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7th Circuit affirms District Court in mortgage dispute

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The 7th Circuit Court of Appeals held that financier Morgan Stanley acted lawfully when selling a loan to another party.

In 2005, 20 limited liability companies joined together to invest in property in Indianapolis. They formed a new company – IP of A Fund Manager – and vested in that company the authority to negotiate and execute a loan on their behalf with Morgan Stanley, naming Edward Okun as the manager. Okun executed a loan, mortgage and reserve security agreement with Morgan Stanley.

The group had already secured a loan in 2004 for $7.1 million, which Morgan Stanley refinanced, lending the investors $6.1 million to refinance the property, with the additional $1 million placed into escrow accounts.

Morgan Stanley decided to sell the loan, ultimately agreeing to sell it to an Okun-controlled entity, IP of A 5201 Lender LLC. As it structured the sale, Morgan Stanley agreed to offset the purchase price of the loan by the amount of funds available in several escrow, reserve and impound accounts, in which it held a security interest and which were, under the terms of the loan with the investors, required to reimburse the investors for maintenance, taxes and other property-related expenses. IP of A 5201 Lender, now holding the loan, never re-established the escrow accounts, depriving the investors of $1,361,184.63 in which they, too, had an interest.

In 2008, Okun was convicted of wire and mail fraud, conspiracy and other crimes.

In IP of A West 86th Street 1, LLC, et al., v. Morgan Stanley Worldwide Capital Holdings, LLC, No. 11-2891, the investors alleged Morgan Stanley breached its agreement and committed conversion when it allowed Okun’s company to use escrow funds to finance the purchase of the loan. But the 7th Circuit found that nothing in the loan’s promissory note, mortgage agreement or reserve security agreement precluded Morgan Stanley from structuring the sale of the loan as it wished.

 

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  1. This law is troubling in two respects: First, why wasn't the law reviewed "with the intention of getting all the facts surrounding the legislation and its actual impact on the marketplace" BEFORE it was passed and signed? Seems a bit backwards to me (even acknowledging that this is the Indiana state legislature we're talking about. Second, what is it with the laws in this state that seem to create artificial monopolies in various industries? Besides this one, the other law that comes to mind is the legislation that governed the granting of licenses to firms that wanted to set up craft distilleries. The licensing was limited to only those entities that were already in the craft beer brewing business. Republicans in this state talk a big game when it comes to being "business friendly". They're friendly alright . . . to certain businesses.

  2. Gretchen, Asia, Roberto, Tonia, Shannon, Cheri, Nicholas, Sondra, Carey, Laura ... my heart breaks for you, reaching out in a forum in which you are ignored by a professional suffering through both compassion fatigue and the love of filthy lucre. Most if not all of you seek a warm blooded Hoosier attorney unafraid to take on the government and plead that government officials have acted unconstitutionally to try to save a family and/or rescue children in need and/or press individual rights against the Leviathan state. I know an attorney from Kansas who has taken such cases across the country, arguing before half of the federal courts of appeal and presenting cases to the US S.Ct. numerous times seeking cert. Unfortunately, due to his zeal for the constitutional rights of peasants and willingness to confront powerful government bureaucrats seemingly violating the same ... he was denied character and fitness certification to join the Indiana bar, even after he was cleared to sit for, and passed, both the bar exam and ethics exam. And was even admitted to the Indiana federal bar! NOW KNOW THIS .... you will face headwinds and difficulties in locating a zealously motivated Hoosier attorney to face off against powerful government agents who violate the constitution, for those who do so tend to end up as marginalized as Paul Odgen, who was driven from the profession. So beware, many are mere expensive lapdogs, the kind of breed who will gladly take a large retainer, but then fail to press against the status quo and powers that be when told to heel to. It is a common belief among some in Indiana that those attorneys who truly fight the power and rigorously confront corruption often end up, actually or metaphorically, in real life or at least as to their careers, as dead as the late, great Gary Welch. All of that said, I wish you the very best in finding a Hoosier attorney with a fighting spirit to press your rights as far as you can, for you do have rights against government actors, no matter what said actors may tell you otherwise. Attorneys outside the elitist camp are often better fighters that those owing the powers that be for their salaries, corner offices and end of year bonuses. So do not be afraid to retain a green horn or unconnected lawyer, many of them are fine men and woman who are yet untainted by the "unique" Hoosier system.

  3. I am not the John below. He is a journalist and talk show host who knows me through my years working in Kansas government. I did no ask John to post the note below ...

  4. "...not those committed in the heat of an argument." If I ever see a man physically abusing a woman or a child and I'm close enough to intercede I will not ask him why he is abusing her/him. I will give him a split second to cease his attack and put his hands in the air while I call the police. If he continues, I will still call the police but to report, "Man down with a gunshot wound,"instead.

  5. And so the therapeutic state is weaonized. How soon until those with ideologies opposing the elite are disarmed in the name of mental health? If it can start anywhere it can start in the hoosiers' slavishly politically correct capital city.

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