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‘Assuming facts not in evidence’

Myers’ Musings

Posted: August 16, 2008 8:55 p.m.
Updated: October 18, 2008 5:02 a.m.
 
Law school only teaches three things that one cannot learn elsewhere: The Rule Against Perpetuities, the Hearsay Rule, and my personal favorite: “Assuming Facts not in Evidence.”

The Rule Against Perpetuities prohibits a trust, particularly one that holds real property, from lasting generally more than 200 years. The Hearsay Rule prohibits introducing a statement overheard by another to prove the truth of the assertion in the overheard statement.

But how best to describe “Assuming Facts Not in Evidence”? The best example resides in the history of the O.J. Simpson trial.

At one point, the defense team floated an alternative theory of drug dealers murdering Nichole Brown and the unlucky Ron Goldman to send a message to friends of Nichole Brown who owed them money.

This theory never entered the courtroom due to the rule of “Assuming Facts not in Evidence.” Yes, drug dealers exist, and they do deal roughly with people who owe them money, but the defense could introduce no specific facts to support this theory in this particular case.

Consider the local case of “Assuming Facts not in Evidence.” David Gauny, the local activist most involved in opposing hospital expansion, sent out a flurry of e-mails on Aug. 7-8 prior to holding a press conference in front of City Hall.

Reading the e-mails and viewing certain comments on local message boards, David Gauny’s hidden and coded message appears very clear: The city did not hew to a specific 45-day timetable due to some conspiratorial plan with G&L Realty and Henry Mayo Newhall Memorial Hospital so that the City Council, now completely corrupted by G&L Realty campaign money, could finally approve the expansion plan.

Ironically, the city did immediately agree to extend the calendar to hew to David Gauny’s reading of the calendar.

Greater evil
Now David Gauny and his fellow travelers’ message assumes facts not in evidence. Namely, the pursuit of lawful commerce (permitting office buildings), the exercise of First Amendment rights (supporting one’s candidate of choice in a local election) and an elected official’s evaluation and vote approving the pursuit of lawful commerce necessarily provide all the evidence we need of the exercise of greater evil in our community.

Let us shift topics quickly. Every scholar and economist agrees that subprime mortgages, sold to people with sketchy credit, income, and with terms that screamed of impending default, and then bundled and sold to worldwide holders of liquid assets, fueled the real estate bubble in the United States and elsewhere.

Their collapse caused by investor flight resulted in the write-off to date of $500 billion in financial assets and a credit crunch that already negatively impacts the broader economy.

Meanwhile, the foreclosed real estate centered around these subprime loans produces eyesores in neighborhoods all across the country, and especially in Southern California, with brown lawns, broken windows, graffiti, squatters, and even mosquitoes carrying West Nile virus sprouting in untended pools.

Accurate facts
Most experts agree that a critical mass of foreclosures concentrated in one area will not only depress everyone’s property values, but also substantively raise the rate of crime.

While many conspired in this debacle, at one place along the chain the role of mortgage broker comes up again and again. People in the process of foreclosure assert the mortgage broker did not fully explain or pooh-poohed the more odious terms of the subprime mortgages, while lenders claim the brokers flat-out provided false information.

One economist stated it seemed the system compensated mortgage brokers, many of whom entered the lightly licensed and basically unregulated profession with only a high school education, to purposely maintain ignorance of the products they sold, that no one knowledgeable of financial matters would ever sell.

David Gauny brokered mortgages under the name “SmartMoneyBroker” (www.smartmoneybroker.com) before moving seven months ago to a consulting and business development job for Thermapure (www.linkedin.com/in/davidgauny).

The SmartMoneyBroker Web site contains a page titled “For Those Less Than Perfect,” still promising mortgages to those with low FICO scores, stated income, and prior bankruptcies and foreclosures.
These all constitute actual facts.

So some might assume that David Gauny conspired with many to join in the great conspiracy to undermine the world economy, knowingly selling loans with no possibility of repayment and pocketing large commissions while fueling the ever-increasing real estate bubble.

Or the more calm, like myself, might assume he just earned an honest living engaging in legal commerce with willing counterparties.

To assume the former we must believe facts not in evidence. I choose not to.

Tim Myers is executive vice president and chief financial officer of Landscape Development Inc. in Valencia. His column represents his own views, not necessarily those of The Signal.

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