Monday, October 11, 2010

Caught Spying on Student, FBI Demands GPS Tracker Back

Kim Zetter
Wired.com

A California student got a visit from the FBI this week after he found a secret GPS tracking device on his car, and a friend posted photos of it online. The post prompted wide speculation about whether the device was real, whether the young Arab-American was being targeted in a terrorism investigation and what the authorities would do.

It took just 48 hours to find out: The device was real, the student was being secretly tracked and the FBI wanted its expensive device back, the student told Wired.com in an interview Wednesday.

The answer came when half-a-dozen FBI agents and police officers appeared at Yasir Afifi’s apartment complex in Santa Clara, California, on Tuesday demanding he return the device.

Afifi, a 20-year-old U.S.-born citizen, cooperated willingly and said he’d done nothing to merit attention from authorities. Comments the agents made during their visit suggested he’d been under FBI surveillance for three to six months.

An FBI spokesman wouldn’t acknowledge that the device belonged to the agency or that agents appeared at Afifi’s house.

“I can’t really tell you much about it, because it’s still an ongoing investigation,” said spokesman Pete Lee, who works in the agency’s San Francisco headquarters.

Afifi, the son of an Islamic-American community leader who died a year ago in Egypt, is one of only a few people known to have found a government-tracking device on their vehicle.

His discovery comes in the wake of a recent ruling by the 9th U.S. Circuit Court of Appeals saying it’s legal for law enforcement to secretly place a tracking device on a suspect’s car without getting a warrant, even if the car is parked in a private driveway.

Brian Alseth from the American Civil Liberties Union in Washington state contacted Afifi after seeing pictures of the tracking device posted online and told him the ACLU had been waiting for a case like this to challenge the ruling.

“This is the kind of thing we like to throw lawyers at,” Afifi said Alseth told him.

“It seems very frightening that the FBI have placed a surveillance-tracking device on the car of a 20-year-old American citizen who has done nothing more than being half-Egyptian,” Alseth told Wired.com.

Afifi, a business marketing student at Mission College in Santa Clara, discovered the device last Sunday when he took his car to a local garage for an oil change. When a mechanic at Ali’s Auto Care raised his Ford Lincoln LS on hydraulic lifts, Afifi saw a wire sticking out near the right rear wheel and exhaust.

Garage owner Mazher Khan confirmed for Wired.com that he also saw it. A closer inspection showed it connected to a battery pack and transmitter, which were attached to the car with a magnet. Khan asked Afifi if he wanted the device removed and when Afifi said yes, Khan pulled it easily from the car’s chassis.

“I wouldn’t have noticed it if there wasn’t a wire sticking out,” Afifi said.

Later that day, a friend of Afifi’s named Khaled posted pictures of the device at Reddit, asking if anyone knew what it was and if it meant the FBI “is after us.” (Reddit is owned by CondeNast Digital, which also owns Wired.com).

“My plan was to just put the device on another car or in a lake,” Khaled wrote, “but when you come home to 2 stoned off-their-asses people who are hearing things in the device and convinced it’s a bomb you just gotta be sure.”

A reader quickly identified it as an Orion Guardian ST820 tracking device made by an electronics company called Cobham, which sells the device only to law enforcement.

No one was available at Cobham to answer Wired.com’s questions, but a former FBI agent who looked at the pictures confirmed it was a tracking device.

The former agent, who asked not to be named, said the device was an older model of tracking equipment that had long ago been replaced by devices that don’t require batteries. Batteries die and need to be replaced if surveillance is ongoing so newer devices are placed in the engine compartment and hardwired to the car’s battery so they don’t run out of juice. He was surprised this one was so easily found.

“It has to be able to be removed but also stay in place and not be seen,” he said. “There’s always the possibility that the car will end up at a body shop or auto mechanic, so it has to be hidden well. It’s very rare when the guys find them.”

He said he was certain that agents who installed it would have obtained a 30-day warrant for its use.

Afifi considered selling the device on Craigslist before the FBI showed up. He was in his apartment Tuesday afternoon when a roommate told him “two sneaky-looking people” were near his car. Afifi, already heading out for an appointment, encountered a man and woman looking at his vehicle outside. The man asked if Afifi knew his registration tag was expired. When Afifi asked if it bothered him, the man just smiled. Afifi got into his car and headed for the parking lot exit when two SUVs pulled up with flashing lights carrying four police officers in bullet-proof vests.

The agent who initially spoke with Afifi identified himself then as Vincent and told Afifi, “We’re here to recover the device you found on your vehicle. It’s federal property. It’s an expensive piece, and we need it right now.”

Afifi asked, “Are you the guys that put it there?” and the agent replied, “Yeah, I put it there.” He told Afifi, “We’re going to make this much more difficult for you if you don’t cooperate.”


Afifi retrieved the device from his apartment and handed it over, at which point the agents asked a series of questions – did he know anyone who traveled to Yemen or was affiliated with overseas training? One of the agents produced a printout of a blog post that Afifi’s friend Khaled allegedly wrote a couple of months ago. It had “something to do with a mall or a bomb,” Afifi said. He hadn’t seen it before and doesn’t know the details of what it said. He found it hard to believe Khaled meant anything threatening by the post.

“He’s a smart kid and is not affiliated with anything extreme and never says anything stupid like that,” Afifi said. “I’ve known that guy my whole life. “

The agents told Afifi they had other agents outside Khaled’s house.

“If you want us to call them off and not talk to him we can do that,” Afifi said they told him. “That was weird. [...] I didn’t really believe anything they were saying.”

When he later asked Khaled about the post, his friend recalled “writing something stupid,” but said he wasn’t involved in any wrongdoing. Khaled declined to discuss the issue with Wired.com.

The female agent, who handed Afifi a card, identified herself as Jennifer Kanaan and said she was Lebanese. She spoke some Arabic to Afifi and through the course of her comments indicated she knew what restaurants he and his girlfriend frequented. She also congratulated him on his new job. Afifi recently got laid off from his job, but on the same day was hired as an international sales manager of laptops and computers for Cal Micro in San Jose.

The agents also knew he was planning a short business trip to Dubai in a few weeks. Afifi said he often travels for business and has two teenage brothers in Egypt whom he supports financially. They live with an aunt. His U.S.-born mother, who divorced his father five years ago, lives in Arizona.

Afifi’s father, Aladdin Afifi, was a U.S. citizen and former president of the Muslim Community Association here, before his family moved to Egypt in 2003. Yasir Afifi returned to the United States alone in 2008, while his father and brothers stayed in Egypt, to further his education he said. He knows he’s on a federal watchlist and is regularly taken aside at airports for secondary screening.

Six months ago, a former roommate of his was visited by FBI agents who said they wanted to speak with Afifi. Afifi contacted one agent and was told the agency received an anonymous tip from someone saying he might be a threat to national security. Afifi told the agent he was willing to answer questions if his lawyer approved. But after Afifi’s lawyer contacted the agency, he never heard from the feds again until he found their tracking device.

“I don’t think they were surprised that I found it,” he told Wired.com. “I’m sure they knew when I found it. [...] One of the first questions they asked me was if I was at a mechanics shop last Sunday. I said yes, that’s where I found this stupid device under my car.”

Afifi’s attorney, who works for the civil liberties-focused Council on American Islamic Relations, said this kind of tracking is more egregious than the kind her office usually sees.

“The idea that it escalates to this level is unusual,” said Zahra Billoo. “We take about one new case each week relating to FBI or law enforcement visits [to clients]. Generally they come to the individual’s house or workplace, and there are issues that arise from that.”

However, she said that after learning about Afifi’s experience, other lawyers in her organization told her they knew of two people in Ohio who also recently discovered tracking devices on their vehicles.

Afifi’s encounter with the FBI ended with the agents telling him not to worry.

“We have all the information we needed,” they told him. “You don’t need to call your lawyer. Don’t worry, you’re boring. “

They shook his hand and left.

Read Original Article HERE

Censored Gulf News: Human Body Parts Washed-up, Covered-up

Deborah Dupré
Examiner.com

An hour after BP workers were told they had to shift from Destin, Florida to another location and to not discuss anything with anybody, human body parts washed up where they had been working.

Gregg Hall reports that a former BP worker contacted him under agreed anonymity because the contractor wanted to ease his conscience. The interview is below.

"I want it understood I'm doing this because there are some things that need to be told, need to be said. I'm not doing this for publicity. I don't want publicity," the worker told Hall.

"There are some things some people haven't heard."

"At first, we weren't allowed to dig at all."

Then, workers were not allowed to dig deeper than 6 inches.

"One hour after we were shifted out [of Destin, Fl], body parts started washing up," he said. "There were hands, arms, feet... a leg and a foot."

He then told Hall that there are lots of things people do not know.

The worker confirms that large, deep trenches were being dug. He explains in one incident, a 15-foot deep, 20-foot wide hole was dug and berm put around it. The workers were not allowed to know what went into it or other trenches before covered with sand.

"We were told at that time, 'Don't say anything to anybody if they ask questions.'"



View Original Article HERE

Federal Agencies Raid Christian Ministry

Since when is selling supplements a federal crime?
By Brian Fitzpatrick
WorldNetDaily

Two federal agencies, backed up by state and local police, have swooped down on a peaceful Portsmouth, R.I., ministry like Eliot Ness busting up one of Al Capone's Prohibition-era breweries.

"They came in screaming and hollering, 'This is a raid, hands up.' I saw a gun in my face," said Jim Feijo, founder of Daniel Chapter One, a ministry that supports itself in part by providing health counseling and nutritional supplements.

Feijo also provides nutritional counseling to world-class athletes.

The raid was spearheaded by the Federal Drug Administration and the Internal Revenue Service, Feijo told WND. Feijo has no idea why the government raided his offices, but he noted that the raid came Sept. 22, a week after a federal judge refused to allow the FTC to levy a massive fine against Daniel Chapter One for refusing to send a letter to customers saying in effect that their products were worthless.

"If they can do this to us, they can do this to anybody," said Feijo. "We haven't had due process, we thought we were innocent until proven guilty."

"They patted Jim down and removed him from the office. They didn't show me a warrant. They came in very aggressively, that was needless," said Tricia Feijo, Jim's wife and partner and a trained homeopath.

"They locked us out of the building and for the next four hours they went through everything. They took personal correspondence, they took phone records. It's so over the top that they're going through personal e-mail to see if I told a friend how to use a certain product, or told somebody what they could do for an illness."

"We've developed a series of products based on Biblical principles," said Feijo. "We've never had a complaint, never harmed anyone, and thousands of people have told us they've been helped by our products. We've never had a lawsuit.

"They're making it sound like it's an urgent matter to protect the public, yet they've had our client list for six months and haven't contacted them," Feijo told WND.

The raid is the latest development in a three-year legal battle between the Federal Trade Commission and Daniel Chapter One, which sells products intended to promote natural healing without the use of prescription drugs.

"The position for the FDA is only drugs can treat illness. We believe drugs don't treat anything. Fifteen years on the radio, no one's ever complained, no one's ever been harmed, we haven't been sued, but 106,000 people will die this year from FDA-approved drugs," said Jim Feijo.

The FTC alleges that Daniel Chapter One falsely claims its products can cure cancer.

"We never said that," said Tricia Feijo. "They took a few words from one paragraph, some words from another paragraph, put them together, and said we implied we could cure cancer … their biggest complaint was testimonies of people saying they were healed of cancer."

The conflict began with a Federal Trade Commission Internet sting operation against companies that claimed they could cure cancer. According to the Feijos, 130 health products companies were targeted, and all but Daniel Chapter One reached agreements with the government.

"They ordered [us] to tell our customers there is no science behind our products, that only conventional medical treatment has been proven safe and effective in humans. We know from experience that chemotherapy and radiation are not safe," said Jim Feijo.

"We told them we can't comply, because there is scientific evidence in favor of our products. They wanted us to give in to their position of scientism and deny our religion of faith in the Lord Jesus.

"They acknowledged that we are a ministry, but then they denied all our rights as a ministry, all our constitutional rights," Feijo added. "We are a corporate soul, a 508 corporate soul. We have same legal status as the Roman Catholic and Mormon churches.

"We told the IRS during the raid they have no legal right to do what they did because of our 508 status. We're immune to filing papers and so forth because we're a 508 corporate soul. They've gone against their own laws."

At an FTC hearing in April, the Feijos presented five experts to testify to the scientific evidence supporting their products, but they failed to sway the FTC judge. The FTC will only accept double-blind, placebo-controlled studies, according to the Feijos, and small organizations like theirs cannot afford to conduct such expensive research.

View Original Article HERE

CONFIRMED: Court Did Rely on Oath Keeper Association to Take Baby

Stewart Rhodes
Oathkeepers

There has been some confusion about this case, leading some commentators to believe that the reference to John Irish’s “association” with Oath Keepers was in some other document, rather than in the affidavit relied on by the Court’s Order. Alex Jones’ site, in an effort to protect the privacy of the family, posted excerpts from two different documents, leading some to question where the reference actually was.

To clear that up, below you will find an embedded PDF which contains the full (though redacted) versions of the following documents: the two Petitions (one pertaining to each parent), the Court’s Ex Parte Order, the Affidavit of Dana Bickford which was attached, the Motion for Change of Venue, and lastly, the Notice to Accused Parent, explaining the legal process. We have highlighted in yellow all text where the Petitions or the Court Order refers to the Affidavit which contains reference to Oath Keepers.

By looking at the below documents, you will be able to see from the two Petitions, the Order, and Affidavit item #7, in that order, that:

1. Both Petitions state: “7. Details or Details or facts of abuse/neglect (attach separate sheet if necessary): See affidavit filed with the Concord Family Court.”

2. The Court’s Ex Parte Order states:

“Findings of Fact:

There is reasonable cause to believe that the child is in such circumstances or surroundings as would present an imminent danger to the child’s health or life, which require the immediate placement of the child for the following reasons:

See attached affidavit”

Thus, the Court’s Order does, in fact, refer to, and adopt all of the reasons given in the Affidavit as being the reasons for the order.

3. The Attached Affidavit, referenced by the Petitions and adopted by the Court as its findings of fact, includes, at #7: “The Division became aware and confirmed that Mr. Irish associated with a militia known as the, “Oath Keepers,” and had purchased several different types of weapons, including a rifle, handgun and taser.”

This is how all such petitions are done. The same goes for a restraining order. The petition is supported by affidavit laying out the reasons, and then if the judge finds those reasons sufficient, he or she issues the order. Such orders always rely on the affidavit attached to the petition. And in this case, the Order explicitly states that the reasons in support are listed in the “attached affidavit.”

We have posted these documents with the permission of both parents, but we redacted (blacked out) all the personal information and allegations that do not pertain to Oath Keepers or gun ownership. This was done in part to respect the privacy of the family, including the kids. It is out of such concerns that family court proceedings are usually closed to the public and I think it would be improper to post the entirety of the affidavit for the same reason. If the parents choose to post a non-redacted version, they can do it themselves (we left in their address because they have given that information out in several interviews, asking for donations to their defense fund),

More to the point, we also blacked out the parts unrelated to Oath Keepers and to gun ownership because my focus in this case is on the illegitimate listing of a father’s political affiliations and his gun ownership as a reason to take his daughter away from him and also away from her mother. That the Court relied on an affidavit that explicitly lists the father’s association with Oath Keepers to issue that order makes it important to all ten thousand dues paying members of Oath Keepers (many of them current serving police and military), and also makes it important to the estimated thirty thousand people (and growing) who have “associated” with Oath Keepers in the past, or still do, on several social media sites, such as Facebook, Myspace, Twitter, on our email alert list, in the comments section of our main site, in our free state forums, or in person at our many meetings across the country, and the many additional tens of thousands who have “associated” with us at various rallies, summits, and forums across the nation.

This use of a father’s political association and his gun ownership is also important to many other Americans who don’t even associate with Oath Keepers because what happens in this case can impact the free speech and association rights of all of us, across the nation, of whatever political or social orientation. And that is why we must stand firm, now.

RALLY FOR THE FIRST AMENDMENT! This Thursday, October 14, Dover, NH

We will be holding a rally in support of the First Amendment protected right of freedom of association, to be held this Thursday, October 14, at the Rochester Family Division Court, 259 County Farm Rd, Dover, NH 03820-6016. I will be there, and I am calling on all Oath Keepers, all who “associate” with us, and on all other organizations that stand for the Constitution and for liberty to be there for a peaceful gathering in support of both the due process rights of the parents (who have a hearing there, on that day), but also to stand in support of the rights of free speech and association, free from persecution, for ALL Americans. I will post more details later today. Please join us!

Please read the relevant sections of the documents below, and then I will have additional comments on the other side. – Stewart Rhodes, Founder of Oath Keepers

ADDITIONAL COMMENTS BY STEWART:

As is clear from the documents, the reasons given to the Court in the Petitions, and the reasons adopted by the Court when it adopted the entirety of the attached Affidavit, included John Irish’s association with Oath Keepers. Certainly it was not the only reason, nor are we even arguing that it was the principle or dominant reason (I can’t get inside the judge’s head, and unless the judge elaborates, we don’t know).

But the fact that the political association of the father with Oath Keepers, and his gun ownership, were even among the reasons given for the taking of this baby takes this case beyond the realm of your mundane family court matter and turns it into something that could affect the rights of us all, nation-wide. Such a listing of a parent’s political associations as one of the reasons to remove a child from her parents should not happen in any case, regardless of whatever else is going on.

Relevance?

Whether it is a criminal or a civil proceeding, the political affiliations of the accused are both irrelevant and prejudicial. For example, if I had a criminal defense client accused of beating his wife, what relevance would his NRA membership have to the question of whether he beat his wife? And what relevance would there be if he were a Tea Party member, or belonged to a 912 group, or was a member of Rush Limbaugh fan club, or a member of Glen Beck’s “Insider Extreme” which includes a message board? Or what if he were a member of the ACLU, or Answer, or ACORN, or Code Pink, etc.? What relevance would any such associations have to the question of whether he assaulted his wife? The political associations of the accused in a child endangerment case are no less irrelevant to the question of whether he or the mother are guilty or whether the child is endangered.

Prejudicial.

In addition to a relevancy problem, it would also be prejudicial for the finder(s) of fact to hear testimony on the suspect’s political association, especially when such may be with an unpopular group. Say, for example, you have a conservative, pro-drug war jury in a theft case and the defendant turns out to be a member of NORML (which advocates legalizing marijuana). Should the jury be able to hear evidence of that membership? Or imagine a liberal jury, with jurors who are anti-gun. Should the jury be able to hear evidence that the accused was an NRA member, or, perhaps even a member of the far more hardcore Gun Owners of America? Mention of the defendant’s associations in either case would not only be irrelevant but also potentially prejudicial. Even if some twisted argument convinced the judge to find those associations relevant, their prejudicial effect would outweigh any such relevance. See Rule 403, Federal Rules of Evidence.

http://www.law.cornell.edu/rules/fre/rules.htm

Yes, it is true that in family court one does not get the same level of due process as in a criminal trial, but that only makes it a more likely system to be abused to target political undesirables. The lower the threshold of due process protection, the more ripe it is for arbitrary abuse.

The Chilling Effect: Making People Afraid to Speak Out and Associate

And in this case the problem is not just a possible violation of the due process rights of these particular parents, but also the very real chilling effect this case will have not just on their speech but also on the free speech of potentially millions of other American parents who will, if this is allowed to stand, thereafter have to worry that their political affiliations will be listed among the reasons for taking their children in some future run-in with CPS.

A law or government practice that targets people for their speech and association, based on the content of their speech, or that MAY be used in such a way, is unconstitutional and harms not just that individual, but also all others who thereafter are “chilled” or dissuaded from engaging in similar speech or associations.

The chilling works even if it is rarely applied since just the knowledge that it can be done will chill speech and association. All the government needs to do is make an example out of one person, and others will refrain from sticking their necks out.

If it can be done to someone who is “associated” with Oath Keepers just by posting on an open social networking site (In this case John Irish was not even a dues paying member, but merely a forum user on the Oath Keepers Ning forum system, which was open to the general public to “join” for free, even on a whim) then it can happen to anyone from any group which particular authorities may look down upon.

Let’s flip the political paradigm: Imagine the same thing being done in a case involving members of PETA, Earth First, or the Anti-War Committee (AWC) which recently had their homes and offices raided by the FBI. Would it be acceptable for Child Protective Services to list those affiliations when investigating potential child abuse or neglect, or would that be both irrelevant, and prejudicial? And would it not also chill free speech, making people afraid to join those groups?

Think back to how the very arbitrary “no-fly list” was used by the Bush Administration to punish critics and political opposition, including journalists. Such power is always subject to abuse. And especially so when the list is secret, and the criteria used to put you on it is secret. Talk about arbitrary power! But even there, it was not openly and honestly used to target people because of their political associations. That was the wink, wink, nudge, nudge, we all knew was happening, but the Bush Admin knew better than to state it publicly. But it still had a chilling effect (as was likely intended), because we all knew what was really going on when some journalist critic of the President just happened to make the list.

In this case, it is openly acknowledged that the political association of the father is one of the reasons for taking the child (again, the Court’s Order adopted the entire affidavit as its findings of facts). Ditto for his perfectly legal gun ownership. Over half the people in this nation own guns. Imagine the chilling effect on them.

You Defend the Constitution for Everyone, Regardless of Innocence or Guilt, Regardless of Virtue or Vice

One last point: Too many people are asking “but did he do it.” In constitutional law, what counts is not whether the particular defendant was an angel or a “dirtbag” – whether he is innocent or committed the underlying offense at issue. What counts is whether the Constitution is protected.

For example, Ernesto Miranda was suspected of kidnapping and raping of an 18-year-old girl. Because of the Supreme Court ruling, which ruled his confession inadmissible, his first conviction was overturned. But then the case was retried, leaving out the tainted confession, and Miranda was convicted and served 20 years. A dirtbag? You bet. He was a filthy rapist. Guilty? Yes, so found by a jury of his peers. He raped the girl and was rightfully convicted and locked up. But it was still wrong to coerce his confession, and his case gave us the procedural protection of our “Miranda” rights, which helps to give meaningful effect to our right to remain silent and to not incriminate ourselves, as well as our right to have counsel present at questioning.

The same goes for the case of Jose Padilla, the alleged “Chicago dirty bomber.” A dirtbag? Likely. He as both a former gang member and liked to hang out with Al Qaeda types. But that still did not make it OK to black bag him with no due process and throw him in a military brig on secret evidence, without indictment, without a lawyer, without a jury trial, for over two years. That was unconstitutional even if he “did it.” (he was later convicted in a jury trial of aiding Al Qaeda). Even though a dirtbag, he still had procedural rights that were violated, and those violations set a dangerous precedent for the rest of us. Now, according to the Fourth Circuit (who’s decision still stands as “good law”), that can be done to any of us. What happens even to “bad guys” can and will affect our rights too. Rules of due process and protections of free speech and association apply to EVERYONE, not just those who are pure as the driven snow.

Sadly, so dumbed down is the average American that many just cannot grasp these elemental concepts. In this case, they ask whether the parents are “guilty,” as if that would make it OK to list their political associations or gun owner status as evidence of why they are unfit parents. If people cannot understand why this cannot be allowed to happen, then how can we restore our Republic? That is why, regardless of whether the parents are guilty of any of the alleged abuse; the listing of their association with Oath Keepers is illegitimate and must be fought. And it will.

We Oath Keepers and our many allies will fight this regardless of the supposed validity of the other allegations against the parents. This use of political associations as evidence is wrong in every case, and in any case. It is the “weaponization” of CPS – turning it into a weapon against political undesirables. And that weapon will be used to silence and suppress those who might otherwise speak out, and to silence and suppress those who already have spoken out. It will thus chill speech even when not used (just by the implied threat that you may be paid a visit by CPS if you get “uppity”), and it will punish speech when used against dissidents who still dare to speak out.

Either you defend the Constitution for everyone, or we may as well just scrap it and let government agencies and judges do whatever they want to those they deem bad, using whatever arbitrary “reasons” they want, like in some third world junta. The choice is yours. I hope to see you in New Hampshire, the “Live Free or Die” state on Thursday.

Stewart Rhodes

View Original Article With Full Affidavit HERE

View Related Article: Feds Treat Baby Snatch Protest Like Terrorist

Foreclosuregate

theeconomiccollapseblog.com

If you work in the mortgage industry or for a title insurer, you might not want to make any plans for the next six months. Foreclosure-Gate is about to explode. It is being alleged that many prominent mortgage lenders have been using materially flawed paperwork to evict homeowners. Apparently officials at quite a few of these firms have been signing thousands upon thousands of foreclosure documents without even looking at them. In addition, it is being alleged that much of the documentation for these mortgages that are being foreclosed upon is either "improper" or is actually "missing". As lawyers start to smell blood in the water, lawsuits challenging these foreclosures have already started springing up from coast to coast. In fact, some are already calling Foreclosure-Gate the biggest fraud in the history of the capital markets. JPMorgan Chase, Ally Bank's GMAC Mortgage and PNC Financial have all suspended foreclosures in the 23 U.S. states where foreclosures must be approved by a judge. Bank of America has actually suspended foreclosures in all 50 states. Now, law enforcement authorities from coast to coast are calling for investigations into this controversy and it could be years before this thing gets unraveled.

This thing just seems to escalate with each passing day. It is being reported that the attorneys general of up to 40 U.S. states will be working together on a joint investigation into this foreclosure crisis. Lawmakers in both houses of the U.S. Congress, including Nancy Pelosi and Christopher Dodd, have called for an investigation to begin on the national level. U.S. Attorney General Eric Holder said last week that he is looking into the issue. Things are certainly getting very serious out there. Never before has there ever been such a national focus on foreclosure paperwork.

But apparently there are good reasons for such scrutiny....

*One GMAC Mortgage official admitted during a December 2009 deposition that his team of 13 people signed approximately 10,000 foreclosure documents a month without reading them.

*One Bank of America employee confessed during a Massachusetts bankruptcy case that she signed up to 8,000 foreclosure documents a month and typically did not look them over "because of the volume".

But the "robo-signing" aspect of Foreclosure-Gate is just the tip of the iceberg. Apparently there is a whole lot more going on than just a bunch of bad signatures.

Peter J. Henning, a professor at Wayne State University Law School in Detroit, was recently quoted by MSNBC as saying the following about Foreclosure-Gate....

"You've got so many potential avenues of liability. You don't even know the parameters of this yet."

The sad truth is that potentially millions of foreclosures across the United States could potentially be invalid because the securitization process has muddied the chain of ownership. In fact, an increasing number of judges from coast to coast have been ruling that the "owners" of the mortgage have no right to foreclose on a property because they lack clear title.

At the core of this title controversy is MERS - Mortgage Electronic Registration Systems. MERS is based in Reston, Virginia and it was created by the mortgage industry to enable that big financial firms to securitize and swap mortgages at high speed. MERS allowed these big financial firms to largely avoid the hassle of filling out more forms and submitting new filing fees every time that a mortgage was traded.

But now MERS is facing some very serious legal challenges. A recent article in Businessweek described the situation this way....

A lawsuit filed on September 28th in federal court in Louisville on behalf of all Kentucky homeowners claims that MERS was part of a conspiracy to create false promissory notes, affidavits, and mortgage assignments to be used in mortgage foreclosures. Similar class actions have been filed on behalf of homeowners in Florida and New York. Karmela Lejarde, a MERS spokeswoman, declined to comment on any pending litigation.

The reality is that as millions of U.S. mortgages have been bunched together and traded around the globe at lightning speed, it has become increasingly unclear who actually has title to them and who actually has the right to foreclose on these properties.

Title insurers have backed the titles of millions of these foreclosed properties and now potentially find themselves in a heap of trouble. Some of the biggest title insurers have already begun circling the wagons in an attempt at damage control. For example, one of the biggest title insurance companies in the United States, Old Republic National Title Insurance, has already declared that it will no longer write new policies for homes that have been foreclosed on by JPMorgan Chase and GMAC Mortgage.

So what happens if nearly all title insurers start avoiding foreclosed properties?

Won't that make it much more difficult for the banks to sell the massive backlog of foreclosed properties that they have accumulated?

In addition, Americans that have purchased foreclosed homes may now be facing some serious problems themselves. Millions of Americans may now "own" homes that they do not have clear title for. When it comes times to sell those homes, many Americans may find themselves unable to do so.

Needless to say, this is a complete and total mess.

Already, U.S. banks have a record number of foreclosed properties that they need to clear out, and now all of this scrutiny on foreclosure paperwork and all of these lawsuits are going to grind the process of getting these homes sold off to a standstill.

In fact, the true legacy of Foreclosure-Gate may be the massive amount of bank failures that it causes.

It would be difficult to understate how much of a nightmare Foreclosure-Gate is going to be for U.S. mortgage lenders. Having to go back through the paperwork of millions of old mortgages is going to be a complete and total disaster. If banks end up being unable to foreclose on a large number of bad mortgages, it could potentially be enough to put many banks out of commission for good. Not only that, but the legal fees that many of these banks will accumulate defending lawsuits related to Foreclosure-Gate will be astronomical.

The U.S. mortgage industry was already on the verge of death, and Foreclosure-Gate may just be the straw that broke the camel's back.

The reality is that U.S. banks are drowning in foreclosures and this current crisis is just going to make things a lot worse. Back in 2005, there were approximately 100,000 home repossessions in the United States. In 2009, there were approximately 1 million home repossessions in the U.S. and RealtyTrac is now projecting that there will be an all-time record of 1.2 million home repossessions in the United States this year.

For the U.S. mortgage industry, Foreclosure-Gate must feel like someone has dropped a bomb on them after they have already been beaten up and doused with gasoline.

Attorney Richard Kessler, who recently conducted a study that found serious errors in approximately three-fourths of court filings related to home repossessions, says that Foreclosure-Gate could haunt the U.S. mortgage industry for the next ten years....

"Defective documentation has created millions of blighted titles that will plague the nation for the next decade."

While it may be easy to beat up U.S. mortgage lenders and say that they deserve all this, let us not forget that this is going to impact a whole lot of other people too.

It is going to become much harder to get a mortgage. It is going to become much harder to buy a home. It is going to become much harder to sell a home. The U.S. housing industry is likely to suffer a significant downturn due to all of this. There is even a good chance that the entire U.S. economy could be dragged down for an extended period of time.

So no, Foreclosure-Gate is not good news for anyone.

Well, except maybe for lawyers.

But for virtually everyone else this is really bad news. Any hope that the U.S. housing industry would experience a quick recovery is completely and totally gone.

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Democrats Unleash the IRS and Justice on Donors to Their Political Opponents.

Shutting Up Business
Wall Street Journal

If at first you don't succeed, get some friends in high places to shut your opponents up. That's the latest Washington power play, as Democrats and liberals attack the Chamber of Commerce and independent spending groups in an attempt to stop businesses from participating in politics.

Since the Supreme Court's January decision in Citizens United v. FEC, Democrats in Congress have been trying to pass legislation to repeal the First Amendment for business, though not for unions. Having failed on that score, they're now turning to legal and political threats. Funny how all of this outrage never surfaced when the likes of Peter Lewis of Progressive insurance and George Soros helped to make Democrats financially dominant in 2006 and 2008.

Chairman Max Baucus of the powerful Senate Finance Committee got the threats going last month when he asked Internal Revenue Service Commissioner Douglas Shulman to investigate if certain tax exempt 501(c) groups had violated the law by engaging in too much political campaign activity. Lest there be any confusion about his targets, the Montana Democrat flagged articles focused on GOP-leaning groups, including Americans for Job Security and American Crossroads.


Mr. Baucus was seconded last week by the ostensibly nonpartisan campaign reform groups Democracy 21 and the Campaign Legal Center, which asked the IRS to investigate whether Crossroads is spending too much money on campaigns. Those two outfits swallowed their referee whistle in the last two campaign cycles, but they're all worked up now that Republicans might win more seats. Crossroads GPS, a 501(c)(4) affiliate of American Crossroads supported by Karl Rove, is a target because it has spent millions already in this election cycle.

Editorial Board Member Matt Kaminski on the Wisconsin senate race.
Last Tuesday, the liberal blog ThinkProgress, run by the Center for American Progress Action Fund, reported that the U.S. Chamber of Commerce had collected some $300,000 in annual dues from foreign companies. Since the money went into the Chamber's general fund, the allegation is that it could have been used to pay for political ads, which would violate a ban on foreign companies participating in American elections. The Chamber says it uses no foreign money for its political activities and goes to great lengths to raise separate funds for political purposes.

That didn't stop President Obama from raising the issue in a Maryland speech last week, saying that "groups that receive foreign money are spending huge sums to influence American elections." Within hours of the ThinkProgress report, the bully boys at MoveOn.org asked the Department of Justice to launch a criminal investigation of the Chamber. In a letter to the Federal Election Commission, Minnesota Senator Al Franken expressed his profound concern that "foreign corporations are indirectly spending significant sums to influence American elections through third-party groups." From the man who stole his Senate election in a dubious recount, this is rich.

Even Mr. Franken admits in his letter that the Chamber's commingling of funds in its general accounts is not "per se illegal," but apparently he thinks it's fine to unleash federal investigators because the Chamber cash might contribute to the defeat of fellow Democrats.

The outrage over the Chamber is especially amusing considering the role of foreigners in U.S. labor unions. According to the Center for Competitive Politics, close to half of the unions that are members of the AFL-CIO are international. One man's corporate commingling is another's union dues.

Unions and liberal groups are hardly cash poor this year in any case. The Campaign Media Analysis Group looked at the combined spending of candidates, their parties and outside groups and found that Democrats outspent Republicans $47.3 million to $40.8 million in a recent 60-day period.

Democrats claim only to favor "disclosure" of donors, but their legal intimidation attempts are the best argument against disclosure. Liberals want the names of business donors made public so they can become targets of vilification with the goal of intimidating them into silence. A CEO or corporate board is likely to think twice about contributing to a campaign fund if the IRS or prosecutors might come calling. If Democrats can reduce business donations in the next three weeks, they can limit the number of GOP challengers with a chance to win and reduce Democratic Congressional losses.

The strategy got a test drive in Minnesota earlier this year after Target Corporation donated $100,000 cash and $50,000 of in-kind contributions to an independent group that ran ads supporting the primary candidacy of Republican gubernatorial candidate Tom Emmer. MoveOn.org accused the company of being anti-gay, organized a petition, and crafted a TV ad urging shoppers to boycott Target stores. Target made no further donations, and other companies that once showed an interest have since declined to contribute.

Then there's the curious reference to the tax status of Koch Industries by White House chief economist Austan Goolsbee. In a late August conference call with reporters, Mr. Goolsbee cited the closely-held Koch as an example of "really giant firms" that pay no corporate income tax because they file under other tax rules. But how in the world would Mr. Goolsbee know Koch's tax status? Could his knowledge be related to the White House-liberal campaign against Koch for contributing to Americans for Prosperity, a group that is supporting free-market candidates for Congress this year?

In an August 9 speech, Mr. Obama personally trashed Americans for Prosperity, hinting that it was funded by "a big oil company." He had to mean Koch, which makes no secret of its support for Americans for Prosperity.

The White House didn't respond to queries about Mr. Goolsbee's remark for weeks until GOP Senators requested an investigation. The Treasury's inspector general for tax matters has since announced such a probe, and last week White House spokesman Robert Gibbs finally got around to explaining that Mr. Goolsbee's statement "was not in any way based on any review of tax filings" and that he won't use the example again.

We're glad to hear it, but pardon our skepticism given the ferocity of this White House-led campaign against businesses that donate to political campaigns. Faced with electoral repudiation as the public turns against their agenda, Democrats are unleashing government power to silence their political opponents. Instead of piling on, the press corps ought to blow the whistle on this attempt to stifle political speech. This is one more liberal abuse of power that voters should consider as they head to the polls.

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