Posts Tagged ‘fraudclosure’

Part III-Why Obama and agencies like the SEC settle cases


Newscast Media HOUSTON, Texas—Before I conclude this series, I would like to explain what a forensic audit is. A true forensic audit on any property will tell you if the underlying debt obligation was securitized and who the “holder in due course” or holder of the debt obligation is. If a property was purchased in cash, a forensic audit can still be done, because banks are known to seize properties that were paid in cash due to a broken chain of assignments, that led to a broken chain of title. It is important therefore even with a paid off property to make sure you have what is referred to as a clear title. Read this story about how a court authorized the house sale of a man in Florida who had paid cash and had no mortgage.

A clear title has no encumbrance on it, because prior to the sale of the property, the lien was perfected, or there were absolutely no clouds on the title. A perfected lien is one where the person who holds the deed of trust, also holds the note. If by any chance the person who holds or held the deed of trust is or was different from the one who holds or held the note, then you have a defect in title that can never be cured, because both instruments traveled on divergent paths. Even if you paid cash for it, someone five or ten years down the road who knows about the Law of Mortgages and trust law, can come back and sue for a “fraudulent conveyance.” For now, I will just stick to the topic of the Department of Justice and the SEC, including what I discovered during a forensic audit on some property.

After my investigative research was complete, I demonstrated using charts, that several SEC violations happened and trust laws were broken, and that the true owner of the securitized debt obligation was the Depository Trust Company the nominee of whom is CEDE & Company. The judge got scared and immediately sealed the case. In the end the bank walked away from the property out of fear of being charged with fraud by the SEC under Section 17(a)(2) of the Securities Act of 1933 that states:
“It shall be unlawful for any person in the offer or sale of any securities or security-based swap agreement to obtain money or property by means of any untrue statement of a material fact.”

The untrue statements in this case were the ones the bank’s attorneys uttered in the court record, claiming the bank owned the debt obligation, and using those statements to unlawfully obtain a piece a property, and legal fees (money) as a result of representing the banks.

Also 17 C.F.R section 240.10b-5 states: “It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.

Because the Justice Department and the Securities and Exchange Commission know that military agents ultimately have the last word in these cases, and because such cases are very sophisticated even for experienced judges, who last went to school in the 70s or 80s before the creation of the Collateralized Debt Obligations in form of mortgage-backed securities, the SEC and DOJ are laying out the fraud and violations before these multi-national corporations, and are succeeding in settling out of court.

You probably are thinking how these military Judge Advocate Generals can control the outcome of a case if it is a trial by jury. Before a case goes to trial, the judge will determine whether it is frivolous, whether you have standing, whether there is enough evidence, and if he or she dismisses it, and it never goes to trial, hasn’t the judge controlled the outcome? We see criminal charges being dropped everyday because there was a mishandling in the chain of evidence or a witness disappeared, and such criminal cases remain unsolved and untried. We also see civil cases being dismissed for failure to state a claim under which relief may be granted, or lack of subject matter or jurisdiction. Isn’t the judge controlling the outcome?

Even when it does finally go to trial, we always hear about “mistrials” happening because of a “procedural” defect, technicality or one side files a “voluntary withdrawal” because the evidence is questionable. It only takes one stubborn juror to create a hung jury even when there is clear and convincing evidence that a crime was committed. If conviction requires a 10-2 vote and it is 9-2, that one juror can make the case go one way or the other, resulting in a mistrial or conviction.

In his farewell speech in January 1961 President Eisenhower warned us of the military industrial complex because of the potential of misplaced powers. Watch:

In the very last sentence, Eisenhower was talking about the military that secretly controls the outcome of every case: “The total influence, economic, political, even spiritual, is felt in every city, every state house, every office of the federal government. We must never let the weight of this combination
(Military Industrial Complex) endanger our liberties or democratic processes.”

Obama knows what is going on in the courts, being a lawyer himself. He knows the military flag is in every courtroom and church for a reason. He, together with the SEC are not taking any chances so they are winning cases outside court, before they even enter the courts. I believe the only reason John G. Roberts flipped and voted for Obamacare was maybe Obama had some dirt on him, like a tape or photos.

Secondly, companies are willing to settle outside court because they know that the shareholders and investors might start filing class action lawsuits and the prolonged litigation would definitely damage the company’s bottom line. The third and perhaps most important reason is the corporations do not want the IRS breathing down their necks. It would be hard to succeed against these federal alphabet agencies namely: the DOJ, SEC, IRS and risk also having the FBI join the party and start investigating criminal behavior of corporate executives. Right there you are going into RICO territory, and who wants that?

Above all, Obama’s Department of Justice and the SEC have succeeded in winning outside the courts, by getting off-the-record confessions after doing internal investigations with the help of whistleblowers, and offering immunity to corporations and executives who acknowledge that violations were made, but don’t have to admit to any wrongdoing.

How come you never hear the media tell people that every court is a profit-making business whose primary function is to sell securites in form of bundled up surety bonds on the secondary market? Because the corporate media is owned by the very corporations that trade the bonds and securities.


Be the first to comment - What do you think?  Posted by Joseph Earnest - October 10, 2012 at 8:02 am

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SEC applies Admin. Procedure as one-two punch to UBS bank fraud

UBS bank

Newscast Media WASHINGTON, D.C.—The Securities and Exchange Commission has charged UBS Financial Services Inc. of Puerto Rico and two executives with making misleading statements to investors and concealing material information regarding securities. However, this approach is very unique that the SEC is taking. It bypasses the courts by the use Administrative Procedure Act, and directly charges the banks and executives involved with securities fraud, and even imposes a fine.

This is very powerful because the majority of judges in federal courts do not understand securities; attorneys also do not know how to defend such cases because they do not learn about securities laws in law school, so rather than risk losing a case based on a technicality or a judge’s unwillingness to address fraud committed by banks, the SEC is charging them directly and writing orders very much like a judge would do. This out-of-court approach will help investors and beneficiaries of fraudulently-created trusts resolve cases in which mortgage-backed securities are involved.

Just like a judge can issue an injunction, the SEC’s version is to issue a cease and desist from violating the Securities Act of 1933. Which means if a bank defrauds investors in regard to the existence of Trusts that don’t exist, and they bring it to the awareness of the SEC rather than the courts, they can receive relief for the fraud. Homeowners whose mortgages were put in defunct trusts secured by their deeds of trusts, benefit from such an order because it prohibits the banks and their agents from ever receiving any financial gain relating to such trusts. This way, homeowners are quietly winning injunctions against the big banks, without having to deal with the courts or when ruled against by the courts.

In this particular case of UBS in PR, the SEC used the Administrative Procedure to resolve the case. Here is exactly what the SEC said in its order:

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in UBS PR’s Offer.

Accordingly, pursuant to Section 8A of the Securities Act, and Sections 15(b) and 21C of the Exchange Act, it is hereby ORDERED that:

A. UBS PR cease and desist from committing or causing any violations and any future violations of Sections 17(a) of the Securities Act, Sections 10(b) and 15(c) of the Exchange Act, and Rule 10b-5 of the Exchange Act.

B. UBS PR shall, within 14 days of the entry of this Order, pay disgorgement of $11,500,000.00, prejudgment interest of $1,109,739.94, and a civil money penalty of $14,000,000.00 to the Securities and Exchange Commission.


When a bank violates Section 17 of the Securities Act of 1933, it means there was fraud involved in the sale or acquring of securities. As I have said before in previous articles, almost 100 percent of the Trusts banks claim to be Trustees over do not exist, so the mortgage-backed securities are not mortgage backed. Banks like Deutsche Bank, Option One, Wells Fargo and many others that claim to hold mortgages for Trust XYZ on behalf of Certificate holders would be in violation of Section 17(a)(2) if the Trusts in which those alleged mortgage-backed securities they claim to own do not exist.

Violation of Section 17(a)(1) and 17(a)(2) of the Securities Act of 1933

Section 17 – Anti-Fraud Authority

Section 17(a) provides one of the central sources of anti-fraud authority for law enforcement. In most securities actions you will see Section 17(a) used as a basis for jurisdiction (along with Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder).

“It shall be unlawful for any person in the offer or sale of any securities or any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act [15 USCS § 78c note]) by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly (1) to employ any device, scheme, or artifice to defraud, or (2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.”

So when the SEC issues a cease and desist to a bank from committing or causing any violations and any future violations of Sections 17 of the Securities Act of 1933, it is an equivalent of a permanent injunction to enjoin(stop) the bank from claiming any property rights to the related trust as highlighted in Section 17(a)(2) above.

Unfortunately not too many homeowners or even their attorneys are familiar with SEC rules, to be able to benefit from the rulings that are happening in regard to fraud. Only the savvy homeowners are the ones benefiting from such rulings, and when a “clear title” is filed, the bank, in accordance to the SEC order, cannot attempt to claim ownership over a property tainted with fraud, or else it will be in violation of the SEC order. This is something the media is forbidden to report, because the large corporations own the corporate media, and do not want an awakening to occur. You may read or download the UBS cease and desist order here.


2 comments - What do you think?  Posted by Joseph Earnest - May 4, 2012 at 12:55 am

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Judge orders CEO to pay $10 million penalty for mortgage fraud

Mortgage fraud

Newscast Media WASHINGTON D.C. — The Securities and Exchange Commission today announced that a federal judge has ordered the former CEO of Brookstreet Securities Corp. to pay a maximum $10 million penalty in a securities fraud case related to the financial crisis.

The SEC litigated the case beginning in December 2009, when the agency charged Stanley C. Brooks and Brookstreet with fraud for systematically selling risky mortgage-backed securities to customers with conservative investment goals. Brookstreet and Brooks developed a program through which the firm’s registered representatives sold particularly risky and illiquid types of Collateralized Mortgage Obligations (CMOs) to more than 1,000 seniors, retirees, and others for whom the securities were unsuitable.

Brookstreet and Brooks continued to promote and sell the risky CMOs even after Brooks received numerous warnings that these were dangerous investments that could become worthless overnight. The fraud caused
severe investor losses and eventually caused the firm to collapse.

The Honorable David O. Carter in federal court in Los Angeles granted summary judgment in favor of the SEC on February 23, finding Brookstreet and Brooks liable for violating Section 10(b) of the Securities Exchange Act of 1934 as well as Rule 10b-5. The court entered a final judgment in the case yesterday and ordered the financial penalty sought by the SEC.

Section 10(b) of the Securities Exchange Act states:

Section 10 — Manipulative and Deceptive Devices: It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange–

a. (1) To effect a short sale, or to use or employ any stop-loss order in connection with the purchase or sale, of any security registered on a national securities exchange, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or
for the protection of investors.

(2) Paragraph (1) of this subsection shall not apply to security futures products.

b. To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act), any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

Rules promulgated under subsection (b) prohibit fraud, manipulation, or insider trading.

“Brooks’ aggressive promotion and sale of risky mortgage products to seniors and other risk-averse investors deserves the maximum penalty possible, and that is what he got,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.

“Those who direct such exploitative practices from the boardroom will be held personally accountable and face severe consequences for their egregious actions.”

Rosalind Tyson, Director of the SEC’s Los Angeles Regional Office, added, “The CMOs that Brookstreet sold its customers were among the most risky of all mortgage-backed securities. This judgment highlights the responsibility of brokerage firm principals to ensure the suitability of the securities they sell to customers.”

Click here to download or read entire SEC lawsuit.

The SEC has brought enforcement actions stemming from the financial crisis against 95 entities and individuals, including 49 CEOs, CFOs, and other senior officers.


2 comments - What do you think?  Posted by Joseph Earnest - March 3, 2012 at 7:48 am

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Mortgage fraud suit brought by NY Attorney General against MERS, BofA, Chase and Wells Fargo

Mortgage fraud

Newscast Media NEW YORK — Some of the nation’s largest banks were sued on Friday by New York’s Democratic Attorney General, Eric Schneiderman, for deceit and fraud in using an electronic mortgage registry that he said puts homeowners at a disadvantage in foreclosures. The biggest culprit in this fraudulent scheme is Mortgage Electronic Registration System Inc. or MERS, that uses an electronic
registry to track mortgages without having to pay local county fees for registering Deeds of Trust when ownership changes hands.

Schneiderman said on, “The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people, with little regard for basic legal requirements or the rule of law.”

Member banks like Bank of America, JP Morgan Chase, and Wells Fargo, who actually do not own these mortgages, but are only Servicers of securitized debt obligations, can then claim the right to foreclose on a property without disclosing the actual identity of the owner of the Deed or the Note, since the majority of mortgages issued between 2001-2008 were securitized and sold on the secondary market as derivatives. Schneiderman refused to negotiate a deal that lets banks off the hook after paying a soon-to-be-reached settlement, in which banks are expected to pay roughly $25 billion for fraudclosure. Instead, the New York Attorney General is fighting for homeowners in his state and holding these banks accountable.

MERS is owned by the company, MERSCORP, which in turn is owned by a group of Wall Street investment bankers. MERS is unregistered and unlicensed to conduct mortgage lending or any other type of business in any state and has been knowingly and intentionally, illegally and fraudulently recording mortgages and conducting business in the U.S. on a large scale and systematic fashion.

MERS often splits the Note from the Deed in violation of Carpenter v. Longan, creating an unsecured debt obligation, because one entity holds the Note, while MERS holds the Deed of Trust even though MERS is not a creditor nor does its name appear on the Notes secured by such Deeds. When the Note is bifurcated from the Deed, it means the lien was never perfected, therefore neither the holder of the Note nor the holder of the Deed can foreclose on a homeowner. The reason is: A person holding only the Note lacks the power to enforce it, and a person holding only a Deed of Trust suffers no default because only the holder of the debt obligation is entitled to payment on it.

By suing for “fraud and deceit” the New York Attorney General has put MERS and the bankers in a very difficult place because by law the Supreme Court has ruled that: “Fraud vitiates everything” (Boyce’s Executors v. Grundy); also “Fraud vitiates the most solemn contracts, documents and even judgments,” (in United States v. Throckmorton). This means that all the contracts that have MERS on them become nullified by law, if there was fraud involved as the NY Attorney General alleges in his lawsuit. Any previous judgments against homeowners who were also victims of the fraudulent scheme by MERS and the banks are also nullified and void by law, as stated below:

37 Am Jur 2d at section 8 states: “Fraud vitiates every transaction and all contracts. Indeed, the principle is often stated, in broad and sweeping language, that fraud destroys the validity of everything into which it enters, and that it vitiates the most solemn Contracts, Documents, and even Judgments.”

If a document, contract or judgment is deemed fraudulent and void, no court in America is bound to honor such a judgment or contract, hence it releases the one who was defrauded from any further obligation, because the law permits the judge to declare such contracts and judgments from previous courts void. See below:

“A void act cannot be legally consistent with a valid one. An unconstitutional law cannot operate to supersede any existing valid law. Indeed, insofar as a statute runs counter to the fundamental law of the land, it is superseded thereby. NO ONE is bound to obey an unconstitutional law, and NO COURTS are bound to enforce it. (Sixteenth American Jurisprudence Second Edition, 1998 version, Section 203 (formerly Section 256)).


Joseph Earnest is not an attorney and does not offer legal advice. The information in this article is a result of his extensive two-year research and investigation, and is not meant as a substitute for seeking legal advice from an attorney.


Be the first to comment - What do you think?  Posted by Joseph Earnest - February 3, 2012 at 10:09 pm

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Congresswoman Tammy Baldwin stands up for homeowners across America

Fraudclosure crisis

Newscast Media WASHINGTON, D.C. – Congresswoman Tammy Baldwin (D-WI) led colleagues in standing up for millions of homeowners across the nation who were victims of fraudulent practices by the nation’s biggest banks. In a letter to U.S. Attorney General Eric Holder concerning the ongoing settlement talks between state attorneys general, federal regulators, and large mortgage servicers, Baldwin, joined by 24 colleagues, opposed any settlement to grant mortgage servicers blanket immunity for wrongdoing related to illegal mortgage and foreclosure practices.

You may read or download letter to U.S Attorney General Eric Holder here.

“It is simply wrong that Wall Street was allowed to recklessly endanger our economy and has had no required recompense while millions of Americans have lost homes and savings and our national economy was brought to virtual collapse,” said Congresswoman Baldwin. “Those families who were victimized by unscrupulous and illegal activities by banks and mortgage companies must be allowed to sue to recover their losses,” she said.

Due to wrongdoing on the part of mortgage lenders, millions of homeowners now find that the mortgage on their homes is greater than the assessed value of those homes. Consequently, many of these homeowners now find themselves in greater debt, bankruptcy, or foreclosure. In her letter to Holder, Baldwin wrote, “We believe that the American public deserves a full investigation into these claims and that those responsible are held to account for their actions.”

Baldwin is angered by the stark contrast between the status of Main Street Americans and Wall Street executives. “I’ve spoken with homeowners throughout Wisconsin who are financially and emotionally devastated by the collapse of the housing market. Yet, no Wall Street executives have faced prosecution for their part in intentionally causing that collapse and that suffering. The message this sends is that average Americans play by one set of rules and everyone on Wall Street plays by another; and Wall Street always wins,” she said.

“It’s outrageous that while banks and other financial institutions were rescued on the premise that they were ‘too big to fail,’ they are now being rewarded as being ‘too big to prosecute,’” Baldwin said.

Baldwin has escalated her opinions in the letter and has now introduced a resolution in Congress to make sure banks do not get immunity when a deal is struck to resolve the fraudclosure that was committed against homeowners.

Baldwin said, “If blanket immunity is granted to mortgage servicers their appalling behavior goes unpunished and they will continue to behave as if they are above the law…The American principle of equal justice under the law must apply to all, not just some.”

Related article:Bank of America Class Action Foreclosure Lawsuit by Homeowners


Be the first to comment - What do you think?  Posted by Joseph Earnest - November 3, 2011 at 4:28 pm

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