Monday, July 06, 2015

S. Jersey R/E Operator Cops Guilty Plea In Combined Foreclosure Rescue/Ponzi Scam; He Duped 25+ Unwitting Underwater Homeowners Into Signing Over & Vacating Their Homes, Then Pocketed Rents From Subsequent Tenants While Stiffing Bank On Mortgage Payments - All While Using Properties As Bait To Illicitly Reel In Over $3 Million In Investor Funds For Add'l Pocket Money

From the Office of the U.S. Attorney (Camden, New Jersey):
  • A Woolwich Township, New Jersey, man [] admitted scamming distressed homeowners into giving him their houses and then soliciting fake real estate investments from private investors – secured by those same properties – that netted him more than $3 million in illicit profits, U.S. Attorney Paul J. Fishman announced.

    Randy Poulson, 44, pleaded guilty before U.S. District Judge Renée Marie Bumb in Camden federal court to Count One of an indictment charging him with mail fraud.

    According to documents filed in this case and statements made in court:

    Poulson owned and operated Equity Capital Investments, LLC and Poulson Russo LLC and was the former president of the South Jersey Real Estate Investors Association. Paulson gave speeches, seminars, monthly dinners and various private tutorial sessions, purporting to teach real estate investing tips to individuals who paid fees to attend.

    Poulson engaged in a two-pronged scheme.

    First, he promised to pay the mortgages of distressed homeowners facing foreclosure if they sold their homes to him. Using this method, Poulson obtained the deeds to more than 25 distressed homeowners’ residences, causing them to vacate the homes so renters could move in.

    Afterwards, Poulson then stopped making the monthly mortgage payments, causing those mortgages to go into foreclosure without the distressed homeowners’ knowledge.

    In the second part of the scheme, Poulson solicited seminar attendees and other private investors to invest in Equity Capital Investments, which purportedly bought and sold real estate. Poulson told the investors that their money would be used to acquire and rehabilitate a property, which Poulson claimed he would rent out and then sell for a 10 to 20 percent return on the investment.

    The properties for which Poulson solicited the investments were those he acquired in the first part of the scheme. Although Poulson claimed that he would use funds to acquire and rehabilitate those properties, Poulson spent the money on personal expenses and to repay other investors.(1)

    As a result of the scheme, Poulson was able to fraudulently obtain more than $3 million from investors.
Source: Gloucester County, New Jersey Man Admits Operating Mortgage Foreclosure Rescue, Real Estate Ponzi Scheme.

For the indictment, see USA v. Poulson, and go here for the original Criminal Complaint.

(1) Using money raised from new investors to make lulling payments (ie. payments designed to dupe/lull investors into a false sense of confidence that their money had been used in legitimate, income-generating deals) to earlier investors in an attempt to avoid the detection or unraveling of this type of racket is the hallmark of a Ponzi scheme.

Office Temp For Lennar-Owned Title Company, Co-Conspirator Cop Pleas For Roles In Identity Theft Victimizing 250+ Would-Be Homeowners; Purloined Personal I.D. Information Scavenged From Escrow, Loan Documents Used To Obtain Credit Cards

From the Office of the U.S. Attorney (Los Angeles, California):
  • A brother and sister from the Inland Empire have pleaded guilty to federal charges of conspiring to steal identities of hundreds of would-be homeowners from North American Title Company and using those stolen identities to obtain credit cards from major national retailers.

    Charlie Rickie Jackson III, 43, of Corona, and Bridgette Lenet Jackson, 45, of Riverside, both pleaded guilty [] to conspiracy to commit access device fraud. Charlie Jackson also pled guilty to possession of 15 or more unauthorized access devices (credit cards).

    In late 2013, Bridgette Jackson was a temporary employee at North American Title Company’s office in Temecula, where she was responsible for processing escrow documents and copying loan documents. Simply put, Bridgette Jackson allowed Charlie Jackson to come and take documents from the office when no other employees were around. According to court documents, the Jacksons stole personal identifying information belonging to well over 250 would-be homebuyers that was found in the North American Title Company documents.

    Using the would-be homeowners’ personal identification information – including social security numbers, dates of birth, and bank account numbers – Charlie Jackson opened credit card accounts from major national retailers, and he used the unauthorized access devices to purchase goods online. Jackson then pawned the purchased items in exchange for cash, netting him tens of thousands of dollars.

    During the course of the investigation, Charlie Jackson twice was caught in possession of hundreds of stolen identities, according to his plea agreement. The first time, in February 2014, he had hundreds of title documents from North American Title Company, sensitive medical documents containing personal identifying information, and credit cards he opened in the names of victims. In July 2014 he was caught with scanned copies of the stolen North American Title Company documents as well as a spiral notebook with personal identification information of other victims.

    North American Title Company provides real estate settlement services and is a subsidiary of Lennar Homes, a national home builder. Lennar Homes has sustained thousands of dollars in losses due to the payout claims for victim homebuyers who experienced identity theft due to the breach of the secure documents.

    The Jacksons pleaded guilty [] before United States District Judge Jesus G. Bernal, who is scheduled to sentence both defendants on August 31.

Sunday, July 05, 2015

Philly Feds Bust Payday Lending Operator For Allegedly Charging Illegally High Interest Rates; Accused Of Using Federally-Insured Bank & Indian Tribe As Paid Cover In Attempt To Cloak His Outfit With Their Exemption/Immunity From State Usury Laws

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania) (via Public Citizen's Consumer Law & Policy Blog):
  • Adrian Rubin, 58, of Jenkintown, PA, has been charged with participation in a racketeering conspiracy for the operation of a “payday lending” business that allegedly violated the usury laws of Pennsylvania and other states, announced United States Attorney Zane David Memeger. Rubin is charged with one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (“RICO”), one count of conspiracy to commit mail fraud and wire fraud, and two counts of mail fraud and aiding and abetting mail fraud. It was investigated by the FBI, the United States Postal Inspection Service, and IRS Criminal Investigations.

    According to the information unsealed [], between 1998 and 2012, Rubin owned, controlled, financed, and/or worked for multiple businesses that issued short-term loans, commonly known as “payday loans.” Rubin allegedly conspired with other people to evade state usury laws and other restrictions on payday loans by engaging in a series of deceptive business practices that included:

    (a) paying a federally-insured bank, which was not subject to state laws, to pretend that it was the payday lender;
    (b) relocating his operations to a state considered “usury friendly;” and
     (c) paying an Indian tribe to pretend that it was the actual payday lender as part of a scheme to have the tribe claim that “sovereign immunity” prevent application of state usury laws and other regulations.

    Rubin and his co-conspirators also allegedly went to great lengths to hide Rubin’s personal involvement in the payday lending business because he had a criminal record. It is further alleged that Rubin, with the knowledge of his co-conspirators, incorporated his payday businesses in the names of his father-in-law and a family friend and then forged the signatures of those people on company documents. In total, it is alleged that Rubin and his co-conspirators reaped tens of millions of dollars from the defendant’s payday lending activities, much of which stemmed from the collection of fees that were usurious in Pennsylvania and elsewhere.

    Pennsylvania law makes it a crime to collect interest, fees, and other charges associated with a loan at a rate in excess of 36 percent per year. Payday loans are short-term loans of relatively small amounts of money, usually a few hundred dollars, which borrowers promise to repay out of their next paycheck or regular income payment, such as a social security check. Some loans have finance charges or fees of between 10 and 30 percent of the amount borrowed. Given the short-term nature of these loans, those charges can translate to annual percentage rates of interest (“APR”s) of 260 to 780 percent.
Source: RICO Conspiracy Charged In Payday Lending Case.

For a recitation of the formal charges, see USA v. Rubin.

Heads Of Philadelphia-Area Usurious Lending & Wagering Enterprise Get Stiff Sentences; Use Of 'Arm-Twisting' & 'Leg-Breaking' Threats To Enforce High-Interest Street Loans Among Milder Forms Of 'Self-Help Remedies' Employed To Squeeze Hapless Debtors; Seven Others Await Sentencing

From the U.S. Department of Justice (Washington, D.C.):
  • The leaders of a violent loan sharking and illegal gambling ring that operated out of several Philadelphia businesses were sentenced [] to serve 168 months and 147 months in prison, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania.

    Ylli Gjeli, 49, and Fatimir Mustafaraj, also known as Tony, 42, both of Philadelphia, were previously convicted following a six-week jury trial of engaging in a racketeering conspiracy, collection of unlawful debts, extortion and illegal gambling. Two other defendants were convicted of various related charges in the same trial and are scheduled to be sentenced at a later date. ...

    According to evidence presented at trial, the defendants’ enterprise used businesses in Philadelphia, including the Lion Bar & Grill, Blackbird Café and Ylli’s 2 Brothers, to conduct the illegal loan sharking and gambling activities. The enterprise generated money by making and collecting on loans with usurious rates of interest, and making loans to customers whose debts were incurred through the enterprise’s illegal gambling business. The evidence established that from October 2011 to 2013 alone, the enterprise extended 125 usurious loans totaling $1.78 million with annual interest rates ranging from 104 percent to 395 percent. Further, the evidence established that from February 2007 to August 2013, the organization’s online sports betting website contributed more than $2.9 million in gross profits.

    The evidence showed that members and associates of the enterprise cultivated their reputations within the organization by threatening customers with dangerous weapons such as firearms and a hatchet, threatening to kill, assault or “break the legs” of delinquent customers if they did not pay their debts, and physically assaulting subordinate members and associates who stole from the organization.

    According to the evidence presented at trial, Gjeli was a “boss” of the multi-million dollar criminal organization. Mustafaraj served as “muscle” to forcefully collect debts owed to the organization.


    The evidence also demonstrated that the defendants attempted to conceal the existence and operations of the enterprise from law enforcement by limiting their discussions of criminal activities when on the phone, using cryptic and coded language to describe criminal activities, conducting pat-downs and body searches of customers to check for weapons and recording devices, and conducting the enterprise’s transactions primarily in cash.

    Five co-defendants who previously pleaded guilty are awaiting sentencing.

Pair Cop Guilty Pleas For Roles In Bogus Debt Relief Outfit That Purported To Be Nationwide Law Firm, Scamming Victims Out Of 1st Six Months Of Payments As Undisclosed Upfront Fees; Three Other Co-Conspirators Await Trial On 22-Count Indictment

From the U.S. Department of Justice (Washington, D.C.):
  • Two individuals pleaded guilty [] for their roles at fraudulent debt relief services companies that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees, the Justice Department and U.S. Postal Inspection Service (USPIS) announced.

    Athena Maldonado, 30, and Christopher Harati, 31, both of Orange County, California, pleaded guilty to a one-count information alleging conspiracy in connection with debt relief companies known as Nelson Gamble & Associates (Nelson Gamble) and Jackson Hunter Morris & Knight LLP (Jackson Hunter).

    According to the information filed in the case, the defendants and their co-conspirators portrayed the debt relief companies as law firms and attorney-based companies that would negotiate favorable settlements with creditors. Clients made monthly payments expecting the money to go toward settlements. The companies instead took an amount equal to at least 15 percent of clients’ total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees.


    Maldonado admitted that she acted as the “legal department” for both companies, and used multiple aliases when responding to complaints submitted by state attorney general offices, the Better Business Bureau and private attorneys. Maldonado admitted that, after Nelson Gamble changed its name to Jackson Hunter, she responded to consumer complaints by falsely stating, among other things, that the two companies were not related and that Jackson Hunter could not refund money paid to Nelson Gamble.

    Harati admitted that he worked as a client relations manager for the companies and handled complaint calls from clients. He admitted he told customers that Nelson Gamble and Jackson Hunter were separate companies, falsely stated that Jackson Hunter was a nationwide law firm with years of experience and made other misrepresentations designed to convince customers to stay with the company.


    On Dec. 3, 2014, a grand jury in Santa Ana, California, returned a 22-count indictment charging Jeremy Nelson, Elias Ponce and John Vartanian, all of Orange County, for mail fraud, wire fraud, and conspiracy to commit mail and wire fraud in the same fraudulent scheme. The trial in that case is scheduled to begin on Feb. 16, 2016, in Los Angeles.

Saturday, July 04, 2015

New Florida Law Now Offers Protection For Some Unit Owners Against Involuntary 'Squeeze-Outs' Where Condo Bulk Purchaser Acquiring 80% Of Units Seeks To Terminate Association & Convert Building To Rentals; Law To Help Homesteaded Owner-Occupants Only; Snowbirds, Investors Still Face Boot

In Miami, Florida, The Real Deal (South Florida) reports:
  • Investors and developers looking for distressed condominiums to convert into apartment buildings will have a harder time doing so in Florida.

    On Tuesday, Gov. Rick Scott signed a new law that grants a slate of new protections for property owners who don’t want to sell their units, but are being forced to sell.

    The number of optional condominium terminations rose during the downturn because developers that owned a majority of units in a condominium development wanted to convert to rental apartments or sell the property for conversion to rentals, said Jeffrey Margolis, a Fort Lauderdale-based partner at law firm Berger Singerman. He added that condominium terminations also occur in older condominiums where the unit owners receive an offer to sell an entire condominium to a developer.

    “The new law is a disincentive for investors and developers,” Margolis said. “It could make [condo terminations] economically unfeasible for them.”

    For example, if a bulk owner owns 80 percent of the units in a condominium, the owners of the other 20 percent must be compensated at least the fair market value of their units or the original purchase price paid for the unit, even if the current value is lower. But the owners must be current with their assessment fees and mortgage payments.

    In the case of a unit owner whose unit was granted homestead exemption, the bulk owner must pay an additional relocation payment in an amount equal to 1 percent of the termination proceeds allocated to the non-bulk owner’s unit.

    The law passed with overwhelming support in the state Senate and state House because it was viewed as protecting consumers. Following the 2008 crash, developers and bulk condo buyers amassing a majority of the units at empty condo buildings would seek to terminate condo associations, a practice that has led some homeowners to lose title to their units against their will.

    There was a negative impact to people who were being thrown out of their units and not getting what the unit was worth,” Margolis said. “The law could give potential single unit buyers peace of mind that they won’t be subject to a condo termination without being adequately compensated.”

    The law also places additional burdens on bulk owners by preventing a plan of termination from becoming effective if the first mortgages for all the unit owners have not been paid off. In addition, a bulk owner will have to wait 18 months to offer a second plan of termination if the first one is rejected by the individual unit owners.

    The changes, which are effective immediately, makes optional terminations of a condominium more difficult, Margolis said. “Although the new legislation was intended to help unit owners in a distressed condominium facing termination, the legislation may have the unintended consequence of hurting unit owners by making making it more expensive to terminate distressed condominiums,” he explained.
Source: Scott signs law making condo terminations more difficult (Individual property owners protected from bulk condo investors under new law).

But see, Orlando SentinelCondo reform does not help all owners:
  • State Rep. Chris Sprowls, R-Palm Harbor, who introduced the legislation, said the main concession he made in getting the legislation approved was restricting it to help only owner occupants who live in their condos instead of investors and snowbirds who may use the condos as vacation homes.
For earlier posts on unit owner squeeze-outs, see:

Jury Convicts Woman Of Lying About Having Sole Custody Of Daughter To Score Nearly $69K In Rent Subsidies In Luxury NYC Building; Evidence Unearthed During Unrelated Extortion Probe Involving Yankee GM

In New York City, the New York Post reports:
  • A Manhattan jury [...] convicted the alleged ex-mistress of Yankee general manager Brian Cashman of lying on a subsidized housing application to score nearly $69,000 in rent breaks.

    As the verdict was read, the usually bubbly Louise Neathway, 39, sat stone-faced, wearing a beige pantsuit and floral top and her hair pulled back in a tight bun.

    It took jurors five hours to find her guilty of nine counts of grand larceny, falsifying business records and offering a false instrument.

    During the one-week trial in Manhattan Supreme Court, prosecutors argued that Neathway falsely claimed she had sole custody of her daughter and that her ex-husband lived in England in order to bump up her household size to two.

    This made her eligible for a below-market-rate apartment at 88 Leonard St., a luxury Tribeca building, where she lived for five years.

    The trouble was her ex, Jason Bump, has had sole custody of their 17-year-old since 2004 and lives in upstate New York.

    “This is a case about this defendant taking something she had no right to take, and in doing so, taking away the opportunity from other applicants who applied for and actually qualified for this apartment,” Manhattan Assistant District Attorney Kenn Kern said during the trial before Justice Bruce Allen.

    Neathway was arrested in 2012 for allegedly stalking, harassing and extorting $6,000 and attempting to extort $15,000 more from Cashman by threatening to go public with their affair. The scandal led to Cashman’s divorce from his wife, Mary Bresnan.

    During the investigation, authorities uncovered evidence of housing fraud, and they opted to try that case first.

    Defense lawyer Lawrence LaBrew wasted no time telling jurors that the beleaguered baseball big was the real reason Neathway landed in court.

    “Sometime in 2012 she was arrested, charges were brought against her alleging various charges related to Mr. Cashman and at that point these [housing-fraud] charges surfaced,” LaBrew told jurors. “The DA chose to prosecute this case.”

    Neathway is expected to be sentenced Aug. 20. Prosecutors are expected to try the extortion case next.

Friday, July 03, 2015

Fresno Feds Reel In Seven Suspects In Another Alleged Real Estate Short Sale Fraud Conspiracy Targeting At Least 25 Underwater Homes; Lenders Take $3M+ Financial Hit

From the Office of the U.S. Attorney (Fresno, California):
  • A federal grand jury returned a 15-count indictment [...] against seven individuals, charging them with conspiracy to commit mail fraud and bank fraud, mail fraud and aiding and abetting, and making false statements to a bank in a mortgage fraud scheme, United States Attorney Benjamin B. Wagner announced.

    Jyoteshna Karan, 43, and Praveen Singh, 36, were arrested [...] at their home in Modesto. Mahendra Prasad, 53, was arrested [...] at his home in Fremont. The remaining defendants each received a summons to appear for arraignment: Phul Singh, 79; and Sunita Singh, 60, both of Modesto, Nani Isaac, 69, of Ceres, and Martin Bahrami, 42, of Turlock.

    According to court documents, the defendants conspired to defraud mortgage lending companies and financial institutions by making false statements on loan applications and short-sale applications in order to obtain properties under their names and the names of others. The false statements included statements relating to the defendants’ employment, their familial relationship, income, and their intent to occupy the home as their primary residence.

    According to the indictment, the conspiracy encompassed at least 25 properties from Sacramento to Modesto. As a result of the scheme, lenders lost in excess of $3 million.


    “The partnership between the Stanislaus County District Attorney’s Office, federal agencies and the U.S. Attorney’s Office allows us to investigate the most complex real estate fraud cases at the local level and yet prosecute at the federal level to ensure full accountability. This is a true benefit to the community,” said Stanislaus County District Attorney Birgit Fladager.

    The short sale process is intended to assist legitimately distressed homeowners,” said Leslie DeMarco, Special Agent in Charge, Federal Housing Finance Agency Office of Inspector General. “Our investigation disclosed that Karan and others allegedly manipulated the process for their personal gain. FHFA-OIG is committed to ensuring that real estate professionals maintain the highest ethical standards, which in turn will protect taxpayers.”
For the news release, see Seven Indicted for $3 Million Mortgage Fraud Conspiracy (Scheme Involved 25 Properties from Modesto to Sacramento).

Notorious Foreclosure Trash-Out Contractor Agrees To Cough Up $1 Million To Settle State AG Lawsuit Accusing It Of Illegally Breaking In & Locking Out Illinois Residents From Their Homes Before Foreclosures Were Finalized

From the Office of the Illinois Attorney General:
  • Attorney General Lisa Madigan [] announced a $1 million settlement with Safeguard Properties LLC over allegations the company illegally locked Illinois residents out of their homes before a foreclosure was finalized.

    Under Madigan’s settlement, Safeguard, a Delaware corporation based in Ohio, must pay $1 million, nearly all of which will be paid to Illinois residents who filed complaints over Safeguard’s practices. Safeguard must also follow 40 operating standards in conducting inspections and other services relating to Illinois properties set by Madigan’s office to ensure homeowners’ rights are protected.

    Safeguard is the largest company in the country hired by mortgage lenders to determine whether homeowners in default or facing foreclosure are living in their homes. If a property is deemed vacant, Safeguard is responsible for securing and maintaining the property to ensure it does not lose value after it is foreclosed. Madigan alleged in a 2013 lawsuit that Safeguard wrongly deemed homes vacant, instructing its contractors to shut off utilities, change the properties’ locks and illegally remove residents’ personal belongings even though they actively remained in their homes.

    “When I filed this lawsuit, Safeguard was illegally breaking and entering into homes, often removing residents’ belongings and locking people out,” Madigan said. “I am pleased that this settlement will provide some compensation for the nightmare they caused these homeowners and that it will ensure that Safeguard does not employ these brazen practices moving forward.”
For the rest of the Illinois AG press release, see Madigan Announces $1 Million Settlement With Safeguard Properties (Homeowners Illegally Locked Out of Homes to Receive Restitution).

Go here for earlier posts on the notorious trash-out contractor, Safeguard Properties.

Thursday, July 02, 2015

Home Repair Contractor w/ Decades-Long History Of Targeting Elderly Chicago Homeowners In Equity Stripping Scams Using Subprime, Reverse Mortgages To Fund Shoddy, Incomplete Home Improvements Continues To Dodge Criminal Prosecution; Illinois AG: He's A "Conman Of Unimaginable Magnitude!"

In Chicago, Illinois, Columbia College Professor Jeff Kelly Lowenstein writes in The Huffington Post:
  • Life for Chicago businessman Mark Diamond got harder last week, even as questions remain for some about why he has not yet faced criminal prosecution.

    On Wednesday Cook Count Judge David Atkins granted Attorney General Lisa Madigan's request for an injunction against Diamond while the 2009 cases her office filed on behalf of dozens of homeowners makes its way through the court system.

    "The court finds that Plaintiff has carried its burden of proof to obtain a preliminary injunction against the Defendants," Atkins wrote in his 10-page decision.

    In the 2009 suit Diamond was accused of bilking elderly black homeowners out of more than $1.3 million through a reverse mortgage/home repair scam.(1)

    Reverse mortgages are loans that allow homeowners 62 years or older to convert some of their home's equity into cash. Although the mortgage is not due until the homeowner dies or the house is no longer used as a primary residence, mortgage holders must pay insurance premiums.

    Madigan told me in January for a story I wrote for The Chicago Reporter that she filed the injunction in October 2014 because her office had received an uptick last year in complaints about Diamond's activities.(2)

    "For too many years, Mark Diamond defrauded the most vulnerable people in our society," Madigan said in a statement. "He stole the financial security that these families struggled to build over a lifetime. It is deplorable that he got away with his scheme for so many years. The preliminary injunction provides a small victory for those who have already lost so much but will at least prevent additional people from losing their homes and savings to one of Diamond's reverse mortgage scams."(3)

    Diamond's lawyer Dennis Both declined requests for comment.

    Diamond has been the subject of dozens of lawsuits in circuit and federal court in Illinois stretching back nearly 30 years.(4) Many of the actions allege that he targeted elderly black homeowners on the city's South and West Sides. Madigan has sought to thwart Diamond's activities since she assumed office in 2002.

    A number of these homeowners recounted their experiences in the injunction Madigan's office filed last year. Their testimony creates a consistent picture of Diamond's misrepresenting the nature and terms of the reverse mortgage, taking a substantial portion, if not all, of the money, and doing little, no or shoddy repairs.

    The homeowners who testified included Clyde Ross, a member of the Contract Buyers League that fought for West Side residents' housing rights in the 1960s. Ross, who is in his 90s, said in his testimony that he wanted to make his home accessible for his son Tim, a disabled Marine who was injured in the war in Iraq. Diamond took more than $35,000 from Clyde Ross and left his home more dangerous than before he started, according to the testimony.

    Legislation filed by Sen. Jacqueline Collins (D-16) that would require a cooling off period for prospective reverse mortgage applicants and that would prohibit those involved in granting a reverse mortgage from getting access to the money has not moved since passing the House in late May.

    Collins said she was relieved that Diamond will not be able conduct the business activities that have allowed him to prey for decades on senior citizens of color, but noted that he is "not the only scammer at work in our neighborhoods."

    "I urge the governor to sign the reverse mortgage consumer protection legislation I sponsored so these individuals have fewer opportunities to defraud homeowners," Collins wrote in a statement.

    Catherine Kelly, spokeswoman for Gov. Bruce Rauner, said the governor will take seriously any legislation that crosses his desk.

    The Rev. Robin Hood, founder of the Illinois Anti-Foreclosure Coalition and the nephew of one of Diamond's alleged victims, also applauded the move by Atkins and said he will not stop advocating until Diamond faces criminal charges.

    "We will not quit until Mark Diamond and others like him, are completely out of business and face the full extent of the law," said Hood, adding that he had spoken with an attorney in South Dakota who said Diamond had victimized hundreds of families across the country. "We will seek restitution for all the victims, and their heirs."

    "Now is the time for federal, state and local law enforcement to stop Mark Diamond and his enablers, Bankers, mortgagers and all that prey on the elderly," Hood wrote later.(5)
Source: Judge Grants Injunction Against Mark Diamond.

(1) See Madigan Cracks Down On Chicago Mortgage And Home Repair Fraud Scheme ($1.3 Million Swindled from Elderly, African-American Homeowners in Subprime Loan Scam):
  • After the closings, Diamond allegedly convinces consumers to endorse over their "cashout" checks to him to pay for home repairs. According to Madigan's complaint, however, Diamond's repair companies often fail to begin construction. When they do start construction, Diamond's repair companies often perform substandard work or do not complete the project, leaving homeowners with outstanding loan balances for unfinished work and owing more on their homes than ever before.
(2) See Elderly on West and South Sides targets of reverse mortgage scheme, say advocates.

(3) See also, Attorney General: He’s a conman of unimaginable magnitude.

(4) See Cases filed against Mark Diamond in Cook County Circuit Court, 1987-2014.

(5) Diamond has recently been under the FBI microscope in connection with a criminal probe. See FBI agents raid office of alleged con man.

Disgraced Ex-Lawyer Gets 2-6 Years For Ripping Off Dead Client's Estate Of $70K From Real Estate Sale; Sentence To Start After Completion Of 4-12 Year Stint For $400K+ Escrow Account Fleecing Of Another Dead Client's Estate

From the Office of the Kings County, New York District Attorney:
  • Brooklyn District Attorney Ken Thompson [] announced that a South Orange, New Jersey, man has been sentenced to two to six years in prison for stealing $70,000 from a client’s real estate sale. The sentence was ordered to run consecutive to a sentence of four to 12 years he received last year for stealing $411,082.50 from another client whom he represented in a property sale.

    District Attorney Thompson said, “This defendant disgraced the legal profession when he stole money from the estates of his clients. Now he will pay a serious price for his misconduct. This should serve as a warning to others who let greed get the best of them.”

    The District Attorney identified the defendant as Stephen Mitchell, 48, of 542 Hartford Court, in South Orange, New Jersey. The defendant was sentenced [] to two to six years in prison by Brooklyn Supreme Court Justice William Garnett following his conviction earlier this year on one count of second-degree grand larceny following a jury trial. The judge ordered the sentence to run consecutive to a sentence he handed down last year in a similar case.

    The District Attorney said that, according to trial testimony, in 2006, the defendant was hired by the property manager for the estate of Jacques Montrevil to remove the estate’s administrator and to complete the sale of property located at 3215 Church Avenue in Brooklyn that was owned by the estate. On November 6, 2006, an amended contract of sale for that property was executed between representatives of the estate and Stephen Falcone, the prospective purchaser. The defendant was present at the signing of the contract and accepted the $70,000 down payment from the buyer, made payable to himself.

    The next day, the defendant deposited the check into his escrow account and wrote a check for $65,500 from the account. At the closing of the property in 2008, the defendant did not turn over the funds to complete the sale on that day or any point thereafter.

    The defendant was previously convicted in 2013 of second-degree grand larceny for stealing more than $400,000 from another client. In that case, he was hired in December 2005 to represent the estate of Charles Brown for the sale of his property located at 302 St. James Place, in Brooklyn. The defendant sold the property for $650,000, netting $411,082.50, which belonged to Mr. Brown’s estate. The defendant deposited the money into his own escrow account, and then into three of his own bank accounts through March 2006.

    Justice Garnett, who presided over both of the defendant’s jury trials, ordered his sentences to run consecutively and ordered him to pay $70,000 and $411,082.50 in restitution to both victims.(1)

    The defendant surrendered his law license prior to his first trial.
Source: Former Attorney Who Stole Nearly $500,000 From Clients To Spend From Six to 18 Years in Prison (Defendant Convicted In Two Separate Incidents, Sentences Ordered to Run Consecutively).


(1) To seek some reimbursement for being screwed over, the victims here might be able to turn to the  The Lawyers’ Fund For Client Protection Of the State of New York, which manages and distribute 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 bar acting as an attorney or a fiduciary.

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

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.

Wednesday, July 01, 2015

Fresno Feds Bag Attorney For Alleged Misrepresentations Made In Connection w/ Proposed Short Sales Of Two Investment Properties; Accused Of Making Short Sale Offers To Lenders Thru Entity He Created & Controlled, Naming Friend As Registered Agent To Conceal Retained Ownership Interest

From the Office of the U.S. Attorney (Fresno, California):
  • Robert Farrace, 51, of Modesto, was indicted [] on three counts of wire fraud in connection with a fraudulent short-sale scheme, United States Attorney Benjamin B. Wagner announced.

    According to the indictment, Farrace was an attorney specializing in real estate transactions. He owned two investment properties in Modesto with substantial mortgage loans. In early 2010, he received foreclosure notices for the two properties. Farrace then created an entity called “Dignitas LLC” that he controlled but used a friend’s name as the company’s registered agent to conceal his control.

    Through Dignitas, Farrace submitted short sale offers to the bank that serviced the loans on both properties. During the process, Farrace misrepresented his relationship with Dignitas, and because the servicing bank did not know of the true relationship, it went forward and completed one of the short sales. The other sale was stopped by law enforcement and the bank.

    This case is the product of an investigation by the Federal Housing Finance Agency–Office of Inspector General, the Federal Bureau of Investigation, and the Stanislaus County District Attorney’s Office. Assistant United States Attorney Michael G. Tierney is prosecuting the case.

Underwater Homeowner Gets 15 Months, Forfeits Home To Feds For Duping Lender Into Taking $400K+ Bath In Connection w/ Fraudulent Short Sale; Hid Secret Agreement To Regain Title From Straw Buyer; Submitted Phony "Hardship Letter" & Remained Silent On Availability Of Funds From Pending Sale Of Other Realty; Co-Conspirator R/E Agent Gets 21 Months For Role As Orchestrator

From the Office of the U.S. Attorney (Fresno, California):
  • Agustin Simon, 53, of Patterson, was sentenced [...] to 15 months in prison for conspiring to commit bank fraud, United States Attorney Benjamin B. Wagner announced. Simon also was ordered to pay restitution to financial institutions in the amount of $421,372 and to forfeit to the United States all rights, title and interest he had in a Patterson home that was the subject of his fraud scheme.

    According to court documents, beginning in or around March 2010, Simon, with the assistance of his real estate agent, undertook a short-sale of Simon’s home [...] to the real estate agent’s son. Simon submitted to Tri Counties Bank and Freddie Mac false and fraudulent short-sale applications, and caused these financial institutions to approve the charge-off of funds for the short-sale of Simon’s home.

    In these applications, Simon did not disclose that he provided the buyer with the full purchase price of the home ($355,000). Simon also made false statements to the lenders regarding his hidden agreement with the buyer that Simon would regain ownership of his home following the short-sale, and also misrepresented his ownership of other real estate and assets.

    Simon’s real estate agent, Minerva Sanchez, 48, of Freemont, was charged in a separate indictment for her role in the scheme. On February 17, 2015, Sanchez was sentenced [...] to 21 months in prison.(1)

    “Agustin Simon and his real estate agent, Minerva Sanchez, acted together to willfully exploit and abuse the short sale process, which was designed to assist legitimately distressed homeowners,” said Leslie DeMarco, Special Agent in Charge, Federal Housing Finance Agency Office of Inspector General. “Such selfish acts of fraud will not go undetected or unpunished. Our office, along with our law enforcement partners, is committed to protecting taxpayers, and thus the integrity of the short sale process, and ensuring that real estate professionals maintain the highest ethical standards.”

    This case was the product of an investigation by the Federal Housing Finance Agency-Office of Inspector General and the Internal Revenue Service-Criminal Investigation. Assistant United States Attorney Christopher Baker prosecuted the case.
Source: Patterson Man Convicted Of Fraudulent Short Sale Scheme Sentenced To Prison And Ordered To Forfeit House.

(1) See Real Estate Agent Sentenced To Prison For Fraudulent Short Sale Scheme:
  • [W]ith Sanchez’s knowledge, [homeowner Augustin Simon] provided the straw buyer with the full purchase price of the home ($355,000). Sanchez provided [Simon] with a “hardship letter” for him to use in connection with the short-sale application, which misrepresented the seller’s inability to make his monthly mortgage payments. In fact, Sanchez knew that [Simon] could make his monthly mortgage payments with proceeds from a pending sale of other real property he owned.

    Sanchez, along with [Simon] and straw buyer, made other misrepresentations to the financial institutions in connection with the short-sale, including false statements that the transaction was “arm’s length,” and false statements concerning the parties’ hidden agreement that the seller would provide the straw buyer with the purchase money for the short-sale and ultimately regain ownership of his home following the short-sale. In her plea agreement, Sanchez admitted that her criminal conduct caused the financial institutions to lose more than $316,000.

Another Attorney Bagged In Middle Of Alleged Real Estate Ripoff; Pensacola Feds Say Suspected Handiwork Includes Possible Embezzlement Of Money Held While Acting As Fiduciary, Then Laundering The Loot

From the Office of the U.S. Attorney (Pensacola, Florida):
  • Richard Michael Colbert, 54, of Pensacola Beach, was charged by a federal grand jury with 15 felony counts, including one count of conspiracy to commit bank fraud and/or mail fraud affecting a financial institution, four counts of false statement to a federally insured financial institution, one count of theft, embezzlement or misapplication by a person connected with a financial institution, and nine counts of money laundering. The indictment, [...] was announced by Pamela C. Marsh, United States Attorney for the Northern District of Florida.

    The indictment alleges that Colbert, while the manager of Beach Title Services, a subsidiary of Beach Community Bank, participated in a scheme to defraud and obtain money and/or property by fraudulent means from federally insured financial institutions. As a part of the scheme, Colbert allegedly signed and submitted false settlement statements to Bank of America and Beach Community Bank. The indictment also alleges that Colbert signed and submitted a false settlement statement to the now defunct GulfSouth Private Bank, so former builder Lawrence Wright could obtain a loan.

    The indictment further alleges that Colbert, while acting as an escrow agent for Beach Community Bank, embezzled and misapplied funds being held at Beach Community Bank.(1) Thereafter, Colbert allegedly conducted a series of financial transactions thereby laundering the embezzled funds.
Source: Gulf Breeze Attorney Indicted for Bank Fraud and Money Laundering Charges.

See also: Northwest Florida Daily News: Financial scheme leads to another indictment:
  • Gulf Breeze attorney Richard Michael Colbert became the third local man charged by federal authorities for his alleged involvement in a real estate scheme to steal from local banks.

    Michael “Sean” Davis, the former president of Crestview’s Premier Community Bank of the Emerald Coast, pleaded guilty in March to a handful of crimes he committed as part of the same scheme. Davis is scheduled for sentencing July 20.

    Lawrence Allen Wright of Niceville was also tied to the scam, which ran from 2006 until 2011, court records say. Wright is serving a 75-month prison sentence for fraud and theft of his ex-wife’s identity.

    Colbert “was not and never was a bank employee or officer,” wrote Beach Community Bank President Tony Hughes in an email. “We uncovered his alleged embezzlement in October 2011,” Hughes wrote. “We immediately terminated him, notified law enforcement, and closed down the title company. We have been cooperating with the criminal investigation ever since.” Hughes added he wouldn’t be surprised to see more indictments in the case.

(1) If the alleged ripoff, if proved, resulted from a direct and current lawyer-client relationship with the bank, the Florida Bar's Clients' Security Fund may make some reimbursment as a result of the loss suffered due to the misappropriation or embezzle­ment.

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..

Tuesday, June 30, 2015

Fair Housing Act "Disparate Impact" Claims Survive Supremes; Proof Of Intent To Discriminate Unnecessary In Establishing Whether Housing Policies Have Substantially Greater Negative Effect On Protected Groups

From a story by National Public Radio:
  • Civil rights groups won a victory Thursday, as the Supreme Court ruled that claims of racial discrimination in housing cases shouldn't be limited by questions of intent.

    The court affirmed a Court of Appeals decision in a case in which a nonprofit group, the Inclusive Communities Project, said that the Texas Department of Housing and Community Affairs had contributed to "segregated housing patterns by allocating too many tax credits to housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods."

    The 5-4 ruling endorses the notion of citing disparate impact in housing cases, meaning that statistics and other evidence can be used to show decisions and practices have discriminatory effects — without proving that they're the result of discriminatory intentions.

    "Justice Anthony Kennedy surprised many legal experts by siding with the court's four liberals," NPR's Carrie Johnson reports. "Business groups had long sought to limit lawsuits over the 1968 Fair Housing Act."

    Reacting to the ruling, Attorney General Loretta Lynch says, "While our nation has made tremendous progress since the Fair Housing Act was passed in 1968, disparate impact claims remain an all-too-necessary mechanism for rooting out discrimination in housing and lending."

    The majority wrote, "Recognition of disparate-impact claims is consistent with the FHA's central purpose" of ending discriminatory practices in housing.

    The justices wrote, "These unlawful practices include zoning laws and other housing restrictions that function unfairly to exclude minorities from certain neighborhoods without any sufficient justification."

    But the dissenting justices say that Thursday's ruling creates a legal liability that wasn't intended in the original 1968 law. [...]