The Tale of Three Monkeys and the Government's Attempt to Transform a Real Estate Agent, His Wife,the Broker, and Two Successful Real Estate Investors into Convicted Criminals

On August 22, 2014, a Sacramento federal jury returned a verdict of not guilty to all counts against all four defendants in a bogus mail fraud and money laundering prosecution. See the news story in the Sacramento Bee.    

Here is how my three colleagues, Toni White, John Balazas, and Daniel Koukol, and I viewed the evidence presented at trial. Each of our defendants had material defenses on the various elements of fraud.   We also presented a broader challenge to the prosecutions through the testimony of our expert, Professor William Black, professor of economics and law, white-collar criminologist, and former financial regulator. This federal prosecution against four Russian Americans was nothing more than the government’s attempt to punish our clients instead of the real crooks, the bankrupt lenders who designed the system that pumped out millions of phony mortgages that destroyed the global financial system.

Literally back in 2006, all one needed to get 100% financing on a home, was for the loan application to state any income desired and the banks would lend the money. These loans were called stated income loans, or “liar loans.” During trial, the lender’s underwriters’ testimony was that the lenders were forbidden to verify income or employment.

How could this be you ask? Well, as the GreenPoint Mortgage flyer with the three monkeys suggests, the officers controlling GreenPoint, and the other lender in the case, Aegis Mortgage, ordered their underwriters not to verify the borrower’s willingness to repay the loan. The underwriters were ordered by their bosses not to conduct essential underwriting.

Astounding that my client, who could have submitted any income amount on the application she wished,was prosecuted when she instead submitted an application with the income and employment sections left blank pursuant to the bank’s lending program which called for the income and employment section to be left blank – for the express purpose of making it impossible for the underwriter to even “guess” at the borrower’s income. The loan was funded, and my client was still prosecuted even though she had nothing to do with the decision to fund the loan.

The federal government was and still is aggressively prosecuting the little people in the mortgage crisis: the real estate agents, brokers’ representatives, and the borrowers who thought they were going to get rich flipping houses in a modern day Gold Rush. The government refuses to prosecute the the fat cats who brought this country and much of the global economy to its knees walked away with millions of dollars in bonuses made possible by leading the “sure thing” of “accounting control fraud.”

Professor Black, whose credentials would take up this whole blog, explains how during the trial, the government tried to defend the crooked lenders who he exposed during his testimony in their scheme to defraud the people of the United States of America through what he called “control fraud:” “The [government] tried to become the defense counsel for the ‘worst of the worst’ lenders as innocent victims, but the evidence from the agents at trial was that they never investigated the banks in this case because they assumed that they were innocent victims -- and that in eight years of ‘investigations’ of ‘mortgage fraud’ they had never investigated the banks or any bank officer. [Chief Assistant United States Attorney of the Eastern District of California Benjamin] Wagner has given interviews published in the WSJ revealing that he believes he has a valid fraud case against [JP Morgan] based on it conspiring with senior GreenPoint officers to restructure their secondary market sales to JPM to try to hide the toxic nature of GreenPoint's loans. The ‘three monkeys’ ad makes it clear that GreenPoint's ‘decision-makers’ invited toxic loans as their regular course of business.”

The bottom line folks is that these crooked lenders created these “toxic” loan programs so they could get rich reselling these loans to willing buyers at Wall Street Banks and they left the borrower out to dry. Now the government is prosecuting the borrowers for taking advantage of the crooked loan programs instead prosecuting the real crooks who created the loans. For more information, read the updated version of Professor Black’s book: The Best Way to Rob a Bank is to Own One (published in 2014). It explains how the banksters’ frauds caused the financial crisis and the Great Recession.



Jailhouse Etiquette 200 -- Checking into Prison

I had the privilege of defending a young man convicted of two very very serious felonies because the jury said he used a gun to commit an ultimate sin on two different people for no good reason.   Sadly for my client and his family, he will enjoy the services of the State of California for the rest of his natural life.

San Quentin Prision
San Quentin's Welcoming Look
San Quentin is the receiving center for the Bay area for those convicted of felonies.  As of December 2008 the “Q” was one of the largest prisons in the United States with a population of 5,222 inmates.  Upon your arrival at your smelly new home, they make you throw everything you are wearing as you enter the hallway of the hallowed institution into a trash container. What ever personal property they let you keep depends upon the guard who goes through your stuff.  You are then ordered to dress in prison blues.  Hopefully they give you a shower, then they spray you with some kind of bug killer in case the county jail you came from had a lice or bed bug problem.  It should be no surprise that most county jails are not very clean. You are given underwear, socks, shoes, or boots and the clothing –including the underwear-- is probably used but washed in the prison laundry.

If you arrive at approximately 7-8 am, you are then given a series of medical check-ups and that can take up to twelve hours to complete.  Some receiving centers have you line up en masse and they check your penis and testicles while you are in the company of large groups of naked men and then they have you bend over and cough so they can make sure that you have not tried to smuggle money or other contraband into the institution in your anal cavity.

After your very intimate physical examination, you are then sent to a “counselor” who asks you a series of intimate question of a psychological nature, questions about the nature of your offense ad whether you are suicidal, among others.  Just a word, if you are convicted of murder, you are going to a maximum prison no matter how sorry you tell them you are about your offense.  The term of imprisonment largely dictates the number of points you will get.

You are then given a numerical value which reflects the level of the security of the institution to which you will be sent after your brief visit at the “Q.” There are four levels of institutions in California. Level 1 is for housing the least dangerous inmates and Level 4 housing is for the most dangerous. The Inmates Classification Score is used as a primary factor to determine the level of institutional placement.

Inmates can get points for commitment offense, unfavorable behavior, background factors, prior prison or jail behavior and special case factors. The new arrival can also have points taken off for favorable behavior.  If you are convicted for a crime of murder for example, you will most assuredly be sent to a level 4 institution until your “points drop“ which can take years to accomplish.  The good news for a lever 4 inmate is that he (or she, yes women are murders too) gets to spend their time in a two man cell rather than on four man bunk beds in some gym somewhere.

I’m told that the food in prison is better than in the county jail and that meals showers and the yard are the best events in prison.  You also get to visit the law library once a week to work on your appeal.

In short, prison has its advantages and if you have to do a long sentence you are better in prison than in the county jail.  At least the food is better.

If you are faced with a prosecution that would give you a trip to the San Quentin, make sure you present an excellent defense.  Visit the criminal defense attorney's website and contact Tim for help!


Sometimes the Jury Gets it Wrong

Trial by jury is the most democratic way to decide a case. But, as every ad agency and marketing person knows, people can be manipulated by skilled story teller.  A jury is made up of 12 humans, and sometimes they get it wrong.

I am known for fighting police officers in court, pointing out when they have violated his client’s rights.  But, I defended Officer Stephen Tanabe against 7 Federal charges that allege that Tanabe committed fraud while acting as a peace officer.  I thought he deserved a jury trial that would clear his name from the false charges made by a former “friend”.

In my opening statement at trial, I said that during the trial I would attack the credibility of the prosecution’s witnesses.

I felt that the government was believing the word of people who testified in the hopes that they would receive favorable treatment in cases against them. “These are people who built their careers on lies, deception and destroying people," I told the jury.

I think I did a decent job pointing out inconsistencies in the witnesses’ statements and getting the witnesses to describe their not-so-savory behavior.  The San Jose Mercury News went even further.  It reported that I hammered the main prosecution witness with my questions.

Dr. Phil on the PI Mom's Scandal
Dr. Phil was so upset that he believed Butler's story
that he ran this second segment about Butler's fall.
Unfortunately, the witness, convicted felon Chris Butler, is a great manipulator.  In the past, he convinced Dr. Phil, People magazine, the Today Show, Lifetime Television, and the Contra Costa Times to feature him doing fake investigations, according to Peter Crooks in Diablo magazine.  In fact, read all of Peter’s story called “The Setup” to find out how many normally suspicious people – including cops and journalists – were successfully and completely deceived by Butler.

In court, Butler was a good witness.  Despite the facts of his past criminal activity, his pattern of lying, his pattern of setting up others for a fall to protect himself, in person he seemed honest.

In my opinion, Butler manipulated the government prosecutor and the jury. He got them to believe events that I don’t think happened.  I pointed out what was wrong with Butler’s stories to the jury, but it didn’t matter.  He is that good!

My client was convicted of six counts of conspiracy, extortion, and multiple counts of wire fraud.  I think the people on the jury were the most recent victims of Butler’s manipulation of reality. He and his family were devastated.  Now Stephen Tanabe, a respected police officer, has been taken down by a friend who is looking for time to be shaved off his own prison time.

Going to trial is always risky, no matter how strong the facts are in your favor.  A good story in the hands of a skillful manipulator is powerful.  Innocent people often plead guilty to lesser charges to avoid facing the uncertainty of a jury.

I recommend that my clients go to trial only when the prosecution is being unreasonable and I think I have a good chance of convincing a jury to vote Not Guilty.  Given the facts as I know them, Officer Tanabe should have won in court.  However,  as every trial attorney knows, sadly, sometimes the jury gets it wrong.


The Eastern Sun and a New Day

San Francisco Defense criminal defense attorney remembers his hippie phaseI remember the eastern sun streaming through the dirty sliding glass door on the East Side of our home on Fleetwood Way in Bakersfield, California, after a long night of dropping LSD and drinking Budweiser.

I would awaken with the pounding sensation in my addled and disoriented brain and the feeling of extreme nausea which would well up into a cascade of vomit of yellow bile which would produce a fountain of a multi-colored stomach contents.  We used to call it “the technicolor yawn,” “praying to the porcelain god,” “yacking,” or just plain puking your guts out.  This unpleasant side effect wasn’t from the acid, but from the beer that followed the acid that made me so sick.  But I loved beer, so I drank it anyway.

For me, it was a necessary price to pay for what we regarded as partying, tripping, or getting high, which usually included copious amounts of LSD in different forms: blotter paper or microdots (small saccharin tablets coated in LSD).  Sometimes we would get liquid acid on a sugar cube or crystal acid in its raw form, which was the most powerful.  My record was 22 hits of yellow microdot.

San Francisco criminal defense attorney had fantasies about police and can-can girls
That shit had me hallucinating: a parade of police officers dancing into my room with circa 1920's police uniforms carrying nightsticks followed by girls doing the can-can.  I loved acid during my formative teenage years.  On my very first trip, I saw a spaceship shooting red and white lights into the sky – it was one of the most beautiful, colorful sights I had ever seen.  There is something about hallucinogens that I can barely explain except that it produces mind and body experiences that a dummy like me would risk suffering a felony conviction – or even a gunshot – just to get high.

When I was about 16 years old, I was in Boulder, Colorado, smoking marijuana, but before I lit up, I stuffed about 100 hits of LSD that I had in a baggie into a Marlboro cigarette box.  I’m glad I did.

I was smoking away that night in the bushes, and when I looked up, I saw a Boulder Police Officer shining a flashlight on me.

Like any intelligent 16-year-old would, I started to run when I saw him, but by the time I reached the other side of the bushes, he had his gun pointed at me, and he threatened to shoot me.  I stopped dead in my tracks.

He searched me and found and subsequently seized the pot I had, but he never found the LSD I had stuffed in the cigarette box, which I had dropped somewhere along the way. I never went back for it either.

By the way, the Supreme court regards a police shooting as a seizure under the Fourth Amendment to the U.S. Constitution, so if the police shoot you unlawfully, your relatives can sue the police for killing you even though you are dead, but I wouldn't recommended getting shot for running from the police.  It’s simply just a bad idea.

If you need help (before you're dead) because you've been accused of drug possession or other crimes, check out my criminal defense website and give me a call at 415.495.4800.


Fast Car, Reckless Arrest

I remember my first high-status car.  I thought it would get me girls, but it didn’t.

What it did get me was arrested.  I received my first moving violation and trip to the L.A. County Jail driving that car at 105 miles per hour on Interstate 5 in California in a 70 mile per hour zone on the mountain pass known as the “Grapevine” that divides Bakersfield from the Greater Los Angeles area.

“Can they really arrest you for driving too fast!?”  I asked as the cop was slapping handcuffs on me.

It was circa 1979, and I owned a bitchin’ 1979 Chevrolet Camaro.  I was very proud indeed of that car and its power.  I dreamed that I would drive to the great nightclubs and discotheques in West Hollywood and meet a beautiful girl and find romance.  One evening, I was on my way to fun and adventure in tinseltown –  Hollywood.  I found the adventure and the cops found the fun.

I didn’t realize that the California Highway Patrol used aircraft to catch speeding motorists until I was unceremoniously arrested after being pulled over for reckless driving. I was taken to the Newhall office of the California Highway Patrol where I was cited and released and told to return a couple of weeks later.

I returned to court, and like an idiot, I represented myself, so I had a fool for a client.  My lawyer advised me to plead guilty to reckless driving on the first court date and was ordered to enjoy the luxury and the services of the LA County Jail for three days.

I returned to Newhall in 1979 and was put into a holding cell where I was transported on a huge black and white Jail Bus that I believe had “Los Angeles County Sheriff” painted on it.  It was an extradition bus, which is kind of like the Greyhound of County Jail transportation, and the stops are the holding cells of all the substation holding facilities of all the LA Police Department from the Grapevine through the valley to the Downtown LA County Jail. The bologna sandwiches were terrible but resembled something I had eaten before; they reminded me of the food in the Kern County Jail.

In the LA County Main Jail, I remembered that the jail cells were several tiers (jail floors are called tiers) tall.  The jail was so big they used an escalator to transfer us from our jail cells to the chow hall where we had five minutes to eat.  When you walked down the hall to chow, you were required to keep one hand in your pocket and the opposite shoulder on the wall as you traveled down the hall, or you would catch a beating.

The jail is so big it literally took three days to book me into the jail.  They take you into a room with glass walls where you were required to be frisked and strip-searched, and you were given a cursory medical exam that included a genital exam, an x ray, a blood test, and a spray down of bug spray for lice.  One guy shook his penis at the doctor who simply told the jailers “I don’t like this guy,” so they put him in the drag-queen tank in the jail. As soon as your batch left the tank, a crew of trustees would squeegee the glass with bleach and a new batch would come in.  The booking process was endless and lasted around the clock.  You were booked, photographed, and issued a mattress and LA County designer clothing to wear during your stay. At night you could hear screaming, moaning, pleading, and fighting.  How I left that jail with my virginity I will never know, but I did.

I don’t know about you, but since then, I always tried to keep it under 80 MPH in California after my visit to LA County Jail.

If your hot car has gotten you into jail, or you're in for something a lot more serious. don't do what I did and represent yourself!  Call me at 415 495-4800 and talk to a specialist in criminal defense, and check out more information on the San Francisco Criminal Defense web site.


What the Jury Needs to Know

In my opening statement to the jury defending a client “Juan” against first-degree murder charges, I said that my had no intention of helping co-defendants “Pedro” and “Miguel” shoot anyone.  I explained that Juan thought he was picking up a couple of guys who he could smoke some dope with after his day at work.  I emphasized that my client was a steady, well-liked laborer with no history of gang involvement or criminal activity.  He was surprised and fearful when the guys he thought he was going to smoke with came running back to his car toting guns.  He drove away from the scene because there was gunfire and the guys with guns in his car told him to keep going. 

The jury is going hear a lot of facts in the trial.  My job is to show the jury how to put the jigsaw-puzzle bits of facts flying at them into a picture that correctly shows what my client did and didn’t do.  The jury needs to know that the picture I give to them is a reasonable one and that what the prosecutor wants them to see just doesn’t exist.

Laying out the narrative of the event – alerting the jury what they should expect to see and not see – is critical.  These 12 citizens are going to be sold a slick story by the District Attorney, police, and a cadre of witnesses who routinely testify at trials.  These folks are skilled – and I have to help the jury to see past the polish and the professionalism and to examine the lack of the actual evidence against my client.

I want the jury to watch for the prosecutor to show them that my client was a gang member –- she cannot.  And, then I want to jury to understand the importance of that missing piece in the prosecutor’s story of the day. 

I want the jury to see if the prosecutor’s theory that my client knew that he was helping gang members kill a person in a rival gang makes sense.  My client worked regularly at a legal job where he was popular – there’s no evidence that he supported himself by criminal acts. There’s no evidence that he was planning anything special that day. In fact, the shooters called my client’s cell phone asking for a ride when he was shopping at a local mall.  There’s no evidence that my client was or is a gang member.  Instead, there is evidence that Juan didn’t and doesn’t participate in gang culture. 

Juan was a young man who wanted to relax by smoking marijuana after a hard day at work. All of the jigsaw-puzzle pieces fit that picture.  It is a human and normal picture. And, the picture the DA wants the jury to see has missing piece after missing piece.

My opening statement was designed to spotlight the pieces missing from the DA’s story.  I want the jury to start watching for those missing pieces from the moment the trial opens. Because, if  those pieces are still missing at the end of the trial, the jury will find my client not guilty.

The real-life trial which sparked this entry was still in progress when I wrote this post.  I have changed some of the facts (names, etc.). But, if you would like to discuss your case with a criminal defense attorney, please contact me.