Tom Miller Pens Love Letter to Settlements with Financial Fraudsters

By David Dayen, author of Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud.

You could spread around a lot of blame for the current state of our two-tiered system of justice and lack of accountability, particularly as it relates to the financial sector. But if you wanted to find the most pathetic figure involved in that whole rigamarole, all roads lead to Iowa Attorney General Tom Miller.

As a refresher for non-obsessives, Miller was the somewhat highly regarded law enforcer put in charge of the 50-state Attorney General investigation after revelations around the end of 2010 that mortgage servicing companies, mortgage-backed trustees and their law firms were issuing false documents in foreclosure cases on a mass scale to cover up busted chains of title on securitized loans. (I, er, wrote a book on this.) Within days of being announced as the lead investigator, we learned that Miller received $261,000 from banking interests for his re-election campaign – 88 times more than he ever took in the previous decade – and that he personally asked bank lawyers for contributions. Miller then famously told community groups in Iowa that “we will put people in jail” for foreclosure fraud, only days later his office backtracked and said they weren’t referring to foreclosure fraud but some separate mortgage fraud investigation in Iowa (which he didn’t put people in jail for either), and then days after that he called the case “inherently civil,” and days after that he appeared at the Senate Banking Committee and admitted he had two settlement negotiations with Bank of America within the first month of the vaunted investigation. I could go on, but why bother? Whatever his outlook going into the investigation, Miller folded within first contact with the system, and became Washington’s lackey for a settlement that didn’t even rise to the level of a slap on the wrist.

So it was no surprise to dig up a public comment he made a couple weeks ago to the Department of Education, praising civil settlements for corporate crimes rather than holding individuals and corporations accountable for their wrongdoing. This paean to settlements couldn’t come from a better source.

Just as Miller quickly settled out foreclosure abuses, he opted for a national settlement with for-profit college chain Education Management Corporation (EDMC) after they misled prospective students with bogus job placement statistics. No executive saw handcuffs or restrictions on their bonuses from that either. But after a series of these incidents, and outcry from student groups who were forced to pay back their loans to colleges that defrauded them, the Education Department was belatedly pressured into issuing a rule providing a streamlined debt forgiveness process.

The Education Department rule would allow defrauded students to more easily assert a “defense to repayment” on their student debt, as stipulated in their loan contract. The rules restrict the use of mandatory arbitration to settle disputes with wronged students, require schools to post warnings if they have financial problems or poor student loan repayment outcomes, and force colleges to secure a letter of credit if they engage in misconduct, so they would be responsible for paying back students, not taxpayers.

That last one is what Miller objects to. One of the triggering events for the letter of credit acquisition is any state or federal settlement in excess of $750,000. Since the letter of credit would make colleges far more liable to repay borrowers they harmed, and would be costly to obtain, this could make them less likely to agree to settlements. And Tom Miller just cannot have that. So he wrote a comment letter on the proposed rule.

“I am concerned that this component of the proposed rule will negatively impact the states’ efforts to protect consumers from the predatory practices of certain educational institutions by deterring them from settling with state attorneys general,” Miller writes. “In many scenarios, settling is more appropriate than bringing a lawsuit, and settlements are often the best vehicle for providing refunds or loan forgiveness to consumers.”

I mean, we already knew that Tom Miller had an ongoing love affair with settlements, but writing a mash note to them borders on ridiculous. The Education Department rule would make colleges who dupe their students specifically liable to deliver relief to them. It would actually empower students to enforce their own contracts. And it would be so devastating that the institutions would steer clear of engaging in any misconduct to begin with. Miller’s “settle now and settle later” strategy provides no deterrent, dooming students to abuse in perpetuity.

Miller’s rationale is that settling is faster, a claim he made during the foreclosure settlement too, sacrificing adequacy for speed. By the way, the one settlement Miller mentioned, with EDMC, granted 80,000 students $102.8 million in relief, an average of just $1,285 per student (and these for-profit colleges are far more expensive than their non-profit counterparts). And Miller actually bragged about the EDMC case in this letter!

“Reaching a settlement means companies do not have to spend significant amounts of money on litigation, leaving more money available for refunding consumers,” Miller added, as if there wasn’t a year-plus of lawyer-led wrangling on the mortgage settlement, like every other one. He also said that settlements allow him to spend more time pursuing other bad actors, essentially arguing that he should be able to settle so he can make more settlements. And he beamed with pride about the requirements attached to settlements, which invariably amount to little more than Miller’s office telling some miscreant “Don’t do it again.”

Never mind that Miller’s job is not “Settlement Officer” but “Attorney General,” charged with leading an office of prosecutors, not negotiators. It’s one thing to make a cost-benefit analysis on cases after obtaining all the evidence and gaming out the prospects of a legal case. But Miller is actually making a defined rule that settlements are preferable to “a lengthy lawsuit with an uncertain outcome.” Any law enforcement official elected to protect the public interest should be ashamed of such an outlook. Miller has made a virtue of settlements, and a standard of fearing the courtroom.

Even when Miller acknowledges that “bringing suit can be an important tool,” he means that it can be an important tool in bringing a settlement! The example Miller gives is a consumer fraud case against La’ James International College, which never went to trial and settled for $2.6 million. He’s not really saying that settlements are a good option for offices like his, he’s saying they’re the only option.

If Miller had any self-awareness, he wouldn’t write something that so debases the mission of his office. This is the real problem with the Eric Holder, Lanny Breuer-driven culture of settlement that has neutered our justice system. It expresses a new goal for law enforcement: to stand in front of a podium proudly parroting some headline number rather than actually doing the job of preventing lawbreaking and making sure those who do it pay a price.

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About David Dayen

David is a contributing writer to He has been writing about politics since 2004. He spent three years writing for the FireDogLake News Desk; he’s also written for The New Republic, The American Prospect, The Guardian (UK), The Huffington Post, The Washington Monthly, Alternet, Democracy Journal and Pacific Standard, as well as multiple well-trafficked progressive blogs and websites. His has been a guest on MSNBC, CNN, Aljazeera, Russia Today, NPR, Pacifica Radio and Air America Radio. He has contributed to two anthology books, one about the Wisconsin labor uprising and another on the fight against the Stop Online Piracy Act in Congress. Prior to writing about politics he worked for two decades as a television producer and editor. You can follow him on Twitter at @ddayen.


  1. Steve H.

    “This is the real problem with the Eric Holder, Lanny Breuer-driven culture of settlement that has neutered our justice system. It expresses a new goal for law enforcement: to stand in front of a podium proudly parroting some headline number rather than actually doing the job of preventing lawbreaking and making sure those who do it pay a price.”

    Say it again!

    1. Damian

      “real problem with the Eric Holder, Lanny Breuer – driven culture of settlement”…………shouldn’t you add the equivalent “no prosecutor would take this case” Comey to the list?

  2. crittermom

    I continued to be reminded of Eric Holder when reading the article.
    Sounds like Tom Miller was a protege.
    “…neutered our justice system.” is a good way to state it.

  3. Jo

    Does this mean bank robbers can now “settle” instead of going to prison. I don’t think I got the memo that the law of our land has been revoked and we can now pillage and rape and “settle” without imprisonment. Who knew??? This crap makes me sick! What the hell happened to our country? Oh yeah, nevermind, I just remembered, the corruption of our judicial and political system by “big money”.

  4. Stupendous Man - Defender of Liberty, Foe of Tyranny

    Go back further.

    The National Mortgage Settlement (NMS) of 2012 wasn’t driven by “robosigning” revelations that came into the public consciousness in September 2010. It was driven by a multi-state settlement with Countrywide for mortgage misbehavior between 2004 and 2007, entered into in the fall of 2008. Countrywide did NOT perform in accordance with the terms of that settlement. That performance failure kept some AGs eyes on Countrywide (and subsequently BoA), and lead to the discovery of … wait for it … more mortgage misbehavior. The “robosigning scandal” came to light as those, and other AGs, were looking at ways to enforce the prior violated settlement. My recollection is Iowa AG Miller was involved in the 2008 settlement, and in subsequent enforcement actions. Miller is no peach, and never was. But neither are/were any of the other 48 AGs that entered into the NMS (only Oklahoma abstained).

    Maybe those above purported settlements are a macro view. For poops and grins here is micro view a year or so before the 2008 settlement.

    On December 20, 2007, it was revealed at a BK hearing that Countrywide was “recreating” letters, and using them in an attempt to extract additional monies from a discharged debtor. The case was In re Hill, Case No. 01-22574, Western District PA. Morgenson (“Lender Tells Judge it ‘Recreated’ Letters”) covered the hearing transcript, and the implications of the revelations, as early as January 8, 2008.

    At that time, December 2007, GWB was in office, and Mukasey was the AG. In the simplest language:

    – If Mukasey didn’t know fabricated were being used in Federal BK courts he should have been fired.
    – If Mukasey did know, but did nothing about it, he should have been fired.
    – If Mukasey did know, but did nothing about it, and didn’t tell GWB, he should have been fired.
    – If Muksaey did know, but did nothing about it, and did tell GWB and he also did nothing about it, they should both have been fired.

    Rinse, and repeat. Cut and paste the name of just about any elected or appointed official and the results are the same.

    1. Pearl

      @Stupendous Man: Thanks for reminding me about In re Hill. You have no idea how well-timed that reminder was for me.

      @David Dayen: I cannot begin to thank you enough for having written your book, Chain of Title. It is a fantastic book just on its own, but it is also serving as a handy compendium for those of us who are still actively litigating a fraudulent foreclosure. (7 years, pro se, in forma pauperis, woo-hoo.) When you get around to writing your “Georgia Version” of Chain of Title–feel free to give me a call!)

      @Everyone: David Dayen’s book is a must-read. It was just recently published and it is completely up-to-date. Indeed, this book is no irrelevant reflection on a “crisis that was.” It’s jam-packed with the nerdy info and topics relating to the crisis, but it is told through the stories of the (literal) trials and tribulations of real people. So–it’s of nerd interest and human interest. Such a rare juncture!

      1. Stupendous Man - Defender of Liberty, Foe of Tyranny

        The last I saw of the case was the October 5, 2010, Memorandum Opinion and Order of Judge Agresti. That was a wowser.

        1. Pearl

          @ Stupendous Man: Yikes! 80 pages of wowser– I better get started re-reading again. Thanks again, Stupendous Man.

  5. dee preston

    The mortgage settlement was disgustng! If anyone else forged documents and LIED in court, they would be in jail for sure. The corruption we are witnessing in this lifetime are so nepharious and must be stopped. We have successfully fought and beat deutche bank (it took 6 1/2 years), but I’m sure they are going to doctor up all the ailments in the title and transfers which were fraudulent, and bring it again! I am sick and tired. This fiasco must stop but how will that happen when we have attorney generals that ALL are on the take?! Justice is not for all. It is only for criminals.

  6. KYrocky

    Leave Eric Holder alone, he did exactly what Obama wanted done. Holder was a lapdog for Wall Street when Obama chose him for AG, and he was Obama’s lapdog while he was AG. Holder does not give a shit about justice, only about who has the money and power. Holder is the very model of a modern Attorney General.

    1. perpetualWAR

      Yep, the buck did stop at Obama’s front door.

      A couple days ago, I was having a beer at a local pub. Overheard two guys at the next table say “He’s one of the best President’s we’ve ever had.” My head flipped around and said “14+ million homes stolen, 21+ trillion $$$ stolen, and no one prosecuted? I beg to differ.”

      1. Larry

        I had to shock the relatives in Ireland who view both the Clintons and Obamas as the paragon of American grace and power with a similar comment.

        People give Obama credit for just being presentable, intelligent, and a bit personable. The bar is quite low on what we expect from a “good” politician.

  7. Nut Farmr

    I remember calling his office during the settlement process to let them know what I thought about letting these banks off the hook, and the response from his office was something akin to “these are complicated cases”……what a load of garbage. I said that day I was done voting for him and have told friends since that he is as crooked as Hillary. Competent government, why is that so hard?

  8. Enquiring Mind

    The Tom Miller story is timely to reinforce other financial industry instances of malfeasance. If you watched 60 Minutes last night, you saw the life insurance segment about foot-dragging and other ways they kept beneficiaries from receiving payouts. One egregious example was how they would deduct their fees from the accumulated cash value on policies where they had evidence in the file that their policy holder was deceased.
    Here is one newspaper account of an aspect of that life insurance industry practice. Call your congressional representatives to insist that they take action to eliminate such practices in your state.

    1. crittermom

      Tho’ I quit subscribing to TV almost 2 decades ago, I do watch some shows on here and saw that.
      Disgusting! Not surprising, unfortunately, but absolutely disgusting and enraging.

      I’ll add that topic to my list for making calls to those who are supposed to be representing us.

      That story confirmed why I fail to hold the insurance industry in any higher regard than I do the banks…
      …or the govt, for that matter.

  9. Sluggeaux

    Thank you for this strongly-worded piece. I am leaving my job as a prosecutor after 32 years because I’m seeing this settlement mentality on the part of elected officials cozying up to big donors as the dominant paradigm of our justice system — while the small fry get no deals.

    The real problem isn’t the money, however. It has always been there. What has changed is monopoly ownership of news media, the collapse of journalism as an honorable profession, and that corruption can exist without fear of exposure.

    A democracy can only function with a free and independent press — why this was in the FIRST amendment to our constitution.

    1. crittermom

      “I am leaving my job as a prosecutor after 32 years because I’m seeing this settlement mentality on the part of elected officials cozying up to big donors as the dominant paradigm of our justice system — while the small fry get no deals.”

      I’m sorry that area in a profession you chose has become so corrupt (with the help of lacking a ‘free press’).
      It’s sad that you’ve invested so much of your life in what should be a noble profession, only to see it be ‘neutered’, as so aptly put in the article by David Dayen (been following him for some time), corrupted by greed.

      We need to get back to basics–the Constitution and the Bill of Rights.
      We’ve all but lost them.

    2. Yata

      A thank you, Sluggeaux, for being on the job. Somehow in the back of my mind there was the thought that the government employees were actually a good lot, coralled into a limited number of duties when it came to executing the letter of the law in an even fashion.

  10. ChrisPacific

    By now we are all used to being betrayed by those who claim to act in our interest. Even so, I think the Tom Miller betrayal set the record both in terms of the speed and magnitude of the turnaround.

    The idea that the attorney general’s job is to streamline the settlement process to get more money to victims is ludicrous. The best way to help victims is to prevent the abuses from happening in the first place, and the best way to do THAT is to have a law enforcement and prosecution process with some teeth. An AG’s office that specializes in making problems go away quickly and quietly at a price that amounts to a cost of doing business is not on the side of the angels.

    1. flora

      adding: on the one hand his A.G. webpage offers advice for veterans against higher ed scams; on the other hand there’s the ‘love letter’ to fraudsters described here in DD’s post. Seems Miller is always there for the little guy (veterans, home buyers, etc.) just long enough to get the attention of the big guys and cash in. Isn’t that the essence of the modern Dem party?

  11. griffen

    Rules, we don’t need no stinking rules. That is for the suckers and little people.

    I hasten to add that is definitely a sarcastic tone intended.

  12. crittermom

    Currently, I’m awaiting the results of a ‘settlement’ in a class action regarding Chase Bank and the FDCPA.

    In my case, Chase kept my home they stole in my name for 3 years after taking it in foreclosure.

    Twice they put forced-placed insurance on it during that time, all under my name.
    I continued to get copies of these policies from the insurance companies as well as other correspondence, each one a gut-wrenching constant reminder–not that I needed any–of what happened, while those folks who don’t understand were telling me to ‘just move on’ and ‘put it behind me and start over’.
    It could be considered another form of harassment by the banks, IMO.

    I had filed BK after they stole my home, for fear of them coming after me for the rest of my life should I ever be fortunate enough to have any assets again. That didn’t stop ’em, either, from using my identity.

    They continued to do ‘soft inquiries’ on our credit after taking our homes and ‘reselling’ them.

    This is the biggest ‘settlement’ ever regarding FDCP. A whopping $8.75 million.

    I called the attorney representing us in this class action suit (I prefer to hear things ‘straight from the horse’s mouth’ if possible) to see what we victims would receive as a result.

    *drum roll*…………………………………………..”around $50 each”, was his answer.

    Because all the cost of notifying victims, setting up an 800#, hiring Rust Consulting to disburse the pymts, the mailings, a website–all of it, comes out of the settlement money to the victims!

    I asked why? (while exclaiming, “that’s not right!”)

    That was the ‘best they could do’, was his answer.

    Uh, huh. The firm still gets their third, no matter what the victims receive (or don’t).
    Chase will be able to write the settlement off and probably even benefits from any tax breaks associated with it as a ‘loss’, perhaps?
    And the victims are screwed once again.

    Yeah, it’s completely screwed up. From the top down.
    Can ya hear me scream?!

      1. flora

        “Because all the cost of notifying victims, setting up an 800#, hiring Rust Consulting to disburse the pymts, the mailings, a website–all of it, comes out of the settlement money to the victims!”

        Punishing, er, charging the victims instead of the malefactors for the bureaucratic costs of compensation has become de rigueur. Even when you win you lose. Sorry for the plight of everyone caught in this anti-Hobbesian nightmare. (“In ‘Leviathan’ Hobbes set out his doctrine of the foundation of states and legitimate governments and creating an objective science of morality.” -Wikipedia)

  13. Steve

    Theses settlement attitudes trickle down to the local District Attorneys, so that they won’t bother with defending the little guy. You end up hearing more metaphoric excuses not to investigate a crime than an actual interest in investigating one.

  14. Richard Davet

    This is a great piece with one glaring omission.

    You don’t call the scam by its name……………The GSE Business Model.

    People have to understand exactly what the crux of the problem is. The “financial fraudsters” are selling a Model that does not work for the purpose intended (remember Madoff).

    Whether it be in the mortgage industry or education the culprit is the same—-The GSE Business Model.

  15. Rod

    1. What does GSE refer to?
    2. When an entity settles w an AG, what sort of reimbursement % is held back by the ‘govt’ for the expenses related to prosecuting that settlement?

    1. TheCatSaid

      Wikipedia on GSE [emphasis mine]: “A government-sponsored enterprise (GSE) is a financial services corporation created by the United States Congress. Their intended function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent, and to reduce the risk to investors and other suppliers of capital. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors primarily by reducing the risk of capital losses to investors: agriculture, home finance and education. The two most well known GSEs are the Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac.[1]”

      Got that? GSEs are designed to send money to bigwig cronies in the financial sector, and reduce risk to investors. They are not designed to help the end users of these financial services (students, home buyers). IOW they’re a species of vampire squid.

      1. Richard Davet

        Well said.

        The the fraudulent player/partners in the GSE Business Model have hijacked the mortgage industry and made college, inc. the norm.

        All eyes should be on Congress ro revoke their charters as the Model simply does not work as designed and sold. Like selling an item to Walmart that does not sell through to the consumer.

        Without the congressional guarantee of the GSEs mbss——-the GSEs would die a quick death like all other business models that do not function as sold.

  16. kburns

    To those of us who were wrongfully foreclosed and lost EVERYTHING, this information is just twisting the knife deeper into us. We have no recourse. There is no justice. Tom Miller sleeps just fine each night and everyone who can do something sleeps with him.

  17. On the Bubble

    This root of this problem precedes President Obama and AG Holder. I heard no mention of the Bush and Clinton administrations which actually got corruption, in the housing market, off and running. There is plenty of blame to grow around so let’s not just put it on Holder. Miller doesn’t report to Holder so what motivated him to sell his soul to the devils?

    1. Yves Smith

      Huh? The settlement process has noting to do with the prior abuses. Pecora in the 1930s went after the Roaring Twenties misconduct, as did the 1933 and 1934 securities laws. You are bizarrely taking the position that previous misconduct commits all future officials to follow the same path.

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