Tuesday, June 28, 2016

Florida Attorney Loses Bar Ticket, Gets 10 Years Prison Time For Snatching Approx.$1.5 Million Of Surplus Proceeds From Foreclosure Sales Belonging To Booted Ex-Homeowners; Loot Represented Victim's Accumulated Home Equity

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A former Coconut Creek lawyer began serving a 10-year state prison term [] for stealing more than a million dollars from property owners who'd lost homes in foreclosure transactions in 11 Florida counties, authorities said.

    "There is no excuse for my behavior," said Nicholas Steffens, 37, as he read a statement to Broward Circuit Criminal Court Judge Michael I. Rothschild.

    In March, Steffens pleaded no contest to five counts of grand theft as part of his negotiated sentence.

    Steffens stole approximately $1.5 million over three years from about 50 people who owned homes in Florida, including in Palm Beach, Broward and Miami-Dade counties, Assistant State Attorney David Schulson said.(1)

    Some victims have yet to file claims or have not yet been located or have died, and next of kin have not been found, he said.

    When a foreclosed property was sold, sometimes a portion of those proceeds, called surplus mortgage foreclosure funds, were owed to the former homeowners. Steffens was entrusted to find those persons and pay them what they were due.

    "He made absolutely zero effort to locate anyone and stole the surplus money," Schulson said. "The most outrageous thing is he did it all over the state. He disgraced the legal profession."
    Present to hear the judge sentence Steffens to a decade behind bars, 20 years' probation and to make full restitution to victims was Carmen Barbara of Pembroke Pines. She was owed $12,717, according to a court document.

    "In the past two or three years, I lost my husband, I lost my house and then I found out that this happened," Barbara said. "That's what I find the most heart wrenching, is that he was taking advantage of people at their worst possible times, when they lost their homes."
    The Florida Bar said in February that the State Supreme Court granted Steffens' request for a disciplinary revocation of his license, which is equivalent to disbarment.

    Schulson said anyone who thinks they may be a victim should call him at 954-831-8056.
For the story, see Former lawyer surrenders for 10 year prison term for theft of $1.5 million.

See, generally, 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:
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression. [...] The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
(1) The Clients' Security Fund was created by The Florida Bar to help compensate persons who have suffered a loss of money or property due to misappropriation or embezzlement by a Florida-licensed attorney.

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.

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.

Pennsylvania Supremes: Lawyers Representing Foreclosing Banksters Can Be Held Liable To Borrowers For Excessive & Unearned Attorney Fees Charged

In Pittsburgh, Pennsylvania, The Legal Intelligencer reports:
  • A law firm representing a residential mortgage lender in connection with foreclosure proceedings can be liable to a borrower for excessive attorney fees charged in violation of the Pennsylvania Loan Interest and Protection Law, the Pennsylvania Supreme Court has ruled.

    In a 3-1 decision filed Monday (June 20) in the joint cases Glover v. Udren Law Offices and Johnson v. Phelan Hallinan & Schmieg, the court overturned a Superior Court ruling that held lawyers could not violate the law, referred to as Act 6, because the act specifically uses the term "residential mortgage lender."

    In the Supreme Court's majority decision, Chief Justice Thomas G. Saylor said Section 502 of the act provides a broad remedy against anyone who collects excessive fees.

    "In the statute at issue here, the legislature's use of the term 'person' in Section 502, which it defined to include actors other than residential mortgage lenders, suggests an intent to hold accountable any of the entities that might have engaged in the abusive practices specifically prohibited in Article IV," Saylor wrote. "The plain language of the statute does not exempt attorneys, debt collectors, or any other third parties from liability in this regard."
    Mary Glover filed a lawsuit against Udren Law Offices and EdElla and Eric Johnson sued Phelan Hallinan & Schmieg, both alleging violations of Act 6. They said the law firms charged unearned and excessive attorney fees in connection with the mortgage foreclosure proceedings in which the plaintiffs were involved.
    AARP, the National Consumer Law Center and Community Legal Services of Philadelphia filed as amici curiae in the case, and argued that under the Superior Court's interpretation, "the prohibitions of Act 6 are too easily evaded by residential mortgage lenders who can—and regularly do—hire attorneys and other third parties to conduct debt collection and foreclosures," Saylor said.

Monday, June 27, 2016

Indiana Prosecutor's Passionate Plea Falls On Deaf Ears, Judge Gives Real Estate Broker w/ Reputation For Preying On Unsuspecting Homebuyers w/ Dubious Deals 8+ Years Probation, But No Prison Time

In Anderson, Indiana, The Herald Bulletin reports:
  • Madison Circuit Court Judge Thomas Newman Jr. [] sentenced Roger Shoot to 8 1/2 years of probation for real estate practices that prosecutors said were intentionally designed to take advantage of unsuspecting buyers.

    As part of a plea agreement approved by Newman, Shoot pleaded guilty to to three Class D felony Counts of theft, and one Class C felony count of forgery.

    He will be required to pay court costs and restitution of nearly $36,000. Newman also ordered the Madison County Probation Department to investigate whether an elderly couple who invested in real estate with Shoot is owed any money.
    Much of the hearing focused on whether Shoot should serve time in prison.

    Deputy Prosecutor Andrew Hopper argued for a four-year prison term followed by a period of probation.

    "We're familiar with bank robbers and drug dealers and we have a notion of what an appropriate type of accountability looks like for them," Hopper said in his arguments. "But this is very different The task of determining what is just and fair is much more complex."

    Shoot carried out criminal activity under a cloak of respectability, Hopper said.

    "He uses the tools of a licensed real estate broker. He uses contracts, and notaries, and the complexities of a professional practice to prey upon members of our community who are working to make their lives better by owning a home, trying to make Anderson and Madison County a better place," Hopper said.

    Shoot stole homes out from under people, and then didn't pay property taxes that were owed to the county, according to Hopper.

    "His crime can be summed up as the systemic destruction of a community, home by home, and family by family," Hopper concluded. "It is that cloak of respectability, your honor, that makes him more dangerous than the street criminal. His behavior is wrapped up in what is otherwise legitimate business dealings, making it nearly impossible to detect.

    "For years, he has swindled the treasurer, the auditor, the recorder, the taxpayers and an untold number of homeowners. We know this is just the tip of the iceberg. But don't let him con the courts, too," Hopper argued.

    "He must be held accountable for the vastness of his crime, and an appropriate sentence, your honor, calls for four years in the Department of Correction followed by a period of probation."(1)
For the story, see Real estate broker Shoot gets 8 1/2 years probation (No jail for embattled real estate broker).

For a couple of follow-up stories, see:
  • Shoot faces more legal issues (Rent-to-own buyers sue the embattled real estate broker):

    A couple who entered into a rent-to-own agreement with Roger Shoot two years ago have filed a lawsuit against the real estate broker, alleging breach of contract, fraud and conversion.
  • Deputy prosecutor seeks state review of Shoot's cases:

    A Madison County deputy prosecutor is asking the Indiana Attorney General's Office to review at least 15 cases involving local real estate broker Roger Shoot following comments made by Shoot during his recent sentencing hearing. Originally charged with 32 felonies in connection to his business practices, Shoot pleaded guilty to three counts of Class D felony theft, and one count Class C felony forgery as part of a plea agreement.
(1) As a reminder to those lowlifes and others who mistakenly assume that these apparent ripoff deals are nothing more than civil cases, it is clear that all the sophisticated paperwork in the world (ie. business/purchase contracts, leases, closing statements, etc.) isn't enough to permit scammers to insulate themselves from criminal prosecution when they target their victims with legitimate-looking business propositions when screwing their victims over. Criminal prosecutors have the authority to "pierce through" such attempts to disguise a blatant criminal real estate ripoff as a common, legitimate business deal.

Clear precedent exists for such a "pierce through" approach to overcome any objections that will certainly arise when the scammers make the argument that the arrangement was just a civil transaction that, if challenged, should be done with a civil lawsuit, not a criminal prosecution. See, for example:

People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:
  • The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)
People v. Jones, (1943) 61 Cal.App.2d 608, 620 [143 P.2d 726]:
  • Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.


    Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.

    The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

Payment-Skimming Real Estate Operator's Bankruptcy Leaves Residents In Over 100 Homes Hanging In The Lurch; Use Of Lease/Options, Wrap Around Mortgages To Peddle Properties To Novice, Credit-Weak Homebuyers Leaves Them In Fear Of Being Foreclosed Out From Under By Unpaid, Undisclosed Mortgage Holders

In Marion County, Florida, the Ocala Star-Banner reports:
  • As first-time homeowners, Angela and Luis Funez feel like they did everything right.

    They chose a three-bedroom ranch in Silver Springs Shores that was financially within their means. They more than maintained it, sinking somewhere around $10,000 into improvements like tile floors and remodeled bathrooms over a six-year period. And they paid their monthly mortgage religiously.

    “We always paid on time,” Angela Funez said. “Always.”

    So they never expected to find themselves where they are today: waiting for word on whether a foreclosure will force them out of the house they call they’ve been calling home since 2010.

    Theirs is one of more than 100 homes in Marion County on which banks have foreclosed — or are threatening to foreclosure — following a declaration of bankruptcy by Francis and Jo Billy Frick.

    The Fricks had been managing properties and financing buyers under F&C Developers, F&J Developers and F&F Quality Home Builders since 1999, according to court documents. By February 2015, when they filed for bankruptcy, they indicated in filings that they had interests in 131 rental properties throughout Ocala.

    What the Fricks were not disclosing to renters and renters-cum-buyers like the Funezes, who have held the title to their home since 2012, was that they themselves continued to hold mortgages against the properties. That meant that when the the court converted their bankruptcy filing to Chapter 7, meaning the Fricks would have to liquidate their assets, tenants and homeowners found themselves scrambling.

    “It was many sleepless nights,” said Ana Sweet, who had been renting through the Fricks, while pursuing an option to buy, when news of the bankruptcy and impending foreclosures hit.

    She and her husband bought their home at auction last summer. They estimate they lost $13,000 when their option to buy through the Fricks fell through.

    “That figure has stuck in my head very well,” Ana Sweet said.

    Casandra Barkley, who had been renting through the Fricks without putting money toward purchasing the home outright, likewise said she’d been shaken.

    “I was almost homeless,” said Barkley, who remains in her home with a new landlord. “I didn’t have anywhere to go.”

    The financing scheme at play at the Funezes' home and 33 others is known as a wraparound mortgage.(1) In this case, it means that an existing mortgage persisted while another was taken against the homes.

    Raymond Andrews, president of Prime Mortgage Group, said that because a typical mortgage includes a due-on-sale clause, indicating that the mortgage must be satisfied when the holder of the mortgage sells the property, wraparound mortgages are not common. (Prime Mortgage Group, which is based in Ocala, is not involved in the Frick mortgages.)

    The Funezes case stands as a clear example of how this played out. Court records indicate that the Fricks picked up the property by warranty deed in 2009 and used it as collateral for financing through Central Florida State Bank. (CenterState Bank of Florida later picked up Central Florida’s mortgage.)

    The Funez family arrived in 2010. They rented for two years while pursuing an option to buy, and took ownership of the home through a warranty deed in 2012.

    The couple financed through the Fricks, so they paid their mortgage to the Fricks' office each month. They tried to refinance in 2014, they said, hoping that their improved credit would qualify them for a lower interest rate through a traditional mortgage lender. But the Fricks refused, a decision the Funezes said they didn’t understand --- until bankruptcy proceedings revealed the other mortgages against their home.

    Wraparound mortgages are legally legitimate, according to two attorneys representing homeowners who purchased through the Fricks, and would have been revealed in a title search on the property. But that’s not an obvious step for the type of homeowners that the Fricks were attracting: often first-time buyers and buyers without the favorable credit scores that would have qualified them for traditional mortgages.

    In his objection to the entry of the Fricks' bankruptcy discharge, which is still pending even as many of the homes involved are now locked tight or under new owners, U.S. Trustee Guy Gebhardt alleges that the couple deliberately took advantage of their clients. The motion alleges that the couple lured “unknowing and generally unsophisticated” tenants and buyers into leases with options to buy.

    Knowing that their tenants’ and buyers’ credit put them at a disadvantage, Gerbhardt alleges, the Fricks marked up their properties above market value.

    They also included charges for real estate taxes and property insurance in monthly rents, according to the motion. These sums were not placed in escrow accounts; around 100 of the properties showed at least one year of unpaid taxes.

    The Fricks did not respond to multiple requests for comment.

    The U.S. trustee’s assessment is in line with what the Sweets said they experienced. The couple had moved into their home in 2010, after moving to Central Florida in search of better weather and a lower cost of living than they’d had in Massachusetts. Ana Sweet primarily supports the family as a medical assistant, she said, so financing through the Fricks seemed like a financially feasible path toward home ownership.

    “It gave us that extra chance to come up with the down payment to be able to purchase the house,” she said. It wasn’t until later that they realized that chance had put them on track to pay significantly more than the market value of their home.

    The Sweets moved in with a $3,500 down payment. They agreed to pay an extra $100, on top of their $750 monthly rent, toward their option to buy. Ana Sweet figures they were within $1,000 of taking ownership of the home when they received a letter explaining the bankruptcy.

    “My heart fell to the floor,” she said.

    Across the neighborhood, Tony and Betty Dechaves knew they were in trouble when a sign appeared in their yard. They, too, had been renting while pursuing an option to buy. They figure they lost some $5,000 when the Fricks lost the home in bankruptcy, between a $3,000 down payment and around $2,000 in money paid toward their option to buy.

    Unlike the Sweets, to whom they’re related by an ex-marriage, they weren’t able to arrange the loan they would have needed to buy the home outright at auction.

    “We were ready to go,” Tony Dechaves said. He’d gone so far as to pull up the plants he’d recently put in the front yard.

    They later learned that the new owner, who had purchased the home at auction, would to let them stay as renters. They said they’re reluctant to try an option to buy again.

    For Barkley, the experience has made firm her resolve to purchase a home herself. Once she began to notice other Frick renters moving out of the neighborhood, she said she realized why the couple wasn’t returning her calls requesting maintenance on her stove. She packed up her own house, lining her living room end to end with boxes, waiting for word that it was time to clear out.

    She didn’t know where she would go when that happened. With three children and a grandson, she said, she didn’t think nearby relatives could put her up if they wanted to.

    “I want my own house,” she said, vowing to never let herself or her children go through the nerve-wracking experience again.

    At the Funez home, the family is hoping that their attorney, Stanley Plappert, can arrange for them to stay where they are. They’ve worked hard to build a good life for their children, they said, and don’t want to have to watch their teenagers pack up their rooms.

    “I believe in God,” Angela Funez said. “He’s my lawyer.”
For the story, see Mortgage mess: Financier's bankruptcy leaves residents in lurch (if link expires, TRY HERE).
(1) While differing in form, a wraparound mortgage (generally referred to as an all-inclusive trust deed in states that use trust deeds; ie. California, among others) is a financing device used to sell real estate that is substantially similar to a land contract or contract for deed.

These devices, along with their "kissin' cousins" - the lease/option, lease/purchase, rent-to-own, etc. arrangements, are often used as the financing devices of choice for unscrupulous real estate operators when attempting to unload dilapidated, defective and otherwise unmarketable homes onto unwitting, unsophisticated (often frst-time) homebuyers, particularly those with crappy credit.

Landlord To Pay $8,500 In Fines, Plus Restitution To Customers For Allegedly Using Lease Purchase Deals w/ Illegal Terms To Unload Crappy Homes On Unsophisticated, Credit-Challenged Homebuyers

In Baltimore, Maryland, The Baltimore Sun reports:
  • A Georgia property management company that allegedly included illegal terms in its leases and rented some homes without hot-and-cold running water in Maryland reached a settlement with the Maryland Attorney General's Office to pay restitution and fines and comply with state law.

    Atlanta-based Homes Direct Inc. had at least five properties in Baltimore, according to the settlement agreement.

    As part of the settlement, neither Homes Direct nor its owner Cortland Plichta admitted wrongdoing and the attorney general's office ended its investigation into the company's rental practices. Plichta did not respond to requests for comment.

    The company and Plichta allegedly included clauses and fees in leases that are illegal under Maryland law, according to the settlement agreement. For example, it charged late payments in excess of 5 percent and failed to refund security deposits or properly store the deposits.

    According to the settlement agreement, Homes Direct targeted financially distressed consumers who were unable to qualify or afford traditional mortgages by offering "a lease to purchase program."

    Some properties did not have hot or cold running water and the company did not comply with state lead laws, though no lead was found in its properties, said Christine Tobar, a spokeswoman for the attorney general.

    "All tenants in Maryland have the right to hot and cold running water," said Maryland Attorney General Brian E. Frosh in written statement. "All tenants have the right to know their children are not exposed to lead paint poisoning."

    Homes Direct will pay $8,500 in penalties and fees to the state as part of the settlement. Three tenants of Homes Direct will receive $1,500 each. The company could pay more if other tenants file valid claims, according to the settlement.

    Home Direct also agreed to enter into new leases with its Maryland tenants that abide by state law and to repay security deposits as part of the settlement.
Source: Property management firms settles with Maryland Attorney General's Office.

For the Maryland Attorney General press release, see Attorney General Frosh Announces Settlement With Homes Direct, Inc. (Landlord agrees to stop illegal rental practices and to reimburse tenants).

Sunday, June 26, 2016

Connecticut Housing Developer Admits No Liability, But Coughs Up $40K Anyway To Settle Fair Housing Complaint, Resolving Allegations Of Race Discrimination Against Rental Applicants

In Stamford, Connecticut, the Stamford Advocate reports:
  • Building and Land Technology’s Harbor Point development has agreed to a $40,000 settlement over allegations of discrimination from the Connecticut Fair Housing Center.(1)

    BLT, Harbor Point and Prime Realty agreed in November to settle a complaint regarding housing discrimination based on race without admitting liability, the center said in a statement [this week].

    In 2014 clients Tamica McKune and Matthew Notice reported to the center instances of racial discrimination in their dealings with BLT, Harbor Point and Prime Realty, naming the high-end Yale and Towne building specifically.

    McKune and Notice told the Connecticut Fair Housing Center that as affordable housing applicants they were not permitted to tour apartments prior to the submitting applications. These specific complaints came among several other similar reports that year.

    Upon investigation, the center said it found significant evidence of disparate treatment between below market and market rate applicants and differential treatment based on race, even among the affordable housing applicants.

    The center uncovered one instance an African American prospective affordable housing applicant who was denied a showing by Harbor Point, while a white prospective below market rate applicant was show a model unit without issue.

    This spurred the Connecticut Fair Housing Center to file a complaint with the Department of Housing and Urban Development, alleging that the companies violated the Fair Housing Act’s prohibition on discrimination based on race.
For more, see Stamford’s Harbor Point pays $40K in racial discrimination settlement.
(1) The Connecticut Fair Housing Center is a nonprofit fair housing organization working statewide, providing investigative and legal services to Connecticut residents who believe they have been the victims of housing discrimination. The Center also provides education and conducts outreach on fair housing and fair lending issues throughout the state.

Civil Rights Feds $queeze Developer, Architect For $160K To Resolve Allegations That Pair Violated Fair Housing Act By Designing, Building Two Neighboring Condo Complexes With Variety Of Features That Made Them Inaccessible To Persons With Disabilities

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department announced [] that Dean Windham and Milton Studer, a real estate developer and an architect in Ohio, as well as several companies that they owned and controlled, have agreed to pay a total of $160,000 to resolve allegations that they violated the Fair Housing Act by designing and constructing two neighboring condominium complexes in Hartville, Ohio, with a variety of features that made them inaccessible to persons with disabilities.

    Under the terms of the agreement, which must still be approved by the U.S. District Court for the Northern District of Ohio, the defendants will pay $100,000 to current condominium owners at Windham Bridge Condominiums and Hampton Court Condominiums who choose to make accessibility modifications to their units.

    These modifications include:
  • eliminating steps and excessive slopes in the walkways to the front entrances of their units;
  • widening doorways;
  • removing or lowering thresholds;
  • installing removable cabinets in kitchens and bathrooms to increase maneuvering space for wheelchair use and relocating toilets, showers and sinks to provide access to a wheelchair user.
  • [U]nder the agreement, the defendants will also pay $10,000 to the Tri-County Center for Independent Living and $10,000 to the Fair Housing Advocates Association, two fair housing community organizations that expended resources in connection with this matter, as well as a $40,000 civil penalty to vindicate the public interest.

    The lawsuit arose out of complaints that Tri-County Center for Independent Living and the Fair Housing Advocates Association originally filed with the U.S. Department of Housing and Urban Development (HUD). After investigating the complaints, HUD determined that the defendants had violated the Fair Housing Act and referred the matter to the Justice Department.

Michigan Trial Judge: OK For Amish Man To Disregard State Building Code When Constructing Home, Other Structures; Forced Compliance Would Violate His 1st Amendment Right To Freely Exercise His Religion

In Chippewa County, Michigan, the Sault Ste. Marie Evening News reports:
  • The Amish will not have to abide by the requirements of the Michigan Residential Building Code as they construct new structures in Chippewa County, according to a recent ruling from visiting Judge Harold Johnson in the 50th Circuit Court.

    The defendant in this case, William Miller, sought an exemption asserting compliance with the code would violate his First Amendment right to freely exercise his religion. He further argued, according to Johnson's written opinion issued on June 6, that denial of the exemption would be both a violation of the Fair Housing Act and a violation of the Religious Land Use and Institutionalized Persons Act of 2000.

    The building code requirements include provisions for electric and plumbing systems, indoor bathrooms, modernized kitchens and additional requirements for electronic devices such as smoke alarms and carbon monoxide detectors.

    "The court is of the opinion the denial of an exemption is a violation of the Religious Land Use and Institutionalized Act of 2000, 42 U.S.C Sec 2000cc (a) (1)," wrote Johnson before outlining his rationale for handing down this decision.

    Citing Miller's membership to the Old Order of Amish teachings and strict adherence to the conservative Ordnung which stresses separation from the outside world and the practice of self-sufficiency in the construction of houses, barns and structures, Johnson determined that denying an exemption would be a substantial burden to Miller's beliefs in the free exercise of his religion.

    Johnson also noted that a violation of the Ordnung could result in church discipline up to and including excommunication, essentially showing that Miller could be kicked out of his church for following the building code.

    County Administrator Jim German said it is likely the prosecutor's office will seek a reconsideration of the motion, but barring a change of mind by Judge Johnson the ruling will stand. The only other option, German explained, would be to appeal the ruling, but that would require the Chippewa County Board of Commissioners to approve a measure to pursue this matter and sign off on unspecified legal costs for the appellate court proceedings.

    "We've done everything we could per the law," said German. "All the county is trying to do is follow the legal opinions that are given to us."

Anxiety/Depression-Suffering Teenage Girl's Four Therapy Chickens Dodge Eviction Ax; Fair Housing-Fearing Town OKs Home Residency For Two Hens & Two Roosters Provided Family Boots Rest Of Flock (Once Numbering About Two Dozen)

In Western Pennsylvania, the Pittsburgh Tribune-Review reports:
  • Hempfield Township's zoning hearing board decided to spare a teenage girl's four pet chickens from eviction, as long as her parents give up the other chickens that live at their home.

    Sarah Downing, 15, was not at [the recent] hearing, but her parents, David and Sharon Downing, were. They told the board that Sarah's feathered friends — two hens and two roosters — are emotional support animals and vital to her mental well-being.

    “These are her companions. She often has them cuddle with her in her bed while she's watching TV or doing homework,” David Downing said.

    Sarah suffers from anxiety and depression, her father said. The four chickens live in her bedroom, and she turns to them for comfort when she's overwhelmed.

    The Downings used to have about 25 chickens living at their residence, mostly in coops outside.

    In April, neighbors complained about the birds, and the township issued a zoning violation notice. Chickens are not allowed in the village residential district where the Downings live.

    The Downings have reduced their flock since receiving the notice. They now have fewer than 10 chickens at the home, David Downing said, and would be willing to give away all but the four that live with Sarah.

    Nancy Kasparek, the Downings' neighbor who first wrote the township to complain about the chickens, voiced her complaints at the meeting.

    Chickens were running all over my yard, on my deck, crapping everywhere,” she said.

    However, she said things have gotten better since the Downings found new homes for most of their birds, and she has no complaints with Sarah keeping her four pets.

    “I love that little girl,” she said.

    Sarah would “spiral into depression” if she had to give up her four pets, her father said.

    “It would be a very dark day for her, and very hard for her to rebound from this emotionally,” he said.

    After taking testimony and questioning the Downings for more than an hour and a half, the board decided to let Sarah's chickens stay, with a few conditions.

    The Downings can keep only those four birds, and only if they are listed on the National Service Animal Registry.(1)

    The Downings registered three of Sarah's chickens after receiving the township's violation notice, and David Downing said they plan to register the fourth soon. The registry is run by a private company that requires applicants to submit a letter from a therapist to place their animals on the list.

    Additionally, the board said the Downings are not allowed to breed the chickens, or sell their eggs. The chickens must be kept in a pen when they are taken outside.

    Sharon Downing said she doesn't mind finding new homes for her family's other chickens.

    “We're very happy with the outcome. The whole time, we were looking out for the interests of our daughter,” she said. She began to cry as she called Sarah to tell her the news. “We won for you, baby,” she said on the phone.
Source: Hempfield teen's therapy chickens given OK to stay.
(1) The National Service Animal Registry appears to be a private, Internet-based outfit that, as of the date of this post, is apparently peddling a Service Animal Certification Kit that purports to register emotional support animals for people with emotional or psychological disabilities. Based on the content of its website, one may get the impression (correct or otherwise) that this registration bestows some form of "official status" on an animal that might thereby make it easier for an emotional support animal to be "allowed to fly in the cabin of an aircraft with their disabled handler and to qualify for "no pet" or "limited pet" housing." Whether it actually does or not may make for an interesting topic of discussion.

The Upending Of "No-Pet" Policies By Tenants' "Emotional Support Animal" Requests: "What Was A Drip, Drip, Drip Is Now A Flood," Says One Attorney Representing Penalty-Fearing Landlords

In New York City, DNAInfo New York reports:
  • [T]he number of requests for emotional support animals — or ESAs — in pet-free buildings has ballooned over the past few years, lawyers and brokers said. Landlords are fearful of potentially hefty fines if they contest a pet’s presence while residents are now feeling more emboldened.

    It’s become a bigger issue as websites now make it as easy to become licensed for an emotional support animal as it is to become a minister to officiate your friends’ wedding, many say.

    A few sites, for instance, promise an ESA letter from a registered therapist within 72 hours of completing a phone interview. They only require you to pay $125 if you meet the diagnosis of such emotional disabilities as anxiety, depression, panic attacks, personality disorder or post-traumatic stress disorder.

    Another — which costs $140 for a letter with an additional $49.50 for overnight shipping — states that if you qualify, “you will then be given your prescription letter which allows you to fly with your ESA, and live in housing where pets are typically not permitted.”

    Real estate attorney Sherwin Belkin, of Belkin Burden Wenig & Goldman, said he gets multiple calls every week from landlords across the city asking how to field requests for emotional support animals.

    "What was a drip, drip, drip is now a flood,” he said.

    A tenant at a Midtown East building, for instance, recently got the go-ahead for an emotional support animal — after a lot of “back-and-forth” with the landlord — and within two weeks, two more tenants from the building submitted requests for such animals, Belkin said.

    “If a tenant comes forward with what seems like a legitimate reason, the owner has to consent. You’re not allowed to make deep inquiries because it’s considered a violation of privacy,” Belkin said, also noting that under the city’s pet laws, a landlord can’t do anything about a pet if the landlord knew or should have known about the animal living in the building but failed to take action for 90 days.

    Belkin — himself a dog owner — said he was unaware of the ESA evaluation letter websites until a few weeks ago when he started poking around.

    He was surprised by the ease with which one could possibly be obtained.

    “It struck me that these questions are intended to be as coverall as going to the daily newspaper and reading your horoscope. They’ll apply to everybody,” he said. “This has now created a significant problem in buildings, which is far beyond what anyone intended in creating the category of ESA.”

Saturday, June 25, 2016

Convicted, Foreclosure Scamming Attorney Gets Bagged Again For Alleged Unpunished Theft Of $1.8 Million From Her Escrow Account Occurring Prior To Earlier Conviction

In Suffolk County, New York, the Riverhead News-Review reports:
  • A disbarred Wading River attorney previously convicted in a $4 million real estate Ponzi scheme was indicted last month for wire fraud in connection with an alleged theft that occurred prior to her conviction, according to a federal indictment.

    Alice Belmonte, 49, bilked two California real estate investment companies out of approximately $1.8 million in March 2013, according to a May 12 grand jury indictment. Her latest arrest came just over one month after she was released from prison, New York State Division of Parole records show.

    Ms. Belmonte had pleaded guilty in July 2014 to felony larceny, forgery and theft charges stemming from a foreclosure scam in which prosecutors said she forged contracts, faked e-mails from banks and signed her victims’ names for them while she bought new cars and took vacations to California with the stolen funds.

    She was sentenced to serve three to 9 years in state prison, but was granted an early release on April 11, state records show.

    At her latest arraignment in Eastern District Court of New York May 19, Ms. Belmonte pleaded not guilty to two charges of wire fraud and was released on a $500,000 bond, court records show.

    A company connected to her most recent arrest, which was not named in the indictment, has alleged that $1.8 million it had wired to an escrow account Ms. Belmonte set up for real estate investments was redirected in March 2013 to her personal bank account after she forged “fraudulent disbursement instructions” in the name of one of the companies to the escrow company involved in the transaction.

FTC Files Civil Lawsuit Accusing Foreclosure Rescue Operator & Four Attorneys With Running 'Mass Joinder Lawsuit' Racket That Allegedly Promised To Use Legal Challenges To Void Homeowners' Mortgages; Thousand$ In Recurring Monthly Fees Pocketed By Lawyers Were Never Deposited Into Their Trust Accounts As Required By Law

In Washington, D.C., the Federal Trade Commission recently announced:
  • The Federal Trade Commission has charged the operators of a mortgage relief scam with bilking millions of dollars from homeowners by falsely telling them they could join a so-called “mass joinder” lawsuit that would save them from foreclosure and provide additional financial awards.

    “Preying on homeowners who already are financially distressed and struggling to pay their mortgages is appalling,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “That’s why stopping phony mortgage relief operations, like this one, is a priority at the FTC.”

    At the FTC’s request, a federal court temporarily halted the scheme, and the agency seeks to permanently stop the alleged illegal practices and obtain refunds for consumers.

    According to the FTC’s complaint, Damian Kutzner and four attorneys using a set of law firms under the names Brookstone Law and Advantis Law, claimed they would bring lawsuits against lenders for mortgage fraud and void consumers’ mortgage notes “to give you your home free and clear, and/or to award you relief and monetary damages.”

    According to the FTC, the promise of a mass joinder lawsuit is a ruse used by some mortgage relief scams. Unlike class-action lawsuits, in the event of trial each plaintiff would have to prove his or her case separately. Although the defendant attorneys have sued several well-known banks, the FTC has alleged that they have not won any cases and that most were dismissed because they never pursued them. According to the FTC’s complaint, the defendants’ operation did not have attorneys who could litigate hundreds or thousands of cases.

    According to the complaint, the defendants mailed marketing materials to consumers with the homeowner’s name, loan amount and property identification number, with statements such as, “Your home will be sold at Auction unless you take immediate action.” People who responded to the advertising were told they could join a lawsuit by paying $895 or more in advance for a “legal analysis,” and that they were likely or certain to prevail in a lawsuit against their lender; some consumers were told they would recover at least $75,000. After claiming the analysis showed that a consumer had a good case, the defendants charged thousands of dollars in recurring monthly fees through the law firms and failed to deposit the fees in client trust accounts as required by law.(1)

    The defendants falsely promised some clients that they would add them as plaintiffs in lawsuits; they told others they would add them soon but did so only months later. Clients’ requests for information were ignored. In addition, the defendants did not tell people when their lawsuits had been dismissed and kept collecting fees from those clients. Clients’ requests for refunds were refused.

    One of the defendants, Vito Torchia, was disbarred by the California bar for misconduct. During his ethics trial, he conceded that Brookstone failed to provide the most basic elements of legal representation

    The defendants are Damian Kutzner; Vito Torchia, Jr.; Jonathan Tarkowski; R. Geoffrey Broderick; Charles T. Marshall; Brookstone Law P.C., doing business as Brookstone Law Group, a California corporation; Brookstone Law P.C., doing business as Brookstone Law Group, a Nevada corporation; Advantis Law P.C.; and Advantis Law Group P.C. They are charged with violating the FTC Act and the FTC’s Mortgage Assistance Relief Services Rule (MARS Rule) and Regulation O.
Source: FTC Halts California Based Mortgage Relief Scam (Defendants Claimed ‘Mass Joinder’ Lawsuits Would Void Mortgage, Stop Foreclosure).

See also, Exposing a mortgage relief scheme’s empty promises.

See, generally, 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:
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression. [...] The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
(1)The California State Bar's Client Security Fund is a public service of the California legal profession. The State Bar sponsored the creation of this fund to help protect consumers of legal services by alleviating losses resulting from the dishonest conduct of attorneys. The amount the fund may reimburse for theft committed by a California lawyer depends on when the loss occurred. A maximum of $50,000 is reimbursable if the loss occurred before January 1, 2009. A maximum of $100,000 is reimbursable if the loss occurred on or after January 1, 2009.

Unfortunately, because of the number of victimized clients who were screwed over by these attorney-driven foreclosure rescue scams, there reportedly is a long wait for claims to be approved and paid by the Fund. See, for example, California Homeowners' Claims Attributable To Attorneys Running Illegal Loan Modification Rackets Play Significant Role In Driving State Bar's Client Security Fund Into Insolvency.

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.

Eleven Fleeced Clients Of Five Western NY Ex-Lawyers Are Among Those Who Participated In Record-Setting $12.3 Million Restitution Payout From State's Attorney Ripoff Reimbursement Fund

In Buffalo, New York, The Buffalo News reports:
  • Eleven clients of five former Western New York lawyers were among the 274 recipients statewide last year of the record-setting $12.3 million in restitution paid out by the state’s Lawyers Fund for Client Protection.(1)
    Last year six former clients of the late Ronald D. Anton, a former Niagara Falls-area attorney, or their heirs were reimbursed a combined $115,684. Anton, who had lived on Grand Island, was a widely-respected attorney active as a teacher at various colleges in Western New York and he died as an attorney in good standing on April 1, 2014 at the age of 82, O’Sullivan noted. But, after his death, it was learned there was a significant shortage in the escrow funds he owed clients, resulting in the restitutions.

    A former Western New York couple now living in Pennsylvania was reimbursed the $75,000 former Jamestown lawyer James A. MacCallum allegedly cheated them out of in a loan transaction before he was disbarred in October 2912.

    O’Sullivan noted that MacCallum, a Canadian by birth, was charged this past November by the U.S. Attorney’s Office in Buffalo with using an illegal Ponzi scheme to cheat former clients and investors out of at least $3.4 million in an alleged investment scam he was accused of operating between January 2008 and December 2010.

    Barbara Burns, a spokeswoman for the U.S. Attorney’s Office, said the criminal case against MacCallum is currently in the pre-trial discovery stage.

    One client of David S. Widenor, a disbarred and briefly imprisoned former Buffalo lawyer, received $22,500 from the fund last year. O’Sullivan noted that in August 2014, Widenor pleaded guilty in Erie County Court to second-degree grand larceny charges for failing to pass on to clients more than $226,000 in escrow funds.

    Two North Tonawanda clients of the late Michael J. Ingham, a widely known lawyer practicing in Buffalo and Niagara Falls, shared $3,500 in fund repayments. Ingham died in his Williamsville home on March 16, 2015 at the age of 49.

    One more client of former Erie County lawyer Kenneth P. Bernas last year was repaid $2,325 by the fund, making 39 former Bernas clients the fund had repaid more than $1.7 million since he was sent to prison in 2011 on his felony plea to a number of grand larceny counts that kept him in prison over three years.
For the story, see Clients of five former local lawyers aided by state fund.

See, generally, 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:
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression.[...] The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
(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.

Typical losses reimbursed by the Fund include the theft of escrow deposits in real property transactions, estate and trust assets, settlements in personal injury litigation, debt collection receipts, money embezzled in investment transactions within an attorney-client relationship and the practice of law, and unearned fees paid in advance to lawyers who falsely promise their legal services.

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.

Booted From Legal Profession After Fleecing Clients Out Of Over $330K, Disbarred Attorney Commits Suicide Shortly After Being Tagged w/ Felony Arrest Warrant; Ex-Lawyer Had Also Faced Separate Probe For Allegedly Shuttling Assets To Wife Both Before & After Filing Bankruptcy In Alleged Attempt To Dodge Creditors

In Colorado Springs, Colorado, the Colorado Springs Independent reports:
  • Gregory Chernushin, a local attorney disbarred last year for converting client money to his own use, faces more scrutiny, as does his wife.

    An arrest warrant for Chernushin was issued last week accusing him of six felonies in connection with alleged theft of client money, according to District Attorney's spokeswoman Lee Richards.
    Meantime, Chernushin's wife, Andrea, is the target of a filing in U.S. Bankruptcy Court that seeks an accounting of assets Chernushin transferred to her allegedly to avoid payment of his debts, which include more than $350,000 owed to the IRS, as well as hundreds of thousands owed to clients and others.
    Chernushin, a longtime attorney in Colorado Springs who represented clients injured in car crashes or work-related accidents, closed his practice in early 2015 and stopped communicating with clients. Several clients filed complaints with the Office of Attorney Regulation Counsel alleging he took their settlements without their permission. Chernushin was disbarred in July and admitted in the disbarment agreement he took $334,865 from a handful of clients.(1)
For more, see Disbarred attorney Chernushin faces criminal charges stemming from his law practice.

For the follow-up story, see Colorado Springs attorney suspected of stealing from clients commits suicide:
  • A longtime Colorado Springs attorney charged with stealing thousands of dollars from his clients has killed himself, authorities confirmed [June 9, 2016].

    Gregory Chernushin, 64, was found Thursday morning [June 9] with a self-inflicted gunshot wound at the Target Tree Campground in Hesperus, said La Plata County Coroner Jann Smith. His body was discovered about 8:10 a.m. by workers at the campground on Highway 160 near the Montezuma County line, Smith added.
(1) The Colorado Attorneys' Fund for Client Protection is a fund established by the Colorado Supreme Court to reimburse clients who suffer a loss of money or other property from the dishonest conduct of their attorney. Additionally, the loss must arise out of and by reason of an attorney-client relationship or a court-appointed fiduciary relationship between the attorney and the screwed-over victim. The fund is a remedy of last resort for clients who cannot be repaid from other sources, such as from insurance or from the attorney involved. Claimants are expected to make reasonable efforts to collect from these other sources first.

According to this story, the Fund has, as of February, 2016, roughly $4 million available to clients who were victims of dishonesty by their lawyers, according to Jamie Sudler, chief deputy regulation counsel in the Office of Attorney Regulation. Sudler reportedly said, "We're really, really interested in getting the word out and we try as hard as we can to let people know about it."

If you believe you have lost money or property as a result of the dishonest conduct of your attorney who either is licensed in Colorado, or unlicensed but nevertheless practicing in the state, you should start by filing a disciplinary complaint against the attorney with the Colorado Supreme Court Office of Attorney Regulation Counsel.

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.

    Law Firm Trust Account Irregularities Trigger Police Probe, Ultimately Landing Office Manager With Past History Of Embezzlement & Rubber Check Writing 7 To 9 Years Prison Time For Siphoning $150K+ From Employer's Bank Accounts

    In Wilmington, North Carolina, WECT-TV Channel 6 reports:
    • A Wilmington woman pleaded guilty [] to stealing thousands of dollars from her employer.

      According to District Attorney's Office, Felicia Kelley, 44, was accused of embezzling from the law firm Yow, Fox & Mannen, L.L.P. and pleaded guilty to one count of embezzling greater than $100,000.

      Kelley was sentenced to 7-9 years in prison and will be forced to pay back over $145,000 in restitution to the victims.

      The Wilmington Police Department was contacted by partners at the law firm when they noticed a discrepancy in their trust account in November of 2015. When trying to locate the missing money, other financial discrepancies were ultimately linked to Kelley, who was the office manager and bookkeeper.

      The discrepancies included $10,000 in missing cash and checks written to Kelley's husband, juvenile son and boyfriend. Kelley disguised the checks as legitimate business expenditures for the law firm. A forensic audit found a total loss in excess of $153,000.

      Kelley was in Colorado at the time the warrants were issued for her. She was arrested and extradited back to North Carolina in December 2015.

      She has also been previously convicted of a lower class embezzlement at another law firm in Jacksonville, misdemeanor embezzlement in Virginia and has worthless check convictions in North Carolina. These convictions, however, were under a different name and were not identified in her employer's background check.

      “This case was handled by the [North Carolina] Financial Crimes Division of the Conference of District Attorneys, which is an elite group of prosecutors. We rely upon this division in complex, multi-jurisdictional, and conflicts cases. Today’s result once again demonstrates our joint commitment to hold white collar criminals fully responsible under the law,” stated District Attorney Ben David.

    Friday, June 24, 2016

    Philly Feds Pinch Closing Agent For Allegedly Using Escrow Account That Held Proceeds From Real Estate Transactions As His Personal Piggy Bank While Leaving Over $2.9 Million In Mortgages Unpaid

    From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
    • Alfred Drechsel, 47, of Voorhees, NJ was charged by Information with one count of wire fraud in connection with a scheme that defrauded borrowers and title insurance companies, announced United States Attorney Zane David Memeger.

      Drechsel was an owner of Lenders Edge Settlement Services, LLC, (“Lenders Edge”) and Integrity Assurance Inc. (“Integrity Assurance”), located in Feasterville, PA. The information alleges that Drechsel, who was responsible for making the loan disbursements, diverted settlement funds into various Lenders Edge and Integrity Assurance bank accounts and used the diverted loan proceeds to pay off other unrelated mortgages, to pay other business expenses, and for personal expenditures.

      According to the information, the total amount of mortgages that the defendant failed to pay off as required by the settlement statements was approximately $2,919,186.61.

    Antitrust Feds Bag One More In Ongoing Probe Into Bid Rigging At Public Foreclosure Auctions In Southern Alabama

    In Washington, D.C., the U.S. Department of Justice announced:
    • An Alabama real estate investor pleaded guilty for his role in a conspiracy to commit mail fraud at public real estate foreclosure auctions held in southern Alabama, the Department of Justice announced [].

      Adrian J. Beach admitted that he conspired with others to, among other things, defraud financial institutions, homeowners and others with a legal interest in rigged foreclosure properties, out of proceeds from foreclosure auctions. Beach is charged with participating in the conspiracy from January 2004 through March 2010. Financial institutions and homeowners suffered monetary losses as a result of the conspiracy.
      Beach is the fourteenth defendant prosecuted in the Antitrust Division’s ongoing investigation of bid rigging and other fraudulent conduct in the Alabama real estate foreclosure industry.

      The investigation into fraud and bid rigging in the Alabama real estate foreclosure industry is being conducted by the Washington Criminal II Section of the Antitrust Division, and the FBI’s Mobile Field Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama.

      Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, or visit www.justice.gov/atr/contact/newcase.htm.

    Thursday, June 23, 2016

    Foreclosed Connecticut Homeowner Who Lost All Her Worldly Possessions After Getting The Boot Scores "Six-Figure" Settlement After Judge Tags State Marshal w/ Liability For Illegally Disposing Of Victim's Stuff & Not Storing It In Designated Facility

    In Bristol, Connecticut, The Connecticut Law Tribune reports:
    • A Superior Court judge said state law does not give state marshals the right to 'dispose of the personal property of the person subject to ejectment other than to store it in a designated facility.'

      Barbara McLoughlin had already suffered one devastating blow when she lost her home in Bristol to foreclosure. But then the state marshals came to evict her.

      McLoughlin was preparing to move and came home from work to find her car and everything she owned cleared out, said Ray Hassett, her attorney with Hassett & George. She was left without her home and bereft of everything she owned.

      The loss of all her personal property, including the uniform her father wore in World War I and her mother's jewelry, started McLoughlin on a legal quest that tested for the first time in Connecticut whether a state marshal has a duty to protect the property of the people they evict.

      On Oct. 26, 2012, then-Connecticut Marshal Jerome Martin alleged he was carrying out a court order to perform an ejectment at McLoughlin's foreclosed home. He said he found McLoughlin's personal property infested with fleas and abandoned.

      McLoughlin countered that Martin failed to follow the court order that he was supposed to notify her where her property would be stored. Instead, her property disappeared and she was only able to recover her vehicle.

      Martin also argued that McLoughlin did not have standing to bring a legal action against him and he did not owe a duty to protect her personal property during the execution of the judgment. State marshals are independent contractors appointed as public officers with the authority to enforce court orders, including the execution of ejectment orders.

      The law says marshals may remove the personal property of people who are being removed from their foreclosed homes. But once that decision is made, Hassett argued, the law requires the marshal to give notice to the homeowner and take the property to a municipal storage facility.

      In this case, Martin wrote on his ejectment order that McLoughlin's personal effects would be stored with the town. No phone number was listed on the order that would have enabled McLoughlin to track down her possessions. Instead, all her worldly goods disappeared, some apparently going to the town dump and others apparently taken by members of outside firms brought in by the marshal.
      Following the judge's decision, the case settled for a six-figure sum. Hassett would not disclose the full sum, but did say that the marshal had insurance and his client has been paid in full.
    For more, see Judge Holds State Marshal Accountable for Evicted Homeowner's Missing Belongings (Judge says state marshals are accountable for evicted residents' belongings) (may require paid subscription; if no subscription, GO HERE, then click the appropriate link).

    Tampa Lawsuit Accuses Four Banksters Of Bullying Elderly Homeowner To Death; Family Claims Repeated Debt Collection Robocalls To Cellphone Seeking Money That Wasn't Owed Began Health Spiral That Led Senior Citizen To Drop Dead Of Heart Attack During Foreclosure Hearing

    In Tampa, Florida, ABC Action News reports:
    • At 67, Kimberly Collelo's father Frank Collelo showed little sign of slowing down. Collelo and her sister Amanda say their dad's golden years turned dark after he applied for a mortgage modification.

      Relatives say he faxed the bank the requested documents over and over again without response.

      The family and their attorney, Billy Howard with the Consumer Protection Firm, claim Frank never missed a house payment until he applied for the modification.

      According to a lawsuit, Bank of America, M & T Bank and two other loan servicers robo dialed Collelo’s cellphone up to eight times a day everyday between 2014 and 2015 attempting to collect money he did not owe.

      The calls took a toll, according to his daughters, who say he would become short of breath and upset when the phone rang. In 2014, Frank Collelo left his home in Valrico and gave it back to the bank. Still the calls continued.

      On March 3, 2015, Collelo dropped dead of a heart attack. He died inside a court room in the middle of his foreclosure hearing.

      Their lawsuit accuses the defendants of violating both the federal and Florida robo calling laws. But this case filed in Tampa federal court is unprecedented. It blames the banks for robo bullying Frank Collelo to death.

      Stetson Law Professor Dr. Thomas Kaye says while it's possible to convince a jury robo calls played a role in the death, the legal challenge remains.

      "We have a statute in Florida that deals with robo calling, and it provides a financial payment to be made for each wrongful call but it doesn't say anything if someone dies as a result," Kaye said.

      For the Collelo sisters the case isn't about setting a precedent. It is about fighting for a father who can no longer defend himself.

      We reached out by phone and email to all four defendants. Bank of America, M & T Bank and Caliber Home Loans refused to comment on pending litigation. Lakeview Loan Servicing has yet to respond.
    Source: First of its kind lawsuit accuses banks of killing customer (Robo bullying case unprecedented).

    Wednesday, June 22, 2016

    Federal Court Green-Lights Elderly, Dementia-Stricken Veteran's Lawsuit Accusing D.C. Of Violating His 5th Amendment Rights By Swiping His $200K Free & Clear Home Over Unpaid $134 Tax Debt & Refusing To Fork Over The Proceeds For His Surplus Home Equity From Tax Sale

    From a recent post on the Pacific Legal Foundation's(1) Liberty Blog:
    • [Last] week, in Coleman v. District of Columbia, a federal district court held that the plaintiffs have grounds to bring their Fifth Amendment challenge to the District of Columbia’s taking of their property under its former tax-foreclosure scheme.

      Liberty Blog readers may recall that PLF filed a friend-of-the-court brief in support of Benjamin Coleman, an elderly veteran who suffered from dementia. Mr. Coleman owned his $200,000 home lien-free when the District of Columbia took the home to pay an overdue $134 tax debt, plus penalties, interest, and fees.

      Despite the fact that Mr. Coleman’s property was very valuable, and his tax debt was small, District law did not allow Mr. Coleman to collect any of the surplus profits from the tax sale.

      The District later amended that law, when the Washington Post exposed the unjust tax foreclosure scheme,(2) but it did not compensate Mr. Coleman. A representative for Mr. Coleman sued on his behalf, arguing the District’s scheme violated the Fifth Amendment’s maxim that government cannot take property unless it pays just compensation for the property. In other words, while government may keep fees, penalties, and interest when it sells property to pay a tax debt, it must pay the property owner for the surplus equity it takes.

      Last summer, the District asked the court to rule against Mr. Coleman and the other plaintiffs, arguing that taxpayers forfeit their constitutional property rights when they fail to pay their property taxes on time. PLF argued that the government cannot be allowed to redefine property rights or forfeitures in that manner. If state and federal governments were allowed the final say on what constitutes a forfeiture of constitutional rights, then government would find it all too easy to take property from the public.

      [Last] week, the court thanked PLF for its amicus brief and denied the District’s motion, holding that Mr. Coleman and the other plaintiffs may proceed with their Fifth Amendment challenge.
    Source: Challenge to Washington, D.C.’s tax scheme moves forward.
    (1) Pacific Legal Foundation is a Sacramento, California-based, donor-supported public interest legal organization that litigates cases throughout the United States for property rights, limited government, and free enterprise.

    (2) See The Washington Post: Homes for the Taking (Liens, losses and profiteers).

    Snoozing Michigan Property Owner Forfeits Title To Vacant Lot Over Failure To Pay $7 Late Fee On Her Local Real Estate Taxes

    In Hillsdale County, Michigan, Michigan Capitol Confidential reports:
    • A vacant lot owned by a Jackson woman was foreclosed by Hillsdale County because she failed to pay a $7 late fee on her property taxes.

      A Freedom of Information Act request found that Pam Baker, a Jackson resident, owed Hillsdale County $7.70 in interest and late fees for delinquent taxes from 2013 on land she owned near Lake LeAnn in Somerset Township.

      The 2013 taxes on the property, which she owned since 2000, were due on Feb. 14, 2014. Baker says she paid her taxes two weeks late because she was in a car crash seven days before the due date.

      Hillsdale County Treasurer Gary Leininger confirmed that Baker paid her taxes, albeit late. He said Baker likely paid the taxes to the township where the property is located, and then the township treasurer turned the payment over to the county treasurer, which is responsible for collecting delinquent taxes.

      Baker paid $161.29 on March 18, 2014, according to Leininger. The $7.70 was, he said, a balance due from interest and a four percent late fee.

      “That’s standard operating procedure for county treasurers all over the state,” Leininger explained. “She would have received a paid receipt, but it clearly showed it was a partial payment and there was a balance due."

      Leininger said the receipt would have shown a balance of less than $10 and Baker never responded.

      Baker claims she didn’t receive any notices stating that a failure to pay the late fee would result in a forfeiture of the property. Baker’s property was forfeited on March 1, 2015.(1) According to documents included in the FOIA, a notice of judgement of foreclosure was issued Feb. 26, 2016, which stated the foreclosure would become final on March 31, 2016.

      Baker said she called the county clerk to find out what she owed on the property, and that’s when she found out it had already been foreclosed.

      “I called there and couldn’t believe my property was foreclosed,” she said. “I couldn’t believe it. I didn’t receive anything.” “I was just calling to see what I owe, but I didn’t know what it was for,” she said. “I never signed anything.”

      Leininger disputed Baker’s claim that she did not receive any notifications. Documents received from the FOIA request show that Hillsdale County sent delinquent tax notices in 2014, postmarked June 1 and Sept. 1, to Baker's home address in Jackson. The notices said she owed $7.70. If she paid after Aug. 31, the fee would go up to $9.16. The second notice stated the fee would go up to $24.39 if the bill were paid after Nov. 30.

      Documents also show that the county sent a notice of forfeiture to Baker’s Jackson residence on June 30, 2015, through certified mail.(2) Tracking information indicates that the mail was not signed for, so a notice was left at Baker’s home and the mail was returned to the Hillsdale County treasurer's office.

      The county also posted a notice on the Somerset Township lot and published notices in the Hillsdale Daily News three weeks in a row in January 2016. But Baker said she rarely visited the property, which is why she never saw any notices posted there, and she doesn’t receive the Hillsdale Daily News.

      “The thing that gets me is, I have a phone number and they know what it is,” she said. “Why didn’t someone call me?”

      “I had a 'for sale' sign on the property with my phone number on it,” she added.

      Leininger, who sent an agent to post a notice on the property on Jan. 15, 2016, said county treasurers are not required by law to call delinquent taxpayers, nor did the county know Baker’s phone number.

      He also said the last time the county heard from Baker, who has not paid her 2014 or 2015 property taxes, was March 18, 2014, when the county processed her payment on the delinquent 2013 taxes, absent the interest and late fee. “We never heard from her since, until after the foreclosure was final,” he said.

      “In my view, the lady doesn’t have a leg to stand on,” Leininger said.
    For the story, see County Takes Michigan Woman's Property Over $7 Late Fee (Treasurer: 'Lady doesn't have a leg to stand on').
    (1) In a similar case (see Federal Court Green-Lights Elderly, Dementia-Stricken Veteran's Lawsuit (Accuses D.C. Of Violating His 5th Amendment Rights By Swiping His $200K Free & Clear Home Over Unpaid $134 Tax Debt & Refusing To Fork Over The Proceeds For His Surplus Home Equity From Tax Sale), a Washington, D.C. homeowner is currently suing the District, and is advancing the argument that the process it used for foreclosing on homes for unpaid tax debt violated the U.S. Constitition's Fifth Amendment’s maxim that government cannot take property unless it pays just compensation for the property (i.e. the government may keep what it's owed when selling property to pay a tax debt, but it must pay the property owner for the surplus equity it takes. See Challenge to Washington, D.C.’s tax scheme moves forward.

    If, in fact, the tax foreclosure process in Hillsdale County, Michigan operates as a forfeiture of property and where the foreclosed homeowner gets nothing for any accumulated equity for her home (the way it did in the aforementioned Washington, D.C. case), the tax-foreclosed Michigan homeowner may have similar grounds for a lawsuit against the county for taking her property without paying her just compensation in violation of her 5th Amendment rights.

    (2) Ibid.

    Tuesday, June 21, 2016

    Oregon Non-Profit Group Acts As Intermediary That Organizes & Assists Mobile Home Residents To Avoid Eviction, "Control Their Own Lives" By 'Buying The Dirt' Underneath Their Homes From Lot-Leasing Landlords Looking To Sell, Cash In

    From a recent story in the Portland (Oregon) Tribune:
    • [B]uying the dirt

      CASA of Oregon,(1) which stands for Community and Shelter Assistance Corp., expanded into mobile home buyouts after a wave of park closures in 2007, says Peter Hainley, the executive director.

      So far, the group has helped nine mobile home parks form cooperatives and get financing to buy out their landlords.

      Mobile home owners have little recourse when their landlords slap yearly rent increases on them, because they own their homes but it’s very costly to move them, even if they can find a park that will accommodate them.

      “The down side is you don’t own the dirt,” says John Van Landingham, a staff lawyer for Lane County Legal Aid Advocacy Center,(2) who has worked in the mobile home field for 40 years. But when tenants buy the land, “they get to control their own lives,” he says.

      Under the 2014 law that Van Landingham helped write, owners must provide tenants at least 10 days to fashion buyouts after giving notice their parks are for sale. That’s when CASA of Oregon steps in.

      It can make offers to buy the complexes, and get access to confidential financial information about the parks. CASA has relationships with lenders that provide low-interest loans, and mobile home owners help pay off the loans via their monthly space rent.

      CASA builds in extra money in its deals so there is some funding to spruce up the parks, which often are in disrepair when an owner decides to redevelop their property for something more lucrative.

      “We want to upgrade the (Oak Leaf) park, so we don’t look like we’re a bunch of derelicts,” says Renae Corbett, who has emerged as a leader of the park residents. “We may have to raise the rent, maybe 50 bucks,” she says, to help finance the deal.

      Many park residents have construction skills, and can supply some sweat equity, Corbett says.

      “For minimal dollars you do the fix-up,” says resident Larry O’Mara. “It’s not as expensive as people think.”

      Because it’s so costly and difficult to move mobile homes, some are advertised on Craigslist for free, O’Mara says, for folks who will move them. “Some of them are in really fine shape.”
    Source: Mobile Home Owners Unite To Thwart Eviction.
    (1) Casa of Oregon is a private non-profit community development corporation that advocates statewide for the needs of low-income families in connection with providing affordable housing, neighborhood facilities, and programs that enhance their financial well-being.

    (2) Lane County Legal Aid Advocacy Center is a non-profit law firm that provides civil legal assistance in Lane County, Oregon to people in poverty, many recipients of public benefits, and many persons who experience disabilities, as well as people 60 and over.

    Exploding Portland Land Prices Strike Fear In Homeowners Leasing Lots In Mobile Home Parks; Despite Owning Their Homes, Concerns Remain Constant That Park Operators Could Sell Land Out From Under Them, Subjecting Residents To Steep Space Rent Increases ... Or Worse

    In East Portland, Oregon, the Portland Tribune reports:
    • Diane Pense figured she and her husband were pretty set for retirement in their cozy manufactured home in East Portland.

      Their double-wide unit, with three bedrooms and two baths, was only 21 years old and in great shape — and they owned it outright.

      “We didn’t feel vulnerable at all,” says Pense, 67.

      Then, last August, the landlord notified the Penses and nine other families at the Lostinda Woods manufactured home park that their complex at Southeast 125th Avenue and Foster Road was being sold.

      A couple weeks later, new owner Hichi Investments LLC sent word that the Penses’ space rent would spike from $573 to $964 a month, and tenants would have to start paying for garbage, cable TV, water and sewer utilities previously covered by the rent. Hichi demanded residents sign a letter agreeing to the rent hikes and return it in 15 days.

      “It came as a slap in the face, a shock,” Pense says. “If we didn’t sign it, we had to be out by Dec. 30 and move our homes, or forfeit our homes.”

      Mobile homes aren’t so mobile, and can cost more than $20,000 to move — if owners can find a suitable park with an empty space available. So [Oregon] state law actually requires a year’s notice before manufactured home park owners can evict tenants to redevelop their property. But that deadline is fast approaching, and nine of the 10 Lostinda Woods owners sold their homes at a loss, Pense says.

      The Penses sold theirs — appraised at $55,000 — for only $25,000, and cleaned it out last week. They bought another manufactured home at a Milwaukie park for $58,000.

      “Now we’re retired and we have to take another mortgage,” she says, on top of paying the space rent.

      Mobile home parks and manufactured home parks are an important source of affordable housing in Oregon. But Portland’s exploding land and housing prices could easily spur a wave of park closures — and homeowner evictions — in Portland and elsewhere. That’s sure to worsen the housing crisis.
      It’s terrible to own your own home yet have to constantly worry the land beneath you could be sold, [Rita] Loberger says. She’s a volunteer leader of the Manufactured Housing/Oregon State Tenants Association, and often hears of park residents’ fears via the group’s hot line.