Ex-Ontario Attorney Gets 22 Months For Manufacturing Forged Mortgage Used To Swindle 85-Year Old Man Out Of $150K

In Barrie, Ontario, the Toronto Sun reports:

• A Barrie-area lawyer was sentenced to 14 months in jail yesterday after being convicted fraud and forgery. Justice Amy Mullins imposed a 22-month sentence on Myles McLellan, 56, a real estate lawyer, but gave him credit for time already served in prison, leaving him facing a 14-month jail term.

• McLellan was charged in 2006 after he forged his office clerk’s signature, Janet Laurin, and convinced an 85-year-old Toronto business man, Sam Klaiman, to loan him $150,000 for the false mortgage, which he deposited into his own bank account. At the time, McLellan, who has since been disbarred because of the charges, ran a legal service called the Law Store with offices in Barrie and Innisfil that offered mortgage financing services.(1)(2)

For the story, see Lawyer jailed for fraud.

(1) According to another story (see Lawyer sentenced 22 months for fraud), The Law Society of Upper Canada has disbarred McLellan from practicing law. In all, he was found to have misappropriated approximately $423,000 of trust funds belonging to four clients. McLellan will return to a Toronto court May 31 for preliminary hearing in connection with trust fund frauds.

(2) If an Ontario, Canada attorney or paralegal, either in the course of representing you or acting as a fiduciary, screws you out of money or property through dishonest conduct, check out the The Law Society of Upper Canada Compensation Fund for information on how to recover some or all of your losses from the fund.

Elsewhere in Canada, check the Canada Client Protection Funds Map for the attorney compensation fund for client protection available in your province.

In the United States, see:

• Directory Of Lawyers' Funds For Client Protection (courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

Santa Maria Elderly Swindles: R/E Agent Suspected In $300K Ripoff Of 69-Year Old Victim; Landscaper Pockets $50K From Seniors For Unperformed Services

In Santa Maria, California, edhat.com reports:

• More care must be taken to protect elderly residents from unscrupulous people who are hired to help them. As recently as March 4, a 59-year-old Santa Maria man was arrested for bilking an elderly woman out of hundreds of thousands of dollars in a fraudulent real estate deal, the Santa Barbara County sheriff office reported.

• Deputies said the man convinced the 69-year-old victim to invest $300,000 for the purchase of a commercial property and promised the woman 12 percent interest on her investment. He even paid the first six months interest up front. Sheriff's detectives began investigating the incident last year. At that time, the woman reported that aside from receiving a payment for the first six months of interest, which was pulled from the $300,000 she had invested, the man had never paid her anything.

• Deputies said the woman trusted the man because he is a Realtor whom she had worked with before. The man was booked into county jail on suspicion of [financial] elder abuse, and authorities said more charges could be filed before the investigation is finished.

***

• And in [another case in] Santa Maria, a landscaper pleaded no contest to charges he charged elderly homeowners for services he never performed. He was ordered to pay $50,000 in restitution and sentenced to eight years in prison.

Source: Op Ed: Elder Abuse.

1st Time Offender Could Dodge Convictions; Charged w/ Forgery, Unlawful Use Of POA To Pocket Reverse Mortgage Proceeds On 90-Year Old Mom's Home

In Greenville, South Carolina, the Anderson Independent Mail reports:

• Former Clemson City Council member Elouise James, facing multiple felony charges, will be entering a pretrial intervention program. [...] Pretrial intervention provides first time offenders with the opportunity to avoid prosecution and a criminal history. [...] For applicants who complete the program, charges are dropped and they can seek to have their arrest records pertaining to those charges expunged.

• James was charged in September with two counts of forgery and one count of obstruction of justice in Greenville County and two counts of obtaining goods by false pretenses and one count of financial exploitation of a vulnerable adult in Pickens County.

***

• On the [] charge of taking financial advantage of a vulnerable adult, investigators say James unlawfully used a power of attorney to obtain a reverse mortgage on her 90-year-old mother’s home. The [South Carolina Law Enforcement Division] report says James used $15,451.60 obtained from the mortgage to pay an outstanding balance of restitution fees related to her daughter’s probation. The payment reportedly occurred a few days before Kristyn James’ scheduled probation revocation hearing.

For the story, see Former Clemson council member enters pretrial program.

Son Gets Six Months In Life Savings Swindle Of Dementia-Stricken Mom; Need To Meet Nursing Home Expenses Makes Sale Of Family Farm Likely

In Hennepin County, Minnesota, the Star Tribune reports:

• Anna Sitte lost her life's savings to swindle, her ability to recognize family members to dementia and, at 78, is about to lose what's left of the farm her family settled a century ago. "What she has is a measure of dignity," her son Jimmy said. "There are lots of ways to measure justice, but I tell the prosecutors that they did something good."

• The family, however, has been torn apart. Jimmy's brother, Steven Carl Sitte, 53, of New Hope, is serving six months in the Hennepin County workhouse after pleading guilty to swindling their mother, who has Alzheimer's disease. He was turned in by Jimmy.

• Anna Sitte is expected to be moved within weeks to a nursing home in Wahpeton, along the Minnesota border and 12 miles from her North Dakota farm. It's an assisted-living complex that Jimmy said Anna really can't afford. Jimmy said he will probably sell the three remaining acres of the 188-acre family farm to help the state of Minnesota pay for his mother's assisted-living home. With her medication, Anna's monthly living expenses are expected to reach $7,000, he said.

• "The judge ruled that my brother owed my mother $274,000 in restitution, but I doubt they're ever going to see a penny of it because he's broke," said Jimmy Sitte, a musician who lives modestly.

For the story, see She lost the farm, but found a new life (A victim of an elder abuse scheme is about to go to a home, while one son serves time and another tries to make sense of a family divided).

Nephew Dodges Hard Time After Copping Plea To Abusing POA In $98K Ripoff Of Care Facility-Bound Aunt, Leaving Nursing Home Costs Unpaid

In Canton, Ohio, the Canton Repository reports:

• A man convicted of improperly using funds from his aunt’s estate must repay more than $98,000, a judge said Wednesday. Stark County Common Pleas Judge Lee Sinclair also placed Lawrence V. Kline Jr., 57, [...] on probation for three years. Any violation could send Kline to prison for up to 18 months. Kline pleaded guilty last month to unauthorized use of property.

• Defense attorney Jeffrey Jakmides said Kline is the victim’s sole heir. Assistant Stark County Prosecutor Lewis Guarnieri said Kline had power of attorney over the victim, who is in a nursing home and now has a court-appointed guardian. Kline was supposed to pay the victim’s nursing home expenses, but didn’t and money was missing from her account, Guarnieri said.

Source: Lake Twp. man must pay $98,000 in restitution.

Niece Overcomes Authorities' Initial Reluctance To Prosecute Cousin For Stealing Aunt's Life Savings As Man Cops Plea To $53K+ Embezzlement

In Sylva, North Carolina, the Asheville Citizen Times reports:

• Ann Buchanan isn't one to give up. And that trait served her and her family well as she pushed to have a cousin charged and ultimately convicted of stealing her 89-year-old aunt's life-savings. Marc Jeffery Hawk, a 54-year-old former county maintenance supervisor, pleaded no contest to four counts of embezzlement and one count of exploitation of an elder for taking $53,438 from his aunt's bank account.

***

• He is the first person in Western North Carolina to go to jail under a law aimed at protecting the elderly from financial exploitation. But the conviction wasn't easy for [the 89-year old widow's] family. At first, authorities didn't want to prosecute the case, and throughout the process, Buchanan said, officials suggested it should be handled in civil court. Now she's hoping others will take notice of potential elder abuse and use a 2005 law aimed at protecting North Carolina's oldest residents. “Be persistent,” she said. “And don't take no for an answer.”

***

• The nature of exploitation makes winning a criminal case hard, said Michael Rich, director of the 30th Judicial Alliance, a group that advocates for victims of abuse in the state's seven western counties. Often, he said, family members are the criminals and families don't want to bring charges against their own or spend the time it takes to get through the criminal court process. And the victims often aren't good witnesses because of disabilities such as Alzheimer's or dementia.

***

• Buchanan said throughout the process, officials suggested the case should be handled in civil court. But that's not what the family wanted. “We weren't after money for us,” she said. “We were after justice for Aunt Mae. We were just so afraid that this case was going to be eventually dismissed.”

• Rich said her experience is common. “When it comes to financial issues, it appears to many in law enforcement and in the court system that these are civil rather than criminal issues,” he said. “Criminal charges mean an investigation that might involve hard work. A civil case means that the victim and his abuser are responsible for following through.”

***

• Buchanan said without help from [Jackson County Department of Social Services] and Rich's organization — and hard work from her entire family — her aunt might not have seen justice.

For the story, see Jackson County man Marc Hawk convicted of stealing $53,000 from 89-year-old relative.

Daughter Charged w/ Putting Herself On Title To Now-Deceased Stroke Victim's Home, Then Mortgaging Property To Drain $134K+ In Equity

In St. Paul, Minnesota, the Star Tribune reports:

• Anacleto Adamez raised 10 children in his small 1 1/2-story home on St. Paul's West Side. After suffering a stroke in August 2000, he gave his son Jesus power of attorney over his affairs. Unknown to the rest of the family, his daughter Alma Adamez-Randle filed a quit-claim deed on Aug. 15, 2000, making herself co-owner of her father's home. She then took out three mortgages, the last in 2006, for more than $134,000, according to court documents.

• She also allegedly helped herself to his bank account, making large withdrawals after she moved into his house to help him with daily living, the documents said. Anacleto Adamez died Sept. 28 at age 82.

• Alma Adamez-Randle, 46, was charged Monday in Ramsey County District Court with one felony count of theft by swindle. She must appear in court April 7. Adamez-Randle is a lieutenant at the Shakopee women's prison.

For more, see Daughter accused of swindling ailing St. Paul father (Alma Adamez-Randle is accused of taking thousands of dollars by mortgaging his home, draining bank accounts).

Two Busted In Alleged Door-To-Door Handyman Racket Targeting Elderly Homeowners For Easy Ripoffs; Cops Seeking 3rd Suspect

In Waterville, Maine, the Kennebec Journal reports:

• Police arrested two men Tuesday and are looking for a third man in connection with what they said are scams against older people. The men reportedly were knocking on doors and asking to rake, trim trees and seal driveways and then perform inadequate work, according to police Chief Joseph Massey. In one case, one of the men reportedly stole 40-milligram OxyContin pills, Massey said.

• "You want to be very suspicious of contractors who approach you to do work and they want to start immediately," Massey said Wednesday. "It's just amazing. There's always somebody willing to steal you blind in a heartbeat."

• Arrested Tuesday were Jason Donald Bolduc, 32, of Kennebunk, and Jean Louise Beaulieu, 39, of Biddeford. Both were charged with violation of seller's performance, a law that requires contractors to wait three days before doing work to give customers time to cancel a contract. The men also were summonsed for a second charge of violating a contract, and Bolduc was summonsed and charged with stealing drugs, Massey said.

• Additionally, Beaulieu was charged with violation of conditions of release. District Attorney Evert Fowle said Wednesday that he later was charged with violation of consumer sales solicitation and violation of registration, as he was not registered to do such work in Maine.

***

• Fowle started a program in Kennebec and Somerset counties to educate health care facility workers and others about scams targeting the elderly. The program takes inventory of every case in which a victim is older than 60, and those cases receive heightened scrutiny, Fowle said.

For more, see Police arrest pair in reported scam.

Home Handyman Ripped Off Elderly Woman Physically Unable To Care For Herself, Say Louisville Cops

In Louisville, Kentucky, WDRB/WMYO-TV Channel 41 reports:

• A man who acted as an elderly woman's handyman has been arrested and charged with exploitation and forging checks. A police report and a warrant obtained by Fox 41 News indicate that for five months beginning in Sept. 2008, 43-year-old Tracy McCoy did chores around the house for a 67-year-old woman who was physically unable to care for herself.

• During this period, she was hospitalized and McCoy was charged with the upkeep of her home and bringing her mail to the hospital. While his employer was away from her home, police allege that McCoy cashed six of her checks and kept the money for himself, stealing roughly $11,200.

Source: Louisville Police arrest "handyman."

Caregiver/Handyman Cops Plea To $600K+ Ripoff Of 93-Year Old Pennsylvania Woman

In Cambria County, Pennsylvania, The Tribune Democrat reports:

• A Windber man admitted in Cambria County Court Thursday that he had ripped off an elderly West Hills woman for more than $600,000 while working for her as a handyman and caregiver. Frank A. Solensky Jr., 56, [...] pleaded guilty to nine felony counts of theft by deception and one count of forgery. [...] Solensky agreed that at the time of sentencing, he would make $100,000 on the restitution owed to the victim, who is now 93 years old. Tulowitzki said at the time of sentencing he will determine the exact amount of restitution owed, although a forensic audit showed that $680,000 is the amount due from 2000 into 2008.

• Assistant District Attorney Wayne Langerholc said that Solensky, while working for the victim, was reimbursed by the woman at greatly inflated purchase prices for various household repairs, equipment and goods.(1) Langerholc and [police detective George] Musulin said that the case is a warning to senior citizens and their families to closely monitor any financial accounts handled by a caregiver.

For more, see Caregiver admits $600,000 theft.

See also: Violating trust is one of the worst crimes.

(1) Accotrding to the story, examples included a $950 charge for salt for the woman’s driveway and seven garage-door openers for $2,500 each, said George Musulin, the West Hills police detective who investigated the case. The remote-control openers can be purchased for less than $40 each, he said.

FHLB Of San Francisco Sues To Void $19.1B+ Purchase Of Crappy Mortgage-Backed Securities; Says Dealers BS'd About Quality Of Underlying Home Loans

The Federal Home Loan Bank of San Francisco announced:

• [T]he Federal Home Loan Bank of San Francisco(1) (Bank) filed complaints in the Superior Court of California, County of San Francisco, against nine securities dealers in relation to certain of the Bank’s investments in private-label residential mortgage-backed securities (PLRMBS). The Bank is seeking to rescind its purchases of 134 securities in 113 securitization trusts, for which the Bank originally paid more than $19.1 billion. The Bank’s complaints allege that the dealers made untrue or misleading statements about the characteristics of the mortgage loans underlying the securities. All of the PLRMBS in the Bank’s mortgage portfolio, including those identified in the complaints filed today, were rated AAA when purchased, based on the information provided by the securities dealers.

For the entire press release, see Statement Regarding PLRMBS Litigation.

Thanks to Rob Harrington for the heads-up on the press release.

(1) According to its website, the Federal Home Loan Bank of San Francisco helps meet the borrowing needs of communities by providing wholesale credit products and services to member financial institutions. The Bank is privately owned by its members, which include commercial banks, savings institutions, credit unions, thrift and loan companies, and insurance companies headquartered in Arizona, California, and Nevada. We are part of a network of 12 regional Federal Home Loan Banks chartered by Congress in 1932 to provide low-cost credit to residential housing lenders.

NY Feds Bag Two In Alleged Upfront Fee Foreclosure Rescue Scam Using Bogus Bankruptcy Filings On Behalf Of Strapped Homeowners To Delay Loss of Homes

In White Plains, New York, Courthouse News Service reports:

• Two New Jersey residents took nearly $400,000 in a foreclosure protection scam, federal prosecutors said. Andrew Bartok of Clifton and Kathleen Addario aka Kathy Adams [aka Kathleen Kelly, aka Kate Adams] of Saddle River raked in $44,000 a month for 9 months last year through their business, Revelations Consulting, prosecutors said. Clifton and Addario ran their scam in Dutchess and Westchester Counties, N.Y., according to the complaint. They not only bilked people up front, they charged monthly fees for "services" such as "foreclosure delay," and banked the money, prosecutors said.

Source: Foreclosure Scam Raked It In, Feds Say.

For the criminal charges, see U.S. v. Bartok, et ano.

Arizona AG Squeezes Duo For $120K Settlement In Civil Suit Alleging Flipping Racket Combining Use Of Straw Buyer Investors, "Rent-To-Own" Homebuyers

In Pima County, Arizona, the Arizona Daily Star reports:

• Two Tucson real estate agents and their affiliated companies agreed to a $120,000 settlement for their role in a deal that state prosecutors say deceived novice investors, lenders and unqualified home buyers.(1)

***

• The Attorney General's Office alleged that [Andrew] Silverstein, when he was a real estate agent with Re/Max All Executives, told investors they could purchase investment homes and obtain 100 percent financing. Silverstein and other co-defendants told the investors they would find rent-to-own buyers to purchase the properties, and they would receive their rent every month whether or not rent was collected, according to the attorney general.

• Silverstein and other co-defendants then sought out rent-to-own buyers to enter into purchase agreements for homes that they would otherwise not qualify for, state prosecutors said. Eventually, the attorney general said, investors no longer received rental amounts that covered their increasing mortgage payments and many of the homes went into foreclosure.

***

• Others originally named in the case - Tucson Mortgage Co., WGA Enterprises, William Anastopoulos and Jane Doe Anastopoulos -reached a $60,000 settlement with the attorney general on Jan. 8. The Attorney General's Office said its case remains active against additional defendants, including other loan officers and a rent-to-own company, AZI Rent2Own LLC, which does business as Arizona Investments and AZI, and its owner.

Source: 2 realty agents settle investment case.

For the Arizona AG press release, see Terry Goddard Announces Settlements in Real Estate Fraud Case.

(1) The settlement was reached with Andrew T. Silverstein; his company, Andrew Silverstein PLLC; and VinLan Ventures Inc., doing business as Re/Max All Executives. Vincent Volpe, Re/Max's president and CEO, also agreed to the settlement. Their attorneys said the judgment, filed in Pima County Superior Court, didn't include any admissions of wrongdoing.

California Authorities Apply Heat On Now-Defunct Suspected Loan Mod Racket With "Loose Affiliations" w/ Lawyers; Outfit Took In $20M, Bar Probers Say

In Fresno, California, KFSN-TV Channel 30 reports:

• Last may, we investigated a company called Green Credit Solutions. It sold loan modification services for $3,495 dollars through local brokers. The state bar raided its Southern California offices this past December. Investigators say they uncovered thousands of victims of the loan modification company, bringing in more than $20-million dollars combined.

***

• Green Credit Solutions is accused of being paid and doing nothing by hundreds, if not thousands of [homeowners]. The department of real estate gave the company's officers a cease and desist order in June 2009 about a month after the Action News investigation into the company aired. As a result, Green Credit's officers voluntarily surrendered their real estate licenses in the last month.

• In late December, the State Bar searched its offices in Irvine, saying the company did nothing to help clients while also misleading them to believe that services would be performed or supervised by an attorney. "Green Credit Solutions had a loose affiliation with a few lawyers. Never really had a lawyer on staff handling the loan modifications. And the one lawyer they did hire to work with them was a suspended Tennessee attorney," said state bar investigator John Noonen.

• The 6,000 plus Green Credit customers came from sales people, called brokers, all across California; including San Joaquin Real Estate and Financial Services in Clovis. [...] Workers [there] collected the personal information from at least 650 clients and sent it to Green Credit in Southern California. San Joaquin Real Estate was paid between $1,500 to $2,000 dollars per client. That's more than a million dollars since they started in August 2008.

***

• The State Bar is collecting the files from Green Credit and seized its assets. The State Bar does not have the authority for criminal charges but can forward the results of any investigation to the proper jurisdiction for prosecution. Action News talked with the Fresno County District Attorney's Office.

For the story, see Loan Modification Scams.

As HOA Maintenance Fee Delinquencies Increase, Financial Burdens Of "Bulk Billing" Contracts Grow For Fee-Paying Unit Owners

In Virginia Beach, Virginia, WVEC-TV Channel 13 reports:

• Marilyn Castro wants to get rid of her telephone land line, but if she does, she still has to pay for it. She's one of many residents in a subdivision developed by LM Sandler of Virginia Beach. Many Sandler developments are under bulk billing contracts for communications services.

• Bulk billing provides residents a bundle package for phone, Internet and cable services at a discount. Developers often make the agreements before ground is broken on a development so that the services come with the purchase of a home. The bill for the services is attached to what residents pay their homeowners association. Under the agreement, homeowners pay for the deal no matter what. That's just one of the things they don't like.

***

• The communications services agreement also say if a homeowners association is 60 days late paying the cable bill, cable can be shut off to the entire complex. That includes paying customers. In some bulk billing agreements, homeowners end up picking up the tab when other residents fail to pay.

• At a complex in Florida, every time a homeowner went into foreclosure and stopped paying, the cable bill went up for other residents. Casey Taylor lives in Suffolk's Remington Park, another Sandler development. "It's detrimental to the spirit of the community when you look at your neighbor and say, 'I wonder if I'm paying your cable bill,' Taylor says.

For the story, see Residents fight mandatory bundle agreement.

NJ Consumer Says Texas-Based Debt Workout Outfit Pocketed Thousands In Fees While Failing To Negotiate Satisfactory Settlements

In Nutley, New Jersey, The Star Ledger reports:

• Sharon Lemma Bozza charged her way to big-time debt. [...] Nearly $60,000 in debt and 12 delinquent credit cards later, Bozza decided to get help. In July 2008, she found Texas-based American Financial Concepts (AFC), a debt-settlement company that promised to negotiate lower payoffs for her debt. It didn’t exactly work out that way, and by the time she was through, Bozza was sued by creditors and she was out thousands of dollars in fees to AFC with nothing to show for it.

***

• Here was the deal: Bozza would deposit money into a bank account from which AFC would take its fees. Eventually, she’d pay the negotiated debts from that account. After 48 months, she should be debt-free — as long as AFC could negotiate good deals and as long as she kept paying. On Aug. 11, 2008, AFC took its first of four monthly fees of $733 from the account. Those would be followed by 18 payments of $310. All fees to AFC, no debts paid yet.(1)

For more, see After hiring debt-settlement firm, Nutley mom found bills piling higher.

(1) According to the story, Bozza started with a Citi card on which she owed more than $23,000. AFC records said that on Feb. 3, 2009, it negotiated a payoff of $10,530, called Bozza at home and left a message on her cell phone. It said it renegotiated on April 13, 2009, for a settlement of $9,503. But not according to Citi, she said. "(Citi) had no indication that there were ever, ever any figures talked about, nothing broken down or offered on the account," Bozza said, adding the account was sent to a collections company.

She then contacted her Chase card, to which she owed more than $20,000, the story states. It, too, had no record of negotiations with AFC, she said, although it had been notified the company would be her debt-settlement firm.

Reportedly, at Sears, there was no record of contact by AFC, Bozza said.

BofA Continues Pocketing Mortgage Workout Payments While Refusing To Recognize Predecessor's Loan Mod Deal, Says Kentucky Couple Now Facing F'closure

In Louisville, Kentucky, WAVE-TV Channel 3 reports:

• Jason and Melissa Mattingly are finding out that mortgage modifications can become nightmares. Two years ago they fell behind on a couple of mortgage payments and received a mortgage modification through their lender, Countrywide Homes. Shortly thereafter, Countrywide was acquired by Bank of America and the Mattingly's had to file the paperwork again - but now Bank of America is taking steps to foreclose on the home. "We've never gotten anything like this, we've made our payments, they've accepted (them)," said Melissa Mattingly. "So I just don't see how they can foreclose on us if we've honored our payments every month."

• The Mattingly's receive up to a dozen phone calls a day from Bank of America saying they are only making 'partial' payments on their home mortgage. When Melissa or Jason bring up the home mortgage modification they sent in, bank representatives say there's no reference to a modification in their computer records. The bank admits they're receiving the Mattingly's payments, but refuses to recognize the modification.

For more, see Bank refuses to recognize loan modification.

Ten Facts About Mortgage Debt Forgiveness

Syndicated real estate columnist Kenneth R. Harney writes:

• With the Obama administration and private lenders now actively considering mortgage-principal-reduction programs to help financially distressed homeowners, the Internal Revenue Service has issued a new advisory to taxpayers who receive - or seek to receive - such assistance if it’s offered.

• The IRS gets involved in mortgage principal write-downs because the federal tax code generally treats any forgiveness of debt by a creditor in excess of $600 as ordinary taxable income to the recipient. However, under legislation that took effect in 2007, certain home mortgage debt cancellations - such as through loan modifications, short sales or foreclosures - may be exempted from tax treatment as income.

For more, see IRS issues loan write-down rules.

See also:

• IRS Tax Tip 2010-44: Ten Facts about Mortgage Debt Forgiveness,
• Avoiding The Tax Man For Owners Of Homes Sold In Foreclosure & Short Sale Situations.

Bank President Laments: "Never Do Business With Family!" As Improper Notarization Allows Brother-In-Law/Borrower To Successfully Void Lender Mortgage

The following facts have been extracted from a recent court ruling by a Federal Bankruptcy Court in Nebraska that resulted in a borrower successfully voiding a mortgage:

• Businessman borrows approximately $8,000,000 from Bank.
• Businessman signs all loan documents.
• Bank President, who just so happens to be Businessman's brother-in-law, notarizes all loan documents signed by Businessman.
• Businessman defaults on loan shortly thereafter.
• Bank starts foreclosure action.
• Businessman files Chapter 11 bankruptcy.
• In the bankruptcy proceeding, Businessman attempts to void Bank's mortgage on the grounds of improper notarization by Bank President, his (probably now-estranged) brother-in-law.

According to the court (my emphasis added, not in the original text):

• In this case, the issue is the validity of the notarization of the signatures on the deed of trust. Nebraska law plainly provides that "[a] notary public is disqualified from performing a notarial act as authorized by Chapter 64, articles 1 and 2, if the notary is a spouse, ancestor, descendant, or sibling of the principal, including in-law, step, or half relatives." Neb. Rev. Stat. § 64-105.01.

***

• As Mr. Baer's brother-in-law, Mr. Maher [ie. Bank President] was disqualified from notarizing his signature. The exception at section 64-214 permitting bank officers or employees who are notaries public to acknowledge any written instrument given to the bank does not salvage this transaction because section 64-105.01 disqualifies a relative from performing the notarial acts authorized in article 2, which includes the exception for banks.

***

• The bank's deeds of trust and modifications thereto were improperly acknowledged, were not lawfully recorded, and are therefore void. Separate judgment will be entered for the plaintiff [ie. Buisnessman].

For the ruling, see In re BowlNebraska, L.L.C. (USBC, D. Neb. March 15, 2010).

Feds Get AIG Units To Cough Up $7.1M To Settle Race-Based Discrimination Claims In Home Mortgage Lending Practices

The Washington Post reports:

• Two AIG units settled federal charges that they discriminated against black home buyers on fees for mortgages and will pay $7.1 million for restitution and education efforts, the U.S. Justice Department said.(1)

• The units, AIG Federal Savings Bank and Wilmington Finance Inc, will provide $6.1 million to about 2,500 borrowers in at least 19 major metropolitan cities who were affected by the alleged discrimination, according to the department. "This sort of practice is what I often call discrimination with a smile, because I would predict that many of the victims that we will contact will have no idea that they were victimized," said Thomas Perez, head of the Justice Department's civil rights division.

• Blacks were charged fees by mortgage brokers that were on average one-fifth of a percentage point higher than whites for the mortgages, which were all subprime loans, Perez said. The victims will receive on average about $2,300 back. He also said that there were some 45 lending discrimination cases pending.

For more, see AIG units settle mortgage discrimination case.

(1) The settlement was filed in conjunction with a civil lawsuit brought under the federal Fair Housing and Equal Credit Opportunity Acts, which alleges African American borrowers nationwide were charged higher fees on wholesale loans. For the U.S. Department of Justice press release, see Financial Fraud Enforcement Task Force Announces Settlement with AIG Subsidiaries to Resolve Allegations of Lending Discrimination.

Philly Candidate For State Legislature Once Served As Notarizing Dupe For Convicted Scammer In Deed Theft Racket; Elderly Among Those Victimized

In Philadelphia, Pennsylvania, the Philadelphia Daily News reports:

• Michelle Brownlee, an aide to state Rep. Frank Oliver for 37 years, says she forgot all about the criminal trouble she got into in 2002 until somebody told her the other day that info about the case had been circulating in the 195th District.

• Brownlee was charged with forgery and other crimes in 2002, after she notarized a deed for the sale of an Olney home. The deed held phony signatures from the couple who owned the home but who had been dead for decades, according to court records. Brownlee, who is hoping to replace her retiring boss, said a ward leader got an anonymous call last week about her arrest, then received paperwork from her court case. "I know the perception is bad," said Brownlee, one of seven Democrats on the primary-election ballot. "It's being circulated so I expect somebody is going to use it."

• Brownlee agreed to cooperate against Melvin Lindsey, aka Ali Abu Lumumba, who was being investigated by the District Attorney's Office for using bogus deeds to steal several houses. Brownlee entered the Accelerated Rehabilitative Disposition program, meaning her record would be cleared if she stayed out of trouble for six months. "Of course, that was a piece of cake for me," Brownlee said.

• Brownlee said - and the D.A.'s office agreed - that she hadn't profited from Lindsey's scam and had been duped by the conman into notarizing the deeds. She said Lindsey had come into Oliver's district office asking for help with clients who were too elderly to come themselves.

• "Some of the people in the community seemed to think he was a pretty good guy," Brownlee said. "I thought I was doing a community service." The state Constitution says no person "convicted of embezzlement of public moneys, bribery, perjury or other infamous crime" can serve in the General Assembly. The Department of State said that would not apply to Brownlee, since she completed the ARD program and has no conviction.

• Lindsey, now in state prison, ran under the name Lumumba as a Republican for City Council in 1995 and in 1983, and for mayor in 1979 on the Consumer Party line.

Source: Clout: Free advice: Mariano offers redistricting help.

Another One West Bank / IndyMac Horror Story: Lender Approves Loan Modification For Couple Several Months After Foreclosing & Giving Them The Boot

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:

• One local family believes what happened to them may be happening to others facing foreclosure. The Stelton family tried for months to get a home loan modification after they fell on tough times but it didn't work and they were evicted. [...] IndyMac foreclosed on them and auctioned off the house. The Steltons now rent a home. What they didn't expect, was a call from IndyMac this week, congratulating them on being approved for a loan modification, several months after IndyMac kicked them out.

For more, see Family Approved for Loan Modification After Eviction.

North Texas Feds Sack NFL Defensive Line Coach, 39 Others In Alleged Mortgage Fraud Scam; Losses Close To $19M Involving 114 Homes: Authorities

In North Texas, CBS-TV Channel 11 reports:

• A federal task force has uncovered a massive mortgage fraud conspiracy operating in North Texas. And an NFL coach is among the 40 people who have been indicted. [...] In this case, officials say some of those indicted collected a large volume of fees, while others took kickbacks to participate in the scheme. Law enforcement officers held a news conference in an affluent McKinney neighborhood to talk about the indictments.

***

• So, what happened to the houses? "The purchasers end up in foreclosure. The lenders end up with bad loans and the neighborhoods end up with abandoned properties," explained Erick Martinez with the Internal Revenue Service. [...] Law enforcement officials say the fraud accounts for nearly $19 million in losses and 114 properties were involved. Federal officials say in the grand scheme of the case, [the c]oach [] played a relatively minor role as a buyer.

For the story, see Dozens Indicted In N. Texas Mortgage Fraud Scheme.

See also: The Times Picayune: New Orleans Saints assistant indicted by U.S. attorney in Texas a victim, attorney says (Claims to be unwitting straw buyer).

Mortgage Fraud Racket Used 3rd Party Payouts, "Double Escrows" In Straw Buyer, Flipping Scam, Say Las Vegas Feds

From the Office of the U.S. Attorney (Las Vegas, Nevada):

• Brett Depue, 36, a former resident of Las Vegas, but currently a resident of Gilbert, Arizona, Brian Barney, 36, of Fairfield, California, and Maria Ornelas, 32, of Las Vegas, are charged with conspiracy to commit bank fraud, mail fraud, and wire fraud, 11 counts of wire fraud, and criminal forfeiture.

***

• The Indictment alleges that from about February 1, 2005, to May 31, 2007, in Nevada and elsewhere, the defendants participated in a mortgage fraud conspiracy in which they used “third party disbursements”(1) and “double escrow”(2) methods to fraudulently obtain monies from the financial institutions.

***

• The defendants recruited home owners in the Las Vegas area and elsewhere who agreed to sell their property at a price substantially above the asking price. The home owners were told that the difference would go to Depue for improvements. The defendants then recruited straw buyers to apply for mortgage loans to purchase the homes using false and fraudulent information concerning the straw buyers’ income, assets, employment, and intent to occupy the homes. In some instances, the defendants had the straw buyers apply for mortgages for more than one house at a time and concealed from the lenders that they were purchasing more than one property. The Indictment specifically discusses 17 homes in Las Vegas and Henderson which were purchased fraudulently between April 2005 and April 2007 at the direction of and for the benefit of the defendants.

For the U.S. Attorney press release, see Federal Mortgage Fraud Charges Filed Against Owner And Employees Of Former Nevada Investment Companies.

(1) A third party disbursement is the issuance of money at the closing of a mortgage loan to a person or entity that is not typically entitled to the money, the press release states.

(2) A double escrow is where two sales of the same property are conducted at the same time, the press release states. Typically, the property is sold to a middleman, who then sells the property to a straw buyer at a substantially inflated price. The difference between the first sale price and second price is distributed to a conspirator as seller proceeds. The paperwork on the second sale is concealed from the seller, and the paperwork on the first sale is concealed from the lender, according to the press release.

National Call For Loan Documents Signed By Multiple Corporate Hat-Wearing Vice Presidents

From Florida Attorney Lynn E. Szymoniak, Esq.(1) in the March 12, 2010 entry on Fraud Digest:

MORTGAGE DOCUMENTS

Action Date: March 12, 2010

Location: WEST Palm Beach, FL

CALL FOR MORTGAGE ASSIGNMENTS & AFFIDAVITS - March 12, 2010:

• Researchers at Fraud Digest are comparing the job titles on Mortgage Assignments and Affidavits of the individuals listed below. If you have any Mortgage Assignment or Affidavit in Support of Summary Judgment in a Foreclosure action signed by any of the following individuals, please scan the document(s) and send it as a pdf. attachment to szymoniak@mac.com. This request is for research regarding mortgage-related documents. The individuals named below are not accused of wrong-doing or fraudulent activity: Christina Allen; Scott Anderson; Brent Bagley; China Brown; Eric Friedman; Linda Green; Ely Harless; Korell Harp; Laura Hescott; Erica Johnson-Seck; Dennis Kirkpatrick; Topako Love; Jessica Ohde; Shelly Scheffey; Keri Selman; Kathy Smith; Roger Stout; Eric Tate; Tywanna Thomas; Linda Thoresen.

For other postings by attorney Szymoniak on suspected muiltiple corporate hat-wearing vice presidents, see:

• TOO MANY JOBS: A report that lists the names Linda Green, Tywanna Thomas, Korell Harp and Shelly Scheffey that frequently appear on so-called "Docx-prepared" documents and some of the many job titles used by Green, Thomas, Harp and Scheffey.

• MORTGAGE ASSIGNMENTS AS EVIDENCE OF FRAUD: Highlights the apparent manufacturing & use of "backdated" and "retroactive" assignments of mortgage by foreclosing entities to satisfy paperwork requirements in foreclosure actions.

• AN OFFICER OF TOO MANY BANKS: Addresses some legal issues arising when multiple corporate hat-wearing vice presidents hold themselves out as acting as officers of multiple companies.

• SIGNATURE COMPARISONS: A collection of copies of the signature section from legal documents that aids in the comparison of signatures from the same small group of suspected multiple corporate hat-wearing vice presidents.

Much of the information set forth in the above links are also set forth in greater detail in a class action complaint filed in a Miami Federal Court in February that alleges document manufacturing practices by lenders, servicers, and others in foreclosure actions (as I understand it, the suit has been withdrawn, subject to refiling in the future).

Creditor's Failure To Record Request For Notice Allows Ex-Homeowner To Snatch Away Surplus Out From Under Subordinate Lienholder After F'closure Sale

In Southern California, Lexology reports:

• In Banc of America Leasing & Capital, LLC v. 3 Arch Trustee Services, Inc. (2009) 180 Cal.App. 4th 1090, defendant 3 Arch Trustee Services (“Arch”) properly conducted a nonjudicial foreclosure. After Arch recorded notices of default and sale, a creditor recorded an abstract of judgment against the property owner. The creditor later transferred the judgment to Banc of America Leasing & Capital (“BofA”).

• A month later, the property was sold at a foreclosure sale, conducted by Arch, and there were excess sale proceeds. Three months later, Arch remitted the excess proceeds to the former property owner.(1)

• BofA filed suit claiming Arch owed a duty to pay excess proceeds to junior lien holders. The trial court agreed with BofA and awarded it damages in the amount of the excess proceeds, plus interest. Arch appealed claiming it had no duty to BofA. The appellate court agreed, and reversed the judgment, holding Arch had no duty to search out junior lien holders to remit excess proceeds.

• The court reasoned that, “[t]he rights and powers of trustees in nonjudicial foreclosure proceedings are ‘strictly limited and defined by the contract of the parties and the statutes.’ Thus, a trustee owes no duty to provide notices to any person unless the trust deed or the statute specifically provides for such notice.” The court went on to hold that under Civil Code section 2924b, BofA, as a judgment lien holder, was not entitled to automatically receive a notice of default or notice of sale. Additionally, BofA did not record a statutory request for notice.

• Further, the court stated that under section 2924j, when there are excess sale proceeds, a trustee must notify those persons who would have been entitled to receive a copy of the notice of default; i.e., those that are automatically entitled to receive such notice and those that recorded a statutory request for notice. Anyone who receives a notice from the trustee, must submit a written claim to the trustee and the trustee distributes the excess proceeds in order of priority of the claims.

For more, see Trustee has no duty to seek out junior lien holders following foreclosure sale (requires registration; if no registration, go here, then click link for the story).

(1) According to the court ruling, the excess sale proceeds generated by the foreclosure sale which the ex-homeowner successfully snatched away from BofA Leasing by reason of the latter's failure to record a statutory request for notice was $114,797.77.

Forced Placed Insurance Causes Unit Owner's Mortgage Payment To Skyrocket After HOA Drops Windstorm Coverage; Suit Filed Seeking Reimbursement

In Oakland Park, Florida, The Miami Herald reports:

• Carla Gemmati, 45, a resident at the Lake Pointe Condominium in Oakland Park, saw her mortgage almost double from $975 to $1,700 in December. The additional cost was to cover a windstorm insurance that her condominium's association had just eliminated,(1) forcing her mortgage lender, Bank of America, to purchase a policy of more than $4,500 on her behalf and charge the cost against her monthly mortgage payment. "I haven't been able to make the whole payment,'' Gemmati said. "If I can't make the payments, I foresee that [a foreclosure] can happen.''

• Windstorm insurance coverage is mandated under Chapter 718 of Florida Statutes, or the Condominium Act. According to the law, insurers issuing residential property insurance policies, in this case the condominium's association, are required to include hurricane windstorm coverage. In February, Gemmati filed an unprecedented lawsuit against the condominium association and members of its board in order to regain the windstorm coverage and get reimbursed for the price hike in her mortgage.

• The lawsuit states that, "the defendants intentionally refused to obtain and maintain adequate insurance, specifically windstorm coverage.'' Robert Kaye, a managing member of Kaye & Bender in Pompano Beach, is representing Gemmati, who is a collection specialist in the same firm. "Florida Statute and the declaration of the condominium require the association to provide a certain level of insurance for the buildings and that includes the windstorm insurance,'' Kaye said.

• Gemmati has been living at the Lake Pointe Condominium for five years. Up until last September, the windstorm coverage was provided by the association and included in the $375 fee homeowners paid each month to the association. "All the insurances are supposed to be included,'' Gemmati said.

For the story, see Lawsuit targets wind insurance.

(1) I suspect that this condo association, like many throughout Florida, is getting stiffed left and right by delinquent unit owners on their monthly maintenance payments (many facing foreclosure), and the association is simply looking for a way to cut expenses without having to jack up the monthly fees on the fee-paying owners. Such an increase may serve to push some of those owners into the delinquent category.

Arizona Couple Seeking Help With House Payments Accuse Loan Modification Outfit Of $2500 "Hit & Run" Fleecing

In Sun City West, Arizona, KNXV-TV Channel 15 reports:

• A Sun City West couple trying to get help with their mortgage was apparently scammed out of $2500 by a company they thought was legit. Noah and Joan Adams said they paid a company called Choice out of Mesa to help them negotiate they're mortgage. But several months later the company that promised "to make things less scary" is no where to be found. "What did they do with the $2500?" asked Noah. "[I] told Joan my wife that they're scamming us."

• The lady who came to their home had the name Kay Henning. She had business cards and paperwork. Noah said the company had the fancy forms, made the couple fill out a ton of documents, but then they just stopped returning the calls.

For more, see Sun City West couple becomes victim of foreclosure scam.

Ex-Granite State Lawyer Gets 51 Months In $2.3M+ Ripoff Of Deceased Client's Estate; Handiwork Included Selling Family Home Out From Under Heirs

In Concord, New Hampshire, the New Hampshire Union Leader reports:

• A longtime Manchester attorney and city water commissioner was sentenced [] to four years and three months in a federal corrections facility. Thomas J. Tessier, a partner in the now shuttered Christy & Tessier law firm, pled guilty in November to bank fraud, mail fraud and money laundering in an agreement with U.S. Attorney's Office. [...] Tessier pleaded guilty to bilking a client of more than $2.3 million over several years.

***

• The case involves the family of Beatrice Jakobiec, who died in 2001 without a will, but had set up trusts for her two sons [...]. According to the agreement with the U.S. Attorney's Office, Tessier submitted documents to banks with forged signatures, which gave him access to certificates of deposit from Jakobiec's estate.

• Tessier also created fraudulent documents indicating he had the power of attorney to sell the family homestead, which he did and deposited most of the money into his personal bank account. And he cashed in Jakobiec's insurance policies, investment accounts and trust accounts, claiming he had the legal right to do so and created fraudulent trusts to hide much of the money.

• Although he funneled small amounts of money to the family members, Tessier kept more than $2.3 million for himself, according to court documents. Assistant U.S. Attorney Robert Kinsella said earlier that Tessier spent most of the money on personal expenses. [...] A substantial amount of money has been repaid to the victims, Kinsella said. Tessier was disbarred in December 2008 by the State Supreme Court.

For the story, see Tessier sentenced to 4 years in federal facility.

Five Named In 327-Count Indictment In Alleged NYC Mortgage Fraud Scam Using Stolen IDs; Deceased Woman’s Home Allegedly Sold Out From Under Her Estate

From the Office of the Queens County District Attorney:

• Queens District Attorney Richard A. Brown [] announced that five individuals [...] have been charged in a 327-count indictment in connection with an approximately $2 million mortgage fraud scheme in which stolen identities were allegedly used to buy and sell three properties in Queens.(1)

***

• District Attorney Brown said that the investigation began after one of the owners of a property located at 120-18 132nd Street in South Ozone Park began receiving mail indicating that the mortgage had been paid off and the home was now in the name of another individual – who also had come to the District Attorney’s office complaining that he, too, had been the victim of identity theft.

• An investigation revealed that the property was allegedly sold during a closing on July 13, 2006, that began in an attorney’s office in Westbury but concluded that evening in a restaurant parking lot in Deer Park, Long Island. It is alleged that three unidentified individuals showed up at the closing with fake identification and pretended to be the two actual homeowners (one of whom had died three months earlier) and the buyer. The house was sold for $500,000, of which $340,948 was due the two homeowners – less their existing mortgage. However, it is alleged that $250,0000 of that amount went to [Martina] Duran – who organized and was present at the closing – and her co-conspirators.

For the details of the other two fraudulent home sales, see Five Charged In $2 Million Fraud Operation That Used Stolen Identities To Illegally Obtain Mortgages (Deceased Woman’s Home Allegedly Sold Out From Under Her Estate).

(1) According to the press release, nightclub owners Roger Arias and his mother, Martina Duran, allegedly orchestrated the three transactions and pocketed the majority of the fraudulent proceeds from the closings, which the other three defendants helped facilitate. According to the DA's office, the others are: Aldo Bussi, 41, of Levittown, Long Island, Ramon Gaston, 29, from parts unknown, Percy Randall, 54, of Westbury, Long Island. Four of the defendants are in custody and the fifth is presently being sought.

Family Friend Charged With Swindling $130K+ Proceeds From Sale Of Investment Home Sold Out From Under Grieving, Recently-Widowed Senior

In Naples, Florida, the Naples Daily News reports:

• A man who claimed he was a broker is accused of bilking a long-time family friend out of more than $130,000. Brian William Cramer, 33, who used to live in [...] Marco Island, was arrested [...] at his house [...] in Cincinnati by a Cincinnati police officer, said Hamilton County (Ohio) Sheriff's Office spokesman Steve Barnett. Cramer remained in an Ohio jail pending Wednesday extradition to Lee County.

***

• The case dates back to September 2005 when Deborah and Joe Workman of Naples decided to sell a Fort Myers Beach investment home. Joe Workman died Sept. 5, 2005 at the age of 72. Deborah Workman, still grieving and taking care of her late husband's estate, didn't know anything about the Sept. 7, 2005, sale of the house until several months later. She learned about it from one of Cramer's friends.

***

• In records dated Sept. 7, 2005, Deborah Workman's signature appears on closing paperwork for the house. The money from the sale, $132,841.39, was to be placed in escrow. She told investigators it was not her signature on the documents and she never received the money.

• Deborah Workman said she didn't find out about the sale until March 2006 when she was told by a friend of Cramer's it had sold. She began contacting Cramer about the money, and he said it was in an escrow account. "Deborah Workman gave the issue no more thought for several months as she had complete confidence and trusted Brian Cramer," Lee County Sheriff's Office Detective Mark Zellman wrote in his report.

• She began losing that trust when, "as time went by, it became increasingly difficult to reach him and ... eventually he stopped returning her calls...." Several months later, after numerous attempts to get the money, she contacted an attorney to get things straightened out. "He dropped the ball," she said Wednesday, explaining the two-year gap before trying to report the theft to the Sheriff's Office on April 28, 2008.

• Sheriff's Office records show an offense report was not taken and she was told her only recourse was to file civilly. She continued to try to recover her money, but was eventually told by an attorney to again report it to the Sheriff's Office. She did so and spoke with Zellman on May 22, 2009. Zellman's investigation and the packet of information Workman gave to the detective, shows that the money was put into Cramer's business account listed under BC Properties LLC at a Wachovia bank and he was the sole signatory on it. A Wachovia employee told the detective the account was not an escrow account, but has been Cramer's business account since Nov. 18, 2004.

For more, see Marco Island man arrested in Ohio on grand theft charge.

R/E Agent Faces Charges Of Using Downpayment Cash From Would-Be Homebuyers To Take Title To House; Unwitting Couple Left As Tenants In Own Home

In Newman, California, The Modesto Bee reports:

• Carlos Gonzales and Ernestina Valladarez said they have faced 13 judges in criminal, civil and bankruptcy courts in what's become a five-year fight to save their home. The couple said then-PMZ agent Erica Burdg of Modesto took $350,000 from them, including a down payment and monthly mortgage payments on their Newman house. Then Burdg tried to evict them.

***

• Gonzales, 59, and Valladarez, 60, said they believed they were buying a home in the summer of 2002, when they gave Burdg $22,481 and moved into a three-bedroom, two-bathroom house on a corner lot in Newman. [Attorney Mike] Linn said Burdg crafted a purchase agreement for Gonzales, but sold the home to her husband, then to her son. He claims the signatures of Gonzales and the home's previous owners were forged on sales documents. Burdg later filed a lawsuit to evict the Newman couple, who prevailed in November 2006 when a Superior Court jury said Gonzales and Valladarez didn't have to move out. A three-judge appellate panel agreed.

Reportedly, Judge John G. Whiteside said Burdg and her son, Carlos Obando, must face a jury in September after the two pleaded not guilty [] to all charges.

For the story, see Judge orders trial on Newman couple's claims of real estate fraud.

For an earlier story, see Who owns home? Newman case tied up in courts.

Ex-Agent Charged w/ Theft By False Representation In Contract For Deed Home Sale; Collected Cash From Would-Be Buyer, Failed To Pay Pre-Existing Loan

In Kenosha, Wisconsin, the Kenosha News reports:

• Arraignment has been set for April 14 for a former real estate salesman accused of embezzlement and theft. Michael H. Granger, 50, appeared Wednesday in Kenosha County Circuit Court for his two felony files — one for allegedly pocketing a $12,000 commission, the other for allegedly taking more than $7,800 from a would-be home buyer, according to criminal complaints.

***

• In the theft case, the charges stem from an August 2008 land contract [aka "contract for deed" or an “installment sale agreement”] meant to purchase a $140,000 property [...] in Kenosha. The would-be buyer said she wrote Granger seven checks for what she believed were mortgage payments and other fees. All the checks were cashed. But, she later learned, the land contract was never filed and the home went into foreclosure in February 2009.

• When the woman asked Granger about the money she gave him, she reported that he said it was “none of her business” and it was spent, a criminal complaint says. The homeowner said Granger told him the land contract was needed because the buyer had trouble getting financing. He said he was never presented any paperwork until February 2009, when he said Granger met him at a bar, scrawled out a statement and had him sign it. The broker for whom Granger worked at the time confirmed that the land contract had not been filed; the incomplete contract was later found in Granger’s desk. Granger faces two felonies for theft by false representation for the deal.

Source: Former real estate salesman arraigned (Granger facing embezzlement, theft charges).

How Some Of Wall Street's Finest Minds Managed To Destroy $1.75 Trillion Of Wealth In The Subprime Mortgage Markets

CBS News' 60 Minutes reported last night:

• If you had to pick someone to write the autopsy report on the Wall Street financial collapse 18 months ago, you couldn't do any better than Michael Lewis. He is one of the country's preeminent non-fiction writers with a knack for turning complicated, mind numbing material into fascinating yarns.

***

• His new book, called "The Big Short: Inside the Doomsday Machine," comes out later this week and it explains how some of Wall Street's finest minds managed to destroy $1.75 trillion of wealth in the subprime mortgage markets. "60 Minutes" and correspondent Steve Kroft spent two days debriefing Lewis at his home in California.

To read the entire transcript of this story on last night's 60 Minutes program, see Wall Street: Inside the Collapse (Author Tells "60 Minutes" What Led to Wall Street Collapse and Who Predicted It).

To watch the 60 Minutes' program,(1) see:

• Inside The Collapse, Part 1 (Michael Lewis writes about a handful of Wall Street outsiders who realized the subprime mortgage business was a house of cards and found a way to bet against it),
• Inside The Collapse, Part 2 (Michael Lewis talks about the current situation on Wall Street, the large bonuses still being paid and his predictions for the future of the industry).

(1) 60 Minutes provides these "web extra" videos on its website on last night's story:

• Web Extra: Is Wall Street Overpaid?
• Web Extra: Bailout Blues
• Web Extra: The $8.4 Billion Bet
• Web Extra: Wall Street Misfit
• Web Extra: "The Blind Side"

New Washington State Law Targets Foreclosure "Surplus-Snatching" Scams; Caps "Overage-Chaser/Scavenger" Fees At 5% In Tax Sales

In Olympia, Washington, LegalNewsline reports:

• Washington residents who lose their home because of back property taxes could get a little extra money in the end thanks to a bill championed by state Attorney General Rob McKenna that was signed into law Friday. Signed by Democratic Gov. Chris Gregoire, the new law places a 5 percent cap on fees charged by firms that contact owners of foreclosed properties offering to obtain money remaining after their land's auction.

***

• "As foreclosures have increased, we've seen an uptick in get-rich-quick schemes that prey on those who have lost their homes," McKenna said. "This new law is part of our ongoing efforts to help financially-strapped families keep the little money they have left."

***

• The group's legislative chair, Lewis County Treasurer Rose Bowman, said in a statement that firms charging property owners exorbitant fees was a growing problem. "We were looking for a way to protect our most vulnerable population - people who, for whatever reason, have lost their property to tax foreclosure - and figure out how we can get their money to them and not to others who are trying to claim it," Bowman said. Bowman added there is no need for residents to even use outside help to get surplus funds returned to them. All that is needed is a notarized from, and a notary at the county will provide the service for no charge, she said.(1)(2)

For the story, see Washington AG gets finder-fee cap in foreclosure cases.

For the Washington State Attorney General press release, see New law protects families in foreclosure.

(1) According to the state AG's press release, individuals who provided such services previously kept as much as 50-70 percent of the former homeowner’s money; Bowman added that many of the “finders” use shady tactics, including hounding the original homeowner to sign a paper or trying to convince county officials that they are a relative of the original homeowner, and therefore entitled to the money. “It’s amazing the lengths they go to try to intercept these funds,” she reportedly said.

(2) In May, 2009, the Washington Attorney General's office won a civil jury verdict which hammered a foreclosure rescue operator whose activities allegedly included the snatching of foreclosure surplus funds due to homeowners after they lost their homes in tax sales. The jury found that the business practices engaged in by the operator violated the state Consumer Protection Act. See Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M.

Ex-Lawyer Gets 21 Months In $2.4M+ Escrow Swindle; Issued Title Policies, Pocketed Payoff Proceeds Leaving Existing Mortgages Unpaid In R/E Closings

In Atlanta, Georgia, Forsyth County News reports:

• A Forsyth County man who kept a law practice in Sugar Hill will spend nearly two years behind bars on a federal mail fraud conviction. Trent Edward Wright, 38, was sentenced Friday to one year and nine months in federal prison by U.S. District Judge Timothy C. Batten Sr. Wright will also spend three years on probation following his release and must pay more than $2.4 million in restitution.

***

• Acting U.S. Attorney Sally Quillian Yates said in a statement that lenders and title companies relied on Wright as their closing attorney and agent. “He was supposed to pay off all prior encumbrances on properties to secure loans and pass clear title as warranted by the title insurance,” she said. “He didn’t. Now he is going to federal prison.”

• According to the statement, information presented in court showed Wright closed about 17 loans during fall 2006 “in which lenders were falsely assured that all prior loans encumbering the properties securing their loans had been paid off.” As a result, the lenders thought they would be in the first position to recoup their loan amounts from the sale of the properties if they went into foreclosure, the statement shows.

• In addition, Wright reportedly wrote title insurance for the loans, though he failed to pay off several prior recorded liens encumbering the properties. According to the statement, “Rather than ordering title searches and requesting payoff amounts from all prior lenders as required before the new loan closings, Wright either failed to order title searches or disregarded recorded prior encumbrances, causing over $2.4 million in losses.” Wright closed his Sugar Hill law practice in 2007. In December, he surrendered his license to practice law.

• It appears Wright didn’t operate alone. Edward William Farley, 47, of Hoschton is identified in the statement as a co-conspirator in a related case.

For more, see Ex-attorney sentenced to federal prison (Forsyth man pleaded guilty in mortgage scheme).

For a press release from the U.S. Attorney's Office in Atlanta, see Former Georgia Closing Attorney Sentenced to Prison in Multimillion Dollar Mortgage Fraud.

Loan Mod Scammer Serving 2 To 5 Years Gets Another 6 To 24 Months On Theft By Deception Charge As "Poor Business Decisions" Defense Falls On Deaf Ears

In Wyoming County, Pennsylvania, The Times Tribune reports:

• A New Jersey woman who claimed to help people with potential foreclosure problems was sentenced in Wyoming County on Thursday for theft by deception. Shirley Matthews, 54, of Willingboro, N.J., was ordered to serve six months to two years in prison on the theft by deception conviction for bilking a Tunkhannock man out of $8,000.

• Ms. Matthews will serve that sentence after she finishes a 2- to 5-year prison term on similar charges from Monroe County, Judge Russell Shurtleff ordered.

• Also, additional charges are now pending against Ms. Matthews in Luzerne County. In all of the cases, Ms. Matthews was accused of taking payments from home­owners in exchange for helping solve mortgage foreclosure problems, then failing to follow through. [...] Her attorney, Robert Saurman, told the court Ms. Matthews may have made some poor business decisions, but it wasn't her intent to harm.(1)

For the story, see N.J. woman gets 2 to 5 years in prison for taking from people facing foreclosure.

(1) The problem that some police and prosecutors have in dealing with scams like this one that are disguised as legitimate business transactions is that it's too easy for the scammer, once "caught," to hide behind the terms of what purports to be a "legitimate" business contract. A scammer who pocketed money in exchange for performing a slew of failed loan modifications may assert that the terms of the business contract with the victims insulate him/her from criminal prosecution, and at most, may simply "confess" to being a crappy businessperson who made lousy business decisions, but without any intention of actually screwing anybody, leading some authorities to decline investigation and prosecution. 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. Fortunately for the victim in this case, the police and prosecutors did not adopt that approach here and, instead, looked through the paperwork to show the true nature of the transaction.

See People v. Frankfort, (1952) 114 Cal.App.2d 680; 251 P.2d 401, for the following commentary by a California appellate court on how it dealt with a scammer who tried to hide behind the terms of a "legitimate" contract with a "customer/victim" in a failed attempt to dodge criminal prosecution (case law links are found at Findlaw.com - may require free registration):

• 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.

See also:

People v. Pierce, (1952) 110 Cal.App.2d 598, 243 P.2d 585):

• The determination of the intention is not limited to a construction of the writing. This is particularly true in the criminal field since the prosecution is not bound by any such contract. (People v. Sidwell, 27 Cal.2d 121, 126 [162 P.2d 913]; People v. Robinson, supra, p. 221; People v. Martin, 102 Cal. 558, 566 [36 P. 952].)

People v. Sidwell, (1945) 27 Cal.2d 121, 162 P.2d 913, in which the California Supreme Court made this observation:

• And in this criminal prosecution the state is not bound by the written provisions of the civil contract between the defendants and Moore. (People v. Martin (1894), 102 Cal. 558, 566 [36 P. 952]; People v. Eiseman (1926), 78 Cal.App. 223, 241 [248 P. 716]; People v. Kelley (1927), 81 Cal.App. 398, 403 [253 P. 773]; People v. Robinson (1930), 107 Cal.App. 211, 221 [290 P. 470].

Effort To Curb "Sewer Service" May Require NYC Process Servers To Use GPS To Electronically Record All Attempts To Deliver Lawsuit Notice To Defendnts

In New York City, The New York Times reports:

• In a proposal aimed at unscrupulous debt collectors, the City Council is considering legislation that would require process servers to use global positioning systems to show that they have actually visited consumers’ homes or workplaces to deliver notices of collection proceedings.

• Lawmakers hope the measure will help curb a long-running practice known in legal circles as “sewer service,” which occurs when process servers fail to serve court papers on defendants but file affidavits swearing that they did so — which allows the cases to proceed.(1) [...] The bill would require process servers in New York City to electronically record every instance in which they serve or try to serve someone, using a global positioning system that would pinpoint their exact location.

• Advocates for consumers say that sewer service has grown in recent years because of the recession and an increase in the number of collection firms that buy bad debts from credit card companies for pennies on the dollar and then seek to collect them.(2)

***

• A federal class-action lawsuit(3) was filed in Manhattan in December against several debt-purchasing companies and firms that help them collect debts, accusing them of fraudulently obtaining judgments against debtors.

• The bill was introduced amid an investigation by the state attorney general, Andrew M. Cuomo, into fraudulent process serving. Last year, Mr. Cuomo’s office arrested the owner of a Long Island process serving firm, accusing the company’s servers of frequently filing false affidavits in which they claimed to have attempted to serve three and four people at the same time.(4)

For the story, see Council Seeks to Crack Down on Process Servers Who Lie.

(1) According to the story, the victims are often debtors involved in collection suits who, when they fail to show up in court, are nailed with default judgments, often for thousands of dollars. Councilman Daniel Garodnick, a Manhattan Democrat who is the bill’s lead sponsor, reportedly said “Tens of thousands of people are being sued for debts that they may or may not truly owe, but they only learn that they’ve been sued after they’ve lost, and find their bank accounts are frozen and their wages are garnished.”

(2) For more on the "sewer service" problem, see MFY Legal Services: Justice Disserved (A Preliminary Analysis of the Exceptionally Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York ) (documents problem of improper service of process in debt collection lawsuits that have led to judgments entered against unknowing victims).

(3) According to an earlier New York Times story [Suit Claims Fraud by New York Debt Collectors]:

• The class-action lawsuit [...] goes after an entire debt collection chain, starting with the debt-buying companies, the law firm they hired to collect the debt, and the process-serving firm used to notify debtors. The suit names five debt-buyer firms with variations of the names L-Credit and LR Credit. All are subsidiaries of Leucadia National, a $6 billion publicly traded holding company engaged in various businesses, including timber and manufacturing. The company, which is also named as a defendant, declined comment on the suit.

• Mel S. Harris & Associates, the law firm named in the suit, did not return phone calls seeking comment. The process-serving company, Samserv Inc., out of Brooklyn, denied allegations that it filed false affidavits of service. [...] The lawsuit was filed by MFY [Legal Services], the Neighborhood Economic Development Advocacy Project and the law firm of Emery Celli Brinckerhoff & Abady. It claims it could represent more than 100,000 victims of judgments won through the actions of the companies in New York civil courts since 2006. A central claim of the action is that most debt-buying firms do not get enough information in the volume data they buy to meet the burden of proof to win a debt case. They therefore seek default judgments.

See also: Civil Rights Advocates File Civil Racketeering Lawsuit Against Major Debt Collection Network.

For the class action lawsuit, see Sykes, et al. v. Mel S. Harris and Associates LLC, et al.

(4) The Times reports that one server, according to the AG's complaint, claimed to have made 77 service attempts on one day, interspersed at locations in Brooklyn and Cattaraugus County, roughly 400 miles apart — a feat that would have required 11 round trips covering 8,194 miles.

BofA's Recent Illegal Padlocking Of Home Not In Foreclosure, Coupled With Abduction Of Homeowner's Pet Parrot Hits Major National News Media

In Allegheny County, Pennsylvania, Bank of America's recent blunder of improperly padlocking and taking possession of a home believed to be in foreclosure and taking the owner's pet parrot, Luke, has hit the major national media outlets, evidenced by the following stories:(1)

• ABC News' Good Morning America: Bank of America Apologized for Accidentally Repossessing Home (Experts Say More Wrongful Lockouts as Foreclosure Rates Increase),
• The Wall Street Journal: Bank Sorry for Taking Parrot (BofA Believed Woman's Home Was Vacant, Padlocked It and Kept Bird Over a Week),
• The Wall Street Journal's Developments Blog: BofA and the Parrot: Bird’s Eye View of the Foreclosure Mess.

The Wall Street Journal reports that:

• [The homeowner's] lawyer, Michael Rosenzweig, a partner at Edgar Snyder & Associates in Pittsburgh, said Ms. Iannelli was seeking damages of more than $50,000. The amount of any damages would be decided by a jury if the case goes to trial.(2)

This is not Bank of America's first screw up in this regard, according to the ABC News' story:

• The owners of a St. Petersburg, Fla., home claimed their belongings were cleaned out, despite paying for their home with cash, the St. Petersburg Times reported. In Galveston, Texas, the power was shut off at a vacation home, resulting in 75 pounds of spoiled salmon and halibut for the owner, according to the Galveston County Daily News. A pool in an Orlando, Fla., home was even drained after an alleged wrongful lockout. A neighbor told WFTV that it looked as though "the army came up and took over the house."

For other published reports of similar Bank of America screw-ups, see:

• Naples, Florida: Another BofA Blunder: Files Suit To Foreclose On Former REO Sold To Retired Ex-Cleveland Cop For Cash, Then Issues Apology For Foreclosure Fiasco,
• Floyd County, Kentucky: Man sues after bank takes wrong house,
• Trenton, New Jersey: Mortgage mix-up in Trenton,
• Johnson City, Tennessee: Plaintiff home sick by decision.

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(1) The media appear to be having a field day reporting on this story, as evidenced by the following headlines:

• Bank of America: Polly wants a lawyer,
• Pay up or the parrot gets it, says bank,
• Woman loses parrot, has house ransacked by Bank of America in mortgage foreclosure mix-up: lawsuit,
• Bank Of America Apologizes For Parrot Snatching,
• Bank of America sued for seizing parrot,
• Bank of America: They Steal Parrots, Don't They?,
• Bank of America Hijacks Parrot, Forecloses Wrong House,
• Bank Of America Seizes Wrong House, Holds Parrot Hostage.

(2) Based on a few recent reports of litigation involving foreclosing lender screw-ups in this regard, damage awards to the victimized homeowners in cases of improper lockouts have ranged from $150,000 to well over $1,000,000. See:

• Long Island Judge Hammers Wells w/ $155K Tab For Oppressive, Heavy Handed, Egregious Conduct For Pre-Sale Lockout Of Homeowner In Foreclosure (for the actual ruling, see Wells Fargo v. Tyson, 2010 NY Slip Op 20079 (Sup. Ct., Suffolk County, March 5, 2010)),

• Plaintiff home sick by decision (Attorneys seeking to lower a $1,050,000 award to $200,000 obtained a tentative reduction of $550,000, and left the status of another $300,000 in punitive damages up in the air. The remaining $200,000 in damages was left untouched),

• Court reduces $3 million judgment in wrongful foreclosure case (A company that wrongfully foreclosed on a Las Vegas family’s condominium will pay the owners $1.29 million, not the original $3 million jury verdict. The Nevada Supreme Court reduced the amount that Countrywide Home Loans Inc. must pay Gerald and Katrina Thitchener and their family in general and special damages, but upheld the $968,070 in punitive damages; for the actual ruling of the Nevada Supreme Court, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008)).