Financier Martin Watson jailed over mortgage scam
May 28 2010
by Rob Kennedy, The Journal

A CROOKED financier has been jailed after he contributed to the sub-prime mortgage crisis with a £2.2m mortgage scam.

Martin Watson seemed every inch the upright money expert, living in style on Northumberland’s smart Darras Hall estate and shining as a self-employed broker.

But the 54-year-old former high-flying consultant was also the brains behind an audacious fraud in which he inflated the salaries and employment details of clients in the North East to win mortgage advances of up to £219,000.

Watson used fake job records, pay slips and P60s supplied by sidekick Paul Robertson from his South Tyneside accountancy firm to seal the home loans from high street banks and building societies.

And by the time the racket was finally smashed, more than 20 bogus applications together worth £2.24m had been secured, Newcastle Crown Court heard.

.....(cont'd)

Accountability and Transparency in the World of Big Money: Banks too Big to Fail and too Big to Jail
Global Research, August 18, 2010
by Danny Schechter

AS BANKS SETTLE FRAUD COMPLAINTS, WHAT HAS REALLY BEEN SETTLED IN THE CONFLICT WITH THE BANKSTERS?

Another day, another bank in the news -- with the settlement blues.

Now, Barclays is coughing up $298 million for violating a US Trade law. A Judge is still deliberating on a settlement that may cost Citi $70-$100 million for misleading investors about $40 billion in sleazy subprime holdings.

Last week, It was Wells Fargo settling for $200 million after being caught gouging their own customers. This follows in the wake of a $550 million dollar settlement on the part of Goldman Sachs and then a $600 million deal involving Countrywide and Bank Of America.

If this keeps going, we will soon be talking about real money---but for what? What have these settlements settled other than payoffs substituting for criminal prosecutions?

Bear in mind that very little, if any, of this money wrested from the banksters by the SEC and other agencies goes back to the people who were ripped off in the first place.

Some of the bankers consider this extortion, but it certainly isn’t justice.

The avaricious banks remain too big to fail and, unfortunately, too big to jail. While I don’t think filling our prisons with white-collar criminals will fix the economy, it might lead to overdue improvements in shameful prison practices. It also might send an overdue signal.

.....(cont'd)

The SEC Needs a Win Against Mozilo
August 27, 2010
Jake Zamansky

As a New York Times story suggested earlier this week, Federal Judges are no longer rubber stamping the SEC’s settlements with Wall Street. This has put the SEC in an almost impossible situation: drive harder bargains and risk facing off in court against Wall Street’s limitless legal resources or bow to their wishes and risk more rejected settlements.

It all started with Judge Jed S. Rakoff’s denouncement of the SEC’s settlement with Bank of America (BAC) for allegedly misleading shareholders about losses pending at Merrill Lynch, which at the time was in the process of being acquired. Judge Ellen Segal Huvelle then refused to accept a settlement with Citigroup (C), which also was accused of misleading shareholders about tens of billions of dollars in potential losses.

Judges are frustrated that the SEC’s settlement patterns harm shareholders who actually bear the brunt of the fines. They also want the SEC to negotiate stiffer penalties holding executives personally liable for fraudulent acts.

There are many reasons why large Wall Street firms are able to negotiate such generous terms with the SEC. One reason is the so-called “revolving door,” where former SEC officials representing Wall Street sit across from their past colleagues who themselves might be eying lucrative Wall Street jobs. But another is that Wall Street knows that the SEC is at a disadvantage if push comes to shove and a trial is scheduled.

.....(cont'd)

Countrywide's Mozilo Loses Bid for Dismissal of SEC's Subprime Risks Suit
Sep 17, 2010
By Edvard Pettersson

Countrywide Financial Corp. former Chief Executive Officer Angelo Mozilo must face trial on regulators’ claims he misled investors about risks tied to subprime lending, a judge ruled.

U.S. District Judge John F. Walter in Los Angeles yesterday denied requests by Mozilo and two other former senior Countrywide executives, David Sambol and Eric Sieracki, for a ruling that there were no genuine issues to be tried. The case is now set for a jury trial in October.

“It remains to be seen whether the Securities and Exchange Commission will be able to convince a jury that defendants’ statements were indeed misleading and material,” Walter said in his decision. “At the summary judgment stage, the judge’s function is not himself to weigh the evidence and determine the truth of the matter.”

.....(cont'd)

Financial Fraud and the Global Derivative Casino
Global Research, September 29, 2010
by Matthias Chang

Not one banker, regulator or central banker has been prosecuted

Basel Accords III is another crude endeavour by BIS and Global Too Big To Fail Banks to cover up their scams and shore up the global derivative casino.

Part 1 - The Mechanics of the Derivative Scam

The fact that common folks in the US and other developed countries have not come out in arms to lynch the central bankers and their accomplices in Wall Street and other banking centres is an indication how effective the financial elites have been able to hoodwink and confuse the masses.

$Trillions have been wiped out but hardly anyone of substance has demanded criminal prosecutions. Fraud, massive frauds have been committed by top bankers, lawyers, accountants, regulators and politicians of all hues but none had to pay for their crimes.

But, the guy who robs the corner shop down the road for a couple of bucks is incarcerated for five years or more, buggered and abused in prison. There is no pity for such a scumbag, no matter what are the circumstances that drove him to commit the crime.

The Bernankes, the Geithners, the Paulsons, the Larry Summers and their pals in Goldman Sachs, JP Morgan, Citigroup, Merrill Lynch, Bear Sterns, Lehman Brothers, Fannie Mae, Freddie Mac and their European counterparts are given blanket immunity and allowed to continue the rape and plunder of the global economy. I believe that unless progressive financial analysts and commentators simplify their analysis and commentaries so that more people will understand how the frauds have been committed, the status quo would remain and the plunder would continue.

This article is an attempt on my part to explain the massive banking fraud in simple terms and I hope that I have succeeded in doing so.

.....(cont'd)

Jérôme Kerviel case: why is it so rare to see a banker behind bars?
Published: 06 Oct 2010

Jérôme Kerviel's financial folly put him in prison, but others get away with it, says Tracy Corrigan.

Has Jérôme Kerviel, the trader who nearly bust Société Générale, received his just deserts? France's answer to Nick Leeson has been sentenced to three years in prison and ordered to pay his former employer damages of approximately £4.2 billion – roughly what it cost the bank to unwind the £40 billion of exposure he had accumulated. He was found guilty of abuse of trust, forgery and computer abuse (I am working on the assumption that this implies rather more than the habitual hurling of insults at the screen when the keyboard freezes or the internet won't connect; in any case, it is the only charge he didn't contest).

According to his lawyer, Kerviel plans to appeal, and is "revolted that those that created him put all responsibility on him. Prison is unacceptable for a man who didn't make a penny." This depiction of him as a victim, both of his bosses and of the financial system within which he operated, has been the main strand of his defence. Only one former colleague backed him up in court, but did so rather effectively: "It's as if Jérôme Kerviel had a mandate to buy 10 tons of strawberries but bought 100 tons of potatoes and the supervisor passes through the hangar every day and says nothing."

Kerviel himself claimed that his superiors were aware of the risks he was taking, but turned a blind eye until things went wrong. He suggested that he was caught up in a perverse financial system that put huge pressure on traders to make short-term profits.

It's true that Kerviel held a fairly junior position, and that SocGen's failure to have spotted what was going on earlier was shameful; it's probably also true that he was motivated primarily by a desire to impress, and then by a desperate scramble to conceal. But none of that absolves him of guilt. In fact, I find the characterisation of Kerviel as a victim only marginally less irritating than the fact that many in France view the youthful rogue trader as a latter-day Robin des Bois – albeit one who neither stole any money, nor gave it to the poor.

.....

Most of the executives who bust their banks, or whose institutions had to be rescued by the state during the financial crisis, are moving on with their lives smoothly enough. The Securities and Exchange Commission is pursuing civil fraud charges against Angelo Mozilo, the former boss of Countrywide, one of the leading sub-prime mortgage lenders. But it seems unlikely that he – or anyone else – will do time. Meanwhile, Bank of America has settled charges relating to its acquisition of Merrill Lynch at the height of the financial panic, and Goldman Sachs has reached a settlement over fraud charges relating to a sub-prime mortgage transaction (Kerviel has pointed out that, unlike SocGen, Goldman stuck by its suspect Frenchman, "Fabulous" Fabrice Tourre – but then Tourre did make the bank an awful lot of money, rather than lose it).

In fact, the only man who looks as if he may go to jail over the financial crisis is Geir Haarde, the former Icelandic prime minister, who has been indicted for economic mismanagement after leading his island from boom to bust in short order.

Ultimately, there is something unsettling about the prospect that the perpetrators of the financial crisis who profited from a bubble they helped to inflate have walked away with their wealth and even their careers largely intact. In contrast, those punished for breaking the law begin to look like small fry.

.....(cont'd)

They're having one in Nigeria...
http://www.bbc.co.uk/news/world-africa-11506421

That's right, folks, home of the interenet spam scam can prosecute its bankers...

Countrywide's Mozilo settles lawsuit
Friday 15 October 2010

Angelo Mozilo, highest-profile defendant to face trial over US sub-prime mortgage collapse, pays $67.5m in SEC lawsuit

Angelo Mozilo, former chairman and chief executive of Countrywide, the biggest US sub-prime mortgage lender, has agreed to pay $67.5m (£42m) in penalties and compensation to settle a lawsuit brought by the US Securities and Exchange Commission.

Known as "the orange one" for his luminous tan, Mozilo will pay a $22.5m civil penalty, plus $45m in compensation to investors.

Two other defendants – Countrywide's president, David Sambol, and former chief financial officer Eric Sieracki – also agreed settlements in a Los Angeles federal court. Sambol is to pay $5.5m and Sieracki $130,000. Mozilo also agreed to a permanent ban as a director of a public firm.

The settlement came just before Mozilo and his former colleagues were due in court to face charges of civil fraud and insider trading. Under the terms of agreement, the men did not admit wrongdoing.

.....(cont'd)

Angelo Mozilo: From housing hero to subprime foe
LOS ANGELES | Fri Oct 15, 2010
By Alex Dobuzinskis

(Reuters) - Few in the U.S. business world can claim to have risen so far, then fallen so quickly as Angelo Mozilo.

The former head of mortgage lender Countrywide Financial was once among America's best-paid CEOs. But on Friday, he agreed to settle fraud charges with the U.S. Securities and Exchange Commission that will see him pay a record $67.5 million fine -- the highest ever for an executive of a public company.

The son of a Bronx butcher who embodied a rags-to-riches success story, Mozilo became the burned face of the mortgage meltdown when the subprime crisis surfaced in 2007.

Mozilo was dubbed "Tangelo" by the business media because of his rich tan. He also sported a flamboyant wardrobe and earned a reputation for aggressive risk-taking as he built Countrywide Financial into the top U.S. home lender.

A golf enthusiast, Mozilo's compensation package with Countrywide at one point included payment of his annual dues at three country clubs, including one near his home at the Sherwood Country Club in Thousand Oaks, California.

.....(cont'd)

Mozilo settled without admitting or denying any wrongdoing. Bank of America, which bought Countrywide in 2008, said it will advance $45 million to Mozilo for the settlement, as required by indemnification provisions.
"He's got a nice pile of cash and he can live the rest of his life, assuming he's not indicted, pretty well," said Michael Perlis, a former SEC attorney.

there is more

How Countrywide Covered the Cracks
Published: October 16, 2010
By GRETCHEN MORGENSON

ON June 27, 2006, Countrywide Financial, the nation’s largest mortgage lender, was about to close its books on a record-breaking six-month run. The housing market was on fire and Countrywide’s earnings were soaring. Despite all the euphoria inside the company, some executives noticed that Angelo R. Mozilo, the company’s brash and imperious chief executive, seemed subdued.

Angelo R. Mozilo spoke at a Denver event in 2006. He defended Countrywide, though e-mail messages show his doubts.
At a town hall meeting that day with 110 of the company’s highest-ranking executives in Calabasas, Calif., Mr. Mozilo sat alone on a stage, fielding questions and offering rosy predictions about his company’s prospects. But then he struck a sober note in response to a question from one of his colleagues.

The questioner wanted to know what, if anything, worried Mr. Mozilo, according to a participant.

“I wake up every day frightened that something is going to happen to Countrywide,” Mr. Mozilo said.

A year and a half later, that day arrived. In January 2008, Countrywide, the company he had built from a two-man mortgage operation into a lending behemoth, had to sell itself to Bank of America at a bargain price because it was being smothered by losses tied to a mountain of sketchy loans.

.....(cont'd)

"Now, what does 'broken chain of title' mean? Simple: when a homebuyer signs a mortgage, the key document is the note. As I said before, it's the actual IOU. In order for the mortgage note to be sold or transferred to someone else (and therefore turned into a mortgage-backed security), this document has to be physically endorsed to the next person. All of these signatures on the note are called the 'chain of title.'

"You can endorse the note as many times as you please...but you have to have a clear chain of title right on the actual note: I sold the note to Moe, who sold it to Larry, who sold it to Curly, and all our notarized signatures are actually, physically, on the note, one after the other.

"If for whatever reason any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.

"To repeat: if the chain of title of the note is broken, then the borrower no longer owes any money on the loan.

"Now, the banks had hired 'foreclosure mills'...law firms that specialized in foreclosures...in order to handle the massive volume of foreclosures and evictions that occurred because of the housing crisis. The foreclosure mills, as one would expect, were the first to spot the broken chain of titles.

"Well, what do you know, it turns out that these foreclosure mills might have faked and falsified documentation, so as to fraudulently repair the chain-of-title issue, thereby 'proving' that the banks had judicial standing to foreclose on delinquent mortgages. These foreclosure mills might have even forged the loan note itself...

Why Isn't Wall Street in Jail?
February 16, 2011 9:00 AM ET
By Matt Taibbi

Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them

Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.

"Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."

I put down my notebook. "Just that?"

"That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there."

Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.

The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars.

.....(cont'd)