California AG-Led Joint Probe Bags Three In 'Mortgage Killer' Upfront Fee Debt Elimination Racket

From the Office of the California Attorney General:

• Attorney General Kamala D. Harris [] announced the arrest of three suspects who have been charged in a mortgage fraud scheme targeting struggling Northern California homeowners. Six websites allegedly used by the suspects to advertise their scheme have been intercepted and redirected to a resource page on the California Attorney General’s website.
  
  The felony complaint alleges that Ronald Vernon Cupp, 58, of Santa Rosa, deceived homeowners by falsely advertising a way to “kill” their mortgage debt on six websites including www.wekillyourmortgage.com.(1)
  
  Cupp was assisted by Randall Gilbert Heyden, 69, of San Rafael, and Angelle Wertz, 38, of Santa Rosa, a public notary who allegedly certified phony legal documents. Cupp allegedly recorded fraudulent documents, which would only delay a foreclosure, not actually satisfy the preexisting mortgage debt.

***

• Cupp, Heyden and Wertz are charged in a 57-count complaint alleging theft, forgery, notary fraud and recording of false documents. They were booked at the Sonoma County Jail on Wednesday, January 23. Cupp and Heyden are being held with bail set at $500,000 and $75,000 respectively. Wertz was released but ordered to appear for arraignment on Friday, January 25.
  
  Through Cupp’s business, North Bay Trust Services, homeowners would often allegedly pay upfront fees of between $1,000 and $10,000 and sign a promissory note or new mortgage for a phony offer to eliminate their mortgage debt. Requiring up-front fees is illegal in California.
  
  The suspects would then allegedly record fraudulent documentation purporting to be the attorney for the homeowner’s actual lender and then relinquish the mortgage and record a new deed of trust in favor of North Bay Trust Services. The debt to the original lender was never actually satisfied.

***

• The arrests were a result of a joint investigation by the California Department of Justice Mortgage Fraud Strike Force, Northern California Computer Crimes Task Force, Marin County District Attorney’s office, Sonoma County District Attorney’s Office and Santa Rosa Police Department.

For the California AG press release, see Attorney General Kamala D. Harris Announces Arrests in ‘We Kill Your Mortgage’ Scheme; Seizure of Fraudulent Websites.

For the formal felony charges, see People v. Cupp, et al.

(1) The websites that were shut down are:

• http://www.northbaytrustservices.com/
  http://wekillyourmortgage.com/
  http://santarosatrustandtitle.com/
  http://sonomafidelitytitle.com/
  http://cortemaderafidelityandtitle.com/
  http://marintrustandtitle.com/

These pages have been redirected to the California Attorney General’s website (http://oag.ca.gov/ecrime/doj-investigation) where individuals are able to file an online complaint form if they believe they may have been the victim of the scheme.

Trial Pressure Forces Accused Scammers To Cop Guilty Pleas After Testimony Begins In Mortgage Fraud Case That Included Ripping Off Unwitting Lenders, Underwater Homeowners By Profiting Off 'Simultaneous Closing' Short Sale 'Flips'

From the Office of the U.S. Attorney (Columbus, Ohio):

• Deborah L. Kistner, 50, and her husband, Mark A. Kistner, 52, both of Hilliard, pleaded guilty three days after their trial started on a $7 million mortgage fraud scheme they carried out between June 2006 and July 2010.

***

• Deborah Kistner pleaded guilty to three counts of conspiracy to commit bank fraud, three counts of conspiracy to commit money laundering, and one count of bank fraud. Mark Kistner pleaded guilty to one count of conspiracy to commit money laundering.
  
  Deborah Kistner operated Premiere Title Company in Hilliard. She deceived lenders in connection with the purchases of real estate in Ohio and Florida. Evidence presented during the first three days of the trial showed that she conspired with others to secure inflated loans for real estate and kept the excess proceeds or used them to pay others involved in the conspiracy. Deborah Kistner intentionally failed to provide lenders with critical purchase contract language and accurate settlement statements.
  
  Deborah and Mark Kistner also schemed to defraud lenders and launder the money they received through simultaneous “short sale” closings where the lenders would agree to absorb losses on existing mortgage loans while Deborah Kistner actually sold those properties on the same day for a profit and laundered the profits through bank accounts controlled by Mark Kistner. The government was prepared to show that they secured as much as $7 million in fraudulent loans through their schemes.

For the U.S. Attorney press release, see Hilliard Couple Plead Guilty In $7 Million Mortgage Fraud Scheme.

Extradited Scammer Who Admitted Peddling Bogus Multi-Level Early Mortgage Payoff Scheme Gets 100 Months

From the Office of the U.S. Attorney (Las Vegas, Nevada):

• A former resident of Las Vegas who defrauded 17 individuals of almost $1.5 million in an investment fraud and marketing scheme involving early mortgage payoffs, was sentenced [] to just over eight years in prison for his guilty pleas to fraud and tax evasion charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
  
  “Mr. Maharaj repeatedly solicited victims through fraud and deception knowing that they would never receive the monetary rewards he pitched,” said U.S. Attorney Bogden. “Although he tried to avoid facing the reality of a conviction by fleeing to Fiji and causing the United States to extradite him, he was eventually brought to justice and will spend much of the next decade behind bars.”
  
  Aneal Maharaj, 65, currently in custody, was sentenced by U.S. District Judge James C. Mahan to 100 months in prison, five years of supervised release, and ordered to pay $1,473,111 in restitution. Maharaj received a greater sentence because of the significant loss amount and number of victims, and because he obstructed justice by failing to appear for trial in the case and fled to Fiji to avoid prosecution. Maharaj pleaded guilty on Oct. 18, 2012, to one count of mail fraud, two counts of wire fraud, one count of tax evasion, six counts of bank fraud, and one count of making a false declaration in a bankruptcy petition.
  
  Beginning in about 1990 and continuing to about October 2004, Maharaj operated a multi-level marketing program from Las Vegas wherein he promised persons that they could pay off a 30-year mortgage in five years or less by investing and becoming franchise owners in a business he called “PowerNet Marketing Systems,” and a “home loan plan” he called Systematic Mortgage Amortization Reduction Technology (SMART).
  
  The system required the investors to recruit additional persons into the program, which Maharaj told them would entitle them to substantial commissions and income. Maharaj knew that no individual had ever paid off a 30-year mortgage in five years or less using the SMART plan, and that he had no intention of paying the commissions and income to the participants.
  
  At least 17 individuals each invested a minimum of $25,000 and up to $500,000 with Maharaj to become franchise owners in his fraudulent marketing program. The plea agreement states that Maharaj convinced one victim to sign over his interest in his $100,000 life insurance benefit.

For the U.S. Attorney press release, see Man Who Stole Almost $1.5 Million From Victims In Early Mortgage Pay-Off Scheme Sentenced To Eight Years In Prison.

Fannie, Freddie To Begin Deed-In-Lieu Program Allowing Eligible Homeowners With On-Time Mortgage Payments To Walk Away From Underwater Homes

Bloomberg reports:

• Fannie Mae and Freddie Mac will let some borrowers who kept up payments as their homes lost value erase their debts by giving up the properties, helping Americans escape underwater loans while adding to losses at the mortgage giants bailed out with $190 billion of taxpayer money.
  
  Non-delinquent borrowers with illness, job changes or other reasons they need to move will become eligible in March to apply for a so-called deed-in-lieu transaction that erases the shortfall between a property’s value and the size of its mortgage.
  
  It follows a change in November that lets on-time borrowers sell properties for less than they owe, known as short sales, wiping out the remaining mortgage debt. Normally, the lenders could pursue people to recoup their losses.

***

• The deed-in-lieu transactions, which require homeowners to leave properties in good condition, preserve the value of homes by preventing owners from abandoning them to take a new job or cope with an illness, Gordon said. Vacant and dilapidated real estate drags down values of nearby houses, increases expenses for Fannie Mae and Freddie Mac, and reduces the amount they’ll recover when the property is sold, she said.

For the story, see Fannie to Let On-Time Borrowers Walk Away From Homes: Mortgages.

Widow Files Wrongful Death Suit Against Local Sheriff, Others In Connection With Shooting Death Of Locksmith/Hubby During Forcible Eviction Of Occupant In Foreclosed Apartment

In Fresno, California, Courthouse News Service reports:

• A widow's husband was killed because the sheriff sent him to drill open the door of a heavily armed, deranged man, who shot him to death during a forcible eviction, the widow claims in court.
  
  Irina Engert sued Stanislaus County, Sheriff Adam Christianson, three of his officers, and RT Financial, the owner of the apartment where Jim Ferrario, 45, lived. Engert's husband, Glendon, was shot to death on April 12, 2012, by Ferrario, who "had been subject to foreclosure proceedings since January 2012," according to the federal complaint.
  
  The complaint states: "On April 12, 2012, the Stanislaus Sheriffs' Office sent a young civilian locksmith, Glendon Engert, into a situation the sheriffs knew was dangerous and life-threatening.
  
  Mr. Engert was hired to accompany two sheriffs deputies to assist in an eviction by drilling open the door lock of a residence inhabited by a man known to sheriffs as being mentally disordered, who possessed a cache of weapons, including high-powered automatic military-style rifles, and who had military training, with surveillance cameras mounted inside and outside the residence, who had threatened others in the past, and who was a clear and present danger to himself and anyone who approached him.
  
  The sheriffs, as well as the property owner, gave no warning to Mr. Engert about the danger in which they were placing him, did nothing to protect him, and failed to take alternative measures that could have kept him out of harm's way."

***

• Irina Engert seeks punitive damages for wrongful death, negligence, civil rights violations, and municipal liability.

For more, see Widow Blames Sheriff for Husband's Death.

Closing Agent Gets Two Years For Illegally Dipping Into Escrow Accounts, Pocketing $1.5M+ Intended To Satisfy Prior Liens, Pay Recording Fees, Insurance Premiums; Title Underwriter Left Holding The Bag

From the Office of the U.S. Attorney (Baltimore, Maryland):

• U.S. District Judge William D. Quarles, Jr. sentenced Harriet M. Taylor, age 57, of Ellicott City, Maryland, [] to two years in prison followed by five years of supervised release for wire fraud in connection with a scheme to use over $1.5 million in mortgage closing funds for her personal use and to operate her title companies. Judge Quarles also ordered Taylor to pay restitution of $1,256,635.70 to Old Republic and $253,750.84 to CAN Surety, the insurer on Taylor’s errors and omissions policies.

***

• According to her plea agreement, Taylor co-owned and managed two title insurance companies, Regal Title Company, LLC and Loyalty Title Company, LLC, located in Columbia, Maryland. Pursuant to an agreement with a national title insurance underwriter, and as required by Maryland state law, escrow accounts for Regal and Loyalty were established, separate from company operating accounts, for the purpose of holding and disbursing funds received from lenders for real estate closings.
  
  Beginning in 2009, however, Taylor caused some mortgage lenders to wire their funds entrusted for real estate settlements to Regal’s operating account, rather than to the escrow accounts. Taylor also caused funds in Regal’s and Loyalty’s escrow accounts to be transferred back and forth to the companies’ respective operating accounts. By using commingled funds throughout 2009, Taylor kept her two businesses afloat, while enriching herself with both company and escrow funds. From January through December 2009, Taylor paid herself $477,877.50 from three company operating accounts.
  
  As shortfalls in the escrow accounts increased, Taylor failed to remit insurance premiums to the title insurance underwriter, Old Republic National Title Insurance Company (Old Republic), pay recording fees for deeds and pay off prior liens, including four of which belonged to the government sponsored entities, Fannie Mae and Freddie Mac.
  
  Old Republic learned of the commingling of escrow and operating funds during a 2009 audit of Regal. They directed Taylor to stop the practice. Five months later during a further audit of both companies, Old Republic discovered that in nine cases Taylor used the payoff checks that were supposed to pay prior lien holders, and immediately terminated her as an agent.
  
  Old Republic was obligated to satisfy the prior liens against the properties affected by the misuse of settlement funds and to complete other transactions Regal and Loyalty failed to perform. Accordingly, in January 2010, Old Republic incurred a total loss of $1,518,532 which resulted from paying off prior liens, paying recording fees, and for insurance premiums collected by Regal and Loyalty but not forwarded to Old Republic.

For the U.S. Attorney press release, see Title Company Owner Sentenced in $1.5 Million Fraud Scheme.

Court Allows Couple To Stay In Their Home & Continue Making House Payments After Getting A Loan Modification Screwing-Over From Wells Fargo

In St. Augustine, Florida, the Jacksonville Business Journal reports:

• Something just isn’t going right for Wells Fargo in St. Augustine. The bank, which is the third-largest in Northeast Florida, is on the wrong end of a court ruling that will allow a St. Augustine couple to stay in their home.
  
  The couple, facing foreclosure, was going through a loan modification when the bank advised them to make a lump sum payment of nearly $7,000 to bring their loan out of default. After the couple made the payment, the bank moved to foreclose on the home a month later, prompting the couple to defend the foreclosure with an attorney, according to a news release.
  
  The end game? The couple gets to keep their home, and continue to pay their original mortgage.
  
  Last November, a St. Augustine woman filed foreclosure on an area Wells Fargo branch after the bank tried to forclosure on her home.(1) A judge subsequently ruled she could keep her home and the bank owed her nearly $20,000 in legal fees, but at the time of the suit the bank hadn't paid the fees.(2)

For more, see St. Augustine couple wins foreclosure case against Wells Fargo, will stay in home.

(1) See Local woman wants to shut down big bank.

(2) In a typical Florida foreclosure action that allows a foreclosing lender to recover its attorney fees from the homeowner when successfuly foreclosing its mortgage, state statute (F.S. 57.105(7)) similarly allows a homeowner to recover his/her legal fees from the lender in the event he/she successfully defends against a foreclosure. See:

• Fla. Appeals Court: Homeowner Entitled To Nail Bank For Prevailing Party Legal Fees After Lender Voluntarily Dismissed F'closure Case w/out Prejudice.

For an example of how an attorney can screw-up and deprive his/her client out of a recovery of legal fees paid in a successful foreclosure defense (and possibly leave him/herself open to a professional malpractice claim), see:

• Fla. Appeals Ct. Nixes Prevailing Party Legal Fee Award In Foreclosure Defense; Failure To Include Request In Pleading Sinks Recovery Attempt.

See Pleading Requirements for a Claim for Attorneys' Fees for an old (July/August, 2000) article in The Florida Bar Journal that may be of some value in providing guidance to Florida lawyers in requesting court-ordered, prevailing party attorneys fees from losing defendants (ie. lenders, servicers, etc.).

Judge Smacks Down Feds In Attempt To Swipe Elderly Mom & Pop's Motel Using Forfeiture Law In Connection With Uncharged Drug Crime Allegations

In Boston, Massachusetts, WBUR Radio 90.3 FM reports:

• In what is being called a triumph for property rights, a federal judge in Boston has rejected the federal government’s attempt to seize a family-owned motel in Tewksbury under a controversial civil forfeiture law.
  
  The owners of Motel Caswell have never been charged with any crimes and have never come under police suspicion. But in a trial last November, the U.S. attorney’s office sought to take the property because it alleged the motel — the building — had “facilitated” drug crimes.
  
  “I’m in shock right now,” said 69-year-old Russell Caswell. “Been three and a half years of this garbage. Takes a while to comprehend it’s finally over with.”
  
  Caswell had all his savings tied in the family motel that charges $57 a night for a room. He never had any trouble getting license renewals from the town. He’d never received any warnings from the police when he got a letter from the U.S. attorney’s office a few years ago announcing they were coming after his property because of crimes committed by some of his guests.
  
  At trial, federal prosecutors introduced information about 15 specific drug-related incidents that occurred in a 14 year period. “It should be noted” wrote Magistrate Judge Judith Dein in Thursday’s decision, that during that time period, Russ Caswell had rented out 196,000 rooms.
  
  “I don’t know how I can see through the doors,” Caswell said last November in reference to the fact that those alleged crimes took place in closed rooms.
  
  Now, even after winning, Caswell can’t forget his years under threat.
  
  “You’ve just been going through this stuff every day thinking about it, scratching your head like, ‘What the heck is this all about?’ You know? ‘Where’d this come from?’ It’s just hard to believe this stuff can happen to people when you’ve done absolutely nothing,” Caswell said. “And they even say I’ve done nothing.”
  
  The judge concluded that there was no evidence that Caswell knew of any drug activities which he did not report to the police.
  
  After spending a $100,000 defending himself, Caswell turned to the Institute of Justice, a libertarian public-interest law firm. Scott Bullock, who defended him, says the judge pulled no punches.
  
  “She saw Russ as someone who did all he could do to try to prevent drug crimes on his property,” Bullock said. “And recognized he had no control of what people did behind closed doors out of the view of him and his employees.”
  
  Judge Dein faulted the government for engaging in “gross exaggeration,” misstatements of fact and “highly derogatory argument.”
  
  “Punishing Mr. Caswell by forfeiting the Motel obviously would not punish those engaged in the criminal conduct,” Judge Dein wrote.
  
  During the four-day trial in November, U.S. Attorney Carmen Ortiz released a statement saying her office wanted to send a message by going after the motel. But just up the street from the mom-and-pop run Motel Caswell, the Motel 6, Walmart and Home Depot had all experienced a similar rate of drug crimes, according to Caswell’s attorneys, without the government going after them.(1)
  
  “I mean, the government’s got all the money in the world to throw at these things and they just bully people is what it is,” Caswell said. “And it’s completely wrong. It’s just not American.”
  
  The idea to go after the Motel Caswell sprung from the Drug Enforcement Administration, the trial revealed. The DEA has an agent who testified his job is to seek out targets for forfeiture by watching television news and reading newspapers. When he finds a property where drug crimes occur he goes to the Registry of Deeds. Finding the Motel Caswell had no mortgage and was worth almost $1.5 million, the DEA teamed up with the Tewksbury Police, who were offered 80 percent of the taking, the agent testified.
  
  After widespread criticism following the death of defendant Aaron Swartz, U.S. Attorney Carmen Ortiz, has been dealt a second major setback in two weeks. Attorney Scott Bullock accuses her of abusing a draconian power of civil forfeiture.
  
  “This case epitomizes what an aggressive U.S. attorney wielding these laws can do to a small and even innocent property owner like Russ Caswell,” Bullock said.
  
  The U.S. attorney’s office says it is reviewing the decision. Having lost its effort to take the Motel Caswell, the government is now obligated to pay for both Caswell’s legal expenses and the legal work of the Institute of Justice, which will come to at least $500,000.

Source: Judge Dismisses Government Seizure Attempt Of Tewksbury Motel.

See also IJ Scores Major Federal Court Victory In Massachusetts Civil Forfeiture Case (Motel Caswell is Safe from Federal Seizure):

• “This outrageous forfeiture action should never have been filed in the first place,” said Larry Salzman, an IJ attorney. “What the government did amounted to little more than a grab for what they saw as quick cash under the guise of civil forfeiture.”
  
  Caswell said, “I couldn’t have fought this fight without the help of the Institute for Justice. It is hard to believe anything like this goes on in our country, but the government goes after people they think can’t afford to fight. But with IJ’s help, we put up a heck of a fight and have won. The public needs to stand up against these abuses of power.”

For the court ruling, see U.S v. 434 Main Street, Tewksbury, Massachusetts.

See Inequitable Justice: How Federal “Equitable Sharing” Encourages Local Police and Prosecutors to Evade State Civil Forfeiture Law for Financial Gain, an Institute for Justice report documenting how the problem of the use of the civil forfeiture law by U.S. Attorneys to snatch property to pocket quick cash is apparently growing.

(1) It should be noted that Mr. Caswell lived right next door to the Motel, with his 71-year old wife who is in poor health, his 92 year old mother-in-law, one of his two sons, his son's wife, and their 9 year old daughter. He has lived there since at least 1994. (See court ruling, paragraphs 6-7) Apparently, they appeared ripe for the pickings, in the view of the Boston U.S Attorney Carmen Ortiz.

San Bernardino County Scraps Thoughts Of Using Eminent Domain To Bail Out Underwater Homeowners

In San Bernardino, California, the Contra Costa Times reports:

• More than seven months after announcing it was entertaining a proposal to use eminent domain to acquire underwater mortgages to help stabilize the local housing market, a San Bernardino County joint powers authority on Thursday rejected the proposal.
  
  The proposal, rolled out by San Francisco investment firm Mortgage Resolution Partners last summer, intrigued cities and counties across the nation hardest hit by the subprime mortgage crisis and garnered national opposition by the real estate and mortgage industries, which joined forces in an effort to stop the proposal in its tracks.
  
  But it was potential risk and a lack of community support, not threats of litigation and the cutting of credit to homebuyers in San Bernardino County, that prompted the Homeownership Protection Program - the joint powers authority (JPA) composed of the county and the cities of Fontana and Ontario - to back away from the proposal, said Greg Devereaux, chief executive officer of both the county and the JPA.

For more, see San Bernardino County rejects 'eminent domain for underwater mortgages' proposal.

Another Adverse Possession Crackpot Stakes Claim To Foreclosed Home; Recent Target: Vacant $2.5M Boca Raton Waterfront Mansion; Cops Befuddled As BofA Fiddles

In Boca Raton, Florida, ABC News reports:

• The neighbor of a Florida man invoking an obscure real estate law to stake a claim to an empty $2.5 million mansion said he believes that the man is a pawn in a attempt to cash in on the empty property.
  
  Andre "Loki" Barbosa has lived in the five-bedroom Boca Raton, Fla., waterside property since July, and police have reportedly been unable to remove him. The Brazilian national, 23, who reportedly refers to himself as "Loki Boy," cites Florida's "adverse possession" law in which a party may acquire title from another by openly occupying their land and paying real property tax for at least seven years.
  
  The house is listed as being owned by Bank of America as of July 2012, and that an adverse possession was filed in July.
  
  After Bank of America foreclosed on the property last year, the Palm Beach County Property Appraiser's Office was notified that Barbosa would be moving in, according to the South Florida Sun-Sentinel.
  
  The Sun-Sentinel reported that he posted a notice in the front window of the house naming him as a "living beneficiary to the Divine Estate being superior of commerce and usury."
  
  On Facebook, a man named Andre Barbosa calls the property "Templo de Kamisamar."
  
  A neighbor of the Boca property, who asked not be named, told ABCNews.com that he entered the empty home just before Christmas to find four people inside, one of who said the group is establishing an embassy for their mission, and that families would be moving in and out of the property. Barbosa was also among them.
  
  Police were called Dec. 26 to the home but did not remove Barbosa, according to the Sentinel. Barbosa reportedly presented authorities with the adverse possession paperwork at the time.
  
  The neighbor said he believes that Barbosa is a"patsy."
  
  "This young guy is caught up in this thing," the neighbor said. "I think it's going on on a bigger scale."
  
  Bank of America responded to ABCNews.com, saying that it is in communication with the Boca Raton police department regarding concerns at the house.(1)
  
  "There is a certain legal process we are required by law to follow and we have filed the appropriate action. The bank is taking this situation seriously and we will work diligently to resolve this matter," the bank said in a statement.
  
  Barbosa could not be reached for comment.
  
  The Florida Department of revenue even posts the form to establish adverse possession on its website, but it is not the equivalent of a lease.
  
  The neighbor says that although the lights have been turned on at the house, the water has not, adding that this makes it clear it is not a permanent residence. The neighbor also says that the form posted in the window is "total gibberish," which indicated that the house is an embassy, and that those who enter must present two forms of identification, and respect the rights of its indigenous people.
  
  "I think it's a group of people that see an opportunity to get some money from the bank," the neighbor said. "If they're going to hold the house ransom, then the bank is going to have to go through an eviction process.
  
  "They're taking advantage of banks, where the right hand doesn't know where the left hand is. They can't clap."

Source: Brazilian Man Attempting 'Adverse Possession' of $2.5 Million Boca Mansion.

For story update, see Bank files to evict Boca Raton mansion squatter.

(1) Regrettably, the longer this crackpot is able to continue his charade, the more the Boca Raton cops come away looking stupid. It is clear that legitimate adverse possession claims only apply to property that is abandoned. The mere fact that the home has been vacant for some time, without the existence of other factors, doesn't establish abandonment. It seems to me that since the premises was the subject of a recently-concluded foreclosure action by the bankster, that, in itself, is enough to establish that the property is not abandoned and, consequently, enough to establish probable cause for the befuddled cops to arrest this idiot.

By the way, adverse possession claims and other bogus claims like the one made here have not insulated the crackpots making them from arrest in other jurisdictions. See, for example:

• $105K Bail Set For Suspected "Deadbeat Dad" Pinched By Cops For Allegedly Hijacking Vacant Homes & Renting Them Out In Adverse Possession Racket,
  
  
• Accused Home Title-Snatcher Faces Charges Of Forgery, Obtaining Property By False Pretenses, Breaking & Entering For Hijacking Vacant F'closed Mansion,
  
  
• Broke C. Fla Man Unable To Mount Defense To Charges Of Hijacking, Renting Out 100+ Vacant F'closures Under Claim Of Adverse Possession Commits Suicide,
  
  
• Orange County DA Slams Suspect With Multiple Felony Charges In Alleged Vacant Home-Hijacking, Title-Swiping, Rent-Pocketing Racket,
  
  
• C. Fla. Man Claims "Adverse Possession" Defense After Arrest On Home Hijacking Charges; Swiped 72 Houses, Rented Out 31 To Unwitting Tenants, Say Cops,
  
  
• Florida Man Accused Of Using Bogus Deeds, Adverse Possession Claims In Alleged Massive Foreclosed Home Hijacking Scam Faces New Charges,
  
  
• Atlanta Cops Pinch 'Sovereign' Pair On Theft By Deception, Racketeering Charges; Duo Accused Of Hijacking F'closed Homes w/ Adverse Possession Claims,
  
  
• Cops Pinch Two In Adverse Possession Home-Hijacking Scam; Use Of Forged Lease To Turn On Utilities Could Lead To More Charges,
  
  
• Florida AG Takes Active Role In Vacant Home Hijacking Prosecutions As 'Adverse Possession' Rackets Span Multiple Counties,
  
  
• Alleged Vacant Home Hijacker Asserts Adverse Possession To Claim Ownership Of Abandoned Houses; Bogus Docs Recorded To Cloud Property Titles: Cops,
  
  
• Accused Central Florida Vacant Home Hijacker Bagged Again On New Charges; Vows To Continue Snatching Homes, Claiming Adverse Possession Defense,
  
  
• Vacant Foreclosed Home Hijacker Scraps "Adverse Possession" Defense; Cops Plea To Organized Fraud, Dodges Jail Time, Gets Two Years Probation.

Nevada AG Bags Loan Modification Operator On Multiple Felony Charges Alleging Upfront Fee Ripoffs

From the Office of the Nevada Attorney General:

• Nevada Attorney General Catherine Cortez Masto announced a preliminary hearing has been set for Xochitl Cervantes, 35 of Las Vegas, for her involvement in a mortgage lending fraud case involving several victims operating under the name of CSR Services.

***

• Xochitl Cervantes is charged with two felony counts of mortgage lending fraud, one felony counts of embezzlement, eight felony counts of uttering a forged instrument, one felony count of multiple transactions involving fraud and deceit in the course of enterprise and occupation, and one felony count of pattern of mortgage lending fraud.
  
  From approximately March 2009 to May 2010, Cervantes made false representations that she was capable of rescuing homeowners who were looking to refinance their mortgages by negotiating loan modifications. She collected up-front fees, in most cases ranging from $2,100 to $2,500, for the proposed services that were never performed or refunds provided.

For the Nevada AG press release, see Attorney General Masto Encourages Victims Of Mortgage Lending Fraud To Submit A Complain.

22 Elderly Plaintiffs File Suit Accusing Landlord Of Unconscionably Jacking Up Rents To Drive Them Out Of Their Homes & Give Complex A More Youthful Appearance

In Greenwich, Connecticut, Greenwich Time.com reports:

• Dogged for years by complaints of onerous rent hikes, a revolving door of owners and disruptive construction, a Glenville apartment complex now faces a legal battle over how much it charges its renters.
  
  More than 20 residents of Greenwich Oaks are suing the property's parent company, alleging it has attempted to levy excessive rent increases against some tenants. The suit was filed against Greenwich Oaks, the management or owner of the apartments on Weaver Street, according to a complaint submitted at state Superior Court in Norwalk in August 2012.
  
  The complaint document claims "the defendant has attempted to raise the rent of each of the plaintiffs by an amount which exceeds that which is fair and equitable," based on state law.
  
  "The defendant is attempting to raise the rents of each plaintiff to unconscionable levels in order to force the plaintiffs to vacate their apartments and create a more youthful appear in the rental complex," the document states.
  
  Tenants complained of age discrimination several years ago, when an ill-fated condominium conversion by a Greenwich-based real estate developer collapsed after the complex's mostly elderly residents claimed they were being strong-armed out of their apartments to make way for a younger clientele.

***

• [2]2 plaintiffs were listed on the suit, which is seeking over $15,000 in damages in addition to the fair market value determination. Included in the document is a complaint that the company said residents would be charged $250 if they failed to sign their leases.
  
  "As persons over the age of sixty two the plaintiffs are not required by law to sign new leases and therefore may not be charged a $250 penalty for not signing said leases," the document indicates. "Said leases are therefore void as contracts of adhesion and are further void as being entered into through deception and misrepresentation."
  
  The acts of the defendant are unfair or deceptive under the Connecticut Unfair Trade Practices Act,(1) the lawsuit alleges.

For more, see Lawsuit alleges unfair apartment rent hikes.

(1) The Connecticut Unfair Trade Practices Act is Connecticut's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (commonly known as state UDAP statutes).

For more on UDAP statutes across the U.S., see Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

Southern California Squatters Continue Making Themselves At Home In Vacant Unguarded Foreclosed Homes As Banksters Fiddle

In Southern California, KCET-TV reports:

• This is a foreclosure story that will make you hit the roof. It all started when California's real estate bubble popped. Then foreclosures spiked, and then came the squatters.
  
  Squatters are taking advantage of all those empty, unguarded homes owned by the banks and not being maintained. Turns out at least one trespasser may have done a lot more than just make himself at home.

For more, see Squatter's Rights and Wrongs: Some Making Money Off Foreclosed Homes.

Judge Delays Sentencing For Sobbing Scammer Until Alleged Co-Scamming Dad Stands Trial In Case Involving Failed Promises Of Foreclosure Assistance That Screwed 100+ Homeowners

In Hartford, Connecticut, NBC Connecticut reports:

• Sunita Buddhu sobbed in the courtroom [] as she expressed remorse for her role in a debt elimination scheme that left many homeowners facing foreclosure. "I'm horrified that this is the result of what we did," Buddhu said. "I thought we would be helping people, but it turned into the opposite."
  
  Buddhu, 42, pleaded guilty in October to issuing, selling and presenting fictitious financial instruments. Her father, Deowraj "Deo" Buddhu, is the alleged mastermind of the scheme.
  
  Prosecutors say the Buddhus preyed on struggling homeowners and defrauded them out of thousands of dollars by promising access to a supposed secret stash of federal money. Sunita notarized many of her father's documents and invoices. Prosecutors claim there are nearly 200 victims.

***

• Sunita's apologies to the victims did not appear to gain her any sympathy with the judge, who announced he would wait to sentence her until after her father's trial later this year. [...] Sunita Buddhu has already served almost seven months in a federal holding cell. Her lawyers were asking for a "time served" sentence.

***

• The judge said he already has a number in mind for Sunita Buddhu's sentencing and told the courtroom it would be "substantial."

For the story, see Sentencing Delayed for Debt Elimination Scheme Suspect.

Afghan/Iraq War Vet Challenges Local Ordinance Restricting Rentals; Says Rule At Fault For Leaving Him In Foreclosure, Threatening $50K In Home Equity

In Winona, Minnesota, Watchdog.org reports:

• More than a year after suing the City of Winona for preventing them from renting out their houses, three homeowners will get their day in court [] in a property rights case that’s being tracked by zoning authorities beyond Minnesota.
  
  “It’s being watched across the country because restrictions on the right to rent and other property rights are popping up in states all over the country. But the epicenter for this battle is in Minnesota, where cities have been very aggressive in denying people the right to rent out their homes,” said Anthony Sanders, the Institute of Justice lawyer who represents the homeowners.
  
  The southeastern Minnesota city implemented an ordinance in 2005 that caps the number of homeowners who can rent out their properties to 30 percent of dwellings per block.

***

• A city study of rental housing in the college community found “the concentration of rental housing results in negative impacts to the quality and livability of residential neighborhoods” and a higher incidence of nuisance and police violations.
  
  Homeowners unable to obtain a rental permit, however, say the prohibition has cost them thousands of dollars in lost rental income, while also undercutting the value of their property in the real estate market.
  
  “I could have sold it years ago. I’ve had numerous people tell me, realtors and people that own homes in the town, that they would have bought it the day I put it on the market so they could rent it out,” said Ethan Dean, a plaintiff in the case.

***

• During Dean’s five tours of duty as an U.S. advisor in Iraq and Afghanistan, the city granted him a temporary rental waiver until his return. Now that he’s back, Dean says he is in the final stages of losing the house to foreclosure, along with some $50,000 in equity. He places the blame squarely on the lost rental income and sale opportunities due to the rental ban. “It’s not just me who’s been hurt here. It’s numerous people in the Winona city district. Enough is enough and sometimes you just to stand up and say this is wrong,”
  
  The lawsuit asks the state court to strike down the rental ordinance as a violation of the homeowners’ fundamental property rights under the Minnesota constitution. “What the 30 percent rule does is it bans people from renting out their homes if a certain number of their neighbors already rent out their homes. So your property rights are controlled not by yourself or whatever tenants you have, but by your neighbors,” Sanders said.
  
  At least three more Minnesota cities have slapped similar restrictions on rental properties. Two cities with significant numbers of college-age students, Mankato and Northfield, now limit the number of rental properties to 25 and 20 percent respectively on a block. West St. Paul may have the toughest restrictions in the country, allowing just 10 percent of dwellings per block to be rented out.

For the story, see Homeowners fight rental ban in Minnesota property-rights case.

Lawyer Not Liable For $80K Deposited Into Client Trust Account Without His Knowledge, Then Subsequently Embezzled By Legal Secretary In Soured Foreclosure Avoidance Deal

In Mobile, Alabama, Alabama Live reports:

• A judge [...] determined that a Saraland lawyer had no legal obligation to safeguard money that his secretary had deposited into a client trust account. The judge ruled in the defendant’s favor.
  
  Mobile County Circuit Judge Michael Youngpeter’s ruling meant that Johnny Lane, who also is a part-time municipal judge in Chickasaw, did not have to put on a defense in the civil trial. “The judge made the right ruling,” defense lawyer Walter Honeycutt said.
  
  Robert Stankoski, who represented plaintiff Daniel Burrage, said he would discuss an appeal with his client. “I think Judge Youngpeter is a great and thoughtful judge,” Stankoski said. “But I completely disagree with his finding in this one.”
  
  The dispute centered on an $80,000 check that Burrage wrote in January 2010. According to testimony, he had agreed to pay off the mortgage of Lane’s secretary, Susan Pack, to stave off foreclosure of her home. The plan called for Pack renovating the house, selling it and splitting the profit with Burrage. The mortgage company would not halt the foreclosure unless the money was safe in an escrow account.
  
  Witnesses gave conflicting accounts of what happened next. Burrage maintained that Lane suggested the money be deposited in his client trust account, telling him it was the safest place the money could go.
  
  Lane testified that he never agreed to that. Pack testified that Lane expressed misgivings but ultimately allowed her to deposit the money.
  
  The deal went south later in the year after Lane fired Pack for failing to address her drug problem. Burrage testified that he went to Lane and asked for his investment back. It was gone, along with a bunch of other money. Pack ultimately pleaded guilty to embezzling some $195,000 form the law firm.
  
  Burrage already has won a civil judgment against Pack, but it is unlikely she ever will be able to pay the money back. Stankoski argued that Lane should be held liable because he was so detached from the day-to-day operation of his office that he allowed Pack to have unsupervised access to the law firm’s finances despite her drug problem.
  
  Lane testified that he did not realize his longtime employee was abusing drugs until shortly before he fired her. Honeycutt argued that his client had no legal obligation to protect the money that Burrage had put up because Lane had nothing to do with that transaction. “It was a private deal between Ms. Pack and Mr. Burrage,” Honeycutt said. Youngpeter agreed.
  
  During the trial, Honeycutt argued that Lane was a victim. It was his account that Pack stole from. It is Lane to whom a judge in the criminal case ordered Pack to pay restitution.
  
  Stankoski noted that Lane did not even bother to look at bank records from the time his law partner died in 2008 until he fired Pack in 2010. “You can’t stick your head in the sand like an ostrich and say you’re a victim,” he said.
  
  Honeycutt acknowledged that his client could have done a better job overseeing the financial affairs of his practice. He said Lane has not reason to suspect a trusted employee who had worked for him for 27 years. “Most lawyers are terrible businessmen,” he said.
  
  Lane’s legal headaches are not over. He still has a pending lawsuit against him by families of asbestos victims who alleged that she forged the litigants’ signatures on settlement checks that she then stole. Honeycutt said banks have paid most of those clients back.

Source: Judge rules Saraland lawyer had no legal obligation to safeguard Baldwin man's money.

Another Couple Gets Screwed Over Renting Home Offered Online; Premises A Fire Hazard & In Foreclosure

In Miami-Dade County, Florida, WTVJ-TV Channel 6 reports:

• After Army soldier Josh Wagner returned from Afghanistan to his base in Tennessee, he was stationed in South Florida.
  
  His wife found online what looked like a wonderful home in Florida City. But the Wagners’ troubles began as soon as they opened the door. “None of this was fixed. I mean, this in itself is a fire hazard,” Wagner said, pointing to an open electrical socket.
  
  After the Army helicopter mechanic came back to the U.S. from Afghanistan, he got a job in the Florida National Guard, gathered his family and pets, and headed to Florida City. But his rental home had all the electrical socket covers broken, no smoke detectors, hanging electrical wires, infestation of roaches and other violations, inspectors ultimately found.
  
  “Absolutely. Absolutely without a doubt we were had,” Wagner said. His wife, Misty Wagner, found the rental.
  
  “They told us that they loved to rent to military families and they had a beautiful home for us to stay in, and everything would be ready when we came down here,” she said.
  
  She said she saw an ad to rent a home with pictures of the rooms and what looked like a nice backyard. The owner's wife even wrote, “I am sure you will like the home an (sic) you will love it.”
  
  The Wagners signed a lease and said they give the security deposit and two months’ rent in advance, totaling about $3,300.
  
  The owner's wife, Romina Jelves, sent them a copy of her driver’s license along with her driver's license photo, the couple said.
  
  “We got copies of their licenses, their IDs, their work information, verified their bank information, and we thought it was completely legitimate,” Misty Wagner said.
  
  But she quickly told the Jelves in an email that she was shocked when she first walked into the house. “The pictures you listed on the ad did not come close to representing the true condition of this home,” she wrote, in a message from her and her husband.
  
  The Wagners said that when they started complaining about the conditions of the property, the owners told them they could simply leave, but that would mean forfeiting the $3,300 that they had put down upfront.
  
  The Wagners said they were burglarized this week, and lost their computers and televisions.
  
  Court records show the bank moved to foreclose on the homeowners two months before the rental agreement was signed. “They took our money and they left us with their issue,” Misty Wagner said.
  
  The couple that rented the property told NBC 6 South Florida they did nothing illegal.(1) They said in an email that they offered to refund the security deposit – which the Wagners dispute. The owners said they did not want to provide any more information, told NBC 6 not to contact them again, and hung up.
  
  “Do not ever rent sight unseen,” Misty Wagner concluded.
  
  Florida City’s mayor said he will try to help, and the bank and service provider that took back the home are investigating how to bring how to bring it up to code, and clear up the Wagners’ financial and living mess.

Source: Military Family's Move to South Florida Turns into Housing Nightmare (The Wagners said their troubles began when they opened the door of their Florida City rental home).

(1) Obtaining money or property by deception, or securing the execution of documents by deception may, in fact, be crimes (albeit crimes that may not be too frequently prosecuted).

Cops Continue Efforts In Probes Targeting Scammers Hijacking Possession Of Vacant Homes In Foreclosure & Renting Them Out To Unwitting Tenants

In Pearland, Texas, The Pearland Journal reports:

• For one couple hoping to find an affordable place to live, paying $900 rent each month for a 5,000 square-foot home in Shadow Creek Ranch seemed a dream come true. Months later after they moved in, made numerous repairs and spent weekends painting and decorating the house, the couple discovered they had been taken in by a sophisticated real estate scam.
  
  In recent months, Pearland Police detectives have uncovered several cases involving the same real estate scheme. In addition, investigators in Fort Bend County and League City are also investigating similar incidents. Detectives say there may be even more residents taken in by the scams. Police officials are now reaching out to community to identify other potential victims
  
  Detectives say in each case so far, lease agreements were arranged by “Homeowner Solutions,” a company that reportedly specialized in finding rental properties for those not able to qualify for a regular lease arrangement.
  
  Sugar Land-resident Kenneth Upchurch has been identified by police as the suspected business owner. According to police officials, Upchurch put his plan in motion by allegedly tracking down vacant homes in the process of foreclosure. After changing the locks and making sure the property was clean, Upchurch would find potential renters via Craig’s list or through word-of-mouth advertising.
  
  To cover his track with new renters, Upchurch allegedly refused to accept personal checks and instead required money orders that had to be mailed to a P.O. Box. Victims were also reportedly not given contracts. Instead, Upchurch allegedly gave customers only unsigned documents outlining the lease terms by mail.
  
  Police say the plan went on without a snag for several months in each case; that is until the real homeowners showed up and discovered uninvited strangers had taken up residence and called police.
  
  In the most recent case, detectives say the victims were cheated out of monies paid in rent plus their deposit. The couple was asked to move out as soon as the upset homeowners arrived.
  
  Police officials said no charges have been filed against Upchurch although he is currently considered a suspect in the case. Anyone with information related to the case or those who may think they may have been victimized are urged to call Pearland Police Det. DeSpain at 281-997-4231.

Source: Pearland detectives investigating rental property scam.

Title Insurance Underwriter Cautions Its Ohio Agents Of Effect Of New Case Law Regarding Foreclosure Standing Requirements

From the General Title Insurance Company Blog:

• The Fed. Home Mtg Corp. v. Schwartzwald case recently decided by the Ohio Supreme Court has turned foreclosure standing requirements around.
  
  This was the case in which the Ohio Supreme Court held that a lender must have standing to foreclose on the date the complaint is filed in order to proceed to final judgment. If they do not “hold” the mortgage and note, via assignment or otherwise, on the date the complaint is filed they are not the real party in interest for purposes of foreclosure and they are not entitled to a judgment through the jurisdiction of the court.
  
  As a result of this case, we required all Ohio title agents to use the following requirement on all future title insurance commitments with the admonishment that further guidance would be forthcoming: “Per the Ohio Supreme Court’s holding in Fed. Home Loan Mtge. Corp. v. Schwartzwald, 2012-Ohio-5017, the Insurer requires filing and proper service of a new Complaint in Foreclosure naming the assignee under Instrument dated DATE, and filed for record on DATE, in the YYYY County, Ohio Recorder’s Office, as the plaintiff and real party-in-interest in said action.”
  
  Since lack of jurisdiction cannot be cured by the passage of time, defeated with a laches or bona fide purchaser defense and impervious to prospective application, we must now take the steps to except the result of the Schwartzwald case entirely.
  
  Therefore, all Ohio title agents should replace the requirement above with the following language, including those transactions insuring the successful bidders at Sheriff’s Sale, or said purchaser’s lender and insuring parties to an REO transaction.
  
  What is the new guidance for Ohio title agents? In the event you find a foreclosure where at the time of the filing of the complaint the lender was not the holder of the note and mortgage, please use the following guidance for Ohio purchase transactions, including those involving Sheriff’s Sales and REO transactions:
  
  “The Policy does not insure, and the Company will not be liable for attorney’s fees and defense costs, against loss or damage by reason of an attempt to void and set aside the foreclosure judgment and subsequent sale, or a decree voiding and setting aside the foreclosure judgment and subsequent sale, in case captioned ____________v. ____________, Case No. ___________, [name of county] Court of Common Pleas, Ohio.”
  
  The above-referenced exception must appear in both the title commitment and the title insurance policy.

For more, see Ohio Agents: Be Aware of Recent Ohio Case Law (Dec.10, 2012).

Thanks to Deontos for the heads-up.

Detroit Feds Pinch Recently-Resigned State High Court Justice On Charges Related To Alleged Illegal 'Short Sale Shuffle'

In Lansing, Michigan, The Detroit News reports:

• Former Michigan Supreme Court Justice Diane Hathaway is scheduled to appear Jan. 29 in federal court on a bank fraud charge stemming from a real estate scandal that caused her to resign from the high court Monday.
  
  Hathaway is expected to enter a plea on the charge during a 10:30 a.m. appearance before Judge John Corbett O'Meara at the federal building in Ann Arbor. The U.S. Attorney's office in Detroit on Tuesday confirmed the date of the court appearance.
  
  Federal prosecutors filed a bank fraud charge Friday against Hathaway, accusing her of concealing and transferring assets to stepchildren in a scheme to fool mortgage lender ING Direct into believing she and her husband, attorney Michael Kingsley, had a financial hardship.
  
  The bank approved the couple for a short sale, allowing Hathaway and Kingsley to unload a $1.5 million Grosse Pointe Park home for about $600,000 less than they owed. The charge is listed as a criminal "information," meaning a guilty plea is likely.
  
  Though the maximum penalty for bank fraud is 30 years in prison, federal sentencing guidelines call for 27 to 33 months in prison for someone facing a first offense and who defrauds a bank of more than $400,000, according to Wayne State University law professor Peter Henning.
  
  Hathaway's attorneys have previously argued she and Kingsley saved the bank money by not allowing the home overlooking Lake St. Clair to fall into foreclosure and be subjected to an auction, where the sale price could fluctuate.
  
  In a related civil case, U.S. Attorney Barbara McQuade is trying to seize Hathaway and Kingsley's second home in suburban Orlando, valued at $664,000 in 2010, to compensate for the $600,000 in mortgage debt the couple allegedly defrauded the bank.
  
  Kingsley has not been charged.
  
  Public and legal scrutiny of the questionable short sale caused Hathaway to resign her seat on the Supreme Court halfway through an eight-year term. Before being elected to the Supreme Court in 2008, Hathaway was a Wayne County judge.
  
  Hathaway, a Democratic Party nominee, is the first sitting Supreme Court justice to be charged with a crime since 1975 when Justice John Swainson was indicted for bribery and lying to a federal grand jury. Swainson, a former governor, later beat the bribery charge, but served a brief sentence for a perjury conviction.

Source: Justice Hathaway in court Jan. 29 for fraud charge in real estate case.

Felony Charges Continue For California Homeowners Allegedly Recording Phony Documents In Effort To Stall Foreclosure

In Stanislaus County, California, The Modesto Bee reports:

• Authorities appear to be taking foreclosure fraud prosecution to a new level in Stanislaus County, with possible implications elsewhere in California.
  
  A Turlock couple face felony charges of trying to stall foreclosure of their property by filing phony documents with the county recorder, similar to cases launched last month against four other homeowners in this county.
  
  But this time, state prosecutors — not local — will handle the case. And court documents suggest that authorities may go after supposed masterminds accused of running a fraud scheme from Southern California.
  
  "We have not filed anything yet against the so-called kingpins, but we're not going to ignore where this case is leading," said Leslie Westmoreland, deputy California attorney general.
  
  Westmoreland recently filed a felony complaint against Blas and Nancy Arreola of Turlock alleging multiple counts of identity theft, recording false or forged documents, and fraud conspiracy.
  
  Blas Arreola, 37, initially was arrested in June, and he and his 34-year-old wife are scheduled to appear Tuesday at an arraignment. A state prosecutor is expected to ask that they be held with bail set at $412,000 and $201,000, respectively — far more than in previous similar cases. A phone number for the couple has been disconnected, and they could not be reached.
  
  They were tutored by Jacob and Aide Orona of Highland in San Bernardino County, according to an arrest warrant affidavit for the Arreolas filed by investigator Glenn Gulley of the district attorney's office. Calls to a number associated with the Oronas' address and business, Document Recovery Forensic LLC, went unanswered.

For more, see Prosecution of foreclosure fraud hits higher gear in Stanislaus County.