June 4, 2004
John D. Hawke, Jr.
Comptroller of the Currency
250 E. Street, SW
Washington, DC 20219
Dear. Mr. Hawke:
An essential step in protecting the integrity of the regulatory process is supporting the people who provide leadership within that process. The management of our resources is transparent and lawful when individuals in positions of responsibility are personally accountable for managing them under the high fiduciary standards required by law. Supporting the individuals employed by the government to assist in this task involves paying them what you owe them for services rendered and enjoyed by the government.
For almost seven years, I have tried to get my former company, Hamilton Securities, paid for work that saved the federal mortgage credit system more then $2.2 billion (as calculated by the Department of Housing and Urban Development (HUD) and the Office of Management and Budget and confirmed by a subsequent audit conducted by the General Accounting Office). My polite requests, repeated paperwork filings, administrative appeals and, finally, court actions, have been to no avail.
I called your office in the first week of September, 2001 regarding my efforts to get our outstanding bills paid. You did not return my call, although your assistant later insisted that you told her you did. My impression was that communications were not open, so I concluded that it was best to continue to seek a solution through the courts.
A federal court has now affirmed that Hamilton did not breach its contract with the federal government; rather, it is the government that has breached its contract with Hamilton. Enclosed please find a copy of the order of judgment issued by the Court of Federal Claims on April 19, 2004, which states, in pertinent part:
“In light of the court’s prior determination that neither the 18505 Contract nor Task Order I required Hamilton to run an optimization model utilizing “bid floors” to yield HUD “maximum sales proceeds” on the North/Central Sale, the court finds that HUD breached the 18505 Contract in failing to promptly pay Hamilton for work performed under the 18505 Contract….. Accordingly, the court enters judgment for Hamilton in the amount of $1,505, 256, plus any interest according to law….”For full text see: Final Judgement
Following the receipt of this order, my attorneys told me that the Department of Justice (“DOJ”) had informed them that HUD would not pay the judgment. In May, DOJ filed a motion for reconsideration. We expect HUD to appeal the judgment if the court denies HUD’s motion for reconsideration and I have been advised to expect the appeals process to take years. We are also informed that HUD does not intend to pay an additional $600,000 in contract close-out and termination expenses owed to Hamilton.
I am confident that you are familiar with this situation. You were the Under Secretary of the Treasury for Domestic Finance when Hamilton’s primary contract was terminated “for the convenience of the government” by HUD, a number of capable officials were forced out of federal mortgage credit leadership and the housing finance policies Henry Cisneros, as Secretary of HUD, instituted to save billions of tax dollars, were reversed, resulting in an explosion of mortgage credit and a refusal by HUD to produce statutorily required audited financial statements. The year after our contract was terminated, HUD’s Inspector General reported that HUD had made “undocumentable adjustments” of $59 billion.
Hamilton’s problems originated from a “qui tam” (whistleblower) lawsuit filed in 1996, brought by Ervin & Associates, a HUD contractor, in the name of the government as permitted under the Federal False Claims Act. Your son, Daniel Hawke, filed the original lawsuit as one of the lead attorneys for Ervin and pursued the case for four years before withdrawing as counsel of record. I have provided significant documentation at our website Dillon Read and the Aristocracy of Stock Profits that helps to illuminate his conduct in this matter.
In a recent article in the New York Times, you are quoted as saying, “It’s a fair criticism of our supervision of Riggs that we let things go on too long.” From this statement I conclude that you agree with me that it is never too late to do the right thing.
I have tried calling HUD to request a meeting from the Secretary, Alphonso Jackson. He has not responded. Will you help me get paid? I would appreciate your assistance. As the banks you supervise will tell you, waiting six to nine years for numerous bills to be paid is a long time for a small business to wait.
My attorneys and I are scheduled to resume the “qui tam” trial in the DC Federal District Court on July 15. For almost seven years, my family and I have funded the expenses related to eighteen governmental audits, investigations and inquiries and my insurance company and I have funded attorneys’ fees related to twelve lawsuits, all resulting from or inspired by the original, frivolous “qui tam” lawsuit.
If HUD were to pay the judgment, I would have the resources necessary to do a good job providing a defense in the lawsuit that started this mess. It goes without saying that the ideal resolution would be for the Department of Justice to move to dismiss this suit, since it agreed back in 2000 to allow Ervin to drop the claims against our original “deep pocket” co-defendants, Goldman Sachs, BlackRock Capital and OCWEN. From this action, it was obvious four years ago that a purpose of the suit was to run out of government those who protected the integrity of the federal mortgage credit regulatory process and not to right any wrong perpetrated against the government.
I look forward to working with you to fashion a positive solution to a situation that has been allowed to get too messy and go on for “too long.”
Very truly yours,
Catherine Austin Fitts, President
The Hamilton Securities Group, Inc.
Hamilton Securities Advisory Services, Inc.
c/o Solari, Inc.
PO Box 157
Hickory Valley, TN
Attachment: Final Judgment, April 2004
cc: Michael Oxley, Chairman, House Financial Services Committee
Sue W. Kelly, Vice Chairwoman, House Financial Services Committee
Barney Frank, House Financial Services Committee
Ron Paul, Member, House Financial Services Committee
Richard Shelby, Chairman, Senate Banking Committee
Paul Sarbanes, Ranking Member, Senate Banking Committee
Wayne Allard, Member Senate Banking Committee
Lincoln Chaffe, Member, Senate Banking Committee
John S. Corzine, Member, Senate Banking Committee
Christopher J. Dodd, Member, Senate Banking Committee
Rick Santorum, Member, Senate Banking Committee
John E. Sununu, Member, Senate Banking Committee
Stephen Friedman, Assistant to the President for Economic Policy and Director of the National Economic Council
John Ashcroft, Attorney General of the United States
Alphonso Jackson, Secretary of Housing & Urban Development
Elliot Spitzer, Attorney General of the State of New York
