Elderly Florida Woman Victimized In Home Repair Scam

A North Port, Florida woman in her mid-80's who lives in Holiday Park paid two men, claiming to be contractors, more than $80,000 for home repairs found to be unnecessary or not even done, reports the Charlotte Sun-Herald. Based on inspections, the value of the work completed was approximated at only about $7,000. North Port police have reportedly said that they will charge the two men-- Michael Richardson, who uses the alias Gisbel Antonio Nunez-Melendez, and Joel Kelly Hill-- with theft from a person 65 years or older, a felony (prison up to 30 years, fine up to $10,000, and restitution). The quote of the day, made by the victim in this case, was "I used to think that people who fell for scams were just being stupid." For more, see North Port woman reportedly scammed (Unlicensed repairmen charged $80,000 for repairs).

See also, Elderly North Port woman scammed out of savings (Fox Channel 13, Tampa, FL).

33 States, D.C., Allow "Credit Freezes" In I.D. Theft Battle

The Washington Post reports:

• "Thirty-three states and the District of Columbia allow consumers to place a "security freeze" on their credit files, and more states are considering similar legislation."

For more, see States, Uncle Sam Combating Identity Theft.

Go here for Consumers Union's detailed list of state laws related to data privacy (includes links to individual laws and instructions on how consumers can file a credit freeze).

Go here for list of pending legislation on "credit freezes."

Free Counseling To Avoid Foreclosure

The Fort Worth Star-Telegram reports:

• "Consumers struggling with subprime mortgages will be the target of public-service ads this summer offering free counseling to avoid foreclosure. The radio and TV spots by NeighborWorks America, in partnership with the Homeownership Preservation Foundation, warns people facing foreclosure against inaction and supplies a toll-free number, 888-995-HOPE, said Marietta Rodriguez, national director of NeighborWorks' homeownership programs. The campaign, which starts June 25 using donated airtime, will run for three years in English and Spanish."

For more, see Ads to tell borrowers about option plans.

Washington Mutual Laying Off 120

The fallout from the subprime mortgage lending market continues in California as the East Bay Business Times (Pleasanton, California) reports:

• "Washington Mutual, whose Long Beach Mortgage unit is a leading subprime lender, is closing its fulfillment office ... in Dublin. The move will affect 120 workers, who were notified of the layoffs on June 1, according to WaMu spokesman Tim McGarry. The layoffs do not affect WaMu's larger operations in Pleasanton. "We are reducing overall staff in response to overall demand," McGarry said. The work will be transferred to a similar facility in Anaheim."

For more, see WaMu lays off 120 in Dublin.

Foreclosure Rescue 101

BusinessWeek posted an article online yesterday that captures the essence of the mechanics used by many foreclosure rescue operators:

• "Within days of showing up on [lists of new foreclosure cases compiled from public records by private companies], desperate homeowners are beset by hordes of supposed white knights."
• "The outfits are sophisticated, carefully targeting owners whom the tax records show have been in their homes for years, a sign they may be sitting on a nice chunk of equity."
• "Most commonly, the rescuers then coordinate what they say is a refinancing through a designated investor, or they arrange a deed transfer with a rent-to-own plan that will supposedly allow the owners to buy back their homes down the road. But usually buried within the stack of closing documents is a so-called quit claim, or deed of gift, in which the homeowners effectively sign their houses over to the investor. At that point, the rescuers charge the former owners rent high enough to ensure they can evict them and pocket the equity built up in the property."
• "Some of these operations are quite complex. A number of firms recruit staff through real estate seminars or late-night TV infomercials to work either as "door knockers," who pay visits to distressed homeowners, or as "bird dogs," who serve as fake buyers."

Included in the story are references to foreclosure rescue operator D and D Home Loans and owner W. Michael Robinson, of Virginia (referred to here in a prior blog post), and Real Estate Investor's Advantage (REIA), a reportedly now-defunct Fort Washington, Maryland outfit run by Nathaniel X. Arnold, who recruited "individuals with good credit to be both door knockers and bird dogs in these transactions. In return, they would be paid a flat fee or a cut of the profits." To become part of this group, individuals would attend an REIA seminar (and pay a fee of $1,995).

For more, see The Foreclosure "Rescue" Racket (As soon as a lender raises the red flag, scammers descend. Here's how they wind up holding the deed).

Foreclosures Hammering One South Florida Neighborhood

The Miami Herald recently reported the story of the Bunche Park neighborhood of Miami Gardens which is in the process of being ravaged, as house after house is lost to foreclosure. Highlights of the article:

• "[C]ardboard signs tacked on light poles offer reverse mortgages to the elderly and foreclosure rescue services to others. Piles of furnishings dot the streets, the evidence of evictions."
• "Bunche Park is a magnet for foreclosure because so many older people live there, says Miami Gardens Mayor Shirley Gibson. The neighborhood was set aside after World War II for black soldiers and their families, many of whom own their property mortgage-free. During the housing boom, the equity in their modest homes grew exponentially. Now, Gibson says, she hears of children and other relatives who tap into their inheritance early and don't make payments. ''It's heartbreaking, because what are you going to do? We can't get in the home and tell the grandmother not to let her child take the home,'' Gibson said."

For more, see Foreclosures soar in South Florida.

See also, Foreclosures Are Rising, Hurting The Poor (CBS4 - Miami, FL).

Subprime Mortgage Lending For Dummies

A recent article in The Motley Fool provided the following analysis of the subprime mortgage lending mechanics that has left the mortgage and real estate market mired in the current quagmire:

• "Sure, it's easy enough to see the problem now. You only need to follow the money trail for what passed as a viable business model for a few years: Crummy loan broker handed money to bad credit risk (often with ginned-up financials). Loan originator held nose, got compliant appraiser to OK the inflated price, then flipped loan to Very Clever Men on Wall Street.


• Very Clever Men bought toxic-waste loans, chopped them into bits, recombined them into tranches of varying yields -- differentiated by risk -- and sold these, now marked with disturbingly sanguine credit ratings, to eager bagholders across the world who were hungry for yield and oblivious to the hidden time bombs within. Along the way, marking mortgage "securities" to market, booking illusory profits on unpaid interest from option ARMs, taking inadequate reserves, and other accounting hocus pocus helped many companies in the food chain post record "profits."


• It was a perfect perpetual motion machine, until it stopped swirling. When non-performing loans and foreclosure rates climbed, the apparatus started to grind, smoke, and hiss."

For more, see Housing Collapse Squishes Bear.

More On Wall Street Hedge Funds Holding Bets On The Tanking Of Subprime Market

The possible crossfire that many subprime mortgage borrowers in trouble may find themselves in is the subject of a recent article by The Associated Press and is making its way around numerous media outlets around the country. The crossfire is between the big Wall Street hedge funds who bet that the subprime mortgage market would go south (and who are against any form of loan modifications because they only get to "cash their bets" when the market goes south), and the Wall Street mortgage-backed securities packagers, who are beginning to modify the troubled loans in their securitizations to help stabilize the subprime market and help keep borrowers in their homes. For the story, see Dispute among Wall Street titans could affect foreclosures.

Go here for other posts on the tug-of-war among the Wall Street giants. MortgageServicingIssuesAlpha

Ex-NFL Lineman, Others, Charged In Mortgage Fraud Scheme

(orig. post 6-14-07; revised 6-19-07)
KHOU-TV Channel 11 in Houston, Texas is reporting that former Hoston Oiler defensive end Sean Jones has been indicted in a multimillion dollar mortgage fraud scheme, along with a number of others. The Channel 11 online report states:

• "Jones, Jerome Karam, 44, of Friendswood, TX, a real estate developer and licensed Texas lawyer, Tommy Jay Trammel, 44, and David Ranostaj, 40, both of Houston and former loan officers with Southwest Bank of Texas, Bank of Houston and Whitney National Bank, and Jay Westrick, 44, of Houston, a real estate appraiser, have been charged in a 12 count indictment for their alleged involvement in a mortgage fraud scheme that allegedly reached every aspect of a real estate loan: seller, buyer/borrower, loan officer, appraiser, escrow officer, and title company."

For all the details, see Former Houston Oiler accused in fraud case.

See also, Former NFL star Sean Jones indicted on fraud charges.

For copy of grand jury indictment, see USA vs. Karam, Jones, et al.

Michigan "Cat House" Owners Arrested

As a follow-up to the Michigan "cat house" post earlier today, the Traverse City Record-Eagle reports:

• "Benzie sheriff's officials on Tuesday arrested Todd Joseph Bukowiecki, 38, and Jane Ellen Bishoff, 52, on 10 misdemeanor animal cruelty charges [...] Eleven more cruelty counts were to be sought Wednesday, authorities said."

Over 60 animals were found in a home that was believed lost in foreclosure by the former owners.

For more, see Couple faces numerous animal cruelty charges.

Go here for more on pets and foreclosures.

NACA Class Action Guidelines

On a housekeeping note, the link in the right sidebar of this page to the National Association Of Consumer Advocates' Class Action Guidelines has now been fixed.

Illinois Man Charged With Theft Of Proceeds Of Elderly Woman's Home

In Illinois, the Northwest Herald reports:

• "A judge has issued a $1.5 million arrest warrant for a Bartlett man who failed to appear in McHenry County court Tuesday on charges of allegedly bilking an elderly Huntley woman out of more than $350,000. Charles Landwer, 44, faces charges of theft, theft by deception, financial exploitation of an elderly person and fraud, all charges to which he has pleaded not guilty. [...] Authorities allege that Landwer kept the proceeds to the sale of a 70-year-old woman’s house, instead of investing it as promised."

Source: Warrant issued for man charged with theft.

Another Tenant Falls Victim To Equity Skimming, Foreclosure

In Tennessee, a Seymour couple who had paid nearly $30,000 under a lease with an option-to-buy contract for a small commercial building from which they started and operated a fitness center business, and who claim that they personally increased the value of the property by running a successful and prominent business and by making capital improvements, reportedly investing well over $200,000 into the property, expect to be evicted from the premises tomorrow by the bank who recently foreclosed on the premises, according to a story in The Daily Times.

The total purchase price on the arrangement was to be for $212,000. Four months after signing the lease, and unbeknownst to the couple, however, the then-property owner took out a mortgage for $560,000 on the property and, shortly thereafter, defaulted on his mortgage payments. The couple unwittingly continued making the lease payments to the owner, and the owner continued skimming the equity in the property by pocketing the rent without paying on the recently-obtained mortgage. Reportedly, the lease-option contract stated that the agreement was “subordinate to any existing or future liens against the property”, thereby allowing the property owner to get a new mortgage on the property, with the mortgage having legal priority over any rights the couple may have had in their leasehold interest (and thereby allowing for them to legally "have the rug pulled out from under them").

For more, see 'Forced out of business'.

For posts on other stories of tenants unwittingly renting homes in foreclosure, go here and go here, and go here. alpha

Postcript

While this story involved a lease of commercial property, it nevertheless serves as a cautionary tale to residential tenants renting homes and condos. With all the residential property currently in foreclosure, I expect to see more and more "lease-option" scams, where a real estate investor facing foreclosure (or a "professional equity skimmer", for that matter) (1) purports to lease-option a home to an unwitting tenant, (2) pockets a significant amount of upfront cash for the option, (3) "squeezes out" as much monthly rent as possible without paying the mortgage until the mortgage lender finally forecloses, and (4) leaves the tenant "holding the bag."

Michigan "Cat House" Another Casualty Of Foreclosure, Say Cops

In Michigan, in a case of what authorities are calling "the worst case of animal abuse in Benzie County’s history", more than 60 abandoned cats were found without food or water in a house that cops believe was lost in a foreclosure, according to the Traverse City Record-Eagle. According to the story:

• "Sheriff's officials were working Tuesday to contact former homeowners Todd Bukowiecki, 38, and Jane Bishoff, 52, to question them in an animal cruelty case. Detectives believe the suspects lost the three-bedroom ranch home to foreclosure and left the animals behind."

For more, see Authorities discover 60 abandoned cats in house.

Go here for more on pets and foreclosures.

Maryland To Contribute Over $100 Million In Mortgage Assistance

The Baltimore Business Journal is reporting:

• "[Maryland] Gov. Martin O'Malley said Wednesday he was forming a task force aimed at preventing home foreclosures and curbing predatory sub-prime lending deals. [...] Declaring June "Home Ownership Month," O'Malley announced the creation of the Maryland Homeownership Preservation Task Force to look into the problem. The group is expected to present its findings in October. The state is also contributing $111 million in mortgage-assistance and education efforts, Housing Secretary Ray Skinner said in an interview. Skinner said the state expects to issue up to $100 million in taxable bonds, in increments of $20 million, that it will be able to use as a "lifeline" for homeowners facing foreclosure. "

For more, see State task force to tackle home foreclosures, predatory lending.

See also, Md. moves to avoid foreclosures (O'Malley announces public-private plan for refinancing, counseling).

Dodging The Income Tax On Foreclosure & Real Estate "Short Sales"

An article by Kevin McCormally of Kiplinger.com is the first article in a mainstream media outlet that I have seen that, when discussing the income tax consequences of a both a foreclosure sale and a real estate "short sale" (when a mortage lender forgives or cancels a portion of a loan secured by property that is worth less than the full outstanding mortgage balance), also mentions one of the most frequently applicable exceptions to the rule (found in Section 108 of the Internal Revenue Code).

The general rule is that when a lender cancels a portion of the mortgage loan, the homeowner has to include the amount cancelled as income. One exception to this rule, referred to as the insolvency exception, essentially says that to the extent you are insolvent, you don't have to include the cancelled portion of the loan as income. The article even points out that the taxpayer is to use IRS Form 982 to claim the exception.

The article concludes with a sound word of advice:

• "If you benefit from debt forgiveness after a foreclosure or short sale, be sure to make a careful inventory of your assets and liabilities at the time. You'll need it to claim an exception under the insolvency rule."

For more, including an illustration of how the exclusion works, see Lose Home, Pay More Tax (As foreclosures soar, a cruel tax rule rears its head).

See also:

• Debt Forgiveness On "Short Sales" Not Always Subject To Income Tax,
• IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments.

Go here for other posts on this subject.

Connecticut "Stings" 160 Home Repair Contractors

WVIT-TV (NBC 30) in West Hartford, Connecticut reports that the Connecticut State Department of Consumer Protection has been conducting an undercover sting by soliciting bids from home repair companies that it suspected were unregistered with the state. According to the report:

• "One hundred sixty contractors were invited to a state-owned sting house and 150 turned out to be unregistered. The other 10 offered contracts that were missing something, because state law requires that they tell the homeowner what the contract period is going to be, when they can expect work done and when money is due."

To date, only four arrests have been made (all from Still River Home Maintenance in New York); the rest will have hearings that may result in fines of $2,000, and possible arrest if they decline to appear. For more, see Four Arrested; Others To Get Fined In Home Improvement Sting.

Go here to watch Channel 30 TV report (by reporter Doug Greene).

California Attorney Gets Off With A Hand Slap In Misconduct Towards Clients

In the "conflict of interest" department, Modesto, California attorney Thomas Patrick Hogan, who also owns real estate and financial services companies, has been punished by the State Bar of California with a hand slap for misconduct in dealing with four clients, according to a story in The Modesto Bee. With respect to his dealings with one client, Hogan used his financial services company to secure a loan for a client facing foreclosure, earning $16,487 in fees from the loan transaction and $6,750 in legal fees, but did not advise the client that she could seek advice from an independent lawyer. Hogan received a public reproval and will be on probation for two years (the story is silent as to whether Hogan was ordered to pay any restitution to any of his clients). For more, see Modesto lawyer disciplined on misconduct allegations.

More Unwitting Renters Being Displaced By Foreclosures

Another story about tenants unwittingly renting homes that are in foreclosure comes from the Star Tribune (Minneapolis - St. Paul, Minnesota). The article reports:

• "[A] growing number of renters being displaced because their landlords are losing their investment properties to foreclosure. While there is no estimate of the number of renters being forced to move because their buildings are in foreclosure, workers on the front lines -- from foreclosure prevention counselors to tenants organizations -- say that starting last year, they began hearing from significantly more people caught in the foreclosure crossfire. The problem has been getting worse."

While the article is not clear on this point, it appears that the equity skimming (collecting rents from tenants while failing to make the mortgage payments) being perpetrated here is being done by the legitimate owners of investment properties who can't afford to keep their investments and, given that they have resigned themselves to losing the properties to foreclosure, have decided to "milk the property" of whatever rent they can get before losing the home to the bank without telling the unsuspecting tenants. It is becoming more common that, like the story of one tenant mentioned in the article, the tenant learns of the foreclosure when someone comes to their rented home and either hands them or attaches to the front door a legal notice ordering them to vacate the premises.

For more, see Foreclosures often lock out renters (Foreclosure doesn't always hurt only the person whose name is on the mortgage. More renters are turning to support agencies for help).

Postcript

As I have commented on before (and as crazy as it sounds), it may start becoming necessary for prospective tenants looking to rent private single family housing (homes, condos, etc.) to do a limited title search on the home being rented to assure themselves that (a) they are renting the property from the legitimate owner (and possibly not a "professional equity skimmer"), and (b) the property does not have a recent history of multiple sales (ie. possible house flipping scam) and is not the subject of a current foreclosure action (which in most jurisdictions, will be reflected by the existence of a recorded lis pendens or notice of default against the home in the office of the county property records).

For posts on other stories of tenants unwittingly renting homes in foreclosure, go here and go here, and go here. alpha

Entire Neighborhood Placed On Lock Down As Swat Team Called In To Carry Out Foreclosure Eviction

In Illinois, a McHenry County Sheriff’s SWAT team surrounded an area home on Monday after residents barricaded themselves inside when police tried to serve them an eviction notice, according to a story in the Northwest Herald. After 71⁄2 hours, the matter was resolved peacefully and without further incident. According to the story, numerous deputies in bullet-proof vests, a SWAT team, an armored vehicle and the McHenry County Emergency and Disaster Agency came to the subject home after the owner would not cooperate with the eviction order. About the same time, police used an automatic telephone system to call residents within a quarter-mile radius to warn residents to remain inside. Property records showed that the owners had foreclosures against their home since 2004, which included a lien for failure to pay income taxes. The owner denied that the eviction was due to foreclosure, but acknowledged that he had an unresolved dispute with his mortgage company. Neighbors were on edge because of the incident, and some were aggravated at being locked in – or out – of their homes all day. For more, see Man surrenders house peacefully after 7 1/2 hours.

Go here for other posts on Police stories involing homes in foreclosures. SheriffDeputiesForeclosureAlpha

More Animal Surprises On Foreclosure Evictions

(orig. post -6-12-07; revised 6-13-07; revised 6-15-07)
In another story involving foreclosure and abandoned animals, The Modesto Bee reports that Manteca, California police went to a home on Monday to start eviction and foreclosure proceedings. According to the story:

• "Police on Monday captured nine cats and found a dog chained up in the back yard of a house they believe is unfit for habitation. Sgt. Charles Goeken called it "the most disgusting home I've ever been in." [...] Officers had to don protective masks to endure conditions in the house."

Wanting to seal up the home because of the horrid conditions, Sgt. Goeken began what presumably was an intensive search for the municipal code section in the local ordinance that would allow him to do it. "There has to be a section to cover this," said Goeken. Apparently, the code section has, at press time, yet to be found. Police said the missing resident, Cora Bruno, 49, is wanted on suspicion of animal cruelty. For more, see Cops try to seal feces-fouled Manteca home.

6-15-07 Update:

Some of more than 40 cats rescued from unsafe living conditions in a north Manteca home are up for adoption at the Manteca Animal Shelter, according to police. The homeowner, Cora Bruno, was initially nowhere to be found, but is now being cooperative and has signed the cats over to the city, said police spokesman Rex Osborn. For more, see Rescued cats up for adoption.

Go here for more on pets and foreclosures.

Go here for other posts on Police stories involving homes in foreclosure. SheriffDeputiesForeclosureAlpha

Subprime Bailout Plan Should Be Crafted With Care & Thoughtfulness

One recognized expert in mortgage finance offers a list of principles that he believes should be observed by advocates of mortgage reform when crafting a bailout plan to navigate through the subprime mess. One principle that seems to make good sense is that a bailout plan should not be available to everyone in financial trouble. For example, borrowers who speculated on house-price appreciation and lost should not be bailed out. For more, see Unique plan to save ARM borrowers from foreclosure (reported by Inman Consumer News).

Mass. Governor Files Mortgage Fraud Bill

Reports out of Boston, Massachusetts today are that Massachusetts Governor Deval Patrick filed mortgage fraud legislation to protect the increasing number of families in Massachusetts facing foreclosure. Among other things, the bill would ban foreclosure rescue schemes that allow homeowners to stay in their home in exchange for signing over the property.

Earlier this month, Attorney General Martha Coakley adopted an emergency ban on rescue schemes, which she said entice homeowners facing foreclosure to sign over their property to a temporary purchaser, under the false hope it will help them keep the home over the long run. For more, see:

• Governor Files Mortgage Fraud Legislation (Patrick Hopes To Protect Families Facing Foreclosure). (WCVB-TV Channel 5)
• Watch a related Channel 5 WCVB-TV report (by Janet Wu)
• Patrick files bill to criminalize mortgage fraud (Associated Press; Boston Herald)
• Patrick files bill to help home buyers (Law would offer safeguards against riskier mortgages) (The Boston Globe)

Alleged Minnesota Straw Buyer Scam Focus Of Media Report

In Minnesota, a story by the Star Tribune focuses on a number of real estate transactions involving Universal Mortgage Inc., a brokerage company in Brooklyn Park. According to the story:

• "Property records show Universal has been at the center of a web of transactions where a small group of investors, including several Universal employees, bought rental properties and quickly resold many at above-market prices. At least 27 houses linked to the firm have landed in foreclosure, according to property records. Earlier this year, a mortgage lender filed a federal lawsuit against Universal, accusing two employees of using fraudulent documents to make money from another real estate deal. And two other people who bought houses through Universal are accusing the company of taking advantage of their real estate inexperience to sell them overpriced rental properties."

The story describes one buyer, a 21 year old woman, who was duped into buying ten investment properties; and another couple who purchased homes through Universal's helped who have already lost three homes to foreclosure, and soon will lose six more.

Apparently, there are no criminal charges pending against Universal owner Donald Walthall (who declined comment for the Star Tribune story), Marlon Pratt (a Universal employee who owned five of the houses that one unwitting straw buyer ended up being stuck with), or former Universal employee Andre Bellfield. However, a civil lawsuit filed by a mortgage company names Universal, Bellfield and Pratt as defendants, alleging fraud and racketeering involving the alleged duping of another straw buyer.

For more, see 'Straw buyer' deals fuel tidal wave of foreclosures (Real estate speculators out for profit can manipulate the system, experts say. A woman says she fell victim to a Twin Cities scheme).

Go here for other posts on the alleged Universal Mortgage straw buyer, home flipping scams.

For copy of Federal lawsuit, contact me at HomeEquityTheft@yahoo.com and I'll e-mail it to you.

Scam Artists Targeting Foreclosure Sale Surplus Money

Buried in a story in The News Journal (Wilmington, Delaware) is the following reference to a foreclosure scam involving the scamming of homeowners who recently lost their homes in a foreclosure sale where the home sold for more than what was owed and there was money left over:

• "Another problem comes after a foreclosed home goes to a sheriff's sale. 'When a home is sold in foreclosure and there is money left over, the money belongs to the former homeowner,' said [Delaware Attorney General Beau] Biden. "People are not always aware that this money belongs to them." Superior Court has more than $5 million waiting to be claimed. Now some people are persuading distressed homeowners to sign over their rights to the residual money in exchange for an upfront payment. In some cases, homeowners have signed away as much as $30,000 in exchange for $1,000. Consumers who believe they may be victims of a foreclosure scam can call the Delaware Department of Justice's Consumer Protection Unit at 577-8600, Biden said."

For more, see Officials seek solutions to foreclosure boom (Filings hit record highs in all three Del. counties; authorities warn of spreading scams).

Go here for other posts on scams involving foreclosure sale surplus funds.

25 Unlicensed Contractors "Stung" By S. Florida Law Enforcement

CBS4 TV in Miami, Florida reports that a four-day sting operation by local law enforcement and the Miami-Dade County building code compliance office resulted in the arrest of over twenty people and the issuance of twenty seven civil violations to people for acting as a contractor without a license. According to the story:

• "[T]he operation included a Miami-Dade police officer posing as a homeowner who bought a house in west Miami-Dade, looking to make improvements.The officer called known unlicensed contractors, and made appointments for them to give repair estimates. Individuals came to the house, providing estimates on jobs such as installing shutters, a pool, a stamped concrete driveway, as well as electrical and plumbing jobs."

For more, see 25 Arrested In Unlicensed Contractor Sting (27 Civil Violations Also Served In Miami-Dade Operations).

Colorado Attorney / 1031 Exchange Intermediary Accused Of Ripping Off Clients

In Summit County, Colorado, the Summit Daily News reports:

• "The amount of money Breckenridge lawyer Royal "Scoop" Daniel allegedly defrauded his clients of before disappearing in late April is growing, but police won't have an exact number until a detailed accounting report is complete. In early May, police estimated about $561,000 of clients' money was missing; recent estimates put that number at closer to $800,000, said Breckenridge Sgt. Susan Quesada. Six potential victims have come forward, Quesada said."

The article is not clear as to how many of the victims used attorney Daniel as a 1031 real estate exchange intermediary; however, the report states that he did act as a qualified intermediary for 1031 real estate exchanges and at least one couple reportedly lost $80,303.10 from the proceeds of the sale of an investment condo in Keystone, which Daniel handled as a 1031 qualified intermediary and held the couple's money pending a reinvestment of the funds into another real estate investment. (An opinion article in the Rocky Mountaiin News reports that law enforcement agencies believe that Daniel may have absconded with more than $1 million from the proceeds of 1031 exchanges he had put together for clients; see No cure for rogues).

A 1031 exchange, which is a reference to section 1031 of the Internal Revenue Code, is a process used to legally defer paying capital gains taxes when selling an investment property. For the story, see Scoop investigation waiting on accounting report.

Go here for other posts on the recent reported problems in the 1031 exchange industry.

Links To Recent Stories On 1031 Exchange Intermediaries Stealing Escrow Funds

The following links are to articles about some of the more recently reported stories of 1031 exchange qualified intermediaries making off with their clients' escrow money that was to be used for investment:

• No cure for rogues (Abuse of "1031" shelter won't be cured by more rules)
• Looting the Escrow Account: A 1031 Cautionary Tale Continued (Buyers in Hundreds of Pending Deals Left in Lurch as 1031 Intermediaries Go Belly Up or Disappear Altogether)
• I-Team: Judge Rules Former Owner of Collapsed Financial Firm Must Testify
• Big Swindle in the high desert (The Southwest Exchange litigation ensnares an array of businesses in its web)

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

Another "Beazer Homes" Foreclosure Story

In North Carolina, The Charlotte Observer reports on the aftermath of 41 foreclosures in a 107 unit development of starter homes built by Beazer Homes USA several years ago. Reportedly, Beazer arranged mortgages for 37 of the 41 homeowners who lost their homes. For more, see Lost homes haunt families (107 homes. 41 foreclosures. An ongoing crisis in Barrington ruins finances, credit and lives).

Go here for other posts on Beazer Homes, including links to investigative reports on Beazer by The Charlotte Observer.

Wisconsin Feds Continue Lytle Mortgage Fraud Investigation

The Week in Delavan, Wisconsin reports that a local real estate fraud case in which Lake Geneva mortgage broker James J. Lytle is the central figure, relied heavily on identity theft. At least 11 of the 19 Walworth County properties connected to the fraud scheme had straw buyers whose identities were stolen.

Lytle signed a plea agreement on May 12 and is expected to formally enter a guilty plea to a single charge of wire fraud in a Wisconsin Federal Court on June 27. He is the only person charged, but other charges are expected, according to an FBI source. For more, see Authorities believe real estate fraud scheme relied heavily on ID theft.

Go here for Plea Agreement - U.S.A. vs. Lytle or go here for other posts on this story.

Servicemembers' Civil Relief Act Provides Active Duty Military Protection Against Foreclosure

The Beacon News recently ran a story about the Federal law known as the Servicemembers' Civil Relief Act, whereby troops on active duty are granted various legal protections, including a shield against foreclosure in some cases. The protections in this law are available to troops from all over the country.

In Illinois, families of local reservists or Illinois National Guard members may also apply for grants to help pay their bills with the Illinois Military Family Relief Fund. Information about the fund is available by calling (866) 524-4564. For more information about assistance available to military families in Illinois, people may visit Operation Home Front.

For more, see Law offers protection to military families.

For a prior post on one servicemember suing his mortgage lender for an alleged illegal foreclosure of his home while on active duty, see Michigan Servicemember Loses Home To Illegal Foreclosure, Says Lawsuit.

Go here for other posts on the Servicemembers Civil Relief Act.

Homeowner Protection Under The Illinois Mechanics Lien Act

For those of you in Illinois, a recent article in The Business Ledger discusses basic ways for homeowners to protect themselves and their homes under the Illinois Mechanics Lien Act from stepping into traps when dealing with general contractors and avoid disastrous consequences when contracting for home repair and home improvement projects. Problems can arise if the contractor doesn't perform the work contracted for; they can also arise when the work is satsifactorily completed, and paid for by the homeowner in full, if the contractor decides to stiff the building material supplier or a subcontractor who worked on the project. (The article also suggests ways for subs to protect themselves against a GC who "forgets", fails, or otherwise decides not to pay the sub). For more, see Mechanics Lien Act Can Trap the Unwary.

Weekend I.D. Theft Blotter

This week's identity theft related stories from around the country:

• Alleged I.D. theft ring member gets job at gas station; allegedly steals over 500 customers' bank account and personal I.D. numbers associated with debit cards; ring used stolen information to make over $600,000 in fraudulent withdrawals (see Five indicted in identity-theft ring - Officials: Defendants stole bank info from Hanover gas station),
• I.D. theft suspect arrested; allegedly involved in phony mortgage company used to allegedly solicit personal I.D. info from over 100 unwitting customers (see Deputies arrest Vista fugitive),
• Cops arrest four in alleged "restaurant customer I.D. theft" scheme involving victimizing patrons who handed over credit cards to waiter to pay for meals; waiter then allegedly swiped cards through pager-sized "skimming" device that downloaded account holders' information (see Four arrested in Redondo identity theft case - Today: Redondo Beach police suspect four people of funding shopping sprees with credit card info from residents),
• While serving on Air Force bases in New Mexico and Japan, Illinois seviceman victimized by I.D. theft that currently links him to some 20 delinquent credit accounts, child support obligations to a woman he'd never heard of, and a string of felonies, including drug charge that kept him from landing a job after leaving the military (see While he served abroad, his credit was under siege).