Suit Charges Law Firm Principals, Others In Alleged Equity Snatching, Sale Leaseback Scam Targeting Bucks County Homeowners Facing Foreclosure

In Bucks County, Pennsylvania, The Intelligencer reports:

• Nine area residents are suing Doylestown Township Supervisor Jeffrey Bennett and his law partner Stephen Doherty - attorneys at Bennett & Doherty P.C. - claiming they were defrauded in a real estate scheme. In a lawsuit filed in Bucks County Court last week, Bennett and Doherty are linked to what is alleged to be a complicated ploy where homeowners expecting to refinance mortgages ended up losing their homes and seeing their equity divvied up among attorneys, mortgage brokers and investors through a maze of fees, adjustments and "kickbacks."(1) [... Last week's] lawsuit adds seven new plaintiffs to what has been an evolving case against the defendants that started with complaints from Plumstead's William and Phyllis Kemp. [...] Neither Bennett nor Doherty agreed to be interviewed about the lawsuits but, in court documents filed in the Kemps' earlier state and federal suits, they denied any wrongdoing.(2)

***

• Stuart Eisenberg of Warminster's McCullough & Eisenberg PC is representing all nine plaintiffs - the Kemps, Michael and Joann Lieber, Mark and Beverly Goldman, Jose and Carmen Ortiz and Susan Edge. All had faced foreclosure of their homes and turned to the defendants for help.(3)

***

• The new court filing, which will consolidate the Kemps' earlier Bucks County court action, alleges similar claims brought by other plaintiffs who owned property in Bucks County, ran into financial trouble, and sought help from Bennett and Doherty or, in some cases, [mortgage broker Ed] McCusker. The suit alleges all were guided through similar transactions that ended with them losing title to their homes as well as equity.(4) The suit claims those deals included forged signatures on sales agreements, improperly inflated appraisals used to maximize borrowing from Long Beach Mortgage, the loss of more than $1 million in home equity from the six properties and alleged "kickbacks" to Bennett and Doherty totaling almost $56,000.

***

• Reached at his Upper Makefield home last week, McCusker said he was simply following a program Bennett and Doherty said they designed "to help people facing foreclosure." The program, which he referred to as a sale-leaseback, allowed the Kemps to sell their home to investors and lease it back. Sale-leaseback deals aren't uncommon in real estate circles and they're not illegal if everyone involved knows and understands the terms and purpose. The Kemps say they didn't understand either, because they didn't have the documents in advance, they didn't realize what they were signing at the settlement table and they claim their names were forged on the agreement of sale. Assuming the homeowners could make their share of the mortgage payments and their credit remained solid, McCusker said they could have had the house sold back to them a year later [...]. The Kemps signed an "Option Agreement" at settlement listing terms by which the property could be returned.

For more, see Suit claims 9 are victims of mortgage scheme.

(1) Bennett and Doherty top a list of defendants in the case, in which the residents claim they were swindled out of houses they owned in Haycock, Hilltown, Newtown Township, Plumstead, Richland and Solebury.

(2) Reportedly, the situation has caught the attention of Federal criminal investigators. In June, through their attorneys, Bennett and Doherty asked the U.S. District Court to halt the civil proceedings due, in part, to "a pending criminal investigation" by the U.S. Attorney's Office and the FBI, according to the story. They claimed defendants in the civil case were subpoenaed to appear before a grand jury in April with records relating to Bennett, Doherty and the others named in the suits. The motion for a delay was reportedly denied July 7.

(3) According to the story, not long after receiving word of the impending foreclosure, the Kemps said they received a flier in the mail from a company called "Foreclosure Relief Services," offering to help "stop foreclosure" and "save" the home. Bennett and Doherty admit in court documents to owning the company. The Kemps said they went to Bennett and Doherty for help in March 2006. Doherty agreed to represent the Kemps and file preliminary objections to the foreclosure. That was the extent of Doherty's legal representation, the defendants claimed in documents filed in response to the earlier suits.

(4) "It's my experience that clients go into a pink cloud," the homeowners' attorney Stuart Eisenberg reportedly said of people in a tight spot who believe they're getting help. "They're happy to have their burdens lifted. They don't know the details, but they're very happy about it. They sign where they're told to sign. They initial where they're told to initial." foreclosure rescue equity stripping