The New York Times has the story today.
NY Times link.
A volunteer lawyer working for a small legal services program in Maine managed to blow the lid off of a nationwide conspiracy to take people's homes through a massive and sustained scheme to defraud.
It is the mortgage foreclosure efforts of some of the nation's biggest banks and lenders, and it turns out to have been rotten to the core.
A semi-retired lawyer in Maine was volunteering at a Maine legal services program to help out people with legal problems who couldn't afford to hire their own lawyers, and he was asked to help out a woman who was facing foreclosure because she could no longer afford to make her mortgage payments. Nicolle Bradbury had worked since she was 14 but had lost her job and was just about to lose the home that she had bought seven years ago. With a teenaged son and daughter, she just wants to keep her family together, but with no job and no money she was facing GMAC, the holder of her mortgage, and was looking at long odds and fast running out of time. She turned to the Pine Tree Legal Assistance program as her last option.
PTLA took her case and asked a volunteer lawyer to review it. This lawyer, Thomas Cox, used to work for a bank and knows the foreclosure process well -- because he used to do foreclosure cases for the bank. He didn't much like doing them then, but he did his job. As soon as he looked at Ms. Bradbury's file he saw that it didn't look right. For one thing, the documents had been signed by someone who was identified as a "limited signing officer" -- which sounded to Cox like someone who didn't know anything about this loan but was simply rubber-stamping foreclosure documents to get people out of their homes.
Cox asked for permission to take a deposition of the "limited signing officer," to ask him questions under oath to see whether he actually knew anything about the case in which he he had been filing documents to the court.
The judge gave Cox permission to take the deposition.
And as soon as that deposition started, the entire nationwide scheme by banks and lending institutions to use fraudulent documents and false statements to get people out of their homes began to unravel.
The "limited signing officer" freely admitted that he didn't know the first thing about the case. How could he? He was under instructions to process 400 mortgage foreclosures a day, and there was simply no time to review any of them. It was all he could do to get that number of documents out the door -- he could hardly be expected to know anything at all about any single one of them!
So, as Attorney Cox told the judge in his filing after he finished questioning GMAC's "limited signing officer" (whose name was Jeffrey Stephan):
"When Stephan says in an affidavit that he has personal knowledge of the facts stated in his affidavits, he doesn’t. When he says that he has custody and control of the loan documents, he doesn’t. When he says that he is attaching ‘a true and accurate’ copy of a note or a mortgage, he has no idea if that is so, because he does not look at the exhibits. When he makes any other statement of fact, he has no idea if it is true. When the notary says that Stephan appeared before him or her, he didn’t."
And so the entire fradulent scheme began to unravel.
The judge stopped GMAC's foreclosure, even after they went out and hired the biggest law firm in the state of Maine. He didn't appreciate being lied to. He denied the high-priced new lawyer's request to ignore GMAC's false documents and hide their fraudulent conduct by evicting Ms. Bradbury anyway and then sealing the case file. He noted that GMAC had been admonished by a court in Florida for doing this sort of thing four years ago, and he found that they had acted in bad faith in trying to evict her and foreclose on her home with bogus documents. Then he ordered GMAC to pay Pine Tree Legal Assistance the amount that Cox would have charged Bradbury in legal fees if he hadn't volunteered to represent her for free.
And once the conduct of GMAC and many other mortgage holders started to become public, they were forced to call a halt to their mortgage foreclosure efforts all around the country. Attorneys General in all fifty states are looking into the conduct of the lenders in filing phony foreclosure paperwork, and Congress is preparing to hold hearings.
And all because one honest lawyer, who had volunteered to work for free through a legal aid program for people who can't afford lawyers, won the right to ask a few well-aimed questions.
These mortgage-holders were knowingly filing in courts completely false affidavits, swearing under oath that they had done things that they had not done, and knew things that they simply did not know.
And they were doing this over and over and over and over again, day after day, in courts all around this country, trying to force people out of their homes illegally, through a pattern of fraudulent conduct that is shocking in its cynicism and scale.
If a massive conspiracy to defraud people out of their homes like this had been undertaken by groups of shadowy people wearing pinkie rings, there would be organized crime strike forces all over the country preparing wiretaps and rolling up these organizations starting with the small-fry and going up the chain to nail the big fishes at the top, using statutes with names like "RICO," and other anti-corruption laws.
These banks and lending institutions have battallions of officials and lawyers, and every time they go to court they have to be represented by a lawyer.
But if anyone on the inside ever asked a single question -- like "hey, can we file an affidavit that swears that we did something we did not actually do? Isn't that fraud?" -- then those questions never saw the light of day.
Is there some good reason why this is not considered a massive conspiracy to defraud?
Isn't this organized crime?