Executive Summary
The collapse of Countrywide Financial Corporation (CFC) in January 2008, signaled a turning point in the current financial crisis. It allowed the public world-wide first clue to allow any estimate of the scope of the escalating financial disaster. On the other hand, it demonstrated the failure of U.S. banking regulation, and also involved actions by senior Bush administration officials to usher, some say to coerce, the merger of CFC with Bank of America Corporation (BAC). Similar events recurred in the collapse of Merrill Lynch, which led to an April 2008 letter by NY Attorney General Andrew Cuomo. [1] In response to that letter – some media called for criminal indictment of senior U.S. and BAC Officers, including FRB Chair Henry Ben Bernanke, and BAC Chair Kenneth Lewis. Evidence from various court actions and a year long study by the U.S. Trustee, documented conditions at CFC in the years preceding its collapse, which included non-functional external and internal audit structure, headed by Chair Mozilo, underwriting department that disregarded the law, large data processing systems that were crippled, and a Legal Department, headed by Chief Legal Officer Samuels, which was routinely engaged in undermining the integrity of court actions across the U.S.[2] , [3] Disregarding such mounting evidence of alleged racketeering at CFC, involving its most senior officers, including those holding direct reporting duties to SEC, law enforcement and banking regulators, routinely refused to investigate complaints. Given the nature of operations at CFC, the insistence of senior U.S. officers on merging it into BAC, instead of letting it be liquidated, with no indication of any attempt at enforcement before or after the merger, remains inexplicable, or worse. Concerns regarding ineffective banking regulation in the U.S., which poses risks to financial markets at home and abroad, were repeatedly raised, e.g. during the recent visit by U.S. Treasury Secretary Geithner to Beijing.
In proceedings of SEC v BAC (1:09-cv-06829), filed on August 3, 2009 at the U.S. District Court, NY, SEC appeared to engage in enforcement action against BAC. The parties came before the Court for approval of a proposed settlement. To assist the Court in reviewing whether the proposed settlement was “fair, reasonable, adequate, and in the public interest”, Prof Joseph Grundfest, Stanford Law School, former Commissioner of SEC, produced an Affidavit (Dkt #10), filed by BAC August 24, 2009. The affidavit supported approval of the settlement. Dr Joseph Zernik, a Los Angeles County, California resident, asked and received Court permission to provide his input as well. Dr Zernik filed complaints with FBI, SEC, Thrift Supervision, and Federal Trade Commission, starting January 2007, providing credible documenting of alleged large scale fraud by CFC against U.S. Government, which in early 2007 he estimated at hundreds of billions, and which involved CFC officers holding direct reporting duties. He filed further complaints with the Audit Committee of BAC after the merger, regarding alleged violations of the law that involved Mr Kenneth Lewis, Mr Joe Price, and Mr Timothy Mayopoulos – all holders of direct reporting duties. Furthermore, in February 2009 Dr Zernik and Prof Grundfest engaged in discussion of the refusal of SEC to engage in enforcement in re: BAC and its subsidiary CFC, and records were forwarded to Prof Grundfest, as credible evidence of material violations by officers holding reporting duties. Prof Grundfest later stated that he forwarded the records to the Head of Enforcement at SEC. SEC again refused to investigate complaints against CFC and BAC. [4]
Dr Zernik forwarded instant letter to Prof Grundfest, BAC, and SEC, requesting that the Affidavit (Dkt #10) either be rewritten or entirely withdrawn. Dr Zernik stated that the Affidavit in its current form, in the docket as it appear online in Pacer, [5], [6] is false and deliberately misleading in itself, and also provides legitimacy to proceedings which so far fail to demonstrate the essential elements of a valid, effectual U.S. Court Action. Such Affidavit lends support to one in chain of events where certain senior U.S. officers and some members of the U.S. and California judiciary, with CFC and BAC officers, conduct U.S. banking in a manner that is contrary to public policy interest - recklessly setting up the grounds for a new, bigger financial calamity, which may leave the U.S. entirely crippled.
This letter was also forwarded as requests to:
1) Stanford Faculty – to assess the academic integrity of Prof Grundfest’s Affidavit, and its potential harm to U.S. financial markets and law enforcement.
2) General Tommy Frank, and Admiral Joseph Frueher – to issue “Farewell Addresses” to the public at large, in relationship with their departure from the Audit Committee of BAC.
3) Basel Committee and U.N. High Commissioner on Human Rights – to send a delegation, including banking regulators, Human Rights experts, and court administrators, to observe conduct of U.S. and State agencies in the current financial crisis. It is proposed that such observation start in Los Angeles County, defined by FBI as “the epicenter of the epidemic”.
[1] April 23, 2008 letter of NY Attorney General Andrew Cuomo to U.S. Senate
http://inproperinla.com/09-04-23-text-of-cuomo-letter-on-merrill-lynch-takeover-marketwatch.pdf
[2] 1) Borrower Sharon D Hill ( ), U.S. Court, Pittsburgh, PA, and related actions by U.S. Trustee.
2) Borrower William A Parsley () U.S. Court, Houston TX, Memorandum Opinion of the Honorable Jeff Bohm (Dkt #248), and related year-long study by U.S. Trustee.
3) Samaan v Zernik (SC087400) LA Superior Court
4) Zernik v Connor et al (2:08-cv-01550) U.S. District Court LA, CA
5) Zernik v U.S. Dist Court ((08-72714) U.S. Court of Appeals, 9th Circuit
6) Zernik v Melson et al (1:09-cv-00805) U.S. District Court, Washington, DC
[3] Many of the court records in (2), above, were copied under index in:
[4] February 2009 - Correspondence Zernik-Grundfest-Bezek:
http://inproperinla.com/09-09-02-compiled-corresopndence-grundfest-bezek-2009-s.pdf
[5] date Letter to the Clerk, U.S. District Court, NYC, requesting access to records:
http://inproperinla.com/09-08-31-cover-emai+-zernik-requests-explanation-from-bryan-cave-llp-s.pdf
[6] date Letter to SEC, BAC, requesting records and actions in re: Docket of SEC v BAC.
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The complete letter can be viewed at:
http://inproperinla.com/09-09-02-zernik-to-counsel-sec-v-bac-grundfest-re-affidavit-s.pdf
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