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Jeffrey Knox, USDOJ Criminal Fraud Division : Investigate criminal bank UBS AG for predatory $1.5 Billion loan to Detroit

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The City of Detroit, the nation's largest Black-majority city and also its poorest major city, faces utter devastation at the hands of Emergency Manager Kevyn Orr and its creditors, the global banks.. One Detroit creditor, UBS AG, has already paid a $1.5 billion fine to the U.S. Dept. of Justice for interest-rate rigging related to the LIBOR scandal; two of its employees have been criminally charged. Standard & Poor's also faces a $5 billion USDOJ lawsuit.

In 2005, UBS AG and their minority partner Siebert, Brandford and Shank initiated a $1.5 Billion "Pension Obligation Certificate Loan" to the City of Detroit, with the assistance of representatives from Standard & Poor's and Fitch Ratings, who came to the City Council table to push the loan during the Kwame Killpatrick administration, in a clear conflict of interest. The city's Chief Financial Officer Sean Werdlow took a top manager position with SBS after the deal. Shown in the photo at top are (l to r) CFO Sean Werdlow, unnamed SBS official, Joe O'Keefe of Fitch Ratings, Stephen Murphy of Standard and Poor's, and Deputy Mayor Anthony Adams, at the City Council table Jan. 31. 2005. After getting the loan, Kilpatrick laid off city workers anyway, and S & P and other ratings agencies still downgraded the city's debt later that year.

This was clearly a predatory loan, part of the Wall Street boom prior to the 2008 economic collapse. The city has defaulted on the loan twice since the 2008 crash, causing it to pay billions more in fines and predatory swap agreements. Revenue from the city's casino taxes is now diverted to pay off this debt. Despite this and other criminal activities of the banks to whom Detroit owes billions, Detroit Emergency Manager Kevyn Orr is demanding drastic cuts from city workers and retirees including demands for pension cuts. He also wants the sell-off/lease of city assets and services, including the city's Water & Sewerage Department, the third largest in the country, Belle Isle, the nation's largest public island park, a 40 percent reduction in street lights, cuts in bus service which is already bare bones, and elimination of numerous city departments which are federally funded, among other demands.

Orr withheld payment on $37.5 million to UBS/SBS June 14, but they will be compensated by their insurers. UBS AG and all parties involved in this loan must be investigated and brought to justice, and the entire debt, with all interest, penalties, and related swaps, must be canceled.



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