Inner City Reporter's Bank Beat: Mergers, Community Reinvestment Act, Antitrust, Revolving Doors

Welcome to Inner City Press’ Bank Beat. We aim to scrutinize the industry, from high to low. Our other Reporters cover Community Reinvestment, the Federal Reserve, and other beats. ICP has published a (double) book about the Bank Beat-relevant topic of predatory lending - click here for sample chapters, an interactive map, and ordering information. The Washington Post of March 15, 2004, calls Predatory Bender: America in the Aughts "the first novel about predatory lending;" the London Times of April 15, 2004, "A Novel Approach," said it "has a cast of colorful characters." See also, "City Lit: Roman a Klepto [Review of 'Predatory Bender']," by Matt Pacenza, City Limits, Sept.-Oct. 2004. The Pittsburgh City Paper says the 100-page afterword makes the "indispensable point that predatory lending is now being aggressively exported to the rest of the globe." Click here for that review; click here to Search This Site. Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere, which include bank-related topics.

Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere. Click here for a recent BBC piece on Inner City Press' reporting from the United Nations. New: Follow us on TWITTER BloggingHeads.tv Click for March 1, 2011 BloggingHeads.tv re Libya, Sri Lanka, UN Corruption by Inner City Press. Until next time, for or with more information, contact us.

March 1, 2021

After Eaze ex-CEO Pled Guilty Before Wirecard Linked Akhavan Trial Circle Subpoena OKed

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - The Source

SDNY COURTHOUSE, Feb 22 – Hamid "Ray" Akhavan and Ruben Weigand are charged with a "scheme to deceive US banks into processing in excess of $100 million for marijuana products."

On January 7, Akhavan and Weigand had a proceeding before U.S. District Court for the Southern District of New York Judge Jed S. Rakoff, covered by Inner City Press, below. Their trial starts March 1 - with Eaze's James Patterson cooperating, see below.

Now Judge Rakoff has mostly allowed the defendants' subpoena to Circle about Eaze, limiting it in some ways and by time: "Weigand hired a private investigator to initiate a marijuana purchase on the Eaze platform via Circle. See Larsen Decl., ECF No. 142. Based upon that investigator’s findings and the other limited evidence before the Court, there is reason to believe that Circle charges a customer’s debit or credit card for USD Coin in the amount of the marijuana purchase; credits Eaze for the purchase, nominally in USD Coin; converts that USD Coin back into U.S. dollars; and transfers those dollars into Eaze’s account. In essence, Circle offers Eaze USD Coin as a fig leaf separating the issuing bank from Eaze. But -- and here is defendants’ key allegation -- Circle does not hide what it is doing from the banks. When Weigand’s private investigator conducted a test buy, her credit card statement included the word “Eaze” in the description of the charge. The private investigator’s bank had in its possession information tending to show that this charge related to Eaze. Akhavan and Weigand observe that anyone who Googles Eaze -- or anyone familiar with this case -- knows that Eaze is a marijuana marketplace. Given the ease with which a bank could figure out that Eaze sells marijuana, and the alleged quantity of marijuana sales consummated by Eaze (tens of millions of dollars annually), defendants argue that a juror could infer that banks must know what Eaze and Circle are doing.

The fact that banks nevertheless process such transactions, like the private investigator’s test buy, could arguably support an inference that the banks would not have cared about the misrepresentations that the defendants allegedly made. To be sure, defendants’ argument requires several inferential steps, which a jury is free to make or to reject. All the Court must here decide is whether defendants’ subpoena seeks relevant information on this topic. The Government principally argues that the victim banks have policies prohibiting use of their credit and debit cards to make illegal purchases and that whether banks are effective at enforcing those policies is beside the point because a victim’s negligence or ineptitude is no defense to bank fraud. This is true as far as it goes, but it misunderstands defendants’ theory. They intend to argue not that banks are lackadaisical in their enforcement, but rather that banks do not care about whether their cardholders are purchasing marijuana (at least in states where that is legal). If defendants uncover evidence sufficient to support such an inference, then, at least arguably, a juror might find that the alleged misstatements did not have a natural tendency to influence or a reasonable likelihood of influencing a bank’s decision whether to process Eaze transactions.4 For these reasons, the Court finds that the subpoena seeks relevant materials." Game on.

February 22, 2021

In Citibank Wire Transfer Case Money Does Not Have To Be Returned Judge Furman Rules

By Matthew Russell Lee, Patreon Song Podcast
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, Feb 16 – As Citibank tries to recoup the money it wired out on August 11, 2020, the virtual / Zoom trial began on December 9 before U.S. District Court for the Southern District of New York Judge Jesse M. Furman. Inner City Press reported daily on the trial, below.

Now on February 16, Judge Furman has ruled that the Defendants can keep the money: "Defendants in this case — ten investment advisory firms managing entities that, collectively, received more than $500 million of the mistaken August 11th wire transfers from Citibank — contend that this exception to the general rule, known as the “discharge-for-value defense,” applies here and that Citibank is therefore not entitled to the return of its money. In December 2020, the Court held a bench trial to decide whether Defendants are correct. For the reasons that follow, the Court concludes that Defendants are indeed correct. As the Court will explain, application of the discharge-for-value defense ultimately turns on whether Defendants (or, more precisely, their clients) were on constructive notice of Citibank’s mistake at the moment they received the August 11th wire transfers. Based on the credible testimony of Defendants’ employees and the documentary record, the Court concludes that they were not. Taken together, the evidence shows that the entities believed — in good faith and with ample justification — that the payments they received were prepayments in full of the Revlon loan. The real explanation for the payments — a banking error of perhaps unprecedented nature and magnitude — understandably did not occur to them until, nearly a day later, Citibank itself realized the error and sent notices demanding the money back. Because the discharge-for-value defense applies, the Court holds that Citibank is not entitled to its money back. Instead, Defendants’ clients are entitled to keep the money. Accordingly, and for the reasons that follow, judgment will be entered in favor of Defendants." Full order on Inner City Press' DocumentCloud, here. Podcast here

Here for now some of the Day 1 blow by blow.

And Day 2 documents / Defendants exhibits zipped on Patreon here, one on DocumentCloud here, saying "Please retain the funds received 8/11 into Battalion CLO VIII Ltd. on account of the Revlon Term Loan 2016 pending further instruction. Please do not book, and carry the funds as a cash break for the time being."

Hear, for now, this song.

On Day 6 and last, there were closing arguments and questions, and this: Judge Furman begin with questions about the Banque Worms decision. There's some talk about getting a phone charger. Counsel classily presses on. It's not easy being a court reporter. Judge Furman: Page 47 of Plaintiff's brief argues the District Court erred...

Closing arguments still going. Lot of talk of imputed knowledge; Judge Furman asks if there's any excited utterance showing the defendants knew something was wrong, even before Citibank notified them. Judge Furman also asks why Citibank didn't get a grace period

OK - it's over. Judge Furman: It was a well-tried case, but I hope the industry finds a better way of dealing with this, even if it was a black swan event. I will get you a decision as quickly as I can.

February 15, 2021

Hamid Akhavan For Pot & Wirecard Trial To Be Freed With Armed Guards As Patterson Added

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - The Source

SDNY COURTHOUSE, Feb 11 – Hamid Akhavan and Ruben Weigand are charged with a "scheme to deceive US banks into processing in excess of $100 million for marijuana products."

On January 7, Akhavan and Weigand had a proceeding before U.S. District Court for the Southern District of New York Judge Jed S. Rakoff, covered by Inner City Press, below.

It emerged that Akhavan had been presented in Magistrates Court earlier in the day on an alleged violation of supervised release, and detained on consent. It involved a gun.

After being arrested and detained in California, Akhavan was writted to SDNY in connection with the case before Judge Rakoff. He was returned on the warrant related to the violation of pretrial release on January 7, after a December 30 arrest. His counsel Christopher Tayback of Quinn Emanuel consented to his detention without prejudice to make a future bail application.

On February 9 Judge Rakoff heard arguments on releasing Akhavan for the week or two weeks of trial, starting March 1. He said he would rule by Feb 12. Inner City Press live tweeted below.

Now on February 12, this: "MEMORANDUM ORDER as to Hamid Akhavan. The Court hereby orders that, once all custodial holds are lifted (including any imposed by the California state authorities), Akhavan shall be released pending trial on the following conditions: 1. All conditions of pretrial release in effect prior to Akhavan's arrest in November 2020 remain in effect." The order cites not Ng Lap Seng but US v. Boustani 932 F.3d 79, in which the Second Circuit affirmed denial of bail on a "fundamental principle of fairness" sounding in equal protection. But he'll be out. With his own armed guards. Guidepost?

February 8, 2021

BNP Paribas Orban Partners For Steel Alloy Bar Payments Now Traxys Intervenes in SDNY

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, Feb 3 – BNP Paribas sued Kurt Orban Partners for its alleged failure to pay for steel alloy bars that KOP purchased from Traxys North American. Now Traxys has intervened.

On February 3, U.S. District Court for the Southern District of New York Magistrate Judge Sarah L. Cave held a proceeding. Inner City Press covered it.

The Orban side has asked for more time, having had a partial change of counsel amid bankruptcy. Meanwhile, Traxys wants in on the default.

Reference was made to papers pending before District Judge Andrew L. Carter, and inquiries. A next conference was set for April 6.

The case is BNP Paribas v. Kurt Orban Partners LLC et al., 19-cv-9616 (Carter / Cave)

February 1, 2021

Manafort Lender Calk SDNY Trial Set for June 28 Some Witnesses In But With Limits

By Matthew Russell Lee, Exclusive Patreon
Honduras - The Source - The Root - etc

SDNY COURTHOUSE, Jan 27 – Steven M. Calk of FDIC-regulated Federal Savings Bank was presented and arraigned on May 23 in the U.S. District Court for the Southern District of New York for financial institution bribery for corruptly using his position with FSB to issue $16 million in high-risk loans to Paul Manafort in a bid to obtain a senior position with the Trump administration, namely Undersecretary of the Army.

On April 23 SDNY Judge Lorna G. Schofield held an oral argument, by telephone with Calk himself on the line from Chicago. Inner City Press covered it, below.

On January 26 Judge Schofield held a conference and Inner City Press covered it. It resulted in this order, docketed on January 27: ORDER [121] It is hereby ORDERED that, Defendant's motion to preclude Ms. Aguirre's testimony is GRANTED. It is further ORDERED that, Defendants motions to preclude Mr. Belanger's, Mr. Paulson's and Mr McCuthcheon's testimony are DENIED. It is further ORDERED that, the parties shall meet and confer and by February 10, 2021, jointly provide appropriate limiting instructions as to Mr. Paulsons testimony and Mr. Belangers testimony, as well as limitations on such testimony as discussed at the conference. To the extent the parties are unable to agree, by February 10, 2021, the parties shall file a letter outlining the partiescompeting proposals, the points on which the parties have reached agreement and the points on which the parties have been unable to reach agreement. It is further ORDERED that, the Governments motion to preclude Dr. Carron's testimony is DENIED. It is further ORDERED that, the Governments remaining motions to preclude certain arguments and evidence are DENIED as moot, as Defendant has not indicated he intends to make such arguments or offer such evidence, unless related to the case. It is further ORDERED that, by February 10, 2021, Defendant shall file supplemental disclosures as toDr. Carron's testimony, including those regarding Dr. Carrons projections and calculations regarding profit and loss. It is further ORDERED that, a trial in this matter is scheduled for June 28, 2021, at 10:30 a.m."

January 25, 2021

Fair Finance Watch Protests Investors Bank Bid For Berkshire Branches on Lending Disparities

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - ESPN

SOUTH BRONX, NY, Jan 19 – Even amid the Coronavirus pandemic, U.S. banks keeps seeking to merge and expand, with less and less oversight. Fair Finance Watch, with Inner City Press on the FOIA, on January 19, 2021 has filed a Community Reinvestment Act protest:

"Federal Deposit Insurance Corporation Attn: Frank Hughes, Regional Director and Robert P. Cordeiro, Scott D. Strockoz 350 Fifth Avenue, Suite 1200 New York, NY 10118-0110

Re: Timely First Comment on Application by Investors bank to Buy Branches from Berkshire Bank Dear Regional Director Hughes and others at the FDIC:

This is a timely first comment opposing and requesting an extension of the FDIC's public comment period on the Applications by Investors Bank to acquire branches from Berkshire Bank - and close some.

The applicant Investors Bank in the New York in 2019 made 272 home loans to whites and only 11 to African Americans. Its denial rate for African Americans was more than double than for whites.

In Pennsylvania in 2019, Investors Bank made 61 home loans to whites and NONE to African Americans, and only ONE to Latinos. This is unacceptable. There is a history. For the record, here.

Hearings are requested on that; they may also touch on which branches Investors would close. The comment period should be extended; evidentiary hearings should be held; and on the current record, the application should not be approved."

In this new era, we will report on this in detail. Watch this site.

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January 18, 2021

Capital One Money Laundering Gets $390M Fine From FinCEN As PNC Is Sued For Usury

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, Jan 15 – Capital One has been fined $390 million by FinCEN, for anti-money laundering violations. This comes on top of predatory lending, on autos and otherwise. Inner City Press and Fair Finance Watch will have more on this.

Meanwhile, PNC Bank and its Midland Loan Services have been sued for usury, predatory lending and civil conspiracy, under New York and Federal law.

The complaint docketed on December 29 in the U.S. District Court for the Southern District of New York, which Inner City Press covers, describes PNC's lending on a number of homes and allegedly racking up $250 charges.

It questions the reporting on line 205 of the HUD statement. When the plaintiff questioned it, he was called an "assh*ole."

The case is filed while PNC seeks to buy the US retail banking business of BBVA for $16 billion, an application to the Federal Reserve Board and other regulators which is subject to the Community Reinvestment Act.

The case is Barli v. PNC Bank, NA et al., 20-cv-11027 (Castel)

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January 11, 2021

IMF Is Asked Of China Belt and Road By Inner City Press and Cites Transparency Video Here

By Matthew Russell Lee, Patreon Video
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, Jan 8 – When the International Monetary Fund held a press briefing about China and its Article IV review, on January 8, Inner City Press posed a question and got an answer, below.

Inner City Press asked the IMF's Helge Berger, Mission Chief, about China's so-called Belt and Road Initiative: "Your Article IV report cites China's "overseas lending projects" amid "rising geopolitical tensions and economic and trade frictions." How does the IMF think that rising debt levels among African countries, and increased skepticism about the "Belt and Road" will impact or be addressed going forward? -Matthew Russell Lee, Inner City Press. Video here.

Berger responded about the IMF's work to provide lower income countries "breathing space." He said while the IMF generally welcomes the BRI it stresses the need for transparency, where the money is going.

(An aside: Inner City Press has reported on the CEFC China Energy Fund Committee's activities in Chad and Uganda and in the UN, on which the UN is UNresponsive.)

Other questions included China's digital currency (Inner City Press also reports on crypto-currency cases in the U.S. District Court for the Southern District of New York and elsewhere). Berger said when used overseas an issue is that residents could start using another country's currency, if it is easier.

January 4, 2021

PNC Bank Is Sued In NY For Usury As Applies For BBVA Under CRA So Conference March 1

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, Dec 30 – PNC Bank and its Midland Loan Services have been sued for usury, predatory lending and civil conspiracy, under New York and Federal law.

It questions the reporting on line 205 of the HUD statement. When the plaintiff questioned it, he was called an "assh*ole."

Now on December 30 the case has been assigned to SDNY District Judge P. Kevin Castel, who has ordered: "ORDER INITIAL PRETRIAL CONFERENCE: COUNSEL FOR PLAINTIFF (OR THE REMOVING DEFENDANT) SHALL IMMEDIATELY SEND A COPY OF THIS ORDER TO ALL PARTIES. Counsel for all parties shall appear for an Initial Pretrial Conference, held pursuant to Rule 16 of the Federal Rules of Civil Procedure, March 1, 2021 at 12:00 p.m. Principal trial counsel shall appear at this and all subsequent conferences. SO ORDERED. Initial Conference set for 3/1/2021 at 12:00 PM before Judge P. Kevin Castel. (Signed by Judge P. Kevin Castel on 12/30/2020)."

The case is Barli v. PNC Bank, NA et al., 20-cv-11027 (Castel)

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December 28, 2020

Stefan Qin Accounts At CoinBase and Kraken Are Frozen by Ex Parte SDNY Order for SEC

By Matthew Russell Lee, Exclusive Patreon
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, Dec 23 – An asset freeze against Stefan Qin's Sigma Fund was sought and obtained by the U.S. Security and Exchange Commission at 7 pm on December 23.

No defense lawyer was present.

Inner City Press covered and live tweeted it, here: (and added more on Patreon here)

It's 7 pm and the SEC has gotten an ex parte hearing to freeze accounts, before U.S. District Court for the Southern District of New York Judge Lorna G. Schofield.

"Qin, Virgil Capital & Sigma Fund 'held millions worth of digital assets at 39 trading platforms." SEC lawyer Susan Lamarca said she spoke with defendant's lawyer, who said they would only appear if required.

SEC: "This is ex parte, to freeze assets."

SEC: "Qin is a citizen and resident of Australia and part-time resident of New York. He is currently believed to be in Seoul, South Korea and owns these LLCs through Virgil Technologies LLC, domiciled in the Cayman Islands."

SEC: "Qin claims to use a proprietary trading algorithm for the Sigma Fund to generate better returns that an investment in Bitcoin." SEC asks: "defendants to disgorge their ill-gotten gains according to proof, plus perjudgment interest thereon."

SEC lawyer says the assets are in CoinBase and Kraken, who are temporarily maintaining a compliance hold. But it could end anytime. "It won't last long."

SEC: we spoke with both platforms. They agreed to maintain the hold for a couple of days.

Now Qin knows

SEC lawyer: we've spoken with a lawyer who represents Qin in another investigation. We reached out to him. Judge Schofield: I am prepared to enter the temporary restraining order and freeze the assets of the entity defendants, and a document preservation order

Judge Schofield: I would not put the account numbers in a public order. Should I put it in a sealed appendix?

SEC lawyer: You do not need to put it in an order. We may found other accounts. Numbers are not necessary at all.