Monday, October 11, 2010

U.S. Eyes Criminal Violations in Foreclosure Crisis, U.S. Secret Service and Department of Justice to Investigate The Law Office of David J. Stern Plantation Fl.

WASHINGTON (CNN) -- Federal law enforcement officials said Tuesday the probe of potential fraud by financial firms in the foreclosure crisis includes an investigation into possible criminal violations of federal laws. Two sources familiar with the Financial Fraud Enforcement Task Force indicated the multi-agency effort by investigators in the Justice, Treasury (U.S. Secret Service) and Housing Departments would determine whether prosecutors would ultimately pursue criminal or civil penalties - or both.investigation into the foreclosure process," White House Press Secretary Robert Gibbs confirmed Tuesday, 10/19/2010.

The Task Force has scheduled a meeting for Wednesday morning, 10/20/2010, at the Department of Housing and Urban Development. Upon conclusion a briefing is likely at the White House, officials said.  "The administration's Federal Housing Administration and Financial Fraud Enforcement Task Force have undertaken their own regulatory and enforcement.

Attorneys general in half a dozen states are demanding action or opening investigations. The Treasury Department said Thursday it was asking regulators to look into “these troubling developments.” The Florida attorney general is investigating three law firms for allegedly providing fraudulent affidavits that identify who holds the original mortgage note in foreclosure cases. In Florida and in other states, this document allows lenders to bypass a costly trial and proceed with a foreclosure.

Two of the three firms being investigated — the Law Office of Marshall C. Watson and the Law Offices of David J. Stern PA — have represented GMAC in foreclosure proceedings. And the person who signed many of these allegedly false affidavits was an employee of GMAC.  The U.S.Secret Service received concurrent jurisdiction with Department of Justice law enforcement personnel to conduct any kind of investigation, civil or criminal, related to federally insured financial institutions (Fannie Mae and Freddie Mac).

The U. S. Secret Service agency's primary investigative mission is to safeguard the payment and financial systems of the United States.   Since 1984, the Secret Service's investigative responsibilities have expanded to include crimes that involve financial institution fraud, (Fannie Mae and Freddie Mac) computer and telecommunications fraud, false identification documents, access device fraud, advance fee fraud, electronic funds transfers and money laundering as it relates to the agency's core violations.
10/19/2010 BLOOMBERG NEWS...Florida Foreclosure Lawyer David J. stern, Lehman, JPMorgan in Court News.

For Americans, the foreclosure crisis has wiped out fortunes, bringing destitution and homelessness. For Florida attorney David J. Stern, it has brought mansions, a Bugatti sports car, see photo above, and a luxury yacht, Bloomberg News’s David McLaughlin reports.

Florida has the third-highest residential foreclosure rate in the U.S., and Stern, 50, has made a fortune off the bust. His foreclosure-processing business has generated hundreds of millions of dollars in revenue preparing documents for the cases that his law firm brings on behalf of lenders seeking to reclaim homes from borrowers who can’t pay their mortgages.

NY Times 10/18/2010...The foreclosure crisis has an unusual capital markets twist. A law firm at the center of the controversy in Florida, the Law Offices of David J. Stern, his and his wife's photo above, sold its foreclosure-servicing business to a special purpose acquisition company, or SPAC, the Chardan 2008 China Acquisition Corporation, less than a year ago. The newly formed company is called DJSP Enterprises.  SPACs are specially formed public companies set up to acquire a single public company and take it private.

The DJSP Enterprises (David J. Stern his photo above) SPAC was always a particularly risky deal. The initial SPAC was formed under the laws of the British Virgin Islands. This presumably was to take advantage of tax laws and the laxer disclosure laws applicable to foreign issuers, particularly those that are not listed elsewhere.
Unfortunately, the plan did not work. Chardan instead agreed on Dec. 10, 2009, to acquire a very American business: the nonlegal foreclosure business of Daniel J. Stern.

Foreclosure Attorney David J. Stern Leads the Life of a Oil Rich Sheik While Destroying The Lives of Thousands of Florida Homeowners, ‘Su Casa es Mi Casa, Your House is My House’ Exclusive See His Photos.

Chardan paid $64.8 million in cash for this business. Since Chardan did not have enough money to pay the full purchase price, the deal included the issuance to Mr. Stern by DJSP of a promissory note for $52.469 million, a right to receive a later cash payment of $25 million and stock in DJSP. This was in addition to a $58.7 million cash payment to Mr. Stern. It was a nice cash-out for Mr. Stern, who was also left with a 33.15 percent interest and became chief executive of the now public company.

A SPAC pursing hot money in China went after even hotter money, Florida foreclosures. Investing in this business was clearly a “riding the wave” event. Looking through the documents filed with the Securities and Exchange Commission, there does not appear to have been proposed any viable exit plan for this business once that wave subsided.
It has all come to a head now. Citigroup and GMAC have suspended referrals to the Stern law firm, and Fannie Mae and Freddie Mac have reportedly dropped him as well. The dry-up of referrals and the general foreclosure suspension by other lenders will directly affect DJSP. The company’s stock closed at $1.87 on Thursday, down from its $13.65 high back in April. DJSP announced Thursday that it had laid off 10 percent of its staff.

Bill Warner Private Investigator, SEX, CRIME, CHEATERS & TERRORISM.