdoing in resolving the accusations.
The House Oversight and Government Reform Committee issued a report today on Countrywide Mortgage and its so-called VIP loan program which the committee said was “a tool used by Countrywide to build goodwill with lawmakers and other individuals positioned to benefit the company. In the years that led up to the 2007 housing market decline, Countrywide VIPs were positioned to affect dozens of pieces of legislation that would have reformed [Freddie Mac and Fannie Mae].” This is the second report the committee has issued on the VIP program.
Bank of America, which acquired the bankrupt Countrywide Mortgage in 2009, produced more than 120,000 pages of documents for the committee to enable it to enlarge on an earlier investigation conducted by Darrell Issa (R-Vista, CA) who was at the time the ranking member of the committee.
The VIP program, referred to internally as Branch 850, was established in 1991 to process loans for senior Countrywide officials and their friends. According to bank operating procedure information it had 13 full-time employees and the benefits available to its borrowers included program/underwriting and pricing exceptions.
Countrywide used the VIP unit to widely dispense discounted loans during the period of January 1996 and June 2008 when it processed a total of 17,979 loans.
Hundreds of these loans went to members of Congress, congressional staffers, staff of the executive branch, three top executives of Fannie Mae and Freddie Mac and many lower level employees of the two government sponsored enterprises, especially Fannie Mae which bought most of the loans originated by Countrywide. Many of the loans and discounts were personally approved by Countrywide CEO Angelo Mozilo and the recipients were known as “Friends of Angelo.”
These loans were not only aimed at gaining influence for the company, the report states, but to help Fannie Mae at a time it was under attack by legislators who were seeking to reform its mission and operation.
The names of prominent persons who received discounted loans have all been published earlier. They included six current and former members of Congress, former Senate Banking Committee Chairman Christopher Dodd (D-CT); Senate Budget Committee Chairman Kent Conrad (D-ND); Rep. Howard “Buck” McKeon (R-CA); Rep. Elton Gallegly (R-CA); Former Rep. Tom Campbell (R-CA) and Rep. Edolphus Towns (D-NY) former chairman of the Oversight Committee. Towns began the investigation into Countrywide but the report says that when he subpoenaed Bank of America for Countrywide documents the bank left out those related to Towns’ loan.
Other government recipients of Countrywide discounts were Former Housing and Urban Development Secretaries Alphonso Jackson and Henry Cisneros and former Health and Human Services Secretary Donna Shalala. Both Cisneros and Shalala had left government service before the loans were made.
The House committee’s report said documents and testimony show that Countrywide “may have skirted the federal bribery statute by keeping conversations about discounts and other forms of preferential treatment internal. Rather than making quid pro quo arrangements with lawmakers and staff, Countrywide used the VIP loan program to cast a wide net of influence.”
Thanks to the few readers who sent in the links about the Fannie/Freddie executives who had civil lawsuits filed against them today – but it doesn’t look like they will be facing jail time. Excerpted from theAP:
In a lawsuit filed in New York, the Securities and Exchange Commission brought civil fraud charges against six former executives at the two firms, including former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron.
The executives were accused of understating the level of high-risk subprime mortgages that Fannie and Freddie held just before the housing bubble burst.
“Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” said Robert Khuzami, SEC’s enforcement director.
Many legal experts say they don’t expect the six executives to face criminal charges.
“If the U.S. attorney’s office was going to be bringing charges, they would have brought it simultaneously with the civil case,” said Christopher Morvillo, a former federal prosecutor now in private practice in Manhattan.
Robert Mintz, a white-collar defense lawyer, says he doubts any top Wall Street executives will face criminal charges for actions that hastened the financial crisis, given how much time has passed.
The SEC has brought other cases related to the financial crisis since it began a broad investigation into the actions of Wall Street banks and other financial firms about three years ago.
Most cases, however, didn’t involve charges against prominent top executives.
An exception was Angelo Mozilo, the co-founder and CEO of failed mortgage lender Countrywide Financial Corp. He agreed to a $67.5 million settlement with the SEC in October 2010 to avoid trial on civil fraud and insider trading charges that he profited from doling out risky mortgages while misleading investors about the risks.
(These perpetrators will probably settle for something less than the Tan Man?)
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