Altisource, as a whole, has become the trainwreck no one can look away from. Since Foreclosurepedia’s initiation of #OpAltisore less than a year and a half ago, the entire Altisource Portfolio now resembles a homeless wino holding a Homeless and Hungry sign on the corner of Artesia and Santa Fe Boulevard in Compton. Fraud has become so common within the Mortgage Field Services segment of Altisource that I like to think there are water cooler bets being taken daily on how much time Pat McTaggart has left in her current position as Altisource’s Manager, Field Vendor Management, VMO. The reality is that it may not matter a whole lot over the next several months anyway.
Altisource Residential Corporation (RESI) was hit with not one but two class action lawsuits. The Brualdi Law Firm, P.C. kicked off their litigation in the United States District Court for the Virgin Islands on behalf of purchasers of Altisource Residential Corporation securities during the period between February 7, 2013 and January 23, 2015 for violations of federal securities laws. Not to be outdone, the Rosen Law Firm, a global investor rights law firm, filed on a nearly identical set of circumstances.
The case, right now, to follow is: Eric Martin, Individually and On Behalf of Others Similarly Situated v Altisource Residential Corporation, William C Erbey, Ashish Pandey, Kenneth D Najour, Robin N Lowe, and Rachel M Ridley; 1:15-cv-WAL-GWC. Martin filed it on 27 March 2015 in the St Croix Division of the Virgin Islands — pretty damn wise for more than one reason which does not deal with thong bikinis. 😉 You see, Big Bill Erbey claims this as his residence. More on that later.
The Martin, et al., lawsuit alleges: 1. This is a federal securities class action on behalf of a class consisting of all persons other than defendants who purchased RESI securities between February 7, 2013 and January 23, Case: 1:15-cv-00024-WAL-GWC Document #: 1 Filed: 03/27/15 Page 1 of 47 2015, inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, codified at 15 U.S.C. § 78a et seq. (the “Exchange Act”) and Rule 10b-5 against the Company and certain of its officers and directors.
William Big Bill Erbey tossed his own proverbial salad and left Ocwen Financial (Ocwen) earlier this year after an investigation – castration by Benjamin Lawsky, Superintendent of the New York Department of Financial Services (NYDFS). Depending upon which side of the table you were sitting it was deemed a conflict of interest — to put it mildly — pertaining to a boatload of financial transactions by Ocwen and entities involved with Ocwen, including Altisource, Altisource Portfolio Solutions and Home Loan Servicing Solutions, Ltd.
From bad to worse, WA Sokolowski fired off a shareholder lawsuit on Christmas Eve, 2014, against Big Bill Erbey and Ocwen in a case entitled WA Sokolowski Individually and Derivatively on behalf of Ocwen Financial Corp v William C Erbey, Ronald M Farris, Ronald J Corn, William H Lacy, Barry N Wish and Robert A Salcetti; and Ocwen Financial Corporation as a Nominal Defendant; 9:14-cv-81601-WPD. In a testament to the fact that all roads lead to #Fraudsterville Florida, the shareholder litigation was based, in part, upon Florida Business Corporation Act, § 607.07401.
[Ocwen was the lovechild of] Oxford, which was founded in 1983 by Defendant Wish, who was soon joined by Defendant Erbey, and together they founded Ocwen and took the Company public in 1996. By 1999, Ocwen had largely stopped making loans to people with poor credit and focused instead on servicing these loans, positioning the Company to reap profits in the aftermath of the 2008 housing collapse from the millions of delinquent and underwater borrowers. — Case No. 9:14-cv-81601-WPD Document 1 Entered on FLSD Docket 12/24/2014 Page 3 and 4 of 90.
In 2009 Ocwen began the first of four separate company spin-offs. These spin-off companies, which do business with each other and with Ocwen, were purportedly created to provide technology and perform various services for Ocwen, including management of its foreclosed properties, while appearing, on the surface, to be separate and independent entities from Ocwen. In August, 2009, Ocwen spun off its Real Estate Owned and related business operations to Altisource Portfolio Solutions S.A. (“Altisource”), a publicly traded company that derives its revenues largely from providing mortgage foreclosure services to Ocwen. In 2010, Ocwen spun off Home Loan Servicing Solutions, Ltd., (”HLSS”), a publicly traded company created to acquire mortgage servicing rights (“MSRs”), rights to fees, and other income from servicing loans from Ocwen, which hires Ocwen to collect its loan payments. In 2013, Ocwen spun off two more publicly traded companies: Altisource Residential Corporation (“Residential”), which purchases non-performing loans and foreclosed homes, many from Ocwen, to turn into rental homes; and Altisource Asset Management Corporation (“AAMC”), which serves as …… the asset manager for Residential’s portfolio in exchange for a large quarterly incentive fee.
Despite statements that the four spin-offs had sound corporate governance with separate boards and management, and that Ocwen maintained a “’strictly arms-length business relationship with ‘ [the four spin-off] companies,” in actuality, because of the overlapping ownership, control and management of Ocwen and the other four entities, Defendants Erbey and Wish, were siphoning off revenues from Ocwen to the four related spin-off companies for services that were illicitly raising costs for the mortgagees whose loans Ocwen was supposedly servicing, thereby exposing Ocwen and its shareholders to billions of dollars in regulatory and civil liability. Meanwhile, in direct breach of their fiduciary duties and Company policies, Defendants Erbey and Wish benefited personally because they largely owned the four spin-off companies which profited from the improper fees charged to Ocwen. As Christopher Wyatt, a housing consultant and former Vice President at Goldman Sachs’ Litton Loan Servicing LP (“Litton”), would later articulate, Ocwen’s attitude was the “[i]f a mortgage goes into foreclosure and you lose those servicing fees, so what, [y]ou can funnel it to one of your other businesses and still make money from it.”
Big Bill Erbey is a citizen of St. Croix, U.S. Virgin Islands, where he maintains a residence. Erbey has served as Chairman of the Board of Directors for Altisource Portfolio Solutions S.A. (“Altisource”), which runs Hubzu.com, a real-estate site that bills itself as “the easy way to buy and sell homes online” and where a former homeowner’s now bank-owned property can join thousands of others for a quick sale. He is also the founder of Home Loan Servicing Solutions, Ltd., (“HLSS”), which exists only as a holding company that purchases assets from Ocwen and has served as its Chairman since December 2010. He has also served as Chairman of the Board of Directors of Altisource Asset Management Corporation, which offers reinsurance and title services, since March 2012. Finally, Altisource Residential Corporation is the business, for example, of “re-purposing” homes as rental properties after acquiring them through a foreclosure auction or directly from the foreclosed home’s investors. Pursuant to the latest settlement with the NY DFS, defendant Erbey resigned as chairman of the boards of directors of these affiliates.
Ocwen purchased SCI Services Inc. from Morgan Stanley for $1.459 billion in October 2011; Litton from Goldman Sachs for $600 million in October 2011; Residential Capital LLC’s (“ResCap”) $3 billion loan-servicing unit, owned by Ally Financial Inc., in 2012; Homeward Residential Holdings, Inc. (“Homeward” or HRH”) for $750 million in October 2012; Genworth Financial Home Equity Access, Inc. (“Genworth”) for $22 million in November 2012; the MSRs and servicing advances from OneWest Bank, FSB for $2.53 billion in January 2013; the MSRs of Ally Bank, a wholly-owned subsidiary of Ally Financial Inc., the indirect parent of ResCap, for $585 million in March 2013; the 51% of Correspondent One, an entity Ocwen formed with Altisource in March, 2011, that it did not already own for $12.6 million in March 2013; the servicing and origination platforms of Liberty Home Equity Solutions, Inc. (“Liberty”) for $22 million in April 2013; and increased its ownership of Ocwen Structured Investments, LLC (“OSI”) from 26% to 87.35% for $11 million in January 2014. All told, Ocwen more than doubled its loan servicing business during 2013 alone, and increased its portfolio by 300% over the two-year period, as bigger banks retreated from the almost $10 trillion per year business of collecting mortgage payments.
On 19 December 2013, the Consumer Financial Protection Bureau (CFPB), joined by 49 states and the District of Columbia, filed a Complaint in the United States District Court for the District of Columbia, alleging that Ocwen, HRH and Litton had violated, among other laws, the Unfair and Deceptive Acts and Practices laws of the plaintiff states and the Consumer Financial Protection Act of 2010 by deceiving consumers about their loans and engaging in illegal foreclosures. According to the CPFB Complaint, investigators found evidence that, among other things, Ocwen repeatedly gave borrowers false or misleading information, did not honor trial mortgage modifications begun by previous servicers, wrongly charged fees, and denied mortgage loan modifications to eligible borrowers.
The $ 2.1 billion CFPB Consent Judgment far exceeded the $1.5 billion in revenues the Company took in during the first nine months of 2013, and dwarfed the $357 million the Company then had on its books.
Want to talk about some convolution; are you curious about truly how deep the depths of insanity go? Here, take a look at how RESI runs their shop to ensure tracking anything and I MEAN ANYTHING, becomes nearly impossible:
RESI does not have its own executives or management team to protect the interests of RESI’s shareholders or properly monitor the Incentive Fees paid to AAMC. Indeed, RESI’s executive officers are provided by AAMC. According to the RESI’s Proxy Statement for 2013 filed with the SEC on 19 April 2013 (“RESI 2013 Proxy”):
We have no employees. Our executive officers, including our Chief Executive Officer, do not receive compensation directly from us for services rendered to us;
As a result, we do not have, and our Compensation Committee has not considered, a compensation policy or program for our executive officers. Accordingly, we have not included a Compensation Discussion and Analysis, a Compensation Committee Report or an Executive Compensation section in this proxy statement.
Members of AAMC’s management serve in a dual capacity as asset managers and executives of RESI. As AAMC states in its Form 10-K for the fiscal year which ended 31 December 2013 (“AAMC 2013 10-K”) filed with the SEC on 20 February 2014 states “[o]ur executive officers are also officers of [RESI].”
Pursuant to the 04December 2012 Consent Order between Ocwen and NYDFS, an independent on-site compliance monitor at Ocwen conducted a comprehensive review of Ocwen’s servicing operations. It is in the course of the monitorship that they uncovered these potential conflicts between and among Ocwen, Altisource Portfolio Solutions, S.A. (“Altisource Portfolio”), Altisource Residential Corporation, Altisource Asset Management Corporation, and Home Loan Servicing Solutions Ltd., all of which were chaired by William C. Erbey, who is also the largest shareholder of each and the Executive Chairman of Ocwen.
So, as we begin to drill down even further, we now move to the Mortgage Field Services Industry side. Park Forest, IL, eNews reported as follows,
Washington, DC—(ENEWPSF)—December 16, 2013. A former repair contractor of a Florida property management company was sentenced to serve time in prison for his participation in a wire fraud scheme related to housing repairs made under a contract between Ocwen Loan Servicing LLC, and the U.S. Department of Veterans Affairs (VA), the Department of Justice announced today.
Ronald B. Hurst was sentenced by Judge Philip G. Reinhard of the U.S. District Court for the Northern District of Illinois in Rockford to serve 24 months in prison for his role in the conspiracy.
In addition, a second former repair contractor, Bryant A. Carbonell, was sentenced by Judge Reinhard to serve six months of home confinement for his role in the conspiracy. Hurst and Carbonell were sentenced to pay $147,825 jointly and severally in restitution to the VA. Hurst pleaded guilty on Feb. 15, 2013, to two wire fraud counts of a 10-count indictment and Carbonell pleaded guilty on Sept. 21, 2012, to the same charges.
“By paying kickbacks in exchange for contracts to companies they secretly owned or with which they were affiliated, the conspirators created the illusion of competition while illegally steering contracts to themselves,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Today’s sentencing reaffirms the Antitrust Division’s commitment to prosecuting schemes that undermine competition in the VA Mortgage Guarantee Program.
According to the charges, Hurst and Carbonell paid Piana to steer housing repair work to companies affiliated with Hurst and Carbonell. Piana recruited other Ocwen employees into the scheme and paid them on behalf of himself and the other conspirators. The department said in order to execute the scheme, the conspirators sent, or caused to be sent, various transmissions via wire communication.
This is the third case involving properties managed by Ocwen under contract with the VA. On Dec. 3, 2010, Benjamin K. Graves, also a former Ocwen employee, pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with the VA contract. On Jan. 25, 2012, Joshua R. Nusbaum, another former Ocwen employee, and Andrew J. Nusbaum, a former Ocwen contractor, pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with the same VA contract. Piana pleaded guilty to the same counts as Carbonell and Hurst on July 16, 2013, in U.S. District Court in Orlando, Fla. Piana was sentenced on Sept. 30, 2013, to serve 24 months in prison and to pay $147,285 in restitution to the VA.
So, how is Ocwen doing financially? Well, in 2014 Ocwen was looking a hell of a lot like the National Association of Mortgage Field Services (NAMFS) in that NAMFS lost nearly $50,000 the latest year we are able to verify via the NAMFS IRS Form 990, and Ocwen lost FIVE HUNDRED AND FORTY SIX MILLION DOLLARS in 2014.
Altisource, in Q4FY2014, reported a net loss of $1.5 million. Q4FY2013 had Altisource bringing in right at $35.5 million. The main reason, as far as I could tell, is having to get rid of the kickback scheme referred to as forced placed insurance program. From Altisource’s Press Release,
However, given the uncertainties with industry-wide litigation and the regulatory environment, Altisource believes it is in the best interest of the Company and its shareholders to discontinue this line of business […].
Let me elucidate; let me opine upon the aforementioned statement, in the way which only a trained media professional like myself is capable of doing. Altisource knew that there was immanent danger that they were going to be proverbially castrated while hung upside down on a cross for their sins. No two ways about it. If it were otherwise, these two bit, foreign national hacks would have continued to screw US Citizens for as long as they could continue to line their coffers which meant, in part, lining Big Bill Erbey’s wallet.
Stay tuned this weekend as we lay out precisely what kind of people Altisource truly has at the helm. We are going to walk you through the entirety of how the former Associate General Counsel of Altisource had full and complete knowledge of the level and amounts of fraud being perpetrated upon innocent men and women of Labor; how Pat McTaggart did jack shit to fix it.
In addition, we are going to walk you through how low into the gutter these foreign nationals will go to make a buck off the backs of even our brave men and women working in the emergency services — sounding like Carol Boyd again?! The West Palm Beach Firefighters Pension Fund alleges that they were taken to the cleaners in a “…fraudulent scheme to artificially inflate Altisource’s stock price.” Yeah, you just can’t make up shit like this!
A few facts for those whom cannot believe the incestuous relationships laid out above. The below is taken, verbatim, from Richard Eskow and his Campaign for America’s Future. It is found, in its entirety, here. Eskow has some GREAT MATERIAL if you click his name above. The man is capable of articulating highly complex thoughts into a manner which the common man may easily identify with. Check him out if you get time!
One building in the Cayman Islands is the official location of 18,857 corporations!
According to the Government Accountability Office, a five-story building called “Ugland House” is home to nearly twenty thousand corporations. That’s impressive, especially for such a small edifice. (Perhaps it has supernatural half-floors and space-time defying “mind tunnels” like the office in Being John Malkovich.). While impressive, Ugland House’s distinction pales next to that of 1209 North Orange Street in Wilmington, Delaware. According to one investigation,that address is home to 217,000 corporations.
Big corporations paid $216 million to Congress and got $223 billion in tax breaks!
As Citizens for Tax Justice and USPIRG reported, 280 large and profitable corporations contributed $216 million to Congressional campaigns over four election cycles and got nearly a quarter of a trillion dollars in tax breaks.
Bank of America committed foreclosure fraud, was bailed out by the government, and then paid no taxes on $4.4 billion in profit!
That’s right. In 2010, while BofA was negotiating a sweet settlement deal for its foreclosure fraud, it paid nothing in taxes. (Source: FACT Coalition.) Zero, on $17.2 billion in offshore earnings. (Source: Americans for Tax Fairness.).
The amount of money US corporations are holding offshore is an estimated one trillion dollars!
Rather than tax these profits the way other countries do, corporate politicians are promoting a tax “repatriation” break that would let corporations “bring this money home” while paying even less than their currently low rates.
Wells Fargo got $8 billion in tax breaks, even as executives at its subsidiary Wachovia avoided indictment for laundering money for the Mexican drug cartels!
That’s right. Wells Fargo paid a negative tax rate of -1.4 percent between 2008 and 2010 while Wachovia, a Wells Fargo subsidiary, admitted to laundering more than $378 billion for Mexican drug gangs. We’re talking about crazed killers like “El Loco” and gangs like “Los Zetas” – gangs who cut people’s heads off and toss them out onto disco dance floors or display them in the town square. Wachovia bankers ignored repeated warnings from law enforcement officials, and continued to launder money for cartels that have murdered tens of thousands. And yet no criminal indictments were handed down because, as a Senate investigator told Bloomberg News, “”There’s no capacity to regulate or punish them because they’re too big to be threatened with failure.”
We’re told we can’t “afford” full Social Security benefits, even though closing corporate tax-haven loopholes would pay for Obama’s “chained CPI” benefit cut more than ten times over!
Abusive offshore tax havens cost the US $150 billion in lost tax revenue every year (via FACT Coalition). That’s $1.5 trillion over the next ten years.
A tremendous amount of the aforementioned material pertaining to the Ocwen – Altisource #FraudFest was gleaned from litigation filed in the US District Courts. For those of you possessing a PACER Account, feel free to peruse the same cases which I did. In full disclosure, much of this material has been compiled for a forthcoming novel to be published by the end of this year. While the aforementioned, in its entirety, are the allegations of several lawsuits now working their way through the US District Courts, I am of the opinion that they are the Gospel and I subscribe to the veracity of the claims. I leave the interpretation of such up to my Readers. My blog functions as a repository of that which I believe and accordingly convert my thoughts into the written form through a magically worn and antiquated Linux Based laptop.