So here is the start of our coverage of the Washington Mutual neo-bankruptcy. One day WaMu is doing about the same as other big U.S. banks... the next day stockholders are screwed and the hedge fund clients of certain law firms start profiting as they traffic in this neo-fiscal tragedy.

Mork would ask outrageous questions like:

Wouldn't the nations most powerful bankruptcy firm set their prime objective to be the recovery of as much value as possible to the owners of the company?

Wouldn't the unprecedented orchestration of events that led to the extra-market demise of WaMu give rise to a broad range of legal claims that would benefit stockholders ... claims that should be protected at all costs and pursued?

Quite funny really, the naiveté of this impish looking alien. Almost like a law student, or clueless law professor, who just don't understand the real world. In the real world of the mega case bankruptcy industry, quid pro quo is the business model as normal logic, duty, and honor is deprecated. But don't take our word for it, read what a famous UCLA law professor has to say about the corruption of our Federal Bankruptcy System.


Robin Williams was a most lovely character as "Mork from Ork". He had a child-like innocence as he tried to understand the complexities of human society here on earth. Come to think of it, Mork would certainly have had much trouble trying to understand how some banks had their liquidity revoked while others received quite handsome bailouts. Bailouts that were supposed to be used to lend money to businesses so that the economy could be boosted. Instead, these bailouts were used to consolidate power among the surviving institutions.

Most of all, Mork would not understand how WaMu stockholders could have been so screwed while so many high priced lawyers were supposed to be guarding the hen house. How do all of those hedge funds get rich on the Washington Mutual bankruptcy case? Is there a history repeating itself here? Shall we remind ourselves of the Leslie Fay legacy?

Neo-Mafia likes things as they are

Organized Crime would not be as profitable if some of its associates suffered for their part in an orchestrated feeding frenzy. BankruptcyMisconduct readers are not surprised that a central component to the first failed WaMu plan was yet another overly broad release of claims against some of the co-conspirators. This is reminiscent of the modus operandi employed during the early machinations of the Enron bankruptcy case, when the professionals seemingly went out of their way to protect their golden boys, those executives who did the "favor" of granting the lucrative position as lead counsel for the debtor in exchange for .....

Are the same lawyers who escaped incarceration for their Leslie Fay crimes involved again? Are these the same lawyers who presided over the WorldCom case, where death threat advice was acknowledged by counsel to have been delivered to the independent claims trader - the very same claims trader who was fighting to have conflict of interest issues brought before the court? Sadly, it seems that only a claims trader has the moral courage to call the emperor naked, as in SONICblue, which starts the unraveling of criminal conspiracy by high paid bankruptcy lawyers as they scheme for their hedge fund clients.

King of the Jungle brought down by "a Pack of Dogs"

The Lion is supposed to be king of the jungle. But did you know that a coordinated gang of hyenas can kill and eat a lion? Thus, a massive bank with tremendous assets can be taken down and consumed by a gang of dogs. Do any of these big money dogs have a money trail to lawyers who don't protect stockholders... but instead seek to protect and release certain hedge funds? "Zero Sum" ain't just an externality when conflict of interest gets in bed with prosecutorial discretion. Let's be clear: A well orchestrated assault is what destroyed WaMu shareholder value - starting with the arbitrary banking regulatory action and extending through the so-called reorganization. Be assured that connected hedge funds escaped harm in the initial collapse of WaMul and enriched themselves during the reorganization.

"United We Are Strong"

Just as a pack of hyenas can coordinate their efforts to bring down a much more powerful lion, so too can those of us getting defrauded fight back against the corruption with consistent pressure coming from many directions. The pretending bankruptcy industry law firms, and their minor league farm teams at the DOJ, have their advantage in front of their brethren judges. But at the end of the day, there are thousands of times more citizens and voters who are damaged by this fraudulent system then the few corrupt who profit from it. Consistent and prolonged efforts to halt the corruption can prevail and we must never give up. The internet is our new media, and we can choose to promote and echo the voices of justice.

Demand That Clear Crimes Are Prosecuted

We can defeat this Neo-Mafia by exposing them, and demanding prosecution. The Enron executives would have escaped criminal repercussions if left to the tainted neo-justice of the bankruptcy industry, where DOJ Lawyers devote their efforts at career opportunities for themselves and their relations. But in Enron, it was the public outcry which demanded for the prosecutions of the executives. We could start with easy cases of fraud upon the court by bankruptcy lawyers, like in eToys. As the corrupt house of cards starts falling, stockholders would not only be better protected from future schemes, stockholders would have another chance at recoveries. When the official counsel in a bankruptcy case files its mandatory affidavits requiring disclosure of all possible conflict of interest issues, any falsehood is a fraud upon the court. And there is no statute of limitations which protect lawyers who commit fraud upon the court.

BankruptcyMisconduct is seeing a lot of interest in this bankruptcy case, as well as U.S. Trustee Roberta DeAngelis and the crazy judge. Perhaps a Federal Special Prosecutor will eventually be brought in to unravel this web, and don't forget that Fraud Upon The Court has no statute of limitations.