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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Friday, July 8, 2011

Goldman Sachs Is Being Sued--Again

Goldman Sachs may have to dip into its funds that are reserved for litigation costs--that $2.7 billion that they set aside. It is surprising that there are not more such suits against Goldman Sachs when you consider all the junk securities that they underwrote before the financial crisis.

Liberty Mutual Sues Goldman Over Freddie Mac Investment Losses
By Andrew G. Simpson - Insurance Journal

Boston-based Liberty Mutual Insurance Co. and several of its subsidiaries have sued investment banker Goldman, Sachs & Co. for “making materially misleading statements and omissions” in a preferred stock offering of mortgage lender Freddie Mac in November 2007.

The insurers invested $37.5 million in the Series Z offering of Freddie Mac (Federal Home Loan Mortgage Corp.) shares backed by subprime mortgages and underwritten by Goldman, according to the filing made in U.S. District Court in Massachusetts.

The insurers say that if they had been informed of the “true state” of Freddie Mac’s capitalization, they would never have purchased the Series Z preferred shares. They say that as a result of what they charge is Goldman’s “fraudulent conduct,” their more than $37 million in investments are “virtually worthless.”

Their complaint says they have suffered “huge losses” on the shares of stock they have sold, as well as on the shares of stock that they still hold.

They are asking treble damages and a jury trial.

The plaintiffs include Liberty Mutual and its subsidiaries Safeco, Employers of Wausau, Peerless and Liberty Life.

Goldman Sachs told Insurance Journal it will fight the suit.

“The suit is without merit and we will contest it vigorously,” said spokesman Michael DuVally.

The complaint alleges that Goldman’s actions in underwriting the Series Z offering were “part of a calculated pattern of deception in which Goldman not only profited from the collapse of the mortgage market, but also magnified risks in the market by selling high risk, poor quality mortgage products to investors around the world.”

The complaint alleges that Goldman sold investors poor quality investments and placed its own financial interests before its clients’.

Freddie Mac began getting into trouble around 2006 when homeowners began defaulting on subprime mortgages in increasing numbers. Freddie Mac raised almost $6 billion in the November 2007 offering, according to the complaint.

But by 2008 Freddie Mac had deteriorated to the point where it had to be rescued by the federal government. Preferred stock investors like Liberty Mutual then suffered losses because the government-issued new preferred shares that were senior to the preferred stock they held.

While it was marketing and selling Freddie Mac securities, Goldman had taken huge net short positions on other securities backed by subprime residential mortgages that generated $3.7 billion in profits for the firm in 2007 alone, according to the complaint.

Read the entire article here


Anonymous said...

Bailed out the meals for the elderly...nice job corrupt politicians...wait til this hits the US! It's coming!

Elderly in tears as hot meal service is axed

VULNERABLE elderly people unable to cook their own meals were reduced to tears when they learned a service providing them with hot food is to be axed.

The Community Housing Group (CHG) has pulled the plug on the Cooking Pot Dining Service, which caters for dozens of pensioners from 11 sheltered homes in Worcestershire.

Distraught pensioners, some of whom cannot cook because of illness or disability, were in tears after being told the service, provided by Wyre Forest Sheltered Housing staff, would be axed, on July 31.

Anonymous said...

They laugh at every person on the way to the bank...we're all A$$wholes..we accept it!

JP Morgan Chase Fine: Another Slap on the Wrist for Wall Street

This is one of the best examples we’ve had yet of the profound difference in the style of criminal justice enforcement for the very rich and connected, versus the style of justice for everyone else. This scam that Chase, Bank of America and UBS were involved with was no different in any way, really, from old-school mafia-style bid-rigging scams.

Anonymous said...

There's No Recovery Because the Government Made it Official Policy Not to Prosecute Fraud

Fraud caused the Great Depression and it has caused the current financial crisis. But fraud is not not being prosecuted, and so it will occur again and again, and prevent a sustainable economic recovery.

Anonymous said...

Dog wagging tail..or tail wagging dog?

It's good business to be in bed with government!

Iran Test Fires Two Long-Range Missiles Into Mouth Of Indian Ocean Where Two US Aircraft Carriers Are Situated

Stratfor provides the latest distribution of US naval assets: it shows why the "mouth of the Indian Ocean" is in many ways a comparable zone to Serbia circa 1914. All we need is a (real or false flagged) Gavrilo Princip, and suddenly Goldman's latest oil reco flip flop will make a whole lot of sense.

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