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Senators Consider Whether Financial Fraud Should Mean More Prison Time

May 4, 2010

DISCLAIMER: THE CONTENT IN THIS BLOG IS FOR INFORMATION PURPOSES ONLY AND IS NOT TO BE MISCONSTRUED AS LEGAL ADVICE! Anthony Martinez is a Complex Litigation & Consulting Expert. Neither Anthony Martinez nor his firm AMA engage in the practice of law and only work in conjunction with licensed practicing attorneys. AMA will provide public information only and will not provide any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms or strategies.

I don’t normally repost news articles however this particular article is important because it begins to show the demise of a fallen financial empire.  In every criminal act there is the criminal and the victim.  Homeowners have been the victims in this foreclosure epidemic.  And like any criminal prosecution, unless the victim comes forward and prosecutes the criminal, the criminal will most likely be set free.  So what does this mean?  It means that more homeowners need to come forward and fight their foreclosures.  There are only a handful of true to the cause advocates that are fighting this fight with an army of pro-se soldiers.

We have now in the homeowners corner, a handful of prosecutors (Senators) that are willing to put the criminals feet to the fire.  We have the potential in front of us to give a criminal element to fraudulent foreclosure actions (which it is and should have always been to begin with).

There is a systematic approach I would like to share with homeowners facing foreclosure and attorneys alike that are engaged in foreclosure defense and that is the sales dynamic.  See there is a simple philosophy in sales that sales managers train their sales representative to do and follow.  Sales is a numbers games so the first rule of sales is (1) the more people you contact the greater your chance at closing a sale.  Sales mangers would require reps to make 100 calls a day because out of those 100 calls maybe 10 could be closed.

This is the same approach being used by foreclosure law firm mills.  File 100 foreclosure and maybe 10 fight back.  This means 90% of their foreclosures go to summary judgment without resistence.  To the parties initiating foreclosures these are great statistics.  It is for this very reason foreclosure law firm mills charge a flat rate of approximately $1,200 per foreclosure.  Any attorney will tell you that they normally charge a retainer of $2,500 to $10,000 to take a case depending on the circumstances surrounding the case at which point they will bill out anywhere from $200 to $350 per hour.  Think about that for a second.  An attorney that spends 10 hours on your case alone who bills out at say $300 an hour cost $3,000.  So what does it say of a foreclosure law firm mill that bills out a flat rate of $1,200 to a multi-million dollar financial institution?

If you can understand the sales philosophy that this is a numbers game with the bets on the homeowner that will not fight to keep their home, then try to understand the adverse affect those initiating these foreclosure actions will face if the homeowner actually defends themselves in litigation.  It would mean the foreclosure law firm mills would not be able to charge a flat rate of $1,200 to the banks or servicers.  It would mean they would have to charge more money to prosecute these foreclosure suits.  Banks don;t want to spend so they would look to other foreclosure mills to represent them which would open up a biding war for their work (which already exist on another level).  It would cause the banks to have to spend more money in litigation to defend their fraudulent behavior and their statics of 90% success to straight summary judgment would decrease.

The article below in another language is basically saying that law makers are prepared to put the feet of fraudulent behavior of financial institutions and organizations to the fire.  I implore every homeowner to fight for their homes and families futures.  There are people like myself, Matt Weidner, Ice Legal and others who are here to help you every step of the way. 

Anthony Martinez

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Originally Posted By:
David Ingram
The National Law Journal
May 04, 2010
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 Amid the flurry of securities fraud investigations, a Senate Judiciary subcommittee today is considering whether the laws governing conduct on Wall Street need an overhaul.

The subcommittee on crime and drugs, chaired by Sen. Arlen Specter, D-Pa., is hearing testimony from academics, advocates and at least one voice from Big Law. One major point of dispute: a proposed requirement for some financial services employees to meet a fiduciary duty to their customers, or else face criminal charges and potential prison time.

“I have long believed that it is insufficient to have fines for fraud,” Specter said in an opening statement, adding that fines from the Securities and Exchange Commission are “calculated as part of doing business.”

The Justice Department has brought criminal fraud charges stemming from the financial crisis, but one of its biggest cases, against two former Bear Stearns hedge fund managers, ended in acquittal in November.

Among those testifying at the hearing is Andrew Weissmann, former director of the Justice Department’s Enron Task Force. Now the co-chair of the white-collar defense practice at Jenner & Block, he said a new criminal statute relating to fiduciary duty would raise questions of fairness and proper notice to those who might be covered.

“Would every breach of a duty of care now become a crime?” Weissmann asked this morning.

Another witness, Damon Silvers, associate general counsel of the AFL-CIO, said such a statute would not be unique. “I would submit that there’s nothing particularly exotic about criminalizing willful breaches of fiduciary duty. It’s a well-known feature of our pension law today,” Silvers said.

Click here for video of the hearing, which is likely to last much of today. Assistant Attorney General Lanny Breuer, head of the Justice Department’s Criminal Division, is scheduled to testify at 2 p.m.

Sen. Ted Kaufman, D-Del., said the public is demanding some action by Congress, especially in the wake of last week’s congressional testimony by Goldman Sachs executives. “I just think there’s a crisis, in terms of people thinking there are two sets of rules,” Kaufman said.

This article first appeared on The BLT: The Blog of Legal Times.

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One Comment leave one →
  1. avirani0203 permalink
    May 4, 2010 9:52 pm

    Great commentary. It is just a numbers game. The beginning started when struggling homeowners were vilified and branded as deadbeat scumbags. The banks PR machine worked overtime making sure they saturated the airwaves with their rhetoric.

    Homeowners have been at a disadvantage since then. The stigma for most is just too much to bear. Especially when it’s a blue collar working class family that has worked hard their entire lives to obtain their one small sliver of the American pie.

    Please keep up the great work.

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