Foreclosure Fraud Settlement Monitor: Banksters Falling Short On Living Up To Their End Of Deal

Bloomberg reports:

• The largest U.S. mortgage servicers, including Citigroup Inc (C). and Bank of America Corp., haven’t done enough to upgrade their treatment of customers in danger of foreclosure, according to a court-appointed monitor.
  
  To meet the terms of a legal settlement with the U.S. Justice Department and 49 state attorneys general, the monitor said in a report released [this week], the banks must improve their response to loan-modification requests and their collection of records, and provide a single point of contact for borrowers. The settlement over botched foreclosures requires the banks to submit plans to the monitor for improving their performance.
  
  “I want to send a simple message to these banks that it’s time for them to live up to their end of the deal by complying with all aspects of the settlement,” Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said on a conference call with reporters.
  
  Donovan, who helped negotiate the February 2011 settlement, called the banks’ performance “unacceptable” and said federal and state authorities would fine or “haul them back into court” if they failed to improve their treatment of borrowers seeking mortgage relief.
  
  The banks were required to meet new servicing standards as part of the accord, which came about after disclosures that they used faulty documents to seize homes.

For more, see Banks’ Mortgage-Service Fixes Faulted by Settlement Monitor.

Antitrust Feds' List Of N. California Foreclosure Sale Bid-Rigging Suspects Admitting Guilt Now Grows to 31 As Probe Continues

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

• A Northern California real estate investor has agreed to plead guilty for his 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 San Francisco against Robert Williams of Atherton, Calif. Williams is the 31st individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.
  
  According to court documents, Williams conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Mateo County, Calif. Williams was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others.

***

• “Collusion at these foreclosure auctions enabled the conspirators to present the illusion of competition, when they were actually thwarting the competitive process and profiting at the expense of lenders and distressed homeowners,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division remains committed to holding accountable those who illegally subvert competition at real estate foreclosure auctions across the country.”

For the Justice Department press release, see Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions.

Dubious Conduct Involving Straw Buyer Scams, Loan Modification Rackets & Solicitations Targeting Victims Of Time Share Ripoffs Among Reasons For Recent Discipline Handed Out By Florida Supreme Court

The Florida Bar recently published its periodic 'gossip sheet' announcing the discipline meted out to some of its wayward members.

The following lawyers were disciplined for a variety of real estate-related missteps:

• Ronald Clyde Denis, 801 Spencer Drive, West Palm Beach, suspended for 60 days, effective 30 days from an April 16 court order. (Admitted to practice: 1997) Between 2009 and 2010, Denis was associated with a loan modification company that was run by non-lawyers. He accepted clients from the company, although it was not an approved lawyer referral service. The non-lawyer company had clients sign a special power of attorney stating that it was their attorney in fact. (Case No. SC12-2177)
  
  Daniel Nathan Hoskins, 1154 Adair Park Place, Orlando, disbarred for five years, effective immediately, following an April 16 court order. Hoskins pleaded guilty in federal court to one count of conspiracy to commit wire fraud and bank fraud — both felonies. In and between March 2006 and October 2008, Hoskins, along with another attorney, conspired with individuals involved in the development of three condominium conversion projects to artificially inflate their sales prices through the use of straw buyers and nominee purchasers. Hoskins failed to disclose to lenders the existence of the kickbacks or disguised payments made to straw buyers and Realtors. (Admitted to practice: 1996) (Case No. SC12-2171)
  
  Harold George Uhrig, 370 Lake Seminary Circle, Maitland, suspended for 60 days, effective May 1, following an April 16 court order. (Admitted to practice: 1975) Uhrig created another law firm, outside of his criminal law practice, to assist his non-lawyer son’s company, which assisted timeshare owners who felt they’d been scammed by timeshare resale companies and wanted refunds. The new firm provided form letters to customers that were misleading and implied that the law firm was available to litigate against timeshare resale companies, if necessary. (Case No. SC12-2175)
  
  Alexander Zouzoulas, 1270 Miller Ave., Winter Park, disbarred effective 30 days from an April 16 court order. (Admitted to practice: 1983) In August 2012, Zouzoulas pleaded guilty in court to conspiracy to commit wire fraud and bank fraud. Between 2006 and 2008, Zouzoulas and another attorney conspired with persons involved in the development of three condominium conversion projects, to artificially inflate the sales prices of the condominium units. He also made several misrepresentations regarding the condominiums and failed to disclose to lenders the existence of kickbacks or disguised payments. (Case No. SC12-2167)
  

Source: Supreme Court Disciplines 29 Attorneys.

Oakland Federal Judge Green-Lights Another Lawsuit Alleging Banksters Bilked Home Loan Borrowers In Default With Inflated Junk Fee Racket, Clipping Homeowners For Exorbitant Mark-Ups For Services Provided By 3rd Party Vendors

In Oakland, California, American Banker reports:

• JPMorgan Chase (JPM) must defend itself against allegations that it charged millions of dollars in improper fees to mortgage borrowers who were in default, a federal judge has ruled.
  
  Thursday's ruling by Judge Yvonne Gonzalez Rogers of the U.S. District Court in Oakland, Calif., means borrowers may proceed with a lawsuit that accuses JPMorgan of inflating fees for inspections, brokers' estimates and other so-called property preservation services. Vendors hired by JPMorgan's servicer performed the services.
  
  The decision follows rulings in April by Rogers that allowed similar lawsuits against Wells Fargo (WFC) and Citigroup (NYSE:C) to proceed.
  
  The homeowners, who live in California, Tennessee and Oregon, say they are suing JPMorgan Chase on behalf of hundreds of thousands of borrowers who have had a mortgage serviced by the company since May 2011.
  
  The borrowers, who sued JPMorgan Chase last year, charge that the allegedly marked-up fees violated state and federal law, forced them deeper into debt, damaged their credit scores and had the potential to add hundreds or thousands of dollars to their loans.
  
  JPMorgan Chase sought to dismiss the lawsuit, contending it was preempted by an April 2011 settlement with the Office of the Comptroller of the Currency that required the company and seven other servicers to fix problems with their foreclosure processing.
  
  Rogers disagreed although she narrowed some of the charges.
  
  "First, the deficiencies and unsafe or unsound practices identified by the OCC were primarily, if not entirely, devoted to foreclosures," Rogers wrote in an opinion issued Thursday. "The consent order did not require remediation to borrowers for financial injuries outside the scope of the review."
  
  According to the borrowers, loan paperwork issued by JPMorgan Chase failed to inform borrowers that JPMorgan Chase could allegedly profit from default-related services. As of Dec. 2010, JPMorgan Chase allegedly charged borrowers between $95 and $125 for so-called broker's price opinions that allegedly cost the bank $50 or less, the lawsuit charged.

For the story, see Mortgage Fee Suit Against JPM May Proceed: Judge.

Wisconsin AG: Attorneys Associated With Consumer Debt Adjustment Firm Merely A Facade For Outfit Providing Services Thru Non-Lawyer, 3rd Party Companies

From the Office of the Wisconsin Attorney General:

• Attorney General J.B. Van Hollen and the Wisconsin Department of Justice (DOJ) have filed an enforcement action in Dane County Circuit Court against Legal Helpers Debt Resolution, LLC, a/k/a the law firm of Macey, Aleman, Hyslip & Searns, as well as the company’s principal managers and owners.
  
  According to the complaint, Legal Helpers Debt Resolution provides debt settlement services to people nationwide, including in Wisconsin. Under Wisconsin’s statute governing adjustment service companies, Wis. Stat. § 218.02, companies that negotiate with creditors on behalf of debtors must obtain a license, file certain disclosures with the Department of Financial Institutions -- Division of Banking, and limit the amount of fees they charge from debtors.
  
  The complaint alleges that the defendants and their Chicago-based company illegally charge exorbitant upfront fees for their debt settlement services while maintaining that, as lawyers, they were not required to be licensed as an adjustment service company pursuant to Wis. Stat. § 218.02.
  
  The complaint alleges, however, that the attorneys with Legal Helpers Debt Resolution are merely a façade for the company, and the debt settlement services are fulfilled by non-lawyer, third-party companies. Consumers report they never meet an attorney, talk to an attorney and when seeking consult with an attorney about the status of their debt, are not permitted to speak with one.
  
  According to the complaint, Legal Helpers Debt Resolution has enrolled nearly 2,000 Wisconsin consumers, charging illegal upfront fees that range from $500-$900, and monthly maintenance fees from $50.00 to more than $75.00. This has resulted in the collection of millions of dollars of illegal upfront fees from Wisconsin consumers.

For the Wisconsin AG press release, see Attorney General J.B. Van Hollen Files Complaint Against Chicago-based Debt Settlement Company and its Principals for Violations of Wisconsin's Consumer Protection Laws.

For the lawsuit, see State of Wisconsin v. Legal Helpers Debt Resolution, LLC, et al.

FHFA IG, Nevada Feds Bag Hubby/Wife Real Estate Operators For Allegedly Structuring Short Sale-Leaseback Of Underwater Home In Effort To Stiff Bankster Out Of Loan Deficiency Without Unloading Residence; Straw Buyer-Relative Roped In By Suspects To Assist In Scheme: Investigators

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

• A husband and wife who worked in the real estate profession in southern Nevada, have been charged in U.S. District Court in Las Vegas with conspiracy and fraud for making false statements to Wells Fargo Bank in order to get it to approve a short sale on their home, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
  
  Cynthia Hosbrook, 41, currently a licensed real estate agent in Nevada, and Robert Hosbrook, 51, formerly a licensed real estate agent in Nevada, both of Henderson, are charged in a criminal indictment dated June 12, 2013, with one count of conspiracy to commit bank fraud and one count of bank fraud.
  
  According to the indictment, the Hosbrooks allegedly solicited a relative to act as a straw buyer for their residence at 2704 Mallard Landing in Henderson.
  
  In a short sale contract dated March 2, 2010, and in other paperwork submitted to Wells Fargo Bank, the Hosbrooks falsely represented that the sale of their home would be an arms length transaction, that it was between two unrelated parties, that no party to the contract was a family member or business associate, that there were no agreements that the seller would remain in the property as a renter, and that the short sale did not constitute straw buying, when they allegedly knew that they were selling the residence to a relative and a straw buyer.(1)
  
  The Hosbrooks also allegedly caused the relative/straw buyer to falsely sign a title company form on July 9, 2010, stating that the relative would be residing at the property, which the Hosbrooks knew was a false and fraudulent representation.
  
  Cynthia Hosbrook and Robert Hosbrook have been summoned to appear for an initial hearing and arraignment on June 21, 2013, at 3:00 p.m. before U.S. Magistrate Judge Carl W. Hoffman. If convicted, they face up to 30 years in prison and fines of up to $1 million on each count.
  
  The case is being investigated by the Federal Housing Finance Agency Office of the Inspector General, and is being prosecuted by Assistant U.S. Attorney J. Gregory Damm.

For the U.S. Attorney press release, see Husband And Wife Charged With Short Sale Fraud.

(1) Despite the fact that getting a mortgage lender to approve a deal like this appears to be quite difficult, if not impossible, unless a false representation is made, some real estate operators remain undeterred in their pursuit to peddle sale leaseback deals to underwater homeowners in the context of a proposed short sale in an effort to purportedly allow homeowners to unload a significant amount of home mortgage debt without actually having to move from their home.

See, for example, ShortSaleLeaseBack.org Helps Home Owners Avoid Foreclosure with New Program (Newly launched short sale lease back programs lets homeowners short sale to escape toxic mortgage debt and foreclosure, but lets them rent back the home):

• The short sale leaseback program works in a similar way to a conventional short sale. This means that the toxic mortgage debt is completely removed, and the decimation of credit history is avoided.
  
  However unlike a normal short sale, the previous homeowner can remain in the home as a tenant. This stops a huge amount of family upheaval and stops people from having to dramatically change their lifestyle. When times are better, the homeowner may even be able to buy their home back at market price. This is known as a short sale buy back.

Tacoma Feds Pinch Local 'Loan Wolf' In Business Of Taking Away Homes From Financially Vulnerable; "I Am A Wolf!" Suspect Once Said In Response To Inquiries About Loan Agreements He Used With Hapless Borrowers

From the Office of the U.S. Attorney (Tacoma, Washington):

• A hard money lender who resides in University Place, Washington was arrested [] after being indicted by the grand jury for conspiracy, making false statements on loan applications and mail fraud. EMIEL A. KANDI, 36,was taken into custody by the FBI this morning and will make his initial appearance on the indictment in U.S. District court in Tacoma at 2:30 today.
  
  “The business practices of this defendant harmed individuals who lost their homes. Then the lies told in mortgage documents harmed taxpayer funded institutions such as the Federal Housing Administration,” said U.S. Attorney Jenny A. Durkan. “These mortgage fraud cases result from thorough and intensive investigations. I’m grateful for the hard work of the dedicated agents and investigators working to hold Mr. Kandi accountable.”
  
  According to the indictment, between 2008 and 2009, KANDI submitted false information to obtain home mortgage loans. Some of these loans were designed to let KANDI cash out of properties that KANDI owned through his hard money lending. KANDI’s lending activities were typically secured by a borrower’s home and charged a high rate of interest.
  
  The hard money loans were structured, in some instances, to allow KANDI to seize control of a home if the borrower missed a single payment. Other loans included an inflated and often disguised commission payment to KANDI. In at least 19 loans, KANDI and his co-schemers submitted false information regarding the borrowers’ employment, salary, and intention to live in the home. Some of the loan paperwork included inflated appraisals so that KANDI could maximize the money he obtained in the scheme.
  
  The false statements were designed to make the loans appear legitimate and ensure that they would meet federal lending standards. Many of the loans were processed by Pierce Commercial Bank and were insured by the Federal Housing Administration (FHA), a unit within the federal Department of Housing and Urban Development (HUD).

For the U.S. Attorney press release, see Pierce County Hard Money Lender Indicted For Conspiracy, False Statements And Mail Fraud In Mortgage Fraud Scheme (Submitted False Documents Defrauding Bank and Federal Insurers).

Go here for links to earlier stories on Emiel Kandi.

See generally, The Seattle Times: Lender seizes desperate borrowers' homes (A Seattle Times examination of numerous Emiel Kandi loan deals shows that they are set up so he can quickly take borrowers' homes and in some cases flip them for a profit. And he gets away with it):

• Kandi is the lender of last resort for some people who've been turned down by banks because of poor credit or limited income. He says his requirement for a borrower is merely "a pulse and a legal ability to sign." He admits he charges borrowers as much as he can get away with — 45 percent interest in one case — and makes it clear to them that if they fail to comply with the loan agreements, he will take their property. "I am a wolf," he explained.
  
  A Seattle Times examination of numerous Kandi loan deals shows that they are set up so he can quickly take borrowers' homes and in some cases flip them for a profit. And he gets away with it. "He's in the business of taking people's property," said Martin Burns, a lawyer who sued Kandi on behalf of [one homeowner]. "He finds vulnerable people and exploits them."(1)

-----------------------------------------------------------

(1) Reportedly, one of Kandi's common practices is to have his victims sign over their title to the property using a quitclaim deed, writing the loan as a purported 'commercial' (as opposed to a 'consumer') loan in attempt to dodge certain consumer protections, and employing 'hair-trigger' default clauses in the loan agreement that allow him to take possession of the house immediately using the deed after a missed payment without going through foreclosure, which includes a 190-day waiting period and several consumer protections.

Dad/Son Duo Belted With Multi-Year Prison Sentences For Running Fraudulent Foreclosure Rescue Outfit Peddling Bogus Sale Leaseback Arrangements To High-Equity, No-Cash Homeowners

From the Office of the U.S. Attorney (Newark, New Jersey):

• A father and son who ran a mortgage loan fraud scheme that succeeded in obtaining $4.4 million in mortgage loans while masquerading as a foreclosure rescue operation were both sentenced to prison [], U.S. Attorney Paul J. Fishman announced.
  
  Vito C. Grippo, 58, of Jackson, N.J., the president of Morgan Financial Equity Shares and Vanick Holdings, LLC, based in Holmdel, N.J., was sentenced to 96 months in prison.

***

• Frederick “Freddie” Grippo, 32, of Old Bridge, N.J., formerly a loan officer at Worldwide Financial Resources and an officer of Vanick Holdings, was sentenced to 41 months in prison.

***

• According to documents filed in this case and statements made in court:
  
  Between January 2008 and February 2010, Vito Grippo held Morgan Financial out to the public as a company that could help homeowners who faced foreclosure on their homes through something Grippo called the “Equity Share Program.” As described by Grippo and his associates, the Equity Share Program involved creating a limited liability company (LLC) in the name of the homeowner’s house, in which the homeowner would supposedly own a 90 percent interest with the rest to be owned by one or two private investors.
  
  In reality, the so-called investors invested nothing and were instead straw buyers recruited by Vito Grippo or his son, Frederick Grippo, because they had good credit. The Grippos and their associates then applied for mortgages in the names of the “investors” for the purchase of the properties owned by the homeowners in distress.
  
  A homeowner in distress would come to a closing in Vito Grippo’s office in Holmdel and be given a stack of documents to sign to prevent foreclosure. The homeowners frequently did not understand that they would be transferring title to their homes to the “investor.”
  
  The new mortgage loan applications filled out by the Grippos or their associates in the name of one of the investors contained materially false information about the loan applicant’s monthly income, his assets and whether the residence to be bought would be applicant’s primary residence.

***

• Properties that lost money through the Equity Share Program were found throughout the metropolitan area, including homes in Rutherford, N.J., Monroe, N.J. and Brooklyn, N.Y.

For the U.S. Attorney press release, see Father And Son Sentenced To Prison In Connection With Bogus Foreclosure Rescue Company.

Deficiency Judgments, Statutes Of Limitations, Collection Period Extensions, Lien Renewals & Other Pleasant Thoughts For Now-Foreclosed Ex-Homeowners

The Washington Post reports:

• Lenders are filing new motions in old foreclosure lawsuits and hiring debt collectors to pursue leftover debt, plus court fees, attorneys’ fees and tens of thousands in interest that had been accruing for years.
  
  It’s an aftershock of the foreclosure crisis, and most homeowners don’t know it’s coming.
  
  “When people take out a loan, they generally think the home is the security for the loan,” said Alys Cohen, an attorney in the Washington office of the National Consumer Law Center. When they no longer have that home, “people don’t expect that debt to follow them,” she said.
  
  It’s all part of a legal process known as a “deficiency judgment,” which is allowed in the District and 40 of 50 states, including Maryland and Virginia. Since the start of the mortgage meltdown of 2008, at least 400 Maryland homeowners have been pursued in court, according to a Washington Post analysis of state court data. In the first four months of this year, 57 new court actions have been filed against homeowners — on pace to exceed last year’s total of 120.

***

• Suing people immediately after foreclosure was problematic. For one thing, lenders usually could not get more money out of already broke homeowners. But, if lenders waited a few years, some forecast that people would have money again once the economy recovered.
  
  The irony is not lost on Evan Goitein, a Bethesda-based foreclosure attorney.
  
  “There is very little to be gained from the bank’s perspective to be suing people for the money at this point,” Goitein said. “While deficiency judgments are not really a problem right now, I can see it being a big problem in the future. So seven years from now when my client has recovered from his foreclosure, he’s got a job again, he’s saved up enough money . . . [from the bank’s perspective], that would be a great time for the bank to try to sue them.”

***

• States have different statutes of limitation on how long they allow lenders to pursue deficiency judgments, ranging from 30 days to 20 years. In Kansas, a deficiency judgment must be sought at the time of foreclosure. If a judge feels the bid at foreclosure sale isn’t “fair value,” the judge can deny or reduce the judgment.
  
  In Maryland, it’s three years. However, there’s a little-known exemption for most mortgage documents that gives debt collectors 12 years to sue homeowners, plus another 12 years to collect the debt and on top of that a one-time renewal of 12 years for a total of 36 years.
  
  “That’s 36 years that lenders have to go after people,” said [Maryland bankruptcy attorney Tate] Russack, whose firm has taken on 80 bankruptcy cases in the past four months, all of which involve deficiency judgments.

***

• Already-foreclosed homeowners won’t know that they’re being targeted until they receive the court notice. In many cases, it is hard to even know who owns the debt until the notice arrives. Often times, the entity pursuing the debt is not the original lender, because that debt can be sold by the homeowner’s lender to someone on the secondary debt market for pennies on the dollar. Most of the deficiency cases that Goitein said he sees involve smaller banks.

***

• The wave of deficiency judgments had a prologue in Texas.
  
  During the 1980s in Houston, the bottom went out of the oil market, with the price dropping to about $15 a barrel. Homes that had been assessed at $200,000 couldn’t be sold for $100,000. More than 200,000 people lost their jobs and could not pay their mortgages.
  
  The lenders foreclosed on the homes and then pursued the homeowners for the outstanding balance.
  
  Once a judgment was granted, debt collectors had 10 years to collect, according to the Texas statute at the time, and another 10 years if the debt collector petitioned the court to renew the judgment. “It was an absolute disaster,” [retired professor at the University of Houston Law Center John] Mixon said.
  
  In response to the situation, the state passed laws increasing consumer protections in deficiency cases. “It’s less an event in Texas today than it was back then,” Mixon said. “But Texas still provides the object lesson of what could happen.”
  
  But for the moment, efforts to pursue deficiency judgments are ramping up rather than winding down.

For the story, see Lenders seek court actions against homeowners years after foreclosure.

Ex-BofA Employees Spill Beans, File Sworn Statements On Bankster's Approach To Giving Financially Strapped Homeowners Loan Modification Jerk-Arounds

ProPublica reports:

• Bank of America employees regularly lied to homeowners seeking loan modifications, denied their applications for made-up reasons, and were rewarded for sending homeowners to foreclosure, according to sworn statements by former bank employees.
  
  The employee statements were filed late last week in federal court in Boston as part of a multi-state class action suit brought on behalf of homeowners who sought to avoid foreclosure through the government’s Home Affordable Modification Program (HAMP) but say they had their cases botched by Bank of America.(1)
  
  In a statement, a Bank of America spokesman said that each of the former employees’ statements is “rife with factual inaccuracies” and that the bank will respond more fully in court next month. He said that Bank of America had modified more loans than any other bank and continues to “demonstrate our commitment to assisting customers who are at risk of foreclosure.”
  
  Six of the former employees worked for the bank, while one worked for a contractor. They range from former managers to front-line employees, and all dealt with homeowners seeking to avoid foreclosure through the government’s program.

For more, see Bank of America Lied to Homeowners and Rewarded Foreclosures, Former Employees Say.

(1) Statements by the Bank of America Employees:

William Wilson, Jr.,
Simone Gordon,
Theresa Terrelonge,
Steven Cupples,
Recorda Simon,
Erika Brown.

Statement by Bank of America Contractor:
Bert Sheeks

Banksters Continue Dual-Tracking Home Loan Borrowers Into Foreclosure, Relying On Subtle Loopholes In 49-State Settlement Agreement To Keep Screwing Homeowners

In West Palm Beach, Florida, The Palm Beach Post reports:

• Crafters of the National Mortgage Settlement clearly wanted banks to pause the foreclosure process while in negotiations with homeowners for a loan modification, but the double-dealing is only “restricted” in the lengthy agreement, leaving workarounds for lenders to continue the practice.
  
  Foreclosure defense attorneys cite dozens of cases where homeowners with pending loan modification applications are also finding themselves moving quickly toward a final judgment and foreclosure sale — a procedure known as dual tracking.
  
  West Palm Beach foreclosure defense attorney Paul Krasker said he has 143 clients who are being dual-tracked. He said lenders are outright violating the dual-tracking restrictions, but are also using the complicated rules to legally continue with a foreclosure during the modification process.
  
  “The banks know they can find loopholes in this type of detailed language,” Krasker said. “I assume the banks would not commit to a simple ‘no dual-tracking’ provision and insisted on carving out exceptions.”
  
  The dual-track rules, which are outlined in more than four pages in settlement documents, include time lines for when foreclosures will be put on hold, appeals processes, trial payment periods and expedited review requirements.
  
  There are different rules depending on when the modification is requested and whether the application is considered complete.
  
  Krasker said some bank attorneys interpret the rules to mean they can get a final judgment against a homeowner but not go to sale. In Florida, sale dates are set when a judgment is entered, and with the courts under pressure to move cases, it may not be so simple to get a sale changed.
  
  Also, lenders are ruling applications incomplete for minor reasons, such as checking the wrong box on a tax return transcript request, Krasker said.
  
  “The banks are relying on borrowers to not be able to complete the applications and then the banks notify the borrowers to resubmit after the time deadline passes,” he said. “The worst part is you get banks who come back and say you’re too close to a sale date so we won’t issue a modification.”
  
  Florida Attorney General Pam Bondi scolded Bank of America and Wells Fargo for possible violations of the 2012 settlement this month, including concerns about dual tracking.
  
  In a May letter to Wells Fargo that preceded a meeting with the National Mortgage Settlement monitoring committee, Bondi’s office said homeowners are complaining they are wrongfully referred to foreclosure during the modification process and then charged for attorneys costs and other default-related fees. According to the settlement, a homeowner who is late on payments by 10 months or less, but submits a loan modification application, should not be referred to foreclosure.
  
  Still, the attorney general’s office acknowledges dual tracking is permitted in some circumstances.
  
  “While there are stringent restrictions on dual tracking in the settlement, the settlement does not prohibit it entirely as there are instances when it is appropriate or mandated by the terms of the mortgage and the entity that controls the loan,” wrote Assistant Attorney General Michael Moore in a June 7 letter to Krasker.

For the story, see Loopholes in mortgage settlement allow for dual-tracking foreclosures.

Loan Servicer Cops Guilty Plea To Pocketing Payoff Proceeds From Homeowners' Mortgages, Then Continuing To Remit Monthly Payments & Creating Phony Amortization Schedules To Dupe Note Holders Into Believing Loans Remained Unpaid

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

• The former president and chief executive officer of U.S. Mortgage, a loan servicing company in Nevada, pleaded guilty [] for his role in a scheme to defraud Wells Fargo Bank out of more than $8 million.

***

• Earl Gross, 75, of Las Vegas, pleaded guilty to one count of bank fraud. Gross faces a maximum penalty of 30 years in prison when he is sentenced on Sept. 19, 2013. Gross has agreed to forfeit $8,440,439 pursuant to his plea agreement.
  
  According to plea documents, Wells Fargo Bank contracted with U.S. Mortgage to service pools of residential mortgage loans held by investors in mortgage-backed securities. Under the agreement, Gross and U.S. Mortgage were obligated to collect from the borrowers the monthly payments that the borrowers made toward their mortgage obligations and forward these proceeds to Wells Fargo Bank.
  
  In the event that a borrower paid off the loan – usually by selling the mortgaged property – U.S. Mortgage was obligated to remit to Wells Fargo Bank the full payoff amount. U.S. Mortgage agreed to provide Wells Fargo Bank with monthly reports, which described the status of the loans, such as the balance, principal and interest, and payment status and received servicing fees for each loan it serviced.
  
  According to the indictment, from 2004 to 2009, Gross and U.S. Mortgage withheld more than $8 million in loan payoffs that were due Wells Fargo Bank by submitting to the bank reports stating that numerous borrowers were continuing to make monthly payments when in fact they had paid off the loans in full.
  
  Rather than remit to Wells Fargo Bank the full payoff amount, Mr. Gross and U.S. Mortgage forwarded only what the borrowers’ monthly payment would have been and retained the difference in U.S. Mortgage’s bank account. To deceive Wells Fargo Bank about the status of paid off loans, Mr. Gross and U.S. Mortgage created fake amortization schedules indicating that borrowers who had sold and paid off homes were continuing to make monthly payments. In addition to withholding loan payoff amounts to which he was not entitled, Mr. Gross charged Wells Fargo Bank fees to service mortgage loans that had been paid off.

For the Justice Department press release, see Former Chief Executive of Mortgage Servicing Company Pleads Guilty to Bank Fraud for Scheme to Withhold Funds from Wells Fargo Bank.

California Attorney Slammed With State Bar Discipline For Attempting To Circumvent Loan Modification Rules Prohibiting Collection Of Upfront Fees By Unbundling Services, Then Clipping Clients For Cash As Each Service Was Performed

The June 2013 issue of the California Bar Journal announced the discipline handed out to a California attorney for pocketing upfront fees for loan modifications under the mistaken belief that the statute can be circumvented by unbundling his services, then charging for each service as it is provided:

• SWAZI ELKANZI TAYLOR [#237093], 34, of Beverly Hills, was suspended for two years, stayed, placed on two years of probation with an actual six-month suspension and was ordered to take the MPRE and pay restitution. The order took effect March 29, 2013.
  
  Taylor committed nine counts of misconduct in eight client matters involving loan modifications. Eight of the counts of misconduct involved charging pre-performance fees for loan modifications. Civil Code Section 2944.7 prohibits the collection of any fees until all loan services are performed.
  
  Taylor believed he could unbundle the fees for his legal advice and real estate consulting services, charging separately when each service was performed, but the court rejected that argument. Taylor was also found to have failed to provide a client with a separate statement about the lack of necessity for a third-party negotiator. He was ordered to pay $14,350 in restitution, plus interest, to his former clients.

Source: California Bar Journal: Suspensions/Probation.

State Bar Of California Acts Against Members Involved In Various Types Of Client Ripoffs

The Sate Bar of California recently published its periodic 'gossip sheet' announcing the discipline meted out to some of its wayward members.

The following lawyers were disciplined for either playing fast & loose with client's trust funds, attempting to improperly rip off clients out of unwarranted legal fees, or being involved in some form of loan modification scheme:

• CALEB PAUL LEYS [#171683], 70, of Beverly Hills, was suspended for one year, stayed, and placed on one year of probation with an actual 120-day suspension that will continue until he pays restitution. He was ordered to comply with rule 9.20 of the California Rules of Court. The order took effect March 16, 2013.
  
  Leys stipulated that he failed to perform legal services with competence, to return unearned fees and to promptly respond to reasonable status inquiries in connection with a home loan modification. The client paid Leys $2,995 in advance attorney fees and Leys pledged to file a civil suit if he was unable to negotiate with the lender. Instead, he performed no services of value and failed to return any part of the unearned fees.
  
  Leys was previously disciplined for similar misconduct that occurred between March and September 2009. Leys failed to perform legal services with competence and return unearned fees in two client matters involving loan modifications, and in a third matter, engaged in the unauthorized practice of law and collected an illegal fee.
  .....................................
• CURTIS GEORGE MUCK [#190328], 42, of Rolling Hills Estates, was suspended for two years, stayed, placed on three years of probation with an actual six-month suspension, and was ordered to take the MPRE . The order took effect March 16, 2013.
  
  Muck committed misconduct in three client matters, all of which involved aiding in the unauthorized practice of law. In one of the matters, Muck also shared fees with a non-lawyer and failed to cooperate with a disciplinary investigation. In that matter, he allowed a non-attorney to give legal advice to a client and to collect fees from her, which the two later shared. Muck later failed to acknowledge a letter from a State Bar investigator asking him to respond to complaints the client made against him.
  ..................................
• MITCHELL BERENSON [#183166], 48, of Los Angeles, was suspended for one year, stayed, and he was placed on probation for one year subject to conditions, including paying restitution and passing the MPRE. The order took effect March 16, 2013.
  
  Berenson stipulated to four acts of misconduct in one client matter. Berenson failed to perform legal services with competence in an immigration matter, failed to respond to repeated inquiries from his client regarding the immigration matter, failed to return advance fees, and failed to cooperate and participate in the State Bar investigation. Berenson was ordered to pay his former client $1,500 in restitution, plus interest.
  ....................
• CHARLOTTE SPADARO [#190328], 61, of Riverside, was suspended for one year, stayed, and placed on three years of probation with an actual six-month suspension until she makes restitution in the amount of $26,500, plus interest. She was also ordered to take the MPRE. The order took effect March 22, 2013.
  
  Spadaro was found culpable of failing to account for client funds, failing to return advanced fees and unused advanced costs totaling $7,500, and three counts of entering into an improper business relationship with a client.
  ....................
• LOUIS GORDON BRUNO [#137898], 60, of Escondido, was suspended for two years, stayed, placed on two years of probation with an actual six-month suspension, and was ordered to take the MPRE and to pay restitution. The order took effect March 23, 2013.
  
  Bruno stipulated to three counts of misconduct in one client matter, collecting an illegal fee, holding himself out to be eligible to practice law when he wasn’t and misrepresenting his entitlement to practice law. [...] Bruno was ordered to pay $1,500 in restitution, plus interest.
  ....................
• MARIE DARLENE ALLEN [#138263], 63, of Cypress, was suspended for one year, stayed, placed on one year of probation with an actual 30-day suspension and was ordered to take the MPRE. The order took effect April 6, 2013.
  
  Allen was found culpable of two counts of misconduct: issuing numerous checks from her client trust account without sufficient funds to cover them and failure to cooperate with a disciplinary investigation by not responding in a timely matter to three letters she received from a State Bar investigator.
  .....................
• ALLYSON ERWIN BAUTISTA [#202023], 55, of Escondido, was suspended for three years, stayed, placed on three years of probation with an actual six-month suspension and was ordered to take the MPRE and comply with rule 9.20 of the California Rules of Court. The order took effect April 6, 2013.
  
  Bautista stipulated that he charged and collected an unconscionable fee and failed to provide a client with a full accounting of a settlement the client received.
  
  Bautista settled his client’s personal injury matter for $15,000 then essentially double billed the client, withholding $2,967.68 for hourly fees as well as $5,000 in contingency fees for the same services. Bautista also failed to provide the client with an itemized list of “administrative costs” he charged for his services.
  .........................
• NICOLE ROSIE GALLEGOS [#231744], 36, of Irvine, was suspended for two years, stayed, and placed on two years of probation with an actual nine-month suspension that will continue until she pays restitution. She was also ordered to take the MPRE and comply with rule 9.20 of the California Rules of Court. The order took effect April 6, 2013.
  
  Gallegos stipulated to 15 counts of misconduct in seven loan modification matters, six of which involved collecting illegal fees from out-of-state clients. Gallegos also committed multiple counts of unauthorized practice of law. She has been ordered to pay $ 11,979.98 in restitution.
  ................................
• TANYA CORA ZEROUNIAN [#235207], 36, of Simi Valley, was suspended for two years, stayed, placed on 18 months of probation with an actual six-month suspension and was ordered to take the MPRE, comply with rule 9.20 of the California Rules of Court and pay restitution. The order went into effect April 6, 2013.
  
  Zerounian stipulated to misconduct in three client matters. In each instance, Zerounian failed to prepare and file clients’ bankruptcy petitions, to respond to inquiries about the clients’ cases and to return unearned fees. Zerounian also failed to respond to allegations in a complaint one of the clients made to the State Bar. She was ordered to pay $5,600 in restitution, plus interest.

Source: California Bar Journal (June 2013): Suspensions/Probation.

Playing Fast & Loose With Trust Accounts, Attempted Legal Fee Ripoffs Among Reasons For Attorney Discipline Recently Meted Out By Florida Supreme Court

The Florida Bar recently published its periodic 'gossip sheet' announcing the discipline meted out to some of its wayward members.

The following lawyers were disciplined for either playing fast & loose with client's trust funds, or attempted to improperly rip off clients out of unwarranted legal fees:

• Rosalyn Dunlap, P.O. Box 616705, Orlando, disbarred effective immediately, following an April 16 court order. (Admitted to practice: 2006) Dunlap admitted to intentionally misappropriating more than $40,000 from a trust account belonging to an estate. She did not maintain the required trust account records, did not regularly perform mandatory trust accounting procedures, and entered into a business transaction with a client with interests adverse to the client. Dunlap failed to communicate the status of a client’s case, failed to show reasonable diligence, and failed to provide adequate and timely representation. (Case No. SC12-145)
  
  David A. Hoines, 3081 E. Commercial Blvd., Suite 200, Fort Lauderdale, suspended for 30 days, effective 30 days from an April 16 court order. (Admitted to practice: 1975) Hoines shall also return $25,000 in equal shares to three clients. Hoines entered into a contingent fee agreement with out-of-state clients in a probate matter involving assets of an indeterminable value. Hoines’ use of the contingent fee contract was improper because it caused him to obtain a pecuniary interest in the matter and receive a larger than normal fee. (Case No. SC12-229)
  
  C. Michael Magruder, 203 S. Clyde Ave., Kissimmee, to be publicly reprimanded by publication in the Southern Reporter, following an April 16 court order. (Admitted to practice: 1990) Magruder was hired by a client to handle business related to an estate and a pending lawsuit. He delegated the estate matter to a paralegal firm and failed to take adequate steps to ensure that the client understood his legal matter. Magruder also failed to timely account to the client regarding the settlement proceeds of the lawsuit, all of which went to pay the hospital lien for services rendered prior to the death of the testator. Magruder also failed to maintain minimum trust accounting records and he failed to follow minimum trust accounting procedures. (Case No. SC12-519)
  
  Scott Elliott Rovenger, 8 Port Side Drive, Fort Lauderdale, permanently disbarred effective immediately, following an April 17 court order. (Admitted to practice: 1978) Rovenger was disbarred for trust accounting violations in May 2012. In September 2012, Rovenger gave a sworn statement to the Broward County State Attorney’s Office, as a result of a criminal investigation. He admitted to misappropriating more than $1 million in client funds over a period of several years. He also admitted to settling clients’ matters without their knowledge or consent and forging client signatures on settlement checks. (Case No. SC12-1819)
  
  Guy Bennett Rubin, 1649 Atlantic Blvd., Jacksonville, to be publicly reprimanded by the Board of Governors at a date and time to be determined by the Board, following an April 16 court order. (Admitted to practice: 1987) Rubin filed a suit against a former client alleging breach of contract. A court later ruled that Rubin was not entitled to recover any fees because the agreement violated Bar rules. (Case No. SC12-2059)
  
  Silvia Rodriguez Sanders, P.O. Box 974, Orlando, to be publicly reprimanded by publication in the Southern Reporter, following an April 16 court order. (Admitted to practice: 1992) Sanders and her husband practice law together. She failed to exercise reasonable diligence to ensure that her firm’s trust account was in compliance. Her husband had managerial authority over the trust account and her mother was the firm’s bookkeeper in the two-attorney law firm. (Case No. SC12-2174)
  
  Tristan Wilson Sanders, P.O. Box 974, Orlando, suspended for two years, effective 30 days from an April 16 court order. (Admitted to practice: 1992) Sanders and his wife practiced law together. Funds that should have been held in trust on behalf of the firm’s personal injury clients were transferred to the law firm operating account and used for other purposes. Sanders had primary responsibility for the law firm’s trust account at the time the violations took place. His violation of misconduct is based on the grossly negligent supervision of his bookkeeper in the administration of his firm’s trust account. (Case No. SC12-2173)
  
  Harold Milton Windlan III, 6334 Madison St., New Port Richey, suspended for one year, effective 30 days from an April 16 court order. Windlan shall pay restitution totaling $2,040 to three clients. (Admitted to practice: 2003) Windlan failed to provide adequate representation to clients. In several instances he accepted attorneys' fees and subsequently failed to communicate. He did not take action on cases but led clients to believe he had. Windlan also failed to refund fees he did not earn. (Case No. SC12-666)
  
  Lawrence Philip Zolot, 3864 Sheridan St., Hollywood, disbarred effective retroactive to Jan. 12, 2011, following an April 22 court order. Zolot shall pay restitution totaling $1,089 to two clients and shall deposit more than $130,000 into the court registry for the 17th Judicial Circuit in and for Broward County. (Admitted to practice: 1974) Instead of disbursing the funds to his clients, in two separate matters, Zolot misappropriated trust funds and used them to pay his personal expenses. (Case No. SC11-267)

Source: Supreme Court Disciplines 29 Attorneys.

Attorney Admits To Looting An Escrow Account, Co-Conspiring With Another To Rip Off Off $4.7M In Bogus Real Estate Deal

From the Office of the U.S. Attorney (New York City):

• Preet Bharara, the United States Attorney for the Southern District of New York, announced that EDWARD ADAMS, a New York-based attorney, pled guilty [] in Manhattan federal court to conspiracy to commit wire fraud in connection with his participation in a fraudulent real estate scheme.
  
  As part of that scheme, ADAMS and a co-conspirator misappropriated millions of dollars in escrow funds that should have been safeguarded for investors in a real estate development project. The real estate project was never developed and investors lost all of their money. ADAMS pled guilty before U.S. District Judge John G. Koeltl.
  
  According to the Information, statements made during [the] guilty plea proceeding, and a Complaint previously unsealed in Manhattan federal court:
  
  Beginning in early 2008, ADAMS and James Monahan, a former sergeant in the New York City Police Department and the owner of a real estate investment company called Panam Management Group, Inc., negotiated with another real estate investment company to solicit investors for a project Monahan claimed to be constructing in the Dominican Republic.
  
  In connection with the project, ADAMS and Monahan executed agreements that required investor funds to be deposited into escrow accounts that were to be managed by ADAMS. From October 2008 through February 2009, approximately $4.7 million in investor funds were deposited into the escrow accounts. Shortly after the deposits were made, the funds were improperly withdrawn by ADAMS and Monahan without disclosure to investors.(1)
  
  In an effort to hide the fact that the funds had been removed from the escrow account, Monahan mailed a forged letter on the stationery of a major bank to investors in May 2009 claiming that their money was safely deposited with that bank. However, by June 2009, all of the investor funds had been taken from the escrow accounts. At that point, almost no work had been performed on the purported project in the Dominican Republic. None of the money was returned to investors.

For the U.S. Attorney press release, see New York Attorney Pleads Guilty To Participating In Multi-Million Dollar Real Estate Fraud Scheme.

(1) The Lawyers’ Fund For Client Protection Of the State of New York may find itself being asked by the victims to step up and cover at least some of the losses they suffered. The Fund exists to protect legal consumers from dishonest conduct in the practice of law in the state, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, and to promote public confidence in the administration of justice in the Empire State. It attempts to secure these goals by, among other things, reimbursing client money that is misused in the practice of law.

According to the Fund, "typical losses covered include the theft of money from estates of dead clients; escrow funds in real property closing; settlements in personal injury actions; and money embezzled from clients in investment transactions" up to a maximum of $300,000 for each client loss.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

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

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

California Bar Recommends Boot For Attorney Who Played 'Hide & Seek' With Escrowed CMO, Pocketing $400K In Accrued Interest Owed To Rightful Owners; Judge: Lawyer "Fails To Understand & Appreciate The Basic Duties Of A Fiduciary ... Misconduct Displays Shocking Lack Of Basic Honesty"

From The State Bar of California:

• A State Bar Court hearing judge has recommended the disbarment of a Beverly Hills attorney for misappropriating about $400,000 in interest from two investment vehicles that he agreed to hold in escrow pending their sale.
  
  In each case, Jon A. Divens, 57, [bar # 145549] agreed to hold in escrow a collateralized mortgage obligation (CMO), a type of investment vehicle that owns an underlying pool of mortgages. When the proposed sales of the CMOs fell through, Divens hid the CMOs from their rightful owners for months and transferred the monthly interest payments to his personal investment accounts.
  
  State Bar Court Judge Richard A. Platel rejected Divens’ argument that he was entitled to the interest under article 8 of the California Uniform Commercial Code and found him culpable of three counts of moral turpitude.
  
  “It is clear from the evidence that, from day one, respondent never intended on returning the Cobalt CMO or the FNMA CMO or the interest income they generated to the rightful owners,” Judge Platel wrote in the April 17 decision. “Respondent displays a complete lack of insight and recognition of the wrongfulness of his misconduct. What is more, the record establishes that, after 23 years as a member of the State Bar of California, respondent fails to understand and appreciate the basic duties of a fiduciary. Finally, respondent’s misconduct displays a shocking lack of basic honesty.”(1)

Source: Beverly Hills Attorney Facing Disbarment For Pocketing Interest On Escrow Money.

(1) The State Bar of California Client Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a California-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

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

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

State Bar Judge To Attorney Attempting To Shift Blame To Scheming Client In Investor-Screwing, $1M Trust Account Ripoff: "When Your Sole Job Is To Protect The Henhouse, You Are Not Allowed To Trust The Fox With The Chickens!"

From the California Bar Journal:

• A Woodland Hills attorney has been stripped of his law license for misappropriating nearly $1 million intended for movie projects. Robert M. Victor [#156232], 47, was disbarred April 7, 2013 and ordered to make restitution and comply with rule 9.20 of the California Rules of Court.
  
  Two different film companies had entered into agreements with Victor's client, Rosemax Media LLC, in 2011 under the auspices that they would be working together to produce films. The film companies, Triton Films Inc. and SBDL Productions LLC, wired their investment money to Victor's client trust account with the understanding that Rosemax would also invest in the film project. The consolidated funds were to remain untouched in the trust account until all agreements involving the films were finalized and executed.
  
  Instead, Rosemax never followed through with its agreed-upon investments, and Victor immediately began to disburse money at the request of Rosemax CEO Joseph Q. Bretz. Less than two days after Triton deposited the first $375,000 of its $500,000 investment in a movie to be called “The Zone,” Victor had removed all of Triton’s funds through transfers to his firm and various parties. Similarly, SBDL’s $475,000 investment in a film titled “Light Years” shrank to $33,336.10 within three days of deposit.
  
  Both Triton and SBDL asked for confirmation that Rosemax had deposited the money it had agreed to, $1.5 million in the case of Triton and $925,000 per its agreement with SBDL. After the companies continued pressing the issue, Victor provided them with account statements which turned out to be bogus, bearing no reference to Victor or his firm and a different account number than Victor’s client trust account. Even after SBDL filed a civil action in court accusing Victor of conversion, fraud, negligence and racketeering, Victor continued to draw on the company’s funds in his trust account.
  
  The State Bar Court found Victor culpable of two counts of misappropriation and two counts of failure to cooperate in a State Bar investigation. At the time of the court’s Sept. 21, 2012 disbarment recommendation, Victor had not repaid any of the money to Triton or SBDL.(1)
  
  At trial, Victor argued that Rosemax’s CEO Bretz had swindled both him and the two companies and “spent considerable time and energy seeking to explain how impressive and charismatic Bretz was in the entertainment world,” State Bar Court Judge Donald F. Miles wrote in his recommendation.
  
  Miles dispelled that notion, saying Triton and SBDL had taken steps to protect themselves from Bretz and were only put at risk because Victor disregarded his fiduciary duties.
  
  “When your sole job is to protect the henhouse, you are not allowed to trust the fox with the chickens, no matter how reassuring that carnivore may purport to be,” Miles wrote.
  

Source: Disbarred attorney scammed film partners in movie making deal.

(1) The State Bar of California Client Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a California-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

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

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

Indicted Law Firm Office Manager Wins Race To Prosecutor's Office, Copping Quick Plea, Then Spilling The Beans On Attorney/Boss In Alleged $1M+ Fee-Padding Conspiracy That Fleeced Unwitting Client

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

• The former office manager of a Broward County law firm admitted stealing money from the Seminole Tribe of Florida and helping her former boss — an attorney — to pad legal bills paid by the tribe.
  
  Maria Hassun, 66, of Coral Gables, pleaded guilty to one count of theft from Indian tribal organizations at a hearing in federal court in Fort Lauderdale, records show. Hassun was indicted earlier [last] month with her former boss Frank Excel Marley III, 39, of Southwest Ranches.(1)
  
  Federal prosecutors said Marley billed the tribe close to $3.2 million and more than $1 million of that was fraudulently obtained in a conspiracy between October 2006 and early 2011.
  
  Marley, now at the Excel Law Group in Davie, has pleaded not guilty to one count of wire and mail fraud conspiracy and nine counts of theft from Indian tribal organizations. Hassun was Marley's administrative assistant and office manager at The Marley Firm in Miramar.
  
  Marley was retained in 2006 to represent the tribe on sports and entertainment issues and help it to obtain Federal Communications Commission licenses and equipment to build radio stations at the Brighton and Big Cypress reservations.
  
  Hassun admitted [] that she followed Marley's instructions to inflate his billable hours and billed the tribe "for travel, conferences, phone calls and meetings that did not occur."
  
  "Marley told … Hassun that he needed to make a specific dollar amount, then later told Hassun to be creative in figuring out how to inflate the invoice to reach the specified dollar amount," according to Hassun's plea agreement.
  
  Hassun agreed to pay restitution of $148,658, the amount prosecutors said she deposited in her bank account during the conspiracy. She faces up to five years in prison and a $250,000 fine when she is sentenced Aug. 9.(2)

Source: Former law firm worker admits stealing from Seminole tribe.

From the U.S. Attorney's Office:

• Two Defendants Charged In Theft From Seminole Tribe;
• Indictment: U.S. v. Marley, et al.

(1) See United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) for one Federal judge's observations on the so-called "race to the courthouse/prosecutor's office" that frequently takes place during the early stages of these "multi-target" criminal probes and conspiracy prosecutions:

• When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed.

(2) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

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

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

Woman On Maternity Leave Scores $13K Fair Housing Settlement For Allegedly Being Told By Lender That It Would Be Willing To Make A Home Loan To Her, But Only After She Returns To Work

From the Department of Housing & Urban Development (Washington, D.C.):

• The U.S. Department of Housing and Urban Development (HUD) announced [] that it has reached a Conciliation Agreement with Primary Residential Mortgage, Inc. (PRMI), in Salt Lake City, UT, settling allegations that the lender denied a Baltimore, Maryland woman a mortgage loan because she was pregnant and on maternity leave.

***

• Refusing to approve a mortgage loan or to provide refinancing because a woman is pregnant or on maternity leave violates the Fair Housing Act’s prohibitions against sex and familial status discrimination.

***

• The woman, who applied for the loan in her name, and her husband filed a complaint with HUD alleging discrimination after one of PRMI’s loan officers told her that she was a “good risk” and that the lender would be willing to finance her loan, but only after she returned to work. After being unable to get a loan from PRMI, the woman and her husband applied for a loan with another lender and were approved.
  
  Under the terms of the agreement, PRMI will pay the woman $13,000 and adopt a parental leave policy with respect to loan applications to ensure compliance with the fair lending requirements of the Fair Housing Act. In addition, PRMI’s loan officers, processors, underwriters and decision makers will be trained on the Act and the new policy. The Parental Leave Policy applies to men as well as women who are on parental leave due to the birth or adoption of a child and prohibits inquiries concerning a person's future parental leave plans.

For the HUD press release, see HUD, Utah Mortgage Company Settle Pregnancy Discrimination Claim (Baltimore family denied approval based on maternity leave status).

HUD, Bankster Settle Fair Housing Allegations That Lender Discriminated Against Two Pregnant Women On Maternity Leave In Unrelated Cases Involving Home Financing Transactions; Victims Each Pocket $18K; Feds: Bias Prohibitions Also Apply When Men Take Paternity Leave

From the Department of Housing & Urban Development (Washington, D.C.):

• The U.S. Department of Housing and Urban Development (HUD) announced [] that it has reached two Conciliation Agreements with SunTrust Mortgage, Inc., settling allegations that the Richmond, VA-based lender denied mortgage loans to a couple in Port St. Lucie, FL, and another couple in Ashland, VA, because the women were on maternity leave.
  
  The Fair Housing Act makes it unlawful to discriminate in residential real estate-related transactions based on race, color, national origin, religion, sex, disability, or familial status. These prohibitions include denying a mortgage because a person is pregnant or takes maternity or paternity leave.

***

• A Port St. Lucie, FL, woman and her husband alleged that SunTrust had pre-approved them for a mortgage loan, but 14 days before closing, a loan officer informed them that the loan would not be approved unless she returned to work.
  
  In the Ashland, VA, case, a couple alleged that the bank had provided a construction-to-permanent mortgage loan but delayed its conversion to a permanent loan until after the woman returned from maternity leave. The Fair Housing Act requires lenders to provide full and fair access to home mortgages regardless of a person’s sex or familial status, including pregnancy.
  
  Under the terms of the agreements, SunTrust will pay each couple $18,000, adopt a parental leave policy that prohibits discriminatory mortgage lending due to parental leave, and train their employees on the fair lending requirements of the Fair Housing Act. The Parental Leave Policy specifically prohibits asking mortgage applicants about their intent to take parental leave in the future. The policy also provides that mortgage applicants on or scheduled to be on parental leave may still qualify for loan approval and funding.

For the HUD press release, see HUD And Suntrust Bank Settle Maternity Leave Discrimination Claims (Bank to pay two couples who were denied loans).

Recorded Restrictive Covenant Prohibiting Use Of House As Group Home For Disabled Persons Leads To $90K Fair Housing Settlement; Listing Brokerage, Law Firm Each To Cough Up $45K; Prospective Buyer Scores $78K, Buyer's R/E Agent Pockets $12K For Initiating Complaint With HUD

From the Department of Housing & Urban Development:

• The U.S. Department of Housing and Urban Development (HUD) announced [] a $90,000 Conciliation Agreement with Coldwell Banker Residential Brokerage and the seller of a home in Worcester, Massachusetts, settling allegations they violated the Fair Housing Act by preventing the sale of a house to be used as a group home for persons with disabilities.
  
  The Fair Housing Act prohibits discrimination in rental or sales transactions based on disability, including preventing a home sale because the home is going to be used by persons with disabilities.

***

• The prospective buyer planned to rent the house to a non-profit organization that provides supportive housing for persons with disabilities. When Erwin Miller, the executor of the estate learned the house would be used as a rental property, he agreed to sell the home on the condition a restrictive covenant was attached to the property. Miller stated in an email, “If they rent to a responsible family it is okay, BUT no unrelated individuals, students, dorm! Neighbors will fight this.”
  
  Donna Truex, Miller’s attorney, at Bowditch & Dewey, LLP, recorded a restrictive covenant prohibiting the use of the house as a group home for disabled persons. Miller’s real estate agent, an independent contractor associated with Coldwell Banker Residential Brokerage, then emailed the restrictive covenant to the prospective purchaser’s sales agent, thereby prompting the prospective purchaser to withdraw from the sale.
  
  The prospective purchaser and his sales agent subsequently filed a complaint with HUD, alleging the restrictive covenant that prohibited future owners of the home from using it as a group home for individuals with disabilities.
  
  After receiving the complaint, HUD filed its own Secretary-initiated housing discrimination complaint alleging that the actions of the seller, real estate agent Maureen Kelleher, and attorney Donna Truex violated the Fair Housing Act.
  
  Under the terms of the agreement, which was negotiated by HUD’s Regional Counsel in Boston, Coldwell Banker Residential Brokerage and Bowditch & Dewey will each pay $39,000 to the prospective buyer and $6,000 to his sales agent.
  
  Coldwell Banker Residential Brokerage and Bowditch & Dewey, LLP, will provide their employees with fair housing training. In addition, Bowditch & Dewey, LLP, will donate 100 hours of free legal services directly related to fair housing and 100 hours of free legal services directly related to the promotion of disability rights.

For the press release, see HUD Settles Discrimination Claim With Coldwell Banker Residential Brokerage And Home Seller (Brokerage firm, seller will pay $90,000 for preventing sale of house).

NYC Fair Housing Watchdog Scores $385K In Settlement With 675-Home Bronx Co-op Over Allegations That Rule Requiring Prospective Homebuyers Submit Three References From Existing Shareholders Discriminated Against African Americans

In New York City, the Fair Housing Justice Center reports:

• District Court Judge Robert P. Patterson, Jr. approved a settlement between the Fair Housing Justice Center (FHJC) and the Edgewater Park Owners Cooperative, Inc. (EPOC). The agreement resolves a lawsuit filed in February 2010 in which the FHJC alleged that two housing cooperatives located in the Throggs Neck area of the Bronx and a real estate broker were discriminating against African American prospective home buyers.
  
  Prior to filing a lawsuit, the FHJC conducted a testing investigation in 2009. The complaint alleged that Edgewater Park, a community with 675 homes, and Silver Beach Gardens, a community with 350 homes, required that prospective buyers provide three (3) references from existing shareholders and that this reference rule discriminated against African American home buyers.

***

• The settlement provides a general injunction requiring EPOC to abide by fair housing laws and permanently eliminate the 3 shareholder reference requirement. [... In addition to other non-financial terms], the agreement provides that EPOC will make a payment of $385,000 to the FHJC to cover damages, attorney’s fees, and costs.

***

• FHJC Executive Director Fred Freiberg stated, “This settlement opens up housing opportunities to prospective buyers of all races. We urge all cooperative and condominium communities in the New York City region to fully comply with fair housing laws by removing policies or procedures that restrict access to housing based on race or other protected characteristics.”
  
  The FHJC entered into a settlement with Silver Beach Gardens in May 2011 for injunctive relief, which included removal of the 3 shareholder reference requirement, along with a monetary recovery of $115,000.
  
  The defendant real estate broker, Amelia Lewis, also settled with the FHJC and agreed to pay damages to two African American testers and surrender her real estate license.

For the press release, see Bronx Co-op Community Welcomes All Buyers (Discriminatory Reference Rule Abolished).