0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21 Page 1 of 3

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION MAR O2 2011

U.S. ex rel. [UNDER SEAL], )

)
Plaintiff, )
)
v. ) CIVIL NO. 3:10CV575-RJC
)
ACE SECURITIES CORPORATION, ) UNDER SEAL and
et al., ) in Camera
)
Defendants. )

UNITED STATES' THIRD MOTION TO PARTIALLY UNSEAL CASE

The United States, on behalf of the State of North Carolina, the District of Columbia, and

the States of California, Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Massachusetts,

Minnesota, Montana, New Hampshire, New Jersey, New Mexico, New York, Oklahoma, Rhode

Island and Virginia, respectfully moves the Court, pursuant to the False Claims Act, 31 U.S.C. §

3 730(b)(2) for a third partial lifting of the seal in this case for the limited purpose of disclosing

the sealed complaint in the captioned action, any amended complaints, or a subset of information

contained therein to the defendants, at the government's discretion and at the government's

discretion as to timing. The basis for the Government's application is contained in the

Memorandum in Support, filed contemporaneously herewith. A proposed order is also submitted

for the convenience of the Court.

1. This case was filed by Lynne E. Szymoniak on or about November 12, 2010. It

was served on the Office of the United States Attorney for the Western District of North Carolina

on or about November 12, 2010. An Order was entered on January 18, 2011, extending the seal
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21 Page 2 of 3

through July 18, 2011.

2. In order for the investigation to proceed, the relator has consented to the filing of

this motion and to the entry of an order partially unsealing this case for the express purpose of

allowing the United States to furnish the complaint and all other relevant documents, whether or

not under seal, to the defendants.

ANNE M. TOMPKINS
UNITED STATES ATTORNEY

~ J~ ~
DONALD H. CALDWELL, JR.
ASSISTANT UNITED STATES ATTORNEY
NC Bar No. 15489
Attorney for the United States of America
227 West Trade Street, Rm 1650
Charlotte, NC 28202
Tel: (704) 344-6222
Fax: (704) 227-0248
Email: Donald.H.Caldwell@usdoi.gov

2
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21 Page 3 of 3

CERTIFICATE OF SERVICE AND NO SERVICE

I hereby certify that on the 'F day of March, 2011, a true and correct copy of the
foregoing United States' Third Motion for Partial Lifting of the Seal was served upon the parties

below by mailing a copy thereof, postage prepaid and properly addressed as indicated. The

Memorandum in Support of that Motion has not been served upon the parties noted below

because that pleading refers to details of the Government's investigation of this case.

Richard A. Hartpootlian
Richard A. Hartpootlian, P.A.
1410 Laurel Street
Columbia, SC 29202

Preston 0. Odom, III

William K. Diehl, Jr.
JAMES, MCELROY & DIEHL, P.A.
600 South College Street
Charlotte, NC 28202

Reuben Guttman
GRANT & EISENHOFER, P.A.
1920 L Street, N.W.
Washington, DC 20036

James J. Sabella
Lydia Ferrarese
GRANT & EISENHOFER, P.A.
485 Lexington Ave.
New York, NY 10017

AUSA Fran Trapp

AUSA James C. Leventis, Jr.
United States Attorney's Office
District of South Carolina
1441 Main St., Suite 500
Columbia, SC 29201
~M-1 ~ sf
DONALD H. CALDWELL, JR.
ASSISTANT UNITED STATES ATTORNEY

3
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-1 Page 1 of 5

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
MAR o2 zou
U.S. ex rel. [UNDER SEAL], )
)
Plaintiff, )
)
v. ) CIVIL NO. 3:10CV575-RJC
)
ACE SECURITIES CORPORATION, } UNDER SEAL and
et al., ) in Camera
)
Defendants. )

MEMORANDUM IN SUPPORT OF THE UNITED STATES'

THIRD MOTION TO PARTIALLY UNSEAL CASE

The United States, on behalf of the State of North Carolina, the District of Columbia, and

the States of California, Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Massachusetts,

Minnesota, Montana, New Hampshire, New Jersey, New Mexico, New York, Oklahoma, Rhode

Island and Virginia, respectfully moves the Court for a third partial lifting of the seal in this case

for the limited purpose of disclosing the sealed complaint in the captioned action, any amended

complaints, or a subset of information contained therein to the defendants, at the government's

discretion and at the government's discretion as to timing.

This case was filed by Lynn E. Szymoniak on or about November 12, 2010. It was served

on the Office of the United States Attorney for the Western District of North Carolina on or

about November 12, 2010. An Order was entered on January 18, 2011, extending the seal

through July 18, 2011. In the North Carolina case, the relator alleged that when the defendants

needed to bring foreclosure actions, they used fraudulent mortgage assignments to conceal that

over 200 mortgage-backed securities trusts are missing critical mortgage assignments and notes.
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-1 Page 2 of 5

I. BACKGROUND

Ms. Szymoniak filed both the North Carolina case and the South Carolina case, both

containing allegations of mortgage fraud, under the False Claims Act ("FCA"), 31 U.S.C. § 3729

et seq., which provides for the award of treble damages and civil penalties for, inter alia, the

presentation of a false claim or the making of a false statement in order to obtain a payment from

the United States Government. 31 U.S.C. §§ 3729(a)(l) and (2). Section 3730(b) of the Act

permits a private person, known as the "relator," to bring a qui tam action for the person and for

the United States Government." 31 U.S.C. § 3730(b)(l).

The United States Government is investigating the allegations as allowed by statute in

order to make an intervention decision. An initial interview session, including the Government

plus state agency representatives, was conducted on January 5 - 6, 2011. More interviews are

underway, and other districts may need to participate in these interviews.

There are 26 defendants, all mortgage lenders, named in this District and various other

districts. Considering the number of documents in a single, simple refinance, plus the documents

related to the establishment of the trusts which were created for a number of years and portions

of years, reviewing and storing even one package of documents by a single defendant lender

would be a massive undertaking. The relator initially provided the Government with 6 compact

discs of documents to review, constituting an initial overview of the allegations. Special agents

of the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation

Division are investigating this matter for the Western District of North Carolina. Pursuant to the

Order partially unsealing the case entered on December 13, 2010, the Government is able to call

upon the assistance of the North Carolina Office of the Attorney General, and other North

2
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-1 Page 3 of 5

Carolina agencies, including, the Commissioner of Banks, the Commissioner of Insurance, the

Secretary of State and the State Treasurer. Further, employees of the Federal Reserve Bank of

New York are coordinating their own investigation, and a parallel criminal investigation is being

undertaken in this District.

II. DISCUSSION

Under Section 3730(b) of the FCA, qui tam complaints are filed under seal so that the

United States has "an adequate opportunity to fully evaluate the private enforcement suit and

determine both if the suit involves matters the Government is already investigating and whether

it is in the Government's interest to intervene and take over the civil action." See Legislative

history of the FCA, S. Rep. 99-345, 99th Cong., 2d Sess., reprinted in 1986 U.S. Code Cong. &

Admin. News 5266, 5289. Once the government intervenes, it has the primary responsibility for

prosecuting the action pursuant to the terms of 31 U.S.C. § 3730(c)(l). The lifting of the seal in

qui tam matters is expressly authorized by 31 U.S.C. § 3730(b)(3).

The United States seeks a partial lifting of the seal so that it may disclose the sealed

complaint in the captioned action, any amended complaints, or a subset of information contained

therein to the defendants, at the government's discretion. The goal of this request to unseal is to

facilitate settlement discussions among the government and the various defendants.

In order for the investigation to proceed, the relator has consented to the filing of this

motion and to the entry of an order partially unsealing this case for the express purpose of

allowing the United States to furnish the complaint, disclosure statement and all other relevant

documents, whether or not urider seal, to the defendants, at the discretion of the government.

3
0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-1 Page 4 of 5

ANNE M. TOMPKINS
UNITED STATES ATTORNEY

~~ '1'
Donald H. Caldwell, Jr.
Assistant United States Attorney
NC Bar No. 15489
Attorney for the United States of America
227 West Trade Street, Rm 1650
Charlotte, NC 28202
Tel: (704) 344-6222
Fax: (704) 227-0248
Email: Donald.H.Caldwell@usdoj.gov

4
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-1 Page 5 of 5

CERTIFICATE OF SERVICE AND NO SERVICE

I hereby certify that on the zd. day of March, 2011, a true and correct copy of the

foregoing United States' Third Motion for Partial Lifting of the Seal was served upon the parties

below by mailing a copy thereof, postage prepaid and properly addressed as indicated. The

Memorandum in Support of that Motion has not been served upon the parties noted below

because that pleading refers to details of the Government's investigation of this case.

Richard A. Hartpootlian
Richard A. Hartpootlian, P.A.
141 0 Laurel Street
Columbia, SC 29202

Preston O. Odom, III

William K. Diehl, Jr.
JAMES, MCELROY & DIEHL, P.A.
600 South College Street
Charlotte, NC 28202
Reuben Guttman
GRANT & EISENHOFER, P.A.
1920 L Street, N.W.
Washington, DC 20036

James J. Sabella
Lydia Ferrarese
GRANT & EISENHOFER, P.A.
485 Lexington Ave.
New York, NY 10017

AUSA Fran Trapp

AUSA James C. Leventis, Jr.
United States Attorney's Office
District of South Carolina
1441 Main St., Suite 500
Columbia, SC 29201

~ ,~ d
DONALD H. CALDWELL, JR.
ASSISTANT UNITED STATES ATTORNEY

5
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-2 Page 1 of 1

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION

U.S. ex rel. [UNDER SEAL], )

)
Plaintiff, )
)
v. ) CIVIL NO. 3:10CV575~RJC
)
ACE SECURITIES CORPORATION, ) UNDER SEAL and
et al., ) in Camera
)
Defendants. )

ORDER PARTIALLY UNSEALING CASE

This cause, coming on for consideration before the undersigned Chief United States

District Court Judge Upon the United States' Third Motion to Partially Unseal Case, for the

reasons stated in the motion, and for good cause shown,

IT IS THEREFORE ORDERED that the United States' Third Motion to Partially Unseal

Case for the limited purpose of disclosing the sealed complaint in the captioned action, any

amended complaints, or a subset of information contained therein to the defendants, at the

government's discretion, is hereby GRANTED.

IT IS FURTHER ORDERED that the Complaint and all other filings shall remain under

seal, except insofar as that seal has been partially lifted by the Court.

This the _ _ _ _ day of _ _ _ _ _ _ _ _, 2011.

ROBERT J. CONRAD, JR.

CHIEF DISTRICT COURT JUDGE
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-1 Page 1 of 5

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
MAR O2 2DI!
U.S. ex rel. [UNDER SEAL], )
)
Plaintiff, )
)
~ ) CIVIL NO. 3:10CV575-RJC
)
ACE SECURITIES CORPORATION, } UNDER SEAL and
et al., ) in Camera
)
Defendants. )

MEMORANDUM IN SUPPORT OF THE UNITED STATES'

THIRD MOTION TO PARTIALLY UNSEAL CASE

The United States, on behalf of the State of North Carolina, the District of Columbia, and

the States of California, Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Massachusetts,

Minnesota, Montana, New Hampshire, New Jersey, New Mexico, New York, Oklahoma, Rhode

Island and Virginia, respectfully moves the Court for a third partial lifting of the seal in this case

for the limited purpose of disclosing the sealed complaint in the captioned action, any amended

complaints, or a subset of information contained therein to the defendants, at the government's

discretion and at the government's discretion as to timing.

This case was filed by Lynn E. Szymoniak on or about November 12, 2010. It was served

on the Office of the United States Attorney for the Western District of North Carolina on or

about November 12, 2010. An Order was entered on January 18, 2011, extending the seal

through July 18, 2011. In the North Carolina case, the relator alleged that when the defendants

needed to bring foreclosure actions, they used fraudulent mortgage assignments to conceal that

over 200 mortgage-backed securities trusts are missing critical mortgage assignments and notes.
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-1 Page 2 of 5

I. BACKGROUND

Ms. Szymoniak filed both the North Carolina case and the South Carolina case, both

containing allegations of mortgage fraud, under the False Claims Act ("FCA"), 31 U.S.C. § 3729

et seq., which provides for the award of treble damages and civil penalties for, inter alia, the

presentation of a false claim or the making of a false statement in order to obtain a payment from

the United States Government. 31 U.S.C. §§ 3729(a)(l) and (2). Section 3730(b) of the Act

permits a private person, known as the "relator," to bring a qui tam action for the person and for

the United States Government." 31 U.S.C. § 3730(b)(l).

The United States Government is investigating the allegations as allowed by statute in

order to make an intervention decision. An initial interview session, including the Government

plus state agency representatives, was conducted on January 5 - 6, 2011. More interviews are

underway, and other districts may need to participate in these interviews.

There are 26 defendants, all mortgage lenders, named in this District and various other

districts. Considering the number of documents in a single, simple refinance, plus the documents

related to the establishment of the trusts which were created for a number of years and portions

of years, reviewing and storing even one package of documents by a single defendant lender

would be a massive undertaking. The relator initially provided the Government with 6 compact

discs of documents to review, constituting an initial overview of the allegations. Special agents

of the Federal Bureau oflnvestigation and the Internal Revenue Service - Criminal Investigation

Division are investigating this matter for the Western District of North Carolina. Pursuant to the

Order partially unsealing the case entered on December 13, 2010, the Government is able to call

upon the assistance of the North Carolina Office of the Attorney General, and other North

2
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-1 Page 3 of 5

Carolina agencies, including, the Commissioner of Banks, the Commissioner oflnsurance, the

Secretary of State and the State Treasurer. Further, employees of the Federal Reserve Bank of

New York are coordinating their own investigation, and a parallel criminal investigation is being

undertaken in this District.

II. DISCUSSION

Under Section 3730(b) of the FCA, qui tam complaints are filed under seal so that the

United States has "an adequate opportunity to fully evaluate the private enforcement suit and

determine both if the suit involves matters the Government is already investigating and whether

it is in the Government's interest to intervene and take over the civil action." See Legislative

history of the FCA, S. Rep. 99-345, 99 th Cong., 2d Sess., reprinted in 1986 U.S. Code Cong. &

Admin. News 5266, 5289. Once the government intervenes, it has the primary responsibility for

prosecuting the action pursuant to the terms of 31 U.S.C. § 3730(c)(l). The lifting of the seal in

qui tam matters is expressly authorized by 31 U.S.C. § 3730(b)(3).

The United States seeks a partial lifting of the seal so that it may disclose the sealed

complaint in the captioned action, any amended complaints, or a subset of information contained

therein to the defendants, at the government's discretion. The goal of this request to unseal is to

facilitate settlement discussions among the government and the various defendants.

In order for the investigation to proceed, the relator has consented to the filing of this

motion and to the entry of an order partially unsealing this case for the express purpose of

allowing the United States to furnish the complaint, disclosure statement and all other relevant

documents, whether or not urider seal, to the defendants, at the discretion of the government.

3
0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-1 Page 4 of 5

ANNE M. TOMPKINS
UNITED STATES ATTORNEY

Donald H. Caldwell, Jr.

Assistant United States Attorney
NC Bar No. 15489
Attorney for the United States of America
227 West Trade Street, Rm 1650
Charlotte, NC 28202
Tel: (704) 344-6222
Fax: (704) 227-0248
Email: Donald.H.Caldwell@usdoj.gov

4
 0:13-cv-00464-JFA Date Filed 03/02/11 Entry Number 21-1 Page 5 of 5

CERTIFICATE OF SERVICE AND NO SERVICE

I hereby certify that on the 2d day of March, 2011, a true and correct copy of the

foregoing United States' Third Motion for Partial Lifting of the Seal was served upon the parties

below by mailing a copy thereof, postage prepaid and properly addressed as indicated. The

Memorandum in Support of that Motion has not been served upon the parties noted below

because that pleading refers to details of the Government's investigation of this case.

Richard A. Hartpootlian
Richard A. Hartpootlian, P.A.
1410 Laurel Street
Columbia, SC 29202

Preston O. Odom, III

William K. Diehl, Jr.
JAMES, MCELROY & DIEHL, P.A.
600 South College Street
Charlotte, NC 28202
Reuben Guttman
GRANT & EISENHOFER, P.A.
1920 L Street, N.W.
Washington, DC 20036

James J. Sabella
Lydia Ferrarese
GRANT & EISENHOFER, P.A.
485 Lexington Ave.
New York, NY 10017

AUSA Fran Trapp

AUSA James C. Leventis, Jr.
United States Attorney's Office
District of South Carolina
1441 Main St., Suite 500
Columbia, SC 29201

DONALD H. CALDWELL, JR.

ASSISTANT UNITED STATES ATTORNEY