Deutshe Bank, Securitization Fraud and Foreclosure Fraud w/ Bonus Rap Song

DEUTSCHE BANK, SECURITIZATION FRAUD  AND FORECLOSURE FRAUD

Lynn E. Szymoniak, Esq., April 23, 2011

On April 13, 2011, the Permanent Subcommittee on Investigations of the U.S. Senate released a report titled “Wall Street and The Financial Crisis: Anatomy of a Financial Collapse.”

Section VI of the Report, pages 318 to 639, is titled “Investment Bank Abuses: Case Study of Goldman Sachs and Deutsche Bank.” Part B of this section, pages 330 to 375, focuses on Deutsche Bank and is titled
“Running the CDO Machine: Case Study of Deutsche Bank.”

The Deutsche Bank case study section is divided into the following areas:

(1) Subcommittee Investigation and Findings of Fact

(2) Deutsche Bank Background

(3) Deutsche Bank’s $5 Billion Short

(a)  Lippmann’s Negative View of Mortgage Related Assets

(b)  Building And Cashing In the $5 Billion Short

(4) The “CDO Machine”

(5) Gemstone

(a)  Background on Gemstone

(b)  Gemstone Asset Selection

(c)  Gemstone Risks and Poor Quality Assets

(d)  Gemstone Sales Effort

(e)  Gemstone Losses

(6) Other Deutsche Bank CDOs

(7) Analysis

The Analysis Section, pages 374  – 375, states the following clear condemnation of Deutsche Bank’s practices:

Deutsche Bank was the fourth largest issuer of CDOs in the United States. It continued to issue CDOs after mortgages began losing money at record rates, investor interest waned, and its most senior CDO trader concluded that the mortgage market in general and the specific RMBS securities being included in the bank’s own CDOs were going to lose value. Mr. Lippmann derided specific RMBS securities and advised his clients to short them, at the same time his desk was allowing the very same securities to be included or referenced in Gemstone 7, a CDO that the bank was assembling for sale to its clients. In fact, the bank was selling some assets that Mr. Lippmann believed contained “crap.” While the Gemstone CDO was constructed and marketed by the bank’s CDO Desk, which is separate from the trading desk controlled by Mr. Lippmann, both desks knew of Mr. Lippmann’s negative views. The bank managed to sell $700 million in Gemstone 7 securities which then failed within months, leaving the bank’s clients with worthless investments.

This case history raises several concerns. The first is that Deutsche Bank allowed the inclusion of Gemstone 7 assets which its most senior CDO trader was asked to review and saw as likely to lose value. Second, the bank sold poor quality assets from its own inventory to the CDO. Third, the bank aggressively marketed the CDO securities to clients despite the negative views of its most senior CDO trader, falling values, and the deteriorating market. Fourth, the bank failed to inform potential investors of Mr. Lippmann’s negative views of the underlying assets and its inabilityto sell  over a third of Gemstone’s securities. Each of these issues focuses on the poor quality of the financial product that Deutsche Bank helped assemble and sell. Still another concern raised by this case history is the fact that the bank made large proprietary investments in the mortgage market that resulted in multi-billion-dollar losses  – losses that, in this instance, did not require taxpayer relief but, due to their size, could have caused material damage to both U.S. investors and the U.S. economy.

“Mr.  Lippmann” in the above summary refers to Greg Lippmann, Deutsche Bank’s top global CDO trader. Regarding Mr. Lippman, the Senate report finds the following (on page 330):

By the middle of 2006, Mr. Lippmann repeatedly warned and advised his Deutsche Bank  colleagues and some of his clients seeking to buy short positions about the poor quality of the assets underlying many CDOs. He described some of those assets as “crap” and “pigs,” and predicted the assets and the CDO securities would lose value.

At one point, Mr. Lippmann was asked to buy a specific CDO security and responded that it “rarely trades,” but he “would take it and try to dupe someone” into buying it. He also at times referred to the industry’s ongoing CDO marketing efforts as a “CDO machine” or “ponzi scheme.”

“Gemstone” in the above summary refers to a CDO that the Subcommittee chose to examine in detail called Gemstone CDO VII Ltd. (Gemstone 7).  The Subcommittee report states the following (on page 331) regarding Gemstone 7:

In October 2006, Deutsche Bank began assisting in the gathering of assets for Gemstone 7, which issued its securities in March 2007.  It was the last in a series of CDOs sponsored by HBK Capital Management (HBK), a large hedge fund which acted as the collateral manager for the CDO. Deutsche Bank made $4.7 million in fees from the deal, while HBK was slated to receive $3.3 million. It was not the last CDO issued by Deutsche Bank. Even after Gemstone 7 was issued in March of 2007, Deutsche Bank issued 9 additional CDOs.

Gemstone 7 was a hybrid CDO containing or referencing a variety of high risk, subprime RMBS securities initially valued at $1.1 billion when issued. Deutsche Bank’s head global trader, Mr. Lippmann, recognized that these RMBS securities were high risk and likely to lose value, but did not object to their inclusion in Gemstone 7. Deutsche Bank, the sole placement agent, marketed the initial offering of Gemstone 7 in the first quarter of 2007. Its top tranches received AAA ratings from Standard & Poor’s and Moody’s, despite signs that the CDO market was failing and the CDO itself contained many poor quality assets.  Nearly a third of Gemstone’s assets consisted of high risk subprime loans originated by Fremont, Long Beach, and New Century, three lenders known at the time within the financial industry for issuing poor quality loans and RMBS securities.
Although HBK directed the selection of assets for Gemstone 7, Mr. Lippmann’s CDO Trading Desk was involved in the process and did not object to including certain RMBS securities in Gemstone 7, even though Mr. Lippmann was simultaneously referring to them as “crap” or “pigs.” Mr. Lippmann was also at the same time advising some of his clients to short some of those same RMBS securities. In addition, Deutsche Bank sold
five RMBS securities directly from its inventory to Gemstone 7, several of which were also contemporaneously disparaged by Mr. Lippmann.

Footnote #1325 on paqe 347 shows the disdain for the products the traders were selling was widespread among the traders, as a trader sends a parody of a rap song to his boss at Deutsche:

Mr. Lippmann’s negative views were shared by his traders. In an email originally sent by one of the traders on his desk, Rocky Kurita, the CDO business is set to a song, “CDO Oh Baby,” by Vanilla Ice with the following lyrics: “Yo vip let’s kick it! CDO oh baby, CDO oh baby. All right, stop, collaborate and listen. Spreads are wide with a technical invasion. Home Eq Subs were trading so tightly. Until Hedge Funds Bot Protection daily and nightly. Will they stop? Yo I don’t know. Turn up the Arb and let’s go. To the extreme Macro Funds do damage like a vandal. Now, BBs are trading with a new handle. Print, even if the housing bubble looms. There are never ends to real estate booms. If there  is a problem, yo, we’ll solve it. Check out the spreads while my structurer revolves it. CDO oh baby, CDO oh baby.” 11/8/2005 email from Jordan Milman to Greg Lippmann, DBSI_PSI_EMAIL00686597-601 (forwarding an 11/8/2005 email from Rocky Kurita at Deutsche Bank).

Ameriquest Mortgage Securities, Inc. (AMSI) loans were part of the Deutsche Bank warehouse inventory that were included in Gemstone 7. On page 362 of the report, the Subcommittee finds that Mr. Lippmann was also very disdainful of the Ameriquest loans, but that he bought them to sell to investors:

On April 6, 2006, Mr. Lippmann called AMSI 2005-R7 M8 a “crap name.”  In a June 16, 2006 email, Mr. Lippmann called  AMSI generally a “weakish name.”  On December 12, 2006, Gemstone 7 purchased $5 million of another RMBS, AMSI 2005-R11 M10, with no objection from the Lippmann trading desk. (footnotes omitted)

The Report has very many examples of Mr. Lippman and his colleagues and traders sending emails to each other wherein they repeatedly refer to loans and securities as “absolute pigs” and “generally horrible” and “crap” as Deutsche Bank was buying these very loans and securities to sell to investors.  “Doesn’t this deal blow?” Lippman asks one of his traders (page 361), as they forge ahead with the deal.

The Subcommittee Report records in painful, exhaustive detail the building and collapse of mortgage securitization and in particular the role of two of the largest entities, Deutsche Bank and Goldman Sachs, in causing investors to lose billions while they reaped the largest profits in the history of their companies.

The Subcommittee Report focused on the financial collapse and Wall Street.  The aftermath of that financial collapse was widespread unemployment and foreclosures.

If the Subcommittee had extended its investigation, it would have found that the trusts with the loans from the four mortgage companies identified as “crap” by Deutsche Bank’s traders became the top foreclosure litigants in the country as Deutsche Bank itself became known as “America’s Foreclosure King.”

When Deutsche Bank, as trustee, foreclosed, it was no more honest with courts and foreclosure defendants than it had been with investors.  To prove to courts and homeowners that the trusts owned the mortgages in foreclosure actions, Deutsche Bank most often relied on documents produced by Lender Processing Services (“LPS”) to create mortgage assignments to the trusts when the mortgages had been originated by Ameriquest, Fremont, Long Beach and New Century.

LPS employees signed thousands of mortgage assignments as if they were officers of Ameriquest, Fremont, Long Beach and New Century.

Both the Alpharetta, Georgia and the Mendota Heights, Minnestoa offices of LPS produced these Assignments.

On these Assignments, the dates that the  trusts acquired the mortgages are falsely stated.

These false Assignments were prepared from 2007 to at least February, 2010.  When LPS stopped producing the Assignments, employees of other mortgage servicing companies continued these practices.

The Deutsche Bank trusts needed these Assignments because they failed to get Mortgage Assignments from the loan originators to the trusts  – even though Deutsche Bank promised investors and the SEC they would get these mortgage assignments.

On tens of thousands of these LPS produced Assignments, the mortgage servicer is identified as American Home Mortgage Servicing.  On the documents produced by LPS subsidiary Docx in Alpharetta, the servicer is identified in a box in the upper left-hand corner as “AHMA” or “AHCIT.”

AHMA is an abbreviation for American Home Mortgage Acquisition, the company that became American Home Mortgage Servicing in Coppell, Texas.  American Home Mortgage Acquisition, owned by billionaire investor Wilbur Ross, (the “King of Bankruptcy”) purchased the $45.3 mortgage servicing business of bankrupt American Home Mortgage in September, 2007.

AHCIT is an abbreviation for American Home Citigroup.  In February, 2009, Citigroup sold its servicing rights on 185,000 loans to American Home Mortgage Servicing (AHMSI) for $1.5 billion. Citigroup was one of the primary servicers of the Ameriquest loans.

Only a few courts have recognized that the LPS assignments were fraudulent and forged, even after former employees of Docx admitted on a segment of CBS “60 Minutes” to forging over 4,000 documents each day for several years.

No criminal charges have been filed against Deutsche Bank, Lender Processing Services or American Home Mortgage Servicing and all three of these corporations continue to pursue forecloses in courts
throughout the United States using fraudulent mortgage assignments to trusts created by Deutsche Bank and sold to investors as the bank was shorting these same investments.

~

4closureFraud.org

Comments
13 Responses to “Deutshe Bank, Securitization Fraud and Foreclosure Fraud w/ Bonus Rap Song”
  1. xo says:

    Candy Arreche is a complete fraud.

  2. Nancy Coxall says:

    I feel absolutely terrible for all of you whoes home is in foreclosure….Do not leave your home…shot of someone knocking on your door from Deutsche Bank, no one will challenge…Just have all your legal papers out in plain sight so you can prove if challenged that they have no legal right or authority to take you home.

    I say this because before I knew all about the fraud, I believed there was nothing that could be done. IndyMac Bank, Deutsche Bank and MERS are all involved in the foreclosure of my retirement home that we left. It is still vacant. Deutsche Bank bought my home at the Auction. I have fraud on my Mortgage starting on that day of the closing. The foreclosure itself….Robo-signers on two Assignments of Mortgage that they tossed my home back forth for IndyMac Bank and Deutsche Bank….and might I add IndyMac bank didn’t even exist at that time.

    Yes in deed Mr. President Obama…..DO YOUR JOB AND GIVE AMERICA BACK TO ITS PEOPLE

  3. yvonne says:

    Let me read and vet this info before submitting my comments…meanwhile…can anyone research the connection with Deutsche Bank and Bankers Trust…particularly the acquisition of the Bankers Trust in NY when Bankers Trust was charged by the SEC and not allowed to continue with what they were doing…the actual securities held by Bankers Trust at the time…,they had reportedly sold of some ‘toxic’ ‘mortgages’/investments to another New York trust…let me know what you come up with…thanks….and who are currently being foreclosed under Banker’s Trust? And why is Deutsche Bank referred to in the foreclosures as FKA/formerly known as Bankers Trust when they never were known as such…but bought over…acquisitioned? not merged….

  4. Candy Arreche says:

    Deutsche Bank is doing the same things here in Puerto Rico, a Commonwealth of the USA in the Caribbean. We have enough problems being treated like third class US citizens and on top of this Deutsche Bank is foreclosing on our properties using 2 of over a thousand corporations they have incorporated in Delaware or Nevada. The corporations they us here are Reo Properties and DB Structured Properties. These corporations have not filed their paperwork as a foreign corporation and do not have any business license ,not even to do collections nor banking. When they file for foreclosure they are not filing the non-resident bond Rule 69.5 requires from foreign corporations. When they buy the mortgages from local banks, the local banks say thy have no further interest in the note. Yet when they file foreclosure procedures they file in the name of the local bank and then transfer the rights of the case from the local bank to Reo Properties, but the local bank sold to Deutsche, how can they re-sell to Reo Properties ??? I confronted over the phone the Attorney and Vise President of Deutsche Bank Americas, Mary Doherty, with this situation and she told me that since the Bank owned all the corporations they can mix and match the assets from one corporation to another? I wonder were she studied law. Candy Arreche, JD

  5. l vent says:

    The Big Short, The Big Swindle, The Great Stick-up of America, The Ponzi Scheme Heist. There are alot of names for this crime.
    There are many culprits,FOREIGN OWNED MULTINATIONAL BANKS such as, Deutsche, Chase, Wells Fargo, BofA, CONgress, The fake mortgage lenders who were really FOREIGN MULTINATIONAL OWNED, FANNIE AND FREDDIE, they were the ORIGINATION FRAUDSTERS, the mortgage servicer fraud, The real estate firms, the title insurance companies, the so called ratings agencies, the home builders, the appraisal fakery, the loan underwiting fakery, the closing fraudsters,MERS, Wall Street firms like Goldman Sucks and AIG, Lehman Bros.
    The result of that VAST CRIMINAL NETWORK AND ITS ENORMOUS PONZI SCHEME and all of the attempts to cover it up has lead to MASSIVE CORRUPTION OF ALL OF OUR LEGAL PROTECTIONS and this is also is why there is the FORECLOSUREFRAUD SCAM, THE SHORT SALE SCAM, THE DEED IN LIEU SCAM, THE LOAN MOD SCAM, THE CASH FOR KEYS SCAM,THE INTERESTED INVESTOR THAT WANTS TO BUY YOUR HOME SCAM, and the entire U.S Governement is still attempting to cover it up and are continuing to allow these criminals to STEAL HOMES THEY DO NOT OR NEVER HAVE OWNED,
    along with Congress with the massive tax-payer funded bailouts, THE FEDERAL RESERVE KEEPS ROBBING THE AMERICAN PEOPLE WITH MASSIVE INFLATION AND DEFLATION OF THE CURRENCY VIA QE2 AND THE BACK DOOR BAILOUTS TO THEIR PERPS, THE BANKSTERS AND WALL STREET.,the massiveness of the cover-up for these crimes includes almost all of the attorneys, the entire Judicial system is all in on the cover-up so as to try and save something that was stolen from ALL of AMERICA and only the criminals that STOLE IT SHOULD BE FORCED TO REPLACE THE MISSING STOLEN WEALTH, NOT THE VICTIMS. ALL OF THAT WEALTH WAS CREATED OFF OF THE BACKS OF THE AMERICAN PEOPLE AND IT WAS CREATED OFF OF THE BACKS OF THE VICTIMS OF THE FRAUD ALL OF THESE CRIMINAL SHEISTERS COMMITTED.
    The victims of these horrible crimes are every U.S. citizen with the exception of the top 2%, the so called elite class.
    That is why the whole scandal is being called ForeclosureGate.
    The real criminals hiding behind the scenes of this FINANCIAL HOLOCAUST AND THE ROBBERY OF THE AMERICAN PEOPLES HOMES AND WEALTH AND JOBS ARE THE FOREIGN MULTINATIONALS AND ALL OF THEIR MINIONS WHO HAVE COMPLETELY CORRUPTED OUR GOVERNMENT AND OUR JUDICIAL SYSTEM.
    THEY WORE AN AMERICAN FACE TO ROB THE AMERICAN PEOPLE BLIND.
    We The People cannot let them get away with it.

  6. Isn’t it even worse when attorney firms forge signatures and robo-sign? Shouldn’t they know better?

    The arrogance…..

    • enough already says:

      isnt this enough already the boyyom line is we cant sell these go foraken homes. when times are good there
      is a profit when you sell a home well now its the negative. there should have been a built in provision, i case real estate turned and went the other way banks/trusts homever cant foreclose. a work out mortgage needs to be done. but when in your lifetime dod real estate gp the other way ? help we need the president. please help we need to stop the hurting of american families. houses are not cars. please save us from the this tyranny they call our judicial system and end foreclosures. i am a miami that now lives in tampa bay area. did you here the article about miami dade county the investors are walking away from there properties leaving people in a learch with out water and electric. this is atrocities happening the wild west. it must stop please help us. please write who you can and stop these foreclosoures

  7. David Robert says:

    – and what would we expect from a consciousness of a Bank that just a few years ago funded one of the largest death marches on the planet and anyone who challenged the 3rd Reich was executed, I believe we are talking over 6 million executions and Deutsche Bank financed the death camps and the testing and experiments performed on those victims.

    Now this German Nazi war machine known as Deutsche Bank National Trust Company is in our back yards throwing American families in the street. Their organizing principal, lie, cheat, robo-signers, forgery, counterfeiting, attack anyone and everyone and fix on failure or slip the Judge, Clerk or Sheriff or all the above some bribe $$. I also find it truly amazing how many Jewish Law Firms are in bed with these ass holes.

    The American people need to send these criminal bastards back to Germany in body bags.

    Spread the news about this sinister Bank and who they really and what they represent and we can take their slimly asses down.

    Or you can always go back to sleep and wait for another episode of American Idol and pretend you love your country.

    • MARIO KENNY says:

      I like the last line of your rant the best

    • l vent says:

      The same criminals that are committing this financial terrorism they are the Fourth Reich. This is the Revived Roman Empire here in America. All of the same players are hiding behind the scenes that were also involved in the first Holocaust. Check out this link: http://www.theforbiddenknowledge.com/hardtruth/jesuit_world_control.htm

      • enough already of this b-ll sh-t says:

        I MADE A POST IN ANOTHER EMAIL WHERE IS OBAMA , HE MUST BE HIDING IN THE HILLS WITH OSAMA.

        WHERE IS OUR ‘NEWS CONFERENCE” LIKE ALL THE OTHER PRESIDENTS WHEN THINGS WERE BAD. THEY WOULD COME ON TRY AND BOOST OUR MORAL. REAGAN AND CLINTON WERE THE BEST AT THAT. WHERE IS OBAMA. HE SHOULD BE SAYING ” I WILL MAKE IT MY DUTY TO RESTORE AMERICA TO ITS HUMBLE SELF. I WILL WORK DILIGENTLY TO STOP THIS MORTGAGE FRAUD THAT HAS BEEN PERPATRATED ON THE AMERICAN PEOPLE. AND RESTORE OUR COUNTRY TO IT GLAMOROUS SELF”

  8. MARIO KENNY says:

    Thanks for the info Lynn, I am so glad you are doing this.

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