The Cause of The Crisis
Received from a DOJ Naybob...
Amen to the aforementioned references to your professional experience in underwriting 1st TD's, compadre. Based upon my very limited research to date, the floodgates to creation of potentially fraudulent mortgage-backed securities (derivatives, credit default swaps, etc) were thrown wide open in 1999 when the Glass-Steagall Act of 1934 was effectively repealed to satiate Wall Street greed.
Interestingly enough, our assignment today (yes, Saturday) was to select a case of particular importance and present it to the assembled group of aspiring legal scholars. Most of the cases presented dealt with supposedly "newsworthy" items involving grisly murders, contentious divorces, child custody matters, etc.
You know, the standard, simplistic, sensationalist crap that Oprah, Entertainment Tonight, and the celebrity-obsessed, bubble-headed Network News anchors feed the masses. As an alternative to such puffery, I chose to present a complaint filed by the Assistant U. S. Attorney on March 22, 2010 in U. S. District Court for the Eastern District of North Carolina Western Division alleging that one Amy Robinson (a formerly licensed real estate closing attorney since disbarred) conspired with a number of licensed real estate professionals and others in recruiting investors to secure home mortgage loans under the guise of a real estate rehabilitation and investment plan from December 2002 to at least May 2006.
In her capacity as the closing attorney for at least 50 properties tied to the scheme, Robinson prepared HUD-1 settlement statements and provided them to mortgage lenders under the pretense that they reflected the economic truth of the underlying transaction.
Robinson knowingly made misrepresentations on the HUD-1 settlement statements despite her knowledge that they dealt with facts material to the lenders' funding decisions, such as the degree of seller financing, the presence or degree of pre-existing mortgages, the actual contract price for the property, and the disbursement of loan proceeds in a fashion differing from that known to the lender.
As a result of what was essentially a Ponzi scheme, lenders issued loans worth approximately $2.5 million on approximately 40 loans and a substantial portion of the loans have since gone into default or foreclosure. This would ostensibly constitute (among other charges) a violation of Title 18, United States Code, Section 1344 (Bank Fraud) punishable by a fine not more than $1.0 million dollars or 30 years imprisonment or both.
Robinson waived the right to a Grand Jury review of the validity of these charges and is currently scheduled to appear for arraignment on May 11, 2010. Robinson's defense in answer to a related complaint before the Disciplinary Hearing Commission of the North Carolina State Bar filed on April 16, 2008 (which resulted in voluntary surrender of her law license) was that "her inexperience in the practice of law and lack of adequate training lead to the grossly negligent action as alleged in the complaint."
It is expected that Robinson's case will serve as a precursor to the filing of federal criminal charges against the "mastermind" of this real estate rehabilitation and investment scheme one Mr. James T. Webb who vacated his residence and businesses in North Carolina in or around mid-2004 and relocated to Weston, Florida. The Securities and Exchange Commission filed a civil action against Mr. Webb in United States District Court, Southern District of Florida on November 15, 2007 which resulted in the court freezing Mr. Webb's personal, corporate, and real estate holdings on November 26, 2007. Details on the SEC complaint.
Numerous parties in civil actions against Mr. Webb commented that their case is only the "tip of the iceberg". There are countless other iterations of Webb-Robinson across the USA that are only now being brought to light and many others that will likely escape the unyielding glare of justice. In the Webb-Robinson example, it would appear that some modicum of justice will eventually be served and possibly serve as the basis for systemic changes necessary to restore a greater degree of integrity to our financial institutions and their lending practices.
Be well, my friend...
The Nattering One muses... stay thirsty my friends as I continue this DOJ Naybob's most excellent diatribe in my next post.
Amen to the aforementioned references to your professional experience in underwriting 1st TD's, compadre. Based upon my very limited research to date, the floodgates to creation of potentially fraudulent mortgage-backed securities (derivatives, credit default swaps, etc) were thrown wide open in 1999 when the Glass-Steagall Act of 1934 was effectively repealed to satiate Wall Street greed.
Interestingly enough, our assignment today (yes, Saturday) was to select a case of particular importance and present it to the assembled group of aspiring legal scholars. Most of the cases presented dealt with supposedly "newsworthy" items involving grisly murders, contentious divorces, child custody matters, etc.
You know, the standard, simplistic, sensationalist crap that Oprah, Entertainment Tonight, and the celebrity-obsessed, bubble-headed Network News anchors feed the masses. As an alternative to such puffery, I chose to present a complaint filed by the Assistant U. S. Attorney on March 22, 2010 in U. S. District Court for the Eastern District of North Carolina Western Division alleging that one Amy Robinson (a formerly licensed real estate closing attorney since disbarred) conspired with a number of licensed real estate professionals and others in recruiting investors to secure home mortgage loans under the guise of a real estate rehabilitation and investment plan from December 2002 to at least May 2006.
In her capacity as the closing attorney for at least 50 properties tied to the scheme, Robinson prepared HUD-1 settlement statements and provided them to mortgage lenders under the pretense that they reflected the economic truth of the underlying transaction.
Robinson knowingly made misrepresentations on the HUD-1 settlement statements despite her knowledge that they dealt with facts material to the lenders' funding decisions, such as the degree of seller financing, the presence or degree of pre-existing mortgages, the actual contract price for the property, and the disbursement of loan proceeds in a fashion differing from that known to the lender.
As a result of what was essentially a Ponzi scheme, lenders issued loans worth approximately $2.5 million on approximately 40 loans and a substantial portion of the loans have since gone into default or foreclosure. This would ostensibly constitute (among other charges) a violation of Title 18, United States Code, Section 1344 (Bank Fraud) punishable by a fine not more than $1.0 million dollars or 30 years imprisonment or both.
Robinson waived the right to a Grand Jury review of the validity of these charges and is currently scheduled to appear for arraignment on May 11, 2010. Robinson's defense in answer to a related complaint before the Disciplinary Hearing Commission of the North Carolina State Bar filed on April 16, 2008 (which resulted in voluntary surrender of her law license) was that "her inexperience in the practice of law and lack of adequate training lead to the grossly negligent action as alleged in the complaint."
It is expected that Robinson's case will serve as a precursor to the filing of federal criminal charges against the "mastermind" of this real estate rehabilitation and investment scheme one Mr. James T. Webb who vacated his residence and businesses in North Carolina in or around mid-2004 and relocated to Weston, Florida. The Securities and Exchange Commission filed a civil action against Mr. Webb in United States District Court, Southern District of Florida on November 15, 2007 which resulted in the court freezing Mr. Webb's personal, corporate, and real estate holdings on November 26, 2007. Details on the SEC complaint.
Numerous parties in civil actions against Mr. Webb commented that their case is only the "tip of the iceberg". There are countless other iterations of Webb-Robinson across the USA that are only now being brought to light and many others that will likely escape the unyielding glare of justice. In the Webb-Robinson example, it would appear that some modicum of justice will eventually be served and possibly serve as the basis for systemic changes necessary to restore a greater degree of integrity to our financial institutions and their lending practices.
Be well, my friend...
The Nattering One muses... stay thirsty my friends as I continue this DOJ Naybob's most excellent diatribe in my next post.
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