Just In: Acquittal - Real Fraudsters were the Banksters!

Wed, Aug 27, 2014 - 4:12pm

Real estate flippers avoided criminal conviction because they argued, and persuaded the jurors, that the REAL criminals were the banksters!! No way!!!

“In an unprecedented trial, four people charged with mortgage fraud were acquitted Friday by a jury in Sacramento federal court after defense attorneys argued the real culprits are the so-called victim lenders.” https://www.sacbee.com/2014/08/22/6648529/sacramento-federal-court-jury....

Let’s do a little background.

We all know of the real estate boom, and bust, particularly in California, and specifically localized in massive numbers in California’s Central Valley. Essentially, some of us have correctly pointed out that the root cause of the onset of the bubble, were criminal bankers, beginning with Blythe Masters of JPMorgan, who conjured up the scheme of securitized finance for home mortgages. The scheme was simple: the big banks would write loans, using investor money, and none of the banks’ own money. Once the loans were made, the banks would in turn package a thousand loans or so, and bundle them up, then sell them as a whole to investors, as a security. Investors getting first dibs at repayment streams [upper tranches] were paid less interest, than investors who were last to be paid [lower tranches]. The whole theory was that out of the pool of the thousand home loans, not all would default and go bad. Since in the aggregate, most of the loan payments would be paid on time, then those investors at the upper tranches were not risking non-payment as compared to the investors and the lower tranches. The interest rates were balanced against this risk, and the securities were marketed and sold off to investors.

The problem, though, crystal clear to anyone with a brain, from the inception of the whole scheme, is in the incentive structure of the whole mess.

Not a single participant in the scheme had a single incentive to scrutinize the deal. The prospective home loan applicant, wanted a home, and inflated the income and other figures on the application. None of the bankers cared about the fake applications, because the bankers were only going to bundle the loans and sell them off, having no skin in the game and having massive incentives to get more and more loans bundled regardless of the underwriting standards or risk of default.

The investors at the upper tranches cared not. They were guaranteed first payment from the income stream. Their risk of loss was near zero. The lower tranch investors cared not either, as they were getting astronomically high rates of return, and on balance, the risk to them of defaulting payment streams was outweighed by the lucrative returns, much like unsecured credit cards. They figured there would be defaults, but the high interest rates made it, on balance, perfectly acceptable.

The various middlemen in all the transactions, like appraisers, real estate agents, escrow companies, and all the durable goods manufacturers filling all those new homes with shiny new appliances cared not one bit either. Local governments, always desperate for tax dollars, care not one bit either that the mortgage applications were filled with false incomes, and outright lies.

Then, of course, the incentive structure, understood as it was, created a new class of opportunists: the flippers and fraudsters.

These criminals, correctly realizing that there existed NO incentive by any of the participants to scrutinize mortgage applications, began scheming with straw buyers to flip properties.

In Sacramento, this type of fraud was particularly rampant.

Here is where the story gets fun.

The basic crime details are set out here:

“According to prosecutors’ filings, Charikov, a 42-year-old real estate agent who lives in West Sacramento, used straw buyers to purchase properties in a declining real estate market and then immediately resold them to another straw buyer at fraudulently inflated prices. To qualify for the mortgage loans, prosecutors contended, the defendants submitted fraudulent loan applications to lenders, falsely stating the straw buyer’s income, liabilities, and intent to occupy the home as a primary residence.

“The indictment alleges that Charikov recruited his loan officer wife, Romanishin, 32, of West Sacramento; Tuzman, 42, of Citrus Heights; and Talybov, 32, of Antelope, as straw buyers in transactions involving the sale and purchase of two West Sacramento properties in 2006 and 2007.

“After the first set of straw buyers obtained the proceeds from Talybov’s fraudulent purchases, they allegedly split the take with Charikov. Subsequently, Talybov defaulted on loans for both properties.

All four were charged with fraud that resulted in alleged losses to the lenders of at least $710,000. Charikov and Tuzman were also charged with laundering their ill-gotten gains.”

Got it so far? The United States Attorney, in a hard-hit part of California, used its massive massive, taxpayer-funded resources, and made the decision to charge the low-level fraudsters, and none of the bankers. No plea deals were reached.

Instead, in an act of incredible lawyering, the defense attorneys turned the case on its head by arguing the real criminals were the banksters! Unbelievable.

Remember, to prove fraud, one element is reliance. That means the banksters, who lost the $710,000, had to prove that they relied upon the statements in the loan application to lend the money. The criminal defendants showed that the loans would have been made anyway, whether the application information was true or completely false. Thus, there was no reliance, an essential element, and the jury acquitted the criminal defendants. Brilliant, simply brilliant, and my hat is off to those fine lawyers who advocated a winning position. It was a risky move, too, one that drew sharp objections from the prosecution:

“In this trial, U.S. District Judge Lawrence K. Karlton, over the government’s strenuous objection, allowed testimony meant to show that the lenders in the two transactions at issue – Aegis Wholesale Corp. and Greenpoint Mortgage Funding – didn’t care whether information on the applications was true or false. Under those circumstances, the defense argued, the information was not material because, either way, the loan would have been approved.”

As an aside, I am a bit miffed that the criminals got away with fraud, as this now sends a message that prosecuting low level fraud may not achieve the desired convictions. This now creates a MOPE problem for the Feds. That means those idiots and criminals in Washington have to dream up a new class of criminal defendants to pursue. Who knows what the next set of criminals will be? Maybe us bloggers who dare to challenge the government spin machine? Perhaps returning war veterans who dare to criticize the inept commander in chief? Stay tuned on this one.

Anyhow, back to the story.

In a statement given after losing a sure winner, the US attorney, Benjamin Wagner, did not mention his own office’s lack of pursuing the real criminals, the banksters:

“U.S. Attorney Benjamin Wagner, in a statement issued at The Sacramento Bee’s request, said:

“Criminal trials are inherently uncertain endeavors. We have had tremendous success in convicting scores of persons in mortgage fraud cases over the last several years, but it is unrealistic to expect that we will get the outcome we are seeking in every single case.

“We respect the criminal trial process, and accept the jury’s verdict in this case. It will not dissuade us from pressing forward in the many other mortgage fraud cases currently pending in this courthouse.”

What is telling here, is the UA attorney’s reliance on PAST success, attempting to foreshadow future success: “An acquittal in Sacramento federal court is rare, regardless of the charges. But with respect to mortgage fraud, it is virtually unheard of. There was little or no difference between the mail fraud charges against Yevgenity Charikov, Vitaliy Tuzman, Nadia Talybov and Juliet Romanishin and charges brought against hundreds of other defendants prosecuted by the U.S. attorney’s office in the Sacramento-based Eastern District of California. The office has often described the Central Valley as “ground zero” for mortgage fraud, and noted it has been a national pacesetter in pursuing the perpetrators.”

The winning defense attorney, naturally, highlighted the real issue:

““The big banks and other lenders made as many loans based on patently false information as they could, packaged them as securities and passed them up the chain to Wall Street’s investment and management bankers, who peddled them to an unsuspecting public,” said defense lawyer Tim Pori after the verdict.

“No bank executives have been prosecuted,” Pori said. “Sure, there have been multibillion-dollar settlements with some big banks, but none of their officers – the ones who really pulled the strings – will ever see the inside of a cell.”

“In the week when details of the United States government’s $16.5 billion civil settlement with Bank of America was disclosed, I hope the jury’s verdict causes the U.S. attorney’s office to readjust its priorities and investigate criminally the true culprits of our country’s financial collapse, the mortgage lenders’ officers who committed the real fraud – not those who allegedly lied on the industry’s ‘liar’s loans,’ ” said defense lawyer John Balazs.”

The star defense witness, none other than William Black, chimed in as well:

William Black, who boasts long academic and regulatory careers, was a key expert witness for the defense, again over Coppola’s objection. Black is an associate professor of economics and law at the University of Missouri, Kansas City, and the “distinguished scholar in residence for financial regulation” at the University of Minnesota’s School of Law.

His testimony purportedly connected the fraud in the Sacramento case directly to the lenders, and he explained to the jury why the false information on the applications had no bearing on lending decisions.

“This is the first time that the overwhelming fraud at the banks has been discussed in a criminal courtroom by the person with the greatest expertise on the issue, William Black,” said defense lawyer Toni White after the verdict.

“Prosecutors have refused to criminally prosecute the elite bankers responsible for the mortgage crisis that decimated our economy. The jurors heard shocking testimony from ‘control fraud’ expert William Black that regular people who got loans they were unable to pay back did not (defraud) the banks. The elite bankers commit the fraud while prosecutors look the other way and prosecute the wrong people.”

If Rand Paul wins the presidency, he could do no better than to appoint William Black as Attorney General. Will we see that?

Prepare accordingly.

About the Author


Safety Dan
Aug 29, 2014 - 10:42pm

Google Testing Delivery

Google Testing Delivery Drones

The latest endeavor to emerge from Google Inc. GOOGL +0.35% 's advanced-research lab is flying into a field buzzing with competitors.

Is the U.S.'s regulatory framework in position to welcome a new delivery drone being tested by Google? Brendan Schulman from law firm Kramer Levin joins MoneyBeat. Photo: Getty Images.

Google X said Thursday it is developing a system of drones to deliver goods. RivalAmazon.com Inc. AMZN -0.29% is also testing delivery drones, and Domino's Pizza Inc. DPZ +0.25% tested delivering pies via drone in 2013.

Google said a 5-foot-wide single-wing prototype from its Project Wing carried supplies including candy bars, dog treats, cattle vaccines, water and radios to two farmers in Queensland, Australia, earlier this month.

Google's drones are 2½ feet high and have four propellers that move into different positions for different stages of flight. Packages fit into a gap in the middle of the wing. Google said it began test flights last year.

The rush to the skies comes despite the fact that commercial drone use is mostly banned in the U.S. The Federal Aviation Administration is considering regulations to change that and in June approved the first commercial drone flight over land—for energy giant BP BP.LN -0.15% PLC in Alaska. But the regulator is moving carefully because the technology is potentially dangerous and raises privacy concerns.

Google began working on drones in 2011 and said it expected it would "take years to develop a service with multiple vehicles flying multiple deliveries per day."

Enlarge Image

Google says these planes will have more in common with the Google self-driving car than the remote-controlled airplanes people fly in parks on weekends.Google

Google aims to have the drones flying programmed routes at altitudes of 130 feet to 200 feet with the push of a button. Precise navigation will be needed to pick the most efficient routes while controlling noise, respecting the privacy and safety of people on the ground and delivering items to an area the size of a doorstep, Google said.

A YouTube video released by Google shows Australian farmers ordering dog food. The drone takes off vertically, with its single wing pointing to the sky. Once in the air, the wing turns into a horizontal position and the vehicle flies fast, more like an airplane than a hovering, helicopter-like drone.

Google X works on long-term, risky projects with big potential payoffs, which Chief Executive Larry Page calls moonshots. The company hopes its drones will create new economic growth opportunities by moving goods around more efficiently.

Google hired Nick Roy, an associate professor of aeronautics and astronautics at the Massachusetts Institute of Technology, in July 2012 to head the project. Mr. Roy returned to MIT MITD -17.91% this month and Dave Vos, a veteran in automated aviation systems, joined Project Wing to work on turning the prototype into a commercial product, Google said.

Amazon said late last year it was testing delivering packages using drones. Earlier this year the e-commerce giant asked the FAA to test the vehicles in open U.S. airspace.

Amazon's initial prototypes looked like a typical drone, with small rotor blades arranged in a square.

The company hopes the helicopter-like vehicles will be able to drop-off items generally weighing less than 5 pounds within a 10-mile radius of its warehouses in about 30 minutes.

Amazon has acknowledged that regulatory approval could take several years. Along with Google and drone makers DJI Innovations, Parrot SA and 3D Robotics, it retained Akin Gump Strauss Hauer & Feld LLP to help lobby the government on civilian use of drones.

"I don't know that Google is much better positioned than Amazon or anyone else in terms of technology, but the company has a track record of being influential in terms of policy," said Ryan Calo, a law professor at the University of Washington who studies robotics and privacy.

Earlier this year, the FAA said it didn't contemplate autonomous drone delivery, effectively grounding Google's and Amazon's ambitions for now, Mr. Calo noted. However, he said having both Google and Amazon working to change the FAA's view increased their chances of success.

Commercial drone use by these companies faces legal and practical headwinds. Legal experts have questioned the legality of operating drones within homeowners' airspace and raised insurance issues.


Safety Dan
Aug 29, 2014 - 10:28am

The Blueprint For WW III

The Blueprint for World War III

29Aug, 2014by Dave Hodges

This article is the first of a two part series which details the coming war. This war will not be a simple war of occupation such as what we saw in Iran and presently in Afghanistan. This war will be utterly devastating and has the potential to escalate into a conflict befitting the over-used term, “Armageddon”.

Part one of this series will present what boxing fans call, “the tale of tape”. The “tale of the tape” entails identifying the combatants, their respective sides as well as the relative strengths of the participants and their military forces.

The Relative Strengths of Each Side

The coming war will largely feature what pundits call the BRIC nations and the USA and her allies. Each side of this coming conflict possesses widely divergent military strengths, weaknesses and strategies.

The US Is Dependent On a Devastating First Strike Attack

The United States and her allies have a decided advantage of quick strike, long range battlefield capabilities because of superior aircraft and carrier strike capabilities. The BRIC nations have an advantage with manpower, rocket propelled weapons and tanks. The USA and her allies cannot win a sustained battlefield campaign because of the attrition factor. The Chinese have demonstrated the ability to negate the United States Navy’s technological advantage through the use of killer satellites. Therefore, the entire US strategy is predicated on a first strike before the Chinese can destroy the majority of the eyes and ears of the US military, namely, its superior satellite capabilities in which the US forces can quickly locate and destroy the enemy with its smart weapons before the enemy knows what hit them.

Aug 29, 2014 - 10:14am

UK terrorist threat level raised to 'severe'

Great minds think alike. That was my reaction when I heard it on NPR.

Aug 29, 2014 - 9:09am

Here we go. Next false flag coming...

UK terrorist threat level raised to 'severe', Theresa May says

The UK international terror threat level has been raised to "severe", Home Secretary Theresa May has said.

The new alert level means an attack is "highly likely". It is the fourth highest of five possible threat levels.

Mrs May said there was no intelligence to suggest an attack was "imminent" but that the level had been raised in response to events in Iraq and Syria.

The threat level in the UK last changed in July 2011 when it was reduced to "substantial".


Aug 29, 2014 - 8:21am


Because he'd ruin the "party" for "them"! ;-(

Aug 29, 2014 - 8:05am


I saw that Ron Paul interview on RT last night as well. He nailed his message quite well. The truth is refreshing even it is scary. If that guy could get the same face time on MSM, heck, he could be President! So I wonder why they don't give him any face time?

Safety Dan
Aug 29, 2014 - 7:38am
Safety Dan
Aug 29, 2014 - 7:04am

HeliDropCash and

HeliDropCash and Happiness

HeliDropCash and Happiness

Andre Willers

27 Aug 2014

“If I were a rich man…” Fiddler on the Roof .


How rich must a society be to give every citizen a full life ? For USA an annual income per person of $30 766 will do it . So it can be done .

Discussion :

0.Dish out cash to the consumer directly .


1.We use Optimal Reserves (1/3) as developed in Infinite Probes and Maslow Hierarchies to determine reserves .

This is compared to some actual figures for the US (see Appendix B)

See Appendix A and Appendix B



2.There is always a surplus of about 13% !

This means that there is continual upward pressure to move up classes .

The surplus pops up as charity , benevolence , subsidies , etc .

3. A fraction of society can choose to forebear further development and use the saved resources for upliftment of less fortunate .

There is no optimal for this .

Use method in Appendix A to determine ad hoc ratios .

4. From the US data , the system seems under some stress . The various higher classes are not fully populated . .


The poverty level is $11 670pa .

From Appendix A , the Ratio = (1-0.13)/(0.33)

= 2.6363

US$11 670 pa translates into $30 766 for full realization of Maslow Hierarchies .


USA GDP per capita (2014) = $52 804.66

Taxes :


Total tax percentage potentially paid by the well above average US citizen, 2005 - 53.2% *

Total tax percentage potentially paid by the well above average US citizen, 2013 est. - 58.5% *

The US can fully afford HeliDropCash if their existing resources are sensibly applied .

5.Globally :


$1.25 per day . Ratio up by 2.6363 gives $3.2953 per day , or $1202.81 per annum .

For 7 Billion people this gives about $8.419 Trillion .

World GDP 2013 about $74.899 trillion .

About 11% of Global GDP can buy happiness for everybody .

6. The Future :

Most societies are already rich enough to enable happy lives for all their citizens .

Yet huge discrepancies lead to enormous pressures building up .

Revolutions are becoming a dime a dozen .

Visit the FAQ page to learn how to track your last read comment, add images, embed videos, tweets, and animated gifs, and more.

Safety Dan
Aug 29, 2014 - 6:54am

The Newest Terror WHO Says More Than 20,000 Could Be Infected

Ebola Outbreak Evolving "In Alarming Ways," WHO Warns 20,000 Could Be Infected

Submitted by Tyler Durden on 08/28/2014 - 12:00

More than 20,000 people may be infected with the Ebola virus before the outbreak in West Africa is controlled, warns the World Health Organization. As we noted previously, they believe the costs to fight this epidemic will be $490 million (higher than the previous $430 million estimate) as Bloomberg reports the WHO roadmap released today warns "The 2014 Ebola virus disease outbreak continues to evolve in alarming ways." So far, the virus has infected more than 3,000 people, making it the biggest outbreak ever, and has killed more than 1,550. It’s on a pace to cause more deaths than all previous outbreaks combined.

Aug 29, 2014 - 6:14am

Where our govt creates a new, not so nice, "you"


Here's the tactics used to create a whole new "You", you go from whistle blower to drug dealer or pedophile in a few key strokes; accountability not wanted or required on the part of our fine govt "professionals". Really.

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