The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), a white-collar law enforcement agency, continues on its mission of safeguarding American taxpayers’ funds, while going after those that are defrauding the U.S. government.
“SIGTARP, through its own investigative resources and through partnership with other relevant law enforcement agencies, is committed to robust criminal and civil enforcement against those, whether inside or outside of Government, who waste, steal or abuse TARP [Troubled Asset Relief Program] funds,” according to the SIGTARP website.
Robin Brujhell Brass received an eight-year prison term for a “Ponzi scheme at elderly or ailing, hardworking citizens down on their luck,” according to SIGTARP.
On July 23, SIGTARP and the U.S. attorney for the Southern District of California fined Ziad Nabil Mohammed Al Saffar, Sara Beth Bushore Rosengrant, and Daniel Al Saffar.
“According to court documents, the defendants targeted homeowners who were unable to afford their mortgage payments and falsely advertised to them that CAS and CAS Group were affiliated with the federal government,” said SIGTARP in a recent public notice.
Also in July, SIGTARP went after Edward Woodard, former CEO at the Bank of the Commonwealth, his son Troy, as well as both executive vice presidents, Simon Hounslow and Stephen Fields, and others. The accused developed a fraud scheme that was responsible for the bank’s demise.
In general, SIGTARP uncovered different types of schemes for hiding a bank’s financial condition. One was the Extend and Pretend Scheme, under which bank staff set up a structure that concealed past due loans, pretending they were in a current paid status. Another method was to pay for unfinished construction, so the company could pay down its defaulted loans.
“Banks and their regulators have an opportunity to implement lessons learned from the schemes SIGTARP uncovered. … Bank examiners should therefore be on the alert to detect these and other schemes. … Banks should not wait for Government action,” said SIGTARP in its Quarterly Report to Congress, released on July 25.
By mid-July, SIGTARP was involved in a total of 150 criminal and civil investigations, some of which are still in the investigative stage. So far, 67 individuals have been sentenced, of which 28 were given prison terms
SIGTARP acknowledged that it might not be able to collect the fines when it published the “Orders of restitution and forfeiture and civil judgments entered for more than $4 billion. This includes restitution orders entered for $3.7 billion, forfeiture orders entered for $126.9 million, and civil judgments and other orders entered for $281.9 million.”
Taxpayer Losses From TARP 37
“Taxpayers are owed $109.1 billion as of June 30, 2012. According to the Treasury, as of June 30, 2012, it had written off or realized losses of $15.6 billion that taxpayers will never get back. …
These amounts do not include $4.5 billion in TARP funds spent on housing programs, which are designed as a Government subsidy, with no repayments to taxpayers expected,” according to the SIGTARP report.
The auto industry impacted losses, with Chrysler Group LLC contributing $1.3 billion to taxpayer losses, followed by General Motors Company with $4.3 billion in losses. The losses stemmed mainly from the sale of common stock in these companies.
Additionally, a $1.9 billion write-off was recorded by forgiving Chrysler a portion of the debt on a $3.5 billion loan.
The American International Group, Inc. (AIG) stock sale by the Treasury resulted in a loss of $5.5 billion. A significant portion of the losses stemmed from the sale of preferred stock to the public. A loss of $2.3 billion was the result of the bankruptcy of two financial institutions, CIT Group Inc. and Pacific Coast National Bancorp.
TARP repayment announcements are often not transparent, as a repayment may not be a cash payment, but the refinancing of the debt under other TARP or government programs, such as the Small Business Lending Fund (SBLF).
The total cost to the taxpayer is the best guess by a number of different agencies and they aren’t close to each other. For example, the Congressional Budget Office (CBO) suggests a final cost of $32 billion, $2 billion less than it estimated at the end of 2011.
The Treasury’s latest guess as of Sept. 30, 2011, was $70 billion, up $21 billion from $49 billion on March 31, 2011, and it advised that the highest TARP losses are from funds extended to the automotive industry, AIG, and the housing industry.
“On February 13, 2012, OMB [Office of Management and Budget] issued the Administration’s fiscal year 2013 budget, which included a TARP lifetime cost estimate of $67.8 billion, based upon figures from November 30, 2011.10 That was an increase from its estimate of $53.2 billion based on June 30, 2011 data,” said the SIGTARP report.
Transparency in Question
“One common theme that runs through SIGTARP’s audits is that there was often a lack of detailed and complete documentation of Government decision-making during the financial crisis and TARP,” testified Christy Romero, special SIGATARP inspector general, before a July House Committee.
At issue is the refusal by President Barack Obama’s former auto industry adviser Ron Bloom and Treasury officials Matt Wilson and Harry Feldman to answer questions concerning the restructuring plans of General Motors Company (GM) and Delphi Automotive PLC, claiming that their testimony would not add any new information and that they were too busy to comply, despite that email traffic to the contrary came to light during the hearings.
Facing subpoenas, the three finally agreed to submit themselves to questioning by SIGTARP’s audit team, according to a statement on the Delphi Salaried Retirees Association website.
The government involved itself in GM’s bankruptcy proceedings by constraining the bankruptcy process. It appears that the process was rigged in favor of the United Auto Workers (UAW) labor union.
Without the government’s interference into the bankruptcy process, there would have been no taxpayer loss, while due to the meddling, taxpayer losses amounted to $26.5 billion, testified Todd Zywicki of the Mercatus Center before a July U.S. House of Representative Committee.
“The bankruptcy and bailouts of Chrysler and GM were unprecedented in the number of blatant irregularities and in their abuses of the bankruptcy system [by the U.S. government]. … In light of the Treasury’s estimate that the government will lose $23 billion on this investment, we conclude that the entire loss to the taxpayers is the result of preferentially favorable, and completely unjustified, treatment of the UAW in bankruptcy,” testified Zywicki.
The Epoch Times publishes in 35 countries and in 19 languages. Subscribe to our e-newsletter.