Tag Archive | "Abacus"

ACA Financial Guaranty Sues Goldman Sachs for Fraud

ACA Financial Guaranty Sues Goldman Sachs for Fraud

Suit Seeks $30 Million in Compensatory and $90 Million in Punitive Damages from Goldman
Sachs Over Its Role in Developing and Marketing the Synthetic CDO “ABACUS”

New York, NY — January 6, 2011 — ACA Financial Guaranty Corporation (ACA), a monoline
bond insurance company now operating in run off, filed suit today against Goldman Sachs & Co.
(Goldman Sachs) for fraud and unjust enrichment in connection with a synthetic collateralized
debt obligation (CDO) called ABACUS 2007-AC1 (ABACUS), which Goldman Sachs
developed and sold on behalf of its hedge fund client Paulson & Co. Inc. (Paulson) in 2007.
ACA was misled by Goldman’s fraudulent activities and is seeking $30 million in compensatory
and $90 million in punitive damages.

According to the complaint, filed in the Commercial Division of the Supreme Court of the State
of New York, New York County, this fraud action arises from the egregious conduct of Goldman
Sachs in developing and marketing ABACUS based on a portfolio of investment securities
selected largely by its hedge fund client, Paulson. Goldman Sachs’s scheme was to design
ABACUS to fail, so that Paulson could reap huge profits by shorting the portfolio and Goldman
Sachs could reap huge investment banking fees. Goldman Sachs fraudulently induced ACA to
take a long position in and provide guaranty insurance for ABACUS. Goldman Sachs did so by
deceiving ACA into believing that Paulson also was to be a long investor in ABACUS. In fact,
as Goldman Sachs knew, Paulson intended instead to take an enormous short position in
ABACUS, reaping nearly $1 billion when the portfolio failed.

As the complaint alleges: “ABACUS was worthless at the time Goldman Sachs marketed it to
ACA. Had Paulson’s true role as a short investor selecting the portfolio been known, neither
ACA nor anyone else would have taken a long position in it. Because of Goldman Sachs’s
deceit — which led ACA to reasonably believe that ABACUS was a valuable product selected by
the equity investor with identical objectives — ACA invested in what was in fact a worthless
product. Goldman Sachs engaged in this egregious misconduct notwithstanding that it expressly
acknowledged that its participation presented ‘reputational risk’ and after at least one other major
investment bank declined to participate for that very reason.” Goldman Sachs has since settled
SEC civil charges arising out of this fraudulent conduct, agreeing to pay a $550 million fine.

ACA is represented by Marc E. Kasowitz of Kasowitz, Benson, Torres & Friedman LLP.

About ACA Financial Guaranty Corporation
Founded in 1997, ACA Financial Guaranty Corporation is a monoline bond insurance company
licensed in 50 states and 5 territories and regulated by the Maryland Insurance Administration.
On August 8, 2008, the Company and counterparties to its structured finance products reached an
agreement on a restructuring plan for ACA. The plan, approved by the Maryland Insurance
Administration, provided for settlement of the structured finance obligations and protection for
ACA’s municipal policyholders. ACA will operate as a runoff insurance company and focus on
actively monitoring its remaining insured municipal obligations. ACA’s portfolio consists of
approximately 700 policies guarantying timely payment of principal and interest on more than $7
billion of generally high yield municipal bonds.

Elliot Sloane

Whit Clay

Read Complaint Below…

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© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

Posted in STOP FORECLOSURE FRAUDComments (1)

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:


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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© 2010-19 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 StreetComments (1)

Handcuffs for Wall Street, Not Happy-Talk

Handcuffs for Wall Street, Not Happy-Talk

“If the people cannot trust their government to do the job for which it exists
– to protect them and to promote their common welfare – all else is lost.”
– BARACK OBAMA, speech, Aug. 28, 2006

Zach Carter

Zach Carter

Economics Editor, AlterNet; Fellow, Campaign for America’s Future

Posted: September 12, 2010 02:52 PM

The Washington Post has published a very silly op-ed by Chrystia Freeland accusing President Barack Obama of unfairly “demonizing” Wall Street. Freeland wants to see Obama tone down his rhetoric and play nice with executives in pursuit of a harmonious economic recovery. The trouble is, Obama hasn’t actually deployed harsh words against Wall Street. What’s more, in order to avoid being characterized as “anti-business,” the Obama administration has refused to mete out serious punishment for outright financial fraud. Complaining about nouns and adjectives is a little ridiculous when handcuffs and prison sentences are in order.

Freeland is a long-time business editor at Reuters and the Financial Times, and the story she spins about the financial crisis comes across as very reasonable. It’s also completely inaccurate. Here’s the key line:

“Stricter regulation of financial services is necessary not because American bankers were bad, but because the rules governing them were.”

Bank regulations were lousy, of course. But Wall Street spent decades lobbying hard for those rules, and screamed bloody murder when Obama had the audacity to tweak them. More importantly, the financial crisis was not only the result of bad rules. It was the result of bad rules and rampant, straightforward fraud, something a seasoned business editor like Freeland ought to know. Seeking economic harmony with criminals seems like a pretty poor foundation for an economic recovery.

The FBI was warning about an “epidemic” of mortgage fraud as early as 2004. Mortgage fraud is typically perpetrated by lenders, not borrowers — 80 percent of the time, according to the FBI. Banks made a lot of quick bucks over the past decade by illegally conning borrowers. Then bankers who knew these loans were fraudulent still packaged them into securities and sold them to investors without disclosing that fraud. They lied to their own shareholders about how many bad loans were on their books, and lied to them about the bonuses that were derived from the entire scheme. When you do these things, you are stealing lots of money from innocent people, and you are, in fact, behaving badly (to put it mildly).

The fraud allegations that have emerged over the past year are not restricted to a few bad apples at shady companies– they involve some of the largest players in global finance. Washington Mutual executives knew their company was issuing fraudulent loans, and securitized them anyway without stopping the influx of fraud in the lending pipeline. Wachovia is settling charges that it illegally laundered $380 billion in drug money in order to maintain access to liquidity. Barclays is accused of illegally laundering money from Iran, Sudan and other nations, jumping through elaborate technical hoops to conceal the source of their funds. Goldman Sachs set up its own clients to fail and bragged about their “shitty deals.” Citibank executives deceived their shareholders about the extent of their subprime mortgage holdings. Bank of America executives concealed heavy losses from the Merrill Lynch merger, and then lied to their shareholders about the massive bonuses they were paying out. IndyMac Bank and at least five other banks cooked their books by backdating capital injections.

Continue reading…..The  Huffington Post

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

Posted in Bank Owned, citi, conspiracy, Economy, FED FRAUD, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, goldman sachs, hamp, indymac, investigation, jobless, lehman brothers, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., OCC, racketeering, RICO, rmbs, Wall Street, wamu, washington mutual, wells fargoComments (0)

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