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UH student investigates ORIX

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"[ORIX] offers a distinctive line of 'Just Pay' attire reflecting [ORIX's] proud determination to recover, for the benefit of the lender/bondholders, everything that is owed, by all who owe it."

Also, "Photographs of 'Just Pay' attire worn in unusual or significant locations will be entered into a contest with winners receiving additional free merchandise and inclusion in [the] 2004 Just Pay Calendar."

Cyrus found this cached Web page and threw it and The Economist story on Predatorix. The next day, he got a letter from ORIX's Dallas attorneys, demanding he remove "false and libelous" statements, as well as "confidential and proprietary information" from Predatorix.

Although ORIX quickly removed its Just Pay attire from its Web site, the letter was not referring to the clothes. It was referring to 93 pages from a lawsuit ORIX filed against Wachovia Bank, which ORIX claimed was confidential.

It was one of many ORIX suits Cyrus would ultimately post on the site; suits filed both by and against ORIX, and all of them containing the same allegations: ORIX was a predator. But these claims were spread over myriad judicial districts. That fragmentation meant prospective investigators would have to sift through court filings everywhere ORIX did business, if they wanted to know what kind of company was servicing their loans. Predatorix bundled all the claims together and slapped on a bow.

What turned out to be perhaps the most important tidbit emerged from a suit ORIX and Wells Fargo filed against UBS Paine Webber for breach of contract in a Dallas district court in 2002. In 1999, UBS Paine Webber had sold mortgage loans it controlled to a trust ORIX managed. ORIX accused UBS of breach of contract by failing to deliver all the necessary loan documents.

In a deposition stemming from that case, ORIX executive Michael Wurst revealed the existence of a partnership among ORIX executives that had not been disclosed to other bondholders. Through this partnership, the executives were investing up to 60 percent of their own money in the same B-piece bonds ORIX was servicing.

In UBS Paine Webber's counterclaim, the company accuses ORIX of putting its own interest ahead of other certificateholders', since its principals had their own money on the line. In the event of a breach of contract that significantly affects the trust, special servicers are allowed to demand that contributors to the trust (like UBS Paine Webber) buy back their loans.

So UBS accused ORIX of manufacturing contract breaches in order to bully contributors into repurchasing loans. In its counterclaim, UBS states that ORIX CEO Jim Thompson told a UBS principal that he could avoid litigation by buying back its loans and find a "sleepy, shitty servicer" (presumably, a servicer that doesn't have its own line of clothing).

The counterclaim states: "Since the fall of 2001, ORIX has embarked upon an ambitious course of litigation against much of the mortgage loan industry," including Citibank, Lehman Brothers, Salomon Brothers and First Union. (The bitterness between ORIX and UBS Paine Webber is evident in an e-mail — posted on Predatorix — from ORIX CEO Thompson to a UBS Paine Webber representative in January 2001. "Don't be so quick to impugn our motives...it brings out our competitive instincts in this shop," Thompson wrote in his six-point list. Point five: "You still suck." Point six: "Jack still owes me the phone number of some babe he lined up for me.")

When ORIX sued Wachovia for not providing loan documents, Wachovia presented the same argument: "ORIX abuses its position as servicer to benefit itself as investor."

The thing was, the partnership was never identified by name. It was not until Cyrus got a copy of the sales agreement between ORIX and KeyCorp, the company that bought ORIX's special servicing operation, that he noticed an entity called OCM Operating, LP. He wondered what role that limited partnership played in the sale of ORIX's special servicing operation to KeyCorp. But when one of Cyrus's attorneys asked ORIX attorney Beth Jaynes for more information, Jaynes appeared to deny the partnership's existence.

In a July 2006 letter from Jaynes to Cyrus's attorney, Jon Bohn, posted on Predatorix, Jaynes writes: "You...describe this alleged 'partnership' as believed to be a 'Texas partnership'...No such partnership exists."

However, as Cyrus discovered through the Texas Secretary of State, there was indeed a Texas limited partnership by that name. And in a deposition four months later, ORIX executive Jeffrey Yarckin said OCM Operating did indeed exist, although he didn't know what it was.

Naturally, this all wound up on Predatorix, with Cyrus's commentary:

"It seems ORIX would rather lie and hope to get away with it rather than admit their guilt, as usual. Busted!"

This is not the first time that a member of the Rafizadeh family has alleged a conspiracy targeting their properties.

In 2001, hundreds of Louisiana state employees who worked in a New Orleans office building owned by the Rafizadehs complained of toxic mold, faulty elevators and nonworking heating and air-conditioning units. They said water leaking from pipes soaked asbestos-laden ceiling tiles, which fell onto their desks. After state agencies moved 700 workers out of the building, the workers filed a class-action suit that was eventually settled out of court for $4.25 million.

According to a series of articles by Greg Thomas of the New Orleans Times-Picayune, a fire marshal found that not all of the building's 44 stories had a sprinkler system. And in 1996 and 1998, the Rafizadehs were "cited by the Department of Environmental Quality for violating the building's asbestos management plan. The building was issued $130,000 in fines."

Schumann told Thomas that a piece of building material containing asbestos discovered in 1998 was planted. He said the environmental claims were part of a state conspiracy to declare a health emergency and quickly move its employees into a new building without having to go through a public bid procedure.

And then there is, of course, the finding of fraud regarding the apartment complex Mondona Rafizadeh owned in Louisiana. The judge in that case found Mondona's company guilty of falsifying rent rolls, not maintaining the property and missing payments. The judge's ruling also described odd behavior on the part of Mondona and Schumann.

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