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
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.