TABLE OF CONTENTS I. JURISDICTION II. RESPONDENTS III. NONRESPONDENT PARTICIPANTS IV. INTRODUCTION AND SUMMARY OF CHARGES V. HURWITZ, MAXXAM, AND FEDERATED VIOLATED THEIR NET WORTH MAINTENANCE OBLIGATION A. APPLICABLE STATUTES AND REGULATIONS B. THE UFG NET WORTH MAINTENANCE OBLIGATION C. THE MCO/FEDERATED NET WORTH MAINTENANCE OBLIGATION D. MCO AND FEDERATED OWNED MORE THAN 35% OF UFG STOCK WITH THOSE ACTING IN CONCERT WITH THEM 1. THE UFG SHARES ACQUIRED BY RESPONDENT GROSS 2. THE UFG SHARES ACQUIRED BY DREXEL AND THE PUT-CALL OPTION E. USAT'S FAILURE TO MEET REGULATORY CAPITAL REQUIREMENTS F. FIRST CLAIM FOR RELIEF: FAILURE TO COMPLY WITH MCO AND FEDERATED'S NET WORTH MAINTENANCE OBLIGATIONS (Respondents MAXXAM, Federated, Hurwitz, and Munitz) G. SECOND CLAIM FOR RELIEF: FAILURE TO COMPLY WITH UFG'S NET WORTH MAINTENANCE OBLIGATION (Respondents MAXXAM, Federated, Hurwitz, Munitz, Berner, and Gross) H. THIRD CLAIM FOR RELIEF: RESPONDENTS CAUSED FALSE AND MISLEADING STATEMENTS TO BE MADE REGARDING MCO/FEDERATED'S CONTROL OF UFG (Respondents MAXXAM, Federated, Munitz, and Berner) I. FOURTH CLAIM FOR RELIEF; CONTROL ACT VIOLATIONS (Respondents MAXXAM, Federated, Hurwitz, and Gross) VI. USAT'S PURCHASES OF JUNK BONDS FROM DREXEL VIOLATED AFFILIATED PARTY REGULATIONS A. APPLICABLE STATUTES AND REGULATIONS B. DREXEL ACTED IN CONCERT WITH MCO AND FEDERATED TO OBTAIN CONTROL OF UFG C. SALE OF JUNK BONDS TO USAT D. FIFTH CLAIM FOR RELIEF: USAT'S PURCHASE OF JUNK BONDS FROM DREXEL VIOLATED THE REGULATION PROSCRIBING AFFILIATED PARTY TRANSACTIONS (Respondents MAXXAM, Federated, UFG, Hurwitz, Munitz, and Huebsch). VII. RESPONDENTS ENGAGED IN UNSAFE AND UNSOUND PRACTICES AND MADE FALSE AND MISLEADING STATEMENTS WHILE SPECULATING WITH USAT'S MBS PORTFOLIOS A. APPLICABLE STATUTES AND REGULATIONS B. RESPONDENTS CAUSED USAT TO PURCHASE MBS'S FOR THREE USAT PORTFOLIOS C. USAT'S INVESTMENTS IN THE PURPORTED MBS STRUCTURED ARBITRAGE PORTFOLIOS WERE UTILIZED TO SPECULATE ON THE DIRECTION OF INTEREST RATES 1. RESPONDENTS' SPECULATION IN MORTGAGE BACKED SECURITIES WAS DONE IN ORDER TO APPEAR TO MEET USAT NET WORTH REQUIREMENT D. RESPONDENT'S SPECULATION IN THE THREE PORTFOLIOS INCREASED THE RISK OF LOSS TO USA AND EVENTUALLY CAUSED USAT TO LOSE IN EXCESS OF $275 MILLION E. RESPONDENTS KNEW OF THE UNQUANTIFIED RISK IN THE MBS PORTFOLIO, KNEW THAT THEY LACKED THE KNOWLEDGE TO SUPERVISE THE PORTFOLIO MANGERS, AND KNEW THAT REPORTED IN ORDER TO CREATE THE APPEARANCE OF COMPLIANCE WITH USAT'S NEW WORTH REQUIREMENTS F. SIXTH CLAIM FOR RELIEF: RESPONDENT'S SPECULATION WITH THE THREE USAT MBS PORTFOLIOS WAS UNSAFE AND UNSOUND (All Respondents) VIII. RESPONDENTS MISREPRESENTED THAT THE THREE USAT MBS PORTFOLIOS WERE HEDGED, RISK-CONTROLLED ARBITRAGE PORTFOLIOS AND THAT THEY WERE NOT TRADING PORTFOLIOS TO SPECULATE ON CHANGES IN INTEREST RATES A. APPLICABLE STATUTES AND REGULATIONS B. RESPONDENTS MISREPRESENTED TO THE FHLBB THAT USAT'S MBS PORTFOLIOS WERE FULLY-HEDGED, RISK-CONTROLLED ARBITRAGE PROGRAMS THAT HAD REDUCED, AND WOULD CONTINUE TO REDUCE, USAT'S INTEREST-RATE RISK C. RESPONDENTS MISREPRESENTED THAT USAT'S MBS PORTFOLIO WAS A RISK-CONTROLLED ARBITRAGE AND NOT A TRADING PORTFOLIO THAT SPECULATED ON THE CHANGES IN INTEREST RATES VIOLATED PROHIBITIONS AGAINST MAKING FALSE AND MISLEADING STATEMENTS (All Respondents) IX. RESPONDENTS CAUSED USAT TO ENTER INTO SHAM TRANSACTIONS TO FALSELY INFLATE ITS MATURITY MATCHING CREDIT IN ORDER TO MEET ITS NET WORTH REQUIREMENTS A. APPLICABLE STATUTES AND REGULATIONS B. RELEVANT FACTS 1. REVISIONS OF MINIMUM REGULATORY CAPITAL REQUIREMENTS 2. RESPONDENTS CAUSED USAT TO ENGAGE IN SHAM TRANSACTIONS IN ORDER TO MAXIMIZE USAT'S MATURITY MATCHING CREDIT C. EIGHTH CLAIM FOR RELIEF: VIOLATIONS OF MINIMUM REGULATORY CAPITAL REQUIREMENTS (All Respondents) X. RESPONDENTS CAUSED UNITED MBS TO VIOLATE APPLICABLE SERVICE CORPORATION REGULATIONS A. APPLICABLE REGULATIONS B. USAT'S GUARANTEE OF UNITED MBS'S DEBT C. NINTH CLAIM FOR RELIEF: RESPONDENTS CAUSED USAT TO GUARANTEE THE LIABILITIES OF UNITED MBS, THEREBY CAUSING USAT TO VIOLATE APPLICABLE REGULATIONS (MAXXAM, federated, Hurwitz, Munitz, Gross, Crow, and Berner) D. TENTH CLAIM FOR RELIEF: RESPONDENTS CAUSED USAT TO VIOLATE THE LIABILITY GROWTH REGULATION (MAXXAM, Federated, Hurwitz, Munitz, Gross, Crow, and Berner) E. ELEVENTH CLAIM FOR RELIEF: RESPONDENTS CAUSED USAT TO VIOLATE THE DIRECT INVESTMENT LIMITATIONS (MAXXAM, Federated Hurwitz, Munitz, Gross, Crow, and Berner) XI. RESPONDENTS ENGAGED IN UNSAFE AND UNSOUND LENDING PRACTICES A. APPLICABLE STATUTES AND REGULATIONS B. RELEVANT FACTS 1. INTRODUCTION AND BACKGROUND 2. REAL ESTATE TRANSACTIONS ILLUSTRATIVE OF RESPONDENTS' RECKLESS REAL ESTATE LENDING AND INVESTMENT PRACTICES a. THE PARK 410 TRANSACTION i. INITIAL FUNDING ii. THE RESPONDENTS' DECISION TO MAKE THE $80 MILLION LOAN b. NORWOOD/UNITED PARK JV TRANSACTION C. TWELFTH CLAIM FOR RELIEF: RESPONDENTS CAUSED UNSAFE AND UNSOUND INVESTMENTS AND LOANS TO BE MADE (Respondents MAXXAM, Federated, Hurwitz, Gross, Crow, and Munitz) XII. RESPONDENTS CAUSED USAT AND UFG TO ENGAGE IN UNSAFE AND UNSOUND COMPENSATION PRACTICES A. APPLICABLE STATUTES AND REGULATIONS B. RELEVANT FACTS 1. THE FINANCIAL CONDITION OF USAT AND UFG 2. THE USAT AND UFG BONUS AGREEMENTS 3. USAT'S AND UFG'S SEVERANCE AGREEMENTS 4. SUPERVISORY INTERVENTION 5. UFG'S PAYMENT OF SEVERANCE CLAIMS C. THIRTEENTH CLAIM FOR RELIEF: RESPONDENTS CAUSED UNSAFE AND UNSOUND BONUSES, SETTLEMENT, AND SEVERANCE PACKAGES TO BE AUTHORIZED AND PAID TO OFFICERS AND DIRECTORS (Respondents Munitz, Berner, Gross, and Crow) XIII. RESPONDENTS' CULPABILITY AND UNJUST ENRICHMENT XIV. INJURY XV. PRAYER FOR RELIEF XVI. GROUNDS FOR ASSESSMENT OF CIVIL MONEY PENALTIES XVII NOTICE OF ASSESSMENT OF CIVIL MONEY PENALTIES XVIII. NOTICE OF HEARING XIX. NOTICE OF OPPORTUNITY FOR HEARING ON CMP ASSESSMENT