NY AG Reaches Settlement With Sleazy Lawyers, Title Agent, Mortgage Broker For Their Roles In Sale Leaseback Foreclosure Rescue Racket That Caused 14 Long Island Homeowners To Lose Their Deeds, Home Equity

On Long Island, New York, Newsday reports:

• New York Attorney General Eric T. Schneiderman announced [] that his office has reached a more than $400,000 settlement in a mortgage foreclosure "rescue" scam that caused 14 Long Island homeowners to lose their deeds and equity.(1)
  
  "This shameful scam re-victimized families already suffering from the collapse of the housing market," Schneiderman said in a statement.
  
  Empire Property Solutions in Medford and Bethpage advertised services to help struggling families save their homes from foreclosure by refinancing mortgages and repairing credit scores, Schneiderman said.
  
  Empire principals John Rutigliano and Kenneth Kiefer encouraged homeowners to turn their deeds over to them through "sale-leaseback" agreements, in which they were told they could stay in their homes, pay rent, build up their credit, and after a year, the deed would revert to them, the attorney general said.
  
  An investigation found Rutigliano and Kiefer failed to make good on their promises to use the homeowners' payments to pay down their mortgages. In the end, the homeowners faced foreclosure and eviction.
  
  Schneiderman said other parties to the scam were: the Zornberg & Hirsch law firm in Hauppauge and its married principals, attorney Barry Zornberg, since disbarred, and Nanci Hirsch; H & Z Abstract, a title company owned by Hirsch; Hauppauge attorney Cory Covert; and Baldwin mortgage broker Leonie Neufville.
  
  The state filed a civil complaint and multiple settlements were reached, with Zornberg agreeing to pay $340,000; Covert $67,500; and Neufville $10,000, plus a five-year ban on acting as a broker, Schneiderman said.
  
  Schneiderman's office also received a default judgment against Rutigliano and Kiefer, which it said will be converted into a monetary judgment.
  
  The funds will be used to compensate victims of the fraud. The attorney general's office said it is working with several of the victims to return their deeds to their rightful ownership.
  
  Attorneys for Empire and the individuals named in the state lawsuit could not be reached for comment [].

Source: AG: settlement reached in LI mortgage foreclosure scam.

See also, A.G. Schneider Reaches $400,000 Settlement With Alleged Participants With Alleged Participants In Mortgage Rescue Scam That Stole Deeds From Long Island Homeowners (Sale-Leaseback Fraud, Perpetrated At Height of Housing Crash on Long Island, Cheated 14 Families Out Of Their Homes’ Deeds and Equity):

• One of the homeowners who will get her deed back is Rosalie Thomas, a licensed nurse practitioner from Elmont, NY. After receiving a foreclosure notice in 2006, Thomas called Empire Property Solutions for help. Empire Property Solutions claimed Thomas could avoid foreclosure by signing onto their payment plan, but she still received a foreclosure notice a year later after spending tens of thousands of dollars.
  
  “This whole ordeal has been very scary and stressful,” said Rosalie Thomas. “My youngest son was born in the house that Empire Property Solutions tried to take away from me. It’s the only home he’s ever known. I’m looking forward to finally getting the deed back and finally putting this behind me.”
  
  Ronald Lambre and Marie DiManche, Haitian immigrants who live in Medford, NY, are working with [the Office of the New York Attorney General] to purchase a new home with money from the settlements.
  
  After seeing an ad in the newspaper, Ms. Dimanche, a certified nursing assistant, called Empire Property Solutions and set up a payment plan that was initially half of what she and her husband were paying on their mortgage. After a year, Empire Property Solutions tripled the monthly payments and threatened to evict Lambre and DiManche if they did not pay. Their family, which includes six children, left the home and has since moved three times. OAG came across their case after opening an investigation.
  
  “There is no way to describe how you feel when your home is stolen,” said Marie DiManche. “I’m from Haiti, and it was my dream to own a house. How do you tell your kids you can’t get back what you lost? Thanks to these settlements, my family will finally have a chance to start over again.”
  
  The federal government also brought a criminal investigation against the partners of this sale-leaseback fraud. The United States Attorney’s Office (USAO) indicted Rutigliano and Kiefer on charges of conspiracy to commit wire fraud. USAO also indicted Zornberg for lying to federal investigators about his role in the scam.
  
  The indictment has been dismissed against Rutigliano due to his death. Kiefer pleaded guilty and is awaiting sentencing. Zornberg pleaded guilty to perjury as part of a plea deal and has agreed to pay approximately $1.3 million in compensation to the victims of the fraud. Zornberg is awaiting final sentencing in federal criminal court.(2)

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(1) A couple of the key players have already copped guilty pleas for the crimes associated with this racket, with one dying while charges were pending. See Former Attorney Pleads Guilty To Lying To Federal Investigators About His Role In A Million-Dollar Fraud Scheme (Agrees To Pay More Than $1 Million To Ten Families Who Fell Victim To The Scheme).

(2) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).