Wagner V.citibank COMPLAINT

1 Philip A.
Kramer SBN # 113969

KRAMER & KASLOW
2
23901 Calabasas Road, Suite 2010
Calabasas, CA 91302
3
Tel: (818) 224-3900
4
Fax: (818) 224-3911
5 Attorneys for Plaintiffs
6
SUPERIOR COURT OF THE STATE OF CALIFORNIA
7
COUNTY OF LOS ANGELES
8
RICHARD WAGNER an individual;
9 MELISSA SISSON, an individual; Case No. BC452265
PEDRO NUNEZ SANTACRUZ, an
10 individual; GABRIEL CASTANARES, an FIRST AMENDED COMPLAINT FOR:
individual; STEPHEN HUPE, an individual;
11 NATALYA HUPE, an individual; 1. FRAUDULENT
DAI VU, an individual; CONCEALMENT
12 ANNE PHAM, an individual;
STEPHEN VICTOR ZAMPAGA, an [VIOLATION OF CAL. CIV.
13 CODE §§ 1572, 1709 AND
individual; KARA ANN DUFFY, an
individual; JEREMY SHEAFFER, an 1710] (INCLUDING
14
individual; HEATHER SHEAFFER, an DECLARATORY AND
15 individual; PAVEL TSIBIKOV, an INJUNCTIVE RELIEF TO
individual; MICHAEL VOID MORTGAGE);
16 SCHOENBAECHLER, an individual; 2. INTENTIONAL
CAROL SEVERANCE, an individual;
JULIE CRESPI, an individual; JOSE MISREPRESENTATION
17
PEREZ, an individual; ALBERT [VIOLATION OF CAL. CIV.
18 RODRIGUEZ, an individual; FUMIKO CODE §§ 1572, 1709 AND
FISHER, an individual; CLIVE RUPERT, an 1710] (INCLUDING
19 individual; LINDA ADELMANN- DECLARATORY AND
SCHEMBERGER, an individual; TOM INJUNCTIVE RELIEF TO
20 PHANCO, an individual; JAMES VOID MORTGAGE);
LUNFORD, an individual; MINA
21 MONTEJANO, an individual; BONNIE 3. NEGLIGENT
MORENTIN CHAVEZ, an individual; MISREPRESENTATION
22 [VIOLATION OF CAL. CIV.
DONALD OKADA, an individual; JORGE
23
LLAMAS, an individual; DAVID BERGER, CODE §§ 1572, 1709 AND
an individual; WILLIAM DANIELS, an 1710] (INCLUDING
24
individual; ALEXANDER MENDEZ, an DECLARATORY AND
individual; CAUSEVIC NAZIHA, an
individual; CATALINO OSORIO, an INJUNCTIVE RELIEF TO
25
individual; ALBERT BRYANT, an VOID MORTGAGE);
26 individual; MICHELE BEEKMAN, an 4. VIOLATION OF CAL. CIVIL
individual; APOLLEON ALEXANDER, an CODE § 2923.5;
27 individual; MICHAEL CHAMBERS, an 5. UNFAIR COMPETITION
individual; JESUS ATIENZA, an individual; [VIOLATIONS OF CAL. BUS.
28 MARCI SMITH, an individual; JANET & PROF. CODE § 17200 ET
LINDER, an individual; TIEN MCKINNON,
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COMPLAINT
an individual; LORI MARTIN, an SEQ.] (INCLUDING
1 individual; LOUISA STINCHCOMB, an INJUNCTIVE RELIEF TO
individual; ANUSHKA DRESCHER, an VOID MORTGAGE)
2
individual; SOFIA COSTA, an individual;
JEFFREY MCKOY, an individual; 6. BREACH OF CONTRACT
3
CHARLES E. KLEIN, an individual;
NEMESIO NAVARRO, an individual; [JURY TRIAL D EMANDED]
4
TRAVIS PALMER, an individual; KATHY
5 BROWN, an individual; CLINT JAMES, an
individual; ELIZABETH HILD, an
6 individual; AVADIS KHANO, an individual;
ARACELI GARCIA, an individual;
7 EDUARDO FERNANDEZ, an individual;
ILONA ROSE, an individual; CORRIE ANN
8 MARLOW, an individual; RAFAEL
PENILLA, JR., an individual; JOSE SOLIS,
9 an individual; LORI WALLER, an
individual; DENISE REGISTER, an
10 individual; WILLIAM NORMANDY, an
individual; MARK KNOTT, an individual;
11 LUCILLE MILLER BARNETT, an
individual; STEVEN JAMES, an individual;
12
GLENN WILLIAMS, an individual; TERRY
13
MONTGOMERY, an individual; ROSE
RIVERA, an individual; DIANE
14 STEINIGER, an individual; PEDRO
SANTACRUZ, an individual; WARREN
15 HARADA, an individual; ROCHELLE
SAULSBERRY, an individual; KAREN
16 GADALETA, an individual; WILLIAM
BOYD, an individual; and others similarly
17 situated named herein as ROES 1 through
10,000, inclusive,
18
Plaintiffs,
19
vs.
20
21
22
CITIBANK CORPORATION, a Delaware
corporation; CITI RESIDENTIAL
23
LENDING, a national banking association;
WESTERN NATIONAL APPRAISALS, a
24 business entity; CALIFORNIA
RECONVEYANCE COMPANY, a
25 California corporation; CASAS &
HIPOTECAS, a California corporation; and
26 DOES 1 through 1000, inclusive,
27 Defendants
28
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COMPLAINT
1 Plaintiffs, and each of them, hereby demand a jury trial and allege as follows:
2
3 INTRODUCTION
4 1. This lawsuit arises from, among other things: (i) the deception in inducing
5 Plaintiffs to enter into loans and mortgages1 from approximately 2003 through 2007 and which
6 were acquired or are serviced by Defendants; (ii) the fraudulent and illegal use of MERS in
7 connection with those loans and mortgages; (iii) Defendants’ failure to perform their obligations
8 required pursuant to accepting TARP funds; (iv) Defendants’ breach of Plaintiffs’ statutorily
9 protected rights; (v) Defendants’ breach and willful violation of numerous consumer and
10 homeowner protection statutes, and willful violations of unfair business practices statues, by,
11 among other things, processing money from unknown sources, in contravention of the Patriot
12 Act; (vi) accepting money, transferring alleged assets and foreclosing upon alleged assets in
13 instances where the alleged assets do not exist, and which these Defendants have no right, title, or
14 interest upon which they can act; and (vii) Defendants’ continuing tortuous conduct intended to
15 deprive Plaintiffs of their rights and remedies for the foregoing acts, described below.
16 2. Defendants, among other things, violated laws, breached contracts, and repeatedly
17 and intentionally failed to honor its agreements with borrowers.
18 3. Moreover, Defendants, and each of them, wrongfully acted and continue to act as
19 if they are either the owner, beneficiary, successor, assignee, servicer, or have some right, title, or
20 interest in Plaintiffs’ notes, mortgages, or deeds of trust. In reality, the Defendants, and each of
21 them, are committing and continuing a fraud, by utilizing and foreclosing upon assets that do not
22 exist.
23 4. This action seeks remedies for the foregoing improper activities, including a
24 massive fraud perpetrated upon Plaintiffs and other borrowers by the Defendants’ business that
25 devastated the values of their residences, in most cases resulting in Plaintiffs’ loss of all or
26 substantially all of their net worths.
27 1
This Complaint uses ―mortgage‖ and ―deed of trust‖ interchangeably. Depending upon the state
28 and other factors, a loan may be secured by either form of security instrument, the deed of trust
being the customary instrument in California.
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COMPLAINT
1 PARTIES
2 5. Plaintiff RICHARD WAGNER is an individual residing in the State of
3 California, who borrowed money from Defendants or its subsidiaries or affiliates between
4 January 1, 2003 and December 31, 2007, secured by a deed of trust on his California real
5 estate. At all times material hereto, Defendants has acted as Servicer or some other control
6 capacity over processing the loan.
7 6. Plaintiff MELISSA SISSON is an individual residing in the State of Deleware,
8 who borrowed money from Defendants or its subsidiaries or affiliates between January 1, 2003
9 and December 31, 2007, secured by a deed of trust on her real estate. At all times material
10 hereto, Defendants has acted as Servicer or some control capacity over processing the loan.
11 7. Plaintiff PEDRO NUNEZ SANTACRUZ is an individual residing in the State of
12 Colorado, who borrowed money from Defendants or its subsidiaries or affiliates between
13 January 1, 2003 and December 31, 2007, secured by a deed of trust on his real estate. At all
14 times material hereto, Defendants has acted as Servicer or some other control capacity over
15 processing the loan.
16 8. Plaintiff GABRIEL CASTANARES is an individual residing in the State of
21 9. Plaintiff STEPHEN HUPE is an individual residing in the State of Utah, who
22 borrowed money from Defendants or its subsidiaries or affiliates between January 1, 2003 and
23 December 31, 2007, secured by a deed of trust on his real estate. At all times material hereto,
24 Defendants has acted as Servicer or some other control capacity over processing the loan.
25 10. Plaintiff NATALYA HUPE is an individual residing in the State of Utah, who
27 December 31, 2007, secured by a deed of trust on her real estate. At all times material hereto,
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COMPLAINT
1 11. Plaintiff DAI VU is an individual residing in the State of Washington, who
5 12. Plaintiff ANNE PHAM is an individual residing in the State of Washington, who
9 13. Plaintiff STEPHEN VICTOR ZAMPAGA is an individual residing in the State
10 of Hawaii, who borrowed money from Defendants or its subsidiaries or affiliates between
14 14. Plaintiff KARA ANN DUFFY is an individual residing in the State of Hawaii,
16 and December 31, 2007, secured by a deed of trust on her real estate. At all times material
17 hereto, Defendants has acted as Servicer or some other control capacity over processing the
18 loan.
19 15. Plaintiff JEREMY SHEAFFER is an individual residing in the State of Virginia,
21 and December 31, 2007, secured by a deed of trust on her California real estate. At all times
22 material hereto, Defendants has acted as Servicer or some other control capacity over
24 16. Plaintiff HEATHER SHEAFFER is an individual residing in the State of
25 Virginia, who borrowed money from Defendants or its subsidiaries or affiliates between
26 January 1, 2003 and December 31, 2007, secured by a deed of trust on her real estate. At all
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COMPLAINT
1 17. Plaintiff PAVEL TSIBIKOV is an individual who borrowed money from
2 Defendants or its subsidiaries or affiliates between January 1, 2003 and December 31, 2007,
3 secured by a deed of trust on his real estate. At all times material hereto, Defendants acted as
4 Servicer or some other control capacity over processing the loan.
5 18. Plaintiff MICHAEL SCHOENBAECHLER is an individual residing in the State
6 of Nevada, who borrowed money from Defendants or its subsidiaries or affiliates between
8 times material hereto, Defendants acted as Servicer or some other control capacity over
10 19. Plaintiff CAROL SEVERANCE is an individual residing in the State of
12 January 1, 2003 and December 31, 2007, secured by a deed of trust on her California real
15 20. Plaintiff JULIE CRESPI is an individual residing in the State of California, who
17 December 31, 2007, secured by a deed of trust on her California real estate. At all times
20 21. Plaintiff JOSE PEREZ is an individual residing in the State of New York, who
24 22. Plaintiff ALBERT RODRIGUEZ is an individual residing in the State of
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COMPLAINT
1 23. Plaintiff FUMIKO FISHER is an individual residing in the State of California,
6 24. Plaintiff CLIVE RUPERT is an individual residing in the State of California,
8 and December 31, 2007, secured by a deed of trust on his California real estate. At all times
11 25. Plaintiff LINDA ADELMAN-SCHEMBERGER is an individual residing, who
15 26. Plaintiff TOM PHANCO is an individual who borrowed money from
17 secured by a deed of trust on his real estate. At all times material hereto, Defendants has acted
18 as Servicer or some other control capacity over processing the loan.
19 27. Plaintiff JAMES LUNFORD is an individual who borrowed money from
23 28. Plaintiff MINA MONTEJANO is an individual who borrowed money from
25 secured by a deed of trust on her real estate. At all times material hereto, Defendants has acted
27 29. Plaintiff BONNIE MORENTIN CHAVEZ is an individual residing who
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COMPLAINT
3 30. Plaintiff DONALD OKADA is an individual who borrowed money from
7 31. Plaintiff JORGE LLAMAS is an individual who borrowed money from
11 32. Plaintiff DAVID BERGER is an individual who borrowed money from
15 33. Plaintiff WILLIAM DANIELS is an individual who borrowed money from
19 34. Plaintiff ALEXANDER MENDEZ is an individual who borrowed money from
23 35. Plaintiff CAUSEVIC NAZIHA is an individual who borrowed money from
27 36. Plaintiff CATALINO OSORIO is an individual residing in the State of
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COMPLAINT
4 37. Plaintiff ALBERT BRYANT is an individual residing in the State of Florida,
6 and December 31, 2007, secured by a deed of trust on his Florida real estate. At all times
9 38. Plaintiff MICHELE BEEKMAN is an individual residing in the State of
10 Nebraska, who borrowed money from Defendants or its subsidiaries or affiliates between
11 January 1, 2003 and December 31, 2007, secured by a deed of trust her Nebraska real estate.
12 At all times material hereto, Defendants has acted as Servicer or some other control capacity
13 over processing the loan.
14 39. Plaintiff APOLLEON ALEXANDER is an individual residing in the State of
15 Texas, who borrowed money from Defendants or its subsidiaries or affiliates between January
16 1, 2003 and December 31, 2007, secured by a deed of trust his Texas real estate. At all times
19 40. Plaintiff MICHAEL CHAMBERS is an individual residing in the State of
20 Nebraska, who borrowed money from Defendants or its subsidiaries or affiliates between
21 January 1, 2003 and December 31, 2007, secured by a deed of trust her Nebraska real estate.
24 41. Plaintiff JESUS ATIENZA is an individual residing in the State of California,
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COMPLAINT
1 42. Plaintiff MARCI SMITH is an individual residing in the State of California, who
6 43. Plaintiff JANET LINDER is an individual residing in the State of California,
11 44. Plaintiff TIEN MCKINNON is an individual residing in the State of California,
16 45. Plaintiff LORI MARTIN is an individual residing in the State of Maryland, who
18 December 31, 2007, secured by a deed of trust on her Maryland real estate. At all times
21 46. Plaintiff LOUISA STINCHCOMB is an individual residing in the State of Ohio,
23 and December 31, 2007, secured by a deed of trust on her Ohio real estate. At all times
26 47. Plaintiff ANUSHKA DRESCHER is an individual residing in the State of
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COMPLAINT
3 48. Plaintiff SOFIA COSTA is an individual residing in the State of Massachusetts,
5 and December 31, 2007, secured by a deed of trust on her Massachusetts real estate. At all
8 49. Plaintiff JEFFREY MCKOY is an individual residing in the State of California,
13 50. Plaintiff CHARLES E. KLEIN is an individual residing in the State of
18 51. Plaintiff NEMESIO NAVARRO is an individual residing in the State of New
19 York, who borrowed money from Defendants or its subsidiaries or affiliates between January 1,
20 2003 and December 31, 2007, secured by a deed of trust on his New York real estate. At all
23 52. Plaintiff TRAVIS PALMER is an individual residing in the State of
24 Massachusetts, who borrowed money from Defendants or its subsidiaries or affiliates between
25 January 1, 2003 and December 31, 2007, secured by a deed of trust on his Massachusetts real
28 ///
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COMPLAINT
1 53. Plaintiff KATHY BROWN is an individual residing in the State of Virginia, who
3 December 31, 2007, secured by a deed of trust on her Virginia real estate. At all times material
5 loan.
6 54. Plaintiff CLINT JAMES is an individual residing in the State of Virginia, who
8 December 31, 2007, secured by a deed of trust on his Virginia real estate. At all times material
10 loan.
11 55. Plaintiff ELIZABETH HILD is an individual residing in the State of California,
16 56. Plaintiff AVADIS KHANO is an individual residing in the State of California,
21 57. Plaintiff ARACELI GARCIA is an individual residing in the State of California,
26 58. Plaintiff EDUARDO FERNANDEZ is an individual residing in the State of
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COMPLAINT
3 59. Plaintiff ILONA ROSE is an individual residing in the State of California, who
8 60. Plaintiff CORRIE ANN MARLOW is an individual residing in the State of
13 61. Plaintiff RAFAEL PENILLA, JR., is an individual residing in the State of
18 62. Plaintiff JOSE SOLIS is an individual residing in the State of California, who
20 December 31, 2007, secured by a deed of trust on his California real estate. At all times
23 63. Plaintiff LORI WALLER is an individual residing in the State of California, who
25 December 31, 2007, secured by a deed of trust on his California real estate. At all times
28 ///
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COMPLAINT
1 64. Plaintiff DENISE REGISTER is an individual residing in the State of
2 Massachusetts, who borrowed money from Defendants or its subsidiaries or affiliates between
3 January 1, 2003 and December 31, 2007, secured by a deed of trust on her Massachusetts real
6 65. Plaintiff WILLIAM NORMANDY is an individual residing in the State of
7 Montana, who borrowed money from Defendants or its subsidiaries or affiliates between
8 January 1, 2003 and December 31, 2007, secured by a deed of trust on his Montana real estate.
11 66. Plaintiff MARK KNOTT is an individual residing in the State of Washington,
13 and December 31, 2007, secured by a deed of trust on his Washington real estate. At all times
16 67. Plaintiff LUCILLE MILLER BARNETT is an individual residing in the State of
21 68. Plaintiff STEVEN JAMES is an individual residing in the State of Alabama,
23 and December 31, 2007, secured by a deed of trust on his Alabama real estate. At all times
26 69. Plaintiff GLENN WILLIAMS is an individual residing in the State of Maryland,
28 and December 31, 2007, secured by a deed of trust on his Maryland real estate. At all times
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COMPLAINT
3 70. Plaintiff TERRY MONTGOMERY is an individual residing in the State of
4 Mississippi, who borrowed money from Defendants or its subsidiaries or affiliates between
5 January 1, 2003 and December 31, 2007, secured by a deed of trust on his Mississippi real
8 71. Plaintiff ROSE RIVERA is an individual residing in the State of Arizona, who
10 December 31, 2007, secured by a deed of trust on her Arizona real estate. At all times material
12 loan.
13 72. Plaintiff DIANE STEINIGER is an individual residing in the State of Arizona,
15 and December 31, 2007, secured by a deed of trust on her Arizona real estate. At all times
18 73. Plaintiff PEDRO SANTACRUZ is an individual residing in the State of
19 Colorado, who borrowed money from Defendants or its subsidiaries or affiliates between
20 January 1, 2003 and December 31, 2007, secured by a deed of trust on his Colorado real estate.
23 74. Plaintiff WARREN HARADA is an individual residing in the State of Hawaii,
25 and December 31, 2007, secured by a deed of trust on his Hawaii real estate. At all times
28 ///
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COMPLAINT
1 75. Plaintiff ROCHELLE SAULSBERRY is an individual residing in the State of
2 Michigan, who borrowed money from Defendants or its subsidiaries or affiliates between
3 January 1, 2003 and December 31, 2007, secured by a deed of trust on her Michigan real estate.
6 76. Plaintiff KAREN GADALETA is an individual residing in the State of New
7 York, who borrowed money from Defendants or its subsidiaries or affiliates between January 1,
8 2003 and December 31, 2007, secured by a deed of trust on her New York real estate. At all
11 77. Plaintiff WILLIAM BOYD is an individual residing in the State of Nevada, who
13 December 31, 2007, secured by a deed of trust on his Nevada real estate. At all times material
15 loan.
16 78. The other Plaintiffs, named as ROES 1 through 10,000, are similarly situated to
17 Plaintiffs identified above in that they too borrowed money from the Defendants (as defined
18 below) between the dates beginning on January 1, 2003 and ending on December 31, 2007,
19 secured by deeds of trust on their California realty. Further, at all times material hereto,
20 Defendants have acted as servicer or in another capacity with respect to loan processing. All of
21 the foregoing secured real estate loans made to Plaintiffs were wrongfully and fraudulently
22 handled and processed by Defendants, resulting in damages.
23 79. Plaintiffs’ counsel is aware of and has provided services to unnamed Roe
24 plaintiffs, each of whom has sustained actual injury. The unnamed Roes sue under their names
25 fictitiously because they either wish to maintain their privacy or because Plaintiffs’ counsel
26 have not completed the due diligence necessary to properly plead their claims as of the filing of
27 this Complaint. From time-to-time, upon conducting the due diligence and learning the
28 information sufficient to add remaining Roe Plaintiffs to this action, Plaintiffs shall seek leave
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COMPLAINT
1 of Court to amend this Complaint to name these additional Roe Plaintiffs, or will follow such
2 other process as is prescribed by the Court.
3 80. An additional large number of persons has contacted counsel or their staffs
4 pertaining to the matters complained of herein. In the event Plaintiffs believe it is in
5 furtherance of judicial economy and justice to add all or any of these additional persons to this
6 Complaint, Plaintiffs shall bring a noticed motion to add such parties to this action. In the
7 event Plaintiffs file a separate lawsuit appertaining to all or any of these unnamed persons, or
8 such further number as may exist in view of future developments, Plaintiffs shall file all
9 appropriate Notices of Related Cases in accordance with California law, or as otherwise
10 directed by the Court.
11 81. Defendant CITIBANK CORPORATION (―CITI‖), a Delaware corporation, is,
12 among other things, a mortgage lender with its primary headquarters located in New York, New
13 York.
14 82. Defendant CITI RESIDENTIAL LENDING (―CRL‖) is a national banking
15 association. CITI and CRL are sometimes collectively referred to as the ―CITI Defendants.‖
16 83. The Defendants’ mortgage lending business grew to the point where it had
17 become one of the largest savings association and one of the largest servicer of mortgages in
18 the Unites States. Growth was due largely to an aggressive growth strategy that was
19 relentlessly pursued. The business operated in all fifty States in the United States of America.
20 84. Defendant WESTERN NATIONAL APPRAISALS is a business entity, with its
21 principal place of business in the State of California, in the County of Los Angeles.
22 85. Defendant CALIFORNIA RECONVEYANCE COMPANY is a business entity,
23 with its principal place of business in the State of California, in the County of Los Angeles.
24 86. Defendant CASAS & HIPOTECAS is a business entity operating in the State pf
25 California, County of Los Angeles.
26 87. At all times material hereto, the business of Defendants was operated through a
27 common plan and scheme designed to conceal the material facts set forth below from Plaintiffs,
28 from the California public and from regulators, either directly or as successors-in-interest to the
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COMPLAINT
1 business acquired from others.
2 88. The concealment was completed, ratified and/or confirmed by each Defendant
3 herein directly or as a successor-in-interest as the acquirer of an entire business, and each
4 Defendant performed or has sought to benefit from the tortious acts set forth herein for its own
5 monetary gain and as a part of a common plan developed and carried out with the other
6 Defendants or as a successor-in-interest to the business that did the foregoing.
7 89. The true names and capacities of the Defendants listed herein as DOES 1
8 through 1,000 are unknown to Plaintiffs who therefore sue these Defendants by such fictitious
9 names. Each of the DOE Defendants was the agent of each of the other Defendants herein,
10 named or unnamed, and thereby participated in all of the wrongdoing set forth herein.
11 90. On information and belief, each such Defendant is responsible for the acts,
12 events and concealment set forth herein and is sued for that reason. Upon learning the true
13 names and capacities of the DOE Defendants, Plaintiffs shall amend this Complaint
14 accordingly.
15 91. Plaintiffs believe and thereon allege that the agents and co-conspirators through
16 which the named Defendants operated included, without limitation, financial institutions and
17 other firms that originated loans on behalf of the enterprise acquired by the CITI Defendants
18 and the CITI Defendants. These institutions acted at the behest and direction of the enterprise
19 and the CITI Defendants, or agreed to participate — knowingly or unknowingly - in the
20 fraudulent scheme described in this Complaint.
21 92. Those firms originating loans that knowingly participated in the scheme are
22 jointly and severally liable with the Defendants for their acts in devising, directing, knowingly
23 benefitting from and ratifying the wrongful acts of the knowing participants. Upon learning the
24 true name of such knowing participants, Plaintiffs shall amend this Complaint to identify such
25 knowing participants as Doe Defendants.
26 93. For avoidance of doubt, such knowing participants include, without limitation,
27 legal and natural persons owned in whole or in part by the enterprise or Defendants or affiliates
28 thereof legal and natural persons owning directly or through affiliates financial interests in the
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COMPLAINT
1 enterprise or Defendants; legal and natural persons directly or through affiliates acting pursuant
2 to contracts to share in the benefits of the wrongdoing alleged in this Complaint and knowing
3 to at least some degree committing acts and omissions in support thereof; and legal and natural
4 persons knowing to at least some degree acting in concert with the enterprise or the
5 Defendants..
6 94. As to those legal and natural persons acting in concert without an express legal
7 relationship with Defendants or their affiliates, on information and belief, the Defendants
8 knowingly induced and encouraged the parallel acts, created circumstances permitting and
9 authorizing the parallel acts and omissions, benefited therefrom and ratified the improper
10 behavior, becoming jointly and severally liable therefor.
11 95. As to those legal an natural persons whose acts in support of the loan scheme
12 were unwitting, Plaintiffs will consider whether and on what basis such persons might be liable
13 for their acts; however, on information and belief, the Defendants knowingly induced and
14 encouraged the acts and omissions, created circumstances permitting and authorizing the
15 parallel acts and omissions, benefited therefrom and ratified the improper behavior, becoming
16 liable therefore.
17 96. The Defendants’ mortgage lending business implemented a plan to ―pool‖ the
18 foregoing mortgages and sell the pools for inflated value. Rapidly, these two intertwined
19 schemes grew into a brazen plan to disregard underwriting standards and fraudulently inflate
20 property values – county-by-county, city-by-city, person-by-person – in order to take business
21 from legitimate mortgage-providers, and moved on to massive securities fraud hand-in-hand
22 with concealment from, and deception of, Plaintiffs and other mortgagees on an unprecedented
23 scale.
24 97. From as early as 2004, the senior management of Defendants’ mortgage lending
25 business knew the scheme would cause a liquidity crisis that would devastate Plaintiffs’ home
26 values and net worths. But, they didn’t care, because their plan was based on insider trading –
27 pumping for as long as they could and then dumping before the truth came out and Plaintiffs’
28 losses were locked in.
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COMPLAINT
1 98. At the very least, at the time of entering into the notes and deeds of trust
2 referenced herein with respect to each Plaintiff, the Defendants’ business, each Defendant
3 originating or participating in the origination of a mortgage, each Defendant in the chain of title
4 of the foregoing mortgages and each Defendant servicing the foregoing mortgages and the
5 successors to each of the foregoing (collectively, the ―Defendants‖) was bound and obligated to
6 fully and accurately disclose to each borrower, including each Plaintiff herein, that the
7 mortgage being offered to the Plaintiff was, in fact, part of a massive fraud that Defendants or
8 their business principals knew would result in the loss of the equity invested by Plaintiff in
9 their homes and in severe impairment to Plaintiffs’ credit ratings.
10 99. It is now all too clear that this was the ultimate high-stakes fraudulent
11 investment scheme of the last decade. Couched in banking and securities jargon, the deceptive
12 gamble with consumers’ primary assets – their homes – was nothing more than a financial
13 fraud perpetrated by Defendants’ mortgage lending enterprise and others on a scale never
14 before seen. This scheme led directly to a mortgage meltdown in California that was
15 substantially worse than any economic problems facing the rest of the United States.
16 100. From 2008 to the present, Californians’ home values decreased by considerably
17 more than most other areas in the United States as a direct and proximate result of the
18 Defendants’ enterprise scheme set forth herein. Defendants’ enterprise systematically
19 destroyed California home values county-by-county, then State-wide, and ultimately across the
20 entire Country.
21 101. The business premise of the enterprise the CITI Defendants’ acquired was to
22 leave the borrowers, including Plaintiffs, holding the bag once Defendants and their executives
23 had cashed in reaping huge salaries and bonuses and selling securities based on their inside
24 information, while investors were still buying the increasingly overpriced mortgage pools and
25 before the inevitable dénouement.
26 102. This massive fraudulent scheme was a disaster both foreseen by Defendants’
27 business and waiting to happen. The operators of Defendants’ business knew it, and yet still
28 induced the Plaintiffs into their scheme without telling them.
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COMPLAINT
1 103. Almost to add further insult to injury, CITI, knowing of this massive fraud, like
2 Civil War carpetbaggers, sought to swoop in and profiteer from the carnage that had been
3 wreaked on Plaintiffs. The CITI Defendants sought to ignore the responsibility for the results
4 of the massive fraud in the mortgage assets and tainted business they were acquiring by
5 aggressively enforcing the mortgages purchased or serviced. The CITI Defendants did this
6 with calculation and deliberation after over nine months had elapsed from the failure of the
7 business and in full recognition of the patent frauds that had been perpetrated on Plaintiffs in
8 connection with the mortgages.
9 104. As a result of all of these actions of Defendants, Plaintiffs lost their equity in
10 their homes, their credit ratings and histories were damaged or destroyed, and Plaintiffs
11 incurred material other costs and expenses, described herein. At the same time, Defendants
12 took from Plaintiffs and other borrowers billions of dollars in interest payments and fees and
13 generated billions of dollars in profits by selling their loans at inflated values.
14 105. With government loss-protection in their hip pocket, the CITI Defendants, with a
15 voraciousness that has been chastised by numerous courts, sought to obliterate the last vestiges
16 of value held by Plaintiffs, lock in government fill-up money and flip distressed assets for a
17 profit. On the heels of an already bad disaster, Defendants piled on after March 2009 to
18 systematically continue the destruction of California home values.
19 106. Defendants’ improper acts are numerous, including, inter alia: (i) issuing Notices
20 of Default in violation of Cal. Civil Code §2923.5; (ii) misrepresenting their intention to
21 arrange loan modifications for Plaintiffs, while in fact creating abusive roadblocks to deprive
22 Plaintiffs of their legal rights; and (iii) and by refusing to respond, in any way, to Plaintiffs’
23 communications.
24 107. These acts continue to this day with hardball tactics and deception that continue
25 to threaten Plaintiffs’ rights and financial security, as well as the economic future of the State of
26 California and the entire United States of America.
27 108. The carpetbagger business plan of the CITI Defendants is no mystery. It is
28 evident in their very formation to acquire the mortgage assets to which this action relates.
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COMPLAINT
1 109. What the Defendants had hoped was that helpless homeowners would not be
2 able to stand up to the Defendants as they eviscerated the Plaintiffs’ life’s savings, chasing a
3 hoped-for gold rush of government bail-out money to make the Defendants rich in the process,
4 while at the same time positioning the Defendants as vultures to pick on the government-paid-
5 for carcass that would be left over.
6 110. Though they were careful not to reveal overtly the piranha-like nature of their
7 business plan, the Defendants’ formation for the sole purpose seeking to obtain an enormous
8 portfolio of tainted mortgages, enforce them as if they were not tainted, crush the homeowners
9 in the process to profit from government money, and then flipping the ―cleansed‖ portfolio is
10 patently evident. In this action, Plaintiffs seek to stop this behavior and obtain the redress they
11 are due.
12 111. The common facts herein include those facts set forth above in the prior sections
13 of this Complaint.
14 112. There has been considerable press attention, litigation and pending governmental
15 investigations establishing, among other things, that in many instances the Defendants herein
16 do not have in their possession, custody or control the original or an authentic copy of the
17 promissory notes or other indicia of realty rights regarding Plaintiffs. Based thereon, on
18 information and belief, Plaintiffs hereby allege that Defendants have made demand for payment
19 on the Plaintiffs with respect to Plaintiffs’ properties at a time when Defendants are incapable
20 of establishing (and do not have any credible knowledge regarding) who owns the promissory
21 notes Defendants are purportedly servicing.
22 113. Many of the promissory notes referenced above are secured or controlled by a
23 beneficiary known as Mortgage Electronic Registration Systems, Inc. (MERS). MERS is
24 sometimes named as the ―nominee‖ or ―beneficiary‖ for unknown lenders representing
25 unsourced money advanced by persons in violation of law. When a loan is transferred among
26 MERS members, MERS purports to simplify the process by avoiding the requirement to re-
27 record the liens and pay county recorder fees.
28 ///
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COMPLAINT
1 114. For the substantial majority of the Plaintiffs herein, MERS claims to be the
2 owner of the security interest indicated by the mortgages transferred by lenders, investors and
3 their loan servicers in the county land records. MERS claims its process eliminates the need to
4 file assignments in the county land records which lowers costs for lenders and consumers by
5 reducing county recording costs from real estate transfers and provides a central source of
6 information and tracking for mortgage loans.
7 115. Based upon published reports, including the MERS website as of the date of this
8 Complaint, on information and belief, MERS does not: (1) take applications for, underwrite or
9 negotiate mortgage loans; (2) make or originate mortgage loans to consumers; (3) extend credit
10 to consumers; (4) service mortgage loans; or (5) invest in mortgage loans.
11 116. MERS has been, and continues to be, used to facilitate the unlawful transfers of
12 mortgages, unlawful pooling of mortgages and the injection into the United States banking
13 industry of unsourced (i.e., unknown) funds, including, without limitation, improper off-shore
14 funds. Plaintiffs are informed and believe and thereon allege that MERS has been listed as
15 beneficial owner of more than half the mortgages in the United States.
16 117. In 2001, Congress found that ―money laundering, and the defects in financial
17 transparency on which money launderers rely, are critical to the financing of global terrorism
18 and the provision of funds for terrorist attacks.‖ Congress specifically found that ―money
19 launderers subvert legitimate financial mechanisms and banking relationships by using them as
20 protective covering for the movement of criminal proceeds and the financing of crime and
21 terrorism . . .‖
22 118. On information and belief, during periods relevant to the other acts complained
23 of herein, Defendants and each of them did not and persist in failing to (1) establish due
24 diligence policies, procedures and controls reasonably designed to detect and report instances
25 of money laundering, (2) establish procedures to take reasonable and practicable measures to
26 verify the identity of those applying for an account with the institution and maintain records of
27 the information used to verify a person’s identity, including name, address, and other
28 identifying information, (3) determine and report the sources of funds used for the mortgages
_____________________________________________________________________________________
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COMPLAINT
1 they originate and service, as well as the sources of funds used to acquire any mortgages, or (4)
2 disclose to Plaintiffs the identities, address and telephone numbers of transferees of their
3 mortgages.
4 119. Upon completion of suffcient discovery, Plaintiffs will seek leave to amend the
5 complaint to supplement the foregoing allegations with respect to additional violations
6 pertaining to the Plaintiffs and additional patterns supporting Plaintiffs’ claims herein including
7 its claim of Unfair Competition, infra.
8 120. Under California Civil Code § 1709 it is unlawful to willfully deceive another
9 ―with intent to induce him to alter his position to his injury or risk.‖
10 121. Under California Civil Code § 1710, it a ―deceit‖ to do any one or more of the
11 following: (1) the suggestion, as a fact, of that which is not true, by one who does not believe it
12 to be true; (2) the assertion, as a fact, of that which is not true, by one who has no reasonable
13 ground for believing it to be true; (3) the suppression of a fact, by one who is bound to disclose
14 it, or who gives information of other facts which are likely to mislead for want of
15 communication of that fact; or, (4) a promise, made without any intention of performing it.
16 122. Under California Civil Code § 1572, the party to a contract further engages in
17 fraud by committing ―any other act fitted to deceive.‖
18 At the time of entering into the notes and deeds of trust referenced herein with respect to each
19 Plaintiff, the enterprise acquired by the CITI Defendants, was bound and obligated to fully and
20 accurately disclose:
21 a. Who the true lender and mortgagee were.
22 b. That to induce a Plaintiff to enter into the mortgage, the enterprise caused the
23 appraised value of Plaintiff’s home to be overstated.
24 c. That to disguise the inflated value of Plaintiff’s home, the enterprise was
25 orchestrating the over-valuation of homes throughout Plaintiff’s community.
26 d. That to induce a Plaintiff to enter into a mortgage, the enterprise disregarded its
27 underwriting requirements, thereby causing Plaintiff to falsely believe that
28 Plaintiff was financially capable of performing Plaintiff’s obligations under the
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COMPLAINT
1 mortgage, when the enterprise knew that was untrue.
2 e. That the enterprise not only had the right to securitize and sell Plaintiff’s
3 mortgage to third-party investors, but that it specifically planned and intended to
4 do so as to virtually all mortgages at highly-inflated and unsustainable values.
5 f. That as to the intended sales:
6 i. The sales would include sales to nominees who were not authorized
7 under law at the time to own a mortgage, including, among others,
8 Mortgage Electronic Registration Systems Inc., a/k/a MERSCORP, Inc.
9 (―MERS‖), which according to its website was created by mortgage
10 banking industry participants to be only a front or nominee to
11 ―streamline‖ the mortgage re-sale and securitization process;
12 ii. Plaintiff’s true financial condition and the true value of Plaintiff’s home
13 and mortgage would not be disclosed to investors to whom the mortgage
14 would be sold;
15 iii. The enterprise intended to sell the mortgage together with other
16 mortgages as to which it also intended not to disclose the true financial
17 condition of the borrowers or the true value of their homes or mortgages;
18 iv. The consideration to be sought from investors would be greater than the
19 actual value of the said notes and deeds of trust; and
20 v. The consideration to be sought from investors would be greater than the
21 income stream that could be generated from the instruments even
22 assuming a 0% default rate thereon;
23 g. That the mortgage would thereby be used as part of a scheme by which the
24 enterprise would bilk investors by selling collateralized mortgage pools at an
25 inflated value.
26 h. That, at the time they did the foregoing, the enterprise knew the foregoing
27 would lead to a liquidity crisis and the likely collapse of the enterprise;
28 i. That the enterprise also knew the foregoing would lead to grave damage to each
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COMPLAINT
1 Plaintiff’s property value and thereby result in the Plaintiff’s loss of the equity
2 Plaintiff invested in the Plaintiffs’ house, as well as damaging the Plaintiff’s
3 credit rating, thereby causing the Plaintiff additional severe financial damage;
4 and
5 62. That the enterprise knew at the time of making each loan, but did not disclose to
6 Plaintiffs, that entire communities would become ―ghost-town-foreclosure-communities‖ after
7 a domino effect of foreclosures hit them.
8 63. When property values started falling – just as the enterprise knew would occur –
9 the enterprise could no longer continue the pretense, concealment and affirmative
10 misrepresentations. Plaintiffs through their losses, and then also the ultimate banker, the U.S.
11 taxpayer, have footed the bill through TARP and other programs.
12 64. The CITI Defendants not only continue to ratify the scheme, but they
13 aggressively seek to profiteer from it.
14 65. With specific aim, CITI, knowing of the massive fraud perpetrated by the
15 enterprise they sought to acquire, swooped in to profiteer. Like Civil War carpetbaggers, the
16 CITI Defendants sought to conceal the fraud of which they were aware and which gave
17 legitimate defenses to borrowers and to ramrod through foreclosures. This was all done while
18 the CITI Defendants have put window dressing on their business strategy, seeking to obfuscate
19 their actions by press releases of diametrically opposite actions. This conspiracy has all been to
20 further crush values, realize losses and collect government bail-out money, and then to take
21 their foot off the neck of the California homeowner market and profiteer from rises in portfolio
22 asset values.
23 66. However, the CITI Defendants can not improve their position in the mortgages
24 and must stand in the shoes of their predecessor.
25 67. As a result, the CITI Defendants are subject to the shortcomings of the assets
26 they purchased, and not only those the CITI Defendants can control for their profit. They are
27 also subject to all defenses to the mortgages. The CITI Defendants’ high-pressure and
28 aggressive foreclosure tactics have been designed to push this fraud through and avoid these
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COMPLAINT
1 defenses by sheer weight of a well-financed financial group against individual homeowners.
2 However, they must accept the burdens as well as the benefits of the mortgage assets contained
3 in the tainted business they acquired.
4 68. The CITI Defendants have hatched their scheme with calm deliberation,
5 including carefully investigating the assets they were acquiring, interviewing executives of the
6 enterprise, and forming their own vehicles to execute the plan. After over nine months had
7 elapsed from the failure of the enterprise, after the emergence of government bail-outs and
8 support, including privately negotiated help and TARP assistance, and in full recognition of the
9 patent frauds that had been perpetrated on Plaintiffs in connection with the mortgages, the CITI
10 Defendants stepped into those dirty shoes.
11 69. As a result of all of these actions of Defendants, Plaintiffs lost their equity in
12 their homes, their credit ratings and histories were damaged or destroyed, and Plaintiffs
13 incurred material other costs and expenses, described herein. At the same time, Defendants
14 took from Plaintiffs and other borrowers billions of dollars in interest payments and fees and
15 generated billions of dollars in profits by selling their loans at inflated values.
16 70. With government loss-protection in their hip pocket, the CITI Defendants, with a
17 voraciousness that has been chastised by numerous courts, have sought to obliterate the last
18 vestiges of value held by Plaintiffs, lock in government fill-up money and flip distressed assets
19 for a profit. On the heels of an already bad disaster, Defendants piled on after March 2009 to
20 systematically continue the destruction of California home values.
21 71. Defendants cannot aver that the market would have worked its way out of the
22 fraud, because they knew of the liquidity crisis and devastation that the fraud had already
23 created. Notwithstanding this knowledge, the CITI Defendants embarked on a massive
24 campaign to crush the values of homes to feed their profiteering scheme.
25 72. The CITI Defendants knew through their investigation that, in violation of their
26 own underwriting guidelines, the enterprise had covertly offered Plaintiffs and others loans at a
27 loan-to-value ratio that was unsustainable and without income verification. The CITI
28 Defendants knew that the enterprise knew this, but concealed from Plaintiffs that they knew,
_____________________________________________________________________________________
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COMPLAINT
1 Plaintiffs would soon be unable to afford the loans once introductory discount interest rates
2 ended, and variable interest and balloon payments kicked in. Indeed, the CITI Defendants saw
3 this fraud and the disjoint it had created in the market, and their ability to act fast and profiteer
4 from the U.S. taxpayer, as key to their own scheme.
5 73. The CITI Defendants knew that when interest payments increased and balloon
6 payments became due, if not before, Plaintiffs and others would begin defaulting on their
7 mortgages and would suffer grievous losses from mortgages for which they were not qualified.
8 Indeed, at the time of their acquisition of the tainted assets, this was going on. It was a pivotal
9 confluence of events that the CITI Defendants sought to exploit for gain. Given the inflated
10 appraised values of their residences, even without a decline in property values, few Plaintiffs
11 would be able to refinance or sell their homes without suffering a significant loss.
12 74. The Defendants knew that the scale of the lending – based on inflated property
13 values, without income verification and in violation of numerous underwriting guidelines –
14 would lead to widespread declines in property values, thereby putting Plaintiffs and others into
15 extremis through which they would lose the equity invested in their homes and have no means
16 of refinancing or selling, other than at a complete loss. That is precisely what happened to
17 Plaintiffs herein.
18 75. The enterprise did not just make misrepresentations and conceal material facts
19 from investors. First, each of the foregoing misrepresentations was made in public documents
20 or forums given wide communication to the public, including Plaintiffs herein. Second, the
21 identical affirmative misrepresentations and concealment pertained to the Plaintiffs, and other
22 borrowers.
23 76. The enterprise had perpetuated its lies by affirmative misrepresentations and by
24 concealing the truth from Plaintiffs and other borrowers because to do otherwise would mean:
25 (a) immediate wash-back into their investor fraud since Plaintiffs and other borrowers are part
26 of the investor public receiving all other investor communications, and (b) decapitation of the
27 source of the supply of mortgages needed for the scheme. The CITI Defendants knew this
28 when they acquired the tainted assets.
_____________________________________________________________________________________
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COMPLAINT
1 77. The concealment of the scheme from borrowers was absolutely essential because
2 the enterprise knew it would soon be delivering Plaintiffs’ notes and deeds of trust to investors
3 and their representatives at intentionally inflated values as collateral for Defendants’ fraudulent
4 securitized pools. The CITI Defendants knew this when they acquired the tainted assets.
5 78. By not disclosing the truth of the inflated appraisals, lax lending standards,
6 deficient loan portfolio, shaky secondary market collateralized securities, and overall scheme to
7 its borrowers, as set forth above, the enterprise not only made them unwitting accomplices, but
8 put them into a no win situation in which the price of taking a mortgage from the enterprise
9 would be – and has been – cascading defaults and foreclosures that have wiped out billions of
10 dollars in equity value, including the equity invested in their homes by Plaintiffs. The CITI
11 Defendants knew this when they acquired the tainted assets. The CITI Defendants exacerbated
12 this situation by setting off cascading foreclosures in entire cities and counties in California,
13 leading to unemployment and economic turmoil. All Plaintiffs have been damaged by the
14 foregoing.
15 79. Despite billions of dollars of taxpayer-funded relief programs, property values
16 continue to fall and unemployment and underemployment remain terribly high. However, this
17 are all key to the CITI Defendants’ profiteering scheme. The bigger the carnage now, the more
18 government relief they get, and the more upside that remains in the assets they have confiscated
19 from homeowners.
20 80. As defaults incReased, the Defendants used it as an opportunity to increase their
21 fees and to punish Plaintiffs and other borrowers.
22 81. The enterprise first and later the CITI Defendants concealed and did not
23 accurately or fully disclose to any Plaintiff herein any of the foregoing facts. Further, neither
24 the enterprise nor Defendants disclosed or explained their schemes to Plaintiffs at any time.
25 They did the foregoing with the intent to deceive Plaintiffs, the investing public and the U.S.
26 taxpayer. Plaintiffs did not know the massive scheme the enterprise had started and that the
27 CITI Defendants diabolically enhanced and accelerated.
28 ///
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COMPLAINT
1 82. To the contrary, the enterprise affirmatively misrepresented its underwriting
2 processes, the value of its mortgages and the fundamental nature of its business model in its
3 press releases, annual report and securities filings, all of which were widely distributed to the
4 public, including Plaintiffs. The CITI Defendants knew this as they hatched their own new
5 chapter to the scheme. The enterprise intended the public, including Plaintiffs, to rely upon its
6 misrepresentations and made those misrepresentations to create false confidence in the
7 enterprise and to further its fraud on borrowers and investors. The CITI Defendants are now
8 playing on this same theme, but they are getting caught in their own creation.
9 83. Plaintiffs would never have done business with the enterprise or entered into the
10 mortgages if the scheme had been disclosed to them. Had the Plaintiffs known the facts
11 concealed from them, Plaintiffs would have never entered into bogus and predatory
12 transactions creating the tainted assets acquired by the CITI Defendants, designed only to line
13 the pockets of the lenders and their executives and not to actually and justifiably create value
14 and generate capital from the Plaintiffs’ equity investments in their primary residences, and
15 now designed to line the pockets of the CITI Defendants directly through their carpetbagging
16 and through their sucking at the TARP and other government money troughs.
17 84. If the Plaintiffs had later learned the truth, each Plaintiff would have either (a)
18 rescinded the loan transaction under applicable law and/or (b) refinanced the loan
19 transaction with a reputable institution prior to the decline in mortgage values in late
20 2008. Instead, each Plaintiff reasonably relied on the deceptions of the enterprise in
21 originating their loans and forbearing from exercising their rights to rescind or refinance
22 their loans. The CITI Defendants knew of this massive fraud and step into all the
23 infirmities of these mortgages.
24 85. After entering into the transactions with each Plaintiff herein as alleged herein,
25 the enterprise sold in securities transactions the notes and deeds of trust pertaining to Plaintiffs’
26 properties. The sales:
27 a. Included sales to nominees who were not authorized under law at the time to
28 own a mortgage, including, among others, MERS;
_____________________________________________________________________________________
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COMPLAINT
1 b. Involved misrepresentations by the enterprise to investors and concealment from
2 investors of Plaintiff’s true financial condition and the true value of Plaintiff’s home
3 and mortgage;
4 c. Involved misrepresentations by the enterprise to investors and concealment from
5 investors of the true financial condition of other borrowers and the true value of
6 their homes and mortgages also included in the pools;
7 d. Were for consideration greater than the actual value of the said notes and deeds
8 of trust;
9 e. Were for consideration greater than the income stream that could be generated
10 from the instruments even assuming a 0% default rate thereon; and
11 f. Were part of a scheme by which the enterprise bilked investors by selling
12 collateralized mortgage pools at an inflated value.
13 g. The CITI Defendants knew all of this when they acquired the tainted assets.
14 86. The enterprise hid from Plaintiffs that Defendants were engaged in an effort to
15 increase market share and sustain revenue generation through unprecedented expansions of its
16 underwriting guidelines, taking on ever-increasing credit risk.
17 87. The CITI Defendants knew all of this when they acquired the tainted assets, as it
18 was a critical component of their own scheme to further victimize the Plaintiffs.
19 88. When first the enterprise induced Plaintiffs to enter into mortgages, the
20 enterprise knew their scheme would lead to a liquidity crisis and grave damage to each
21 Plaintiff’s property value and thereby result in each Plaintiff’s loss of the equity such Plaintiff
22 invested in his house, as well as damaging the Plaintiff’s credit rating, thereby causing the
23 Plaintiff additional severe financial damage consisting of the foregoing damages and damages
24 described elsewhere in this Complaint. The enterprise concealed the foregoing from, among
25 others, Plaintiffs, California consumers and regulators. The CITI Defendants’ tainted assets
26 have all the imperfections resulting from these fraudulent actions, and the CITI Defendants
27 knew this when they embarked on their campaign to profiteer off of the mortgage carnage and
28 government bail-out money.
_____________________________________________________________________________________
- 29 -
COMPLAINT
1 89. Based upon the enterprise’s position as a leading financial institution and the
2 public statements made by representatives of the enterprise, including in its securities filings,
3 the Plaintiffs reasonably relied upon the statements made by the foregoing and reasonably
4 relied that no material information necessary to their decisions would be withheld or
5 incompletely, inaccurately or otherwise improperly disclosed. In so relying, the Plaintiffs were
6 gravely damaged as described herein. The enterprise initially acted willfully with the intention
7 to conceal and deceive in order to benefit therefrom at the expense of the Plaintiffs. The CITI
8 Defendants thereafter acted deliberately in a massive scheme to crush the last vestiges of
9 wealth from the Plaintiffs, all in a mission to profiteer from the fraud the CITI Defendants had
10 purchased.
11 90. The other Defendants followed each other’s direction because they are either
12 subsidiaries of each other, directly or indirectly owned, controlled and dominated by each
13 other, or because they are in an unequal economic and/or legal relationship with each other by
14 which they are beholden to each other and are thereby controlled and dominated by each other.
15 91. As a proximate and foreseeable result of the sale of the notes and deeds of trust
16 regarding Plaintiffs’ properties and others similarly situated for more than the actual value of
17 such instruments, securitization pools lacked the cash flow necessary to maintain the
18 securitization pools in accordance with their indentures.
19 92. The unraveling of the fraudulent scheme has materially depressed the price of
20 real estate throughout California, and the entire Country, including the real estate owned by
21 Plaintiffs, resulting in the losses to Plaintiffs described herein. It is precisely this loss of value
22 on which the CITI Defendants now seek to capitalize. They would transfer a material portion
23 of that wealth to themselves or those in collusion with them. This scheme includes acquiring
24 the real property at reduced values, collecting U.S. government money for paper losses, and
25 harvesting the future increase on the value of these artificially depressed homes.
26 93. There has been considerable press attention and litigation in the United States
27 Bankruptcy Courts and state courts establishing, inter alia, that in many instances the
28 Defendants herein do not have in their possession the original or an authentic copy of the
_____________________________________________________________________________________
- 30 -
COMPLAINT
1 promissory notes with respect to the loans they originated and/or purport to service. Based
2 thereon, based on other litigation of which counsel to Plaintiffs are aware, and based upon
3 Plaintiffs interactions with Defendants, on information and belief, Plaintiffs hereby allege that
4 Defendants have made demand for payment on the Plaintiffs with respect to Plaintiffs’
5 properties at a time when Defendants are incapable of establishing (and do not have any
6 credible knowledge regarding) who owns the promissory notes Defendants are purportedly
7 servicing.
8 94. MERS operates an electronic registry designed to track servicing rights and the
9 20 ownership of mortgages. MERS is sometimes named as the ―nominee‖ for lenders, and at
10 other times MERS is named as the ―beneficiary‖ of the deed of trust on behalf of unknown
11 persons. When a loan is transferred among MERS members, MERS purports to simplif,r the
12 process by avoiding the requirement to re-record liens and pay county recorder filing fees.
13 95. For the substantial majority of the Plaintiffs herein, MERS claims to be the
14 owner of the security interest indicated by the mortgages transferred by lenders, investors and
15 their loan servicers in the county land records. MERS claims its process eliminates the need to
16 file assignments in the county land records which lowers costs for lenders and consumers by
17 reducing county recording revenues from real estate transfers and provides a central source of
18 information and tracking for mortgage loans.
19 96. Based upon published reports, including the MERS website, on information and
20 belief, MERS does not: (1) take applications for, underwrite or negotiate mortgage loans; (2)
21 make or originate mortgage loans to consumers; (3) extend credit to consumers; (4) service
22 mortgage loans; or (5) invest in mortgage loans.
23 97. MERS has been used to facilitate the unlawful transfers of mortgages, unlawful
24 pooling of mortgages and the injection into the United States banking industry of un-sourced
25 (i.e., unknown) funds, including, without limitation, improper off-shore funds. Plaintiffs are
26 informed and thereon believe that MERS has been listed as beneficial owner of more than half
27 the mortgages in the United States.
28 ///
_____________________________________________________________________________________
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COMPLAINT
1 98. In 2001, Congress found that ―money laundering, and the defects in financial
2 transparency on which money launderers rely, are critical to the financing of global terrorism
3 and the provision of funds for terrorist attacks.‖ Congress specifically found that ―money
4 launderers subvert legitimate financial mechanisms and banking relationships by using them as
5 protective covering for the movement of criminal proceeds and the financing of crime and
6 terrorism...‖
7 99. On information and belief, during periods relevant to the other acts complained
8 of in this Complaint, Defendants did not: (1) establish due diligence policies, procedures and
9 controls reasonably designed to detect and report instances of money laundering, (2) establish
10 procedures to take reasonable and practicable measures to verify the identity of those applying
11 for an account with the institution and maintain records of the information used to verify a
12 person’s identity, including name, address, and other identifying information, (3) determine and
13 report the sources of funds used for the mortgages they originate and service, as well as the
14 source of funds used to acquire any mortgages, or (4) disclose to Plaintiffs the identities,
15 address and telephone numbers of transferees of their mortgages.
16 100. At the same time, Defendants continue to issue notices of default in violation of
17 Cal. Civil Code § 2923.5 and despite assurances that the failures will be remedied, corrective
18 action is dilatory, at best.
19 101. The foregoing is indicative of the Defendants’ bad acts. Those bad acts include,
20 but are not limited to:
21 a. The intentional efforts to frustrate Plaintiffs and other borrowers seeking
22 information about their mortgages and loan modifications.
23 b. Wanton violations of the laws regulating the sourcing of money in real
24 estate transactions.
25 c. Intentional violation of Cal. Civil Code § 2923.5 and dilatory steps to
26 remedy those failures, even when notified thereof.
27 102. By the foregoing acts, Defendants are intentionally making it difficult or
28 impossible for victims of Defendants’ massive mortgage fraud and statutory violations to
_____________________________________________________________________________________
- 32 -
COMPLAINT
1 enforce their rights. This is all in furtherance of Defendants’ scheme to profit from the misery
2 of the Plaintiffs. In addition to the foregoing allegations, venue is proper in this County in
3 accordance with Section 395(a) of the California Code of Civil Procedure because, on
4 information and belief, some or all of the Defendants working in California to achieve the
5 unlawful and tortuous objectives set forth herein, reside in and/or do business in this County
6 and committed the torts and unlawful acts alleged herein in this County. This Court has
7 jurisdiction over this action under the California Constitution, Article V, Section 10, because
8 this case is not a cause given by statute to other trial courts. This Court has jurisdiction over
9 the defendants because a substantial portion of the wrongdoing alleged in this Complaint took
10 place in California, the Defendants are authorized to do business here, the Defendants have
11 sufficient minimum contacts with California and/or otherwise intentionally avail themselves of
12 the markets in California through the promotion, marketing, sale, maintenance . . . and now
13 wrongful exercise of real property rights and foreclosure rights – with respect to realty in
14 California, to render the exercise of jurisdiction by California courts permissible under
15 traditional notions of fair play and substantial justice.
16
17 FIRST CAUSE OF ACTION

18 (By All Plaintiffs – Fraudulent Concealment – Against the CITI Defendants)
19 103. Paragraphs 1 through 102 are hereby incorporated by reference as though fully
20 set forth herein.
21 104. The enterprise purchased by the CITI Defendants had exclusive knowledge not
22 accessible to Plaintiffs of material facts pertaining to its mortgage lending activities that it did
23 not disclose to Plaintiffs at the time it was entering into contracts with Plaintiffs. As more fully
24 alleged herein, these facts included false appraisals, violation of underwriting guidelines, the
25 intent to sell Plaintiffs’ mortgages above their actual values to bilk investors and knowledge
26 that the scheme would result in a liquidity crisis that would gravely damage Plaintiffs.
27 105. Further, in connection with entering into contracts with Plaintiffs, the enterprise
28 purchased by the CITI Defendants made partial (though materially misleading) statements and
_____________________________________________________________________________________
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COMPLAINT
1 other disclosures as to their prominence and underwriting standards in the public releases, on
2 their web site, in their literature and at their branch offices. However, the enterprise purchased
3 by the CITI Defendants suppressed material facts relating thereto as set forth above. The
4 enterprise purchased by the CITI Defendants knew that the mortgages would be ―pooled,‖ and
5 ―securitized sale.‖
6 106. The enterprise purchased by the CITI Defendants also knew that within a
7 foreseeable period, its investors would discover that the enterprise’s mortgagors could not
8 afford their loans and the result would be foreclosures and economic devastation. It was the
9 movie The Sting in real life, with real lives and with people whose homes were often times
10 their only asset.
11 107. The enterprise purchased by the CITI Defendants was more dependent than
12 many of their competitors on selling loans it originated into the secondary mortgage market, an
13 important fact it disclosed to investors. The enterprise expected that the deteriorating quality of
14 the loans that the enterprise was writing, and the poor performance over time of those loans,
15 would ultimately curtail the enterprise’s ability to sell those loans in the secondary mortgage
16 market.
17 108. The enterprise purchased by the CITI Defendants misled borrowers, potential
18 borrowers and investors by failing to disclose substantial negative information regarding the
19 enterprise’s loan products, including:
20 a. The increasingly lax underwriting guidelines used by the enterprise in
21 originating loans;
22 b. The enterprise’s pursuit of a ―matching strategy‖ in which it matched the
23 terms of any loan being offered in the market, even loans offered by primarily
24 subprime originators;
25 c. The high percentage of loans it originated that were outside its own
26 already widened underwriting guidelines due to loans made as exceptions to
27 guidelines;
28 d. The enterprise’s definition of ―prime‖ loans included loans made to
_____________________________________________________________________________________
- 34 -
COMPLAINT
1 borrowers with FICO scores well below any industry standard definition of
2 prime credit quality;
3 e. The high percentage of the enterprise’s subprime originations that had a
4 loan to value ratio of 100%; and
5 f. The enterprise’s subprime loans had significant additional risk factors,
6 beyond the subprime credit history of the borrower, associated with increased
7 default rates, including reduced documentation, stated income, piggyback
8 second liens, and LTVs in excess of 95%.
9 109. The enterprise knew this negative information from numerous reports they
10 regularly received and from emails and presentations prepared by the enterprise’s chief credit
11 risk officer. The enterprise nevertheless hid this negative information from the public,
12 including Plaintiffs.
13 110. Plaintiffs did not know the concealed facts.
14 111. The enterprise intended to deceive Plaintiffs. As described herein, that deception
15 was essential to their overall plan to bilk investors, trade on inside information and otherwise
16 pump the value of the enterprise’s stock.
17 112. The enterprise was one of the nation’s leading providers of mortgages. It was
18 highly regarded and by dint of its campaign of deception through securities filings, press
19 releases, web site and branch offices, the enterprise had acquired a reputation for performance
20 and quality underwriting.
21 113. As a result, Plaintiffs reasonably relied upon the deception of the enterprise.
22 114. As a proximate result of the foregoing concealment by the enterprise, California
23 property values have precipitously declined and continue to decline, gravely damaging
24 Plaintiffs by materially reducing the value of their primary residences, depriving them of access
25 to equity lines, second mortgages and other financings previously available based upon
26 ownership of a primary residence in California, in numerous instances leading to payments in
27 excess of the value of their properties, thereby resulting in payments with no consideration and
28 often subjecting them to reduced credit scores (increasing credit card and other borrowing
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COMPLAINT
1 costs) and reduced credit availability.
2 115. In fact, property values across the United States of America precipitously
3 declined prior to the CITI Defendants acquiring the tainted mortgage assets and the property
4 values continue to decline, gravely damaging Plaintiffs by materially reducing the value of
5 their primary residences, depriving them of access to equity lines, second mortgages and other
6 financings previously available based upon ownership of their primary residences, in numerous
7 instances leading to payments in excess of the value of their properties, thereby resulting in
8 payments with no consideration and often subjecting them to reduced credit scores (increasing
9 credit card and other borrowing costs) and reduced credit availability
10 116. The CITI Defendants acquired the mortgages or rights related thereto with
11 knowledge of the fraudulent operations of the enterprise.
12 117. The CITI Defendants can have no more rights in the mortgage assets than their
13 predecessors.
14 118. Without limiting the damages as described elsewhere in this Complaint,
15 Plaintiffs damages arising from this Cause of Action also include loss of equity in their houses,
16 costs and expenses related to protecting themselves, reduced credit scores, unavailability of
17 credit, increased costs of credit, reduced availability of goods and services tied to credit ratings,
18 increased costs of those services, as well as fees and costs, including, without limitation,
19 attorneys’ fees and costs.
20 119. To this day, the CITI Defendants profess willingness to modify Plaintiffs’ loans
21 in accordance with law, but nonetheless they persist to this day in their secret plan to deprive
22 Plaintiffs of their rights.
23 120. As a result of the foregoing, Plaintiffs’ damages herein are exacerbated by a
24 continuing decline in residential property values and further erosion of their credit records.
25 121. First the enterprise’s concealments as to the pervasive mortgage fraud, and then
26 the CITI Defendants’ concealments, both as to the their scheme to profiteer from the mortgage
27 melt-down and as to their purported efforts to resolve loan modifications with Plaintiffs, are
28 substantial factors in causing the harm to Plaintiffs described in this Complaint.
_____________________________________________________________________________________
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COMPLAINT
1 122. Defendants acted outrageously and persistently with actual malice in performing
2 the acts alleged herein and continue to do so. Accordingly, Plaintiffs are entitled to exemplary
3 and punitive damages in a sum according to proof and to such other relief as is set forth below
4 in the section captioned Prayer for Relief which is by this reference incorporated herein.
5 123. With respect to all damages, exemplary damages, costs and attorneys fees
6 Plaintiffs seek in this cause of action, each Plaintiff seeks a sum and has been damaged in a
7 sum not exceeding $70,000 per each Plaintiff.
8
9 SECOND CAUSE OF ACTION

10 (By All Plaintiffs –Intentional Misrepresentation – Against the CITI Defendants)
13 125. From 2005 through 2007, the enterprise purchased by the CITI Defendants
14 misled the public, including Plaintiffs, by falsely assuring them that the enterprise was
15 primarily a prime quality mortgage lender which had avoided the excesses of its competitors.
16 As described herein with specific examples, affirmative misrepresentations and material
17 omissions permeated the enterprise’s website, customer and investor materials, required
18 securities filings and presentations.
19 126. The enterprise purchased by the CITI Defendants underwent unprecedented
20 expansion by, among other things, aggressively making loans which were unsupported by
21 documents, pushed through impotent loan committees, and taken by unworthy borrowers who
22 were destined to be unable to repay the loans at the time the loans were made.
23 127. The enterprise purchased by the CITI Defendants never disclosed or explained
24 their aggressive business model which was built on making these loans which were destined to
25 become non-performing assets.
26 128. The enterprise purchased by the CITI Defendants never made any disclosures in
27 its Forms 10-Q or 10-K for 2005, 2006, or 2007 about the unprecedented expansion of its
28 underwriting guidelines. Instead, the enterprise purchased by the CITI Defendants made public
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COMPLAINT
1 statements from 2005 through 2007 that were intended to mislead Plaintiffs about the
2 increasingly aggressive underwriting at the enterprise and the financial consequences of those
3 widened underwriting guidelines.
4 129. Nothing disclosed or provided by the enterprise purchased by the CITI
5 Defendants informed Plaintiffs that the enterprise included in its prime category loans with
6 FICO scores below 620. Nor did the enterprise purchased by the CITI Defendants inform
7 Plaintiffs that the ―prime non-conforming‖ category included loan products with increasing
8 amounts of credit risk, such as (1) reduced and/or no documentation loans; (2) stated income
9 loans; or (3) loans with loan to value or combined loan to value ratios of 95% and higher.
10 Finally, the enterprise purchased by the CITI Defendants did not disclose that enterprise’s
11 riskiest loan product, the Pay-Option ARM, was classified as a ―prime loan.‖
12 130. The enterprise purchased by the CITI Defendants made affirmative misleading
13 public statements in addition to those in the periodic filings that were designed to falsely
14 reassure Plaintiffs about the nature and quality of the enterprise’s underwriting.
15 131. Specifically, the enterprise purchased by the CITI Defendants repeatedly
16 emphasized the enterprise’s underwriting quality in public statements from 2005 through 2007.
17 132. The growing network of branches, loan offices, and outside originators
18 (―Network‖) feeding the enterprise purchased by the CITI Defendants participated in making
19 the loans and knowingly and intentionally assisted in drafting the false and misleading
20 statements delivered to the public, including Plaintiffs herein.
21 133. The foregoing misrepresentations were made with the intention that Plaintiffs
22 rely thereon. It was important to the enterprise purchased by the CITI Defendants that
23 Plaintiffs rely on its misrepresentations so that Plaintiffs would come to a false understanding
24 as to the nature of the enterprise. The foregoing misrepresentations were specifically intended
25 to convince Plaintiffs to take mortgages from the enterprise.
26 134. The campaign of misinformation succeeded. Plaintiffs relied upon the
27 misrepresentations and entered into mortgages with the enterprise purchased by the CITI
28 Defendants.
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COMPLAINT
1 135. By reason of the prominence of the enterprise purchased by the CITI
2 Defendants, the campaign of deception as to its business plans and the relationship of trust
3 developed between the enterprise purchased by the CITI Defendants and Plaintiffs, Plaintiffs
4 were justified in relying upon the enterprise’s representations.
5 136. The aforementioned Network supporting the enterprise purchased by the CITI
6 Defendants and other representatives of the enterprise cooperated with each other to plan and
7 implement the scheme described herein.
8 137. The Network participated in developing the misrepresentations to borrowers,
9 including Plaintiffs herein and to investors. They shared in the financial benefits of the scheme
10 and ratified and approved of the material steps therefore taken by the other Defendants.
11 Conversely, the Defendants other than the CITI Defendants approved of, ratified and shared in
12 the fees and other revenue received by the Network arising from its participation in the scheme.
13 The CITI Defendants in 2009 approved of, ratified and are now seeking to profit from this
14 same scheme through the acquisition at a discount of tainted mortgages that it is seeking to
15 enforce as if they were not tainted.
16 138. As a result of relying upon the foregoing misrepresentations, each Plaintiff
17 entered into a mortgage contract with the enterprise purchased by the CITI Defendants.
18 139. In fact, the appraisals were inflated. The enterprise purchased by the CITI
19 Defendants did not utilize quality underwriting processes. The enterprise’s financial condition
20 was not sound, but was a house of cards ready to collapse, as the enterprise well knew, but
21 Plaintiffs did not.
22 140. Further, Plaintiffs’ mortgages were not refinanced with fixed rate mortgages and
23 neither the enterprise nor any of the Defendants ever intended that they would be.
24 141. As a result of the scheme described herein, Plaintiffs could not afford the
25 mortgages when the variable rate features and/or balloon payments kicked in.
26 142. Further, as a result of the scheme, Plaintiffs could not refinance or sell their
27 residence without suffering a loss of their equity investments.
28 ///
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COMPLAINT
1 143. As a result of the foregoing, Plaintiffs have lost all or a substantial portion of the
2 equity invested in their houses and suffered reduced credit ratings and increased borrowing
3 costs, among other damages described herein.
4 144. The CITI Defendants seek to enforce the mortgages irrespective of this massive
5 fraud.
9 predecessors.
10 147. Plaintiffs’ reliance on the misrepresentations of the enterprise purchased by the
11 CITI Defendants, appraisers and the other Defendants, all ratified by the Defendants, was a
12 substantial factor in causing Plaintiffs’ harm.
13 148. The CITI Defendants represented to multiple Plaintiffs that they would be
14 assisted by the CITI Defendants in a loan modification. As described herein, that
15 representation was false. Defendants knew that representation was false when they made it.
16 149. Because of new laws pertaining to loan modifications and the CITI Defendants’
17 insistence that they had a genuine interest in complying therewith and in keeping borrowers in
18 their homes, Plaintiffs reasonably relied on the representations.
19 150. By delaying Plaintiffs from pursuing their rights and by increasing Plaintiffs’
20 costs and the continuing erosion of each Plaintiff’s credit rating, each Plaintiff’s reliance
21 harmed that Plaintiff, further eroding values in furtherance of the CITI Defendants’ scheme.
23 Plaintiffs damages arising from the matters complained of in this Cause of Action also include
24 loss of equity in their houses, costs and expenses related to protecting themselves, reduced
25 credit scores, unavailability of credit, increased costs of credit, reduced availability of goods
26 and services tied to credit ratings, increased costs of those services, as well as fees and costs,
27 including, without limitation, attorneys’ fees and costs.
28 ///
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COMPLAINT
1 152. Plaintiffs’ reliance on the representations made by the enterprise purchased by
2 the CITI Defendants and then by the CITI Defendants was a substantial factor in causing
3 Plaintiffs’ harm.
4 153. Plaintiffs are entitled to such relief as is set forth in this Cause of Action and
5 such further relief as is set forth below in the section captioned Prayer for Relief which is by
6 this reference is incorporated herein as though fully set forth at length. Inclusive of all
7 damages, exemplary damages, costs and attorneys’ fees recoverable hereunder, each Plaintiff
8 has been damaged in a sum according to proof not to exceed $75,000 per each Plaintiff.
9
10 THIRD CAUSE OF ACTION

11 (By All Plaintiffs – Negligent Misrepresentation – Against All CITI Defendants)
14 155. Although the enterprise purchased by the CITI Defendants and other members
15 of the Network may have reasonably believed some or all of the representations they made,
16 described in this Complaint, were true, none of them had reasonable grounds for believing such
17 representations to be true at the time: (a) the representations were instructed to be made, as to
18 those Defendants instructing others to make representations, or (b) at the time the
19 representations were made, as to those Defendants making representations and those
20 Defendants instructing others to make the representations, or (c) at the time the representations
21 were otherwise ratified by the Defendants.
22 156. Such representations, fully set forth in the First and Second Causes of Action
23 and previous sections of this Complaint, were not true.
24 157. The enterprise purchased by the CITI Defendants, including the Defendants
25 making representations, intended that Plaintiffs rely upon those misrepresentations.
26 158. As described herein, Plaintiffs reasonably relied on those representations.
27 159. By reason of the prominence of the enterprise purchased by the CITI Defendants
28 and the campaign of deception as to its business plans and the relationship of trust developed
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COMPLAINT
1 between the enterprise and Plaintiffs, Plaintiffs were justified in relying upon the enterprise’s
2 and Defendants’ representations.
3 160. As a result of relying upon the foregoing misrepresentations, each Plaintiff
4 entered into a mortgage contract with the enterprise purchased by the CITI Defendants.
5 161. As a result of scheme described herein, Plaintiffs could not afford his or her
6 mortgage when its variable rate features and/or balloon payments kicked in.
7 162. Further, as a result of the Defendants continuing scheme, Plaintiffs could not
8 refinance or sell his or her residence without suffering a loss of Plaintiff’s equity.
9 163. The CITI Defendants seek to enforce the mortgages irrespective of this massive
10 fraud.
14 predecessors.
16 Plaintiffs damages as a result of the foregoing also include loss of equity in their houses, costs
17 and expenses related to protecting themselves, reduced credit scores, unavailability of credit,
18 increased costs of credit, reduced availability of goods and services tied to credit ratings,
19 increased costs of those services, as well as fees and costs, including, without limitation,
20 attorneys’ fees and costs.
23 this reference incorporated herein.
24 ///
25 ///
26 ///
27 ///
28 ///
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COMPLAINT
1 FOURTH CAUSE OF ACTION
2 (Injunctive Relief for Violation of Cal. Civil Code § 2923.5 – By Plaintiffs – Against All
3 CITI Defendants)
4 168. Paragraphs 1 through 167 are incorporated by reference as though fully set forth
5 herein.
6 169. Pursuant to California Civil Code, § 2923.5, the Defendants – and each of them
7 – are prohibited by statute from recording a Notice of Default against the primary residential
8 property of any Californian without first making contact with that person as required under §
9 2923.5 and then interacting with that person in the manner set forth in detail under § 2923.5.
10 An exception to this rule of law exists in the event the Defendants are unable with due
11 diligence to contact the property owner.
12 170. Pursuant to laws and ordinances in jurisdictions other than California, which
13 laws or ordinances are similar to California Civil Code, § 2923.5, whereby certain protections
14 are afforded homeowner borrowers, the Defendants – and each of them – are prohibited by
15 statute from recording a Notice of Default and/or proceeding to institute or initiate foreclosure
16 proceedings against the primary residential property of any homeowner without first making
17 contact with that person as required, and then interacting with that person in the manner set
18 forth in the specific statute or ordinance.
19 171. With respect to all Plaintiffs in this cause of action, the realty that is the subject
20 hereof was and is their primary residential dwelling.
21 172. The Defendants, and each of them, caused Notices of Default to be recorded
22 against the primary residential properties of the California Plaintiffs named in this cause of
23 action absent compliance with California Civil Code, § 2923.5.
24 173. Included in the noncompliance, Defendants, and each of them, caused
25 declarations to be recorded in the public records that were – each of them – false. This act also
26 violates § 2923.5 and other California laws precluding the filing of false statements.
27 174. The Defendants, and each of them, caused Notices of Default to be recorded
28 and/or initiated foreclosure proceedings against the primary residential properties of the Non-
_____________________________________________________________________________________
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COMPLAINT
1 California Plaintiffs named in this cause of action absent compliance with State specific laws,
2 statutes, or ordinances. Included in the noncompliance, Defendants, and each of them, caused
3 declarations to be recorded in the public records that were – each of them – false. This act also
4 violates other laws precluding the filing of false statements.
7 this reference is incorporated herein as though fully set forth at length.
8
9 FIFTH CAUSE OF ACTION

10 (By All Plaintiffs – Unfair Competition – Against All CITI Defendants)
12 herein.
13 177. Defendants’ actions in implementing, perpetrating and then extending their
14 fraudulent scheme of inducing Plaintiffs to accept mortgages for which they were not qualified
15 based on inflated property valuations and undisclosed disregard of their own underwriting
16 standards and the sale of overpriced collateralized mortgage pools, all the while knowing that
17 the plan would crash and burn, taking the Plaintiffs down and costing them the equity in their
18 homes and other damages, violates numerous federal and state statutes and common law
19 protections enacted for consumer protection, privacy, trade disclosure, and fair trade and
20 commerce.
21 178. The enterprise first perpetrated this fraudulent scheme of selling off overpriced
22 loans by making willful and inaccurate credit disclosures regarding borrowers, including
23 Plaintiffs, to third parties. This false credit disclosure was critical to the success of Defendants’
24 continued sales of the massive pools of mortgage loans necessary to perpetuate the scheme.
25 179. The CITI Defendants extended this fraud in connection with their scheme to
26 acquire these assets at deflated values, knowing the fraud that had been committed, but with the
27 specific intent to seek to attempt to enforce the mortgages as sound and legitimate instruments.
28 ///
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COMPLAINT
1 180. The enterprise was first aware that if the true credit profiles of the borrowers and
2 the values of their real estate were accurately disclosed, the massive fraudulent scheme would
3 end. As a result, the enterprise repeated, reinforced and embellished their false disclosures.
4 181. The CITI Defendants were aware of the fraudulent scheme that had been
5 perpetrated by the enterprise whose assets and operations it was acquiring.
6 182. The enterprise knew the borrowers’ credit was inadequate to support continued
7 loan payments, absent unsustainable inflation of property values. These pervasive false credit
8 disclosures to third parties (including purchasers of bundled mortgage pools created by the
9 Defendants) constituted false credit reports in violation of the Fair Credit Reporting Act, 15
10 U.S.C. §§ 1681 et seq. and these pervasive false disclosures permitted the Defendants to
11 continue their scheme and victimize the Plaintiffs.
12 183. These pervasive false disclosures also caused the bubble to burst. Once it
13 became known that some of the information provided by the enterprise was false, the market
14 for the sale of bundled loans dried up. Notwithstanding their knowledge of the fraudulent
15 nature of the assets they were seeking to enforce, the CITI Defendants began to issue
16 foreclosure notices, property values continued to drop, and then, under the weight of deflation
17 in a market that requires inflation, the equity investments made by Plaintiffs and others in their
18 homes was lost. . . . and then Plaintiffs were lost in the greatest economic recession since the
19 1930s.
20 184. The foregoing violations were in furtherance of the fraud perpetrated on
21 Plaintiffs. In fact, the enterprise could not have told the truth in their public filings without that
22 truth becoming known to Plaintiffs.
23 185. Conversely, the false filings gave additional credence and support to omissions,
24 concealment, promises and inducements.
25 186. The CITI Defendants knew of all of these violations of law in acquiring the
26 tainted assets and operations and then in seeking to enforce these mortgage obligations, when
27 the CITI Defendants knew of these meritorious defenses.
28 ///
_____________________________________________________________________________________
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COMPLAINT
1 187. The forgoing fraudulent concealment, material misstatements, and the
2 intentional violations of state and federal statutes cited herein constitute unlawful, unfair and
3 fraudulent business acts or practices and so constitute unfair business practices within the
4 meaning of the California Unfair Practices Act. Cal. Bus. & Prof. Code §§ 17200, 17500.
5 Sections 17200 et seq. of the California Business & Professions Code provides, in the
6 disjunctive, for liability in the event of any such ―unlawful, unfair or fraudulent business act or
7 practice.‖
8 188. The actions described herein are unfair and patently fraudulent in that they were
9 conducted for the specific purposes of first perpetuating an unlawful and unsustainable
10 investment scheme and then perpetrating a fraudulent foreclosure and confiscatory scheme.
11 189. As a result of the actions, concealment and deceit described herein, each of the
12 Plaintiffs has suffered material financial injury in fact, including as described elsewhere in this
13 Complaint, loss of equity in their houses, costs and expenses related to protecting themselves,
14 reduced credit scores, unavailability of credit, increased costs of credit, reduced availability of
15 goods and services tied to credit ratings, increased costs of those services, as well as fees and
16 costs, including, without limitation, attorneys’ fees and costs.
17 190. As a further result of the actions, concealment and deceit described herein, each
18 of the Plaintiffs has lost money or property as a result of such unfair competition.
19 191. California Civil Code § 2923.5 requires that each mortgagee, trustee,
20 beneficiary, or authorized agent may not file a notice of default pursuant to California Civil
21 Code § 2924 until 30 days after initial contact is made as required therein, or 30 days after
22 satisfying the due diligence requirements to contact the mortgage described therein.
23 192. Defendants violated the foregoing law by causing a notice of default to be filed
24 against Plaintiffs without the mandatory notice. Defendants did not diligently endeavor to
25 contact the Plaintiffs as required by § 2923.5(g) and Defendants thereby also violated
26 California Civil Code §§ 2923.5 and 2924.
27 193. As a result of the foregoing unlawful conduct, Plaintiffs suffered further injury
28 in fact by the filing of notices of default and as such the Plaintiffs suffered monetary and
_____________________________________________________________________________________
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COMPLAINT
1 property loss. Such injuries and loss included diminished credit scores with a concomitant
2 increase in borrowing costs and diminished access to credit, fees and costs, including, without
3 limitation, attorneys’ fees and costs with respect to wrongful notices of default and loss of some
4 or all of the benefits appurtenant to the ownership and possession of real property.
5 194. The foregoing unlawful activities were pervasive and violate Business and
6 Professions Code §§ 17200 et seq.
7 195. As a result of Defendants’ unfair competition, Plaintiffs are entitled to restitution
8 for all sums received by Defendants with respect to Defendants’ unlawful and/or unfair and/or
9 fraudulent conduct, including, without limitation, interest payments made by Plaintiffs, fees
10 paid to Defendants, including, without limitation, the excessive fees paid at Defendants’
11 direction, premiums received upon selling the mortgages at an inflated value and moneys
12 received from government agencies for ―losses‖ incurred by Defendants.
13 196. Plaintiffs are also entitled to the issuance of a temporary restraining order, a
14 preliminary injunction, and a permanent injunction restraining and enjoining Defendants from
15 any further concealment with respect to the sale of notes and mortgages, any further violation
16 of § 2923.5, any further violation of law, and any further exercise of purported legal rights with
17 respect to Plaintiffs’ real estate.
18 197. Each of the enterprise whose assets CITI purchased has an affirmative burden to
19 ascertain verify and prove, among other things, the identity, source, character, origin, and
20 legitimacy of the funds which they controlled, handled, and/or facilitated in its transactions.
21 198. Plaintiffs are informed and believe and hereon allege that none of the enterprise
22 whose assets CITI purchased or can comply with the strict rules imposed by the laws regarding
23 money sourcing, that both the enterprise whose assets CITI purchased and the CITI Defendants
24 have acted in direct violation of law, and that the CITI Defendants must forfeit any and all
25 claims, liens, encumbrances, debts, or obligations from others in accordance with the California
26 Business and Professions Code.
_____________________________________________________________________________________
- 47 -
COMPLAINT
1 this reference incorporated herein as though fully set forth at length.
2
3 SIXTH CAUSE OF ACTION

4 (By All Plaintiffs – Breach of Contract – Against All CITI Defendants)
6 herein.
7 201. Defendants’ acceptance of TARP money created an obligation to modify loans
8 outstanding on Plaintiffs’ real estate to the extent Defendants were pronouncing rights thereto,
9 to assist borrowers, and to otherwise use the TARP funds for the benefit of, among others, the
10 Plaintiffs herein.
11 202. In fact, the Plaintiffs are intended third party beneficiaries of the contracts
12 between ther United States Government, certain intermediaries and the Defendants.
13 203. Defendants, and each of them, breached their contractual obligations to Plaintiffs
14 as set forth herein. Defendants further breached the contractual obligations owing to each
15 Plaintiff in the manners alleged hereinabove.
16 204. As a proximate and foreseeable result of said breaches of contract, Plaintiffs
17 have been damaged in a sum according to proof, which – inclusive of all damages, costs, and
18 attorneys’ fees – is equal to or less than $70,000 for each Plaintiff herein.
21 this reference incorporated herein as though fully set forth at length.
22
23 PRAYER FOR RELIEF

24 WHEREFORE, Plaintiffs pray for judgment against Defendants and each of
25 them as follows:
26 1. General and special damages according to proof under the First, Second, Third
27 and Sixth Causes of Action, in the sums set forth hereinabove;
28 2. Declaratory relief voiding the notes and mortgages of Plaintiffs held or serviced
_____________________________________________________________________________________
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COMPLAINT
1 by the Defendants and temporary, preliminary, and permanent injunctive relief under the First,
2 Second, Fourth, Fifth and Sixth Causes of Action.
3 3. Statutory relief according to proof under the Fifth Cause of Action;
4 4. Restitution according to proof under the Fifth Cause of Action;
5 5. Temporary, preliminary, and permanent injunctive forfeiture relief under all
6 causes of action;
7 6. On all causes of action, for costs of suit herein;
8 7. On all causes of action, for pre- and post-judgment interest;
9 8. On all causes of action for which attorney’s fees may be awarded pursuant to the
10 governing contract, by statute or otherwise, reasonable attorneys fees; and
11 9. On all causes of action, for such other and further relied as this Court may deem
12 just and proper so that each Plaintiff shall recover no more than $70,000 in restitutionary or
13 compensatory damages and so that each Plaintiff shall receive a judicial determination that the
14 mortgage lien alleged to exist against their particular property is null and void ab initio.
15
16
17
Dated: March ___, 2011 By: __________________________
18 Philip A. Kramer
KRAMER & KASLOW
19 Attorneys for Plaintiffs
20
21
22
23
24
25
26
27
28
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COMPLAINT

Wagner V.citibank COMPLAINT

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Wagner V.citibank COMPLAINT

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1 Philip A.

Kramer SBN # 113969

5 Attorneys for Plaintiffs

17 FIRST CAUSE OF ACTION

9 SECOND CAUSE OF ACTION

10 THIRD CAUSE OF ACTION

9 FIFTH CAUSE OF ACTION

3 SIXTH CAUSE OF ACTION

23 PRAYER FOR RELIEF

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