by Melinda Pillsbury-Foster
“The
trade in derivatives, using home notes, was designed as a Ponzi
scheme. Excel knew it. Cadwalader, Wickersham & Taft (CWT), knew
it. My fellow junior associates laughed at me, senior associates got
mad at me, and the senior partners ultimately asked me to resign or
be fired when I wrote repeated lengthy memoranda explaining this out
to them.” - Charles
Lincoln, III, PH.D., Harvard, J.D., University of Chicago, School of
Law
Who
is Charles Lincoln, III?
In
October, 1993, Charles Lincoln, III began work as an associate at
Cadwalader, Wickersham & Taft (CWT). He had just completed a
judicial clerkship for Kenneth L. Ryskamp, U. S. District Judge,
Southern District of Florida. During his clerkship with Judge
Ryskamp, Lincoln had planned, coordinated, and framed the jury
questions for a very large securities fraud trial in Palm Beach
against Alan B. Levan’s Florida-based BankAtlantic Bancorp and
Subsidiary Bank Atlantic Financial Company (BAFCO), which were
heavily involved in Florida Real Estate from 1952-2011.
What
he was about to learn, and challenge, would change the course of his
life, from one of privilege to destitution.
In
many ways, Lincoln might have appeared exactly the kind of associate
who could be expected to make partner rapidly. Ambitious, bright,
and energetic, CWT hired him because he received top law school
grades in Securities, Antitrust, and Banking Law, as well as for his
clerkship experience in Securities & Banking cases in the post-S
& L Collapse period in Florida. He had also been President of
the Environmental Law Society at University of Chicago, School of
Law.
In
law school, he had become intrigued by the role of securities in
establishing, maintaining, and shaping the global-elites of the 20th
century. The complexities of hierarchical and socio-political
structures had been his greatest interest in Anthropology &
History at Harvard.
In
his first month at CWT he turned in 393 billable hours wildly
exceeding any expectations. First year associates are expected to
bill at least 2000 hours per year, Lincoln managed to do this in less
than six months. At Cadwalader, Lincoln aspired to a professional
specialization in securities litigation, fraud, shareholder’s and
directors’ relations, rights and obligations, general agency and
relationships of fiduciary duty.
Lincoln
had taken up law as a second career after a decade as a working
archeologist in Mexico & Central America, during which time he
wrote a doctoral dissertation “Ethnicity & Social Organization
at Chichen Itza, Yucatan” at Harvard’s Peabody Museum. His
dissertation resulted from a project he directed in his 20s, funded
by the National Geographic Society, Harvard’s Peabody Museum of
Archaeology & Ethnology, and private donors such as Doris
Zemurray Stone and novelist James A. Michener.
As
an archaeologist, Lincoln had become frustrated, acutely aware of
problems mounting in the world, which originated in finance.
Determined to use law creatively as a force for positive change, he
enrolled at the University of Chicago, School of Law. At the school,
he served as President of the Environmental Law Society (ELS),
presiding on a year-long symposium at the Law School in 1990-1991,
concerning oil spills in the immediate wake of the Exxon Valdez
disaster of March 24, 1989.
Raised
as the grandson, and effectively adopted son, of a wealthy
petro-chemical engineer & military supplier in Highland Park,
Dallas, Texas, Lincoln was not a stranger to the better addresses in
New York. The welcome dinner held at the Waldorf Astoria for the
twenty associates hired at the same time, of which he was one, did
not impress him. Cadwalader, Wickersham, & Taft, though claiming
to be the oldest, founded in 1792, the same year as the New York
Stock Exchange, was by no means the largest.
Lincoln
knew Cadwalader’s history and greatest claim to fame and power.
This is its status as primary law firm to the Bank of New York
(BNY), now BNY-Mellon, founded in 1784 by Alexander Hamilton, 8 years
before Cadwalader opened its doors under a different name.
The
long relationship between the oldest bank and the oldest Wall Street
Law Firm include Cadwalader’s role in setting up BNY to be the very
first law firm to be traded on the NYSE. Cadwalader’s historical
policies have consistently, matched and supported those of the BNY
and the thinking of Alexander Hamilton.
Cadwalader’s
flagship office was then at 100 Maiden Lane, in New York 10038, close
to the heart of the financial district in New York.
Having
been hired on for Cadwalader’s litigation department, Lincoln
encountered a department which was essentially inactive in 1993. The
only the only active cases involved municipal defense to voting
rights act cases in California.
Even
the litigators, in 1993, were all working on one project, one
particular project which was shrouded in great mystery and secrecy.
The
Excel Mortgage Project
Instead
of litigation, Lincoln along with all other first year associates,
were temporarily to work with the “Structured Finance Department”
on preparing the registration statement of Excel Mortgage. Lincoln’s
role was to review and assess a series of some 1500 Arizona
residential properties in relationship to state and federal
environmental law and geographic issues, such as cultural resource
management, and other points relating to the entire history and
possible condition and liabilities of these properties.
The
1500 or so properties, subject of his study, were earmarked as assets
being “deposited” into the Excel Mortgage Bond Fund, along with
promissory notes originated by a number of creditors on homes
conforming to a certain size and value profile, but having no other
relationship. These were not part of the same communities, not part
of a single development project, not built by a common builder, or
anything else. This struck Lincoln as strange. Why “pool” all
these unrelated properties together? And would be in the completed
“pool?” Why was the Bank of New York underwriting this project?
Enter
the Securitized Derivative
Excel
Mortgage, a highly valued client of CWT was about to become part of
history, doing something that had never been done before: registering
a bond for sale to the public, which bond was based on pooled notes,
a hybrid of debt and equity interests in and contingent claims to
realty. This type of financial instrument had never before been sold
to the public, though it had existed for about 25 years in the
“private placement” market.
Lincoln
was unwittingly participating in the first initial public offering
(IPO) of a bond, a debt instrument, derived in part from promissory
notes, 'debts,' and in part from contingent pledges of title,
'secured equity,' in residential real estate.
Secutitized
derivatives were being born at 100 Maiden Lane.
Bernard
Madoff, who founded the NASDAQ when he was 33, was a prominent client
of CWT, walking the floors of Cadwalader late at night.
The
entire staff of CWT, underwritten by the Bank of New York, supporting
Excel, were charged getting these new-fangled “derivative”
instruments past examination by the Securities & Exchange
Commission (SEC).
This
was an arduous, and expensive task, necessitating a “lint-picking”
review, before these 'derivative instruments' could be packaged
under the name of Excel Mortgage and offered both on the NYSE and
NASDAQ. An SEC Registration Statement is an application for Federal
Blessings affirming investing in a certain stock, bond, or “other
instrument or obligation” is a reasonable investment for an average
investor to make.
Supposedly
“sophisticated investors” can do whatever they want to do, so
long as it’s not expressly fraudulent or otherwise illegal. But
the average grandmother investing for her grandkids’ college needs
Federal Protection. Like “Social Security”, the concept of
“Security” in the “Securities and Exchange Commission” is
essentially a matter of “Trust us, We’re the Government.”
SEC
Registration Statements require, prior to sale of any debt or equity
instrument to the public, disclosure of all a companies’ assets and
liabilities along with the qualifications of its officers and
directors, and more.
Nobody
outside of the law firms who prepare such things and SEC staff, would
ever read this, but preparing the registration would bring CWT
millions of dollars.
Excel
Mortgage, however, was not selling stock in itself as an enterprise
or an entity: it was selling a pooled collection of utterly unrelated
and unconnected and barely similar promissory notes with contingent
interests in, and access to, equity ownership of real property owned
by 1500 different people and subject to 1500 separate notes and
mortgages.
1993
- Anomalies, and Questions, Emerge
Who
was to supervise its operation after “Registration”? What
coherence did this “enterprise” have ASIDE FROM the Registration
Statement? Would anyone ever recognize it as a “business?” If
so, how and why? Lincoln was puzzled and perplexed, and not
satisfied with any of the answers he was getting.
The
SEC did not appear to inquire into post-issuance management or
maintenance of the pool of assets. Once “securitized” the notes
would still be handled by individual originators or assigned to
servicers. Lincoln asked “what was there left to be assigned or
handled once the notes and mortgages were pooled?”
The
SEC is charged with protecting small individuals and the corporate
investor.
The
SEC is expected to be involved in examining and making inquiries
about a company’s claims for potential and predictions of earnings
or profitability.
On
what opinion or data would these be based for the Excel Mortgage
Pool, since there weren't any?
The
opinions used were based on the “normal statistical performance of
similarly credit rated and similarly valued mortgages in similar
markets from studies of a group at MIT Sloan School of Management
headed by a then no-name professor Frank J. Fabozzi. Fabozzi, with
close ties to the Bank of New York, was also among the occasional
Night walkers at Cadwalader.
The
process of preparing an SEC registration statement is a gold-mine for
lawyers inclined to highly detailed work. Such a process for
registration can normally require Lincoln said, over a thousand
individual revisions. The Excel Mortgage registration would be
subject to over 2,000 revisions, but in all this there was still no
attention given to claims of ownership, transfer of title, the laws
of agency and fiduciary duty of managers, any of the concerns which
normally plague the corporate world and frame the concern of SEC
examiners and securities lawyers.
What's
In It for CWT?
The
careers of young associates, and even older partners, at firms such
as Cadwalader, Wickersham, & Taft, Chadbourne & Park,
Sullivan & Cromwell, or Skadden, Arps, depend upon work measured
in billable hours. Cadwalader had a “billing goal” of multiple
millions of dollars for the Excel Mortgage registration project.
Lincoln
recalls three relevant details:
First,
the firm was never able to reach it’s own goal of billable hours by
the time the project was complete.
Second,
the firm sent constant “internal memoranda” by e-mail to all
employees, down to the lowliest legal secretaries and paralegals, to
work harder and BILL MORE HOURS. It was simply inconceivable that
Cadwalader might have to refund any part of enormous retainer paid
for the Excel Mortgage, SEC Registration Statement project. The
money for this had all been advanced by BNY, who counted on
Cadwalader to do the job which needed to be done.
Third,
the practical purpose of any billable hours stood quite above and
beyond any possibility of doubt or question. In fact, any and all
billings, however described, so long as they were assigned to the
Excel Mortgage Registration Statement Account, were welcomed.
Lincoln
was therefore able to unleash his curiosity, delving late at night
after hours into issues which ranged far, far afield from the
environmental history, condition, and culturally or historically
significant use or contents of the subject properties.
Despite
some losses during the 2007-2008, CWT was in 1993-1994, and remains
today, the top firm representing the creators and implementing the
designs of “structure finance and derivative securitization”
world wide. Lincoln wanted to understand what he was doing, and what
he was involved in creating. The more he found out, the more
troubled he became.
As
an entry-level associate at Cadwalader Lincoln received his own
office and secretary and paralegal. Little time was spent interacting
with others in the office. A quick question might be asked but
friends did not come quickly. Each associate knew what mattered was
the hours billed, and friendly socialization was hard to itemize even
on the Cadwalader charts. Hanging over the heads of all new
associates was the goal of “making partner.”
As
an anthropologist, Lincoln saw immediately the subculture of the law
firm had its own standards, values, and mandates. The firm had high
standards for dress which included ties which remained in place all
day, regulations for tie clips or tie pins and cufflinks and belts
and, of course, shoes, whether white or “normal.”
Standards
for women included skirts below the knee and mandated the length for
sleeves and the height of necklines and collars. Even the length of
hair, for women, was described and outlined in the firm guide,
although one paralegal from the litigation department was granted a
special exemption, for cause. Known to and noted by everyone in the
firm, for his ponytail and paisley shirts, the associate was hired
from SDS in California as “our eyes and ears to the lower classes,”
as the senior partners consistently and uniformly described him.
Lincoln,
as an undergraduate, had twice been voted, “best dressed man on
campus”, but the whole Cadwalader atmospheric ethos of bloodless
conformity, as noted above, was for him one of stifling suffocation.
The
anomalies which began to intrude on Lincoln's consciousness during
his late hours trying to understand the “entity” being sold
almost as if it were a company or entity, without actually being one,
became an obsession. At first, this lead only to more billable
hours, but the trip down the rabbit hole became increasingly
disconcerting.
All
questions of real value or reasonable expectations, lead the inquirer
to the Bank of New York’s Heart, ending any questions.
The
Disconnect between Law and Derivatives
Lincoln’s
law school classes, under the University of Chicago’s Andrew M.
Rosenfield, William Landes, Geoffrey Parsons Miller, and Richard A.
Posner, and from his further and ongoing research as a Law Clerk with
Ryskamp and now at Cadwalader, had considered the question of real
value and reasonable expectations.
Issuing
and selling securities, debt or equity, takes place when a company,
or group of people who have control over assets they planned to use
to make money, or with which they were already doing something
generally profitable, or wanted to raise new capital and/or liquidate
their ownership and interests in an ongoing and successful venture.
This
did not come close to describing what Bank of New York had
underwritten for Cadwalader to prepare for Excel Mortgage.
This
SEC Registration Statement gave birth to new type of
“debt-equity-derivative debt instrument” which had none of the
elements or characteristics of a traditional enterprise at all. It
was PAPER MADE FROM PAPER, SECURED BY PAPER.
Indeed,
the Excel Mortgage Bond, which was soon to be popped onto the market
with an SEC certification of Federal conformity was a creation of the
lawyers, by the lawyers, for the lawyers.
As
one of the most senior associates, now firm Chairman, Christopher
White explained to Lincoln when he asked him, “Who will own the
interests in these notes once they are securitized?” He grinned
boyishly from ear-to-ear and said, “we will, because everyone will
have to pay us to tell them.”
Without
any unifying manager or common owner for these properties, the pool
of notes struck Lincoln as
like nothing so much as “res
nullius”
in Ancient Roman Law---the legal category of “property belonging to
no one”, e.g. virgin forests, wild beasts and undomesticated fur
and game animals of every kind, the un-owned and un-ownable creatures
of the deep.
Excel
Mortgage was going to pool all these “derivative” real estate
mortgage interests, whose only commonalities marking them as similar
were the price, promissory note, range, size and “single-family
home-residential” nature of the properties, and the credit or FICO
scores of the owners.
Having
“pooled” these “cherry picked” assets, Excel was going to
create a strange creature without an owner until either default or
foreclosure moved someone to homestead these unownable notes back to
control and “ownership” again.
In
essence, the concept was, “everything belongs to everyone in
common” and “debt is not individual but collective.”No one owes
his or her debt to any person, but everyone owes it to everyone to
pay. This concept seemed, even to Lincoln in 1994, strangely
reminiscent of Aldous Huxley’s “Brave New World.”
The
Excel Mortgage Bond to be securitized reflected an artificial
“derivative” interests in a non-coherent, uncontrolled mass of
wealth, which could and would have to be tamed individually, just
like hunting the wild game of the woods.
There
would be only a pretense of relationship between the notes originated
and the notes collected upon.
There
was no one to oversee the transfers, no one to audit the exchanges of
values; there were quite simply no responsible parties anymore than
anyone can take charge of wheat chaff thrown into the wind or the
by-products of a paper mill dumped into a river, yet these
“derivative by-products” were being STRUCTURED into something
said to have value.
Around
1500 or 2000 properties had been collected together and placed in a
basket or pool. But no single plan of real estate development or
construction or sales was involved, nor was any contemplated.
Nothing joined these properties as a class. Most were not new, but
merely resales.
Raising
the Issues
Lincoln
dug in further, producing and circulating to all his fellow
associates and the senior partners at Cadwalader his own memoranda:
lengthy studies and analysis on issues such as the fiduciary
obligations in the Law of Agency.
Fiduciary
responsibility of issuers of securities to purchasers, holder in due
course doctrine, implied covenants of good faith and fair dealing
between parties to a contract, privity of contract itself, and
commercial paper doctrines such as endorsement and ownership as
holder, and the comparative rights and priorities of “naked”
holders vs. “perfected” holders.
As
Lincoln’s months stretched out among the whirring circular brushes
which polished the green and white marble floors of CWT, he spent
more-and-more time with the partners of real estate department, which
seemed to understand his worries and concerns better than others,
certainly better than the Fourth or Fifth year associate in charge of
coordinating the Excel Mortgage Project who kept explaining “this
is my road to partner; if I can finish this and make it happen, I
won’t have to worry about how to live on these lousy six figure
salaries anymore, I’ll finally be making millions, and that’s why
we all came here, isn’t it?”
Questions
Find Answers
Since
it was not why Lincoln had arrived at 100 Maiden Lane this presented
a dead end for him.
The
real estate connection, and an aborted plan to open a CWT office in
California, permitted him to compare the Excel Mortgage project with
another, more traditional real estate development Sacramento,
California.
An
extremely prominent CWT client based in Los Angeles was complaining
and encountering major problems because of a parallel but separate
and distinct set of misapplications of the law of agency, fiduciary
duty, and obligation, also originating from the same historical
“Cadwalader Memorandum” on transfer of interests which had
triggered the explosion of derivative innovations in the securities
realm.
With
CWT acting as counsel for an old and distinguished California family
and collection of enterprises, the Ahmansons, tracts totaling several
dozen suburban “townships” in El Dorado, Placer, Sacramento,
Sutter, Yolo, and Yuba Counties had sold by the Ahmanson family to a
Japanese firm and retained an “Ahmanson Construction Group.”
The
intention was to build a resort in the area for the benefit of the
Japanese owners acting as “construction agents.”
Normally
construction is performed pursuant to agreements with “independent
contractors” who make estimates but are not obligated to continue
working if their estimated budgets prove insufficient to complete a
project. The Japanese investors were seeking to securitize all the
sales in this immense, almost unimaginable project.
Involved,
were the Bank of New York, with Cadwalader’s long-time California
based H.F. Ahmanson holding Company, parent company both to Ahmanson
Construction and the since failed Home Savings of America Bank.
The
“construction agency relationship” which Cadwalader had created
imposed devastating duties and obligations on Ahmanson. As agents,
Ahmanson Construction was obligated to use its own money to achieve
the ends of the principal, in this case the Japanese company which
had purchased the real estate but woefully underfunded the
construction of the vast tracts of homes. Ahmanson could not make a
profit or even break even. In effect, they had become slaves to the
Japanese and might never be compensated.
Lincoln,
having reviewed the facts, pointed out to Stephen Meyer, Richard C.
Field, and John McDermott, the partners most closely associated with
Ahmanson, that by not only failing to protect Ahmanson, but in fact,
selling them into quasi-slavery as agents under a contract without
guarantees of adequate funding to execute agency obligations, the
firm had made a ghastly mistake amounting to nothing less than legal
malpractice. This was a breach of fiduciary duty in and of itself.
Lincoln
was told, “This firm has a policy of doing no wrong. Therefore,
you are wrong. The firm is never wrong. You should reevaluate your
conclusions.”
This
happened in 1994, only two and a half years after the sensational
October 1991 confirmation hearings for Justice Clarence Thomas. The
Paula Jones allegations against the new President Clinton, were
beginning. “Sexual harassment” became a great boogie-man haunting
law firms all over America.
Consequences
are Clarified
After
reading his memorandum on the Ahmanson project, these senior partners
asked Lincoln to leave the room.
When
they called Lincoln back in, they told him, very solemnly,
“you
know you need to keep your nose clean around here. We have all
received reports that you have taken your secretary Alex to lunch
more than once and what’s more you gave Holly, the Senior Secretary
in recruitment & personnel, flowers for her birthday and
Valentines Day. So just remember: never ever do anything, anything
at all, that you would not want to see published on the front page of
the New York Times. Anything here can be, you know, and anything will
be, at the drop of a pin, because everyone is very sensitive to
questions of decorum these days, and, after all, you are a married
man.”
Lincoln
reports he did not even bother to ask how they happened to think of
this only after a three hour meeting concerning the Ahmanson contract
of construction agency, when he had never heard about any concerns of
this nature before.
At
work, Lincoln continued to pile up daunting billable hours doing
research on a growing list of issues, each going back to the
dissection of the elements of value, which were being “deposited”
into the derivative pool. He was determined to understand what was
really happening. Why were they doing this?
Confirming
what Christopher White had told him before, a Properties Department
attorney named Stephen Meyer, advised Lincoln to keep his mouth shut,
this happening shortly before Lincoln was asked to resign. Both men
had made it clear, in nearly the same words, that Lincoln should be
careful about questioning or criticizing firm's plan for transforming
the economy of the Western World, “this
is how things are being done these days. We do because we get to
charge everybody. This is how the whole world will be managed by
2020, we have a plan.”
As
Lincoln was to discover, there was a plan. A book called “Cadwalader
2020”
contained a comprehensive manifesto of how the world would be changed
by the year 2020. Unsecuritized individual debt would no longer
exist.
During
Lincoln’s entire time at CWT, the firm maintained a high level of
security over the Excel Mortgage work, work which finally involved
everyone at the firm. All who worked at the firm had to submit to a
frisk on leaving work. No papers or laptop computers or diskettes,
this still the era of 3.5 inch diskettes, were to be taken home or
removed from the premises, and no external e-mail was allowed
connecting to firm e-mail. All firm e-mail was in fact carefully
monitored.
To
entirely use up the retainer on the Excel work, Lincoln and all the
other first and second year associates found themselves in a large
conference room supervised by some of the partners pasting labels on
files.
The
partners had to review the signature pages before officers of Excel
would sign the documents, and the associates were there to prepare
and affix signature tabs, saying “sign here, Mr. So-and-So, on to
the final pages of Statement before final submission.
Lincoln
said it seemed odd to use attorney billable time to prepare,
double-check, and verify signature tabs, even on a super important
document until you considered the driving desire of CWT to maximize
their billable hours.
Billing
rates were $150.00 an hour for new associates, $60 – 80 an hour for
paralegals, and $40 – 50 an hour for secretaries. On being told
that he had failed to bill his secretary’s and paralegals’ time
for bringing him after hours meals and snacks, Lincoln asked the
senior associate in charge of organizing the Excel Mortgage Project
how much the firm billed out for the hourly operators of the
automated circular marble floor polishers which whirred seemingly
ceaselessly day and night throughout the offices. Epstein just
glared at Lincoln silently. Those hours were not billable.
CWT
was determined to drain every possible penny from the work done for
Excel Mortgage, and did. This appeared to be consistent with the Bank
of New York’s plan in financing the project in the first place.
As
Lincoln's research continued, the business plan being followed by
Excel Mortgage also emerged, in all of its complexity and disturbing
detail. The company had seen the potential to redefine a debt,
recreating it as equity, and equity can be used as collateral for
originating and extending more debt, which can be hybridized with
contingent interests in an ever expanding pyramid of debt, doubled
into equity, doubled into debt…. And again, this was the CWT-BNY
plan for perpetual inflation.
There
was quite simply no plan other than to pool and securitize the notes
to issue X millions of dollars in bonds. These would be sold on the
major stock exchanges, generating equity. The equity would be used
to extend or originate more money to the borrowing public who then
“sell” or give their new notes. This then generates more equity
through debt, a constantly pooling and production of derivatives then
sell to continue the cycle.
Ponzi
Scheme
Emerges
After
his first month of painful research, it took Charles an additional 6
weeks to figure out and map the nature of the pyramid, another 6
weeks to check his work and accept the results, and then he started
writing memoranda, one after the other, each one critiqued by other
associates or the senior partners and getting longer and longer.
His
first memorandum was entitled “The Law of Fiduciary Duty in
Agency.”
His
second was “Transfer and acceptance of instruments by endorsement
and receipt: who is responsible?”
There
were at least four others, the longest of which was over 500 pages.
Lincoln’s
conclusion was breathtakingly simple: “merger of identities
destroys the identities merged, there is no individual liability for
debt in the absence of privity of contract, and no privity of
contract without individual identity of contracting parties.”
It
was clear from the elated attitude of the Senior Partners that
designing and implementing the Excel Registration Statement, as the
first IPO of its kind, stood in their minds as their most important
contribution to western civilization, as envisioned through the world
of “Cadwalader 2020”.
Finally,
Lincoln was asked to resign, about six weeks shy of his first
anniversary. His questions and concerns had not ended and the
Partners were becoming hostile.
Leaving
with a not quite “Golden Parachute” consisting of a $50,000
severance payment, he had vocally identified a series of challenges
which the management of Cadwalader had no intention of addressing.
It was now clear to Lincoln these were not any kind of mistake or
oversight.
Lincoln’s
final memorandum at Cadwalader opined, perhaps overestimating general
knowledge of the law, “no mortgage note included in the Excel
mortgage pool will ever be lawfully collected in the event of
borrower/credit-debtor default, because the pooling of identities
obliterates individual obligations and rights, and discrete
transactions lie at the foundation of our system of contract and
debt.”
At
the meeting where he finally resigned, the Senior partners, perhaps
understanding the American public better than Lincoln, said to him,
“Who
is ever going to notice lack of privity of contract besides you?
They teach you all those archaic “Elements of Law” at the
University of Chicago, we know all about it, but nobody does business
that way anymore. The economy of the future is now, nobody cares
about endorsements and signatures anymore, it’s all going to be
electronic, anyhow.”
Lincoln
responded, “well, then, you’re going to have to change the law.”
And the masters of the CWT universe said, “Don’t let the door
hit you on your way out, we write the law, we interpret the law, we
tell everyone in America what the law means, that’s what we do.
The
Price Paid
The
next nineteen years of Lincoln’s life have been filled with
constant attacks from the legal establishment from directions and in
ways which exacted a hideous toll on him and those he loves. He has
repeatedly learned what it is to be hated, rejected, despised, a man
of sorrows and acquainted with grief. In those two decades he lost
his wife, his birth family, and his son, all his inherited property,
including several homes and a gigantic private library and personal
collections of fossils, numismatic, painted, and sculptural art, his
law licenses in three states and even his own
not-at-all-insubstantial investments.
Lincoln
notes that, after what can only be called a blessed beginning in life
with his loving grandparents supporting him, an exceptional
education, and basically a privileged and charmed first three decades
of life, his consistent pattern of loss only began when he was 33-34
years with his entry into private law practice at Cadwalader, in
what, quite simply should have been “the best of all possible
worlds.”
Left
with nothing, he refused to quit.
All
of these events began after those critical months, less than a year,
that he had spent at Cadwalader, Wickersham, & Taft.
As
historical events unfolded, parallel to his own life, his worst
projections regarding the impact of the new market in mortgage
derivatives proved to be frighteningly accurate. Lincoln began to
research how the runaway Ponzi Scheme could be halted, and reversed.
A
Solution
According
to Lincoln, for the past ten years, his life has been entirely shaped
by the mortgage crisis and its origin in securitization. The
question which, he says, drove him is how private property and
integrity of contract could restored in the face of the “New World
Order” Plan. This is the plan Lincoln first became aware from the
internal firm booklet “Cadwalader 2020,” while he was working at
CWT in 1993-1994.
Lincoln
believes such restoration is possible. The systemic fraud has not
gone unnoticed, as CWT and BNY clearly thought would be the case.
Their concern is registering through the rising wave of settlements
which are now extinguishing the cases they deem most threatening.
These cases are now settling on the courthouse steps for significant
amounts and return of the real estate, free and clear of mortgage
related liens.
Banks
understand the ominous possibilities they face if juries realize what
really happened. And today, it is not just Cadwalader. Nearly
every major financial law firm in the United States who is involved,
directly or indirectly, in the implementation, defense, or coverup of
securitization is potentially liable.
This
potential for liability makes the settlements paid out by cigarette
companies seem like chump change.
As
long as such settlements are few and remain outside the view of the
courts, the banks are safe. But the moment juries hear the facts, and
see the reality, the banks are toast, and they know it.
And
here, Lincoln said, is the leverage point from which change can be
enacted. More cases must be litigated using the facts so cases won
in the light of day can become case law and precedent. The war can
be won, but will be costly. This challange requires, along with
several lines of attack, the means for funding litigation.
One
possible solution is to solicit private direct investment in
litigation for individual cases in exchange for a share of the awards
by the jury. Another is to design an “anti-derivative derivative”
plan which bundles and pools both investments and potential awards,
allowing Americans at all income levels to invest in the effort.
For
this derivative, investors would understand both the risk and the
benefits of investing.
Lincoln's
team, they know, cannot fund its efforts as the banks do, by an out
of control pyramid scheme piling debt on equity to create more debt,
but Lincoln sees a certain symmatry achieved by using the weapons
created by the originators of the problem against them.
Either
solution, Lincoln says, lies directly in the hands of Americans. If
the money is available, litigation can go forward. He and the team
see a build out across the country, with litigation taking place in
every state as attorneys sign on and funds are available.
They
have already begun. Lincoln's team is now working with homeowners
and the currently small number of attorneys willing to litigate.
They have no illusions. They are aware they are going up against the
most powerful institutions in the world. But they also know that, if
they are successful, the crack now forming in the protections
constructed by CWT, BNY, and so many others, makes it possible to
reverse the ominous trends in the American housing market while
proving it is possible to enact accountability for a corrupt
establishment and good for the people.
If
houses now held by banks go on the market, or are returned to their
owners, the heavily inflated prices of homes will drop to its natural
market level based on supply and demand. Communities will stabilize,
as will the lives of Americans.
The
America which emerges from this crisis can be very different. No
stability will ever result from the current expectations of perpetual
economic growth relying on perpetual inflation and perpetual motion
in the market place, and the resultant social instability.
The
99% need to bring the 1% home to live with the rest of us in peace,
Lincoln says.
Given
the propensity of the legal establishment to go after activist
attorneys, Lincoln admits this will not be without risk, but public
involvement can help here, too. He remains confident, many will
step forward. They did so in 1775 and in other times of crisis in
America.
Failing
to act, he said, means abandoning Americans to the cartels and
monopolies who are responsible for what has happened to our country.
Lincoln
and other members of the team believe strongly most attorneys and
judges, when asked to make a choice in the light of day, will do the
right thing.
The
effort has already begin in New Jersey. Right now he has a case in
motion in the Garden State, just across the river from Manhattan,
where Cadwalader still holds sway at the ominously named “One World
Financial Center.”
Now,
they are looking for more attorneys who love and respect the law, and
investors who know what matters most and want to make a difference.
His website is, homeownersjustice.com.
