This week we saw the first major legal challenge to the mortgage servicers and lenders at the center of the kerfuffle over “robo-signers”—the mortgage servicer employees who allegedly signed thousands of documents authorizing foreclosures across the country, without actually having reviewed the loan documents, as the law requires.
Some say these middle-manager types (who have been identified at GMAC Mortgage LLC, J.P. Morgan Chase & Co., Bank of America Corp. and OneWest Bank, in depositions by consumer lawyers), if they did what they say they did, committed fraud in hundreds and even thousands of foreclosure cases by claiming knowledge of a financial matter of which they had no personal knowledge.
This chaffed Ohio Attorney General Richard Cordray so badly that he filed suit Wednesday against GMAC and its parent company Ally Financial Inc., seeking $25,000 in civil penalties for each instance of fraud, plus untold thousands of dollars more in consumer restitution.But the interesting thing about Mr. Cordray’s case in Ohio is that it specifically names Jeffrey Stephan, GMAC’s alleged robo-signer, as a defendant.
In an interview Wednesday, Mr. Cordray explained why Mr. Stephan was a target of the suit:
“Fraud is fraud. If you’re ordered to violate the law and you violate the law, you’re not innocent,” he said. “That’s the Nuremberg defense. In the trials after World War II, the defendants, the Nazis claimed, I did this, but someone ordered me to do it. You can’t just say you’re not responsible because someone told you to do it.”
While I'm always leery of jumping to the end and invoking Godwin's Law and the Nazis in any debate, Cordray makes an valid point: the usual line of defense in corporate crime cases is always "orders": someone ordered me to do this, the orders came from up above, I was just following orders, etc. As if job expedience and fear of being fired somehow absolves these middle managers of individual responsibility for any alleged criminal conduct.
The only way to find out "how high it goes" will be to sue these middle managers to the fullest extent and have them reveal exactly where the "orders" were coming from.
And then the real criminal prosecutions can begin.