The Mortgage Fraud Hoax

   Next time a politician proclaims law enforcement agencies need even more quasi-Constitutional powers to enable them to thwart the menace-of-the-moment, think about the guy who got caught recently trying to carry $70,000 in cash through an airport security checkpoint in Kansas City.

  Despite the apparent absence of any evidence of actual wrongdoing, the man faces charges fashioned over the decades to deal with terrorists (interfering with airport security officers by leaving the checkpoint area rather than handing over the non-liquid, non-metallic book-like objects in his pants pockets). He faces charges concocted to deal with mobsters, Klansmen and drug lords (wire fraud and money laundering, based on federal agents' suspicions that the man's cash might have come from "mortgage fraud" activities).

   White collar crime was the Justice Department's first big obsession under the Bush Administration  until September 11 diverted some of its attention elsewhere.

   Still, mortgage fraud represented an especially rich target for agents eager to throw the press off the scent of a president who was on first-name terms with former Enron CEO "Kenny Boy" Lay...a president with SEC skeletons in his own closet from his days in the oil business. Early in the Bush Administration, one of the most vibrant get-rich opportunities in the country was buying properties, fixing them up and renting or selling them for big returns on the investment.

   Google "property flipping" a year or two ago, before federal agents began arresting virtually every business person in the nation who was buying and selling properties on a large scale, and the first 30 hits typically offered lessons on how to get rich flipping properties. Google flipping today, and most entries address the "epidemic of mortgage fraud" by "organized criminals" ripping off lenders in every state in every big city in the nation. Incidentally, most of the sites bemoaning the mortgage fraud scourge are run by folks offering their services to protect lenders from "mortgage hustlers."

  Appropriately, the government named its mortgage fraud crusade Operation Quick Flip. The crusade runs on the notion loan defaults are tantamount to fraudulently prepared loan documents. It runs on the notion federal agents are better suited to determine fair market values than are professional property appraisers or willing buyers. It runs on the notion that only those involved in preparing loan documents are criminally liable when loans go bad --not lending companies that aggressively  solicit loans in hot real estate markets and then fail to do even minimal underwriting on loan apps.

   Anyway, the poor guy with pockets full of cash probably faces a virtual life sentence with all the federal charges stacked against him Fighting the government at trial costs upwards of a half-million dollars and the chances of winning are virtually nil.

   The feds typically close their cases (96 to 97 percent of the time) with plea agreements. And federal prosecutors punish suspects who maintain their innocence by stacking addidtional charges or threatening to charge members of the suspect's family until the plea deal eventually seems irresistable....even to innocent suspects.

   At trial, the feds nearly always win, especially in highly complicated cases like mortgage fraud. Maybe they win because some defendants are actual criminals (recruiting "straw buyers" to apply for loans....deliberatly misstating income or debts or equity in certain types of loans where those considerations are crucial in granting loans, etc.).In other cases, maybe they win because too many jurors simply can't imagine  Ephraim Zimbalist Jr. coercing confessions from innocent people.

  We don't hear much about our draconian federal justice system because it extorts silence from those it steamrollers into submission. Complaining about coerced confessions means failing to "accept responsibility for the crime" which means additional punishments can be imposed.

   Personally, I can hardly wait for Martha Stewart's probation to end in September 2007 so I can hear what she has to say about the way the government manhandled her. Recall, if you will, that she was convicted and imprisoned for lying to bureaucrats who were investigating a crime she was never formally charged with committing  And, no, she wasn't under oath during the questioning.

   The guy at the KC airport must have known that in America today, possessing "large amounts of cash" gives cops the right to assume you've committed a crime, which gives them the right to confiscate the cash. I assume that's why he resisted handing over the cash to the checkpoint feds. What he may not have realized until a week into the episode was that the government views big profits on real estate transactions as crimes per se.

    The poor bastards I pity most are the folks who had dealings with cash boy in the buying and selling of properties. In the feds' eyes, all of them are probably "co-conspirators" in the suspected mortgage fraud dealings.

  The steady march toward a police state continues. The erosion of Constitutional rights and the subjugation of American citizens continue.

  Anyway, the lesson is this: Whatever the feds say they need today to fight the devil (warrant-less wiretaps, secret searches of our homes, computers and library records, etc.) will be used tomorrow on the Real Estate agent who sold you your home, or the insurance man who lives next door, or the doctor who prescribed pain pills for your mother, or the physical therapist in your office building who made a mistake on a Medicare form, or your grown children who flip properties to supplement their incomes or maybe even on you.

President Hillary Rodham Clinton

   Though Hillary Clinton possesses the intellect and political skills to make a good president, perhaps even a great one, the last thing America needs is another president that close to half the country hates.

   After 16 years of Bill Clinton and George W. Bush, the country desperately will need what Bush Junior disingenuously promised: a uniter, not a divider.

Coerced 'Plea Agreements'

Perhaps the best examples of coerced plea agreements have yet to be made known.

   Over the past three or four years, hundreds of mostly young, well-educated business people who buy and sell property have been swept up in Operation Quick Flip, the Justice Department's crusade against mortgage fraud.

   The Department's story is that sometime around the turn of the century, hundreds of business people (nearly all of whom had no criminal history) in virtually every metro area in the nation turned to lives of "organized crime" by tricking lenders into making bad loans.

   And while clearly some of the accused deserved to be prosecuted for obviously criminal acts, in other instances overzealous federal agents and prosecutors used their breathtaking powers to shape the facts to fit the government's big-picture story of the crusade.

   We haven't heard many stories about heavy handed "plea bargaining" in those instances because part of the deal is the sinister extortion clause the government puts in all of its "deals." It notes that complaining about draconian alternatives to accepting the government's "deal" means failing to take responsibility for the crime...which means the government can renege on whatever meager concessions it made and impose harsher punishments.

   In my research for a book on this, I've met three people who pleaded guilty to wire fraud and money laundering charges to avoid virtual life sentences of up to 30 years in prison. All three were sentenced to six months of home detention and ordered to pay restitution. All three had been operating with advice from attorneys in the activities (which their attorneys considered "gray areas"...leaving lines blank on loan apps, for example) that put them in the federal crosshairs. But when they offered that as evidence they lacked criminal intent, agents and prosecutors merely threatened to increase the number of charges from two or three to more than a hundred.

   Would like to hear from anyone who has information on this phenomenon. email me at

The Tough, the Brilliant Chris Matthews

  The true wonder is why Chris Matthews bothers having "guests" at all. Chris always knows more than they do. His next question is always more fascinating and imparitive than the rest of their answer to his previous question.

   Hard Ball. That's funny. I'll bet Matthews was always one of those guys who got picked last or not at all as teams were being chosen.

   He thinks playing hard ball means asking wordy, showy questions that demonstrate his vast knowledge, experience and insights. He confuses being tough with being rude and loutish. He never yields an inch to whomever else is talking when his impulses take over. He just keeps on talking til they give up and shut up.

   It's really really hard to watch.

Lou Dobbs versus John Kerry

Lou Dobbs' reporting of the John Kerry speech at Pasadena College was inaccurate and unfair. The "tease" writer for CNN obviously had a viewpoint to express with the question "Will Kerry's remarks hurt the Democrats in the mid-term elections?"

   In context, it was obvious Kerry was taking a shot at President Bush, not the troops.

   Kerry, unlike Bush, actually was a troop in combat at one time. He was "stuck" in Vietnam despite an Ivy League education. Dobbs' assertion, that Kerry was suggesting only students who don't study end up getting stuck in bad wars, is simply illogical at best.

   Dobbs is sharply critical every night of public figures and agencies that screw up? What about his own crew's screw ups?

America's in Trouble

  Did we learn nothing from Mel Brooks' movie, Blazing Saddles? Like Governor Le Petomane, our congressional leaders seem ready, eager even, to do despicable things to save their "phony, baloney jobs." National debate, to the extent there is any, seems driven by "authentic frontier gibberish."

   On Tuesday the American president signed a bill that OKs torture as an interrogation technique, permits the executive branch of the government to skirt habeas corpus at will and interpret the Geneva Conventions however it best suits its purposes. Welcome to Rock Ridge.

      The worst of these cardboard characters we call leaders are prevalent in both parties. Republican senators Lindsey Graham, John Warner and John McCain provided cover for the Torture Bill with their bogus pose as concerned moderates. Slice it anyway you want, they provided the lipstick for the despotism pig that was George Bush's military tribunal bill.

    Then you have the cowardly Democrats who voted for the bill to avoid being accused of being weak on terrorism. Speaker Dennis Hastert proved their fears were well founded Wednesday with his condemnation of the 159 House members who voted against the bill. Predictably, Hastert accused them of wanting to coddle terrorists.

   Sadly, too many Americans don't have a clue as to what happened to their country on Tuesday. Sadder still, even if they knew about it, too many of them probably wouldn't have understood its significance.

   The steady march toward a police state -- "strong" and "tough" on everthing and wise and thoughtful about very little -- continues.

Operation Quick Flip

  Apparently not everybody who's been convicted of "mortgage fraud" in the Justice Department's national Operation Quick Flip pogrom is an actual lawbreaker. In fact, the power of the Justice Department to coercively shape the facts to fit its version of truth is about to be exposed in one of the so-called "hotbed cities" of mortgage fraud.

   It appears the FBI's wide, tight highly publicized "mortgage fraud" dragnet snags a lot of people who, at worst, were innocent in the sense they had no criminal intent and committed no overtly culpable acts. At best, many of the mortgage fraud "targets" were guilty of working "gray areas"....often on advice of legal counsel. It appears the government's power to coerce confessions, not sincere admissions of wrongdoing, helped build a substantial number of its big, splashy, highly publicized "mortgage fraud" cases.

   If you know what I'm talking about and have additional information, or if you'd be willing to be interviewed, please contact me at my website: http://johnkerr.typepad.com

   I'm writing a book about Operation Quick Flip and am looking for ordinary business people who were coerced into accepting plea deals as an alternative to financial ruin (the cost of a legal defense) and/or the threat of draconian prison sentences...despite heart-felt belief they were innocent.

   In the meantime, watch mortgage fraud news out of Missouri. It appears a Show-Me State grand jury....a thoughtful, truly independent grand jury (as hard as that might be to believe)....didn't buy the government's story about "unwitting buyers" and elaborate conspiracies to trick lending agencies into making bad loans.

Let's Talk

Imagine what could be accomplished in America if its leaders valued wit and wisdom as much as they do looking and sounding tough. Couldn't help but laugh, in a bitter-irony sort of way as opposed to actual amusement, to hear GWB -- boss of the most secretive government in America's history -- argue that the secretive nature of the North Koreans makes it undesirable to negotiate with them. If there's a good reason not to talk to our axis-of-evil enemies, it escapes my powers of comprehension.

Public Enemy Pattie Dunn

   Pattie Dunn is the new Martha Stewart, the high-profile headline-worthy celebrity perp the Justice Department needs from time to time to justify its ever growing budgets and staffing levels.

  Apparently Dunn got a bit carried away in her bid to ferret out a leaker on HP's board of directors, and the government's fair-and-proportional response was to indict her on four obscure, technical "felony charges" that put her in jeopardy of a prison term of a decade or more.

   The leaker, an obscenely rich HP board member and white male good old boy, got to the feds first...apparently as retribution for Dunn's efforts to expose him. In his story enthusiastic federal agents and the California attorney general saw an opportunity to grab headlines and the career perks that come with them. So they began sifting through literally thousands of arcane federal and state laws to coble together plausible sounding charges befitting Dunn's "serious offenses."

   Remember now that legislators (the more than 600 "lawmakers" in congress) routinely criminalize so many activities that nobody, not even the prosecutors, can keep up with the list of new "felonies." Virtually any activity any member of congress considers deceptive either has been or will be characterized as conspiratorial and then criminalized. Introducing such bills is akin to enacting them because congress members don't vote against crime bills for fear of being accused of being soft on crime.

    Mindlessly harsh sentencing guidelines ensure most "targets" take plea deals and nearly all targets do. Consider the alternative. Fight the charges and prosecutors become vengeful, the number of charges increases geometrically and the legal cost of fighting the government starts at about half a million dollars. The cost of actually beating the government is typically much higher...and well beyond the reach of most people snagged in the government's ever-widening dragnet.

The upshot is that any of us are vulnerable to the creative impulses of unprincipled careerists in local, state and especially federal law enforcement agencies. Just look at what happened to Dunn.

   A recent MSNBC report noted prosecutors "patched together" elements of several laws inspired by privacy concerns to come up with plausible-sounding charges against Dunn. Nothing normal people would consider truly criminal activity, mind you (She didn't rob a store, hit anyone on the head or even profit from her actions) but official crimes nonetheless....felony crimes....carrying draconian prison terms as sanctions.

   Not surprisingly, several of those who helped Dunn find the leaker are gleefully "cooperating" with prosecutors, inspired no doubt by threats of decades in prison should they fail to help make a case against Dunn.

   Basically the same thing happened to Martha Stewart, who went to prison for lying to federal investigators...even though when she wasn't under oath when they questioned her.

  Only a relative handful of Americans know it now. But someday -- after a sufficient number of uncles, cousins, sons, daughters, fathers, brothers, nextdoor neighbors and friends have been "brought to justice" by federal agents -- the sad state of American justice will be widely known.

   Here's how it works. Federal laws are cranked out like sausages at the Jimmy Dean plant. Public fears of terrorism are used to justify the hiring of additional federal agents by the thousands. More arrests must therefore be made to justify ever expanding Justice Department budgets and staffing levels. And not all of today's federal agents are fastidious about old-school notions of justice. High-profile perps like Dunn and Stewart and a sufficient number of coerced witnesses and they're good to go.

   But just remember, if they can railroad Pattie Dunn, chairman of the board of one of the richest and most powerful companies in the world...if they can do it to Martha Stewart, once a titan of Wall Street, what chance do ordinary people have in similar circumstances?

   At worst, Pattie and Martha were guilty of entering a gray area....stretching the boundaries of ethical behavior....committing transgressions that ten years ago might have gotten them sued in civil court or merely embarrassed in the court of public opinion. But by inadvertently attracting the attention of career-obsessed "lawmen" swimming in a sea of fuzzy laws, they engendered persecution and threats of absurdly harsh punishments far far beyond traditional notions of fairness and justice.

   Wake up, folks. America is being transformed in ways that would have horrified and saddened its founders.   

Keith Olberman's The Man

God bless Keith Olbermann. God bless MSNBC for letting him have his say. The President seems either dangerously deluded or pathologically prone to lying, and he has been working overtime since he took office to ruin America. It was soul stirring to hear Olbermann say it out loud.

We've Been Scrooged

The Ghosts of Nixon's Past -- Dick Cheney, Donald Rumsfeld and Henry Kissinger -- have pointed the way for us to re-examine our miserable lives and resolve to mend our ways. The path to redemption is clear. We must restore checks and balances by electing Democrats to the U.S. House and Senate.

Despicable, Shameless 'Leaders'

   One can't help but wonder. After Republican politicians and their talk-radio apologists serve up the spin, deflections and talking points -- after they "frame the terms of the debate" with simplistic, poll-derived slogans -- do they huddle privately, slap each other on the back and congratulate themselves on their wizard-like ability to turn dung into diamonds? It's difficult to imagine they actually believe some of the things they zealously sell to the credulous folks that make up the party's base.

   Instead of owning up to the dreary circumstances of the Congressman Foley-16-year-old pages sex scandal, some of these guardians of the nation's morals instead blamed the teen-age victims, the "16-year-old beasts," as Matt Drudge characterized them. Rush Limbaugh speculated the pages might have conspired with the "liberal media" to hurt Republicans on the eve of the election.

    Rank and file Republican "leaders" took turns at the microphone to invoke -- in remarkably similar phrases"  the "everybody else is doing it" defense. They pointed to Democrats' scandals of years past. The Democrats, some of them noted, are after all the Party that tolerates homos...apparently equating homosexuality with predatory sexual impulses. Never mind that Democrats don't put themselves forward as the moral police, as Republicans typically do.

   George W. Bush is distinguishing himself as the worst president in America's history. The damage he's done to America's image in the world will take decades under enlightened administrations to fix. Bush's do-nothing, rubberstamp congress likewise is worthless by any thoughtful historic standard. If the citizens of this country don't act this November to restore checks and balances to government, they will deserve the fascist theocracy the Bush People have been working so hard to create.

Dunces Endanger Democracy

   Here's the problem threatening the future of the American democracy. It's next to impossible to persuade  lots of Americans that the principles the flag symbolizes should be cherished at least as much as the cloth the flag is made of. So every few years, right wing voters are "energized" by cynical politicians calling for a ban on flag burning as an act of free speech.

    Harder still, apparently, is convincing too many fellow Americans that 1. America's foundational values, including the Bill of Rights, the "Grand Writ"  of habeas corpus and the notion that only tyrannical regimes torture prisoners, were what made America a good and great nation; and defending those values is not akin to "coddling terrorists." and 2. The notion that this government -- any government for that matter -- can "keep you safe" is absurd.

   Everyone of us is susceptible to injury or death at almost any given moment. Recently, for example, spinach posed a far greater threat to Americans in many states than a possible terrorist attack.

   We've also learned now, that Condi and Rumsfield were indeed briefed on the Bin Laden threat weeks before it occurred. Despite the drag on the Bush Administration of having to get warrants in order to spy on you....despite the inconvenience of legal prohibitions preventing U.S. officials from "disappearing" people to secret torture prisons....it turns out the Bush people had all the info they needed to prevent 911...if only they'd taken the warnings more seriously.

Presidential Prerequisites

At a minimum, Americans should insist the next president understands and values what it is that makes America great.

   It's not Superbowl Sundays, NASCAR races or fireworks displays in July that makes it great. It's not America's status as the world's only superpower, replete with secret torture prisons, the ability to "disappear" people without judicial oversight or the inclination to launch pre-emptive wars on a whim.

   America was great because of its Bill of Rights, its institutional checks and balances and its respect for the rule of law. America was great because its politicians couldn't fool as many of the people as much of the time as they do now. It was great because it always at least aspired to be the land of the free and the home of the brave.

   Now we're terrified, as much through the efforts of our own president as by any foreign enemy. So, again, what we need is a presidential civics exam...and presidents capable of passing it.