Corruption upon Corruption?

Posted by kevin on August 7, 2015 under Foreclosure Blog | Comments are off for this article

Late last week, it was reported on Bloomberg News and other outlets that the AG of Utah had revived a suit against Bank of America (BOA) over illegal foreclosure practices. In addition, the current Utah AG charged two of his predecessors with corruption after they dropped out of a similar lawsuit against BOA. The BOA hook is what caught my eye. I read the account in Bloomberg and started drawing diagrams to represent the people and acts involved. After a while, I threw my hands up. Then, I looked at an articles in the Salt Lake Tribune and Fox News and started to piece it together. Note, that I am not saying that anyone did anything wrong. But it is an incredible series of events and allegations made by the current AG.

Here are the basics (and probably not all the basics), as best as I can figure out. The Bell’s filed a lawsuit against BOA alleging that they did not follow Utah law in foreclosing on their home and other homes in Utah. The AG’s office, headed by Mark Shurtleff, joined in the suit as an intervenor. According to the current AG, Sean Reyes, a few months later, Shurtleff dropped the lawsuit notwithstanding that the deputy AG’s handling the case believed they could prevail.

Another key player is John Swallow, who purportedly was Shurtleff’s chief deputy. It appears Shurtleff was stepping down as AG and Swallow ran for that office.

The Bell’s hosted a fundraiser for Swallow. Shortly after the fundraiser, Swallow engaged in settlement negotiations with BOA. It is inferred (altho I cannot see how it happened) in more than one of the articles that Swallow acted on behalf of the Bell’s. Then, BOA offered the Bell’s a mortgage modification that, according to Bloomberg, cut $1.13 million from the loan and reduced the interest rate from 7.5% to 2.65%. The Bell’s, presumably, dropped their lawsuit. Shurtleff then dropped Utah’s action against BOA. Shortly thereafter, Shurtleff landed a job with a lobbying firm that apparently had done extensive business with BOA.

Fast forward, another home owner in foreclosure, McBride, filed suit against the former AG’s arguing that because of the corrupt nature of the Bell deal, McBride was denied a mortgage modification. McBride also alleged that Shurtleff offered him $2 million to dismiss a sensitive lawsuit. The person who was going to come up with this $2MM has alleged that Swallow and Shurtleff tried to shake him down. They say truth is stranger than fiction, but this fact pattern strains credulity.

Even in New Jersey, this kinda stuff does not happen. Or at least we hope.

At any rate, the current AG has piggybacked on a suit by a homeowner who is making the same allegations that were made in the suit by Bell. The attorney for that individual states that ReconTrust, a subsidiary of BOA, foreclosed illegally on at least 8000 homes. BOA’s denial of the allegations stated that it was not 8000 homes but only 3-4000. Priceless. It was sort of like Clinton saying it depends on what ‘is’ means.

Let the courts decide if the AG’s in Utah did anything wrong. But BOA was up to its elbows in this alleged corruption, and no where in the numerous articles does it say that anyone at BOA was indicted or convicted or in jail. Worse than that, for a bank to deny an allegation not because they did nothing wrong but because they only screwed around 1/2 as many people as plaintiff alleged, that must win the hubris award for the decade.

But, is it much better in NJ? Banks do not turn over discovery. Banks put in BS certifications which make a mockery out of the business records exception to the hearsay rule. Moreover, no- you cannot look at the actual computer records to verify or find exculpatory material. And no, you cannot depose any witness.

But, it could be worse. We could all be in Utah.