Skip to comments.Bet on Foreclosure Boom Turns Sour for Investors
Posted on 02/01/2011 7:22:16 PM PST by DeaconBenjamin
David J. Stern may be the best-known beneficiary of the foreclosure boom, having made millions in recent years from evictions processed by his law firm, the largest of its kind in Florida. But when he took part of his firm public early last year, he had plenty of help from a constellation of investors also looking to cash in on people losing their homes.
Early in 2010, the back-office processing operations of Mr. Sterns law firm were converted into a publicly traded company called DJSP Enterprises. Mr. Stern pocketed nearly $60 million from that transaction, public filings show.
Behind that big-money deal was a curious cast of characters, including some with previous run-ins with regulators. Other parties included a small Wall Street investment bank headed by a former presidential candidate, the retired Gen. Wesley K. Clark, and a little-known private equity firm based in New York.
As the Florida attorney generals office continues to investigate whether Mr. Sterns law firm falsified documents in order to speed up foreclosures, the firm has lost its biggest clients, including Citibank and Fannie Mae. Many of DJSPs executives have left the company, and it has laid off about 80 percent of its 1,200 employees.
Meanwhile, investors in DJSP are not doing any better. Shares of the company, which were worth $14 apiece last summer, trade now for about 50 cents on the Nasdaq exchange.
DJSP faces a lawsuit from investors who claim they were misled about its financial prospects, an accusation the company has denied. Separately, former employees of DJSP who performed back-office work related to Mr. Sterns law firm have sued, contending that the company failed to follow federal regulations in laying them off; the company filed a motion to dismiss the claims.
(Excerpt) Read more at nytimes.com ...
That whole rubberstamping and bypassing deed registration thing just didn’t pan out.
Face it it’s the Dead Beats’ FAULT!
That’s what the free market and investing is all about. If the guy who took it public committed fraud, that’s one thing; but if all of these disappointed investors simply jumped on the bandwagon of what wouldn’t have looked like such a great deal if they’d done their homework properly, then they got what they deserved.
Speaking of deadbeats wow look at all the business’s not paying up and then the really big deadbeats the big global banks they are sticking it to the taxpayer from every angle.
“Construction loans made up more than half of the total, at $391 million, while commercial mortgages contributed $209 million, or 29% of the total nonperforming pool.
Bad residential loans, by way of comparison, made up $90 million in nonperforming loans.”
Fannie and Freddie’s biggest deadbeats
Unlimited credit for GSEs seen as backdoor bailout
“The very best its million-dollar executives can do is claw back a penny on each bubbly subprime dollar?”
They write them off and leave the taxpayers stuck with the mess.
More banks walking away from homes, adding to housing crisis
Investigate Ashley Wilkes (Wesley Clark).