Some NY Attorneys In Hot Water For Real Estate Related Fraud

Eight lawyers or former lawyers from the Lower Hudson Valley have been charged, pleaded guilty, sentenced, or investigated by state or federal prosecutors in the past two months, according to an article in The Journal News, reported at nynews.com.

Among the lawyers in hot water is Pleasantville attorney Anthony Bellettieri, who is currently under a federal investigation in the theft of more than $10 million from real estate escrow accounts of clients. Further, J.P. Morgan Chase has sued him and his firm in December, saying $17 million was stolen through a check-kiting scheme. The attorney representing Bellettieri's law partners - Robert Fonte and Tara Anne Laudonio - claims that his clients are also victims in the case.

For the full story, see Lots of lawyers are making headlines, but as defendants.

For other recent attorney related investigations for real estate fraud, see:

• Lawyer Nailed In Shady "Cash Back" Land Deal
• Theft Of Client Funds Concerns Connecticut Bar Association
• Massachusetts Cops Probe Attorney Involvement In Loan Scams
• Attorney Charged With Theft of 300K+ Home Sale Proceeds
• Westchester DA Nabs Attorneys For Alleged Theft Of "Home Sale Proceeds"
• FBI Investigate NY Attorney For Alleged $600,000+ Theft Of Home Sale Proceeds

For other stories involving real estate related fraud by attorneys and closing agents, see this collection of reports at The Mortgage Fraud Blog, presented by The Prieston Group.
Go here for stories on other alleged escrow agent mishandling of funds. sneaky slick escrow agents alpha

$29 Million In Bad Loans In Chicago "Straw Buyer" Scam; Ringleader, 3 Appraisers Plea Guilty

Mohammad "Mike" Taghie Kakvand pleaded guilty in Chicago Federal Court Monday to one count of wire fraud in a mortgage fraud scam where units in 33 Chicago apartment buildings were sold off as renovated condominiums at artificially inflated prices using "straw buyers" who ultimately defaulted on $29 million in loans. A sentencing agreement with prosecutors has yet to be worked out. Sentencing is scheduled for May 9.

Bogus appraisals misrepresented the condition of the units as being rehabilitated when, in fact, no renovation had ever taken place. Real estate appraisers Thomas M. Groh, Eric L. Dorsey and Britt J. Pierre, have already pleaded guilty for their roles in the operation.

A fifth individual, Syed Ali Mohammed Razvi, was also charged in the fraud and is currently on the lam.

In addition to mortgage lenders such as Washington Mutual and Wells Fargo, the scheme victimized the community by reportedly

• displacing renters,
• leaving decaying, crime-plagued buildings,
• increasing real estate taxes on surrounding property owners as a result of the artificial inflation of home prices, and
• decreasing the amount of available rental housing.

To read more, see Guilty plea in mortgage scam, reported by the Chicago Sun-Times at suntimes.com.
.

Feds Probing "Cash Back" Scam Involving Over 60 Deals

Federal investigators in Minnesota are reviewing more than 60 real estate transactions handled by one former closing agent who, authorities say, prepared loan documents that overstated the purchase price of the properties, hid the overpayments from lenders, and allowed buyers to pocket the difference between the actual price paid and the inflated mortgage amounts (adding up to over $3 million).

The closing agent, Jill Lehn, who was the buyer in a half dozen of the transactions, will forego a criminal trial and instead, has pleaded guilty to one count of wire fraud and one count of money laundering in Minneapolis Federal Court. She is currently cooperating with investigators as the investigation continues while she awaits sentencing.

To read more, see the Star Tribune story, reported at StarTribune.com:

Mortgage scam nets $3 million
(A former Prior Lake closing agent has been charged in an investigation of 60 transactions with inflated purchase prices
.

Federal Lawsuit Alleges Racketeering Conspiracy

Two Rialto residents have filed suit last week in a Riverside County, California Federal Court claiming that they have been defrauded of over $600,000 by an alleged racketeering conspiracy that is said to have cheated over 700 investors in multiple states, according to an article in The Press Enterprise, reported at PE.com.

The men who have been named as defendants in the suit include James Duncan, Maurice McLeod and Hendrix Montecastro, who are also defendants in a Riverside County Superior Court for their alleged roles in a related mortgage fraud scam affecting hundreds of Filipino investors in southwest Riverside County.

Temecula attorney Richard Ackerman represents the plaintiffs in both Riverside lawsuits, who said that, as of Monday, he had identified 867 victims.

For the whole story, see:

Investors file federal fraud lawsuit
(HUNDREDS AFFECTED: Two Rialto residents say they sustained losses of more than $600,000)

For earlier reports regarding the state court lawsuit, see these reports in The Californian / North County Times:

• Suit alleges massive mortgage scam
• Real-estate investors bought on faith
  .

Connecticut TV Station Finds Felon Originating Mortgages; State Caught With Pants Down

The WFSB-TV Channel 3 I-Team (Hartford, Connecticut) has found convicted felons originating mortgage loans in the state of Connecticut. They discovered that Kyle Gwynn, a registered felon in Florida, was working as a loan officer in Connecticut. Gwynn had pleaded guilty in Florida to stealing money from a former employer. Reportedly, Gwynn was hired as a loan officer in May 2005, but his registration application was not received for almost 18 months.

For the full story (including a link to the I-Team Video Report by Len Besthoff), reported by WFSB-TV Channel 3 on their website, see:

Conn. Blind To Loan Officers' Backgrounds
(Registered Felon Found Writing Loans)

Senator Troubled By Loan-Officer Registration
(Changes May Be Made To Process Of Registering Loan Officers)
.

Michigan Federal Judge Orders Return Of Home By Foreclosure Rescue Operator

This post is a follow up on a prior post dated January 2, 2007 titled Foreclosure Rescue Operator Violates Federal Law, State Usury Law.

In an order and accompanying opinion dated this past Friday (2-9-07), a Michigan Federal judge has officially declared the foreclosure rescue arrangement at issue in the case an equitable mortgage, and has ordered the foreclosure rescue operator to reconvey the title to a house back to the homeowner (the original "rescue" transaction took place in June, 2003). In addition, the judge has ordered that the homeowner is:

• entitled to statutory damages of $2,000 for the rescue operator's failure to comply with the disclosure requirements of the Federal Truth In Lending Act ("TILA"),

• entitled to additional statutory damages of $2,000 for the rescue operator's failure to respond to the homeowner's notice of rescission, in violation of the TILA,

• entitled to a rent credit for $6,700 for rent payments paid to the rescue operator on the leaseback agreement for the period of time immediately after the "rescue" transaction was consummated and the time that the homeowner defaulted on the "leaseback",

• not liable for over $25,000 in "origination fees and other settlement charges" paid on his behalf when the sale leaseback arrangement was consummated.

Implicit in the court order is that the homeowner has obtained the benefit of an interest free loan on the money advanced by the "rescue" operator from the date the initial "foreclosure rescue, sale leaseback" was consummated ( June 11, 2003) until the date of the court order (February 9, 2007), a little over 3 1/2 years.

In addition, the court awarded the operator approximately $6,500 for amounts advanced for property taxes and insurance on behalf of the homeowner, and 7% interest on the equitable mortgage (commencing 2-9-07). The court has given the homeowner 90 days to satisfy the unpaid balance of the court-declared equitable mortgage (approximately $186,000), at which point the "rescue" operator will be free to foreclose on his equitable mortgage.

The amount of attorney's fees that the operator will have to pay to the homeowner's attorney as a result of its losing this case has yet to be determined by the court and, unless the parties reach a settlement on this issue, will be the subject of a future court order.

There is no indication in the record as yet as to whether the operator will appeal this decision.

For the court order and opinion, see

Moore - Summary Judgment Order

Moore - Summary Judgment Opinion

Click here for other Moore v. Cycon court documents in this case. equitable mortgage zebra

Equitable Mortgage Doctrine In Illinois (Updated)

For those readers interested in information on the equitable mortgage doctrine as applied in Illinois, see:

Equitable Mortgage Doctrine In Illinois - Part 1, and

Equitable Mortgage Doctrine In Illinois - Part 2. equitable mortgage zebra

One-Time Hero Sentenced In Mortgage Scam

On Wednesday, a Delaware Federal judge sentenced MacDonald P. Taylor to a year and a day in prison for his involvement in a mortgage fraud scam that allowed him and his family to live in several homes rent free for almost three years, according to an article reported on The News Journal's (Wilmington, Delaware) online presence, delawareonline.com. Mr. MacDonald agreed to plea guilty to five fraud counts (out of a ten count indictment) in lieu of going to trial.

Ten years ago in Philadelphia, Mr. MacDonald played a key role in the apprehension and conviction of a murder suspect who was sought in connection with the murder of a 16 year old Philadelphia police officer's son. This fact, along with medical issues, were cited by the judge in sentencing MacDonald to a term below that called for in Federal sentencing guidelines.

For the whole story, including details of MacDonald's heroics in the Philadelphia incident a decade ago, see

One-time hero to serve year in prison
(Man who helped put killers behind bars sentenced in NCCo homes fraud)

For links to the indictment and plea agreement, see Delaware man sentenced to a year and day in mortgage scheme on the Bankruptcy Fraud Resource Center blog.
.

State Of Ohio Starts Foreclosure Rescue Fund

The State of Ohio has started a statewide "foreclosure rescue fund" for homeowners behind on their house payments. To find out more, listen to reporter Karen Kasler's reports at WKSU 89.7 radio, a service of Kent State University and Ohio Public Media.
.

The "Double Dirty Dozen" Predatory Mortgage Lending Practices

"Predatory and abusive practices by mortgage lenders and brokers, which impose excessive and unreasonable charges on homeowners, are pervasive and cause serious harm." So says an article appearing on the website of the National Association of Consumer Advocates (NACA).

The article identifies the typical victims of these practices and sets forth a list of over thirty predatory and abusive practices and insider tricks used to dupe homeowners.

To read more of this article written by NACA members, attorneys William Brennan and Patricia Sturdevant, see:

The Double Dirty Dozen Predatory Mortgage Lending Practices (HTML version).
.

Ex-Haitian Death Squad Leader Pleads Guilty In NY Mortgage Scam

Emmanuel Constant, 49, pleaded guilty for his role in a "straw buyer" mortgage fraud scam in a Brooklyn, New York state court, according to a Press Release from New York State Attorney General's Office. The investigation was conducted by the office's Organized Crime Task Force.

In the 1990s, Constant was reportedly the head of a notorious Haitian death squad that was supported by Haiti's military dictatorship. For more, see Former Haitian Strongman Pleads Guilty In Massive Mortgage Fraud Scheme.

For an earlier story, see Haitian Death Squad Leader Arrested in US - For Mortgage Fraud.
.

Ohio Land Flipper Pleads Guilty In Federal Court

Randall Aaron Davidson, the head of an illegal property flipping operation in Montgomery County, Ohio that involved 350 fraudulently obtained loans, pleaded guilty in Federal Court today to three charges in connection with the scam. The properties were located primarily in the city of Dayton and was called the largest mortgage fraud operation to be prosecuted in Montgomery County. For more, see Mortgage fraud 'ringleader' pleads guilty reported by the Dayton Daily News.

For prior stories on this case, see Dayton Federal Trial Of Property Flippers Postponed, Plea Deals Expected
.

Equitable Mortgage Doctrine In Illinois

For those readers interested in information on the equitable mortgage doctrine as applied in Illinois, see Equitable Mortgage Doctrine In Illinois - Part 1. equitable mortgage zebra

Detroit Area Law Enforcement Targeting Deed Theft With Dedicated Units

The Wayne County Deed Fraud Unit has made arrests in two new cases involving a deed scam where homes are sold right out from under the real owners without them knowing about it. The announcement, made yesterday by Wayne County Prosecutor Kym Worthy, is reported by Click On Detroit at ClickOnDetroit.com.

Reportedly, over 100 homeowners in Wayne County have been targeted in this scam where forged documents purporting to transfer title from the true owner to a scammer are recorded with the county's office for recording land records since 2005. These forged records are then used to defraud mortgage lenders out of the loan proceeds from subsequent phony realty transactions. Typically, the true owners only become aware of the scam when they begin receiving collection and legal notices from the mortgage lenders who were duped into making the loans.

Wayne County Sheriffs Office currently has three full time deputies assigned to combat deed fraud, according to Sheriff Warren C. Evans. Victims (and those who know victims) of deed fraud are encouraged to report the incidents to the Wayne County Prosecutor's Office Deed Fraud Hotline at 313-224-5869. To read the article, see New Arrests Made In Deed Scam.

To read of deed theft by forgery problems in the Philadelphia, Pennsylvania area, see:

• PA. Gov, House Speaker, Philly Mayor Homes "Stolen" ? (link to TV News report),
• Family Friend Pleads Guilty to "Equity" Scamming Disabled Philadelphia Family,
• Pennsylvania Prosecutor's Office Obtains Guilty Plea Against Home Thief.

To read of a Boston area woman who almost had her home sold from underneath her, see: Boston Cops, Feds Sting Alleged Home Thieves.

Go here for other deed theft posts. deed theft zorro

The "Happy Greek" Restaurant - Home Of The $5.50 Gyro Sandwich (and "Cash Back" Mortgage Fraud Operation?)

A mortgage fraud investigation by the Columbus, Ohio Police Department's Economic Crimes Unit has led to a seizure last week of "computers, mortgage files, counterfeit cash, phony immigration documents and fake driver's licenses, according to affidavits and evidence logs filed in Franklin County Municipal Court." So says an article in The Columbus Dispatch, reported at columbusdispatch.com, which reports that simultaneous searches by investigators were made of the Happy Greek restaurant, a home the restaurant owners share and the apartment of a property appraiser that yielded all of the above listed evidence.

Authorities believe that the Happy Greek owners ran a multimillion dollar "cash back" mortgage fraud ring, involving foreigners buying houses in elite central Ohio neighborhoods, from the restaurant's basement office.

Arrests have yet to be made.

Highlights of the article include reports, claims, or allegations that:

• People were buying upscale homes for upwards of $250,000 more than the asking price,
• Home sellers were immediately refunding the extra money (giving the "cash back"),
• The "cash back" was earmarked on loan documents for home improvements that were never done,
• Weeks and months later, the newly purchased homes remain vacant,
• At least four remodeling companies, which existed only on paper to defraud lenders, were controlled by the co-owners of the Happy Greek,
• Eight deals handled by one title closing agent resulted in $1.4 million being funneled to the phony remodeling companies,
• The people under suspicion have been described as foreign nationals from the Middle East,
• A husband and wife, linked to the suspicious deals, reportedly have already fled the country,
• The Happy Greek owners have reportedly been "relieved of their passports" by authorities.

For the whole story, see Owners ran mortgage scam from Happy Greek, officials say
.

Bank Violates Truth In Lending Law; Case To Go Forward As Class Action

A Milwaukee Federal Court judge ruled last month that Chevy Chase Bank violated the Federal Truth in Lending Act, which requires lenders to clearly explain loan terms to borrowers, according to an article in The Washington Post, reported at washingtonpost.com.

The case involved a husband and wife who were misled into refinancing their 5.75% fixed rate loan by signing for a high rate, deferred interest (negative amortization), adjustable rate mortgage that was represented to them as being a 1.95% fixed rate mortgage for the first five years. The 1.95% was merely a "teaser rate" subject to adjustment after one month. It wasn't until after the couple received their first payment coupon for the new loan in the mail that they initially became aware of what they had signed for. A $5,700 prepayment penalty in the mortgage kept them from refinancing into a different loan.

The judge will allow the case to be treated as a class action lawsuit. The bank has filed an appeal.

For the whole story, see: A Fight Over the Fine Print (Chevy Chase Bank Faces Suit Over Adjustable-Rate Mortgages).

See also, Milwaukee Journal Sentinel: Mortgage lawsuit may have big effect (Couple's low interest rate lasted a month).

Dayton Federal Trial Of Property Flippers Postponed, Plea Deals Expected

The federal court "property flipping" trial of four defendants scheduled to begin this past Tuesday in Dayton, Ohio has been postponed. Court officials have announced that the defendants are now expected to forego a trial and instead, agree to plead guilty to some of the charges. To read the article, reported by the Dayton Daily News, at daytondailynews.com, see:

Guilty pleas expected in mortgage fraud trial
(Four defendants are accused in a 14-count indictment involving 350 loans)

For background on this story, see my February 4th post, Dayton Area Task Force Fighting Flipping, and the two links to additional Dayton Daily News articles on this story.
.