Category: Justice

Senators Ask the Right Question

And the question is, “why aren’t the people who broke banking and our economy going to jail?”

Senators pressed investigators on a lack of prosecutions of top Wall Street executives in the wake of the most severe financial crisis since the Great Depression.

“I will say right now that I’m frustrated,” Sen. Edward Kaufman, a Delaware Democrat on the Judiciary Committee, said on Wednesday.

“We have seen very little in the way of senior officer or boardroom-level prosecutions of the people on Wall Street who brought this country to the brink of financial ruin. Why is that?”

The reason that there have been no prosecutions is because the the Cossacks work for the Czar, and the Czar, Obama, does not want the prosecutions, and instead wants to “look forward.”

The technical term for this is “cowardice reinforcing rewards for moral hazard.”

Cloture Fails on DADT in Senate, Thanks Barry

So the Republicans successfully filibustered the Defense authorization bill.

It’s not surprising given the full court press that we didn’t hear coming from the White House.

When one considers the fact that the Obama Department of Justice submitted a legal brief equating homosexuality with incest, his administration defied a judges order to provide health benefits for a same sex spouse, and his campaign had an anti gay bigot front a campaign concert, one begins to wonder whether is inaction on DADT is more than cowardice, or whether he actually has a problem with “th ghay”.

To paraphrase Kanye West, I’m beginning to wonder if “Barack Obama doesn’t care about gay people,” because it’s clear that the Obama administration antipathy to being seen as pro-LGBT at this point is both bad politics, it loses votes, and bad policy.

Federal Courts Rule that Software Publishers Own You

The 9th Circuit Court of Appeals reversed a lower court, and ruled that it’s not a sale, it’s a license, and so they can do whatever they want:

The US Court of Appeals for the Ninth Circuit today ruled (PDF) on a long-standing case involving used software on eBay, and it came to an important decision: if a company says you don’t have the right to resell a program, you don’t have that right. Could this mean the end of the resale market for all digital content? Yup. But the court says it had no choice.

The case is Vernor v. Autodesk, in which Timothy Vernor made his living from selling items (including software) on eBay. Vernor had picked up some old copies of AutoCAD from an architect’s office sale, complete with their serial numbers, and he put them up on eBay noting that they were not currently installed on any computer. Sounds legal, right?

But there’s a catch. Autodesk, the software’s developer, forced all users to accept an agreement before using AutoCAD. This agreement made clear that AutoCAD was merely licensed, never sold, and that one’s license was non-transferable. Further, a licensee could not rent, lease, or sell the software to anyone else; you couldn’t even physically transfer the discs out of the Western Hemisphere (!). Finally, if you upgraded to a new version, the old version had to be destroyed.

That sound that you hear is the stock price of Gamestop falling like the 54th floor of the World Trade Center on September 11, 2001.

Almost every single video game out there bans resale in the license, or as Aris Technica notes, “So, to recap: EULAs are binding, they can control just about everything you might dream up, and only Congress can change the situation.”

This means that a publisher can deactivate your software wherever, and whenever they want, so long as they have it in the license, or they have a section of the license that allows them to change their license whenever they want, like credit card companies do.

Call your congresscritter, and look hard at open source software.

OK, Time to Freak Out

A few days ago, Yves Smith noted that Wells Fargo has started to spring a last minute contract clause on its foreclosure sales that basically says if the property does not have a clear title, it’s your tough sh%$:

Yves here. Some readers may take this all to be unduly alarmist. But confirmation that this problem is real and potentially serious comes via a new “gotcha” practice by Wells Fargo on foreclosure sales. Wells is sufficiently concerned about the risks of selling properties out of foreclosure that it is springing an addendum on buyers, shortly before closing, which effectively shifts all risk for any title deficiency on to the buyer.

Now why is this a big deal? Go reread the boldfaced sentence above. [“Technically, the foreclosing bank has no recorded title rights to foreclose in the first place“] If a bank like Wells does not have the right to foreclose, it cannot have clean title to the property. So the bank could conceivably be selling something it does not own.

Let’s say you buy a vase from a store. You open the box when you get home and find out the box is empty. You’d clearly be within your rights to get your money back.

With the Wells Fargo addendum, even if the bank has sold you the equivalent of an empty box, you have no recourse to Wells. Zero. Zip. Nada.

So the banks realize that they are selling properties at auction that they do not own or hold the note on.

They want to clear their balance sheets, and they are now more than willing to engage in outright fraud to do so.

Well, it looks like it’s not just Wells Fargo who is freaking out about this, because GMAC has just suspended its foreclosures in 23 states based on similar concerns that the documentation was forged, though they claim that it will be resolved, “within the next few weeks”.

There are also rumors of a criminal investigation, while GMAC has denied any moratorium.

It appears that much of this has to do with the foreclosure mills law firms, largely based in Florida, most notably Watson, Shapiro & Fishman, and David J. Stern. (MoJo has a good tour of their business practices here)

Note also that Congressman Alan Grayson has written a letter too the Florida Supreme Court asking for an immediate suspension of foreclosures, because these firm are doing the paperwork on about 80% of the foreclosures in the state and have already been cited by a judge for blatant fraud.

There are a couple of issues here, the first is that in the mortgage mixmaster, title for a lot of properties may have been lost, and the second is that the law firms doing the paperwork are simply defrauding homeowners and the courts.

Grayson’s letter is after the break:

September 20, 2010

Chief Justice Charles T. Canady
Florida Supreme Court
500 South Duval Street
Tallahassee, FL 32399-1900

Dear Chief Justice Canady,

I am disturbed by the increasing reports of predatory ‘foreclosure mills’ in Florida. The New York Times and Mother Jones have both recently reported on the rampant and widespread practices of document fraud and forgery involved in mortgage assignments. My staff has spoken with multiple foreclosure specialists and attorneys in Florida who confirm these reports.

Three foreclosure mills – the Law Offices of Marshall C. Watson, Shapiro & Fishman, and the Law Offices of David J. Stern – constitute roughly 80% of all foreclosure proceedings in the state of Florida. All are under investigation by Attorney General Bill McCollum. If the reports I am hearing are true, the illegal foreclosures taking place represent the largest seizure of private property ever attempted by banks and government entities. This is lawlessness.

I respectfully request that you abate all foreclosures involving these firms until the Attorney General of the state of Florida has finished his investigations of those firms for document fraud.

I have included a court order, in which Chase, WAMU, and Shapiro and Fishman are excoriated by a judge for document fraud on the court. In this case, Chase attempted to foreclose on a home, when the mortgage note was actually owned by Fannie Mae.

Taking someone’s home should not be done lightly. And it should certainly be done in accordance with the law.

Thank you for your consideration of this request.

Sincerely,

Alan Grayson
Member of Congress

Jail, please

Gee, the SEC has determined that Citicorp CEO Chuck Prince and Chairman of the Board, and Clinton era Secretary of the Treasury, Robert Rubin both knew that the numbers that they were feeding investors about their top tranches of mortgage backed securities were crap:

Charles O. “Chuck” Prince and Robert Rubin were among Citigroup Inc. officials who knew 2007 losses were mounting on mortgage assets that U.S. regulators have faulted the bank for not disclosing, a court filing shows.

Prince, the bank’s chief executive officer at the time, and Rubin, who was then chairman, knew the highest-rated segments of subprime mortgage-backed securities were the source of about $200 million in new losses in October 2007, the Securities and Exchange Commission said yesterday in a filing at federal court in Washington. In July, the agency accused the bank and two other executives of failing to disclose $40 billion in subprime assets before losses surged. It didn’t target Prince and Rubin.

Bob Rubin has been Gordon Gecko for a very long time, and if the Obama administration wants to show some real commitment to financial reform, ramping up criminal investigations of his behavior would be a very good idea.

If you put a former Secretary of the Treasury in jail, it goes a long way toward cleaning up the system.

IRS Investigates Chamber of Commerce for Tax Fraud

The Internal Revenue Service is investigating whether or not, “the group mixed funds for charitable and noncharitable political purposes in violation of tax codes.”

It’s pretty clear that most of the 501(c)3s that are attached to lobbying groups have nothing to do with what should be educational purposes:

Cyrus Mehri, a Washington lawyer who brought the I.R.S. complaint on behalf of U.S. Chamber Watch, said in an interview that the chamber’s current political activities were, in effect, being underwritten with money intended for charitable work.

The complaint focuses on loans and grants totaling about $18 million that were made beginning in 2003 to a nonprofit affiliate, the National Chamber Foundation, by the Starr Foundation, a charity started by the founder of A.I.G. and now led by Maurice R. Greenberg, the insurer’s former chairman.

Lawyers for Chamber Watch said their research, based largely on public tax filings, found that none of the principal on some $12 million in loans had been paid back and that the money appeared to have been given to the chamber’s foundation for unrestricted use.

This actually strikes close to home for me, as I actually incorporated a 501(c)3 tax exempt organization, Arisia, and while I don’t regret doing so, it got the organization a lower postal rate in its early, pre everyone-has-email, days, which helped a lot.

That being said, it’s a group that basically holds a science fiction convention every year, and the fact that it was legal to register as a tax exempt educational organization, as opposed to a non-profit membership organization, a 501(c)7 where contributions are not tax deductible, still bothers me.

There is a lot of abuse in the tax exempt organization regulations, whether it is science fiction conventions generally, the Chamber of Commerce’s faux charity, or the various think tanks out there, and it really needs to be fixed.

Don’t Ask, Don’t Tell Ruled Unconstitutional

One of the interesting things here is that the judge, Virginia Phillips, has ruled that, the policy has a, ” ‘direct and deleterious effect’ on the armed services, which will make the overturn at the appellate level more difficult, since appeals are typically based on matters of law, and this is a determination of fact, but note that I’m an engineer, not a lawyer, dammit!*

The judge will be issuing an injunction against separations, but will be giving the government time to appeal before doing so, so I expect another round of accelerated witch hunts in the Pentagon over the next few weeks.

This is an acid test of the Obama administration’s dedication to gay rights. If they go for a stay, i.e. keep expelling gays from the military, during appeals, they are not merely doing their duty to defend existing laws, as they have previously argued, they are actively and aggressively anti-gay rights.

My money is on Obama making the wrong decision both morally and politically, and going full bore against this decision, because I think that, much like Bill Clinton, there is a level of political, if not personal revulsion, against “te ghay” that drives them to do truly stupid and hateful things.

*I LOVE IT when I get to go all Doctor McCoy!!!

A Court Case to Watch on HAMP

A federal court in California has ruled that a borrower is an intended 3rd party beneficiary of the HAMP program, and so has standing to sue the bank for acting in bad faith:

This is getting interesting. A judge in U.S. District Court, Southern District of California, has issued an order that may just answer a few prayers of many homeowners. Here’s what happened…

A San Diego homeowner, by the name of Ademar Marques, was applying for a loan modification, and, although it might be hard for many readers to believe, his servicer, Wells Fargo, dba, America’s Servicing Company, wasn’t being very nice about it, or even cooperating at all. It seems that Wells Fargo wanted to just skip all of those messy and time-consuming formalities required when considering someone for a loan modification, and just jump straight into foreclosure.

Mr. Marques filed a lawsuit against Wells Fargo’s America’s Servicing Company because he read about the Home Affordable Modification Program (“HAMP”) and the program’s guidelines said that his servicer was “REQUIRED” to screen him for a hardship, and consider him for a loan modification. He also alleged that he qualified for the loan modification program based on all of the published guidelines, and that his servicer, a participating servicer in HAMP never said that his loan could not be modified, they just refused to modify it, and instituted foreclosure proceedings.

Well, I never! The gall of some servicers. Have you ever heard of such a thing? Actually, I have. But not more than 30-40 times a day for the last two years.

The court ruled that as a participant in HAMP, the bank was obligated to review Ademar Marques case, and in not doing so, they breached their HAMP contract, and so do not have the right to foreclose.

Here is the money quote:

Are you digging this? Best I can make out, if you’re the intended third party beneficiary to a federal contract you can sue for breach of contract. So, if it says in the contract that the servicer “MUST” do something, and that servicer doesn’t do it… you the borrower may be able to sue the servicer for breaching that contract.

If Wells appeals, and if I were them, I wouldn’t, because settling in this one case loses them a mortgage, and if the court of appeals rules against them, it becomes case law for a large swath of California, but bankers are not know for cutting their losses.

If there is an appeal, and Mr. Marques prevails, then it is certain that Wells Fargo will appeal to the Supreme Court, and I would bet 5 to 1 odds that if it gets that high, then the Obama administration will argue for the malefactor banks, because that’s how they roll.

He’s Expecting to be Indicted

Mayor Richard M. “Richie” Daley has decided not to run for reelection as Mayor of Chicago.

Basically, given his history, my guess is that he knows that a corruption indictment is coming, and he wants to clear the deck in preparation.

There are whispers that Rahm Emanuel might take a shot at running for mayor, but I don’t think so.

Rahm has failed upward his entire political career, NAFTA, trying to kill the 50 state strategy, running pro-war candidates who lost, etc.

You can make money in Washington, and on Wall Street (Rahm worked at Wasserstein Perella and Federal Home Loan Mortgage Corporation (Freddie Mac)) based on connections, but if you are the Mayor of Chicago, you have to make things work.

Just ask former Chicago Mayor Michael Bilandic.

Rahm might have the chops for the party politics, it is what he excels at, but at making worthwhile things happen, he is simply incompetent, and if he were to be mayor, he would be a one term mayor, and he would be unelectable thereafter, at least in Illinois.

But I’ve gotten off topic. My thesis is that Daley is resigning because US Attorney Patrick Fitzgerald is getting to close for comfort.

Sergey Aleynikov Gets One Count Dismissed

He is accused of stealing Goldman Sachs’ proprietary high frequency trading software, but one of the three counts against him, for unauthorized computer access, has been dismissed.

I’ve always maintained that HFT is actually illegal front-running, or at least it was illegal before Treasury Secretary Robert “Why am I not in jail?” Rubin got his hands on the regulatory regime, and as such, I have always wondered if there was a cover-up of some kind, seeing as how the prosecutors have admitted that this code could be used to manipulate the markets.

A twist in the case that I was unaware of was that Sergey is not the only one the Feds are going after on this, as, “Two months after Aleynikov’s indictment, prosecutors charged former Societe Generale trader Samarth Agrawal with stealing computer code used in high-frequency proprietary trading in the French bank’s New York office.”

I am beginning to think that there is an official policy of allowing “systemically important” banks to skim profits from the markets in order to bolster balance sheets that are far shakier than has been revealed, but they want to keep this technology out of the hands of the small fry, because it would make the flash crash look like a weenie roast if too many people got their hands on this technology.

Background here

Feds Sue Sheriff Joe Arpaio

They have had a civil rights investigation of his department since (at least) 2009, and he has refused to turn over documents, so the DoJ has filed suit against the Maricopa County Sheriff’s Office.

Seeing as how it’s pretty clear that the Sheriff’s office is guilty, Arpaio has campaigned on harassing people on the basis of their ethnicity, one hopes that they get the documents, and an injunction, before Sheriff Joe goes and abuses his power to go Jim Crow on Hispanic voters this year.

I Don’t Approve of 3 Strikes Laws Either, But……

I Wonder if the DA Would do This to a White Man

Timothy Barnett is a con man. He has been convicted twice of using fraud to steal from homeowners.

Well, he appears to be back at his game, to the tune of 23 counts, and the DA has decided to pursue him with the 3rd strike law which would put him in prison for the rest of his life.

I think that 3rd strike laws are generally bad ideas, and the one in California is worse, but this is the sort of guy who makes me want to throw the book at him:

Timothy Barnett spent nearly five years in state prison for a 1990s foreclosure rescue scam in which he conned homeowners out of tens of thousands of dollars. Now, prosecutors say, he has been at it again, targeting residents in the same South Los Angeles neighborhood he fleeced before.

But this time, the state is unleashing one of its more powerful weapons against him. The Los Angeles County district attorney’s office has charged Barnett under California’s much-debated three-strikes law. Usually aimed at offenders with a history of violent crime, it is rarely used for white-collar offenses such as fraud.

Arrested in April, the 47-year-old Barnett is charged with 23 felonies — including theft from the elderly, identity theft and real estate fraud — for allegedly tricking five people into unknowingly granting him title to their homes. He has pleaded not guilty.

Some experts said the case would be one of the first times a person charged with a white-collar crime was prosecuted under the state’s three-strikes law. If convicted, Barnett could face life in prison.

I do think if you have 3rd strike laws, and I don’t think that you should, then it should be applied to white collar criminals.

But I think that 3rd strike laws are yet another case of what H.L. Menken, the Bard of Baltimore, meant when he said, “For every complex problem there is an answer that is clear, simple, and wrong.”

Another Reason to Fix IP Law

I thought that I did a good job of following patent law, but I was unaware that it is illegal, or more accurately a civil tort, for a company to claim a patent after it has expired.

So, if I were to get patent number 867-5309, someone could sue me for anticompetitive behavior if I were to continue to claim that my product were still protected.

Well, recent court cases have vastly expanded the law, taking this from a $500.00 award to a $500.00 award per offense, which means that it applies to each product shipped:

Marking a tube of toothpaste or paper cup with a patent that is out of date or doesn’t exist has been against the law for years. It is considered anticompetitive. Until late last year, the most a violator had to worry about was paying a $500 penalty for misleading the public.

But in December, the Court of Appeals for the Federal Circuit in Washington ruled that defendants could be held responsible for up to $500 per offense.
Document

Lawyers for product manufacturers now fear clients are liable for up to $500 for every tube of mascara or box of garbage bags marked with an expired patent—an error that turns out to be quite common.

Now, I’m sure that the holders of patents will be lobbying Congress to fix this.

Call your Representative, and tell him, that absent meaningful change, which rolling back the expansion of patents (discovered genes, species, software, business plans, tax deductions, etc.) that have perverted the purpose of Patents in the past few decades.

Stricter rules on what is, and is not, “obvious”, as well as changes to make it harder for patent trolls would help too.

Obama Throws the Environmental Movement Under the Bus

This is a distressingly familiar refrain

I’m sure that there are a lot of “eleventy dimensional chess” folks out there, but when you look at Obama’s record, both in terms of his support for coal and for his full throated endorsement of the fiction that is “clean coal,” the fact that the administration filed an brief urging the Supreme Court overrule the appellate court decision does not surprise me one bit:

The Obama administration has urged the Supreme Court to toss out an appeals court decision that would allow lawsuits against major emitters for their contributions to global warming, stunning environmentalists who see the case as a powerful prod on climate change.

In the case, AEP v. Connecticut, the 2nd U.S. Circuit Court of Appeals sided with a coalition of states, environmental groups and New York City. The decision, handed down last year, said they could proceed with a lawsuit that seeks to force several of the nation’s largest coal-fired utilities to reduce their greenhouse gas emissions.

……

In a brief (pdf) filed yesterday on behalf of the Tennessee Valley Authority, acting Solicitor General Neal Katyal agreed with the defendants, saying that U.S. EPA’s newly finalized regulations on greenhouse gases have displaced that type of common-law claim.

……

Matt Pawa, an attorney representing plaintiffs in the case, said he and his colleagues expected the White House to stay out of the matter. During a meeting with more than 30 administration lawyers at the solicitor general’s office on June 24, it seemed they had “a lot of friends in the room,” he said.

“We feel stabbed in the back,” Pawa said. “This was really a dastardly move by an administration that said it was a friend of the environment. With friends like this, who needs enemies?”

I would also note that the regulations that the Solicitor General is touting, which he says should preempt this suit, only applies to new power plants, and these new plants are not the subject of the nuisance suit.

I suppose that a lot of folks will blame Rahm, who has a history of sucking up to miscreant industries for campaign cash, but remember, Obama knows who and what Rahm is, and hired him. Remember, the Cossacks work for the Czar.

As gay activist Joe Sudbay noted at Americablog:

Welcome to our world.

Now, what these environmentalists don’t understand — yet — is that Team Obama isn’t really on their side. Not in the way they think, anyway. It’s a tough lesson and hard to swallow. The gays learned it early on, between Rick Warren and the DOMA brief.

(Mr. Pawa and Mr. Bookbinder should be prepared. They’ll see a lot of their colleagues in the environmental movement make excuses and apologize for what the Obama administration did.)

If the Obama were serious about carbon emission regulation, then it should see this suit would be a wonderful lever to get Congress to move on comprehensive legislation.

The only two justifications for this brief are that they aren’t serious, or, once again, they are trying to expand the reach of the executive branch.

Tom Delay to Be Tried for Corruption in Austin

He had asked for a change of venue, on the grounds that Austin was “too liberal,”but the judge decided that he could have a fair trial in Travis County, and ruled against moving the trial.

Honestly, thee did not pass the laugh test, but I understand why the defense tried it, it loses them nothing if they lose.

You move a trial when excessive pre-trial publicity taints the jury pool, not because they voted for the other party, and Delay’s corruption got no more coverage in Austin than it did anywhere else.

I’m not sure how this will turn out, but according to the good folks at Talk Left, they are not particularly impressed with Travis County DA (TX law has most corruption prosecutions being conducted by the DA for the Austin area), Donnie Earle, and Delay’s lawyer, Dick DeGuerin, is very good.

Presumption of innocence be damned, this is a man well deserving of a couple of decades of jail time.

Appeals Court Denies Federal Reserve Coverup Bid

Bloomberg filed a freedom of information act request to get information on the Fed’s bailout of banks and other financial institutions about 2 years ago, and true to form, their response to a perfectly reasonable request for information has been delay and litigation.

They lost at the circuit level, and they lost at the appeals court level, and now the appeals court has denied them an en banc rehearing, so unless the Supreme court deigns to hear the case, they are going to have to turn over the information:

The Federal Reserve will have to appeal to the U.S. Supreme Court if it wants to avoid having to disclose details of its emergency lending programs to banks bailed out with taxpayer money during the financial crisis.

The U.S. 2d Circuit Court of Appeals denied the Fed’s motion on Friday to rehear the case in which Bloomberg LP, the parent of Bloomberg News and News Corp’s Fox News Network sought information on the U.S. central bank’s emergency lending programs that began in late 2007.

The programs, designed to shore up the financial markets, more than doubled the Fed’s balance sheet to well over $2 trillion, especially in the wake of the September 2008 collapse of Lehman Brothers.

I am not sure how much of this is just the fetish that the Federal Reserve has for secrecy, and how much is an attempt to cover up behaviors which might be illegal or otherwise appear corrupt.

My guess is that it is a bit of both.

But in either case, absent the Supreme Court taking this up, it appears that we may have some very dull reading of some rather interesting events over the next few months.

Older posts on this are here.

Well, Obama Mans Up On Somethng

I have always felt that Obama has been profoundly ambivalent on the matter of abortion rights, so I figured that their response to a judge’s injunction against funding embryonic stem cell research would be to wring their hands, bleat a bit, and suggest that “Congress” do something.

I appear to have been too cynical, because the DoJ has announced that it will appeal this ruling:

The Obama administration said Tuesday that it would appeal a court ruling challenging the legality of President Obama’s rules governing human embryonic stem cell research, as the head of the National Institutes of Health said the decision would most likely force the cancellation of dozens of experiments in diseases ranging from diabetes to Parkinson’s.

I am truly shocked. My sense was that Obama would go the way he tried to on “Don’t Ask Don’t Tell”, and punt to Congress.

Court Injunction Against Federal Embryonic Stem Cell Research

My non-lawyer opinion

This seems to be a rather strange ruling to me.

Federal Judge Royce Lamberth ruled that the plaintiffs had standing because someone else might get grants if studies using embryonic stem cells could get funding, which seems top be a big of a whiskey tango foxtrot moment to me.

The Dickey-Wicker amendment prohibits the NIH from funding the destruction of embryos, and not all research post this act, which makes appear to me that this ruling is rather a bit of overreach by the judge as well.

Yeah, Sure, Nothing to See Here

Tell Me That You Do Not Believe That This is a Setup

So, Wikileaks founder Julian Assange goes to Sweden to setup a server, because Swedish laws, and the Swedish concept of Offentlighetsprincipen (openness) in the constitution, as well as an offer from the Swedish Pirate Party to host for him.

Wouldn’t you know it, Swedish authorities issued a rape warrant against Mr. Assange, and then withdrew the warrant the next day.

It couldn’t be that the CIA, the Pentagon (DIA), or the DNI were behind these apparently now bogus charges could it?

As Capt Howdy observes, it’s like we are living in that, “horrific thru the looking glass universe where Nixon is serving his 5th term.” (a Watchman reference, and yes, it would now be the 11th term)

As to my legal mind, my guess is that at this moment, some Swedish prosecutor is reviewing the laws on suborning perjury, and hoping that they don’t apply to him.

As a practical matter, I would suggest that the rest of the folks at Wikileaks start dealing with the “Julian Assange commits suicide by shooting himself in the head 3 times and then throws himself off a bridge,” contingency.