JP Morgan Attempts to Intimidate Whistleblowers Testifying Against Bear Mortgage Traders

[stockholmer]

http://www.teribuhl.com/2012/01/19/jp-morgan-attempts-to-scare-whistleblowers-testifying-against-bear-mortgage-traders/

JP Morgan’s lawyers are once again using intimidation tactics to scare whistleblowers in the Bear Stearns mortgage fraud machine lawsuits. http://www.theatlantic.com/business/archive/2011/01/e-mails-suggest-bear-stearns-cheated-clients-out-of-billions/70128/ Lawyers at Greenberg Traurig LP filed a public letter two days ago with Judge Crotty in New York State Supreme Court outing the name of a confidential whistleblower Ambac, Syncora & Assured Guarantee has secured to testify against the Bear Mortgage team run by Tom Marano, Jeff Verschleiser, and Mike Nierenberg. http://www.rollingstone.com/politics/blogs/taibblog/everything-you-need-to-know-about-wall-street-in-one-brief-tale-20120113 The JPM/Bear lawyers have also attempted to see copies of whistleblower affidavits before tomorrow’s big deposition in an apparent move to scare people coming forward saying they could be violating confidentiality agreements they signed when they left the third party due diligence firms Bear hired to help orchestra their alleged scheme.

Confidentiality agreements are often used when offering a severance to employees leaving financial firms so they can’t talk about anything bad they saw happen at the company. The worry for whistleblowers is those firms could sue to take back pay if the ex employees do things like tell the public about financial crimes/violations their clients asked them to commit—although we have yet to see a finance firm actually pull a move like this and file a real suit.

I previously reported this fall http://www.teribuhl.com/2011/11/21/lawsuit-shows-more-fraud-and-coverup-from-bears-mortgage-team/ about 30 whistleblower from Bear’s wholly owned mortgage servicing firm, EMC, and outside due diligence firms, Watterson Prime and Clayton have now come forward in an amended complaint filed by Paterson Belknap Webb & Tyler for three of their monoline clients (mortgage bond insurers) suing JPM/BEAR for billions. These whistleblowers detail a ‘Bear Don’t Care’ attitude towards packaging billions of residential securities sold to pension funds and other institutional investors that blew up and lost buyers billions and billions of dollars. Court documents show this extra lawer of independant due dilligence for investors was nothing more than a sham to create a false sense of confidence in the Bear rmbs product.

Some of the Watterson Prime ex-staffers have said, “ Watterson’s review was nothing more than a rubber stamp approval to satisfy defendants’ (the Bear Mortgage Team) objective of purchasing a large volume of loans for securitization…the vast majority of the time the loans that were rejected [byWatterson] were still put in the pool and sold.”

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[saras]

1. Too bad we have explosive diarrhea on the Supreme Court...

"The worry for whistleblowers is those firms could sue to take back pay if the ex employees do things like tell the public about financial crimes/violations their clients asked them to commit"

Any sensible court would rule instantly that you cannot make a legal contract to commit a crime or assist in the commission of a crime. Testifying in a criminal action ought to give them complete immunity from corporate lawsuits. They're not out in public giving speeches, they are answering questions; they can't say anything about anything, trade secret or not, that they aren't explicitly asked about in a court of law, where they are required to tell the truth.

But I can't imagine the current court getting within a continent's range of that kind of reason. I would more likely expect them to rule that working for a corporation - taking the job in the first place - obligates you to go to jail for the corporation when called to.

[JDPriestly]

2. But if the Supreme Court ruled as you propose, then it would relinquish the

authority of courts to compel testimony. Wouldn't it?

These "whistleblowers" are witnesses. In fact, I wonder why they are called whistleblowers. Seems to me that since these "whistleblowers," there was a duty on the part of the defense lawyers to identify them in discovery when asked to identify all witnesses to relevant events. So the witnesses cannot be blamed for having identified themselves. I don't think they fit the definition of whistleblowers,but i could be wrong.

How can a court enforce a contract that would prohibit a witness from being identified or from testifying in a deposition.

Also, having read one of the articles, it sounds to me like the plaintiffs are pretty confident that Morgan will settle once the plaintiff has deposed these witnesses, so the plaintiffs can force Morgan to abandon any vengeance it might take against the whistleblowers as part of the settlement. Also if the case goes to trial, couldn't the deposition testimony be used to show the court that the testimony of these witnesses is relevant and material and should not be ruled inadmissible?