Housing and Urban Development‘s (HUD) Craig Karnes was, for years, an advocate for Labor. And while Karnes would never directly intercede, when he could have, at least he would always shoot straight when it came to illegal conduct. This Series will track the decade long journey I made with him that has finally come to an end with the parlay now long forgotten.
Karnes, the current Karnes has a storied history when it comes to complacency in US government contracting and playing both sides of the table. A simple perusal of his personnel file reflects as much. In fact, Karnes was associated with the attempt to have Foreclosurepedia charged under national security directives. It was our first real fight to both protect our Sources as well as demonstrate that the Obama Administration was not this touchy feely liberal bastion that everyone painted it up to be. As we will get into later, the case revolved around releasing information about how HUD advised BLB and other Housing and Urban Development (HUD) officials to answer inquiries long before the Awards on R-ATL-02006, a HUD Management and Marketing (M&M) Asset Manager (AM) contract were released. You can generally read all about it in this article. I submit, though, that the alphabet soup agencies which appeared to be lassoed in by Karnes and his cronies and their failed hacking attempts, shown here, are par for the course. And it was also during this period of time when Karnes was knee deep in investigations about his home mortgage — it was the era of the Friends of Angelo.
We all have masters — I to Labor and Karnes to I presume Montgomery and his ilk over at Gatehouse Strategies — but when you pull the plug on over a decade of quiet, symbiotic engagement, it comes at a price. I mean let us not bullshit around, becoming the Number Two within the HUD Office of Procurement almost immediately after the HUD M&M FSM awards to the very same firm that has now held nearly 90% of all HUD FSM contracts for the past six years? Yeah, that smacks of bribery. My opinion, I get it, but it has NEVER happened before in the history of HUD M&M contracting.
These were days of high flying with folks like Matt Martin, an entrepreneur whom realized, early on that data was more valuable than the asset itself and Boris Whiteside, a Missouri native and graduate of Kennett High School and Arkansas State University alumni. Now heading up Capitol Asset Management, based out of Stone Mountain, Georgia, Whiteside and his wife were both senior level HUD officials. Flo Rida and Lil’ Wayne were all the rage as the cocaine fueled stock market had begun its eternal, zero percent interest meteoric rise, once again. It was Two Houses: The House of HUD and the House of Fraud. Both spun up under the watchful eye of Karnes whom refused to even exert a light touch in order to maintain a semblance of status quo. Ernie Stefkovic, most recently a Director at Guardian Asset Management, had perfected the employee based Asset Management Specialists (AMS) workflow; however, it was a decade too soon. Tens of millions of dollars in fraud flowed outward, under the watchful eye of Karnes whom, time and again, refused to intervene.
Atlanta was a hotspot of dysfunction. It was everything related to the 2008 Financial Crisis as it pertained to the fraud, waste, and abuse in the distressed asset sector — and more. It was a centralized purgatory for those who ever believed in Apple Pie, the American Flag, and honest business. And while many misunderstood that the President of the United States or even the HUD Secretary were in charge of anything, it was obvious that they did not know who Craig Karnes was.
Look, I get it. The Mortgage Field Services Industry is contracting and entering into a new, institutionally based phase, that I predicted several years ago, happening almost to the day. Blood in and blood out, as they say — literally, if you look at some of the #Banksters questionable suicides — or suiciding — found here. In a several month period, prior to testifying in front of Congress, here is how the #Banksters fell,
Autumn Radtke, the CEO of First Meta, a cyber-currency exchange firm, was found dead outside her Singapore apartment. The 28-year-old American, who worked for Apple and other Silicon Valley tech firms prior to founding First Meta, jumped from a 25-story building, authorities said.
28-year old Kenneth Bellando, a former JPMorgan banker, current employee of Levy Capital, and brother of a top chief investment officer of JPM, jumped to his death from his 6th floor East Side apartment.
JPMorgan finance pro Li Junkie leaped to his death from the roof of the company’s 30-story Hong Kong office tower, authorities said. Li Junjie’s suicide marked the third mysterious death of a JPMorgan banker.
Gabriel Magee, 39, a vice president with JPMorgan’s corporate and investment bank technology arm in the UK, jumped to his death from the roof of the bank’s 33-story Canary Wharf tower in London, landing on the 9th story.
Ryan Henry Crane, 37, a JPMorgan executive director who worked in New York, was found dead inside his Stamford, Conn., home. A cause of death in Crane’s case has yet to be determined as authorities await a toxicology report, a spokesperson for the Stamford Police Department said.
Mike Dueker, chief economist at Russell Investments and a former Federal Reserve bank economist, was found dead at the side of a road that leads to the Tacoma Narrows Bridge in Washington state, according to the Pierce County Sheriff’s Department. He was 50.
William Broeksmit, 58, a former senior risk manager at Deutsche Bank, was found hanged in a house in South Kensington, according to London police.
And the best of them all, yet another CEO has committed suicide by shooting himself multiple times with a nail gun, a coroner reported on Friday. Richard Talley, 57, founder of American Title Services in Centennial, Colorado, was found dead in his home with up to eight wounds to the torso and head. His company was being investigated by state insurance regulators at the time of Mr Talley’s suicide.
All of this had direct ties to the Industry, whether that be through the title companies or otherwise and does not even take into consideration the JPMorgan Bank Executive murder – suicide, and the more gruesome JPMorgan bank executive murder – suicide wherein he strangled his wife before killing himself. It is more likely that all of these folks were suicided and came on the heels of the breaking up of Lender Processing Services (LPS) which is now more formally known as Black Knight, whom owns ServiceLink. Intriguingly, Black Knight was just sold off to the operator of the New York Stock Exchange, Intercontinental Exchange, last month. Incidentally, the Intercontinental is a real thing and not simply a John Wick play on words.
I mean, hey, why not make money instead of testifying, right? But when the switch is thrown and you do decide to testify, like many of these folks, you gotta know it is going to be ruled a suicide. I am not saying Karnes ever was associated with any of these folks, but you really gotta ask yourself how it was that around that same time period, the rapid ascension of Karnes, an appointed official best we can tell, came down the pike. Before we get there, let’s fast forward a bit, and take a look at where we are today, when it comes to who controls the Industry,
For the first time in the history of our Industry, New Residential, the owner of Guardian Asset Management, now controls over well over 10% of the entire mortgage servicing rights in the Industry at a value of over $1.6 trillion. To put this into perspective, Wells Fargo weighs in at $1.8 trillion, Bank of America at $1.6 trillion, New Residential at $1.6 trillion, JPMorgan Chase at $1.4 trillion, and Citigroup at $1.2 trillion. To say that there is not an extreme conflict of interest, is an understatement as no other company in the Industry is outright owned and controlled by a REIT like New Residential. — Internal IAFST Position Paper circa September 2023
Let me lay out a few little noted facts which have taken place during the Karnes Regime. On 09 August 2013, Karnes received a document which confirmed the accuracy of a now discarded document I received. It clearly detailed HUD’s marching orders allowing BLB to take control of the HUD M&M AM contract well in advance of the Award itself. Kevin Simpson attempted to have me hauled in on National Security charges — it was the Snowden days, after all. Let’s just call it the La Rosa matter. Counselors Charness, Little, Yang, and Krabill had a bone to be picked with Karnes and the apparently corrupt HUD M&M program. It didn’t read like a typical PEMCO or Where in the World Is Carmen Sandiego missive. Here, take an initial read,
When [La Rosa] learned this information La Rosa became concerned about the possibility that BLB would have received a pre-award debriefing following its initial exclusion from the competitive range and that information learned in that debriefing-which was available to no other offeror-gave BLB a competitive advantage with which it was able to revise its proposal to ultimately win the award.
Simple enough and in line with the document that Simpson demanded destroyed. Only problem is that I have an eidetic memory. Here were a few points that the lawyers threw out that struck me as pretty blunt about how Karnes was operating,
This information confirms that HUD provided competitively valuable information to BLB in its debriefing, which was not made available to any other offeror. This information also strongly suggests that HUD provided information about the ranking of other offerors that exceeds the level of information permitted in a pre-award debriefing under the Federal Acquisition Regulation (“FAR”)§ 15.505. In either event, BLB’s debriefing conferred upon it a unique and unfair competitive advantage that enabled it to revise its proposal in such a way that all but guaranteed its award of the contract-i. e., the debriefing, at the very least, tipped BLB off that its best chance of winning the award was to lower its price and may even have provided more specific guidance as to how much by which to lower it.
Now, the Director of the HUD M&M back then was Craig Karnes. So, not much would be flowing outward without his knowledge. And it would certainly have taken his ok to bring Ken and Barbie — as the California plastic looking couple were known as — inside. And with Karnes sicing his consiglere, Kevin Simpson on me, with the help of Linda Fallowfield, both of whom are conveniently retired from HUD now, the reality is that it appears pretty clear cut to me. The La Rosa matter, though, was simply a first shot across the bow to test out shakedowns by the National Association of Mortgage Field Services (NAMFS). NAMFS was waist deep in their fraud, what with their Secretary in her second bankruptcy; their Executive Director, Eric Miller, receiving $10,000 a year bonuses; and their insurance agent member, Vicki Boser sent to prison for two years for insurance fraud. Miller is most interesting in that his $100,000+ annual salary consumed all NAMFS member dues and then some without a single word from the NAMFS Board. Miller was and is integral to the Karnes ascension to power and any OIG investigation out to dig deep into that angle vis-à-vis Gatehouse Strategies. More on that in our Series as it unfolds. Whether or not any of this could be proven as exerting their pressure on US government civil servants to do the bidding of outside entities is immaterial. The simple appearance of such, is enough to throw the baby out with the bathwater, so to speak. And for anyone whom has doubt that this was not going to shape up to be Mr Rogers Meets the Dahmer Family, believe me, it gets far worse.
In fact, when filed, GAO Protest SIZ-2013-07-10-92 was going nowhere and everyone knew the fix was in. Undoubtedly Karnes, as a former Army Contracting Officer, knew as much. Karnes is, has been, and always will be a river to his people, so to speak. And it was the first major play which lead up to a potentially multi-billion dollar Qui Tam whistleblower lawsuit that Karnes played the role of the Emperor Wears No Clothes. It was a precursor to power plays which rolled out later, under the HUD M&M Field Service Manager (FSM) that closely resemble those of Serbian President Aleksandar Vučić.
The scaything 49 page La Rosa document, submitted to Karnes laid out, in excruciating detail, a pattern and practice that the revamping of the HUD M&M program attempted to rid itself of in the 3.0 series. La Rosa exposed the framework which most HUD contracting has flowed from since then. Drilling down a bit more on the La Rosa protest we find,
BLB’s protest regarding HUD’s tradeoff analysis, combined with its other allegations indicating that BLB was eliminated because its price was too high, confirms that BLB received competitively useful information during its debriefing. That information gave BLB a significant advantage in the competition once it was let back into the competitive range following its protest, resulting ultimately in its selection for award. HUD erred by not excluding BLB from the competition or, alternatively, leveling the playing field by releasing information provided during BLB’ s debriefing to the other offerors, and by ultimately selecting BLB for award.
Matt Martin Real Estate Management and BLB Resource were the first to perfect the art and used Karnes as the messenger. Karnes was pretty blunt in his reply to anyone desiring to have the fraud looked at,
No further discussions are contemplated and subsequent revisions to your proposal will not be considered. No further contact with the Contracting Officer need be made at this time regarding the above referenced solicitation unless you have grounds to challenge the small business size status of the apparent successful offeror.
This is the first, of many examples we are going to unravel which paint, at minimum, a picture with all the stripes we are seeing today, in the Industry. Six years of over 90% of all HUD M&M FSM awards underneath one roof. Bridge contracts aside, the reality is that the institutionalization is not simply within the Industry and the payoffs, the ripoffs, and the things no one saw are now being exposed to that cleansing effect of transparency. Stay tuned this week as we continue the Series.
