Daily Archives: April 24, 2014


Subprime Lender Faces Class Action Amid CFPB Probe

Subprime Lender Faces Class Action Amid CFPB Probe

Law360, New York (April 23, 2014, 9:02 PM ET) — World Acceptance Corp., a top provider of short-term loans to low-income borrowers, on Wednesday was slapped with a securities class action after the disclosure of a recent U.S. Consumer Financial Protection Bureau probe caused its stock to tumble.

Plaintiff Edna Selan Epstein also took aim at current and former World Acceptance executives, including chief executive A. Alexander Mclean III, accusing them of violating the Securities Exchange Act of 1934 by making false and misleading statements about the company’s lending practices and its compliance with related federal…


Rep. Cummings Requests Oversight Hearing on Foreclosure Review

Rep. Cummings Requests Oversight Hearing on Foreclosure Review

New Documents Show High Error Rates at Banks, Foreclosure Review Terminated Before Full Harm Revealed  

Washington, D.C. (Apr. 24, 2014)—Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, sent a letter to Chairman Darrell Issa requesting a hearing to examine why federal regulators appear to have prematurely ended the Independent Foreclosure Review (IFR) and entered into a major settlement agreement with mortgage servicing companies in January 2013 just as the full extent of harm caused by abusive mortgage servicing practices was beginning to be revealed.

Cummings’ request is based on new documents obtained by the Committee showing that independent consultants brought in to review servicer abuses had identified high error rates in some categories directly before the IFR was terminated and the final settlement was announced.

For example, Bank of America’s independent consultant, Promontory Financial Group, LLC, found the bank had a 60% error rate in loan modification efforts; a 19% error rate in charging fees; and a 16% error rate in loans involving bankruptcy that were reviewed.  Promontory found similar trends in PNC Bank’s foreclosure activities, including “borrower financial injury” in 21% of cases reviewed.

The new documents also show that independent consultants had conducted significant preparatory work assembling files and creating systems to conduct more comprehensive reviews, but regulators suddenly halted these efforts in January 2013 despite projections that they would have been completed in months.

Promontory stated that “the peak of engagement was at the end of December 2012” and estimated that the projected time to complete its review of Bank of America was nine and a half months.  Similarly, PNC Bank’s independent consultant estimated that the review process could have been completed by June 2013.

“Now that we have obtained copies of these documents, they confirm that some mortgage servicing companies engaged in widespread and systemic foreclosure abuses, including charging improper and excessive fees, failing to process loan modifications in accordance with federal guidelines, and violating automatic stays after borrowers filed for bankruptcy,” Cummings wrote.  “It remains unclear why the regulators terminated the IFR prematurely, how regulators determined the compensation amounts servicers were required to pay under the settlement, and how regulators could claim that borrowers who were harmed by these servicers would benefit more from the settlement—including the settlement amounts paid for each error category—than by allowing the IFR to be completed.”

In his letter, Cummings requested that the Committee hold a hearing with representatives from the Federal Reserve, the Office of the Comptroller of the Currency (OCC), mortgage servicing companies, and independent consultants to address three key questions:

·        Why did the Federal Reserve and the OCC terminate the IFR prematurely before its objective had been achieved?

It is unclear why the regulators believed it was in the best interests of borrowers to end the IFR when high error rates were identified during preliminary reviews and consultants were poised to conduct more in-depth reviews to identify the full extent of harm. 

·        How did the regulators arrive at the compensation amounts in the settlement?

The settlement required banks to provide cash payments and other assistance to affected borrowers, but it is unclear what criteria were used to determine these settlement amounts, and whether these amounts were in any way related to the actual or estimated harm suffered by borrowers.

·        How did the regulators determine that the amounts mortgage servicers would pay—and the amounts borrowers would receive—would be more favorable under the settlement than if the IFR had been completed?

It is unclear how regulators determined that the settlement amounts would provide a greater benefit to borrowers than if the IFR had continued until the independent consultants could report reliable data on servicer error rates.

Cummings also commended Issa for conducting the investigation in a responsible and bipartisan manner and for helping to obtain the documents cited in today’s letter.

The full text of the letter is available here and copied below.

– See more at: http://democrats.oversight.house.gov/press-releases/cummings-requests-hearing-on-mortgage-settlement/#sthash.6bCqrbr7.dpuf





DFS Seeks Restitution for Consumers, Disgorgement of Profits

Condor Case is First Legal Action Brought by a State Regulator to Enforce Violations of Federal Dodd-Frank Consumer Protection Law

Benjamin M. Lawsky, Superintendent of Financial Services, today announced that the Department of Financial Services (DFS) has obtained a temporary restraining order in federal court against Condor Capital Corporation (“Condor”), a subprime auto lender based in Long Island, and its owner, Stephen Baron. A DFS investigation uncovered that Condor, as alleged, engaged in a longstanding scheme to steal millions of dollars from its vulnerable customers – among other unfair, abusive, and deceptive practices. As part of its ongoing legal proceeding, DFS is seeking restitution for Condor consumers, disgorgement of profits, the appointment of a receiver to wind down Condor’s operations, and other remedies.

The proceeding against the defendants (Lawsky v. Condor) is the first legal action initiated by a state regulator under section 1042 of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). That provision empowers state regulators to bring civil actions in federal court for violations of Dodd-Frank’s consumer protection requirements, and obtain restitution for abused customers and other remedies provided for under that law.

Superintendent Lawsky said: “When companies abuse New York consumers, we will use any tool at our disposal to get restitution and help make things right. As alleged, the defendants bilked millions of dollars from vulnerable borrowers who could least afford it. We are taking swift action today to stop them from abusing any more consumers and help obtain relief for those who were victimized.”


Condor is also alleged to have endangered the security of its customers’ personally identifiable information, placing them at serious risk of identity theft. Among other information-security lapses, the DFS examiners found stacks of hundreds of hard-copy customer loan files lying around the common areas of Condor’s offices. Condor also has failed – despite repeated directives from DFS – to adopt basic policies, procedures, and controls to ensure that its information technology systems (and the customer data they contain) are secure.

DFS has reviewed and analyzed numerous complaints about Condor. Multiple customers have alleged that Condor has harassed and threatened customers and friends and relatives of customers, including for accounts that are current. Other customers have alleged that Condor has reported inaccurate information to credit agencies, imposed fees or late charges where none are appropriate, or has failed to properly apply payments to loan balances. Still other complainants – including complainants that are not Condor customers – have alleged that Condor has made unauthorized charges to their credit cards or unauthorized debits from their bank accounts.

The allegations in DFS’s complaint remain subject to proof at trial. The Court has scheduled a hearing on DFS’s request for a preliminary injunction for Tuesday, April 29, 2014 at 10:00 a.m.

Li Jianhua, director of the non-bank CBRC sudden heart attack death

Via Caixin,

Li Jianhua still unhappy 49-year-old, is the trust industry, “a law two regulations,” the main drafter, 2012 CBRC took the post of director of the non-bank advocates trust industry to establish market discipline, gradual transition

 [Caixin] (reporter Huo Kan Zhang Yuzhe Liucai Ping)

April 23, Li Jianhua, director of the CBRC AfDB died due to heart attack, still less than 49 years old. As planned, Li Jianhua this morning to attend a major industry conference.


  According to several sources close to the CBRC said, Li Jianhua April 22 Revising into the night 12:00.Unexpectedly around 6:00 this morning, his wife found him passed away, due to sudden heart attack lines. Both inside and outside China Banking Regulatory Commission expressed sorrow and regret.

Li Jianhua was born in July 1965, Hunan Yongxing, graduated from Wudaokou Finance Institute. Li Jianhua trust industry is “one law two rules” or “People’s Republic of China Trust Law,” “Trust management approach” “Trust Capital Trust scheme management approach,” the main drafter, a former deputy director of the China Banking Regulatory Commission non-banking department, 2007 December was transferred to the Secretary of Shaanxi Banking Bureau, party secretary, in 2012 took over the CBRC Li Jianhua, director of the non-banking post.

 Li was among the main drafters on new “caveat emptor” market-based rules on China’s shadowy banking system and recently said in an interview that “now is not only a time to control risk, but to transform the trust industry.. if it’s too loose, it’s a big problem.”

This brings the sad list of senior financial services exectives who have died in the last few months to 13:

1 – William Broeksmit, 58-year-old former senior executive at Deutsche Bank AG, was found dead in his home after an apparent suicide in South Kensington in central London, on January 26th.

2 – Karl Slym, 51 year old Tata Motors managing director Karl Slym, was found dead on the fourth floor of the Shangri-La hotel in Bangkok on January 27th.

3 – Gabriel Magee, a 39-year-old JP Morgan employee, died after falling from the roof of the JP Morgan European headquarters in London on January 27th.

4 – Mike Dueker, 50-year-old chief economist of a US investment bank was found dead close to the Tacoma Narrows Bridge in Washington State.

5 – Richard Talley, the 57 year old founder of American Title Services in Centennial, Colorado, was found dead earlier this month after apparently shooting himself with a nail gun.

6 – Tim Dickenson, a U.K.-based communications director at Swiss Re AG, also died last month, however the circumstances surrounding his death are still unknown.

7 – Ryan Henry Crane, a 37 year old executive at JP Morgan died in an alleged suicide just a few weeks ago.  No details have been released about his death aside from this small obituary announcement at the Stamford Daily Voice.

8 – Li Junjie, 33-year-old banker in Hong Kong jumped from the JP Morgan HQ in Hong Kong this week.

9 – James Stuart Jr, Former National Bank of Commerce CEO, found dead in Scottsdale, Ariz., the morning of Feb. 19. A family spokesman did not say whatcaused the death

10 – Edmund (Eddie) Reilly, 47, a trader at Midtown’s Vertical Group, commited suicide by jumping in front of LIRR train

11 – Kenneth Bellando, 28, a trader at Levy Capital, formerly investment banking analyst at JPMorgan, jumped to his death from his 6th floor East Side apartment.

12 – Jan Peter Schmittmann, 57, the former CEO of Dutch bank ABN Amro found dead at home near Amsterdam with wife and daughter.

13 – Li Jianhua, 49, the director of China’s Banking Regulatory Commission died of a sudden heart attack


Wall Street Greed and the Corrupt Global Banking Cartel: Too Big to Prosecute? Not for a California Jury

Wall Street Greed and the Corrupt Global Banking Cartel: Too Big to Prosecute? Not for a California Jury

Sixteen of the world’s largest banks have been caught colluding to rig global interest rates.  Why are we doing business with a corrupt global banking cartel?

United States Attorney General Eric Holder has declared that the too-big-to-fail Wall Street banks are too big to prosecute.  But an outraged California jury might have different ideas. As noted in the California legal newspaper The Daily Journal:

California juries are not bashful – they have been known to render massive punitive damages awards that dwarf the award of compensatory (actual) damages. For example, in one securities fraud case jurors awarded $5.7 million in compensatory damages and $165 million in punitive damages. . . . And in a tobacco case with $5.5 million in compensatory damages, the jury awarded $3 billion in punitive damages . . . .

The question, then, is how to get Wall Street banks before a California jury. How about charging them with common law fraud and breach of contract?  That’s what the FDIC just did in its massive 24-count civil suit for damages for LIBOR manipulation, filed in March 2014 against sixteen of the world’s largest banks, including the three largest US banks – JP Morgan Chase, Bank of America and Citigroup.


Jury Convicts Former GMAC and Countrywide Loan Officer and Former New York Corrections Officer on Mortgage Fraud Charges

Jury Convicts Former GMAC and Countrywide Loan Officer and Former New York Corrections Officer on Mortgage Fraud Charges

NEW HAVEN, CT—A federal jury has convicted two men for their roles in an extensive mortgage fraud scheme arising from the fraudulent purchases of more than 40 properties in New Haven, U.S. Attorney Paul J. Fishman, District of New Jersey, announced today.

Andrew Constantinou, of Unionville, Connecticut, and Jacques Kelly, of Poughkeepsie, New York, were convicted on April 18, 2014, of all counts charged in the indictment following a three-week trial before Chief U.S. District Judge Janet C. Hall. The jury found both men guilty of conspiracy to commit mail, wire, and bank fraud. The jury also found Kelly guilty of one count of wire fraud and one count of making a false statement to a financial institution.

According to documents filed in this case and the evidence at trial:

From 2006 to 2008, Constantinou, Kelly, and others, including Menachem Yosef Levitin, Ronald Hutchison, Charles Lesser, Jeffrey Weisman, Genevieve Salvatore, Bradford Rieger, Lawrence Dressler, and Kwame Nkrumah, conspired to defraud mortgage lenders of millions of dollars of mortgage proceeds by inflating the contract price that the sellers of the properties had actually agreed to accept. The scheme involved multi-family properties in New Haven.


Sky News: Letter claiming to represent scores of disgruntled Barclays employees about poor staff morale just hours of bank’s annual meeting

Sky News: Letter claiming to represent scores of disgruntled Barclays employees about poor staff morale just hours of bank’s annual meeting

A letter claiming to represent scores of disgruntled Barclays employees made potentially damaging claims on Wednesday about poor staff morale just hours before the bank’s board gathered for its annual meeting.

Addressed to Sir David Walker, Barclays’ chairman, the letter made allegations of an unjustified workload for ordinary workers and “arrogant” behaviour by senior colleagues demonstrating a “complete lack of empathy”.

The letter claimed to be from an organisation identifying itself as the Barclays 100+ Group, and said it was “written…by a total of 100+ colleagues … from retail, Barclays Wealth, Barclaycard and Barclays”.

It said copies had been sent to the entire Barclays board, shareholders including BlackRock and Capital Group, as well as news organisations such as Sky News.

The authenticity of the letter could not be ascertained on Wednesday and there was no independent verification that it had been sent by a current employee or employees of Barclays.