Friday, September 03, 2010

Oregon AG, State Represntative Squeeze Refund Out Of Loan Modification Racket For Elderly Couple Hoodwinked Into Defaulting On Mortgage

In Medford, Oregon, the Mail Tribune reports:
  • A Gold Hill couple may lose their home because of the illegal acts of a Florida-based mortgage consultant now being sanctioned by the Oregon attorney general. 1st Call Consultants, of Boca Raton, Fla., must stop doing business in Oregon and was required to repay $1,500 that Eva and Vern Patterson paid the consulting firm for help modifying their mortgage.

***

  • Attorney General John Kroger and [state representative Dennis] Richardson were in Medford [] to present a check from 1st Call reimbursing the Pattersons for the illegally collected fee. [... T]he Pattersons plan to meet with ACCESS Inc., which provides foreclosure prevention help through federally approved programs. Richardson said he plans to contact the Pattersons' lender to help explain that the aging couple was "hoodwinked into defaulting" by 1st Call's bad advice.

For the story, see Retirees might lose home in land scam (Oregon attorney general bars Florida firm from doing business in the state).

Family Gets 1-Day Notice Of Pending Foreclosure Sale After Being Stiffed By Suspected Out-Of-State Loan Modification Racket

In Lewisburg, Tennessee, WSMV-TV Channel 4 reports:
  • The Vetter family in Lewisburg first learned their house was being auctioned on the courthouse steps when they read it in the newspaper the day before. They’d paid a home loan modification company to help them avoid foreclosure, but later discovered the company had hundreds of complaints against it for doing nothing to help the consumers who had paid them.

***

  • They turned to a company called Premier Legal Advocates and paid it a fee of $998 upfront to negotiate a lower mortgage payment for them. They found out too late it isn't a real law firm.(1) Hundreds of former clients have posted comments on consumer websites claiming they lost their houses to foreclosure because Premier never contacted their mortgage companies.

  • [Kathrynne] Vetter said her mortgage company had never heard from Premier Legal Advocates. The company, which is based in California, has an F rating with the Better Business Bureau. The owner is listed as Brian Pascal, a man who the Better Business Bureau said has owned several similar companies in the past.

For the story, see Family Loses Home With 1 Day's Notice (Couple Blames Loan Modification Company).

(1) By using the word "legal" in the name of their business, Premier Legal Advocates arguably misrepresented that consumers would receive professional services associated with legal counsel. The Ohio Attorney General has recently taken this position in an unrelated lawsuit involving an outfit allegedly running a racket targeting the infirm elderly. See Cordray Sues Duo who Targeted Seniors with Medicaid Ploy.

Mortgage, Consumer Fraud Litigation To Skyrocket With Passage Of Wall Street Reform Act?

LegalNewsLine.com reports:
  • Homeowners gained leverage for litigation against mortgage lenders through the financial reform law Congress passed this summer. The Dodd-Frank Wall Street Reform and Consumer Protection Act not only tightened mortgage rules, but it also multiplied potential damages against rule breakers.

***

  • Along with mortgage litigation, the bill invites consumer fraud litigation. Any state attorney general can enforce the state's consumer fraud law against a national bank or a federal thrift, the authors wrote. "This will subject national banks to state law requirements they otherwise would not be subject to," Taft said. "If they do not comply, there would be penalties under state and possibly federal law." [...] Whether a private citizen can pursue a cause of action for consumer fraud could depend on state or federal law, he said.

For more, see Dodd-Frank reform law invites new litigation opportunities against mortgage lenders.

See also Lexology: Mortgage Reform and Anti-Predatory Lending Act for an overview of this new consumer protection law (requires subscription; if no subscription GO HERE; or TRY HERE - then click link for the story).

BofA's "Deed-In-Lieu" Mail Solicitation After Approving Loan Modification Leaves Couple Confused, Upset; Bank Speechless When Asked To Explain Letter

In Thornton, Colorado, KUSA-TV Channel 9 reports:
  • Chris Carpenter says he has paid his mortgage on-time for the nearly seven years he has owned his home. [...] But Friday, Carpenter said his wife brought a letter from the mailbox from his mortgage lender, Bank of America, that baffled the couple. "She was crying," he said. "She was upset."

  • The letter was "deed-in-lieu of a foreclosure" solicitation from Bank of America, saying the family needed to take immediate action to prevent foreclosure. If the Carpenters would sign over the deed to their home, the letter stated, Bank of America would give the couple $3,000 relocation assistance, and save them from the credit nightmare of a foreclosure. Carpenter would also lose any equity built up in his home.

  • "She couldn't understand why we were being singled out like this," Carpenter said. Carpenter and his wife were approved through a loan modification with Bank of America after her layoff, but he said they paid their mortgage on-time, every month, and sent in all the necessary paperwork the bank required. "We have paid," he said. "We have done exactly what they wanted." Monday, no one at Bank of America could explain why Carpenter received the letter.(1)

For more, see Couple confused about bank's request for deed to home.

(1) Bank of America has stepped up its solicitation for "deed-in-lieus" this year, according to its quarterly impact report, the story states. Citibank also reportedly is doing the same. See Citibank Says If Borrowers Return the Deed of Their Property, They May Stay on For 6 Months.

Thursday, September 02, 2010

7 Bagged In Mtg Fraud Scam That Lured Straw Buyers w/ Phony "No Management" Investment Program, Sham Rent-To-Own Offers To Credit-Impaired Tenants

In Northern Ohio, WYTV-TV Channel 33 reports:
  • The Youngstown Mortgage Fraud Task Force and the U.S. Attorney for the Northern District of Ohio are investigating a $7.5 million mortgage fraud scheme involving 48 properties in Mahoning and Trumbull counties. The U.S. Attorney's office indicted seven people, five of whom are from the Valley, Tuesday in connection with the scheme.

***

  • The indictment alleges that Romero Minor, 51, of Georgia, was the person who spearheaded the scheme along with Wendell Kerr, 62, of Mississippi. They had local loan officers, appraisers and title companies help them commit the mortgage fraud.(1)

  • The indictment alleges that Minor operated a religious organization and investment group known as BFB Investments. Between July 2003 and January 2006, state court documents, Minor recruited investors to purchase several properties, telling them he wanted to help those in the community with bad credit who could not buy homes themselves.

  • The investors were told that after they bought the homes, Minor would enter one-year rent-to-own agreements with tenants so the tenants could improve their credit scores. After a year, he told them, the tenants would buy the homes.

  • "(He said that) during that year period he would make the mortgage payment, he would keep the houses up, he would pay the taxes, all of that," said Assistant U.S. Attorney Mark Bennett. "In reality, Minor did none of that. He didn't pay the mortgages, but for a limited instance, he did not keep the houses up, he did not mow the lawns, etc., etc." [...] "He just takes the extra money and walks away from the properties," said Bennett.

For the story, see 7 Indicted in Valley Mortgage Fraud Conspiracy.

(1) The others indicted were:

  • Title attorney William Helbley, 57, of Poland,
  • Appriaser Timothy Corey, 49, of Youngstown,
  • Loan officer Robert Lunsford, 54, of Hubbard,
  • Appraiser Damon Petrich, 39, of Boardman,
  • Title attorney Michael Wagner, 54, of Canfield.

Federal Judge Ruling Favorably For BofA In Utah Foreclosure Challenge May Have Conflict Of Interest: Report

In Salt Lake City, Utah, KTVX-TV Channel 4 reports:
  • "They're foreclosing illegally here in Utah.” Those were the words of St. George Attorney John Christian Barlow spoken in early June. Barlow at the time had appeared before a Federal Judge arguing that the banking giant, Bank of America, was foreclosing illegally in the State of Utah. The Southern Utah Attorney believed that because B.O.A. was not a registered business or corporation in the state, they lacked authority to do business here. Barlow had succeeded in getting a 5th Circuit Court Judge to agree with him. As a result, the judge imposed an injunction on all Bank of America foreclosures.

  • Weeks later, the case went before a Federal Judge where B.O.A. argued that they were regulated by federal, not state laws. Federal Judge Clark Waddoups heard the case, and threw out the injunction therefore Bank of America’s foreclosure company (ReConTrust) was allowed to foreclose once again.

  • After the decision, ABC4 got a tip about the case and started digging. Our tipster said that Judge Waddoups may have a conflict of interest in hearing the B.O.A. cases. Why? Because Judge Waddoups' old law firm represents Bank of America. We checked into Waddoups background, and found that the Federal Judge did work for Parr, Brown, Gee & Loveless for nearly 30 years. ABC 4 also found that Waddoups, as of 2008, drew a pension from the law firm. ABC 4 placed a call to the firm, but they wouldn’t comment if the former firm partner had ever handled B.O.A. cases.

For more, see Conflict of Interest? ABC 4 investigates judges' ties to Bank of America.

Title Insurance Unavailability For Would-Be Buyers In Bankrupt HOAs May Make It Nearly Impossible For Unit Owners To Unload Homes & Bail Out

In Phoenix, Arizona, The Arizona Republic reports:
  • Thousands of vacant properties and millions of dollars in unpaid dues are taking their toll on Arizona homeowners associations, and homeowners are paying the price.(1) [...] In the most troubled master-planned communities, generally those in recent high-growth areas [...], delinquencies have reached alarming proportions, placing some HOAs under serious threat of bankruptcy.

  • Should an HOA go bankrupt, prospective homebuyers would not be able to obtain title insurance on the community's homes, making them nearly impossible to buy or sell.

***

  • Although there are no recorded instances of Arizona HOAs declaring bankruptcy thus far, the home-vacancy problem is widespread enough to cause serious concern, said Steve DeLaveaga, vice president of sales and marketing at Fidelity National Title in Tempe. "There are over 25,000 homes in our state that are just empty, vacant," DeLaveaga said.

  • If an HOA did go bankrupt, the most serious consequence would be the inability of prospective homebuyers to obtain title insurance, required for any home purchased with a mortgage loan, he said. "Title insurers cannot insure a home in an HOA that is bankrupt," DeLaveaga said.

Source: HOA groups in Arizona cutting services, raising fees (Homeowners associations facing own crisis amid foreclosures).

(1) See Chicago Sun-Times: A cure for crumbling condos for the kind of horror stories that have resulted in Chicago, Illinois as a result of financially strapped associations going under.

Homeowners Accuse HOA Of Using Lien Notices To Retaliate For Earlier Suit Charging Association w/ Illegally Amending Rules To Increase Their Control

In Charlotte County, Florida, the Sarasota Herald Tribune reports:
  • Residents in a retirement community here say they are being threatened with lien and foreclosure notices because of a legal battle with their homeowners association. About 50 residents of the Gardens of Gulf Cove, [...] are suing the association that manages the community, and the local board of directors. Their attorney, Barbara Stage, said the board illegally amended association rules to gain greater control over the budget and dues assessments.

***

  • [R]esidents say that since the suit was filed in March, perhaps 90 homeowners have received "intent to lien" letters over late dues, without receiving bills or late-payment notices.

***

  • The lawsuit was filed around the time quarterly payments were due, so the timing of the letters may be a coincidence. But Stage said it is common for HOAs to "play dirty" when they are sued, and the lien process is a moneymaker. Resident and plaintiff James McMahon noted that he was charged $256 in attorney's fees. Multiplied by 90 residents, that is about $23,000.

For more, see Homeowners association battle threatens homes.

Wednesday, September 01, 2010

Cops: Developer Pocketed $410K From Buyer For Condo In Project That Was Never Built; Faces Grand Theft Charges After Allegedly Refusing To Refund Cash

In Flagler Beach, Florida, WJXT-TV Channel 4 reports:
  • A Flagler Beach developer was arrested [...] on a charge of grand theft in excess of $100,000 in connection with a fraudulent real estate purchase. John Boback Sr., 51, is accused of taking $410,000 from a Marco Island man in the sale of a condominium on North Oceanshore Boulevard. Investigators said although Boback received the money, the man who purchased the condo received only a deed for the unit, and the structure was never built.

***

  • In October 2009, South Florida resident Patrick Lyons, 55, told investigators that between August and December 2006, he paid Boback for a condominium unit that was to be part of a professional complex on State Road A1A. Lyons said when he realized the property had not been developed, Boback would not refund his money, investigators said. The property is presently in foreclosure. [...] "He never turned a shovel of dirt," said Cpl. Nate Flach, a detective with the Flagler County Sheriff's Office, in a news release.

For the story, see Developer Charged With Grand Theft (Man Accused Of Taking $410,000 In Condo Sale).

S. Florida Lawyer Gets Jail Time For Hijacking $1.6M In Real Estate Closing Funds Earmarked For Mortgage Loan Payoffs; Title Insurer Left Holding Bag

In Miami, Florida, the South Florida Sun Sentinel reports:
  • Hollywood title attorney Peter N. Price has been sentenced to almost four years in jail, and ordered to pay $1.7 million to Stewart Title Guarantee Inc. regarding allegations that he embezzled $1.6 million in loan proceeds.

  • Federal and state investigators said Price took the money, earmarked for paying off mortgage loans for clients, from his Intracoastal Title Services Inc. escrow account for real estate closings he was handling. Instead of doing the payoffs, Price prepared and sent false federal real estate forms, stating the loans had been paid, according to court documents.

  • Price was charged with making false statements to the U.S. Department of Housing and Urban Development, and sentenced by U.S. District Judge James Cohn in Miami.

Source: Hollywood title attorney gets four years after embezzling $1.6 million.

Bank Returns Possession Of Prematurely Padlocked Home In Foreclosure To Ailing Senior Who Spent Winter In Homeless Shelters; Slept In Parked Car Since

In Schaumburg, Illinois, the Daily Herald reports:
  • A Schaumburg man who was living in his own yard after being padlocked out of his house during foreclosure proceedings was able to move back inside [last week]. John Wuerffel, 62, [...] was returned access to his home by representatives of HSBC Mortgage Corp., which is handling the foreclosure case on behalf of Freddie Mac.

  • HSBC spokesman Neil Brazil said the house was padlocked last fall to protect its value after it appeared to have been abandoned by Wuerffel, who couldn't be found. Wuerffel said he was living out of state when the house was padlocked, and he returned to find it in that way. He spent the winter living in homeless shelters and took to sleeping in one of his several vehicles parked in the driveway when the shelters closed in the spring.

***

  • Wuerffel said he is supposed to be on medication for bipolar disorder and a heart condition, but that his financial situation has sometimes kept him from affording either one. In fact, Wuerffel said medical bills are to blame for the threatened foreclosure of the home he's owned since 1971.

For more, see Schaumburg man regains access to padlocked home.

Chicago Man Guilty Of Creating Phony Land Documents To Sell Homes Out From Under Real Owners To Unwitting Buyers While Posing As Federal Official

From the Office of the U.S. Attorney (Chicago, Illinois):
  • A Chicago man was convicted of federal charges for posing as a federal government official in a scheme to sell properties he did not own out from underneath the real owners. The defendant, John Hemphill, was found guilty [] of mail fraud and false impersonation of a federal official following a week-long trial in U.S. District Court, [...].

***

  • According to the evidence at trial, since 2008, Hemphill engaged in a scheme to defraud property owners and prospective purchasers of property by creating and recording fictitious deeds with the Cook County Recorder of Deeds, posing as the property owner selling the property in question.

  • Hemphill typically filed a fictitious deed with the county recorder that purported to convey title to a parcel of property from its lawful holder to one of Hemphill’s businesses, and then filed a second fictitious deed purporting to convey title to the same property from his business entity (the new purported owner) to a third party. Hemphill also falsely represented to prospective purchasers of properties that he and his business entities held title to these properties in their capacity as a "federal receiver" or had other lawful authority to convey the properties to third parties. Under these false pretenses, Hemphill purported to sell these properties to third parties, usually for cash payments.

***

  • Two witnesses at trial — a La Grange police officer and a victim who bought a home Hemphill did not own — testified that when they challenged Hemphill over his fraudulent representations, he produced a bogus badge indicating that he was a federal agent.

For the U.S. Attorney press release, see Chicago Man Convicted of Posing As Federal Official in Scheme to Obtain and Sell Area Properties he Did Not Own.

Rogue Public Official Gets 17 Years In Prison For Assorted Corruption; Bad Acts Include Sales Of Land He Didn't Own To Church, Elderly Woman

In New Orleans, Louisiana, The Times Picayune reports:
  • Jonathan Bolar upset an incumbent in 2001 to gain a seat on the Gretna City Council, in great part because voters believed his promises to work hard and to put their interests first. Mr. Bolar worked hard all right -- but to put his office up for sale.

  • He extorted thousands of dollars from constituents who needed city permits. He twice sold land he did not own, to a church and to an elderly woman. He evaded paying taxes for a decade. In April, a jury convicted Mr. Bolar on 13 charges. The heavy price for such a resume of corruption came [last week], as U.S. District Judge Lance Africk sentenced Mr. Bolar to 17 years in prison. He also will have to pay $174,000 in restitution to his victims, in addition to $85,700 he already was ordered to forfeit.

For the story, see Former Gretna Councilman Jonathan Bolar, rogue public official, goes to jail.

Tuesday, August 31, 2010

Florida Court Clobbers Foreclosure Mill With $49K Contempt Citation; Continuous Failure To Appear At Hearings w/out Giving Notice Raises Judge's Ire

In Manatee County, Florida, the Sarasota Herald Tribune reports:

  • A circuit judge singled out a Fort Lauderdale foreclosure firm on Monday, finding its business model violates legal ethics and leveling a $49,000 fine for scheduling hearings and then not showing up in court.

  • In a judicial district that has taken a hard line on fraudulent or messy foreclosure filings, the judge's ruling is the first time a court officer has openly attacked the methods of one of the firms responsible for thousands of foreclosures statewide.

  • Circuit Judge Janette Dunnigan scolded five lawyers from the Smith, Hiatt and Diaz firm in connection with a Manatee County foreclosure case filed in 2007. The firm is one of several "foreclosure mills" filing thousands of foreclosure cases monthly. The firm's attorneys filed what amounted to "sham" paperwork setting seven hearings over two years, and then failed to appear in court or tell the judge or other parties when they were canceled. The case is still unresolved.

***

  • Dunnigan brought the contempt of court herself, and threatened to push forward on a criminal contempt of court against the attorneys. [...] The firm will be fined $7,000 a day until [the firm] provides Dunnigan with a description of a new policy that attorneys cannot set hearings without having all documents ready. Also, every lawyer in the firm must sign documentation that they understand the new policies. The firm must also review all cases scheduled in Manatee County and have the attorney that will appear at that hearing sign a paper that they will do so.

***

  • The case turned out well for the homeowner. The law firm voluntarily dismissed the case, and must pay the owner $450 in lost wages for showing up at the last hearing.(1)(2)

For more, see Judge fines major legal firm for foreclosure conduct (Lawyers to pay $49,000 for not showing up at scheduled hearings).

(1) The homeowner may also be able to recover any legal fees paid or due to his/her attorney by asking the judge to order the foreclosing lender to cough up the cash. See Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137 (Fla. 1st DCA 1999):

  • The general rule is that "when a plaintiff voluntarily dismisses an action, the defendant is the prevailing party." See Thornber v. City of Ft. Walton Beach, 568 So. 2d 914, 919 (Fla. 1990). Further, "it is well established that attorney's fees are properly awarded after a voluntary dismissal where such award is provided for by statute or agreement of the parties." See Century Construction Corp. v. Koss, 559 So. 2d 611, 612 (Fla. 1st DCA 1990), review denied, 574 So. 2d 141 (Fla. 1990). See also Boca Airport, Inc. v. Roll-N-Roaster of Boca, Inc., 690 So. 2d 640, 641 (Fla. 4th DCA 1997), review dism'd, 698 So. 2d 543 (Fla. 1997)("for purposes of a prevailing party attorney's fees statute, a voluntary dismissal by the claimant makes the opposing party a 'prevailing party' as to the issue of entitlement to fees").

In Florida, where an agreement allows for an attorney fee award to one of the contracting parties, state statute mandates an award of prevailing party attorney's fees to the other party under the reciprocity provisions of section 57.105(7), Florida Statutes; Landry, supra. (Mortgages almost always contain a provision that allow a lender to tack on its legal fees to the amount owed by the borrower when bringing litigation to enforce its rights. Accordingly, by reason of section 57.105(7), the homeowner likewise would be entitled to a recovery of his/her attorney's fees from the losing lender).

See also Attorney Fee Awards For Successful Foreclosure Defense In Florida.

For the latest (as of 9/8/2010) Florida court ruling involving the application of section 57.105(7), which turns contractual provisions allowing only one side attorney’s fees into bilateral provisions that allow both sides fees under Florida law, see Florida Hurricane Protection and Awning Inc. v. Pastina, No. 4D08-4641 (Fla. App. 4th DCA, September 8, 2010) (en banc). See also, Abstract Appeal: Fourth District: Fees, and “Blog” Arrives In The Case Law.

In addition, in this case, the law firm possibly may also be ordered to ante up part of the homeowner's legal fees by reason of section 57.105(1), Florida Statutes:

  • Upon the court’s initiative or motion of any party, the court shall award a reasonable attorney’s fee, including prejudgment interest, to be paid to the prevailing party in equal amounts by the losing party and the losing party’s attorney on any claim or defense at any time during a civil proceeding or action in which the court finds that the losing party or the losing party’s attorney knew or should have known that a claim or defense when initially presented to the court or at any time before trial:

    (a) Was not supported by the material facts necessary to establish the claim or defense; or

    (b) Would not be supported by the application of then-existing law to those material facts.

In a peripherally related article (added 9-22-10), see The Florida Bar: Pleading Requirements for a Claim for Attorneys' Fees.

(2) The Court reportedly awarded Barrington Ridge Homeowners Association, Inc., the association in which the property in foreclosure is a part of and which presumably holds a lien (subordinate to the foreclosing lender's mortgage) for unpaid HOA fees, its attorneys' fees from the filing of its Motion to Compel the Bank to Proceed with Foreclosure to the present, according to a press release issued by the association's law firm. See Becker & Poliakoff Applauds Manatee County Circuit Court Judge's Order Imposing Fines Against Bank's Foreclosure Law Firm.

Media Probe Spurs Texas AG Lawsuit Alleging That Unlawful Servicer Collection Tactics Squeezed Late Fees From Homeowners, Driving Them Into F'closure

In Dallas, Texas, KDFW-TV Channel 4 reports:
  • Just two weeks after a FOX 4 investigation, the Texas Attorney General is cracking down on a local mortgage servicing company. In our investigation, FOX 4 showed how the AG's office told complaining consumers it was too busy and they should hire their own attorneys to fight American Home Mortgage Servicing, Inc.

  • But that has suddenly changed. Now, the Texas Attorney General has sued the Coppell-based company, accusing AHMSI of aggressive and unlawful tactics to collect mortgage payments from Texas homeowners and has filed suit.

For more, see Texas Attorney General Sues Mortgage Servicing Company.

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

From the Office of the Texas Attorney General:

  • Texas Attorney General Greg Abbott [] charged Coppell-based American Home Mortgage Servicing Inc. (AHMS) with using illegal debt collection tactics and improperly misleading struggling homeowners.

  • According to state investigators, AHMS collections agents used aggressive and unlawful tactics to collect payments from Texas homeowners who had difficulty meeting their payment obligations. The defendant also failed to credit homeowners who properly submitted their payments on time.

***

  • In other cases, AHMS agents falsely claimed that homeowners did not make payments so the agents could justify profitable late fees or escrow accounts. The defendant also failed to properly credit homeowners after AHMS agents withdrew funds from the homeowners’ checking accounts. Because of the defendant’s unlawful conduct, homeowners defaulted on their loans, leading to foreclosure proceedings.

For the Texas AG press release, see Attorney General Abbott Charges Home Loan Servicer With Violating State Debt Collection Laws (American Home Mortgage Servicing Inc. failed to properly process requests).

For the lawsuit, see State of Texas v. American Home Mortgage Servicing Inc.

Nevada AG: Trio Stiffed Strapped Homeowners Seeking Loan Mods After Clipping Them Out Of Thousand$ In Upfront Fees, Filed Liens Based On Bogus Notes

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • The Nevada Attorney General has announced that three people have been indicted for allegedly operating a foreclosure rescue scam in Las Vegas. The AG's office says Doninador Palalay, a.k.a. Dominador Palalay, Marie Tejada Medina and Benjamin Aquino Moraleda III operated a foreclosure rescue business named PDM Financial Group, Inc.

  • The AG says PDM charged around $3,000 for loan modification services and misled customers. They say PDM told customers they could prevent foreclosure and customers could obtain loan modifications. But according to the AG, those services were not performed.

  • Moreover, the state alleges the suspects had their customers sign deeds of trust that gave PDM liens on their customer's homes based on false promissory notes. The AG believes this was done to cloud the home's title to prevent the lenders from foreclosing.

For the story, see Three Indicted in Foreclosure Scam.

For the Nevada AG press release, see Three Indicted In Foreclosure Rescue Scam.

Wisconsin AG Scores $110K+ Default Judgment Against Forensic Loan Audit Outfit That Pocketed Upfront Fees From Consumers

From the Office of the Wisconsin Attorney General:
  • Attorney General J.B. VanHollen announced [] that the Wisconsin Department of Justice has obtained a default judgment of $111,861 against Relief Law Center, Inc., (d/b/a USA Loan Auditors), for violating Wisconsin's consumer protection laws in soliciting purported loan modification services.

***

  • The lawsuit charged USA Loan Auditors, a California company, with using deceptive and misleading representations in its mail solicitations. The solicitations were designed to appear as though the company was a “loan auditor” investigating the homeowner's lender but it in fact was soliciting purported loan modification services. The judgment was obtained following the failure of the company to file an answer to the complaint. The judgment enjoins the company from further violations and orders $118,861 in forfeitures, penalties, and costs to the State for prosecution.

For the Wisconsin AG press release, see Van Hollen Announces Judgment Against USA Loan Auditors.

Cops: "Owner-Finance" Home Seller Pocketed Buyer's Monthly Payments & Stiffed Bank Holding Existing Mtg After Screwing Earlier Victim In Similar Scam

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Michael Chinloy, detectives allege, bought an Acreage home, sold it to someone, waited for her to move out, sold it to another couple, and then let it foreclose. And, in the process, pocketed at least $86,000.

  • Now Chinloy, 46, booked into the Palm Beach County Jail [...], is charged with grand theft more than $20,000 and organized scheme to defraud more than $50,000. He's being held in lieu of $20,000 bail.

  • According to a Palm Beach County Sheriff's report, the couple believed they'd bought the home from Chinloy in June 2007. The deal: $30,000 down plus a monthly mortgage payment of $3,290.42. Over two years, the couple claimed, they paid Chinloy more than $120,000 before they started getting foreclosure notices.

  • It turned out Chinloy had bought the Acreage home in July 2006 for $360,905. Three months later, he sold it for $384,000 to a woman in Palm Beach Gardens. The woman, who had just gone through a divorce and had credit problems, said Chinloy kept jacking up her mortgage payments until she could no longer pay and she moved out in May 2007.

  • A month after that, Chinloy sold the house to the couple for $354,983. Then he stopped paying the mortgage and the home was foreclosed on in January 2008.

For more, see West Palm Beach man charged with grand theft, real estate fraud; allegedly sold same house twice.

Seattle Feds Bag Woman In Alleged Scam That Placed Title To Homes Bought By Novice Homebuyers Into Other Clients' Names & Pocketed Their Loan Payments

From the Office of the U.S. Attorney (Seattle, Washington):
  • LIZA BAUTISTA, 50, of Tukwila, Washington, was arraigned [] in U.S. District Court in Seattle on charges of mail fraud, wire fraud and misuse of a Social Security Number, in connection with a scheme to defraud lenders and line her own pocket.

***

  • According to the indictment, BAUTISTA held herself out as someone who could help first time buyers with bad credit purchase their first home. According to the indictment, she took advantage of these purchasers naivete—they trusted BAUTISTA when she told them the paperwork was all in order, and that they had purchased their first home.

  • In reality, BAUTISTA had obtained the home loans and placed title to the properties in the names of past clients who had better credit. These past clients were shocked when lenders started contacting them about homes they had never purchased. The naive buyers could not understand why lenders kept mailing information to their home in the names of other people.

  • Some of these new purchasers made their mortgage payments to BAUTISTA who pocketed the payments instead of passing them on to the lending institutions. When the young purchasers learned they had not really purchased their dream home, they had to move out, and the lending institutions lost thousands as the homes were foreclosed and sold at a loss. BAUTISTA pocketed about $20,000 on six loans worth over $800,000.

For the U.S. Attorney press release, see Former Mortgage Originator Indicted for Scheme Misusing Former Clients’ Personal Information (Woman Allegedly Obtained Loans in the Names of Past Clients for New Novice Purchasers).

Monday, August 30, 2010

Banks’ Self-Dealing Super-Charged Financial Crisis

ProPublica reports:
  • Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history. Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses:

They created fake demand.

  • A ProPublica analysis shows for the first time the extent to which banks -- primarily Merrill Lynch, but also Citigroup, UBS and others -- bought their own products and cranked up an assembly line that otherwise should have flagged.

For more, see Banks’ Self-Dealing Super-Charged Financial Crisis.

Thanks to Mike Dillon at GetDShirtz.com for the heads-up on the story.

Closing Attorney Ordered To Pay $2.37M Restitution In Escrow Funds Theft; State's "Lawyer Ripoff Reimbursement Fund" May Be Left Holding The Bag

In Ballston Spa, New York, The Glens Falls Post Star reports:
  • A 47-year-old attorney who practiced law in Saratoga Springs admitted [...] to stealing millions of dollars during real estate transactions he handled for more than a dozen clients. Patrick M. Reidy of [...] Wilton, pleaded guilty in Saratoga County Court to second-degree grand larceny, a felony.

  • Saratoga County District Attorney James Murphy said his office will ask the court to impose a 5-to-15-year jail term when Reidy is sentenced on Oct. 22. Reidy will also be ordered to pay $2.37 million in restitution to the 19 victims and will lose his license to practice law.

  • Reidy, an attorney who specialized in real estate in addition to being a licensed real estate broker and notary public, stole money from real estate closings and used that money for own purposes, rather than paying off mortgages and other loans, Murphy said.

***

  • "I'm thrilled because it feels like there's finally a light at the end of the tunnel," said [Theresa] Olson-Hoffman, of Lake George, whose dealings with Reidy resulted in the disappearance of a $135,000 check she had given to him and a crash to her credit rating when she refinanced a home loan.

***

  • Olson-Hoffman has been working with The Lawyers' Fund for Client Protection [of the State of New York], an organization whose mission is to protect consumers from dishonest conduct in the practice of law, by reimbursing client money that is misused.(1) "They said that they needed a conviction and we'll have that in October," she said regarding the Oct. 22 sentencing. "After that, I don't know how long it's going to take to kick in."

For more, see Saratoga Springs lawyer pleads guilty in larceny case.

(1) This recent Albany Times Union story adds:

  • [Criminal defense attorney Michael] Koenig would not discuss any personal assets Reidy still has, but said the victims will be able to turn to the Lawyer's Fund for Client Protection for money, and the fund managers will then pursue Reidy's holdings.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

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

Closing Agent Blames Russian Mob For Stolen Online Wire Transfers Meant For Loan Payoffs; Unwitting Couple Seeking Mtg Refi Now Left Facing F'closure

In Parker, Colorado, KMGH-TV Channel 7 reports:
  • It sounds like it's from a movie, but a Parker family and a title company both say the Russian mafia is stealing money from wire transfers. As a result, a Parker family may lose their home to foreclosure and they did nothing wrong. "I don't get why this can't be cleared up today," said Kim Canning, of Parker.

  • Canning and her husband, Tim, refinanced their home in September 2009. Canning thought it was a simple process -- a few signatures and the deal was done. But a few months later she started receiving letters from Bank of America stating she had not paid her mortgage and they were going to begin foreclosing on her home. That's when she learned the refinancing never went through and she might actually lose her home.

***

  • Canning refinanced her home with Classic Title Agency. At some point when Classic Title was transferring the funds online to Chase Bank, $900,000 disappeared. President Ryan Rodenbeck of Classic Title said nine $100,000 transfers were stolen -- $277,000 of that was part of the Cannings' refinancing.

  • According to Rodenbeck, the Russian mafia intercepted it and stole the money. Bank of America, which held the Cannings' first mortgage and was supposed to get the money, never did. Bank of America assumed the Cannings had just stopped paying their mortgage so they started the foreclosure process on the family's Parker home.

For more, see Did Russian Mafia Steal Family's Refinancing Money? (Title Company Claimed Russian Mob Stole Money During Wire Transfer).

Foreclosure Mill Cited In Recent Case By Judge For Fraud Calls State AG Probe Into Allegedly Fabricated Documents Politically Motivated, Overly Broad

In West Palm Beach, Florida, The Palm Beach Post reports:

  • The economic crimes division of the Florida attorney general's office is reviewing three firms following complaints that foreclosure documents were fabricated to rush cases through the court system. Other firms included in the probe are the Law Offices of Marshall C. Watson in Fort Lauderdale and the Plantation-based firm of David J. Stern.

For more, see Boca law firm calls foreclosure probe political.

For more on this outfit, see The Florida Foreclosure Fraud Weblog: Foreclosure lawsuits are built on lies: Shapiro & Fishman admits foreclosure claims cannot be verified (Shapiro & Fishman explained that their lawyers cannot ethically swear to the truth of the papers they file with the court, because they rely on information from others, according to this Motion for Rehearing filed earlier this year with the Florida Supreme Court).

(1) The Shapiro & Fishman law firm was recently cited by Duval County, Florida Circuit Court Judge Jean Johnson in a foreclosure action for "ha[ving] acutal knowledge of the falsity of any averments and representations made [in court] on behalf of the current servicer of the Mortgage" being foreclosed, and went further by "find[ing] by clear and convincing evidence that these acts committed by WAMU, Chase and Shapiro & Fishman amount to a "knowing deception intended to prevent the discovery essential to defending the claim" and are therefore fraud." See Jacksonville Trial Judge Bags Foreclosure Mill, Chase, WAMU For Fraud On The Court In Foreclosure Action; Dismisses Suit With Prejudice.

For Judge Johnson's ruling, see JP Morgan Chase Bank v. Pocopanni, Case # 16-2008-CA-3989 (Fla. Cir. Ct. 4th Dist. Duval County, August 9, 2010).

State Bar Confirms Probe Into South Florida Foreclosure Mill

The South Florida Business Journal reports:

  • The Bar also confirmed Aug. 16 that it is also investigating Stern for numerous allegations of violating attorney regulations, including whether his running of DJSP Enterprises, a publicly traded company, is in compliance.

For more, see Florida Bar previously disciplined Stern.

For more on this outfit, see The Florida Foreclosure Fraud Weblog:

  • Forged foreclosure filings by David J. Stern anger Pasco judge ("[T]he notary’s stamp [on an assignment of mortgage] said Terry Rice’s commission expired on May 19, 2012. That stamp could not have been lawfully issued any time before May 19, 2008. So that assignment document wasn’t really signed on December 5 of 2007 – unless our notary has discovered a way to travel in time.");

(1) Reportedly, Stern received a public reprimand in 2002 for billing practices that made it appear he was paying other companies for work on title insurance, when he was actually using in-house staff. See More On Alleged South Florida Bogus Foreclosure Document Manufacturing Foreclosure Mill, footnote 1, for more links to other past allegations made against Stern.

Sunday, August 29, 2010

Alleged Mastermind In Sale Leaseback F'closure Rescue Scam Arraigned On 25 Counts; Investors Left Holding Bag As Homeowners Got Boot, Say Prosecutors

From the Office of the Massaachusetts Attorney General:
  • An Oxford man was arraigned in Worcester Superior Court for his role 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 42, is charged with Forgery (4 counts), Uttering (8 counts), Inducing a Lender to Part with Property (12 counts) and Larceny by False Pretenses.(1)

***

  • According to authorities, Seymour targeted properties in danger of foreclosure. He allegedly personally approached the owners of these properties and presented a variety of rescue options. For those homeowners who merely wished to sell their property to avoid foreclosure, Seymour allegedly offered to purchase the property for the amount owed to the foreclosing lenders.

***

  • Simultaneously, Seymour allegedly found individuals with good credit who were looking to begin investing in real estate. Many of these “investors” were allegedly told they would be helping homeowners in danger of foreclosure. Seymour allegedly told several investors that the purchase would only be temporary, and the homeowners would purchase the property back from them after Seymour repaired the homeowner’s credit.

***

  • After the closing, several investors state that Seymour abandoned them to the mortgage payments. Without Seymour’s assistance, the investors were unable to pay the loans, and these mortgages themselves fell into foreclosure. Some homeowners, allegedly promised lifetime leases, have been evicted from their homes by these foreclosures.

For the entire Massachusetts AG press release, see Oxford Man Arraigned in Connection with Orchestrating Complex Mortgage Rescue Scheme.

(1) According to the press release, three other co-defendants have been charged in connection with this case. On December 1, 2009, Raymond A. Desautels III, age 43, of Oxford, was sentenced to serve two years in State Prison after pleading guilty to the charges of Inducing a Lender to Part with Property (5 counts) (see Disbarred Attorney Cops Plea In Fraudulent Rescue Scam; Homes Drained Of Equity, Then Fall To Foreclosure; Owners Get Boot; Investors Left Holding Bag).

On January 13, 2010, Judith Piette, age 44, of Worcester, pled guilty to the charge of False Written Report by Public Officer (4 counts). Piette was sentenced to serve two years of probation. The remaining co-defendant, Jason Passell, age 51, of Worcester, is charged with Forgery and Uttering (7 counts). He is due back in court on August 30, 2010, for a status conference.

Mass AG Obtains Civil Judgments Against Five Accused In Equity Stripping, Sale Leaseback, F'closure Rescue Racket; Case Against 9 Others Still Pending

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office has obtained consent judgments against five defendants that perpetrated an unlawful foreclosure rescue scheme against multiple homeowners facing foreclosure that stripped and retained hundreds of thousands of dollars of the victims' home equity.

  • The judgments, entered against Primary Mortgage Resource, Leo Desire, Sr., Robert Marks, Pierre Joseph and Daphne Mompoint, provide for payments of restitution to victims and civil penalties to the Commonwealth and prohibit the defendants from engaging in certain activities that facilitated the scheme.(1)

For the entire Massachusetts AG press release, see AG Martha Coakley Obtains Judgments Against Multiple Defendants in Alleged Foreclosure Rescue Scheme.

(1) In addition to the five recently-announced consent judgments, the Commonwealth obtained consent judgments against five other defendants (closing attorney Valerie Hanserd and straw buyers Marie Betey Mereus, Neville Francis, Jean Roll Joseph and Robens Joseph) within the last year, the press release states. The case remains pending against defendant closing attorney James J. Alberino, defendant real estate salesperson Robin Hayes, and seven other defendants who failed to appear or defend in the action and as to whom the Commonwealth obtained entries of default.

California AG Scores $1.1M Judgment Against Attorney In Alleged Foreclosure Rescue Racket That Screwed 2,000 Desperate Homeowners Out Of Thousand$

From the Office of the California Attorney General:
  • Attorney General Edmund G. Brown Jr. [] announced a $1.1 million judgment against longtime Los Angeles attorney Mitchell Roth after he conned 2,000 desperate homeowners into paying him thousands of dollars to file "frivolous and phony" lawsuits that didn't reduce a penny of mortgage debt for a single client.(1)

***

  • In 2008, Roth, a seasoned Los Angeles attorney, joined with Nevada-based United First, Inc. and the company's owner, Paul Noe, to provide foreclosure relief services to homeowners struggling to pay their mortgages.(2)

***

  • United First charged homeowners some $1,800 in up-front fees, plus at least $1,250 each month, and 50 percent of the cash value of any settlement. If a homeowner's debt was eliminated altogether, the homeowner was required to pay United First 80 percent of the value of the home.

  • After collecting up-front fees, Roth filed lawsuits on behalf of homeowners, pushing a novel legal argument that a borrower's loan could be deemed invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Once the lawsuit was filed, Roth did next to nothing to advance the case and often failed to make required court filings, respond to legal motions, comply with court deadlines or appear at court hearings. Instead, Roth tried to extend the lawsuits as long as possible to collect additional monthly fees from clients. This approach did not generate a single victory in court and did not lower or eliminate the mortgage debt for a single one of the 2,000 homeowners who hired Roth and United First.
For the entire California AG press release, see Brown Wins $1 Million in Restitution for Victims of Attorney-Backed Foreclosure Rescue Scam.

Go here for the California AG lawsuit against Roth and here for the $1.1 million judgment against Roth.

(1) AG Brown's lawsuit contended that Roth and others:
  • Violated California's credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945;
  • Inserted unconscionable terms in contracts;
  • Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and company owner Paul Noe, who were not lawyers, to generate business for his law firm violating Section 6150-6156 of the California Business and Professions Code, and
  • Violated Section 17500 of the California Business and Professions Code.

(2) In addition to the hot water they got into in this case, Paul Noe reportedly was convicted of wire fraud in 1989 and the subject of a California Department of Insurance Cease and Desist Order in 2004; and Mitchell Roth resigned from the California State Bar in late May 2009, after the State Bar closed his law firm (see SF Weekly: State Bar Takes Over 'Son of Super Swindler' Law Firm -- 2,000 Con Jobs Too Late).

Homeowners Say Chase Pocketed Insurance Payment w/out Promptly Crediting Account; Sue Servicer For Credit Rating Damage, Inflated Fee Clip

In Galveston, Texas, The Southeast Texas Record reports:
  • A Galveston County couple accuses Chase Home Finance LLC of mishandling a house payment made after Hurricane Ike and providing false information to credit bureaus, recent court documents say. According to a lawsuit filed July 20 in Galveston County Court No. 3, Sam and Jennifer Finegan informed the defendant that they will pay off a loan for their Hurricane Ike-damaged residence when they receive their insurance claim.

***

  • The plaintiffs issued Chase a check for $20,000 in November 2008. They claim the defendant, however, did not properly apply the payment, but submitted negative credit information to various credit reporting agencies instead.

  • Chase continued to hold on to the funds without crediting the account, the suit says. The plaintiffs argue that they tried to address the situation, but were unsuccessful in reaching an authority. Chase's errors and lack of response inflicted damage to the Finegans' credit rating, the suit states.

For more, see Couple claims finance company ruined their credit.

Loan Mod Scammer "Buys Out" Of Jail Time; Gets Suspended Sentence, Probation After Agreeing To Cough Up Half Of Required Restitution Before Sentencing

From the Office of the Nevada Attorney General:
  • Michael Sinclair was sentenced in Las Vegas [] connection with his involvement with a mortgage foreclosure rescue company, Federal Housing Aid, whose operation included a call center in the Philippines.

  • District Court Judge Michael Villani imposed a sentence of 30 to 90 months in the Nevada State Prison, but suspended the sentence and placed Sinclair on probation for a period not to exceed five years. Sinclair entered a plea to one count of Mortgage Lending Fraud and is required to pay half of the restitution owed prior to sentencing. He is required to pay restitution in the amount of $29,853.56 to the victims of his crime as well as another $300 for the cost of his extradition from the Philippines.(1)

For the Nevada AG press release, see Defendant In Mortgage Rescue Scam Operated from The Philippines Sentenced.

(1) According to the Nevada AG press release, Sinclair would contact homeowners facing foreclosure and offer to stop the foreclosure proceeding and save their credit. The victims entered into an agreement to pay an up-front fee ranging from $700.00 to $1,500.00 as compensation for affecting a solution to the foreclosure. Once the victims forwarded these fees to Federal Housing Aid, no further action was taken. The homeowners, some of whom were over the age of 60, were never provided with assistance in resolving their problems and, in fact, ended up losing their homes.

Saturday, August 28, 2010

16 Tenants In Dilapidated Apartment House Get The Boot w/ No Prior Notice; Dangerous Conditions Force City To Shut Down Premises On Eve Of F'closure

In Salisbury, Massachusetts, The Daily News of Newburyport reports:
  • The Salisbury Beach apartment building at 14 Ocean St. deemed uninhabitable by town inspectors will be up for sale in a foreclosure auction Sept. 15, as its owners Jack and Marina Kitzis walked away from it, leaving five families homeless.

***

  • After nearly 30 calls from town inspectors since May concerning the unsafe state of the building's staircase, its electrical and plumbing systems, as well other code violations, Kitzis told Salisbury building inspector David Lovering on Aug. 10 if his insurance company won't pay to fix what's wrong with the building, he was going to forfeit the property to the bank.

***

  • Town Manager Neil Harrington has since Aug. 16 tried unsuccessfully to make contact with the bank that now has control of the buildings. Harrington and selectmen had hoped the bank would make the needed improvements to the buildings, allowing the 16 displaced tenants to return to their homes. "Right now, I think it's fairly clear that the families who once lived there won't be returning," Harrington said.

***

  • The electricity was turned off, and firefighters tore down the stairs as a precaution. Although firefighters helped residents out via ladders, tenants left most of their food and belongings behind and were out on the street with no shelter.

***

  • Kitzis was called to the scene that night [of the eviction], agreeing to put up the tenants for one night at a Salisbury motel, but since then the families -- most with young children -- have had to shift for themselves. Kitzis has not returned security deposits or rents for the month of August, leaving the families cash strapped as well. [...] The foreclosure may let Kitzis wiggle out of his responsibilities to his mortgage holder and his tenants, but Harrington hopes there's a way to move legally -- even criminally -- against him in weeks to come.(1)

For more, see Auction set for 'slumlord' apartments, leaving tenants homeless.

(1) For one thing, he can be charged with theft of entrusted funds for refusing to return the tenants' security deposits that he pocketed (and that he should have kept in a segregated bank account).

Los Angeles Man Arrested For Rescuing Panting, Overheated Puppy Confined In Allegedly Foreclosed, Abandoned Home; Authorities Leave 2nd Dog Behind

In Los Angeles, California, The Examiner reports:
  • Let's chalk this one up to another example of "no good deed goes unpunished." Or is it perhaps an illustration of overwhelming fear of lawsuits? An animal rescuer was arrested Thursday after attempting to save two dogs left behind in an allegedly foreclosed and abandoned Los Angeles house. L.A. Animal Services officers contacted the police department, alleging that the man, Hans Peterson, interfered with their investigation and they feared the city would be sued because of it.(1)

***

  • A six-month old puppy was locked inside the house and another dog named Taz was left inside the garage. After entering the house to remove the puppy, rescuer Hans Petersen was arrested for “interfering with Animal Services as they conduct their duties.” [...] The [panting & overheated] puppy was taken to the South L.A. Animal Shelter, but Taz was left behind in the garage to wait for the owners to show up.

For more, see Good Samaritan arrested after he tried to save two L.A. dogs from abandoned house.

Go here for the KNBC-TV Channel 4 video report.

See Deputies say man abandoned sick dog for a Sarasota, Florida story of a pet owner who abandoned his residence, leaving Sampson, a golden retriever, in a hot garage, with no food and little water, and who was reportedly in the full throes of a seizure when sheriff's deputies found him.

(1) Reportedly, neighbors, afraid for the dogs' welfare, contacted authorities as the heat outside increased.

Phoenix Jury Finds Man Peddling "Mortgage Elimination" Racket Guilty On Ten Fraud Counts; Scammer Pocketed $250K+, Say Prosecutors

In Phoenix, Arizona, KSWT-TV Channel 13 reports:
  • A Phoenix mortgage broker has been convicted on 10 charges of fraud for scamming some homeowners into filing bogus foreclosure paperwork. Maricopa County prosecutors say 52-year-old Edward L. Carpenter was found guilty by a jury Wednesday after a 6-day trial. He faces an Oct. 7 sentencing.

  • Authorities say Carpenter contacted homeowners and claimed he ran a "mortgage elimination" business that could legally remove their names from their mortgages, giving them free and clear ownership of the properties.

  • They say Carpenter charged upfront fees of $1,000 or more and got the homeowners to file fraudulent foreclosure paperwork with the Maricopa County Recorder's Office. The filings were designed to cloud the title, confuse title companies and cause mortgage companies to fund loans. Prosecutors say Carpenter received more than $257,000 in illegal proceeds from the scheme.

Source: Phoenix man convicted of mortgage fraud.

Cops Probe Squatters' Alleged Attempt To Snatch Three Vacant Seattle-Area Mansions; "Mortgage Note Elimination Program" Peddler Suspected

In Kirkland, Washington, KOMO-TV Channel 4 reports:
  • Detectives believe squatters are attempting to take possession of three separate mansions on the Eastside, each worth more than a million dollars. And detectives say they're investigating ties between these latest squatting cases and a man connected to the squatters, who set up shop in a $3.2 million Kirkland mansion back in June.

  • These latest cases first caught the attention of realtors, who found letters posted on three vacant properties in Kirkland and Bellevue earlier this week. The letters tell occupants "to surrender possession within three days of serving this notice" on August 17. Two of the properties are bank-owned; the third, listed at $2.1 million, is in foreclosure.

***

  • Realtors say red flags were raised when they saw the name James McClung at the bottom of the letters. McClung, a former Bothell-based realtor, is also listed on state records as the owner of NW Note Elimination, which bills itself as a mortgage elimination company.

For more, see Police investigating man claiming million dollar Eastside mansions.

See also: Kirkland Reporter: Man connected with Kirkland squatter targets more Eastside homes.

"Sovereign Citizen" Bail Set At $100K In Alleged Deed Ripoff Racket; Judge Refuses To Recognize Suspects' Claims Of "Diplomatic Immunity" From Arrest

In Conyers, Georgia, the Rockdale Citizen reports:
  • Rockdale County Superior Court Judge David Irwin ordered a $100,000 bond for charges relating to foreclosure fraud for an Atlanta man who claimed to be a sovereign citizen and apparently “no team player in the World Cup,” the judge said.

  • Akeem Kwame, 48, of Atlanta appeared before Irwin on Monday in connection with a May incident in which Kwame allegedly identified himself as a private banker and offered a Lions Gate Drive homeowner a quit claim deed so he could try to gain ownership of her home. The homeowner told authorities that someone, claiming to be her husband, called her mortgage company and did a loan modification on the foreclosure of the home, according to law enforcement reports. The Realtor selling the home called authorities when all the locks to the house had been changed and Kwame was seen leaving the residence in a Porsche. Kwame told responding deputies that he was buying the house from the bank. Kwame was arrested shortly afterward.

***

  • Irwin questioned if Kwame needed psychiatric evaluation, based on Kwame’s claims to sovereignty. “Because when they write me letters ... and say ‘I’m sovereign and not governed by anybody’ ... it causes me to wonder about one’s sanity,” Irwin said.

***

  • As a special condition [to allow for a bail bond], Irwin also ordered Kwame to surrender any passport and any ID card “saying he is a diplomat in his own mind or a diplomat for the country of whatever his country is.” Kwame is charged with first-degree forgery, financial identity fraud, theft by deception, criminal trespass, second-degree forgery and financial identity fraud.

  • Kwame’s case is the second local case involving sovereign citizens that has popped up in Rockdale County. Authorities in DeKalb County arrested Ivan Willis Taylor, 47, and Princess Donya Taylor, 41, of Stone Mountain on Aug. 19 on Rockdale County warrants relating to a July incident in Magistrate Court. Ivan Taylor was accused of making identification cards that claimed he was an ambassador of a sovereign state and had diplomatic immunity from arrest.

For the story, see Bond set in foreclosure fraud case (48-year-old suspect claims he is a sovereign citizen).

Judge Gives Foreclosure Action The Go-Ahead; Refuses To Give Weight To Crackpot-Created Promissory Notes & Deeds In Home Rescue Racket

In Cobb County, Georgia, WSB Radio reports:
  • A Cobb County man says he can save your house from foreclosure. All you have to do is sign it over to him! Joseph Jones III has been busy explaining this procedure to a judge. Somewhat incredibly, 13 homes in four metro counties have been signed into his name.

  • Jones says banks are "stealing" and committing "fraud". So he prints his own promissory notes, posting deeds in the window in his name. He insists he's not breaking any laws and isn't counterfeiting. Nor is he one of the "sovereign citizens" we've heard about recently. Jones simply claims there's no difference between a bank note, and his.

  • "Everything I do is according to law," Jones tells Channel 2 Action News. "And if I'm not doing anything according to law, then call the police and have them come arrest me." A judge late Thursday disagreed, ruling foreclosure proceedings against one of Jones' properties can proceed.

Source: Cobb County Home Buying Scam.

More On "Sovereign Citizens" Racket Using Phony Deeds, Fraudulent Liens To Stake Claims To Real Estate, Harass Enemies Of The Movement

In DeKalb County, Georgia, The Atlanta Journal Constitution reports:
  • When a new family moved into the mansion on South Goddard Road in south DeKalb County, residents just assumed they were “city folks” too busy to meet neighbors. Georgia Power and the water company came out, but 87-year-old Helen Goddard never saw the residents. “We know everyone around here. But they were quiet, no knocking on the door to introduce themselves,” said Goddard, whose husband’s family has lived in the area for centuries and are the namesake for the road.

  • The only time Goddard saw her next-door neighbors was when they were being led off in handcuffs. Prosecutors say the $1 million brick home next to the Goddards’ farmhouse is one of at least 19 properties that have been taken over by a sect of anti-government extremists involved in criminal behavior.(1)

  • They call themselves “sovereign citizens” and believe they are immune to state and federal laws. They assert, among other things, that banks can’t own land and that any home owned by a bank – including the thousands throughout Georgia – is free for the taking. Police and prosecutors take a different view.(2)

For more, see DA: Paper terrorists stealing homes (S. DeKalb home is one of 19 Ga. properties usurped by 'sovereign citizen' group).

(1) According to the story, local investigators have tied the sovereign citizens to at least 19 property thefts in DeKalb, Fulton, Gwinnett, Henry, Spalding, Newton and Richmond counties, including mansions – some still under construction – and a shopping center in Buckhead valued at $13 million. Police have reportedly charged six suspects – including Goddard’s two neighbors Linda and Gregory Ross – with violating the Racketeer Influenced and Corruption Organizations Act, with warrants having been issued for another five suspects.

For a similar racket being alleged in New York, see Feds Indict Trio In Alleged $1.24 Trillion Bogus Lien Extortion Racket Targeting Government Officials, Bank Executives; and for a related civil lawsuit filed in this NY case, see County of Ulster, New York, et al. v. Ulloa, et al.

(2) In a related item, see Anti-Government "Sovereign Citizen" Movement Exploits Economic Climate, Engages In Scams And Criminal Acts:

  • [Among the] troubling developments in the sovereign citizen resurgence include:

    · Exploiting the mortgage/foreclosure crisis. Sovereign citizen adherents are promoting a variety of scams that falsely claim to save people's homes from foreclosure. Other sovereign citizens are even brazenly seizing foreclosed homes for their own use.

    · Engaging in "paper terrorism." At alarming rates, sovereign citizens are placing fraudulent liens on the property of perceived enemies as a highly effective means of harassment and retaliation. Some even do it from prison cells.

Judge Kiboshes "Secession" Defense; Rejects Native American Property Owner's Attempt To Form His Own Indian Reservation To Dodge City "Fix-Up" Order

Attorney/columnist John G. Browning writes in The Southeast Texas Record:
  • Sometimes, I get the feeling that judges are placed in the position of being like a game show host dealing with a particularly dense contestant giving an incorrect answer - "No, so sorry, but thanks for playing and we have some lovely parting gifts for you." When litigants come up with some of the most bizarre theories and defenses imaginable, some judges have to wonder, "Did you really think I was going to buy that?"

  • Take William Bowersock, for example. The Lima, Ohio, man was facing violations of the city's nuisance laws for two run-down houses he owns, and which the Lima property authorities had ordered him to clean up and repair. Bowersock's defense was to contend that he had seceded from the city and, by virtue of his Native American ancestry, had formed his own Indian reservation - making him exempt from the city's property code.

  • But Judge Richard Warren said not so fast, Cochise; he rejected the whole "I am my own reservation" argument and ordered Bowersock to fix up the two homes. It just goes to show you - no man is an island, and no man is an Indian reservation either.

For other bizarre legal theories and defenses from litigants in lawsuits, see "Nice Try, But ... No."