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FBI: Beware of Loan Modification Scams

Paul Kiesel — Tue, 28 Oct 2008 16:08:26 GMT

According to the Justice Department, San Joaquin Valley has been a hotbed for loan modification scams, as cities like Stockton, Modesto and Merced top the foreclosure rankings among cities nationwide.

Last week, Representative Dennis Cardoza (D-Modesto), urged Attorney General Michael Mukasey to investigate mortgage-reduction schemes that are being marketed to distressed homeowners throughout the Valley.

Most of these scams ask homeowners for an upfront fee in order to start a loan modification program. At best, the homeowners may end up paying for work that is completed by the group asking for the money, however, it's work that likely could have been done for free through other non-profit organizations or loan-modification assistance programs (i.e. Community Housing Council, a non-profit based in Fresno). At worst, the homeowners pay for work that isn't done at all.

Cardoza wrote to Mukasey that it was "imperative" that law enforcement authorities "crack down on these foreclosure scams quickly and comprehensively. Cardoza pointed out that San Joaquin Valley residents are particularly vulnerable because of the region's foreclosure crisis.

The scams are typically initiated over the phone or through the mail, however, the people running the scams sometimes show up at the homes they're targeting. The companies will then offer the distressed homeowner their services to renegotiate the mortgage in exchange for an up-front fee amounting to one month's mortgage payment or more.

Just last week, in Modesto, "some homeowners attended a workshop in which they were asked to pay $3,500 for getting their mortgage woes resolved," (San Jose Mercury News, 10/27/08).

The FBI is aware of this problem, as they report to having 1,569 pending mortgage fraud investigations open as of last month. However, it is clear that number will rise and more resources will need to be poured into combating mortgage fraud, as incidences of it has annually doubled between 2003 and 2007.

The FBI has also been taking some flack recently due to their late arrival to all of the rampant mortgage fraud that's been taking place over the last couple years, but part of that is due to the agency not having enough agents to cover the continuing spread of mortgage fraud, as the housing and foreclosure crisis gets worse. The bureau slashed its criminal investigative work force to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas like white-collar crime, which has taken on urgent importance in recent weeks because of the nation’s economic woes.

Originally posted at InjuryBoard by Paul Kiesel

The Subprime Mess and Phil Gramm: An Experiment in Deregulation

Paul Kiesel — Tue, 24 Jun 2008 16:12:58 GMT

In 1933, a few years following the stock market crash, Congress passes the Glass-Steagall Act, in hopes that regulating banks will help prevent market instability, particularly amongst Wall Street banks. The purpose of the act is to separate commercial banks that focus on consumers from investment banks, which deal with speculative trading and mergers.

The Glass-Steagall Act provided the proper oversight and entity separation that would prohibit banks and other financial companies from merging into giant trusts (conflict of interests) -- giant trusts or corporations being more powerful, naturally, and having the seemingly limitless capital to lobby their corporate interests, however, with a very myopic scope (particularly when it comes to factoring in potential losses -- most banks, as seen in contemporary times, chose not to anticipate losses in the mortgage market; they presumed home prices would continue to appreciate).

In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain's economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall). Sen. Gramm was the driving force behind the Gramm-Leach-Bliley Act, as he had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of "megamergers" took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm's Act. Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm's Act: an experiment in deregulation.

Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision -- lobbied for by Enron, a major campaign contributor to Gramm -- that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm's wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act.

In 2003, Gramm left the Senate to join UBS, which had acquired investment house PaineWebber due to his deregulation bill. At UBS, Gramm lobbied Congress, the Fed and the Treasury Department. During Gramm's tenor at UBS and as a lobbyist, Congress passed the Responsible Lending Act, billed as an anti-predatory-lending measure, but was called the "Loan Shark Protection Act" by consumer advocates, as it was designed to preempt stronger state laws against anti-predatory lending. The Fed largely ignored the underlying and growing problems within the subprime mortgage/housing markets, as Bernanke famously acknowledged the housing market in April, 2007 as, "[showing] signs of softening," but said that a "sharp slowdown," is unlikely. Then, according to Mother Jones magazine, Henry Paulson became the Treasury Secretary in July, 2007, when, "In 2005, [at] Goldman [he] securitized $68 billion in residential mortgages and $23 billion in 'other assets' primarily related to CDOs," (Mother Jones, August, 2008). With such self-interest, and a lack of the nation's interest, we can see how this subprime mess was allowed to escalate to such great proportions.

Some justice was served, however, this spring, as UBS became one of the subprime debacle's biggest losers, having to write down $37 billion -- the same amount as their previous four years of profits combined. UBS also made the public aware that two-thirds of its losses were due to reckless investing in collateralized debt obligations (CDOs).

Now, Gramm has a second chance of extending his out-of-touch and ill-performing policies, as Senator John McCain appointed Gramm to be his "economic expert" and cochair of his presidential campaign, last year. Also, it is likely that if Senator McCain were to win in November, Gramm would be our next Treasury Secretary, which means more of the same deregulatory mess and the continuation of failed and insidious economic policies.

Originally posted at InjuryBoard by Paul Kiesel

Message to Archbishop Joseph F. Naumann: Leave Gov. Kathleen Sebelius Alone

Paul Kiesel — Tue, 10 Mar 2009 16:15:20 GMT

Archbishop Joseph F. Naumann of Kansas City has been spewing his vile opinions in regards to President Obama's selection of Kansas Governor Kathleen Sebelius as the Health and Human Services secretary nominee with several media outlets this week. These opinions include: being openly, however, unfairly critical of the governor and her political party (i.e. Vice President Joe Biden, California Senator Nancy Pelosi, etc.), suggesting her political and social views are evil or wicked ("Such acts [abortion] are judged to be intrinsically evil..."), and he has called for the Catholic Church to deny Governor Sebelius communion.

First, Archbishop, Governor Sebelius has maintained that her Catholic faith is the basis of her belief that "life is sacred." She INSISTS that her personal belief is that abortion is wrong. However, bullying her to try and criminalize abortion will not stop the practice of abortion, but only make it more deadly. Governor Sebelius has stated several times that her goal is to implement policy to prevent unwanted pregnancies, obviously in a hope to lessen the number of abortions that take place in the U.S.

And the Governor will likely have the opportunity as HHS secretary to make several policy changes in an effort to reduce the amount of abortions that take place in this country, but that will only occur if the number of unwanted pregnancies decreases, as well. However, I'm sure the Archbishop will oppose that, too, since his church is adamantly against the use of condoms, except in the most narrow circumstances (and that latter exception is only a recently amended doctrine rule).

Now the Catholic Church and Archbishop Naumann will state that 100 percent extramarital abstinence will prevent unwanted pregnancies and abortions. See, the problem with this argument is 1) That'll never occur. Never. We're humans. We're mammals. And sex is natural. And it'll naturally occur among teenagers, young adults and other non-married couples. 2) These guys, the clergy and other leaders within the Catholic church, can't even practice what they preach. Just because they're not having sex with consenting adults, doesn't make sex with children morally correct.

Archbishop Naumann is essentially saying that the Catholic Church's doctrine should dictate public policy. He wants to surreptitiously make church and state one in the same. And if the Archbishop had his way, his views on all church doctrine being vigorously enforced, then condoms would be prohibited. In fact, Archbishop Namann and his church's doctrine essentially sacrifices the lives of thousands of women each year. For instance...

Human Papillomavirus (HPV) is now the most common sexually transmitted disease in the United States. The virus infects over half the American population and causes nearly five thousand women to die each year from cervical cancer; the Center for Disease Control (CDC) estimates that more than two hundred thousand die worldwide. We now have a vaccine for HPV that appears to be both safe and effective. The vaccine produced 100 percent immunity in the six thousand women who received it as part of a clinical trial. And yet, Christian conservatives [and Catholic conservatives] in our government have resisted a vaccination program on the grounds that HPV is a valuable impediment to premarital sex. These pious men and women want to preserve cervical cancer as an incentive toward abstinence, even if it sacrifices the lives of thousands of women each year.

Sam Harris, "Letter to a Christian Nation"

There is nothing wrong with discouraging teenagers from having sex at a young age. But, as seen by Sarah Palin and her daughter's unwanted pregnancy, abstinence only is not a good way to curb teen pregnancy nor is it the responsible approach to prevent the spread of sexually transmitted diseases.

Also, in preemption to the Catholic Church's uproar in regards to President Obama lifting the Bush ban on embryonic stem-cell research, that I'm sure will be heard vociferously later today or this week, your qualms and complaints are similarly obtuse.

Until you guys (Archbishop Naumann, Cardinal Mahony, Dolan, etc.) quit contradicting yourselves, quit acting in nefarious ways when it come to clergy sex abuse matters, quit saying you appreciate all forms of life, when in fact that's a flat out lie (i.e. see the church's recent views on most things scientifically progressive; the Catholic church seemingly wants society to be shackled in the ways and mores of medieval Europe, much like Islamic-extremists would like us to revert to the Stone Age) then most people, rational people, do not want to hear anything you've got to say.

Most of your opinions and belief are anachronistic and invalid. So leave Governor Sebelius alone.

Originally posted at InjuryBoard by Paul Kiesel

Washington Post: The Bubble - An Excellent Survey of the Subprime Lending Debacle

Paul Kiesel — Mon, 16 Jun 2008 20:37:15 GMT

This past weekend, The Washington Post began a three-part series that examines all of the avarice, pride, and myopic lending during the subprime boom.

Overall, the series, written by Alec Klein and Zachary A. Goldfarb, is an indictment on the lack of government oversight and regulation within the lending industry, which led to irresponsible lending (teaser rate loans; subsequently being packaged as mortgaged-back securities or collateralized mortgage obligations) and opaque accounting, thus, paving way to the economic contraction the country has faced over the last 16 months.

Here are links to the articles: (Article 1); (Article 2)

As noted in the article, with the help of two big tax cuts pushed by the Bush Administration in 2002 and 2003, and interest rates having been slashed by the Fed, lending and spending became two words analogous with this administration. However, as far as fixing the housing mess or dealing with its ramifications, the current administration, in its last six months, has done little to help relieve homeowner distress, even though it help prompt the crippling consequences this country is now seeing. We'll have to wait and see what type of impact the Bush Administration will have on the mortgage crisis and Wall Street, as it vacates the White House.

Originally posted at InjuryBoard by Paul Kiesel

If You Have an Option ARM Loan with FDIC IndyMac, Read This!

Paul Kiesel — Fri, 10 Oct 2008 21:47:57 GMT

Any Californian who has a Pay Option ARM loan from IndyMac (now FDIC IndyMac) that was originated between 2004 and 2007 and has faced or will be facing an interest rate reset (ballooned monthly payment), should contact the bank or seek legal counsel before next Friday, October 14.

According to the FDIC, Option ARM borrowers have 90 days to respond to the notice of IndyMac being taken over by the federal government, if they want to be able to modify their loan or take legal action against IndyMac. When does the 90 day period end? October 14. Where did the notice come from? The FDIC claims that when newspapers reported that the Office of Thrift Supervision transferred control of IndyMac to the FDIC, on July 11, the newspaper articles throughout the State of California served as a notice to the public.

However, most borrowers of Option ARM loans never got a formal notice. Regarding this issue, the only notices that have been sent out are to named plaintiffs in class action lawsuits against IndyMac Bancorp. In fact, the FDIC has refused to notify other Californian consumers of Option ARM loans that their time to take action is running out, and this is a big problem because tens of thousands of Option ARM borrowers have been left in the dark and do not realize that the date is rapidly approaching for them to seek a fair remedy to their troubled mortgage situation (or pending situation).

The FDIC has a contact number listed on their website under the page titled: FDIC Loan Modification Program for Distressed IndyMac Mortgage Loans. On the bottom of this page it states: Borrowers who are delinquent or who are experiencing financial hardship and are falling behind on their IndyMac Federal mortgage should call 1-800-781-7399 to speak with an IndyMac Federal customer service representative.

Originally posted at InjuryBoard by Paul Kiesel

Fresno Diocese Continues to Let "Accused" Child Molester Work with Children

Paul Kiesel — Thu, 19 Mar 2009 19:20:46 GMT

A little over two years ago, a Fresno jury found Father Eric Swearingen guilty (9-3) of molesting a former altar boy, however, Bishop John J. Steinbock has continued to allow this man to work with children at the Holy Spirit Parish in Fresno, California.

What is Bishop Steinbock thinking? Would a school district allow a teacher faced with the same situation as Swearingen (I find it inappropriate to refer to him as "Father," as it shows deference to a man who, frankly, doesn't deserve it) to continue working with children? As a parent, would you want your children around a man like that?

Bishop Steinbock, based on his actions, could care less about the future safety of children within any of his parishes and this was especially punctuated yesterday, as he waltzed into a Fresno courtroom, for another clergy sexual abuse case involving one of his former priests, and casually winked at the jury. His attitude, though, changed almost immediately after being questioned by the plaintiff's attorney, Jeff Anderson.

Jeff Anderson: Bishop, when did you first realize or learn that when an adult lays his hands on the genitals of a child and manipulates the genitals of a child and places them on the body of a child for sexual purposes, it was a crime? When did you first realize that?

Bishop: You know, it's really hard for me to say. I think society --

Anderson: No, you.

Bishop: Me?

Anderson: You.

Bishop: I think I thought along with society for so many years it was --

Anderson: Bishop, I'm going to ask you to focus on the question. When did you first learn that it was a crime for an adult, a person over the age of 18, to engage in sex with a kid?

Bishop: Well, I think we would all think that was always a criminal case.

Anderson: If you knew that, then why didn't you turn it over to the law enforcement for them to determine whether or not a crime had been committed and the statute of limitations had passed or not?

Bishop: Because I do not have an allegation of that against him. This is way back in 1995. As I said, I had no cause to take his faculties or away. There was no allegation.

Anderson: You were concerned about a civil suit because you go on to say [in the Bishop's own notes from 1995], "There can always be a civil suit," right?

Bishop: Well, there can always be a civil suit. But I'm also thinking of his, you know, that might be a civil suit against him. I mean, I wasn't aware that they'd probably just come at the Diocese alone. I figured they would also go after the priest.

Wow! Steinbock's responses at one point show that back in 1995, when the current allegation was brought to his attention, he was more concerned with a civil suit than turning over any evidence of wrongdoing by his clergymen to the authorities.

Again, what is Steinbock thinking and who above him (i.e. the Pope, Cardinal Mahony) would allow for this type of behavior to continue in ANY Catholic diocese throughout the world?

Originally posted at InjuryBoard by Paul Kiesel

Interim Head of Government Bailouts, Neel Kashkari, Called a "Chump" by One Congressman, While Another Compares Him to Mel Gibson

Paul Kiesel — Fri, 14 Nov 2008 19:09:16 GMT

Neel Kashkari, the interim head of the Troubled Asset Relief Program (aka the Treasury Department's $700 billion financial rescue plan or TARP), came under heavy fire today at a House Oversight and Government Reform subcommittee hearing, after Maryland Democrat Elijah Cummings got his chance to ask Kashkari questions relating to an expanded $154 billion that was given to American International Group Inc. (AIG) this week, even though AIG still plans on setting aside $503 million in compensation for executives.

Cummings asked Kashkari, "I'm just wondering how you feel about an AIG giving $503 million worth of bonuses on the one hand, and accepting $154 billion from hard-working taxpayers? [And] what really bothers me is all these other people lining up. They say, well, is Kashkari a chump?"

Kashkari responded by telling the panel he was "outraged" that AIG will do this, but he then said he recently learned that AIG has set aside money in order to eliminate an incentive to leave the insurer.

"I'm not defending it," Kashkari said. But, in actuality, he had done just that.

After Cummings prodded Kashkari further, and laid a minor guilt-trip on him, explaining that families, due to the economic situations that many in the country currently face, will "probably be sitting under the Christmas tree with no presents" this year due to his decisions inadvertently determining consumer behavior, Dennis Kucinich, the chairman of this subcommittee, repeatedly interrupted the Treasury official during the more than two-hour session.

Kucinich harshly criticized Treasury Secretary Henry Paulson's decision this week to abandon the TARP's original intent of purchasing toxic mortgage assets from financial firms.

"The secretary just essentially took some scissors and cut it out and threw it away [. . .] Maybe this is some kind of game to some people in the administration," Kucinich said. "They're [Bush's Administration] on their way out of office and they just feel they can do whatever they want."

Is Kashkari a Chump

Kashkari reitterated to the subcommittee that his department isn't in charge of bank oversight, and that financial regulators are more concerned with bank using this capital to increase lending.

The top Republican on the subcommittee, Darell Issa (R-CA), chided Kashkari saying that his efforts have done little to help families stay in their homes. "It's very clear that the Treasury cannot and will not make the effort to keep people in their homes."

After further accusations by some other members of the committee, California Republican Brian Bilbray, with an absurd veneration, compared Kashkari to Mel Gibson's character from Braveheart, "I guess you sort of got a taste of how Mel Gibson felt in the last scenes of 'Braveheart' [. . .] You're probably the best spokesman the administration has [and] you've come across with more credibility than anyone else that I've heard."

Originally posted at InjuryBoard by Paul Kiesel

More Inconvenient Truths: I.O.U.S.A.

Paul Kiesel — Thu, 21 Aug 2008 17:03:13 GMT

I came across this AP article this morning about Warren Buffett's new documentary (he financed the project) titled: I.O.U.S.A.

It appears the film is a more in-depth look at the entire credit crisis, how our economy is teetering on catastrophic disaster, however, it does relate most of the looming problems to the current mortgage crisis we're facing.

I would assume the movie is worth checking out, as Buffett is one of the more erudite figures in the investment sector, and has a keen understanding of what's at stake for the U.S. in the next couple years.

Here is the AP article that describes the film and what motivated Buffett to make it with former official Pete Peterson.

The catastrophe looming in the documentary "I.O.U.S.A." isn't romantic like the doomed young love in "Titanic," but billionaires Warren Buffett and Pete Peterson warn it could break many more hearts.

Billionaire Warren Buffett has long warned that the nation's trade deficit is a ticking time bomb.

The disaster they warn of could be bigger than any we've ever seen -- bigger than an iceberg, bigger even than the current mortgage crisis.

If the U.S. doesn't do something, and fast, to tame the federal government's debts -- now more than $50 trillion -- the two Nebraska natives warn we will saddle coming generations with economic problems that will make this year's financial turbulence look like a trip to the debt counselor's office.

Premiering Thursday at 358 theaters nationwide, "I.O.U.S.A." is part of Peterson's campaign to give the ballooning debt a central role in the presidential campaign.

A live panel discussion after the first showings -- tape delayed for moviegoers in the West -- will include Buffett, Peterson and other experts. Despite ticket prices much higher than for a feature, at $11.50 to $20, Thursday's showings had sold out at some theaters by Wednesday, organizers said.

The two prominent investors don't share a political philosophy: Peterson endorses Republican John McCain for president while Buffett favors Democrat Barack Obama. But they say the nation's budget and trade deficits aren't really partisan issues.

"Our situation is a lot worse than advertised, and we need to start making some tough choices if we want our future to be better than our past," former U.S. Comptroller David Walker, one of the movie's stars, said Wednesday.

Peterson -- who co-founded the Blackstone Group LP private equity firm and served as commerce secretary under President Nixon -- is financing the movie and the discussion in Omaha to advance the goals of his foundation, created in February, which Walker runs.

Peterson pledged $1 billion to help raise the alarm about the nation's budget deficit, the projected shortfalls in Medicare and Social Security funding, the trade deficit and the meager savings rate for most Americans.

Peterson and Walker both talk about the substantial debt burden that could be left for future generations if changes aren't made.

"We're mortgaging the future of people who can't vote and might not even be born yet," Walker said.

The "I.O.U.S.A." filmmakers followed Walker as he toured the country speaking to college groups, newspaper editorial boards and community groups about the nation's financial problems.

Most of the talks in the movie took place while Walker still ran the Government Accountability Office, an investigative arm of Congress that audits and evaluates the performance of the federal government.

Walker and the movie cite GAO figures that show the U.S. government owed roughly $53 trillion more than it had at the end of the 2007 fiscal year, which is the most recent figure available.

About $11 trillion of that covers the publicly traded government debt, the amount the federal government owes to employee pensions and the cost of environmental cleanup of federal land. The rest of the $53 trillion figure accounts for projected shortfalls in Medicare and Social Security.

The cost of covering those obligations is expected to spiral as more and more baby boomers become eligible for the two programs.

The film also features interviews with prominent businessmen and officials from both major political parties, such as former Federal Reserve chairman Alan Greenspan and Paul Volcker and former U.S. Treasury secretaries Paul O'Neill and Robert Rubin.

Buffett did not respond to a request for an interview for this story, but he has said the United States is essentially selling off chunks of the country to foreign investors to finance the nation's overconsumption.

"We've got a super-subprime crisis brewing -- namely, the federal government's finances," Walker said. "The factors that caused the mortgage-based subprime (crisis) to explode exist for the government's finances. The difference is it's 25 times -- at least -- bigger."

Buffett also has warned for years that the nation's trade deficit -- the difference between how much the country imports and exports -- was going to devalue the dollar and create other problems.

"Our trade equation guarantees massive foreign investment in the U.S. When we force-feed $2 billion daily to the rest of the world, they must invest in something here," Buffett said in his annual letter to shareholders earlier this year.

Thursday's panel discussion will also feature Bill Novelli, AARP's chief executive, and William Niskanen, chairman of the libertarian-leaning CATO Institute.

With showings in 358 theaters, the movie's premiere likely will be bigger than its planned 12-city theatrical run, which begins Friday.

The main reason the movie is being distributed in theaters is that its makers think it could contend for an Academy Award, Walker said. More people will likely see the movie after it leaves theaters because the foundation hopes to air it on television early next year, he said.

Clips from the movie and panel discussion will be available online.

Originally posted at InjuryBoard by Paul Kiesel

More Bayer Birth Control Dangers

Paul Kiesel — Thu, 12 Nov 2009 17:57:55 GMT

From Fox News:

Within the past year both Christine Navarro and Robyn Dunn were rushed to the hospital with life threatening blood clots. At the time Christine was taking the Yaz birth control pill and Robyn was taking its sister birth control drug Yasmin.

Both of these women were young and athletic and blame birth control for their brushes with death.

It's common knowledge that all women's oral contraceptives carry a percentage risk of health complications. But attorney's who've filed lawsuits on behalf of Robyn and Christine contend that Yaz and Yasmin from Bayer carry a greater risk.

These attorneys claim that recent study in the British Medical Journal found increased risk from the drug drospirenone unique to Yaz and Yasmin.

Representatives for Bayer, the maker of Yaz and Yasmin responded to the concerns, saying quote: "Patient safety is Bayer's top priority. Bayer's oral contraceptives have been and continue to be extensively studied and tested worldwide. Bayer reaffirms and stands behind the safety of its drospirenone containing oral contraceptives."

Click here for the rest of the article.

**Also, anyone who has been adversely affected due to taking these prescription drugs, like Yasmin, Yaz or Ocella, should get in touch with Helen Zukin. Ms. Zukin recently retained a client, a young woman, who unfortunately suffered from a stroke, after only taking Ocella (generic version of Yaz) for a month.

Originally posted at InjuryBoard by Paul Kiesel

Ernest Nelson Found Guilty in UCLA Body-Parts Program Scandal

Paul Kiesel — Thu, 14 May 2009 15:53:39 GMT

SEE BOLD CAPS FOR EDITORIAL COMMENTS

From the Los Angeles Times:

A businessman accused of selling body parts from corpses donated to UCLA medical school in a scandal that tarnished the reputation of the university's willed body program THE PROGRAM, DURING 1999-2003, WHEN ERNEST NELSON AND HENRY REID, THE PROGRAM'S FORMER DIRECTOR, WERE PURCHASING AND SELLING PARTS FROM ONE ANOTHER, WAS NOT CONSIDERED AS VENERABLE AS UCLA HAS TRIED TO PORTRAY IT; IN FACT, UCLA'S WILLED BODY PROGRAM WAS STILL RECOVERING FROM A 1993 INCIDENT (CADAVERS, FROM THE WILLED BODY PROGRAM WERE HANDLED "WITHOUT DIGNITY" AND DUMPED INTO THE PACIFIC OCEAN ALONG WITH OTHER MEDICAL WASTE FROM THE SCHOOL OF MEDICINE) was found guilty today in Los Angeles Superior Court of conspiring to commit grand theft, embezzlement and tax evasion .

Prosecutors alleged that Ernest V. Nelson, 51, cut up heads, torsos and other parts from donated bodies and sold them without UCLA's permission to medical and pharmaceutical research companies, collecting $1.5 million between 1999 and 2003. THE PEOPLE, THROUGHOUT THE TRIAL AGAINST MR. NELSON, TRIED ARGUING THAT UCLA HAD LOST $1.5 MILLION VIA NELSON AND REID'S CHICANERY. HOWEVER, IF NELSON HAD STOLEN $1.5 FROM UCLA, THEN LOGICALLY SPEAKING, UCLA WOULD HAVE NEEDED TO HAVE SOLD THE PARTS ON ITS OWN AND COLLECTED THAT MUCH MONEY, RIGHT? AND IF THAT'S THE CASE, THEN UCLA WOULD HAVE BEEN PARTICIPATING IN ILLEGAL BODY PARTS TRAFFICKING; MEANING THEY NEVER WOULD HAVE (NOR SHOULD HAVE) BEEN ABLE TO MAKE THAT MUCH MONEY BY USING, NOT SELLING, THE DONATED BODIES FOR MEDICAL RESEARCH. THEREFORE, THE IDEA THAT NELSON STOLE OVER A MILLION DOLLARS FROM UCLA IS NOT ONLY A REACH, BUT IT'S AN OUTLANDISH ARGUMENT.

The bodies were donated to UCLA for medical and scientific research (AH, SEE, FOR RESEARCH, NOT FOR UCLA TO SELL AT $1.5 MILLION) at the university. The scandal over the sale of the body parts became public in 2004 and prompted UCLA to shut down the program for more than 18 months. UCLA ALSO HAD TO ATTEND TO OTHER PROBLEMS THAT WERE DISCOVERED THROUGHOUT THE PROGRAM, TOO: SANITARY ISSUES; "CADAVER ROOMS" THAT WERE OVERCROWDED; MAJOR ACCOUNTING, BOOKKEEPING AND INVENTORY ISSUES, ETC.

Prosecutors said Nelson hatched the scheme with the director of the willed body program, Henry Reid (WHO, BY THE WAY, WAS NEVER CALLED TO THE STAND TO TESTIFY AGAINST NELSON, EVEN THOUGH THE PEOPLE'S CASE WAS LARGELY BUILT AROUND REID'S ACTIONS, INTENT AND MALEVOLENCE AND THEN HOW NELSON WORKED WITH HIM TO SELL THE BODY PARTS (AND PREPARE THEM) TO PHARMACEUTICAL AND MEDICAL RESEARCH COMPANIES. WHY WASN'T REID CALLED TO THE STAND? BECAUSE, INCREDULOUSLY, THE PROSECUTION FORGOT TO FILE THE CORRECT PAPERWORK AND FOLLOW ADMINISTRATIVE PROCEDURES IN ORDER TO TRANSFER REID TO LOS ANGELES FROM THE FEDERAL PRISON HE'S CURRENTLY RESIDING IN WITHIN A TIMELY MANNER.), who pleaded guilty last year to conspiring to commit theft. Reid received checks from Nelson totaling $43,000 in return for giving him access to the bodies, prosecutors said.

Nelson's attorney argued that the payments to Reid were legitimate. He accused the program director of pocketing the money instead of forwarding it to the university. (WHICH WAS AN INTERESTING ARGUMENT: UCLA HAD THREE OF ITS EMPLOYEES, INCLUDING DR. ROBERT B. TRELEASE, A PATHOLOGY PROFESSOR WHO FREQUENTLY USED BODIES FROM THE WILLED BODY PROGRAM TO INSTRUCT MEDICAL STUDENTS AND WHO, IN THE PAST, HAD A MORE ACTIVE ROLE WITHIN THE PROGRAM, SET UP A BANK ACCOUNT, COUNTER TO TYPICAL UCLA ACCOUNTING PRACTICES, AT A WESTWOOD BANK OF AMERICA BRANCH, WHICH WOULD BE THE SAME ACCOUNT USED BY HENRY REID TO FUNNEL THE MONEY MADE FROM SELLING PARTS TO NELSON, INTO HIS OWN PERSONAL BANK ACCOUNT. UCLA, BASED ON THIS INFORMATION, SHOULD HAVE KNOWN THEN WHAT WAS GOING ON WITH THAT BANK ACCOUNT, CONSIDERING THREE RESPECTED EMPLOYEES SET UP THE ACCOUNT BACK IN 1995, TWO YEARS BEFORE REID BECAME THE PROGRAM'S DIRECTOR... HMM...?)

CLICK HERE FOR THE ENTIRE LOS ANGELES TIMES ARTICLE WITHOUT MY COMMENTARY.

Originally posted at InjuryBoard by Paul Kiesel