Thursday, July 28, 2016

Manhattan DA Tags Landlord, Contractor With Criminal Charges, $3 Million Civil Forfeiture Suit For Allegedly Creating Life-Threatening Conditions To Bully Couple With Five Young Kids Out Of Their Rent-Stabilized Apartment

In New York City, WNBC-TV Channel 4 reports:
  • A landlord and two contractors intentionally created "life-threatening" conditions at an East Harlem apartment to push a couple and their five young children out of their rent-stabilized home, prosecutors say.

    The landlord and East 115th Street building owner, Ephraim Vashovsky, along with property manager and contractor Adam Cohen, 32, and contractor Shaoul Ohana, 56, allegedly made conditions perilous and unlivable for the parents and their children, who range in age from 1 to 12, including leaving them without water and heat and the building at risk of structural collapse.

    According to an indictment [], the trio conducted ongoing illegal construction and renovation at the apartment, and harassed and intimidated the family, threatening to report their status as undocumented immigrants, in a conspiratorial effort to get them to leave or pay more.

    "These defendants are charged with turning an East Harlem apartment building into a death trap,” Manhattan District Attorney Cy Vance said in a statement. “They forced a family with five young children to endure life-threatening conditions on some of winter’s coldest nights. As demolition continued around apartment 5E, the entire building was at risk of a devastating fire, or worse, collapse."

    The alleged concerted effort against the family began shortly after Vashovsky acquired the building in May 2014, according to court documents. Vashovsky and his associates wanted the family out so they could make renovations to the building that would allow the units to command higher rents, court papers say. Amid pending eviction proceedings and litigation, the defendants moved to begin construction while the family still inhabited the apartment.

    In an effort to expedite the Department of Buildings work permit applications submitted by Ohana, Cohen allegedly submitted falsified documents purporting that the building was unoccupied, while the defendants simultaneously moved for the family’s eviction in housing court on the grounds that the apartment was overcrowded, court documents say. Based on the falsified filings, DOB approved a work permit in December 2014.
    The Manhattan District Attorney’s Office’s Asset Forfeiture Unit has filed a civil forfeiture lawsuit against the indicted defendants and their companies, seeking the forfeiture of more than $3 million in connection with the criminal case.
For the story, see Landlord, Contractors Turned Apartment Into 'Deathtrap' to Force Out Family of 7, Indictment Alleges (Prosecutors allege the landlord and contractors wanted the family out so they could renovate the apartment to command higher rent).

Go here for the Manhattan District Attorney press release.

Elderly NYC Tenant Goes To Florida For Extended Stay To Care For Dying Brother; Billionaire Landlord Responds By Trying To Give Her The Boot, Claiming Her Rent-Stabilized Apartment Is No Longer Her Primary Residence

In New York City, the New York Post reports:
  • A billionaire landlord [...] is trying to evict a blind 82-year-old woman from her longtime rent-stabilized apartment on the Upper East Side — because she was out of the city caring for her dying brother, a lawsuit charges.

    “It makes no sense,” fumed Valerie Miké, who says she has lived at 500 E. 77th St. since 1973 but was in Florida tending to her brother, who died this past spring after a stroke.

    “When someone has a severe stroke, he may die any day because of the infection or he may wake up. A family member had to be here. I had no option,” said Miké, a professor at Weill Cornell Medical College. “I tried over and over again to speak with management.”

    After hiring a lawyer for the first time in her life, Miké is suing her landlord to keep her $1,800-a-month one-bedroom.

    Glenwood Management’s Leonard Litwin owns the high-rise, where one-bedrooms go for $3,700 a month.
    [In May], Miké got a notice that her lease wouldn’t be renewed.

    The letter claimed the apartment wasn’t her primary residence because she was living with her “husband” John Miké in Florida, according to her Manhattan civil suit.

    John is Miké’s brother, her suit says. She went to care for him last year but still uses the 77th Street address on her voter, financial and health forms, court papers say.

    Even after Miké’s lawyer, Justin Bonanno, sent Litwin documentation — including a doctor’s note saying she was staying with her brother — he refused to void the eviction.

    “The law is clear. The code says you can do that as long as you keep a substantial ‘physical nexus’ with the apartment,” Bonanno said. “She has 2,000 volumes of books, all her furniture, her entire life is in that apartment.”

    Miké said, “Everyone in the building knew why I was in Florida.”

    Reps for Glenwood did not comment.

Landlord Agrees To Cough Up Nearly $1 Million To Settle Class Action Suit Alleging It Squeezed About 14,000 Tenants With Bogus Charges By Loading Leases With Illegal Terms

In Iowa City, Iowa, the Press-Citizen reports:
  • Past and future tenants of Apartments Downtown will benefit from a settlement approved by a district court judge last week, their attorney said Monday.

    The settlement includes $65 repayments to about 14,000 tenants who rented from Apartments Downtown and Apartments Near Campus, which have the same owner, from 2010 to 2014 and also establishes a new and unique complaint process, said Chris Warnock, an attorney with the Iowa Tenants' Project who represented tenants in the case.

    The repayments are the result of lease provisions ruled to be illegal that included charging an automatic carpet-cleaning fee, regardless of whether the carpet was clean; shifting responsibility for repair and maintenance to tenants, including in common areas of a building; and a variety of illegal fees, penalties and other charges.

    Tenants who rented from 2010 to 2014 can find more information and register to collect repayment at, and will be asked to provide a building address and apartment number.

    Warnock said the repayments are expected to total about $1 million.

City Convicts First Landlord/Airbnb Host Under Its New Law Prohibiting Short Stay Rentals Of An Entire Residence For Less Than 30 Days; Landlord Vows To Leave Town After Thumbing Nose At Authorities

In Santa Monica, California, the Los Angeles Times reports:
  • Santa Monica, which last year passed some of the nation’s toughest regulations on short-term rentals, has now convicted its first Airbnb host under the new law, prosecutors said.

    Rental operator Scott Shatford, who listed five properties on Airbnb, was charged with eight misdemeanor counts of operating a business without a license and failing to comply with citations after he refused to stop renting out his properties, Deputy City Atty. Yibin Shen said [].

    Shatford pleaded no contest on July 5 in a plea deal with the city, agreeing to pay $3,500 in fines and to stop renting properties within the city. He was also placed on two years’ probation.

    In May 2015, the Santa Monica City Council unanimously passed a law outlawing rentals of less than 30 days. The law allows so-called home-sharing, such as renting a couch or spare room while the owner is present, but bars renting an entire residence for fewer than 30 days.

    At the time, the new rule outlawed more than 80% of the city’s estimated 1,700 short-term rentals.

    The city now has a full-time task force dedicated to the issue, with two code enforcement officers and an analyst, said Shen, the prosecutor on Shatford’s case.
    Shen, the prosecutor, said city officials received a complaint from someone who had rented one of Shatford’s properties. The woman was surprised to learn that she was renting a unit that was illegal and was uncomfortable with the situation, Shen said.

    Before referring the case to the city attorney’s office, the new Vacation Rental Enforcement Task Force “attempted to work with and educate Mr. Shatford for many months, issuing multiple warnings and citations with fines,” the city said in a statement, adding that Shatford “boasted publicly that he was ‘not concerned’ about local law.”

    Shen said he hopes the case will serve as an example for the public.

    “The city views its rental prohibition quite seriously, and it takes enforcement of these laws quite seriously,” Shen said.

    As for Shatford, he’s moving to Denver this week, after 13 years of living in Santa Monica. He said he hopes people are more tolerant there.

Wednesday, July 27, 2016

Non-Profit Public Interest Law Firm's Lawsuit: Municipality's Inspection Requirement As Condition For Issuing Rental License Violates Landlord's, Tenants' 4th Amendment Privacy Rights; Inspectors Seeking Entry Into Premises Told To Quit Snooping Around & Take A Hike!

In Highland, California, the Redlands Daily Facts reports:
  • A landlord and his tenants have accused the city of violating their Fourth Amendment rights.

    Sacramento-based Pacific Legal Foundation(1) filed a complaint [] in U.S. District Court on behalf of property owner Karl Trautwein, accusing city inspectors of attempting to coerce his tenants, DeVondra and James Gill, into allowing a warrantless inspection of the property in order to issue the property’s rental license.

    According to the complaint, city inspectors made two attempts to inspect the single-family home owned by Trautwein, after he told city workers they did not have permission to inspect the property.

    The city now refuses to process the rental license application and has charged Trautwein a $40 reinspection fee, according to the complaint.

    “At the end of the day it’s about privacy and all these private places they don’t want government officials snooping around,” said Wen Fa, staff attorney with Pacific Legal Foundation, which litigates cases involving property and civil rights for clients at no charge.

    Highland’s residential rental program requires property owners to obtain a rental license through the city. There must be a full inspection of the interior and exterior of the property before the city will approve the license.

    If a tenant or property owner refuses to allow an inspection, the city will obtain a warrant, according to the city code.

    In April 2015, Trautwein applied for a rental license for the home, which has been rented by the Gills since 2011, and paid the $161 application fee. He noted on the application that the city did not have permission to enter the property.

    When the Gills refused to let city inspectors into the home, they were told their landlord would “get in trouble,” according to the complaint.

    The city later sent Trautwein a letter informing him that he owed a $40 reinspection fee for the two missed inspections and could be cited.

    Trautwein sent a letter back to the city, restating that it did not have permission to inspect the property due to privacy concerns.

    Craig A. Steele, Highland’s city attorney, said in an email that the city was served [] with the lawsuit but had yet to evaluate it. He said he could not comment on the specifics of the case.

    Generally, Steele said, the city has worked successfully and cooperatively with most rental property owners in the city to ensure that rental housing is safe and habitable.

    “I would think that landlords in the rental housing business would welcome health and safety inspections of their business locations, just as inspections are conducted at other commercial businesses in the city,” he said.

    The city will evaluate the complaint and respond in a timely manner, he said.

    Trautwein is not seeking any monetary damages, but rather a court order calling the city’s action unconstitutional and demanding it stop attempting to conduct warrantless searches.

    This lawsuit is for principle, that’s why we don’t want monetary damages,” Fa said. “We want the court to tell the city to stop and we want the court to issue a declaration that what the city is doing violates the constitutional rights of the plaintiffs in this case.”

    In his letter to the city, Trautwein said the home was a vacant foreclosure that he improved and rented to a responsible tenant.

    “We pride ourselves in taking care of any maintenance issues at the homes we manage,” he wrote.
Source: Highland landlord, tenants accusing city of violating Fourth Amendment rights.

See also, Highland is sued for attempting warrantless snooping on rental property (go here for podcast).

For the lawsuit, see Trautwein v. City of Highland, et al.
(1) Pacific Legal Foundation is a non-profit, public interest law firm that fights for limited government, property rights, individual rights and a balanced approach to environmental protection. Donor-supported, this firm represents all clients free of charge.

ACLU, NAACP Class Action Lawsuit Invokes Fair Housing Act Against Wayne County, Michigan Over Allegedly Inflated Property Tax Assessments; Complaint Also Cites Constitutional Due Process Considerations Concerning Method Of Granting Homestead "Poverty Tax Exemption" Which Reduces Tax Burden By Half Or Eliminates It Entirely For Qualified Impoverished Homeowners

In Detroit, Michigan, The Detroit News reports:
  • The American Civil Liberties Union of Michigan and the NAACP Legal and Education Fund [last week] sued to stop the Wayne County Treasurer from auctioning hundreds of owner-occupied homes for unpaid taxes this fall, arguing the foreclosures were illegal.

    The county’s tax sale violates the Federal Fair Housing Act by disproportionately foreclosing on black homeowners,(1) a process driven by Detroit’s inflated city tax assessments, said ACLU Legal Director Michael Steinberg. The suit, filed [last week] in Wayne County Circuit Court, names Wayne County Treasurer Eric Sabree, the county and the city of Detroit as defendants.

    “Wayne County and Detroit are creating a human catastrophe by tossing thousands of homeowners into the streets for inability to pay unlawfully assessed taxes,” Steinberg said in a press release. “This short-sighted practice not only violates federal law, it destabilizes families, destroys neighborhoods and undermines the economic recovery of the region.”

    The city taxed the home of one ACLU client at risk of foreclosure as if it was worth $40,000, while a private appraisal paid by the ACLU pegged its value at $9,000.

    The controversial auction has drawn critics for years, who say residents are losing properties because of tax bills that bear little relation to market value. The sale has attracted hundreds of out-of-state speculators and local investors who buy for as little as $500, and many don’t pay tax bills either.

    The treasurer has processed more than 140,000 foreclosures countywide since 2002, according to Loveland Technologies, a company that studies tax foreclosure.

    The ACLU is asking the court to halt the sale of all properties that are owner occupied, an estimated 1,530, and stop future foreclosures until the city can properly assess them, according to the lawsuit.

    A total of 5,600 homes headed to the tax sale in September are occupied, which includes renters.

    The plaintiffs, seven homeowners and four neighborhood associations represented by ACLU attorneys, are also asking the lawsuit be designated as a class action for all homeowners affected.
    An investigation by The Detroit News in 2013 concluded that Detroit was over-assessing homes by an average of 65 percent, according to a review of state tax appeals. The series prompted state regulators to overhaul Detroit’s Assessment Division.

    Steinberg said he believes “a huge percentage” of people on county payment plans are defaulting because they can’t afford them.

    The lawsuit also argues that the Detroit Citizen Board of Review’s process to grant poverty exemptions has violated homeowners’ due process rights by not giving them a reason for their denial. And some ACLU clients didn’t receive a response at all, according to the lawsuit.(2)

    Poverty exemptions can lower or eliminate tax bills if owners qualify.
    The ACLU, and NAACP Legal and Education Fund were joined by lawyers from the Washington, D.C.-based Covington & Burling LLP in the lawsuit filing.
For more, see ACLU, NAACP sue to stop Wayne County tax auction.

For the lawsuit, see Morningside Community Organization, et al. v. Sabree, et al.
(1) See ACLU, NAACP LDF Sue Wayne County to End Racially Discriminatory Tax Foreclosures in Detroit:
  • The [Fair Housing Act] bars not only intentional housing discrimination, but also neutral practices that have an adverse disparate impact on people of color. The Wayne County Treasurer's practice has a significant disparate impact on African Americans in the county. The complaint alleges that the tax foreclosure rate in predominantly African-American neighborhoods in Wayne County is 10 to 15 times higher than the rate of foreclosures in predominantly non-African-American areas.
(2) Ibid.
  • Plaintiffs also allege that the City of Detroit has violated the due process rights of impoverished homeowners who are entitled by law to a "poverty tax exemption," which reduces a qualified homeowner's tax burden by half or eliminates it entirely. The complaint alleges that, prior to 2016, Detroit's process for eligible homeowners to apply for the poverty exemption was convoluted, difficult, and in some cases, impossible. Many of those who succeeded in submitting a timely, complete poverty exemption application never received a response from the City regarding the decision on their application or were denied for reasons that were arbitrary and capricious.

Tuesday, July 26, 2016

Another Hispanic Judge To Feel Trump Wrath? Miami Jurist Belts Mogul's Golf Course With Nearly $300K In Legal Fees After Losing Foreclosure Suit; Court Battle Started When Local 'Mom & Pop' Paint Store Slapped Resort Operator With Lien After Allegedly Being Stiffed Out Of Final Payment On $200K Contract; Foreclosure Sale Date On Hold Pending Appeal

In Miami, Florida, the Miami Herald reports:
  • While developer Donald Trump was busy getting the Republican Party’s presidential nomination [last] week, he was losing big in a Miami-Dade County courtroom.

    Circuit Court Judge Jorge Cueto, presiding over a lawsuit related to unpaid bills brought by a local paint store against the Trump National Doral Miami golf resort, ordered the billionaire politician’s company to pay the Doral-based mom-and-pop shop nearly $300,000 in attorney’s fees.

    All because, according to the lawsuit, Trump allegedly tried to stiff The Paint Spot on its last payment of $34,863 on a $200,000 contract for paint used in the renovation of the home of golf’s famed Blue Monster two years ago.

    Trump National’s insistence that it had “paid enough” for the paint despite a contract, according to the lawsuit, caused The Paint Spot to slap a lien on the property and Cueto to order the foreclosure sale of the resort.

    In time, Donald Trump’s company got the judge to cancel the June 28 courthouse auction after it placed the $34,000 in escrow, and the case was put on hold while Trump National’s owner, Trump Endeavor, considered an appeal.

    But the lien remained.

    And Cueto was asked to rule on the fees for The Paint Spot’s three $500-an-hour attorneys and two $150-an-hour paralegals that lawsuit loser Trump Endeavor will have to pay.

    The golf company, according to the court file, objected to the hourly rates because it paid its lawyers $400 an hour, according to court records.

    This week, Cueto ruled that the fees were reasonable, and then some.

    First, he ruled Trump should pay for nearly 500 hours of legal work, since the store’s legal team had to prepare for a trial that never took place.

    Then, Cueto tacked on a 75 percent “risk” fee, partly because the store’s lawyers took the risk that they would never be paid if they lost.

    Total: $282,949 and 91 cents, including copying and expert testimony.

    “I’m happy I have a judgment,” said Juan Carlos Enriquez, owner of The Paint Spot. “But he [Trump] hasn’t paid yet.

    “You know how he says he’ll surround himself with the greatest people if he is president? In this case, he might not be surrounded by the right people.”

    Trump bought the property in 2012 for $150 million then launched into a major renovation.

    Alan Garten, Trump’s in-house lawyer, didn’t return a call for comment.
Source: Judge orders Trump to pay nearly $300,000 in attorney’s fees in Doral painter’s lawsuit (The Paint Spot of Doral sued for $34,000 in unpaid painting fees at Trump National; Tiny shop slapped a lien on the property; judge ordered foreclosure date that was later canceled; But Trump must pay nearly $300,000 in attorney’s fees).

For more on those accusing Donald Trump of having deadbeat bill-paying habits, see USA TODAY exclusive: Hundreds allege Donald Trump doesn’t pay his bills:
  • [T]he actions in total paint a portrait of Trump’s sprawling organization frequently failing to pay small businesses and individuals, then sometimes tying them up in court and other negotiations for years. In some cases, the Trump teams financially overpower and outlast much smaller opponents, draining their resources. Some just give up the fight, or settle for less; some have ended up in bankruptcy or out of business altogether.

Philly Feds Pinch Mortgage Outfit/Title Agency Owner For Pocketing Nearly $13 Million In Customers' Refinancing Proceeds While Failing To Pay Off Their Existing Loans At Real Estate Closings; Over Two Dozen Unwitting Homeowners Left Stuck With Two Mortgages On Their Homes

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
  • An Indictment was unsealed [] charging George Barnard, 45, of Newtown Square, with 24 counts of wire fraud, four counts of bank fraud, and three counts of filing a false tax return, announced United States Attorney Zane David Memeger.

    The indictment alleges that Barnard, who from 2005 to March 2013 was one of the two owners of Capital Financial Mortgage Corporation ("CFMC"), based in Delaware County, Pennsylvania, and also was the owner of several title companies, defrauded banks out of almost $13 million dollars and instead of using the money to fund mortgage loans for borrowers and pay off the borrowers’ existing mortgages, he took the money for his personal benefit, including buying yachts, luxury cars, multi-million dollar beach homes in Avalon, New Jersey, and paying the salary of a yacht captain.

    The indictment further alleges that in order to continue to have access to a large pool of money to fund his extravagant lifestyle, Barnard orchestrated a massive fraud scheme, which included selling other banks the mortgages that CFMC had written and representing to the lenders who purchasing those mortgages that they were first mortgages, when in reality they were worthless second mortgages.

    The indictment alleges that while the tax returns Barnard filed with the IRS showed hundreds of thousands of dollars in losses, in reality Barnard had more than $2,300,000 in unreported income, and in order to convince other banks to issue mortgage loans to him so he could purchase yachts and multi-million dollar beach homes, Barnard gave false tax returns to the banks with inflated income figures, and on at least one occasion, told the bank that he was buying the beach home for more than $3,000,000 when in reality the sales price was $2,000,000. The indictment alleges that Barnard was able to conceal this deception by using his own title company to handle the closing of that loan and falsifying closing documents.

    The indictment alleged that as a result of Barnard’s actions, lenders suffered losses of more than $12,700,000, and more than 25 borrowers who obtained refinance loans from CFMC were stuck with two mortgages on their homes after Barnard’s companies failed to pay off the borrowers’ existing first mortgages.

Rhode Island Real Estate Agent With History Of Playing Fast & Loose With Homebuyers' Contract Deposits Hit With Emergency License Suspension For Failing To Tender Customer's Money To Employer For Deposit Into Firm's Escrow Account

In Providence, Rhode Island, the Providence Journal reports:
  • The state's Department of Business Regulation has issued an emergency order to summarily suspend the real estate salesperson's license of John Paliotta, after clients accused him of mishandling their $6,000 deposit check for a property in West Warwick.

    According to the DBR's order, signed July 1 by Director Macky McCleary, Paliotta asked his clients "to make the deposit check out to him, not Coleman Realtors," on Oct. 13, 2015. The deposit accompanied a $200,000 offer for a short-sale property at 5 Queen Anne's Court, West Warwick.

    Then, on Nov. 4, 2015, Paliotta "advised the complainants to submit a second, lower offer for the subject property," for $193,500, "with a deposit of $200 cash," the order added.

    The emergency order said neither deposit was ever tendered to Coleman Realtors for deposit into Coleman's escrow account. On March 23, 2016, the clients told Paliotta they planned to contact Coleman Realtors, according to the DBR. Paliotta, who worked in Coleman Realtors' East Greenwich office, responded: "'Now you are [expletive] with my livelihood. Do not call Coleman Realty. I took this one outside the box,'" the order stated.

    The clients met with Michael Young, principal broker of Coleman Realtors, on April 19, and Paliotta was terminated from the agency that day, the order added. "During the investigation, the Department received evidence of at least two additional real estate transactions in which Respondent was involved from July 2015 through December 2015 that failed to comply with the relevant law. ..."

    State law prohibits real estate agents from depositing clients' money into their personal accounts.

    In 2011, Paliotta, then working for a different agency, was fined $7,500 for depositing a $5,000 check from a client into a personal bank account. That client's offer to purchase real estate was never delivered to the sellers, DBR said at the time, adding that it had evidence that Paliotta "had listed, offered and/or participated in a significant number of real estate transactions which dated back to 2006 in which he solicited and accepted deposit funds made payable to himself personally or his wholly owned corporation, Diamante Realty." Paliotta could not immediately be reached for comment.
For more, see R.I. suspends real estate agent's license after client accusations (DBR: John Paliotta asked clients to make checks out to him, not agency).

Monday, July 25, 2016

Predatory Land Contracts/Contracts For Deed Are Built To Fail, Create "Mirage Of Homeownership" For Unsophisticated Homebuyers, Says National Consumer Advocate In New Report

The New York Times reports:
  • Seller-financed home sales are “toxic transactions,” a prominent national consumer law organization said [] as it released a report and called for greater federal and state oversight of the sales.

    In its report, the National Consumer Law Center said that many of the contracts in such transactions were “built to fail” and were predatory in nature — benefiting sellers at the expense of lower-income and minority buyers who could not qualify for mortgages.

    Such a transaction, called a contract for deed or land contract, is similar to buying a home on an installment plan, with a high-interest, long-term loan. For buyers lured by the dream of homeownership, the transactions can turn into money pits that result in a quick eviction by the seller, who can then flip the home again, an investigation by The New York Times found earlier this year.(1)

    The National Consumer Law Center study describes a shadow housing market that has emerged after the financial crisis. These contracts have flourished in communities where there was a large supply of cheap, foreclosed homes and a paucity of mortgages for properties worth substantially less than $100,000.

    “Land installment contracts are popular with investors because defaulting borrowers can be swiftly evicted, and traditional mortgage foreclosure protections do not apply,” the report said. “This allows investors to reap substantial profits.”

    Some state regulators and federal lawmakers are pushing for stronger action to clamp down on predatory seller-financed home sales.

    One of the larger national firms to emerge in the contract for deed market is Harbour Portfolio Advisors. The Dallas company has bought nearly 7,000 homes — most of them from the government-backed mortgage company Fannie Mae — and has been reselling them “as is,” often in need of major repairs, through contracts that critics contend lack basic consumer protections. The Times article in February focused on Harbour Portfolio.

    The National Consumer Law Center looked at 94 homes that Harbour Portfolio had purchased in the Atlanta area and found that the properties were overwhelmingly located in predominantly African-American neighborhoods.

    In one case, Charles Wright, 46, of Lithonia, Ga., spent more than $12,000 on repairs and improvements for a Harbour Portfolio home in 2012. The company then moved to evict Mr. Wright this year after he missed several monthly payments last year.

    Over three years, Mr. Wright paid more than $17,000 toward the balance of the 30-year contract, according to his lawyer and one of the authors of the report. Mr. Wright said he felt misled by Harbour Portfolio, which had bought the home for $11,745 from Fannie Mae.

    “They were wrong for telling me that I was buying a house and then getting me to put all this money in,” Mr. Wright said. “And now they are kicking me out.”
    The law center report also noted that from the 1930s to the 1960s, contract for deed sales were typically used by home sellers in black communities where mortgages were largely unavailable.

    But then as now, a contract for deed created a “mirage of homeownership,” the report said. It said that the housing lawyers who were interviewed described “marketing schemes that appeared to target African-American and Spanish-speaking consumers.”

Sneaky Landlords Accused Of Using Contract For Deed, Other Lease-To-Own Methods To Skirt Maintenance Responsibilities When Renting Out Dilapidated, Run-Down Money Pits To Unsuspecting Tenants

In Crookston, Minnesota, the Crookston Times reports:
  • As more and more comments were made at a public input session on the City’s proposed “Property Maintenance Code” held at Tuesday’s City Planning Commission meeting, it started to sound like there’s some sort of an under-the-radar, covert subculture in the community that involves rental property owners who are able to legally skirt the rules by frequently moving their dilapidated and otherwise run-down properties via contract for deed or other lease-to-own methods.
    More than anything, though, what emerged Tuesday evening in the council chambers was a strong belief that too many rental property owners in Crookston are able to own vacant, dilapidated and run-down properties that aren’t subject to inspection because they use contract-for-deed and other lease-to-own methods to quickly get tenants in and out of their properties without the involvement of a third party like a bank or governmental unit, which would likely trigger some kind of inspection.

    And, added rental property owner Sheryl Adams, those property owners were not in attendance Tuesday.

    “Everyone that’s here, they already maintain and keep up their properties,” she said. “The people who aren’t here are the ones with vacant or terrible properties. They need to be here.”

    People hide behind things like contract for deed, but is it really a contract for deed? Do they have to prove it?” wondered At Large City Council Member Wayne Melbye. “If you go legit when you’re moving a property, there are some real stopgaps out there. But when these people slip under the radar, they’re in it for the almighty buck and only the almighty buck.”

    Blake Royal, co-owner of JR Rentals, LLC with Justin Jerde, said it’s pretty easy for landlords to find loopholes in the system. “I’m not saying I would because I don’t, but I read this code and in five minutes I figure out how I can get around it,” Royal said. “I could find someone who doesn’t want all the hassle and just wants to get into a house because they can’t get in anywhere else.”

    “These investors that come in, they grab cheap places and turn right around and rent for cheap or contract for deed to felons or others who have a hard time renting a place,” added Dean Adams.
For the story, see City Planning Commission Public Input Session on property maintenance code attendees ask about dilapidated properties (Many at public input session say landlords skirt the rules all the time). land contract

Disabled Man, Parkinsons/Dementia -Stricken Father Face Boot From Brooklyn Home Of Nearly 50 Years After Aunt Allegedly Sells Brownstone Out From Under Them & Swindled Their Share Of $1.525 Million Proceeds; Currently Fighting Off Eviction Against New Owners While Battling To Reverse Fraudulent Sale

In Park Slope, Brooklyn, DNAInfo New York reports:
  • Developers are trying to kick an elderly man and his disabled son out of the Park Slope building they've lived in for nearly 50 years so they can renovate the property, court records show.

    Lawyers for high-end housing specialists The Brooklyn Home Co. recently requested a court order to speed up eviction proceedings against Ernesto Bonilla, 79, and his son Ernesto J. Bonilla, 52, who's known as Junior.

    The father and son, along with the younger Bonilla's girlfriend, live in a three-story 19th century rowhouse on Fifth Street between Fifth and Sixth avenues that the Bonilla family has occupied since the elder Bonilla's parents bought it in 1967.

    The elder Bonilla, who worked as a dish washer at a restaurant and a factory worker in his younger days, now has Parkinson's disease and dementia and spends much of his time in the building's sunny third-floor apartment, where he was watching Spanish-language TV news on a recent visit.

    "[Eviction] would be a psychological disaster for this gentleman, who has lived in the same place for over 40 years," said the Bonillas' attorney, Mayne Miller, referring to the elder Bonilla. "[Evictions] happen all the time but this is a particularly notable example because the father is old and ill and the son is disabled."

    The younger Bonilla was a toddler when his family moved from 15th Street to the Fifth Street brick and brownstone building. He and his parents and grandparents lived there with other relatives and rented out one of the floors to tenants.

    In 2015, unbeknownst to the father and son, an aunt who had lived in the Fifth Street house with them sold the building for $1.525 million to an LLC linked to Brooklyn Home Co. The Bonillas received no money from the sale, and the aunt left the state shortly afterward.

    The Bonillas' three-bedroom apartment is rent-controlled, and the legal rent is $86.25 a month, according to the New York State Division of Housing and Community Renewal, which oversees rent-regulated units.

    The Bonillas found out the property's new owners wanted them out last fall when they were mailed a copy of an application the new owners had filed with DHCR to start the eviction process.

    Property owners have the right to kick out rent-controlled tenants if the owner plans to demolish the building, a process that requires DHCR approval.
    Miller says his clients have been subjected to harassment by the building's new owners. The cellar has been padlocked, and the Bonillas went without hot water for 12 days last winter, he said. The younger Bonilla documented both issues with complaints to the Department of Housing Preservation and Development.

    The new owners have not given the Bonillas a lease or offered them money to leave, according to the younger Bonilla.

    The father and son were awarded $26,000 last year after they took their aunt, with whom they had a contentious relationship, to court in a dispute that wasn't related to the new owners or the sale of the building. The younger Bonilla refused to accept the money, he said. He believes his aunt swindled him out of rightful ownership of the building, and fears accepting the money would damage his legal battle to regain ownership and reverse the 2015 sale.

    The younger Bonilla said his father used to enjoy sitting in the backyard, but hasn't been able to since new owners took over the building last year and padlocked the door that gave them access to the yard.

    Eighteen months ago the elder Bonilla could walk for blocks, but his health has gone downhill since the building changed hands — his son thinks it's because of the stress — and he uses a walker to get around now, his son said.

    The younger Bonilla was once a computer systems engineer but can't work anymore because of health problems, including diabetes and asthma, he said.

Sunday, July 24, 2016

NYC Non-Profit Public Interest Law Firm Gives Hope To Tenants In Lawsuit Against Gentrifying-Seeking, North Bronx Landlord Looking To Give Them The Boot

In the Bedford Park section of The Bronx, Norwood News reports:
  • For the past six months, the small band of tenants at 267 E. 202nd St., a 2-story apartment building, have dealt with an uncertainty that hasn’t quite been resolved: are they staying or going?

    It’s a question that’s been on the minds of these tenants who’ve built lives there for as long as 30 years.

    “Everybody’s been living in that building for so long,” said Cynthia Garcia, a tenant and single mother of two children. “Everybody’s like family.”

    The piece of property, resting at the tip of Briggs Avenue in a sleepy part of Bedford Park, remains a source of attention for a lawyer looking to keep tenants in their homes, a lawmaker who’s kept an eye on developments, and housing advocates who balk at the ongoing urbanization of the neighborhood.

    Together they’ve all set their sights on the new owner, Peter Fine, a housing developer who spent some years building homes in wealthy parts of Florida state. He’s since been taken to court, propagating a situation that, at its core, is arguing the future look of Bedford Park. It’s since inspired petitions demanding lawmakers downzone the district.

    Fine is now answering a lawsuit originally filed against Genesis Realty, which had sent 30-day eviction notices to tenants in February. The original suit, filed by the tenants’ attorney, Andrew Darcy,(1) demanded repairs inside the building be made. The suit doubled as insurance to keep the tenants in their homes. The two sides are expected in court in July to conference with the court over repairs.

    For tenants, their fears seem rooted with one conclusion: Fine wants to clear the building so it could be bulldozed, making way for new housing. Just what kind of housing remains unclear.
For more, see Residents, Holding to Bedford Park Home, Plug Away.
(1) Andrew Darcy is a staff attorney with MFY Legal Services, a non-profit public interest law firm that provides free legal assistance to vulnerable and under-served residents of New York City on a wide range of civil legal issues.

Sneaky Landlord Agreed Not To Permanently Displace Tenants As Condition For Scoring $16 Million In City Rehab Loans, Then Tried To Boot Over 30 Families Anyway; Protest Thwarts Mass Eviction Attempt

In Austin, Texas, The Austin Chronicle reports:
  • [T]he owners of the Cross Creek Apartments retracted more than 30 notices to vacate that had been served on their current tenants. The move comes less than a week after some of the residents – organizing as the Cross Creek Tenant Association – led a march through the Rundberg-area complex to protest the eviction.

    The owners recently received $16 million in private activity loans approved by the Austin Housing Finance Corporation [AHFC] to renovate the complex, but the notices to vacate, delivered to more than 30 families living at Cross Creek, violated the AHFC rules and regulations that the owners had agreed to follow.
    [T]he tenant association will continue organizing to put pressure on both the city and the owners to follow through on their commitments. Residents have been supported since the end of May by Building and Strengthening Tenant Action (BASTA), a Texas RioGrande Legal Aid program funded by the city. Shoshana Krieger, the program's director, said that her team originally got involved because of [a] hot water issue, but that they have increased their efforts after the notices to vacate were distributed. "If the owner wants to use city money, then he should honor his commitment not to displace his tenants," she said.

    In 2014, the Austin Housing Finance Cor­poration awarded the owners $2 million in general obligation bonds, and then in April of this year they approved $16 million in financing, provided that no tenant was permanently displaced as a result of redevelopment. While the city has taken action in regards to the hot water issue and code violations, it did not take a position on the notices to vacate. "The question should not be whether or not the buildings are up to code, but whether or not they are up to code for the people living there," Krieger said.
For more, see Cross Creek Evictions Retracted (Tenants' efforts to organize prove successful).

Landlord's Failure To Clear Open Electric Code Violations Leads To Power Shutoff; Failure To Bring Premises Into Compliance May Lead To Closure Of Wisconsin Mobile Home Park, Forcing Lot-Leasing Homeowners To Abandon Their Residences

In Superior, Wisconsin, the Superior Telegram reports:
  • Some homeowners in the Downtown Mobile Home Park on North 12th Street face uncertainty after the city served notice June 30 the electricity to their homes would be shut off later this month; others are making plans to move on.

    The city secured a warrant to turn off the power to the mobile homes at 8 a.m. July 25 after years of battling the park owner to correct electric code violations.

    While some repairs have been made by the owner, Brian Androski, city officials say he failed to act on violations with the electrical infrastructure going to residents’ homes.

    It’s life safety issues out there … electrical issues mainly,” said Jason Serck, economic development, port and planning director. “It’s bare wires. It’s leaning pedestals. It’s electrocution type of stuff.”

    However, Androski said the leaning pedestals are just a normal function of standing in clay soil.

    “We live in clay country,” Androski said. “Once somebody has a leak or it gets kind of damp, the pedestal, they will eventually start to lean. We take and straighten them back up in the spring and pound them down real tight again and it’s back to normal.”

    Caught in the middle

    “I’m just so frazzled, I don’t know what to do,” said Kathy Mains, a six-year Downtown Mobile Home Park resident who cares for a disabled veteran, Henry Niemann. “It’s home, but it’s not no more … Where are you going to go that’s going to be handicap accessible for him?

    He has two dogs. I’m just packing and hoping for the best.”

    Mains said they may move in with her son until they can figure it out, but she’s worried what will happen to the home Niemann owns, built in 1978 and older than some mobile home parks will accept.

    Residents were notified June 30 that the power would be cut to their homes July 25, at which time they could no longer live there.

    “Just give us more time,” said David Sickler, 62, who lives in a 1968 mobile home owned by his sister. “It’s just a mess … It’s a scary proposition to have someone say you have to leave your house.”

    He said he knows he can’t stay. He needs electricity because a lung condition requires him to be on oxygen, and he needs air conditioning to cope with hot weather.

    “The worst thing is this has been going on for six years, and this is the first we hear about it, 26 days before you decide to close the park up,” Sickler said. “And there are people worse off than me.”
    The city noted code violations going back to 2010. It wasn’t until 2013 and 2014 when the city started in earnest to address the problems at the mobile home park. In June 2014, the city issued orders to correct electrical issues, according to city officials.
For more, see Homeowners forced out.

For follow-up story, see Lights to stay on at Downtown Mobile Home Park:
  • Residents of the Downtown Mobile Home Park received official word Friday that the lights will remain on Monday.

    The city is hand-delivering and mailing notices to residents to let them know a warrant issued to cut the electrical power Monday won’t be executed after all.

    “Downtown Mobile Home Park owner Brian Androski has entered into a contract with Benson Electric to make repairs to the electrical system necessary to bring the park into compliance with electrical code as ordered by the city of Superior Building Inspection Division,” the notice signed by Building Inspector Peter Kruit states.

    The Downtown Mobile Home Park was slated to have the power cut at 8 a.m. Monday after the city secured a warrant, making more than 20 homes their uninhabitable under the law.

    Kruit said he signed off Friday on the permit for the work to proceed.

Another Aging, Money-Losing Nursing Home Bites The Dust, Causing Displacement Of Over 70 Seniors By Thanksgiving; Significant Medicaid Cuts Impact Closure Decision

In Hutchinson, Kansas, The Hutchinson News reports:
  • Staff and residents of Dillon Living Center were notified [] that the facility at 1901 E. 23rd Ave. would close its doors at the end of November.

    Officials blamed ongoing losses by the 96-bed assisted-living and skilled nursing home, as well as a need for $3 million to $4 milliown in building upgrades to make the facility competitive in today’s care-home market.

    The closure will affect 71 residents and about 70 full-time-equivalent staff, said Ken Johnson, president and CEO of Hutchinson Regional Healthcare System.

    “The hardest part of this decision is the burden we’re placing on our residents, their families and our staff,” Johnson said. “Moving to a new home or place of work is stressful, so our priority is to ease that transition for everyone.”

    The organization is planning to schedule meetings with officials from other long-term-care facilities in the community to help residents transition to new homes, Johnson said.
    The home, [...] has been “sustaining very significant losses” annually for the past decade, Johnson said, including losing about $1 million per year the past two years. [...] “The industry is moving to a homelike atmosphere,” Johnson said. “We feel very much like an industrial or institutional assisted-living facility, on both sides.”

    While housing about 20 people in assisted living and 50 in skilled nursing, the operation lacks an independent-living segment, which helps feed new residents into the home as they transition through different levels of need, helping maintain the facility’s census, Johnson said.

    Recent cuts to Medicaid through KanCare by the state also have had an impact, though they are not directly the cause for the decision, Johnson said.

    “This decision has been in the works a long time, but significant cuts on Medicaid payments add to the prudence of the decision,” he said.

200+ Unit Apartment Complex's Date With Wrecking Ball Spells The Boot For Over 600 Rent-Controlled San Jose Tenants; Believed To Be Largest Mass Eviction Ever In Silicon Valley

In San Jose, California, KGO-TV Channel 7 reports:
  • A mass eviction could be the largest ever in Silicon Valley with hundreds of tenants being told they must move out of their homes.

    The Reserve apartments located on South Winchester Boulevard near Williams Road in San Jose are slated to be demolished and replaced with new development.

    Everyone in the 200-plus unit apartment complex must be out by March. In its place will be new market-rate housing shops and restaurants.

    It's a project that's going to triple the number of apartment units at the expense of the people living there now.

    San Jose has no laws requiring compensation packages for evicted tenants, but the landlord is offering assistance to tenants who make less than 80 percent of the region's median income.
Source: Mass Eviction Could Be Silicon Valley's Largest Ever.

See also, Mass Eviction—San Jose’s Largest—to Displace 670 People:
  • For context, consider that San Francisco called a drawn-out eviction of 100 tenants from 86 rent-controlled units the largest in the city’s history. At The Reserve, nearly seven times as many people got the boot with far less notice.

    To make matters worse, the South Bay city of a million has no policy on the books to help tenants pay for the forced move. This was never supposed to happen, says Randi Kinman, who chairs the Metropolitan Transportation Commission’s policy advisory subcommittee, a regional planning body. Evicting 600-plus people from rent-controlled units conflicts with state-set goals to maintain housing stock for all income levels.

    “We kind of brush off displacement from four units here or five units there,” Kinman says. “But at no point has there been any idea that we would see this scale of displacement or that it would remove this many rent-controlled units. When I brought this up at our meeting two months ago, people wanted to know how could this possibly be happening? Everybody just kind of looked at each other and said, ‘Holy smokes.’”

Saturday, July 23, 2016

2015 A Banner Year For Minnesota Supremes When Hammering Lawyers In Professional Disciplinary Actions; Of Six Disbarred Attorneys, Three Got The Boot For Embezzling Client Cash

In Minneapolis, Minnesota, the Star Tribune reports:
  • Minnesota lawyers set a record in 2015, but it’s nothing to boast about.

    Sixty-five lawyers were publicly disciplined last year, breaking the previous record of 55 set in 1990, the Minnesota Lawyers Professional Responsibility Board said in its annual report [].

    Among other disciplinary actions, the Minnesota Supreme Court suspended 47 lawyers in 2015, smashing the previous record of 27, set in 1990 and matched in 1995 and 1996.

    “I wish that we knew why there was a record year, but we don’t,” said Susan M. Humiston, who took over as director of the lawyers board office in March. “It really does appear to be the fact that more people were engaged in more serious conduct.”

    The office has a backlog of complaints to investigate, although it has made progress in reducing that number.

    Six attorneys were disbarred in 2015:

    • Jeremy Thomas Kramer of Owatonna lost his license for misappropriating client money, neglecting their cases, failing to communicate with them, failing to deposit all of their money into trust accounts, keeping money they gave him for filing fees, and failing to return their property.

    • Robert David Boedigheimer was found guilty of conspiring with his brother-in-law, a marijuana dealer based in southern Minnesota, to launder proceeds from drug sales through his St. Paul law firm.

    • John Tedman Heim of Rochester was found guilty of forging a client’s signature on a check and depositing the proceeds into his own business account for his own personal benefit.

    • David A. Overboe was found by clear and convincing evidence “to have had unwelcome sexual contact with multiple clients, including groping and exposing himself to them, and had offered to reduce his legal fees in exchange for sexual favors.” The alleged misconduct took place over 14 years. He also was found to have practiced law in North Dakota while his license was suspended.

    • Douglas A. Ruhland of Eden Valley lost his license as a result of his seventh disciplinary action since 1989. He represented a client with whom he had a conflict of interest without providing written disclosures and obtaining written consent; he misappropriated client funds, he failed to keep trust account records and books and he failed to cooperate with the lawyers board investigators.

    • Robert Andrew Huff lost his license in Minnesota after he was disbarred in Illinois, an action resulting from a 2009 conviction for conspiring to distribute a large cache of marijuana.

    So far, 2016 is shaping up as another busy year for lawyers in trouble. [...] As of June 14, the board reported 25 public disciplinary actions in 2016, including two disbarments, a dozen suspensions, nine reprimands that resulted in probation and two other reprimands..
    Misappropriation of client funds always leads to disbarment,”(1) Humiston said. Sanctions for other kinds of serious misconduct are less predictable..
For more, see Minnesota set a new record last year for punishing lawyers (The state Supreme Court disbarred six lawyers and suspended the licenses of 47 others last year).
(1) The Clients' Security Fund was established by the Minnesota Supreme Court to aid those persons who suffer a loss because of dishonest conduct on the part of a lawyer during the course of an attorney-client relationship in Minnesota.

The fund may reimburse up to $150,000 for dishonest conduct committed by a Minnesota lawyer. It covers the loss of money or property resulting from lawyer dishonesty, but not because the lawyer acted incompetently, committed malpractice or failed to take certain actions.

To qualify for reimbursement, you must be able to show that the money or property actually came into the lawyer's possession and that the loss was caused by the lawyer's dishonest conduct.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

Florida Supremes Suspend Or Boot Seven Lawyers For Playing Fast & Loose With Their Clients' Cash

The Florida Bar, the state’s guardian for the integrity of the legal profession, has published the latest issue of its periodic gossip sheet, announcing that the Florida Supreme Court has recently disciplined 16 attorneys – disbarring five, revoking the licenses of two, suspending eight and publicly reprimanding one. Four attorneys received more than one form of discipline. One attorney was ordered to pay restitution; three attorneys were also placed on probation.

Of those 16 lawyers, the following seven have been disciplined for playing fast and loose with their clients' money, including one who pocketed upfront fees for loan modifications and foreclosure defense in Missouri, where he is not licensed to practice law:
  • Angela Morton Armstrong, Palm Harbor, disbarred effective immediately, following an April 21 court order. (Admitted to practice: 2001) Armstrong was not diligent in the performance of services for which she had been retained. She accepted fees and failed to keep clients reasonably informed about the status of their cases. In numerous instances, there were no records showing that Armstrong filed bankruptcy cases on behalf of clients. (Case Nos. SC15-1407 & SC15-1418)

    Keirsten Klatch, Jacksonville, suspended until further order, effective immediately, following a May 17 court order. (Admitted to practice: 2011) Klatch was found in contempt for failing to respond in writing to a Bar subpoena for records and an inquiry regarding the whereabouts of a client’s funds. (Case No. SC16-567)

    William Todd Long, Winter Park, disbarred, effective immediately, following a May 12 court order. (Admitted to practice: 1989) Long pervasively misappropriated client trust funds, to which he was not entitled, for business expenses and for his personal benefit. He failed to respond to the Bar’s nine letters and six subpoenas requiring production of his trust account records; he misrepresented himself as a Board Certified Civil Trial Lawyer, when in fact he was not; and he improperly charged personal injury clients an administrative fee of $100 to $200. Long also failed to comply with the emergency suspension order issued by the Supreme Court of Florida that required notification of his suspension to all clients, opposing counsel, and courts to which he was counsel of record. (Case No. SC15-1739)

    Eric Andrew Mader, Tampa, suspended for three years, effective retroactive to June 18, 2014, following a May 19 court order. (Admitted to practice: 1997) Mader is further placed on probation for three years. Mader improperly handled a case involving the collection of a commercial debt. Additionally, Mader is not licensed in Missouri, but engaged in the unauthorized practice of law, beginning in 2012, representing Missourians in loan modification and foreclosure defense cases. He charged and received advance payment prior to fully performing all services. (Case No. SC15-2000)

    Robert Andrew Mogle, Davie, disbarred effective immediately, following an April 14 court order. (Admitted to practice: 2000) Mogle accepted money to represent several clients but took no significant action on the cases. He also abandoned his law practice without giving notice to clients or The Florida Bar. (Case No. SC15-1664)

    William Reid Penuel, Atlantic Beach, disbarred effective immediately, following an April 21 court order. (Admitted to practice: 2006) Further, Penuel shall pay restitution of $147,495. Penuel withdrew funds from an estate account without authorization. He provided no accounting of the missing funds nor has he returned the funds to the estate account. Penuel failed to appear before the bankruptcy court as ordered and was held in contempt. (Case No. SC15-1634)

    David Land Whigham, Tampa. The Supreme Court granted Whigham’s request for a permanent disciplinary revocation, without leave to seek readmission, effective immediately, following a May 19 court order. (Admitted to practice: 1998) Whigham had previously been placed under emergency suspension for misappropriating more than $899,000.00. Disciplinary revocation is tantamount to disbarment. Disciplinary matters pending against Whigham involved trust accounts. (Case No. SC16-428)
Source: Supreme Court Disciplines 16 Attorneys.

Note: To view discipline documents, follow these steps. Additional information on the discipline system and how to file a complaint are available at

Another Attorney Pleads Guilty To Using Client Trust Account As A Personal Piggy Bank, Pocketing $105K+ In Funds Meant As Security For Municipal Construction Project

From the Office of the U.S. Attorney (Scranton, Pennsylvania):
  • The United States Attorney’s Office for the Middle District of Pennsylvania announced that the former Solicitor for Hazle Township, Luzerne County, pleaded guilty [] to the theft of approximately $105,586 from the township.

    According to United States Attorney Peter Smith, Charles Pedri, age 64, of Hazleton, entered a guilty plea [...] in Scranton to a Criminal Information which charged Pedri with theft from a program receiving federal funds. Pedri was the Solicitor for Hazle Township at the time of the theft.

    As set forth in the Criminal Information, Hazle Township required a company which was developing a project in the Humboldt Industrial Park in the township to complete certain specific improvements to the property, pursuant to land development ordinances. As security for the completion of the improvements, the company and Hazle Township entered into an escrow agreement.

    Pedri, in his capacity as Hazle Township Solicitor, signed the agreement as escrow agent. The company then paid to Hazle Township the sum of $105,586 to be held in escrow as security for the completion of the improvements. Pedri, as escrow agent, deposited the funds into his law office account.

    Thereafter, Pedri began withdrawing the funds held in trust and converted the funds to his own personal use. The investigation revealed that, between December 2012 and November 2013, Pedri wrote checks payable to himself, which were drawn on the Township funds. By November 2013, the funds were gone.

    Upon completion of the improvements in May 2014, the company requested that Hazle Township return the escrowed funds. Over a period of approximately eight months, Pedri made misrepresentations to representatives of the company regarding the status of the funds and failed to make payment. In January 2015, after the company informed Pedri it intended to file a law suit, Pedri admitted that he had converted the funds to his own use.

Another Aging Attorney Bows Out On Career-Ending Low As Feds Unseal Indictment Against Him Three Days After Bar Grievance Committee Yanks Law License; Theft/Income Tax Charges Center Around Alleged Pilfer Of An $850K Real Estate Deposit From Prospective Buyer

From the Office of the U.S. Attorney (White Plains, New York):
  • Preet Bharara, the United States Attorney for the Southern District of New York, [and two other high-ranking Feds], announced [] the unsealing in White Plains federal court of a six-count Indictment of former Orange County Attorney JOSEPH G. SCALI for mail fraud, structuring cash transactions, obstructing the IRS, tax evasion, obstruction of justice, and perjury. SCALI was arrested this morning and is expected to be arraigned in federal court in White Plains this afternoon.
    According to the Indictment and other court filings related to this matter:

    From January of 2011 through August 28, 2012, SCALI, who represented the seller of two tracts of land in Pennsylvania, schemed to defraud the prospective purchaser of that real estate of the $850,000 the latter had given to him to hold in escrow by misappropriating those funds from his attorney trust/escrow account.(1)  Additionally, the Indictment charges SCALI with structuring approximately $32,000 of cash deposits to that account.
    SCALI, 67, of West Hartford, Connecticut, is charged with one count of mail fraud, which carries a maximum sentence of 20 years in prison; on count of structuring cash transactions, which carries a maximum sentence of five years in prison; one count of obstructing the IRS, which carries a maximum sentence of three years in prison; one count of tax evasion, which carries a maximum sentence of five years in prison; one count of obstruction of justice, which carries a maximum sentence of 10 years in prison; and one count of perjury, which carries a maximum sentence of five years in prison.

See also, the Times Herald-Record: Town of Wallkill lawyer disbarred for professional misconduct:
  • A judicial grievance committee has disbarred Town of Wallkill lawyer Joseph G. Scali, issuing a scathing decision [] that sustained 49 charges of professional misconduct against him.

    The Grievance Committee for the Appellate division, Second Department of state Supreme Court rejected Scali's January attempt to resign from the bar ahead of the disciplinary finding, choosing instead to disbar him. He is also ordered to refrain from practicing law in any form, appearing as a lawyer in any court. giving legal advice or holding himself out as a lawyer.

    The disbarment is the conclusion of a disciplinary process against Scali that's been ongoing since 2011.

    The Grievance Committee wrote that Scali engaged in serious misconduct, misappropriating client money from his escrow accounts, mingling client and personal funds, failing to keep or provide proper financial records, and failing to cooperate with the committee's investigation. Scali had already racked up eight admonitions and six letters of caution for similar misconduct, the committee wrote.
(1) The Lawyers’ Fund For Client Protection Of the State of New York manages and distributes money collected from annual dues paid by members of the state bar to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the New York bar acting as an attorney or a fiduciary.

For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

See generally:
  • N.Y. fund for cheated clients wants thieving lawyers disbarred, a July, 2015 Associated Press story on this Fund reporting that the Fund's executive director, among other things, is calling for prompt referral to the local district attorney when the disciplinary committee has uncontested evidence of theft by a lawyer injuring a client or an admission of culpability;

    When Lawyers Steal the Escrow, a June, 2005 New York Times story describing some cases of client reimbursements ("With real estate business surging and down-payment amounts rising with home prices, the temptation for a lawyer to filch money from a bulging escrow account and later repay it with other clients' money has never been greater, said lawyers who monitor the thefts."),

    Thieving Lawyers Draining Client Security Funds, a December, 1991 New York Times story that gives some-real life examples of how client security funds deal with claims and the pressures the administrators of those funds may feel when left insufficiently financed as a result of the misconduct of a handful of lawyer/scoundrels.

    Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession.

Friday, July 22, 2016

Alleged Financial Exploitation Of The Elderly Among Felony Charges Facing Missouri Man Accused Of Making False Promises To Do Roofing, Remodeling Work, Fleecing Seven Homeowners Out Of $20K+

From the Office of the Missouri Attorney General:
  • Attorney General Chris Koster announced [] that he filed a criminal case against Donald J. Harralston in Jefferson County for multiple felony counts of financial exploitation of the elderly, stealing, and unlawful merchandising practices. Koster has joined with Jefferson County Prosecuting Attorney Forrest Wegge in prosecuting Harralston for defrauding Jefferson County consumers.

    Koster alleges that Harralston made false promises to do roofing and remodeling work for consumers. Harralston demanded significant upfront payment then, in most cases, performed no work and provided no materials.

    The total loss is more than $20,000 from seven consumers.

    “When our investigation reveals that a company has ripped off customers, this office will act to punish the scammer and protect Missourians,” Koster said.

Cops Pinch Connecticut Man On Larceny Charges For Allegedly Fleecing Two Elderly Homeowners Out Of $30K+ For Home Repairs That Were Never Started

In Norwalk, Connecticut, NBC Connecticut reports:
  • Norwalk police have arrested a man accused of scamming elderly residents out of thousands of dollars.

    Angelo Bimbo, 21, of Ponus Avenue faces larceny charges after two separate incidents. Police said the first was reported on March 15. According to police, Bimbo went to the victim’s home looking for work and agreed to do repairs. The victim paid $24,750 in checks, but the work was never done, police said. Bimbo was identified by his license, which he used to cash the checks.

    The second incident was reported to police on May 12. Police said another elderly Norwalk resident reported that Bimbo showed up at the victim’s home and claimed the roof had a “bubble” and that the driveway needed repairs. The victim paid Bimbo $7,000 in checks but Bimbo did not start the work, according to police. Bimbo eventually returned and the victim contacted police. Police said when they arrived Bimbo had fled the scene and abandoned a worker on the roof of the home.

    Police said Bimbo turned himself in [] on a warrant. He is being held on a $31,650 bond.

NJ Woman Pleads Guilty To Theft By Deception For Pilfering $40K+ From Two Homeowners By Falsely Posing As Rep For Home Improvement Outfits & Pocketing Upfront Deposits For Repair Work

From the Office of the New Jersey Attorney General:
  • Acting Attorney General Robert Lougy and the Office of the Insurance Fraud Prosecutor (OIFP) announced that a woman pleaded guilty [] to stealing more than $40,000 from two home improvement customers, including an elderly woman who hired her to repair roof damage caused by Superstorm Sandy.

    Dorian Leigh Dammer, 56, whose last known address was in Easton, Pennsylvania pleaded guilty to two counts of theft by deception in the third degree in a hearing before Superior Court Judge Robert B. Reed in Somerset County.

    Under the terms of the plea agreement, Dammer agreed to pay a total of $37,500 in restitution to the two homeowners. Additionally, the State will recommend a probationary sentence when Dammer is sentenced. Her sentence is scheduled for August 25, 2016.

    In pleading guilty, Dammer admitted that on two occasions she stole money from homeowners by posing as a representative authorized to bid jobs for two improvement companies that in reality she didn’t work for.
    Dammer admitted that in October 2013 she stole money from a Bridgewater widow who had hired her to repair roof damage caused by Superstorm Sandy. Dammer admitted she posed as an employee of Vanguard Construction and cashed three checks totaling $28,770 but never had the repairs done.

    Dammer also admitted that in December 2015, she posed as an employee of Majestic Exteriors to solicit a job to install windows in a Bridgewater home. Dammer admitted she cashed three checks totaling $15,000 but never had the work done.

Thursday, July 21, 2016

California AG Pinches Six On 135 Felony Charges For Allegedly Peddling Phony Foreclosure Rescue Racket; Defendants Accused Of Using Forged Deeds & Fraudulent Court Documents, Causing $4+ Million In Losses

From the Office of the California Attorney General:
  • Attorney General Kamala D. Harris announced that six individuals were indicted and arrested on 135 felony charges for operating a mortgage fraud scheme throughout Southern California and the Inland Empire, preying on homeowners facing foreclosure. The case is being prosecuted by attorneys in the Attorney General’s Mortgage Fraud Strike Force, created by Harris in 2011 to prosecute mortgage fraud at every step of the process.

    Jacob Orona, Aide Orona, John Contreras, Prakashumar ("Kash") Bhakta, Marcus Robinson, and David Boyd were indicted by a grand jury on 135 felony charges, including conspiracy, grand theft, filing false or forged documents, and identity theft. All six defendants were arrested last week and one defendant, Marcus Robinson, was arraigned [], Monday, July 11, in San Diego Superior Court.
    The scam artists promised homeowners who were underwater on their mortgages that they could provide legal remedies to avoid foreclosure, convincing homeowners to stop making mortgage payments and instead pay them $3,500 to start with an “administrative process,” plus $1,000 every month and separate amounts to allegedly file legal documents. The defendants filed bogus petitions and court pleadings and recorded false deeds in county recorders’ offices, causing over $4 million in losses while failing to halt any foreclosures. The fraud stretched through San Diego, Riverside, San Bernardino, and Los Angeles counties.

    The indictment was delivered following a two-week special statewide grand jury convened in San Diego County. If convicted, Jacob and Aide Orona face over 90 years in prison; Contreras and Prakashkumar face over 70 years in prison; Robinson faces over 28 years in prison, and Boyd faces over 18 years in prison.

    The arrests and arraignments are the culmination of a joint investigation by the Federal Housing Finance Agency Office of the Inspector General (FHFAOIG), the Attorney General’s Financial Fraud and Special Prosecutions Section (FFSPS), the California Department of Justice Bureau of Investigation, and the Stanislaus County District Attorney’s Office, Real Estate Fraud Unit.
Source: Attorney General Kamala D. Harris Announces Arrests and Indictments by California Department of Justice Mortgage Strike Task Force (Six Defendants Indicted on 135 Felony Counts For Scam That Cost Vulnerable Homeowners $4 Million).

For the indictment, see People v. Orona, et al.

South Carolina Man Gets 63 Months After Pleading Guilty To Running Bogus Loan Modification Racket That Fleeced Over $2.2 Million From Financially Distressed Homeowners

From the Office of the U.S. Attorney (Florence, South Carolina):
  • Acting United States Attorney Beth Drake stated that Shayne Harrison Smith, of Myrtle Beach, South Carolina, was sentenced to 63 months imprisonment in federal court. In July of 2015, Smith pled guilty to Wire Fraud, [...].

    After Smith completes the term of imprisonment, he will be on federal supervised release for 5 years. Smith was also ordered to pay $2,213,307.99 in restitution to the victims in his case. United States District Judge R. Bryan Harwell, of Florence, imposed the sentence.

    Information presented at an earlier hearing established that Mr. Smith was involved in a "mortgage rescue scheme." He convinced distressed home owners that he could negotiate better terms of repayment with their lenders. Mr. Smith required the victims to pay him fees which he used for his own benefit. He encouraged some of the home owners to cease communicating with their lenders and stop making payments to the lenders, because he would take care of everything. Mr. Smith never successfully renegotiated any of the mortgages.

Wednesday, July 20, 2016

Washington State Supremes Slam Door On Banksters' Pre-Foreclosure Sale Lockouts Of Homeowners Behind On Loan Payments; Ruling Clears Way For Federal Class Action; Homeowner's Attorney: Damages Could Easily Reach Into Ten$ Of Million$

In Seattle, Washington, The Associated Press reports:
  • Laura Jordan came home from work one day to find herself locked out. She had missed two mortgage payments, and the company servicing her loan had changed the locks without warning.

    In a ruling this month, the Washington state Supreme Court found that action illegal — a decision that clears the way for a federal class-action case that Jordan brought on behalf of at least 3,600 borrowers in the state, and one that could have broad ramifications on how some lenders respond when homeowners miss payments.

    This is criminal trespass and theft, and it should be treated as such,” said Sheila O’Sullivan, executive director of the Northwest Consumer Law Center. “There’s no basis for them to walk in and change the locks on a person’s home until they have foreclosed. It’s an important ruling.”

    The mortgage industry is wrestling with the significance of the 6-3 ruling, which found that provisions standard in mortgage documents around the country conflict with state law. The provisions allow for lenders to change locks, winterize homes or take other steps to preserve the value of properties that are in default or abandoned.

    In a friend-of-the-court-brief, the Federal Home Loan Mortgage Corporation — better known as Freddie Mac — highlighted the importance of such provisions in maintaining its collateral and avoiding blight that might harm property values in a neighborhood.

    But the court held that they violate state law, which prohibits lenders from taking possession of property before foreclosure. The court addressed the question at the request of a federal judge in Spokane, who is overseeing the class action.

    The plaintiffs’ lawyers say Washington appears to be the first state in the nation that has invalidated the provisions, and consumer advocates say other states could follow suit, or that the ruling could inspire additional class-action lawsuits.

    In Jordan’s case, Dallas-based Nationstar Mortgage hired a vendor to inspect her Wenatchee property in 2011 after she missed a couple of mortgage payments that year. The vendor posted a notice on the door saying the property was “unsecure or vacant,” prompting the company to have the locks changed. Jordan, a dental hygienist, argues that she was still living there, and that when she got home from work, she found herself locked out. The new key to the house was in a lockbox, and she had to call Nationstar to get the combination to retrieve it.

    “She could no longer access her home without going through Nationstar,” Justice Susan Owens wrote for the majority. “This action of changing the locks and allowing her a key only after contacting Nationstar for the lock-box code is a clear expression of control.”

    Nationstar said it was evaluating whether to ask the court to reconsider, to narrow the impact of the decision. A spokesman for Freddie Mac said the organization would not comment on the ruling.

    “For many years, we have followed standard industry practices regarding property preservation,” Nationstar said in an emailed statement. “Particularly if broadly construed, the decision will likely hamper loan servicers’ efforts to maintain abandoned properties and avoid blight in Washington communities.”

    The Northwest Consumer Law Center, which works with financially troubled borrowers to help them modify their loans or otherwise retain their properties, argued that the real reason Nationstar was quick to change locks was to prompt people to move out — making it more likely that foreclosure would proceed uncontested. Several borrowers whose locks were changed said their properties were incorrectly deemed abandoned, and that they believed they had no right to remain once the locks were changed.

    Clay Gatens, a Wenatchee lawyer who represents the plaintiffs, said that if properties are truly abandoned and at risk, Washington law does provide lenders a quicker alternative to foreclosure, which can take months. That’s to have a court appoint a receiver, he said.

    Gatens said he’s seeking damages that include the fair rental value of the class members’ properties between the time the locks were changed and the time the foreclosures were eventually completed — a period that typically spanned eight to 10 months, meaning damages could easily reach into the tens of millions of dollars, he said.

    “You have all this egregious behavior,” he said. “These folks are in economic distress. They don’t know what’s happened — they just know their home’s been broken into and the locks have been changed, which prompts them to move. This ruling has got broad, broad ramifications in Washington to stop this practice, but I think it will have national impact as well.”

California Man Cons Grandparents Into Signing Over Deed To Their Home Of 56 Years, Pockets Over $400K In Refinancing Proceeds, Then Sells Premises Out From Under Them

In Thousand Oaks, California, The Acorn reports:
  • Sitting on a hillside under towering pine and eucalyptus trees is the home Hank and Helen Kawecki have lived in for 56 years. But it might not be theirs for much longer.

    The Kaweckis, both in their late 80s, have received foreclosure notices on the 2,000-squarefoot, mid-century post-and-beam house they bought directly from the builder. In what they call the worst kind of fraud, they say their grandson took out three separate loans against the home and then tried to sell it out from under them.

    “I’m in a daze and we can’t sleep,” Hank said.“She’s nervous and can’t walk half the time and I’m getting like that.”

    The ranch-style house off Erbes Road in T.O. holds all the Kaweckis’ worldly possessions.

    And it holds memories of raising a family there and of the visits from their five grandchildren and five great-grandchildren. They did, however, willingly sign the deed over to their grandson, whose name they requested not be used due to ongoing criminal investigations and court proceedings. Attempts to reach him for comment on this story were unsuccessful.

    The trouble started two years ago, when the Kaweckis found themselves in need of money. They were thinking about getting a loan from the bank, but their grandson told them they wouldn’t be able to because they were retired. They said he suggested they sign the house over to him and he’d take out a loan against it and give them the money.

    “We signed the papers but we didn’t read them carefully enough,” Hank said. “We believed him and that was our mistake.”

    The grandson went on to convince the Kaweckis it would save them money if he kept the loan funds—about $470,000—in his account and just gave them monthly disbursements, they said. They agreed, but after a few payments, the money stopped coming.

    Things got worse. He put the home up for sale without telling them.

    Several times the grandson asked the Kaweckis to leave the house because he was having bank agents come by to assess the home to help him lower the loan payments, but in reality, he was having real estate agents and possible buyers over to view the home, they said.

    The Kaweckis remained unaware of the looming sale until a neighbor on their close-knit block found out by sheer chance.

    Art Kraft said he was talking with a Realtor about renting out his property when the agent mentioned that another house on the street was for sale—the Kaweckis’.

    “I had been there the day before and they didn’t mention selling their home, so I came up that day and said, ‘Hey, your house is for sale and it’s going to be foreclosed soon,’” Kraft said.

    The Kaweckis didn’t believe him. They asked their grandson about it and he convinced them it wasn’t on the market.

    It took another neighboring couple to open their eyes.

    Linda Emerson said she found out when two people came to her door saying, “We’re the new neighbors.”

    “We went over (to the Kaweckis) and said, ‘Your house has been sold,’ and they couldn’t believe it,” Emerson said.

    Emerson’s husband, Doug, did some online research and discovered evidence of the prior loans that finally convinced the heartbroken grandparents they’d been had by their own flesh and blood.

    With the help of their neighbors the Emersons, the Kaweckis were able to get a lawyer who helped stop the sale and begin a civil case against the grandson, but the couple still faced eviction.(1)

    “They have a lawsuit on file, and in that lawsuit they’re claiming the first deed was fraudulent . . . but lawsuits like that take a long time, they take a lot of money,” Doug Emerson said. “The problem is they could win their lawsuit, but it wouldn’t be until after they were evicted and they basically have no money, no place to go.”

    “The No. 1 type of reported abuse against our elders is financial,” said Marcy Snider, elder abuse program manager for Ventura County Adult Protective Services. “What we’re seeing mostly is, ‘Why don’t you quick deed the house to me?’” Snider said.

    In addition to home deeds, Snider’s department receives many cases of people giving full access of their bank accounts to others, perhaps to pay bills or manage the finances, without realizing the person can do whatever they want with the money in the account.

    “People do it because they think they’re doing the right thing,” Snider said. “Nobody expects family members to take advantage of you, but money can change people.”

    The county statistics—50 to 70 percent of the abuse comes from family members—match national figures, she said.

    In 2015, the department received more than 3,700 reports of abuse and neglect of the elderly and dependent adults. May and June this year each saw more referrals than any other month in the department’s history.

    The financial abuse isn’t always obvious—especially when it comes at the hands of family.

    For Hank and Helen, it’s catastrophic.

    “We’re going down,” he said. “The money we had in the bank for emergencies is almost gone.”

    The Ventura County Sheriff’s Office says the grandson is being investigated and that the case is ongoing.
Source: Grandson’s betrayal threatens couple’s home.
(1) To rescind this type of fraudulent real estate transaction, the main issue to be addressed under California law is the determination as to whether the transfer of title (ie. grant deed), and any subsequent deeds of trust / mortgages placed on the property, are absolutely void, or merely voidable, and how the equitable doctrine of bona fide purchaser (ie. one who acquires his or her interest in real property without notice of another's asserted rights in the property and therefore takes the property free of such unknown rights) interacts therewith.

Among the California court rulings that have addressed this issue is Schiavon v. Arnaudo Bros., 84 Cal. App. 4th 374; Cal.Rptr.2d 801 (Cal. App 6th Dist. 2000):
  • A deed is void if the grantor's signature is forged or if the grantor is unaware of the nature of what he or she is signing. (Erickson v. Bohne, supra, "130 Cal.App.2d at pp. 555-556.)

    A voidable deed, on the other hand, is one where the grantor is aware of what he or she is executing, but has been induced to do so through fraudulent misrepresentations. (Fallon v. Triangle Management Services, Inc. (1985) 169 Cal.App.3d 1103, 1106 [215 Cal.Rptr. 748].) The same rules apply to the reconveyance of the property interest under a deed of trust as to the conveyance of property by grant deed. (Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 43 [198 Cal.Rptr. 418] (Wutzke).).
A void deed is a nullity, invalid ab initio, or from the beginning, for any purpose. It does not, and cannot, convey title, even if recorded. The interest of a good faith purchaser under a void deed is not protected. In other words, the interests of a subsequent purchaser or encumbrancer are also void, and any action in court to declare them void can be brought at any time.

In contrast, a voidable deed conveys property and creates legal title unless, and until, it is set aside by the court. The interest of a good faith purchaser who asserts ownership under a voidable deed will be protected.

The distinction between void and voidable deeds becomes highly important in its consequences to third persons (ie. subsequent purchasers and encumbrancers), because nothing can be founded upon a deed that is absolutely void, whereas from those which are only voidable, fair titles may flow.

Furthermore, in California, even in a case of a subsequent purchaser or encumbrancer who buys under a deed deemed to be voidable, said purchaser / encumbrancer will not be afforded the protection available to a bona fide purchaser if it can be shown that said purchaser knew or should have known of any unrecorded legal or equitable interests.

In the case of real property in the open possession and occupation by one other than the holder of the recorded title at the time of the title transfer, a subsequent purchaser or encumbrancer will generally be presumed to have purchased and taken a conveyance from the seller with full notice of all the unrecorded legal and equitable rights in the premises of such party in possession and in subordination to these rights. "As a general rule, possession of real property is constructive notice to any intending purchaser or encumbrancer of said property." JR Garrett Co. v. States, 3 Cal. 2d 379 (Cal. 1935). This presumption is only to be overcome or rebutted by clear and explicit proof on the part of such purchaser, or those claiming under him, of diligent, unavailing effort to discover or obtain actual notice of any legal or equitable rights in behalf of the party in possession.

Whether the subsequent purchaser / encumbrancer knew of the occupant's possession, or not, is immaterial. It is his duty to know who was in possession of the property before making the purchase, and his purchase without ascertaining the fact must be regarded as the strongest evidence of bad faith on his part. The burden of making the proper inquiry is cast upon him by the mere fact of actual possession on the part of the occupant in possession. See Scheerer v. Cuddy, 85 Cal. 270, 24 P. 713 (Cal. 1890).

If it were allowed that by failing to acquaint himself with the fact of possession on the part of another than the seller, the subsequent purchaser / encumbrancer could avoid the effect of the rule to make diligent inquiry of those in possession as to any unrecorded rights or equities they may have in the realty, he could purposely avoid any inquiry on the subject, and thereby evade the rule and its consequences entirely. Ibid.

For more, see: