Tuesday, September 27, 2011

Sacramento Feds Continue Scoring Guilty Pleas In Northern California Foreclosure Sale Bid Rigging Scams That Violate Sherman Act

From the Office of the U.S. Attorney (Sacramento, California):
  • A real estate investor pleaded guilty [] in U.S. District Court in Sacramento, Calif., to conspiring to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, Calif., Christine Varney, Assistant Attorney General of the Department of Justice’s Antitrust Division, and Benjamin B. Wagner, U.S. Attorney for the Eastern District of California, announced.


  • Robert Rose, 47, of Danville, pleaded guilty to conspiring with a group of real estate speculators who agreed not to bid against each other at certain public real estate foreclosure auctions in San Joaquin County.(1)


  • The primary purpose of the conspiracy was to suppress and restrain competition and to obtain selected real estate offered at San Joaquin County public foreclosure auctions at non-competitive prices, the department said in court papers.


  • According to the court documents, after the conspirators’ designated bidder bought a property at a public auction, they would hold a second, private auction, at which each participating conspirator would bid the amount above the public auction price he or she was willing to pay.


  • The conspirator who bid the highest amount at the end of the private auction won the property. The difference between the price at the public auction and that at the second auction was the group’s illicit profit, and it was divided among the conspirators in payoffs. According to his plea agreement, Rose participated in the scheme beginning in or about August 2009 until in or about October 2009.(2)

For the U.S. Attorney press release, see California Real Estate Investor Pleads Guilty To Bid Rigging At Public Foreclosure Auctions.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

(1) According to the U.S. Attorney press release, Rose pleaded guilty to bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. Rose also pleaded guilty to conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine.

“Perpetrators of schemes like the one charged here do not compete fairly,” U.S. Attorney Wagner stated. “Instead, they muscle out honest bidders who don’t play along. Such schemes not only drive down the price of the auctioned properties, they steal equity from those homeowners trying to weather the financial storm. Rose is the eighth defendant charged in this case. Prosecutions like this one send a clear message to those who may be tempted to cheat at auction: Don’t.”

The U.S. Justice Department urges anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions to contact the Antitrust Division’s San Francisco Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm, the U.S. Attorney’s Office for the Eastern District of California at 916-554-2700 or the FBI’s Sacramento Division at 916-481-9110.

(2) For indications that these bid-rigging rackets at foreclosure sales appear to be pretty blatant activities all over the country that are often perpetrated with impunity, see:

A story earlier this year in the San Francisco Chronicle (FBI looks into bid rigging at courthouse auctions) contains this excerpt describing the observations of one individual who attended one of these auctions:

  • A real estate agent who attended some San Francisco auctions in hopes of buying investment property described what he witnessed.

    "If you start to bid, there are about five guys who work together and who box you in," said the man, who asked not to be named for fear of retribution. "One guy came up to bid who clearly was not part of that crew. The guys were bidding. At some point, (their ringleader) turned to (the outsider) and said, 'You must really like this property. It must be really important to you.' He had a piece of paper in his hand; he showed it to the guy. The guy nodded OK and then disappeared into the building."

Felony Plea Deal In Loan Mod Scam Has Sentence 'Buy-Down' Of No Jail, Misdemeanor Treatment Upon $192K Paymnt; Stiffing Victims Could Cost 1 To 10 Yrs

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • The head of a Las Vegas company that claimed it could stop foreclosure has accepted a plea deal that includes restitution for his victims. In 2009, the I-Team first reported consumer complaints and then criminal charges against Jack Ferm of the U.S. Justice Foundation.


  • The I-Team sat down with Jack Ferm in 2009 as he insisted his company could help homeowners help themselves by filing lawsuits against their lenders. Trouble was most, if not all, of the suits went nowhere and many of Ferm's clients thought he was a lawyer when he wasn't.


  • Fast forward two years and Ferm agreed to a deal to repay his victims nearly $200,000. Ferm pleaded no contest to one count of felony theft before Judge Donald Mosley Wednesday morning. As part of the deal the court will delay adjudication of the case as long as Ferm makes restitution to 80 victims.


  • When and if he repays all $192,000 worth, the Attorney General's Office will reduce the charge against him to a gross misdemeanor.


  • Judge Mosley made it clear to Ferm he held a "dim view" of those who commit mortgage fraud. "Restitution is important to this court. We don't just talk about it, walk out the door and make some haphazard attempt and say, 'Gee whiz, I can't do it.' You understand me?" he said.


  • Mosley ordered Ferm to pay at least $7,000 by January 1, 2012. If he doesn't live up to his end of the deal he could face one to 10 years in prison. The AG's Office says in addition to punishing those who commit mortgage fraud they work to get the victim's their money back.
Source: Head of Mortgage Modification Takes Plea.

Federal Appeals Court To Subprime-Peddling Developers: 'Not So Fast, Guys - You're Not Off The Hook On Homebuyers' Fraud Claims Just Yet!'

In San Francisco, California, Courthouse News Service reports:
  • California homeowners can sue many of the nation's largest builders over the economic and social fallout of the housing bubble, the 9th Circuit ruled Wednesday, finding that the penchant for marketing to high-risk buyers could be responsible for today's plummeting home values and blighted neighborhoods.


  • The federal appeals court in San Francisco reversed a lower court's dismissal of claims brought by 19 homeowners against D.R. Horton, Richmond American, Shea Homes, Lennar Homes, and other top developers, their parent companies and subsidiary mortgage companies.


  • The homeowner plaintiffs each put down at least 20 percent on a home in a new development between 2004 and 2006. They seek damages and the option to rescind their purchase based the builders' alleged fraud, misrepresentations and violations of state law.


  • Though developers allegedly promised that they were building "stable, family neighborhoods occupied by owners of the homes," they actually sold houses to unqualified buyers and investors prone to foreclosure.

For more, see Court Revives Claims of Developers' Subprime Fraud.

For an earlier report on the appeals court litigation, see Subprime Showdown in 9th Circuit Hearing.

For the ruling, see Maya v. Centex Corporation, No. 10-55658 (9th Cir. September 21, 2011) (for publication).

Monday, September 26, 2011

'Criminal Charges Coming To A Mortgage Servicing Racket Near You!': Nevada AG

HousingWire reports:
  • Mortgage servicers could soon face criminal actions in Nevada, according to the state Attorney General Catherine Cortez Masto.


  • Masto reportedly opposed releasing the largest servicers from future criminal liability. Earlier in September, Iowa AG Tom Miller, who is leading the settlement talks, pledged the final agreement would not indemnify the banks from any criminal actions and not all civil suits. Miller's office further clarified that immunity from criminal prosecution is not and never has been part of the settlement negotiations.


  • "Criminal actions are likely coming to the industry soon," a spokesperson for Masto's office told HousingWire Wednesday, though no other details were provided.

For more, see Nevada AG: Criminal actions coming to servicing industry soon.

WPB Cops Pinch Now-Disbarred Title/Closing Attorney For $800K+ In Real Estate Escrow Account Ripoffs

In West Palm Beach, Florida, The Palm Beach Post reports:
  • A disbarred Wellington attorney defrauded clients out of more than $800,000 while representing them in real estate transactions,(1) West Palm Beach police said. Christian N. Scholin, 45, was booked into the Palm Beach County Jail Tuesday night after being charged with grand theft, organizing a scheme to defraud and practicing law while disbarred or suspended.


  • Scholin's alleged actions date back to 2004, when he was operating International Title Company of the Palm Beaches in West Palm Beach, a probable cause arrest affidavit stated.


  • According to the affidavit, Scholin represented a woman living in Finland with the sale of her Lake Worth home in May 2004. The house closed for $800,000, and she was due $733,125. Scholin allegedly deposited the money into a Wachovia account and made several payments from the account to the client. But $468,000 was not delivered and instead was deposited into another bank account, the affidavit stated.


  • Scholin's actions led to his suspension from practicing law in October 2009, and he was disbarred by the Florida Supreme Court in July 2010, the affidavit stated. During his suspension, Scholin represented another woman during the attempted short sale of a Royal Palm Beach townhouse. The closing occurred in February of 2010, with the woman and a buyer from Finland believing that $245,158.66 in unpaid principal had been negotiated by Scholin and satisfied by the short sale.


  • The buyer wired $74,000 to Scholin, the affidavit said. But Scholin did not use the money to satisfy his client's mortgage and kept it instead, the affidavit said. The woman's home went into foreclosure, causing a judgment against her in the amount of $277,790, according to the affidavit.

Source: Disbarred Wellington attorney charged with defrauding clients out of $800,000.

(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help 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.

NYC-Area Title Insurance Agency Operator Gets 20 Months For Misappropriating Million$ In Client Cash From Escrow Accounts In Real Estate Transactions

From the Office of the U.S. Attorney (New York City):
  • PREET BHARARA, the United States Attorney for the Southern District of New York, announced that BRIAN H. MADDEN, the former president and co-founder of a title insurance agency, Liberty Title Agency, LLC [...], was sentenced [...] to 20 months in prison for misappropriating and embezzling escrow and other client funds from Liberty Title and two other insurance agencies he controlled and operated in New York and Suffolk counties.

***

  • Beginning around early 2008, MADDEN misappropriated millions of dollars of escrow and other client funds by transferring and commingling those funds among various bank accounts held by Skyline Title, GNY Liberty, and Liberty Title. MADDEN then used the misappropriated funds to sustain LibertyTitle's operations and to make significant withdrawals of monies for his personal use.

For the U.S. Attorney press release, see President Of Title Insurance Agency Sentenced In Manhattan Federal Court To 20 Months In Prison For Misappropriating Millions Of Dollars Worth Of Client Funds.

Closing Agency Owner Gets 3+ Years For Snatching Escrow Cash; Took $200K To Buy Out Prior Owners; Says 'I Didn't Steal The Loot, I Only Borrowed It!'

In Missoula, Montana, the Ravalli Republic reports:
  • The owner of a Florence escrow company will spend 3 1/2 years in prison and be required to pay close to $500,000 in restitution after being convicted of wire fraud and money laundering. Stacey M. Hebuck, 37, of Florence, pleaded guilty earlier this month before U.S. District Judge Donald W. Molloy in a plea agreement that dropped seven additional counts.


  • Court records said Hebuck manipulated financial transactions associated with five different real estate closings handled by her company, New Pinnacle Title LLC, and its predecessor, Pinnacle Title and Escrow, between June 2008 and January 2009.


  • Hebuck was charged with diverting funds obtained by the escrow companies into her personal bank accounts. The diverted funds were wired to banks outside of Montana.


  • Rather than spending the money to pay off existing mortgages, Hebuck used the money to buy a $31,000 pickup truck, $41,000 horse trailer and $17,000 for facial plastic surgery. She also used $90,000 to pay off her parent's mortgage on land at Seeley Lake.


  • The first $200,000 she diverted while still an employee of Pinnacle Title and Escrow was spent to buy the business from its previous owners.(1)


  • In some cases, Hebuck continued to make monthly mortgage payments on loans that were supposed to be closed. Twice she paid the entire balance on mortgages with smaller payoff amounts.


  • When investigators interviewed Hebuck about the fraud in February 2009, she admitted the essence of what she'd done, but referred to her actions as "business practices." She told investigators she planned pay off all five loans as her business grew.


  • In a written statement, Hebuck said she felt she was borrowing the money, not stealing it.

For the story, see Florence woman sentenced to prison for fraud, money laundering.

(1) Go here for the Notice of Proposed Action from the office of the Montana insurance regulator containing more details about Hebuck's antics, including the fact that she had a previous felony conviction in California for welfare fraud, and the fact that, in ripping off the escrow account of $200K+ to buy out the escrow agency owners, she took ownership of the outfit under her sister's name.

Sunday, September 25, 2011

U.S. Labor Department To BofA: 'You Illegally Fired Mortgage Fraud Whistleblower For Doing Her Job - Now Pay Her $930K & Give Her Back Her Job!'

Michael Hudson of the The Center for Public Integrity's iWatch News reports:
  • In the summer of 2007, a team of corporate investigators sifted through mounds of paper pulled from shred bins at Countrywide Financial Corp. mortgage shops in and around Boston.


  • By intercepting the documents before they were sliced by the shredder, the investigators were able to uncover what they believed was evidence that branch employees had used scissors, tape and Wite-Out to create fake bank statements, inflated property appraisals and other phony paperwork. Inside the heaps of paper, for example, they found mock-ups that indicated to investigators that workers had, as a matter of routine, literally cut and pasted the address for one home onto an appraisal for a completely different piece of property.


  • Eileen Foster, the company’s new fraud investigations chief, had seen a lot of slippery behavior in her two-plus decades in the banking business. But she’d never seen anything like this.

***

  • More surprises followed. She began to get pushback, she claims, from company officials who were unhappy with the investigation. One executive, Foster says, sent an email to dozens of workers in the Boston region, warning them the fraud unit was on the case and not to put anything in their emails or instant messages that might be used against them. Another, she says, called her and growled into the phone: “I’m g--d---ed sick and tired of these witch hunts.”


  • Her team was not allowed to interview a senior manager who oversaw the branches. Instead, she says, Countrywide’s Employee Relations Department did the interview and then let the manager’s boss vet the transcript before it was provided to Foster and the fraud unit.


  • In the end, dozens of employees were let go and six branches were shut down. But Foster worried some of the worst actors had escaped unscathed. She suspected, she says, that something wasn’t right with Countrywide’s culture — and that it was going to be rough going for her as she and her team dug into the methods used by Countrywide’s sales machine.


  • By early 2008, she claims, she’d concluded that many in Countrywide’s chain of command were working to cover up massive fraud within the company — outing and then firing whistleblowers who tried to report forgery and other misconduct. People who spoke up, she says, were “taken out.”


  • By the fall of 2008, she was out of a job too. Countrywide’s new owner, Bank of America Corp., told her it was firing her for unprofessional conduct.”


  • Foster began a three-year battle to clear her name and establish that she and other employees had been punished for doing the right thing. Last week, the U.S. Department of Labor ruled that Bank of America had illegally fired her as payback for exposing fraud and retaliation against whistleblowers. It ordered the bank to reinstate her and pay her some $930,000.

For more, see Countrywide protected fraudsters by silencing whistleblowers, say former employees (iWatch News investigative series reveals legacy of corruption that still plagues Bank of America).

F'closing Banksters Score Another Big 'Win' As Lender Dodges Bullet, 'Games' Judicial System, 'Buys Off' Homeowner; Ohio Supremes Declare Issue "Moot"

Foreclosing banksters throughout the U.S. are presumably in a celebratory mood as they have recently succeeded in buying off another homeowner in foreclosure who had the temerity to bring a dubiously-conducted foreclosure case to the attention of a state supreme court.(1)

Go here for the one-page ruling issued by the Ohio Supreme Court declaring the case of U.S. Bank v. Duvall moot.(2)

Thanks to OHIO FRAUDclosure, who contributed a 'friend of the court brief" in this matter, for the heads-up on the ruling.(3)

Editor's Note:

According to U.S. Bank's Memorandum regarding notice of suggestion of mootness filed in this matter, there are at least two other cases percolating through the Ohio judicial system that present the same issues. It may be that the Ohio Supreme Court merely dismissed this case with the view of addressing the issues by hearing one or both of the other two cases.

Interestingly, according to footnote 1 of U.S. Bank's Memorandum regarding notice of suggestion of mootness, counsel representing the bankster in this case notes that it also represents the banksters involved in the other two cases. It remains to be seen if the banksters in those cases are equally successful in 'buying off' the respective homeowners in foreclosures with a 'free house.'

(1) The use of '11th hour' legal maneuvers to dodge a potentially adverse court ruling in the foreclosure context by the sleazy banksters is not unheard of. In a recent Florida foreclosure case involving the use of dubious documents to obtain a foreclosure judgment, the banksters and their foreclosure mill avoided having the Florida Supreme Court hear an appeal of a case by reaching a settlement with the screwed over homeowner shortly before the case was presented to the Florida high court (keep in mind that this was a case the banksters had won decisively at the intermediate appeals level). See:

See also, F'closure Mill Dodges Appellate Court Reversal On Merits; Opts To 'Confess Error' Instead In Agreeing To Reversal Of Rubber-Stamped Lower Court Ruling, where, in an appeal by a homeowner of a lower court ruling favorable to a foreclosing bankster, the bankster agreed to 'confess error,' thereby leading a Florida intermediate appeals court to boot the case back to the lower court without actually ruling on the merits of the appeal. In effect, the foreclosure mill law firm/sweatshop may have intentionally thrown the case to avoid even more negative precedent and publicity that these faulty foreclosure cases have been generating.

(2) For earlier posts on this story, see:

(3) For some commentary from OHIO FRAUDclosure on the dismissal of this case, see Ohio Supreme Court's Shocking Decision in Landmark Case.

Federal Agency Inspector General: Fannie Had Chance To Catch Its Law Firms Manucaturing Phony Foreclosure Documents & Blew It!

The Associated Press reports:
  • Fannie Mae missed chances to catch law firms illegally signing foreclosure documents and its government overseer did not take the right steps to ensure Fannie was doing its job, federal regulators say.


  • The Federal Housing Finance Agency's inspector general said in a report Friday that Fannie failed to establish an "acceptable and effective" way to monitor foreclosure proceedings between 2006 and early 2011. Government regulators then failed to ensure it was complying with demands that it clean up its programs.


  • Mortgage industry employees — including law firms employed by Fannie Mae — signed documents they hadn't read and used fake signatures on foreclosure cases across the country.


  • The practices, known collectively as "robo-signing," resulted in a suspension of foreclosures last fall and a probe by all 50 state attorneys general into how corners were cut to keep pace with the crush of foreclosure paperwork.

For more, see Fannie Mae cited for failing to stop robo-signing.

For the Federal Housing Finance Agency Inspector General's report, Evaluation of Whether FHFA Has Sufficient Capacity to Examine the GSEs (EVL-2011-005, September 23, 2011).

Government Suits Targeting Banksters' Recording Fee Dodge Begin To Attract Interest, Gain Traction

Bloomberg reports:
  • Bank of America Corp. is among a group of lenders that may face a wave of new lawsuits claiming cash-strapped counties were cheated out of millions of dollars by a system used for more than a decade to register mortgages.


  • Dallas County District Attorney Craig Watkins said state attorneys general and county officials across the U.S. have expressed interest in his lawsuit against Mortgage Electronic Registration Systems Inc. and Bank of America, filed in Texas state court on Sept. 21. Dallas County could be owed as much as $100 million in filing fees, he said.(1)


  • This is a big new front,” said Christopher L. Peterson, associate dean and professor at the University of Utah S.J. Quinney College of Law. “This case is scary because if Dallas wins then there are a lot of other counties around the country that are going to follow.”

***

  • Dallas County called that crisis “a direct result of the financial system’s commoditization, packaging, securitization and sale of tens of millions of mortgages throughout the U.S.,” according to the complaint. “Without the fiction of the MERS system, these activities would not have been possible.”

For more, see BofA Case May Be Followed by More Mortgage Suits by Counties.

(1) See also:

Saturday, September 24, 2011

California City Begins Using Violations Of Public Health Ordinance As Basis To Quickly Boot Squatters From Vacant F'closed Homes Without Court Process

In Manteca, California, the Manteca Bulletin reports:
  • Every neighborhood seems to have one. And they’re not hard to spot. They are foreclosures with a twist. Homes owned by small-time landlords that are in process of being repossessed by the bank. The investor’s name is on the tax rolls but they’ve been missing in action even before the property started going south. Even if you know the name of the bank that holds the loans it does no good until the legal foreclosure process is completed.


  • That process is now taking upwards of a year or more thanks to the backlash from the robo signing scandal. The tenants were served eviction notices but they either didn’t leave or they came back. They are anything but good neighbors.


  • They often don’t have water. The city turns it off for non-payment and then they bypass it. That results in the city removing the meter and shutting off the flow of water.


  • Electricity and natural gas bills have been cut off for non-payment. Some use noisy generators to keep the lights going.Others - if they have a swimming pool - use that stagnant water to flush toilets.

***

  • You call the police. They respond. They are caught in a twilight zone. They can’t order anyone out of the home or arrest them for trespassing because they don’t have a complaint from the owner. It is a hassle to find out who the mortgage holder is but that is an exercise in futility since the legal owner is still the party the bank is foreclosing on.


  • So what can be done? In extreme cases, the city has stepped up its game. This week, City Manager Karen McLaughlin working with municipal workers exercised one of its few options.


  • They declared such a home uninhabitablefor public health reasons. They have the power to do that when there is no water and electricity to a house.


  • The posting gives police the ability to chase trespassers - a polite name for squatters - off the property. [...] McLaughlin correctly notes the city’s legal options are pretty limited in such cases. But she emphasized the city intends to work diligently and do what it can to try to get the problem under control.

For the story, see No water, no power = home uninhabitable.

Former Charleston Navy Base Foreclosure Leads To Boot For Homeless Veterans Benefitting From McKinney Act

In Charleston, South Carolina, The Post and Courier reports:
  • Since the Navy shuttered its base in North Charleston, more than 2,000 homeless veterans have lived there, rent-free, as they battled drug and alcohol addiction and tried to repair their lives. They resided in the "Veterans Villas," a series of neat brick ranch homes along Manley Avenue first built for naval officers and their families. Now that this property is owned by S.C. Public Railways, the few dozen veterans there are preparing to move.


  • Melissa Kelly, director of the Chesapeake Health Education Program, said the organization will consolidate operations at its site off Ashley Phosphate Road rather than sign a lease with S.C. Railroad Railways.


  • The Chesapeake Health Education Program, which has run the villas since 1998, originally got access to the properties through the McKinney Act -- a federal law that addressed homelessness in part by giving agencies that serve the homeless free access to surplus federal property.


  • That act no longer applies now that the base property has changed hands. The Noisette Co. had allowed Chesapeake to continue to occupy the homes at no cost -- the nonprofit pays insurance and maintenance costs -- but when the Public Railways acquired the property last year after Noisette's foreclosure, things began to change.

***

  • For the veterans, who stay in the program about four months on average, the move will mean a longer commute to their treatment at the Veterans Administration health center in downtown Charleston.


  • Their new neighborhood also won't have the same quietude -- or the quality and quantity of nearby parks or the chance to fish in the nearby creek. A regular narcotics support group meeting, known as "Staying Alive," also will relocate.


  • Kelly said the move is most unsettling to some older veterans who have grown familiar with the former base.

For more, see Homeless veterans to leave old base site (Group to relocate men to Ashley Phosphate facility).

Go here for more from HUD on the McKinney-Vento Act.

Landowner's Unpaid Water Bills & Mortgage Payments, Failing Sewage System Threaten To Drive Mobile Home Park Residents Out Of Their Homes

In Clermont County, Ohio, WKRC-TV Channel 12 reports:
  • Dozens of worried mobile home park residents crowd into a Clermont County courtroom, anxious to know if they're going to be forced out of their homes because their landlord hasn't been paying his bills.


  • If that scenario sounds familiar, that's because it's being repeated in courtrooms across the Tri-State with properties owned by the same man ... Lanny Holbrook. Holbrook owns at least 31 different properties across the area, and one by one, they're going into foreclosure, as millions of dollars in debts against him mount.


  • Today, the scene was a Clermont County Courtroom and Local 12's Rich Jaffe says one of the biggest concerns is raw sewage. Clermont County officials are concerned this mobile home park may have to be shut down, because the owner hasn't been paying the bills on this park and others, and sewage from this park is allegedly being channel straight into the Little Miami River.


  • The sewage system has failed health department inspections over and over again. You can see the putrid sludge accumulating, even though the system is running at full tilt, with the Little Miami just beyond.


  • Today in court, property owner Lanny Holbrook agreed with health department findings. He also agreed he owes more than 28,000 dollars in water bills. He also agreed he owes close to half a million dollars in back taxes on the three mobile home parks.

For more, see Property Owner In Court Again.

State Bar Gives Golden State Counsel Six Months In Penalty Box For Violating Tenants' Rights In Running Fraudulent Robosigning F'closure Eviction Mill

In San Francisco, California, Highland News reports:
  • Two years after Tenants Together demanded that attorney David Endres stop illegally evicting tenants, the State Bar of California has suspended Endres from practice. Endres has been notorious for pursuing eviction actions on behalf of major banks after foreclosure in violation of federal, state and local law. The Bar suspended Endres from practice for six months and ordered Endres to pay the costs of the proceeding in the amount of $4,000.


  • Dean Preston, Executive Director of Tenants Together, California’s statewide organization for renters’ rights, welcomed the news of disciplinary action, but called for stronger sanctions: “We are pleased to see the Bar taking action to police unethical eviction lawyers, but this 6-month suspension is not nearly enough. David Endres should be disbarred, if not put in jail. His fraudulent robo-signing eviction mill caused the mass eviction of thousands of tenants and undermined the integrity of the judicial system. He should never be permitted to practice law in this state again.”

***

  • Endres has handled thousands of eviction cases on behalf of major financial institutions including U.S. Bank, HSBC, and Aurora Loan Services. The August 23, 2011 suspension order from the State Bar notes that he filed over 1,000 cases between July 1, 2009 and December 31, 2009 alone.


  • To accomplish these mass filings, Endres had non-attorney staff prepare verified pleadings and sign on his behalf.


  • Endres knowingly submitted false verifications to the court. The Bar concluded that “respondent aided the unauthorized practice of law, in willful violation of Rules of Professional Conduct, Rule 1-300(A)” and “sought to mislead judicial officers, in willful violation of Business and Professions Code section 6068(d).”

For more, see California Bar Suspends Attorney for Illegal Foreclosure Evictions of Tenants (Statewide Tenant Organization Calls for Stiffer Sanctions).

See also, News10.net: Davis attorney suspended in foreclosure evictions probe.

Outfits Peddling Anti-Homestead Tax Exemption Fraud Software, Services Target Cash-Strapped Counties Desperate For Funds

From a press release from LexisNexis regarding a recent conference of county tax assessment administrators:
  • LexisNexis will be conducting demos of their Homestead Exemption Fraud Detection Solution on the exhibit floor at Booth #506. Attendees will learn how leveraging the combined power of public records and advanced search technology enables cities to discover millions of dollars in revenue from back taxes and new revenue assessments.

Source: Remarks to Focus on Leveraging Public Records to Detect Homestead Exemption Fraud and Boost Tax Revenue.

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

In Forsyth County, Georgia, Forsyth News reports:

  • Forsyth County commissioners expressed interest Tuesday in a plan to attack tax fraud. The proposal, aired during a work session, could net the county up to $2.5 million in three years.


  • The money would come from taxes owed by residents claiming more than the one homestead exemption allowed, said Royce Lain of Affiliated Computer Services Inc.


  • The Fairfax, Va.-based company offered to launch a nationwide search of records to determine which Forsyth County homeowners may be taking advantage of the exemption, Lain said. From there, the service would narrow the results and present cases to the board of assessors.

For more, see Group offers to hunt down tax cheats (Proposal would target homestead exemptions).

Cops Bust Foreclosed Homeowner On Charges Of Stripping Fixtures From Former Home, Using Craigslist Ads To Unload Goods

In Woodbury, Minnesota, KSTP-TV Channel 5 reports:
  • A 35-year-old Woodbury woman is accused of selling thousands of dollars worth of fixtures and property, after her home fell into foreclosure. According to the criminal complaint, Riana Bennerotte made her first court appearance on September 14 on charges of defeating security on realty.


  • According to Woodbury Police, Bennerotte and her then husband obtained a mortgage of about $359,000 to purchase the property in July of 2005. The couple defaulted on their mortgage in August of 2008, but were given time to correct the default. The loan was assigned to US Bank in 2009. During this time, the couple separated, and Bennerotte's husband moved out of the home in January of 2010.


  • Bennerotte was served with a foreclosure notice on January 14, 2010, and a foreclosure sale occurred on March 25, 2010. A six month redemption period went into affect, in which she was permitted to stay in the home.(1)


  • During this time investigators learned Bennerotte was placing ads on Craigslist and other online services to sell items from the home. Among other items, the ads included a china hutch, office suite, and chandelier. Bennerotte's phone number was listed with each ad as the contact.(2)

For more, see Woodbury Woman Accused of Gutting Foreclosed Home.

See also, Woodbury Bulletin: Felony charge filed against woman accused of gutting foreclosed Woodbury home (A Woodbury woman whose home fell into bank ownership after foreclosure is accused of gutting the house and selling off tens of thousands of dollars in fixtures before she moved out).

(1) See State v. Zacher, 490 NW 2d 149 (Minn. App. 1992) for an example of one property owner who successfully scored a reversal of a conviction of this charge where the property was taken after the sheriff's foreclosure sale had taken place (owner removed the fixtures one day before the end of the statutory six-month redemption period).

(2) See Minnesota Prosecutors Invoke Seldom-Used Law To Charge Office Building Owner In Foreclosure With Removing/Damaging Property Subject To Mortgage for another story on a criminal prosecution of a real estate owner in foreclosure who was charged with stripping the fixtures from his property.

Cops Pinch Man Facing F'closure For Running Indoor Pot Farm Out Of Home; Suspect Said He Needed To Supplement Income After Boss Cut His Hours At Work

In Oak Lawn, Illinois, The SouthtownStar reports:
  • A 34-year-old Oak Lawn man who allegedly was growing more than a dozen marijuana plants at his home faces drug charges after an anonymous tip led police to the home Saturday, Oak Lawn police said.


  • Mark A. Korzeniewski, [...] was charged with manufacturing and possessing marijuana with intent to deliver, possession of drug paraphernalia and unlawful production of marijuana plants, police said.


  • Police said they found five marijuana plants in the back yard and 11 plants in a “grow room” in the basement. The room also had heat lamps, a ventilation system on a timer, fertilizers and a digital scale. Police also found several clear plastic bags that contained about 290 grams of marijuana, police said.


  • Korzeniewski, who gave police consent to search the house, told police he was growing the marijuana plants to supplement his income. He said his house is in foreclosure and his hours at work have been cut.

Source: Police: Home in foreclosure, so Oak Lawn man grew pot to sell.

Vacant Foreclosed Home Hijacking Incidents On The Rise In Los Angeles

In Los Angeles, California, Fox Channel 11 reports:
  • Law enforcement officials say that when houses go into foreclosure, well-organized criminals break into the homes and create illegal titles. They set up the utilities in their names and they live there until they are evicted. In other cases, the criminals take over the foreclosed houses and then rent them to unsuspecting victims.


  • We approached the people living in one Hollywood Hills home that residents in the neighborhood accused of being squatters. Bank officials say they want them out and law enforcement is also investigating.


  • When FOX 11's Gina Silva approached them -- after an ugly confrontation -- they told us they paid $5,000 to rent the house. The man yelling obscenities in the video is rapper, J.O. Felony. His girlfriend told us they rented the house and insisted they are not squatters.


  • A lot of innocent people are caught up in these illegal foreclosure scams. Los Angeles city attorneys tell us they prosecute one case a week.

Source: Squatting Cases on the Rise in Los Angeles.

Friday, September 23, 2011

Kentucky AG On Foreclosure Fraud Probe: "There Should Be Absolutely No Criminal, Civil Immunity Given To Banks For Activity Not Yet Investigated!"

The Huffington Post reports:
    li>Kentucky Attorney General Jack Conway has added his name to a list of state law enforcers who fear that a settlement being negotiated among government officials and big banks isn't backed by a sufficient investigation into potential wrongdoing.

  • As law enforcers approach a deal with banks to settle allegations that the companies improperly foreclosed on American homeowners, the banks are pushing for a broad release from liability for actions that have not yet been fully investigated, Conway said in a Thursday email to the Progressive Change Campaign Committee, obtained by The Huffington Post.


  • By raising these concerns, Conway has aligned himself with New York Attorney General Eric Schneiderman and law enforcers from other states who have questioned the adequacy of the groundwork underlying the settlement talks.


  • "Today's economic crisis was caused by Wall Street acting improperly," Conway, a Democrat, said in the email. "Every American has paid the price -- with families losing their homes, investors losing their money, and many Americans losing their jobs. There should be absolutely no criminal or civil immunity given to banks for activity that has not yet been investigated."

For more, see Kentucky Attorney General Backs New York's Schneiderman In National Foreclosure Settlement Talks.

'Stagecoach To Hell' Accused Of More Sleaze; Homeowners' Attorney: "They Forged Signatures, They Backdated Documents. We've Got Them Cold!"

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • A Las Vegas attorney who represents people facing foreclosure has accused Wells Fargo of forging loan documents. The allegation is the latest sign that efforts to hold mortgage lenders accountable are escalating in Nevada.


  • In court papers filed this month in Clark County District Court, attorney Dave Crosby alleged bank employees committed forgery and fraud in making a $350,000 loan to a father of four who was unemployed at the time. "They forged signatures, they backdated documents," Crosby said. "We've got them cold."


  • Crosby said the bank has presented two deeds of trust for the same property. One bears the signature of Olivia A. Todd, who on Jan. 27, 2010, was identified as an assistant secretary with MERS, Inc., a mortgage servicer from the Phoenix area and a co-defendant in the lawsuit.


  • But on Feb. 16, 2010, Todd's signature appears on a second deed of trust, where she is identified as the firm's president. Both assignments were notarized as authentic, Crosby said in court papers.


  • Crosby made his allegations in a request to have a judge review three failed mediations between him and his clients, Ryan and Mical Henderson of Las Vegas, and lawyers with Wells Fargo, formerly Wells Fargo Home Mortgage.

***

  • Crosby said he suspects robo-signing is widespread in Nevada. One of his cases was the subject of an appeal filed with the state's high court, and he used the lender's own words against it. Supreme Court justices found in favor of Crosby's client, Moises Leyva, ruling unanimously that lenders have an absolute duty to strictly follow foreclosure mediation rules exactly as written.(1)

For more, see Wells Fargo accused of forging loan documents.

(1) See Defective Assignment, Failure To Produce Note Endorsement Sanctionable Under Nevada Mediation Rules; Halts F'closures; Another Lower Court Reversal.

Federal Appeals Court Affirms 10-Year Prison Sentence For Notorious Central Florida Foreclosure Rescue, Home Equity Scammer

From a recent ruling from a federal appeals court:
  • Peter James Porcelli, II, appeals his sentence for one count of mail fraud, in violation of 18 U.S.C. § 1341. He raises four issues on appeal.

    First, he argues that the district court erred in applying the U.S.S.G. § 3B1.3 offense-level enhancement for abuse of trust or use of a special skill, particularly in light of its simultaneous application of the § 3B1.1 aggravated-role enhancement.

    Second, he claims that the financially distressed victims facing home foreclosure were not "vulnerable victims" for purposes of § 3A1.1(b)(1).

    Third, he contends that the portion of the forfeiture money judgment that exceeded the loss amount constituted a violation of the Excessive Fines Clause of the Eighth Amendment.

    Finally, he argues that the decision to impose the instant sentence to run consecutively to his sentence in a Southern District of Illinois telemarketing-fraud case was substantively unreasonable.

    For the reasons set forth below, we affirm.

For the ruling, see U.S. v. Porcelli, No. 10-14777 (11th Cir. September 21, 2011) (unpublished).

(1) Among the observations made by the appeals court in ruling against this lowlife are those appearing in the following five excerpts (anyone going after dirtbags lilke this guy, either in criminal prosecutions or civil lawsuits (either in state court or federal court), would be well advised to work into their presentations in court the following points in seeking stiff criminal penalties, and, in the case of civil lawsuits, stiff compensatory and punitive damages):

  1. Porcelli and the others searched for homeowners who were in jeopardy of losing their homes through foreclosure, specifically targeting those who still had equity in their homes.


  2. The probation officer calculated that 68 homeowner-victims borrowed a total of approximately $1.8 million. Of that amount, approximately $1.2 million constituted fraudulent loan fees and costs, and, thus, was the "loss and restitution" amount owed to the victims.


  3. At the first sentencing hearing, several victims testified that Porcelli had caused them emotional and physical distress by manipulating, intimidating, and confusing them into the agreements, then harassing and threatening them and stealing their homes after they defaulted. One victim experienced high blood pressure and a heart attack as a result of Porcelli's actions, another was seeing a psychologist and taking considerable medication, and a third attempted to commit suicide.


  4. "[T]he primary concern of § 3B1.3 is to penalize defendants who take advantage of a position that provides them freedom to commit or conceal a difficult-to-detect wrong." Garrison, 133 F.3d at 838 (quotation marks omitted). The court "must distinguish between those arms-length commercial relationships where trust is created by the defendant's personality or the victim's credulity, and relationships in which the victim's trust is based on [the] defendant's position in the transaction." Id. (quotation marks omitted).

    "Fraudulently inducing trust in an investor is not the same as abusing a bona fide relationship of trust with that investor." United States v. Mullens,
    65 F.3d 1560, 1567 (11th Cir. 1995).

    Here, Porcelli falsely held out Safe Harbour as a nonprofit foundation dedicated to "foreclosure relief." Victims contacted Porcelli in reliance on that representation, as well as on the misrepresentations that Safe Harbour was established to "keep [people] in [their] home[s]," "give [them] a second chance," "[s]ave [their] credit," and protect them from "predators" who wanted to profit from their misfortunes.

    Porcelli then took advantage of the victims' belief that he was a nonprofit foreclosure-relief counselor in order to induce them to take out second mortgages through Silverstone Lending or another of his for-profit lenders. Silverstone Lending's ability to make such mortgages and to create the attendant fees depended on Porcelli's state-issued mortgage-lending license.

    Under all the circumstances, the district court did not clearly err in finding that Porcelli held, or falsely led the victims to believe that he held, a bona fide relationship of trust with them. See § 3B1.3 & comment. (n.3); Garrison, 133 F.3d at 837.

    Furthermore, Porcelli's interactions with the victims were not limited to "arms-length" lending transactions in which Porcelli, as a representative of Silverstone Lending, "[f]raudulently induc[ed] trust in" the borrowers. See Garrison, 133 F.3d at 838; Mullens, 65 F.3d at 1567.

    Rather, Porcelli also used his falsely assumed position as a nonprofit foreclosure-relief coordinator to manipulate and intimidate the victims into believing that a second mortgage from Silverstone Lending was their only remaining option, and, in doing so, caused the victims to be more susceptible to signing the exorbitant mortgage contracts. Thus, the court did not err in finding that Porcelli abused his falsely assumed position of trust with the victims. See § 3B1.3 & comment. (n.3); Garrison, 133 F.3d at 837-38; Mullens, 65 F.3d at 1567.

  5. "If the defendant knew or should have known that a victim of the offense was a vulnerable victim," he is subject to a two-level enhancement. § 3A1.1(b)(1).

    A "vulnerable victim" is a victim "who is unusually vulnerable due to age, physical or mental condition, or who is otherwise particularly susceptible to the criminal conduct." Id., comment. (n.2). The adjustment applies when the defendant selects his victim due to his perception of the victim's vulnerability to the offense. United States v. Day,
    405 F.3d 1293, 1296 (11th Cir. 2005).

    Thus, in determining whether the victims were "vulnerable," we focus on the facts known to the defendant when he decided to target the victims, not on the harm actually suffered by the victims. United States v. Page,
    69 F.3d 482, 489 & n.6 (11th Cir. 1995). "It is clear that having bad credit or otherwise being in a precarious financial situation is a `vulnerability' to fraudulent financial solicitations . . . ." Id.

    When a fraudulent loan scheme is "specifically addressed . . . to persons with bad credit," it "target[s] the most desperate victims." Id. at 490. "We will not absolve. . . defendants of their culpability for having targeted `vulnerable victims' simply because, in casting out their net, they happened to ensnare and defraud some individuals who did not share this vulnerability." Id. at 491-92.

    Porcelli specifically targeted individuals who were financially distressed and were in danger of losing their homes through foreclosure. He marketed Safe Harbour as a nonprofit organization that would "give people a second chance when no one else w[ould]," and he wrote the marketing materials to appeal to people who were facing "financial pressures," bankruptcy, harassment by creditors, and "ruin[ed] . . . credit ratings."

    Although Porcelli suggests that some or all of the victims might have lost their homes despite their involvement with him, the actual harm suffered is irrelevant to this analysis. See Page, 69 F.3d at 489 n.6.

    Furthermore, his speculation that some of the victims might not have been financially distressed or might have sought the mortgages for reasons other than imminent foreclosure does not prove that the vulnerable-victim finding was plainly erroneous. See Massey, 443 F.3d at 818; Page, 69 F.3d at 491-92. The district court did not plainly err in finding that the victims were unusually susceptible to the mortgage-fraud scheme, that Porcelli had targeted them for that reason, and, thus, that the vulnerable-victim enhancement applied. See § 3A1.1(b)(1) & comment. (n.2); Massey, 443 F.3d at 818; Page, 69 F.3d at 489-90.

Thursday, September 22, 2011

Dallas DA Fires Shot At MERS; Sues Suspected Racket, Others Over Alleged Mortgage Recording Fee Dodge Costing County Million$

In Dallas, Texas, the Dallas Observer reports:
  • District Attorney Craig Watkins on behalf of Dallas County, Texas, commenced an action against MERSCORP, Mortgage Electronic Registration System ("MERS"), Bank of America, and others seeking a judicial determination of whether the MERS System established by the mortgage banking industry to electronically track home mortgages violates Texas law related to the public recording of interests in home loans and the mortgages securing them.

***

  • Dallas County, Texas, believes that the MERS System may violate a number of laws applicable to the recordation of mortgages in Texas and has asked the court to order MERS and the other defendants to pay statutory penalties to Dallas County for having filed mortgage records which improperly claim that MERS is a beneficiary of tens of thousands of mortgages filed in the Dallas County deed records and for the filing fees that Dallas County would have been paid had all transfers of the subject mortgages been properly recorded in the deed records.

For more, see Craig Watkins Makes Good on Threat to Sue Mortgage Processor Over "Tens of Millions"

For the lawsuit, see Dallas County, Texas v. Merscorp Inc., et al.

See also, Reality Check: Dallas County, Texas Sues BofA through MERS for over $2.8 billion.

(1) The Dallas Observer describes the lawsuit as one:

  • [w]hich reads less like a lawsuit -- at least, initially -- and more like a treatise on the events leading up to the financial collapse of 2008, the history of the mortgage system in the U.S. and why "public recordation of mortgage interests in the U.S dates back to at least the middle of the 17th Century," augmented with charts, graphs and quotes from Frederic Mishkin and Paul Krugman.

Report Shines Light On Effects Of Robosigning Racket On Prince William Land Document Public Records

In Prince William County, Virginia, The Washington Post reports:

***

  • A team of more than 30 VOICE volunteers found widespread irregularities in a random selection of more than 1,600 real estate records, which amount to 10 percent of the foreclosures filed between 2004 and 2009, when foreclosures in Prince William peaked.


  • They found that one employee of a loan processing firm based in Jacksonville, Fla., signed foreclosure documents as an official for seven different banks. They also found mismatched signatures for the same notary public.

For more, see Probing Pr. William foreclosures, group sees widespread irregularities, ‘robo-signed’ papers.

Elderly Fresno-Area Senior Cops Plea To Grand Theft Charges In Vacant Foreclosed Home Hijacking Scam; Rented 13 Houses, Scouted 150 Others, Say Cops

In Fresno, California, KMJN Radio reports:
  • A Fresno man admitted his role in an elaborate foreclosure scam late Monday afternoon -- a scam in which he rented out foreclosed homes that he did not own. Sam Haley, 69, pleaded no contest -- the equivalent of guilty -- to three counts of grand theft. Haley did not have a real estate license, but he was able to find foreclosed homes -- then rent them out.


  • When he was arrested three years ago, police say he was renting out 13 homes, had another 19 people ready to rent and was scouting out another 150 homes in the Fresno area. Police Chief Jerry Dyer called him nothing more than a scam artist.


  • His plea could put Haley in jail for a year, but his lawyer will argue that he's suffering from post traumatic stress disorder from years in the military and ask a judge to give him probation and perhaps treatment. Haley agreed to pay $35,000 in restitution.(1)

Source: Alleged Fresno Scam Artist Admits It.

(1) I wonder if Haley's agreement to cough up $35K is part of a deal to buy his way out of any possible jail/prison time.

Wednesday, September 21, 2011

Utah Federal Judge Boots Post-Foreclosure Eviction Case Back To State Court

In Salt Lake City, Utah, KCSG-TV reports:
  • St. George attorney John Christian Barlow, representating homeowners who have been lost their home to the Bank of America's foreclosure machine ReconTrust, may have finally achieved a measure of victory in the battle of Utah homeowners against ReconTrust fraudulent foreclosures.


  • Federal Judge Clark Waddoups Thursday returned to Utah Fifth District Court in St. George a case in which ReconTrust was named as a third-party in the complaint claiming immunity under the National Bank Act in an unlawful detainer action. (Court Order and Memorandum).

For more, see Bank of America-ReconTrust to Face State Court Judicial Process in Illegal Homeowner Foreclosures.

Sleazy Banksters To Launch Toll-Free Phone Number In Search For Robosigner Victims?

The Wall Street Journal reports:
  • It probably won’t include “1-800-ROBO,” but big banks are preparing to launch a toll-free number to find consumers harmed by problems in foreclosure processing. The effort to find consumers is an outgrowth of the controversy over so-called robo-signing and other problematic foreclosure practices.(1)

For more, see Foreclosure Complaint? Stand By for New Toll-Free Number.

(1) Inasmuch as the banksters have demonstrated a complete inability to deal in good faith throughout this entire mortgage debacle (whether with the homeowners/consumers when originating or modifying the troubled loans, or the investors currently left holding the bag on the crappy securitized paper the banksters peddled all around the world), I hope there is nobody out their stupid enough to believe they are going to reform their ways at this late stage (except, of course, for some of the moronic regulators and bureaucrats who come up with these proposals).

Lamenting Booting Of 101 Year Old Homeowner, HUD Backpeddles, Says She Can Come Back To Her Home Of 50+ Years & Stay As Long As She Wants

In Detroit, Michigan, the Detroit Free Press reports:
  • A 101-year-old Detroit woman evicted from her home earlier this week says she's grateful for the outpouring of support. Texana Hollis was staying with a longtime friend on Detroit's west side Friday, looking forward to going home sometime in the next few days.

***

  • Hollis found out she was being evicted when officers from Detroit's 36th District Court showed up with disposal trailers Monday morning. She ended up at Henry Ford Hospital in Detroit after those around her realized her medication was buried in the trailer among the family's belongings. She went to Cheeks' home after she was released Thursday night and will stay there until her house is put back in order.


  • Warren Hollis, 64, said he had his mother sign a reverse mortgage in 2002, and he used the $32,000 they received to fix the roof and pay other bills. But he failed to continue paying the property taxes and insurance, a requirement for reverse mortgages to avoid going in arrears.


  • The U.S. Housing and Urban Development Department took over the mortgage in 2007 from Financial Freedom Senior Funding, a subsidiary of Lehman Brothers Bank, according to HUD spokesman Brian Sullivan and court records. HUD has made $6,964.60 in tax payments on the Hollises' behalf since then.


  • But Warren Hollis and brother Ira Hollis Jr., 69, did not follow through with repayment arrangements they made with HUD, Sullivan said this week. And they ignored 36th District Court officers' warnings since May that they were about to be evicted, according to Chief Judge Marylin Atkins.


  • After Texana Hollis' situation became national news and went viral on the Internet, HUD announced late Wednesday the agency would allow her to return to the home for as long as she wants.


  • "Truth be told, this foreclosure action shouldn't have been brought forward in the first place," Sullivan said Thursday. Sullivan said HUD officials mistakenly thought Hollis' home was a tax foreclosure before they reviewed the case.

***

  • While Hollis is staying with [a long-time frien and neighbor], a grassroots group called It Takes A Village Y'All and family friend Laurie Ridgell will fix up the home Hollis lived in for more than 50 years.

For the story, see Evicted 101-year-old grateful for support, ready to return home.