- A systemic problem, it's everywhere, especially in savage
capitalism's greed-driven system, enriching a global royalty at the expense
of most others. In his book "On Fact and Fraud: Cautionary Tales from
the Front Lines of Science," David Goodstein examined examples from
centuries back to more recent times, including some accusations turning
out to be false.
-
- Trinity University's Bob Jensen maintains fraud updates
through June 2009 on his web site, accessed through the following link:
-
- http://www.trinity.edu/rjensen/FraudUpdates.htm
-
- He also reviewed a "History of Fraud in America,"
starting in colonial (and pre-colonial) times, saying the earliest kinds
involved "phony health cures," including snake oil ploys, medical
frauds, and other deceptions transitioning to today's "miracle cures
and Internet charlatanism."
-
- Largely agricultural early America saw land schemes as
well as "deceptive rural living and farming products." Con men
either bought or sold land. Victims were often immigrants and Indians.
The one best remembered was the 1626 Manhattan Island purchase "for
trinkets valued at 60 guilders," about $24. Ironically in a sense,
Carnarsie Indians were the culprits as the land wasn't part of Manhattan.
Usually, however, indigenous people were victimized, land scams expanding
the country west and south, accompanied by others at the expense of the
unwary.
-
- Frontier history got crooked politicians and bureaucrats
involved, accepting bribes collaboratively with land swindlers. It got
worse during corporate America's early days. In 1787, less than 40 existed,
mostly to build roads, bridges, canals, and other public projects. Many
involved "bribes, kickbacks, and inflated prices" like today
but for smaller stakes.
-
- Checks and balances also arose, significantly in free
press reporting, but not enough to curb greed or notorious "robber
barons" like Jay Gould, Andrew Carnegie, John D. Rockefeller, Cornelius
Vanderbilt, JP Morgan, and others, perhaps inspiring Honore de Balzac's
maxim that "Behind every great fortune lies a great crime," or
words to that effect.
-
- The landmark 1886 Santa Clara County v. Southern Pacific
Railroad gave corporations personhood under the 14th Amendment. It also
helped proliferate fraud, including stock scams, land grabs, labor exploitation,
various types of product and pricing swindling, and much more.
-
- Now recognized as legal persons with full rights without
obligations, corporations were on a roll, heading them towards monopoly
or oligopoly power. Today more than ever globally with interlocking directorates,
market dominance, and complicit governments arranging things their way.
-
- Years back, General Motors negotiated a big heist with
bribes and other means to get cities to abandon street cars for buses.
It worked brilliantly, but was disastrous for large communities and the
public, becoming more dependent on autos. A sprawling suburbia arose. Urban
decay followed, so now ghettos proliferate nationally, their needs largely
ignored.
-
- Prior to the Great Depression, corporations operated
virtually regulation free. That changed, but over time consumer protections
eroded. Thereafter, global cartels arranged business friendly environments,
manipulated them for profit, and committed greater than ever fraud. It's
worst of all on Wall Street, especially after the 1913 Federal Reserve
Act gave big banks money creation power, letting them game the system more
than ever, including a free hand to commit fraud.
-
- The 1920s stock selling scandals culminated in the 1929
crash. New Deal reforms followed, but what goes around comes around. Deregulation
in the 1980s facilitated savings and loan fraud, then crime on the order
of Enron, Worldcom, Madoff, other Ponzi schemes, market manipulation, bubbles,
derivatives flimflam, embezzling, insider trading, false accounting, phony
financial products, misrepresentation, and other scams, conspiracies, "foreclosuregate,"
and grandest of grand theft bailouts. The Treasury was literally looted
of trillions of dollars, government partnering with bankers for plunder,
sucking wealth from consumers globally.
-
- Underlying Causes of Fraud in America
-
- Jensen lists eight, including:
-
- -- an obsession with privacy, freedom being "prized
over the risk of being ripped off;"
-
- -- laws and courts go easy on white collar criminals,
the worst of them rich and well-connected to escape punishments for blue
collar or violent crimes;
-
- -- whistleblowing is discouraged, doing it a high-risk
undertaking because lawsuits and other type retaliation may follow, including
ostracism by fellow employees;
-
- -- declining morality and ethics at a time of extreme
unregulated greed;
- -- unaccountable contracting, auditors dealing with complex
financial deals "so complicated that they virtually cannot be (properly)
audited or explained;"
-
- -- as a result, "incompetent and corrupt audits
are routine....the audit trail end(ing) in front of a maze of networked
computers or some giant black box that cannot be fathomed;"
-
- -- CPA audits have flawed designs, firms doing them in
jeopardy of losing clients unless issue "clean" reports, and
rating agencies face the same issue; and
-
- -- money corrupting politics, candidates needing large
donors for campaigns in return for which friendly legislation and deregulation
follows.
-
- As a result, ever larger, more sophisticated fraud schemes
proliferate. They "roll across America like waves move onto a beach.
(They) rise and fall with new innovations and ultimate corrections."
Creative corporate ploys follow new accounting and auditing rules, exponentially
growing to become nearly incomprehensible.
-
- Corporate bad guys so far are winning, their excesses
continuing unrestrained. Neither legislation, potential lawsuits, or criminal
prosecutions deter them. The "weakest front" is the political
one because office holders need cash, and powerful lobbyists game the system
for them. So one scandal begets another, new ones increasingly greater
for larger stakes. Big money always prevails while consumer households
lose out.
-
- "Foreclosuregate"
-
- Ellen Brown (http://www.webofdebt.com/) does some of
the best financial writing around. Her latest deals with foreclosure swindling,
involving fabricated documents, forgery, and perjury proliferating "massive
fraud," including lost paperwork that "would have revealed to
investors that they had been sold a bill of goods - (a package of junk),
toxic subprime loans very prone to default." Yet they were cleverly
dressed up in legal mumbo jumbo to resemble AAA quality until post-bubble
foreclosures exposed the scam, too late to save most victims.
-
- On October 7, Washington Post writers Brady Dennis and
Ariana Eunjung headlined, "In foreclosure controversy, problems run
deeper than flawed paperwork," saying:
-
- "Millions of US mortgages have been shuttled around
the global financial system - sold and resold by firms - without the documents
(to) prove who legally owns" them. With millions now in default and
homes seized, "judges around the country have increasingly ruled that
lenders had no right to foreclose, because they lacked clear title."
-
- In fact, major US banks faked documents to speed up foreclosures
illegally, a criminal industry/Washington partnership dispossessing defrauded
homeowners from their properties. In other words, when pols conspire with
Wall Street racketeers, the public gets scammed, in this case millions
of victimized homeowners.
-
- In September, "foreclosuregate" emerged after
evidence forced Ally Financial (formerly GMAC Mortgage) to stop dispossessions
in 23 states where court orders are needed.
-
- At issue are backdated documents, false affidavits, and
so-called court-ordered "rocket docket," speed throughs to evict
homeowners, proceedings lasting around 20 seconds per case. Judges are
so swamped, they pay no attention, says Margery Golant, a veteran Florida
foreclosure defense lawyer. As a result, "They just rubber-stamp them,"
case closed.
-
- On October 8, Bank of America announced it would halt
foreclosure sales in all 50 states. Earlier, Ally Financial and JPMorgan
Chase said they're doing it in 23 states. PNC Financial Services Group
will also for 30 days, and very likely other banks will follow.
-
- On October 8, Obama pocket-vetoed a rushed-through Senate
bill to facilitate foreclosure fraud. It would have mandated mortgage and
other financial document notarizations in one state (including those done
electronically) be recognized in all others. Consumer groups and other
critics complained, saying the measure would have facilitated dispossessions
faster, and in many cases improperly.
-
- Attorney General Eric Holder then said the Financial
Fraud Enforcement Task Force is investigating reports of greater numbers.
Seven or more state attorneys general began their own, that if not stopping,
at least may slow down dispossessions. More on that below.
-
- Last May, Herman John Kennerty, a Wells Fargo default
document group administration manager testified that he typically signed
50 to 150 evictions daily. He also said he didn't independently verify
information to which he was attesting, just rubber-stamping it along.
-
- In Florida, problems are especially acute, recent 12th
Judicial Circuit state findings showing that 20% of foreclosures set for
summary judgment involved deficient documents, according to Chief Judge
Lee E. Haworth. In an interview, he said:
-
- "We have sent repeated notices to law firms saying,
'You are not following the rules, and if you don't clean up your act, we
are going to impose sanctions on you.' They say, 'We'll fix it, we'll fix
it, we'll fix it.' But they don't."
-
- As a result, on September 17, Judge Harry Rapkin, overseeing
district foreclosures, dismissed 61 cases. Plaintiffs may refile, however,
by repeating the procedure, including paying fees involved.
-
- Overall, the process is riddled with fraud. Mortgage
lenders used boiler room tactics, conning borrowers with no knowledge of
what they were doing, including the risks. To close deals, some forged
their signatures on key documents, pressured real estate appraisers to
inflate home values, and created fake W-2 forms to exaggerate applicant
incomes.
-
- The Housing Bubble
-
- Make no mistake, the housing bubble was built on an edifice
of fraud and was no accident. Catherine Austin Fitts is a former Assistant
Housing Secretary. Then from 1994 - 1997, her company, Hamilton Securities,
was the lead Federal Housing Administration (FHA) advisor. An expert, she
"watched both the Administration and the Federal Reserve (game the
system by) aggressively implement(ing) the policies that engineered the
housing bubble."
-
- In her March 15, 2009 Solari.com article headlined, "The
Fed Did Indeed Cause the Housing Bubble," she explained:
-
- "In 1995, a senior Clinton Administration official
shared with me the Administration's targets for Fannie Mae and Freddie
Mac mortgage volumes in low and moderate-income communities. We had recently
reviewed the Administration's plans to increase government mortgage guarantees
- and most of these mortgages would also be pooled and sold as securities
to investors."
-
- "Even in 1995, I could see that these plans would
create unserviceable debt loads in communities struggling with the falling
incomes expected from globalization. Homeowners would default on mortgages
while losses on mortgage-backed securities would drain retirement savings
from 401(k)s and pension plans. Taxpayers would ultimately be hit with
a large bill....but insiders would make a bundle. I looked at the official
and said that the Administration was planning on issuing more mortgages
than there were houses or residents."
-
- The official's response - "Shut up, this is none
of your business."
-
- In her August 7, 2007 article titled, "Sub-Prime
Mortgage Woes Are No Accident," Fitts said:
-
- "One of the dirty little secrets behind the housing
bubble is the longstanding partnership (between) narcotics trafficking
and mortgage fraud," both used "to target and destroy minority
and poor communities with highly profitable economic warfare."
-
- The model is global, profiting hugely from illicit drugs,
money laundering, and economic destruction of poor communities. Business
and government officials at the highest levels are involved because of
the enormous stakes - an estimated $500 billion - $1 trillion laundered
annually through major financial firms, mostly in America.
-
- On May 6, 2009, the Center for Public Integrity headlined,
"Who's Behind the Financial Meltdown: The Top 25 Subprime Lenders
and Their Wall Street Backers," saying:
-
- The companies most responsible "for triggering the
global economic meltdown were owned or backed by giant banks now collecting
billions of dollars in bailout money."
-
- They include Goldman Sachs, JPMorgan Chase, Bank of America,
Citigroup, Wells Fargo, and other familiar names, profiting hugely through
criminally engineered fraud, facilitated by government complicity - initially
during the Clinton administration, or perhaps earlier.
-
- Banks getting bailout money own, financed, or were financially
connected to at least 21 of the top subprime lenders. Twenty have now closed,
stopped lending, or were sold to avoid bankruptcy. Nine were California
based, including: Countrywide Financial, Ameriquest Mortgage, New Century
Financial, First Franklin, and Long Beach Mortgage, scamming homebuyers
through criminal fraud.
-
- State Foreclosure Fraud Investigations
-
- As explained above, seven or more state attorneys general
began investigations, and reports suggest up to 40 or more may work cooperatively
on it. According to Bloomberg.com on October 8:
-
- "State attorneys general led by Iowa's Tom Miller
are in talks that may lead to the announcement of a coordinated probe as
soon as October 12....Lawyers representing the banks are expecting a more
widespread investigation, according to Patrick McManemin (of Patton Boggs),
a Washington-based law firm that represents banks, loan servicers and financial
institutions." Lawsuits will likely follow, at least one now initiated
by Ohio Attorney General Richard Cordray against Ally Financial, formerly
GMAC Mortgage.
-
- Whether Attorney General Holder and top congressional
officials will get on this forcefully remains to be seen. So far, there's
more furor than action or tough measures. There's also risk it may subside
post-election, given other lame duck session priorities, then a new Congress
in January. However, the housing scandal is so huge ("foreclosuregate"
one part alone) that momentum may give it legs in 2011.
-
- The situation bears watching. Financial institutions
may be penalized, but expect no top heads to roll, just perhaps a few lower-level
sacrificial lambs. It's how Washington officials always handle scandals,
because they, too, are complicit.
-
- Stephen Lendman lives in Chicago and can be reached at
lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com
and listen to cutting-edge discussions with distinguished guests on the
Progressive Radio News Hour on the Progressive Radio Network Thursdays
at 10AM US Central time and Saturdays and Sundays at noon. All programs
are archived for easy listening.
-
- http://www.progressiveradionetwork.com/the-progressive-news-hour/.
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