• Virginia files lawsuit against plutocrats who conned state with toxic mortgages.
By Ronald L. Ray —
True to its state motto — “Sic semper tyrannis,” or “Thus always to tyrants” — the Commonwealth of Virginia has brought a $1.15 billion civil fraud lawsuit against a “banker’s dozen” of the largest international investment houses. Attorney General Mark R. Herring announced the case in mid-September, which was filed in Richmond Circuit Court. In a prepared statement, the Office of the Attorney General (OAG) alleged that the big banks deliberately misrepresented the quality of residential mortgage-backed securities (RMBS), a form of financial derivative, sold to the Virginia Retirement System (VRS), beginning in 2004.
Prior to 2010, “Virginia was forced to sell the vast majority of these toxic securities built on junk mortgages and lost $383 million.” The attorney general now seeks to obtain the maximum penalty allowed by law, in order to redress the harm done to Virginia taxpayers. The OAG expects that the money recovered will go to repay the taxpayers and VRS for their losses.
In a virtual “who’s who” of plutocratic pirates, 13 mega-banks have been accused of violating the commonwealth’s 2002 Fraud Against Taxpayers Act, which permits treble damages for losses, plus additional penalties.
According to the Richmond Times-Dispatch, however, two JPMorgan Chase subsidiaries, JPMorgan Securities LLC and WAMU Capital Corporation (formerly Washington Mutual), were dropped subsequently, when the OAG learned that Herring’s predecessor, Kenneth T. Cuccinelli II, had previously reached a secret settlement with the two firms for $3 million. Depending on circumstances, however, they could be sued in the future.
The remaining “banker’s dozen” are subsidiaries of the world’s biggest institutional usurers: Barclays, Citigroup, Countrywide, Credit Suisse, Deutsche Bank, Goldman Sachs, RBS, HSBC, Morgan Stanley, UBS and Merrill Lynch.
In brief, Virginia alleges that 220 securities it purchased were offered as being rated AAA or similarly, with 0% delinquency. This factor is important to institutional investors like Virginia because of the need for a stable and secure return. However, 75% of the mortgages eventually defaulted. The RMBSs were backed by 785,000 mortgages, of which 40% were “fraudulently misrepresented.” The OAG stated that the banks “knew, or should have known,” that claims in their prospectuses and sales presentations were false.
The fraudulent practices were discovered by Integra REC, LLC, “using extremely sophisticated proprietary methods” to match RMBSs with the respective individual mortgages, said the OAG.
The first of three main accusations is that the banks misrepresented the loan-to-value ratio (an indication of likely default). On average, only 23.4% of loans were represented as being for more than 80% of property value, when it was really 54%. Fifteen percent were “underwater.” Further, rates of owner occupancy were overstated significantly, and second mortgage numbers were severely understated. Both of these latter factors also contribute to delinquency rates.
Herring stated: “Every Virginian was harmed by the financial crisis. Homes were lost, retirement accounts were devastated, small businesses saw their credit dry up almost overnight. . . . I will not allow Virginians to be left holding the bag for the reckless, fraudulent business practices of a few big banks who thought they were above the law. These banks lied to Virginia, and taxpayers and [nearly 600,000] state employees lost hundreds of millions dollars as a result.”
As a measure of Herring’s confidence and resolve, the Commonwealth of Virginia has demanded a jury trial. It is to be hoped that true justice will be served, and that there will be no further secret settlements that allow the plunderous plutocrats to return to usury as usual.
Despite a nearly endless stream of revelations of the moneylenders’ wrongdoing—now including collusion by the Federal Reserve—at least one apologist for the weasels of Wall Street, Matthew E. Fishbein, suggests in the New York Law Journal that the banksters and other corporate criminals are the victims, forced by evil government lawyers to admit to things they believe they did not do. He goes so far as to call cases similar to the Virginia lawsuit “marginal,” because they involve only a few hundred million dollars.
But the truth is that the international bankers are usurious pirates, bent on sucking every cent out of the nearly empty pockets of widows and orphans. They have created a corporate culture of corruption, which is destroying nearly every economy on the face of the planet. It is time to end the financial pharaohs’ stranglehold on the common man by ending usury and putting every single one of these predatory banks out of business.
Ronald L. Ray is a freelance author and an assistant editor of THE BARNES REVIEW. He is a descendant of several patriots of the American War for Independence.
Can you amend your comment to be about private banks such as the Federal Reserve Bank and other great central banks of the world? I think there is a difference between national banks and central private banks.
The reason is very simple: by including only interest and other costs, but none of the sums deposited by clients (for whatever reason) in the financial statements, the entire operating margin of these credit institutions would be fully evident: consequently, they would be required to pay high taxes and, above all, it would be even too obvious that loans could be managed with negative interest rates without giving rise to “losses,” but only reduced revenue growth.
As a Virginia resident who had a solid credit rating and secured a mortgage via Countrywide and then struggled to address the rampant and lawless sale of my mortgage to several different banks, I applaud this action and will monitor its progress.
My reason for characterizing this as ‘ironic’ is due to the result of my effort to sue Bank of America, the final ‘owner’ of my mortgage, in a Virginia court. As with thousands of others, I did research, paid for further research and learned all I could with regard to false sales and recordings of deeds. My case, as with most cases in Virginia, was essentially ‘nol prossed‘ by the ignorant and arrogant judge who barely allowed my attorney to present our case. The banks sent several ‘bright and shiny’ D.C. lawyers to argue, but the judge didn’t need to listen; he found for them within less than five minutes. I left wondering if his pension was endangered by the same game of tranching and by the same banksters I was trying to win against.
Cuccinelli was among several other AGs who met with bank reps and hammered a quick and dirty settlement that saw no recompense for those of us who had struggled to pay the exorbitant fees and fight to avoid foreclosure. It was no small coincidence that the main device used to process false sales and recordings of deeds was MERS, headquartered in Reston, Va.
Upon continuing to research the various machinations of MERS and the large banks, I discovered that the State of Virginia employees’ pension funds were also part of the investment packages, and realized that the judge who supported the banksters was an unknowing victim of the same scheme.
I hope that other AGs in other states will see this as the bold and correct behavior it is and proceed to do the same.
Freedom is built on property. Without it, we have no reason to vote or even to have even a form of quasi-government. I say, hang those who put liberty and freedom in peril. And when you do find them guilty, don’t do as the British did recently who refused to put a name to the banker. The desire to save one’s family from shame, is tacit approval that they enjoyed the benefits, too.
I like it!!!!!!!!!! Go kick their butts and let’s not take a decade to do it either. And be sure to charge penalties, interest, lawyers fees, and everything possible to raise it to $1B payback for the bunch of bankster crooks!