ReplyGuy

@mikulaja Will be interesting to learn if Celtic's D&O policy will cover/advance defense costs for Foster if there is merit to the conflict of interest claims. The allegations fall squarely into most policy exclusions 👀

🚨 SCOOP: Celtic Bank engaged in racketeering, conspiracy to defraud, explosive new lawsuit in Water Station Ponzi case alleges: A civil case filed yesterday in U.S. District Court in Utah is the latest lawsuit in a sprawling alleged Ponzi scheme linked to as much as $115 million in SBA-backed loans. The scope of the role of SBA loans in the scheme was first reported by Fintech Business Weekly in early August and confirmed weeks later by @Bloomberg's @sparkyrandles and @ArroyoNieto. The new suit is filed on behalf of nine individuals who serve as guarantors for the SBA loans their affiliated companies used to make the purported "investments" in Water Station. One of the individual plaintiffs, Tyler Sadek, served as now-defunct Water Station's chief financial officer. The suit names Celtic and the bank's head of SBA lending, Scott Foster, as defendants. Foster, together with his wife Jennyfer, took an SBA loan through an LLC they controlled from another bank to invest in Water Station, publicly available SBA records show. But, Celtic and Foster failed to disclose this conflict of interest, plaintiffs in the suit claim. Water Station steered potential "investor" franchisees to Foster and Celtic, and, despite knowing that Water Station's franchise model should not qualify for the SBA 7(a) program, which only permits "active," not "passive," franchises, Celtic provided over $17 million in SBA-backed financing, the suit says. Foster benefited from facilitating these loans by striking a side deal with Water Station to earn a higher rate of return and, when he began to suspect the company was not legitimate, demanded and received repayment of his investment, according to the complaint. Celtic benefited from packaging fees, collateral review, documentation fees, and interest payments on the loans, which amounted to millions of dollars, the plaintiffs say. Now, Celtic is threatening legal action up to and including foreclosure of real property, including some borrowers' residential homes -- and has commenced foreclosure proceedings against certain individual plaintiffs, the filing says. The complaint argues that Celtic was part of a RICO enterprise along with Foster, the various Water Station entities, Water Station founder Ryan Wear (who was recently criminally charged), and two other banks, UniBank and First Fed, which are not named defendants in this complaint. The suit argues numerous causes of action, including fraud, conspiracy to defraud, negligence, breach of fiduciary duty, RICO violations, and securities violations. Among other relief, the plaintiffs ask the court to find the loan agreements and personal guarantees to be void and unenforceable.

@mikulaja 😳

Me, writing tomorrow’s newsletter:

Evolve Bank says the plaintiffs are just a Frankenstein monster of stitched together copy pasta claims. The IRL horror here is how Evolve ponzied Yotta and Juno deposits to Mercury (allegedly) to keep Mercury as a client, which they ended up losing anyway. 🤦‍♂️

@Yankees 😔

Today, the Yankees released INF DJ LeMahieu from the roster.

@mikulaja LoL.

Wow, coming home from a trip at the exact moment the dogs are being fed is literally soul crushing.

At a 7% interest rate on a median priced home the annual cost would be around 40k a year with property taxes and insurance. Over 3k a month, not including the cost of maintenance. Twice what the median rent is in America.

@WPT I’ve seen him lose 200k on a single roll of the dice at a craps table. Can’t imagine a 4500 dollar pair of shoes being that big of a deal.

Ivey dropped HOW MUCH on new kicks?! 👟🤯

@ScottiePippen Poetry

@willshawison @mikulaja

@ReplyGuyyyyy @mikulaja If people only knew…🤣

Synapse bankruptcy end user: is there no plan to investigate who has the millions of dollars that are missing? I'm more interested in finding that out than being made whole.

@willshawison @mikulaja I’m not a lawyer either. I just play one on Twitter.

@ReplyGuyyyyy @mikulaja Sounds like embezzlement to me, but I’m not a cop or lawyer.

@TalkinYanks 😳

Clarke Schmidt throwing to Clarke Schmidt?

@bank_reg 🤔

Per its call report, The Santa Anna National Bank had ~$77 million in total assets and ~$71 million in deposits as of March 31. The FDIC's press release says that by June 18 the bank reported assets of $63.8 million and deposits of $53.8 million

@mikulaja good thing Evolve will have the only copy of AWS data for the CFPB

Synapse bankruptcy - end user asks CFPB how long, how much do we get back? CFPB atty: working on process to be able to handle w/trustee efficiently. Understand there is complexity w/the data. Will need data from banks. Understand people are waiting on this money, working quickly

We were talking about foreclosure prevention measures taken as a % of inventory - not inventory impact on prices. If we’re talking about one of many symptoms in the housing market as it relates to a true housing collapse that usually requires a cascade: mass defaults, forced sales, additional credit tightening, and a Fed that doesn’t interfere. Without that chain, it’s just predicting the inevitable ups and downs of the market. 🤷

@ReplyGuyyyyy @Bryozoan136344 Less than 1% of the total housing stock is for sale. These numbers make huge impacts on prices

FHFA has hidden over 7,000,000 possible foreclosures and morons are saying "delinquencies are low"

FL is an overpriced market with insurance companies abandoning ship and outrageous property taxes. Everything more than a couple blocks from the ocean or an intercoastal is next to a meth lab or swamp.

53 seconds in. 👀

@VladTheInflator Maybe poor millennials will finally be able to afford a house with all this inventory.

9.8 months supply isn't even the best part! There are currently more homes under construction than any time in US history with the WORST demographics in US history.

So many doomers over US housing market in my timeline. Muh interest rates. 😑 Has Wall Street started shorting the housing market? Basic rule of thumb: it’s rarely as good or bad as you might think it is.