Who’s on First

posted by admin
August 20, 2010

Mortgages bundled into securities were a favorite trick of Wall Street at the height of the big bubble. The securities changed hands frequently, the French bought billions, and the investment banks profiting from mortgage payments were often not the same parties that made the loans. At the heart of this disconnect was the Mortgage Electronic Registration System, or MERS, a company that serves as the mortgagee of record for lenders, allowing mortgage pools to transfer without the necessity of recording. The point was investment banker fees without responsibility or accountability to the home owner!

MERS was made for the banks, but courts are now slamming down the impact of all of this financial juggling when it comes to mortgage ownership. To foreclose on real property, the plaintiff must be able to establish the chain of title entitling it to relief. As MERS has acknowledged that MERS is a “nominee”—an entity appointed by the true owner simply for the purpose of holding property in order to facilitate transactions. Recent court opinions stress that this defect is not just a procedural but is a substantive failure, one that is fatal to the plaintiff’s legal ability to foreclose.

The latest decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E–11. The court held that MERSbecause it was a mere nominee; and that as a result, plaintiff Citibank could not collect on its claim. The judge opined:

Since no evidence of MERS’ ownership of the underlying note has been offered, and
other courts have concluded that MERS does not own the underlying notes, this
court is convinced that MERS had no interest it could transfer to Citibank.
Since MERS did not own the underlying note, it could not transfer the
beneficial interest of the Deed of Trust to another. Any attempt to transfer
the beneficial interest of a trust deed without ownership of the underlying
note is void under California law
.

While not binding on courts in other jurisdictions, the ruling could serve as persuasive precedent there as well, because the court cited non-bankruptcy cases related to the lack of authority of MERS, and because the opinion is consistent with prior rulings in Idaho and Nevada Bankruptcy courts on the same issue. Call Bill Miller at 480-948-3095 a long standing Arizona Trial and Real Estate Lawyer located in Scottsdale.

To the Left to the Left

posted by admin
June 25, 2010

For a long time conservative like me, this is a tough issue to blog on. I lean left on the Gulf oil spill mess. So, call me a flaming liberal; no pun intended.

For over a month or two, Obama watched the oil spill spread over the Gulf of Mexico with the same powerless shock as other Americans. Regarding this, the right wing pundits got a big time pay back for Bush slander on Katrina. Yep, Bush should have stopped the hurricane & Obama could plug the leak.

Lampooned by his contingency & ‘my people’ for his impotence, Obama was spurred into action. He attacked the only available party—BP—and, to underline the stress with which he takes this problem, he gave his first Oval Office address on the subject. Lawsuits! That is what the professional/motivational speaker/professor said. Where is “mission-accomplished-bush” when you need him!

Obama’s address got poor reviews; his attack on BP better ones. Last week the firm bowed to pressure, and announced that it was, in effect, handing over $20 billion to the government to pay for compensation and clean-up, as well as cancelling the payment of any dividends this year and setting up a fund—of a mere $100m—to compensate unemployed oil workers.

This may do Obama some good. Whether it will benefit our friends in the Gulf is more doubtful. Businessmen are already blue, shot-down by the economy and nervous of their president’s attitude towards free markets.

I lean very left on this one. Where are those ‘onerous-left-wing-regulations” when you need them? Anyone who says the ‘free market’ can solve this mess needs history lessons.

Go get ‘em Obama! Sue everyone later, but fix the problem first.

May God richly bless our friends in the Gulf as this drags on.

Make sure to call Bill Miller @ 480-948-3095, a 22 year Arizona litigation and trial lawyer with any questions about Arizona law or Maricopa County courts.

Following on the heels of the federal class-action lawsuit filed against two nation­al law firms and national accounting firms last week in Phoenix, Greenberg Traurig and Mayer Hoffman McCann and its affiliates find themselves on the wrong end of another inves­tor lawsuit to recover some $52.3 million that the investors claim the lawyers and audi­tors helped Mortgages Ltd (MLtd) and its wholly-owned subsidiary Mortgages Ltd. Secur­i­ties (MLS) defraud investors to the tune of $900-plus million between 2004 and 2008.

The latest lawsuit was filed on June 1st in Maricopa County Superior Court in Phoenix by Scotts­dale attorney William A. Miller on behalf of the Plaintiff, Victims Recovery, LLC (VR), a group that represents 18 high net-worth investors who, according to the complaint, as the result of the defendants’ misrepresentations, bought into Mortgages Ltd.’s promise of high-interest income and relatively quick payback of principal from its “secured” investments.

In addition to Greenberg Traurig and Mayer Hoffman, the complaint names as defendants May­er Hoffman affil­i­ates, CBIZ, Inc., and CBIZ-MHM, LLC, as well as two Greenberg attor­neys, Robert Kant and Jeffrey Verbin, two Mayer Hoff­man accountants and auditors, Charles McLane and Joel Kramer, and three former MLtd executives, former president Michael Den­ning, former CFO Chris­to­pher Olson and former vice president Jeffrey Newman, who was also the for­mer president of MLS, which was used to sell MLtd’s invest­ments to investors.

Kant, Verbin and Greenberg Traurig were MLtd’s and MLS’s attorneys from 2006, while McLane, Kramer and Mayer Hoffman reviewed and audited the company’s 2004-08 financial statements, which Olson prepared. According to the complaint, these defendants participated in or facilitated MLtd’s fraud by preparing false offering memoranda, other legal documents and indepen­dent auditors’ reports, which mis­led investors by misstating the real risks of MLtd’s loan programs, and the fact that MLS was selling securities illegally and that MLtd was actually insolvent but for creative accounting and undisclosed bor­row­ing from related and third parties.

In the complaint VR says, “the Company’s lawyers, accountants and auditors made sure that “MLtd would fall [like Humpty Dumpty], leaving investors ‘holding the bag’ of worth­less paper.” After detailing how all of that happened, VR alleges claims of fraud, negligence, aiding and abetting breaches of con­tract, bad faith and fiduciary duty, and civil conspiracy against Greenberg Traurig, Mayer Hoffman and the other defendants.

By way of background, MLtd was founded in 1963 and licensed as an Arizona mortgage bank­er. It opera­ted as a private real estate mort­gage len­der in Arizona until 2008 when Scott Coles took over the compa­ny as CEO from his father who founded the company. Coles moved the compa­ny’s business from making traditional residential mortgage loans to making short-term multi-million dollar bridge loans to commercial real estate developers and buil­ders for pro­jects in Arizo­na such as mul­ti­family residential complex­es, office buildings and unde­vel­op­ed mixed-use prop­erties.

MLtd packa­ged these loans into “pro­grams” and sold invest­ments in the pro­grams as unreg­i­s­tered securities through its MLS subsi­di­ary to investors, such as those represented by VR, to raise the money it used to make the loans. Accor­ding to VR’s complaint, MLtd made its money by col­lec­ting “a virtual airline-like laundry list” of fees from both its borrowers and its inves­tors in addition to receiving the “interest spread,” the dif­fer­ence between the interest received from bor­rowers and the inter­est it paid to inves­tors, on the loans.

One of MLtd’s loan investment programs, its “Revolving Opportunity” (RevOp) program, was differ­ent from its other programs in that it was geared towards high net-worth investors, like the VR investors, and required higher minimum investment amounts (initially $500,000.00 and later increased to $1 million). According to VR’s complaint, RevOp, the program that the VR investors lost their money in, was touted as offering investors preferred posi­tions, higher rates of return, better security, and more liquidity than the company’s other loan programs.

VR’s complaint goes on to say that MLtd increasingly originated significantly larger but few­er loans, many of which had delayed-funding terms that obligated the company to fund sub­stan­tial portions of the loans in stages rather than the entire amounts upfront. This magnified the adverse effects of the deteriorating real estate market conditions in Arizona in late 2006 and through­out 2007, all of which began to severely impact MLtd’s cash flow.

For example, as VR’s complaint states, in late 2006 through late 2007, MLtd made com­mit­ments to developers to loan them more than $670 million for a multitude of projects with­out the resources to fund those loans. Moreover, many of MLtd’s borrowers began defaul­ting on their large multi-million dollar loans and by January 2008, developers had defaulted on more than $100 million in loans.

According to the complaint, that coupled with the impact of having to meet delayed-funding obligations resulted in the company’s not having the money or ability to raise more money to pay the VR Investors their monthly interest or to honor their investment-redemption requests as required under RevOp. The complaint continues that with the assistance of the defendants, “[a]s a result of being so grossly overextended, MLtd and MLS pursued vari­ous Ponzi schemes of sell­ing even more loan programs to existing and new investors, including the VR Investors, to raise the money needed to pay the interest due investors on earlier investments and to keep the com­pany afloat.”

As a result, the complaint alleges, “MLtd’s house of cards came crashing down” when Coles, who also ran MLS, committed suicide on June 2, 2008, and just three weeks later, MLtd was forced into bankruptcy by its creditors. Short­ly after that the SEC and the Arizona Depart­ment of Financial Institutions (ADFI) began investi­ga­ting the com­pa­ny’s business, and the SEC shut MLS down for violating federal securities laws and the ADFI yanked MLtd’s license based on its improper finan­cial practices and accounting, which violated Arizona law.

The complaint explains that the VR RevOp investors first became aware of the fact that Greenberg Traurig and Mayer Hoffman may have been involved in MLtd’s fraud during MLtd’s bankruptcy proceedings. That then led these 18 investors to join together to set up VR to investigate the situation and that resulted in the lawsuit that VR filed on June 1st. A copy of VR’s complaint is available under the “Mortgages Ltd. Case” tab at the top of this website.

Be Careful of What you Ask for…

posted by admin
May 5, 2010

My dad always said be careful of what you ask for because you might just get it.

“Drill, baby,drill” was a siren song during the last election and some were all too quick to want more off-shore drilling. Well, look what happened … The big spill has been unfolding for more than two weeks, pouring at least 5,000 barrels of oil a day into the Gulf of Mexico, and probably a lot more than that. It began on April 20th with a fire and an explosion on an exploratory rig 40 miles from the Louisiana coast. Eleven workers were lost (RIP), and several days later it became apparent that the well underneath had begun to leak. By April 26th the slick was 80 miles across, with the western part 36 miles from reaching the coast.

An array of Federal agencies are on the scene, skimming up oily water, installing thousands of feet of boom in an attempt to contain the oil, and burning off some of the slick. BP, which was leasing the rig, will spend at least $500 million on the clean-up. Much depends on the wind, which could push the oil out towards the open sea—or in the other direction. If the oil does reach Louisiana, the costs will be grave. The lawsuits will fly. The coastal marshes are home to abundant and various animal life, as well as to fishing and tourism industries.

The lawyers will be the only winners. Sad, Sad, Sad. Be careful of what you ask for … We may not be able to stop such environmental nightmares, but if you need legal representation for business or real estate disputes in the Phoenix, Arizona, area, call Bill Miller at 480.948.3095.

The Fox Teaching at the Hen House

posted by admin
April 13, 2010

It’s not the traditional law professor career path, but disgraced securities plaintiffs attorney and all around scum bag Bill Lerach might make the transition from prison cell to ivory tower, according to ALM.

The University of California, Irvine School of Law is considering having Lerach teach an upper-level course in 2011, Assistant Dean for Communications and Public Affairs Rex Bossert confirmed Monday.

Lerach told the San Diego Union-Tribune last weekend that he is developing a course called “Regulation of Free Market Capitalism–Why Have We Failed?” He told the newspaper that he expects to “lecture at other law schools” and participate “in the ongoing debate about the need for better and more effective financial regulation and protection of investors.”

Lerach was released from a two-year sentence on March 8, the final two-and-a-half months of which were spent in home confinement following stints in an Arizona federal prison and a halfway house in San Diego. He still must complete 1,000 hours of community service and is scheduled to remain under supervised release for two years.

He pleaded guilty in 2007 to one count of conspiracy. The government alleged that members of his former firm, Milberg Weiss Bershad Hynes & Lerach, now called Milberg, paid kickbacks to lead plaintiffs in securities class actions.

Lovely! Only could lawyers dream up such. If you have a legitimate loss and need legal representation, call Bill Miller at 602.319.6899.

Think Global- Sue ‘em Local

posted by admin
March 23, 2010

As it has been said in ALM (American Lawyer Media), “In a global economy, price and convenience are valued above all else.” Global consumers demand produce out of season, buy sophisticated appliances made with cheap labor and build homes with materials shipped from abroad. And yet when these products prove to be defective, they expect to be able to sue the manufacturer at the local courthouse, regardless of where it resides. After all, the product reached them — so they should be able to sue in their home court, right?

We’ve come a long way from Penoyer v. Neff, 95 U.S. 714 (1878), when a defendant’s physical presence in the forum state was required to exercise jurisdiction over him. Various U.S. Supreme Court decisions have expanded the notion of personal jurisdiction, simultaneously muddying the water as to precisely what constitutional analysis is required.

Take, for example, Asahi Metal Indus. Co. v. Superior Court of Calif., 480 U.S. 102 (1986). There, the separate plurality opinions of justices Sandra Day O’Connor and William Brennan both approved of some form of the “stream of commerce” theory of jurisdiction but disagreed on the exact formulation of the test to be applied. Although lower courts subsequently used some form of “stream of commerce” analysis after Asahi, they seldom used it as a stand-alone test. Most have always added to it some form of “minimum contacts,” “purposeful availment” or other analysis to establish that the defendant somehow intended or expected to benefit from the jurisdiction. This traditionally has been seen as required by the due process clause.

In February, the New Jersey Supreme Court substantially expanded the scope of personal jurisdiction over foreign manufacturers in products liability cases by abandoning any form of “purposeful availment” or “minimum contacts” analysis, opting instead to rest exclusively on the “stream of commerce” theory. Nicastro v. McIntyre, 2010 N.J. Lexis 19 (N.J. Feb. 2, 2010). Nicastro was a classic products liability case. The defendant was a British manufacturer of metal presses used to recycle metal. The plaintiff was the operator of the machine, which severed four of his fingers. He sued the manufacturer for failure to warn and design defect, arguing that the machine lacked a specific safety guard that would have prevented the accident.

If you need help looking over your case, call Bill Miller in Scottsdale at 602.319.6899. He has been suing Fortune 500 companies for 22 years!

God’s Grace

posted by admin
March 23, 2010

I just got back from my beach house in San Diego with a sad story regarding the direction of our Country.

OK, it was very late, I had my old golden retriever Rose, a backpack beach chair, a nasty beard, a surf t-shirt, G-Star jeans from France (looked gnarly by design) and a rusty beach bike. I went to the liquor store to buy water for my prayer time on the beach that night. I needed to put the water in a paper bag so I could ride to the beach on the bike with Rose’s leash in my other hand.

Looking back, the bag of water must have looked like a 40 ounce beer. I looked like death warmed over because I had not shaved in a few days, had worked 10 hours at home and driven six hours without a stop to get to San Diego.

I almost got beat up big time by three college kids who shouted evil things and nicknamed me “HOMELESS.” They smacked me a time or two and had the nerve to mock sweet Rose. All because of who they thought I looked like.

I learned to fight as a young man (my son Billy is on his way to the Golden Gloves) and I think they were surprised I fought back so darn hard. Punks! My first thought was, I’ll bet I could have bought and sold your parents in two seconds, but that’s not the point, the point is Grace. Who taught these little brats to mock the poor, weak or homeless?

Today, I just learned that two preteens assaulted a woman walking home through a playground as part of a violent game called “Catch and Wreck,” in which children identify targets they think are homeless and then beat and rob them for fun.

An 11-year-old boy was arrested Monday night and charged with aggravated assault, conspiracy and robbery, Philadelphia police Lt. John Walker said.

A 12-year-old girl was charged shortly after the Friday night attack in southwest Philadelphia. The victim was surrounded by children, then punched and hit with sticks, police said. She suffered minor injuries to her knee and head and delayed seeking medical attention to help police with the investigation.

What is going on out there? I can only ask that parents, clergy and educators help stop this negative attitude towards the poor and homeless. I’ll be giving my jeans to Goodwill, hopefully whoever gets them is not on the receiving end of some idiot who doesn’t know grace or at least “get it.” Anyone could be there. Trust me, I felt it!

Not to worry, we’ll always be ready for State or Federal Court with the latest from Holland & Sherry, Prada or Gucci and a clean shave. Give Bill Miller, a 22 year Scottsdale litigation attorney, a call at 480.948.3095 to discuss any legal issues that are troubling you.

A Rose is a Rose

posted by admin
February 26, 2010

A Rose is a Rose by any other name. So is a crook and a federal appeals court has upheld the conviction of Franklin Brown, the former general counsel of Rite Aid, on fraud and obstruction charges in connection with the $1.6 billion accounting scandal that sent half a dozen executives to prison and cut the company’s stock price in half. You call him a lawyer, but he really is just a crook.

As American Lawyer Media states, the unanimous three-judge panel rejected Brown’s claims that both the prosecutors and judge had engaged in misconduct, and that secretly recorded tapes of his conversation with another executive had been tampered with.

But the appellate judges agreed that Brown, 82, who is now about halfway through serving his 10-year prison term, is entitled to a new sentencing hearing.

I say send them all away. If you have been wronged by a lawyer, a crook or a real estate con give Bill Miller a call at 602.319.6899 and we will see if we can help you. Our offices are off of the 101 in North Scottsdale.

TARANTULAS

posted by admin
September 1, 2009

“Tarantulas” was the term philosopher Friedrich Nietzsche used for those who are consumed by resentment. Unable themselves to be great at anything, they burn with a feverish fervor, expressed as righteous anger, to tear down the reputations of those who are great. Nietzsche regarded it as one of our deepest, darkest motivations. I think of my fellow counsel in two major cases I am working as Tarantulas. Each opposing firm has 100’s of lawyers on staff and offices all over the country, but we keep winning every possible motion. All rulings sway our way. In both matters we have the facts. In both matters we have the law. These lawyers can only be explained by Nietzsche. Often a large firm is like an HMO. Some good docs, some not too good and the bad ones hide behind their doors. Believe me, bigger is NOT better when it comes to law firms.

If you want a fair evaluation of a stock scam, real estate deal gone bust or commercial litigation matter, call Bill Miller at 602.319.6899. My Scottsdale, Arizona, law firm has been handing it to the white shirt law firms for 22 years. Tarantulas and all.

A Ship without a Sail

posted by admin
June 2, 2009

I just finished lunch with one of the smartest and richest guys in Paradise Valley, Arizona. He knows I am writing this post as he teased me about being silent the last few weeks. I told him I was WORKING on legal briefs and I did not have time to blog about the Arizona legal world and litigation.

Blogging is a luxury like being so well off you can — go green or eat only vegan. Working stiffs have no such luck.

Anyway, this guy told me he was so depressed at the markets–all of them–that he is like ship without a sail. I knew what he meant.

Too much time checking Drudge or WSJ. It is time to WORK. SAVE. PRAY. FIGHT. It’s not time to drift. For me this means going back to my legal roots. Doing my own legal research. Showing up 110% ready to fight. No more blogs for a while. Well, no more until this guy pays me. Hey, its almost six figures.

You real estate guys would do better getting in your car and driving to properties and meeting clients as opposed to sitting in front of the PC like a ship without …