PUSHING BACK AGAINST THE MOTU THIEVES

I've been wondering when the avalanche of lawsuits will start against the crooks on Wall Street and beyond who were primarily responsible for the Big Shitpile. Back in the summer, I noted that IndyMac was facing several civil lawsuits and now I learn that a local firm has also been sued.

Suit says 1st Magnus officers fueled crisis; their reply: 'absurd'
By Josh Brodesky
arizona daily star
Tucson, Arizona | Published: 02.28.2009

The $1 billion lawsuit, filed by a trustee appointed to advocate for First Magnus creditors — including former employees — makes larger allegations as well.

It essentially argues that First Magnus executives fueled the financial crisis by stripping the company of hundreds of millions of dollars in the form of bonuses and redemptions while manipulating financial records and failing to keep funds in reserve.

"The 'credit crisis' resulted and spiraled into an unprecedented global financial crisis. First Magnus was not the victim of the 'credit crisis' or 'collapse of the secondary market' ... it was a significant cause," the suit says.

Here was their business plan:

Essentially, warehouse lenders advanced First Magnus funds to provide home loans. First Magnus then paid back those funds plus fees within a certain time period — usually 30 days — while selling the loans to Wall Street firms at a greater price.

The majority of the loans First Magnus created were Alt-A quality, meaning they were riskier than prime loans, but not as risky as the sub-prime market.

The suit alleges there were times when First Magnus employees would overstate incomes or assets to qualify potential borrowers and that a large number of borrowers had credit scores below 700.