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I'm shocked, just shocked to hear that mortgage fraud was occurring here.
Of couse they were arrested. GS hates competition.
One day the Martin Wolf's of the world will wake up to the fact that the little guys weren't the only ones doing the defrauding. It's just a more idiotic version. And glod knows how many of them got away with it.
just in time for the pig! repost, apologize for topicality...
HollywoodHack (homepage, profile) wrote (in reply to...) on Wed, 7/8/2009 - 6:00 pm
"(End of off-topic diversion, I promise). "
is it off-topic? substituting MEW for income - leverage for investment ideas - low rates for genuinely free-market reforms...
the present economic failure is a moral failure (and generational failure), and the baseball roids crisis is part of that.
Deeper than that. It is simple game theory and evolutionary arms races run amok. This is in fact what can be observed to happen at the highest levels of ability in any discipline, period. The differentiating characteristics at that tier are so miniscule relative to one another, and so large relative to the population at large, that absolutely anything which can convey a competitive edge makes a significant difference in performance. It is all about the "elite of the elite". The moral hazard begins when one of the "elite" begins doping, as it conveys enough advantage that he or she begins to dominate the performance of the others. At first the others resist but eventually the technology forces capitulation. In time there are enough participants that an implicit conspiracy is formed around the source of their competitive advantage, as they are all getting very rich relative to the non-participants. Eventually even being a viable part of that elite group requires cheating. And the rewards are so excessive and disproportionate that complicity swells the ranks. Repeat enough, and it can become a reality of cultural indoctrination at certain levels. By the time the source of advantage becomes publicly disclosed, some group has already discovered a better and still undisclosed source of advantage so the prior one is "allowed" to leak out in an effort to further limit competition. It is not so much a cultural problem as an inherent limitation of an incentive-based system.
These same dynamics apply to any human enterprise, whether it is sports teams, college affiliations, countries, investment banks or mortgage lenders
25 down and millions to go.
The D.A.'s office also described another "particularly brazen sham transaction" where one of the suspects, Pank Haulson, allegedly wrote up a bogus appraisal of 700 Billion dollars for a rescue, but "in reality, it was hookers, cocaine, and hookers dusted in cocaine for bankers"
I would not be surprised if some huge number of RE transactions in 2005-2008, maybe as high as 10%, or even more, involved fraud. It's not a few bad apples. If you throw in legal but unethical behavior, then it's probably closer to 30-40%.
I'd also like to add my outrage over the government's own description of its PPIP: "The Legacy Securities program is designed to support market functioning and facilitate price discovery in the asset-backed securities markets, allowing banks and other financial institutions to re-deploy capital and extend new credit to households and businesses." Taking money from some people, and giving it to others, is certainly an intent of the PPIP, and they do say that, even if only by using euphemisms and "credit". But the notion that poor incompetent Goldman Sachs, JP Morgan, BoA, PIMCO etc need some smart and helpful govt bureaucrats to help them discover the price at which buyers will take junk assets off their books is a joke.
Also agree with comments that Congress is where the worst corruption occurred, and no one is investigating that band of thieves. It's worse in Congress not because of the amounts, which would be small, but because that's where the power to stop all this was, and they instead kept encouraging and nurturing the madness, and are continuing to do so.
Chicken feed. I doubt the banks even balance their books anymore.
Thanks for putting up the link to Rachel Dollar's site, CR.
Another good webpage for fraud news:
Mortgage and Real Estate Fraud - Home Page
These bank robbers went in with paper , Hank went in screaming and crying riots and run on the banks, but most bank robbers go in with guns.
Going after the small fish?
If you go to that mtg fraud site CR linked, you'll notice lots of prosecutions of individuals resulting in prison, but Beazer gets a " deferred prosecution agreement" and no jail time for anyone.
Now that's odd. Remember Congressman Randall "Duke" Cunningham?
And Thomas Kontogiannis, who got 8 years for laundering bribes to him?
Well, here's a snippet from his arraignment. That Stephen Martini really gets around.
MR. KONTOGIANNIS, MR. MICHAEL, AND OTHERS WERE ALSO
INVOLVED IN WRITING AND SELLING FRAUDULENT MORTGAGES ON
VARIOUS PROPERTIES INCLUDING A PROPERTY THAT WAS THE SUBJECT
OF A FRAUDULENT MORTGAGE USED TO PAY OFF MR. CUNNINGHAM'S
SECOND MORTGAGE. MOST OF THE PROPERTIES INVOLVED WERE NOT
BUILT AND IN SOME CASES NEVER BUILT OR ONLY PARTIALLY
CONSTRUCTED.
APPRAISER STEPHEN MARTINI CREATED APPRAISALS FOR
THESE PROPERTIES, WHICH ENABLED MR. KONTOGIANNIS AND
MR. MICHAEL TO WRITE THEMSELVES FRAUDULENT MORTGAGES. BOTH
BEFORE AND AFTER THIS TRANSACTION -- THIS TRANSACTION BEING
THE PAYOFF OF MR. CUNNINGHAM'S SECOND MORTGAGE --
MR. KONTOGIANNIS AND MR. MICHAEL HAD REGULARLY ENGAGED IN
FINANCIAL TRANSACTIONS INVOLVING PROCEEDS OF UNLAWFUL
ACTIVITIES, MOSTLY MORTGAGE OR BANK FRAUD WHICH TRANSACTIONS
PROMOTED THESE UNLAWFUL ACTIVITIES, SUCH AS THE MORTGAGE AND
BANK FRAUD.
http://www.signonsandiego.com/news/metro/images/070830konto2.pdf
I grew up in a law and order house. My dad has a very narrow definition of what he will even define as appropriate civil disobedience....but if this keeps up, I'm sorry, but lynching seems to be the only alternative...where am I wrong? Oh wait, money really does make you 'better' than everyone else. Trial by peers and all that no doubt.
I have encountered several people who bought rental property by getting a loan for a vacation home, 3 blocks over from their home. Then spending a ton of money to fix up the priamary home and write it off as rental home expennce. Guess this is common with the middle class who wanted the free money just like the big boys.
Now they want a bail out like the big boys.
Everyone apsires to become what they concider their betters. And if fraud or theft is the accepted way of the "better class" then they will copy the behavior.
Sad all the way around.
"I'm shocked, just shocked to hear that mortgage fraud was occurring here."
+1. "Your REIT winnings, sir."
The Mortgage Fraud blog? It would seem that a phenomenon has 'arrived' when a blog is devoted it.
//Everyone apsires to become what they concider their betters. And if fraud or theft is the accepted way of the "better class" then they will copy the behavior.//
Yes. A fish rots from the head down.
The Mortgage Fraud blog? It would seem that a phenomenon has 'arrived' when a blog is devoted it.
She started that blog ten years ago.
the little guys weren't the only ones doing the defrauding.
This is how criminal prosecution works. The little guys negotiate a plea deal by giving up the big guys. Otherwise, it's too hard to make a case against the big guys.
Never fear. Some of the big guys will be taken down. It'll be just like taking down a drug syndicate.
"I have encountered several people who bought rental property by getting a loan for a vacation home, 3 blocks over from their home."
Had an respected local CPA make that same recommendation to me six or seven years ago, just before he dropped me because my returns weren't complicated enough to make him enough cash. Makes me think it really was all about the fees, on every level.
"http://www.iamned.com good articles "
WTF happened to this site? I recall that it used to be so pathetically Pollyannish as to be laughable. Now, it does not seem to be quite so dumb. Still the spamming seems to be bad form.
.....seems to be?..........once is quite enough......3-4 times is a bit much -
The Mortgage Fraud blog? It would seem that a phenomenon has 'arrived' when a blog is devoted it.
Yalt said: She started that blog ten years ago.
Well, that would explain a lot! I still stand by my observation.
Yup....the financial engineering racket is simply the best organized white collar crime organization ever !
....don't mind me.....I'm always grumpy right after waking up from a nap....
Steve Martini? You just can't make these names up.
Madoff.
Liesman.
C'mon Broward. Do some sort of statistical correlation on names reflecting a semblance of reality.
ppk (profile) wrote on Wed, 7/8/2009 - 7:03 pm
//Everyone apsires to become what they concider their betters. And if fraud or theft is the accepted way of the "better class" then they will copy the behavior.//
Yes. A fish rots from the head down.
Right. And once the "head" is infected with the meme, it is propagated downstream by the power of hierarchical authority in that dynamic you summarized. The body at large doesn't get a chance to revolt or object, it just dies.
Isn't mortgage fraud redundant?
Do some sort of statistical correlation on names reflecting a semblance of reality. .
Nominative determinism! Guys named Hurt are destined to be personal injury plaintiffs. Exh. A: Bernie Madoff. (Some will recall that they used to call pre-scandal Enron "the crooked E", because of the angled logo, but it turned out to be correct in more ways than one.)
http://dshort.com/charts/bears/four-bears-large.gif
Surely the scope of the fraud and the dollar amounts involved would make this downturn more dire than the tech bubble? Sure this time around we don't have a pets.com, but we do have a California.
Anyone else get the feeling that the markets are in for some short term hurt?
traderwalt,
zing....you got a winner.
Blackhalo (homepage, profile) wrote on Wed, 7/8/2009 - 5:20 pm
Anyone else get the feeling that the markets are in for some short term hurt?
Short term? As in years beginning with "2"?
Did these fraudulent mortgages end up being securitized? If so, isn't there, at the very least, a negligence civil suit against the securitizers?
"Good" GM is going to start off with $48B in debt and ~60B in "equity." I guess you can polish a turd (with the help of BK court). Since I refuse to pay to access PACER, I'm going to have to wait until Prof. Lubben who provides 24/7 GM BK coverage at CreditSlips reveals who these creditors are.
- Bloomberg.com
The new GM agreed to take on those obligations to benefit creditors, U.S. Bankruptcy Judge Robert Gerber in New York said yesterday. They will be offset by GM’s most competitive assets, such as Cadillac, Chevrolet, Buick and GMC. . . .
Detroit-based GM entered bankruptcy court on May 1 reporting global liabilities of $176.4 billion as of Dec. 31. The old GM will be left with GM’s remaining obligations and unwanted assets. . . .
By contrast, the equity of the new entity, if the deal goes through, would be from $63 billion to $73 billion, with 10 percent of that going to unsecured creditors including accident victims, according to the judge.
"Short term? As in years beginning with "2"?"
Well, I would not be so pessimistic to think that we are in for a bad millennium, but the bad bears chart leads me to think that a second half 2009 end to the recession is silly.
"the bad bears chart leads me to think that a second half 2009 end to the recession is silly."
Sounds like somebody forgot to take his hopium this morning. Tsk, tsk.
"... Martini, allegedly wrote up a bogus appraisal of $500,000 for a two-family home, but "in reality, the location was a vacant lot."
I'm willing to bet there are probably at least two families now living in that vacant lot ....
Samdog, the question is "Are those 2 famiies paying rent?"
Feckless Ness (homepage, profile) wrote on Wed, 7/8/2009 - 8:04 pm
This is how criminal prosecution works. The little guys negotiate a plea deal by giving up the big guys. Otherwise, it's too hard to make a case against the big guys.
Never fear. Some of the big guys will be taken down. It'll be just like taking down a drug syndicate.
It will be more like "justice" in a third world country. You take down the little guys because the big guys own you. "Victory for justice" and the people on top make sure that the rungs leading up the ladder to their ass stay kicked out.
The "little guys" are not runners for the "big guys" they are a different kind of criminal. The real "big guys" cashed their legal bonus checks, received for their quarterly production of CDOs, some quarters ago, and your government helpfully bought the proceeds in exchange for Treasuries when the deal went south.
You'll never touch them because they own your country.
Byzantine_Ruins , I agree 100%
http://finance.yahoo.com/q/bc?t=1d&s=USDJPY%3DX&l=on&z=m&q=l&c=^tnx
Sooo, any way to find out who bailed out the 10-year today? Methinks it was Japan.
Interesting in that it is new-style asymmetric warfare. The bankers facilitated the zerg of wanna-be affluent robbers, but never communicated directly with them. They just set up circumstances -- push a huge warehouse line of credit on Countrywide and talk at length about the demanding roll-out on the CMO schedule -- that led to the crime. There's no way to prove association because there ARE no lines of communication, other than implicit ones.
No conspiracy = No RICO
@Byzantine_Ruins
The bankers and the robbers shared the same hookers. And the hookers have loose lips.
The whereabouts of one Steven Martini is presently unknown. He was last seen boarding a flight for Antigua. His passport has been withdrawn and should he attempt further travel he will be arrested. Of course, his identity has now been changed to unknown and was either a passenger on the airliner that ditched in the Atlantic or he has died of swine flu in Buenos Aires. Of course it is entirely possible that he has slipped notice and is now herding goats in Peshawar. Then, the standard of living he enjoys as a result of his larceny is far in excess of what he might have known stateside. Then again, he may well be leveraging his position with some unknown terrorist types for the purchase of a suitcase bomb that might be used against the very people who are pursueing him.
Speaking of the markets, I still think GE is a ticking time bomb in a deflationary environment.
GE has net tangible asset of $8 billion, debt > than $500 billion, and a net quick of negative $150 billion (now you see the need for alphabet soup).
That's bad, but it gets worse. GE is carrying $82 billion in goodwill (10x net tangible assets).
A few weeks ago I watched former GE CEO Jack Welch on CNBC. He claimed Bernanke was a national hero. No joke. Given that GE has been thrown a huge lifeline by the fed, it's easy to understand Welch's views.
Welch deserves the Greenspan treatment in my book - genius to idiot in the public's eye. The man is a sham, the product of a bubble.
These guys are not smart enough as blackfiend's goldman. You got to do it in a way that is outside the legal purview.
A demand that the originating banks buy the loans back out of the securitization packages? No doubt followed by claims against the insurers that wrote the banks' FI bonds--I see from CR's quote that "employees of the banks were involved."
That's almost $200 million in losses just from the two Martini stories in the last month. That'll leave a mark.
Maybe AIG's got a piece of this.
Not Mortgage Fraud but certainly another bad investment by CALPERS. Buying this property in 2007 when the Florida Residental Market was already crashing is amazing to me. Extremely high end mall ( The Gardens Mall) adjacent to this property. Vacancy rate seems to be nearly fifty percent. Downtown at the Gardens. Cobb Theater closed a 12 plex movie house in Abacoa adjacent to the community that I live in. Their departure caused the majority of the small main street community shopping in this planned community to close. They must have been offered a sweat deal but it still wasn't enough. The boutique mix was just too high end but unfortunately not high end enough.
West Palm Beach Business: News, stock quotes, financial, Real Money, health care, real estate | The Palm Beach Post
....but if this keeps up, I'm sorry, but lynching seems to be the only alternative...where am I wrong?
Too bad I'm on my iPhone, I have a lot to say here
I hope it's about statistical anomolies in names.
No Need for explicit communication/conspiracy i f there's enough shared context
that's the schramm model
i'm sorry but you cannot imagine the level of fraud that is happening/happened at every level. i live in cali and within my little community i see it pretty plainly.
but the bottom line here is that people think they are not defrauding anyone. for example the neighbor across the street has a house he paid 690k for in 05. his pmt was/is 1580 a month. i assume it remains at that level. this is ridiculous at every level. but he is behind 34k in tax payments. at some point the county treasurer is going to belly up and post a notice on his house. but til then, he continues. and he is a nice guy. i helped him put up a flag pole for the 4th of july.
i have more examples of how i saw this thing happening in real time. but the point is that the perp just does not see it that way. and we (collectively) have let that happen. they have seen that the "man" has put something over on them and they want it to be fixed (by "us"). it really is that simple.
it really is that simple.
spot-on, darkmatter.
The lax enforcement of white collar crime in general, and mortgage frauds in particular, was a direct consequence of policy choices by leaders in the federal government. Post-9/11, resources went to domestic security, and were shifted from traditional white collar crimefighting.
The FBI field agents knew precisely what was at stake, and argued against the shift. But headquarters would not be deterred, and 3000 cops got taken off the beat.
A few talented reporters in Seattle got the story out 2 years ago. Yes, 2 years ago.
How the P-I put this story together