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FRAUD Alledged Against Financial Corps...

A

Anonymous

Guest
KB Home, Countrywide Accused of Racketeering

Friday, May 8, 2009 3:04 PM

LOS ANGELES -- Homeowners brought a federal racketeering lawsuit on Thursday against KB Home (KBH.N), the former Countrywide Financial Corp and appraiser LandSafe Inc, accusing the companies of operating a scheme to fraudulently inflate sales prices of KB homes in Arizona and Nevada.


The lawsuit, filed in federal court in Phoenix, claims the three companies colluded to overprice as many as 14,000 homes in the two states by an average of $20,000, for an estimated total of $2.8 billion between 2006 and the present. The plaintiffs seek class action status and triple damages.


A KB Home spokeswoman said the Los Angeles-based home builder had not seen the lawsuit and had no comment. Calabasas, California-based Countrywide, which was acquired last year by Bank of America (BAC.N), could not be reached for comment.


The lawsuit contends that KB and Countrywide formed the joint venture Countrywide KB Home Loans to "rig and falsify" appraised values of the homes they were selling and financing in the two states.


The joint venture steered prospective buyers of KB Homes to hand-picked appraisers at Countrywide subsidiary LandSafe who would "come in with the appraisal at whatever number was necessary to close the deal," the lawsuit said.


LandSafe appraisers "blatantly falsified" sales prices for comparable properties, using prices from homes as much as 10 miles away, and citing comparable properties that were in different planned communities, the suit said.


The homes were generally priced between $250,000 and $350,000 -- inflated sums that homeowners discovered when they attempted to sell their homes and hired independent appraisers, said plaintiffs attorney Steve Berman of Hagens Berman Sobol Shapiro LLP in Seattle.


"Most of these people were underwater from the get-go," said Berman.


The Hagens firm filed a similar lawsuit against KB and Countrywide earlier this year in California, citing claims under the Racketeer Influenced and Corrupt Organizations Act and violation of the state's unfair competition law.


The case is Nathaniel Johnson v. KB Home et al., 2:09-CV-00972-MHB, in U.S. District Court in Arizona.
 

TexasBred

Well-known member
Sounds very familiar to the Savings and Loan fiasco back in the 80's when certain S&Ls were flipping land 3-4-5 times a day. Bad part was that about the only people that ever went to prison were the appraisers. The big shots walked and are still living the good life.
 

Mike

Well-known member
Zer0 appointed the one who turned a blind eye to the Madoff scandal to run the SEC.

That's change?
Mary Schapiro, the regulator who once cleared part of Bernard Madoff's $50 billion investment business from fraud, was last night approved by the US Senate as head of the Securities and Exchange Commission.

Ms Shapiro was voted through unanimously as chairman of the main Wall Street regulator as the commission faces attacks over how it missed the world's biggest fraud.

Ms Schapiro, who spent two decades regulating financial markets, was confirmed as the 29th chairman of the SEC, is now tasked with restoring investor confidence into Wall Street amid one of the worst financial crisis in decades.

At her confirmation hearing, the 53-year-old regulator promised to take the "handcuffs off" the SEC's enforcement division and go full force against anyone who violates investors' trust.

Ms Schapiro was chief executive of the Financial Industry Regulatory Authority which gave Mr Madoff a clean bill of health when they investigated his business.
 

Sandhusker

Well-known member
I don't think it's any secret that Countrywide was playing fast and loose.

On a related note, when is Chris "Friend of Angelo" Dodd going to come clean on the bribe he took from Countrywide?
 

Steve

Well-known member
seems as if everyone from the builder / appraiser and loan officer stinks on this one... except the buyer?

but one thing that gets me is that, the buyer had to look at the home, see the asking price, and bid or put an offer in...

how much protection do people need from themselves?
 
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