In answer to questions frequently asked of me, the term “dark pool” was not coined by me nor was it discovered by me as an instrumentality of obscuring financial transactions. I have understood the workings of dark pools since my Wall Street days. But back then, in the 1960’s and 1970’s they were not so common.

What I did discover was a dark pools were in widespread use in the era of false claims of securitization — a discovery provoked by reading the prospectuses and pooling and servicing agreements (Trust instruments) for the issuance of of “certificates” a/k/a “mortgage bonds.”  There, in black and white, was a “reserve fund” consisting of money from investors who bought the certificates from underwriters using the fictitious name of a Trust that never existed. And it was stated therein that investors could be paid from this reserve — i.e.,. paid using their own money.

There were virtually no restrictions on the use of the “reserve fund.” The more I read and the more I asked my tipsters, it became very apparent that the reserve funds were interconnected, that the Trusts did not exist and so the reserve fund was actually a dark pool — a trading ground for securities and money. It is also the locale where the the most gross violations of law occur because they are hidden from public view and often hidden even from the financial statements of the participants.

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see DARK POOLS DEFINED — https://ag.ny.gov/press-release/ag-schneiderman-announces-landmark-resolutions-barclays-and-credit-suisse-fraudulent

Securitization was at first disclaimed by all the banks and servicers 10-15 years ago. Most people don’t remember that. The defense was “What Trust?”

Forensic researchers then discovered that underwriters or others had uploaded “securitization” documents to the SEC website and later added mortgage loan schedules, (that trend out to be false and fabricated) in which certain “REMIC” trusts claimed ownership of the “mortgage loans.”

Going with the flow, the banks and servicers then filed foreclosures in the name of the nonexistent trusts — and they got away with it. Today we have a mixed blend of claims of trust ownership of loans (i.e., the underwriter using the fictitious name of the nonexistent trust) and claims of corporate ownership of loans where a major bank or “successor” trust initiates foreclosure.

But in the end what they filed in foreclosures was antithetical to the claim they were making. None of the Trusts ever acquired loans from a settlor or trustor. Nor did any trust receive the proceeds of investor capital. By definition, securitization never actually happened. Adam Levitin calls this “securitization fail.”

The true money trail starts with the dark pool consisting of all proceeds of the sale of certificates or bonds issued by the underwriter in the name of the nonexistent trust. Hence the money is not in the trust; it is in the dark pool where money and trading, deposits and withdrawals occur in great frequency. Hence the underwriter has performed a Texas two step — on the one hand it claims that ownership is in the name of the fictitious REMIC Trust while at the same time funding the origination and acquisition of loans from the dark pool.

This is critically relevant to the foreclosures. In virtually all cases, the money came from the dark pool (not a trust) to originate (not allowed under the prospectus) or acquire loans. Careful securities analysis reveals a simple fact, to wit: that there IS a money trail but it leads back to the dark pools. Hence the paper trail that leads to the successors and “trusts” are documenting transactions that never occurred between the parties named on the written instruments. This in turn means that the certificates and bonds issued in the name of the named trust were neither backed by notes or mortgages and were most certainly not backed by debts.

A careful reading of certificates indicates that most of them have a disclaimer of any interest in the underlying debts, notes and mortgages. The investors acknowledge that all they are receiving is a promise to pay issued by in the name of the trust (but not issued By the trust). The real party in interest is the underwriter who also poses as “Master Servicer” for assets owned by the named Trust. But there are no such assets; so in the end we should be dealing with, and litigating with the underwriter.

Investors gave money to the underwriter believing their money would be deposited into the “REMIC” Trust. It wasn’t. Instead their money ended up in a dark pool with no rules. The money in the dark pool should be considered as deposits by investors rather than investments since the certificates were bogus. To consider it otherwise would be to deprive investors of the last vestige of ownership of the debts, notes and mortgages that were to be conveyed into the trust in exchange for the money paid to the “trust” by investors and then paid out by the “Trustee.” No such thing ever happened.

So the answer to the frequently asked question of “then where did the money come from” is that it came from an unregulated, undisclosed dark pool invented for the purpose of defrauding investors and homeowners. And the answer to the the other frequently asked question of “how do I prove that” is you don’t prove it. You prove the inevitable gaps that show that no financial transaction occurred anywhere along the paper trail.

Remember: documenting a false transaction doesn’t make it real. The document (note, mortgage, assignment, etc.) is either tethered to a real transaction in the real world that can be disclosed or it is untethered to any real transaction. If there is no real transaction in the real world the document becomes only a piece of paper. If there is a real transaction in the real world that your opposition can prove resulted in the creation of the document, then they win — simple as that. If there is no such transaction then the claimed liability does not exist, hence there can be no default. You can’t default on a nonexistent obligation. But obviously the investors have an equitable right to the loans funded with their money.


9 Responses

  1. Roger is correct — ” the PSA’s I have read regarding some WFASC (Wells Fargo Asset Securities Corp) deals allow Wells to repurchase the loans from the SPV and make them Wells assets when a trigger event occurs,” And, including any PSA to which Wells Fargo was swap administrator. Swaps remove from the trust.

  2. file:///C:/Users/usedk/Downloads/SSRN-id1695070%20(1).pdf

    Brush up on your standing arguments…..

  3. @louise and all…The collateral files never moved. In the case of Wells they were the custodian on all those “sponsored” securitizations, meaning they held the collateral. Now they can re-pledge the same loan and nobody is the wiser. Without any recorded assignments in the public record, they were free to do what they wanted.
    Also, the PSA’s I have read regarding some WFASC (Wells Fargo Asset Securities Corp) deals allow Wells to repurchase the loans from the SPV and make them Wells assets when a trigger event occurs,
    The only reason my mortgage was ever assigned was in response to my objections to the lack thereof or invalidity thereof, resulting in THREE assignments of the same note to the same non-existent entity or HSBC in it’s CORP capacity.

  4. YO MAMA — YO!! 1) Was the prior loan even paid off? Yo – -NO 2) was the new loan actually funded? Yo – NO 3) Who was real party that claimed to fund the loan? Yo — No one knows.

    Looks like you missed the finance class — while you were YO-ing in the Dorm.

  5. Ooooh dark pools…spooky, and, and, well, uh, dark! Let me put it to ya this way: who gives a crap how dark or spooky or murky the pools are. If you apply for a loan (don’t argue semantics now!) and get funded, then you received a loan. Only in college dorm room bull-sessions and on internet blogs is any other analysis considered

  6. Geniius talk Mr Garfield!?p. My residence feels Impremeditated fraud foreclosed due to modification auction sold twice underwrter r the worse criminal cheaters financial terrorist robbery

  7. Maxim – By no agreement can it be effected that a fraud shall be practiced. Fraud will not be upheld, though it may seem to be authorized by express agreement.

    What does this tell you about the BAR? That works hand in glove with the banksters to fleece the people;

    The courts pull the same trust and money bill scams; just follow where the original documents go; that is the money to follow;

    Only a Truth & Reconciliation Commission will full public participation can reveal the extent of the fraud; in peace

  8. We call these the inviso-transactions, because they never happened. Fraudulent and forged documents from the very beginning of the alleged transaction at closing all the way through the nonexistent REMIC trusts.

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