Tuesday, January 06, 2015

Bay State Real Estate Operator Gets Canned For Ten Months, Faces Ten Years Probation & $112K Restitution Order For Ripping Off Nearly 100 Wanna-Be Homeowners In Blatant Rent-To-Own Racket Targeting 1st Time Buyers, Consumers w/ Crappy Credit

From the Office of the Massachusetts Attorney General:
  • An Easton man has pleaded guilty and been sentenced to jail in connection with stealing $112,000 from customers in a “Rent to Own” advance-fee scheme, Attorney General Martha Coakley’s Office announced []. He was also ordered to make full restitution to his victims.

    Joshua Leventhal, age 44, of Easton, pleaded guilty today in Bristol Superior Court to the charges of Larceny over $250 (4 counts) and Larceny by a Single Scheme.

    “This defendant tricked consumers into believing his program would result in easy homeownership, when in fact, not one of his nearly 100 customers was ever able to purchase a home through that program,” said AG Coakley. “He will now serve time in jail for his crimes and will be required to pay full restitution to the victims.”

    After the plea was entered, Superior Court Judge Robert J. Kane sentenced Leventhal to two years in the House of Correction, with 10 months to serve and the balance suspended for 10 years, during which time he will be on probation. Judge Kane also ordered Leventhal to pay restitution in the full amount of $112,000. Leventhal will begin serving his sentence on Feb. 17, 2015.

    Several victims were present in court today and provided impact statements about the effect of Leventhal’s actions.

    The AG’s Office began an investigation in the fall of 2012 after the matter was referred by the Bristol District Attorney’s Office and the Easton Police Department. The investigation revealed that Leventhal operated a “Rent to Own” scheme out of his Easton home, ultimately stealing over $100,000 from customers between 2010 and 2011.

    Leventhal described his “Rent to Own” program as a way for first-time home buyers or people with poor credit to rent a property through a complicated agreement with the homeowner, which allowed the buyer to later purchase the property for a set price and for a portion of each monthly check to be set aside for the renter to use as a deposit for that purchase. Investigation revealed that not one of Leventhal’s customers ever purchased a property under his program.

    Leventhal targeted first-time homebuyers and consumers with poor credit through online advertisements. Leventhal posted thousands of online advertisements including deceptive claims, such as: “Our rent2own program WILL turn you into a homeowner ASAP,” and “Rent 2 Own WILL Turn You Into A Homeowner Even If You Have Bad Credit and/or No Down Payment.”

    Leventhal, on a now-shuttered website, also fabricated customer testimonials, including one in which a customer purportedly wrote, “I saved $44,000 on my Rent 2 Own Purchase. All I can say is WOW.”

    In reality, investigators learned that out of Leventhal’s nearly one hundred customers, only three customers ended up occupying a property through his program, and not one of his customers ever purchased a property through his program.

    According to investigators, after he convinced potential customers that his program was a functional and successful path to homeownership, Leventhal charged them an enrollment fee, typically ranging from $150 to $2,000.

    In some cases, Leventhal also received additional deposit money from his customers, ranging from $4,350 to $7,000. However, Leventhal did not use these funds to pursue homeownership for his customers, but rather kept the money for his own personal use.

    A Statewide Grand Jury returned indictments against Leventhal on August 15, 2013 and he was later arraigned in Bristol Superior Court. He pleaded guilty and was sentenced [] in Bristol Superior Court. He will begin serving his sentence on Feb. 17, 2015.

    The case was prosecuted by Assistant Attorney General Andrew Doherty of AG Coakley’s Fraud and Financial Crimes Division, with assistance from Investigator Marco DePalma, Victim Advocate Megan Murphy, and Sergeant Jack Lynn of the Easton Police Department.(1)
Source: Easton Man Pleads Guilty, Sentenced to Jail in Connection with Stealing More Than $100,000 in "Rent to Own" Scheme (Sentenced to Jail, Ordered to Pay Restitution to Victims in Full Amount of $112,000).

See Would-Be Homeowner Victimized In Rent-To-Own Racket: "If Somebody Says, 'We Finance Homes; Ugly Credit, No Credit,' Don't Buy It! Do Your Research. I Didn't, & I Got Stung!" for an earlier story of a Pennsylvania consumer who got similarly screwed on a rent-to-own ripoff.

Go here for earlier posts on "rent-to-own" rackets.

(1) As a reminder to those who mistakenly believe that these apparent ripoff deals are nothing more than civil cases (as opposed to criminal matters), it is clear that all the sophisticated paperwork in the world (ie. business/purchase contracts, leases, closing statements, etc.) isn't enough to permit scammers to insulate themselves from criminal prosecution when they target their victims with scams masquerading as legitimate-looking business propositions when screwing them over. Criminal prosecutors have the authority to "pierce through" such attempts to disguise a blatant criminal real estate ripoff as a normal, arms-length business transaction.

Clear precedent exists for such a "pierce through" approach to overcome any objections that will certainly arise when the scammers make the argument that the arrangement was just a civil transaction that, if challenged, should be done with a civil lawsuit, not a criminal prosecution. See, for example:
  • People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

    Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (
    People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)
    a
  • People v. Jones, (1943) 61 Cal.App.2d 608, 620 [143 P.2d 726]:.
    Defendant argues that the deal with each "seller" was a
    civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.

    [***]
    a
    Although each deal in its incipiency
    bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.
    The use of the corporate name and the promises made in accomplishing his purpose
    were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

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