Financially Distressed Homeowners Face Criminal Prosecution For Recording Bogus Land Documents To Stall Foreclosure

In Stanislaus County, California, The Modesto Bee reports:

• Authorities' patience with people facing foreclosure — normally a sympathetic bunch, especially in the Central Valley where rates are sky high — wears thin when owners might be using illegal means to keep their homes.
  
  Fraud investigators say they are seeing an emerging foreclosure rescue scheme in which desperate homeowners record phony documents — a felony — simply to stall losing property at public auction.(1)
  
  The cost of buying time can be steep: The homeowner typically pays a bundle of money for bogus forms and learning how to use them, often loses the property anyway and then faces criminal charges.
  
  In the past couple of weeks, authorities have launched prosecutions against four Stanislaus County property owners. All were warned when investigators got wind that the owners might be up to something, but each returned later or sent someone else to try to file fake papers again.
  
  "It comes to a point where enough is enough," said Jeff Mangar, a prosecutor with the district attorney's real estate fraud unit. "How many breaks can we give these people?"
  
  They include a mortgage company owner, a gas station cashier who obtained a $648,000 loan and a woman who said her lender should pay her $2.5 million. Two told The Bee they are innocent; the others could not be reached.
  
  Some fell into schemes pushed on the Internet, they told authorities.
  
  A website reviewed by The Bee encourages owners to fight back against greedy banks engaging in unscrupulous robo-signing and refusing to renegotiate loans. The site brags that none of its 2,600 customers has made a mortgage payment in the past two years.
  
  "We essentially tie the banks up in administrative proceedings," the site says. When lenders catch on to delay tactics, "our team is counter-maneuvering to tie the bank's legal team up in administrative red tape" with more filings, the site says.
  
  Clerks at the recorder's office in Stanislaus County are getting wise to suspicious documents and tip off investigators, who rush over from a couple blocks away and sometimes arrive before people leave the recorder's office.
  
  "We are the government (too)," said county Clerk- Recorder Lee Lundrigan. "If the purpose of making a document public may be criminal, we communicate that information to the DA's fraud team and they can make the final determination."

For more, see Fake filings aim to stall valley foreclosures, prosecutors say.

(1) This "technique" for stalling the foreclosure process is an unlawful version of what is generally referred to by some real estate operators as "clouding the title."

Not to be confused with "crowding the title" - a maneuver in which an enterprising property owner conveys small fractional interests in his land title to multiple - typically controlled - entities, or to friends/relatives/business associates, each having P.O. Box addresses, addresses in far away places, etc. before a bankster files a foreclosure action, for the purpose of creating difficulty for a process server to serve a foreclosure lawsuit in a judicial foreclosure state. Note that if you use addresses that are located outside of the United States, for example, Canada, Jamaica, the Bahamas, Haiti, Central/South America, or any other continent, service of process may need to comply with the laws of that foreign jurisdiction, the Hague Service Convention, and/or possibly the Inter-American Service Convention and Additional Protocol. See generally,  American Bar Association Newsletter (October, 1999): Service of Process Abroad; U.S. State Department: Service of Legal Documents Abroad. What a cruel joke to play on the poor process server!

Atlanta-Area Counties Tag Bankster With Fair Housing Suit Over Discriminatory, Predatory Lending Practices; Similar Litigation Taken Earlier In Baltimore, Memphis

In Atlanta, Georgia, The Associated Press reports:

• Three Atlanta-area counties have filed a lawsuit claiming that British bank HSBC cost them hundreds of millions of dollars in extra expenses and damage to their tax bases by aggressively signing minorities to housing loans that were likely to fail.
  
  The Georgia counties' failure or success with the relatively novel strategy could help determine whether other local governments try to hold big banks accountable for losses in tax revenue based on what they claim are discriminatory or predatory lending practices. Similar lawsuits resulted in settlements this year worth millions of dollars for communities in Maryland and Tennessee.

***

• As in those cases, the lawsuit filed by the Georgia counties says the bank, in this case HSBC, targeted communities with high percentages of Fair Housing Act-protected minority residents, particularly blacks and Hispanics.

***

• It is the alleged targeting of minority communities that entitles the counties to seek action against HSBC for loss of tax income and other expenses, the lawsuit says.
  
  "If you can show that you yourself have suffered harm by an illegal act under the Fair Housing Act, even if you are not the target, even if you are not the intended victim, you can still sue to stop the behavior and to recover any damages that you can prove you suffered because of the violation of the Fair Housing Act," said Steve Dane, a lawyer whose firm was involved in the Memphis and Baltimore lawsuits.

For more, see Ga. counties sue HSBC claiming loss of tax base.

Clauses In Existing Mortgages Create Hang-Ups For Landowners Seeking To Cash In From Natural Gas Drilling Craze

In Youngstown, Ohio, the Youngstown Vindicator reports:

• Some landowners who have signed lease agreements with oil and gas companies are running into a problem based on mortgage-contract language.
  
  “A lot of these mortgages appear to contain clauses that would give the banks first dibs on any royalty income or even bonus payments,” said Tom Carey, an attorney for Harrington, Hoppe & Mitchell, Ltd., a Youngstown-based law firm.
  
  BP has been directing lessees to have this language in their mortgage and have their bank sign a subordination agreement before completing the lease, he said. The landowner typically has 60 days to get the bank to sign the agreement.
  
  “Some banks are willing to sign; others are requiring an application and a fee; others are just refusing to sign,” Carey said.
  
  The mortgages were made to people based on collateral and their ability to repay, he said. Oil and gas leases were not something that was being considered.
  
  “I think if someone receives a big lease bonus payment they would be more likely to repay,” Carey said. “We’ve even agreed to pay the bank the next year’s payments from the lease bonus, whatever it takes to move things along.”
  
  It would be understandable if the banks were stating that allowing drilling could make reselling a property difficult in the event of a foreclosure, especially if drilling is under way on the property, he said.
  
  “The deal is that in some cases, [bank employees] don’t want to take a chance,” Carey said.
  
  Banks with local branches have been easier to work with, but bigger problems have arisen when mortgages were sold to groups based outside the area, he said.
  
  “One person’s mortgage was sold to Fannie Mae, and trying to get a real person on the phone at Fannie Mae is impossible,” Carey said. “When we did get in touch with someone, they said he would have to fill out a form, pay $295, and it would take six weeks to get a decision.”
  
  The lessee has only 60 days to get the issue taken care of for the lease to proceed with BP, Carey added.
  
  The issue with the subordination agreements is due to mortgage language that was inserted into the contracts to protect the banks, said James Thurston, communications manager for the Ohio Bankers League.
  
  The goal was to protect the bank from damage that could come to the house through it being demolished, used for drug trafficking, or a number of other issues that would diminish the value, he said.
  
  “For example, if you have a $300,000 house and something is done on the property that creates a sinkhole next to it, the property is now worth zero,” Thurston said. “A lot of these mortgages were written by small community banks that couldn’t afford to inspect each and every one of these 500 to 600 properties they have on the books, so they had to protect themselves through contract language.”
  
  The contract language has nothing to do with oil and gas development, but those lease agreements have gotten caught up in the general-protection language, he said.
  
  Banks have to take precautions in contract language because “if we don’t, we’ll get spanked by our regulators,” said Rod Alba, general counsel for the American Bankers Association.
  
  Mortgages have to contain clauses to ensure there will be nothing done to the property that makes it impossible for the bank to recoup its investment during a sale, he said.
  
  Banks have to be cautious because it’s not about what the perceived value of the property is, but what the market will pay for it, Alba said.
  
  Carey said he is not sure how widespread of a problem the subordination agreements are, but has seen 15 to 20 people come to his firm with the issue.
  

Source: Mortgage language delaying some oil and gas leases.

Class Action Suits Targeting Alleged Loan Modification Rackets Using Attorney Involvement To Dupe Financially Distressed Homeowners Into Sense Of Trust Continue

From a recent press release from the Lawyers' Committee For Civil Rights Under Law:

• The Lawyers' Committee for Civil Rights Under Law (Lawyers' Committee) and pro bono counsel Cooley LLP filed a lawsuit in Orange County, California, on behalf of 14 homeowners from 10 states against a network of for-profit loan modification companies.
  
  The suit alleges that these loan companies defrauded vulnerable homeowners out of tens of thousands of dollars by falsely promising—for substantial upfront fees and also monthly membership/installment payments—to obtain much-needed mortgage modifications on their behalf, but consistently failing to deliver results.
  
  “This type of scam activity continues to have a severe impact on financially distressed homeowners who are desperately trying to save their homes,” said Linda Mullenbach, senior counsel for the Fair Housing and Fair Lending Project of the Lawyers’ Committee.
  
  “This lawsuit also seeks to halt a disturbing trend of attorney involvement in the scam operations, touting the attorney’s specialized experience and using one’s status as an attorney to gain trust. As a result, these homeowners are defrauded out of thousands of dollars in illegal fees, and suffer other losses as a direct result of the scammers’ activities and deceit.”

***

• This case is the Lawyers’ Committee’s eleventh loan modification scam lawsuit filed nationwide and its fourth filed in California.

For more, see Lawyers’ Committee and Cooley LLP File Lawsuit on behalf of Loan Modification Scam Victims.

Advocate: Case Follows Disturbing Trend Of Attorneys Using Their Status As Attorneys In Attempting To Paint Their Loan Mod ‘Business’ As Lawful

From a recent press release from the Lawyers' Committee For Civil Rights Under Law:

• The Lawyers' Committee for Civil Rights Under Law (Lawyers' Committee) and pro bono counsel McDermott Will & Emery LLP (McDermott) filed a lawsuit, Culliver et al. v. Alarcon Law Group, P.C. et al., in Kings County, New York on behalf of 17 homeowners from New York and nine other states against a network of for-profit loan modification companies.
  
  The suit alleges that defendants, led by New York attorney Rory M. Alarcon, defrauded vulnerable homeowners out of tens of thousands of dollars by falsely promising—for substantial upfront fees and also monthly membership fees—to obtain much-needed mortgage modifications on their behalf, but consistently failing to deliver results.

***

• “This is our seventh case filed in Long Island, New York since 2011, targeting this type of egregious scam activity which continues to have a severe impact on financially distressed homeowners who are desperately trying to save their homes,” said Linda Mullenbach, senior counsel for the Fair Housing and Fair Lending Project of the Lawyers’ Committee.
  
  “This case follows a disturbing trend of attorneys using their status as attorneys in an attempt to paint their loan modification ‘business’ as lawful. As a result of the scam activities, homeowners are placed in an even worse position when they are defrauded out of thousands of dollars in illegal fees, incur late fees, experience damage to credit scores, and face an increased risk of foreclosure as a direct result of the scammers who falsely claim to have specialized expertise.”

For more, see Lawyers' Committee Files Suit on Behalf of Distressed Homeowners who Lost Thousands to Alleged Loan Modification Scam.

Civil Rights Group Brings Class Action Suit Against Network Of SoCal Loan Modification Outfits Alleging Upfront Fee Ripoffs

From a recent press release from the Lawyers' Committee For Civil Rights Under Law:

• The Lawyers’ Committee for Civil Rights Under Law (Lawyers’ Committee) and pro bono counsel Dorsey & Whitney LLP (Dorsey) filed Williams v. Premiere Loan Services, Inc., Case Number RIC1215573, a class action lawsuit in Riverside County, California, against a network of for-profit loan modification companies and associated individuals.
  
  The case is brought by six named plaintiffs, who live in California and Nevada, on behalf of a class alleged to include over 100 homeowners. The suit alleges that the defendants, who are based in San Bernardino and Riverside Counties in California, defrauded vulnerable homeowners out of tens of thousands of dollars by inducing them to pay thousands of dollars in up-front fees for mortgage loan modification and related legal services that were never provided. Plaintiffs seek both monetary damages, including recovery of the illegal up-front fees, and injunctive relief to put an end to the deceptive practices of the defendants. The Lawyers’ Committee and Dorsey are representing the plaintiffs free of charge. (Click here to view Complaint.)
  
  The defendants named in the Complaint are Premiere Loan Services, Inc.; Raed Farraj; Nathaniel Genis; DKNZ Marketing & Media, Inc. d/b/a/ National Bailout Application Assistance; Samer J. Farraj; Ernest Auger; George Faraj; Emerge Financial Advisors, LLC; Thomas Duck; and Larry Foster.

For more, see Lawyers' Committee and Dorsey & Whitney LLP File Class Action Lawsuit Targeting Loan Modification Scam Acitvity in Riverside County, California.

Businessman: Now-Dead, Once-Trusted NJ Real Estate Broker Forged My Name As Straw Buyer On Sale Leaseback Ripoff Docs That Drained 9/11 Widow's Home Equity

In North Naples, Florida, the Naples Daily News reports:

• Marie and Ronald Rotunda were eating lunch at Olde Cypress golf club in North Naples one day in January 2006 — at the time a lawsuit says he was in an office more than 1,200 miles away, signing a lease-back agreement for a New Jersey home.
  
  Court documents contend a Trenton broker forged Ronald Rotunda's signature in New Jersey that day, and that a notary swore Rotunda stood before her that day, signing a $368,000 mortgage on the New Jersey home.
  
  The home in question was owned by a 41-year-old widow whose husband died in the 9/11 terrorist attacks. The fraudulent transaction on the home, which said Ronald Rotunda would lease the home back to the widow after she paid $92,000, staved off the widow's impending foreclosure, a lawsuit alleges.
  
  The Rotundas say they had no idea what was going on in New Jersey that day in January 2006. It was two years later before the North Naples couple discovered the mortgage that Ronald Rotunda supposedly had signed and owed.
  
  "We didn't know anything because we'd been living here (in Naples) since 2004," Marie Rotunda said. "It was through a credit report that we found out."
  
  Since then, the Rotundas said, they've been hounded by two banks to pay up on the mortgage. They eventually were cleared by Countrywide Mortgage, which dropped the foreclosure against Ronald Rotunda after deciding it was a fraud. But the Rotundas were pursued again through phone calls and letters by Bank of America after it took over Countrywide.
  
  Those are among the allegations in a tangled 2009 lawsuit and countersuit expected to head to trial early next year in Gloucester County, N.J. The North Naples couple also are defendants in a pending 2010 foreclosure lawsuit filed by Bank of America.
  
  Jorge Sanchez, the Trenton broker, died in 2008. But Ronald Rotunda, Sanchez's company Landmark Mortgage Services, Sanchez's wife, and the 9/11 widow's lawyer are named as defendants in a lawsuit filed by the 9/11 widow, Charlette Thompson.
  
  Ronald Rotunda filed a countersuit, seeking damages against Sanchez's estate, the 9/11 widow's lawyer, the notary and her title agency employer.
  
  "(The 9/11 widow) is arguably a victim of a mortgage rescue scheme, but she's lived in the house for years without paying," said the Rotundas' lawyer, Daniel Graziano of Lawrenceville, N.J.
  
  "You just don't know how to resolve the case," Graziano said of the many involved who relied on Sanchez's word that Ronald Rotunda signed the mortgage, lease-back and promissory note. "The judge understands the case has to be settled because it's too difficult to present to a jury … That's why it's dragged on so long."

***

• It was after Sanchez's death that the lawsuits and countersuits began. Court records and interviews provide this account of how the Rotundas became involved:
  
  On Dec. 28, 2005, the 9/11 widow agreed to sell her home to Ronald Rotunda for $460,000 and she then signed a mortgage. She agreed to provide $92,000 in financing and Rotunda supposedly signed a promissory note on Jan. 30, 2006.
  
  The 9/11 widow alleges Ronald Rotunda failed to hold up his end of the financial deal and that she's a victim of a conspiracy between her lawyer, Rotunda, Landmark Mortgage, Sanchez and his wife, who deprived her of most of the equity in her home.

For more, see North Naples couple caught in tangled web of lawsuits involving 9/11 widow.

Maine AG Squeezes $250K+ Settlement Out Of Debt Resolution Outfit To Resolve Complaints By 300+ State Residents

In Bangor, Maine, the Bangor Daily News reports:

• [L]egal Helpers website trumpets that it is “the nation’s largest debt resolution law firm” with “offices in 50 states.” When Eric Wright went looking, he found an office in Thomaston but had a lot of trouble finding the attorney who was supposed to be there.
  
  Wright is staff attorney for Maine’s Bureau of Consumer Credit Protection. He was looking for the attorney on behalf of our southern Maine consumer, who was less than pleased with the iceberg-like progress Legal Helpers seemed to be making.
  
  Wright investigated complaints from about two dozen Mainers, most of whom had dropped their business dealings with Legal Helpers.
  
  “They didn’t appear to have done anything,” Wright told me last week. “There never seemed to be a method to the madness of what they were doing” in terms of getting clients’ debts reduced.

***

• There was also the matter of registering to operate in Maine, which the company refused to do even though Maine law requires registration by debt settlement companies. Attorneys are exempt, unless those attorneys’ sole activity is settling debts. Legal Helpers claimed it had “partnerships” with attorneys who were licensed in Maine, and so should be exempt.
  
  Wright turned the whole matter over to Maine’s attorney general, William Schneider. Last week, Schneider and Will Lund, superintendent of the Bureau of Consumer Credit Protection, announced a settlement with Legal Helpers and with The Mortgage Law Group LLP, a sister company of Legal Helpers that claimed to have a national reputation for representing homeowners in danger of losing their homes to foreclosure.
  
  Under the agreement, the firms will pay $250,000 to be equitably distributed among more than 300 Maine consumers. The companies also agreed to stop charging monthly fees to present clients and will pay the state $15,000 to cover part of its administrative and investigative costs.

***

• In July, the state of Illinois reached a $2.1 million settlement with Legal Helpers.

For the story, see Debt settlement firm settles with Maine for six figures.

Disbarred Attorney Gets Nearly Five Years For Forging Clients' Signatures On Settlement Checks, Then Pocketing $200K+

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• Disbarred attorney Scott Schieb was sentenced to nearly five years in prison Thursday and will have to pay at least $250,000 to reimburse clients for personal injury settlements he stole from them.
  
  Schieb, 55, will pay back the thefts over 10 years, said prosecuting attorney Erika Quartermaine. Schieb forged clients' signatures and took between $10,000 and $50,000 in settlement checks from each client. He was sentenced for eight counts of grand theft Thursday.
  
  Schieb stole settlements from eight clients who were all injured in car accidents from 2005 to 2008. The clients' injuries ranged from whiplash to a debilitating back injury, Quartermaine said. Schieb gave up his license to practice law in 2011 after the Florida Bar found him guilty of misappropriating more than $200,000. “This is a sad case for all of the victims, and the defendant's family,” Quartermaine said.(1)
  
  Schieb lost his home this month after US Bank won a $1.13 million foreclosure judgment against him. Shieb bought the land in 1992 and built the house two years later.
  
  Schieb borrowed the money in April 2004 against his 4,234-square-foot house in the 2900 block of Dick Wilson Drive in the Laurel Oaks neighborhood of Sarasota.

For the story, see Disbarred Sarasota attorney imprisoned for stealing from clients.

(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:

• Directory Of Lawyers' Funds For Client Protection (now includes Canadian recovery funds, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

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

More On The Out Of Control Miami Judiciary In Handling Foreclosure Cases

A recent post on the website for Loan Lawyers, LLC, Plantation, Florida foreclosure defense lawyer Matthew Bavaro describes a recent courtroom confrontation he had with an arguably out of control Miami-Dade, Florida Judge Alan Schwartz during a trial while representing a homeowner in foreclosure.

As described by Mr. Bavaro, the judge's conduct was outrageous enough that it drove him (Bavaro) to ask the judge to disqualify himself from the case. Apparently sensing that he (Judge Schwartz) may have inappropriately pushed the wrong foreclosure defense attorney, granted Mr. Bavaro's request to recuse himself from the case.(1)

In concluding his post, Mr Bavaro offers this observation on foreclosure proceedings as they are apparently being conducted in Miami-Dade, Florida:

• Miami-Dade county is just setting hundreds of foreclosure cases for trial at a time without regard to whether any attorney is available or ready. I think this is a problem and shows that in Miami-Dade county, they are just interested in plowing through foreclosures, not administering justice and due process.

For Mr. Bavaro's post, see Fireworks in open court today. Matthew Bavaro and Judge Alan Schwartz did not see eye-to-eye in today’s Miami-Dade foreclosure trial.

Go here for the Order Granting Motion to Recuse.

Thanks to Deontos for the heads-up on this post.

(1) For more on the problem of bad judges -- judges and magistrates who are incompetent, self-indulgent, abusive or corrupt, see (appropriately named): Bad Judges, by New York University Law Professor Geoffrey P. Miller:

• In jurisdictions across the country, complaints are heard about judges and magistrates who are incompetent, self-indulgent, abusive, or corrupt.
  
  These bad judges terrorize courtrooms, impair the functioning of the legal system, and undermine public confidence in the law. They should not be allowed in office. Yet many retain prestigious positions even after their shortcomings are brought to light. The situation, moreover, does not appear to be under control. If recent scandals in New York and other states are a guide, incidents of judicial misconduct may be on the rise.
  
  The problem of bad judges is embedded in broader considerations about the optimal design of the judiciary in American political culture. The basic tradeoff is between independence, accountability and quality. To preserve independence it is necessary to insulate judges from external controls over their behavior. If judges are protected from external controls, however, they have fewer incentives to provide quality services. To ensure accountability judges must be subject to democratic processes. But influence and patronage, enemies of good judging, are inevitable when judges are chosen by political means. The challenge is to select, retain, supervise and remove judges in such as way as to maintain independence and accountability while not unduly sacrificing quality.

Days From Retirement, Bronx Judge Dodges Bench Boot For Failure To Fire Estate Lawyer Subsequently Indicted By Feds For Allegedly Ripping Off Dead People; Majority Ruling A "Big Blank Check" For Future Fleecings: Dissent

In New York City, Reuters reports:

• Bronx Surrogate Lee Holzman should be censured but not removed from office for failing to fire a lawyer in his court who charged estates hundreds of thousands of dollars in legal fees before performing any work, the state Commission on Judicial Conduct ruled on Tuesday.
  
  The commission filed charges against Holzman after Michael Lippman, the former counsel to the public administrator, was indicted in 2010 for stealing $300,000 in excess fees. Lippman has pleaded not guilty.
  
  The public administrator handles estates for which there is no designated heir, and its counsel is subject to oversight by the surrogate.
  
  The commission faulted Holzman for not firing Lippman upon learning that he violated court protocol and for failing to alert law enforcement and disciplinary authorities about his actions.
  
  "Instead, respondent failed to report Mr. Lippman's misconduct and permitted him to remain in a position of public trust for three years under an ill-conceived plan to repay the unauthorized monies he had collected, thereby putting the estates under his care at further risk and conveying the appearance of favoritism," the commission wrote in its decision. "Respondent's abdication of his ethical responsibilities, which was influenced by his long and close professional relationship with Mr. Lippman, constitutes serious misconduct."
  
  The commission, however, dismissed other charges of misconduct, including a claim that Holzman rubber-stamped Lippman's fee requests without proper documentation.
  
  Holzman, who has served as surrogate judge in the Bronx since 1988, is already set to leave the bench at year's end after reaching the mandatory retirement age of 70.
  
  Holzman's attorney, David Godosky, said Holzman had only done what he thought was best for the estates under his supervision.
  
  "Once the surrogate was informed of any departure of protocol, not a penny of harm occurred to any estate of the public administrator's office," he said.
  
  Holzman has 30 days to appeal the decision to the Court of Appeals. Godosky said a decision on whether to do so has not been made.
  
  In two dissenting opinions, three of the commission's 11 members said they would have gone further and recommended that Holzman be removed for his actions.
  
  In one dissent, Richard Emery faulted the majority for a punishment that "defies logic," given the findings.
  
  "Removal is the only sanction which is commensurate with respondent's uncontroverted, sustained, self-aggrandizing misconduct," he wrote. "And that is because it is clear that respondent's three-year cover-up of the criminal acts of his appointee and long-time colleague was actually an attempt to protect himself from scandal and cover up his own misconduct."(1)
  
  The commission's counsel, Robert Tembeckjian, had pushed for Holzman's removal from the bench despite his retirement plans.
  
  "I believed removal from office was the appropriate result based on the judge's egregious misconduct," he said in a statement following the ruling.

***

• 'BIG BLANK CHECK'
  
  In Tuesday's decision, the commission largely accepted Shea's findings that other charges of misconduct should be dismissed, including the claim that Holzman broke the law by routinely approving a 6 percent fee based on "boilerplate" documents with insufficient detail about the work Lippman was supposedly doing.
  
  Shea noted that other surrogates often did the same thing and that Holzman should not be held responsible for following what had become standard procedure, even though it might technically violate state law.
  
  The 6 percent fee is intended to be a maximum fee for public administrators under state guidelines but has become the default payment in almost all cases, Shea said.
  
  In a dissenting opinion joined by Thomas Klonick, Nina Moore found that charge should have been sustained in order to establish that the 6 percent figure should not be abused.
  
  Noting that the Bronx administrator's office handles tens of millions of dollars in estates at any given moment, the majority's ruling "gives a blank check to counsels to the Public Administrators," Moore wrote. "It is in all likelihood a big blank check."
  
  A Bronx civil court judge, Nelida Malave-Gonzalez, won the election for Holzman's seat in November and will take office after his retirement.(2)

For the story, see Bronx Surrogate Holzman faces censure but escapes removal in misconduct case.

For the ruling of the New York State Commission on Judicial Conduct, see In re Holzman.

Go here for other posts on the sanctioned grave-robbing of people who die without wills in New York City and elsewhere.

(1) Emery continued in his dissent:

• Cover-ups, as we have come to learn, in many walks of life are often more egregious than the substantive offenses being concealed. But for a judge to protect himself by covering for an appointee he supervised is a particularly grievous assault on the majesty of the judiciary. It is equivalent, in my view, to corruption.
  
  In this case, respondent's misconduct was worse than a simple cover-up. It was compounded by his bizarre scheme to have Lippman handle estate funds after 2006, when it was discovered that he had systematically taken fees that he had not earned. By constructing this scheme that allowed Lippman to continue earning fees for years - ostensibly to pay back what he had stolen but really to avoid the scandal of thefts by his appointee on his watch - respondent enabled a continuing fraud. It is as if the United States attorney's office told Madoff when his Ponzi scheme was discovered, "Keep the investments going so that what you make in the market can be returned to your victims."
  
  Remember, even if Lippman had been fired in 2006, he would have been responsible for repaying the monies he owed. Respondent has no excuse or justification for secretly helping him repay those monies - especially by retaining him in a position of trust. In effect, respondent was imposing on future estates a person whom he knew could not be trusted. And he told no one other than his trusted insiders, even while he knew law enforcement agencies were breathing down Lippman's proverbial neck.
  
  Respondent knew that as long as he kept his secret scheme in-house, the scandal in his court would not be revealed. He knew better than anyone that Lippman's victims were virtually all intestate estates where the beneficiaries had no one to look to for oversight other than the judge (respondent) who is the sole "disinterested" repository of trust and accountability in the system of public administration. Instead of carrying out his sworn duty, he hid the truth from the victims by not disclosing Lippman's dishonesty and not reporting Lippman to the law enforcement agencies that were engaged in ongoing active investigations, or to disciplinary authorities with oversight over attorney malfeasance.
  
  As we all know, it is all too common for disciplinary committees to disbar attorneys for misuse of client funds. Knowingly enabling that conduct is no less culpable.

(2) For more on the problem of bad judges -- judges and magistrates who are incompetent, self-indulgent, abusive, corrupt, see (appropriately named): Bad Judges, by New York University Law Professor Geoffrey P. Miller.

Court Slams Horndog Judge In Disciplinary Proceedings For "Conducting Photo Sessions Featuring The Judicial Penis" From Cell Phone While Allegedly 'Putting The Moves' On Young Female Courthouse Employee

In Philadelphia, Pennsylvania, The Legal Intelligencer reports:

• Even though a former Philadelphia Traffic Court judge contends that he did not intend to show photographs of his genitals on his phone to a Philadelphia Parking Authority contractor,(1) the Court of Judicial Discipline found that he did intentionally show the images.
  
  By doing so, Willie F. Singletary brought the judicial office into disrepute in violation of the state constitution, said Judge Timothy F. McCune, writing for the panel of President Judge Robert E.J. Curran and Judges Bernard L. McGinley, Charles A. Clement Jr. and John R. Cellucci.
  
  "We think that the public — even those members of the public who register the lowest scores on the sensitivity index — do not expect their judges to be conducting photo sessions featuring the judicial penis and then to be sending the photos over the electronic airwaves to another person," the opinion said.

***

• The opinion resulted in an unusual holding.
  
  "We hold that a judge who intentionally grooms his penis for photography, and then intentionally photographs his penis for the purpose of display to others, had better remember that the photographs are in his phone lest they 'slip out' at some inopportune (albeit unplanned) time under circumstances which are likely to offend another person or persons, for, if they do, we will hold such conduct satisfies the 'mens rea requirement' so as to support a finding that the conduct is such that brings the judicial office into disrepute," according to the opinion.

***

• Singletary has previously been the subject of judicial discipline.
  
  Singletary previously received a public reprimand and probation over a YouTube video in which he was recorded soliciting campaign funds from motorcycle riders while running for judge for the first time in 2007.
  
  When Singletary was previously subject to judicial discipline, the court found that Singletary violated the state constitution by bringing the judicial office into disrepute by soliciting campaign funds and intimating that he would give favorable treatment to anyone who donated to his campaign. The court sanctioned him with a public reprimand and probation.
  
  During his donation solicitation, Singletary asked the bikers, according to court papers: "Now you all want me to get there, you're all going to need my hookup, right?'"

For the story, see Court finds picture of 'judicial penis' matter of disrepute (A traffic court judge has been found to have brought his office into disrepute by showing photos of his penis taken with his phone to a contractor).

For the ruling of the Commonwealth of Pennsylvania Court of Judicial Discipline, see, see In re Singletary, No. 3 JD 12 (October 9, 2012).

(1) According to the ruling, this contractor to whom the cell phone photograph of the "judicial penis" was displayed was:

• "a twenty-two year old female employee [...] assigned as a cashier at Traffic Court’s location at 800 Spring Garden Street to collect [Philadelphia Parking Authority] fees for booting, towing, and impoundment operations." (Findings of Fact No. 12).

As described in the ruling at Findings of Fact No. 28, this judge ("Respondent") apparently took a personal liking to the twenty-two year old female employee ("F"):

• Respondent’s discussions with F during the time period described above included Respondent’s statements that he thought F was “a beautiful young lady,” that he “would like to go out with” her, and they might choose to have an “intimate relationship.” “But whatever we do, it has nothing to do with Traffic Court. You’re an adult, I’m an adult. It’s a private matter.” Additionally, he told her that, alternatively, he “could be a friend there for you if you need somebody to talk to or if you need help in any other area that I can help you in, whatever that might be,” including “a ride somewhere” or "helping paying a bill or anything.”

The shit began to hit the fan for this judge the following day when, obviously upset, the young woman clocked in for work and asked a female Philadelphia cop with whom she was friendly for advice on how to handle the situation, at which point the judge began to feel the heat, as described in the ruling at Findings of Fact Nos. 44 to 55.

Illinois AG Tags Two Outfits In Seperate Suits For Peddling Forensic Mortgage Audit Services To Homeowners, Allegedly Pocketing Illegal Upfront Fees While Providing No Assistance

From the Office of the Illinois Attorney General's Office:

• Attorney General Lisa Madigan [] sought to crack down on a new form of “mortgage rescue fraud,” filing lawsuits against two companies for preying on struggling homeowners and promising loan assistance while actually adding to their targets’ financial hardship.
  
  In this new scam, a fairly new variation of mortgage rescue fraud, con artists falsely claim that an audit of a homeowner’s mortgage will identify errors and can reduce a homeowner’s monthly mortgage payments. In some cases, Madigan said, scammers specifically targeted struggling homeowners and convinced them that the audit would reduce their mortgage as a way to help them avoid foreclosure and stay in their homes.
  
  Madigan filed two lawsuits [] against Mortgage FACS Corporation and Enlightened LLC [which operated as A.M.T. Auditing Services LLC and the Mortgage Auditing Program] for posing as professionals who can help consumers by completing so-called “mortgage loan audits.”
  
  In exchange for illegal upfront fees, the scammers promised to review whether lenders complied with state and federal lending regulations and to identify errors that could help the homeowner’s case for reducing their monthly payment or modifying their loan. In reality, many victims of the scam paid the upfront fee but received no assistance.

For the Illinois AG press release, see Madigan Sues "Forensic Loan Audit" Schemes for Ripping Off Homeowners Seeking Loan Savings, Help Fighting Foreclosure (Attorney General Files 2 Lawsuits in Crackdown on New Form of Mortgage-Related Scam).

Indiana AG Files Civil Suits Against Two More Out-Of-State Outfits Peddling Purported Foreclosure Assistance

From the Office of the Indiana Attorney General:

• Two foreclosure consultant companies face state lawsuits [] after taking more than $2,600 from local homeowners and not providing services or refunds.
  
  Nevada-based Blue Chip Group, Inc. and California-based Certified Legal Processing and Legal Preparation Services were illegally operating in Indiana when each company entered into contracts with homeowners.

***

• Blue Chip Group and its owner William Damiter contracted with two residents – from Lake County and Spencer County – and charged up-front fees for foreclosure consultant services ranging from $495 to $730. Zoeller filed the lawsuit [] at the Lake County courthouse.
  
  Certified Processing and Legal Preparation Services and its owner Shaun Lambert are accused of collecting $1,400 in up-front fees from a Porter County resident for similar services.
  
  Both defendants are accused of taking the money and not rendering the promised services or providing refunds. The companies did not obtain certificates of authority from the Secretary of State’s Office to conduct business in Indiana and did not register $25,000 surety bonds with the Attorney General’s Office. These bonds are required before services can be performed, including collecting money up front.
  
  According to the lawsuits, both businesses violated the Credit Services Organization Act, the Mortgage Rescue Protection Act, the Home Loan Practices Act and Indiana’s Deceptive Consumer Sales Act. Zoeller is seeking injunctions against the companies, restitution for the victims, civil penalties and attorneys' fees.

For the Indian AG press release, see Zoeller targets foreclosure consultants for ripping off local homeowners.

Federal Court Issues 'Time-Out'/Asset Freeze Order On Outfit That Allegedly Ripped Off Homeowners With False Low-Interest Debt Consolidation Offers

The Federal Trade Commission recently announced:

• At the request of the Federal Trade Commission, a U.S. district court has temporarily halted a debt relief operation that allegedly charged cash-strapped consumers hundreds of dollars based on the false claim that it could obtain rates as low as zero percent.
  
  The agency estimates that the operation’s gross revenues since January 2008 were at least approximately $11.8 million, according to documents filed with the court. The FTC complaint names as defendants Southeast Trust, LLC (formerly known as The Debt School, LLC, also doing business as Financial Freedom Credit Counseling), and the companies’ principal, Paul A. Wexler. The court order stops the illegal conduct and freezes the operation’s assets while the FTC moves forward with the case.
  
  According to documents the FTC filed with the court, the defendants “callously take advantage of consumers who seek debt relief services in this difficult economic environment.”
  
  The complaint alleged that the defendants claimed to be a non-profit group that targeted consumers with robocalls, and with ads on websites such as southeasttrust.com and thedebtschool.com. The defendants promised a single monthly payment, an interest rate ranging from zero percent to six percent, and that consumers would be debt free in three to five years.

For the FTC press release and links to some available court filings, see At FTC’s Request, Court Halts Operation That Allegedly Deceived Consumers with Bogus Debt Relief Services (Defendants Routinely Called Consumers on the Do Not Call Registry, Complaint Alleges).

Revoked Bar Ticket For Attorney Convicted Of Forging Documents To Snatch $500K+ In Foreclosure Surplus Sale Proceeds From Unwitting Foreclosed Ex-Homeowners

In Madison, Wisconsin, The Associated Press reports:

• The state Supreme Court has revoked a Brookfield attorney's license after he was convicted of stealing more than half-a-million dollars from Milwaukee County. The court said in a revocation order Tuesday that Thomas Bielinski hurt the integrity of the court system.
  
  Prosecutors accused the 53-year-old Bielinski in 2011 of defrauding the county out of $542,000. They say he targeted mortgage foreclosure cases in which the owners had failed to file claims for surplus funds. He claimed to represent the owners, filed claims on their behalf and kept the money for himself.
  
  He pleaded guilty this past February to one felony count of theft and was sentenced to five years in prison. His attorney, Michael Hart, declined comment except to say Bielinski has cooperated with authorities.

Source: Attorney's law license revoked after theft conviction.

Antittrust Feds Score Another Guilty Plea In Ongoing Probe Into Northern NJ Tax Lien Auction Bid-Rigging Scheme

From the U.S. Department of Justice (Washington, D.C.):

• A New Jersey company in the business of receiving the assignment of municipal tax liens pleaded guilty [Wednesday] for its role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities in New Jersey, the Department of Justice announced.
  
  A felony charge was filed [Wednesday] in U.S. District Court for the District of New Jersey in Newark, against Mercer S.M.E. Inc., a company located in Burlington, N.J. According to the charges, from at least 2003 until approximately February 2009, Mercer, in conjunction with a nonprofit corporation and others participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey.
  
  As part of the conspiracy, the co-conspirators agreed to allocate the liens on which each would bid. Among other things, Mercer was assigned tax liens it understood were purchased in accordance with the unlawful agreement.
  
  “The conspirators agreed to coordinate their bids and allocate the tax liens amongst themselves, at the expense of distressed property owners,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s guilty plea sends a message that those who profit from illegal, anticompetitive conduct will be held accountable.”

***

• [Wednesday]’s plea is the 11th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler – and two companies, DSBD LLC and Crusader Servicing Corp., have previously pleaded guilty as part of this investigation.

For the Justice Department press release, see New Jersey Company Pleads Guilty for Role in Bid-Rigging Scheme at Municipal Tax Lien Auctions (Investigation Has Yielded 11 Guilty Pleas).

Watch Out For Those Government Logos On Solicitations Peddling Foreclosure Help

ConsumerAffairs reports:

• You've seen the Internet ads. They feature President Obama's smiling face or the seal of a federal agency, suggesting the company making the offer has official sanction.
  
  They don't, and the Consumer Financial Protection Bureau (CFPB) is urging consumers not to fall for this blatant scam.
  
  “No, really. Just because something has a government logo on it doesn’t mean that it’s legitimate,” the agency warns on its website.
  
  As a case in point, the CFPB points to enforcement action is has launched against two mortgage modification operations it accuses of ripping off struggling homeowners. The Websites, emails and other promotional materials bear government agency logos, letterhead or other markings that could mislead a consumer into thinking these services are associated with government agencies.
  
  The government claims these two companies took in more than $10 million by charging consumers for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.

For more, see Why you should be suspicious of government logos (Pretending to be government-sanctioned is a scammer's favorite ruse).

Russian Immigrant's 'Shtetl' Defense Mitigates Jail Time For Self-Made Millionairess Bagged For Pocketing $77K+ In Federal Low-Income Rent Subsidies; Agreed To Serve 1+ Year, Only Gets 2 Months

In New York City, the New York Post reports:

• She’s headed for a different kind of public housing now.
  
  A self-made millionairess was sentenced to two months in the slammer [] for scamming nearly $80,000 in rent subsidies by illegally leasing a taxpayer-subsidized apartment after striking it rich in real estate.
  
  Russian immigrant Nataliya Dyakovskaya, 65, had agreed to serve more than a year behind bars in a plea deal with the feds, but caught a big break after her lawyer blamed her “crazy” crime on a “shtetl mentality,” using the Yiddish word for the former Jewish villages of Eastern Europe.
  
  “She has always believed that, notwithstanding her good luck and her success, she was afraid, and still is, that everything could disappear in a day,” defense lawyer Steven Kartagener said.
  
  Prosecutor Tatiana Martins countered by calling Dyakovskaya’s 14-year scheme “really egregious,” noting that 163,000 families are on a waiting list for the kind of low-income apartment she had in the Vladeck Houses on the Lower East Side.
  
  “Every time she sat down and took out the [qualification] form and put her name on the form, she knew she was ripping off the US government,” Martins said.
  
  Judge Alvin Hellerstein rejected Dyakovskaya’s bid for no jail time, saying: “What she did was reprehensible.”
  
  But Hellerstein also called her a “good person” who did “good things” for her friends and family, and noted that immigrants often fail to appreciate that “what was OK in a different society” isn’t acceptable here.
  
  In addition to the jail time, Hellerstein gave Dyakovskaya six months’ house arrest, fined her $25,000 and ordered her to pay more than $77,000 in restitution to the Housing Authority.

Source: Rental Yentl (Yiddish plea can’t save apt. cheat).

Baltimore-Area Foreclosure Mill Lawyer Gets Spanked In Court For Having Others Sign, Notarize His Name On Court Documents

In Baltimore, Maryland, The Baltimore Sun reports:

• A Hunt Valley attorney who admitted to having his employees sign his name to foreclosure documents was found by a Baltimore County judge to have violated three of Maryland's rules of professional conduct for lawyers, according to court records.
  
  Thomas P. Dore engaged in behavior that was "prejudicial to the administration of justice" by "routinely and repeatedly" filing "with the courts affidavits purportedly signed by him and attested to by notaries" he employed, according to court documents. Affidavits are the written equivalent of taking the stand to testify under oath and Maryland law does not allow for them to be signed by a proxy.
  
  The decision against Dore is the latest stemming from a series of petitions by the Maryland Attorney Grievance Commission against lawyers who, during the height of the foreclosure crisis, cut corners in thousands of foreclosure cases in order to manage overwhelming workloads. So far, one attorney has been reprimanded by the state's highest court for such behavior and several other cases are working their way through the legal system.

For more, see Foreclosure attorney violated rules by having others sign his name, court finds (Sanctions, if any, will be determined by Court of Appeals).

Litigating Miami-Dade Foreclosures Becomes A Joke As Judges Begin Bulldozing Cases Through System, Steamrolling Homeowners In The Process

In Miami, Florida, The Miami Herald reports:

• Miami-Dade Circuit Court — choked with foreclosure cases, many dating to 2009 — has gotten tough on pushing cases through the system.
  
  Five months into a state-funded project, Florida’s busiest circuit court is conducting hundreds of foreclosure trials a week.
  
  With $626,000 in special funds for the fiscal year ending July 31, 2013, the court has added two senior judge slots and a staff of case managers to help clear a backlog of some 53,668 foreclosure cases.
  
  “It’s a rocket docket,” said Miami-Dade Circuit Judge Jon Gordon, a senior judge who is churning through about 50 trials a day.

***

• Most trials are short and simple. Judges can plow through a one-witness foreclosure case in 15 minutes if it isn’t contested, the judge said. Contested cases with two witnesses can take a couple of hours.
  
  Attorneys, especially defense attorneys, don’t like the court’s tough line.
  
  Bruce Jacobs, a Miami attorney who specializes in foreclosure defense work and hosts a weekly radio program called Mortgage Wars on WZAB-AM 880 in Miami, said the court’s efforts are well intended but can hamper the defense’s ability to challenge a bank’s evidence that it is entitled to foreclose.
  
  Jacobs said he has shown up in court objecting that lenders have refused to provide documents he requested to prepare a defense until the day of trial. “They haven’t provided me anything, and the judge sends me outside the courtroom to look at them and then it’s, ‘Let’s go to trial,’ ” he said, expressing frustration at being asked to speed-read important documents.
  
  Jacobs said under the law, it isn’t enough for a lender to show that a homeowner hasn’t paid a loan; the lender must prove it has the right to foreclose. That often can be dicey when mortgage loans have been packaged into securities and are being serviced by a third party and have been passed from one institution to another.
  
  “I’m all in favor of moving these cases forward, but they’ve got to hold both sides to the rules of procedure,” Jacobs said.
  
  Last Thursday, Sergio Cabanas, a Pembroke Pines attorney, was in court arguing to postpone a foreclosure trial set for that morning, because, among other things, his attorney had another hearing in Broward County the same morning.
  
  Gordon, the senior judge, denied Cabanas’ request. “You’re here today,” the judge said.
  
  Cabanas, who defends foreclosure cases, claimed it would be “almost like a Woody Allen skit,” for him to be both a witness and the attorney in the case, but the judge brushed aside his argument.
  
  In Miami-Dade, the court typically won’t consider requests for continuances made the day of trial, except in an emergency. Such requests must be filed at least seven business days ahead of time for review by a judge on the foreclosure team.
  
  Forced to go to trial, Cabanas acknowledged that he hadn’t made payments on the loan since early 2009, even as the bank laid out its documentation to foreclose.
  
  Asked if a signature on a document was his, Cabanas said it looked like it, but he had “no specific recollection” of signing it.
  
  Cabanas then raised one issue after another — to no avail. Among other things, he said he was trying to get a loan modification for the rental property, held in a trust.
  
  He questioned the bank representative’s qualifications to be a witness in the case. He challenged the bank’s right to foreclose at all, demanding proof the mortgage had been properly transferred when the original lender, World Savings, was acquired by Wachovia, which in turn was acquired by Wells Fargo.
  
  The judge overruled his objections.
  
  “I’m running out of time, and I’m running out of patience,” Gordon finally told Cabanas. Soon afterward, he ruled in favor of the bank. Cabanas later said he plans to file an appeal.
  
  “In my case, they’re overlooking certain burdens of proof and other evidence that would never be tolerated in other proceedings,” Cabanas said. “They’re under the gun, no matter what, come hell or high water, to push these cases off the cliff.’’

For the story, see Miami-Dade court puts foreclosures on fast track (Miami-Dade Circuit Court is aggressively setting foreclosure cases for trial as it tries to clear the backlog that ensued from the ‘robo-signing’ delays).

Mozilo's Unloading Of Countrywide: Beleaguered BofA Continues To Choke On Stockpile Of Inherited Crappy Loans

Bloomberg reports:

• Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, more than twice the amount held by its four largest competitors combined.
  
  The loans are monitored as part of February’s $25 billion settlement between the top five U.S. lenders and state attorneys general over allegations of abusive foreclosure practices. Bank of America’s stockpile of deteriorating debt is mostly from its 2008 acquisition of Countrywide Financial Corp., once the nation’s largest mortgage provider. Wells Fargo & Co., the biggest U.S. servicer, has $15.3 billion of such unpaid loans.

For more, see Bank of America Delinquent Loans Mean Losses: Mortgages.

In a related story, see Forbes: As Bank Of America Tries To Recover, Mozilo Says Countrywide Was Never The Problem (The man at the top of the mortgage company that nearly crippled Bank of America says he has no regrets).