Wednesday, January 23, 2008

Florida AG Tags Foreclosure Rescue Operator, Title Agency, Others With Civil Suit In Alleged Sale Leaseback Scam; State "Rescue" Statute Proposed

In Broward County, Florida, the South Florida Sun Sentinel reports:

  • Attorney General Bill McCollum has sued a South Florida-based foreclosure rescue company, alleging the firm defrauded dozens of homeowners, and is seeking legislation to strength protections for those facing foreclosure. The civil suit — filed jointly with the Office of Financial Regulation in Broward County Circuit Court — charges National Foreclosure Management Inc. and multiple affiliates violated the state's deceptive and unfair trade laws. The suit claims the foreclosure rescue firm or its affiliates defrauded at least 80 homeowners of about $1.7 million in home equity. The company, which also does business as American Home Rescue Inc., selected homeowners who were facing foreclosure and had substantial equity in their homes, the suit said. The company offered to hold the homeowners' property titles for a year, and refinance the debt while allowing the homeowners to stay in their houses. [...] Representatives of National Foreclosure Management and its agent, Wyman F. Roberts, and American Home Rescue Inc. and its agent, Bernard Williams, could not be reached for comment.

***

  • On Tuesday, state Sen. Mike Fasano, R-New Port Richey, and state Rep. Clay Ford, R-Gulf Breeze, filed legislation — the Foreclosure Rescue Fraud Prevention Act — to provide a safeguard system to protect homeowners. [...] House Bill 643 — and the companion Senate Bill 992 — would guarantee homeowners a five-day period to cancel any contract agreement with a foreclosure rescue firm. It would require specific definitions be provided to consumers for job titles such as "equity purchaser" or "foreclosure consultant," and prohibit foreclosure consultants from accepting payment until all services are completed. Violators would face up to $15,000 in fines for each infraction.

For more, see Florida attorney general sues foreclosure rescue firm.

For other stories, see:

To view the lawsuit, filed in Fort Lauderdale, FL, see Office of the Attorney General, et al. v. National Foreclosure Management, Inc., et al.

To view the proposed Florida legislation, see:

Mortgage Broker, Questionable Practices The Focus Of "Globe" Report

In Boston, Massachusetts, the Boston Globe ran an investigative report on area mortgage broker, Nicole Lyder, who is suspected of engaging in questionable conduct in originating mortgages for local mortgage companies:
  • Fake documents, a phantom borrower, and other irregularities were common features of five subprime mortgages brokered by Lyder between November 2005 and June 2006 that were examined by the Boston Globe. Lyder's clients ranged from the barely employed to struggling working-class couples; one had just left a homeless shelter and two others gave up government-subsidized housing to buy homes. They said Lyder arranged loans that they later realized had monthly payments that far exceeded their means. All five loans are now in foreclosure.

For more, see Broker's clients detail web of dashed dreams (Irregularities cited in five mortgages).

Pittsburgh Feds Indict Man For Alleged Use Of Phony Deed Transfers To Get Mortgage Cash

In Pittsburgh, Pennsylvania, the Pittsburgh Tribune-Review reports:
  • A federal grand jury in Pittsburgh [last] week indicted a Washington County man accused of defrauding three financial institutions out of $1 million by falsifying loan documents. Matthew McConaghy, 42, of Peters, is accused of falsifying documents and deed transfers to obtain the money from August through November 2006 and falsifying signatures to show he was sole owner of a property he actually co-owned.

For more, see Jury indicts man in $1M loan fraud.

Go here and go here for other posts on deed theft by forgery, swindle, etc. deed theft yahtzee

Senior Fraud Victims Confront California Con Man In $43M Ponzi Scheme

In San Jose, California, the San Jose Mercury News reports:
  • One by one, a succession of elderly fraud victims spoke in a San Jose courtroom [last] Thursday, many struggling for words and composure as they described how a dishonest mortgage broker took their life savings as part of a $43 million scam - and left them bereft. "Our savings are completely gone. We've had to sell every item we could. We are very depressed, and feel so frustrated, that we must count every penny," said 76-year-old Henry Bertrand, a retired military man whose voice grew hoarse as he explained that he had trusted broker Michael Schneider, only to become the victim of an elaborate scheme.
    "I was shaken to the core," added 80-year-old Mel Nashban, explaining that he had come to think of the earnest, boyish-looking 45-year-old as a member of his own family. On discovering Schneider's betrayal, Nashban said: "It was like he had taken a knife and put it in my heart." Fourteen others spoke in Santa Clara County Superior Court, most urging Judge Ray Cunningham to give the defendant a stiff prison sentence. Schneider pleaded no contest in August to 173 felony counts of burglary, embezzlement, elder financial abuse, grand theft and forgery. The maximum possible sentence is 169 years.

For more, see Elderly fraud victims confront swindler in court (Charming Swindler In Real Estate Case Confronted In Court).

For story update, see Santa Clara man gets 28 years for defrauding clients out of $43 million.

Go here , here , here , and here for other posts on elder financial abuse. whale

Tuesday, January 22, 2008

Who's To Blame For The Subprime Mortgage Mess?

The New York Times explores this question:
  • Everyone wants to know who is to blame for the losses paining Wall Street and homeowners. The answer, it seems, is someone else. A wave of lawsuits is beginning to wash over the troubled mortgage market and the rest of the financial world. Homeowners are suing mortgage lenders. Mortgage lenders are suing Wall Street banks. Wall Street banks are suing loan specialists. And investors are suing everyone.

For the rest of the story, see If Everyone’s Finger-Pointing, Who’s to Blame?

Metropolitan Grapevine / POS Metro Dream Homes Update

The following legal documents have been filed in the Metropolitan Grapevine / POS Metro Dream Homes matter so far in the month of January:

Additionally, as mentioned yesterday, the auction for the POS and related entities office furniture and equipment will be held tomorrow, January 23, 2008 at:

14228 Cherry Lane Ct., Laurel, MD 20707

For more information on the auction, please go to: http://www.americanaai.com/metro.htm

For periodic updates on the case itself, check the POS, et al in Receivership website.

Go here for earlier posts on the Metropolitan Grapevine / POS Metro Dream Homes alleged Ponzi Scheme.

Florida AG Investigating 20 Foreclosure Rescue Cases; One Firm Allegedly Ripped Off 80+ Homeowners Of $1.7M In Home Equity

In Florida, WFOR-TV Channel 4 reports:
  • State investigators are concerned that as foreclosures rise, scams by people claiming to rescue homes from foreclosures will rise as well, so Tuesday the Florida Attorney General's Office is expected to make a big announcement that will help many homeowners to keep their homes. Investigators say they are looking at some 20 cases right now, [...] . "We're investigating a particular South Florida company, National Foreclosure Management, who has allegedly defrauded more than 80 homeowners out of their home equity more than $1.7 million in home equity to be exact," said Sandi Copes, Florida Attorney General Press Secretary.

For more, see Florida To Launch Campaign Against Mortgage Fraud (read story) (watch video).

Out Of Town Investors Stuck With Inflated Mortgages In Alleged Columbus-Area Real Estate Investment Scam

In Columbus, Ohio, The Columbus Dispatch reports:
  • More out-of-towners have reported being stuck with inflated mortgages on houses in low-income Columbus neighborhoods, where they were directed by real-estate investment classes. A Virginia couple and their Maryland son took the advice of an investment club and bought four homes from Mid-State Homes of Columbus with the help of Summertyme Mortgage of Sunbury. The family has since sued Mid-State and Summertyme in Franklin County Common Pleas Court, contending that appraisers either negligently or fraudulently inflated the value of the properties so lenders would lend more than they were worth. The defendants then shared in the extra cash, the suit says.

For more, see Inflated mortgages: Investor property problem deepens.

Minneapolis-Area Mortgage Broker Facing Eight More Charges

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:
  • A mortgage broker already charged by Hennepin County as part of an alleged mortgage fraud ring now faces eight additional theft charges for earlier home loans. The county charged Donald L. Walthall of Anoka with eight counts of theft by swindle for mortgage transactions for eight homes bought from eight lenders in 2005. Seven of the properties were in Minneapolis, and the other was in St. Paul. [...] Walthall was president of Universal Mortgage Inc., of Brooklyn Park, and also did business as Superior Mortgage Inc., the county said.

For more, see Mortgage broker faces eight more charges.

Go here for other posts on the alleged Universal Mortgage straw buyer, home flipping scams.

Sacramento Feds Get Guilty Plea In Mortgage Fraud Case

From the U.S Attorney's Office in Sacramento, California:
  • United States Attorney McGregor W. Scott announced today that Sennett H. Swift, 25, of Sacramento, pleaded guilty today to bank fraud and money laundering. [...] According to [the prosecutor in the case], Swift defrauded two homeowners and the corresponding lenders by fraudulently refinancing the two homes, the goal of which was to receive the substantial loan broker commissions.

For more, see the U.S. Attorney News Release - Unlicensed Loan Officer Pleads Guilty To Fraud.

Go here for an earlier post on the arrest of Sennett Swift. jim martin

Legal Aid Lawyers Muzzled In Mortgage Mess

A recent article in The Nation describes some of the problems faced by legal aid attorneys around the country in their attempts to represent the poor and point to these impediments as a key reason why the mortgage crisis has been allowed to fester for over a decade.
  • Civil legal aid lawyers, who work for non-profit organizations around the country, represent low-income people in the sorts of civil cases most important to their daily lives: housing issues, child custody, wage and hour law violations and consumer fraud. They are an essential part of our nation's law enforcement apparatus, because they ensure that the businesses and government agencies that operate in low-income communities do so according to the rule of law. Civil legal aid attorneys also serve as a detection and warning system for problems plaguing low-income communities. As the people most familiar with the legal problems of the communities in which they work, often they are the first to learn of new legal abuses occurring in those communities. Over the years, civil legal aid lawyers have spoken out and prompted change when the police refuse to respond to domestic violence calls, when foster care agencies place children in unsafe foster homes and when local employers repeatedly fail to pay the minimum wage.

  • But since 1996, civil legal aid attorneys have been muzzled. Congress has barred them from using some of the legal tactics that are most effective at enforcing the law for entire communities. Civil legal aid lawyers who receive any Congressional funding through the federal Legal Services Corporation cannot call legislators to warn of new problems facing their communities and suggest legislative fixes. They cannot represent clients seeking to use the class action mechanism to compel repeat offenders to obey the law. They cannot use statutorily available fee awards to make it too expensive for repeat offenders to continue breaking the law. They cannot use private funds, donated by private foundations or individuals, to provide client communities with any of these services. And because their funding has eroded over the years, they cannot represent millions of people who seek help every year.

For more, see Lawyers for the Poor Muzzled in Subprime Mess.

Monday, January 21, 2008

Long Island Homeowner Gains $3.5 Million Judgment In Foreclosure Rescue Scam

On Long Island, New York, Newsday reports:
  • A Great Neck woman victimized in a mortgage fraud in which she unknowingly gave away her house has won a $3.5-million judgment against the mortgage broker who scammed her, court documents show. Priscila Nano, 66, said she was "scared" and on the brink of losing her longtime home to foreclosure in 2004 when she received an advertisement from the Westbury-based Foreclosure Options Inc., and called the company's number. In court papers, Nano's attorneys described her as "an underemployed, senior citizen and immigrant with a modest command of the English language ... desperate to keep her home." Nano's attorney, Douglas Good of Uniondale, said the company, headed by Moses Crawford III, was so predatory that it even sent a town car to Nano's home to bring her to what she believed was a closing of a refinance of her home.

***

  • The Uniondale firm of Ruskin Moscou Faltischek took Nano's case pro bono, and worked out a settlement in which she recouped from her mortgage carrier most of the value of her home. Good and associate Jennifer Hillman then sued Crawford seeking punitive damages. When Crawford did not respond to the suit, State Supreme Court Justice John Galasso last month awarded Nano a $3.5-million judgment.

For more, see Woman gets $3.5M judgment in mortgage scam.

Metropolitan Grapevine "Alleged Ponzi Scheme" Office Equipment To Be Auctioned Off

According to the website of American Auctions & Appraisals, Inc., an auction for the Metropolitan Grapevine, POS Metro Dream Homes and related entities office furniture and equipment will be held on January 23, 2008 at: 14228 Cherry Lane Ct., Laurel, MD 20707. Go here for more information on the Metropolitan Grapevine auction.

Go here for earlier posts on the Metropolitan Grapevine / POS Metro Dream Homes alleged Ponzi Scheme.

D.C. Foreclosure Rescue Operator Settles One Sale Leaseback Lawsuit; Denied In Request To Set Aside Verdict In Another

In Washington, D.C., The Washington Post reports:
  • Five D.C. residents who say they were tricked into signing away their homes have reached out-of-court settlements that enabled them to regain ownership and a total of $455,000. The settlements end a three-year-old lawsuit, a rare happy ending for the growing number of people who claim to be victims of foreclosure rescue scams. In the suit, the elderly plaintiffs alleged that to stave off foreclosure they signed paperwork for what they thought were loans that would cover missed mortgage payments. Instead, they had signed away their homes to Washington businessman Vincent L. Abell and his associates.

With respect to the buyback terms called for in the arrangements:

  • "The buyback terms were so onerous that there was no way to meet them," said N. Thomas Connally III, a lawyer at Hogan & Hartson, who, with AARP, represented the plaintiffs. "The arrangements were designed to fail from the start, and they allowed Mr. Abell to take ownership of the property by paying the former owner almost nothing." The monthly payments were often so high that many of the plaintiffs fell behind, lost their buyback option and ended up facing eviction, said Connally, whose firm worked on the case pro bono.

Regarding another case involving foreclosure rescue operator Vincent L. Abell:

  • Abell's legal troubles are not over. In March, after a two-week trial in D.C. Superior Court, a jury awarded more than $3 million in punitive damages and $60,000 in compensatory damages to Maria Wilson of the District, who had separately accused Abell, his company and Baltimore of defrauding her in a similar foreclosure rescue operation. On Jan. 9, Judge Mary A. Gooden Terrell denied the defendants' motions to set aside or reduce the verdict, Connally said. "Whether she'll ultimately be able to collect from those folks, who knows?" said Connally, who represented Wilson.

For more, see Homeowners in Alleged Scam Get Settlement (Payments to 5 D.C. Residents Conclude 3-Year Legal Battle).

Go here for other posts on Vincent Abell and his associate, Calvin Baltimore. elder financial abuse whale

Cleveland-Area Prosecutors Gain Convictions In Foreclosure Rescue Scam

Buried in a recent mortgage fraud article in The Cleveland Plain Dealer is the story of one foreclosure rescue scam that ripped off approximately $56,000 from a Clevland-area homeowner and resulted in an attempt to evict the homeowner. The foreclosure rescue group, Sammy Quick, 29, of Brook Park and Brian Cicerchi, 29, of Middleburg Heights, partners in First Primary Mortgage Inc., and Lesley Loney, 34, of North Ridgeville were all arrested in the scam. According to the story:
  • The outcome: Loney pleaded guilty to unauthorized use of property and testified against Quick and Cicerchi. She was sentenced to 12 months probation and fined $1,000. Quick and Cicerchi were convicted in a jury trial this month. Both were found guilty of theft by deception, securing a writing by deception and telecommunications fraud. Quick was also found guilty of mortgage broker prohibitions and receiving stolen property. They are scheduled for sentencing next month.

Source: Loose lending rules gave criminals chance to flourish.

Iowa AG Calls For Laws To Fight Foreclosure Rescue Scams

The Iowa Attorney General announces:

Among the measures being sought is a law specifically targeting foreclosure rescue scams.

  • Miller also asked the Legislature to pass a bill to fight “mortgage foreclosure rescue fraud” – scams that prey on people facing foreclosure by asking them to pay hundreds of dollars for so called assistance or “rescue” from the danger of foreclosure. “The problem is these ‘rescue scams’ just take people’s money and fail to do almost anything to help them avoid foreclosure,” Miller said at a news conference Friday at his office. “And they take precious funds from people who are vulnerable and who can least afford to be cheated. This is the definition of adding insult to injury.”

For more, see AG Miller Offers laws to protect home buyers.

Sunday, January 20, 2008

More On Family Pets Displaced By Foreclosure

The following links are to recent stories on the stress placed on local pet shelters due to families losing their homes to foreclosure:

Salem, New Hampshire: Shelter houses pets homeless due to foreclosure (Over the past month, those over at the Salem Animal Rescue League have noticed a trend of pets being given up by people who have lost their homes in the subprime mortgage crisis),

Placer County, California: Mortgage crisis is hurting pets, too (In January, at least 20 percent of dogs and cats surrendered to the Placer SPCA shelter came from people who "lost their homes or were having such extreme financial difficulties" that they could no longer afford to care for them),

Vero Beach, Florida: As owners lose homes, so do many Treasure Coast pets (Since September, about six people a month have been saying their loss of housing is the reason they're giving their pets to the Humane Society of Vero Beach and Indian River County),

Fremont, Ohio: Overabundance of animals (Fremont shelter has no room for pets after drop-offs) (The number of animals at the Humane Society of Sandusky County has multiplied since a year ago. And part of the problem is attributed to animals being dropped off in the night. Several of them have been severely malnourished. A local animal cruelty investigator said the recent spike could be attributed to the housing-foreclosure issue that is affecting so many people in the area. "It's an ongoing problem with the foreclosures," Hammond said. "People are finding out their dogs don't fit with them. They're leaving their animals behind."),

Saugerties, New York: Foreclosures force farm animals out (In addition to pets, foreclosures are hitting horses, mules and donkeys. The Catskill Animal Sanctuary in Ulster County has seen a dramatic rise in calls — sometimes five a day — from people looking for a shelter for their large animals. Other local shelters have not yet noticed an uptick in animals because of foreclosures. "Most people don't go into detail — 'The house is being foreclosed on' — that might be more personal than they want to get with me," said Adam Saunders, shelter manager of the Ulster County SPCA, "but the most common reason is, 'I have to move, I can't take the pet with me.' It would make sense that that is happening more because there are more foreclosures going on."). See also, Money woes bring animals to shelter (NY Daily News).

Brentwood, California: Pets a growing casualty of the real estate market (As the real estate market continues to languish and foreclosures become more and more common, unwanted furniture isn’t the only thing being left behind when a mortgage turns upside down).

Illinois: Dogs, cats latest victims of subprime-mortgage mess (Animals lose families as owners lose homes) ("We're seeing quite a few animals being surrendered due to economic reasons, including foreclosure," said Angie Wood, assistant executive director of the Naperville Area Humane Society, [...] "We're probably getting 25 [animals] a week coming to us for those reasons," said Terri Sparks, a spokesman for The Animal Welfare League in Chicago, which works with 53 municipalities on animal-control issues. "It's probably increased a lot in the past six to seven months." Linda Gelb, president of Community Animal Rescue Effort, which works through the Evanston Animal Shelter, said her group has taken in four dogs in the past three weeks because their owners were losing their homes. [...] Authorities around the country in recent months have reported numerous findings of cats, dogs, birds, horses and other animals at foreclosed houses and farms. Among the more notorious cases, animals were found in large number -- three dogs and 20 birds in a house in Lorain, Ohio; 24 horses on a farm in Bixby, Okla.; and 63 cats in a house in Cincinnati. It was too late when authorities got to a foreclosed house in Bradford, Pa., to discover the bodies of 21 Great Danes. The owner on Thursday pleaded guilty to 21 counts of animal cruelty.)

For more on foreclosures and family pets, see Foreclosures & Pets I, and see Foreclosures & Pets II. petsII and foreclosures

More On Now-Defunct 1031 Exchange Intermediary, $160M In Trust Money Missing

In Indiana, the Indianapolis Business Journal reports on embattled businessman Edward Okun and his Richmond, Va.-based Investment Properties of America:
  • A high-flying Carmel businessman who moved his base of operations to Miami a couple of years ago is accused of burning through $160 million of investors’ money in the collapse of his real estate empire. [...] Investigators believe [Edward] Okun [...] used investor money to fund a lavish lifestyle that included four mansions, a helicopter, three airplanes, 20 automobiles and a 130-foot yacht. Investment Properties filed for Chapter 11 bankruptcy in November.

  • His investment firm, The 1031 Tax Group, and more than a dozen affiliated companies around the country, sought bankruptcy in May. The 1031 Tax Group was named after a section of federal tax code that allows certain commercial property owners to defer capital gains taxes by reinvesting proceeds from property sales into other real estate. Money held by 1031 Tax Group was sheltered from taxes until investors put their gains into other properties later. But last year, investors began complaining that money they entrusted to Okun had vanished. In fact, Okun and his Investment Properties had “borrowed” funds investors had placed in 1031 Tax Group, according to a report by James Lukenda, a managing director of Huron Consulting Group. A New York bankruptcy court appointed Lukenda as 1031’s chief restructuring officer last year.

For more, see Empire crumbles (Real estate exec with lavish lifestyle accused of $160M fraud).

Go here for more on Edward Okun.

Go here for The 1031 Tax Group's Chapter 11 Bankruptcy Trustee newsletter. sneaky slick escrow agents beta

More On 1031 Exchanges

Realty Times recently ran two stories explaining the mechanics of, and the benefits in using, so-called 1031 exchanges, in which real estate investors are able to defer payment of income taxes due (and possibly avoid the income taxes altogether if this tax deferral technique is continued by an investor indefinitely) on their profitable real estate investments. For those who are interested, see:

Success in using this tax deferral technique will depend on the level of expertise and integrity of the company used as a 1031 exchange intermediary. For some real estate investor horror stories that have occurred when the wrong intermediary is used to conduct the exchange, see 1031 Exchange Intermediaries - Problems.

Saturday, January 19, 2008

Indictment Of Financially Strapped Texas Sup. Court Justice In Home Torching Dismissed; Subprime Mortgage Recently In Foreclosure; Grand Jury Outraged

In Houston Texas, The Associated Press reports:
  • The highest reaches of the Texas judicial system were consumed Friday by a real-life legal thriller that could be titled "The Runaway Grand Jury." A grand jury indicted a Texas Supreme Court justice Thursday on arson-related charges. But on Friday the district attorney's office that brought the case to the grand jury in the first place dropped the charges, angering members of the panel and drawing allegations of political backscratching. Harris County District Attorney Chuck Rosenthal, who is himself embroiled in a scandal involving inappropriate e-mails found on his office computer, said there was insufficient evidence to support the charges against Justice David Medina, a fellow Republican.

***

  • [Medina's] wife, Francisca, was accused of setting a fire last summer that destroyed the couple's suburban Houston house and damaged a neighbor's residence. Her husband was charged with evidence tampering in the June 28 blaze, which caused nearly $1 million in damages.
***
  • The fire marshal's office has said the fire at the Medinas' home in Spring, north of Houston, was not electrical or accidental. A dog detected an accelerant at the scene. Investigators became suspicious after discovering a mortgage company sued in June 2006 to foreclose on the $300,000 home. The lawsuit, filed after the family missed payments for five months, was settled in December 2006. [Medina's attorney] has acknowledged the family had financial problems. They owed nearly $1,900 in fees to a homeowners association and also let the insurance policy on the house lapse, meaning losses from the fire were not covered.

For more, see Texas Thriller: the Runaway Grand Jury (if link expires, try here).

See also, Dismissing of case against Texas justice outrages some grand jurors:

  • I’ve just never seen anything like the vigor with which these two defendants were defended by the Harris County district attorney’s office,” the assistant foreman, Jeffrey Dorrell, told The Chronicle. “It was theater of the absurd. We knew before we handed the indictment down that the district attorney was going to refuse to prosecute.”

The Houston Chronicle reports that the fire also damaged two adjacent homes, and describes Medina's mortgage that went into foreclosure as a subprime adjustable rate mortgage. See Medina attorney asks judge to sanction 2 grand jury members:

  • Medina and his wife purchased the home in the Olde Oaks subdivision in 1992, according to appraisal district records. Loan documents show he took out an adjustable rate home equity loan in 2003 for $288,000, equal to the home's full appraised value at the time. The interest rate was high — almost 10 percent — and was to adjust upward to a cap of almost 16 percent in December 2005. His previous monthly note of about $2,500 could have jumped considerably.

For a subsequent column in the Southeast Texas Record on this story, see A Judicial Career Up in Flames? The Strange Case of David Medina.

For other stories on fires & foreclosures, go here , go here , and go here. foreclosure arson xerox

Criminal Prosecutions Of Home Improvement & Repair Contractors

The following links are to recent stories involving home repair and improvement prosecutions and the criminal charges involved:

Connecticut - Police said Angelo Cassarino, a 38-year-old Babylon, New York man accused of bilking an elderly woman out of $1,851 during a home improvement project, was arrested on a warrant that charged him with second-degree larceny and second-degree reckless endangerment. Police said Cassarino did not properly secure a liner in the woman's chimney on Valley Circle, which could have blocked ventilation and cause a buildup of carbon monoxide in her house. Piping on the job also was smaller than it should have been, police said. About $8,800 in repairs are needed to fix the job, police said. See $1,800 Bilking (3rd story from top).

Massachusetts - William D. Chappell, of Worcester, who was hired to (1) install a new roof, and (2) rebuild a deck and paint the exterior of a house in Shrewsbury, was arrested for receiving over $11,000 for both jobs, and allegedly did not complete either job. He was charged with a violation of the Massachusetts home improvement contract statute; he is also wanted for a New York State probation violation for "grand larceny pertaining to the same type of contractor fraud scheme.” See City man held in home improvement case.

New York - Todd Clifford, of Webster, and who defrauded customers by taking money for work he didn't finish was sentenced to 6 to 12 years in prison, after pleading guilty to third- and fourth-degree larceny. See Contractor Gets 6 to 12 Years for Defrauding Customers.

Illinois - A DuPage County grand jury indicted Lubos Dubravsky, of Schiller Park, on felony charges of suspicion he defrauded a Naperville woman who hired him to install hardwood flooring, according to court records. He is charged with theft and home repair fraud. Authorities allege Dubravsky accepted a $3,000 down payment from the woman, but failed to provide any work. See Man accused of theft, fraud (3rd story from top).

Delaware - Delaware State Police detectives have obtained an arrest warrant for Donald J. Schulze (T/A Affordable Construction Inc.), of Millsboro, charging him with felony theft and home improvement fraud. The victim paid Schulze $11,345.77 to repair her mobile home that had been damaged by fire. Schulze allegedly received the money and only completed $2,000.00 worth of work on the property. See Police searching for Millsboro man.

Maryland - Kevin Robinson was sentenced to six months in jail after prosecutors said he accepted $23,000 for a contracting job he never completed. Prosecutors said Robinson took the money and didn't do the work. Robinson was sentenced after pleading guilty to failing to put money in an escrow account. Prosecutors said this may have been the first conviction in Maryland under the law involving contractor escrow accounts. See Man Sentenced To Jail In Contractor Scam (Prosecutors Say Man Took Money For Job He Didn't Complete).

Kentucky - Louisville Metro Police arrested Willie S. Baldon, of Louisville, for allegedly scamming an 86-year-old woman out of thousands of dollars in a home repair scheme. Police say he was paid for work that was never completed. He allegedly received $6,697.97 but no repairs were made to the woman's home. Baldon has been charged with exploiting an elderly person and three counts of theft by deception, according to his arrest citation. The department's crimes-against-seniors unit was involved in the investigation. See Police charge man with bilking elderly woman over home repairs (Nearly $7,000 paid; work never began).

California - Palm Springs Police Detectives are looking for help located a mother and son team wanted for 38 counts of Financial Elder Abuse and Contractor Fraud. An extraditable warrant has been issued for the arrest of Mary Agnes Stewart, 62, and her son, Joseph Cunningham, 44, for allegedly defrauding an elderly Palm Springs couple of approximately $800,000 over a four-month period by contracting to do remodeling work in the couple's Las Palmas area home. According to reports, they allegedly required the victims to pay large quantities of money in installments. They started demolition of the couple's home, and then fled without providing any materials or construction work. See Palm Springs Police Search for Elder Abuse Suspects.

For other posts on contractors accused of stiffing customers, go here and go here. contractors stiff subs customers zeta

Lawyers, Judges, Bribes & The State Of Mississippi

Anyone interested in a story involving high-powered attorneys allegedly attempting to buy off judges in the State of Mississippi, you can check out:
  1. Federal Indictment - U.S. v. Dickie Scruggs, Zach Scruggs, Sidney Backstrom, Steve Patterson, Tim Balducci,
  2. Scruggs case at a glance (The Jackson Clarion Ledger),
  3. Prosecutor: Miss. judge told ruling could earn federal bench bid (Herald Tribume),
  4. Another lawyer pleads guilty (Court papers filed point to Scruggs) (The Jackson Clarion Ledger),
  5. Former Miss. auditor pleads guilty in judicial bribery attempt in which top lawyer charged,
  6. Scruggs scandal update: Information in Langston plea,
  7. Scruggs Nation, Day 48: center for news updates.
Lawyer Tim Balducci has already pleaded guilty to the bribery charges described in the indictment. He admitted he approached Lafayette County Circuit Judge Henry Lackey in March about taking a bribe in a $26 million legal-fees dispute involving litigation on behalf of Hurricane Katrina victims. Lackey contacted authorities and began cooperating with the FBI. Eventually, Balducci told authorities he gave the judge a $40,000 bribe to rule in Scruggs' favor. The others named in the indictment have all pleaded not guilty.

Coincidentally, indicted high-powered attorney Dickie Scruggs is the brother-in-law of recently retired Mississippi U.S. Senator Trent Lott. knuckleheaded judges zeta

Friday, January 18, 2008

Indiana AG Tags Foreclosure Rescue Operator With Civil Lawsuit; Alleges Violations Of State Credit Service Organization, Deceptive Consumer Sales Acts

The Office of the Indiana Attorney General announces:

  • Indiana Attorney General Steve Carter has filed a lawsuit against Indianapolis-based Capital Foreclosure, Inc. seeking nearly $20,000 in restitution for customers and an injunction to halt the company and its operators from illegal practices. “Some people lost their homes after placing their trust with this company,” Carter said. “The company exploited the vulnerability of its customers who faced foreclosure.” Nearly 20 people sought “Foreclosure Rescue” and credit counseling services from Capital Foreclosure and its operators, Eriq Brye, Kenneth Brye and Sallie Brye. Individuals paid fees and other costs that ranged from $40 to as high as $4,100.

The AG's lawsuit alleges the following violations of Indiana’s Credit Service Organization Act:

  • Failure to obtain a $10,000 surety bond,
  • Failing to provide legally required disclosures on contracts,
  • Failure to provide two copies of a Notice of Cancellation form for buyers.

The AG's lawsuit also alleges the following violations, among others, of Indiana's Deceptive Consumer Sales Act:

  • Promising a full money-back guarantee and then failing to give the refund when failing to stop foreclosure,
  • Representing having the characteristics of experienced consultants with in-depth industry knowledge on how to avoid and stop foreclosure.

For more, see Indiana AG News Release: Attorney General Steve Carter Says Foreclosure Rescue Company Left Customers Out in the Cold.

For a copy of the lawsuit, see State of Indiana v. Capital Foreclosure, Inc., et al.

See also, WRTV Channel 6 report: State: 'Foreclosure Rescue' Company Ripped Off Hoosiers (State Seeks Restitution, Fines).

Las Vegas-Area Cops Charge Escrow Agent In $500K+ Theft; Announce A Ramping Up Of "Rescue" Scam Investigations; Undercover Stings In The Offing

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • A local escrow officer was arrested after Metro Fraud investigators say she pocketed more than $500,000 in escrow funds. Metro says this latest case is just the tip of the iceberg in what they believe will be a deluge of mortgage fraud cases in the weeks and months ahead. [...] Police arrested Sheila Katherine Williams on Tuesday for her alleged role in a scheme to steal $568,000 from a valley lending institution.

In a news conference held Wednesday, Metro Fraud investigators announced that they are seeing more desparate homeowners being victimized in foreclosure rescue scams where they unwittingly sign over the deed to their homes to a con artist who promises to take over the house payments but fails to do so.

  • Metro says they're currently cross training all of its fraud investigators to handle potential mortgage fraud. And the department even plans to conduct its own undercover sting operations to crack down on the fraud scam artists who target homeowners and businesses in financial distress.
For more, see Metro Targeting Real Estate Fraud (read story) (watch video).

See Theft Of Escrow Funds I and Theft Of Escrow Funds II for other stories of trust account / escrow account theft of funds. sneaky slick escrow agents beta

Foreclosure Rescue Bill Introduced In Virginia Legislature

In Richmond, Virginia, The Virginian-Pilot reports:
  • Del. Sal R. Iaquinto, R-Virginia Beach, has introduced a bill he said will provide more protection to people at risk of losing their homes to foreclosure. HB 947 would require companies or people that offer assistance to homeowners under threat of foreclosure to clearly disclose their services. The bill would also give homeowners a three-day period to rescind contracts with foreclosure-aid entities. Iaquinto said these companies often take advantage of desperate homeowners by getting them to sign over ownership of their homes under the guise of helping them avoid foreclosure. “We’re not going to stop the process,” he said. “People just need to know what’s going on.”

Source: Bill seeks to protect homeowners in foreclosures.

Go here for more on HB 947 (summary as introduced) (full text).

For a competing foreclosure rescue proposed law introduced by Del. G. Glenn Oder, see HB 408 (summary and status report) (full text).

March 13, 2008 update:

Go here for the current version of HB 408 (summary and status report) (full text), which, as of 3-13-2008, has been passed by the House and Senate and awaits the Governor's signature.

Home Repair Contractor Gets 13 Months For Pocketing Insurance Proceeds, FEMA Funds & Failing To Perform Hurricane Repairs

In Norfolk, Virginia, The Virginian Pilot reports:
  • A former home-repair contractor convicted last year of mail fraud was sentenced in federal court [last] Friday to a year and a month in prison - a fraction of the prison time that the Justice Department asked the court to impose. The contractor, Richard C. Pirozzi of southern Maryland, defrauded scores of Hampton Roads homeowners in 2003 after they suffered damages from Hurricane Isabel, a jury determined in June. Pirozzi's company, National Restoration Specialists Inc. of Bowie, Md., collected insurance and Federal Emergency Management Agency payments from victims but failed in many cases to make the needed repairs, prosecutors reiterated during [last] Friday's hearing.

For more, see Home-repair contractor gets 13 months in prison for fraud.

Ex-Appraiser Gets 18 Months For Submitting Inflated Appraisals

In Forsyth County, Georgia, Appen Newspapers reports:
  • A Decatur man will spend 18 months in federal prison and must pay $4.7 million in restitution for his part in a mortgage fraud scheme involving fraudulent appraisals for 15 homes in the Greenleaf subdivision in Forsyth County. Darryl L. Cooper, 27, received a reduced sentence, which includes three years of supervised release, from U.S. District Judge Thomas W. Thrash Jr. because of his cooperation in the investigation. He pleaded guilty Nov. 7, 2007 to one count on a charge of mortgage fraud conspiracy. The appraisals supported $4.7 million in fraudulent loans for purchases in the names of out-of state "investors" of incomplete homes from builder/coconspirator Jeffery Alan Teague. Cooper was recruited by Teague to prepare $5 million in appraisal valuations for 15 complete houses, when none of the houses had been completed. A California lender relied on Cooper's fraudulent appraisals to make $4.7 million in mortgage loans secured by these properties, which had no value. Many of the borrower/purchasers from California, New York and Florida also relied on the Cooper appraisals, rather than inspecting the properties before closing on their loans.

For more, see Decatur man must pay for Forsyth County mortgage fraud.

For FBI Press Release, see Appraiser Sentenced To Prison In Mortgage Fraud (Submitted Fraudulent Appraisals On Incomplete Houses In Forsyth County).

400 Guilty Verdicts In $190M California Fraud Trial Targeting Mostly Elderly Investors

In Riverside County, California, The Press-Enterprise reports:
  • Prosecutors will seek the maximum prison term of 117 years for the president and sole officer of D.W. Heath & Associates, who was convicted this week of bilking 1,600 mostly elderly investors. Daniel W. Heath received the final verdicts Friday, with jurors finding him guilty of 400 of 401 criminal counts, including securities fraud, selling securities without a license, theft from the elderly and grand theft. The verdicts were read over two days in the $190 million investment fraud trial involving his shuttered company. [...] "There are (sellers) out there who think that if investors complain, the worst they can face is civil suits, but we made it clear that you will face criminal charges," Deputy District Attorney Michael Quesnel said.

For more, see Heath investment fraud trial ends in 400 guilty verdicts, one not guilty (read story) (watch video).

Go here , here , here , and here for other posts on elder financial abuse. whale

Seniors Strike Back With Class Action Targeting Living Trust Peddlers

In Miller County, Arkansas, The Southeast Texas Record reports:
  • A number of Texarkana residents have filed suit against sellers of living trust documents in a class action accusing the salesmen of exploiting senior citizens. [...] The living trust sellers are facing allegations of "masquerading as qualified financial advisers, estate planners, lawyers, and paralegals" to "exploit and prey" upon senior citizens with the creation and selling of "unnecessary and often useless" living trusts. [...] Defendants are accused of fraud, unauthorized practice of law, negligence, breach of fiduciary duty and conspiracy. The suit alleges that the defendants created and sold the living trusts as part of a scheme to gain access to senior citizens' financial information in order to sell annuities and other financial products.

  • According to the original complaint, the scheme begins with advertisements that persuade senior citizens to attend a free lunch or dinner. At these meetings, the "unlicensed" living trust defendants conduct presentations and distribute materials that misrepresent the impact of probate fees and estate taxes in order to create fear that the senior citizens need to buy a trust to prevent heirs from losing their estate.

For more, see Seniors file class action against sellers of living trusts.

Go here , here , here and here for other posts on elder financial abuse. whale

Thursday, January 17, 2008

Foreclosure Rescue Scams, Reverse Mortgage Fraud To Increase, Says FBI

A recent USA Today article reports on the FBI and their work in pursuing mortgage and real estate scams. Included in the story is this except regarding scams involving foreclosure rescue and reverse mortgages:
  • The FBI expects more foreclosure scams as criminals prey on growing numbers of people desperate to keep their homes while interest rates balloon on adjustable rate mortgages, [FBI financial crimes section chief Sharon] Ormsby says. She also expects increasing fraud in "reverse mortgages," in which homeowners 62 or older can take out a loan against the equity in their home. Unlike a traditional home-equity loan, the borrower doesn't pay back a reverse mortgage until they sell the home.

***

  • In [one type of] scam, people posing as "foreclosure rescue" experts persuade homeowners with bad credit to sign over their deeds to a third person who can get a second mortgage against the home. The "expert" pockets the cash and defaults on the loan. A New York grand jury charged six people with fraud last month for allegedly stealing more than 80 homes in this way.

For more, see FBI: Housing scams more than double.

Countrywide Stops Automatic Drafts, Then Forecloses On Homeowner, Says Lawsuit

In Beaumont, Texas, The Southeast Texas Record reports:
  • There seems to be no relief in sight for Countrywide Home Loans, as a West End couple has just filed a new lawsuit alleging that the lender stopped automatically withdrawing loan funds and wrongly foreclosed on their home. Brian and Ahli Sparkman assert Countrywide had been automatically drafting their mortgage payment from their bank account for one full year, then for reasons unknown, stopped and foreclosed on them.

Reportedly, the lawsuit alleges that Countrywide's failure to automatically withdraw the monthly mortgage payments after agreeing that it would do so (and having done so for a year) constitutes a misrepresentation under the Texas Deceptive Trade Practices Act (Tex. Bus. & Com. Code §§17.41—63).

For more, see Beaumont couple claims Countrywide wrongly foreclosed on home.

For more on the Texas statute, see The Texas Deceptive Trade Practices Act: Still Alive And Well.

Montana Woman Gets 5 Years For Stealing Bank CDs, Home Sale Proceeds From 80+ Year Old Mother

In Billings, Montana, The Billings Gazette reports:
  • A Billings woman who admitted to stealing $300,000 from her elderly mother in a bankruptcy fraud scheme will serve the maximum five years in federal prison. "I would just like to apologize and ask forgiveness from God and everyone," an emotional Nancy Florence Short, 63, said Friday. [...] Short pleaded guilty in July to concealing assets and making false statements in a scheme that started in 2001 with bankruptcy filings in Montana. Prosecutors said Short converted $300,000 in certificates of deposit from her mother without authorization and took $22,780 from the sale of her mother's house in Texas, knowing that the money was intended for her mother's care.

***

  • When Short placed her mother in [an assisted care facility], she isolated her by diverting her mail and denying access to her car, [U.S. District Judge Richard] Cebull said. Short also gave the staff a false medical history of her mother by saying she suffered from Alzheimer's and was paranoid. When Short's mother discovered the theft, the staff and police initially didn't believe her allegations because of the supposed Alzheimer's, Cebull said. Short was the victim's only contact outside [the care facility], he said.

For more, see Woman gets 5 years in bankruptcy fraud.

Go here , here , here and here for other posts on elder financial abuse. xero

Broward Cops Collar Contractor On New Charges; Pocketed Deposits, Failed To Complete Work

In Broward County, Florida, The Miami Herald reports:
  • An unlicensed contractor on probation for ripping off dozens of homeowners in Miami-Dade County is being accused of ripping off another dozen new homeowners in Broward. John T. Pluto, 45, [...] was arrested Friday in Hollywood by the Economic Crimes Unit of the Broward Sheriff's Office on charges that he defrauded at least 14 Broward residents who needed concrete work at their homes in 2006. Pluto faces one count of organized scheme to defraud, a first-degree felony. He is being held at BSO's Main Jail in Fort Lauderdale without bond.

  • BSO spokesman Mike Jachles said Pluto cheated local homeowners out of $50,000. Pluto's system, according to authorities: He would enter into contracts, begin some of the work, and become hard to reach after pocketing their deposits -- often totaling 50 percent of the final price.

For more, see Accused of new scams, contractor held in Broward (A contractor already in trouble for scamming homeowners in Miami-Dade is suspected of conducting a similar scheme in Broward) (if link expires, try here).

Go here for other posts on contractor arrests by Broward Sheriff's Office.

Poisonous Spiders Force Indiana Family From Home; Insurer Refuses To Indemnify

In Anderson, Indiana, The Anderson Herald Bulletin reports:

  • It’s every arachnophobe’s or homeowner’s nightmare: The home you just bought already has tenants — hundreds of poisonous brown recluse spiders. That was the reality for Chad Cook, his pregnant wife and their 1- and 3-year-old children in April 2005, when they moved into their home at 906 Whitmore St. in Anderson and discovered the poisonous arachnids had infested their home.

***

  • The infestation sparked a lawsuit when the spiders couldn’t be done away with. Allstate, the insurer for the Cooks, wouldn’t compensate the family for its uninhabitable home. The family also sued for compensation for punitive damages, financial losses, emotional distress and the covered value of the home and its contents under the insurance policy, $187,000. The ensuing legal battle between the family and Allstate, which dragged on for more than two years, is only now drawing to a close. The Cooks, unable to live in their own home or remove most of their possessions, had to rely on assistance from friends, family and Good Samaritans through their church. All the while, the family continued to pay the mortgage on the home.

For more, see Brown recluse spiders cause family to flee home, file lawsuit.

For earlier media reports (WRTV Channel 6) on this story, see: