UH student investigates ORIX

When you reopen in December, only 20 percent of the tenants return, and the fact that they now live in a war zone means you can't charge them full rent. The company servicing your loan is getting antsy. You submit some proposals, something along the lines of, "You remember when those planes flew into those buildings right next door? Well, it kind of put us in a pickle. Any way we can restructure this loan?"

Nope. ORIX wants its money. Period. The company starts the foreclosure process. When the New York Daily News covers your story, you read a quote from ORIX CEO Jim Thompson.

"[The owners] saw it as an opportunity to capitalize on a situation," Thompson is quoted as saying, "to get something from a lender that they couldn't have otherwise gotten."

When The Economist weighs in, Thompson says, "The owners are contractually obligated to pay, and they are capable of paying."

The headline of the story is "Just Pay." And the company likes how it looks in the article so much that it creates a line of clothing called "Just Pay." (By the way, you can stop hypothesizing now, because this is all true.)

ORIX advertises its haute couture on its Web site:

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

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

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

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

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

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

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

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

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