Bank of America Attorney: “Government should stop looking for Fraud where it doesn’t Exist”


By William Hudson


The big banks have demonstrated to the world that they own everything including the courts, law enforcement and government officials. They have demonstrated this fact by rigging currency and economies, obtaining bailouts when they had no losses, foreclosing on loans they can’t prove they own, playing both sides of the market and by purchasing government representatives with “deals” they just can’t turn down. Meanwhile 318 million Americans have had their lives impacted or decimated by illegal banking practices.

In late May,  a federal appeals court ruled it will not hold Bank of America accountable for the sale of worthless mortgages, overturning a paltry $1.27 billion penalty they had been ordered to pay. A panel of three judges ruled that federal prosecutors had failed to prove that Bank of American’s Countrywide Mortgage division had defrauded Fannie Mae and Freddie Mac by selling them fatally flawed loans. Seriously, who cares when the federal government, courts and banks can fleece the American taxpayer for the bank’s bad behavior?


The judges ruled that Countrywide employees “may” have sold loans in 2007 and 2008 (more like from 2000 to 2008) that were not of the quality promised in the contracts with Fannie and Freddie. Moreover the judges ruled that there was no evidence that these “sales” — an element of a loan program at Countrywide that was known informally as “the hustle” — were part of a “deliberate deception”. Apparently the judges didn’t feel that selling D grade paper as A paper and then forging appraisals, failing to deliver the notes to the trust, falsifying loan documents and inflating buyer qualifications to deceive investors was a criminal act.


“The trial evidence fails to demonstrate the contemporaneous fraudulent intent necessary to prove a scheme to defraud,” Judge Richard C. Wesley wrote in a 31-page ruling that refused to acknowledge that this case was evidence of a nationwide practice between small lenders and the big banks.


The ruling by the United States Court of Appeals for the Second Circuit is simply another attempt to sabotage the Justice Department’s ineffectual prosecution of Wall Street after the mortgage crisis. It is also a message for Preet Bharara, the United States attorney for the Southern District of New York, and any other state attorney who dares to prosecute the big banks. Bank of America was so arrogant in its fraud that they called its practice of rubber-stamping high-risk loans and selling them to Fannie and Freddie “spectacularly brazen”- but not criminal?


This is evidence of the insane times we are now living in.  Back in 2014, Judge Jed S. Rakoff of the Federal District Court in Manhattan ordered Bank of America to pay a $1.27 billion penalty in the “hustle” case. But that sum is an insignificant fraction of the billions of dollars that Bank of America has paid in legal fees and settlements related to Countrywide, in which Bank of America “purchased” in 2008. Bank of America has spent nearly $37 billion on litigation expenses since 2010, most of it related to the legal fallout from the financial crisis.


The hustle prosecution was important because in addition to Bank of America, federal prosecutors had FINALLY decided to hold a major industry player accountable by the name of Rebecca Mairone, who was a former Countrywide executive who was aware that faulty loans were being issued and sold.


However, this case is different in that Bank of America, who normally will fight an opponent until the end, settled most of the charges before the case went to trial. That in itself demonstrates that Bank of America knew they had something to hide. However, from the beginning, it was obvious that Bank of America’s attorneys were confident they would win the hustle case,  based on the fact that in all cases against the big banks- there is NO party prosecuted for criminal conduct and all fines and settlement are too miniscule to deter future criminal behavior.



“The Second Circuit understood this was a massive government overreach from the beginning,’’ said Josh Rosenkranz of the law firm Orrick, who represents Ms. Mairone. “The message is that government should stop looking for fraud where it doesn’t exist.” That is a great message considering homeowners with no education in mortgage fraud are quite capable of finding fraud in their own Countrywide loan documents just by doing a cursory search on google to see if the signatures and assignments are valid.

The case was referred to as the “hustle” because a program at Countrywide was known as the “High-Speed Swim Lane” that the originator created to sell mortgages to Fannie and Freddie as the subprime mortgage market was imploding.   By October 2013, federal prosecutors singled out and accused Ms. Mairone of overseeing the high-speed lane program that pushed through fraudulent loans to unqualified buyers knowing that ultimately the loans would fail (while the banks bet against the securities to fail). The high speed lane would result in more than $1 billion in losses. The faster the employees originated loans, the higher their bonuses were paid.

The appeals court acknowledged that Countrywide’s contracts with Fannie and Freddie may have including false statements but that “intentional” contract breaches did not constitute fraud on the part of the mortgage lender. And poor little Ms. Mairone was forced to leave her job at JPMorgan Chase after a jury convicted her of one count of fraud. Mairone is now consulting, and it is likely her services are in high demand.
The government’s case was based on a whistle-blower complaint brought by Edward O’Donnell, who was a former Countrywide executive. Mr. O’Donnell received $57 million from the government (taxpayers) for his role in bringing the issues to light (and the award will stand).

Predictably, the taxpayers end up paying almost half a billion dollars and NO ONE goes to jail! The message sent to the big banks is that they are above the law- therefore, rape and pillage the American homeowner with wild abandon.

11 Responses

  1. […] Source: Bank of America Attorney: “Government should stop looking for Fraud where it doesn’t Exist&#… […]

  2. 300 Million Americans can bring these folks and big gov,and anyone else trying to run a sham on hard working Americans to their knees and even lower.
    We have to be willing to risk those things we hold dear and Demand they play fair for all.
    Thats all there is ti it,if we dont Demand we shall not receive.

  3. Write to the FBI, OCC, CFPB, FTC and Attorney General of your state. Do not think that someone else will fix the problem of this outright fraud and ongoing illegal foreclosures. Each and everyone needs to do whatever it takes to cure this national crisis for self help and for the future generations to come as this is a serious problem this country is now facing which may cause economic depression, devaluation of dollar and rampant homelessness. Please act now as a principle in democracy to save this nation and use the power vested in the people to complain and to correct.

  4. RICO is what the banksters need. This is a giant RICO scam from the beginning. Judges are in on the scam, too. Sad commentary for a once great nation.

  5. Agree marina, many people are bidding their time
    saving money and that day will come. Our day of justice will be cast. Please god wrap your arms around each one of us fighting this. Keep us and our families in your mind and help us through this.

  6. You will know when it is no longer a dog and pony show and has become real commitment for justice when the DOJ, AGs, DAs, and homeowners file federal RICO actions…racketeering, conspiracy, obstruction of justice…and the justices rule on the rule of law….

    but not until then. Until then, they are just putting on a show until an unfounded statute of limitations is met (fraud has no statute of limitations) and they have played enough ineffective court games to get thrown out by rulings of res judicata and collateral estoppel.

  7. How about manufactured defaults o on homeowners who were never late, had 700-800 credit scores, but asked for a modification after a job loss, medical emergency, a hurricane, the Bp oil spill? How does a government allow banks to continue to do this to hard working Americans and then judges acting as if this did not occur? This need to change these same people with the 700-800 credit scores will never let this go ever, they will fight back. The backs need to beware.

  8. Every fiat currency in history has failed.
    They knew ours would too…they knew & planned this in advance sucking every last cent from the American people.

    You would think the CDO derivative swaps would have been a clue.
    Obviously the case was heard by deaf ears & blind eyes.

    Take Morgan Stanley for instance…2 cents shy of BK. .
    Then a 8 trillion CDO swap via the Federal Reserve Window and Walla! !

  9. Reblogged this on Deadly Clear and commented:
    Very well positioned. They think they are protecting the banks from failing by allowing the the foreclosures to keep them liquid and stopping the fines for bad behavior. Let’s face it – the crash will likely wipe them out of retirement investments. Karma is a bitch.

    If they really wanted to clean up the banks and protect American citizens they’d confiscate the computer programs and software designed to default America…and regulate the industry.

  10. Do you recognize a Broadway stage play when you see one?

    Here is how the case was initially announced:

    Preet Bharara, the United States Attorney for the Southern District of New York, Steve A. Linick, the Inspector General of the Federal Housing Finance Agency (“FHFA”), and Christy L. Romero, the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), announced today that the United States has filed a civil mortgage fraud lawsuit against BANK OF AMERICA CORPORATION (“BANK OF AMERICA”) and its predecessors Countrywide Financial Corporation and Countrywide Home Loans, Inc. (collectively, “COUNTRYWIDE”). The Government’s Complaint seeks damages and civil penalties under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) for engaging in a scheme to defraud the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Specifically, the Complaint alleges that from at least 2007 through 2009, COUNTRYWIDE, and later BANK OF AMERICA after acquiring COUNTRYWIDE in 2008, implemented a new loan origination process called the “Hustle,” which was intentionally designed to process loans at high speed and without quality checkpoints, and which generated thousands of fraudulent and otherwise defective residential mortgage loans sold to Fannie Mae and Freddie Mac that later defaulted, causing over $1 billion dollars in losses and countless foreclosures.

    Something is very troubling with this suit from the onset. This is actually a fraud and top of a fraud. How can a player/partner like FNMA be both a plaintiff and a victim just because of a bankruptcy proceeding called a “conservatorship? Isn’t FNMA hiding behind its advantage again soaking the US Government with this litigation financed by taxpayer funds?

    I have know from 1996 forward that FNMA was not a victim rather an integral player and willful participant and author of “The GSE Business Model” widely adopted by the mortgage industry. This is a business model that had brought the world’s financial system to its knees, yet its model that simply does not work and is based on fraud continues to this day. Hedge funders abound jockeying their position for the Model’s ill gotten gains. Public officials derelict in their duty are scurrying wanting to appear to be doing something.

    FNMA is a partner and player with Bank of America in the fraud which is designed in the event of implosion to tap the US Taxpayers.

    FHFA’s Linick and Sigtarp, US Attoneys feigning ignorance should be immediately investigated for the waste of judicial resources when the entire GSE business model from A-Z is entirely based on fraud (described by every creditable scholar on the subject as “fatally flawed”).

    It is time for all of the partner/players in the business Model to be called into court so we can hold them all accountable in this sham of the century.

Contribute to the discussion!

%d bloggers like this: