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Unprecedented Fraud, Toothless Watchdogs

Posted By Barry Ritholtz On December 23, 2011 @ 8:03 am In Bailouts,Legal,Regulation | Comments Disabled

“Why there hasn’t been more robust prosecution is a mystery.”

-Raymond Brescia, visiting professor, Yale Law School

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Reuters has an outrageous article [1] detailing the absurdity of the lack of prosecution of financial crimes in modern America. It is a shocking to watch the United States, a nation that once followed the Rule of Law, slip into a banana republic.

“Four years after the banking system nearly collapsed from reckless mortgage lending, federal prosecutors have stayed on the sidelines, even as judges around the country are pointing fingers at possible wrongdoing.

The federal government, as has been widely noted, has pressed few criminal cases against major lenders or senior executives for the events that led to the meltdown of 2007. Finding hard evidence has proved difficult, the Justice Department has said.

The government also hasn’t brought any prosecutions for dubious foreclosure practices deployed since 2007 by big banks and other mortgage-servicing companies.

But this part of the financial system, a Reuters examination shows, is filled with potential leads.

Foreclosure-related case files in just one New York federal bankruptcy court, for example, hold at least a dozen mortgage documents known as promissory notes bearing evidence of recently forged signatures and illegal alterations, according to a judge’s rulings and records reviewed by Reuters. Similarly altered notes have appeared in courts around the country.

And it gets much worse.

• Despite laws against it, banks have foreclosed on active-duty U.S. soldiers who are legally eligible to have foreclosures halted. Attorneys representing service members estimate banks have foreclosed on up to 30,000 ACTIVE military personnel, mostly while they were in Iraq and Afghanistan.

• There has been — literally — “tens of thousands of fraudulent documents filed in tens of thousands of cases.” Sworn affidavits have been filed containing false information. This is easily prosecuted perjury.

• The size and scope of the fraud on the U.S. court system is unprecedented in U.S. history

• NY State court judge Arthur Schack, ruled in 2010 that pleadings by the Baum Law — who handle 40% of NY foreclosures — were “so incredible, outrageous, ludicrous and disingenuous that they should have been authorized by the late Rod Serling, creator of the famous science-fiction television series, The Twilight Zone.”  There has been no fraud prosecution to date.

• Banks have routinely filed falsified mortgage promissory notes — in some cases, six different documents have been filed, all claimed to be the original. At the least 5 must be forgeries — an easy felony to prosecute.

Read the entire article [1] if you want to be outraged and send your blood pressure skyrocketing.

The fraud is rampant, self-evident, easy to prosecute. The only reason it hasn’t been done so far is that this nation is led by corrupt cowards and suffers from a ruinous two-party system.

We were once a great nation that set a shining example for the rest of the world as to what the Rule of Law meant. That is no more, as we have become a corrupt plutocracy. Why our prosecutors cower in front of the almighty banking industry is beyond my limited ability to comprehend.

Without any sort of legal denouement, we should expect an angry electorate and an unhappy nation.

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Source:
Special Report: The watchdogs that didn’t bark [1]
Scot Paltrow
Reuters Dec 22 2011
http://www.reuters.com/article/2011/12/22/us-foreclosures-idUSTRE7BL0MC20111222


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[1] outrageous article: http://www.reuters.com/article/2011/12/22/us-foreclosures-idUSTRE7BL0MC20111222

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