IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
__________________, PRO-SE

)
)
Plaintiff,
)
)
v.
)
)
BANK OF AMERICA, NA fka BAC HOME
)
LOANS SERVICING, LP. Fka COUNTRYWIDE )
HOMELOANS SERVICING LP:
)
)
Defendant
)

Case No. 15-CVJudge

Mag. Judge

DEMAND FOR JURY TRIAL

COMPLAINT FOR:
COUNT1:RICO-18 U.S.C. 1961 ET SEQ.
COUNTII: BREACH OF CONTRACT PURSUANT TO 810 ILCS 5/2-301;
COUNTIII: FRAUDULENTINDUCEMENT & FRAUDULENT
CONCEALMENT PURSUANT TO 735 5/13-215
COMES NOW Plaintiff _________________, (Plaintiff) who alleges Violations of
the Racketeering Influenced and Corrupt Organizations Act ; Breach of Contract; and
Fraudulent Inducement and Concealment against Defendant Bank of America, NA, (BAC)
fka Bank of America Servicing LP, fka Countrywide Home Loans Servicing, LP.
(Countrywide).
THE PARTIES
1.

Plaintiff ___________ is an individual residing in the State of Illinois, County of ____________

and is the true title holder to subject property which she purchased in 2004. Plaintiff ------------

resides at subject property that is the subject of this Complaint, the location of which is
commonly known as -------------------------------------------------- (hereinafter "the Property").
2.

This complaint was catalyzed by a foreclosure complaint filed by Defendant BAC on

------------------ known as -------------------------- in the 18th Judicial Circuit in ---------- County, Ill.

3.

The aforementioned foreclosure litigation was brought by Bank of America Servicing, LP F/K/A
Countrywide Home Loans Servicing, LP. who later changed its name to Bank of America, N.A.
At all times mentioned in this complaint BAC is a federally chartered bank with headquarters at
100 N Tryon St #170, Charlotte, NC 28202 which finalized its purchase Countrywide Home
Loans, Inc. (Countrywide and its affiliates) on July 1, 2008 thus becoming Countrywides
defacto successor and subsuming Countrywides liabilities upon purchase. Countrywide is the
alleged originator, Lender and Seller of Plaintiffs alleged loan. Plaintiff refers to
Countrywide throughout this complaint with the understanding that Countrywide and BAC are
the same entity. At the time BAC filed its foreclosure complaint against the Plaintiff, BAC was
and still is in the business of "servicing" "federally related mortgage loans" as those terms are
defined in RESPA, 12 U.S.C. 2602(1) and 2605(i) (2); acting as the collector of consumer
debts, either on behalf of itself or others. Any reference made to BAC; Bank of America Home
Loans Servicing; Bank of America NA; or its predecessor Countrywide by de facto merger
throughout this pleading is to be construed as BAC as one entity which includes any and all
Bank of America or Countrywide entities as they are now one and the same.

4.

Upon information and belief, Plaintiff alleges that BAC is a member of a RICO Enterprise
composed of numerous members who at all times herein relevant, were and still are, agents for
one another, and acting under the course and scope thereof, with knowledge and consent of each

other. Plaintiff is now suffering and has suffered harm as the result of the actions of BAC and its
Co-Conspirators who acted in concert and collusion to harm Plaintiff as stipulated in the
forthcoming paragraphs below.
5.

Plaintiff, for the purpose of judicial economy, has elected to name BAC as the sole Defendant. If
BAC has reason to believe that other Defendants are separately liable, BAC is welcome to cross
complain against any actor it deems appropriate.
JURISDICTION AND VENUE
6.

Plaintiff's claims against BAC include violations of federal statutes commonly

known as RICO, 18 U.S.C.1961 et seq.; with additional claims under Illinois state law: Breach
of Contract pursuant to 810 ILCS 5/2-301; and Fraudulent Inducement and Concealment
pursuant to 735 5/13-215. These claims all arise out of the same controversy and sequence of
events.
7.

The real property which is the subject of this complaint is located within

________ County.
8.
9.

This Court has diversity jurisdiction over this action under 28 U.S.C. 1332.
This Court has subject matter jurisdiction over this action under 28 U.S.C.

1331 and 1367, 18 U.S.C. 1964(c), and 15 U.S.C. 1640(e).

10.

Venue is proper in the Northern District of Illinois under 28 U.S.C. 1391(b)

because the purported contracts between the Plaintiff and Defendants were made and to be
performed, and the obligations arose in the Northern District of Illinois, Eastern Division.

11. Plaintiff further invokes the pendent jurisdiction of this Court to consider claims arising under
Illinois state law. District courts have discretion to hear pendent state claims where there is a
substantial federal claim arising out of a common nucleus of operative fact. 28 U.S.C. S 1367(a);
United Mine Workers v. Gibbs, 383 U.S. 715 (1966). This is a "doctrine of flexibility, designed
to allow courts to deal with cases involving pendent claims in the manner that most sensibly
accommodates a range of concerns and values." Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343,
350 (1988).
SEQUENCE OF EVENTS

12. This is a civil action brought by the Plaintiff pursuant to the provisions of the Racketeer
Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961, et seq., concerning a
pattern of racketeering activity perpetrated by Defendant BAC together with non-party CoConspirators as well as others known and unknown (the Conspirators). Evidence garnered
from governmental investigations, MBS Securities lawsuits, Amicus Briefs provided by the
Harvard Law School and McDonnell Property Analytics, sworn testimony of numerous
employees of the Conspirators, numerous news articles, and books, etc., points to a group of
Conspirators which are all engaged and in concert in a massive multi-faceted Enterprise in every
state in these United States of America and the world. The Conspirators are a group of persons
associated together in fact for the purpose of carrying out an ongoing criminal enterprise which
has been structured to operate as a unit in order to accomplish its overarching goal and intent: to
maintain the power and control of the U.S. fiat monetary system which the Conspirators have
covertly held for decades as this system is on the precipice of collapse as the forgoing facts will
validate.

13. In addition to the aforementioned RICO claim the Plaintiff also alleges breach of contract and
fraudulent inducement and concealment.
ALLEGATIONS
14. Questions of law and facts pertaining to the RICO claim include, but are not limited to the
following:
a. Whether BAC and its Co-Conspirators participated in an associationin-fact Enterprise with the intent to entrap, defraud, and wrongfully
foreclose properties throughout these United States without legal right
through the false assertion that the Conspirators had the right to foreclose
upon the security interest in Properties and therefore acquire title to real
properties through deception and fraud for the profit of the Enterprise;
b. Whether BAC and its Co-Conspirators falsified borrowers loan
application in furtherance of the Enterprise;
c. Whether BAC and its Co-Conspirators set the stage for the market to
collapse in 2008 in furtherance of the Enterprise but fraudulently
misrepresented to borrowers that the market was favorable;
d. Whether BAC and its Co-Conspirators loaned any of their own funds
as lender or if the MBS Investors pre-funded and funded the loans
and thus were the true lenders;
e. Whether BAC and its Co-Conspirators placed unsuspecting borrowers
into high-risk loans which would undoubtedly default if interest rates
were to increase;
f. Whether BAC and its Co-Conspirators created questionable loan
products which were designed to fail such as no-doc loans;
stated-income loans; loans with teaser rates to entice/dupe
borrowers into entering the real estate bubble;
g. Whether BAC and its Co-Conspirators incentivized their own
employees to sign up any borrower, whether they qualified or not for a
mortgage loan;
h. Whether BAC and its Co-Conspirators threatened their own employees
with the loss of their jobs if they refused to overlook industry-standard
underwriting guidelines, appraisal guidelines and refused to be coerced
by monetary bonuses to aid and abet the Enterprise through the
committing of crimes;

i. Whether BAC and its Co-Conspirators encouraged AAA ratings of

MBS by Moodys Fitch and Standard & Poors when the data showed
that the Mortgage-Backed Security bonds (MBS) were clearly not
AAA;
j. Whether BAC and its Co-Conspirators created the securitization of
loans and MBS Trusts as a Strawman Scam designed to rob investors
of their investments, borrowers of their property, and gain untold
Trillions of dollars through the payouts of derivative insurance;
k. Whether BAC and its Co-Conspirators used their influence in the U.S.
Congress to reduce the size of the SEC Regulator Enforcement Team
from 146 to 1 to ensure that no-one impeded the success of the
Enterprise;
l. Whether BAC and its Co-Conspirators intentionally failed to
underwrite borrowers loans placing said borrowers at grave risk
regarding foreclosure;
m. Whether BAC and its Co-Conspirators created fraudulent documentary
evidence after-the-fact which included but is not limited to the creation
of false assignments of beneficial interest, the false creation of
affidavits where affiants swear to having personal knowledge of the
cases they are testifying to when in reality they have no personal
knowledge of the circumstances they are attesting to as required by the
law; the creation of false allonges; the fraudulent rubber-stamping of
blank indorsements which were/are placed by teams within the
Conspirator banks or third-party document manufacturing entities such
as DocX or LPS to confer standing to themselves in order to falsely
foreclose on Borrowers real property in furtherance of the Enterprise;
n. Whether BAC and its Co-Conspirators employed their own employees
to pose as Vice-Presidents or were conferred other lofty titles at MERS
or other banks to fraudulently confer ownership of the loans to the
Conspirators when the Conspirators had no ownership;
o. Whether BAC and its Co-Conspirators created MERS as a secretive
veil to hide its crimes of selling borrowers notes as bearer paper to
multiple parties in multiple countries, and in multiple tranches of the
same MBS Trust;
p. Whether BAC and its Co-Conspirators retained the loans they
allegedly sold to MBS Trusts in their own vaults so they could use
them to foreclose on borrowers real property and resell borrowers
notes as bearer paper to multiple parties in multiple countries, and in
multiple tranches of the same MBS Trust;

q. Whether BAC and its Co-Conspirators utilized their own employees to

notarize false assignments and affidavits to confer standing to
themselves and steal borrowers real property;
r. Whether BAC and its Co-Conspirators sold the borrowers loans as
true sales to MBS Trusts;
s. Whether BAC and its Co-Conspirators refused to consider CFTC
Chair Brooksley Borns warnings that unregulated derivatives had the
potential to collapse the economy because derivatives were an essential
part of the Enterprise and were created as the vehicle to collapse the
economy;
t. Whether BAC and its Co-Conspirators created the 2008 Financial
Crisis to strip the Middle-Class of America of its assets knowing the
crisis would cause incredible harm and suffering to average people;
u. Whether BAC and its Co-Conspirators lured borrowers into believing
that they could apply for loan modifications but only after they had
defaulted for 90 days as a means of distracting borrowers, giving them
false hope with the intent of simultaneously accelerating the
foreclosure process;
v. Whether BAC in collusion with the Conspirator Federal Reserve
lowered interest rates and kept them low knowing that a bubble would be
created as a result;
w. Whether BAC and its Co-Conspirators lured unsuspecting borrowers
into inflating said bubble and then intentionally burst said bubble
through the raising of interest rates 17 times from 2004-2007;
x. Whether BAC and its Co-Conspirators created the International Swaps
and Derivatives Association (ISDA) as blackmail insurance that
would allow the Conspirators to collapse the economy at will if any
governmental body did not acquiesce to the Enterprise;
y. Whether BAC and its Co-Conspirators recorded false documents in
county recorders offices;
z. Whether BAC and its Co-Conspirators failed to follow the PSAs and
deliver the notes to the investors;
aa. Whether BAC and its Co-Conspirators failed to record the sale of real
property as required by law at the county level thus slandering borrowers
titles;
ab. Whether BAC and its Co-Conspirators promised to modify borrowers
loans and then repeatedly lost the paperwork which was sent to them
multiple times in furtherance of the Enterprise;

ac. Whether BAC and its Co-Conspirators circumvented existing recording

laws thus obfuscating the real parties in interest who purchased the loans;
ad. Whether BAC and its Co-Conspirators encouraged high appraisals and
black-listed those appraisal firms which did not violate the law and
inflate the appraisals;
ae. Whether BAC and its Co-Conspirators instructed the courts to not
question Conspirators standing to foreclose to ensure the success of
the Enterprise under the excuses: foreclosing on the properties as
rapidly as possible will stabilize the economy; the banks just made
mistakes in their paperwork; borrowers used their homes as ATM
machines and received the loan proceeds and are the guilty parties who
only want to use the judicial system to get a free house! in order to
justify the courts conflicting emotions, gain the courts ire for the
borrowers and sympathy for the Conspirator banks thereby having the
courts overlook the Conspirators violations of law;
af. Whether BAC and its Co-Conspirators are urging the courts to push
foreclosures through as fast as they can while 20 million housing units in
America are vacant and rotting and more and more people are becoming,
and are currently homeless, when statistics prove that foreclosure creates
the vicious cycle of more homelessness, despair, and crime as well as
causing real estate prices to plunge even further;
ag. Whether BAC and its Co-Conspirators caused the bankruptcies of 90%
of all mortgage Originators which were in business before 2008;
ah. Whether BAC and its Co-Conspirators manipulated the creation of the
TOO BIG TO FAIL banks and ensured that said banks grew even larger
in the aftermath of the Financial Crisis and thus more critical to the
economic stability of the world in furtherance of the Enterprise;
ai. Whether BAC and its Co-Conspirators conspired to take the privatelyheld investment banks on Wall Street public in 1998 thereby shifting risk
to the shareholders of those companies.
aj. Whether BAC and its Co-Conspirators conspired with government
prosecutors to allow numerous lawsuits against the Conspirators to settle
but, ensured that no one was found culpable and sent to jail;
ak. Whether BAC and its Co-Conspirators engaged in a pattern of
racketeering activity;
al. Whether BAC and its Co-Conspirators committed acts of fraud on the
courts, wire fraud, and mail fraud;

am.Whether BAC and its Co-Conspirators knowingly prepared and

submitted fraudulent documentary evidence, perjured assignments and
affidavits to courts;
an. Whether BAC and its Co-Conspirator's pattern of racketeering activity
affected interstate and foreign commerce;
ao. Whether the Plaintiff was harmed by BAC and its Co-Conspirators'
wrongful acts; and
ap. The amount of any damages to which the Plaintiff is entitled in this action.

15. The Enterprise is so vast and complex that although many more questions exist as to the
criminal acts and violations of law the Conspirators have perpetrated, in the interest of
judicial expediency the Plaintiff will discontinue the questions of law with the
understanding that additional questions may be raised as a result of Discovery, thus the
Plaintiff reserves the right to add to this list.
16. As it pertains to the Plaintiffs specific loan, Plaintiff alleges that BAC and its predecessor
Countrywide committed the following violations of law:
a) Plaintiff alleges that Countrywide induced the Plaintiff to enter a
predatory mortgage loan agreement and falsely represented that the
Plaintiff qualified for said loan pursuant to standard underwriting
guidelines;
b) Plaintiff alleges that Countrywide induced Plaintiff to enter a high-risk
loan despite having knowledge that the market was on the precipice of
collapse thus endangering the financial health of the Plaintiff and
______;
c) As sworn testimony by BAC/Countrywide witnesses/employees attest
on pages 50, 53, 72, 80, 83, Countrywide incentivized employee and
broker misconduct through bonuses and higher commissions to sell
risky loan products which compelled Countrywide loan officer
____________ to place Plaintiff into a high risk loan and then falsified
______s income to ensure the loans approval;
d) Plaintiff alleges that Countrywide loan officer _____ fraudulently
changed the type of loan the Plaintiff had agreed upon from a fully9

documented and verified income loan to a stated income loan or

liars loan to ensure its approval;
e) Plaintiff alleges that Countrywide loan officer ____________ forged
the false name ____________ on the loan application when it was
____________ who took the loan application over the phone;
f) Plaintiff alleges that Countrywide failed to underwrite said loan which
placed the Plaintiff at great risk of foreclosure;
g) Plaintiff alleges that Countrywide sold and securitized Plaintiffs loan
to the CWALT Trust and converted it into Mortgage-Backed Securities
and withheld that knowledge from the Plaintiff and ______;
h) Plaintiff alleges that Countrywide suppressed the knowledge of the
true owner of the Plaintiffs loan and prevented the Plaintiff from
learning the true identity of the lender when Plaintiff requested said
identity through a Qualified Written Request (QWR) the Plaintiff
sent to BAC on July 22, 2010 and BAC ignored;
i) Plaintiff alleges that BAC instituted a false foreclosure complaint
misrepresenting that it was the real party in interest and owner of
Plaintiffs mortgage on 7-7-2010 when it filed said complaint;
j) Plaintiff alleges that BAC attached to its foreclosure complaint
documentary evidence produced after-the-fact which included a blank
indorsement allegedly signed by Laurie Meder of Countrywide Bank
but as the forthcoming sworn testimony attests by Countrywide/BAC
employee Michele Sjolander, the alleged signature was not a
signature at all but instead a rubber-stamp which was applied by
parties unknown to the alleged signator Laurie Meder;
k) Plaintiff alleges that Countrywide failed to record the true sale of
Plaintiffs loan to the CWALT Trust at the ____________ County
Recorders Office thus breaking the chain of title and slandering
Plaintiffs title;
l) Plaintiff alleges that BAC counsel ordered an assignment of
beneficial interest as documentary evidence after-the-fact as evidenced
by the fact that the assignment reads Prepared by and Mail to: Fisher
and Shapiro, LLC followed by its address and phone number and the
initials ht. The forthcoming sworn testimony by BAC/Countrywide
employees attest that any collateral deficiency found in the loan file
which is necessary to foreclose would be remedied by creating false
evidence by BAC;
m) Plaintiff alleges that on November 16, 2009 BAC recorded an
assignment of the Plaintiffs mortgage with the Recorder of Deeds for
10

____________ County, Illinois as document __________. Said

assignment was false, misleading, and unlawfully fabricated as
Plaintiff alleges that it was ordered as documentary evidence after-thefact by F&S for the sole purpose of filing a foreclosure action against
the Plaintiff on behalf of BAC, an entity that had no ownership in
Plaintiffs mortgage; EXHIBIT 1 - assignment
n) Plaintiff alleges that said assignment executed on 11-4-2009 was
created in the name of MERS as nominee for Countrywide, but
Countrywide did not exist on 11-4-2009 as the merger between BAC
and Countrywide was complete on 7-1-2008 thus BAC is fraudulently
attempting to confer to itself standing by means of a fraudulent
assignment;
o) Plaintiff alleges that in furtherance of its fraudulent scheme to convey
beneficial interest to itself, Plaintiff alleges that BAC engaged one of
its own employees to pose as a Vice-President of MERS and forge said
assignment;
p) Plaintiff alleges that BAC misrepresented that Plaintiff could modify
their loan but after submitting 96 pages of the requisite paperwork,
BAC purportedly lost said paperwork - 3 times - and then denied
said modification saying Plaintiff did not meet INVESTOR
guidelines;
q) Plaintiff alleges that BAC misrepresented that it was the Owner of
Plaintiffs mortgage, when its true capacity was the Servicer of said
loan;
r) Plaintiff alleges that BAC submitted false and misleading court
documents and filed said documents in the ____________ County
Clerks office;
s) Plaintiff alleges that after selling Plaintiffs loan as a true sale, BAC
retained the Plaintiffs Note in its own vault thereby having access to
the subject Note and thus the ability to claim holder of the legal
indebtedness even though BAC acquired that status illegally by
violating the Pooling and Servicing Agreement (PSA), the governing
documents of the Trust.
t) Plaintiff alleges that on July 7, 2010 BAC filed a foreclosure
complaint with the Clerks office of ____________ County, Illinois.
This document was false, misleading and unlawfully fabricated by
F&S at BACs behest for the sole purpose of foreclosing the Plaintiffs
property on behalf of BAC an entity that had no ownership in the
Plaintiffs mortgage and an entity that had no legal standing to bring a
foreclosure action against the Plaintiff.

11

u) Plaintiff alleges that on July 12, 2010 BAC filed a Lis Pendens which
was recorded with the Recorders office of ____________ County,
Illinois as document #R2010087976. Plaintiff alleges that this
document was false, misleading and unlawfully fabricated by F&S at
BACs behest for the sole purpose of filing a foreclosure action against
the Plaintiff on behalf of BAC an entity that has no ownership in the
Plaintiffs mortgage and an entity that had no legal standing to bring a
foreclosure action against the Plaintiff.
BACS ALLEGATIONS ARE FATALLY FLAWED AS A MATTER OF LAW

17. The loan which Countrywide allegedly tendered and other Conspirator banks allegedly tendered
to millions of borrowers across America were part of a meticulously orchestrated Enterprise, a
set-up where the Plaintiff along with millions of others across America were used as patsies
by BAC and its Co-Conspirators to entrap, defraud, and wrongfully foreclose properties without
the legal right through the false assertions that the Conspirators had the right to foreclose upon
the security interest in Properties and therefore acquire title to real properties through deception
and fraud for the profit of the Enterprise.
18. BAC, as part of the Enterprise filed an illegal foreclosure against Plaintiff which is fatally flawed
as a matter of law for the forgoing reasons:
19. July 2007 Countywide loan officer ___ ____________ offered a specific loan product to

Plaintiff contingent upon ______s credit rating and the appraised value of property. As
Plaintiffs husband was suffering a terminal illness which plunged Plaintiff into financial
hardship, the Plaintiff did not qualify to co-sign the subject Note, therefore ______ alone signed
the Note, but Plaintiff both signed the mortgage as co-borrowers.
20. Plaintiff alleges that Countrywide loan officer ___ ____________ (____________)
intentionally misled Plaintiff through material statements to believe that ______ qualified for the

12

subject loan under residential loan underwriting standards and placed Plaintiff in a fullydocumented verified income ARM loan at 7.5% interest with interest-only for 10 years which
required ______s paycheck stubs and income tax returns which were provided to
____________. EXHIBIT 2 - verified loan; EXHIBIT 3 - request for Transcript of Tax Return;
EXHIBIT 4 - documents submitted with loan application
21. 7-27-2007: ____________ conducted a telephone interview with ______ for a loan application
where he provided true and accurate information regarding his financial status. ______s
monthly income, supported by documentation was $__________________. The loan application
was signed by ____________. EXHIBIT 5 loan application showing ____________
22. 8-7-2007 Loan application documents were signed by ______ and returned to Countrywide.
23. 7-2007: Plaintiff alleges that ____________ changed the subject loan from fully-documented,
and verified to a stated-income loan commonly known as a liars loan thus submitting a false
loan application to Countrywides underwriting department.
24. 9-7-2007: Plaintiff entered into a loan agreement, the terms of which were memorialized in a
promissory note ("the Note") which was secured by a Mortgage lien on the Property. Said
Mortgage was recorded on September 14, 2007 in ____________ County, Illinois as Document #
R2007-170861. The Mortgage identified MERS as nominee and mortgagee for alleged lender
Countrywide. Countrywide separately executed the note naming Countrywide Bank as lender
and then separately executed the mortgage document citing Countrywide Bank as lender with
MERS as nominee for lender and lenders successors and assigns. MERS is the mortgagee under
this security instrument. EXHIBIT 6 - Note

13

25. From 9-7-2007 to 9-27-2007Countrywide irrevocably sold and assigned all of its rights and
entire interest in the subject loan as a true sale in accordance with the Financial Accounting
Standards Board (FASB) 140 to Investors of Mortgage-Backed Securities (MBS) as The
Bank of New York, in trust for registered holders of Alternative Loan Trust 2007-25, Mortgage
Pass-Through Certificates, Series 2007-25, Group 1 Certificates. (CWALT). The CWALT
Trust offered to buy the loan, Countrywide accepted, and compensation was paid by the Trust to
Countrywide. Thus Plaintiffs loan was sold without recourse to the CWALT Trust under a
Pooling and Servicing Agreement (PSA), the governing documents of the Trust which is
depicted in the Rule 424b5 Prospectus. The Plaintiff learned of this sale through a securitization
audit of the alleged loan on the subject property by Luminaq she ordered on 2-21-2011 as all
attempts to learn the real owner of Plaintiffs property through BAC were ignored. EXHIBIT 7 Prospectus Pgs 9-12; EXHIBIT 8 - Luminaq audit
26. 12-2007 - Plaintiff relied upon the truthfulness and legitimacy of the alleged subject loan,
Plaintiff and her family moved into subject property using it as their primary dwelling. In
addition Plaintiffs company, ______ Designers/Builders Inc. (Expressions) which
designed/built the subject property used it as its model home in order to avoid capital gains tax
which is waived if Plaintiff lived in said property for 24 months.
27. April 2008 - In full reliance that the subject loan was legitimate and the information conveyed to
the Plaintiff was truthful, ______invested an additional $300,000.+ to finish the 2200 square foot
basement and fully furnish the model home.
28. May 2008 ______procured two new clients to build multi-million dollar properties as a result
of an open house at the subject property and drafted designs for these clients.

14

29. September 2008 Economic Crisis announced: ___________________new clients put their
plans on hold which rendered Plaintiff unemployed. The Financial Crisis triggered a panic where
potential buyers/borrowers were unable to procure financing which resulted in an over-inventory
of homes on the market that began selling far below construction costs. With a huge supply of
homes on the market and little demand, real estate prices plummeted which impacted the subject
property significantly.
30. 10-2008: In order to feed her family and exist on Plaintiffs husbands social security payment of
$2100.00 a month, Plaintiff stopped making payments on all obligations, including the mortgage
on the subject property.
31. 11-17-2008: The Plaintiff received a NOTICE TO ACCELERATE from Countrywide stating that
the subject loan was in default. The first line of the notice states: Countrywide Home Loans
Servicing, LP services the home loan on behalf of the holder of the Promissory Note (the
Noteholder). EXHIBIT 9 - Countrywide notice to accelerate
32. November 2008 Plaintiff listed her familys vacant property in __________________ for sale
believing that once it sold, its sizable equity would enable her to resume the mortgage payments
on all her properties.
33. ______had entered into two joint venture agreements in 2005 with separate investors and built
spec homes which were to pay $_____________ each upon selling so Plaintiff was confident that
with 3 properties on the market, the sale of one property would provide enough funds to catch up
on back payments.

15

34. January 2009: The Plaintiff, a published author and diligent researcher grew suspicious of the
events which unfolded in the aftermath of the 2008 Financial Crisis, as said Crisis caused her
company ______to fail, rendered her unemployed and resulted in the two multi-million dollar
projects ______had spent 4 years designing/building/general contracting to sell at a loss in 2010,
thus paying ______nothing. These events transpired while the Plaintiff was trying to support her
terminally-ill husband and put her son through college, and further eviscerated an already
tenuous financial condition caused by the Plaintiffs husbands illness and his resulting inability
to work. Unemployed with no income, the Plaintiff faced three foreclosures which prompted the
Plaintiff and her now deceased husband joined a nationwide group of similarly-situated
homeowners where she learned that Countrywide had perpetrated outright fraud, falsified
documents, engaged in a plethora of deceitful acts and failed to disclose pertinent material facts
regarding mortgage loans. Although the allegations posed by this Group initially sounded
incredulous, the Plaintiff spent countless hours investigating and researching these claims in an
effort to either corroborate or refute them.
COUNTRYWIDE LOAN OFFICER FALSIFIES LOAN APPLICATION
35. The aforementioned group urged the Plaintiff to scour the loan closing documents on the subject
loan with a fine-tooth comb which caused the Plaintiff to discover that ______s allegedly
verified income had been falsified. On the loan application, ______s income was reported as
___________ per month but a fictitious monthly bonus of $11,600 now appeared on the loan
application showing ______s income now as $26,500.00 per month, an amount which
contradicted the documents sent to Countrywide which validated ______s income. EXHIBIT 10
loan application with bonus to ______s income.

16

36. 1-2009: Plaintiffs late husband visited the Countrywide Home Loans office and was told by
Countrywide employee Matt Kaley to contact BACs Foreclosure Retention Team. When Mr.
______ told Countrywide loan officer Jack Jones that the subject loan had been falsified, Jones
replied that ____________ had been fired by Countrywide in September 2008 for falsifying
numerous loan documents. EXHIBIT 11 - Jack Jones Stationary; EXHIBIT 12 - Matt Kaley note
PLAINTIFF SEEKS LOAN MODIFICATION
37. 10-26-2008: Plaintiff sought a modification of the mortgage loan with BAC after seeing a BAC
full page ad in the Chicago Tribune stating that BAC was $11 billion serious... about
modifying mortgage loans. EXHIBIT 13 Chicago Tribune BAC ad
38. 1-24-2009 BAC sent a letter to Plaintiff denying the request for modification saying that said
request did not meet investor guidelines. EXHIBIT 14- BAC letter of denial
39. 1-28-2009 Plaintiff persisted in her attempt to modify the loan and BAC responded favorably
and asked Plaintiff to fax a letter of hardship, along with income tax returns from 2006, 2007,
and 2008, and ______s 2008 pay check stubs verifying his income from Jan. 1, 2008 to Dec 15,
2008; as well as a letter from her husbands doctor detailing his disability status to BAC for the
loan modification. Plaintiff complied and faxed 92 pages of required documentation. EXHIBIT
15 - fax cover sheets; EXHIBIT 16 - letter of hardship
40. 2-3-2009 Plaintiff called BAC regarding modification but BAC claimed they lost the
paperwork and asked her to refax it again which she did 2 more times. There is now much
evidence which supports the fact that BAC had no intention of modifying subject loan as it was
far more profitable to collect TARP funds. As revealed in the House of Representatives Judiciary

17

Committee hearing on December 21, 2010, (transcript at: http://judiciary.house.gov/hearings/

printers/111th/111-158_62935.PDF) Detroit attorney Vanessa Fluker, also found a high rate of
modification paperwork being misplaced up to 10 times in some cases for clients she was
trying to help modify their loans. She discovered that any loan insured by Fannie Mae or Freddie
Mac paid the bank the ENTIRE mortgaged amount whereas a loan modification did not.
41. March 2009 Because Plaintiff was getting nowhere with BAC on the modification, Plaintiff
and her husband met with ___________ of the ____________ County Housing Foreclosure
mitigation office whose job was to assist homeowners with modifications of their mortgages.
____________ contacted BAC which instructed her to fax Plaintiffs modification
paperwork once again. However, BAC failed to respond in any meaningful way to __________,
and Plaintiff and ______s numerous attempts to modify subject loan were in vain. EXHIBIT 17
- __________
42. 7-7-2010: Plaintiff was served a Complaint to Foreclose Mortgage from BAC attorneys Fisher
and Shapiro (F&S), as case #2010 CH 003787 in ____________ County. Exhibit A of said
complaint included an alleged copy of the note and Exhibit B was an alleged copy of the
mortgage. The foreclosure complaint was filed in the name Bank of America Servicing, LP
F/K/A Countrywide Home Loans Servicing LP, but BAC now claimed under (n) of said
complaint Capacity in which Plaintiff brings this foreclosure: as legal holder of the
indebtedness and owner of the mortgage given as security therefore. To own Plaintiffs
mortgage and be the legal holder of indebtedness is a legal impossibility as in Illinois the
mortgage follows the Note and the Note was previously sold to the CWALT Mortgage-Backed
Securities Trust. (MBS)

EXHIBIT 18 Foreclosure complaint

18

43. Moreover, Countrywides 11-17-2008 Notice to Accelerate also stated: Countrywide Home
Loans Servicing, LP services the home loan on behalf of the holder of the Promissory Note. *See
Exhibit 9
44. 7-23-2010: Upon learning that the subject loan had been falsified and material facts were not
disclosed to Plaintiff, so Plaintiff sent a letter disputing the debt to BAC foreclosure attorneys
Fisher and Shapiro thereby identifying the fraudulent causes of action within the 3 years as
specified by 815 ILCS 505/10a a(e). EXHIBIT 19 letter from Fisher and Shapiro;
45. 7-23-2010: Plaintiff sent certified letters to the Office of RESPA and Interstate Land Sales, the
Office of Housing Enterprise Oversight (OFHEO), the Federal Trade Commission, the Office of
the Attorney General State of Illinois and the Comptroller of Currency (OCC) notifying the
following governmental agencies of Probable Loan Fraud. EXHIBIT 20 letters to
governmental agencies, certified receipts and responses.
PLAINTIFFs LOAN WAS RESCINDED ON 7-22-2010 UNDER THE TILA
46. 7-22-2010: Plaintiff sent a Qualified Written Request (QWR) and NOTICE OF RIGHT TO
CANCEL to Defendant BAC which was validated by BAC attorneys Dilworth Paxon LLP in
their correspondence on August 27, 2010, but ignored. EXHIBIT 21- BAC Counsel Dilworth and
Paxon letter acknowledging notice of right to cancel; EXHIBIT 22 - BAC letter acknowledging
Defendants notice of right to cancel.
47. The TILA requires that under all circumstances that BAC must file a Declaratory Judgment
within 20 days of receiving said notice if it contested Defendants Notice of Right to Cancel.
BAC did not.

19

48. The Rescission of Plaintiffs loan was absolute when BAC failed to file a declaratory judgment
which is not subject to equitable interpretation by the lower courts as TILA is a strict statute.
(Truth-In-Lending, 5th Edition, National Consumer Law Center, 1.4.2.3.2, page 11). By operation
of law, the security interest and promissory note automatically became void and the consumer
was then relieved of any obligation to pay any finance or other charges (15 USC 1635(b); Reg.
Z-226.15(d)(1),226.23(d)(1). See Official Staff Commentary 226.23(d)(2)-1. (See Willis v.
Friedman, Clearinghouse No. 54,564 (Md. Ct. Spec. App. May 2, 2002) (Once the right to
rescind is exercised, the security interest in the Plaintiff's property becomes void ab initio).
Thus, the security interest was void on Plaintiffs property and of no legal effect irrespective of
whether the creditor made any affirmative response to the notice. (See Family Financial
Services v. Spencer, 677 A.2d 479 (Conn. App. 1996) (all that is required is notification of the
intent to rescind, and the agreement is automatically rescinded).
49. As courts across the country have wrestled with the interpretation of the TILA, on January 13,

2015 Judge Scalia of the United States Supreme Court provided clarification in re: Jesinoski vs.
Countrywide in which the Supreme Court unanimously stated that: Section 1635(a)s
unequivocal termsa borrower shall have the right to rescind . . . by notifying the creditor . . .
of his intention to do so (emphasis added)leave no doubt that rescission is effected when
the borrower notifies the creditor of his intention to rescind. This conclusion is not altered by
1635(f), which states when the right to rescind must be exercised, but says nothing about how
that right is exercised. Nor does 1635(g)which states that in addition to rescission the court
may award relief . . . not relating to the right to rescindsupport respondents view that
rescission is necessarily a consequence of judicial action. And the fact that the Act modified the
common-law condition precedent to rescission at law, see 1635(b), hardly implies that the Act

20

thereby codified rescission in equity.

Pp. 25. 729 F. 3d 1092, reversed and remanded.

SCALIA, J., delivered the opinion for a unanimous Court. The Jesinoskis mailed Respondents
written notice of their intention to rescind within 3 years of their loans consummation. Because
this is all the borrower must do in order to exercise his right to rescind under the act, the court
below erred in dismissing the complaint. Accordingly, we reverse the judgment of the 8 th circuit
and remand the case for further proceedings consistent with this opinion. EXHIBIT 23 -Jesinoski
Ruling
50. Because Countrywide failed to deliver all material disclosures to the Plaintiff and ______, such
as changing the ARM index from Treasury to LIBOR without disclosing said material fact
among many to the Plaintiff, Regulation Z dictates that the voiding of the Note and Mortgage is
absolute and not subject to judicial modification. 12 C.F.R. 226.23 (a) (3), (b) (1) This requires
that BAC or any other entity claiming interest in Plaintiffs property (1) to return cancelled Note;
(2) file a satisfaction of mortgage; and (3) return all monies to Borrower. (Official Staff
Commentary 226.15(d)(2)-3, 226.23(d)(2)-3.) The TILA statute and Regulation Z make it
clear that if the Plaintiff/consumer has the extended right and chooses to exercise it, the security
interest and obligation to pay charges are automatically voided. (Cf. Semar v. Platte Valley Fed.
Sav. & Loan Assn, 791 F.2d 699, 704-05 (9th Cir.1986).) Statutes may not be construed unless
there is a specific finding that the statute is ambiguous in some way.
51. The Supreme Courts decision in Jesinoski and TILAs statutory language state that the courts
modification authority extends only to the procedures specified by section 1635(b). The statute
makes no distinction between the right to rescind in 3-day or extended as neither cases nor
statute give courts equitable discretion to alter TILAs substantive provisions. (15 USC
1625(b)). *See Exhibit 23 - Jesinoski ruling
21

52. When the Plaintiff rescinded the subject loan transaction on July 22, 2010, BAC was required to
release its security interest in the home and return all funds that the Plaintiff paid over the course
of the loan, including interest and costs and that which may have been passed onto a third party,
such as a broker or an appraiser as well as to take any action necessary to reflect the termination
of the security interest within 20 calendar days of receiving the rescission notice.
53. Upon BACs failure to terminate the security interest and tender funds to the Plaintiff, BAC
waived its right to contest Plaintiffs Notice of Right to Cancel as said failure to comply with
the TILA is a violation of the strict TILA Statute thus giving rise to a claim for actual and
statutory damages under 15 USC 1640. In re: Cervantes v. General Electric Mortgage Co., 67
B.R. 816 (Pa. 1986): creditor failed to meet disclosure requirements under the Truth in Lending
Act, 15 U.S.C.S. 1601-1667c and Regulation Z of the Federal Reserve Board, 12 CFR 226.1
54. In the event that BAC disputes the borrowers right to rescind or if it is unwilling to tender first,

the Plaintiff is obligated to seek assistance from the court. U.S.C. 1635(b); Reg. Z.
226.15(d)(3), 226.23(d)(3).
55. The Plaintiff had no reason to suspect that a government-regulated financial institution would
conceal the true lender of funds; that the loan was predatory and induced by fraud as
Countrywide was not a lender of funds as claimed but instead a broker/originator of the funds
provided by investors of Mortgage Backed Securities (MBS); that Countrywide would conceal
the fact that it changed the loan status from a fully verified and documented loan to a stated
income loan; that the Countrywide loan officer would falsify the loan application by adding a
bonus of $11,600.00 per month to ______s income; that a Countrywide loan officer would
forge the loan application by signing said application as an altogether different entity thereby
committing outright fraud and engaging in deceitful acts.
22

56. The Jesinoskis mailed Respondents written notice of their intention to rescind within 3 years of
their loans consummation. Likewise, the Plaintiff did the same as the subject loan closed on 97-2007 and the Notice of Right to Cancel was sent on 7-22-2010, within 3 years of their loans
consummation, thus BAC waived its right to contest the Plaintiffs NOTICE OF RIGHT TO
CANCEL by failing to comply with the TILA thus voiding the subject Note and Mortgage. In re:
Family Fin. Servs v. Spencer, 677 A.2d 479 (Conn. App. Ct. 1995), the court held that because
the lender failed to accept the borrowers valid rescission notice, the borrower did not have to
tender and was able to keep the loan proceeds.
PLAINTIFF ORDERED A SECURITIZATION AUDIT
57. 2-21-2011 - When BAC failed to respond to Plaintiffs Qualified Written Request (QWR) on
7-22-2010 which asked BAC to identify the owner of Plaintiffs loan, the Plaintiff ordered a
securitization audit of the alleged loan on subject property by Luminaq where it was ascertained
that Countrywide, irrevocably sold and assigned all of its rights and entire interest in the subject
loan to the CWALT Trust. *See Exhibit 7 - Prospectus Pgs 9-12; *See Exhibit 8 - Luminaq audit
58. Upon selling the Note to the CWALT Trust Countrywide bifurcated the Note from the mortgage
and illegally retained the mortgage and fraudulently confer ownership of the mortgage to
itself; *See 1872 US Supreme Court precedent Carpenter v. Longan, 83 U.S. U.S. 1872 271, at
274; when the note is separated from the deed as in the case of a MERS nomination, the deed
becomes a nullity and the remedy is Quiet Title.
59. Plaintiff alleges that Countrywide violated this commonly known long-standing law and retained
the mortgage after selling the note for if Countrywide secretively held the mortgage for three
years, then filed an IRS Form 1099a and claimed the full amount of the lien as abandoned funds

23

and deducted the full amount from Countrywides tax liability, Countrywide would receive
consideration a second time.
BAC WAS NOT OWNER OF PLAINTIFFS MORTGAGE AS IT CLAIMED
60. The Plaintiff alleges that BAC neither legally held Plaintiffs indebtedness (the Note) as it was
owned by the CWALT Trust, nor was BAC the Owner the Plaintiffs mortgage when BAC
filed its foreclosure on 7-7-2010 as Illinois law is clear: the Mortgage follows the Note, thus if
the Note is owned by the CWALT Trust, the mortgage cannot be owned by BAC as the two
instruments cannot be bifurcated. *See 1872 US Supreme Court precedent Carpenter v. Longan,
83 U.S. U.S. 1872 271, at 274, when the note is separated from the deed as in the case of a
MERS nomination, the deed becomes a nullity
61. Throughout the course of the foreclosure litigation BAC has not refuted Plaintiffs claim that the
subject loan was sold to the CWALT Trust, therefore the court must construe this fact as true.
Exhibits are a part of the complaint to which they are attached, and facts contained within an
exhibit serve to negate inconsistent allegations contained within the body of the complaint. A
party may not rely on the allegations of its pleadings to contradict evidence produced by the
movant that would entitle it to judgment. Triple R Development, 2012 IL App (4th) 100956.
62. BAC has misrepresented its ownership of Plaintiffs mortgage as it owns nothing and has thus
committed a fraud on the court.
63. Moreover, BACs failure to produce any competent evidence which rebuts Plaintiffs evidence of
the CWALT securitization preempts BACs allegation that it was the Owner of Defendants
mortgage on 7-7-2010, the date that BAC filed its foreclosure suit against the Defendant, thus

24

BAC lacks standing to foreclose Plaintiffs property. Deutsche Bank National Trust Co. v.
Gilbert, 2012 IL App (2d) 120164: As Deutsche Bank produced no competent evidence
rebutting Gilberts prima facie showing that the bank lacked standing at the time of filing, Gilbert
was entitled to summary judgment in his favor on this issue.
64. Further evidence that BAC had no ownership in Plaintiffs mortgage was evidenced by the fact
that the CWALT 2007-25 Trust as well as 88 other Trusts were downgraded by the Ratings
Agency Fitch, on August 1, 2008 on the basis that: [the trusts] reflect Fitchs analysis of
expected default and loss from delinquent loans in addition to projected losses from the currently
performing pool. EXHIBIT 24 Fitch downgrades CWALT trust
65. In the wake of the Fitch downgrade, numerous MBS Investors filed lawsuits which resulted in
the Bank of New York Mellon, as Trustee for the CWALT 2007-25 Trust as well as many others,
proposing a settlement with BAC of $8.5 Billion which represents a tiny fraction of the Trusts
original value and had investors protesting.
66. However, this case was not settled by the New York Supreme Court until April 15, 2015. Thus
the CWALT Trust ownership did not change hands until 4-15-15 which means that on 7-7-2010,
the date that BAC filed its foreclosure suit, BAC could not have owned Plaintiffs Mortgage.
EXHIBIT 25 4-15-2015 Settlement
67. The Illinois Appellate court has specifically applied the states standing doctrine to a Plaintiffs
capacity to bring a mortgage foreclosure action. See Eckel v. Bynum, 608 N.E.2d 167, 173 (Ill.
App. Ct. 1992). The legislative requirements of the Illinois Mortgage Foreclosure Law (IMFL)
See 735 ILL. COMP. STAT. 5/15-1504(a)(3)(N) (2010) requires plaintiffs in a mortgage
foreclosure action to plead the capacity in which they bring the foreclosure. Id. See In re Unioil,

25

Inc., 962 F.2d 988, 992 (10th Cir. 1992) (proof of claim which did not even indicate [claimants]
representational capacity much less disclose the identity of the true creditor, was defective
under Fed. R. Bankr. P. 3001(b)).
68. ARTICLE III STANDING is federal threshold law which usurps state law. Federal courts have
deduced a set of requirements that together make up the irreducible constitutional minimum of
standing. Lexmark Intl, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 138688
(2014) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)).
Three components comprise this irreducible constitutional minimum:
(1) the plaintiff must have suffered an injury in fact,
(2) that injury must be fairly traceable to the defendants challenged conduct,
and
(3) it must be likely that the plaintiffs injury would be redressed by the requested
relief. Lujan, 504 U.S. at 56061.
69. Under Article III, BAC has no personal and particularized stake in the dispute for BAC did not
own Plaintiffs mortgage as it claimed. Because Countrywide sold the subject Note to the
CWALT Trust as a true sale, Countrywide was paid in full, therefore BAC as Countrywide
successor does not stand to suffer any loss or harm should it be enjoined from foreclosing on the
Property.
BORROWERS ARE
SECURITIZATION

ROUTINELY DENIED

THE

RIGHT

TO

CHALLENGE

70. Banks have routinely denied borrowers the right to challenge securitization on the basis that
borrowers are non-parties to securitization. However, that premise is a fallacy and is refuted in a
U.S. Bank Global Corporate Trust Services The Role of the Corporate Trustee brochure. Wall
Street banks authored the Pooling and Servicing Agreements (PSA) to comply with strict New

26

York Law, thus for all intents and purposes, all PSAs resemble one another and identify the roles
assumed by all parties in an MBS transaction. Under Distinct Party Roles the US Bank
brochure states: Parties involved in an MBS transaction include the borrower, the originator, the
servicer, and the trustee, each with their own distinct roles, responsibilities and limitations. The
fourth page of the brochure identifies the Parties to a Mortgage-Backed Securities
Transaction, with the first being Borrower, followed by the other parties and ending with
the Trustee (stating that the Trustee does not have an economic or beneficial interest in the
loans.) Therefore the borrower is indeed a party to the transaction as it could not have occurred
without the borrower. EXHIBIT 26 - U.S. Bank brochure

71. In all securitized loans there is only one transaction - a loan from the investors to the homeowner.
Without an investor there would be no loan; conversely without a borrower there would be no
investor or investment, a premise corroborated in Re: Alabama No. 3:08cv1019-MHT (WO), US
District Court, M.D., Eastern Division, February 17, 2009, Horace v. LaSalle Bank:
"Horace is a third-party beneficiary of the pooling and servicing agreement
without such plaintiff Horace and other mortgagors similarly situated would
never have been able to obtain financing." (Plaintiffs emphasis)
PLAINTIFFS LOAN WAS FUNDED BY MBS INVESTORS NOT COUNTRYWIDE
72. As verified by Plaintiffs securitization audit and not disputed by BAC, on or before 9-7-2007 to
9-27-2007 Countywide Home Loans, through its affiliate Countrywide Bank, sold and assigned
its entire interest in the subject loan to Depositor CWALT 2007-25, under a PSA which is
depicted in the Rule 424b5 Prospectus. Depositor CWALT then transferred and assigned its
entire interest in the Receivables/Mortgage Loan Installment Contract to the CWALT Certificateholders under the PSA. The Trust then issued the Notes to the Depositor CWALT under the

27

Indenture Agreements and pledged the Receivables/Mortgage Loan Installment Contract to the
Indenture Trustee, as the Owner Trustees under Trust Agreement. Depositor CWALT then sold
the offered Notes to the Certificate holders and Security Underwriters. *See exhibit 7 Prospectus Pgs 9-12

73. Plaintiffs securitization report states that it is highly probable that Plaintiffs alleged loan was
sold and funded prior to the loan closing on 9-7-2007 to Investors of the CWALT Trust.
74. Experts on Wall Street state that the industry standard is to sell the MBS forward, meaning that
the security was sold and the money collected BEFORE the loan was funded on behalf of
borrowers. Therefore, upon information and belief Plaintiff alleges that Countrywide
misrepresented its role and fraudulently posed as the alleged lender on Plaintiffs loan
documents, when its true role was that of intermediary/broker.
75. To corroborate that forward selling is the norm on Wall Street and lend credence to the CWALT
MBS Trust as the true lender and provider of funds on Plaintiffs loan and not Countrywide, the
Federal Reserve Bank of New York Staff Report No. 468-August 2010 entitled TBA Trading
and Liquidity in the Agency MBS Market by James Vickery Joshua Wright states the following:
A less widely recognized feature is the existence of a liquid forward market for
trading agency MBS, out to a horizon of several months. The liquidity of this
market raises MBS prices and improves market functioning. It also helps
mortgage lenders manage risk, since it allows them to lock in sale prices for
new loans as or even before those mortgages are originated. The vast majority of
agency MBS trading occurs in this forward market, which is known as the TBA
market (TBA stands for to be announced). In a TBA trade, the seller of MBS
agrees on a sale price, but does not specify which particular securities will be
delivered to the buyer on settlement day. Instead, only a few basic characteristics
of the securities are agreed upon, such as the coupon rate and the face value of the
bonds to be delivered. *3 In a forward contract, the security and cash payment for
that security are not exchanged until after the date on which the terms of the trade
are contractually agreed upon. The date the trade is agreed upon is called the
28

trade date. The date the cash and securities change hands is called the
settlement date. (emphasis by Plaintiff)
76. Further corroboration that the CWALT MBS Trust prefunded Plaintiffs loan is provided in the
CWALT prospectus supplement which states on page 4 that the CWALT Trust pre-funds loans as
stated in the Pre-Funded Amount:
as of the date of this prospectus supplement, the pre-funded amount to be
deposited in the pre-funding account is expected to be $137,761,260.00.
EXHIBIT 27 prospectus page 10
77. Upon information and belief Plaintiff alleges that at the closing of Plaintiffs loan on 9-7-2007
Countrywide was not the true lender because Countrywide did not advance funds to Plaintiff
with any of its own assets. In Anheuser-Busch Brewing Company v. Emma Mason, 44 Minn. 318,
46 N.W. 558 (1890), No lawful consideration tendered by Original Lender and/or Subsequent
Mortgage and/or Servicing Company to support the alleged debt. A lawful consideration must
exist and be tendered to support the Note and demand under TILA full disclosure of any such
consideration. IN RE Ramsey v. Vista Mortgage Corp., 176 BR 183 Chptr 13 bnkr, the Ramsey
court tackled the concept of when a loan is consummated and opined: when Ramsey signed the
loan documents on September 13, 1989, he knew who was going to provide the financing. Courts
recognize the date of signing a binding loan contract as the date of consummation when the
lender is identifiable. The court also cited Jackson v. Grant, 890 F.2d case (9 th circuit 1989), a
non-bankruptcy case, and stated: the Ninth Circuit held that under California law a loan contract
was not consummated when the borrower signed the promissory note and deed of trust because
the actual lender was not known at that time. Thus, BAC has no legally enforceable contract.
BAC MUST HAVE A LEGAL ASSIGNMENT OF BENEFICIAL INTEREST TO
FORECLOSE THE SUBJECT NOTE AND SEIZE PLAINTIFFS PROPERTY
78. Because BAC is not the original entity which issued Plaintiffs loan and Countrywide had

29

previously sold Plaintiffs loan to the CWALT Trust (which BAC has not disputed and as such this
court must construe as true) for BAC to have standing to foreclose Plaintiffs property, BAC
must

demonstrate

that

the

beneficial

interest

in

Plaintiffs

loan

was

somehow

acquired/transferred to BAC prior to filing its foreclosure complaint which is achieved by means
of an assignment.
79. BAC, through its counsel Fischer & Shapiro (F&S) attached to its foreclosure complaint an
assignment purporting to assign beneficial interest in Plaintiffs mortgage and Note to BAC. Said
assignment was dated 11-4-2009 and recorded on 11-16-2009 at the ______ County recorders
office as document #R_______ and reads as follows:
For value received, Mortgage Electronic Registration System, Inc. solely as
nominee for Countrywide Bank, FSB has hereby sold, assigned and transferred to
Bank of America Home Loans Serving, LP, f/k/a Countrywide Home Loans
Servicing, L.P., its successors and assigns, all right, title and interest in and to a
certain mortgage executed by __________ to Mortgage Electronic Registration
Systems, Inc.. solely as nominee for Countrywide Bank FSB, dated September 7,
2007 as Document R__________in the ____________ County Recorders Office,
in the state of Illinois, conveying the property known as
(LEGAL
DESCRIPTION FOLLOWS) Commonly known as ______ Drive,
____________________ (page 2) Together with said note therein described. And
the money due, or to become due thereon, with interest, subject to the provisions
of the said mortgage. This instrument serves to memorialize the transfer of this
loan which had previously taken place. *See Exhibit 1 - assignment
PLAINTIFF AS A NON-PARTY TO THE ASSIGNMENT HAS LEGAL STANDING TO
CHALLENGE ASSIGNMENTS AUTHENTICITY
80. Although the Plaintiff is a non-party to the assignment the Plaintiff does have standing to
challenge the assignments authenticity if the assignment is inauthentic.

81. The Plaintiff both alleges and supports with exhibits that the aforementioned assignment of
beneficial interest is inauthentic as it was created as documentary evidence after-the fact to feign

30

standing to BAC. Therefore, said document is void as a matter of law and everything that flows
from this breeder document is tainted with fraud and must be revoked.
The alleged assignment cannot be enforced by the initial receptor and its
purported successors. Enforcement is void ab initio due to the falsity uttering
placed by such agent. The Appellate Court of Illinois, Fourth District, ruled that
three trial court orders entered in 2007 and 2008 under the Illinois Structured
Settlement Protection Act, 215 Ill. Comp. Stat. 153-1 et seq. (the Illinois
SSPA) were void ab initio, because they were procured by fraud.
82. Although the courts have routinely denied a foreclosure Defendant the right to challenge the
assignment, a 9-29-2014 decision from the 6TH Circuit Appellate Court in Re: Slorp V. Lerner,
Sampson Etc. overturned that supposition as a matter of law:
the circumstances under which a mortgagor can challenge the validity of an
assignment that purports to assign the mortgagees interest in the mortgage to
another entity. Much of the district courts analysis was taken from Livonia
Properties Holdings, LLC v. 1284012976 Farmington Road Holdings, LLC,
where we held that a homeowner did not have standing to challenge the validity
of a home-loan assignment in an action contesting a Foreclosure. 399 F. Appx
97, 102 (6th Cir. 2010).
The type of standing we discussed in Livonia Properties is a common-law
analogue of statutory standing, wholly unrelated to Article III standing. It is
entirely a creature of state contract law and is assessed in conjunction with the
merits of the claim, not as a threshold issue.
Assignments are contracts and, as a general matter, are regulated by the common
law of contracts. See 6A C.J.S. Assignments 123 (2014). A person who is
neither a party to the contract nor in privity with the parties, and who is not a
third-party beneficiary of the contract, is said to lack standing to enforce the
contracts terms and to challenge its validity. See Kaplan v. Shure Bros., Inc., 266
F.3d 598, 60203 (7th Cir.2001) (analyzing contractual privity as an issue of statelaw standing); City of Akron v. Castle Aviation, Inc., No. 16057, 1993 WL
191966, at *2 (Ohio Ct. App. June 9, 1993) (As a general rule a non-party may
not assert contract rights unless it is a third-party beneficiary under the contract or
such standing is conferred by statute.). Livonia Properties was one of
innumerable cases recognizing that this general contract principle extends to
assignments, subject to various caveats and exceptions. See also, e.g., Druso v.
Bank One of Columbus, 705 N.E.2d 717, 72122 (Ohio Ct. App. 1997).
Our Livonia Properties opinion has confounded some courts and litigants, see,
e.g., Etts v. Deutsche Bank Natl Trust Co., No. 13-11588, 2014 WL 645358, at
31

*4 (E.D. Mich. Feb. 19, 2014) (noting that the inexact use of the term standing
to denote a homeowners eligibility to challenge certain aspects of a foreclosure
made it unclear whether Plaintiffs are challenging Plaintiffs standing under
Article III of the Constitution), and has generally received more attention than an
unpublished opinion might warrant.
The district court held that Slorp lacked standing to assert his claims because an
individual who is not a party to an assignment may not attack the assignments
validity. We differ with this interpretation of Livonia Properties. The sweeping
rule that the district court extrapolated from Livonia Properties dwarfs our actual
holding in that case.
The District court in Livonia Properties stated that an individual who is not a
party to an assignment lacks standing to challenge that assignment, and our
Livonia Properties opinion quoted and endorsed that general statement, perhaps
inartfully. 399 F. Appx at 102.
But we quickly limited the scope of that rule, clarifying that a non-party
homeowner may challenge the validity of an assignment to establish the
assignees lack of title, among other defects. Id. (citing 6A C.J.S. Assignments
132); see also Carmack v. Bank of N.Y. Mellon, 534 F. Appx 508, 51112 (6 Th
Cir. 2013) (Livonias statement on standing should not be read broadly to
preclude all borrowers from challenging the validity of mortgage assignments
under Michigan law.). Thus a non-party homeowner may challenge a putative
assignments validity on the basis that it was not effective to pass legal title to
the putative assignee. See Conlin v. Mortg. Elec. Registration Sys., 714 F.3d 355,
361 (6th Cir. 2013); Livonia Props., 399 F. Appx at 102; see also Woods v. Wells
Fargo Bank, N.A., 733 F.3d 349, 35354 (1st Cir. 2013); 6A C.J.S. Assignments
132 (The debtor may also question a plaintiffs lack of title or the right to sue.).
There was no dispute in Livonia Properties that the assignor had assigned title to
the assignee; rather, the homeowner lacked standing to assert that the
assignment was not properly recorded and suffered from technical defects that
prevented the assignee from establishing record chain of title under Michigan law.
In this case, by contrast, Slorp alleges that Bank of America, the putative
assignee, held neither his mortgage nor the attendant promissory note when it
filed the foreclosure action because the parties lacked the authority to assign
his mortgage to Bank of America when they purported to do so.
That distinction makes all the difference. See Conlin, 714 F.3d at 361 (stating that
a third party may challenge an assignment if that challenge would render the
assignment void).
Because Slorp alleges that the assignment was fraudulent and that BAC therefore
did not hold title at the time of the foreclosure, Livonia Properties does not bar
his suitin fact, it supports it.
Livonia Properties discusses the defenses that are available to homeowners who
face foreclosurei.e., the circumstances in which a homeowner may impede
foreclosure by attacking the assignment of the mortgage. See 399 F. Appx at

32

10203 (relying in large part on 6A C.J.S. Assignments 132, which is captioned

Defenses). That opinion says nothing about when a homeowner may bring suit
to seek redress for fraudulent or deceptive acts in connection with a foreclosure.

THE BAC ASSIGNMENT IS FATALLY FLAWED AS A MATTER OF LAW

83. As in Slorp, the Plaintiff alleges that BAC, the putative assignee, fraudulently concealed the
material fact that it neither legally held Plaintiffs indebtedness nor was the Owner the
Plaintiffs mortgage when BAC filed its foreclosure on 7-7-2010 thus the Plaintiff has the right
to challenge the assignments authenticity, a document fatally flawed as a matter of law for the
following reasons which will be expanded upon in forthcoming paragraphs:
i.

BAC merged with Countrywide on 7-1-2008 therefore Countrywide was

not in existence on 11-4-2009 when said assignment was executed, hence
Countrywide had no authority to convey beneficial interest to BAC and
said assignment is an illegal conveyance from BAC to BAC. proof of
an agents authority must be shown from the mouth of the principal, not
the agent. Lexow&Jenkins, P.C. V. Hertz Commercial Leasing Corp.,
122AD2d 25, 504 NYS2d 192(2 nd Dept 1986), Siegel V Kentucky Fried
Chicken Of Long Island Inc. 108 AD2d 218, 488. EXHIBIT 28 FDIC
proof of non-existence

ii.

Countrywide had previously sold the subject Note to the CWALT Trust
between _________ the date of the closing, and ___________, the date the
CWALT Trust closed. From that time forward there is no evidence that
CWALT, a non-MERS member, sold, assigned or transferred Plaintiffs
Note to any entity, thus MERS had no authority to assign said Mortgage to
BAC; *See Exhibit 8 - Luminaq Audit; EXHIBIT 29- ____________
record

iii.

MERS is a non-party to the subject Note as the terms of the Note do not
mention MERS, thus MERS had no authority to assign the subject note;
*See Exhibit 6 Note

iv.

Rhoena Rice executed said assignment as Vice-President of MERS but

was not employed by MERS on 11-4-2009, the date she executed the
assignment but was instead an employee of BAC as corroborated by
McDonnell Property Analytics who lists Rhoena Rice as an alleged robosignor/forger; EXHIBIT 30 John OBrien Affidavit

33

v.

Upon information and belief, said Assignment was fraudulently created as

documentary evidence after-the-fact according to the sworn testimony in
the depositions of former Countrywide/BAC employees, who
independently expose the fraudulent manufacturing of any collateral
deficiency needed to foreclose when foreclosure attorneys request said
documents which includes: blank indorsements, allonges, assignments of
beneficial interest, affidavits or promissory notes.

vi.

BAC counsel, F&S is listed at the bottom of Plaintiffs alleged assignment

as Prepared by and Mail to: Fisher and Shapiro, LLC followed by its
address and phone number and the initials ht. F&S has admitted to
falsifying thousands of mortgage documents. EXHIBIT 31 Tribune
article

84. The Plaintiff will now expand upon each of the aforementioned fatal flaws as a matter of law in
depth.
i.

DOCUMENTARY EVIDENCE EXISTS OF THE MERGER BETWEEN

COUNTRYWIDE AND BAC OCCURRING ON 4-27-2009 THUS NULLIFYING THE
CLAIM THAT MERS, AS NOMINEE FOR COUNTRYWIDE HAD THE AUTHORITY
TO CONVEY BENEFICIAL INTEREST to BAC: *See Exhibit 28
ii.
THE ASSIGNMENT TO BAC IS FATALLY FLAWED AS A MATTER OF LAW AS
THE SUBJECT NOTE WAS IRREVOCABLY SOLD AS A TRUE SALE TO THE NONMERS MEMBER CWALT TRUST WITHOUT RECOURSE
85. As validated by the Plaintiffs securitization audit Plaintiffs was sold without recourse to the
CWALT Trust under a Pooling and Servicing Agreement (the governing documents of the Trust)
which is depicted in the Rule 424b5 Prospectus.*See Exhibit 7 - Prospectus Pgs 9-12
86. Once the loan was irrevocably sold to the CWALT Trust as a true sale, MERS, as nominee for
Countrywide, was no longer the mortgagee and thus had no authority to convey beneficial
interest:
This Court has held that a plaintiff may state a claim for wrongful
foreclosure based on allegations that sale of the DOT precluded Plaintiffs
from retaining a beneficial interest in that DOT. See Subramani v. Wells
Fargo Bank N.A., C 13-1605 SC, 2013 WL 5913789, at *4 (N.D. Cal. Oct.
31, 2013). Plaintiffs allege that WAMU irrevocably sold all right, title and
34

interest in Plaintiffs' mortgage loan, for value received, to the JPMorgan

Mortgage Trust 2008-R2 Mortgage Pass-through Certificates Series 2008-R2
("JPMMT 2008-R2"), a private label mortgage-backed securities trust with a
Real Estate Mortgage Investment Conduit election and continuing
qualification.
87. Upon selling the Plaintiffs loan to the CWALT Trust, Countrywide Home Loans Servicing LP,
was assumed by Bank of America Home Loans Servicing, LP after the defacto merger. No
provision exists in the CWALT PSA which confers the authority to MERS to act as a nominee for
the CWALT Trust, as the CWALT Trust is a non-MERS member. In re Vargas, 396 B.R. 511,
517 (Bankr. C.D. Cal. 2008) ([I]f [the original lender] transferred the note, MERS is no longer
an authorized agent of the holder unless it has a separate agency contract with the new [ ]
principal.). Under MERS procedures, if a mortgage loan is transferred to a non-MERS
member, it generally requires deactivation of the loan from the MERS system, Membership
Rules, supra note 19, R. 2, 4(a). Id., R. 2, 6 (MERS shall at all times comply with the
instructions of the holder of mortgage loan promissory notes.).
88. BAC has not produced an agency contract with MERS throughout the foreclosure litigation, thus
Plaintiffs loan was deactivated from the MERS system and Countrywide did not have the
authority to assign Plaintiffs mortgage to BAC.
89. Moreover, the CWALT Trust Prospectus Supplement and PSA requires that the sale of Plaintiffs
loan, the mortgage, and assignment be publicly recorded in the name of the Trust evidencing the
CWALT investors' interest in real property as validated on Page 62 of the PSA: Assignment of
the Mortgage Loans: EXHIBIT 32
Pursuant to the pooling and servicing agreement, on the closing date, the
depositor will sell, transfer, assign, set over and otherwise convey without
recourse to the trustee in trust for the benefit of the certificate-holders all right,
title and interest of the depositor in and to and each Group 1 Closing Date
35

Mortgage Loan and each mortgage loan in loan group 2 and all right, title and
interest in and to all other assets included in Alternative Loan Trust 2007-25,
including all principal and interest received on or with respect to the Closing Date
Mortgage Loans, but not any principal and interest due on or before the initial cutoff date, and amounts on deposit in the Pre-funding Account and the Capitalized
Interest Account on the closing date. In connection with the transfer and
assignment of a mortgage loan, the depositor will deliver or cause to be delivered
to the trustee, or a custodian for the trustee, the mortgage file, which contains
among other things,
the original mortgage note (and any modification or amendment to it) endorsed
in blank without recourse, except that the depositor may deliver or cause to be
delivered a lost note affidavit in lieu of any original mortgage note that has been
lost;
the original instrument creating a first lien on the related mortgaged property
with evidence of recording indicated thereon or a copy of such instrument;
an assignment in recordable form of the mortgage or a copy of such assignment;
the original or a copy of the title policy with respect to the related mortgaged
property; and
if applicable, all recorded intervening assignments of the mortgage or copies
thereof and any riders or modifications to the mortgage note and mortgage or
copies thereof (except for any documents not returned from the public recording
office, which will be delivered to the trustee as soon as the same is available to the
depositor).
90. Moreover, if the CWALT Trust had sold its interest in the subject Note to BAC, and BAC has
claimed in foreclosure court proceedings that it is the Investor of Plaintiffs loan but has
provided NO evidence of said claim, thus this baseless claim is preempted by Plaintiffs prima
facie claim that the CWALT Trust purchased Plaintiffs loan without recourse, a fact which has
not been refuted by BAC which the court must then construe as true and the fact that a sale
transaction would be recorded in ____________ County, but no transfers nor conveyances exist
which have been recorded at the ____________ County Recorders Office as required by the
PSA. *See Exhibit 29-____________ property record

91. Upon information and belief the Plaintiff alleges, and provides specific details in her forthcoming

36

RICO Count, there is a reason that Plaintiffs loan was not delivered to the CWALT Trustee, nor
was it recorded, for it permitted BAC to sell the same notes MULTIPLE TIMES to MULTIPLE
Trusts both in America and abroad as verified in the Financial Crisis Inquiry Commission
Report* (FCIC.)
Synthetic CDOs [MBS collateralized debt obligations] created by Goldman
[Sachs] referenced more than 3,400 mortgage securities, and 610 of them
were referenced at least twice. This is apart from how many times these
securities may have been referenced in synthetic CDOs created by other
firms. *See The January 2011 FCIC report at FCIC.law.Stanford.edu/report
92. Moreover, loans were identified and listed for the SEC and the investors, regardless of whether
the loan existed or had been closed, and some loans were listed more than once in SEC filings,
indicating that the Conspirators had sold them to multiple parties in multiple MBS as verified by
the above FCIC report.
93. Moreover, Foreclosure defense attorney Jeff Barnes found that the same note was sold to
multiple tranches in the same trust which he articulated in an article he posted on Foreclosure
Defense Network on October 19, 2010 which stated that:
FDNs network has recently acquired computerized securitized mortgage loan
trust software and special computer terminals which can track a mortgage loans
history including its assignment to specific tranches inside of a trust. The
information being revealed by this unique research tool is both fascinating and
disturbing.
Our researchers are finding that loans were assigned to multiple tranches within
one securitized mortgage loan trust; the assignment of the loan to different trusts;
the division of the loan into parts across tranches, and more. What this means to
foreclosure defense discovery is nothing short of monumental.
If a loan is assigned to different tranches and/or different trusts, with each tranche
or trust having its own series of credit enhancements and insurances, this means
the possibility of multiple levels of insurance for the same loan, which goes to
prove that upon securitization, the mortgage loans were insured with multiple
layers of insurance so that when the loan went into default, those in the
37

placement chain could reap untold profits by having the same risk paid over
and over and over again through multiple claims or reserves. *See SEC v.
Goldman Sachs Jeff Barnes, Esq.
94. In re: Horace v. LaSalle Bank, Re: Alabama No. 3:08cv1019-MHT (WO), US District Court,
M.D., Eastern Division, February 17, 2009, it was ruled:
Since no assignment to date has been recorded, now exists a case whereby
both Washington Mutual a/k/a JP Morgan Chase and LaSalle Bank as Trustee
conspired to deceive the certificate holders into thinking that all mortgages
have been securitized and the security instruments have been assigned to the
Trustee at the time the certificates were issued when in fact they have not.
This is a deceitful and fraudulent act whereby the certificate holders are
unsecured on the outset and leaves opens the possibility of double selling the
certificates abroad. Furthermore, this act represents a violation of the PSA and
prospectus as registered with the Security Exchange Commission and IRS
REMIC code possibly making any future assignments to the Trust voidable.
95. According to the forthcoming sworn testimony of Countrywide/BAC employees, upon receiving
a borrowers loan documents, Countrywide/BAC scans the original documents prior to indorsing
the documents [or do not place an indorsement on the Note at all unless/until foreclosure counsel
requests said documents in order to confer the legal capacity to the bank from which to
foreclose]. Having unbridled access to this bearer paper, the equivalent of money, would
enable BAC to produce photo-shopped copies of said Notes which are only discernable to
computer-forging experts while retaining the original promissory note in its own vault in
violation of the PSA as detailed in the declaration by James Kelley. EXHIBIT 33 the
declaration of James Madison Kelley

96. This access to the original loan documents under the MERS secretive veil which is closed to the
public would allow BAC to claim Ownership of the Mortgage, as it has in the instant case, and
holder of the indebtedness, as it indeed is holding the indebtedness, albeit illegally, which
then would serve to confer the legal authority for BAC to foreclose, even though the Note had

38

been previously sold as a true sale.

97. This scam Enterprise would serve to confer standing to BAC and its Co-Conspirators if its own
employees had not exposed the truth of said illegality. *See Sworn Testimony Of Renee
Hertzler Page 53; Linda DeMartini Pages 50, 80, 83 and Michele Sjolander Page 72
98. In violation of the CWALT PSA, no timely or legal assignment of Plaintiffs mortgage to the
CWALT Alternative Loan Trust 2007-25 has ever been recorded in the land title records of
____________ County which creates an irreparable break in the chain of title. The FCIC Report
released in January 2011 referred to Kemp v. Countrywide which stated that the borrowers home
could not be foreclosed because it [the bank] had failed to indorse and deliver the Note to the
MBS Trust.
On November 16, 2010, a bankruptcy court ruled that the Bank of New York
could not foreclose on a loan it had purchased from Countrywide because MERS
had failed to indorse and deliver the Note to the Bank of New York as required by
the PSA. This ruling could have further implications because it was customary for
Countrywide to maintain possession of the note and related loan documents when
the loans were securitized.
ii.

MERS IS A NON-PARTY TO THE SUBJECT NOTE

99. On 11-4-2009 BAC filed its Mortgage Assignment which read: MERS, as nominee for
Countrywide, sold, assigned and transferred to BAC all rights, title and interest in, and to a
certain mortgage executed by Plaintiffs together with said note therein described (emphasis
by Plaintiff) *See Exhibit 1 - Assignment
100.

Under the terms of the subject Note, no power or authority was granted to MERS to

transfer, assign, or otherwise pledge the promissory Note to any party under any circumstances
or conditions. In re: Mortgage Syndicate, Inc. v. Do and Go Equip,. Inc 7 Ill. App.3d 106,108

39

(1972) Any provision in the mortgage not found in the note itself is not part of the note and
does not affect the personal liability of the maker of the note. *See Exhibit 6 - Note
101.

MERS is named in the standard MERS mortgage as nominee for the lender. Blacks Law

Dictionary defines a nominee as [a] person designated to act in place of another, usu[ally] in a
very limited way, and [a] party who holds bare legal title for the benefit of others or who
receives and distributes funds for the benefit of others. Blacks Law Dictionary 1149 (9th ed.
2009); see Landmark Natl Bank v. Kesler, 216 P.3d 158, 166 (Kan. 2009).
102.

Illinois case law supports the proposition that terms contained in a mortgage cannot apply

to the Note without corresponding language in the note itself. See Collins v. Ogden, 154 N.E.
701, 704-05 (Ill. 1926) (It must be regarded as the settled law in this state that while an
equitable interest in negotiable instruments payable to order may be acquired either by gift or
contract without indorsement by the payee, the mere possession of negotiable securities payable
to order and not indorsed by the payee, or, if indorsed specially, not indorsed by the special
indorsee is not alone evidence of title, either legal or equitable, in the possessor, but the burden
of proof is on the possessor to prove his equitable title by showing a delivery to him with the
intent to pass the title.).
103.

MERS has no authority to assign the Note in a standard mortgage foreclosure action. A

mere transfer of the mortgage without a corresponding transfer of the right to enforce the note is
effectively meaningless. See Elvin, 157 N.E. at 244; see also Moore, 366 N.E.2d at 599;
Commercial Prods. Corp. v. Briegel, 242 N.E.2d 317, 321 (Ill. App. Ct. 1968) (Our courts have
long held that a mortgage is deemed a mere incident to the mortgage debt, and that an attempt to
assign the mortgage without any transfer of the debt will not pass the mortgagees interest to the

40

assignee, but is a nullity.). MERS Mortgage, supra note 18, p. 3. See also In re Wilhelm, 407
B.R. 392, 397 (Bankr. D. Idaho 2009).
104.

The Illinois Supreme Court [has] held that mortgages and notes are separate

undertakings and that any provision in the mortgage not found in the note itself, has no effect on
the note. 2140 Lincoln Park West v. Am. Natl Bank & Trust Co. of Chi., 410 N.E.2d 990, 992
(Ill. App. Ct. 1980) (discussing Oswianza v. Wengler & Mandell, 193 N.E. 123 (Ill. 1934)). See
also Conerty v. Richtsteig, 41 N.E.2d 476, 479 (Ill. 1942) (Any further or additional obligations
in the mortgage, not contained in the note, relate solely to the security pledged and not to the
obligation of the maker of the note, which is the only evidence of his liability.).
105.

In an opinion relating to MERS effect on federal jurisdiction, the United States Court of

Appeals for the Seventh Circuit stated: [MERS] is a nominee only, holding title to the mortgage
but not the note. (Mortg. Elec. Registration Sys., Inc. v. Estrella, 390 F.3d 522, 525 (7th Cir.
2004). Although Seventh Circuit decisions are not binding on state courts in Illinois, to the
extent that the statement makes intuitive sense, a state court could consider it persuasive.
106.

By its own terms, the language in a MERS mortgage relating to MERS powers only

applies to the Security Instrument reading as follows:

Borrower understands and agrees that MERS holds only legal title to the
interests granted by Borrower in this Security Instrument, but, if necessary to
comply with law or custom, MERS (as nominee for Lender and Lenders
successors and assigns) has the right: to exercise any or all of those interests,
including, but not limited to, the right to foreclose and sell the Property; and to
take any action required of Lender including, but not limited to, releasing and
canceling this Security Instrument.

41

107.

To the extent that MERS only maintains authority to assign the mortgage, not the note, an

assignment of the mortgage and the note by MERS is arguably meaningless in terms of
establishing BACs capacity to foreclose.
108.

Because the subject Note does not contain language specifically describing MERS as

nominee, the November 4, 2009 MERS assignment to BAC invalidates the mortgage and renders
the loan as unsecured. See, e.g., Carpenter v. Longan, 83 U.S. 271, 275 (1873).
109.

In the U.S. Bankruptcy Court for the District of Idaho the Honorable Terry L. Myers,

Chief Bankruptcy Judge concluded on July 9, 2009 in re: Wilhelm et al., Case No. 08-20577:
that even if MERS is granted authority to foreclose if required by custom or law (as set forth on
the Deed of Trust) this language does not, expressly or by implication, authorize MERS to
transfer promissory notes.
110.

In the Supreme Court of New York #26203/09 BNY Mellon fka Bank of New York as

Trustee on behalf of Citi Mortgage Loan Trust 2007-1 as Plaintiff, v. Juan Mojica, et al
Plaintiffs, the Honorable Justice Thomas Adams ruled:

Among the affirmative defenses contained in Defendants pro-se answer is that

of standing. [See CFLR 3211 (A) (3)] in support of its standing to maintain the
action where the action was commenced is an Assignment of Mortgage
executed by MERS as Nominee of Home Funds Direct which includes a provision
indicating the assignment is together with the bond or note Not only has the
Plaintiff failed to establish MERs right as a nominee for purposes of recording to
assign the mortgage, more importantly, no effort has been made to establish the
authority of MERS, a non-party to the Note, to transfer the ownership. Without
establishing ownership of the Note at the time the action was instituted, the
Plaintiff lacked the right to maintain the action. (See Klug vs. Fugazy, 145 AD2
537)

42

111.

In re: Hendricks et al v. US Bank NA as Successor to BAC case #10-849-CH in the

State of Michigan, Judge Archie Brown opined on page 7 of his ruling:

the court finds that the Assignment, recorded on December 30, 2009 in the
Washtenaw County Register of Deeds, serves to transfer nothing. The alleged
conveyance failed to comply with the terms and conditions of the PSA and New
York Trust Law which governs the PSA. The alleged conveyance stated that
MERS assigned the Mortgage and Promissory Note to USB, however, there has
been no evidence presented to support the chain of the required assignments
and indorsements of the mortgage and note as required by the terms and
conditions of the PSA.Therefore, the purported transfers, indorsements or
assignments are void ab initio or never properly transferred into the trust.
112.

In Re: Walker. Case No. 10-2165-E-ll v. Bayrock Mortgage Corp, the Court's

opinion is headlined stating that MERS and Citibank are not the real parties in interest.

The court found that MERS acted "only as a nominee" for Bayrock under the
Deed of Trust and there was no evidence that the note was transferred. The
opinion also provides that "several courts have acknowledged that MERS is not
the owner of the underlying note and therefore could not transfer the note, the
beneficial interest in the deed of trust, or foreclose on the property secured by the
deed or mortgage", citing the well-known cases of In Re Vargas (California
Bankruptcy Court), Landmark v. Kesler'' Since no evidence of MERs
ownership of the underlying Note has been offered, and other courts have
concluded that MERS does not own the underlying Notes, this Court is convinced
that MERS has no interest it could convey to Citibank. Since MERS did not own
the underlying Note, it could not transfer ownership of the beneficial interest of
the Deed of Trust to another. Any attempt to transfer the beneficial interest of a
trust deed or mortgage without ownership of the underlying note is void under
most state laws. Since the claimant, Citibank, has not established that it is the
owner of the promissory note secured by the mortgage, Citibank is unable to
assert a claim for payment in this case."
113.

In Luis E. Gallardo, 1O-0471O-MM7, vs Movant, US Bank National Association, as

Trustee for CSMC Mortgage-Backed Pass-Through Certificates, Series 2006-7, in a San Diego
Bankruptcy decision handed down by the Honorable Judge Margaret M. Mann, Judge Mann
ruled:
"Movant has not supplied evidence that establishes that Movant has standing to
43

seek stay relief. Movant has attached an ''Assignment of Deed of Trust" from
MERS to Movant, which assigns the trust deed and the related note. But, there is
no evidence that MERS ever received an assignment of the note or had the
ability to assign the note to Movant. The note attached to the motion does not
indicate that the note has been endorsed to Movant or endorsed in blank such that
it became bearer paper. Without evidence either that MERS could properly assign
the note, or that the note was endorsed to Movant or in blank. Movant has not
established standing to seek stay relief. (emphasis by Plaintiff)
114.

BAC cannot premise its right to enforce the note on the MERS assignment, which means

that BAC cannot foreclose the subject Notes security without demonstrating its right to enforce
the note in some other way because Illinois law states that the mortgage follows the note but the
note does not follow the mortgage.

iv. THE SIGNATOR ON THE ASSIGNMENT FALSELY PRESENTED HERSELF AS A

VICE-PRESIDENT OF MERS
115.

BACs alleged assignment was executed and authenticated on 11-4-2009 by Rhoena Rice

as alleged Vice-President of MERS and recorded in ____________ County on 11-16-2009. At

the time of the execution of said assignment, Plaintiff alleges and supports with exhibits, that
Rhoena Rice was not a Vice-President of MERS but an employee of BAC.
116.

Moreover, any Assignment of beneficial interest of Plaintiffs loan to another entity must

be authenticated by an affidavit or power of attorney or certification based on knowledge. No

power of attorney document has been filed in Illinois which appointed Rhoena Rice vicepresident of MERS.
117.

To substantiate that Ms. Rice was not employed by MERS as she has attested, the

following legal documents bear Rices signature and reveal that she is in fact, an employee of
BAC:

44

a. 1-14-09: Rhoena Rice executed a document as Vice-President for BAC

which appointed the law firm Orlans Moran PLLC a power of attorney as
of 7-6-2009. EXHIBIT 34
b. 11-23-09: Rhoena Rice was appointed Vice-President of BAC as of 8-72009 in a document recorded by Bank of America National Association in
Woonsocket Rhode Island. EXHIBIT 35
c. 10-5-2010: Rhoena Rice executed a document as Vice-President of MERS
as nominee for First Magnus Financial Corporation attesting to corporate
Assignment of mortgage from MERS as nominee for First Magnus to an
MBS Trust. EXHIBIT 36
MC DONNELL PROPERTY ANALYTICS HAS DETERMINED THAT RICE IS A
ROBO-SIGNOR AND THAT ASSIGNMENTS USED IN FORECLOSURES ARE
INVALID
118.

Extensive research conducted by McDonnell Property Analytics, Inc. (McDonnell), a

litigation support and research firm that provides MBS research services and foreclosure
forensics to attorneys nationwide, has determined that Rice is a robo-signor, a forger of
documents.
119.

McDonnell conducted a forensic examination of the Registry of Deeds in the Essex

Southern District in Salem, Massachusetts for County Register John OBrien to test the integrity
of his registry due to his concerns that: 1) MERS boasts that its members can avoid recording
assignments of mortgage if they register their mortgages into the MERS System; and 2) due to
the robo-signing scandal spotlighting Linda Green as featured in a 60 Minutes expos.
120.

Through a diligent examination of the Salem, Mass. registrys records, McDonnell

compiled a comprehensive list of alleged forgers, which County Register OBrien, if presented
with a document to be recorded bearing the signature of a McDonnell identified robo-signor,
refuses to record said document as he believes the document to be a fraud which will ultimately
corrupt his registry.

45

121.

McDonnells list of forgers identified Rhoena Rice, whose signature executed and

authenticated the assignment BAC presented to the court, as an alleged forger and stated that
Rice is employed by BAC not MERS.
122.

In OBriens pursuit of justice and desire to expose the deceit perpetrated by BAC and its

Co-Conspirators in a criminal RICO Enterprise designed to defraud the Plaintiff and illegally
seize her property when the Conspirators lacked the legal authority, OBrien has provided
Plaintiff with a sworn affidavit attesting to Rices role as an alleged forger. *See Exhibit 30
John OBrien affidavit
123.

The credentials of Marie McDonnell, owner of McDonnell Property Analytics are

substantial as she is a Mortgage Fraud and Forensic Analyst; a credentialed Certified Fraud
Examiner; founder and managing member of The Truth in Lending Audit & Recovery Services
LLC of Orleans, Massachusetts and has twenty-four years experience in transactional analysis,
mortgage auditing, and mortgage fraud investigation.
124.

Further, McDonnell has provided Amicus Briefs to the Massachusetts Land Court and to

the Massachusetts Supreme Judicial Court in the landmark cases U.S. Bank National Association
v. Ibanez, and Wells Fargo Bank, N.A. v. LaRace, 458 Mass. 637 (2011) where the courts
vacated two foreclosures prosecuted by trustees of securitization trusts when presented with the
evidence McDonnell provided.

125.

McDonnells research revealed that each of the assignments she has examined in relation

to foreclosure cases is fraudulent and therefore invalid.

46

126.

In excerpts from the Brief of Amicus Curiae of Marie McDonnell CFE dated September

3, 2011 in the Supreme Judicial Court for the Commonwealth of Massachusetts, No. SJC-11041
in re: Eaton, Plaintiff/Appellee vs. FNMA, McDonnell stated the following:
PGS 11-12: The purpose of this Assignment is not to memorialize a true sale
of the Note and Mortgage to the Assignee; but rather, it is a litigation tool
designed to close the gap in the chain of title so that it appears in the public
record that the Assignee, Green Tree in this case, had the legal right to
foreclose the property. This sham Assignment is a necessary precursor to the
ultimate recordation of the Foreclosure Deed; otherwise, Registers of Deeds
would not allow title to pass to the foreclosing entity.
It is incumbent upon consumers, their attorneys, registry staff, clerks of court,
and judges to learn how to recognize these sham assignments because they
are corrupting the chain of title in our land records; and because, once
recorded, courts afford them deference rather than seeing them for what they
are: counterfeits, forgeries and utterings. By privatizing property transfer
records MERS has been allowed to set up a control fraud of epic
proportions that has facilitated the largest transfer of wealth in human history,
and it should be abolished.
THE PIVOTAL ASSIGNMENT OF MORTGAGE THAT PURPORTS TO
TRANSFER PLAINTIFFS MORTGAGE TO PLAINTIFF GREEN TREE IS
INVALID.
My examination of the Assignment of Mortgage recorded in the Suffolk
County Registry of Deeds on May 20, 2009 at Book 44958 Page 249 by which
Mortgage Electronic Registration Systems, Inc. as nominee for BankUnited, FSB
purports to assign and transfer to Green Tree Servicing LLC all its right, title and
interest in and to the Eaton mortgage revealed the following facts: (See Exhibit E.
Assignment of Mortgage.
1.

The Appellants state in their Brief that, After the loan was funded, the Note was
endorsed in blank and transferred to Fannie Mae, which retained Green Tree to
service the loan. [Appellants Brief, p. 4]

2.

On information and belief, this transfer from BankUnited to Fannie Mae occurred
at or near the origination date of September 12, 2007.

3.

Accordingly, BankUnited had no interest in the Eaton Mortgage to transfer on

April 22, 2009.

4.

Moreover, BankUnited had conveyed all right title and interest to Fannie Mae and
could not sell the Mortgage for a second time to Green Tree.

5.

The Appellants admit that Green Tree was the Loan Servicer.

47

6.

The Assignment of Mortgage in question was executed by Monica Medina,

Assistant Secretary of Mortgage Electronic Registration Systems, Inc. acting on
behalf of BankUnited, FSB.

7.

Monica Medina is not an employee of MERS; and she was not employed by
BankUnited on April 22, 2009 when she executed this Assignment.

8.

In truth, Monica Medina is employed by Green Tree Servicing LLC at its

headquarters in Tempe, Arizona.

9.

Thus, what we have here is a fictitious, self-dealing Assignment of Mortgage that

contains false statements, misrepresentations, and omissions of material fact in
order to deceive or defraud. It was prepared and executed by Green Tree without
BankUniteds knowledge, authority or consent.

10.

This Assignment was not prepared for the purpose of legally transferring the
Eaton Mortgage to Green Tree. Rather, it is a litigation tool that was prepared
under false pretenses to close the gap in the chain of title to so that Green Tree
could prosecute the instant foreclosure, which it completed on November 4, 2009.
McDonnell further stated: In preparation for writing this amicus brief, I called
upon Register John OBrien to search the Southern Essex District Registry of
Deeds filings for other assignments that were executed by Monica Medina
(Medina). As of this writing, eleven (11) assignments were provided to me for
review. The results are astonishing and clearly establish a pattern and practice of
assignment fraud. Medina executed the assignments on behalf of ten (10) different
assignors in her dual role as a MERS Certifying Officer or as Authorized Agent
for Green Tree. In my capacity as a Certified Fraud Examiner, I hereby certify to
the Massachusetts Supreme Judicial Court that the above-described Assignment
of Mortgage is fraudulent and therefore, it is void as a matter of law. Thus,
everything that flows from this breeder document is tainted with fraud and must
be revoked.
My audit of the Southern Essex District Registry of Deeds enabled me to
examine 565 Assignments of Mortgage, the majority of which were prepared in
order to foreclose on John OBriens electorate. Every single assignment of
mortgage that I examined that was prepared to prosecute a foreclosure, without
exception, is tainted with the same fraud that I have detailed here.
According to McDonnell: to establish that a Plaintiff bank can foreclose it must
have received a valid assignment of the mortgage from a party that itself held the
mortgage. (in the instant case, the CWALT Trust). If more than one transfer was
involved, the successor mortgagee must be able to provide a complete unbroken
chain of assignments linking it to the record holder of the mortgage. If the
operative assignment is shown to be invalid, the issue of whether or not a
mortgagee who neither owns nor holds the note can foreclose on the collateral
property becomes academic in nature. John O'Brien was the first Register of
Deeds in the country to commission a forensic examination of a Registry of
Deeds Register O'Brien was not prepared for the results of my audit and when
48

he read my report he declared publically: ''My registry is a crime scene."

The result of my investigation revealed widespread, systemic, methodical
patterns of practice whereby the public land recording system has been used by
the nation's largest banks to transfer title to real property that the banks do not
own. This is especially true where a foreclosure is involved.
This charade is being carried out by the filing of a defective, often fraudulent
conveyancing document, such as an assignment of mortgage, which becomes the
"breeder document" that enables the alleged assignee to obtain all other
documents necessary to extinguish the property owner's rights and transfer full
legal and equitable title as well as possession to the fraudster.
Once these documents appear in a registry of deeds, they are presumed to be valid
and are relied upon by the public, the courts, title examiners, title insurance
companies, and other stakeholders as the underlying real property is bought, sold,
financed, and on occasion, foreclosed upon. *See Masscases.com/
cases/sjc/462/462mass569/SJC-11041(underscore)06(underscore)Amicus
(underscore) McDonnell(underscore)Brief.pdf
127.

Testimony by MERS executives confirm that none of the alleged robo-signors have

ever worked for MERS, therefore Plaintiff alleges that Rices role was to falsify and forge
documents at the behest of BAC in November 2009. Thus, the assignment allegedly from MERS
as nominee for Countrywide is in reality, a fraudulent conveyance from BAC to BAC. (See
Culhane v. Aurora Loan Servs. of Nebraska, 826 F. Supp. 2d 352, 374 (D. Mass. 2011), decision
reached on appeal, 708 F.3d 282 (first Cir. 2013) Equally troubling is the conflict of interest
posed by these certifying officers wearing two hats simultaneously: that of assignor (as agent
for MERS) and assignee (as employee of the note holder or its servicing agent proof of an
agents authority must be shown from the mouth of the principal, not the agent. Lexow&Jenkins,
P.C. V. Hertz Commercial Leasing Corp., 122AD2d 25, 504 NYS2d 192(2 nd Dept 1986), Siegel
V Kentucky Fried Chicken of Long Island Inc. 108 AD2d 218, 488.
128.

With respect to Rhoena Rices signature on the document as certifying officer for

MERS, BAC has provided no evidence regarding Rices relationship to MERS, her authority to

49

certify that the assignment had taken place, when the assignment had taken place, as the
assignment stated that it had previously taken place, or the information upon which she based
her representation that an assignment occurred.
129.

On 9-25-2006 a video-taped deposition was given by MERS CEO, R.K. Arnold in re:

Trent et al v. MERS #3:06CV-374-8 where Mr. Arnold stated that: MERS has fewer than 20
employees that run the computers and there are thousands of certifying officers which act as
signors for assignments etc. to hasten the process for members of MERS.
130.

In the Superior Court of New Jersey, Bank of New York v. Victor and Enoabasi Ukpe, case

#10-43081, a deposition by MERS Secretary Hultman revealed that MERS has no employees
and that the signers on the assignments are certifying officers whose only link to MERS is a
corporate resolution signed by MERS Secretary Hultman. Accordingly, the certifying officers are
not employees of MERS, but are employed by Member Financial Institutions and Attorneys at
firms doing foreclosures for MERS banks, as well as non-member employees. MERS bylaws
state that only the board of directors can appoint a certifying officer and no evidence exists that
MERS Secretary Hultman was given the power to appoint the certifying officers.
131.

Further, MERS has acknowledged to the Congressional Oversight Panel dealing with

fraudulent documentation in the foreclosure process that it is familiar with the [robosigning/forging] crisis and has in fact admitted that it has learned that its so-called certifying
officers have been pressured by MERS members [BAC among them] to perform activities not
allowed by law or by the MERS rules.
v. THE BAC ASSIGNMENT IS FATALLY FLAWED AS A MATTER OF LAW AS SAID
DOCUMENT WAS CREATED AS DOCUMENTARY EVIDENCE AFTER-THE-FACT

50

132.

To comply with the Illinois Mortgage Foreclosure Law (IMFL) BAC must demonstrate

that the beneficial interest in Plaintiffs loan was transferred to it prior to filing its foreclosure
which is achieved by means of an assignment. Thus, upon information and belief, BACs counsel
F&S ordered an assignment from BAC which BAC created as documentary evidence after-thefact which was corroborated by the following sworn testimony of Countrywide/BAC employees.
EXCERPTS OF LINDA DEMARTINIS SWORN TESTIMONY REGARDING
DOCUMENTARY EVIDENCE PRODUCED WHEN REQUESTED BY COUNSEL
133.

On November 22, 2010, former Countrywide, now BAC Vice-President Linda DeMartini

testified in Kemp v. Countrywide. At the time of her testimony in Kemp, DeMartini had worked
for BAC/Countrywide for 10 years in the litigation department at Bank of America and as an
operational team leader for approximately a year.
I am employed by Bank of America Home Loans, formally known as
Countrywide Home Loans.
Q. Okay. And how long have you been employed there?
A. A total of almost ten years - as an operational team leader for the Litigation
Management Department currently. Ive been there just about a year. The owner
as in the investor, that would be Bank of New York, and we -- we are the servicer,
Bank of America Home Loan, Servicing, LP, formally known as Countrywide
Home Loan Servicing, LP.
Q. Could you tell the Court what that document is?
A. Thats the allonge to the promissory note.
Q. And is that the original?
A. Yes, this is.
Q. And who signed that document?
A. Sharon Mason, Vice President of the Bankruptcy Risk Litigation Management
Department.
Q. The purpose of the allonge?
A. It shows the transfer to Bank of New York as the trustee.

51

Q. Okay. So it -- its your testimony that Bank of New York is trustee as the
holder or the investor of that loan?
A. Yes.
MR. LEVITT: Q .When was the first time that you saw the allonge to the
promissory note?
A. Approximately two weeks ago.
Q. And how was it that you came to see the promissory note?
A. Well, in my role as a supervisor in the department I have 2 litigation specialists
who work for me. When cases are coming up, I review their cases as a regular
matter of course so Id be reviewing the documents with that. When this date
came up as far as having this hearing today and it became known to me that I was
most likely going to be the one traveling here to be a part of it, I made sure that I
got involved in every aspect of the case.
Q. When was this allonge prepared?
A. This allonge would have been prepared by my specialists. I dont have the
exact date committed to memory, but this would have been done within the last
couple of months most likely.
Q So one of your employees prepared the allonge?
A. One of my employees would have taken -- would have gotten the allonge and
we would have been the ones that obtained the signature from Sharon, yes.
Q. So it was just recently signed?
A. Fairly recently signed, yes.
Q. Signed essentially in contemplation or in the course of this litigation, correct?
A. Most likely.
Q. And has the original of this allonge remained in your office until you appeared
here today?
A. We had sent it on to -- to our attorneys. They were in possession of it.
MR. LEVITT: Q. Ms. DeMartini, you testified that this allonge was just
prepared a couple of weeks ago, correct?
A. Yeah, a short time ago, yes.
Q. And wasnt it prepared because counsel called up and said we need and
allonge?
A. Yes.
Q. When was this loan made?
A. This loan was taken out I believe in 2006 -- yes.

52

Q. So between 2006 and 2009 when you got a phone call from counsel that said
weve got a problem, prepare an allonge, there was no allonge, correct?
A. There wasnt an allonge prior to that, no. This loan, like I said, it was always -this was a loan that we originated that has always been within the company that
yes, it was sold to -- as Bank of New York as the trustee and securitized, but there
wasnt a need for an allonge prior to this case.
Q. Because there was no litigation pending, correct?
A. Well, because there was no litigation - and because there was nothing to -- to
get in the way of the fact of the normal course of -- of the way that this loans
being executed and being --serviced.
EXAMINATION BY THE COURT: Q. There was an unexecuted allonge to
Americas Wholesale Lender that was filed with the proof of claim. So is it the
normal practice of Countrywide not to sign allonges in the normal course?
A. When a loan goes into bankruptcy, our Bankruptcy Department is the one that
would be the ones actually preparing and filing the proof of claim. Our group gets
involved when things turn to litigated matters. *See full testimony of Linda
DeMartini at https://www.scribd.com/doc/189630260/ Testimony-of-LindaDeMartini
EXCERPTS FROM THE SWORN TESTIMONY OF COUNTRYWIDE/BAC
EMPLOYEE RENEE D. HERTZLER WHICH EXPOSES BACS FRAUDULENT
CREATION OF DOCUMENTARY EVIDENCE
134.

The 3-10-2010 deposition of Countrywide/BAC employee Renee Hertzler corroborates

the routine forging and fraud taking place at BAC through the manufacture of documentary
evidence after-the-fact. As Vice President of BAC, Hertzler has testified that she signed thousands
of fabricated documents without reading any of them, had no clue as to what she was signing, nor
the legality of her signature. In re: United States District Court District of Massachusetts Patricia L. Starr Debtor/ Plaintiff: Chapter 13 No. 09-41903-Vs Bank of America Corporation:
No. 09-04122-Jbr Assignee And/or Successor In Interest To Countrywide Home Loans, Inc.,
Countrywide Home Loans, Inc., and Bank Of New York Mellon Plaintiffs.

Q. And when did you look at those documents [assignments, an affidavit, mortgage
note, Proof of Claim]

53

A. I looked at them today.

Q. And are you testifying on behalf of that party [BONY] pursuant to a Power of
Attorney?
A. Yes.
Q. I'm going to hand you a document and ask you if that's the Power of Attorney
that you've made reference to.
A. Yes, it is.
Q. Does your name appear on that Power of Attorney?
A. No.
Q. Do you know if that Power of Attorney has been recorded anywhere in the
Commonwealth of Massachusetts?
A. I don't know.
A. Yes. That's the principal balance, the interest, escrow shortage, foreclosure fees
and costs, property inspections and uncollected late charges. Owed to Bank of New
York.
Q. The party identified as "the creditor"? "Assignment of Mortgage," do you see
that?
A. Yes.
Q. Where it says, "This assignment has an effective date of May 12, 2008." Do you
see that?
A. Yes.
Q. Can you read what is on this document?
A. "The Bank of New York as Trustee, for the Benefit of the Certificate-holders
CWABS Inc., Asset-Backed Securities" "Certificates, Series 2007-5ES, Series
2007-5 ('Assignee') all Assignor's right, title and interest in and to the following:"
And that's the party for whom you're testifying today?
A. Yes.
Q. Now, if you look on that May 12 assignment, the second to the last page, about
two-thirds of the way down you'll see the name "Kimberly Dawson"?
Q. And what is it you know about her authority to execute the assignment?
A. I know she has a resolution for MERS.
Q. And what does the resolution say?
A. It indicates that she has the ability to act on their behalf.
Q. Does it identify her personally?

54

A. Not that I'm aware of.

Q. So how do you know that it provides her with the authority to act on its behalf?
A. I read it; that we're able to act as an agent for them.
Q. When did you read it?
A. I read it today.
Q. The document that is marked as 2B, "Corporate Resolution," is that the
document you were just referring to?
A. Yes.
Q. And does Kimberly Dawson's name appear anywhere on that document?
A. No.
Q. And today was the first time you had ever seen that document?
A. Yes.
Q. Were you present on the date that she signed the May 5, '09 assignment?
A. No, I did not see her sign it.
Q. Do you know if a notice of that May 5, '09 assignment was ever sent to Patricia
Starr? "Assignment of Mortgage." Do you see that?
A. Yes, I do.
Q. It's dated as of July 10 of '09. Do you see that?
A. Yes.
Q. Do you know why the assignment on July 10th of '09 was executed?
A. Yes. It was to correct the assignment that Kimberly Dawson had executed,
because there was an error in how the creditor's name was outlined in the
assignment.
Q. So the May 5, '09 assignment identified the wrong assignee; is that correct?
A. Yes.
Q. And the July 10 assignment -- July 10 of '09 corrected that by identifying the
correct assignee?
A. Correct.
Q. And the assignee identified on the July 10th, '09 assignment is the creditor on
Page 1 of the Proof of Claim.
A. Correct.
Q. Now, you are the person who signed the July 10, '09 assignment; is that correct?
A. Yes.
55

Q. And that's your signature -- if you look at the last page of the Proof of Claim,
the assignment dated July 10, '09, that is your signature, "Renee Hertzler, Vice
President," correct?
A. Yes.
Q. And did you sign this document on July 10th of '09?
A. I don't remember.
Q. But there was one assignment that was signed, according to this document, on
May 5th of '09 by Kimberly Dawson, correct?
A. I don't know if she specifically signed it that day, but this is the assignment that
she signed.
Q. Well, do you remember if anybody was present when you signed the document,
the July 10th assignment?
A. I don't know.
Q. Do you sign a lot of these documents?
A. Yes
Q. How many do you sign in a day?
A. The last I heard, roughly 7,000 or 8,000 per month.
Q. And when you sign them, is there generally somebody present with you?
A. Generally, no.
Q. Now, the July 10, '09 assignment contains a jurat just below your signature. Do
you see that? A. Yes.
Q. And it appears to be Sandra Rivers. Do you see that?
A. Yes.
Q. When was the last time you spoke with Sandra Rivers?
A. I generally don't speak to her. I just know of her. She works in the Document
Execution Team. And they are trained to familiarize themselves with our
signatures.
Q. So as you're testifying here today, was Sandra Rivers present when you signed
the July 10, '09 assignment?
A. No.
Q. And you signed it "Renee Hertzler, Vice President." Do you see that?
R. A. Yes.

56

Q. Why did you put "Vice President" next to your name?

A. The Document Execution Team actually stamps that on there for us.
Q. So when you signed it, your name appeared below you, with the title "Vice
President."
A. Correct.
Q. And the entity just above your name, that is the assignor; is that correct?
A. Yes.
Q. On July 10th of '09, were you a vice president of that entity?
A. Yes, let me correct myself. I'm a Vice President of Bank of America.
Q. But Bank of America is not the assignor.
A. Correct.
Q. Bank of New York Mellon, formerly known as the Bank of New York as
Trustee, is the assignor?
A. Correct.
Q. On July 10th of '09, were you a Vice President of the Bank of New York
Mellon, formerly known as the Bank of New York as Trustee?
A. No.
Q. Have you ever been a vice president of that entity?
A. No.
Q. But when you signed it, it clearly identified the Bank of New York Mellon,
formerly known as the Bank of New York as Trustee, as the party for whom you
were signing; is that correct?
A. Correct.
Q. And it clearly identified you as its vice president, correct?
A. Yes.
Q. Do you know what the location of the original promissory note was on July 15
of 2009?
A. From my understanding, Bank of New York had it. That's what I was told.
Q. Who told you?
A. My attorney.
Q. Now, you filed an affidavit in this case. Do you recall that?
A. Yes.
Q. Is that a copy of the affidavit that you filed?

57

A. Yes.
Q. And that's your signature on the bottom?
A. Yes.
Q. Do you recall who prepared this affidavit?
A. It was sent to us by Shawn Masterson.
Q. Who is Shawn Masterson?
A. He's the attorney, bankruptcy attorney.
Q. Do you believe he prepared this?
A. I don't know. It came from his office. I recall that he sent it through email to
myself and Sandra Rivers.
Q. Do you recall when?
A. I don't remember specifically.
Q. And Sandra Rivers is the person who notarized your signature on the July 10th
assignment?
A. Right.
Q. Did you read it before you signed it?
A. No.
Q. Is there a particular reason why you didn't read it?
A. I typically don't read them because of the volume that we sign. And we have
the Power of Attorney and also the Corporate Resolution. So part of the process
is that we don't read them before we sign them.
Q. You don't read them, meaning affidavits?
A. Documents.
Q. Any documents.
A. Correct. We have a team of people who screen them for us and prepare them for
us to sign.
Q. So you're in the habit of signing documents without reading them.
A. That's correct.
Q. And you see this affidavit was signed under oath. Do you see that?
A. Yes, I do see that.
Q. Would you read out loud the first paragraph of the affidavit.
A. "That I am the Vice President of The Bank of New York Mellon, formerly
known as the Bank of New York as Trustee, for the Benefit of the Certificate-

58

holders, CWABS, Inc., Asset-Backed Certificates, Series 2007-5ES, Series 20075."

Q. Is that statement true?
A. No, but I have the Power of Attorney as a vice president.
Q. So it's false?
A. I'm a vice president of Bank of America, but I have the Power of Attorney
Q. I didn't ask you if you had a Power of Attorney. The statement in Paragraph 1 is
you're a vice president of the Bank of New York Mellon. And I'm asking you if
that statement was true.
A. No, I'm not a vice president of Bank of New York.
Q. Have you ever been a vice president of the Bank of New York?
A. No.
Q. So it was false when you signed it.
A. Yes.
A. "That as a vice president of The Bank of New York Mellon, formerly known as
the Bank of New York as Trustee, for the Benefit of the Certificate-holders
CWABS, Inc., Asset-Backed Certificates, Series 2007-5ES, Series 2007-5, I am,
among other things, authorized to execute assignments of mortgages."
Q. And was that statement true when you signed it?
A. No, I'm not a vice president of the Bank of New York.
Q. Has it ever been true?
A. No, I've never worked for them.
Q. Was that statement true when you signed it?
A. No. It's always been false.
Q. Did you know why you were signing this affidavit?
A. Yes. The assignment that I signed prior had a mistake in it, in the jurat. It said
that I was a vice president of MERS, and so the attorney was making an attempt to
correct that problem.
Q. And in attempting to correct that problem, the affidavit contained at least three
false statements, right?
A. Right.
Q. You don't need to be an attorney to know truth from false, correct?
A. That's correct, but I don't know how to word the documents.

59

Q. You don't know how to word the truth?

A. Well, since I had Power of Attorney for Bank of New York, I don't know the
proper way to word the documents for the Power of Attorney.
Q. Well, does it say anywhere in your affidavit "Power of Attorney"?
A. No.
Q. And were you prevented in any way from inserting into this affidavit the words
"Power of Attorney"?
A. No.
Q. Did you know that this document was going to be filed in the U.S. Bankruptcy
Court?
A. No.
Q. Do you see at the very top of the document where it says "United States
Bankruptcy Court, District of Massachusetts"?
A. Yes.
Q. Did that give you any indication that it was going to be filed in a bankruptcy
case?
A. I didn't look at it when I signed it -Q. So the copy of the promissory note that contains the stamp of Michele
Sjolander, I just want to clarify, do you know when that stamp appeared on the
original of this promissory note, ma'am?
A. I don't.
Q. Can you read this paragraph?
A. "Creditor admits that the jurat indicates that the assignment was signed by an
officer of MERS as nominee for Countrywide Home Loans, but that this was
obviously a typographical error, as the assignment was clearly executed by Renee
Hertzler as Vice President of The Bank of New York Mellon, formerly known as
The Bank of New York Mellon as Trustee."
Q. What you just read is false; isn't that correct, Ma'am?
A. That's correct.
Q. It's false.
A. Right.
Q. And with regard to your affidavit, do you know if this affidavit has ever been
amended?
A. I don't know if it's been done yet, but I know that it's going to be done.
Q. Was George McMillan present when you signed that affidavit?

60

A. No.
Q. He wasn't. Was anyone present when you signed it?
A. Yes. A lady by the name of I believe it's Julia Myra, a co-worker who works in
my building.
Q. But George McMillan wasn't present?
A. That is correct.
Q. Even though it says, On October 9, 2009, you personally appeared before -- he
personally appeared before you. It says, "On October 9, '09, personally appeared
before me, the above-named Renee Hertzler..." That isn't true?
A. No, he wasn't there. *See full deposition of Renee Hertzler
https://www.scribd.com/137253988/STARR-v-BAC-CHL-BNY-deposition-of-reneehertzler-02-19-2010-bank-fraud-securities-fraud-bankruptcy-fraud-forgery
135.

at

Additional evidence that all the Conspirator banks engaged in the fabrication of

documentary evidence after-the-fact is corroborated by the following articles and testimony:

136.

Lorraine Brown of DocX was convicted of participating in the manufacture and

falsification of more than 1 million mortgages. According to the New York Times, Brown
admitted to participating in the falsification of more than a million documents, documents
produced at the behest of banks that hired Brown and her company to produce admittedly false
documents that were then filed in county land records all over the country and used as evidence
in court cases.
137.

An article authored by Helga Zepp-LaRoiche entitled Systemic Fraud Dominated

Mortgage-Securitization and Foreclosure Scam dated Oct. 6, 2010 (http://www.larouchepac.

com/node/16009) stated:
...that the use of fabricated mortgage assignments occurred on a massive scale:
to get around this legal dilemma (the need to provide legal capacity to prove
standing via an assignment) many of the derivative-holders and their agents have
resorted to outright fraud, by creating and filing phony documents. This is fraud
61

upon the courts, a serious crime. As the Florida Attorney General noted in a recent
release, numerous documents to even the untrained eye, appear to be forged or
fabricated. Corporations seem to be creating and manufacturing bogus
assignments of mortgages These documents appear to be forged, incorrectly
and illegally executed, false and misleading
138.

A December 13, 2011 Washingtons Blog entitled: Fraud by the Big Banks More

Than Anything Done by the Little Guy Caused the Financial Crisis reveals yet another
element of the fraud and Enterprise perpetrated by BAC and its Conspirators:
The U.S. Treasurys Office of Thrift Supervision Noted Last Year: The FBI
estimates that 80 percent of all mortgage fraud involves collaboration or collusion
by industry insiders. This confirms what one of the countrys top fraud experts has
said for years: that it was fraud by the big banks more than anything done by the
little guy which caused the financial crisis

BAC COUNSEL FISHER AND SHAPIRO LLC ADMITTED TO ALTERING,

FORECLOSURE DOCUMENTS
139.

Upon information and belief, Plaintiff alleges that BAC counsel F&S ordered said

assignment from BAC which BAC created as documentary evidence after-the-fact and
fraudulently concealed this fact from Plaintiff and ______.
140.

On the bottom left-side of the aforementioned assignment the following statement

appears: Prepared by and mailed to:

Fisher and Shapiro, LLC 4201 Lake Cook Road, Northbrook, Il. *See Exhibit E
- assignment
141.

The Plaintiff alleges that F&S conspired with BAC to defraud Plaintiff as F&S has

admitted to falsifying of thousands of foreclosure documents as evidenced in a front page

Chicago Tribune article dated Saturday March 26, 2011 entitled Altered Documents Stay 1,700
Foreclosures. The article stated: Fisher and Shapiro LLC, one of the top three law firms used

62

by mortgage servicers to handle their local foreclosure actions, reported to the court that, in a
breach of protocol, affidavits in the cases were changed...the admission to the court by Fisher and
Shapiro does not involve rubber-stamping of documents but rather removing the signature page,
altering the affidavits content and reattaching the content page, the (Cook County Circuit Court)
said. *See EXHIBIT 31 Chicago Tribune article
142.

Plaintiffs alleged assignment of mortgage has a separate signature page, as does

Plaintiffs Note, which F&S had the opportunity to alter as well.

143.

Plaintiff alleges that BAC through its counsel F&S recorded said assignment on

November 16, 2009 at the ____________ County Recorders office knowing that said
assignment was false. This document and others just like it have been presented in court before
judges as actual assignments of mortgages and have later been shown to be legally inadequate
and/or insufficient.
144.

Hence, the pivotal Assignment of Mortgage that purported to transfer the Plaintiffs

Mortgage from MERS as nominee for Countrywide to Bank of America, is fatally flawed as a
matter of law as 1) Countrywide had no authority to transfer beneficial interest as it no longer
existed on November 4, 2009, the date the assignment was execute; 2) The mortgage and Note
were owned by the CWALT Trust which did not grant authority to Countrywide via MERS to
assign; 3) MERS is a non-party to the Note and does not have the authority to assign the Note; 4)
a known forger executed said document; 5) the assignment was created as documentary evidence
after the fact. As a result of BACs aforementioned fraud, the Note and assignment are void ab
initio and the mortgage is a nullity.

63

In Long Island Savings Bank v. U.S.Long Island Sav. Bank, FSB v. U.S., 2007 WL
2685640 (Fed. Cir. Sept. 13, 2007) Forfeiture of Claims Act, 28 USCA 2514,
the new panel opinion, issued Sept. 13, 2007, and reported at 2007 WL 2685640
(Fed. Cir.) (LISB II), does not discuss 2514 but opinion holds that the bank
cannot recover damages under the contract at issue because under federal
common law principles the contract was tainted from its inception by fraud
and thus void ab initio, and alternatively because the bank committed a prior
material breach of the contract.
COUNTRYWIDE LOAN OFFICER FALSIFIED SUBJECT LOAN APPLICATION
145.

Countrywide loan officer ___ ____________ fraudulently induced Plaintiff to enter a

loan agreement in which (1)

______ did not qualify for the subject loan under standard

residential loan underwriting standards; (2) ____________ switched Plaintiff and ______s loan
from a fully-documented verified income loan to a stated income loan without the Plaintiff or
______s knowledge or agreement; (3) ____________ altered said loan application by adding a
$11,600.00 monthly bonus to co-owner ______s real income of $14,167. without the Plaintiff or
______s knowledge or agreement; (4) ____________ forged said loan application under the
fictitious name of ____________ without the Plaintiff or ______s knowledge or agreement (5)
____________ changed the ARM index of the loan from Treasury to LIBOR without the
Plaintiff or ______s knowledge or agreement. *See Exhibit 2 -verified loan; Exhibit 10 - loan
application page with altered income; Exhibit 4 - documents provided to ____________
Any conduct capable of being turned into a statement of fact is representation.
There is no distinction between misrepresentations effected by words and
misrepresentations effected by other acts. (The seller or lender) He is liable, not
upon any idea of benefit to himself, but because of his wrongful act and the
consequent injury to the other party. Leonard v. Springer, 197 Ill 532. 64 NE 299
(1902).
Silence can only be equated with fraud where there is a legal or moral duty to
speak or when an inquiry left unanswered would be intentionally misleading.
U.S. v. Tweel, 550 F.2d 297 (1977). In determining whether the plaintiffs come
before this Court with clean hands, the primary factor to be considered is whether
the plaintiffs sought to mislead or deceive the other party, not whether that party

64

relied upon plaintiffs misrepresentations.

387; 230 N.W.2d 529, 534 (1975).
146.

Stachnik v. Winkel, 394 Mich. 375,

The falsification of documents by Countrywide appeared to be routine according to

Illinois Attorney General Lisa Madigan in her investigation into Countrywides wrongdoings, as
she stated: Countrywide used egregiously unfair and deceptive lending practices to steer
borrowers into loans that were destined to fail As the nations largest originator of mortgage
loans, Countrywides conduct has had, and will continue to have, a devastating financial impact
on tens of thousands of families as well as many communities in Illinois.
COUNTRYWIDE FAILED TO UNDERWRITE PLAINTIFFS LOAN
147.

Countrywide concealed the material fact that Plaintiffs loan was not underwritten and

thus Countrywide made a false loan approval which placed Plaintiff at grave risk of foreclosure.
148.

Evidence of Countrywides failure to underwrite Plaintiffs loan is evidenced by

Countrywides employment of its HSSL program, an acronym for the High Swim Speed
Lane which took place from August 2007 to April 2008. For the duration of the HSSL
program, Countrywide abandoned all underwriting, which ostensibly permitted the fraud
committed by ____________ and Countrywide to go undetected. The repercussions of the HSSL
program were articulated in the 7-30-2014 ruling in re: United States and (Countrywide
whistleblower) Edward ODonnell vs. BAC/Countrywide, where Federal Judge Rakoff opined:
Page 2: in 2012 Edward ODonnell, a former Countrywide Vice President
turned a whistleblower, filed a qui tam action alleging that another Countrywide
program, known as the High Speed Swim Lane (or HSSL or Hustle), was
the vehicle by which Countywide had perpetrated a fraudulent scheme from
August 2007 to May 2008.
Page 6: In short, while the HSSL process lasted only 9 months, it was from start
to finish the vehicle for a brazen fraud by the Plaintiffs, driven by a hunger for

65

profits and oblivious to the harms they visited, not just on the immediate victims
but also on the financial system as a whole.
Page 2: Countrywide, and one of its officers, Rebecca Mairone, had engaged in
an intentional scheme to misrepresent the quality of the mortgage loans that it
processed As a result, the jury found Countrywide and its successor in
interest, Bank of America N.A. (collectively, the Bank Defendants), along with
Ms. Mairone, civilly liable for fraud
Pages 7 &8: The Court agrees with the government that the removal of
experienced underwriters and their continued absence from the clear-to-close
process was at the heart of the HSSL Enterprise. *See case 1:12-CV-01422-JSR
Page 16: ...the careful review of the evidence that the Court has conducted in
connection with determining the penalty has convinced the Court, as it did the
jury, that the evidence of the defendants fraudulent scheme and fraudulent
intent was ample. That evidence proved convincingly that the Defendants were
fully prepared to jettison reasonable steps to assure loan quality in favor of
volume, speed, and profits. Even when Countrywides own internal quality
reports evidenced deteriorating loan qualitythe defendants shunted critics and
criticisms aside, doubled down on their risky behavior, and applied even more
pressure on loan specialists to ignore loan quality concerns. (emphasis by
Plaintiff)
149.

Moreover, Federal Judge Rakoff provided a probable reason that Countrywide

chose to deliberately violate the law in a footnote on page 13 of his opinion and order
dated 7-30-14:
.by virtue of this fraud, the Bank Defendants managed to unload a vast
portfolio of risky assets on unwitting buyers and were thereby able to reduce the
risk from their own balance sheet at a crucial moment in time. Indeed,
Countrywides introduction to the HSSL program coincided with a severe
contraction of the market for riskier mortgages and Countrywides understanding
that it would no longer find willing buyers for the subprime mortgages that the
Full Spectrum Lending Division had churned out for ears.
PLAINTIFFS LOAN TOOK PLACE DURING THE HSSL PROGRAM
150.

Plaintiffs loan closed on 9-7-2007 when the Countrywide HSSL program was employed.

151.

Further evidence that Countrywides fraud was systemic and not only perpetrated in the

66

HSSL program was articulated in a footnote on page 17 in a footnote of Judge Rakoffs 7-302014 opinion: whether the HSSL program was symptomatic of more pervasive fraud at
Countrywide, the Court cannot say, since, as noted, the SECs case against its highest officers
was settled without the defendants admitting or denying liability. See settlement agreements,
SEC v. Mozillo, No. 09-cv-3994, EC Nos 481, 482, 483 (C.D. Cal. Oct. 15, 2010) while,
moreover, the Government proffered in the instant case an email from another Countrywide
executive, Cindy Simantel, in which she informs Countrywides Chief Credit officer Rod
Williams that she lied to Freddie Mac to conceal the awful quality of certain non-HSSL loans,
see ECF No. 165, Decl. of Malachi Jones, Ex A, the Court excluded the email from introduction
at trial and will not consider it here. (emphasis by Plaintiff)

152.

Confirmation that Countrywide abandoned the underwriting of loans, committed rampant

fraud and concealed this fraud from millions of borrowers as it was from the Plaintiff and
______, was corroborated in the sworn testimony from Countrywide employees in the
shareholders derivative complaint In re: Countrywide Fin. Corp. Deriv. Litig., Lead Case No.
07-CV-06293 (C.D. Cal. 2007). The court ruled in this case that the "numerous confidential
witnesses" "support a strong inference of a Company-wide culture that, at every level,
emphasized increased loan origination volume in derogation of underwriting standards." Said
allegations came from Countrywide employees (i) located throughout the United States; (ii) in
varying levels of the Countrywide hierarchy (including underwriters, senior underwriters, senior
loan officers, vice presidents, auditors, and external consultants); and (iii) employed at varying
times. In the court's words, these witnesses tell what is essentially the same story - a rampant
disregard for underwriting standards - from markedly different angles.

67

153.

According to Confidential Witness 14 ("CW14"), a former underwriter at Countrywide in

Charlotte, North Carolina between 1997 and 2007: there was "a lot of pressure" on underwriters
to approve a high volume of loans in order to keep their job.

CW14 goes on to state:

underwriters were held to a quota of at least eight files a day - preferably ten - and supervisors
preferred more. The Regional VP told underwriters that "as long as you get a CLUES Accept"
they should approve the loan, and "if you don't do some bad loans, you're not doing your job."
According to CW14, there were incentives at Countrywide to approve as many loans as possible
regardless of quality, the primary incentive being "keeping your job." In fact, CW14 stated that
she was ultimately let go for not approving enough loans.
154.

According to Confidential Witness 1 (CW1), an underwriter for Countrywide in the

Jacksonville, Florida processing center between June 2006 and April 2007: as much as 80% of
the loans originated at Countrywide involved significant variations from the underwriting
standards that necessitated a sign-off by management. According to CW1, Countrywide was
very lax when it came to underwriting guidelines. Management pressured underwriters to
approve loans and this came from up top because management was paid, based at least in part,
on the volume of loans originated. CW1s manager directed CW1 to approve as many loans as
possible and push loans through. According to CW1, most loans declined by underwriters would
come back to life when new information would miraculously appear which indicated to
CW1 that Countrywide was not enforcing its underwriting standards.
155.

According to Confidential Witness 2 ("CW2"), a senior underwriter in Roseville,

California from September, 2002 to September, 2006: Countrywide would regularly label loans
as "prime" even if made to unqualified borrowers (including those who had recently gone
through a bankruptcy and were still having credit problems). According to CW2, Countrywide's
68

lending practices got riskier in 2006 and the Company was more lax in enforcing its
underwriting policies during that year.
156.

According to Confidential Witness 5 ("CW5"), a former senior underwriter at

Countrywide in Independence, Ohio, between August 2006 and April 2007: the Company's
"philosophy was that you didn't turn down loans." According to CW5, the Company "did
whatever they had to do to close loans" including making exceptions to underwriting guidelines everyone was motivated to increase loan volume and "approv[e] things that should not
have been approved."
157.

According to Confidential Witness 13 ("CW13"), a former underwriter at Countrywide's

Full Spectrum Lending Division from October 2005 until 2007: the underwriting practices at
Countrywide were "pretty much 'anything goes'" and "there's nothing we wouldn't do." CW13
worked as part of a team of eight or nine underwriters at a branch office in Chandler, Arizona.
According to CW13, quality restrictions did not slow down this team. And while a quality
review group was supposed to evaluate the loans, originators worked on a bonus system where
negative quality ratings meant a deduction of bonus points and negative ratings were "few and
far between."
158.

According to CW10: it was "evident" that one of Countrywide's goals was to be able to

fund any loan; senior management didn't want to have to turn down any loan application
because it wanted to grow market share and didn't want borrowers, mortgage brokers, or other
mortgage companies that sought warehouse lines of credit from Countrywide to take their
business to competitors. As a result, loans that did not meet Countrywide's underwriting
standards were approved and funded routinely. CW10 added that: senior management's

69

philosophy was that if the risks associated with a particular loan were simply ''priced right,"
Countrywide should be able to fund any loan.
159.

A lawsuit brought by the Illinois Attorney General alleged that Countrywide employees

did not properly ascertain whether a potential borrower could afford the offered loan, and many
of Countrywide's stated income loans were based on inflated estimates of borrowers' income, as
it was in the instant case.

According to the Illinois Attorney General Complaint:

(i) a

Countrywide employee estimated that approximately 90% of all reduced documentation loans
sold out of a Chicago office had inflated incomes; and (ii) one of Countrywide's mortgage
brokers, One Source Mortgage Inc., routinely doubled the amount of the potential borrower's
income on stated income mortgage applications.
160.

According to an FDIC Report, Countrywide had about 5,000 internal referrals of

potentially fraudulent activity in its mortgage business in 2005, 10,000 in 2006, and 20,000 in
2007, according to Francisco San Pedro, the former Senior Vice President of Special
Investigations at the Company, but it filed only 855 Suspicious Activity Reports with the
Financial Crimes Enforcement Network in 2005, 2,895 in 2006, and 2,261 in 2007.
161.

Countrywide's business model changed to originating loans and selling them to the

secondary market as quickly as possible regardless of their quality, the suitability of the products
for the borrower, or the number and magnitude of exceptions to Countrywide's supposedly sound
underwriting standards. Having shifted the risk to the holders of the MBS securities and
unsuspecting homeowners, it was irrelevant to Countrywide whether borrowers could repay the
loans for that was outweighed by the incentive to originate, bundle and sell as many loans as

70

possible. Thus, almost anyone could get a loan from Countrywide regardless of their ability to
pay it back.
162.

Countrywide's new business model with all risk assumed by others, was further fueled by

a compensation structure, devised and approved by management, that was linked to loan volume
rather than the quality of loans originated. This structure facilitated a widespread and pervasive
abandonment of sound risk management, an increase in the volume of exception loans that were
processed, and an extraordinary amount of falsified data entered into Countrywide's computer
systems. According to a former sales representative quoted on August 26, 2007 in a New York
Times expose, [t]he whole commission structure in both prime and subprime was designed to
reward salespeople for pushing whatever programs Countrywide made the most money on in the
secondary market."
163.

Plaintiff had secured an offer on the property in July 2006 for $1.5 million but declined

the offer as they believed that the market would strengthen when additional high end homes were
built in the same location as the subject property. More important, if the Plaintiff were to have
sold the property for $250,000 less than asking price, said sale would have created a
comparable sale which would have forced appraisers to utilize a price-per-square-foot value as
calculated by this low sale price to determine values of other properties built by Expressions.
Because ______had built two other multi-million investment spec properties at the time, their
values would have been gravely impacted by a low price-per-square foot, so the Plaintiff
declined the offer.
164.

If Countrywide had followed standard underwriting procedures the loan would have been

declined and Plaintiff would have been forced to sell the property at the lower price. Moreover,

71

Plaintiffs company, ______would not sustained further damages as it invested $300,000 + to

finish the 2200 square foot basement and fully furnish the model home.
BAC FRAUDULENTLY CONCEALED THAT IT RUBBER-STAMPED A BLANK
INDORSEMENT ON THE SUBJECT NOTE
165.

The IMFL states that two primary entities are entitled to enforce negotiable instruments:

(1) the holder of the instrument, and (2) a non-holder in possession of the instrument who has the
rights of a holder. An entity becomes the holder of an instrument through negotiation.
Negotiation requires indorsement and transfer of possession, which is defined as delivery for the
purpose of giving the recipient the right to enforce the instrument. Indorsement may be either
special or in blank.
166.

If BAC is indeed the legal holder of indebtedness as it claimed in its foreclosure

complaint, BAC must demonstrate that the note is indorsedeither to BAC or in blank.
167.

On the last page of the subject Note an undated blank indorsement appears which reads

as follows:
Payable to the order of _________ without recourse. Countrywide Bank FSB by
Laurie Meder, Senior Vice-president. *See Exhibit 6 - Note

168.

Upon information and belief Plaintiff alleges that BAC created said blank indorsement as

documentary evidence after-the-fact and the alleged signature of Laurie Meder is not a signature
but a pre-signed rubber-stamped blank indorsement which was placed by an unknown individual
from a team of employees of which Meder was not personally aware of according to the sworn
testimony of BAC/Countrywide employee Michele Sjolander taken January 25, 2012 in re:
Kirby v. BAC.

72

EXCERPTS FROM THE SWORN TESTIMONY OF MICHELE SJOLANDER WHICH

CORROBORATES THE CREATION OF DOCUMENTARY EVIDENCE AFTER THE
FACT
MR. HEMBREE: I'm here representing Bank of America.
MR. KIRBY for pro-se: Michele Sjolander is here as a fact witness.
Q. And so who is your employer?
A. Bank of America. I was an associate of Countrywide. I began through the
merger, so day one of -- it was April 1, 2009, I started with Bank of America.
Q. Okay. And what is your title there?
A. With Bank of America, I'm a senior vice president.
Q. when did you start working at Countrywide?
A. 1998, yes, 1998.
Q. '98. So what -- can you just break down for me what types of jobs you did and
the time period that you did them in?
A. -- I was hired in as Countrywide to run their pooling group, which is to create
securities, again, trades that were on the secondary market. I ran their pooling
group. And I also then began to trade on the secondary market. I traded mortgagebacked securities for conventionals and ARMs. I was the ARM trader and
conventional trader. In the year 2000, I became -- from a vice president, I went
to a senior vice president, and I took over the operations group that is located in
Simi Valley. And I oversaw collateral deficiencies, master file audit a wiring
group -- wiring, FHA wiring... I then stopped trading and ran the settlements
group, the loan delivery group, and took over what we call an eligibility group,
which was to write rules against the master contracts that we have with the
agencies and to ensure that we pool loans that are eligible for securities. That was
probably the year 2000. Pg 14- Then I did get promoted into an executive vice
president 2003, maybe 2004, oversaw the same duties, but my job expanded in
the amount of people I had and the eligibility work that I did, and I started in
contracts, working with the contracts with the agencies. Then I became managing
director for Countrywide.
Pg 19- Q. And this is in 2006 and 2007?
A. Yes, and that was located in Calabasas. In Simi Valley, I had the operations
group which was collateral deficiency, master file audit, and I am unsure if I had
bonds at that time. 20- And then in my Simi Valley group, I have a master file
audit group. I have a collateral deficiency group which, if there is a deficiency
that is found on the collateral, they will work with the borrower or the title
company or the branch to cure the deficiency.

73

PG 24 - Q. Now, can you explain what Investor 10 is?

A. When a loan is moved from what we would call our Countrywide Bank, which
is the first indorsement stamp, and goes into what we call Countrywide Home
Loans, Inc., (CHL) it moves investor numbers, so it will move from our bank
investor to our CHL investor, and so I ensured that the loan was moved through
the correct channels to match the indorsement.
Pg 25- A. I was an officer for Countrywide Home Loans, Inc. I was an officer
for Countrywide Bank FSB. Pg 26- I oversee the eligibility, which is to ensure
that the loan is eligible to be pooled into a mortgage-backed security. There are
different types of loans that are created, and I have to ensure that these loans are
eligible to be put into individual securities, FICO, DTI, coupon, paid through date
to ensure its current, no collateral deficiencies. So eligibility really does
encompass the whole loan including the collateral and the data elements of the
loan. We take a group of loans, investment loans, and we group them together
with similar attributes, and we create a mortgage-backed security. Pg 27-I also
look at the collateral deficiency department.
Pg 28- Q. RE: paragraph 2 of the declaration. You said that you have oversight
and collateral operations involving the files that contain original promissory
notes. What are collateral operations?
A Collateral operations would be our master file audit department and the
collateral deficiency department. Pg 29 Our collateral deficiency department
works with the branches or the borrowers to cure any defects it's found on
collateral.
REGARDING INDORSEMENTS
Q. So how does -- I guess the question is: How does the indorsement of a note
involve collateral operations?
A. If there's an issue with an indorsement, then it would come through my
collateral deficiency department.
Q. Would you be alerted that that was the case?
A. We have reporting that shows any sort of deficiencies that are found on loans,
yes. .. We review the collateral deficiencies and make sure that my group is
working with the borrowers or with the bank in that case to cure the deficiency.
Pg 31A. The note was printed off of our imaging system. And I think in this case
I asked for a copy of the note showing the indorsements, because in our imaging
system it does not -- the note is actually imaged prior to my indorsement stamp
being in place. -- in '07, the note is imaged prior to an indorsement being
placed on the note. So if you look in our imaging system, you wouldn't see the
chain of title of indorsement.
Q. And where would you see that?
A. On the original note.

74

Pg 32 A. Credit file documents are imaged after the closing of a loan, and they are
put in our imaging system, and we can go into the system by loan number and
pull up the documentation of a loan.
Q. Who would have access to records from the imaging system?
A. You would have to talk to the head of imaging. There are access points -- you
have to fill out requests for access.
Pg 33 Q. So you cant as a even as a senior vice president or executive vice
president, in -- well, you're an executive vice president in '07, senior vice
president now. Even you can't just go pull up in the imaging system something
that you want?
A. Not without access.
Pg 36 Q. Do you know where that scanning is done? in 2007.
A. 2007. I do not know where it was done.
Q. Okay. What about now?
A It's done in Texas.
REGARDING THE COLLATERAL VAULTS
Pg. 38 A I have oversight of the collateral vaults.
Pg 43 Q. who owns the vaults? I mean, what company is over the vaults?
A. Recontrust. And it's owned by Bank of America. It's under Bank of America.
Recontrust is the custodian of our collateral. pg 44 As the collateral comes into
the door, it is scanned, and the origination file is scanned, and the collateral is
pulled out. The collateral then is sent over to the bank, currently.
Q. What about in 2007?
A. In 2007, the branch created the collateral file, so after the loan funds, the
branch would receive it from the title company. They would take the collateral
file, create a collateral package, and then create their credit file and take copies
from what's in the collateral file and put it into the credit file. Pg 45 They would
take copies of what's in the collateral file and stick it in the origination file for it
to go off to imaging.
A. The collateral file Typically includes the promissory note, the riders, a
copy of power of attorney, and a copy of the deed of trust.
Q. Okay. Now, just to touch back on the 2007 sending of the originals to the
custodian from the branch, how were they sent?
A. FedEx or UPS, whoever was our mail source at the time.
Q. ..what happens to the collateral file once it comes into existence? And let's

75

start with 2007.

Pg 48 A. Loan funds. The branch receives the collateral, the mortgage file back,
breaks it up into two sections, makes a copy of the collateral, puts it in the
origination file. That goes off to imaging. Collateral file gets sent over to -- at that
time it was Countrywide Bank, which was our custodian. The custodian would
then receive the collateral and log it in.
A. Each collateral file has a bar code, and as it goes through the different facilities, it
is logged in or bar coded in so that we can track where the file is at all times.
REGARDING THE RUBBER-STAMPING OF INDORSEMENTS
Q. Now, how is it -- or what's the routine process by which notes get endorsed? I
mean, how -- and let's say in 2007. How are notes endorsed?
A. When the collateral is received from the branch into collateral processing, an
indorsement stamp is placed on the note.
Q. Okay. And can you -- I mean, what kind of stamp are you talking about?
A. A facsimile stamp.
Q. Is this a rubber stamp?
A. Yes. .. It's a rubber stamp.
Q. A rubber stamp. And it has -- on the rubber side, it has this information in the
indorsement?
A. Yes.
Q.
I mean, it has, "Countrywide Home Loans, Inc., pg 56 and Without
Recourse"? Or, I mean, just exactly as it appears with the signatures and
everything?
A. Exactly how it appears.
Q. Okay. So that is an indorsement rubber stamp, okay. Is the note endorsed at the
same time the collateral file is created? And maybe that's not a good way to
phrase it.
A. The indorsement stamp is placed when the collateral file is received into
collateral processing.
Q. So branch collateral documents, they get the package from the branch, stamp
the indorsement, and then that's how it's done; is that correct?
A. That is correct. The indorsement stamp is placed when it's received into
collateral processing, yes.
ACCESS TO THE COLLATERAL VAULTS
Q. And who would then have access to that collateral file?

76

A. Part of Recontrust, the custodian.

Q. Oh, so you're saying that, when I asked you who has access to the collateral
file, you said Recontrust employees. I mean, you're not a Recontrust employee?
A. No, I'm not Not all Recontrust associates could have access to the vault. If
they do not report to me, I do not know who has access and who doesn't. I
know it is limited
Q. What is Recontrust's relationship to Bank of America as you understand it?
A. Recontrust is Bank of America's custodian. and that was true in 2007 with
Countrywide was Recontrust. In 2007I think it was named Countrywide Bank
or Treasury Bank.
Pg 64 Q. Would there be any way to tell -- if the collateral file that has the note
that we're talking about, would there be a way to tell if that was ever held by an
entity other than Recontrust?
A. It stayed in the same spot from 2007 till 2011. In April of 2011 The
original had been released to the attorneys.
Pg 66 Q. The indorsement that you, you know -- that you said was on the note at
the time you reviewed it for the declaration, do you know when that indorsement
came to be placed on the note in this case?
A. I stated in the declaration that the indorsement was placed at the time that it was
received into collateral processing. on 9-5 on -- the file was received at
Recontrust on September 5th, and September 6th the file was received in
Recontrust unit.
RECONTRUST EMPLOYEES STAMP THE ENDORSEMENTS
Q. It's employees at Recontrust that stamp the indorsements on the notes in
general, including this one; is that right?
A. Yes.
Q. And you've seen that taking place?
A. Yes.
Q. In Simi Valley?
A. Yes.
Q. Is there some type of manual or set of instructions?
A. They have my power of attorney.
Q. So your declaration indicates -- I think it's paragraph 10, but also throughout,
it's the routine practice for indorsements to be placed on notes on the day
the collateral file is received at Recontrust, but the indorsements themselves are
not dated. So is there any way to know absolutely for sure that it was done on that

77

particular day?
A. No. However, the loan would have not passed certification if there was no
indorsements applied on September 7th of 2007.
Q. RE: Countrywide in 2007: Who is allowed to be an endorser as you were? Are
there people other than you at Countrywide in 2007 whose names would appear
on a note as an indorsement?
A. For Countrywide Home Loans, Inc.?
Q. Yes.
A. In 2007, I was the endorser for Countrywide Home Loans, Inc. I knew that my
previous boss was the endorser, yes.
Q. Oh, okay. Now, we covered this, that other people stamped your signature
and the other -- her name is -- oh, it's Laurie Meder?
A. Meder.
Q. So other people have a stamp with her name and your name on it, and how
do those people have the authority to put her name and your name on a note for it
to be an effective indorsement?
A. With my name, they have a power of attorney.
Q. And what does the power of attorney say?
A. The power of attorney allows them to place my indorsement stamp on
collateral.
Q. How do they come to have your power of attorney?
A. I gave that to them.
Q. I understand that a power of attorney document exists, I'm assuming; correct?
A. Yes.
Q. And how do those people come to operate under it?
A. It's common, standard practice.
Q. Do the people who actually use the stamps -- is there more than one, or is
there just one stamp? I said "stamps" multiple. Is there only one, or is there -A. No, there's multiple stamps.
Q. So do these people sign something that says, "I understand I'm under Michele
Sjolander's power of attorney"?
A. Its out of my scope.
Q. So that's your understanding that you -- did you sign a power of attorney
document?
A. Yes, I did.

78

Q. And, I mean, can you explain just in -- you know, in general, not word for
word what it says, but what does it purport to grant as power of attorney?
A. It grants Recontrust. They can endorse and assign notes on behalf of
myself.
Q. And do you know if this applies to a select group of people?
A. I do not have -- I would have to read the document.
Pg 76 Q. But just to clarify, once again, you dont actually know the legal
mechanism by which these people with the stamps operate under this power of
attorney?
A. As I said, I would have to go back through all of the documentation that
surrounds the power of attorney, and Recontrust has desk procedures, and it
would be their procedures for them to assign that, to place the stamp on the
collateral.
Q. was there any way we could get a copy of that power of attorney
MR. HEMBREE: I can try. Countrywide Home Loans, Inc., is not a party to the
litigation.
Pg 77 Q. So this was -- this power of attorney was not just for your name; it was
for your name as executive vice president of Countrywide Home Loans, Inc.?
A. As an officer of Countrywide Home Loans, Inc.
Q. The people at Recontrust who do the actual stamping, I mean, do you
know who they are? Do you know them by name, for example?
A. No.
Pg 78 Q. When you're in the Simi Valley office, do you ever observe the
endorsing going on?
A. Only when I do an audit. Security based, I do not have a security level to be
in there without being in the company.
Q. So you're not even allowed, unless accompanied on the floor where this is
happening?
A. Unless I'm performing an audit and unless escorted by a Recontrust associate.
Q. So you wouldn't know anything or would you know the name of the
person who did this stamping, for example?
A. No.
Q. Okay. But, I mean, you weren't there when it happened?
Pg 79 A. No.

79

Q. And of the individuals that do it, that did this in 2007, you wouldn't be able
to identify which particular individual put the stamp on this particular note?
A. Correct.
Q. This Laurie Meder, is she in the same office as you?
A. She's part of Recontrust, yes.
Pg 80 Q. Do you know what type of controls there are to exist -- what type of
controls exist to prevent the unauthorized use of your stamp? if there are
multiple stamps, are there some procedures in place that keep people from -- I
don't know -- taking one, for example, or -A. The stamps are in a secured environment on the floor, and it is part of
Recontrust's security.
Pg 82 Q. I mean, have you ever personally, you know, with a pen signed an
indorsement on a promissory note?
A. No.
Q. who would you contact about collateral at Recontrust? I mean, a name, if
you know it?
A. Laurie Meder.
Q. She is your contact at Recontrust, and that was true in 2007 we're talking
about?
A. Yes.
Pg 85 Q. So that's all Countrywide in 2007 and Bank of America now
custodians?
A. Yes.
*See full deposition of Michele Sjolander at
https://www.scribd.com/doc/189634270/Deposition-of-michele-sjolander
EXCERPTS FROM THE SWORN TESTIMONY OF LINDA DEMARTINI REGARDING
INDORSEMENTS
169.

Corroborating

material

evidence

exists

through

the

deposition

of

former

Countrywide/BAC Vice-President Linda DeMartini in Kemp v. Countrywide who testified to two

important points: 1) she had never seen an actual note that has an indorsement on the bottom
and 2) to her knowledge, the only time indorsements were prepared was when they were needed
for litigation purposes (this was fleshed out under questioning from the judge).

80

A. An imaged copy of the signed note is in here. -- The absolute original, no, it is
not.
MR. LEVITT: Q. Now, that document is the note that was contained in your file?
A. Yes
Q. And theres no indorsement on the last page of that note, is there?
A. No
Q. Theres
A. -- theres no signature
Q. Now, you were asked about whether or not the note could be -- was endorsed
at the bottom. Is it generally the practice to endorse the actual note or to use an
allonge?
A. Its -- Ive never seen an actual note that has an indorsement on the bottom.
Mr. LEVITT: -- the proofs that have been submitted to the court are that theres
a piece of paper that theyre calling an allonge that was prepared in the course
of this litigation that theyre relying upon as an indorsement.
*See full
testimony
of
Linda
DeMartini
at
https://www.scribd.com/doc/189630260/Testimony-of-Linda-DeMartini
170.

In the Consent Orders between the OCC and BAC, the OCC found that BAC had

problems with indorsements, among other things: [Bank of America] litigated foreclosure
proceedings and initiated non-judicial foreclosure proceedings without always ensuring that
either the promissory note or the mortgage document were properly endorsed or assigned and, if
necessary, in the possession of the appropriate party at the appropriate time. Thus, Plaintiff
alleges that BAC needed the requisite collateral evidence to feign standing and sought to produce
said evidence, through the fraudulent manufacture of documentary evidence after-the-fact.
171.

The use of signature stamps applied by random individuals is incapable of generating an

effective indorsement if the stamping of Plaintiffs Note was intended to deceive, as testimony by
BAC employees have confirmed. Moreover, the alleged blank indorsement is invalid because
the signature stamp was not lawfully indorsed by an individual authorized by lawful resolution of

81

the Board of Directors of either Countrywide Document Custody Services as to Laurie Meder,
Senior Vice-President, or Countrywide Home Loans, Inc.
172.

As Bankruptcy Judge Robert D. Drain iterated in a 1-15-2015 Memorandum of Decision

of Debtors Objection to the Claim of Wells Fargo Bank, NA:

if the indorsement is forged, it is not valid, and Wells Fargo could not rely on
the foregoing statutory provisions to establish that it is the holder of the Note. See
In re Pastran, 2010 Bankr. LEXIS 2237, at *10 ([S]ince [claimant] is in
possession of a promissory note endorsed in blank, it is, by definition, a holder
under section 3.201(a). This, of course, assumes that all of the indorsements on
the Note are authentic and authorized.).
BAC RETAINED THE SOLD NOTES IN ITS OWN VAULTS
173.

For BAC to qualify as a Holder with rights to enforce, BAC must be in possession of the

subject Note. Illinois case law supports the proposition that if a note is not indorsed to the
Plaintiff, the Plaintiff must demonstrate both possession and the underlying transaction through
which it obtained possession. See Collins v. Ogden, 154 N.E. 701, 704-05 (Ill. 1926)
174.

A court can infer a Plaintiffs possession of the note by the fact that it attached a copy of

the note to its complaint. However, unless the Lender alleged facts in its complaint describing
how it acquired its interest, and unless those facts are either admitted by the
Defendant/Mortgagor or deemed admitted by the borrowerss failure to answer, the court has no
basis to support a finding that the alleged Lender is entitled to enforce the note as a non-holder in
possession with the rights of a holder.
175.

In Plaintiffs answer to BACs foreclosure complaint, Plaintiff denied that BAC was the

legal holder of the indebtedness and that BAC owned the mortgage.

82

176.

Plaintiff alleges as BAC employees have attested, that BAC has attempted to create the

illusion of standing and fulfill the legal requirement of Holder of the indebtedness by violating
the PSA and illegally retaining the subject Note, as well as the Notes of millions of other
borrowers across America in its own vault. Pursuant to 5/3-2003 (b) Transfer of an instrument,
whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to
enforce the instrument, including any right as a holder in due course, but the transferee cannot
acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due
course if the transferee engaged in fraud or illegality affecting the instrument.
177.

To comply with the PSA and retain its status as a tax exempt Real Estate Mortgage

Investment Conduits (REMIC), a newly invented tax avoidance measure in 1987 was created
by Investment Banks the CWALT Trustee must have possession of the mortgages recorded in the
investors name as the beneficiaries of the MBS. No such recording appears in the records of
____________ County. *See Exhibit 29 ____________ County Records
EXCERPTS FROM LINDA DEMARTINIS SWORN TESTIMONY REGARDING THE
NON-CONVEYANCE OF THE SOLD NOTES TO THE TRUSTS AS REQUIRED BY
THE PSA
178.

Evidence of BAC illegally retaining the Notes is seen in the aforementioned sworn

deposition of former Countrywide/BAC, Vice-President Linda DeMartini in Kemp v.

Countrywide whose deposition was taken on November 22, 2010.
Q. And again, who do you believe is the holder of the note and mortgage here?
A. Well, Countrywide -- Bank of America -- whatever were calling ourselves
these days, we are Bank of America now we originated this loan. It was
originated via a broker and its really always been a Countrywide loan. The
investor is Bank of New York. We are the servicer of the loan.
Q. Now, when you say its really a Countrywide loan, wasnt it sold? Wasnt
this loan securitized and ultimately sold --sold to this trust?

83

A. Right, it would have been securitized and sold. They are the investors of
the loan. But we are the ones that would have originated it, we are the ones
that have always serviced it.
Q. Today who is the owner of the loan?
A. Bank of New York.
As the trustee for the certificate holder
CWABS, Asset-Backed Securities series number
Q. And who is in possession of the note?
A. We have the note in our origination file.
Q. So -- Bank of New York as trustee does not hold the note, is that correct, or
is not in possession of the note?
A. The original note to my knowledge is in the origination file.
Q. So its in your office, its not with this trust that owns the -- thats
supposedly holds the -- or is the owner of this note, is that correct?
A. Thats correct.
Q. And your testimony is that this allonge was never submitted to -- it was
never in the possession of Bank of New York as trustee for the certificate
holder, is that correct?
A. Correct.
Q. Im talking about the customary business practice of Countrywide when a loan
is transferred, when ownership is transferred, when in this case the mortgage
assignment occurred on March 24th, 2008, correct?
A. Yes.
Q. And would that have been the date that the ownership of the note and mortgage
were sought to be transferred to Bank of New York as trustee?
A. That would have been the day they got the ownership, yes.
Q. So the question is whether you know whether its normal practice for
Countrywide to execute an allonge at the time that that transfer takes place.
A. I dont believe that theyre always executed when the transfer takes place I
believe that it oftentimes happens after the fact.
Q. And does it always happen?
A: I can speak that it always happens? No.
Q. So theres no routine that requires internally, to your knowledge that the
allonge be executed in connection with the transfer of ownership?
A.but as a normal business practice with a normal loan, oftentimes there really
isnt a need for it unless the loan is going to continually be sold, and since this
loan was yes, it was transferred to Bank of New York as trustee, it was
securitized, but it wasnt that another mortgage company had the loan and then we

84

bought it from them. Like I mentioned, this was always done by Countrywide and
we securitized it and we, you know, we sold it to them.
Q. Im not asking whether it was necessary, I am asking whether there was an
ordinary business practice to sign an allonge and the answer is no, there was not?
A. I dont believe so
Q. And there was a pooling and servicing agreement between Countrywide and
Bank of New York?
A. Yes
Q: Is there any provision that in the servicing of this loan that Countrywide acts as
agent for Bank of New York in terms of possession?
ATTORNEY FOR DEBTOR: MR. LEVITT: Theres other provisions in this
document which would be contradictory because theres provisions in the PSA
that say that documents have to be delivered to an intermediary between Bank
of America and Bank of New York.
Q. And are documents ever transferred to the investor?
A. If we service-release them they would be transferred to whomever were
service-releasing them to.
Q. So Countrywide had possession of the documents from the outset?
A. Yes.
Q. And subsequently did Countrywide transfer these documents by assignment or
an allonge?
A. Yes. Well, transferred the rights, yes, transferred the ownership, not the
physical documents.
Q. So the physical documents were retained within the corporate entity
Countrywide or Bank of America?
A. Correct
Q. Okay. And would you say that this is standard operating procedure in the
mortgage banking business?
A. Yes. It would be normal -- the normal course of business as the reason that we
are the servicer, as were the ones that are doing all the servicing, and that would
include retaining the documents. I do know that it is our normal course of action
with the loans that we service that we are the ones that retain the that we retain
those documents.
Q. Ms. DeMartini, is it generally the custom to -- for your investor to hold the
documents?
A. No. They would stay with us as the servicer.

85

DIALOGUE BETWEEN THE ATTORNEYS AND THE COURT

MR. LEVITT: You have to have possession of the document but in addition to
possession, you either have to have an indorsement, or you have to have proof
that these documents were actually transferred to the ultimate owner, even if
the agent for the owner is holding them. But there still has to be proof that it
was delivered from A to B to C but none of those proofs have been submitted
and its not my burden, Your Honor. If counsel wants to say all right, forget the
holder argument, I lost on holder but heres my case that this note was transferred
from A to B to C, heres the delivery receipts and yeah, it may be sitting in
somebodys vault in California and not with this trust, fine. But I havent heard
those proofs and I dont think the Pooling and Servicing Agreement gives us that,
Your Honor. We need to see the delivery receipts, we need to show the chain and
theres nothing before the Court.
THE COURT: Understood. Mr. Kaplan, is there anything in those documents in
the Pooling and Servicing contract that would -MR. KAPLAN: -- and I believe the witnesss experience is that documents are not
physically transferred from party to party to party.
THE COURT: But its not experience that were talking about, its UCC
requirements. Is Mr. Levitt right when he says that some kind of delivery of
possession is required in order to qualify as a transferee, not a holder? I think
weve pretty well established that the affixing that is required for holder in due
course status as not apparent in this case, has not been established, but if you
establish under UCC requirements that there is a proper transfer, there may still be
opportunity to enforce the obligation.
MR. KAPLAN: Right. Your Honor, I understand but, I mean, theres no way Im
going to argue that there was a physical transfer. Countrywide was the servicer,
the originator. They had the documents
THE COURT: Right, there was no -MR. KAPLAN: -- they physically signed the necessary documents required to
document their ownership interests transferred to the trust -THE COURT: Thats the issue. In other words, Im -MR. KAPLAN: -- but they didnt physically deliver it.
MR. LEVITT: This is the Pooling and Servicing Agreement that was provided
by the Plaintiff and Ill call your attention to Section 8-13.
THE COURT: PG 150: 8.13, Access to records of the trustee. The trustee shall
afford the sellers, the depositor, the master servicer, the NIM Insurer and each
certificate owner upon reasonable notice during normal business hours access to
all records maintained by the trustee
MR. LEVITT: That tells me the trustee has the records, Your Honor.

86

THE COURT: If there is no authority in this document for Countrywide to act as

the agent for the Trustee in maintaining the original documents, then we face
squarely the question of whether lack by the servicer, violates the transferee status
of the owner, or whether the servicer if there is no authority in this document for
Countrywide to act as the agent for the Servicer who filed the proof of claim can
stand by that status to succeed against this challenge.
MR. KAPLAN: Well. Your Honor, the Servicer has authority to act in servicing
the loan, including filing a proof of claim under the PSA. In addition, I believe
theres a power of attorney that Bank of New York has provided to Countrywide
to act on their behalf to administer
THE COURT: Have you looked at whether there is reference to this particular
mortgage?
A: LEVITT: My experience is that theres a schedule that is annexed. Very often
Im finishing that they dont include the schedule in the filing with the SEC I
guess for privacy purposes and if youre directed to whichever law firm is the
firm that filed the documents with the SEC, but I wasnt provided the schedule as
part of this submission.. I went to the SEC website and couldnt find it...this may
not be the operative document as it is labeled draft I asked for a final document
but didnt receive it.
THE COURT: The only clue we have is that its between Countrywide and Bank
of New York Trustee and it relates to asset-backed certificate series 2006-8
which suggests that it might be the same pool, but we dont know whether it was
executed. We have questions raised because its not on the SEC website and we
dont have a specific listing of this particular mortgage, which will require extra
time, right? This is a serious consequence. If there are substantial gaps in my
ability to follow the stream, then the debtor/plaintiff would be successful. If
Countrywide cant come up with a signed verified copy of it, the final executed
document with some tie-in to this mortgage somebody has an exhibit that
would, list this mortgage theoretically--- and if they dont thats a problem with
certification from a qualified Countrywide representative that this is what it
purports to be.
MR. LEVITT: So its two different -- from all practical purposes and in fact I
think the Pooling and Servicing Agreement will show, its two separate and
distinct legal entities, both Countrywide entities, now Bank of America entities.
So if A, which is Countrywide the originator, ended up securitizing and selling
this loan they would have had to have followed the terms of the Pooling and
Servicing Agreement to get it into the hands of the trust and then D, which is
Countrywide the servicer, could have gotten possession. And even if it meant -even if they stayed in the same vault but if it meant that there was a delivery
receipt from A to D or A to B to C to D, thats what they have to prove. And
because theyre saying that, now maybe they do have those delivery receipts and
if they want to produce them, thats great, but if that document never moved

87

from that safe, first of all theyre in violation of their Pooling and Servicing
Agreement, theyre in violation of the UCC -- were done.
THE COURT: If theyre in violation of the UCC, Im agreeing with you.
MR. KAPLAN: Im a little troubled by the fact that were accepting a
representation here. And this witness is in the Litigation Department, this witness
is not the person that was responsible for the Pooling and Servicing Agreement or
how these documents are dealt with. I think at the very least, even if we dont
have live testimony, we need to have something from someone who can say
theyre custodian of records that truly tracks this. Were accepting a representation
the representation that they [the Notes] stayed in the same vault and they never
moved. We dont know that, Your Honor. Were -- this is -THE COURT: But lets examine Ms. DeMartini in terms of her knowledge of that
fact.
EXAMINATION BY THE COURT TO MS. DEMARTINI:
Q. Youve testified that these documents, the originals, the files
A. Have remained with Countrywide.
Q. -- stayed with -- now, are there two different entities? This note was entered
into with Countrywide Home Loans, Inc.
A. Yes.
Q. Is that the same as Countrywide Home Loan Servicing, LP?
A. Countrywide Home Loan Servicing, LP is the -- is our Servicer -- is the portion
of the business that does the servicing of the loan so they are slightly different in
that they were both part of the -- what was formerly Countrywide Financial
Corporation. Countrywide Servicing Home Loans, LP was the servicing portion
of that business. They would and Countrywide Home Loans would have been
the ones that originated the loan.
Q. Well, lets talk first about your experience with the company. You said that you
started about ten years ago?
A. Yes.
Q. And with which company, the servicer or the
A. Ive always been involved with servicing.
Q. And what were your positions with servicing?
A. Oh, Ive had a lot of positions with servicing. Ive been a customer service
representative, Ive been a supervisor, Ive been a trainer, Ive been a training
developer, Ive managed our Policies and Procedures writers, Ive been a
Communications leader, Ive been a senior team leader, Ive been a team leader
auditor, a team leader trainer -- Ive done all kinds of things all within the
customer contact area of servicing. And as being part of customer contact we had

88

to --we were involved in every aspect of the servicing. We were the ones that did
all of the speaking to the borrowers about anything to do with their loans so I had
to know about everything in order to be able to do that and in order to be able to
train the customer service representatives. In order to do that, as I stated before, I
went over to the -- we were called the Case Management Department; now were
called the Litigation Management Department. We are part of servicing as well
under -- under -- in the loan admin servicing, what used to be loan admin
servicing as a supervisor last September.
Q. What contact, if any, during your experience with Countrywide Servicing have
you had with the loan originator aspect of the company?
A. Ive never been involved specifically with the originations of the -- of the
loans. As a servicer, we get involved after the loan is established and were the
ones that then deal with everything after the fact.
Q. What do you -- are you aware of the procedures that occur internally as
between the originator and the servicer as soon as the loan is given?
A. Well, after the loans originated, then its going to what we would have called
boarded our system. I would be familiar with it from the time that it boarded on -Q. What does that mean?
A. Boarded is when it would get put into the computer system. That would be
when the documents are all imaged and then stored. That all happens when the
loan comes on board or becomes a part of our servicing. What happens to it prior
to that as far as the origination process inasmuch as the underwriting or any of
that, that Im not as familiar with, no.
Q. When the file is -- when the loan is boarded, who does that?
A. Let me find the best way to describe that. Well, the documents themselves, we
have a Documents Department that would be in charge of imaging and then they
would be the ones that would be storing the original documents. We have a
system..
Q. Have you ever dealt in that department -- the Documents Department?
A. I have not physically worked in that department. Ive been in that building, I -but for me to specifically be the one doing that, no, I havent.
Q. Have you had occasion to go there to look for a document lets say or
A. Ive had occasion to speak to people -- the documents -- some of them are
stored -- theyre stored there and then we also have other storage facilities. These
particular documents are in our building because I looked these ones up, but -Q. What do you mean, youve looked these up -- these ones up?
A. Well, when we went to order the originations file we looked -- looked for the -documents. The documents had been previously requested by our Foreclosure

89

Department and so thats where theyre located right now. The physical
documents are in the Foreclosure department.
Q. The original physical documents?
A. Yeah.
Q. So is it your custom to request original documents -- from this department
when the Litigation Department needs them?
A. If theyre requested by counsel, if theyre requested for various things with
whether its within a foreclosure or a bankruptcy. But if theres something that
comes up where were being asked to prove something, then its
becoming customary lately. It never used to be to where the originals were ever
requested but lately more and more of the time of day of things around the
country, we are being asked to physically produce the originals more frequently.
Q. And you would direct those inquiries to the Document Department?
A. Yes, Document Request. Its our DMS system, its our Document Request.
Q. And so to your knowledge, the original documents, the origination documents,
the notes and the mortgages are maintained in that facility?
A. Yes.
Q. To your knowledge, are they ever moved except for inquiries from counsel?
Are they ever moved to follow the transfer of ownership?
A. I cant say that theyre never moved because, I mean, with this many millions
of loans as we have I wouldnt presume to say that, but it is not customary for
them to move.
Q. Do you have personal knowledge of under what circumstances they would
move or whether and to what extent theyre ever moved?
A. Not -- not specifically to what I would be comfortable testifying to, no.
Q. Okay. In terms of this particular transaction, from experience of requesting
these original documents, were you able to establish that these were not moved?
A. We were able to establish that theyre in our -- what we call the 400 Building
which is the building that were --where were at and we were able to establish
that thats where theyre located and thats -- we were still in the process of trying
to physically get them to bring them here today but it just -- I wasnt able to
obtain them in time.
Q. And your information is that they may be at the Foreclosure Department, but
are you certain that they werent moved out of the servicing company?
A. We had Federal Express tracking. Even when we move something internally
like that a lot of times it will go Fed Ex so that we have that tracking so thats how
I know that they went there because I have the tracking number --LOKIO09 -- so
thats how I know that theyre there, and I dont have any receipt or any tracking

90

that theyve ever moved beyond that. *See full testimony of Linda DeMartini at
https://www.scribd.com/doc/189630260/Testimony-of-Linda-DeMartini
179.

Plaintiff alleges that the retention of Notes by BAC was a calculated element of the

Enterprise which will be detailed in Plaintiffs forthcoming RICO count by retaining the Notes in
its ow vault allowed the fox to enter the hen house providing BAC unbridled access to the
Bearer Paper Notes which (1) allowed BAC to feign ownership of the Note by blank
indorsement when ordered by foreclosure counsel, and (2) allowed BAC to sell said this Bearer
Paper to multiple Trusts in America and abroad and to the SAME trust in multiple tranches as
verified by the FCIC Report and Attorney Jeff Barnes on page 38.

COUNT 1
VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT
ORGANIZATIONS ACT RICO-I8 U.S.C. 1961 (3) ET SEQ. 18 U.S.C.A.
1962(c)

180.

The Plaintiff re-alleges and incorporates the allegations, sworn testimony and facts

supported by exhibits contained in the preceding paragraphs as though set forth at length herein
and utilizes the RICO format as provided by the Federal courts.
#1- UNLAWFUL CONDUCT IN VIOLATION OF 18 U.S.C. 1962(c)
181.

This is a civil action brought by the Plaintiff pursuant to the provisions of the Racketeer

Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961, et seq., concerning a
pattern of racketeering activity perpetrated by BAC and non-party Co-Conspirators as well as
others known and unknown (the Conspirators).

91

182.

BAC and its Co-Conspirators are persons within the meaning of 18 U.S.C. 1961(3), and

conducted and participated, directly and indirectly, in the conduct of the affairs of said Enterprise
through a pattern of racketeering activity.
183.

At all relevant times, the Plaintiff was and is a person within the meaning of 18 U.S.C.

1961(3) and 1962(c).

#2 CONSPIRATORS MISCONDUCT& BASIS OF LIABILITY
184.

BAC has conducted or participated, directly or indirectly in the conduct, management or

operation of the Enterprises affairs through a pattern of racketeering activity within the
meaning of 18 U.S.C. 1961(5) and in violation of 18 U.S.C. 1962(c), to wit: BAC used the
Enterprise to mislead both the Plaintiff and the state court and is thus attempting to fraudulently
deprive the Plaintiff, and others similarly situated, of her real property through an illegitimate
foreclosure sale.
185.

Upon information and belief the Plaintiff alleges that the Enterprise includes, but is not

limited to the following predicate acts:

a. Initiating loans which were designed-to-fail by fraudulently inducing borrowers
to take out predatory high risk loans with the Enterprises intent of bursting the
real estate bubble the Conspirators created through the intentional lowering of
interest rates and thereby bursting said bubble by raising interest rates thus
ensuring the loans would default and enabling the Enterprise to collect on
Trillions of dollars of Credit Default Swap (CDS) bets; FRAUDULENT
INDUCEMENT 735 5/13-215
b. Entering into contractual relationships with borrowers which were breached as no
consideration was paid by the so-called Conspirator lenders who loaned nothing
and thus had nothing to lose thus the Conspirator banks lack standing to foreclose;
BREACH OF CONTRACT 810 ILCS 5/2-301

92

c. Selling the mortgage loans to MBS Trusts and converting said loans into security
bonds without disclosing to the borrower the nature of the transaction in violation
of the FDCPA 15 U.S.C. 1692;
d. Claiming to be the owner of mortgages while concurrently claiming to be the
legal holder of indebtedness which fails as a matter of law as Illinois law states
the mortgage follows the Note and because the Notes were sold as true sales to
MBS Trusts, the Conspirators cannot legally own the mortgage and hold the Note
owned by the MBS Trust; FALSE REPRESENTATION/FRAUD
e. Fabricating documentary evidence after the fact through the use of rubber
stamped signatures which are applied by people unknown to the signator;
FRAUD
f. Falsely representing that the market was favorable to borrowers in 2004-2008,
including the Plaintiff, while knowing that the market was about to collapse
thereby leading borrowers as sheep to the slaughter; NEGLIGENT
MISREPRESENTATION/
g. Incentivizing Conspirator employees with bonuses and encouraging them to
falsify loan applications, which were intended to entrap borrowers in loans which
were designed to fail so the Conspirators could collect Trillions on CDS bets;
FRAUD
h. Failing to record the sale of real property as required by law; ILLINOIS
RECORDERS ACT
i. Using MERS as a secretive veil to conceal the Conspirators numerous crimes as
enumerated above from the public; NEGLIGENT MISREPRESENTATION
j. Failing to respond to Qualified Written Requests sent by both the Plaintiff and
borrowers across America thereby preventing the Plaintiff and others similarly
situated from discovering the truth about their loans; Silence can only be equated
with fraud where there is a legal or moral duty to speak or when an inquiry left
unanswered would be intentionally misleading. U.S. v. Tweel, 550 F.2d 297
(1977). In determining whether the plaintiffs come before this Court with clean
hands, the primary factor to be considered is whether the plaintiffs sought to
mislead or deceive the other party, not whether that party relied upon plaintiffs
misrepresentations. Stachnik v. Winkel, 394 Mich. 375, 387; 230 N.W.2d 529,
534 (1975). FRAUD
k. Ignoring Discovery requests sent by Plaintiff; NEGLIGENT MISREPRESENTATION Any conduct capable of being turned into a statement of fact is
representation. There is no distinction between misrepresentations effected by
words and misrepresentations effected by other acts. (The seller or lender) He is
liable, not upon any idea of benefit to himself, but because of his wrongful act and

93

the consequent injury to the other party. Leonard v. Springer, 197 Ill 532. 64 NE
299 (1902).
l. Falsely creating assignments of beneficial interest of borrowers mortgages or
deeds of trust by a non-existent entity through MERS when MERS no longer had
authority to assign anything after the loan sold to a non-MERS member; FRAUD
m. Trying to dupe the Plaintiff into believing that the false assignment conveyed the
Note when there was no language in the Note conferring authority to MERS to
assign the note; FRAUD
n. Using Conspirator employees to forge assignments of beneficial interest and pose
as Vice-Presidents or other lofty titles of MERS on documents which are/were
manufactured as documentary evidence after the fact; FRAUD/FORGERY
o. Offering loan modifications and telling borrowers to fax numerous pages of
documents which BAC and the Co-Conspirators allegedly lose multiple times
as the Conspirators have no intention of modifying loans as it is far more lucrative
to the Conspirators foreclose and steal homes; FRAUD
p. Feigning Ownership of the Mortgage and holder of the indebtedness when the
Conspirators, Countrywide in the instant case had previously sold the loan as a
true sale to MBS Trusts. Moreover, the only reason BAC or its Co-Conspirators
could be holder of the indebtedness was because the Conspirators illegally held
the Notes in their own vaults in violation of the PSAs; FRAUD
q. Submitting and recording false documents to the courts with the intent to illegally
foreclose on borrowers property; FRAUD
r. Collecting TARP money to ostensibly offset losses on toxic loans which were
made to become toxic by the Conspirators own actions through the deliberate in
creation and deployment of the 2008 Financial Crisis.

186.

BAC and its Co-Conspirators engaged in a pattern of racketeering activity where they

routinely and repeatedly have engaged and are currently engaging in the aforementioned
illegal predicate acts as articulated in paragraph 185.
187.

The Enterprise is now and has facilitated the illegal foreclosure of Millions of

Americans homes, which BAC is now attempting to do in the instant case with the goal of

94

throwing families from their homes with callous disregard for the basic protections of the
law and established American notions of justice.
#3 WRONG-DOERS AND ALLEGED MISCONDUCT OF EACH

188.

The Foreclosure Enterprise (the "Enterprise") is an association-in-fact within the meaning

of 18 U.S.C. 1961(4) and 1962(c) which includes but is not limited to BAC, together with the
active aid, assistance and agreement of its Co-Conspirators and their respective agents,
repeatedly, deliberately, intentionally, conspiratorially and with criminal intent, have engaged
and ae still engaging in a pattern of racketeering through theft, fraudulent practices, false
pretenses, fraud and perjury in the acquisition of title to real property and in the attempt to
further acquire title to and claims the rights, interest and equity in the Plaintiffs real property.
The Conspirators have each participated and continue to participate in the operation or
management of the Enterprise and include, but are not limited to:
a.

BAC f/k/a Countrywide

b.

Non-party F&S and other foreclosure Mills around the country

c.

Non-party The Federal Reserve

d.

Non-Party Mortgage Servicers

e.

Non-party Goldman Sachs

f.

Non-party MERS

g.

Non-party Bank of New York Mellon

h.

Non-party Wells Fargo

i.

Non-party JP Morgan Chase

j.

Non-party Wall Street Investment Banks

k.

Non-party Barclays

l.

Non-party Merrill Lynch

m.

Non-party Citigroup

95

n.

Non-party UBS

o.

Non-party Morgan Stanley

p.

Non-party Deutsche Bank

q.

Non-party Fannie Mae

r.

Non-party Freddie Mac,

s.

Non-party HSBC

t.

Non-party Rhoena Rice

u.

Non-party Laurie Meder

v.

Non-party AIG

w.

Non-party MERS members

x.

John Does 1-100

#4) THE VICTIMS & HOW THEY WERE INJURED

189.

The Conspirators specifically engaged a pattern of criminal activity at the expense of the

Plaintiff and millions of other borrowers across America who are similarly-situated, for the
Conspirators own benefit. The victims include the Plaintiff who has been forced to protect her
property rights, along with millions of others who have been defrauded in foreclosure and those
that are still being defrauded in foreclosure. Thus far the Enterprise has been successful:
According to NBC News, from January 2007 to May 2013 there were more than 5 million
completed foreclosures. RealtyTrac reports that there were more than 8.2 million foreclosure
starts in 2011. But this is just the tip of the iceberg for as the Great Recession trudges along more
people become unemployed or underemployed, and are thus incapable of making mortgage
payments. As the Pew Charitable Trust stated in 2009: [f]oreclosure can have a devastating
impact on homeowners and their families. It can ruin their credit for years, adversely affect their
jobs and childrens schooling, and take away what for many Americans is their principal
investment opportunity and chance to get ahead. The lives of millions of families have been

96

destroyed by the Enterprise and millions of more lives are intended to be destroyed by the
Conspirators.

190.

Additional victims include the investors of MBS who were duped into buying sham

investments thus eviscerating the pension funds of millions around the world. Moreover, the
intentionally-created 2008 Financial Crisis and subsequent Great Recession have caused
businesses to fail, communities to go bankrupt, etc., all as a result of the Enterprise.
#5 PATTERN OF RACKETEERING ACTIVITY
191.

BAC and its Co-Conspirators racketeering activities constitute a common course of conduct

with similar pattern and purpose. Each separate use of the U.S. mails and/or interstate wire
facilities employed by BAC was related, had similar intended purposes, involved similar
participants and methods of execution, and had the same results affecting the same victims: those
in foreclosure including the Plaintiff in the instant case.
192.

On thousands of separate occasions, BAC and its Co-Conspirators used the U.S. mails

and interstate wire facilities in furtherance of the Enterprise. Each of these fraudulent mailings
and interstate wire transmissions constitute a racketeering activity within the meaning of 18
U.S.C. 1961(1)(B) and constitute a pattern of racketeering activity within the meaning of 18
U.S.C. 1961(5), in which BAC and its Co-Conspirators intend to defraud the Plaintiff and
millions of others across America.
193.

BACs pattern of racketeering can be discerned by its fraudulent conduct directed to the

Plaintiff in the aforementioned claims which the Plaintiff has supported with exhibits.

97

194.

BACs pattern of racketeering can be discerned within its fraudulent conduct as described

by federal and state judges who have identified and condemned BACs unlawful activities.
195.

BAC and predecessor Countrywides pattern of racketeering can be discerned within the

investigation, Complaint and Consent Judgment in the matter of Federal Trade Commission v.
Countrywide Home Loans, Inc. and BAC Home Loans Servicing, LP, Civil Action No. Case
2:10-cv-04193-JFW-SS (C.D. Cal. June 7, 2010).
196.

BACs pattern of racketeering can be discerned within the investigations and actions of the

Fed, OCC, FDIC and other federal regulators, including the Interagency Review, and the
Complaints and Consent Orders announced on April 13, 2011.
197.

BACs pattern of racketeering can be discerned within the investigations of both the Illinois

Attorney General and the 49 other State Attorneys General and the U.S. Department of Justice,
which engaged in settlement negotiations with the nations largest mortgage servicers, including
BAC.
5A. ALLEGED PREDICATE ACTS
198.

The predicate acts listed on pages 92-94 constitute a pattern of racketeering activity and

were and still are part of the Enterprise to wrongfully foreclose upon both the Plaintiffs and
millions of other properties across America without legal right, and therefore acquire title to said
Properties through deception and fraud for the profit of the Enterprise.
199.

As it pertains specifically to the case at bar, Defendant BAC and its Co-Conspirators

perpetrated the following predicate acts which specify the date of the fraud, the perpetrator of the

98

fraud; the location of the fraud and nature of the fraud in conformance with the elements of fraud
as detailed in the Federal Rules of Civil Procedure 9 (b).
5B. DATES OF PARTICIPANTS ACTS, DESCRIPTION OF FACTS SURROUNDING
EACH ACT
a. 7-2007: COUNTRYWIDE LOAN OFFICER ___ ____________ Induced the
Plaintiff into entering into a predatory loan agreement; FRAUDULENT
INDUCEMENT
b. 8-2007: COUNTRYWIDE LOAN OFFICER ___ ____________: , Il.: Falsified
co-owner ______s income by adding a bonus of $11,600 a month to __s income;
FRAUD/FALSIFICATION
c. 8-2007: COUNTRYWIDE LOAN OFFICER ___ ____________ Changed the
loan from a fully documented/verified loan into a stated income liars loan;
FRAUD/FALSIFICATION
d.

7-2007: COUNTRYWIDE LOAN OFFICER ___ ____________: Il.: Forged the

name of the person who took the loan application over the phone; FORGERY

e. 8-2007: BAC FKA COUNTRYWIDE HOME LOANS: Texas office: Failed to

underwrite the loan placing the Plaintiff at risk of foreclosure and losing her
sizable investment; NEGLIGENT MISREPRESENTATION
f. 7-2007: COUNTRYWIDE LOAN OFFICER ___ ____________: , Il.:
Misrepresented the market conditions in July 2007 as favorable when 14 months
later the market collapsed; NEGLIGENT/FALSE MISREPRESENTA-TION
g. 8-2007: COUNTRYWIDE LOAN OFFICER ___ ____________: , Il.: Changed
the ARM index from TREASURY to LIBOR; FRAUD/FALSIFICATION
h. 9-2007: BAC FKA COUNTRYWIDE HOME LOANS: Texas office: Converted
subject loan into securities and sold said securities as Mortgage-backed Securities
for a sum greater than said mortgage; FDCPA
i. 9-2007: BAC FKA COUNTRYWIDE HOME LOANS: Texas office: Falsely

99

claimed to be the Lender of funds when the loan had been pre-sold and funded
by Investors of the CWALT Trust; FALSE PRESENTATION/FRAUD
j. 7-2010: BAC: Texas office: Falsely claimed to be the owner of the subject
Mortgage when the CWALT MBS Trust had previously purchased the subject
Note; FRAUD/FALSE PRESENTATION
k. 7-2010: BAC COUNSEL F&S: _____, Il.: Recorded a fraudulent mortgage,
fraudulent Lis Pendens, fraudulent Notice of Default; fraudulent assignment and
fraudulent foreclosure complaint in the ____________ County Recorders office
knowing the aforementioned documents were fraudulent; FRAUD
m. 9-2007: BAC FKA COUNTRYWIDE HOME LOANS: Texas office: Bifurcated
the note from the mortgage through selling the Note to the Trust and retaining the
mortgage; *See 1872 US Supreme Court precedent Carpenter v. Longan, 83 U.S.
U.S. 1872 271, at 274, when the note is separated from the deed as in the case of
a MERS nomination, the deed becomes a nullity and the remedy is Quiet Title.
SLANDER OF TITLE
n. 9-2007: BAC FKA COUNTRYWIDE HOME LOANS: Texas office: Failed to
record all transfers of beneficial ownership in the Plaintiffs property thereby
breaking the chain of title and placing a cloud on and slandering Plaintiffs title.
SLANDER OF TITLE - QUIET TITLE
l. 10-2009: BAC COUNSEL F&S: Bannockburn, Il.: Ordered a blank indorsement
on Promissory Note. FRAUD
m. 10-2009: BAC COLLATERAL DEFICIENCY TEAM: Texas office: rubberstamped Note as blank indorsement as documentary evidence after-the-fact.
FRAUD
n. 10-2009: BAC COUNSEL F&S: Bannockburn Il.: Ordered assignment of
beneficial interest. FRAUD
o. 10-2009: BAC COLLATERAL DEFICIENCY TEAM: Texas office: Created
assignment of beneficial interest as documentary evidence after-the-fact from
MERS as nominee for Countrywide which no longer existed on 11-04-2009 as

100

MERS had no authority as the loan was sold as a true sale to the CWALT MBS
Trust, a non-MERS member. FRAUD
p. 11-2009: BAC EMPLOYEE RHOENA RICE: Texas office: Executed assignment
of beneficial interest as Vice-President of MERS when she was an employee of
BAC. FRAUD
q. 11-2009: BAC COUNSEL F&S: Wheaton, Il.: Recorded false assignment.
FRAUD
r. 7-2010: BAC COUNSEL F&S: Wheaton, Il.: Recorded false Lis Pendens.
FRAUD
s. 7-2010: BAC COUNSEL F&S: Wheaton, Il.: Filed a false foreclosure complaint
knowing BAC had no standing as it did not own Plaintiffs mortgage as it
claimed. FRAUD
5C. WIRE/MAIL FRAUD & IDENTIFICATION OF WHO, WHAT, WHERE, WHEN &
HOW PURSUANT TO FED. R. CIV. P9 (B) IDENTIFY TIME PLACE CONTENTS OF
MISREPRESENTATION OR OMISSION
200.

In the execution of the Enterprise to defraud the Plaintiff and obtain money and/or real

property through false pretenses, BAC and its Co-Conspirators transmitted and received
messages by wire, including but not limited to telephone and Internet communications. In such
communications, the Conspirators sought to intimidate the Plaintiff either to part with large sums
of money or to abandon the Property for the profit of the Enterprise under the false assertion that
BAC had the right to foreclose upon the security interest in subject Property in violation of 18
U.S.C. 1343 Wire Fraud.
201.

In the execution of the Enterprise, BAC and its Co-Conspirators placed in post offices

and/or authorized repositories matter and things to be sent or delivered by the Postal Service,
caused said matter and things to be delivered by commercial interstate carrier, and received

101

matter and things from the Postal service or commercial interstate carriers, including, but not
limited to, default notices and foreclosure-related notices in violation of 18 U.S.C. 1341 Mail
Fraud. Said notices were false, misleading, and contrary to law, as described herein; and are/were
deliberately designed to compel the Plaintiff either to part with large sums of money or to
abandon the Property for the profit of the Enterprise.
202.

In the execution of the Enterprise BAC counsel filed foreclosure lawsuits on the basis of

unsupported assertions of fact which are included in court filings and land records that contain
falsified signatures and notarizations to facilitate the prosecution of foreclosure lawsuits in the
name of entities without legal standing to bring them.
203.

Pursuant to the Enterprise, mail and wire fraud was routinely committed by BAC and its

Co-Conspirators. The following are non-exhaustive examples of fraudulent misrepresentations

made by BAC as it pertains to the instant case through the use of the U.S. Mail or interstate wire
facilities.
On November 17, 2008 Countrywide mailed a NOTICE OF INTENT TO
ACCELERATE the Plaintiffs loan to the Plaintiff. This notice was sent through
the U.S. Mail.
On November 16, 2009 BAC recorded a false assignment of the Plaintiffs
mortgage with the Recorder of Deeds for ____________ County, Illinois. Said
assignment was transmitted by interstate wire facilities and was false, misleading,
unlawfully fabricated after being ordered by F&S for the sole purpose of filing a
foreclosure action against the Plaintiff on behalf of BAC, an entity that had no
ownership in Plaintiffs mortgage thus had no legal standing to bring a foreclosure
action against the Plaintiff.
On July 12, 2010 BAC filed a Lis Pendens was recorded with the Recorders
office of ____________ County, Illinois. This document was transmitted by
interstate wire facilities, and was false, misleading and unlawfully fabricated by
F&S at BACs behest for the sole purpose of filing a foreclosure action against the
Plaintiff on behalf of BAC an entity that had no ownership in the Plaintiffs
mortgage and an entity that had no legal standing to bring a foreclosure action
against the Plaintiff.
102

On July 7, 2010 BAC filed a foreclosure complaint with the Clerks office of
____________ County, Illinois. This document was transmitted by interstate wire
facilities, and was false, misleading and unlawfully fabricated by F&S at BACs
behest for the sole purpose of foreclosing the Plaintiffs property on behalf of BAC
an entity that had no ownership in the Plaintiffs mortgage and an entity that had
no legal standing to bring a foreclosure action against the Plaintiff.
204.

The entirety of BAC and its Co-Conspirators business operations, not just their

fraudulent activities, are carried out by an array of legal and mortgage servicing personnel
working across state boundaries who engage in constant transfers of correspondence, legal
documents, loan data, information, invoices, account statements, financial instruments and
currency. These transfers occur almost exclusively through use of interstate wire facilities or U.S.
Mail.
205.

The origination of loans through the foreclosure process at BAC depends upon electronic

Internet-based communications transmitted by interstate wire facilities. BAC Assistant Vice

President Jon T. Kuretich informed New Jersey Chancery Court Judge Jacobson in a Foreclosure
Irregularities Matter, "there are various mechanisms by which foreclosure counsel
communicate with BAC Servicing regarding issues concerning the prosecution of foreclosure
matters on BAC Servicing's behalf." These include: (b) "use of a group email box managed by
the Bank's Vendor Management group [which] manages the relationship with foreclosure
counsel, and provides quality control oversight"; (c) use of foreclosure counsel's own e-mail
system; and (b) the telephone.
206.

In the course of making fraudulent misrepresentations to both the Plaintiff and the

misrepresentations to millions of other Americans in foreclosure, BACs systematic use of

interstate wire facilities and the U.S. Mail were/are an indispensable part of the Enterprises
fraudulent schemes.

103

207.

Pursuant to the Federal Rules of Civil Procedure 9 (b) FRAUD: Circumstances Which

Constitute The Fraud: Said circumstances constituting the fraud committed by BAC and its CoConspirators has been articulated on pages 92-94 and the specific predicate acts pertaining to the
case at bar appear in paragraphs 98-101 which details/ the Who perpetrated the fraud; What
the nature of the fraud which was perpetrated; Where the fraud was perpetrated; When the
fraud was perpetrated and How the fraud was perpetrated.
5D) HOW THE PREDICATE ACTS RELATE TO THE ENTERPRISE AS A PART OF A
COMMON PLAN
208.

The common plan and overarching agenda for the multi-faceted Enterprise is to retain the

power and control of the U.S. Monetary system which the Conspirators have held for decades.
Said system is on the verge of collapse as the forthcoming paragraphs will detail and the
Conspirators seek to control this inevitable collapse through the employment of the Enterprise.
The facet of the Enterprise which the instant case focuses upon deals with the Origination of
loans through the Foreclosure of those loans. This element of the Common Plan is an essential
facet of the common plan as it contributes to the destabilization of the public and subsequent
elimination of the Middle-Class as will be articulated in forthcoming paragraphs.
DESCRIBE THE ALLEGED ENTERPRISE IN DETAIL
209.

While BAC and its Co-Conspirators participate in and are part of the Enterprise, they also

have an existence separate and distinct from the Enterprise.

210.

The specific facet of the Enterprise's racketeering activity period which this complaint

focuses upon began in the late 1970s and has operated continuously to the present being carried
out hundreds of times per month which constitutes an on-going activity.

104

211.

The Plaintiffs aforementioned claims alleged in 1-210 have exposed violations of law

and criminal acts which are corroborated with indisputable evidence from investigations by the
SEC, FBI, FTC, FDIC and various other governmental agencies, litigation conducted by all 50
States Attorneys General and numerous MBS investor lawsuits which have all exposed the
existence of an Enterprise composed of a group of Conspirators. Federal Judge Rakoff confirmed
the existence of this Enterprise on Page 6 of his ruling in re: United States and (Countrywide
whistleblower) Edward ODonnell vs. BAC/Countrywide: ...the evidence of the Defendants
fraudulent Enterprise and fraudulent intent was ample.
212.

Elements of the Enterprise have been elucidated through the sworn testimony by

employees of BAC and its Co-Conspirators which confirm the existence of an Enterprise
through a common nexus of criminal and civil violations of the law being perpetrated by BAC
and its Co-Conspirators which are all engaged and in concert in a massive multi-faceted
Enterprise in every state in these United States of America and the world.
213.

BAC and its Co-Conspirators are a group of persons associated together in fact for the

purpose of carrying out an ongoing criminal enterprise which has been structured to operate as a
unit in order to accomplish its overarching goal.
214.

The Plaintiffs RICO claim focuses on the furtherance of a pattern of criminal

activity set forth herein, which includes a regular pattern and practice of predicate acts with the
intent to entrap, defraud, institute and further fraudulent foreclosures and to wrongfully foreclose
the Plaintiffs Property without legal right through the false assertion that the Conspirators had
the right to foreclose upon the security interest in the subject Property and therefore acquire title
to the Subject Property through deception and fraud for the profit of the Enterprise and/or to

105

obtain money by means of false pretenses which included mail fraud and wire fraud through the
placement of all matter and things to be sent or delivered by the Postal Service in post offices
and/or in authorized repositories, caused said matter and things to be delivered by commercial
interstate carrier, and received matter and things from the Postal service or commercial interstate
carriers, including, but not limited to, default and foreclosure related notices.
215.

The Conspirators have preyed and continue to prey upon the naivet and innocent faith

of both the Plaintiff and other victims across America who believed that the foundation of
America and its banks as her most sacred institutions entrusted to protect the earnings and
investments of Americans was built upon truth, justice, morals, integrity and values.
216.

Thus far the Enterprise has achieved, and is still in the process of achieving one of its

objectives as the Enterprise has catalyzed the greatest shift of wealth and assets from the middle
class to the wealthiest, while its larger goal is yet to be realized.
THE ENTERPRISE
217.

The Plaintiff incorporates the above allegations as though fully restated herein.

It may appear that what goes on is happenstance, but the government most
surely has planned it.
President Franklin D.
Roosevelt
THE VIABILITY OF AN ENTERPRISE
218.

The January 2011 FCIC Report hints at the creation of an Enterprise stating the following

on Pg xx:
In the years leading up to the crisis many financial institutions borrowed to
the hilt, leaving them vulnerable to financial distress or ruin if the value of
their investments declined even modestly. For example, as of 2007 the five
major investment banksBear Stearns, Goldman Sachs, Lehman Brothers,
106

Merrill Lynch, and Morgan Stanleywere operating with extraordinarily

thin capital. By one measure, their leverage ratios were as high as 40 to 1,
meaning for every $40 in assets, there was only $1 in capital to cover losses.
Less than a 3% drop in asset values could wipe out a firm. To make matters
worse, much of their borrowing was short-term, in the overnight market
meaning the borrowing had to be renewed each and every day. For example,
at the end of 2007, Bear Stearns had $11.8 billion in equity and $383.6 billion
in liabilities and was borrowing as much as $70 billion in the overnight
market. It was the equivalent of a small business with $50,000 in equity
borrowing $1.6 million, with $296,750 of that due each and every day. One
cant really ask What were they thinking? when it seems that too many of
them were thinking alike. And the leverage was often hiddenin derivatives
positions, in off-balance-sheet entities, and through window dressing of
financial reports available to the investing public. The kings of leverage were
Fannie Mae and Freddie Mac, the two behemoth government-sponsored
Enterprises (GSEs). For example, by the end of 2007, Fannies and Freddies
combined leverage ratio, including loans they owned and guaranteed, stood at
75 to 1.
219.

The Conspirators, purportedly the best and brightest on Wall Street, the Federal

Reserve and the five largest banks, are paid Millions of dollars for their superior intellect, yet
not a one of these seemingly brilliant souls had an inkling that a major economic crisis was
brewing which directly contradicts the data.
220.

To validate that something was happening, a CNBC documentary entitled House of

Cards aired the following quote dated 12/15/2006 from an internal Wall Street email: Lets
hope were are all wealthy and retired by the time this house of cards falters.
221.

According to Nomi Prins, former Goldman Sachs analyst who authored It Takes a

Pillage, Rolling Stone Wall Street reporter Matt Taibbi, who authored Griftopia, and Michael
Lewis who authored The Big Short, those on Wall Street who were not insiders were
astutely aware that something was happening on Wall Street especially around 2007-2008 as
anomalous events began to occur at break-neck speed. These events prompted some noninsiders to look deeper into the sale of MBS and soon discovered that even though these

107

securities were rated AAA, meaning they were low risk investments, these securities were, as
revealed in Congressional hearings, pieces of crap i.e. worthless.
222.

As the following paragraphs unfold, each event which led to the Financial Crisis was a

critical step in a meticulously engineered Enterprise executed by the Conspirators over decades
beginning in the 1970s but gearing up to warp speed in the 1990s.
223.

To identify the Conspirators one need simply follow the money and ask: Who

benefited from the 2008 Financial Crisis?; Who made off with Trillions?; Who is not being
prosecuted for these crimes against Humanity?
THE CORE ISSUE CATALYZING THE CREATION OF THE ENTERPRISE: THE
UNSUSTAINABLE FIAT MONETARY SYSTEM
224.

In America and most of the world, a fiat monetary system is utilized. Fiat money is not

backed by gold, silver or any tangible asset but by debt where money is printed out of thin air.
A fiat system allows those who print and control the currency, in the U.S., the Federal Reserve,
(Fed) which is not Federal nor part of our government but instead a privately-owned
corporation, to control everything for He who has the gold, makes the rules.

225.

The Enterprise was created in response to the inevitable collapse of the fiat monetary

system.
226.

Historically there have been 599 fiat systems which have all collapsed as they

unsustainable. A collapse is based upon expanding debt and the compounding interest (another
facet of the Enterprise which ensures the Conspirators power and control) needed to sustain that

108

debt. At some point the compounding interest exceeds the revenue coming into the Treasury, and
the system collapses.
227.

The Conspirators have an expertise in the world of finance and economics and control

that world and have used this expertise and control to manipulate the system to their advantage
and exploit the foundation of trust that Americans, and others around the world relied upon.
228.

The Conspirators knew the fiat system was a veritable ticking time bomb due to explode

at some point in the very near future and set up the Enterprise to control the collapse which will
fall when the Conspirators choose to pull the trigger.
229.

In an article entitled Wall Street Meltdown Failure of Central Banking System author

Kameel noted on 10/20/08 in The Edge:

The money meltdown observed in Wall Street is what monetarists have been
warning about for some time. What we are witnessing now is the failure of the
central banking system. The debt-based fiat monetary system with compounding
interest is simply unsustainable and the United States, occupying the pinnacle of
the capitalistic model, is being brought down by the inherent fallacies within its
own monetary system.
230.

Further validation of impending collapse is seen in the following quotation by

Daniel J. Pilla:
As the debt grows, governments interest burden grows with it. The more our tax
dollars are consumed by interest, the fewer dollars are available for discretionary
spending. Whats worse, more pressure is then exerted to use tax increases to fund
mandatory spending programs, such as Social Security, Medicare, and Medicaid.
We all know government spends more than it collects. The federal interest burden
exists simply because government must actually service its debt. Interest, of
course, represents the cost of debt service.

109

231.

Those who have held the highest offices in America throughout history have warned that

our fiat/debt-based monetary system was unsustainable.

The eyes of our citizens are not sufficiently open to the true cause of our
distress. They ascribe them to everything but their true cause, the banking
system; a system which if it could do good in any form is yet so certain of
leading to abuse as to be utterly incompatible with the public safety and
prosperity. The Central Bank (now the Federal Reserve) is an institution of the
most deadly hostility existing against the principles that form of our
Constitution.
Thomas Jefferson
I place economy among the first and most important virtues, and public debt as
the greatest of dangers. To preserve our independence, we must not let our rulers
load us with perpetual debt.
Thomas Jefferson

232.

The inevitability of economic collapse was poignantly illustrated in the Grace

Commission Report which President Reagan appointed in 1982 in an effort to eliminate

governmental waste. This distinguished panel of economists reported the following:

If fundamental changes are not made in Federal spending, as compared with the
fiscal 1983 deficit of $195 billion, a deficit of over ten times that amount, $2
trillion, is projected for the year 2000, only 17 years from now. In that year, the
Federal debt would be $13.0 trillion and the interest alone would be $1.5 trillion
per year. 100 percent of what is now collected (as taxes) is absorbed solely by
interest on the Federal debt and by Federal Government contributions to transfer
payments. In other words, all individual income tax revenues are gone before one
nickel is spent on the services which taxpayers expect from their
Government.(emphasis added) The President's Private Sector Survey on Cost
Control shows that no revenues are used to lower the national debt while
Congress keeps borrowing against it. It has to go up. And with the use of
compound interest, it must rise exponentially.
233.

If 100 percent of what was collected as revenue was absorbed solely by interest on the

Federal debt in 1982 that interest could only grow exponentially with each successive year even
if the national debt were not to increase. As illustrated in a Bell Curve, the interest required to

110

service the national debt eventually exceeds all revenue the government takes in thus causing it
to implode. The best and brightest Conspirators were keenly aware of this fact.
THE CREATION OF MONEY THE FRACTIONAL RESERVE BANKING SYSTEM
234.

In order to understand the workings of the Enterprise one must understand how money is

created, and as such, can be manipulated. In a fiat/debt-based fractional reserve monetary

system, money is created through debt. For example: When a borrower takes out a loan for
$100,000, the FED loans [hits a computer button which magically sends] $1,000,000. or 10
times that amount to the lender which in turn creates new money. Out of the $1 Million,
$100,000, or ten percent is loaned to the borrower, ten percent is retained by the bank as its
reserves and the 80% remaining is given to the bank to lend or invest.
235.

A lowering of interest rates entices people to take out loans and speculate thus expanding

the amount of currency in circulation. The downside of creating additional currency is inflation
for as the present money is added unto, the value of the present monetary supply is diluted.
236.

To effectively implement the Enterprise and simultaneously keep others in the dark the

Conspirators created a convoluted language called economics (quantitative easing, for

example) as author Trace Mayer explains in the following:
Monetary science, finance and economics are mired in a convoluted language.
Economics experts propagate multiple terms and multiple definitions for those
terms. This quagmire hinders the ability of individuals outside the economic elite
to reach reasonable conclusions. Because the current system is inherently
unsound, unstable and unethical, those who perpetuate it must attempt to keep
those it abuses in ignorance, ensuring they are confounded and misdirected from
the true issues.
THE DEBAUCHING OF THE CURRENCY

111

237.

To ensure the overarching goal of the Enterprise to maintain power and control of the

monetary system, the Conspirators sought to control its collapse but to do so the Conspirators
had to maintain an absolute stranglehold on the American economy.
238.

A multi-pronged attack was engineered and waged by the Conspirators which included

the debauching of the currency. Under the guise of helping the economy, the Conspirators
implemented a tactic known as Quantitative Easing which debauches the currency through the
non-stop printing of money which effectively dilutes the value of the present money resulting
dollars that buy less and less and the public working harder and harder to make ends meet.
The surest way to overthrow an existing social order is to debauch the
currency.
Vladimir Lenin

(1870-1924)

By a continuing process of inflation, governments can confiscate, secretly and

unobserved, an important part of the wealth of their citizens....while the process
impoverishes many, it actually enriches some. There is no subtler, no surer means
of overturning the existing basis of society than to debauch the currency. The
process engages all the hidden forces of economic law on the side of destruction,
and does it in a manner which not one man in a million is able to diagnose.
John Maynard Keynes
(18831946) British Economist 1919-Economic Consequences of Peace

DISEMPOWERING THE MIDDLE-CLASS

CREATION OF THE 2008 FINANCIAL CRISIS
239.

THROUGH

THE

INTENTIONAL

To ensure the success of the Enterprise, the Conspirators sought to disempower

the Middle-Class for this powerful class with its potentially loud and influential voices of
dissent whose sheer numbers far outweigh the .0001% of the Conspirators could derail the
Enterprise, whereas a disempowered destabilized Middle-Class struggling to make ends meet is
so focused on survival, it is far easier to manage.

112

240.

To eviscerate the wealth and power of the Middle-Class the Conspirators

engineered the 2008 Financial Crisis and its resulting Depression.

241.

The Conspirators attack on the Middle-Class began in the late 1970s and extends to the

present day through unemployment and underemployment which the Conspirators achieved by
moving manufacturing plants, hence jobs, to third world nations with low-cost labor, and as a
result, many in the Middle Class became unemployed or were forced to work at far lower wages.
242.

The Conspirators schemed to create banking institutions that were so critical to the

financial infrastructure of our country (and the world), they would be too big to fail and would
therefore be bailed out by the American taxpayer thereby adding Trillions of dollars of
additional debt to the alleged National Debt.
243.

The Conspirators continued its slow but sure eradication of the Middle Class through

foreclosure and the loss of pension funds which continues to this day.
244.

To ensure the success of the Enterprise and stranglehold of the economy, the Conspirators

bank-rolled Congressional candidates and paid lobbyists Billions to control the outcome of
legislation. On April 29, 2009 Illinois Senator Dick Durbin stated: "the banks, hard to believe in
a time when we're facing a banking crisis that many of the banks created, are still the most
powerful lobby on Capitol Hill. And they frankly own the place." The Conspirators indeed own
the place.
245.

With control of the government, the Conspirators instructed their Congressional minions

to pass legislation which ensured that the largest corporations (now People) paid little to no
income taxes thus shifting that burden to the Middle Class.

113

SETTING THE STAGE FOR COLLAPSE: GAINING CONTROL OF THE ASSETS OF

EARTH
246.

To ensure the Common Plan of continued power and control, the Conspirators had to gain

control of all commodities are essential to life on Earth, and to do that the Conspirators covertly
gained control of the corporations of the world as shown in the following Swiss Study.
PROOF OF A WORLDWIDE INTERLOCKING DIRECTORATE (paraphrased from an
article written by David Wilcock)
Three scientists from the Swiss Federal Institute of Technology in Zurich found
conclusive proof (in 2012) that the world is being run by a vast interlocking
directorate. An armada of supercomputers utilizing the Orbis database took data
from a list of 43,060 TNCs [Trans-National Corporations] from a sample of about
30 million economic factors worldwide. The scientists found, according to the
OECD [Organization for Economic Co-operation and Development], that a large
portion of control flows to a small, tightly-knit core of financial institutions, an
economic super-entity composed of 1,318 companies in direct control of many
corporations that earn 20 percent of the worlds wealth. These 1318 [corporations]
appear to collectively own, through their shares, the majority of the world's large
blue chip and manufacturing firms. The "core" also appears to own and control
the stock in a majority of all the largest companies in the world, the profits of
which add up to an additional 60 percent of global revenues.
Moreover, within the 1,318 corporations there are 737 top holders which have
accumulated 80% of the control over the value of all TNCs in a closed, central
network. And within these 737 companies lies a super-entity composed of 147
corporations of which 75 percent are financial institutions. Multiple
investigators outside the Swiss Study have concluded that these financial
institutions are the private banks that run the privately-held, for-profit Federal
Reserve.
The following list of the 50 companies shows the Rank of the company, the
Economic Actor Name, a two-digit Country code, a NACE Code, their Network
Position, and their Cumulative Network Control (TM, %) The lower the
Cumulative Network Control number on the far right, the higher the amount of
power this corporation has thus, Barclays Bank is the most powerful corporation
in the network based on the Swiss analysis.
1 BARCLAYS PLC GB 6512 SCC 4.05
2 CAPITAL GROUP COMPANIES INC, THE US 6713 IN 6.66
3 FMR CORP US 6713 IN 8.94
4 AXA FR 6712 SCC 11.21

114

5 STATE STREET CORPORATION US 6713 SCC 13.02

6 JP MORGAN CHASE & CO. US 6512 SCC 14.55
7 LEGAL & GENERAL GROUP PLC GB 6603 SCC 16.02
8 VANGUARD GROUP, INC., THE US 7415 IN 17.25
9 UBS AG CH 6512 SCC 18.46
10 MERRILL LYNCH & CO., INC. US 6712 SCC 19.45
11 WELLINGTON MANAGEMENT CO. L.L.P. US 6713 IN 20.33
12 DEUTSCHE BANK AG DE 6512 SCC 21.17
13 FRANKLIN RESOURCES, INC. US 6512 SCC 21.99
14 CREDIT SUISSE GROUP CH 6512 SCC 22.81
15 WALTON ENTERPRISES LLC US 2923 T&T 23.56
16 BANK OF NEW YORK MELLON CORP. US 6512 IN 24.28
17 NATIXIS FR 6512 SCC 24.98
18 GOLDMAN SACHS GROUP, INC., THE US 6712 SCC 25.64
19 T. ROWE PRICE GROUP, INC. US 6713 SCC 26.29
20 LEGG MASON, INC. US 6712 SCC 26.92
21 MORGAN STANLEY US 6712 SCC 27.56
22 MITSUBISHI UFJ FINANCIAL GROUP, INC. JP 6512 SCC 28.16
23 NORTHERN TRUST CORPORATION US 6512 SCC 28.72
24 SOCIT GNRALE FR 6512 SCC 29.26
25 BANK OF AMERICA CORPORATION US 6512 SCC 29.79
26 LLOYDS TSB GROUP PLC GB 6512 SCC 30.30
27 INVESCO PLC GB 6523 SCC 30.82
28 ALLIANZ SE DE 7415 SCC 31.32
29 TIAA US 6601 IN 32.24
30 OLD MUTUAL PUBLIC LIMITED COMPANY GB 6601 SCC 32.69
31 AVIVA PLC GB 6601 SCC 33.14
32 SCHRODERS PLC GB 6712 SCC 33.57
33 DODGE & COX US 7415 IN 34.00
34 LEHMAN BROTHERS HOLDINGS, INC. US 6712 SCC 34.43
35 SUN LIFE FINANCIAL, INC. CA 6601 SCC 34.82
36 STANDARD LIFE PLC GB 6601 SCC 35.2
37 CNCE FR 6512 SCC 35.57
38 NOMURA HOLDINGS, INC. JP 6512 SCC 35.92
39 THE DEPOSITORY TRUST COMPANY US 6512 IN 36.28
40 MASSACHUSETTS MUTUAL LIFE INSUR. US 6601 IN 36.63
41 ING GROEP N.V. NL 6603 SCC 36.96
42 BRANDES INVESTMENT PARTNERS, L.P. US 6713 IN 37.29
43 UNICREDITO ITALIANO SPA IT 6512 SCC 37.61
44 DEPOSIT INSURANCE CORPORATION OF JP JP 6511 IN 37.93
45 VERENIGING AEGON NL 6512 IN 38.25
46 BNP PARIBAS FR 6512 SCC 38.56
47 AFFILIATED MANAGERS GROUP, INC. US 6713 SCC 38.88
48 RESONA HOLDINGS, INC. JP 6512 SCC 39.18
49 CAPITAL GROUP INTERNATIONAL, INC. US 7414 IN 39.48
50 CHINA PETROCHEMICAL GROUP CO. CN 6511 T&T 39.78

115

The Swiss scientists stated: This remarkable finding raises at least two questions
that are fundamental to the understanding of the functioning of the global
economy. Firstly, what are the implications for global financial stability?
Recent works have shown that when a financial network is very densely
connected, it is prone to systemic risk [24, 16]. Indeed, while in good times the
network is seemingly robust, in bad times firms go into distress simultaneously.
This knife-edge property [25, 26] was witnessed during the recent financial
turmoil [in the Lehman Brothers collapse of 2008].
Secondly, what are the implications for market competition? Since many TNCs in
the core have overlapping domains of activity, the fact that they are connected by
ownership relations could facilitate the formation of blocs, which would hamper
market competition [14].
Remarkably, the existence of such a core in the global market was never
documented before and thus, so far, no scientific study demonstrates or excludes
that this international super-entity has ever acted as a bloc. However, some
examples suggest that this is not an unlikely scenario.
For instance, previous studies have shown how even small cross-shareholding
structures, at a national level, can affect market competition in sectors such as
airline, automobile and steel, as well as the financial one [14,13].
This is the first time a ranking of economic actors by global control is presented.
Notice that many actors belong to the financial sector This means that they do
not carry out their business in isolation but, on the contrary, they are tied
together in an extremely entangled web of control. This finding is extremely
important since there was no prior economic theory or empirical evidence
regarding whether and how top players are connected. Finally, it should be noted
that governments and natural persons are only featured further down in the list.
Our results show that, globally, top holders are at least in the position to exert
considerable control, either formally (e.g., voting in shareholder and board
meetings) or via informal negotiations.
http://www.newscientist.com/article/mg21228354.500-revealed--the-capitalistnetwork-that-runs-the-world.html
247.

Proof that the aforementioned "informal negotiations" are taking place was seen in the

Conspirator-led LIBOR rate-rigging Scandal.

THE RIGGING OF LIBOR

116

In June 2012, a scandal ensued when it was revealed that major banks
particularly Barclays, UBS, Rabobank, and the Royal Bank of Scotland were
manipulating LIBOR interest rates to fraudulently boost their profits.
LIBOR, an acronym that stands for London Interbank Offered Rate, is a
benchmark interest rate derived from the rates that major banks charge each other
for loans in the London interbank market. LIBOR is used as a reference rate for
trillions of dollars of commercial and consumer loans, other financial products
across the globe and for derivatives a market dominated by big banks. Traders at
numerous banks colluded with one another to fraudulently manipulate the LIBOR
to boost profits on their derivatives positions.
Banks hold large notional amounts of derivatives and loans which are impacted
by even minuscule changes in the LIBOR which can equate to millions of dollars
in profits or losses. Citigroup stated that it would have generated $936 million in
net interest revenue in the first quarter of 2009 if interest rates fell by 25 basis
points or .25 percentage points, and $1.935 billion if rates fell by 1 percent.
Instant messages from a trader at Barclays surfaced during the LIBOR scandal
investigations and stated that traders could earn a couple of million dollars for
every .01 percent that LIBOR was manipulated in their favor.
The derivatives market is a zero-sum game where there is a loser for every
winner, thus the fraudulent profits that banks and traders earned from
manipulating the LIBOR came at the expense of other unwitting parties that were
on the other side of their trades. Many of the losing counterparties were not
savvy speculators or banks, but U.S. municipal governments that lost
approximately $10 billion on their derivative hedges, as well as homeowners who
paid higher mortgage rates as a result of the manipulations.
EVENTS WHICH SET THE STAGE FOR THE 2008 FINANCIAL CRISIS
248.

Although the Conspirators were well aware of the future collapse of the currency

in the 1970s and began to enact steps to move companies overseas at that point, they
aggressively laid the groundwork for collapse in the 1990s beginning with the merger of
Citibank and Travelers Insurance in 1998.
249.

This merger violated the Glass-Steagall Act enacted in 1934 to control speculation

of the exact nature of what has transpired over the last decade, so the Glass-Steagall Act was
repealed which effectively removed the separation that previously existed between Wall Street

117

investment banks and depository banks.

250.

In another integral element of the Enterprise, the privately-held investment banks on Wall

Street became publicly-held in 1998 thereby shifting any risks taken by these investment firms to
the shareholders of those companies. As a result of this paradigm shift, compensation and salaries
rose meteorically on Wall Street and along with those salaries, the disintegration of values,
morals, integrity, conscience and responsibility.
THE SET-UP: THE FICTITIOUS SECURITIZATION OF MORTGAGE LOANS
251.

From the time of the Great Depression until 1999, the conversion of loans into MBS

was illegal. The repeal of Glass-Steagall in 1999 by the Gram-Leach-Bliley Act opened the door
for the securitization of mortgage loans - the vehicle the Conspirators employed to strip Investors
of their wealth, decimate the pension funds of the Middle Class and steal their homes through
foreclosure.
252.

MBS representing approximately 5000 mortgages were pooled in a Trust, and converted

into securitized instruments which created a Collateralized Debt Obligation (CDO) where
pieces of the pool were sold as bonds to investors all over the world.
253.

To ensure the success of the Enterprise the Conspirators needed a vast number of dubious

mortgage loans which would later serve as a lynch-pin, for when the Conspirators raised interest
rates the real-estate bubble would burst which would then catalyze the default of these dubious
mortgages which would trickle up to mortgage loans with sizable equity as real estate prices
plummeted. The defaults would in turn trigger the payout of derivative insurance which
Warren Buffett stated were weapons of mass economic destruction.

118

254.

To create this essential lynch-pin laws were enacted in the Bush and Clinton

administrations which opened the door to a new class of borrowers, sub-prime borrowers, who in
the past were unable to secure mortgages because they did not meet industry-standard
underwriting guidelines designed to protect lenders from default.
255.

One of the new laws was the 1977 Community Reinvestment Act which made it illegal

for a bank not to grant a loan to a sub-prime borrower. Under the guise of helping low income
Americans achieve the American dream of homeownership, people with questionable
qualifications were now being set-up as pansies for they could now obtain a mortgage.
THE CREATION OF THE REAL-ESTATE BUBBLE
256.

The Conspirators chose real estate to inflate their bubble because, as FED Chairman, Ben

Bernacke stated in 2005 amid warnings of a bursting real estate bubble: Historically, real estate
has never dropped in value and therefore there is no bubble - despite the fact that irrefutable
evidence existed to the contrary.
257.

To lure borrowers, speculators, or anyone breathing into the bubble, the Fed lowered

interest rates from 6.5% to 1.25% in 2002 which turned on the pump of mortgage loans to full
throttle and began to inflate the real estate bubble.
The Federal Reserve definitely caused The Great Depression by contracting the
amount of currency in circulation by one third from 1929 to 1933.
Milton Friedman

258.

Nobel Prize winning economist and Stanford University Professor

These low interest rates were intentionally manipulated to entrap unwary borrowers into

the Conspirators real estate bubble thereby flooding the market with homebuyers which resulted
in home prices doubling from 1996 to 2006.

119

THE CREATION OF LOANS DESIGNED-TO-FAIL

259.

To further entice borrowers and inflate the bubble, the Conspirators created new easy-to-

obtain mortgage products: no-document loans, stated income loans, 100% of purchase loans,
and adjustable rate mortgages, to name a few, which allowed borrowers to obtain loans under
suspicious circumstances. Lenders offered teaser interest rates of 1.75% for a specified
amount of time which delayed the onset of a higher true payment which would go into effect at a
later date. In other words, mortgage payments would dramatically increase if interest rates rose,
which is exactly what the Conspirators intended.
260.

Illinois Attorney General Lisa Madigan in her investigation into Countrywides

wrongdoings stated the following: Countrywide used egregiously unfair and deceptive lending
practices to steer borrowers into loans that were destined to fail.
THE STRAWMAN MBS TRUSTS
261.

MBS Trusts were set up as a Strawman - empty shells designed to rob investors of their

investments [typically the pension funds of the middle-class], collect derivative insurance on the
loans the Conspirators designed to fail, acquire the alleged toxic loans in settlements for
pennies on the dollar from the MBS Trusts, and then after the loans had been paid off multiple
times, steal the homes of Americans through foreclosure.
262.

In re: Horace v. LaSalle Bank, Re: Alabama No. 3:08cv1019-MHT (WO), US District

Court, M.D., Eastern Division, February 17, 2009, it was ruled:

Since no assignment to date has been recorded, now exists a case whereby
both Washington Mutual a/k/a JP Morgan Chase and LaSalle Bank as Trustee
conspired to deceive the certificate holders into thinking that all mortgages

120

have been securitized and the security instruments have been assigned to the
Trustee at the time the certificates were issued when in fact they have not.
This is a deceitful and fraudulent act whereby the certificate holders are
unsecured on the outset and leaves opens the possibility of double selling the
certificates abroad. Furthermore, this act represents a violation of the PSA and
prospectus as registered with the Security Exchange Commission and IRS
REMIC code possibly making any future assignments to the Trust voidable.
263.

According to the FCIC report, the Trusts were never set up nor registered as Trusts. As a

result, the promissory notes were never properly obtained by the trusts and the mortgages never
obtained nor recorded or assigned. The FCIC Report stated that the banks failed to convey the
mortgages to the MBS Trusts as required by the governing documents of the MBS Trusts.
*See The January 2011 FCIC report at FCIC.law.Stanford.edu/report
264.

The elaborate MBS con began with Wall Street Investment banks offering Mortgage-

backed bonds to Investors based upon specific criteria. A pool of loans was divided into levels or
tranches according to their loan to value (LTV), the credit score of the borrower, etc. The
highest tranches carried the lowest risk and paid the lowest interest rate in a waterfall-like
payment allocation and were paid first whereas the lower tranches, while paying a higher rate of
interest, carried the highest risk and thus were paid last.
265.

Investments were made in the MBS based on a prospectus, (i.e. sales pitch) which was

required to be filed with the SEC along with a PSA, the governing documents of the Trust,
which must also be publicly filed. The only purpose for the PSA is for the administration and
distribution of funds to the investors and the obligation of the Trustee in administering the
MBS. The investors who put up the money for the MBS and who were supposed to receive the
MBS Certificates or Bonds, are not parties to the PSA.

121

266.

The PSA sets forth what happens after the mortgages are bundled together, but also sets

forth a Cut-off Date, the date which all mortgage loans in the MBS Trust must be identified in
the SEC-required list of mortgage loans.
THE SEC FILING OF 15-15D - CONCEALING THE ACTIVITIES OF THE TRUSTS
267.

Multiple owners of the same loan would never that others owned the same loan as the

Conspirators had meticulously planned the Enterprise so no one would be able to penetrate the
veil of MERS nor have access to MBS Trust activities. Three to four months after the Trusts
closing date the Conspirators filed a 15-15D Notice with the SEC. This notice immediately
suspends the obligation to file reports with the SEC thus concealing the activities of the
Strawman trust and preventing the prying eyes of Foreclosure Defense litigants to discover the
Truth.
268.

In the instant case, the CWALT Trust closed on September 27, 2007 and filed its 15-15d

on January 24, 2008 not even 4 months later. EXHIBIT 37 -15-15D

269.

The Con: The MBS Trusts pledged an oath with the SEC and the IRS that the Trusts were

mortgage asset pass through entities which prohibits the Investors to own the mortgage loan
assets. However, the PSA requires that the Trustee take legal title to the loans.
270.

The MBS Investors invested in the stream of income derived from the mortgage

payments which allowed the MBS Trusts to qualify a REMIC, a tax avoidance measure created
in 1987 by the Conspirator Investment Banks as opposed to an ordinary Real Estate Investment
Trust (REIT) which was subject to taxation. To file as a REMIC and avoid taxation by the IRS
and state, a REMIC cannot engage in any prohibited action.

122

271.

When Countrywide, the Originator, Sponsor and Depositor [Countrywide Bank] of

Plaintiffs loan, sold Plaintiffs loan as a true sale to the CWALT Trust, the Trustee of the CWALT
Trust, the Bank of New York Mellon f/k/a The Bank of New York (BONY) must hold legal
title to the mortgage loan and take physical possession of the loan. As the aforementioned sworn
testimony of BAC employees stated: BAC, nor any of the Conspirator banks, took physical
possession of the Mortgage documents which means that the Trust would lose its tax-exempt
REMIC status pursuant to IRS Code 26 U.S.C. 860G(d)(1), which provides for a 100 percent
tax penalty on the non-complying cash flows but the Conspirators didnt care as they had no
skin in the game.
272.

Moreover, the Trustee, as the sole and exclusive legal title owner of the securitized loan,

must take physical delivery of the securitized notes and mortgages in order for the securitization
to be valid.
273.

The Con: A true sale of the loan was to occur when the Lender who allegedly owned

the note, sold it to another party for consideration = money. An offer would be made, accepted,
and compensation given to the seller in return for the note. The notes were to be transferred and
mortgages assigned to the Trustee with an Assignment made every step along the way with a
corresponding indorsement which would correspond with each transfer.
274.

The Con: The legal ownership of the loans was to be bankruptcy remote because

bankruptcy trustees have the right to seize assets from bankrupt entities, so the transfer to the
trustee must be clean, with no prior transferee in the securitization chain of title can have any
cognizable interest in the loans. For this reason, all securitization trusts are Special Purpose
Vehicles (SPVs) or Special Purpose Entity (SPE) created for the sole purpose of taking

123

legal title to the securitized loans. All MBS Trustees represent and certify to the MBS investors
that the Trust purchased mortgage loans as true sales in accordance with the Financial
Accounting Standards Board (FASB) 140.
275.

Although the Trusts were registered with the Securities and Exchange Commission

(SEC) and the Internal Revenue Service (IRS) as a REMIC, more often than not they were
not properly registered in any state of the union as a Corporation, Business Trust, or any other
type of corporate. Therefore, the REMIC Trust does not legally exist for purposes of capacity for
filing a law suit in Illinois or any other State.
276.

No Trustee of any securitized mortgage loan originated from 2001 to 2008 obtained legal

title or Financial Accounting Standards board (FASB) 140 control of any securitized loan, a
fact recognized in the FCIC Report, which is why the FASB Rule 140 was changed on
September 15, 2008 - the eve of the financial meltdown. The new rule revised the standards for
accounting in securitizations and other transfers of financial assets and collateral derecognizing
the financial assets when control has been surrendered [loans sold as true sales] and
derecognizing liabilities when extinguished, hence the Conspirators liability was extinguished
upon the true sale of the loans to the MBS Trusts.
277.

Because the MBS Trusts were set up as Strawman entities, the Conspirators had no need

to comply with the PSAs, thus all excuses proffered to the courts are Kabuki Theater designed to
further the Enterprise, those of: sloppy paperwork, losing the paperwork; retaining the
Notes in the Conspirators own vaults; creating fraudulent documentary evidence after the
fact; the use of robo-signors etc.

124

278.

In both the instant case and millions of other cases across America neither BAC nor any

of its Co-Conspirators can proffer legal receipt, possession, transfer, negotiations, assignment
and ownership of the borrowers original Notes and mortgages which results in imperfect
security interests and claims. Even if the attorney for the Servicer who is foreclosing on behalf of
a Trustee acting for the MBS Trust produces a copy of a note or even the alleged original, the
mortgage loan was not conveyed into the Trust under the requirements of the prospectus and the
PSA nor the REMIC requirements of the IRS. Therefore an MBS Trust cannot be considered a
"holder" of a loan and thus is not entitled to bring a foreclosure action as the Trust will never
have standing or be a real party in interest.
279.

Moreover, the Strawman Trust engaged in a plethora of prohibited activities and sold

the investors certificates and Bonds with phantom mortgage-backed assets which explains the
numerous Class actions filed by investors of the Trusts against the Conspirators who sold the
investments as REMICS as they were based on a bogus prospectus.
280.

In a new federal complaint filed by Blackrock MBS Investors v. HSBC, the Plaintiff

investors allege that the Trustee breached his duty. U.S. District Court Judge Shira Scheindlin
ruled on 6-3-2015 that: while Blackrock may amend, their causes of action were sufficiently
stated citing the routine abandonment of their [HSBCs] underwriting guidelines; the routine
fabrication of borrower and loan information; massive breaches of their [representations and
warranties]; and the engagement of predatory and abusive lending; and the common sponsors
pervasive disregard of prudent securitization standards. Although HSBC is relatively small, it
faces at least $34 Billion in damages relating to investor losses. However, other Conspirator
banks such as U.S. Bank could potentially face staggering losses having the potential to bankrupt
the Conspirator banks just what the Conspirators have planned as the bank bankruptcies will
125

catalyze the collapse of the economy and these lawsuits afford the Conspirators plausible
deniability.
281. Bank failures and the resulting collapse of the economy is the final objective of the Enterprise
however, to ensure that the public is financially eviscerated, the Conspirators had their
Washington minions enact the Bankruptcy Reform Act of 2005 whereby depositors are now
legally classified as creditors of the banks. Thus when a depositor deposits money in a bank,
rather than the bank acting as keeper of the depositors funds the depositors are now loaning
the banks their money. In the event a bankruptcy by the bank the first in line to be paid, over all
other creditors and depositors, are the derivatives, the Las Vegas styled bets, which, by design,
the banks hold excessively large derivatives positions in.
282.

And though the FDIC insures bank funds to a specific amount, in the event of a bank

bankruptcy, FDIC reserves will be quickly be exhausted due to the scale of losses in a
derivatives-led meltdown for today, mid-2015 outstanding derivatives are estimated to be over
$1 QUADRILLION, more money than the worlds GDP many times over.
283.

In the FCIC Report on page 156 (B) evidence exposed that even when the Conspirators

knew the MBS were faulty, instead of making amends for their mistakes, they plowed ahead
with the Enterprise indifferent to those left in its wake as described in the following excerpt:
JPMORGAN KNEW ITS REPRESENTATIONS WERE FALSE AND WAS
WILLING TO CAPITALIZE ON ITS UNIQUE KNOWLEDGE AT THE
EXPENSE OF INVESTORS
The evidence discussed above not only shows that the representations were
untrue, but also that JPMorgan knew, or was reckless in not knowing, that it was
falsely representing the underlying origination and securitization process and the
riskiness of the mortgage loans that collateralized the GSE Certificates. As
discussed above, such evidence includes:

126

The pervasive misrepresentations relating to basic information about the

underlying mortgage loans, such as Plaintiff occupancy and LTV ratios, and
knowledge of inaccurate and misleading credit ratings;
Third-party due diligence providers such as Clayton and Bohan informed
JPMorgan that significant percentages of loans in the pools did not adhere to
underwriting guidelines. For example, Clayton admitted that in the period from
the first quarter of 2006 to the second quarter of 2007, 27 percent of the mortgage
loans JPMorgan submitted to Clayton to review in RMBS loan pools were
rejected by Clayton as falling outside the applicable underwriting guidelines. Of
the 27 percent of mortgage loans that Clayton found defective, 51 percent were
subsequently waived in by JPMorgan without proper consideration and analysis
of compensating factors and included in securitizations such as the ones in which
Fannie Mae and Freddie Mac invested here. JPMorgans waiver of over half of
the defective loans shows that JPMorgan knew of or recklessly disregarded the
systemic failure in underwriting and the fraudulent misrepresentations in the
offering materials received by the GSEs.
BRIBING THE RATINGS AGENCIES
284.

MBS are always rated AAA by Moodys, Fitch or Standard & Poors to invoke a

sense of confidence, for large institutional investors can only invest in AAA-rated low-risk
investments. To ensure the AAA rating, the Conspirators sought to entice employees of the
Ratings agencies according to Michael Lewis The Big Short. By singling out the best and
brightest employees of the ratings agencies, the Conspirators encouraged these employees to
produce favorable ratings on the MBS by offering them (Ratings agency jobs were seen as low
level on Wall Street) extremely well-paying jobs if they produced AAA ratings. This scam
created a built-in bias to rate the MBS pools favorably despite contrary data from multiple
sources which indicated that sub-prime MBS were defaulting in droves and were in reality, a
high-risk investment.
MBS INVESTORS WERE THE TRUE LENDERS WHICH FUNDED THE LOANS
285.

After the MBS was rated the Investors money was pledged and collected before

127

the homeowner even applied for a loan, thus the MBS was created first.
286.

The Conspirators didnt care if the borrowers qualified for the loans as they had nothing

to lose as the Investors of the MBS had pre-funded the loans.

287.

No funds were borrowed from Countrywide as it was neither the lender of funds nor

the creditor as it purported in the contract between the Plaintiff and Countrywide. In reality
Countrywide acted in the capacity of an intermediary middleman/broker which loaned none of
its own funds. The Investors of the CWALT Trust were the true and rightful Lender of funds of
Plaintiffs loan which upon information and belief, were pre-funded by way of an MBS
prospectus with TBA (to be announced) funds. *See page 29
288.

Once the funds were secured from the MBS investors, they remained in a Trust

awaiting a loan application which specified the borrower and property's data which was then
matched with the underlying criteria as set forth in a MBS Prospectus. When a match occurred,
funds were directed to purchase that loan. And if a match did not occur, as in the case at bar,
employees at the Conspirator banks were offered incentives in the form of bonuss to falsify
the loan data so that the loan fit the criteria. If money was not an effective enticement for the
employees to violate the law, the employees were threatened with losing their jobs according to
the aforementioned testimony of confidential witnesses in the shareholders derivative complaint
- In re: Countrywide Fin. Corp. Deriv. Litig., Lead Case No. 07-CV-06293 (C.D. Cal. 2007).
*See page 67
289.

Each MBS Trust was required to keep a list of the individual loans they had

recruited for the MBS, which must be publicly recorded with the SEC, however, the SEC looked
the other way and did not require any proof that the loans actually existed or were possessed by
128

the MBS.
DERIVATIVES: WEAPONS OF MASS ECONOMIC DESTRUCTION
290.

The Conspirators Weapons of Mass Economic Destruction were Credit Default Swaps

(CDSs), which are nothing more than Las Vegas styled bets whose value is derived from,
in this case, mortgages which the Conspirators took out as insurance policies on the MBS
bonds. CDSs were a zero-sum bet; if one placed a bet (shorted in Wall Street parlance) on a
MBS tranche that held mortgages for $100 million, one would pay approximately $200,000. for
that policy, however, when, not if, the tranche failed, the policy holders would then be paid
minimally $100 Million!
291.

Unbeknownst to the borrowers, the billions of dollars spent to fund the soon-to-be-

toxic loans were expended to prime the pump for the larger objective of the Enterprise was to
drain the economy to a point of collapse through the payments of derivatives.
292.

Every facet of the Enterprise was integral to its overall success, and unregulated

derivatives were critical. However, an unanticipated situation arose which had the potential of
derailing the Enterprise. Brooksley Born, Chairman of the Commodity Futures Trading
Commission (CFTC- a federal agency which oversees the futures and commodity options
markets) is an expert in the field of derivatives and became alarmed when she analyzed the
potential destruction of the economy as a result of the unregulated derivative market. Born
lobbied Congress and President Clinton to give the CFTC oversight of off-exchange markets for
derivatives and on July 24, 1998 testified at a Congressional hearing where Conspirators Alan
Greenspan, Chairman of the Federal Reserve of the United States from 1987 to 2006; Larry
Summers, Secretary of the Treasury from 1999 to 2001; and Robert Rubin, Secretary of the
129

Treasury from 1995 to 1999 in 1996 exhibited unmitigated contempt as each vehemently
opposed Borns warnings of the potential destruction of the economy. (See the Oscar-winning
movie The Inside Job which clearly shows each man on the verge of a heart-attack.) The three
Conspirator Wall Street Titans accused Born of wanting to bring the economy of the United
States down rather than trying to protect it! Born had had enough of this absurd charade and
resigned as chairperson of the CFTC on June 1, 1999.
293.

Despite Borns premonitions, in December 2000 Congress passed the Commodity

Futures Modernization Act of 2000 which shielded credit default swaps from virtually all
regulation or oversight by both the CFTC and the SEC. According to the 2011 FCIC Report:
The enactment of legislation in 2000 to ban the regulation by both the federal and state
governments of over-the-counter (OTC) derivatives was a key turning point in the march toward
the financial crisis.
294.

On April 7, 2010 Born was to have her retribution. As a member of the Financial Crisis

Inquiry Commission, Born declared at a hearing that Greenspans tenure at the Federal Reserve
was an unmitigated failure to his face. Born went on to say that Greenspans agency failed to
prevent housing bubble, failed to prevent the predatory-lending scandal, failed to prevent the
activities that would bring the financial system to the verge of collapse, and failed to prevent
many of our banks from consolidating and growing to a size that are now too big or too
interconnected to fail. This outburst was highly unusual because Greenspan affords a degree of
respect on Capitol Hill, despite Borns accurate take of his many failures which, in respect to
the Enterprise, were successes as the 2008 Financial Crisis accomplished and is still
accomplishing what it intended to do: drain the economy of its wealth and set the stage for the
forthcoming economic collapse.
130

295.

Born may have been unaware that the derivatives which precipitated the 2008 Financial

Crisis were key elements of the Enterprise controlled by the Conspirators.

296.

Derivatives were purchased by MBS Trusts under the guise of protecting the assets of the

pool, to cover losses if a tranche were to reach a specific default percentage which, according to
the PSA, then liquidated that tranche.
297.

The Conspirators reserved the bottom tranche of the MBS pool which held the highest-

risk loans for themselves which ensured that when, not if, the defaults began, the Conspirators
would be first in line to collect on the derivative bets.
298.

The Conspirators authored the PSAs which stated that a Trust would slowly liquidate

from the bottom up. When a specific percentage of defaults occurred in the lowest tranche, that
tranche would fail, but the tranches successively above that tranche would still be viable until the
new bottommost tranche failed, and so on. This ensured that Investors who purchased the senior,
lowest-risk tranche would be paid regardless of the performance of the lower tranches until all
tranches failed.
299.

The failure of a tranche triggers a credit event which then triggers the payoff of

derivative insurance.
300.

A Kentucky RICO class action suit against MERS and the largest banks as Co-

Conspirators, alleges that the largest banks collected Trillions on derivative Contracts.
The Double and Triple Dip and Derivative Contracts: Most MBS/Trusts were
covered by an insurance policy, commonly referred to as a Derivative or
Collateral Contract. These Derivative Contracts are not recorded or regulated by
the SEC. Upon information and belief, the Defendants [Conspirators] have
attempted to receive distribution, fees or proceeds or have received distributions

131

from the liquidation of the borrowers homes, when the actual beneficiaries under
the homeowners loans, the shareholder/investors have been made whole by a
Derivative Contract. In other instances, the MBS has been closed months or
years prior. Funds collected from the loans allegedly within the MBS, are no
longer being paid to the investors, but are an unearned windfall to the servicer.
Likewise, the MBS/Trusts themselves became parties to Derivative Contracts.
Most times, the actual Derivative contract is for more, up to ten times (10x), the
face value of the MBS. More often than not, multiple insurance policies were
taken and traded on the MBS. The double dip or double compensation of the
MBS/Trustee, or Servicer is improper in its own right. The offense is patently
egregious when it is viewed in light of the fact that the Servicer has no standing to
foreclose, yet they came, and continue to come to the Courts with the fabricated
and forged documents.

301.

The Conspirators had bet heavily in this rigged game that the loans they had designed

to default would do just that for when the loans defaulted the Conspirators would earn trillions
of dollars on their bets.
302.

However, the Conspirators had one small problem: the insurance companies which

took the bets had to cover the bets, and if the derivative amount exceeded the companys actual
worth, the company would go bankrupt and the Conspirators would be left empty-handed. So,
AIG, the insurance giant, was set up to take the fall and had to be so integral to the economy that
it too would be bailed out by the taxpayers which is exactly what happened.
303.

In a February 7, 2010 New York Times article by Gretchen Morgenson and Louise Story

entitled Testy Conflict With Goldman Helped Push AIG to Edge, the following corroborates
that allegation:
Some financial analysts have argued that in calculating Goldman Sachs
government bailout, the total should include the $12.9 billion in government funds
that flowed from the New York Federal Reserve through AIG to Goldman Sachs.
Goldman Sachs was paid full-value for collateral calls on debt swaps it had made
with AIG, and received more of AIGs bailout money than any other firm. It also

132

received AIG bailout money through deals it had with Societe Generale, a French
bank that received $11 billion of the AIG bailout. According to a New York Times
analysis, before the government was forced to bail out AIG Goldmans demands
for billions of dollars from the insurer helped put it in a precarious financial
position by bleeding much-needed cash. AIG analysts believed that Goldman
Sachs had pushed other banks, including Societe Generale, to demand collateral
payments, an accusation Goldman Sachs denies. AIG disagreed that the securities
in dispute had fallen as much as Goldman Sachs claimed, but Goldman Sachs
refused to allow third parties to set a value on these securities. The Times reported
that The federal bailout locked in the paper losses of those deals for AIG. The
prices on many of those securities have since rebounded.
THE RISE IN MBS OVER-LEVERAGED WALL STREET FIRMS
304.

As more and more MBS were churned out, the risk to the Wall Street firms selling the

MBS grew greater and greater which many non-insiders on Wall Street found to be both
incredulous and irrational. As disclosed in the FCIC report, these investment firms overleveraged their respective companies to a high of 40:1, meaning 40 times the amount of their
own investment with (high-risk) MBS securities. The risk was clear: if anything were to go
wrong in the market, the investment company would fail - exactly what the Conspirators
intended as it provided a cover of plausible deniability.
305.

In a Congressional sub-committee investigative hearing regarding the 2008 Financial

Crisis, the following messages reveal the anomalous events occurring in the market:
From Edwin Chin regarding an article by Gillian Tett on 1-19-2007: Last week I
received an email that made chilling reading. The author claimed to be a senior
banker with strong feelings about a column I wrote last week, suggesting that the
explosion in structured finance could be exacerbating the current exuberance of
the credit markets, by creating additional leverage. The message read:I have
been working in the leveraged credit and distressed debt sector for 20 years and
I have never seen anything quite like what is currently going on. Market
participants have lost all memory of what risk is and are behaving as if the socalled wall of liquidity will last indefinitely and that volatility is a thing of the
past. I dont think there has ever been a time in history when such a large
proportion of the riskiest credit assets have been owned by such financially
weak institutionswith very limited capacity to withstand adverse credit events

133

and market downturns. Im not sure what is worse, talking to market players
who generally believe that this time its different, or to more seasoned payers
who privately acknowledge that there is a bubble waiting to burst but hope
problems will not arise until after the next bonus round."
He then relates the case of a typical hedge fund, two times leveraged. That looks
modest until you realize that it is partly backed by fund of funds money (which is
three times levered) and investing in deeply subordinated tranches of
collateralized debt obligations, which are 9 times levered. Thus every CDO bond
acquired is effectively supported by less than 20,000 euro of end investors capital
a 2% decline in the CDO paper wipes out the capital supporting it. The degree
of leverage at work is quite frankly, frightening, he concludes. Very few hedge
funds I talk to have got a prayer in the next downturn. Even more worryingly,
most of them dont even expect one.
there is, for example, a credit analyst at a bulge-bracket bank who worries that
rating agencies are stoking up the structured credit boom, with dangerously little
oversight. If you take the 3 appointed interpreters of investment grade, that
market folds up shop...and the non-trivial conflict of interest that these agencies
sit on top of as publicly listed, for-profit companies?
Another Wall Street banker fears that leverage is proliferating so fast, via new
instruments, that it leaves policy officials powerless. I hope that rational
investors and asset prices cool off instead of collapse, like they did in Japan in the
1990a, he writes, but if they do, monetary policy will be useless.
A JP Morgan analyst stated: it is how much unease and leverage is bubbling,
largely unseen in todays Brave New financial world.
MERS: A SMOKESCREEN TO HIDE THE CONSPIRATORS CRIMINAL ACTIVITIES
306.

To hide its crimes, maintain secrecy and separate the borrower from the investor, the

Conspirators created MERS, a smokescreen and secretive veil which allowed the Conspirators to
carry out the Enterprise unimpeded. The Conspirators established MERS to undermine and
eviscerate long-standing principles of real property law as MERS circumvents the lawful
requirement to record all documents pertaining to the beneficial ownership of real estate at the
county level. Hence, in a brazen move, the Conspirators created their own system without going
through the legislative process.

134

307.

MERS is owned by BAC and its Co-Conspirators: the country's biggest lenders,

lender associations, and other industry giants, including the Mortgage Bankers Association
of America, Fannie Mae, Freddie Mac, American Land Title Association, and various other
mortgage companies, title insurers, and mortgage insurers. In addition to capital contributed
by the shareholders, MERS has a committed line of credit from Bank of America, which is
guaranteed by the Mortgage Bankers Association of America, Fannie Mae, and Freddie
Mac.
308.

The Con: MERS describes itself as "an innovative process that simplifies the way

mortgage ownership and servicing rights are originated, sold and tracked. Created by the
real estate finance industry, MERS eliminates the need to prepare and record assignments
when trading residential and commercial mortgage loans."
309.

According to its website, www.mersinc.org:

MERS was created by the mortgage banking industry to streamline the
mortgage process by using electronic commerce to eliminate paper. Our
mission is to register every mortgage loan in the United States on the MERS
System.
Beneficiaries of MERS include mortgage originators, servicers, warehouse
lenders, wholesale lenders, retail lenders, document custodians, settlement
agents, title companies, insurers, investors, county recorders and consumers.
MERS acts as nominee in the county land records for the lender and servicer.
Any loan registered on the MERS System is inoculated against future
assignments because MERS remains the nominal mortgagee no matter how
many times servicing is traded. MERS as original mortgagee (MOM) is
approved by Fannie Mae, Freddie Mac, Ginnie Mae, FHA and VA, California
and Utah Housing Finance Agencies, as well as all of the major Wall Street
rating agencies.

135

310.

The Con: The Conspirators excuse for creating MERS was a desire to save

hundreds of millions of dollars by shortcutting the long-established requirements for

assignments and recording of mortgages, which are in place to protect the property rights of
borrowers/mortgagors, as well as subsequent purchasers.
311.

The MERS Integration Handbook Volume One laments the costs and hassles

of complying with the legal protections of private property rights established by law:
In today's mortgage banking industry, a costly, time-consuming and paper
intensive environment exists for all those involved in transferring and tracking
mortgage rights. Investors transfer mortgage ownership rights using the same
process as required by seventeenth century real property law. Note
endorsements, mortgage assignments, and satisfaction documents must be
prepared, verified, and delivered, and mortgage assignments and releases must
be recorded. This process is cumbersome and paper intensive, costing the
mortgage industry hundreds of millions of dollars each year.
312.

MERS claims to have "solved the problem" of complying with the

bothersome ''real property laws" which require that note endorsements and mortgage
assignments "must be prepared, verified, and delivered ... and must be recorded." According
to the MERS Integration Handbook Volume One:
In recent years, the mortgage banking industry has used information
technology to reduce costs for "back-office" and retail operations, but it
continues to use paper-based methods to record and track mortgage rights.
The tremendous amount of required manual intervention and paper processing
that currently exists also perpetuates significant inefficiencies in document
custody, loan and pool certification, and lien release processing activities.
Based upon benefits realized from registry systems
validation that benefits are also realizable from a
mortgage banking industry, representatives from
mortgage industry concluded that an industry utility
electronically track the ownership of mortgage rights.
136

in other industries and

registry system in the
all participants in the
should be developed to

MERSCORP, Inc., which owns and operates a national electronic registry

called the MERS System to track ownership and changes to ownership of
mortgage rights, and Mortgage Electronic Registration Systems, Inc., its
wholly owned and bankruptcy remote subsidiary which acts as the mortgagee
of record in the public land records and as nominee for the lender and its
successors and assigns, are referred to collectively as "MERS." When MERS
is the mortgagee of record, MERS eliminates the need for mortgage
assignments, thereby improving the process and reducing the cost to transfer
and track the ownership of mortgage rights and increasing the efficiency of
the lien release process.
313.

The repercussions of the creation of MERS and its real intent are enumerated in the

following excerpts taken from a March 23, 2015 Amicus Brief authored by the Legal Services
Center of the Harvard Law School and law professors from Harvard, Georgetown, Brooklyn Law
School, and the School of Law at Yeshiva University in re: The Appellate Court for the 3 rd circuit
in Montgomery County, Pennsylvania, Recorder of Deeds v. MERS, as an Appeal from the
Interlocutory appeal granted on September 8, 2014 under civil Action No. 11-CV-06968:
Pg 2: MERS is recorded as the mortgage holder in traditional county records, as a
nominee for the holder of the mortgage note. Meanwhile, the promissory note
secured by the mortgage is pooled, securitized, and transferred multiple times, but
MERS does not require that its members enter these transfers into its database.
usurps the function of county recorders and eviscerates the system recorders are
charged with maintaining.
Pg 3: MERS has no statutory basis, nor is it regulated by the SEC. MERSs lack
of statutory grounding and oversight means that it has neither legal authority nor
public accountability. By allowing its members to transfer mortgages from MERS
to themselves without any evidence of ownership, MERS dispensed with the
traditional requirement that purported assignees prove their relationship to the
mortgagee of record with a complete chain of mortgage assignments, in order to
foreclose. MERS thereby eliminated the rules that protected the rights of
mortgage holders and homeowners.
Pg 3: because MERS does not allow public access to its records, the full extent of
its systems destruction of chains of title and the clarity of entitlements to real
property is not yet known.

137

Pg 4: by making recording of mortgage assignments voluntary, and cloaking its

system in secrecy, it [MERS] has introduced unprecedented and perhaps
irreparable levels of opacity, inaccuracy, and incompleteness, wreaking havoc on
the local title recording systems that have existed in America since colonial times.
Pg 6: Through the simple but essential service of recording the name of a person
or entity that originated a mortgage loan, any party that subsequently sought to
purchase a mortgage note could ascertain that a seller possessed the interest he
claimed by verifying that his chain of title was complete and derived from the
original lender. Heekin, supra 5 at 190. The burden lay upon a party seeking to
foreclose to confirm the interest it claimed to hold by showing that same
unbroken chain of title.
Pg 9: MERS removes the incentives for its members to retain and aggregate the
legal documentation pertaining to such transfers for any given piece of property,
astronomically increasing both the likelihood of broken chains of title and the
difficulty of detecting fraudulent claims in the absence of documentation showing
the legitimacy of prior transfers.
Pg 10: When a subsequent holder of the note wishes to foreclose, MERS
ostensibly transfers the mortgage to that party. However, in actuality, that party
assumes the MERS identity to transfer the mortgage to itself. MERS operates by
allowing employees of mortgage servicers, originators, debt collectors, and
foreclosure law firms to enter their own names on a webpage that certifies them as
assistant secretaries or vice-presidents of MERS for a low fee. (Peterson, Two
Faces, supra p. 9, at 120; Robo-Signing, Chain of Title, Loss Mitigation, and
Other Issues in Mortgage Servicing: Hearing before the Subcommittee on
Housing and Comty. Opportunity of the H. Comm. On Fin. Servs., 111 Cong. 10304 (2010) (prepared statement of R.K. Arnold, MERSCORP Inc. President and
Chief Executive Officer). MERS itself has under fifty employees, but over 20,000
such secretaries and vice presidents, who are not employees of MERS, and do not
know simple facts about the company, such as where it is located or who its
president is.
Pg 11: before MERS was launched, the Senior Director and Director of Technology
Initiatives of the MBA wrote that [c]learinghouse rules will have to be carefully
developed to assure the protection of the mortgage rights of participants.
Slesinger and McLaughlin, supra 7 at 808. However, MERS did not develop
reliable clearinghouse rules to provide such protection. Rather, it has introduced
unprecedented opacity and incompleteness to the record of interests in real estate.
First, MERS makes it possible to keep transfers of a mortgage note private once a
mortgage is recorded under its name in a county registry, because access to MERS

138

is restricted to its members. The public has no way of identifying the actual owner
of a lien on a property and therefore, of holding lenders and investors accountable
for errors or fraud.
Pg12: MERS never requests or possesses proof that one of its members

in fact
holds the mortgage note or is the agent of the note holder when that member seeks
to foreclose. Rather, it allows its members certifying officer to assign the
mortgage at will, without reviewing the records to confirm that the party receiving
the transfer is entitled to enforce the mortgage. MERS Rules of Membership 2934; MERS Procedures 124-25
Pg13: Without judicially or statutorily recognized legal authority, they [The
creators of MERS] independently launched MERS as a private system, and
created legal theories to legitimate the system post facto. In Professor Joseph
Singers words, MERS allowed banks to be prolific about securitizing those
mortgages but complacent about formalizing mortgage assignments. The result
was that the formal records of mortgage transfers are often incomplete or
incorrect; the chain of title for many properties appears to be irretrievably
broken.
Pg18: MERS helped precipitate the foreclosure crisis and left homeowners
without recourse to protect their property rights.
MERS FACILITATED THE SECURITIZATION OF SUBPRIME LOANS:
Pg 19: mortgage industry insiders reported that the key development that led them
to use MERS was its indorsement by credit rating agencies such as Moodys,
Standard and Poors, and Fitch Investment.
Pg 21: MERS, as Christopher Peterson has written, was an important cog in the
machine that churned out the millions of unsuitable, poorly underwritten, and
incompletely documented mortgages that were destined for foreclosure in the
recent mortgage crisis. Peterson, Foreclosure, supra 4 at 1407.
Pg 21: MERS increased the costs of enforcing property rights and left
homeowners without recourse to challenge wrongful foreclosures.
MERSS UP-FRONT SAVINGS FOR FINANCIAL INSTITUTIONS THAT
SECURITIZED MORTGAGES CAME AT THE EXPENSE OF CERTAINTY
AND ENFORCEABILITY OF PROPERTY RIGHTS.
Pg 22: When one compares these costs to the costs of record-keeping that the
139

industry targeted for elimination, $10 per recordation, amounting to around $30
per loan, seems a small amount to pay to protect a familys interest in the ability
to discover who owns their loan, who would execute a foreclosure proceeding
against them, and to challenge a party attempting to do so on the basis of mistake
or fraud.
Pg 23: It is practically impossible to track errors or detect fraud through the MERS
system both because MERS does not require that its members record the
necessary documentation and because MERS does not make its records available
to the public. Because MERS records are shrouded in secrecy, it is also
impossible to know just how incomplete or inaccurate MERS records are.
One survey of 396 foreclosure cases in six judicial foreclosure states found that
the plaintiff asserting the right to foreclose matched the identified investor in
MERS database only twenty percent of the time. Alan M. White, Losing the
Paper-Mortgage Assignments, Note Transfers and Consumer Protection, 24 Loy.
Consumer L. Rev. 468, 486 (2012). An audit in California, a non-judicial
foreclosure state, found that the beneficiary on the foreclosure sale deed only
matched MERSs investor field forty-two percent of the time. Id. at 487 (citing
Aequitas Compliance Solutions, Inc., Foreclosure in California: A Crisis of
Compliance 7 (2012)). This figure excluded cases where MERS did not disclose
an investor. Id.
Pg 24-25: In 2009, a Florida mortgage origination and servicing company called
Diversified Mortgage (Diversified) sued MERS over the uncertainty in ownership
of Florida mortgages registered on MERS. Diversified complained that MERS
may have allowed Diversifieds trading partners to list themselves as owners of
Diversifieds loans without permission from Diversified. Peterson, Two Faces,
supra p. 9, at131. Diversified claimed that when asked to produce a list of all its
trading partners that may have made this claim, MERS could not or refused to do
so, eventually became confusing and hostile, and demanded that Diversified
not attempt further contact with MERS. Id. at 132. Diversified then learned that
other third-party financial institutions had initiated foreclosure proceedings on
mortgages that Diversified believed it owned. Id. at 132-33.
Pg 27: MERS has largely replaced the formerly transparent public record of
mortgage interests with a partial, inaccurate and inaccessible private registry that
greatly increased the likelihood of fraud and litigation. *See full Brief of Amicus
Curiae at https://www.scribd.com/doc/265183090/Amicus-Brief

140

ELIMINATING THE REGULATORS

314.

To ensure the success of the Enterprise the Conspirators had to eliminate any potentially

problematic government regulators. According to the Oscar-winning documentary Inside Job,

the Conspirators had their minions lobby Congress which passed legislation that cut the
Enforcement Division of the SEC from 146 regulators down to 1!
APPRAISAL FRAUD
315.

The senior tranches in the MBS pool required low-risk loans, or those which appeared to

be low-risk. Loans can be manipulated to appear low-risk through low loan-to-value ratios
(LTV), i.e. the homes appraised value in relation to the loan amount which indicates that the
borrower has sizable equity or has enough equity not to walk away in the event of property
values plummeting, thereby ensuring that these borrowers would be more likely to make their
payments. To achieve low LTV ratios the Conspirators required high appraised values and to
garner those the Conspirators used specific appraisers and pressured them to falsely inflate the
appraised values, and blacklisted the appraisers who refused to violate industry standards.
316.

The Uniform Standards of Professional Appraisal Practice ("USPAP"), incorporated into

federal law, 12 C.F.R. 34.44, requires appraisers to conduct their appraisals independently:
"An appraiser must perform assignments with impartiality, objectivity, and independence, and
without accommodation of personal interests.

In appraisal practice, an appraiser must not

perform as an advocate for any party or issue." USPAP Ethics Rule (Conduct).
317.

In a civil complaint filed by a real estate appraisal company, Capitol West Appraisals,

LLC ("Capitol West") v. Countrywide, compelling evidence was provided which indicated that
Countrywide pressured real estate appraisers to artificially increase appraisal values on loans that
141

Countrywide originated. When Capitol West refused to falsely increase the appraisal values
from what it independently determined was appropriate, Countrywide placed Capitol West on its
"Field Review List," a Countrywide database which contains the names of appraisers whose
reports Countrywide will not use. According to the complaint, the effect of being placed on the
Field Review List was to be ''blacklisted;" to punish the appraisers who even attempted to
maintain the integrity and independence of the appraisal process.
318.

According to Capitol West, Countrywide created certain procedures to further enforce its

blacklisting of uncooperative appraisers. If a mortgage broker were to hire an appraiser that was
on the Field Review List, Countrywide used its own subsidiary, LandSafe, Inc. to perform the
appraisal and cut off the black-listed appraiser.
319.

Allegations in the whistleblower complaint filed in the Southern District of Texas,

Zachary v. Countrywide Fin. Corp., et al., No. 4:08-CV-01464, by Mark Zachary ("Zachary") (a
former Regional Vice President of Countrywide's joint venture with KB Homes) stated that
Countrywide knowingly relied on overstated, low-quality appraisals that failed to conform to
industry standards. In September 2006, Zachary informed Countrywide about the questionable
use of only one appraiser to perform all of the appraisals on KB Home properties being
purchased with Countrywide's loans. According to Zachary, Countrywide executives knew that
appraisers were being strongly encouraged to inflate appraisal values by as much as 6% to allow
homeowners to "roll up" all closing costs. According to Zachary, this practice resulted in
borrowers being "duped" as to the values of their homes and made loans more risky because
when values were falsely increased the LTV ratios were incorrect. Zachary also stated that
Countrywide loan officers simply threw away appraisals that did not support the values
Countrywide needed in favor of appraisals that supported a qualifying LTV ratio.
142

320.

The MBS investors were not made aware that the actual home values were less than the

inflated appraised values. According to Zachary, the inflated appraised values put buyers
''upside down" on their homes immediately after purchasing them; thus the borrowers owed
more than their homes were worth, and as a result the borrowers were set up to default on their
loans, with the MBS investors losing their investments.
THE BURSTING OF THE BUBBLE AND ITS DOMINO-EFFECT
321.

By 2004 the bubble was sufficiently inflated which initiated Phase 2 of the Enterprise:

The Bursting of the Bubble. To accomplish this task the Fed raised interest rates 14 times from
2004 to 2006 and as anticipated, the sub-prime borrowers began to default en masse thus
triggering the domino-effect where the following events ensued:
THE CHRONOLOGICAL EFFECT OF THE EVENTS WHICH SET THE STAGE FOR
COLLAPSE
322.

6-2007: The sub-prime defaults affected the hedge funds which held large portfolios of

sub-prime MBS which included Bear Stearns, (Bear) the smallest bank on Wall Street which
had massively overly-leveraged their MBS despite warnings from many astute traders. Although
Bear bailed out two of its hedge funds for $3.2 billion which had invested heavily in subprime
mortgages, by July 2007 both of these funds had little to no value and filed for bankruptcy.
Chinese lender Citic tried to rescue Bear paying $1 billion for a 6 percent stake in the firm, but
rescue was not a part of the Enterprise, as the fall of Bear constituted an integral domino
which had to fall for the Enterprise to succeed, so the offer was declined.
323.

8-3-07 - The secondary MBS market stopped trading most non-conforming securities as

difficulties began surfacing in AAA-rated MBS securities.

143

324.

8-6-2007 - American Home Mortgage collapsed when Countrywide disclosed to the SEC

that these disruptions in the secondary market could hurt Countrywide.

325.

8-9-2007 Speculation arose concerning Countrywides bankruptcy risk.

326.

8-10-2007 - A run on investment banks began as the secondary MBS markets shut down,

which, in turn, curtailed new mortgage funding.

327.

8-2007 The perceived risk regarding Countrywide MBS bonds rose. Credit rating

agencies downgraded Countrywide bonds 1-2 grades, some near junk status causing the cost to
insure bonds to rise 22% overnight precipitating bankruptcy rumors.
328.

8-2007 - Fifty mortgage lenders filed for bankruptcy Chapter 11. Countrywide was then

cited as a bankruptcy risk by Merrill-Lynch which advised clients to sell Countrywide stock.
329.

8-16-07 The secondary market for MBS declined further causing Countrywide to draw

$11.5 billion from 40 banks including Chase.

330.

8-17-07 The Fed, with its ability to produce money out of thin air, accepted $17.2

billion in re-purchase agreements for MBS to feign aid in liquidity to calm Wall Street. To the
naive unsuspecting public, this action, along with a host of others, provided plausible deniability
on behalf of the Conspirators.
331.

8-20-2007 The Fed waived banking regulations for Citigroup and BAC and agreed to

exempt each from rules which limited the amount federally insured banks are able to lend to
related brokerage companies, down to only 10% of the banks capital. Until that time, regulations

144

stated that banks with federally insured deposits should not be put at risk by brokerage
subsidiaries activities.
332.

8-23-07 CITI, BAC and 2 other banks received $500 million in 30 day loans from the

Fed. Countrywide obtained $2 billion from BAC in exchange for stock.

333.

10-17-07 - (MarketWatch) - The complicit SEC opened an investigation into stock sales

made by the chief executive Countrywide Financial Corp., Angelo Mozilo, who sold at least
$130.6 million in Countrywide stock in the first half of 2007 while simultaneously telling
investors that Countrywide stock was a great investment.
334.

11-26-07 - Countrywide stock plummeted to $8.64 per share.

335.

12-2007 - Bear Stearnss death knell was uttered when it posted a fourth-quarter loss of

$854 million which added even more momentum to the intentionally created bubble burst.
336.

1-11-08 - BAC offered $5.50 per share for Countrywide stock and purchased

Countrywide Financial for $4 billion in an all-stock transaction for 27% of its manipulated
depressed value. BAC knew there would be lawsuits but stated publicly that it had weighed
Short term pain v. Good deal for BAC stockholders. (JP Morgan acquired Washington Mutual
for $1.9 Billion when its assets were $321 Billion, thus giving Chase a bonus of $319.1 Billion!)
337.

3-11-08 An undisclosed investor on Wall Street placed a bet for $1.7 Million that Bear

would lose more than half its value in 9 days or less, thereby pushing Bear off the cliff. Bear
went down and the bet paid.

145

338.

3-2008 The Con: Fed chairman, Ben Bernanke, stated that if Bear were to fail, the

entire U.S. financial system would be threatened so Bernacke orchestrated a deal between JP
Morgan, backed by the Federal Reserve Bank of New York, to buy the firm for a scant $2 a
share.
339.

Ben Bernanke, head of the Fed; Tim Geithner, President of the New York Fed; and Hank

Paulson, Treasury secretary, suddenly recognized that the country was on the brink of
catastrophe. The collapse of Bear was engineered to create panic with rumors of financial
meltdown which the Fed responded to by taking dramatic sweeping action. The New York
Times, owned by the Conspirators, amplified the panic commenting that without the Feds
action, the Bear crisis "could have triggered potentially a collapse of the financial system."
340.

MBS derivatives stood at $45 Trillion, with many shorts betting that the MBS would

default.
341.

Spring 2008 - The scope of Bears investment in subprime and other toxic assets was

revealed. Although the Conspirators believed the public and judiciary would be incapable of
connecting the dots in their highly-complex Enterprise, they were wrong. In a Securities lawsuit
against Bear, a very astute Judge saw through their veneer of deceit and rejected Bears defense
that the suit was a classic fraud by hindsight case which alleged that Bear did not predict the
impact of the subprime mortgage crisis. The judge identified misconduct by Bears senior
officers and directors which was integral to Bears decline, and found that the competing
inference of market implosion had not been demonstrated to overcome the strong inference of
scienter developed by Plaintiffs. That intentional misconduct included the inflation of asset
values, the overestimation of Bears risk management protocols, the understatement of losses,

146

and the misleading denial of a liquidity crisis. The judge also allowed securities fraud claims
against accounting firm Deloitte based on the allegation that Deloittes audits of Bear were so
deficient that the audit[s] amounted to no audit at all. The opinion includes the Courts acerbic
observation that although Deloitte certified Bears financials in 2006 and 2007 without
discovering Bears true financial condition, JP Morgan discovered in the course of one weekend
the overvaluation of assets and underestimation of risk exposure in Bear Stearns' financial
statements.
342.

6-2008 Countrywide CEO Angelo Mozilos Friends of Angelo fraud was uncovered

where he made mortgages to members of Congress at much lower rates than to the public.
343.

6-25-2008 After numerous complaints from Illinois consumers, Illinois Attorney

General Lisa Madigans Consumer Fraud Bureau conducted an investigation into Countrywide
Home Loans thereby filing a lawsuit against Countrywide alleging fraud.
344.

7-1-08 BACs purchase of Countrywide was final creating an institution even larger

than before and now more capable of employing the threat of economic collapse to blackmail the
government.
345.

7-11-08 - Federal regulators seized Countrywide spin-off Indy Mac Bank.

346.

9-15-08 - To deter the public from connecting the dots and placing blame on the true

perpetrators, the Conspirators needed plausible deniability, a sacrificial lamb in the form of an
investment bank which would fail, for when the public witnessed the repercussions of that
failure, it could be coerced to believe that the other banks were simply too big to fail and

147

must be bailed out by the American taxpayer. And unless the banks were bailed within a few
days with no debate on Congresss part, they would undoubtedly bring down the entire economy!
From Wikipedia: LEHMAN BROTHERS GOES BANKRUPT: Lehman Brothers
borrowed significant amounts to fund its investing in the years leading to its
bankruptcy in 2008, a process known as leveraging or gearing. A significant
portion of this investing was in housing-related assets, making it vulnerable to a
downturn in that market. One measure of this risk-taking was its leverage ratio, a
measure of the ratio of assets to owners equity, which increased from
approximately 24:1 in 2003 to 31:1 by 2007. While generating tremendous profits
during the boom, this vulnerable position meant that a mere 3-4% decline in the
value of its assets would entirely eliminate its book value or equity. Since the
deregulation of Glass-Steagall of 1999, investment banks such as Lehman were
not subject to the same regulations applied to depository banks to restrict their
risk-taking. In 2008, Lehman faced an unprecedented loss due to the continuing
subprime mortgage crisis. Lehman's loss was a result of having held on to large
positions in subprime and other lower-rated mortgage tranches when securitizing
the underlying mortgages. (*no one purchased lower tranche MBS unless they
had insured them multiple times with CDSs) Whether Lehman did this because it
was simply unable to sell the lower-rated bonds, or made a conscious decision to
hold them, is unclear. According to Bloomberg, reports filed with the U.S.
Bankruptcy Court, Southern District of New York on September 16 indicated that
J.P. Morgan provided Lehman Brothers with a total of $138 billion in "Federal
Reserve-backed advances." The cash-advances by JPMorgan Chase were repaid
by the Federal Reserve Bank of New York.
347.

If the overarching objective of BAC and the Conspirator banks is to ensure the

continuation of their power through a controlled collapse of the economy, the Conspirator banks
need plausible deniability so the public will place blame on anyone but the true culprits. Thus,
BACs baffling purchase of Countrywide with its exposure to Countrywides vast liabilities fits
the Conspirator banks larger goal, for a multitude of litigation and settlements costs would
provide the smoke and mirrors needed to bankrupt BAC, thus blaming the collapse of the
economy on the lawsuit settlements.
U.S. SUIT OVER LOANS By Keri Geiger, Tom Schoenberg and Greg Farrell
Aug 20, 2014 (Bloomberg) Bank of America, trying to solidify its mortgage
business by snatching a stumbling competitor, completed the Countrywide
acquisition in July 2008. The purchase turned into an albatross. Bank of America
148

has absorbed almost $55 billion in fines and charges since 2010, mostly
attributable to Countrywide.
July 14, 2014: In an article written by author Ellen Brown entitled DID THE
OTHER SHOE JUST DROP? BIG BANKS HIT WITH MONSTER $250
BILLION LAWSUIT IN HOUSING CRISIS: For years, homeowners have been
outgunned and out-spent by the banking titans. In June [2014], some equally
powerful titans strode onto the stage. Investors led by BlackRock, the worlds
largest asset manager, and PIMCO, the worlds largest bond-fund manager, have
sued some of the worlds largest banks for breach of fiduciary duty as trustees of
their investment funds. The investors are seeking damages for losses surpassing
$250 billion the equivalent of one million homeowners with $250,000 in
damages suing at one time. The defendants are the so-called trust banks that
oversee payments and enforce terms on more than $2 trillion in residential
mortgage securities. They include units of Deutsche Bank AG, U.S. Bank, Wells
Fargo, Citigroup, HSBC Holdings PLC, and Bank of New York Mellon Corp. Six
nearly identical complaints charge the trust banks with breach of their duty to
force lenders and sponsors of the mortgage-backed securities to repurchase
defective loans. Why the trust banks failed to sue the lenders evidently involves
the cozy relationship between lenders and trustees.
Beyond the legal issues are the implications for the solvency of the banking
system itself. Can even the largest banks withstand a $250 billion iceberg? The
worlds largest banks are considered too big to fail for a reason. The fractional
reserve banking scheme is a form of shell game, which depends on liquidity
borrowed at very low interest from other banks or the money market. When
Lehman Brothers went bankrupt in 2008, triggering a run on the money market,
the whole interconnected shadow banking system nearly went down with it.
Congress then came to the rescue with a taxpayer bailout, and the Federal Reserve
followed with its quantitative easing fire hose. But in 2010, the Dodd Frank Act
said there would be no more government bailouts. Instead, the banks were to save
themselves with bail ins, meaning they were to recapitalize themselves by
confiscating a portion of the funds of their creditors including not only their
shareholders and bondholders but the largest class of creditor of any bank, their
depositors.
Theoretically, deposits under $250,000 are protected by FDIC deposit insurance.
But the FDIC fund contains only about $47 billion a mere 20% of the Black
Rock/PIMCO damage claims. Before 2010, the FDIC could borrow from the
Treasury if it ran short of money. But since the Dodd-Frank Act eliminates
government bailouts, the availability of Treasury funds for that purpose is now in
doubt.
When depositors open their online accounts and see that their balances have
shrunk or disappeared, a run on the banks is likely. And since banks rely on each
149

other for liquidity, the banking system as we know it could collapse. The result
could be drastic deleveraging, erasing trillions of dollars in national wealth.
When the Wall Street credit system fails, the government can start issuing its own
currency and credita power now usurped by private banks but written into the
US Constitution as belonging to Congress.
Credit default swaps, interest rate swaps, central bank manipulation, slicing and
dicing of mortgages, rehypothecation in the repo market, and the assorted other
fraudulent schemes are underpinning our systemically risky banking system
today.
Fraud is grounds for rescission, restitution and punitive damages. In the end,
however, it may be the titans themselves who take each other down, clearing the
way for a new phoenix to rise from the ashes.

348.

After the engineered fall of Lehman, a tsunami of fear washed over the economy

destroying everything in its path. This panic compelled unsuspecting investors to sell their
investments for pennies on the dollar, thus triggering a depression, or contraction in the money
supply.
349.

The $700 Billion in TARP (Troubled Assets Relief Program) funds provided to the too

big to fail banks to pay off toxic loans, instead paid off the CDS insurance bets, as the socalled toxic loans made up a small percentage of the losses thus saddling the American taxpayer
with paying the derivative bets off at 100 cents on the dollar - on mortgage loans destined to
default. And the TARP bail out only bailed out the Conspirator banks, not the borrowers who
were duped as their assets were still to be harvested.
350.

The $700 Billion TARP funds had the stated purpose of compensating the lenders and

investors for losses sustained due to the alleged default on residential mortgage loans which
meant that the loans were paid-in-full, thus, in most cases, the real parties in interest have
already been made whole, either by one or multiple CDSs and/or through the TARP.
150

351.

However, rather than the bailout being a mere $700 Billion, according to former

Goldman Sachs analyst Nomi Prins in her book It Takes a Pillage, the bailout totaled $13.3
Trillion which other authors have estimated at over $17 Trillion.
352.

6-2009 In a show of Kabuki Theater the complicit SEC filed civil fraud and insider

trading charges against Angelo Mozilo, the former chief executive of Countrywide who agreed
to pay a mere $108 million to settle federal civil charges that it overcharged customers and failed
to disclose Countrywides lax lending standards in a 2006 report.
353.

In August of 2009, Countrywide agreed to pay $600 million to settle shareholder lawsuits

over its mortgage losses - a mere pittance as compared to the amount the Conspirators were able
to steal as a result of the Enterprise.
THE SERVICER SCAM
354.

The Conspirators authored the sham PSAs and appointed themselves as Servicers of

the mortgage loans thereby granting themselves the authority to foreclose. Thus having no
money invested, the Servicers gain free houses which have already been paid multiple times.
ROBO WITNESSES
355.

Florida foreclosure defense attorney Tom Ice while defending a foreclosure action had a

group of documents inadvertently emailed to him from opposing counsel. Said documents
exposed an in-house strategy of prepared questions and answers to feed to unqualified witnesses
testifying in foreclosure cases against Florida homeowners.
356.

Among the documents was a script that was provided to witnesses which was designed to

crush homeowner defenses and allegations of robo-signors by financial services sector

151

employees who have no first-hand knowledge of mortgage details. These documents outlined
litigation tactics addressing foreclosure defenses, and strategies for debunking them. In one email
thread, a list of questions focused on default notices sent to homeowners to begin the foreclosure
process as those notices have proven challenging for lenders as they speak of sloppy paperwork,
incorrect mailing addresses and other administrative slipups during mortgage transfers, giving
homeowners real defenses at trial. In addition, answers were provided to a witness preparation
form, which Ice said "provides all the documents that will be exhibits at trial to the witness." Ice
further stated that: This is the exact opposite of the relationship that they pretend to have in the
courtroomthat the witness is the records custodian who culled through the bank's records and
provided the relevant ones to the attorney,"
357.

Courts consider testimony from servicers describing mortgage transfer documents to be

hearsay unless Servicer employees testify to a fact-checking process to verify the information in
the documents.
358.

Among the questions with the expected answers which follow:

Is this boarding process routinely followed by _____(servicer)? Yes.
Do you have any reason to believe the information provided by the prior
servicer is not trustworthy? No.
Are these records made at or around the time the event occurred by a
person with knowledge? Yes.

359.

Ice further stated: "My conclusion is that it's pretty clearthat they've [bank servicer

counsel] been telling clients what to say," Ice said. "These are listed out for the attorneys to ask
the witness, and the answers that the witness needs to give are right there. I find that to be
extremely telling. Rather than training the witness, they're teaching them what to say at trial

152

whether it's true or not." "My concern at the moment is the bank's conduct as it is disrupting
the ordinary judicial process." "These witnesses are not qualified to testify. They should not be
allowed to put these records into evidence. They are being told by these attorneys what to say in
answer to these questions."
THE ISDA - THE ACE THE CONSPIRATORS ARE HOLDING
360.

The Conspirators created a final ace they could play to ensure their power and control

of the monetary system and thus stranglehold of the world economy in the event they
encountered resistance The International Swaps and Derivatives Association or ISDA, an
association owned and controlled by the five largest Conspirator banks: JPMorgan Chase,
Citigroup, Bank of America, HSBC, and Goldman Sachs. The ISDA is said to be one of the most
powerful monetary entities in the world which, according to commodities expert Jim Sinclair,
has more power than governments; Its dominion spreads throughout the entire banking system,
determining whether one or more of the nearly $1 quadrillion in derivatives and credit default
swaps are paid out to holders in the event of a bank, sovereign nation, or securities default.
361.

Thus, if a default or write-down were to occur in Greek bonds which have been heavily

shorted that circumstance would trigger a credit event which would in turn catalyze the
payoff of the derivative bets which would then cause the collapse of the Conspirators own
banking institutions, thus resulting in the economic collapse of the worlds banking systems.
Hence, the worlds economy is now resting upon whether the 5 Conspirator banks declare a
default. In other words, the Enterprise is a House of Cards just waiting for a single card to fall
which is the perfect weapon against Humanity: the ability to pull the trigger on world-wide

153

collapse at any time thus having the power to blackmail those in government to do their
perpetual bidding.
B 1: STRUCTURE OF THE ENTERPRISE
362.

The Foreclosure Enterprise (the "Enterprise") is an association-in-fact within the meaning of

18 U.S.C. 1961(4) and 1962(c) and consisted of, but is not limited to the aforementioned
Conspirators listed in paragraph 188 with each participating in the operation or management of
the Enterprise.
363.

Members of the Enterprise are linked systematically and inextricably through contractual

relationships, financial transactions and coordinated activities, including similar understandings

concerning the selection, duties, performance and oversight of the prosecution of mortgage
foreclosure actions, as well as its choice of third-party vendors providing so-called default
management services.
B2. PURPOSE
364.

The evidence garnered from governmental investigations, MBS Securities

lawsuits, Amicus Briefs provided by the Harvard Law School and McDonnell Property
Analytics, the sworn testimony of numerous employees of the Conspirators, numerous news
articles, books etc., provides irrefutable proof that a group of Conspirators exist which are all
engaged and in concert in a massive multi-faceted Enterprise in every state in these United States
of America and the world. The Conspirators are a group of persons associated together in fact
for the purpose of carrying out an ongoing criminal enterprise which has been structured to
operate as a unit in order to accomplish its overarching goal and intent.

154

B3. ROLES
365.

As alleged above, at all material times, each of the Conspirators acted as the agent,

partner, servant, Joint Venturer and/or Co-Conspirator of each or all of the other Conspirators.
The Conspirators conspired to perpetrate the above-described unlawful, oppressive, and immoral
acts through unlawful, oppressive, and immoral means.
366.

In addition the following persons were instrumental in the instant case, not as members of

the Enterprise, but as passive participants which aided and abetted the Enterprise:
Rhoena Rice (Rice), at times relevant to this Complaint, was an employee and
agent of BAC.
___ ____________ (____________), at times relevant to this Complaint, was
an employee and agent of BAC predecessor, Countrywide.
Laurie Meder (Meder), at times relevant to this Complaint, was an employee
and agent of BAC predecessor Countrywides affiliate Countrywide Bank or
Recontrust.
B4. FUNCTION OF THE ENTERPRISE
367.

The function of the specific element of the Enterprise the instant case has focused upon

was to create a real estate bubble inflated by large number of mortgage loans which were
designed to fail and thus heavily shorted by the Conspirators as they were to default when the
Fed raised interest rates and thus burst the bubble. The Conspirators set-up bogus Strawman
Trusts and pre-sold these toxic loans as sham MBS to unwary investors multiple times in
order to trigger a credit event which would catalyze the payout of Trillions of dollars of the
shorted loans. Then the Conspirators falsely foreclosed millions of properties in America and
illegally acquired the properties and/or money for the furtherance of the Enterprise.
B5. COURSE OF CONDUCT OF THE ENTERPRISES AFFAIRS

155

368.

Throughout the Enterprise Period, BAC and its Co-Conspirators exerted control over the

Enterprise. In violation of 18 U.S.C. 1962(c), BAC and its Co-Conspirators conducted or

participated in the predicate acts and conduct of the affairs of the Enterprise as follows in
violation of 18 U.S.C. 1962(c):
a. Inducing borrowers into entering predatory high risk loans;
b. Falsifying borrowers loan applications to ensure the loans approval;
c. Changing loans from fully documented/verified to stated income liars
loans;
d.

Failing to underwrite the loans which place borrowers at risk of

foreclosure and losing their sizable investments;

e. Misrepresenting market conditions to assuage the fears borrowers might

have expressed;
f. Changing ARM indices to those which pay a higher rate:
g. Converting loans into securities and selling them on Wall Street as
Mortgage-backed Securities for a sum greater than said loan amounts;
h. Falsely claiming to be the Lender of funds when the loans had been presold and funded by Investors of the MBS Trusts;
i. Falsely claiming to be the owner of the mortgages when the MBS Trusts
had previously purchased the subject Notes;
j. Falsely claiming that MERS had the authority to convey the Notes when
the Notes carry no language to that effect;
k. Recording fraudulent mortgages, fraudulent Lis Pendens, fraudulent
affidavits; fraudulent allonges; fraudulent Notice of Defaults; and
fraudulent assignments in County Recorders offices across America
knowing the aforementioned documents are fraudulent;

156

l. Bifurcating the note from the mortgage through selling the Notes to MBS
Trusts while retaining the mortgage;
m. Failing to record all transfers of beneficial ownership in the properties
thereby breaking the chains of title and placing clouds on and slandering
borrowers titles;
n. Ordering the necessary collateral to foreclose which included blank
indorsements, assignments, allonges, affidavits which were created by the
Conspirators as documentary evidence after-the-fact;
o. Using unknown teams of employees to rubber-stamp blank indorsements
on Notes and presenting this documentary evidence after-the-fact to the
courts to convey standing;
p. Presenting documentary evidence after-the-fact to the courts as bona fide;
q. Having Conspirator employees execute assignments of beneficial interest
and affidavits while posing as Vice-Presidents of MERS;
r. Filing false foreclosure lawsuits on the basis of unsupported or untrue
assertions of fact, which are included in court filings and land records on
the basis of unsupported or untrue assertions of fact and are intended to
create the false appearance of legal standing.
369.

These predicate acts perpetrated by BAC and its Co-Conspirators constitute a malicious

campaign to fraudulently extort money and/or real property from and otherwise damage the
Plaintiff and others similarly-situated across America either currently in foreclosure or having
lost their homes to foreclosure through a litany of illegal acts, including mail fraud, wire fraud,
and obstruction of justice.
370.

These acts of racketeering, occurring within ten years of one another, constitute a pattern

of racketeering activity within the meaning of 18 U.S.C.A. 1961(5) and include the following:

157

a. selling designed-to-fail loans to unsuspecting MBS investors around the

world as AAA-rated low risk investments through the bribing of the ratings
agencies personnel to secure said false AAA rating;
b. creating the real estate bubble through the raising of interest rates, luring
unsuspecting borrowers into said bubble and then intentionally bursting
the bubble through the raising of interest rates 17 times from 2004-2007;
c. deliberately bursting the real estate bubble through the raising of interest rates
17 times from 2004-2007 which served to raise the payments of sub-prime
mortgages thereby making these payments unaffordable which catalyzed
millions of defaults, real estate prices to plummet thereby causing a dominoeffect whereby homeowners with significant investments in their properties,
such as in the instant case, were financially eviscerated;
d. obfuscating profits and fees that were not disclosed to the Investor who put up
the money, nor to the Borrower from accessing the true information;
e.

intentionally not following the dictates of the PSAs nor strict New York law
and retaining the previously sold Notes in direct violation of the PSAs thus
enabling the Conspirators to present said Notes for submission to the courts to
create the illusion of ownership and falsely foreclose on homes across
America;

f. creating false documents which were intentionally forged by persons with no

authority to execute and authenticate said documents to create the illusion of
ownership and the legal capacity from which to foreclose the borrowers
property;
g. creating MERS as a secret system of recording transfers of beneficial
ownership of real estate mortgages which ipso facto creates an automatic
cloud upon title.
h. participating in an association-in-fact Enterprise with the intent to entrap,
defraud, and wrongfully foreclose properties throughout these United States
without legal right through the false assertion that the Conspirators have/had
the right to foreclose upon the security interest in Properties and therefore
acquire title to real properties through deception and fraud for the profit of the
Enterprise;
i. falsifying borrowers loan applications to ensure their approval and
subsequent sale to MBS Trusts;
j. having knowledge that the market was going to collapse in 2008 but
fraudulently misrepresenting to borrowers that the market was favorable n
order to entrap them into the Enterprises scheme;

158

k. acting as lender of loan funds when the MBS Investors who pre-funded
and funded the loans were the true lenders;
l. placing unsuspecting borrowers into high-risk loans which would
undoubtedly default if interest rates were to increase based on their real
incomes;
m. intentionally creating loan products which were designed to fail such as
no-doc loans; stated-income loans; loans with teaser rates to entrap
borrowers into the real estate bubble;
n. incentivizing Conspirator employees to look the other way and sign up
any borrower, whether they qualified or not for a mortgage loan;
o. threatening Conspirator employees with the loss of their jobs if they
refused to overlook industry-standard underwriting guidelines, appraisal
guidelines and refused to be coerced by monetary bonuses;
p. encouraging AAA ratings of MBS by Moodys Fitch and Standard &
Poors employees when the data showed that the MBS were clearly not
AAA;
q. creating the securitization of loans and MBS Trusts as a Strawman Scam
designed to rob investors of their investments, borrowers of their property,
and gain untold Trillions of dollars through the payment of derivative
insurance;
r. using Conspirator influence in the U.S. Congress to reduce the size of the
SEC Regulators from 146 to one to ensure that no-one impeded the
Enterprise;
s. failing to underwrite borrowers loans which placed them at grave danger
in regards to foreclosure;
t. creating fraudulent documentary evidence after-the-fact which included
but is not limited to the creation of false assignments of beneficial interest,
the creation of affidavits where the affiants swear to having personal
knowledge of the cases they are testifying to when in reality they have no
personal knowledge of the circumstances they are attesting to as required
by the law; the false allonges; the false rubber-stamping of blank
indorsements which were/are placed by teams within the Conspirator
banks, to confer standing to themselves in order to falsely foreclose on
Borrowers real property in furtherance of the Enterprise;
u. employing Conspirator employees to pose as Vice-Presidents or other lofty
titles at MERS or other banks to fraudulently confer ownership of the
loans to the Conspirators when they had none;

159

v. creating MERS as a secretive veil to hide its crimes of selling borrowers

notes as bearer paper to multiple parties in multiple countries, and in
multiple tranches of the same MBS Trust;
w. retaining loans which were previously sold to MBS Trusts in Conspiratorowned vaults so the Conspirators could use them to foreclose on
borrowers real property;
x. utilizing Conspirator bank employees to notarize false assignments and
affidavits to confer standing to themselves and steal borrowers real
property;
y. refusing to acknowledge CFTC Borns warnings that unregulated
derivatives had the potential to collapse the economy because derivatives
were an essential part of the Enterprise and were created as a vehicle to
steal vast amounts of money;
z. creating the 2008 Financial Crisis to strip the Middle -Class of America of
its assets knowing the crisis would cause incredible harm and suffering to
average people;
aa. baiting borrowers into believing that they could apply for a loan
modification but only after they had defaulted for 90 days as a means of
distracting borrowers, giving them false hope but behind the scenes
accelerating the foreclosure process;
bb. creating the ISDA as its blackmail insurance that would allow the
Conspirators to collapse the economy at will if any governmental body did
not acquiesce to the Enterprise;
cc. recording false documents in county recorders offices;
dd. failing to follow the PSAs and deliver the notes to the investors;
ee. ignoring Discovery requests;
ff. ignoring Qualified Written Requests questions;
gg. failing to record conveyance documents as required by law at the county level
thus slandering borrowers titles;
ah. promising to modify borrowers loans but only if the borrower is in default for
3 months and then repeatedly losing the paperwork which was sent multiple
times while accelerating the foreclosure process;
ii. circumventing existing recording laws thus obfuscating the real parties in
interest who purchased the loans;
jj. encouraging high appraisals and black-listing those appraisal firms which
did not violate the law and inflate the appraisals;
160

kk. lowering interest rates and keeping them low knowing that a bubble would be
created as a result;
ll. instructing the courts to not question Conspirators standing under the
excuses: foreclosing on the properties as rapidly as possible will stabilize
the economy; the banks just made mistakes in their paperwork;
borrowers used their homes as ATM machines and received the loan
proceeds to buy their homes are the guilty parties who only want to use the
judicial system to get a free house! in order to justify the courts
conflicting emotions, gain the courts ire for the borrowers and sympathy
for the Conspirator banks thereby having the courts overlook the very real
violations of law the courts were there to uphold in blind fairness to both
parties;
mm. urging the courts to push foreclosures through as fast as they can while 20
million housing units in America are vacant and rotting and more and more
people are homeless today than ever before when statistics prove that
foreclosure creates the vicious cycle of more homelessness, despair, and crime
as well as causing real estate prices to plunge even further;
nn. causing the bankruptcies of 90% of all mortgage Originators which were in
business before 2008;
oo. intentionally creating TOO BIG TO FAIL banks and ensuring they grew
larger thus making them more critical to the economic stability of the
world;
aq. taking the privately-held investment banks on Wall Street public thereby
shifting risk to the shareholders of those companies.
ar. conspiring to encourage government prosecutors to allow the numerous
lawsuits against the Conspirators to settle but ensuring that no one was found
culpable and sent to jail;
as. committing acts of fraud on the courts, wire fraud, and mail fraud;
at. perpetrating racketeering activity which affects interstate commerce;

371.

The Conspirators benefit from their unlawful conduct and participation in the affairs of

the Enterprise as they hold the power and wealth of America and thus have prestige and fame
bestowed upon them.

161

372.

BACs role is a principal of the Enterprise; a member of the Enterprise, and a perpetrator

of racketeering activity.
373.

The Enterprise is a multi-faceted association-in-fact and as such, the Pattern of racketeering

as cited within this complaint is one element within the Enterprise which is one entity with one
common purpose.
EFFECT OF ENTERPRISE ACTIVITIES ON INTERSTATE/FOREIGN COMMERCE.
374.

The Enterprise engaged in and has affected interstate and foreign commerce,

including, but not limited to: the sale, transfer, and foreclosure of real property affecting
interstate commerce; the sale, transfer, and assignment of Notes in interstate and foreign
commerce; and the creation and sale of MBS securities in interstate and foreign commerce.
THE JUDICIARY IS AWAKENING
375.

Although the Enterprise continues unabated some members of the judiciary are

connecting the dots and horrified at the conclusion they must draw as was seen in Bankruptcy
Judge Drains ruling in Carrsow-Franklin Chapter 13 Bankruptcy #10-20010 Southern District
of New York after hearing the sworn testimony of John Kennerty, a former employee of Wells
Fargo. Kennerty corroborates the previous testimony of BAC employees and testified that Wells
Fargo employed teams to create fictional documentary evidence to be used in foreclosures all
over the country. In a 1-15-2015 Memorandum of Decision of Debtors Objection to the Claim of
Wells Fargo Bank, NA, Bankruptcy Judge Robert D. Drain opined the following in a footnote on
page 7 of his ruling:
What courts do not address, perhaps because the issue is not raised, is that the
authorized signing officers of MERS, if [Wells Fargo employee] Mr. Kennerty is
162

a typical example, never actually worked for that company, never had an
agreement with that company, never received a paycheck from that company and
were, in reality, really officers and employees of the lenders who were MERS
members, Dep. Tr. at 99102, and, therefore, that MERS could readily be used
as a vehicle for selfdealing and fraud. That is, under the guise of being a
MERS officer, an employee of Bank X could purport to transfer a mortgage
held by MERS as nominee for Bank Y without Bank Y knowing about it or
authorizing it with the exception of the fact that MERS had conferred signing
authority on employees of its members, including employees of Bank X. See
Culhane v. Aurora Loan Servs. of Nebraska, 826 F. Supp. 2d 352, 374 (D. Mass.
2011), decision reached on appeal, 708 F.3d 282 (first Cir. 2013) (Equally
troubling is the conflict of interest posed by these certifying officers wearing two
hats simultaneously: that of assignor (as agent for MERS) and assignee (as
employee of the note holder or its servicing agent).).
Judge Drain went on to say:
PG 3: (ii)how could Wells Fargo properly assert any rights under the July 12,
2010 Assignment of Mortgage when the person who signed the Assignment of
Mortgage from MERS in its capacity as nominee for Washington Mutual Bank,
FA to Wells Fargo was an employee of Wells Fargo (as well as of MERS), and
there was no evidence that Washington Mutual Bank, FA authorized MERS to
assign its interest in the Property to Wells Fargo?
PG 4: First, the Debtor contended that Wells Fargo lacked standing to assert the
claim because it admittedly did not own the loan upon which it was based yet
filed the claim on its own behalf, not as agent or servicer for Freddie Mac. See In
re Unioil, Inc., 962 F.2d 988, 992 (10th Cir. 1992) (proof of claim which did not
even indicate [claimants] representational capacity much less disclose the
identity of the true creditor, was defective under Fed. R. Bankr. P. 3001(b));
PG 5: July 12, 2010 Assignment of Mortgage to Wells Fargo executed on
behalf of the assignor/nominee by an employee of Wells Fargo. As alleged by the
Claim Objection, the blank indorsement was forged in response to problems with
the documentation of Wells Fargos right to enforce the Note in order to falsely
lead the Debtor and the Court to think that Wells Fargo had an independent
right to enforce a mortgage on the Property.
PG 8: the blank ABN Amro indorsement has been stamped on the last page of
the Note: So this is the second indorsement, the blank indorsement, then is a file
stamp? Its a stamp? Mr. Dunn: I have no personal knowledge, but it appears to
be.
PG 9: The Court: Well, it appears to be. It doesnt look like its a signature. Mr.
163

Dunn: It appears to be an inked stamp. The Court: Right. Mr. Dunn: The
indorsement in blank by ABN Amro does appear to have been applied by a
representative.).
PG 9: Debtor

also moved to reopen the record to take further discovery of Wells

Fargo based on the contention that she had unearthed withheld evidence
consisting of a Wells Fargo attorney foreclosure manual that supported her
contention that Wells Fargo had an indorsement team that improperly added
the blank indorsement to the Note.
PG 12: the Debtor disputes the bona fides of ABN Amros blank indorsement
that appears on it. if the indorsement is forged, it is not valid, and Wells
Fargo could not rely on the foregoing statutory provisions to establish that it is the
holder of the Note. See In re Pastran, 2010 Bankr. LEXIS 2237, at *10 ([S]ince
[claimant] is in possession of a promissory note endorsed in blank, it is, by
definition, a holder under section 3.201(a). This, of course, assumes that all of
the indorsements on the Note are authentic and authorized.).
PG 12: Wells Fargo has the ultimate burden of proof, the indorsements on the
Note, including ABN Amros allimportant blank indorsement by Margaret A.
Bezy, Vice President, are presumed to be authentic. In re Pastran, 2010 Bankr.
LEXIS 2237, at *1011 (unless and until the Debtor overcomes the
presumption by putting on evidence that supports a finding that the indorsements
on the Note were somehow forged or unauthorized.).
PG 16-18: [in] the deposition of John Kennerty, who no longer worked for
Wells Fargo, see Kennerty v. CarrsowFranklin (In re CarrsowFranklin), 456
B.R. 753 (Bankr. D. S.C. 2011), the foregoing evidence goes to show that the
blank indorsement, upon which Wells Fargo is relying, was forged. .. show[s] a
general willingness and practice on Wells Fargos part to create documentary
evidence, afterthefact, when enforcing its claims, WHICH IS
EXTRAORDINARY. (emphasis by the COURT)
THE COURT: PG 20: I conclude that the foregoing evidence cumulatively shifts
the burden to Wells Fargo under Tex.Bus. & Com. Code 3.308(a) and 1206(a)
to show the authenticity of the blank ABN Amro indorsement to establish its
status as a holder of the Note under Tex. Bus. & Com. Code 3.301(i) and
3.201(a). It constitutes substantial evidence that Wells Fargos administrative
group responsible for the documentary aspects of enforcing defaulted loan
documents created new mortgage assignments and forged indorsements when it

164

was determined by outside counsel that they were required to enforce loans.
PG 21:[Re: Mr. Kennertys testimony] Frankly, it does not appear that he
understood the difference between preparing legitimate assignments and
indorsements by Wells Fargo and improper assignments and indorsements to
Wells Fargo.
PG 22: It is more reasonable to infer from Mr. Kennertys testimony that,
instead, Wells Fargo was improving its own position by creating new documents
and indorsements from third parties to itself to ensure that it could enforce its
claims.
PG 22: Again, then, the burden should shift to Wells Fargo to show that it did not
forge the blank ABN Amro indorsement. Wells Fargo has not carried that burden.
PG 28: Washington Mutual Bank, FA would not have been able to enforce the
Note, either, without the blank indorsement. In other words, why would only an
outdated and unenforceable version of the Note have been logged in by Wells
Fargo when it took over the file in February 2007 if the only enforceable version
of the Note had in fact existed at that time (and should have existed since 2002)?
The far more likely inference, instead, is that when the loan was transferred to
Wells Fargo, the Note with the blank ABN Amro indorsement did not exist.
PG 28: Why would the Note with the blank ABN Amro indorsement have
appeared in Wells Fargos file only on December 28, 2009, twentytwo months
later? Wells Fargo has not provided an explanation, supported by evidence,
replying only that the question is irrelevant. All that matters, Wells Fargo
contends, is that the enforceable document was imaged into its records before the
Debtors counsel started raising questions about Claim No 11. What is, in fact, at
least equally pertinent, however, is that the loan went into default well before the
appearance of the blankindorsed Note in the file. Thus, [PG 29] Wells Fargo
would at that time have started to focus on the enforcement of its rights; thus
the default documents team would then have become involved; thus,
recognizing the absence of an enforceable Note, someone on Wells Fargos behalf
responsible for enforcement should then, consistent with Mr. Kennertys
testimony, have seen fit to add the necessary indorsement.
PG 29: It is reasonable to assume from the Debtors testimony, however, that
during this period she appeared less likely to be able to perform a new loan
modification agreement that would be acceptable to Wells Fargo (she
acknowledged that her financial condition worsened, she moved out of the
165

Property, and there was storm damage to it during that period, Trial Tr. at 99100),
and that those responsible for enforcing the loan would then have seen the need
for a blank indorsement on the Note and had it forged.
PG 29: In the light of the evidence submitted by the Debtor Wells Fargo has the
burden to show that the indorsement was genuine, and its only argument, based on
the timing of the appearance of the blankindorsed Note in the file record, does
not address the reasonable contrary inference that Wells Fargo forged it when the
Debtor became seriously in default. Nor is there any evidence that anyone at ABN
AMRO caused the original of the Note to be stamped and signed with the blank
indorsement, nor any evidence that anyone from Washington Mutual Bank, FA or
MERS on its behalf held that version, let alone forwarded it to Wells Fargo after
Wells Fargo took over the loan in February 2007. Wells Fargo has not satisfied its
burden.
PG 30: Wells Fargos failure to establish that it is the holder of the Note similarly
requires the Claim Objection to be granted and Claims 12 and 11 disallowed.
*see Memorandum of Decision on Debtors Objection to Claim of Wells Fargo
Bank, NA @pacer -10-20010rdd doc 109 filed 1-29-2015
376.

Former Ohio Attorney General and current Consumer Finance Protection Bureau

(CFPB) Chief Richard Cordray recently increased a legal award from $6 Million to $109
Million in a case against a lender who engaged in an insurance kickback scheme. Foreclosure
Defense attorney Neil Garfield wrote the following:
As our administrative and judicial systems come to grips with the massive fraud,
fabrication, and manipulation of their systems they are revealing a callous
disregard not only for rules and laws, but for society at large.
377.

The Enterprise is ongoing and its final objective is yet to be realized, but with each new

day, rulings emanate from judges across the country who can clearly see that they too are being
duped by the Conspirators. The hope for our country is being placed in the hands of our
judiciary which was established by our founding fathers under the separation of powers act to
provide a system of checks and balances so that the other two branches of government would be

166

incapable of upsetting the equilibrium which our founding fathers intended. It is the hope of the
Plaintiff that the judiciary will uphold their sacred oaths and deliver a powerful message that will
serve to deter BAC from future violations of the law, for anything less than that will only aid in
the disintegration and enslavement of our civilized society.

COUNT II
FRAUD IN THE INDUCEMENT & FRAUDULENT CONCEALMENT
PURSUANT TO 735 ILCS 5/13-215

378.

The Plaintiff re-alleges and incorporates the allegations contained in the preceding

paragraphs as though set forth at length herein.

FRAUD IN THE INDUCEMENT: is an action "with respect to" the contract
and was material to the decision to enter into a contract.
In Thorne v. Riggs, 2013 IL App (3d) 120244-U (September 3, 2013), the trial
court rescinded a real estate contract and the Third District affirmed. In doing so,
the Court examined Illinois fraud in the inducement and fraudulent concealment
law and discussed the special relationship fiduciary duty rule. Plaintiffs fraud
claims were premised on Plaintiff misrepresentations and concealing material
information about the project.
The fraud which furnishes the foundation for an action of deceit or for rescission
in equity exists where a person makes a false representation of a material fact
susceptible of knowledge, when he does not know whether it is true or false, with
intention to induce the person to whom it is made, in reliance upon it, to do
something to his pecuniary hurt, where such person acting with reasonable
prudence is thereby deceived and induced so to do to his damage": Martin v.
South Bluefield Land Co., 81 W. Va. 62, 94 S. E. 493. See also, Definition of
Fraud, by Melville M. Bigelow, 3 Law Quarterly Review, 419.
FRAUDULENT INDUCEMENT BY BAC PREDECESSOR COUNTRYWIDE LOAN
OFFICER ___ ____________
379.

Countrywide loan officer ___ ____________ fraudulently induced Plaintiff to enter a

loan agreement in which (1) ______ did not qualify for the subject loan under standard

167

residential loan underwriting standards; (2) ____________ switched Plaintiffs loan from a
fully-documented verified income loan to a stated income loan without the Plaintiffs
knowledge or agreement; (3) ____________ altered said loan application by adding a
$11,600.00 monthly bonus to co-owner ______s real income of $14,167. without the Plaintiffs
knowledge or agreement; (4) ____________ signed said loan application under the fictitious
name of ____________ without the Plaintiffs knowledge; (5) ____________ changed the
ARM index of the loan from Treasury to LIBOR without the Plaintiffs knowledge or agreement.
*See Exhibit 2 -verified loan; Exhibit 10 - loan application page with fraud; Exhibit 4 documents provided to Countrywide
380.

BAC predecessor Countrywide engaged in fraud in the inducement when ____________

deceived the Plaintiff as to the factual contents of the agreement which they entered into.
FRAUDULENT CONCEALMENT BY BAC PREDECESSOR COUNTRYWIDE LOAN
OFFICER, ___ ____
The Doctrine of Fraudulent Concealment:
If a lender conceals wrongdoing, thereby preventing a borrower from
discovering a cause of action, the statute of limitation will be tolled until the date
the plaintiff, through due diligence, would have learned of the existence of a
claim. The doctrine of fraudulent concealment operates to toll the statute of
limitations, when a plaintiff has been injured by fraud and remains in ignorance of
it, without any fault or want of diligence or care on his part. Holmberg v.
Arnlbrecht, 327 U.S. 392, 397 (1946) (quoting Bailey v. Glover, 88 U.S. (21
Wall.) 342, 348 (1874); see Maggio v. Gerard Freezer & Ice Co., 824 F.2d 123,
127 (1st Cir. 1987).
381.

Countrywide loan officer ___ ____________ fraudulently concealed the aforementioned

material facts.
BAC FRAUDULENTLY CONCEALED THE MATERIAL FACT THAT THE
ASSIGNMENT IT RELIED UPON TO CONVEY STANDING WAS CREATED AS
168

DOCUMENTARY EVIDENCE AFTER-THE-FACT

382.

In October 2010, BAC placed a nationwide moratorium on foreclosures, based on the

illegalities in the policies, practices and procedures of their own employees and the law firms
representing their interests in foreclosures. The moratorium was to allow time for BAC to fix
its foreclosure paperwork. However, according to the aforementioned testimony of BAC
employees BAC fixed its collateral deficiencies by fraudulently creating indorsements,
assignments, allonges, promissory notes or whatever collateral deficiency they lacked as
documentary evidence after-the-fact which BAC then used and is still using to confer standing to
itself thus allowing BAC to fraudulently foreclose real property.
FRAUDULENT CONCEALMENT BY BAC EMPLOYEE RHOENA RICE
383.

Rhoena Rice, as executor of the assignment of beneficial interest fraudulently concealed

the material fact that she was not a Vice-President of MERS but an employee of BAC.
CONCLUSION FRAUDULENT INDUCEMENT
384.

Countrywide loan officer, ____________ made false representations in full knowledge of

their falsity to fraudulently induce Plaintiff to enter into said loan agreement with the intent to
deceive them at Plaintiffs financial loss and ____________ financial gain. Had these
representations been made at the time the Plaintiff closed on the subject loan, they would have
acted differently and not entered into the loan agreement.
385.

The Plaintiff were unaware that BAC knowingly and falsely feigned ownership of

Plaintiffs mortgage as it claimed in its foreclosure complaint. As stated earlier, as the CWALT
Trust was the owner of both Plaintiffs Note and the mortgage as the mortgage follows the note.

169

The Plaintiff relied upon the authenticity of the documents as being valid and were thus damaged
which included, but is not limited to, being forced to defend their respective property rights in
this fraudulent loan transaction.
386.

Plaintiff relied on ____________ expertise in mortgage loans as she had complete

control of the loan information and greater knowledge and expertise in this realm. As such,
____________ owed Plaintiff a fiduciary duty. Although the Plaintiff is an intelligent individual
as both an author and a designer/builder/general contractor, her fields of expertise lie in different
areas thus she relied on and was in a vulnerable position compared to ____________ and
Countrywide.
387.

There was no other reason for ____________ to represent that there were no

impediments to the loan approval other than to induce the Plaintiff to accept the loan she
proffered. Plaintiff did not question ______s ability to qualify for said loan as Plaintiff had
qualified for prior Construction loans for the subject property from 2004-2007, and so they
justifiably relied on the facts which were presented to them. ____________ control of
information made it reasonable for the Plaintiff to rely upon ____________ presentations.
DAMAGES
388.

Plaintiff has suffered damages, both actual and emotional as a result of being

fraudulently induced to enter the loan agreement by Countrywide loan officer, ____________,
as ______had earned a $---------- fee for the designing/building/general contracting of the
subject property over 2 years and ______invested an additional $300,000 to finish the 2200
square foot basement and fully furnish the subject property. Moreover, the subject propertys

170

value has plummeted from Countrywides appraisal value of $1725. Million to $800,000 with a
net loss of $925,000 even after finishing the basement. Further damages have been sustained by
the Plaintiff in legal fees and other fees associated with the litigating of this lawsuit.
CONCLUSION FRAUDULENT CONCEALMENT
389.

BAC fraudulently concealed the following material facts with the intention of inducing

the Plaintiff to believe them:

a. BAC submitted the blank indorsement with its rubber stamped signature as
documentary evidence after-the-fact;
b. BAC predecessor Countrywide employee ____________ altered the loan
application by adding a monthly bonus to co-owner ______s income of $11,600.;
changed the status of the loan from fully-documented to stated income; changed
the ARM index from Treasury to LIBOR and falsely presented herself as
____________ instead of her real name ___ ____________ when she signed
the loan application;
c. Countrywide failed to underwrite the subject loan thus placing Plaintiff at great
risk of losing the substantial investment ______had made in the subject property;
d. BAC counsel F&S ordered the Assignment of Mortgage which was fatally
flawed as a matter of law and thus void as for the following reasons: (1) the
assignment was created as documentary evidence after-the-fact; (2) Countrywide
no longer existed when the assignment was executed thus Countrywide had no
authority to use MERS as nominee to convey anything; (3) Countrywide had
previously sold the Note to the CWALT Trust and as such MERS was a non-party
to the subject Note; (4) Rhoena Rice falsely claimed she was Vice-President of
MERS when she executed said assignment when she was actually an employee of
BAC; 5) MERS is a non-party to the Note and does not have the authority to
assign the Note; *See Exhibit 6 - Note
171

e.

BAC claimed that it owned Plaintiffs mortgage and was the legal holder of
indebtedness, when BAC was the Servicer of Plaintiffs loan;

f. BAC illegally retained Plaintiffs loan in its own vault in violation of the PSA
which enabled BAC to pretend it was the legal holder of indebtedness while
feigning Ownership of Plaintiffs mortgage which is a legal impossibility
because the mortgage follows the note.
390.

The Plaintiff was prevented from discovering the Truth through reasonable inquiry as

the Plaintiff had submitted a Qualified Written Request to BAC in on 7-22-2010 which was
ignored. Plaintiff tendered Discovery on November 18, 2014 which BAC ignored and the lower
court subsequently denied and thus prevented the Plaintiff from finding the truth and protecting
her property rights.
391.

A fiduciary relationship existed between the Plaintiff and Countrywide as the Plaintiff

placed trust and confidence in Countrywide who stood in a dominant position in terms of
business acumen. In Thorne v. Riggs, 2013 IL App (3d) 120244-U (September 3, 2013), 63.
The special relationship fiduciary duty rule applies where one party puts trust and confidence
in another who stands in a dominant position in terms of age, education, mental status or
business acumen. ( 64).

172

392.

The Plaintiff did enter the loan agreement in justifiable reliance on the facts which

were presented to her and further justifiably relied upon the documents submitted in the
foreclosure as being true as Plaintiff couldnt fathom that government-regulated institutions
would commit fraud and deceit of such enormous magnitude. Had Plaintiff known the truth
which was fraudulently concealed from her, she would not have entered into the loan
agreement. Central States Joint Board v. Continental Assurance Co., 117 Ill.App.3d 600, 453
N.E.2d 932, 935-937, 73 Ill.Dec.107, 110-112 (1st Dist.1983); Warner v. Lucas, 185
Ill.App.3d 351, 541 N.E.2d 705, 706; 133 Ill.Dec. 494, 495 (5th Dist.1989) (reasonably
believed and justifiably relied upon).
393.

The Plaintiff has suffered damages as a result of BACs fraudulent concealment of

material facts which voids the contract between BAC and the Plaintiff.
394.

Contracts made under fraudulent inducement conditions are declared voidable, at the

innocent partys election the innocent party can void the agreement if they so desire. The
Plaintiff elects to void the contract under the law.
In addition to actual damages, certain consequential damages proximately
resulting from the fraud are recoverable. Home Savings & Loan Association v.
Schneider, 127 Ill.App.3d 689, 469 N.E.2d 585, 589; 82 Ill.Dec. 941, 945 (3d
Dist.1984), aff'd in part & rev'd in part on other grounds, 108 Ill.2d 277, 483
N.E.2d 1225, 91 Ill.Dec. 590 (1985); Tan v. Boyke, 156 Ill.App.3d 49, 508 N.E.2d
390, 394; 108 Ill.Dec. 229, 233 (2d Dist.1987); Restatement (Second) of Torts
549 (1977) (in a business transaction, additional damages to give plaintiff the
benefit of his or her bargain may be recovered if properly proved).
395.

Contracts made under fraudulent concealment voids the loan as a matter of law which

thereby extinguishes any claims/security interest that BAC purports to hold, real or implied,
which are void/unenforceable due to its fraudulent concealment of material facts. Hence the

173

foreclosure of Plaintiffs property fails as a matter of law as BAC does not possess the requisite
standing to invoke the jurisdiction of the courts. See Illinois State Bar Assn Mut. Ins. Co. v.
Coregis Ins. Co., 355 Ill App. 3d 156, 164 2004 which states: Contracts containing illegal
subject matter or involving parties that exceed their authority are void, not voidable.
The elements for a claim of fraudulent concealment and fraudulent misrepresentation have been held to be the same. Intentional concealment is said to
be the equivalent of a false statement of material fact. Zimmerman v. Northfield
Real Estate, Inc., 156 Ill.App.3d 154, 510.
Under federal common law principles the contract was tainted from its inception
by fraud and thus is a Fraud on the Court and void ab initio.
Criminal fraud voids a contract, ab initio, both at law and in equity, whether the
object be to deceive the public, third persons or one party endeavor thereby to
cheat the other. Antle v. Sexton, 137 III. 410, 27. N. E. 691 [affirming 32 III. App.
437]; Crocker v. Manley, 164 III. 282, 56 Am. St. Rep. 196, 45 N. E. 577;
Prentice v. Crane, 234 111. 302, 84 N. E. 916; Gillespie v. Fulton Oil & Gas Co.,
236 III. 188. 86 N. E. 210; Prout v. Hoy Oil Co., 263 111. 54, 105 N. E. 26;
Wachsmuth v. Martini, 45 111. App. 244.
PRAYER FOR RELIEF
WHEREFORE, as a result of BAC and predecessor Countrywides fraudulent
inducement and fraudulent concealment, Plaintiff respectfully requests the relief
requested on page 182 of this complaint.

COUNT III
BREACH OF CONTRACT PURSUANT TO 810 ILCS 5/2-301
396.

The Plaintiff re-alleges and incorporates the allegations contained in the preceding

paragraphs as though set forth at length herein.

In Illinois, the elements of a Common Law cause of action for a breach of
contract are:
(1) a valid contract exists supported by (a) an offer and an acceptance; and (b)
consideration;
(2) definite and certain terms;
174

(3) performance by the parties of all required conditions;

(4) breach by one of the parties; and
(5) damages.
Village of South Elgin v. Waste Management of Illinois, Inc. 348 Ill.App. 3d 929,
940 (2nd Dist. 2004), Brown and Kerr v. American Stores Properties, Inc. 306
Ill.App. 3d 1023, 715 N.E. 2d.804, 810 (1st Dist. 1999); Wilder v. Butler Mfg.,
1788 Ill.App.3d 819, 533 N.E.2d 1129 (3rd Dist. 1989).
A VALID CONTRACT DOES NOT EXIST
397.

By way of the Note and Mortgage signed by Plaintiff on September 7, 2007 at the closing

of the refinance of Plaintiffs property, the Plaintiff believed she was entering a valid contract
and agreed to the terms and conditions of said loan which had been set forth prior to closing on
9-7-2007.
DEFINITE AND CERTAIN TERMS
398.

The terms and obligations of the mortgage loan contract were memorialized in the Note

and Mortgage.
PERFORMANCE BY THE PARTIES OF ALL REQUIRED CONDITIONS
399.

The Plaintiff made timely payments on subject mortgage until October 2008 when the

Financial Crisis occurred and Plaintiff was rendered unemployed, thereby performing under the
contract.
400.
Countrywide failed to perform under the contract for the following reasons:
a. Countrywide failed to disclose that it was not the true Lender of funds;
b. Countrywide failed to disclose to the Plaintiff that said loan was pre-sold to an
MBS Trust and converted into securities;
c. Countrywide failed to disclose that it altered ______s loan application by adding
a monthly bonus to ______s income of $11,600.00;
d. Countrywide failed to disclose that Countrywide loan officer ____________
forged the loan application as ____________;
e. Countrywide failed to disclose that market conditions were tenuous and on the
precipice of a downturn which would negatively impact Plaintiff;
f. Countrywide failed to disclose that it failed to underwrite Plaintiffs loan thereby
exposing Plaintiffs investment to great risk;

175

g. Countrywide failed to disclose that it had changed the ARM index from Treasury
to LIBOR;
h. Countrywide failed to disclose that it had changed the terms of the contract from a
401.

fully verified/fully documented loan to a stated income loan or liars loan.

Countrywide is not a party to the mortgage loan contract according to contract law

because Countrywide did not tender any consideration to bind the loan transaction and is thus
void. . In Anheuser-Busch Brewing Company v. Emma Mason, 44 Minn. 318, 46 N.W. 558
(1890), No lawful consideration tendered by Original Lender: A lawful consideration must exist
and be tendered to support the Note.
402.
The acts of concealing material facts establishes a breach of contract as Countrywide
had the legal duty to act in good faith and disclose the material facts relative to the transaction
pursuant to the FDCPA.
403.
Having obtained the Plaintiffs Note by constructive fraud, BAC is not justified to
enforce the contract by any implied consent because true consent, expressed or implied, cannot
be given under a cloud of non-disclosure, concealment, and suppression of the material facts, or
a state of duress.
A contract is a living body of law; an agreement made between living people with their

404.

full knowledge and consent.

BAC and predecessor Countrywide made material breaches to the contract which

405.

included, but are not limited to, the following:

v) Countrywide breached the contract when it induced the Plaintiff to
enter a predatory mortgage loan agreement and falsely represented that
the Plaintiff qualified for said loan;
w) Countrywide breached the contract when it induced Plaintiff to enter a
high-risk loan despite having knowledge that the market was on the
precipice of collapse thus endangering the financial health of the
Plaintiff;
x) As sworn testimony by the aforementioned Countrywide witnesses/
employees have attested, Countrywide breached the contract when it
incentivized employee and broker misconduct through bonuses and
higher commissions to sell risky loan products which compelled
176

Countrywide loan officer ____________ to place Plaintiff into a high

risk loan and then falsify ______s income to ensure the loans
approval;
y) Countrywide breached the contract when its loan officer
____________ changed the agreed upon loan from a fully-verified
income loan to a stated income loan or liars loan;
z) Countrywide breached the contract when its loan officer
____________ signed/forged the false name ____________ on the
loan application when it was ____________ who took the loan
application over the phone;
aa) As attested to by former Countrywide employees and corroborated by
Federal Judge Rakoff Countrywide breached the contract when it
failed to underwrite said loan which placed the Plaintiff at great risk of
foreclosure;
ab) Countrywide breached the contract when it sold, securitized and
bifurcated Plaintiffs loan and converted it into Mortgage-Backed
Securities.
406.

BAC and its predecessor Countrywide committed fraud in the factum, which occurs

when one party deceives the other as to the factual contents of the agreement which is being
entered into. Fraud in the factum is a predatory type of fraud where misrepresentation causes one
to enter a transaction without accurately realizing the risks, duties, or obligations incurred. Fraud
in the factum is induced to sign the instrument without a reasonable opportunity to learn of its
fraudulent character or essential terms. Fraud may be established where a party acted in
culpable ignorance as to the truth or falsity of the assertion. Perlman v. Time, Inc., 64
Ill.App.3d 190, 380 N.E.2d 1040, 1045; 20Ill.Dec. 831, 836 (1st Dist.1978). Fraud in the
factum voids the instrument under state law.
407.

As a matter of law, the subject Note and mortgage were void at their inception because

they were created out of fraud in the factum which deals with the content of the contract itself.
408.

BAC and predecessor Countrywide made said material misrepresentations with the

177

knowledge of their falsity and with the intent of misleading Plaintiff into relying upon them.
409.
The Plaintiff did rely upon these representations as true which have directly and
proximately caused severe and irreparable damages to the Plaintiff. Central States Joint Board
v. Continental Assurance Co., 117 Ill.App.3d 600, 453 N.E.2d 932, 935-937, 73 Ill.Dec.107,
110-112 (1st Dist.1983); Warner v. Lucas, 185 Ill.App.3d 351, 541 N.E.2d 705, 706; 133Ill.
410.
BAC and predecessor Countrywides failure to disclose critical facts to the Plaintiff
acted to their detriment and constituted a breach of contract as there was no meeting of the
minds, no consideration and therefore as a matter of law, an utter failure to create a security
instrument thereby rendering Plaintiffs loan documents void upon execution.
Hickox v. Bell, 195. Ill.App.3d 976, 522 N.E.2d 1133, 1143, 142 Ill. Dec. 392 (5th
Dist. 1990); Klem v. Mann, 279. Ill.App.3d 735, 665 N.E.2d 514, 518, 216 Ill.
Dec. 454 (1st Dist. 1996). Liability for breach of contract is strict, and plaintiff is
not required to show neglect or deliberate conduct.
411.

As a result of breaches of contract by BAC, the Plaintiff has suffered damages which

include, but are not limited to the following:

A. A significant reduction in property value of $925,000. based upon
Countrywides appraisal of $1,725 million and $800,000. the estimated value
per Zillow.co. Damages are determined by assessing the difference
between the actual value of the property and the value the property would
have had if the representations had been true. Gerill Corp. v. Jack L.
Hargrove Builders, 128 Ill.2d 179, 538 N.E.2d 530, 537-538; 131 Ill.Dec.
155, 162-163 (1989), cert. denied, 493 U.S. 894, 110 S.Ct. 243, 107 L.Ed.2d
193 (1989).
B. The additional investment of more than $300,000 which Plaintiffs company
______made in the property when she finished the 2200 square foot basement
and fully furnished the home;
C. ______design/build/general contract fee of $300,000.;
D. Severe and irreparable damage to the Plaintiffs credit scores;
E. The facing of this foreclosure litigation and the vast expenditure of time
required to learn the law;
F. Legal costs and fees associated with the defense of this lawsuit;
G. The loss of reputation and work because of the stigma of foreclosure;
178

H. Mental anguish, anxiety, humiliation and emotional harm;

I. Other general and special actual damages.
PRAYER FOR RELIEF
WHEREFORE, as a result of BAC and its predecessor Countrywides breach of
contract as set forth above, Plaintiff respectfully requests the relief requested on page 182
of this complaint.

CONCLUSION
DAMAGES: INJURY TO BUSINESS AND PROPERTY AND RELATIONSHIP
BETWEEN INJURY AND RICO STATUTE
412. The Enterprise perpetrated by BAC and its Co-Conspirators constitutes
false, misleading, deceptive, fraudulent, criminal or otherwise illegal conduct under the
law. BACs violations of federal law and pattern of racketeering activity have directly and
proximately caused the Plaintiff to be injured in her property and her business by reason
of the violation of 18 U.S.C. 1962 (c), in that, as a direct and proximate result of BACs
complained of acts, the Plaintiff has suffered and continues to suffer damages, which
include but are not limited to the following:
a. The Plaintiff has been forced to defend her property rights by reason of BACs
RICO violation thus incurring legal fees and legal costs as injuries to her business
and property. See 18 U.S.C. 1964(c). injuries to property and at least some
pecuniary losses flowing from those property injuries do confer relief under
1964(c). Although the Plaintiff has represented herself and her now deceased
husband for the majority of these proceedings pro-se thus requiring thousands of
hours of study and research, after her husbands death she temporarily hired a law
firm and thus incurred legal fees which were pecuniary losses intertwined with the
property injury and therefore are recoverable under 1964(c).
179

b. The Plaintiff has suffered injury to her property as a result of BACs violations
as the Conspirators Enterprise catalyzed the significant loss of property value of
$925,000. based upon Countrywides appraisal of $1,725. million and the
propertys current value of $800,000. as estimated by Zillow.com and
neighborhood sales, or more accurately, the lack thereof.
Damages are determined by assessing the difference between
the actual value of the property and the value the property
would have had if the representations had been true. Gerill
Corp. v. Jack L. Hargrove Builders, 128 Ill.2d 179, 538 N.E.2d
530, 537-538; 131 Ill.Dec. 155, 162-163 (1989), cert. denied, 493
U.S. 894, 110 S.Ct. 243, 107 L.Ed.2d 193 (1989).
c. The Plaintiffs business, ______was damaged as a result of BACs violation of
the RICO statute as the subject property is the Model Home (______is now
defunct and was replaced by ______Designs, Inc. of which the majority stock
[80%] is owned by Plaintiffs son who made a series of loans to ______in the
aftermath of Plaintiffs husbands [her sons father] death, to try and help his
grieving mother get back on her feet so she would not sink further into an abyss of
despair from which there was no escape). ______earned $300,000. for
designing/building/general contracting the property and placed a mechanics lien
on the property to protect its rights. In addition, ______ had built two multimillion dollar properties
d. ______spent 4 years designing/building/general contracting two multi-million
projects for two investors; one at $3Million (investor paid $5,000 a month for 12
months as a General contracting fee= $60,000) and the second for $2.8 Million,
whose property values plummeted as a result of the Enterprise. After languishing
on the market each finally sold in 2010 at a loss of $1 million + thus paying
______nothing. ______fee was $300,000. on each property thus Expressions loss
amounted to $840,000.
e. When the Plaintiff and her family moved into the subject property and used it
both as their primary residence and ______model home, ______invested another
$300,000+ to finish the 2200 square foot basement and furnish the subject
property as it had been responsible for every job ______garnered. Thus
________, which was solely owned by the Plaintiff, incurred a total loss of
$1,440,000. as a direct result of the Enterprise which does not include the jobs

180

______lost as a result of being in foreclosure which served to scare clients away

as they thought the funds for their projects would be confiscated.
The pecuniary losses flowing from a property injury are recoverable under
1964(c). Cf. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985) (stating
that a RICO plaintiff can recover only if he has been injured in his business or
property by the conduct constituting the violation); Isaak v. Trumbull Sav. &
Loan Co., 169 F.3d 390, 397 (6th Cir. 1999) (permitting RICO plaintiff to recover
damages resulting from plaintiffs purchase of an interest in a campground).
DAMAGES AND AMOUNT BAC IS LIABLE FOR
413.

Under 18 U.S.C. 1964(c), BAC is liable to the Plaintiff for three times the damages that

the Plaintiff has sustained. The injuries to the Plaintiff caused by BAC and its Co-Conspirators
violations of 18 U.S.C. 1962(c) include but are not limited to attorneys fees, costs, and other
expenses incurred defending this litigation; damage to the Plaintiffs business interests, the loss
in value of the subject property; disruption of her business as a result of the substantial diversion
of time to respond to and deal with the Conspirators fraudulent schemes. The injuries to the
Plaintiff were direct, proximate, and a reasonably foreseeable result of the Conspirators
violations of 18 U.S.C. 1962. The Plaintiff has been and will continue to be injured in her
business and property in an amount to be determined at trial. In addition to the aforementioned
injuries the Plaintiff has sustained, she also faces potential multiple liabilities from others who
may claim an interest in the mortgage or note and a clouded title to her property as a result of
the chain of title being broken when the sale of the loan was not recorded and because the
fraudulent assignment continues to be recorded with the ____________ County Recorder.

PRAYER FOR RELIEF

WHEREFORE, by reason of BACs violation of 18 U.S.C.A. 1962 (c), the
Plaintiff is entitled, pursuant to 18 U.S.C.A. 1964(c), to threefold the damages
sustained, costs of suit, and reasonable consulting fees which amount to estimated actual
damages $2,365,000. as enumerated above x 3 = $7,095,000. The Plaintiff prays that:

181

A. The conduct of BAC be determined to have violated the Racketeer Influenced

and Corruption Act, 18 U.S.C. 1962(c).
B. BAC be found liable to the Plaintiff under the common laws of the State of
Illinois for (1) Breach of Contract Pursuant to 810 ILCS 5/2-301; (2) Fraudulent
Inducement and Fraudulent Concealment Pursuant to 735 ILCS 5/13-215;
C. Judgment be entered against BAC for damages sustained by the Plaintiff to
the maximum extent allowed by law, together with the costs of this action,
including reasonable attorneys fees.
D. Judgment be entered against BAC and any and all persons claiming or having
an interest in Plaintiffs property from asserting or claiming any interest, right or
title in or to the Property or any part thereof adverse to the title of Plaintiff, which
voids/extinguishes any claims/security interest that BAC purports to hold, real or
implied;
E.
Award Plaintiff punitive damages to punish BAC and to deter future
misconduct and to protect the public; and
F. any other, further and different relief as the Court may deem just and proper
under the facts and circumstances of this case.
Dated this 1st day of July 2015
Respectfully submitted,

182