David Dayen posts a powerful cover-story investigation in The Nation detailing a blistering NY lawsuit that presents evidence that Chairman and CEO Jamie Dimon knowingly implemented a grand scam on the US Government to pay off the government-mandated settlement for JPMorgan’s fraud that helped trigger the 2008 financial crash.
As part of the National Mortgage Settlement, JPMorgan Chase claimed credit for forgiving the mortgages of tens of thousands of homeowners. The scam? Years earlier JP Morgan had sold many of those toxic mortgage properties — often for pennies on the dollar — to third party investors.
“If the allegations are true, JPMorgan screwed everybody.” —former congressman Brad Miller
JPMorgan was claiming hundreds of millions of dollars in credit for forgiving the full value of loans it didn’t even own.
In many cases, Chase was still collecting payments on these sold loans. And loan forgiveness transferred responsibility for paying back taxes back to the homeowners, many of whom had long ago abandoned the properties expecting JPMorgan to foreclose.
The mass forgiveness also allowed the bank to ditch paying taxes on those properties to cities, lowering the cities’ tax revenues while adding costs.
Federal appointees were complicit. Federal officials knew about the problems and did nothing.
Penalties for this fraud include jail time that could put Dimon behind bars.
David Dayen in The Nation:
Here’s how the alleged scam worked. JPMorgan moved to forgive the mortgages of tens of thousands of homeowners; the feds, in turn, credited these canceled loans against the penalties due under the 2012 and 2013 settlements. But here’s the rub: In many instances, JPMorgan was forgiving loans on properties it no longer owned.
The alleged fraud is described in internal JPMorgan documents, public records, testimony from homeowners and investors burned in the scam and other evidence presented in a blockbuster lawsuit against JPMorgan, now being heard in US District Court in New York City. ...
JPMorgan, it appears, was running an elaborate shell game.