Saturday, May 09, 2009

"Wire-Wearing" Mistress Key To Federal Indictment Snagging Builder-Boyfriend In Alleged Tax Evasion Scheme; Accountant, Real Estate Agent Also Named

In Columbus, Ohio, The Columbus Dispatch reports:
  • Federal agents put a secret recording device on the mistress of a central Ohio luxury-home builder and pieced together shredded documents from his accountant's trash to unravel a tax-evasion scheme that involved kickbacks to home buyers and fraudulent loans linked to one of Franklin County's largest mansions.(1)

For more, see 3 indicted in tax scheme (Builder, accountant accused of 18 counts in alleged fraud involving luxury homes).

(1) According to the story, the home builder, Thomas Parenteau, and the accountant, Dennis Sartain, pleaded not guilty yesterday in U.S. District Court in Columbus to an 18-count indictment charging them with tax fraud, bank and wire fraud, money laundering and obstruction of justice. Bonnie Helt, a real-estate agent who sold many of Parenteau's luxury homes, also was arraigned. She pleaded not guilty to bank and wire fraud, money laundering and obstruction of justice, the article states. She is accused of helping put the real-estate deals together and cover up the sales.

Ohio AG Tags Two Home Improvement Outfits With Suits Alleging Pocketing Homeowner Money, Failing To Deliver Professional Work

From the Office of the Ohio Attorney General:
  • Attorney General Richard Cordray has filed two lawsuits against home improvement companies accused of defrauding Ohioans. One lawsuit, filed in the Union County Court of Common Pleas, charges ABC General Contracting and its owner, Jeremy Adams, with failure to deliver promised services. The other suit, filed in the Montgomery County Court of Common Pleas, charges Brown and Brown Roofing and its owner, Bob Brown, with shoddy service.

***

  • [Prosecutors allegedly] found that Adams routinely collected $400 to $7,700 from consumers but did little or no actual work in return. [...] According to Cordray’s lawsuit, Brown did shoddy, unprofessional work, made false representations about warranties and failed to provide proper estimates to consumers.(1)

  • Both lawsuits charge the companies with numerous violations of Ohio’s Consumer Sales Practices Act. Cordray is asking the court to stop the companies from committing deceptive practices, to hold them responsible for reimbursing consumers and to assess a $25,000 civil penalty for each violation of the law.

For the entire press release, see Cordray Takes Action Against Home Improvement Fraud (Two Ohio companies leave trails of fraud throughout state).

(1) According to the press release, an investigation found that Adams operated under numerous business names, including Adams Contractors, Mr. Haul, Absolute Maid Service, Rent-a-Husband, Lakeside Remodeling, A2Z General Contractors and Handyman Services. None of these names are registered with the Ohio Secretary of State. Bob Brown also failed to register with the Secretary of State, Cordray said. Brown operated his business under the names Brown and Brown Roofing and Bob Brown Roofing.

Broome County Leaning Against Stripping Mineral Rights Away From Delinquent Owners Who Repurchase Property Earlier Lost In Tax Foreclosures

In Broome County, New York, the Binghampton Press & Sun Bulletin reports:
  • Hard-luck Broome County property owners who lose out on tax foreclosures should keep their mineral rights, a special committee is recommending. Under a proposal to update county policies, Broome County will give up its claim to potentially lucrative mineral rights on properties lost to foreclosure and then repurchased by their original owners who show hardship. [...] The issue came to light last year after Broome's Office of Real Property retained mineral rights to three of 12 foreclosed properties that were later repurchased by their owners.

For more, see Legislators: Let mineral rights revert (Change would help foreclosed owners).

For follow-up story (8-15-09), see Tax foreclosures, mineral rights explained.

Go here for other posts on those looking to strip property owners of their mineral rights. MineralRightsAlpha

Maine Woman Admits Misrepresenting Value Of Home In Foreclosure & Using It As Collateral For Bail Bond

In Farmington, Maine, the Kennebec Journal Morning Sentinel reports:
  • A woman who signed a bail lien using property in foreclosure to post bail for a man charged with manslaughter in the death of a toddler pleaded guilty to forgery Monday. Jamie Badeau, 24, of Wilton, misrepresented the value of the real estate she used to bail out David Cook, 26, of Wilton. She used property in foreclosure to post $100,000 surety bail for a man charged with manslaughter in the death of a toddler. [...] On Jan. 5, 2009, Badeau signed a surety bond and bail lien for Cook at the Franklin County jail and swore to the bail commissioner that the property had a net value of $100,000.

For more, see Woman pleads guilty in bail forgery case.

Couple Seeking To Make Some Extra Cash Left Holding The Bag In Straw Buyer Deal; Schemes Begin Unraveling As Economy Tanks

In Calgary, Alberta, The Calgary Herald reports:
  • About two years ago, in a lawyer's office, Linda put her signature on a document she believed would help someone buy a house. She thought it was an easy way to make some money,(1) while doing good for someone she understood just needed her "good name" to get a leg up.

  • But the small act of putting pen to paper has left Linda and her husband Rick (not their real names) on the hook for a house trashed by its tenants and facing a $100,000 lien on the home they've lived in for a decade. The couple are part of a growing group of Calgarians who have fallen victim to a common mortgage fraud scheme known as "straw buyer."

***

  • As the economy falters, mortgage fraud schemes are starting to unravel, said Sgt. Shawn Goertzen of the Calgary police's commercial crime unit. Goertzen said there have been several phone calls recently from people finding themselves in the exact same situation as Rick and Linda. But, for every one case that comes to the attention of officials, there are many more.

For more, see Mortgage frauds on the rise in Calgary (Scams start to unravel as economy falters).

(1) According to the story, Linda pocketed $3,000.

Friday, May 08, 2009

Recognizing & Avoiding Foreclosure Rescue, Loan Modification Scams The Focus Of Miami Seminar

In Miami, Florida, the South Florida Carribean News reports:
  • Alarming foreclosure rates in South Florida are prompting many homeowners to seek the services of foreclosure rescue and loan modification companies. To help consumers avoid being victimized and losing their money, the Miami-Dade Consumer Services Department and Mayor Carlos Alvarez’s Mortgage Fraud Task Force are holding educational presentations in English and Spanish.(1)

For more, see Learn how to guard yourself against mortgage fraud & loan modification scams.

(1) The English session will be held Wednesday, May 13 at the North Dade Regional Library, 2455 N.W. 183rd Street in Miami Gardens, at 6:30 p.m. A Spanish session will be held Wednesday, May 27 at the West Kendall Regional Library, 10201 Hammocks Blvd., at 6:30 p.m. Representatives of the Consumer Services Department and the Mortgage Fraud Task Force will discuss the methods con artists use to carry out foreclosure rescue and loan modification fraud and answer questions. They will also provide consumers with information to obtain legitimate assistance to help save their homes.To RSVP for these events, please call the Consumer Services Department at (305) 375-3677, and specify which event you are interested in attending.

Florida To Belt Mortgage Lenders With Big Hike In Fees When Filing Foreclosure Actions

In Tallahassee, Florida, the Sarasota Herald Tribune reports:

  • The cost of foreclosing on homes and businesses will rise sharply under a bill lawmakers are expected to approve [Friday], a change that one state leader predicts may persuade lenders to try harder to work out alternatives with struggling borrowers.

***

  • Under the measure, the cost of filing foreclosure actions -- which are now $295 -- will be increased on a sliding scale. For properties under $50,000, it will rise to $395. For homes and businesses between $50,000 and $250,000, it will increase to $900. And for properties over $250,000, it will jump to $1,900 -- more than a sixfold increase.

***

  • "I think if I was a lender or someone filing a lawsuit I might have a little more incentive to try to work things out," [Lee Haworth, the chief judge for the 12th Judicial Circuit in Sarasota] said, adding there may be "a big jump" in the filings before the new law actually takes effect.

For the story, see Bill increases costs to foreclose.

Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M

From the Washington State Office of the Attorney General:
  • The Washington Attorney General’s Office declared a major victory for consumers today in response to a judge’s order that a notorious foreclosure rescue scammer must pay more than $3.2 million to victims he wronged plus $179,000 in penalties for violating the Consumer Protection Act.
  • Joseph Kaiser’s a cunning real estate investor who made his living by claiming to help people facing tax foreclosure – then taking their homes, land and money,” Attorney General Rob McKenna said. “Thanks to the hard work of our Consumer Protection Division, he will no longer be able to prey on struggling homeowners.” The Attorney General’s Office also obtained an order permanently stopping Kaiser from participating in real estate transactions with people facing foreclosure.
  • Kaiser, of Tacoma, was the first foreclosure “rescuer” to be tried by the Attorney General’s Consumer Protection Division, which works to enforce a fair marketplace for consumers and businesses. He is the author of several books describing tactics for making quick profits from real estate and has conducted seminars to teach his methods for earning large amounts of money through deals involving distressed properties.
  • Kaiser entered transactions with more than 300 property owners. No one has ever successfully regained their home from Kaiser. Assistant Attorneys General Jim Sugarman and Jake Bernstein represented the state in the trial, which included six days of testimony and arguments by attorneys on both sides during December 2008 and January 2009.
  • Kaiser’s victims were elderly, disabled or low-income individuals – people who trusted him to solve their foreclosure problems and were betrayed,” Sugarman said. “Kaiser portrayed himself to these people as an expert in saving homes facing foreclosure, when he is actually an expert in taking homes facing foreclosure.”
  • King County Superior Court Judge Palmer Robinson ordered Kaiser to pay nearly $4.2 million including more than $780,000 to partially repay the state for the costs and attorney fees for bringing the lawsuit. It’s a significant finale to a case that began in March 2007 when the state filed civil charges against Kaiser and simultaneously settled with several of his colleagues.
  • In its complaint, the state alleged that the defendants used public records filed with county treasurers to contact property owners with offers to help solve their foreclosure problems. Their real intent, however, was to obtain ownership of the home or to let the home be sold at tax foreclosure and then take the excess sales money that should have been paid to the homeowner.
***
  • Trial Judge Michael Trickey called Kaiser’s contracts “grossly unfair.” “No fully informed person, not acting under compulsion, would enter a transaction with such onerous terms,” Trickey wrote in his decision [at paragraph 12].
For the entire press release(1), see Pay time for notorious foreclosure rescue scammer (Attorney General announces major victory in state’s case with Washington man who promised help but took homes).

See also, Seattle Post Intelligencer: Foreclosure guru hit with $3.2 million penalty ("I'm the Tiger Woods of foreclosure rescue" accused man claims).

(1) Relevant court documents and other case information:

Fannie's Reverse Mortgage Interest Rate Rule Changes To Invite Fraud, "Bait & Switch" Tactics?

The Associated Press reports:
  • Almost daily, the reverse mortgage industry is changing, and it’s worrying plenty of people. For years, reverse mortgages have been reliable, a way for seniors to live off the equity in their homes as they age. [...] But now, reverse mortgage veterans [...] are concerned about that some sudden changes by Fannie Mae that allow [interest rate] margins to fluctuate almost daily until the funding process is complete. These adjustments can confuse seniors and cause them to question whether they are getting fair treatment.

  • Fannie Mae — the largest financier in the U.S. mortgage industry — is trying to attract more money to the reverse mortgage market by increasing the amount lenders can make on selling the loans. But raising fees and allowing rates to change can lower the amount of money senior homeowners can borrow. It also can increase the fraud risk as competition for their business increases.

***

  • Industry insiders fear that the margin increases will lead to higher instances of fraud, with lenders quoting a low margin to get clients interested, then disclosing a margin increase later in the process in a “bait-and-switch” strategy.

For more, see Changes in reverse mortgages stir fears among senior citizens.

For stories related to reverse mortgage problems, go here and go here. reverse mortgage yak

NYC Housing Officials Fear Deteriorating Conditions For Tenants In Rent-Regulated Apartment Buildings In Danger Of Foreclosure

In New York City, The Indypendent reports:
  • City housing officials laid out their plan to deal with multi-family building foreclosures [last week] at the New York City Council. In the Council’s Community Development committee, council members grilled newly minted Department of Housing Preservation Development ["HPD"] commissioner Rafael Cestero on the foreclosure crisis. HPD’s commissioner laid out a plan to tap federal bailout and stimulus money to save multi-family buildings from falling into foreclosure.

***

  • Cestero warned about the dangers of multiple family buildings going into foreclosure such as landlords refusing to make repairs that contribute to deteriorating building conditions. This in turn could drive entire blocks into decline by lowering property values and encouraging other property owners from investing in buildings – namely through making repairs and capital improvements. HPD will stress outreach to owners in danger of foreclosure, code enforcement targeting distressed buildings and the linchpin – using federal funds to purchase or co-finance mortgages with private investors.

For more, see Foreclosures Could Loom for Rent-Regulated Buildings.

See also, the New York Post: FORECLOSING IN ON 90,000 APARTMENTS (As many as 90,000 city apartment units could go into foreclosure as the housing crisis spreads from single-family homes to rental properties, city officials warned). RentSigmaSkimming

Tenants Forced Out By Raw Sewage In Condemned Omaha Apartment Building In Foreclosure; Landlord Unavailable For Comment

In Omaha, Nebraska, KETV Channel 7 reports:
  • There’s an apartment complex in Omaha that the city’s chief housing inspector calls deplorable and the landlord is nowhere to be found. In fact, one building has raw sewage flowing throughout it.

***

  • All my stuff is ruined,” said tenant Kimberly Wright. “I don’t have a place to stay. I lived here with my three children. I’ve lost everything.” Wright was displaced when city inspectors recently condemned the building. She showed I-Team investigators the raw sewage that backed up into her toilet and bath tub. It flooded her ground-level apartment and sent a terrible stench through the building. The city’s chief housing inspector, Kevin Denker, said the conditions inside the building are about as bad as they get. “This looks like an issue of the sewer line going out to the street being blocked and every time anybody runs their sink or flushes their toilet above this unit, it empties into this unit,” Denker said.

***

  • KETV NewsWatch 7 tried contacting the company by phone, but two business lines, a cell phone and a tenant hot line had been disconnected. The current mortgage holder for the apartment complex confirmed the property is in foreclosure.

  • The director of the Fair Housing Center [of Nebraska], Jill Fenner, said her agency will help Wright and other tenants bring legal action against the landlord. “She can sue for three times the rent, plus liquidated damages and reasonable attorney’s fees,” Fenner said. But any legal action will take time.

For more, see City Condemns 'Deplorable' Apartment Building (Tenant Loses Everything After Raw Sewage Backs Up In Her Unit). RentSigmaSkimming

Thursday, May 07, 2009

FTC, Others Testify On Foreclosure Rescue & Loan Modification Scams

The Federal Trade Commission announced Wednesday:
  • The Federal Trade Commission [Wednesday] told the U.S. House Subcommittee on Housing and Community Opportunity of the Committee on Financial Services that, with the rapid increase in mortgage delinquencies and foreclosures, the FTC has intensified its efforts to protect consumers from foreclosure rescue and loan modification scams. The FTC also recommended legislative and other remedies to enhance the agency’s effectiveness.

For the rest of the press release, see FTC Testifies on Efforts to Combat Foreclosure Rescue and Loan Modification Scams.

Go here to view the archived webcast.

Witness List & Prepared Testimony:

Panel One:

Panel Two:

California Regulator Shifts Over A Dozen Deputies To Investigate Loan Modification Outfits As Firms "Are Popping Up Like Weeds!" Says DRE Spokesman

In San Diego, California, the San Diego Union Tribune reports:
  • Complaints about loan modification companies that charge hefty fees but provide little or no service are soaring statewide as distressed homeowners struggle to avoid foreclosure. While many firms are reputable, the state Department of Real Estate ["DRE"] is shifting resources to keep up with a mounting caseload of consumers who say they've been taken advantage of. There were very few complaints against loan modification firms last fall, but since then the number has climbed to about 500, said department spokesman Tom Pool.

  • In response, the department has transferred more than a dozen deputies to enforcement duties. Loan modification companies “are popping up like weeds,” Pool said. “The best defense is consumer education. We are seeing more and more foreclosures every day. We are probably going to get a whole new crop of victims.”

For more, see Complaints to state soar over loan modification firms (Officials monitoring for-profit companies).

California State Bar Testifies On Role Of Some Attorneys In Upfront Fee Foreclosure Rescue & Loan Modification Scams

In a U.S. House of Representatives hearing Wednesday entitled Legislative Solutions for Preventing Loan Modification and Foreclosure Rescue Fraud, Mr. Scott Drexel, Chief Trial Counsel of The State Bar of California testified as to the role that some attorneys are playing in scamming the public in foreclosure rescue & loan modification fraud. He pointed out to the subcommittee that since approximately November 2008, calls to The State Bar's toll-free telephone lines have averaged nearly 900 per month on the subject of loan modification and foreclosure rescue fraud, an annual rate of more than 10,000 telephone calls on this subject alone. Among other points made by Mr. Drexel in his prepared testimony are the following:
  • [A]ttorneys have been complicit in loan modification and foreclosure rescue fraud in several respects. The key component of their involvement in fraudulent activities is their ability to demand and receive advanced fees for services.

  • Regrettably, a certain number of attorneys are willing to engage in these fraudulent activities on their own.(1) In many cases, however, attorneys are approached by non-attorney foreclosure consultants who seek to work in concert with them. In exchange for the use of the attorney’s name and his or her ability to charge and receive advanced fees, the foreclosure consultant typically offers to perform most or all of the loan modification services and promises to either pay the attorney a specified amount for each loan modification or to provide an agreed-upon percentage of the fees received from the homeowner.

  • The foreclosure consultants often prey upon new attorneys who are unaware of their ethical responsibilities and who, in the current economy, are having problems in attracting sufficient legal business.

  • These consultants also appear to prey upon older attorneys who cannot afford to retire but who no longer have the energy or ability to maintain a large law practice by offering them a steady monthly income to supplement what the attorney can earn through his or her legitimate law practice.

  • Besides the fraudulent aspect of the activities themselves, these arrangements violate numerous provisions of California’s Rules of Professional Conduct. For instance, rule 1-310 of the Rules of Professional Conduct prohibits a member of the State Bar from forming a partnership with a person who is not a lawyer if any of the activities of the partnership consist of the practice of law.

  • Similarly, rule 1-320 prohibits a member or a law firm from directly or indirectly sharing legal fees with a person who is not a lawyer, with exceptions that are not applicable to the alleged services to be provided by foreclosure consultants.

***

  • In the cases that the California State Bar has been investigating, we have typically encountered advanced fees for loan modification services ranging from approximately $2,500 to more than $10,000, with the average fee in the range of about $3,000 to $4,000.

  • In most of the cases that the State Bar is investigating, the attorney and/or the foreclosure consultant perform few, if any, services in exchange for these advanced fees. In essence, these monies have been obtained from homeowners under false pretenses. At most, in exchange for these advanced fee payments, the attorneys or foreclosure consultants make a few, largely ineffectual, telephone calls to the financial institution that holds the mortgage.

Go here for the entirety of Mr. Drexel's prepared testimony.

*********************

In a related point, from the Committee on Professional Responsibility and Conduct ot The State Bar of California, see: ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications.

In a related story, see SF Weekly: State Bar Takes Over 'Son of Super Swindler' Law Firm -- 2,000 Con Jobs Too Late (The State Bar of California has taken over the law firm of Mitchell Roth, who had, in partnership with convicted felon Paul Noe II, convinced more than 2,000 troubled homeowners to fall for an apparent "foreclosure assistance" scam).

Go here and Go here for other posts on the potential perils relating to attorneys and non-attorney loan modification firms joining forces to provide foreclosure-related rescue services.

(1) Mr. Drexel describes one particularly egregious case, in which the attorney and the foreclosure consultants with whom he is working have talked homeowners into providing them with bank account information before the homeowner has even signed an agreement retaining the attorney for loan modification services. The attorney then electronically withdraws funds from the homeowner’s bank account without any prior notice or authorization from the homeowner and before the homeowner has even decided to retain the attorney. UnauthPractOfLawTheta

First Of Ten Defendants In Alleged San Diego-Area Land Grant Foreclosure Rescue Scam Cops Plea; 400+ Homeowners Victimized, Say Prosecutors

In San Diego, California, XETV-TV Channel 6 reports:
  • A man accused with nine other people of stealing hundreds of thousands of dollars in a home foreclosure scam pleaded guilty Tuesday to seven felonies, including conspiracy and grand theft. Octavio Escatel, 29, will be sentenced to probation and a year in jail at a June 5 hearing before Judge Charles Gill.

  • William Hutchings and wife Xiaoke Li, Edgar Martinez, Diego Gil, Shawna Landis, Joel E. Garcia, Stephen Mauer and Alex Olmos pleaded not guilty to more than 150 counts of grand theft, conspiracy and deceitful practices as a foreclosure consultant. They, along with a 10th defendant, Rose Napoli, had their trial set for Jan. 19.

***

  • More than 400 homeowners in San Diego and Riverside counties were victimized, prosecutors said. Two methods were allegedly used to induce property owners in foreclosure to participate in a so-called land grant program, according to prosecutors. One method required homeowners to pay a one-time fee of up to $10,000 to put their property in a land grant, prosecutors said. The second method was a lease-back scheme, according to authorities. In both scenarios, the homeowners were typically evicted and retained no legally recognized title to their property.

For the story, see Man Preyed on Over 400 People in Home Foreclosure Scheme.

California Probe Continues Into Man At Center Of Possible Straw Buyer Scheme Leaving 150+ Homes In Foreclosure

In Fresno, Cailfornia, KSEE-TV Channel 24 reports:
  • Renters at Stonemark Homes in east central Fresno could be the victims of a real estate scheme that stretches from the Valley down to Southern California. At the center of the suspected scam is 58 year old James McConville. McConville is the subject of an investigation in San Diego County for allegedly renting identities to purchase properties. More than 150 homes connected to McConville have gone into foreclosure.

  • That seems to be McConville’s M.O., find investors or find people with good credit, use their identity, pay them a little bit so he can get the loans and then let them (properties) go into default while he pockets all of the money,” property appraiser Carin Lane said.

***

  • At least 10 people listed as owners of multiple units at the east central Fresno complex have McConville's address listed as their own. [...] Many of the owners of Stonemark units were also listed as owners of units at McConville's other properties now being investigated as possible scams.

For more, see Real estate scheme could leave renters homeless.

For media reports on the San Diego investigations involving McConville, see:

NYC Woman Charged With Swiping Three Manhattan Apartment Buildings From Dead Ex-Boyfriend's Estate

In New York City, the New York Post reports:
  • A former exotic dancer with a body for sin and maybe a brain for it, too, stole three Upper East Side apartment buildings from her late ex-boyfriend and brazenly started collecting rent, authorities said. Flora Soto Hernandez, 54, was arrested Thursday on 21 counts of forgery and fraud for posing as a landlady, officials said. She's now cooling her heels on Rikers Island, on $250,000 bail. The former blonde bombshell claimed her ex, a wealthy property owner named Fred Zeiss, left the buildings to her when he died in 2002.

***

  • Zeiss' brother, Alan, says the deed conveyances are forgeries. "This is one of the most brazen yet ludicrous schemes I've ever seen," said Alan Zeiss' lawyer, Mark Bederow.

***

  • She even attempted to sell one of the buildings, at 405 E. 90th Street, a source said. Alan Zeiss countered by placing a lis pendens on the property, a legal notice that should have kept Soto from trying to sell the building. But that didn't perturb Soto. "She marched down to the County Clerk's Office with fake affidavits and tried to get them removed," said Bederow.

For more, see BUILDINGS 'STOLEN' (BOGUS LANDLADY SCAMMED EX'S ESTATE: DA).

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Wednesday, May 06, 2009

NYC Public Forum: Options When Facing Foreclosure

In New York City, the Brooklyn Daily Eagle reports:
  • Thurs. May 7, Public Forum: Options When Facing Foreclosure, 6 p.m.-8 p.m. Speaker: Lynn Armentrout, director, Lawyers Foreclosure Intervention Network, City Bar Justice Center. Held at the New York City Bar Association, 42 West 44th St., Manhattan. Free and open to the public. For information or to register, contact the City Bar: www.nycbar.org.

Source: Upcoming Events in the Legal Community - May 6, 2009.

Feds Award Colorado Firm Linked To Risky Subprime Mortgages With $798M Jackpot; State Congressional Staffers Refuse Comment

In Douglas County, Colorado, The Denver Post reports:
  • The U.S. Treasury has pledged $798 million in incentives to Aurora Loan Services LLC of Douglas County for help in refinancing homeowner mortgages, according to The Associated Press. The company, a subsidiary of bankrupt Lehman Brothers, is the 10th Colorado financial institution this year to receive federal funds intended to boost the economy.

***

  • The firm's risky lending practices, including allowing low down payments and requiring no income documentation, were part of a widespread Lehman strategy involving mortgage-backed securities that led to Lehman's bankruptcy.

  • Officials for Aurora Loan Services were not available for comment or could not be reached Tuesday. Staffers with three Colorado congressional offices would not comment Tuesday because they had not seen documentation of the award to Aurora.

For more, see Aurora loan firm hits jackpot (Aurora Loan Services, which engaged in risky lending, has been pledged incentives to help refinance mortgages).

Northern Virginia Loan Modification Firm The Target Of Media Scrutiny, Customer Protests

In Vienna, Virginia, The Huffington Post reports:
  • [T]he FTC said several [loan modification] operations, which guarantee they can get lenders to reduce monthly payments and prevent foreclosure in return for an upfront fee, advertised their services under names designed to suggest government affiliation -- names like Federal Loan Modification Law Center and Bailout.hud-gov.us.

  • One company that has not hidden behind such a title is The Shmuckler Group. Days before the Federal Trade Commission announced its crackdown, dozens of Shmuckler clients protested outside the company headquarters in Vienna, Va., saying the firm never came through on promises to modify loans after collecting thousands in upfront fees.

  • "I think it's a scam," said Kristi Cahoon, director of a foreclosure assistance program at Legal Services of Northern Virginia, a non-profit law firm that provides legal help to low-income Northern Virginia residents. "Based on what I've seen it doesn't appear that they've done anything for the clients" after taking their money.

For more, see Shmuckler Group: Another Mortgage Rescue Firm Accused Of Scam.

See also:

(1) According to the story, Kristi Cahoon told the Huffington Post she has over 20 cases with Shmuckler clients and that she has filed complaints with the Virginia Bureau of Financial Institutions over Shmuckler's licensing. In March the Washington Post reported that Maryland Department of Labor, Licensing and Regulation is investigating the Shmuckler Group and that Shmuckler is up for disbarment in D.C. Shmuckler wrote in his letter that on March 30 the government raided his office, taking computers and files.

Standing-Lacking Rhode Island Mortgage Lenders Now Under Attack By "Produce The Note" Strategy

In Providence, Rhode Island, NBC Nightly News reports on Rhode Island attorney George E. Babcock, who reportedly has used the "produce the note" strategy in his effort to help 100% of his foreclosure clients slam the brakes on the loss of their homes through foreclosure. Florida foreclosure defense attorney April Charney makes a cameo appearance in the story.

For more (video only, approx. 2:16), see Lawyer Practices "Foreclosure Stoppage."

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here. EpsilonMissingDocsMtg

Feds, Florida Foreclosure Rescue Operators Settle Civil Charges Of TILA, HOEPA Violations

The Federal Trade Commission recently announced:
  • Two individuals who lured homeowners into high-cost, short-term loans secured by an additional mortgage on their homes have settled FTC charges that they violated federal law – and a previous court order against them. Thomas C. Little, an attorney, also settled contempt charges based on his role in facilitating the scam. The Commission sued them and seven other defendants in February 2008 as part of an ongoing effort to crack down on businesses that prey upon homeowners facing foreclosure.

***

  • The settlements with Christopher Tomasulo and Bonnie Werner (formerly Bonnie A. Harris) resolve these charges and impose judgments of $2,791,040.40 each, which will be suspended based on their inability to pay. The full judgments against them will become due immediately if they are found to have misrepresented their financial condition.(2)

For the entire press release, see Mortgage Foreclosure ‘Rescue’ Defendants Settle FTC Charges for Deceiving Homeowners.

For links to copies of the initial lawsuits, the settlements, and the related press releases, see:

(1) The defendants allegedly violated the Home Ownership and Equity Protection Act (HOEPA) by extending credit based on the value of consumers’ collateral without regard to their repayment ability, by requiring balloon payments after only six months, by providing negatively amortized loans that cause consumers to owe more at the end of the loan than at the beginning, and by failing to make required disclosures. The defendants also allegedly engaged in a number of violations of the Truth in Lending Act (TILA).

(2) Other defendants in these cases are: Silverstone Lending, LLC, a Florida limited liability company; Silverstone Financial LLC, a Florida limited liability company; Keystone Financial, LLC, a Nevada limited liability company; Southeast Advertising, Inc., a Florida corporation; MT25 LLC, a Nevada limited liability company; and Peter J. Porcelli, II, individually and as officer, partner, or member of Silverstone Lending, LLC, Silverstone Financial LLC, and Safe Harbour Foundation of Florida, Inc..

Desperate South Florida Developers Turn To Lease To Own Programs To Fill Up Unsold Inventory

In Miami, Florida, The Miami Herald reports:
  • [W]ith some of the region's swankiest projects honeycombed with empty units, developers are increasingly using lease-to-own programs as a way of attracting wary buyers and eager renters. Some are offering terms unheard of in normal markets.

***

  • The proliferation of lease-to-own options represents the latest survival strategy for developers whose projects came to market just as prices crashed and credit markets dried up, making it nearly impossible for potential condo buyers to obtain financing. Developers currently hold about 10,000 new units in the greater downtown Miami area alone, not to mention the thousands of new condos and condo conversions built throughout the rest of Miami-Dade and Broward counties.

For more, see Lease-to-own condo deals attracting buyers (South Florida condo developers are using lease-to-own options to attract renters and fill unsold units. Would-be buyers are responding because condo loans are hard to get).

California Man Charged With Selling House Out From Under Vacationing Homeowners

From the Office of the Santa Cruz County, California District Attorney:
  • Santa Cruz County District Attorney Bob Lee announced [last week] that Raymond Tate was arrested today in connection with a deed dispute involving property in Ben Lomond owned by Tom Decker and his wife Maria McArthur.

  • The case began when the couple came back from vacation to find someone living in their house. The occupant, Daniel Judd had a grant deed from the seller, California Housing Association LLC, signed by Raymon Tate, the owner of the California LLC. The only problem was that Tate's California Housing Association LLC, didn't own the property. In 2007 Tom Decker and Maria McArthur had formed a Nevada LLC with the name California Housing Association, and they were the true owners of the property. An investigation by the District Attorney's office revealed the names of the true owners and the deed scam.

  • District Attorney Bob Lee commented, "To come home and find someone living in your house is bad enough, but to then to prove to law enforcement that you really own the house, just adds insult to injury." Tate formed his California LLC on 3/26/09 and then sold the Decker's property on 4/2/09 to Daniel Judd.

Go here for the April 28, 2009 press release.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Tuesday, May 05, 2009

South Carolina High Court Slams Brakes On Thousands Of In-State Fannie, Freddie Foreclosures

In Columbia, South Carolina, The Associated Press reports:

  • South Carolina's highest court has temporarily stopped thousands of pending foreclosure sales so homeowners can take advantage of a new federal program to refinance mortgages. The state Supreme Court on Tuesday issued a restraining order preventing South Carolina judges from finalizing foreclosure sales on properties with mortgages backed by Fannie Mae or Freddie Mac.

  • The order also applies to any mortgage lender who has signed on to a federal assistance program.

***

  • The ruling was in response to a request from a Columbia attorney representing Fannie Mae, who had argued that it was necessary to keep homeowners who might be eligible for federal assistance from being shut out of the process.

  • "Absent the injunction, mortgagors eligible for relief under the HMP program could be denied their right to participate because their property was sold at the foreclosure sale," Ronald Scott wrote in his three-page motion. "This qualifies as irreparable injury for which the court should provide redress in the form of a temporary injunction."

For more, see SC court halts thousands of home foreclosure sales.

Ohio AG Wins $300K+ Judgment In Loan Modification Foreclosure Rescue Scam; Fires Warning Shots Against 10 Others With Subpoenas, C&D Orders

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Richard Cordray [Monday] announced that a foreclosure rescue scam company operating out of Cincinnati has been shut down and now owes more than $300,000 in damages and civil penalties. The default judgment issued out of Hamilton County Common Pleas Court demands that Foreclosure Solutions and owner Timothy Buckley pay $225,000 in civil penalties and $79,565 in restitution for scamming Ohioans facing foreclosure.(1)

***

  • Also, in an unprecedented move, Cordray [Monday] issued 10 cease and desist demands with accompanying subpoenas to businesses suspected of operating rescue scams in Ohio. The cease and desists demand that the companies halt all predatory practices, and the subpoenas require information to substantiate current practices. The sweep is the first in a widespread investigation into rescue operations targeting Ohio. “This is a strong, preventative measure to keep foreclosure rescue scammers out of Ohio,” said Cordray. “It is a warning shot announcing that we have no tolerance for these predatory practices in our state.”

For the entire press release, see Cordray Puts Heat on Foreclosure Rescue Operations (Attorney General pursues more than $300,000 in restitution and penalties; Launches multi-state cease and desist sweep).

For the Ohio AG lawsuit, see State of Ohio v. Foreclosure Solutions L.L.C.

Go here for other posts and lawsuits against Foreclosure Solutions.

(1) According to the press release, from January 2003 through May 2008, Foreclosure Solutions solicited Ohioans who were going through foreclosure via direct mail and offered services to save their homes. The company then arranged in-person meetings and entered into written agreements with the promise to act as an agent to stop the foreclosure. After charging amounts ranging from $750 - $1,300 the company never provided the services promised and some Ohioans lost their homes.

3 Accused With Stealing $4M In Escrow Funds; Title Insurer Takes $3M+ Hit; Used Photoshop Software To Create Altered Bank Statements, Say C. Fla. Cops

In Orange County, Florida, WDBO Radio reports:
  • Orange County Sheriff's Economic Crime Unit arrested Michelle Worley [...] on grand theft charges. Deputies allege that between December 2004 and July 2006, Worley and the partners of Preferred Alliance Title, Patrick Torre and John Callaghan, misappropriated approximately $4 million in escrow funds. Investigators say the escrow funds were used to operate other businesses such as a real estate company, a restaurant and a magazine publishing company.

  • The suspects, investigators say, were able to hide their fraud from Stewart Title Guaranty, by conducing fraudulent monthly bank reconciliation with altered bank statements. Stewart Title insured a number of real estate transactions which were closed at Preferred Alliance Title. After satisfying all of the lien holders and various other entities, Stewart suffered an approximately $3.1 million dollar loss.

Source: Three accused of multi million dollar fraud.

See also, Orlando Sentinel: Third suspect arrested in $4 million escrow-fraud case:

  • [T]hey hid their activities from Stewart Title Guaranty, referred to as the "victim," by creating altered bank statements with Photoshop software, the Sheriff's Office's economic-crime unit said. EscrowRipOffAlpha

Title Agency Owner Cops Plea To Pocketing $3.4M In Escrow Funds From Real Estate Closings Intended To Pay Off Existing Lien Holders

From the Office of the U.S. Attorney (Maryland):
  • Deborah Williams, age 56, of Pasadena, Maryland, the owner of a Severna Park title company, pleaded guilty [last Friday] to mail fraud related to a scheme to divert settlement funds to her own benefit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

***

  • According to her plea agreement, [...] Deborah Williams used for her own benefit settlement funds from real estate closings that were deposited in Day Title’s escrow account and were intended to pay off the lien holders on those properties. [...] Williams attempted to conceal her illegal transactions by falsely representing on the settlement documents that her company had paid off lien holders, then sent the falsified settlement documents to the lender by commercial carrier. In fact, Williams either initiated stop payments of payoff checks that had been disbursed or intentionally failed to mail the payoff checks to the lien holder.

  • Day Title’s failure to make the pay offs to the lien holders was not detected until sellers began receiving delinquency notices from their mortgage companies. The time delay between the settlement and the date when Day Title made the pay offs to the lien holders allowed Williams to replenish the escrow account with proceeds from new unrelated real estate settlements.

  • A title insurance company that had issued policies through Day Title, began to receive claims from lien holders who had not been paid off and conducted an audit of Day Title. The title insurance company found over 16 properties where Williams had not paid off the lien holder. The company paid out a total of $3.443 million to these entities, as required under the title insurance policies that guaranteed that the buyer was receiving a title free of prior liens. As part of her plea agreement, Williams must forfeit $3.4 million, the amount she admits that she failed to pay to the lenders.
For the entire press release, see Pasadena Title Company Owner Pleads Guilty to Defrauding Lenders of over $3.4 Million (Diverted Real Estate Proceeds to Personal Use and Created False Settlement Documents). EscrowRipOffAlpha

Suspected Memphis-Area Straw Buyer, Rent Skimming Scam Leaves Tenants Facing Eviction & Investors Holding The Bag

In Memphis, Tennessee, WREG-TV Channel 3 reports:
  • You've seen homes across Memphis foreclosed and boarded up. But there's a deeper problem uncovered by News Channel 3; one that points to a housing hustle and one Memphis couple. Our investigation revealed a troubling pattern that has one attorney and the state promising a thorough investigation.

  • Larry and Marilyn Conway, an elusive couple who by all accounts love cash and live large, won't return calls, but they can't run from their own past. One tenant, on the verge of being evicted, is so afraid she wants us to call her "Denise". Her attorney, Webb Brewer with Memphis Area Legal Services, says the Conways make their money off the poor and off uninformed investors.

  • "All of these mortgages that these investors were left with were sub-prime loans with high interest-rates and bad terms," says Brewer. "I'm fortunate I found out when I did," says Denise who says the Conways tried to get her to buy her rental home, until she learned the Conways didn't own it.

  • Brewer says the Conways find investors to buy rental homes. The Conways collect the rent and they pay the investor's mortgage. Then they stop paying, but keep collecting rent. The homes fall into foreclosure, the investors are left with the loan, and the renters have to move. Meantime, the Conways rake in thousands.

For the story, see Housing Hustle?

In a related story, see Investigation: Renters Victims Of Housing Hustle. RentSigmaSkimming

Countrywide's Mozilo Attempt To Move Florida AG Suit To Federal Court Thwarted As District Judge Boots Case Back To State Court

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [last week] announced that his office has obtained a federal court order remanding the Attorney General’s lawsuit against former Countrywide CEO and Chairman of the Board Angelo R. Mozilo back to Broward County Circuit Court. The lawsuit, filed last June, addresses deceptive trade practices relating to Countrywide’s alleged practice of placing consumers in loans they could not afford or with rates which were false or misleading. Mozilo was named as a defendant.

***

  • When the civil complaint was originally filed in Broward County Circuit Court by the Attorney General’s Economic Crimes Division, Countrywide and Mozilo sought to remove the action to Federal Court in Florida and the case was subsequently consolidated in the Southern District of California. Attorney General McCollum argued the case should be remanded to state court so Mozilo would be tried in Florida under Florida’s Deceptive and Unfair Trade Practices Act. Earlier [last] week, the Federal Court agreed with the Attorney General’s request and sent the case back to state court in Broward County.(1)

For the entire press release, see McCollum: Former Countrywide CEO, Board Chairman Must Stand Trial in Florida.

For the federal court order remanding the case back to state court, see State of Florida v. Countrywide Financial Corporation, et al.

(1) For more on erroneous removals of lawsuits filed in state court to federal court, see:

Monday, May 04, 2009

Media Report Shines Light On Use Of Multiple Corporate Hat-Wearing Dummy "Vice Presidents" By Lenders To Sign Court Documents In Foreclosure Actions

In Central Florida, an investigative report by the St. Petersburg Times shines light on, what appears to be, a bogus arrangement being utilized by foreclosing mortgage lenders in which they authorize employees of a local firm to sign as "vice president'' in assigning loans from one company to another in an attempt to expedite foreclosure actions (and, presumably, with the hope that judges hearing the actions won't catch on to what they are doing).
  • Despite the turmoil in the lending industry, Bryan Bly seems to have no trouble finding a job. On Aug. 3, 2007, Bly signed a document as vice president of Option One Mortgage. On Feb. 13, 2009, Bly signed a document as vice president of Deutsche Bank. And on Feb. 18, 2009, Bly initialed dozens of documents — this time as vice president of Citi Residential Lending.

  • In fact, Bly never worked for any of those. His real employer is Nationwide Title Clearing, a Pinellas County company that helps lenders clean up problems that can complicate efforts to foreclose.

  • Bly, who lives in a Clearwater trailer park, is one of several Nationwide employees authorized by lenders to sign as "vice president'' in assigning loans from one company to another. Assignments are key in determining who actually owns the loan, an issue that has become all-important as banks foreclose on millions of loans that were bundled into securities and sold to investors.

***

  • Critics, though, say that Bryan Bly and "vice presidents'' like him at similar companies are part of an assembly-line process designed to resolve a big problem: In the rush to "flip'' loans as fast as possible in order to make more money, the new loan holders often failed to get the proper paperwork showing they owned the loan and had the right to foreclose.

***

  • To expedite transactions, Nationwide gets resolutions from lenders that authorize Bly, [...] and other employees of "proven reliability'' to sign as their vice presidents, said [Jeremy] Pomerantz, the Nationwide spokesman. On a big project like the Citi-to-Deutsche loan assignments, "they may sit there all day for a week and sign.''

***

  • But it is exactly that assembly-line process that makes critics wonder if "vice presidents'' can be certain that what they are signing is accurate and legal.(1) "Papering over a hole doesn't make the hole disappear,'' [Tampa attorney Chris] Hoyer said. "Using this device to present an air of legitimacy is an affront to the judicial system and a stain on society.''

For more, see Tampa Bay companies help lenders transfer home loans, foreclose.

For other posts on lenders using multiple corporate hat-wearing vice presidents to sign off on court documents in foreclosure actions, see:

(1) The St. Pete Times' story highlights two examples where judges refused to roll over and permit these slick and sloppy lender tactics.

In one example in New York, Brooklyn Supreme Court Justice Arthur M. Schack dismissed Deutsche Bank's motion to foreclose on a $408,000 loan last year because it had started foreclosure proceedings while the loan was still owned by IndyMac Bank. The judge said he wouldn't reconsider the case unless Deutsche explained why one woman — Erica Johnson-Seck — had signed as vice president of two different companies. The justice also said he was "perplexed'' as to why both Deutsche and IndyMac had the same address, and why an affidavit by Johnson-Seck, who supposedly worked in California, was notarized in Texas (see Deutsche Bank National Trust Company v. Harris, 2008 NYSlipOp 30308(U), February 5, 2008).

(In other cases where Justice Schack had problems with the same Erica Johnson-Seck with respect to her apparent wearing of multiple corporate hats when signing court documents for a number of lenders in different foreclosure actions, see Deutsche Bank Natl. Trust Co. v Maraj, 2008 NY Slip Op 50176(U) [18 Misc 3d 1123(A)], Decided on January 31, 2008; and IndyMac Bank, FSB v Bethley, 2009 NY Slip Op 50186(U) [22 Misc 3d 1119(A)], Decided on February 6, 2009.)

In a second example in a New Jersey case, another foreclosure case was reportedly thrown out after the "vice president'' for Deutsche Bank acknowledged she was only an assistant secretary. "She said she was told to fill out the paperwork however it needed to be done in order to make the document look valid,'' a New Jersey mortgage expert said. EpsilonMissingDocsMtg

More On Lenders, Mortgage Servicers Using Short Sale Contracts, Promissory Notes To Squeeze Homeowners Looking To Unload "Underwater" Homes

The Wall Street Journal reports:
  • Financially troubled borrowers may think that foreclosure or a short sale of their home means their mortgage woes are over. Not necessarily.

  • Some homeowners are finding that when they sell their homes for less than the outstanding mortgages -- a so-called short sale -- their mortgage companies are going after them for some or all of the difference. Mortgage companies are also sometimes taking legal action to recover unpaid amounts after a foreclosure is completed.

  • In a growing number of cases, holders of mortgages or home-equity loans are requiring borrowers in short sales to sign a promissory note, which is a written promise to pay back a loan or debt. Real-estate agents and attorneys say they have seen an increase in requests for promissory notes as mortgage companies look to short sales as an alternative to foreclosure.(1)

For more, see A Short Sale May Not Mean You're Home Free.

(1) According to the story, the number of short-sale agreements that are made with strings attached is increasing. In the past month and a half, "every short sale I have has had a promissory note or gives the lender the right to collect a deficiency," says Pamela Simmons, an attorney in Soquel, Calif., who represents financially troubled homeowners. Often, the terms are buried in the sale contract, she says. Regina Rivard, a real-estate consultant in Apollo Beach, Fla., has completed 22 short sales in the past six months. In half of them, the holder of the first or second mortgage required that the borrower sign a promissory note or retained the right to pursue the deficiency. The amounts borrowers were obliged to pay ranged from a few thousand dollars to as much as $100,000, she says.

Woman Cops Guilty Plea In California Loan Modification Fraud That Scammed 100+ People

From the Office of the California Attorney General:
  • Continuing his crackdown on mortgage fraud, Attorney General Edmund G. Brown Jr. late Thursday won a guilty plea from 22-year old Anna Santos, who conned thousands of dollars from homeowners in a "cruel and sophisticated" loan scam. Santos will be formally sentenced on May 20 in Los Angeles Superior Court. She is expected to receive 2 years in prison. "Santos conned thousands of dollars from homeowners trying to save their homes through a cruel and sophisticated scam," Brown said. "She held out hope, but in reality did not provide an ounce of loan modification, leaving her victims unprotected and in far worse straits." Santos was arrested on March 12, 2009 after she used forged documents to convince victims to hand over thousands of dollars for non-existent loan modification services.(1)

For the entire press release, see Brown Obtains Guilty Plea from Woman Who Operated Sophisticated Loan Scam.

For more from the California AG on its criminal action against Santos, see:

(1) According to AG Brown, Santos obtained a fictitious business permit through the City of Los Angeles for "Payment Processing Department." She opened several bank accounts and two post office boxes under that name. She mailed flyers to vulnerable homeowners that appeared to be from victims' lenders or a government agency. The flyer used a large, bold header that read "Final Notice" and advised homeowners that they qualified for a special program to save their home from foreclosure. After signing up for "loan modification services," homeowners then received what appeared to be "confirmation" that their lender had been notified. Many victims also received loan modification documents that appeared to be from their lender. These documents were all forgeries. The victims were informed they had been placed in a "probationary" program and their mortgage payments should be submitted to "Payment Processing Department" and sent to a given post office box address. None of the payments were credited to the victims' home loans.

Massachusetts Community Organizer Uses "Sword & Shield" Approach To Stop Foreclosure Evictions

In Jamaica Plain, Massachusetts, PBS' Bill Moyers Journal reports:
  • [C]ommunity organizer Steve Meacham of City Life/Vida Urbana is fighting on the frontlines of the foreclosure crisis. Meacham and his colleagues at City Life employ a community organizing strategy they call the ["sword & shield".]

  • The "shield" is a strategy of legal defense: teaching City Life members about their rights under the law, plus providing access to volunteer legal assistance. The "sword" is a public relations strategy, where City Life organizes protests in front of banks, and eviction blockades in front of people's homes.

  • For these protests, City Life tries to attract as much media attention as possible, trying to draw public scrutiny towards what they argue are unfair banking and eviction practices in their community. "We find that the two [strategies] work extremely well in combination," says Meacham. He says that a strong legal defense often isn't enough to avoid eviction. "A legal defense is not enough because in Massachusetts the banks can evict you for no reason. And so for many people the strongest legal defense will simply slow the bank down. Slowing the bank down, however, can be very, very important because it gives us a chance to use the public protest to good benefit. If the bank is facing the prospect of a long, drawn-out legal procedure, even one that they might ultimately win.. and at the same time they're going through that, they're being regularly protested by City Life.. that is a public relations battle the bank loses every time. So faced with that combination of long, drawn-out legal defense and public protest, the banks are very often choosing to negotiate and settle with us." According to City Life, they've been able to prevent evictions for 95% of the people who've come to their door by employing the "sword and shield" strategy.

For more, see Steve Meacham: Fighting Foreclosure.

Go here for the accompanying video of the Bill Moyers' Journal program (approx. 23 minutes).

Sunday, May 03, 2009

Arizona Feds Being Flooded With Thousands Of Complaints On Loan Modification Scams

In Phoenix, Arizona, KNXV-TV Channel 15 reports:
  • At a time when families are losing their homes to foreclosure, others are seeing a way to prey on their desperation. And right now the FBI is inundated with loan modification fraud schemes.

***

  • "I've never seen these levels of fraud in the 12 years I've been in Arizona," said Julie Hafferty, Special Agent in charge of Arizona's mortgage and fraud division with the FBI. Hafferty says they're getting thousands of complaints to investigate. Homeowners have paid out $500 to $5,000 dollars hoping to save their homes with more affordable payments, but in return were robbed.

For more, see Valley FBI office swamped with loan modification scams.

Another Prospective Tenant Falls Victim To Phony Landlord Scam

In Dale City, Virginia, Newschannel 8 reports:
  • A local family who thought they had found the perfect home ended up losing more than $1,000 to an accused scam artist. The five-bedroom house on a quiet Dale City street was everything Patricia Keith had always wanted. "Well, it was a dream," she said. But despite putting down more than $1,000 in a security deposit and first month's rent, Keith never had the chance the call the house home.

  • Sources say 24-year-old Armeca Wright is now facing fraud charges for trying to rent a house that didn't belong to her. "It took us awhile to actually scrape our money together," said Keith. "We've been homeless since 2007." [...] This is yet another negative by-product of the foreclosure crisis. Con artists break into and try to pawn off vacant and abandoned homes to unsuspecting people.

For the story, see Virginia Woman Scammed While Trying to Rent Home.

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

More On Property Owners Being Tricked Or Deceived By Scammers Into Signing Documents

The following California cases appear to support the proposition that criminal prosecutions for forgery can be properly brought against those (ie. equity stripping, foreclosure rescue operators and others) who trick or deceive financially strapped homeowners into unwittingly signing over interests in their homes through grant and trust deeds (cases available online courtesy of Findlaw.com; fre registration may be required):

People v. Martinez, (2008) 161 Cal. App. 4th 754; 74 Cal. Rptr. 3d 409:
  • Nevertheless, a forgery conviction can be based on a document with a genuine signature. "[F]orgery is committed when a defendant, by fraud or trickery, causes another to execute a . . . document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature." (People v. Parker (1967) 255 Cal.App.2d 664, 672.)

  • Defendant argues that this rule applies only where the "fraud or trickery" consists of an affirmative misrepresentation regarding the nature of the document. He concedes that Michiel may have "signed the . . . trust deed without understanding what she was signing," but he argues that he "did not make any material affirmative misrepresentations to her."

  • Preliminarily, even assuming defendant is correct about the law, there was sufficient evidence that he did, in fact, affirmatively misrepresent the nature of the trust deed. Michiel testified that defendant "provided [her] with a number of documents to sign to try and help [her] with [her] financial problems . . . ." (Italics added.)

***

  • In sum, there was evidence that defendant presented Michiel with a stack of documents to be signed and that he affirmatively misrepresented to her that their purpose was to help her with her financial problems and/or help her file a bankruptcy.

  • Separately and alternatively, however, even assuming there was no evidence that defendant affirmatively misrepresented the nature of the trust deed, he could still be found guilty of forgery. People v. Parker, supra, 255 Cal.App.2d 664 involved strikingly similar facts. There, the defendants (Parker and Ex) sold aluminum siding to a number of homeowners. They gave each purchaser a stack of papers, including a trust deed, and they indicated where the purchaser should sign. Occasionally, they affirmatively misrepresented the nature of the trust deed; for example, they told two couples that the papers consisted of a "purchase order," plus several "copies" thereof. (Id. at p. 668 [Edwards and Helland transactions].) Most of the time, however, they simply failed to disclose that the papers included a trust deed. (Id. at pp. 667 [Kinsfather transaction], 668-669 [Buss transaction], 669 [Dick transaction], 669-670 [Longoria transaction], 670 [Kincaid transaction].) The appellate court held that there was sufficient evidence of forgery in connection with each and every sale (see id. at pp. 665-666): "The crime of forgery is committed when a defendant, by fraud or trickery, causes another to execute a deed of trust or other document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature." (Id. at p. 672.) "Clearly, from the evidence in this case appellants are guilty of the forgeries as charged . . . . [Citations.]" (Ibid.)
People v. Parker, (1967) 255 Cal.App. 2d 664:
  • The crime of forgery is committed when a defendant, by fraud or trickery, causes another to execute a deed of trust or other document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature. In Buck v. Superior Court, supra, (an aluminum siding case) 232 Cal.App.2d 153, it is stated at page 162: "Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. [Citations.] ... The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. [Citations.] Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent." (See also Buck v. Superior Court, supra, 245 Cal.App.2d 431, 436-437 [54 Cal.Rptr. 282]; People v. Carson, 240 Cal.App.2d 477, 480 [49 Cal.Rptr. 653].)

  • Clearly, from the evidence in this case appellants are guilty of the forgeries as charged and of the grand theft as charged. (See Buck v. Superior Court, supra; People v. Bresin, 245 Cal.App.2d 232, 237-238 [53 Cal.Rptr. 687]; Buck v. Superior Court, supra, 232 Cal.App.2d 153, 162.) [255 Cal.App.2d 673].

Buck v. Superior Court, (1966) 245 Cal.App.2d 431, 436-437; 54 Cal.Rptr. 282:

  • That the crime of forgery is committed when a defendant, by fraud or trickery, causes another to execute a deed of trust or other document, where the signer is unaware, by reason of such trickery, that he is executing a document of that nature, is now settled by Buck v. Superior Court, supra, (1965) 232 Cal.App.2d 153.

People v. Carson, (1966) 240 Cal.App.2d 477, 480; 49 Cal.Rptr. 653:

  • The issue is settled in Buck v. Superior Court, supra, 232 Cal.App.2d 153, 161- 162, where the court said: "Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. [Citations.] An encumbrance may be the subject of forgery. [Citation.] The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. [Citations.] Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent."

Buck v. Superior Court, (1965) 232 Cal.App.2d 153:

  • Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. (Conklin v. Benson, 159 Cal. 785, 791 [116 P. 34, 36 L.R.A. N.S. 537]; Wright v. Rogers, 172 Cal.App.2d 349, 362 [342 P.2d 447].) An encumbrance may be the subject of forgery. (Conklin v. Benson, supra, page 792.) The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. (People v. McAffery, 182 Cal.App.2d 486, 493 [6 Cal.Rptr. 333]; People v. Morgan, 140 Cal.App.2d 796, 800 [296 P.2d 75].) Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent."

People v. McAffery, (1960) 182 Cal.App.2d 486, 493, 6 Cal.Rptr. 333:

  • The crime of forgery (Counts I, II and III) is committed when one makes or passes a false instrument with intent to defraud, the element of loss or detriment being immaterial (People v. Morgan, 140 Cal.App.2d 796, 800; 296 P.2d 75).

Wright v. Rogers, (1959) 172 Cal.App.2d 349, 342 P.2d 447:

  • "Where a person who has no intention of selling his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is a forgery." (People v. Nesseth, 127 Cal.App.2d 712, 718-720, 274 P.2d 479.

People v. Morgan, (1956) 140 Cal.App.2d 796, 800; 296 P.2d 75:

  • That crime is committed when one makes or passes a false instrument with intent to defraud. "The crime of forgery consists either in the false making or alteration of a document without authority or the uttering (making use) of such a document with the intent to defraud. (Pen. Code, § 470.) Whether the forged instrument is one of a particular [140 Cal.App.2d 801] name or character or, if genuine, would create legal liability, is immaterial; the test is whether upon its face it will have the effect of defrauding one who acts upon it as genuine." (People v. McKenna, 11 Cal.2d 327, 332 [79 P.2d 1065].) "In the case of a forgery of an instrument it is not necessary that the forged writing create a valid and legally enforcible obligation in order to constitute the making of it a forgery. It is sufficient that it may possibly deceive another and was prepared with intent to deceive and defraud another. Where the writing alleged to have been forged shows on its face that it might be the means of fraud, no averments of extrinsic facts to show how this could be are necessary." (People v. Brown, 101 Cal.App.2d 740, 742 [226 P.2d 647].) Failure to consummate the intended fraud is not of the essence. (People v. Horowitz, 70 Cal.App.2d 675, 688 [161 P.2d 833].)

People v. Nesseth, (1954) 127 Cal.App.2d 712, 718-720; 274 P.2d 479:

  • Mr. Justice Fox' statement in People v. Frankfort, 114 Cal.App.2d 680, 700; 251 P.2d 401, is here appropriate: "... The fact that the documents were read would not make it inherently improbable that other, different and additional representations were made by the salesmen.

  • "Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that 'The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction.' ... The practical wisdom of the rule is illustrated in this case. Upon at least three occasions prospective purchasers complained to defendant Nudelman that the written agreement did not seem to conform to what they had been told, whereupon he assured each party, in effect, that everything would be taken care of and he need not worry."

***

  • That the foregoing facts constitute forgery is evident. Section 470 of the Penal Code provides in part as follows: "Every person who, with intent to defraud, ... falsely makes, alters, forges, or counterfeits, any ... writing obligatory, ... contract ... is guilty of forgery."

  • That the correct rule is that the procuring of a genuine signature to an instrument by fraudulent representations constitutes forgery is supported by these well reasoned authorities: State v. Shurtliff, 18 Me. 368; Commission v. Foster, 114 Mass. 311 [19 Am.Rep. 353]; Gregory v. State, 26 Ohio St. 510 [20 Am.Rep. 774]; State v. Farrell, 82 Iowa 553 [48 N.W. 940]; Williams v. State, 213 Ala. 1 [104 So. 40]; Williams v. State, 20 Ala.App. 337 [104 So. 38]; Horvath v. National Mortg. Co., 238 Mich. 354 [213 N.W. 202, 56 A.L.R. 578]; Turner v. Nicholson, 115 Okla. 56 [241 P. 750]; Julia Oil & Gas Co. v. Cobb, 128 Okla. 260 [262 P. 650].

  • This rule appears to be supported by Conklin v. Benson, 159 Cal. 785, where the court says, at page 791 [116 P. 34, 36 L.R.A.N.S. 537]: "There is no foundation in the facts above set forth for the conclusion that the papers signed by plaintiff were forgeries, and absolutely ineffectual even to serve as a basis for the application of the doctrine of estoppel. The theory of the learned judge of the trial court appears to have been that all of these papers, including the deeds of the Monache lands to the United States, were in effect forgeries and absolutely void. The idea underlying this apparently was that plaintiff was so deceived in the matter of executing these instruments as to bring her within the doctrine of certain cases which substantially hold that where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forced. These decisions are not such as to sustain plaintiff's claim in this regard. The distinguishing feature between all such cases and the case at bar is that here plaintiff fully understood and believed that she was signing papers which, when delivered, would convey all her interest in the Monache lands. She intended to execute papers having this effect. The difference between the papers she thought she was signing, according to the evidence, and the papers she actually signed, was merely one of detail and in no degree material, one set of papers having precisely the ultimate effect of the other, the conveyance of her interest in this land. Her real and only complaint upon her own testimony was her failure to personally receive full payment for her land claimed to have been occasioned by reason of the failure of her agent to place the papers in escrow, to be taken up as payments were made, and the delivery thereof to Benson without payment first having been made. ..."

People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

  • The fact that the documents were read would not make it inherently improbable that other, different and additional representations were made by the salesmen. Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.) The practical wisdom of the rule is illustrated in this case. Upon at least three occasions prospective purchasers complained to defendant Nudelman that the written agreement did not seem to conform to what they had been told, whereupon he assured each party, in effect, that everything would be taken care of and he need not worry.

People v. Brown, (1951) 101 Cal.App.2d 740, 742; 226 P.2d 647:

  • In the case of a forgery of an instrument it is not necessary that the forged writing create a valid and legally enforcible obligation in order to constitute the making of it a forgery. It is sufficient that it may possibly deceive another and was prepared with intent to deceive and defraud another. Where the writing alleged to have been forged shows on its face that it might be the means of fraud, no averments of extrinsic facts to show how this could be are necessary.

People v. McKenna, (1936) 11 Cal.2d 327, 332; 79 P.2d 1065:

  • The crime of forgery consists either in the false making or alteration of a document without authority or the uttering (making use) of such a document with the intent to defraud. (Sec. 470, Pen. Code.) Whether the forged instrument is one of a particular name or character or, if genuine, would create legal liability, is immaterial; the test is whether upon its face it will have the effect of defrauding one who acts upon it as genuine. (People v. Gayle, 202 Cal. [11 Cal.2d 333] 159 [259 P. 750]; People v. Thorn, 138 Cal.App. 714 [33 PaCal.2d 5]; People v. Munroe, 100 Cal. 664 [35 P. 326, 38 Am.St.Rep. 323, 24 L.R.A. 33].) A deed which conveys no title may be the subject of forgery. (People v. Baender, 68 Cal.App. 49 [228 P. 536].)

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