Category: Justice

Whiskey Tango Foxtrot?

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The power of wishful thinking

Representative Louise Slaughter has suggested during an interview on Olbermann and she suggested that, because of Clarence Thomas’s repeated violation of conflict of interest statutes that his votes might be subject to retroactive recusal.

Rep. Slughter’s suggestion as a remedy is just wishful thinking.

There is a remedy, and it’s called impeachment, and the idea that Chief Justice Roberts as head of the judicial ethics commission would refer this to the Department of Justice is ludicrous.

Oh, Now I Get It!!!!!!

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It seems like ir was just earlier this evening, I was wondering what political calculus could be driving numerous states Attorneys General to walk away from the so-called “50 State Deal” on “Robosigning”.  (Wait, it was just earlier this evening)

Well, now we know why.  The New York Times just described the recent transition of New York AG Schneiderman from a very (for New York, anyway) low key Attorney General to Political superstar:

The other day, in his office down on Wall Street, Eric T. Schneiderman owned up to an awkward truth.

Until fairly recently, he acknowledged, if you had asked the average passer-by to name New York’s attorney general, you might have gotten a mystified “Huh?” or the answer that it was Andrew M. Cuomo (the governor who used to have the job) or Eliot Spitzer (the disgraced former governor who had it before that), rather than the correct response: Mr. Schneiderman.

In the eight months since he has assumed the office, the emphatically unglamorous Mr. Schneiderman has maintained a low profile for the state’s top law-enforcement officer, charting a busy but anonymous course between Spitzerian aggression and Cuomoesque charm. Even his own press aide, Danny Kanner, recently confessed that, before this summer, his own parents did not know who Mr. Schneiderman was. “And I’m their kid; I work for the guy,” Mr. Kanner said.

But then came August, when Mr. Schneiderman, 56, rejected a proposed nationwide settlement releasing some of the country’s biggest banks from a lawsuit brought by the states claiming misconduct in the mortgage markets. Almost overnight, he found his own name mentioned in a series of laudatory articles in publications as varied as Rolling Stone, The Rochester Democrat and Chronicle and the Web site Gawker.

Adding fuel to the profile-raising fire were the phone calls Mr. Schneiderman received this summer from officials in the Obama administration who pressured him to smarten up and join his counterparts in other states in settling the case. There were reports that a Federal Reserve official, Kathryn S. Wylde, had harangued him in public for his stubbornness (at the funeral for Hugh L. Carey, the former New York governor, no less). At the end of August, an unrepentant Mr. Schneiderman was kicked off the executive committee of attorneys general in charge of the case by its leader, Tom Miller, the attorney general of Iowa.

The cynic in me wonders if perhaps the fact that the flood of adoring correspondence was accompanied by, “Small tsunami of campaign donations,” might have something to do with the increasing numbers of Attorneys General who are balking at signing an agreement exchanging a token payment for immunity for the banksters.

Pass the Popcorn, Mortgage Fraud Edition

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And another shoe drops, as California leaving the 50 state mortgage deal, claiming that it’s too bank friendly, joining New York, Delaware, Minnesota, and Massachusetts (link) in objecting to the blanket grants of immunity proposed:

California Atty. Gen. Kamala Harris will no longer take part in a national foreclosure probe of some of the nation’s biggest banks, which are accused of pervasive misconduct in dealing with troubled homeowners.

Harris removed herself from talks by a coalition of state attorneys general and federal agencies investigating abusive foreclosure practices because the nation’s five largest mortgage servicers were not offering California homeowners relief commensurate to what people in the state had suffered, Harris told The Times on Friday.

The big banks were also demanding to be granted overly broad immunity from legal claims that could potentially derail further investigations into Wall Street’s role in the mortgage meltdown, Harris said.

“It has been  a process of negotiating and sitting at a table in good faith, but ultimately I have decided that we have to go our own course and take an independent path. And that decision is because we need to bring relief to Californians that is equal to the pain California experienced, and what is being negotiated now is insufficient,” Harris told The Times in an interview.

Harris delivered the news in a letter sent Friday to Iowa Atty. Gen. Tom Miller, who has been leading the 50-state coalition.

Here are some other interesting bits:

The removal of California from the discussions is a major blow to fraying efforts by the coalition, which has been trying to strike a settlement deal with the big banks for months. The move by Harris to reject the settlement talks is also a key departure from efforts by the Obama administration, which has been pushing for a fast resolution to the so-called robo-signing scandal that erupted last year.

Just so you know, “Pushing for a fast resolution,” translates to, “Throwing lawbreakers another get out of jail free card,” because the Banksters are Obama’s real base.

“This whole concept of a settlement on foreclosure abuse is probably dead,” said Christopher Whalen, the founder of Institutional Risk Analytics. “Nobody in their right mind is going to opt into a settlement right now.”

So one would hope.  Neither the Obama administration, nor their corrupt lackey Iowa Attorney Gen. Tom Miller have had the slightest interest in pursuing any allegations or real wrongdoing against big banks.

I’m not sure what is motivating the AGs to bail on what would be a win-win for them, they get to “wave the bloody shirt” of some sort of settlement payments while insuring their own access to Wall Street campaign donations, but it appears that either they think that the political calculus is changing, or they just want to do the right thing.

Finally!

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Pass the Popcorn

Even if the mortgage non-transfer transfers conducted through MERS fulfill the technical obligations required by existing real estate and trust law (they don’t), they still don’t excuse the illegal evasion of recording fees for local county clerks.

We’ve had a couple of smaller counties file suit, but now it’s Dallas, Texas, which turn over a huge rock, and reveal what is underneath:

Mortgage Electronic Registration Systems Inc., along with Bank of America Corp., was sued by Dallas County District Attorney Craig Watkins over claims its mortgage-tracking system violates Texas law.

Merscorp Inc.’s MERS, which runs an electronic registry of mortgages, cheated Dallas County out of “tens of millions in uncollected filing fees,” Watkins said in a statement. MERS tracks servicing rights and ownership interests in mortgage loans on its registry, allowing banks to buy and sell loans without recording transfers with counties.

Watkins, in a complaint filed yesterday in state court in Dallas, claims MERS was established by banks including Bank of America to avoid paying filing fees, as well as to ease transfers of mortgages. The county asked the court to hold Bank of America liable as a shareholder of MERS and said the bank “knew or should have known” that the system would cause improper filing.

We are talking billions, if not tens of billions of dollars in fees that were illegally evaded by the banks, and Dallas County is big enough that the banks can’t afford to settle to make the problem go away.

My heart bleeds for these ratf%$#s.

The Banks are Going Spitzer on New York AG Schneiderman

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They are hiring private investigators to dig up personal dirt on him and his staff:

The New York Post has a salacious story about Alisha Smith, a lawyer with the New York attorney general’s office, who is a dominatrix in her private life. Frankly, many of the skills honed by being a domme probably come in handy in litigation (such as knowing exactly how much pain and humiliation to administer when).

The problem isn’t with her having a kinky private life per se; it is the allegation by the Post that she may have gotten paid for performing at S&M parties. Smith makes all of $78,825 a year and the policy of the state AG’s office is for staff to obtain prior approval of any activity which will earn them more than $1,000. The Post presented its allegations about Smith, who was hired by Andrew Cuomo and played an important role in a securities fraud case that led to a $5 billion settlement by Bank of America. She has been suspended without pay as the AG conducts an investigation.

The banksters are going to stop at nothing to protect their asses, and what they feel is their God given right to earn insane pay for stealing money from the rest of us.

DoJ Files Against Texas Congressional Districts

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They are saying that the new districts violate the Voting Rights Act:

The Justice Department said Monday that Texas’ state House and congressional redistricting plans didn’t comply with Section 5 of the Voting Rights Act (VRA), indicating they thought the maps approved by Gov. Rick Perry (R) gave too little voting power to the growing Latino population in the state.

Officials with DOJ’s Civil Rights Division said the proposed redistricting plan for the State Board of Education (SBOE) and the state Senate complied with the Voting Rights Act, but indicated they had concerns with the state House plan and the plan for congressional redistricting.

The federal government “[denied] that the proposed Congressional plan, as compared with the benchmark, maintains or increases the ability of minority voters to elect their candidate of choice in each district protected by Section 5,” DOJ lawyers write in a filing. “Defendants deny that the proposed Congressional plan complies with Section 5 of the Voting Rights Act.”

For all I complain about Obama, the fact that the professional staff in the DoJ’s civil rights division are allowed to do their jobs is an improvement over Bush and His Evil Minions™.

Another Nail in the Bank Sellout Settlement Deal Coffin

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Minnesota Attorney General Lori Swanson has sent a letter to the Attorneys General of New York and Iowa (The Iowa AG is leading the negotiations) saying that any settlement that grants immunity to the banks on areas that have not been thoroughly investigated will be unacceptable to her:

In a letter sent to the attorneys general of New York and Iowa on Friday, Minnesota Attorney General Lori Swanson said that banks shouldn’t be protected from liability in connection with the nationwide foreclosure settlement.

Swanson said that banks should not be released from liability for mortgage securitization, securities claims or the use of a mortgage registry known as MERS, Bloomberg News reported.

“The banks should not be released from liability for conduct that has not been investigated and is not appropriately remedied in any settlement,” Swanson wrote, according to Bloomberg News.

State and federal officials are negotiating a settlement with the five largest mortgage services in the U.S. – Bank of America Corp., Wells Fargo & Co., JP Morgan Chase & Co., Citigroup Inc. and Ally Financial Inc.

I think that it has become increasingly clear to people involved with the negotiations that Iowa Attorney General Tom Miller and the Obama administration are primarily interested in shielding the banks, and creating the appearance rather than the reality of accountability for the banksters.

Note also that Swanson has some serious consumer protection cred, as she was the one who uncovered the fraudulent and self dealing behavior of the National Arbitration Forum, and forced the organization out of consumer arbitration.

I don’t think that there has been an outbreak of ethics in the case of the banks, it’s just that the AGs who oppose this deal realize that not only are the settlement talks a corrupt endeavor, but they are a transparently corrupt endeavor, and they don’t think that they can defend it to the voters.

Signs of the Apocalypse: Alphonse “Da Woim” D’amato Wants the Banks Prosecuted

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He’s come out against the big banks and for New York Attorney General Eric Schneiderman:

New York state’s attorney general, Eric Schneiderman, is making national news regarding his opposition to a nationwide $20 billion foreclosure settlement involving some of the largest banks over questionable foreclosure practices and mortgage abuses.

While I didn’t support Schneiderman in the 2010 election, he deserves to be applauded for standing up to the big banks and some of the questionable practices that have attributed to America’s economic downturn.

Last Oct. 13, the attorneys general from all 50 states announced that they would join forces to investigate the bank foreclosure practices after there were several reports of faulty documents being used in the seizure of homes. Thirteen of the attorneys general serve on an executive committee, working with the Department of Justice and various other federal agencies to negotiate a settlement with the five largest mortgage servicers in the United States: Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and Ally Financial.

Shaun Donovan, the secretary of housing and urban development, and other members of the Obama administration have been pressuring Schneiderman to go along with and support the settlement. It has been an intense campaign to change our attorney general’s mind.

Schneiderman has held his ground, and throughout the negotiations maintained the belief that the proposed $20 billion, which would mostly be designated to pay for loan modifications instead of going directly to Americans who were harmed by the banks’ practices, was not enough money. Also, if the banks and executive committee reached an agreement, it would prevent any further litigation or investigations against the large banks.

As a result of Schneiderman’s holdout, on Aug. 24 it was reported that he was “removed from a leadership role in negotiating a nationwide foreclosure settlement with U.S. banks.”
Iowa Attorney General Tom Miller, who is heading the executive committee, accused Schneiderman of “actively working to undermine the very same multistate group that it had spent the previous nine months working very closely with.”

Bravo, Mr. Attorney General!

………

By pressuring the attorneys general’s executive committee to pass this fruitless proposal, President Obama and his administration are allowing the big banks, generous campaign contributors, to once again get away unscathed for their chancy and untrustworthy practices. In times like these, we need leaders like Schneiderman to challenge the big banks, making sure that victims receive justice and restitution and that overall reform changes the mortgage industry.

To allow a settlement to be reached that hinders future investigations into large banks’ foreclosure and mortgage practices is criminal. Fight on, Mr. Attorney General.

I don’t think that Mr. D’Amato’s motives are completely benign: As a Republican, he has vested interest in criticizing the Obama administration, and has never been particularly interested in pursuing corruption.

What he does know is how to pander to his constituents, and he clearly sees the enthusiastic embrace of Wall Street, and explicit toleration of its endemic corruption, by the Obama administration to be a political miss-step.

I agree, and I would further add that it’s also good policy, as we are creating moral hazard by not prosecuting the banksters.

The Term for This Is Chillul Hashem*

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In this case, it’s “Rabbi” Moshe Zigelman, who is refusing to testify in a money laundering and tax evasion trial:

As U.S. District Judge Margaret Morrow contemplated federal law from her bench Wednesday morning, more than a dozen ultra-orthodox Jewish men with yarmulkes and sidelocks looked on in the courtroom. One held open a gilt-edged, elaborately embossed copy of the Shulchan Aruch, a book of Jewish law, tracing lines of the Hebrew text with his finger.

Appearing before the judge was Rabbi Moshe Zigelman, a 64-year-old devout Hasid who was refusing to testify before a federal grand jury, citing an ancient Jewish principle that forbids informing on other Jews.

Zigelman was ordered to testify in a tax-evasion case involving his Brooklyn-based Hasidic sect Spinka. He had earlier invoked the same principle, known as mesira, when he pleaded guilty to his part in the scheme in 2008 but refused to cooperate with authorities or testify in trial. He was sentenced to two years in prison.

What was going on here is that they were accepting “donations”, which the donors declared on their taxes, and then, after taking about 10-20% vigorish, they funneled funds back to the donors via an Israeli bank.(Wiki here)

First, lets be clear that clergy privilege does not apply here. This creep was a co-conspirator, not someone providing counseling.

What’s more, according to Shmarya Rosenberg’s excellent analysis, as well as those of normative Jewish scholars, mesira does not apply:

There are textbook exceptions to mesira even for those who hold that mesira applies in a democracy.

One of those exceptions is when the government knows certain people are guilty but needs testimony from one of them or another Jew to convict or capture the others. (In other words, there is a difference between speculation and knowledge.

Another exception is when refusing to give the government the information makes it seem as if Jews (or Orthodox Jews) do not follow or respect the country’s laws.

Hasidim use mesira to hide crimes and to enforce order in their communities.

It has nothing to do with the original intent of the mesira law, which was meant to save Jews from unjust punishments meted out by antisemitic governments, and from the unscrupulous Jews who used informing to hurt business opponents and social enemies, to extort them, and to gain favor from antisemitic government officials.

But in a democracy like the US, the fear of antisemitic unjust punishments does not apply.

The law of mesira would then only apply to spiteful informing done to settle personal grudges and the like, and it would not apply if the government was already convinced the subject is guilty.

In Rabbi Moshe Zigelman’s case, the government already knows Zigelman is guilty of money laundering, and it has already put the Spinka rebbe and others in prison. And it knows there are dozens, if not hundreds, of other co-conspirators, and it knows many of their names.

This is actually far more charitable than I would be.

Zigelman is not just a witness, he is an active co-conspirator, who is using mesira to cover his own corrupt tuchas.†

It is also, of course a Shanda before the Goyim, in that it allows the antisemites of the world to claim that Jews consider themselves above the law and cover up for each other.

This makes a mockery of the concept of Or LaGoyim,‡, which stipulates that Jews are to be held to higher standards, and not cover up each others corruption.

*Literally, a ““Desecration of God’s Name.”
†Ass.
‡Light unto the nations.

How Quaint, Anti-Trust Law Enforcement

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The Department of Justice has filed papers to prevent the merger of AT&T and T-Mobile:

The US government is attempting to block the $39bn (£24bn) takeover of T-Mobile by AT&T on antitrust grounds.
The department of justice (DoJ) filed court papers in Washington on Wednesday in an attempt to halt the merger, claiming that it would “lessen competition substantially” in the telecoms market and harm consumers. AT&T said it was “surprised and disappointed” by the intervention.
“AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” the DOJ said in its filing, which was first reported by Bloomberg.

The multibillion-dollar merger, announced in March, would create the largest mobile provider in the US with 130 million customers, and reduce the number of players in the market to three.

This is not surprising, except perhaps to AT&T, who greased a lot of palms lobbied extensively for support of this deal.

After all, not only is T-Mobile aggressively competing on price, but between it and AT&T, the two cmpanies control something like 90% of the GSM cell network in the US, which, unlike Sprint and Verizon’s competing CDMA, works everywhere in the world,* which means that if you wanted to use your phone internationally, then you would have only one choice.


We don’t care, we don’t have to…we’re the phone company.

The Death Star is saying that they will “Vigorously Contest” the filing, but considering the fact that on their own paperwork it was shown to be 10 times as expensive to buy T-Mobile as it would be to upgrade their network to 4G:

So just to recap what you’re reading here, if AT&T doesn’t buy T-Mobile and spends $3.8 billion instead of $39 billion then they will be able to cover 97% of Americans in 4 years less time. What’s the deal? AT&T continues to downplay this memo, hopefully it’s enough for some of the Attorney Generals on the fence to start asking the important questions.

Fundamentally the business plan for the incumbents is the same as it ever was, finding ways to leverage their natural monopolies to extract maximum rent from the general public.

Finally, as much as it pains me to say this, props to Obama and Holder for engaging in some real antitrust actions.

*God bless the international standards averse USA, where we use the English system of measurements, and CDMA, for no good reason at all.

Yes, that Acquisition of Countrywide was So Good for BoA

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I probably haven’t been writing about this as much as I should, but it’s beginning to look like Bank of America’s ill-advised takeover of Countrywide Financial, and it’s portfolio of fraudulent mortgages, is beginning to cause some real problems.

Basically, the sweetheart deal that they negotiated with the trustee, Bank of New York Mellon, would have them paying out pennies on the dollar for misrepresented and mis-documented mortgages.

First, New York Attorney General Eric Schneiderman opposed the settlement saying that it was unfair to investors.

Of course, the unfairness was a feature, not a bug, since BNY Mellon is desperate to reduce its exposure from their deliberate lack of due diligence.

Then, the FDIC opposed the deal, saying that they did not have enough information to evaluate the deal on its merits.

And if we know anything about the world of securitized mortgages and trusts, we know that more information means more bad news, as we have seen every time another rock gets overturned.

Well, now we have individual homeowners filing to block the settlement, because, as a sop to investors, the deal would have established a “rocket docket” for foreclosures:

Lawyers for the National Consumer Law Center said in a report prepared as part of the case that the proposed settlement “will speed up foreclosures, perpetuate existing servicing abuses in the system, and undermine federal programs designed to stabilize the housing market.”

Bank of America had hoped the $8.5 billion settlement would finally put much of this potential liability behind it, but the challenges have raised investor fears that the ultimate cost of the settlement could rise sharply. Anxiety about the extent of Bank of America’s legal woes has also weighed on the bank’s stock, with some estimates suggesting the ultimate cost could be in the tens of billions.

First, I think that the penalties, including tax penalties for improperly conveying the mortgages to the trust, are almost certainly in the hundreds of billions of dollars, and second, when an $8.5 billion payout is a sweetheart deal, it means that the banks are too big.

Oh, yeah, and I almost forgot: The FHFA filed a similar objection to the FDIC’s and U.S. Bancorp is suing to get BOA to buyback the mortgages in yet another trust.

BoA would be, in a fair and just world, toast, and its executives would be facing criminal investigations.

In this world, however, it means that Obama and Geithner and Bernanke will be setting up someway to bail them out in order to insure executive bonuses “protect the banking system” with our money.

H/t Naked capitalism.

On edit:

It looks like the Nevada is claimed that BoA reneged on its loan modification agreement with the state, and so they are filing to abrogate the agreement so that they can sue:

The attorney general of Nevada is accusing Bank of America of repeatedly violating a broad loan modification agreement it struck with state officials in October 2008 and is seeking to rip up the deal so that the state can proceed with a suit against the bank over allegations of deceptive lending, marketing and loan servicing practices.

In a complaint filed Tuesday in United States District Court in Reno, Catherine Cortez Masto, the Nevada attorney general, asked a judge for permission to end Nevada’s participation in the settlement agreement. This would allow her to sue the bank over what the complaint says were dubious practices uncovered by her office in an investigation that began in 2009.
In her filing, Ms. Masto contends that Bank of America raised interest rates on troubled borrowers when modifying their loans even though the bank had promised in the settlement to lower them. The bank also failed to provide loan modifications to qualified homeowners as required under the deal, improperly proceeded with foreclosures even as borrowers’ modification requests were pending and failed to meet the settlement’s 60-day requirement on granting new loan terms, instead allowing months and in some cases more than a year to go by with no resolution, the filing says.
The complaint says such practices violated an agreement Bank of America reached in the fall of 2008 with several states and later, in 2009, with Nevada, to settle lawsuits that accused its Countrywide unit of predatory lending. As the credit crisis grew, the settlement was heralded as a victory by state offices eager to help keep troubled borrowers in their homes and reduce their costs. Bank of America set aside $8.4 billion in the deal and agreed to help 400,000 troubled borrowers with loan modifications and other financial relief, such as lowering interest rates on mortgages.

I wish that I knew of a way to go short on the bad news piling up, and long on the eventual bailout.

Jury Pushes Back Against the Police State

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A stripper attempted to file a sexual harassment complaint against a Chicago police officer, and when she approached Internal Affairs, instead of making an effort to investigate the allegations, they attempted to get her to withdraw their complaint.

In response, she taped their malfeasance, and the response of the District Attorney was to charge her with a felony.

Thankfully, the jury realized that this was yet another attempt to exempt police from any sort of public scrutiny, and acquitted her:

A former stripper, who secretly recorded two Chicago Police Internal Affairs investigators while filing a sexual harassment complaint against another officer was acquitted on eavesdropping charges Wednesday.But why the f%$# did the reporter feel it germane to the story.

She alleged that she was fondled by a cop on a domestic abuse call.Why the hell is this in the story/

It doesn’t matter if she was a freaking nun, or a lobbyist, it was a damn domestic abuse call, and there were allegations of sexual harrassment.

“I’m feeling a lot better now,” a smiling Tiawanda Moore said after a Cook County jury returned the verdict in a little over an hour.
The 20-year-old Indiana woman admitted she taped the officers on her Blackberry in August of last year. But she said she only did it because the investigators were coaxing her to not go forward with her complaint.
“I wanted him to be fired,” Moore testified of the cop she alleges fondled her and gave her his phone number during a domestic battery call at the South Side residence she sometimes shares with her boyfriend.
Moore said she didn’t know about the Illinois Eavesdropping Act, which prohibits the recording of private or public conversations without the consent of all parties. Even so, Moore’s attorney, Robert Johnson, said his client was protected under an exemption to the statute that allows such recordings if someone believes a crime is being committed or is about to be committed.
The Internal Affairs officers were “stalling, intimidating and bullying her,” Johnson said. The recording, which was played in court during the one-day trial, proved it, Johnson said.
Assistant State’s Attorney Mary Jo Murtaugh told jurors, “The content of the tape is not the issue. The issue is that the words were taped.”

No, the IA officers were conspiring to conceal an alleged crime, and as such they were engaging in conspiracy, abuse of office, and probably a few dozen other crimes that someone better versed in the law would be aware of.

But Ed Yohnka, spokesman for the American Civil Liberties Union of Illinois, said the verdict “reflects a repudiation of the eavesdropping law in Illinois. Clearly, the public believes that individuals should be able to record police engaged in their public duties, in a public space in an audible voice.”

Your mouth go God’s ear, Mr. Yohnka.

There is a word for societies where law abiding citizens are prosecuted for uncovering and revealing police corruption, and that work is police state

Interesting Point

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Harold Feld (Full disclosure, he’s a friend, we were at his son’s Bar Mitzvah reception) explains why BART shutting down its cellular service in its stations to prevent a flash protest is more than a 1st amendment issue, but that it is a flagrant violation of the law:

I suppose I am really a telecom lawyer at heart. My reaction to the news that the Bay Area Rapid Transit (BART) police shut down cellphone networks in a number of stations on August 11 had nothing to do with democracy, the First Amendment, Tahrir Square, etc. With all deference to the importance of these concerns, my reaction was WHAT DO YOU MEAN THESE IDIOTS MESSED WITH THE PHONE SYSTEM? From my perspective, and the perspective of traditional telecom law, BART could just as well have turned off the local central office and all this chatter about whether or not BART is a public forum is just a distraction.

Obviously, however, no one at BART thinks of cell phones as the phone system. In BART’s open letter explaining what they did and why it was cool, BART focuses on the First Amendment /public forum issue and completely skips the fact that they shut off a phone system. Mind you, I suppose I can’t blame them – much. A number of folks are asking if there is a right to cell phone service as if this were a novel question rather than something settled by decades of telecom law.

………

In California, where this took place, the governing case is People v. Brophy, 120 P.2d 946 (Cal. App. 1942). In Brophy, the California Court of Appeals held that yes, residents of California have a right to phone service. The federally protected right to access the phone network derives from the duty of common carriage imposed by Sections 201 and 202 of the Act. The California Court of Appeals further found that Earl Warren, then the California Attorney General, could not order the phone company to discontinue service to a person the Attorney General suspected of running a gambling operation by use of the telephone. The court explicitly found that only the California Railroad Commission (predecessor to the California Public Utilities Commission) can give an order in California to suspend phone service.

………

Like the Attorney General in Brophy, the BART is an instrumentality of the State of California. As in Brophy, the mere allegation that someone (or some group of someones) may use their phone for illegal purposes most emphatically does not confer authority to unilaterally shut off access to the phone network – even if that phone network is physically located within the BART. Why? Because the BART is an instrumentality of the state of California and is geographically in California. There is no BARTistahn, and the Directors do not get to decide this on their own.

………

We will savor the irony that the most eloquent annunciation of the right of individuals to access phone service without interference from law enforcement (absent due process) takes us from Earl Warren to Eugene “Bull” Connor.

(emphasis original)

And yes, part of the case law here does involve “Bull” Connor, and BART is taking his side in this.

It’s a good read, and clear and informative to the layman.

Wanker of the Jay

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New York Times Columnist Joe Nocera, who writes that by enforcing the law against illegal retaliation against unions, the Democrats are anti-job.

This is about the Boeing case, where Boeing executives publicly bragged about moving an assembly line to South Carolina specifically because of legal labor actions taken by the union.

Somehow or other, all the “Very Serious People” out there stem to feel that blatant law breaking by large corporations must be tolerated, because they count more than the rest of us.

I Thought That I Had Already Posted This

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Former Luzerne County Court Judge Mark A. Ciavarella Jr., who took bribes from private prison companies to send kids to jail, was sentenced to 28 years in jail:

As his moment of sentencing drew near Thursday, former Luzerne County Court Judge Mark A. Ciavarella Jr. was still trying to minimize his crimes. No way, he said, had he sold “kids for cash.”

The prosecutor would have none of it.

“In essence, Mr. Ciavarella’s argument is, ‘I was not selling kids retail,’ ” Assistant U.S. Attorney Gordon A.D. Zubrod said. “We agree with that. He was selling them wholesale.”

Minutes later, U.S. District Judge Edwin M. Kosik slammed Ciavarella, 61, with 28 years in prison. It appeared to be the longest federal prison sentence ever given in a U.S. political corruption case.

In the Scranton area, Ciavarella was a key target among many in a sweeping and still-ongoing federal corruption probe. Prosecutors have brought charges against nearly 30 officials, including two other judges, numerous court officials, a former state senator, school board members, and county officials.

(emphasis mine)

It may be a record long sentence, but it is not long enough.

His partner in crime, county president judge Michael T. Conahan, has already pled guilty, and is awaiting sentencing.

Hopefully, he gets a sentence of similar length.

Obama Admin Pressuring NY AG Schneiderman to Drop Bank Investigations

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We are getting leaks that the Obama administration is going full bore to prevent New York State Attorney General from doing a thorough and diligent investigation of the banksters mortgage fraud:

Eric T. Schneiderman, the attorney general of New York, has come under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices, according to people briefed on discussions about the deal.

In recent weeks, Shaun Donovan, the secretary of Housing and Urban Development, and high-level Justice Department officials have been waging an intensifying campaign to try to persuade the attorney general to support the settlement, said the people briefed on the talks.

Mr. Schneiderman and top prosecutors in some other states have objected to the proposed settlement with major banks, saying it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities.

But Mr. Donovan and others in the administration have been contacting not only Mr. Schneiderman but his allies, including consumer groups and advocates for borrowers, seeking help to secure the attorney general’s participation in the deal, these people said. One recipient described the calls from Mr. Donovan, but asked not to be identified for fear of retaliation.

So, not only are they pressuring Schneiderman, but they are trying to gin up an AstroTurf response to further intimidate him.

I’m with what Yves Smith said, “It is high time to describe the Obama Administration by its proper name: corrupt.” (emphasis mine)

What’s more, he’s also catching flack from the in the person of Kathryn Wylde, Deputy Chair of the New York Bank of the Federal Reserve, who accosted him at a memorial service

Representatives for the four big banks declined to comment. Mr. Schneiderman has also come under criticism for objecting to a settlement proposed by Bank of New York Mellon and Bank of America that would cover 530 mortgage-backed securities containing Countrywide Financial loans that investors say were mischaracterized when they were sold.

The deal would require Bank of America to pay $8.5 billion to investors holding the securities; the unpaid principal amount of the mortgages remaining in the pools totals $174 billion. Lawyers representing 22 institutional investors, including the Federal Reserve Bank of New York, BlackRock and Pimco, contended that the deal was favorable.

This month, Mr. Schneiderman sued to block that deal, which had been negotiated by Bank of New York Mellon as trustee for the holders of the securities. The lawsuit contends that the deal could “compromise investors’ claims in exchange for a payment representing a fraction of the losses” experienced by investors and that it had been negotiated without the knowledge of all of the holders of the securities.

The lawsuit angered Bank of New York Mellon, and as Mr. Schneiderman was leaving the memorial service last week for Hugh Carey, the former New York governor who died Aug. 7, an attendee said Mr. Schneiderman became embroiled in a contentious conversation with Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York who represents the public. Ms. Wylde, who has criticized Mr. Schneiderman for bringing the lawsuit, is also chief executive of the Partnership for New York City. The New York Fed has supported the proposed $8.5 billion settlement.

Other investors in the Countrywide mortgage pools who were not part of the settlement talks between Bank of New York Mellon and Bank of America have called the terms inadequate.

Characterizing her conversation with Mr. Schneiderman that day as “not unpleasant,” Ms. Wylde said in an interview on Thursday that she had told the attorney general “it is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”

(emphasis mine)

Defrauding investors and home buyers is defensible?

I’m with Barry Ritholtz, who has called for Wylds’s resignation:

If the Times report is accurate, and the quote below [it;s the last paragraph above quote] represents Ms. Wylde’s comments, than that position is a laughable mockery, and Ms. Wylde should resign effective immediately.

…………

But what is surprising is the utterly inappropriate behavior of Kathryn S. Wylde. She is not only a member of the board of the Federal Reserve Bank of New York, but occupies the seat supposedly reserved for the representing the public.

If the Times report is accurate, and the quote below represents Ms. Wylde’s comments, than that position is a laughable mockery, and Ms. Wylde should resign effective immediately.

(emphasis mine)

In any case, if you want to contact the AG and tell him not to back off, you can call (800) 771-7755 or at (212) 416-8000) or use his e-mail form.

This is particularly recommended.

BTW, if you live in Delaware, you might want to drop a dime on Beau Biden, the VP’s son, and Delaware’s AG, who has joined with Schneiderman in opposing the BoA deal.

If the Fed and the Obama administration are dead set on any sort of meaningful reform or accountability for the banks, then we need back up the State Attorneys General to pursue the banksters.

[on edit]

The AGs or Massachusetts and Nevada are also balking on the settlement offer, and considering that Nevada has probably the worst foreclosure problems in the nation, it makes any settlement even more problematic.

DOJ, SEC Investigate S&P, EE-I-EE-I-O

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It’s not just S&P, it’s Moody’s too:

The U.S. Justice Department is probing Moody’s Investors Service and Standard & Poor’s over ratings of mortgage-backed securities, according to three former employees who said they were interviewed by investigators.

Washington-based lawyers from the Justice Department spoke to former employees as recently as last month about whether the companies raised their grades for the complex investments in order to win business, said the former employees, who asked for anonymity because the investigation is ongoing. The inquiry is a civil matter, two of them said.

The probe is the latest of dozens of government investigations and investor lawsuits targeting Moody’s and S&P, a unit of McGraw-Hill Cos., all based in New York, over the top grades they assigned to bonds backed by subprime mortgages. Even as the Financial Crisis Inquiry Commission called them “key enablers of the financial meltdown,” the raters avoided legal liability, according to Benchmark Co.’s Edward Atorino.

Note there that the DoJ being involved means that this is some sort of criminal investigation.

Here’s hoping that Eric “Place” Holder doesn’t decide to look forward instead of backward.

Have I Mentioned that I Love Matt Taibbi?*

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He just uncovered another bit of regulatory capture, specifically he is reporting on allegations that the SEC routinely destroyed all records of its investigations:

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency’s records – “including case files relating to preliminary investigations” – are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term “Orwellian,” devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases – known as MUIs, or “Matters Under Inquiry” – was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission’s internal website. “After you have closed a MUI that has not become an investigation,” the site advised staffers, “you should dispose of any documents obtained in connection with the MUI.”

Many of the destroyed files involved companies and individuals who would later play prominent roles in the economic meltdown of 2008. Two MUIs involving con artist Bernie Madoff vanished. So did a 2002 inquiry into financial fraud at Lehman Brothers, as well as a 2005 case of insider trading at the same soon-to-be-bankrupt bank. A 2009 preliminary investigation of insider trading by Goldman Sachs was deleted, along with records for at least three cases involving the infamous hedge fund SAC Capital.

The widespread destruction of records was brought to the attention of Congress in July, when an SEC attorney named Darcy Flynn decided to blow the whistle. According to Flynn, who was responsible for helping to manage the commission’s records, the SEC has been destroying records of preliminary investigations since at least 1993. After he alerted NARA to the problem, Flynn reports, senior staff at the SEC scrambled to hide the commission’s improprieties.

And that’s just his first 5 paragraphs.

What’s also in the article is the pattern of what can only be described as a patterned of end loaded bribery, where SEC senior bureaucrats spiked investigations, destroyed all evidence collected, and then found well remunerated positions with firms that they had “exonerated.”

There should be hundreds of people on Wall Street, and regulating Wall Street, who should have been frog marched out of the places of work in hand cuffs.

*In a 110% purely heterosexual kind of way, of course, as the General would say.

It’s Official, RICO Time for Rupert

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There are credible reports that the FBI and the DoJ are considering a RICO investigation of Newscorp.

This is significant because the standards of RICO are very lax. You are not showing criminal activity, you are showing a pattern of corrupt behavior within the organization*:

Well-sourced information coming out of the Department of Justice and the FBI suggests a debate is going on that could result in the recently launched investigations of News Corp. falling under the RICO statutes.

RICO, the Racketeer Influenced and Corrupt Organizations Act, establishes a way to prosecute the leaders of organizations—and strike at the organizations themselves—for crimes company leaders may not have directly committed, but which were otherwise countenanced by the organization. Any two of a series of crimes that can be proven to have occurred within a 10-year period by members of the organization can establish a pattern of racketeering and result in draconian remedies. In 1990, following the indictment of Michael Milken for insider trading, Drexel Burnham Lambert, the firm that employed him, collapsed in the face of a RICO investigation.

Among the areas that the FBI is said to be looking at in its investigation of News Corp. are charges that one of its subsidiaries, News America Marketing, illegally hacked the computer system of a competitor, Floorgraphics, and then, using the information it had gleaned, tried to extort it into selling out to News Corp.; allegations that relationships the New York Post has maintained with New York City police officers may have involved exchanges of favors and possibly money for information; and accusations that Fox chief Roger Ailes sought to have an executive in the company, the book publisher Judith Regan, lie to investigators about details of her relationship with New York police commissioner Bernie Kerik in order to protect the political interests of Rudy Giuliani, then a presidential prospect.

Pass the popcorn.

*One of the reasons that I’ve never been a fan of the statute, particularly as embraced and extended by Giuliani when he was US Attorney.