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Summary of Events
As of February 2001

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My name is Catherine Austin Fitts.

I was born and raised in Philadelphia. I graduated from the University of Pennsylvania in 1974 and from The Wharton School in 1978. After graduation, I joined Dillon Read & Co., Inc, a Wall Street investment bank, becoming a managing director and member of the Board of Directors until I resigned in 1989 to join the Bush Administration. From April 1989 to August 1990, I served as Assistant Secretary of Housing-Federal Housing Commissioner at the Department of Housing and Urban Development.

In 1991, I started Hamilton Securities Group, a Washington, DC based investment bank focusing on using financial software and relational databases to understand and reengineer public and private investment within a place. Essentially, all government and corporate financial disclosure organizes its reporting by function. For example, the federal budget is divided and reported by functions such as military, housing, health care, etc. Rarely is the information shown by place. For example, citizens in a particularly congressional district very rarely if ever see a clear picture of all the sources and uses of government monies, credit and regulation for their area. Such literacy is essential for understanding performance and holding government accountable. The absence of such financial literacy by citizens is one of the causes of cooked books by government and budgets and resources controlled by special interests and manipulated in illegal ways. I was asked by Secretary of Treasury Nicholas Brady and Chief of Staff John Sununu to serve as a member of the Federal Reserve Board of Governors and declined as I had just started Hamilton.

Hamilton Securities was financed by me through reduced pay, my 401K plan, other savings and the sale of my house.  Other employees invested a small amount of money or took reduced pay to help capitalize the firm. (See "How the Money Works at Hamilton")

In September 1993, Hamilton was awarded a competitively bid contract to serve HUD/Federal Housing Administration as a financial advisor. (See "HUD Loan Sales Performance Report")

Hamilton’s first assignment was to help determine the Department's options in the overwhelming task of servicing a large and growing portfolio of defaulted mortgages.  The build-up of defaulted mortgages had created a workload problem and was identified by HUD's auditors as its #1 material weakness. (See "HUD Loan Sales Performance Report" and GAO Report)

After a serious analysis, Hamilton recommended and HUD decided to implement a loan sale program similar to the one that had been successfully used by the Resolution Trust Corporation to dispose of mortgages from failed savings and loans. (See "HUD Loan Sales Performance Report")

Virtually no one within government or capital markets community knowledgeable of HUD's management, contracting and political weakness thought that a HUD loan sales program would be successful. (See Articles on Loan Sales)

But it was a resounding success.  Between 1994 and 1997, HUD sold approximately $10 billion of mortgages, raising HUD's recovery rates on defaulted loans from 35 cents to 70-90 cents on the dollar, generating $2.2 billion of profits (i.e., budgetary savings), as determined by OMB and confirmed by GAO audit.  (See July,1999 GAO report)  The savings were used to lower the deficit and to fund HUD programs.  The higher recovery rates enabled HUD to lower the cost of issuing new insurance and to lower required loan loss reserves on outstanding insurance.

HUD’s $2.2 billion savings were widely attributed to Hamilton's software innovations.  Prices were substantially higher than for RTC sales of similar mortgages and substantially higher than HUD and market expectations.  According to an OMB analysis reported by OMB to HUD loan sale staff, fees paid to contractors to do the loan sales were well below fees RTC paid for comparable loan sales services.  This was also attributed to Hamilton's software tool and related process and disclosure innovations. (See HUD Loan Sales Performance Report for description of on line disclosure, optimization model, GAO Audit; HUD Loan Sale Design Book, and HUD loan sales table) (See On the Money Trail, The Story of Edgewood Technology Services, the Place Based Survey & Former Bush Assistant Secretary for additional information on our software tool, Community Wizard, and efforts to make government spending and activities in neighborhood transparent with place based financial information accessible to citizens)

In June 1996, Ervin and Associates, Inc., a HUD loan servicing contractor, filed a lawsuit action against HUD, the Small Business Administration[1] and the HUD Deputy Assistant Secretary in charge of the loan sales in DC federal district court claiming that high level department employees and contractors had engaged in a fraudulent scheme to deny Ervin contracting opportunities in connection with the loan sales and to rig the sales in favor of certain bidders.[2]

The next day, Ervin also filed a Federal False Claims Act "whistleblower" or “Qui Tam” lawsuit under seal alleging that Hamilton and HUD had engaged in bid rigging and insider trading to favor certain investors, including Goldman Sachs and BlackRock/PNC.  (See summary of False Claims Act)  Because the Qui Tam case was under seal, Hamilton had no knowledge of the existence of the case, that Hamilton had been named, or the nature of the allegations.  As a debt collector for a large portion of HUD's portfolio of defaulted mortgages, Ervin had lost a substantial amount of its business as a result of the success of the HUD loan sales. (See copies of Qui Tam and Bivens suits) Ervin’s efforts to interest Wall Street in hiring it to help with bids, and to bid, had also been unsuccessful. (See Penn Capital memorandum)

Under the Federal False Claims Act, there is a 60-day investigation period for the DOJ to determine whether or not it will adopt the case.  The purpose of the seal is to protect the accuser and accused.  In addition, the act provides that any “civil investigative demands” issued by the DOJ to obtain documents in the course of a qui tam investigation must inform the recipient if it is the target of a qui tam complaint and the general nature of the allegations. (See False Claims Act)

In August 1996, Hamilton received two subpoenas from the HUD Office of Inspector General.  The DOJ later took the position that because it had delegated the investigation to the HUD Office of Inspector General, which has independent subpoena authority, DOJ was not required to comply with the False Claims Act notice provisions that require DOJ to tell the target of the Qui Tam case that it has been named in a qui tam and the general nature of the allegations against it.

From August 1996 through October 1997, Hamilton spent substantial time and money responding to subpoenas.  During that period, Secretary Cisneros was asked to resign due to an unrelated investigation.  Andrew Cuomo, who had been Assistant Secretary of Community Planning and Development at HUD from 1993-96, replaced him in December 1996.

In October 1997, Secretary Cuomo terminated Hamilton's contract "for convenience of the government" as permitted under the contract.[3]  In addition, he made a "common law" claim for set-off of $3.8MM against Hamilton, and froze approximately $2MM that HUD owed Hamilton for work already performed by Hamilton.  Hamilton was the subject of very negative press at this time. Most of what Hamilton learned about the allegations at that time, in fact, came from press accounts.  For example, Hamilton first learned in the morning paper that a subpoena had been issued that it had not yet received.

Secretary Cuomo subsequently cancelled the HUD loan sales program and pending place based trust sales, despite having other contractors available to lead and manage the program. Hamilton had created design books for the loan sales that were non-proprietary. This helped to ensure proper government oversight and ease of hiring and training contractors. As a result of the loan sale cancellation, HUD, with the approval and support of OMB and Congressional appropriation committees, returned to resolution methods on its defaulted portfolio that had below market recovery rates (traditionally approximately 35% compared to the 70-90% achieved by the loan sales) while “cooking its books” by assuming high recovery rates for pricing the appropriations to support new originations of FHA mortgage insurance. The losses to the FHA fund of operating and below market recovery rates on defaulted mortgages has been in the billions as has the losses to FHA borrowers and nearby homeowners in neighborhoods harmed as a result of higher foreclosure rates and longer resolution periods on foreclosures.

In almost five years, no evidence has been produced to support any allegation of wrongdoing by Hamilton. The subpoenas sought all of Hamilton's HUD related documents and computer records, as well as all of its corporate financial information and additional information regarding proprietary, non-HUD business activities and software development.  Subpoena requests have been redundant and highly duplicative.  Hamilton's costs to date for subpoena compliance and related costs exceed $2 million dollars.

On March 6, 1998, Assistant US Attorney David Gottesman of the Civil Division of the Commercial Litigation Branch of DOJ faxed a letter to Hamilton’s attorney claiming a prior interest in Hamilton auction proceeds and warning of personal liability of company representatives under the federal priority statute for any amounts paid to third parties ahead of HUD.  In addition to the impact this letter had on trying to get people to assist in satisfying government requests, I was concerned that this would lay the groundwork for seizure of any items at my home, Fraser Court. To protect me and the people helping me, I began research on asset forfeiture which eventually lead to retaining asset forfeiture attorney, David Smith, to help protect the proceeds of my house sale in 1999 to pay for legal and administrative expenses.

On March 8 1998, HUD seized Hamilton's office under a court order issued by Judge Stanley Sporkin of the DC US District Court, based on government assurances that Hamilton's complete copies of electronic records stored with Hamilton's attorneys (then Jenner & Block) were not sufficient to comply with the subpoenas.  With misleading government representations to the court that Hamilton's massive document production had been incomplete, Judge Sporkin required redundant back-up of all of Hamilton's computer systems by the government and that all of Hamilton's paper and electronic files be moved under the exclusive control of a Special Discovery Master, a law firm appointed by the court.  The resulting process destroyed Hamilton's software and tool infrastructure and its ability to preserve or resurrect its promising software development and related advisory, trading and principal business. The following week, a government investigator complained to one of Hamilton’s staff that Fitts should not have been able to preserve the main server as “we have orders that you may not retain any of the knowledge” but declined to provide a legal basis as to why a corporation was not allowed to attempt to maintain some copy of the digital records that the courts now had under lock and key.

While Hamilton personnel were not allowed in it’s building, an attempt was made by HUD IG’s General Counsel, Judith Hetherton, a former DOJ/DC US Attorney’s Office attorney to argue that Hamilton was throwing away responsive documents. According to an eyewitness, however, Ms. Hetherton’s investigators had taken trash and emptied it into empty bins and then Ms. Hetherton took pictures of the now full bin.  At this time, Ms. Hetherton sent a letter to Hamilton’s attorneys alleging that Hamilton was throwing out financial records subject to subpoena. (See Legal Summary, Petition to Enforce Subpoena complaint, related correspondence and affidavit of the third party building eyewitness refuting the OIG’s allegations)

Ervin's 1996 Qui Tam allegations included charges of "bid rigging" and "insider trading."  These were a re-packing of allegations that already had been made and investigated and dismissed twice by the HUD IG’s office. (See HUD IG Auditor Affidavit; 1995 Press Coverage in Housing Affairs Letter.)

On October 9th and 13th, 1998, Ginnie Mae, a part of HUD, awarded two Small Business Set Aside contracts to Ervin and Associates, Inc. These awards were made despite prior HUD contracts with Ervin and Associates having been cancelled for default and despite the cost and burden of Ervin litigation and bid protests. The first contract was executed on October 9 1998 and had a 40% minority and women business owned requirement. The second contract was executed on October 13, 1998 and had a 50% minority and women owned business requirement and was awarded to Ervin teamed with Asset Strategies Group, a woman owned subcontractor who had been fired by Hamilton. As of November 2000, Ginnie Mae reported payments of $825,000 to Ervin and Associates under these contracts. This means that Ginnie Mae paid Ervin approximately $33,000 a month during the period.

In September 1999, Ervin amended the Qui Tam complaint (with, according to recently unsealed court transcripts, the assistance and collaboration of the DC US Attorney’s Office -- see transcripts of Qui Tam case) to add a long laundry list of allegations, including additional bid rigging, insider trading and contracting fraud. (See qui tam amended complaint)

In the spring of 1999, Hamilton provided to the DOJ, through a court filing, an affidavit from a lead HUD OIG auditor who had completed an audit of the loan sales program in the summer of 1996 and had concluded that there was no substance to any bid rigging or insider trading charges made in connection with the loan sales program.  The affidavit described pressure by the HUD IG’s Counsel, a former DOJ/DC US Attorney’s Office attorney, to substantiate the bid rigging and insider trading allegations notwithstanding the audit teams’ conviction that no such evidence existed. (See Affidavit of HUD IG auditor)

In May 1999, the Department of Justice Criminal Division informed Hamilton's attorneys that they had not received any evidence from the investigation to warrant criminal charges and were informing the HUD OIG that they were declining prosecution. Some time before August 1999, DOJ’s Antitrust Division also reached the conclusion that the evidence did not support any charges against Hamilton.

At that time, Hamilton's attorneys filed a motion in Federal District Court to have the Qui Tam case unsealed.  The Department of Justice had been able to extend the initial 60-day investigatory period in which a qui tam is under seal many times -- to approximately 1,200 days for the complaint and approximately 1,500 days for court transcripts.[4] (See Correspondence of Drinker Biddle & Reath with PCIE and Congressional oversight committees and Hamilton motion to unseal).  The court would not hear arguments on Hamilton’s motion until seven months later (January 2000), after Judge Sporkin resigned and was replaced on the file, and the government finally announced that it would not intervene in the case.

At this time, I sold my home in Washington to help fund continued legal and administrative expenses and began living in four places on an unpredictable schedule in the hopes that it would enable me to escape the physical harassment and surveillance that I had been experiencing in Washington for several years. (See list of Audits, Investigations, Inquiries, Leaks, Conflicts of Interest, Harassment and Surveillance)

In August 1999, the FBI issued a report (a copy of which was received by Hamilton in 2000 pursuant to a FOIA request filed with the FBI) stating that in numerous interviews and investigations, there was no evidence of any wrongdoing on the loan sales, nor did any of the people interviewed, including losing bidders, voice any concerns or suspicions of wrongdoing. (See FBI Report received in response to FOIA request)

Despite the FBI report, the DOJ Civil Division and the HUD OIG continued on with the investigation and continued to seek extensions of the 60-day qui tam investigation period from the DC Federal District Court.

In June of 1999, Hamilton had filed a civil suit against Ervin & Associates in the Superior Court for the District of Columbia Hamilton v. Ervin alleging tortious interference with potential business advantage, tortious interference with contractual relations, and abuse of process.  Subsequently, Ervin & Associates removed the case to the District Court for the District of Columbia.  When Hamilton challenged the removal to federal court, Judge Stanley Sporkin ruled that Hamilton's attempt to remand the case to state court would have to wait until the unsealing of the qui tam, although this ruling is directly contradictory to controlling case law. 

In March 2000, the HUD OIG, Susan Gaffney, testified before Rep. Stephen Horn’s Committee on Government Reform, Subcommittee on Government Management, Information and Technology on the Status of Financial Management at HUD regarding her refusal to certify HUD’s financial statements for 1999 as required by law. She described missing money in FY 1998 and FY 1999 of $17 billion and $59 billion, respectively, along with failure in the installation of new computer systems (HUDCAPS) and unsupervised access to accounting systems and information by HUD contractors. No mention was made of the impact of Ervin and Associates lawsuits and the consequent investigations had on forcing out and firing honest officials and contractors or frightening others that remained. No payment adjustments or firings of the contractors operating HUD systems or related resulted. Systems contractors included Lockheed Martin, DynCorp, and AMS. DynCorp was the lead contractor for the HUD Office of Inspector General computer systems. AMS was paid $206 million to date to install HUDCAPS. The audit has never been finalized and none of the missing money has been identified and returned.

In April 2000, approximately a month after all available legal documents on the case were posted on the Solari website, the Qui Tam case finally was unsealed when DOJ notified the court that it declined to adopt the case.  Hamilton received a copy of the initial complaint and then filed a request for and received the 1999 amended complaint by the end of May 2000.  Hamilton then requested the presiding judge[5] to order the clerk to release the Qui Tam hearing transcripts.  Hamilton eventually received transcripts for most, though not all, of the hearings in December 2000. (See transcripts of some qui tam hearings) This was not the first time that court hearing transcripts were unavailable.

In the summer of 2000, my family assisted me by asking our Congressional representatives to help me get Hamilton paid monies owed or, at a minimum, require the government to disclose the truth about its own assessments that we should be paid. Congressional representatives included Barney Frank in Massachusetts, John E. Sununu in New Hampshire and my representatives in Tennessee, Senator Fred Thompson, Senator Bill Frist, and Congressman Ed Bryant. One of our creditors in Missouri wrote on our behalf to Senator Kit Bond, then Chairman of the HUD Senate appropriations subcommittee, and Senator John Ashcroft, now Attorney General.  (See Family Letter)

I met with Senator Bond’s chief of staff who expressed to me their concern that HUD was being run as a “criminal enterprise.”  Subsequent to many letters and meetings, all the Congressional representatives involved, including Congressman Frank, Senator Frist and Senator Ashcroft, voted large billion plus increases in HUD appropriations in the summer (House) and fall (Senate). They took no actions to find where the $59 billion missing from HUD had gone, to get it back or to require that HUD comply with the laws requiring audited financial statements. They also took no actions to require HUD to resolve their defaulted mortgages at market recovery rates instead of below market recovery rates or to require that HUD and OMB reflect actual recovery rates in its appropriation assumptions for new mortgage insurance. Finally, they declined to take the necessary steps to ensure that the government paid monies owed to Hamilton or that the targeting of me ceased.

In August of 2000, Ervin served the Qui Tam complaint upon Hamilton for the first time. Just before it served the complaint, Ervin voluntarily dismissed Goldman Sachs and BlackRock/PNC and other bidders as defendants, notwithstanding the fact that they were the bidders who, according to Ervin’s imaginative and baseless allegations, had made away with billions of dollars worth of mortgage notes for hundreds of millions less than fair market value.[6] (See Hamilton's motion to dismiss Qui Tam case)

The 1996 Qui Tam complaint and the 1999 amendment confirmed that Ervin had no credible evidence to support his claims. (See Parker/Cargill Affidavit and excerpt from Richbourg deposition)

What we found out from the Qui Tam hearing transcripts was that the DOJ attorneys and Ervin's attorneys were not truthful in many representations made to Judge Stanley Sporkin that served as the basis for their requests to extend the 60-day investigation period over and over again.  Sporkin extended the 60-day period despite the statements of a prior judge in 1996 that there was no basis to extend it beyond 1996. Sporkin is reminded by the DOJ attorneys that they do not want to consolidate it with the Bivens action so they can take opposite positions – one under seal and a different one in open court. At one point Sporkin even coaches the attorneys from the bench. According to the transcripts, the initial judge had indicated in 1996 that it would be inappropriate to extend the seal without evidence and that unless evidence was produced he would not extend the seal again. The case was then transferred to Judge Sporkin.

Judge Sporkin is the former general counsel of the CIA and former head of the Securities and Exchange Enforcement Division, both under William Casey. Judge Sporkin was the CIA general counsel during the Iran Contra period, including at the time that the CIA entered into the now infamous Memorandum of Understanding with the Department of Justice that permitted it to not report narcotics trafficking by CIA assets.   

We also discovered from the Qui Tam hearing transcripts that DOJ took credit for helping Ervin to fashion the original Qui Tam and Bivens suit and the amendment of the Qui Tam suit in September 1999, and referred to Ervin on the record as their "bounty hunter". The transcripts also showed that DOJ confirmed to Judge Sporkin that Ervin could expect to receive 15-30% of any monies generated from the Qui Tam.[7]

In October 2000, Ervin and HUD/DOJ settled the Bivens lawsuit.[8]  Our understanding is that HUD/DOJ paid Ervin $2,000,000 to settle the case despite the fact that allegations had proved baseless.  Ervin and his attorneys, at a hearing on Hamilton’s motion to dismiss the Qui Tam case held on January 31 in DC Federal District Court and Ervin’s motion to dismiss Hamilton’s lawsuit against Ervin, expressed how pleased they were with the settlement. Ervin’s attorneys made several statements implying DOJ’s continuing support.  Rudy Contreras from the DC US Attorney’s Office attended the hearing, even though the government was no longer a party.  Ervin’s attorneys referred to DOJ support on several occasions during the hearing in Mr. Contreras’s presence and sought his counsel during the recess.

In the last almost five years, Hamilton and Catherine Austin Fitts have been forced to spend an estimated $6MM to defend against baseless accusations as well as deal with 18 audits, investigations and inquiries from numerous federal agencies, including the IRS, as well as DC tax collection and other agencies.  All of Hamilton's assets, its software and tools and its equity value have been destroyed.  All of Catherine Austin Fitts’ assets have been expended.

To date, Ervin, the HUD IG Audit, HUD IG Investigation, the DOJ Criminal Division, the DOJ Civil Division, the DOJ Antitrust Division and the FBI have all failed to produce any evidence to show any wrongdoing on the part of Hamilton.  All allegations are rumor, speculation and imagination -- a meritless excuse to conduct a very expensive fishing expedition and to terminate a program that benefited the FHA Fund and homeowners, but not certain well-connected property managers and property owners.  Given significant institutional reviews, approval and management and internal controls enforced by HUD’s own attorneys and audited and participated in by the HUD IG audit staff on HUD loan sales, Ervin’s allegations are not credible and never were. For such allegations to be true, countless HUD staff, attorneys and Inspector General staff would have had to be part of engineering such things.

An official at HUD who had been responsible for Ervin's contracts provided Catherine Austin Fitts with an estimate that Ervin's workload on this litigation and related discovery and lobbying activities was the equivalent of tens of millions of work under a HUD contract of the type Ervin had.

I estimate that all components of the government have expended in excess of $40 million to date on pursuing this investigation and litigation.  Government and homeowner losses from HUD returning to methods of resolution with historically low recovery rates and a growing defaulted portfolio for more than two years have been substantial --- in the billions.

Despite what appears to be egregious behavior on the part of the federal investigators, none of the oversight committees in Congress has acted to shut down the investigation and litigation.  The President's Council on Integrity and Efficiency, the organization responsible for overseeing Inspector Generals' conduct, declined on two separate occasions to take action in response to complaints filed by Hamilton.  The "investigations" it conducted consisted almost solely of permitting the Inspector General herself to make a written response to charges made by Hamilton.  Based upon Hamilton's detailed charges and the Inspector General's denials, this body concluded that it had "insufficient evidence" of wrongdoing by the Inspector General to proceed. (See PCIE documents and Drinker Biddle & Reath letter to Government Affairs and Government Reform Committees) PCIE files received under FOIA by Hamilton in 2000 document a letter from Lee Radek, head of the DOJ Public Integrity Unit, in support of the position that no investigation into Hamilton’s documentation of wrongdoing was warranted.

Today, the HUD OIG investigation continues, with Hamilton attorneys spending hours reviewing for production many many gigabytes of electronic records consisting of back up tapes of digital tapes, much of which is redundant of paper records that already had been produced to the OIG as long as four years ago.  The vast majority of these records are e-mails and documents sent to HUD on-line that HUD should have on its own ccmail server.  Between subpoenas, contract compliance, and contract closeout, many of these documents have been produced for HUD many times.  Logs at the Special Master's offices show that HUD and DOJ have rarely accessed Hamilton's documents since they were seized in March 1998. (See Petition to Enforce and various correspondence)

In addition, HUD refuses to pay Hamilton $2.5 million (plus interest and expenses) owed to it, including some $600,000 of contract close-out expenses and amounts withheld subject to final audit under unrelated contracts for which HUD received required back-up as long as four years ago.  Hamilton continues litigation in the Court of Claims for Hamilton to get paid.[9] (See Court of Claims filings.)

Hamilton's understanding is that in 2000 then Assistant Secretary of Housing- FHA Commissioner Bill Apgar stated that when he was Assistant Secretary in charge of HUD's Policy, Development and Research Office, HUD had contracted for an analysis of the so-called "3.8 million error" that is HUD's basis for not paying Hamilton. Based on that analysis, he concluded that the error did not provide justification for HUD to withhold money owed Hamilton. In subsequent FOIA requests by Hamilton and Congressional requests, HUD has stated that HUD never did such an analysis nor reached such conclusions.

Finally, Ervin continues with meritless litigation against Hamilton, having served the Qui Tam complaint on Hamilton in August 2000, despite the fact that Hamilton has no money and substantial creditors and notwithstanding the fact that key alleged sources had refuted the information that Ervin relied on to justify the bid rigging and insider allegations (See Qui Tam Motion to Dismiss and Ervin filings in Response; Parker/Cargill affidavit)

Is it possible that Ervin and DOJ are hoping that Hamilton will run out of money so Hamilton's attorneys will resign because Hamilton and Fitts, unlike the government, do not have limitless resources?

Catherine Austin Fitts
P.O. Box 157
Hickory Valley, Tennessee 38042

communicate@solari.com  

Note: In the summer of 2001, subsequent to an article by Paul Rodriguez of Insight Magazine about Catherine Austin Fitts and articles by Kelly O’Meara of Insight Magazine about the $59 billion missing from HUD, the HUD Inspector General leading the investigation resigned unexpectedly and the investigation of Hamilton was concluded. However, the government declined to move to dismiss the qui tam or to pay Hamilton monies owed.

In the spring of 2003, Susan Gaffney, retired HUD Inspector General, testified in deposition for the qui tam case that she did not know what the recovery rates were on the HUD defaulted portfolio before, during or after the loan sales.

She appeared to think the information was not relevant or something of which she should be aware.

 

Footnotes:

[1] Through which Section 8(a) minority contracting is conducted.

[2] This suit is referred to as the "Bivens" action because a named defendant who was a HUD Deputy Assistant Secretary was sued personally, and the Bivens case established that a government employee can be sued in his or her individual capacity for acts committed as a government employee. Other government employees added to the suit at a later time.
[3] The Federal Acquisition Regulation requires that all government contracts by their terms be terminable without cause by the government at its convenience.
[4] The tapes for at least two hearings have not been made available by court reporting firms responsible for safekeeping and, as a result, no transcripts are available for these dates.  Hamilton has not been able to determine whether these tapes were "lost."
[5] Judge Sporkin, without advance notice, announced in early January 2000 that he would retire several days hence.  Judge Louis Oberdorfer was appointed to succeed Judge Sporkin. 
[6] The initial July 1996 complaint named Hamilton, Goldman Sachs and BlackRock Capital as defendants.  In the subsequent amendment in 1999, Ocwen Capital (formerly known as Berkeley), a loan sales bidder, and Williams Adley, a minority contracting firm that provided due diligence services for most of the loan sales, were added as defendants.   When the government elects not to adopt a qui tam case, the “relator” [Ervin, in this case] must decide whether to go forward with the case without the government.  Although the government is no longer a party, it is permitted under the False Claims Act to reenter the case.  Its permission was required (and given) for Ervin to drop all of the loan sale bidders as defendants.

[7] From reading the transcripts and reviewing court filings to date it appears that most of DOJ’s involvement through this period was under the leadership of Frank Hunger, Assistant Attorney General over the Civil Division of the Department of Justice until Spring 1999.  Frank Hunger is Al Gore's brother-in-law and was described by the Washington Post in November 2000 as Al Gore’s closest confidant. 

Playing a lead role for the DOJ Civil Division was the District of Columbia’s US Attorney’s Office-Civil Division, led by Mark Nagel.  When the Qui Tam complaint was filed, the District of Columbia US Attorney was Eric Holder.  When Holder became Deputy Attorney General in April 1997, Wilma A. Lewis replaced him as DC US Attorney.  Day-to-day lead on the Qui Tam have been Barbara Van Gelder (now at Wiley, Rein & Fielding), Anthony Alexis and, currently, Rudy Contreras. 

Representing the HUD Inspector General from the DC US Attorney’s Office in connection with its Petition to Enforce Subpoena is Daniel Van Horne.  Lead for the HUD IG until she retired in September 1999 was the HUD OIG Counsel, Judith Hetherton.  Ms. Hetherton had served in the DC US Attorney’s Office under Charles Ruff, who was at the time of the Qui Tam filing Corporation Counsel for the District of Columbia, replacing Jack Quinn as White House Counsel in 1997. Ms. Heatherton is now a staff attorney to the DC Bar Ethics Committee.

Ervin and Associates in 1996 was represented by Daniel Hawke and Wayne Travell of Tucker Flyer & Lewis. Mr. Hawke as the son of Jerry Hawke, then Undersecretary of Domestic Finance at the US Treasury, the person in charge of ensuring the integrity of the federal credit and federal accounts. In 1998, Jerry Hawke became the Comptroller of the Currency, the leading US bank regulator at the US Treasury. Tucker Flyer disbanded in 1999, with Mr. Travell joining Venable Baetjer, Howard and Civiletti, lead by Benjamin Civiletti, former US Attorney General, and Mr. Hawke withdrawing from the case and later joining the Securities and Exchange Enforcement Division.

Subsequent to the unsealing of the Qui Tam, Mr. Travell was joined by Neil Getnick, Getnick & Getnick of New York, as co-counsel in April of 2000 who subsequently withdrew in July of 2000, Subsequently, Mark Polston, a sole practioner specializing in qui tam litigation became co-counsel. Mr. Polston had served in the Civil Fraud Section of the U.S. Department of Justice, the office that enforces the False Claims Act and investigates qui tam lawsuits. Along with Mr. Travell of Venable, Aaron Handleman, Craig Brodsky and Michael P. Freije of Eccleston & Wolf also represent Ervin and Associates on the Hamilton action against Ervin.

            In the spring of 2003, Joseph Hornyak of Sonnenschein Nath & Rosenthal entered his appearance

            as co-counsel for Ervin in the Hamilton v. Ervin case.  Along with the entrance of new co-counsel,

Ervin filed a motion for leave to file a third-party complaint against the United States.  In the proposed                                                                   complaint, Ervin asserts that if Hamilton prevails in its claim against Ervin, then Ervin is entitled to contribution from HUD, DOJ or "possibly others" because the destruction of Hamilton's business was their fault, not Ervin's.

[8] As well as a similar, second "Bivens #2" lawsuit that was filed against additional HUD employees.

[9] As of February 1, 2001, Hamilton was awaiting a ruling from Judge Bush on legal briefs filed by the parties in the Court of Claims in September 2000.  This case essentially started over in the summer of 2000 after the recusal of the original judge, Marian Blank Horn.  As part of her recusal, Judge Horn vacated the orders she had issued in this case, which was originally filed in March 1998.