Pay attention to this, its quite fascinating and has potentially awesome and amusing consequences.

There is a former bank defense attorney named Thomas Cox. You may not recognize his name, but after he retired, he decided to switch sides, defending people on the receiving end of bank litigation, typically foreclosures. You should know him as the lawyer from Maine who exposed the entire robo-signing sscandal. The cost to banks were a few billion dollars (far less than the damage they wrought and the profits they earned on this unlawfulness) Oh, and it also resulted in exactly one arrest.

Robo-signing was conceived to deal with a quantity of scale issue — there were simply too many foreclosure files that required to much costly review for banks to pay attorneys  $300 hour to pursue them. Hence, a 90 minute, legal review might cost over $200-500 was covered instead by an $8 an hour person doing 100-200 files per hour. The math is compelling: 36 seconds of time from someone making $8 per hour = 8 cents a file. That’s more attractive than the $100s they pay for an actual legal review.

The Robo-signing scandal revealed exactly how corrupt the US banking system was, but also show the corruption of the US Treasury department, too many state Attorneys General, and a frightening swath of court rooms and judges. If I had anything good to say about the Robosignin, it was the epiphany it was for so many people perhaps the exact moment they discovered we are in fact a banana republic.

Perhaps emboldened by the costless (at least to them) destruction of centuries of US Property law and legal precedent, the bankers are pursuing a new form of legalfuckery, as revealed once again by our intrepid counsel from Maine, Thomas Cox: Behold the litigation department “Robowitness.”

A very similar person to the robosigner, only instead of doing the robosigning behind close doors, they do their dirty deeds by testifying live in person in court.

This new approach to robosigning is very different — you are not paying $8 an hour burger flippers to falsify documents — you have specifically trained witnesses testifying in open court to some very dubious data.

Judges do not like when someone under oath lies to them in their court.

This is, to my eyes an extremely risky behavior. After the testimony of the Robowitness, I believe it would take less than 20 questions of cross examination to get them to repeatedly perjure themselves. That would be part 1 of my strategy as a defense counsel. Part 2 would be working closely with judges and local prosecutors — the goal is to have the RoboWitness arrested for perjury immediately as they get off the stand.

This is a very interesting development, and warrants further observation.


Foreclosure Fraud Reveals Structural & Legal Crisis (October 5th, 2010)

The Big Lie on Fraudclosure (October 29th, 2010)

Crystal Moore RoboSigning Deposition  (November 14th, 2010)

Meet the Robo-Witnesses: Foreclosure Defense Lawyer Tom Cox on New Practices in Foreclosure Fraud
David Dayen
FDL, December 13, 2012 7:45 am

In addition to enormous personal satisfaction, Cox also received the $100,000 Purpose Prize for this work on behalf of homeowners.


Category: Credit, Foreclosures, Legal, Real Estate, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “The Newest Foreclosure Scandal: Robo-Witness”

  1. Bokolis says:

    How would this not be RICO?

  2. cjcpa says:

    I stole, uh excerpted, this from the FDL comments at the link:

    Stupendousman writes:

    The English Statute of Frauds was adopted in 1677 for reasons almost identical to what we see today, professional witnesses willing to perjure themselves for the highest bidder.

    Until the past several years our adoption of almost identical statutes (in short that all contracts for the sale of real estate be in writing) had kept us safe from this kind of crap.

    If only our elected officials (executive, legislative and judicial) had the will to protect citizens instead of criminal enterprises.

    As I say, it doesn’t count unless you put it in writing.
    Departure from that system has many, bad, consequences.


  3. Petey Wheatstraw says:

    How does ANY of it not fall under RICO?

    The problem with perjury is that although the courts talk a good game regarding it, they, or the prosecutors who would pursue such charges, do not, under any circumstances, want to do anything about it. Especially if the perpetator is the favored party in litigation (and, as we have seen in the robosigning portion of this process, and since, there IS a favored party, here).

    If, by some Christmas miracle, the government were to start kicking ass and taking names in cases having to do with the banks trashing our system of finance (and now, government), one of the 20 questions asked in order to prove that the secondary crime of perjury had, indeed, taken place, and a question that would lead to greater implications (perhaps even charges under RICO), would be to ask exactly who had prepared the witness to offer up false testimony, and how they were prepared. The same tack could be taken with each successive person or entity named, until it reached upper management.

    Even if this were to happen, expect any penalty to be dwarfed by the money made by undertaking the root fraud, and jail or prison time only for those who are expendable (that is to say, no one from management).

  4. howardoark says:

    I realize there were cases where the Robosigning led to people who didn’t even have mortgages having their possessions taken to the dump and the locks on their houses changed – for which the responsible bank officials belong in prison. But isn’t what’ going on now, for the most part, people who stopped paying their mortgages 2 years ago fighting a delaying action to stay in a house that doesn’t belong to them rent free? I realize that doesn’t justify breaking the law and tossing 300 years of legal precedent out the window. But, how are the bankers the only legalfuckers here? I think it was on this website that I read about a guy in Orange County California who bought a house in the early 2000s for $170,000 (10% down) refinanced and took out HELOCs to the tune of $550k (probably remodeled along the way), stopped paying his mortgage in 2008 and stayed in the house until 2011. There’s more than enough blame to go around here and it isn’t only the bankers who are responsible.


    BR: This is not about keeping in their homes, its about RULE OF LAW.

    There is no reason why banks cannot legally do foreclosures, without fraud, perjury or other illegal actions.


  5. george lomost says:

    The part I don’t get is the following:

    President Obama can blame his military advisors for the debacle in Afghanistan, he can blame his economic advisers for our sucky economy BUT President Obama (and Michelle O.) are both lawyers. They cannot fail to understand that the foreclosure debacle is thoroughly suffused with malfeasance.

    Given that Republicans utterly despise this president why is there no move to impeach? If we can impeach a pres for a blowjob why not for turning a blind eye to fraud of massive proportions? the POTUS oath of office is to defend the constitution. Don’t Republicans believe that the sanctity of property rights is a foundation of capitalism? Isn’t that one of their tenets? Isn’t that a central tenet of Ayn Rand’s philosophy?

    Can someone enlighten me on that?

  6. Dick Watson says:

    It is not clear to me whether these robo-witnesses appear in contested forclosures or unopposed proceedings. If they appear in contested proceedings, even moderate cross examination would quickly discredit them, and vigorous motion practice and continuing pressure on prosecutors by opposing counsel could result in perjury charges.

    If, on the other hand, the proceedings are unopposed, so what? If there is not enough at stake to make an appearance (even a pro se appearance) to oppose the forclosure, where is the loss? All due process requires is notice and an opportunity to be heard. If a party does not avail himself of this, he can’t complain about the result.

    This is similar to any default in any civil suit. If defendant, upon being served with suit papers, fails to answer, he loses; judgement is automatically entered against him. The merits of the case are never reached.

  7. Big meat says:

    I agree with you Dick, when it really comes down to it there really is very little real borrower harm (from a strictly legal perspective). I mean it would be horrible to be one of the VERY FEW borrowers that really get stomped (without saying more I have looked at many of these cases in GREAT detail and the legal proceedings are usually as good as you’d expect). There really is no need for this to be a big deal, the system is equipped to deal with these issues of fraud and the borrowers are rarely harmed.


    BR: I disagree with you that systemic fraud and institutionalized illegality is not a big deal. People made similar arguments in 2010 (look at the comments at the links above) about the original robosigning.

    You either support the rule of law, or not. You apparently don’t, and that’s why you earn my disdain.

  8. Big meat says:

    Well BR, I will take your disdain and wear it with pride, thank you.

    The original robo signing didn’t cause borrower harm which was my point. It is a sign of deeper issues relating to powerful and perverse incentives, but in itself it is no hijacking of the legal system like you seem to think. So keep running around with your hair on fire because the evil banks get their collateral back on defaulted loans. Many of the people did wrong were also persecuted, see David Stern in Florida as a prime example. There are mean/bad/crazy people out there and you can now rest easy because I’m here to tell you that we have courts to figure out how to handle them. I’m not here to rain out your hating-on-the-financial-system parade because I love it as much as anyone, (obviously im here right) its just this particular point doesn’t strike me as large of an issue as you think.


    BR: We disagree — you think its okay for banks to disregard the RULE OF LAW, commit perjury, and engage in systemic fraud — I don’t.

  9. Marc P says:

    Barry, keep pushing this issue. Sadly, the Obama administration has made it clear that criminal conspiracies based upon clear evidence will not be prosecuted, so long as the defendant is a megabank employee. However, I still have faith that at some point the administration will wake up to morality and the rule of law.

    Meanwhile we can hope that the state attorneys general will actually do their jobs.

    BTW, I’m still curious about how the megabanks convinced all 50 state attorneys’ general to ignore robosigning and settle cheap. What kind of political pressure was used? They can’t all be corrupt or incompetent, can they?

  10. algernon32 says:

    Private equity thinks foreclosed homes around Tampa FL are a good investment to buy in bulk and rent out.
    It has the appropriate Dr. Evil mentality to rent back homes to credit impared forclosure recipients for the article to pass the smell test.

  11. Petey Wheatstraw says:

    Borrower harm? Our entire economy was trashed AND our legal system hid its head in the sand to avoid harming our shadow government.

    We have all been harmed.

  12. bdw says:

    Robosigning is a polite word for forgery, which the former CEO of DocX just entered a guilty plea in Fl and a plea agreement in MO.

    Now trained witnesses lie and Bank of America CEO claims today at Brookings that we need a more streamlined foreclosure process.

    Put another way, even with forgery and a system of trained liars, foreclosure takes too long.

  13. 873450 says:

    “Hence, a 90 minute, legal review might cost over $200-500 was covered instead by an $8 an hour person doing 100-200 files per hour. The math is compelling: 36 seconds of time from someone making $8 per hour = 8 cents a file. ”

    Imagine how much money banks could have saved if they off-shored robo-signing to sweat shop labor in 3rd world countries.

  14. rd says:

    Everybody keeps talking about “bad” corporations but how really punishing them would be “destabilizing.” HSBC is but the most recent of a long string of them over the past 5 years.

    However, it is not corporations who do the bad things; it is the people inside them who do (although the Supreme Court believes that companies are people too). Nobody is irreplaceable inside a company. Therefore it would not be destabilizing to throw people in a company into jail even if the company gets off with a relatively light fine etc. Instead, it is likely that many of the remaining people would be vaccinated against the illegal contagion that the people who went to jail had. So I have been baffled by the incredibly small number of indictments over the past five years during a period when thousands, if not 10s of thousands of people should have been indicted for a wide variety of crimes.

    The single most destabilizing factor over the past 5 years has been the insistence that it is “too difficult” to prosecute criminals. If you can do something illegal, make a killing doing it, and then walking away scot-free, then it takes very strong moral character to resist the urge. This 15-20 year long depression won’t end until the house is cleaned, people are in jail, and debt is dramatically reduced. But we will have to wait for another Administration to do this.