Wilbur Ross Accused of Stealing $120 Million
Secretary of Commerce Wilbur Ross.
The pair worked side by side for more than a decade, eventually at the firm, WL Ross & Co.—where, Storper later alleged, Ross stole his interests in a private equity fund, transferred them to himself, then tried to cover it up with bogus paperwork.
Two weeks ago, just before the start of a trial with $4 million on the line, Ross and Storper agreed to a confidential settlement, whose existence has never been reported and whose terms remain secret.”
”It is difficult to imagine the possibility that a man like Ross, who Forbes estimates is worth some $700 million, might steal a few million from one of his business partners. Unless you have heard enough stories about Ross.”
The move drew fire from consumer advocates and Democrats, who pointed out that Otting would be in a position of overseeing banks even though one he headed up has run into trouble with regulators.
Otting is being tapped to be the comptroller of the currency, a powerful regulator who oversees federally chartered banks, the White House announced Monday night. Those include the banking arms of some of the largest financial institutions in the country, including JP Morgan Chase & Co. and Wells Fargo & Co.
His role with OneWest, which has been criticized for its foreclosure practices, made Otting’s nomination concerning, said Sen. Sherrod Brown (D-Ohio).
“If Mr. Otting didn’t deal fairly with the customers at his own bank, it’s difficult to see why he’s the best choice to look out for the interests of customers at more than 1,400 banks and thrifts across the country,” he said.
Brown is the top Democrat on the Senate Banking Committee, which must confirm the nomination.
The Office of the Comptroller of the Currency, which is an independent bureau of the Treasury Department, was a pivotal player in the $185-million settlement last year with Wells Fargo involving its creation of unauthorized accounts.
Otting would replace Keith Noreika, a banking industry lawyer whom Trump appointed last month as acting comptroller of the currency to replace Thomas Curry after his five-year term expired.
Otting’s nomination is likely to revive Democratic criticisms of Mnuchin regarding the practices of OneWest Bank. They were a key factor in Mnuchin’s narrow 53-47 confirmation in February, the slimmest margin ever for a Treasury secretary.
In 2009, Mnuchin led a group of investors who put up about $1.6 billion to buy the failed IndyMac bank, a leading subprime mortgage lender, and renamed it OneWest. Otting was hired as OneWest’s chief executive the following year.
Mnuchin served as the bank’s chairman from 2009 to 2015. Democrats accused the bank of being “a foreclosure machine” that helped Mnuchin profit from the 2008 financial crisis, which left many homeowners unable to make their mortgage payments.
The bank was sold to CIT Group in 2015 for $3.4 billion.
Mnuchin denied the allegations, saying the bank was trying to deal with IndyMac’s poor mortgage portfolio. Nevertheless, the Office of Thrift Supervision, a savings-and-loan regulator that merged into the Office of the Comptroller of the Currency, chided the bank for its practices during Mnuchin’s ownership and Otting’s leadership.
In 2011, the agency said in a regulatory order that OneWest had engaged in robo-signing — the practice of having workers sign mortgage- and foreclosure-related documents without reviewing them or verifying they were accurate.
“The president’s choice for watchdog of America’s largest banks is someone who signed a consent order — over shady foreclosure practices — with the very agency he’s been selected to run,” Brown noted.
Last month, the Justice Department announced that Financial Freedom, a OneWest subsidiary, agreed to pay $89 million to settle allegations it defrauded the Federal Housing Administration regarding reverse mortgage insurance payments from March 31, 2011 to Aug. 31, 2016.
Like acting Comptroller Noreika, the previous five comptrollers have all been lawyers, and most have a record of public service.
Thomas Curry, whom Noreika replaced, was a state bank overseer in Massachusetts and a director of the Federal Deposit Insurance Corp. before being appointed as comptroller in 2011.
Curry’s predecessors, John Dugan and John Hawke Jr., were both attorneys who had worked in private practice as well as for the Treasury Department and for congressional committees, according to the OCC, which maintains a list of all former comptrollers.
Otting, by contrast, has no record of government service and has spent his career in commercial banking. If approved, he would be the first former top bank executive to lead the bank regulatory agency in nearly a century.
That troubles some critics, who say putting Otting atop the regulatory agency would amount to allowing banks to regulate themselves.
“Are bank regulators there to work for the banks, or are they there to ensure banks are safe and sound and not risking the economy?” said Paulina Gonzalez, executive director of the California Reinvestment Coalition and a vocal critic of OneWest.
“Putting Joseph Otting in this position is risking the livelihood of everyday Americans.”
Bartlett Naylor, financial policy advocate at Public Citizen, a public interest group, said Trump showed he doesn’t care about victims of the financial crisis. And Naylor said Otting’s relationship with Mnuchin raised ethical questions.
“Will Otting be independent of political interests from the president’s Treasury secretary? Or will he reprise his role as Mnuchin’s employee?” Naylor said.
Otting butted heads with advocacy groups after CIT announced its plans to buy OneWest. The California Reinvestment Coalition and other groups said the two banks had not made enough commitments to serve low-income and minority communities and urged the OCC and the Federal Reserve to hold a hearing about the deal.
In a rare move, one that analysts at the time called both risky and undiplomatic, Otting started an email campaign through OneWest’s website, asking bank customers and others to send form letters to regulators saying that the deal should be approved without a hearing.
Otting would fit in with the Trump administration’s preference for appointees that come from the business world rather than from Washington. Mnuchin, too, lacks the inside-the-Beltway experience shared by most of his predecessors. Treasury secretaries appointed by Presidents Obama and George W. Bush all worked for the federal government at some point in their careers.
But while Mnuchin is a creature of Wall Street — he is the son of a former Goldman Sachs partner and spent 17 years at that firm — Otting is a classic main-street banker.
He spent the bulk of his career in the business lending divisions of Union Bank and US Bancorp.
Lloyd Greif, a longtime L.A. investment banker, said that he’s known Otting since his days at Union Bank and that Otting’s experience makes him a shoo-in for comptroller.
“He’s been at community banks, he’s been at money center banks — he has the experience that really spans the gamut,” Greif said. “Steve [Mnuchin] is a Wall Streeter, but Joseph is a dyed-in-the-wool commercial banker.”
CIT Group fired Otting in late 2015 as it reshuffled executives following the OneWest acquisition. Otting walked away with more than $12 million in severance.
Since then, he has been spending much of his time in Las Vegas, where he is one of the co-owners of the private Southern Highlands Golf Club.
Former HUD Employee Sentenced to 24 Months for Accepting Bribes from Government Contractor.
Defendant Took Gifts in Return for Preferential Treatment on Contracts
WASHINGTON – Kevin Jones, 48, a former contract oversight specialist with the U.S. Department of Housing and Urban Development (HUD), was sentenced today to 24 months in prison on a federal bribery charge stemming from a scheme in which he provided non-public information about pending HUD contracts to a business owner in exchange for tickets to sporting events, travel, and cash.
The announcement was made by U.S. Attorney Jessie K. Liu, Charles A. Dayoub, Acting Special Agent in Charge, Criminal Division, FBI Washington Field Office, and Reginald O. Sessoms, Special Agent in Charge, Special Investigations Division, HUD Office of Inspector General.
Jones, of Laurel, Md., pled guilty in March 2019, in the U.S. District Court for the District of Columbia to one count of federal bribery. He was sentenced by the Honorable Randolph D. Moss.
As part of his plea agreement, he is required to pay a forfeiture money judgment of $50,302.75 representing the value of the gifts and benefits he received.
Following his prison term, Jones will be placed on three years of supervised release and complete 100 hours of community service.
According to a statement of offense signed as part of the plea, Jones began work at HUD in 1999. His responsibilities included serving as the technical point of contact for certain contracts and reviewing contractor performance. By virtue of his position, he had access to bid, proposal, and source selection information about a number of HUD contracts.
The bribery charge involves Jones’s dealings with Charles Thomas, the sole owner and president of a company in Maryland that provided technology services to agencies of the federal government and educational services to public school children in the Washington, D.C. area.
Between at least 2010 and 2018, according to the statement of offense, Thomas provided Jones with tickets to sporting events, travel, and cash in exchange for Jones providing Thomas and his company with non-public information about pending HUD contracts.
In particular, the information and recommendations that Jones provided gave Thomas an unfair competitive advantage in obtaining two contracts valued at more than $4.5 million. Jones himself approved invoices totaling nearly $3.8 million for work done under one of the two contracts.
According to the statement of offense, from 2010 through 2017, Thomas and his company provided Jones with a variety of gifts and benefits, including more than $17,000 worth of tickets to Washington Redskins games and three Super Bowls; $1,700 in Washington Wizards tickets, more than $3,200 in hotel accommodations; more than $3,600 in travel expenses, more than $13,000 in cash and checks, meals, a camera, and a pair of basketball shoes.
In a related prosecution, another former HUD employee, LaFonda Lewis, 57, of Lusby, Md., was sentenced to a year and a day in prison in April 2019, for providing non-public information about pending HUD contract to Thomas in exchange for money, tickets to sporting events, and other things of value.
As part of her plea, she agreed to pay a forfeiture money judgment of $23,055, representing the illegal proceeds. Lewis was a former supervisory contract oversight specialist.
Thomas, 45, of Lusby, Md., pled guilty in May 2018 to one count of conspiracy to commit bribery and two counts of conspiracy to pay gratuities and violate the Procurement Integrity Act.
Thomas is awaiting sentencing. In his guilty plea, Thomas admitted to paying bribes to the two HUD employees as well as to an employee of the District of Columbia Office of the State Superintendent of Education (OSSE) in return for payments on contracts involving that agency.
The former District of Columbia employee, Shauntell Harley, 49, of Washington, D.C., was sentenced in July 2018 to 56 months in prison for accepting bribes in return for clearing the way for payments to be made to Thomas and another businessman.
In announcing the sentence, U.S. Attorney Liu, Acting Special Agent in Charge Dayoub, and Special Agent in Charge Sessoms commended the work of those who investigated the case from the FBI’s Washington Field Office, HUD’s Office of the Inspector General, and the Office of the Inspector General for the District of Columbia.
They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Joshua Fein and former Paralegal Specialist Kristy Penny. Finally, they expressed appreciation for the work of Assistant U.S. Attorney Peter C. Lallas, who investigated and prosecuted the matter.