Salon.com > Fraud

Turns out much-hyped settlement still allows banks to steal homes

Thu, 02 May 2013 15:08:00 +0000

The absolute least Americans can hope for from a major government settlement with a large industry over well-documented crimes is that the industry wouldn’t, after signing the settlement, just continue to commit the same crimes day after day. After all, following the tobacco industry settlement, cigarette makers did manage to stop advertising to teenagers that their product had no medical side effects.

But new evidence reveals the nation’s largest banks have apparently continued to fabricate documents, rip off customers and illegally kick people out of their homes, even after inking a series of settlements over the same abuses. And the worst part of it all is that the main settlement over foreclosure fraud was so weakly written that it actually allows such criminal conduct to occur, at least up to a certain threshold. Potentially hundreds of thousands of homes could be effectively stolen by the big banks without any sanctions.

Tale of lost Vietnam vet reunited with family in “Unclaimed” deemed false

Wed, 01 May 2013 20:31:00 +0000

The remarkable story of a Vietnam vet, who had been reunited with his American family after being presumed dead in 1968, made international headlines earlier this week thanks to an upcoming documentary, "Unclaimed."

But if it sounded too good to be true, it's because it was.

The ambitious project by Emmy Award-winning filmmaker Michael Jorgensen charts veteran Tom Faunce's journey to reconnect Special Forces Green Beret Master Sgt. John Hartley Robertson with his family. Though the filmmaker makes no claims, the conclusion seems firm when Robertson's 80-year old sister declares: “There’s no question. I was certain it was him in the video, but when I held his head in my hands and looked in his eyes, there was no question that was my brother."

But new information has emerged, debunking the conclusion of Jorgensen's film. From the Independent:

Reports: Jesse Jackson, Jr., signs plea deal

Fri, 08 Feb 2013 18:53:00 +0000

According to multiple reports, former Illinois Rep. Jesse Jackson, Jr., has signed a plea deal that includes "significant jail time" over charges that he improperly used campaign funds to decorate his home in Washington and to buy a Rolex, among other things.

The Chicago Sun-Times cites a source who says the deal includes "significant jail time," and NBC News reports that federal law subjects Jackson to “not more than 5 years” in prison.

From NBC News:

Israel’s Avigdor Lieberman resigns amid fraud charges

Fri, 14 Dec 2012 15:19:00 +0000

In a move that may have implications for Israel's upcoming election, foreign minister Avigdor Lieberman announced Friday that he is resigning after being charged with fraud and breach of trust.

According to Reuters, "opinion polls have predicted that the rightwing party of Lieberman and the prime minister, Binyamin Netanyahu, would win the election on 22 Jan." Lieberman said Friday in an email statement that he was resigning in order to clear his name, "Though I know I committed no crime ... I have decided to resign my post as foreign minister and deputy prime minister," he announced.

Lieberman will, however, remain on the election ticket for the conservative Likud Beiteinu coalition party.

Bank reimburses hacking victim $300K

Fri, 30 Nov 2012 20:47:00 +0000

In a case that may set a precedent for liability in hacking fraud incidents, a bank in Maine has agreed to reimburse a construction company $345,000 that was lost to hackers. A court ruled that the bank’s security practices were “commercially unreasonable,” reported Wired Friday.

In 2009, hackers installed malware on construction firm Patco’s computers and stole its banking credentials to steal around $300,000. People’s United Bank has agreed to pay Patco Construction Co. all the money it lost plus interest. Although a U.S. District Court ruled that People’s United wasn’t responsible for the lost money as Patco claimed, the First Circuit Court of Appeals found the bank was responsible for an increased fraud risk and advised on the settlement.

"The case raised important questions about how much security banks and other financial institutions should be reasonably required to provide commercial customers," noted Wired. Jeremy Kirk at ComputerWorld.com wrote that the case is "a sign that small businesses are having greater success at shifting liability toward banks in online security meltdowns, including out-of-court settlements."

BNY Mellon reaches Madoff settlement

Tue, 13 Nov 2012 21:04:00 +0000

ALBANY, N.Y. (AP) — Officials have reached a $210 million settlement with Ivy Asset Management, a BNY Mellon subsidiary that advised clients to invest with Wall Street multibillion-dollar swindler Bernard Madoff.

The settlement of lawsuits filed by the New York attorney general, U.S. Labor Department and private plaintiffs also provides for about $9 million in payments by other defendants. Combined with anticipated future payments from Madoff bankruptcy proceedings, New York Attorney General Eric Schneiderman said it is expected to return nearly all of the original investments to those who were defrauded, including union pension funds from upstate New York.

"Ivy Asset Management violated its fundamental responsibility as an investment adviser by putting its own pecuniary interests ahead of the interests of its clients," Schneiderman said. "Ivy deliberately concealed negative facts it uncovered in its due diligence of Madoff in order to keep earning millions of dollars in fees. As a result, its clients suffered massive and avoidable losses."

Labor Secretary Hilda Solis said the agreement "provides a measure of justice for those Americans who worked hard to prepare for their retirement and then saw hoped-for stability disappear."

U.S. sues Bank of America for mortgage fraud

Wed, 24 Oct 2012 16:55:00 +0000

The Department of Justice sued Bank of America for mortgage fraud Wednesday, in the latest in a series of civil fraud suits filed by the U.S. government against major banks. According to a breaking Reuters report, the complaint filed in Manhattan accuses the banking giant of "deliberately generating and then selling thousands of toxic home loans that later defaulted to Fannie Mae and Freddie Mac."

According to U.S. Attorney Preet Bharara, these loan sales resulted in "countless" foreclosures and over $1 billion in losses. As Salon noted in early October, the U.S. filed a fraud complaint against Wells Fargo and, in September, a joint federal and state task force sued JPMorgan Chase for deceptive practices related to the sale of mortgage-backed securities. All of these suits, including today's BofA filing, are civil and may result in monetary penalties for banks, but no jail time for bankers.

As I wrote following the Wells Fargo complaint filing, "although many welcome the government going after Wall Street, critical pundits have raised questions about the timing, noting that the Obama administration might be projecting a tough-on-banks stance with the election countdown in mind."

U.S. government sues Wells Fargo for mortgage fraud

Tue, 09 Oct 2012 21:43:00 +0000

The U.S. government filed a complaint in a Manhattan federal court Tuesday against Wells Fargo & Co., the largest U.S. bank, alleging fraud. According to Bloomberg, which broke the news:

The government seeks damages and civil penalties ... for alleged misconduct spanning more than a decade related to the San Francisco-based bank’s participation in a Federal Housing Administration program, U.S. Attorney Preet Bharara in Manhattan said in a statement.

“As the complaint alleges, yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance,” Bharara said in the statement.

How Citigroup stays fraud-proof

Sat, 08 Sep 2012 20:00:00 +0000

It’s one of the few things that's predictable on Wall Street; an immutable signature on the reply briefs whenever Citigroup is charged with fraud – and that is quite often.

Brad Karp, a partner at the 737-attorney-strong Wall Street law firm, Paul, Weiss, Rifkind, Wharton & Garrison LLP, has been Citigroup’s go-to guy for fraud allegations since the company was born out of the too-big-to-fail merger of Travelers Group insurance, its myriad Wall Street investment banks, brokerage units, and Citicorp, parent of Citibank.

When the London-based private equity firm, Terra Firma, claimed it had been lied to and defrauded by Citigroup, making it overpay for the purchase of EMI, a British music label, in 2007, Karp and colleagues wrung an 8-0 decision from the jury in favor of Citigroup. Karp was also on hand to witness victory when the trustee for the bankrupt Italian dairy giant, Parmalat, charged Citigroup with fraud. Then there were fraud charges connected to Citigroup’s involvement in the collapse of WorldCom AND Enron -- along with auction rate securities, rigged stock research and understating its exposure to subprime debt by $39 billion. Karp, Karp, and more Karp.

Weird news: Hole-in-one swindler

Fri, 24 Aug 2012 20:23:00 +0000

SEATTLE - A man who specializes in insuring golf tournament hole-in-one prizes has been charged in Washington state with refusing to pay up. Kevin Kolenda, of Norwalk, Conn., was charged this week in King County Superior Court with five felony counts of selling insurance without a license. He is set to be arraigned Sept. 5.

The Seattle Times reports that charging documents accuse the 54-year-old Kolenda of failing to pass out prize money when several Seattle-area golfers connected on an elusive ace. In some cases, charities or tournament hosts had to come up with the cash, according a state insurance commissioner’s investigation.

The documents also say Kolenda ignored a cease-and-desist order and a $125,000 insurance commission fine in 2004. The Times also reports that he was charged with similar crimes in Montana last month. Attempts to reach Kolenda were unsuccessful.

Her dad was a con man

Fri, 10 Aug 2012 00:00:00 +0000

Dear Cary,

I have a friend named N -- more of an acquaintance, actually -- whom I've known for a long time, but I've never particularly liked all that much. Her demeanor is very hostile, which began when she was younger. She grew up rich. Her father was a very successful businessman. As it turned out, her father ended up being a con man and was arrested for high-scale fraud, and is still in prison to this day. The family dynamic was destroyed. Due to this, when N was in her 20s, her mother and brother fled to a Southern state, leaving her with no family in the Northeast, not telling her where they were going. She's been searching for them, thinking that everything will be all right if she finds them. Clearly, they want nothing to do with her.

So this is the problem: N is extremely bitter and hasn't gotten over the bad things that have happened in her life. She's holding onto her pain and is sabotaging herself. My husband has known her more years than I have, and he says she's been this way the whole time. She's got two children from separate fathers who won't help her. (I think she became pregnant to try to entrap the fathers, which never worked.) She's unmarried and gets no child support and she is struggling. She has been struggling her whole life, which I think has been self-inflicted. She blames God for her suffering, that she doesn't know what she did to deserve what her life is like.

Inside a financial blowup

Thu, 12 Jul 2012 19:54:00 +0000

This Monday, Russell Wasendorf Sr., founder of the futures brokerage Peregrine Financial Group, attempted suicide in his car near the company’s headquarters in Cedar Falls, Iowa. By the close of business Tuesday, the firm he’d been building for decades had filed for bankruptcy and was poised for liquidation. The National Futures Association, a trade group, released a statement saying Peregrine had falsified documents and bank statements and had a shortfall of more than $200 million.

Immediately, news surrounding the fallout focused on whether, when and how much of their money Peregrine’s customers would be able to reclaim. Less attention has been paid to the scores of company employees who find themselves in a kind of professional and financial purgatory, turned loose with tarnished résumés in a tough job market.

A former Peregrine employee, whom I’ll call E., spoke to Salon on condition of anonymity. “It’s sort of difficult to have sympathy for the employees when the customers lost a lot of money,” E., who’s now jobless, acknowledged. But innocent employees “are going to be in a really bad spot because of this.”