Daily Archives: July 10, 2014

Former Wells Fargo Loan Officer Sentenced to Two Years in Prison for Role in $40.8 Million Mortgage Fraud Scheme

U.S. Attorney’s OfficeJuly 10, 2014
  • District of New Jersey(973) 645-2888
 

CAMDEN, NJ—An Ocean County, New Jersey, man who used his position as a loan officer of Wells Fargo Home Mortgage Inc., to get the company to release more than $4.6 million on fraudulent mortgage loan applications was sentenced today to 24 months in prison for his role in a $40.8 million mortgage fraud conspiracy, U.S. Attorney Paul J. Fishman announced.

Robert Serao, 48, of Bayville, New Jersey, previously pleaded guilty following his indictment to one count of conspiracy to commit wire fraud. He was the 10th defendant to plead guilty in the case. U.S. District Judge Joseph E. Irenas imposed the sentence today in Camden federal court.

According to documents filed in this case and statements made in court:

While working in various positions – including branch manager, sales manager and loan officer – within Wells Fargo Home Mortgage Inc., a division of Wells Fargo Bank N.A., Serao entered into a conspiracy to submit mortgage loans to his employer for financially unqualified “straw buyers” based upon false and fraudulent information contained in Uniform Residential Loan Applications, HUD-1 Forms, tax returns and other documents.

Serao’s conspirators caused fraudulent mortgage loan applications and supporting documents to be submitted to Wells Fargo and numerous other mortgage lenders in various straw buyers’ names, attributing to them inflated income and assets in order to induce the mortgage lenders to approve the loans. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with the real estate closings on the properties, Serao’s conspirators took a portion of the proceeds from the fraudulent mortgage loans. Wells Fargo Home Mortgage released more than $4.6 million based on fraudulent mortgage loan applications. Serao profited from his role in the conspiracy by increased commissions on the mortgage funds.

Read on.

Big press on Bank of America treatment of whistleblower Michael Winston — but, you’ll have to read German!

It is truly a shame that many of the media in this country will not continue to press on the banks’ crimes exposed by whistleblowers. Mr. Winston as well as other whistleblowers are in Germany’s respected newspaper, Handelsblatt, the country’s parallel to the Wall Street Journal. In the German newspaper’s article, Life Like A Thriller, devoted to how whistleblowers are being ostracized in the name of exposing misconduct in the financial sector.

 Hendelsblatt (translated in English):

Charles Alford has seen intimidation strategies in various shapes and forms. The professor at the University of Maryland is the author of the book “Whistleblowers: Broken Lives and Organizational Power”, which portrays the battle of the individual against mighty organizations. Alford says that “the main objective is to discredit the whistleblower in an effort to diminish his or her credibility.”

Typical strategies against opposing employees include isolation, exclusion from meetings, and assignment to tasks for which they are over-or under-qualified. “Organizations do not care about winning the battle. They care about creating a prime example to scare off future whistleblowers”, he says.

Michael Winston is a great example of this. The member of the Board of Directors of Countrywide discovered massive fraud in 2005. Winston reported the matter internally in the hope to solve the issue quickly, especially given the fact that he was known to be a trusted adviser to top management.

However, he did not receive any support and matters got worse. In 2006 he was asked to misstate information to the rating agency Moody’s. Winston refused to cooperate and faced isolation and mobbing in return.

One day before Winston and his team were supposed to present a new strategy, the project was called off. “I had to inform my staff that they would no longer work for me. That was painful given that some of these people especially moved to the west coast for me.” The team shrank from 200 to two employees and he was forced to relocate several times. “I changed office locations 9 times in 18 months”, Winston explains.

In 2008, Countrywide was taken over by Bank of America. Winston remembers that they “supposedly forgot to invite me” to the first meeting with the new CEO. Shortly after Winston was let go.

Retaliation against whistleblowers is against the law, which is why Winston chose to sue the bank. “The bank defrauded employees, home-owners, shareholders, and tax payers”, says Winston, who expected to win his trail in court. Instead, he found himself in a massive legal battle that would destroy his worldview forever.

“Management lied repeatedly under oath, documents were forged, and legal officials were bribed”, according to Winston. Still, the jury voted overwhelmingly in his favor in 2011 and awarded him 3.8 million dollars in compensation.

The media called Winston a hero, but the tides turned quickly: Two years later, the verdict was reversed by the Appellate Court although there was no new evidence. Winston was not even invited to the hearing. Even worse: “The Appellate Court re-evaluated the evidence and disregarded the verdict of the jury, which voted with overwhelming majority in my favor”, says Winston. He refers to two eminent lawyers, who confirm the court has overstepped its competencies. Until this day Winston has not seen any of the 3.8 million dollars.

Winston, who was a popular manager with guest appearances at INSEAD and Harvard a couple of years ago, was a broken man after the legal battle. Today no one wants to hire him. “I always defined myself through work”, he says. Today he feels too weak to do the things he once enjoyed, like going on long runs. Retrospectively it becomes clear that the battle made him weak and depressed. Bank of America states that they are “satisfied with the verdict of the Appellate Court.”

 

 

Fed’s new Vice-Chairman Fischer does not support breaking up biggest banks

Marketwatch:

WASHINGTON (MarketWatch) — It is not clear that breaking up the largest banks would end the need for government bailouts of the financial sector, said Stanley Fischer, the new vice-chairman of the Federal Reserve, on Thursday. “In short, actively breaking up the largest banks would be a very complex task, with uncertain payoff,” Fischer said in his first speech since joining the central bank in May. Fischer will find some opposition to this view on the Fed as Richard Fisher, the president of the Dallas Fed, is a strong proponent of breaking up banks to end too-big-to-fail.

Banker Suicides Return: JPMorgan Executive “Blasts Wife, Kills Self” With Shotgun

Wow, very sad..

As IB Times reports,

JP Morgan executive director Julian Knott blasted his wife Alita to death with a shotgun before turning the gun on himself. 

The 45-year-old, who worked for the investment bank in London until July 2010, shot his 47-year-old wife multiple times before committing suicide with the same weapon.

The couple met in London, with Alita opening nursery Quayside Tots Playgroup in Southwick, West Sussex, before they moved to the United States.

She remained the playgroup’s care provider until at least February 2013, according to the nursery’s most recent Ofsted report.

Julian moved to the United States from London in 2010 and was working at JP Morgan’s Global Network Operations Center in Whippany, New Jersey, at the time of the tragedy.

Jefferson Township police, in New Jersey, confirmed on Sunday they had found two unconscious bodies at the Knotts’ large suburban home at 1.12am.

A statement released on Tuesday added: “Through an extensive investigation conducted by the Jefferson Township Police Department, the Morris County Prosecutors Office and the Morris County Medical Examiner’s Office the preliminary investigation has revealed that the two adults died as a result of gunshot wounds and the incident has been determined to be a murder/suicide.

“This preliminary investigation revealed that Julian Knott, age 45, shot his wife Alita Knott, age 47, multiple times and then took his own life with the same weapon.”

This is the 15th financial services exective death in recent months…

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

14 – Lydia _____, 52 – jumped to her suicide from the 14th floor of Bred-Banque Populaire in Paris

15 – Julian Knott, 45 – killed wife and self with a shotgun in Jefferson Township, New Jersey


Julian Knott and his wife Alita

6th Circ. Says Fannie, Freddie Exempt From Transfer Taxes

Case Title

Board Of Commissioners, et al v. Fed Housing Finance Agency, et al

Case Number

13-4429

Court

Appellate – 6th Circuit

Nature of Suit

4950 Constitutional – State Statute

Law360, New York (July 10, 2014, 3:12 PM ET) — The Sixth Circuit on Thursday upheld a district court’s dismissal of a class action brought by two Ohio counties against Fannie Mae and Freddie Mac seeking unpaid real property transfer taxes, saying the mortgage giants’ statutory charters exempted them.

According to the appeals court’s Thursday opinion, the district court was correct in determining that their statutory charters exempted Fannie Mae and Freddie Mac from all state and local taxes, including Ohio’s transfer tax. In addition, the appeals court concurred with the district court that the tax…

Read on.

U.S. banks to lose profit cushion of releasing bad-loan reserves

A popular way for big U.S. banks to boost profits may have run its course.

The practice of dipping into funds set aside for bad loans, known as releasing loan-loss reserves, has helped the industry weather weak loan demand and lower fee income. But it is expected to have a smaller impact on banks’ second-quarter earnings, which will start being unveiled on Friday, because loss rates and reserves are nearing their lower limits.

“This could be the first quarter where credit doesn’t bail out most banks,” Goldman Sachs analyst Richard Ramsden wrote in a recent report.

Analysts at Credit Suisse expect JPMorgan Chase & Co, the largest U.S. bank, to report $300 million worth of loan-loss reserve releases, down 80 percent from $1.5 billion in the second quarter of 2013. They expect releases to drop 40 percent at Bank of America Corp and Citigroup Inc and 30 percent at Wells Fargo & Co.

The decline in income from reserve releases is the latest obstacle for banks to increase earnings in an environment of slow economic growth and low interest rates.

Bankers have been able to justify large reserve releases as the economy gradually recovers from the financial crisis. As more borrowers make payments on time, banks can set aside less money for losses.

Read on.

San Francisco landlord uses loophole to evict 98-year-old who paid rent on time for 50 years

It’s called gentification, folks…

SAN FRANCISCO (KRON) — Don’t be fooled by the frail frame of the 98-year-old woman that answers the door of a San Francisco apartment.

The elderly woman is putting up a brawny fight against the landlord that is trying to kick her out of her home.

“I didn’t sit down and cry, I just refused to believe it,” said Mary Phillips.

“They’re going to have to take me out of here feet first.”

Phillips has lived at her Dolores Street apartment for 50 years, but now her landlord, Urban Green Investments, is evicting her along with several other tenants through the Ellis Act.

The 1986 Ellis Act is a state law that gives landlords the unconditional right to evict tenants to get out of the rental business.

Urban Green Investments has purchased a number of buildings in San Francisco, has evicted its residents through the Ellis Act, and is reselling the buildings for profit.

Many of those being evicted are low income families and seniors.

“I’ve been very happy here,” Phillips said. “I’ve always paid my rent, I’ve never been late.”

Read on.