Monday, November 12, 2007

Alleged Pennsylvania Ponzi Scheme Head Pleads Guilty Of Swindling 800+ Victims Out Of Millions

(original post -11-10-07; last modified 11-16-07)
In Harrisburg, Pennsylvania, Lancaster Online reports:

  • Wesley A. Snyder pleaded guilty in U.S. District Court in Harrisburg Friday to a mail-fraud scheme that defrauded more than 800 mortgage customers, including about 300 in Lancaster County. An evidentiary hearing was canceled Thursday because Snyder's lawyer worked out a plea agreement with the U.S. Attorney for the Middle District of Pennsylvania. The agreement requires Snyder to make restitution to his victims, which the court stipulates to be somewhere between $15 million and $32 million.

***

  • Authorities said that since 1988 Snyder took in more than $65 million from 811 purchasers of his "wraparound" mortgages but forwarded only $39 million to the banks and other institutions that provided the financing. [...] Snyder's wraparound mortgages were essentially second contracts tied to larger mortgages he brokered in their names with outside banks.

For more, see Snyder pleads guilty to mail fraud (Owner of bankrupt mortgage business admits to fraud involving more than 800 customers and faces paying up to $32 million in restitution).

Go here for an illustration of how the refi / wraparound mortgage scam works.

See also:

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving Wesley Snyder, OPFM, Image Masters.

Charles Head Nationwide Foreclosure Rescue Scam Nicks Arizona

The Arizona Republic reports:
  • Seven Arizona properties are part of a "foreclosure rescue" mortgage scam that snared hundreds of victims in 27 states, according to an Internal Revenue Service warrant. An IRS search warrant obtained by the Asbury Park Press of New Jersey lists 256 affected properties stretching from Maine to Hawaii. The warrant identified 106 homeowners as victims, so luckily Arizona wasn't this scam's main focus. The FBI has sent letters to homeowners and investors about the scam. Those letters identify Charles Head, who ran FundingForeclosure.com, as the focus of the investigation.Three of the Valley properties named as part of the investigation are in Phoenix. Two of the homes are in Mesa. One is in Cave Creek, and the other is in Litchfield Park.

From: The Arizona Republic - Foreclosure Scam (2nd story from top).

Go here for other posts on foreclosure rescue operator Charles Head, Head Financial, Funding Foreclosure and related companies.

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.).

South Florida Condo Converters Unable To Unload Unsold Inventory; Units Reverting Back To Rentals

Regarding condo buyers who not too long ago thought investing in a unit in a converted rental building might be a good idea, the South Florida Sun Sentinel reports:
  • Stephen Mahaffee became one of those new buyers. He had been renting a one-bedroom apartment ... for about 10 years when he got word the building was being converted to condos. So in January he made his move and paid $199,900 for a two-bedroom unit. Less than a year later, he's one of only 18 owners in the 164-unit complex that Bankers Holding Group reluctantly decided to turn back into a mostly rental property. The emerging trend of going from rentals to condos and — when the units don't sell — back to rentals again is what South Florida real estate experts are calling "conversion reversions." Since 2006, about 6,059 units that were once for sale in Broward and Palm Beach counties have been switched back to rentals, according to Jack McCabe, a Deerfield Beach real estate analyst. "The condo-conversions sales market has absolutely fallen off the table," said McCabe.

For more, see Slow housing market spurs condo 'conversion reversions' (With no buyers, market forced to change units back to rentals) (story also available here).

Credit Card Skimming On The Rise

Some straw buyer, mortgage fraud scams have incorporated identity theft into the mix, whereby straw buyers who are in on the scam from the get-go use stolen identities to illegally obtain mortgage loans.

One technique for stealing identities which appears to be on the rise is credit card skimming. An entry in Wikipedia (as of 11-12-07) contains the following description of credit card skimming:
  • Skimming is the theft of credit card information used in an otherwise legitimate transaction. It is typically an "inside job" by a dishonest employee of a legitimate merchant, and can be as simple as photocopying of receipts. More imaginative routes are possible; an episode of The Sopranos showed how a compromised magnetic stripe reader could store account information for later use. Common scenarios for skimming are restaurants or bars where the skimmer has possession of the victim's credit card out of their immediate view. The skimmer will typically use a small keypad to unobtrusively transcribe the 3 or 4 digit Card Security Code which is not present on the magnetic strip. Many instances of skimming have been reported where the perpetrator has put a device over the card slot of a public cash machine (Automated teller machine), which reads the magnetic strip as the user unknowingly passes their card through it. These devices are often used in conjunction with a pinhole camera to read the user's PIN at the same time.
WTVJ-TV Channel 6 in Miami, Florida recently ran a credit card skimming story reporting that "what started at restaurants, police records show, is now being found in fast food outlets, hotels, and grocery store ATM machines." The story describes one recent case in which an 18 year old drive-through cashier at a McDonald's was arrested in September for skimming 100 credit cards, police say, before he was stopped. Police say he admitted he did it.

To watch the report and see how easy it is for an employee of a local merchant to literally "swipe" an unsuspecting customer's I.D. information off the magnetic strip from a credit card, see Who's Swiping Your Card? (NBC 6 Investigates Credit Card Skimming).

Go here for additional footage of NBC 6 reporter Jeff Burnside talking about his investigation, "Who's Swiping Your Card?"

Go here to read the online story.

For another story on credit card skimming, see:
  • Authorities indicted 13 in alleged identity theft ring - Alleged New York City I.D theft ring accused of hiring waiters and waitresses to steal credit card info from restaurant customers by use of small skimming devices; ring accused of making millions of dollars of credit card charges, over 1000 victims identified.

Sunday, November 11, 2007

New Hampshire "Sleeping Judge" Admits Helping Hubby Stiff State Bar

In Dover, New Hampshire, SeacoastOnline reports:
  • Superior Court Judge Patricia Coffey admitted violating judicial conduct code by hiding her husband's assets in a trust to avoid paying $75,000 in fees related to his disbarment from practicing law. Coffey's admission was released Wednesday by the state Judicial Conduct Committee, which also scheduled a Dec. 10 hearing to decide what discipline will be imposed upon her. The JCC reports its options include a private reprimand or public censure.

***

  • The JCC reports Judge Coffey and her husband, John, ultimately paid the $75,000 in disbarment fees, but only after an investigation was launched. The investigation resulted in the discovery of their real estate trusts which were established within days of the disbarment proceedings, according to the JCC. Coffey's admission follows scandals alleging she slept on the bench during multiple court proceedings and her husband's disbarment for bilking an elderly woman out of a half-million dollars in Rye real estate.

  • The sleeping allegations came to light soon after a Sept. 26, 2006 jury poll was published by the N.H. public defenders office, quoting seven of 13 jurors who found Candia's Donald Spinner guilty of sexual assault. Two jurors said they saw Coffey sleeping on the bench during the trial. Juror Donna Kolber-Simonds, told a public defender's office interviewer "she noticed that the judge kept falling asleep during the trial," while fellow juror, Mary Fortuna, told the same interviewer the jury "got a kick out of Coffey nodding off."

For more, see Judge cooked the books (Hid husband's assets to save $75K).

For other current and past media reports on Judge Coffey, see:

For earlier post, see New Hampshire "Sleeping Judge" Accused Of Helping Hubby Hide Assets From Creditors. naughty judges

Virginia Judge Booted From Bench For "Coin Flipping" Approach to Decision Making (& Other Antics)

In Richmond, Virginia, The Associated Press recently reported:
  • A judge who ordered a woman to drop her pants and decided a custody dispute by flipping a coin was removed from the bench by the Virginia Supreme Court on [Nov. 2]. The decision against Juvenile and Domestic Relations Court Judge James Michael Shull of Gate City was unanimous. "Unless our citizens can trust that judges will fairly resolve the disputes brought before our courts, and treat all litigants with dignity, our courts will lose the public's respect and confidence upon which our legal system depends," Justice Barbara Milano Keenan wrote.

***

  • The justices could have merely censured Shull, but they noted that he had appeared before the Judicial Inquiry and Review Commission in 2004 for allegedly calling a teenager a "mama's boy" and a "wuss" and advising a woman to marry her abusive boyfriend. That complaint was dismissed with an admonition to Shull to chalk it up as a learning experience.

For more, see Judge booted for flipping coin to decide (if link expires, try here).

Go here to view the Virginia Supreme Court ruling booting Judge Schull from the bench.

-----------------

For an opposing point of view, see In Defense of Judge James Michael Shull - Part I, Part II, and Part III. naughty judges

Sleeping On The Bench: Conduct To Be Condemned Or "Harmless Error" ???

Let me start by saying that this post is not about poor, down-on-their-luck homeless people looking to catch a few winks on the bench in a neighborhood park or at a bus stop.

The blog, Bits Of News, recently ran a piece on a subject that I found quite interesting - the issue of trial judges who, in the course of presiding over a court proceeding and without formally calling for a recess and retiring to their chambers, take an occasional nap in plain view of those in the courtroom. Included in the story is a description of the presiding judge in a criminal trial who reportedly was seen by the jury nodding off during parts of the proceeding. The trial ended in a conviction of the defendant and, despite the judge's reported nap-taking tendencies, was upheld on appeal. For more, see When Justice Sleeps: The Law on Snoozing at the Bench.

For other stories of judges accused of taking occasional snoozes on the bench, see:

In defense of our robed members of the court system, a "Letter to the Editor" appears in the Utah Bar Journal, in which the writer (who identifies himself as a judge) suggests that the problem with sleeping judges may rest with the attorneys appearing before them who may be "mumbling and stumbling with mind-numbing effect" in their courtroom presentations, as well as those barristers so mesmerized by their own eloquence that they just don't know when to shut up (asking "Do you make your point and then just stop talking, or do you flog it until the judicial mind retreats to sleep in self-defense?").

The above "Letter to the Editor" was written in response to this "Letter to the Editor" (also from the Utah Bar Journal) which tries to address ways to deal with the problem of the occasional snoozing judge. naughty judges

Arsonist Facing Foreclosure Takes Plea Deal; Admits Torching Home For Insurance Cash

In Suffield, Connecticut, The Journal Inquirer reports:
  • A Suffield arsonist with dozens of prior felony convictions was sentenced Thursday to seven years in prison for torching his house for the insurance money. Michael Paul Schook had in October rejected a plea offer, but with a trial looming, he accepted the deal that also requires him to serve eight years of special parole when he's released from prison.

***

  • [P]olice say an ex-convict who had spent time in prison with Schook and was living with the family told authorities that Schook asked him how to set a fire that wouldn't look suspicious. That man said Schook told him he had financial difficulties, and police say a credit check revealed the house was in foreclosure, Schook's car was being repossessed, and he owed thousands to credit card companies.

For more, see Suffield man gets 7 years for burning home for insurance money.

For more on fires & foreclosures, go here and go here. foreclosure arson yak

Trial Of Accused Arsonist Facing Foreclosure Ends In Mistrial

In Marietta, Ohio, The Marietta Times reports:
  • Alleged juror misconduct brought an abrupt end Friday to the trial of Newport man accused of having his own house burned down. Testimony in the trial, in which Willard Bush, 30, ... is accused of arranging to have his house torched to collect insurance money, ended on Thursday. Jurors deliberated into the evening before requesting a break that night. Deliberations resumed Friday, but the case ended in the afternoon with Common Pleas Judge Ed Lane declaring a mistrial. “We had a report that some information reached the jury room other than what was provided through the trial, and there was some concern that it might affect the jurors’ decision,” said Assistant Washington County Prosecutor Kevin Rings.

For more, see Mistrial declared in arson case (11-3-07).

In an earlier story published during the trial, The Marietta Times reported:

  • Assistant Washington County Prosecutor Kevin Rings said it [was] suspicious that Bush bought insurance 10 days before the fire. Also, he said Bush lied on his insurance application, failing to report several past claims — including another house fire just four years earlier. Also, Rings said Bush failed to report he was facing foreclosure on the property.

For more, see Newport man’s trial out of home fire continues (11-1-07). foreclosure arson yak

Home Burns Down Three Days Before Foreclosure Sale; Homeowners Charged With Arson

In South Beloit, Illinois, the Rockford Register Star reports:
  • Three days before Dean and Jaclyn Jacobson’s house was scheduled to be sold at a foreclosure auction, it went up in flames. Now the couple are charged with arson, accused of setting the home ablaze. [...] The Jacobsons are charged with aggravated arson, a Class X felony, which carries a penalty of between six and 30 years in prison, January Smith, spokeswoman for the marshal’s office, said. The charge was upgraded to aggravated arson in this incident because a South Beloit firefighter was injured during the blaze. [...] Court records show that the Jacobsons were having trouble making payments on their home, automobile and medical expenses.

Reportedly, the home was a total loss, with damages estimated at approximately $120,000-$150,000. For more, see South Beloit couple charged with arson (if link expires, try here). foreclosure arson yak

Flue Fire Damages Home In Foreclosure; Fireplace Used For Heating After Gas Service Shut Off

In Somerset, Pennsylvania, The Tribune-Democrat reports:
  • A Somerset family had to leave home Thursday after a flue fire left it temporarily uninhabitable. Jay Patton said he filled the fireplace at his mother’s home ... with six logs Thursday morning and let them burn for an hour while he played video games. The family heats the home with a fireplace because their gas service has been shut off since last year, Patton said. The house is up for sheriff’s sale Nov. 16 after a mortgage foreclosure.

***

  • Greg Davis, Somerset second assistant chief, said most of the damage was contained to the walls. The fire is not considered suspicious, he said. “I would tell people that, if they are using a wood-burner, they should have their flue cleaned first,” Davis said, adding that the damage should be fairly minor, though he did not have an estimate.

For more, see Flue fire damages home in Somerset. foreclosure arson yak

Another Vacant Foreclosed Home Goes Up In Flames; Investigators Suspect Squatters

In Mansfield, Ohio, the Mansfield News Journal reports:
  • After living in the same place for 26 years, Glenna Hershberger said she was heartsick to see her former two-story home ablaze Sunday afternoon. Hershberger, 59, and her husband only recently lost the 521 Springmill St. home to foreclosure. [... According to Mansfield Fire Captain Don Yarger,] "It looked like a mattress in the living room was all burned up, so I don't know if someone was smoking on it or what happened. We're still not sure what actually caused the fire, but I'd be leaning toward vagrancy." [...] Neighborhood watch coordinator Amanda Stamfield, 33, said she suspected drug dealers had been in and out of the home since the Hershbergers moved out.

For more, see Vagrants suspected in Mansfield house fire.

Go here for posts on vacant homes, foreclosures and squatters. foreclosure arson yak squatter zebra

Saturday, November 10, 2007

Reports Of Rent Gouging Due To Southern California Wildfires

In Southern California, The San Diego Union Tribune reported about two weeks ago:
  • North County real estate agent Christine Richards described the race to find rentals in areas hit by wildfires as “a feeding frenzy.” “On Wednesday and Thursday, I probably had 60 phone calls,” said Richards, who handles rentals. “You see a lot people raising rents, unfortunately. The prices jump up a couple of thousand dollars in houses that don't rent for that much. If someone requested me to do that, I would cancel the listing.”

***

  • [The San Diego County Apartment Association] posted a notice at warning landlords that raising rents by more than 10 percent during a declaration of emergency is a crime punishable by a $10,000 fine and/or up to a year in jail. The rent restriction remains in effect for 30 days.

For more, see Rental hunt 'a feeding frenzy' (It might be hard to find places near burn areas).

Maryland Legislator No Stranger To Foreclosure Rescue Suits

HometownAnnapolis.com reports:
  • While his fellow delegates were in Annapolis Tuesday to work on the state's budgetary woes, Del. Tony McConkey made the trek downtown for another reason: The Severna Park Republican is being sued. Reginald D. Williams of Crofton reopened a 2005 lawsuit earlier this year, alleging that Mr. McConkey - who buys and sells homes in foreclosure - violated a previous court order and stole more than $12,500 from the sale of Williams' home. [...] Mr. Williams and his ex-wife, Deborah Ann Williams, first sued Mr. McConkey in July 2005, saying the delegate scammed them out of their house, according to court documents. The case was settled in January 2006 when Mr. McConkey agreed to sell the house, pay off the mortgage and pay Mr. and Mrs. Williams $12,516 each. But Mr. Williams, who originally hoped to keep the entire house, claims Mr. McConkey never sent him his $12,500 check.

***

Teresa Milligan, another disgruntled client, filed a lawsuit against Mr. McConkey in October 2006, also claiming the delegate tricked her out of her Pasadena townhouse. A year later, the lawsuit is still pending. Michael Gregg Morin, Ms. Milligan's attorney, said in court papers that Mr. McConkey has been involved in "years of effort" in "perfecting various schemes." He claimed the delegate approaches "susceptible and vulnerable consumers" and that he never told Ms. Milligan she was signing over her house.

For more, see Delegate faces suit (Former client says he was swindled out of $12,500) (link no longer available online).

For more on Tony McConkey, see:

  • Suit Against Maryland Delegate Reopened (WBAL Radio AM-1090 - 11-1-07) (link no longer available online),
  • Maryland Legislator Accused of Fraud (Lenderloft.com - 12-1-06),
  • Delegate accused of fraud (The Examiner - 10-25-06),
  • Let Me Work For You, Specializing In Problem Properties - 17 Homes Saved From Foreclosure In 05 (link no longer available online).

See also, Maryland State Legislator Sued For Alleged "Foreclosure Rescue" Scam; Police Investigation Ongoing.

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.).

Oregon Jury Convicts Real Estate Con Artist On 28 Felony Counts

In Multnomah County, Oregon, The Oregonian reports:
  • After nearly 11 days of listening to Corey Jerry Pritchett talk about his innocence -- sometimes for hours at a time -- a Multnomah County jury Thursday found the Gresham pastor guilty of 28 felony counts of swindling low-income people out of an estimated $43,000. Pritchett, 44, represented himself as a successful real-estate investor who would use his clients' money to flip houses, promising 30 percent returns. Or he sold or rented them houses he didn't own. In one case, he sold two people the same house on the same day. Lisa Heinemann, 44, a single mother of five who was about to lose her Southeast Portland house in a foreclosure, testified that Pritchett took $1,000 from her.

***

  • Many of the victims encountered Pritchett through Craigslist, newspaper ads or by chance. Special prosecutors Simon Whang and Jason Weber said Pritchett told his victims he was a pastor and prayed with them. But investigators found earlier this year that his congregation had dwindled to his immediate family. While wooing clients, he failed to mention that he had filed for bankruptcy five times, had at least 40 civil judgments against him, and owed a few hundred thousand dollars, according to prosecutors.

For more, see Jurors find swindler guilty of 28 felonies (Flipping houses - Corey Jerry Pritchett promised 30 percent returns on real estate) (no longer available online).

Disgraced Florida Attorney / Ex-Sheriff To Fork Over $46K To IRS

The St. Petersburg Times reports:
  • Broward County's former sheriff has agreed to pay about $46,000 in back taxes, interest and penalties to the Internal Revenue Service, federal court records show. The payments stem from Ken Jenne's guilty plea in September to tax evasion and wire fraud conspiracy for accepting thousands of dollars in hidden payments and favors while sheriff. Jenne resigned in disgrace on Sept. 4 after a nine-year tenure as sheriff.

Jenne, 60, also a former Florida state senator and a former partner at the high powered, Fort Lauderdale law firm formerly known as Conrad, Scherer & Jenne, is currently awaiting his scheduled Nov. 16 sentencing. He is looking at 18 to 24 months in prison. For more, see Former sheriff to pay $46,000 to IRS.

Friday, November 09, 2007

Story Updates On Alleged Florida Escrow Funds Theft, Pennsylvania Mortgage Investment Ponzi Scheme

Alleged Eastern Pennsylvania Ponzi scheme involving Wesley Snyder, OPFM, Inc., Image Masters:
  • A hearing scheduled for Thursday in U.S. District Court in Harrisburg concerning the personal assets of bankrupt mortgage broker Wesley Snyder was delayed. For more, see Hearing for OPFM founder delayed (Lancaster Online - 11-9-07),
  • Broker’s assets frozen indefinitely (Lancaster Online - 11-9-07),
  • Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving Wesley Snyder, OPFM, Image Masters.

Alleged theft of escrow funds (estimated at approximately $4M) by Vero Beach, Florida attorney Ira C. Hatch and his now-defunct escrow company, Coastal Escrow Services:

Washington State Homeowner Sues To Void A "Charles Head-Orchestrated" Foreclosure Rescue Sale Leaseback

Andrews Publications reports:
  • A victim of a mortgage fraud scheme is asking a Washington state court to declare that title to her home was not transferred to Deutsche Bank National Trust Co. in a foreclosure action. Seattle homeowner Phyllis Reynolds wants the King County Superior Court to declare that the defendant bank's title to her home is void.

  • Reynolds sued Deutsche Bank, its agent Northwest Trustee Services Inc. and escrow company First American Title Insurance Co. after learning that the loan she took out to refinance her mortgage was fraudulent. The suit also names as defendants Donald and Linda Theriault, a married couple whose identities were allegedly stolen and used by con artist Charles Head to defraud Reynolds. Head is not named in the lawsuit.

***

  • Reynolds says that since she was not a Deutsche Bank customer and was the victim of a scam, the bank's title to her home is void and the foreclosure conducted by Northwest Trustee Services is a nullity. Reynolds also says any transfer of the title to the Theriaults is void as well. She seeks a declaration that title to the property belongs to her. Reynolds is also seeking unspecified damages from First American on the grounds that the company breached its fiduciary duty when serving as the escrow agent during the fraudulent loan closing.

Charles Head entities that are allegedly involved in this case are Funding Foreclosures (aka FundingForeclosures), Nations Property Management, and A-One Investment Management Inc. For more, see Woman Sues to Keep Home After Mortgage Scam.

Case Filing Information: Reynolds v. Theriault et al., No. 07-2-29304-3, complaint filed (Wash. Sup. Ct., King County Sept. 6, 2007).

Go here for other posts on foreclosure rescue operator Charles Head, Head Financial, and related companies.

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.).

Equity Stripper Ordered To Return Deed To Home To New Jersey Resident; Status Of Existing Mortgages Up In The Air

In Ocean County, New Jersey, the Asbury Park Press reports on a local homeowner who found herself unwittingly signing away her home in another bogus Charles Head-orchestrated sale leaseback deal:
  • Marie Citarella said she never wanted to sell her house. But land records show Citarella signed a "warranty deed" to Michael and Deanne Mattice of Colorado Springs, Colo., transferring the property for nothing, and thus paying no real estate transfer taxes. The Mattices, in turn, took out two mortgages on the property for a total of $204,250, according to documents. Neither the Mattices or their attorney could be reached for comment. However, a letter to Citarella from the Mattices' attorney said the couple was working with the U.S. Attorney's Office in Sacramento, Calif.,which is leading the investigation, and expressed the couple's intention to return the property to her.

Citarella said that Charles Head, a principal in FundingForeclosure (aka Funding Foreclosure), attempted to evict her in June 2007, but an attorney representing Head dropped the case after reviewing Citarella's paperwork. The attorney said he no longer represents Head or his companies and declined to comment further.

The home went into foreclosure, and while the local judge in Toms River, New Jersey ordered the Mattices to reconvey the title to the home to Citarella, it appears that the foreclosure action is continuing, though the judge did give Citarella a 30 day stay. For more, see Defrauded woman fights to stay in house she didn't intend to sell.

Go here for other posts on foreclosure rescue operator Charles Head.

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.).

Financially Strapped Orlando-Area Homeowner Unwittingly Signs Over Deed To Home In Sale Leaseback, Rescue Deal

In Orlando, Florida, a story by the Orlando Sentinel that came out in June reported on another Charles Head sale leaseback deal gone bad:
  • If you're not careful, homeowner Arthur Washington warned Wednesday, your house may be the next to go. [...] Washington, 59, said he was surprised how easily he was persuaded to give up the title to his home. When he and his elderly mother moved here from Massachusetts, Washington said, he wanted the kind of house often showcased in glossy magazines. But when his mother spotted the coffee-colored three-bedroom house on Montague Place in Pine Hills, she fell in love. The pair bought the home in 2003. Then the 2004 hurricanes hit, bringing water damage and a long wait for insurance money. In early 2005, bankruptcy and foreclosure loomed briefly but were avoided. But Washington was never quite able to catch up financially.Washington, who has poor credit, found a loan he thought would help keep him afloat. A lender told Washington he would hold the title to the home if Washington paid $600 a month in rent for one year. When the year was up, Washington could refinance his home. It didn't work out that way. Instead, in 2006, the lender sold Washington's home to an investor, who was unaware of the situation. Washington is still living in the house.

  • The Federal Bureau of Investigation already is looking into the actions of Charles Head, the lender who dealt with Washington. Meanwhile, Washington is searching for a lawyer to help him regain ownership of his home.

For more, see Foreclosures fly through roof, or go here for the same story.

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.).

More On The Metropolitan Grapevine / Metro Dream Homes "Ponzi Scheme"

The Laurel Leader (Laurel, MD) reports on last week's Prince George's County Circuit Court ruling placing Laurel home- mortgage company Metropolitan Grapevine under receivership and freezing the company's assets:
  • Judge Thomas P. Smith took the action against POS Dream Homes, also known as Metropolitan Grapevine, following a three-day trial that ended Oct. 31. [...] "The only income that the defendants have shown of any significance is the investments of each succeeding generation of investors," Smith wrote in his ruling. "Investments are not income ... because they have to be repaid." Smith not only froze POS' assets, effective Oct. 29, but also those of 18 other entities affiliated with the company.

***

  • "The examiner wasn't able to do a thorough investigation because at times the office was closed, and (when he did get in he) found computers and files missing," said Raquel Guillory, spokesperson for the state attorney general. The examiner did determine that the company only had $150,000 in cash assets and 50 cars, including numerous S-Class Mercedes Benzes, Corvettes, Escalades and other high-end vehicles. Those vehicles, along with 14 real estate properties in Laurel, Virginia and the District, totaled $2 million, according to court documents.

***

  • "The only method of the defendants paying older investors was to obtain new investors in a classic Ponzi scheme," Thomas ruled.

For more, see Judge freezes assets (Payoff plan seen as 'classic Ponzi scheme').

See also, Maryland Shutters 'Investment Firm' Amid Fraud Charges (Victims lost more than $50 million in Ponzi scheme) (Consumer Affairs - 11-6-07).

Go here for other posts & links to other stories on Metropolitan Grapevine / POS Metro Dream Homes.

Virginia Judge Stripped Of Robe For Courtroom Antics

The New York Post reports:
  • A family court judge in Richmond, Va., was removed from the bench after several kangaroo-court moments, including flipping a coin to decide a custody case. James Michael Shull was unanimously stripped of his robe by the state's Judicial Inquiry and Review Commission, which also found the jurist guilty of calling a teen a "mama's boy" and a "wuss" as well as telling a woman to marry her abusive boyfriend.

Source: Weird But True. Go here for other stories on naughty judges. naughty judges

Thursday, November 08, 2007

Ohio Feds Squeeze Plea From Upfront Fee Foreclosure Rescue Operator

In Ohio, Cincinnati.com (The Enquirer) reports:

  • A Springboro man faces up to 20 years in prison and a fine of up to $250,000 after pleading guilty to one count of mail fraud for falsely promising help to Cincinnati and Dayton homeowners concerned about foreclosure. Operating under the name American Foreclosure Group LLC, Randall Webb promised to negotiate with lenders for strapped homeowners in exchange for a $600 to $700 fee. Instead, he filed bankruptcy on behalf of clients, sometimes without their knowledge or consent.

  • Gregory G. Lockhart, U.S. Attorney for the Southern District of Ohio, said that Webb's business was similar to other foreclosure-rescue scams that promise desperate homeowners help but instead pocket upfront fees. [...] Prosecutors say Webb did little for his distressed customers and, in at least one case, pocketed money from a client that was intended to fund a new payment plan. His clients remained in the dark, in part because he instructed them not to contact their lenders.

For more, see Foreclosure scam triggers plea.

See also, Ohio Man Pleads Guilty to Mail Fraud.

For press release announcing the initial indictment, see Springboro Man Indicted In "Operation Truth Or Consequences" National Action Bankruptcy Fraud.

Connecticut Homeowner Slaps Foreclosure Rescue Operator With Federal Lawsuit

In New Haven, Connecticut, the New Haven Independent reports on a foreclosure rescue deal involving a homeowner facing foreclosure and local real estate agent Alex Ortner and his investors, operating through the Whittier Road Land Trust and the Temperly Investment Group LLC:
  • Arthur and Joanne Taylor were days away from losing their Westville home to foreclosure when a man came knocking on the door. He had a plan to save them. Alex Ortner and his real estate company ended up making at least $25,000 off the family in a buy-back scheme now being challenged in New Haven U.S. District Court. After getting slapped with a lawsuit filed in October by attorney Gary Sklaver, Ortner said he won't be making the same offer to desperate homeowners anymore.

***

  • Sklaver considers Ortner's transaction was not just a sale with buyback option, but a "disguised loan" with an exorbitant interest rate. In this case, investors advanced $36,000 towards the mortgage and were repaid $78,583 a year later, Sklaver calculated - that's a 120 percent interest rate.

  • Sklaver contends the Taylors' home sale falls under the Truth In Lending Act, which requires disclosure of certain information including the interest rate and an option to rescind. Since no such information was disclosed, his clients should be able to rescind the transaction they unwittingly fell into ... , Sklaver argued.
***
  • Ortner said he's been sued once before by homeowners in a similar buyback case. He agreed to pay a settlement, because "our paperwork wasn't clear for our case." This time, with the Taylors, he said he made sure "everything was made clear." [...] Though Ortner didn't agree he had done anything wrong, he did say the lawsuit has forced him to change his ways. When he knocks on the doors of soon-to-be-foreclosed homes, he said he no longer offers owners to buy back the house: "I can't do that anymore, because people seem to want to sue me if I do that."

For more, see Suit Reveals Foreclosure Rescue Scam.

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.).

Bankrupt Lenders Prohibited From Wiping Out Borrowers' Right To Sue

A statement has recently been filed with Congress on behalf of the United States Trustee Program in connection with their mission of promoting the integrity and efficiency of the United States bankruptcy system.

Among other things, the statement reports that The Program has been active in enforcing a provision of the bankruptcy statute (11 U.S.C. § 363(o)) , which, in the context of credit transactions to which the Truth in Lending Act applies, prohibits bankrupt lenders from selling off their loan portfolios or other interests “free and clear” of the rights of their customers to assert claims or defenses provided under applicable laws. According to the statement:
  • The United States Trustee’s role to enforce [the statute] is paramount because consumer borrowers may not receive notice of the intended sale of their loans. Even if they receive notice, they may not have the financial means to object to the sale or request the sale provisions contain [legally required] safeguards to preserve their rights. To date, United States Trustees have filed pleadings to enforce [this statute] in at least a dozen cases in which bankruptcy sales by lenders did not provide the required and appropriate consumer protection.

(What I guess this means is that, among possibly other things, home mortgage lenders are prohibited from making mortgage loans that violate (blatantly or otherwise) homeowners' rights under consumer protection or other laws, and then file bankruptcy, using the bankruptcy process to (1) wipe out those homeowners' legal rights that the lenders' violated when making the mortgage loan, and (2) subsequently sell off their mortgage loans to other investors, free of the homeowners' ability to enforce those violated legal rights through a lawsuit against a subsequent purchaser of those mortgages.)

Source: The United States Trustee Program: Watchdog Or Attack Dog? (page 5).

Sacramento Feds' Nationwide Investigation Of Charles Head Foreclosure Rescue Scam Largest Current Case In Office

Earlier this week, reports from the Asbury Park Press (Asbury Park, NJ) stated that the FBI is currently investigating a nationwide foreclosure scam allegedly mastermined by Charles Head of FundingForeclosure (also of Head Financial) affecting 256 properties stretching from Maine to Hawaii. A report indicates that the case is currently being investigated by the FBI office in Sacramento, California and that it is the largest case currently under investigation by that office. The report also indicates that of the 256 properties listed in a warrant to search the offices of FCO Inc., Costa Mesa, Calif., which is believed to be part of owner Charles Head's financial operation, at least 69 properties are in California. Reports also indicate that Charles Head's whereabouts are currently unknown. For more, see:
For examples of Charles Head's online solicitations and personal profile, see:
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.).

Wednesday, November 07, 2007

Mortgage Elimination Scheme Results In 68 Count Criminal Complaint Against 10

In Stanislaus County, California, The Modesto Bee reports:
  • The Stanislaus County district attorney's office last month filed a 68-count criminal complaint against three real estate agents and seven alleged accomplices from Modesto, Ceres, Waterford, Turlock and Stockton. They are accused of stealing more than $2 million from lenders by filing false documents with the county clerk-recorder's office, indicating that loans to three properties had been paid so straw buyers could get new loans, then cash out the proceeds. [...] Authorities think Eric Charles Braun, 29, of Modesto did most of the legwork by meeting with lenders and managing the paperwork. His attorney, Bruce Perry, said Braun cooperated with authorities once they had a paper trail in hand, something that could help limit his culpability.

According to Braun (who, once he got nailed by authorities, appears to have wasted no time spilling his guts on his confederates to save his own hide), he downloaded legitimate deeds from a public access computer in the Stanislaus County clerk-recorder's office, which were then used to create fraudulent documents then filed with the same office. He also said he purchased notary stamps from a supply store, so the group could forge the names of Modesto-area notaries onto the phony documents. He also claimed that a fictitious mastermind given the name of "Seth Davis" was created and upon whom the blame for the fraud would be ultimately placed when the scheme was planned to end.

In addition to Braun (63 felonies), others charged were:
  • Noah Adam Yates, 29, of Modesto (53 felonies), Jearod Miles Robinson, 34, of Ceres (18 felonies), Doug Eugene Wallick, 32, of Waterford (15 felonies), Darin Eric Abell, 41, of Turlock (9 felonies), Dawna Lea Abell, 38, of Turlock (9 felonies), Elizabeth Marcela Ayhens, 24, of Stockton (2 felonies), Nicholas Matthew Ayhens, 24, of Modesto (2 felonies), Arnold Vergara Rodriguez, 32, of Modesto (2 felonies), Brian William Heytz, 32, of Ceres (1 felony).
Richard Morris, the loan originator whose suspicions and tip-off to authorities prompted the investigation, commented: "If they wouldn't have been so greedy, they might still be in business."

For more, see 3 accused of mortgage fraud (DA charges more than $2M stolen from lenders using false documents).

Homeowners In Foreclosure Being Clipped For Illegally Inflated Legal & Appraisal Fees, Says Lawsuit

In a class action lawsuit originally filed in a Delaware Federal Court in September, with an amended complaint filed yesterday, two Missouri homeowners accuse Mortgage Electronic Registration Systems, Inc. ("MERS"), a home loan registration system allegedly controlled by an all star team of nine big time nationwide mortgage lenders, of overcharging borrowers for legal services in foreclosures. MERS reportedly charged borrowers for "attorney fees" of as much as $1,200 - $2,000 and upwards (see Lawsuit - page 18, paragraph 49) while MERS is only charged $400 - $500 by the attorney actually handling the foreclosure (see Lawsuit - page 15, paragraph 36).

The lawsuit also accuses MERS of charging borrowers appraisal fees ranging from $300 to $500 for appraisals that are (1) often times not done at all, or (2) done but some times are nothing more than "drive by" appraisals where the appraiser never actually gets out of his or her automobile (see Lawsuit - page 19, paragraph 52).

In addition to MERS, the lawsuit names as additional defendants the following all star lineup of mortgage lenders who are allegedly the controlling shareholders of MERS:
  • Citigroup, Inc., Countrywide Financial Corporation, Fannie Mae, Freddie Mac, GMAC-RFC Holding Company, LLC, (doing business as GMAC Residential Funding Corporation), HSBC Finance Corporation, JP Morgan Chase & Co., Washington Mutual Bank, and Wells Fargo & Company.

Among other things, the lawsuit alleges that "MERS is grossly undercapitalized to cover the potential liability stemming directly from its role as primary mortgagee on tens of millions of Mortgage Notes." Because of this, the homeowners / borrowers also seek to hold the above listed all star lineup of mortgage lenders jointly and severally liable for damages as well as MERS (see Lawsuit - page 8, paragraphs 9(l) and 9(m)).

Representing the homeowners are Carmella P. Keener, Wilmington, DE, Jeffrey M. Norton, New York City, and Matthew S. Chase, University City, MO.

--------------------

To view the lawsuit, see Trevino v. Merscorp Inc., et al..

For a media report which makes reference to this lawsuit, see Borrowers Face Dubious Charges in Foreclosures (subscription required; if no subscription, try here).

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

Mortgage Servicer's Law Firm, Foreclosure Rescue Operator Hammered By U.S. Trustees In Bankruptcy Cases

On the TPMCafe blog, Warren Reports on the Middle Class reports:
  • [In bankruptcy cases] Seeing a few [U.S.] trustees step up to discipline mortgage lenders and servicers is a heartening development. [R]ecent examples (PDF) of activism by Trustees include an action in Pennsylvania against a firm that promised to save homes from foreclosure, but actually provided almost no services in exchange for its fees. In Texas, a Trustee is moving against a large mortgage servicer. Trustee involvement has already led to a $75,000 sanction against the mortgage servicer’s law firm for making inaccurate representations to the court.

Source: Bankruptcy Trustees Taking Action Against Dishonest Lenders.

Tuesday, November 06, 2007

Questionable Mortgage Servicing Practices Coming To Light In Bankruptcy Cases

The New York Times reports:
  • As record numbers of homeowners default on their mortgages, questionable practices among lenders are coming to light in bankruptcy courts, leading some legal specialists to contend that companies instigating foreclosures may be taking advantage of imperiled borrowers. Because there is little oversight of foreclosure practices and the fees that are charged, bankruptcy specialists fear that some consumers may be losing their homes unnecessarily or that mortgage servicers, who collect loan payments, are profiting from foreclosures.

  • Bankruptcy specialists say lenders and loan servicers often do not comply with even the most basic legal requirements, like correctly computing the amount a borrower owes on a foreclosed loan or providing proof of holding the mortgage note in question.

  • Regulators need to look beyond their current, myopic focus on loan origination and consider how servicers’ calculation and collection practices leave families vulnerable to foreclosure,” said Katherine M. Porter, associate professor of law at the University of Iowa.

[...]

  • Questionable practices by loan servicers appear to be enough of a problem that the Office of the United States Trustee, a division of the Justice Department that monitors the bankruptcy system, is getting involved. Last month, It announced plans to move against mortgage servicing companies that file false or inaccurate claims, assess unreasonable fees or fail to account properly for loan payments after a bankruptcy has been discharged.

[...]

  • [O. Max Gardner III, a Shelby, N.C., consumer bankruptcy attorney said,] “Somebody files a Chapter 13 bankruptcy, they make all their payments, get their discharge and then three months later, they get a statement from their servicer for $7,000 in fees and charges incurred in bankruptcy but that were never applied for in court and never approved.

Included among the examples of questionable practices by mortgage servivcing companies is a reference to a class action lawsuit filed against Mortgage Electronic Registration Systems (aka "MERS"), a home loan registration system which oversees more than 20 million mortgage loans and is reportedly owned by Fannie Mae, Countrywide Financial and other large lenders. MERS is accused of overcharging borrowers for legal services in foreclosures. According to Jeffrey M. Norton, a lawyer who represents the plaintiffs, it pays its foreclosure attorneys a flat fee of $400 or $500 but charges the borrowers three or four times that amount. The plaintiff's mortgage loan is reportedly owned by Washington Mutual, and went into foreclosure in 2006.

For more, see Borrowers Face Dubious Charges in Foreclosures (if link expired, try here).

For another lawsuit accusing a mortgage servicing company of questionable practices, 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 , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics yak

Attorney Meets With Victims Of Eastern Pennsylvania Alleged Mortgage Investment "Ponzi Scheme"

Lancaster Online reports on an informational meeting held by attorney Joseph O'Keefe with about 430 property owners who face significantly higher mortgage bills due their involvement with local real estate operator Wesley Snyder and his companies, OPFM Inc. and Image Masters, among others. O'Keefe filed a class action lawsuit in September to void mortgages held by 25 lenders. In all, they hold about 800 disputed notes brokered by Wesley A. Snyder's OPFM Inc. and Snyder's other businesses.

Among other things, despite a temporary mortgage payment arrangement ordered by the Federal judge presiding over the case, O'Keefe states that some lenders have ignored that agreement, telling customers they must make the full loan payment. O'Keefe said his team has received a litany of complaints lodged by customers of one lending company and urged those customers to testify in federal court against the lenders.

Some at the meeting were upset at how easily the case was moved out of the area (a Berks County, Pennsylvania state court) where OPFM president Wesley A. Snyder operated his businesses. The case is now in a Philadelphia Federal Court. For more, see Creditors play tough on OPFM mortgages (Lawyer says judge sees case’s urgency).

Go here to view WFMZ-TV Channel 69 News coverage and comments from attorney Joseph O'Keefe and some of the victims of the alleged Ponzi scheme, or here to read the Channel 69 online report.

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving Wesley Snyder, OPFM, Image Masters.

Feds Investigating Nationwide Foreclosure Rescue Scam

A national foreclosure rescue scam has ensnared hundreds of victims in 27 states, including at least 17 homeowners in New Jersey, according to a story in the Asbury Park Press (Asbury Park, New Jersey). Among the New Jersey victims who unwittingly signed away title to their homes in purported sale leaseback arrangements are two mothers in Ocean County and a widow in Middlesex County. A disabled Vietnam veteran in Delaware also claims to be among the defrauded. According to the story:
  • An IRS search warrant obtained by the Press lists 256 affected properties stretching from Maine to Hawaii. The warrant identified 106 homeowners as victims and 99 third-party, or straw, buyers, who may have unwittingly propelled the fraud forward. Two dozen companies are also named, but it is unclear what their roles were in the investigation. An FBI spokesman and an IRS agent last week confirmed the investigation into the companies and people behind what had been touted as a way for small investors to save financially strapped homeowners.

  • "It is a large and significant case," FBI spokesman John Cauthen said. "We're investigating with the full force and weight of the FBI." Cauthen said no charges have been filed. Nonetheless, the FBI has sent letters to homeowners and investors to inform them they are victims.

  • Those letters identified Charles Head, operator of the now-defunct FundingForeclosure.com, as the focus of the investigation. Head could not be reached for comment. Private attorneys representing the victims said Head, believed to be from Florida, cannot be located.

Reportedly, the FBI letters have been helpful to some in that a couple of the victims have successfully used the letters to convince judges to postpone ongoing foreclosure proceedings. For more, see Victims of scam face losing homes.

For related stories on two of the New Jersey victims, see:

Go here for an earlier report from Hawaii on the Charles Head FBI investigation.

Go here for other posts on foreclosure rescue operator Charles Head.

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.).

Minnesota Equity Stripping Victim Now Suing Foreclosure Rescue Operator

Minnesota Public Radio reports the story of Anita Nunn, a Minneapolis-area resident who lost her home more than a year ago in a foreclosure rescue deal. She lived in her South Minneapolis home since 1999 until the onset of her financial problems triggered by a job loss when her job at a call center was transferred to India. She was unable to find another job until after her unemployment ran out, at which point she was already behind on her mortgage. When the offers of "help" started pouring in, she responded to one that resulted in a foreclosure rescue transaction involving The Ordway Group. The story describes what happened next:
  • The company and an outside investor bought Nunn's house, bringing it out of foreclosure. They then rented it back to Nunn. Under the agreement, she could eventually buy the house back. But her monthly rent payments were several hundred dollars higher than they were when she owned the house, and Nunn was soon unable to keep up.

  • If she had sold her house instead of taking the deal, she could have walked away with approximately $50,000 in home equity. Instead, she lost that equity, and in 2004, she lost the house. The company evicted her so they could resell it.

  • Nunn is now suing The Ordway Group, alleging the company misrepresented a deal that offered hope that she would keep her home but instead doomed her to losing it. "I think they took away her options," says Nunn's attorney Bryan Battina. He says the deal preyed upon her hope that she could stay in the house. "Just the simple fact that they talked her into this agreement that was basically set up to fail, they in turn took away any other opportunities she had," Battina says.
For more, see Equity-stripping scams could rise as foreclosures increase.

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.).

"Quick Flips" Transform Luxury Estate Homes Into Public Nuisances

In Tampa, Florida, The Tampa Tribune reports on the fate of five luxury homes that were bought and sold on the same day (with simultaneous closings) by real estate operator Atlantic Coast Investments to straw buyers with questionable backgrounds:
  • Once they were dream homes, with views of the golf course, a marble-floored music room, servants' quarters and a taste of the good life behind the gates of some of Tampa's most posh communities. Now, they sit abandoned, with overgrown lawns, leaky roofs and deep-green, algae-filled pools. They are empty and overpriced. All are in foreclosure. One has been declared a public nuisance by Tampa Code Enforcement and two others have active cases against them. All were bought sight unseen by a South Florida investor who is suing his former business partners and lawyer for fraud and identity theft.

Reportedly, two of the straw buyers (who together purchased four of the homes) have outstanding court judgments against them for more than $600,000. For more, see Questionable flips leave upscale homes derelict.

Florida Homeowner Stiffed By Unlicensed Contractor

A recent reader of The Miami Herald Action Line asks:
  • My wife and I live in New York and have a house in Palm Beach. On April 30, we gave North Star VP Shutters $6,474 -- a 50 percent deposit -- to purchase hurricane shutters. The company never delivered, and, according to the building department, never applied for a permit. The last we heard, in August, they were ''walking through'' the permit, whatever that means. [...] Can Action Line help us get our money back?

Action Line responds:

  • Unfortunately, there's a lot more wrong with this picture than you think. As you found out, North Star VP Shutters hasn't applied for a permit for your house, and with good reason; it's not licensed to do such work. It had you sign an application for an owner/builder permit (a major red flag of unlicensed contracting), which has gone nowhere.

Among other questionable paperwork the homeowner received from the company was a ''contract'' with no license number on it (illegal); a copy of another company's state license; a copy of a liability insurance certificate, which, according to state records, was canceled.

Action Line further informs:

  • Unlicensed contracting [In Florida] is a felony unto itself; accepting deposits without a license for jobs that require one constitutes grand theft. [...] In addition to all this, North Star VP filed for Chapter 7 bankruptcy on Oct. 22. However, this doesn't protect its principals from any potential criminal prosecution.

For more, see North Star VP shutter company files for Chapter 7 bankruptcy. (if link expires, try here).