South Florida Man Gets 10 Years In Slammer In Straw Buyer, Identity Theft Mortgage Fraud

The South Florida Sun-Sentinel reports that Ishmael Grant, 60, of Lauderhill, Florida was sentenced Friday to 10 years in prison for his role in a South Florida crime ring that used stolen identities to buy more than 30 homes and receive $10 million in mortgages. Prosecutors had said Grant was involved in obtaining fraudulent mortgages valued at $3.3 million.

U.S. District Judge William Dimitrouleas reportedly described Grant as a leader in an "extensive criminal enterprise," involving eleven ring members who were accused of paying straw buyers to get mortgages. Eight of the 11 suspects charged have pleaded guilty in the fraud scam. Grant is the only one who has fought the charges at trial. The remaining two suspects are believed to be in Jamaica. The government is reportedly in the process of having them extradited.

For more, see Lauderhill man sentenced to 10 years for charges stemming from mortgage fraud case (Lauderhill man led group that used stolen IDs).

For a copy of the indictment in this case, see Indictment - USA vs. Patterson, Brown, McGuire, et al., (detailing the Federal Grand Jury's 47 charges against the 11 person fraud ring).

12 Indicted In Alleged Central Ohio Mortgage Fraud

WBNS-TV Channel 10 (Columbus, Ohio) reports:

• "Twelve people who police said were involved in a mortgage fraud scheme were indicted Thursday on more than 70 charges. Police began their investigation in 2006 after a woman in California told Columbus police her identity had been stolen from someone in central Ohio. The investigation, headed by the state's Organized Crime Task Force, resulted in two indictments with a total of 38 counts and 77 charges. The mortgage fraud scheme involved people procuring loans under false pretenses, taking the money and then failing to pay it back, resulting in foreclosure of the properties, 10TV News reported."

For more, see 12 Charged In Mortgage Fraud Scheme or go here to watch WNBS Channel 10 report (by reporter Brittany Westbrook).

Texas Real Estate Developer Charged In Alleged Mortgage Fraud

The Houston Chronicle reports:

• "A Clear Lake-area real estate developer and loan broker was arrested Friday on an federal indictment charging him with six counts of bank fraud and making false statements on loan and credit applications. It alleges Richard Bell obtained $2.7 million in loans from Wells Fargo Bank and Wachovia Bank to buy a home in League City and refinance an office building by using fraudulent documents about his income, assets, bonus and credit history. Bell attempted to obtain another loan from Wachovia for Harborside Mortgage Corp., which was refused, the indictment said."

Source: Clear Lake broker charged with fraud (2nd story from top).

See also, News Release, U.S. Attorney's Office (S.D. Texas).

Blanket Lien Foreclosure Affects 200 Innocent Homeowners

In Manatee County, Florida, a battle between the Oak View subdivision builder deMorgan Communities and McLeod Land Services of Sarasota, the company that did roads, utilities, sewers and drainage for the development, has resulted in a blanket lien of $500,000+ being placed on the entire subdivision for work that reportedly has not been paid for. The affect on the current residents of the subdivision is that roughly 200 innocent individual homeowners are finding themselves facing foreclosure through no fault of their own because of the unpaid debt that McLeod claims it is owed by the builder. A couple who currently owns a home in the subdivision and have a contract to sell it to a new buyer, have already had their closing put in limbo because of the blanket lien. For more, see Subdivision homeowners surprised by blanket lien (Sarasota Herald-Tribune).

See also, Contractor liens on Oak View homeowners (Bradenton Herald).

Another Lawsuit In New London Alleged Mortgage Fraud Scam

In Connecticut, The Day reports:

• "A Waterford man whose housing complaint has garnered the attention of the Connecticut attorney general has filed a lawsuit in New London Superior Court seeking damages for real estate practices he calls 'fraudulent, oppressive, unethical, immoral and unscrupulous'. Luis Zayas, who told his story in The Day in May, purchased a $330,000 Waterford home in 2005 and is in severe debt and facing foreclosure. Zayas says the financing he received through New London loan originator Jose Guzman was based on bogus listed assets and income figures. The $81,000 worth of improvements he believed the house had received before the sale were faked as well, he says."

Named in the lawsuit are mortgage loan originator Jose Guzman, Zayas' then attorney Alan Messier; the seller, Juan Velez; the seller's attorney, Maurizio Lancia; the appraiser, Peter Kilbride; Royal Financial Services LLC, and Elizabeth Athan Real Estate in New London.

Guzman and other defendants named in the suit are also being sued by three other people who have similar claims. Connecticut Attorney General Richard Blumenthal is investigating the allegations and has said he is near to filing a suit. Meanwhile, several more people have come forward to both The Day and Blumenthal to claim they were victims of a scheme that includes purchasing houses in different names, redirecting profits and falsifying financial information in order to profit from the sale of houses in New London, Waterford and Norwich at the expense of the homebuyers and sellers.

For more, see Lawsuit Alleges 'Fraudulent' Real Estate Practices (Plaintiff Says He Was Targeted Because He Was A First-Time Homebuyer).

For story update, see Real Estate Offices Close Amid Lawsuits And Foreclosures (Alleged Predatory Lending Under Investigation By State) (TheDay.com - 8-29-07).

Go here for other posts on this investigation.

Upstate NY Feds Get Straw Buyer Guilty Plea In Mortgage Fraud

According to EmpireStateNews.net, Federal authorities announced that William Lask, 63, of Schenectady, New York pleaded guilty Wednesday to conspiring with Anthony Andersen and others in a mortgage fraud scheme. Lask admitted in substance that he acted as a straw borrower in the charged scheme, allowing Andersen to use his name and personal information to obtain loans for two properties in Troy, NY, and that Andersen paid him $17,000 for the two loan transactions. For more, see Man pleads guilty to mortgage fraud.

Go here for prior posts on this alleged mortgage fraud scam.

California Mortgage Fraud Targets Surrender Brokers' Licenses

In Southern California, The Press Enterprise reports:

• "Stonewood Consulting Inc. and its broker, Hendrix Moreno Montecastro, will forfeit their real estate licenses rather than contest a wide range of violations filed against them by the California Department of Real Estate, according to an agreement filed with the department. [...] Among the accusations the department filed late last month against Stonewood and Montecastro was that they used inflated appraisals and took commissions ranging from $74,000 to $115,000 for each house they bought for investors. Stonewood represented investors in buying hundreds of homes in Riverside County, particularly in Murrieta and Temecula. Many of the houses are now in default or foreclosure and many of their former clients are suing Stonewood for fraud. The company is also under investigation by the Riverside County District Attorney."

Stonewood Consulting and Montecastro are also targets in several civil lawsuits accusing them of fraud. Richard Ackerman, a lawyer for many of the plaintiffs, said hundreds of investors in California and several other states were defrauded. For more, see Murrieta company, broker to forfeit licensese.

Go here for other posts on this story.

New Hampshire Lawmakers Pass Foreclosure Rescue Statute

Foster's Online reports:

• "Lawmakers passed a bill Wednesday to protect homeowners from losing their homes and their equity to foreclosure rescue scams."

Now that both Houses of the State legislature have agreed to and passed the bill, the final stop for it is the Governor's desk for his signature. For more, see N.H. bill aims to stop foreclosure rescue scams.

Senate Told Of Appraiser Coercion To Inflate Valuations

CNNMoney reports:

• "In prepared testimony Tuesday before a Senate subcommittee on mortgage industry abuses, Alan Hummel, spokesman for the Appraisal Institute said 'Appraisers face pressure from various parties involved in mortgage transactions. They are told to doctor their appraisals or else never see work from those parties again'. Hummel blamed poor regulation of mortgage brokers and lenders, and weak or nonexistent enforcement of real estate practitioners."

The inflating of real estate appraisals is referred to as "hitting the number", and how often an appraiser can "hit the number" may determine how much work comes his/her way from unscrupulous mortgage brokers and loan officers. For more, see Appraisers push for real estate fraud rules (Testimony before Senate subcommittee reveals pressure placed on appraisers to inflate valuations).

NY Mobster Admits To "Stealing" His Grandmother's Home Equity

AM New York reports on an ongoing Federal racketeering trial in which mob turncoat Dominick Cicale, 40, once an acting captain in the Bonanno family, testified as a witness for the government in a Brooklyn Federal Court against two alleged mobsters. Under cross examination, and in an attempt to impeach Cicale's credibility, defense attorney James Kousouros got Cicale to admit that he had lied at times to avoid going to jail and Cicale also admitted carrying out scams, including soliciting the forgery of his 94 year old grandmother's signature on a mortgage for cash for his business. Cicale testified that his grandmother's home is now in foreclosure. For more, see Mob turncoat fingers bosses in hit.

See also, Illegal Briefs (Mobster Made His Capos Strip) (New York Post)

Florida Unlicensed Contractor Gets 5 Years For Cheating Over Two Dozen Homeowners

(revised 7-9-07)
The St. Petersburg Times reports that Mark Shannon Kiser, who falsely held himself out as a licensed contractor and who was charged with bilking over two dozen victims victims across Pinellas County, Florida out of more than $1-million, was sentenced to five years in prison followed by 15 years of probation. He was also ordered to pay $500, 000 in restitution to his victims. Kiser used the business names "Hill Construction" and "Hill Construction and Design" in carrying out the scam. For more, see Unlicensed contractor gets 5 years (Bilked of $1-million, two dozen homeowners spoke at his sentencing).

See also, DPBR, state attorney investigations lead to contractor jail time (Tampa Bay Business Journal).

Six Month Suspension For Mass. Lawyer Who Bought Client's Home At Foreclosure Sale

The Sun Chronicle reports that North Attleboro, Massachusetts attorney Michael J. Duggan, a lawyer for more than three decades, has had his law license reinstated after serving a six month suspension because of conflict of interest and ethics violations.

The law license suspension was over Duggan's representation of a financially strapped local couple facing foreclosure. According to the article, Duggan was hired by the couple to protect their North Attleboro home from foreclosure and restructure their debt; instead, he reportedly ended up purchasing the home himself at the foreclosure sale. For more, see North Attleboro lawyer Duggan's license reinstated.

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Postscript

The couple subsequently filed a civil lawsuit against Duggan and ultimately was entitled to get back some of their home equity. For more details on this case, in which a Massachusetts appeals court sets forth the specific conduct that they determined that Duggan engaged in and, in essence, awarded the couple the right to their home equity back (by imposing a constructive trust on the home and the attorney), see Duggan v. Gonsalves, 65 Mass. App. Ct. 250; 838 N.E.2d 614; (Mass. App. Ct. 2005) (case available online courtesy of Findlaw.com).

According to the court case, it wasn't until immediately prior to the foreclosure sale that Duggan advised his clients, the homeowners, that he was going to bid on the home. He informed them that if he was the successful purchaser, he would let them stay in the house and rent it for a year. A dispute about the rent arose shortly after Duggan purchased the home and he subsequently attempted to have the homeowners evicted (sound familiar?)

By the way, the Massachusetts appellate court decision constituted a reversal of an earlier decision of a trial court, in which the judge initially hearing the case apparently didn't think the homeowners were entitled to relief. Fortunately for the homeowners, their legal counsel was prepared to appeal the initial decision and have it reversed by the higher court.

Delaware Lawmakers To Consider Foreclosure Rescue Legislation

In Delaware, The News Journal reports:

• "In an effort to curtail scam artists who take advantage of vulnerable homeowners, the Mortgage Rescue Fraud Protection Act was introduced Tuesday in the Delaware Senate. Sponsored by Sen. Robert I. Marshall, D-Wilmington West, the bill aims to make it more difficult for so-called "mortgage consultants" to ensnare homeowners trying to avoid foreclosure."

The legislation, currently referred to as Senate Bill 163 is reportedly based on similar laws in effect in other states. For more, see Senate bill to protect Del. homeowners (With scammers capitalizing on rising foreclosure rate, lawmaker wants to crack down on fraud).

For story update, see Law Regulating Foreclosure Rescue Among Financing-Related Homeowner Protection Bills Signed By Delaware Governor.

California Squatters Using Adverse Possession To "Steal" Land From Property Owners?

Riverside County, California Treasurer-Tax Collector Paul McDonnell is seeking changes to an obscure state law that allows squatters to take land from unsuspecting owners, according to a recent story in The Press-Enterprise. The state law involved is the law of adverse possession which, according to McDonnell, has created "a cottage industry of people who are attempting to capitalize on the weakness of others."

In California, the adverse possession law allows an individual to acquire title to a property if they've fenced it, openly occupied it without permission and paid property taxes continuously for five years. McDonnell has discovered that there are 20 cases in Riverside County where this law is being used in an attempt to take title to properties away from the existing property owners.

In San Bernardino County, Assistant Treasurer-Tax Collector Annette Kerber said adverse possession has been an issue in her county as well, and has found cases where even though the title holder has already paid their taxes, a non-owner will insist his payment be applied.

The story also describes the alleged activities of Jeff Downtain, a local man who with his family, has been accused by a half-dozen Wildomar landowners of erecting a large fence and installed guards to keep them off their own property. Some claim to have been threatened. According to a local real estate agent, whose elderly client's property has been fenced off, "The Downtains' whole MO is to prey on the elderly, pay their (property) taxes, put their names on the title as a tenant in common, and take control of these people's properties. They will confront you. They are violent people."

The local district attorney's office is conducting a criminal real estate fraud investigation into the Downtain family's efforts to take their neighbors' land. Jeff Downtain denies any wrongdoing. For more, see Obscure law that benefits squatters criticized.

Go here for other posts on using the adverse possession legal mechanism to acquire title to property without having to pay for it.

Go here for posts on vacant homes and squatters. squatter foreclosure zebra adverse possession alpha

Mass. AG Trains 150+ Attorneys For Pro Bono Legal Services For Homeowners Facing Foreclosure

Last week, Massachusetts Attorney General Martha Coakley's Office, in collaboration with several bar and advocacy groups, hosted a two-day training session, on June 20 and 21, for local attorneys who have volunteered to provide pro bono legal assistance to homeowners facing foreclosure. Approximately 150 attorneys from throughout the Commonwealth attended the training, each committing to take on at least one pro bono case.

The training covered, among other things, litigation tactics relative to foreclosures, consumer claims and defenses, and reviewing loan documents.

Earlier this month, Attorney General Coakley announced the formation of a pro bono attorneys group as part of a multi-faceted plan to address the current foreclosure crisis in Massachusetts.

The Boston Bar Association will establish a referral hotline for individuals and families in need of such services to connect with volunteer attorneys. The referral hotline should be in place by within the next several weeks. Massacusetts attorneys who are interested in volunteering their services for this project should contact the Boston Bar Association at (617) 778-1934. Attorneys are still needed from areas of Massachusetts beyond the greater Boston area.

For more, see Press Release - Massachusetts Attorney General's Office.

California CSLB Stings Unlicensed Contractors

Working with the Elk Grove Police Department, investigators from the California Contractors State License Board (CSLB) conducted a sting operation in Elk Grove, California last week that nailed 30 unlicensed contractors who allegedly bid on work they weren't licensed to perform. Investigators posed as homeowners and invited suspected unlicensed contractors to bid on home improvement jobs such as landscaping, tile work, and painting. For more, see Elk Grove sting targets unlicensed contractors.

Hiring A Home Improvement Contractor? Ask These Questions

An article in Realty Times lists and describes specific questions a homeowner should be asking a contractor before signing a home improvement contract. Answers to these questions will (hopefully) go a long way to keep a homeowner from getting hurt financially, either when dealing with a legitimate contractor or an unlicensed, fly-by-night scam artist. For more, see Important Questions to Ask Before You Sign a Remodeling Contract.

California Foreclosure Rescue Operator Faces Felony Charges

The Santa Cruz Sentinel is reporting that Leonard Bernot, a man who over three years ago offered to help a local, financially strapped Santa Cruz homeowner with foreclosure rescue services and ended up owning her home, is now facing felony charges on the grounds that he induced her into entering into an unlawful "equity purchase" contract, in violation of California state law and is also charged with grand theft. Bernot was charged in May of this year and pleaded not guilty on June 13.

According to county prosecutor William Atkinson, a grant deed turning over ownership of the home to Bernot was among the paperwork he had the homeowner sign; he also refinanced the property with a loan large enough to pay off the existing mortgage and to allow him to pocket $90,000.

The criminal charges allege violations of what is long standing California law (passed in 1979) regarding equity purchasers (Section 1695 - 1695.17, Cal. Civ. Code) and foreclosure consultants (Section 2945 - 2945.11, Cal. Civ. Code).

After being victimized, the homeowner retained the assistance of Soquel attorney Bill Purdy, who filed a notice of rescission (possibly a Federal Truth In Lending claim here; the article doesn't say) on her behalf in April 2005 and is representing the homeowner in a civil lawsuit against Bernot. Reportedly, Bernot trnsferred title to the home back to the victim in March of this year. (Inasmuch as it wasn't until May of this year that Bernot was charged criminally for conduct that took place three years ago, I suspect that it may have been the civil lawsuit -- and the facts that may have come out of it -- that possibly served as the impetus for the criminal action by the local prosecutor.)

For more, see Santa Cruz resident says her home was stolen in foreclosure scam (no longer available online).

Go here for more on attorney William Purdy.

Go here for more on Leonard Bernot.

Go here for more posts on homeowners who have refinanced into bad mortgage loans and are now using the Federal TILA to try and undo the bad loans. undo mortgage loans TILA alpha

NYC Alleged I.D. Thief Agrees To Plea Guilty In $1.4 Million Fraud

In New York City, the Staten Island Advance reports that Fayyaz Ahmed, a bit player in a large identity theft ring with alleged criminal ties to Pakistan, pleaded guilty in state court last Thursday to six counts (of a 69-count grand jury indictment) involving charges of scheming to defraud, identity theft, grand larceny, money laundering and forgery in a six-month scheme that netted $1.4 million. The scheme involved using fake identification such as counterfeit driver's licenses to secure mortgage loans and cashing bank-issued checks.

He used a Staten Island home belonging to someone else as collateral to fraudulently pocket the mortgage loan proceeds from unsuspecting mortgage lenders and also used phony identification to obtain credit cards. Reportedly, Washington Mutual Bank, Wachovia, Citibank, Wells Fargo Bank, and MBNA America/Countrywide were the financial institutions victimized in the scam. For more, see Alleged identity thief admits role in $1M fraud scheme.

Builder Settles Alleged Pocono Fraud Case With Pennsylvania AG

Reported in an article in The Morning Call, Pennsylvania builder and mortgage company owner Gene Percudani was sued five years ago by the Pennsylvania Attorney General for claims that hundreds of homeowners had been duped into buying homes at inflated prices. Then-Pennsylvania Attorney General Mike Fisher was seeking $10 million in fines and restitution against Percudani, claiming it was one of the biggest fraud cases he'd ever seen. Last Friday, Fisher's successor, AG Tom Corbett, settled the suit against Percudani, who agreed to pay $250,000 and accepted permanent banishment from participating in the mortgage business in Pennsylvania. None of the money will go toward restitution to the homeowners, and Percudani, who is free to build homes again, admits no wrongdoing, said Kevin Harley, a spokesman for Corbett. Essentially, the settlement only covers the cost of the (failed ?) civil prosecution.

The dream of home ownership turned into a nightmare for many aspiring homeowners, who bought homes at inflated prices and, unable to sell or refinance their mortgages, ended up in foreclosure and bankruptcy. In 2001, allegations that Percudani engaged in corrupt practices drew the attention of Freddie Mac and Fannie Mae, the nation's quasi-governmental suppliers of mortgage funding. Their subsequent investigations revealed that the homes were overpriced by as much as $80,000, and resulted in Percudani being placed on their exclusionary list, which virtually barred him from the lending business.

Reportedly, Freddie Mac also forced Chase Manhattan Mortgage Corp., which financed Percudani's loans, to ''write down'' more than 200 mortgages at a cost of $8 million. Percudani, who escaped criminal prosecution when a statewide investigative grand jury declined to indict him in 2005, remains the subject of a federal lawsuit alleging he conspired with Chase Manhattan Mortgage to defraud nearly 100 home buyers. That suit, which is scheduled to go to trial in Scranton early next year, is the only hope for restitution, according to Harley, spokesperson for the Pennsylvania AG's office.

For more, see State ends part of Poconos fraud case (Home builder agrees to pay $250,000 and a ban from mortgage work).

Louisiana Feds Get Indictment of Mortgage Company Owner In Alleged Straw Buyer, Flipping Scam

In Louisiana, The Times-Picayune reports:

• "Michael O'Keefe Jr., son of disgraced former state Sen. President Michael O'Keefe and owner of Citywide Mortgage Co., defrauded the federal government into guaranteeing nearly $600,000 in Citywide loans to unqualified borrowers involved in a "house-flipping" scam, according to a federal grand jury indictment unsealed Monday. [...] O'Keefe Jr. is the seventh person charged in the ongoing "house-flipping" investigation. Five of the seven have pleaded guilty, including three who admitted they were recruited by real estate investor Calvin Davis to seek the HUD-backed loans to help him unload blighted property between Feb. 1, 2001, and January 2003."

According to the details set forth in the indictment, the typical earmarks of a "flipping" scam were present here: use of straw buyers, inflated appraisals, false information on fraudulent loan applications, and phony tax returns. Among some of the other participants allegedly involved:

• Appraiser Donald White who, according to the Feds, took payments for inflating home values in his appraisals. White, who is cooperating with the government, has yet to be charged (and maybe earning a Federal "get-out-of-jail-free" card???),
• Citywide Mortgage underwriter Michelle Cochrane, an unindicted co-conspirator who, according to the government, acknowledged that she signed off on the stack of bogus paperwork in numerous cases in exchange for between $70,000 and $120,000 from investor Calvin Davis,
• Tax preparer Robert Green, who helped buyers in (and has pleaded guilty to) preparing false tax returns,
• Real estate investor Calvin Davis, an unindicted co-conspirator and has not been charged in the scam, and around whom the entire scam seems to revlove, according to the O'Keefe indictment.

For more, see Loan firm's owner accused of fraud (Ex-senator's son faces 5 fed counts).

For the actual Federal grand jury charges, see Indictment - USA vs. O'Keefe, Jr.

For an earlier report on this story, see House flipping scam nets plea (N.O. man will be sentenced in July).

Neighborhood Problems Associated With Homes In Foreclosure

A vacant, foreclosed home in Banks Township, Carbon County, Pennsylvania was destroyed in an early morning fire. About 60 firefighters from across the area responded to the fire. The home was a total loss because of water and fire damage. The cause is undetermined; officials continue their investigation. See Marshal probes cause of morning fire (Standard-Speaker, Hazelton, PA).

A vacant and abandoned home in foreclosure with an unmaintained backyard pool raises concerns for one Visalia, California neighborhood. See Neighbors bugged by mosquitos in abandoned pool (Visalia Times-Delta).

Michigan, Ohio Cities Declaring War On Foreclosure "Eyesores"

1) The News Herald reports that in Willowick, Ohio, city officials, hope they have found a solution to the eyesores created by boarded up, foreclosed homes. The City Council has unaninously passed an ordinance prohibiting lending institutions from boarding up such homes. Lending institutions that violate the ordinance could be charged with an unclassified misdemeanor punishable by a fine of up to $2,500 for each day the violation occurs. For more, see Willowick prohibits boarding up homes.

2) In an attempt to get a hold on the "tall grass" problem common with homes that are in foreclosure and/or vacant, the City Council in Westland, Michigan unanimously passed an ordinance on tall grass, according to a story in The Detroit News. The ordinance calls grass higher than 8 inches a problem and mandates it must be cut by the owner, officials said. The ordinance takes immediate effect. The move follows similar ordinances in Warren and Grosse Pointe Woods to crack down on tall grass as foreclosure rates soar in Metro Detroit. For more, see Westland cracks down on tall grass.

3) In Bowling Green, Ohio, The BG News reports that "Legislation introduced in City Council on Monday would allow the city to more quickly mow homeowners' lawns if the owner fails to respond to requests to do so". The bill sponsor reportedly said he introduced the bill to help cope with increasing foreclosures in the city, which can leave the property neglected. For more, see Proposed bill aims to tidy lawns.