Disbarment Is No Bar To Thieving Ex-Lawyer's Escapades In Ripping Off Clients; One Week After Getting Bar Boot For Knowingly Misappropriating Client Funds, Gets Pinched For Allegedly Screwing Another Victim Out Of $17K, $tiffing Her w/ Rubber Check

From the Monmouth County, New Jersey Prosecutor's Office:

• A Monmouth County grand jury returned a 4-count indictment [] naming a disbarred attorney for providing legal services and failing to properly handle a $17,000 settlement, announced Acting Monmouth County Prosecutor Christopher J. Gramiccioni.
  
  Kim Andre Fellenz, 58, of Neptune Township, who was disbarred in 2012 for knowingly misappropriating client funds, was named in today’s indictment following a direct presentment of the facts to a Monmouth County Grand Jury.
  
  The charges stem from a client meeting Fellenz had on Sept. 17, 2012, seven days after he was disbarred by the New Jersey State Supreme Court. At that meeting, Fellenz met with his victim to get her signature on the settlement papers of a civil lawsuit. Fellenz had the victim sign the document, as well as a Power of Attorney, allowing Fellenz to receive a settlement check for $17,000 and dispense the money according to the settlement agreement. The victim was to receive $11,380 from the settlement.
  
  Due to his status as a disbarred attorney, Fellenz had a responsibility to turn the check over to the Clerk of the New Jersey Superior Court after he received the payment on Sept. 19, 2012. After the victim learned of his disbarment, she attempted to recover her settlement money from Fellenz. On Oct. 17, 2012, Fellenz issued a check to the victim for the full amount of the settlement, however, that check was not honored at the bank due to insufficient funds.
  
  Fellenz continued to promise the victim her money, but failed to follow-through, prompting the victim to contact the state Office of Attorney Ethics and the Monmouth County Prosecutor’s Office. The investigation conducted by the Monmouth County Prosecutor’s Office revealed the money from the settlement was deposited into Fellenz’s personal bank account was used for unauthorized purposes.
  
  Fellenz is charged in the indictment with one count each of third degree Unauthorized Practice of Law, third degree Theft by Failure to Make Required Disposition, third degree Misapplication of Entrusted Funds, and fourth degree Bad Check.

Source: Disbarred Attorney Indicted for Doing Legal Work (Former Neptune Township Attorney Misappropriated Settlement Money).

Another Aging Attorney Wraps Up Professional Career By Copping Guilty Plea To Bleeding $1.3 Million Of Elderly Siblings' Trust Money; Expected To Dodge Prison Time & Get Four Years Probation Instead After Agreeing To Forfeit $800K, Surrender NY, Florida Bar Tickets

In Buffalo, New York, The Buffalo News reports:

• An estate lawyer who diverted $1.3 million from trust accounts – set up by an Orchard Park brother and sister to benefit charities – pleaded guilty [] to second-degree grand larceny, a felony, according to the state Attorney General’s Office.
  
  As part of his plea in New York County Supreme Court, Stephen M. Newman, 71, will forfeit $800,000 and surrender his licenses to practice law in New York and Florida.
  
  Newman, who once catered to wealthy clients from law offices in Amherst and Palm Beach County, Fla., is scheduled to be sentenced to four years’ probation on May 12.
  
  The trust funds were set up by June and Worth Farrington, lifelong Orchard Park residents, to benefit charities. June Farrington was 84 when she died in 2008 and Worth Farrington was 87 when he died in 2014. Neither ever married or had children.
  
  In 2007, Newman was retained by June and Worth Farrington as an estate planning attorney. Between 2007 and 2009, Newman revised the trusts and changed the outright gifts to charities into annuities and made himself the sole trustee.
  
  As sole trustee, between November 2008 and November 2011, Newman diverted more than $900,000 from the Farringtons’ trust accounts to himself. Additionally, Newman diverted more than $400,000 to Joan M. Morgante, a home aide he introduced to the Farringtons, according to the state Attorney General’s Office.
  
  Morgante, 76, of Cheektowaga, pleaded guilty [] in State Supreme Court in Buffalo to second-degree attempted grand larceny, a felony, for her part in the scheme. Morgante is scheduled to be sentenced to five years’ probation when she appears before Justice John L. Michalski on June 15.
  
  “When individuals abuse the trust of elderly New Yorkers, they will face prosecution and they will be held accountable,” Attorney General Eric T. Schneiderman said.
  
  Newman arranged for Morgante to work for the elderly siblings beginning in 2006. The Farringtons were worth an estimated $20 million at that time.
  
  Morgante, who met Newman while caring for another of his clients, had little training as a caregiver, according to an affidavit signed by Morgante and filed in Surrogate’s Court. The high school dropout worked as a geriatric “companion” and held no health care certifications.
  
  A legal battle between the charities and Newman erupted in Erie County Surrogate’s Court following June Farrington’s death. She established a trust in 1999 from money she inherited from her father’s hand-tool fortune, intending to leave all of her assets to three charities upon her death – the Community Foundation for Greater Buffalo, the Nature Conservancy and the Women & Children’s Hospital of Buffalo Foundation.
  
  So when she died in 2008, her favored charities counted on sharing about $8 million.
  
  Instead, they found themselves in a pitched battle with Newman. At the time, the charities’ attorneys accused Newman of masterminding a “wrongful scheme” to steer the money to himself and the home aide by changing Farrington’s will.(1) [more]

For more, see Lawyer admits larceny from Orchard Park elderly siblings’ trust accounts.

For the New York Attorney General press release, see A.G. Schneiderman Announces Felony Convictions Of Attorney And Caregiver For Stealing Hundreds Of Thousands Of Dollars From Estates Of Wealthy Brother And Sister.

See, generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession:

• This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.
  
  There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.
  
  This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression.

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

(1) The Lawyers’ Fund For Client Protection Of the State of New York manages and distributes money collected from annual dues paid by members of the state bar 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.

For similar "attorney ripoff reimbursement funds" that attempt to clean up 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 a listing for Canadian client protection 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.

See generally:

• N.Y. fund for cheated clients wants thieving lawyers disbarred, a July, 2015 Associated Press story on this Fund reporting that the Fund's executive director, among other things, is calling for prompt referral to the local district attorney when the disciplinary committee has uncontested evidence of theft by a lawyer injuring a client or an admission of culpability;
  
  When Lawyers Steal the Escrow, a June, 2005 New York Times story describing some cases of client reimbursements ("With real estate business surging and down-payment amounts rising with home prices, the temptation for a lawyer to filch money from a bulging escrow account and later repay it with other clients' money has never been greater, said lawyers who monitor the thefts."),
  
  Thieving Lawyers Draining Client Security Funds, a December, 1991 New York Times story that gives some-real life examples of how client security funds deal with claims and the pressures the administrators of those funds may feel when left insufficiently financed as a result of the misconduct of a handful of lawyer/scoundrels.

Thieving Lawyer Gets Three Year Stay In NJ State Prison For Embezzling Client's R/E Closing Proceeds, Fails To Raise $127K In Upfront Victim Restitution Necessary To 'Buy Down' Incarceration To One Year In County Cage; Among Shameless Attorney's Parting Words To Incredulous Judge: "I Personally Have Not Gained From Anything I Have Done"

In Morristown, New Jersey, the Daily Record reports:

• A now-disbarred lawyer who claimed he used $123,495 in client funds to support his two daughters was sentenced [] to three years in prison on his guilty pleas to theft, practicing law without a license, and writing bad checks.
  
  "I personally have not gained from anything I have done," defendant Neil Lawrence Gross, 47, of Livingston, told a disbelieving Superior Court Judge Stephen Taylor in Morristown. "I have daughters and actually everything I do, I do for them."
  
  ***
  Gross pleaded guilty in December to three charges: unauthorized practice of law, writing bad checks and theft of $123,495 from a female client's estate that was siphoned between Oct. 21, 2013 and Oct. 21, 2014 by Gross issuing 30 checks to himself off the client's funds held in his attorney trust account.
  
  The judge had actually postponed sentencing Gross a few times to give him a chance to borrow restitution from relatives. His last attempt to borrow money from relatives in Florida over the past week was not successful. Restitution was vital to his case in that Morris County Assistant Prosecutor Michael Rappa had recommended that Gross be sentenced to 364 days in the Morris County jail if he made restitution but three years in state prison if he couldn't come up with the money.
  
  The judge Friday sentenced Gross to three years' prison and total restitution of $127,583. He will be eligible for parole after serving about nine months behind bars. The bulk of the restitution is due to the estate but he also owes Hudson City Savings Bank $3,366 for the bad checks he wrote, and $722 to the state Lawyers Fund for Client Protection.(1) While practicing law with a suspended license -- before his disbarment -- he had over-billed a "client" who was compensated by the lawyers fund.
  
  ***
  In the summer of 2015, the Prosecutor's Office received a referral of a theft from the New Jersey Lawyers' Fund for Client Protection. Through an investigation by the Prosecutor's Office's Financial Crimes Unit, Gross was found to have used the name of another attorney in a real estate closing that occurred in 2013, while he was suspended.

For more, see Ex-Flanders lawyer imprisoned for $127K in financial crimes.

See also, Disbarred attorney gets 3 years for stealing $123K from client:

• Gross, while suspended from practicing law, held $150,000 in a trust account as part of the closing on a property in 2013, but he didn't distribute those funds to the property seller. Instead, he diverted the funds to a personal account while forging the name of another attorney, Knapp has said.

See, generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession:

• This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.
  
  There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.
  
  This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression.

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

(1) The New Jersey Lawyers' Fund for Client Protection was established to reimburse clients who have suffered a loss due to dishonest conduct of a member of the New Jersey Bar.

For similar "attorney ripoff reimbursement funds" that attempt to clean up 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 a listing for Canadian client protection 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.

See generally:

• N.Y. fund for cheated clients wants thieving lawyers disbarred, a July, 2015 Associated Press story on this Fund reporting that the Fund's executive director, among other things, is calling for prompt referral to the local district attorney when the disciplinary committee has uncontested evidence of theft by a lawyer injuring a client or an admission of culpability;
  
  When Lawyers Steal the Escrow, a June, 2005 New York Times story describing some cases of client reimbursements ("With real estate business surging and down-payment amounts rising with home prices, the temptation for a lawyer to filch money from a bulging escrow account and later repay it with other clients' money has never been greater, said lawyers who monitor the thefts."),
  
  Thieving Lawyers Draining Client Security Funds, a December, 1991 New York Times story that gives some-real life examples of how client security funds deal with claims and the pressures the administrators of those funds may feel when left insufficiently financed as a result of the misconduct of a handful of lawyer/scoundrels.

NJ Supremes Banish Another Stick-Fingered Attorney From Profession For Improperly Glomming Clients' Cash From Real Estate Escrow Account, Then Lying About It To Disciplinary Investigators

Law360 reports:

• A New Jersey real estate attorney had his license revoked [] for knowingly misappropriating his clients’ funds from an escrow account and then lying about it to disciplinary investigators, according to the state’s Supreme Court.(1)
  
  The Supreme Court’s Disciplinary Review Board disbarred Roger J. Weil for misappropriating client funds, failing to deliver funds to clients, knowingly making false statements, and fraud, according to a [recent] order.

Source: NJ Real Estate Atty Misued Client Funds, Panel Says.

For the decision of the New Jersey Supreme Court Disciplinary Review Board, see In re: Roger J. Weil.

See, generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession:

• This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.
  
  There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.
  
  This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression.

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

(1) The New Jersey Lawyers' Fund for Client Protection was established to reimburse clients who have suffered a loss due to dishonest conduct of a member of the New Jersey Bar.

For similar "attorney ripoff reimbursement funds" that attempt to clean up 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 a listing for Canadian client protection 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.

See generally:

• N.Y. fund for cheated clients wants thieving lawyers disbarred, a July, 2015 Associated Press story on this Fund reporting that the Fund's executive director, among other things, is calling for prompt referral to the local district attorney when the disciplinary committee has uncontested evidence of theft by a lawyer injuring a client or an admission of culpability;
  
  When Lawyers Steal the Escrow, a June, 2005 New York Times story describing some cases of client reimbursements ("With real estate business surging and down-payment amounts rising with home prices, the temptation for a lawyer to filch money from a bulging escrow account and later repay it with other clients' money has never been greater, said lawyers who monitor the thefts."),
  
  Thieving Lawyers Draining Client Security Funds, a December, 1991 New York Times story that gives some-real life examples of how client security funds deal with claims and the pressures the administrators of those funds may feel when left insufficiently financed as a result of the misconduct of a handful of lawyer/scoundrels.

Another Attorney Gets Bagged For Allegedly Misappropriating $200K Of Clients' Cash; Cops: As Soon As Suspect Found Out He Was Under Investigation, He Made Good On Allegedly Pilfered Money To Three Of Four Victims

In Nassau County, Long Island, WCBS-TV Channel 2 reports:

• A prominent Long Island attorney is accused of misusing up to $200,000 in funds that were awarded to his clients.
  
  CBS2’s Jennifer McLogan reported Tuesday that 59-year-old Steven Morelli is accused of pocketing settlement money meant for his clients, as some of them were waiting for their payouts for more than a year.
  
  ***
  One client was reportedly shorted $50,000 from a nearly $70,000 settlement. Irman Rubbani, a limousine driver in Brooklyn, told CBS2 that he has not seen “one penny” of the $50,000 Morelli owes him.
  
  Rubbani said he has been trying for over a year to collect the funds, but that his calls, emails, and office visits have been ignored.
  
  “I tried to make appointment with him. I went to see him, he does not come on the phone, or he does not want to see me,” Rubbani told CBS2. “He ignored me.”
  
  Detectives claim Rubbani’s check was deposited in Morelli’s bank account and spent by the lawyer on personal items.
  
  Morelli lives in Manhasset and owns another home in Manhattan. His office is located in Garden City, across the street from police headquarters.
  
  Police told CBS2 that as soon as Morelli found out he was being investigated he made good on the money he owed to three of the four victims.
  
  Victims said Morelli told them it was an unintentional clerical error.
  
  Police said Morelli is charged with one count of second-degree grand larceny and three counts of third-degree larceny. Prosecutors say he faces up to 15 years behind bars.

Source: Prominent Long Island Lawyer Accused Of Pocketing $200,000 In Client Funds.

NYC Lawyer Cops Plea To Fleecing Dead Client's Estate Out Of Over $500K; Effectively 'Buys Out' Of Major Prison Time - Judge Indicates 90-Day Jail Sentence Forthcoming For Defendant Who Completed Return Of Stolen Loot, Plus Interest, Through Multiple Partial Payments Throughout 2015

From the Office of the Queens County, New York District Attorney:

• Queens District Attorney Richard A. Brown, [] announced that a Brooklyn lawyer pleaded guilty [] to grand larceny for stealing hundreds of thousands of dollars from the estate of a deceased Queens man between August 2008 and July 2013.
  
  District Attorney Brown said, “The defendant has pleaded guilty to having breached her fiduciary duties and violated the trust of the victim - the very person who retained her to help handle the estate of his deceased loved one. But instead of working on behalf of her client, the defendant stole from the estate to enrich herself. Under the terms of the defendant’s plea agreement, she has made full restitution, making the heirs of the estate whole again. In April, the defendant will be sentenced to jail time for her actions.”
  
  The District Attorney identified the defendant as Debra Ann Purcell-Regis, 56, of Syosset, Long Island. Purcell-Regis pleaded guilty yesterday to one count of second-degree grand larceny before Queens Supreme Court Justice Dorothy Chin-Brandt, who indicated she will sentence the defendant to 90 days in jail on April 26, 2016. Purcell-Regis was suspended from practicing law as of February 4, 2015.
  
  District AttorneyBrown said that, according to the criminal complaint, in 2008 Purcell-Regis was retained to oversee the estate of Joseph Filiano by the deceased man’s half brother, Thomas Massaro. A forensic analysis of the estate’s financial records revealed that the defendant removed more than $500,000 from the deceased man’s bank account and re-deposited the funds into two separate accounts held at Washington Mutual and Chase banks, both of which were in the defendant’s name. Over the span of five years, the defendant made numerous cash withdrawals and endorsed payments to others unrelated to the Filiano estate totaling $495,000.
  
  District Attorney Brown said, according to the charges, the defendant used funds from the Filiano estate for her own personal gain - including making tuition payments to a private Quaker school in Long Island.
  
  Throughout 2015, starting in January with a $200,000 payment, the defendant has been returning the funds stolen to the Filiano estate. Purcell-Regis’ last payment, marking full restitution in addition to interest, was in November 2015.

Source: Brooklyn Lawyer Pleads Guilty To Bilking Client Out Of More Than $500,000 (Makes Full Restitution; Faces Jail Time At Sentencing).

Alabama Woman 'Buys Out' Of Five Year Prison Sentence, Gets Probation For Abusing POA To Fleece $40K From Hospitalized, 68-Year Old Mom; 'Get Out Of Jail Free' Card Required $12K Cash Upfront & $250/Month In Restitution, Agreement To Give Back Title To Victim's Home

In Henry County, Alabama, the Dothan Eagle reports:

• An Abbeville woman received probation [] after she paid $12,000 in restitution toward the $40,000 total owed back to her 68-year-old mother, the victim in her exploitation of the elderly case.
  
  Assistant Henry County District Attorney Sam Clenney said 50-year-old Karen Elizabeth LaRoche received five years of probation from Circuit Court Judge Larry Anderson. The court had already issued LaRoche a five-year prison sentence for the felony financial exploitation of the elderly charge filed against by the Henry County Sheriff’s Office.
  
  Clenney said the court did not address the issue of probation until a significant portion of the restitution had been paid. He said LaRoche had already paid $4,000 toward the restitution, and she brought in another $8,000 on Thursday.
  
  Clenney said the court ordered LaRoche to pay $250 a month as part of her probation toward the remainder of the $40,000 owed to the victim in restitution.
  
  Henry County Sheriff’s investigators arrested LaRoche in October 2014 on the felony charge. Sheriff’s Investigator Sgt. Steve Sanders told the Dothan Eagle after he made the arrest that the victim in the case is the suspect’s 68-year-old mother, who had given power of attorney over to LaRoche after the victim was hospitalized.
  
  “She used power of attorney to steal her mother’s money,” Sanders said upon LaRoche’s arrest. “The daughter went and used her mother’s money to go on a shopping spree.”
  Sanders said the sheriff’s office was notified by other relatives after the victim started receiving credit card bills and collection notices for purchases she did not make.
  
  Court records show the charge involved LaRoche moving $30,697.50 out of the victim’s savings account for her personal benefit and obtaining and misusing credit cards for personal benefit.
  
  The charge also alleged the victim suffered a loss of medical benefits due to non-payment of premiums, the victim’s checking account regularly showing overdraft charges, and delinquent medical bills, including an assisted living balance which exceeded $11,000.
  
  LaRoche agreed to sign the deed to her mother’s home back to her in order for her mother to recommend probation to the court.
  
  Records show the offense occurred between Aug. 26, 2013 and May 28, 2014.

Source: Abbeville woman gets probation after $40,000 exploitation of elderly mother.

'Caregiving' Son Faces 4 To 15 Years On Charges That He Allegedly Neglected Elderly Father & Burned Through $138K Of His Money, Causing Victimized Dad To Get The Boot From Nursing Home; Suspect Allegedly Told Cops That He Has Never Been Good w/ Money, Putting Him In Charge Of Dad's Cash “Was Like Putting A Kid In A Candy Store”

In DeKalb County, Illinois, the Daily Chronicle reports:

• A Sycamore man accused of neglecting his elderly father and using money intended to pay for nursing-home care to buy a time-share in Mexico was released [] from the DeKalb County Jail.
  
  Police said Bruce E. Zekoff, 55, [...], Sycamore, caused his deceased father, 81-year-old Wilbur Zekoff, to be evicted from the DeKalb County Rehab & Nursing Center, then used his father’s bank account to buy a camper and a time-share in Mexico, court records show.
  
  Zekoff is charged with financial exploitation of the elderly and theft of more than $100,000, both of which are punishable by from four to 15 years in prison. He was released from jail after posting $1,000 bail [].
  
  Bruce Zekoff was a signatory on his father’s checking account to pay the bills, and was legally responsible for his father’s health care treatment.
  
  The father was sent to live with his son after being evicted from the nursing home in May for not making payments. Soon after, Elder Care Services found Bruce Zekoff had neglected his father by leaving him alone knowing he couldn’t care for himself, and never filled out the public aid forms that would have allowed his father to remain at the nursing home, court records show.
  
  Wilbur Zekoff died in July under the legal guardianship of his niece and nephew.
  
  Two years into his father’s stay at the nursing home, Bruce Zekoff said his father’s account had run out of money and he could not longer afford to pay the bills and rehab center fees, records show.
  
  Although Bruce Zekoff had paid the nursing home about $82,000 for his father’s care, he used more than $138,000 for himself, records show.
  
  Prosecutors allege that more than $57,000 alone was put toward Bruce Zekoff’s personal bills and the purchase of a new camper and a time-share property in Mexico.
  
  He told police he couldn’t remember how he spent the $82,000 he paid himself using his father’s checks, court records show.
  
  During an interview with DeKalb County Sheriff’s deputies, Zekoff said he has never been good with money, and that putting him in charge of his father’s funds “was like putting a kid in a candy store,” court records show.
  
  A future court date has not yet been scheduled.

For the story, see Police: Sycamore man stole money meant for father's nursing home care.

Loan Modification Scammer Who Ran Racket That Ripped Off Homeowners Facing Foreclosure Of Over $2 Million Gets Away Untouched By Any Criminal Charges, But Civil Judgment Requires Him To Give Back Pilfered Proceeds, Orders Him To Never Do It Again

From the Federal Trade Commission:

• Denny Lake, the final individual defendant in a mortgage modification scam aimed at financially strapped homeowners, will be banned from selling debt relief and mortgage-related products and services, and from telemarketing under a court order obtained by the Federal Trade Commission.
  
  The court’s order granting the FTC’s request for summary judgment against Lake on all counts resolves an FTC action brought in April 2015, when the court halted the HOPE Services and HAMP Services scheme that promised consumers help getting their mortgages modified, but instead stole their mortgage payments, leading some to foreclosure and bankruptcy.
  
  The court found that Lake, doing business as JD United, Advocacy Department, Advocacy Division, and Advocacy Agency, substantially assisted HOPE Services and HAMP Services, while knowing or consciously avoiding knowing the other defendants were violating the FTC’s Mortgage Assistance Relief Services Rule and its Telemarketing Sales Rule.
  
  ***
  In addition to the banned activities, the order [] prohibits Lake from making misrepresentations about any products or services, including financial products in particular, and from making unsubstantiated claims about any financial product unless they are non-misleading and based on reliable evidence. He also is barred from profiting from consumers’ personal information and failing to dispose of it properly.
  
  The order imposes a judgment of more than $2 million, which represents the amount of bogus mortgage payments consumers paid.

Source: Scammer Banned from Debt and Mortgage Relief Business, Telemarketing.

Indiana Real Estate Scam Victims To Get Limited Compensation For Losses From State Consumer Ripoff Reimbursement Fund

From the Office of the Indiana Attorney General:

• Indiana Attorney General Greg Zoeller announced [] that 29 victims of real estate scams and foreclosure-relief fraud are receiving payments from the state’s Consumer Protection Assistance Fund (CPAF).
  
  This week, March 6-12, is National Consumer Protection Week.
  
  Zoeller, whose office administers the fund, said these victims will receive more than $70,000 in total payments with each person receiving an amount equal to their loss up to the statutory cap of $3,000. Victims are from Elkhart, Hancock, Lake, LaPorte, Marion, Monroe, Scott and St. Joseph counties.
  
  “When lawsuits against scam artists end in default judgement, it is very difficult to recover victims’ losses,” Zoeller said. “The CPAF helps direct money my office does receive for violations of Indiana’s consumer protection laws, to assist victims who’ve been left in the lurch. Real estate and foreclosure scams can be particularly devastating because they often involve large amounts of money, and the victims tend to already be in a tough financial spot.”
  
  Zoeller said Hoosiers currently receiving relief are victims of several different scams targeting property owners. More than half of the CPAF recipients are victims of an Indianapolis-area real estate scheme perpetrated by TMJ Foundations, Inc., in which the company sold properties it did not own, leaving victims out thousands of dollars and no claim to the properties they thought they purchased.
  
  The AG’s Office filed a lawsuit against this company in June 2014 and subsequently received a default judgment, in which the company was ordered to pay victims $96K in restitution, but it never did.
  
  Now, Zoeller said, the 16 victims involved in this case will see some relief. The AG’s Office will continue to pursue recovery efforts in the TMJ Foundations case, which, if received, will be deposited into the CPAF.

Source: AG Zoeller: Indiana real estate, foreclosure fraud victims receive more than $70K from Consumer Protection Assistance Fund.

Another Alleged NYC Real Estate Hustler Gets Bagged By Manhattan DA, Accused Of Peddling Property He Neither Owned Nor Had Authority To Sell & Pocketing $250K In Downpayments

In New York City, DNAinfo New York reports:

• A phony real estate agent from The Bronx stole about $250,000 in down payments from four potential real estate investors in Harlem as part of an elaborate property scam, according to the Manhattan District Attorney's Office.
  
  Dan Stern, 51, opened Harlem Village Realty at 104-106 E. 126th St. between Oct. 1, 2014 and May 30, 2015, where he advertised several properties as being for sale without letting the actual owners know or getting their permission to do so, the DA's office said.
  
  Targeted properties included two churches and several buildings that needed serious repairs or were facing foreclosure, according to Manhattan District Attorney Cyrus Vance Jr's office.
  
  After a buyer expressed interest in one of the properties, Stern would have contracts prepared and take checks as down payment, occasionally posing as a real estate agent or attorney to investors, according to the DA's office.
  
  He then deposited their money in a bank account that was in another person's name, and when his victims called requesting their money back, he simply did not return the calls, Vance's office said.
  
  Stern still has not returned any of the money, which he used to cover personal expenses like membership to a country club and maintenance on luxury cars, according to the Manhattan DA's Office.

Source: Fake Bronx Real Estate Agent Stole $250K in Down Payments, DA Says.

For the Manhattan District Attorney press release, see Phony Real Estate Agent Charged with Stealing $250,000 in Down Payments Through Harlem Property Scam.

Sleazy NYC Real Estate Hustler Gets Pinched Again, Accused By Queens DA Of Ripping Off $13K In Tenant Deposits From Prospective Renters; After Arrest, Another Victim Comes Forward Claiming She Was Fleeced Out Of $7K+

In Astoria, Queens, WPIX-TV Channel 11 reports:

• Phivos Ioannou, a notorious real estate agent from Astoria First Realty in Queens, is in trouble with the law again.
  
  PIX11 has reported on him before. A few years ago he served federal prison time for identity theft and was stripped of his real estate license. But he continued hustling would-be renters after getting out of prison.
  
  Last May we reported on a young couple, Miguel and Erica, who put $5,000 down for rent and security after Phivos’ son, Dino, showed them a vacant apartment. But it turned out that many others had been shown the same apartment. Miguel and Erica did not get the apartment, or their deposit back. However, after they contacted PIX11, we confronted Phivos and Dino and the realtors agreed to return the $5,000.
  
  Recently, Phivos was arrested after allegedly ripping off a number of other renters from whom he took a combined $13,000 in fees for an apartment in a brand new building on Astoria Boulevard. Each of them was promised the apartment after they paid first and last month’s rent and a broker’s fee. However, none of them got the promised lease or their money back.
  
  As a result, the Queens district attorney investigated Ioannou and he was arraigned on three counts of grand larceny in the third degree and three counts of scheme to defraud in the first degree. Bail was set at $15,000.
  
  ***
  While that case moves along, another victim has recently come forward. Engeel Zeldon says she gave Phiovs Ioannou $7,200 in cash to rent an apartment on 40th Avenue in Astoria.
  
  Zeldon, the single mother of two children, paid $2,400 each for first and last month’s rent and $2,400 for the broker’s fee. Phivos told her the landlord was out of town in Las Vegas and when he returned a few days later, he would sign the lease and give her the key. But after those few days passed, and Phivos stopped answering the phone, Zeldon went to the office of Astoria First Realty and found it was closed down.
  
  The city marshall had evicted Ioannou for allegedly owing six months rent to the landlord.
  
  Ioannou texted Zeldon, promising to return her money in two days. He never did and she has now added her name to the list of victims on file with the Queens D.A. She and her two daughters are now living temporarily in the Ramada in Astoria, looking for another apartment, while Phivos Ioannou sits in a jail cell.

For the story, see Queens real estate agent accused of ripping off customers again.

Florida Appeals Court Bags Sleazy Loan Servicer For Double-Crossing Homeowner Seeking Loan Modification; Bank Collected $52K Upfront For Reworking Mortgage Terms, Then Welched On Deal, Pocketing The Cash & Foreclosing On Home

In Miami, Florida, the Daily Business Review reports:

• Homeowners who made a $52,000 catch-up payment to stop foreclosure under a mediated settlement agreement claim the lender took their money but double-crossed them on a loan modification deal.
  
  Gene Lentz, Maria Lentz and Gladys Marcos raised the allegation in their appeal to the Third District Court of Appeal, which ruled in their favor and ordered Monroe Circuit Senior Judge Sandra Taylor to enforce the settlement.
  
  They faced foreclosure in 2010 after reportedly defaulting on a Community Bank of Florida Inc. loan with a $337,328 balance. After the trial court ordered the case to mediation, the parties reached an agreement to modify the loan if the borrowers qualified.
  
  The new arrangement dropped the interest rate from 7.5 percent to 6 percent but increased the principal by $41,000 for the bank's legal fees and $4,100 for other expenses, according to court documents. The borrowers were required to pay all closing costs under a deal with a 40-year amortization and a balloon payment due after five years.
  
  It also required the homeowners to pay $52,000 within 72 hours of reaching the agreement to cover past-due payments on their original loan, court documents show. The bank was supposed to hold those funds in escrow and refund them if the borrowers didn't qualify for the loan. If the modification was approved, the parties were supposed to meet at Community Bank's Homestead office within 45 days to close the deal. The bank would then dismiss the foreclosure case with prejudice and inform credit reporting agencies of the modification.
  
  After the deadline passed, "the record indicates the bank did not prepare any documents associated with the new loan," District Judge Edwin Scales wrote in the decision issued March 9.
  
  Both sides blamed the other, with the bank claiming the homeowners failed to provide insurance documents, bank statements and other information needed to process their application.
  
  "Despite its not receiving complete information to qualify the borrowers, the bank did not return the $52,000," Scales wrote in the unanimous decision with Chief Judge Richard Suarez and Judge Frank Shepherd concurring.
  
  ***
  The bank [] removed the $52,000 from escrow, applied it to the old loan and successfully filed for foreclosure.
  
  The appellate panel found the trial court erred by not enforcing the settlement agreement, which would force Community Bank to return the catch-up payment or offer the modification. The court reversed summary judgment and remanded the case to the trial court to enforce the terms of the settlement.

For more, see Keys Homeowners Claim Double-Cross on Loan Modification; Court Agrees (may require paid subscription; if no subscription, try here, then click appropriate link for the story).

For the court ruling, see Lentz v. Community Bank of Florida, Inc., No. 3D14-726 (Fla. App. 3d DCA, March 9, 2016).

Statute Of Limitations 'Clock' Continues To Tick On Thousands Of Severely Delinquent NYS Home Mortgages Suffering From Broken Chains Of Ownership

In New York City, the New York Post reports:

• Financial firms that have clogged New York courts with questionable foreclosures may finally feel the effects where it hurts: their profits from troubled mortgage loans.
  
  Eight years after the housing bubble burst, foreclosures nationwide have finally declined to levels last seen before the crisis.
  
  But while pundits talk of “healing” the housing sector, the foreclosure crisis lingers in pockets of New York’s market. A big one: so-called severely delinquent loans, past due for an astonishing six years or more.
  
  New York state has as many as 35,300 severely delinquent loans, worth more than $13 billion, at risk of not being repaid, according to Black Knight Financial Services. The majority of these homes are on Long Island, and in Brooklyn and Queens. New Jersey has 22,000, and both states saw the totals jump more than 20 percent in January from the year-ago period.
  
  These foreclosure cases are so old that the plaintiff may have run out of time to collect on the debt. This issue wouldn’t have arisen without the bundling and resale of individual mortgage loans into securities during the housing boom.
  
  Rushing to profit, banks broke the chain of ownership, robo-signing documents. Even now, many homeowners cannot obtain accurate records of who owns their loan. The broken chain-of-title underlies many foreclosure case delays.
  
  The statute of limitations issue is now playing out in New York’s courts. Rose Marie Cantanno, a New York Legal Assistance Group attorney who has several such cases pending, notes how shocking it is that thousands of New York homeowners have lived in foreclosure limbo long enough for the statute of limitations to kick in. “When this was starting years ago, I said, ‘We’re never going to get to that point.’ ”
  
  Delays are so onerous that last year the Department of Financial Services recommended the Office of Court Administration investigate. A DFS spokesman said the issue “remains a priority.”
  
  Earlier this year, Kings County (Brooklyn) implemented a change to address the foreclosure backlog, turning over 12,000 foreclosure cases to the courtrooms of three judges who will focus on them, instead of being spread among more than two dozen jurists. “Resolution of foreclosure cases is a top priority,” said a spokesman for the Office of Court Administration. “That is one of the steps, and we’re anticipating that will work better, and if it does not, then we’ll modify that.”

Source: Clock begins to tick on those bad old mortgages.

Michigan AG Hits Foreclosure Rescue Operator w/ 35 Felony Charges For Allegedly Clipping Financially Distressed Homeowners w/ Phony Loan Modification Racket, Credit Card Debt Management Service

From the Office of the Michigan Attorney General:

• Michigan Attorney General Bill Schuette [] announced that his Homeowner Protection Unit has filed thirty-five felony charges against Pasquale Longordo, 39, of Birmingham, and his company Modify Loan Experts, LLC, for allegedly stealing money from Michigan residents who were facing mortgage foreclosures or needed help managing their credit card debt. Longordo also faces an additional three misdemeanor charges.
  
  "People who abuse the trust of their clients during a vulnerable time, for their own personal benefit, will be held accountable for their actions,” said Schuette. “I applaud the work of my Homeowner’s Protection Unit for the diligence of their investigation and hope that this case can bring some relief for his victims.”
  
  ***
  Longordo and Modify Loan Experts allegedly promised victims that they would have an attorney assigned to represent them and negotiate mortgage modifications on their behalf with mortgage companies. However, this did not happen and many victims lost their homes as a result.
  
  Additionally, Longordo, who also operated a credit card debt management service, allegedly told debt management victims he was putting their funds into an escrow account and that he would use the payments to negotiate their debt with credit card companies. In reality, Longordo put the victims’ funds into a regular bank account and allegedly used that account like his personal ATM.
  
  During this time, Longordo allegedly received unemployment compensation although he was ineligible, and he failed to file taxes for several of his companies.
  
  Foreclosure Rescue Scam Victim Restitution Fund
  
  In August 2013, Schuette announced the launch of a $7.5 million Foreclosure Rescue Scam Victim Restitution fund as a part of the Homeowner Protection Fund monies received by the State of Michigan to resolve the National Mortgage Settlement. This program is intended to provide restitution payments for victims of foreclosure scams who would otherwise never see a penny of court-ordered restitution.
  
  For more information on the mortgage settlement, including a consumer alert and a Frequently Asked Questions document available for download on the Attorney General’s website.
  
  In addition to operating Modify Loan Experts, Longordo operated under the company names Modify Debt Experts LLC, Experts LLC, Modify Credit Experts, and DLC Group.
  
  Citizens who believe they may have been victims of Pasquale Longordo and/or Modify Loan Experts or any of his other companies are encouraged to file complaints with the Attorney General's Office.

Source: Schuette Charges South East Michigan Man and his Company with Thirty-Five Felonies in Mortgage and Debt Management Scheme.

Disbarred For Looting Over $2 Million In Clients' Cash From Trust Account, Thieving Central Florida Ex-Lawyer Now Gets Tagged By Her Hubby For Allegedly Forging His Name On $900K Mortgage Secured By Marital Home, Which She Then Gave To One Of Her Ex-Law Client-Victims; Investigators Yet To Bring Criminal Charges As Probe Continues

In Sanford, Florida, the Orlando Sentinel reports:

• Disbarred attorney Julie Kronhaus has already been sued by several former clients, who say $1.5 million of their money disappeared. Now, she's being sued by her husband.
  
  But not for divorce. His lawsuit alleges a forgery in a real estate deal that he is asking a judge to cancel.
  
  Cardiologist Kenneth Kronhaus, 62, says someone forged his name on a mortgage and note last year, putting in jeopardy the $1 million, 6,500-square-foot home he shares with his wife in Alaqua, one of Seminole County's most prestigious neighborhoods.
  
  According to the lawsuit, filed Tuesday, he knew nothing about the $900,000 mortgage and note that gives an Oviedo couple a stake in the house until he saw the documents three weeks after they were signed.
  
  The notary's signature also is a forgery, he alleges. The notary public whose stamp appears at the bottom is Leigh Smith of Mount Dora, a Starbucks employee at the time.
  
  Smith gave a sworn statement two months after the date on the mortgage, saying she has never met Ken or Julie Kronhaus and, though she is a notary public, has never notarized any documents.
  
  Dr. Kronhaus did not respond to a Thursday phone call. Neither did his attorney, his wife or her attorney, August J. "Jay" Stanton Jr. of Winter Park.
  
  The suit also names Alan and Brenda Cook of Oviedo, who accuse Julie Kronhaus, their longtime attorney and trust manager, of stealing nearly $1 million from them.
  
  Last year, a Sanford judge awarded them more than $2.7 million in damages — triple what they say she stole — but they have been unable to collect.
  
  Dr. Kronhaus' suit does not name the suspected forger, it simply lists three defendants: Julie Kronhaus and the Cooks.
  
  His 51-year-old wife was permanently disbarred last year by the Florida Supreme Court, which accused her of misappropriating funds, misconduct, violating accounting standards and failing to shut down her law practice when she had been ordered to do so months earlier.
  
  The state also stripped her of her certified public accountancy license.
  
  At least eight former clients have accused her of misappropriating more than $2 million. Three of them have sued, claiming they lost more than $1.5 million. Judges have awarded the trio $4.9 million in damages.
  
  ***
  The mortgage: Signed Jan. 28, 2015
  
  The Cooks discovered their trust account had been emptied in 2014 and demanded repayment, according to public records.
  
  Julie Kronhaus wrote them a pair of checks, each totaling more than $220,000, but they bounced, according to records from the Florida Bar.
  
  She then gave them a $900,000 stake in the home she shares with her husband, a physician who owns Lake Cardiology in Mount Dora and has a radio call-in show.
  
  She did that on Jan. 28, 2015, by signing a mortgage and note that require the Kronhauses to pay the Cooks $900,000 by next year. If they don't, the Cooks could then foreclose on the house.
  
  The Cooks also were unavailable for comment Thursday, but in previous interviews with the Sentinel said that Kronhaus had been their attorney and trustee for 17 years when they discovered in 2014 that she had emptied their trust fund.
  
  "She had control of my checkbook, power of attorney, she had everything I needed because basically I trusted her," Alan Cook said Dec. 23.
  
  "I thought surely by now we'd have our money back or she would be arrested," he said. "It's sickening to work your life, to work hard, both Brenda and myself. ... All of the sudden you're wiped out in the blink of an eye."
  
  But one of the Cooks' attorneys, Helen von Dolteren-Fournie, who drafted the disputed paperwork, described the sequence of events on Jan 28, 2015: The Kronhauses were to sign the mortgage and note at their home in front of a witness and notary public, but Julie Kronhaus said her husband could not get away from work, so she took it, saying she'd drive to Lake County and have it signed, witnessed and notarized there.
  
  Later that day she delivered the signed, notarized records to a law firm runner for Von Dolteren-Fournie at the Panera in Heathrow, and Brenda Cook then took it to a Seminole County Clerk's of Courts office to have it recorded, Von Dolteren-Fournie said.
  
  The Cooks have been critical of federal investigators and State Attorney Phil Archer, accusing them of failing to arrest and prosecute an embezzler.
  
  Archer said Thursday that he had talked to them earlier in the week.
  
  "I feel so sorry for the Cooks. They're nice people, great people," he said. "They've been devastated by this loss. Someone deserves to go to prison."
  
  But he said until an ongoing investigation is concluded, he cannot prosecute.
  
  The Seminole County Sheriff's Office investigated for several months then turned the matter over to the FBI, according to former Kronhaus clients.
  
  An FBI spokesman would not comment, but William Daniels, a spokesman for the U.S. Attorney's Office in Tampa, on Thursday described the case as "ongoing."
  
  Archer said that earlier this week he spoke to an assistant U.S. attorney, who said they "hoped the investigation was nearing its end."

For the story, see Husband of disbarred attorney sues her, alleging fraud, forgery.

For an earlier post on this disbarred attorney, see Florida Bar's Client Security Fund Faces Potentially Heavy Payouts Attributable To Sticky-Fingered, Now-Disbarred Lowlife Lawyer.

Despite Not Owing Any Money, Innocent Wife Loses Her Share Of Co-Owned Marital Home Over Hubby's $1+ Million Unpaid Corporate Federal Tax Lien; Court: As Long As She's Compensated For Her Share As Required By Statute, She's Outta Luck

From a recent Justia US Law Opinion Summary:

• Ronald Davis, the owner of a corporation, was liable for over $1 million in unpaid federal employment taxes and penalties.
  
  After demands for payment went unanswered, the government filed suit against Ronald to reduce its tax assessments to judgment and sought to enforce its tax liens through the sale of the primary residence of Ronald and his wife, Diane.
  
  The government named Diane, who did not owe any unpaid taxes, as a defendant in the action because she had an interest in the properties. The district court issued an order of sale authorizing the sale of the primary residence. Diane appealed, arguing (1) the district court should have allowed the government to sell only Ronald’s interest in the property; and (2) the order of sale violated 26 U.S.C. 7403 and the Fifth Amendment’s Just Compensation Clause.
  
  The Sixth Circuit affirmed the district court’s order of sale, holding (1) the district court did not err when it declined to limit the government to the sale of Ronald’s interest in the property; and (2) the order of sale did not violate section 7403 or the Just Compensation Clause.(1)

Source: Opinion Summary - United States v. Davis.

For the court ruling see United States v. Davis, No. 15-1696 (6th Cir. March 9, 2016).

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

(1) According to the court:

• [S]o long as third-party interest holders are compensated as required by the statute, there is no Takings–Clause problem. United States v. Barczyk, 434 F. App’x 488, 491 n.1 (6th Cir. 2011). Without any other relevant support for her argument, Diane Davis cannot establish that the district court’s order violates the Fifth Amendment’s Just Compensation Clause.

Court Leaves Unwitting Mom, Aunt Holding The Bag For Now-Deceased Son's Use Of Forged POA To Mortgage $246K Out From Under Aunt's Home; Judge: Despite Having No Knowledge Of Fraud, Sisters Were Both Willfully Blind Of Troubled Son's Antics

In Vancouver, British Columbia, The Province reports:

• Two Vancouver sisters have been ordered to pay a total of more than $240,000 by a judge due to a mortgage fraud perpetrated by the son of one of the women who was later found dead in the trunk of a car.
  
  Court heard that in March 2009 Jason Lee used a fraudulent power of attorney in his aunt Sylvia Chan’s name to place a mortgage on the aunt’s Vancouver home.
  
  Lee arranged to have the net proceeds of the mortgage, about $246,000, deposited into Chan’s bank account and convinced her to allow all of the money to be paid to him the same day.
  
  He transferred $15,000 into an account belonging to Alice Lee, his mother, and used the rest of the money for himself.
  
  Immediately after the mortgage was registered and the funds advanced to Lee, the mortgage went into default, said B.C. Supreme Court Justice Elaine Adair.
  
  “In June 2010, Jason Lee was found dead in the trunk of a car,” said the judge in her ruling. “His hands had been bound and a plastic bag placed over his head, and a blood test revealed heroin in his body.”
  
  The judge added the circumstances of the death remain a mystery but there is evidence that as of 2009, Lee had been “mixed up with the wrong people,” who were after him for money and had made threats on his life to his mother.
  
  “While alive, Jason Lee was the source of much worry and heartache for his mother,” the judge said.
  
  The mortgage lender, Reliable Mortgages Investment Corp., sued the two women for damages on the grounds of fraud or conversion. The company also sued the notary who witnessed the power of attorney.
  
  In her ruling, the judge found that the two women, who have lived in Vancouver since the mid-1970s and have earned a modest income as housekeeping staff at a downtown hotel, had not committed fraud themselves.
  
  “Neither Ms. Chan nor Ms. Lee had any contact with, or knew anything about, Reliable prior to the loan being advanced. Neither Ms. Chan nor Ms. Lee created, or indeed had any knowledge, of the power of attorney that was used to obtain the loan proceeds. That was Jason Lee’s doing, and his alone.”
  
  But the two women were held responsible because they were both wilfully blind as to what Jason Lee was up to, said the judge.
  
  Chan accepted without question an “incredible, preposterous” story told to her by Jason Lee and should have been highly suspicious, she said.
  
  “Ms. Lee, knowing what she knew about her son, and what he had already done to her personally, also had no reasonable basis to believe anything Jason Lee told her or to trust anything he did as legitimate.”
  
  The judge held Chan liable for the sum of $246,000 and of that sum, Lee was liable for $15,000. The claim against Akash Sablok, the notary, was dismissed.

Source: Mom, aunt must pay $246,000 to Delta mortgage lender (Judge says sisters shouldn’t have trusted fraud perpetrator, later found dead in trunk of car).

Subsidized Rental Housing In NYC Not Limited To Poor As Some Sneaky, High Income Tenants Score Big By Paying Low Rents; State Auditors Stumble Into Discovery Of Million Dollar Earners In One Complex When Their Seven-Figure Incomes Couldn't Be Entered Into Computer Databases That Had Room For Only Six Figures

In New York City, the New York Post reports:

• While most New Yorkers scratch and scape to afford the city’s sky-high housing costs, a group of millionaires has found an underhanded way to take advantage of a major middle-income-apartment program and pay minuscule rents.
  
  A state audit found hundreds of tenants — one with an income of $1.4 million — living in the city’s Mitchell-Lama developments as of 2012, though the law says only people of middle-class means are ­eligible for such accommodation.
  
  These public-housing moneybags can pay rents reminiscent of the 1990s.
  
  At the subsidized Kings Bay II development in Sheepshead Bay, Brooklyn, for instance, one resident paid just $636 a month in rent even while making $801,377 in 2012.
  
  “For anybody to be making almost a million dollars a year and living here is just unfair,” said tenant Kareem Jabara, 45. “It’s a crime.”
  
  The audit by state Comptroller Tom DiNapoli found that there were 230 tenants pulling in $250,000 a year or more living in the city’s 97 subsidized Mitchell-Lama developments in 2012.
  
  The program was created in 1955 to provide housing for those whose income disqualified them for public housing but who struggled to pay market rents. It includes both rental apartments and low-cost co-ops.
  
  The annual pay of a few residents who met income caps when they moved in has over the years risen to $1 million-plus.
  
  At the sprawling Penn South co-op complex in Chelsea — where apartments are sold for as little as $109, 000 for a two-bedroom — one resident reported an income of $1.4 million in 2012. Another made $1.16 million.
  
  Under state law, the city Department of Housing Preservation and Development is supposed to tell well-to-do tenants to leave once their income exceeds 125 percent of the eligibility limit.
  
  But that almost never happens, the audit found.
  
  Instead, landlords just tack on surcharges of 5 to 50 percent — a steal for tenants in today’s market.
  
  The audit specifically reviewed five complexes: Big Six Towers in Queens, Confucius Plaza in Manhattan, Kings Bay II in Brooklyn, North Shore on Staten Island and Tracey Towers in The Bronx.
  
  The seven-figure earners at Penn South were discovered when their incomes couldn’t be entered into computer databases that had room for only six figures.
  
  Of the 191 sampled tenants, 59, or 30 percent, exceeded the eligibility limit by at least 25 percent, and many exceeded it by 50 percent or more. And there’s no telling how much some tenants really earn.
  
  HPD Commissioner Vicki Been emphasized that the number of tenants making more than $250,000 is “quite small.”
  
  There are 45,000 regulated apartments under the Mitchell-Lama program.
  
  “The city’s Mitchell-Lama portfolio provides stable, affordable apartments to more than 100,000 New Yorkers, the vast majority of whom are low-income,” Been said.

Source: Millionaires are shacking up in subsidized apartments: audit.

San Francisco Landlord Invokes State Law In Mass Eviction Campaign To Remove All Tenants Out Of Their Rent Control-Protected Apartments In 84-Unit Building; Some Call Effort Largest Ellis Act Boot In City History

In San Francisco, California, the San Francisco Examiner reports:

• A group of artists and musicians living in an 84-unit building on Market Street are going toe-to-toe with their landlord after being handed notices of what they say is the largest Ellis Act eviction in San Francisco history(1) for their live-work units late last month.
  
  The tenants gathered in front of their 1049 Market St. building on Tuesday with the support of local housing rights organizations, saying they refuse to leave without a fight. Some of the tenants said they have lived in the seven-floor building for more than a decade.
  
  Tenants at 1049 Market St. were handed the eviction notices Feb. 23, according to Steve Collier, an attorney who has worked for the for the Tenderloin Housing Clinic(2) for 28 years. The Ellis Act allows landlords to evict tenants if they decide to take the property off the rental market.
  
  The eviction comes in the midst of a citywide housing crisis and after a three-year tug-of-war between the tenants and the landlord in what residents call an effort to convert the residential units into office spaces.
  
  Legal counsel representing the building’s landlord, John Gall, however, maintained in a statement to the San Francisco Examiner on Tuesday that the building has always been commercially zoned, making it “improper” for the tenants to continue living there.
  
  “This is really a blow to The City’s efforts in maintaining rent-controlled housing,” Tommi Avicolli Mecca, an organizer with the Housing Rights Committee, said of the Ellis Act eviction notices. “We are looking at the heart of San Francisco and the heart of San Francisco is being pushed out. They have no place to go.”

For more, see Residents protest Ellis Act evictions of mid-Market building.

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

(1) The Ellis Act is a California which state law says that landlords have the unconditional right to evict tenants to “go out of business.” For an Ellis eviction, the landlord must remove all of the units in the building from the rental market, i.e., the landlord must evict all the tenants and cannot single out one tenant (for example, with low rent) and/or remove just one unit out of several from the rental market. Ellis Act evictions generally are used to change the use of the building.

(2) The Tenderloin Housing Clinic operates San Francisco's largest permanent housing program for single homeless adults and is a leading provider of legal services to low-income tenants with over 250 full time employees.

Expiring Section 8, State Subsidy Contracts w/ Landlords, Skyrocketing Rents Leave Over 16,000 Low-Income Families Receiving Rental Assistance Across Bay State In Fear Of Getting The Boot By 2018

In Boston, Massachusetts, NewBostonPost reports:

• For Holly Marcus, the fear of having to leave her North End neighborhood after nearly 40 years is beginning to feel real.
  
  Marcus was one of dozens of Massachusetts residents who showed up at the State House on Tuesday morning to testify for a proposal that would prevent landlords from acting on expiring federal restrictions that currently shelter subsidized apartments from the forces of supply and demand.
  
  “The city should be accessible for every income and not just for the wealthy,” Marcus told the NewBostonPost before Tuesday’s public hearing, held by the Joint Committee on Housing. “I’m 56 years old now, and the North End has been my home since I was 18.”
  
  Marcus’s sliver of the city, however, is just one of many Boston residences in high demand. According to a 2015 Northeastern University study, rents citywide have risen steadily since 2009 and now average $2,100 per month for a one-bedroom unit.
  
  Tuesday’s hearing saw emotional testimony from disabled and elderly residents and those living primarily on Social Security payments, like Joe Perry, a Marcus neighbor at Mercantile Wharf, an apartment building featuring 85 subsidized units.
  
  “I was lucky to get in there,” Walsh told the committee.
  
  ***
  “This is critical as more than 16,440 families across the state currently face the expiration of federal HUD and state subsidy contracts on their multifamily apartment buildings by 2018,” [Rep. Frank] Smizik (D-Brookline) said.
  
  Committee member and state Rep. Marjorie Decker (D-Cambridge) expressed concern over the statistics offered by Smizik and said that rents are “out of whack” in Cambridge. “If we don’t enact this piece of legislation, the question we’re going to have to ask ourselves is, ‘What are we doing to ensure that families don’t go into homelessness?” Decker said. “Once they’re homeless, the cost to the state is far greater.”

For more, see Housing protections needed, low-income residents say.

NYC Congresswoman Weighs In On Reports That Gentrifying Landlords Throughout City Are Gaming Section 8 System By Purposely Failing To Repair & Maintain Rent-Regulated Apartments In Effort To Intentionally Fail Building inspections, Compelling HUD To Yank Tenants' Housing Subsidies & Effectively Give Them The Boot

In Ridgewood, Queens, the Queens Chronicle reports:

• Two weeks after dozens of Ridgewood residents protested the alleged “predatory” practices of their landlord, Rep. Nydia Velazquez (D-Brooklyn, Manhattan, Queens) is getting involved.
  
  The tenants at 17-08 Summerfield St. have accused Silvershore Properties of purposely failing to maintain the residential units in an effort to fail building inspections and lose the Section 8 subsidy — which covers the difference between how much a tenant can afford to pay toward rent and the rent itself — it receives from the federal government.
  
  Once Washington cuts ties with Silvershore, the lawmaker said the residents would effectively be evicted, as they couldn’t afford to pay the full rent. This would allow the company to remodel the units and sell them at a much higher rate.
  
  In a letter to Silvershore owners Jason Silverstein and David Shorenstein dated March 3, Velazquez called on the men to explain their company’s practices.
  
  “These problems with apartment maintenance, building security and billing inaccuracies, as reported by your tenants, are unacceptable,” Velazquez wrote.

For more, see Velazquez to look into Ridgewood landlord.

See also, Congresswoman reaches out to ‘unscrupulous landlords’ on behalf of Ridgewood tenants:

• “We’ve heard reports throughout the city that some unscrupulous landlords are gaming the system to end Section 8 vouchers and essentially evict low-income New Yorkers from their housing,” Velázquez said. “These allegations must be taken seriously, which is why I am asking Silvershore Properties to explain how they intend to remedy these problems.”

Failing To Address Health & Safety Issues (Water Leaks, Mold, Rodent Infestation, etc.) Continues As Favored Tactic By Sleazy Landlords To Drive Out Below-Market Rate-Paying Tenants From Rent Regulated Apartments In Gentrifying NYC Neigborhoods

In Crown Heights, Brooklyn, Politico - New York reports (via The Real Deal - NYC):

• G-Way Management has been trying to push out long-term residents in a Crown Heights apartment building to capitalize off higher rents, dozens of protesters said [last week].
  
  “G-Way Management has been threatening [tenant’s] health and safety and engaging in tactics that border on criminal behavior,” said Public Advocate Letitia James, who stood with the protesters.
  
  Assemblyman Walter Mosley was also present at the demonstration outside the building at 410 Eastern Parkway.
  
  James and Mosley said they have been attempting to negotiate with G-Way Management for almost a year, and the management company has refused to meet with them.
  
  ***
  Around three dozen protesters from the Crown Heights Tenants Union and other local organizers gathered outside the building on a chilly Saturday afternoon. Bundled up in winter jackets, the protesters flanked James as she made remarks to the press. Some held signs saying, “G-Way Go Away,” and “G-Way Shame on You.”
  
  Many of the tenants present had lived in the building for decades in rent-stabilized apartments. They said G-Way refused to attend to mold and rodent infestation problems in their apartments, as well as not allowing tenants to renew their leases.
  
  “I have mold, I have holes, I have cracks, I have leaks, you name it all,” said tenant Janice Hector, who has lived in her apartment for 16 years. “I’m sick and tired of it.”
  
  Press was taken on a tour of some of apartments in the buildings where mold and holes were visible. In one apartment, trash was falling through a hole in the ceiling created by a rodent.
  
  Crown Heights has become a desirable market for real estate developers, with some of the Brooklyn’s fastest growing rents. Two high-rise towers are under construction across from 410 Eastern Parkway.
  
  The public advocate has recently made tenant harassment a front-burner issue. James recently put forward a bill at a City Council hearing to prevent landlords with multiple violations from receiving new building permits.
  
  ***
  New York’s Housing and Preservation Department has the power to fix issues in the apartments and charge the landlord for the repairs. Urban Homesteading Assistance Board member Celia Weaver said they had reached out to HPD multiple times but seen no action.

For more, see James and Crown Heights residents rally against alleged tenant harassment.

Housing Authority Audit Of Gov't-Subsidized Rental Homes Triggers Mass Eviction For 30 Central Florida Farmworker-Families Who Couldn't Provide Proof Of Citizenship/Legal Status

In Pasco County, Florida, the Tampa Bay Times reports:

• About 60 children, most of them American citizens, are being forced to move from a cluster of government-subsidized homes because their parents are undocumented immigrants and ineligible to live there.
  
  Thirty families, nearly half of those who live in Cypress Farms — a neighborhood of farm-labor housing funded by the U.S. Department of Agriculture — have been served seven-day notices to vacate their homes or be taken to court for eviction proceedings.
  
  ***
  Within the past few months, the Pasco County Housing Authority, which oversees Cypress Farms, conducted an audit of all the families living in the community [...]. Officials told every family in the development they'd have to come up with proof of citizenship or legal status — a birth certificate, green card or other applicable government paperwork — to continue living there. The 30 who couldn't received a notice to vacate.
  
  Nancy Wesoff, the executive director of the Housing Authority, hung the responsibility for the situation around the necks of the families who moved in under false pretenses.
  
  "Keep in mind, all these families signed forms," she said. "When you ask me how did this happen, families signed forms, signed federal documents, stating that they were eligible when they weren't."
  
  ***
  [Margarita] Romo, who runs the local advocacy group Farmworkers Self Help Inc., said she knew families needed to leave and encouraged them to do so to avoid more trouble. She sought to buy them more time than a week to move.
  
  The seven-day notice, though, is in line with Florida eviction statutes, said Tom DiFiore, an attorney with Bay Area Legal Services, which specializes in eviction law.
  
  "All we were asking for was some compassion and some time," Romo said. "I just want to make sure the children are remembered, because nobody is considering the children."
  
  Many of the kids, she said, will have to switch schools in the middle of testing season as their families move around.

For more, see 30 Pasco families told to vacate public housing complex.