Category Archives: Bankruptcy

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Manhattan judge asked to determine if rent guidelines should be based on tenant affordability

For some tenants, the rent is still “too damn high” — but is that something the city’s Rent Guidelines Board can consider when it decides just how high rents can go for more than 1 million rent stabilized apartments?

That is what a Manhattan judge has been asked to determine by landlords who argued Tuesday that tenant affordability is not a factor that the board can weigh when it sets rent increases each year.

“Affordability is not the be all and end all of the rent stabilization law,” Jeffrey Turkel, the lawyer for the Rent Stabilization Association, a landlord group, told Manhattan Supreme Court Justice Debra James.

The RSA has asked the judge to rule that the board was “arbitrary and capricious” in 2015 and 2016 for even considering tenant affordability when it decided to freeze rents for stabilized tenants renewing their leases.

Full Article – http://www.nydailynews.com/new-york/manhattan/landlords-don-rent-guidelines-based-tenant-paychecks-article-1.2960656

50 Cent to Receive $14.5 Million in Legal Malpractice Suit

Rapper awarded payout after suing former legal team over botched headphones lawsuit; $14.5 million will go toward bankruptcy settlement

By

50 Cent was awarded $14.5 million stemming from a malpractice suit the rapper filed against a law firm that represented him in a headphones lawsuit.

However, it’s unlikely 50 Cent will see any of that award, as most of it will go toward satisfying the $23 million bankruptcy settlement he agreed to in July, pending approval, Forbes reports.

In a 2014 lawsuit, 50 Cent (real name Curtis Jackson) was ordered to pay headphone makers Sleek Audio $16 million after the rapper severed his deal with Sleek to produce his own brand of headphones that a court ruled was “basically the same designs” as his Sleek-branded pair.

Following that decision, 50 Cent filed a malpractice suit against Garvey Schubert Barer (GSB), the law firm who represented him against Sleek Audio, alleging that the firm “didn’t adequately represent his interests in licensing negotiations and arbitration disputes with Sleek Audio.”

“Among GSB’s numerous failures was its inexplicable decision not to call technical and damages experts to rebut expert testimony offered by Sleek — failures relied upon by the arbitrator in crediting Sleek’s experts and entering an eight-figure award in Sleek’s favor,” 50 Cent’s new legal representation alleged in their suit against GSB.

As part of 50 Cent’s Chapter 11 reorganization plan, agreed to in July after he filed for bankruptcy in July 2015, the rapper owed Sleek Audio $17 million, making them 50 Cent’s largest outstanding debt. 50 Cent also owes $7 million in damages after losing a privacy lawsuit over a leaked sex tape.

In a deleted Instagram post following the $14.5 million decision, the rapper wrote, “I just got 14.5 million back from one Law Firm For malpractice. They fucked up so bad, I don’t think they should be practicing Law.”

On Monday, 50 Cent replaced that post with a Photoshopped image of the rapper sitting on a stack of money and a caption that read, “I retract my earlier statements about the legal services provided to me by the law firm of Garvey Schubert Barer. The law firm and I have settled our dispute and I consider the issue closed.”

“With respect to Sleek Audio, the $14.5 million settlement represents significantly more than the $12.5 million payable to Sleek Audio under the Bankruptcy Plan and more than half of the total amount owed under Mr. Jackson’s reorganization plan,” Craig Weiner, one of 50 Cent’s lawyers in the malpractice said, said in a statement.

“We are informed that these proceeds, together with other funds contributed by Mr. Jackson should position the Estate to provide for the remaining obligations to be satisfied in connection with this successful Chapter 11 Reorganization Plan. This is a most significant achievement, especially considering that the Plan was approved less than six months ago and provided Mr. Jackson with up to five years to satisfy all debts. Mr. Jackson is eager to move forward in doing what is best for his estate and creditors, and this settlement brings us one step closer toward that end.”

Sourced From – http://www.rollingstone.com/music/news/50-cent-to-receive-145-million-in-legal-malpractice-suit-w453975

Largest lawsuit against an auditor goes to court for $5.5 billion

Colonial Bank in Miami Beach, on August 17, 2009, days after it failed. The bank’s fraud with Taylor, Bean & Whitaker is the subject of a lawsuit against its auditor, PricewaterhouseCooper, which failed to catch the fraud for seven years. John VanBeekum Miami Herald

The largest-ever lawsuit against an auditing firm is set to open Monday in a Miami-Dade County Circuit Court, pitting Big Four firm PwC against a trustee of the defunct Taylor, Bean & Whitaker Mortgage Corporation.

At stake: $5.5 billion.

The lawsuit was filed in 2013 by a trust formed following the bankruptcy of Ocala-based Taylor, Bean & Whitaker, which in the early 2000s was one of the nation’s largest mortgage companies. The firm was raided by federal agents in 2009 for its part in a seven-year, multibillion-dollar fraud scheme with Colonial BancGroup.

According to the lawsuit, the fraud went undetected by PwC, the independent public auditor in charge of auditing Colonial, as a result of “gross negligence.”

The $5.5 billion action is one of a wave of suits against major auditing firms, including PwC, in the aftermath of the 2009 banking crisis. Most have alleged faulty work, said Jonathan Perlman, equity partner at Miami-based firm Genovese Joblove & Battista, who has prosecuted several cases against auditing firms. A majority of the cases have settled, including a suit brought against PwC for the alleged negligent auditing of failed brokerage MF Global Holdings Ltd. PwC paid $65 million in a settlement.

Few of the suits have gone to trial, Perlman said.

Still, Steven Thomas, lead trial lawyer for the trust, said he is confident this suit will succeed.

Thomas, who has has obtained several multimillion-dollar settlements and verdicts in cases involving negligent audits, said PwC’s alleged negligence is the “worst” of any case he’s had.

As early as 2002, six top executives at Taylor, Bean & Whitaker, including chairman Lee Farkas, colluded with two executives at Colonial to sign off on mortgage sales that didn’t exist. Colonial financed Taylor, Bean & Whitaker’s mortgages, but in order to bypass the federal lending limit, Colonial started registering loans from the mortgage company as sales instead.

Circumventing the lending limits allowed the fraud to grow exponentially as executives at each company worked to falsify documents and computer entries and shift money between Colonial bank accounts. Both Colonial and Taylor, Bean & Whitaker were raided on Aug. 3, 2009, and later filed for bankruptcy, leading to the sixth-largest banking failure in U.S. history.

Farkas was sentenced to 30 years in federal prison. Catherine Kissick at Colonial, who worked most closely with Farkas, received eight years in prison as part of a plea deal.

 

Trump University case will go to trial

  @CNNMoney April 26, 2016: 5:49 PM ET



The slug-fest between Donald Trump and New York Attorney General Eric Schneiderman over Trump University continues.

On Tuesday, a New York court ruled that Schneiderman’s $40 million civil suit alleging fraud against Trump University would still have to go to trial, even though Schneiderman had asked the court for a ruling based on the evidence already presented.

No date has been set for a trial. But according to a statement from Schneiderman, the judge “indicated her intention to move as expeditiously as possible.”

A spokesman for Schneiderman’s office said the trial could take place as early as this fall. If so, that timing could prove tricky for Trump should he be chosen as the GOP’s presidential nominee.

The Trump camp was happy with the court’s decision Tuesday.

“We are extremely pleased that the Supreme Court has yet again rejected the Attorney General’s attempt to avoid a trial.” said Alan Garten, an attorney for Trump.

Related: Trump University controversy … in 2 minutes

The denial of Schneiderman’s request for summary judgment came after a New York court rejected the arguments of Donald Trump’s lawyers that Schneiderman’s fraud case should be tossed out.

Trump University, launched in 2005, was a real estate seminar business that promised to teach students the mogul’s investing techniques to get rich on real estate. The business, which has effectively been defunct for several years, is currently facing three lawsuits filed by and on behalf of former students who claim it was a fraud.

Schneiderman’s suit, filed in 2013, accuses Trump University of deceptive business practices, alleging that its advertisements made false claims, including that Trump handpicked the instructors and that consumers who took the seminars would receive access to private sources of financing — i.e., “hard money lenders.”

“It was a classic bait-and-switch scheme,” Schneiderman told CNN.

–CNN’s Drew Griffin contributed to this report.

 CNNMoney (New York)First published April 26, 2016: 5:20 PM ET from http://money.cnn.com/2016/04/26/news/trump-university/

Wells Fargo admits deception in $1.2 billion U.S. mortgage accord

BY JONATHAN STEMPEL

Wells Fargo & Co (WFC.N) admitted to deceiving the U.S. government into insuring thousands of risky mortgages, as it formally reached a record $1.2 billion settlement of a U.S. Department of Justice lawsuit.

The settlement with Wells Fargo, the largest U.S. mortgage lender and third-largest U.S. bank by assets, was filed on Friday in Manhattan federal court. It also resolves claims against Kurt Lofrano, a former Wells Fargo vice president.

According to the settlement, Wells Fargo “admits, acknowledges, and accepts responsibility” for having from 2001 to 2008 falsely certified that many of its home loans qualified for Federal Housing Administration insurance.

The San Francisco-based lender also admitted to having from 2002 to 2010 failed to file timely reports on several thousand loans that had material defects or were badly underwritten, a process that Lofrano was responsible for supervising.

According to the Justice Department, the shortfalls led to substantial losses for taxpayers when the FHA was forced to pay insurance claims as defective loans soured.

Several lenders, including Bank of America Corp (BAC.N), Citigroup Inc (C.N), Deutsche Bank AG (DBKGn.DE) and JPMorgan Chase & Co (JPM.N), previously settled similar federal lawsuits.

But Wells Fargo held out, and its payment is the largest in FHA history over loan origination violations.

Friday’s settlement is a reproach for “years of reckless underwriting” at Wells Fargo, U.S. Attorney Preet Bharara in Manhattan said in a statement.

“While Wells Fargo enjoyed huge profits from its FHA loan business, the government was left holding the bag when the bad loans went bust,” Bharara added.

The accord also resolved a probe by federal prosecutors in California of alleged false loan certifications by American Mortgage Network LLC, which Wells Fargo bought in 2009.

No one has been criminally charged in the probes, and the Justice Department reserved the right to pursue criminal charges if it wishes, according to the settlement.

Franklin Codel, president of Wells Fargo Home Lending, in a statement said the settlement “allows us to put the legal process behind us, and to focus our resources and energy on what we do best — serving the needs of the nation’s homeowners.”

Lewis Liman, a lawyer for Lofrano, did not immediately respond to requests for comment.

Wells Fargo on Feb. 3 said the settlement would reduce its previously reported 2015 profit by $134 million, to account for extra legal expenses.

The case is U.S. v. Wells Fargo Bank NA, U.S. District Court, Southern District of New York, No. 12-07527.

(Reporting by Jonathan Stempel and Nate Raymond in New York; Editing by Dan Grebler)