Shining Spotlight on Racket of Debt Collection

[Sharing Lights]

When I look for these law-cases,
I am in the mode of applying the core I try to chisel out
that could be & would be applied in our
defense vs. banks-lawyers, who violate laws,
as pertaining to us.

We can't get wild in our accusations in going all out
mode, as true as they may be,
because the

judges could not care less
of the reality.

They would be forced to look at the law-cases of
precedence when such are solid.

I want to stick under their, corrupt noses the key parts of law
- not our pains & sufferings.
Then, you may add what happened to you.

Let's not reinvent the wheel, when it comes to law,

unless have a great chance, but to
copy/paste what works.

Only then we should add what need to state, personally.

This is the time when I am a strong advocate
of accurate copying.

Take the matrix-es that work & begin putting them
together to create a working unit.

That's how computers are build.

You can build & rebuild, add, replace, do much with PC,
as long as you obtain valid
pre-assembled chips/cards, etc & stick them in the right
slots, as long as they are compatible
with the whole PC system.

Life & technology are Universal & are based on
the same principles.

The Boolean Algebra is at the core of this research of
applying law cases to our cases.


We identify the premises (parts of existing law-
cases/laws,) connect them logically
(under the same subdivisions/sections

i.e. a to a, b to b, then build chains: a.b.c.d, etc.,)
and then derive the conclusion
(copy actual sections of judges next to the laws quoted,)

which we are going to push for the based on law
decisions from the judge who must read it all & verify.

Cement that by the same but from actual Appeals,

and,
even, a corrupt judge may think
twice on being overruled by the Appellate Term.

All judges do not want be overruled too
many times & in a row or ever.

That brings us to a logical conclusion, that the proper
way would be for

Consumers to organize & identify
judges which preside in Pro Se Part.

Consumers should bring the cases together before the
same judge.

The cases/Motions should be prepared together
and in the same format.

Get together, share, exchange - I mean those who have guts & brains to use
logic & have good will.

For others, hire an attorney, or you would be crushed
by the legally-illegal system.

Pro Se route is only for the strong ones - that is the Truth.

You can't be dumb, lazy, overconfident, not being able to learn quickly &
think coherently, as well as being very
strong internally & be able to perform under stress & persevere.

When I encountered what I encountered in the Civil Court of NY,
initially, that put me in a state of shock.

There was nothing Civil but a uniformed outright corruption & fraud on all levels.

I could not believe what was going on in the Country & how people are being whipped
by these bastards as if slaves without any Rights but with one purpose -
to serve the mutants & enrich them.

Whatever I did, I only met more corruption & resistance.


All those around me said, "give up, you can't fight the System."

If they have no resilience and character, that doesn’t mean, you are one of them.

Weight your beliefs & the consequences, and then do what wisdom tells you.

Either way, you are not wrong.
You can only proceed in accord with your Nature.

Being independent by spirit, I knew that giving up, means
not being able to do what's right & lose to adversity.
that means further loses in other confrontations with injustice.
A constant retreat.

I found the remedy in studying the parts of law
that can give me the weapons to defend.

The Higher Principle stated that one should not
only look for himself but help & share with others.

So, I began studying, researching, & sharing at the same time.

[Sharing Lights]

Then, when a judge rules vs. one: he/she must rule
the same way vs. all others.

If the judge is that dumb as not to notice & does
his/her usual fraud in Ruling, appeal together at once.

Then, bring a complaint vs. that judge to the
Administrative Judge.

Not because it is good to compliant but because you establish
record of this judges’ complaints/wrongdoings.

This way, you would help others too.

Always, think about others.

Don’t only protect your interests.

When you help others, the Higher Forces would help you.

Don’t doubt that for a moment.

Establish a pattern on record by bringing
cases of:

all Consumers at once who have united.

If even three of you have, then judges are in deep, deep,
yes, what they are full of...


Meanwhile, appeal together.

Follow my suggestion & you may see the amazing results
of the Power of Unity!!!


I suggest using a very simple technique with which I easily crush opposition here
on the Forum vs. those who make claims contrary to what they write i.e. the record.

I do not do things in vain.

All of that is a preparation for a bigger battle;
if you can’t win, small ones, forget the real ones.

The technique is the same for replying to lawyers' Motions or appealing
decisions of the black robes, as well, and, equally, re: anything posted on any Forum.

1) You make your claims & put them on the record.

2) You accurately copy what the opposition has provided and retain such.

3) Rebut by substance & merit when the opposition engages in any fraud.

4) Patiently wait for the opposition to trap itself in more fallacies.

5) Stay calm & withdraw emotions.

6) Remain on the original subject, as lawyers and bull ****ters of all sorts
would try to pull you into their arguments. Stress that they refused to answer
your Discovery demands.

7) Stick to the original subject no matter what & ask the opposition prove
where is their answer by substance & merit.

8) Be prepared that the opposition would do anything to get you
off your center: by openly lying, using any deceit, even using offensive language.

9) Smile at all that & continue accumulating their statements.

10) When have enough, reverse the defense into a counter-attack,
by accurately quoting the opponents’ statements, one by one, where fallacies
and/or deceit have been used.

11) Next to 10) copy what you have put in your Motions.

12) Side by side comparison comprised of actual quotes is the ultimate
weapon vs. any fallacy/deceit.

13) You are guaranteed that the adversary would be going insane as knows
got caught.

14) In Courts, appeal by that route after relying heavily on the law-cases
of precedence, particularly of Appeals.

15) On Forums, quotations from both sides presented equally,
would discredit the opposition & its allies regardless of their status, & put
you in the category, “do not tread on this Sovereign –
you would lose more than gain by such exposure."

16) Remember the reality/truth is more important than opinions regardless of
their numbers.

17) When you are on the side of truth, the truth would be on your side.

18) Never fear anything, as that fear breeds more fear.

19) Believe in the Higher Justice – it is always out there. It is a matter of time
before it unveils in accord with laws of Karma of all parties involved.

20) When opposition retreats, leave it alone, unless others are abused or may be abused.
Be forgiving, concentrate on the positive.

21) Follow the basic, Ten Commandments & you would go in the right direction.

Amen!
In Unity is your power.
They fear it the most.

Even if you are alone, as long as you are honest & present real facts, then you are not alone, as TRUTH! is on your side!

What FORCE can be a better ally?

A simple & precise example of how you use this technique on Forum is at:
http://www.suijuris.net/forum/religi...onists-25.html

From the Posts #248 to 263, before the opposition's nerves
gave up & by joint efforts with a help

That is his version of Justice -
"use force when such was entrusted to you by the people here:
press the button: block truth & accuracy.

In his opinion - search for it can't be on 27 pages.
Pages are being counted.

Bookkeepers with dark shades & guns rule the Forum now,
tilting Justice in their favor by the weight of Force
behind the back
& not direct battle, from which they run, once realize they
would be fought to the core, on 7, 27 or 28 web-pages, until truth & accuracy are seen side by side.


Why don't you, moderator with dark shades & gun, lock up this thread?
Be consistent and true to your, own ways & logic.

If 27 pages of defense of Noble Esoteric System vs. many more, of unsubstantiated garbage
by all of you, who have never studied it & just have no clue of it, is too much,
then, 2047 Post of mine here, must be almost a National Disaster!!!

Why don't you edit and/or cut some?

Go ahead, pull you button, you have the access to it
from your PC or pissee, whatever the spelling may be.

Few of your thinkers alike (Henry Bowman, B. Rookard) did, virtually,
complain that this Thread should be locked too.

Go ahead, use your version of the "Patriot Act - Terminator style."




Let's terminate my contribution to the people -
I have more than 27 Web-pages.

Aren't your Ego & agenda more important?

I made my point that banks are corrupt many, many Posts ago.

Am I permitted to continue "your honor of dishonor?"

Just follow your "logic."

Then, block me from responding and write all the trash vs. me that may
please your refined taste.

For all of them, I stand - as well as, for myself here or vs. corrupt judges!!!

May reality judge on whose side was TRUTH & what "fair" methods were used?

Yet, honesty, accuracy, & true friendship would, still win,
since truth can unite many even from different worlds.

Later I would Post, how I used the same technique of
Truth vs deceit, side by side, vs. Forster & Garbus,
yielding their default by substance when they acted worse than this "Moderator" with shades &
gun on his avatar.

As life emerges even in the depth of desert, TRUTH, shall emerge regardless of what or who is around it with shades, black robes or guns.
It doesn't matter.

F&G locked the "Thread" by using their judge's aid to steal my Motions from
the Court file and claim the latter were not there.
I accurately saved all the copies & proof, including the Clerk's copies,
just like the relevant posts here.

It is all practice to bigger things to come, when we have to engage not
clowns here but powerful judges in the courts.
Our accuracy & precision must be absolute.

I do must give some credit to the hypocrites on this
Forum that, even though they begged fro locking up the
Thread if not me, they have not stole my Posts as the
judge did; so have not stepped that low.

Thank you Moderator with shades & gun on you side
for not stealing that at least.

[Sharing Lights]

Feds Asked to Reverse Auto Safety "Secrets" Rule




January 3, 2007
• Feds Asked to Reverse Auto Safety "Secrets" Rule
• NHTSA's Dirty Little Secrets
---
• Auto Safety News

A proposed set of new federal rules endangers consumer safety and restricts the rights of consumers to educate themselves on the safety of future car purchases, the American Association for Justice (AAJ) charged.

It urged the National Highway Transportation Safety Administration (NHTSA) to withdraw the rule.

"These unwarranted rule changes by the federal agency charged with ensuring the public's safety allow the automobile industry to hide information about the safety of their vehicles and ultimately evade responsibility for negligence," said Jon Haber, CEO of the AAJ.

NHTSA's proposed rules exempt the auto industry from revealing crucial safety information on their vehicles. The exemption includes the divulging of consumer complaints, which have consistently proven to be the most effective method of keeping dangerous vehicles off the roads, Haber said.

In a letter to Michael Kido, Chief Counsel at the National Highway Transportation Safety Administration, AAJ noted that the proposed rule changes violate both the Freedom of Information Act and its subsequent common law interpretations.

Specifically, the new rules decrease public access to records (including documents that previously had been readily available to the public) and foster administrative secrecy for the benefit of the auto industry

.

Under the newly proposed rules, consumer complaints and individual companies' safety data would be classified as "trade secrets" -- and thus be made unavailable to the public.

This data -- gathered and maintained by public employees at taxpayer expense -- is crucial for consumers making important decisions about such an expensive purchase, and one which potentially could be life-changing in the event of an accident, AAJ said.

Haber said that restricting consumers from accessing this data only serves the interest of the auto industry -- not the lives of the over 200 million US motorists on the roads. He said keeping the rules as they are now would alternatively signal an agency commitment to strict safety standards and industry accountability.

AAJ sent the letter in response to the NHTSA's Notice of Proposed Rulemaking (NPRM) regarding the confidentiality of information submitted by motor vehicle and equipment manufacturers.

AAJ was formerly known as the American Trial Lawyers Association

.

[Sharing Lights]

Rep. Frank Promises Hearings On Credit Bureas
Consumers Complain of Delays in Correcting, Updating Credit Reports




By Martin H. Bosworth
ConsumerAffairs.Com

January 1, 2007
Your Credit
• Free Credit Reports
• Equifax
• Experian
• Trans Union
• Consumerinfo
---
News
• Rep. Frank Promises Hearings On Credit Bureaus
• PayPal, Equifax Team Up To Offer "Free" Credit Monitoring
• Free Credit Reports Available Nationwide Starting Sept. 1
• Marketer of "Free Credit Reports" Settles FTC Charges
• Credit Bureaus: Biggest Threat to Your Identity
• Escape From Plastic Prison
• Experian, ConsumerInfo.Com Named in Class Action Suit
• Free Annual Credit Reports Required by Next Year
• Big 3 Charged
• Trans Union Ordered to Stop Selling Consumer Data
• Equifax in Trouble Again

Observers had predicted that reforming the credit industry would be a prime objective of the new Democratic Congress, and Rep. Barney Frank (D-Mass.) is taking up the challenge.

Frank, the incoming chairman of the House Financial Services Committee, says he will hold hearings in 2007 on how the credit bureaus can improve their reporting and error-correcting procedures.

ConsumerAffairs.Com receives a constant stream of complaints from irate customers regarding credit bureaus' inability -- or unwillingness -- to protect the personal information of the very people they claim to assist.
"It took me over three months of letters, emails and calls to no avail," said Georgia of Lodi NJ in a recent complaint to ConsumerAffairs.Com. "The workers at Experian read from script and do NOTHING to help one out.

"They've listed accounts that have been closed since 1998 and have inaccurate addresses on my credit report.

My credit is as pristine as possible and would like to keep it that way, but cannot trust Experian," she said.

Rep. Frank's pledge followed a Boston Globe article spotlighting the difficulties consumers have in trying to correct mistakes in their credit reports.

"We will have some hearings about how to fix this," Frank told the Globe. He said that laws mandating free credit reports for all Americans were not enough, especially if the procedures to correct errors were difficult and time-consuming.

Frank and his Senate counterpart, Christopher Dodd (D-Conn.), incoming chairman of the Senate Banking Committee, have already promised to target the mortgage industry and pass new protections against predatory lending.

Profiting From Fear

Errors in credit reporting can cost consumers jobs and loans, as well as leading to identity theft and fraud. Each of the three credit bureaus -- Experian, Equifax, and Trans Union -- has a laborious process for correcting errors that requires sending extensive documentation to prove the information is inaccurate or out of date.

The credit agencies generally blame the lenders for reporting inaccurate data, and for only reporting negative information, such as delinquencies, bankruptcies, or liens.


SL: This is the true issue & this is the whole point!!!

But the sale of credit reports continues to be a billion-dollar business for the credit bureaus, which collect buy information from lenders and sell it cheaply to lenders and other business clients while charging consumers three or four times as much to view their own information.

Consumers can spend years and thousands of dollars trying to clean up innaccurate credit reports, even those that are mixed up with others' information, being denied jobs, loans, and places to live all the while.

Worse yet, the "fraud monitoring" services credit agencies offer to protect against identity theft often don't work. They don't detect Social Security number theft, for example, which leads only to a new file being opened under the new account holder's name.

The three major credit bureaus -- Equifax, Experian, and Trans Union -- all offer comprehensive, and expensive, "identity protection" packages, which claim to insure the user from damages incurred by misuse of their personal data and issue notifications of fraud to creditors and other agencies who view consumers' credit on a regular basis.

Yet many Americans find themselves threatened with collection or unable to obtain credit due to a credit bureau's mistakes. The major CRA's consistently fail to report accurate information, change credit ratings based on erroneous data, and often "mix up" customers' information, resulting in innocent consumers being harrassed or penalized for actions they did not commit.

Moreover, as Consumers Union pointed out in 2005, "When a company improperly breaches a consumer's sensitive information, the onus is on that consumer -- the victim -- to fix the problem." Customers have to contact the credit bureau and attempt to prove that they were not responsible for the actions committed using their identity, a process made more difficult by the lack of direct contact options most credit bureaus provide.

A recent New York Times article detailed the failings of credit monitoring services, including the admission by credit agency spokespersons that

they fail to detect SSN-based fraud, even as credit monitoring rakes in $900 million a year for the agencies that offer it.

[Sharing Lights]

Gift Cards Becoming Currency For Criminals




By Martin H. Bosworth
ConsumerAffairs.Com

December 26, 2006
Gift Cards

• Gift Cards Becoming Currency For Criminals
• Gift Cards an $8 Billion Gift to Retailers
• Bad Gift Better Than Gift Card, Says Philosopher
• Scrooges Threaten Holidays With Gift Card Scam
• Connecticut Angered by Simon Mall's End Run Around Gift Card Rules
• Congress Studies Gift Card Abuses
• FTC Issues Gift Card Tips
• Survey: Teens High on Gift Cards
• Simon Mall Group Settles Gift Card Lawsuit
• NY Sues Simon Malls For Gift Card Fees
• States Challenge Mall Gift Cards
• Make sure gift cards don't have strings attached
---
Complaints
• American Express Gift Cards
• Home Depot Gift Cards


The $80-billion gift card market is a profitable one for retailers and banks and, some reports indicate, for criminals as well.
Legitimate businesses make an estimated $8 billion or more on "dormancy" charges, service fees and abandoned cards, as consumers cheat themselves by failing to use their gift cards promptly.

But that's just the most obvious source of profits. A number of reports claim that enterprising thieves are using gift cards for everything from fraudulent purchases to currency in transactions.

Running The Numbers

According to reports circulating recently, crooks will copy down the numbers of unclaimed gift cards hanging on store racks, wait for them to be activated, then use the gift cards to make online purchases.

Law enforcement and the National Retail Federation mostly dismissed the scam as small-scale, noting that many store chains utilize additional protections before activating gift cards, such as keeping them behind the store counter or requiring scratch-off activation codes.

According to unconfirmed reports, scammers simply go to stores or the vendor's Web site and enter the stolen numbers until one shows up with an unused balance.

There's also the "grey market" of Internet auction sites, where stolen or bulk-purchased gift cards -- or card numbers -- can be resold for considerably more than their dollar value.

The concern over gift card number copying has become so widespread that the Federal Trade Commission recently issued a consumer alert about it.

Currency for Criminals
A more disturbing scam involves criminal groups buying gift cards, preloading them with high dollar amounts, then exchanging them for drugs, guns, and so on.

Crime crews favor using "open-ended" gift cards, such as those from banks and credit card issuers, due to the lack of preset spending limits.

A report jointly issued by the Royal Canadian Mountain Police (RCMP), the U.S. Justice Department, and the Drug Enforcement Administration (DEA) outlined the growing use of gift cards as criminal currency.

According to the RCMP, criminals will come to drug buys or exchanges loaded with dozens of gift cards that can total hundreds of thousands of dollars.

The cards are especially attractive for international and cross-border trafficking because they circumvent the money reporting requirements for traveling between the United States and Canada, the RCMP said.

What You Can Do
Gift cards are enough of a scam as it is without buyers and retailers becoming pawns for criminals. Here are a few steps to ensure your card hasn't been misused:

• Only buy cards from reputable stores and banks. Always ask for gift cards from behind the service counter. Don't buy cards off an open rack, and never from online auction sites of any kind.

• Make sure the card hasn't been tampered with. Check any newly purchased gift card to ensure the "scratch-off" or removable activation label has not been removed. Check the balance regularly, and confirm it via phone with the card issuer before or after any transaction you make.

• Stick with cash unless it's unavoidable. What's more tacky, really -- to give a friend or loved one a wad of cold hard cash, or a piece of plastic?
After all, cash is a perfectly viable option if you don't know what to get someone for a gift, and it has much less in the way of hidden traps than your average gift card. Even bad gifts are generally better than gift cards -- at least there's regifting.

[Sharing Lights]

Red Cross Agrees to Fund-Raising, Executive Pay Reforms



December 29, 2006
The American Red Cross (ARC) will maintain reforms of its executive compensation and disaster relief solicitation practices under an agreement with California Attorney General Bill Lockyer's office that specifically covers Red Cross chapters in the Golden State, but could well be applied nationwide.

"By protecting against excessive pay and strengthening fundraising disclosure, this agreement will benefit the Red Cross, its donors and disaster victims in desperate need of aid," said Lockyer. "Hopefully, the reforms in this agreement will provide an operational template for Red Cross chapters across the country."

The contractual agreement resolves Lockyer's investigation of the ARC's San Diego and Imperial Counties Chapter (SDIC), launched in 2002 by the Attorney General's charitable trusts section. The probe focused on possible violations of state laws governing nonprofit corporations.

Specifically, the investigation examined allegations of improper handling of relief funds raised for victims of the 2001 Alpine-Viejas Fire, excessive executive compensation and deceptive solicitation practices by both the ARC and SDIC.
Based on the investigation, Lockyer's office concluded:

• the ARC and SDIC failed to properly restrict certain donations made to aid victims of the Alpine-Viejas fire;

• the ARC's Donor DIRECT fundraising program misled contributors by not informing them that, if they wanted their money earmarked for victims of a particular disaster, they had to specifically declare that intent;

• the ARC's policies and procedures governing executive compensation were wholly inadequate and provided virtually no national oversight of local chapters;

and

SL: Guess in which pockets much of donations went?
Just guess!!!

• Dodie Rotherman, former CEO of the SDIC, was substantially overpaid during fiscal years 1997-2001.

After Lockyer's office presented the findings of its investigation to ARC and SDIC officials, the ARC agreed to distribute roughly $55,000 to Alpine-Viejas fire victims. Additionally, the ARC took steps to improve its executive compensation practices and adopted new language for its Donor DIRECT program that strengthens disclosure to prospective contributors.

Those reforms are memorialized in the agreement with Lockyer's office. The agreement will be enforced as a contract, with violations subject to lawsuits for damages caused by the breach.

The compensation reforms significantly strengthen oversight by the national ARC of executives' initial pay, merit salary adjustments and bonuses. The ARC has implemented the new procedures nationwide.

Regarding initial hiring, the national ARC's Human Resources Department now conducts a compensation analysis of each chapter's executive positions -- based on market-driven data for nonprofits -- and provides a base salary range to the chapter.

Based on the analyses provided by the national organization, "Service Area Executives (SAE)," who have responsibility for a number of local chapters, approve compensation packages before they are offered to prospective hires. If local chapters want to exceed the parameters set by the national ARC by more than 25 percent, they must obtain approval from the national ARC's senior vice president for service areas.

The compensation reforms also strip local chapters of their ability to approve salary adjustments and bonuses. Instead, raises and bonuses must be approved by the SAEs, again based on guidance provided by the national ARC.

The guidance includes recommendations for annual salary budgets, a template for chapter executive incentive plans, and measurable, objective criteria for determining whether raises or bonuses are merited.

Under the agreement with Lockyer's office, Donor DIRECT solicitations for the ARC's national disaster relief fund, conducted in California through print media, direct mail or email, will include the following statement: "The American Red Cross honors donor intent. If you wish to designate your donation to a specific disaster please do so at the time of your donation."

If the solicitations are conducted in California on radio or television, the solicitation must refer prospective donors either to the ARC's web site or its toll-free phone lines, which must provide the new disclosure statement.

The Donor DIRECT reforms address widespread concern that the ARC's solicitations misled donors into thinking their contributions would be used to aid victims of a particular disaster. The new solicitation language will educate donors that they need to state their intent if they want their contribution used for a specific disaster.

The solicitation reforms in the agreement apply only to campaigns conducted in California. However, Lockyer's office believes practical concerns will convince the ARC to adopt the stronger disclosure nationwide.

[Sharing Lights]

Re-aging: Ong, ex rel v. Sears

--------------------------------------------------------------------------------

On November 12, 2002, Sears filed its Form 10-Q for the third quarter of 2002.

In that report, Sears for the first time revealed to investors how the Sears MasterCard and

Sears Card portfolios

had both been

deteriorating during the Class Period.

SL: How about using human English?
An average reader would read these cases and think what the hell are they talking about?
Only a few more words could clarify the issue.

But, nooooo, these judges have to keep normal people away from their "bread and wine."

Let's read further down to figure out that "cactus in the sand."

deteriorating during the Class Period.

Sears explained that "[b]ecause the MasterCard portfolio has a lower delinquency rate than the Sears Card, the growth in the MasterCard portfolio coupled with the decline in the Sears Card portfolio led to an improvement in the total portfolio delinquency rate as compared to the third quarter of 2001."

Sears also stated that it "charges off accounts at 240 days where[as] most bankcard issuers charge off at 180 days. Therefore Sears' delinquency rate is not directly comparable to participants of the bankcard industry." (Id. ¶¶ 182, 183.)

With respect to its re-aging policies, Sears disclosed that

*8 [t]he Company's current credit processing system

charges off an account automatically when a customer's number of missed monthly payments reaches eight, except that accounts can be re-aged once per year when a customer makes two consecutive monthly payments.

Also, accounts may be charged off sooner in the event of customer bankruptcy

.

Finance charge and credit card fee revenue is recorded until an account is charged off at which point the charged off balances are presented as a reduction of revenue.


SL: Another word, they report it as loss.

(Id. ¶ 184.)
An article on The Street.com reported that this new data "shows deep deterioration in the MasterCard portfolio. A back-of-the-envelope calculation suggests that, if this rot continues, the company may have to make loan provisions in 2003 that could wipe out a large part of the earnings analysts currently forecast." (Id. ¶ 186.) On November 20, 2002, Bear Steams described Sears' "aggressive write-off policy" as a "key concern," and expressed "uneas [e]" as to whether Sears had "adequately accounted for the potential level of charge-offs." [FN6] (Id. ¶ 187.)


FN6. The Complaint does not identify the format of this report.


Ong ex rel. Ong v. Sears, Roebuck & Co.
Slip Copy, 2005 WL 2284285
N.D.Ill.,2005.
Sep 14, 2005
_________________

[Sharing Lights]

Sears, Roebuck & Co.
01/17/2002 to 10/17/2002
Whistleblower: Officer
Motivation: Industry Downturn



SL: That means someone turned them in from the inside.

In firing the head of the credit card division for Sears due to "personal credibility" issues,
Sears CEO opens this area of the firm to intense scrutiny. Information emerges that Sears
is carrying a large portfolio of uncollectible accounts for which its
control system has failed to sufficiently take provisions, despite Sears claims in
the annual report that the reserves are adequate.

The case is yet pending.


On Sears & credit operations in details:

in PDF:
http://dwight.com/quarterly/public/4q02dwightqtly.pdf

[Sharing Lights]

Subject: Re-aging:In re American Business Financial Services

--------------------------------------------------------------------------------

A. Alleged Fraudulent Scheme
*2 Plaintiffs allege that

to raise capital, ABFS used a financing technique known as a securitization.

In its Form 10-K filed with the Securities and Exchange Commission (SEC) on October 10, 2000, ABFS noted that

"[t]he ongoing securitization of our loans is a central part of our current business strategy." (Consol.Compl.¶ 5).

In each of its securitizations, ABFS transferred a pool of mortgage loans to a trust in exchange for certificates, notes or other securities issued by the trust that were then sold to investors for cash.

SL: They received cash for NOTES for which they pledged no assets!


Plaintiffs allege that ABFS would often retain the rights to service the loans for a fee and would retain an interest in the cash flows generated by the securitized loans (called an "interest-only strip").

Plaintiffs further assert that ABFS' loan delinquency ratio, or the ratio between the company's current and delinquent loans,

affected ABFS' ability to securitize its loan pools and consequently its profitability.

They allege that investors were less likely to invest in securities secured by loan pools containing a higher number of delinquent loans.

SL: True. Who does want delinquencies?


Thus, plaintiffs assert that ABFS would be unable to execute its quarterly securitizations if the company's loan delinquency ratios became too high and the company's profitability would suffer.

SL: Math is math -they counted right.

Plaintiffs allege that throughout the class period ABFS consistently reported an extremely low delinquency ratio as compared to industry averages for the sub-prime mortgage industry thus allowing the company to

obtain securitizations for increasingly large sums with each successive quarter.

At the core of plaintiffs' claims is their allegation that defendants fraudulently altered their loan delinquency ratio by engaging in improper practices to artificially lower the number of loans that were reported as delinquent.



Plaintiffs assert that ABFS employees "knowingly accepted bad checks to satisfy ABF[S'] months delinquency goals...." (Consol.Compl.¶ 42). Plaintiffs also allege that ABFS

engaged in "re-aging" techniques such as forbearance and deferment agreements and that ABFS pressured delinquent borrowers to enter into such agreements in order to keep properties from being counted as delinquent. (Consol.Compl.¶¶ 31-41).