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Busted: BankAtlantic CEO Accused Of Real Estate Fraud

January 19, 2012 By Leave a Comment

SEC charges Florida-based BankAtlantic CEO with real estate fraud

Andrew Scoggin, Housing Wire

Alan Levan Charged

BankAtlantic and its CEO Alan Levan have been accused of real estate fraud by the SEC

The Securities and Exchange Commission chargedBankAtlantic Bancorp (BBX: 3.10 +2.31%) and its chief executive Wednesday for allegedly misleading investors on defaulting loans in its real estate development portfolio.

The SEC said in a statement BankAtlantic and its CEO and Chairman Alan Levan hid the “deteriorating state” of portions of its land acquisition and development business in 2007. The company and Levan then tried to minimize losses on the books, the SEC said, by committing accounting fraud.

The Fort Lauderdale, Fla.-based bank and Levan improperly recorded loans it tried to sell from the portfolio, according to the SEC. The agency filed its complaint in U.S. District Court for the Southern District of Florida.

“This is exactly the type of information that is important to investors, and corporate executives who fail to make that required disclosure will face severe consequences,” Robert Khuzami, director of the SEC’s Division of Enforcement, said in a statement.

The SEC seeks to bar Levan from holding an executive position at any financial firm, as well as financial penalties against BankAtlantic.

The company’s stock fell sharply right before market close Wednesday to $3.03, or by 7.6%.

Gene Stearns, a long-time lawyer for BankAtlantic and Levan, said the company is not concerned about the merits of the SEC case, aside from any monetary costs and bad publicity.

“We all know the SEC is under enormous pressure to sue somebody, but it sure picked an odd defendant,” Stearns said.

The loans were for large tracts of land intended for single-family housing and condos, the SEC said. Borrowers could not meet loan obligations, and the SEC said BankAtlantic kept them current in some cases by extending the loan terms.

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FBI Reportedly Investigating Fannie and Freddie

December 22, 2011 By Leave a Comment

, Huffington Post

It’s been a bad month for Fannie Mae and Freddie Mac.

The Securities and Exchange Commission announced last week that it was suing half a dozen former executives from the mortgage giants, including the ex-CEOs of both companies. Now, the Federal Bureau of Investigation is reportedly asking questions about Fannie and Freddie’s behavior in the months preceding the financial crisis, according to The Daily.

At issue is whether Fannie and Freddie — two of the largest mortgage companies in the country, and the recipients of a major government bailout in September 2008 – misled the public and investors about the relative risk of their loans in the lead up to the financial crisis, the Daily reports. The matter has serious implications, since many allege that mortgage lenders’ enthusiasm for making loans to homeowners with shoddy credit, and banks’ penchant for using those loans as financial instruments, are among the principal reasons for the housing crash and financial crisis.

The SEC’s lawsuit probes much the same question, hitting six former executives at the two companies with charges of security fraud, and accusing them of continuing to hold onto questionable loans even after the magnitude of the risk became clear. Neither company is directly named as a defendant in the SEC’s suit.

The SEC appears to be framing that suit as a response to critics who have accused the agency of going easy on the major banks and financial institutions who played a central role in the financial meltdown, according to The New York Times.

However, it’s unclear whether the SEC’s pursuit of Fannie and Freddie alumni will assuage taxpayer ire or merely inflame it further, since, as CNBC recently pointed out, it’s taxpayers who may end uppaying the legal fees for the six defendants named in the suit, as Fannie and Freddie are now owned by the government.

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DOJ Arrests “Mass Joinder” Attorney Mitchell Stein at LAX

December 21, 2011 By Leave a Comment

Martin Andelman, ML-Implode

This is a story for the ages… you want crazy, I’ve got crazy.

Remember attorney Mitchell J. Stein?  His law office was shut down along with the the law offices of Kramer & Kaslow.  Stein filed the first lawsuit against Bank of America that came to be know as a “mass joinder,” or multi-plaintiff suit… Ronald v. Bank of America.

When I first called Mitchell Stein to find out what he was up to, I discovered that coincidentally, he went to my high school.  He was two years older than me, so he didn’t remember me, but I did remember him.  And he seemed like a smart trial lawyer who certainly talked like he was dedicated to fighting for the rights of homeowners against the banks.  He said that many of his clients were pro bono and contingency cases, where the homeowners were paying nothing.  I never listed him on my “Trusted Attorneys” tab… because I just didn’t know him long enough… but I did try to keep tabs on him.

Then this past September, I believe, both he and Kramer got shut down by the State Bar and AG, the allegations being that they were “running and capping,” essentially meaning that they were paying non-lawyers sales commissions.  Kramer continues to deny that happened, and I suppose we’ll have to wait to see what evidence is presented at trial to be sure one way or the other.  Stein, on the other hand, not only denied any involvement with Kramer’s marketing, but further said that he had never received any funds from that marketing… and to-date, I haven’t seen any evidence that he did.  So, I was waiting to see how all that came out, as well.

But… never mind all that… in fact, as far as Stein is concerned, it’s pretty much mass-smash… joinder-schmoinder.

Okay, ready for this?  I wasn’t.

Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division announced today that attorney Mitchell J. Stein was arrested on Sunday, December 18, 2011, at Los Angeles International Airport on charges related to his alleged role in a multi-million dollar market manipulation stock fraud scheme.  Stein was arrested for his role as attorney for a South Carolina health care device company, Signalife… now known as Heart Tronics.

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SEC sues Hub’s Richard Syron

December 18, 2011 By Leave a Comment

Home-loan execs hit

Hub business icon Richard Syron is denying SEC charges that he misled investors about subprime mortgages while heading home-loan giant Freddie Mac during the housing boom and subsequent bust.

“The SEC’s case against Mr. Syron is without merit,” Syron’s lawyers said yesterday after the U.S. Securities and Exchange Commission civilly charged their client and five other ex-executives with securities fraud.

Regulators claim the former Freddie Mac and Fannie Mae honchos deceived investors about some $300 billion in subprime-mortgage exposure that the firms allegedly had prior to the market’s meltdown.

Bad subprime loans eventually drove Fannie and Freddie to the brink of collapse, forcing Uncle Sam to seize the firms in 2008 to keep America’s mortgage market going.

Syron — a 68-year-old Hub native who ran the Boston Fed, Waltham’s Thermo Electron and other major local entities over the years — took over Washington-based Freddie Mac in 2003.

The SEC claims that during his five years there, Syron signed off on filings that vastly understated the firm’s exposure to subprime loans.

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