Foreclosure Rescue - For Criminal Prosecutors Only
(original post 8-29-07)
For criminal prosecutors who are curious about what some of your colleagues are doing around the country in going after those engaged in fraudulent equity stripping arrangements that are typically structured as sale leaseback transactions, and are generally referred to as foreclosure rescue transactions, please feel free to look over the following summary of incidents that have resulted in criminal prosecutions:
1) The U.S. Attorney's Office in Tampa, Florida tried and convicted five individuals working together in foreclosure rescue scam stemming from a federal indictment alleging a scheme to cheat homeowners out of the equity in their homes and to defraud mortgage lenders. They were convicted of multiple counts of mail fraud, wire fraud, bank fraud, and false statements to a federally insured lender. It also obtained a guilty plea from a sixth member of the group. For more, see U.S. Attorney Press Release (3-29-07) - Tampa Federal Jury Convicts five Persons In Home Equity/Bank Fraud Scheme. For a copy of the grand jury indictment in this case, see Indictment - U.S. vs. Moumneh, et al.
2) The U.S. Attorney's Office in Los Angeles, California has obtained guilty pleas from four out of five members of a foreclosure rescue group that were accused of participating in a $12 million foreclosure rescue scam in which over 100 homeowners who were in default on their mortgages were promised refinancing, but ended up having their homes sold to others after the equity had been stripped. The fifth member of the group is currently awaiting trial (see 8-3-07 Findings & Order). The indictment reportedly alleged 19 counts of mail fraud and seven counts of aggravated identity theft. For more, see U.S. Attorney Press Release (7-20-06) - Three Defendants Added To Federal Indictment In Foreclosure Scam Targeting Homeowners In Default. See Stipulation To Continue Sentencing Hearing in connection with the four defendants pleading guilty - hearing set for December 17, 2007. For copy of plea agreement of one of the defendants, see Plea Agreement - U.S. v. Valenzuela.
3) The U.S. Attorney's Office in Sacramento, California obtained a guilty plea from a foreclosure rescue operator for bank fraud, and from two straw buyers for misprision of a felony in a scam where the operator admitted to a scheme in which he approached homeowners on the verge of having their homes foreclosed on by their mortgage lenders, promised to loan them money, and instead, he created documents deeding away their residential properties to the straw buyers who applied for financing from a mortgage lender, claiming falsely that they were the true owners of the properties and that there were no pending mortgages on the properties. For more, see U.S. Attorney Press Release (5-10-07) - Man Posing As Foreclosure Specialist Takes Advantage Of Homeowners To Rip Off Bank For Almost $1 Million. For a copy of the grand jury charges, see Indictment - U.S.A. vs. Christopher Craig, et al. For a copy of the plea agreement, see Plea Agreement - U.S.A. vs. Craig.
4) The U.S. Attorney's Office in Minneapolis, Minnesota obtained indictments of two individuals who were charged with one count of conspiracy, three counts of mail fraud, and one count of engaging in a financial transaction with criminally derived property. Among the allegations was a scheme to defraud homeowners who were either in foreclosure or behind on their mortgage payments. Specifically, they allegedly caused homeowners to refinance their homes and then stole some or all of the equity checks produced through the refinancing process. In some instances, the defendants also allegedly used physical intimidation to force homeowners to endorse equity checks over to them. The matter is currently being prosecuted. According to documents filed this month (August 2007), one of the defendants appears to have reached a resolution with prosecutors and a Change of Plea hearing has been scheduled on her behalf. For more, see U.S. Attorney Press Release (6-21-07) - Local Mortgage Broker and Assistant Indicted for Bilking Homeowners. For a copy of the grand jury charges, see Indictment - United States vs. Fiorito & Jerde.
5) For those prosecutors interested in a case where one of your colleagues successfully convicted a foreclosure rescue operator by first, proving that a foreclosure rescue, sale leaseback transaction should be recharacterized as a secured loan, and then proving that the "interest income" on the recharacterized loan exceeded the maximum amount of interest allowed by law, see Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988). This case should be of some interest to those in states that have usury statutes. See also:
Re: Metropolitan Money Store
In conclusion, I would be remiss if I didnt include a reference to a civil case currently being litigated in a Federal District Court in Maryland. The complaint, in which class action status is sought, reads a lot like a criminal indictment (ie. it uses words and phrases like, "illegal kickbacks and unearned fees", "false HUD-1s," "wire fraud" and "mail fraud", and that "the false HUD-1 Settlement statements were utilized to launder the money being paid to the RICO defendants for the purpose of evading taxes ..." etc.).
For a copy of the complaint, see Proctor, et al. v. Metropolitan Money Store, et al. - Case # 8:07-cv-01957-RWT (Does not include the 28 exhibits).
It can also be obtained by going here for direct links to the lawsuit (76 pages - $2.40) and the 28 accompanying exhibits (50+ pages - $.08/page) on the U.S. Courts' PACER website. PACER registration required.
In the alternative, you can drop me an e-mail at:
For criminal prosecutors who are curious about what some of your colleagues are doing around the country in going after those engaged in fraudulent equity stripping arrangements that are typically structured as sale leaseback transactions, and are generally referred to as foreclosure rescue transactions, please feel free to look over the following summary of incidents that have resulted in criminal prosecutions:
1) The U.S. Attorney's Office in Tampa, Florida tried and convicted five individuals working together in foreclosure rescue scam stemming from a federal indictment alleging a scheme to cheat homeowners out of the equity in their homes and to defraud mortgage lenders. They were convicted of multiple counts of mail fraud, wire fraud, bank fraud, and false statements to a federally insured lender. It also obtained a guilty plea from a sixth member of the group. For more, see U.S. Attorney Press Release (3-29-07) - Tampa Federal Jury Convicts five Persons In Home Equity/Bank Fraud Scheme. For a copy of the grand jury indictment in this case, see Indictment - U.S. vs. Moumneh, et al.
2) The U.S. Attorney's Office in Los Angeles, California has obtained guilty pleas from four out of five members of a foreclosure rescue group that were accused of participating in a $12 million foreclosure rescue scam in which over 100 homeowners who were in default on their mortgages were promised refinancing, but ended up having their homes sold to others after the equity had been stripped. The fifth member of the group is currently awaiting trial (see 8-3-07 Findings & Order). The indictment reportedly alleged 19 counts of mail fraud and seven counts of aggravated identity theft. For more, see U.S. Attorney Press Release (7-20-06) - Three Defendants Added To Federal Indictment In Foreclosure Scam Targeting Homeowners In Default. See Stipulation To Continue Sentencing Hearing in connection with the four defendants pleading guilty - hearing set for December 17, 2007. For copy of plea agreement of one of the defendants, see Plea Agreement - U.S. v. Valenzuela.
3) The U.S. Attorney's Office in Sacramento, California obtained a guilty plea from a foreclosure rescue operator for bank fraud, and from two straw buyers for misprision of a felony in a scam where the operator admitted to a scheme in which he approached homeowners on the verge of having their homes foreclosed on by their mortgage lenders, promised to loan them money, and instead, he created documents deeding away their residential properties to the straw buyers who applied for financing from a mortgage lender, claiming falsely that they were the true owners of the properties and that there were no pending mortgages on the properties. For more, see U.S. Attorney Press Release (5-10-07) - Man Posing As Foreclosure Specialist Takes Advantage Of Homeowners To Rip Off Bank For Almost $1 Million. For a copy of the grand jury charges, see Indictment - U.S.A. vs. Christopher Craig, et al. For a copy of the plea agreement, see Plea Agreement - U.S.A. vs. Craig.
4) The U.S. Attorney's Office in Minneapolis, Minnesota obtained indictments of two individuals who were charged with one count of conspiracy, three counts of mail fraud, and one count of engaging in a financial transaction with criminally derived property. Among the allegations was a scheme to defraud homeowners who were either in foreclosure or behind on their mortgage payments. Specifically, they allegedly caused homeowners to refinance their homes and then stole some or all of the equity checks produced through the refinancing process. In some instances, the defendants also allegedly used physical intimidation to force homeowners to endorse equity checks over to them. The matter is currently being prosecuted. According to documents filed this month (August 2007), one of the defendants appears to have reached a resolution with prosecutors and a Change of Plea hearing has been scheduled on her behalf. For more, see U.S. Attorney Press Release (6-21-07) - Local Mortgage Broker and Assistant Indicted for Bilking Homeowners. For a copy of the grand jury charges, see Indictment - United States vs. Fiorito & Jerde.
5) For those prosecutors interested in a case where one of your colleagues successfully convicted a foreclosure rescue operator by first, proving that a foreclosure rescue, sale leaseback transaction should be recharacterized as a secured loan, and then proving that the "interest income" on the recharacterized loan exceeded the maximum amount of interest allowed by law, see Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988). This case should be of some interest to those in states that have usury statutes. See also:
- Sale Leaseback Recharacterization As Loan Results In Criminal Conviction,
- Usurious Loans Masquerading As Sale Leasebacks?
Re: Metropolitan Money Store
In conclusion, I would be remiss if I didnt include a reference to a civil case currently being litigated in a Federal District Court in Maryland. The complaint, in which class action status is sought, reads a lot like a criminal indictment (ie. it uses words and phrases like, "illegal kickbacks and unearned fees", "false HUD-1s," "wire fraud" and "mail fraud", and that "the false HUD-1 Settlement statements were utilized to launder the money being paid to the RICO defendants for the purpose of evading taxes ..." etc.).
For a copy of the complaint, see Proctor, et al. v. Metropolitan Money Store, et al. - Case # 8:07-cv-01957-RWT (Does not include the 28 exhibits).
It can also be obtained by going here for direct links to the lawsuit (76 pages - $2.40) and the 28 accompanying exhibits (50+ pages - $.08/page) on the U.S. Courts' PACER website. PACER registration required.
In the alternative, you can drop me an e-mail at:
and I'll e-mail the complaint to you (sorry, no exhibits - be sure to put "Metropolitan Money Store" in the "Subject" line of the e-mail).
posted by Home Equity Theft Reporter at 8:01 AM
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