Monday, September 26, 2016

Gentrifying Brooklyn Landlord Faces Lawsuit For Allegedly Illegally Overcharging Tenants In Recently Purchased 8-Unit Rent-Stabilized Building Being Gut-Renovated & Operated As A Rooming House

In Crown Heights, Brooklyn, The Real Deal (NYC) reports:
  • In June, residents of 80 New York Avenue came up with a novel way to warn prospective tenants away. They hung fluorescent green, orange and pink signs in the windows across three floors, that together spelled out, “SLUMLORD: DON’T RENT HERE.”

    The landlord they were referring to, Mendel Gold, bought the four-story Crown Heights walk-up in 2014 for $2.3 million, then gut-renovated and converted most of the eight units to five-bedroom apartments, which he rents out by the room.(1)

    Renting by the room is gaining popularity in gentrifying Brooklyn, Gothamist reported, and it’s easy to see why. Both landlords and brokers can reap the benefits of a rotating pool of tenants. The rooms, which can go for under $1,000 a month, appeal to young singles who may not have the finances or willingness to make a long-term commitment.

    Landlords “are essentially gutting apartments and turning them into relatively nice places to live,” Bernard Klein, a realtor with Blooming Sky, told Gothamist. “Then, to increase their rental yield they get a broker to market it by the room.”

    David Maundrell TRData LogoTINY, who runs the Brooklyn and Queens division for Citi Habitats, told the website that the practice of renting by the room was a common one in emerging neighborhoods. “If you go out to a cool restaurant and you have a younger waiter, they all live in these neighborhoods,” he said. “And this is how they do it.”

    Renting by the room is illegal, however, unless all the tenants co-sign a lease.

    In the case of 80 New York Avenue, however, the landlords and broker were less-than-upfront about the living arrangements, the tenants allege. Some didn’t realize they’d be co-leasing an apartment with four other people, or that the landlords would have so much control over who lived with them.

    The tenants have sued the landlords alleging illegal deregulation and rent overcharges.

    Their lawyer, Brian Sullivan of MFY Legal Services,(2) said they are “exactly the sort of tenants to live in an SRO.” They’re working but not making a lot of money and need cheap, no-frills accommodations, Sullivan told Gothamist. “That whole section of the housing market just got demolished, and it creates conditions where landlords can take advantage.”
Source: Landlords in gentrifying Brooklyn are increasingly renting by the room (Demand for quick and cheap housing prompts some to consider SRO-like arrangements: report).
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(1) See 'Slumlord' Matchmaker: Brooklyn Landlord Turns Desperate Strangers Into Sudden Roommates.

(2) MFY Legal Services is a New York City-based non-profit, public interest law firm that works in concert with neighborhood social service providers and community advocates to reach and provide legal representation and education to low-income New Yorkers in the following areas: housing, public benefits, consumer, employment, civil rights, disability rights, and family matters.

Tenants Living In Rooms In Illegally Drywall-Subdivided Basement Of 2-Family Home All Get Immediate Boot While Code Enforcement Inspector/Homeowner Gets Pinched For Unpermitted Conversion; Unwitting Occupant Contributed To Own Eviction With Maintenance-Related Complaint To NYC Housing Agency, Triggering Probe

In Jamaica, Queens, DNAInfo (New York) reports:
  • A housing inspector endangered the lives of his tenants by violating the same building codes the city employed him to enforce, the Queens District Attorney’s office announced [].

    Derrick Allen, 58, a Brooklyn inspector for the Department of Housing Preservation and Development who owns two buildings in Queens, was charged [] with illegally converting the cellar space in his Rosedale and St. Albans properties into dangerous living quarters, according to the DA’s office.

    The units — hooked up to illegal gas and water lines — lacked adequate exits and natural light, which District Attorney Richard Brown noted made the residencies dangerous not only for tenants, but emergency responders as well.

    “Such conversions jeopardize the lives of not only the buildings’ residents but firefighters and other personnel who in responding to an emergency are confronted by a maze of rooms with no way out,” said Brown in a statement.

    “As a code enforcement inspector himself, the defendant should have known better.”

    The Housing Department first became aware of Allen’s practices as a landlord on Aug. 18 when an illegal tenant in his Rosedale building called 311 to complain about building maintenance, according to the DA.

    Housing inspectors arrived one week later to find four illegal single-room residencies in the basement with access to only one exit, as well as a shared kitchen with an illegal gas stove and a bathroom with a hole in the ground where a toilet once stood, the DA said.

    Tenants were ordered to vacate the premises immediately due to the unsafe circumstances, the DA said.

    Representatives from the Department of Investigation and Department of Buildings looked into Allen’s St. Albans residence on Sept. 1 and found a similar setup, the DA said.

    The basement had been converted into a two-bedroom apartment with illegal gas and water lines, and once again there was only one exit.

    Allen was expected to be arraigned in Queens Criminal Court [] where he will be charged with one count of reckless endangerment and two code violations. The inspector will face up to one year in jail if he is convicted.
Source: Housing Inspector Charged with Making Dangerous Conversions to His Home: DA.

For the Queens District Attorney press release, see City Housing Inspector Charged With Reckless Endangerment After Inspection Uncovers Violations And Illegal Conversion Of Queens Buildings Owned By Him:
  • [A]ccording to the criminal complaint, an HPD [code enforcement] inspector conducted an inspection on August 26, 2016, and observed that the cellar had been illegally divided by drywall into four separate single room occupancies (“SRO”) with a kitchen and bathroom.

Electrical Circuit Malfunction Blamed For Fire In Home Carved Up Into Illegal Rooming House, Leaving 11 Crammed-In Boston Residents Homeless; Landlord Cited For Code Violations

In Boston, Massachusetts, WCVB-TV Channel 5 reports:
  • A Boston landlord has been cited after a [] fire left nearly a dozen people homeless.

    The Myrick Street fire in the city's Allston neighborhood was a caused by an electrical circuit malfunction.

    The landlord is suspected of operating the building as an unlicensed rooming house, with several individual units with dead bolts on the doors. The 11 residents included college students and young adults.

    "Every single bedroom had a dead bolt on it, roughly 10 rooms," said Boston Fire Marshall Jack Dempsey.

    The commissioner of Inspectional Services and the city fire marshal met with landlord to issue two violations for failing to obtain a permit and having an unsafe structure.

Cops, Code Enforcement, Other Officials Raid 3-Bedroom Long Island Home That Was Carved Up Into 9-Bedroom Firetrap; Landlord & 18 Seasonal Occupants Face Various Charges

In Montauk, Long Island, The East Hampton Star reports:
  • Nineteen people were charged with violations of the town code when The East Hampton Town Code Enforcement Department, working with the Building Department, fire marshals, and town police, executed a search warrant at 13 Beech Hollow Court in Montauk at 6 a.m. According to Michael Sendlenski, the town attorney, 18 people were found staying in the house, which apparently had nine bedrooms. The homeowner was also charged.

    The raid was the result of an investigation of an alleged share house and dangerous overcrowding, which spanned most of the summer. Alina Gersham, who leased the house for the season from Thomas Mahl of Montauk, was at the house at time of the raid. Mr. Mahl reportedly bought the house in 2006 for $1.65 million.

    Ms. Gersham "was renting out rooms, parts of rooms, the illegally converted basement, and even the pool house . . . to 17 occupants for as much as $1,800 for a weekend per room," according to a town press release.

    She allegedly created six additional bedrooms, illegally converting the basement, among other spaces, into rooms that were firetraps, with no egress in case of emergency, and no smoke detectors, according to the release. The pool house was also allegedly converted into bedrooms illegally.

    The town became aware of the apparent violations earlier this summer after police were called in response to a noise complaint. They issued summonses for noise violations as well as overcrowding. "They previously tried to legalize the basement, but the town said, 'No,' Mr. Sendlenski said, due to the dangerous conditions. Ms. Gersham, allegedly with the permission of Mr. Mahl, continued to rent out the rooms after the summonses were issued.

    Each of the residents of the house [] is facing charges under the town code on the use of single family residences. Ms. Gersham and Mr. Mahl, on the other hand, are facing "many dozens" of charges, quite a few of which are criminal misdemeanors, according to Mr. Sendlenski. The number of charges each is facing could top 100, he said.

    Mr. Mahl, who was living at his house at 16 Gates Avenue in Montauk, told authorities he was not aware of what was happening on Beech Hollow Road. It is the second time in a year that one of his properties has been cited as an illegal share house.

    Kimberly Geise, then 46, who, like Ms. Gersham, rented the Gates Avenue house for the season, pleaded guilty in October to seven charges stemming from the sale of shares on AirBNB and Craigslist. "The homeowner, Tom Mahl, told investigators that he was unaware of what was going on," The Star said in reporting the charges. At the time, Mr. Sendlenski said homeowners are not generally charged the first time around. By phone on Saturday, he reiterated that point. "The second time around, the owner is culpable," he said. He added that the investigation was ongoing.

    In the press release, the charges were described as "rental registry violations that provide that the landlord notify the town Building Department when the number of tenants change and when new rental periods begin and end." Other charges include the sale of shares, no smoke detectors, construction without a permit, no certificate of occupancy, improper egress for bedrooms in the basement, conversion of the house from single to multifamily use, and alleged violations with respect to the pool house and basement.

    All 19 charged will be arraigned in East Hampton Town Justice Court on Sept. 26.
For the story, see Town Charges 19 in Dawn Raid of Rented House. subdivided

Sunday, September 25, 2016

Threatened With Redevelopment Plans That Don't Include Them, Boot-Fearing, Low-Income Tenants In 535-Unit Section 8 Apartment Complex Tag D.C. Developer With Housing Discrimination (Familial Status) Lawsuit For Alleged Harm Against Big Families; Failure To Replace Existing 4 & 5-Bedroom Apartments Will Displace As Many As 150 Extended Families Needing Larger Accommodations: Complaint

In Washington, D.C., the Washington Lawyers' Committee for Civil Rights and Urban Affairs(1) recently announced:
  • As plans move forward to redevelop Brookland Manor, a group of long-standing resident families, along with community-based organization ONE DC, have filed a class action lawsuit [] challenging the discriminatory redevelopment by developer Mid-City Financial Corporation and its affiliates.

    If allowed to go forward as planned, the redevelopment would eliminate many apartments with three bedrooms and all apartments of more than three bedrooms, and displace up to one hundred and fifty families. Defendant Mid-City Financial Corporation has “justified” this discrimination on the basis that large families are “not consistent with the creation of a vibrant new community.”

    Tenants, who have lived at Brookland Manor with their families for years, disagree with this notion. Named plaintiff, Adriann Borum, comments: “They say it takes a village to raise a child. I was raised at Brookland Manor, and have raised 5 children here. Brookland Manor is our village, and our village is being torn apart.”

    Ms. Borum has lived at Brookland Manor for 28 years, but her four bedroom apartment is among those that would be bulldozed and left un-replaced in the proposed redevelopment. She and other residents bringing this lawsuit want to preserve their homes, which are among the only affordable apartments with three, four, or five bedrooms in the District.

    The complaint [] details the resident families’ claims that Defendants seek to exclude and displace up to 150 families by eliminating family-sized units (three-, four- and five-bedroom units) in the redevelopment, which will have a discriminatory and disproportional impact on families. The lawsuit also seeks an order from the court halting the proposed redevelopment to prevent any further forced displacement of tenants prior to the resolution of this court action.
For more, see: Low-Income Families File Lawsuit to Halt Discriminatory Redevelopment of DC-Based Brookland Manor Property.

View the Brookland Manor Litigation Fact Sheet here.

For the lawsuit, see Borum, et al. v. Brentwood Village, LLC et al.

See also Washington City Paper: Northeast Tenants Sue Owner for Alleged Discrimination (A lawsuit against the owner, notorious for anti-tenant practices, claims redevelopment plans would push out Brookland Manor residents).
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(1) The Washington Lawyers' Committee for Civil Rights and Urban Affairs, a non-profit 501(c)(3) organization, was established in 1968 to provide pro bono legal services to address discrimination and entrenched poverty in the Washington, DC community.

Citing Age, Health Problems, Landlord Announces Retirement Plans - Including Shutting Down 49-Unit Building & Bequeathing It To Local University, Leaving Four Dozen Families Scrambling For New Accommodations

In Oak Ridge, Tennessee, The Oak Ridger reports:
  • It appears the oft-maligned Applewood Apartments on Hillside Road will soon close once and for all, as tenants recently received notice they need to vacate the premises by Sept. 30.
    ***
    Knoxville attorney Joseph Levitt Jr., who owns the Applewood Apartments, recently sent a letter to all his tenants announcing the impending closing. [Building residents] Joe and Brenda Lisenberg provided a copy of Levitt’s letter to The Oak Ridger.

    “I am closing down the Applewood Apartments as of Sept. 30, 2016,” the letter begins. “I have tried to keep the apartments going as long as possible to provide affordable housing for the working people of Oak Ridge. Unfortunately, my health no longer affords me the ability to keep operating the apartments.

    THIS IS YOUR 60-DAY NOTICE. Please begin looking for other lodgings as soon as possible. Stephanie will be glad to give references and help facilitate your smooth transition. You can pay at the office as usual and let the staff know when you have cleaned out your unit. An inspection will be made and your damage deposit will be refunded depending upon the condition upon your departure.

    “It is a sad day for all of us who have tried to give you an affordable place to live. Our Applewood staff will be available to you during this time.”
    ***
    In a phone interview with the Applewood Apartments owner, Levitt said he’s leaving his estate to the University of Tennessee Law School when he dies and doesn’t want to leave the “ruckus” of Applewood to UT.

    “I don’t want to saddle the university with that,” said Levitt, adding his age and state of health prevent him from doing many of the activities he once did. Levitt and the city of Oak Ridge have been in legal disputes over the apartments for years; and when asked about those confrontations, Levitt said he’ll continue to fight “on principle.”
    ***
    The mission of the Oak Ridge-based nonprofit organization Trinity Outreach Center of Hope (TORCH) is to help homeless people and to attempt to prevent local homelessness. Executive Director Andy O’Quinn told The Oak Ridger [] that he’d just learned of the Applewood Apartments fate — but nevertheless said he is already in the process of doing what he can.

    “I am talking to several other people about what the best approach will be and how TORCH and the community can work together to assist these individuals,” O’Quinn said. “I will let you know more once I have a more formal plan.”

    The Oak Ridger also spoke to Housing Choice Voucher/Section 8 Manager Terri Flynn with the Oak Ridge Housing Authority, and she said the ORHA has a plan in place to help the 49 families being displaced. The Housing Authority reportedly has a preference code for those displaced through no fault of their own, and Flynn urged Applewood Apartments residents to contact the ORHA as soon as possible to get the process started.

    “They can call (865) 482-1006, Ext. 121, to get the process started as soon as possible,” said Flynn, who noted there are current openings in Oak Ridge’s public housing but applicants must still meet certain requirements for eligibility.

Dementia Patients In Troubled Nursing Home To Be Displaced After Reports Of Mistreatment Force Facility Shutdown

In Middleton, Rochdale, United Kingdom, the Manchester Evening News reports:
  • Staff and families of residents at an under-fire nursing home hit with a string of abuse and neglect allegations say they have been told it will close at the end of the month, the [Manchester Evening News] can reveal.

    Ashbourne House Nursing Home in Middleton, Rochdale, is at the centre of a ‘dementia doll’ row - and has faced calls to shut following a series of claims about residents being mistreated.

    A number of sources have told the M.E.N. they have been told by a manager at the home it will close on September 30.

    The Care Quality Commission (CQC) has taken enforcement action, which the home has 28 days to appeal against, but the body would not confirm the measures.

    It is understood a ‘troubleshooting’ manager sent in as a ‘last resort’ to turn the home around has told staff and families it will shut following a damning CQC inspection.

    In June, the health watchdog said Ashbourne House could face closure within six months if drastic changes were not made.

    Inspectors branded the home ‘inadequate’ and put it into special measures.

    The report - which outlined a string of health and safety regulation breaches - said residents’ ‘health and welfare’ had put people at risk and care was ‘not delivered in a thorough and dignified way’.

    Many of the inspectors’ findings corroborated the claims of whistleblowers who approached our reporters earlier this year in the wake of the M.E.N’s investigation into alleged mistreatment of dementia patients through ‘torture’ of their comfort dolls.
    ***
    Residents requiring nursing services are already in the process of leaving - or have already found alternative accommodation. The council will rehome anyone under its contract and any private residents will also be assisted.
For more, see Nursing home hit with string of abuse and neglect allegations 'set to close at end of the month' (Ashbourne House in Middleton has faced calls to shut following a series of claims about residents being mistreated).

Two Years After Taking Title To Foreclosed Nursing Home, Bank Announces Closure Of Facility, Causing Displacement Of Two Dozen Residents

In Johnson City, Tennessee, WCYB-TV Channel 5 reports:
  • The bank that has held the title on a Johnson City nursing home has announced it's closing the facility.

    Employees and families of patients at Lexington at Johnson City were recently informed of the move during a meeting held on last week.

    TruPoint Bank has kept the nursing home operational after the previous owners defaulted on a loan.

    The decision will cause 24 residents to be relocated.

    “After learning of the owners plans to shut the doors immediately in the spring of 2014, TruPoint Bank began working diligently behind the scenes, trying to avoid an abrupt closure of the Lexington,” explains Barry Elswick, president & CEO of TruPoint Bank.

    “For two years, the bank’s strategy has been twofold: we’ve sought to market the facility to grow the resident population while simultaneously seeking new ownership.”

    Since May 2014, TruPoint Bank has funded, to the extent that resident rent payments were insufficient, full operations at the facility, including costs directly related to monthly operations, major capital repairs to its elevators and boilers, demolishing a gutted building and providing new and ample parking.

    “Unfortunately, new ownership has not been secured and we are faced with this very difficult decision,” says Elswick. “We had worked toward and hoped for a very different outcome.”

    The last day of operation is October 31.
Source: Lexington at Johnson City nursing home to close doors Oct. 31 (Bank had kept facility open for two years).

Nursing Home's Abrupt Closure Leaves Devastated Elderly Patients With 48 Hours Notice To Find Alternative Accommodations; Families Of Residents Rage As They Scramble To Assist Vulnerable Loved Ones

In Hull, United Kingdom, the Hull Daily Mail reports:
  • Families of residents in an east Hull nursing home are furious after being given 48 hours to find them alternative accommodation.

    Some are believed to be dementia sufferers. Private health firm Bupa is closing the 13-bed unit at its Saltshouse Haven residential and nursing care complex in Saltshouse Road.

    The move follows a highly-critical inspection report on the home by the Care Quality Commission. It placed the home, which has a capacity of 150 beds, in special measures after being rated inadequate.

    Inspectors found Bupa was in breach of seven regulations under the Health and Social Act over the way the home was being run.

    The CQC said inadequate staffing levels had resulted in people not receiving proper levels of care, putting some of them at risk. As a result of the special measures sanction, Bupa agreed to suspend taking in new admissions with a warning that its registration to run the home could be removed unless improvements were made.

    Now the company has announced the Coniston Lodge nursing unit is to close.

    However, families with people in the unit say they have only been given 48-hours notice to find alternative accommodation for their relatives.

    One relative, who did not wish to be named, said: "Some residents who are very ill are devastated to say the least. It's a scandal."

    Another family member said: "We are frantically trying to find a place for our mother."

Saturday, September 24, 2016

Slow-Paying California Client Security Fund Estimates Shelling Out $8 Million For Year 2016 To Theft Victims Ripped Off By Their Attorneys

In San Francisco, California, the Northern California Record reports:
  • The California Client Security Fund, managed by the State Bar of California, provides a chance at reimbursement for those whose money is taken by a dishonest attorney.(1)

    The California State Bar website tells the story of Jewell Matthews, a pastor, who recently received $3,000 from the fund as reimbursement for the fee she and her late husband paid to California attorney Philip Kramer in 2010. The couple was struggling with mortgage payments for their Pennsylvania home when a letter from Kramer arrived, offering his services to help find a solution to their payment problem.

    The couple didn’t think twice about trusting Kramer. The fact that he was an attorney, coupled with the name of the Matthews’ mortgage lender used in the document, gave it perceived legitimacy. Matthews attributed her naiveté to her trusting pastoral nature and desperation. When Kramer took their money without providing any work, the Matthews tried unsuccessfully to contact him.

    The Matthews were not the only victims of Kramer’s dishonest dealings. The State Bar and the Attorney General’s office shut down his office in 2011. He was disbarred for collecting advanced fees from clients without providing representation.

    The California Client Security Fund does not move quickly, but it does move, as Matthews can attest to. She is grateful to receive the money, even though it is six years after Kramer cheated her and her husband.

    The fund’s director, Lori Meloch, estimated that $8 million in reimbursements will be awarded in 2016. Approximately 700-800 people are reimbursed by the fund each year. But it is a lengthy process; Meloch tells people it can take up to two years before their application is considered.

    California has more than 150,000 lawyers. When someone believes they have been cheated by one of them and wants retribution, they need to start the process by filing a complaint with the State Bar. If the bar investigates accusations and finds the lawyer has taken money illegally, usually by not providing services, the complainant may be awarded restitution through the fund. There is a cap of $50,000 on payouts that occurred before Jan. 1, 2009, and a $100,000 cap on losses that occurred on or after Jan. 1, 2009.

    A victim of attorney fraud must fill out an application, available on the State Bar website, to get the reimbursement ball rolling. The complaint must be due to actual loss of money, which the attorney received. It can’t be simply a matter of dissatisfaction with the attorney’s performance.

    The fund was established in 1972 to protect consumers from dishonest lawyers. It covers the loss of money or property to a dishonest lawyer. It does not provide compensation due to lawyer incompetence or malpractice.

    The types of dishonest actions that can qualify under the fund include
  • theft or embezzlement;
  • failure to refund unearned attorney fees;
  • borrowing money from a client without the intention or ability to repay;
  • taking a client’s money or property purportedly for use as an investment when no investment is made; and
  • an act of dishonesty or deceit that causes a client to lose money or property.
Source: California's lawyer-backed fund gives victims of attorney fraud chance to recover money.
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(1) 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.

Nassau County DA Pinches Disbarred Attorney For Allegedly Fleecing Dead Client Out Of Over $400K; Estate Beneficiaries Still Await Proceeds From Sale Of Home

From the Office of the Nassau County, New York District Attorney:
  • Nassau County District Attorney Madeline Singas announced that a disbarred attorney was arrested [] for allegedly stealing more than $400,000.00 from an estate he represented.

    Robert Alan Wagner, 63, of Bellmore, was arraigned [...] and is charged with grand larceny in the second degree (a C felony). Bail was set at $200,000 bond or cash and the defendant is due back in court on September 12. Wagner, who was also ordered to surrender his passport, faces up to five to 15 years in prison if convicted.

    “This defendant is charged with stealing more than $400,000 in estate funds that he held for a client, and using that money for his own personal purposes,” DA Singas said. “Attorneys hold a special position of trust with their clients, and stealing from those grieving from the loss of a loved one is especially despicable.”

    DA Singas said that Wagner was retained by the executrix of an estate to represent her in February 2013. In December 2013, the deceased woman’s property was sold for approximately $450,000.00. After the appropriate deductions and expenses, the approximate balance of $407,000.00 was to be deposited in the defendant’s escrow account and to be used for estate related matters, including distribution to the beneficiaries of the estate.

    Although the money was deposited in December 2013, at one point in February 2014 the balance in the account had been depleted to $300.00. In addition, none of the proceeds from the sale of the home had been distributed to the beneficiaries of the estate.

    Between July 2014 and March 2015, the defendant allegedly misappropriated or used other funds to pay the beneficiaries. One beneficiary, however, who was entitled to $100,000.00, still had not received any money by May 2015. The defendant allegedly provided the beneficiary with multiple excuses and no payment was forthcoming. Wagner allegedly used the money to pay for personal expenses and to carry on his law practice.

    The executrix of the estate and the beneficiary filed a complaint with the NCDA in July 2015.
Source: Disbarred Attorney Arrested For Stealing More than $400,000 from Estate Funds (Robert Wagner faces up to five to 15 years in prison).
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(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.

Nassau County DA: Attorney Held $25K Of Clients' Home Sale Proceeds In Escrow Pending Receipt & Recording Of Mortgage Satisfactions; He Never Obtained Documents & Pocketed His Clients' Cash Instead

From the Office of the Nassau County, New York District Attorney:
  • Nassau County District Attorney Madeline Singas announced the arrest of a disbarred attorney yesterday who is accused of stealing $25,000 from clients he was representing in the sale of their home.(1)

    Timothy Daly, 53, of Hempstead, was arrested and charged with grand larceny in the third degree (a class D felony). If convicted, he faces up to 2-1/3 to 7 years in prison. He is due back in court on September 16 and was released on his own recognizance.

    “Attorneys have a special obligation to act in the best interests of their clients,” said DA Singas. “This defendant is charged with stealing from clients who entrusted him with their home purchase and using their money to pay his rent and line his pockets. My office is committed to holding him accountable.”

    DA Singas said Daly was hired by the complainants to represent them in the sale of their residence in Queens. On the day of closing in August 2011, Daly agreed in writing to hold in escrow $25,000 of the sale proceeds until he sent two original satisfactions of existing mortgages to the title company for recording. Daly, however, allegedly failed to obtain the satisfactions and his clients never received the money owed to them.

    The NCDA began investigating the case in June 2016 when the complainants, who had to obtain the satisfactions of mortgage on their own, filed a complaint.

    Daly was disbarred by the Appellate Division, Second Department, on July 24, 2013 for professional misconduct unrelated to this matter.
Source: Disbarred Attorney Arrested for Stealing $25,000 from Clients (Timothy Daly, 53, Allegedly Used Homebuyers’ Escrow Funds to Pay His Rent).
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(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.

Law Enforcement Finally Catches Up To Attorney Recently Disbarred For Commingling, Misappropriating Client Funds; Theft By Misapplication Of Property Charge Brought For Defendant's Alleged Failure To Distribute Nearly $44K Belonging To Dead Client's Estate

In North Haverhill, New Hampshire, the Valley News reports:
  • A 63-year-old Woodsville attorney has been indicted by a Grafton County grand jury on accusations that he failed to distribute nearly $44,000 he had been holding on behalf of the estate of a Haverhill farmer.(1)

    Gary J. Wood, who operated a law office on Pine Street in the village of Woodsville, faces a felony count of theft by misapplication of property.

    He was disbarred this summer, according to documents on the state Bar Association’s website, for allegedly commingling and misappropriating clients’ funds.

    According to his Martindale-Hubbell online profile, Wood earned a law degree from Franklin Pierce Law Center in 1980.

    The indictment asserts Wood deposited $43,927 from the estate of Haverhill resident Irving W. Thayer, into his attorney trust account, at the request of the estate’s executor, Alan Rutherford, a Haverhill real estate appraiser and registered tax preparer.

    Wood was supposed to later return the money to the estate but “recklessly” failed to make the payment “and treated the said funds as his own,” according to the indictment.
    ***
    According to the state Bar Association’s website, Wood came under scrutiny in November when he failed to file his annual trust accounting certificate, an auditing system that ensures attorneys either don’t possess any client’s assets or funds, or if they do, ensures the funds are held in compliance with Supreme Court rules.

    Because he failed to produce the certificate, the Supreme Court in December suspended him from practicing law in New Hampshire.

    The next month, the Supreme Court ordered Wood produce a second certificate, this time to show that he had completed and met minimum continuing education requirements for New Hampshire lawyers. Though he had never rectified his first suspension, the Supreme Court again suspended Wood from practicing.

    In May, the Professional Conduct Committee, a board that works under the New Hampshire Supreme Court Attorney Discipline System, recommended to the court that Wood be disbarred.

    The recommendation came after an auditor reviewed Wood’s attorney accounts and found that he “misappropriated client funds,” according to a Supreme Court order, published on the state Bar Association website on July 20.

    “The audit demonstrated that attorney Wood misappropriated client funds in his possession, routinely paid himself before they were earned, commingled client funds with his own funds and operated his Interest on Lawyers Trust Accounts with a deficit or out of trust,” the Supreme Court order reads.

    Wood was formally disbarred on July 11.
Source: Woodsville Attorney Indicted.
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(1) The Public Protection Fund has been established by the New Hampshire Supreme Court to provide some measure of reimbursement to victims who have lost money or property because of theft or misappropriation by a New Hampshire attorney, and occurring in New Hampshire during the course of a client-attorney or fiduciary relationship between the attorney and you. The Fund is administered by the New Hampshire Bar Association, through a nine-member committee, under the general oversight of the New Hampshire Supreme Court. The Fund is funded by annual contributions made by attorneys who are members of the New Hampshire Bar Association.

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.

Cops Bag Law Firm's Legal Secretary For Allegedly Filching Nearly $200K From Employer's Dead Clients

In Freeport, Pennsylvania, the Pittsburgh Tribune-Review reports:
  • A legal secretary stole nearly $200,000 from seven estates she oversaw at the Tarentum-based law firm where she worked, the Allegheny County District Attorney's office said [].

    Joy Hale, 57, of Freeport is charged with seven counts of theft and 21 counts of forgery, court records show.

    Hale's bookkeeping — in which investigators said the forgery and theft spanned more than two years — came under scrutiny in May when Sandra Smith noticed discrepancies in the estate of her father, which was being handled by attorney Bill Krzton's Three Rivers Law Firm, according to a criminal complaint.

    Law firm officials could not immediately be reached for comment.

    When Smith approached Krzton about the mistakes, he responded: “You probably just made a mistake somewhere; you are not meant to understand this.”

    Krzton asked Hale to look over the estate paperwork, police wrote. Smith met later with Hale and Krzton, and Hale produced bank statements later found to be altered, police said. Smith discovered the alterations when she checked Hale's documents against documents from the bank.

    Investigators found $96,480 missing from Smith's father's estate, coming from 20 monthly checks Hale made payable to herself with Smith's forged signature, according to the complaint.

    Police said Hale admitted to signing the forged checks and creating false bank statements to cover up the theft.

    Hale told police she needed the money to help with medical care of her son in Georgia, according to the complaint, and her husband had been laid off.

    According to the complaint, when police asked Hale if she'd stolen from other estates, her attorney — Krzton — spoke up. He told police Hale had stolen about $3,000 from Krzton's aunt's estate in 2013, and he'd allowed Hale to pay back the stolen funds through her wages.

    Investigators searched Hale's bank records and discovered she'd stolen money from six other estates, totaling $94,547, according to the complaint.
Source: Tarentum legal secretary charged with stealing nearly $200,000 from estates.
----------------------

(1) If the attorney is found to have some responsibility for the failure to properly safeguard his clients' money, the victims of this theft may be eligible for some reimbursement for their losses from the Pennsylvania Lawyers Fund for Client Security, which was established by the Supreme Court of Pennsylvania in 1982 to reimburse clients who have suffered a loss as a result of a misappropriation of funds by their Pennsylvania attorney.

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.

Friday, September 23, 2016

Nassau County DA Pinches Long Island Man For Alleged Home Improvement Ripoff, Accused Of Grabbing $7K For Work That He Subsequently Never Performed; Complaint Filed With County Consumer Affairs Office Yields Referral To Prosecutor

From the Office of the Nassau County, New York District Attorney:
  • Nassau County District Attorney announced that a Bellmore man was arrested [] for a “take the money and run” scam, in which he allegedly took $7,000 from a homeowner for home improvement work that he did not perform.

    Joseph Policaro, 41, of Bellmore was arrested [] by NCDA investigators and charged with grand larceny in the third degree (a D felony) and operating a home improvement business without a license (an A misdemeanor). If convicted, he faces a maximum of 2-1/3 to 7 years in prison. He is due back in court on September 1 and was released on his own recognizance.

    “This defendant claimed to be a contractor and stole thousands from a Bellmore resident for home improvement work that he never performed,” said DA Singas. “Today’s arrest serves as a reminder to the public to check contractors’ licenses before hiring them, and a warning to unscrupulous contractors that those who scam Nassau residents will be prosecuted.”

    On July 25, 2015 the homeowner entered into a contract with Policaro to perform home improvement work on the exterior of the home, and paid the defendant $7,000. When the work did not begin as scheduled, the defendant allegedly made excuses claiming that he was “running late or he was “delayed.” The complainant filed a complaint with the Nassau County Office of Consumer Affairs, which then referred the case to the NCDA’s office for investigation in March 2016.

    The investigation revealed that Mr. Policaro allegedly spent the homeowner’s funds on expenses unrelated to the complainant’s home including assorted debit card purchases for personal expenses at Wal-Mart, Speedway, Stop & Shop, gas stations and convenience stores. He also paid vendors for expenses unrelated to the complainant.
Source: Unlicensed Home Contractor Arrested for Taking Money for Work He Never Performed (Joseph Policaro Allegedly Took $7,000 and Repeatedly Told Victim He was “Running Late” or “Delayed”).

Home Improvement Contractor Gets Jail Time For Fleecing Four 80+ Year Old Homeowners (Including One With Alzheimers') Out Of $40K+; Probe Triggered By Initial Review, Subsequent Complaint Filed By Local Social Services Agency Serving The Elderly

In Honesdale, Pennsylvania, the Wayne Independent reports:
  • Texas Township business Borsdam's Plumbing and Electrical Services is “effectively dead” after its co-owner was sent to jail [] for home-improvement fraud.

    Wheelchair-bound David Borsdam, 70, of Honesdale, was sentenced to spend 20 days to five years, less one day, in Wayne County jail in connection with him scamming four elderly victims out of thousands of dollars. The defendant also cannot ever again work in the home-improvement business.

    President Judge Raymond Hamill said the case was not an instance of simply a businessman overcharging customers, but an intentional act to defraud “vulnerable” victims. “This is a criminal, a criminal, act,” the judge emphasized during the sentencing hearing.

    Borsdam could have been sentenced to between nine months and seven years in prison, but the judge said he was imposing a lighter term due to the defendant's frail health.

    Borsdam in July pleaded no contest to the felony charge. A defendant who pleads no contest doesn't admit guilt but concedes there is enough evidence for a conviction.

    He and his wife and co-defendant, Betty Jane Borsdam, also must pay $41,400 in restitution to the victims.

    Betty Borsdam, 70, also of Honesdale, was earlier placed in the Accelerated Rehabilitative Disposition program, which allows non-violent, first-time offenders to have charges dismissed if they complete a probationary period.

    Defense lawyer Richard Henry told the court, “Effectively the (Borsdams') corporation is dead.”

    The investigation into the business at 1903 Roosevelt Highway began in 2015, when the Wayne County Area Agency on Aging reported to police the financial exploitation of several elderly residents.
    ***
    The victims were all in their mid- to late 80s at the time of the crimes, one of whom suffers from Alzheimer's disease and was forced into an assisted living facility after being scammed.
    ***
    In one instance, the aging agency gave state police 15 contracts for work completed by Borsdam's at the Texas Township residence of an 81-year-old woman who paid the company $64,697 between October 2014 and July 2015.

    A certified inspector with the aging office reviewed the Borsdam's work and said the prices were “extremely high and the homeowner was taken advantage of,” according to court papers.

    In another incident, police investigated work performed by Borsdam on a leaking toilet at the High Street residence of a senior citizen.

    Borsdam submitted an initial proposal for $2,736, but later said more work needed to be done for approximately $18,891, according to court papers.

    An acquaintance of the victim, suspicious of the price jump, contacted Jim Miller Plumbing & Heating. Miller found much of the work to be unnecessary.

    Documents prepared by Betty Borsdam revealed the victim was “grossly overcharged, man hours were exaggerated” and materials were marked-up in excess of industry standards, police said.

    Also, a review of checks used by some of the victim indicated the checks were only signed by the victim but made out by and to David Borsdam, police said.

Judge Belts Home Improvement Grifter With 8 Consecutive 1 To 2 Year Sentences (8 To 16 Years Total) For Fleecing Over $163K In Ripoffs Covering Eight Homes, Mostly Elderly Homeowners; Defendant Stole By Signing Contracts, Pocketing Substantial Upfront Deposits, Performing Shoddy, Incomplete Work

From the Office of the Bucks County, Pennsylvania District Attorney:
  • An unlicensed Langhorne contractor was sentenced [] to serve eight to 16 years in state prison for bilking multiple homeowners of more than $163,000.

    The scope of John New’s home-improvement crime wave covered three counties, eight homes and 11 victims, most over age 60. It spanned nearly five years under three corporate entities, each unlicensed or fraudulently licensed and insured.

    Left in New’s wake were unfinished kitchens, bathrooms, roofs, patios and tens of thousands of dollars in lost deposits. Several victims had to shell out many thousands more to correct substandard work that New did complete.

    To Bucks County Senior Judge Clyde W. Waite, these circumstances justified eight consecutive one- to two-year state prison sentences, one for each household. He also ordered New to pay a total of $163,291.92 to his victims, none of which New has raised.

    “This should send any message that needs to be sent as to what will be tolerated,” Waite said.

    New’s punishment was the latest in a series of lengthy sentences imposed recently on fraudulent contractors by Bucks County judges.

    Last year, John and Ryan Thayer, a father-son team from Levittown, received state prison sentences of seven to 20 years and six to 20 years, respectively. The Thayers admitted fleecing 10 victims out of more than $675,000.

    The longest sentence given a contractor in Bucks County was imposed on John Succi of Yardley in February 2015. Succi was sent to state prison for 15 to 30 years for stealing $2.5 million from a dozen victims in one of Pennsylvania’s largest contractor-fraud cases.

    New pleaded guilty on June 13 to eight felony counts of receiving advance payment for services and failing to perform them.

    He also pleaded guilty to one count each of theft by deception and defrauding his insurance provider by obtaining coverage with false information. Waite imposed concurrent one- to two-year sentences for those crimes.

    Bucks County Detective Eric Landamia began investigating New in August 2015. The investigation found that New had incorporated three different businesses for home improvement work. Only one ever was registered with the Pennsylvania Attorney General’s Office.

    Pennsylvania’s Home Improvement Consumer Protection Act, which took effect July 1, 2009, requires all contractors performing more than $5,000 per year of home improvement business to register with the Attorney General. The registration application requires disclosure of prior home improvement-related criminal convictions, bankruptcies, civil judgments and other information.

    Landamia found that New had lied to register one of his businesses, NUHL Construction & Management Group, in December 2012. New failed to disclose multiple lawsuits that had been filed against him and/or his business. New also operated his business without a state registration after it expired in December 2014.

    In addition, New used false information to obtain an insurance policy for his business. Not only did he submit the faulty state registration information to his insurer, he falsely told the insurer that he used no subcontractors.

    After his policy expired in October 2013, New continued without insurance.

    New typically stole from customers by signing a contract, collecting substantial down payments and failing to complete the work promised.

    Victims were forced to hire new contractors to finish the work at added cost. Some contractors had to re-do work that New had botched or performed contrary to engineering plans.

    “John New has stolen $17,000 from my family, destroyed our back yard, ruined our trust in people, and put us in (a) bad financial position that will impact my family for years into the future,” one victim, who hired New to install a new patio and deck, wrote in a letter to Waite.

    New stole seven years of home-improvement savings, the victim wrote, and left his property unsafe and looking “like a bomb exploded in our back yard.”

    An older couple wrote of how they had wanted to renovate their bathroom to include a walk-in tub for their adult daughter, who has cerebral palsy. Instead, New “left us stranded with no tub, no toilet, and no sink,” just a shower that was not working.

    The couple wound up paying $19,295 for a project that was expected to cost less than $9,000. “That someone would take advantage of a project that was essentially going to make life better for a disabled woman and her caregiver parents still leaves our nerves frayed and stomachs cold,” the couple wrote to the judge.

    “The damage to these victims was in many ways irreparable,” said Deputy District Attorney Marc J. Furber, who prosecuted New.

    Yet New has paid “not one penny” to make his victims whole, Furber said. “It doesn’t take much to see what the defendant’s purpose was here, and that was to defraud them.”

    Waite looked askance when New asked for a sentence of probation to allow him to work for the money he owes the victims. “I just want to make this right by everyone,” New said.

    Furber replied that the victims already understand, based on “a lot of empty promises” from New, the slim chances of recovering their money. He said a substantial prison sentence would send a stronger message of accountability to others.

    “Generally, contractors must know that this is wrong,” Furber said.

Complaints Continue Against Iowa Home Improvement Contractor With Dubious History Of Allegedly Stiffing Homeowners After Pocketing Their Money; Local Cops Allow Him To Get Away With It, Saying That Where There's A Contract, It's A Civil Matter!

In Windsor Heights, Iowa, The Des Moines Register reports in columnist Lee Rood's Reader's Watchdog column:
  • Here’s what we know about Timothy Lee Peek:

    He has a habit of walking away with other people’s money.

    He doesn’t pay debts.

    He shies away from courthouses.

    Which is why Pam Said wonders why law enforcement hasn’t done more about the fact that Peek, owner of T and J Home Improvement in Greenfield, cashed a $16,000 down-payment check last spring for a big job at her Windsor Heights home and disappeared without lifting a finger.

    “You can’t tell me he’s not breaking the law when he’s taking that kind of money,” she said. “It seems he just gets away with it and gets away with it and no one cares.’

    Said, 65, says she and her 72-year-old husband found Peek on Thumbtack.com and hired him to redo their driveway and sidewalk, add some siding to the front of their house and build a dining room addition. She hadn’t even picked out what color siding she wanted when Peek took her check in March and never came back.

    A month later, a Polk County judge issued a warrant for Peek’s arrest for failing to appear in court after not paying a $6,712 judgment left over from 2007, court records show. The court ordered Peek's wages be garnished, but those payments stopped after Peek paid $1,200, according to Curt McCormick, the lawyer trying to collect.

    A year ago, Peek cashed a $7,900 down payment check for a deck job around a pool in Waukee and didn’t hammer a nail.

    Tim and Marcia Tope told the Iowa Attorney General’s Office in a complaint that Peek was supposed to begin the job in October 2015. From then until July this year, he blamed other jobs, weather and sickness for failing to get the work started.

    Then, he claimed in June a refund check was in the mail. It wasn’t, according to the complaint.

    In Decatur County, Peek’s got another judgment against him for $6,000. He’s also got convictions for theft in Decatur and Clarke counties, assault in Wayne County, and he’s been sued for back rent and unpaid building supplies.

    Talk to him on the phone, though, and he’s got an answer for most everything.
    ***
    Windsor Heights police told me they looked into Pam Said’s complaint for three months but weren’t able to come up with probable cause for his arrest.

    Sgt. Derek Meyer contended the case was a civil matter because the two had a contract,(1) and Said is contending Peek broke that contract.

    I told Meyer I have written about similar cases in which contractors were charged criminally for taking large sums of money and failing to deliver work.

    He said each case is different.
For more, see Contractor who takes $16,000 has a history of not doing work.
---------------------------

(1) The idea that a scammer can immunize himself from criminal liability merely by incorporating the use of a written contract in his scheme to defraud is an idiotic notion. For the cop to dismiss this case as a civil matter simply because of the existence of a written contract is a reflection that this particular police department (and possibly the local prosecutor's office) may not have the resources (and/or possibly the expertise) necessary to adequately prosecute this type of fraud.

Courts have long ago addressed the authority criminal prosecutors have to "pierce through" attempts to disguise a blatant criminal ripoff as a common, legitimate business deal through the use of a business contract, thereby allowing them to overcome the scammer's common defense that the arrangement was just a civil transaction that should be handled as 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].)

Convicted Felon With Long History Of Fleecing Off Homeowners In Home Improvement Ripoffs Finds Himself In More Hot Water; New Criminal Charges Trigger Probation Revocation Hearing In Earlier Case

In Park County, Colorado, KDVR-TV Channel 31 reports:
  • A Park County contractor was awarded a license despite a history of convictions and lawsuits involving theft from clients. Now, more residents are crying foul.

    Donavon Johnson’s criminal history in Colorado dates to the 1990s. He is on probation related to a case of theft from El Paso County clients. Two Park County residents claim Donavon allegedly took their money without completing work.

    Betty Cain owns and operates the Freshwater Bar and Grill in Guffey, and hired Johnson for a major expansion.

    "The problem for most homeowners who hire a contractor that takes the money and runs, is that law enforcement usually calls it a civil matter and refuses to get involved," Cain said. "But Johnson actually has a felony conviction where his probation demands he do no more contracting work so 16-years later, why's he still doing it?”
    ***
    Park County resident Dena Vucetich also said Johnson did not do the work he was hired to do. Vucetich is an Army veteran who served in Afghanistan. She never thought adding a new roof plus front and back porches would be so stressful.

    "He ran pretty quickly with my money," Vucetich said. "You can't even begin to imagine how mad it makes me."

    Vucetich said she gave Johnson nearly $10,000 to do the work, but ended up paying someone else to finish the job.

    "You can imagine my shock when I found out the contractor license he had in El Paso County was revoked because he was convicted of a felony," Vucetich said.

    Sixteen years ago in Colorado Springs, there was a similar story.

    "He was supposed to put a new addition onto top of our house," Nancy Weddle said.

    Johnson pleaded guilty to theft of $15,000 in the Weddle case. But the justice system sentenced him to restitution of $10 month. At that rate, it won’t be paid back for 125 years. "Well, after we are dead and gone. We won`t get paid back," Weddle said.

    Johnson's probation paperwork from El Paso County said he is not supposed to do any contracting work and is not supposed to take any money up front from anyone.

    Despite those stipulations, he filed for a license in Park County. The county application is a self-reporting document and asks the potential contractor: “Have you ever had a contractor license denied, suspended or revoked by any jurisdiction?”

    Johnson left the box blank. Park County admits it failed to notice the omission, but did not revoke his license until the FOX31 Problem Solvers started asking questions.

    "Our frustration is, we would not have gotten duped if he didn't have a license. You have to have a license to do our job. He should not have been licensed and he was," Cain said.

    Johnson’s contracting insurance dropped him for nonpayment in June, before any work was to begin.
    ***
    As for leaving the self-reporting box blank on his license application, Johnson said, “I probably missed it, consciously or subconsciously, to be honest, OK?

    Taking money up front from customers violates his court orders.
    ***
    The Problem Solvers have learned Johnson's legal history includes six felonies and two dozen lawsuits. [...] Johnson returns to court on Oct. 4 in El Paso County for a probation revocation and a week later, he has a court appearance in Park County. Prosecutors there have charged him with two counts of obtaining signatures by deception.

Thursday, September 22, 2016

Illinois Title Insurer: Real Estate Agents Are Squeezing Bribe$ Out Of Closing Attorneys In Exchange For Referral Business; State Realtors' Association Left Highly Offended

In Chicago, Illinois, the Illinois News Network reports:
  • A law firm president said Realtors across Illinois are involved in kickback schemes with the lawyers they use to write title insurance policies, contributing to closing costs more than doubling in the past decade.

    Title insurance is essentially homeowners insurance against loss to past issues, such as boundary disputes and unknown liens on the property. Realtors typically guide the buyer to a law firm to facilitate that. A State Senate Licensed Activities and Pensions Committee hearing in Chicago last week examined whether there is a need for such transactions to be better regulated. Attorneys’ Title Guaranty Fund President Peter Birnbaum said the need is dire because Realtors across Illinois are receiving bribes for that business.

    “Kickbacks and other forms of illegal competition are growing, and the costs of these arrangements are being borne by the consumer in the form of higher prices,” Birnbaum said.

    Birnbaum and others at the hearing alleged that this practice is why the average cost of closing on a home has more than doubled in the last 10 years.

    “That’s an increase of 105 percent in the last 10 years, and it comes at a time when many home sellers are underwater, and the last thing they need is another $2,000 in fees,” Birnbaum said.

    Birnbaum said his company is one that he says would be approached to provide bribes to ensure they are referred title insurance policy customers. Birnbaum said he wanted to bring the issue to light because it’s hurting homebuyers and sellers. Birnbaum said you rarely hear complaints about the system of kickbacks because the lawyers who would complain would surely lose that business.

    The Illinois Department of Financial and Professional Regulation, which regulates the industry, said there are 19 licensed underwriter agencies and approximately 20,000 title agents in Illinois.

    Illinois Association of Realtors President Greg St. Aubin told the committee that he and his members take great offense to Birnbaum’s accusation and that if Birnbaum knew of any kickbacks, he should report them.

    “To make this broad-brush accusation that Realtors are involved in illegal kickback schemes, we find very offensive,” St. Aubin said.

City Housing Authority, HUD Begin To Kick In Ca$h To Give Rent, Security Deposit Assistance To Over 1,000 Poor East Chicago Residents Forced To Permanently Relocate From Public Housing Complex That Sits On Soil Loaded With Lead, Arsenic

In East Chicago, Indiana, The Times of Northwest Indiana reports:
  • The East Chicago Housing Authority board approved two resolutions [] intending to help residents of a public housing complex where alarmingly high levels of lead and arsenic were found in the soil.

    The resolutions authorized the use of the authority’s capital funds to help relocating West Calumet Housing Complex residents with security deposits at new homes and waived criminal background check requirements as part of the voucher process.

    More than 1,000 residents, including nearly 700 children, have been given until Nov. 30 to move out after learning the full magnitude and extent of lead and arsenic contamination in the soil around their homes. The complex sits in the footprint of the long-ago-demolished Eagle Picher lead smelter and just north of USS Lead, a second factory.

    The public housing complex is in the west end of the city’s Calumet neighborhood, which is part of an EPA Superfund site established in 2009.

    It’s long been known the soil within the entire Calumet neighborhood is contaminated,(1) but public housing residents were not expecting to have to permanently leave their homes as the city applies to HUD for the site’s demolition.

    The EPA in 2012 selected a cleanup plan and reached an agreement in fall 2014 with Atlantic Richfield and DuPont for a $26 million cleanup in part of the USS Lead Superfund site. However, last month, the federal agency said cleanup of the property could be renegotiated depending on the city’s long-term plans for the area.

    The U.S. Department of Housing and Urban Development last month released $1.9 million to ECHA to provide vouchers so West Calumet Complex residents can permanently relocate.

    A HUD spokesperson said [...] it was seeking approximately $1.2 million in additional federal, state and local funds in hope of reimbursing the East Chicago Housing Authority for the agency’s use of its capital dollars.
For more, see Resolutions aimed at helping West Calumet residents OK'd.
------------------------
(1) See Lead in East Chicago: Old lead smelter site went unaddressed for years:
  • Nearly 20 years after an EPA project manager told state and federal health officials about a long-demolished lead smelter that once operated on the site of a public housing complex and elementary school in East Chicago, residents are just learning the full extent and magnitude of the contamination in the land some of them have lived on for generations.

Wednesday, September 21, 2016

Florida Trial Judge Gives Notorious Zombie Debt Buyer The Boot In Attempt To Collect From Consumer Without First Providing Evidence That It Independently Verified Accuracy Of Original Creditor's Billing Statements

From The Consumer Financial Services Blog:
  • The County Court of the Twelfth Judicial Circuit Court of Florida [ie. Sarasota, Manatee, & DeSoto Counties] recently held that a debt buyer could not use the original creditor’s credit card statements to try to collect on the underlying debts, as the debt buyer failed to present evidence that it independently verified the accuracy of the credit card statements.
For more, see Fla. Court Holds Original Creditor Records Inadmissible in Debt Buyer’s Collection Action.

For the court ruling, see Midland Funding LLC v. Nole, Case No. 2016-SC-319 (Cty. Ct., 12th Jud. Cir., Manatee County, May 26, 2016).

Representing the consumer was Arthur Rubin, We Protect Consumers, P.A., Tampa, Florida.

Another Loan Servicer Screw-Up: 71-Year Old Homeowner With Perfect Record For Making House Payments Almost Loses Home To Foreclosure Anyway; Calls Local Media Troubleshooter To Intervene, Straighten Out Problem

In East Palo Alto, California, KGO-TV Channel 7 reports:
  • Making timely house payments should protect you against foreclosure. However, a South Bay woman with a perfect payment record still got the scare of her life.

    Carolyn White, 71, paid her mortgage on time every month, but when her mortgage company was bought out she was threatened with the loss of her East Palo Alto home due to a computer glitch.

Tuesday, September 20, 2016

Ten Real Estate Operators Get Sentenced In Northern California Foreclosure Sale Bid Rigging Racket; Defendants Get Off Light On Prison Time, But Get Belted With Fines, Restitution

From the U.S. Department of Justice (Washington, D.C.):
  • Ten Eastern California real estate investors were sentenced [] for their participation in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Eastern California, the Department of Justice announced.

    The primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Joaquin County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties.
    ***
    The following individuals were sentenced in the U.S. District Court for the Eastern District of California in Sacramento:
  • Anthony B. Ghio of Stockton, California, was sentenced to serve five months in prison and ordered to pay a $1 million criminal fine and $214,544 in restitution to the victims of the crime.
  • John R. Vanzetti of Stockton, California, was sentenced to serve five months in prison and ordered to pay a $1 million criminal fine and $271,454 in restitution to the victims of the crime.
  • Theodore B. Hutz of Stockton, California, was sentenced to serve five months in prison and ordered to pay a $250,000 criminal fine and $76,670 in restitution to the victims of the crime.
  • Richard Northcutt of Stockton, California, was sentenced to serve seven months in prison and ordered to pay a $1 million criminal fine and $614,982 in restitution to the victims of the crime.
  • Kennen A. Swanger of Alta, California, was sentenced to serve five months in prison and ordered to pay a $5,000 criminal fine.
  • Wiley C. Chandler of Stockton, California, was sentenced to serve seven months in prison and ordered to pay a $500,000 criminal fine and $614,982 in restitution to the victims of the crime.
  • Walter Daniel Olmstead of San Francisco, California, was sentenced to serve eight months in prison and ordered to pay a $29,687 in restitution to the victims of the crime.
  • Gregory L. Jackson of Lodi, California, was sentenced to pay a $150,000 criminal fine and $20,900 in restitution to the victims of the crime.
  • Robert Rose of Danville, California, was sentenced to pay a $100,000 criminal fine and $24,128 in restitution to the victims of the crime.
  • Anthony B. Joachim of Stockton, California, was sentenced to pay a $175,000 criminal fine and $94,154 in restitution to the victims of the crime.
  • Two other real estate investors, Andrew B. Katakis and Donald M. Parker, were convicted at trial of bid rigging in March 2014.

    A total of thirteen individuals pleaded guilty or were convicted in the U.S. District Court for the Eastern District of California in connection with this investigation. The sentences announced yesterday resulted from an ongoing investigation being conducted by the Antitrust Division’s San Francisco office, the U.S. Attorney’s Office for the Eastern District of California, the FBI’s Sacramento Division and the San Joaquin County District Attorney’s Office.

    Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco office at 415-934-5300, visit www.justice.gov/atr/contact/newcase.htm, contact the U.S. Attorney’s Office for the Eastern District of California at 916-554-2700 or contact the FBI’s Sacramento Division at 916-481-9110.

More On The Legalized Pillaging Of Assets From Senior Citizens: The Court-Appointed Guardianship Racket

From a recent column in The Huffington Post:
  • It’s legal, but is it right?

    Imagine you’ve worked hard all of your life and suddenly you are deemed incapacitated and are stripped of your dignity and basic individual rights. You have been abducted from your home, isolated from your family, and “placed” somewhere to be medicated while your assets are being pillaged. The authorities that should be protecting you are the ones committing these heinous acts. It sounds like Nazi Germany, but this is happening in the United States today.

    The victims are seniors. The partners in crime are financial predators and agents of the Elder Guardianship system — attorneys, professional guardians, medical experts, and others who are paid out of the senior’s assets.

    There are some good judges but many are overworked and some are actively aiding the exploitation. Anyone can file to deem you incapacitated. The entire process from filing an incapacity petition to plenary guardianship where all rights are removed can happen within days. Yet, once you’re caught in the web, it’s almost impossible to break free... AND you are forced to pay your abusers in the process.

Monday, September 19, 2016

Judge Uses Civil Contempt Charge (Arising Out Of Civil Lawsuit) To Jail Loan Modification Scammer For Over Six Years (& Counting) Without Criminal Charges Ever Having Been Filed

In Orange County, California, The Orange County Register reports:
  • The judge simply does not believe that the black duffel bag, the one stuffed with $360,540 cash from Zulmai Nazarzai’s closet, mysteriously disappeared on that summer day six years ago. And, really, it’s hard to blame him.

    “The most incredulous story I’ve ever heard, and I’ve heard some whoppers,” Orange County Superior Court Judge Andrew Banks said in 2010, when he ordered Nazarzai to go to jail on contempt of court charges for failing to turn over the money as ordered.

    Nazarzai was never charged with, or convicted of, a crime. But he has been in solitary confinement in the Orange County jail ever since.

    Last week, however, a crack appeared in the prison wall: For the first time, a state appeals court asked Orange County Superior Court to hold a hearing to decide whether Nazarzai lacks “the present ability” to comply with the court’s turnover order; whether there’s a “substantial likelihood that continued confinement will accomplish the purpose”; and whether Nazarzai’s continued confinement has, in fact, become punitive.

    If the county does not hold that hearing, it must explain why. The Court of Appeal gave Orange County until Sept. 19 to comply.
    ***
    The California attorney general accused Nazarzai of doing very bad things in the civil suit that started this chain of events. He and his then-girlfriend were the masterminds behind a “boiler-room telemarketing operation” that lied to distressed and elderly people on the verge of losing their homes back in 2008 and 2009, prosecutors said in court documents. More than 1,000 people paid $2 million to keep their homes from foreclosure, most often unsuccessfully.

    The state attorney general prevailed in this civil – not criminal – action, and the couple were ordered to pay more than $4 million in penalties and restitution. Nazarzai pulled some $370,000 of company funds from the bank and stashed it at his home; the judge ordered him to hand it over to a court receiver.

    Nazarzai said he gave the cash to then-girlfriend Fasela Sheren, who said that she stuffed it in the duffel bag and was driving it to the receiver’s office in Los Angeles when she blacked out. She awoke at a hospital; the car had been towed; and when she reclaimed it, the bag with the money was gone, she said in a deposition.

    “I think he’s got the money in his possession, custody or control,” Judge Banks said of Nazarzai at the time. “And he holds the keys to getting out of jail.”

    Contempt is a tool judges use to compel reluctant witnesses to testify, deadbeat parents to pay child support or recalcitrant journalists to reveal sources.

    The law gives judges sweeping authority to use this tool: One can be held in civil contempt as long as a judge thinks it’s possible for you to comply and there’s a chance of compliance, [...]. Former lawyer H. Beatty Chadwick set the American record for time in jail on a contempt charge, spending 14 years behind bars under circumstances similar to Nazarzai’s.

    In 1995, a Pennsylvania judge ordered Chadwick to place $2.5 million into a court-controlled account during divorce proceedings. Chadwick said he couldn’t, as he had lost the money in bad investments. His wife’s lawyer charged that he actually hid it offshore. The judge believed the wife: Chadwick went to jail for failing to produce the money. He stayed there until 2009, when the court finally agreed that his incarceration had morphed from something coercive into something punitive. Continued jail time wouldn’t result in him producing the money, the court concluded, and he was set free. Chadwick noted that if he had been convicted of third-degree murder, he would have been out in half the time.

    Had the attorney general filed criminal charges against Nazarzai and prevailed, law professor Campbell doubts Nazarzai would have been sentenced to five years. If he had, and if his behavior in prison had been good, he’d be out by now, Campbell said.

Senior Member Of Boiler Room Telemarketing Sales Team Gets 52 Months for Role In Loan Modification Scam

From the Office of the U.S. Attorney (Bridgeport, Connecticut):
  • Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that MEHDI MOAREFIAN, also known as “Michael Miller,” 37, of Irvine, California, was sentenced [...] to 52 months of imprisonment, followed by three years of supervised release, for participating in an extensive mortgage loan modification scheme. MOAREFIAN also was ordered to pay restitution in the amount of $2,390,496.59.
    ***
    [M]OAREFIAN was a senior member of the sales team. Acting as representatives of [a slew of controlled] entities, MOAREFIAN and other co-conspirators cold-called homeowners and offered to provide mortgage loan modification services to those who were having difficulty repaying their home mortgage loans.

    The defendants charged homeowners fees that typically ranged from approximately $2,500 to $4,300 for their services. To induce homeowners to pay these fees, the defendants falsely represented that the homeowners already had been approved for mortgage loan modifications on extremely favorable terms; the mortgage loan modifications already had been negotiated with the homeowners’ lenders; the homeowners qualified for and would receive financial assistance under various government mortgage relief programs, including the Troubled Asset Relief Program and the Home Affordable Modification Program; and if for some reason the mortgage loan modifications fell through, the homeowners would be entitled to a full refund of their fees.
    ***
    Few homeowners ever received any type of mortgage loan modification through the defendants’ companies, and few homeowners received refunds of their fees.

    Participants in the scheme used pseudonyms and periodically changed their business and operating names to evade detection. The defendants also directed homeowners to mail their checks to addresses and mail boxes that the defendants and their co-conspirators had set up in states other than California.

    As a result of this scheme, more than 1,000 homeowners suffered losses totaling more than $3 million.

    The investigation revealed that the top tier of salesmen, including MOAREFIAN, were paid based on commission and typically earned 45 percent to 50 percent of the final fee, after $750 to $1,000 was taken [] for administrative costs.

Another Loan Modification Scammer With Dubious Past Dodges Heavy Time, Gets 9 Months For Ripping Off Thousand$ In Upfront Fees, Mortgage Payments From Unwitting Homeowners; Faces Additional 7+ Years Prison Time If She Violates Probation

In Hartford, Connecticut, the Journal Inquirer,com reports
  • An East Hartford woman who was charged in what state authorities have called a scheme that cost homeowners thousands of dollars as they were seeking to modify their mortgages was convicted of a reduced charge [] and sentenced to nine months in prison.

    Sabah Kennawi, 53, [...], was convicted of second-degree larceny and criminal impersonation in a Hartford Superior Court plea bargain, online court records show.

    She had originally been charged with first-degree larceny and two impersonation counts in her operation of a business called Mortgage Professional Services LLC.

    After the Correction Department releases Kennawi, the sentence calls for her to spend five years on probation, with the possibility of 7¼ more years behind bars if she violates release conditions.

    Kennawi collected thousands of dollars in fees and supposed mortgage payments from homeowners who had gone to Mortgage Professional Services seeking assistance in modifying their home loans, authorities alleged.

    Prosecutors in the chief state’s attorney’s office in Rocky Hill said she wasn’t legally permitted to collect the fees because she didn’t have a required state license. Moreover, authorities charged, she didn’t make the mortgage payments for which money had been turned over to her, keeping the money for her own use.

    Kennawi has a long history of brushes with state authorities over her business, which includes allegations that she engaged in debt negotiations on behalf of others without a license required by state law and that she practiced law without a license.

Sunday, September 18, 2016

Los Angeles Agrees To Spend $200+ Million Over 10 Years To Settle Fair Housing Suit Involving Lack Of Accessibility For Disabled Tenants In Publicly Funded Apartment Complexes; Settlement Comes On Heels Of Deal To Shell Out $1.3 Billion Over Three Decades In Separate ADA Lawsuit That Argued That City's Crappy Sidewalks Were A Nightmare For Wheelchair Users

In Los Angeles, California, the Los Angeles Times reports:
  • Los Angeles will spend more than $200 million over the next decade to settle a federal lawsuit alleging that the city failed to provide enough apartments for people with disabilities in its publicly funded housing developments.

    Under a deal approved Tuesday by the City Council, city officials will be required to ensure that 4,000 units are accessible to people who use wheelchairs, have hearing impairments or live with other disabilities. The city could reach that goal by building additional apartments, redesigning existing ones or demonstrating that units already built are, in fact, accessible.

    Michael Allen, a lawyer for three nonprofit groups that sued the city, called the agreement “the largest accessibility settlement ever reached involving affordable housing.”

    “It will send a strong, positive message to cities all over the country that their housing programs must be accessible,” he said.

    Los Angeles Mayor Eric Garcetti endorsed the settlement, saying in a statement that the city “stands for inclusiveness and access for all.”

    "If we have fallen short of that commitment, we need to fix it as quickly as possible,” he said. “This settlement allows us to resolve a long-standing legal issue with a predictable level of investment. More importantly, we are working to meet the needs of our disabled community now and for decades to come.”

    The settlement puts Los Angeles on the hook for another costly, multi-year legal payout centering on facilities for the disabled. Last year, city lawmakers agreed to spend $1.3 billion over 30 years on sidewalk repairs — ending a lawsuit that argued broken walkways were a nightmare for wheelchair users.(1)

    Tuesday’s vote will end a legal challenge filed in 2012 by Independent Living Center of Southern California, Fair Housing Council of San Fernando Valley, and Communities Actively Living Independent and Free. The dispute focused on apartments that were supposed to be built for the disabled in more than 700 affordable housing projects — buildings with nearly 47,000 units — approved over nearly three decades, city officials said.

    The three nonprofits argued that the city and its redevelopment agency had flouted state and federal anti-discrimination laws as they provided public money to affordable housing developments. Such buildings were typically constructed by private developers or nonprofit groups and financed or otherwise assisted by the city and its redevelopment agency.

    Disabled residents reported going to apartment buildings that were advertised as accessible, only to find they weren’t. In some locations, apartments had doorways that were too narrow to accommodate wheelchairs, the lawsuit states. Bathrooms and kitchens lacked the room to accommodate wheelchair users.

    Allen said that many apartments did not meet the higher accessibility standards established for housing built with government assistance, which require additional features such as lower countertops and grab bars in bathrooms.

    “They were not merely technical violations,” Allen said. “They were, in every instance that we studied, significant barriers to people with disabilities using those units, and in some cases the common areas leading to them.”
    ***
    The city must spend an average of $20 million annually on the program and ensure that at least 2,655 of the 4,000 units are designed for wheelchair users. The settlement will also require new affordable housing supported by the city to include a larger percentage of units for people with disabilities than is currently required.

    In addition to the $200 million, L.A. will also pay $4.5 million to the nonprofits that sued the city, plus up to $1 million in court costs and up to $20 million in attorneys’ fees.
For the story, see L.A. to spend more than $200 million to settle suit on housing for disabled.
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(1) See L.A. agrees to spend $1.3 billion to fix sidewalks in ADA case:
  • [T]he [] agreement would resolve a lawsuit filed by attorneys for the disabled, who argued that crumbling, impassable sidewalks and other barriers prevented people in wheelchairs or others with mobility impairments from accessing public pathways in violation of the Americans With Disabilities Act.
    ***
    Councilman Paul Krekorian said it was a historic victory not only for people with disabilities, but also for the elderly and “anyone who is ever a pedestrian.”