The U.S. Government’s Involvement In “Foreclosure Genocide” Revealed

Late last year, in the U.S. Bankruptcy Court for the Eastern District of Washington, a proof of claim was filed on behalf of an alleged “secured creditor” named “U.S. Bank Trust, as Trustee of LB-Igloo Series IV Trust.” Subsequently, this alleged creditor filed the following proposed order, which surprisingly, was paid for by the “U.S. Treasury” as revealed in the docket.

 

 

 

 

 

 

 

 

This revelation begged the questions, why is the U.S. Treasury paying the fee for this supposed creditor, and who was directing the law firm to handle this case? [CORRECTION: BASED UPON FEEDBACK AFTER THIS POST, THE APPEARANCE OF THE U.S. TREASURY IN FEDERAL COURT DOCKETS LIKELY MEANS THAT THE FEES ARE PAID INTO THE TREASURY AND NOT PAID BY THE TREASURY. THIS DOES NOT CHANGE THE OVERALL SUBSTANCE OF WHAT IS BEING REPORTED IN THIS POST.] What you are about to read next should turn the stomachs of every American, as it reveals a grotesque “cover-up” of the government’s hidden involvement in tens of thousands (maybe millions) of illegal foreclosures as the result of the 2008 “too big to fail” “back-door bailouts” of Wall Street.

Attached (here:StarrvUS06152015 ) is an Order from the United States Court of Federal Claims issued in the following case:

 

The Order details how the U.S. Treasury and the Federal Reserve Bank of New York illegally hijacked (“Exacted”) control of AIG, and in doing so, concocted a scheme (through “loophole lawyering”) to hide and conceal the government’s illegal involvement through the creation of three trusts called “Maiden Lane I, II, & III.” Per the Order:

Based upon statements made by government officials, there can be little doubt that the Government controlled AIG. Mr. Bernanke testified before Congress on March 23, 2009 that “AIG is effectively under our control.”

 

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Moreover, there is nothing in the Federal Reserve Act or in any other federal statute that would permit a Federal Reserve Bank to take over a private corporation and run its business as if the Government were the owner. Yet, that is precisely what FRBNY did. It is one thing for FRBNY to have made an $85 billion loan to AIG at exorbitant interest rates under Section 13(3), but it is quite another to direct the replacement of AIG’s Chief Executive Officer, and to take control of AIG’s business operations. A Federal Reserve Bank has no right to control and run a company to whom it has made a sizable loan. As FRBNY’s outside counsel from Davis Polk & Wardwell observed on September 17, 2008 in the midst of the AIG takeover, “the [government] is on thin ice and they know it. But who’s going to challenge them on this ground?” PTX 3283, Davis Polk email. Answering this question, the “challenge” has come from the AIG shareholders, whom the Government intentionally excluded from the takeover process.

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Similarly, the Government’s creation of a trust to hold the shares of AIG stock does not cure the illegal exaction. FRBNY’s counsel, Mr. Baxter, developed the idea of a trust during September 16-22, 2008 as a way to circumvent the Federal Reserve’s lack of authority to hold equity. Baxter, Tr. 791; see also PTX 368 at 3 (Alvarez) (“The creation of the Trust is necessary . . . because neither the Reserve Bank nor the Treasury Department has the legal authority to hold the equity in the form of preferred or common stock directly.”). In an April 30, 2010 interview, Mr. Baxter stated: “We didn’t have the legal authority to own shares, we didn’t want to control the company. That’s why the credit facility trust and the equity participation went to trust – legal ownership was in the trust, which has three independent trustees, so there’s no control in Treasury or the Fed.” PTX 580 at 3. The trust was not executed until January 16, 2009, four months after the Government took control of AIG. The creation of the trust in an attempt to circumvent the legal restriction on holding corporate equity is a classic elevation of form over substance. The three appointed trustees had lengthy historical ties to the Federal Reserve. The trust was created “for the sole benefit of the Treasury.

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Blackrock worked to value AIG’s assets (JX 379 at 2) and to devise, structure, and manage Maiden Lane II and Maiden Lane III (explained in section J below).

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To further understand the government’s illegal takeover of AIG, the following “Special Report” was produced by Congress in 2010 titled, “Public Disclosure As A Last Resort: How the Federal Reserve Fought to Cover Up the Details of the AIG Counterparties Bailout From the American People.”  You can read the report here: (20100125aigstaffreportwithcover )

 

The congressional investigation was stonewalled, yet still reveals how the government has worked mightily to conceal the fact that most of the largest financial institutions were made (100%) whole via the purchasing of all the toxic assets using these Maiden Lane trusts in what amounted to a “back-door bailout.” And, when these purchases were made by Maiden Lane, the transactions tied to the MBS certificates were terminated. This too was deliberately hidden and concealed from the SEC in AIG’s public disclosures, and information regarding these terminated transactions were kept from Congress upon subpoena, arguing there was a potential “risk to national security.”

Now comes the sickening part. The following whistleblower complaint was filed in U.S. District Court in Florida beginning in 2014, was amended, and ultimately decided in 2022 (See: COMPLAINT – whistleblower REMIC IRS – OCR’d.pdf – Google Drive ). The allegations made in the complaint were all deemed to have merit by the U.S. Treasury upon its own investigation! However, without ever disclosing its massive conflict to the court, that the Treasury was involved in owning and controlling AIG, and as such, had a financial stake in the very toxic REMIC assets it was asked to investigate and enforce, the Treasury took the position that it would be too burdensome and expensive to investigate all of the failed transfers of title to the REMICS, and therefore by its own discretion, was not going to enforce the violations.

It is now obvious why the Treasury took this position. During the period of the whistleblower complaint, and to this day, Treasury has been actively directing and profiting from foreclosures. But in order to carry out the foreclosures, falsified documents and perjured testimony that the failed REMIC trusts acquired, owned, and possessed the mortgages and notes was a requirement to prove standing in courts; an impossibility. The government knew the failed REMICs held nothing! The whistleblower allegations were acknowledged by the Treasury as having merit! –

15. The device created by mortgage bankers for trading REMIC interests as if they were publicly traded stock was the “Mortgage Electronic Registration System” (“MERS”). It is important to note what MERS is and is not – it is an electronic registration system, but it is not a real property interest recording system. This distinction is at the heart of the statutory non-compliance. The principal source of non-compliance with the I.R.C. lies in the relationship between REMICs and MERS that could not have been anticipated when Congress enacted I.R.C.§860D.
16. This process first runs afoul of the express statutory requirement that REMIC-qualified mortgages remain qualified at all times because the financial industry through the use of MERS separated mortgage notes from mortgages and traded them aggressively and actively as “REPOs”, often overnight. Once the notes were separated, they and their underlying debt obligations were no longer secured because to finance the REPOs the notes had to be sold to REPO investors and repurchased without transfer of the real estate recorded security. The design and execution of the MERS trading system failed the “at all times” real estate security requirement from its inception.

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26. Because the IRS verified that Plaintiffs’ allegations were true and had sealed documents in hand to validate the Whistleblower claims: (1) the claims should have been properly investigated;

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35. Here, the IRS failed to engage in reasoned decision-making, and that failure has caused the IRS to issue denials that are arbitrary and capricious agency actions.

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36. The REMICs failed to meet the qualifying requirement set forth in § 860D(a)(4).
37. Because the REMICs failed to meet that requirement, they did not obtain tax-exempt status and their income was taxable.
38. The REMICs are indebted to the government for unpaid taxes, but the IRS never took steps to collect these taxes.
39. These missteps prompted the Plaintiffs to blow the whistle, but to no avail.
40. The Agency acknowledged that the Plaintiffs’ claims had merit, but made the egregious error of deciding that the “mistakes” – the complete substantive failure of the REMICs to comply with the mandatory statutory requirements to qualify the mortgages for treatment as tax exempt entities which prevented the income earned from being tax exempt – would be “too expensive” to correct.

So, there you have it. The government illegally took control of AIG and purchased the toxic/worthless assets, concealing itself through the Maiden Lane trusts with full knowledge that the mortgages, deeds, and notes were/are all unenforceable and/or non-existent, and titles never passed to any of the empty paper-bag REMIC trusts (i.e. “Robo-Signing Scandal”). Yet the government, via the creation of hundreds of fake trusts operating as debt collector proxy agents on its behalf (i.e. “U.S. Bank Trust, as Trustee of LB-Igloo Series IV Trust”) continue to lie, perjure, and fabricate documents in courtrooms and public land records in an ongoing genocide against American property owners. I have spent the last 14-years of my life investigating foreclosure fraud and wading through the collateral damage of death, suicides, divorce, and trauma inflicted upon families and children thrown to the curbs, all under the guise of preventing a moral hazard, “no one gets a free house.” But that is precisely what the government is taking from the people – “free houses.”

For the government to state, “There was never any harm to the Government or any of the Trust investors as a consequence of the title transfer failures” is beyond gaslighting, it is pure evil.

Micah 2:1-3

Woe to those who plan iniquity, to those who plot evil on their beds! At morning’s light they carry it out because it is in their power to do it. They covet fields and seize them, and houses, and take them. They defraud people of their homes, they rob them of their inheritance. Therefore, the LORD says: “I am planning disaster against this people, from which you cannot save yourselves. You will no longer walk proudly, for it will be a time of calamity.

 

Bill Paatalo

Private Investigator – OR PSID# 49411

Bill.bpia@gmail.com