Thursday, May 24, 2012

Unwitting Borrower Has Home Foreclosed Out From Under Her Despite Three Approved Loan Modifications; 'Sleeping' Servicer: 'We Know Nothing About It!'

In Park City, Utah, KSL-TV Channel 5 reports:
  • Georgene Clotfelter recently hired a realtor to sell her Park City home, but was surprised to find out country records showed she no longer owned it. When she contacted her mortgage lender, Chase Bank, she says a representative told her the bank had no record of a sale.

  • "I don't even want to hear the word bizarre anymore, because everybody I talk to uses the word bizarre," Clotfelter said. "It's stupid. It really is stupid." Having spent decades working in the mortgage finance business, Clotfelter said she's yet to see anything like the mess she finds herself in today.

  • The problems began back in 2009 when she was having trouble making her mortgage payments and began the process of applying for a loan modification. To be eligible for a modification, she said the bank told her to skip mortgage payments, declare hardship, and go into default.

  • Since 2009, Clotfelter says Chase has approved her for three different loan modifications.

Federal Appeals Court: OK To Use 'FDCPA-Hammer' On Attorneys Hired For Mere Enforcement Of Security Interest Through Non-Judicial Foreclosure

From the law firm Burr & Forman, LLP:
  • The Eleventh Circuit Court of Appeals released an opinion earlier this month that could give foreclosure lawyers cause for concern.

  • In Reese v. Ellis, Painter, Ratterree & Adams, LLP, No. 10-14366, 2012 WL 1500108 (11th Cir. May 1, 2012), the Eleventh Circuit ruled that a foreclosure firm conducting a non-judicial foreclosure could be liable under the Fair Debt Collection Practices Act (“FDCPA”) for sending homeowners correspondence that includes false or misleading information.

  • This decision may call into question the protection that foreclosure firms have enjoyed under existing case law holding that mere enforcement of a security interest through non-judicial foreclosure is not debt collection activity under the FDCPA.
For the ruling, see Reese v. Ellis, Painter, Ratterree & Adams, LLP, No. 10-14366, 2012 WL 1500108 (11th Cir. May 1, 2012).
Editor's Note: This case was brought as a putative class action.

Fed. Appeals Court: OK To Hammer Bill Collectors Making Automated Calls To Wrong Cell Phone Subscribers; Numbers Were Reassigned To Unintended Targets

In Chicago, Illinois, Legal Newsline reports:
  • A federal appeals court ruled last week that bill collectors can be sued for costly, automated calls made to the wrong cell phone subscribers. [...] At the center of the case is the federal Telephone Consumer Protection Act, the law governing the conduct of telephone solicitations and telemarketing.

  • In particular, the TCPA restricts the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages received by cell phones, and the use of fax machines to send unsolicited advertisements.

  • The act also curtails the use of automated dialers and prerecorded messages to cell phones whose subscribers often are billed by the minute as soon as the call is answered. Routing a call to voicemail counts as answering such a call.

  • As the Seventh Circuit noted, an automated call to a landline phone is simply an annoyance, but the same call to a cell phone adds expense to the annoyance.

  • In this case, dozens of automated calls were made to two cell phone numbers, which went to voicemail, consuming minutes from the current subscribers' plans. All of the calls were made in an effort to reach previous subscribers to the numbers, whom agreed to receive the calls.

  • The "bystanders" or current subscribers, Teresa Soppet and Loidy Tang, sued Enhanced Recovery Company LLC, a bill collector for AT&T, contending they never consented to receive the automated or recorded calls.

  • In all, Enhanced Recovery called Soppet's number 18 times and Tang's 29 times trying to reach the previous subscribers, whom provided AT&T with the cell phone numbers as a way to contact them at least three years prior.

  • Enhanced Recovery argues that the previous subscribers' consents to be called at the cell phone numbers remained in force even after the numbers were reassigned to Soppet and Tang.

  • The district court disagreed, saying that only the consent of the subscriber assigned to the cell phone number at the time of the call, or perhaps the person who answers the phone, justifies an automated or recorded call. The court then certified the issue for interlocutory review by the Seventh Circuit.

  • In its 12-page opinion, the Seventh Circuit affirmed the lower court's ruling, concluding that the so-called "called party" is the cell phone number's current subscriber, not the person the debt collector is trying to reach.
For the appeals court ruling, see Soppett v. Enhanced Recovery Company, LLC, No. 11-3819 (7th Cir. May 11, 2012).
For the earlier ruling of the lower court, see D.G. ex rel Tang v. William W. Siegel & Associates, Attorneys At Law, LCC, 791 F.Supp.2d 622 (N.D. Ill. Eastern Div. 2011).
Editor's Note: This case was brought as a putative class action lawsuit (go here for the lawsuit).

Wednesday, May 23, 2012

Brooklyn Man Gets 13 To 41 Years For Impersonating Dead Mom To Recover Home Lost In Foreclosure & Pocket Her Social Security Benefits

In Brooklyn, New York, The Village Voice reports:
  • A Brooklyn man who dressed up as his dead mother to commit real estate and social security fraud was in court this afternoon where he was sentenced to some rather lengthy prison time after getting found guilty last month of multiple dressing-as-your-dead-mother-to-scam-people-related crimes.

  • [Thomas] Parkin, 51, was sentenced to a total of 13 2/3 to 41 years in prison for a scam in which he attempted to convince the government that his mother was alive so he could regain ownership of her home, which was sold at auction after Parkin was unable to pay the mortgage.

11th Hour Phone Call To Baltimore Councilman Helps Homeowner Dodge Foreclosure After City Loses Another Check For Real Estate Tax Payment

In Baltimore, Maryland, The Baltimore Sun reports:
  • Kristina Suson's home wasn't part of the city's tax sale Monday, but it was a close call.

  • Baltimore places liens on properties for unpaid property taxes, water bills and other municipal debts, then puts the liens up for auction every spring — allowing investors to buy them and either collect or move to foreclose. The city auctioned liens on about 10,600 properties on Monday, finding buyers for 6,545 of them and raising $20 million.

  • Suson ended up on this year's list, to her surprise, after the state retroactively reduced a property tax credit she'd received in 2009. Her mortgage servicer sent a check for the $2,100 tab in late April, but the Finance Department still hadn't processed it as the auction date neared. That's because the city lost the check. But no one told Suson that.

  • "When I would call and ask, they'd say, 'It takes two weeks, it'll be processed in two weeks, don't worry about it,'" said Suson, a pediatric urology fellow. Her Patterson Park home was taken off the tax-sale list Thursday after she contacted City Councilman James B. Kraft's office to plead for help.

  • Janice J. Simmons, chief of the Finance Department's Bureau of Revenue Collections, said in an email that the office's FedEx tracking list shows the check was received, but "it is lost internally." Staffers taking calls about tax-sale payments had no way of knowing, she said, which is why they kept telling Suson that it would eventually be processed.

  • "The check was misplaced between departments after being logged in," Simmons said. "We are revising our internal protocol to ensure that checks remain in the original tracking envelope and that each department that handles the check has to sign for the check."
  • [City Councilwoman Mary Pat Clarke has] received a lot of frantic calls over the years from homeowners in a fix, occasionally because the city didn't properly account for their payments. "Things get lost in the shuffle," Clarke said.
For more, see Baltimore homeowner almost ends up in tax sale after city loses check (Home removed just in time from city auction of tax liens on 10,600 properties).

Another County Joins In Attack On MERS' Scheme Allegedly Contrived To Stiff Municipal Recorders' Offices Out Of Recording Fees On Mortgage Transfers

In Belleville, Illinois, The Associated Press reports:
  • An Illinois prosecutor is suing 22 local and national banks and mortgage companies, accusing them of deceit and fraud in using an electronic mortgage registry to sidestep recording fees his county should have been collecting.

  • St. Clair County State’s Attorney Brendan Kelly contends the lenders engaged in fraud and deception by failing to file documents with the county’s recorder of deeds.

  • The lawsuit claims that the companies used an electronic mortgage database system called the Mortgage Electronic Registration Systems Inc. that tracked the transfers of loans between lenders and Wall Street securities entities, thereby eliminating the public’s ability to see the purchase and sale of properties through the traditional public records system.

  • Kelly said the county’s recorder’s office estimates that system allowed tens of thousands of transfers of title to take place without proper documentation.

Tuesday, May 22, 2012

RI Feds Score Guilty Plea From Now-Disbarred Closing Attorney In $600K Escrow Ripoff; Loot Intended To Pay Off Existing Liens In Mortgage Refinancings

From the Office of the U.S. Attorney (Providence, Rhode Island):
  • A former Rhode Island and Massachusetts mortgage attorney pleaded guilty in U.S. District Court in Providence [] to defrauding mortgage holders and lending institutions of more than $600,000. David L. Spector, 52, of Needham, Mass., admitted that he used the funds to operate a Ponzi scheme.
  • Spector pleaded guilty to three counts of wire fraud and one count of money laundering. He faces up to 70 years in federal prison followed by up to 3 years of supervised release, and a fine of up to $1,000,000 [...].
  • Spector admitted to the court that between April and October 2007, he conducted real estate mortgage refinance closings for properties in Plymouth and Lawrence, Mass., and Westerly, R.I. As part of the closing process, Spector had the proceeds of the mortgages obtained by his clients transferred to his attorney escrow account for the purpose of redistributing the funds to pay off existing mortgages and other costs associated with the closings.
  • Spector admitted that rather than properly distribute the funds, he used $601,962 to run a Ponzi scheme to pay his personal expenses and to pay off previous mortgages the he had failed to pay off.
  • Spector admitted that in order to keep his victims from learning of his scheme, he filed change of address forms with the mortgage companies that had not been paid off so that the bills would go to a post office box that he controlled.(1)
For the U.S. Attorney press release, see Former attorney pleads guilty to fraud and money laundering (Former mortgage attorney’s Ponzi scheme defrauded banks and customers of more than $600,000).
(1) The Rhode Island Bar Association's Client Reimbursement Fund was established to provide a public service and to promote confidence in the administration of justice and the integrity of the legal profession by providing some measure of reimbursement to victims who have lost money or property because of theft or misappropriation by a Rhode Island attorney, and occurring in Rhode Island during the course of a client-attorney relationship.
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:

Attorneys' Sleazy Practices Leave State Bar's Loan Modification Ripoff Task Force With Hands Full; Dozens Probed, Disciplined; 18 Disbarred

In Van Nuys, California, the Los Angeles Daily News reports:
  • Paulette Breen sensed something was wrong when her home loan modification made her mortgage payments more expensive. Suspecting fraud, the Van Nuys resident hired a lawyer to sort things out. That only made things worse.
  • Breen is among more than 1,000 potential victims of attorneys across the state who are targeting homeowners facing foreclosure as part of the fallout of the mortgage crisis that began in 2007. These attorneys charge fees with the promise of stopping the foreclosure, but then don't follow through with the case and disappear with the money, according to Laura Ernde, spokeswoman for the California State Bar, which has reported a spike in these types of cases.

  • Since 2009, the State Bar -- which created a task force in 2009 solely to focus on the issue -- has investigated 1,186 loan modification cases involving 153 lawyers, according to Ernde. So far, 69 attorneys in 581 cases have been disciplined and 18 cases have resulted in disbarment. About 720 cases are still pending and another 291 are under investigation.
  • But there are no hard numbers on just how many homeowners have been victimized. Oftentimes, victims are immigrants or from low-income families, and may not know where to turn for help after they've been scammed.

  • "Is it happening very frequently? Absolutely," said Charles Evans, an attorney with the Los Angeles-based Legal Aid Foundation, which provides legal help for the poor. "We have seen dozens of these folks each just over the last year and for every one of those, there are dozens more that don't end up coming our way."

  • Sometimes, it's ignorance. Some of the consultants are real estate brokers who switched over to law or attorneys who may not be familiar with foreclosure laws, according to Evans.

  • But often, it's more sinister. Evans has handled cases where attorneys will place liens on the home to secure money they think they're owed, taking advantage of immigrants' lack of English skills and getting them to sign over deeds.

  • "They're just playing the odds," Evans said. "The folks that they target are desperate, they're scrambling from place to place to try and save their home. They rarely take the time to file a lawsuit or file a complaint."

Suit: Trash-Out Contractor Swiped F'closed Homeowner's Work Tools From Adjacent Lot Not Part Of Sale Proceedings; Leaves Victim Unable To Earn Living

In Beaumont, Texas, The Southeast Texas Record reports:
  • A Jefferson County man has filed suit against the company that he claims refused to modify his mortgage after he faced financial hardships.
  • [Gregory James] Viator's property on White Perch Lane in Beaumont was sold on Aug. 3, 2010, to CMC, the suit states. Viator was given until Oct. 8, 2010, to vacate the premises, the complaint says.

  • Viator claims he moved all of his property onto an adjacent lot that was not subject to the foreclosure proceedings. However, when defendant Dana Bellanger was hired by defendant Federal National Mortgage Association to clean the property, he removed Viator's personal property from the adjacent lot, according to the complaint.

  • Although Viator has demanded return of his property, he has not yet received it back, the suit states. "Plaintiff, without his possessions, namely his work tools and equipment, is totally destitute and cannot perform his usual and normal trade to support himself," the complaint says.

  • In his complaint, Viator is seeking compensation for all tools and equipment that was destroyed and for lost wages. He is also seeking damages for his mental anguish, plus court costs, pre- and post-judgment interest and any other relief the court deems just.

Monday, May 21, 2012

Loan Mod Scammer Falls After Forcing Feds Thru 10-Day Jury Trial; Stands To Get Hammered For Screwing 100s Across Country Out Of Hundred$ Of Thousand$

From the Office of the U.S. Attorney (Manhattan):
  • Preet Bharara, the United States Attorney for the Southern District of New York, announced that ISAAK KHAFIZOV, a former owner of American Home Recovery (“AHR”), a mortgage loan modification business, was found guilty [] in Manhattan federal court of conspiracy, mail fraud, and wire fraud, in connection with a scheme to defraud distressed homeowners and lenders.

  • KHAFIZOV was convicted after a ten-day jury trial [...]. He was remanded into the custody of the U.S. Marshals following his conviction.

  • Manhattan U.S. Attorney Preet Bharara said: “Isaak Khafizov dangled false promises of relief to distressed homeowners who were trying to keep their homes, but instead, he repeatedly victimized them by stealing their money and forcing many of them into foreclosure. He will now face justice for the fraud that he committed against vulnerable and needy homeowners all over the country.”
  • After receiving up-front fees from the distressed homeowners, KHAFIZOV and AHR did little or no work to try to renegotiate the homeowners’ mortgages. And on those rare occasions when KHAFIZOV succeeded in getting a homeowner a mortgage modification, he typically did so by coaching the homeowner to lie about his or her income and assets on forms submitted to the mortgage-lender.

  • Because KHAFIZOV and AHR did not do the work they had promised and because KHAFIZOV specifically directed the distressed homeowners to stop paying their mortgages and to pay AHR its fees instead, many of AHR’s clients wound up in foreclosure. All told, KHAFIZOV and AHR defrauded hundreds of customers across the country out of hundreds of thousands of dollars in fees.

Scammer Gets 18 Months For Running Loan Modification Ripoff That Fleeced 80+ Homeowners Out Of $250K

From the Office of the U.S. Attorney (St. Louis, Missouri):
  • Marien Brown was sentenced to 18 months in prison, and ordered to pay approximately $250,000 restitution for falsely representing that she operated a “mortgage rescue” or “foreclosure rescue” service.

  • According to court documents, Brown, 42, Wentzville, Mo., also known as Marien White, owned and operated 1st Financial Resource, LLC, (First Financial) from September 2008 until March 2009, at which time the business became known as 1st Federal Resource, LLC (First Federal).
  • Brown researched and identified groups of vulnerable homeowners in Hawaii that were one or more mortgage payments behind, or were in imminent risk of home foreclosure, and sent out a large number of unsolicited mailings to prospective clients claiming that she operated a “mortgage rescue” or foreclosure rescue” service.

  • More than eighty clients responded to her mailings and wired funds to First Federal. Brown converted these funds to her own use. None of the client funds were ever sent to lenders. [...] Her scheme resulted in losses of approximately $250,000.

Arizona AG: Loan Modification Racket Used Multiple Ruses To Pocket Upfront Cash From Homeowners; Claimed Fees Were 'Church Donations'

From the Office of the Arizona Attorney General:
  • Attorney General Tom Horne announced [] that a complaint has been filed in Maricopa County Superior Court against Rosa Galope, of Surprise and Avondale, Arizona, alleging that she defrauded homeowners looking for help in obtaining mortgage modifications and saving their homes from foreclosure.
  • The lawsuit alleges that Galope charged thousands of dollars in advance fees for mortgage loan modification and foreclosure rescue services that she later falsely claimed were donations to her church, Nation to Nation Ministries.

  • The lawsuit also alleges that Galope prohibited her clients from communicating with their lenders and told them to send her any payments that they intended to go to their lenders, and that Galope would forward the payments to the lender.

  • The lawsuit alleges that rather than forwarding homeowners' payments to their lenders, Galope kept the funds for her own use, even endorsing checks made payable to lenders and cashing them at a local check cashing store.

  • The lawsuit further alleges that when Galope was unsuccessful in helping homeowners get a modification. She convinced them to give her thousands of dollars more, money that Galope said would be used as a down payment for the homeowners to repurchase their homes from an investor. [...] The lawsuit alleges that Galope kept the down payment money for herself and failed to refund it to homeowners when no investor deal occurred.
For the Arizona AG press release, see Horne Files Complaint In Mortgage Fraud Scam.

Alleged Scam Victims' Attorney: Mortgage Assistance-Peddling 'Guru' May Have Ripped Off $1M+ From Nearly 200 Connecticut Residents; Cops Yet To Act

In Wethersfield, Connecticut, The Hartford Courant reports:
  • An immigrant couple paid a Wethersfield man $18,600 to erase their debts by tapping into a little-known federal fund that they were told has money for anyone who knows the special, complicated way to apply for it, court records state. But no such fund exists, their lawyer Manuel A, Suarez said Monday. The fund is "fictitious," he said.
  • Suarez said his clients were struggling but current on their debts when they went to [Deowraj] Buddhu for advice in 2010, hired him and followed his guidance to stop paying on loans and apply for money to wipe out all their obligations. That advice caused the couple to fall into foreclosure, which they believed until a few months ago would be reversed by the secret fund, Suarez said.

  • In court, Judge Antonio Robaina said he needed time to review the motion and would notify all parties once he made a decision on the motion.

  • Outside court, Suarez said he has six clients who claim they were defrauded by Buddhu, a Wethersfield resident in his 60s who served time in state prison for his misdemeanor role in a counterfeit check case.

  • In court papers, Suarez says he's gotten information that Buddhu may have collected more than $1 million from as many as 200 clients who on his counsel stopped paying mortgages, car loans, credit card debts because the secret fund would pay off those obligations.

  • Buddhu has not been charged.

Sunday, May 20, 2012

Suit: BofA Charges Homeowner In Foreclosure For Court Costs, Then Fails To Give Refunds Despite Subsequent Receipt Of Reimbursement For Unused Amount

In Hamilton County, Ohio, the Cincinnati Enquirer reports:
  • A Madisonville woman sued Bank of America [...] for pocketing court fees from foreclosure cases that she says belong to homeowners. Kathleen Collins accused the bank of fraud, breach of contract, unjust enrichment and other violations in a class-action lawsuit filed in Hamilton County Common Pleas Court.

  • Collins’ attorney, Robert Newman, said the bank’s practice of keeping the fees could impact thousands of homeowners who should have been reimbursed money when their cases were resolved.
  • The lawsuit’s accusations revolve around court fees, typically about $550, which the bank is required to pay when filing a foreclosure action. Depending on the length and outcome of the litigation, a portion of those fees often is reimbursed to the bank when the case is over. The suit says that’s what happened in Collins’ case when the bank was repaid $29 of its original court costs.

  • The problem, according to the lawsuit, is that the bank added all of the original court costs into Collins’ new loan, so she would pay the costs instead of the bank. And when the court reimbursed the $29 in Collins’ case, the bank collected it and left the full original costs in Collins’ loan.

  • Newman said the bank essentially is double-dipping: Collecting the full amount of the court costs from homeowners and then keeping the reimbursement of unused court costs for itself.

  • The refund goes to the bank and the bank doesn’t fork it over,” Newman said. “There is a substantial amount of money owing to the class.” He said it’s impossible to know how much money is involved at this time, since individual reimbursements are relatively small, usually no more than a few hundred dollars.

  • The lawsuit asks the court to bar Bank of America from such practices and to repay any reimbursed court costs to Collins and, potentially, to thousands of other borrowers. The suit also seeks unspecified damages.

NYS Hearings On Banksters' Force-Placed Insurance Racket Begin; Homeowners Give Testimony Describing Alleged Abuses

In Albany, New York, The Associated Press reports:
  • Premiums for so-called force-placed insurance have more than tripled since 2004, producing enormous profits for insurers and the banks that take out policies when a homeowner fails to maintain coverage required by the mortgage, according to New York regulators.

  • In some cases, the premiums are "exponentially higher" than regular homeowners insurance and can push homeowners into foreclosure, Department of Financial Services Superintendent Benjamin Lawsky said Thursday at the start of public hearings on insurance rates. Such premiums rose from $1.5 billion in 2004 to $5.5 billion in 2010 during the U.S. housing crisis and have probably risen since, he said.

  • A handful of homeowners told regulators about insurance rates they were forced to pay that were up to three times higher than their original policies, making it harder to keep their homes. Some said they didn't get notices about the changes until they got higher bills for their escrow accounts.

  • Consumer advocates said similar stories were widespread, and that homeowners also end up with policies that don't cover their personal injury liability or their house contents.
See also, New York Daily News: 'Forced place insurance' gouging threatens to kick homeowners to the curb (State hears claims that banks are jacking up mortgage payments with possibly unwarranted insurance payments).

Homeowner Forced Into Hospital, Returns Home To Find Adverse Possession-Claiming Family On Premises; Judge Orders Suspect To Go To Trial

In Castle Rock, Colorado, CBS 4 reports:
  • A Douglas County judge has ordered a man who had been living in a million dollar home to stand trial on charges including trespassing and perjury. CBS4’s On Your Side Investigator Rick Sallinger has linked this case to at least a dozen other “stolen homes” across the area. The homes involved were under foreclosure and taken over by people who claim they have a legal right to do so under a law called “Adverse Possession.”

  • Sergio Hernandez was in court for a preliminary hearing after he was evicted from a million dollar mansion in the Bell Mountain Ranch subdivision near Castle Rock on March 22nd. Hernandez is charged with trespassing, perjury, offering false instrument and violation of a bail bond.

  • In March, Hernandez and his family members were forced to leave the four bedroom, five bathroom home at 1252 Rosewind Circle. All their possessions were hauled to the curb by bank hired movers. The true owner of the furniture inside the home remains the subject of debate.

  • The home was originally owned by Joyce Carroll, who tells us her furniture was still inside when Hernandez moved in. She went into the hospital, was unable to make payments, and Bank of America started foreclosure proceedings. When she was able to leave the hospital, she found strangers living inside a home she never fully moved out of.

  • That’s when Sergio Hernandez provided a document of “Adverse Possession”, which he claims gives him a legal right to live in the house.
  • Last Friday, Hernandez arrived in a U-Haul van to help move a family out of a $750,000 home in Larkspur. The home was occupied by a man named Gonzolo Perez, who is believed to be related to Hernandez.

  • In a similar fashion, Douglas County deputies were accompanied by a locksmith, who picked the lock to the home [...]. The bank-hired real estate agent helped haul Mr. Perez’s possessions to the curb. Hernandez refused to talk with us about his connection to this home.

  • But back in court, Detective Trindle made the link. He said he learned about Hernandez and the home in Castle Rock after investigating the house in Larkspur. Sergio Hernandez is due back in court on August 13th. Gonzolo Perez also has future court appearances scheduled.

Homeowner Facing Foreclosure Takes Two Month Trip, Returns Home To Find Premises Ransacked

In Palmdale, California, KABC-TV Channel 7 reports:
  • Shock and frustration for Palmdale homeowner Leroy McComb: He's speaking out about the distress of finding his home burglarized and trashed after a two-month trip. Leroy McComb certainly knows bad times. He lost his job in September. His house is in foreclosure. And he's going through a divorce. But none of that prepared him for a rude homecoming.

  • "The beds are all tore up, they stole the door off my daughter's bedroom," said McComb. "They stole the wiring off the side of the house to the junction box."

  • McComb says he went to visit his brother in Texas in February and when he returned two and a half months later he found his house ransacked, computer equipment stolen, furniture destroyed and trash scattered through every room.

  • "They took my pictures of my kids, they tore up memories," said McComb. "I don't have the nicest stuff in the world, but it was all I had in the world was in here. Now there's nothing left but trash and overturned furniture."

Saturday, May 19, 2012

Jury Convicts Suspect On 34 Counts In Home-Hijacking Racket That Commandeered Possession Of Vacant Homes, Then Rented Them To Tenants

In Cobb County, Georgia, WSB-TV Channel 2 reports:
  • A Cobb County jury convicted a man accused of taking over homes on the verge of foreclosure and renting them to unsuspecting tenants. Jurors found John Harris, the CEO of New Life Granted, guilty of 34 counts, including racketeering, burglary, theft, forgery and criminal trespass. It’s believed there were more than 20 victims in the case.

  • Harris testified on his own behalf [], stating that his company would find homes that looked abandoned take them over and then move in their own tenants. His company promised to help people facing foreclosure by restoring their credit and finding them a place to live – the abandoned homes.
  • Police discovered what Harris was doing when the real homeowners showed up. Harris said that’s when he’d remove his signs and move tenants out of the home.

  • Harris told jurors that he started to have second thoughts about his business model, but prosecutors said that only came after he placed tenants and collected rent. “I no longer felt comfortable taking over the houses as I was, so I was making a more concerted effort to get quit-claim deeds or leases,” Harris said. Four other people were charged in the case.

90-Year Old Tenant Dodges Foreclosure Boot; Court Holds BofA To Remaining 3.5 Years On Lease, Sinking Bankster's Effort To Disregard Federal Law

In Porterville, California, the Porterville Recorder reports:
  • Eve Ball is going to stay in her home after all. Local attorney Alex Krase said last week that the 90-year-old resident won her case against Bank of the America and got a court order that will allow her to stay in her home until October of 2015.

  • I think it was the right outcome. I’m happy she gets to stay,” said Krase. Judge Glade Roper made his ruling April 25 and Bank of America had five days in which to appeal. It did not. “We know it’s final now,” said the young attorney.

  • Eve Ball has lived in the two-bedroom, one-bathroom home on Road 223 for 11 years. She has three and a half years remaining on her lease, but then got an eviction notice from the large bank. “It’s quite a relief. She’s pretty excited about it,” said her son, Barry Ball.

  • According to records, the bank seized possession of the property late last year after the previous property owner foreclosed. Barry Ball had purchased the property — which includes two other small homes and a total of about one quarter of an acre of land — in 2002 but sold it three years later.

  • In 2005, the son negotiated with the new owner a 10-year lease for his mother to continue living in the home. The lease, which is set to expire in October 2015, has her paying $425 a month in rent.

  • Last October, Eve Ball received a letter from Bank of America informing her that the property owner had foreclosed. She was told to contact the bank immediately if she had a lease. She did, sending a copy of the escrow papers and asking the bank’s attorneys where she could send her payments.

  • According to Barry Ball, his mother did not hear back from the bank until January, when she was served with an eviction notice. Barry Ball said a section in the Protecting Tenants at Foreclosure Act of 2009 should allow his mother to keep her lease because it was agreed upon before foreclosure and she is not related to the previous property owner. Krase said that is true, but what made the case a big sticky is she had a verbal lease.

  • Krase had sought to have Eve Ball stay in her home until the law sunsets on Dec. 31, 2014, but was pleased the judge gave the extra 10 months. “The client is happy. She just wants to stay in her home,” said Krase. “That’s the most important part. She doesn’t have to worry any more,” added her son. He said she is glad to remain with her rose garden she planted.

Miami Woman Loses Home Of 40+ Years After Being Scammed In Home Improvement Ripoff

In Miami, Florida, WPLG-TV Channel 10 reports:
  • From the driver's seat of her large forest green sedan, Angela Samuels looked on her parents' modest pink-hued Liberty City home with a glazed expression Wednesday. Fellow community activists picked from the pile of belongings scattered across the front lawn and placed them in the car for her. There were buckets stuffed with clothes wedged into the trunk and back seat.

  • After years of fighting her eviction, Samuels seemed a bit stunned that this is how it would end. Maybe her optimism kept her from ever processing this possibility, that she would be kicked out of the home she's lived in for more than 40 years.

  • Samuels' problems started after her parents died. According to Occupy Miami community organizer Kevin Young, her parents didn't leave a will, and so the home ended up in probate.

  • At the time, he said, there was a mortgage of $7,000, and while Samuels was trying to work out a loan to pay off the debt, she said someone duped her.

  • A man promising to help her fix up the home conned her, she said, into taking equity out of the home, and then he vanished with the cash without making any improvements. Now faced with a loan bigger than she could afford, Samuels was stuck and her family home was in jeopardy.
  • Samuels said her father was a pastor, and her mother a missionary. That home was the community's home. Those in pain, those who were homeless, those who needed a meal, she said, all knew they could come to 1740 NW 46th St. That's why her favorite room was the "great room," the big room in the front where everyone would come and hang out, in some cases crash for the night.

Six Would-Be Renters Get Taken For $10K By Swindler Showing Vacant Apartments, Then Taking Off After Pocketing Security Deposits

In Corona, Queens, the New York Post reports:
  • A con artist [] tricked six people into giving him nearly $10,000 by posing as a realtor and showing vacant apartments in Corona, police said. One victim was smart enough to catch him in the act on video, sources said.

  • After the swindler took security deposits ranging from $1,400 to $2,300 from apartment seekers between Oct. 21 and Nov. 25, one victim had a friend call the fraudster for another showing. The friend videotaped the suspect inside 100-22 40th Rd., where he had lured three victims, then left without turning over any cash, sources said.

  • Police are asking for the public’s help finding the con man, who also allegedly showed homes and ripped people off on 42nd Avenue and Denman Street.
Source: NYPD Daily Blotter (1st story).

Mystery Surrounds Disappearance Of County Real Estate Tax Payments As 77 Fort Lauderdale- Area Property Owners Get Hit With Delinquency Notices

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • Seventy-seven Broward property owners paid their taxes last November but got a piece of mail no taxpayer wants to receive — a delinquent tax notice. They say they were among the victims of a mysterious disappearance of property tax payments mailed by diligent property owners last fall. The checks just vanished.

  • Broward officials say the tally of missing checks is at 1,075 now — the last 77 of which were discovered after the delinquent tax notices went out. Taxpayers who hadn’t noticed until now that their checks never were deposited by the county face a steeper climb to clear up the problem, and the stakes are higher.

  • If the taxes aren’t paid by May 22, the delinquent tax bill can carry an interest rate up to 18 percent, or, the notice warns ominously, “your property may be sold at a later date.’’ [...] “There are legitimate people who are just now finding this out, for whatever reason,’’ said Claudio Manicone, operations manager in the county’s tax and deeds department.
  • Broward officials determined earlier this year that hundreds of checks mailed in November never made it to their destination.

Cop Booted From Force Over Fraudulently-Obtained Mortgage; Dodges Criminal Charges As Bank Fails To Follow Up On Cooperation With Prosecutors

In Naples, Florida, the Naples Daily News reports:
  • Cpl. Michael Kovar, a detective in the North Naples district who had been with the Sheriff's Office since 2000, was dismissed for inflating his salary on paperwork that allowed him to fraudulently receive a $2.2 million loan in 2007, reports show.

  • On a loan application, Kovar said he made $510,000 a year at his second job as owner of Marbella Fabrics in Bonita Springs, a figure that was not supported by information on his tax returns. The actual income from the business was about $88,000 a year, reports said.

  • Kovar later told internal investigators the application was completed by a law firm and said he signed the document without proofreading it. The Sheriff's Office economics crime unit began investigating in October 2010 after receiving a report created by JPMorgan Chase. Kovar told investigators he felt his actual income would qualify for the high mortgage. "We applied and they gave it to us, so I assumed that yes," he told investigators.

  • The investigation also revealed that Kovar, who was hoping to buy a $2.2 million home, received $300,000 in two equity loans from the home's seller based on two other properties Kovar owned. Kovar then used the $300,000 as a down payment on a $1.7 million loan. "We purchased the property with the intent on flipping it and we were hoping for the best," he told investigators.

  • Instead, he later defaulted on the loan with a loss of more than $500,000, according to the report given to the Sheriff's Office. All of his mortgages ended in foreclosure, he said.

  • Documents indicate the bank, JPMorgan Chase, did not wish to press charges or provide pertinent paperwork. The State Attorney's Office said it would not issue an arrest warrant without the bank's cooperation.

  • Kovar was fired from the Sheriff's Office in mid-March for unlawful or improper conduct on- or off-duty, and for failing to pay just debts and liabilities. His appeal was later denied, said agency spokeswoman Michelle Batten.

Friday, May 18, 2012

State AG Charges Michigan Woman With Racketeering, False Pretenses For Allegedly Running Loan Modification Scam That Ripped Off Dozens Out Of $250K

From the Office of the Michigan Attorney General's Office:
  • Attorney General Bill Schuette [] announced charges against a Holly woman for her role in a foreclosure-rescue fraud operation that scammed at least 60 victims across the state out of $250,000. Tashia Winstanley, 38, of Holly, and her company, TLW Mortgage Solutions, face criminal charges for collecting upfront fees and impersonating a mortgage modification company.
  • The criminal charges come as the result of an investigation by the Attorney General after complaints against the company were filed with Attorney General Schuette's Consumer Protection Division. The investigation revealed that from September 2009 through January 2012 Winstanley allegedly operated TLW Mortgage Solutions as a mortgage modification business.

  • It is alleged Winstanley offered prospective clients mortgage loan modifications for a fee. Winstanley allegedly promised victims she would secure a mortgage loan modification for them. Some victims even made their mortgage payments directly to Winstanley instead of their lenders, but instead of remitting those payments to the banks, Winstanley allegedly pocketed the funds for her own personal use. Investigation subsequently revealed that Winstanley allegedly made no efforts to secure loan modifications for any of the victims.

  • Affected victims reside in the following counties: Grand Traverse, Leelanau, Kalkaska, Roscommon, Oakland, Genesee, Benzie and Macomb. Winstanley and her company, TLW Mortgage Solutions are each charged in Grand Traverse County's 86th District Court with the following:

    One count of Conducting Criminal Enterprises (Racketeering), a felony punishable by up to twenty years in prison;

    One count of False Pretenses - More than $20,000, a felony punishable by up to ten years in prison and

    Three counts of False Pretenses - $1,000-$20,000, a felony punishable by up to five years in prison and/or three times the value of money or property involved.

  • Winstanley is currently incarcerated in Huron Valley Women's Correctional Facility serving time for previous convictions for Larceny by Conversion - $1,000-$20,000 charged in Leelanau and Kalkaska counties.

More Media Heat On Detroit-Area Real Estate Operator Suspected Of Using Land Contracts To Peddle Illusory Home Ownership Dreams To Wanna-Be Homebuyers

In Wayne County, Michigan, WXYZ-TV Channel 7 reports:
  • 7 Action News Investigator Bill Proctor broke the story about Leonard Bale, a West Bloomfield real estate investor who has been selling homes that buyers later found to be in some stage of foreclosure, according to property records.

  • We’ve now learned from our own news archives that Bale has been in business a long time and that there have been many complaints about the way he conducts business. In a troubling scenario involving your tax dollars, Bale admitted guilt but only received a slap on the wrist. These days his business has grown, but many who have dealt with Bale over the years continue to ask: What can be done about Bale?

  • Bale sells mostly Wayne County houses that are in some state of foreclosure. Local real estate experts reviewed the land contract deals and other records involving Bale’s properties. They say what he has done could result in criminal charges. We know the Wayne County Prosecutor is looking into him.
  • Bale sells houses on land contract. But many buyers, [...] discovered the home they were buying was in foreclosure. They didn’t learn this until it was too late. That means the bank or county owns the house, not Bale. Those buyers were out thousands of dollars in cash they put down, as well as the money each shelled out to fix up the property.

  • But the people we talked to are just a handful of the many who have crossed Bales’ path. Bale has been around a long time—and he has been dodging questions along the way.
  • 7 Action News was there when a half dozen people went to complain to the Wayne County Prosecutor’s office. They say they never heard back. Why no answer, and why hasn’t Bale been considered for charges? “All I can say is it’s under investigation, so I can’t comment on the facts,” said Wayne County Prosecutor Kym Worthy.

  • Why should it take months to determine if a crime has been committed? Worthy said, “Most of our deed-fraud cases, and mortgage fraud cases take a long time…because they’re very paper intensive. So, they generally take quite a while to organize and decide if there are going to be charges issued.”

  • Attorney Mike Jaafar is not waiting. “Shocks the senses. It really shocks the senses,” he said when asked about the land contract deals Bale had provided his customers. Jaafar represents 10 people he says are frustrated with waiting on local government to go after Bale. He filed a lawsuit against Bale, alleging fraud and civil conspiracy to commit fraud. He and his law partner say there is plenty of evidence to support criminal charges.

  • There should be criminal charges pressed because we’ve seen a regular, and ongoing pattern of obtaining money from unsuspecting people by false pretences,” says attorney Kassem Dakhlallah, who says it is laid out thoroughly in their lawsuit against Bale.

  • There’s a road map to those charges in the complaint,” added Dakhalallah. “If somebody should choose to read it.”

  • The same people who took complaints to the Wayne County Prosecutor say they also complained to with the State Attorney General’s office. A spokesman tells 7 Action News the Attorney General is no longer Investigating Bale.(1)

(1) Observers in Michigan and elsewhere may find it interesting that the Michigan Attorney General's office has not been shy about criminally prosecuting loan modification rackets (see, for example, State AG Charges Michigan Woman With Racketeering, False Pretenses For Allegedly Running Loan Modification Scam That Ripped Off Dozens Out Of $250K). Yet, however, the state AG apparently has little interest in using the same legal theories in prosecuting one who, operating in a similar manner but in a slightly different context, reportedly has a long history of talking people out of their cash and failing to give those same people what they thought they were bargaining for.

As a reminder to those who mistakenly believe that these apparent ripoff deals are nothing more than civil cases, it is clear that all the sophisticated paperwork in the world (ie. business/purchase contracts, leases, closing statements, etc.) isn't enough to permit scammers to insulate themselves from criminal prosecution when they target their victims with legitimate-looking business propositions when screwing their victims over. Criminal prosecutors have the authority to "pierce through" such attempts to disguise a blatant criminal real estate ripoff as a common, legitimate business deal.

Clear precedent exists for such a "pierce through" approach to overcome any objections that will certainly arise when the scammers make the argument that the arrangement was just a civil transaction that, if challenged, should be done with a civil lawsuit, not a criminal prosecution. See, for example:

  • People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

    The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (
    People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)

  • People v. Jones, (1943) 61 Cal.App.2d 608, 620 [143 P.2d 726]:

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


    Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.

    The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

Multiple New Jersey Tax Lien Auction Bid Rigging Class Action Suits Face Consolidation In Federal Court

In Lebanon Township, New Jersey, the Hunterdon County Democrat reports:
  • A class action lawsuit initiated by a township woman facing foreclosure could be consolidated with two other similar lawsuits.

  • Jeanne Boyer who has been fighting to save her own home from foreclosure, filed the suit in March on behalf of herself and potentially thousands of other homeowners in similar situations. Boyer alleges that she is one of many victims of an illegal scheme that allowed tax lien investors to charge the highest amount of interest allowed by law by eliminating the competitive bidding process.

  • The suit was filed in Hunterdon County Superior Court on March 13 and removed to federal court on March 28. Since then two other similar suits have been filed in Federal District Court.

  • One of the suits was filed by Raymond Contarino, of Newfield. A New York company, M.A. Sass, bought the lien on his home at the March 2007 auction for $5,224. That company has not been charged by the Department of Justice but so far there have been nine other guilty pleas in connection with the scheme. The investigation is still open.

  • According Contarino’s suit, “as a direct result of defendants’ unlawful combination, collusion, conspiracy and agreement,” all 59 tax liens auctioned at the March 2007 tax lien sale in Newfield, were purchased “by defendants and/or unnamed co-conspirators, at the artificially elevated, maximum bid rate of 18%.”

  • Another suit was filed by MSC, LLC, of Cherry Hill. The three suits name many of the same people or companies as defendants. A motion to consolidate is now pending in federal court.

  • All three suits ask the court to stop the people who have pleaded guilty from enforcing any tax liens they currently hold, return title to properties already foreclosed upon and turning over proceeds from sales of properties they received because of the bid-rigging scheme. Such proceeds are the “fruits of the illegal conduct” of the people now awaiting sentencing.