Thad Westbrook Advises State NOT to Help South Carolina Residents Against FRAUD
Posted in the Columbia Forum
#1 Oct 14, 2013
Haley asks Cabinet for ideas on informing public about Credit Security Breach, Identity THEFT
November 2, 2012
Dept. of Public Safety director Leroy Smith (center) offered to have state troopers give notifications about the data breach during traffic stops. He showed Gov. Nikki Haley and her chief-of-staff Bryan Stirling after Thursday’s meeting
The 12-month credit monitoring program (and lifetime credit protection without monitoring) offered by the credit information agency EXPERIAN. It is meant to help more than 3.6 million people whose Social Security numbers were compromised in a cyber attack against the state Department of Revenue.
The governor said she wanted any ideas by Tuesday.
Any of the ideas must first be approved by attorneys advising the state in the case. Thad Westbrook of law firm Nelson Mullins said agency employees would not be allowed to actually sign up taxpayers due to liability concerns.“You cannot have your employees registering individuals who are eligible to enroll,” he told the Cabinet officials,”Because, if there was another breach, your agency would become more exposed than we would want"
#2 Oct 14, 2013
"I can't tell you how many were compromised," Etter told members of the Senate Finance Committee on Tuesday. Etter
said the numbers aren't the same numbers used by the federal government to identify corporations. But he gave few
other details or promises on how the state would address the issue, and senators ended the meeting grumbling about
not getting all the information they wanted. Peeler explained that senators were transferring their constituents'
frustration to Etter but still hoped to hear more. "Questions are leading answers two to one," he said. Leatherman was
among several senators who said they were dissatisfied. "I'm getting more frustrated by the moment," he said. Several
senators pressed Etter to develop a different approach for identity theft protection so the state could do the work
instead of placing the burden on the taxpayer. But Etter and Thad Westbrook, an attorney with the law firm of Nelson
Mullins hired to assist the agency, said Experian requires each person covered to answer personal information questions
to verify their identity, something the agency couldn't readily do. They also said having the Revenue Department to
approach Experian raised privacy law concerns. "Bullfeathers," responded Sen. Phil Leventis of Sumter. "There is no
privacy issue. We ought to be the ones holding the bag." Sen. John Matthews of Orangeburg said the system set up by
the Revenue Department doesn't help the elderly, disabled or the many who aren't sophisticated enough to navigate
the Experian website or the system, even with assistance by phone. "I think you are treating taxpayers unfairly," he said.
"You are leaving them out in the cold." Officials said military personnel are being contacted by the U.S. Department of
Defense so the Revenue Department can arrange to notify them about the breach and identity theft protection service.
Westbrook said out-of-state residents who at one time filed South Carolina returns also will be notified by the agency at
some point. Several senators also wanted to know why the Revenue Department hadn't encrypted Social Security
numbers and other information before the hacking. Etter said the agency's system was designed years ago without
encryption. Officials are in the process now of encrypting all information, a process that could take up to 90 days. Etter
said in a conference call Tuesday that officials with 15 of 19 states said they didn't encrypt their information. Sen. Kevin
Bryant of Anderson said he was surprised the agency didn't encrypt all of its files before now. Sen. Larry Grooms,
chairman of the Senate Transportation Committee, said he doesn't believe the agency has been looking out for
taxpayers. "I believe the agency was more interested in squeezing taxpayers than protecting taxpayers,
#3 Oct 14, 2013
But Etter and Thad Westbrook, an attorney with the law firm of Nelson Mullins hired to assist the agency, said Experian requires each person covered to answer personal information questions to verify their identity, something the agency couldn't readily do. They also said having the Revenue Department to approach Experian raised privacy law concerns.
"Bullfeathers," responded Sen. Phil Leventis of Sumter. "There is no privacy issue. We ought to be the ones holding the bag."
#4 Oct 15, 2013
COLUMBIA — Thad Westbrook of Nelson Mullins, a law firm representing the state in the aftermath of a massive cyber breach now says NO competitors were contacted before the state reached a $12 million no-bid contract with Experian.
Attorney Jon Neiditz of Columbia firm Nelson Mullins said the confusion over whether the firm had contacted other credit monitoring companies resulted from an unclear statement made by another attorney, Thad Westbrook.
The Revenue Department reached an initial agreement with Experian just before the breach affecting millions of current and former S.C. taxpayers was first announced publicly on Oct. 26.
The confusion over whether Thad Westbrook of Nelson Mullins ever reached out to Experian competitors began at an Oct. 30 Senate Finance Committee hearing from comments from Nelson Mullins attorney Thad Wetbrook.
Revenue Department Director James Etter, who is resigning effective at the end of this year, correctly told senators that no other companies were contacted besides Experian.
But Nelson Mullins attorney Thad Westbrook immediately followed up and told senators that pricing was obtained from two other firms but Experian had the ability to scale up quickly in an emergency situation.
Weeks after the hearing, Revenue Department spokeswoman Samantha Cheek named the other two companies that Nelson Mullins had obtained estimates from as Citreas and Identity Force.
Obtaining pricing information from Experian competitors and examination did not include reaching out to them.
Neiditz said he had pre-existing pricing information from various cyber security companies and knew Experian could offer the best deal. The leaders of other firms have disputed that assessment.
Neiditz said Monday that Thad Westbrook’s statement during the hearing caused confusion.
“It wasn’t clear,” Neiditz said.“It led to the impression that other companies had been contacted....I mentioned those vendors to him.”
Some senators have expressed concerns about the state’s NO-BID contract with Experian.
Anderson GOP Sen. Kevin Bryant said it’s worrisome that no other companies were approached following the breach.
“This snowball just keeps getting bigger and bigger as time goes by,” Bryant is co-chairman of a new oversight panel tasked with looking into the cyberattack.
Normally, state contracts are struck following a request for proposals from various companies.
The law states “competition as is practicable SHALL be obtained.”
Neiditz recommended Experian to his firm, which then recommended Experian to the state. Nelson Mullins attorneys are being paid an estimated $100,000 for its work assisting the state.
...Experian and two competitors as Thad Westbrook and Cheek said, but never contacted any of them before deciding on Experian.
Neiditz said he provided pricing information on Citreas and Identity Force because they have different business models than Experian.
He said he first contacted Experian on Oct. 23, three days before the breach was announced.
Etter had told senators during the hearing that Experian was first contacted on Oct. 25. The Secret Service alerted state officials to the breach on Oct. 10.
“As a result, I don’t think that those business models received full consideration. Neither did other companies.”
The CEOs of Citreas and Identity Force said that their pricing would have been competitive with Experian and their services would have been superior in some ways.
Vendors likely would have been beating down the state’s doors and possibly could have provided a better deal...
Nelson Mullins attorneys are being paid an estimated $100,000
#5 Oct 21, 2013
"SC Democrats plan vigils for hacking anniversary"
October 22, 2013
Almost a year after Republican Gov. Nikki Haley announced that the tax returns of millions of South Carolinians were hacked by a cyber-thief, state Democratic Party Chairman Jaime Harrison announced Monday the party will hold a series of vigils marking the event.
"Over the next week, South Carolinians will gather in local communities to mark the 16 days that Nikki Haley hid the truth from millions of people," Harrison said. "The silent vigils will mark the inexcusable lag time and gross failure of leadership when governor Haley chose to cover her own behind."
He said at least eight events are planned, the first in Greenville on Tuesday. He himself observed 10 seconds of silence during a news conference on a downtown Charleston street.
In September of last year, a cyber-thief hacked unencrypted information from tax filings about 3.8 million adults, 1.9 million of their dependents, and 700,000 businesses. It's not clear whether any of those people or businesses became victims of identity theft as a result.
State officials were made aware of the problem on Oct. 10, 2012, by the U.S. Secret Service. Haley announced the hacking at a Columbia news conference 16 days later. She said investigators needed time to investigate the breach.
When reminded of that by reporters, Harrison said "my response to that is you have to let the good people of South Carolina know. My question to them is do you have the people who hacked into the system? No."
"From day one, Gov. Haley's focus has been on working with law enforcement to catch the criminal who attacked our state and on protecting our citizens from further harm by massively upgrading our cybersecurity systems and making sure everyone has identity theft protection," Haley spokesman Doug Mayer responded.
He added while cybercrime is evolving every day "we can say without any doubt that we are far safer now than we've ever been before in South Carolina."
People affected by the hacking of the state Revenue Department servers are being offered another year of free credit monitoring and can begin enrolling this week for protection provided by CSIdentity Corp. South Carolina is paying the Texas company up to $8.5 million to provide the monitoring.
Credit bureau Experian had been doing that work for nearly 1.5 million people under a $12 million contract. The service will not transfer, so people who had signed up with Experian will have to sign up with the new agency.
#6 Oct 25, 2013
US SENATOR DEMANDS ANSWERS FROM EXPERIAN
A powerful U.S. Senator is demanding answers from credit rating agency Experian in the wake of revelations that it sold confidential customer data to a Vietnamese identity thief.
“If these recent news accounts are accurate, they raise serious questions about whether Experian as a company has appropriate practices in place for vetting its customers and sharing sensitive consumer data with them,” U.S. Sen. Jay Rockefeller (D-West Virginia) wrote in a letter to Experian’s CEO Don Robert.
Rockefeller added that Experian “refused to comply” with a previous request for information regarding its customer security safeguards that was made by his committee over a year ago.
Why does any of this matter to South Carolinians?
Glad you asked …
Experian received a secretive, no-bid contract from S.C. Gov. Nikki Haley during last year’s infamous #SCHacked scandal – which remains the largest state-level security breach in American history (resulting in the loss of 3.8 million Social Security numbers, 3.3 million bank account numbers, tax info for more than 650,000 businesses and nearly 400,000 credit and debit card numbers).
With a wink ;) and a nod, Haley coughed up $12 million of your money to Experian to provide credit monitoring services to victims of the breach – a deal which almost immediately came under fire.
What for? Well, in addition to numerous inconsistencies regarding the timing of the contract and the lack of consideration given to other providers, Haley’s administration was busted telling several flat out lies regarding the company’s so-called “exclusive” services, which it turns out other companies not only provided – but provided at cheaper costs.
The scandal made news again last month when Experian notified its South Carolina customers – whose data is presumably floating down the Mekong River right now – that it was charging them $12 to “renew” their accounts. What did the company neglect to tell them? That state government had coughed up millions more on another credit monitoring contract.
Haley has been working hard in recent months to minimize the political damage from the #SCHacked scandal. The very last thing she needed was for Experian to find itself embroiled in a national controversy …
Read more at http://www.fitsnews.com/2013/10/24/us-senator...
#7 Nov 15, 2013
Foreclosing Party Must Own Note and Mortgage
IN THE COURT OF COMMON PLEAS
OF THE NINTH JUDICIAL CIRCUIT
STATE OF SOUTH CAROLINA
COUNTY OF CHARLESTON
Deutsche Bank National Trust Company, as
Trustee of the Indy Mac INDX Mortgage Trust
2007-FLX3, Mortgage Pass-Through
Certificates, Series 2007-FLX3 under the
Pooling and Servicing Agreement dated April 1, 2007
Scott J. Heinrich; Dinah K. Heinrich; One West
Bank, FSB; County of Charleston,
May 13, 2013 on Defendants’ pre-Answer Motion to Dismiss this case pursuant to Rules 12(b)(6) and 12(b)(7), SCRCP. Defendants, Scott J. Heinrich and Dinah K. Heinrich (“Defendants”), were represented by William H. Sloan of the Sloan Law Firm, PA in Summerville, and Plaintiff was represented by John J. Hearn of Rogers Townsend & Thomas, PC in Columbia.
I. Rule 12(b)(6), SCRCP
Defendants claim that the Complaint should be dismissed pursuant to Rule 12(b)(6),SCRCP, because Plaintiff “lacks the necessary standing to file this action prior to acquiring and recording an Assignment of Mortgage” and fails to mention how they are the owner of the Noteand Mortgage in this case under our fact-based pleading scheme. Plaintiff admits that the assignment of mortgage into Plaintiff was recorded February 23, 2011, about two weeks after this action was filed. Plaintiff has possession of the original-Note, which is indorsed in blank at the time of the hearing before me on May 13. 2013. Plaintiff claims that the note is a negotiable instrumentunder the South Carolina Uniform Commercial Code, S.C. Code §36-3 et seq. which would entitle them certainly to sue on the note in this action. However, Plaintiff is seeking to foreclose on the mortgage that is attached to the real property as opposed to simply suing on the promissory note.The idea that the Mortgage follows the Note is one which has been repeatedly confirmed by our courts:‘”South Carolina recognizes the ‘familiar and uncontroverted proposition’ that ‘the assignment of a note secured by a mortgage carries with it an assignment of mortgage. However, Carpenter v. Longan, 83 U.S. 271, 16 Wall. 271, 21 L.Ed. 313 (1872), quoted by Plaintiffs counsel in this oral argument and brief, clearly supports the notion that the Plaintiff must clearly own the Note and the Mortgage to foreclose on the property. Plaintiff failed to show that it owned the Mortgage at the time the Complaint was filed. In its Complaint, Plaintiff merely contends in §3 of its Complaint that is a holder and has the right to enforce. Further, the mortgage of this case shows Mortgage Electronic Registration Systems, Inc.(MERS) to be the mortgagee. This was confirmed by Plaintiffs counsel in oral argument. MERS is never mentioned on the Note. Qur state court of appeals made a recent decision in BAC Home Loan Servicing, L.P. v. Kinder, 398 S.C. 619, 731 S.E.2d 547 (Ct. App. 2012.)“[T]he assignment of a mortgage does not need to be recorded, and failure to do so has no effect on the rights of the assignee.”/d. at 623. However, I distinguish the facts of Kinder from this case as the Assignment of Mortgage in Kinder was after the foreclosure was already complete and the issue at dispute in that case was the surplus funds going to the,Assignee. Filing is not the issue but ownership of the note. It is clear that to have standing in this foreclosure case, Plaintiff must not only be the holder & owner of the original Note, but also the Mortgage as well. Plaintiff ’s Complaint in this case fails to meets this criteria. Plaintiff lacks the standing to initiate and prosecute the foreclosure, and dismissal pursuant to Rule 17(a) and Rule 12(b)(6) SCRCP is appropriate.
However, I have dismissed this case pursuant to Defendants’ Heinrich’s Motion to Dismiss under Rule 12(b)(6), SCRCP.
And it is so ordered that this case be dismissed without prejudice.
IT IS SO ORDERED!
J.C. Nicholas, Jr.
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