Minnesota Prepares to Sue A Debt Collection Agency: Robosigning

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“The Minnesota attorney general, Lori Swanson, accused Encore of fraud, saying it had filed false affidavits to collect consumer debt that was not owed or had been already paid off.”



The significance here is not just that robo-signing was used, which violates even common sense rules of evidence. It is the fact that the false affidavits were used to collect debts that were not due or had already been paid. This is the same as the current foreclosure mess, where pretenders are using false representations, fabrications, forgeries and perjured testimony to collect on non-existent debt, and debt which has already been paid by parties who have expressly waived any right to subrogation, which means they paid, but they did not purchase the receivable — to protect themselves from being called “lenders” or being subject to claims from homeowners for fraudulent or predatory lending.

As you will see from the description below, this opaque construct of conflicting “deals” and “trades” created a context in which the borrower’s obligation would be paid, regardless of whether the homeowner made the payments or not. The pretender lenders stepped in to the void created by this scheme to enforce a void note, void mortgage and an obligation in which it was neither the lender nor the purchaser of the receivable.

The pretenders are able to do this under the noses of the people who were the actual lenders because the investors don’t want to accept any responsibility for the fraudulent and predatory lending and documentation.

On a basic intuitive level it would seem that if a borrower received the benefit of funding of a loan, that the borrower was responsible for paying it back, regardless of what back-room deals were made. But in the words of Renaldo Reyes, Chief Asset Acquisition Officer (i.e., “trustee”) for Deutsch bank, the whole thing is COUNTER-INTUITIVE. That is why the courts are having so much trouble with these foreclosures — AND THAT IS THE SOLE REASON FOR THE USE OF ROBO-SIGNERS, FABRICATED DOCUMENTS AND FORGERIES TOGETHER WITH PERJURED TESTIMONY.

If the creditor was actually named, the real issues would come out and the issue would be completely reframed — because the the real creditor doesn’t want the house or the foreclosure, and in many cases is still getting paid. This leaves a “floating obligation owed to nobody” which is what the pretenders are exploiting and using on their balance sheets as “assets.”

Payment came from third parties who expressly waived rights of subrogation — it is right there in the insurance, credit default swap and buy-out agreements in the bailouts. That was intentionally done to remove the insurers or counterparts from any potential liability for fraudulent or predatory lending claims. But you can’t pick up one end of the stick without picking up the other end. The payments were received by agents of the investors — and the servicers keep on paying the payments to assure the imposition of absurd fees and costs. So at no time is the borrower’s debt to the investor-lender ever in default despite representations to the contrary in court. AND THAT IS WHY THEY USE ROBO-SIGNING, FABRICATION AND FORGERY — BECAUSE IF THEY WENT TO THE ACTUAL CREDITOR, THE DOCUMENT WOULD NOT BE SIGNED. SAME THING WITH CREDIT CARDS, STUDENT LOANS AND OTHER CONSUMER CREDIT WHICH INCIDENTALLY WAS MOSTLY SECURITIZED AS WELL.

Minnesota Prepares to Sue A Debt Collection Agency


Minnesota’s attorney general accused the Encore Capital Group of cutting corners by filing “robo-signed” affidavits in debt collection lawsuits, the same practice for which banks have come under fire in home foreclosures.

Encore shares fell as much as 10.3 percent before closing with a 3 percent loss on the day.

The Minnesota attorney general, Lori Swanson, accused Encore of fraud, saying it had filed false affidavits to collect consumer debt that was not owed or had been already paid off.

Encore is one of the nation’s largest debt collection companies, and often buys debt from credit card companies.

The allegations follow an Ohio federal judge’s preliminary approval on March 11 of a $5.2 million class-action settlement of similar claims against Encore’s Midland Funding unit.

An Encore spokesman, Mike Huckman, had no immediate comment.

Robo-signing is a term coined to describe employees’ signing of litigation documents without reviewing their contents. All 50 state attorneys general are investigating robo-signing and other practices by banks in the mortgage industry.

Ms. Swanson said such practices were pervasive in debt collection. Ben Wogsland, a spokesman for Ms. Swanson, said she was investigating about a half-dozen other companies that buy debt.

Encore, which is based in San Diego, had through year-end invested $1.8 billion to buy 33 million accounts with a face value of $54.7 billion, according to its annual report.

Ms. Swanson wants the Ohio court to clarify that the proposed class-action settlement does not bar government agencies from pursuing similar litigation. She is seeking to file her lawsuit in a Minnesota state court, Mr. Wogsland said.

25 Responses

  1. […] View the original article here LikeBe the first to like this post. […]

  2. A man
    re yes Patrick has shifted from homeowner loan audit to doing work for investor v bank audits & bank v bank audits… but he was never a shill, i cant really blame him for not wanting to continue the nonsense games that was homeowners & their attorneys , lack of payment for his services,plagiarizing his work, bla bla.
    Patrick did my audit from LFI, the audit was very good, he is a likable guy.
    And I might add merely playing the devils advocate when he posts here.

  3. Google Patrick Pulatie and see that he fails to disclose that he works for the banks. Dual Agent.

  4. SilentDoGoodJr,

    While there may be some victories in NJ — yesterday was a huge failure as judge approved a very weak settlement that will allow foreclosures to resume. All in an effort to rapidly push through the foreclosures.

    As long as politics remains the primary controlling influence, we will fail as a whole.

    If we sit back and allow 50 state AG settlement to also be poorly drafted – like NJ —, we have to blame ourselves.

  5. patrick
    FWIW – in my own UD the judge DID look at the title issues because they were raised & thus the sale was voided, sale was brought by the wrong trustee. i believe the attorney i spoke to was raising the issue.. the OWNER of the debt – [ the owners substituted trustee] is the party that would sold the property “pursuant to a regualarly conducted sale etc” this may very well turn on §2923 and the contextual meaning “regularly” to imply that MERS effectually deficient status lacks authority assign the debt to the substituted trustee. i dont know – i am waiting for the case law.
    I HOLEY..[hahaha] agree most attorneys have a difficult time tying shoes even with instructions.. but NOT all attorneys are incompetent – so to you competent lawyers – no offense intended .

  6. Can you Neil or anyone else out there comment on this article that I came across while researching for more dirt? I haven’t heard of IPFS, but have a blind hunch that they may have something to do with long standing problem related to a Lehman table funded loan.

    Corporate Funding: New Funding Source Rises To Meet Banks’ Needs
    Potential competitor to Home Loan Bank System

    US Banker | April 2006

    By Lee Conrad
    Print Email Reprints Feedback

    A new type of investment is emerging, a type of securitized CD that provides small and mid-sized banks a much-needed funding source, while giving institutional investors a new asset class of the safest degree.

    In a nutshell, this new asset class enables banks to sell their certificates of deposit to a special-purpose vehicle, which, in turn, uses the CDs to sell a securitized bond to institutional investors. For banks, the major attraction is a pathway to the capital markets and the deep pockets of institutional investors. That, in turn, gives banks more opportunity to fund community loans, says Greg Schein, managing director of Insured Deposits Conduit, a special-purpose vehicle trying to garner interest among community banks for its first deal. To date, 63 banks have signed up, and at least another 37 are expected to be signed up by the end of the month. The deal could be valued at up to $250 million.

    A conduit created for these deals is similar to those in a mortgage-backed or credit-card-receivables market, Schein says, except that CDs-the underlying collateral for these new securitization deals-are insured by the Federal Deposit Insurance Corp. This safety feature, he notes, is a key attraction for institutional investors. Normally, they would not give a second thought to products insured by the FDIC, which tops out at $100,000, because that threshold is much lower than the value of their investments. But with this type of arrangement, those insured deposits become not the ultimate investment, but collateral, making the securitized bond a safe bet for investors. Banks are required to pay the same interest rate they would on CDs.

    To be sure, safety was a major issue in the development of this investment, says Weili Chen, an analyst at Standard & Poor’s. While Chen would not comment specifically on this deal-it had not closed at press time-he says this type of investment been in the making for a long time. Initially there was some question as to whether the FDIC would honor the typical insurance if CDs were used in this type of arrangement. But in July 2004, the agency decided that if at least 100 banks were involved in any given deal, then the CD insurance would apply, which essentially gave the idea its first real boost, he says.

    Some in the market have high hopes for this asset class, Chen says. “It has the potential to draw big investors and offers them very low risk. It could be very big,” he says. Still, he acknowledges that it has a long way to go. “So far, the market is puny,” he admits.

    To date, only one $10 million deal has been completed. That deal, rated triple-A by Standard & Poor’s, was a transaction called IPFS (named after the deal’s sponsor, Indexed Powered Financial Services LLC) completed in August, he says. Deutsche Bank is facilitating the deal, acting as trustee and paying agent, says David Scola, global product manager at Deutsche.

    Shein says he hopes to generate enough interest from small banks to eventually issue new deals once a week. Once the industry wraps its arms around the concept, he expects banks’ interest to grow. “It fills a [funding] gap that many of them are struggling with,” he says.

    S&P’s Chen adds that this type of investment could become a direct competitor to the Home Loan Bank, a government-sponsored program that offers loans to community banks as a source of capital. The HLB offers a source of funds for small banks, but since the funding is structured as a loan, it requires collateral.

    At the end of 2005, secure loans to members stood at $620 billion, up seven percent from 2004. (c) 2006 U.S. Banker and SourceMedia, Inc. All Rights Reserved. http://www.us-banker.com http://www.sourcemedia.com

  7. Patrick.

    “1. In UD Court in CA, most judges are not paying any attention to “title issues”. All they want to know is who is the current “owner” of the property, by recordation”

    But that would be proper assignments as well. right? Recorded.

  8. If you have to go to court to save your home, you’d better investigate the opposing party, lawyers and everybody on the other side involved. Find some crimes or unethical conduct on their part as added defense, as data. Never mind you, just investigate as added ammo. Just a suggestion.

  9. Why is it so difficult for all the 50 AG’s to stop all foreclosures on the same grounds
    Most of these foreclosures as we know by now are illegal, most loans were paid off by now by some undisclosed third party.

    Why if they are going to sue these debt collectors o these grounds, they still allow bankrupt firms and their liquidating trustees to steal homes with paid off notes, but they have blank endorsements what is the deal?

  10. Everyone check this out: Victory in New Jersey: click on the link to see New Jersey Unpublished Court decisions: http://www.judiciary.state.nj.us/decisions/index.htm

    Bank National Association v. Arthur Spencer

  11. Patrick –I thought the Gomes case was on appeal and neither the courts nor attorneys could cite it while it is on appeal.

  12. Angry,

    A couple of things that you should know.

    1. In UD Court in CA, most judges are not paying any attention to “title issues”. All they want to know is who is the current “owner” of the property, by recordation. I have watched Marc Pierce in Dept 9 of Santa Clara through case after case out. Any hope would be through bk court, and that is difficult at the very least.

    2. The Trustee is an agent of the beneficiary. I have seen the documents sent by the servicer, who is a legitimate agent of the PSA’s, to Trustees, and there is no doubt in my mind that an agency relationship exists. I have even seen the authorizations to execute Substitutions and Assignments. The applies to portfolio lenders as well.

    3. Gomes v CW, a CA Appellant Court decision, has essentially “gutted’ MERS and Prove the Note arguments. In Gomes, it was ruled that since the Deed authorizes MERS to foreclose, and the borrower has signed it, then MERS can foreclose.

    Gomes also ruled that there is no requirement under 2924 to Prove the Note.

    4. The only viable defenses that are getting anywhere in CA right now is Fraud in the Modification. Brian Angeline, my Southern Ca attorney, is having great success with it. I don’t know of anyone else, but most attorneys are a joke.

  13. Tags:

    The Inside Job- A Terrifying Commentary on Amerika’s Future

    It should be a requirement that every American watch The Inside Job. The award-winning movie is chilling and offers detailed analysis of the epic and continuing collapse of the United States economy.

    What I find most chilling are the profiles and interviews with the architects of the collapse, the bankers, the politicians and the academics. Pure evil.

  14. If proper creditor is not identified in any debt collection or court action, you still owe the debt because “collection rights” have been sold but that creditor never identified itself to you — or proved it’s right to collect..

    Even if insurance has paid off “investors” — collection rights — not the debt itself — is sold elsewhere at steep discount to the actual charged-off debt. Servicers have long concealed who purchases collection rights. Foreclosures are nothing more than an extension of credit card debt collection (rights) – which has been abused in courts for a very long time. What is needed to be determined is the party who is actually asserting debt collection rights — and the validity of “assignment/sale” of those collection rights.

    All this means is that foreclosures and credit card debt collection is, and has been for a long time, fraudulent.

  15. As I recall, debt collectors are running wild in Minnesota. This lawsuit should be very interesting. Burmese8@yahoo.com

  16. angry & not taking it,

    can you help me identify this attorney about his license in texas. he has an office in irvine, ca. lawrence jay dreyfuss.

  17. can you please help me find out if this attorney named lawrence j. dreyfuss lost his license in Texas. i know this guy is in trouble in texas. can you help me dig more into this person?

  18. Sherry H
    the notary issue requires you discredit the doc /notary…
    find the FRAUD- FORGERY/FALSITY investigate the doc- ,then investigate the notary and file a complaint with the secretary of state the notary is from, or if the notary commission is expired the state AG the notary is from…

  19. http ://mikerooneylaw.com/RoboSigning.aspx

    an attorney of 30 years in s ca posted..
    In particular, when the foreclosure purchaser, be it a third party or the foreclosing entity, seek to evict the “former” owner in possession. Claifornia law requires that the foreclosure purchaser/”new owner” prove that they purchased the property pursuant to a regualarly conducted sale etc. Foreclosure caused by an entity that is not the owner of the debt [ususally/traditionally, the beneficiary] is not a regualarly conducted sale.

    you must read this until you understand it- that the foreclosure trustee is not representing the “owner” of the interest =[property, debt,note, $$$$$]
    they are a paid actor to bluff the court using the recorded substitution of trustee, thru assignment of deed of trust = rights to the deed of trust ONLY- not the NOTE not the $$$. hence “caused by an entity that is not the owner of the debt [ususally/traditionally, the beneficiary=actor]”
    how you convey this to the court is another issue altogether …but standup for yourself, do try to find an attorney but be sure they understand these issues.!!

  20. Would anyone happen to know if Ecore Capital mentioned in the above article is in any way part or, or affiliated with, Encore Credit, which was or is a Bear Stearns entity? As I recall, Bear Stearns had a debt collection subsidiary (consumer receiveables) as well as mortgage servicing subsidiaries, but have no idea what name they went under. I see that the full name of the co. is Encore Capital Credit Group,Inc.- similar to BS’s Encore Credit.

  21. Angry,

    I found the full article by looking up Michael Patrick Rooney, Esq., very interesting as we look at eviction as our next step.

    It feels like I have tried everything, but it would seem that if the Pretender Lender, who would only answer my letters with more copies of the original signed paperwork signed at the onset of the refinanced loan, they cannot possibly have the original docs. It was of course MERS and securitized, therefore the eviction notice, the foreclosure notice and the trustee notice must all be fraudulently signed since the Notary could not verify it to be true, right?

  22. see, it’s securitized loans. Your credit cards are funded by investors in ABS. So you default, credit default swops take care of it. Now these scum suck’in pigs called collection agencies pay peanuts for paid debt and harass and try to get you to pay.

    Well, same with car loans. How many cars have been repo’d? And who got that car for free? To sell again for a profit less paying some criminal to get it?

    Welcome to the free market, where things are not what they seem and everything is living lies.

  23. Hi Angry,

    I am interested in the rest of your message about Felonies under 4. Is there more you can share?

    Here I am packing my home of 20 years in CA, awaiting the eviction notice, the house was stolen 2-24-11.

    This all started due to mortgage servicing fraud on another property, which we did a short-sale, too bad since I have Crystal Moore and Brian Bly as the robo-signers on the Notice of Default. We sold it prior to robo-signing becoming known. That mortgage servicing fraud has wiped us out financially over the past 3+ years.


  24. the” presumptive lie ” yes “the whole thing is COUNTER-INTUITIVE”
    Why Robo-Signatures Are Illegal in California and Other Non-Judicial Foreclosure States
    By Michael Patrick Rooney, Esq.

    In turn, California Civil COde 2934a requires that the beneficiary execute and notarize and record a substitution for a valid substitution of trustee to take effect. Thus, if the Assignment of Deed of Trust is robo-signed, the sale is void. If the substitution of trustee is robo-signed, the sale is void. If the Notice of Default is Robo-Signed, the sale is void.

    3. These documents are not recordable without good notarization.

    In California, the reason these documents are notarized in the first place is because otherwise they will not be accepted by the County recorder. Moreover, a notary who helps commit real estate fraud is liable for $25,000 per offense.

    Once the document is recorded, however, it is entitled to a “presumption of validity”, which is what spurned the falsification trend in the first place. Civil Code section 2924.
    Therefore, the notarization of a false signature not only constitutes fraud, but is every bit intended as part of a larger conspiracy to commit fraud on the court.

    4. The documents are intended for court eviction proceedings.

    A necessary purpose for these documents, AFTER the non judicial foreclosure, is the eviction of the rightful owners afterward. Even in California, eviction is a judicial process, albeit summary and often sloppily conducted by judges who don’t really believe they can say no to the pirates taking your house. However, as demonstrated below, once these documents make it into court, the bank officers and lawyers become guilty of FELONIES:

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