The Biggest Outrage in Atlanta’s Teacher Cheating Case

http://www.thefiscaltimes.com/2015/04/03/Biggest-Outrage-Atlanta-s-Crazy-Teacher-Cheating-Case?utm_campaign=548f5168cb03a93709042da0&utm_source=boomtrain&utm_medium=email&bt_alias=eyJ1c2VySWQiOiJiN2FmNTUxZi02NDgwLWU4ZDUtYzdiNy03ZjYxODk1YzUyMjAifQ%3D%3D

By David Dayen, The Fiscal Times
April 3, 2015

One of the defining issues of this millennium has been the bifurcation of the criminal justice system, with one set of rules for ordinary people and another for elites. We’ve learned that justice is a commodity to be purchased rather than a universal value delivered without prejudice.

That’s the proper backdrop to the news of convictions in the Atlanta test cheating case. Eleven educators were found guilty of racketeering charges — something typically reserved for organized crime — for feeding students answers to standardized tests, or changing test sheets after they were turned in.

If you don’t remember these kinds of creative prosecution strategies during the financial crisis, that’s probably because no prosecutor ever used them. Teachers ordered to falsify tests and the superiors who demanded it, amid desperation to save schools from destruction, deserve no mercy from the court. Bankers who ran a criminal enterprise to engage in the largest consumer and investing fraud in world history deserve our thanks.

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As recounted by The New Yorker, at one middle school, the principal informed teachers they had to cheat to keep the school above the NCLB threshold. Dissenters were transferred to other schools or placed on a track to be terminated. The cheating became routinized, with teachers tearing open sealed test sheets with razor blades and fixing the answers. They justified it to themselves as doing it for the school, for the children even. The tests didn’t properly evaluate student performance in their view, and the kids needed stability, not upheaval through shifting schools every couple years.

None of this excuses the misconduct, it sets a context for it. And it matches almost precisely what went on at every level of the mortgage market before, during and after the housing bubble. Mortgage brokers used Wite-Out and exacto knives to falsify income tax data for unqualified borrowers to get them into loans. They employed Coke vending machines as light boards to trace forgeries, putting people into garbage loans they didn’t purchase. The loans got sold to Wall Street banks, which routinely lied to investors, who purchased bundles of mortgages packaged into securities, by telling them that the loan quality exceeded underwriting standards.

When the loans predictably defaulted, mortgage servicing company employees were instructed to lie to customers, claim to have lost loan modification applications when they actually shredded them, and push customers into foreclosure, which maximized servicer fees. One set of workers at Bank of America testified that they received Target gift cards as bonuses for causing foreclosures among customers.

In the foreclosure process, these same companies, with help from “default services” specialists and “foreclosure mill” law firms, fabricated and forged the legal documents required to enforce the terms of the mortgage, because all that documentation was either lost or never recorded. Workers would sign each other’s names, use each other’s notary stamps, pretend to work for other companies, and assign mortgages from the company they didn’t work for to the one they did.

The job pressures faced by the Atlanta educators differed little from the job pressures faced by line-level workers at mortgage origination, securitization, servicing, foreclosure mill and default services shops across the country. In both cases, the workers performed their jobs under threat of termination. Supervisors watched everyone to ensure compliance. The fraud became institutionalized. And after a while, people stopped asking whether what they were doing was in any way legal.

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So let’s see how the justice system dealt with these two cases. When mostly African-American educators at poor schools in Atlanta cheat on tests, they get the book thrown at them. Ten of the 11 convicted on Thursday went directly to jail while they awaited sentencing; Superior Court Judge Jerry Baxter only spared the eleventh because of her imminent pregnancy. They each face up to 20 years. With Baxter quoted as saying “they have made their bed and they’re going to have to lie in it,” it’s difficult to expect much leniency.

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As for the entire housing market, top to bottom, you can count the number of people who went to jail on one finger. Lorraine O’Reilly Brown was the CEO of a default services company called DocX, which filed over 1 million false documents in courts and county offices from 2003 to 2009. This was industry practice, but only Brown went to jail for it, with the claim that she committed a conspiracy of one, allegedly defrauding banks by concealing the fraudulent document scheme. Apparently when banks contracted DocX to create documents they should have legally already had in their possession, they never expected them to be fake.

Outside of Brown, nobody who authorized any falsification, no superiors at DocX parent company Lender Processing Services (now Black Knight), nobody at a major mortgage servicer, no mortgage origination manager, and certainly no executive of any Wall Street bank ever faced the full wrath of Judge Jerry Baxter or any other authority figure forcing them to don a jumpsuit and spend 10 to 20 thinking about what they did. Despite the clear criminality of the enterprise, nobody thought to use a RICO statute on banks and their affiliates, or do anything beyond settle for cash.

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You don’t have to consider the Atlanta teachers innocent to know something has gone terribly awry in the country when filling in bubbles on Scan-Tron sheets can get you 20 years, but stealing people’s homes and defrauding pension funds can’t get you indicted. The only way you could see what the justice system has granted bankers as in any way commensurate with what it does to ordinary people is if you grade on a curve.