Archive for July, 2009
In the summer of 2007 I was retained by a man (who shall remain unidentified), for our purposes named Mr. Prompt. Mr. Prompt had never been to Texas, but found himself the embarrassed owner of at least 5 homes in North Texas.
How he ended up with these homes was directly tied to the collapse of Bear Stearns just about a year later.
In 2005, Mr. Prompt had gone to a church function in his small home town in a southern State. Mr. Prompt is a member of a mostly black congregation that was eager to see its members do well and good. At this church function a few members of the Hill family showed up and everyone admired their apparent success in real estate.
The Hills told their tale of good fortune and God’s blessings that had allowed them to create an empire of rental properties returning a reaonable 10% return on investment.
Of course, once the bait was cast it was not long before the hook was set. Many members clamored to invest in the scheme, there was no shortgage of participation. Even Mr. Prompt wanted to know more.
So he, and others, handed over their identification and gave up their social security numbers and even mothers maiden names during the hustle. None of the church members or other participants felt any concern, because the Hills NEVER ASKED FOR MONEY!
Everyone assumed that the Hills would contact the interested people and then provide the opportunity to invest.
Instead of a request for funds, they started to be approached with documents to sign by Hill family members. They were told that the documents were offers on homes and if the deal went through, they would then be given a chance to invest. Of course, no documents were left with Mr. Prompt or the others.
Soon the Hill family faded away and all was quiet for a while, Mr. Prompt, assuming the deals had fallen through, had forgotten the whole thing.
Then came the calls. First they came from mortgage companies, then from collectors and then from tenants in homes in far away Dallas, Texas.
All of the callers claimed the same thing: Mr. Prompt was the owner of a number of properties in the Dallas area and he was not paying the mortgages and not taking care of his tenants.
Soon Mr. Prompt came to realize that the Hill family had bought a number of homes in his name, somehow getting mortgages totaling almost 1 million dollars (which included about $400,000.00 in cash out mortgages to the Hill family).
Mr. Prompt contacted my office and in the next few months got to see an inside view of just how our mortgage industry, and Bear Stearns committed a murder-suicide on the American economy.
Part Two: Bear Stearns and Mr. Ford at the Fraud Dept.
Pa
Having read over the GM Bankruptcy decision creating the new Union controlled, taxpayer financed automaker, I can only conclude that this *reorganization* will ultimately be transformed into a Chapter 7 liquidation. This decision addresses the issue of saving jobs while acknowledging that the plan has questionable economic merit. Seemingly the Judge is admitting that the plan will save some jobs in the short term, while in the long-term, GM will ultimately fail.
Does it take 95 pages for a Judge to admit that they don’t have the guts to what needed to be done?
The new GM is emerging from bankruptcy with the same moribund management that drove the company off the cliff and still saddled with Union contracts that will smother any chances the new GM may have had.
Unfortunately when the new GM fails, along with the new Chrysler, there will be no chance to save the remnants of the companies. I am afraid both of these companies will fade into the night. The attempt to pervert the bankruptcy process and *save* the UAW while shafting the equity investors will result in a reluctance by investors to touch any Union dominated industry. The fear of political favor in the normally orderly bankruptcy process should rightfully concern investors and bankruptcy litigators.
On the other hand, these two developing disasters will give Ford the cover it needs to do a proper bankruptcy, one that will discharge forever the Union and dealership strangleholds that have been crippling the American auto industry for decades.
My practice is seeing more cases involving the deteriorating economy and the effects of dropping Real Estate prices. People who were wealthy just a couple of years ago are now up against the wall and many are panicking. I am seeing people who have used credit card advances to pay bills, while maintaining a senseless lifestyle of expensive cars, clothes and consumables. Many of these people have used equity in their homes to buy cars and boats and vacation homes, and now that the equity has run out they are in a shambles.
People are going bankrupt, getting divorced and committing crimes as they become more angry and desperate. It is distressing to see and hear from people who seemingly have no idea how they found themselves in the middle of their life, broke and with few prospects. Commonly, these people have gambled their future on the hope that someday, somehow they would find a solution to their growing debt problem. In practice, most seem unwilling to cut back on senseless consumption until forced to by circumstance.
Then they show up at my office, some of them have already been fleeced by debt consolidators or been crushed by their house flipping foray and now just want to put their debt/arrest/wife/husband behind them and move on.
Sadly, I suspect most of them will simply repeat the mistakes that led them here in the first place.
Oh well…
Someone working for these characters once tried to offer me a *chance* to invest in this mess. Good thing I am broke.
A client complained to me about a class action lawsuit he is involved regarding some investment advice he received, which resulted in a lawsuit brought by a large number of investors. The case has been settled and he received about 25 dollars. The law firm garnered fees in excess of 5 million dollars.
Well, long story short, the client expresses the standard “Lawyers making too much from class action, while the members get peanuts” line.
My response was to point out that no regulatory or law enforcement authority had done anything about the matter. The company led him and others off a cliff while knowing the information was flat wrong. I pointed out that he, as an individual, was unable or unwilling to take a run at the company and make the situation right. I also pointed out that the law firm spent time and money, to move the case to a point where a settlement was possible.
Quite honestly, in this day when corporate interests and financial gain are main drivers of regulatory authority in government, where law enforcement lives in fear of politics and individuals hold far too little power to effectively protest a bad act by a giant corporation, who but the Class Action law firms and attorneys are standing up and fighting back?
It is easy to beat on the straw man of over-paid Class Action lawyers (are they hiring?), but look around and tell me who else is doing anything at all?
http://www.reuters.com/article/bigMoney/idUS422798251820090701
Wal-Mart has taken the *surprising* step of endorsing nationalized health care. What a progressive and wonderful company! Oh. Wait. This is the company that holds classes for employees to teach them how to be eligible for Medicare while being a WalMartian.
WalMart is the nations largest employer. They will benefit tremendously by dumping this cost onto my children and grandchildren.
Honestly, if we would just call all government programs (Medicare, Social Security, Unemployment) by their real name, *WELFARE*, maybe the stigma would wake people up.
Bottom line: We are squandering my kids future. I am getting upset. I am starting to think some people need to be shot, or will need to be soon.
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Opinion and commentary about law and life.