Fraud Legal, Rule of Law Dead.

By Tom Rhodes, 6/16/2014

For centuries fraud has been illegal. The fundamental English Common law pretty much dictated that if you sell somebody something, and then deliver something other than what you said you sold, you are guilty of fraud. If I tell you I’ll sell you a 5 lb sack of potatoes for $3 dollars, and you then take the clearly labeled 5 pound sack of potatoes and later find out it had 5 lbs of rocks you have a clear case of fraud, and could win compensation for the fraud in court. Simple enough principle and everybody agrees advertising and selling potatoes and delivering rocks is fraudulent and illegal and actionable.

Unless of court you’re a bank. The rule of law no longer applies to banks. It is now legal for banks to falsely represent their products to consumers. Goldman Sachs Group Inc. (GS) won dismissal of a suit over $450 million in residential mortgage-backed securities, with a New York judge saying that the firms that bought the bonds should have done more research beforehand.

State Supreme Court Justice Charles Ramos dismissed the claims against Goldman Sachs today, saying the investors only reviewed data presented in offering documents for the securities and never asked to review files for the underlying loans.

“The true nature of the risk being assumed could, admittedly, have been ascertained from reviewing these loan files and plaintiffs never asked for them,” Ramos wrote.

In no uncertain terms judges have ruled that it is perfectly legal to present someone with a fraudulent document claiming to be selling them a pig in the poke, if you don’t actually look in the crate to see that there is a dead cat, and not a live pig in there, it's your fault.

Singlehandedly Judge Ramos has destroyed the loan security market. You are now responsible for checking every single loan that Is part of a mortgage security to ascertain the risk. The bank offering the security is allowed to legally present you with a fraudulent document that doesn’t reflect the actual risks of the loans making up such securities.

Imagine if food companies could legally tell you that the ground beef you were buying was USDA certified and inspected, and sell you rotten mutton instead. If you didn’t check the actual inspection certificate for that lot and compare it to USDA documents, you couldn’t sue for fraud.

Imagine ordering a computer from Amazon online, you purchase a unit advertised to have a Pentium i7 processor and 8GB of ram, and a 2TB hard drive, when you open the box you get an 4.77Mhz XT with an 8088 processor, a single floppy and 256K of ram. Then you find out you have no legal recourse, can’t return it, and can’t sue you didn’t verify that the components in the box where what was promised. That’s the new standard for Banking.

If you have an IRA, or retirement fund that has any money in financial securities, you can be legally fleeced because the banks have no legal requirement to be honest in their holdings, and if you or your broker doesn’t verify the validity of all the details in any prospectus provided independently, you have no recourse.

Game over people, banks are exempt from the law, just like congress. We no longer live in a nation of laws, but an oligarchy ruled by money changers and political hacks. Now that you cannot get justice from the government, the result will be bad. Real bad. To have justice you will be forced to seek it yourself. Just as if you purchase an ounce of pot and get an ounce of oregano, you can’t go to police. Now if you get a bad prospectus and the bank takes your life savings, you can’t go to the FCC or police. So like drug dealers and users, if ripped off you have two choices, accept being ripped off and write off your loses or seek justice on your own. Drug dealers often die violently because they ripped somebody off. Bankers fraudulently take too many people’s money and the courts and government don’t let them get away with it, and they too might be treated like a drug dealer selling oregano as pot. When enough people lose their life savings and their homes because bankers are legally allowed to present fraudulent documents, and those people have no recourse, you will see violent repercussions. Justice in the USA is looking more and more like the third world; justice depends on who you know and your political status not the rule of law.