Audit Notes: Justice’s Revolving Door, GE Probed, iBooks Author

Reuters’s Scot J. Paltrow reports that Obama’s Attorney General Eric Holder and the head of his criminal division worked for a law firm that represented a “Who’s Who of big banks and other companies at the center of alleged foreclosure fraud” (emphasis mine):

The firm, Covington & Burling, is one of Washington’s biggest white shoe law firms. Law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for.

Both the Justice Department and Covington declined to say if either official had personally worked on matters for the big mortgage industry clients. Justice Department spokeswoman Tracy Schmaler said Holder and Breuer had complied fully with conflict of interest regulations, but she declined to say if they had recused themselves from any matters related to the former clients.

Reuters reported in December that under Holder and Breuer, the Justice Department hasn’t brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases.

The evidence, including records from federal and state courts and local clerks’ offices around the country, shows widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel.

Covington has also done lots of work for MERS, which was the linchpin in the foreclosure scandal. Good reporting here.

— Michael Hudson and E. Scott Reckard are back together again, reportingfor the Los Angeles Times that the feds are investigating General Electric’s defunct subprime lending arm, which Hudson wrote about a couple of weeks ago for the Center for Public Integrity.

The government is asking whether WMC used falsified paperwork, overstated income and other tactics to push through questionable loans, two of the people said. They said the probe appears to be focusing on whether senior managers condoned improper practices that enabled fraudulent loans to be sold to investors.

“It’s mostly about: Did they knowingly sell mortgages into the secondary market that they knew were fraudulent?” said one person with direct knowledge of the investigation.

They point to a website set up by former IndyMac CEO to defend himself from FDIC and SEC civil fraud charges, which you should check out just for the comments on the home page.

— Thinking about using Apple’s new iBooks Author software for your magnum opus? You might want to read the fine print, aka the end user license agreement

“I have never seen a EULA as mind-bogglingly greedy and evil as Apple’s EULA for its new ebook authoring program,” writes ZDNet’s Ed Bott.

Apple says you must pay it 30 percent of every copy you sell on any platform. Dan Wineman:

Apple, in this EULA, is claiming a right not just to its software, but to its software’s output. It’s akin to Microsoft trying to restrict what people can do with Word documents, or Adobe declaring that if you use Photoshop to export a JPEG, you can’t freely sell it to Getty. As far as I know, in the consumer software industry, this practice is unprecedented.

Microsoft’s PR folks are making hay out of this. Here’s Frank X. Shaw on Twitter:

1. If you write a novel in Word, we promise not to take a 30% cut

2. Likewise, if you deliver a speech in PowerPoint, we promise not to take 30% of your speaking fees

3. if you manage your finances in Excel, we promise not to take 30% of your income

(h/t Henry Blodget)

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,