Wisconsin Widow Sues Foreclosure Rescue Operator To Keep Home

A battle is currently going on in a Milwaukee, Wisconsin court between an 80+ year old widow and local foreclosure rescue operator Pamela Johnson in which Johnson and her business, PAJ Investments, are accused of having engaged in an equity stripping, foreclosure rescue arrangement involving the widow's home of 30+ years, according to a story recently reported in the Milwaukee Journal Sentinel.

According to the report, the transaction involved the use of trust documents purportedly establishing a "family trust" that were signed by the widow and that was one element in the overall arrangement that resulted in the home being sold out from underneath the widow to a straw buyer. Attorneys from the Legal Aid Society of Milwaukee are representing the widow in an attempt to help her keep her home and void the foreclosure rescue transaction.

In addition to the "main event" in this court battle between the widow and the operator, other fights on the "undercard" involve (1) the straw buyer, who has reportedly filed a claim against Johnson, saying she was duped, and (2) the lenders, who have reportedly filed a counterclaim and are seeking damages against the appraiser involved in the transaction, saying he overvalued the widow's home.

For more, see Facing eviction, widow sues (Lawmakers consider bill against 'rescue scams').

For other foreclosure rescue stories involving the attorneys from the Legal Aid Society of Milwaukee, reported in the Milwaukee Journal Sentinel, see:

From foreclosure fire into eviction frying pan (Desperate homeowners are targets of buyback plans),
Beware those offering help on foreclosures.

Editor's Note:

The use of trust agreements (and, in connection therewith, the use of assignments of beneficial interests) in foreclosure rescue transactions appear to be relatively common. It is undeniable that using trusts is a legitimate way of establishing and maintaining a businessperson's privacy in connection with legitimate business and family transactions. In my view, however, using complicated trust agreements in an attempt to conceal or otherwise obscure transactions that are ultimately found by a court to be based in fraud, deception, or any other act of overreaching can only exacerbate the situation for a foreclosure rescue operator when a court (after finding such fraud, etc.) determines that the imposition of punitive damages against the operator is warranted. For punitive damage awards in foreclosure rescue situations, see for example, Foreclosure Rescue Victim Wins $3.3+ Million Verdict Against Operator.

New York Times On Foreclosure Rescue / Equity Stripping

The New York Times has recently posted a video on the story of a Chicago homeowner who was victimized in a foreclosure rescue, equity stripping transaction by Birmingham, Michigan-based foreclosure rescue operator RYM Technology Holdings and owner Felix Daniel.

Lea Weems, a lawyer at the Home Ownership Preservation Project at the Legal Assistance Foundation of Metropolitan Chicago, represents the Chicago homeowner and reportedly has helped her client get the title to her house back. As far as the lender who provided the mortgage in the equity stripping transaction is concerned, the victimized homeowner is currently suing them to declare the mortgage void because of the fraud involved when she signed away the title to her home. A hearing in her case is scheduled for mid-July.

For more, watch A Victim Of Equity Stripping (By New York Times reporters Gretchen Morgenson and Rob Harris).

More Foreclosure Rescue Victims Fighting Back To Keep Their Homes

The New York Times recently ran a story on the foreclosure rescue business and featured the stories of three victims that were reportedly ripped off by foreclosure rescue operators and are fighting back to keep their homes.

One case involves a Brooklyn, New York couple did business with Home Savers Consulting Corporation, a Brooklyn company that advertised help for people facing foreclosure. The homeowners signed their home away to this company. According to the story:

• "Jessica Attie, co-director of the Foreclosure Prevention Project at South Brooklyn Legal Services and the lawyer for the [Brooklyn homeowners], said her office was overwhelmed with homeowners who had handed over their deeds to people pretending to help “save” their homes. Officials at Home Savers could not be reached; the company’s telephone has been disconnected."

A second case involves a Newark, New Jersey homeowner who responded to a flier from foreclosure rescue operator Equitable Real Estate Solutions and met with Kenneth McKinnon, an official at the company. The homeowner ultimately signed over his home to them. Essex-Newark Legal Services is handling this homeowner's case.

A third case involves a Chicago, Illinois homeowner who did business with foreclosure rescue operator RYM Technologies and Felix Daniel, the head of the company. Within four months after signing up for a program offered by RYM, the home was in foreclosure. Lea Weems, a lawyer at the Home Ownership Preservation Project at the Legal Assistance Foundation of Metropolitan Chicago, represents the Chicago homeowner and has helped her client get back the title to her home. They are also suing the lender who placed the mortgage on the house that was part of the equity stripping transaction. They are seeking to void the mortgage. A hearing in her case is scheduled for mid-July.

Reportedly, securities regulators in Utah have issued a cease and desist order against RYM Tech, and Arizona officials said a hearing was scheduled for this month in its civil suit against the company for offering securities inappropriately.

For more, see Predators Bilk Struggling Homeowners, or

Predators Bilk Struggling Homeowners (The Times Daily).

Go here to watch NY Times video - A Victim Of Equity Stripping.

Go here for other posts on foreclosure rescue operator, Home Savers Consulting.

For copy of one of the above lawsuits, see Johnson vs. Home Savers Consulting Corp., Phil Simon, et al. equitable mortgage yak

Foreclosure Rescue Scams Growing

KOMO-TV Channel 4 in Seattle, Washington reports on the growing problem of foreclosure rescue scams in Washington. The types of scams are described in the report. Interviewed for the story is Seattle-area attorney Melissa Huelsman, who reportedly is swamped with victims of real estate foreclosure scams, with her office file cabinets beiing filled with case upon case of local homeowners tricked out of their homes by people claiming to help them keep their homes. She reports that she has clients in foreclosure receiving 20 to 30 pieces of mail each day from people and companies marketing their services to them.

Go here to watch KOMO-TV Channel 4 report (by reporter Connie Thompson) or, to read the online story, see Beware of foreclosure rescue scams.

Facing Foreclosure? Say No To Bird Dogs!

In a column by attorney Benny L. Kass appearing recently in The Washington Post, he cautions homeowners facing foreclosure (potential foreclosure rescue victims) to "say no to bird dogs." Reference is made to the 2005 report from the National Consumer Law Center which highlights three types of rescues. For more, see When Foreclosure Threatens, Beware the Bird Dogs.

For the 2005 report, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (file size - 4.61 MB).

Foreclosure Consequences On The Community

The consequences of homeowners unable to make their mortgage payments and maintain their homes often affects more than just the borrower and mortgage holder. Today's posts illustrates some of the effects foreclosures can have on the community.

Lack Of Maintenance Results In Loss Of Home For Owner & Headaches For Upstate NY Town

One homeowner's inability to maintain her home resulted in both her loss of ownership, an unsafe health condition for the community, and a potentially significant bill for demolition for the village board, as reported in a recent story appearing in the Binghamton Press & Sun-Bulletin.

The home, in the upstate New York Village of Owego, ended up being sold to the local municipality in a tax foreclosure sale when the prior owner failed to pay real estate taxes. However, the problems dated back prior to the foreclosure when the village worked with the Tioga County Health Department to evict the owner, after her inability to maintain the home resulted in unsanitary living conditions that affected the entire neighborhood. According to the story:

• "Shortly after the eviction, the village contracted three companies to clean up trash inside and outside the two-story home. Exterminators removed at least 280 rats... [T]he garbage was about 3 feet high in every room and was full of feces... [C]leanup costs totaling $7,222.89 were attached to [the owner's] property taxes... [F]urther fees included routine outdoor maintenance, according to village bills."

Reportedly, the owner sufferred from a medical condition that restricted her from standing on her feet for long periods of time. Neighbors and a local church had cleaned the property on several occasions, but the owner simply couldn't maintain the home. According to the story, the owner's husband told her not to pay the taxes because the property would be condemned anyway.

The village board is now considering when to demolish the home, the average cost of which reportedly ranges from $20,000 to $25,000. For more, see Owego takes over house that had rats.

California Court Orders Forcible House Cleaning Of Home Nearing Foreclosure

In Oceanside, California, the North County Times reports:

• "Citing health and fire code violations, and an ongoing rat infestation, the city will remove accumulated trash and other debris from a private home in Oceanside's Capistrano Park neighborhood. [The Oceanside manager of the city's code enforcement division] said his department has received 14 complaints about conditions at the property and added that the enforcement action is likely to cost $5,000 to $7,000 and will be billed to property owner ..."

Reportedly, the owner is four months late on the mortgage and is nearing foreclosure. Her failure to maintain the home may be based on medical reasons. She says that she suffers from a chronic medical condition that causes widespread pain in her muscles that prevents her from lifting anything very heavy; the condition also makes it very difficult for her to sleep. For more, see Oceanside asks judge to allow forcible house cleaning.

Ohio Man Killed, Wife Injured In Accident With Fire Truck Responding To Suspicious Vacant (Foreclosure) House Fire

In Canton, Ohio, the Canton Repository reports:

• "A World War II veteran was killed and his wife critically injured Wednesday when their car was struck by a fire truck on the way to a vacant house fire. [They] were celebrating their 53rd wedding anniversary, said friends at the nearby American Legion post they had just left."

Firefighters were responding to a burning 2 1/2-story wood-frame vacant house, which also caused some damage to the house next door. No injuries were reported at the site of the fire.

Reportedly, the house was in foreclosure and was scheduled for sheriff's sale Monday. The cause of the fire, while not yet declared arson, remains suspicious and is under investigation. For more, see Tragic end to wedding anniversary. zebra

Another Suspicious Fire Burns Down Vacant Yakima Condo Project

A condominium project which sat empty and in limbo for years has been reduced to charred remains in the largest in a string of local suspicious fires last week in Yakima, Washington, according to press reports. Construction of the condo project began seven years ago and its ownership has passed through several hands over the years.

Reportedly, the original owner lost the condos to foreclosure, and the current owners bought the property in a Sheriff's sale for $450,000 two years ago. Yakima Fire Chief Charlie Hines says damage estimates could easily be into the millions. Authorities said it's unclear whether the property was insured. The current owner, Deerfalls Property, reportedly filed for Chapter 11 bankruptcy last month. It also owes more than $25,000 in delinquent property taxes for the past three years. Jacques Von Speyer and Alexa Petschek-Von Speyer, who are listed as the debtors on the bankruptcy petition, could not be reached Thursday.

Federal Alcohol, Tobacco & Firearms agents will be working on the investigation with Yakima Fire and Police investigators to figure out what caused the empty condos to burn down. While not yet calling it arson, they are calling the fire suspicious. For more, see:

ATF Agents Join Investigation Into Fire That Burned Down Empty Condos. (KNDO-23/KNDU-25).

Go here to watch the KNDO-23/KNDU-25 video report (Brian Levitan reports) (no longer available online).

Condo project destroyed in latest suspicious fire (Yakima Herald-Republic). zebra

South Dakota Man Cops Plea In Foreclosure Arson

An Associated Press article reports that Dustin Bomford, 19, pleaded guilty to second degree arson and was given a ten-year prison sentence with five years suspended for torching a home that was in foreclosure. Bomford claimed that the homeowner had asked him to help burn down the home for the insurance money. The homeowner was not charged. Bomford was also ordered to pay about $76,000 in restitution to reimburse the insurance company for the money it coughed up to the lender holding the mortgage. For more, see Arsonist ordered to reimburse insurance company. zebra

More On Foreclosure Eyesores

A Detroit Free Press article reports on the glut of empty houses - both for sale and foreclosed - unkempt properties can be widely found that are decreasing everyone's property value. For more, see Unsold properties create neighborhood eyesores.

USA Today recently ran a story on the mosquito problem in parts of Arizona, Southern Nevada, and California due to the untended pools of vacant and abandoned homes. See Vacant pools leave neighbors swimming in mosquitoes.

Concerned that high grass attracts rats and snakes from the river, the borough council in Scottdale, Pennsylvania has recently passed a "tall grass" ordinance that can result in a $600 fine per offense and as long as 90 days in jail for violators, according to the Connellsville Daily Courier. Reportedly, the borough has spent much time with problem properties owned by banks and other lenders. See Scottdale adopts high grass ordinance.

In Binghampton, New York, the Press & Sun-Bulletin reports on the plight of one area homeowner who has been pressuring local code enforcement for ten years to force her neighbors living next door to clean up their home. The home is described as a hodgepodge of cracked paneling, broken windows and faded paint. Asphalt roofing shingles are multicolored and mismatched. And trash is strewn throughout the yard. While the neighbors have since lost their home to the city in a tax foreclosure sale, the homeowner is still waiting for the cleanup. See 10 years later, woman still waits for cleanup of adjoining property.

New Jersey Man Charged In Alleged Distressed Property Scam

Michael Weinberg, 53 of Sparta, New Jersey and who allegedly collected more than $200,000 from his real estate clients for access to properties on the foreclosure and tax liens lists, was charged with theft by deception by Morris Township police after an investigation revealed he did not provide the services for which he was being paid, according to The Sparta Independent. Weinberg was also charged with theft by failure to make the required disposition of property received and issuing back checks. For more, see Morris Township police nab white collar criminal.

Alleged Theft Of Back Tax Money Results In Foreclosure For NJ Homeowner

The Express-Times reports that Northampton County, New Jersey detectives have arrested Philip A. Simonetta and have charged him with stealing $2,500 earmarked to pay a local woman's back taxes and prevent a mortgage foreclosure on her home. Reportedly, Simonetta, who told the homeowner that he worked for Apex Mortgage, was given the $2,500 with the understanding that he would wire her money to the mortgage lender. He subsequently told her that he wired the money to the lender and that her home would not be listed for sheriff's sale. About a week later, an agent for a local real estate brokerage showed up at the woman's front door, advising her that the brokerage bought the home at the sale. For more, see Police say man stole woman's tax payment.

Illinois Feds Indict Realtor In Mortgage Fraud

The Rockford Register Star reports:

• "A 41-year-old Caledonia man was charged in federal court Tuesday with doctoring documents so borrowers could receive commercial and Federal Housing Administration-insured loans to boost his own real estate commissions. Raymond S. Talan is facing two counts of interstate carrier fraud, five counts of wire fraud and three counts of making false statements to a federal agency."

Talan is a member of the Rockford (Illinois) Area Association of Realtors and affiliated with RE/MAX Property Source of Rockford. For more, see Realtor charged with mortgage fraud.

Montana Feds Charge Loan Officer In Mortgage Fraud

The Associated Press reports that Scott Hilgers, who has a history of theft, bad checks and probation violations (and who currently resides in Montana State Prison), is now facing Federal charges in connection with his mortgage lending practices in Helena. Last month, 34-year-old Hilgers was indicted by a grand jury on charges of scheming to defraud mortgage companies and conspiracy. Similar charges are pending against Todd Rice of Boulder. It's alleged that Rice applied for four residential mortgages, which were arranged by Hilgers, allegedly using fraudulent information.They are also accused of using false statements to obtain $686,000 in mortgages.

For more, see Ex-mortgage agent facing fraud charges (Billings Gazette).

For story update, see Men plead guilty to mortgage fraud (10-6-07).

Colorado Man Victimized In Identity Theft / Mortgage Fraud Scam

The Rocky Mountain News reports on the story of Eric Krueger and how he had his identity ripped off and then used by Tremayne Miller to obtain loans from different institutions to purchase three homes before being nabbed by Aurora, Colorado police in December. Miller, 29, pleaded guilty in Denver Federal Court this month to fraud and money laundering. His sentencing is scheduled for Sept. 14. As part of his plea bargain, Miller agreed to pay Krueger for any cost related to the ID theft. Miller faces a sentence that could range from 24 to 63 months. For more, see Up and Down 17th Street: Tale of ID theft bizarre, alarming.

St. Pete Loan Officer In More Hot Water

St. Petersburg, Florida area mortgage loan officer Victor Thomas Clavizzao, a convicted felon who spent years in prison for fraud and grand theft, and who is still in the lending business, now faces a new grand theft charge stemming from an $805, 000 condo purchase in March, according to The St. Petersburg Times. Reportedly, he is also being sued over his alleged mismanagement of a Quiznos sub shop, where he repeatedly bounced checks and ruined the owner's credit; he also faces accusations by his first wife that his three other marriages - the most recent in Las Vegas this year - are invalid because she and Clavizzao never divorced. For the story, see New chapter, same sordid story (A felon real estate wheeler-dealer faces theft and bigamy accusations).

For story update, see Felon changes tune on mortgage fraud (8-23-08; In filings made public this week in U.S. District Court in Tampa, Clavizzao agreed to plead guilty to conspiring to fraudulently obtain nearly $6-million in mortgage loans on the Venetian Isle house and 12 other homes and condos in Pinellas County).

For links to other stories on Victor Clavizzao, see Multi-Flipped St. Pete Home Raises Suspicion.

California Man Gets Five Years In Federal Prison For Scamming $32 Million From Clients In Ponzi Scheme

Salvatore Favata (aka Sam Favata) was sentenced Monday in a Santa Ana, California Federal Court to five years in prison for stealing $32 million from more than 200 investors through a real estate related Ponzi scheme, according to a story in the Los Angeles Times. He was also ordered to compensate his victims at a rate of $10,000 a month when he is released from prison. A one-time owner of Orange-based National Consumer Mortgage,

• "Favata had persuaded clients to refinance their homes and use the cash, and other assets, to invest in another arm of the company, promising investment returns of 30% to 60% a year. An investigation, triggered by tips to the Securities and Exchange Commission, revealed that little of the money was invested. Instead, Favata was paying earlier investors with funds from new investors in what is known as a Ponzi scheme."

Present at the sentencing in support of Favata were former Los Angeles Dodger stars Steve Garvey and Maury Wills. For more, see Ex-athlete gets 5-year sentence in Ponzi scheme (A Cal State Fullerton baseball star convicted in a real estate scam also is ordered to compensate victims).

Foreclosure Eyesores May Be Tell Tale Signs Of Mortgage Scams In One Community

In Central Florida, the St. Petersburg Times recently ran a story on the 533 home, Venetian Isles subdivision, reportedly one of the most attractive waterfront communities in southern Pinellas County. The story reports on the eyesores being caused by three homes in the homeowner association-run community that are currently vacant, abandoned, and not being maintained, and the possible badges of mortgage fraud that are associated with each home.

The Times found that in one case, the homeowners are an elderly couple who say their signature was forged without their knowledge on $930, 000 in loans. The lawn is nearly dead and the house, now vacant, is in foreclosure proceedings.

In the two other cases, The Times found that the current owners of record can't be found, and that the former owners of each home both have said they dealt with a man named Tommy Watts who, according to The Times, has a criminal record that includes convictions for larceny, armed robbery and dealing in stolen property. Watts also couldn't be located by The Times. Along with the suspicious nature of the recorded transaction documents on file with the county involving these homes (which is described in detail in the article), the liklihood is that the two homes were used in a straw buyer mortgage fraud scam. Meanwhile, the plant beds are full of weeds and there are dead shrubs lining the sidewalk entrance.

For more, see Weeds sprout, as do suspicions.

Housing Feds Investigating Baltimore-Area Mortgage Company

City Paper reports:

• "A federal law-enforcement agency has demanded loan documents from a local mortgage company whose prominent frontman, David Carey, was profiled by City Paper ("Where Credit Is Due," Feature, Feb. 21). The subpoena, served at Equitable Trust Mortgage Corp.'s White Marsh headquarters, asks for records pertaining to about 20 loans the company made during the past three years, according to Equitable Trust co-owner William Scott Lucas. [...] Instead of a cordial informal request, agents of the federal Department of Housing and Urban Development's Office of Inspector General subpoenaed the records, Lucas says. HUD's Office of Inspector General is an independent agency that investigates HUD programs to prevent waste and fraud. [...] Equitable Trust is a seven-year-old mortgage brokerage with offices in Baltimore City, Baltimore County, and Harford County."

For more, see HUD-aches (HUD Inspector General Opens Investigation of Equitable Trust Mortgage Corp.).

Beazer Homes Faces Another North Carolina Homebuyer Lawsuit

The Charlotte Observer reports:

• "More Charlotte-area homebuyers are suing Beazer Homes, alleging a litany of misdeeds and claiming the company "fraudulently qualified" them for loans they couldn't afford.
  A lawsuit filed Tuesday by 10 homebuyers in northern Charlotte's Oak Hill development says a Beazer sales agent, Roderick D. Williams, falsified documents to help buyers get loans for Beazer homes. Williams and Beazer Mortgage, which arranged five of the loans, are also named as defendants."

Charlotte, North Carolina attorney Ken Davies, whose firm represents the mostly first-time homebuyers, calls the litigation "an abuse-of-trust case." His clients claim that that they were told they could afford the homes and could qualify for the financing. "They had a right to rely on the professionals to guide them appropriately," says Davies. For more, see Beazer facing new suit (Oak Hill homebuyers say they weren't properly advised about loans).

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

California Regulators Investigating Defunct Real Estate Company's Ties With Sour Loans

The Bakersfield Californian reports:

• "It's impossible to know what state regulators are looking for as they examine files of the former Crisp & Cole Real Estate company. Two former staffers recently told The Californian that investigators from the state Department of Real Estate have been asking questions and requesting files. Meanwhile, default notices continue to pile up for properties related to Crisp & Cole. [...] Californian research has uncovered a pattern of property turnover among Crisp & Cole associates, steep price increases and 100 percent financing by subprime lenders in many of the properties now defaulting."

Quick flips involving some of the homes now sitting empty that are described in the article may point to possible improprieties that underlie the transactions.

For more, see Crisp defaults pile up (Latest notice on $1.75 million loan for Seven Oaks mansion).

Wall Street Investment Bank Helped Defraud Subprime Borrowers, Says Federal Jury

A Wall Street Journal article appearing in the St.Louis Post-Dispatch reports:

• "Twelve years ago, Lehman Brothers Holdings Inc. sent a vice president to California to check out First Alliance Mortgage Co. Lehman was thinking about tapping into First Alliance's lucrative business of making "subprime" house loans to consumers with sketchy credit. The vice president, Eric Hibbert, wrote a memo describing First Alliance as a financial "sweat shop" specializing in "high-pressure sales for people who are in a weak state." At First Alliance, he said, employees leave their "ethics at the door." The big Wall Street investment bank decided First Alliance wasn't breaking any laws. Lehman went on to lend the mortgage company roughly $500 million and helped sell more than $700 million in bonds backed by First Alliance customers' loans. But First Alliance later collapsed. Lehman landed in court, where a federal jury found the firm helped First Alliance defraud customers."

For more, see Subprime lending problems ensnaring big Wall Street firms.

Change In Maryland Ground Rent Law Results In Flurry Of Lawsuits

(original post 7-2-07; revised 7-5-07)
A new Maryland law that changes the way ground rent lawsuits are handled and which went into effect on July 1 has resulted in a flurry of lawsuits being filed before the law became effective, reports The Baltimore Sun. According to the article:

• "The [Maryland state legislature] overhauled the ground-rent system after The Sun published an investigative series that showed how a small number of investors had used their extraordinary power under the law to seize hundreds of homes over back rent as meager as $24. In many other cases, ground-rent owners have extracted fees of 20 to 50 times the amount of rent owed to settle cases."

Owners of more than 80,000 Baltimore City homes must rent the ground under their houses; smaller numbers of ground rents exist in Baltimore and Anne Arundel counties. For more, see Ground-rent owners rush to file suits (Flurry of ejectment cases logged before law changes).

For links to the entire series of stories on the ground rent issue reported by The Baltimore Sun, see The Sun's ground rent series.

See also, In Baltimore, Sun Shines On "Ground Rent" Outrage (Columbia Journalism Review).

Straw Buyer Scam "Quote Of The Day"

In their July 2, 2007 edition, Florida Trend Magazine declared the following their "Quote Of The Day" (made by one of the mortgage fraud straw buyers claiming the "dupe defense" that I wrote about in my 7-3-07 post, Straw Buyers Assert "Dupe Defense" In Reports To Cops In Suspected South Florida Mortgage Fraud Scam):

• "'As smart as I am, I had no clue that this was a scam because my best friend is telling me his cousin is doing it.' -- John Oral, an insurance claims investigator and straw buyer of a house in Miami who discovered he had been duped and his credit ruined in a mortgage deal gone bad."

I would simply add that, according to the Miami Herald article in which this quote appeared, after the FBI declined to investigate Mr. Oral's fraud complaint (made jointly with another straw buyer), Mr. Oral (who reportedly received a "$7,000 fee [which] was delivered by courier to his home in two neat bundles" for being a straw buyer) and his fellow straw buyer "victim" (who reportedly received an $11,000 "straw buyer fee") ultimately relieved themselves of their unaffordable properties by reportedly unloading them onto another unwitting straw buyer.

See Quote of the Day - What You Need to Know About Florida Today.

Dallas District Attorney On Local Mortgage Fraud: “The Criminals Are Running The Show”

Texas television station KDFW Channel 4 in Dallas-Fort Worth reports:

• "[D]allas County District Attorney, Craig Watkins says he has not yet prosecuted a mortgage fraud case in his six months in office. Watkins says his office has received more than 600 mortgage fraud cases it is currently investigating but he has no prosecutors able to handle them. Watkins says he also needs more funding approved by County Commissioners to fight the problem. “We don’t have the prosecutors that can go forth and prosecute these cases because we don’t have the resources,” Watkins told Fox 4."

• "But in neighboring Collin County, there is a much different story. Assistant District Attorney, Chris Milner says the problem ‘has to be taken over by local DA’s offices.’ “There has been a landslide of reported cases and we are running as fast as we can to prosecute them,” Milner told Fox 4. Milner says Collin County has prosecuted more than a dozen people in recent mortgage fraud cases and ordered them to pay thousands in restitution. Milner wants to send a message."

• “If you want to perpetuate mortgage fraud, don’t do it in Collin County,” said Milner. Fox 4 asked Dallas County DA Craig Watkins what message his office is sending by not prosecuting mortgage fraud cases. Watkins replied, “…the criminals are running the show.”"

According to the Fox4 story, the local FBI office isn't doing too much either. Because of the mortgage fraud which was followed by subsequent foreclosures, residents have watched their neighborhood go downhill, while seeing their tax appraisals skyrocket.

For more, see New Station Investigation: Mortgage Fraud Presents Challenge for Dallas D.A.

Coercion To Inflate Property Appraisals Alive & Well In South Florida

The Miami Herald recently ran a story on the pressure exerted on local real estate appraisers to meet the expectations of mortgage originators and others when preparing a property appraisal. According to the story:

• "The temptation to tinker with the numbers can be intense in a market where the workflow for many has slowed to a trickle. Appraisers are the least paid in the chain of professionals involved in a real estate transaction -- a typical appraisal costs about $350. The consequences for not bending the rules can be severe. Appraisers complain bitterly of being blacklisted or not getting paid for appraisals that don't match what a buyer, seller or broker wants."

On the private website MortgageFraudWatchList.org, South Florida appraisers reportedly logged 20 attempts in less than a month to get them to misrepresent the value of a property.

For more, see Appraisers feel heat to inflate property's value (Inflated appraisals can send prices rippling up through neighborhoods and raise property taxes).

Disbarred Northern Florida Lawyer Cops "No Contest" Plea

The Pensacola News Journal reports:

• "A disbarred Pensacola attorney who admitted stealing hundreds of thousands of dollars of his clients' money for his personal use faces at least four years in state prison. Vince Whibbs Jr., 62, known as "Vinnie," pleaded no contest Tuesday to charges of racketeering, grand theft and mortgage fraud involving the theft of more than $680,000. A second grand theft charge was dropped."

For more, see Whibbs Jr. awaits sentence (Disbarred attorney pleads no contest to bilking clients). For a prior story on Vincent J. Whibbs, see Whibbs faces fourth charge (Disbarred attorney also is accused of racketeering).

Suspicious House Fires In South Florida Rising; Any Link To Foreclosures?

This is the question being asked by officials with the State Fire Marshal's office in Lee County, Florida, according to a report by NBC2 (Channel 2 - Fort Myers). According to the story:

• "Through just the first six months of 2007, the number of suspicious fires under investigation in Lee County has more than tripled compared to all of 2006. [...] Officials with the Fire Marshal's Office say this is a problem all over South Florida and they're keeping an eye on the growing number of fires."

"Are they behind on their mortgage payments and they're trying to get out of a bad house deal?' This is a key question being asked in arson investigations, according to one fire official.

For more, see Number of suspicious fires on the rise, or watch Channel 2 TV report (by reporter Josh Davidsburg).

Oregon Townhomes Sinking Into The Ground; Lawsuits Are Flying

The Oregonian is reporting on one heck of a mess going on involving six Washington County, Oregon townhomes that are literally sinking into the ground.

County officials have declared the homes unfit and ordered the residents to evacuate and are concerned about gas lines bursting or electrical lines shorting.

Some of owners of the six townhomes are struggling to make payments on homes they can't live in anymore; others are facing foreclosure and bankruptcy because they can't afford to pay mortgages, rent and fees to lawyers fighting for them.

The association is suing the builders for what it claims are defects in the homes and townhouses throughout the community.

The homeowners have sued eight entities for damages. The eight entities named in the suit took action against 17 other companies. They, in turn, brought action against four more, and those four brought in four additional companies. All told, there are 35 parties involved in all the related litigation, according to one attorney involved in the matter. He says that the cases have generated about 40,000 pages of documents, 30 to 50 depositions and hundreds of thousands of dollars in attorney fees.

Meanwhile, the banks holding the mortgages on the sinking townhomes are pressing the homeowners into foreclosure. For more, see Hope of simple solution sinks with homes.

Detroit Deed Thief Sentenced To 3-20 Years In State Prison

A state court judge in Detroit, Michigan sentenced local man Russell Jenkins Daniels last week to serve 3-20 years in prison for his involvement in a deed theft scam in which dozens of people unwittingly bought homes based on bogus quit claim deeds, The Detroit News reports. According to the story:

• "Prosecutors said Daniels, 61, of Detroit, would target mostly unoccupied homes, research their title history at the Wayne County Register of Deeds office and then create phony paperwork, including mortgage releases and quit claim deeds to sell the properties to legitimate buyers. Daniels pleaded guilty to uttering and publishing, forgery, obtaining money under false pretenses over $1,000 and 4th time habitual criminal, which could have earned him a life sentence."

The criminal investigation began when the sheriff's department was tipped off about Daniels' frequent visits to the register of deeds office; his visits attracted the attention of office employees. Before sentencing, Daniels was required to sign 52 affidavits admitting fraud and nine quit claim deeds involving 43 properties in an attempt to assist the true owners of the properties straighten out their property titles.

For more, see Detroiter gets prison in deed fraud.

Go here for Wayne County Prosecutor's Press Release - Prosecutor, Register of Deeds and Wayne County Sheriff Announce Deed Fraud conviction.

Go here for other deed theft posts. deed theft zorro

Convicted Connecticut Home Repair Scammer In More Hot Water; AG To Get Involved

The Hartford Courant reports that Richard Koslik of Springfield, who has a past record of convictions for home improvement scams, is now facing additional charges of such severe home improvement fraud that Connecticut Attorney General Richard Blumenthal may personally handle part of the criminal cases against him.

Koslik is accused of taking tens of thousands of dollars from five homeowners and then abruptly abandoning the remodeling jobs he'd promised. Homeowners in Bristol, New Britain, Enfield, and West Hartford complained to police last year, according to police. He is already on probation for home improvement convictions in 2002, and Blumenthal plans to ask a court to put Koslik back in prison, who served only six months of his three year sentence for his previous escapades.

"Clearly he has violated his probation, and his latest arrests show he violated the conditions of his probation. We'll also pursue the pending fraud cases," said Blumenthal, who expects to handle the July 3 hearing himself rather than assign it to an assistant.

For the details of the current charges, see Man Accused In Multiple Cases Of Home Improvement Fraud.

Another New York Lawyer In Hot Water

In Westchester County, NY, The Journal News reports:

• "Denise Cooper ... has been disbarred after admitting she could not successfully defend herself against complaints that she misappropriated more than $137,000 worth of client funds. [...] The state's Grievance Committee began the probe into allegations that she converted $40,000 worth of client funds from her attorney escrow account on one occasion, and $97,592 from a foreclosure sale in another. Cooper had an office in Elmsford."

For more, see Elmsford lawyer disbarred.

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

Minnesota Mortgage Broker Pleads Guilty In Cash Back Fraud

Prior Lake, Minnesota mortgage broker Ronald C. Joseph, 49, pleaded guilty yesterday in a Minneapolis Fedreral Court to federal mail fraud and money laundering charges stemming from a cash back, mortgage fraud scheme whereby he concealed $2.5 million in payments from lenders to himself and others, according to the Minneapolis Star-Tribune. Reportedly, the money was fraudulently obtained from lenders through about 40 real estate transactions in which phony loan applications and closing statements were used to dupe the lenders into making loans. For more, see Prior Lake mortgage broker guilty in loan scheme.

See also, Another Prior Lake mortgage broker pleads guilty to fraud (Shakopee Valley News).

Federal Appeals Court Stops Government From Taking Wife's Interest In Marijuana Grow House

An Associated Press article reported on the ABC News website reports on a decision by a Federal Appeals Court that stopped the Federal government from taking, by forfeiture, a wife's one half interest in her Branford, Connecticut home in which her husband was growing marijuana.

The home was owned by a husband and wife. The police raided their home and found 65 marijuana plants, glass smoking pipes and other items associated with operating an indoor pot farm. The wife claimed she was unaware that her husband was growing pot in the home. The lower Federal trial court ruled that the entire home was to be forfeited to the Federal Government.

On appeal, the Second Circuit U.S. Court of Appeals reversed that portion of the trial court's decision that required the wife to forfeit her half of the home. The appeals court found that the court record was devoid of any evidence indicating her use of drugs or her involvement in any criminal activity whatsoever. It did, however, note that the jury found that the wife did become aware at some point of her husband's activities, and upon becoming aware, did nothing. Accordingly, the appeals court ruled that forfeiture of her half of the home was a constitutionally excessive fine, given her lack of involvement in the pot cultivation and sent the case back to the lower court to determine to what extent forfeiture should be imposed on her if at all for, what the appeals court described as, "her minimal culpability or any harm she caused." It affirmed that portion of the lower court ruling ordering forfeiture of the husband's half to the government.

For more, see Court: Feds Allowed to Seize Only Half Conn. House in Drug Case, Woman Gets Other Half.

For court decision, see von Hofe vs. United States (2nd Cir., June 27, 2007). pot grow ops alpha

Straw Buyers Assert "Dupe Defense" In Reports To Cops In Suspected South Florida Mortgage Fraud Scam

In Miami, Florida, the story of Dayalin Zayas, 36, and her husband, Marlon Gonzalez, 31, was featured in a recent investigative report by The Miami Herald. The couple found their way into the lucrative mortgage lending industry by becoming loan officers which is simple in Florida, since licensing of loan officers is not required (Florida mortgage brokers, however, do need to be licensed).

The report details how the couple proceeded to recruit (and reportedly dupe) straw buyers for home purchases and who were ultimately left holding the bag.

For example, in little more than a month, one straw buyer couple (a husband and wife) was approved for six mortgages worth $3.67 million, according to property records. A second straw buyer agreed to provide his signature and Social Security number on loan documents, in exchange for $7,000. A third straw buyer was signed up for $1.32 million in loans for two homes, public records show, and said he was paid $11,000 for the use of his personal information in obtaining the loans.

According to The Herald, two of the straw buyers (the second and third straw buyers above) reported the matters to the FBI (presumably claiming they were dupes). The FBI reportedly is not investigating the complaint because, according to the story, it has only two agents in its Miami field office working on mortgage fraud cases (maybe the FBI's lack of interest in these cases had something to do with the fact that these straw buyers pocketed $7,000 and $11,000, respectively, in the scams). Police reports have also been filed with several other agencies.

The Herald reports that the properties owned by the two straw buyers who went to the cops were ultimately unloaded onto another straw buyer found by loan officer Zayas; the new straw buyer was Zayas' housekeeper's husband. Reportedly, Zayas arranged the deal to dump the properties onto the new straw buyer to placate the old straw buyers (possibly to keep them from pressing criminal charges in the event the local Miami-Dade cops investigate the matter).

The Herald concludes its report by stating that the company owned by the couple at the heart of the dubious deals, SeaSide Advantage, is still around; it has changed its focus to making both home and commercial loans, according to its website. For more, see Home buyers duped into foreclosure.

Lax Mortgage Underwriting Standards Result In Headaches For One Identity Theft Victim

The Miami Herald ran a story recently about a Miami-area executive who says negligent underwriting on the part of JP Morgan Chase allowed him to become a victim of mortgage fraud. Reportedly, his home was broken into and thieves made off with a jewelry box containing his social security card. About a year later, he learned that two homes had been purchased in his name and JP Morgan Chase, who ended up holding the mortgages, was suing him for foreclosure. After obtaining copies of the loan documents, he says he discovered that the only correct information on the mortgage application was his Social Security number. He believes that the mess could have all been prevented had the mortgage underwriter simply made one phone call.

Reportedly, a spokesman for Chase Home Lending says the loan was bought from another originator, and that Chase acted quickly to address the identity theft once they learned of it. For more, see Lax lending fuels fraud, foreclosures (The mortgage underwriting process has been criticized for lax standards).