Attorney General

As he joins President Obama’s task force on investigating financial wrongdoing, Attorney General Eric Schneiderman filed a lawsuit today against three major banks over an electronic registry system his office says resulted in a “wide range” of fraudulent foreclosure filings in New York state and federal courts.

The banks are Bank of America, J.P. Morgan Chase and Wells Fargo. Also named in the suit is Virginia-based MERSCORP, the company that facilitates the system.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages,” Schneiderman said in a statement. “Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law. Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The suit in part could help Schneiderman alleviate any concerns liberals might have over his joining of the dormant investigatory task force. The attorney general was booted from a nationwide settlement panel after refusing to go along with a deal that would help banks escape future scrutiny from lawsuits.

Schneiderman has said he considers the task force involvement and the mortgage settlement debate two separate issues.

As New York braces for what’s expected to be a new wave of foreclosure this year, Attorney General Eric Schneiderman announced a $1 million program designed to stem that potential tide.

“As our state faces another tight budget year, we must be creative and aggressive in our efforts to support working families who are struggling to stay in their homes,” Schneiderman said. “This funding will provide thousands of New Yorkers with the legal expertise they desperately need to defend their rights and avoid falling prey to unscrupulous mortgage servicers or foreclosure mill law firms filing fabricated or robosigned documents. My office will continue to use every tool available to us to protect homeowners and all vulnerable New Yorkers.”

The money is coming from a 2006 settlement (when Eliot Spitzer was still office) with Ameriquest Mortgage Co. The investigation at the time found that the company was engaged in predatory lending practices and misrepresenting loan terms.

The settlement required Ameriquest to pony up $295 million in restitution, with about $22 million going back to New York. The announcement immediately got support from advocacy groups.

“We wholeheartedly thank Attorney General Schneiderman for making this new funding available for foreclosure prevention services. This builds nicely on the gap funding the Governor and the Legislature made available for the Foreclosure Prevention Services Program in the tax reform package passed in December. The Attorney General’s funding will make a significant difference for the programs that receive it, ”Kristin Brown Lilley, Director of Policy Advocacy for Empire Justice Center said.

The announcement also comes as Department of Financial Services launches a foreclosure prevention unit and crackdown on possible abuses within the system.

“We’re also going to consider every regulatory tool in our toolbelt to try and see what we can do to deal with the foreclosure problem,” DFS Superintendent Ben Lawsky told reporters earlier this month

The case against the Democratic Senate aides charged with siphoning member item money is “straightforward and graphic,” Attorney General Eric Schneiderman said in an interview for WAMC Northeast Public Radio’s Alan Chartock.

Schneiderman earlier this month indicted four people — two of whom work with Queens Democratic Sen. Shirley Huntley — accusing them of either stealing or fabricating documents relating to nearly $30,000 in taxpayer-funded earmarks diverted from a non-profit.

The interview will air on the Capitol Connection Friday at 10:30 p.m. and a repeat broadcast on Saturday at 1p.m.

The Democratic attorney general said the case demonstrated that his office is agnostic to political affiliations.

“It was a pretty straightforward and graphic case: two people who stole money and two people who helped them cover it up by fabricating documents,” he said. “I think it’s important to send the message, these are folks who are Democratic Senate staffers and I used to be a Democrat in the Senate, send a message that it doesn’t how powerful you are, it doesn’t matter what you’re party is, we are going to enforce the law.”

Schneiderman faced questions during the 2010 Democratic primary and general election that he wouldn’t be able to go after his Senate colleagues as attorney general, making the ongoing case something of a rebuke to that charge.

Schneiderman said in the interview more indictments are to come.

His office earlier this year requested expanded investigatory powers from the Cuomo administration, but were turned down (ex-Cuomo aide Steve Cohen denied a request was made).

Asked about the incident, Schneiderman parried to say that he does work with the administration on number of issues to begin with and again related his close effort with Comptroller Tom DiNapoli to investigate public fraud and corruption.

“There’s not really much to tell,” he said. “Our office is completely intertwined with the executive branch. I mean, the governor is my biggest client. Our staff attorneys are working with the folks in the state agencies all the time.”

Schneiderman took office a year ago, succeeding Andrew Cuomo. He told Chartock in the interview that being called by the honorary “general” still feels weird.

“I have to say ‘General Schneiderman’ doesn’t sound quite right to me,” he said. “Some of my colleagues around the country really insist you call them “general” but others don’t like it all. I’m more comfortable if you call me Eric.”

Senate Republicans were dealt a blow in their fight against a law that requires prisoners be counted as residents of their last known address during the contentious legislative redistricting process.

The ruling — which is sure to be challenged in the case known as Little v. LATFOR — is also a big win for Attorney General Eric Schneiderman’s office. Recall that the Gov. Andrew Cuomo suggested that his successor may not be able to defend the suit, given Schneiderman’s role in shaping the legislation as a state senator.

“Today’s decision by Judge Devine is a victory for fundamental fairness and equal representation,” Schneiderman said in a statement. “The court affirmed the legality of counting incarcerated individuals in their home communities for the purposes of redrawing district lines, rather than the districts where they are in prison.”

“As a lawmaker, I fought to end the practice of prison-based gerrymandering that distorted the democratic process and undermined the principle of ‘one person, one vote.’ This decision affirms and applies a fair standard to the drawing of state legislative districts and makes it easier for counties to do the same by providing them with an accurate data set.”

In a ruling handed down by Supreme Court Judge Eugene Devine and obtained by Capital Tonight, there’s no criticism of the way the 2009 law was passed, which was inserted into a budget bill over Republican objections.

Rather Devine writes that the law follows the one person, one vote rule for redistricting.

From the ruling:

“Though inmates may be physically found in locations of their respective correctional facilities at the time the census is conducted, there is nothing in the record to indicate that such inmates have any actual permancy in these locations or have an intent to remain. In fact it is undisputed that the inmates are transferred at the discretion of DOCCS and plaintiffs have not proffered any evidence that inmates have substantial ties to the communities in which they are involuntarily and temporarily located.”

Senate Republicans, who hold a narrow 32-30 majority, stand the most to lose from the law being upheld. Most state and federal prisons are in the upstate region, which is predominantly represented by Republican senators.

The Assembly released a look at what the new population count would mean for Senate districts, with 26 of 30 seats held by Democratis receiving a population gain.

Democrats pushed the measure into the law while they were in the Senate majority in 2010, partially as a means of insurance during the redistricting process.

LATFOR, the lawmaker-led commission charged with redrawing state and federal boundaries, has said it would draw lines based on the new law, though initially members hesitated citing the lawsuit.

The ruling is good news for Senate Democrats, who hope that the shifting district counts will give them a leg-up in the redistricting process next year.

“The time for delay is over,” spokesman Mike Murphy said. “The Senate Republicans and LATFOR must immediately comply with the law. Any further delay is an outrageous and illegal assault on Democracy.”

UPDATE: Senate GOP spokesman Scott Reif said: “We will review the judge’s decision, but regardless of the final outcome of this lawsuit Republicans will expand our majority in the Senate next year.”

Plaintiffs in the case have indicated that they will indeed appeal. In addition, Sen. Mike Nozzolio, LATFOR’s Republican co-chair, said in October the GOP would comply with the prisoner-counting law, regardless of the lawsuit’s outcome, and always intended to do so. The Democrats aren’t buying that, however, and have accused the Republicans of dragging their feet.

Decision and Order