Bank of America Corp. | FORECLOSURE FRAUD | by DinSFLA

Tag Archive | "Bank of America Corp."




Q. At the point in time of this board
meeting, though, you were relating to the board
that you felt you had a commitment from the Fed and
the Treasury to make good on whatever harm is
caused by the increased losses at Merrill Lynch; is
that right?

A. I had verbal commitments from Ben
Bernanke and Hank Paulson that they were going to
see this through, to fill that hole, and have the
market perceive this as a good deal.

MR. CORNGOLD: Isn’t the only way to
fill that hole, though, to give you money,
not to give you money that you would have to
pay back at some interest rate with some
potential equity interest, too?

THE WITNESS: No. I think you have to
separate the fact that, yes, there is still
some short-term paying -it’s more
short-term paying now than we would have had
had all this not happened, but longer term we
still see a strategic benefit. So we saw it
as a short term versus a long term impact on
the company.

MR. CORNGOLD; When you entered into the
initial contract with Merrill Lynch did you
get a fairness opinion about the transaction?


MR. CORNGOLD: From whom?

THE WITNESS; Chris Flowers something.

MR. CORNGOLD: And did you get a
fairness opinion from anyone about the
transaction that you entered into with the federal government and the Fed?

THE WITNESS: No. MR. CORNGOLD: Did you consider whether you had a legal obligation to do that? THE WITNESS: I would rely on the advice of the general counsel for that.

MR. CORNGOLD: But when you say that, does that mean that you asked and got advice, or that you didn’t ask but relied
THE WITNESS: I would rely on somebody bringing that question forth, and nobody did.

Q. Did you ask anyone to look into whether the oral, verbal commitments from the Fed and Treasury were enforceable?

A. No. I was going on the word of two very respected individuals high up in the American government.

Q. Wasn’t Mr. Paulson, by his instruction, really asking Bank of America shareholders to take a good part of the hit of the Merrill losses?

A. What he was doing was trying to stem a financial disaster in the financial markets, from his perspective.

Q. From your perspective, wasn’t that one
of the effects of what he was doing?

A. Over the short term, yes, but we still
thought we had an entity that filled two big
strategic holes for us and over long term would
still be an interest to the shareholders.

Q. What do you mean by “short term”?

A. Two to three years.

Q. So isn’t that something that any
shareholder at Bank of America who had less
than a three-year time horizon would want
to know?

A. The situation was that everyone felt
like the deal needed to be completed and to be able
to say that, or that they would impose a big risk
to the financial system if it would not.

MR. LAWSKY: When you say “everyone,”
what do you mean?

THE WITNESS: The people that I was
talking to, Bernanke and Paulson.

MR. LAWSKY: Had it been up to you would
you made the disclosure?

THE WITNESS: It wasn’t up to me.

MR. LAWSKY: Had it been up to you.

THE WITNESS: It wasn’t.

MR. CORNGOLD: Why do you say it wasn’t
up to you? Were you instructed not to tell
your shareholders what the transaction was
going to be?

THE WITNESS: I was instructed that “We
do not want a public disclosure.”

MR. CORNGOLD: Who said that to you?


MR. CORNGOLD: When did he say that to

THE WITNESS; Sometime after I asked Ben
Bernanke for something in writing.

Q. When did that occur?

A. Which one?

Q. When did Mr. Paulson state that he did
not want a public disclosure?

A. It was sometime late in the year. I
think it’s actually in the minutes.

MR. LIMAN: If you have the next set of
minutes it might help the witness.

Q. What’s your best recollection of what

Mr. Paulson said to you on that point?

A. That was the conversation that I
mentioned that I went to Bernanke to ask the
question, and he didn’t call me back but Hank did.
The request was for a letter stating what they
would do, and he had those two elements in there.
But the thing that we’re talking about is that he
said “We do not want a public disclosure.”

Q. A public disclosure of what?

A. Of what they were going to be doing for us until it was completed.


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

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For Bank of America, a $50 Billion Claim of Havoc Looms – SKLAR v. BANK OF AMERICA

For Bank of America, a $50 Billion Claim of Havoc Looms – SKLAR v. BANK OF AMERICA


Bank of America’s potential liability for bad mortgages — in the tens of billions of dollars — is well known. But Bank of America is haunted by other demons from the financial crisis, the most significant one being a lawsuit arising from its troubled Merrill Lynch acquisition.

This lawsuit, brought by Bank of America shareholders, claims that Bank of America and its executives, including its former chief executive, Kenneth D. Lewis, failed to disclose what would be a $15.31 billion loss at Merrill in the days before and after the acquisition. The plaintiffs contend that this staggering loss was hidden to ensure that Bank of America shareholders did not vote against the transaction.


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

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FULL COMPLAINT | Cambridge Place Investment Management Inc. v. Morgan Stanley, 10-2741, Suffolk Superior Court (Boston)

FULL COMPLAINT | Cambridge Place Investment Management Inc. v. Morgan Stanley, 10-2741, Suffolk Superior Court (Boston)

[ipaper docId=34161218 access_key=key-hnn1p8grrpy85crm4rc height=600 width=600 /]

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Mortgage Investors Suing For MBS FRAUD… Is your Trust named?

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

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Too BIG to Fail, Too BIG for Jail? Bid-Rigging Conspiracy

Too BIG to Fail, Too BIG for Jail? Bid-Rigging Conspiracy

March 26 (Bloomberg) — JPMorgan Chase & Co., Lehman Brothers Holdings Inc. and UBS AG were among more than a dozen Wall Street firms involved in a conspiracy to pay below-market interest rates to U.S. state and local governments on investments, according to documents filed in a U.S. Justice Department criminal antitrust case.

A government list of previously unidentified “co- conspirators” contains more than two dozen bankers at firms also including Bank of America Corp., Bear Stearns Cos., Societe Generale, two of General Electric Co.’s financial businesses and Salomon Smith Barney, the former unit of Citigroup Inc., according to documents filed in U.S. District Court in Manhattan on March 24.

The papers were filed by attorneys for a former employee of CDR Financial Products Inc., an advisory firm indicted in October. The attorneys, as part of their legal filing, identified the roster as being provided by the government. The document is labeled “list of co-conspirators.”

None of the firms or individuals named on the list has been charged with wrongdoing. The court records mark the first time these companies have been identified as co-conspirators. They provide the broadest look yet at alleged collusion in the $2.8 trillion municipal securities market that the government says delivered profits to Wall Street at taxpayers’ expense.

‘Sufficient Evidence’

“If the government is saying they are co-conspirators, the government believes they have sufficient evidence that they can show they were part of the conspiracy,” said Richard Donovan, a partner at New York-based law firm Kelley Drye & Warren LLP and co-chair of its antitrust practice. Donovan isn’t involved in the case.

The government’s case centers on investments known as guaranteed investment contracts that cities, states and school districts buy with the money they receive through municipal bond sales. Some $400 billion of municipal bonds are issued each year, and localities use the contracts to earn a return on some of the money until they need it for construction or other projects.

The Internal Revenue Service sometimes collects earnings on those investments and requires that they be awarded by competitive bidding to ensure that governments receive a fair return. The government charges that CDR ran sham auctions that allowed the banks to pay below-market interest rates to local governments.

CDR Fights Case

CDR, a Los Angeles-based local-government adviser, was indicted in October along with David Rubin, Zevi Wolmark and Evan Zarefsky, three current or former executives. The company and the three men have denied wrongdoing. Since last month, three former CDR employees who weren’t charged in the initial indictment have pleaded guilty and agreed to cooperate with the Justice Department.

More than a dozen financial firms are also facing civil suits filed by municipalities over the alleged conspiracy. Yesterday, U.S. District Judge Victor Marrero in Manhattan refused to toss out a lawsuit brought by Mississippi and other bond issuers.

Brian Marchiony, a spokesman for JPMorgan in New York; Doug Morris, a spokesman for UBS in New York; and Danielle Romero- Apsilos, a spokeswoman for Citigroup in New York, all declined to comment. A Societe Generale spokesman, Jim Galvin; Lehman spokeswoman Kimberly MacLeod, and GE Capital spokesman Ned Reynolds in Stamford, Connecticut, also declined to comment. Bank of America spokeswoman Shirley Norton in San Francisco declined to comment. Bear Stearns was bought by JPMorgan in 2008, the same year Lehman Brothers collapsed.

‘Absolute Disaster’

Laura Sweeney, a Justice Department spokeswoman in Washington, declined to comment.

Banks may choose to cooperate with prosecutors because in light of the government bailout funds they’ve received “a guilty plea would just be an absolute disaster for some of these companies,” said Nathan Muyskens, a partner at Shook, Hardy & Bacon in Washington and former trial attorney with the Federal Trade Commission’s Bureau of Competition.

“There have been antitrust investigations where there have been companies involved that were just never indicted,” he said in a phone interview.

At the same time, the government will probably focus on seeking to convict individual bankers, he said.

“When someone goes to jail for five years, that resonates,” he said. “When a company pays $200 million, it’s simply a balance sheet issue. Jail time is what captures corporate America’s attention.”

Lawyers’ Filing

In a court filing yesterday, defense lawyers said they “inadvertently” included the names of individual and company co-conspirators in a motion asking the court to compel the government to provide more specific evidence of the alleged misconduct. They asked the court to strike the entire exhibit in which the list appears. Judge Marrero granted the request.

The government’s probe became public in 2006 when federal investigators raided CDR and two competitors and issued subpoenas to more than a dozen firms. The “co-conspirators” on the list released in court this week also included Wachovia Corp., which was purchased by San Francisco-based Wells Fargo & Co. in 2008. Elise Wilkinson, a Wells Fargo spokeswoman in Charlotte, North Carolina, didn’t return a call today seeking comment.

October Indictments

The indictments released in October didn’t identify any of the sellers of the investment contracts involved in the alleged conspiracy. They were identified only as Provider A and Provider B. They paid kickbacks to CDR after winning investment deals brokered by the firm, according to the indictments.

The firms did this by paying sham fees tied to financial transactions entered into with other companies, prosecutors said. Kickbacks were paid from 2001 to 2005, ranging from $4,500 to $475,000 each, according to the Justice Department.

According to the list contained in the court filing this week, the investment contracts involved were created by units of GE and divisions of Financial Security Assurance Holdings Ltd., a bond insurer formerly part of Brussels-based lender Dexia SA.

The kickbacks were paid out of fees generated by transactions entered into with two financial institutions that weren’t identified in the October court filing. The March 24 list filed by the defense named the two firms as UBS and Royal Bank of Canada.

Dexia Sale

Dexia completed the sale of FSA’s bond-insurance business in July to Assured Guaranty Ltd. of Hamilton, Bermuda, while retaining its outstanding investment contracts.

Thierry Martiny, a spokesman for Dexia in Brussels, declined to comment. FSA, based in New York, was the biggest insurer of U.S. municipal bonds in 2007 and 2008.

“We have no comment,” said Betsy Castenir, a spokeswoman for Assured Guaranty in New York, in an e-mail response. “Dexia has responsibility for the liabilities of the Financial Products business.”

Royal Bank of Canada “has been fully cooperating with the government,” Kevin Foster, a spokesman for the bank in New York, said in an e-mailed statement. “We have no knowledge or evidence of wrongdoing by any of our employees.”

The case is U.S. v. Rubin/Chambers, Dunhill Insurance Services Inc., 09-CR-01058, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: William Selway in San Francisco at; Martin Z. Braun in New York at

Last Updated: March 26, 2010 13:09 EDT

Posted in bank of america, bloomberg, chase, citi, concealment, conspiracy, corruption, jpmorgan chase, wachoviaComments (0)

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