New Jersey Landlord's Alleged Refusal To Accept Section 8 Housing Voucher To Cost Him $5K In Damages To Tenant To Resolve Allegation Of Unlawful Housing Discrimination

From the Office of the New Jesrey Attorney General:

• Acting Attorney General Robert Lougy and the Division on Civil Rights announced today that a Monmouth County landlord has agreed to pay a woman $5,000 to resolve allegations he refused to rent her an apartment once she indicated her intention to pay using federal Section 8 housing vouchers.
  
  In addition to paying Shakisha Wallace $500 per month for 10 months, attorney Scott Kelly and his company, 374 Sairs Avenue LLC, will be subject under a settlement agreement to monitoring by the Division for two years to ensure compliance with fair housing laws.
  
  Under the agreement, Kelly also must attend a Continuing Legal Education (CLE) class focused on the New Jersey Law Against Discrimination (LAD). The CLE course must include a module on fair housing laws that is approved by the Division.
  
  Going forward, Kelly and 374 Sairs Avenue, LLC also must keep a detailed record of all prospective tenants who complete applications for rental housing, including their names and contact information, the type of rental unit they sought, whether they were offered an opportunity to rent, and the reason for any applicant rejection.
  
  “This settlement represents a fair resolution to a troubling matter,” said Acting Attorney General Lougy. “The search for safe, affordable housing that meets all of one’s daily needs can be difficult enough without the added obstacle of unlawful discrimination. Hopefully, this case will serve as a message to other [New Jersey] landlords that it’s illegal to refuse public housing assistance vouchers, and that we will hold accountable any landlord who engages in such conduct.”
  
  “Landlords cannot reject otherwise qualified, hard working families who are looking for safe, clean housing and can pay their rent simply because they rely on rent subsidies to make ends meet,” said Division Director Craig T. Sashihara.
  
  “Under New Jersey law, that behavior is no different than rejecting a qualified tenant based solely on his or her race, sexual orientation or religion.”

For more, see Settlement Announced in Case of Landlord Accused of Denying Apartment to Woman Who Sought to Pay with Rental Assistance (Woman Responded to Long Branch Apartment Rental Advertised on Craigslist).

Go here for the initial charges, and here for the settlement agreement.

Blind Central New York Tenant Forced To Forfeit Long-Awaited For Housing Subsidy Voucher Because She Couldn't Find Anywhere To Use It After Being Rejected By Multiple Landlords Refusing To Accept Section 8 Renters

In Syracuse, New York, The Post-Standard reports:

• Monica Johnson is an ideal tenant by most standards. She's neat. She doesn't smoke. She has no pets. She's quiet and lives alone.
  
  Still, more than half of the dozens of landlords she called during a recent apartment hunt refused to rent to her. That's because Johnson was looking for a place that would accept her Section 8 housing voucher.
  
  Johnson was eventually forced to forfeit that federally funded voucher -- for which she'd waited three years -- because, after 120 days, she couldn't find anywhere to use it.
  
  'I'm not a bad tenant'
  
  Johnson is blind. She lost her sight at 29 after a diabetic attack that nearly killed her. It took her several years to regain the strength to walk. Today, at 43, she makes her living as a motivational speaker, preaching inspiration at corporate events and schools. She makes less than $23,000, making her eligible for federal housing assistance.
  
  Under New York State law, property owners can't legally discriminate against Johnson because she is blind. But they can refuse to rent to her based on the assistance she receives from the government.(1)
  
  "I need financial help, but I'm not a bad tenant or a messy tenant," Johnson said. "I'm not bringing fleas or bedbugs. I'm not lazy. You could eat off my floors."
  
  ***
  Johnson applied for Section 8 in 2012 and received approval for a voucher last summer. Prior to that, she had been living in a facility that cost $1,000 per month and was struggling to afford it.
  
  Section 8 vouchers are transferable financial aid tickets from the government that are redeemable for a portion of a recipient's rent. Once approved, a recipient has 60 days to find housing using the voucher. After 60 days, that person can apply for two 30-day extensions -- a total of 120 days to find housing.
  
  In order to receive the funding, Johnson first had to attend several classes that outlined the federal housing program's rules. For example, Section 8 doesn't allow tenants registered as sex offenders or those arrested for selling methamphetamine. The government can revoke vouchers from tenants arrested for criminal activity.
  
  Under the terms of the voucher, Johnson could spend up to $700 per month on rent and utilities. She would pay a portion of that and the federal government would cover the rest.
  
  Johnson said she called to inquire about more than 30 apartments. At least half told her they did not accept Section 8 vouchers. Many that did, she said, were located in areas where she, as a blind woman, didn't feel safe.
  
  "I need a secure building," she said. "If someone broke into my house I wouldn't even know it until I stepped on the broken glass."

For more, see Landlords refuse to rent to blind woman because she gets Section 8.

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(1) While there may be no statewide law in New York prohibiting housing discrimination based on a tenant's source of income (including public assistance, pensions, annuities and government rent subsidies such as Section 8), some municipalities in the state have passed local ordinances which do prohibit such discrimination.

See this August 4, 2008 New York Attorney General press release, Attorney General Stops Buffalo Apartment Complex Owner From Discriminating Against People Receiving Financial Housing Assistance (Undercover investigation reveals Section 8 recipients denied housing), which identifies New York City, Buffalo, Nassau County, Hamburg, and West Seneca as a few municipalities in New York State that have passed such laws.

Excessive Ongoing Repairs Force Shutdown Of 20-Story Montreal-Area, Jewish-Tradition Retirement Home, Leaves 171 Mostly English-Speaking, Kosher-Observant Canadian Seniors Facing The Boot; Dozens Fear Having Nowhere To Go

In Côte-St-Luc, Quebec, the Montreal Gazette reports:

• Anne Barbis pushed her walker slowly outside the Castel Royal seniors’ residence Friday morning, a look of anxiety crossing the 98-year-old’s face as she contemplated the prospect of being uprooted from her home within a year. A private attendant followed closely behind, making sure Barbis wouldn’t fall.
  
  “I’m shocked,” said Barbis, who moved into the 20-storey Côte-St-Luc building two years ago, thinking it would be her final place of residence.
  
  “I can’t believe it,” she added. “I haven’t got a clue where I’m going to move now.”
  
  On Tuesday, staff at the Castel Royal slipped notices under the doors of all the apartments informing the 171 residents — some of whom are in their 90s and Holocaust survivors — they will have to be relocated within the next 12 months because of plumbing and other problems in the building.
  
  Chartwell Retirement Residences, which runs the Castel Royal, announced it has hired a placement agency to find new homes for the tenants, and will pay the full cost of moving everyone. But Côte-St-Luc has run out of private assisted-living units for semi-autonomous seniors after the Manoir Montefiore closed last year.
  
  Most of those living in the Castel Royal are Jewish, eat kosher and want to stay in Côte-St-Luc.
  
  “This is a crisis in our seniors’ community, particularly our Jewish community, where the resources for anglo residences are dwindling,” said Bonnie Sandler, a geriatric consultant.
  
  After the Manoir Montefiore closed, its residents were relocated to Le Waldorf, an upscale assisted-living facility on Côte-St-Luc Rd. But that retirement home is now full, with a waiting list to get in. Although there are other retirement homes in the Montreal area, most don’t offer a kosher menu, as the Castel Royal did.
  
  “This is a very sad situation,” Sandler added. “Some of the residents will relocate to the West Island or move to be closer to their children in other cities like Toronto. But that still leaves about 100 residents who want to stay in Côte-St-Luc. Who is looking out for them?”
  
  Chartwell, which operates a chain of retirement homes across North America, acquired the Castel Royal about 10 years ago. Over the years, it has renovated the property, but in the past five months the building was hit with four floods. For two days last winter, there was no heating, prompting Chartwell to put up some of the residents at hotels.
  
  “We’ve had building issues here for many, many years,” said Marie-France Lemay, Chartwell’s vice-president of operational business services in Quebec. “We’ve had to invest more than $5 million over the past four years (in repairs and renovations), and we’ve just come to the decision that this building is not suited to be a retirement home.”
  
  ***
  The Castel Royal was charging about $3,000 a month per resident for accommodations, two meals a day, housekeeping and nursing supervision. Although the ground-floor synagogue was renovated recently, much of the brick and concrete exterior is in need of repair. Workers have spray-painted yellow circles around craters in the concrete pavement near the main entrance.

For the story, see Côte-St-Luc seniors anxious after being told Castel Royal residence will close.

Mobile Home Park Owner's Failure To Pay Bills Leads To Water Shutoff, Triggering Code Enforcement Boot For 11 Rent-Paying Families

In San Antonio, Texas, KSAT-TV Channel 2 reports:

• The city of San Antonio is offering to help residents of a mobile home park find a new place to live.
  
  The city said the owner of the Plaza Mobile Home Park Joseph Sandoval has repeatedly failed to pay his water bill forcing SAWS to shut off the water service to his tenants.
  
  "We pay our rent on time. We pay our water on time but for some (reason) like I paid my water last week on a Wednesday and my water was off Thursday," said tenant Matthew White.
  
  The director of the city's Development Services department Roderick Sanchez says Sandoval owes thousands of dollars and it must all be paid by May 27.
  
  "He still owes SAWS $3,000 at the end of the month where once again they may turn off the water. Where we come into it is if that trailer park the mobile home park does not have any water we're in a situation where we have to vacate it," Sanchez said.
  
  The city says nine of the 11 families at the mobile home park have agreed to accept the city's help in finding a new place to live.
  
  "We're just trying to find a decent place for them to live in their price range and probably some moving assistance as well," Sanchez said.
  
  It's an offer resident Matthew White said he could not pass up. "I've tried everything you can think of possible to stay here but it's not working out. If it ain't the water it's something," White said.
  
  Sanchez said code-compliance crews will be out at the mobile home park in the coming week to see if living condition are up to standards.

Source: City helps move residents from mobile home park without water (Joseph Sandolval, owner of Plaza Mobile Home Park, failed to pay bill, city says).

Regional Gang Task Force Collars Two Tenants In "Section 8 Raid" For Possible Perjury, Alleged Fraud To Score Gov't Rent Subsidy; Pair Accused Of Pocketing Federal Aid While Housing Felons, Gang Members, Drug Dealers

In Hemet, California, The Press Enterprise reports:

• A regional gang task force raided four Section 8 housing locations in and near Hemet where they made three arrests, investigators said.
  
  Task force officers and federal Housing and Urban Development agents served the search warrants Thursday, April 28, on Section 8 recipients suspected of receiving federal aid while housing violent felons, gang members or drug dealers.
  
  ***
  Two people were arrested for investigation of perjury and defrauding a public housing authority. One person was arrested on a felony parole warrant. Their names were not released.

Source: Section 8 housing raids net 3 arrests.

Surprise! Surprise! Recent Homebuyer With Renovations In Mind Spends $1.375 Million For 3-Bedroom Brooklyn Co-Op, Then Gets Bagged For Fines By Local Building Department When Host Of Previously-Existing Illegal Repairs, Re-Habs That Were Completed Without Proper Permits Comes To Light

In Brooklyn, New York, DNAInfo New York reports:

• Picture this: you've saved up for the renovations that'll finally make your home perfect. But as you're about to take a sledgehammer to some sheetrock, a host of previously-existing repairs and renovations that were done before you moved in come to light, and guess what: you're responsible for all the fines that come with the illegal work.
  
  That's what happened to a couple in Cobble Hill who after spending $1.375 million on a three-bedroom co-op in a pre-war limestone walk-up last summer, decided to upgrade the guest bathroom and add a shower to the master bedroom's half bath.
  
  The couple, who asked to withhold their last name to stay on good terms with their co-op board, anticipated it would be a relatively simple renovation, but when they went to file permits with the Department of Buildings, their troubles began.
  
  Previous renovations by past owners were done illegally, unbeknownst to the new owners. The prior work raised red flags for the DOB, resulting in a string of rejected permits and even a fine for the new owner.
  
  Applying for the permits, which should have taken several weeks, drew out over several months.
  
  “With the real estate market in New York the way it is, you don’t really have the time to look into an apartment’s history that way,” said Adam, one of the owners.
  
  After getting the OK from the board of his nine-unit building to do renovations, he hired an experienced architect for the roughly $300,000 job, along with a reputable contractor through the start-up Bolster, which aims to transform the renovation experience by guaranteeing projects never go over budget. The team also included a seasoned expeditor to help move along the permitting process through the DOB, and without whom, the process would have likely taken even longer.
  
  When permit application is submitted to the DOB, its plan examiners review the paperwork to ensure the projects conforms to construction codes and the city's zoning resolutions. If there are red flags, the owner must make revisions and resubmit the plans. Once a permit is granted, construction begins. When the work is completed, an inspector visits the site to sign off on the project.
  
  Adam was determined to follow this process to the letter, but was frustrated that the examiner kept unearthing new issues on each visit.
  
  “The system was difficult to navigate,” he said.
  
  Here’s what happened and tips to avoid such complications when doing a renovation.
  
  A new owner can be on the hook for illegal work that was previously done.
  
  The initial permits, filed in mid-October, were denied because there wasn’t enough clearance over the washer and dryer in the master bath, the examiner said.
  
  So Adam’s team fixed that. But during the next round, the DOB examiner then noticed the bathroom had a different flaw: its window led to a fire escape — which is a no-no for a point of egress, it turned out, and there were no permits on file to legalize that.
  
  The half-bath was added to all of the units when the building was converted from a rental to a co-op in 1983, Adam explained. To hunt for possible past permits, his team tried calling the plumber who did the work, but he had passed away more than a decade ago. The architect of that project was also nowhere to be found.
  
  Ultimately, they had to redesign the bathrooms so the fire escape wasn't in it and then returned to the DOB with new drawings.
  
  This time, the plan examiner noticed something unrelated to the bathroom was problematic: the entire layout, with the current configuration of bedrooms, was different from the layout the DOB had on record.
  
  Because of that, the examiner again rejected the bathroom application and fined the owner $5,000 to legalize the layout.
  
  The permits were finally approved in January.
  
  “You can’t necessarily count on having a consistent experience with every plan reviewer,” said Bolster's David Yum, the architect for the project, who’s worked in the city for more than 20 years.
  
  The plan reviewer for this project was a newbie, Yum noted.
  
  “He probably was overcompensating by being very detailed,” Yum said. “I think technically the comments were very valid, but it was sort of using the precision of a heart procedure for a tiny cut on the finger.”
  
  Before you buy, look at previous permits filed for your apartment.
  
  The layers of an apartment’s history can sometimes be hidden, even to professionals, and can be especially complicated in pre-war buildings that were renovated decades ago when they turned into co-ops, experts said.
  
  When purchasing old apartments in co-ops, be sure to ask when the apartment was last renovated and find out whether it was granted a permit, advised Fraser Patterson, Bolster’s CEO and founder.
  
  If work was done after 1993, the DOB’s website should list previously filed permits. If the work was done before then, ask the co-op board to provide you with hard copies of drawings and permits. If they don’t have the permits, you can order the original microfiche from the DOB, Paterson said.
  
  Have your lawyer look into previous alterations.
  
  Ensure your attorney does due diligence on previous alterations — and require an affidavit from the seller with recourse, Patterson suggested.
  
  “Usually when you buy a new property,” he noted, “the contract has a statement asking the seller to certify that they have only conducted legal renovations to the best of their knowledge.”
  
  He added: “Attorneys are very picky when someone doesn't make that statement and will raise a huge red flag.”
  
  Have an architect inspect the property.
  
  Yes, it may cost about $1,000 for a few hours of the architect’s time, but it’s important do a site visit to check if blatantly illegal conditions exist before beginning the renovation, Patterson said.
  
  Also have the architect, or a code consultant, review the permit history to see if a deeper dig might be merited, he advised.
  
  While it can be difficult to ascertain whether a property has illegal work, reviewing as much as possible should be part of the process before the design is in place, he suggested.
  
  “The price to pay an architect for a few hours is nothing compared to the problems and costs you may encounter legalizing an apartment during a renovation,” Patterson said.

For the story, see Avoid a Renovation Fiasco: Know Your Home's Permit History Before Starting.

Owner Of Event & Wedding Venue Loses Building To Foreclosure After Pocketing Thousand$ From Soon-To-Be-Married Couples, Leaving Them High & Dry

In Chattanooga, Tennessee, the Times Free Press reports:

• Lindsay Street Hall, a high-profile event and wedding venue in downtown Chattanooga, was sold to a new owner [] at a foreclosure auction on the courthouse steps because the former owner, who filed for bankruptcy in October, wasn't paying the mortgage — which means about 10 couples will be out thousands of dollars they already paid for weddings.
  
  "If I hadn't been there [at the auction], the building would have been padlocked," said Chattanooga businesswoman Tara Plumlee, who was the sole bidder for 901 Lindsay St., a former First Congregational Church that's on the National Register of Historic Places.
  
  Plumlee, who owns three other local event venues and a catering company, will rebrand the building as 901 Lindsay.
  
  She said she spent Tuesday contacting couples who had prepaid for weddings with Kenneth E. Crisp Sr., the owner of the now-defunct Lindsay Street Hall.
  
  "Some of them are out all of their money," she said, adding that some wedding parties are out $20,000.
  
  Plumlee said she can't do the upcoming weddings free of charge, but she's trying to work out something.
  
  "I've been working with every bride, every momma of the bride," she said. "We've been on the phone with everybody. We've cried together. There are parents that are hiding it from their children. We've been instructed not to tell certain brides."
  
  "This has been an incredible scandal, and I'm trying to do my darnedest," Plumlee said. "That's why I showed up on the courthouse steps — because I just wanted to do the right thing."
  
  'He assured us there weren't any issues'
  
  The Times Free Press contacted several couples who had prepaid for upcoming weddings at Lindsay Street Hall, but they declined to comment on advice of their attorneys or because they wanted to focus on their upcoming nuptials.
  
  Crisp's bankruptcy court filings show that in October eight couples prepaid an average of $3,500 for upcoming weddings. But Plumlee said that some couples paid more since then, as much as $20,000.
  
  "May is a big wedding month," she said. "Those people have already paid in full."
  
  One man, who had prepaid for a wedding but didn't want to be named, said Ken Crisp Sr. assured him not to worry about the May 3 foreclosure auction, because Crisp promised that he'd retain control of the venue.
  
  "He assured us there weren't any issues," the groom-to-be said. "We had already paid them a little more than $5,000."
  
  Crisp didn't return phone calls left at the telephone number he put on court documents filed in U.S. Bankruptcy court in the historic courthouse on 11th Street in downtown Chattanooga.

For more, see Families lose thousands after Chattanooga wedding venue goes bankrupt.

In a related story see Wedding insurance offers safety to help couples prevent disaster on their big day:

• "Our biggest claims are really venue-related," said Todd Shasha, a managing director at Traveler's, a publicly-traded insurance giant that has about 30,000 employees. "[Wedding] pictures never show up. Your florist does not deliver the flowers."
  
  Insurance typically covers the cost of lost deposits if a venue goes out of business. It also can pay to reconvene the wedding party to retake photos if the photographer doesn't show.
  
  Insurance can cover costs in the case of natural disasters, such as tornadoes, that make weddings impossible, and reimburse in the case of other wedding disruptors, such as the illness of a bride or groom or their military deployment.
  
  "Obviously, you never know when you're going to get deployed," Shasha said.
  
  Traveler's least-expensive policy is $160, Shasha said, and covers such things as $7,500 toward the venue and $1,500 toward the wedding photographer. Traveler's wedding insurance tops out at $1,025, which covers a $175,000 wedding. "The average cost of a wedding, I think it's around $30,000 today," Shasha said. "If you don't have the coverage, you're really putting it all at risk."
  
  Wedding insurance isn't a big product line for insurance companies, though Traveler's spokewsoman Sperry Mylott said its popularity is growing.
  
  There are no deductibles with Traveler's wedding insurance plans, so couples who buy one don't have to pay anything out of pocket.
  
  [Insurance agent Jim] Hartley said he's only sold two wedding insurance policies. "It's not popular in this area," Hartley said. "In Tennessee, [many] people go to the JP — justice of the peace."
  
  Cold feet is one thing that wedding insurance is not good for, he said. "If the bride backs out or the groom backs out — that's not covered," Hartley said.

New York Fund That Provides Reimbursement To Clients Who Were Fleeced By Dishonest Attorneys Hits Its All-Time Record For Annual Payout$; $12.3 Million In Coughed-Up Funds In 2015 More Than Doubled 2014 Payout$

The New York Law Journal reports:

• Reimbursements from a state-maintained fund to compensate the clients of dishonest attorneys reached a record $12.3 million in 2015, or more than double the amount paid out in 2014, the state Lawyers' Fund for Client Protection said.(1)
  
  The total reimbursement made to the clients of 51 lawyers was the highest in the fund's 33-year history. All the lawyers involved have been suspended, disbarred or are deceased, the fund said in its annual report for 2015.
  
  The fund's executive director, Timothy O'Sullivan, [...] credited the increase to the anomaly of claims from several high-volume compensation cases rather than the emergence of new abusive kinds of misconduct by lawyers.
  
  "I don't believe it's a trend of seeing our numbers of dishonest lawyers going through the roof," O'Sullivan said. "But for some reason, we got hit substantially [with claims] within this one year."
  
  Nearly two-thirds of total payouts in 2015 went to former clients of five attorneys: William Parente ($2.03 million in client reimbursements), Stephen Krawitz ($1.73 million), Donald B. Rosenberg ($1.44 million), Robert Fontanelli ($1.36 million) and Timothy Griffin ($1.05 million).
  
  While thefts from clients' real property escrow accounts remain the most common misconduct resulting in reimbursements from the fund, O'Sullivan said 2015 was atypical because three of the most abusive attorneys—Krawitz, Rosenberg and Fontanelli—stole money from proceeds of settlements that clients had won in litigation.
  
  The fund is composed of money accumulated by a $60 assessment on the $375 biennial registration fee on attorneys in New York state.

Source: Five Cases Drive Surge in Client Compensation (requires paid subscription; if no subscription, TRY HERE, then click the appropriate link for the story).

Go here for the 33-year 'hit parade' of New York lawyers whose dishonest conduct led to Fund payouts, & amounts awarded to their clients 1982-2015 (total payouts per attorney range from as little as $40 to over $4,000,000).

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.[...] The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.

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(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 New York bar acting as an attorney or a fiduciary.

Typical losses reimbursed by the Fund include the theft of escrow deposits in real property trans- actions, estate and trust assets, settlements in personal injury litigation, debt collection receipts, money embezzled in investment transactions within an attorney-client relationship and the practice of law, and unearned fees paid in advance to lawyers who falsely promise their legal services.

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.

Golden State's Head Auditor Rips California Bar For, Among Other Things, Screwing The Already-Screwed Victims Of Dishonest Lawyers By Stiffing Them Through Its Currently-Insolvent Client Protection Fund, Obscuring Fact That Payout Estimates Approach $19 Million While 2015 Year-End Cash Balance Sits At Only $2.2 Million; Victims Can Be Left Sucking Wind For Years Before Claims Are Paid

In Sacramento, California, the Courthouse News Service reports:

• The California State Bar lacks millions of dollars in funding to compensate victims of attorney misconduct, but pays some of its executives more than the governor, the state auditor said [last week].
  
  The state bar, which regulates the conduct of attorneys through its discipline system and administers the California bar exam, is supported primarily through annual member fees.
  
  It also receives revenue through recovery payments from dishonest attorneys who have caused the bar to reimburse their clients. But according to the audit, disbarred attorneys rarely pay the money they owe — leaving the agency to rely almost entirely on annual member fees to reimburse the victims of dishonest attorneys.
  
  The review, released by State Auditor Elaine Howle, said that the agency has not been upfront about its lack of money in its client security fund necessary to compensate all of the victims.(1)
  
  "Since 2010, estimated future payouts to consumers have far outstripped the amount of money in the client security fund available for payments. Because the state bar did not take sufficient action when it first identified this potential problem, it is currently unable to make timely reimbursements," the 68-page audit stated.
  
  At the end of 2015, the agency reported a backlog of 5,500 applications for payment and estimated that it would need to pay a total of $18.9 million related to those claims.(2)
  
  "Nonetheless, it had only $2.2 million available in its client security fund at the time. In other words, the fund's likely future payouts outstripped its assets by $16.7 million," the report stated.
  
  Victims can potentially wait four to five years before receiving any reimbursement, the audit said.
  
  "The state bar's long delays in paying claims harm the people who are waiting and who may be counting on these resources to meet basic needs," the report said.
  
  The audit also pointed out that the state bar's salaries are its largest and fastest-growing expense, with the agency's top 13 executives making more than Gov. Jerry Brown's salary of $182,791.
  
  The senior director of admissions' maximum annual salary is just over $208,000, while the maximum salary for state agencies' civil services executives with comparable responsibilities is just under $136,000.
  
  "If the state bar capped all executive staff salaries in positions below that of the operations officer at the highest level for comparable [executive assignment positions], it could save as much as $428,000 annually," the report said.
  
  The audit also highlighted problems with the agency's errors and lack of transparency when it comes to its financial reports, which limits "stakeholders' ability to understand the state bar's operations and the Legislature's ability to ensure the appropriateness of the state bar's fees," Howle said.
  
  Additionally, the bar has made some inappropriate financial decisions, the report said.

For more, see Calif. State Bar Blasted for Lack of Transparency.

See also, The Recorder: New State Bar Audit Finds Problems New and Old (may require paid subscription; if no subscription, GO HERE, then click the appropriate link for the story).

For the State Auditor's Report, see The State Bar of California: Its Lack of Transparency Has Undermined Its Communications With Decision Makers and Stakeholders.

Go here for Report Summary, and here for Fact Sheet.

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(1) The California State Bar's Client Security Fund is purportedly a public service of the California legal profession. The State Bar sponsored the creation of this fund to help protect consumers of legal services by alleviating losses resulting from the dishonest conduct of attorneys. The amount the fund may reimburse for theft committed by a California lawyer depends on when the loss occurred. A maximum of $50,000 is reimbursable if the loss occurred before January 1, 2009. A maximum of $100,000 is reimbursable if the loss occurred on or after January 1, 2009.

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

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

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

(2) The report states that the number of claim applications to the Client Security Fund program soared beginning around 2009, in large part because many Californians had become victims of loan modification schemes.

Recently-Unsealed Whistleblower Suit Alleges More Of The Same Against Sleazy Bankster; Ex-Employee Claims Mortgage Servicer Canned Him For Resisting Requests To Lie To Homeowner/Borrowers

In Portland, Oregon, The Oregonian reports:

• A Damascus man claims he was terminated by Wells Fargo & Co. in 2014 after he discovered the bank was repeatedly collecting on mortgage loans for which it did not have the proper documentation.
  
  When Duke Tran, 54, complained about the practice, he claims he was told to lie to customers. When he resisted, the bank fired him in November 2014, Tran said.
  
  In a whistleblower lawsuit unsealed [earlier this month], Tran claims Wells also defrauded the U.S. government. He argues the bank illegally collected hundreds of millions of dollars in federal foreclosure-prevention funding for loans the bank knew lacked proper documentation.
  
  ***
  Tran's wrenching transition from happy 10-year veteran at Wells Fargo to self-proclaimed whistleblower began in December 2013 when he fielded a call from a couple terrified they were going to get foreclosed out of their home. They were overdue on their second mortgage and Wells Fargo was demanding a balloon payment.
  
  Tran, who worked at the bank's Beaverton call center, checked and checked again. He claims he could find no trace of the couple's loan in the bank's computer system and he told the couple so.
  
  Tran says his bosses were not happy. Three months later, on April 21, 2014, Tran and the rest of his team received an email from a supervisor telling them that full disclosure was a bad idea.
  
  "Please remember when you come across a situation where we have a lost contract, deed, any type of document, really, but especially when It relates to securing a property, we are not to share that with the customer," reads the email, which Tran submitted into the court file.
  
  Tran was troubled. The first-generation Vietnamese-American and volunteer in the US Army Reserve considered it illegal and unethical for the bank to threaten foreclosure when it didn't have the mortgage contract in question.
  
  "The company told me to lie about that," he said in an interview. "I don't think that's right, for the customers, for the company or the entire country."
  
  Tran continued to question the policy. In response, he claims, his managers grew increasingly critical of his performance. On Nov. 24, 2014, Wells Fargo fired him.
  
  Last June, Tran filed the whistleblower suit alleging bank managers illegally retaliated against him. He filed the suit also on behalf of the federal government, alleging Wells Fargo violated the False Claims Act when it collected $1.4 billion in government foreclosure prevention funding.

For the story, see Whistleblower claims Wells Fargo misled borrowers, government.

Trump Names Ex-OneWest Bank Foreclosure King As Campaign Finance Chairman

From a recent blog post in The Slatest:

• Donald Trump has successfully run for the Republican presidential nomination as a friend of the common man. His speeches are about standing up for people who've been victimized by the recession, free trade agreements, and marauding hordes of Mexican rapists. His voters—relative to other Republicans, though not to Americans as a whole—skew working-class. He sometimes suggests that he wants to raise taxes on rich people.
  
  And yet. Trump's fortune is derived from having inherited millions of dollars and a real-estate company from his father. His own recent business history is one of fraudulently preying on regular people. His actual tax plan involves massive, hugenormous breaks for people in his income bracket.
  
  And now, the New Republic reports, he's named a national finance chairman who made a ton of money running a bank that, per TNR, repeatedly committed fraud in the course of foreclosing on struggling homeowners during the housing crisis. That individual is Steve Mnuchin, former chairman and primary owner of OneWest Bank.
  
  Here's a fact about that institution's business practices:
  

• Erica Johnson-Seck, a vice president of foreclosure and bankruptcy for OneWest, explained in a July 2009 deposition that she “robo-signed” 6,000 foreclosure-related documents per week, spending just 30 seconds on each sworn affidavit that attested to the veracity of all relevant information in the case. Johnson-Seck admitted to not reading the documents before signing them, to not knowing how the records were generated, and to not signing in the presence of a notary, all of which made the affidavits she signed false evidence in court.

• Here's another fun bit about OneWest's foreclosures on reverse mortgages, which are marketed to seniors:

• OneWest disclosed in its most recent annual report that it’s under investigation for this disproportionate share of “widow foreclosures” by HUD’s Inspector General. The victims include 103 year-old Myrtle Lewis of North Texas, who OneWest put into foreclosure after her insurance coverage lapsed; Karen Hunziker, who got a foreclosure notice from OneWest ten days after her husband passed away in 2014; and a host of others.

For the blog post, see Trump Names Foreclosure King as Finance Chairman, Is Not Actually a Populist.

See also, New Republic: Donald Trump’s Finance Chair Is the Anti-Populist From Hell (Steve Mnuchin specialized in fraudulent foreclosures during the heart of the Great Recession. Power to the people).

Predatory Land Contract/Contract For Deed Rackets Used By Private Equity Outfits To Peddle Dilapidated Foreclosed Money Pits To Unsophisticated Low-Income Homebuyers w/ Crappy Credit Now On Consumer Feds' Radar

The New York Times reports:

• A revival in seller-financed home sales aimed at people who cannot qualify for a mortgage has started to attract scrutiny from the nation’s top consumer watchdog.
  
  The Consumer Financial Protection Bureau recently assigned two enforcement lawyers to investigate the prevalence of seller-financed home transactions and determine whether the terms of some deals may violate federal truth in lending laws, said two people with direct knowledge of the matter but who were not authorized to speak publicly at the request of federal officials.
  
  The regulator’s interest in seller financing was prompted by discussions between members of the commission staff and one of its advisory boards, the people said. The advisory board began raising questions about seller-financed home transactions in the wake of reports on the subject, including a front-page article in The New York Times on abuses in a marketplace that targets lower-income buyers.
  
  Such contracts proliferated in recent years as banks retrenched from lending to low-income families and private investment firms like hedge funds stepped in to fill the void.
  
  Sam Gilford, a consumer bureau spokesman, confirmed that staff members had conversations with members of the consumer advisory board about seller financing, specifically a type of arrangement called a contract for deed or a land contract.
  
  “We want all consumers to be treated fairly, and we monitor the marketplace to stay apprised of emerging developments in consumer finance,” Mr. Gilford said in an emailed statement. “As part of that work, staff from our research, markets and regulations division have had conversations with members of our consumer advisory board about land contracts.” He declined to comment on whether the agency had assigned two enforcement lawyers.
  
  A contract for deed is a long-term, high-interest installment financing deal.
  
  Actual ownership, or title to a home, passes to the buyer from the seller only after the last payment is made. The contracts, which can run for as long as 40 years, have become widespread in the Midwest and the South, where there are a large number of homes that sell for less than $100,000.
  
  In the wake of the financial crisis, contracts for deed and other seller-financing arrangements have had a resurgence. The foreclosure crisis created a bountiful supply of cheap, often dilapidated, homes for investors to buy and left millions of people with damaged credit histories. Thousands of the homes that are now being sold to borrowers under contracts for deeds were ones that had been foreclosed on by Fannie Mae, one of two mortgage finance firms bailed out by the federal government.
  
  The Consumer Financial Protection Bureau may or may not look to bring any enforcement actions over contracts for deeds and it is only in the early stages of researching the financing model.
  
  The regulator, now nearly five years old, has been seeking to flex its muscles of late. Last week, the Consumer Financial Protection Bureau announced a new rule that would prohibit many financial companies from requiring customers to resolve disputes through mandatory arbitration. The agency is also said to be preparing a new set of regulations for payday loans — high-interest, short-term loans aimed at the same people as those who often enter contracts for deeds.
  
  Contracts for deeds and other seller financing transactions have been around for decades, often used by family members or friends to sell properties to one another. But the arrangements have had a history of being predatory and the terms have often benefited the seller at the expense of the buyer.
  
  Legal aid lawyers in 13 states say that the contracts are being aimed at black and Hispanic homebuyers, according to a national survey undertaken by the National Consumer Law Center. The center has begun to survey housing lawyers in states where these contracts are most commonly used, in part to help determine the effect of new institutional players in the market.
  
  Statistics on the number of homes sold through contracts for deeds are hard to come by because not every state requires contracts to be recorded with the county. It is also not uncommon for borrowers to walk away from homes without contesting a seller’s eviction proceeding in court.
  
  Often issues with homes that are sold through contracts for deeds emerge only once local municipalities bring cases against the sellers. Even then, the sellers sometimes do not show up to court and the code violations on their homes pile up.
  
  Heather K. Way, a professor of law at the University of Texas, said: “This segment of the homeownership market cries out for greater federal oversight. It’s a toxic mix out there of sellers looking to make a quick and easy buck on the shoulders of vulnerable, unsophisticated buyers.” She added, “Unlike bank-financed sales, with seller financing there is typically no outside third party involved in the sale.”
  
  Homes sold through a contract for deed often are put on the market “as is,” meaning buyers must spend a significant portion of their disposable incomes on repairs and renovations. When they do not — or cannot — problems result.
  
  Municipal officials across the United States have complained that out-of-state investors selling properties with a contract for deed often tend to do little maintenance on properties and fall behind on paying property taxes or water bills.
  
  “They do not take care of the code violations with these properties, which is why they are trying to pass them off to other people,” said Jill Steele, city attorney for Battle Creek, Mich.
  
  Ms. Steele said Battle Creek has had a number of code violation issues with Harbour Portfolio Advisors, a firm out of Dallas that is one of the larger national players in the contract for deed business.
  
  Harbour Portfolio bought more than 6,700 single-family homes following the financial crisis of 2008, most of them from Fannie Mae through bulk sales. In recent months, Harbour has sold more than 600 homes with existing contracts for deeds in place to other investment firms and individual investors.
  
  The Consumer Financial Protection Bureau is trying to determine how many other firms are selling homes nationally with a contract for deed already in place or are renting out homes with an option to buy, said the people with direct knowledge of the matter.
  
  Still, there are some in the housing market who think that contracts for deeds and seller-financing plans can help people with no credit get back on the housing ladder.
  
  Odell Barnes, a longtime buyer and seller of foreclosed homes who operates out of Gilbert, S.C., chafed at the idea of government regulation in the industry and emphasized that seller financing contracts were a way to make homeownership accessible to anyone.
  
  “Our government thinks all poor people are stupid,” Mr. Barnes said.

Source: ‘Contract for Deed’ Lending Gets Federal Scrutiny.

No Charges Yet In Year-Long Probe Into Phoenix-Area Land Contract/Contract For Deed Racket As Victim List Now Includes 25 Families; Unsophisticated, Non-English-Speaking Homebuyers Paid Downpayments & Monthly Payments To Seller But Lost Homes To Foreclosure Anyway Due To Seller's Non-Payment Of Undisclosed Liens

In Phoenix, Arizona, KNXV-TV Channel 15 reports:

• The wheels of justice are turning too slowly for families who say they were duped out of their homes by a Valley business.
  
  Now they're banding together hoping to push the case forward.
  
  When the Attorney General's Office started investigating Montecristo Properties nearly a year ago there were five listed victims.(1)
  
  Twenty five have now come forward hoping their collective stories will help make the case stronger.
  
  The victims say they bought new homes, made the mortgage payments, but received foreclosure notices because their money never made it to the bank.
  
  “You feel so violated when you have to get up and leave," said one victim named Ana.
  
  In some cases, the company didn't even own the homes it was selling but the victims didn’t know that.
  
  They all say the financial loss was crippling but the emotional toll is even greater. "I’ve lost a good part of my dreams, my hopes," said Ana.
  
  "We're all frustrated because Francisco is free while all of us have suffered tremendous damage," said Silvia Gallo, one of the original complainants referring to the company’s owner Francisco Aguirre.
  
  There still have been no arrests. The AG's office says it expects a case update soon.

Source: 25 victims listed in homeowner fraud investigation; group banding together to push case forward.

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

(1) See Valley homeowners say they're victims of fraud; AG's office investigating Montecristo Properties LLC:

• The Arizona Attorney General's Office is investigating Phoenix real estate company Montecristo Properties, LLC for selling people homes without telling them loans had been taken out against the properties.
  
  Court documents show Montecristo defaulted on those loans resulting in foreclosure notices for people who thought they had been paying off their homes.
  
  At least five people are listed in the investigation and the AG's office says there could be dozens more. Court documents also show all of the victims are Spanish speaking and many trusted company managers to translate the sale contracts.
  
  ***
  Aguirre does have a felony criminal record after a 2008 plea deal for sale of unregistered securities which came with a 2.5-year prison sentence.

Spotlight Continues To Burn On Predatory Land Contract/Contract For Deed Real Estate Rackets; Arrangements "Are To Housing What Payday Loans Are To Banking & Rent-A-Centers Are To Furniture!"

From The Washington Post's Wonkblog:

• Beryl Satter knew something like this was bound to happen. Or, rather, to happen again.
  
  The Rutgers historian wrote the book on an obscure form of predatory lending from the mid-20th century that victimized black home buyers when banks would not lend them mortgages.
  
  Her book, "Family Properties," came out in 2009,(1) on the heels of the housing crash. And as she traveled the country talking about it — about families defrauded from the homes they thought they owned, about sellers who promised home ownership but collected deposits and evictions instead — people kept approaching her.
  
  "Pretty much everywhere I go, people say 'I’ve been hearing about this,'" Satter says. "Contract" lending is making a comeback.
  
  In this model, buyers shut out from conventional lending are offered an alternative: They can make monthly payments on a home directly to the seller, instead of a bank, with the promise of receiving the deed only once the property is entirely paid off, 20 or 30 years down the road. In the meantime, they have few of the legal protections of a typical home buyer but all of the responsibilities of one. They don't build equity with time. They can be easily evicted. And if that happens, they lose all of their investment.
  
  ***
  What is particularly alarming about the trend, though, is that we've seen it before. In its earlier incarnation, it was an explicitly racist form of exploitation. And now it is victimizing the same groups again: mostly lower income and minority home buyers who can't access traditional credit.
  
  "There’s nothing new here in the slightest," Satter says. "This is just a continuation of the same old game. That’s what’s so disturbing."
  
  ***
  "When the banks close down, people still need to buy," Satter says. And so they find a way. Just as creative investors find a way to meet their demand. Land contracts are to housing what payday loans are to banking and Rent-A-Centers are to furniture. What people in need can't access through credit someone is always willing to provide — for a price.

For more, see Why a housing scheme founded in racism is making a resurgence today.

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

(1) See generally:

•  In Chicago, Real Estate and Race as a Volatile Mix,
• You Tube Video: Book TV: Beryl Satter "Family Properties" (describes the process known as "contract selling," where landlords in post-World War II Chicago would sell African-Americans overpriced homes and retain the homes title while charging exorbitant interest rates. Upon default of the loan the home's owners would be evicted and the process would start anew with another family.). contract for deed

Report: HUD Sales Of Delinquent FHA Mortgages Yields Big Payoffs For Sleazy Loan Servicers & Easy Profits For Private Equity Investors While Hastening The Boot For Struggling Homeowners

From a recent press release from the National Consumer Law Center:

• The U.S. Department of Housing and Urban Development’s (HUD’s) program for selling defaulted Federal Housing Administration (FHA) loans is the largest auctioning off of government-insured home mortgage loans in the nation’s history, yet the big winners are the large mortgage servicers who flout HUD rules while homeowners often unnecessarily lose their homes.
  
  To date, under the Distressed Asset Stability Program (DASP), HUD has sold over 105,000 FHA-insured home loans valued at $17 billion, primarily to private equity companies and hedge funds that bought the loans at big discounts.
  
  “HUD’s own data show that selling FHA mortgages through its Distressed Asset Stability Program does not help struggling homeowners and their communities in the long term,” said National Consumer Law Center attorney Geoff Walsh and author of Opportunity Denied: How HUD’s Note Sale Program Deprives Homeowners of the Basic Benefits of Their Government-Insured Loans.
  
  “HUD excludes homeowners from the loan sale process by not even notifying them before the sales. As a result of the sales, a homeowner loses valuable protections from foreclosure, protections that are available only when the loan is FHA-insured.
  
  Through DASP sales, HUD pays off the mortgage servicers who routinely flout the agency’s own rules, and then sells the loans at fire-sale prices to private speculators who reap profits while doing little to help vulnerable homeowners remain in their homes.”
  

For more, see Report: HUD’s Sales of FHA-Defaulted Mortgage Loans Benefit the Big Mortgage Servicers and Hedge Funds While Homeowners Lose.

Full report, charts and tables (including the 10 largest buyers of DASP note sales), and web only materials are available at: http://bit.ly/1WTd5sW

Sleazebag Accusations Finally Catch Up To Notorious NYC Bully Landlord; NY AG Belts Him w/ Contemporaneously-Filed Criminal Charges, Civil Lawsuit For Variety Of Allegations Related To Operation Of Over 140 Apartment Buildings

In New York City, the The New York Times reports:

• For decades, Steven Croman was a successful landlord in New York City. His companies bought up more than 140 Manhattan apartment buildings, often filled with rent-regulated tenants. And then, methodically, he pushed them to leave, buying them out of their leases for relatively modest sums or, if that didn’t work, harassing them until they left, tenants said. He was a regular on “worst landlords” lists. His tenants even created a website against him.
  
  Mr. Croman’s business came to embody in many ways how rent regulations have eroded in the city, putting housing out of reach for more and more New Yorkers. He was able to deregulate most of his rent-stabilized apartments within just a few years of buying the buildings, enabling him to reap much higher rents.
  
  On Monday morning, though, his fortunes took a different turn. Mr. Croman, 49, turned himself in around 7 a.m. at the First Precinct in Lower Manhattan. He was charged with 20 felonies, including grand larceny, criminal tax fraud, falsifying business records and a scheme to defraud, relating to accusations he inflated his rental income to secure more than $45 million in bank loans. He faces up to 25 years in prison. His mortgage broker, Barry Swartz, 53, was charged with 15 felonies.
  
  The New York State attorney general’s office, which investigated Mr. Croman for almost two years, also sued Mr. Croman on Monday, seeking to force him to give up his real-estate business and pay millions of dollars in restitution to tenants and penalties.
  
  ***
  In its lawsuit, the attorney general’s office accused Mr. Croman of harassing and coercing “countless working-class and low-income families out of their longtime homes.” Mr. Croman then turned those vacant rent-regulated apartments into lucrative market-rate units, often with shoddy and illegal construction that violated lead-safety laws and endangered tenants who remained in the buildings, court documents said. Mr. Croman’s companies are also accused of repeatedly ignoring violations and orders issued by the city’s buildings and health departments.
  
  The lawsuit also named Mr. Croman’s director of security, Anthony Falconite, a former New York City police officer accused of abusing his former position, and accused him of intimidating tenants into surrendering their apartments.
  
  Mr. Croman is accused of using a variety of methods to push out rent-controlled tenants. He was said to offer them buyouts, often no more than a few thousand dollars or a few months of free rent. Employees of Mr. Croman referred to tenants as “targets” and competed to push out the most, the lawsuit said. A property manager who persuaded a tenant to take a buyout was said to have earned a bonus of up to $10,000.
  
  Mr. Croman would walk through his office chanting, “buyouts, buyouts,” the lawsuit said. At one point, Mr. Falconite told a property manager through a text message that obtaining buyouts was a “team sport.” The lawsuit said the property manager, Christine Bermudez, then responded: “I know that!! Who’s our next target? We have to start lining them up!!!”
  
  If tenants did not leave voluntarily, Mr. Croman had other tactics, the lawsuit said. He turned their buildings into hazardous construction sites, failed to make repairs and failed to maintain services such as heat, electricity and hot water. His companies also repeatedly filed baseless lawsuits against tenants. In internal emails, company employees acknowledged that such suits would “aggravate” tenants or pressure them to accept buyouts, the lawsuit said.
  
  In some cases, Mr. Croman’s employees refused to acknowledge receiving tenants’ rent checks, and then his companies sued the tenants for unpaid rent.
  
  In all this, Mr. Croman had one person he relied on more than any other: Mr. Falconite, whom he described as his “secret weapon.” The attorney general’s office accused Mr. Falconite of lying to get into tenants’ apartments, of posing as a repairman, a building manager, a U.P.S. deliveryman, an inspector. He would do “building sweeps,” knocking on the door of every rent-regulated unit in a building. Once inside, Mr. Falconite would accuse tenants of illegally occupying the units, demand their identification and take their photographs without permission, the lawsuit said. Then he would stalk them, it said, confronting them at work and even following them out of state. The goal: to intimidate them into leaving.
  
  During a subpoena hearing, Mr. Falconite admitted that he used his credentials as an ex-officer to see confidential complaint logs at a police precinct, according to court documents. He then used that information to threaten a disabled tenant whose partner had died six months earlier.

For the rest of the story, see Regular on New York’s ‘Worst Landlords’ Lists Is Charged.

For more on this lowlife, see Inside the mega-parties ‘Madoff of landlords’ threw in the Hamptons (Sources familiar with the Cromans could barely contain their glee at Steven’s arrest on charges filed by state Attorney General Eric Schneiderman. “They are super-obnoxious. They have no class,” one source said. “They are very lavish people. They are not low-key. They brought it upon themselves.”).

For the New York Attorney General press release, see A.G. Schneiderman Announces 20 Felony Charges And Civil Suit Against Major New York City Landlord Steven Croman (Croman, Owner Of 140 Apartment Buildings Throughout Manhattan, Faces 20 Felony Counts, Including Grand Larceny, Criminal Tax Fraud, And Falsifying Business Records; Mortgage Broker Barry Swartz Also Charged; Cases Allege Croman Pushed Rent-Stabilized Tenants From Their Apartments And Obtained Loans Based On False Accountings Of Rent-Stabilized Tenants In His Buildings).

Go here for the Spanish version of the press release.

NY Governor On Recent Legal Action Against Sleazy NYC Landlord: "Criminal & Civil Wrongdoing That Harasses Rent Regulated Tenants Demands The Weight Of A Prosecutorial Solution!" Tackling Tenant Harassment In Housing Court Just Not Enough

New York Governor Andrew Cuomo weighs in on the contemporaneously-filed criminal charges and civil lawsuit recently filed against a notorious New York City landlord:

• “There was a time when tenant harassment by landlords and their agents was only tackled in housing court.
  
  For justice to be served and for tenants to be righteously protected, criminal and civil wrongdoing that harasses rent regulated tenants demands the weight of a prosecutorial solution. When allegations surface that landlords are stalking tenants to compel fraudulent buyouts, we need stronger remedies; this is it and I thank the Attorney General and his office for continuing to work closely with the Tenant Protection Unit to help safeguard the rights of more than one million rent regulated tenants.”

Source: A.G. Schneiderman Announces 20 Felony Charges And Civil Suit Against Major New York City Landlord Steven Croman.

'Page Six' Piles On After Notorious NYC Landlord Gets Busted; Schadenfreude Fills The Air As Mogul's Critics Can Barely Contain Their Glee

In New York City, the New York Post's Page Six gossip column reports:

• The “Bernie Madoff of landlords” has been living it up while running what authorities say is a $45 million mortgage-fraud scheme and using an ex-cop enforcer to scare his tenants out of their rent-stabilized apartments.
  
  Disgraced real-estate mogul Steven Croman, who was busted [last week], and his wife, Harriet, are infamous for throwing lavish, over-the-top parties at their Hamptons summer getaway — which sources said cost them nearly $700,000 in rent one season.
  
  ***
  The couple has a college-age son, Jake Croman, for whom there’s even a Web site — jakecroman.com — devoted to cataloging negative videos and news reports about the “world class d—-ebag,” including him caught in a profanity-laden video berating an Uber driver.
  
  Another Croman son celebrated his bar mitzvah under the giant blue whale model at the Museum of Natural History several years ago, sources said. The event featured a sumptuous feast, free-flowing booze and a performance by singer Ariana Grande, who was paid $500,000 to appear.
  
  Sources familiar with the Cromans could barely contain their glee at Steven’s arrest on charges filed by state Attorney General Eric Schneiderman.
  
  “They are super-obnoxious. They have no class,” one source said. “They are very lavish people. They are not low-key. They brought it upon themselves.”
  
  Another source said that Harriet was “keeping her cool” and Steven was downplaying the charges against him, which Schneiderman called “the most serious . . . brought against a bad landlord in anyone’s living memory,” while comparing him to Ponzi king Bernie Madoff.
  
  “She is acting like everything is fine. He is acting like he didn’t do anything wrong,” the source said.
  
  Croman, 49, was busted along with mortgage broker Barry Swartz, 53, on more than a dozen counts of grand larceny, scheme to defraud and other charges.
  
  Croman — whose real-estate portfolio includes 140 buildings — is accused of filing fraudulent paperwork that inflated his rental income so he could score bank loans.
  
  He also allegedly employed an NYPD ex-cop, Anthony Falconite, as his “secret weapon” to help strong-arm tenants out of rent-stabilized apartments so he could raise the rents.

Source: Inside the mega-parties ‘Madoff of landlords’ threw in the Hamptons.

Co-Op's Alleged Refusal To Allow Title To Apartment Unit To Be Held By Supplemental Needs Trust Created To Provide For Disabled Man's Care Lands HOA In HUD Hot Water Facing Housing Discrimination Charges

The U.S. Department of Housing & Urban Development recently announced:

• The U.S. Department of Housing and Urban Development (HUD) announced [] that it is charging a White Plains, New York, co-op with housing discrimination for refusing to grant an exception to its policies that would allow a person with disabilities to buy a unit there. HUD’s Office of Regional Counsel for New England, which has jurisdiction over the case, issued the Charge of Discrimination on April 26. Read the charge.
  
  ***
  The case came to HUD’s attention after a person with disabilities filed a complaint alleging that he was denied the opportunity to buy a unit at Thompkins Manor, a 155-unit cooperative in White Plains, New York, because of his disabilities.
  
  The man’s parents had created a supplemental needs irrevocable trust to provide for the man’s care. In August 2013, the man and his parents attempted to purchase a cooperative unit using the trust as the owner. According to the Charge, 505 Central Avenue Corp., which owns Thompkins Manor, rejected the application because the cooperative did not permit ownership by trust. The family allegedly asked the company to make an exception to its ownership rule as a reasonable accommodation, but it refused to do so.
  
  HUD’s charge will be heard by a United States Administrative Law Judge unless any party to the charge elects to have the case heard in federal district court. If an administrative law judge finds after a hearing that discrimination has occurred, he or she may award damages to the complainants for their loss as a result of the discrimination. The judge may also order injunctive relief and other equitable relief, as well as payment of attorney fees. In addition, the judge may impose civil penalties in order to vindicate the public interest. If the case is heard in federal court, the judge may also award punitive damages to the complainants.

Source: HUD Charges White Plains, New York, Co-Op With Housing Discrimination For Refusing To Sell Unit To Person With Disabilities.

Prescription Pooch's $36K Bite Out Of HOA Gets Federal Appeals Court OK; Emotionally Distressed Condo Owner Was Forced To Sell Home Of Close To 20 Years After HOA Wilfully Disregarded His Healthcare Providers' Documentation Showing That Companion Pet Would Help Him Manage Depression, Anxiety

A federal appeals court has recently affirmed an order of the Secretary of the Department of Housing & Urban Development ordering a condominium association to pay $20,000 in emotional distress damages to a now-former unit owner with disabilities, plus a $16,000 civil penalty to the government after finding that the association violated the Fair Housing Act when it refused to allow him to keep his emotional support dog, Bebo, thereby leaving him with no choice but to vacate the premises and unload his home of close to 20 years.

From a press release issued at the time the original order was issued by the HUD Secretary:

• The case came to HUD's attention when a resident of Castillo Condominiums filed a complaint alleging that the condominium's homeowner association discriminated against him when it denied his request to keep an emotional support animal in his unit, even though he presented documentation from his healthcare provider identifying his disability and his need for the animal.
  
  Pets were allowed when the resident initially bought his unit in 1995, but the condominium association had adopted a "no-pets" policy before the resident adopted his emotional support animal. As a result of being denied the right to have a support animal, the man experienced depression and anxiety and he was forced to sell the home he had lived in for almost 20 years.
  
  HUD's Order modifies a previous HUD Administrative Law Judge decision that ordered Castillo Condominium Association to pay only $3,000 in emotional distress damages and a $2,000 civil penalty. The HUD order ruled that a higher damages award and civil penalty are necessary in light of the seriousness of the violation and complainant's injuries.

For the recent appeals court ruling, see Castillo Condominium Ass'n v. Sec'y of HUD, No. 14-2139 (1st Cir. May 2, 2016).

For the HUD Secretary's order, see Sec'y of HUD v. Castillo Condominium Ass'n, et ano, HUD ALlI2-M-034-FH-9 (October 2, 2014).

Seattle Office Of Civil Rights Bags 23 Landlords In Recent Fair Housing Sting, Making Non-Criminal Allegations Of Housing Discrimination In Connection w/ Their Treatment Of Section 8 Tenants & Those With Disabilities

In Seattle, Washington, seattlepi.com reports:

• Seattle's Office of Civil Rights filed "director's charges" against 23 property owners after fair housing testing showed evidence of discrimination in three categories, the office said in a [] news release.
  
  Testers, who called or emailed posing as potential renters, found that nearly two-thirds of landlords gave different treatment based on disability or Section 8 status, with some landlords simply turning away or not responding to Section 8 applicants, the release said.
  
  "We have filed 23 charges where the differences in treatment were undeniable," said Patricia Lally, Director of the Seattle Office for Civil Rights, in the news release. "These test results are not isolated incidents – they demonstrate patterns of behavior that have profound impacts on people's lives."
  
  The charges don't amount to criminal violations, but could carry penalties, depending on the final findings by the city, said Elliott Bronstein, public information officer for the Office of Civil Rights.
  
  In 12 of 13 cases that were filed after 2014 testing, landlords agreed to settlements that included repaying the cost of tests -- $700 each -- and $1,000 to be used by the Office of Civil Rights for outreach, Bronstein said.
  
  Landlords and their employees also are likely to go through fair housing training and have to update internal policies to ensure they follow fair housing ordinances, he said.
  
  The latest round of testing looked at treatment of potential renters with regard to family and disability status and use of federal Section 8 vouchers.
  
  One manager advertised a rental for "professional tenants only," while others gave less information about rentals if the tester said they had children, the release said.
  
  For applicants with disabilities, some landlords hung up "repeatedly" when they received calls from the Washington State relay service (for people who have hearing or speaking impairments), or refused to allow service animals or waive pet fees, according to the release.
  
  "Housing discrimination is real in Seattle – not something that just happens in other places," said Seattle Mayor Ed Murray. "These test results tell us that we still have work to do to achieve fair housing in Seattle."
  
  The city contracted with the Northwest Fair Housing Alliance in Spokane to conduct a total of 97 tests.
  
  Of the 23 charges, 13 were for issues with treatment of Section 8 applicants, six for unequal treatment based on disability and two related to different treatment based on family status, the release said.
  
  The Office of Civil Rights has conducted the tests annually the last two years, paid for with $50,000 in city funding, according to the release. The office is responsible for enforcement of anti-discrimination ordinances in Seattle.

Source: City says 23 property owners broke fair housing laws (Fair housing test found rental owners discriminated across three categories, Office of Civil Rights says).

Non-Profit Fair Housing Agency Squeezes California City Out Of $299K, Forcing It To Tweak Rule Limiting Number Of Renters In Single Family Homes In Settlement Of Housing Discrimination Lawsuit

In Riverside County, California, The Press Enterprise reports:

• Riverside has tweaked a rule that limits the number of renters in single-family homes and agreed to pay $299,000 to settle a lawsuit by the Fair Housing Council of Riverside County.(1)
  
  The city has long had a cap of four renters per home in single-family zoned areas. In 2013, the Riverside City Council made a new rule requiring homeowners to get a permit to rent to more than two people.
  
  The permit rule was a response to complaints from residents near UC Riverside about landlords adding extra bedrooms to pack homes with students, who weren’t always courteous neighbors.
  
  Fair Housing officials challenged the permit rule and four-renter limit in court in 2014, arguing that the rules were discriminatory and led some renters to be forced from their homes, restricted owners’ ability to rent their properties and barred some people – including single mothers and minorities – from living in the city’s most desirable neighborhoods.
  
  Fair Housing program manager Monica Lopez referred questions on the settlement to attorney Christopher Brancart, who could not be reached for comment this week.
  
  In the settlement, approved in March, the city did not admit liability but agreed to pay $299,000 to Fair Housing and seven individuals. City officials also changed its rules so that a group of renters functioning as a “single housekeeping unit” would not need a permit or have to abide by the four-renter cap, Riverside Deputy City Attorney Rahman Gerrin said.
  
  The city’s municipal code describes a single housekeeping unit as a household in which all members can use common areas such as a kitchen and living room, members share expenses, chores and other responsibilities. If they are renters, all household members must have a single lease to be considered a single housekeeping unit.
  
  The change creates an exception to the four-renter limit for single-family homes, but Gerrin said the cap would likely still apply in many cases. If people are simply renting rooms in a house, they wouldn’t necessarily be considered a single unit, and college students who rent homes may sign separate leases because “who wants to be the one on the hook” if a roommate can’t make their rent payment, he said.
  
  Michael Beaumier, one of the suit’s plaintiffs, disagreed with Gerrin.
  
  “Every shared living situation I’ve ever been in was under one lease,” he said.
  
  Beaumier, who is months from earning his PhD in physics from UCR, joined the lawsuit after the city threatened him and his four roommates with fines for violating the four-renter cap. One roommate agreed to move out and the others negotiated a lower rent with the landlord, because they couldn’t afford to split five shares of rent four ways, he said.
  
  Beaumier said he and his roommates would qualify as a single housekeeping unit because they have one lease and share chores and bills. He got some money in the settlement, he said, but his “only interest in the case was to get the amendment” to the rules.
  
  Last summer, in response to residents’ complaints about crowded rental homes, the city created special zoning that sets a ratio for the square footage of bedrooms versus common living areas in single family homes. The goal was to discourage landlords from adding bedrooms by simply carving up living and dining rooms, which was one of the issues homeowners were complaining about when the city created the renter permits.

Source: City settles Fair Housing suit (Riverside will pay $299,000 to plaintiffs who alleged a renter limit, permit rules were discriminatory).

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(1) The Fair Housing Council of Riverside County, Inc. is a private, non-profit, HUD-approved advocacy organization that, among other things, promotes the enforcement of laws prohibiting unlawful housing practices and discrimination.

HUD, Non-Profit Fair Housing Advocacy Group Shake $22K Out Of California Property Management Company To Settle Disability Discrimination Charges That It Routinely Denied Housing, Reasonable Accommodations To Renters Needing Use Of An Assistance Animal

The U.S. Department of Housing & Urban Development recently announced:

• The U.S. Department of Housing and Urban Development (HUD) announced [] a $22,600 Conciliation Agreement between Housing Equality Law Project(1) and the owners and managers of a San Diego-based property management company, settling allegations that they discriminated against persons with disabilities who required the use of assistance animals. Read the agreement.
  
  ***
  The case came to HUD’s attention when Housing Equality Law Project (HELP), a non-profit fair housing advocacy organization based in South San Francisco, filed a complaint alleging that the owners and managers of HKT Cal, Inc., discriminated against persons with disabilities.
  
  The allegations were based on tests HELP conducted between July 2013 and April 2014, which allegedly showed that several apartment complexes managed by HKT Cal, Inc., in San Diego and Spring Valley, California routinely denied housing and reasonable accommodations to persons who required assistance animals.
  
  Under the terms of the agreement, HKT Cal will pay $22,600 to HELP to support the organization’s education and legal advocacy work on behalf of their clients. In addition, the company agreed to provide fair housing training for its agents.

Source: HUD Reaches Agreement With San Diego Property Owners, Managers Accused Of Discriminating Against Persons With Disabilities.

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(1) The Housing Equality Law Project is a private, non-profit fair housing advocacy group located in San Francisco, California that promotes the enforcement of anti-discrimination laws in housing.