May 31st, 2012 at 11:00pm
Sherry Hunt, a 55-year old Missouri woman who joined CitiMortgage in 2004 as a vice-president in order to oversee its acquisition of loans underwritten by other banks, has struck gold for making honesty her first priority.
Hunt’s job was to audit the outside loans for fraud or other irregularities. In the mid-2000s, the hottest commodity was securitized mortgages and CitiMortgage, which was the sixth biggest lender at the time, was buying loans at breakneck speed. Before selling the mortgages to investors or vouching that they were eligible for government mortgage insurance, the loans had to be reviewed for complete signatures and documentation, the latter of which had to be verified. Citi’s guarantee to its investors was serious: it promised to pay on loans if the borrowers defaulted.
In March 2011, Hunt and another employee were ordered by Citi executive Jeffery Polkinghorne to lower the amount of loans they were classifying as defective – or else (bank fraud). Hunt refused and sued Citigroup in Manhattan federal court under the federal Whistleblower’s Act. Her lawsuit, which accused the lender of violating U.S. home mortgage regulations, attracted the attention of the U.S. Justice Department, which joined the suit because Citigroup had accepted $45 billion in bailout (TARP) money from both the U.S. government and the Federal Reserve. Citigroup not only did not challenge her allegations, it did not defend itself in court and agreed to pay $158.3 million to settle the case. Of that amount, Sherry Hunt will receive $31 million.
Read the original article in Businessweek.
December 13th, 2011 at 7:18am
A man who promised investors he would use their money to buy corporate bonds backed by TARP (Troubled Asset Relief Program) could get life in prison for defrauding them out of $20 million.
John Farahi, 54, a fund manager has been charged with 41 felony counts, among them loan fraud and obstruction of justice.
Attorney David Tamman has also been charged in what prosecutors allege is a Ponzi scheme.
Read the original article in SFGate.
October 21st, 2011 at 8:27am
This blog usually concerns itself with arrests, prosecutions and convictions for real estate fraud and mortgage fraud.
Today, I’m happy to write that eight investigators with the SEC have been honored with the 2011 Award for Excellence in Investigations by the Council of the Inspectors General on Integrity and Efficiency (CIGIE).
In 2009, Colonial BancGroup Inc. and Taylor, Bean & Whitaker Mortgage Corp. both collapsed due to the fraud committed by former Taylor, Bean & Whitaker chairman Lee B. Farkas and four others. Farkas and his co-conspirators scammed the taxpayers’ via the Troubled Asset Relief Program (TARP) by selling $1 billion of worthless mortgage assets to Colonial, which was later seized by the U.S. government and sold to BB&T Corporation. Farkas was sentenced to 30 years in prison.
Since the original arrests, the former CEO of Taylor, Bean & Whitaker has also been charged, as well as a C-suite executive and supervisor of Colonial.
In addition to the SEC investigators, staff at the following agencies were honored as was the Eastern District Court of Virginia:
Department of Housing and Urban Development (HUD) – Office of Inspector General
Federal Deposit Insurance Corp. (FDIC) – Office of Inspector General
Federal Housing Finance Agency (FHA) – Office of Inspector General
Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP)
Federal Bureau of Investigation (FBI)
Department of Justice (DOJ)
Read the original article in LoanSafe.
October 19th, 2011 at 9:46pm
The Federal Deposit Insurance Corporation (FDIC) has announced that it has fined the chief loan officer of Circle Bank a whopping $100,000 for making “false statements and omissions” to the FDIC and bank examiners when he worked for United Commercial Bank.
Not only could Christian Lee be punished financially for “imped(ing) the bank examination process, or conceal(ing) the true nature of a bank’s financial condition from examiners, auditors, or the public”, he could be banned from working from any FDIC-insured institution, which would cost him his current job. Sandra Thompson, the director of the FDIC’s division of risk management supervision referred to Lee’s actions as “very serious misconduct” and said “the FDIC will respond accordingly.”
Lee and the nine other former United Commercial Bank officers face an administrative law hearing, before which the FDIC will plead for the harsh penalties.
United Commercial Bank, which received $298 million in TARP (Troubled Asset Relief Program) money, filed for bankruptcy soon after. It was considered one of the largest bank failures and, along with others, drained more than $2.5 billion from the FDIC’s coffers.
Read the original article in the Marin Independent Journal.
July 6th, 2011 at 11:43am
It was just a matter of time: banks being sued for violating the terms of their own loan modification agreements.
Testing the theory of “we can do whatever we like, to hell with contracts”, mega-banks have been twiddling consumers on the end of a proverbial stick (or shaft) ever since loan modifications began.
Now Bank of America NA and subsidiary BAC Home Loans Servicing LP are the focus of a proposed lawsuit by borrowers alleging breach of contract after the banking giant ignored the terms of its own loan modification agreement with borrowers and proceeded with aggressive foreclosure tactics.
This lawsuit is in relation to permanent modifications of residential mortgages through the U.S. Treasury-administered Home Affordable Modification Program (HAMP). HAMP offers financial incentives to loan servicers who complete modifications. The Treasury also offers incentives for “proprietary modifications, which banks offer independently of the government guidelines,” according to the Daily News.
The picture for these accusations gets very complicated: some of the allegations are that the monies the banks received under the Treasury Departments TARP (Troubled Asset Relief Program) were a quid pro quo for working with consumers to prevent foreclosures. In light of that agreement, the Daily News reported in the same article that U.S. Treasury officials was withholding incentives from Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. for claiming that many borrowers were not eligible for HAMP modifications. The banks deny this practice.
Bank of America comes out at the top of paid Google searches for “HAMP Home Affordable Modification Program.”
August 27th, 2010 at 2:35pm
Mark Alan Abrams, 49, one of the central players in the Beverly Hills mortgage fraud conspiracy that consisted of real estate agents, appraisers, straw buyers, mortgage brokers and probably more, pleaded guilty to conspiracy, bank fraud and other loan fraud-related charges.
For the tens of millions that Abrams helped to steal, prosecutors are seeking a seven year (at most) sentence from U.S. District Judge Dean D. Pregerson. Assuming Abrams behaves himself, he could end up serving about half that time. Taxpayers, on the other hand, will be paying back his thievery and that of his eight fellow-convicted conspirators, for years via TARP (Troubled Assets Relief Program).
Lehman Brother Bank was misled by Abrams and his co-conspirators to fund over 80 loans in expensive Westside neighborhoods. As part of their sentences, the guilty have been ordered to pay their share of the $46 million restitution.
Read the full article in the Los Angeles Daily News. You can search the California Real Estate Fraud Report for earlier articles about the Beverly Hills mortgage fraud gang.
April 30th, 2010 at 1:05pm
Neil Barofsky is the head of the Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP. His job is a tough one: to oversee and catch fraud and waste in the federal government’s $700 billion TARP program (Troubled Asset Relief Program), passed in 2008.
Although under the Treasury, SIGTARP has had plenty of criticism of its parent agency and Treasury Secretary Timothy Geithner.
Read the full article in SFGate, the San Francisco Chronicle.
February 9th, 2010 at 11:13pm
Here’s a YouTube video by a couple of real estate professionals in Fairfield, California, whose business is called ThinkBigWorkSmall.
The Troubled Asset Relief Program, aka TARP, has been the biggest piece of corporate pork ever bestowed by both Republicans and Democrats, Congress and presidents alike, on the never-too-rich obscenely wealthy.
After watching this video, you will have an understanding of what the new math is and why the concept of loan modifications is a pure con perpetuated on the taxpayer by the cooperation of Wall Street and our elected leaders.
Click here to watch the Indymac / OneWest rip-off.
February 5th, 2010 at 10:36am
Pitbull New York Attorney General Andrew Cuomo has done what the toothless Securities and Exchange Commission has refused to do: hunt down individuals he feels have committed white-collar crimes.
Under the Martin Act, a New York securities law that allows civil AND criminal penalties, AG Cuomo has sued both former Bank of America CEO Kenneth Lewis and former CFO Joe Price for defrauding investors and taxpayers (ok, the “government”) when B of A bough Merrill Lynch & Co. Bank of America settled its suit with U.S. regulators by agreeing to pay a $150 million fine, a sum which has yet to be approved by U.S. District Court Judge Jed Rakoff.
Bank of America was criticized for allegedly keeping both the government and the public in the dark about the losses attributed to Merrill Lynch as well as the generous bonuses given to executives such as Ken Lewis and Joe Price. Bank of America received billions from the Troubled Asset Relief Program, aka TARP, in order to help stabilize both Bank of America and facilitate the Merrill Lynch takeover.
Read articles about this story in Bloomberg, the Huffington Post and BusinessWeek.
December 18th, 2009 at 10:09am
United Commercial Bank, based in San Francisco, may be the first recipient of TARP funds to go belly up, at the cost of $300 million. Former Treasury Secretary Henry Paulson, the architect of the TARP raping of U.S. taxpayers, let loose the sum, chirping it was only for “health” lending institutions, although UCBH had just posted a loss for the third quarter ending in September 2008.
United Commercial Bank is (or was) the son of United Bank, a thrift also based in San Francisco that failed in the mid-1980s from its practice of “reckless construction lending”, according to Richard Newsom, a retired bank and thrift regulator.
Besides winning first place as a spectacular failure, UCBH was the first U.S. bank to wholly purchase a bank in China, buying the Business Development Bank of Shanghai in March 2007. Considering the long downturn already in motion the world economy at the time, the decision was a fatal blunder.
Read the Full Article, very well-written, in the San Francisco Chronicle.