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.

April 19, 2021

Chase Bank Sues In SDNY Seeking A Deposition Citing A Case in New Jersey

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

SDNY COURTHOUSE, April 14 – Chase Bank has sued M. Harvey Rephen & Associates, seeking to depose a corporate representative.

On April 14, U.S. District Court for the Southern District of New York Judge Gregory H. Woods held a proceeding. Inner City Press covered it.

Judge Woods asked about a related case in New Jersey federal court, Malk Lasry v. JP Morgan Chase & Co., No. 3:18-cv-09776-PGS-DEA (D.N.J.). Moneys have been restrained for a year. The restraining orders remain in place.

The case is Chase Bank USA N.A. v. M. Harvey Rephen & Associates, P.C., 19-mc-275 (Woods)

April 12, 2021

In Citibank Wire Transfer Case Money Did Not Have To Be Returned Now Citi Asks For Stay

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

SDNY COURTHOUSE, April 9 – 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.

On February 16, Judge Furman ruled that the Defendants can keep the money, see below.

On April 9, Judge Furman held an oral argument on Citi's motion for an injunction pending appeal:

And they's back! Citibank, which lost at trial on its "$900 million mistaken wire" on the Revlon loan, is now asking SDNY Judge Furman to freeze the funds pending their appeal.

Problem for Citibank: Judge Furman would have to find Citi has a likelihood of success in getting his decision after trial reversed. Citi's lawyer says they are moving fast on the appeal. Judge Furman: But that doesn't mean the Circuit will act with dispatch

Judge Furman asked, if he were to grant the injunction, what kind of a bond Citi would put up. Citi's lawyer: Citi is one of the most respected financial firms in the world.

[Inner City Press: Ever heard of CitiFinancial? Sandy Weill?]

Inner City Press will continue to follow this.

From February 16: "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

April 5, 2021

Woman Sues US Bank For Role In Misuse Of Her Debit Card Amid COVID Pandemic

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

SDNY COURTHOUSE, April 3 – Lorenza Collins says here U.S. Bank prepaid payroll card was misused for $980, and that U.S. Bank did nothing to make her whole.

She sued.

In the complaint filed on April 2 in the U.S. District Court for the Southern District of New York and found there that day by Inner City Press, Collins emphasizes that U.S. Bank's abuse happened at the high of the COVID-19 pandemic, and that her CFPB complaint accomplished nothing.

She demands that U.S. Bank comply with the Electronic Fund Transfer Act and pay damages.

The case is Collins v. U.S. Bank, National Association, et al., 21-cv-2863 (Unassigned)

March 29, 2021

Flagstar Bank Blamed Regulators For Golden Parachute Delay Now Quietly Settles It

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

SDNY COURTHOUSE, March 25 – Joseph P. Campanelli was apparently an officer of Flagstar Bank, who wants his golden parachute payments but is being told he can only get them if the Federal Reserve and FDIC (and, it seems, the Office of the Comptroller of the Currency) sign off.

On October 30 U.S. District Court for the Southern District of New York Judge Paul A. Engelmayer, to whom the case was assigned in August 2019, held a proceeding. Inner City Press covered it.

In the proceeding Judge Engelmayer to his credit told counsel for Flagstar, which was once referred to as Flagstaff like in Arizona, that they could not hide behind the regulators by citing "best efforts" language in the agreement.

The difficult is that even hours after the open proceeding, the complaint of PACER still says, "You do not have permission to view this document."

Now on March 25, this: "ORDER terminating [64] Letter Motion to Stay re: [64] JOINT LETTER MOTION to Stay re: [63] Scheduling Order,,, addressed to Judge Paul A. Engelmayer from Julia M. Jordan and Martin F. Gaynor III dated March 24, 2021. The Court commends counsel on resolving this dispute. The Court today will issue a "60-day order" dismissing the case while giving counsel 60 days to move to reopen it if settlement is not finalized. SO ORDERED. (Signed by Judge Paul A. Engelmayer on 3/25/2021)."

The case is Campanelli v. Flagstar Bancorp, Inc., 19-cv-7299 (Engelmayer)

March 22, 2021

Goldman Sachs Was Sued For Money Laundering Citing Dodd Frank For Arbitration

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

SDNY COURTHOUSE, March 18 – Christopher Rollins has said Goldman Sachs for retaliating against him after he blew the whistle on Goldman's "concealment of anti-money laundering compliance failures associated with a notorious European businessman [with a] 200-foot superyacht in the Mediterranean Sea."

On March 18, U.S. District Court for the Southern District of New York Judge Edgardo Ramos held a proceeding. Inner City Press covered it.

The case, citing the Dodd-Frank Act, was forced to arbitation. Now defendants' motion is due April 8 with Rollins' cross-motion due April 29.

The case is Rollins v. Goldman Sachs & Co. LLC et al., 18-cv-7162 (Ramos)

March 15, 2021

IMF Answers on Sri Lanka and Ukraine As Inner City Press Asks of JOH

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

SDNY COURTHOUSE, March 11 – When the International Monetary Fund held its biweekly embargoed press briefing on March 11, Inner City Press asked about Sri Lanka, Honduras and Ukraine. Spokesperson Gerry Rice responded on each, though he perhaps understandably said the IMF does not comment on judicial proceedings.

On Sri Lanka, Inner City Press asked, "On Sri Lanka, what is the IMF's comment and view on the country's decision to go with a $1.5 billion currency swap with China, with some saying it is an alternative to the IMF?"

Spokesperson Rice described the IMF's recent programs with Sri Lanka, including regarding COVID-19. Video and transcript coming.

On Ukraine, Inner City Press asked "On Ukraine, what is the IMF's comment and view on the deputy head of Ukraine's central bank Kateryna Rozhkova today accusing her own press office of trying to censor comments she gave to a local media outlet that cast fresh doubt on the central bank's independence and decision-making process?"

Spokesperson Rice said the IMF takes central bank independence very seriously, and tied it to review of Ukraine program(s).

In a question Inner City Press, given what it has reported on for the past three days was compelled to ask, it sent and asked, "On Honduras, given mounting evidence including in the trial of Geovanny Fuentes-Ramirez that high government officials are implicated in narco-trafficking, what are the IMF's comments on current programs and safeguards in place?"

As noted, Spokesperson Rice said that IMF does not comment on (pending) judicial proceedings. At least he took the question.

Watch this site.

March 8, 2021

Bank Audi of Lebanon Accused of Keeping $17 Million Now Questions of Correspondent Banks

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

SDNY COURTHOUSE, March 3 – Patricia Raad says she placed $17 million with Lebanon's Bank Audi and now they won't give her the money back.

She has sued.

Raad and two relatives filed in New York State court, but Bank Audi on December 31 removed the case to the U.S. District Court for the Southern District of New York, in the docket of which Inner City Press found it.

DLA Piper, in the Corporate Disclosure Statement it filed, said Bank Audi S.A.L. does not have a corporate parent, and that no publicly traded company owns ten percent of more of Bank Audi S.A.L.'s comment stock.

Its Jeffrey D. Rotenberg recounts in a declaration that on December 18 a virtual hearing was held before Judstic Ostanger, and that also present were counsel for JPMorgan Chase, Citibank, Bank of New York Mellon and Standard Chartered.

On March 3, SDNY Magistrate Judge Ona T. Wang held a proceeding. Inner City Press covered it.

The plaintiffs want to attach funds. Judge Wang asked about it, and about correspondent banks.

The case is Raad et al. v. Bank Audi SAL et al., 20-cv-11101 (Nathan / Wang)

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.