Thursday, February 10, 2011

USA v Charles R. Engle

Well, i guess now since sentencing happen, we are all allowed to talk about Charlie's case, I decided to post Charlie's dad's letter since there is nobody more passionate about the case than his dad, as a parent i can relate that a parent will do anything if he or she feels that a child has been treated unfairly.

This will be the last time i will make reference about the case, I decided to post it since Anonymous is determined to tell us all how wrong Charlie was, let me say something, i sat thought the trial and listen to all the evidence and not once did i feel any different about Charlie, we have our problems but they were never about how i think he handle this situation.
Also there is a great documentary regarding the housing crisis CNBC House of Cards.

"Ref: USA v Charles R. Engle
United States District Court for the Eastern District of Virginia

Judge: Jerome B. Friedman
Prosecutor: Joe Kosky
Defendant: Charlie Engle (Charles R. Engle, Jr.)
US Government, IRS, Criminal Investigation: Robert Wayne Nordlander
Nordlander’s Supervisor: David Kalil
Kalil’s boss in Charlotte, NC: Jeannine Hammett
Hammett’s boss: Michael Thomas, Director of Field Operations for the Southeast Region

This trial began September 28, 2010. Sentencing took place on January 10, 2011.

There were 15 Counts of bank fraud, wire fraud, mail fraud, false statements to banks, and money laundering lodged against Charlie Engle. The United States dropped one count of providing false information to HSBC Bank before the trial started. The Jury found Charlie not guilty on the other count of providing false information to Shore Bank of Cape Charles, VA. The Jury found Charlie not guilty of money laundering. The bulk of the charges which resulted in guilty verdicts (12 Counts) involved faxes and Federal Express regarding loan applications and settlement papers. As a layman, I remain confused as to how one can be found not guilty of providing false information to the banks named in the Indictment, yet be found guilty of fraud.

It is important to note here that there were no Counts involving tax issues even though this was an IRS tax investigation. Indeed, this whole sordid affair started as a tax evasion investigation by Robert Nordlander, whom we consider to be a rogue IRS agent, but the United States Government was not able to find any tax code violations. They used what they called a “confession” by Charlie to start an investigation into bank fraud. The “confession” was not a confession. It was a statement regarding two stated income loans which Charlie obtained. Charlie was never advised by any lender that he was getting a stated income loan. This alleged confession to an IRS Undercover Agent took place four years after the loans for Yarmouth and Mason Street were obtained, and represented Charlie’s description of what he came to learn later was his involvement in a couple of “liar’s loans”, and his knowledge that his loan broker attributed a $400,000 annual income to him when the loan broker knew very well that Charlie did not earn $400,000. The Government asked everyone to believe that Charlie confessed to getting liar’s loans, when neither lender testified at trial that they had advised Charlie that he was getting a liar’s loan. Remember, Charlie disclosed all employment information as well as his tax returns to this broker. The Underwriter was a Bank of America company and this company, Impac Funding, had the responsibility to verify Charlie’s assets since this was a SIVA loan (stated income, verify assets). The United States Government knew very well that Impac did not verify assets and other material requirements for the underwriting of this loan. They simply were pushing loans out the door as most of us now know. We had a Judge and Jury who seemed not to know anything about the housing bubble bursting and the subsequent collapse of the mortgage industry due to the subprime lending practices of such banks as Bank of America, through companies such as Impac Funding, and at that time, Countrywide, which later became a Bank of America company. Judge Friedman stated in open court that he had never heard of a Stated Income loan, yet he refused to allow an expert witness to testify as to the lending practices prevalent in 2005-06. These lenders were tasked by the banks with selling these loans and then bundling them into bonds and derivatives for sale to investors, many of whom were foreign entities. Did Kosky, Nordlander, Friedman, Noll, Hammett, or Kalil know anything about what occurred during those 2005-06 days of toxic lending? How could they not? Could they possibly be that uninformed about current events? Together, they convicted what might be the only borrower in the United States of bank fraud regarding Stated Income loans. Charlie’s loans involved no victims. Not one person, other than Charlie Engle, lost money on those loans. He lost almost $100,000 in down payments. He lost the properties and the equity in them. He lost his credit. He lost his means to make a living. He lost his freedom and is going to prison because he got duped into taking two stated income loans on investment properties. Charlie had bought at least 15 properties in his lifetime and made money every time. There were never any issues legally or ethically about these prior purchases and sales. He reported and paid his taxes on all of those transactions. It is an honest way to make a living. The United States Government tried to portray Charlie’s real estate investing as a criminal endeavor. These last two properties, Yarmouth and Mason, turned out to be big losers, for many reasons. Robert W. Nordlander is the main reason for this tragedy. He is a liar and a manipulator. He lied to the Grand Jury, and he lied to the trial jury. He lied to his Supervisors, Kalil and Hammett, and they blessed his lies by okaying his requests for investigation, even after he had to drop tax issues as the basis for his investigation. He used tax evasion as the basis for performing surveillance on Charlie and his friends, for searching Charlie’s garbage, and for impounding Charlie’s mail. What did these efforts turn up? Nothing. So he went back to the well one more time to get an Undercover encounter approved. It is widely known that when there is no evidence of wrongdoing, the next measure for law enforcement is to get a confession, in any way possible. In this case, an agent from Myrtle Beach, Ellen Burrows, was used. I have copies of the confession and copies of the internal IRS memos memorializing the confession. Again, I will say this was not even close to a confession. Nordlander spun the conversation with the Undercover to fit his story. Nordlander’s version of a confession is not only inaccurate, it is intended to deceive.

There were two properties involved: 3118 Yarmouth, which Charlie acquired through a 1031 Exchange, whereby he exchanged a property he had owned for 7 years for the Yarmouth property. His share of the proceeds from the 1031 Exchange was $66,000, which was paid by Towne Bank to Charlie’s Bank of America account at the time of the closing of the Yarmouth escrow. The other property was a condo located at 115 Mason Street in Cape Charles. Charlie had placed a $5000 deposit two and a half years prior in the form of an “option to purchase” for a fixed price of $250,000 upon completion of the under construction condo. Thus, both properties designated in the Indictment were properties which Charlie had long investment ties to and were in no way impulse or short term purchases (schemes) as the United States Government tried to insinuate. The original Mason Street purchase for the option price of $250,000 was executed by a full documentation loan whereby Charlie provided all documentation requested by Shore Bank and its Underwriter. The United States Government, through the person of IRS agent Robert W. Nordlander, introduced a letter of intended employment and claimed that said letter was falsely concocted and part of a scheme to mislead the bank into making the loan. In fact, if the bank had done its required due diligence, it would have found that the letter, which was written by a colleague of Charlie’s named Robert Coyne, was a 100% accurate description of a venture that was underway and in which Charlie had invested $25,000. It is very important to note that this project was only under way a short time and would not qualify as employment for loan purposes anyway, since two years is required for a chain of employment to get a loan. The lender either knew this or should have known this. This was just more misleading information used to try to bring down Charlie Engle. It worked. None of the lenders did the requisite due diligence on these loans. Unfortunately, Charlie’s attorney was unable to grasp the importance of using the lack of due diligence to impeach the lenders’ testimony and the United States Government worked diligently to paint Charlie as a thief and a liar, when they knew very well that it was not true. Consequently, we were not able to pin down the lenders in the eyes of the jury. For many reasons, we are exploring civil remedies against the lenders at this time. It is also important to note here that the trial jury was less than stellar. That’s all I will say about that at this time.

This case started, according to Agent Nordlander’s testimony to the Grand Jury and at trial, when he read a newspaper article about Charlie Engle and his athletic exploits as an ultra-marathoner and a top endurance athlete. Nordlander stated that he was curious how a guy like this could earn a living and travel around the world and compete athletically. He stated that he was certain that Charlie was not reporting taxable income in order to support his lifestyle. It turns out that this “lifestyle” theme is somewhat of a fad among US Attorneys’ offices. Neil MacBride, US Attorney for the Eastern District of Virginia, an Obama appointee, stated for the press that Charlie “manipulated the mortgage industry” to support his lifestyle; a remark that is totally false and misleading. It is difficult to believe that someone as high up the food chain as MacBride could accuse a single borrower, with no victims, of manipulating the mortgage industry by getting duped into taking a couple of stated income loans. Charlie had never heard of a stated income loan in 2005-06, and the lenders didn’t explain to him what they were or why he was getting one. As a matter of fact, Charlie was fedexed the subject loan applications, which were all filled out by the lenders, and told to return them in a matter of an hour or two, in order to meet the close of escrow deadline. This was part of their scam. Not only did they never review the loans with Charlie, they forced him to sign as much as 50-60 pages of loan docs in a few hours and return them immediately. Charlie never met any of these lenders face to face. These loans had 2/28 ARM’s, resettable every 6 months, based on the LIBOR, and were interest only, starting at 7.5% interest. These loans were so toxic that it wasn’t safe to be in the same room with them. Charlie, nor anyone, could have ever serviced these loans. When the housing market collapsed, because of these kinds of loans, Charlie quickly and wisely defaulted. He would never have been able to make those payments, even though he serviced the Yarmouth loan for almost a year. The condo went from an appraised value of $415,000 in 2006, to $124,000 today, and it is not selling at $124,000. Something is very wrong with those numbers. What really went on with that condo? What does the Government know that they have not revealed? The Yarmouth house went from $555,000 to less than $275,000 today. The Mason Street condo sold in foreclosure for more than Charlie owed, so there was no loss to the bank or anyone. Whoever bought it though has lost a ton by now. The Yarmouth house sold for $292,000, generated a foreclosure loss for B of A of approximately $262,000, an amount which the US Government has asked Charlie to repay. Are they blaming Charlie for the collapse of the housing market? Nordlander writes in an internal IRS memo that Charlie indeed caused the collapse of the US housing market. Yes, I have it in writing. Charlie should not be tasked with paying this loss to a bank which caused this problem to begin with. Has the Government asked any of Bernie Madoff’s victims to pay him back because they stopped paying into his funds?

This case is an embarrassment to me, to US citizens everywhere, and to the United States Government. They have ruined Charlie Engle’s life. He lost speaking engagement contracts, endorsements, magazine article fees, and so much more. We don’t know why this occurred. Nordlander claims he was just reading his newspaper. Frankly, I don’t believe him. I believe he had another motive and we are looking into that possibility currently. He testified also that if he saw a person driving a nice car, like a Ferrari, he might run the tags, and pull the driver’s tax returns to see if it looked like he could afford such a car. How did we get to this point in the United States of America? Is our Government so morally bankrupt that they have to delve into citizens’ private lives when there is no visible sign of wrongdoing? Actually, sponsors were paying for Charlie’s travels. Nordlander, Kosky, and Neil MacBride hammered Charlie’s lifestyle at every opportunity, and how he was defrauding banks through second mortgages to get money to support his lifestyle. In fact, I have an internal IRS memo from Nordlander to Kalil and Hammett stating that Charlie Engle appeared NOT to be living a “lavish” lifestyle. Notwithstanding that statement, they continued to tell the Grand Jury, the trial jury, and the press that Charlie used unlawfully obtained money to support his lifestyle. This is just not true. They used a journalist/goon named Tim McGlone in Norfolk to spread their propaganda. First he reported erroneously that Charlie took loan money to finance his run across Africa. Elementary fact checking would have proven that to be not true. His most recent contribution to the Government was describing Charlie’s loans as over a million dollars in an article after the sentencing took place. Of course, they counted the Mason Street condo, which was originally purchased for $250,000, and paid off in full on a refinance for $300,000, as $550,000 in purchases. By counting the condo twice, they simply continued the thread of deception which they engaged in from day one. They wanted to use that million dollar figure. At the end, the restitution amount shrunk to $260,000, and that was simply due to default and foreclosure. That property would have lost its value whether it was sold or not sold. All properties lost their values during this time frame.

Charlie obtained $66,000 from the proceeds of a 1031 Exchange. This was totally legal and the United States Government did not ask Charlie to repay it. The same is true for the $80,000 he received from the “cash out refinance” of the Mason condo. He paid $250,000, with $50,000 down payment originally, and months later refinanced it for $300,000 against an appraisal of $400,000 and withdrew $80,000 in equity. This was perfectly legal. Charlie left even more equity on the table. The transaction was called a “cash out refinance”. There was nothing deceptive about that. Remember, the property was later sold in foreclosure for more than the $300,000 loan amount. The statements by the Government that Charlie took $146,000 from second mortgages was simply not true. There was one second mortgage involved in the three transactions and that was for $111,000 on the Yarmouth property. That $111,000 was a purchase money second mortgage, and went directly to the Seller. Furthermore, the Government, as late as Jan. 10, 2011, at the sentencing was telling the Court that Charlie had caused the banks to lose $405,000. In fact, based on discovery provided by the United States Government before the trial in September, 2010, the Mason condo was sold in foreclosure for $312,000. So why did Nordlander, Kosky, Kalil, and Hammett continue to insist that the banks lost $405,000? I can only surmise that they continued to lie about the numbers in order to confuse the real issue, which was that subprime lending practices had caused the housing bubble to burst, and not individual borrowers who were coerced into taking stated income loans.

We just found out that Charlie is to report to Beckley, West Virginia, on February 14, 2011. Of course, they wouldn’t send him to Butner, which is about 55 miles from Greensboro. Then he would be able to see his sons and friends regularly. The Government certainly wouldn’t want that. We have no idea why this Prosecutor, Kosky, or the Probation Officer, Jeff Noll, would misrepresent the truth so blatantly and aggressively against someone like Charlie. Noll’s presentencing report was so amateurish as to be embarrassing. It was filled with errors and misstatements of facts. He requested that Charlie serve 47 months in prison. There was a federal sentence handed down in Seattle recently to two individuals who caused the IRS to lose out on $240 million in taxes in a tax shelter scheme. The sentence: 50 months. The question remains: why did these United States Government people want so badly to put Charlie Engle in prison over two stated income loans, and no victims were involved other than Charlie.

Charlie has helped many, many people get off drugs and alcohol. He is active to this day in that regard. He was instrumental in helping to raise over $6 million for H2O Africa, with the Matt Damon Foundation. Charlie starred in a documentary, Running the Sahara, narrated by Matt Damon. He did this in the middle of this property mess. Yes, he definitely was trying to make some money to support himself and service his debt, including child support payments during this time. He was committed to his sport and he was trying to turn it into a way to make a living. The United States Government repeatedly accused him of trying to make money to pay his child support and living expenses. Since when did that become against the law in the United States of America? Nordlander is someone we understand to a point. Let’s just say he has “shortcomings”, which might explain some forms of envy vis a vis a Charlie Engle, but it doesn’t explain his propensity for lying under oath, which I look forward to disclosing. He should be indicted for perjury. More troubling is how his Supervisors, Kalil and Hammett, justified using a tax investigation to trample on Charlie’s Fourth Amendment and other rights, and to investigate every aspect of his personal life only to toss it aside, and substitute bank fraud because of a conversation with an IRS Undercover in Mimi’s CafĂ© in Greensboro, NC. The IRS had everything but a SWAT Team involved in the Undercover operation. They were armed and there were seven or eight of them. They spent over 660 hours admittedly on this investigation at a cost to the taxpayers of probably more that $2 million. I don’t know the real amount. They do. And what is the outcome? Charlie is to spend 21 months in prison and repay Bank of America $262,000 for a default and foreclosure, which is only one of millions caused by the subprime lending practices of banks like B of A. There is nothing else to the case. It was so simple and so void of substance that nobody, including the jury, the Judge, our attorneys, the prosecutor, and the IRS, could understand it. The jury is a topic I will address later.

One lender is an admitted liar and a felon. He forged his own parents’ signatures on a loan application. Nordlander never mentions his name, which is John J. Hellman, Jr., of Priority Financial, in any internal IRS memos that I can find. One Grand Juror asked Nordlander if the loan officers might be indicted. Nordlander and Kosky deflected the question and no answer appears in the Grand Jury transcript. They clearly avoided making a response to the Grand Juror. This Hellman character has not been sentenced yet. I am watching with great interest to see what he gets for a sentence. To his credit, he did not admit to any scheme with Charlie, since there was none, which is what the Government had charged Charlie with publicly. He simply said that Charlie told him that he was making $32,500 a month, a figure so implausible that it would be comical if the consequences were not so severe. The loan application he wrote for Charlie was revealed by a handwriting expert hired by the US Government to have been initialed apparently “by someone other than” Charlie Engle, and signed by someone who might or might not be Charlie Engle. Would that be reasonable doubt? I have in my possession four other loan application pages signed by John Hellman. All four are clearly signed by different people. This lender was churning out stated income loans, but you won’t learn that from the United States Government. By all rights, all borrowers who received Stated Income loans involving John J. Hellman, Jr., through Priority Financial, or Impac Funding should have been notified that he was under investigation for falsifying income on loans. How many such loans were brokered by Hellman that involved Stated Income loans? The Government withheld this information from the Grand Jury and provided no testimony at trial as to the extent to which Hellman brokered these loans. Why wasn’t Charlie notified that this person was indicted for falsifying Stated Income Loans? The lenders certainly should have notified everyone who received a loan from Priority Financial or any Bank of America company. There are lots of unanswered questions. A big one would be: how many Bank of America/Countrywide/Impac Funding executives have been indicted for subprime lending practices?

The other loan by Linda Gaskill of Shore Bank in Cape Charles attributed an income of $15,000/month to Charlie. Charlie denies telling her that, but at the same time, Charlie had bank deposits in 2005, the year that loan was applied for, of $247,000, with an income of over $180,000, so there was no falsification anyway. The United States Government lied about that income to the Grand Jury and to the Trial Jury. Thus, there are only two loans in question, because the third loan was a full doc loan which was fully repaid by the refinance. Of the two, we have a forgery on the loan application of one, and the stated income in the proper amount of $180,000 on the other. So how did this happen? When the tax investigation scheme created by Nordlander proved not to be viable, he was probably embarrassed to have wasted so much Government time and money, so he lied to his Supervisor about the tax evasion, in order to bring in the Undercover.

It is also noteworthy here to clarify the degree to which these lenders went to avoid knowing Charlie’s income. On four occasions, two by Linda Gaskill at Shore Bank, and two by Hellman’s staff at Priority Financial, the lenders had Charlie’s employer at Extreme Makeover, Home Edition, on the telephone to verify Charlie’s employment. They both aggressively made certain to let this person know that they did NOT want to know Charlie’s income. Hellman’s Underwriter even wrote in black and white bold print on a Verification of Employment form which the employer, Rob Davis signed, “NO INCOME NEEDED, THANKS.” Did the United States Government know this? Of course they did. They had a copy of the Verification of Employment form described above. Furthermore, this does not explain why both lenders did not order and read Charlie’s tax returns. He signed 4506 Forms giving both of them permission to access his tax returns. The fact remains that these lenders wanted to be able to put down an income figure necessary to fit the requisite ratios needed by the Underwriters to approve the loans. They assured Charlie that he was already pre-approved and requested that he trust them and just sign and return the forms. Not only did the United States Government know this, the United States Government encouraged these practices by turning a blind eye to all regulation regarding these subprime lenders.

The fact, though, remains, that those liar’s loans cost Charlie a lot of money and he, and only he, lost money because of them, so what kind of a confession would that be? We will let US public opinion make a determination about this case. I asked Brad Miller, Charlie’s North Carolina Congressman, to monitor the case; not to get involved, but to monitor it. He blew it off. We shall see what others say about this case.

I have the documentation to back up what I have written in this paper/complaint, particularly regarding Charlie’s innocence of the income falsification charges, which is what the entire case was about. I want to state here that even if Charlie had misstated, exaggerated, or falsified his income, he should not be going to prison. Millions of people were duped into taking stated income loans during 2005-06. It was such a corrupt lending tactic that the US Senate in May, 2010, banned further use of stated income loans. If the US Government arrested all of the people who were duped into falsifying their income on stated income loans during that period of time, the judicial system and the prisons would be full for many, many more years. Anyone who is minimally current regarding the lending/banking/housing crisis knows the role that stated income loans played in the near destruction of the US economy. How then could Judge Friedman, the Jury, Mr. Kosky, Mr. Noll, Nordlander, Mr. Kalil, Ms. Hammett, and US Attorney Neil MacBride have such a low level of awareness regarding the current events now and in 2005-06? The United States is still in economic trouble because of subprime lending practices by banks such as Bank of America. It is appalling that these people could be so ignorant of the facts. I ask again. What was the real reason for the viciousness and mean-spirited IRS lynching of Charlie Engle?

I am a US Army veteran, having served from 1966-69. I volunteered my services because I thought it was the right thing to do. How proud am I of my Government now?

Richard Engle"


Dave said...

What a travesty and miscarriage of justice. I continue to become more and more disillusioned by any and all things govt at all levels.....did Matt Damon try and yield any influence or create any exposure to Charlie's plight? Appeal? Certainly something so blatantly wrong on so many levels cannot stand???

Debbie Hampton said...

Norma, thank you for posting this. It makes me really sad and brings tears to my eyes. It is all so senseless and negative. What a waste of a bunch of peoples' time, energy and taxpayers' money. Surely, they can find some people really doing some bad things to pursue? You would think. There are enough of them out there. Sheesh.

I can certainly relate to Charlie. I was accused of some totally bogus negligence charges by my X husband and did not see my own children for 6 months. I just went to court and the charges were thrown out, but, if someone knows how to work the system, as they obviously did in Charlie's case, they can be successful at almost anything. This has been going on for me in one form or another for a decade, and I have no doubt it will continue. At least, with Charlie's, there is a sense an end at some point.

While there is no answer to the question of "Why," there is great personal learning in these challenges. I have shared some of my tools for making peace with all of this in my own life with Charlie. I know Charlie will and already is teaching others by his example in this situation and will come out a better person for it. Blessings.

Neary said...

I cannot believe can this happen in this day and age--right before our very eyes? Something needs to be done...EVERYONE CAN SPEAK OUT!!!!!! This makes me want to scream! I'm going to write letters!!! I'll post this on my facebook page as well...OMG!

Anonymous said...

To think my taxes pay Robert Nordlander's salary at the IRS. What an oxygen thief.

Anonymous said...

Let's hope that Mr. Norlander may quickly find himself looking for work now... I wonder what his loan application looked like...

Anonymous said...

Engle got what he deserved. Thank God there are guys like Nordlander out there ferreting out the fraud that self-indulgent slackers like Engle commit so that they can finance their hobbies with other people's money.

Anonymous said...

You realize the real criminals are the ones originated, repackaged, sold, and let this practice take place while lining their own pockets. For the gov't to aggressively go after someone like Engle simply because he happened to be in a movie by an IRS agent who doesn't care about going after the actual people who committed (the loan broker and the underwriter) is laughable. I hope you happen to run into Mr. Nolander on the street wearing the wrong sort of suit or driving the wrong sort of wheels, you may have a government team spending a million dollars to investigate a $4000 discretion... but i digress.

Anonymous said...

I just read the NYTimes article and was appalled at the actions of the IRS. It seems that Robert Nordlander is eager to target anyone with a lifestyle better than his own.

Anonymous said...

Nordlander is a bully with a gun -- and we taxpayers put it in his grimy paw. Hope that he and his ilk get the tables turned on him. What scum.

Hank said...

So much for Obama being any different than Bush. Both parties are there to protect the rich and prosecute the little guy.

I agree that Robert Nordlander is a snake but his bosses are no better.

sufaud said...
This comment has been removed by the author.
sufaud said...

Many of the documents from United States v. Engle have been uploaded from PACER (8¢/page) to and to where they can be read for free. The court transcripts won't be available on PACER until March 29.

Anonymous said...

What a disgrace. Robert Nordlander rummaged through this poor guys trash - he must have been looking for his wife in there - what a scumbag.