From: A Voice For Children

Sent: Monday, November 18, 2002 3:27 AM

To: US Senator Ron Wyden;; US Senator Gordon Smith;; President George Bush; Ombudsman Office; office of inspector general;; International World Court; US Attorney General Ashcroft; A Voice For Children Cc: catherine austin fitts



Evidence that US is not controlling our own courts. Many layers of representatives now shown to be corrupt to the core, corruption seen to be now to the top of a global corporate beast, controlled by the "secret" government in London.

The representatives have now been unable to defend the fraud in the US courts, England bails out "US major mortgage business", really protecting self interests of systemic banking industry, all one money rendering machine, US controlled by England all along ALL IN THE MONEY $$

"All the kings horses and all the kings men" have not been able to fix the hole and the TRUTH is coming out in the courts - The banks and courts are trying to stop the flow of public knowledge that all banks are engaging in the same criminal enterprise



The following articles relate to each other in that they show a pattern of known fraud being protected in the courts, and through which people are losing their homes every day to the state and federal agencies. Their homes and properties are being seized without contract, without judicial due process, in administrative paperwork outside of courthouses.

There are alot of websites that talk about England running the banks in the united states, and now there is direct evidence that this is true. We hope the patterns in their process stand out to the reader as clearly as they do for us. This is an astounding move we are witnessing, again, policies that have been there for years are now exposed and are not being defended or disputed in the courts. This is happening becuase the People are learning what Sui Juris means, to go into courts and lay out the fraud being committed against them by predatory banking practices and fraud.

The metaphor is that first the pawns could not defend their actions, the agents and agencies level. Then the Knights were exposed to be running a racketeering operation (the BAR attorney esquires, judges and politicians), and with the People learning Sui Juris we are taking back our Inherent Authority in the courts. Then we discovered they were all deceiving the Public Trust by not telling us they are all working a system that profits from violating our Bill of Rights. We discovered that the BAR is operating a quasi governmemt parallel to the constitutional government, with their own rules which they are imosing as standards in the "real" courts INSTEAD of constitutional standard of judicial due process. We discovered they are violating their first and only contract to the People not upholding their oaths to the constitution, in Oregon, judges not even TAKING the lawful constitutional oath.

In this chessgame, the bishops turned out to be pedophiles and violating the Public Trust in their own quasi government and courts system for protecting pedophiles and criminals and the system. So now on this Chessboard on the other side of the looking glass, the Queen is exposed and unprotected. All the kings horses and all the kings men have not been able to put this back together as the TRUTH has exposed the fraud higher and higher, and now they have had to "play their hand" and make a very public move to try to stop the banking exposure and vast liability that is going to take down the whole system. THEY KNOW that they have pillaged anything real years ago and there is no money, and the people are starting to ask all the right questions IN THE COURT where it has to be asked and answered on the Record. Just like with the accounting fraud, they try to protray this as "generally accepted motgage banking practices" now seen in the light of TRUTH to be complete FRAUD. Their SYSTEM OF LIES CANNOT WITHSTAND THIS.

Read on, this is comprehensive so that many aspects of the fraud can be recognized. What have been thought to be private banks, low income assistance, local, and in the benefit of the community turn out to be selling our rights and our future.

As the first article attests, a British banking giant, HSBC, has bought Household International, the biggest subprime lender in the United States. Used to be known as Household Finance Corp. (Subprime being low income loans and high interest, high risk loans, also housing developments with Non Profits and Private Public partnerships, primarily homes and automobiles loans.)

The article states that for the England bank this is a "shift in strategy", HSBC "usually service the wealthy". Formerly this British Bank "built its empire in Asia", and now that the bottom has fallen out of that exploited economy, HSBC is going to "diversify the geographic balance...less reliant on Asia and Europe".... one third of their profits will come from the United States. They will own all the mortgages and loans and property held now by Household International, biggest subprime lender.

The article comments this is an "unusual transaction", that only last month Household was found guilty of predatory banking and borrowing practices and deceiving consumers. Household has also restated earnings covering fraudulent banking records. Englands bank says "not to worry - Household has dealt with this problem effectively" and that now Household can "draw money from the HSBC deposit base". Englands bank says this is a "fantastic opportunity to buy a franchise in America, mostly low income borrowers.

The lawsuit last month exposed Households predatory practices and the courts are planning settlements to compensate Household victims ordered by the court. HSBC, formerly HongKong Bank, now is five banks, Internationally, and is bailing out Household, now exposed and a liability to the systemic banking enterprise. Households CEO will head the US business and be a board member of the British based bank.


Fact is the United States is already operating in fraud in that the system proceeds as though the state/fed/gov own all the property now. No more allodial title rights are acknowledged. And by this action we see who stepped in to cut this liability as quickly as possible, as what is exposed here is the method and operation of all the banks and the fact that England owns the mortgages. They are making it appear that one banking group is buying the US Mortgage Bank, when in reality they are all the same, the Queen operating the now global interests from its center in London. Through the International BAR Association, the Inns of Court they have until now controlled the courts and the process. By the process - the things they do, now we see who the real perpetrators are behind the scenes. They are terrified up to the top to be directly protecting their interests in this open of a manner.


In the past few years, the People have discovered that the agencies are operating outside of any lawful authority. Lawsuits have been filed here in Oregon that have expressly outlined in the court records the methods of the banking fraud. These facts have been undisputed in the courts. Also exposed and unrebutted now are the unlawful use of Landlord'Tenant statutes when there is no contract, racketeering and profiteering in state and federal agency funding fraud.

The MOVE that has been made now by the English Banks to "save" International Household is a protection action. The eitists at the top do not tell the People that they are in control of all US Banks and courts and have been since before l776 and still. These individuls do not "come out" and publicly make moves that reveal their motivations.

What this means that we see this action is that the US Courts have not been able to control the record and keep the fraud from coming out. We have watched a pattern in this from the Oregon perspective coming in for some years.

After lawsuits were filed in Oregon that laid out the facts of the methods of the systemic colusion and void of law statutory policies in Oregon, first the state judges acted to silence this knowledge. When that did not work, the federal agents started coming into Oregon to override the courts and which they are doing at this time. But that has failed to stop the flow of money and information from the machine, with the People seeing more every day. It is as though a huge hole has been blown into the Beast now and we are all looking up into the void that was a corporate structure for at least the last 300 years. Recently Greenspan said "we are at the end of a system 300 years old".

Since the state and federal agents have failed to protect the corporate interest miserably and the huge fraud of the money system is oprn knowledge now, all England can do it try to bring back home this first failing mortgage company that has been exposed and cannot defend itself in a court.


They have operated the Banks and the Courts all along, and this is the first time they can't block the public knowledge or control the spin, and this has forced their hand to make an action that we see as evidence of their vulnerability. People putting the evidence of the unlawful operation is what has changed the paradigm. Always before their agents of the International BAR had been able to stop the flow of information so their criminal enterprise could operate unseen in the Public. Maintaining the facade of propriety of law while they strip the people is the foremost goal for attorneys and judges.

This is only the first bank caught, and as the articles below attest, they are still trying to spin it that the bankers have defrauded HUD, like HUD is above the criminal operation. Same way the press keeps saying "Bush administration is going to bring Enron to accountability" - the GOVERNMENT IS THE SAME BUSINESS - they are not seperate except in name for deception purposes.


We have a wealth of public knowledge now how the history of this came into place. But very little evidence is exposed that the Queen of England still owns all the US Banks, and the mortages - it is all the same and since l9l3 Federal Reserve Act all the land is "owned" by the state/feds/England/Global Interest. As it calls itself, International Household.


HSBC to Buy a U.S. Lender for $14.2 Billion - England trying to protect failing system after US courts unable to protect fraud from being exposed

This is the beginning

Related Articles in this case:



New housing project for low-income senior citizens - private/public partnerships

Housing agency fails to manage contractors, pays for work that's not done

Man held on fraud charges in alleged mortgage scheme

On the Money Trail - Catherine Austin-Fitts, Expose HUD Systemic Fraud

Re-Establishing Constitutionally-Lawful "Townships, Precincts, & Counties"; for "We the People" of the United States of America - Charles Stewart, Christian Common Law.  

November 15, 2002

HSBC to Buy a U.S. Lender for $14.2 Billion


SBC Holdings, the British banking giant that built its empire in Asia, agreed yesterday to pay $14.2 billion in stock for Household International, the biggest mortgage lender to people with blemished credit histories in the United States.

The deal is a significant shift in strategy for HSBC, which has typically focused on servicing the very wealthy. Household's biggest business is making home loans at high interest rates to people with poor credit and low incomes, sometimes referred to as the subprime market.

For HSBC, the acquisition is part of its effort to increase its consumer lending business and diversify the geographic balance of its earnings so it can be less reliant on finicky markets in Asia and Europe. About a third of HSBC's pretax profits will come from its business in the United States, up from 12 percent, once the acquisition of Household is completed.

Still, the deal is a risky one. The timing of the transaction is especially unusual given that lending to people with weak credit may be becoming more perilous as the economic recovery falters and personal debt levels continue to rise.

There are lingering questions, too, about controls and corporate culture at Household. Just last month, the company, which is based in Prospect Heights, Ill., agreed to pay a fine of as much as $484 million to settle charges that it used predatory borrowing practices in more than a dozen states to deceive consumers into paying extraordinarily high interest rates. In August, the company restated nine years of results, saying that it had earned $386 million less than it had previously reported because of a difference of opinion by its new auditors over how to account for its credit card contract. And yesterday, a consumer group said it planned to try to block the deal.

Sir John Bond, HSBC's chairman, brushed aside Household's troubled past yesterday during a news conference, saying, "Our due diligence shows us Household has dealt with this problem effectively."

Indeed, the problems at Household, which was founded in 1878 and has 50 million customers, helped create the opportunity for HSBC to buy the company at a significant discount. In the last year, shares of Household have fallen more than 60 percent, from a 52-week high of $63.25 to $22.46 on Wednesday.

"We see this as a fantastic opportunity to buy a national franchise in America," Sir John said. "The U.S. consumer is the engine room of world growth, and we don't think this subdued period is going to last forever."

Under the terms of the deal, HSBC will exchange 2.675 ordinary shares, or 0.535 American depository share, for each share of Household. Based on Wednesday's closing price, that represents about $30 a share, or a premium of about 34 percent. Yesterday, shares of Household International jumped $5.04, or 22.4 percent, to $27.50. HSBC's American depository receipts dropped $1.85, or 3.3 percent, to $54.20.

HSBC will take a one-time charge to set aside $600 million to $800 million to increase reserves at Household, according to Youssef Nasr, president of HSBC's American operations.

Some industry analysts said they were surprised that HSBC wanted to enter the subprime market, which contrasts sharply with HSBC's highbrow image. "I think of HSBC as a very Presbyterian company — squeaky clean," said Peter Carroll, managing director at Oliver, Wyman & Company, a financial services consulting firm. "Most banks nowadays are very concerned about what they call `reputational risk.' "

"There's nothing wrong with subprime lending," he added. "It's just how it is executed."

Citigroup made a similar acquisition in 2000, acquiring the consumer credit firm Associates First. That deal was marred with early problems stemming from lawsuits brought against Citigroup by the Federal Trade Commission soon after the deal closed; those suits accused Associates First of predatory lending practices. Citigroup settled that case for $215 million.

A consumer group, Inner City Press/Community on the Move, said yesterday that it planned to try to block the deal. "Household is well known to be engaged in predatory lending practices," said Matthew Lee, executive director of the organization, an advocate for low-income borrowers based in the Bronx.

Another consumer organization, the Association of Community Organizations for Reform Now, which has filed three lawsuits against Household accusing it of predatory lending, said that it hoped the deal would help it settle the cases. "We are hopeful that a deep-pocketed company like HSBC will be able to resolve these matters quickly and in a way that adequately compensates Household's victims."

HSBC, which was founded as Hongkong Bank in 1865 by Thomas Sutherland, a Scotsman and employee of the Peninsular and Oriental Steam Navigation Company, has taken risks before with the acquisitions of companies that needed to be turned around.

The purchase of Marine Midland Bank of the United States and the unrelated acquisition of Midland Bank of Britain fit that mold. But as valuations began to rise, HSBC moved away from the turnaround model, analysts said, and spent lavishly to acquire Republic National Bank of New York, Safra Republic and Cr�dit Commercial de France.

"HSBC used to have a fantastic reputation for doing things on the cheap," James Eden of Commerzbank Securities said. "The Household deal is reminiscent of the old HSBC that we used to know and love."

For Household, the deal will help it lower its financing costs by being able to draw on money from the HSBC deposit base rather than having to tap the credit markets, which would exact a much more expensive price. The company was recently forced to raise nearly $1 billion by selling stock and convertible bonds.

"Basically, this is all about capital," said Mark Alpert, an analyst at Deutsche Bank Securities. "The funding market was becoming very difficult for Household to tap. Their debt costs narrowed somewhat after the stock deal, but they must have felt that given their funding needs for next year, a sale was their best alternative."

As of the end of June, Household had total long- and short-term debt of more than $70 billion. It said that 4.82 percent of its loans from the third quarter are more than 60 days overdue, up from 4.53 percent in the second quarter. William F. Aldinger III, Household's chairman and chief executive, will become the head of HSBC's United States business and is expected to join the board of the parent company.

Moody's Investors Service and Fitch, two ratings agencies, said that they would consider raising Household's credit ratings as a result of the deal.

If the acquisition is not completed, Household has agreed to pay HSBC $550 million under certain conditions.

The Goldman Sachs Group Inc. is acting as Household's adviser on the transaction. HSBC is receiving investment banking advice from Morgan Stanley, Rohatyn Associates L.L.C. and HSBC Investment Bank P.L.C.

Copyright The New York Times Company | Permissions |


-----Original Message----- From: A Voice For Children 

Date: Saturday, November 16, 2002 9:48 PM

Subject: National Century Nears Bankruptcy Filing Rumor Mill News Reading Room Forum


Posted By: Rosalinda Date: Saturday, 16 November 2002, 11:47 p.m.

[source: Bloomberg, Washington Post, Nov. 15]

NATIONAL CENTURY NEARS BANKRUPTCY FILING. National Century Financial Enterprises intends to file for Chapter 11 bankruptcy to protect it from creditors, today's {Washington Post} reported, adding that the filing could be as early as today. Bondholders have retained accountants to try to find missing assets, which includes $500 million missing from bond fund reserves.

"Any company in this situation would consider bankruptcy as an option," a company spokesman said, according to Bloomberg. Some of the holders of NCFE-sponsored bonds (i.e., the beneficiaries of NCFE/DCHC hospital-looting schemes) are Allianz AG's Pacific Investment Management Co. (PIMCO), Alliance Capital Management, ING, Capital Research & Management, the Dreyfus Corp., and the Highland Financial Group hedge fund.

[source:, Nov. 15; Wall St. Journal, Nov. 5]

NATIONAL CENTURY RUMORS RATTLE MARKETS. reported the following this afternoon, referring to National Century: "Fears resurfaced Friday in the U.S. asset-backed securities market after bankruptcy news dashed Thursday's positive buzz from HSBC's Holdings PLC's plan to buy U.S. consumer lender Household International Inc."

On Nov. 5, the {Wall Street Journal} ran a story on the National Century collapse headlined "A Jolt for the Asset-Backed Bond Market," which said that "the episode is one of the biggest black eyes in years for the booming $1.4 trillion asset-backed securities market, and raises questions about this unorthodox slice of the market, in which companies sell bonds backed by such things as credit-card and car-loan payments."

The story went on to say that the losses anticipated from National Century bonds "underscore the some of the dangers in segments of the asset-backed market, which has soared from just $400 million to $1.4 trillion in just six years."

[source: USAT 8B, Bloomberg, Nov. 15, 2002]


* UNITED AIRLINES is trying to line up $2 billion in financing to prepare for filing Chapter 11 bankruptcy protection, in case it doesn't get an $1.8 billion Federal loan guarantee by Dec. 2 from the Transportation Stabilization Board.

* AT&T Latin America said it may file for bankruptcy protection, after it posted a $532 million third-quarter loss. AT&T has a 69% financial stake in the subsidiary.



Posted By: Rosalinda Date: Sunday, 17 November 2002, 8:59 p.m.


[source: Wall Street Journal, AP, Boston Globe, Nov. 14]

NATIONAL CENTURY, J.P. MORGAN CHASE, AND BANK ONE WERE SUED FOR ONE BILLION DOLLARS in federal court in Boston yesterday. Also named is Hal Pote, a J.P. Morgan executive who is a director of National Century Financial Enterprises NCFE) and who heads its audit committee. The suit was brought by Med Diversified and two of its affiliates, who charged NCFE and the banks with fraud, for taking their accounts-receivables and then failing to provide funding to the health-care companies.

Another affiliate of Med Diversified (not Med Diversified itself, as erroneously reported in yesterday's briefing) has filed Chapter 11 bankruptcy because of lack of payments from NCFE. The affiliate, Tender Loving Care Health Services, says it is owed $6.8 million for medical bills purchased by NCFE. National Century buys accounts-receivable from hospitals and other health-care firms at a discount, and then bundles them and sells them as bonds known as asset-backed securities.

Credit Suisse First Boston is NCFE's lead underwriter, and J.P. Morgan Chase and Bank One are trustees for the bond funds. NCFE has "diverted" (i.e., stolen) at least $500 million from the reserves that two of its bond funds are required to maintain.

"It's a shell game and they got caught," said an analyst for Boland Healthcare of Berkeley, California. "This could very well bankrupt a number of groups."

To make matters worse, Lance Poulsen, the chairman of National Century who abruptly resigned last week, owns big equity interests in many of the companies National Century was looting.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ (Note that the federal government pays millions to build in the communities ..... we have watched one example of St Vincent DePaul in Mt Angel build a huge low income "neighborhood" without any public hearing, or input, exceptions for building codes, virtually anything goes for private contracts, special interests, Public locked out. Also that Volunteers of America is operating the compelled services contracts for the state that strip the families of their children as well as their homes. On our website alot more about elderly abuse and asset forfeitue, how they aquire the property to build their state subsidized communites)  

New housing project for

New housing project for low-income senior citizens


Project: A 63-unit apartment building for low-income senior citizens

Location: 525 N.W. Sixth Ave., Estacada

Developer: Volunteers of America National Services

Financing: The project will cost $5 million. Most of the money comes from a U.S. Department of Housing and Urban Development grant. Clackamas County is providing a $300,000 interest-free loan, and the state is supplying a $100,000 grant.

Status: Work started last month, and the project will be completed next summer.

Details: The units will be rented to people 62 and older who earn no more than $20,000 a year for a single person or $22,900 for a two-person household. Nationwide, Volunteers of America has built more than 100 apartment buildings for the low-income elderly in the past 30 years. The Estacada project is the organization's first Oregon housing venture.

Information: Janeen Wadsworth, Volunteers of America, 503-595-2001.

-- Steve Mayes Copyright 2002 Oregon Live. All Rights Reserved.


Housing agency fails to manage contractors, pays for work that's not done

By CONNIE CASS The Associated Press 11/15/02 5:51 PM

WASHINGTON (AP) -- After shifting work from government employees to contractors, the nation's housing agency failed to oversee its contracts properly and ended up paying for work that wasn't done, congressional auditors said Friday.

For example, the Department of Housing and Urban Development paid $164,000 in June 2001 for repair work on sidewalks next to some of its apartment buildings that was never performed and "appears to be fraudulent," the General Accounting Office reported.

In one case, HUD paid $10,400 for replacement of an apartment's floor and closet doors, but the tenant said no such work was done.

The report from the GAO, an investigative arm of Congress, came a day after the Bush administration announced plans to let private companies compete for nearly half the federal government's civilian jobs.

The GAO report didn't criticize HUD's shift of work to contractors, but said the agency needed more workers and better contract management, employee training and tools to properly oversee its contracts.

HUD has already made some improvements, but other problems "are long-standing and will likely require years to resolve," the report said.

In response, housing officials said they plan a 50 percent increase in staff devoted to awarding and managing contracts, and are improving training.

"HUD is focused on pursuing contractor oversight as a major tool in its program of management controls for preventing fraud, waste, abuse and mismanagement," said Vickers B. Meadows, assistant secretary for administration.

During the 1990s, the housing department trimmed its staff from 13,500 to about 9,000. HUD contracts increased by about 62 percent over five years -- from $786 million in 1997 to almost $1.3 billion in 2000, adjusted for inflation.

Federal employees told the GAO they were assigned too many contracts, spread across the country, and could not do onsite inspections of work because the travel budget was too small.

A survey of most of the Office of Multifamily Housing contracts found HUD's written policies for monitoring contractors and assuring quality and timely work were not followed in 70 percent of the cases.

A contractor paid to manage apartment buildings bypassed controls by claiming repairs were emergencies, and therefore not subject to competitive bidding, and by splitting renovations into multiple projects below the $50,000 threshold for pre-approval by HUD staff.

Over 18 months, HUD paid for about $10 million in renovations at two of the contractor's properties -- with each invoice under $50,000 -- without verifying whether the work was performed, GAO found.

The auditors did not identify the buildings mentioned in their report, but said the inspector general for housing was investigating.


(Note that they are trying to protray this group as being seperate from HUD fraud. The whole racket is in on the same profiteering and they are ALL engaging in these frauds and violating the peoples rights. This is method and operation they have arrested them for, and like in the corporate fraud in the courts already, the whole system of lies is exposed now. TIME FOR PROSECUTION - all the colluders on the other end of these crimes in the justice dept and HUD now have to also be imprisoned) y.ssf/html_standard.xsl?/base/business/103745152740730.xml

Man held on fraud charges in alleged mortgage scheme



A 26-year-old mortgage broker from Happy Valley was arraigned Friday in U.S. District Court, charged with 28 counts stemming from an alleged scheme to defraud lenders that involved $10 million in loans.

Ryan Frank Bonneau pleaded not guilty to the charges of wire fraud, Department of Housing and Urban Development fraud, making false statements on loan applications, engaging in money transactions derived from unlawful activity and bank fraud.

It isn't clear yet how much money is lost, but $10 million in mortgage loans passed through the scheme, officials said. HUD estimates its losses at $464,000 on Federal Housing Administration loans that went into default or foreclosure. Losses on conventional loans from banks aren't yet known.

The bank fraud charge relates to Bonneau's alleged submission of 20 counterfeit checks to U.S. Bank to inflate the credit balance on his Visa card before charging large amounts. The bank lost $14,333 on the fraud, the indictment says.

Bonneau and his girlfriend, Misti Lynne Byrd, and three others allegedly put together false loan packages with false borrower information and false appraisals. Byrd was a retail loan officer and manager of the Portland branch of Royal Crown Bancorp, a Hayward, Calif., mortgage company.

Byrd and the other defendants -- Pauline Louise Gentry, Todd Mikal Troen and Mack James Gentry -- are scheduled for arraignment next Friday on the same charges.

The indictment alleges that real lenders wired loan money to various title company bank accounts in Portland for disbursement to Bonneau and his alleged accomplices. They used "straw purchasers" -- people pretending to be buyers -- to apply for the loans and falsely inflated appraisals in the complex scheme, the indictment says.

Most of the loans later defaulted, but the defendants profited from loan commissions and fees, according to the U.S. Attorney's Office.

Agents of the FBI and HUD's Office of the Inspector General investigated the case for more than a year, with help from the Internal Revenue Service.

On Friday, agents searched Bonneau's house and Estacada office and arrested him. A grand jury indictment listing the charges was issued last week and unsealed Friday afternoon in the court proceeding.

Bonneau told Judge Dennis J. Hubel that he could not afford to hire an attorney. Assistant U.S Attorney Karin Immergut responded that Bonneau's assets have yet to be located and tallied, but agents found at least 10 classic cars, elegant offices and an extensive computer setup in their searches Friday morning.

Hubel granted Bonneau's request for an attorney but cautioned him that he might be billed later for the service if it is determined that he can afford one. He detained Bonneau as a flight risk and said he would review the detention at a hearing Tuesday.

Copyright 2002 Oregon Live. All Rights Reserved.


Power to the People: Catherine Austin-Fitts has spent her career trying to bring economic independence to individuals.

On the Money Trail

The dangerous world of Catherine Austin-Fitts

By Mari Kane

Enron. Arthur Anderson. WorldCom. Global Crossing. Some of the biggest players in corporate America, and what do they have in common? They are all perpetrators of reporting fuzzy numbers as revenue to pump their stock prices. But in the realm of creative accounting run amok, one institution stands apart as the mother of all financial fraud--the Department of Housing and Urban Development.

Although HUD's mission involves "spurring economic growth in distressed neighborhoods," the reality is that HUD is an agency run and managed by the departments of Treasury and Justice, Lockheed Martin, JPMorgan Chase, Dyncorp, Harvard, AMS, Arthur Anderson, and others that use the agency for their own for-profit interests.

All this according to Catherine Austin-Fitts, the self-described "cleaning lady" whose job it was to clean up financial messes such as the savings and loan scandal at HUD. Few people know more than Fitts about how the money works in Washington--and now that Enronitis is spreading, Fitts has found a willing audience for her insight on how complicated financial schemes get cracked and implemented at the highest corporate and governmental level. The software she has developed, if implemented, is poised to revolutionize the way communities and individuals use their money.

When Fitts left the Wall Street firm of Dillon Read and joined HUD in 1989 as Assistant Secretary of Housing, what she found was an agency awash in conflicts of interest and fraud that was subservient to the big-money people in the financial community.

Moreover, she discovered that HUD had never tracked its financial results on a location-specific basis, so each field office had no idea how the money worked in its jurisdiction. By putting together a crude place-based cash-flow map, she found that HUD's business had been substantially distorted by the way the data had been presented. Her numbers proved that S&L and HUD fraud were perpetrated by the same networks, in the same places, and involved the same use of federal credit.

"In Washington, everyone was talking about the S&L and HUD scandals as if they were separate, but it was clear that place-based financial data would have told us what had happened, who had profited, and how to prevent it from happening again," Fitts recalls. "It also became apparent that our investments in communities conflicted with the other federal, state, and local investments in that place."

Fitts was fired by the Bush administration in 1990 after only 18 months on the job. She was told the day after she left that the preparation of place-based financial accounting and statements had also been terminated.

Out of work, Fitts decided to dedicate herself to the concept of helping communities finance themselves. Fitts founded a new company, Hamilton Securities Group, which in 1993 won a contract with HUD to manage its $500 billion portfolio.

After her discouraging experience in the employment of HUD, the things that gave Fitts the most hope were digital technology and the advent of the Internet, which were both becoming more and more accessible to the public. Hamilton's contract with HUD provided an invaluable opportunity to draw from what Fitts describes as "the richest database in the world on how the money works in neighborhoods."

When HUD decided to auction off a portfolio of defaulted mortgage loans, Hamilton introduced a proprietary place-based bidding software and an online database of information so that the portfolio could be bid upon in an open, competitive auction. With it, little guys were able to compete with big, publicly traded players for the first time.

The problem, she found, was that the model was too effective. In 1995, Fitts' team auctioned $950 million worth of multifamily mortgages in the Southeast. It was estimated that by selling them the old-fashioned way the sale would bring $350 million, but thanks to the innovations implemented at Hamilton's recommendations, the loans sold for $710 million and, according to Fitts, "took the world's breath away."

Although the sale hurt some big players, it helped taxpayers save $2 billion in defaulted loan sales. That accomplishment raised eyebrows and sent a loud message to HUD that all this time they had been dealing with low bidders.

One of the reasons Hamilton was called in to help with the sale is because HUD needed to raise its loan recovery rates in order to issue more mortgage insurance without congressional appropriations. Hamilton came in with its optimization software, blew away the market with wildly successful loan sales, brought HUD's recovery rates up from 35 percent to 70 percent and 90 percent, and HUD was able to generate $2.2 billion in new revenue and new credit.

But the story didn't end happily ever after. In 1997, HUD canceled Hamilton's contract and the loan sales program while continuing to use the new recovery rate assumptions in order to get new credit originations. That is a clear case of, in Fitts' words, "cooked books."

And, Fitts notes, HUD is currently out of compliance with its own accounting rules. In 1999, under the direction of HUD Secretary Andrew Cuomo, HUD's Inspector General refused to certify its own financial statements as required by law, while admitting that $59 billion somehow disappeared. The explanation given was accounting systems failure, and the matter was dropped without investigation.

"In 2000 I visited with a senior staff assistant to [Senator] Kit Bond, the chairman of one of the appropriations committees for HUD," remembers Fitts. "I asked her what she thought was going on at HUD, and she said, 'HUD is being run as a criminal enterprise.' Then Bond, the committee, and my congressional delegation, all Republicans, all voted a $1.7 billion increase in HUD's appropriation."

Starting in 1994, Hamilton Securities Group began building an easy-to-operate computer software system to track the money flows in any given region. The program, Community Wizard, provided the kind of transparency needed to expose cooked books. Former Hamilton employee Carolyn Betts remembers the power of Community Wizard, even in its infancy.

"It was in the beta stage, so it was not complete, but with each piece of information it became more and more powerful," recalls Betts. "The HUD field office people went absolutely crazy when they saw it. You could go in with a pointer on a map and get to information on expenditures by each HUD program. It was a pretty beautiful program and would have become unbelievably powerful."

To imagine the Wizard at work, Betts says, picture a place-based website with modules. For each place, you could pull up a map, like on Mapquest, and see information such as the socioeconomic characteristics of the residents or the amounts of revenue generated by private companies.

The developers at Hamilton got geocoded information from every government agency and private contractor they could, including information on all payments made by the federal government to contractors. Depending on which side of the law you sit, Community Wizard could be either a godsend or a threat.

In the fall of 1996, Hamilton became the target of nightmarish covert operations, smear campaigns, harassment, and criminal investigations. The Community Wizard technology was ultimately destroyed in 1998 when Department of Justice agents stormed in and wrecked Hamilton's office. Fitts suspects that Wizard held secrets which may have revealed that some U.S.-guaranteed mortgage securities were fraudulently issued and were illegally draining HUD's reserves.

Thanks to Hamilton's innovations, HUD was able to save taxpayers over $2 billion through the defaulted loan sales. In spite of that, the agency refuses to pay Hamilton over $2.5 million worth of outstanding invoices. To top it off, John Ervin, a HUD contract servicer, brought a qui tam (whistleblower) suit against Fitts that accused her of committing fraud against HUD to the tune of $3.8 million.

So the cleaning lady of fraud is now being sued for allegedly committing fraud against the most fraud-ridden agency in the U.S. government. Is this a great country or what?

Fitts has continued to develop groundbreaking technologies to separate the U.S. government from the tentacles of corporate America and give economic control back to the people. Her latest is called a Solari.

"A Solari is an investment advisor and databank for a neighborhood of 10,000 people or less that promotes transparency and literacy about how the time and money works, while raising and reengineering capital within that place," Fitts explains.

The Solari Action Network is an investment advisory company founded by Fitts in 1998, and its launch date is set three months after the feds pay Fitts the monies owed under Hamilton contracts. Once launched, the first thing needed is a Community Wizard-like technology to give average people the confidence to approach complex financial situations.

The second part of a Solari is the creation of a trust structure for shareholders, an investment pool, if you will. This plan includes nonvalue, voting "A" shares owned by a self-perpetuating group of entrepreneurial neighbors. The nonvoting "B" shares have monetary value and are sold to whomever "A" shareholders determine. First they are sold to the community, but ultimately they can be traded on the stock market. The "A" shareholders only make money on "B" shares, which encourages all neighbors to optimize total equity in the place.

Here is a theoretical example. If the town of Forestville had a Solari Network, its "A" shareholders could, by using Community Wizard, determine that residents send $2 million to HUD, which takes $1 million for "overhead" and plans to use the other $1 million to renovate four housing units in Mirabel Heights. If the shareholders estimate the actual cost of construction to be $200,000 if financed locally, they can tell Washington to cancel the HUD expenditure and save residents $1.8 million in taxes. This would be a sophisticated way of telling Washington to shove it. Moreover, it's a method for residents to distance themselves from a "criminal enterprise."

"If HUD is spending money outside of the Constitution and failing to comply with the law, it would be improper to give them money because by doing so, we would be encouraging criminal activity," says Fitts.

Fitts envisions Community Wizard being reinvented on a decentralized basis, one for each neighborhood. She has already agreed to help one community in California build its own version through a website.

"I will reinvest the proceeds from litigation judgments or settlements, and/or capitalizing Solari as part of a global settlement, into venture capital that will fund as many locally developed Community Wizards as possible," Fitts promises. "My hope is that online collaboration will lead to a much more dynamic network of databases and tools to take control of the money flow."

Catherine Austin-Fitts can be reached at . Fitts' writings can be read at .


Re-Establishing Constitutionally-Lawful "Townships, Precincts, & Counties"; for "We the People" of the United States of America.

Please Review the following Web Page, and read the work of Charles Stewart on Constitutional townships, government   , &/or EMail author: "Charles Bruce, Stewart":   ; &/or Phone at: 503-668-3932.

More Info at: