Wednesday, May 02, 2007

Sacramento Area Real Estate Group Accused Of Duping Investors

A recent report by Investigative Reporter Josh Bernstein of KCRA-TV Channel 3 in Sacramento, California describes an alleged mortgage fraud scam where seven unsophisticated investors where lured into a "real estate investment opportunity" where they purchased over twenty homes, and then were left with their credit destroyed and stuck with unrented homes and unaffordable mortgage payments. The real estate group who is accused of providing the investment opportunity, reportedly made all the arrangements in the investors' purchase of the homes, including allegedly submitting false loan applications on behalf of the investors. Those identified by the investors as being involved in the alleged fraud scheme are:

  • James Martin (aka Jim Martin), VFM Investment Group LLC, Gabriel Viramontes, Freedom Capital Mortgage, Inc., Joseph S. Gallo, Esnian Mortgage & Realty Network, Mario Fellini III, real estate agent Yajen Huang (aka Jennifer Huang), and others.

An impromptu, on camera interview was attempted with some of the accused at their office; however, they didn't seem to interested in answering any questions. While their attorney agreed to appear on camera, he didn't seemed to relish the opportunity to answer Josh Bernstein's questions, either (he sounded like he had "marbles in his mouth" and he looked like "a deer caught in the headlights." I actually felt sorry for him. He looked like a young guy; maybe he needed to earn the legal fees from representing these clients so he could pay his own mortgage.)

All the investors have reportedly filed lawsuits. A lawsuit filed by one of the investors is currently pending in Sacremento County, California Superior Court alleging fraud, constructive fraud and breach of fiduciary duty, civil conspiracy, negligent misrepresentation, and unlicensed practice of law, among other claims against some or all of the above named accused. Representing the investor in this lawsuit are Dennis B. Hill and Andrew E. Bakos of Hill Law Firm, Lincoln, California.

To read that lawsuit, see Romano vs. Martin, et al. (6.51 MB)

Go here to watch the KCRA3 report by Josh Bernstein (no longer available online).

North Carolina Home Flipper Leaves Investors "Holding The Bag"

The Fayette Observer recently reported on the story of Eric Omar Jones, a businessman who started a now-defunct company he named U.H.K. Investments — for “University of Hard Knocks.”

Reportedly, he was at the center of more than 100 house flipping deals in North Carolina in Cumberland, Hoke, Moore, Robeson and Sampson counties. At least 53 of the homes ended up falling into foreclosure, The Observer found. Many of the investors he recruited ended up "holding the bag", owning homes in disrepair with mortgages that they couldn't afford to pay.

While he admits he made business mistakes, Jones denies misleading investors. He hasn’t been charged with crimes, though the FBI has apparently investigated. For more, see Easy money, hard lessons.
.

Tuesday, May 01, 2007

16 Unlicensed Contractors "Stung" By Cops

Westchester County, New York police detectives, posing as the owners of a county-owned, rundown home, arrested 16 unlicensed contractors after requesting and obtaining bids for repair work on the home from them, reports Newsday.com and The Journal News.

The three week sting operation used a three story house in Yorktown, NY and captured the suspects on video. Among those arrested were two who were already on the county's Renegade Renovator list of contractors who have generated repeated consumer complaints.

"This was the first-ever sting in Westchester, but it won't be the last," according to GaryBrown, Westchester County's director of consumer protection. "Let the unlicensed contractor beware."

For the whole story, see:

.

South Florida Mortgage Broker, Others Accused In Foreclosure Rescue, Equity Stripping Lawsuit

An elderly South Florida homeowner currently has a civil lawsuit pending alleging that (1) she was victimized by a foreclosure rescue group in a sale-leaseback-option to repurchase deal that resulted in her being stripped of most of the equity in her home, and (2) she was scammed allegedly:
  • through the use of false statements and representations,
  • through the imposition of false charges on a HUD-1 closing statement,
  • through the use of a forged document, and
  • by taking advantage of her lack of financial sophistication.

The homeowner named as defendants in her lawsuit Boca Raton, Florida mortgage broker Nicole Smith, her husband Mauricio N. Smith, mortgage brokerage Signature Lending Group, Inc., Deborah O'Hara (with addresses in Coral Springs, Florida and Brooklyn, New York), and two instituitional lenders among others in which she is seeking relief for:

  • violations of the Federal Truth In Lending Act and Regulation Z,
  • violations of the Federal Home Owners Equity and Protection Act,
  • violations of the Florida state law prohibiting usury,
  • common law fraud (seeking rescission and damages),
  • breach of contract, and
  • quieting the title to her home (quiet title action).

Representing the homeowner in this lawsuit are The Law Offices of Sherri B. Simpson, P.A. of Fort Lauderdale, FL and James A. Bonfiglio, P.A., of Boynton Beach, FL.

.

More On New Generation Funding, NYC Bangladeshi Mortgage Fraud Case

The New York City property flipping, mortgage fraud scam reported here last week involved the mortgage brokerage New Generation Funding, Bangladesh nationals and members of the New York City area Bangladeshi community who were recruited and paid $5,000 per deal to act as straw buyers. The scam ensnared legitimate mortgage lenders, including American Home Mortgage, Argent Mortgage, Long Beach Mortgage Company Fremont Investment and Loan, Aurora Loan Services, BNC Mortgage, Lehman Brothers Bank, Webster Bank, HSBC Bank, New Century Mortgage (R.I.P.), WMC Mortgage Company, GFI Mortgage Bankers, Inc., Alliance Mortgage Banking Corp., and Equifirst Corp.

The following individuals being criminally charged in Brooklyn Federal Court last week:
  • Mohitul Islam, Mohammed Zubair Hossain, Lalon Ahmed, Mohammed Jewel, Mehdi Hasan, Iqbal Hasan, Humayun Kabir, Togor ( last name unknown), Golam Bahauddin Sadi, and Mizanur Rahman.

The basis for the criminal complaint filed by authorities comes from information from an unnamed "confidential witness", identified as CW1, who was a partner in the mortgage fraud, who has already agreed to plead guilty, and has also agreed to "sing" to the Feds in exchange for a lesser sentence for his/her role in the scam. In addition, there are three additional unnamed confidential witnesses, CW2 and CW3 (both of whom have pleaded guilty to fraud charges in a related investigation and have agreed to "sing" to investigators in the hopes of getting lighter sentences), and CW4.

Red flags were raised when two of the victimized mortgage companies noticed high rates of default on the New Generation-originated mortgages; they subsequently found a fraudulent pattern of employment and income information when they audited the corresponding mortgage applications. At that point, the two mortgage companies called in law enforcement.

Described in the criminal complaint are undercover stings that are captured on video, involving confidential witness CW1 and an undercover FBI agent pretending to be a notary public and title closer at a simulated property sale closing.

One element of the alleged scam, as described in the criminal complaint, was the use of "short sales", in which the one member of the alleged conspiracy would negotiate a discounted payoff from the mortgage lender on a loan secured by a particular property controlled by the alleged fraud group. After successfully negotiating the "short pay" and re-taking control of the property for a fraction of what was owed, the property could then be resold to another straw buyer a significantly higher price, thereby "recycling" the property through the alleged fraud group's operation all over again.

For the full story (at least the version filed by the FBI Special Agent in the case), see the Criminal Complaint filed by Federal prosecutors, U.S.A. vs. Hossain, et al.

For media reports on this story, see:

.

New York Attorney Discipline Committee Keeping Busy

In a recent article, The New York Daily News reports on the work of the attorney Disciplinary Commitee of one Department of the Appellate Division of the State Supreme Court.

Thomas Cahill, chief counsel for the Disciplinary Committee of the Division's 1st Department, which covers Manhattan and the Bronx, is interviewed for the Daily News story. His office, which polices the 76,777 lawyers in Manhattan and the Bronx, has a staff that includes 20 full-time attorneys, many of whom are former prosecutors, investigators, an accountant and paralegals. It handles about 3,500 matters a year in a complex process that begins with screening of complaints.

Most ripoffs by attorneys involve theft from escrow accounts and trusts and estates or billing for work that wasn't done, according to an analysis by The Lawyers' Fund for Client Protection of the State of New York. Among the examples of attorney misconduct cited in the article include incidents where:

  • an attorney deposited over $470,000 from the proceeds of a home sale in Peekskill, New York into his business checking account and gave the homeowner a rubber check for the proceeds of the home sale,
  • the same attorney, who failed to remit to his clients the $354,900 proceeds from the sale of an Italian restaurant (he pocketed $319,000; the balance is reportedly still being traced),
  • an attorney who pleaded guilty to participating in a $750,000 mortgage scam,
  • an attorney who reportedly represented approximately 200 clients buying real estate who had her clients buy title services at a company next door that she also owned, which the New York State Appellate Court judges called "an impermissible conflict of interest."

The article also cites the variety of excuses that the rogue attorneys offer up when they get nailed. For more, see Rotten lawyers face raft of raps in ripoffs.

For information on filing attorney grievances and obtaining relief from dishonest attorney conduct in New York State, see:

Go here for stories on other alleged escrow agent mishandling of funds. sneaky slick escrow agents alpha

.

Monday, April 30, 2007

Channel 2 News "Sting" Two Foreclosure Rescue Operators

In Southern California, local television station CBS 2 and its investigation team led by investigative reporter David Goldstein set up hidden cameras in a Whittier, California home and caught two foreclosure rescue, mortgage consultants seeking to charge upfront fees to help a homeowner facing foreclosure, according to a report on Channel 2's website at cbs2.com. According to the report:

  • "The real homeowner is facing foreclosure. That information is made public so she has received hundreds of flyers from people offering to help. But we hired this actress to pose as the homeowner and watched from the back room as we invited foreclosure experts in to hear their pitch."
This is the first "foreclosure rescue sting" caught on video that I have come across. I suspect that these "caught-on-video stings" of foreclosure rescue operators will become more and more frequent. If anyone knows of any foreclosure rescue stings on video that are available online, please let me know at HomeEquityTheft@yahoo.com. For more on this story, see:

Editor's Note:

California has specific statutes strictly regulating foreclosure rescue purchasers and mortgage foreclosure consultants who approach homeowners facing foreclosure seeking to do business with them.

.

Central Florida Homeowners Victimized By Foreclosure Rescue Operator

Reports of two financially strapped Central Florida homeowners allegedly having their home equity stripped from them by a foreclosure rescue operator is the subject of a Local 6 News investigation by WKMG-TV Channel 6 in Orlando, Florida. Reportedly, both homeowners lost their homes and the entire equity that they had accumulated in them.

Local attorney Austin Aaronson is reportedly fighting the equity stripping issue for over a dozen clients.

Local 6 Emmy Award winning Investigative Reporter Mike Holfeld brought his findings to state Rep. Bryan Nelson of Apopka, who is currently co-sponsoring legislation that will create criminal penalties for equity deception schemes in Florida.

For more, see Homeowners Warned Of Equity Stripping.

(revised 4-30-07 12:26 am)
.

California Foreclosure Rescue, Equity Stripping Warning, Consultant Jailed

In California, an Associated Press appears in the Ventura County Star that warns:

  • "The potential for real estate fraud has soared, driven by a surge in default notices sent to thousands of struggling California homeowners during the past several months."

  • "Real estate scams prey on the trust of people in desperate situations. These so-called foreclosure consultants make false promises, giving homeowners the impression that they can improve their credit or pay off their properties in full, with the intent to swindle homeowners out of large amounts of money or, in some cases, their homes."

For more, including the story of an equity stripping victim who lost her home and equity to a forecloure rescue "consultant" (who has since been sentenced to three years and eight months in prison), see:

.

Foreclosure Rescue Scammer Pleads Guilty To Felony Theft

A Prince George's County, Maryland homeowner facing foreclosure got a flier in the mail from Perver Taylor offering financial help, according to a story by investigative reporter Darcy Spencer, of WRC-TV Channel 4 in Washington, D.C. The homeowner responded, but instead of helping her, Taylor proceeded to victimize the homeowner in a foreclosure rescue scam in which she lost her home and the entire equity she had accumulated in it. Taylor pleaded guilty to felony theft and faces up to 10 years in prison when he's sentenced in August. For the whole story, see:

For the Maryland statute regulating foreclosure rescue operators, see the Maryland Real Property Law, Title 7, Subtitle 3 - Protection of Homeowners in Foreclosure (Sections 7-301 through 7-321). (Each section of the statute has its own link).

.

Sunday, April 29, 2007

Massachusetts Banking Officials To Help Homeowners Avoid Foreclosure

Following a protest at the Statehouse on Thursday by homeowners facing foreclosure, Massachusettts Governor Deval Patrick has directed state banking officials to help homeowners negotiate mortgage payment terms to avoid foreclosure, according to an Associated Press article appearing in the Boston Globe.

Reportedly, the Massachusetts Division of Banks has already secured 60 to 90 day freezes on the foreclosures on behalf of 11 of the protesters and will help other homeowners having trouble with their mortgages by providing housing counselors or contacting their lenders to stop or delay foreclosures, according to Steven Antonakes, the Commisioner of Banks. For more, see Patrick directs state to help homeowners.
.

Donkey Testifies On Attorney's Behalf

In another story having nothing to do with this blog, the Associated Press reports that:
  • "Faced with complaints that his donkey was too loud, attorney Gregory Shamoun decided to bring his case directly to the court: He had the donkey testify."

No word on how Buddy the Donkey held up on cross examination, but reportedly the litigants settled the matter while the jurors were deliberating. For more, see Attorney brings donkey to testify on own behalf in court, reported by Daily Report.

.

Weekend I.D. Theft Blotter

Some of the highlights of the week's identity theft stories follow:

.

Saturday, April 28, 2007

Wheelchair Bound Widow Beats Down Bully Condo Association

A Margate, Florida condominium association, which brought a lawsuit against an 86 year old, wheelchair-bound widow with a failing memory for allowing two caretakers to stay with her in her apartment around the clock, decided to backpeddle when she retained legal counsel to fight back against them. The association has announced its intent to dismiss the case. However, her attorney, Blaine Carneal, has accused the association of violating Normoyle's civil rights and fair housing laws and asked the Florida Attorney General's Office to investigate. Further, he has formally demanded that the association pay him his attorney fee incurred by his client. The condo association is painfully finding out that once you pick on the wrong person, you can't just back away and not expect any repercussions. For the whole story, see Margate condo drops lawsuit against ailing widow who needs live-in help, reported in the South Florida Sun-Sentinel.

Go here for other posts on Widow vs. Condo association.
.

More Charges Against Minnesota Woman Accused Of Using Stolen I.D.s To Buy Homes

Ida Mae James, of Shakopee, Minnesota, who was accused in January of the identity theft of five people to secretly purchase homes in other people's names, secure mortgages, and then collect sales commissions and rents, is now facing an additional accusation of stealing the I.D. of a sixth person. Additionally, a second defendant has been charged in the scam. Holly Jo Jackson, also of Shakopee, is alleged to have assisted James in pulling off the scam. Reportedly:
  • "A complaint filed Monday alleges that Jackson, a former personal care attendant for disabled persons, assisted James in stealing the identity of a person whom she cared for in 2005. Two properties allegedly were bought in that person's name."

For more, see Case grows against Shakopee woman accused of ID theft, reported in the Star-Tribune.

.

Three Lawyers Involved In Real Estate Theft, Forgery Scam

Authorities say that three lawyers played key roles in a $14 million mortgage scam that robbed owners of the value of dozens of properties, according to The Daily Telegraph. The scam involved forgery, falsely witnessing signatures, and false documents. Reportedly, title insurance companies ended up getting stiffed since the money lost in the scam was repaid by them. Two lawyers have already confessed and have been jailed. The third is on trial. For more, see Lawyers 'in mortgage loan scam'.
.

Friday, April 27, 2007

NYC Establishes Foreclosure Prevention Helpline

EmpireStateNews.net reports:
  • "New York City Comptroller William Thompson, Jr. Thursday launched a Foreclosure Prevention Helpline to assist New Yorkers struggling to overcome burdensome mortgage payments and threatened with foreclosure. Joined by representatives from community and civic groups, Thompson announced the Helpline - at (212) 669-4600."

For more, see Plan unveiled to assist New Yorkers with escalating mortgage payments.

.

Ohio Mortgage Broker Convicted Of Using I.D.s Of Recently Deceased To Get Loans

The Dayton Daily News reported last week:
  • "Mark D. Musselman, the mortgage broker accused of using the identities of recently dead people to obtain fraudulent mortgages and steal more than $1 million, was convicted of 48 felony counts Friday following a three-week trial."
  • "Musselman ran Phoenix Funding Inc., with offices in Vandalia and his Piqua home."
  • "His former employee Mark Edwards pleaded guilty to 48 felony counts the week before the two were to go on trial. Edwards testified against his former employer."

The scam also involved forging appraisals, loan applications and other documents. The victimized lender was Interfirst Mortgage Lenders of Ann Arbor, Mich., owned by ABN AMRO Mortgage.

For more, see Man guilty of using identities of dead people.

.

More On California Appraiser Fighting Mortgage Fraud

The Bakersfield Californian reports:
  • "Last week, local appraiser Gary Crabtree told The Californian that he has documented about 20 suspicious local home sale transactions in the last year -- and that the number has since grown to more than 50 as news of his allegations spread. He has referred some of them to the FBI, California Department of Real Estate and California Office of Real Estate Appraisers."

According to Detective Frank Wooldridge, who handles real estate fraud cases and other financial and white-collar crimes for the Bakersfield Police Department, "It is very prevalent and it will become more prevalent. There is real estate and mortgage fraud going on in this town. To say it is not, you are just missing the boat."

For more, see Loan fraud cases rising (Officials confirm that mortgage scams occur in Bakersfield market). Click here for other posts on this story.

.

Washington State To Have Its First Statewide "Shred-A-Thon"

The Washington State Office of the Attorney General, in conjunction with Washington’s Law Enforcement Group Against Identity Theft, better known as LEGIT, have announced Washington’s first statewide shred-a-thon to take place on Saturday, April 28. Events at 29 locations statewide will help raise awareness of identity theft prevention and assist the public in keeping sensitive documents out of the hands of crooks. Reportedly, nine professional shredding companies are offering free shredding at those locations. For more, see:

.

Missouri Woman Awarded $400,000 For Being Forced Out Of Her Home

A Missouri woman who was, in effect, forced out of her home of over 30 years as a result of her municipality's failure to correct a city sewage system that caused continued and substantial sewage backup into her home, was awarded approximately $400,000 in damages and interest from the City of Oak Grove, Missouri.

Reportedly, her home was subjected to over a dozen incidents of significant sewage backup over at least a twelve year period beginning in 1992 theough at least 2004, with the incidents increasing in frequency over the tail end of the 12 year period. Each time, she reported the incident to Oak Grove officials without receiving any relief from this pattern of flooding from them.

According to the court decision:
  • "During this time, the homeowner began to experience headaches, nausea, bronchitis, and trouble breathing from continuous congestion. Her symptoms began as early as 1999 but became markedly worse in 2001. Her doctor prescribed rounds of antibiotics. In 2003, Collier met with Dr. Kanarak, an allergist, who informed her home was infested with mold and her health complaints likely arose from her exposure to the environmental mold. He recommended that she should move out of her home. Collier was reluctant to leave her home of thirty years; but after she was hospitalized in August 2004, she agreed to leave. The allergist recommended that she leave everything in her home to avoid contaminating another environment and that she would likely need to discard everything in her home. He told her to wear a mask and gloves if she ever went into the house."
In prevailing in her lawsuit against the City of Oak Grove, she was awarded $200,000 on her claim of inverse condemnation, $60,000 in personal injury damages, and over $139,000 in interest.

The homeowner was represented by attorney Bill Carr, Law Offices of William Lewis Carr, Kansas City, Missouri.

Source:

Donna Collier v. City of Oak Grove, Missouri (Mo. App. Ct., W.Dist., April 24, 2007) with an assist from MoreLaw.com.
.

Indiana Man Charged In $1 Million Mortgage Fraud

Jason Keigley of First Place Mortgage in Indianapolis, Indiana was charged in 12 counts of theft and violations of the Indiana Securities Act in connection with an alleged a $1 million mortgage fraud scheme. Charges against Keigley center on deals involving two properties in which he is alleged to have misled sellers and buyers, brokering loans in their names without their knowledge and without a proper license. The office of the Indiana Secretary of State investigated the case. For more, see:

  • Man Arrested in $1M Mortgage Fraud Scheme, reported by WISH-TV Channel 8 - Indianapolis (link no longer available online),
  • Loan broker faces charges tied to $1M in foreclosures, reported by The Indianapolis Star,
  • Click here for Channel 8 Video (link no longer available online).

For story update, see The Indianapolis Star: Ex-broker convicted in loan fraud case (2-20-08).

Indiana Secretary Of State Pursuing Mortgage Broker, Title Agent In Alleged Fraud

The State of Indiana is continuing its attack on mortgage fraud, according to an online story by The Indianapolis Star. This time, it's the Indiana Secretary of State launching an offensve against professionals licensed with the state who allegedly played roles in deals involving improper loan applications. It recently filed an administrative complaint which cited loan broker Extreme Investments of Terre Haute and settlement agent Hoosier Title of Sullivan for their alleged roles in deals that enabled West Indiana investors Rick N. Burnett and Kris J. Sommerville in obtaining $1.4 million in loans on 23 houses.

According to the article, "The complaint marks one of the few actions in which a state agency has tried to clamp down on a ring of companies rather than focus on the mastermind of an illicit real estate deal." No criminal charges have been filed. For more, see New tactic in mortgage fraud war (Secretary of state complaint holds broker, title agent accountable).
.

Thursday, April 26, 2007

Securities / Mortgage Fraud Suit Filed Against Florida Builder, Bank, Broker

A Broward County, Florida couple have filed a civil lawsuit against homebuilder First Home Builders, their real estate broker, D’Alessandro & Woodyard; their real estate agent, Samir Cabrera, and First Florida Bank, containing allegations of mortgage fraud, securities fraud and breach of contract in connection with an alleged investment scheme involving the construction of three homes in Lee County, Florida, according to a report in The News-Press.

Allegedly, "[t]he prospectus sent to [the couple] by D’Alessandro & Woodyard included language that adds up to securities fraud. For example, it states: “Investors will receive a gross return of 14 percent of the sales price of the home. The 14 percent is contractually agreed upon by the tenant before occupancy.”"

According to the couple's attorney, Gary Poliakoff of Fort Lauderdale-based Becker & Poliakoff, he has been contacted by more than 20 people in similar circumstances and may convert the case into a class action lawsuit to represent others who entered into the same type of investment deals as his client.

Real estate broker Frank D’Alessandro, who writes a real estate column for The News-Press, said he was uanware of any indication of wrongdoing by any of the real estate brokerage employees.

For more, see Dispute in housing deal could lead to class-action lawsuit (Broward couple claim fraud in loans for three First Home properties in Lee).
.

Massachusetts Governor Calls For Crackdown On Abusive Foreclosure Rescue Schemes

An Associated Press article in the Boston Herald is reporting that:
  • "Governor Deval Patrick, reacting to record numbers of people losing their homes, called today for the criminalization of foreclosure fraud, better tracking of foreclosures, and a public education campaign for would-be homeowners."

  • "Patrick’s crackdown would include legislation to make mortgage fraud a criminal offense and prohibit abusive foreclosure rescue schemes."

For more, see Patrick seeks crackdown on foreclosure fraud, enhanced oversight.

.

NYC Mortgage Brokerage, Company Officials Face Federal Fraud Charges

A Newsday article appearing online at AM-NewYork reports that federal prosecutors have filed a criminal complaint in Brooklyn Federal court Wednesday charging ten people from Bangladesh in a mortgage fraud scheme that centered on that immigrant community.

According to the allegations in the complaint, no fewer than 13 legitimate mortgage banking companies were defrauded by the mortgage brokerage New Generation Funding. Reportedly, the company:
  • "recruited the straw buyers to purchase properties in the city with false information on mortgage applications. But in late 2005, mortgage lenders became suspicious because of a high default and foreclosure rate involving deals done through New Generation, the complaint stated. Mortgage companies shared their suspicions with the FBI which began the investigation, said federal prosecutors. Those charged in the complaint included officials at New Generation as well as some straw buyers, according to court documents."

For more, see Ten charged in mortgage fraud scheme.

.

Mortgage Servicing Scam Warning

The Mortgage Lender Implode-O-Meter warns of a predatory mortgage servicing scam whereby a third party comes along and claims to be the new servicer of your mortgage loan. For insight in going about protecting yourself, see Scam Alert: Loan Servicer Takeovers.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra