Bay State Appeals Court Green-Lights AG's Probe Into Notorious Foreclosure Mill For Possible Violations Of Massachusetts UDAP Statute In Dealings With Financially Strapped Homeowners, Tenants Living In Foreclosed Homes

In Boston, Massachusetts, The Boston Globe reports:

• Massachusetts Attorney General Martha Coakley on Monday applauded a state Appeals Court decision that gave her permission — once again — to investigate a Newton law firm specializing in home foreclosures.
  
  The recent unanimous court ruling affirmed a 2011 Suffolk Superior Court decision allowing Coakley’s office to continue examining Harmon Law Offices for alleged “unfair and deceptive acts” related to the firm’s foreclosure and eviction work.(1)
  
  “This strong ruling upholds this office’s investigatory power,’’ Coakley said in a statement. “Harmon Law Offices had a vital obligation to follow Massachusetts law and court orders. Our office will continue to fully investigate this case and take action if appropriate.”
  
  The decision is the latest development in a long-simmering dispute between the state and Harmon, one of the largest law firms specializing in foreclosures in Massachusetts. In 2010, Harmon Law sought court protection to stop or modify the attorney general’s efforts to seek certain legal documents. Among other issues, Harmon argued the demand interfered with attorney-client privilege and that it was the conduct of the firm’s clients, not its attorneys, that was in question.
  
  Associate Justice Ariane D. Vuono, who wrote the five-page decision made by a three-member panel, said the lower court judge’s ruling in favor of the state was sound.
  
  “Harmon has not met its burden of showing good cause why it should not be required to produce the requested documents,’’ Vuono wrote.
  
  Mark P. Harmon, president of the firm, said he is considering what to do next. “We are disappointed with the Appeals Court decision on this important issue,” he said.
  
  Coakley’s office began looking at Harmon Law three years ago in an effort to determine whether the firm failed to comply with a new Massachusetts law protecting tenants living in foreclosed homes from being evicted without cause.
  
  Harmon said in legal briefs that it filed eviction notices for residents in properties seized by lenders before the law became effective.
  
  The state also is investigating whether Harmon Law disregarded a court order requiring it to notify the state before initiating foreclosures on homeowners with mortgages that originated with Fremont Investment & Loan, a California firm Coakley sued for predatory lending practices.
  
  Harmon, which also runs a title firm and auction company, has been the focus of criticism by some consumer advocates and foreclosure law specialists for violating homeowners’ rights so it could maximize profits.
  
  George E. Babcock, a Rhode Island attorney who specializes in foreclosure defense, said Harmon Law continues to improperly foreclose on borrowers, sometimes taking back properties without the proper documentation.
  
  Although foreclosure numbers have dropped this year, Babcock said many borrowers in lower-income communities still struggle to keep up with mortgages on homes they purchased at inflated prices.
  
  More than 1,200 Massachusetts homeowners lost their properties to foreclosure during the first five months of the year, a 69 percent decline compared with the same time last year, according to the Warren Group, a Boston company that tracks local real estate.
  
  Babcock said Harmon is still by far the largest foreclosure firm he encounters in his Rhode Island defense work. “They continue to run roughshod over the citizens of Rhode Island and the Commonwealth of Massachusetts,’’ he said.
  
  Harmon Law declined to comment on Babcock’s allegations.

Source: AG Martha Coakley gets OK to examine law firm (Alleges deception tied to foreclosures).

For the court ruling, see Harmon Law Offices, P.C. v. Attorney General, No. 12-P-407 (June 28, 2013).

(1) From the court's ruling:

• Acting pursuant to her authority under the Massachusetts consumer protection act, G.L. c. 93A (c. 93A or the statute), the Attorney General issued two civil investigative demands (CIDs or demands) to Harmon Law Offices, P.C. (Harmon), seeking information regarding its foreclosure and eviction practices.[1]
  
  Harmon challenged the demands and filed a complaint seeking relief under § 6(7) of the statute.[2] After a hearing, a judge of the Superior Court concluded that Harmon had not met its burden of showing good cause to set aside the CIDs and dismissed the complaint.
  
  Harmon appeals, claiming that the judge abused her discretion because the demands interfere with Harmon's attorney-client relationships, and the requested documents are protected by the litigation privilege.
  
  Harmon also contends that, by representing its clients in foreclosure and eviction proceedings, it is not engaged in trade or commerce and therefore cannot be subject to liability under c. 93A. Thus, Harmon maintains, the Attorney General exceeded her authority by requesting information directly from Harmon regarding possible violations of c. 93A.
  
  For substantially the reasons articulated by the Superior Court judge in her thorough memorandum of decision and order dismissing Harmon's complaint, we conclude that Harmon has not met its burden of showing good cause why it should not be required to produce the requested documents.
  
  Accordingly, we affirm.

Sacramento Feds Score Another Guilty Plea In Foreclosure Rescue Scam That Falsely Promised Homeowners Easier House Payments Thru Discount Delinquent Mortgage Purchases; Used Fractional Interest Deed Transfers, Bogus Bkrptcy Filings Invoking Automatic Stay To Drag Out Legal Process & Continue Collecting Periodic Fees

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

• Jewel Hinkles, aka Cydney Sanchez, 63, of Los Angeles, pleaded guilty [] to bankruptcy fraud in connection with a foreclosure rescue scheme she ran, United States Attorney Benjamin B. Wagner announced.
  
  According to court documents, on December 1, 2011, a federal grand jury indicted Hinkles along with Jesse Wheeler, 36, of Roseville, Cynthia Corn, 60, of Oakland, and Brent Medearis, 46, of Modesto, in connection with the scheme. Wheeler operated JW Financial Solutions in Roseville and Corn operated Property Relief! in South San Francisco, both as affiliates of programs created by Hinkles. Medearis worked out of Modesto for Corn. Wheeler and Medearis previously pled guilty to bankruptcy fraud.
  
  According to court documents, Hinkles was the founder and general manager of Horizon Property Holdings LLC, in Beverly Hills. From 2008 through 2010, Hinkles offered a service called the “Save My Home” or “Homesaver” that promised to rescue financially distressed homeowners from foreclosure and reduce the principal on homeowners’ mortgages. Horizon offered its program directly to clients and also through several layers of “affiliates,” who promoted and sold the program to clients, mostly in Northern California.
  
  The defendants allegedly told homeowners that they would save their residences from foreclosure by arranging for investors to purchase their existing mortgage at a discounted price, thereby reducing the homeowner’s principal and monthly mortgage payment.
  
  To prevent foreclosure and defraud the existing lenders, the defendants filed fraudulent deeds transferring an interest in the homeowner’s property to a fictitious entity called Pacifica Group 49/II.(1)
  
  In many instances, the defendants also filed fraudulent petitions in bankruptcy court, often naming both the homeowner and Pacifica Group 49/II as the debtor. The purpose of these petitions was to invoke the automatic provisions of federal bankruptcy law that bring to an immediate halt any foreclosure actions against a debtor’s property.
  
  Because the fraudulent deeds and bankruptcy petitions delayed foreclosure proceedings, the defendants were able to pretend that they were providing a legitimate service and continue to collect fees from defrauded homeowners.
  
  To enroll in the Save My Home program, clients were required to pay an initial payment of approximately $3,500 and monthly fees up to $1,500. The Homesaver program required clients to pay an initial payment ranging from $1,750 to $6,500 and monthly fees up to $850.
  
  In total, the scheme collected at least $4.9 million from more than 1,000 homeowners, including homeowners whose mortgages were owned by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
  
  According to the indictment, the defendants never arranged for the purchase of a single mortgage from any of the clients’ lenders and never negotiated a single mortgage principal reduction for any of Horizon’s clients.

For the U.S. Attorney press release, see Los Angeles Woman Pleads Guilty To Foreclosure Rescue Scheme.

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

Operator Of Loan Modification Racket Faces Multiple Grand Theft, Burglary Charges For Allegedly Clipping Homeowners Facing Foreclosure With Upfront Fees, Providing No Assistance

In Tulare County, California, The Fresno Bee reports:

• A man who allegedly committed foreclosure fraud by taking money from poor, Hispanic victims and then doing nothing to help them is in jail in Tulare County.
  
  Ricardo Melgoza, 43, was arrested last week in Los Angeles County on arrest warrants and felony complaints issued last year. He is also being held at the request of immigration authorities.
  
  Melgoza was brought to Tulare County to face two counts of grand theft, involving more than $950 per count, and two counts of burglary between August 2008 and July 2010, the Attorney General's Office said.
  
  He also faces 15 counts of grand theft for similar crimes in Kern County. If found guilty, he faces about 20 years in prison, Deputy Attorney General Leslie Westmoreland said. The Special Crimes Unit of the Attorney General's Office is prosecuting the case.

Source: Tulare County man arrested in foreclosure scam.

Speculating Banksters Increase Use Of Credit Bids At Foreclosure Auctions To Buy, Flip Their Own Distressed Properties

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• As home prices in the region climb and inventory dries up, the nation's largest mortgage lenders are gambling on the future of the housing recovery, a Herald-Tribune analysis shows.
  
  Banking giants from Wells Fargo to Fannie Mae are routinely paying top dollar on the auction steps to hold onto their own distressed properties, outbidding cash offers and paying well above assessed value, according to a review of thousands of Southwest Florida auction purchases.
  
  They are speculating that the properties will appreciate even more in the next couple of years.
  
  The new strategy is a shift from the years after the nadir of the foreclosure crisis, when mortgage lenders accepted any fair offer to avoid the hassle of listing the default.
  
  Yet worries are mounting that the competition between lenders and billion-dollar investment funds could drive housing values higher through the kind of price speculation that marked the walk-up to the Great Recession.

***

• So far, lenders have had mixed results.
  
  The strategy worked to near perfection for a 2,100-square-foot house on Venice's Flamingo Road. To keep the three-bedroom home, Fannie Mae outbid a $161,700 third-party offer at a Jan. 11 auction — committing $31,700 more than the property's assessed value.
  
  With a $276,827 final judgment and $250,297 unpaid principal in the deal, the government enterprise famously bailed-out by federal tax dollars was bound to take a loss on the property either way.
  
  But by holding onto it for six more months, the lender found a retail buyer willing to pay $194,000 on May 30 — reducing the loss by $32,300 with the gamble.
  
  Although Fannie Mae can still go after the borrower for the difference, banks rarely pursue a deficiency judgment to collect the remaining balance.
  
  Fannie Mae whiffed on a similar attempt with a home on Lockwood Meadows Boulevard in Sarasota.
  
  The lender turned down firm cash offers at an auction in late January to bid a winning $121,001 for the property — a 203 percent markup from the assessed value.
  
  During the next five months in Sarasota, the median prices for single-family homes grew nearly 19 percent.
  
  Despite that rapid appreciation, the home could only fetch $92,200 on the retail market in May. Fannie Mae's overpayment at auction ultimately cost the lender $28,800 on top of the soured principal amount, plus any subsequent expense to maintain the property and brokerage fees to find a buyer.

For more, see Big lenders bidding to keep homes.

5th Circuit Affirms Texas Bankruptcy Court Ruling Slamming Bankster's Attempt To Squeeze Loan Guarantors By Recovering More Than Amount Due On Foreclosed Mortgage; Lender Fails In Claim That Its Credit Bid Should Not Be Used As Basis For Reducing Loan's Outstanding Balance

From Bankruptcy-RealEstate-Insights.com:

• A bank made loans to the debtor to finance construction of a golf course. The loans were secured by senior liens on the debtor’s assets, limited guaranties of its principals, and a $1.2 million certificate of deposit. During a sale of the debtor’s assets ordered by the bankruptcy court, the holder of the senior debt submitted a credit bid. Spillman involved a dispute over the effect of the credit bid.
  
  After the debtor filed bankruptcy, a junior lender (Fire Eagle) that had loaned the debtor $4.1 million, purchased the senior debt from the bank. At that time, the parties stipulated that the outstanding balance of the senior loans were ~$9.1 million.
  
  After the bankruptcy court refused to confirm any of the proposed plans of reorganization, it ordered a sale of the debtor’s assets under Section 363 of the Bankruptcy Code. After the bidding at the sale reached a cash bid of $9.2 million, Fire Eagle submitted a credit bid of $9.3 million, which was the winning bid.
  
  The debtor and most of the guarantors brought an action in the bankruptcy court seeking a declaratory judgment that the guarantors were released from their obligations. Fire Eagle argued that its credit bid did not result in the senior debt being paid in full. Instead, it contended that the court should have determined the fair market value of the assets, and only that value should have been credited against the senior debt. Assuming the value was less than the debt, Fire Eagle argued that it could still recover the deficiency from the guarantors.
  
  The bankruptcy court found that the credit bid paid the senior debt in full so that there was no deficiency claim left and Fire Eagle was not entitled to recover from the guarantors. Consequently, the bankruptcy court granted summary judgment to the guarantors holding: “This is not rocket science. The Senior Loan has been PAID!!!!”(1)
  
  On appeal Fire Eagle proposed three arguments to support this position:
  
  (1) Credit bidding in a bankruptcy auction affects only the claim in the bankruptcy and not any underlying debt.
  
  (2) Bankruptcy events “do not typically ‘inure to the benefit of non-bankrupt guarantors.’”
  
  (3) The guaranties provided that the guarantors’ obligations would not be affected by a bankruptcy.
  
  The 5th Circuit rejected the first argument as “logically unsound.” The court noted that if Fire Eagle had been outbid by a cash bid, the cash would have been applied against the senior debt, and if the debt was paid in full with cash, it would be absurd to allow Fire Eagle to collect again from the guarantors. Otherwise it could recover more than the face value of the senior debt notwithstanding that the guaranties explicitly provide for termination upon payment in full.
  
  So, Fire Eagle had to be arguing that a credit bid is not equivalent to a cash payment. However, the 5th Circuit found that the provision in Section 363(k) of the Bankruptcy Code that allows credit bidders to offset their claims against the purchase price implicitly assumes the equivalence of the value of the credit bid with cash.
  
  As for the second argument, the cases cited by Fire Eagle addressed situations where the debt was not paid in full. Consequently those cases were not applicable. Similarly with respect to the third argument, relying on provisions in the guarantees that a bankruptcy does not affect the validity of the guarantee ignores the fact that the guarantees also provide for termination upon payment of the guaranteed debt.
  
  So, the 5th Circuit agreed with the lower courts that the credit bid had the effect of paying off the senior debt so that Fire Eagle could not collect on the guarantee agreements.
  
  The very nature of a credit bid is that the bidder holds debt secured by a lien on the assets that are being sold. If the bidder paid cash, the seller would have to turn around and apply that cash to the bidder’s debt. Rather than require an unnecessary back and forth payment of cash, the bidder is allowed to “credit” or setoff its bid against the debt owed to it.
  
  It is important to remember that, although money doesn’t actually change hands, there is still in effect a payment and a repayment. A credit bid is not “funny money,” rather it actually reduces the debt. Similarly, it is key that the seller be required to return the sale proceeds to the bidder in repayment of its debt. If instead a third party held a lien that was senior to the bidder’s lien, payment would have to be applied first to the third party debt, and only any excess would have been returned to the bidder. Thus, the bidder would have to pay cash to the extent of the senior lien, and could credit bid only the excess.
  
  It is surprising that people often don’t “get it.” As the bankruptcy court said, this isn’t rocket science.

Source: Credit Bid: “This Is Not Rocket Science”.

For the court ruling, see Fire Eagle L.L.C. v. Bischoff (In re Spillman Dev. Group Ltd.), 710 F.3d 299 (5th Cir. 2013).

(1) In re Spillman Development Group, LLC, 401 B.R. 240 (Bankr. W.D. Tex. 2009).

Montana Feds Pinch Woman For Allegedly Forging Hubby's Name On POA, Loan Documents To Pocket Proceeds From Fraudulently-Obtained HELOC

In Billings, Montana, the Billings Gazette reports:

• A Billings woman suspected of impersonating a nurse at a local hospital is facing federal bank and wire fraud charges.
  
  Appearing for arraignment Tuesday morning before U.S. Magistrate Judge Carolyn Ostby, defendant Angela Corson Smith, 32, was charged with a series of crimes accusing her of defrauding banks and individuals of thousands of dollars by lying about her health, family and work.
  
  Smith pleaded not guilty to an eight-count indictment charging her with bank fraud, aggravated identity theft, false statements to a bank and wire fraud.

***

• The indictment accuses Smith of three schemes.
  
  In the bank fraud scheme, Smith is accused of defrauding Altana Federal Credit Union of $27,300 by getting a home equity loan on a residence owned by her husband, identified as B.S., without his permission. The money was for her personal use, the indictment said.
  
  Smith applied for the home equity loan on Oct. 23, 2009, by forging a power of attorney representing she had her husband's authority to get the loan, the indictment said. Smith also forged her husband's signature on the loan documents.
  
  About three years later, on Nov. 5, 2012, Altana contacted Smith about delinquent loan payments. Smith lied and told the credit union that her daughter had died the day before of leukemia and that she would be unable to make the payments because of medical and funeral expenses related to her daughter's death, causing Altana to defer four loan payments, indictment said.
  
  Smith's daughter was not suffering from leukemia and didn't die, the indictment noted.

For the story, see Billings woman charged with fraud.

9th Circuit: Dual-Tracking Of Homeowner Making Prompt Payments Under Loan Modification Agreement Constitutes "Adverse Action" That Triggers Bankster's Duty To Give Notice Within 30 Days Under Federal ECOA

In San Francisco, California, Bloomberg reports:

• Wells Fargo & Co. (WFC) must face borrowers’ claims that it violated the Equal Credit Opportunity Act by starting foreclosure proceedings while the customers were making payments under a loan-modification agreement.
  
  The U.S. Court of Appeals in San Francisco [] reinstated the claims of John and Carol Schlegel, who received default notices after the bank told them to proceed with payments under a loan-modification plan and failed to respond to their inquiry seeking an explanation.
  
  The bank’s action, the court found, constituted a revocation of credit without notice required under the Equal Credit Opportunity Act, which makes it illegal for creditors to discriminate against applicants and requires them to provide an explanation within 30 days when denying or revoking credit or changing credit terms.
  
  “While sending a mistaken default notice would not necessarily constitute an adverse action, the Schlegels’ complaint describes egregious conduct that goes far beyond clerical error,” the three-judge panel said.
  
  The bank sent five default notices before acknowledging the modification agreement was in effect and the notices were incorrect, according to the ruling. The panel sent the case back to federal court in San Francisco. The Schlegels had sued on behalf of themselves and other borrowers.
  
  Jennifer Temple, a spokeswoman for San Francisco-based Wells Fargo, didn't immediately respond to an e-mail seeking comment on the ruling.

Source: Wells Fargo Must Face Foreclosure Suit After Loan Accord.

For the ruling, see Schlegel v. Wells Fargo, No. 11-16816 (9th Cir. July 3, 2013).

HOA Lien For Unpaid Maintenance Survives Condo Association's Foreclosure Sale; 3rd Party Buyer At Subsequent Foreclosure By Existing 1st Mortgagee Finds Itself Stuck Inheriting Said HOA Lien, Despite Association's Interim Ownership

In Miami, Florida, the South Florida Business Journal reports:

• A Miami circuit judge has upheld his original 2011 ruling that an Aventura condo association lien survives foreclosure and must be paid by the buyer even though the association itself owned the home briefly. In effect, this decision reinforces the idea that buyers are responsible for paying condo association fees attached to foreclosure purchases they make.
  
  The ruling was hailed by the association’s lawyer, Ben Solomon of the Association Law Group, as helpful for associations trying to shore up their finances in the wake of the recession. Many associations took hits to their budgets as units went vacant due to foreclosures.
  
  Miami Dade Circuit Judge Ronald Dresnik had ruled in favor of the association at Spiaggia Ocean Condominium two years ago, in a lawsuit filed by a buyer called Aventura Management. According to Solomon, the buyer owes $101,000 to the association.
  
  But the Third District Court of Appeal sent the case back to Dresnick for more consideration of whether the association was also liable for association fees during the period it owned the condo.
  
  On May 28, Dresnick reaffirmed his own ruling, adding that the association is also liable for the fees accrued on the unit, but it can choose to pursue collection against the new buyer severally.

Source: Buyers liable for condo fees in foreclosures, Miami judge affirms.

For the trial court's ruling, see Aventura Management, LLC v. Spiaggia Ocean Condominium Association, Inc.

Homebuyer Who Paid $160K To Purchase Foreclosed REO Inherits Pre-Existing Squatter, Can't Move In

In Lake Worth, Florida, WPEC-TV Channel 12 reports:

• An outrageous story about Lake Worth homeowner who purchased a house back in April, but he can't even get into the home because the people that have been living there are refusing to get out.
  
  It all started several years ago when the home at 5035 Woodstone Circle went into foreclosure. The bank took it over, but the people who were renting from the owner never moved out.
  
  Now the house has been sold, and believe it or not, the new owner can't move in.
  
  Marilyn Rodriguez, the president of the neighborhood association, is fed up with the people who refuse to get out. "This person is squatting and it seems like he has more rights than the new owner," said Rodriguez.
  
  Even though the new owner closed on the house in April and paid $160,000, he can't move in. Believe it or not, the squatters actually have rights according to foreclosure defense attorney Anisha Atchanah with Ice Legal.
  
  "As the owner of the property you've got to file a cause of action to the court and prove your case," said Atchanah. "It is very bold, very bold on part of squatter to think they have entitlement to property. It is a huge problem."
  
  Rodriguez and other neighbors agree. "This is ridiculous, it's absurd that in this day and age the new owners has to petition the court and go through all this rigamarole to occupy the house that he purchased."

Source: Squatter Refuses To Leave Lake Worth Home.

Cleveland Feds: Closing Agency Pair Looted Real Estate Escrow Account Out Of $290K, Then Doctored Documents To Dupe Title Insurance Underwriter Into Believing Funds Were Properly Accounted For

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

• Two Lorain County men were charged with conspiracy to commit wire fraud for defrauding companies and customers out of more than $290,000, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
  
  Charged in the criminal information are Gregory R. Klima, 52, of Avon Lake, and Timothy R. Grodzik, 52, of Columbia Station. The men owned Title Access, LLC, with Klima serving as president and Grodzik as vice president of sales, according to the information.
  
  Title Access was formed in 2000 and in the business of administering real estate transactions by providing services including title insurance and escrow account management. Title Access used Stewart Title as an underwriter for the issuing of title insurance, according to the information.
  
  Klima and Grodzik are accused of defrauding Stewart and parties to real estate transactions by diverting funds from Title Access’ escrow account for their personal benefit between December 2009 and February 2011, according to the information.
  
  Around February 2011, Grodzik, with Klima’s knowledge, falsified Access’ financial documents to conceal from a Stewart auditor the fact that they diverted funds from the Title Access escrow account, according to the information.

For the U.S. Attorney press release, see Two From Lorain County Charged With Fraud For Diverting $290,000 From Escrow Account.

Bond Set At $100K & $50K For Pair Pinched By Michigan AG For Allegedly Running Loan Modification Ripoff Racket That Screwed 200+ Homeowners Out Of $400K+

In Detroit, Michigan, M Live reports:

• Two men are accused of offering services they never provided to vulnerable homeowners looking to refinance their mortgages.
  
  State Attorney General Bill Schuette issued a statement [] announcing charges against Jeffrey Baker, 45, of Detroit and Leroy Yeagin Jr., 44, of Southfield related to the 9-month scam that allegedly defrauded 272 victims of more than $400,000.
  
  The men are each charged with operating a criminal enterprise, punishable by up to 20 years in prison; conspiracy to conduct a criminal enterprise, punishable by up to 20 years in prison; and four counts of false pretense, punishable by up to 5 years in prison.
  
  The men are accused of forming the company Wayne County Loan Modification in February of 2010.
  
  The company offered loan modifications to customers to reduce their monthly mortgage payments and usually charged a fee of one month's mortgage up front for the service, an average of near $1,500.
  
  Yeargin and Baker, however, never provided the loan modification.

***

• Bond for Baker was set at $100,000 and bond for Yeargin at $50,000. The men are scheduled to appear in court for their preliminary examination July 15.

For the story, see AG Schuette charges two men in $400,000 Wayne County mortgage scam.

Homeowner Forced To Refinance To Save Home After Being Hit With Foreclosure Notice On Mortgage-Free Residence Over Unpaid, 2006 Property Tax Bill; Investor Purchased Tax Lien, Then Allegedly Sat On It For Six Years Until $500 Debt Grew To $13K Before Notifying Homeowner

In Hartford, Connecticut, NBC Connecticut reports:

• For nearly 40 years, Butch Lewis has strolled the streets of northeast Hartford. “I’ve been living on Vine Street for 37 years,” said Lewis. “Same house. Identical. My kids were raised in that house.”
  
  Lewis didn’t leave when the drug dealers tried taking over. Instead of turning away, Lewis started a neighborhood watch and helped turn this community around. “We fought back, run drug people out, and it’s quality of life,” he said.
  
  But a few months ago, Lewis got the shock of his life when he was served with foreclosure papers on the Vine Street home he’d already paid off. “This guy walks in the driveway and says, ‘We have a lien against your house. We’re going to take it,’” recalled Lewis.
  
  Turns out he was caught in a business transaction between Hartford and tax lien purchaser American Tax Funding, or ATF.
  
  It’s a common practice across the country: municipalities sell property tax liens to private companies. The companies take over the lien and by law can charge up to 18 percent interest on the back taxes – and foreclose if they don't get paid. It's a tried and true way for towns and cities to collect on delinquent taxes. But critics like City Councilman Larry Deutsch (Working Families Party) believe it shouldn't be happening.
  
  “We have to stop this practice,” said Deutsch.
  
  He explained that once the lien is sold, it is taken off of the city’s books. Lewis said he never knew he owed the city of Hartford $500 back in 2006, and didn’t even realize the lien was sold off.
  
  “We thought we were up to date. If you check our records and it says your taxes have been paid, you do not owe the City of Hartford [anything],” said Lewis. Lewis insisted that ATF only came calling after a $500 debt had skyrocketed over half a dozen years with interest and fees.
  
  “It ended up being $13,000," Lewis said. "Yeah, at 18 percent." “It’s in the interest of the company to be very quiet and then after two, three, four, five years of 18 percent accumulating, then they’ll let someone know,” argued Councilman Deutsch.

***

• In the meantime, Lewis isn’t going anywhere. He worked out an agreement with ATF to pay $10,000 by refinancing his home. “We are fortunate that we can do that, but what about the other people in this city?” asked Lewis.

For the story, see Is Hartford Selling Out its Homeowners?

Foreclosure Forces License Revocation, Shutdown Of Longtime Assisted Living Facility, Leading To Short-Notice Boot For 28 Frail Residents

In Ridgefield, Washington, The Columbian reports:

• The state Department of Social and Health Services shut down a longtime assisted living center in Ridgefield after the facility went into foreclosure and was sold at public auction.
  
  DSHS issued notice of its intent to revoke the operating license for Carolees at Ridgefield on March 21, after learning owner Carol Fox had fallen behind on her mortgage payments and was facing foreclosure, said Nancy Tyson, district administrator for DSHS residential care services. At the time, 28 residents lived there, Tyson said.
  
  The license revocation was effective April 18, after a 29-day appeal period expired without Fox challenging the state decision, Tyson said. All of the residents had relocated before the April 18 revocation, she said.
  
  The property sold for $3 million at a public auction March 29. Fox's lender, Matrix Advisors IV, took possession of the deed of trust.
  
  The property also included 12 cottages that were rented but were not licensed as part of the assisted living facility.
  
  Walt Bassett, 84, and his wife, Vera, rented one of the cottages for 11/2 years before learning in early April that they had to move out. "That's when everything hit the fan and everything went to pot," Walt Bassett said.
  
  The Bassetts were told the facility had sold and they had a week or two to find a new place to live. "It was a very short time, and it didn't seem reasonable," Walt Bassett said. "There was no forewarning," he added. "We didn't know anything was going on until it was too late."
  
  The Bassetts were renting a cottage month to month for $1,500, which included prepared meals. They paid for the month of April, and another $300 in advance for the month of May, but Walt said the couple never got any of their money back when they were forced to move out. The Bassetts moved into a new facility April 15.
  
  Fox could not be reached for comment.
  
  Carolees at Ridgefield, 888 S. Hillhurst Road, operated as a licensed assisted living facility for 24 years. The facility was licensed to house 36 residents.

Source: State puts end to Carolees assisted living center (Ridgefield facility had operated for 24 years until foreclosure, auction).

After Feeling Forced To Move, Disabled Tenant Scores $16.5K In Suit Settlement Over Landlord's Alleged Failure To Respond & Engage In Interactive Process In Connection With Request To Make Building Wheelchair-Friendlier By Either Fixing Often-Broken Elevators Or Installing Ramp

From the Office of the Massachusetts Attorney General:

• A Worcester housing complex and its property management company will pay $20,000 to resolve allegations of disability-based housing discrimination, Attorney General Martha Coakley announced [].
  
  The assurance of discontinuance (AOD), filed with the Suffolk Superior Court today, resolves allegations that Federal Square Condominium Trust, owner of a 76-unit condominium complex with four commercial units in Worcester, and its property management company Alpine Property Management, failed to respond to a tenant’s requests to make the building wheelchair accessible.
  
  Specifically, the tenant requested that the defendants fix the often-broken elevators or install a ramp. Because of the failure to respond and to make the requested modifications, the tenant and her disabled partner were forced to move out of the building.
  
  “Massachusetts law requires landlords to communicate with and provide reasonable accommodations for their tenants with disabilities,” AG Coakley said. “Landlords must meet their obligations under the law in a timely manner especially when it comes to tenants who have every right to safe access to their own home.”
  
  Under Massachusetts law, when a property owner or manager receives a request from a tenant with disabilities for an accommodation, the owner or manager has to take steps to communicate with the tenant to identify whether or not it is reasonable to provide such an accommodation. They may ultimately deny the tenant’s request, but they have to engage in an interactive process.
  
  Under the terms of the agreement, Federal Square and Alpine will pay a total of $20,000, including $16,500 to the tenant and $3,500 to the Commonwealth. In addition, Alpine will implement new policies to ensure that it properly responds to requests for reasonable accommodations in the future within 15 business days and to maintain a written log of all requests to ensure compliance.

For the Massachusetts AG press release, see Worcester Condominium Complex and Management Company to Pay $20,000 to Settle Housing Discrimination Allegations.

Craigslist Ad Indicating Unwillingness To Rent To Families With Kids Under Age 6 To Dodge Duty To Delead Apartment To Cost Landlord $38K+ In Penalties, Legal Fees, Costs

From the Office of the Massachusetts Attorney General:

• A Melrose landlord and property manager have been ordered to pay more than $38,000 in a housing discrimination case that resulted from posting a Craigslist advertisement indicating their unwillingness to rent to families with children because of the lead status of a rental unit, Attorney General Martha Coakley announced [].
  
  [A] civil judgment was entered in Suffolk Superior Court against landlord Nicholas Keramaris and MT. V.M. Realty Trust (MT. V.M.) – the owner of a 20-unit rental property in Melrose – who were found to have violated both the state anti-discrimination law and consumer protection law by posting an advertisement on the popular classified advertising website Craigslist.org stating that an apartment “is not deleaded, therefore it cannot be rented to families with children under six years old.”
  
  “Massachusetts law is very clear – landlords cannot avoid their obligations under the state’s lead paint laws by refusing to rent to families with young children,” AG Coakley said. “This judgment demonstrates that there are serious consequences for violating anti-discrimination laws.”
  
  In 2010, the AG’s Office filed a complaint against Keramaris and MT. V.M., alleging that their advertisements were discriminatory against families with young children. Under Massachusetts law, it is illegal to refuse to rent or steer families away from rental properties because they have young children whose presence triggers an owner’s duty to eliminate lead hazards that pose serious health risks.
  
  The Court has ordered Keramaris and MT. V.M. to pay a civil penalty of $10,000, and more than $28,000 in attorneys’ fees and costs. They have also been ordered to cease from posting any discriminatory advertisements, and delead the next two-bedroom apartment in the building that becomes available for rent that is not yet deleaded. Additionally, both Nicholas Keramaris and George Keramaris, the trustee, are required to attend fair housing training.

For the Massachusetts AG press release, see Melrose Landlord and Property Manager Ordered to Pay More Than $38,000 for Discriminatory Craigslist Ad (Court Judgment Requires Defendants to Delead Unit, Attend Fair Housing Training).

Massachusetts AG Indicts Landlord For Allegedly Using Forged Lead Inspection Compliance Letter In Attempt To Qualify For Receipt Of Section 8, State-Subsidized Rental Assistance Payments On Behalf Of Tenant With Three Kids Under Age 6

From the Office of the Massachusetts Attorney General:

• A Chelsea area property owner and real estate broker has been indicted in connection with procurement fraud and falsifying a lead inspection report, Attorney General Martha Coakley announced [].
  
  Nidia Peguero, age 39, of Chelsea, was indicted [...] by a Suffolk County Grand Jury on the charges of Procurement Fraud (2 counts) and Uttering False or Forged Records.
  
  “Exposure to lead can be extremely dangerous, especially for young children,” AG Coakley said. “We allege that this defendant falsified a lead inspection report in order to be able to accept government-funded housing assistance payments from a tenant with three children under six years old.”
  
  The AG’s Office began an investigation to this matter after it was referred by the Department of Public Health. Authorities allege that in October 2011, Peguero, a licensed realtor, submitted a falsified lead inspection compliance letter for a Chelsea property her husband owned to the Metropolitan Boston Housing Partnership (MBHP) in order for him to be approved as a landlord eligible to receive government-funded rental assistance payments.
  
  MBHP serves as a regional administrator for the state Massachusetts Department of Housing and Community Development (DHCD) and administers both the Section 8 and HomeBase housing assistance programs in the Boston metropolitan area. A landlord must submit appropriate documentation to MBHP to become eligible to receive rental assistance payments.
  
  Further, if there are to be children under the age of six living in the unit, a landlord must submit documentation showing that a passing lead paint inspection was conducted on the property.
  
  According to authorities, after a tenant of the Chelsea property, who at the time had three children under the age of six, applied to receive housing assistance, MBHP received a letter of lead inspection compliance from Peguero. The letter was purportedly signed by a licensed lead inspector.
  
  However, a review of the letter conducted by MBHP and inspectors from the Massachusetts Department of Public Health's Child Lead Poisoning Prevention Program determined the documentation to be fraudulent. Investigators allege that Peguero altered a prior proper lead inspection report prepared for her parents for a different property and submitted the falsified document to MBHP.
  
  Further investigation revealed that Peguero submitted the same forged lead letter in May 2010 to Children’s Services of Roxbury in order to receive payments under a different state housing subsidy program called Flex Fund, which is administered by DHCD.

For the Massachusetts AG press release, see Chelsea Area Property Owner Indicted in Connection with Procurement Fraud, Falsifying Lead Inspection Report.

Bay State Landlord Gets Jail Time In State Hate Crimes Prosecution For Use Of Racial Slurs To Harass, Intimidate Once-Pregnant, White Tenant Who Since Delivered, Brought Home Newborn Biracial Infant, Forcing Her To Move From Residence

From the Office of the Massachusetts Attorney General:

• A Holyoke man has been found guilty in connection with the racial harassment of his tenant in violation of her civil rights and sentenced to jail, Attorney General Martha Coakley announced [].
  
  Following a two day trial, a Hampden Superior Court jury found Jesse Jedrzejczyk, 58, guilty on the charge of Civil Rights Violation. Following the verdict Judge Daniel Ford sentenced Jedrzejczyk to one year in the house of correction, six months to serve with the balance suspended for one year. Jedrzejczyk was further ordered to attend counseling per his probation, comply with the permanent injunction, engage in substance abuse evaluations, and stay away from and have no contact with the victims.
  
  “The defendant harassed and intimidated victims despite being subject to a court order due to similar behavior in the past,” AG Coakley said. "This verdict and sentence shows that bias and hate-motivated conduct is not tolerated in Massachusetts.”
  
  In 2009, the Attorney General’s Office filed a Superior Court civil action against Jedrzejczyk pursuant to the Massachusetts Civil Rights Act and obtained a permanent injunction against him based on allegations that he threatened, intimidated, and harassed a neighbor and her young daughters because of their perceived race.
  
  Despite being subject to the Superior Court order, Jedrzejczyk engaged in substantially similar behavior toward his tenant and her infant child because of their perceived race. Jedrzejczyk rented the first floor apartment in his building to his tenant. The tenant, a white female, was three months pregnant at the time she moved into the defendant’s building.
  
  After the tenant brought home her newborn biracial infant, Jedrzejczyk regularly harassed his tenant using racial slurs thereby intimidating his tenant, creating concern for her infant’s safety and, ultimately, forcing her to move from her home.
  
  A Hampden County grand jury returned indictments against Jedrzejczyk on October 23, 2012. Jedrzejczyk was arraigned in Hampden Superior Court on November 8, 2012 where he pleaded not guilty and was ordered held on $10,000 bail. Jedrzejczyk was found guilty on May 24 by a Hampden Superior Court jury following a two day trial and was sentenced to jail.
  
  AG Coakley’s Civil Rights Division works to protect the civil rights of all residents and visitors to Massachusetts. The Attorney General’s Office may obtain an injunction if an individual is the victim of threats, intimidation, or coercion on the basis of a protected category or a protected activity pursuant to the Massachusetts Civil Rights Act, commonly referred to as the “hate crimes” statute.

For the Massachusetts AG press release, see Holyoke Man Found Guilty, Sentenced to Jail in Connection with Violating Civil Rights (Defendant Engaged in Race-Based Harassment of Neighbors).

FTC Tags Alleged Loan Modification Racket In Civil Suit For Upfront Fee Homeowner Ripoffs Peddling Purported Forensic Audits, Bankruptcy Advice, Credit Counseling; Scores Court Order Shutting Down Outfit's Websites & Freezing Its Assets Pending Trial

From the Federal Trade Commission (Washington, D.C.):a

• The Federal Trade Commission filed suit in federal court to halt a mortgage relief scheme that allegedly deceived and preyed on distressed homeowners by charging them $2,000 to $4,000 based on bogus foreclosure rescue claims.
  
  The defendants allegedly falsely claimed they would provide legal help to save consumers’ homes from foreclosure and lower their mortgage payments, then charged them up-front fees in violation of federal law, delivering little or no help, and driving them deeper into debt.
  
  The temporary restraining order signed by the court shuts down the defendants’ websites, freezes their assets, and provides for appointment of a receiver pending trial.
  
  The defendants marketed their scheme in a variety of ways, which included using an official looking mailer that implores consumers to act quickly before they “FORFEIT LEGAL RIGHTS,” or face a “statute of limitations and government program deadlines,” according to the FTC. Three individuals – Ratan Baid, Madhulika Baid, and William D. Goodrich – and seven companies falsely promised lower monthly payments and interest rates, and conversion of adjustable-rate mortgages to fixed ones, the FTC complaint alleged.
  
  Many consumers who called the toll-free numbers were falsely guaranteed a loan modification that supposedly would make their payments more affordable, that they would get results within 60 to 90 days, or that Goodrich, an attorney, would use his impressive legal experience on their behalf, according to the complaint.
  
  The defendants also marketed their scheme online, through telemarketing calls and with television and radio ads, according to the complaint. The defendants’ websites touted a range of financial services, including bankruptcy advice, credit counseling, and “forensic mortgage audits.” One of the sites described how these “audits” can help consumers hold onto their homes or lower their mortgage payments. It falsely claimed that the “audits” could uncover any “lending violations” committed by lenders, and that the information could be used “to gain leverage in a successful loan modification,” the complaint stated.
  
  In reality, however, the defendants generally did not provide the promised loan modification or help consumers avoid foreclosure, either directly or through the “forensic mortgage audits.”
  
  The complaint charges the defendants with violating the Federal Trade Commission Act and with violating the Mortgage Assistance Relief Services Rule, which bans mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.
  
  The complaint also names as defendants Apex Solutions, Inc.; William D. Goodrich, Attorney, Inc.; A to Z Marketing, Inc.; Apex Members, LLC; Backend Inc.; Expert Processing Center, Inc.; and Smart Funding Corp.

For the FTC press release, see FTC Halts Allegedly Phony Mortgage Relief Scheme (Victimizing Thousands of Consumers, Marketers Falsely Touted Legal Assistance and "Forensic Audits" for Homeowners Facing Foreclosure).

Go here for links to the lawsuit and the restraining order and asset freeze.

St. Louis Feds: Needing Quick Loot To Fund Outfit's Operations, Closing Agency Manager Illegally Dipped Into Clients' Cash Held In Real Estate Escrow Account, Then Doctored Financial Records In Effort To Dupe Insurer; One Sour Deal Left Title Insurance Underwriter Holding The Bag For $200K+

From the Office of the U.S. Attorney (St. Louis, Missouri):

• Elizabeth Glosemeyer of St. Louis County, was indicted on two counts of wire fraud.
  
  According to the indictment, while the manager of Lenders Guarantee Title Company of St. Louis, Glosemeyer raided the company’s escrow account to fund operations.
  
  The escrow account consisted of clients’ money and was to be used only for clients’ real estate transactions.
  
  The indictment further alleges that Glosemeyer doctored financial records to cover up her raiding of the escrow account from Lenders’ underwriters. In the summer of 2012, an audit uncovered Glosemeyer’s scheme and Lenders went out of business soon thereafter.
  
  Due to the deficit in the escrow account Glosemeyer created, at least one transaction in excess of $200,000 had to be closed with the underwriters’ funds.

For the U.S. Attorney press release, see Former Manager Of Local Title Company Indicted On Federal Fraud Charges.

Warning To Brooklyn Residents, Property Owners Who Die Without A Will Or Next Of Kin: The Institutional Grave-Robbing Of Dead New Yorkers Continues, So Prepare To Be Fleeced!

In Brooklyn, New York, the New York Post reports:

• They’ve done a ghastly job.
  
  Public administrators responsible for the estates of people who die in Brooklyn mishandled more than $2.2 million in assets — losing a fur coat and forgetting to collect $50,000 in cash, an audit has found.
  
  Among its missteps, the Kings County Public Administrator’s Office left $50,000 it knew about sitting in a safe-deposit box for five years and failed to credit an estate after selling a six-family home for $140,000, said a report by Comptroller John Liu. The $50,000 in cash was claimed only after auditors pointed it out.
  
  The administrator’s office, which deals with estates of those who die without wills or next of kin, also misplaced a $1,000 fur coat it had stored in a vault at the Macy’s in Kings Plaza back in 2004. When auditors asked what happened to the coat, administrator staffers frankly admitted, “We have no idea what happened regarding the fur coat.”
  
  This was the same office where a bookkeeper was indicted last year in the theft of $2.6 million from the deceased.
  
  “The missing valuables and cash uncovered by this audit read like a blooper reel,” said Liu, a mayoral candidate dogged by campaign irregularities. “It would be funny if the Brooklyn public administrator wasn’t responsible for protecting estates worth millions of dollars. They need to show they are capable of safeguarding the estates entrusted to their care.”
  
  His audit identified the mishandling of assets in more than half of the 50 estates that were examined.
  
  But the administrator’s office had been responsible for more than 3,300 estates, valued at nearly $75 million, as of June 2011.
  
  Public Administrator Bruce Stein wrote a six-page response to Liu’s audit with an item-by-item refutation of its findings. He blasted a chart detailing the minimum $2.2 million in mishandled assets as “riddled with errors” and full of “false information.” He also charged that Liu’s auditors had a “complete lack of understanding of the authority of the public administrator and our handling of estate matters.”
  
  Stein’s office did not immediately respond to a request for comment.
  
  But Liu’s audit found plenty of other concerns with Stein’s office, including its charging of excessive legal fees, poor record-keeping and slow pace at closing estate cases. More than 92 percent of estates hadn’t been fully distributed within two years.
  
  Liu also noted that the administrator failed to deactivate information-sensitive user accounts for seven former staffers — including the one charged with swindling $2.6 million by writing fraudulent checks.

Source: Administrators mishandled more than $2.2M for estates of people who died in Brooklyn, audit shows.

For earlier stories on the fleecing of dead New Yorkers, see:

• How insiders snatch millions from estates in the scandal-scarred Surrogate Courts,
• NYC Controller Urges All Brooklyn Residents To "Make Out A Will ASAP!" To Avoid Risk Of Getting Fleeced By Public Administrator's Office,
• Were Funds Pilfered from a Retired Judge’s Estate? (Supporters Say Accounting Should Reopen Criminal Probe).
• Wringing Out The Dead In Brooklyn (If there's no will, court grabs big hunk of estate):
  
  "Don't get caught dead in Brooklyn without a will. If you do, a sizable hunk of your earthly assets is likely to wind up in the pockets of bureaucrats and well-connected insiders instead of your rightful heirs. A Daily News investigation of 80 estates administered by Brooklyn's Surrogate Court found that in those worth $100,000 or more, 24% of the assets ended up in the coffers of the city, the court, the court's public administrator and her counsel - or a lineup of Brooklyn subcontractors. When it comes to profiting from the estates of the dead who haven't left wills, officials familiar with surrogate courts in other boroughs say, Brooklyn is in a league of its own."

Those old-timers who have some familiarity with the sleaze that has been associated with the public administrators' offices in New York City know that recent media reports don't bring anything new to light - they are mere reminders of the ongoing ripoffs that have been going on for decades. See, for example, these two New York Times' stories that date back 25+ years:

• 3 in Surrogate's Office Charged With Thefts (June 29, 1988),
• Wider Inquiry Into Stealing From the Dead (February 3, 1988).

Institutional grave robbing is not limited to New York City. Go here for links to earlier stories of similar fleecings of the dead, both in New York City and elsewhere.

Disciplinary Actions By Florida Supreme Court

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

The following lawyers were disciplined for either playing fast & loose with client's trust funds, improperly ripping off clients out of unwarranted legal fees/gifts, or otherwise not dealing on the up & up with their clients:

• Ronald George Baker, 2655 S. Le Jeune Road, Ph. II-B, Coral Gables, suspended for 91 days, effective July 14, following a May 15 court order. (Admitted to practice: 1976) Baker had a long-time business relationship with a client whom he assisted in an estate planning matter. A restatement of the trust provided that Baker, who prepared the documents at the instruction of the client, would receive $250,000 as a beneficiary of the reinstatement. Upon the death of the client, Baker disbursed the funds to himself and he additionally collected $110,000 for serving as trustee, personal representative and attorney. Baker violated Bar rules involving conflict of interest. His acceptance of a substantial gift from a client was inappropriate and also violated Bar rules. (Case No. SC12-2725)

***

• Jennifer Aycock Bonifield, 1025 Professional Park Drive, Brandon, disbarred effective immediately, following a May 15 court order. (Admitted to practice: 2002) Bonifield abandoned her law practice and converted funds held in trust. She was found guilty of the following offenses: committing a criminal act, charging excessive fees, fraud and misrepresentation, and engaging in a pattern of neglect. In several instances, Bonifield failed to maintain adequate communication with clients, failed to work diligently on cases, and failed to respond to the Bar's inquiries. (Case No. SC12-1188)

***

• Libio Calejo, 2500 N.W. 79th Ave., Suite 102, Doral, suspended for one year, effective 30 days from a May 15 court order. Further, Calejo was ordered to pay restitution of $9,700 to six separate clients. (Admitted to practice: 2004) Calejo represented approximately 20 debtors in federal bankruptcy court. Many of the petitions and schedules he filed contained inaccuracies, leading to amendments that also contained inaccuracies and resulted in unreasonable delays. Calejo’s failure to appear at a number of scheduled creditors’ meetings resulted in the dismissal of most of the bankruptcy cases. Calejo also failed to adequately communicate with clients, often leaving that responsibility to his non-lawyer personnel. (Case No. SC12-2729)

***

• Stewart Lawrence Jacobson, P.O. Box 120007, Clermont, to be publicly reprimanded following a May 15 court order. (Admitted to practice: 1977) The Bar’s audit of Jacobson’s trust account revealed a shortage of approximately $30,000, but found no indication of intentional misappropriation. The shortage was due to negligent record keeping. (Case No. SC12-1941)
  
  Stephen Gilman Kolody, 3625 Hidden Tree Lane, Fort Myers, suspended for 91 days with reinstatement under Rule 3-7.10, effective 30 days from a May 15 court order. Further, Kolody shall pay restitution of more than $10,000 to two clients. (Admitted to practice: 1980) Kolody was found in contempt for noncompliance with a subpoena to produce trust accounting records. Kolody accepted fees in advance in two instances and subsequently failed to perform the services. (Case Nos. SC11-721 & SC12-1420)

***

• Charles Edward Pellicer, 28 Cordova St.,Saint Augustine, to be publicly reprimanded and placed on probation for two years, following a May 15 court order. (Admitted to practice: 1976) Pellicer took out a $20,000 loan from an elderly blind woman who was a former client. He also handled several legal matters for her after obtaining the loan. He failed to advise her to obtain independent legal advice regarding the loan. Pellicer failed to make the required loan payments for six months but later paid off the loan. Pellicer also commingled his personal funds with trust funds and failed to maintain his trust account records in substantial compliance with the rules. (Case No. SC12-1190)

***

• James Herbert Rainey, 1117 Clare Ave., West Palm Beach, suspended until further order, following a May 22 court order. (Admitted to practice: 1983) According to a petition for emergency suspension, Rainey appeared to be causing great public harm. A Bar investigation found that Rainey misappropriated client funds. He also misrepresented facts in a written response to a Florida Bar inquiry. (Case No. SC13-881)

***

• Mark David Tucker, P.O. Box 557818, Miami, disbarred effective 30 days from an April 30 court order. (Admitted to practice: 1981) Tucker was found in contempt for failing to comply with the terms of a November 2010 suspension order that also placed him on probation for three years. Tucker failed to pay $72,950 to a former client within the three-year probationary period as required. (Case No. SC12-952)

Source: Supreme Court Disciplines 23 Attorneys.

78-Year Old Ex-Lawyer Gets Two Years House Arrest For Screwing Over Clients By Pocketing $400K+ Of Entrusted Funds Intended To Be Used To Pay Off Mortgages; Probe Triggered By Referral From State High Court's Attorney Ripoff Reimbursement Fund

From the Office of the Massachusetts Attorney General:

• A former Tewksbury attorney has pleaded guilty and been sentenced in connection with stealing more than $400,000 from multiple clients, one of whom was disabled, Attorney General Martha Coakley announced []. The defendant stole money that had been entrusted to him by clients seeking help to pay off mortgages or as part of the probate of an estate.
  
  Raymond Paczkowski, Jr., age 78, of Tewksbury, pleaded guilty [...] in Middlesex Superior Court to Larceny over $250 from a Disabled Person and Larceny over $250 (7 counts). After the plea was entered, Superior Court Judge Edward P. Leibensperger sentenced Paczkowski to two years of home confinement, with the conditions that he be monitored by GPS and complete 400 hours of community service. Judge Leibensperger also ordered Paczkowski to serve three years of probation upon completion of his period of home confinement and to pay $479,000 in restitution.
  
  In 2010, the AG’s Office began an investigation after the matter was referred from the Tewksbury Police Department and the Massachusetts Clients’ Security Board, which manages a fund that is supported, in part, by annual fees paid by members of the bar.
  
  The Clients’ Security Board distributes fund money to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the bar acting as an attorney or a fiduciary.
  
  Paczkowski worked as an attorney specializing in conveyancing and probate work, and also did some work with insurance claims and litigation. In 2008, Paczkowski began stealing from several of his clients.
  
  According to investigators, Paczkowski received $75,000 in 2008 from a disabled client in order to pay off a mortgage on her home. Several months later, however, the client received a letter indicting that the loan was still outstanding. Investigation revealed that Paczkowski never gave the money to the lender and instead stole it for his personal use.
  
  Paczkowski also took money from several other clients who had sought help in paying off their mortgages. In one case, a client gave Paczkowski $175,000, with the intent that Paczkowski immediately use those funds to pay off the existing mortgage on his property. The client, however, continued to receive monthly mortgage statements and investigation revealed that Paczkowski stole the money instead of paying off the clients’ mortgage.
  
  In other instances, Paczkowski stole money from clients who had hired him to assist with the handling or disposing of estate property after experiencing a death in the family. In one case, a client who assumed the full title to his mother’s property after she passed sought Paczkowski’s assistance in paying off a mortgage in order to refinance. The client’s mother owed roughly $109,000 to the company that held a mortgage on the property and Paczkowski received $158,100 from a new lender. According to investigators, Paczkowski forwarded the proceeds to the client, but failed to pay off the original mortgage company. The client realized the theft when he received multiple late notices on his mother’s mortgage statement.

For the Massachusetts AG press release, see Former Tewksbury Attorney Pleads Guilty, Sentenced in Connection with Stealing More Than $400,000 from Clients (Defendant Stole Money Entrusted to Him by Clients for His Personal Use; Stole from Disabled Client).

Massachusetts AG Pinches Now-Disbarred Attorney For Various Client Ripoffs Totalling $900K+; Alleged To Have Failed To Pay Off Existing Loans When Retained To Handle Real Estate Transactions

From the Office of the Massachusetts Attorney General:

• A now-disbarred Lawrence attorney has been indicted in connection with stealing more than $900,000 from multiple clients, one of them elderly, Attorney General Martha Coakley announced [].
  
  Phillip Thompson, age 35, of Lawrence, was indicted [] by Statewide Grand Jury on charges of Larceny over $250 from a Person over Sixty, Larceny over $250 (7 counts) and Unauthorized Practice of Law.
  
  “This defendant abused his stature as an attorney to take advantage of vulnerable clients,” AG Coakley said. “We allege that he stole hundreds of thousands of dollars for his own personal use.”
  
  The AG’s Office began an investigation in 2011 after the matter was referred by the Essex County District Attorney’s Office. Thompson worked as an attorney out of his Lawrence law office, primarily specializing in real estate, and also ran a debt collection agency out of his office. Authorities allege that between July 2007 and June 2011, Thompson stole more than $900,000 from at least seven clients.
  
  The investigation revealed that Thompson represented clients in several real estate transactions, allegedly failing to pay off loans and failing to give funds to clients who were owed money.
  
  In one case, Thompson allegedly represented an elderly man and his wife who were seeking to obtain a settlement from their insurance company after their home burned down. When the insurance company issued more than $416,000 in checks jointly to the clients and Thompson, Thompson allegedly converted the funds for his own use and the clients never received any of the money.
  
  In another instance, a reverend gave Thompson $60,000 to hold in escrow pending a closing on land that his church intended to purchase. When the closing fell through, Thompson allegedly never returned the money and kept it for his personal use.
  
  According to investigators, Thompson continued to solicit legal business and represent himself as an attorney after he was suspended from practice in June 2010. Thompson was later disbarred in July 2012.

For the Massachusetts AG press release, see Former Lawrence Attorney Indicted for Stealing More Than $900,000 From Clients (Defendant Allegedly Stole Money for His Personal Use; Stole from Elderly Client).

Now-Disbarred Lawyer Gets Year In Jail, 18 Months House Arrest After Copping Plea To Ripping Off Elderly Clients Of Nearly $900K

From the Office of the Massachusetts Attorney General:

• A disbarred attorney has been sentenced to jail and ordered to pay restitution in connection with stealing a total of nearly $900,000 from an estate she represented, a beneficiary of that estate whose funds were in a trust she managed, and an elderly client, Attorney General Martha Coakley’s Office announced [].
  
  Maureen F. Pomeroy, age 46, of Bedford, pleaded guilty on [] in Middlesex Superior Court to charges of Larceny over $250 from a Person 60 or Older (2 counts), Larceny over $250, and Embezzlement by Fiduciary.
  
  [M]iddlesex Superior Court Judge Kimberly Budd sentenced Pomeroy to two-and-a-half years in the House of Correction, with one year to serve and the balance suspended with probation for two-and-a-half years. As a condition of probation, Pomeroy must remain on house arrest for one-and-a-half years and pay restitution in the amount of $277,292.
  
  “This defendant took advantage of clients who entrusted her with access to their funds and believed that she would assist them with their best interests in mind,” said AG Coakley. “It is particularly appalling that she stole more than $800,000 from an elderly client and from someone who was grieving the loss of a family member. This defendant is being held accountable for these injustices and is no longer able to practice law.”
  
  In May 2010, the AG’s Office began an investigation into Pomeroy’s activities after receiving a complaint from one of her former clients. During the time she practiced as an attorney, Pomeroy specialized in real estate and estate planning, and would routinely draft wills or other financial documents for her clients.
  
  According to authorities, an 85-year-old man retained her services to prepare a will and other estate planning documents for him, and to assist him in obtaining funds from several bank accounts. Authorities allege that from July 2008 through October 2008, Pomeroy stole more than $810,000 from this client. Pomeroy used these funds for her personal benefit and used some of the elderly client’s funds to repay two clients from whom she had earlier misappropriated money.
  
  According to authorities, in October 2007, Pomeroy handled a closing on the sale of a deceased man’s home under a power of attorney and concealed her receipt of more than $32,000 of sale proceeds. In addition, Pomeroy set up a trust for one of the deceased man’s adult sons. Pomeroy, who was trustee for the man, deposited amounts the man received into bank accounts she set up, but withdrew substantial sums, totaling more than her fees, from the account for her own benefit from January 2008 to June 2008. Pomeroy repaid the estate in September 2008, and also paid over $50,000 from her personal account on the deceased man’s son’s behalf in October 2008. In each instance she used funds belonging to the elderly client.

For the Massachusetts AG press release, see Disbarred Attorney Sentenced to Jail, Ordered to Pay Restitution in Connection with Stealing Nearly $900,000 from Elderly Client, Estate, and Trust.