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.
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  • 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.
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  • 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.
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  • 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.