Friday, October 15, 2010

Blumenthal, Affidavits And Court Fraud

Attorney General Richard Blumenthal’s latest media release announcing his plans to lead an investigation into “allegedly defective legal documents filed by banks in thousands of foreclosures nationwide” is written, as usual, in the heroic mode.

Although the legal documents are “allegedly” defective, the banks, according to Mr. Blumenthal, “broke the law, papering the courts with defective documents to railroad consumers into fast, possibly fraudulent foreclosures.” Mr. Blumenthal’s summary judgment – the banks broke the law – precedes a careful investigation that may or may not support his prejudgment.

According to the press release, Mr. Blumenthal’s “powerful multi-state investigation will hold big banks accountable, determining how and why they broke the law.”

There is a certain dissonance in Mr. Blumenthal’s media releases that those in the media who receive them – this one was sent to over 40 recipients and media outlets – have grown used to over the years. If the investigation into “allegedly defective legal documents” is yet pending, it cannot be possible for Mr. Blumenthal to have determined so far in advance of his “powerful multi-state investigation” that the banks “broke the law, papering the courts with defective documents to railroad consumers into fast, possibly fraudulent foreclosures (emphasis mine).”

At the center of Mr. Blumenthal’s pending investigation are “robo-signers” at some banks “who allegedly failed to verify the accuracy of foreclosure affidavits and have documents properly notarized, as required by law.” In his media release, Blumenthal warned that “Filing defective foreclosure documents is potentially a fraud on the court, which can result in dismissal of foreclosure cases and underlying mortgages.”

Some of Mr. Blumenthal’s business targets might find the attorney general’s concern for accurate affidavits – filed by others – particularly touching. In the New England Pellet (NEP) case, Mr. Blumenthal’s “investigator,” since retired for medical reasons, supplied to a judge an affidavit in which he swore under oath he had reason to believe that the principles of New England Pellet either had or were about to fraudulently transfer assets. On the strength of that sworn assertion alone, the judge, in an ex parte proceeding – one in which the party accused in the affidavit is not present before the judge to answer the charge – authorized Mr. Blumenthal to impound NEP’s business assets. Such impoundments have two immediate effects: First, the business is effectively shut down, leaving in its wake all customers the business can no longer service; and second, the targets of prosecution are deprived of the means of obtaining an adequate defense to challenge the untried charges in court.

From Mr. Blumenthal’s point of view, the greater the number of dissatisfied customers a targeted company leaves behind as it disappears beneath seemingly endless waves of litigation the better. Complainants are worth thousands of dollars per head in fines that Mr. Blumenthal is able to collect, enabling him to boast that his office pays for itself through its prosecutorial zeal.

"If you are a small business owner,” NEP lawyer Jim Oliver told a reporter for the Connecticut Post, “and he [Mr. Blumenthal] sues you for $70,000, and wants $1 million in penalties, life as you know it is over. Your bank accounts are seized. Liens are placed on property and assets. Even if you win, the state will appeal and you will wait another year. You are out if business. You are dead.”

In the NEP case, one of the principals in the business was in such distress that he attempted suicide. NEP’s lawyer deposed the then retired “investigator” who admitted in his sworn deposition that he was unfamiliar with Connecticut’s Fraudulent Transfer Act; that he had not check bank records to verify the charge made in his sworn affidavit that NEP’s principals either had or were about to fraudulently transfer assets; and finally, the retired investigator acknowledged that he never had sufficient reason to believe that the principals of the business either had or were about to fraudulently transfer assets when he signed his affidavit. The assertions made in the sworn deposition under oath strongly suggested perjury. But before the perjury issue could go to trial, Mr. Blumenthal settled the then two year old case.

In the now notorious Computer Plus Center of East Hartford case, the principal of the company Mr. Blumenthal drove out of business, Gina Malapanis, was arrested at her home and led off in handcuffs. A jury that got a gander at one of Mr. Blumenthal’s affidavits in that case, awarded Malapanis $18 million, later reduced by an understanding trial court judge to $1.83 million. If Malapanis wants to rest contentedly in the assurance that justice had been served in a case she had won months ago, she’ll just have to wait in line. Mr. Blumenthal is appealing the ruling.

One of the Assistant Attorneys General who lost the Malapanis case is now the campaign director for Democratic attorney general nominee George Jepsen, formerly a campaign chairman of the Democratic Party. In two debates with Republican attorney general nominee Martha Dean, Jepsen allowed that Mr. Blumenthal had done a marvelous job as attorney general, and he cited the usual big marquee cases. But it is the little guy who is crushed under the wheels of Mr. Blumenthal’s litigatory juggernaut – not Big Tobacco or Big Banking or Big Business. Large business entities can easily afford gold plated lawyers to support their interests or, when appropriate, make cash settlements they pass on to their customers in the form of higher prices. When large suit-proof companies targeted by Mr. Blumenthal continue in business, the costs of such settlements come from the pockets of customers whose consumer interests Mr. Blumenthal purportedly represents.

Concerning the inaccurate affidavits the banks are said to have used, Mr. Blumenthal writes sternly in his press release, doffing his hat to the rule of law: “Bankers routinely invoke the rule of law to demand repayment of predatory mortgages they peddled to consumers. The rule of law – requiring proper legal procedure and documentation -- must apply equally to bankers. Bankers created this monstrous mess, threatening to unfairly force consumers from their homes and undermine their property rights. We will demand accountability and corrective action to resolve this injustice.”

In the interest of reforming possible frauds on courts in his own office, Mr. Blumenthal should copy to his assistant attorneys general the sharp reproofs in his press release.




15 comments:

Anonymous said...

I think this foreclosure action by Blumenthal's office was brilliant and good for Connecticut homeowners struggling to buy time to keep their houses. It is humanly impossible to swear genuine affidavits that quickly, on an assembly line.

That doesn't mean I don't have problems with Blumenthal, Jepsen and Dean.

Couple of points:

On Nullification:

If federal government were rolling out a piece of provocative right wing legislation, a very provocative one, Blumenthal and Jepsen both would be posturing over nullification themselves. They'd at least rattle a distant saber over it.

I am pro universal health care and think we need to roll out the bill passed, flawed as it surely is, so I am not at all supportive of any hint of desire by Dean to block its implementation in Connecticut. '

I don't like hypocrites, posers, or just plain federal sycophants. Whatever category Jepsen falls into there, it doesn't impress me at all. It comes off as weak minded.

Dean's description of the flaws of Blumenthal's AG office is right on. It is so accurate it is a wonder anyone gave her a microphone to say it, where she talks about the office's press hounding, the choice of cases, the backlog, the frivolous cases.

She doesn't comment on the strengths of his office, and one wouldn't expect her to, considering she is campaigning. There are many strengths too.

Every AG has made hidden political choices that have protected certain parties from the rule of law. Blumenthal's loyalties in this regard have been some of the best hidden.

Dean is testy and even mean in interviews with the press, which makes an observer worry if she could be fanatical.

She has dropped some hints about religion that belie her emotional belief that all people should be practicing some religion, even if intellectually, she is beholden to the constitutional separation of church and state. I don't want to hear any candidate on campaigning for office even hint that people should be practicing some religion.

There is an unassailable body of moral philosophy people could study to develop moral thinking that are not religious works. Western philosophy is replete with these great works of philosophy. Dean should study some of these before the November election and stop preaching that morals can only developed by going to some church.

The issues upon which she would evoke nullification and her testiness, which suggests she would be too tempted, too often, to evoke it, trouble me.

I am a democrat. I am tired of the party here and the business environment, and Connecticut's thumb sucking relationship with the feds.

And I don't mean a thumb sucking that would be solved through nullification, but solved by getting through one day in government without being hand in glove with federal officials here, and a night not spent in bed with them.

I an tired of and offended by the tiny circle of overweaningly arrogant officials who literally run the lives and control the fates of every single person who lives here.

Unfortunately, my vote will go to business as usual and I am not enthusiastic about it. I am not voting for Dean and I am not at all happy about voting for Jepsen. I might even do a write in.

What Dem Party Voters Want:

Dean has some qualities Connecticut disenfranchised Democratic voters could get excited about but she unfortunately falls short.

CONT ...

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

CONT ...

She doesn't comment on the strengths of his office, and one wouldn't expect her to, considering she is campaigning. There are many strengths too.

Every AG has made hidden political choices that have protected certain parties from the rule of law. Blumenthal's loyalties in this regard have been some of the best hidden.

Dean is testy and even mean in interviews with the press, which makes an observer worry if she could be fanatical.

She has dropped some hints about religion that belie her emotional belief that all people should be practicing some religion, even if intellectually, she is beholden to the constitutional separation of church and state. I don't want to hear any candidate on campaigning for office even hint that people should be practicing some religion.

CONT ...

Anonymous said...

CONT ...

I an tired of and offended by the tiny circle of overweaningly arrogant officials who literally run the lives and control the fates of every single person who lives here.

Unfortunately, my vote will go to business as usual and I am not enthusiastic about it. I am not voting for Dean and I am not at all happy about voting for Jepsen. I might even do a write in.

What Dem Party Voters Want:

Dean has some qualities Connecticut disenfranchised Democratic voters could get excited about but she unfortunately falls short.

CONT ...

Anonymous said...

CONT ...
What those despairing, middle and upper middle class, former solid working class Democrats want is a Democrat with a libertarian streak.

They want someone hostile to the incestuousness of the party, someone ready to divorce from the 50 year old once progressive but no longer progressive Democratic party paradigm of group politics over individual rights.

They want a better business environment like Dean promises but not at the price of universal health care. They love the strict adherence to constitutional rights they are hearing from the right.

They believe the Dem party's direction is not adjusting at all, not at all, and Dem party voters hate that. It's a meal of rotting rhetoric. The Dem party behaves as if they will not wake up to this until Congress is lost to the tea party.

CONT ...

Anonymous said...

CONT ...

Dean doesn't fit the bill, though there are things she says that are very attractive to this group of voters.

Unfortunately, we want to hear a Democratic version of this and we are not getting it. We are not getting what we want.

Jepsen doesn't fit the bill either. He comes off as weak minded to those in the party wanting to hear hints of this remaking of the party. All the Democratic candidates do.

END.

Don Pesci said...

Anon,

Thanks for the intelligent comment. The bank fraud probably should be covered more completely in another blog. In this one, I was concerned mostly with Mr. Blumenthal’s views on faulty affidavits. The “bank fraud” originated due to the gap between traditional banking reporting, which inked signatures in the multiple steps leading to foreclosure and housing sales, and modern computerized reporting, which dispenses with inked signatures. The real difficulty involves a freeze on all foreclosure activity. Free everything until the legality questions are settled and you will bring the entire market – both foreclosures and sales of foreclosed housing -- to a grinding halt until the legal matters are settled. And, of course, you will open the door to what some may call predatory suits issuing from everybody involved, not merely the attorneys general. In this economy, that would be a disaster. Even President Barack Obama doesn’t want that. No reporter that I know of has cornered Mr. Blumenthal on this question. They appear to be content to accept his releases as gospel.

On another point, I’m not sure there are any libertarians in the Democratic Party. If there are some around, they are all hiding behind the flower pots. I do agree with you that the Democratic Party would be wise to order up half a dozen or more. But don’t hold your breath.

Don Pesci said...
This comment has been removed by the author.
Don Pesci said...

Here are a couple of rhetorical speed bumps for you to consider.

On Fanaticism: I agree with you that there are some lightning flashes of libertarianism in Dean. Libertarianism and fanaticism are by nature incompatible, unless one wants to argue that one might be a fanatical libertarian. Dean strikes me as someone who is quite willing to live within the strictures of constitutional and statutory law, which is to say – she believes in limited government. Presumably those limits would apply to the office of attorney general under her administration. I leave it to you to devise a method of distinguishing between Dean’s possible fanaticism and Mr. Blumenthal’s fanaticism.

On Religion: I’ve written about the First Amendment earlier in this blog and in several columns that touched on former Sen. Lowell Weicker’s view that the First Amendment provides a right of freedom from religion, which is profoundly silly. It’s nothing we need come to blows over. I do not think Dean is excessively or fanatically religious.

Richard E. said...

Why such a lenghthy response but still anonymous. Anyway the person must have its reason :)

I have a quick one / response . . . Mr AGB does the atypical PR case and the "lawsuit first . . . ask questions later" CT Taxpayer money wasting grand-standing.

Why do we never hear about the 95% of standard and not so business disputes that get COST FFECTIVE "resolved" before any legal action . . . I "beleive" there were ample opportinities in the NEP case to put all the parties in a room and work it out . . . and why does that not apply to the AG office . . . its common business-legal 101 sense.

Don do you know about the Alden Motors case Blummy is referring to these days

Don Pesci said...

Don't know about the Motors case.

Don Pesci said...
This comment has been removed by the author.
Chris Hoffman said...

Addendum

In a postscript to the letter below, Chris Hoffman, a communication advisor to Attorney General Richard Blumenthal, asks that I keep the postscriptum off the record. He also asked that the attached letter be posted “as is” on the blog from which the column was drawn. That is why Mr. Hoffman’s remarks begin with the salutation “To the editor.” It will not betray any confidence in his postscriptum to me to say here that I have advised Mr. Hoffman that he may post to the blog on behalf of Mr. Blumenthal himself. In that way it will not seem that I have changed anything in his letter.

http://donpesci.blogspot.com/2010/10/blumenthal-affidavits-and-court-fraud.html



To the Editor

A recent column concerning the Office of Attorney General’s successful consumer protection lawsuit against New England Pellet contained significant factual errors.

New England Pellet agreed in April to pay $55,000 in restitution to about 250 state residents for pellets they say they paid for, but never received. The settlement resolved a lawsuit that the Attorney General’s Office filed in 2008 with the cooperation and approval of Department of Consumer Protection (DCP) Commissioner Jerry Farrell, Jr.

During our investigation, the Attorney General’s Office received information that New England Pellet was seeking to sell property, potentially diminishing assets for customers allegedly defrauded by the company.

To protect consumers, the Attorney General’s Office asked a court to attach the company’s property. The judge granted our request. New England Pellet continued to own and enjoy full use of its equipment and assets, but was required to surrender part of the proceeds of any sale for restitution to consumers.

In an unrelated lawsuit, New England Pellet's lawyer challenged procedures the Attorney General’s Office used for preparing affidavits seeking attachments like the one the court approved against New England Pellet. The state Supreme Court earlier this year voted 7‐0 to reject his challenge, finding that the office’s affidavit practices and procedures are lawful and proper.

Sincerely Yours,


Policy and Communication Advisor Christopher Hoffman

Don Pesci said...

A detailed discussion of the NEP case referenced by Mr Hoffman may be found here: http://donpesci.blogspot.com/2010/06/new-england-pellet-cases-settled-by.html

Don Pesci said...

Chris,

Some of your comments are highly inaccurate. The attachment order – I have a copy of it – prevented the principles of NEP from using their trucks and forklifts, effectively putting them out of business. The claim made in the affidavit which secured the attachment -- that Blumenthal’s “investigator” had evidence that assets were about to be fraudulently transferred -- was false, and the “investigator” admitted as much in a sworn deposition. Both cases are reviewed extensively and accurately on the blog http://donpesci.blogspot.com/2010/06/new-england-pellet-cases-settled-by.html
, but not in the column to which you refer. Briefly, in the Hoffman case, the Supreme Court did not find the affidavit to be accurate or even truthful. The court said the affidavit was "sufficient" to grant the Court jurisdiction to hear the matter. Blumenthal settled the case before the hearing – and just in time: The cross examination of the author of that affidavit would have shown the affidavit to be false and misleading.