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Here’s That Devastating Report On Bank Of America That Everyone Is Talking About Today

Here’s That Devastating Report On Bank Of America That Everyone Is Talking About Today

Business Insider published this report yesterday:

Excerpts:

Earlier, we wrote about Felix Salmon’s contention that there’s a new mortgage fraud scandal that has the potential to dwarf Goldman’s ABACUS dealings. In this fraud scenario, banks took advantage of their information advantage and sold CDOs with mortgages they knew to be bad without clear representation to investors.

In August, Manal Mehta and Branch Hill Capital put together a presentation targeting Bank of America’s potential exposure to this mortgage fraud, as well as other problems in the mortgage market.

The presentation comes to a pretty damning conclusion: Bank of America’s exposure could nearly halve its share price.

It’s all about what capital Bank of America has in reserve for the scenario of mortgages having to come back on its balance sheet.


Read more: http://www.businessinsider.com/bank-of-america-mortgage-report-2010-10#ixzz12X9OhENP

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CONFIDENTIAL PRESENTATION

[ipaper docId=39475268 access_key=key-mp9uuxa33spuihcjdet height=600 width=600 /]


© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, foreclosure, foreclosure fraud, foreclosures, insider, insurance, investigation, mortgage, Mortgage Foreclosure Fraud, stock, STOP FORECLOSURE FRAUD, Wall Street1 Comment

Law Office of David J Stern, DJSP Enterprises and a Special Purpose Acquisition Company (SPAC)

Law Office of David J Stern, DJSP Enterprises and a Special Purpose Acquisition Company (SPAC)

Foreclosure Crisis Trips Up a SPAC

October 15, 2010, 10:00 am

The foreclosure crisis has an unusual capital markets twist. A law firm at the center of the controversy in Florida, the Law Offices of David J. Stern, sold its foreclosure-servicing business to a special purpose acquisition company, or SPAC, the Chardan 2008 China Acquisition Corporation, less than a year ago. The newly formed company is called DJSP Enterprises.

When I last wrote about SPACs, it was to note their looming death. SPACs are specially formed public companies set up to acquire a single public company and take it private. I have previously criticized these entities on the following grounds:

A purchase of SPAC securities is typically an investment in a single, to-be-determined acquisition. At the time of his or her purchase, a public investor is uncertain what business or industry the SPAC will enter, the size of the SPAC’s acquisition and the leverage it will bear and whether the SPAC’s management will have any facility in the industry of the investment. Their influence on these matters is instead limited to a vote on the acquisition.

However, this vote is one that has an inherently coercive aspect to it; a nay vote entitles investors only to their share of the remaining offering proceeds, an amount that is less than their original investment. By this time, you are unlikely to want to take the loss instead preferring to take a flyer on the acquisition. A SPAC investor is also left relying upon the SPAC sponsors to select an appropriate target.


These problems appear to have borne fruit. According to SPAC Analytics, SPACs have significantly underperformed the market. Their index of special purpose acquisition companies shows that since their reappearance back in 2003, SPACs are down 17.8 percent, compared with a fall of 4.5 percent in the Russell 2000. During this time, there have also been some terrible blow-ups. This includes American Apparel which, after a long struggle, was itself acquired by a SPAC, the Endeavor Acquisition Corporation, in 2007. American Apparel has struggled with liquidity problems of late and averted breaching its debt covenants at the last minute when its primary lender, Lion Capital, agreed to modify American Apparel’s loan.

The DJSP Enterprises SPAC was always a particularly risky deal. The initial SPAC was formed under the laws of the British Virgin Islands. This presumably was to take advantage of tax laws and the laxer disclosure laws applicable to foreign issuers, particularly those that are not listed elsewhere.

Continue reading…NY TIMES DEAL BOOK

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About The Deal Professor

Steven M. Davidoff, writing as The Deal Professor, is a commentator for DealBook on the legal aspects of mergers, private equity and corporate governance. A former corporate lawyer at Shearman & Sterling, he is a professor at the University of Connecticut School of Law. He is the author of “Gods at War: Shotgun Takeovers, Government by Deal and the Private Equity Implosion,” which explores modern-day deals and deal-making.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in djsp enterprises, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, Law Offices Of David J. Stern P.A., stock1 Comment

Clogged foreclosure pipeline may lead to DJSP layoffs

Clogged foreclosure pipeline may lead to DJSP layoffs

DinSFLA here: Side note…DJSP recently signed what may be the largest lease in Orlando this year. They plan to open a 12,870-square-foot in Highwoods Properties’ Landmark Center Two, near Lake Eola.

by Austin Kilgore September 9, 2010

The clogged foreclosure pipeline is delaying new foreclosure filings, and Florida-based processing services firm DJSP Enterprises said it’s considering layoffs to deal with the decreased business.

DJSP Enterprises’ main client is The Law Offices of David J. Stern, P.A. (DJSPA). In the DJSP Enterprises second quarter 2010 and mid-year earnings report released this week, the company said a slow down in new foreclosure filings will likely necessitate cost cutting and personnel layoffs. The company said it initially believed file volume would increase in the third quarter, leading to the decision to maintain current staffing levels. However, file volumes continue to be delayed and existing staffing levels are not sustainable indefinitely, the report said.

“While a large portion of our business can only be processed with human capital, we are identifying opportunities where technology and process change can be implemented to create efficiency,” recently-appointed DJSPA President and COO Richard “Rick” Powers said in the financial statement. “We are prepared to create efficiencies and make cuts where appropriate over the next three to six months.”

Continue reading ….REO Insider

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in Bank Owned, djsp enterprises, foreclosure, foreclosure mills, foreclosures, jobless, Law Offices Of David J. Stern P.A., mortgage, REO, stock, title company, Wall Street3 Comments

DJSP reports smaller profit as AG probe looms

DJSP reports smaller profit as AG probe looms

South Florida Business Journal

Tuesday, September 7, 2010, 6:05pm EDT

As an investigation by the Florida Attorney General’s Office looms over its chairman and CEO, Plantation-based DJSP Enterprises reported a decline in both profits and income during the second quarter.

The foreclosure and title processing company (NASDAQ: DJSP) reported net income of $3.8 million, or 32 cents a share, on revenue of $56.1 million. That’s down from net income of $14.1 million, or 73 cents a share, on revenue of $61.7 million in the second quarter of 2009.

DJSP handles foreclosure legal work for major lenders, and its largest client is the Law Offices of David J. Stern, P.A. The lawyer is chairman and CEO of DJSP.

On Aug. 10, Attorney General Bill McCollum announced he had started an investigation of David J. Stern, P.A., along with three other Florida law firms, over whether they engaged in unfair and deceptive actions in the handling of foreclosure cases. There have been allegations that the law firms fabricated mortgage assignments to speed up foreclosures.

David J. Stern, P.A. responded to the news by stating that it would cooperate with the investigation and it has done nothing wrong.

In addition, a pending class action lawsuit accuses Stern and his firm of violating the RICO Act.

Continue reading… South Florida Business Journal


© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in chain in title, class action, CONTROL FRAUD, corruption, djsp enterprises, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, investigation, Law Offices Of David J. Stern P.A., Mortgage Foreclosure Fraud, notary fraud, racketeering, RICO, robo signers, stock, STOP FORECLOSURE FRAUD, stopforeclosurefraud.com, title company3 Comments

It All goes Back in the Box

It All goes Back in the Box

We can learn a thing or two about a simple game called Monopoly!

In the end .. it all goes back in the box …

Editing done by me.

“What we do for ourselves dies with us. What we do for others and the world remains and is immortal.” -Albert Pine

Speech is by John Ortberg

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in chain in title, CONTROL FRAUD, corruption, deed of trust, Eviction, FED FRAUD, foreclosure, foreclosure fraud, foreclosures, mbs, mortgage, scam, securitization, stock, stopforeclosurefraud.com, sub-prime, svp, tarp funds, TAXES, trade secrets, Trusts, Wall Street0 Comments

NEW YORK TIMES ‘FORECLOSURE FRAUD’ ARTICLE MISSES THE MARK

NEW YORK TIMES ‘FORECLOSURE FRAUD’ ARTICLE MISSES THE MARK

Please don’t get me wrong. I really like Gretchen Morgenson and Geraldine Fabrikant but I am somewhat disappointed in today’s article High-Speed Courts Try to Rush Through Foreclosures, in which they really missed some important “key components”.

A few weeks ago our friend at Chink in the Armor said it best in his post Gretchen Swoops for the Kill, and Feints … Twice. He states “Gretchen Moregenson of the New York Times is circling the MERS story. Every once in a while she will seem to make a pass at it but at the last moment she diverts to something else, plucking a nice little morsel but leaving the main dish of MERS behind. She refrains, like everyone else, from coming in for the kill. I know for a fact she knows – from two different sources – but I don’t know why she holds her powder.”

He continues… “She had two stories this past week just like that.”

Again, don’t get me wrong, but there are other players just as important as, if not more so, than the Foreclosure Mills, such as MERS, Lender Processing Services, mortgage-backed security trusts, Freddie Mac/Fannie Mae (or GSEs??).

In today’s NYT’s article Gretchen and Geraldine did, however, manage to get in touch with David J. Stern. Of course, to no one’s surprise he “attributed any backdating to sloppiness on the part of paralegals“.

I am sure that statement will not sit well with any paralegals working there who are working hard, doing exactly what their supervisors are telling them to do.

I must say the most important statement from this article comes from the Florida Attorney General,… “Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of these law firms,” said Mr. McCollum in an interview. “We’ve had so many complaints that I am confident there is a great deal of fraud here.

My suggestion to any journalist that fine combs this site is to please do your research and, then, write a mind blowing article that will clear the smoke from the mirrors.

Gretchen, when will you finally swoop in for the kill?

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in chain in title, djsp enterprises, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, investigation, Law Offices Of David J. Stern P.A., LPS, MERS, MERSCORP, mistake, mortgage, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, Notary, notary fraud, note, servicers, stock, Wall Street1 Comment

Banks’ Self-Dealing Super-Charged Financial Crisis

Banks’ Self-Dealing Super-Charged Financial Crisis

ProPublica

Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history.

Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses:

They created fake demand.

A ProPublica analysis shows for the first time the extent to which banks — primarily Merrill Lynch, but also Citigroup, UBS and others — bought their own products and cranked up an assembly line that otherwise should have flagged.

The products they were buying and selling were at the heart of the 2008 meltdown — collections of mortgage bonds known as collateralized debt obligations, or CDOs.

As the housing boom began to slow in mid-2006, investors became skittish about the riskier parts of those investments. So the banks created — and ultimately provided most of the money for — new CDOs. Those new CDOs bought the hard-to-sell pieces of the original CDOs. The result was a daisy chain [1] that solved one problem but created another: Each new CDO had its own risky pieces. Banks created yet other CDOs to buy those.

Individual instances of these questionable trades have been reported before, but ProPublica’s investigation shows that by late 2006 they became a common industry practice.

Source: Thetica SystemsSource: Thetica Systems

An analysis by research firm Thetica Systems, commissioned by ProPublica, shows that in the last years of the boom, CDOs had become the dominant purchaser of key, risky parts of other CDOs, largely replacing real investors like pension funds. By 2007, 67 percent of those slices were bought by other CDOs, up from 36 percent just three years earlier. The banks often orchestrated these purchases. In the last two years of the boom, nearly half of all CDOs sponsored by market leader Merrill Lynch bought significant portions of other Merrill CDOs [2].ProPublica also found 85 instances during 2006 and 2007 in which two CDOs bought pieces of each other’s unsold inventory. These trades, which involved $107 billion worth of CDOs, underscore the extent to which the market lacked real buyers. Often the CDOs that swapped purchases closed within days of each other, the analysis shows.

There were supposed to be protections against this sort of abuse. While banks provided the blueprint for the CDOs and marketed them, they typically selected independent managers who chose the specific bonds to go inside them. The managers had a legal obligation to do what was best for the CDO. They were paid by the CDO, not the bank, and were supposed to serve as a bulwark against self-dealing by the banks, which had the fullest understanding of the complex and lightly regulated mortgage bonds.

It rarely worked out that way. The managers were beholden to the banks that sent them the business. On a billion-dollar deal, managers could earn a million dollars in fees, with little risk. Some small firms did several billion dollars of CDOs in a matter of months.

“All these banks for years were spawning trading partners,” says a former executive from Financial Guaranty Insurance Company, a major insurer of the CDO market. “You don’t have a trading partner? Create one.”

The executive, like most of the dozens of people ProPublica spoke with about the inner workings of the market at the time, asked not to be named out of fear of being sucked into ongoing investigations or because they are involved in civil litigation.

Keeping the assembly line going had a wealth of short-term advantages for the banks. Fees rolled in. A typical CDO could net the bank that created it between $5 million and $10 million — about half of which usually ended up as employee bonuses. Indeed, Wall Street awarded record bonuses in 2006, a hefty chunk of which came from the CDO business.

The self-dealing super-charged the market for CDOs, enticing some less-savvy investors to try their luck. Crucially, such deals maintained the value of mortgage bonds at a time when the lack of buyers should have driven their prices down.

But the strategy of speeding up the assembly line had devastating consequences for homeowners, the banks themselves and, ultimately, the global economy. Because of Wall Street’s machinations, more mortgages had been granted to ever-shakier borrowers. The results can now be seen in foreclosed houses across America.

The incestuous trading also made the CDOs more intertwined and thus fragile, accelerating their decline in value that began in the fall of 2007 and deepened over the next year. Most are now worth pennies on the dollar. Nearly half of the nearly trillion dollars in losses to the global banking system came from CDOs, losses ultimately absorbed by taxpayers and investors around the world. The banks’ troubles sent the world’s economies into a tailspin from which they have yet to recover.

It remains unclear whether any of this violated laws. The SEC has said [4] that it is actively looking at as many as 50 CDO managers as part of its broad examination of the CDO business’ role in the financial crisis. In particular, the agency is focusing on the relationship between the banks and the managers. The SEC is exploring how deals were structured, if any quid pro quo arrangements existed, and whether banks pressured managers to take bad assets.

The banks declined to directly address ProPublica’s questions. Asked about its relationship with managers and the cross-ownership among its CDOs, Citibank responded with a one-sentence statement:

“It has been widely reported that there are ongoing industry-wide investigations into CDO-related matters and we do not comment on pending investigations.”

None of ProPublica’s questions had mentioned the SEC or pending investigations.

Posed a similar list of questions, Bank of America, which now owns Merrill Lynch, said:

“These are very specific questions regarding individuals who left Merrill Lynch several years ago and a CDO origination business that, due to market conditions, was discontinued by Merrill before Bank of America acquired the company.”

This is the second installment of a ProPublica series about the largely hidden history of the CDO boom and bust. Our first story [5] looked at how one hedge fund helped create at least $40 billion in CDOs as part of a strategy to bet against the market. This story turns the focus on the banks.

Merrill Lynch Pioneers Pervert the Market
By 2004, the housing market was in full swing, and Wall Street bankers flocked to the CDO frenzy. It seemed to be the perfect money machine, and for a time everyone was happy.

Homeowners got easy mortgages. Banks and mortgage companies felt secure lending the money because they could sell the mortgages almost immediately to Wall Street and get back all their cash plus a little extra for their trouble. The investment banks charged massive fees for repackaging the mortgages into fancy financial products. Investors all around the world got to play in the then-phenomenal American housing market.

The mortgages were bundled into bonds, which were in turn combined into CDOs offering varying interest rates and levels of risk.

Investors holding the top tier of a CDO were first in line to get money coming from mortgages. By 2006, some banks often kept this layer, which credit agencies blessed with their highest rating of Triple A.

Buyers of the lower tiers took on more risk and got higher returns. They would be the first to take the hit if homeowners funding the CDO stopped paying their mortgages. (Here’s a video explaining how CDOs worked [6].)

Over time, these risky slices became increasingly hard to sell, posing a problem for the banks. If they remained unsold, the sketchy assets stayed on their books, like rotting inventory. That would require the banks to set aside money to cover any losses. Banks hate doing that because it means the money can’t be loaned out or put to other uses.

Being stuck with the risky portions of CDOs would ultimately lower profits and endanger the whole assembly line.

The banks, notably Merrill and Citibank, solved this problem by greatly expanding what had been a common and accepted practice: CDOs buying small pieces of other CDOs.

Architects of CDOs typically included what they called a “bucket” — which held bits of other CDOs paying higher rates of interest. The idea was to boost overall returns of deals primarily composed of safer assets. In the early days, the bucket was a small portion of an overall CDO.

One pioneer of pushing CDOs to buy CDOs was Merrill Lynch’s Chris Ricciardi, who had been brought to the firm in 2003 to take Merrill to the top of the CDO business. According to former colleagues, Ricciardi’s team cultivated managers, especially smaller firms.

Merrill exercised its leverage over the managers. A strong relationship with Merrill could be the difference between a business that thrived and one that didn’t. The more deals the banks gave a manager, the more money the manager got paid.

As the head of Merrill’s CDO business, Ricciardi also wooed managers with golf outings and dinners. One Merrill executive summed up the overall arrangement: “I’m going to make you rich. You just have to be my bitch.”

But not all managers went for it.

An executive from Trainer Wortham, a CDO manager, recalls a 2005 conversation with Ricciardi. “I wasn’t going to buy other CDOs. Chris said: ‘You don’t get it. You have got to buy other guys’ CDOs to get your deal done. That’s how it works.'” When the manager refused, Ricciardi told him, “‘That’s it. You are not going to get another deal done.'” Trainer Wortham largely withdrew from the market, concerned about the practice and the overheated prices for CDOs.

Ricciardi declined multiple requests to comment.

Merrill CDOs often bought slices of other Merrill deals. This seems to have happened more in the second half of any given year, according to ProPublica’s analysis, though the purchases were still a small portion compared to what would come later. Annual bonuses are based on the deals bankers completed by yearend.

Ricciardi left Merrill Lynch in February 2006. But the machine he put into place not only survived his departure, it became a model for competitors.

As Housing Market Wanes, Self-Dealing Takes Off
By mid-2006, the housing market was on the wane. This was particularly true for subprime mortgages, which were given to borrowers with spotty credit at higher interest rates. Subprime lenders began to fold, in what would become a mass extinction. In the first half of the year, the percentage of subprime borrowers who didn’t even make the first month’s mortgage payment tripled from the previous year.

That made CDO investors like pension funds and insurance companies increasingly nervous. If homeowners couldn’t make their mortgage payments, then the stream of cash to CDOs would dry up. Real “buyers began to shrivel and shrivel,” says Fiachra O’Driscoll, who co-ran Credit Suisse’s CDO business from 2003 to 2008.

Faced with disappearing investor demand, bankers could have wound down the lucrative business and moved on. That’s the way a market is supposed to work. Demand disappears; supply follows. But bankers were making lots of money. And they had amassed warehouses full of CDOs and other mortgage-based assets whose value was going down.

Rather than stop, bankers at Merrill, Citi, UBS and elsewhere kept making CDOs.

The question was: Who would buy them?

The top 80 percent, the less risky layers or so-called “super senior,” were held by the banks themselves. The beauty of owning that supposedly safe top portion was that it required hardly any money be held in reserve.

That left 20 percent, which the banks did not want to keep because it was riskier and required them to set aside reserves to cover any losses. Banks often sold the bottom, riskiest part to hedge funds [5]. That left the middle layer, known on Wall Street as the “mezzanine,” which was sold to new CDOs whose top 80 percent was ultimately owned by … the banks.

“As we got further into 2006, the mezzanine was going into other CDOs,” says Credit Suisse’s O’Driscoll.

This was the daisy chain [1]. On paper, the risky stuff was gone, held by new independent CDOs. In reality, however, the banks were buying their own otherwise unsellable assets.

How could something so seemingly short-sighted have happened?

It’s one of the great mysteries of the crash. Banks have fleets of risk managers to defend against just such reckless behavior. Top executives have maintained that while they suspected that the housing market was cooling, they never imagined the crash. For those doing the deals, the payoff was immediate. The dangers seemed abstract and remote.

The CDO managers played a crucial role. CDOs were so complex that even buyers had a hard time seeing exactly what was in them — making a neutral third party that much more essential.

“When you’re investing in a CDO you are very much putting your faith in the manager,” says Peter Nowell, a former London-based investor for the Royal Bank of Scotland. “The manager is choosing all the bonds that go into the CDO.” (RBS suffered mightily in the global financial meltdown, posting the largest loss in United Kingdom history, and was de facto nationalized by the British government.)

Source: Asset-Backed AlertSource: Asset-Backed Alert

By persuading managers to pick the unsold slices of CDOs, the banks helped keep the market going. “It guaranteed distribution when, quite frankly, there was not a huge market for them,” says Nowell.The counterintuitive result was that even as investors began to vanish, the mortgage CDO market more than doubled from 2005 to 2006, reaching $226 billion, according to the trade publication Asset-Backed Alert.

Citi and Merrill Hand Out Sweetheart Deals
As the CDO market grew, so did the number of CDO management firms, including many small shops that relied on a single bank for most of their business. According to Fitch, the number of CDO managers it rated rose from 89 in July 2006 to 140 in September 2007.

One CDO manager epitomized the devolution of the business, according to numerous industry insiders: a Wall Street veteran named Wing Chau.

Earlier in the decade, Chau had run the CDO department for Maxim Group, a boutique investment firm in New York. Chau had built a profitable business for Maxim based largely on his relationship with Merrill Lynch. In just a few years, Maxim had corralled more than $4 billion worth of assets under management just from Merrill CDOs.

In August 2006, Chau bolted from Maxim to start his own CDO management business, taking several colleagues with him. Chau’s departure gave Merrill, the biggest CDO producer, one more avenue for unsold inventory.

Chau named the firm Harding, after the town in New Jersey where he lived. The CDO market was starting its most profitable stretch ever, and Harding would play a big part. In an eleven-month period, ending in August 2007, Harding managed $13 billion of CDOs, including more than $5 billion from Merrill, and another nearly $5 billion from Citigroup. (Chau would later earn a measure of notoriety for a cameo appearance in Michael Lewis’ bestseller “The Big Short [7],” where he is depicted as a cheerfully feckless “go-to buyer” for Merrill Lynch’s CDO machine.)

Chau had a long-standing friendship with Ken Margolis, who was Merrill’s top CDO salesman under Ricciardi. When Ricciardi left Merrill in 2006, Margolis became a co-head of Merrill’s CDO group. He carried a genial, let’s-just-get-the-deal-done demeanor into his new position. An avid poker player, Margolis told a friend that in a previous job he had stood down a casino owner during a foreclosure negotiation after the owner had threatened to put a fork through his eye.

Chau’s close relationship with Merrill continued. In late 2006, Merrill sublet office space to Chau’s startup in the Merrill tower in Lower Manhattan’s financial district. A Merrill banker, David Moffitt, scheduled visits to Harding for prospective investors in the bank’s CDOs. “It was a nice office,” overlooking New York Harbor, recalls a CDO buyer. “But it did feel a little weird that it was Merrill’s building,” he said.

Moffitt did not respond to requests for comment.

Under Margolis, other small managers with meager track records were also suddenly handling CDOs valued at as much as $2 billion. Margolis declined to answer any questions about his own involvement in these matters.

A Wall Street Journal article [8] ($) from late 2007, one of the first of its kind, described how Margolis worked with one inexperienced CDO manager called NIR on a CDO named Norma, in the spring of that year. The Long Island-based NIR made about $1.5 million a year for managing Norma, a CDO that imploded.

“NIR’s collateral management business had arisen from efforts by Merrill Lynch to assemble a stable of captive small firms to manage its CDOs that would be beholden to Merrill Lynch on account of the business it funneled to them,” alleged a lawsuit filed in New York state court against Merrill over Norma that was settled quietly after the plaintiffs received internal Merrill documents.

NIR declined to comment.

Banks had a variety of ways to influence managers’ behavior.

Some of the few outside investors remaining in the market believed that the manager would do a better job if he owned a small slice of the CDO he was managing. That way, the manager would have more incentive to manage the investment well, since he, too, was an investor. But small management firms rarely had money to invest. Some banks solved this problem by advancing money to managers such as Harding.

Chau’s group managed two Citigroup CDOs — 888 Tactical Fund and Jupiter High-Grade VII — in which the bank loaned Harding money to buy risky pieces of the deal. The loans would be paid back out of the fees the managers took from the CDO and its investors. The loans were disclosed to investors in a few sentences among the hundreds of pages of legalese accompanying the deals.

In response to ProPublica’s questions, Chau’s lawyer said, “Harding Advisory’s dealings with investment banks were proper and fully disclosed.”

Citigroup made similar deals with other managers. The bank lent money to a manager called Vanderbilt Capital Advisors for its Armitage CDO, completed in March 2007.

Vanderbilt declined to comment. It couldn’t be learned how much money Citigroup loaned or whether it was ever repaid.

Yet again banks had masked their true stakes in CDO. Banks were lending money to CDO managers so they could buy the banks’ dodgy assets. If the managers couldn’t pay the loans back — and most were thinly capitalized — the banks were on the hook for even more losses when the CDO business collapsed.

Goldman, Merrill and Others Get Tough
When the housing market deteriorated, banks took advantage of a little-used power they had over managers.

The way CDOs are put together, there is a brief period when the bonds picked by managers sit on the banks’ balance sheets. Because the value of such assets can fall, banks reserved the right to overrule managers’ selections.

According to numerous bankers, managers and investors, banks rarely wielded that veto until late 2006, after which it became common. Merrill was in the lead.

“I would go to Merrill and tell them that I wanted to buy, say, a Citi bond,” recalls a CDO manager. “They would say ‘no.’ I would suggest a UBS bond, they would say ‘no.’ Eventually, you got the joke.” Managers could choose assets to put into their CDOs but they had to come from Merrill CDOs. One rival investment banker says Merrill treated CDO managers the way Henry Ford treated his Model T customers: You can have any color you want, as long as it’s black.

Once, Merrill’s Ken Margolis pushed a manager to buy a CDO slice for a Merrill-produced CDO called Port Jackson that was completed in the beginning of 2007: “‘You don’t have to buy the deal but you are crazy if you don’t because of your business,'” an executive at the management firm recalls Margolis telling him. “‘We have a big pipeline and only so many more mandates to give you.’ You got the message.” In other words: Take our stuff and we’ll send you more business. If not, forget it.

Margolis declined to comment on the incident.

“All the managers complained about it,” recalls O’Driscoll, the former Credit Suisse banker who competed with other investment banks to put deals together and market them. But “they were indentured slaves.” O’Driscoll recalls managers grumbling that Merrill in particular told them “what to buy and when to buy it.”

Other big CDO-producing banks quickly adopted the practice.

A little-noticed document released this year during a congressional investigation into Goldman Sachs’ CDO business reveals that bank’s thinking. The firm wrote a November 2006 internal memorandum [9] about a CDO called Timberwolf, managed by Greywolf, a small manager headed by ex-Goldman bankers. In a section headed “Reasons To Pursue,” the authors touted that “Goldman is approving every asset” that will end up in the CDO. What the bank intended to do with that approval power is clear from the memo: “We expect that a significant portion of the portfolio by closing will come from Goldman’s offerings.”

When asked to comment whether Goldman’s memo demonstrates that it had effective control over the asset selection process and that Greywolf was not in fact an independent manager, the bank responded: “Greywolf was an experienced, independent manager and made its own decisions about what reference assets to include. The securities included in Timberwolf were fully disclosed to the professional investors who invested in the transaction.”

Greywolf declined to comment. One of the investors, Basis Capital of Australia, filed a civil lawsuit in federal court in Manhattan against Goldman over the deal. The bank maintains the lawsuit is without merit.

By March 2007, the housing market’s signals were flashing red. Existing home sales plunged at the fastest rate in almost 20 years. Foreclosures were on the rise. And yet, to CDO buyer Peter Nowell’s surprise, banks continued to churn out CDOs.

“We were pulling back. We couldn’t find anything safe enough,” says Nowell. “We were amazed that April through June they were still printing deals. We thought things were over.”

Instead, the CDO machine was in overdrive. Wall Street produced $70 billion in mortgage CDOs in the first quarter of the year.

Many shareholder lawsuits battling their way through the court system today focus on this period of the CDO market. They allege that the banks were using the sales of CDOs to other CDOs to prop up prices and hide their losses.

“Citi’s CDO operations during late 2006 and 2007 functioned largely to sell CDOs to yet newer CDOs created by Citi to house them,” charges a pending shareholder lawsuit against the bank that was filed in federal court in Manhattan in February 2009. “Citigroup concocted a scheme whereby it repackaged many of these investments into other freshly-baked vehicles to avoid incurring a loss.”

Citigroup described the allegations as “irrational,” saying the bank’s executives would never knowingly take actions that would lead to “catastrophic losses.”

In the Hall of Mirrors, Myopic Rating Agencies
The portion of CDOs owned by other CDOs grew right alongside the market. What had been 5 percent of CDOs (remember the “bucket”) now came to constitute as much as 30 or 40 percent of new CDOs. (Wall Street also rolled out CDOs that were almost entirely made up of CDOs, called CDO squareds [10].)

The ever-expanding bucket provided new opportunities for incestuous trades.

It worked like this: A CDO would buy a piece of another CDO, which then returned the favor. The transactions moved both CDOs closer to completion, when bankers and managers would receive their fees.

Source: Thetica SystemsSource: Thetica Systems

ProPublica’s analysis shows that in the final two years of the business, CDOs with cross-ownership amounted to about one-fifth of the market, about $107 billion.Here’s an example from early May 2007:

  • A CDO called Jupiter VI bought a piece of a CDO called Tazlina II.
  • Tazlina II bought a piece of Jupiter VI.

Both Jupiter VI and Tazlina II were created by Merrill and were completed within a week of each other. Both were managed by small firms that did significant business with Merrill: Jupiter by Wing Chau’s Harding, and Tazlina by Terwin Advisors. Chau did not respond to questions about this deal. Terwin Advisors could not reached.

Just a few weeks earlier, CDO managers completed a comparable swap between Jupiter VI and another Merrill CDO called Forge 1.

Forge has its own intriguing history. It was the only deal done by a tiny manager of the same name based in Tampa, Fla. The firm was started less than a year earlier by several former Wall Street executives with mortgage experience. It received seed money from Bryan Zwan, who in 2001 settled an SEC civil lawsuit over his company’s accounting problems in a federal court in Florida. Zwan and Forge executives didn’t respond to requests for comment.

After seemingly coming out of nowhere, Forge won the right to manage a $1.5 billion Merrill CDO. That earned Forge a visit from the rating agency Moody’s.

“We just wanted to make sure that they actually existed,” says a former Moody’s executive. The rating agency saw that the group had an office near the airport and expertise to do the job.

Rating agencies regularly did such research on managers, but failed to ask more fundamental questions. The credit ratings agencies “did heavy, heavy due diligence on managers but they were looking for the wrong things: how you processed a ticket or how your surveillance systems worked,” says an executive at a CDO manager. “They didn’t check whether you were buying good bonds.”

One Forge employee recalled in a recent interview that he was amazed Merrill had been able to find buyers so quickly. “They were able to sell all the tranches” — slices of the CDO — “in a fairly rapid period of time,” said Rod Jensen, a former research analyst for Forge.

Forge achieved this feat because Merrill sold the slices to other CDOs, many linked to Merrill.

The ProPublica analysis shows that two Merrill CDOs, Maxim II and West Trade III, each bought pieces of Forge. Small managers oversaw both deals.

Forge, in turn, was filled with detritus from Merrill. Eighty-two percent of the CDO bonds owned by Forge came from other Merrill deals.

Citigroup did its own version of the shuffle, as these three CDOs demonstrate:

  • A CDO called Octonion bought some of Adams Square Funding II.
  • • Adams Square II bought a piece of Octonion.
  • • A third CDO, Class V Funding III, also bought some of Octonion.
  • • Octonion, in turn, bought a piece of Class V Funding III.

All of these Citi deals were completed within days of each other. Wing Chau was once again a central player. His firm managed Octonion. The other two were managed by a unit of Credit Suisse. Credit Suisse declined to comment.

Not all cross-ownership deals were consummated.

In spring 2007, Deutsche Bank was creating a CDO and found a manager that wanted to take a piece of it. The manager was overseeing a CDO that Merrill was assembling. Merrill blocked the manager from putting the Deutsche bonds into the Merrill CDO. A former Deutsche Bank banker says that when Deutsche Bank complained to Andy Phelps, a Merrill CDO executive, Phelps offered a quid pro quo: If Deutsche was willing to have the manager of its CDO buy some Merrill bonds, Merrill would stop blocking the purchase. Phelps declined to comment.

The Deutsche banker, who says its managers were independent, recalls being shocked: “We said we don’t control what people buy in their deals.” The swap didn’t happen.

The Missing Regulators and the Aftermath
In September 2007, as the market finally started to catch up with Merrill Lynch, Ken Margolis left the firm to join Wing Chau at Harding.

Chau and Margolis circulated a marketing plan for a new hedge fund to prospective investors touting their expertise in how CDOs were made and what was in them. The fund proposed to buy failed CDOs — at bargain basement prices. In the end, Margolis and Chau couldn’t make the business work and dropped the idea.

Why didn’t regulators intervene during the boom to stop the self-dealing that had permeated the CDO market?

No one agency had authority over the whole business. Since the business came and went in just a few years, it may have been too much to expect even assertive regulators to comprehend what was happening in time to stop it.

While the financial regulatory bill passed by Congress in July creates more oversight powers, it’s unclear whether regulators have sufficient tools to prevent a replay of the debacle.

In just two years, the CDO market had cut a swath of destruction. Partly because CDOs had bought so many pieces of each other, they collapsed in unison. Merrill Lynch and Citigroup, the biggest perpetrators of the self-dealing, were among the biggest losers. Merrill lost about $26 billion on mortgage CDOs and Citigroup about $34 billion.

Additional reporting by Kitty Bennett, Krista Kjellman Schmidt, Lisa Schwartz and Karen Weise.


© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, cdo, citi, CitiGroup, concealment, conspiracy, CONTROL FRAUD, corruption, Credit Suisse, deutsche bank, Economy, goldman sachs, investigation, Merrill Lynch, racketeering, RICO, rmbs, stock, STOP FORECLOSURE FRAUD, trade secrets, Wall Street0 Comments

Cuneo, Gilbert & LaDuca, LLP and Liddle & Robinson, LLP Announce Class Action Lawsuit Against DJSP Enterprises

Cuneo, Gilbert & LaDuca, LLP and Liddle & Robinson, LLP Announce Class Action Lawsuit Against DJSP Enterprises

August 26, 2010 10:19 AM EDT

WASHINGTON, DC — (MARKET WIRE) — 08/26/10 — Cuneo Gilbert & LaDuca, LLP and Liddle & Robinson, LLP today announced that a class action has been commenced in the United States District Court for the Southern District of Florida on behalf of purchasers of the common stock of DJSP Enterprises, Inc. (“DJSP” or the “Company”) (NASDAQ: DJSP) between March 16, 2010 and May 10, 2010, inclusive (the “Class” and “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”).

Any person seeking to serve as lead plaintiff must move the Court no later than September 20, 2010. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Matt Miller, Esq. at Cuneo, Gilbert & LaDuca at 202-789-3960, or via e-mail at mmiller@cuneolaw.com. Any member of the Class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent Class member.

The Complaint charges DJSP and certain of its officers with violations of the Exchange Act. The Complaint alleges that, throughout the Class Period, defendants made material misrepresentations and failed to disclose material adverse facts about the Company’s true financial condition, business and prospects. Specifically, the Complaint alleges that the Company made positive representations concerning its present and future business prospects, when it knew or recklessly disregarded that (1) one of its largest clients would be drastically reducing its need for the Company’s services, and (2) the federal government’s efforts to slow down real estate foreclosures would also reduce demand for the Company’s services. According to the complaint, on May 27, 2010, the Company shocked the market by lowering its guidance for adjusted net income by $15 million to $17 million, and the price of the Company’s stock has fallen dramatically.

Cuneo Gilbert & LaDuca, a firm with offices in Washington, D.C., New York, Los Angeles and Alexandria, Va., specializes in the representation of plaintiffs in consumer, antitrust, civil rights and securities class actions and is active in major litigations pending in federal and state courts throughout the United States. The Cuneo Gilbert & LaDuca website (http://www.cuneolaw.com) has more information about the firm.

Liddle & Robinson, based in New York, represents individuals and financial services firms, hedge funds and other businesses in high-stakes, cutting-edge employment, securities and commercial litigation matters. The Liddle & Robinson website (http://www.liddlerobinson.com) has more information about the firm.

CONTACT:

Matt Miller
202-789-3960
Email Contact
© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in class action, concealment, conspiracy, CONTROL FRAUD, corruption, djsp enterprises, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, investigation, Law Offices Of David J. Stern P.A., lawsuit, stock, STOP FORECLOSURE FRAUD0 Comments

CLASS ACTION AMENDED against MERSCORP to include Shareholders, DJSP

CLASS ACTION AMENDED against MERSCORP to include Shareholders, DJSP

Kenneth Eric Trent, P.A. of Broward County has amended the Class Action complaint Figueroa v. MERSCORP, Inc. et al filed on July 26, 2010 in the Southern District of Florida.

Included in the amended complaint is MERS shareholders HSBC, JPMorgan Chase & Co., Wells Fargo & Company, AIG, Fannie Mae, Freddie Mac, WAMU, Countrywide, GMAC, Guaranty Bank, Merrill Lynch, Mortgage Bankers Association (MBA), Norwest, Bank of America, Everhome, American Land Title, First American Title, Corinthian Mtg, MGIC Investor Svc, Nationwide Advantage, Stewart Title,  CRE Finance Council f/k/a Commercial Mortgage Securities Association, Suntrust Mortgage,  CCO Mortgage Corporation, PMI Mortgage Insurance Company, Wells Fargo and also DJS Processing which is owned by David J. Stern.

MERSCORP shareholders…HERE

[ipaper docId=36456183 access_key=key-26csq0mmgo6l8zsnw0is height=600 width=600 /]

Related article:

______________________

CLASS ACTION FILED| Figueroa v. Law Offices Of David J. Stern, P.A. and MERSCORP, Inc.

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Posted in bank of america, chain in title, citimortgage, class action, concealment, CONTROL FRAUD, corruption, countrywide, djsp enterprises, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, Freddie Mac, HSBC, investigation, jpmorgan chase, Law Offices Of David J. Stern P.A., lawsuit, mail fraud, mbs, Merrill Lynch, MERS, MERSCORP, mortgage, Mortgage Bankers Association, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, non disclosure, notary fraud, note, racketeering, Real Estate, RICO, rmbs, securitization, stock, title company, trade secrets, trustee, Trusts, truth in lending act, wamu, washington mutual, wells fargo13 Comments

Florida Bar investigating “Foreclosure Mill” David J. Stern and DJSP Enterprises

Florida Bar investigating “Foreclosure Mill” David J. Stern and DJSP Enterprises

Friday, August 20, 2010

Florida Bar previously disciplined Stern

South Florida Business Journal – by Paul Brinkmann

David J. Stern, an attorney who is the target of a state civil investigation for mortgage fraud complaints, was previously disciplined by the Florida Bar for deceiving the courts and clients about his web of businesses that do legal support work.

The Bar also confirmed Aug. 16 that it is also investigating Stern for numerous allegations of violating attorney regulations, including whether his running of DJSP Enterprises, a publicly traded company, is in compliance.

Stern represents banks that are attempting to foreclose on residential mortgages. Stern, his law firm and DJSP Enterprises are exemplary of the wave of attorneys who have benefitted from the flood of foreclosures that gripped the nation over the last three years.

Stern received a public reprimand in 2002 for billing practices that made it appear he was paying other companies for work on title insurance, when he was actually using in-house staff.

Stern settled the 2002 Bar complaint by consenting to the reprimand before the Bar’s board of governors. In the reprimand, Bar President Tod Aronovitz said Stern’s practices were “misleading” to the courts and foreclosure defendants.

This summer, Stern is facing allegations that he has been similarly misleading to the courts. On Aug. 10, Florida Attorney General Bill McCollum said he was investigating Stern and two other law firms for allegations of unfair and deceptive actions in their handling of foreclosure cases.

Fabrications in the name of speed

It is alleged that the firms, in representing lenders, may have fabricated mortgage assignments in order to speed up the foreclosure process.

Stern’s attorney, Jeffrey Tew, has brushed off McCollum’s announcement by saying that Stern handled 100,000 cases in the last few years, and a few mistakes were inevitable.

Tew said this week that resolving the 2002 Bar complaint also involved Stern agreeing to have all staff who perform title insurance work to be on the payroll of a separate title company.

Tew, of Miami-based Tew Cardenas LLP, said any alleged deception from the 2002 complaint “was inadvertent on David’s part,” and “there hasn’t been any Bar discipline since 2002.”

Tew said Stern employs 1,200 paralegals in Plantation, and may have turned to using staff in Manila, Philippines, partly due to a lack of space.

“The Bar has approved the use of paralegals in other countries,” Tew said. “DJSP has a group of paralegals in Manila. He doesn’t necessarily have room for more here, and it may be partly related to pay scales also.”

Continue reading… Florida Bar previously disciplined Stern – South Florida Business Journal

_______________________________

RELATED STORIES:

Full Deposition of David J. Stern’s Notary | Para Legal Shannon Smith

__________________________________

STERN’S CHERYL SAMONS| SHANNON SMITH Assignment Of Mortgage| NOTARY FRAUD!

[ipaper docId=34497819 access_key=key-1v3hmd3whnpyout9rn6l height=600 width=600 /]

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Posted in concealment, conflict of interest, CONTROL FRAUD, corruption, djsp enterprises, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, investigation, Law Offices Of David J. Stern P.A., Mortgage Foreclosure Fraud, notary fraud, settlement, stock, STOP FORECLOSURE FRAUD, Violations0 Comments

DJSP Enterprises has been added to the Naked Short Sale list

DJSP Enterprises has been added to the Naked Short Sale list

Aug 17, 2010 (M2 PRESSWIRE via COMTEX) —

BUYINS.NET, www.buyins.net, announced today that these select companies have been added to the NASDAQ, AMEX and NYSE naked short threshold lists. Bay National Corp (OTC: BAYN), Extorre Gold Mines (OTC: EXGMF) and DJSP Enterprises (NASDAQ: DJSP). For a complete list of companies on the naked short lists please visit our web site. To find the SqueezeTrigger Price before a short squeeze starts in any stock, go to http://www.buyins.net .

DinSFLA here:

WWW.BUYINS.NET is a service designed to help bonafide shareholders of publicly traded US companies fight naked short selling. Naked short selling is the illegal act of short selling a stock when no affirmative determination has been made to locate shares of the stock to hypothecate in connection with the short sale.

According to the SEC site…

In a “naked” short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard three-day settlement period. As a result, the seller fails to deliver securities to the buyer when delivery is due; this is known as a “failure to deliver” or “fail.”

For further information on short selling, naked short selling, and threshold securities, please see the Division of Trading and Markets’ Key Points About Regulation SHO. Additional information relating to the SEC’s activities relating to short selling can be found in the SEC Spotlight on Short Sales.

http://www.sec.gov/answers/nakedshortsale.htm


© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in djsp enterprises, foreclosure, foreclosure mills, foreclosures, Law Offices Of David J. Stern P.A., naked short selling, stock1 Comment

EXCLUSIVE: Fannie and Freddie’s Foreclosure Barons

EXCLUSIVE: Fannie and Freddie’s Foreclosure Barons

How the federal housing agencies—and some of the biggest bailed-out banks—are helping shady lawyers make millions by pushing families out of their homes.

— By Andy Kroll

Wed Aug. 4, 2010 12:01 AM PDT

LATE ONE NIGHT IN February 2009, Ariane Ice sat poring over records on the website of Florida’s Palm Beach County. She’d been at it for weeks, forsaking sleep to sift through thousands of legal documents. She and her husband, Tom, an attorney, ran a boutique foreclosure defense firm called Ice Legal. (Slogan: “Your home is your castle. Defend it.”) Now they were up against one of Florida’s biggest foreclosure law firms: Founded by multimillionaire attorney David J. Stern, it controlled one-fifth of the state’s booming market in foreclosure-related services. Ice had a strong hunch that Stern’s operation was up to something, and that night she found her smoking gun.

It involved something called an “assignment of mortgage,” the document that certifies who owns the property and is thus entitled to foreclose on it. Especially these days, the assignment is key evidence in a foreclosure case: With so many loans having been bought, sold, securitized, and traded, establishing who owns the mortgage is hardly a trivial matter. It frequently requires months of sleuthing in order to untangle the web of banks, brokers, and investors, among others. By law, a firm must execute (complete, sign, and notarize) an assignment before attempting to seize somebody’s home.

A Florida notary’s stamp is valid for four years, and its expiration date is visible on the imprint. But here in front of Ice were dozens of assignments notarized with stamps that hadn’t even existed until months—in some cases nearly a year—after the foreclosures were filed. Which meant Stern’s people were foreclosing first and doing their legal paperwork later. In effect, it also meant they were lying to the court—an act that could get a lawyer disbarred or even prosecuted. “There’s no question that it’s pervasive,” says Tom Ice of the backdated documents—nearly two dozen of which were verified by Mother Jones. “We’ve found tons of them.”

This all might seem like a legal technicality, but it’s not. The faster a foreclosure moves, the more difficult it is for a homeowner to fight it—even if the case was filed in error. In March, upon discovering that Stern’s firm had fudged an assignment of mortgage in another case, a judge in central Florida’s Pasco County dismissed the case with prejudice—an unusually harsh ruling that means it can never again be refiled. “The execution date and notarial date,” she wrote in a blunt ruling, “were fraudulently backdated, in a purposeful, intentional effort to mislead the defendant and this court.”

Stern has made a fortune foreclosing on homeowners. He owns a $15 million mansion, four Ferraris, and a 130-foot yacht.

More often than not in uncontested cases, missing or problematic documents simply go overlooked. In Florida, where foreclosure cases must go before a judge (some states handle them as a bureaucratic matter), dwindling budgets and soaring caseloads have overwhelmed local courts. Last year, the foreclosure dockets of Lee County in southwest Florida became so clogged that the court initiated rapid-fire hearings lasting less than 20 seconds per case—”the rocket docket,” attorneys called it. In Broward County, the epicenter of America’s housing bust, the courthouse recently began holding foreclosure hearings in a hallway, a scene that local attorneys call the “new Broward Zoo.” “The judges are so swamped with this stuff that they just don’t pay attention,” says Margery Golant, a veteran Florida foreclosure defense lawyer. “They just rubber-stamp them.”

But the Ices had uncovered what looked like a pattern, so Tom booked a deposition with Stern’s top deputy, Cheryl Samons, and confronted her with the backdated documents—including two from cases her firm had filed against Ice Legal’s clients. Samons, whose counsel was present, insisted that the filings were just a mistake. She refused to elaborate, so the Ices moved to depose the notaries and other Stern employees whose names were on the evidence. On the eve of those depositions, however, the firm dropped foreclosure proceedings against the Ices’ clients.

It was a bittersweet victory: The Ices had won their cases, but Stern’s practices remained under wraps. “This was done to cover up fraud,” Tom fumes. “It was done precisely so they could try to hit a reset button and keep us from getting the real goods.”

Backdated documents, according to a chorus of foreclosure experts, are typical of the sort of shenanigans practiced by a breed of law firms known as “foreclosure mills.” While far less scrutinized than subprime lenders or Wall Street banks, these firms undermine efforts by government and the mortgage industry to put struggling homeowners back on track at a time of record foreclosures. (There were 2.8 million foreclosures in 2009, and 3.8 million are projected for this year.) The mills think “they can just change things and make it up to get to the end result they want, because there’s no one holding them accountable,” says Prentiss Cox, a foreclosure expert at the University of Minnesota Law School. “We’ve got these people with incentives to go ahead with foreclosures and flood the real estate market.”

PAPER TRAIL

View the documents featured in this story:

Federal Securities Fraud Suit, Cooper and Methi v. DJSP Enterprises, David J. Stern, and Kumar Gursahaney, July 2010

Class Action Racketeering Suit, Figueroa v. MERSCORP, Law Offices of David J. Stern, and David J. Stern, July 2010

Fair Debt Collection Violation Suit, Hugo San Martin and Melissa San Martin v. Law Offices of David J. Stern, July 2010

Class Action Suit for Fair Debt Collecting Violations, Rory Hewitt v. Law Offices of David J. Stern and David J. Stern, October 2009

Florida Bar, Public Reprimand, Complaint Against David J. Stern, Sept. 2002

Florida Bar, Public Reprimand, Consent Judgment Against David J. Stern, Oct. 2002

Freddie Mac Designated Counsel, Retention Agreement with Law Offices of David J. Stern, April 2003

Freddie Mac Designated Counsel, Memo to Law Offices of David J. Stern, March 2006

Amended Complaint Alleging Sexual Harassment, Bridgette Balboni v. Law Offices of David J. Stern and David J. Stern, July 1999

Stern’s is hardly the only outfit to attract criticism, but his story is a useful window into the multibillion-dollar “default services” industry, which includes both law firms like Stern’s and contract companies that handle paper-pushing tasks for other big foreclosure lawyers. Over the past decade and a half, Stern has built up one of the industry’s most powerful operations—a global machine with offices in Florida, Kentucky, Puerto Rico, and the Philippines—squeezing profits from every step in the foreclosure process. Among his loyal clients, who’ve sent him hundreds of thousands of cases, are some of the nation’s biggest (and, thanks to American taxpayers, most handsomely bailed out) banks—including Wells Fargo, Bank of America, and Citigroup. “A lot of these mills are doing the same kinds of things,” says Linda Fisher, a professor and mortgage-fraud expert at Seton Hall University’s law school. But, she added, “I’ve heard some pretty bad stories about Stern from people in Florida.”

While the mortgage fiasco has so far cost American homeowners an estimated $7 trillion in lost equity, it has made Stern (no relation to NBA commissioner David J. Stern) fabulously rich. His $15 million, 16,000-square-foot mansion occupies a corner lot in a private island community on the Atlantic Intracoastal Waterway. It is featured on a water-taxi tour of the area’s grandest estates, along with the abodes of Jay Leno and billionaire Blockbuster founder Wayne Huizenga, as well as the former residence of Desi Arnaz and Lucille Ball. (Last year, Stern snapped up his next-door neighbor’s property for $8 million and tore down the house to make way for a tennis court.) Docked outside is Misunderstood, Stern’s 130-foot, jet-propelled Mangusta yacht—a $20 million-plus replacement for his previous 108-foot Mangusta. He also owns four Ferraris, four Porsches, two Mercedes-Benzes, and a Bugatti—a high-end Italian brand with models costing north of $1 million a pop.

Despite his immense wealth and ability to affect the lives of ordinary people, Stern operates out of the public eye. His law firm has no website, he is rarely mentioned in the mainstream business press, and neither he nor several of his top employees responded to repeated interview requests for this story. Stern’s personal attorney, Jeffrey Tew, also declined to comment. But scores of interviews and thousands of pages of legal and financial filings, internal emails, and other documents obtained by Mother Jones provided insight into his operation. So did eight of Stern’s former employees—attorneys, paralegals, and other staffers who agreed to talk on condition of anonymity. (Most still work in related fields and fear that speaking publicly about their ex-boss could harm their careers.)

Continue readingMOTHER JONES

Andy Kroll is a reporter at Mother Jones. For more of his stories, click here. Email him with tips and insights at akroll (at) motherjones (dot) com. Follow him on Twitter here.

— Illustration: Lou Beach

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in chain in title, class action, CONTROL FRAUD, djsp enterprises, fannie mae, FDLG, florida default law group, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, Freddie Mac, investigation, Law Offices Of David J. Stern P.A., notary fraud, racketeering, RICO, robo signers, stock, STOP FORECLOSURE FRAUD, Wall Street1 Comment

ANOTHER |Robbins Umeda LLP Announces the Filing of a Class Action Suit against DJSP Enterprises, Inc.

ANOTHER |Robbins Umeda LLP Announces the Filing of a Class Action Suit against DJSP Enterprises, Inc.

SAN DIEGO, Jul 23, 2010 (BUSINESS WIRE) — Robbins Umeda LLP today announced that a class action has been commenced in the United States District Court for the Southern District of Florida (the “Court”) on behalf of purchasers of DJSP Enterprises, Inc. (“DJSP” or the “Company”) (DJSP 4.99, -0.09, -1.77%) common stock during the period between March 16, 2010 and May 27, 2010 (the “Class Period”).

DJSP is one of the largest providers of processing services for the mortgage and real estate industries in Florida and nationwide. The Company engages in providing non-legal services supporting real estate foreclosure, other related legal actions, and lender owned real estate services. The Company was founded in 1994 and is based in Plantation, Florida.

The complaint alleges that DJSP’s directors and officers issued materially false and misleading statements and failed to disclose adverse facts known to them regarding the Company’s business and financial results. As a result of these fiduciaries’ misstatements and omissions, DJSP’s stock traded at artificially inflated levels. The complaint charges DJSP and certain of its officers and directors with violations of the Securities Exchange Act of 1934.

Specifically, the complaint alleges that on March 16, 2010, DJSP filed a 6-K with the U.S. Securities and Exchange Commission in which it touted its quarterly results announced on March 11, 2010, and assured investors that regardless of the Obama Administration’s efforts to slow down real estate foreclosures, DSJP would continue to profit from continued defaults. Furthermore, investors were told that defaults would continue into subsequent years and that DJSP’s business would not be affected by government involvement in the mortgage market. Then in April 2010, one of DJSP’s largest clients began a foreclosure system conversion which substantially decreased the volume of foreclosures referred to the Company. Until that time, DJSP generated a significant amount of its revenue from the providing of ancillary services to referral clients.

According to the complaint, on May 27, 2010, the Company shocked the market by lowering its guidance for adjusted net income by $15 million to $17 million and for adjusted EBIDTA by $18 million to $22 million. DJSP attributed the lowered guidance to, (i) the foreclosure system conversion of one of its largest bank clients in April 2010, which resulted in a reduction in the referral of foreclosures filed; and (ii) a temporary slowdown in foreclosures due to governmental intervention programs. DJSP’s Executive Vice President and CEO explained that the reason this information was not conveyed to shareholders back in April 2010, was due to a belief that these issues would fix themselves.

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from July 20, 2010. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Gregory E. Del Gaizo, Esq. of Robbins Umeda LLP, at 800-350-6003 or by e-mail at inquiry@robbinsumeda.com.

Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.

Robbins Umeda LLP is a California-based law firm, which has significant experience representing investors in securities fraud class actions, merger-related shareholder class actions, and shareholder derivative actions. For more information about the firm, please go to http://www.robbinsumeda.com.

Advertisement

SOURCE: Robbins Umeda LLP

Robbins Umeda LLP
Gregory E. Del Gaizo, Esq., 800-350-6003
inquiry@robbinsumeda.com

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© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in class action, djsp enterprises, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, Law Offices Of David J. Stern P.A., lawsuit, stock, STOP FORECLOSURE FRAUD1 Comment

EXPLOSIVE!! COOPER vs. DJSP, ENTERPRISES, Inc. SUED FOR VIOLATIONS OF FEDERAL SECURITIES LAWS

EXPLOSIVE!! COOPER vs. DJSP, ENTERPRISES, Inc. SUED FOR VIOLATIONS OF FEDERAL SECURITIES LAWS

COMPLAINT FOR VIOLATIONS OF

THE FEDERAL SECURITIES LAWS

Cooper et al v. DJSP Enterprises, Inc. et al
Filed: July 20, 2010 as 0:2010cv61261 Updated: July 20, 2010 21:15:00
Plaintiffs: Neeraj Methi and Stan Cooper
Defendants: David J. Stern, DJSP Enterprises, Inc. and Kumar Gursahaney
Presiding Judge: William J. Zloch
Referring Judge: Robin S. Rosenbaum
Cause Of Action: Securities Exchange Act
Court: Eleventh Circuit > Florida > Southern District Court
Type: Other Statutes > Securities/Commodities…

[ipaper docId=34650766 access_key=key-o3guj9p65fs5mzgvpv2 height=600 width=600 /]

After reading this, why don’t you take a hop over and take a listen to an audio recording of Mr. Stern at a recent DJSP Conference. Oh and Mr. Obama…According to Mr. Stern we will see historical levels of foreclosures going well into 2017 seems like “A Plan” for the future of whats to come?

No matter what Obama rolls out, there is no stopping this inflow of continued defaults that we anticipate to go for another two or three years late behind that is the math of REO’s that need to be liquidated and at the end of the day, the cycle will start again. Well, foreclosure volumes through 2012 are expected to increase dramatically and remain at high levels going on till 2017″

It’s a little hard to listen to him because he sounds too excited and on helium but trust me it was close enough to what he says. I wonder if his “Clients” would be pleased to listen to this convo detailing what’s in store for the future?

He did say one thing that caught my attention…”there is 50,000 REO’s in Florida that are not in the system” or something like that…Go ahead and take a listen for yourself…I am not quite certain what to make of all this …if it’s even legal? Where is the Client-Attorney Privilege? http://www.americansunitedforjustice.org/Stern.html

Posted in djsp enterprises, Law Offices Of David J. Stern P.A., stock, STOP FORECLOSURE FRAUD3 Comments

THE FLORIDA BAR vs. DAVID J. STERN

THE FLORIDA BAR vs. DAVID J. STERN

I wonder if this was disclosed on DJSP Enterprise’s Prospectus letting investors be aware of this below…

David James Stern, 801 S. University Drive, Ste. 500, Plantation, reprimanded for professional misconduct following an October 24 court order. (Admitted to practice: 1991) Prior to 1999, Stern’s law firm filed potentially misleading affidavits in connection with abstraction work performed for foreclosures handled by the firm. Stern used personnel employed by his law firm to do the abstracting work rather than employees of his title company.(Case no. SC02-1991)

His address is also 900 South Pine Island Road Ste 400, Plantation FL 33324

Yoo Hoo….Bar you mean like this….HERE

[ipaper docId=34497819 access_key=key-1v3hmd3whnpyout9rn6l height=600 width=600 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in djsp enterprises, foreclosure, foreclosure mills, foreclosures, Law Offices Of David J. Stern P.A., stock1 Comment

CAUGHT on VIDEO | DENNINGER ON MARKET MANIPULATION

CAUGHT on VIDEO | DENNINGER ON MARKET MANIPULATION

via kdenninger | July 04, 2010

It’s unlawful to enter an order into a securities market for the purpose of attempting to manipulate the price – that is, to express other than a genuine intent to buy or sell.

It happens every day. But tonight, it’s especially blatant, so I captured it and present it here for you.


© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in corruption, S.E.C., stock0 Comments

VIDEO: DJSP Enterprises Chart 6/9/2010

VIDEO: DJSP Enterprises Chart 6/9/2010

DJSP Video Chart

The DJSP video chart is more than a chart to watch; iIt is a basic lesson in combining 15 minute charts with daily charts in technical analysis.

SOURCE: QualityStocks.net

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in djsp enterprises, foreclosures, Law Offices Of David J. Stern P.A., stock0 Comments

DJSP Enterprises – Kaplan Fox Investigates Possible Securities Laws Violations NYTIMES ARTICLE TO FOLLOW!

DJSP Enterprises – Kaplan Fox Investigates Possible Securities Laws Violations NYTIMES ARTICLE TO FOLLOW!

You DO NOT want to be on this firms radar…they investigate Corporate Fraud and this is the 2nd firm to launch an investigation against DJSP Enterprises.

New York – May 28, 2010 – Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) has been investigating DJSP Enterprises (“DSJP” or the “Company”) (Symbol: DJSP) for potential violations of the federal securities laws.  Investors who purchased Company securities since April 1, 2010 may be affected.

On May 28, 2010, DJSP plunged by $2.59, or 29.2%, to $6.28 after the real-estate foreclosure services company posted weaker-than-expected first-quarter results and warned investors of a full-year earnings shortfall.

DJSP said it had a first-quarter adjusted profit of 35 cents a share, which was a nickel below the Thomson Reuters average estimate.

DJSP said that in April one of its largest bank clients initiated a foreclosure system conversion that cut the number of foreclosures. Because of the foreclosure system conversion and the U.S. government’s steps to prevent foreclosures, DJSP said it expects full-year earnings of $1.29 to $1.36 a share, which is below consensus. Volume topped 3.13 million shares, compared to the 50-day average daily volume of 190,000.

If you purchased DJSP publicly traded securities and would like to discuss our investigation, please e-mail us at mail@kaplanfox.com or contact:

Frederic S. Fox
Joel B. Strauss
Donald R. Hall
Hae Sung Nam
Jeffrey P. Campisi
Pamela A. Mayer

KAPLAN FOX & KILSHEIMER LLP
850 Third Avenue, 14th Floor
New York, New York 10022
(800) 290-1952
(212) 687-1980
Fax: (212) 687-7714
E-mail address: mail@kaplanfox.com

Laurence D. King
KAPLAN FOX & KILSHEIMER LLP
350 Sansome Street, Suite 400
San Francisco, California  94104
(415) 772-4700
Fax:  (415) 772-4707
E-mail address: mail@kaplanfox.com

DinSFLA Here: —–>Heads Up! See Red Text!

According to www.seekingalpha.com’s contributor Glen Bradford on 5/28/2010 he states

“I listened into the conference call. Lowered guidance in most situations comes from future problems down the pipeline. That isn’t the case this time. Lowered guidance this time is just a temporary setback. Company prices should be a discount of their future earnings — and in this case, the discrepancy between price and value appears to be fairly large right now. The main points:

In the Q&A section, someone yelled at David Stern for not disclosing this setback through an 8-K earlier. In my opinion, taking all things into consideration, David Stern has been making the right judgment calls. The future for foreclosure processing is brighter than ever.

There is currently a rumor circulating suggesting that foreclosure processing is being pushed back another thirty (30) days for mid-summer election purposes.

David Stern has been getting phone calls from his customers on a daily basis to make sure that DJSP has the capacity to handle a future ramp up in capacity.

Two of their largest customers are merging, and in my opinion, this is going to make Q2 and maybe the beginning of Q3 temporarily weak. That said, I would argue that DJSP is incredibly likely to continue working with this new merged entity and get the backlog of foreclosures that they have built up.

Fannie Mae (FNM) and Freddie Mac (FRE) have been touring the facilities to make sure that DJSP has the capacity to ramp up processing.

They are in the process of picking up a second REO customer in my opinion, but the time that it takes to ramp up here might push those earnings into Q1 2011 at this point.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in djsp enterprises, investigation, Law Offices Of David J. Stern P.A., stock0 Comments

Fannie, Freddie to scrap NYSE stock listings

Fannie, Freddie to scrap NYSE stock listings

By Greg Morcroft , MarketWatch

NEW YORK (MarketWatch) – In another sign of the firms’ financial disintegration, Freddie Mac and Fannie Mae, the giant mortgage finance companies operating in government conservatorship, said Wednesday they are delisting their common and preferred stocks from the New York Stock Exchange.

Freddie /quotes/comstock/13*!fre/quotes/nls/fre (FRE 1.22, +0.02, +1.67%) said in a press release that, “this notice was made pursuant to a directive by the Federal Housing Finance Agency, Freddie Mac’s conservator, requiring Freddie Mac to delist its common and preferred securities from the NYSE.”

According to a press release by FHFA, the agency issued similar directives to both Freddie Mac and Fannie Mae (FNM 0.92, +0.01, +1.14%) .

Freddie said it expects its shares to trade in the over-the-counter bulletin board market after the delisting. The delisting should occur around July 8, the firm said.

Shortly after Freddie’s announcement, Fannie Mae said that it too is delisting its common and preferred shares from the New York Stock Exchange and the Chicago Stock Exchange after being told to take the move by its regulator.

The U.S. government established Fannie Mae in 1938 to make mortgages more available to low income families. In 1979, the government created Freddie Mac, to expand the market for mortgages in the country.

Both firms were put into government conservatorship in August 2008, after the U.S. housing market collapsed, triggering the worst financial crisis since the Great Depression.

Greg Morcroft is MarketWatch’s financial editor in New York.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in foreclosure, foreclosure fraud, foreclosures, stock0 Comments

OFFICIAL! CLASS ACTION FIRM Statman, Harris & Eyrich, LLC Announces Investigation of DJSP Enterprises, Inc.

OFFICIAL! CLASS ACTION FIRM Statman, Harris & Eyrich, LLC Announces Investigation of DJSP Enterprises, Inc.

FL BROWARD COUNTY very own DJSP aka TOP FORECLOSURE FIRM Law Office of David J. Stern has alleged to have unloaded OVER 28% shares as it tanked!

CINCINNATI, Jun 14, 2010 (GlobeNewswire via COMTEX) — Attorney Advertising

The class action law firm of Statman, Harris & Eyrich, LLC announced today that it is investigating DJSP Enterprises, Inc. (“DJSP” or the “Company”) (DJSP 6.29, +0.04, +0.64%) for potential violations of state and federal securities laws. The affected stock was purchased between March 11, 2010 and May 27, 2010.

The firm’s investigation was triggered on May 27, 2010, when DJSP announced its operating results for the first quarter 2010. DJSP revealed that the Company would be unable to meet its earnings estimates and revised its earnings guidance from $1.83 to $1.29-1.36 EPS.

As a direct result, on May 28, 2010, DJSP’s stock fell to $6.38 per share, a decline of over 28% on unusually high trading volume.

Shareholders who purchased DJSP stock between March 11, 2010 and May 27, 2010 may have a claim against the Company and are encouraged to contact attorney Melinda Nenning at (513) 658-8867 or mnenning@statmanharris.com for further information without any obligation or cost to you.

Statman, Harris & Eyrich, LLC has offices in Chicago, Illinois; Cincinnati, Ohio; and Dayton, Ohio. www.statmanharris.com

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Statman, Harris & Eyrich, LLC

CONTACT:  Statman, Harris & Eyrich, LLC
Melinda S. Nenning, Esq.
(513) 658-8867
Toll-Free: (888) 876-7881
mnenning@statmanharris.com
441 Vine Street, Suite 3700
Cincinnati, Ohio 45202

(C) Copyright 2010 GlobeNewswire, Inc. All rights reserved.
© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in djsp enterprises, foreclosure, foreclosure fraud, foreclosure mills, insider, investigation, Law Offices Of David J. Stern P.A., lawsuit, stock2 Comments

***BREAKING NEWS*** David J. Sterns “DJSP Enterprises, Inc” under INVESTOR INVESTIGATION

***BREAKING NEWS*** David J. Sterns “DJSP Enterprises, Inc” under INVESTOR INVESTIGATION

I recently made a post about Shares of DJSP Enterprises Get SLAMMED….FALL 25%. Are we seeing a DownTrend?
Stock fell from $13.65 to $4.94 in 5 months!!!

I guess now we know what may be happening…Stay tuned as I will be watching closely!

Investigation on behalf of investors in DJSP Enterprises, Inc (NASDAQ:DJSP) over possible securities laws violations – Contact the Shareholders Foundation, Inc

mail@shareholdersfoundation.com

mail@shareholdersfoundation.com

FOR IMMEDIATE RELEASE

PRLog (Press Release)Jun 01, 2010 – An investigation on behalf of investors in DJSP Enterprises, Inc (NASDAQ:DJSP) securities over possible violations of Federal Securities Laws by DJSP Enterprises was announced.

If you are an investor in DJSP Enterprises, Inc (NASDAQ:DJSP) securities, you have certain options and you should contact the Shareholders Foundation, Inc by email at mail@shareholdersfoundation.com or call +1 (858) 779 – 1554.

DJSP Enterprises, Inc., located in Plantation, Florida, through its subsidiary, DAL Group, LLC, engages in providing non-legal services supporting residential real estate foreclosure, other related legal actions, and lender owned real estate services in the United States. DJSP Enterprises, Inc reported in 2009 Total Revenue of $260.269million with a Net Income of $44.565million. According to the investigation by a law firm the investigation on behalf of investors in DJSP stock focuses on the following events. On May 28, 2010, DJSP Enterprises declined by $2.59, or 29.2%, to $6.28 after DJSP Enterprises posted weaker-than-expected first-quarter results and warned investors of a full-year earnings shortfall. DJSP Enterprises said it had a first-quarter adjusted profit of 35 cents a share, which was a nickel below the Thomson Reuters average estimate.

DJSP Enterprises said that in April one of its largest bank clients initiated a foreclosure system conversion that cut the number of foreclosures. Because of the foreclosure system conversion and the U.S. government’s steps to prevent foreclosures, DJSP Enterprises said it expects full-year earnings of $1.29 to $1.36 a share, which is below consensus. Volume topped 3.13 million shares, compared to the 50-day average daily volume of 190,000, so the investigation. Shares of DJSP Enterprises, Inc (DJSP) traded recently at $6.38 per share, down from its 52weekHigh of $13.65 per share.

Those who are investors in DJSP Enterprises, Inc (NASDAQ:DJSP) securities, you have certain options and you should contact the Shareholders Foundation, Inc by email at mail@shareholdersfoundation.com or call +1 (858) 779 – 1554.


# # #

The Shareholders Foundation, Inc. is an investor advocacy group. We do research related to shareholder issues and inform investors of securities class actions, settlements, judgments, and other legal related news to the stock/financial market. At Shareholders Foundation, Inc. we are in contact with a large number of shareholders. We believe that together we can combine the interests of many investors, and use the size of our interest as leverage against the giant corporations. We offer help, support, and assistance for every shareholder. We help investors find answers to their questions and equitable solutions to their problems. The Shareholders Foundation, Inc. is not a law firm. The information is provided as a public service. It is not intended as legal advice and should not be relied upon.

RELATED STORY:

ARE FORECLOSURE MILLS Coercing Buyers for BANK OWNED homes? ARE ALL THE MILLS?

Law Firm of David J. Stern (DJSP) Appears to Be Under State And Federal Investigation For Fraud, Stern Law Firm Even Has It’s Own “Michael Clayton”.


© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in djsp enterprises, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, insider, investigation, Law Offices Of David J. Stern P.A., stock0 Comments


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