Wednesday, September 30, 2009

Indiana Cop Cops Plea To Ripping Off Now-Deceased 89-Year Old Alzheimer's Victim Of Home, Cash

In Gary, Indiana, the Post Tribune reports:
  • Gary police Sgt. Joshua Wiley admitted he stole money and a home from his former neighbor who suffered from Alzheimer's disease and dementia and has agreed to repay $116,765 to the woman's estate. On the day his jury trial was scheduled to begin, Wiley pleaded guilty [...] to two felony charges -- theft and exploitation of an endangered adult.(1)

***

  • In court, Wiley admitted he knew that his former neighbor, Helen Chentnik, who died Dec. 22, 2006, at age 89, was an endangered adult who was not competent to make financial decisions on her own behalf. [...] Wiley obtained a fraudulent quit claim deed to Chentnik's home at 3630 E. 12th Ave., Gary and recorded the deed, knowing that it was signed by him while claiming to have Chentnik's power of attorney.(2)

For the story, see Gary police officer says he stole home, money of Helen Chentnik who suffered from Alzheimer's.

(1) Reportedly, under terms of the plea agreement, which Lake Superior Court Judge Diane Ross Boswell took under advisement, Wiley will be sentenced to eight years -- three years in the Lake County Community Correction Kimbrough Work Program and five years suspended and served on probation. The plea agreement calls for Wiley to serve his probation and Kimbrough Center sentence simultaneously. Wiley, 51, also must pay $53,255 within 30 days and the remaining $62,765 in monthly installments of $1,000, also starting within 30 days.

(2) According to the story, Wiley also looted Chentnik's credit union account "by using his influence on the victim or by using an ATM-debit card issued to the victim" to withdraw cash or buy items and services for his personal use without Chentnik's consent, according to the plea agreement. Wiley then reportedly opened a joint checking account for Chentnik and himself at Mercantile National Bank, deposited the woman's monthly Social Security and pension checks and funds from her credit union account, and then made withdrawals in cash and wrote checks for goods and services, the majority of which were for his personal use. FinancialAbuseOfElderlyAlpha DeedContraTheft

Ontario Man Admits To Defrauding Elderly Parents; Looted Bank Account, Used Forged POA To Pilfer Profits From Sale Of Home

In Peterborough, Ontario, The Peterborough Examiner reports:
  • A 44-year-old man pleaded guilty [...] to defrauding his parents of about $140,000 in a series of crimes that involved forging a power of attorney, selling his parents' home behind their back and racking up thousands of dollars in credit card debt in his father's name. David Edwardes-Evans pleaded guilty to 10 charges in Ontario Court of Justice including fraud, uttering a forged document and breaching court orders.

  • Edwardes-Evans began to defraud his parents after they both became permanent residents of a retirement home in June 2007, court heard. He shared power of attorney over his parents' finances with his sister, Crown attorney Paula Thompson said, and managed their accounts on their behalf.

  • About a month after his father moved to the retirement home, Edwardes-Evans began taking out credit cards in his father's name, using his father's own credit cards without permission and made withdrawals from his parents' joint bank account, Thompson said. He then tricked them into signing away their Oriole Dr. home and forged a power of attorney to sell the house, court heard. "The document had been forged ... in order to facilitate the liquidation of the home," Thompson said.

  • Police arrested Edwardes-Evans [...] after his sister discovered irregularities in her parents' accounts. By then, Edwardes-Evans had racked up $15,000 to $20,000 in credit card debt and had pilfered the profits from the sale of the home, Thompson said.

Source: Man guilty of defrauding parents. FinancialAbuseOfElderlyAlpha DeedContraTheft

Sacramento Feds Bag Two In Alleged Mortgage Scam Targeting Cambodian Immigrants; Home Buyers Left With Unaffordable House Payments, Facing Foreclosure

From the Office of the U.S. Attorney (Sacramento, California):
  • United States Attorney Lawrence G. Brown announced [...] that a criminal complaint was filed this morning charging IRENE SOTIRIADIS, 23, and HELEN SOTIRIADIS, 49, both of Manteca, with conducting a mortgage fraud scheme from March 2006 through November 2007 that caused losses to lenders estimated at approximately $5 million.

***

  • According to [the press release], an affidavit filed by a special agent of the FBI alleges that HELEN and IRENE SOTIRIADIS recruited as many as 25 members of the Cambodian immigrant community to purchase homes they could not afford in and around Stockton and Modesto. HELEN and IRENE SOTIRIADIS promised the Cambodians that after one initial high monthly payment, the homes would be refinanced to a payment of only $1,500 per month. After the initial monthly mortgage payments of $4,000 came due, HELEN and IRENE SOTIRIADIS refused to return phone calls to the victims, according to the affidavit. Most of the homes quickly fell into foreclosure.

For the entire U.S. Attorney press release, see Manteca Mother-Daughter Real Estate Team Arrested In Estimated $5 Million Mortgage Fraud Scam.

Scammer Stripped Of House & Vehicle, Gets 36 Months; Abused POA In $250K+ Ripoff Of Dementia-Suffering Senior

From the Office of the U.S. Attorney (Covington, Kentucky):
  • The United States Attorney’s Office and the Postal Inspection Service jointly announced [...] that a Ludlow, Ky. man was sentenced yesterday to 36 months in prison for financially exploiting a wealthy elderly woman out of more than $250,000. United States District Court Judge Danny C. Reeves also ordered 45-year-old Gordon Powell to forfeit a house [...] in Fort Wright, Ky. and a Cadillac Escalade both of which Powell purchased with a portion of the proceeds from his fraud.

  • Powell pleaded guilty to one count of wire fraud in May of 2009 and admitted that in 2006 he befriended an elderly Kenton County woman in her eighties who had no apparent family and suffered from dementia like symptoms. After learning she was wealthy, Powell persuaded the woman to make him her power-of-attorney which gave him the authority to make decisions on her behalf. After obtaining this authority, he liquidated hundreds of thousands of dollars of assets and transferred over $250,000 of the proceeds of the liquidation to his personal accounts. Powell then used money from these accounts to purchase the house and the car.

For the U.S. Attorney press release, see Ludlow Resident Sentenced 3 Years for Financially Exploiting a Wealthy Elderly Woman.

Blanket Receiverships Coming To Florida's Treasure Coast?

In Stuart, Florida, TC Palm reports on another financially strapped condominium association being screwed over by rent skimming, deadbeat landlords who are pocketing rents paid to them by their tenants and refusing to pay the monthly maintenance fees for their units:
  • The Whitemarsh Reserve Homeowner’s Association in Martin County is now facing this grim scenario with some of its owners, who are under foreclosure by the association, owing it more than $10,000 in delinquent fees. So its members are following the lead of dozens of other associations across the state and trying a new legal approach to solve this problem.

  • The Whitemarsh association is the first on the Treasure Coast to ask a judge for a court order to force delinquent landlords to turn over rent payments to the association. The association filed a petition [...] seeking what’s being dubbed as a “blanket receivership.” If approved, this would require tenants of these delinquent landlords to pay their rent to a court-approved, third-party receiver instead of the landlord. The association itself would not be in receivership, only those units that are under foreclosure by the association and occupied by a tenant paying rent.

***

  • In the past, solving this problem would have been cost-prohibitive for most associations because the receivership approach was used mainly on a unit-by-unit basis, [association attorney Ben] Soloman said. But the [Miami Beach-based] Association Law Group pioneered the group, or “blanket,” approach allowing a receiver to collect rent on an ongoing basis from all owners who fail to pay maintenance fees. “It’s not a new law, but we’ve reinterpreted the existing law to get a practical remedy for our clients,” he said.

  • More than 11 different lower courts across the state have approved this method, granting blanket receiverships to more than 30 associations. And one of Florida’s appellate courts also has upheld this method.(1)

For the story, see Homeowners association first in area trying to force those delinquent in paying fees to turn over rent instead.

Go here for other stories on blanket receiverships.

(1) Reportedly, the first of these receiverships was granted in March to a condo association in Miami Gardens. Officials said in the first month of the receivership program, that association more than doubled its monthly income. By 60 days, it was restored to its regular assessment receivable level.

Struggling SW Florida Condominium Association Seeks Blanket Receivership Appointment In Effort To Stay Afloat

In Naples, Florida, the Naples Daily News reports:
  • Some renters and foreclosed-on squatters at South Bay Plantation in East Naples may soon find red stickers on their front doors, warning that a receiver has been appointed for the struggling property and they have 48 hours to call. If they don’t, their locks will be changed. It’s a tactic the struggling 240-unit community’s new manager, S3 Association Management LLC of Davie, plans on using if Collier Circuit Judge Cynthia Pivacek grants South Bay Plantation Condominium Association’s emergency motion to appoint a receiver.

***

  • South Bay Plantation’s motion details a dire situation: Of the 240 units, only 110 sold and now only 35 diligent homeowners continue to pay monthly HOA fees. [...] The development’s monthly operating costs and expenses total about $34,039, but the association is collecting only $17,000 and is owed roughly $158,000 in delinquent assessments. “The increased burden on those unit owners who have been sharing the financial burden could result in a domino effect, forcing unit owners who have been making timely payments to potentially become delinquent and also face foreclosure proceedings,” the motion says.

For more, see South Bay Plantation residents may get locked out of homes.

Tuesday, September 29, 2009

Mass AG Obtains Indictments Against Foreclosure Rescue Operators Alleging Equity Stripping Ripoffs That Defrauded Homeowners, Banks, Investors

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office announces that a Worcester County Grand Jury returned indictments [...] against an Oxford man, a real estate lawyer, a real estate paralegal and a notary public for their roles in a complex scheme in which fraudulent documents were used to defraud homeowners and mortgage lenders in numerous real estate transactions involving distressed properties in the Worcester County area. Allen Seymour, age 41, of Oxford, Raymond A. Desautels III, age 43, also of Oxford, Jason Passell, age 51, of Worcester, and Judith Piette, age 44, of Worcester, are charged [...].

***

  • According to authorities, Seymour targeted properties in danger of foreclosure. He personally approached the owners of these properties and presented a variety of rescue options. [...] Simultaneously, Seymour found individuals with good credit who were looking to begin investing in real estate. Many of these “investors” were told they would be helping homeowners in danger of foreclosure. [...] None of the proposals made to these “investors” matched the transactions presented to the homeowner.

According to the Massachusetts AG, Raymond Desautels, III, conducted all of the real estate closings and allegedly prepared fraudulent closing statements. Notary public Judith Piette allegedly notarized closing documents stating the homeowner had personally appeared before her and acknowledged they had signed the document voluntarily and for its intended purpose when, in fact, she never actually saw the homeowner. Jason Passell's involvement allegedly centered around the use of forged powers of attorney to facillitate the scams.

For the entire Massachusetts AG press release, see AG Coakley’s Office Announces Indictments Against Four People in Complex Mortgage Rescue Scheme.

Connecticut Law Now Bans Upfront Fees, Requires Licensing & Bonding When Offering Loan Modification Services; Maximum Mod Fee Limited To $500

In Hartford, Connecticut, The Day reports:
  • For the first time in Connecticut, firms and individuals offering debt relief they negotiate with a consumer's creditors will need to be licensed and will be prohibited from charging upfront fees.(1) A new law that goes into effect Thursday is designed to stop a growing number of scams by so-called “debt negotiators” who fraudulently claim to help consumers repay household debt, or credit card or mortgage debt, but instead charge hefty upfront fees, never reduce the debt and sometimes disappear - leaving the already-burdened consumer with even more expenses, and at times an even bigger debt load.

  • Attorney General Richard Blumenthal, who authored the new consumer-based legislation, said he's handled more than 100 complaints involving debt negotiators within the past year alone. And he said he's investigating as many as 10 firms for allegedly fraudulently promising to help consumers repay household or credit card debt or a delinquent home mortgage. He declined to name the companies.

For more, see Connecticut clamps down on 'debt relief' companies (Law requires licenses, bans upfront fees in effort to stop growth of scams).

In a related Connecticut Department of Banking press release, see State Banking Commissioner Howard F. Pitkin Announces Schedule of Fees for Debt Negotiators Under New Public Act:

  • A debt negotiator of secured debt, including Short Sales and Foreclosure Rescue Services, may impose a fee upon the mortgagor or debtor for performing debt negotiation services not to exceed five hundred dollars ($500). Such fee shall only be collectable upon the successful completion of all services stated in the debt negotiation service contract.

(1) Among other protections and requirements are: Filing a surety bond, Not refer to state licensing or bonding as an endorsement, Disclose 10-year criminal history on license application, Evaluate likelihood of success in reducing debt or saving a home before contracting with the consumer, Sign a written agreement with the consumer, Provide complete list of services, costs and results to be achieved, Perform services outlined in contract before charging fees, Adhere to fees regulated by the state banking commissioner, Allow a 3-day right of rescission for the consumer to cancel the contract, Comply with state law or have the contract voided and subject to enforcement.

Florida Bar To Consider Review Process For Ethics Breaches By Attorneys Bringing Foreclosure Actions Filed w/ Errors, False Statements

The Sarasota Herald Tribune reports:
  • The state group that disciplines lawyers is debating how to deal with reports of attorneys using errors and false statements to retake property in foreclosure cases.(1) [...] A section of The Florida Bar that seeks to give everyone equal access to the courts says stories like those prompted it to push for a special committee to review any ethical violations in foreclosure cases.

  • The Equal Opportunity Law section will present its case Friday at the Board of Governor's meeting that letting the behavior go will hurt the image of attorneys. And the resolution will be reviewed and a committee that looks at attorney discipline.

For more, see Foreclosure lawyers scrutinized for ethical violations.

(1) Reportedly, a study this summer that looked at the Sarasota County civil courts system found three of four foreclosure cases that went forward without the proper paperwork. And one Sarasota judge, after the attorney for a foreclosing lender assured her everything was in order, happened to glance at foreclosure paperwork and realized the two properties were in Miami, a few hundred miles outside her jurisdiction, according to the story.

New Jersey Landlord Beats Back RICO Suit Charge That Renting To Illegal Immigrants Constitutes "Harboring"

In Plainfield, New Jersey, myCentralJersey.com reports:
  • A federal judge has denied an appeal of an earlier decision to dismiss part of a landmark lawsuit that challenged the rights of landlords to rent apartments to illegal immigrants. The suit, brought last July against the city-based Connolly Properties Inc., alleged that the company systematically marketed and rented apartments to illegal immigrants and kept them generally separate from other tenants. Citing RICO (Racketeer Influenced and Corrupt Organizations) statutes, which most commonly are used to target organized crime, the suit alleged that the practice constituted "harboring" aliens or helping them avoid detection by federal authorities.(1)

***

  • Presiding Judge William J. Martini, sitting in Newark, last week said in a decision letter to counsel that to be considered harboring, an entity's activities must "prevent government authorities from detecting (an) alien's unlawful presence." He said the activities alleged in the suit do not meet that description. "The only behavior that even comes close ... (is) segregating the illegal aliens from the other residents," Martini wrote, "but even this falls short of the overt types of behavior that the case law has recognized as preventing the government from detecting the presence of illegal aliens."

For more, see Appeal denied in landmark suit involving Connolly Properties.

(1) Reportedly, the case drew direct involvement from two national law groups, as the Washington, D.C.-based Immigration Reform Law Institute, or IRLI, sided with the plaintiffs in the case and the New York City-based LatinoJustice PRLDEF (formerly the Puerto Rican Legal Defense and Education Fund) sided with the defendants.

Monday, September 28, 2009

Effort To Reign In Loan Modification Rackets "A Giant Game Of Whack-A-Mole"?

ProPublica reports on the difficulties authorities around the country are having reigning in loan modification rackets, and shines light on one firm that continues peddling its services, despite a flood of homeowner complaints and a number of legal actions brought by various state authorities:
  • In a giant game of whack-a-mole, law enforcement agencies at all levels across the country have filed suit against 150 such companies, but they continue to proliferate, and the number of consumer complaints continues to rise. “This is a very big scam,” says California Attorney General Jerry Brown. “They’re all over the place, and as soon as you get one, they migrate to somewhere else.”

  • The case of one particularly aggressive firm, 21st Century Legal Services, shows just how ineffective authorities’ moves against the companies often are. Four states have sued 21st Century, and at least three more have open investigations. Over 150 consumers from more than 30 states have filed complaints against 21st Century with the Better Business Bureau. No active firm has more complaints.(1)

  • Yet the company forges on. Operating under a new name, Fidelity National Legal Services,(2) it continues to solicit consumers nationwide, even in states where authorities have won court injunctions.
For more, see Why Authorities Haven’t Stopped the Foreclosure ‘Rescue’ Boom.

Go here to read the internal emails and documents related to this story.

(1) An undercover tape (MP3, transcript), made by the North Carolina attorney general’s office shows a 21st Century salesman in action.

(2) Reportedly, Fidelity is registered at the same address as 21st Century. Its
pitch letter to consumers (see pages 4 & 5) is identical to 21st Century’s. It even appears to share the same employees.

Just Showing Up Buys Financially Troubled Homeowners Three Extra Months On Sarasota's Foreclosure "Rocket Docket"

In Sarasota County, Florida, the Sarasota Herald Tribune reports:
  • Florida "rocket dockets" have earned the reputation as a cold, heartless place where a lender can retake someone's home in less than two minutes. And in most cases, that's true: The judge orders the house sold in 30 days in a rapid-fire proceeding designed to speed through thousands of uncontested foreclosures clogging the court system. But in Sarasota County, the judge has started cutting a break to troubled homeowners who simply show up at the courthouse, giving them an extra three months to try to save their home or prepare to move out.

***

  • [Judge Harry] Rapkin can only do so much. By this point in the legal process, the homeowners have not raised any defense to the foreclosure suit for months. "If they've got their ducks lined up, I can't deny" the lenders, Rapkin told one homeowner Friday morning. Rapkin still gives the lender a final judgment. But instead of setting the sale 30 days out, like in those cases where the homeowner does not show, Rapkin gives more time to those who show up in court. "I can give you 120 days," Rapkin told one woman who came to court Friday. "In the meantime, hire an attorney."

***

  • The attorneys for lenders are not complaining about the extension, because many of the banks are in no hurry to retake homes, 12th Circuit Chief Judge Lee Haworth said.

For more, see Homeowners can slow down 'Rocket Docket'.

A Cautionary Tale On Assumed Mortgages

Ever wonder what the risks are of selling your home in a deal that allows the buyer to take over the payments on your existing mortgage?

A Philadelphia Inquirer opinion columnist and editorial page editor recently detailed a personal situation involving a mortgage he had on a home that he sold back in 1994 that came back to bite him some 15 years later.

For the story, see A cautionary tale about assumed mortgages (Or, Why Americans get so angry when there's a bank in the mix).

Oregon AG Indicts Mtg Broker/Loan Modification Firm Owner For Allegedly Cheating Homeowners In Foreclosure; Aggravated Theft, Forgery Among Charges

From the Oregon Department of Justice:
  • Attorney General John Kroger [...] announced the indictment of a Salem mortgage broker on charges of mortgage fraud, aggravated theft, forgery and identity theft. It is is the first indictment by the Attorney General's Mortgage Fraud Task Force. "We intend to prosecute mortgage fraud aggressively. If you cheat vulnerable Oregonians facing foreclosure, we will hold you accountable," said Attorney General Kroger.

  • Julian James Ruiz III, 38, is the manager and owner of American Home Modifications, a Salem-based loan modification company. He faces 17 counts of first degree aggravated theft, mortgage fraud, identity theft, aggravated identity theft, forgery in the first degree and criminal possession of a forged instrument in the first degree.

For the entire press release, see Mortgage Broker Indicted For Fraud (First indictment by the Attorney General's Mortgage Fraud Task Force).

Sunday, September 27, 2009

Kansas Supreme Court Ruling Unfavorable To MERS Getting National Attention?

In Topeka, Kansas, The Lawrence Journal World reports:
  • Some are touting a recent Kansas Supreme Court decision as a major development in the protection of people facing foreclosures. In Landmark National Bank v. Kesler, the court ruled unanimously that Mortgage Electronic Registration Systems had no standing to bring action in a foreclosure case.(1) According to some reports MERS holds some 60 million mortgages, over half of all new U.S. mortgages. While the case applies only to Kansas, folks who defend homeowners are saying courts in other states could take note of the ruling.

For more, see Kansas court ruling in foreclosure case getting national attention.

(1) While some (see, for example, Waking up to discover the mortgage market was a giant criminal enterprise) have apparently interpreted this case as holding that MERS had no standing to bring action in a foreclosure case, this is simply an incorrect interpretation. Nowhere in the court's ruling did it "hold" or "find" that MERS lacked standing in the case. It simply ruled that the lower court did not abuse its discretion in denying the motions to vacate a default judgment entered in the case and for joinder in a foreclosure action brought by a prior mortgage holder, and in holding that MERS (putatively representing, and asserting the legal rights of, the 2nd mortgage holder) was not denied due process when a foreclosing 1st mortgage holder failed to serve it with notice of the foreclosure action.

In order for MERS to vacate the default judgment entered in this case, it would have to demonstrate to the court that it had a tangible interest in the mortgage, and demonstrate any injury it suffered because it did not receive service of the foreclosure action from the first mortgage holder. In this regard, the court observed:

  • Counsel for MERS explicitly declined to demonstrate to the trial court a tangible interest in the mortgage. Parties are bound by the formal admissions of their counsel in an action. Dick v. Drainage District No. 2, 187 Kan. 520, 525, 358 P.2d 744 (1961). Counsel for MERS made no attempt to show any injury to MERS resulting from the lack of service; in fact, counsel insisted that it did not have to show a financial or property interest.

Given that the attorney for MERS made no attempt to either establish a tangible interest in the second mortgage, or show any injury suffered due to the lack of service, there was no need for the court to make any finding that MERS, generally, lacks standing, is a real party in interest, or (in cases like this one where it is a defendant as a putative second mortgage holder in a foreclosure action brought by the first mortgagee) is a necessary party in foreclosure actions. The court simply made the following finding, explicitly leaving unanswered the question of whether or not MERS was entitled to notice of the foreclosure action from the 1st mortgage holder:

  • Even if MERS was technically entitled to notice and service in the initial foreclosure action--an issue that we do not decide at this time--we are not compelled to conclude that the trial court abused its discretion in denying the motions to vacate default judgment and require joinder of MERS and Sovereign. The record lacks evidence supporting a claim that MERS suffered prejudice and would have had a meritorious defense had it been joined as a defendant to the foreclosure action. We find that the trial court did not abuse its discretion and did not commit reversible error in ruling on the postdefault motions.

***

  • We find that the district court did not abuse its discretion in denying the motions to vacate and for joinder and in holding that MERS was not denied due process.

Presumably, the next time MERS finds itself in a foreclosure action like this one in Kansas in which it seeks to vacate a default judgment, its legal counsel won't fail to make a vigorous attempt to demonstrate that MERS has a tangible interest in the second mortgage, and attempt to establish the injury it suffered by failing to receive service of a first mortgagee's foreclosure action. Only at that point will a Kansas court have the opportunity to consider whether or not MERS, generally, has a sufficient interest in the mortgages it attempts to foreclose so as to make it a real party in interest in the litigation, and whether it has legal standing to be heard in said litigation. EpsilonMissingDocsMtg

NY Times On MERS' Ruling From The Kansas Supreme Court

The New York Times reports:
  • WITH the mortgage bust approaching Year Three, it is increasingly up to the nation’s courts to examine the dubious practices that guided the mania. A ruling that the Kansas Supreme Court issued last month(1) has done precisely that, and it has significant implications for both the mortgage industry and troubled borrowers.

  • The opinion spotlights a crucial but obscure cog in the nation’s lending machinery: a privately owned loan tracking service known as the Mortgage Electronic Registration System. This registry, created in 1997 to improve profits and efficiency among lenders, eliminates the need to record changes in property ownership in local land records.
    Dotting i’s and crossing t’s can be a costly bore, of course. And eliminating the need to record mortgage assignments helped keep the lending machine humming during the boom.

  • Now, however, this clever setup is coming under fire. Legal experts say the fact that the most recent assault comes out of Kansas, a state not known for radical jurists, makes the ruling even more meaningful.

For more, see The Mortgage Machine Backfires.

In a related post on MERS being hammered in court, see Judge Slams Sloppy Lender Unable To Prove Note Ownership; Voids Debtor's $461K Home Loan; Docs Signed By Multiple Hat-Wearing VP Sinks Servicer, MERS.

(1) Landmark Nat'l Bank v. Kesler, No. 98,489, 2009 Kan. LEXIS 834 (August 28, 2009), affirming Kansas Court of Appeals in Landmark Nat'l Bank v. Kesler, 40 Kan. App. 2d 325, 192 P.3d 177, 2008 Kan. App. LEXIS 138 (2008). EpsilonMissingDocsMtg

N. Virginia Code Enforcement Investigators Stumble Into Massive Straw Buyer Scam That Leads Feds To Bag 20 Suspects; As Many As 200 Homes Involved

In Fairfax County, Virginia, the Daily Press reports:
  • Mundane complaints about noise and parking problems in a Washington suburb led authorities to uncover a sweeping mortgage fraud scheme involving as many as 200 properties valued at more than $100 million, officials announced Thursday. Twenty northern Virginia residents were arrested, and authorities have warrants for four other people in what they said was just the first phase of the case, related to 35 houses. Most of those arrested are facing federal charges including wire and mail fraud. Eight of the 20 were arrested on state charges of using false statements to obtain property or credit.(1) Fairfax County Police and federal officials said real estate agents and mortgage brokers used straw buyers with good credit ratings and low income to fraudulently obtain loans they would never have qualified for. Properties were sold and resold within the alleged ring.

For more, see 20 arrested in Fairfax mortgage fraud bust.

See also, The Washington Post: Family Charged In Loan Fraud (Va. 'McMansions' Allegedly Became Boardinghouses):

  • The safety hazards of these new boardinghouses prompted Fairfax County to launch a Code Enforcement Strike Team in 2007. Deeper investigation uncovered the biggest mortgage fraud scheme in Fairfax history, officials said Thursday, and squads of officers arrested 20 people involved in allegedly cheating local banks out of more than $9 million.

(1) According to the story, the federal indictment states that real estate agents Ruben Rojas, 30, and his sister-in-law, Litcia Linares, 32, organized the fraudulent transactions, along with Rojas' sister, 28-year-old Lourdes Rojas Almanza, a loan officer, and his brother, Jaime Rojas. The other people charged in the scheme were straw buyers, many of whom bought multiple properties.

Minnesota AG Targets Three Outfits In Civil Suits Alleging Upfront Fee Rackets Promising Help With Credit Card Debt

From the Office of the Minnesota Attorney General:
  • Minnesota Attorney General Lori Swanson [...] filed three lawsuits against separate companies that promised consumers they would lower the interest rates on their credit cards in exchange for payments of up to $1,995 but then failed to provide the promised services.(1)

***

  • [The] lawsuits were filed against Priority Direct Marketing, a Washington corporation charging consumers fees of up to $1,590, Clear Financial Solutions, a Florida corporation that charged consumers fees of up to $999, and Moneyworks LLC, based in Georgia, which charged consumers fees of up to $1,995.

For the entire Minnesota AG press release, see AG Swanson Files Three Lawsuits Against Companies Claiming To Help Consumers Lower Their Credit Card Interest Rates (Swanson Warns Minnesotans To Be On Guard Against “Here Today, Gone Tomorrow” Companies That Charge High Fees for Supposed Debt Assistance Services During These Tough Economic Times Then Disappear).

(1) Swanson warned the public to be on guard against fly-by-night companies seeking high payments from consumers in exchange for supposed financial help. She said that many companies are aggressively seeking out struggling citizens to exploit during these tough economic times--in which people face record high levels of credit card debt and high credit card interest rates. After the citizen pays the money, however, the companies often disappear, fail to return phone calls, file bankruptcy, or go out of business, driving consumers even deeper into debt.

Justice Department Obtains Guilty Pleas In Cross Burning Incidents; Race-Based Harassment, Intimidation Used To Drive Families From Homes, Say Feds

In two separate incidents, the U.S. Department of Justice recently announced:
.
#1: Two Indiana Men Plead Guilty to Cross Burning:
  • Richard LaShure, 41, and Aaron Latham, 20, both of Muncie, Ind., pleaded guilty to conspiring to violate the civil rights of an African American family and to interfering with their housing rights by burning a cross in the family’s yard. According to the charging document, on July 25, 2008, the two men, acting with the assistance of a third participant, built a cross and poured gasoline on it, then set it on fire in the yard of an African-American family who lived in the neighborhood. They will be sentenced on Nov. 5, 2009.

  • This is the second case in two years in which the Civil Rights Division has brought charges for a cross burning that occurred in Muncie, Ind. Two men were convicted in 2008 for burning a cross at the home of a woman who had biracial children. "These two men used a despicable and unmistakable symbol of hatred, the burning cross, to intimidate a family because they are African American," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division will continue to prosecute this type of illegal, hateful behavior to the fullest extent of the law."

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

#2: Four Arkansas Men Convicted of Civil Rights Charges in Cross Burning Conspiracy:

  • The Justice Department announced that Jacob A. Wingo, Richard W. Robbins, Clayton D. Morrison and Darren E. McKim pleaded guilty [...] to conspiring to drive a woman and her children from their home in Donaldson, Ark., because they associated with African Americans. A fifth defendant, Dustin Nix, 21, pleaded guilty to similar charges in July 2009.

  • All defendants pleaded guilty in federal court in Hot Springs, Ark., to civil rights charges and charges of making a false statement to a federal law enforcement officer. Each admitted and pleaded guilty to a felony civil rights charge for conspiring with each other to force a woman and her young children from their home by threats and intimidation because she associated with African Americans. Wingo and Morrison also pleaded guilty to an additional civil rights charge related to their direct involvement in an attempt to burn a cross at the victims’ home to intimidate the victims into leaving. All four defendants also pleaded guilty to a related charge of lying to agents of the FBI in an attempt to cover their conduct.(1)

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

(1) In other related press releases from the U.S. Justice Department in connection with those charged with the use of fire to interfere with housing rights of others, a felony:

  • (4-27-2009) Anderson County Man Indicted for Cross-Burning: Steven D. Archer, 49, Heiskell, Tennessee, has been indicted by a federal grand jury on charges of willfully interfering with a couple's federal housing rights because of their race by burning a wooden cross, in violation of Title 42, U.S. Code § 3631(a), outside the residence in Anderson County that the victims were occupying.

  • (11-21-2008) Rutherford County Man Sentenced In U.S. District Court In Asheville In Connection With Cross Burning Incident (Defendant to Serve More Than Two Years in Federal Prison): Curtis Gene Worley, 51, of Spindale, North Carolina, was sentenced Wednesday to serve 28 months in federal prison, followed by two years of supervised release. Worley was indicted in October 2007 on one count alleging use of fire to injure, intimidate, and interfere with rights to occupy a dwelling because of race or color. According to information presented in open court during the hearings, Worley built and burned a cross on or near the property occupied by his neighbor, an adult African American female. See also: (10-25-2007) North Carolina Man Indicted In Cross-Burning Case: The indictment charged that Worley used a burning cross to intimidate and interfere with an African-American family because of race and because the family was occupying a dwelling. The indictment charges that Worley violated Title 42, U.S. Code § 3631(a), which provides criminal penalties for interference with the rights of citizens under the Fair Housing Act. Since 2001 and up through and including this prosecution, the Civil Rights Division brought 41 cross-burning prosecutions and convicted 60 defendants for these crimes.

    (6-6-2008) Muncie, Indiana, Man Sentenced to 121 Months in Cross Burning Case: Kyle Milbourn of Muncie, Ind., was sentenced by a federal judge [...] for a hate crime stemming from a cross burning last year that was directed at a woman and her three biracial children. Milbourn was convicted by a jury of one count of interfering with the housing rights of another person; one count of conspiring to interfere with civil rights; one count of using fire during the commission of a felony; and one count of tampering with a witness.

  • (4-23-2007) Two Men Plead Guilty In Lassen County Cross Burning: Kevin William Ridenour, 21, and Nicholas Edward Craig, 18, both of Westwood, California, each pleaded guilty in Sacramento to interference with housing rights, a felony. The crime relates to the burning of a cross outside the rectory of a Catholic church in Westport, California. The Priest who resides in the rectory is from Rwanda, central Africa, and was assigned to Westport by the Catholic Archdiocese of Sacramento in October, 2006. The defendants admitted that they did so in order to threaten and intimidate the Priest because of his race, and the fact that he was occupying the rectory building. They also admitted that, while building the cross, they discussed the fact that the "KKK" had used burning crosses to intimidate black persons.

  • (1-31-2007) Florida Man Sentenced in Cross Burning: Neal Chapman Coombs, a 50-year-old resident of Hastings, Fla., was sentenced to 14 months in prison, to be followed by three years of supervised release. Coombs pleaded guilty to a racially-motivated civil rights crime involving a cross burning. Coombs was charged with knowingly and willfully intimidating an African-American family that was negotiating for the purchase of a house in Hastings, Fla., by threat of force and the use of fire. Specifically, it was alleged that Coombs’ actions were motivated by the family’s race and that he burned a cross on property adjacent to the house. According to the press release, the plea agreement indicatedt that Coombs, who is Caucasian, made a remark about having a “house-warming,” and also made derogatory remarks about the visiting family.

  • (9-26-2006): Federal Jury Convicts Two for Cross Burning: A federal jury convicted Christopher Mitchell and James Bradley Weems of burning a cross in front of the home of an African-American man in Fouke, Ark. The jury convicted each defendant of one count of conspiracy to violate the victim’s civil rights. The evidence at trial established that Mitchell and Weems, attended a party where they discussed an African-American man who lived nearby, using racial slurs to describe him. The defendants, along with a third man, Christopher Baird, who had pleaded guilty to his role in the offense, used wooden boards to erect a cross. The defendants then planted the cross near the home of the African-American man and lit it on fire. Witnesses testified that as a result of the cross burning, the African-American victim and the family he lived with all moved from their home because they were too frightened to remain in the town.

  • (9-2-2004) Two Men Plead Guilty In Kentucky Cross Burning Case: Matthew Scudder, of Florence, Kentucky, who was 18 at the time the crime was committed, and James Foster, of Independence, Kentucky, who was 19, admitted to conspiring to threaten and intimidate an African-American couple and their two children in order to drive them from their Burlington home. Scudder admitted that on July 2, 2004 he burned a wooden cross on the family's lawn. Foster admitted that he helped carry out the plan.

  • (6-15-2004) Indianapolis Man Sentenced For Cross Burning: The Justice Department announced the sentencing of Jerry Dean Landis, of Indianapolis, Indiana, to 18 months in prison for his role in a July 2000 cross burning. Landis participated in the building and burning of a cross in the front yard of an African-American family in Indianapolis. Landis admitted that he and his associates took part in the cross burning in order to “send a message” to the family. Since 2001 and up through and including this 2004 prosecution, the Department prosecuted 29 cross burning cases, filing criminal civil rights charges against 46 defendants.

  • (2-9-2004) Macomb, Illinois Man Sentenced For Cross Burning Targeting Interracial Couple: Charles Lambert was sentenced to thirty-seven months in prison for his role in a July 2001 cross burning targeting an interracial couple. Forest Hatley, a co-defendant in this case, was previously sentenced to forty-one months imprisonment and three years of supervised release. Lambert and Hatley each admitted that they agreed to burn a cross at a home in Macomb, Illinois where an interracial couple lived. The defendants constructed a cross and doused it with gasoline. The two men then transported the cross to the victims’ yard, planted it in front of the home and ignited it. Lambert and Hatley also admitted this action was taken to intimidate the couple because of the male’s race and because he was living with a person of another race.

  • (1-29-2004) Georgia Man Sentenced For Cross Burning In Moultrie: The Justice Department announced the sentencing of Moultrie, Georgia resident Michael Craig Jordan for his role in an April 2002 cross-burning. Jordan pled guilty to criminal civil rights violations in November 2003. He admitted to participating in the April 2002 burning of a wooden cross with the purpose of preventing a biracial African-American and Hispanic couple - as well as their two young children - from moving into the house next door.

Saturday, September 26, 2009

Lender's Rep Stumbles Into Indoor Pot Farm While Changing Locks At Home In Foreclosure; Cops "Bag" 60 Marijuana Plants, One Suspect

In Vero Beach, Florida, TC Palm reports:
  • Authorities on Thursday discovered a home going into foreclosure was being used as a marijuana grow house. Eric Sotero Martinez, 26, [...] was charged with cultivation and possession of marijuana with intent to distribute. He was also charged with possession of illegal mushrooms. [...] The operation [...] was owned by Martinez’s fiancee, according to his arrest affidavit.

  • A representative of a holding company went to the home to have the locks changed as part of foreclosure proceedings, the affidavit said. He told the Indian River County Sheriff’s Office he discovered the marijuana plants inside the home when he went to change the locks. Investigators found 60 marijuana plants in a bedroom of the Stockbridge home along with industrial lights, a carbon dioxide machine and several fans, the affidavit said. Martinez’s fiancee said the plants were the second crop he had grown, the affidavit said. Detectives also found more than a pound of packaged marijuana and four bags of mushrooms in the home. The case is still under investigation, but Martinez’s fiancee will not be charged, sheriff’s spokesman Deputy Jeff Luther said.

Source: Man changing locks on Vero Beach house finds leafy surprise inside. pot grow ops beta

Accused Squatter Family Claims To Be Legal Tenant; Refuses To Show Lease, Won't Pay Rent Or Leave Foreclosed $1.5M Home

In Manhattan Beach, California, the Daily Breeze reports:
  • The buyer of a foreclosed Manhattan Beach house last owned by a former Los Angeles Clipper is suing the occupants, alleging they are refusing to leave the once $2.7 million residence or pay rent. The lawsuit by Soda Partners, a company that purchased the house Sept. 2 for $1.5 million, charges that [a family] and their children are squatters because they have failed to provide documents showing they have a lease to be in the house [...].

  • [One occupant] declined to answer questions Friday when contacted by the Daily Breeze. "The lawsuit is in litigation. We don't want to comment on that," [he] said. "Tenants do have rights and I would point that out." The lawsuit filed Thursday in Los Angeles Superior Court alleges the [occupants] have failed to pay the new owners any money since the sale was completed.

***

  • Attorney Ronald Richards, who represents Soda Partners, said no one knows if [they] ever paid rent because they refuse to answer his calls. [...] In [a] brief phone call with the Breeze, [one of the occupants ...] refused to comment on whether he had rented the home from Zeljko Rebraca, who played for three NBA teams, including the Clippers, from 2004-06. [...] If [they] are paying rent or have a lease, they could protect themselves under the tenants' rights laws.

For more, see Manhattan Beach house buyer sues tenants. hijack

Cops Let Would-Be Foreclosure Stripper Off Hook; Pleads Ignorance Of The Law, Agrees To Stop, Refunds Money On Sale Of Cabinets, Yanks Craigslist Ad

In Medford, Oregon, the Mail Tribune reports:
  • Mike Vaughan was surprised when an elderly couple was willing to pay $60 for some old kitchen cabinets from an east Medford home that is heading into foreclosure. The couple had seen an ad the 30-year-old Vaughan posted on Craigslist Wednesday that offered to sell almost every fixture in the house on Cedar Links Circle — including the kitchen sink. Vaughan, who said he didn't think anybody would really want the old cabinets, was even more surprised when two Medford police fraud investigators approached the couple as they were leaving Thursday. They informed the couple it was against the law to sell anything attached to the house.

***

  • The two Medford fraud investigators, alerted to the ad by some observant citizens, decided not to press charges against Vaughan, who previously lived in the house, which was owned by his father-in-law. "We were able to catch it in time so that no crime was committed," said Medford Detective Sgt. Mike Budreau. [...] After questioning Vaughan, the detectives determined he didn't realize he was doing anything illegal and he agreed to stop. He had been paid $60, but the couple planned to come back later after he removed the cabinets from the wall. After a discussion with the detectives, Vaughan gave the money back and removed the Craigslist ad, which offered to sell sinks, a mirror, bedroom doors, a laundry door, cabinets, light fixtures, ceiling fans, stair rails, attic stairs and an old water heater. [...] He said he had done a lot of work on the house, which his father-in-law bought with the provision that Vaughan would make the monthly payments. He said the house wasn't in foreclosure yet, though he said it would be at the end of the month.

***

  • Budreau said banks and other lenders have been sending letters to police agencies advising that it is illegal to take items that are attached to a house during a foreclosure action. He said the key issue for law enforcement is whether there is an intent to defraud someone, but he said the issue could get into a gray area depending on the status of the loan. "It does get tricky," he said, noting that many police agencies have relatively little experience dealing with foreclosures. [...] At this point, Medford police would prefer to educate people about the law rather than put anyone in jail, [Detective Brenda] Garich said.

For the story, see Police on alert for attempts to sell pieces of forceclosure. foreclosure fixture stripping apple foreclosure stripping

S. Florida Squatters Expand Housing Search Into High-End Neighborhoods; Family Hijacks Foreclosed Waterfront Home; Lender's Agent Caught Flat-Footed

In Coral Gables, Florida, WTVJ-TV Channel 6 reports:
  • Miami's squatter problem has garnered national media attention over the past year and a half, as the foreclosure crisis threatened to transform the Magic City into something resembling a lawless, "Mad Max"-esque landscape. The squatters mostly kept a low profile, moving in [...] to neighborhoods where they could take over unnoticed.

  • But now come reports that squatters are seeking out more ritzy neighborhoods, including the pricey, tree-lined streets of Coral Gables. "They seem to be squatters, I don't think that they pay rent. I don't think that they own the house, the house is in total disrepair," said Gables by the Sea resident Bruce Hornik, who said he couldn't believe his eyes when he saw a family set up shop in the waterfront neighborhood. [...] The bank which owns the property hired a realtor to sell it last month, and the realtor said they have no idea who could be staying in the home.

For more, see Ritzy Gables Pad Plays Host to Squatters (Residents say free-home seekers took over waterfront home).

Water Shutoff Threats Face Tenants In Financially Troubled Apartment Buildings; Notices Sent To Central Jersey Renters In 70 Units

In Plainfield, New Jersey, myCentralJersey.com reports:
  • Notices informing tenants that their water service could be shut off in less than three weeks appeared Monday at two downtown apartment buildings managed by Connolly Properties Inc., but a company spokesman said that residents there shouldn't be concerned. The notices appeared at Pingry Arms(1) and Viola's Place,(2) buildings that include a combined 70 apartment units and sit directly across East Seventh Street from each other on Crescent Avenue.

***

  • Banks since June have filed for foreclosure against at least nine companies owning 17 different apartment entities managed by Connolly Properties, and at least six of those companies then filed for Chapter 11 bankruptcy protection. Debts listed in those proceedings combine to approach $60 million. Connolly Properties manages a total of 3,000 apartment units in more than 60 different apartment entities in New Jersey and Pennsylvania.

For more, see Utility threatens service suspension to two Connolly-managed buildings in Plainfield.

(1) Reportedly, Pingry Arms, the larger of the two Crescent Avenue buildings at 50 units, is not tied to any known pending foreclosure or bankruptcy case.

(2) Viola's Place is reportedly owned by Plainfield Apartments LLC, the company that in August filed for bankruptcy protection after a North Jersey bank filed for foreclosure against its nine city properties. RentSigmaSkimming

Landlord's Unpaid $100K Electric Bill Leaves Building's Tenants In The Dark, Without Refrigerators, Elevators

In Highland Park, Michigan, WJBK-TV Channel 2 reports:
  • Residents of the Highland Towers apartments say they've paid their rent, but they're being left in the dark. It's been more than a week since power to the building was shut off. DTE Energy admits it is a horrible situation, but they say the owners of the building owe $100,000 in unpaid bills.

  • A small but spirited demonstration outside DTE headquarters was meant to shed light on a serious problem. Residents of the Highland Towers apartments have been living without power for more than a week. Latanya Lloyd is one of them. "It's not fair. I don't have money to just up and move somewhere again right now," she said. You can hear the emotion from tenants who have nowhere to turn.

  • DTE says it had no choice but to kill the lights because the building's owner hasn't paid the utility bill in a year and owes $100,000. "The building is not shut down because the people that lived there were delinquent in paying their (bills)," Lloyd said. Residents have the receipts to prove it, but they're the ones stuck in the dark without lights, refrigerators and even elevators. Without the elevators, residents have no choice but to walk up and down a dark stairwell.

  • In the midst of this mess, the building's owner and manager are nowhere to be found. DTE sent the United Way to try and help people who are still at the building. "So far, we've identified about 30 people who are still in the building, including women and children, and we're working with all the resources we have to try and get them placed," said Nick Monterosso with the United Way.

Source: Apartment Tenants Living Without Lights.

For story update, see Struggle restores power to apartment residents. RentSigmaSkimming

Another Tenant In Building In Foreclosure Faces Immediate Boot Due To Landlord's Unpaid Water Bill

In Visalia, California, the Visalia Times Delta reports:
  • By April, [Tracy Wood] and a friend were able to save enough money for the security deposit on a two-bedroom apartment. The deposit was steep more than $2,000 but the $675-a-month rent was just the right price. "I finally thought I was getting back on my feet," she said. Now she's about to become homeless again.

  • The notices of foreclosure started to arrive a few months after she moved in. She called the apartment complex's owner but got no answers. "He was avoiding us and kept telling us not to worry, that he was restructuring his debt," she said. But the notices kept coming, and Wood's roommate moved out.

  • "I've been looking for other places, and everyone wants a completely clean credit history," she said. "I went through a divorce, lost my house in a tornado and was homeless you don't go through that and keep a spotless credit history."

  • Stuck, she waited for the other shoe to drop. And last week it did. She came home from work and found a notice on the door saying the water bill was past due for a total of $800. Like many apartment dwellers, Wood is not directly responsible for paying the monthly water bill, which is paid by the owner.

  • If the water is turned off, city sanitation rules will prevent Wood from staying in the apartment. [...] "Tenants can set up their own account and they won't be responsible for the unpaid balance," [superintendent with Visalia's water provider Mike Markarian] said. But there's a catch. Woods lives in a triplex and would be responsible for the entire property and other tenants' bills if she were to set up such an account. "It would be about $200 a month," she said. "I don't have that kind of money." The Times-Delta attempted to contact Wood's landlord, Habes Alrawashdeh, but phone calls were not returned [...].(1)

For the story, see Foreclosure fallout: Visalia tenant unaware of landlord's financial status (Visalia woman, 4-year-old son may lose use of water).

(1) I suspect that the recently enacted Federal law, known as the Protecting Tenants At Foreclosure Act of 2009 and which gives tenants some protection against being immediately booted from their rented homes in foreclosure eviction situations, may not apply when the tenant displacement is a result of a local municipality applying its ordinances relating to the health and sanitation issues that arise when water service to a home/apartment building is shut off, even though the premises is in foreclosure. RentSigmaSkimming

Foreclosure Stripping Alive & Well In Chicago Suburbs

In suburban Chicago, Illinois, SouthtownStar reports:
  • Now appearing in the Southland: the amazing disappearing kitchen! It's not magic, though. It's homeowners leaving their foreclosed houses bare, stripping and selling everything they can to pay bills or stick it to the bank that's giving them the boot. [...] From ceiling fans to furnaces, light fixtures and water heaters, some homeowners are taking whatever they can. And since they're usually unskilled and doing this in haste, they're damaging things along the way.

  • [Real estate agent Patrick] Zomparelli recently sold a foreclosed house in Orland Park for $89,000. Its entire kitchen had been removed, leaving only the paint outlines of where the cabinets once were. Someone had tried to take the tub, damaging it in the process. They even took the carpet, Zomparelli said, leaving a home that would have sold for much more if left intact.

  • Rich Hofeld, owner of HouseMasters home inspection services, said his employees see items stripped from about 20 percent of foreclosed homes they inspect. "Often, the plumbing is gone, the water heater, furnace," said Hofeld, who is the mayor of Homewood. "I can't say that it's people who've lived there, or someone who came along after they moved out."

For more, see Foreclosure stripping leaves some suburban homes bare.

See also, Chicago Sun Times: Evicted owners stripping homes of all valuables (FORECLOSURES: 'They took everything' -- some homes stripped bare by ex-owners). foreclosure fixture stripping apple

Foreclosure Stripping Among Charges Landing Oregon Man 45 Months In Jail; Ukrainian National May Now Face Deportation

In Clackamas County, Oregon, The Oregonian reports:
  • The Damascus man who stripped his own foreclosed home of more than $50,000 worth of property was sentenced [...] to 3 years and 9 months of prison, as part of a plea bargain that included the defrauding of an electric company. Grigoriy Bogoslavets, 33, was convicted in a Clackamas County Circuit Courtroom of one count of first degree aggravated theft for taking everything from the air conditioning system to the kitchen cabinets in his former home. He was found guilty of four more counts of first degree aggravated theft for his crime involving $400,000 in electrical supplies.

***

  • "The unfortunate thing about this is that you were kind of living the American Dream," [Judge Robert] Herndon said as he addressed Bogoslavets [an electrical supply business owner and non-U.S. citizen from Ukraine], who may now face deportation.

For more, see Man who stripped his own foreclosed home gets prison time. foreclosure fixture stripping apple foreclosure stripping

Owner In Foreclosure Loses Personal Possessions; Contents Seized & Auctioned Off As Alleged Drug Dealer Holding 3rd Mortgage Moves Into $2M+ Home

In Vancouver, British Columbia, The Vancouver Sun reports:
  • The owner of a Shaughnessy heritage home was in tears after learning that all her worldly possessions had been seized by a bailiff and sold at auction. Gail Hewitt is also angry that the man who has taken possession of her $2-million-plus home is an accused drug dealer, Robert Luigi Poloni. Poloni holds a $600,000 third mortgage on Hewitt's house, [...] which is in the midst of foreclosure proceedings. Hewitt, who is living in California, said her neighbours called her about three weeks ago and told her someone had moved into her house.(1)

***

  • Hewitt said the contents of her home were worth about $400,000. "I had about $100,000 worth of clothes, fur coats, at least $50,000 worth of jewelry, furniture, a $40,000 grand piano and five oriental rugs, some worth $15,000," she said in an interview. [...] "I can't believe it's all gone and it's all sold," Hewitt said, crying. "There's nothing I can do. Everything I own has been taken away from me."

For more, see Shaughnessy homeowner stunned by sale of possessions (Says she did not know she was dealing with an accused drug trafficker).

For story update, see Judge rules against Shaughnessy homeowner who sought more time to sell home.

(1) According to the story, Hewitt's neighbors took photos of two men on the property and she recognized them as Poloni and Robbie Della Penna, who were jointly charged with cocaine trafficking offences but were acquitted by B.C. Supreme Court Justice Peter Leask. The Crown has filed a notice to appeal those acquittals. Neighbours called Hewitt again Sept. 10 to tell her that trucks had arrived on her property and were taking out her furniture and personal property.

Friday, September 25, 2009

Slumbering Foreclosing Lenders Unable To Document Loan Ownership Beginning To Face Complete Wipeout Of Mortgage Interests Thru "Quiet Title" Actions?

A recent story in The Huffington Post on the "Produce The Note" strategy of defending against foreclosure actions contained the following tidbit:
  • In Florida, Jacksonville Area Legal Aid attorney April Charney has been using the missing-note argument since she first identified the lenders' weakness in 2004. She began arguing that those initiating foreclosure proceedings on behalf of securitized pools of mortgage loans had no right to do so, because they couldn't prove they actually owned the debt.

  • Five years later, some of those homeowners are still in their homes, she says. Because of the missing ownership documentation, Charney is now starting to file quiet title actions, hoping to get her homeowner clients full title to their homes (a quiet title action "quiets" all other claims).(1)

Source: Who Owns Your Mortgage? "Produce The Note" Movement Helps Stall Foreclosures.

Go here for other posts referencing the work of attorney April Charney.

(1) An earlier post (see Using Statute Of Limitations To Wipe Out Lenders' Right To Foreclose A Mortgage?) referred to a December, 2008 story reported on msnbc.com which alluded to Charney's intent to apply the Florida statute of limitations (see Sec. 95.11(2)(c), 95.281(1)(a), Florida Statutes) to terminate a foreclosing lender's right to foreclose when her clients' cases became ripe for such an attack:

  • Charney said that in a number of her cases, once there is no longer an ability for the loan servicer to profit, the foreclosure “just goes to sleep, and unless I’m going to pursue it, nobody’s setting hearings, nobody’s pursuing anything to get it to trial.”

  • After five years, which is the statute of limitations to enforce a contract in Florida, she can try to help her clients own their homes mortgage-free, Charney said. The first opportunity for her to help clients do that may arise next year.

  • And that legal limbo is where the lion’s share of her cases stand now, Charney said. So far this year, she has achieved two “workouts” and lost two cases. “Many, many, many” of the rest are in sleep mode or getting a single filing each year by plaintiffs’ attorneys just to keep them alive.

For the msnbc.com story, see 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers) (for the entire story on one web page, try here). EpsilonMissingDocsMtg

Mortgage Servicer Sued For Wrongful Death For Allegedly Making Caustic Collection Calls That Lead To Delinquent Homeowner's Fatal Heart Attack

In Tampa, Florida, The Associated Press reports:
  • A widow claims that debt collectors hounded her husband to death with as many as nine caustic calls per day, causing stress that contributed to his fatal heart attack. She's suing the Florida couple's mortgage company in a unique wrongful death case.

  • Dianne McLeod wants Green Tree Servicing to pay damages for what she said are illegal collection practices that led to her husband's heart failure on Dec. 4, 2005. Her 57-year-old husband, Stanley, was already in poor health from a heart attack years earlier that also had left him on disability. An executive at Green Tree Servicing called the claim "outrageous and meritless."

  • Lawsuits against debt collectors alleging illegal practices are common. But McLeod's Tampa attorney, William Howard, believes it's the first time one has ever been sued for wrongful death. [...] Some of the calls were recorded on the family's answering machine, and Howard said he is eager to play them for a jury.

***

  • Howard sued Green Tree on the family's behalf in 2005, then added the wrongful death count in 2006 after Stanley McLeod died. The case has been winding its way through courts since. Earlier this month, the 2nd District Court of Appeal in Florida again ruled against Green Tree in the company's efforts to force the case into arbitration. Howard said he will ask a judge to set the case for trial soon. He hasn't decided yet how much he will seek.

  • "What happened to Stanley McLeod happened to a lot of people," said Howard, who has about 500 pending cases that claim undue harassment by debt collectors. "To be held hostage in your own home is a terrible thing. It's a helpless feeling." Howard works for the law firm of Morgan & Morgan, which has offices around the state, heading a division that sues debt collectors for unfair collection practices.

For the story, see Widow: Debt collectors hounded husband to death.

Veteran Fraudster Gets 97 Months For Running Realty Scams; Bogus Sale Leaseback Foreclosure Rescue Deals Among Rackets Resulting In $1M+ In Losses

From the Office of the U.S. Attorney (New Jersey):
  • A Phoenixville, Pa., man was sentenced to 97 months in prison [...] for his leadership role in operating two Ponzi schemes upon members of a Toms River church, which resulted in total losses of more than $1 million, Acting U.S. Attorney Ralph J. Marra, Jr., announced. U.S. District Judge Joseph H. Rodriguez also ordered Terence Mayfield, 47, to serve three years of supervised release upon the completion of his prison term.

***

  • According to the Information, Mayfield operated two frauds from November 2006 through July 2008. In Count One, Mayfield is charged with mail fraud in connection with his scheme to defraud numerous members of The Church of Grace and Peace of more than $1 million through a phony real estate investment scheme.

  • Count Two charges Mayfield with wire fraud relating to his scheme to defraud three sets of homeowners, who participated in three “foreclosure bailouts” purportedly involving two properties in Georgia and one in Pennsylvania, of more than $75,000.(1)

For the entire U.S. Attorney press release, see Phoenixville, Pa., Man Sentenced to 97 Months in Federal Prison for Operating Ponzi Schemes Upon Members of a Toms River Church.

See also, The Philadelphia Inquirer: Pa. man sentenced to prison for Ponzi scheme at church:

  • This was not Mayfield's first fraudulent venture. In 2005, he was sentenced to two years' probation for a Ponzi scheme in Philadelphia in which eight victims reported losing $198,000, Smith said. In October, he was indicted on securities-fraud charges in Delaware, accused of taking money from two investors who had trusted him with a combined $225,000, state Deputy Attorney General Greg Strong said.

(1) The press release states that, in regards the foreclosure rescue scam, Mayfield admitted that he solicited potential investors to invest in the program he referred to as “foreclosure bailouts.” To induce these individuals to invest in this program, Mayfield explained that the investor would buy the home of a homeowner who was at risk of foreclosure and then lease the home back to the homeowner for a two-year period. The homeowner would then use a portion of the proceeds to pay the investor an “investment fee” and Mayfield a “broker’s fee.” Additionally, the homeowner would place two years’ worth of rent payments into an escrow account, which would be maintained by Mayfield, as a security deposit. At the end of the two-year period, Mayfield explained, the homeowner would have the opportunity to repurchase the home from the investor.

Mayfield made substantially the same representations to homeowners with a significant exception: That the escrow account funds would not serve as security for the investor, but rather would be “drawn down” on a monthly basis and used to pay the homeowner’s monthly rent payments. Mayfield admitted he did not maintain the funds in escrow, but instead pocketed the funds for his own benefit.

Title Agent Cops Plea To Illegally Dipping Into Escrow Funds From Real Estate Closings; "Katrina" Credited For Slamming Brakes On Ponzi-Style Scam

In New Orleans, Louisiana, the Times Picayune reports:
  • A 68-year-old Metairie man pleaded guilty Wednesday in federal court to wire fraud for his role in a local refinancing scheme, authorities said. Hubert Edward Ellzey Jr. acknowledged that, as an independent title agent for Commonwealth Land Title Insurance Company of Louisiana, he wired money from the refinanced properties to a special escrow fund, court records show. He dipped into this account and used the money for personal use [...], according to a news release from U.S. Attorney Jim Letten's office. Ellzey also used the company money from future home closings to pay off some of the previous loans he should have canceled.

  • The scheme was unearthed shortly after Hurricane Katrina because all the closings came to a halt and Ellzey was unable to account for the money he had taken, Letten's office said. In all, Ellzey defrauded his employer of about $775,000. He is scheduled to be sentenced in January.

Source: Title agent pleads guilty to misusing money in wire fraud case. EscrowRipOffKappa

Title Agent Admits To Stiffing Existing Lienholders In Real Estate Closings; Pocketed Cash Due Lenders, Wrote & Sold Phony Secured Notes, Kited Checks

From the Office of the FBI (Louisville, Kentucky Field Office):
  • Candace Hill, United States Attorney for the Western District of Kentucky, announced that Wavy Curtis Shain, age 26, of Louisville, Kentucky, pled guilty on September 18, 2009, to nine counts of wire fraud, and one count of bank fraud.

  • Shain pled guilty to using businesses he owned and operated, Derby City Title and Capital Distribution, LLC, to perpetrate fraudulent schemes on various lending institutions and mortgage companies. The schemes perpetrated by Shain included misappropriating substantial amounts of loan proceeds received by him on behalf of borrowers using Derby City Title to obtain loans to purchase homes or to refinance existing home loans, and, by doing so, failing to pay off existing loans and mortgages held by previous lenders.

  • Additionally, Shain pled guilty to preparing false and fraudulent notes and mortgages purportedly associated with the purchase of houses and selling these instruments to willing buyers. Lastly, Shain plead guilty to perpetrating a check kiting scheme using business accounts maintained with US Bank and BB&T Bank.

For the entire FBI press release, see Louisville Man Pleads Guilty to Defrauding Loan Companies and Banks. EscrowRipOffKappa

Lender Knowingly Wrote Millions Of Dollars In Crappy Loans, Abandoning Prudent Underwriting Standards, Says Mortgage Insurer In Lawsuit

In Los Angeles, California, Courthouse News Service reports:
  • MBIA Insurance Corp. says IndyMac Bank knowingly loaned millions of dollars to borrowers who could not afford to repay the loans, leaving the stock insurance company to pay out more than $487 million on its guarantees with an expected $566 million more to come, MBIA claims in Superior Court.(1)

  • MBIA says IndyMac "abandoned any reasonable and prudent underwriting standards" in an "effort to expand its market share during the mortgage lending boom," according to the complaint. MBIA also says IndyMac encouraged its workers to inflate borrowers' incomes on loan applications to get them loans for which they wouldn't have qualified. MBIA says the thousands of mortgage loans in default or foreclosure "would not have occurred if IndyMac had followed the loan-origination practices that it represented to investors it was following."

***

  • In May, 20 banks and financial services companies sued MBIA with allegations that it fraudulently restructured itself to strip it of $5 billion in cash and securities and to start a new insurance business to duck its obligations to the banks.

For the story, see MBIA Insurance Sues IndyMac.

(1) MBIA provided financial guaranty insurance in the form of guarantees of the trust obligations to make principal and interest payments on the loans.

Ringleader In Cash Back Mortgage Scam Gets 30 Years; Used Phony Repair Invoices, Shell Corporations To Skim $1.1M From Closing Proceeds On 34 Homes

In Denver, Colorado, The Denver Post reports:
  • The ringleader of a multimillion-dollar mortgage-fraud ring was sentenced [...] to 30 years in the Colorado Department of Corrections. Uto Essien, 45, a Nigerian national, will be deported after completing his sentence. Essien was convicted in July of four felony counts related to the use of shell corporations and false invoices to skim money off the top of nearly three dozen real estate transactions. Essien's conviction resulted from a 45-count, 10-person indictment handed down in March 2008. The indictment alleged that Essien and his colleagues fraudulently obtained $10.9 million in mortgages to buy 34 properties in Adams, Denver and Jefferson counties between April 28, 2004, and Dec. 29, 2006.

  • Essien and his colleagues then skimmed $1.1 million from the real estate transactions, which they said paid for repairs the shell corporations never did to the properties. Essien and his colleagues used false invoices from the shell corporations to justify the payments. The jury convicted Essien of violating the Colorado Organized Crime Control Act and of two counts of forgery and theft by receiving. According to the indictment, Essien, while acting as a real estate broker, negotiated the property acquisitions and directed the buyers to create the shell corporations. Nine of Essien's co-defendants have either pleaded guilty or been convicted following a jury trial.

Source: 30-year term for leader of fraud ring (Nigerian Uto Essian was convicted of skimming off the top of real estate deals).

Thursday, September 24, 2009

Ex-Real Estate Agent Faces Forgery, Theft Charges For Use Of Fraudulent HUD-1s To Dupe Lenders Into Giving 100% Financing To Same Buyer For 6 Homes

In Weld County, Colorado, The Greeley Tribune reports:
  • A former Greeley Realtor whose license was yanked last year faces 12 felony charges in Weld District Court upon a grand jury indictment. The Weld County Sheriff's Office has a warrant out for the arrest of Tracy Todd, 35, of Greeley. The grand jury handed down the 20-page indictment against Todd in late August, alleging he participated in a kickback scheme on six home sales in February 2006. Todd's Realtor license was suspended in June 2006, and it was revoked last year for his participation in mortgage fraud schemes.

  • The indictment charges Todd with six counts of felony forgery and six counts of felony theft. The forgery charges stem from misrepresentations alleged on the Housing and Urban Development [closing] statements [also known as HUD-1] that are included in any home sale closing. The indictment also charges six counts of felony theft, each of which could put him in prison for 12 years. According to the indictment, Todd participated in a scheme to sell six homes to the same investment buyer, Tom Lee, paying $78,000 on all the sales for the buyer to qualify for 100 percent financing, plus an additional $36,000 after the sales went through, without disclosing it in the sale documents. The kickback schemes all apparently have many forms, but the common theme for most is forgery, or misrepresentations on closing documents.

For more, see Greeley man faces 12 felony charges for his alleged role in mortgage fraud.

Mandatory Foreclosure Mediation Programs Get Low Grades From National Consumer Advocacy Group

From a press release from the National Consumer Law Center:
  • A spate of new state and local programs that have emerged over the last year requiring mediations or conferences before foreclosures sales take place have great potential to help homeowners, but are suffering from the same lack of industry accountability that has plagued voluntary federal mortgage modification programs, according to a major new study from the nonprofit National Consumer Law Center (NCLC).(1)

For the entire press release, see REPORT: Foreclosure Mediation Programs' Potential To Help Homeowners Now In Jeopardy Due To Lack Of Accountability (NCLC Looks at 25 Programs in 14 States; Mediation Programs Seen as Faltering For Same Reasons as Struggling Federal Voluntary Foreclosure Modification Efforts).

For the report, see State and Local Foreclosure Mediation Programs: Can They Save Homes?

(1) Mediation programs were reviewed in the following 14 states: California, Connecticut, Florida, Indiana, Kentucky, Maine, Michigan, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon and Pennsylvania.

Some In Congress Seek To Make "Produce The Note" Strategy Mandatory To Level Playing Field In Defending Against Sloppy Foreclosing Lenders, Servicers

The Huffington Post reports:
  • Modern-day home mortgages have been so sliced and diced by rapacious financiers that some homeowners are successfully delaying -- or even blocking -- foreclosures through the simple tactic of demanding that banks produce the original mortgage note, which amazingly enough is often not so easy for them to do. As the foreclosure rate continues to set new highs, a little-noticed legal provision that requires bankers, if challenged, to prove they hold the original mortgage documents before getting possession has spawned a minor homeowner rebellion, alternately called "produce the note" or "show me the note". For homeowners trying desperately to keep their homes, the tactic is one way to buy some time -- and maybe even get the upper hand on the lender.

***

  • The fouled-up paperwork or other lack of legal compliance "has resulted in a much higher rate of negotiated [mortgage] modifications" [...], said [North Carolina congressman and House Financial Services Committee member Rep. Brad] Miller. "It gave the homeowner additional defenses and counterclaims that strengthened their hands substantially."

***

  • Some in Congress are trying to make it easier for homeowners. Rep. Marcy Kaptur, an Ohio Democrat, introduced a bill in February with Rep. John Conyers (D-Mich.) that would actually prohibit foreclosures unless lenders produced necessary documentation in court, including the note and evidence that the homeowner was, in fact, notified each time the note was transferred.

  • "I am encouraging [homeowners] to stay in their homes [and] go through the court proceedings until the institution in question can produce [the] note, because chances are, they can't," Kaptur said in an interview Monday. "Somehow the playing field has to be leveled here, and [the bill] provides a very strong means of doing that." The bill is languishing in the House Financial Services Committee, headed by Rep. Barney Frank (D-Mass.), she said.

For more, see Who Owns Your Mortgage? "Produce The Note" Movement Helps Stall Foreclosures. EpsilonMissingDocsMtg

Conn. AG Puts Kibosh On Shaky "Option To Buy" Obtained By Pair From Hospitalized Dying Woman; Deal Would Have Allowed Purchase For Less Than 50% FMV

From the Office of the Connecticut Attorney General:
  • Attorney General Richard Blumenthal [...] announced that his office has successfully challenged a questionable agreement to sell the home of a deceased Greenwich woman, securing at least $300,000 more for charities named in the woman's will. [...] Probate Judge Daniel F. Caruso voided an agreement under which Mona Lee Johnson of Greenwich granted her neighbor Mark L. Lovallo and her long time accountant, David Alfano, an option to buy her home for $500,000 after her death. In fact, the home was estimated to be worth more than twice as much -- about $1.2 million -- when she died in 2005. Johnson signed the agreement at Lovallo's urging a month before she died when she was in the hospital.(1)(2)

For the entire AG's press release, see Attorney General Successfully Challenges Questionable Agreement To Sell Greenwich Home, Secures At Least $300,000 More For Charities.

(1) According to the press release, because real estate values have fallen since Johnson's death, it's unlikely the home's fair market value is still the $1.2 million estimated in 2005. In the current market, Blumenthal's office expects the house to fetch at least $800,000. It seems to me that these two characters should be hammered for the damages suffered by the estate and the beneficiaries of the will for the home's $400,000 diminution in value during the time they improperly clouded the title to the deceased woman's home with this bogus deal.

(2) Attorney General Bloomenthal said:

  • "The net result in this long legal battle is at least $300,000 more for good causes, particularly educational institutions, for a total of about $1.5 million or more. I fought successfully to stop this suspect agreement denying hundreds of thousands of dollars to charities intended to benefit from the home's sale. In charity law, the donor's wishes are paramount, and this extraordinarily generous donor sought to benefit charities, not these two men. This donor never wished to sell her home at a bargain basement price, less than half its estimated value at the time, significantly slashing proceeds to charities named in her will."

  • "Ill and infirm -- this woman supposedly signed papers while hospitalized and in the last month of her life -- raising grave doubt the agreement reflected her true wishes. This decision restores moneys rightfully belonging charities -- as well as charitable intentions. My office will continue to carefully monitor estates, intervening when appropriate to assure that the wishes of the deceased are respected and realized."