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The Kind Of People The Smart Money Boys At AIG Bet On
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March 26, 2009, 12:20 PM
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From the Washington Post:
Woman Pleads Guilty in Mortgage Fraud Scam

By Henri E. Cauvin

A former stripper accused of orchestrating a massive mortgage fraud scheme pleaded guilty yesterday in federal court in Greenbelt, admitting that she played a central role in swindling desperate homeowners out of millions of dollars.

Joy Jackson, who lived lavishly while the real estate market boomed, wore a green jail jumpsuit with the word "PRISONER" across her back. She was a world away from her $800,000 wedding at the Mayflower Hotel in 2006, where she was feted by more than 300 guests and serenaded at the reception by Patti LaBelle.

Jackson, 41, who was the president of the Metropolitan Money Store in Lanham, faces a decade or more in prison.

Instead of helping people hold onto their homes, as they promised, Jackson and her co-conspirators took titles to properties, drained them of equity and charged exorbitant transaction fees, according to prosecutors.

Jackson, her husband and several others were indicted in July by a federal grand jury. Six of the defendants, including Jackson`s key accomplice, Jennifer McCall, have pleaded guilty.

Appearing yesterday before U.S. District Judge Roger W. Titus, Jackson pleaded guilty to conspiracy to commit mail and wire fraud, which carries a maximum prison term of 30 years. With no known criminal record, she is likely to face a sentence of 10 to 12 years.

Three defendants, including her husband, Kurt Fordham, are scheduled to go on trial in July.

The conspiracy spanned from September 2004 to June 2007. Already, 115 victims have been identified in Maryland, and that number is expected to grow, a prosecutor said. Jackson`s sentencing is Nov. 16.

In a statement, U.S. Attorney Rod J. Rosenstein said: "Joy Jackson presided over a `money store` that was in the business of ripping off homeowners and mortgage lenders by submitting fraudulent paperwork to support over $16 million of loans that were never intended to be repaid."

Mighty AIG got taken to the cleaners, in effect, by thousands of small-time grifters like Joy Jackson. As the last participant in the food chain that led from broke nobodies through Joy Jackson through various financial institutions, they were the most clueless about the quality of the mortgages they were insuring against default.

Here`s from an earlier WaPo article on Jackson:

With her long hair and shapely figure, Jackson was one of his most popular dancers, earning well over $1,500 a week in tips, said Schwapp, who owns the Legend Nightclub. He said Jackson danced under the name "Night Rider" from 1997 to 2003. One of her most memorable stunts involved riding in on a white stallion, a la Lady Godiva.

"She was very popular, very creative," he said. "She stood out."

It wasn`t just the patrons who noticed Jackson`s act. Kurt Fordham, a popular disc jockey in Prince George`s clubs, liked her, too, and the two started dating.

Jackson eventually stopped dancing to focus on her career as a loan officer, moving from one mortgage firm to another. In September 2004, she teamed with McCall, 46, to open Metropolitan. They advertised on gospel and R&B radio stations and other African American media outlets, promising to help homeowners with cash-flow and credit problems.

Veronica Savoy was two months behind in mortgage payments on her Waldorf home when she contacted Metropolitan in summer 2006.

She said the firm promised to keep her home from going into foreclosure and to get her a mortgage with a lower interest rate. She signed on. Now the deed is no longer in her name, and $100,000 in equity is gone, she said.

"I guess that`s where the equity in my home went," Savoy said after hearing about Jackson`s big day. "It went to her wedding."

* * *

Investigators say Jackson and McCall ran a sophisticated foreclosure rescue operation that included family and friends, many of whom Jackson taught the ins and outs of the real estate industry.

Essentially, the company would enlist investors with strong credit as "straw buyers" who would take ownership of the houses. The original homeowners could live rent-free for a year and then buy back their homes at the end of the year.

But when the homes passed to the straw buyer, Metropolitan would borrow as much as possible against the value, effectively siphoning out the equity and increasing the cost of the house, according to the suit. The original owners were often unable to repurchase their property; some said they were unaware they were signing over their deeds. ...

Neighbors knew little about the couple but said signs of conspicuous consumption were everywhere. Eight cars were regularly parked outside their home, including a Jaguar, a Porsche, a Corvette and a Cadillac Escalade, several neighbors said. Fordham was seen each day outside wiping down his vehicles and moving them from space to space, neighbors said. A limousine arrived daily to take Jackson`s 15-year-old son to a nearby private school.

"We knew when they came on the street they had a lot of drama. They weren`t friendly at all," neighbor Roger Liggins said. "It was always about them."

Explain to me again why credit default swaps (i.e., insurance against defaults by mortgage backed securities) don`t create moral hazard? If you are Goldman Sachs, you can buy up mortgage backed securities made up of fraudulent refis done by ex-strippers and get AIG to insure them against default. Heads you win, tails AIG loses. What`s not to love? Except for the possibility that AIG is so clueless that they`ll insure everybody`s stripper fraud mortgages so when AIG goes broke you have to go through the inconvenience of calling the latest Goldman Sach`s alum heading the Treasury Department to get the federal government to give billions in the taxpayers` money to AIG to pass on to you for the MBS`s you own full of stripper assets.