Sunday, April 30, 2017

NJ Bar Announces 'Last Call' For Claims From Victimized Clients Ripped Off By 15 Recently-Disciplined Attorneys

From the Office of the New Jersey Courts:
  • Daniel R. Hendi, director of the [New Jersey] Lawyers’ Fund for Client Protection, has announced that any person who intends to file a claim with the fund against any of the attorneys listed below must file prior to the deadlines listed.

    The fund’s purpose is to pay on behalf of the honest majority of [New Jersey-licensed] lawyers for the wrongdoing of a few.(1) For a claim to be eligible, the attorney against whom it is filed must have been a member of the bar, acting as either attorney or fiduciary, at the time of the incident; and unless deceased, must have been disbarred, suspended or placed on disability inactive status from the bar, or convicted of embezzlement or other misappropriation of property. The attorney’s conduct giving rise to the claim must have been dishonest rather than negligent.

    The issuance of the Supreme Court’s determination to suspend or disbar an attorney activates the fund’s jurisdiction to receive claims against that attorney. There is a one-year deadline after the discipline is issued to the attorney for clients to file claims. The client’s claim does not need to be included in the ethics determination to be compensable. Discipline of the attorney does not guarantee compensability for any specific claim. Attorneys can be disciplined for conduct other than misappropriation.

    An individual client can receive up to $400,000. The fund can provide up to $1.5 million in claims against a lawyer.

    To receive a claim form, write to the New Jersey Lawyers’ Fund for Client Protection, Richard J. Hughes Justice Complex, P.O. Box 961, Trenton, NJ 08625-0961, or call 855-533-FUND (3863). The form must be completed, notarized and returned with copies of any proof of the transaction. There is no filing fee. Claimants assisted in their claims by practicing attorneys receive their representation free of charge.

    Any person having a claim that has not been filed involving the following attorneys must file a claim with the New Jersey Lawyers’ Fund for Client Protection prior to the deadline dates indicated below:

    NAME        COUNTY OF PRACTICE       DEADLINE

    Buckley, Christopher J., Hudson, October 21, 2017
    Collins, John J., Hudson, October 21, 2017
    Field, Arthur M., Out of State (FL), November 10, 2017
    Kusnirik, Andrew Michael III, Mercer, November 7, 2017
    Malanga, Anthony F. Jr., Union, October 20, 2017
    Mandale, Michael Z., Out of State (PA), December 7, 2017
    Noonan, Gregory R., Camden, October 14, 2017
    Paragano, John O., Union, December 16, 2017
    Rubin, Merrill N., Out of State (NY), December 7, 2017
    Scher, William G., Passaic, November 9, 2017
    Sison, Victor G., Hudson, December 16, 2017
    Smith, Nestor, Atlantic, November 4, 2017
    Suarez-Silverio, Arturo S., Essex, November 1, 2017
    Tosi, Lawrence G., Passaic, November 1, 2017
    Weichsel, John L., Bergen, December 16, 2017
Source: Lawyers’ Fund for Client Protection Announces Deadlines for Claims.
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(1) For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

With Probation About To Expire, Broke Ex-Lawyer Who Got Off Easy After Fleecing Clients Out Of Over $1 Million Now Seeks To Beat State's Client Security Fund Out Of $200K Reimbursement He Owes For Money It Shelled Out To His Theft Victims

In Woburn, Massachusetts, the Wilmington Patch reports:
  • A disbarred Wilmington attorney, who served time for swindling clients out of more than $1 million, begged a court official for a probation hearing so he can get out from under more than $200,000 in restitution he is supposed to pay before his probation expires.(1)

    Former attorney Michael F. Germano, 53, of Wilmington, told Middlesex Clerk-Magistrate Michael Sullivan on Wednesday [March 29] that he is in "dire straits'' having lost "everything'' since he pleaded guilty in 2014 to a scheme with his former Boston law partner Peter Lagorio to create" false victims'' of a 2006 ink-plant explosion in Danverport and other cases, then pocketing the settlement payments.

    None of the actual victims of the blast were impacted by this scheme.

    In January of 2014, Germano pleaded guilty to a total of 17 counts of embezzlement, uttering, larceny, conspiracy, and attempted larceny. He was sentenced to one year in jail with six months to serve and the balance suspended for three years while he is on probation. He was ordered to pay restitution.

    The Massachusetts Bar Association used money from its victims' compensation fund to repay the victims of the two lawyers,(1) but Probation Department says Germano was ordered to repay the fund about $200,000.

    Some money has been paid over the years, but a large amount is still owed and cannot be repaid before Germano's probation ends. Prior to a 2016 decision by the state's highest court, judges would either extend a defendant's probation until restitution is paid or invoke the remainder of the jail sentence.

    The state Supreme Judicial Court ruled that defendants can't be held hostage by unpaid restitution.(2)
Source: Disbarred Wilmington Attorney Pleads for Probation Hearing (Michael F. Germano says financially he is in 'dire straits').
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(1) In Massachusetts, the Client Security Fund is a fund established by the state Supreme Judicial Court (and financed by a portion of the annual fees paid by each member of the bar) to provide at least some reimbursement to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the Massachusetts bar acting as an attorney or a fiduciary.

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.

(2) See Commonwealth v. Henry, 475 Mass. 117, 55 NE 3d 943 (Mass. 2016):
  • [W]e invoke our superintendence power to declare that a judge may not extend the length of probation where a probationer violated an order of restitution due solely to an inability to pay.[6],[7]
Editor's Note: In footnotes 6 and 7 of the court's decision in Commonwealth v. Henry, the court elaborated on this mandate:
  • [6] A judge remains free to revoke probation or to extend the term of probation where a probationer violates a condition of probation by willfully failing to pay a restitution amount he or she had the ability to pay. See Bearden v. Georgia, 461 U.S. 660, 668 (1983) ("If the probationer has willfully refused to pay the fine or restitution when he has the means to pay, the State is perfectly justified in using imprisonment as a sanction to enforce collection"); Commonwealth v. Avram A., 83 Mass. App. Ct. 208, 212-213 (2013).

    [7] We acknowledge that extending the length of probation in such circumstances has not been recognized to be in violation of Federal constitutional law. See Bearden, 461 U.S. at 674 (where defendant on probation is unable to pay fine, court may extend time for payment).

Client Protection Fund Files Lawsuit To Recover $285K That It Shelled Out To Reimburse Losses Suffered By Fleeced Former Clients Of Disbarred Lawyer

In Edmonton, Alberta, the Edmonton Sun reports:
  • The Law Society of Alberta is suing disbarred lawyer Shawn Beaver to recover money he lost through misuse of client trust accounts.

    The society is seeking a judgement to compel Beaver to pay over $400,000 to cover trust safety insurance payments made to Beaver's former clients and debt accrued through his business.

    Beaver was stripped of his licence to practise law in February after a disciplinary hearing found he had misappropriated money that clients had entrusted to him.

    The Law Society of Alberta — the professional association that disbarred Beaver — operates an insurance policy that paid money to Beaver's former clients.(1) In a statement of claim filed in late March, the society claims Beaver needs to pay back $285,491.11 to cover the misappropriated funds.

    Allegations made in the statement of claim have not been proven in court.

    Beaver is also being sued for allegedly racking up $135,795.91 with Bank of Montreal through a guarantee, an operating loan and a corporate Mastercard account.

    The society paid Bank of Montreal a valuable consideration to take over Beaver's debt in November 2015.
For more, see Shawn Beaver sued by Law Society of Alberta for misused client money.
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(1) The Alberta Lawyers Insurance Association (ALIA) is a wholly-owned subsidiary of the Law Society of Alberta (the organization that regulates lawyers in the province of Alberta, Canada), created to manage the insurance program for Alberta lawyers. It administers both professional liability claims made against the lawyers, as well as client claims from those members of the public who have sustained a financial loss by theft, embezzlement, etc. caused by the dishonest conduct of any lawyer practicing in the province. All lawyers in private practice in the province must purchase mandatory insurance coverage through ALIA. Excess coverage is voluntary and is available through the Canadian Lawyers Insurance Association.

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

Connecticut Feds Catch Up With Sleazy Ex-Lawyer, Bagging Him For Allegedly Swiping $900K+ From Clients In Connection w/ Real Estate Deals; Defendant Recently Responded To Three Grievance Complaints By 'Voluntarily' Relinquishing Law License & Moving To Michigan In Lieu Of Bar Boot

From the Office of the U.S. Attorney (New Haven, Connecticut):
  • Deirdre M. Daly, United States Attorney for the District of Connecticut, today [April 7] announced that THOMAS M. MURTHA, 61, of Newtown, has been charged by a federal criminal complaint with wire fraud related to his alleged theft of more than $900,000 from victims.

    MURTHA was arrested on April 5, 2017, in Michigan. He appeared before U.S. Magistrate Judge Patricia T. Morris in Bay City, Michigan, and was released on a $10,000 bond.

    As alleged in the criminal complaint, MURTHA operated a law practice under the name Maher & Murtha LLC in Bridgeport. Beginning in approximately August 2015, MURTHA defrauded five victims of a total of more than $900,000. As part of the scheme, MURTHA made materially false statements to induce one victim to invest more than $600,000, purportedly for real estate investments. He also was retained to handle real estate transactions on behalf of other victims and, instead of remitting funds to the appropriate parties, converted the funds to his own use.(1)

    The complaint further alleges, in December 2015, MURTHA told the victim of his real estate investment scheme that he needed an additional $100,000 to purchase a $1.5 million commercial property in Bethel, and that a buyer would purchase the property in four to six months to convert it to condominiums. After the victim wired the money, MURTHA used the funds in connection with the purchase, in his own name, of a $725,000 house in Birmingham, Michigan.

    In September 2016, MURTHA resigned from the bar after three grievance complaints were filed against him.
Source: Attorney Charged with Defrauding Clients.
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(1) In Connecticut, the Client Security Fund is a fund established by the rules of the Connecticut Superior Court to provide reimbursement to individuals who have lost money or property as a result of the dishonest conduct of an attorney practicing law in the State of Connecticut, in the course of the attorney-client relationship. The fund provides a remedy for clients who are unable to obtain reimbursement for their loss from any other source.

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.

Indiana Supremes Apparently Apply Modified 'No Harm, No Foul' Approach In Refusing To Disbar Lawyer For Misappropriating Trust Account Funds, Then Lying About It & Submitting Falsified Records; Give Partially-Stayed 180-Day Hand-Slap Instead, Finding No Criminal Intent, No Financial Losses For Any Client, Corrective Measures Taken Upon Discovery Of Depth Of Mismanagement

In Indianapolis, Indiana, The Indiana Lawyer reports:
  • An Indianapolis attorney accused of mismanaging trust funds for both himself and other attorneys and clients has been suspended from the practice of law in Indiana for 180 days [with 90 days actively served and the remaining time stayed subject to completion of at least one year of probation, including trust account monitoring by a certified public accountant].

    According to the disciplinary order handed down Wednesday [March 29], Tarek E. Mercho of Indianapolis law firm Mercho Caughey “misappropriate funds from his attorney trust account over a period of several years, making dozens of disbursements of client funds for purely personal purposes.” On at least two occasions, Mercho disbursed funds that were held in trust for another attorney and that attorney’s client.

    After the Indiana Supreme Court Disciplinary Commission began an investigation into Mercho’s conduct, the attorney made false statements to the commission and submitted a client ledger with false entries to extricate himself from the disciplinary process, the order says. Both the commission and the hearing officer found that Mercho had violated Professional Conduct Rules 1.15(a) and 8.1(a) and Admission and Discipline Rules 23(29)(a)(4)(2016) and 23(29)(1)(5)(2016) in connection with the funds mismanagement and his dishonesty during the investigation.(1)
For the story, see Supreme Court suspends attorney for mismanaging funds.
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(1) According to the disciplinary order:
  • The hearing officer also appears to have credited other evidence tending to reflect the absence of criminal intent, including that no clients ultimately were denied funds or services and that Respondent took corrective measures upon discovering the depth of his trust account mismanagement.

Saturday, April 29, 2017

Water & Power Shutoff At Student Housing Owned By Bill-Stiffing, Rent-Skimming Landlord Facing Foreclosure Results In Over 20 Pittsburgh College Students Facing Final Exams Into Untimely Move

In Pittsburgh, Pennsylvania, WTAE-TV Channel 4 reports:
  • The shutoff of water and electricity service to the Pittsburgh Athletic Association building in the city's Oakland section has forced more than 20 student tenants to move out of their rental apartments. The PAA's ongoing hard times are making for some tough times for those students, with University of Pittsburgh finals just two weeks away.

    PAA is facing potential mortgage foreclosure and sheriff's sale of non-real-estate property and it's several million dollars in the red.

    "It's been crazy. The water was shut off last week and then the electricity was shut off on Monday. And we've had to move out, Nicholas Logan, a PAA tenant told Pittsburgh's Action News 4. Logan is a soon-to-be-graduating Pitt senior, who has been living in a PAA rental apartment for about a year.

    "We decided this is unfit for us to live here. It's just unlivable," said Louis Cherry, a Pitt sophomore who has lived in a PAA apartment for two semesters.

    "The morning that the water went out, I went to take a shower and it wouldn't turn on. So I went downstairs and they said it would be on the next day. And that seems to be what they say every day is, it will be on the next day," Logan said.

    "We could do without the water for the time being, because we have resources on campus for that. The electricity just hit it home," Cherry said.

    "When the electricity went out, I was in the middle of doing homework, and then it turns off," Logan said.

    PAA owes nearly $60,000 in unpaid Allegheny County drink and hotel taxes, more than $300,000 in Pennsylvania taxes, and more than $500,000 in federal taxes.

    Pittsburgh Athletic Association officials did not respond to Pittsburgh's Action News 4 requests for comment.
Source: New PAA troubles: water and electricity shutoff forces 20+ student tenants to move out (The shutoff of water and electricity service to the Pittsburgh Athletic Association building in the city's Oakland section has forced more than 20 student tenants to move out of their rental apartments).

Provo Apartment Complex Housing Poor & Mental Health-Disabled Tenants The Latest Target Of Another Gentrifying Landlord; New Owner Wastes No Time Announcing Renovation Plans, Giving Everyone 30 Days Notice To Pack Their Bags & Get Out

In Provo, Utah, KSTU-TV Channel 13 reports:
  • Thirty days. That's all the time 42 tenants of the Brigham Apartments in Provo have to pack up all they have and move out of their homes.

    New owners of the building want to renovate it and likely turn it over to student housing.

    That means dozens of people who are disabled or who otherwise depend on affordable housing have nowhere else to go.

    Some city leaders say this shines light on a bigger issue of the lack of affordable housing in Provo and Utah County.

    “You have people who have lived here for 30 years, and now we're all being displaced,” said William Boyce, who has lived at the Brigham Apartments in Provo for almost 3 years.

    Three days ago, Boyce got a notice on his door telling him he has 30 days to pack up all he has and leave his home. “I cried like a baby, I cried like a baby," he said. "We had no forewarning, it was just taken away from us, nobody knew."

    A new owner bought the building and is now doing a complete renovation. “They're going to displace a lot of low-income people just so they can make more money after the renovation,” Boyce said.

    Boyce, along with a dozen other tenants, are on Section 8 housing, which is the federal government’s major program for assisting very low-income families, the elderly and disabled with housing.

    The rest of the other 30 people who live at the apartments were placed in the there by Wasatch Mental Health.(1) Now all are being forced to leave.

    “Very concerned because these are the people that need the help the most, and 30 days is just not enough time,” said Robert Vernon, Executive Director of Provo Housing Authority.

    The move is getting attention from city leaders and nonprofit groups.

    “I can only imagine what it would be like to get notification like this, to find housing in a community where housing is very difficult to find,” said Ann Rosine with Ability 1st Utah.(2)

    Year by year, affordable housing in Provo is disappearing. “It has been a trend and it continues and it is very concerning,” Vernon said.

    In the last two years, Provo Housing Authority says six Provo apartment complexes that housed Section 8 tenants have been converted to house students.

    Mark Robbins has been the building manager at Brigham Apartments for 12 years and will leave when the tenants do. He's offering to help anyway he can because most of the tenants don't have cars. “I have a pick-up truck and a trailer, so I’m offering to move their belongings as well,” Robbins said.
Source: Low-income Provo residents given 30 days to vacate; complex to become student housing.
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(1) Wasatch Mental Health is a comprehensive community mental health center offering an array of programs and services for children, teens and adults in both Utah and Wasatch Counties.

(2) Ability 1st Utah a private, non-profit, non-residential facility that provides services to individuals with disabilities of any age and any type of disability to promote independence in their chosen community environment. It provides Independent Living Services in the Utah, Juab, Wasatch and Sanpete County areas.

Failed Septic System, Other Life Safety & Health Violations Force Code Enforcement Officials To Boot Over 30 Poor Residents From Motel In Foreclosure; Most Residents Described As Either "Homeless" Or "In Transition" w/ "Nowhere Else To Go"

In Moultonborough, New Hampshire, The Laconia Daily Sun reports:
  • Some 20 adults and a dozen children who had been living at the Rodeway Inn were displaced last week after the owner was ordered to repair or replace the failed septic system or cease operations by April 14.

    Town Administrator Walter Johnson said Monday [April 17] that Don Cahoon, the code enforcement officer, has raised concerns about the property for some time. In March, when sewage was found flowing onto the ground, he ordered the owner to begin pumping immediately in anticipation of repairing or replacing the system. When the Board of Selectmen met [], Johnson explained that, along with the failed septic system, there are “numerous life safety and health code violations” at the property.

    Although it is permitted for use as a motel, Johnson said it appeared to be operating like an apartment building, contrary to land use regulations.

    Johnson said that in addition to ensuring the septic system is approved, the state Department of Environmental Resources said the property owner must also address the life safety, health code and land use issues before the cease-and-desist order will be lifted.

    Describing herself as a manager of the property, Patricia Brennan, who lives at the motel with her children, told the selectmen that most of the residents are either “homeless” or “in transition” with “nowhere else to go." Some of the children, she said, are attending school in Moultonborough.

    The owner, she said, is Pakistani, with limited proficiency in spoken English, who “does not understand the law at all.” On Monday a man at the motel who described himself as the “manager” declined to comment on the situation beyond saying that “most of tenants have left.”

    Brennan said that the owner has secured $20,000 to forestall foreclosure proceedings scheduled for May 5 and has received estimates of between $15,000 and $20,000 to address the septic system. She said he indicated he has the financing and is prepared to proceed with the work.

    Brennan suggested that the owner misunderstood the order issued ordered in March and believed he was that by pumping sewage weekly until March 24 he was in compliance. She asked the selectmen to permit her to remain on the property to protect the building from vandalism and safeguard the belongings of the tenants.

    “I’m sympathetic to what’s going on here,” said Chris Shipp, who chairs the selectboard. “I understand the human side of it.”

    He was echoed by Selectman Josh Bartlett, who said, “I hate to be hard on the folks living there,” and acknowledged the “chronic shortage of low-cost housing in this town.”

    However, Selectman Joel Mudgett stressed “We have to back up code enforcement. We do. We do.”

Living Conditions Stink For Lot-Leasing Homeowners In 'Sewage-Impaired' Mobile Home Community; Residents Finger Crappy Lift Station As Cause Of Sewer Back-Ups While Out-Of-State Landlord Blames Them For Using Toilets To Dispose Of 'Non-Flushable' Items (ie. Socks, Baby Wipes, Golf Balls, Etc.)

In Jacksonville, Florida, First Coast News reports:
  • In the Ortega Village mobile home community some of the residents are renters and the others are homeowners. But behind its attractive entrance there's an ugly problem.

    "It is nasty and makes my skin crawl," said Kameelah Haywood.

    It happens so often, residents have to remove the sewer clean out cap to get the stench and sewage out of their homes.

    "It is disgusting and it has been going on too long," she said. Haywood rents in Ortega Village. And like some of her neighbors she has experienced the sewer back ups. "I've been here a year and it has probably been five times where we have had sewage backed up into my toilet, and into the tub," she said.

    In the past management would dispatch plumbers, she said, but it would happen again and whatever they did was temporary. "It is my neighbor and the other neighbor, it is three of that I know of," Haywood said.

    Recently, the Mobile Home Park Management notified residents by flyer, "we are experiencing high volume of sewer back up due to non- flushable items...." The flyer identified those items as Socks, Shirts, Baby Wipes, golf balls, grease, etc.

    "I'm not putting any of those things down the drain so why would I have that problem?" Haywood asked.

    She and the other neighbors believe the problem is with the park's lift station. Haywood pays $650 a month in rent and said all she wants is a sanitary place she can call home.

    "I feel it is their problem they should take care of it," she said, "put me in another trailer or take care of the problem permanently."

    The community is operated by Michigan Based RHP properties and Bayshore Home Sales. Neither the corporate office nor the local management team responded to our request for comment.

    We have reported it to the Duval County Health Department and they're reviewing to see it this situation comes under its jurisdiction.

Poor Tenants With Nowhere To Go Stay In Unsafe, Dilapidated New Orleans Apartment Building In Foreclosure While Rent-Skimming Slumlord Allows Complex To Crumble

In New Orleans, Louisiana, WWL-TV Channel 4 reports:
  • Some residents in a New Orleans East apartment complex are in tears over how bad their living conditions have become.

    Some of the things you’d see in this apartment building at 6000 Chef Menteur Highway are things you might expect to see in a condemned building, but people are still living here.

    "We have children back here we have no where to go,” Winesha Wright said through tears. “Once these people tell us we have to go we have nowhere to go… It's stressful that's why I'm crying."

    She’s not alone. Other residents said they’re living with roaches, mold and trash strewn around the complex. They’re complaints have gone no where.

    One resident showed us how her overflowing toilet may have sent her neighbor’s sister to the hospital. "She was sitting the bathroom and the ceiling fell,” Rose Walker said.

    Hannah Adams is the attorney representing the injured tenant.

    "This property is in foreclosure it was actually seized by the Sheriff in February," Adams said. She’s contacted the apartment’s owners, but has struggled to get anything fixed. "Unfortunately the penalties for landlords to make repairs are very minimal,” Adams said.

    While the property is in foreclosure, it still belongs to Graham Packard LLC. We contacted Dan Packard, who came up as a registered agent and officer. His lawyer called us back to say that it’s an ongoing legal matter and that they had no comment at the time.

    "We living in danger right now,” Another tenant said. “I mean he got everybody money we just here I'm due July I'm almost 7 months pregnant I can't be living like that."

    Besides repairs, residents aren’t even sure who to pay anymore.

    "He was telling us to send him the money … don't worry about the these notices,” Wright said as she examined a notice left in her mailbox. "We are calling out for help. Each and every one of us have kids. Where are we supposed to go if they give us 24 hours? I'm trying to figure out where we are supposed to go."

    Many of the people we spoke with said they’re planning to move, but it can’t happen overnight.

Health Care Operator Announces Plans To Close Nursing Home, Leaves Over Three Dozen Elderly Patients Scrambling For New Places To Live, 70 Employees Out Of Work, Local Business Leader Looking For New Owner To Keep Facility Open

In Crandon, Wisconsin, WXPR Radio 91.7 FM reports:
  • Residents at the Crandon Nursing Home, family members and social workers are scrambling to find new places for elderly patients to live.

    Mark Ferris, Executive Director of the Forest County Economic Development Partnership says it's a crisis for the community.

    AGI Healthcare, owners of the nursing home, notified city and county officials [] that the facility will be closed. 38 residents live there, and the home employs 70 people. Ferris described the home as a "vital" employer in the community. The exact date for the closing hasn't been confirmed.

    "We are now dealing in a crisis, emergency situation that leaves very little wiggle room to keep the nursing home open," Ferris said in a statement. "We understand there can be business issues, but we believe this decision was in place long before we were notified."

    Efforts to find a new owner have started, including contacting community members, in efforts to keep the nursing home open.

Friday, April 28, 2017

Facing At Least 135 Indictments For Allegedly Ripping Off Over Two Dozen Homeowners Trying To Rebuild Their Flooded Homes, Sleazy Contractor Proclaims Innocence, Says Customer Disputes Are "A Civil Matter, Not A Criminal One!"

In Baton Rouge, Louisiana, WAFB-TV Channel 9 reports:
  • The attorney for a man accused of dozens of charges of contractor fraud has released a statement following his latest round of charges.
  • Mr. Morris is innocent of the criminal charges against him. This is a civil matter, not a criminal one, and many of the complaining witnesses are actively involved in civil litigation with Complete Construction Contractors. Unfortunately, the criminal charges will delay the resolution of the civil matters. Mr. Morris has agreed to remove all civil liens as a sign of good faith, but law enforcement has not responded to this offer. Mr. Morris is currently being held without bond in Ascension, and is being bounced parish to parish to be denied fair bail.
  • -Bloom Legal, LLC
  • [Matthew] Morris, 39, is the owner of Complete Construction Contractors. He is accused of taking money from people who were rebuilding their flooded homes. But rather than completing the work, they claim he gave them excuses as to why he couldn’t complete the job.

    The first round of criminal charges were filed by the Ascension Parish on Wednesday, Feb. 8. His bond was set at $635,000.

    After his initial arrest, officials with Crime Stoppers released that Morris was also facing charges from the Baton Rouge Police Department, the Livingston Parish Sheriff’s Office, and the Walker Police Department.

    On Monday, April 10, an Ascension Parish grand jury returned 84 indictments of fraud and other charges related to cases involving 18 alleged victims.

    "Mr. Morris is a multi-parish nightmare of a crook and a creep who can't stand a day going by without him once again trying to ruin somebody's life at their most vulnerable time," said Ascension Parish Sheriff Jeff Wiley.

    Two days later, a Livingston Parish grand jury returned 51 indictments for fraud and other charges that related to eleven alleged victims.

    The next day, Morris was moved again. This time he was booked into the East Baton Rouge Parish Prison.

'Crappy Businessman' Defense Gets The Boot; Initially Dodging Slammer In Exchange For Agreement To Pay At Least $1K/Month To Three Homeowners He Screwed Out Of $17,900, Sleazy Contractor Gets Shipped To State Prison To Serve 3 1/3 To 10 Years After He Violated Probation By Stiffing Victims Out Of Promised Monthly Restitution Payments

In Lockport, New York, The Buffalo News reports:
  • Joseph J. Lloyd, a Southtowns contractor with a long history of defrauding clients, will serve 3 1/3 to 10 years in state prison for failing to repay his victims.

    "In the words of Nobel Prize-winning poet Bob Dylan, 'Some men rob you with a fountain pen,' and you fall into that category," Niagara County Judge Matthew J. Murphy III told Lloyd.

    Lloyd had pleaded guilty last year to taking money from three women for home improvement jobs and not doing any work. He was placed on probation by State Supreme Court Justice Christopher Burns, on the condition that he make restitution payments of at least $1,000 a month, but he did not do so.

    The probation violation case was heard in Niagara County because Lloyd, 45, had moved to Niagara Falls by the time he pleaded guilty before Burns, and was being supervised by the Niagara County Probation Department. However, Lloyd later moved back to West Seneca.

    Lloyd's attorney, Alfonso M. Bax, pointed out that if Lloyd is in prison, he can't make any more payments until he gets out and finds a job. That didn't faze one of his victims, Jenny White of Blasdell.

    "I think he should go to jail for the greater good of the public," White said after the court session. Lloyd still owes her about $12,700.

    Two other victims in the case were from Orchard Park. Lloyd was ordered last May to repay the three clients a total of $17,900.

    "It stinks right now that the victims won't get repaid, but they weren't getting repaid anyway," said Erie County Assistant District Attorney Christopher P. Jurusik, who was allowed to take over the prosecution's arguments before Murphy.

    "I don't usually come to other counties, even when probation is transferred to other counties, but this case cries out for justice," Jurusik told the judge.

    He said Lloyd "lacks a moral compass. He lacks decency. He's got to go away."

    "My client is guilty of not being a very good businessman," Bax said. "He got in over his head, no question. ... My client needs to work for someone else. He can't manage his own funds."

    Bax said Lloyd was working as a union carpenter after his guilty pleas to first-degree scheming to defraud and third-degree grand larceny. He lost that job after a hospitalization for "renal disorders" and publicity about his case, but Bax said Lloyd found another construction job.

    Lloyd said he had repaid $2,150 since his last court date Jan. 17. "I'm working very hard," he said. "I've made mistakes. I admit to that."

    But Murphy said the repayments were "too little, too late." "I think you are a con artist whose felony convictions didn't stop you from committing more crimes," Murphy told Lloyd.

    Jurusik said the home improvement charges were a byproduct of a probe by Erie County's Special Investigations and Prosecutions Bureau into a snowplowing service in which Lloyd signed contracts with dozens of property owners in eight Erie County communities and never plowed any snow for most of them.

    He said that case resulted in a civil settlement brokered by the State Attorney General's Office in which Lloyd was ordered to repay about $40,000.

Pool Contractor Avoids Two Years Prison Time After Admitting To Pocketing Total Of $17,800 From Two Homeowners, Then Never Delivering Promised Services; Allowed To Remain Free On Probation Provided He Pays Full Restitution Over 24 Months & Does Not Accept Prepayments On Any New Jobs

From the Office of the New Hampshire Attorney General:
  • New Hampshire Deputy Attorney General Ann M. Rice announces that Douglas Ring, 43, of Charlestown, NH pleaded guilty today [April 5] in Cheshire County Superior Court to 2 class-A misdemeanor charges of Theft by Deception.

    In June 2015, Mr. Ring, doing business as Riverside Pools and Spas of Claremont, NH, accepted a $12,000 deposit from a customer to order and install an in-ground swimming pool. Mr. Ring did not order the pool and instead used the deposit money to pay bills and expenses. When the customer asked for a refund, Mr. Ring lied and told the customer that the pool had been ordered and was on the truck for delivery. He did not provide any amount of refund to the customer.

    In a separate incident, Mr. Ring accepted a $5,800 deposit from a customer in July 2015 to order and install a spa. He did not order the spa and instead used the deposit money to pay bills and expenses. Mr. Ring deceptively told the customer that the reason the spa was not delivered was because the spa company was experiencing a shortage in staff and long delays in production. Mr. Ring did not provide any refund to the customer. Riverside Pools and Spas closed in August 2015.

    Pursuant to a negotiated plea agreement, Mr. Ring was sentenced to 2 concurrent sentences of 12 months in the House of Corrections, both suspended for 2 years and 2 years of probation. The sentences are suspended conditioned on Mr. Ring remaining of good behavior, fully paying restitution to the victims and not accepting prepayments for any goods not yet delivered or services not yet rendered.

Thursday, April 27, 2017

Feds Bag Attorney Who Accepted Position As Housing Authority Legal Counsel For Allegedly Hiding Conflict Of Interest That He Was Also A Local Landlord Pocketing HUD Financial Benefits From His Section 8 Tenants; Defendant Collected $380K In Federally Subsidized Rent: Indictment

In Hagatna, Guam, The Guam Daily Post reports:
  • Former Guam Housing and Urban Renewal Authority legal counsel Mark Smith denied to the GHURA board any financial interest that conflicted with his role with the agency, but an indictment alleged that he did have a conflict, which he tried to disguise through a series of allegedly fraudulent bank and real estate transactions.

    In March 2011, Smith executed a contract with GHURA to serve as its legal counsel, and "falsely certified to GHURA he had no conflict of interest that would prevent him from serving as its legal counsel," according to the indictment, filed on March Monday [March 22] in the District Court of Guam.

    Smith, a former brother-in-law of Gov. Eddie Calvo, was arrested Monday [March 22] along with Smith's friend, flight attendant Glenn Wong, on a host of charges including 25 counts of wire fraud, and additional counts of theft of government property and money laundering as part of a conspiracy.

    As the legal counsel to GHURA, Smith was forbidden from gaining any financial benefit as landlord to households whose rent is paid through GHURA's federally funded Section 8 housing voucher program, according to the indictment.

    The indictment alleges Smith, in part through Wong, received almost $400,000 in Section 8 payments as landlord to the program GHURA administers.

    To conceal his landlord role and the financial payments to his rental properties, Smith and Wong created real estate transactions to make it appear that Smith had sold his rental units to Wong, according to the indictment. Bank transactions, however, showed that the Section 8 rent payments to Wong wound up in Smith's accounts, the indictment alleges.

    After GHURA found out sometime after March 2011 that Smith did have a conflict, the local housing agency tried to ask the U.S. Housing and Urban Development to give Smith a waiver of his conflict, but HUD denied the request, GHURA has confirmed.

    HUD provides GHURA with more than $30 million a year for the Section 8 housing vouchers of thousands of qualified Guam households who can't pay rent on their own.

    Smith served as GHURA legal counsel from May 2011 until he resigned in May 2013, said GHURA Executive Director Mike Duenas. He said he's not sure when Smith became Gov. Eddie Calvo's brother-in-law.

    The federal investigation into the questioned payments to Smith has become a long, drawn-out experience for GHURA, which was the subject of more than a dozen subpoenas, and a raid in June last year by a team of federal authorities.

    "The joint HUD-Office of Inspector General and FBI investigation has been an arduous, 20-month process for all GHURA employees," Duenas said. "We look forward to the resolution of this case when the trial is completed."

    'Heightened awareness'

    As a result of this investigation, Duenas said, "GHURA management and staff have developed a heightened awareness of our personal responsibility to disclose any real or potential conflict of interest." GHURA employees have also benefited from the ethics and conflict-of-interest awareness workshops presented by HUD-OIG and the FBI agents last year, he said.

    Smith, as landlord under the Section 8 program, directly received $98,665 in federal funds between April 2011 and January 2012, and while serving as GHURA's legal counsel.

    Between March 2012 and May 2014, Smith and Wong caused GHURA to directly deposit approximately $281,122 in Section 8 funds into Wong's bank account during Smith's term as legal counsel with GHURA and one year thereafter, according to the indictment.

    In addition to facing a possible prison sentence if convicted, the federal government is also seeking the forfeiture of cash, real estate and other assets "derived from or traceable to" the alleged crimes.

Public Housing Employee Admits To Pocketing Bribes From About A Dozen Low-Income Applicants For Section 8 Rent Subsidies, Allowing Them To Bypass Lottery System & Immediately Qualify For Benefits

From the Office of the U.S. Attorney (Fresno, California):
  • Aryca Danieyelle Williams, 38, of Fresno, pleaded guilty today [March 20] to two counts of extortion under color of official right, U.S. Attorney Phillip A. Talbert announced.

    According to court documents, Williams was a Housing Program Coordinator at the Fresno Housing Authority from 2007 through 2013. The Fresno Housing Authority is a state agency responsible for administering federal housing benefits programs, such as the Section 8 housing choice voucher program.

    To obtain housing benefits, applicants must put their names in a lottery system, which is supposed to randomly award benefits to qualified applicants. As a Housing Program Coordinator, Williams was responsible for managing the files of housing assistance applicants.

    She solicited bribe payments from housing authority applicants and promised to switch their names with the names of individuals who had been legitimately selected to receive housing benefits. In switching the names, Williams enabled the applicants to bypass the lottery system and immediately qualify to receive housing benefits.

    The bribe payments received by Williams included a $1,150 payment to her landlord and a $500 payment to her utility company. In total, Williams received bribe payments from 10 to 12 housing applicants.

Housing Authority Employee Gets 30 Days Jail Time For Squeezing Bribes From Low Income Tenants In Exchange For Making Them Eligible For Section 8 Rent Subsidy Benefits

In Hagatna, Guam, The Guam Daily Post reports:
  • A former employee of the Guam Housing and Urban Renewal Authority will serve 30 days in prison for receiving bribes from low-income housing assistance applicants.

    During a sentencing hearing yesterday before Judge Michael Bordallo of the Superior Court of Guam, Antonia Mayo-San Nicolas, 54, was sentenced to one year and one day imprisonment for each count of receiving a bribe. However, the judge ordered the suspension of all but 30 days of Mayo-San Nicolas' sentence.

    After serving her sentence, the former GHURA employee will be under probation for three years. She was ordered to pay a $10,000 fine.

    Court documents state Mayo-San Nicolas was one of three co-defendants, including Albert Buendicho and Mattos Johnson, who were named in a grand jury indictment concerning Mayo-San Nicolas' receipt of bribes while employed as a Section 8 housing specialist with GHURA.

    According to Post files, Mayo-San Nicolas was arrested and charged with accepting bribes after agents from the Office of the Inspector General of U.S. Housing and Urban Development and the FBI were informed by GHURA's Executive Director Michael Duenas that she solicited a bribe from a Section 8 recipient.

    The agents interviewed the Section 8 recipient in question, Tanya Dominguez, who stated that on Dec. 16, 2015, she went to GHURA's office in Sinajana to meet with Mayo-San Nicolas. Her landlord, Buendicho, was present and took part in the meeting between her and Mayo-San Nicolas.

    Mayo-San Nicolas offered to help Dominguez "fix" her taxes in order to continue qualifying for Section 8 assistance and charged Dominguez $350 for her services. Mayo-San Nicolas reportedly told Dominguez that she knew someone at the Department of Revenue and Taxation and could "make everything go away" if Dominguez paid Mayo-San Nicolas $300. The amount was later increased to $350. Post files state it was apparent that Dominguez believed the payment was legitimately for assistance with her taxes so that she could continue to receive Section 8 housing assistance.

    When questioned by special agents, Mayo-San Nicolas admitted that she received a bribe from Dominguez and others between 2014 and 2015.

    Buendicho initially denied having knowledge of the bribe between Mayo-San Nicolas and Dominguez. However, Post files indicate he eventually said he did witness Mayo-San Nicolas solicit payment from Dominguez. Buendicho reportedly said he knew the solicitation was wrong.

    Buendicho was also charged in the 2016 indictment, including one count of guilt established by complicity to receive bribes as a third-degree felony, crimes against the community and one count of conspiracy as a second-degree felony.

    In December 2016, Buendicho entered into an agreement with the government and pleaded guilty to the charge of conspiracy as a second-degree felony. The court, however, deferred acceptance of Buendicho's guilty plea for two years.

    The third co-defendant, Johnson, 50, was the last to enter into a plea agreement.

    Court documents state Johnson pleaded guilty on March 7 to giving a bribe. His plea agreement states "he shall receive a sentence of incarceration of three years of probation, with credit for time served," in addition to being ordered to pay a $1,000 fine.

    Johnson was one of three Section 8 recipients or applicants who Mayo-San Nicolas received bribes from in exchange for promises to perform certification for Section 8 eligibility in her capacity as a Section 8 housing specialist. He was the only one of the three who pleaded guilty to knowingly giving Mayo-San Nicolas money.

Housing Authority Employee Pleads Guilty To Pilfering $91K From HUD Program That Assists Low Income Tenants Obtain Employment, Get Off Welfare Assistance

From the Office of the U.S. Attorney (Portland, Maine):
  • Acting United States Attorney Richard W. Murphy announced that Jamie Hussey, 35, of Gorham, Maine, pleaded guilty in U.S. District Court to committing federal program fraud.

    Court records show that between February 2014 and September 2016, the defendant embezzled over $91,577 from the South Portland Housing Authority (SPHA), an agency that that administers public housing units and that receives federal benefits each year under programs administered by the U.S. Department of Housing and Urban Development (“HUD”).

    The defendant was employed as the SPHA Resident Services Coordinator for the Family Self-Sufficiency Program (FSS), a program that promotes the development of local strategies to coordinate public and private resources that help public housing tenants obtain employment that will enable participating families to achieve economic independence. Under this program, a participant can earn monetary credits that are placed in an escrow account based upon the participant meeting certain goals. Upon successfully completing a FSS contract, a participant may claim funds in their escrow account if no family member is receiving welfare assistance.

    The defendant caused 48 checks to be issued in the names of FSS program participants and deposited into her personal bank account. None of the participants ever requested these checks, nor received any proceeds of the checks.

Wednesday, April 26, 2017

NY AG Official On Growing Deed Theft, Home Equity Ripoff Proliferation: "[Real Estate] Scammers Are No Longer Content w/ Stealing $5,000. Now They Want The Whole House!"

The Associated Press reports:
  • [A]round the U.S., deed theft has emerged as one of the most sophisticated and devastating frauds ever to menace homeowners. Foreclosure "rescue" scams that have stolen thousands of dollars from individual homeowners in the years since the housing collapse have been pushed by savvy perpetrators to their limit. They use lies to convince the desperate to sign over their title, then force them into homelessness or a years-long legal battle.

    "The scammers are no longer content with stealing $5,000. Now they want the whole house," said Dina Levy, who heads the Homeowner Protection Program in the New York attorney general's office, which has spread word about deed theft and prosecuted culprits.

    Although there are no firm numbers on how many cases of deed theft have occurred, they have been reported around the U.S., particularly in markets that have rebounded from the housing crisis or in neighborhoods that are gentrifying.

    "It's growing, absolutely," said Kristen Clarke, who heads the Lawyers' Committee for Civil Rights Under Law, a nonprofit that has researched foreclosure-related fraud. "We're beginning to see these scammers operate in a far more bold way."

    — In San Diego, federal prosecutors netted a guilty plea and a six-year prison sentence last year for a man who forged deeds on at least 15 homes, then quickly sold them to the surprise of unwitting owners. The ringleader of what investigators called a "tangled web of deceit" netted about $2.2 million in the scheme. Buyers coaxed into purchasing the homes were left with worthless claims to titles.

    — In Detroit, the Wayne County Register of Deeds is looking to expand its mortgage and deed fraud unit to deal with a crush of cases. The problem is so severe the office runs a round-the-clock property fraud hotline and has a marked deed-theft patrol car used by investigators following up on tips. Investors in Kuwait, Australia and the United Kingdom looking to capitalize on Detroit's resurgence are among those who have been caught up in scams.

    — In Indianapolis, Crystal Francis, an attorney with Indiana Legal Services, tells of deed theft cases sprinkled throughout the area in recent years, with elderly people the preferred targets. One woman victimized by a scam while in the throes of a liver problem and dialysis treatment was overcome with shame. She couldn't muster the strength for a protracted legal fight, choosing to simply walk away from her longtime home and move in with a friend. "She was so discouraged," Francis said. "She just concluded it was too much."

    The problem has been gravest in New York, particularly the ever-pricier neighborhoods of Brooklyn. The New York sheriff's office has taken a lead on the cases and since 2014, the office has amassed more than 1,700 complaints, with hundreds under investigation, and some 32 arrests already tallied.

    The cases can take investigators years to solve. Sheriff Joseph Fucito points to a graphic of a single case, a snare of lines representing the three partners at the center of the probe, and their ties to 110 different companies and 189 properties. In this case, like many others, Fucito said the perpetrators did a mix of above-board and fraudulent business through a series of limited-liability companies, leaving it to detectives to pinpoint victims.

    "Some of it's legitimate, some of it's not legitimate, and we have to pick through it," Fucito said. "But all of it smells funny."

    The sheriff ticks off the ways the thefts happen, from opportunists cobbling together documents on vacant properties to those transferring the home of an unwitting family member into their name, to fake housing assistance businesses that prey on those in financial crisis.

    Cases in that final category are the hardest to prove, and the toughest to undo. Companies use misrepresentations to get a home signed over to them and often use licensed professionals to notarize and file legal documents.

    [...]
For more, see Foreclosure scams are stealing victims' homes (Around the U.S., deed theft has emerged as one of the most sophisticated and devastating frauds ever to menace homeowners).

Attorney Gets 1 To 3 Years In State Prison For Siphoning Off Nearly $600K In Real Property Sale Proceeds From Estate Of Deceased Brooklyn Judge

From the Office of the Kings County, New York District Attorney:
  • Acting Brooklyn District Attorney Eric Gonzalez today [April 20] announced that a Howard Beach attorney was sentenced to one to three years in state prison following his guilty plea earlier this year to second-degree grand larceny for siphoning off approximately $600,000 from an estate that he was hired to represent and using the funds for his personal expenses.

    Acting District Attorney Gonzalez said, “This defendant disregarded his duty to his client, stealing nearly all of the proceeds due to the estate of the beloved Hon. Judge Phillips, including from the sale of the historic Slave Theater. He’s now been held accountable for his brazen theft and shameful conduct.”

    The Acting District Attorney said that the defendant, Frank Racano, 54, of Howard Beach, Queens, was sentenced today by Brooklyn Supreme Court Justice Danny Chun to one to three years in prison and required to sign a judgment order or restitution for $587,160.56 payable to the estate of John Phillips, at the request of the District Attorney’s Office. Racano pleaded guilty to second-degree grand larceny in January.

    The Acting District Attorney said that between February 2013 and May 2015, the defendant stole approximately $587,160.56 from the estate of New York City Civil Court Judge John L. Phillips, Jr., who died unmarried, childless and without a will on February 16, 2008.

    The Acting District Attorney said that, according to the investigation, on January 16, 2009, Samuel Boykin, a nephew by marriage, successfully petitioned the Kings County Surrogate to be appointed administrator of the estate.

    In early 2010, Boykin hired Racano, a licensed attorney, to assist in the sale of the estate’s real estate holdings, which included the Slave Theater, located at 1215-1217 Fulton Street in Bedford-Stuyvesant and 10 Halsey Street, a vacant lot behind the theater. In 2012, the properties went into contract for a total of $2.2 million and the buyer paid the estate a down payment of $220,000. That check, payable to “Frank Racano, as attorney,” was deposited into the defendant’s attorney trust checking account.

    Kings County Surrogate Diana Johnson approved the sale of the properties on December 19, 2012. On February 25, 2013, at the closing for the properties, the buyer’s attorney paid closing expenses and taxes that were owed on the property. The net proceeds of the sale, $517,339.65, were paid to the estate in two checks payable to “Frank Racano, as attorney.”

    Racano deposited those two checks into his trust account, thus the total proceeds from the sale of the properties credited to the estate should have been $737,339.65. Between February 2013 and May 2015, Racano paid estate expenditures for tax assistance and other services totaling $150,179.09. During this same period, he wrote and cashed over 300 checks to himself in amounts ranging from $45 to $7,500, without authorization from the estate or the Court and completely depleted the account, stealing a total of $587,160.56.(1)
Source: Attorney Sentenced to State Prison for Stealing Almost $600,000 From the Estate of Deceased New York City Civil Court Judge (Stolen Funds Include Proceeds from Sale of Historic Slave Theater in Bedford-Stuyvesant).
----------------------------
(1) In New York, the Lawyers' Fund for Client Protection was created to provide a source of, at least partial, reimbursement to clients who have suffered monetary losses at the hands of dishonest lawyers licensed and practicing in the state.

According to their website, typical losses reimbursed by the Lawyers' Fund include the theft of estate and trust assets, escrow deposits in real property transactions, settlements in personal injury litigation, debt collection receipts, money embezzled in investment transactions with law clients, and unearned fees paid in advance to lawyers who falsely promise their legal services.

Perhaps the best of all the attorney ripoff reimbursement funds in the U.S. in terms of its payout limits, the Fund places a $400,000 maximum limit, per law client loss, on awards from the Fund, fixed by regulation of the Fund's Trustees. There is no aggregate maximum on awards involving one lawyer.

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.

Cops Pinch Real Estate Broker For Allegedly Fleecing Clients Out Of Nearly $100K; Money Intended For Closing Funds For Two Victims' Home Purchases

In Bay City, Michigan, mlive.com reports:
  • The former owner of a Bay City real estate firm has been charged with embezzling tens of thousands of dollars from his clients.

    Ivan L. Miller II, 48, on Wednesday, April 19, voluntarily appeared before Bay County Chief District Judge Dawn A. Klida for arraignment on single counts of embezzlement between $50,000 and $100,000 and larceny by conversion more than $20,000. The former charge is a 15-year felony, while the latter is punishable by up to 10 years in prison.

    Authorities issued a warrant for Miller's arrest on Tuesday [April 18]. Miller was the owner of Top Producers Real Estate.
    ***
    According to police reports contained in court files, officers began investigating Miller in February. Patricia M. Windiate-Kusch, a broker with Top Producers, visited the Bay County Law Enforcement Center on Feb. 24 to file a larceny complaint against Miller. She told police that Miller contacted her on Feb. 21 and said he "did something very bad."

    Windiate-Kusch went on to say Miller had told her he had received a check for a property closing at in the 500 block of Handy Drive in Bay City, had the purchaser sign it over to him and then he deposited the funds into Top Producers' general account. When Windiate-Kusch asked him what he did with the funds, he replied, "I spent them," she told police.

Georgia Man Pleads Guilty For Abusing Power Of Attorney To Fleece Elderly Mom Out Of Over $100K, Then Stiffing Nursing Home Out Of $40K+ For Her Care, Leaving Her Facing Eviction; Avoids Jail Time, Gets 8 Years Probation After Repaying Substantially All Of Pilfered Loot

In Augusta, Georgia, The Augusta Chronicle reports:
  • An Augusta man accused of exploitation of an elderly person by using money set aside for his mother’s care pleaded guilty Wednesday [April 19] to reduced charges.

    John B. Weigle Jr. pleaded in Richmond County Superior Court to eight counts of misdemeanor theft by deception. Judge John Flythe accepted the negotiated sentence and sentenced him to serve eight years on probation and to pay $1,600.

    Assistant District Attorney John Bell told the judge that he agreed to reduce the felony charge against Weigle to misdemeanors because of Weigle’s lack of criminal history and because he has already paid more than $100,000 in restitution.

    Exploitation of an elderly or disabled person is a felony punishable by 1-20 years.

    An additional requirement of the plea negotiation is that Weigle will not serve a fiduciary role for his mother again.

    In 2012, Weigle assumed power of attorney for his mother, Bell said. He used that position to take money set aside for her care and used it for himself and his immediate family. Last year, his siblings learned about the misappropriation when they found out their mother was about to be evicted from her personal care home for, Bell said.

    According to an earlier report in The Augusta Chronicle, the home was owed $40,000.

    Defense attorney Jack Long told the judge that Weigle should have followed the practice of attorneys in setting up separate accounts for his own money and his mother’s. Instead he co-mingled the money.

    “He made a bad mistake,” Long said.

Tuesday, April 25, 2017

City of Cincinnati Declares War Against Nationwide Real Estate Investor Groups That Use "Predatory & Unconscionable" Contract For Deed, Rent-To-Own Arrangements To Peddle Dilapidated, Violation-Infected Money Pits To Poor, Unsophisticated, Credit-Impaired Homebuyers Desperate To Own A Home

In Cincinnati, Ohio, The New York Times reports:
  • In recent years, private investment firms sold foreclosed homes on high-interest installment contracts to poor Cincinnati residents who could not get traditional bank mortgages.

    Now, the city is cracking down, calling those who offer such deals “predatory” actors targeting the “unsuspecting and vulnerable.”

    In a sweeping lawsuit, Cincinnati took aim at one of the nation’s largest sellers of foreclosed homes, Harbour Portfolio Advisors, saying that the firm owes more than $360,000 in unpaid fines, fees and violation notices. The firm failed to properly maintain dozens of homes, the city claims, leading in one case to a child’s testing positive for lead poisoning.

    Cincinnati’s move against Harbour follows a series of articles in The New York Times last year that detailed how the new market has become a money trap for many poor families. Lucy Morris, a lawyer for Harbour, declined to comment on the litigation.

    The lawsuit against Harbour, which is based in Dallas, is the first of several that Cincinnati plans to file against out-of-state firms that acquired rundown homes in the wake of the housing crisis and then resold them at inflated prices without making repairs.

    “We are planning more litigation,” said Jessica Powell, chief counsel in the Cincinnati Law Department. Her department has set its sights on firms with “even more egregious business practices,” she added, without naming specific companies.

    In the wake of the 2008 housing crisis, opportunistic investors swooped in with hopes of profiting on tens of thousands of blighted homes across the country.

    Investment firms like Harbour scooped up the run-down, foreclosed homes at bargain prices, selling them to families who could not get conventional mortgages but were desperate to own homes.

    Harbour sold its homes through an arrangement similar to an installment payment plan, with a high-interest, long-term loan called a contract for deed, or land contract. But what begins as a dream of homeownership for many residents can end quickly when a payment is missed and the buyer is swiftly evicted.

    Cincinnati is seeking to prevent Harbour from selling additional homes to investors until the firm remedies all the outstanding building code violations at the properties it is selling.

    Harbour, city lawyers said, has been selling “substandard” homes to buyers in Cincinnati who often default on the contracts because they cannot pay for the repairs or keep up with the monthly payments.
    ***
    According to the lawsuit, Harbour’s contracts are “predatory and unconscionable” in part because the firm sells homes for up to five times the price it paid for them and holds the title to the residence until the final payment is made — which rarely happens.

    When the contracts for deed fall through, Harbour “churns the property through the process anew,” often to a new prospective homeowner.
    ***
    Harbour was not alone in buying cheap homes in need of major repairs and selling them through contracts for deed. Another national player, Vision Property Management, which is based in Columbia, S.C., and also operates in Cincinnati, has sold homes in rent-to-own deals that require tenants to make property repairs.
    ***
    Keeping tabs on the number of homes sold through contracts for deed or rent-to-own deals is difficult because the transactions are not always recorded.
For the story, see Cincinnati Sues Seller of Foreclosed Homes, Claiming Predatory Behavior.

For the lawsuit, see City of Cincinnati v. Harbor Portfolio Advisors LLC.

See, generally, The Housing Trap (In the wake of the housing crisis, low-income families have turned to seller financing to buy homes but these deals can be a money trap).

Court OKs $50 Million Settlement In Lawsuit Accusing Notoriously Sleazy Bankster With Clipping Nearly 300,000 Financially Strapped Homeowners With Inflated Charges For Broker Price Opinions In Connection With Foreclosure Process

In Oakland, California, Bloomberg Law reports:
  • Wells Fargo & Co. agreed to pay $50 million to settle a class-action lawsuit by almost 300,000 homeowners who claimed they paid inflated fees for a broker service required on delinquent mortgages at risk of foreclosure.

    The deal won final approval on April 11 by U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, the law firm Baron & Budd said Monday [April 17] in a statement. The homeowners will get about $120 each — more than double the fee markup they paid for so-called broker price opinions, the law firm said.

    The settlement comes as the bank continues to manage the fallout from a scandal over millions of fake deposit and credit- card accounts, which has put pressure on the lender by discouraging potential customers and fueling costs related to compliance. The lender’s embattled community bank, where the scandal emanated, weighed on overall first-quarter results, leading the bank to miss analysts’ estimates last week.

    “While we believe our practices related to broker price opinions were proper and disagree with the claims in the lawsuit, we have agreed to settle the matter to avoid further litigation,” the San Francisco-based bank said in a statement emailed by spokesman Tom Goyda.

    The lawsuit, filed in 2010, covered behavior that took place from 2005 to 2010, according to court filings. Banks use price opinions from real estate brokers when they’re assessing actions to take on a delinquent mortgage, including possible foreclosure. The plaintiffs alleged that Wells Fargo fraudulently concealed charges for marked-up opinions.

    The settlement was announced in October.

Appeals Court Slaps Sneaky Bankster For Legally Baseless Attempt To Glom Rental Income From Condo During Foreclosure Action

In Miami, Florida, the Daily Business Review reports:
  • Deutsche Bank National Trust went beyond the scope of its complaint when it "sequestered" rental income from a condominium in foreclosure, Florida's Third District Court of Appeal found.

    The bank foreclosed on investment property belonging to North Miami-based borrower UV Cite III LLC in 2016. While the case was pending, it moved to require that the defendant deposit into the court registry all rent from tenants occupying the Sailboat Cay condo. At trial after a hearing, Deutsche Bank succeeded on a motion to have UV Cite deposit rents into the court registry. It later won release of all funds in the registry as the prevailing party.

    But the borrower objected, arguing the trial court lacked subject matter jurisdiction and had provided more relief than Deutsche Bank sought in its complaint.

    "There wasn't a whole lot [of precedent] about whether you could sequester rent without pleading it," UV Cite's attorney, Todd L. Wallen of Wallen Hernandez Lee Martinez, said. "If you're going to seek a remedy … you need to plead it. You need to give notice that you're seeking that remedy, and you have to have a basis for it."

    Deutsche Bank's three-count complaint sought to foreclose on the mortgage and reform the mortgage and deed, but had no cause of action for the rent. It also sought no judgment for the rent, and provided no evidence of a rent assignment agreement.

    "Because the rent was not the subject of Deutsche Bank's lawsuit, and there was no other basis for sequestering the money, the trial court had no authority to order that the rent UV Cite collected from its tenant be deposited in the registry of the court," Third DCA Judge Robert Luck wrote in a unanimous decision with Judges Kevin Emas and Thomas Logue.

    Rent assignments are common in commercial mortgages, where lenders see them as a safeguard in case of loan defaults. These assignments allow lenders to collect the income generated from offices, retail properties and other commercial buildings, but are rare in residential mortgages, according to Corona Law Firm founder Ricardo Corona, who was not involved in the litigation.

    In this case, UV Cite III used the condo as an investment property, but the suit was a residential foreclosure.

    "What the bank did in this case … we've seen banks try to do in other cases," Corona said. "It's meant to pressure the borrower, because they don't have that cash flow."

    The state appellate court suggested both parties presented too little information at trial, as neither side cited cases that show a trial court's jurisdiction over money not claimed in the complaint.

    "We reverse because absent an agreement between the parties to assign rents, or some form of injunctive relief, a trial court has no authority to order a deposit of money into the registry of the court if the money was not the subject of the litigation," Luck wrote.
Source: 'Sequestering' Condo Rental Income Improper Without Pleading, Appeals Court Rules (may require subscription; if no subscription, TRY HERE, then click the appropriate link).

For the court ruling, see UV Cite III, LLC v. Deutsche Bank Nat'l Trust Co., No. 3D16-2341 (3d DCA, April 12, 2017).

Monday, April 24, 2017

After Settling Consumer Feds' Lawsuit For $2.1 Billion In 2013, Notorious Bankster Refuses To Clean Up Its Act; Now Gets Slammed With 20+ New Enforcement Actions/Lawsuits By States, Feds Over Similar Charges Revolving Around Alleged Flagrant & Repeated Mortgage Servicing Abuses; Wall Street Responds By Driving Down Defendant's Stock Price By 54%

The New York Times reports:
  • Federal and state regulators unleashed a fusillade of lawsuits and enforcement orders on Thursday [April 20] against the Ocwen Financial Corporation, a large mortgage servicer, aimed at curbing what they said had been years of flagrant and repeated abuses, including illegal foreclosures, deceptive fees and extensive mishandling of customers’ home loan payments.

    Some of the regulatory orders directly questioned Ocwen’s ability to continue operating, and the market responded accordingly: Shares of the company fell 54 percent, closing at $2.49 per share.(1)

    Twenty-two state mortgage regulators filed enforcement orders intended to limit or freeze Ocwen’s ability to acquire new mortgage loans to service in their states. Servicing a loan involves billing customers and funneling payments to the lender; Ocwen, which is not a bank, specializes in doing so for subprime mortgages — home loans issued to people with less-than-stellar credit.

    Wall Street’s mishandling of subprime home loans was a major catalyst of the 2008 financial crisis, in which Ocwen was a player, scooping up troubled loan portfolios to service. But the latest round of accusations stems from activity in recent years.

    In a statement, Ocwen said it was “proud of its corporatewide commitment to a culture of integrity, transparency, compliance and service.”

    The state regulators, however, said the company was failing at some of its most basic duties and needed to be stopped.

    Among the many actions taken against Ocwen on Thursday, the Consumer Financial Protection Bureau [lawsuit here] and Florida’s attorney general filed lawsuits accusing the company of making sloppy mistakes at nearly every stage of the collections process, inflicting frustration and millions of dollars in added costs on borrowers trying to pay back their home loans.

    Ocwen denied the charges, calling them “inaccurate and unfounded.”

    This is Ocwen’s second major run-in with the consumer bureau. In 2013, the company agreed to pay $2.1 billion to settle a similar set of accusations.

    At the time, the company pledged to reform, but instead it has “continued to fall down on the job for borrowers,” said Cara Petersen, a lawyer at the consumer bureau.

    More than 580,000 customers have complained to Ocwen about errors in the last two years, according to the consumer bureau. Some of the company’s “systemic and significant” mistakes cost its customers their homes, Richard Cordray, the bureau’s director, said in a news conference.

    Ocwen, which collects payments from 1.4 million borrowers on mortgage debt of more than $200 billion, said it would review the state regulators’ orders. It intends to fight the consumer bureau’s lawsuit and called it “an unfortunate example of overreaching.”

    [...]
For more, see Regulators Accuse Subprime Mortgage Servicer of Years of Abuses.

See also:

a) Here's a detailed breakdown of Ocwen's new restrictions by state (A deeper dive reveals what Ocwen can and can’t do going forward).

b) The CFPB Just Sued a Crooked Mortgage Servicer, but Indicted Itself (The lawsuit against Ocwen is welcome, but should have happened four years ago):
  • The picture that emerges from the 93-page [CFPB] lawsuit, based on internal audits, company e-mails, third-party reviews by investors and consultants, and employee testimony, is that Ocwen has no ability to execute the basic functions of mortgage servicing.
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(1) See Ocwen shares plunge 54% after suit over 'botched' lending practices.

Recent Lawsuit Allegations Against Sleazy Loan Servicer: Nothing New - Just More Of The Same

A recent story in The National Law Review summarizes the charges leveled at mortgage loan servicer Ocwen Financial Corporation and its subsidiaries in a recent lawsuit filed by the Consumer Financial Protection Bureau:
  • Use of Inaccurate and Incomplete Information to Service Loans. According to the CFPB, Ocwen entered inaccurate and incomplete data in its proprietary servicing system and failed to manage known error-causing problems with the system itself. These alleged practices may have contributed to alleged improper foreclosures, mishandling of loss mitigation applications, misapplication of borrowers’ payments, inaccurate billing amounts and fees and charges, incorrect delinquency statuses, and inaccurate negative credit reporting.

    Improper Foreclosures. The Bureau alleges that Ocwen brought foreclosure proceedings against at least 1,000 individuals in cases where Ocwen did not review borrowers’ loss mitigation applications, where borrowers were complying with a loss mitigation agreement, and where time remained in periods that Ocwen had granted to borrowers for them to provide additional information. Allegedly, some of these proceedings involved foreclosure sales.

    Improper Billing and Misapplication of Payments. According to the CFPB, Ocwen repeatedly misapplied borrowers’ payments and failed to correct billing and payment errors. The Bureau also alleges that Ocwen repeatedly failed to send statements including accurate amounts owed and information regarding how payments were received and applied.

    Escrow Account Mismanagement. The CFPB alleges that Ocwen mismanaged the escrow accounts for borrowers’ accounts by failing to conduct escrow analyses and send escrow statements, misapplying borrower payments, and subjecting borrowers to inaccurate costs. According to the CFPB, Ocwen also failed to make timely insurance payments as required for accounts managed with an escrow account, which caused 10,000 borrowers’ homeowners’ insurance to lapse, in some cases necessitating force-placed insurance.

    Subjecting Borrowers to Excess PMI Premiums. The Bureau alleges that Ocwen failed to cancel borrowers’ private mortgage insurance plans as required, which resulted in charging borrowers for $1.2 million in excess PMI premiums. Ocwen refunded these charges.

    Improper Enrollment of Borrowers in Add-On Products. The CFPB alleges that Ocwen enrolled some borrowers into add-on products—such as identity theft protection and credit monitoring—through misleading solicitations and charged borrowers for these products without proper consent.

    Mishandling of Successors to Deceased Borrowers. The Bureau alleges that Ocwen failed to identify and communicate with successors-in-interest of deceased borrowers, which may have impeded their ability to pursue loan modifications or other loss mitigation options. According to the Bureau, some of these instances reached the point of foreclosure sales.

    Inadequate Steps for Resolving Complaints. The Bureau alleges that Ocwen failed to reasonably investigate and make corrections in response to borrower complaints and notices of errors.

    Failure to Properly Transfer Information to New Servicers. According to the CFPB, Ocwen sold hundreds of thousands of mortgage servicing rights to other entities but allegedly failed to provide complete and accurate loan information to the new servicers or to notify new servicers of known errors.

Court Ruling In Wrongful Condo Foreclosure Case Raises Alarms In Hawaii As Some Fear HOAs May Have To Cough Up $taggering Damages To Hundreds Of Former Unit Owners

In Honolulu, Hawaii, Hawaii News Now reports:
  • Condo owners in Hawaii are raising alarms over a recent federal court ruling that found condo associations used the wrong part of the law to file hundreds of foreclosures, some going back nearly ten years.

    Those owners fear the ruling will force their condo associations to return millions of dollars to former owners, resulting in huge increases in monthly association fees.

    "It's not fair," said Harendra Panalal, who owns a condo in Waialua. His association foreclosed on two units several years ago using the same section of the state's foreclosure law. "The maintenance fees are almost $700, and is expected to go up substantially more. Many people will not be able to afford it."

    The condo associations themselves are also worried about the impact of the ruling.

    "Rulings against the associations will cause them to have to cough up to pay off hundreds of wrongful foreclosures," said Ian Lind, a condo owner and member of his condo board. "I would imagine you could see bankruptcies."

    U.S. District Judge Leslie Kobayashi ruled last month that it was illegal for an association to use a section of the foreclosure law, known as Part 1, that didn't adequately protect consumers.

    Kobayashi says associations should have instead used a separate section of the law, known as Part 2, which provided homeowners with more notice and an opportunity to address their defaults.

    Attorney Steve Chung, who won the case on behalf of an Ewa couple, says the potential damages are staggering.

    "We need to find out how many other homeowners have lost homes in this manner," Chung said. "We've identified close to 200 ourselves. I think you're talking about hundreds of millions of dollars (in damages) potentially."

    But David Major, who represented the association, believes the ruling is incorrect.

    "An association has the statutory right granted by the Hawaii Legislature in order to collect these amounts," he said.

    The legal dispute isn't done yet; the case is still pending, and there are a number of similar cases proceeding through the state courts before they end up in the appeals process.

Sunday, April 23, 2017

NYS Lawyers' Client Protection Fund Shells Out $9.2 Million To 155 Fleeced Clients Of 48 Sticky-Fingered (Or Dead) Lawyers In 2016; Amount Represents 4th Highest Payout In Fund's 34-Year History

The New York Law Journal reports:
  • The legal clients of dishonest New York lawyers received $9.2 million in reimbursement in 2016 from the state Lawyers' Fund for Client Protection, the fourth-highest payout in the fund's 34 years of existence.(1)

    The 155 awards were made last year to clients defrauded by 48 now suspended, disbarred or deceased lawyers, the fund said in its annual report.

    The only years when more money was paid out of the fund to defrauded clients were in 2015 ($12.3 million), 2000 ($10.5 million) and 1996 ($9.9 million).

    Fund executive director Timothy O'Sullivan said the awards, which averaged $12,800 last year, compensated the wrongdoing of a miniscule percentage of the 311,000 lawyers licensed by New York state.

    The illegal misappropriation of funds held in escrow for clients in real estate transactions and personal injury cases such as auto accidents and slip-and-falls was the most common misconduct for which lawyers' clients qualified for reimbursement last year, the fund reported.

    The fund is composed mainly of money accumulated by a $60 assessment on the $375 biennial registration fee on attorneys in New York.

    The fund provides no reimbursement for representation that does not involve fraud or other illegal activity by lawyers, such as fees for unsuccessful representation or poor investment advice.
Source: Fund Disperses $9.2M to Victims of Lawyer Fraud (may require subscription; if no subscription, GO HERE, then click the appropriate link).
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(1) In New York, the Lawyers' Fund for Client Protection was created to provide a source of, at least partial, reimbursement to clients who have suffered monetary losses at the hands of dishonest lawyers licensed and practicing in the state.

According to their website, typical losses reimbursed by the Lawyers' Fund include the theft of estate and trust assets, escrow deposits in real property transactions, settlements in personal injury litigation, debt collection receipts, money embezzled in investment transactions with law clients, and unearned fees paid in advance to lawyers who falsely promise their legal services.

Perhaps the best of all the attorney ripoff reimbursement funds in the U.S. in terms of its payout limits, the Fund places a $400,000 maximum limit, per law client loss, on awards from the Fund, fixed by regulation of the Fund's Trustees. There is no aggregate maximum on awards involving one lawyer.

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.

Markedly Depleted By Payouts To Victimized Clients Of Thieving Lawyers, Pennsylvania Supreme Court's Ripoff Reimbursement Fund To Receive $75 From Each State-Licensed Attorney (Up From $45) Out Of Annual Licensing Fees To Replenish Reserves

In a recent story on a scam ran by now-deceased, suicide-committing Pennsylvania lawyer Jeffrey Mottern,(1) who ripped off dozens of mostly-elderly clients out of over $11 million, the following excerpt described the current condition of the Pennsylvania Lawyers Fund for Client Security,(2) a fund designed to at least partially reimburse clients who have been the victims of theft, embezzlement, etc. by their lawyers practicing in the state:
  • Because of several cases of large misappropriation of funds by lawyers in this state in recent years, the fund's reserves are markedly down, [fund executive director Kathryn] Peifer Morgan said.

    As a result, the annual fee lawyers pay is being upped this year for the first time since 2009 by $25 to the highest it has ever been, $225. The share going into the lawyers fund to pay back victims of bad actor lawyers is increasing to $75 from $45 to help rebuild the fund.

    The fund limits the maximum payout to each victim to $100,000 and places a $1 million aggregate cap on all claims made against a lawyer. However, there is a provision that allows the lawyers fund board to ask the state Supreme Court to waive the $1 million cap. Peifer Morgan said the board agreed to make such a request for the Mottern victims.

    She estimates the total payout from the fund could top $4 million for those victims.
For the story, see Victims of dead lawyer's scam offered hope of recouping some money.
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(1) According to the story, Mottern committed suicide in his law office at the age of 62 three days after his office was raided by the FBI.

(2) 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.