Here is the complaint in United States v. Rainy Day Holdings LLC (E.D. N.Y.):
An excerpt:
129. HAUVER previously worked on funneling down payment assistance to borrowers through the Lower Brule Sioux Tribe. In June 2009. HAUVER began reaching out to Indian tribes, and also e-mailed an American Indian financial consultant for assistance in selling up a deal with an Indian tribe. After failing to strike deals With Indian tribes in Mississippi and the Dakotas. DMS and its principals, including LUDLOW, HAUVEK and NAILLON, began a business relationship with the Ely Shoshone tribe of Ely, Nevada.
130. DMS’ mission statement stated that “(financial assistance is provided through the Ely Shoshone Tribe’s Housing Authority.”
131. DMS was RDF’s successor both in activities and employees. LUDLOW wrote a mortgage lender client that while he still did work on behalf of RDF, despite the fact that “when I began working with the tribe, our attorney told me to separate myself from Rainy Day,” LUDLOW farther wrote that NAILLON, who also worked at the ostensibly separate DMS, “works for Rainy Day as well.”
132. Oilier RAINY DAY employees also took positions at DMS. as well as at the Ely Shoshone Housing Authority, which they renamed the “Ely Shoshone Finance Authority.” RDF employees began using new e-mail addresses at DMS, In addition, some RDF employees, such as HAUVER, also began using Ely Shoshone Finance Authority e-mail addresses.
133. The Ely Shoshone Finance Authority also began to use an office address used previously or concurrently by RDF, DMS and “Positive Alternatives.” yet another company owned by LUDLOW.
134. SCHWEDLAND, his company Dynaconnex, and his employees further assisted in the transformation of RAINY DAY into DMS. From mid-2009 forward. SCHWEDLAND assisted in presenting DMS to correspondent mortgage lenders. Beginning in the early summer of 2009, SCHWEDLAND began a concerted effort to market DMS’s services to new Direct Endorsement lenders. In June 2009, SCHWEDLAND helped brainstorm names for the “new” services to be provided by DMS – in reality, the same services that had been provided by RDF. On June 12, 2009. SCHWEDLAND circulated three versions of an “Ely Shoshone Tribe Seal” (subsequently used on DMS marketing materials) to CLUTE, LUDLOW, DEL SONTRO, HAUVER and others. Later that summer, SCHWEDLAND worked on the Ely Shoshone Housing Authority’s public website.
135. LUDLOW. NAILLON, HAUVER, DMS and RDF continued funneling money from Eastern District or New York-based mortgage lenders Lend America. FRANKLIN FIRST. Mortgage Source and Somerset to the current Secondary Purchasers by the Ely Shoshone Finance Authority.
136. The RAINY DAY DEFENDANTS continued their fraud by contracting through DMS to “administer” a “grants” program for the Ely Shoshone Housing Finance Authority.
137. In a description of the RDF/DMS enterprise, CLUTE wrote that the Financial Payment Assistance” provided by DMS consisted of “[t]ransferring money from Lender to Buyer (by Indian Finance Authority).”
138. Direct Endorsement lenders, including FRANKLIN’ FIRST. Lend America, Somerset. Mortgage Source and Intercontinental Capital Group wire transferred funds to a DMS bank account, DMS then transferred the funds to an Ely Shoshone Mousing or Finance Authority account at the same hank. Ely Shoshone Finance Authority employees then called servicing mortgage holders, and used the funds to pay mortgages by “check by phone” transactions, as directed by LUDLOW and others at DMS. The Ely Shoshone tribe received a per transaction fee for each such phone call.
139. None of the defaulting mortgages concealed by DMS were for mortgages owed by members of the Ely Shoshone tribe.Moreover, none of these mortgages were on property situated on any Indian tribe’s land, the real estate was located on decidedly non-tribal lands, such as Brooklyn. New York.
140. By late June 2009, SCHWEDLAND and LUDLOW were tracking the loans on which the Ely Shoshone Housing Authority tunneled the Direct Endorsement lenders’ money. By late July 2009, SCHWEDLAND was assisting LUDLOW and where in getting information TO potential DMS clients on how the scheme worked. At the same time. HAUVER was selling up the electronic database to track information on the loans for which DMS and the Ely Shoshone tribe were founding the Direct Endorsemeni lenders” payments.
141. In August 2009, LUDLOW e-mailed a mortgage lender about “a service we began shortly after Rainy Day Foundation severed its relationship” with several of RDF’s clients. LUDLOW wrote that DMS was “spun off” from the services that RDF had used 10 reduce default ratios and eliminate Early and First Payment Defaults.”’
142. In mid-to-late August 2009. NAILLON e-mailed a number of Direct Endorsement lenders to describe DMS’ services. For example, on August 12, 2009, NAILLON, in an-email sent to multiple potential clients, wrote that DMS “‘was created to assist lenders in eliminating first and early payment default penalties” providing financial assistance to borrowers that will miss their payments. “[I]f they will cause an EPD penalty or FPD (first payment default) penalty, DMS will arrange for them to receive financial assistance. Financial assistance is provided through the Ely Shoshone Tribe’s Housing Authority. The reason it is provided by a housing authority is because as a governmental entity, the assistance they provide is a non-tax event for the borrower.” NAILLON added that the “goal of the program is to be a ‘quick fix” to a high default ratio which will enable a company to maintain its ability to originate in all its branches…”
143. NAILLON’s e-mail neatly lays out the two sets of frauds RDF/DMS and their clients perpetrated; the first against HUD, which had its ability to track mortgage defaults destroyed by RDF and DMS’s illicit suppression of comparative default ratios, and the second against the Secondary Purchasers, who had Early Payment Defaults and “First Payment Defaults” (defaults on the first mortgage payment due after the mortgage was sold to a Secondary Purchaser) concealed from them.
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