Justia Banking Opinion Summaries

Beginning in 2003, Schmitz convinced financial institutions and others to lend him money, ostensibly for real estate development, by stating that he was the beneficiary of a multi-million dollar trust fund whose assets were available as collateral. There was no trust; Schmitz concocted a trail of paper and digital documents, even creating a phony financial services firm (with a website and virtual office space), and filing suit against fictitious employees of the (non-existent) firm claiming mishandling of the trust. Schmitz obtained more than $6 million from seven banks and two additional lenders. He used about half to pay off previous lenders, and the rest for personal expenses. Schmitz pleaded guilty to mail fraud affecting a financial institution, 18 U.S.C. 1341. Because Schmitz began the charged fraud in 2003, while on supervised release in connection with a prior state conviction, the advisory Guidelines range was 87 to 108 months in prison. The court imposed an 87-month sentence. The Seventh Circuit affirmed, rejecting arguments that “factor creep” in the Guidelines has inflated beyond reason the sentencing range for white collar frauds, particularly for someone of Schmitz’s age (60) and health and concerning the timespan of the fraud. View "United States v. Schmitz" on Justia Law

The U.S. Commodity Futures Trading Commission served administrative subpoenas on Worth, a precious metal wholesaler, Mintco, a precious metal dealer, and DSD, a depository that stores precious metals, seeking documents relating to purchases and sales of precious metals, in connection with its investigation into whether those companies violated the Commodity Exchange Act, 7 U.S.C. 1. The companies handed over the requested documents, but redacted the names and contact information of the individual customers, retailers, and intermediaries, asserting that they (the companies) were covered by the Right to Financial Privacy Act, which requires that customers of a “financial institution” be given notice and the opportunity to object before any disclosures, 12 U.S.C. 3401, 3402(2), 3405. The district court held that the RFPA does not apply to the companies. The Seventh Circuit affirmed, finding that the nature of the businesses is readily distinguishable from that of the other entities listed in the RFPA’s definition of “financial institution.” View "Commodities Futures Trading Comm'n v. Worth Bullion Grp. Inc., " on Justia Law

Harris was a registered representative with an affiliated broker of MetLife and sold insurance, annuities, and other financial products. Investigations by the Illinois Securities Division, MetLife, and the IRS revealed that for almost eight years, Harris had been diverting client funds, using deposit and accounting methods that substantially departed from MetLife’s standard practices. She manipulated software to generate account summaries that falsely displayed the investments that her clients intended to purchase. Harris received $10,938,986.58 in client funds from more than 50 but fewer than 250 clients, reinvested $4,055,945.73 on the clients’ behalf, and used the balance for personal purposes. MetLife settled with clients who suffered a loss, paying more than $7 million. Harris pled guilty to mail fraud, 18 U.S.C. 1341 and money laundering, 18 U.S.C. 1957. The court’s sentencing calculation included addition of 18 offense levels for a loss in excess of $2.5 million, four levels for the number of victims, two levels for sophisticated means, for a total offense level of 35. The final guideline range was 168 to 210 months; the court sentenced her to 210 months in prison plus $6,812,764.98 in restitution. The Seventh Circuit affirmed, rejecting an argument that the court erred in counting married couples as two separate victims. View "United States v. Harris" on Justia Law

Plaintiffs sued U.S. Bank after the Bank enforced its rights under a revolving credit agreement on which plaintiffs failed to make timely payment. The district court granted summary judgment for the Bank, ruling that plaintiffs, by signing forbearance agreements, released all claims against the Bank, and rejected the contention that these agreements were void because of duress caused by an alleged forgery. The alleged forgery was immaterial to the claims because plaintiffs failed to pay the loan by the maturity date, and the Bank was entitled to enforce its rights under the revolving credit agreement. The court agreed with the district court that the alleged forgery was immaterial and affirmed the judgment. View "Meyer, et al v. U.S. Bank National Assoc." on Justia Law

In 2009, Epling purchased a manufactured home, borrowing funds from Vanderbilt secured by a security interest in her manufactured home. Epling resided in Magoffin County, Kentucky. Vanderbilt filed an application for first title and an application for a title lien statement in Bell County, Kentucky and later filed the Certificate of Title for the manufactured home, which listed Vanderbilt’s lien, in Bell County. In 2010, Epling filed a voluntary Chapter 7 bankruptcy petition. The trustee initiated a strong-arm proceeding to avoid Vanderbilt’s lien on the manufactured home, under 11 U.S.C. 544, because the lien was not properly perfected under the Kentucky law. The bankruptcy court granted the trustee summary judgment, concluding that Vanderbilt had failed to perfect its lien because it had filed the required title lien statement in its county of residence, rather than in Epling’s county of residence. The district court and Sixth Circuit affirmed. View "Vanderbilt Mortg. & Fin., Inc. v. Westenhoefer" on Justia Law

This is an adversary proceeding arising out of the bankruptcy of debtor (Derivium). Plaintiff (Grayson), assignee of the Chapter 7 bankruptcy trustee, appealed from a district court judgment affirming the bankruptcy court's decision to grant summary judgment for defendants (Wachovia). The court concluded that the district court did not err in affirming the grant of summary judgment for Wachovia on Grayson's Customer Transfers claim; summary judgment for Wachovia on Grayson's Cash Transfers claim; the bankruptcy court's determinations that the stockbroker defense applied to commissions; and the bankruptcy court's ruling that in pari delicto barred Grayson's tort claims against Wachovia. View "Grayson Consulting, Inc. v. Wachovia Securities, LLC" on Justia Law

Respondent credit union sought to foreclose on the homestead that Appellant and her husband (Husband) owned. The district court granted summary judgment to Appellant after concluding that the mortgage Appellant signed with Respondent was void under Minn. Stat. 507.02 because it was not also signed by Husband. The court of appeals reversed, concluding that the mortgage was valid because Husband had quitclaimed all of his interest in the homestead property to Appellant before the mortgage was executed. The Supreme Court reversed, holding that the mortgage signed by Appellant in favor of Respondent was void because (1) the mortgage at issue here did not meet any of the statutory exceptions to the signature requirement in section 507.02; and (2) Husband's quitclaim deed did not constitute an explicit waiver of his rights under the homestead statute. View "Marine Credit Union v. Detlefson-Delano" on Justia Law

In an attempt to avert the foreclosure of her home, Plaintiff sought to modify the terms of her mortgage pursuant to the Home Affordable Modification Program (HAMP), a federal initiative that incentivizes lenders and loan servicers to offer loan modifications to eligible homeowners. When Plaintiff's efforts did not result in a permanent loan modification, she sued Wells Fargo Bank and American Home Mortgage Servicing, alleging that their conduct during her attempts to modify her mortgage violated Massachusetts law. The district court dismissed Plaintiff's complaint for failure to state a claim. The First Circuit Court of Appeal (1) affirmed the district court's judgment as to the dismissal of Plaintiff's claims of breach of contract, breach of the implied covenant of good faith and fair dealing, and intentional and negligent infliction of emotional distress; and (2) vacated the dismissal of Plaintiff's other breach of contract claim, Plaintiff's unfair debt collection practices claim under Mass. Gen. Laws ch. 93A, and her derivative claim for equitable relief. Remanded. View "Young v. Wells Fargo Bank, N.A." on Justia Law

Appellants, holders of senior notes issued by Washington Mutual - a failed bank - sought to intervene in litigation between Deutsche Bank, the FDIC (Washington Mutual's receiver), and J.P. Morgan Chase. The district court denied intervention under Rule 24. The court concluded that appellants lacked Article III standing and affirmed the district court's denial of intervention. View "Deutsche Bank National Trust v. FDIC, et al" on Justia Law

The United States District Court for the Northern District of Georgia certified three questions regarding the operation of the State's law governing non-judicial foreclosure to the Georgia Supreme Court. After careful analysis, the Georgia Court concluded that current law did not require a party seeking to exercise a power of sale in a deed to secure debt to hold, in addition to the deed, the promissory note evidencing the underlying debt. The Court also concluded that the plain language of the State statute governing notice to the debtor (OCGA 44-14-162.2), required only that the notice identify "the individual or entity [with] full authority to negotiate, amend, and modify all terms of the mortgage with the debtor." This construction of OCGA 44-14-162.2 rendered moot the third and final certified question. View "You v. JP Morgan Chase Bank, N.A." on Justia Law