DOJ: Wells Fargo Pays $2.09 Billion For Mortgage Fraud - No Word Yet On Child Welfare Fraud

If Wells Fargo was found to have misrepresented their quality of mortgage loans, then, just perhaps, Wells Fargo may be found to have also misrepresented their quality of administrative contracts for Social Security Administration electronic payments to "The Poors" (always said with clinched teeth.)

See, there are lots of foster kids who have aged out or emancipated out of foster care, where the Social Supplemental Income monthly disability grant is all they have to live from on the streets.

Many of these youth, living in group homes, may only have, by law, $40 a month, with a transaction back fee for each time they use their cards to pick up a pop and bag of chips for a fleeting moment of comfort from their lives of hell in an Adult Foster Care setting.

Many of these youth, living in boarding homes, may only have after paying for room and board, only $300 a month, where there is a fee for each cash withdraw to take the bus to the food pantry or their monthly 5 minute psychiatric medication review appointment.

Many of these youth are homeless, ending up to be, what the latest buzz term is, "victims of human trafficking", which is just a watered down version of these youth having to resort to prostitution to eat because the culture of privatization, or what I like to call, the residuals of the peculiar institution, once they age out of foster care, which included juvenile justice.

Then, it must is an absolute to complete the anagogic process to understanding this particular child welfare fraud scheme, by asking yourself.....how many of these SSI payments and mortgages are granted under fake identities of kids who were legally kidnapped, but are all grown up, or dead, on paper, now?

Anyway, like I have always said, selling chattel is the oldest form of survival for kids to reach their fullest potential, even if it is a few transaction fees at a time.

Wells Fargo Agrees to Pay $2.09 Billion Penalty for Allegedly Misrepresenting Quality of Loans Used in Residential Mortgage-Backed Securities

The Justice Department announced today that Wells Fargo Bank, N.A. and several of its affiliates (Wells Fargo) will pay a civil penalty of $2.09 billion under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) based on the bank’s alleged origination and sale of residential mortgage loans that it knew contained misstated income information and did not meet the quality that Wells Fargo represented. Investors, including federally insured financial institutions, suffered billions of dollars in losses from investing in residential mortgage-backed securities (RMBS) containing loans originated by Wells Fargo.  

“This settlement holds Wells Fargo accountable for actions that contributed to the financial crisis,” said Acting Associate Attorney General Jesse Panuccio. “It sends a strong message that the Department is committed to protecting the nation’s economy and financial markets against fraud.”  

“Abuses in the mortgage-backed securities industry led to a financial crisis that devastated millions of Americans,” said Acting U.S. Attorney for the Northern District of California, Alex G. Tse. “Today’s agreement holds Wells Fargo responsible for originating and selling tens of thousands of loans that were packaged into securities and subsequently defaulted. Our office is steadfast in pursuing those who engage in wrongful conduct that hurts the public.” 

FIRREA authorizes the federal government to seek civil penalties against financial institutions that violate various predicate criminal offenses, including wire and mail fraud. The United States alleged that, in 2005, Wells Fargo began an initiative to double its production of subprime and Alt-A loans. As part of that initative, Wells Fargo loosened its requirements for originating stated income loans – loans where a borrower simply states his or her income without providing any supporting income documentation.  

To evaluate the integrity of its increasing volume of stated income loans, Wells Fargo subjected a sample of these loans to “4506-T testing.” A 4506-T form is a government document signed by the borrower during the loan approval process that allows the lender to obtain the borrower’s tax transcripts from the Internal Revenue Service (IRS). 4506-T testing involves comparing the tax transcripts of the borrower with the income stated on the loan application. Wells Fargo implemented 4506-T testing on two of its programs. This testing revealed that more than 70% of the loans that Wells Fargo sampled had an “unacceptable” variance (greater than 20% discrepancy between the borrower’s stated income and the income information reflected in the borrower’s most recent tax returns filed with the IRS), and the average variance was approximately 65%. After receiving these results, Wells Fargo conducted further internal testing. This additional testing, performed by quality assurance analysts, was designed to determine if “plausible” explanations existed for the “unacceptable” variances over 20%. This additional step revealed that nearly half of the stated income loans that Wells Fargo tested had both an unacceptable variance and the absence of a plausible explanation for that variance.  

The results of Wells Fargo’s 4506-T testing were disclosed in internal monthly reports, which were widely distributed among Wells Fargo employees. One Wells Fargo employee in risk management observed that the “4506-T results are astounding” yet “instead of reacting in a way consistent with what is being reported WF [Wells Fargo] is expanding stated [income loan] programs in all business lines.” 

The United States alleged that, despite its knowledge that a substantial portion of its stated income loans contained misstated income, Wells Fargo failed to disclose this information, and instead reported to investors false debt-to-income ratios in connection with the loans it sold. Wells Fargo also allegedly heralded its fraud controls while failing to disclose the income discrepancies its controls had identified. The United States further alleged that Wells Fargo took steps to insulate itself from the risks of its stated income loans, by screening out many of these loans from its own loan portfolio held for investment and by limiting its liability to third parties for the accuracy of its stated income loans. Wells Fargo sold at least 73,539 stated income loans that were included in RMBS between 2005 to 2007, and nearly half of those loans have defaulted, resulting in billions of dollars in losses to investors.  

The settlement was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of California, with investigative support from the Federal Housing Finance Agency, Office of Inspector General. 

The claims resolved by this settlement are allegations only, and there has been no admission of liability.

Fun With Fraud:  Wells Fargo, Child Poverty & The Social Security Trust Fund

This particular piece goes back a few months, but I just through it would be fund to my 2 cents into the mix by reminding everyone that Wells Fargo has those administrative contracts with SNAP, Child Support, TANF and those Social Security electronic payment cards.

Yup, there is major fraud in those child welfare programs and no one is talking about it.

The scheme goes like this:

Wells Fargo charges HHS lots of money to make sure "everyone granted eligible" ((that is code for "The Poors" (always said with clinched teeth")) gets their benefits.

Wells Fargo charges fees for each transaction when "The Poors" (always said with clinched teeth) use their governmental issued Wells Fargo electronic benefits card.

The fee is deducted from the monthly benefits.

The fee is not part of the administrative contract, and quite frankly, I have no clue what happens to those fees.

So, what happens to those left over pennies when the local ATM refuses to dispense the granted benefits of Social Supplemental Income payments?

One would assume Wells Fargo is "investing in improving quality control" (code word for 'stealin') in its Wells Fargo Housing Foundation for its Philanthropic Services Private Foundations but we shall never truly know unless we as Nancy Berryhill, the Acting Commissioner of the Social Security Administration.

Acting Commissioner means she is not going to be there much longer, either.

Guiding Social Security Into The Next 80 Years:   A Conversation With Carolyn W, Colvin

In June 2014, the Obama administration nominated Carolyn W. Colvin to head the Social Security Administration (SSA). She has been serving as Acting Commissioner since February 2013, and, in August 2015, she will be on hand to observe the agency’s 80th anniversary. Colvin came out of retirement in 2010 to be the SSA’s Deputy Commissioner, and embodies so many of the characteristics and values older workers possess—she has formidable intelligence and experience, is calm under pressure and is thoroughly engaged in her work.

Robert Blancato, an ASA Board member who has previously worked with Colvin in Washington, D.C., interviewed her in late April about anti-fraud efforts, Social Security’s solvency and more.

Robert Blancato (RB): You are aggressively pursuing fraud cases. What programs are in place to prevent financial elder abuse, and how common a problem is it?

Carolyn Colvin (CC): The Social Security Administration [SSA] serves some of the most vulnerable individuals, not just the aged, but children and disabled people. Protecting seniors is a top priority. Financial exploitation is now an epidemic, and we are approaching it as we would a health epidemic, by joining forces with multiple agencies (we’re working with Kathy Greenlee at the Administration on Aging [AOA]) and finding ways to work collaboratively. SSA has always had zero tolerance for fraud, and [we] will tirelessly identify and prosecute, to the fullest extent of the law, anyone who commits fraud.

Quite simply, people receiving Social Security benefits are targets. When beneficiaries are incapable of managing their finances, SSA appoints a family member or friend to manage their benefits for them. We conduct annual accounting reviews for those individuals to see if benefits are being properly used. We still find it’s a critical issue [in that] we see some [benefits] misuse and fraud of our beneficiaries. We have two pilot projects to recruit and train representative payees so they have the skills and capacity to identify financial abuse, and to make sure we are selecting the right individuals to be representative payees. We’re partnering with local agencies to identify representative payees, and using a multi-disci-plinary training model to teach them how to understand and recognize abuse. This is a collaborative effort with the AOA, the Consumer Financial Protection Bureau and the Corporation for National and Community Service, plus NAPSA [National Adult Protective Services Association] and the banking community, specifically Wells Fargo.

Social Security acting commissioner leaving amid cloud of corruption probes

MADISON, Wis. – Social Security Administration Acting Commissioner Carolyn Colvin has announced she is stepping down.

You’ll excuse whistleblower employees of the scandal-plagued federal agency for not shedding any tears at Colvin’s departure.

“I’m ecstatic about it,” said one employee in the SSA’s Office of Disability Adjudication and Review, or ODAR, division. The employee, a whistleblower, asked not to be identified for fear of reprisal.

In a “Farewell Message” email last week to Social Security Administration staff members, Colvin wrote that she has advised President Barack Obama that she will be leaving her position as acting commissioner at the end of the president’s term on Friday.

“I have devoted my life to public service, serving in positions at all levels of government, but serving here with all of you has been the greatest honor of my life,” Colvin wrote. “The times I have treasured the most are the times I have been able to visit your offices to speak with you about the important work we do, and about your dreams and aspirations.  Those are some of my most joyous and inspirational times at SSA. You are truly the greatest public servants in government.”

STEPPING DOWN: Acting Social Security Administration Commissioner Carolyn Colvin told her employees last week that she is stepping down when President Barack Obama leaves office Friday.

In June 2014, Obama nominated Colvin to lead the agency, which boasts some 65,000 employees and is projected this year to pay out $1 trillion in federal benefits to 68.4 million recipients.

Senate Republicans blocked the appointment amid a “cloud hanging over” Colvin’s nomination. She had assumed the acting commissioner post in February 2013.

The Social Security Administration has been hammered by one negative report after another. A $300 million computer project failed. Designed to help hasten the process of disability claims, an audit found the program could handle just 700 of the millions of claims. Colvin’s defenders say the computer program was initiated under former SSA Commissioner Michael J. Astrue, Colvin’s predecessor. Republicans, however, questioned whether SSA top administrators misled or withheld information from Congress about the scope of the problem.

The Government Accountability Office in 2013 estimated some 36,000 people picked up a combined $1.3 billion in erroneous payments over two years.

Colvin’s tenure has included many of the same problems that have afflicted the agency for some time, most notably the massive backlog of Social Security disability benefit claims.

As Wisconsin Watchdog reported in May, whistleblower Ron Klym, a long-time case worker at the Milwaukee Office of Disability Adjudication and Review alleged grave due process violations in the system. Klym, who was fired in August, claims ODAR facilities operated “shell games” to make their processing numbers better than they were. He accused management of discrimination, harassment, retaliation and other incidents of misconduct.

Whistleblowers allege a “culture of corruption” at the Madison ODAR facility. An administrative law judge recently retired under a cloud of sexual harassment allegations. The hearing office director and another manager were removed from the office. Whistleblowers accuse management of bribery, nepotism, fraud, and retaliation, among other charges.

RELATED: Social Security judge accused of deciding cases on sex appeal retires

Sources say the SSA’s Office of Inspector General, which has been investigating the allegations for months, is preparing criminal and administrative reports on the probes.

Whistleblowers have reported misconduct allegations in SSA offices from West Virginia to California.

“I think she’s getting out while she can,” one whistleblower said of Colvin’s departure under a cloud of scandal.

In her farewell letter, Colvin told Social Security Administration employees they can be proud of numerous accomplishments “which represent our shared legacy.”

“Remember, each day, thousands and thousands of individuals may experience, for even a moment, hope, and if we are lucky, a better life, because of something you have been able to do for them,” the outgoing acting commissioner wrote.

Voting is beautiful, be beautiful ~ vote.©