Another Operator Gets Bagged By Feds For Allegedly Using 'Fractional Interest' Deed Transfers Of Financially Distressed Homes To Gum Up Foreclosure, Bankruptcy Process

From the Office of the U.S. Attorney (San Francisco, California):

• A federal grand jury in San Francisco indicted Walter Bruce Harrell, of Montara, with eight counts of bankruptcy fraud and two counts of making false statements in bankruptcy proceedings, United States Attorney Melinda Haag announced.
  
  The Indictment alleges that Harrell devised and executed a scheme to defraud creditors who were attempting to lawfully foreclose on numerous properties, and that he did so by delaying and obstructing foreclosure sales through the improper use of the federal bankruptcy process.
  
  According to the Indictment, Mr. Harrell, 71, is alleged to have arranged for property owners to grant fractional interests of between 2% and 20% of their properties to individuals whom Harrell had paid to file bankruptcy cases in the U.S. Bankruptcy Court for the Northern District of California. These actions invoked the “automatic stay” provision of the U.S. Bankruptcy Code, which halts foreclosure sales until the creditor seeks relief from the stay or until the bankruptcy case is dismissed.
  
  The Indictment alleges that Harrell’s scheme forced creditors to file motions to lift the automatic stays, or to wait until the debtors’ bankruptcy cases were dismissed, in order to proceed with the foreclosure sales.(1) A number of the creditors affected by the scheme were recipients of funds under the Troubled Asset Relief Program.
  
  The Indictment identifies at least six properties involved in the scheme, one of which was occupied by Harrell. The Indictment also charges Harrell with making false statements in bankruptcy proceedings with respect to two bankruptcy cases that Harrell paid an individual identified as “T.W.” to file.

For the U.S. Attorney press release, see Montara Man Charged With Running Bankruptcy Fraud Scheme.

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the bankruptcy courts.