Mark McHugh

I’m no Harry Markopolos either…(Me and the SEC)

In Open Thread on Wednesday, February 18, 2009 at 12:18 am

I’m trying to put a piece together that details my thoughts on  Harry Markopolos.  He is the stuff American heroes are made of.  If you haven’t read his 2005 report on Bernie Madoff to the SEC, it can be found here: http://www.scribd.com/doc/9231188/MadoffSECdocs20081217 .  I find it unfathomable that the SEC would ignore such a detailed analysis.  These useless cowards were handed a smoking gun on a silver platter and what did they do?  Tossed it in the trash saying, “another tin-foil hat wearing conspiracy theorist”.  Why should any of them be allowed to keep their jobs?  Or the money they were paid, for that matter?

I got no answers for you, people.  Just another disgusting story of sleazebags entrusted to protect the public looking the other way.  My own.

(There should be a “read more” button somewhere down there…….)

Notes: In late 2006 and early 2007, the subprime mortgage market began unraveling at an unbelievable pace. As New Century Financial, Novastar and others imploded, I went searching for the next dominoes to fall.  What I found was that Countrywide Financial Corp (the country’s biggest mortgage lender) appeared to have already hit the iceberg.  What made Countrywide unique was that their CEO (Angelo Mozilo) had been shoveling money out the door at a fevered pace for the last two years.  In either January or February (I’m not sure which), I wrote the SEC an informal inquiry asking, “DON’T YOU FUCKING SEE THIS!!!!!”  They replied, “WE DON’T ANSWER TO YOU, ASSHOLE!”

After digging around a little more, I learned about the SEC’s Bounty Program, so I decided it couldn’t hurt to ask…  Keep in mind, that the internet was already buzzing about problems brewing at Countrywide (and Mozilo’s selling).  So I slapped together my case and sent it off, hoping that just maybe I would be the first (and get that 10% reward).  I’m a big fan of money, but an even bigger fan of justice.  The bottom line was I wanted this scumbag in jail.

What follows is what I sent the SEC, and it’s pretty Crayola, especially compared to Markopolos’ work, but the truth was there:

To:
Office of the Secretary Securities and Exchange Commission
100 F Street,
NE Washington, DC 20549-9303
From:
Mark McHugh

March 7, 2007

Application for Award of a Bounty

Insider trading – selling a security, in breach of a fiduciary duty or other relationship of trust and confidence.  Pursuant to Subsection 21A(e) of the Securities Exchange Act of 1934.

Security involved – Countrywide Financial Corp. (NYSE:CFC)

Individual involved – Angelo Mozilo (CEO and Chairman)

Amount involved – $298,000,000

Time period – 03/18/2005 to Present

Description –

The timing and Volume of Mr. Mozilo’s insider trading clearly indicate that he was fully aware of the consequences of the predatory lending practices that Countrywide Financial Corp and other lenders have been engaged in.   He has chosen to cash-out, knowing that his investors, the U.S. Government and the American people will all pay dearly for many years to come for his corrupt and irresponsible lending practices.

Countrywide Financial is the nation’s biggest mortgage lender.  It set the lending standards that created the housing bubble whose bursting is just beginning now. Angelo Mozilo is well aware that his company is not solvent and based on values of loans that only a fool would believe would be repaid. Yet, for years Mozilo and his company continued to make those loans, refinance them and drive the debt levels higher and higher, without conscience.

His first crime was the predatory lending practices that will drive thousands, if not millions into bankruptcy, at great expense to U.S. taxpayers.

The second crime is profiting so handsomely from it in the form of Insider Trading.

You have the power to stop it now.

Make no mistake, Mozilo’s actions are criminal and he will continue to cash out until he is stopped, with no regard for anyone but himself.

Two final points; Recent actions of Countrywide Financial Corp. have included the purchase of CCM Futures and Countrywide’s transition from a National Bank to a Federal Savings Bank, governed by the Office of Thrift Supervision. Given the nature of futures trading, I suspect that Countrywide may try to mask problems by engaging in higher and higher risk transactions. I am also concerned that the OTS may be a less stringent entity, that will allow Countrywide to deepen the national crisis that they have created. I don’t know enough to say that these actions are criminal or not, but to me they seem suspicious.

I would very much like to be informed of any inquiries or actions that the SEC may take. Please feel free to contact me.

Sincerely,

Mark  McHugh

More notes:  The day before I mailed this Countrywide CFO Eric Sieracki said this:

  • If you’re a monoline subprime lender, this is a dark time for you.
  • We’re a top-conditioned athlete, and I would suggest the future present value of this pain felt today is greater than stumbling along at the status quo.  Source

I guess the geniuses took his word over mine.  I’m no Harry Markopolos, but I think I can relate to how he must feel.

So, Fuck You, Eric.  Fuck You, Angelo.  But I save the biggest FUCK YOU for the useless, dickless, traitors at the SEC.

  1. Just wanted to say that I read your blog quite frequently and I’m always amazed at some of the stuff people post here. But keep up the good work, it’s always interesting.
    See ya,

  2. Thank you very much, Robert.

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