Ex-BofA chief Lewis charged with fraud
New York Attorney General Andrew Cuomo unveiled a major legal action against senior Bank of America executives Thursday over its controversial purchase of Merrill Lynch, including bringing civil charges against its former CEO Ken Lewis.
Cuomo’s office, which has been aggressively pursuing an investigation into the merger and subsequent bonuses paid to former Merrill employees, said it was charging Lewis and Bank of America’s chief financial officer Joe Price, who was recently appointed to lead the firm’s consumer banking business.
The lawsuit contends that the bank’s management team understated the losses at Merrill in order to get shareholders to approve the deal, then subsequently overstated the firm’s willingness to terminate the merger in order to get $20 billion of additional aid from the federal government.
“Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large,” Cuomo said in a statement.
“This was an arrogant scheme hatched by the bank’s top executives who believed they could play by their own set of rules.”
A spokesperson for Bank of America called the charges “regrettable” and “totally without merit.”
Separately, the Securities and Exchange Commission said Thursday it had struck an agreement with Bank of America over the company’s decision to pay $3.6 billion of bonuses to former Merrill employees for fiscal year 2008.
Under the terms of the proposed settlement, the Charlotte, N.C.-based lender will pay a $150 million penalty to its shareholders who were affected by the disclosure violations.
The company also agreed to implement a number of corporate governance changes for the next three years including giving its shareholders an advisory vote, or “say on pay” of its executives.
The settlement will be subject to the approval of U.S. District Court Judge Jed Rakoff, however.
Rakoff scuttled a previous agreement between the two parties last fall, arguing that the original $33 million settlement was not only paltry, but would only impact those who were hurt by the bonus scandal: the company’s shareholders.
Another candidate for the Bernie Madoff wing at Club Fed.
February 5, 2010 at 1:14 AM
Please drop the hammer! I can’t believe it, yet I can! Over and over and over again, these banking institutions want to take advantage of taxpayers, U.S. citizens. Sure we’ll pick up the tab! 🙂
July 5, 2010 at 9:53 AM
It is incredible to see just how out of touch our main stream media is.
I have been researching the Mortgage predatory lending market for some time now, gathering a whole bunch of dirt on Angelo Mozilo, David Sambol, Kurland and others at Countrywide Home Loans. I uncovered more than a little dirt on Bank of America and its CEO Kenneth Lewis. But what moved me the most was coming across this Lone Ranger like character named David Merritt.
This is a guy who got suckered into one of those Countrywide Predatory loans. He and his wife are first time home buyers who wanted to put 5 to 10 % down on their $729,000 home in Silicon Valley California – 2 miles from Yahoo headquarters, 4 from google and 5 from Apple.
With just 2 days to remove their loan contingency, and with at least two other lenders ready to sell them a relatively decent mortgage, Countrywide talked them out of going with the competition by presenting a 1 to 3 percent, FHA Good Faith Estimate and declared: “if you can find someone to beat this loan, then go with them and we’ll pay the closing costs.”
Countrywide staff were trained on how to determine how much knowledge a home buyer had, and they knew that the Merritts were suckers to be taken. Once they fired the other lenders and committed themselves to Countrywide, the Merritts found themselves locked into a 100% financing Pay Option ARM and HELOC which was destined to charged them over 2 million dollars. Countrywide had a policy of talking buyers out of putting down payments, and convincing them that they would give them a loan that was better. In fact, they would always tell home buyers that No One Could beat them and the truth was that they did beat everyone at the application stage in order to remove all the competition, but they left out that by the time the home buyer was closing escrow, most competitors would have done better.
The Merritts signed a loan that was charging twice as much as the average lender. What is more is that they signed a loan which Countrywide assigned Mortgage Electronic Registration System as a lender. As it turns out, MERS was designed to be a front company which allows: 1) Note holders to hide from public scrutiny; 2) the duplication of one loan note that could be sold off to 2 or more investors or mortgage backed security pools: 3) evasion of paying local recorder fees; 4) Overriding state legislatures recording the laws on recording liens, beneficiaries and holders in due course; 5) attacking Public Policy in regards to its goals of protecting consumers and lenders from fraud via recording laws; and last, but not least, 6) being a conduit for billions of dollars to pass right by Uncle Sam and into Cayman or Canadian banks where no federal taxes can touch it.
This is how Countrywide rose to the top. And they intentionally targeted elderly, minorities and unsophisticated first time buyers.
Now in July 2008 Bank of America bought Countrywide out for 2 billion dollars. A company with assets that exceeded 20 billion, and servicing machine that churned out billions more.
Bank of America went to all the states Attorneys Generals and asked them to bring lawsuits on behalf of their state citizens against Countrywide and to already agree to cut a sweet settlement deal with Bank of America. This was a strategy to persuade that Public that BofA was sincere about cleaning up the mess Mozilo and cronies created. But what is left out is that they are also trying to cut off home buyers ability to charge BofA with the predatory loans of Countrywide.
Behind the scenes, BofA has been supporting Countrywide since 1969. It has always been in the predatory loan business, but through other front companies. For the longest, evidence shows, Kenneth Lewis was very close allies with Mozilo and planned with him to defraud Americans out of their home equity.
It is so strange to see so many Americans enslaved to the Banking and Finance gangsters and not even know it, or if they do, just accept it.
David Merritt is literally one of the 21st Century modern epics “David versus Goliath.” And all the has is a little sling and a rock against Goliaths billion dollar war armor. Check out some of his thoughts on many issues at wordpress.com/insightbeyondsight, but the 9th Circuit Court of Appeals has before it Merritt v. Countrywide, BofA, Wells Fargo et al, Docket No 09-17678 where he has charged straight at these Greedsters with RICO and other federal violation. And in Santa Clara Superior Court Merritt v. Mozilo et al No. 109CV159993.
He is actually looking for other victims who have deeds of trust assigned to MERS and he wishes to help in anyway possible to fight these folks offensively , he prefers, but he has enough information to help defensively as well. Lawyers from around the country taps into this Big David. So circulate the word.