Thursday, August 29, 2013

Rise of Right Ensures USA Status As Planet's No. 1 Crime Family (Surefire Scheme: Fund 'Em! No Matter How Unable To Repay! As Taxpayers Are Always First On Hook)

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Not a mistake.

Sounds like no mistakes were made at all.

And if Angilo Mozingo's jail time is spent as nicely as Raj Rajaratnam's is, there will be lots more "not a mistake"s made in the future.

No harm, no foul?

Not to them anyway.

But watch out for the whistleblowers! They're dangerous!

You've gotta love this guy as much as I do. Now, here's a candidate after my heart.

Wednesday, Aug 28, 2013 07:45 AM EST

Wall Street’s Greatest Enemy: The Man Who Knows Too Much

What Michael Winston knows about corporate crimes will horrify you. That's why financial giants want to destroy him

By David Dayen

Wall Street's greatest enemy: The man who knows too much

Michael Winston (Credit: Reuters/Joshua Roberts)

You may know Michael Winston’s story from a series of articles by Gretchen Morgenson in the New York Times, or from a celebrated Frontline episode, “The Untouchables,” about the lack of prosecutions on Wall Street. He was a Ph.D. who rose to the corporate elite, with stints at Lockheed Martin, McDonnell Douglas, Motorola and Merrill Lynch. He was recruited to mortgage originator Countrywide Financial with the promise that it wanted to become the “Goldman Sachs of the Pacific,” a full-service global financial corporation.

“They talked about the importance of ethics and principles, and they said they heard I was a high-integrity guy,” Winston tells Salon, noting his father had a vanity plate that read “HONOR.” Winston initially succeeded as enterprise chief leadership officer at Countrywide, getting promoted twice in 14 months and building a team of 200 working on corporate strategy.

But he could not ignore the rot at the heart of the company’s profitmaking approach.

So now, a successful high-level executive for 30 years, he has been embroiled in seven years of lawsuits with Countrywide and the company that bought it, Bank of America. His determination to speak out against multiple violations of law at Countrywide earned him retaliation, and eventually, he was frozen out of corporate boardrooms, unable to find a new job. He won a jury verdict in his case, but after two and a half more years of fighting, an appellate court reversed the ruling in highly unusual circumstances.

“I keep hearing about whistle-blower protections,” he tells Salon, exasperatedly. “It certainly didn’t happen for me.”

Now, Bank of America wants to gouge Michael Winston one last time, demanding an interest payment on money awarded to him that he never received.

“Thus far, the person who did the right thing got punished, and the person who did the wrong thing got rewarded,” Winston said. The chilling case shows that the greatest enemy for Wall Street is the man or woman who actually tries to expose its secrets.
* * *

“FUND-EM.” That’s what the license plate read when Winston pulled into Countrywide headquarters at the end of 2005. It was the car of CEO Angelo Mozilo. “What does that mean?” Winston asked a colleague.

“That’s Mozilo’s growth strategy for 2006,” his colleague replied. “We fund all loans.”

“What if the borrower has no job?” Winston asked.

“Fund ‘em.”

“What if they have no assets?”

“Fund ‘em.”

“No income?”

“If they can fog a mirror, we’ll give them a loan.”

Winston relayed his fears about this doomed strategy to Drew Gissinger, head of Countrywide Home Loans, offering proposals on how to prioritize customer satisfaction and strong fundamentals over making dicey loans. “I was trying to save Countrywide from itself,” Winston said. These proposals were politely taken and discarded. Later Gissinger would say he never received them.

A separate triggering event had nothing to do with loans, but how Countrywide treated its employees. In addition to selling toxic mortgages, Countrywide also housed its staff in toxic buildings. One in particular, on Tapo Canyon Road in Simi Valley, Calif., was notorious for noxious air, exposed wiring and a generally hideous atmosphere.

Winston worked in this building, and he and his team experienced shortness of breath, dizziness and headaches. One female employee, 35 weeks pregnant, said she was afraid to work there. Michael himself was struck by a toxic substance coming from an overhead air vent. “I thought I was being poisoned,” he said. This is at a company that made $2.7 billion in net revenue in 2006.

Countrywide claimed that it did an investigation of the air quality and found nothing wrong, when Winston knew it was still taking air samples in his office. Winston confronted his boss over this, and she replied that she lied to “prevent a panic” at the company. That’s when Winston submitted a complaint to California’s Occupational Safety and Health Administration (Cal-OSHA).

The retaliation was swift. Winston’s team was assigned elsewhere, his budget was cut, and his responsibilities reduced. Winston stayed out of a sense of loyalty to the team he persuaded to join Countrywide. “Everyone I recruited sold their houses in New York and moved to California,” Winston told Salon. “If not for that, I would have been gone at the first sign of trouble. I felt an obligation to them.”

After months of hardship, the president of Countrywide, Dave Sambol, asked him to come to New York and basically lie to the credit rating agency Moody’s about its corporate governance practices. Countrywide had gone without a president and chief operating officer for five months without informing investors, and had delivered top executives outsize compensation.

Countrywide wanted Winston to fabricate a story about these practices and deliver it to Moody’s. Winston refused to lie. Three weeks later, the CEO, Angelo Mozilo, demanded Winston’s termination because he wouldn’t break the law. (The termination would not come until 2008, by Bank of America when it bought the company.)

For the next several years, Winston pursued a series of court cases, first against Countrywide and then against its new corporate parent, Bank of America, over the illegal retaliation. Winston and his lawyer, a former prosecutor at the Los Angeles district attorney’s office, saw so many lies from top Countrywide executives at their trial, that they wanted to get criminal charges instituted. Winston’s lawyer actually wrote to then-DA Steve Cooley, but nothing came of it (the DA’s office claimed it was never sent the material).

To use just one of a hundred examples, Mozilo claimed under oath he was “unimpressed” with Winston, despite a large documentary record of praise.

“The assumption when someone raises their right hand, you see a check go off in the head of the jury, now we’ll hear the whole truth,” Winston said. “But no part of it was truthful.” In early 2011, after a month-long trial, the jury found in Winston’s favor, awarding him $3.8 million.

Sadly, the story doesn’t end there. First, Bank of America tried to get a “judgment notwithstanding the verdict” in its favor. When a judge tossed that out, the bank “went shopping for justice,” Winston said.  The company would eventually find an appellate court in California to conduct a 29-minute hearing with no transcript made of the proceedings, a highly unusual practice. It didn’t bother to hear from Winston – he was 3,000 miles away at the time of the hearing. The court heard no new information in the case, only the 2-year-old trial record, filled with “perjurious content” from Countrywide executives, in Winston’s view.

Though legal precedent requires appellate courts to not reevaluate evidence heard by a jury, in this case they did, creating new evidence requirements that they said Winston did not meet. According to the Government Accountability Project, which presented an amicus brief to Winston in the case, “respect for the jury’s determinations is the rule in California and the federal system.” Nonetheless, the appellate court reversed the jury verdict, rescinding the $3.8 million award. The court claimed that Bank of America could not be held liable for Winston’s travails, despite clear legal precedent that it assumed those liabilities when it bought Countrywide.  “They reversed my verdict and they broke the law to do it,” Winston said.

* * *

Despite Bank of America taking two years to delay and appeal the verdict, Winston has no right to appeal. He sought a rehearing and then an appeal to the California Supreme Court, to no avail. He’s working on an appeal to the U.S. Supreme Court, arguing that his constitutional rights were violated. “The Constitution gives you the right to a trial by jury. It doesn’t say ‘only if the jury finds in favor of Bank of America,’” said Winston.

The insult on top of injury comes from Bank of America retributively seeking monetary damages from him. It filed in Superior Court to recoup roughly $65,000, allegedly the cost of posting a bond that was ordered by the trial judge after the original $3.8 million jury award. But Bank of America never paid the award to Michael Winston. “I never saw a dime and paid $600,000 in legal fees,” Winston said. The egregious demand for restitution – from a multibillion-dollar company – is a symbol of the vindictiveness of a corporate giant lashing out at someone who dared to expose them.

Winston, 62, has not been able to find work since this ordeal, despite a stellar record over three decades. Bank of America even tried to subpoena speaker’s bureaus Winston had signed up with to tell his story on the lecture circuit, causing those organizations to break ties with him. So the $65,000 is not a trivial amount for him. And the principle of having to pay Bank of America after it put him through hell for years is stinging.

The lesson is clear: If you object to the corrupt practices at financial giants like Countrywide and Bank of America, you will be marginalized and financially ruined. And even if you think you’ve won, over time you will lose. “No one who receives a jury verdict can feel safe,” Winston said. His actions – filing a health and safety complaint and refusing to misrepresent material facts for the company – are supposed to be protected by law. None of that mattered. Says Winston, “If I can’t get this case heard, why would any whistle-blower speak up?”

David Dayen David Dayen is a contributing writer for Salon. Follow him on Twitter at @ddayen.

5 Wildly Offensive Comments and Actions by Rich Jerks 


By RJ Eskow

comments_image 94 COMMENTS
"I don't think the common person is getting it… if you’re lower income — one, you're not as educated, two, they don't understand how [the system] works.” 

“The poor we shall always have with us,” said the Bible, and lately there are more of the poor than ever—over 50 million at last count. But that doesn’t stop wealthy Americans from saying things that reek of insensitivity and callousness toward those less fortunate than themselves, which nowadays is pretty much everybody.

The lordly indifference of the fabulously wealthy has left us with a rich cornucopia of blithely cold-hearted remarks and actions. Which of these rich folks made the most some objectionable, offensive or downright heartless comments? See for yourself.

1. Mark Zuckerberg

The Facebook CEO recently launched a “super-PAC,” aka influence-peddling organization, to represent his interests and that of his fellow Silicon Valley billionaires. A number of them refused to join [3] on moral and ethical grounds, however (good on ya, Vinod Khosla and Josh Miller), leaving only the more venal among them on Zuckerberg’s roster of supporters.

The super-Pac’s prospectus [4] boasts that Zuckerberg and his fellow tech moguls have certain “tactical assets, including the fact that “We control massive distribution channels” and “We have individuals with a lot of money. If deployed properly this can have huge influence in the current campaign finance environment.”

In other words, “We can corrupt the political process even more than it already has been.”

During Facebook’s initial public offering, Zuckerberg made this claim [5] in a letter to potential investors: “We expect governments will become more responsive to issues and concerns raised directly by all their people rather than through their intermediaries controlled by a select few.”

We now learn that Zuckerberg doesn’t have a problem with “intermediaries controlled by a select few” after all, as long he’s doing the selecting.

But then, that particular statement’s the least of Zuckerberg’s post-IPO worries. The Facebook IPO resulted in a rash of lawsuits [6] against Facebook, a $10 million fine [7] for the exchange that handled it, and a series of ongoing government investigations.

The super-PAC’s first initiative is supposed to be immigration reform. But the group’s been running ads and making other efforts to support a hard-right political agenda, directly and through subsidiaries called Americans for Conservative Action and Council for American Job Growth. One ad features [8] conservative Republican Marco Rubio. Others [3] oppose Obamacare and promote the environmentally destructive Keystone XL pipeline.

That’s not “disruptive,” to use a favored Silicon Valley term.

It’s destructive. And it’s sleazebag politics as usual. That super-PAC prospectus also boasts that “Our voice carries a lot of weight because we are broadly popular with Americans,” but it’s been doing its best to change that.

Zuckerberg’s fond of saying “Move fast and break things.” Yeah—like democracy.

2. Peter Shih

Whatever his other faults, Zuckerberg chooses his public words pretty carefully. That’s not true of Zuckerberg wannabe Peter Shih. Shih’s recent product of tech incubator ycombinator [9] makes him more of an incubating tycoon than a present-day one.

Listen to what Shih had to say in a recent blog rant against San Francisco. The post, titled "10 Things I Hate About You: San Francisco Edition [10]," managed to be profoundly offensive to … well, just read the excerpts [11] yourself:
  • “I hate how the weather here is like a woman who is constantly PMSing.”

  • "I'm referring to all the girls who are obviously 4's and behave like they are 9's. Just because San Francisco has the worst Female to Male ratio in the known universe doesn’t give you the right to be a bitch all the time.”
  • “Stop giving [homeless people] money, you know they just buy alcohol and drugs with it right?…. I'm seriously tempted to start fucking with people and pay for homeless guys to ride the Powell street cable cars in the middle of the day, that ought to get the city's attention.”
Shih also complains about “public transit being non-existent past midnight and the transvestite to taxi ratio being quite literally off the charts.” You can’t condemn a whole group of people because one person’s offensiveness is “off the charts.” But Shih is representative of the tech subculture, at least when it comes to some of its least flattering attributes – like excessive self-regard and the improper application of testosterone-fueled energy.

3. Eric Schmidt

Google CEO Eric Schmidt airily dismissed Google users' concerns about privacy this way in a 2009 television interview [12]: “If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place.”

Now Google has formalized Schmidt’s indifference to civil liberties. Last month it made this claim in a motion [13] to dismiss a class action suit: "people who use web-based email today cannot be surprised if their communications are processed by the recipient’s ECS provider in the course of delivery.”

Google went on to approvingly quote a 1979 ruling which said that “a person has no legitimate expectation of privacy in information he voluntarily turns over to third parties.”

Google’s position is, therefore, that any Gmail user—or anybody who sends an email to a Gmail user—has no right to expect their communication to remain private. We’ll say this for Mr. Schmidt: We can’t say he didn’t warn us.

4. Marissa Mayer

Last year Yahoo! announced that Marissa Mayer, a longtime tech star at Google, was going to be its new CEO. Later that day Mayer announced she was pregnant. That was a good moment for society: The USA was overdue for a pregnant celebrity CEO.

Mayer built a nursery right next to her office so she could bring her infant son to work. That was a nice moment, but it didn’t last long. She then promptly ended the company’s policy [14] of letting people work from home, a sign that she lacks empathy toward less fortunate parents. She then improved Yahoo’s parental leave policy—also nice (and necessary if you want to get and keep good Silicon Valley employees). But she did it in a way that favors biological birth parents [15] over those who adopt.

Mayer also stereotyped and demeaned the feminists who made her success possible:

"I don’t think that I would consider myself a feminist. I think that I’d certainly believe in equal rights … But I don’t I think have sort of militant drive and the sort of chip on the shoulder that sometimes comes with that. I think it’s too bad but I do think feminism has become in many ways a more negative word…"
But what she didn’t say was as insensitive as what she did say. For context it should be noted Mayer lives well. The Gilded Age lifestyle choices described in a recent Vogue include “glitzy parties,” Mozart tunes playing on a “computer-driven baby grand piano,” and the “two-story, miniaturized model of Palo Alto’s Peninsula Creamery” in her backyard.

Mayer can spend her money as she likes, but that kind of spending becomes distasteful if the person is also part of an effort to keep the working poor in poverty. Mayer is on the Walmart board of directors, and Walmart is actively resisting increases to the minimum wage [16]. Walmart’s wages are so low many of the people who work there—many of them parents—need government help to get medical care and eat an adequate diet.

Mayer had the chance to meet with Walmart workers who were unjustly fired after protesting the corporation’s policies, but she refused to speak with them [17]. She had them arrested instead. 
Mayer’s public silence doesn’t just extend to mistreated Walmart workers. She prefers to let others do her political talking, too. Yahoo! is part of Zuckerberg’s right-wing super-PAC. It also reportedly remained [18] in the Koch brothers far-right American Legislative Exchange Council (ALEC), even after many other corporations [19] publicly left the group over its extremist policies.

If you’re going to live a life of glamor and opulence, it’s best not to project such insensitivity toward other, less fortunate parents. Or to back politicians who are bent on destroying the social safety net.

5. Daniel S. Loeb

Mayer reportedly got her job through the machinations of hedge fund manager and Yahoo! board member Daniel S. Loeb, who’s known for his relentless publicity-seeking and self-promotion, as well as for his tasteless political comments.

The most notorious of those comments can be found in an Investor Letter [20] Loeb sent around last year, which suggested that President Obama’s political agenda was the “redistribution of wealth.” That’s a pretty extreme claim to make, especially when wages have remained stagnant for most Americans and wealth inequality has grown even more pronounced.

As the AFL-CIO [21] recently pointed out, it also appears that Loeb’s “reinsurance company” may not be in the reinsurance business at all, but has incorporated itself as a Bermuda reinsurer in order to get around U.S. regulations and safeguards. Loeb may think that’s justifiable gamesmanship, given his expressed hostility toward regulation. But his Wall Street peers destroyed the economy the last time they were allowed an unregulated play period with the world’s money.

Loeb is reportedly a Democrat who backed Obama in 2008. But in 2012 he co-hosted a $25,000 per guest Romney fundraiser which made the wrong kind of headlines [22]:

"I don't think the common person is getting it,” said one Loeb guest. “. … I just think if you’re lower income—one, you're not as educated, two, they don't understand how [the system] works.” 
Loeb spouts enough economic misinformation and extremist cant to earn an honorary membership in the Tea Party. He’s distressed about proposals to end loopholes for hedge fund managers and tax them the same way ordinary people are taxed – teachers, for example, and police officers. So he uses historical quotes to describe those proposals, which are far more modest than tax regulations under presidents Eisenhower and Nixon, as “oppression” of a “minority” and “tak(ing) from the mouth of labor the bread it has earned.”

6. Steve Schwarzman

Hedge funder Steve Schwarzman makes Loeb sound like the Dalai Lama. It was Schwarzman [23] who famously compared the idea of taxing hedge funders to an infamous Nazi act of war. “It’s like when Hitler invaded Poland in 1939,” said Schwarzman.

Schwarzman also … oh, why bother? That pretty much closes the case against him.
A lot of wealthy people aren’t on the list, of course, because they’re fair and reasonable people. But scientific research [24] tells us that the wealthier classes are more inclined toward selfishness, arrogance and a sense of entitlement. They can hold some pretty extreme political views [25], too.
So as the rich continue to inherit the earth, we’ll be hearing a lot more the wealthy people who, like Zuckerberg and Mayer, want to corrupt the political process; those who are aggressively ignorant of political and constitutional principles, like Schmidt and Loeb; and the ones who are just loudmouthed jerks like the other guys on this list.

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