Michigan ACORN "Subprime" Protestors Storm Washington Mutual Subsidiary; Cops Called In

The Detroit News reports:

• "Police had to quell a sit-in Tuesday afternoon after angry protesters complaining about lending practices stormed into a mortgage office [in Livonia, Michigan]. More than a dozen members of the Association of Community Organizers for Reform Now descended on an office of Long Beach Mortgage about 4:30 p.m. They chanted "predatory lender, criminal offender." The company is the sub-prime branch of Washington Mutual Mortgage Co."

For more, see Livonia:Protesters storm mortgage firm.

NYC Feds Charge 26 In $200 Million Straw Buyer, Identity Theft Mortgage Scam

The Financial Times reports:

• "US officials charged 26 people with conspiracy and fraud, alleging in a criminal indictment unsealed on Tuesday that they used invented purchasers, stolen identities and inflated appraisals to fraudulently obtain subprime mortgages on more than $200m in property in and around New York City. Those who have been charged include real estate appraisers, a loan settlement agent, mortgage brokers and loan processors in addition to people who purchased the property. They allegedly conspired to lie to a series of lenders to obtain mortgages between 2004 and 2007."

Among those charged are three New York brokerage firms, Northside Capital, AGA Capital and its successor Lending Universe, and AGA Capital owner Galina Zhigun.

Among the victimized mortgage lenders include Countrywide Financial, New Century Financial, Washington Mutual and National City Corporation. For more, see:

U.S. atty indicts 26 for mortgage fraud in New York (Reuters).

Retired NY Judge Reportedly Left Homeless & Broke By Guardianship Process

The Brooklyn Daily Eagle reports on what sounds like a cesspool that may exist in the guardianship process in New York. The story involves a retired judge with a once-sizable estate who was declared incapacitated by a state court and whose estate was placed under the supervision of a court-appointed guardian. Since that time, the retired judge's bones sound like they were picked clean. By the time a Brooklyn, New York District Attorney's criminal investigation found that there was no evidence of criminal wrongdoing, the story reports that "the once-proud judge was left homeless, without the ability to pay his own utility bills."

For more, see Were Funds Pilfered from a Retired Judge’s Estate? (Supporters Say Accounting Should Reopen Criminal Probe).

For story update, see Watchdog Group Looks at Brooklyn Court’s Handling of Retired Judge’s Estate (Brooklyn Daily Eagle - 9-14-07) - which reports:

• A respected judicial watchdog group that maintains a Web site and a paid subscription service has taken on one of the more intransigent cases to have appeared on a court docket in recent years — the guardianship case of retired Civil Court Judge John Phillips, whose supporters have cried foul over the way his once vast estate has been mishandled by a series of court-appointed attorneys, experts and judges over the years. Go here for more.

For additional reporting on the story of the alleged ripoff of the judge's assets by court-appointed guardians, see Fallen Guardian Angels - by Leah Nelson (reported in Judicial Reports).

Go here for other posts on this story.

Go here for other posts on the escapades of the public administrator's offices in New York City. daily eagle retired judge granny-snatching racket

Another Upstate NY Straw Buyer Cops Plea In "Andersen" Affair

EmpireStateNews.net reports that Mark Slagen, 53 of Schenectady, New York pleaded guilty in an Albany, NY Federal Court to conspiring in a mortgage fraud scheme with the currently-under-indictment Anthony Andersen and others. Slagen 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 secured by real estate in the upstate New York cities of Troy and Rensselaer. For more, see Man pleads guilty in mortgage fraud scheme.

Go here for other posts on this alleged mortgage fraud scheme.

Denver Pastor Accused Of Duping Church Members Into Being Straw Buyers

Two former members of a Denver, Colorado church claim that they unwittingly participated in a real estate straw buyer scam orchestrated by their pastor, Rev. Harold Hicks, of Mount Carmel Community Baptist Church, according to an investigative report by the Rocky Mountain News. One straw buyer reportedly ended up buying seven rental properties for about $845,000, according to public records. The total monthly mortgage payments on the seven properties are about $6,000 and are now in foreclosure. According to the story:

• "An investigation by the Rocky Mountain News into claims made by [the unwitting straw buyers], shows that on several occasions in 2005 Hicks used his power of attorney to sign real estate documents that contained false information. The two women maintain that Hicks provided the false information on the documents and that they signed them because they trusted him as their pastor. Doing so, they said, led to ruinous financial consequences."

The article states that one of the houses in foreclosure is currently being used as a crack house. No criminal charges have been brought, although the state Division of Real Estate has reportedly taken steps to revoke the license of the appraiser who valued the properties involved and fined him $22,500.

For more, see Signing on faith (Ex-church members say pastor misused trust to conduct shady real estate deals).

Go here for updates on this Rocky Mountain News investigation.

SEC Investigating Alleged $100 Million Mortgage Fraud

The alleged mortgage fraud scam that reportedly occurred in Murrietta, California and the surrounding area and that is the subject of a number of civil lawsuits is now the subject of an investigation by the Securities Exchange Commission, according to media reports. Reportedly, evidence obtained by the plaintiffs in the civil lawsuits is being shared with the SEC by plaintiffs attorney Richard Ackerman. Those individuals who are of interest to the SEC and the plaintiffs in the civil lawsuits are:

• James Duncan, Maurice McLeod, Chris Oetting, companies linked to Steve Kayden and Dennis Dewitt Jr., Hendrix Montecastro and his Murrieta mortgage brokerage, Stonewood Consulting Inc.

The alleged scam reportedly left unwitting investors with close to $100 million in mortgage debt. For more see:

Feds probing investment ring (North County Times)

SEC investigating alleged Inland scam (The Press Enterprise)

Go here for other posts on this alleged mortgage fraud.

Missouri Foreclosure Rescue Operator Facing Felony Theft Charge; Allegedly Cheated 80 Year Old Woman Out Of Home

An article from The Kansas City Star and appearing in The Columbia Daily Tribune reports that reputed real estate guru and foreclosure rescue operator J. Michael Ledman is facing a felony theft charge alleging that he bilked an 80-year-old Johnson County, Missouri woman out of her home of 38 years, causing her to lose $150,000 in home equity. Local authorities allege that Ledman induced the woman to surrender the title to her $450,000 home without her knowledge. They contend that Ledman deceived her into thinking she was signing papers that would keep her house out of foreclosure. The woman reportedly believed that she was signing a lease with Ledman that would allow her to stay in the house for two years while she made arrangements to pay off what she owed using a pension that was due her.

Involved in the foreclosure rescue transaction was the use of a "land trust" agreement that essentially placed the title to her home in a trust in which Ledman’s wife was named trustee. The elderly woman reportedly also signed over her beneficial interest in the trust to Ledman’s company, J. Michael Properties Inc., giving it the authority to transfer ownership of the house.

In addition to the hot water Ledman currently finds himself in, the real estate investment guru, who reportedly charged $2,900 and up per person for how-to training and gave out advice on his weekly radio show about everything from credit scores to how to buy and sell distressed property with no money down, also finds himself with financial problems. The Star reports that he was evicted from his office, a bank foreclosed on his $500,000 home, and in April, he lost his radio show when he ran out of money to pay for it. He reportedly has also left in his wake unhappy sellers, buyers and investors who lost money in his debt repair and get-rich-quick programs.

For more, see Real estate’s market crash ensnares guru (No-money-down leader in legal trouble).

NJ Man Facing Felonies In Equity Stripping, Straw Buyer Scam

The Jersey Journal reports that Kamal Ghobryl, 41 of Bayonne, New Jersey, has been charged with two counts of theft by deception in excess of $75,000, as a result of his transferring the ownership of a friend's home to his company and then selling it to a straw buyer without her knowledge. While the charges are a state crime, he was arrested by detectives from both the Hudson County, New Jersey Prosecutor's Office and FBI agents, which may mean that Federal charges could also be forthcoming (ie. mail fraud, wire fraud, money laundering, false statement on loan application, conspiracy, etc.).

While the incident does not appear to have occurred in the context of a foreclosure rescue context, the suspect's alleged conduct essentially mirrors that of an equity stripping, foreclosure rescue transaction.

Because of the victim's limited capacity to read and write English, Ghobryl volunteered to help the victim sell her house. He had the victim sign paperwork that transferred her property to his company, K&G Financial, without explaining what she was signing, followed by obtaining a $270,000 mortgage in the name of the straw buyer using phony financial and employment documents, according to authorities. Ghobryl allegedly pocketed the money, made no payments on the mortgage, and allowed the property to go into foreclosure. The victim, who was still living in the house when all this went on, first learned that the property had been sold when she received a water bill in the name of the straw buyer, who has not been charged with committing any crimes (yet). For more, see Charge he fleeced friend in $270G real estate scam.

More On Minnesota Feds' Foreclosure Rescue Prosecution

As reported in a prior post, Twin Cities mortgage brokers Michael Fiorito, 39, of Prior Lake, and Kristin Louise Jerde, 21, of Eagan, were indicted in a Minneapolis Federal Court a couple of weeks ago on charges that they sought out financially strapped homeowners facing foreclosure and stripped the equity from their homes using a variety of schemes.

They were charged with (1) conspiracy to commit mail fraud, (2) mail fraud - 3 counts, (3) engaging in a financial transaction with criminally derived property (money laundering). The government is also seeking forfeiture of all property obtained, connected with, or traceable to the proceeds of the alleged scam.

For the Federal grand jury charges, see - Indictment - United States vs. Fiorito & Jerde.

Go here for other posts on this story.

Criminal Cases Involving Foreclosure Rescue Arrangements Not Unheard Of

Transactions involving foreclosure rescue arrangements have occasionally been the subject of criminal prosecutions. The cases involved (1) those taking upfront fees and/or ongoing periodic fees for services never performed, (2) those who acquired overleveraged homes with no equity who proceeded to pocket the rent from the home without paying on the existing mortgage (ie. equity skimming / rent skimming), and (3) those who engaged in the so-called foreclosure bailout, foreclosure rescue, equity stripping arrangements.

For links to stories and cases involving criminal prosecutions in these situations, see Criminal Prosecutions Of Foreclosure Rescue Operators (posted on the companion blog, The Home Equity Theft Reporter Cases & Articles).

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).