December 19, 1997
Sweeney(Attorney Thompson) response to the

FDIC(Attorney Shea) mediation comments to Judge Mazzone

FDIC: (Attorney Shea)

Judge Mazzone:

        I and my client, the Federal Deposit Insurance Corporation, as Receiver of ComFed Savings Bank, F.A. (the "FDIC") have reviewed the summary (including thirty Exhibits) (the "Summary") submitted by the defendants, John and Rhetta Sweeney, in connection with the mediation of this matter. The materials are irrelevant to the matter pending before the Court of Appeals—whether the Sweeneys must vacate properties owned by the FDIC—and are premised on basic misstatements (or misunderstandings) of fact and law. All of the legal theories in the Summary were or could have been raised in the action the Sweeneys brought against ComFed eight years ago.

        Rather than detail every error in the Summary, I have highlighted the flaws in certain basic themes running throughout it. I have also made briefer, detailed comments on each Exhibit seriatim.

Loan Background

        Before ComFed Savings Bank loaned the Sweeneys $1.6 million, the Sweeneys had entered into a preliminary agreement with a development company which acquired the first mortgage on the Bay Road property to stave off foreclosure. In addition, the $400,000 second mortgage on the Bay Road property was scheduled to go to a foreclosure sale the day after the ComFed loan closed. The Sweeneys used $1.2 million of the ComFed loan funds to pay off the first mortgage to the developer and the second mortgage to another lender to avoid foreclosure in 1987. An additional $200,000 was placed in an interest reserve fund. When the reserve was exhausted the loan went into default.

SWEENEY: (Attorney Thompson)
        Shea has omitted the underlying fraud of Bank Officers at ComFed that led to their indictment and precipitated the above foreclosures. This fraud, and the subsequent failure of the bank as a result of that fraud, the plea and settlement agreements, are public record.

        Omission of material facts is considered attorney deceit, a form of actual fraud, and is as significant as lying to the Court.

FDIC: (Attorney Shea)
ComFed's Foreclosure Proceedings

        In the middle of August, 1997, Linda Thompson contacted me and stated she had discovered important new information which would clarify many things and explain John Hanify's allegedly wrongful behavior. This "new information" involved the fact that ComFed had received Soldiers and Sailors Civil Relief Act decrees in April 1989, before the Sweeneys filed suit against ComFed and sought to enjoin ComFed's foreclosures.

SWEENEY: (Attorney Thompson)
        What Shea refers to as "new information" and "Soldiers and Sailors Relief Act decrees" was a legal opinion concerning the significance of suits for foreclosure that Hanify brought against the Sweeneys to foreclose their properties in Essex court, while failing to provide the Sweeneys proper service and notice, and upon which Hanify had obtained default judgments. The Sweeneys attorney did later appear, but not until judgments were rendered or in default. In the meantime, the Sweeneys had sued ComFed in Middlesex, and one of the foreclosure cases was still pending, when Hanify was enjoined from proceeding; however, he proceeded in the foreclosure cases anyway -- obtaining a default judgment. Hanify failed to mention the pending foreclosures in the Middlesex court, but then failed to raise them on behalf of his client during the Sweeneys' suit against his client as collateral estoppel or res judicata.

        The significance is that had Hanify raised these issues, it should have had an impact on the suit by the Sweeneys on behalf of his clients, in fact, it could have stopped the Sweeneys suit against ComFed. However, he could not raise the issue of the Essex proceedings in Middlesex without admitting he was blatantly violating the restraining order to pursue the action. That he did not mention these in his answer as an affirmative defense, however, left his own clients holding the bag for a $4 million judgment against him. This is a very powerful motive to engage in the subsequent criminal conduct in which Hanify did in fact engage, to get his clients out from under the $4 million dollar judgment and get himself off the hook for a massive malpractice action.

        Hanify mentioned these Essex actions much later in the case (but not in the answer in Middlesex) when Hanify clearly knew of the Essex actions as they occurred.

FDIC: (Attorney Shea)
        According to Ms. Thompson, Hanify's failure to raise the Soldiers and Sailors proceedings in opposition to the Sweeneys' request for a temporary restraining order was a mistake or improper – I do not follow the argument precisely here.

SWEENEY: (Attorney Thompson)
        The argument, precisely, is collateral estoppel and res judicata. If Hanify had not been hiding what he was doing in Essex from the Middlesex Court, he could have and should have, but did not, raise the Essex foreclosure actions in Middlesex in his client's answer. That he failed to do so, demonstrates that he was either as ignorant as Shea of these longstanding doctrines and their application, or that he knew he could not raise these issues in Middlesex because it proved he violated the restraining order. Either way, the failure to raise the Essex actions in the Middlesex action was clearly a breach of Hanify's duties to his clients, ComFed. When the Sweeneys won a $4 million judgment against ComFed, he had 4 million reasons to become desperate and did.

FDIC: (Attorney Shea)
But the Soldiers and Sailors proceedings are simply irrelevant.

SWEENEY: (Attorney Thompson)
        Here, Shea has proclaimed that legal proceedings for foreclosure in a Massachusetts court of record, are, "irrelevant." This is of interest solely because it demonstrates Shea's state of mind as it bears upon his respect for both the law and judicial proceedings.

FDIC: (Attorney Shea)
        First, the Soldiers and Sailors proceedings were known to the parties and pleadings therein were exhibits at trial. The Sweeneys' lawyer appeared in the Soldiers and Sailors Proceedings. Summary, Exhibits 3 and 4. In the action the Sweeneys filed in Middlesex Superior Court against ComFed, the Sweeneys pled that ComFed gave them notice of the proceedings in February 1989. Exhibit 5, pp. 154 (Joint App., p. 680 and Exhibit EE, pp. 835-36).

SWEENEY: (Attorney Thompson)
        The Sweeneys attorney did not appear until late in the proceedings in Essex and did nothing. However, one of these actions was still pending when Hanify's client was enjoined from taking any action whatsoever, by the Middlesex Court, so Hanify did the rest of what he did in Essex by "default," i.e., no notice.

FDIC: (Attorney Shea)
        Second, the Sweeneys apparently do not understand how a foreclosure is accomplished, or the relationship between a note and a mortgage. In Massachusetts, foreclosures are non-judicial, conducted typically under a statutory power of sale. Mortgagees can (and usually do) bring a proceeding under the Soldiers and Sailors Civil Relief Act before foreclosing, to protect themselves in case the mortgagor or other interested party is in the armed services. The sole question in the Soldiers and Sailors proceeding is whether the mortgagor or other interested person is in the armed services. "Such proceedings shall be limited to the existence of such persons [i.e., persons in the service] and their rights, if any." Acts 1959, c. 105; see also Beaton v. Land Court, 367 Mass. 385 (1975)3 If a mortgagor believes that there is reason why the foreclosure ought not occur—fraud, set-off, etc.—, then it can bring a separate action and seek to enjoin the sale in the Superior Court. Id. At 390-91. See also comments on Exhibit 9, below.

SWEENEY: (Attorney Thompson)
        While the above is true as far as it goes, these earlier decisions were not addressing the issue of either the collateral estoppel effect of such proceedings upon other proceedings, and Shea has also omitted decisions which have in fact held that the party sued may raise defenses in the proceedings, as cited in the Sweeney's brief.

        In other words, what he has recited above, has no bearing on the reason for raising the issues concerning the Essex proceedings: Hanify ignored a Middlesex Restraining order, failed to get service, accomplished a summary foreclosure in Essex, but then, failed to raise this issue in his own client's defense in the Middlesex case, his client's lost, to the tune of $4 million, and Hanify freaked out. It's just that simple.

FDIC: (Attorney Shea)
        Here, the Sweeneys did precisely that. After ComFed completed the Soldiers and Sailors proceedings, but before ComFed had actually conducted auctions of the properties, the Sweeneys successfully moved to enjoin the foreclosure sales. While the Sweeneys now assert—some nine years after the fact—that the existence of the Soldiers and Sailors proceedings was for some reason important, the fact is that those proceedings could have had no effect on ComFed's right to foreclose on the properties.4

SWEENEY: (Attorney Thompson)
        The above is conveniently factually and chronologically incorrect. One of two actions was still pending in Essex when Hanify's client was enjoined by the Middlesex Court from proceeding, but Hanify continued to conduct the suit in Essex while the restraining order was pending anyway. The restraining order that issued did not enjoin "foreclosure sales" because at the time of the application for the order, there was no pending sale, it enjoined all proceedings. Hanify ignored this and was only able to do so because at that time (not later in the proceedings, but at the time the Sweeney's suit was filed), the Sweeney's did not have notice of what Hanify was doing over in Essex, Hanify knew it and wanted to get a default judgment, and did in fact proceed on to judgment, even while the restraining order was in effect, by failing to mention it in Middlesex Court at all at that time. The Sweeneys' attorney did not enter an appearance in Essex in time to have prevented the default. Later, certain exhibits, which were useful to Hanify, were used from Essex, that is true, but not on point with the fact that early in the Middlesex action, Hanify did not mention the pendency of the Essex cases, failed to accord notice, and proceeded to judgments in those cases in the face of a restraining order.

        This evidences his criminal state of mind and disregard of ordinary court process early in the litigation, among other things.

FDIC: (Attorney Shea)
        The Sweeneys also display confusion about the relationship of a note and a mortgage. A mortgage is security for a loan, represented by a promissory note. After a default under a mortgage (which often includes a cross-default provisions with its related note), the mortgagee may foreclose and apply the proceeds to the indebtedness represented by the note. Any surplus from the foreclosure sales must be returned to the debtor. In response to the Sweeneys' action in Middlesex Superior Court, ComFed did not file a duplicative action under the Soldiers and Sailors Civil Relief Act, Summary, p. 7, p.25, but instead counterclaimed for the amounts due on the note.5

SWEENEY: (Attorney Thompson)
        The above is a great paragraph because it illustrates the problem Shea has convoluting the facts.
        
        If Hanify had mentioned the Essex proceedings in his counter-claim, he would have been estopped from suing on the entire note, because he already had a judgment and was required to foreclose, to find out how much, if anything was still remaining on the note. All his client would have been entitled to was any shortfall.

        Instead, Hanify sued for the balance of the entire note, AND for foreclosure. He would not be entitled to both, and he would have by necessity, have revealed his own conduct in Essex -- proceeding in the face of a restraining order that he knew about -- had he PROPERLY PLEAD the case, and he did not.

        His failure to properly plead the case resulted from his own wrongful conduct in Essex, but it then left his client open and subject to the $4 million judgment that was obtained against them.

  Hanify screwed up and he screwed up in a big way, and Shea simply illustrates that point in the paragraph above where he sets forth that Hanify "sued for the entire installment contract."

FDIC: (Attorney Shea)
        For the same reason, the United States District Court did not "award summary judgment of foreclosure to ComFed." Summary, p. 18. The District Court adopted and entered the jury's verdict pursuant to Fed. R. Civ. P. 63 and entered summary judgment on the Sweeneys' claims against ComFed and its subsidiaries.

SWEENEY: (Attorney Thompson)
        Here, Mr. Shea talks out both sides of his mouth. If the Court had in fact adopted the Jury's verdict, it was collaterally estopped from failing to adopt the remainder of the judgment, which was in fact entered by the Court prior to Hanify's removal of the case.

        Further, that very judgment was itself a bar to removal from the State court to Federal Court at all. Thirdly, that Harrington got the case in itself was nothing short of criminal collusion, as amply set forth in the conflicts section of the (Sweeney) brief.

FDIC: (Attorney Shea)
        Having thus resolved all parties' claims, the District Court dissolved the preliminary injunction which the Middlesex Superior Court had entered. See also 12 U.S.C. 1821 (j) (prohibiting injunction against FDIC as to assets of failed depository institution).

SWEENEY: (Attorney Thompson)
        First of all, the FDIC was not a party to the Middlesex case and was never restrained by the restraining order, which proves in itself how wholly bogus the entire paragraph above is on its face. Law regarding the FDIC has no application to the Middlesex case and there was no legal basis for the Federal Court's jurisdiction to dissolve the restraining order, either.

FDIC: (Attorney Shea)
        The short of the matter is that it is irrelevant that ComFed completed the Soldiers and Sailors proceedings before the Sweeneys moved to enjoin foreclosure. Contrary to the Sweeneys' belief, Summary, p. 25, one cannot bring a collection action in a Soldiers and Sailors proceeding. Acts, 1959 c. 105. Any theory grounded in the belief that Hanify erred by failing to bring an action on the note in Soldiers and Sailors proceeding, by failing to focus on those proceedings in response to the Sweeneys' request for a preliminary injunction, or by otherwise highlighting those proceedings is without merit.

SWEENEY: (Attorney Thompson)
        Here again, Shea simply proclaims the Essex proceedings "irrelevant" so surely that must make it true. However, it was obviously relevant enough to John Hanify that he failed to properly plead his client's case in Middlesex, in order to avoid exposing his own misconduct in proceeding in Essex in the face of a restraining order not to do so, yet realized how much this had cost him when a $4 million judgment against his client was awarded.

        He had an awful lot of reasons -- four million of them -- to engage in the subsequent criminal conduct in which he engaged, to defraud the Sweeneys.

FDIC: (Attorney Shea)
        These issues were expressly litigated in the United States District Court and the United States Court of Appeals for the First Circuit. See Sweeney v. RTC, 16 F.3d 1, 2 n.1. (1st Cir. 1994). The parties' Joint Appendix contains the complete transcript of an evidentiary hearing bearing on these issues. Joint App., pp. 1647-1759. The District Court sanctioned the Sweeneys and awarded the RTC its attorneys' fees for repeatedly raising the same arguments about removal, without citation to new law or facts. The First Circuit upheld the award of sanctions. Sweeney, 16 F. 3d at 6-7. Additionally, the FDIC has explained the points in detail to numerous of the Sweeneys attorneys. To raise the issues of substitution and remand in the Summary evidences an inability to confront legal reality.

SWEENEY: (Attorney Thompson)
        These issues were not litigated at all. The Sweeneys were pro se through much of the important litigation and raised the issues incorrectly. The Damiano case, removal, and timeliness were never in fact addressed, nor the lack of the Court's underlying jurisdiction. The Federal Court of Appeals itself notes that Harrington treated the challenge to jurisdiction as a challenge of venue, and addressed only the issue of whether the case should have been heard in Washington, D.C. or not.

        That is most assuredly not one of the several, wholly unaddressed, issues raised in the Sweeney brief, in detail, here, which clearly and precisely show why the federal court had absolutely no authority to entertain the action in federal court at all, on any basis, and lacked subject matter as well as personal jurisdiction.

FDIC: (Attorney Shea)
        For at least five years, the Sweeneys have confused substitution with removal. The Resolution Trust Corporation ("RTC"), like the FDIC, had the statutory right to substitute for failed depository institutions. The RTC, like the FDIC, could not substitute for any other entity.

SWEENEY: (Attorney Thompson)
        The Sweeneys do not confuse "substitution with removal." Substitution is a prerequisite to removal because otherwise, the Federal Court very clearly has NO subject matter jurisdiction to hear the case and there is absolutely no basis for a removal action. The removing party would lack legal standing to effect the removal, not being a real party in interest in the case, if there is no prerequisite substitution.

        This is elementary law.

FDIC: (Attorney Shea)
        The initial filing ComFed made in the Superior Court attempted to substitute the RTC for all corporate defendants (i.e., ComFed and its wholly-owned subsidiaries, ComFed Mortgage Co., Inc. and ComFed Advisory Co., Inc.). Summary, Exhibit 17. The motion was allowed as drafted on January 11, 1990. Id. As indicated by a notation on January 15, 1990, however, the allowance was corrected as follows: "After hearing, allowance VACATED. Motion allowed as to 'ComFed Savings Bank' ONLY."

        The Sweeneys argue that because the RTC could not substitute for the subsidiaries, the case could not be removed as to them. Summary, p. 10, Item 3. This is wrong. The RTC, like the FDIC, had the right to remove cases.6 When a case is removed, the entire case is removed, not particular parties or issues. Therefore, the fact that the RTC did not substitute for ComFed's subsidiaries does not alter the fact that the RTC had the right to remove the entire case, including all issues and parties.

SWEENEY: (Attorney Thompson)
        The facts are not as represented, because the substitution did not in fact occur and was revoked, as the State Court record shows, and as Shea's own subsequent motion on this point, several years later, shows.

        If there was no substitution, the removing party had no standing to remove -- it is that simple. If the removing party had no standing, the federal court had no jurisdiction. Standing is a threshold requirement -- a party must show injury and that he is the proper person to invoke the court's jurisdiction. It is a limit on the Court's jurisdiction in itself, if a party is not properly before, lacking standing.

        Without substitution, FDIC and RTC had no standing, the Federal Court had no jurisdiction. It is that simple.

FDIC: (Attorney Shea)
        Although the RTC and FDIC do not substitute for wholly-owned subsidiaries of depository institutions, such subsidiaries enjoy the protection of the D'Oench doctrine.7 The District Court therefore entered summary judgment in favor of all defendants on the Sweeneys' remaining claims. The First Circuit affirmed.

        The First Circuit explicitly addressed the claims the Sweeneys continue to press.8 The RTC substituted for ComFed Savings Bank only. Nonetheless, the entire case was properly removed to the District Court. The District Court thereafter entered summary judgment in favor of the defendants on the Sweeneys' remaining (non-jury) counterclaims because wholly-owned subsidiaries of failed depository institutions enjoy the protections of D'Oench.

SWEENEY: (Attorney Thompson)
        D'Oench Duhme applies only to actions in which a right of FDIC to obtain payment on a note might apply. At the point in time RTC/FDIC invoked D'Oench (improperly), the issue of the payment of the note was res judicata for all purposes. A final judgment had been entered and D'Oench, if it applied, was waived because it had not been raised.

        D'Oench also does not apply at all to the Sweeneys claims for fraud against ComFed and its officers, in any case, and was likewise estopped from being applied, by res judicata.

FDIC: (Attorney Shea)
The Mechanics of Removal

        First, in the First Circuit, as here, the Sweeneys argued that John Hanify acted improperly by not promptly filing Judge Izzo's late-filed Null Opinion in the District Court.9 The District Court and the First Circuit thought otherwise. Sweeney, 16 F.3d at 3. Mr. Hanify contacted the Attorney General's office and urged it to point out to the Superior Court that it could not issue an opinion after removal.

SWEENEY: (Attorney Thompson)
        The First Circuit "thought otherwise" because all they had before them was an incomplete record, itself the result of collusion and fraud. Skilled attorneys who have quite plainly acted in concert and collusion for the express purpose of preventing the facts from seeing the light of day in Court, accomplished that result, and therein lies the heart of the issue.

        Mr. Hanify contacted a lot of people in his efforts to cover his tracks. Unfortunately, the Sweeneys were prevented from putting Mr. Hanify on the stand and cross-examining him and his "facts," which again, is clearly a fundamental issue, and a failure of due process.

FDIC: (Attorney Shea)
        Second, the First Circuit has affirmed that the action was timely and properly removed
to the District Court. Without addressing each assertion made in the Summary, the FDIC notes that:

SWEENEY: (Attorney Thompson)
        There is nothing in the opinion to the above effect whatsoever. The only issue of removal was treated as a question of "venue," regarding whether the case should or should not have been removed to Washington, D.C.

        The lack of substitution, which deprives the Court of jurisdiction and renders the RTC nothing but a stranger to the underlying Middlesex action and the res judicata bars to removal imposed by the fact that the Middlesex action had been to trial and jury verdict, all clearly precluded Federal removal in this case. The Federal Court never obtained jurisdiction or authority to make a determination whether "venue" was proper, but chose to do so anyway.

        The facts concerning "timeliness" of the removal are totally misstated in the opinion by Harrington, which was merely reiterated by the Court of Appeals. A review of the record of the removal itself demonstrates from the evidence that was in fact filed, that this evidence was not and could not have been examined. Any finding of timeliness was clear, open, and obvious error, borne of sloppiness and a failure to review the available record.

FDIC: (Attorney Shea)
        The District Court conducted an evidentiary hearing (including testimony from a handwriting expert and a clerk from the Middlesex Superior Court, and an examination of the original Superior Court docket), and found that the case had been removed on January 11, 1991. Joint App., pp. 1647-1759.
   
SWEENEY: (Attorney Thompson)
        The District Court -- READ: Judge Harrington, who himself formerly worked with Hanify and whose son went to work for Hanify while the case was pending and who otherwise demonstrated clearly collusive conduct throughout the case -- accepted Hanify's wholly inadmissible affidavit and Hanify's witnesses who did not compare Hanify nor his employee's handwriting to anything whatsoever and who made no analysis, while Hanify, not surprisingly, failed to point out it was he who had benefited from the alterations in the record he was "raising" as a red herring on a completely different issue.
        
        The alterations in the record had absolutely no bearing on the issue for which they were presented. The alterations were to a court record regarding substitution of parties, not to the record involving the Middlesex trial and judgment. The only person who benefited from the alterations was Hanify himself on the issue of whether he had managed to complete his substitution before what he believed was his removal deadline ran out. It was also Hanify who was in physical possession of and controlled the docket at all times subsequent to his physically removing it from the Middlesex Court wholly illegally.

        These critical details have not seen the light of day, ever.

        The Sweeneys were not allowed to cross-examine Hanify and Hanify was not examined on any matter, but was allowed to present evidence, all of which had the purpose and effect of exculpating Hanify himself from criminal conduct involving both himself and the judge.

        Thus, it is not surprising that this clearly rigged, improper evidentiary hearing had the result it had.

        It's astonishing that critical, criminal conduct, such as the obvious criminal conduct involved in Hanify's physically taking a file from the Middlesex Court, removing things from that file and keeping them in his possession forever, has simply been glossed over and ignored.

        The facts, if they are ever allowed to surface, however, clearly demonstrate that Hanify resorted to criminal fraud to effect the results in this case, and his fraud has been ratified by Attorney Joe Shea and the FDIC.

FDIC: (Attorney Shea)
        The District Court docket, and Summary, Exhibit 16, indicates that ComFed's Notice of Removal was filed at 12:57 p.m. on January 11, 1991.10

SWEENEY: (Attorney Thompson)
        Yes, and the contradictions shown by the docket, and Hanify's own inconsistent statements, prove otherwise, so why the above is recited as gospel, rather than being pointed out as the self-contradicting representation it is, demonstrates yet another example of an attorney omitting known, material facts, to make a false point. This is attorney deceit and should not be tolerated. This is not "zealous advocacy," it is fraud.

FDIC: (Attorney Shea)
        The RTC removed the case pursuant to 12 U.S.C. Section 1441a(l), not merely 28 U.S.C. Section 1446. Twelve U.S.C. Section 1441a(l)(3)(A) provided that the RTC could remove an action "not later than 90 days after the date the Corporation is substituted as a party . . ." There was no procedural reason for ComFed (or Mr. Hanify) to substitute the RTC for ComFed by January 12, 1991. The Sweeneys fail to recognize that the period within which the RTC may remove is keyed to the date it substituted, and that therefore was no "30 day time limit" for removal. Summary, p. 11. ComFed gave the Sweeneys written notice of removal on January 11, 1991. Joint App., pp. 1668-69.

        Rhetta Sweeney wrote to the RTC on January 24, 1991 seeking information "to better understand the 'Emergency Removal' which you apparently authorized Attorney Hanify to make in the above referenced case to Federal Court." Appendix in Support of Motion to demand dated April 24, 1992, Tab 7.

        Any delay in docketing the January 11, 1991 Notice of Removal on the Superior Court docket was attributable to the Superior court assistant clerk, who testified that he did receive the Notice of Removal on January 11, 1991. Joint App., p. 1752.

        Anecdotal experience indicates that District Court clerks frequently enter filings on the electronic docket on the day following the day they were filed, noting the filing date on the left column and the date of entry on the electronic docket in square brackets. Because January 11, 1991 was a Friday, ComFed's removal was not entered on the electronic docket until Monday, January 14, 1991.11

SWEENEY: (Attorney Thompson)
        The above paragraph and Shea's "anecdotal experience" demonstrate his knowledge of clear inconsistencies in the court's docket and his efforts to explain them away -- the inconsistency he is aware of that contradicts the point he so blithely misrepresented in the previous section which pretty well punctuates the deceitfulness of his earlier comment in the immediately preceding section.

        The "facts" as he recites them, are simply wrong. These facts are set out, in detail in the brief submitted, and demonstrate inconsistency upon inconsistency that lead to only one, inescapable conclusion:

        John Hanify committed criminal fraud to remove the Sweeney case and he had help to do it and he continues to have help to this day to cover it up.

FDIC: (Attorney Shea)        
        In their Summary, the Sweeneys discuss the wrong removal statute, ignore the factual findings made by the District Court and the testimony of the Superior Court assistant clerk, and somehow disregard the documentary evidence that the Notice of Removal was filed on January 11, 1991.12 This question, like most others the Sweeneys raise, has been briefed before and resolved by the First Circuit, over three and one-half years ago.

SWEENEY: (Attorney Thompson)
        Shea acknowledges that the Sweeneys had inadequate assistance of counsel by his paragraph above. This is fundamental error that in itself warrants reversal of Harrington's decision.

        The Sweeneys did not raise critical, relevant law and evidence, and were prevented at the trial court level by collusion, coupled with their own ignorance, from an evidentiary hearing that would have and very easily could have demonstrated evidence proving Hanify's criminal conduct, and can do so at this time.

        In short, Shea is correct -- the Sweeneys had inadequate assistance of counsel. This admission by the FDIC should be of significant import to the Court in its decision to reverse the judgments in these proceedings and remand the case for reconsideration of all these issues.

FDIC: (Attorney Shea)
The RTC Was Not Required To Request a Stay

        The Sweeneys argue that the RTC was required to stay the action for 90 days after substituting into the action. Summary, p. 19. A quick glance at the cited statue, 12 U.S.C.
Section 1821 (d)(12), demonstrates that this is simply wrong. "After the appointment of a conservator or receiver for an insured depository institution, the conservator or receiver may request a stay . . ." (Emphasis added). The Eleventh Circuit case attached to the Summary as Nutter, McClennen & Fish, LLP Exhibit 19, Damiano v. FDIC, 104 F.3d 328 (11th Cir. 1997), does not state that the FDIC or RTC must request a stay. Rather, Damiano merely notes that the RTC can, but need not request a stay within 90 days of being appointed receiver.13 Id. At 333-34 (statute gives receiver right, but not duty, to request stay).

SWEENEY: (Attorney Thompson)
         The law is very plain and the court decisions cited by the Sweeneys (and also by Shea, above) is clearly contrary to Shea's representation. The RTC "may" request a stay BUT when they do not request a stay -- exercising that discretionary "may" recited above by Shea -- then they are bound to the jurisdiction of the State Court. THAT is the point of the Damiano decision -- the RTC did not request the stay, it could have, it did not, and it was stuck in Middlesex as the result of its own decision and was not entitled to remove. It's that simple. This is yet ANOTHER reason why the Federal Court NEVER ACQUIRED JURISDICTION IN THIS CASE, ever.

FDIC: (Attorney Shea)
Miscellaneous Allegations of Fraud and Conflicts

        The Sweeneys raise numerous allegations of conflicts and wrongful conduct. In this regard, the FDIC notes that Mr. Hanify's alleged conflict would have redounded to the detriment of his clients, not to the Sweeneys. To the extent that the Sweeneys claim that their own attorneys acted improperly or committed malpractice,14 such allegations would more properly be addressed to those prior attorneys.

SWEENEY: (Attorney Thompson)
        The above paragraph is tripe. When Hanify's demonstrated criminal conduct deprived the Sweeneys of a $4 million dollar judgment, and that was its purpose, plan and effect, nobody but a total dunce would suggest Hanify's conduct would impact only on his client.

FDIC: (Attorney Shea)
        Attorney Robert Ullman, currently a partner at Nutter, McClennen & Fish, LLP and formerly First Assistant U. S. Attorney and Chief of the Criminal Division for the District of Massachusetts, did not work "with Judge Harrington as a U. S. Attorney." Summary, p. 28.

SWEENEY: (Attorney Thompson)
        Funny, that is reported in the Boston Globe, in connection with the fraud case involving Fidelity in which Ullman appeared on behalf of Fidelity's executive, charged with fraud.

        Ullman's tenure as an Assistant U.S. Attorney was during the period when Harrington not only worked there, he was in charge. Perhaps this little "distinction" renders Shea's statement "true." Ullman didn't work "with" Harrington, he worked "for" him and Harrington was not then a "judge." Noticeably, the statement does not make the forthright assertion "Ullman did not work in the U.S. attorney's office when Harrington did."

FDIC: (Attorney Shea)
        Finally, I represent to the Court that I have not made use of "Fidelity Investments' Airborne Express account number . . . " Summary, p. 28

SWEENEY: (Attorney Thompson)
        Shea lies. Airborne Express tracking information, which was on Airborne Express's web page and which was personally verified by counsel for the Sweeneys and by Faith Sweeney separately, and which is how it was determined the account number belonged to Fidelity, was in fact used by Joseph Shea. After this point was raised to Shea in a letter, asking how he had authority to do that and what was Fidelity's involvement, this information was changed on Airborne Express's records. Both the original tracking records and the subsequently changed records and the date of the change, are in the possession of counsel.

        More importantly, no place BUT Fidelity gets pick ups by Airborne Express at the time of night Shea mailed his packages, another little detail of which Shea was apparently unaware when he went about trying to cover his tracks, so changing the information to a different shipping number on the tracking information doesn't change that fact, either.

        What is more significant, however, is why was Shea so worried about this that he has lied about it and caused the information to be changed?

FDIC: (Attorney Shea)
Conclusion

        The Sweeneys reassert a variety of legal arguments which have been rejected in every court in which they have been tested, including the District court, the First Circuit Court of Appeals, the Supreme Court, and the Bankruptcy Court. The Sweeneys believe that they have been through much, as they have devoted eight years of their lives to vindicating their position. Unfortunately, from a legal point of view, no court has agreed with them.15

        From a broader policy view, depository institutions often fail because their officers, directors, or employees are deceitful or incompetent. Congress has determined that, as between depositors and borrowers, depositors are to be preferred, except to the extent that the borrowers'
claims are in writing and otherwise conform to the requirements of D'Oench and of 12 U.S.C. Section 1823 (e). The Sweeneys are in the same position as many others – they allegedly acted on the basis on an unenforceable oral promise. It is unfair to those others and an affront to the rule of law to extend further special treatment to the Sweeneys.

        Finally, one can empathize with the Sweeneys without believing that they are to be treated more favorably than others. Additionally, such empathy must be tempered by the Sweeneys' penchant for repeatedly misstating (or misunderstanding) the facts, the law, and the application of the law to those facts. After six years, the Sweeneys must reconcile themselves to the facts that Judge Izzo issued her null opinion three weeks after the RTC removed the case and that the removal was appropriate. The FDIC remains willing to attempt a resolution based on acceptance of those facts, but is disinclined to continue to relitigate matters which have already been resolved.

SWEENEY: (Attorney Thompson)
        The Sweeneys have never disputed owing the underlying note; however, the rest of the story is that they were defrauded and they obtained a $4 million dollar judgment against ComFed and its officers, which is far in excess of the value of that note.

        They will "reconcile" themselves to the FDIC taking their property, when the FDIC stops ratifying the underlying fraud and conduct of the attorneys and the bank and its officers in this case, and does the job it is supposed to do and that is to protect the INTERESTS OF THE PEOPLE OF THE UNITED STATES, not cover the butts of criminal and corrupt liars and thieves in white shirts and suits who have defrauded millions of dollars from the public with impunity.

        The FDIC itself has expended far in excess of the value of the property, to prevent the truth from coming out. That in itself should raise the issue of just whose interests are really at stake here?

        There is a word for such people: Banksters. They are thugs in suits, who have been given what amounts to a license to steal, as this case amply illustrates.

        That the persons perpetrating these frauds are officers of the Court who themselves have an ethical duties of candor and honesty, which they apparently think are nothing but meaningless slogans, is a disgrace.


APPENDIX

FDIC: (Attorney Shea)

1        This appears to be a copy of the Superior Courts' opinion, which the Court
of Appeals for the First Circuit held to be "void ab initio". RTC v. Sweeney, 16 F. 3d 1, 4 (1st Cir. 1993). A copy of the null opinion was included in the Joint App., pp. 1449-97.

SWEENEY: (Attorney Thompson)
        The Court of Appeals held this to be "void ab initio" in clear error and only because the facts, as they occurred were not raised to them; however, these facts are fully set forth in the brief submitted. The attorneys involved have played a very large role in advancing false information to the Court of Appeals and in concealing material facts known to them and should be disbarred for this conduct.

FDIC: (Attorney Shea)
2.        These appear to be various SEC filings for ComFed Bancorp, Inc. ("CBI"). CBI
was not a party in any litigation with the Sweeneys. The documents indicate, inter alia, that CBI was the target of a class action by shareholders and that it has no assets. These materials do not appear to have any relevance to the Sweeneys' case.

SWEENEY: (Attorney Thompson)
        The relevance to the Sweeney case is that CBI is the parent corporation of ComFed and under the doctrine of respondent superior and agency, would clearly be responsible for the actions of its wholly owned subsidiaries and officers.

        These documents show that various officers who were indicted were let off the hook, and the proper SEC filings were not filed for several years -- coincidentally, while the Sweeney's case was pending -- and the Sweeney litigation is not mentioned anywhere as a potential liability of CBI, though it clearly was.

        However, the primary significance of those documents is the settlement agreement, also offered as a separate exhibit, reached by the government, with principals involved in fraud and the collapse of ComFed, which demonstrates the government did not and could not have acted in good faith in either that case or the Sweeney case, because it "settled" the case, purporting to "indemnify" one of the principal wrongdoers and officers of the bank, from any future lawsuits of any kind, not merely stockholder actions, but suits against that officer, personally.

        Very obviously, no settlement agreement can bind against persons who were not parties, yet this demonstrates that the government entered into this agreement to obtain the maximum payout on the insurance proceeds of the bank, and guaranteed the insurance company "nobody else could or would be able to sue." That's what the agreement says. It's bogus, but that is what it says.

FDIC: (Attorney Shea)
3, 4        These appear to be copies of the docket sheets in the Soldiers and Sailors
proceedings ComFed filed in Essex Superior Court. They reflect appearances by the Sweeneys' attorney.

SWEENEY: (Attorney Thompson)
        Strangely enough, there is no reference on the docket to "Soldiers and Sailors proceedings," and instead, the proceedings are docketed as court proceedings in Essex by their proper name.

FDIC: (Attorney Shea)
5.        This appears to be an unsigned copy of the Verified Complaint the Sweeneys filed
in Middlesex Superior Court. A copy of the Verified Complaint was included in the Joint App., pp. 648-843.


6.        This appears to be an uncertified copy of the Middlesex Superior court docket
sheet. A copy of the docket sheet was included in the Joint App., pp. 1-12. A certified copy was filed with the District Court at the time of removal. The District Court conducted an evidentiary hearing as to the date of certain entries and found that certain entries had been partially erased and written over. Joint App., pp. 1647-59. See also comment on Exhibit 16, below. One can hardly make out these changes on the poor copy attached as Exhibit 6. The district Court concluded that the case was removed on January 11, 1991.

SWEENEY: (Attorney Thompson)
        The erased and written over entries were misrepresented and form the basis for some of the allegations of fraud. The evidence concerning these erasures and who did them and why, was not in fact presented, and does play a very important role in proving the fraud of John Hanify. Critical witnesses on this evidence were not presented, and the evidence as it was presented was wrong. That is detailed in the Sweeney brief and itself is in fact new evidence, demonstrating fraud, and further demonstrating criminal conduct by John Hanify.

FDIC: (Attorney Shea)
7.        This appears to be a copy of the Answer and counterclaim filed by ComFed and its wholly-owned subsidiaries included in the Joint App., pp. 844-76.

8.        This appears to be a newspaper article about ComFed dated August 26, 1988, approximately one year after the Sweeneys received their commercial loan from ComFed. The article refers to an investigation concerning certain residential mortgage loans.

SWEENEY: (Attorney Thompson)
        How astute. And yes, in fact, that is what it is and this goes to the heart of the Sweeney case and why they won a $4 million judgment against ComFed and its officers for fraud, notwithstanding the fact they owed a note secured by a mortgage.

FDIC: (Attorney Shea)
9.        The interpretation that the Sweeneys place upon this case – that one can (indeed,
must) raise defenses to an anticipated action on a note in a proceeding under the
Soldiers and Sailors Civil Relief Act—is wrong. Moreover, the case was decided in 1943, before the 1959 Amendment to the statute, which now explicitly provides that: "such proceedings shall be limited to the existence of such persons [i.e., persons in the service] and their rights, it any." 1959 Acts, c. 105. See also Beaton v. Land court, 367 Mass. (1975). "In view of the limited purpose of proceeding under the 1940 Relief act, it is evident why it was appropriate for the Legislature. . .to limit the issues in such proceedings to the existence of such persons and their rights, if any. It is true that these restrictions may prevent mortgagors from raising in these particular proceedings many meritorious issues pertaining to the Mortgagee's ultimate right to foreclosure. This, however, is of no constitutional significance, since other adequate procedures are available to the Mortgagor in the same or another forum where these issues may be raised prior to the Mortgagor's loss of his possessory or other important rights in the property subject to the mortgage." Id.
SWEENEY: (Attorney Thompson)
        The point made above, has no bearing on why the action in Essex is significant. The right of the Sweeneys to raise (or not raise) defenses in the Essex action is relevant only because they were deprived of that right, to the extent it exists, by John Hanify's deceitful conduct.

        However, in Middlesex, the Essex proceedings were important because Hanify was restrained from continuing them, but was able to continue them at all, only by failing to reveal their existence to either the Sweeneys or the Court and continuing with the Essex proceedings in spite of the restraining order.

        Secondly, this resulted in a dilemma when Hanify had to file an answer for his clients in the Sweeney's Middlesex action, because he could not very well mention the Essex activity in the Middlesex Answer when it was the same clients who were under a restraining order from the Middlesex Court not to do exactly what Hanify was doing in Essex anyway, and when he did not want to clue in either the Court, or the Sweeneys, or their attorney at that time.

        The Sweeneys did later learn of the action but their attorney did not take any action (and may have been mislead by believing Hanify would honor the restraining order, as he should have done). Hanify got a default judgment in Essex while the restraining order was in effect, that much is obvious.

        He did not mention this until much later in the case, when no one apparently noticed the significance of the dates involved, other than Hanify, who obviously knew, because he never raised the issue in his own client's interests.

FDIC: (Attorney Shea)
10.        This appears to be a document dated July 31, 1990 issued by the Office of Thrift
Supervision (without Exhibits) suggesting the appointment of a receiver for ComFed.

SWEENEY: (Attorney Thompson)
        The date shows RTC had plenty of time to have obtained substitution and removed the case in Middlesex before it went to trial and failed to do so. It also illustrates the fraud involved at ComFed and that the bank did in fact fail from this fraud, which formed the basis for the Sweeney's Middlesex lawsuit and their $4 million dollar judgment against ComFed.

FDIC: (Attorney Shea)
11.        This appears to be a re-typed, unsigned Order of the District Court dated April 14,
1992. A copy of the signed Order was included in Joint App., pp. 1943-50.

12.        This appears to be a copy of an Affidavit of John D. Hanify (without Exhibits)
dated April 19, 1991. A copy of the Affidavit was included in Joint App., pp. 1590-1604. The Affidavit was signed under the pains of penalties of perjury by four others, David McCarthy, Kara Lucciola, A. Mary Meigs, and Michael Burnett. The Sweeneys did not include this page of the Affidavit in Exhibit 12. A copy of page 16 of the Affidavit, containing these four additional signatures is attached as Tab A.

SWEENEY: (Attorney Thompson)
        The affidavit fails in any way, whether signed by those additional persons or not, to satisfy Fed.R.Civ.P. 56 and was inadmissible on its face, for the reasons set forth in the Sweeney brief. If it was in fact signed by more than one person, obviously, they could not all have personal knowledge of the facts set forth in that affidavit, which is apparent from a facial reading of the affidavit itself.

        Thus, the affidavit is made all the more worthless by being a "group" affidavit, if in fact it was. However, it fails to meet the standards of admissibility on several points, first and foremost, that the affiants have not set forth affirmatively that each is competent to testify therein and that the facts are based upon each of their personal knowledge. Further, it is obvious from the brief itself that it could not be based upon each of their personal knowledge.

        Further, each of these parties was available to testify and were called to testify and the Court prevented their testimony and prevented the Sweeneys from cross-examining them. Judge Harrington accepted, instead, this affidavit, which is a clear violation of the Sweeney's right to a thorough and sifting cross-examination, to offer evidence in rebuttal, and to due process and equal protection under the law.

        An affidavit may not be considered when the affidavit by necessity depends wholly upon the credibility of the deponent, which the affidavit clearly does. Thus, that this affidavit was "in evidence" of anything is a mockery of anything resembling a court hearing on the issues of John Hanify's clearly criminal and fraudulent conduct and in itself points to Judge Harrington's incompetence as a judge or his collusion with John Hanify. It is one or the other. Either way, the Sweeneys were deprived of their $4 million dollar judgment by this fraud and they were deprived of their rights to due process and equal treatment in this mockery of "justice."

FDIC: (Attorney Shea)
13.        Exhibit 13 appears to be a copy of a letter from Luis Lavin, Assistant Attorney
General, to the Sweeneys' trial attorneys dated March 29, 1991. Mr. Lavin notes
that the Attorney General's "Office was first contacted by Mr. Hanify in early February." A copy of Mr. Lavin's letter was included as Tab 19 in the Appendix in support of Motion to Remand which the Sweeneys filed in the District Court on April 24, 1992.

14.        Exhibit 14 appears to be a copy of the appointment of the RTC as Conservator of
ComFed Savings Bank dated December 13, 1990. A copy of this document was filed in the Superior Court on January 11, 1991 at the request of the motion judge. A copy was also attached to Mr. Hanify's April 19, 1991 Affidavit (Exhibit 12 above) and was included in the Joint App., pp. 1436-39.

15.        This appears to be a copy of the District Court's Order dated June 7, 1991.
A copy of this Order was included in the Joint App., pp. 1826-29.

16.        This appears to be a copy of the RTC's Notice of Removal. A copy of the Notice
of Remand (without the Superior Court stamp) was included in the Joint Appendix, pp. 1448A-B. The mechanical date stamp indicates that it was filed in the District Court at 12:57 p.m. on January 11, 1991. Sarah Spinale, an assistant clerk in Middlesex Superior court, testified at an evidentiary hearing on May 29, 1991 that she signed a receipt for a delivery from Hanify & King on January 11, 1991. Joint App., pp. 1721-22. David McCarthy, formerly an attorney at Hanify & King, testified that he caused a copy of the Notice of Removal to be hand-delivered to the Superior Court on January 11, 1991. Joint App., 1667-69.

        A handwriting expert, Christine McCarthy, testified that she examined the original Superior Court docket sheet and that it reflected that docket entry 149 had been erased, and had previously read, in part, "1991, January 11th, 149, notice of removal to the United States District Court for the District of Mass., by the conservator, the Resolution Trust Corp. . ." Joint App., p. 1727.

SWEENEY: (Attorney Thompson)
        No "handwriting expert" was needed -- any fool can see there are erasures on the docket. They were not done "secretly." This is another issue that should have been raised and goes to the issue of Harrington's incompetence and/or collusion with Hanify and that what was presented at this supposed "evidentiary" hearing regarding Hanify was a total farce.

        An expert is only necessary when the evidence is likely to need an expert to point out fine details. This expert was surplusage and junk, produced by Hanify to create a smokescreen. The expert did not take handwriting exemplars and was not used to demonstrate who made the erasures or anything relevant.

        In fact, the particular erasures were wholly undisputed. Why? Because they had nothing whatsoever to do with what Hanify later claimed to the Court of Appeals they regarded.

        Hanify represented that the erasures somehow "proved" the Middlesex Court judge had altered the date her order issued, however, the erasures affect only the dates of Hanify supposed "substitution."

        This point has never been raised because only Hanify's version of the "facts" was ever introduced at that hearing.

FDIC: (Attorney Shea)
        Another docket clerk from Middlesex Superior Court, Vincent DeMeo, then testified that he wrote all of the docket entries in January 1991, except for the last one. Joint App., p. 1741. Mr. DeMeo testified that he had erased and written over entries originally dated January 11 and January 14, 1991. Joint App., pp. 1741-43, 1752. Mr. DeMeo stated that he stamped the Notice of Removal only on January 30, 1991, after papers in the case came back from Judge Izzo's clerk.

SWEENEY: (Attorney Thompson)
        Examining those erasures, the only changes made affected the substitution order. The substitution order was granted and then withdrawn because Hanify had not produced the proof necessary to effect the substitution, which is what had caused the erasures.

        The clerk's testimony, above, presents nothing but a statement of the facts.

        However, Hanify (and Shea) both omit what is plainly shown by the docket and the erasures themselves -- they concern only the issue of substitution.

        Yet Hanify (and now Shea) deceitfully, by omitting these material facts, portray these erasures as if they have something to do with the date Judge Izzo's order issued, when they do not.

        In fact, the final matter, that the Notice of Removal was not stamped until January 30, occurred precisely because Hanify did not, in fact, serve notice of removal until January 30, which defeated his own efforts and it was he who stood to benefit from any change to the record, not the Sweeneys and certainly not the Middlesex Court.

        It was also Hanify who had possession of the entire Court file by that time and who had physically removed documents from it, keeping the entire file in his office and then filing only part of the file with the District Court subsequently. That in itself, with nothing more, is clearly, openly and obviously criminal.

FDIC: (Attorney Shea)
17.        This appears to be a copy of the RTC's Notice and Motion of Substitution, with
annotations by the Superior Court clerk. The first page of this document was included in the Joint App., p. 1448. The notations indicate that the Notice and Motion was filed on January 10, 1991; that it was allowed as drafted on January 11, 1991; and that the allowance was vacated on January 15, 1991, and allowed only as to ComFed Savings Bank.

Mr. McCarthy testified that at a hearing on January 10, 1991, Judge Sullivan stated that the Notice and Motion would be allowed upon Mr. McCarthy bringing "a copy of the order appointing the Resolution Trust Corporation as the conservator of the bank. I agreed to do so." Joint App., p. 1661, pp. 1663-69. Mr. McCarthy testified that, although he orally modified the Notice and Motion on January 11, 1991 to apply only to ComFed Savings Bank, the Superior Court allowed it as drafted Joint App., 1681-82. Subsequently, when the Sweeneys' attorneys contacted Mr. McCarthy seeking his assent to correct the Notice and Motion to indicate that the substitution was effective only as to ComFed Savings Bank and not to its wholly-owned subsidiaries, Mr. McCarthy refused because" [i]t was the position of the firm that because the case had been transferred, the Court didn't have jurisdiction to hear the motion, so weren't going to assent." Joint App., p. 1710.

18.        This appears to be a copy of a letter from attorney Kara Lucciola of Hanify & King
to the District Court Clerk. A copy of the letter was included in the Joint App., p. 1502. The Sweeneys misquote this letter to suggest that Ms. Lucciola wrongly stated that copies, rather than originals were being delivered. Summary, p. 15. The letter is silent on this point (it refers only to a certified docket sheet) and the quoted language is not accurate.

SWEENEY: (Attorney Thompson)        
        That the letter is silent on this point is itself damning and the letter is not misquoted. Further, it was offered by Hanify as "proof" of originals being delivered, which it does not prove.

FDIC: (Attorney Shea)
19.        This appears to be a decision issued by the Eleventh Circuit. While the Sweeneys
claim that the case holds that the FDIC must stay litigation for 90 days before removal to federal court, Summary, p. 19, the case in fact simply tracks the statute and notes that the FDIC may request a stay of any litigation within 90 days of its appointment as receiver. 12 U.S.C. Section 1821(d)(12). Damiano does not involve the issue of removal at all, because the case was already pending in federal district court when the RTC was appointed receiver of the defendant bank.

SWEENEY: (Attorney Thompson)
        Shea misrepresents the holding and the effect and why the case was offered by the Sweeneys. The case says that if the FDIC does NOT elect to stay the proceedings, then it is BOUND TO THE JURISDICTION OF THE LOWER COURT and cannot remove. It also says that the FDIC cannot whine when it causes the problem itself, as it is doing now.

FDIC: (Attorney Shea)
20.        These appear to be copies of parts of the District Court electronic docket sheet. A
copy of the electronic docket of June 9, 1993 at 1:53 p.m. was included in the Joint App., pp. 13-30.

21.        This appears to be copies of selected pages of a non-evidentiary hearing before
Judge Woodlock on March 1, 1991. The complete hearing transcript was included in the Joint App., pp. 1512-38.

22.        This appears to be a copy of the D'Oench, Duhme case, with unidentified under linings.

23.        This appears to be a copy of a transcript of testimony before a subcommittee of the
Senate Committee on Governmental Affairs on January 31, 1995.

24.        Exhibit 24 is a copy of a letter dated July 18, 1997 mistakenly indicating that a
loan to John and Rhetta Sweeney was sold to State Street Bank. This is erroneous; neither the note nor the judgment was sold to any party. The Sweeneys' loan was apparently included on a four page list of loans to be sold as of July 22, 1992. Subsequently, the Sweeneys' loan (and many other loans) were removed from the list. By letter dated August 7, 1997, the FDIC informed the Hamilton Planning Board of the error in the July 18, 1997 letter. A copy of the FDIC's August 7, 1997 letter is attached as Tab B.

SWEENEY: (Attorney Thompson)
        Amazing how everything the Sweeneys have turned up -- documents written by the FDIC themselves -- which have critical significance are suddenly labeled "errors" when presented as evidence against the FDIC. That this document exists at all and that the FDIC now claims that their own letter was an "error" should be a basis for a hearing on these issues and to subject those who have made these "errors" if they are errors, and those who have proclaimed them to be errors, to cross-examination.

        If the letter was not in error, the effect is that the FDIC NEVER HAD ANY STANDING IN THIS CASE AT ALL. It thus behooves the FDIC to now claim the letter was "nothing but an error," no big deal, ignore it, pay no attention to that flaming red ball.

FDIC: (Attorney Shea)
25.        This appears to be a copy of a September 6, 1991 wire report about the
management of certain Pooling and Servicing Agreements. The report does not appear to have any relevance to the Sweeneys' case.

SWEENEY: (Attorney Thompson)
        The relevance to the Sweeney's case is that it is further contemporaneous evidence that their loan was, in fact, sold, and that the letter from the FDIC (#24, above) was not an "error" as Shea claims.

FDIC: (Attorney Shea)
26.        This appears to be a copy of a press release concerning an indictment in
Jacksonville, Florida against Ryland Mortgage Corporation. The press release does not appear to have any relevance to the Sweeneys' case.

SWEENEY: (Attorney Thompson)
        The press release concerns one of the companies who was involved in "buying" the notes that the FDIC now says were not bought, yet this company was indicted for fraud on pretty much this exact issue, coincidentally enough. In other words, whether the Sweeney note was or was not "bought" as the FDIC letter (#24 says) but which Shea now disowns and says was an "error" is of significance for more reasons than one and the FDIC has a lot of reasons to attempt to brush it aside with a magical wave of the hand, and proclaim, "mere error, the Sweeney loan wasn't sold."

FDIC: (Attorney Shea)
27.        These appear to be copies of portions of filings with the Massachusetts Secretary
of State's Office concerning ComFed Mortgage Co., Inc., a wholly-owned subsidiary of ComFed Savings Bank. The RTC (and then the FDIC) succeeded to ComFed's interest in this subsidiary. The RTC's and the FDIC's standard operating procedure is to replace the directors or subsidiaries of failed depository institutions with employees of the RTC or FDIC, and to move the subsidiary's office to an RTC or FDIC office. The RTC also used private contract servicers to help it administer assets of failed depository institutions, including their wholly owned subsidiaries. Certain Annual Reports of ComFed Mortgage Co., Inc. included in Exhibit 27 contain an Ohio servicer's address and identify certain of the servicer's employees as officers and directors. Subsequently, FDIC employees served (and continue to serve) as officers and directors, and the subsidiary's business address is the FDIC's office in Hartford, Connecticut. Certain of the documents were included at Tab 27 of the Sweeneys' Appendix in Support of Plaintiffs' Motion dated April 24, 1992.

SWEENEY: (Attorney Thompson)
        The above statement recites what is there but omits the significance. A company in Ohio controlled ComFed's assets during the pendency of this case, not the RTC/FDIC. These same "private contractors" are now suddenly FDIC "officials," who are not merely "managing the assets," they have made themselves into bank officers in a private enterprise that is still operating, it has not been dissolved, while they are simultaneously employees of the FDIC, on the payroll of the taxpayers of the United States, and charged with the legal duty of investigating the fraud of the banking officials previously involved in the failure of the bank in which they are now officers and could be held legally liable for wrongdoing by the bank.

        This is an open and obvious and illegal conflict of interest. It may also explain why FDIC has been willing to expend more than a million dollars fighting the Sweeneys and ratifying fraud to do it and committing fraud themselves.

FDIC: (Attorney Shea)
28.        The first page of Exhibit 28 is a document which appears to indicate that ComFed
Mortgage Co., Inc. sold its mortgage servicing portfolio on August 31, 1991. The RTC, like the FDIC, was charged with selling the assets of failed depository institutions. Subsequent pages of Exhibit 28 appear to be copies of OTS documents dated January 31, 1991 creating ComFed Savings Bank, F.A. and dated September 13, 1991 appointing the RTC receiver (rather than conservator) of ComFed Savings Bank, F.A. The creation of ComFed, F.A. was discussed by the RTC's and the Sweeneys' attorneys at a hearing on March 1, 1991. Joint App., p. 1523. The RTC filed a Notice and Motion reflecting the change on April 23, 1991. Joint App. 1605-07. After the RTC was appointed Receiver of ComFed, F.A., the RTC in its Motion for Summary Judgment, again informed the Court of its new capacity. Joint App., pp. 1838-42.

SWEENEY: (Attorney Thompson)
        The significance is not the dates but that these documents are the RTC's own documents which contain their own rules for removal, plainly set forth in those documents, which clearly say the RTC could not remove the State Banks without following procedures, which were never undertaken. These documents are an admission against interest by the RTC/FDIC that the Sweeneys' judgments against ComFed Mortgage Company and its Bank Officer, could not have been removed under any "theory" of removal coughed up by the FDIC throughout this case and that the Federal Court never acquired jurisdiction over these claims, period.

FDIC: (Attorney Shea)
29.        Exhibit 29 appears to be a copy of a letter from the FDIC to John Sweeney and
Rhetta Sweeney stating that the FDIC did not have a Legal Services Agreement ("LSA") with Hanify & King. The letter also states that an unnamed partner at Hanify & King stated that Hanify & King did not have an LSA with the RTC. LSA are not required by statute, but are merely an internal procedure that both RTC and FDIC used for outside counsel. Particularly where there is continuing litigation, the RTC and FDIC typically carry over with the same pre-receivership law firm until an LSA is in place. Hanify & King chose not to apply for an LSA. The FDIC does not dispute that Hanify & King acted as the RTC's attorney in connection with the Sweeneys' action, until Nutter, McClennen & Fish entered a Notice of Appearance on August 7, 1992 and Hanify & King withdrew.

SWEENEY: (Attorney Thompson)
        Legal Service Agreements are in fact required by the RTC and FDIC's internal regulations, the effect of which, by the U.S. Code, renders them law. That Hanify did not have a Legal Services Agreement goes to his perjury, because he represented that he did and because they are in fact required, Hanify did not have authority to act for RTC, either (which is also why he was not paid for a large portion of his fees, which also proves he had no such authority).

FDIC: (Attorney Shea)
30.        Exhibit 30 appears to be a copy of a Motion to Substitute Party filed on August
31, 1993. The purpose of this motion was an accommodation to the Sweeneys' former counsel. See pp. 55-56 of the RTC's Brief in Appeals court case nos. 93-1427 and 93-1613.

SWEENEY: (Attorney Thompson)
        This motion to substitute is an admission against interest that Shea would like to make disappear because by its mere existence it admits that parties were never properly substituted. The Court never granted this substitution.

        If parties were never substituted into the case, before it was removed to federal court, the federal court never acquired jurisdiction.

        If there was no substitution, the parties who appeared in the case had no more standing than a perfect stranger, walking in off the street, grabbing the file and saying to the Judge, "give me the Sweeneys' house."

        The Federal Court did not ever acquire jurisdiction in this case, for several serious, obvious reasons. That these reasons were not properly raised has also been admitted by the FDIC's counsel, along with the clear admission that parties were in fact not substituted prior to removal (or subsequently). The FDIC is bound by these admissions of its counsel. On several clear bases, the Sweeneys have been deprived of due process and have clearly been defrauded of the victory of their day in court.