SEC LAUNCHES REAL ESTATE FRAUD INVESTIGATION

July 28, 2009

The SEC announced today that it is investigating a mortgage investment scheme based in Phoenix involving commercial loans to area developers. These loans were made from a now bankrupt fund, Mortgages Ltd. The company was established to make short-term, high interest loans to commercial concerns. Another Phoenix-based company, Radical Bunny LLC is also being linked by the SEC to Mortgages Ltd.

The former CEO of Mortgages Ltd., Scott Coles, committed suicide last June shortly after the company filed for bankruptcy. Radical Bunny LLC is run by Tom Hirsch, a friend of Coles and the accountant for Mortgages Ltd. Radical Bunny LLC is also currently seeking bankruptcy protection. In addition to Mr. Hirsch, Radical Bunny officers, Berta Walder; Howard Walder and Harish P. Shah have also been named as defendants by the SEC.

Investors in the mortgage fund backing the Mortgages Ltd loans were apparently not informed of the risk involved and were victims of "material misrepresentations". The safety of investor's money, "material misrepresentations" and the unusually high risk involved with the scheme are the focus of the SEC's investigation.

We are encouraged that the SEC is finally bringing real estate fraud charges against those whose greed was instrumental in collapsing the entire real estate market and subsequently the Nation's economy.

It has been our contention that any company/individual that engaged in backing residential or commercial real estate mortgages, without informing buyers of the incredible risk involved with their plan to leverage, bundle, and sell the buyer's mortgage along with a bunch of basically worthless "liar loans" are guilty of fraud. These greedy plans needed to be disclosed to investors in the current case and residential mortgagees who have been robbed by shameless financial crooks.

Now, we just need the first residential mortgage fraud case to be initiated by someone to blow this scheme wide open and expose the extent and nature of the damage done by banks, politicians, brokers, hedge funds, insurance companies, rating and oversight agencies, etc. simply due to their unfettered greed. The same type of charges the SEC is bringing against Mortgages Ltd could easily be proved against any mortgage concern, such as Countrywide Mortgage, who engaged in the "derivatives" scheme employed during the 2003-08 time frame.