U.S. prosecutors are preparing what would be the first criminal charges against BP Plc (BP/) staff after the worst U.S. oil spill last year, the Wall Street Journal reported, citing unidentified people familiar with the matter.

Prosecutors are focusing on whether some BP employees, including several Houston-based engineers and at least one supervisor, provided false information to regulators about the risks linked to the drilling of the Macondo well in the Gulf of Mexico, the Journal said. Department of Justice officials said in September that they looking to whether BP failed to properly report changes in key pressure measurement during the drilling process.

This is definitely a step in the right direction. Now if only BP’s corporate personhood could be charged with manslaughter and sent away to jail…

Photographer unknown, Tweeted by @haniya_mir

In the past 48 hours, the main focal point of the Occupy Movement has moved from Zuccotti Park in New York City to Frank Ogawa Plaza in Oakland, California after what can only be called a senseless act of aggression by the Oakland Police Department. Armed to the teeth, a small army of riot police forcibly pushed out Occupy Oakland protesters from their encampment on Tuesday night using tear gas, flash-bang grenades, and paintball guns.

Naturally, a whole bunch of defenseless protesters were clubbed by batons, wounded by projectile fire, and, generally speaking, got the crap beat out of them by the Oakland Police force. And to put it all into perspective, a two-tour Iraq War veteran who was taking part in the protest got hit in the head by a canister of tear gas and is now in a critical condition with a skull fracture. So much for whatever he was fighting for.

It goes without saying that the actions of the Oakland Police are going to galvanize support for the Occupy Wall Street movement. When a supposed law enforcement organization instigates violence at an otherwise peaceful political protest, something’s not right. Unless, that is, violence is the law.

¹Please don’t actually. Despite his supposed anti-Wall Street feeding appeal, Brandon was only installed as CEO of Domino’s after the Wall Street Investment Firm Bain Capital (a firm founded by Mitt Romney) bought out Domino’s. Over his lifetime, Brandon has given nearly $250,000 in campaign contributions to Republicans like John McCain, Thaddeus McCotter, Mitt Romney, Rick Santorum, and George W Bush. Ew.

The New York Times published an unflattering article yesterday on the practice of the government contracting out services to private companies. The article examined the findings of a study done by a nonprofit organization called the Project of Government Oversight, and found,

in 33 of 35 occupations, the government actually paid billions of dollars more to hire contractors than it would have cost government employees to perform comparable services. On average, the study found that contractors charged the federal government more than twice the amount it pays federal workers.

No surprise here — We’ve just finished a decade of reckless and wasteful spending that has been symbolized by the no-bid cost-plus tax-free contracts of the wars in Iraq in Afghanistan. Two weeks ago, a congressional panel looked at the results of this practice and estimated that

the U.S. has wasted or misspent between $31 billion and $60 billion contracting for services in Iraq and Afghanistan, or as much as one out of every four dollars spent on wartime contracting in the past decade.

Meanwhile, the very same Republicans who voted for this excess that led us into the deficit now act like they are the financially responsible ones and refuse to do anything to help the country recover.

Halliburton, the corporate champion of fraud, corruption, war-profiteering, cronyism, and criminality would know a little something about being virtuous. That’s why the company is now suing BP for its “cover up scheme” during the Deepwater Horizon Oil Spill last summer in the Gulf of Mexico.

Halliburton, which did cement work on BP’s Macondo well, claims in Thursday’s suit that BP provided false information about the location of pockets of oil and gas around the well before the blowout. Halliburton says knowing the location of those zones is critical for a cementing job.

“Profit and greed” were BP’s motives for concealing the information, the lawsuit alleges. Halliburton says it likely would have insisted on redesigning the well’s production casing if it had known about an additional hydrocarbon zone that BP allegedly failed to disclose.

“Such changes would have cost BP millions of dollars on a well that was already painfully over budget and behind schedule,” says the suit, filed in a Harris County, Texas, state court.

It seems like culpability might just be contextual — but I’m not going to take Halliburton’s word on that.

A Republican committee in Minnesota has been caught creating an eBay-style auction site to sell access with politicians, including top lawmakers like Rep. John Kline (R-MN) and Rep. Erik Paulsen (R-MN), as well as State House Speaker Kurt Zellers (R-MN). With bidding starting at $250, the committee offered opportunities to “get up close and personal” with each lawmaker. The announcement for the auction was reportedly sent to area lobbyists.

LONDON — A new oil sheen has been found in the Gulf of Mexico, although oil giant BP said Thursday the discovery had nothing to do with its operations and was far from the site of its disaster-hit Macondo well.

BP spokesman Daren Beaudo said the company had sent several mini-submersibles into the water over the weekend to investigate the source of the sheen — a shiny coating that floats on the surface of the water which could come from leaked or spilled oil — but had concluded “that it couldn’t have been from anything of ours.”

[...]

[BP Spokesman Daren] Beaudo, asked to estimate the distance between the sheen and the Macondo well, said he believed it was far away.

“We’re talking 10s of miles (kilometers) if not further,” he said.

Yeah, “10s” of miles is pretty darn far away for leaking oil to go! The Deepwater Horizon rig is only 40 miles away from the Louisiana coastline and we all know that nothing came of that… er.. I mean only affected over 1000 miles of American shoreline.

Now in BP’s defense there are about 4,000 other active oil and gas platforms and 27,000 abandoned wells in the Gulf of Mexico that are leaking sealed properly and biding their time with dead fish. Surely it could be another company’s well!

NOAA Ocean Explorer

That started to change last week, with reports of a sworn statement to the Florida attorney general by an ex-employee of what is described as Florida’s largest “foreclosure mill”.

A former paralegal with Florida’s largest foreclosure law practice has told state investigators that the firm routinely signed court paperwork without reading it, misdated records, forged signatures and passed around notary stamps in the rush to foreclose on homes.

“This is just the beginning really,” the paralegal, Tammie Lou Kapusta, told ABCNews.com. “It’s the tip of an extreme iceberg.”

The allegations are the latest leveled against the firm of multimillionaire attorney David J. Stern…
[...]
The paralegal, who worked for Stern a little more than a year, described an office where signatures on notarized documents were regularly forged, legal papers were outsourced to Guam and the Philippines, and shouting matches erupted when cases stalled.
[...]
Across the nation, mortgage-servicers, which include units of major banks such as Bank of America Corp., have been accused of submitting fraudulent documents in thousands of foreclosure proceedings.

In Florida, Stern is foreclosure king, operating the large law firm plus a foreclosure processing company and other support businesses that he recently sold off.

His Plantation, Fla., firm, which filed 70,382 foreclosure cases last year, is the largest of three under investigation by state Attorney General Bill McCollum for allegedly filing improper documents with courts to hasten the overloaded foreclosure process.
[...]
Notary stamps were always available, and employees such as Kapusta, who were not notaries, routinely used them on official documents, she said. Those who could best fake the signature of the person who verified foreclosure affidavits were allegedly sought out to forge her name.
[...]
The paralegal, who worked for Stern a little more than a year, described an office where signatures on notarized documents were regularly forged, legal papers were outsourced to Guam and the Philippines, and shouting matches erupted when cases stalled.

Stern’s lawyer, Jeffrey Tew, naturally, denied all these allegations:

Tew dismissed Kapusta’s allegations as simply untrue, the rants of a disgruntled former employee.

But, sure enough, Kapusta’s “tip of an extreme iceberg” prediction has been borne out. Two more ex-employees have stepped forward with sworn statements that support Kapusta’s testimony. And it’s looking a hell of a lot worse than it did last week:

Some employees of Florida’s largest “foreclosure mill” were given jewelry, cars and houses from the firm, in exchange for altering and forging key documents used to obtain foreclosures, according to a statement released today by the Florida Attorney General’s Office.

The office released transcripts of two interviews it conducted for its investigation into the law offices of David J. Stern. The sworn statements were from Kelly Scott, a former employee of Stern’s and Mary R. Cordova, a former employee of G&Z, a process server used by Stern’s office. The women’s testimonies appear to back up that of former Stern’s employee (sic) Tammie Lou Kapusta, whose statement was released last week. The three statements paint a picture of a secret system designed to speed up the foreclosure process. Attorneys and staff members forged signatures, changed dates, passed around notary stamps, the women say in interviews with attorney general’s staff.

The two former Sterns employees described long tables where employees would sign as a witness and notarize documents without actually witnessing the signing. Twice a day, Scott said, the company’s chief operating officer, Cheryl Samons (sic; the name is apparently Salmons), would go into the office and sign 500 documents at a time “ without reading them.

Scott was Samons’ (sic) legal assistant.

As a perk of Samons’ (sic) job, Stern’s office would routinely pay her personal mortgage, a car payment, her electric bills and her cell phone bill, according to Scott, who told investigators Stern also bought Samons (sic) a new BMW sport utility vehicle every year and gave her and other employees jewelry. Additionally, Stern purchased employee David Vargas a house, a car and a cell phone, Scott claims in her statement.

Scott said the office would move forward with cases, even if they knew the homeowner had not been properly notified of the lawsuit.

Fannie Mae and Freddie Mac were Stern’s “babies,” Scott said, and they routinely questioned documents and came to the office to check files. Last week Freddie and Fannie said they would audit Stern’s files.

Someone inside both organizations would tip Sterns off to the visits, and Stern’s staff would then alter client codes and hide files, according to Scott’s statement. When Fannie and Freddie employees left, they’d bring the files back out. The other witness, Cordova, worked at G&Z for two months. The firm, which handled service for various foreclosure law firms, had special instructions for Stern, the firm’s main client, according to Cordova’s statement.

Every file was billed for at least four people to be served with the foreclosure paperwork, even if the firm knew there weren’t that many people with interest in the property. These bills were sent out before the parties were served and, often, Cordova said, the company didn’t follow through with the service.

Long tables where attorneys and staff members forged signatures, changed dates, passed around notary stamps sounds like the very definition of an assembly line operation for producing fraudulent paperwork.

And, to borrow Sammy Sosa’s phrase (from the year his steroid-assisted home-run-record chase propelled him to national prominence), such business practices have been very very good to Stern. How good? He owns not just a $15 million house in Fort Lauderdale, but also a $20 million yacht. Funny story about the yacht:

The 50-year-old Stern even considered naming his $20-million yacht “Su Casa Es Mi Casa – “Your House is My House,” an acquaintance told the New York Times. After his wife and others reportedly cautioned against it, Stern settled on Misunderstood. He denied to the newspaper that he considered “Su Casa Es Mi Casa.”

And the house is something else too:

His 16,000-square-foot mansion, valued at more than $15 million, occupies a corner lot in a private island community on the Atlantic Intracoastal Waterway in Fort Lauderdale, according to the New York Times and Mother Jones magazine.

The mansion is featured on a water-taxi tour of the area’s grandest estates, including the homes of Jay Leno and billionaire Blockbuster founder Wayne Huizenga, and the former residence of Desi Arnaz and Lucille Ball. In addition to the 130-foot yacht, Stern reportedly has an automobile collection that includes a 2008 Bugatti and multiple Ferraris, Porsches and Mercedes. But Tew declined to discuss his client’s assets. “All that does is feed into this scenario that somehow they’re taking advantage of poor people who are losing their houses and getting rich off of it,” he said. “You could say the same thing about a neurosurgeon that makes millions of dollars a year from people who sustained terrible head injuries.”

You could, indeed. Except that neurosurgeons earn their money for treating those people who sustained terrible head injuries, for helping them with their injuries. You really think there’s much moral equivalence between that, and suborning and rewarding perjury, forgery and fraud to improperly get people thrown out of their homes, do you, Mr. Tew?

In fact, the behavior of David J. Stern seems to fit the very stereotype of the wicked, crooked lawyer who abandons every moral compunction to cut corners in the single-minded pursuit of obscene levels of personal wealth.

Tew says “it’s really wrong to vilify him”. He almost gets it right. By the sworn testimony of his ex-employees, it’s really impossible to vilify him.

On Monday, October 18, Bank of America announced that it will lift its foreclosure freeze in these 23 states next Monday:

The bank said the new documents will be used in 102,000 foreclosure actions in which judgment is pending in the 23 states.

So, in essentially 11 working days, Bank of America scrutinized the paperwork for all their foreclosure actions in 23 states, identified 102,000 cases where the paperwork was defective, and in 5 more working days, the bank will have spanking new documents ready for submission in these 102,000 cases?

It’s not clear how many foreclosure actions were pending in these 23 states, but if we’re charitable to the bank, only a small fraction must have had defective paperwork requiring new documents. So, in these 11 working days, the bank carefully scrutinized many more than 102,000 sets of paperwork.

A pretty impressive performance, all around. But, if that’s all the time and effort it was going to take, why did Bank of America just not bother to do it right in the first place? What about all those stories we’ve been hearing that the problems arose in the first place because the volume of foreclosures resulted in such a huge crush of paperwork that it simply wasn’t physically possible to scrutinize and verify everything?

Is it possible that diligent Bank of America employees still haven’t exactly carefully scrutinized the paperwork for all the pending foreclosure actions?

One week later, on October 6, the Washington Post had another article (by Brady Dennis and Ariana Eunjung Cha) about the systemic problems resulting from the mortgage industry’s hubris in deciding that hundreds of thousands of mortgages could be sent whizzing through the global financial system at high velocity, merrily changing hands, without following the pesky local laws that record and establish legal ownership of the mortgage loans as they change hands. The lack of a clear title to mortgage loans in default now not only threatens to disrupt foreclosures all over the country, but may also have severe repercussions for the state of the housing market, with all kinds of collateral damage to innocent bystanders.

This second article also raised the possibility that, in addition to homeowners filing lawsuits to contest foreclosures, banks could also “face lawsuits from … investors who bought stakes in the mortgage securities – an expensive and potentially crippling proposition”.

Fast forward another week, and lo and behold, there was another article in the Washington Post on October 13 (by Ariana Eunjung Cha and Jia Lynn Yang, this time).

One, this article sheds a little light on the forgery allegations, tying them to the mortgage-loan-title mess:

However, local laws in most states dictate that each time a mortgage changes hands, the transaction needs to be recorded in courts or county offices. But the speed with which the loans were being generated during the housing boom and then pooled together and passed around Wall Street meant that big financial firms took shortcuts, consumer lawyers said.

Often the proper paperwork got lost or was passed along without being filled out, lawyers say. Some documents have been found retroactively signed or even forged.

So documents were forged because banks realized, at least by the time it came to foreclosure, that they lacked clear title to the loans? (And what better way to address the problem than by indulging in a little harmless forgery?)

Two, the article reports that large institutional mortgage investors are indeed trying “to force banks to compensate them or even invalidate the mortgage trades themselves.”

For more than a decade, big lenders sold millions of mortgages around the globe at lightning speed without properly transferring the physical documents that prove who legally owned the loans.

Now, some of the pension systems, hedge funds and other investors that took big losses on the loans are seeking to use this flaw to force banks to compensate them or even invalidate the mortgage trades themselves.

Their collective actions, if successful, could blow a hole through the balance sheets of big banks and raise fundamental questions about the financial system, financial analysts and a lawmaker said.

If judges rule in favor of such lawsuits, “it could be 2008 all over again,” said Josh Rosner, managing director at Graham Fisher & Co., referring to the Wall Street meltdown that occurred after Lehman Brothers collapsed.

I’m not sure it makes a lot of sense for mortgage investors to go down this street, whether by formally filing a lawsuit or by using the threat of a lawsuit to negotiate some form of compensation. Investor A would probably do well to remember that, in most cases, after buying a mortgage from Bank X, it then sold the mortgage to Investor B. Whatever lack-of-legal-title claim Investor A has against Bank X, Investor B would have the exact same claim against Investor A. The only investor who can hope to extract some compensation without having to pay it out, in turn, would be the poor sod at the end of the chain, investor P or Q or R, the proverbial greater fool who was left holding the mortgage when everything came tumbling down like the pack of cards it was.

But none of these investors made just a single transaction in these toxic mortgages. For every mortgage that a given investor ended up holding at the end, there would be many dozens of mortgages which passed through their hands, leaving them now open to a claim against them.

If these institutional investors seriously pursue such claims, all that will happen is that they will beget a long chain of domino claims. If Investor R goes after Q, then Q will be forced to go after P, who will be forced to go after O, and so on down the line. Lawyers will make out like bandits, no doubt, but everyone else is just going to lose.