BOA Escape: Blind Justice or Just Blind?


Proof of fraud might only be possible through the resources of government investigation — but they obviously need help from the private sector of attorneys and forensic auditors who know many of the pieces of this puzzle in a way that far surpasses the current state of knowledge of government investigators and prosecutors.


BOA actually went to trial on their obviously fraudulent scheme. The jury found against them and the Judge imposed a $1.3 billion award, which frankly should have been a lot higher. Then the appellate court said that this was a case of breach of contract and not fraud. The appellate court made a point of saying that the intent at the time of the sale was not apparent from the evidence and unfortunately they were right.

The reason the appellate court was right was that, as presented, the case did not prove INTENT at the time of sale of non-conforming loans to Government sponsored entities that bought them. The problem is that securitization, as practiced, and as assumed, never happened. That intent was self-evident even it was not introduced into evidence. The Hustle was a program to grease the track for getting “loans” and mortgage bonds as far away from the banks who were the fraudsters as possible. From a strictly legal standpoint the loans did not exist and the paperwork that was “evidence” of the loans was inconsistent with the facts of each alleged loan. The Government simply did finish its homework. What went wrong was two things:

(1) the prosecutors of the case failed to investigate the sale itself that went to REMIC Trusts that were empty — completing the circle of fraud in which the banks were essentially selling the loans to themselves using the GSE as a conduit and leaving the GSE, that also served as Guarantor, with full risk of loss on the loans. It is most likely true that the banks did not stop there: they continued to sell or enforce loans that thye had sold multiple times before the transactions with the GSE.

(2) more importantly, the sale of the loans was fraudulent. The “Seller” did not own the loans. The “Seller” knew it was selling empty paper. The “seller” knew and intended to create the illusion of a sale of the loans by using the GSE as conduit. Everything before that “sale” (and which was unfortunately taken as face value upon assurances from the “Seller”) was false, fabricated, forged paperwork. Hence the “Seller” was not a “Seller” and nobody knew that except the “Seller.”


Before that, they knew they were granting approval on loans using money from other people and they knew their business plan was simply to run up the total dollar amount of loans so the same loans that had already been sold to the secondary market and then subjected to securitization, could again be sold to a GSE that was following national policy aimed at getting these toxic loans out of the marketplace. In short they knew they were creating worthless loans. By simple logic they knew that the “buyer” was reasonably relying upon the representations of a mega bank that created very believable assurances that the loans were real and not defective.

Investigators should have started at the beginning when the Trusts were created by the mega banks and totally controlled by the mega banks. Had they done so they would have immediately come up against a startling fact — the mega bank acting as underwriter was actually using a paper entity as the issuer of worthless bonds in what should have been treated as an IPO. The proceeds of sale of those worthless MBS issued by the empty trust, were never deposited into the Trust. Those proceeds were instead deposited into a dynamic dark book consisting of multiple accounts.


This gave the mega bank complete control over both the Trust (who obviously would not protest not receiving the proceeds of sale of securities issued by the trust) and the money. The money was used in part to fund loans in which there was a remote vehicle designed to protect both the bank and any related party from violations of lending laws — including disclosure of the creditor. SO the “originator” who appears on the note and mortgage never actually funded a loan from either its own funds nor any warehouse lender — this making the note and mortgage worthless.


The loan contract was never completed because the parties to the money transaction and the parties to the paper transaction were entirely different.


The prosecutors of this case missed the point completely. But that could be good news. If they really want to make themselves look good and bring BOA and the other mega banks to justice, they might still have the opportunity to bring the action on the premise that BOA knew that it wasn’t a “Seller” and that BOA and Countrywide were the only parties who knew that. They knew they were conveying nothing. They knew that the loans were worse than toxic — most of the loans simply had to fail because upon reset to normal amortization the payment wold be greater than the family could afford and in some cases greater than the entire annual household income.

The whole idea was to have failing loans because that knowledge enabled banks and their affiliates to bet against the loans and even bet against mortgage bonds that were worthless — a bet that contributed to the illusion that the mortgage bonds were worth anything. It worked — in the bailout, the banks received from GSE’s, US Treasury and the Federal reserve trillions of dollars for worthless paper that the banks never owned.


Remember that they were selling this stuff, not buying it. And they were selling it under the guise of insurance contracts and credit default swaps. This even went so far as having the highest “tranche” of the worthless trust guarantee the loans down in the toxic waste tranche so that when any part of the empty trust appeared to fail it gave the appearance that the entire trust had failed — enabling the mega banks to swing around and offer settlements for their “negligence” or “breach of contract.” The truth is not that the trust failed. The truth is that the trust never existed in the first place and this was the vehicle by which the mega banks created multiple layers of illusions in which the wall Street banks created further illusions of “Sellers” of loans they never owned.

With that knowledge the case for “scienter” and intent would have been on solid ground. The problem is that government investigators are still having trouble catching up with the realities of this epic fraud. The banks knew the paper they sold to GSE was worthless not merely defective. The Banks knew that the mortgage bonds they sold to the Federal reserve at face value was worthless, not just defective (the trust that had issued them never owned any asset, much less mortgages). The banks sold them anyway knowing full well that they were selling an undisclosed loss to the buyers.

And that is why in court the banks fight in every way possible to deny the homeowner the right to know his creditor. The truth is there is no creditor. But there is an undefined group out there with claims against the mega banks, the servicers who acted against the interests of investors, the affiliates who pretended to sell loans and mortgage bonds to the government agencies, and of course homeowners who obviously had no clue about any of this — the information being withheld at the time of the alleged loan and which continues to be withheld.


This proof of fraud might only be possible through the resources of government investigation — but they obviously need help from the private sector of attorneys and forensic auditors who know many of the pieces of this puzzle in a way that far surpasses the current state of knowledge of government investigators and prosecutors.




5 Responses

  1. The real crooks are some greedy banks and some servicers. These banks and servicing companies need to be shuttered down by the government to prevent ongoing illegal foreclosures based on blatant fraudulent documents that any kid could figure out. Enough is enough.

  2. Thank you very much Mr. Neil Garfield. I found out some information as to how to track a printer used by a servicer.

    Printer steganography is a type of steganography for “hiding data within data” produced by printers, where tiny yellow dots are added to each page. The dots are barely visible and contain encoded printer serial numbers and time stamps. Unlike many forms of steganography, the hidden information is not intended to be available from a computer file, but to allow serial number and time of printing to be determined by close examination of a printout.

    Hope the servicers don’t destroy printers now like they destroyed Promissory Notes. In this memorial day weekend, I may say that people begin to believe, an eye in the sky. That may be the greatness of America. So, if the servicers think they got all screwed up with fabrications it is time to give homes free.

  3. Please contact Gary Michaels at He may be able to assist you.
    The Lending Lies Team

  4. Our servicer sent a copy the Note without our signatures. The Note was with Countrywide Home Loans and now the serviver says it is with Bank of New York Mellon in their “warehouse”.

    How do we prove that the servicer sent a copy of the Note without signatures? We are hesitant of asking them why they did send a copy this way, as they would deny it. How do we prove?

    What method or letter we need to write to the servicer to get more evidence that they sent a copy of the Note without our signatures? Can anyone help us?

  5. Mr. Garfield, I have a court document that proves just what you are saying. If want to see it E-mail me.

Contribute to the discussion!