Wednesday, March 13, 2013

Multi-State Probe Targets Banksters' Role In Collecting Delinquent Consumer Debt Peddled Out To Collectors For Pennies On The Dollar; Investigators Round Up The Usual Suspects

Reuters reports:
  • The largest U.S. banks face a multi-state investigation into whether they helped debt collectors pursue faulty judgments against credit card customers, according to people familiar with the matter.

    At issue is whether weak record-keeping by banks or a failure to pass accurate information to collection agencies harmed consumers.

    The allegations against the banks echo those central to last year's $25 billion federal-state mortgage settlement to resolve charges that the banks "robo-signed" documents and pursued foreclosures with faulty information.

    This latest probe targets the same banks, including Bank of America (BAC.N), JPMorgan Chase (JPM.N), Citigroup (C.N) and Wells Fargo (WFC.N), said the sources who spoke on condition of anonymity because the investigations are continuing.

    As with the mortgage cases, the investigation focuses on the banks' poor paperwork and their weak tracking of the debts.

    When they sold delinquent credit card debt to the buyers, often at only a few cents on the dollar, they allegedly failed to provide them with the evidence that the borrowers owed the money. It is unclear, however, if the incomplete information was used to pursue borrowers who were not delinquent.
***
  • The probe against the banks marks an expansion of the scrutiny that to date has largely focused on the debt collectors.
***
  • Investigators are finding that the banks often did not provide buyers of the debt with evidence that individual credit card accounts were delinquent. Instead the banks only provided basic information about how much money they thought was owed and who the borrower was, without providing original contracts, past statements, or other additional documentation.
***
  • Despite a lack of documentation, consumer advocates and people familiar with the investigations say debt buyers still pursued court rulings that allowed them to potentially garnish wages and debit bank accounts.

    Consumers usually fail to contest the court proceedings, these people said, because they often don't receive the notices, don't know how to respond, or cannot take the day off work, and courts enter default judgments against them.

    "A lot of these debt buyers are flooding state courts attempting to collect debts that they've bought for pennies on the dollar," said Ira Rheingold, executive director of the National Association of Consumer Advocates. "They're filing these affidavits about how much is owed, and who owes it, but the reality is, they have no information."

Nevada AG Scores Plea In Criminal Prosecution Of Upfront Fee, Debt Reduction Mortgage Refinance Ripoff

From the Office of the Nevada Attorney General:
  • Nevada Attorney General Catherine Cortez Masto announced that on March 6, Gary Dimattia, 62, of Las Vegas, pled no contest to ten felonies in connection with his operation of a mortgage lending fraud scam, including four counts each of mortgage lending fraud and theft, one count of multiple transactions involving fraud and deceit in the course of enterprise or occupation, and one count of pattern of mortgage lending fraud.
***
  • Operating under the name Financial Link Services, Dimattia peddled a so-called “Balance Reduction Program” promising to arrange to have investors purchase his clients’ mortgages from their lenders and refinance his clients at current market value, thereby eliminating negative equity and reducing monthly payments.

    He typically charged $3,495-$3,895 up front but failed to deliver the promised services or refund the fees.

Missouri AG Tags Loan Modification Outfit In Civil Suit; Phony Promises Of Attorney Involvement, Unlicensed Practice Of Law Among Allegations

From the Office of the Missouri Attorney General:
  • Attorney General Chris Koster [] filed a lawsuit against two related businesses that purported to provide loan modification and mortgage relief to desperate homeowners.

    Koster’s suit is against Legal Helpers Debt Resolution, LLC and Mortgage Law Group, LLC, as well as the companies’ managing partner, Jason Edward Searns; senior partner, Thomas Macey; and senior partner, Jeffery Aleman.

    The lawsuit alleges that the defendants preyed on vulnerable Missouri consumers who were already dealing with difficult financial circumstances, especially during the economic downturn. The defendants allegedly lured consumers with promises of mortgage modifications or debt settlements, then encouraged them to pay the companies, rather than their creditors. As a result, many consumers defaulted on their obligations and never received the services the defendants promised.
***
  • Specific allegations in the lawsuit state the businesses broke Missouri’s consumer protection laws by:

    (1) Misrepresenting to consumers the results the defendants could achieve and the time necessary to achieve promised results;

    (2) Persuading consumers to stop making payments to their lenders and creditors while failing to inform the consumers of the legal consequences that could result from withholding those payments;

    (3) Taking upfront payments from consumers for debt relief and loan modification services;

    (4) Failing to provide services as promised to consumers;

    (5) Failing to place legally required notifications of consumers’ rights in contracts;

    (6) Misrepresenting that the defendants’ services would be performed by attorneys licensed to practice law in Missouri, and:

    (7) Engaging in the practice of law in Missouri without a license to do so.

Tuesday, March 12, 2013

Foreclosure Rescue Rackets Tagged By Feds For Peddling Forensic Loan Audits & "Mass Joinder" Lawsuits Dodge Criminal Prosecution, Reach Civil Lawsuit Settlements

From a recent Federal Trade Commission press release:
  • The defendants behind an alleged mortgage relief scam have agreed to settle FTC charges that they deceived cash-strapped consumers into believing they could hold onto their homes and reduce their mortgage payments by either suing their mortgage lenders in so-called “mass joinder” lawsuits or buying “forensic loan audits.”

    All of the defendants, including two individuals and seven companies, will surrender assets and be prohibited from making deceptive claims about any product or service, and all but one are banned from marketing mortgage- and debt- relief services.
For more, including links to pertinent court filings, see Marketers of Alleged "Mass Joinder" and "Forensic Loan Audit" Mortgage Relief Services Scams Settle FTC Charges, Agree to Surrender Assets and Halt Deceptive Conduct (All But One Defendant Banned from Marketing Mortgage- and Debt-Relief Services).

Bay State AG Settles One, Files Another Civil Suit In Effort To Pursue Upfront Fee Loan Modification Rackets; Allegations In Latest Filings Include Charge Of Unlicensed Practice Law

From the Office of the Massachusetts AG:
  • Following separate actions brought by her office this week against two financial companies and a law partnership, Attorney General Martha Coakley is warning consumers about potential scams that attempt to take advantage of struggling homeowners.

    Both cases allege unfair and deceptive acts and practices in connection with foreclosure-related services, including improper charging of advance fees. Under Massachusetts law, consumers should not be charged advance fees for foreclosure-related services.

    “We allege these defendants preyed on distressed homeowners, often requesting advanced payment in violation of the law,” AG Coakley said. “We continue to see many foreclosure and loan modification scams that prey upon borrowers who are desperately trying to save their homes. Homeowners should be aware of their rights and know that our office has resources available to help them.”

    In the first action, a Brighton company and related law firm have agreed to pay a total of $20,000 in restitution to consumers and the Commonwealth for allegedly charging illegal advance fees for loan modifications. According to an assurance of discontinuance, filed [] in Suffolk Superior Court, iMod Corporation (iMod), and Lombardi and Stephenson, an affiliated law firm, charged Massachusetts residents advance fees for foreclosure-related services. In addition to restitution for consumers, the defendants have agreed to no longer charge consumers advance fees for foreclosure-related services, and will notify potential clients that free loan modification services are available.

    In the second action, a Lawrence financial company and its owner have been sued for using the foreclosure crisis to prey upon homeowners and provide legal advice without a license.

    According to the lawsuit, filed in Suffolk Superior Court on Wednesday, Pinnacle Financial Consulting, LLC (Pinnacle), and its owner, Robert Burton (Burton), allegedly engaged in unfair or deceptive conduct while marketing, soliciting and providing loan modification, bankruptcy petition preparation and financial advising services.

    The allegations include misrepresenting to consumers the services they could provide, exaggerating the benefits of their services, charging unlawful advance fees, practicing law without a license, failing to take any action to provide the promised services after receiving payment, and refusing to provide refunds upon request.

    Defendants allegedly targeted minority and non-native English speakers desperate to save their homes from foreclosure. The AG’s Office has obtained a temporary restraining prohibiting the defendants from dissipating or concealing assets and destroying records.
For the Massachusetts AG press release, see AG Coakley Targets Financial Companies for Predatory Loan Practices, Warns Homeowners About Foreclosure Relief Scams (AG’s Office Obtains $20,000 Settlement with iMod Corporation, Files Lawsuit Against Pinnacle Financial for Soliciting Massachusetts Consumers with Foreclosure Relief Scams).

Virginia AG Continues Use Of Civil Suit Settlements To Prosecute Blatant Loan Modification Ripoffs

From the Office of the Virginia Attorney General:
  • Attorney General Ken Cuccinelli announced [] that his office has reached settlements with two affiliated mortgage loan modification companies for allegedly charging illegal advance fees before performing "foreclosure rescue" services for their customers, and failing to follow through on promises to deliver those services.

    The attorney general alleged that Virginia Beach-based Rysnglo Financial Management, LLC, and Los Angeles-based Mae Global Enterprises, LLC violated the Virginia Foreclosure Rescue law by charging and receiving large advance fees from consumers in connection with services to prevent foreclosure. Virginia law prohibits a supplier of foreclosure avoidance or prevention services from charging or receiving a fee prior to the full performance of the services it has agreed to perform, if the transaction does not involve the sale or transfer of residential real property.

    According to the attorney general's complaint, consumers typically contracted directly with Mae Global, but paid money to Rysnglo. Rysnglo would provide portions of the fees it received to Mae Global, which was supposed to provide the services. The companies charged consumers fees ranging from $6,000 to $15,000 to help them obtain mortgage loan modifications.

    In another service offered, consumers could supposedly purchase their home, free and clear of their mortgage, for a fraction of the outstanding balance of their mortgage. At least one consumer allegedly paid $80,000 for this service.
***
  • The settlements include the following key terms:

    The commonwealth is granted judgments against Rysnglo and Mae Global in amounts totaling $248,200 for restitution to consumers.

    The commonwealth is granted judgments against Rysnglo and Mae Global in amounts totaling $85,000 in civil penalties for their alleged violations of the Foreclosure Rescue law and the VCPA.

    The commonwealth is granted judgments against Rysnglo and Mae Global in amounts totaling $25,000 for reimbursement of attorneys' fees and costs.
***
  • "I am unaware of a single instance where consumers received promised services from the Rysnglo or Mae Global,"(1) Cuccinelli said. "My office is committed to pursuing those who prey on Virginia citizens experiencing financial difficulties."
For the Virginia AG press release, see Cuccinelli announces settlements with Virginia Beach, L.A.-based mortgage loan modification companies (Commonwealth will obtain $358,000 in judgments for customer restitution, civil penalties, and attorneys' fees).

(1) If this is true, one wonders why a criminal prosecution (ie. grand theft, theft by deception, etc.) wouldn't have been more appropriate.

Victimized Homeowners Expecting $125K In Restitution From NJ AG Civil Suit Tagging Loan Mod Ripoffs Yields Measly $4K

In Philadelphia, Pennsylvania, KYW-TV Channel 3 reports:
  • Mortgage delinquencies in Pennsylvania and New Jersey are on the rise. Often desperate times call for desperate measures, but before you shell out money to a company to help save your home, 3 On Your Side Consumer Reporter Jim Donovan has a warning for you.

    “We were very vulnerable and you know, they preyed on that,” says Misty Corsey. Corsey had hoped to lower her mortgage payments when her husband’s hours were cut. A company called Mortgage Foreclosure Experts promised to help for a $2300 upfront free.

    According to Corsey, “We were guaranteed to get our mortgage under one thousand dollars.” That would have been a savings of over $500 a month, but what did she really get? Corsey says, “They did get me a modification for about $15 dollars cheaper.”

    “I thought I did everything right,” says Kim Jagielski. Jagielski had hired Mortgage Foreclosure Experts after being laid off. She says, “He said they can help me get a remodification, that I was doing something wrong on my own, that they were there to help me.”

    Jagielski paid $2,300 too and didn’t get anything in return. She says, “They won’t respond. They won’t call.”

    In March 2011, Mortgage Foreclosure Experts was one of 11 unlicensed companies that the New Jersey Attorney General targeted for providing illegal modification services. The State fined the companies and sought $125,000 in restitution.

    But now, two years later, only three of those companies have ever paid up, and only a measly $4,000 was given back to customers. Mortgage Foreclosure Experts wasn’t among those three companies, and has never forked over a cent.

Monday, March 11, 2013

S. Florida Woman Accused Of Grand Theft, Uttering Forged Instrument For Allegedly Hijacking Title To Home, Then Attempting To Evict Occupant

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • In South Florida, thieves will try to steal anything — even your home.

    A Lauderhill woman is accused of filing bogus paperwork at the Broward Government Center to transfer a Southwest Ranches property to her name and seize ownership of the home. She even tried to evict the woman who lived there.

    Neither the renter nor homeowner knew Marlene Baptiste, now charged with grand theft — and neither had any inkling she had set her sights on the property in the 6900 block of Southwest 185th Way, authorities said. Although Baptiste, 39, is now charged with grand theft, her case highlights how vulnerable South Floridians' homes are to strangers' attempts to seize them.

    Homeowners should use public records online to their advantage — just as thieves do, said Sunrise real estate lawyer Gary Singer.

    "It's impossible really to stop someone from fraudulently signing your name and filing it in the public record," he said. "Your house is your biggest investment. Just like protecting yourself against identity theft, you have to also check your public records and make sure no funny business is on it, because it does happen."
***
  • According to a Broward Sheriff's Office report, Baptiste was arrested Feb. 26 and charged with grand theft over $100,000, uttering a forged instrument and refusing to supply a DNA sample.
***
  • The Sheriff's Office said visitor logs and surveillance video showed Baptiste enter the Broward County Governmental Center, 115 S. Andrews Ave., and file the fraudulent quit claim deed in October.

    Last May, Eddie Banks, 40, allegedly took it a step further — after fraudulently recording a deed, he moved into a bank-owned Oakland Park home in the 800 block of Northeast 47th Court.

    When a bank representative contacted authorities, Banks called the Sheriff's Office to report someone had broken into his home. Banks was ultimately charged with burglary and grand theft.

Elderly Scam Victim Loses 14 Rental Properties To Foreclosure After Entrusting Accused Perpetrator With Making Monthly Mortgage Payments Out Of Rent Collections; Suspect Hit With $250K Bail In Alleged $220K+ Ripoff

From the Office of the Ventura County, California District Attorney:
  • District Attorney Gregory D. Totten announced [] the filing of a felony complaint against Julietta Quinones ( DOB 3/12/68) of Port Hueneme. Quinones is charged with seven felony counts of grand theft, along with an aggravated white-collar crime enhancement alleging the thefts involved the taking of more than $100,000. The case was investigated by the District Attorney's Real Estate Fraud Unit.

    The 70-year-old victim owned 14 rental properties throughout Ventura County. The victim entrusted Quinones to make the victim's monthly mortgage payment on each property and provided the defendant with signed, blank checks for that purpose. Rather than pay each respective mortgage, Quinones used the victim's checks for personal expenses. As a result, the victim lost all 14 rental properties. Quinones is accused of stealing in excess of $221,708 over a period of three years.
***
  • Quinones remains in custody in lieu of $250,000 bail and faces a maximum sentence of nine years in state prison.

Antitrust Feds Notch Two More Pleas In Ongoing Probe Into Northern California Foreclosure Auction Bid-Rigging Rackets

From the U.S. Department of Justice (Washington, D.C.):
  • Two Northern California real estate investors have agreed to plead guilty for their role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

    Felony charges were filed [] in the U.S. District Court for the Northern District of California in Oakland against Peter McDonough of Pleasanton, Calif., and Michael Renquist of Livermore, Calif.

    Including [these] pleas, 29 individuals have pleaded guilty or agreed to plead guilty as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

    According to court documents, for various lengths of time between November 2008 and January 2011, McDonough and Renquist conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County, Calif .

    McDonough and Renquist were also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda County properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.

    The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held. Renquist was also charged with additional counts for his involvement in similar conduct in Contra Costa County, Calif.

    “The conspirators suppressed competition and lined their pockets through fraudulent and collusive conduct at the expense of lenders and distressed homeowners,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
For the Justice Department press release, see Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (29 Individuals Have Agreed to Plead Guilty to Date).

See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement? for the distinction between what bidders can and can't do when engaged in cooperative bidding with others at public auctions.

Recent Bid-Rigging Prosecutions Have Tax Lien Investors' Trade Group Seeking Training From Antitrust Feds To Keep Members Out Of 'Sherman Act' Hot Water

In Washington, D.C., Reuters reports:
  • Solo investors, specialty investment firms and others who buy up property tax liens for a profit are studying the finer points of U.S. antitrust law after watching comrades in their niche face charges of bid rigging.

    A Department of Justice lawyer familiar with a series of recent cases in New Jersey has signed on to speak at a training session next month for the National Tax Lien Association. The training is part of a plan to inform members about antitrust pitfalls in the auctions where liens are bought and sold. It will be at the association's annual meeting in Miami.
***
  • Fear of criminal prosecution rippled through the industry in the past few years as the Department of Justice's Antitrust Division brought cases of alleged bid rigging in the local auctions where the lien sales take place.

    Bid-rigging convictions can mean prison time and millions of dollars in fines under the Sherman Act.

    "No one would ever violate the Sherman Antitrust Act if they knew the significance of the penalties," said Brad Westover, executive director of the National Tax Lien Association.

    The association began regular training sessions at its annual meeting last year, Westover said. At his request, the Antitrust Division has agreed to send a trial attorney from New York this year.
***
  • Westover said he tells his members to assume there is a federal agent at every tax-lien auction in the country. "We don't want to venture anywhere near something that could look on the wrong side of the law," he said.
For the story, see After busts, tax-lien industry asks for antitrust training.

See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement? for the distinction between what bidders can and can't do at public auctions.

Sunday, March 10, 2013

U.S. Senator Requests DOJ Probe Into Suspected LPS' Racket That Allegedly Employed Improper Fee Structure, Resulting In Double Billing Of Fees For Legal Services

The Wall Street Journal reports:
  • A U.S. senator has asked Attorney General Eric Holder to investigate the business practices of a company that provides technology services to lenders and other companies that process foreclosures.

    In a letter sent to the Department of Justice on Thursday, Sen. Ron Wyden (D., Ore.) raised concerns over the business practices of Lender Processing Services Inc. LPS +0.04%, a Jacksonville, Fla.-based company that offers software and logistical services for mortgage companies.

    The letter alleges that LPS employed an improper fee structure that resulted in double-billing homeowners or mortgage investors for legal services related to the processing of foreclosures and bankruptcies.

    It also says that the firm’s business model may have been responsible for sowing what became known as “robo-signing,” where bank attorneys and paralegals improperly signed off on foreclosures.

Jury Convicts Title Agent Of Using Mom's I.D. To Illegal Score Reverse Mortgage On Her Own Home, Used Proceeds To Make "Hard Money" Loans; Made Bogus Reps In Subsequent Short Sale

From the Office of the U.S. Attorney (Miami, Florida):
  • A Miami title agent and former mortgage broker was found guilty [...] for her role in a “reverse mortgage” fraud scheme in connection with a loan worth more than $400,000, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

    After a six-day jury trial [...], a federal jury convicted Yesenia Pouparina (aka Yesenia Campos), 40, of four counts of wire fraud and one count of mail fraud for her role in securing a fraudulent Home Equity Conversion Mortgage (HECM), commonly referred to as a reverse mortgage loan, and making false representations related to the occupancy of the property and its subsequentshort sale.”
***
  • According to court documents and evidence presented at trial, Pouparina, a licensed title agent in the state of Florida, devised a scheme to obtain a reverse mortgage loan on her own property in the name of her mother, an individual who failed to meet the requirements of the HECM program.

    Pouparina submitted to a lending institution a false loan application and doctored records in support of that application, misrepresenting her mother’s eligibility to participate in the HECM program.

    Pouparina acted as the title agent for the loan and disbursed the loan proceeds directly to her own personal bank accounts.

    Pouparina also enriched herself by collecting fees generated by the loan, and also profited by using the loan proceeds in connection with her business as ahard money lenderin other mortgage deals.

Law Firm Secretary Pinched For Allegedly Swiping Escrow Account Cash & Lawsuit Settlement Proceeds, Forging Client's Signatures & Pocketing Their Checks

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A former secretary at a Deerfield Beach personal injury law firm has been accused of forging client checks and stealing nearly $25,000, according to an arrest affidavit. Charged with grand theft, Vanessa Belotte, 29, of Coral Springs, is being held at the Main Jail on $25,000 bond.
***
  • "[Belotte's] fraudulent activities amount to $24,916.30; however, the final amount of loss may increase, as it is difficult to ascertain at the present time whether any additional forged checks will be discovered," Detective John Calabro, of the Broward Sheriff's Office, wrote in a Feb. 25 arrest affidavit.

    In a prepared statement, one of the firm's partners, Andrew Berrio, said: "Fuentes & Berrio are working closely with the few clients involved, as well as law enforcement, during this ongoing investigation and assure that the clients will ultimately suffer no economic loss."

    According to the arrest affidavit, as many as 11 clients were affected.

    Embezzlement suspicions were first sparked when it was discovered in November 2012 that five fraudulent debits — three payments to Florida Power & Light totaling $700 and two payments to Comcast for a total of $521 — had been made from a client's trust account in October 2012.

    A subsequent investigation "uncovered an even bigger fraud," including the discovery at Belotte's old desk of "notepads where she practiced client's signatures," and "incriminating correspondence" on her work computer, the arrest affidavit said.

    Aside from the five unauthorized debits, beginning in August 2012, Belotte was also involved in the forgeries of at least nine checks that should have been mailed to clients, according to the affidavit.

    When notified, the clients informed investigators that "they did not receive their checks and that their signatures were forged," the affidavit said. In one instance, the affidavit says, Belotte changed a client's mailing address to her own Coral Springs home address.

    And on another occasion, Belotte sent a letter to a client advising that the firm no longer wanted to represent him. She then called the insurance company and settled the case. When the settlement check arrived at the law firm, instead of arranging for the client to pick it up, Belotte "negotiated the check through the same previously described fraudulent means," the affidavit said.

    It was not immediately clear if Belotte had retained an attorney to represent her.

Oakland Feds: Paralegal Settled Lawsuits, Then Swiped Settlement Proceeds Out From Under Unwitting Law Firm Employer, Clients

From the Office of the U.S. Attorney (Oakland, California):
  • Ana Lissa Reyes, of San Lorenzo, Calif., was arraigned [] on an information charging her with multiple counts of mail fraud and tax evasion, United States Attorney Melinda Haag and IRS Criminal Investigation Special Agent in Charge Jose M. Martinez announced.

    According to the information, Reyes is alleged to have worked as a secretary, office manager and paralegal for a Bay Area personal injury law firm.

    From about 2006 through June 2011, Reyes, without authorization, settled claims without the knowledge of the law firm or its clients and stole the settlement proceeds.

    It is also alleged that Reyes engaged clients without the law firm’s knowledge and stole client retainer fee payments. To carry out the scheme to defraud, Reyes created a bogus company to correspond with clients without the law firm’s knowledge and to defraud the clients into believing their cases were ongoing.
For the U.S. Attorney press release, see Paralegal Charged In Scheme To Defraud Bay Area Law Firm And Its Clients.

For the formal charges, see U.S. v. Reyes.

Saturday, March 09, 2013

Landlord's Alleged Failure To Fork Over Interest On Ex-Tenant's Security Deposit Leads To $24M Lawsuit Seeking Class Action Status

In New York City, the New York Post reports:
  • A former Manhattan resident has slapped his ex-landlord with a $24 million suit over the interest on the security deposit he put down for a plush, rent-stabilized pad on the Upper East Side nearly 40 years ago.

    John Sacchi, 63, claims Elyachar Properties refused to hand over the interest after he moved out of 1100 Madison Ave. and relocated to New Jersey in 2012 after suffering a stroke.

    Sacchi, who worked as a colorist at the tony Pierre Michel hair salon, last paid a little more than $1,800 a month for a spacious, one-bedroom apartment on the 10th floor of the building, which is about a block from the Metropolitan Museum of Art.

    His lawyer, Stephen Simoni, said the accrued interest on Saachi’s 1975 security deposit exceeded $10,000.

    Sacchi’s Manhattan federal-court suit seeks damages for himself and potentially thousands of other ex-tenants at 1100 Madison and two other East Side buildings that Elyachar owns, on grounds including fraud and breach of fiduciary duty.

    Elyachar lawyer Alan Friedman said the company has the canceled checks showing that Sacchi got interest payments on his security deposit, and noted that he was allowed to occupy his apartment, rent-free, for two weeks after breaking his lease.Friedman also added the company Friday mailed Saachi a check for about $1,000 for “every speck of interest” he could possibly claim he’s owed.

Confusion In Legal Community, Conflicting Professional Opinions Lead To Late-Filed Wrongful Death Claim By Parents Of Married Locksmith Gunned Down During Foreclosure Eviction

In Stanislaus County, California, The Modesto Bee reports:
  • The parents of a locksmith gunned down April 12 along with a sheriff's deputy while serving a Modesto eviction have submitted wrongful-death claims to Stanislaus County.

    The claims are similar to one filed in September by the locksmith's widow, Irina Engert, who subsequently sued in federal court in January, saying the Sheriff's Department owed her husband better protection.

    Glendon Engert, 35, and deputy Bob Paris, 53, were ambushed by a distraught man whose property was sold in foreclosure. The murders touched off a standoff with authorities that ended in an inferno and the suicide of gunman Jim Ferrario, 45. "It's a shame that Mr. Ferrario created the situation for all of us," County Counsel John Doering said Monday.
***
  • Engert's mother, Ann, said in January that she had consulted an attorney who advised her that a dead man's widow has legal standing to sue, but not his parents.

    The San Francisco attorney representing his widow read that story in The Bee, provided a different legal opinion and was hired by Ronnie and Ann Engert. Their claims are considered a precursor to a lawsuit.

    The parents' claims come about four months later than allowed by a six-month legal limit for such action. They acknowledge as much in the documents, blame the initial attorney for bad advice and ask for a waiver allowing a late claim.
***
  • A brief says Modesto attorney Gerald Brunn made an "honest mistake" in his opinion regarding the legal standing of an adult's surviving parents and acknowledges "some confusion" in the legal community, saying, "Mr. Brunn is certainly not alone in making this mistake." Brunn could not be reached Monday for comment.

    Based on his assessment, Ann Engert had told The Bee in January, "The state of California does not recognize my loss as legally actionable" and said she supported her daughter-in-law's legal pursuit. She said she had been close to her son, playing online poker with him and chatting on the phone into the wee hours of the morning.

    After her consultation with Brunn, she sent him a letter citing puzzlement that laws would not recognize "my loss as his mother" and saying she "would have been happy to have worked with you" and thanking Brunn. The letter is attached to the new complaints.

    Support in trade journal

    Others believe such parents can sue for wrongful death if the adult who died had no children. Glendon and Irina Engert were childless.

    San Francisco attorney Richard Schoenberger, representing all three survivors, cited a 2008 article in a legal trade journal written by two Santa Monica lawyers specializing in wrongful-death cases. They acknowledged disagreement among lawyers but concluded that parents of childless adults can sue, as well as a surviving spouse.

    In an email Monday, Ann Engert wrote, "I said before that I supported my daughter-in-law's actions in connection with her lawsuit, and the current development is an extension of that conviction."
For the story, see Slain locksmith's parents file claim against Stanislaus County.

Go here for the above-referenced claim, legal brief, letter sent by the victim's mother to the lawyer who advised her she had no standing to file a claim, the earlier Modesto Bee story, and the trade journal article addressing the legal standing of parents to bring a suit for the wrongful death of a married child.

Bay State AG Squeezes Landlord For $75K To Resolve Fair Housing Charges Alleging Use Of Bullying Tactics Against Renters With Young Kids To Dodge Obligations To Delead Apartments

From the Office of the Massachusetts Attorney General:
  • A Boston area property owner has agreed to pay $75,000 and delead his rental units, resolving allegations that he engaged in a pattern of unlawful and retaliatory practices against tenants with young children in order to avoid his obligation to comply with state lead paint laws, Attorney General Martha Coakley announced today.

    The consent judgment, [...] resolves a fair housing complaint filed in February 2011 against Keith L. Miller, of Newton, who at the time owned and managed at least 24 residential rental units in Chelsea, Newton, Arlington, and Brighton. This is the largest fair housing settlement with a landlord that has been reached under AG Coakley.
***
  • In February 2012, the AG’s Office expanded its case against Miller, after learning of additional claims by tenants of the landlord’s bullying tactics and discriminatory behavior.

    The amended complaint alleged that Miller evicted, or threatened to evict, tenants with young children, rented apartments containing lead paint to tenants with young children, failed to remove lead hazards in those apartments, failed to provide proper notice of lead hazards to his tenants, made misrepresentations regarding the presence of lead paint in his apartments, and refused to repair unsafe and unsanitary conditions.

    More recently, the AG’s Office obtained summary judgment for claims that Miller failed to abate lead hazards, failed to provide proper notice of lead hazards, and that he illegally attempted to charge tenants for water use. The court held that those violations constituted violations of the state’s Consumer Protection Act as well.
***
  • Massachusetts laws [] require disclosure of lead paint history, abatement of lead paint hazards in units in which children under the age of six are present, and prohibit landlords from retaliating against tenants who assert their rights under the lead paint laws.
For the Massachusetts AG press release, see Boston Area Landlord to Pay $75,000 and Delead Units to Resolve Fair Housing Lawsuit (Largest Fair Housing Settlement with Property Owner to Date Under AG Coakley).

Spineless Prosecutor Kiboshes Cop's Arrest Warrant Request For Developer Suspected Of Pocketing Customer's Cash, Then Misapplying Funds For Personal Use

In Indian River County, Florida, TC Palm reports:
  • Denise Cisneros is hopeful she will finally get the swimming pool a developer promised her a year ago.

    Recently, she walked alongside her unfinished swimming pool, her face pinched in frustration as she glanced into the concrete crater with trash strewed across dried scum at the bottom. The giant, dry hole was in contrast to her lush lawn and newly built, 3,200-square-foot home in Eagle Trace subdivision, north of Vero Beach city limits.
***
  • For almost a year she and her husband wrangled with developer Eli Baron, who built their house at Eagle Trace and, according to Cisneros, pressured them into paying him $43,000 to install a pool he was supposed to have completed by last June.

    The project stalled because Baron owed almost $6,000 to the pool contractor and $12,000 to the company that built the screen enclosure around the pool. Upset by the delays, Cisneros reported Baron to the Indian River County Sheriff’s Office last year.
***
  • In November 2011, a Press Journal investigation found Baron had a troubled financial history, a criminal record and a long list of contractors who claimed he failed to pay them.

    A year later, the Press Journal learned he has mounting unpaid taxes, owes more than $140,000 in court settlements and has had 146 liens filed against him in the past three years. He also has unhappy homeowners in the subdivision at 58th Avenue and 61st Street.
***
  • Arrest warrant denied

    Cisneros filed a complaint with the Sheriff’s Office in August, arguing Baron taking her money and not using it to finish the job amounted to theft.

    Through subpoenaed bank records, detectives found Baron withdrew money from a business account that was supposed to cover costs such as pool construction and instead spent it on a Caribbean cruise, hotels, $1,000 monthly BMW car payments and restaurants with tabs as high as $175, a warrant affidavit shows.

    Milo Thornton, a detective with the economic crimes unit, stated in a report that he also talked to the contractors involved. In September, he requested a warrant to arrest Baron and charge him with grand theft, but the State Attorney’s Office quashed the warrant saying Baron’s actions didn’t meet the standard for theft under Florida law.

    Nikki Robinson, assistant state attorney, said her office denied the warrant on Sept. 20 because Baron did most of the work he promised and showed he intended to finish the job.

    Plus, Cisneros kept paying him, which suggests she believed he would complete the work, Robinson said. By law, a person must display criminal intent at the outset — otherwise, the main recourse is litigation, she said.

    “Did she pick a bad contractor? Absolutely,” Robinson said. “But is it criminal? Unfortunately, no.”(1)
For more, see Some residents, contractors unhappy with Eagle Trace developer.

(1) In addition to grand theft, the described conduct by the developer could possibly also constitute a misapplication of construction funds, a second-degree felony in Florida (Section 713.345 F.S.) for ripoffs of at least $1,000 but less than $100,000. Further, under Section 713.345(1)(c) of the Florida statute:
  • A permissive inference that a person knowingly and intentionally misapplied construction funds in violation of this subsection is created when a valid lien has been recorded against the property of an owner for labor, services, or materials; the person who ordered the labor, services, or materials has received sufficient funds to pay for such labor, services, or materials; and the person has failed, for a period of at least 45 days from receipt of the funds, to remit sufficient funds to pay for such labor, services, or materials, except for funds withheld pursuant to paragraph (a).
Thumbs up to the detective who requested the arrest warrant; a Bronx cheer for the prosecutor who, in all fairness, may have such a heavy caseload that she didn't feel that the developer's actions, even if rising to the level of a crime and despite his reported track record as a creditor-stiffing businessman, wasn't a big enough deal to merit criminal prosecution. Hence the always-handy fall-back position not-uncommonly invoked by some unmotivated law enforcement personnel - 'No criminal conduct here - It's only a civil matter!'

Engaged Couple, Others Accuse Banquet Hall Operator Facing Foreclosure Of Booking Events (& Pocketing Customer Deposits) Scheduled To Take Place After Date Set For Public Sale

In West Hartford, Connecticut, the West HartfordPatch reports:
  • The doors to La Renaissance were locked [last month] amid reports that the popular East Windsor banquet facility that has played host to myriad proms, graduation ceremonies and wedding receptions throughout the years is subject to a court-ordered foreclosure sale in April.

    Upon hearing the news, several customers who had already put down a deposit to hold a function at the facility have contacted the Attorney General’s office and the state Department of Consumer Protection hoping for help with recouping their money and securing a new venue for their event.

    The owners of La Renaissance, located on Route 5, have been going through foreclosure proceedings since July of 2012, according to the state judicial website.
***
  • A number of consumers have said that, despite the order for the foreclosure sale, the owners of La Renaissance continued to book events - and accept deposits - that were scheduled to take place after the sale.

    One such case is that of Jose Rivera, who wrote in a complaint to the Attorney General’s office that the owners of La Renaissance took two $2,000 payments - $4,000 in total - as a deposit for a July wedding reception without telling Rivera that the facility was due to be sold.

    Rivera said that he and his fiancée are now looking for a new venue to host their wedding reception, in addition to possibly having lost $4,000.

    The state Attorney General’s office has fielded dozens of similar complaints from people who have said that they have deposited thousands of dollars to secure dates at La Renaissance, according to Susan Kinsman, director of communications of the Attorney General’s office.

    “The Office of the Attorney General is looking into the La Renaissance matter with the Department of Consumer Protection,” Kinsman wrote in an e-mail to Patch.

    Telephone calls to La Renaissance and its owners were unanswered. A message left with the attorney of one of La Renaissance’s owners was not returned.

Friday, March 08, 2013

Foreclosure Rescue Scammer Hammered With 11+ Years In Slammer For Pocketing $63K+ In Upfront Fees, House Payments From Six Financially Drowning Homeowners & Throwing Them An Anchor

In Ventura County, California, the Ventura County Star reports:
  • A woman who lost her house and thousands of dollars to real estate fraud was pleased Tuesday when a judge sentenced the manager of the bogus mortgage business. “I am very happy,” Luz Lechuga said in Spanish in an interview outside the courtroom. “I feel better. Yes, this is justice.”

    Ventura County Superior Court Judge James Cloninger sentenced Laura Cecilia Carlson, 66, of Hacienda Heights, to 11 years and eight months despite pleas from the woman’s daughters and lawyer for leniency. The judge ordered her to pay $63,900 to six victims as restitution.

    Cloninger said Carlson was in a management role of a criminal enterprise that tricked Ventura County homeowners out of tens of thousands of dollars.

    “You ruined people’s lives, you and your crime partners,” Cloninger told Carlson, noting Lechuga’s case in particular. “You took her to the brink of suicide with the harm that you inflicted,” Cloninger said. “They (the victims) were drowning, and so you all decided to throw them an anchor to make sure they would drown.”

    Lechuga, who worked in the fields, said in an interview that she had lived for 14 years in her Oxnard home, which was worth $600,000 before she lost it to foreclosure.

    Carlson, a licensed real estate agent, and others were arrested in January 2011, according to prosecutors. Prosecutor Dominic Kardum told Cloninger that state licensing officials would be told of the conviction.
***
  • Carlson ran the business as Global Team Consulting. She trained employees and collected thousands of dollars in upfront fees from clients after promising to reduce the principal and monthly mortgage payments on their homes. Victims were told to stop making mortgage payments and pay the fraudulent company.

    The payments instead went into Carlson’s bank account, Kardum said.
***
  • Carlson’s daughter and two stepdaughters said she was an honest real estate agent who took pride in helping people buy houses.

    They gave tearful comments to the judge, saying their mother was an active church member and law-abiding citizen but that her life worsened after her husband died in 2005. They said they were shocked by what had happened, describing Carlson as a woman who always helped others.
***
  • Cloninger told Carlson’s relatives that if they had heard the facts in the case they would understand the jury’s verdict. The judge said Carlson stole from hardworking, unsophisticated people in a “cold, calculated and heartless way.”

    In an interview, Kardum said co-defendants Victoria Santos, Juan Alvarado Cervantes and Felipe Castro have been convicted and that Jose Miguel Aguilar is a fugitive from justice. Carlson will be eligible for parole after serving 50 percent of her sentence, Kardum said.

Atlanta Feds: Broker Duped Unwitting Prospective Buyers For $1.2M+ In Upfront Fees On Bogus Loan Commitments; Victims Also Allegedly Lost Earnest Money Deposits On Expiring Home Purchase Contracts

From the Office of the U.S. Attorney (Atlanta, Georgia):
  • A New York broker has been indicted for conspiring to defraud 350 financially strapped customers of more than $1.2 million. Kenneth J. Enrico, 46, of Bohemia, New York, was arraigned [] on a federal indictment [...] on one count of conspiracy, three counts of mail fraud, and 13 counts of wire fraud.
***
  • According to United States Attorney Yates, the charges and other information presented in court, between June 2011 and August 2012, Enrico offered property buyers private lender loans of 105 percent of the property’s selling price at a 4.99 percent interest rate, regardless of the buyer’s credit score, as long as the buyers had jobs that generated enough income to qualify for the loan amount and monthly payments.

    Enrico required the buyers to pay him an up-front fee of $2,500 per loan, which he claimed covered loan processing fees and the appraisal. Enrico publicized his offer through several brokers, two of whom were located in the metropolitan Atlanta area. The broker tacked on additional fees.

    More than 350 individuals responded to Enrico’s pitch and sent in more than $1.2 million in up-front fees either to Enrico directly or through the brokers.

    Enrico approved all the buyers for loans. However, none of the buyers ever received a loan from Enrico. He gave the buyers numerous excuses as to why their loans never closed.

    Not only did the buyers lose the fees paid to Enrico, they lost the earnest money they paid to the sellers of the properties they were trying to buy when their sales contracts expired. The buyers often relied on Enrico’s excuses and entered into sales contracts on second properties with additional earnest money payments, which they later lost when Enrico never funded their loans.

6th Circuit Kiboshes Defendant Zombie Debt Buyer, Named Consumer Plaintiffs (& Their Lawyers) From Screwing Over 133,000 Unnamed Class Action Members With Crappy Settlement In FDCPA-Robosigning Suit

In Cincinnati, Ohio, the Toledo Blade reports:
  • A federal appeals court has reversed a lower court’s approval of a class-action lawsuit settlement that dealt with robo-signed [debt collection lawsuit] filings.

    Originally filed in 2008 in Erie County, the class-action suit challenged debt-collection agency Midland Funding’s practice of using false affidavits to initiate [debt collection lawsuits]. The affidavits claimed the person signing the paperwork had direct knowledge of the situation, when in fact they did not.

    Midland employees had been signing 200 to 400 computer-generated affidavits a day for use in debt-collection actions without any knowledge of the accounts.

    In August, 2011, a U.S. District judge approved a $5.2 million settlement in the Midland Funding vs. Brent case that would have paid $17.38 to each of the approximately 133,000 plaintiffs.(1)

    Eight plaintiffs objected to the ruling, however, arguing the settlement was improper and unfair.

    In a decision published [February 26, 2013], the 6th District Court of Appeals agreed, sending the case back to the district court.

    Among the points the appellate court raised in its reversal was that while the settlement exonerated the debts of the four named plaintiffs, [...] it did not exonerate the debts of the other plaintiffs.

    In fact, the settlement prevented unnamed class members from using Midland’s use of false affidavits against the collection agency in other lawsuits.

    The court said that virtually guaranteed Midland would be able to collect those debts.

    The court wrote that the “disparity in relief is so great that we conclude the district court abused its discretion in finding that the settlement was fair, reasonable, and adequate.”

    The settlement also provided a one-year injunction that required Midland of San Diego, to change its policies. The appellate court argued that Midland would be free to resume its “predatory practices” after that year, should it choose to do so.
Source: Appeals court agrees deal unfair to plaintiffs in Erie County robo-signing case.

For the ruling, see Vassalle v. Midland Funding LLC (6th Cir. February 26, 2013).

(1) From the court ruling:
  • Midland agreed to pay $5.2 million into a common fund for the benefit of the class. From this fund, class counsel would receive attorney fees of no more than $1.5 million, and the costs of administration.

    From the remainder of the fund, eligible class members who timely returned a claim form would receive payments of $10.00 each. In fact, however, the response rate was such that each class member would receive $17.38.

    In addition, the four named plaintiffs were to receive $8,000 collectively.

Thursday, March 07, 2013

Father & Son Scammers Who Ripped Off Struggling Homeowners With Sale Leaseback Peddling Scam Cop Guilty Pleas To NJ State AG Charges After Earlier Pleading Guilty To Feds In Separate Prosecution

From the Office of the New Jersey Attorney General:
  • Attorney General Jeffrey S. Chiesa announced that a Monmouth County man has pleaded guilty in a scheme in which he stole more than a million dollars by promising to rescue homeowners who were facing foreclosure, but instead sold their homes to unwitting investors. His son previously pleaded guilty in the scheme.

    Vito Grippo, 58, of Jackson, pleaded guilty yesterday (Feb. 27) to a criminal accusation charging second-degree theft by failure to make required disposition of property received and third-degree money laundering before Superior Court Judge John Triarsi in Union County.

    Grippo’s son, Frederick P. Grippo, 32, of Old Bridge, pleaded guilty on Jan. 23 to a criminal accusation charging second-degree theft by deception.

    According to the plea agreement, the state will recommend that Vito Grippo be sentenced to ten years in state prison and that Frederick Grippo be sentenced to four years in state prison. In addition, Vito Grippo was ordered to pay full restitution. Frederick Grippo was ordered to pay $24,681 in fines.

    “This father and son ripped off struggling homeowners at the height of the national housing crisis,” Attorney General Chiesa said. “My office will continue to seek out those who prey upon unsuspecting homeowners and will prosecute these offenders to the full extent of the law.”
***
  • In pleading guilty, Grippo admitted that between Feb. 14, 2008 and Jan. 7, 2010, he stole $1.3 million by soliciting 12 financially distressed homeowners, saying he could rescue them from foreclosure and fix their credit rating by transferring title to their homes temporarily to a company called Morgan Financial.
***
  • Vito Grippo admitted to his role in the scheme in connection with 12 homes in Elizabeth, N.J., Brooklyn, N.Y. (3 homes), Jersey City, N.J., Staten Island, N.Y. (2 homes), Rutherford, N.J., Monroe, N.J., Somerville, N.J., Mine Hill, N.J., and Cambria Heights, N.Y.

    The investigation determined that he submitted fraudulent loan applications to obtain a total of more than $4.5 million to purchase the homes. Vito Grippo in turn stole more than $1.3 million in loan proceeds that should have been disbursed to the original homeowners as equity at closing.

    He diverted those funds into his companies’ bank accounts in order to launder the money. The investigation determined that he then disbursed the funds to himself and other co-conspirators.

    Frederick Grippo was involved in seven of the fraudulent loan applications and received checks from Morgan Financial for his participation in the fraud. Although Vito Grippo made some mortgage payments on the loans in the names of the investors, all of the homes ultimately fell into foreclosure. The original homeowners lost the properties and the investors’ credit ratings were ruined.(1)
For the NJ AG press release, see Father and Son Plead Guilty in a Scheme to Steal More Than $1.3 Million from Struggling Homeowners.

For the U.S Attorney press releases announcing the earlier guilty pleas on federal charges, see:
(1) For more on this type of foreclosure rescue ripoff, see:

    Actual Knowledge Of Defectively Acknowledged Mortgage & Bona Fide Purchaser Status

    Is it possible for a "purchaser" of real estate (for this purpose, "purchaser" = a buyer of said real estate, or a lender acquiring a security interest thereupon) to have actual knowledge of a land document that is defectively acknowledged and recorded in the office of the local land record registry and still be treated as a  bona fide purchaser?

    A 2010 federal district court ruling in northern Ohio concluded, based on a state appeals court case, that yes, it appears it is possible in some cases - at least in Ohio. An excerpt from the ruling, in which the district court, sitting in its appellate capacity, reviewed the ruling of an earlier federal bankruptcy court decision:
    • Under Ohio law, it has long been established that a defective deed is not entitled to record and, even if recorded, must be treated as unrecorded, which means it does not afford constructive notice of the conveyance to all the world. See, e.g., Citizens National Bank in Zanesville v. Denison, 165 Ohio St. 89 (1956); Straman v. Rechtine, 58 Ohio St. 443 (1898); Amick v. Woodworth, 58 Ohio St. 86 (1898); Erwin v. Shuey, 8 Ohio St. 509 (1858); White v. Denman, 1 Ohio St. 110 (1853).

      This longstanding rule has been applied more recently as well. See, e.g., MERS v. Odita, 159 Ohio App.3d 1, 5 (Tenth Dist. 2004) ("a defective mortgage is treated as though it has not been recorded").

      Indeed, the Odita court held that a defectively executed, albeit recorded, mortgage was not entitled to priority over a subsequent mortgagee's properly executed and recorded mortgage, even though the subsequent mortgagee had actual knowledge of the prior mortgage. Id. at 9.

      In so holding, the Odita court acknowledged that its ruling may seem unfair given the actual knowledge of the subsequent mortgagee. However, after a careful historical analysis of Ohio law upon the subject (See Odita, Id. at 9-10), the court explained:

      [A]lthough this court recognizes that the current ruling may seem intuitively unfair or inequitable to some observers, because there exists a significant line of authority supporting the ruling, we follow these precedents based upon stare decisis and to lend stability to future property transactions.

      Id. at 10
      .(1)
    Source: Bank of Am., N.A. v. Corzin, Case No. 5:09 CV 2520, No. 08-54674, Case No. 09-503, 2010 U.S. Dist. LEXIS 8755 (N.D. Ohio Feb. 2, 2010).

    (1) The Odita court's discussion of the apparent inequity in the case law, as it relates to sloppy banksters and other careless secured lenders, follows:
    • {¶ 21} It would seem that, as a matter of principle, a defectively executed mortgage should be superior to a subsequent legal interest if the subsequent legal interest was acquired with notice of the prior defectively executed mortgage. See 69 Ohio Jurisprudence 3d, Mortgages and Deeds of Trust, Section 103, supra. However, "[w]hile this is the rule in many jurisdictions, the rule is otherwise in Ohio because of the recording statutes." Id.

      Notwithstanding, with property rights it is not necessary that the outcome be the best outcome possible in each case; only that the outcome be consistent across every case so as to provide reliability and predictability.

      In addressing an issue similar to that in the present case, the Ohio Supreme Court noted that it was constrained by cases that had been affirmed and adhered to by subsequent legal authority for many years. See White v. Denman (1853), 1 Ohio St. 110, 115, 1853 WL 2. The court was also mindful that its decision was based on the construction given to a statute, had relation to rights of property, and had become a rule of property in determining priorities among creditors. Id. The court then explained:

      Stability and certainty in the law, are of the very first importance. Hardships may sometimes result from a stern adherence to general rules. This is unavoidable under any system of jurisprudence. Some barrier is essential to guard against uncertainty. If judicial decisions are subject to frequent change, it would disturb and unsettle the great landmarks of property. The certainty of a rule is often more important than the reason of it; and in the case now before us, we think that the maxim, stare decisis et non quieta movere, is the safe and judicial policy, and should be adhered to. If the law, as heretofore pronounced by the court, in giving a construction to the statute, ought not to stand, it is in the power of the Legislature to amend it without impairing rights acquired under it.

      Id. at 115.

      {¶ 22} Therefore, although this court recognizes that the current ruling may seem intuitively unfair or inequitable to some observers, because there exists a significant line of authority supporting the ruling, we follow these precedents based upon stare decisis and to lend stability to future property transactions. For these reasons, appellants' first and second assignments of error are sustained.

    More On Defectively Acknowledged Instruments

    More on defectively acknowledged instruments, courtesy of USLegal.com, and presented here for general information only (Reliance on these cases by any reader of this blog is not recommended without first doing further research to determine the currently applicable state law):
    • Some statutes require that an instrument must be acknowledged before recording. In such a situation, if the certificate of acknowledgment is materially defective and does not establish a valid acknowledgment either active or presumptive, then the actual recording of the instrument will not impart constructive notice to third parties. A defectively executed mortgage is valid between the parties in absence of fraud.[i]

      In Bank of Am., N.A. v. Corzin, 2010 U.S. Dist. LEXIS 8755 (N.D. Ohio Feb. 2, 2010), it was observed that a defectively executed mortgage, although recorded, is not entitled to priority over a mortgage that is executed and recorded subsequently in a proper manner, even though the subsequent mortgagee had actual knowledge of the prior mortgage.

      In Mortg. Elec. Registration Sys. v. Odita, 159 Ohio App. 3d 1 (Ohio Ct. App., Franklin County 2004), the court observed that a defectively executed mortgage although recorded, is treated as though it is not recorded. Therefore, a defectively executed mortgage without proper acknowledgement of the mortgagor by a notary will not be entitled to priority over a subsequent, properly recorded mortgage.

      In Gregg v. Georgacopoulos, 990 S.W.2d 120 (Mo. Ct. App. 1999), the court observed that if the formal acknowledgment is defective, the instrument is not invalidated between the parties or persons having actual notice of the deed. The recordation of the unacknowledged instrument is a nullity and will not provide constructive notice to any subsequent purchaser. Therefore, only purchasers for value without notice can take advantage of a defective acknowledgment.

      However, a deed to secure debt is considered as valid between the parties even if it is unattested or improperly attested.[ii] Recordation of an improperly attested deed to secure debt will not provide constructive notice of the contents or existence of the deed.

      [i] Seabrooke v. Garcia, 7 Ohio App. 3d 167 (Ohio Ct. App., Lorain County 1982),

      [ii] In re Updike, 93 B.R. 795, 797 (Bankr. M.D. Ga. 1988).