Flood Of Foreclosure Fraud Complaints Overwhelms DA's Office; Financially Strapped Victims Told To Prosecute Cases Themselves By Filing Civil Suits

In Riverside County, California, The Press Enterprise reports:

• A nonprofit organization representing 23 faith congregations in Riverside and San Bernardino counties demonstrated Friday, calling for county government to give higher priority to fighting foreclosure fraud with prosecutions and education. [...] Speaking for the grassroots organization, called Inland Congregations United for Change, Tim Lucas, a member of St. Catherine of Alexandria Church in Riverside, said they are asking the district attorney's office, the assessors office and the board of supervisors for help.

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• Lucas complained that the district attorney's real estate unit does not have enough staff to handle its workload. Also Lucas complained that the district attorney has told the group that the majority of foreclosure fraud complaints should be prosecuted as civil rather than criminal cases. He said that would require victims, many of which are of modest means, to hire lawyers.(1)

• In response to the criticism, Ryan Hightower, spokesman for the Riverside County district attorney, said "We work with the resources we have and make the most of them." He said real estate fraud already is a high priority for the office and every complaint is evaluated on an individual basis for possible criminal prosecution. There are 350 cases in some stage of investigation or prosecution, Hightower said.

For the story, see Group demands action on foreclosure scams (DEMONSTRATION: The Riverside County DA's office says fraud is a high priority and is investigating 350 cases).

(1) It's not uncommon for authorities to claim that such incidents are "civil cases," suggesting the victim would need to file a civil lawsuit against the scammer to seek a remedy. California case law has clearly addressed the notion that some scammers have that they can insulate themselves from prosecution by using terms and conditions contained in legitimate-looking business contracts to screw over consumers. The rule in California is cited in, among other cases, People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401 (case law links are found at Findlaw.com - may require free registration):

• 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.)

In People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726], a California appellate court made this observation:

• Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.

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• Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft. The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)