|
Writers Articles And Opinions |
|
|
11 October 2010 By Stephen
Lendman
A systemic problem, it's
everywhere, especially in savage capitalism's
greed-driven system, enriching a global royalty at the
expense of most others. In his book "On Fact and
Fraud: Cautionary Tales from the Front Lines of
Science," David Goodstein examined examples from
centuries back to more recent times, including some
accusations turning out to be false.
Trinity University's Bob Jensen
maintains fraud updates through June 2009 on his web
site, accessed through the following link:
http://www.trinity.edu/rjensen/FraudUpdates.htm
He also reviewed a "History of
Fraud in America," starting in colonial (and
pre-colonial) times, saying the earliest kinds
involved "phony health cures," including snake oil
ploys, medical frauds, and other deceptions
transitioning to today's "miracle cures and Internet
charlatanism."
Largely agricultural early
America saw land schemes as well as "deceptive rural
living and farming products." Con men either bought or
sold land. Victims were often immigrants and Indians.
The one best remembered was the 1626 Manhattan Island
purchase "for trinkets valued at 60 guilders," about
$24. Ironically in a sense, Carnarsie Indians were the
culprits as the land wasn't part of Manhattan.
Usually, however, indigenous people were victimized,
land scams expanding the country west and south,
accompanied by others at the expense of the unwary.
Frontier history got crooked
politicians and bureaucrats involved, accepting bribes
collaboratively with land swindlers. It got worse
during corporate America's early days. In 1787, less
than 40 existed, mostly to build roads, bridges,
canals, and other public projects. Many involved
"bribes, kickbacks, and inflated prices" like today
but for smaller stakes.
Checks and balances also arose,
significantly in free press reporting, but not enough
to curb greed or notorious "robber barons" like Jay
Gould, Andrew Carnegie, John D. Rockefeller, Cornelius
Vanderbilt, JP Morgan, and others, perhaps inspiring
Honore de Balzac's maxim that "Behind every great
fortune lies a great crime," or words to that effect.
The landmark 1886 Santa Clara
County v. Southern Pacific Railroad gave corporations
personhood under the 14th Amendment. It also helped
proliferate fraud, including stock scams, land grabs,
labor exploitation, various types of product and
pricing swindling, and much more.
Now recognized as legal persons
with full rights without obligations, corporations
were on a roll, heading them towards monopoly or
oligopoly power. Today more than ever globally with
interlocking directorates, market dominance, and
complicit governments arranging things their way.
Years back, General Motors
negotiated a big heist with bribes and other means to
get cities to abandon street cars for buses. It worked
brilliantly, but was disastrous for large communities
and the public, becoming more dependent on autos. A
sprawling suburbia arose. Urban decay followed, so now
ghettos proliferate nationally, their needs largely
ignored.
Prior to the Great Depression,
corporations operated virtually regulation free. That
changed, but over time consumer protections eroded.
Thereafter, global cartels arranged business friendly
environments, manipulated them for profit, and
committed greater than ever fraud. It's worst of all
on Wall Street, especially after the 1913 Federal
Reserve Act gave big banks money creation power,
letting them game the system more than ever, including
a free hand to commit fraud.
The 1920s stock selling scandals
culminated in the 1929 crash. New Deal reforms
followed, but what goes around comes around.
Deregulation in the 1980s facilitated savings and loan
fraud, then crime on the order of Enron, Worldcom,
Madoff, other Ponzi schemes, market manipulation,
bubbles, derivatives flimflam, embezzling, insider
trading, false accounting, phony financial products,
misrepresentation, and other scams, conspiracies, "foreclosuregate,"
and grandest of grand theft bailouts. The Treasury was
literally looted of trillions of dollars, government
partnering with bankers for plunder, sucking wealth
from consumers globally.
Underlying
Causes of Fraud in America
Jensen lists eight, including:
-- an obsession with privacy,
freedom being "prized over the risk of being ripped
off;"
-- laws and courts go easy on
white collar criminals, the worst of them rich and
well-connected to escape punishments for blue collar
or violent crimes;
-- whistleblowing is discouraged,
doing it a high-risk undertaking because lawsuits and
other type retaliation may follow, including ostracism
by fellow employees;
-- declining morality and ethics
at a time of extreme unregulated greed;
-- unaccountable contracting,
auditors dealing with complex financial deals "so
complicated that they virtually cannot be (properly)
audited or explained;"
-- as a result, "incompetent and
corrupt audits are routine....the audit trail end(ing)
in front of a maze of networked computers or some
giant black box that cannot be fathomed;"
-- CPA audits have flawed
designs, firms doing them in jeopardy of losing
clients unless issue "clean" reports, and rating
agencies face the same issue; and
-- money corrupting politics,
candidates needing large donors for campaigns in
return for which friendly legislation and deregulation
follows.
As a result, ever larger, more
sophisticated fraud schemes proliferate. They "roll
across America like waves move onto a beach. (They)
rise and fall with new innovations and ultimate
corrections." Creative corporate ploys follow new
accounting and auditing rules, exponentially growing
to become nearly incomprehensible.
Corporate bad guys so far are
winning, their excesses continuing unrestrained.
Neither legislation, potential lawsuits, or criminal
prosecutions deter them. The "weakest front" is the
political one because office holders need cash, and
powerful lobbyists game the system for them. So one
scandal begets another, new ones increasingly greater
for larger stakes. Big money always prevails while
consumer households lose out.
"Foreclosuregate"
Ellen Brown (http://www.webofdebt.com/)
does some of the best financial writing around. Her
latest deals with foreclosure swindling, involving
fabricated documents, forgery, and perjury
proliferating "massive fraud," including lost
paperwork that "would have revealed to investors that
they had been sold a bill of goods - (a package of
junk), toxic subprime loans very prone to default."
Yet they were cleverly dressed up in legal mumbo jumbo
to resemble AAA quality until post-bubble foreclosures
exposed the scam, too late to save most victims.
On October 7, Washington Post
writers Brady Dennis and Ariana Eunjung headlined, "In
foreclosure controversy, problems run deeper than
flawed paperwork," saying:
"Millions of US mortgages have
been shuttled around the global financial system -
sold and resold by firms - without the documents (to)
prove who legally owns" them. With millions now in
default and homes seized, "judges around the country
have increasingly ruled that lenders had no right to
foreclose, because they lacked clear title."
In fact, major US banks faked
documents to speed up foreclosures illegally, a
criminal industry/Washington partnership dispossessing
defrauded homeowners from their properties. In other
words, when pols conspire with Wall Street racketeers,
the public gets scammed, in this case millions of
victimized homeowners.
In September, "foreclosuregate"
emerged after evidence forced Ally Financial (formerly
GMAC Mortgage) to stop dispossessions in 23 states
where court orders are needed.
At issue are backdated documents,
false affidavits, and so-called court-ordered "rocket
docket," speed throughs to evict homeowners,
proceedings lasting around 20 seconds per case. Judges
are so swamped, they pay no attention, says Margery
Golant, a veteran Florida foreclosure defense lawyer.
As a result, "They just rubber-stamp them," case
closed.
On October 8, Bank of America
announced it would halt foreclosure sales in all 50
states. Earlier, Ally Financial and JPMorgan Chase
said they're doing it in 23 states. PNC Financial
Services Group will also for 30 days, and very likely
other banks will follow.
On October 8, Obama pocket-vetoed
a rushed-through Senate bill to facilitate foreclosure
fraud. It would have mandated mortgage and other
financial document notarizations in one state
(including those done electronically) be recognized in
all others. Consumer groups and other critics
complained, saying the measure would have facilitated
dispossessions faster, and in many cases improperly.
Attorney General Eric Holder then
said the Financial Fraud Enforcement Task Force is
investigating reports of greater numbers. Seven or
more state attorneys general began their own, that if
not stopping, at least may slow down dispossessions.
More on that below.
Last May, Herman John Kennerty, a
Wells Fargo default document group administration
manager testified that he typically signed 50 to 150
evictions daily. He also said he didn't independently
verify information to which he was attesting, just
rubber-stamping it along.
In Florida, problems are
especially acute, recent 12th Judicial Circuit state
findings showing that 20% of foreclosures set for
summary judgment involved deficient documents,
according to Chief Judge Lee E. Haworth. In an
interview, he said:
"We have sent repeated notices to
law firms saying, 'You are not following the rules,
and if you don't clean up your act, we are going to
impose sanctions on you.' They say, 'We'll fix it,
we'll fix it, we'll fix it.' But they don't."
As a result, on September 17,
Judge Harry Rapkin, overseeing district foreclosures,
dismissed 61 cases. Plaintiffs may refile, however, by
repeating the procedure, including paying fees
involved.
Overall, the process is riddled
with fraud. Mortgage lenders used boiler room tactics,
conning borrowers with no knowledge of what they were
doing, including the risks. To close deals, some
forged their signatures on key documents, pressured
real estate appraisers to inflate home values, and
created fake W-2 forms to exaggerate applicant
incomes.
The Housing
Bubble
Make no mistake, the housing
bubble was built on an edifice of fraud and was no
accident. Catherine Austin Fitts is a former Assistant
Housing Secretary. Then from 1994 - 1997, her company,
Hamilton Securities, was the lead Federal Housing
Administration (FHA) advisor. An expert, she "watched
both the Administration and the Federal Reserve (game
the system by) aggressively implement(ing) the
policies that engineered the housing bubble."
In her March 15, 2009 Solari.com
article headlined, "The Fed Did Indeed Cause the
Housing Bubble," she explained:
"In 1995, a senior Clinton
Administration official shared with me the
Administration's targets for Fannie Mae and Freddie
Mac mortgage volumes in low and moderate-income
communities. We had recently reviewed the
Administration's plans to increase government mortgage
guarantees - and most of these mortgages would also be
pooled and sold as securities to investors."
"Even in 1995, I could see that
these plans would create unserviceable debt loads in
communities struggling with the falling incomes
expected from globalization. Homeowners would default
on mortgages while losses on mortgage-backed
securities would drain retirement savings from 401(k)s
and pension plans. Taxpayers would ultimately be hit
with a large bill....but insiders would make a bundle.
I looked at the official and said that the
Administration was planning on issuing more mortgages
than there were houses or residents."
The official's response - "Shut
up, this is none of your business."
In her August 7, 2007 article
titled, "Sub-Prime Mortgage Woes Are No Accident,"
Fitts said:
"One of the dirty little secrets
behind the housing bubble is the longstanding
partnership (between) narcotics trafficking and
mortgage fraud," both used "to target and destroy
minority and poor communities with highly profitable
economic warfare."
The model is global, profiting
hugely from illicit drugs, money laundering, and
economic destruction of poor communities. Business and
government officials at the highest levels are
involved because of the enormous stakes - an estimated
$500 billion - $1 trillion laundered annually through
major financial firms, mostly in America.
On May 6, 2009, the Center for
Public Integrity headlined, "Who's Behind the
Financial Meltdown: The Top 25 Subprime Lenders and
Their Wall Street Backers," saying:
The companies most responsible
"for triggering the global economic meltdown were
owned or backed by giant banks now collecting billions
of dollars in bailout money."
They include Goldman Sachs,
JPMorgan Chase, Bank of America, Citigroup, Wells
Fargo, and other familiar names, profiting hugely
through criminally engineered fraud, facilitated by
government complicity - initially during the Clinton
administration, or perhaps earlier.
Banks getting bailout money own,
financed, or were financially connected to at least 21
of the top subprime lenders. Twenty have now closed,
stopped lending, or were sold to avoid bankruptcy.
Nine were California based, including: Countrywide
Financial, Ameriquest Mortgage, New Century Financial,
First Franklin, and Long Beach Mortgage, scamming
homebuyers through criminal fraud.
State Foreclosure Fraud
Investigations
As explained above, seven or more
state attorneys general began investigations, and
reports suggest up to 40 or more may work
cooperatively on it. According to Bloomberg.com on
October 8:
"State attorneys general led by
Iowa's Tom Miller are in talks that may lead to the
announcement of a coordinated probe as soon as October
12....Lawyers representing the banks are expecting a
more widespread investigation, according to Patrick
McManemin (of Patton Boggs), a Washington-based law
firm that represents banks, loan servicers and
financial institutions." Lawsuits will likely follow,
at least one now initiated by Ohio Attorney General
Richard Cordray against Ally Financial, formerly GMAC
Mortgage.
Whether Attorney General Holder
and top congressional officials will get on this
forcefully remains to be seen. So far, there's more
furor than action or tough measures. There's also risk
it may subside post-election, given other lame duck
session priorities, then a new Congress in January.
However, the housing scandal is so huge ("foreclosuregate"
one part alone) that momentum may give it legs in
2011.
The situation bears watching.
Financial institutions may be penalized, but expect no
top heads to roll, just perhaps a few lower-level
sacrificial lambs. It's how Washington officials
always handle scandals, because they, too, are
complicit.
Stephen Lendman lives in
Chicago and can be reached at lendmanstephen@sbcglobal.net.
Also visit his blog site at sjlendman.blogspot.com and
listen to cutting-edge discussions with distinguished
guests on the Progressive Radio News Hour on the
Progressive Radio Network Thursdays at 10AM US Central
time and Saturdays and Sundays at noon. All programs
are archived for easy listening.
http://www.progressiveradionetwork.com/the-progressive-news-hour/.
EsinIslam.Com
|
Save
Add Comments To This Story