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Exclusive: NY Judge in Largest Bankruptcy Case in History Receives IRS & SEC Whistleblower Filing … Updated

24 April 2014 76 Comments

Creditor and Whistleblower evidence alleges securities fraud, income tax fraud and income tax evasion. Further investigation is necessary to protect millions of homeowners.

New York City, New York – U. S. Bankruptcy Court, Southern District of New York’s Judge Martin Glenn, presiding over the simultaneous Chapter 11 bankruptcy filings of 51 residential mortgage companies, received a whistleblower filing package today from one of the creditors in this case, a private American citizen, Greg Morse.

The Internal Revenue Service and Securities Exchange Commission received the same package today. Among its contents is Morse’s whistleblower submission of IRS Form 211—Application for Award for Original Information, and SEC Form TCR—SEC Tip, Complaint or Referral, accompanied by voluminous supporting documentation. These federal agencies are mandated to investigate allegations of corruption and fraud.

The 51 bankrupt residential mortgage companies are directly or indirectly owned by Residential Capital, also known as ResCap.

Morse, a commissioned officer was honorably discharged from the U. S. Air Force and the U. S. Navy as an F-4 Phantom fighter pilot. He was one of the initial people who uncovered and successfully prosecuted a federal fraud case regarding the savings and loan debacle in the late 1980’s.

Like millions of Americans, Morse, believed when he refinanced his home mortgage in 2008 that it was legitimate but found out otherwise when he discovered that his chain of title had been broken by Mortgage Electronic Registration Systems, Inc. (MERS). His home in Texas was not and is not in foreclosure. He has never been late or missed a mortgage payment.

According to N.Y. bankruptcy court records, as of March, 2012, at stake are over 2.4 million mortgages and Residential Mortgage Backed Securities (RMBS) representing over 6.2 million Americans, according to U. S. census statistics.

The value of this bankruptcy case, as of today, is well over $400 billion—making it the largest bankruptcy in history.

There has been virtually no press coverage of this bankruptcy that affects the entire U.S. economy, millions of homeowners and nations who purchased RMBS securities. It far exceeds, in dollar volume and social impact, the General Motors bankruptcy which garnered front page media coverage for months.

68 percent of these mortgages in this N.Y. bankruptcy are either owned, insured, or guaranteed by Government Sponsored Enterprises (GSEs) of Fannie Mae, Freddie Mac and Ginnie Mae. Purportedly, a significant number of the mortgages are owned by RMBS Trusts.

Fannie Mae and Freddie Mac are in conservatorship (bankruptcy). Their conservator is the U. S. Federal Housing Finance Agency (FHFA). $45 billion is guaranteed by Ginnie Mae.

It appears this single bankruptcy represents at least 3% of all active U.S. residential mortgages.

Morse’s whistleblower filing package that was received by the Court today includes his 279 page jurat affidavit in support of IRS Form 211 and SEC Form TCR. His jurat affidavit is supported by 11,000 pages of corroborated, publicly sourced and court admissible evidence related to the mortgage crisis, the 2008 economic crash, his 2011 Racketeer Influence and Corrupt Organizations Act (RICO) civil case addressing his fraudulent mortgage—and the alleged acts of securities fraud, income tax fraud and income tax evasion.

As a court designated creditor, Morse has had access to documents through the official court-ordered website for large bankruptcies. He and his team have scoured through court documents and, to the best of their knowledge, it appears that these issues have not been introduced or investigated by the bankruptcy court.

Additional court docket information is available at KCC L.L.C. at their website and at the Official Committee of Unsecured Creditors website.

The next hearing regarding Morse’s case is currently scheduled for May 15. It regards his RICO civil case due to a fraudulent residential mortgage on his Texas home, in which he is the sole pro se plaintiff. Morse’s RICO civil case is how he became a creditor in this New York bankruptcy case. Under 18 USC Section 1964 private citizens may seek civil damages due to RICO fraud activities. He has been in federal court since April 26, 2011 attempting to get the court to allow the evidence to be brought before a jury of his peers.

Morse’s whistleblower filing to the IRS and SEC grew out of his RICO case which was originally filed in the U. S. Federal District Court, Eastern District of Texas, and is currently on interlocutory appeal in the 5th Circuit Court of Appeals.

In an exclusive interview, when asked what he saw taking place behind the scenes of the mortgage crisis, Morse said, “I see this RICO fraud enterprise with MERS in the center as being a well-masked, legally controlled and potentially a judicially assisted resource, land and asset grab from the American people. Just look at the publicly disclosed evidence. Remember, according to the Federal Reserve’s own reports, the current value of all residential mortgages in the country is estimated to be $13 trillion or so. Compare that number with only the short term federal debt that now exceeds $17 trillion. That means that the total value of residential mortgages alone represents 76% of the national debt. This is very serious and the stakes are high. It doesn’t appear that Judge Glenn is aware of the alleged securities fraud, income tax fraud and income tax evasion issues related to a number of the 51 bankruptcy petitioners,” Morse added. “If Judge Glenn elects to consider our evidence, he could do nothing or he could place this bankruptcy hearing in abeyance pending the results of my requested IRS and SEC investigations. If Judge Glenn allows the bankruptcy to proceed …”

According to court documents, the second amended Joint Chapter 11 Plan, approved on December 13, 2013 allows for the liquidation of hundreds of billions of dollars worth of homeowners’ mortgages to legendary business billionaire magnate—the fourth richest man in the world, according to Forbes, Warren Buffett’s Berkshire Hathaway, Inc. and Ocwen Loan Servicing, L.L.C.

The bankruptcy terms allows Berkshire Hathaway and Ocwen to purchase over $400 billion worth of mortgages and RMBS trusts for less than $5 billion. Once these mortgages are sold, Berkshire Hathaway and Ocwen will be bankruptcy remote. That means that once the mortgage assets are sold to them, American homeowners, like Morse, will not be able to obtain, through discovery, in judicial proceedings, the documents pertaining to their mortgages to determine if there is an issue with their property’s chain of title or verify if there is a free, clear and legally traceable ownership of their homes. It’s called bankruptcy 101. You can’t go back after the ink is dry.

In effect, mortgage records of millions of American homeowners would be destroyed.

Last March, Ocwen, was found guilty of breaking laws in 49 states.

As the Los Angeles Times’ Scott Reckard reported: “California victims of alleged foreclosure abuses will get $268 million in relief from a $2.1-billion national settlement with Ocwen Financial Corp., the nation’s largest non-bank provider of mortgage customer service … The announcement … also spotlights a growing controversy as major lenders outsource their mortgage servicing operations to Ocwen and other firms that specialize in collecting payments, pressuring delinquent borrowers and foreclosing on defaulted mortgages.”

Berkshire Hathaway and Ocwen did not respond to a request for comment for this article.

“The result of this massive sell-off of mortgages is that this effective destruction of documents could contribute to covering up, and making it more difficult to corroborate the alleged acts of securities fraud, income tax fraud and income tax evasion. This is the endgame exit strategy and cover-up I warned about four years ago,” Morse explained to this journalist. “For obvious reasons, it was necessary to ensure that Judge Glenn was made aware of the evidence otherwise he could go down in history as the man who unknowingly destroyed the rights of millions of American homeowners.”

In October, 2010 Morse wrote an article that was well circulated on the Internet where he forecasted and warned that this exact set of bankruptcy proceedings and results would occur and prove to be the endgame exit strategy for those banks and participants, like MERS, in the RICO fraud enterprise at the heart of the mortgage crisis.

“The light speed rate at which this bankruptcy, on behalf of the money changers with their Fortune 125 law firms, is being pushed through is breathtaking. For the last 3 years, I, as a pro se plaintiff, have been following the rules and have not been able to present the evidence before a jury. Unlike my savings and loan days in the late 1980’s, where the rule of law still applied in America and the guilty were held accountable, I have witnessed acts of perjury and misrepresentation on behalf of the defendant’s attorney’s made to the court with no redress or accountability.” Morse said.

James Kidney, a SEC trial attorney, is also concerned about the lack of accountability in the 2008 economic crisis. As Bloomberg News’ Robert Schmidt recently reported, Kidney warned during his outgoing retirement remarks, “The SEC has become an agency that polices the broken windows on the street level and rarely goes to the penthouse floors. On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”

Because of the scope and volume of evidence Morse has uncovered and documented, in addition to the IRS, SEC and Judge Glenn, his whistleblower filing was submitted to over 500 other recipients including: President Barack Obama, the Secretary of the Treasury, all Supreme Court Justices and other members of the U. S. Judicial Branch, Chairmen and Ranking Members of the U.S. House of Representatives Standing Committees, Inspectors General of numerous federal agencies, G20 Summit members, members of the U. S. Senate, the national and international media, attorneys from the Birmingham, Alabama law firm of Bradley Arant Boult Cummings, LLP, who are representing both debtors and creditors in the N.Y. bankruptcy case, and the New York law firm of Morrison & Foerster, LLP.

According to Morse’s whistleblower jurat affidavit: “The IRS and the SEC are the last remaining hopes for justice in disclosing the complete and truthful facts regarding this RICO fraud enterprise that is the mortgage crisis and are the federal agencies with the experience, capability, jurisdictional authority and congressionally mandated tasks of investigating, stopping and prosecuting fraud. Justice and the rule of law must be maintained in these legal actions or the rights, homesteads and financial lives of millions of Americans will be destroyed. The results, positive or negative, will directly affect millions of Americans today and in the years to come.”

Update: The Court will not consider Whistleblower evidence which apparently was not submitted properly.

Update: May 15th hearing under seal until August 19.

Update: Be careful when people ask you for money for a legal defense fund (or anything for that matter). I do not sanction anyone’s legal defense fund or signing petitions.

At the end of this article: Leaked Federal Reserve Doc: Go from paper homeowner instruments to electronic. Foreclosure fraud? What fraud? I provide several free resources as well as professional services that homeowners who are victims of the banks can look in to. There are countless homeowners, who have been fighting the banks for years, and are very generous about providing free information. Another excellent place to look is at court cases. These are open source and will not cost you a dime. Do your own research. In addition to the corrupt bankers, there are cons jobs out there coming out as angels of light.

Update: Hollywood takes the problem to the big screen in The Big Short.

Update April 21,2016: Why Haven’t Bankers Been Punished? Just Read These Insider SEC Emails

Is your home at risk? Is your landlord’s home at risk? Check the list below.

Residential Mortgage Company Bankruptcy Petitioners
Residential Funding Company, LLC
Residential Capital, LLC
ditech, LLC
DOA Holding Properties, LLC
DOA Properties IX (Lots-Others), LLC
Equity Investment I, LLC
ETS of Virginia, Inc.
ETS of Washington, Inc.
Executive Trustee Services, LLC
GMAC-RFC Holding Company, LLC
GMAC Model Home Finance I, LLC
GMAC Mortgage USA Corporation
GMAC Mortgage, LLC
GMAC Residential Holding Company, LLC
GMACRH Settlement Services, LLC
GMACH Borrower LLC
GMACR Mortgage Products, LLC
Home Connects Lending Services, LLC
Homecomings Financial Real Estate Holdings, LLC
Homecomings Financial, LLC
Ladue Associates, Inc.
Passive Asset Transaction, LLC
PATI Real Estate Holdings, LLC
RAHI Real Estate Holdings, LLC
Residential Accredit Loans, Inc.
Residential Asset Mortgage Products, Inc.
Residential Asset Securities Corporation
Residential Consumer Services of Alabama, LLC,
Residential Consumer Services of Ohio, LLC
Residential Consumer Services of Texas, LLC
Residential Consumer Services, LLC
Residential Funding Mortgage Exchange, LLC
Residential Funding Mortgage Securities I, Inc.
Residential Funding Mortgage Securities II, Inc.
Residential Funding Real Estate Holdings, LLC
Residential Mortgage Real Estate Holdings, LLC
RFC-GSAP Servicer Advance, LLC
RFC Asset Holdings II, LLC
RFC Asset Management, LLC
RFC Borrower LLC
RFC Construction Funding, LLC