I think the SEC is engaging in denialism in their statements to the Court
I have been disturbed by the SEC continuing to dispute, in their legal filings to the Court, what I strongly believe are uncontroverted facts in the case. I had been at a loss to explain this properly until I recently came across the concept of denialism. The following was taken from denialism expert Mark Hoffnagle’s website http://www.denialism.com or from other sources:
“Denialism is the employment of rhetorical tactics to give the appearance of argument or legitimate debate, when in actuality there is none.”
“If one party to a debate accuses the other of denialism they are framing the debate, because denialism is prescriptive: it carries implications that there is a truth that the other side denies, and polemic because the accuser usually goes on to explain how the other party is denying the asserted truth and as such the other party is in the wrong, which leads to an implied accusation that if the accused party persist with the denial despite the evidence their motives must be base.”
I think the SEC has engaged in systematic denialism in my securities case and I believe their motive is to mislead the Court. Here is one important example:
Excerpt from Page 16, lines 10-25 of Plaintiff Securities and Exchange Commission’s Supplemental Memorandum in Opposition to Michael W. Perry’s Motion for Partial Summary Judgment Concerning Plaintiff’s Risk-Weighting Claim, August 22, 2012:
“In his reply, Perry claims the OTS’s June 2000 Order does not create a genuine factual dispute on the risk-weighting claim, because that order’s “preamble” allowed the OTS’s West Regional Director to waive any and all requirements in the order. Def. Mot. (Dkt. No. 117) at 5:10-15. In fact, the preamble says no such thing. Rather, it simply provides that:
OTS has determined that the holding company application and the rebuttal of control submission satisfy all applicable statutory and regulatory criteria, provided that the conditions set forth below are satisfied in a manner satisfactory to the West Regional Director or his designee (Regional Director). Chung Decl. (Dkt. No. 115) Ex. 21 (June 2000 Order) at 304.
Therefore, contrary to Perry’s argument, the preamble to the June 2000 Order did not grant the West Regional Director authority to waive any provision in the Order, but only certain “conditions” specified in the Order. Otherwise, the language in paragraphs 8 and 9 of the June 2000 Order, which required the Bank to perform certain measures “until such time as the Regional Director deems it no longer necessary,” would be rendered superfluous. Id. at 305-306.”
I don’t get it???? The OTS’ June 20, 2000 Order and the section of that Order that they highlight above clearly states that the OTS West Regional Director HAS the authority: “provided that the conditions set forth below (one of which is the subprime risk-weighting requirement) are satisfied in a manner satisfactory to the West Regional Director or his designee”. The June 20, 2000 OTS Order is attached below. Read it and determine for yourself.
Furthermore, the SEC knows that the subprime risk-weighting requirement was changed twice by the Western Regional Director in prior years (the SEC mentions it in court filings and it is discussed in sworn testimony by me and others); so not only does the June 20, 2000 OTS Order clearly state that the Western Regional Director has the authority, but he had exercised that authority on this very issue in the past.
At the June 18, 2012 hearing on the Motions in Limine, Judge Real said the following as support for his decision to deny the SEC’s motion to exclude me from presenting evidence of Mr. Dochow, Western Regional Director of the OTS, granting the waiver: “In this case, the statements of Dochow are non-hearsay to the extent that they establish that the statements were in fact made and that IndyMac acted in the way it did because of those statements. The relevant inquiry is whether a government regulator told Perry that certain conduct was permissible, not if such statements were in fact, quote, true.” (page 8, lines 3-9.)
Mr. Dochow signed a declaration (under penalty of perjury) dated June 7, 2012 which is attached below. In this June 7 declaration, which has been provided to the Court, Mr. Dochow clearly admits that he approved the subprime waiver and yet the SEC once again tries to engage in denialism.
Unbelievably, the SEC says that the literal reading of Mr. Dochow’s June 7 declaration does not grant IndyMac the subprime waiver. Read it for yourself. Also, I have included below excerpts from Indymac CFO’s sworn testimony to the SEC that unambiguously confirms Mr. Dochow’s June 7 declaration.
The SEC also says, “well if he did approve it, Mr. Dochow really didn’t have the authority under the June 20, 2000 OTS Order to do so”. After Mr. Dochow’s signed his June 7 declaration, the SEC traveled to the State of Washington to interview him. After this interview, Mr. Dochow sent my lawyers an email (which is not signed under penalty of perjury) that is also attached below. His email essentially says: “I had forgotten about the June 20, 2000 OTS Order and now that I have reviewed it and heard the SEC’s views, I am not sure whether or not I had the authority to grant the subprime waiver.”
In my view, the SEC has inappropriately worked to foster the impression of a controversy about Mr. Dochow’s approval of the subprime waiver and his authority to do so, as part of their denialist legal tactics.
Mr. Dochow admitted in his June 7 declaration that he approved the waiver and his subsequent email, expressing concerns about his authority, does not retract that admission. The June 20, 2000 OTS Order granted Mr. Dochow, the Western Regional Director, the authority to waive the subprime risk-weighting and he had exercised that authority on this specific issue in the past (also, see IndyMac CFO’s testimony below regarding his views, under oath, about Mr. Dochow’s authority under the Order). And Judge Real has ruled on this matter. In essence, Judge Real has said that “it is not relevant whether or not Mr. Dochow had the authority to grant the waiver; it is only relevant as to whether or not he granted the waiver. If he did grant the waiver, IndyMac had a right to rely on Mr. Dochow’s actions”.
Judge Real’s ruling is pure common sense. Even if the June 20, 2000 OTS Order did not grant Mr. Dochow the authority (and it clearly did), Indymac was entitled to rely on Mr. Dochow and his “representation” (via his approval of the waiver) that he did have the authority because of his senior role at the OTS. Was I supposed to ask the Western Regional Director, do you have the authority to do this? That only makes sense to the SEC. Alternatively, the SEC unreasonably expected me to remember and consult this June 20, 2000 OTS Order, nearly eight years later, at the time of Mr. Dochow’s waiver on February 26, 2008. My sworn testimony shows I did not remember this 2000 document by 2008. It is clear from Mr. Dochow’s statements that he didn’t recall this OTS Order either. And this is all beside the point, the June 20, 2000 OTS Order “is clear on its face”, read it for yourself: Mr. Dochow did have the appropriate authority to grant the subprime waiver.
The above facts are overwhelming and show clearly that the SEC is engaging in denialism as an inappropriate legal tactic in an attempt to mislead the Court.
Let me leave you with one final thought:
Excerpt from Page 14, line 10-12 of Plaintiff Securities and Exchange Commission’s Supplemental Memorandum in Opposition to Michael W. Perry’s Motion for Partial Summary Judgment Concerning Plaintiff’s Risk-Weighting Claim, August 22, 2012:
“But whether that purported waiver is actually granted by the OTS is irrelevant in assessing the validity of the Commission’s subprime double-risk weighting claim.”
I think that says it all. Let’s summarize what the SEC alleges in its filings to the Court: Mr. Dochow, the Western Regional Director of the OTS, didn’t approve the subprime double-risk weighting waiver. But if he did, he didn’t have the authority to do so under the June 20, 2000 OTS Order. But if he did and he had the authority to do so, it doesn’t really matter….because it “is irrelevant in assessing the validity” of our claim.
If that isn’t denialism, I don’t know what is.
The SEC wants to create the false impression that there is a controversy (beyond the disclosure omission allegation) when there is not one, in the hopes that it will sway the Court away from the facts, the truth and the law.
Excerpts from IndyMac CFO’s April 5, 2012 Sworn SEC Testimony that supports my statements above:
SEC’s Chung: “Well, do you recall being on a telephone call with Mr. Perry and Darrel Dochow to discuss obtaining relief from the subprime double-risk weighting requirement?”
IndyMac CFO: “I remember being on a call in late February where Mr. Dochow indicated that they were giving us relief.”
SEC’s Chung: “Okay. Well, tell me everything you remember about that phone call.”
IndyMac CFO: “I remember it occurred in Mike’s office. I don’t recall who else was there other than myself and Mike. I remember discussing the purpose of the call…some of this is based on my recollections of documents that I’ve seen in testimony. We were talking about a number of different points. I don’t remember the specifics of the conversation. I do remember…them saying they would be able to do the double-risk weighting of subprime. Obviously that was good news.”
SEC’s Chung: “Well, was there a discussion as to what would trigger prompt corrective action after obtaining this relief from the OTS?”
IndyMac CFO: “My understanding would have been based on the capital calculation that we were following after he gave us, to use your term, the waiver, would have just been the standard 10 percent test for total risk-based capital.”
SEC’s Chung: “Was that made explicit by Mr. Dochow during the phone call?”
IndyMac CFO: “When the west region director tells you that you are not going to be subject to the double-risk weighting requirement, I think it’s obvious that he’s referring to capital calculation, not being….not done on the subprime risk weighted method and that you would follow the other rules. So, if you were below 10 percent on a, I’ll call it a waiver basis, then that would be the way you would assess it. If you were below 10 percent, you would be adequately capitalized. I’m inferring that. I mean he was the west region director, if I remember correctly, and those conditions of approval, compliance with that condition of approval is vested in the west region director. He would be the person we would be looking to determine that we’re following the subprime guidelines correctly.”