Steven Mnuchin and Robo-Denial

As a member of the professional tax community, my interest in the goings on over at the Treasury Department is a bit more keen than that of most Americans. And as an American expatriate, I am impacted financially in ways which leave my stateside countrymen and -women largely unscathed (including, for most American resident citizens, the requirement to report foreign bank accounts under threat of severe penalty for noncompliance). Our financial privacy has been seriously eroded. There are severe restrictions on where and how we expats can invest our money. The laws are crippling enough to begin with, but the way they are administered by IRS and the Treasury Department is driving many Americans to renounce their citizenship.

Accordingly, the baggage carried by Steven Mnuchin, President Trump's nominee for Secretary of the Treasury, gives me great pause. The abuses by the IndyMac-cum-OneWest financial institution under his leadership are well-documented.

At a Connecticut General Assembly hearing, Ms. Frances Kenneally gave an account of IndyMac/OneWest's abusive tactics in the mortgage mediation process, including being told conflicting stories by IndyMac and OneWest as to the status of her mortgage.

Perhaps the most notorious practice from the recent mortgage crisis was the process called "robo-signing."

Erica Johnson-Seck gained notoriety as the poster child of robo-signers. In some Florida litigation, Ms. Johnson-Seck avered under oath that while serving as a vice-president of OneWest and its previous incarnations (plural), she simultaneously served as an officer of other entities whose interests would normally be inconsistent with those of OneWest/IndyMac

In the Drayton case, a Kings County (Brooklyn), New York foreclosure action, Justice Arthur Schack dismissed the case, but gave OneWest Bank leave to renew, provided that, within 60 days,

OneWest Bank, F.S.B., submits to the court:

(1) proof of the grant of authority from the original mortgagee, Cambridge Home Capital, LLC, to its nominee, Mortgage Electronic Registration Systems, Inc., to assign the subject mortgage and note to IndyMac Federal Bank, FSB; and

(2) an affidavit by Erica A. Johnson-Seck, vice-president of plaintiff OneWest Bank, F.S.B., explaining: her employment history for the past three years; why a conflict of interest does not exist in how she acted as a vice-president of assignor Mortgage Electronic Registration Systems, Inc., a vice-president of assignee/assignor IndyMac Federal Bank, FSB, and a vice-president of assignee/plaintiff OneWest Bank, F.S.B. in this action; why she was a vice-president of both assignor Mortgage Electronic Registration Systems, Inc. and assignee Deutsche Bank in Deutsche Bank Natl. Trust Co. v Maraj (18 Misc 3d 1123[A], 2008 NY Slip Op 50176[U] [2008]); why she was a vice-president of both assignor Mortgage Electronic Registration Systems, Inc. and assignee IndyMac Bank, FSB in IndyMac Bank, FSB v Bethley (22 Misc 3d 1119[A], 2009 NY Slip Op 50186[U] [2009]); and, why she executed an affidavit of merit as a vice-president of Deutsche Bank in Deutsche Bank v Harris (Sup Ct, Kings County, Feb. 5, 2008, index No. 35549/07); and

(3) counsel for plaintiff OneWest Bank, F.S.B. must comply with the new court filing requirement, announced by Chief Judge Jonathan Lippman on October 20, 2010, by submitting an affirmation, using the new standard court form, pursuant to CPLR 2106 and under the penalties of perjury, that counsel for plaintiff OneWest Bank, F.S.B. has personally reviewed plaintiff OneWest Bank, F.S.B.'s documents and records in the instant action and counsel for plaintiff OneWest Bank, F.S.B. confirms the factual accuracy of plaintiff OneWest Bank, F.S.B.'s court filings and the accuracy of the notarizations in plaintiff OneWest Bank, F.S.B.'s documents.

In that same judicial opinion, Justice Schack defined a robo-signer as "a person who quickly signs hundreds or thousands of foreclosure documents in a month, despite swearing that he or she has personally reviewed the mortgage documents but has not done so."

The case was not refiled by OneWest.

Senator Sherrod Brown (D-OH) believes, apparently with good reason, that Mr. Mnuchin misled the Senate Finance Committee when he denied that robo-signing occurred while he was CEO and chairman at IndyMac/OneWest. The Columbus Dispatch reports that robo-signing did in fact occur during that period.

Some full disclosure is now in order at this juncture: I voted for Donald Trump in the past election, knowing that, like all other candidates for public office, there would be some disappointments from him if he were elected. I do support most of what our president has done thus far.

But I fear that the Mnuchin nomination may well cause the president more than a little bit of damage. The Department of the Treasury is a complex organization, and its CEO, the Secretary of the Treasury, even more than the IRS, wields profound powers over the lives of all Americans, whether individuals or business entities. As Ms. Kenneally's testimony exemplifies, taxation, financial, and economic policies can take a significant toll on the noneconomic aspects of an individual's life, thereby affecting his well-being. Mr. Mnuchin no doubt understands this dynamic on an intellectual level, but how well has he internalized it?

And what of his ability or willingness to control the behavior of his subalterns?

These are serious questions for which I, as an expatriate tax professional, would really, really like to see satisfactory answers.

Kenneth H. Ryesky, now a senior advisor in the U.S. Desk of Ernst & Young's International Tax Services in Tel Aviv, is a lawyer who has taught business law and taxation at Queens College CUNY. He formerly served as an attorney for the IRS.

As a member of the professional tax community, my interest in the goings on over at the Treasury Department is a bit more keen than that of most Americans. And as an American expatriate, I am impacted financially in ways which leave my stateside countrymen and -women largely unscathed (including, for most American resident citizens, the requirement to report foreign bank accounts under threat of severe penalty for noncompliance). Our financial privacy has been seriously eroded. There are severe restrictions on where and how we expats can invest our money. The laws are crippling enough to begin with, but the way they are administered by IRS and the Treasury Department is driving many Americans to renounce their citizenship.

Accordingly, the baggage carried by Steven Mnuchin, President Trump's nominee for Secretary of the Treasury, gives me great pause. The abuses by the IndyMac-cum-OneWest financial institution under his leadership are well-documented.

At a Connecticut General Assembly hearing, Ms. Frances Kenneally gave an account of IndyMac/OneWest's abusive tactics in the mortgage mediation process, including being told conflicting stories by IndyMac and OneWest as to the status of her mortgage.

Perhaps the most notorious practice from the recent mortgage crisis was the process called "robo-signing."

Erica Johnson-Seck gained notoriety as the poster child of robo-signers. In some Florida litigation, Ms. Johnson-Seck avered under oath that while serving as a vice-president of OneWest and its previous incarnations (plural), she simultaneously served as an officer of other entities whose interests would normally be inconsistent with those of OneWest/IndyMac

In the Drayton case, a Kings County (Brooklyn), New York foreclosure action, Justice Arthur Schack dismissed the case, but gave OneWest Bank leave to renew, provided that, within 60 days,

OneWest Bank, F.S.B., submits to the court:

(1) proof of the grant of authority from the original mortgagee, Cambridge Home Capital, LLC, to its nominee, Mortgage Electronic Registration Systems, Inc., to assign the subject mortgage and note to IndyMac Federal Bank, FSB; and

(2) an affidavit by Erica A. Johnson-Seck, vice-president of plaintiff OneWest Bank, F.S.B., explaining: her employment history for the past three years; why a conflict of interest does not exist in how she acted as a vice-president of assignor Mortgage Electronic Registration Systems, Inc., a vice-president of assignee/assignor IndyMac Federal Bank, FSB, and a vice-president of assignee/plaintiff OneWest Bank, F.S.B. in this action; why she was a vice-president of both assignor Mortgage Electronic Registration Systems, Inc. and assignee Deutsche Bank in Deutsche Bank Natl. Trust Co. v Maraj (18 Misc 3d 1123[A], 2008 NY Slip Op 50176[U] [2008]); why she was a vice-president of both assignor Mortgage Electronic Registration Systems, Inc. and assignee IndyMac Bank, FSB in IndyMac Bank, FSB v Bethley (22 Misc 3d 1119[A], 2009 NY Slip Op 50186[U] [2009]); and, why she executed an affidavit of merit as a vice-president of Deutsche Bank in Deutsche Bank v Harris (Sup Ct, Kings County, Feb. 5, 2008, index No. 35549/07); and

(3) counsel for plaintiff OneWest Bank, F.S.B. must comply with the new court filing requirement, announced by Chief Judge Jonathan Lippman on October 20, 2010, by submitting an affirmation, using the new standard court form, pursuant to CPLR 2106 and under the penalties of perjury, that counsel for plaintiff OneWest Bank, F.S.B. has personally reviewed plaintiff OneWest Bank, F.S.B.'s documents and records in the instant action and counsel for plaintiff OneWest Bank, F.S.B. confirms the factual accuracy of plaintiff OneWest Bank, F.S.B.'s court filings and the accuracy of the notarizations in plaintiff OneWest Bank, F.S.B.'s documents.

In that same judicial opinion, Justice Schack defined a robo-signer as "a person who quickly signs hundreds or thousands of foreclosure documents in a month, despite swearing that he or she has personally reviewed the mortgage documents but has not done so."

The case was not refiled by OneWest.

Senator Sherrod Brown (D-OH) believes, apparently with good reason, that Mr. Mnuchin misled the Senate Finance Committee when he denied that robo-signing occurred while he was CEO and chairman at IndyMac/OneWest. The Columbus Dispatch reports that robo-signing did in fact occur during that period.

Some full disclosure is now in order at this juncture: I voted for Donald Trump in the past election, knowing that, like all other candidates for public office, there would be some disappointments from him if he were elected. I do support most of what our president has done thus far.

But I fear that the Mnuchin nomination may well cause the president more than a little bit of damage. The Department of the Treasury is a complex organization, and its CEO, the Secretary of the Treasury, even more than the IRS, wields profound powers over the lives of all Americans, whether individuals or business entities. As Ms. Kenneally's testimony exemplifies, taxation, financial, and economic policies can take a significant toll on the noneconomic aspects of an individual's life, thereby affecting his well-being. Mr. Mnuchin no doubt understands this dynamic on an intellectual level, but how well has he internalized it?

And what of his ability or willingness to control the behavior of his subalterns?

These are serious questions for which I, as an expatriate tax professional, would really, really like to see satisfactory answers.

Kenneth H. Ryesky, now a senior advisor in the U.S. Desk of Ernst & Young's International Tax Services in Tel Aviv, is a lawyer who has taught business law and taxation at Queens College CUNY. He formerly served as an attorney for the IRS.