Monday, September 17, 2007

Texas AG Sues Upfront Fee Foreclosure Rescue Operator; Assets Frozen

National upfront fee foreclosure rescue operator Foreclosure Assistance Solutions of Clearwater, Florida has been sued again by a state Attorney General. Last month, it was sued by Ohio Attorney General Marc Dann (see State of Ohio vs. Foreclosure Assistance Solutions - doing business as Second Chance Mortgage). Now, it's the Texas Attorney General.

From the Texas Attorney General's Sept. 14 press release:

  • Texas Attorney General Greg Abbott today charged a business with operating an unlawful foreclosure rescue scam that targeted struggling Texas homeowners. As a result, the 408th District Court issued a temporary restraining order and froze assets belonging to three businessmen who organized the scheme. According to court documents, the defendants fraudulently advertised that they could save homeowners from imminent foreclosures.

  • The defendants named in the petition are: Foreclosure Assistance Solutions, LLC of Florida, and its principal operators, Herb Zerden and Adolfo Quintero, as well as J.W.W. Services, Inc. of California and owner John Woodruff. Under the temporary restraining order, the defendants must stop falsely soliciting distressed homeowners immediately. Although the temporary restraining order only applies in Texas, homeowners nationwide are protected by the state’s asset freeze.

[...]

  • Homeowners who contacted Foreclosure Assistance Solutions were urged to sign a $1,200 contract immediately. Under the contract, Foreclosure Assistance Solutions strictly prohibited homeowners from contacting their lenders. After homeowners paid the fee, they rarely heard from the company’s representatives again. When homeowners repeatedly called the company for answers, they were ignored. As a result, many homeowners still lost their homes to foreclosure.

[...]

  • The Attorney General seeks court-ordered restitution for homeowners who were harmed by the defendants’ acts, as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. Additionally, the Attorney General requests up to $5,000 per violation for the defendants’ failure to register the business as one that conducts telephone solicitations.
For more, see Texas AG Press Release - Attorney General Abbott Charges Foreclosure Rescue Firm with Operating Unlawful Scam (Court freezes assets of Foreclosure Assistance Solutions).

Go here for a copy of the Texas AG's lawsuit - State of Texas vs. Foreclosure Assistance Solutions, et al.

Go here for Texas AG's temporary restraining order against Foreclosure Assistance Solutions.

Go here for a sample of a solicitation used by Foreclosure Assistance Solutions to allegedly dupe homeowners in foreclosure.

Go here for a promotional video used by Foreclosure Assistance Solutions.

See Ripoff Report for links to other complaints against Foreclosure Assistance Solutions.

Illinois AG Sues Upfront Fee Foreclosure Rescue Operator

From a September 14, 2007 Illinois Attorney General Press Release:

[...]

  • Madigan's suit alleges that Florida-based Mortgage Assistance Solutions, LLC, and its managing member Michael Thomas Stoller, of Beverly Hills , California , defrauded desperate Illinois homeowners who enrolled in its “Fresh Start” program by falsely promising to negotiate with the homeowners' lenders to reduce their mortgage payments or save their homes from foreclosure. The company requires an upfront enrollment fee but, in the end, provides homeowners with little or no help.

[...]

  • Madigan's complaint describes how the defendants, in some cases, solicit homeowners by taking advantage of their fear of losing their homes with postcards that read, “YOU WILL LOSE YOUR HOME IF YOU DON'T CALL NOW!!!!” When contacted by potential customers, Mortgage Assistance Solutions refuses to discuss the specific programs available until they receive a $1,200 payment from the homeowners.
[...]
  • The Attorney General is asking the court to order restitution for the defrauded homeowners and to order the defendants to stop all deceptive business practices. The suit also seeks a civil penalty of $50,000 and additional penalties of $50,000 for each violation found to have been committed with the intent to defraud.
For more, see Madigan Utilizes New Law To Sue Mortgage Rescue Company (Attorney General Seeks to Shut Down Business and Obtain Restitution for Distressed Homeowners).

Go here for stories on Mortgage Assistance Solutions and its "Fresh Start" program dealing with homeowners facing foreclosure in Tennessee and Massachusetts.

See Ripoff Report for links to complaints against Mortgage Assistance Solutions.

Two Unsatisfied Homeowners vs. Fairbanks Capital; One Claims Home Sold Out From Under Him; Other Files $13.5M Racketeering & Corruption Suit

A story from the West Coast features the mortgage servicing company accused of predatory practices formerly known as Fairbanks Capital Corporation (now known as Select Portfolio Services - "SPS"). The East Bay Express (San Francisco Bay Area) tells the story of a local man who lost his home to foreclosure on a mortgage that was being serviced by Fairbanks.
The story describes the experiences of the Bay Area homeowner who lost his home that had been in his family since 1911, when his maternal grandfather bought the property, and that he ultimately inherited. According to the homeowner, the mortgage servicing practices engaged in by Fairbanks was the cause both of putting him into foreclosure and of the ultimate losing of the long time family home. From the article:
  • [The homeowner] is still deciding whether to proceed with a lawsuit against Fairbanks/SPS. Lawyers are typically shocked when they hear his story, he says: "First they don't believe it. Then, when they see exactly what happened, they [still] can't believe that this happened. And then we are being advised, 'You have a case that you can win hands down, but it's going to cost you a half-million dollars in legal fees to win it, so you might want to cut your losses and run.'"
Included in the article is a reference to another Fairbanks "customer" - one who has sued the company for its practices. Mike Dillon also had his experiences with Fairbanks when it attempted to foreclose on his Manchester, New Hampshire home in 2003.

He successfully obtained a permanent injunction preventing Fairbanks / SPS from taking any further action to foreclose on his home. In June, he took the next step and filed a racketeering and corruption suit to the tune of $13.5 million against Fairbanks / Select and five other companies connected to his mortgage.

For the whole story, see Stolen Property? (An unscrupulous mortgage-collection firm sold Jim Hultman's Berkeley home out from under him, leaving behind a feud and an eyesore).

See also this message board on this story.

For more on Fairbanks Capital Corp. / Select Portfolio Services, see Mike Dilllon's website, GetDShirtz.com.

For information on predatory mortgage servicing, generally, see the Mortgage Servicing Fraud website.

There have also been several complaints referring to Fairbanks/SPS appearing on Ripoff Report:

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra

Fairbanks Capital Screwing Mortgage Lender Too, Says Lawsuit

The mortgage servicing company formerly known as Fairbanks Capital Corporation (now known as Select Portfolio Services - "SPS") appears to have gained much of its notoriety by being accused of screwing individual homeowners through alleged predatory mortgage servicing practices.

However, at least according to the allegations contained in one lawsuit filed in an Austin, Texas Federal Court, Fairbanks has also been alleged to be screwing the owners of the mortgages held in one securitization pool that it services. Some of the allegations involve Fairbanks' conduct after the ownership of a consumer's home is acquired through foreclosure.

Among the allegations are: (1) self-dealing in connection with money it indirectly received (ie. kickbacks???) for real estate commissions, commissions on "force placed" insurance, property inspections, and broker price opinions; (2) allegedly setting up what the lawsuit describes could be straw or dummy companies for this purpose (see Plaintiff's First Amended Complaint - page 18, paragraph 38), and (3) "manufacturing" homeowner defaults, thereby driving homeowners into foreclosure.

In addition, the lawsuit alleges that, when selling foreclosed property ("REO"), a compensation arrangement was set up between Fairbanks and the real estate broker that, with respect to property in the $70K to $120K range, "[n]either the broker nor Fairbanks had any incentive to sell REO property for more than $60,000.00, demonstratably leading to fire-sale prices when the objective appraisals before and after the sale supported a much higher price." (see Plaintiff's First Amended Complaint - page 18, paragraph 39; and also footnote 4 contained therein).

A summary of these points and the names of the entities allegedly set up and controlled by Fairbanks / SPS can be found on the website, GetDShirtz.com (beginning about a third of the way down the page).

For a copy of the entire lawsuit containing all the allegations and a description of how Fairbanks / SPS allegedly structured their business transactions in the conduct of their mortgage servicing business, see Ellington Credit Fund, Ltd. vs. Select Portfolio, Inc., et al. (Plaintiff's First Amended Complaint - 19 counts - 52 pages, 2.35 MB approx.) - available online courtesy of Michael Dillon and GetDShirtz.com.

Go here for other posts on the company formerly known as Fairbanks Capital Corporation.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra
For consumer complaints referring to Fairbanks Capital/Select Portfolio Services appearing on Ripoff Report:

Mortgage Lenders Issuing Botched 1099s To Foreclosed Homeowners For "Debt Cancellation" Income, Say Senators

MarketWatch.com reports:
  • The IRS should ensure that families who are losing their homes to foreclosure get accurate tax bills and have a chance to negotiate the size of the bill as well as a fair payment plan, three U.S. senators said Friday. "The agency has plenty of authority to treat taxpayers reasonably in these situations," said Sen. Charles Grassley, R-Iowa, in a statement. "It needs to use that authority to serve taxpayers." Grassley sent a letter urging the changes to Treasury Secretary Henry Paulson. The letter was also signed by Sens. Gordon Smith, R-Ore., and Pat Roberts, R-Kans. Grassley, the top Republican on the Senate Finance Committee, said families are being hit with "huge" tax bills.

[...]

  • "If the IRS issues simple procedures for taxpayers to file an offer in compromise -- and undertakes a significant program of outreach to taxpayers, practitioners and lenders -- much good can be accomplished immediately," the senators wrote to Paulson.

[...]

  • Separately, Grassley and the others wrote that lenders are providing taxpayers inaccurate 1099 forms for the amount of debt forgiveness. "The IRS should be aggressively educating lenders, practitioners and affected taxpayers to ensure that accurate 1099s are being provided," they wrote.

----------------
For one story illustrating the problem homeowners may face after losing a home to foreclosure when a foreclosing mortgage lender issues an incorrect Form 1099 in reporting the amount of "debt cancellation income" from a foreclosure sale, see Foreclosing Mortgage Lender Screw-Up Results In Whopping IRS Tax Bill For Ex-Homeowner.

Go here for selected posts with information to assist homeowners, accountants, and income tax preparers in minimizing or altogether avoiding any income tax on "cancellation of debt" from foreclosure or "short sales."

(Editorial Note: Hopefully, all this becomes moot if Congress passes a law that President Bush recently proposed that, as I understand it, would provide a blanket elimination of any homeowner income tax liability on "cancellation of debt" from foreclosures and short sales. But until Congress acts, be informed that current law already allows a homeowner who has lost a home to foreclosure (or sold a home using a "short sale") to reduce or possibly eliminate completely the income tax in many situations, notwithstanding all the incomplete or incorrect information being reported by some "real estate experts" to the contrary.) short sale income tax

Some Foreclosing Lenders Conducting Illegal Tenant Evictions In Oakland

A story in Northern California's Inside Bay Area is reporting that lenders who have acquired ownership of homes in foreclosure may be illegally evicting tenants or telling them to move in direct violation of a local ordinance that prohibits the practice in many cases. According to the story:

  • Across Oakland, scores of renters ... are being served eviction notices or being told to move out as banks take over buildings from defaulting landlords. Yet Oakland's tough rental laws exclude foreclosure as a legal reason to evict tenants, except in rare circumstances. These banks, or the brokers representing them, appear to be ignoring city law or hoping tenants don't know about them. "We are getting quite a bit of evidence that there are many violations of Measure EE" — the city's voter-approved renters' rights ordinance, City Attorney John Russo said earlier this month. "The banks foreclose and the landlords take off."

  • Tenants caught in between the banks and their errant landlords may face difficult straits, he said, including eviction. In some cases, building utilities have been turned off because landlords stopped paying the bills.

[...]

  • Measure EE, the "just cause" eviction ordinance passed in 2002, specifies when eviction may occur. Except in dwellings built since 1980, the owner cannot evict rent-paying tenants who abide by rental agreements unless the owner occupies at least a third of the building or intends to move into the unit or move family into the unit. The measure also says landlords must abide by lease agreements unless tenants fail to pay rent, damage property or breach some other portion of a rental agreement.

For more, see Mortgage crisis hurting tenants (Some renters illegally evicted from buildings in foreclosure) (if link expires, try here - courtesy of FindArticles.com).

See also, Oakland City Attorney: Foreclosures Shouldn’t Force Evictions (KCBS Radio - 740 AM).

Measure EE available online courtesy of the Oakland Association of Realtors. unwittingly equity skimming beta

Sunday, September 16, 2007

Oakland Woman Scammed Out Of $1,365 Security Deposit; Unwittingly Rented Home In Foreclosure - Now Faces Eviction

In Northern California, Inside Bay Area reports:
  • Tina Bryson was nine months pregnant when she leased an apartment in April on Congress Avenue in East Oakland. Little did she know the apartment she rented was in foreclosure. Two months after her baby was born, Bryson received an eviction notice from the lender taking over the building, telling her she had 30 days to move out. By then, her landlord — wth Bryson's $1,365 deposit in hand — were nowhere to be found. "This guy tells me that the house was in foreclosure before I rented it," a frightened Bryson said last month, balancing a pile of legal papers on one knee and a baby on the other. She is half-packed to move but does not know to where.

For more, see Mortgage crisis hurting tenants (Some renters illegally evicted from buildings in foreclosure).

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. unwittingly equity skimming beta

Tenants Face Eviction Due To Landlords' Failure To Pay Water Bill

In Ocala, Florida, the Ocala Star-Banner reports:

  • The threat of dry water taps is nothing new to the residents of Busbee Quarters, but if Ocala Electric Utility doesn't receive a large check soon, those who haven't moved out will soon be sent packing. The city sent a final letter to both tenants and property owners on Friday, telling them that water flowing to the apartments will be cut off if an outstanding water bill for more than $7,600 is not paid by Sept. 24. City ordinances require occupied homes to have running water to prevent unsanitary conditions.

Collection is problematic because two outdated master water meters serve all 60-plus units, which means that residents cannot be billed individually for water consumption. Complicating the matter further is that the rented units are all individually owned, so that if the city forces the tenants to leave, the rental income to the individual owners will stop and leave them vulnerable to possible foreclosure.

In addition, there apparently is no homeowner association to handle the payment of the buildings' common expenses on behalf of the owners. The water service is in the name of just one of the owners, an investment company. The company has been paying the entire bill for all the unit owners, then receives reimbursement from the other owners for their share of the water bill. Reportedly, the investment company claims it has fallen behind on the water bill owed to the local utility because it has been getting stiffed by some of the other unit owners for their share of the water bill.

For the rest of the story, see Tenants at risk of losing water, homes (Busbee Quarters again behind on utility bill).

Ohio Mortgage Fraud Indictments Involved Two Cases Of Equity Skimming, Leaving "Rent To Own" Tenants With Homes in Foreclosure

In the recent mortgage fraud indictments in Cuyahoga County, Ohio involving four homes in the city of Solon, at least two of the cases involved an alleged combination of a straw buyer fraud coupled with a "lease / option" or "lease / purchase" scam.

In one case ("the third Solon case"), accused straw buyer Estelle Jackson, 63, of Bedford, fraudulently bought a house by lying about her employment and income. Once title was in her name, she allowed Frederick Watkins, a licensed mortgage broker at Premier Funding of Ohio, Inc. to lease with the option to buy this property to unsuspecting renters who paid Watkins approximately $27,000 before they realized it was a scam. These unsuspecting renters thought their payments were sent to the lender to pay the new mortgage loan. Watkins kept this money and he never paid the mortgage in Jackson's name. Jackson received $31,000 for her role as straw buyer.

In another case ("the fourth Solon case"), Ogbonnaya Edeh, 49, of Cleveland, fraudulently obtained an $850,000 loan in the purchase of a home. He never made a down payment, never saw the inside of the house before the purchase, and never lived in it. He lied about his employment and income, and received $31,000 for his role in the scam.

After Edeh purchased this house, he allowed Stephen Holman and Jeffrey Brown of Buckeye Lending, Inc. to lease the home to a tenant on what appears to have been a "lease-to-own" basis. The tenant made rent payments that were intended to pay the new mortgage and these payments were to count toward buying the home. However, the tenant lost his $6,000 initial down payment and $22,600 in lease payments before realizing it was a scam. Neither Brown nor Holman applied any of the rent money towards the mortgage payments.

Both of these homes are currently in foreclosure. For more, see Cuyahoga County Prosecutor's Press Release - Four Mortgage Fraud Cases Indicted - Solon.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta

South Carolina Real Estate Deals Leaves "Rent To Own" Tenants & Straw Buyers Holding The Bag

WSPA News Channel 7 in South Carolina reports on a Simpsonville real estate operator named Buy Now Properties, who reportedly peddles a "lease-to-own" (rent-to-own) program and who, according to the story, has a number of unsatisfied customers.

One customer says she paid $4500 down, plus monthly rent to Buy Now Properties, and now she's getting letters, first saying her lease was transferred to one company, then to the actual property owner, which the customer says she didn't know existed. That letter says she must now pay a much higher rent or buy the house, neither of which she can afford.

A similar story was told by a couple involving a $3,000 downpayment. Kathy Barrett, President of the local Better Business Bureau, says it has heard the same story from more than a dozen tenants of Buy Now Properties.

In addition to the alleged screwing over that the tenants are claiming, it appears that the "lease-to-own" program may have been part of a larger operation also involving a "straw buyer" investment program. According to the story:

  • This situation not only affects credit-challenged people trying to buy the homes. It affects people with good credit who tell us they agreed to let Buy Now Properties pay them thousands of dollars to use their credit to buy the homes.

  • They say Buy Now Properties was supposed to use the tenants' rent to pay the mortgages. Some say they have 12 to 15 homes in their names and gave us bank statements showing some mortgage payments that were not made. They say the homes are going into foreclosure. Said Barrett, "The investors we've talked so far have been devastated, many are telling us that they're probably going to have to file bankruptcy."
The picture that's been painted here is that Buy Now Properties arranged for straw buyers to buy homes and agreed to manage the homes by placing tenants into the homes by offering a "lease-to-own" program. It collected monies from the tenants to be applied to the straw buyers' mortgage payments, but apparently mortgage payments have reportedly gone unpaid.

The story is silent as to whether Buy Now Properties pocketed any money when arranging the initial home purchases by the straw buyers. This sounds like the beginning of a painful mess.

For more, see Buy Now Properties: From Lease to Loss.

For story update, see Consumer Investigation: Warrant issued in Buy Now Properties case - An arrest warrant has been issued and a lawsuit has been filed against Douglas E. Johnson, who runs the rent-to-own home company, Buy Now Properties, in Simpsonville.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta

Missouri Couple Unwittingly Lease Options Home In Foreclosure, Now Faces Eviction

KSDK-TV Channel 5 in St. Louis, Missouri reports the story of a couple who paid about $1,900 for a lease option to purchase a St. Louis home. They paid a first month's rent of $700, last month's rent of $700 and $500 for the option to purchase the property. It turns out that three weeks after they signed the deal, the landlord lost ownership of the home in a foreclosure sale. To add insult to injury, before the couple received the eviction notice from the mortgage lender, the now-former owner came around and collected one additional month of rent.

The man who sold the house is Wali Furqan, who lives around the corner from the house. He also owns rental properties in the area. For more, see Buyer Beware! Seller May Not Own It.

Go here to watch the KSDK-TV Channel 5 report.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta

Colorado Woman Gets Probation In House Flipping, Equity Skimming Scheme That Stiffed "Rent To Own" Tenants

Judith Smith (aka Katzenberg), 23, who was implicated in a combination property flipping / equity skimming scam that reportedly shattered the lives of its victims avoided jail and received a three-year deferred sentence, is prohibited from working in the mortgage field, or at any other job where she would be privy to sensitive customer information, and must do 60 days of house arrest.

Smith was one of five people indicted by a Pueblo grand jury under the Colorado Organized Crime Act. Each originally was charged with theft, conspiracy, forgery, criminal possession of a forged instrument and offering a false document for recording.

In addition to bilking investors in a real estate scam involving buying homes in foreclosure, getting inflated appraisals, and selling them for more than their actual values:
  • They also were accused of selling homes on a rent-to-own basis, then allowing the original notes to lapse into foreclosure or reselling the homes to second buyers while the rent-to-own contracts were still in effect.

Smith's former employer at Trinity Benefits Group, Maurice Goring, is still awaiting disposition of his case. Goring, 41, is set to face trial in October.

Appraiser Alvin Jack Woolford, 57, pleaded guilty to misdemeanor forgery in exchange for a deferred sentence. Charges against two other defendants were dismissed. The three and Smith have all agreed to testify against Goring at trial. For more, see Woman avoids prison term for fraud scheme.

Go here for other posts on this case.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta

Twin Cities Area Tenants Forced To Move Due To Landlord's Mortgage Problem

KARE-TV Channel 11 (Minneapolis - St. Paul, Minnesota) reports on the story of two tenants who are being forced to move as a result of their landlord's inability to pay the mortgage - with the property going into foreclosure. Go here to watch the KARE-TV Channel 11 report. To read the online story, see Foreclosure shock wave felt in housing courts.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. unwittingly equity skimming beta

Tenants Get The Boot After Landlord Lets Building Go Into Disrepair, Foreclosure

WOOD-TV Channel 8 in Grand Rapids, Michigan reports:
  • Eight families living in a Wyoming [Michigan] apartment complex have until Friday night to find a new place to live after the city condemned their building last week. Inspectors say the Taft Avenue complex is unsafe and unsanitary. The problems at the 16-unit facility include leaky pipes, electrical wiring in disarray and cockroach infestation.

Reportedly, the landlord told city officials that the premises was in foreclosure. For more, see Wyoming apartments condemned, tenants kicked out.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. unwittingly equity skimming beta

HUD To Foreclose On 8 Syracuse Buildings; Tenants Get The Boot

According to media reports out of Syracuse, New York, the U.S. Department of Housing and Urban Development ("HUD") "[i]s foreclosing on eight Syracuse apartment buildings because of their poor condition, which means more than 250 low-income tenants are scrambling for a place to live."

Reportedly, a senior vice president for the current owner says a deal to sell all 8 buildings to another company should close within a matter of days. The new company, he says, plans to fix up the buildings for continued use by the Federal section 8 rent subsidy program. But for now, tenants must move. For more, see:

Central Florida Cops Seek Accused Rental Scammer

WKMG-TV Channel 6 (Orlando, FL) reports:

  • A woman in Central Florida is scamming people by offering them rental properties she does not own, according to police. Ormond Beach police said Alina Loseva placed classified ads to rent properties belonging to other people. Investigators said she obtained the keys to at least three properties from a local real estate office and even collected thousands of dollars from prospective tenants. Loseva and the money are missing, police said.

According to the Orlando Sentinel, investigators think at least five people have lost money in the case. Most paid security deposits of $1,000, although two victims paid $1,500 each, according to police. Reportedly, Loseva is suspected in similar cases in the Jacksonville Beach area. For more, see:

Go here for other posts on tenant victims of rent scams. unwitting tenant rent scam zebra unwitting tenant rent scam zebra

Saturday, September 15, 2007

Novel Approach To Stave Off Foreclosure Lands NY Couple In Hot Water

Finding themselves facing foreclosure and unable to unload a second home that they owned in a faltering real estate market, a married Westchester County, New York mortgage broker couple came up with an approach in an attempt to help overcome their financial situation that local cops took exception to, according to a couple of media reports. They allegedly began operating a brothel out of the second home, which was located in the city of New Rochelle.

Reportedly, New Rochelle detectives were "doing routine monitoring of the Internet" and saw ads on Craigslist.com recently and figured out that "possible prostitution activities" were going on at the house. An undercover operation at the home confirmed the prostitution, according to cops, and resulted in the arrest of Robert Werner, 34, and his 32-year-old wife, Heather Ann Mazzenga, as well as other four women.

The arrests came two days after the couple filed for bankruptcy, and one day after the scheduled foreclosure sale of their home in Pleasantville, New York was cancelled. For more, see:

Ex-Pennsylvania Attorney Gets 51 Months For Stealing From Dead Clients; Cheating IRS

The Morning Call (Allentown, PA) reports:
  • A former South Whitehall attorney will spend 51 months in prison and must pay more than $1.4 million in restitution for stealing from the estates of deceased clients and cheating on his taxes, all while living an opulent lifestyle that included two homes and five cars. Michael Kasprenski, 44, ... was indicted by a federal grand jury in June 2006 and pleaded guilty in February of this year to 24 counts of mail, wire and bank fraud and failing to file federal income taxes.

  • In one theft, Kasprenski took a check destined to pay off a client's mortgage and deposited it into his attorney account to pay personal bills.

For more, see Ex-attorney sentenced for cheating and stealing (story no longer available online).

Pennsylvania Man Pleads Guilty In Pool Fraud

The Courier Post Online reports:
  • "A swimming pool contractor admitted [last month] that he defrauded customers in four [South New Jersey] counties of approximately $60,000 after they ordered in-ground pools. Ellwood Thomson, 50, of Morrisville, Pa., who also traded as Pool Pros, pleaded guilty in [Burlington County, NJ] Superior Court to seven counts of theft and agreed to a state prison sentence on Nov. 30. [...] The defendant agreed to serve up to six years in prison -- three of which would be mandatory before parole -- and to pay restitution to the victims. [...] Thomson admitted he took deposits and did not install pools for customers ... . The specific charge is theft by failing to make required disposition of property."

Reportedly, the states of Delaware and Pennsylvania have brought similar charges against Thomson and have issued arrest detainers with Burlington County, NJ authorities. Thomson had taken off to Florida around the time of the original ten count, 2005 indictment, and wasn't arrested until early this year. For more, see Contractor guilty in pool fraud.

Two Mississippi Judges, Trial Lawyer Get Multi Year Prison Sentences

Business Insurance reports:
  • "A prominent Mississippi trial lawyer and two state judges have been sentenced to prison for bribery schemes that included fixing a local bank’s bad-faith claim against insurer United States Fidelity & Guaranty Co. Jackson, Miss.-based Chief U.S. District Judge Henry T. Wingate last Friday sentenced Paul S. Minor, a past president of the Mississippi Trial Lawyers Assn., to 11 years and prison and fined him $2.7 million. The judge also sentenced Walter W. Teel, a former state chancery court judge, to five years and 10 months in jail and John H. Whitfield, a former state circuit judge, to nine years and two months. A federal jury in Jackson convicted the three men in March on all 14 charges against them, including bribery, racketeering and fraud."

For more, see Miss. lawyer, judges sentenced for bribery schemes.

Go here for other stories on judges who allegedly may have "lost their way". naughty judges

Arizona Foreclosure Investor Discovers Home May Have Hosted Dogfights

In Maricopa County, Arizona, the East Valley Tribune reports:
  • Bruce Jaynes purchased a home late last year, sight unseen in a foreclosure deal, only later to discover what he determined were remains of a dog-fighting training ground. He and girlfriend Sharon Pihl found 32 different stakes with chains in the ground, along with a darkened shed, of which the bottom flooring covered a deep pit the couple believed was used for the burial of the dogs. [...] “There were a couple guys coming in trucks loaded up with pit bulls looking for the former owners,” Pihl said. “After we started querying (the neighbors) about it, that’s when we found out that’s what they were doing.”
For more, see Dogfighting evidence found at Maricopa home.

Friday, September 14, 2007

Embattled Fort Myers Real Estate Broker Reported Missing In New Jersey

(updated 9-22-07)
WBBH-TV in Fort Myers reports that local real estate broker Frank D'Alessandro, who is among the defendants in dozens of state court lawsuits and two suits filed recently in federal court that claim that the investors were deceived into buying homes under the notion that they would make specified returns on their investment, has been reported missing on the New Jersey shore and is the subject of a Coast Guard search.

According to the story:
  • Family members say he went missing on Tuesday around 10 p.m. after kayaking from the residence he was renting. D'Alessandro's family told the Coast Guard and the Point Pleasant Beach Police Department on Wednesday that he was not heard from as expected. The Coast Guard found an overturned orange kayak nine miles off Point Pleasant Beach, but there’s no sign of 52-year-old D'Alessandro. Officials say all indications are that it was the same kayak he was using.

For more, see Frank D'Alessandro reported missing in New Jersey.

For story updates, see:

Go here for other posts on the lawsuits involving D'Allesandro and others.

26 Individuals & Companies Indicted In Cleveland Area Mortgage Fraud

In Cuyahoga County, Ohio, four more cases of mortgage fraud were indicted today, involving 26 individuals and entities and four houses in Solon, totaling over $2.6 million in fraudulent loans. Cuyahoga County Prosecutor Bill Mason announced the indictments Thursday from a lectern in front of one of the properties, a currently vacant, 4,400-square-foot house with a four-car garage, which at one point sold for $725,000. According to one report:
  • Prosecutors say in the cases announced Thursday, mortgage brokers, loan officers and building contractors conspired to inflate prices, forge papers and lie about buyers' incomes to get loans and pocket cash. Straw buyers never saw or lived in the homes.

For the specific details of each of the four separate cases, see the Cuyahoga County Prosecutor's Press Release - Four Mortgage Fraud Cases Indicted 4 Houses in Solon, Over $2.6 Million in Fraudulent Loans.

See also, The Cleveland Plain Dealer - Prosecutor presses mortgage fraud cases in Solon.

For TV coverage from WKYC-TV Channel 3, see Mortgage Fraud - Solon.

Another Multi Million $ Florida Escrow Scandal; $8 Million Missing

It's been a busy last week and a half or so in Florida for escrow agents accused of swiping other people's money that has been entrusted to them in connection with pending real estate transactions.

In the most recent scandal, reported in the St. Petersburg Times, a whistleblower's phone call coming from within Gulf Coast Title Closings and Escrow Services is reported to have triggered an investigation that resulted in yesterday's arrest of Gulf Coast's owners, Cheryl L. Wehlau and John T. Wehlau, who are currently being held by authorities on $5-million bail. They were each charged with 25 felonies - grand theft, money laundering and theft of escrowed funds.

According to an attorney for Commonwealth Land Title Insurance Co., the underwriter that wrote title insurance policies for Gulf Coast and discovered the misappropriations, $7.99-million was stolen from escrow accounts at Gulf Coast, leaving Commonwealth holding the bag, having to cover hundreds of bad checks that started bouncing all over Florida.

Hundreds of people and companies filed claims on bad checks disbursed at Gulf Coast closings, including one couple who sold their home and walked out of a Gulf Coast closing with a rubber check for almost $140,000. After three weeks of experiencing panic and increased high blood pressure when discovering that Gulf Coast had shut down, the couple received full reimbursement from Commonwealth, which reportedly was legally required to cover the Gulf Coast losses.

The funds were allegedly spent entirely on a lavish lifestyle, as a search of the couple's assets hasn't turned up much. For more, see Lavish life over, pair face prison (Title business misspent millions, authorities say).

Go here for other posts on this story.

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

Texas Man Convicted In Flipping Scam; Gets 25 Years

The Houston Chronicle reports:
  • A Sugar Land man who was convicted in what prosecutors say was a mortgage fraud scam was sentenced to 25 years in prison Thursday. Jurors on Tuesday convicted Fredrick Jordan Batts, 63, of engaging in criminal activity, a first-degree felony. He faced up to life in prison. Prosecutors said he was the head of a scheme involving the sale of 20 homes in Harris County and other Texas counties for more than $5 million over a six-month period in 2005.
Others charged in the scam are:
  • Viet Ba Nguyen and Mohammad Asaduddin (both pleaded guilty and received deferred adjudication),
  • Keith Lionell Wiltz (pleaded guilty, gets 8 years),
  • Cistie Johnnie Dixon, Meheret Mammo Woldie, Doris Chen Wang, and James Harold Evans Jr. (cases are pending).

For more, see Sugar Land man sentenced in mortgage fraud case (no longer available online).

ABC News On "Confession Of A Mortgage Broker"

ABC World News Tonight ran an interview last night that it had with a mortgage broker in which he reveals some of the dirty tricks he was trained to employ when pushing subprime mortgage loans onto the consumer public. For more, watch Confessions of a Mortgage Broker (A former mortgage broke describes the tricks he used to dupe home buyers). (Note: May need IE 7.0 to view).

Another Lawsuit Filed In Florida Treasure Coast Escrow Scandal

TC Palm reports:
  • In the latest court action against former Coastal Escrow Services owner Ira Hatch, a Vero Beach man is accusing Michael Thorpe Real Estate of conspiring with Coastal to defraud their common clients. Jeffrey D. Wilber filed suit Wednesday in Circuit Court against both Thorpe and Coastal, as well as Hatch and Thorpe agent Rick Krulikowski.

  • The new lawsuit follows Thorpe’s suit last week against Coastal, in which the brokerage seeks to represent a class of 175 clients all owed money after Hatch shuttered Coastal.
    But Vero Beach attorney Elizabeth Brooker, representing Wilber, said she is seeking to represent the clients. She said Thorpe can’t honestly represent the real estate clients because the brokerage would have a conflict of interest after steering clients to Coastal.
This mess involves the abrupt closing of Coastal Escrow Services leaving dozens of people in a lurch, and out an estimated $3 million. For more, see Vero Beach man files suit alleging real estate, escrow firms conspired to defraud common clients.

Go here for other posts and links to stories on this ongoing investigation.

Thursday, September 13, 2007

Pennsylvania Feds Charge Ex-Real Estate Agent With Lying To Obtain $8M+ In Mortgages

The Pittsburgh Tribune-Review reports:
  • "A former Butler County real estate agent orchestrated a scam involving more than $8 million in faulty bank loans, from which he pocketed more than $1 million, federal prosecutors claim. Scott P. Winovich, 43, of Cranberry, is charged with bank fraud and income tax evasion. He faces 30 years in prison and a $1 million fine. [...] Prosecutors said Winovich received about $8.3 million through 18 fraudulent loans from Allegheny Valley Bank, Progressive Home Federal Savings and Loan, Iron and Glass Bank and Northside Bank. Winovich netted $1.3 million for himself from those loans, according to court documents."
For more, see Butler County real estate agent accused of fraud.

For story update, see Mars Businessman Pleads Guilty To Bank Fraud, Tax Evasion (U.S. Attorney Mary Beth Buchanan announced that Scott P. Winovich, a resident of Mars, Pennsylvania, pleaded guilty in federal court to charges of Bank Fraud and Tax Evasion.)

Tennessee Couple Falls For Upfront Fee Foreclosure Rescue Service

A story on the NBC Today Show website reports on the story of a Tennessee couple who lost their home to foreclosure and their experience with an upront fee foreclosure rescue operator, Mortgage Assistance Solutions LLC of Clearwater, Florida. According to the story:
  • [The couple] agreed to pay $1,300 to enroll in the company’s Fresh Start program, which promises to help homeowners who have fallen behind on their mortgage payments with "creative" solutions. Mortgage Assistance Solutions said it would take care of everything and told the [couple] not to contact the mortgage company. [The husband] says he got a call from the lender in July warning him that he was about to lose his house. He called Mortgage Assistance Solutions and asked for his money back. The company reduced the fee to $1,000 but would not refund the rest.

For more, see BBB warns of shady foreclosure rescue firms (Companies claim they want to help, but many leave you in worse shape).

For a story of a Massachusetts homeowner in foreclosure who reportedly also lost money paying for a so-called "Fresh Start Program" from Florida, see Woman Falls Victim To 'Mortgage' Program (Resident On Verge Of Losing Home) (WCVB-TV Channel 5 - Boston); or watch the Channel 5 report.

See Ripoff Report for links to other complaints against Mortgage Assistance Solutions.

California Cops Sting Alleged "Real Estate Deposit" Scammer

In Pleasanton, California, the Contra Costa Times reports:
  • "Police are looking for more victims of a scam after a 62-year-old man was arrested Wednesday on suspicion of trying to bilk a real estate broker out of $10,000. According to Pleasanton police, Roger Dungan Buack of Hayward approached broker Dave Cunningham under the guise of being interested in buying a home. [...] Buack told Cunningham that he had a large amount of money in England that he couldn't access without a clearance from the Department of Homeland Security. He said that to meet regulations he would have to pay $10,000, which he wanted to borrow from Cunningham, who would be reimbursed twice that amount once the money arrived. [...] He [Cunningham] grew suspicious and contacted Pleasanton police. Cunningham agreed to complete the transaction at his office, along with police investigators waiting out of sight. Buack gave Cunningham a fake promissory note and a lien on a property he didn't own. Police took Buack into custody as he left the building."

  • "Buack was booked on suspicion of burglary, three counts of making false financial statements and one count of using a fictitious business address."

For more, see Man, 62, arrested in real estate scheme (Pleasanton: Broker grew suspicious after suspect asked him for $10,000 to complete transaction).

See also, Hayward scam suspect arrested (Suspicious real estate agent alerted police).

For story update, see:

Couple accused in scams to face more charges (Pleasanton: Hayward pair are accused of taking hundreds of thousands of dollars) -

  • "Additional grand theft charges have been filed against a Hayward man in connection with what authorities say is a real estate scam. Another real estate agent has come forward as a possible victim of 63-year-old Roger Buack, who is accused of running a "Nigerian scheme" to bilk agents out of hundreds of thousands of dollars."

Hayward couple accept plea deal (Pair accused of bilking real estate agents of more than $150,000) -

  • "Citing a lack of money to make bail, a Hayward married couple accused of bilking Bay Area real estate agents of more than $150,000 accepted plea deals from prosecutors Friday [10-5-07]."

Stolen Lockbox Combinations On Realtor-Listed Property Being Used In San Diego-Area Rent Scams; Used Ads On Craigslist

The San Diego Business Journal reports:
  • "Unidentified suspects have fraudulently obtained the combinations of lockboxes used to access residential properties for sale in the district. The suspects listed the properties for rent on Craigslist.com last month, used ill-gotten combinations to access homes, show them to potential renters, accept cash deposits and then disappear, according to Sandicor Inc., the local manager of San Diego County’s multiple listing service."

For more, see Criminals Using Stolen Lockbox Combinations to Run Scams on Renters (Realtor Board Urges Members to Protect PIN Numbers, Codes).

Go here for other posts on tenant victims of rent scams. unwitting tenant rent scam zebra unwitting tenant rent scam zebra

Feds Investigate Baltimore Area Tax Lien Sales

The Baltimore Sun reports:
  • "Federal agents have raided two Baltimore County [Maryland] real estate businesses and seized a wide range of records as part of a criminal investigation into municipal auctions of property tax liens. Search warrants show that the FBI obtained the records to support a probe into possible mail fraud and restraint-of-trade violations. [...] The federal probe raises questions about how the annual tax sales are conducted. In these auctions, investors bid over the Internet for the right to collect back taxes or unpaid municipal fees from delinquent homeowners. The investors can then sue to take the house if the bills, plus interest and fees, aren't paid. [...] In last year's Baltimore tax sale, ... more than 100 companies or individuals bid for about 7,400 tax certificates sold to investors. But just three investment groups won more than two-thirds of the total, city records show. Two of those groups were the targets of simultaneous raids by the FBI on Aug. 9."

For more, see Probe targets tax-lien sales (U.S. agents raid 2 area businesses).

For story update, see Probe of tax sale bids (Federal grand jury subpoenas records on bidding patterns). bidding

Wednesday, September 12, 2007

California Feds Raid 13 Locations In Crisp & Cole Alleged Flipping Operation Investigation

In Bakersfield, California, KBAK-TV Channel 29 (and KBFX Channel 58) reports:
  • "29 Eyewitness News has learned the FBI is raiding homes and businesses of the once prominent real estate duo Crisp & Cole.The FBI began raiding 13 locations about 7 a.m. this morning. Special Agent Steve Dupre works in the FBI office in Sacramento. He says the search warrants were served with the following agencies participating: Bakersfield Police Department, Kern County Sheriff's Department, the Internal Revenue Service, and the California Department of Real Estate. [...] Eyewitness News asked Dupre if 13 is an unusually high number of search warrants to be executed at one time for one investigation and he said yes, often times an investigation requires several warrants, but not usually as many as 13."

  • "Today's raids come as the California Department of Real Estate [in a separate investigation] has a number of serious accusations against the once, high profile Bakersfield real estate team, Crisp & Cole. The DRE says it was an investigation, quote, "several months" in the making. The realtors could have their licenses suspended or even revoked."

The now-defunct Crisp & Cole real estate brokerage was once operated by partners David Crisp and Carl Cole.

Go here to watch today's KBAK-TV news report. To read the KBAK-TV online report, see Crisp & Coles businesses & homes raided by FBI.

To read the KGET-TV Channel 17 report, see FBI raids Crisp home and offices.

Go here for a review of the players and some of the properties involved in the alleged flipping operation.

Go here for other posts and links to stories on the Crisp & Cole alleged flipping operation.

Florida Attorney Gives Up License In Multi Million $ Escrow Scandal

On Florida's Treasure Coast, TC Palm reports:
  • Ira C. Hatch, whose escrow and title businesses are under civil and criminal investigation, agreed Monday to give up his law license for 10 years, the Florida Bar said. “We’ve received the signed disbarment by consent,” said John Stewart, an attorney with Stewart & Evans of Vero Beach, which represents the Bar on the Treasure Coast. “This obviously recognizes how serious the charges are that have been levied against him.” The Bar is investigating charges Hatch misspent $200,000 of client funds on deposit in a Hatch & Doty trust account between July 1 and Aug. 31.
In addition, the story refers to the hot water Hatch is in regarding the escrow company he owns:
  • Hatch shut down Coastal Escrow Services last week, leaving real estate agents, businesses and consumers without their deposits on real estate transactions and property leases. The state attorney general’s office in Indian River County has estimated more than $3 million is not available to customers. Treasure Coast law enforcement officials said Monday it could be months before they file charges in their investigation of Coastal Escrow. On Friday, Vero Beach law officers searched the offices of Coastal Escrow and seized documents and computers.

A local payroll firm has also complained to cops, alleging that Hatch stiffed them with $25,000 of rubber checks, funds from which were intended to pay employees and the taxes and worker compensation payments. For more, see Florida Bar: Hatch voluntarily disbarred.

See also, Hatch gave up license in FL but still able to practice law in NY.

Go here for other posts and links to stories on this ongoing investigation.

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

CBS, NBC Morning Shows On Upfront Fee Foreclosure Rescue Operators

The CBS Early Show ran a story last week on upfront fee foreclosure rescue operators. In the report, two separate homeowners are interviewed about their experiences with the operators that they paid money to, Financial Protection Industries, and WJW Enterprises. Also interviewed for the story was Ohio Attorney General Marc Dann, who has recently filed lawsuits against six mortgage rescue companies, and reports that his office has gotten complaints about dozens of others. To watch the report, see ConsumerWatch: Foreclosure Scams; or to read the online story, see Homeowners Warned Against Mortgage Rescue Scams.

For the subsequent indictment of WJW Enterprises owner James A. Warsing, see Ohio Feds Indict Foreclosure Rescue Operator.

The NBC Today Show ran a story earlier this week about a North Carolina homeowner who lost her home to foreclosure after paying a fee to Nationwide Mortgage Assistance to help her save her home. Reportedly, after North Carolina Attorney General Roy Cooper shut down their operation, they moved one-half mile over the state line into South Carolina and have continued doin business. According to an official with the Better Business Bureau, there were only two companies of this type operating in the Charlotte, NC area last year; now there are sixteen. To watch the report, see Mortgage Foreclosure Scams.

For more on Nationwide Mortgage Assistance and Alan Steve Seabolt, see Local Mortgage Firm in Hot Water in North Carolina.

CBN News On Foreclosure Rescue

CBN News ran a television report recently on a Virginia Beach, Virginia homeowner who got caught up in a foreclosure rescue scam and is fighting back to keep his home. Reportedly, the company that took his house was legally forced to give it back -- and only because of a technicality. But because the company failed to make the mortgage payments, he's still fighting to hold onto it. Attorneys Tanya Bullock and Wanda Cooper represent the homeowner.
  • "The main thing is he was not informed of what was happening," Bullock said. "He thought he was re-financing. He ended up doing a full-fledged sale with the option to rent or lease the house back and with no right to cancel."

To watch the report, see Foreclosure Scams - Don't Get Taken; or go here to read the online article.

Go here for information on other foreclosure rescue litigation filed by the law firm Bullock & Cooper.

For more on equity stripping scams, generally,see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Southern California Legal Services Firm Establishes Mortgage Fraud Unit

The use of civil lawsuits by private and legal services attorneys representing mortgage fraud victims as a first step to bringing criminal complaints to local district attorney's offices may be taking hold in California. In Southern California, the Daily Bulletin reports:
  • "Attorneys at Inland Counties Legal Services, a nonprofit organization, have been rummaging through the financial paperwork of mortgage fraud victims for the past seven months. The organization opened a mortgage fraud unit in February throughout their six offices in the two-county [San Bernardino and Riverside] area. [...] ICLS attorneys in San Bernardino and Rancho Cucamonga said they are seeing a steady increase in mortgage fraud investigations at their offices."

  • "The District Attorney's office would normally handle these cases. However, there's a limited amount of time and only a handful of real-estate fraud investigators are available to see if investigations are eligible for prosecution, according to Larry Roberts, lead deputy district attorney in the real-estate fraud prosecution unit."

  • "While mortgage fraud investigations are in their infancy, one thing is for sure - ICLS attorneys said they know the rise in referrals is just the beginning of more to come. Some would even say a tidal wave is on the horizon. 'We're going to be seeing a lot of these cases,' said Cass Watters, managing attorney for ICLS in Rancho Cucamonga. 'Hopefully, once we have a demonstrable number of cases, then we can get the DAs involved.' Or in some cases, the FBI, she said."

  • " 'They're not interested in Joe Schmo down the street who frauded one person in a predatory scam,' Watters said of local, state, and federal law enforcement officials. 'They're looking for people who set up businesses and do it.' "
For more, see Fraud from housing boom becoming apparent.

For another story involving a criminal case being filed after a civil lawsuit was brought against a wrongdoer, see California Foreclosure Rescue Operator Faces Felony Charges.

Suing May Be Viable Option For Some Homeowners Facing Foreclosures

An article by The Associated Press appearing in the Naples Daily News provides a list of what financially strapped homeowners can do to try and stave off a foreclosure. Of the number of options a homeowner can consider, one route is to take the offensive and bring a contingent legal fee-based lawsuit. According to the story:
  • A growing number of private lawyers, with help from consumer-rights groups and legal-aid lawyers, are pursuing legal relief for borrowers who got loans they had little chance of repaying and, the lawyers argue, shouldn't have been granted.

  • Taking cases on a contingency-fee basis, these lawyers are giving borrowers the chance not only to stop foreclosure and rescind the loan, but also to seek damages for abuses in some cases. The aim is to prove that lenders granted fraudulent or "unconscionable" loans with terms skewed heavily in their favor, or to fight abuses by servicers such as phony fees that cause homeowners to default.

  • The number of lawyers specializing in this area is still small, and many already have packed caseloads. Melissa Huelsman, a Seattle lawyer who has focused on wrongful-foreclosure litigation since 2001, says her caseload has doubled in the past year to 50 active cases. She is mentoring several local lawyers.

  • Bill Purdy, a Soquel, Calif., lawyer, first looks for violations of federal statutes such as the Truth in Lending Act, a 1968 law that requires disclosure of key terms of the loan and its costs. "There are tons of illegal loans out there, but nobody's looking," Mr. Purdy says. Most cases settle out of court. But courts in states such as West Virginia and California have been most receptive to suits against lenders and servicers, says Margot Saunders of the National Consumer Law Center, which assists attorneys in such suits.

  • A possible downside to suing: in extremely rare instances, borrowers who lose a suit may get saddled with attorneys' fees for the lenders. For a list of attorneys specializing in lender/servicer abuses, check http://www.naca.net, the Web site of the National Association of Consumer Advocates, or call your local legal-aid office or bar association.

This approach is currently being used by homeowners caught up in foreclosure rescue scams. For the rest of the story, see What people can do if foreclosure looms.

For more on consumers invoking their legal rights to undo predatory transactions that violate the law, check out these posts & links. If you want more, check out these additional posts & links. undo mortgage loans TILA alpha

Tuesday, September 11, 2007

Illinois AG Files Civil Suit Against Builders For Stiffing Homebuyers

From the Illinois Attorney General's Office:
  • "Attorney General Lisa Madigan filed suit in Cook County Circuit Court on Friday [August 31] alleging that two Chicago area real estate developers have violated the Illinois Consumer Fraud and Deceptive Business Practices Act by failing to complete construction on 39 homes and by further failing to refund $250,000 in down payments to the customers – most first-time home buyers with dreams of homeownership. Madigan's lawsuit names two individuals as defendants: John J. Popp, Jr., of Aurora and Christopher Smith of Peotone. The suit also names three corporate defendants: Lord & Essex, Inc., ... in Aurora, and Pembrooke Homes, L.L.C., and Estates at Brookmere, L.L.C., both of which are located ... in Matteson."

  • "Thirty-nine would-be homeowners entered into agreements with Popp and Smith and made down payments to purchase new homes, but the developers have failed to complete the homes or return the down payments."

For more, see Illinois AG Press Release - Madigan Sues Cook County Developers Over Down Payments For New Homes (More than $250,000 in Disputed Down Payment Never Returned).

Lawsuits Arise In Soured Condo Conversions

In Northern Florida, The Jacksonville Times-Union reports:
  • "Several apartment-turned-condo complexes in the Jacksonville area are swimming in lawsuits, with complaints filed against developers, against homeowners and against condo associations. At the core are problems with aging buildings that were gussied up with paint and fancy trimmings, but never truly renovated, according to lawsuits. Most were sold as luxury condominiums at discount prices, in deals that homeowners say seemed too good to be true."

  • "In the madhouse that was the real estate market a few years ago, thousands of apartments in Florida were converted into condominiums, more than 150,000 between 2004 and 2006, according to state records. With low interest rates and high construction costs, so-called conversion projects were quick, easy and profitable for investors: Renovating apartments was cheaper and faster than building from the ground up, and demand was so high that developers couldn't churn them out fast enough."
For more, see Condo Conversions Gone Bad (Hundreds of homeowners on the First Coast have found their apartment-turned-condo units have hidden and costly problems).

Michigan Man Sentenced To 9+ Years In Multi Million $ Mortgage Scam

The Detroit News reports:
  • "A federal judge on Thursday sentenced [Tariq F. Hamad, 37, a married father of four with a college education] to more than nine years in prison and ordered him to pay about $11.9 million in restitution for his role in a massive mortgage fraud. [...] Hamad admitted to preparing fraudulent loan application packages that included false income statements, false appraisals, false title companies and false property photographs, among other fraudulent records."

For more, see Dearborn man sent to prison for mortgage fraud.

Philadelphia "Rocker" Gets 18 Months In Mortgage Scam

The Morning Call reports:
  • "A Philadelphia man whose rock band recently completed an album was sentenced to 18 months in federal prison Wednesday for his role in an Allentown [Pennsylvania] real estate scam that sold overpriced homes to clients with poor credit. Christopher Gallagher, 35, who in February pleaded guilty to three counts of wire fraud and two counts of failure to file income taxes, was also ordered ... to undergo three years of supervised release and to pay $145,000 in restitution. [...] Two other men, Patrick Balf, 53, and Donald Stone, 58, both formerly of Allentown, pleaded guilty to federal fraud charges in connection with the scam. Balf was sentenced to five years in prison and ordered to pay $2 million in restitution while Stone was sentenced to six months in prison and ordered to pay $820,000 in restitution."

The scam involved pretty standard stuff: inflated purchase prices for homes in rundown neighborhoods, falsified loan documents, selling to homebuyers with bad credit. The sales involved several hundred properties in downtown Allentown.

Reportedly, Gallagher was given three months to turn himself in to prison authorities so that he can fulfill commitments connected to his music career, including the release of a CD scheduled for around Thanksgiving, as well as upcoming performances in Philadelphia and Atlantic City. For more, see 18 months for mortgage fraud (Man allowed to finish music work. Victims say he got little more than a wrist slap).

More Hot Water For Crisp & Cole In Alleged Bakersfield Flipping Operation

KGET-TV Channel 17 in Bakersfield, California reports:

  • "The California Department of Real Estate has filed a formal accusation accusing David Crisp and Carl Cole and their now-defunct realty firm of fraud. The accusation names Crisp, Cole, the Crisp & Cole firm, Tower Lending, and several others with whom they allegedly performed unlawful real estate transactions. The action could result in the revocation of the licenses of the accused. [...] In one instance, the accusation says, Cole falsely claimed he was buying a house in which to live. In fact, the accusation says, he intended to sell it. [In another instance] Crisp told one mortgage company that a woman was an employee of Crisp, Cole and Associates to help her get a loan, the accusation says. She never worked for the company, the claim says."

Crisp, Cole & Associates misled lenders on more than $12 million worth of loans, state regulators said in an accusation filed Monday.

For more, see State accuses Crisp & Cole of fraud.

For a copy of the formal complaint filed by the State of California with the Department of Real Estate, see In the Matter of the Accusation of Crisp Cole & Associates, et al.

For the Bakersfield Californian stories, see Firm's troubles mount (State agency alleges fraud, 'dishonest dealings' in filing) (Reportedly, staffers, family members, business associates and customers owe $48.2 million on defaulted or foreclosed first loans as of Wednesday, according to an ongoing Californian tally) and Crisp, Cole allegations explained (Regulators say case is among largest of its kind in region).

For subsequent KGET-TV stories, see:

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In a related story, two homes that were originally bought for around $1 million each and that may have been involved in the alleged flipping operation involving David Crisp and his associates were recently sold at trustee's (foreclosure) sales at big losses to the mortgage lender. The reported estimated loss to the foreclosing lender was $350,000 in one case, and $400,000 in the other. Two more Crisp family-owned homes are scheduled to be sold today. For more, see Some Crisp family properties sold.

Go here to watch the recent KGET-TV Channel 17 report; and here for other posts and links to media reports on the alleged flipping operation involving David Crisp, Carl Cole, family and associates.