Jury: OK For Insurer To Stiff Property Owner On $6M Damage Claim Where Latter Found Responsible For Torching Premises While On Verge Of Foreclosure Sale

In Asheville, North Carolina, The Asheville Citizen Times reports:

• A federal jury ruled that the former owner of the Richmond Hill Inn participated in the intentional burning of the historic structure nearly four years ago.
  
  The judgment in a lawsuit means the ownership group, The Hammocks LLC, won’t be able to collect on a $6 million insurance policy taken out on the property overlooking the French Broad River.
  
  U.S. District Court Judge Martin Reidinger also ruled this month the company must pay the legal bills incurred by Harleysville Mutual Insurance Co. in fighting the suit.
  
  The mansion, once the home of former congressman and ambassador Richmond Pearson, was destroyed on March 19, 2009, in a fire set by an arsonist, according to investigators.
  
  Harleysville refused to pay the insurance claim, prompting The Hammocks to sue for breach of contract. The insurance company countersued, claiming the owners violated the terms of the policy.
  
  A jury found at the conclusion of a trial in Asheville that The Hammocks was responsible for setting the fire. It also found the company did not willfully make false representations on its insurance policy application.
  
  “Based on the foregoing facts as found by the jury,” Reidinger wrote in his ruling, “the court concludes as a matter of law that the defendant has no duty to provide coverage for the claim of loss tendered by the plaintiff and that the insurance policy at issue is null and void, under the terms and conditions of the policy, as a result of the plaintiff’s intentional participation of the burning of the insured property.”
  
  William Gray, managing member of The Hammocks, declined to comment on the ruling.
  
  While investigators determined the fire that destroyed the inn was intentionally set, no arrests have been made in the case.
  
  The property was in foreclosure at the time of the blaze, and investigators said the sprinkler system had been turned off and they found evidence that a petroleum product was used to start the fire.
  
  Buddy Thompson of the Asheville-Buncombe Arson Task Force said he doesn’t know if there ever will be an arrest.
  
  “All of our leads have been run at this point,” he said. “We really have nothing else to go on unless someone comes up with some new information.”
  
  Thompson said the jury’s conclusion in the civil trial doesn’t mean there’s enough evidence to bring criminal charges.
  
  “There’s a difference in the way that evidence is looked at in a civil and a criminal case,” he said. “In a civil trial it’s the preponderance of the evidence. In a criminal trial you have to find guilt beyond a reasonable doubt.”
  
  Three days before the fire, Buncombe County officials finalized the property’s foreclosure and set the auction for a month later.

For more, see Jury: owner set Richmond Hill fire (Insurer not liable for $6M Richmond Hill claim).

Property Owner In Foreclosure Suspected Of Staging Mistaken Mob Hit, Then Torching Premises To Cash In On $500K+ Insurance Policy

In Portland, Maine, the Portland Press Herald reports:

• The owner of an apartment building in Windham that burned on Dec. 7 is now suspected of setting the fire and then tying himself up to make it look like a mob hit.
  
  Investigators with the state Fire Marshal's Office have not charged Donato Corsetti, 66, owner of the Corsetti's Market next to the apartment building. But officials say in court papers that they believe he set the fire to collect on an insurance policy.
  
  "Donato's objective was to make the event so sensational by staging an attack that investigators would not suspect him as the perpetrator," wrote Christopher Stanford, senior investigator for the Fire Marshal's Office, in an affidavit in support of a search warrant.
  
  Only Corsetti was hurt in the fire. People who were in an adjacent apartment got out safely.
  
  Corsetti's apartment building and his own home had recently been foreclosed on, and he still owed more than $174,000, according to the affidavit filed Dec. 17 in Cumberland County Unified Criminal Court.
  
  He was served with eviction papers three days before the fire.

***

• Investigators then interviewed Corsetti on the day after the fire, at the police station, where he described two attackers, one tall and skinny and the other short and stocky, though he did not offer more details.
  
  He said the men had nothing in their hands, there were no flammable liquids stored in the apartment and the lamps for the vacant apartment were kept in the closet.
  
  Investigators challenged his story, and he changed it.
  
  "He answered by telling us that he had lied the first couple of times and that it was actually a 'set up' by an organized crime group from Rhode Island that he would not identify as the Mafia," Stanford wrote in the affidavit. "He told us that they had come after him by mistake and that he was going to make some calls down in Rhode Island and have the problem taken care of."
  
  "We asked him why he was not poured with ignitable liquid if it was a hit on him, and he answered by saying they just wanted to scare him," the affidavit says. He asked them not to investigate any further.
  
  Corsetti initially agreed to a polygraph exam but then backed out, saying he had to check with his doctor because he had a heart condition, the affidavit says.
  
  Corsetti admitted to being behind on all of his debt payments except for the store, though he denied that the apartment building had been foreclosed on, according to the affidavit. Officers later learned that Corsetti's home also had been foreclosed on.
  
  At the time of the foreclosure, the properties were worth $250,000 and Corsetti owed more than $425,000. He was left owing more than $175,000 after Fannie Mae bought the property in foreclosure on Nov. 29, the affidavit says.
  
  The insurance policy on the properties was for $509,800, the affidavit says.
  
  On Dec. 11, Corsetti told police that he did not want to cooperate any more and gave them his attorney's name, the affidavit says.

***

• Stanford said he believes that Corsetti set the fire and no one was trying to kill him. "Donato did not have any trace of ignitable liquid on his clothing, which in my experience is not the case when a perpetrator is trying to kill someone with the use of such liquids and fire," Stanford wrote.
  
  Sgt. Joel Davis of the Fire Marshal's Office said Corsetti has not been charged with any crime. "We're still finishing up some things before we present everything to the district attorney."
  
  Corsetti has had two previous fires, one that destroyed the store in 1998 and one that damaged his home in 2007. Davis said investigators would take another look at the reports from those fires, which were deemed accidental, but they happened so long ago that it's unlikely any new investigation would be started.

For the story, see Windham fire explanation too 'sensational' for investigators (Court papers say Donato Corsetti staged the fire to collect on an insurance policy).

Orlando Homeowner Applies For 'Free Paint Job' To Dodge Mortgage Payments For Twelve Months

In Orlando, Florida, WFTV-TV Channel 9 reports:

• Hundreds of homeowners in Orlando who want to live mortgage-free for a year have agreed to be part of an extreme and controversial marketing campaign.
  
  Tammy Valdes is one homeowner who's applied to transform her home into a neon-hued billboard to get her mortgage paid for a year. "It would be such a relief. It would be such a burden off of me to have my house that color," said Valdes.
  
  A marketing company, Brainiacs From Mars, is using such homes to advertise its creativity. After painting its first home in California, it signed several Fortune 500 companies and doubled its staff. More than 300 Orlando homeowners have applied for the program so far. The company's California CEO said his decision will be based on who needs help the most.

***

• The city of Orlando has rules that prevent signs on homes, but doesn’t have restrictions on paint -- and some neighbors have big concerns about the neon colors. They worry a neon-colored home would stick out.
  
  But the Valdes family said looking at neon paint colors would be better than looking at a foreclosure. "We love our home and want to stay here and this would definitely help us stay," Valdes said. [...] The company plans to choose an Orlando homeowner next month and will pay to have that home repainted.

For the story, see Marketing campaign offers free mortgage for select homeowners.

Phony 'Prescription Pooch' Claims Used To Dodge 'No Pet' Prohibitions In Residential Buildings Becoming More Flagrant? Some Say Yes

In New York City, Habitat Magazine reports:

• You no longer have the right to live in a no-dog building. People with allergies, people afraid of dogs, people who don’t like dog waste and urine on the sidewalk or loud barking, or even people who’d simply rather live without dogs — sorry, but your rights and preferences are meaningless.
  
  That, at least, is the message co-op and condo boards, attorneys, and others are taking from the plethora of people falsely claiming a disability to avoid pet prohibitions. Not physical disability or psychiatric disability, for which there are specially trained service dogs, but emotional disability — which no one can see, anyone can claim, and for which your friendly family doctor will write a note, no questions asked.
  
  “It’s ridiculous,” says attorney Adam Leitman Bailey, principal in his eponymous firm. “People get a notice to remove a dog, all of a sudden they get a doctor’s note. If you need a dog for support reasons, why would you go to a psychiatrist only after you get an eviction notice?”
  
  False claims of emotional disability are probably “happening more and more often,” agrees Jennifer L. Stewart, an attorney with Smith, Buss & Jacobs who has defended disabled clients. Indeed, she adds, “I’ve seen signs posted in pet stores: ‘Do you want a dog? Do you live in no-pet buildings? Here’s what you do.’ I was a little shocked at how flagrant that was.”

For more, see "Disability Dog" Scams: NYC Explains How to Tell Them from Legitimate Claims.

NYC Public Housing Tenants Living In 'Sandy'-Ravaged Buildings Lacking Heat, Hot Water Get Slapped With Eviction Notices

In New York City, the New York Daily News reports:

• Just days after Hurricane Sandy devastated public housing in Coney Island, the Housing Authority slapped eviction notices on apartment doors for nonpayment of rent, the Daily News has learned.
  
  At the time, tenants had been ordered to evacuate, and those who stuck around had no power, hot water, heat or elevators. Elderly tenants were trapped in upper floors where toilets didn’t function.
  
  “It’s really ridiculous,” said Edward Josephson, director of litigation for NYC Legal Services. “At the very time they were unable to send people out there to see if people were dying or not, they were able to send people to serve notice of evictions.”
  
  Nearly 80,000 tenants at 400 NYCHA buildings across the city were affected by the storm, with thousands in Coney Island, Red Hook and the Far Rockaways living in miserable conditions for weeks without basic services. Tenants at developments most severely damaged by the storm complained that for more than a week, NYCHA staff failed to show up to help or let them know when services would return.
  
  Yet a mere four days after Sandy struck, a NYCHA process server traipsed out to the devastated developments at Coney Island to go after tenants, plastering eviction notices on apartment doors in the Surfside Gardens Houses.

For more, see Just days after Hurricane Sandy, NYCHA tenants with no heat, hot water or power get eviction notices.

Foreclosure Buyer Coughs Up $5K In Damages To Tenant Over Abrupt Eviction In Violation Of Federal Law; Expiring Statute A Concern To Housing Advocates

In Miami, Florida, The Huffington Post reports:

• On a Thursday evening three years ago, Sandra McCutchen found an eviction notice stuck to the door of her Miami rental apartment. The following day, she was in court fighting to get it delayed. The day after that, officers from the Miami-Dade police department forcibly removed her from her home, along with her daughter and six grandchildren, dumping their possessions in the front yard.
  
  "They was at my door to throw me out, and that’s just what they did," says McCutchen, 55, who was then living in a public housing unit. "Grandkids in diapers crying, they threw everything on the lawn."
  
  McCutchen, a single mother, was a bona fide tenant. She had lived peaceably in the house on SW 114th Street for seven years. She was never behind on her rent. But now, unbeknownst to her, the house had fallen into foreclosure and authorities were insisting she move out immediately.
  
  A federal law enacted earlier that same year was designed to protect renters like McCutchen from this very situation. Under the Protecting Tenants Foreclosure Act (PTFA), renters living in homes that land in foreclosure are entitled to stay in their homes until their lease expires or, if they have no lease, for a minimum of 90 days. McCutchen's abrupt eviction, which she described as "an emotional roller coaster" that left her clinically depressed, was a violation of this federal policy.
  
  "You don’t give nobody no one day eviction notice, you know what I'm saying?" she said. "I ain't never heard of that nowhere in my world!"
  
  With the help of Jeffrey Hearne, advocacy director of the Florida-based Tenants’ Rights Project, McCutchen was awarded $5,000 to help cover the cost of damages incurred by the eviction. (Ruined property included a television set, mattresses, and living room furniture left out in the rain.) Hearne also helped her and her family get resituated in nearby public housing, a process that took months.
  
  The federal law that allowed McCutchen to win her case is set to expire in 2014, absent Congressional action, and if it does, experts warn America could see an uptick in homelessness.

***

• Larry Rosenthal, executive director of the Goldman School of Public Policy's program on Housing and Urban Policy, said the federal law's short-term status is cause for concern.
  
  "Does it represent a genuine threat?" said Rosenthal of PTFA's expiration date. "The answer is yeah. These specific protections that are now required under federal law would disappear, but," he cautioned, "that doesn't mean that tenants go into an utterly protectionless state. We'd have to look at the state where they live, and sometimes even the city where they live, to analyze what protections they have."
  
  State and municipal laws range from more protective than federal law -- in California, for instance, where rent control regimes have been coupled with a variety of eviction controls to prevent landlords from ousting longtime tenants and driving up rents -- to considerably less protective -- in Montana, for instance, where a fully compliant tenant can be evicted without cause within the month. In some jurisdictions, state and local laws have been interpreted to prevent eviction due solely to a foreclosure.(1)

For more, see Florida Grandmother, Renter Describes Foreclosure Eviction: 'Emotional Roller Coaster'.

(1) See National Housing Law Project: State and Local Tenant Protections for a roundup of additional state and local protections for tenants in foreclosure situations.

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).