Tells us about your thoughts on the US Real Estate market, given the class action lawsuits on commissions?
I appreciate the follow-up since our last discussions, or at least my predictions for 2024. Which by the way, are fairly spot on for both commercial and residential for the first half of 2024.
How do you think it will end up, or resolve itself.
Just in a nutshell, the whole thing with the residential commission thing is a real shit show. I’m certain those big national companies, like REMAX, Keller Williams and Realty One Group will regret the tens of millions of dollars they have settled as a payout. The same argument being used as to why real estate agents should pay back consumers, where they agreed upfront to pay a 3% to 6% commission to sale their home – is the same argument that plaintiffs in personal injury cases can use against their lawyers, which is usually a 30% to 33% contingency fee, and that they should also have their signed legal retainers nullified and be recompensed. That’s a ludicrous legal theory. Both industry professionals, real estate brokers and lawyers are two of the most prolific over disclosures that exist today, and that’s to avoid what’s happening now. Sorry to be so negative.
What about The Informant, your fourth coming book. That’s at least positive, right?
Of course it is. It’s always good to write. Well, let me see, that’s been more of a statute of limitations situation than anything else. Not in terms of compensation, because the specifics of that situation would not have entitled me to compensation, but more so when it was ideal or even legally permissible to write about my role as an informant, given there were two different states with jurisdiction, that being Florida and the other California.
What do you mean by two different state jurisdictions?
The prevailing law is controlled by either of those two states, since the fraudulent acts originated out of California, where a mortgage fraud ring bought two of my condos in Burbank, CA, unbeknownst to me. Florida may be an issue, since at the time of contact from the FBI in 2010, I was working – ironically, on a banking mortgage fraud project in Jacksonville. I can’t make this stuff up. But more broadly, since it was the FBI who was ‘handling’ my cooperation, there were potential federal violations.
Why weren’t you charged?
I don’t know. Maybe because they liked me. I assumed they had obtained a search warrant for my emails and other electronic communications. Maybe to see if I would call those who I sold my two proprieties to for over a million dollars. It could be, just to see if I would tip them off. Which could have been why they didn’t charge me. To make sure I was a ‘defacto’ cooperating witness. Each condo now is over $1,000,000 apiece, legitimately and easily.
Going back to the compensation to an informant. Why weren’t you compensated?
Well, because my properties weren’t sold at a loss, technically. I was able to sell both properties significantly above the listed price. Since I’m licensed in California, I was the listing agent and the agent of record. Which I realize is suspect, since in 2007 everything pretty much was being sold at a loss. But this mortgage fraud ring wanted to pay significantly over list, so I agreed. Morally and legally, I was not cognizantly aware of what they were doing. Some people do in fact buy over list. As a former commercial real estate broker, that happened several times. No big deal. Not unheard of. They got me out of a deep bind. What was the other question?
About the compensation?
Well yeah. Not those two condo units, but in The Informant I recount the time I was a potential witness against Wells Fargo, in what is called a relator case. That’s a legal term. In a ‘qui tam action’, a relator brings an action against a person or company on the government’s behalf. Or, a relator is one who files a qui tam lawsuit against another under the False Claims Act. The material witness is entitled up to 25% I think, or the gross civil judgement against a company. Essentially, I would have been a federally protected witness in a whistleblower case.
Did you assist in that case.
I didn’t, because I never officially became a witness. In about 2016, about the time I was no longer an active informant with the FBI, which was 2010 to 2012, I got approached. I can talk about this because Wells Fargo settled that relator case in the tens of millions, so the statute of limitations…..or rather, a breach of confidentiality does not affect me, since the documents I had as a whistleblower where in connection with systematic and companywide criminal and civil violations committed by Wells Fargo. In that case, the whistleblower cannot be prosecuted, since their act of absconding – or basically taking company documents is protected activity since it relates to a criminal or civil act. In this case, it being Wells Fargo.
Who was the Realtor? I mean Relator.
It was a real estate guy out of Pasadena, CA. But he had sold homes and I had sold commercial properties. Thought I was going to get along with the him because that’s where I’m from. He came across my background when I answered a blind ad that was looking for subject matter experts on mortgage portfolios.
And looking for what?
For mortgage and real estate professionals that had worked or were working on loan modification projects. What they were actually doing, was floating an advert to recruit unsuspecting witnesses against major banks, and to also get ahold of internal documents that evidenced their decision metrics – all for the purpose to see if those majors banks were compliant with federal law related to the Dodd-Frank Act, which mandates that federally insured banks are properly providing loan modifications to its customers. These guys were really slick. Sophisticated operators who would sell their mothers’ grave if you paid them enough. I was impressed by their audacity.
Did you meet with this person from Pasadena.
No, I didn’t. All communication was by phone and email. But this punk was sleazy. Wanted to fly me into Dallas to view the documents, since I was still working in Minneapolis. At this time the documents were in storage in SoCal, since that’s where I had them overnighted by FedEx. About two banker boxes full of files that showed underwriters, analysts and managers had systematically denied homeowners’ loan modifications they were entitled to under law. Just really a fucked situation. I felt bad. Eventually, I was able to leave that project for another project, without them none the wiser. There has been at least ½ dozen major loan modification class action lawsuits with Wells over the last decade. It’s the gift that just keeps on giving. It all stems from one of the government programs, I think it was called…..the eh….Home, the Home something or another.
You mean the Home Affordable Housing Program.
Yep, that’s it. Thanks for helping me out on that one. They call it HAMP for short.
What eventually became of your cooperation?
Couldn’t get this person out of Pasadena to formalize a Relator Agreement and to put my cut in writing. Rule 1 in real estate. Get it in writing. There were conference calls with his lawyers going over case strategy and my background as an asset. I reciprocated in good faith and shared a small sample of the documents, of about 15 to 20 pages. Even provided a photograph of the two banker boxes, with the top off and shimmied over the side, just to show the live docs inside. Bottomline, he didn’t commit to a Relator Agreement. So essentially, I’d be giving two boxes of material documents to help their case, with no guarantee that I’d get paid.
Seriously?
I know, heard to believe. He at least had credibility on these types of cases. In Westlaw-Lexis, I verified he had won a $30M Qui Tam whistle blower case against Ocwen Financial Corp. But there was something unsaintly about him. Anytime a grown adult brags about having a new $150,000 Maserati in Dallas at his second home to another adult male, you know there’s some developmental issues here. I call it “little boy syndrome”. And I would’ve never forgave myself if I sent over those two boxes and didn’t get paid as one of the Relators. Just couldn’t take the chance. So, I walked.
Any regrets?
Not at all. And especially so, since at one point, he basically said, he and the lawyers may not even use the documents I provide? Which is just haunting. He’s basically saying…..I may fuck you in the end and there’s not a damn thing you can do about it! The way in which I would react if that had actually happened, would likely be detrimental to my freedom and individual liberties.
Now I understand.
Thanks. It just wasn’t worth it.
Good. Then we look forward in highlighting The Informant when it releases.
Fair enough. Probably in about early 2025. It’s 90% done. Shouldn’t be too long.
D Sidney Potter
