Isn't the whole subprime, mortgage based derivatives scam worth a RICO RACKETEERING prosecution?

[yurbud]

RICO is a federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization and was used to prosecute Wall Street scammer http://en.wikipedia.org/wiki/RICO#Michael_Milken">Michael Milken and used to threaten Drexel Burnham Lambert for insider trading.

Let's see, in this case, they gave people mortgages they knew they could never pay back, invented an investment deal based on that, which like a Ponzi scheme was doomed to collapse eventually, and those in the know probably pulled out right before the house of cards collapsed on the rest of us. That sounds like a classic "pump and dump" straight out of http://en.wikipedia.org/wiki/Boiler_Room_%28film%29">BOILER ROOM.

Couldn't you make a RICO case for prosecuting everyone from the person who approved the doomed loan to the guys who packaged the derivatives to the investment banks who kept the whole thing going?

[truedelphi]

1. Just why do you think that theyhad Homeland Security watching

Every move that Elliot Spitzer made? Until they finally caught him making a wire payment for a high priced call girl and brought him down.

A RICO is not going to come from the Obama administration as President Obama is being advised by Tim "I love me some derivatives" Geithner.

Derivatives, if you happen to be on the side of the equation setting up the equation, are like totally cool. You get to plunder through many pension fund bank accounts and it makes Bernie Madoff's 60 billion scam look like a kid's allowance.

[Trillo]

5. Don't forget Carol Lam

She was singled out because she was going after corporate fraud. The following example may not be about mortgages, but well illustrates a pattern of favoritism to corporations over "little people"

http://en.wikipedia.org/wiki/Carol_Lam

Healthcare fraud

Lam was an expert in prosecuting healthcare fraud, having authored a 954-page textbook on the subject.<11> As U.S. Attorney, Lam took an interest in the case of San Diego's Alvarado Hospital Medical Center, which was owned by Tenet Healthcare Corporation, the nation's second-largest hospital chain.<12> In 2002, government agents raided the hospital. In June 2003, the hospital's chief executive, Barry Weinbaum, was indicted on one count of conspiring to violate the federal anti-kickback statute and seven counts of offering and paying illegal remuneration. The hospital and a Tenet unit were indicted a month later.<13> On February 17, 2005, a mistrial was declared when the jury failed to reach a verdict. Lam personally prosecuted the case in a second trial; after seven months in the courtroom and a record of four months of jury deliberation, the judge declared another mistrial on April 4, 2006.<14>

Tenet settled. Denying that it paid kickbacks to doctors for referrals of patients to Alvarado, Tenet paid $21 million to the government, agreed to shut down Alvarado Hospital<15> and admitted that the case has led to "significant reforms" at hospitals around the country and that the company had been "distressed" to learn of "excessive payments" to some doctors.<16>

Lots more at Wikipedia as well as Google. Now we're in the middle of a Health Care debate, but it seems the gov made out okay in this case, they got $21M in fines, and now Health Insurance has its lobbyists out in force.

What about the nickel-and-diming that occurred over years before that by Medical-Insurance-hospital industry against "consumers". Was there justice for many little people that overpaid for years in the 21M fine?

[truedelphi]

8. Very good information. Thanks. n/t

[timeforpeace]

10. Those who wrote and passed the legislation that enabled this should be prosecuted first.

[truedelphi]

15. Funny thing is - if you used that criteria, you would still end up

With a subpoena and maybe a warrant and cozy jail cell for Mr Geithner. He headed the New York Fed and had his fingers in a lot of the bowls wherein the current funancial pie pieces have originally come from.

[Nikki Stone1]

11. +1

:thumbsup:

[Trillo]

2. A variation of Leona Hemsley's advice comes to mind. She said

something like "only little people pay taxes".

[Cessna Invesco Palin]

3. I'm struggling to find the illegality in most of what you're talking about.

The whole problem was that most of that shit was legal in the first place.

[kenny blankenship]

6. 2004 : FBI Warns of "Epidemic" of Mortgage Fraud.

Contrary to what you may now be hearing from the Justice Dept. Fraud is illegal.

http://www.cnn.com/2004/LAW/09/17/mortgage.fraud/

Assistant FBI Director Chris Swecker said the booming mortgage market, fueled by low interest rates and soaring home values, has attracted unscrupulous professionals and criminal groups whose fraudulent activities could cause multibillion-dollar losses to financial institutions.

"It has the potential to be an epidemic," said Swecker, who heads the Criminal Division at FBI headquarters in Washington. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said.

Officials noted mortgage industry sources have reported more than 12,000 cases of suspicious activity in the past nine months, three times the number reported in all of 2001.

Officials said mortgage fraud is one prominent aspect of a wider problem of fraud aimed at financial institutions. The FBI said action has been taken against 205 individuals in the past month in what it described as the "largest nationwide enforcement operation in FBI history directed at organized groups and individuals engaged in financial institution fraud."

Epidemic levels of mortgage fraud at the retail level. But what's really driving it? EPIC levels of fraud at the wholesale level.

http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html

The rating agencies never reviewed samples of loan files before giving AAA ratings to nonprime mortgage financial derivatives. The "AAA" rating is supposed to indicate that there is virtually no credit risk -- the risk is equivalent to U.S. government bonds, which finance refers to as "risk-free." We know that the rating agencies attained their lucrative profits because they gave AAA ratings to nonprime financial derivatives exposed to staggering default risk. A graph of their profits in this era rises like a stairway to heaven . We also know that turning a blind eye to the mortgage fraud epidemic was the only way the rating agencies could hope to attain those profits. If they had reviewed even small samples of nonprime loans they would have had only two choices: (1) rating them as toxic waste, which would have made it impossible to sell the nonprime financial derivatives or (2) documenting that they were committing, and aiding and abetting, accounting control fraud.

The Obama Administration won't bring these cases, not because they can't be made, but because they would be "class warfare". Obama doesn't do class warfare, except against the working class.

[Greyhound]

4. The advantage of owning the legislature; you get to make your theft legal.

The banking system itself would be criminal except for the fact that they cut the kings in on the take. In a sane world of people it is straight-up fraud.

[Rex]

7. Yes.

Great idea! :thumbsup:

[Frank Booth]

9. The answer is: Yes.

This would be a perfect RICO case. There was more than enough knowing, intentional, fraudulent, behavior to go around, from the people who originally processed the loans, to the people bought and bundled the loans, to the rating agencies that gave the securities ridiculous ratings, to those who sold the securities.

Back before he was elected, I (naively) hoped that since Obama understood the legal implications of this massive fraud, he'd see that there was a massive number of prosecutions. Instead, we got almost zilch.

When the people who you'd be prosecuting control the purse-strings, the prosecution's not going to get very far.

[spanone]

12. hey, if you can take the most powerful nation to war for no reason with no consequence....

you're talking small potatoes

[AllentownJake]

13. We are looking forward on the fraud

like we are looking forward on everything else.

Some of these people are now good friends with the President, and who send their friends to jail?

[truedelphi]

14. Obama calls Tim Geithner his "Good buddy."

And apparently Obama's mom and Geithner's dad worked together at the Ford Foundation.

[yurbud]

16. I wish I could use that defense on my parking tickets and taxes...