Fraud and Corruption in the US Courts are Tightly Linked to Banking Fraud and the Global Economic Crisis

a case study
Joseph Zernik, PhD Human Rights Alert (NGO)

Human Rights Alert, 2011

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Take Home Message

The Financial Crisis
1. Reflects widespread corruption of the US
government, on a scale not seen in at least 100 years; 2. Similar/greater in severity compared to the Great Depression; 3. Related to widespread fraud in electronic records systems.

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Case Study: SEC v Bank of America (2009-2010)

1. Significance
• Litigated in the US District Court,
Manhattan – key court in corporate regulation • Widely reported by media • Was staged as restoration of enforcement of banking regulation in the wake of the financial crisis.

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Case Study: SEC v Bank of America (2009-2010)

2. Underlying Matter
Unlawful taking of $5.8 billions by banking executives during the merger of Bank of America and Merrill Lynch in late 2008.

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PACER and CM/ECF: general

1. Electronic Record Systems

• A decade-long project; • Cost - several billions US dollars? • Implemented independently by the Administrative Office of
the US Courts; • PACER – Public Access to Court Electronic Records • CM/ECF – Case Management and Electronic Court Filing.

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PACER and CM/ECF: general

2. Shell-game Fraud
• Not validated; • Electronic court procedures have not been established by law (e.g., digital signatures, electronic authentication records); • Public access to digital signatures and electronic authentication records in denied;

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PACER and CM/ECF: general

3. Shell-game Fraud
file records with no prior review by the clerks of the courts; • Enable unauthorized court personnel to issue and publish online court records – dockets, minutes, orders, judgments;
• Enable unauthorized attorneys to appear and

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PACER and CM/ECF: general

4. Shell-game Fraud
Litigation”, a widespread practice in the state and US courts:
Texas Penal Code §32.48. SIMULATING LEGAL PROCESS. (a) A person commits an offense if the person recklessly causes to be delivered to another any document that simulates a summons, complaint, judgment, or other court process with the intent to: (1) induce payment of a claim from another person; or (2) cause another to: (A) submit to the putative authority of the document; or (B) take any action or refrain from taking any action in response to the document, in compliance with the document, or on the basis of the document. (b) Proof that the document was mailed to any person with the intent that it be forwarded to the intended recipient is a sufficient showing that the document was delivered.

• Enable the conduct of “Simulated

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PACER and CM/ECF: authentication records

1. Certificate of Service
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF <name of district> <name1>, Plaintiff, v. <name2>, Defendant. Case Number: <number>

CERTIFICATE OF SERVICE

I, the undersigned, hereby certify that I am an employee in the Office of the Clerk, U.S. District Court, Northern District of California. That on <date>, I SERVED a true and correct copy(ies) of the attached, by placing said copy(ies) in a postage paid envelope addressed to the person(s) hereinafter listed, by depositing said envelope in the U.S. Mail, or by placing said copy(ies) into an inter-office delivery receptacle located in the Clerk's office. <service list> Dated: <date> <name of individual>, Clerk <wet graphic signature> ________________________ By: <name of individual>, Deputy Clerk

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PACER and CM/ECF: authentication records

2. NEF (Notice of Electronic Filing)
NEF pertaining to SEC v BAC, obtained from office of Fair Fund Administrator

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PACER and CM/ECF: authentication records

3. NEFs – invalid authentication records
• Fail to include a certification statement, “I
certify…”; • Fail to include the name and authority of an individual, who issued the certificate; • Fail to include an individual’s valid digital signature; • Are excluded from public access.

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Methods
• Information regarding PACER and CM/ECF,
US District Court, Manhattan:
• Published Rules of Court • Electronic Case Filing Rules & Instructions and CM/ECF Attorney Civil Dictionary • Users’ Manual • Public access to PACER records • Requests to the office of the Clerk of the Court, attorneys for SEC and BAC in the case, office of the Chair of SEC, office of BAC President, Freedom of Information Act (FOIA) office of SEC, and the office of Fair Fund Administrator.
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• Court records in litigation of SEC v BAC :

Methods
• Media coverage:
Search of major media outlets - New York Times, Washington Post, Wall Street Journal, Times of London

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Results

1. Denial of Access
denied:
-

• Public access to electronic court records is
Summons Minutes NEFs Calendars of the Courts Docket Activity Report

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Results

2. Simulated January 29, 2009 Summons
NEF pertaining to SEC v BAC, obtained through FOIA on SEC

•Unsigned •No seal of the court •Not docketed •Public access denied

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Results

3. Simulated January 19, 2010 Minutes

No docket number is assigned to the entry • No record is linked to the entry • The record, if it existed, could not possibly be authenticated

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Results

4. Simulated Litigation
• • • •

August 3, 2009 - Civil Cover Sheet August 3, 2009 – Summons issued Service of Summons
- No Civil Cover Sheet - No record is linked to the entry - The record, if it existed, could not possibly be authenticated

August 3, 2009 - Motion for entry of Settlement Agreement

- No record of service/waiver of service of summons

- No Motion for entry of the proposed Settlement Agreement - No proposed Settlement Agreement
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Results

5. Simulated Litigation
• August 10, 2009 Proceeding • August 25, 2009 Order pertaining to proposed Settlement Agreement
Access to the NEF is denied - Off the record – no docket listing

- Ruling on a matter that was never pending before the Court

• February 22, 2010 Final Consent Judgment
-

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Circumstances

1. Simulated Litigation
• Initial Proposed Settlement
- $33 millions to be paid by the shareholders to the US government; - Executives were not required to return any of the funds; - No individual was held accountable; - No individual suffered any consequences $150 millions to be paid by the shareholders to themselves; Executives were not required to return any of the funds; No individual was held accountable; No individual suffered any consequences

• Final Consent Judgment

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Circumstances

2. Underlying Criminality
April 23, 2009 letter by State of New York Attorney General Andrew Cuomo to the US Senate, summarizing his findings in investigation of the same matter, generated extreme responses by independent media:

• ‘Let the Criminal Indictments Begin: Paulson, Bernanke, Lewis’ • ‘Cuomo Unveils Paulson, Bernanke, Lewis Conspiracy’ • ‘Bigger Than Watergate?’

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Circumstances

3. Cover-up by Mainstream Media
• Wall Street Journal re: Judge Jed Rakoff • Washington Post re: SEC
Rakoff’s currently proving himself to be, if nothing else, unafraid to single-handedly take on some heavyweight institutions and their lawyers.

“[W]e will vigorously pursue our charges against Bank of America and take steps to prove our case in court," the SEC said in a statement. "We will use the additional discovery available in the litigation to further pursue the facts and determine whether to seek the court's permission to bring additional charges in this case.“

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Circumstances

4. Cover-up by Mainstream Media
• • • • New York Times – Washington Post Wall Street Journal Times of London – 10 reports 8 reports >30 reports 14 reports

• All media were noticed during the litigation of its simulated nature • None raised any doubt about integrity of the litigation records

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Conclusions

1. Widespread Corruption of the US Justice System
• The judiciary has gained disproportionate
power; • Undermining the executive and legislative branches of government, in collusion with large corporate interests.

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Conclusions

2. PACER and CM/ECF
PACER and CM/ECF, electronic record systems of the US Courts, enable corruption of the justice system

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Conclusions

3. PACER and CM/ECF
• Public access to the NEF verification tool is denied • Falsification of a key court order was reported by ProPublica and the National Law Journal in a GITMO
Habeas Corpus case in the US Court, Washington DC.

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Conclusions:

4. PACER and CM/ECF
Missing court records are listed by UN reports as a cardinal sign of court corruption

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Conclusions

5. Banking Regulation

• SEC, BAC, and the US District Court colluded in

fraud on the people in SEC v BAC ; • A simulated litigation was staged in SEC v BAC to appease the public at home and abroad; • SEC, BAC, and other banking regulation agencies routinely offer the US Congress false testimonies; • Due to US court corruption, there is no chance to institute effective banking regulation in the United States.

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Conclusions

6. Proposed Corrective Actions
• Enactment of Federal Rules of Electronic Court

• Implementation of valid authentication records and
and authentication procedures; • Restoration of public access to court records; • Ongoing monitoring of the courts by the public at large, and information systems professionals.

Records;

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Conclusions

7. Corporate-government Corruption

BAC President Brian Moynihan

FBI Director Robert Mueller III

Supreme Court of the US

US Judge Jed Rakoff

SEC Chair Mary Schapiro

Federal Reserve Chair Ben Bernanke

Former Treasury Secretary Henry Paulson

Chair, Senate Judiciary Committee Chair, Senate Banking Committee Former Chair, House Banking Committee Patrick Leahy Christopher Dodd Barney Frank

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Discussion

1. Corruption of the US Courts
On a scale never seen for at least 100 years: Comparable to the “Robber Baron Era” (late 19th century), when the US courts were described in the US Congress as “a sham and a burlesque”.

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Discussion

2. Deprivation of Liberty

On a scale never seen in modern times outside of war

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Discussion

3. Deprivation of Property

On a scale never seen in modern times outside of war

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Discussion

4. The financial crisis and court corruption: The chicken and the egg…
• Foreclosure fraud: The homeowner nightmares continue CNN (Apr 2011) • About 3 million homes have been repossessed since the housing boom ended in 2006 That number could balloon to about 6 million by 2013 Bloomberg (Jan 2011)

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Discussion

5. The financial crisis and court corruption: The chicken and the egg…
• "...a system in which only the little people have to obey the law, while the rich, and bankers especially, can cheat and defraud without consequences." Prof Paul Krugman, MIT (2011) • “In financial crisis – no prosecution of top figures” Gretchen Morgenson, NYT (2010) • “Banks to Pay $25 Billion Bribe For Immunity”
Scott Paltrow, ICH (2011)

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Discussion

6. The financial crisis and court corruption: The chicken and the egg…
• "On July 26, 2010, Laurence Tribe, Senior
Counsel for the United States Department of Justice, Access to Justice Initiative, delivered an important speech to the Conference of Chief Justices, challenging them to halt the disintegration of our state justice systems before they become indistinguishable from courts of third world nations.“
National Defender Leadership Institute (2010)

• In a speech in Georgetown University, Senator

Leahy, Chair of the Senate Judiciary Committee called for a "Truth and Reconciliation Commission" on the US Department of Justice.
Senator Leahy speech Human Rights Alert, 2011 (2009)
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Discussion

7. Historic Perspectives
• Robber Baron Era, USA
late 19th century

• Pre Civil War Era, USA
early 19th century

• Raubritter Zeit, Germany
13th century

• Magna Carta, England
13th century

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Discussion

8. Medieval-Digital Era
21st century, USA
The time of the "Robber Knights“… Germany was loosely knit… the strong hand of an Emperor was absent… They could also not be taken to trial over anything by any other than their fellow ruling class, legitimizing any of their acts, good or bad…

Social Disassembly/Loss of Social Contract

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Discussion

9. US: Constitutional Crisis

US Constitution

Gold Price

Food Prices

• Handicapped presidency: Bush v Gore; • Corporate-courts criminal networks: Citizens • Large-scale abuse of the People:
Dispossession, false imprisonment, torture

Commonwealth of VA v Sibelius

United v FEC; “The Supreme Court closes the door to justice”

• Rising prospects ofRights Alert, 2011 unrest Human

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Discussion

10. Global Destabilization

• Undermining Civil Society and Socio• Key role for digital/networked technology:
• •

economic Development;

Falsification of electronic records in the courts, prisons, banks, executive agencies Denial of public access to public records.

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Thanks!
Joseph Zernik, PhD Human Rights Alert (NGO) Records pertaining to the current presentation and additional records pertaining to the Los Angeles Superior Court: http://www.scribd.com/Human_Rights_Alert

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