Newscast Media WASHINGTON— The Securities and Exchange Commission today charged a California-based lawyer who has been fraudulently churning out baseless legal opinion letters for penny stocks through his website without researching and evaluating the individual stock offerings.
Legal opinion letters are issued to transfer agents on behalf of holders of restricted stock seeking to sell the stock freely in the public markets. Transfer agents typically require a lawyer’s opinion explaining the legal basis for lifting the restriction on the stock and allowing it to be freely traded.
The SEC alleges that Brian Reiss of Huntington Beach, Calif., set up 144letters.com to promote his legal opinion letter business and advertise “volume discount” rates while noting “penny stocks not a problem.” Reiss steered potential customers to his website by making bids on search terms through Google’s AdWords, and then relied on a computer-generated template to draft his opinion letters within minutes absent any true analysis of the facts behind each stock offering. The letters from Reiss ultimately made false and misleading statements and facilitated the sale of securities in violation of the registration provisions of the federal securities laws.
“Reiss flouted his responsibilities as a gatekeeper in the issuance of stock, and churned out opinion letters to make a quick buck,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “Attorneys who act as gatekeepers in our markets have a solemn responsibility to ensure that they provide accurate information to the marketplace.”
The SEC acknowledges the assistance of the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority (FINRA).
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.
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