Sunday, April 19, 2015

Cops Frog-March Two Landlords Into Criminal Court To Face Charges That They Used Baseball Bat/Sledgehammer-Wielding Wrecking Crews & Pit Bulls To Destroy Their Own Buildings & Intimidate Long-Time, Rent-Controlled Tenants In Campaign To Drive Them Out & Bring In Higher Paying Market Rate Renters; Brooklyn DA On Victims: “Grand Larceny. [The Defendants] Stole The Value Of These Folks’ Homes!"

In Bushwick, Brooklyn, WPIX-TV Channel 11 reports:
  • Landlords Josh and Amrom “Aaron” Israel have been ranked among the city’s worst landlords by New York’s public advocate.

    On Thursday, however, they went from just being on a list of bad-faith landlords to being under arrest, accused of wrecking apartments they themselves own, in an attempt to force their tenants out. Those tenants on Thursday were rejoicing over seeing their landlords in handcuffs, but their plight as renters with the Israels is not over.

    PIX11 first encountered the two landlord cousins early last year. They ran from our cameras and used their scarves to cover their faces during an investigation into their alleged tenant intimidation practices.

    On Thursday, however, officers made sure that Joel and Aaron Israel were highly visible in front of cameras as Brooklyn district attorney’s office cops led the pair into a courtroom in handcuffs for their first appearance before a judge.

    The 15 criminal counts against them, ranging from burglary to grand larceny, were the result of the Israels’ apparently intentional destruction of whole bathrooms, walls and even floors in some of their own buildings, as well as the apparently intentional damage to boilers and other machinery necessary for comfortable living in other buildings they own. It was all allegedly an attempt to force rent controlled tenants out and bring much higher paying market rate tenants in.

    District Attorney Ken Thompson said at a news conference after the court appearance that the Israels did such things as hire a wrecking crew to come in to one tenant’s apartment while she was out at a doctor’s appointment, and remove all of her belongings and tear down walls and damage utilities in her apartment.

    “They were committing criminal acts,” said Thompson, citing, as an example, “Grand larceny. They stole the value of these folks’ homes.”

    Thompson added that the Israels’ arrest was meant to send a message, and not just to them. It was a point echoed by some housing advocates. “Other landlords, wake up,” said Father Edward Mason, a priest who has helped tenants of the Israels’ four buildings, “and see what’s happening here today!”

    Fellow affordable housing advocates, as well as the Israels’ tenants, said that the right thing is being done after years of fighting in civil court.

    “It was just hell,” said Catalina Hidalgo, who lives in one of the Israels’ properties in Greenpoint, Brooklyn. “But I can finally say that I’m just happy. Extremely happy.”

    However, in her building, 300 Nassau Avenue, and in other properties owned by the Israels, some hazardous, unlivable conditions are not yet repaired. In response to a question about the next phase of work in this fair housing case, District Attorney Thompson told PIX11 News that he sees a pursuit of the Israels’ alleged accomplices as the way to achieve further justice for their tenants.

    We need to know,” said Thompson, “who was actually walking around with sledgehammers and bats, walk around with pit bulls [intimidating residents]. We want to identify everyone who was part of this scheme.”

    Tenants like Hidalgo said that in her building, conditions were so bad that the city had to take over and do basic renovations. The Israels are also responsible for many of the repairs. Hidalgo said that she had been promised that her once badly damaged home will be habitable again, eventually.

    “They’re in the works of getting some plans drawn up. By Christmas, we’ll be back in our homes.”

    Joel and Aaron Israel could face up to 15 years in prison if found guilty of the burglary charge alone. Their attorney, Kevin Keating, said outside of court that the cousins’ arrest was unexpected, since they had for years cooperated in civil court regarding alleged housing code violations.

    “Why this has surfaced now is peculiar,” said Keating. “We’re going to fight this extensively.”

    Joel Israel was granted $50,000 bail, Aaron Israel’s bail was $25,000. As of Thursday evening, there was no record at the Department of Corrections of them having posted bail payments.
Source: ‘City’s worst landlords’ busted by Brooklyn DA for allegedly sabotaging tenants’ apartments.

For the Brooklyn District Attorney press release, see Alleged Unscrupulous Landlords Indicted For Unlawful Eviction Of Rent Stabilized Tenants and Filing False Documents In Connection With Residential Buildings in Bushwick, Greenpoint and Williamsburg (Defendants Face Up To 15 Years in Prison for Unlawfully Trying To Force Out Tenants In Rapidly Gentrifying North Brooklyn Neighborhoods).

Saturday, April 18, 2015

Another Landlord, Property Manager Suffer 'Sting' By Fair Housing Testers; Get Whacked For $50K+ In Damages, Tenant's Legal Fees In Suit Alleging Discrimination Against Prospective "Section 8" Voucher-Holding Renter Who Proposed To Use Housing Subsidy Towards Rental Payments

In Buffalo, New York, The Buffalo News reports:
  • An absentee landlord and rental property manager are liable for $51,840 in damages and attorney fees linked to a housing discrimination case that occurred in December 2007, according to a Buffalo-based non-profit fair-housing agency.

    State Supreme Court Justice Patrick H. NeMoyer, who issued the judgment recently, in October 2013 upheld the City of Buffalo’s fair housing law, which prohibits discrimination on the basis of legal income, as well as the independent standing of fair-housing organizations bringing claims under the law.

    In December 2007, student Naima Stewart was denied the opportunity to rent one of several Huntington Avenue apartments, owned by California landlord Donald Peterson and listed with University Property Management, because she was low-income with a Section 8 housing voucher, according to Housing Opportunities Made Equal (HOME), which handled the case.

    A HOME investigator without the voucher was given tours of two apartments but one identifying herself as a Section 8 participant was denied, and told that the owner no longer accepted recipients of housing assistance as tenants, according to HOME..

Friday, April 17, 2015

Fair Housing Feds Score Another Settlement Against Landlord, Management Company For Discriminatory Policies Against Families w/ Children; Kids Found On Premises Unaccompanied By Adult Were Cursed At, Forced To Clean Manager's Toilet, Pick Up Trash Around Complex: HUD

From the Fair Housing Defense blog:
  • Even if done for what may appear to be a benign reason, professional apartment management cannot put overly restrictive rules in place which have the look of controlling the free movement of children around the community. HUD recently announced settlement of a discrimination case in which it was alleged unlawful rules were enacted to the detriment of families with children.

    The allegations included that management placed limits on children playing outside as well as a claim that children were forced to clean the manager’s office toilet when the kids were found outside unaccompanied by an adult.

    Many times, of course, cases with bad facts are the ones charged. Here seven families in California filed complaints (along with a nonprofit fair housing advocacy group) with HUD alleging that the community manager cursed at children when he found them playing outside unaccompanied, and then ordered the children to his office and instructed them to sit on the floor. HUD’s charge further asserted that once at the office, the manager required the children to clean the office toilet and pick up trash around the complex.

    He is also alleged to have threatened them by telling the children that their families might be evicted if they did not comply with his instructions. The apartment community also had a rule prohibiting children from using the swimming pool during certain hours.

    Pursuant to the agreed settlement terms, the owner and community manager will pay damages to the residents, former residents, the fair housing group. The community will also provide free rent for a number of months going forward. The total monetary value of the settlement is approximately $19,000. Management also agreed to eliminate the rule that restricted pool usage by children during the day and to obtain fair housing training for employees.

    While many of the facts here were difficult, I suspect the pool usage restriction was done as what was perceived as a helpful safety measure. What I have seen, however, is rules that impact kids need to be crafted in such a way as to not single out families with children.
Source: Can Management Enact Community Rules Which Appear Hostile to Children? No.

See also, Lake County (California) News: HUD takes action against hostile apartment rules against children included no playing outside:
  • In Napa Valley, seven affected families and the nonprofit group Fair Housing of Napa Valley filed complaints with HUD alleging that the manager at the River Park Manor Apartments cursed at children when he found them playing outside unaccompanied, and then ordered the children to his office and instructed them to sit on the floor.

    HUD’s charge further alleges that once at the office, the manager required the children to clean the office toilet and pick up trash around the complex, and threatened them by telling them that their families may be evicted if they did not comply with his instructions.

    The apartments also had a rule prohibiting children from using the swimming pool during certain hours.

Thursday, April 16, 2015

Warren Buffett-Linked Outfit A Predatory Racket Peddling Mobile Homes & High-Cost Loans That Trap The Poor In Unaffordable Deals Almost Impossible To Resell Or Refinance?

From the Public Citizen Consumer Law & Policy Blog:
  • A joint investigation by The Center for Public Integrity and the Seattle Times reveals troubling practices by Clayton Homes, owned by Warren Buffett’s Berkshire Hathaway.

    Clayton, which operates under various names, is the nation’s biggest homebuilder, according to the report, which describes Clayton's practices thus: “Clayton relies on predatory sales practices, exorbitant fees, and interest rates that can exceed 15 percent, trapping many buyers in loans they can’t afford and in homes that are almost impossible to sell or refinance.”

    Some other practices unearthed in the investigation: “loan terms that changed abruptly after [customers] paid deposits or prepared land for their new homes; surprise fees tacked on to loans; and pressure to take on excessive payments based on false promises that they could later refinance”; additionally, Clayton loans average 7% higher rates than typical loans.
Source: Expose on predatory mobile home company owned by Warren Buffett.

From the joint investigation by The Center for Public Integrity and The Seattle Times:
In a related story, see U.S. House rolls back safeguards for mobile-home buyers:
  • The bill passed with strong support from Republicans, helped by a handful of Democrats. Other House Democrats objected vigorously, with several citing the findings of a recent investigation by The Center for Public Integrity and The Seattle Times.

    The investigation, “The Mobile-Home Trap,” found high interest rates, excessive fees and predatory sales practices by industry leader Clayton Homes, part of Berkshire Hathaway, an investment conglomerate run by billionaire Warren Buffett.

Wednesday, April 15, 2015

Two Winning Bidders At NYC Foreclosure Auction Each Face 15 Years For Alleged Premature Booting Of Financially Strapped Homeowner From Home; Duo Had Yet To Fully Pay Off Purchase Price, Close Title, Or Initiate Lawful Eviction Proceedings: DA

From the Office of the Queens County, New York District Attorney:
  • Queens District Attorney Richard A. Brown, joined by New York City Sheriff Joseph Fucito, [] announced that two Forest Hill men, who were the winning bidders at a foreclosure auction, have been charged with illegally evicting a Richmond Hill homeowner from his lawful residence and then breaking-in and boarding up doors and windows prior to legally assuming ownership and taking possession of the property.

    “More and more we are seeing individuals who are dealing with distressed properties unscrupulously taking advantage of the situation to benefit themselves,” said District Attorney Brown. “The defendants in this case are accused of taking the law into their own hands and bullying a homeowner into vacating his residence so that they would not have to deal with a housing court eviction proceeding.”

    Sheriff Fucito said, “We are not going to stand for anyone circumventing the law. Our office is working diligently to protect homeowners and tenants who may fall victim to the various unscrupulous and predatory behavior in real estate transactions. People have the right to live undisturbed in their homes and these two individuals are accused of violating the due process rights of the tenant at the address. The Sheriff’s Office stands ready to arrest individuals who violate this basic principle.”

    The District Attorney identified the defendants as Semyon (a/k/a Sam) Muratov, 34, of 64th Avenue, and Yuriy (a/k/a Erick) Munarov, 31, of 65 Road, both in Forest Hills, Queens. The two defendants were arraigned [...] on a criminal complaint charging each of them with second-degree burglary, third-degree criminal mischief, second-degree criminal trespass and unlawful eviction. The defendants, who each face up to 15 years in prison if convicted, were ordered held on $5,000 bond/$2,500 cash bail and to return to court on May 5, 2015.

    District Attorney Brown said that, according to the charges, Muratov placed a down payment of $25,000 on a residence located on 111 Street in Richmond Hill, Queens, at a foreclosure sale on Friday, January 9, 2015. However, the sale had not yet gone to closing. That same day, it is alleged that Muratov and Munarov went to the 111 Street property and advised the 59-year-old homeowner that they had bought his house at an auction and that he had to vacate the premises. When the homeowner asked for proof of the sale, the defendants allegedly refused to supply any evidence and instead told the homeowner that he had to give them the keys to the house and that they would be back in a couple of days to make sure that he had left.

    It is additionally alleged that when the two defendants returned to the property on January 12 and they couldn’t gain entry, they broke the doorframe and deadbolt lock and pushed in the front door. They then allegedly told the homeowner that he could take a few things with him. When he indicated that he had nowhere to go, the defendants allegedly gave him $200 in cash to find a place to stay. At that point, the homeowner grabbed some important documents and left the location.

    When he returned later to the house, he allegedly discovered that all of the first-floor doors and windows had been boarded up and chains had been placed in the door lock areas of the front door, preventing him from gaining entry to his house which contained most of his personal belongings.

    An investigation by District Attorney Brown’s Economic Crimes Bureau and the Office of the New York City Sheriff allegedly revealed on May 6, 2014, there was a Judgment of Foreclosure and Sale on the 111 Street homeowner’s property, although the homeowner maintained that he was unaware of the foreclosure proceeding. A review of documents allegedly revealed that an estranged son of the homeowner was served with the notice back in 2012.

    Although the mortgage lender auctioned off the property on January 9, 2015, Muratov would not assume ownership of the property until there was a closing with full payment for the property and a transfer of the deed. Even after a closing, Muratov would have had to proceed with a lawful eviction proceeding of the homeowner. He and Munarov did not have any authority to show up at the residence, direct the homeowner to vacate the premises and board up the house.
Source: Two Men Charged With "Theft" Of Queens Home After Foreclosure Auction (Allegedly Forced Homeowner To Illegally Vacate Property; Then Boarded Up Residence To Prevent His Reentry).

Tuesday, April 14, 2015

Lawsuit: Landlord Who Agreed To Give Tenant $500K+ In Two Installments To Get Him To Move Now Seeks To Stiff Estate Out Of 2nd Installment Due To Tenant's Intervening Demise

In New York City, the New York Post reports:
  • An Upper West Side landlord that offered more than half a million bucks to get a longtime tenant out of its building is refusing to pay up after the man’s death.

    Walter Blomeyer lived for decades in his tiny studio at 350 W. 71st St., one of three adjoining single-room-occupancy buildings owned by Icon Realty Management.

    Icon, which is planning to convert the building to luxury housing, offered $525,000 to Blomeyer if he hit the road — a deal he accepted, according a Manhattan Supreme Court lawsuit filed by his estate.

    Icon modified the deal, paying Blomeyer the initial $300,000 and letting him live in one of the adjacent SRO buildings rent-free for a year before issuing the final $225,000, his estate says in court documents.

    Boymeyer, who worked as a black-car driver, died in February of a heart attack, according to lawyer Ted Poretz. “This is bullying,” Poretz fumed. “There’s nothing at all in this agreement that says, ‘We don’t have to pay him when he dies.’ ”

    A lawyer for Icon disputed the claims in the suit. “The agreement said nothing about his estate benefiting,” lawyer Mitch Kossoff told The Post. “His estate is entitled to nothing.”

Monday, April 13, 2015

Jewish Congregants Accuse Rabbi Of Selling Their Lower East Side House Of Worship Out From Under Them For $13M; Court Date Upcoming In Effort To Thwart Title Transfer

In New York City, the New York Post reports:
  • This deal is not kosher!

    Worshipers at a Lower East Side synagogue are furious that their building, at 25 Bialystoker Place, has been sold without their knowledge or permission and are going to New York state supreme court next Wednesday to ask a judge to stop the $13 million sale to developer Peter Fine.

    The worshipers are also outraged that proceeds from the sale of the non-profit building will not be used to help the Lower East Siders who use the building, the Home of the Sages of Israel.

    Instead, $10 million from the sale will go to Ger, a right wing Hasidic sect, to build a synagogue in Israel, and the other $3 million will go to the synagogue’s president, Rabbi Samuel Aschkenazi, who calls himself a leader of the Ger sect and also runs a synagogue out of a converted garage attached to his personal residence in Queens, at 82-61 Beverly Road, Kew Gardens, said David Jaroslawicz, a lawyer who is representing the worshipers who are opposed to the deal.

    “This is a money grab and it’s offensive,” said Jaroslawicz.

    Patrick Rohan, of the top law firm Boies, Schiller & Flexner, which has represented Al Gore and Microsoft, along with the Lower East Side not-for-profit, Home of the Sages, declined to comment.

    Aschkenazi’s Queens synagogue is Congregation Tifereth Shmuel — and the elderly Lower East Side Jews will not be able to travel there to pray on a daily basis. The 25 Bialystoker synagogue is also the only one on the Lower East Side to be wheel chair accessible.

    “There are a lot of charities on the Lower East Side that need money to help people who live there. The synagogue allegedly had a member meeting to pass this deal — even though the ‘members’ were people from Queens who had never stepped foot in the synagogue to worship there,” Jaroslawicz said.

    The Home of the Sages is beside the landmarked Bialystoker Synagogue, where disgraced ex assembly speaker Sheldon Silver worships. Fine is also in contract to buy the synagogue’s air rights and another property adjacent to the synagogue in another controversial deal.

    Real estate sources say that Willy Rapfogel — now in jail for stealing millions from a Jewish charity he ran and where Fine once worked as a social worker — brought Fine into the deal. Fine’s spokesman denied the allegation, saying that “members of the community” introduced Fine to the deal.

    Jaroslawicz also said that the “members” of the synagogue at 25 Bialystoker Place who voted for the deal are members of the Ger sect that will receive the $10 million. “It’s outrageous,” Jaroslawicz said.

    Jaroslawicz also provided the Post with a copy of a lease agreement between the Home of the Sages, where Aschkenazi is president, and Congregation Tifereth Shmuel, which shares the same address as his home in Queens. In the lease agreement, Rabbi Aschkenazi signs for the Tenant — the Home of the Sages of Israel — to pay the Landlord, the Congregation Tifereth Shmuel, $45,000 a year to lease the space above his garage. The Rabbi’s wife signed the lease on behalf of the Congregation but neglected to write her last name. She only signed using her first names, Rathma Bithya, and omitted to identify herself Rathma Bithya Aschkenazi.

    Jaroslawicz also alleges that Aschkenazi gave donations from the Home of the Sages to fancy schools, like the Manhattan School for Girls on the Upper East Side, during the years his granddaughter attended, in lieu of tuition. The donations are noted on the Home of the Sages tax forms, copies of which were obtained by the Post.

    “The Home of the Sages collects $700,000 to $800,000 a year to take care of elderly rabbis — but they don’t! It’s unbelievable,” Jaroslawicz said, adding that Aschkenazi uses some of that money to pay himself $75,000 a year, and other money to pay his son, the late Mendel Aschkenazi, who helped run a nursing home also located in the building with Charles Knoll, until Mendel Aschkenazi’s recent death.

    Rabbi Aschkenazi did not return calls that were made on Thursday before observant Jews turned off their phones to observe the end of Passover.

    Jaroslawicz also slammed the Attorney General’s office for not objecting to the deal in the first place. An AG spokesman told the Post: “We did not ‘approve’ anything. We submitted no objections, but ultimately a judge signs off, approves such a deal.” He added: “We also submitted no objections to the directing of those $10 million. It’s not illegal….We’ve concluded that there will be sufficient funds remaining for Home of the Sages worship/study activities.”

    One lawyer familiar with the case questioned how the AG’s office thinks that 80-year-old worshipers on the Lower East Side will be able to travel to Queens for “worship/study activities” that begin daily at 7 AM. “How will they get there? On their Harleys? The AG’s office is either corrupt or incompetent.”

Wednesday, April 08, 2015

Another Title Insurance Agent Cops Guilty Plea For Looting Ten$ Of Thousand$ Of Clients' Escrow Cash From Real Estate Transactions

From the Office of the Maryland Attorney General:
  • Attorney General Brian E. Frosh announced [] that a Baltimore title insurance agent who took tens of thousands of dollars from her clients' escrow accounts to pay her personal bills pleaded guilty in the Circuit Court for Baltimore County to one count each of felony theft and felony theft scheme.

    Carole Tilghman, 50, was sentenced to five years' incarceration, with all but six months home detention suspended. She was also placed on five years supervised probation and ordered to pay $2,500 in restitution.(1) The conviction is the result of a joint investigation by the Insurance Fraud Division of the Maryland Insurance Administration and the Office of the Attorney General.

    Tilghman, previously known as Carole Hicks, operated a Randallstown title company called Client 1st Title. From 2007 to 2010, she engaged in a series of settlement transactions involving home buyers and sellers. Tilghman would overcharge buyers and sellers recordation taxes and title abstract fees and she would keep the additional monies. In at least one transaction, Tilghman falsified a buyer's financial statement, unbeknownst to the buyer, which led to checks being issued from the buyer's account to pay Tilghman's car, mortgage and credit card payments, among other personal debt.

    "Simply put, these consumers were ripped off by someone who they trusted," said Attorney General Frosh. "Hopefully, this conviction serves as a deterrent to fraudsters who attempt to steal from hard-working Marylanders."

    Misuse of escrow funds by title insurance agencies has been a growing focus of investigations by the Maryland Insurance Administration. In this case, the MIA revoked the licenses of both Tilghman and Client 1st Title in 2011. Each was fined $500, and they were ordered to repay consumers more than $51,700.

    "The Insurance Administration exists first and foremost to protect Maryland's consumers," said Insurance Commissioner Al Redmer, Jr. "I'm grateful that the Attorney General's Office prosecuted this case so aggressively. Working together, we can stop these bad actors who hurt consumers, as well as the reputations of all insurance producers, who overwhelmingly are an honest group."
Source: Former Title Insurance Agent Pleads Guilty to Stealing Clients' Money (Baltimore woman took from escrow accounts to pay personal expenses).

(1) The seemingly light sentence in this case for guilty pleas on two felony counts (five years incarceration reduced to six months house arrest, plus only $2,500 in a restitution order) is an indicator that the perpetrator has probably already disgorged herself of the tens of thousands of dollars she ripped off from her victims.

Tuesday, April 07, 2015

Landlords To Fork Over $19K Plus Tenant's Legal Fees To Resolve Allegations That They Squeezed Section 8 Tenant For Excessive Rent Disguised As Trash Removal Fees; Use Of Whistleblower Provisions Of Federal False Claims To Blow Whistle On Landlord Will Allow Renter To Share In Settlement Proceeds

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
  • The United States Attorney's Office announced today that Bellante Properties, of Lehigh County, PA, and its owners Vincent Fantozzi and Bernard Fantozzi, will pay the government $19,120 to resolve allegations surrounding federally-funded rental assistance payments it received. According to a civil complaint, Bellante Properties received rent subsidy payments from the Lehigh County Housing Authority while unlawfully requiring a tenant to pay supplemental rental payments disguised as trash removal fees.

    The lawsuit was filed by Karen Schware, in the United States District Court for the Eastern District of Pennsylvania, under the whistleblower provisions of the False Claims Act. The False Claims Act allows private citizens to bring civil actions on behalf of the United States and to share in any recovery.

    The Section 8 housing assistance program is designed to provide affordable housing to low-income families. According to the government’s complaint, between July 2007 and September 2013, Bellante Properties received payments from the Lehigh County Housing Authority under the Section 8 rent assistance program. In addition to receiving federally-funded Section 8 rent assistance payments, and approved rent payments from the tenant, the government alleges that Bellante Properties also unlawfully required the tenant to provide supplemental rent payments that had not been approved by the Lehigh County Housing Authority.

    The unlawful supplemental payments were disguised as trash removal fees. The parties have agreed to settle the dispute for a payment by the defendants of $19,120 to the United States. Bellante Properties and its principals, Vincent Fantozzi and Bernard Fantozzi, are also barred for three years from participation in HUD’s Section 8 program. As a whistleblower, Schware will receive a share of the settlement proceeds. Bellante Properties will also pay Schware’s legal fees.

    The settlement was the result of a coordinated effort by the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Department of Housing and Urban Development Office of Inspector General. The case was handled by Assistant U.S. Attorney Joel M. Sweet.
Source: United States Settles With Lehigh County Landlord Over Section 8 Rent Subsidy Payments.

For the whistleblower lawsuit complaint in intervention filed by the Feds, see USA ex. rel. Schware v. Fantozzi. (Note: The original suit was filed on behalf of the tenant by Community Justice Project ("CJP"), Pittsburgh, Pennsylvania and North Penn Legal Services, Bethlehem, Pennsylvania. Both firms are nonprofit legal services organizations providing civil legal aid to low-income residents of Pennsylvania. In addition, CJP is an “unrestricted” legal services program, working on issues and cases that traditional non-profit legal services organizations cannot handle (ie. litigating class actions, representing undocumented immigrants, and litigating against the government).

For an earlier story involving the use of federal whistleblower suits against landlords accusing them of violating Section 8 rules, see Miami Non-Profit Law Firm, Local Feds Join To Score Wins In Two Novel Whistleblower Suits Accusing Local Landlords Of Illegally Squeezing Gov't, Section 8 Tenants Out Of Excessive Rent Subsidies; $uccessful Recovery Includes Tenants' Damages, Legal Fees.

Monday, April 06, 2015

Score Update In N. California Foreclosure Sale Auction Bid-Rigging Probe: Antitrust Feds 52, Real Estate Investors 0; One More Suspect Waves White Flag While 20 Others Remain Targeted & In Hot Water

From the U.S. Department of Justice (Washington, D.C.):
  • A Northern California real estate investor has agreed to plead guilty for his role in bid rigging and fraud conspiracies at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

    Felony charges were filed [] in the U.S. District Court of the Northern District of California in Oakland against Ramin Yeganeh of San Mateo, California. To date, 52 individuals have pleaded guilty or agreed to plead guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California.

    In addition, 20 other real estate investors have been charged in five multi-count indictments for their roles in bid rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa, San Mateo and San Francisco counties.

    Our Northern California real estate investigations have yielded more pleas than any other Antitrust Division matter in recent memory, but our work is not done,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “The sheer number of individuals involved in these conspiracies only emphasizes how critical it is that we remain committed to investigating and prosecuting those who have corrupted the public foreclosure auction process.”

    According to court documents, beginning as early as May 2008 and continuing until about October 2010, Yeganeh conspired with others not to bid against one another, and instead designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County. Yeganeh was also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda County properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have otherwise gone to mortgage holders and other beneficiaries by holding second, private auctions open only to members of the conspiracy. Selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.

    “These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said FBI Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”

    A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

    Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.

Sunday, April 05, 2015

Now-Former Chief Program Director At Philly Non-Profit Cops Plea To "SELF" Ripoff Of $150K+ In Federal Funds Intended To Help Homeless

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
  • Nathaniel E. Robinson, 62, of Philadelphia, plead guilty [] to using funds intended to help the homeless to pay for his own personal and living expenses. Robinson was the Chief Program Officer at SELF, Inc. He was charged with theft from a program receiving federal funds.

    Between 2006 and 2010, Robinson used his corporate American Express credit card at SELF to charge personal expenses. The government alleges he stole approximately $154,050 and reimbursed a total of $2,594.30 before his employment was terminated. Robinson used the corporate American Express card to pay for trips to Alabama, including airfare, lodging, and restaurants; lodging in Orlando, Florida, and Philadelphia; car rentals; car repairs; admission tickets to Six Flags Great Adventure and Clementon Amusement Park; Amtrak tickets; purchases at Walmart and Filene’s Basement; and restaurant charges in Washington, D.C. and Baltimore, MD. Today, Robinson admitted that he stole at least $5,000 of SELF’s funds for personal use.

Saturday, April 04, 2015

Tax Preparer Gets Two Years For Filing Tax Return That Falsely Claimed Entitlement To 1st-Time Homebuyer Credit

From the Office of the U.S. Attorney (Oklahoma City, Oklahoma):
  • WILLIAM DAVID GREEN, a tax preparer from Yukon, Oklahoma, was sentenced to serve 24 months in federal prison for preparing a false tax return for a client, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma. Green was also ordered to pay $171,362.00 in restitution and serve one year of supervised release upon his release from prison.

    Green was charged by information on August 14, 2014, with two separate counts. Count One alleged that Green prepared a false tax return for a taxpayer that falsely represented on Line 69 that the taxpayer was entitled to first-time homeowner credit in the amount of $7,266 when he knew the taxpayer was not because he did not purchase a home in 2008. Count Two charged Green with obstruction of the administration of Internal Revenue laws by preparing the 2010 tax return reflecting a balance of $5,046 due to the IRS from the taxpayer, collecting a check from the taxpayer payable to the IRS in that amount, depositing the check into his business account by altering the payee portion of the check and endorsing the check, failing to file the taxpayer’s tax return, and spending the money intended for the IRS for his own purposes.

    Green pled guilty to both counts on September 3, 2014. Green was sentenced to serve 24 months in federal prison, serve one year of supervised release upon his release from prison, and pay $171,362.00 in restitution. He was ordered to report to the Bureau of Prisons on May 4, 2015, to begin serving his sentence.

Friday, April 03, 2015

Philly Feds Put Pinch On Local Real Estate Operator Who Allegedly Conspired w/ Title Agent Cohorts To Illegally Pocketing $643K+ In Loan Closing Proceeds Intended For Lien Payoffs; Allegedly Made "Lulling" Payments To Prior Lienholders For Years After Perpetrating Ripoff In Failed Attempt To Dodge Discovery & Keep Scam From Imploding

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
  • Dean Rossi, 49, of Warrington, PA, was arrested [] in connection with an alleged mortgage fraud scheme, announced United States Attorney Zane David Memeger. Rossi, a real estate investor who owned numerous low-income properties throughout the Philadelphia area, was charged by indictment, [...], with conspiracy, mail fraud affecting a financial institution, and bank fraud.

    The indictment alleges that Rossi misappropriated in excess of $643,000 from real estate closings. After obtaining bank loans to purchase or refinance residential properties, Rossi allegedly teamed up with title/closing agents to divert a substantial portion of the loan proceeds. According to the indictment, Rossi received cash from the settlements that otherwise should have been used to pay off prior mortgages and tax liens on certain properties.

    To prevent the scheme from being detected, Rossi allegedly continued to cause payments to be made on the prior existing mortgages years after those loans were supposed to have been paid in full.(1)

    If convicted, the defendant faces a possible advisory sentencing guideline range of 46 to 57 months in prison, up to five years of supervised release, a fine of up to $4 million, and a $400 special assessment.
Source: Bucks County Real Estate Investor Arrested On Fraud Charges.

For the indictment, see USA v. Rossi.

(1) These payments made to avoid/postpone detection are sometimes referred to as "lulling" payments (ie. as in "lulling the scam victims to sleep" while preventing (or deferring) ultimate implosion and detection of the scheme by law enforcement authorities).

Thursday, April 02, 2015

Expiring Statute Of Limitations In Foreclosure Cases A Growing Headache For Banksters?

In Miami, Florida, The New York Times reports:
  • In September, Susan Rodolfi celebrated an unusual anniversary: five years of missed mortgage payments.

    She is like a ghost of the housing market’s painful past, one of thousands of Americans who have skipped years of mortgage payments and are still living in their homes.

    Now a legal quirk could bring a surreal ending to her foreclosure case and many others around the country: They may get to keep their homes without ever having to pay another dime.

    The reason, lawyers for homeowners argue, is that the cases have dragged on too long.

    There are tens of thousands of homeowners who have missed more than five years of mortgage payments, many of them clustered in states like Florida, New Jersey and New York, where lenders must get judges to sign off on foreclosures.

    Wanda Darden, at home in Riverdale, Md. Her mortgage has bounced among three loan servicers, leading to increasing mix-ups. “I either get conflicting answers or no answer at all,” she said.

    However, in a growing number of foreclosure cases filed when home prices collapsed during the financial crisis, lenders may never be able to seize the homes because the state statutes of limitations have been exceeded, according to interviews with housing lawyers and a review of state and federal court decisions.


    [T]he laws in places like Florida could prove to be a wild card. In a state where “hanging chads” helped decide the 2000 presidential election, a legal technicality could help settle the state’s foreclosure crisis.

    Lawyers for homeowners in Florida contend that lenders have five years to file for foreclosure after a homeowner defaults, normally after several months of missed payments, and the mortgage is “accelerated,” meaning that the bank says that the debt is due all at once. Banks say they have many more years to file for foreclosure, arguing that the five-year clock resets every time a homeowner misses a monthly payment — regardless of when the mortgage was accelerated. Some Florida judges have agreed.(1)

    The statute of limitations does not halt a foreclosure case that is continuing in court. But in some Florida courts, homeowners’ lawyers have argued that once a foreclosure is dismissed even for technical reasons, the lender cannot refile a new foreclosure to seize the home if the statute of limitations has passed. Still, the lender has some recourse: It can keep a lien on the house that must be paid off if the property is ever sold.

    The issue is now before the Florida Supreme Court.
For more, see Foreclosure to Home Free, as 5-Year Clock Expires.

Thanks to Deontos for the heads-up on this story.

(1) In an analogous case, involving the application of the statute of limitations when challenging (on unconscionability grounds) an escalation clause in a 99-year ground/land lease that became enforceable every five years, a Florida appeals court held that the statute of limitations for commencing such a challenge began at the time of the first escalation, and that the statute of limitations does not reset each time the escalation clause became effective (ie. every five years). See Garden Isles Apartments No. 3, Inc. v. Connolly, 546 So.2d 38 (Fla. 4th DCA 1989):
  • The subject escalation clauses were first enforced in 1975 and 1976 respectively. Contrary to appellants' argument that a new cause of action arose each time a new five-year escalation clause became effective, we hold that the cause of action in this case accrued at the time of the first escalation and that the complaint filed in 1986 was well beyond the applicable five-year statute of limitation periods which commenced in 1975 and 1976.
If the theory applied by the Florida appeals court in the Garden Isles case has any applicability to the statute of limitations in mortgage foreclosure cases, one may reasonably argue that the cause of action for commencing a foreclosure action accrues at the time of the first default, and that a new cause of action does not arise each time a homeowner misses a monthly payment. Just a thought.

Wednesday, April 01, 2015

Jury Belts Attorney, Three Others w/ Guilty Verdicts For Roles In Scheme To Fraudulently Commandeer Control Of Vegas-Area HOAs For Purpose Of Directing Construction Defect Litigation & Repair Work To Outfits Owned By Other Co-Conspirators

From the U.S. Department of Justice (Washington, D.C.):
  • Following a 14-day trial, a federal jury in Las Vegas returned guilty verdicts [] in a case against a Las Vegas attorney and three others for their roles in a scheme to fraudulently take control of homeowners’ associations (HOAs) for the purpose of directing the HOAs’ construction defect litigation and repair work to a law firm and construction company owned by other co-conspirators.

    Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Field Office, Special Agent in Charge John Collins of Internal Revenue Service Criminal Investigation’s (IRS-CI) Las Vegas Field Office and Sheriff Joseph Lombardo of the Las Vegas Metropolitan Police Department made the announcement.

    Keith Gregory, 61, of Las Vegas, Salvatore Ruvolo, 86, of Henderson, Nevada, David Ball, 47, of Las Vegas, and Edith Gillespie, 54, of Las Vegas, were found guilty [] of conspiracy to commit wire and mail fraud. Gregory and Ball were also convicted of two counts of wire fraud each, Ruvolo was convicted of three counts of wire fraud, and Gillespie was convicted of one count of wire fraud. Ruvolo was found not guilty of one count of mail fraud. Sentencing hearings are scheduled for June 17, 2015, before U.S. District Judge James C. Mahan of the District of Nevada.

    According to the evidence presented at trial, from approximately August 2003 through February 2009, the defendants engaged in a complex scheme to direct construction defect litigation and construction repairs at more than 10 condominium complexes in the Las Vegas area to a law firm operated by a co-conspirator and a construction company, Silver Lining Construction, owned by Leon Benzer. In order to accomplish the scheme, the defendants and their co-conspirators identified HOAs for condominium complexes that had potential construction issues that could result in construction defect litigation and require repair. They then sought to take controlling interests on the identified HOAs’ boards by purchasing units in the condominium complexes and running for election to the boards.

    Specifically, the evidence at trial demonstrated that Benzer and others, including Gillespie, enlisted “straw purchasers” to use their names and credit to purchase condominiums in the identified complexes. Ruvolo, Ball and Gillespie, among others, acted as straw purchasers, and the evidence demonstrated that Gillespie provided false information on her loan application in connection with the purchase of a condominium in furtherance of the scheme.

    According to the evidence, Ruvolo and Ball then sought to be elected to HOA boards in the complexes where they had purchased condominiums. Other straw purchasers were directed to transfer a partial interest in their condominiums to other co-conspirators to make them look like homeowners who could stand for election to the HOA boards. To ensure that conspirators won the HOA elections, the defendants employed deceitful tactics, such as submitting fake and forged ballots, and hiring complicit attorneys to run the elections as “special election masters,” who presided over the elections and supervised the counting of ballots.

    The evidence demonstrated that, once elected, the conspiring board members, including Ruvolo and Ball, met with Benzer and other co-conspirators in order to manipulate the selection of property managers, contractors, general counsel and construction defect attorneys to represent the HOAs. Gregory, an attorney licensed in Nevada, agreed to become the general counsel for two HOAs and to take direction from Benzer.

    At trial, the evidence showed that 33 of the 37 condominium units purchased as part of the scheme went into foreclosure. Over the course of the scheme, more than $7 million in construction contracts were awarded to Benzer’s company from a single HOA. Several million dollars in legal fees were also directed to another co-conspirator. Benzer compensated each of the defendants for their participation in the fraud scheme. For example, the evidence demonstrated that Ruvolo received monthly payments of approximately $2,000, and Ball received $5,000 per year, for acting as straw purchasers and board members. Benzer also directed approximately $90,000 in HOA-related legal work to Gregory and paid him approximately $12,000 in kickbacks.

    On Jan. 23, 2015, Benzer pleaded guilty to one count of conspiracy to commit mail and wire fraud, fourteen counts of wire fraud, two counts of mail fraud, and two counts of tax evasion. He is awaiting sentencing.