Daily Archives: April 8, 2014

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Debt settlement firm pleads guilty in first CFPB referral

Debt settlement firm pleads guilty in first CFPB referral

A debt settlement company and its operator on Tuesday pleaded guilty in New York to conspiracy charges of mail and wire fraud, capping the first criminal case referred to U.S. prosecutors by the Consumer Financial Protection Bureau.

Michael Levitis and his company, Mission Settlement Agency, entered the guilty pleas in Manhattan federal court, less than a year after prosecutors announced charges over a scheme that they said victimized more than 1,200 people across the country from 2009 to 2013.

At the time, the office of Manhattan U.S. Attorney Preet Bharara called it the first criminal referral from the CFPB, an agency created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.

Prosecutors accused Mission of touting its ability to help customers reduce their credit card and other debt. Instead, the company charged excessive fees while failing to aid its clients.

“I’m here to take responsibility for my actions,” said Levitis, 37, before U.S. District Judge Paul Gardephe. “I took advantage of people who were struggling financially and caused them further hardship.

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FHFA reaches settlement with City of Chicago over vacant property lawsuit

FHFA reaches settlement with City of Chicago over vacant property lawsuit

The Federal Housing Finance Agency reached a settlement with the City of Chicago over the city’s vacant property ordinances, ending a 2½ year legal battle.

The FHFA, as conservator of Fannie Mae and Freddie Mac, sued the city on December 12, 2011, after the city amended its vacant and abandoned building ordinances to require mortgagees to register, secure and maintain foreclosed properties.

The city’s ordinance requires that mortgage holders of vacant buildings register the buildings with the city, pay a $500 registration fee, and maintain the property, including securing the building, maintaining the lawn, clearing and removing snow from the building’s walkway, maintaining the building’s fence and gates and maintaining the exterior of the building.

The ordinance also states that a watchman must be posted at the vacant building between the hours of 4:00 p.m. and 8:00 a.m., unless the building had been secured by methods approved by the city’s commissioner of buildings

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Congress needs an overhaul—not a raise!

Congress needs an overhaul—not a raise!

If you felt the ground moving over the past few days, it was likely our Founding Fathers rolling over in their graves after Congressman Rep. Jim Moran (D-Va.) suggested that members of Congress were — wait for it — underpaid.

What happened to public service? Somehow, over the years, the definition of “public service” has morphed from fulfilling a temporary civic duty — a way to give back to enhance the greater good of the country — into a lifelong career path for senators and representatives to enrich themselves on the dime of those who elected them. A Congressional career pays a minimum of $174,000 per year, with various allowances and a variety of perks. Should you stick around for five years, as an elected member of Congress you become eligible for a pension, paid for by the taxpayers. Not to mention that when you leave office, should you ever decide to or not get re-elected, your high profile status sets you up for a career of public speaking, appearances and consulting gigs, and access to high paying private sector jobs in industries either heavily regulated by the government (e.g., finance/banking) and/or dependent upon the government for revenue (aerospace/defense).

While I believe that appropriate pay and incentives are required to attract top tier talent, I believe that the current salary and benefits are quite attractive. But I also believe — and it seems that most Americans do as well — that we still aren’t attracting the best and the brightest. In fact, Congress has an approval rating that recently hit the single digits. Literally, Congress’s approval rating from the American people has been chronically less than 15 percent and Rep. Moran seems to believe that showing up means he deserves more compensation. It’s not hard to see how the culture of entitlement that is being cultivated in the U.S. starts directly at the top of our “leadership” (and I put that word in quotes intentionally).

Moran likens Congress to a board of directors, saying “but the fact is that this [Congress] is the board of directors for the largest economic entity in the world.”

I truly wish that our government was run more like a business and that our officials were treated like board members. A board of directors has a key duty to their stakeholders — a fiduciary duty — that means that the board of directors can be held liable and accountable should they act in a manner that is not in the best interests of the people that they represent. Neither our congressional representation nor our president has any true accountability to their stakeholders. The main recourse the people have is to not vote for them again. Sadly, bad behavior doesn’t prevent them from being re-elected, as Rep. Mark Sanford (R-S.C.) showed after going AWOL during his tenure as governor to spend time with his mistress abroad and reimbursing funds used during those trips, yet still being able to run for Congress.

The last thing that we should be doing is rewarding Congress any further for its subpar performance. Rather, we need to restore representation to truly being a public service. To do so, we need to enact term limits to do away with lifetime representation and their ongoing pensions. We need to institute some form of accountability and responsibility for those who have the privilege to represent the people of the United States. We need to ensure that members of Congress attest, under penalty of law, that they have read and understand any bill that they vote for. We need them to abide by the laws of the country or be prohibited from being in office ever again. We need to require them to be held to the same laws and rules that they pass for their constituents and to a reasonable standard of integrity.

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BofA, Allstate End $700 Million Mortgage Securities Suit

BofA, Allstate End $700 Million Mortgage Securities Suit

Bank of America Corp. (BAC)’s Countrywide unit and insurer Allstate Corp. (ALL) settled a 2010 lawsuit over $700 million in devalued mortgage backed securities, according to a filing in Los Angeles federal court. No terms of the accord were revealed in court papers.

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SEC Goldman Lawyer Says Agency Too Timid on Wall Street Misdeeds

SEC Goldman Lawyer Says Agency Too Timid on Wall Street Misdeeds

A trial attorney from the Securities and Exchange Commission said his bosses were too “tentative and fearful” to bring many Wall Street leaders to heel after the 2008 credit crisis, echoing the regulator’s outside critics.

James Kidney, who joined the SEC in 1986 and retired this month, offered the critique in a speech at his goodbye party. His remarks hit home with many in the crowd of SEC lawyers and alumni thanks to a part of his resume not publicly known: He had campaigned internally to bring charges against more executives in the agency’s 2010 case against Goldman Sachs Group Inc. (GS)

The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney said, according to a copy of his remarks obtained byBloomberg News. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”

Kidney said his superiors were more focused on getting high-paying jobs after their government service than on bringing difficult cases. The agency’s penalties, Kidney said, have become “at most a tollbooth on the bankster turnpike.”

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David Wildstein met for several days with federal prosecutors in Newark in Christie Bridge probe, report says

David Wildstein met for several days with federal prosecutors in Newark in Christie Bridge probe, report says

David Wildstein, the former Port Authority official at the center of the George Washington Bridge lane-closings scandal, spent several days meeting with federal prosecutors in Newark last week, according to a report posted online by a Washington-based publication that says it covers “insider news” about the U.S. Department of Justice.

The publication, called “Main Justice,” is also reporting that Charlie McKenna, former chief legal counsel to Gov. Chris Christie, met secretly in mid-January with investigators in the office of New Jersey U.S. Attorney Paul Fishman.

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Bogus Private-Equity Fees Said Found at 200 Firms by SEC

Bogus Private-Equity Fees Said Found at 200 Firms by SEC

A majority of private-equity firms inflate fees and expenses charged to companies in which they hold stakes, according to an internal review by the U.S. Securities and Exchange Commission, raising the prospect of a wave of sanctions by the agency.

More than half of about 400 private-equity firms that SEC staff have examinedhave charged unjustified fees and expenses without notifying investors, according to a person with knowledge of the SEC’s findings who asked not to be named because the results aren’t public. While some of the problems appear to have resulted from error, some may have been deliberate, the person said.