Saturday, October 22, 2016

Gas Leak From Illegal Hookup Tapped Into Con Ed Supply Line Suspected Cause Of Explosion In Rented Bronx House Used As Indoor Pot Farm; Blast Kills FDNY Battalion Chief, Leaves 20 Others Injured; Two Tenants In Custody

In The Bronx, New York, DNAInfo reports:
  • A second suspect has been arrested in connection to the illegal marijuana grow house that exploded and killed an FDNY chief, sources told DNAinfo New York.

    Garivaldi Castillo, 32, of Washington Heights, is said to be a “controlling agent” of the second floor hydroponic pot farm inside 304 W. 234th St. that blew up [], killing Battalion Chief Michael Fahy, who was a father of three and a rising star in the fire department.

    Castillo was spotted going in and out of the building by undercover police who were probing allegations of a marijuana growing factory there days before it exploded, sources said.

    He was being held on marijuana possession charges tied to the pot farm, sources said.

    Julio Salcedo, 34, was arrested hours after the blast on an unrelated warrant for failing to show up in traffic court on a November 2014 arrest for driving without a license.

    Salcedo was seen fleeing the grow house when firefighters, police officers and Con Edison initially responded to a report of a heavy gas odor about an hour before the explosion.

    Salcedo is described as a low-level player in the operation, who apparently was paying the monthly rent in cash.

    But Castillo is believed to be a pivotal figure who literally had the keys to the various locks to the plastic-lined second-floor pot house, where police also discovered several 55 gallon fertilizer containers.

    Authorities believe the gas leak stemmed from an illegal hookup inside the building to avoid running up large Con Edison bills that would attract attention from the owner or the utility.
Source: Second Suspect Arrested in Blast That Killed FDNY Chief, Sources Say.

See, generally, Marijuana Labs Spawn Lethal Explosions Across the Country (An explosion that destroyed a New York City home and killed a firefighter has drawn attention to marijuana-making methods that are legal in many states — but can also be lethal).

From an earlier story:
  • [F]irefighters were checking a report of a gas leak — believed to be caused by a faulty illegal gas hookup for the pot house — at about 6:22 a.m. when they discovered the second-floor apartment was tightly locked, virtually sealed with plastic and there was a blue, 55-gallon drum filled with fertilizer on the landing and several more in the basement, sources said.

    They determined it was likely a hydroponic marijuana growing lab with propane tanks, sources said.

    Emergency responders and Con Ed workers shut off the building's main gas feeder line, evacuating the building and others nearby after finding the pot house and the gas odor.

    Emergency responders led by Fahy were outside when the building exploded, according to FDNY Commissioner Daniel Nigro.

    Investigators believe a large amount of the volatile gas inside the building had suddenly ignited.

    Several ESU officers, one a highly skilled emergency technician, tried to save Fahy. The 17-year veteran, whose father was also an FDNY battalion chief, was pronounced dead at New York-Presbyterian/The Allen Hospital, officials said.

    Nine firefighters, six police officers, three Con Edison workers and two civilians were also injured, Nigro said. They were not seriously injured.

    Investigators believe those behind the marijuana grow house illegally tapped into the gas line to avoid running up unusually large gas bills that would arouse suspicion. "It would have tipped off someone that there was something going on there," a source explained.

    The building's owner has another Tibbetts Avenue house, but apparently only rented out the building that blew up, according to sources.

    Officials were told no one lived in or stayed in the apartment, even though it was rented, sources said, adding that because the rent was paid on time, the owner had no incentive to check on his tenant.

Disbarred In May, Ex-Lawyer Finally Feels Pinch From Long Island DA For Allegedly Screwing Clients Out Of Over $1 Million In Exchange For Fake Paperwork Purporting To Be Short-Term Mortgage Loan Investments

In Suffolk County, New York, Newsday reports:
  • A disbarred real estate attorney from Lindenhurst faces grand larceny charges in the theft of more than $1 million from investors she duped in a mortgage scheme, prosecutors said [].

    Dawn Hughes, 45, of Artic Street, solicited cash investments from clients, “promising them their money would be used to fund short-term private mortgages,” Suffolk County District Attorney Thomas Spota said in a news release.

    “An investigation found that the defendant used names and property addresses from prior, legitimate real estate transactions to create fake mortgage documents to provide to her investors,” Spota said.

    Hughes, who was disbarred in May, embezzled the money for personal use, prosecutors said.

    “The total amount of the theft is over one million dollars,” Spota said.

Cops Cite Fear Of Losing Section 8 Housing Voucher As Effective Crime-Fighting Tool To Compel Rent-Subsidized Tenants To Boot Felonious Family Members; Tenant Advocate Gives Approach A Thumbs-Down

In Meriden, Connecticut, the Journal Record reports:
  • U.S. Housing and Urban Development and Housing Authority rules governing the use of Section 8 vouchers by tenants and their families can be a powerful tool in making neighborhoods safer, police said [recently].
    ***
    Enforcing laws that forbid violent criminal offenders in federally subsidized housing can force gang members and convicted felons out of certain neighborhoods. Sometimes the reality of losing housing is enough to force the Section 8 voucher-holding tenant to remove a convicted roommate, friend, family member or partner. In other cases, convicted felons will leave on their own, rather than see their families or children lose stable housing.

    “If they are violating their lease, Section 8 can move to a termination hearing,” Police Chief Jeffry Cossette told members of the public at a forum on public safety []. “They (felons) don’t care if they go to jail; they care if the Section 8 is lost to the family.”
    ***
    Section 8 fraud investigations are common to prevent felons from living in Section 8 homes and to make sure Section 8 tenants aren’t subleasing part of their home. Unreported roommates may have criminal backgrounds they want to hide. And if tenants are getting government assistance on rent, they aren’t allowed to get extra rent or utility help from a roommate.
    ***
    The MHA combs police arrest reports regularly and checks for names and addresses of tenants at housing authority properties and at Section 8 properties. If a tenant’s name is found on the police blotter, local police are called to testify about the event or produce an incident report. The authority also checks the addresses used by a suspect to see if people are living illegally in a unit. The authority may wait for the case to go through the courts or a guilty plea before taking action. Tenants have a right to appeal a termination and the MHA recognizes that police are wrong sometimes.
    ***
    Emely Morales Varona, a tenant representative on the Meriden Housing Authority Board of Commissioners, cautioned the police, the housing authority, and the city against using Section 8 termination as a threat against families in need.

    “I just don’t want it to become a free-for-all in micromanaging peoples lives, their privacy, ability to try to change family dynamics,” Varona said. [...] “Sometimes many are in abusive relationships at times and have no way to get out of them,” Morales Varona said. “Dealing with gang lifestyle endangers not only mothers, but children as well. Taking or threating to taking a voucher away sometimes just endangers a woman's life. The MHA and police department shouldn’t be pushing parents that are trying to change into not being part of their childrens lives.”
    ***
    Morales Varona wants to know what the police department is doing to assist a struggling parent who is trying to pull herself from a gang-associated relationship.

    “It is very difficult,” she said. “Most women do not make it out alive.”

Gov't Officials' Knowledge Of Lead Contamination At Site Of 40-Year Old East Chicago Public Housing Complex Dates Back Decades; Premises Currently Remains Under Evacuation Order Affecting Over 1,000 Last-To-Be Informed Residents (Including About 700 Kids)

In East Chicago, Indiana, the Post-Tribune reports:
  • When the mayor in this industrial town ordered the evacuation of a 40-year-old public-housing complex this summer because of severe lead contamination, many people wondered: How could the problem have been overlooked for so long?

    The complex, in a blighted corner of Indiana just across from Chicago, had been built on ground once occupied by a lead-products factory. Some yards had lead levels more than 70 times the federal safety standard.

    The abrupt order to remove more than 1,000 residents, including about 700 children, made headlines across the country.

    But it turns out the hazard wasn't — or shouldn't have been — a surprise to anyone in public office in East Chicago or responsible for the safety of the West Calumet Housing Complex.

    A review of public documents and news coverage dating back to the 1960s shows officials at half a dozen local, state and federal agencies were aware residents were living on and playing in lead-tainted soil, though some of the most alarming readings weren't widely known until recently.

    In 1985, the Indiana Department of Environmental Management found elevated lead levels in yards just east of the complex, according to department records. The same year, the Indiana Department of Health found high lead levels in blood samples of some residents' children. Even at low levels, exposure can cause nervous system damage and lowered IQs, according to experts.

    In 2008, an EPA memo described "an imminent and substantial endangerment to the public health, welfare and the environment."

    Instead of prompting urgent action, the situation in East Chicago instead became an example of how longstanding problems can linger indefinitely in some industrial hubs and how environmental cleanups are often grindingly slow, hamstrung by high costs and the fact that the companies responsible for the pollution have long since gone out of business.

    "It's mind-boggling. You have so many people who could have and should have done something," said state Sen. Lonnie Randolph, an East Chicago native who's represented the city since 2008. "The bottom line is somebody just didn't care."

    The history and local politics of East Chicago, a poor, largely black and Hispanic community of about 30,000, also played a role. People were unlikely to complain about factories that provided their livelihood, some here say, and the town's top public officials have often been corrupt.

    The housing authority director who chose the site in the late 1960s was indicted years later for taking kickbacks from the developer who built the project, records show. He pleaded guilty to conspiracy charges and agreed to testify against other defendants.

    Two of the last three mayors were convicted of corruption. The third, defeated in 2004 after serving more than 30 years, was cited in a malfeasance lawsuit against the city administration that resulted in a $108 million judgment.

    The city councilman for the project has been jailed since last fall on a murder charge.

    The evacuation order came in the wake of a highly publicized scandal in Flint, Michigan, where local and state officials were accused of making a lax response to lead contamination of the local water supply. Nine have been charged or taken plea deals after an attorney general's investigation.
    ***
    West Calumet residents, meanwhile, are struggling to find new places to live with the HUD vouchers they received, but tenants say some landlords won't rent to housing project residents.

    Shantel Allen, whose yard is one of the most contaminated, said she's been notified that her 2-year-old daughter's blood lead levels were six times beyond what the Centers for Disease Control considers concerning.

    Allen, who's married and has four other children, says the family's health problems — from ADHD to headaches — "make sense now."

    "I'm upset because we were the last to know," she said.

Housing Authority Warns Against Online Scams Peddling Section 8 Applications

In Rochester, New York, WHEC-TV Channel 10 reports:
  • The Rochester Housing Authority issued a warning [] about scam websites that are popping up on Google.

    According to the authority, residents who search for Section 8 on Google might accidentally click on an ad for a scam website that appears in the search listing. The sites charge for Section 8 applications and ask for personal information.

    The authority says residents should only use the official Rochester Housing Authority website [...].

Friday, October 21, 2016

Home Remodeling Contractor Gets Bagged For Violations Of Rules Regulating Repairs, Renovations Of Housing Built Before 1978; Outfit Slapped With $69K+ Fine For Work Performed On Two Older Homes

From the U.S. Environmental Protection Agency (Seattle, Washington):
  • The U.S. Environmental Protection Agency has fined a Portland, Oregon based remodeling firm, Hammer and Hand Inc., $69,398, for failing to comply with federal lead-based paint rules. EPA’s Lead Renovation, Repair and Painting Rule protects the public from lead-based paint health hazards during repair or remodeling activities in housing built before 1978.

    Hammer and Hand failed to follow lead-safe work practices while performing renovation work on two older homes in Portland last year.

    According to Ed Kowalski, Director of EPA Region 10's Office of Compliance and Enforcement, “Making sure that lead-based paint is properly removed and handled helps protect people's health during repairs or renovations in older homes, particularly where children live. This case shows that EPA is serious about making sure companies that break the law are held accountable when they ignore the rules and put public health at risk.”

    Hammer and Hand is a general contracting and remodeling firm with offices in Portland, Oregon and Seattle, Washington. In 2015, EPA inspectors found multiple violations during renovations the firm conducted at two older homes in Portland.

    Specifically, the firm failed to:
  • determine if lead-based paint was present;
  • perform on-the-job training on lead-safe work practices;
  • post warning signs about lead-based paint renovation works and hazards;
  • cover the ground with plastic sheeting to collect falling paint debris;
  • contain paint chips and waste to prevent release of lead-contaminated dust and debris; and
  • perform post-renovation cleaning.
  • The Lead Renovation, Repair and Painting Rule, which is a part of the Toxic Substances Control Act, is intended to ensure that owners and occupants of housing built before 1978 or any child-occupied facilities, receive information on lead-based paint hazards before renovations begin, and that workers performing renovations are properly trained, certified by EPA, and follow specific work practices to reduce the risk of lead-based paint exposure.

    Lead-based paint was banned in 1978 but still remains in many homes and apartments across the country. Lead dust hazards can occur when lead-based paint deteriorates or is disturbed during renovation and remodeling activities. Lead exposure can cause a range of health problems, from behavioral disorders and learning disabilities to seizures and death. Young children are at the greatest health risk because their bodies and nervous systems are still developing. A blood lead test is the only way to determine if a child has a high lead level. Parents who think their child has been in contact with lead dust or other sources of lead should contact their child's health care provider.

    Renovation firms that are certified under the Lead Renovation, Repair and Painting Rule are encouraged to display EPA’s “Lead-Safe” logo on worker’s uniforms, signs, websites and other material. Consumers can protect themselves by looking for the logo before hiring a renovation firm. Consumers can learn more about the Lead Renovation, Repair and Painting Rule and hiring a certified firm by calling the National Lead Information Center at 1-800-424-LEAD or visiting www.epa.gov/lead.

Lead Paint Cops Shake Sears Out Of $400K, Other Non-Monetary Concessions To Settle Lawsuit Alleging Various Violations Of Laws Regulating Renovations Of Pre-1978-Built Homes For Work Performed By Its Home Improvement Contractors Across The Country

From the U.S. Department of Justice (Washington, D.C.):
  • The Department of Justice and the U.S. Environmental Protection Agency (EPA) [] announced a settlement with Sears Home Improvement Products Inc. that resolves alleged violations of the federal Lead Renovation, Repair and Painting (RRP) Rule for work performed by Sears’ contractors during home renovation projects across the country.

    Under the settlement, Sears will implement a comprehensive, corporate-wide program to ensure that the contractors it hires to perform work are properly certified and follow required procedures to prevent exposure to lead dust from home renovation activities. Sears will also pay a $400,000 civil penalty.

    “This settlement will help prevent children and workers’ exposure to lead during home renovations in communities across the United States by ensuring that Sears’ contractors are fully aware of their obligations under lead safety regulations,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “Sears is required to implement system wide changes across the corporation which will provide additional protection for consumers and bring the company into compliance with the law.”

    “Today’s settlement will have a widespread impact across the home improvement industry, significantly reducing exposure to lead paint dust among children and vulnerable citizens,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “In order to contract with Sears, a worker must follow lead safe practices. Contractors will carry this certification to every job they do. EPA expects all renovation companies to ensure their contractors follow these critical laws that protect public health.”

    EPA discovered the alleged violations through a review of Sears’ records from projects performed by the company’s renovation contractors at numerous projects in cities across California and in Georgia, Minnesota, Nevada, New York and Wisconsin.

    The government also alleged that Sears failed to establish, retain, or provide compliance documentation showing that specific contractors had been certified by EPA, had been properly trained, had used lead-safe work practices, or had performed required post-renovation cleaning.

    Under the settlement, Sears will implement a company-wide program to ensure that the contractors it hires to perform work for its customers comply with the RRP Rule during renovations of any child-occupied facilities, such as day-care centers and pre-schools and any housing that was built before 1978. For these projects, Sears must contract with only EPA-certified and state-certified firms and renovators, ensure they maintain certification and ensure they use lead safe work practices checklists during renovations.

    Sears will also add a link on its website to EPA’s content on lead-safe work practices and use a company-wide system to actively track the RRP firm and renovator certifications of its contractors. In addition, Sears must suspend any contractor that is not operating in compliance with the RRP Rule, investigate all reports of potential noncompliance and ensure that any violations are corrected and reported to EPA.

    EPA reached a similar settlement with home improvement retailer Lowe’s Home Centers in 2014 requiring the company to implement a comprehensive, corporate-wide compliance program at its over 1,700 stores nationwide to ensure that the contractors it hires to perform work minimize lead dust from home renovation activities.

Federal Lead Paint Police Squeezes California-Based Real Estate Brokerage For Allegedly Failing To Comply With Disclosure Requirements When Selling Six Homes; Settlement To Cost It 20K In Penalties, $60K Commitment To Buy Equipment To Test Blood Levels In Kids

From the U.S. Environmental Protection Agency (San Francisco, California):
  • The U.S. Environmental Protection Agency announced a settlement with Carrington, a real estate services firm, for failing to properly disclose the potential presence of lead when selling six residential properties in Kern County.

    The company will pay a penalty of nearly $20,000 and spend about $60,000 to purchase equipment to test blood lead levels in children. At least 21 blood lead analyzers will be donated to non-profit community health clinics in Kern, San Bernardino, or Orange counties. The analyzers measure lead in blood samples and give results in as little as three minutes, allowing immediate follow-up by health care providers and parents.

    “Lead-based paint is one of the most common causes of lead poisoning in children," said Kathleen Johnson, Director of the Enforcement Division in EPA’s Pacific Southwest Region. “Early detection is critical, because the risks of long-lasting health problems increase with the levels of lead.”

    Carrington, headquartered in Anaheim, has real estate and mortgage service offices across the country. An EPA inspection found that between 2010 and 2012, Carrington failed to provide, or to document having provided, home buyers in Bakersfield and Ridgecrest with:
  • Information about the presence of lead-based paint in the home.
  • A 10-day period in which to conduct a lead-based paint inspection or risk assessment.
  • A sales contract that included a lead warning statement, a lead disclosure along with reports pertaining to lead-based paint, and confirmation that the seller had complied with all lead notification requirements.
  • These actions violated the federal Toxic Substances Control Act and the Real Estate Notification and Disclosure Rule. The rule requires landlords, property managers, real estate agents and others who sell or rent houses built before 1978, to provide lead hazard information, including the federal brochure, to buyers or tenants. Lead-based paint was banned for residential use in 1978, but EPA estimates that it is still present in more than 37 million older homes in the United States.
    ***
    Learn more about lead poisoning and how it can be prevented.

    Learn about the Real Estate Notification and Disclosure Rule.

    Notify EPA about violations of the Real Estate Notification and Disclosure Rule in California.
Source: U.S. EPA settles with Anaheim real estate firm for failure to disclose risks from lead-based paint (Company to provide community health clinics with blood lead testing equipment).

Bay State Landlord To Cough Up $100K ($35K Suspended) To Resolve Lawsuit Alleging Violation Of State Asbestos Abatement Rules During Renovation Of Four Rental Homes

From the Office of the Massachusetts Attorney General:
  • A landlord who owns and operates dozens of properties in New Bedford will pay $100,000 to settle allegations that he allowed contractors to perform illegal asbestos work on four properties he owned or operated in the city, Attorney General Maura Healey announced [].

    The consent judgment, [...], settles a lawsuit filed by the AG’s Office in October 2012 against Ronald Oliveira for improper asbestos work on four New Bedford homes he was renovating that risked exposing the public and his workers to the harmful effects of asbestos.

    The consent judgment requires Oliveira, individually and as a trustee of the Roso Investment Realty Trust, to hire a consultant to perform an audit of 20 properties selected by the AG’s Office and the Massachusetts Department of Environmental Protection (MassDEP) to determine whether all asbestos-containing materials onsite are being properly maintained. Oliveira also must ensure future asbestos work on his properties is conducted legally.
    ***
    “Most people have forgotten about the dangers of asbestos. So we find a lot of building owners who don’t know better or contractors who try to cut corners, and then put themselves, residents and employees at risk,” said Michael Flanagan, chief of safety and health programs for the Department of Labor Standards “DLS is pleased we were able to work with the Attorney General’s Office closely on this case, which highlights the importance of keeping people safe from the dangers of asbestos that still exist.”

    The complaint alleges that Oliveira contracted for or allowed asbestos work that risked the health and safety of the public and workers at four properties he owned or operated in New Bedford:
  • During the renovation of a triple-decker house on Merrill Street in September 2009, Oliveira’s contractors began cleaning and painting asbestos-containing shingles with a high-pressure power washer, covering themselves, their tools, their vehicles, and the possessions of the home’s residents with asbestos-containing dust and debris. The contractors were not wearing protective equipment.
  • In January 2011, Oliveira hired contractors to renovate a three-family house on Weld Street allegedly without informing them that the siding contained asbestos. Without wearing protective equipment, the contractors cut and broke asbestos siding and demolished a second floor front deck and left the debris in an open dumpster, putting local residents and passerby at risk of asbestos exposure.
  • In March and April 2011, Oliveira arranged for contractors to renovate the exterior of a three-family house on Harmony Street, which was covered in asbestos-containing siding. As a result, the contractors broke the siding and left the debris dry and exposed to the air in the yard around the house, putting the public and workers at risk of asbestos exposure.
  • In July 2013, Oliveira’s contractors broke asbestos-containing ceiling tiles in the basement of a house on Pleasant Street. The contractors allegedly put the public and workers at risk of asbestos exposure after leaving the debris exposed for approximately a month.
  • Of the $100,000 in civil penalties, $35,000 is suspended pending full compliance with the consent judgment.
For more, see New Bedford Landlord to Pay $100,000 to Settle Claims of Illegal Asbsetos Work (Settlement Requires Defendant to Conduct Audit of Properties and Remediate Any Damaged Asbestos).

'Demolition' Loophole In Lead Paint Rules That Regulate Home Renovations Begins To Cause Concern; State Official: “If You Disturb Six Square Feet, These Rules Apply. If You Knock The Whole House Down, Nothing”

In Portland, Oregon, The Portland Mercury reports:
  • IN A YEAR when environmental hazards have screamed across TV news broadcasts with surprising frequency, lead has had a starring role.
    ***
    As home demolitions reach historic levels in Portland, there are no safeguards against lead dust that can be stirred up when older homes are demolished.

    It’s an odd oversight. Federal rules dutifully require safety precautions if those same homes are renovated—rules designed to stop property owners and their neighbors from coming into contact with lead, a neurotoxin for which there is no known safe exposure level.

    But when the home is torn down? The lead can fly unchecked, potentially creating problems for soil and nearby neighbors.

    It is kind of a strange loophole,” says Brett Sherry, a manager of regulatory programs at the Oregon Health Authority (OHA), which enforces federal lead safety rules for home remodels. “If you disturb six square feet, these rules apply. If you knock the whole house down, nothing.”

    This loophole has been on regulators’ radar for years. There has even been talk of crafting legislation to correct the gap, and a law to do so will be floated in Salem next year.

    But it’s so far gone completely unaddressed. And that has potential repercussions for every neighborhood in the city, as demolitions eclipse pre-recession levels.

    According to public records obtained by the Mercury, from January 2014 through August 2016, the city fielded applications for nearly 950 demolition permits for homes built in 1977 or before.

    That year is important in the context of lead—1978 is the year the federal government banned lead paint. As the US Environmental Protection Agency puts it: “If your home was built before 1978, there is a good chance it has lead-based paint.”
    ***
    Without any rules in place requiring that lead be addressed, all of these demolitions pose a potential hazard, officials say.

    “If you hire someone to knock down a house, it’s probably someone with larger equipment like a bulldozer,” says Sherry. “They’re not certified. They’re not trained. There could be lead dust that could contaminate the ground. You could contaminate neighboring yards.”
For more, see No One’s Policing Lead Dust in Demolition-Happy Portland (That Has Potential Consequences for Every Neighborhood in the City).

Thursday, October 20, 2016

DC Appeals Court: Developer Seeking To Demolish Aging 302-Unit Low Income Housing Complex & Build Market-Rate Condos, Rental Apartments Violated Local Law Requiring Existing Tenants To Be Offered Bona Fide Opportunity To Buy Premises

In Washington, D.C., WAMU Radio 88.5 FM reports:
  • The residents of the Museum Square residential building near D.C.'s Chinatown neighborhood can breathe a little easier now.

    That's because of a ruling from the D.C. Court of Appeals, which last [month] tossed out the $250 million sales price set by Bush Construction Companies, the Virginia-based group that owns and wants to demolish the 302-unit building to replace it with 800 market-rate condos and apartments.

    In the ruling, which upheld a prior court decision, the three judges said that the sales price "was not based on an objectively good faith assessment of the value of the property," and thus violated the D.C. law that offers tenants the first shot at buying the building they live in if it is put on the market.

    The fight over the building — where residents are largely low-income and Chinese — dates back to 2013, when Bush Companies announced it would not be renewing the Section 8 contract with the U.S. Department of Housing and Urban Development that kept rents subsidized. Instead, the group said it wanted to raze and redevelop the property, which stands in Mt. Vernon Square, a neighborhood that has developed quickly over the last decade.

    As per the D.C. Tenant Opportunity to Purchase Act, Bush Companies offered the building up to the tenants first — but for $250 million, or more than $800,000 per unit. (Read more about how TOPA works here.) The residents recoiled at the proposed price tag, but Bush Companies defended it by saying that it faithfully reflected the potential value of the building once it gets redeveloped.

    The tenants sued, saying Bush Companies had not put forth a "bona fide" offer as required by TOPA. Instead, they argued, the building was worth just a fraction of that — a later appraisal set it at just under $70 million — and any proposed sales price should be closer to that. In April 2015, a trial judge sided with the tenants, and last [month] the Court of Appeals backed that decision.

    "TOPA is supposed to work by allowing tenants to purchase a unit at a fair and reasonable price and giving them the right of first refusal if they choose to," says Jonathan Levy of the Legal Aid Society of D.C.,(1) which represented the tenants. "The reason this decision is important is because it clearly says that a land owner cannot evade the intent of the statute by choosing an arbitrarily high figure to sell the building to the tenant, which is functionally the same as not offering to sell it at all."
For more, see D.C. Court Backs Low-Income Renters In Fight With Developer Over Building.
----------------------------
(1) The Legal Aid Society of the District of Columbia is a non-profit law firm that provides legal services to persons living in poverty in the District of Columbia in the areas of domestic violence/family, housing, public benefits, and consumer law. In addition to providing direct representation, it also helps clients avoid unnecessary legal entanglements through outreach and education, and helps them resolve their own disputes with advice and other brief assistance.

Four Years After Being Disbarred, Criminal Charges Finally Brought Against Lawyer Who Allegedly Defrauded Dozens Out Of Over $1.4 Million In Loan Modification Ripoff; Defendant Accused Of Instructing Homeowners To Redirect Their Monthly House Payments To Him, Purportedly To Use In Negotiaitons With Lender

From the Office of the U.S. Attorney (Santa Ana, California):
  • A disbarred California attorney was arrested [] on federal charges of running a mortgage modification scheme that defrauded more than 75 distressed homeowners in Orange County by inducing them to pay more than $1.4 million for services he never provided.(1)

    Moses S. Hall, 60, a resident of Blackwood, New Jersey, who formerly had a law practice in Fullerton, was arrested without incident [] at his residence after being indicted this week on fraud and tax offenses.

    According to the 16-count indictment returned [] by a federal grand jury, Hall operated his mortgage modification scheme from 2008 until 2012 through his law offices, as well as businesses called “Salva Casas” and “Loan Modifications of America.” The indictment alleges that Hall told distressed homeowners to stop making their mortgage payments, and instead direct their monthly mortgage payments to him, purportedly so he could use that money to negotiate with the banks. Instead, as detailed in the indictment, Hall used the victims’ money for himself.

    The indictment alleges that Hall concealed from victims that he was using their money to pay for personal expenses and that he was a previously convicted felon who had served years in state prison in New Jersey prior to being admitted as an attorney in California.

    Over the course of the fraudulent scheme, more than 75 victims were cheated out of more than $1 million, and some subsequently lost their homes. One married couple entrusted Hall with $400,000 to help them modify their mortgages. According to the indictment, Hall spent that $400,000 on personal expenses in only six months. That couple subsequently lost their home to foreclosure.

    As further alleged in the indictment, Hall withdrew more than $1 million in cash from the bank accounts into which the victims’ payments had been deposited. Hall allegedly wrote checks to himself and his daughter, and used $25,000 cash to purchase a Mercedes Benz.

    “This defendant allegedly used his position as a licensed attorney to persuade victims that he could help them with their financial problems,” said United States Attorney Eileen M. Decker. “Instead of working for his clients, the defendant simply pocketed their money to fund an extravagant lifestyle. He has lost his license to practice law, and now he faces a significant prison term for the alleged crimes.”
    ***
    According to the California State Bar, Hall was disbarred in 2012 for “misconduct in three loan modification matters.”
For more, see Disbarred Attorney Indicted in Mortgage Modification Scheme (Victims Paid the Attorney Well Over $1 Million, Which He Allegedly Used for Personal Expenses and Never Reported as Income to IRS).
------------------------
(1) The California State Bar's Client Security Fund is 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:
Maps available courtesy of The National Client Protection Organization, Inc.

California Man Gets 12 Months Imprisonment For Misrepresenting Status With HUD, Misusing Government Seal In Connection With Peddling Loan Modification Services To Financially Strapped Homeowners

From the Office of the U.S. Attorney (New Haven, Connecticut):
  • Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that JOHN VESCERA, 60, of Dana Point, Calif., was sentenced [...] to 12 months and one day of imprisonment, followed by three years of supervised release, for false advertising and misusing a government seal in connection with the provision of mortgage modification services.
    ***
    First One [] misrepresented its status with the U.S. Department of Housing and Urban Development (“HUD”). First One employees were instructed to inform homeowners that “[w]e’re a HUD approved lender and we represent the government loan modification programs.” In addition, certain of First One’s forms claimed that the company provided “HUD . . . Housing Counseling assistance” and bore HUD’s seal. In truth, First One had no affiliation with the government mortgage loan assistance programs and was not licensed or approved by HUD for housing counseling or home mortgage loan modification services.

    Through this scheme, 302 victims lost a total of $374,622. Many of these victims were previously compensated after VESCERA and First One paid approximately $1.5 million to the Neighborhood Assistance Corporation of America in March 2013 to resolve a federal lawsuit in the Central District of California. As part of this criminal case, VESCERA paid restitution of $30,320 to 24 of the victims who were not identified at the time the federal lawsuit was settled.

Wednesday, October 19, 2016

Ex-NJ Politician Gets 10 Months House Arrest After Getting Nailed For Rent Skimming On 2-Family House; Admits Pocketing Nearly $150K In Rental Income While Stiffing Lender Out Of House Payments On $400K+ HUD-Related Mortgage

In West New York, New Jersey, The Jersey Journal reports:
  • A former West New York commissioner will spend about a year on house arrest for collecting nearly $150,000 in rental income while being in default of a federal mortgage loan.

    Ruben Vargas pleaded guilty to equity skimming in May after obtaining a $417,449 loan through the Department of Housing and Urban Development to buy a two-family home at 5512 Grant Place. Vargas collected about $3,000 each month in rental income from the property without making any payment on the mortgage that he obtained in 2007, U.S. Attorney Paul J. Fishman announced.

    Vargas was sentenced [] to three years of probation with 10 months of location monitoring in Trenton. He was ordered to pay the federal government back the $149,900 he collected in rental income, but does not have to pay the interest on the loan.

    By law, anyone in default of a HUD loan can only use rental income for necessary expenses to the property and for making payments on the mortgage.
    ***
    Vargas faced up to five years in prison and $500,000 in fines on the charge. Fines in the case were waived and he was only ordered to pay an additional $100 for assessment, according to the minutes of his sentencing.

Dallas Slumlord Refuses To Comply With New City Ordinance Tightening Rules, Enforcement On Rental Properties; Threatens To Bulldoze Problem Properties, Telling 300+ Tenants: Either Buy The House Or Pack Your Bags & Take A Hike!

In Dallas, Texas, WFAA-TV Channel 8 reports:
  • The man identified by News 8 last February as the largest junk property landlord in the city is threatening to evict most of his tenants. Hundreds of residents could be affected.

    It comes after the Dallas City Council voted last [month] to tighten the regulations and enforcement on rental properties. But rather than conforming to the new rules, the owner of HMK Ltd. is threatening to bulldoze many, if not all, of his rental properties by the end of the month.

    The letter was sent to city officials and tenants just a few days ago. It reads, “HMK, Ltd, as the landlord, is terminating each and every tenancy at each listed property […] as soon as legally possible;” and after the tenants move out the landlord will either immediately demolish the rental unit or no longer use the unit for residential purposes.

    Included in the notice to the city was a list of 305 residential properties that would be affected.

    News 8 talked to several tenants [] who confirmed they were given the option of either buying their property outright or moving out by the end of the month.

    HMK is run by a man named Khraish H. Khraish. Last February, News 8 published a map of Khraish's empire, an estimated 400 rental homes and apartments mostly located in west and south Dallas. In one case in west Dallas he owns an entire block of homes.

    Some tenants we talked to earlier this year say they were living in poor conditions and getting the landlord to make repairs has been next to impossible.

    The city responded by tightening rental property codes, rules, and enforcement. Now, Khraish is responding by forcing tenants to either buy their homes or move.

    Some of those residents told us the asking price for their homes is $40,000, which is well above the average $12,000 value assessed by the Dallas County Appraisal District.

    [T]he City of Dallas issued the following response:

    "At a time when the City is facing a crisis with homelessness, HMK’s mass evictions will likely cause many of its tenants to suffer serious hardships because they may not be able to find suitable alternative housing on such short notice. Regardless, HMK would not need to close so many dwellings had it properly maintained them."
Source: Junk landlord investigated by News 8 evicting hundreds of tenants.

For a story follow-up, see Dallas Judge Temporarily Halts Mass Eviction:
  • State District Judge Ken Molberg [last week] ordered a Dallas landlord to temporarily halt the abrupt mass closure of hundreds of rental houses in some of the city's poorest neighborhoods.
See also, The Texas Tribune: As Dallas Struggles With Poverty, Landlord Plans Abrupt Closures.

Tuesday, October 18, 2016

Real Estate Operator Accused Of Illegally Snatching Surplus Proceeds From Foreclosure Sales For Unpaid Real Estate Taxes Admits No Wrongdoing, But Agrees To Cough Up $415K+ To Settle Indiana Lawsuit; State AG Announces Restitution Distribution To 24 Aggrieved Homeowners While Setting Sights On Other Outfits Engaged In Similar Schemes

From the Office of the Indiana Attorney General:
  • Indiana Attorney General Greg Zoeller announced [] the return of more than $415,000 to Indiana homeowners victimized by a complicated tax sale scheme orchestrated by California-based 4Bridge, LLC and Colorado-based Asset Recovery, Inc.

    According to complaints filed by the Attorney General’s Office in Marion County Circuit Court this year, 4Bridge and Asset Recovery perpetrated a complicated scheme that took advantage of vulnerable Hoosiers across the State who had fallen behind in their real-estate taxes and who did not understand the tax sale process. Homeowners in Elkhart, Howard, Lake, Madison, Marion, Vanderburgh, and Vigo counties will receive a refund.

    The settlement calls for restitution totaling $418,525.97 to 24 Indiana homeowners and a permanent injunction preventing further behavior described in the complaints:
  • Violations of the Home Loan Practices Act: Concealing material information in connection with real estate transactions and engaging in real estate transactions without proper licensure.
  • Violations of the Deceptive Consumer Sales Act: Unfair, abusive, or deceptive acts, omissions, or practices in connection with consumer transactions.
  • “Rarely have we seen a scam that so brazenly exploited desperate property owners and took advantage of their lack of understanding of a complicated legal process. Victims not only lost their property but thousands of dollars rightfully owed to them,” Zoeller said.

    Consumers whose funds had already been distributed will receive monthly payments from Asset Recovery and 4Bridge made payable to, and distributed by the Attorney General’s Office. The remaining homeowners are able to claim the surplus available to them. The Marion County Circuit Court has already entered Orders directing funds to be paid to several of the affected homeowners.

    Zoeller added his office is pursuing an action against other companies he alleges conducted similar schemes across the state. Earlier this year, the Attorney General filed a lawsuit – for up to $12 million in restitution and penalties – against FLRC, LLC. / Oak Tree, LLC; and Coastal Title, Inc. Several individuals operating on behalf of the companies were named in the lawsuit as well.

    These schemes impacted at least 48 vulnerable Hoosiers in Allen, Johnson, Lake and Marion counties, attempting to swindle them out of surplus funds upwards of tens of thousands of dollars.

    “These cases have not only highlighted how homeowners were being exploited, but also assisted local officials in providing more education to citizens,” Zoeller said. “Working with county officials has been key in identifying and preventing potential fraud.”

    4Bridge and Asset Recovery’s Scheme

    When a homeowner falls behind on their property taxes, the county lists the property at tax sale. The minimum bid set for these homes is the amount owed in taxes. If the winning bid exceeds the amount of the unpaid property tax owed, the county claims the tax amount, special assessments, penalties and the costs of the auction. The original homeowner is entitled to any surplus amount beyond what may be owed to a mortgage lender. This surplus may be considered a rough equivalent to their home’s equity.

    The original homeowner then has one year to redeem the property if he or she can pay back the taxes originally owed. If the homeowner can’t pay within a year, then the bidder is awarded ownership of the property. It’s during this one-year time window that 4Bridge and Asset Recovery perpetrated the scheme.

    Using court and public records, the companies and their agents located and contacted the original homeowners whose properties had been sold at tax sales for large surplus amounts. They deceived at least 24 homeowners by making misrepresentations about their legal rights to redemption or surplus in the tax sales. The scam worked best with property owners who did not have an outstanding mortgage that would have to first be paid off with the surplus.

    By exploiting the homeowners’ unfamiliarity, 4Bridge, Asset Recovery and their agents persuaded the homeowners to sign quitclaim deeds and other legal paperwork turning over their remaining legal interest in the properties to the companies. 4Bridge and Asset Recovery, in turn, were then able to submit claims for the tax sale surplus funds that the 24 original owners would have been entitled to – in amounts ranging from $3,000 up to $53,000.

    The Attorney General’s Office through its Homeowner Protection Unit (HPU) fielded complaints about the tax sale scheme from the affected owners and from county officials, who were able to identify the potential scheme only after the deed exchanges were filed with the county offices.

    The complaint notes violations including “unfair, abusive or deceptive” conduct; “incurable deceptive acts” and that the entire scheme conducted by Asset Recovery is considered “unconscionable”. Under the settlement the companies did not admit wrongdoing but have agreed to comply with settlement terms.

Statute Of Limitations Defense Bites Another Home Mortgage Lender

In Suffolk County, New York, Newsday reports:
  • A Suffolk state Supreme Court judge has dismissed a foreclosure action on a $2.47 million mortgage on a Westhampton home, citing New York’s six-year statute of limitations.

    Bohemia-based Young Law Group PLLC, attorneys for Samuel Rudick, defendant in the case, argued that lender U.S. Bank failed to begin its foreclosure action in time.

    In 2003, Samuel Rudick and Patricia Rudick, who is now deceased, took out a $1.75 million loan for their Westhampton home. The Rudicks had the loan modified a year later, before taking out a second mortgage on the home in 2006. Later that year the two loans were consolidated with a third note, totaling $2.47 million.

    The original lender, JP Morgan Chase Bank, placed a lien on the home before sending a note of default to the Rudicks, “stating that they had defaulted on their mortgage loan by failing to tender their monthly payments,” Judge Joseph Santorelli wrote in his ruling Tuesday. In 2008 JP Morgan commenced a foreclosure action.

    “At some point that action was discontinued, and then the bank commenced a second foreclosure action,” said Ivan Young of the Young Law Group. According to documents, that second, 2014 action was dismissed for missing the six-year deadline started by the first foreclosure action. “Then they [U.S. Bank] commenced a third foreclosure action, in 2015.”

    Young, who said he has worked on “a dozen” foreclosure cases invoking the statute of limitations in the last two years, said what made the Rudicks’ case more complex was the change in lenders. The first two actions were initiated by JP Morgan Chase, before the loan balance was transferred to U.S. Bank in 2014.

    The lender still has a mortgage lien on the property, but Rudick can now file court papers seeking to have the lien removed, Young said.

    U.S. Bank has until Nov. 3 to file a notice of appeal if it will try to get the dismissal of the foreclosure overturned. A spokesman for the lender declined to comment.

    Young said he has worked on four cases in which judges dismissed foreclosure actions because lenders missed the six-year deadline. In one, a Brooklyn family was able to get the $75,000 mortgage lien on their property removed, so they now own it free and clear, Young said. In another case, a lender has appealed the dismissal of a foreclosure action on a Sound Beach home; the Appellate Division is expected to hear oral arguments soon, Young said.

    Under state law, the clock starts running when a lender first files a foreclosure case declaring the entire loan due, Young said. If that original case gets dismissed, the lender must file a new case within six years of calling in the loan.

Monday, October 17, 2016

NYPD Cop Accused Of Swiping Title To Home With Forged Deed To Sue Local DA For False Arrest After Judge Throws Out Most Charges Against Her

In Brooklyn, New York, Gothamist reports:
  • An NYPD cop who prosecutors have accused of stealing a townhouse in Bedford-Stuyvesant through a fraudulent deed transfer is striking back, announcing her plans to sue the city for false arrest after a judge threw out some but not all of the charges against her.

    Police arrested veteran NYPD beat cop Blanche O'Neal, 46, last year on charges of possessing and filing forged documents, grand larceny, and perjury, alleging that she carried out the bogus purchase of the abandoned property from one of the heirs to the deceased owner, claiming he was the "sole heir," and later lied to a grand jury by saying she was the owner of the house. In March, a judge threw out three of the four charges against her, leaving only the perjury charge, which stems from a grand jury proceeding where she testified as a prosecution witness against a burglar.
    ***
    Sanders and O'Neal allege that the prosecution is actually an extension of the efforts of the people behind an LLC with a central Long Island address to take over the property by fraud. They claim that the company, 23A Vernon LLC, and its principal, Yotam Michaeli, have concocted fake heirs to the property, doctored a death certificate for its late owner, and improperly acquired a Sheriff's Office investigator's interview notes with O'Neal to bolster their civil case to take the property. The owners have also, O'Neal's lawyers claim, repeatedly sent men to harass O'Neal, at the three-story Vernon house, as well as at the 83rd Precinct where she works, and threatened her livelihood.
    ***
    The floundering of the prosecution of O'Neal could be seen as demonstrating the difficulty of untangling ownership in such cases.

    O'Neal's trial is set for October 19th. She faces as many as seven years in prison, not to mention the loss of her job, and of the house, which is easily worth more than a million dollars. The DA's Office is appealing the judge's decision to throw out her other charges.

Looking To Dodge Tear-Down Costs On Condemned Home, Nationwide Real Estate Operator Comes Up Empty In Effort To Rope In An Unwitting Buyer Willing To Bite On Lease-To-Own Bait On Eve Of Demolition

In Green Bay, Wisconsin, WFRV-TV Channel 5 reports:
  • Last month, we told you about a house off Ashland Avenue that was condemned by the City of Green Bay but offered as a lease-to-own home by a company called Vision Property Management.

    In our 5 Investigates reports, we told you that offering a condemned home for lease is a violation of city code, and the city was ready to tear the house down on Thursday [Sept. 29].

    But now, the owner tore it down before the city could - something Green Bay's neighborhood development specialist Ken Rovinski says is not very common.

    "Typically that doesn't happen," he said. "Typically once it gets to my desk, it will be our contractor that will take it down. You don't usually see the owner step in if it's already been contracted out."

    Vision Property Management has been advertising the condemned house as lease-to-own, which is a violation of city code. In fact back in August, the company offered to lease our producer the house for $750 a month.

    Just last week when crews arrived to remove asbestos, Vision had posted a 'best offer' for sale sign in the front yard. This was concerning to the city.

    "If they would've sold this property and then our demo contractor would've come in, that bill then could've been put on the new owner," said Ravinski. "That's something they weren't advertising, that the demo was scheduled to happen at all. That would've been the extra on top of their $20,000 that they were charging for the property, there would've also been the added bill for this demolition."

    If the property did not sell, that demolition bill would have been on Vision Property Management, which could be one reason the company chose to demolish the home with its own contractor.

    On Monday, 5 Investigates spoke with Mike Murray with Strategic Vantage, a PR firm which represents Vision Property Management.

    "Vision Property Management decided to retain its own company because basically it costs more for the city to do it, so they decided to retain their own company," said Murray.

    City officials admit the company demolishing the house was a bit of a surprise, especially since they've been trying to talk with Vision about the property since it was condemned in April.

    Vision currently owes the city about $9,000 for repairs and damages at other properties in Green Bay.
Source: 5 Investigates: Rent-to-own follow up (Ashland property demolished before scheduled date). rent to own land contract for deed

81-Year Old Ex-Lawyer Buys His Way Out Of Prison Time; Pays $11K Upfront, $400/Month Over 14 Years As Restitution For Ripping Off 80+ Year Old Widow Out Of $75K

In Genesee County, New York, The Batavian reports:
  • Prominent 81-year-old attorney Randolph Zickl was sentenced to five years probation in Genesee County Court [] and ordered to pay $400 a month in restitution to his victim, the widow of a former client.

    Zickl admitted stealing $75,398 dollars from the woman, who is "well into her 80s," and on June 24th he pled guilty to second-degree grand larceny, a Class-C felony punishable by up to 15 years in prison.(1)

    Prosecuting attorney Candice Vogel, an assistant DA in Erie County, said after today's proceedings: “The sentencing order was for five years probation. During that five years of probation the defendant was ordered to make restitution payments at the rate of $400 a month through the Probation Department here in Genesee County. He had already made a payment of $11,300 before we arrived here today.”

    That leaves a remainder of $64,098 in restitution to be repaid to the victim. At the rate set today, she will not see the full restitution payment for approximately 14 years.

    Zickl was once one the most respected attorneys in the county, heading up the County’s Office of Legal Assistance. He also has two sons currently working in the Genesee County District Attorney’s Office.

    One of Randolph Zickl’s defense attorneys said before sentencing that he “feels horrible” about his crime; Zickl declined to speak before sentencing.

    His defense also requested that he be given 60 days before continuing restitution payments as he has already paid a large sum of the amount and is currently living off of Social Security.

    Presiding Judge James Bargnesi gave Zickl 30 days before the resumption of monthly restitution.

    Vogel said that the perpetrator's age, the victim's age, the sizable amount of restitution paid to date and Zickl's assets and capability of paying the remaining amount all factored into the judge's decision to grant probation and set the amount of monthly restitution. Vogel said the victim's family is aware of the terms and indicate they are comfortable with them.

    Asked about the likelihood that the victim will live to reap the benefits of full restitution, Vogel said: "This is one of the biggest issues of financial exploitation of the elderly. It's kind of a race..." to try and prosecute such crimes and recoup what was stolen before the victim dies.

    Vogel said, technically, if Randolph Zickl dies before he completes restitution, the balance will be the liability of his estate and its heirs.
Source: Randolph Zickl given five years probation, ordered to pay $400 a month in restitution.
-------------------
(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.

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

Sunday, October 16, 2016

One Canadian Crooked Lawyers' Victim Reimbursement Fund Boosts Max Payout To $500K Per Screwed Over Client Fleeced By Dishonest Attorneys; Bar To Cover Higher Cap By Clipping Province Attorneys Add'l $18/Year

In Toronto, Ontario, the Times Colonist reports:
  • Anyone cheated by a lawyer in Ontario will now be eligible for up to $500,000 in compensation, more than triple the previous limit, the body that regulates the profession has decided.

    In recommending the higher cap, a committee of the Law Society of Upper Canada tasked with the issue noted the last increase was in 2008, at which the time the limit was set at $150,000.(1)

    "In light of the over eight years that have elapsed since the last increase and acknowledging the mandate of the law society to govern in the public interest, the committee determined that an increase in the per claimant limit is appropriate at this time, notwithstanding the infrequency with which claims exceeding the limit are likely to arise," the committee concluded.

    Between Feb. 1, 2014, and Aug. 31, 2016, the fund doled out almost $7.5 million to 260 claimants, law society figures show.

    The highest payout during that period — almost $1.4 million — went to 35 clients of Javad Heydary, a Toronto lawyer who took money from trust accounts before he fled to Iran in late 2013 and likely died there.

    Another 10 clients of Richard Chojnacki, a lawyer from Mississisauga, Ont., received $1.08 million. His licence was revoked in October 2010 and he was jailed in 2012 after pleading guilty to fraud for embezzling money from clients.

    The society established the fund in 1953 to compensate clients who lose money due to their lawyer's dishonesty. Errors and omissions insurance, which covers negligent conduct, does not cover dishonest conduct, such as theft.

    "The legal profession is considered unique in protecting clients from dishonesty in this fashion," its report states.

    Claims in other provinces vary widely. For example, Nova Scotia has no limit while Quebec's is set at $100,000. A survey of "client protection funds" in the United States also showed wide variance in programs, ranging from limits of $50,000 to $400,000.

    To cover the higher cap approved this week, the society's 35,000 practising lawyers will have to pay another $18 a year, bringing their levy to $290.

    People ripped off by paralegals can get as much as $10,000 — an unchanged amount. The fund paid 37 clients of paralegals $85,640 from February 2014 to the end of last month.
Source: Cap on crooked lawyers fund in Ontario raised to $500K per claimant.
----------------------
(1) The Compensation Fund of the Law Society of Upper Canada helps clients who have lost money because of the dishonesty of a lawyer or paralegal practicing in the province of Ontario, Canada. It is paid for exclusively by the lawyers and paralegals of Ontario, out of their own pockets. Over the years it has paid out millions of dollars to help clients.

If you've lost money due to a lawyer or paralegal's dishonesty, the fund can reimburse you for all or part of your loss. Typically, the fund will pay for losses involving money from estates, from trust funds held for real estate closings and from settlements in legal actions. The fund doesn't reimburse in cases dealing with negligence.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other Canadian provinces or in the states throughout the United States, see:
Maps available courtesy of The National Client Protection Organization, Inc.

Recently-Announced List Of Disciplined Attorneys Include 15 Lawyers For Playing Fast & Loose With Entrusted Money &/Or Recordkeeping Violations Related To Client Money

The Illinois State Bar Association recently announced that the state Supreme Court disbarred 13 attorneys, suspended 16 others in a latest disciplinary filing.

The following seven lawyers were disbarred for, among other things in some cases, playing fast and loose with their clients' money:
  • Bradley F. Aubel, Libertyville
    Mr. Aubel, who was licensed in 1997, was disbarred. He was convicted in federal court of obstruction of justice after he converted client credit cards to his own use. In addition, he was convicted of filing a false income tax return when he materially understated his law business’s gross receipts. He was suspended on an interim basis on January 3, 2013.

    Dwight Lenore Beck, Ford Heights
    Mr. Beck, who was licensed in 1985, was disbarred. He converted $1,800 in client settlement funds, failed to maintain complete records of his trust account, and was convicted on two separate occasions of driving an automobile on a suspended license. He failed to appear at his disciplinary hearing.

    Robert Christopher Beck, Wheaton
    Mr. Beck, who was licensed in 1995, was disbarred. He intentionally misappropriated funds in excess of $700,000 from two elderly clients, one of whom suffered from dementia, and an additional $189,500 from the estate of a third client following that client’s death.

    Reid D. Henderson, Washington D.C.
    Mr. Henderson was licensed in Illinois in 2005 and in the District of Columbia in 2007. The District of Columbia Court of Appeals disbarred him after he neglected six client matters, failed to keep those clients reasonably informed about the status of their cases and engaged in dishonesty when he made false statements to clients and misappropriated fees paid in advance. The Illinois Supreme Court imposed reciprocal discipline and disbarred him.

    Ronald L. McPheron, Chicago
    Mr. McPheron, who was licensed in 1993, was disbarred. He settled a client’s personal injury case without her authority and then intentionally misappropriated $11,737 in settlement funds he had received on her behalf. He also fabricated settlement documents to conceal actions and did not cooperate with the ARDC investigation into the matter.

    Frank Anthony Santilli, Chicago
    Mr. Santilli, who was licensed in 1989, was disbarred on consent. He knowingly misappropriated over $500,000 in client settlement funds and signed a medical lienholder’s signature to three settlement checks without authority. He was suspended on an interim basis on June 1, 2016.

    David Joel Silberman, Mequon, Wis.
    Mr. Silberman, who was licensed in 1973, was disbarred. While operating a title insurance company in Wisconsin, he transferred more than $460,000 from the company’s escrow accounts to its operating accounts, and used more than $180,000 of that money, which had been supplied by mortgage lenders and real estate purchasers planning to buy properties, to fund the title company’s operations.
In addition, the following eight attorneys had their licenses suspended for varying periods of time for either playing fast and loose with money belonging to their clients and/or others, or, in one case, failing to promptly provide a client with an accounting for the assets in an estate upon request:
  • Edward Christopher Abderholden, Chicago
    Mr. Abderholden, who was licensed in 1977, was suspended for six months and until further order of the Court, with the suspension fully stayed by a two-year period of conditional probation. He converted $2,666.50 in client funds and also failed to timely pay medical providers on behalf of that same client when he allowed checks payable to certain medical providers to become stale.

    Robert Allan Holstein, Chicago
    Mr. Holstein, who was licensed in 1962, was suspended for eighteen months. He knowingly used at least $20,000 in fees that were the subject of a citation to discover assets in order to pay personal expenses. The suspension is effective on October 13, 2016.

    Larry S. Mayster, Chicago
    Mr. Mayster, who was licensed in 1955, was suspended for six months, with the suspension stayed after thirty days by a six-month period of conditional probation. He mismanaged approximately $800 in settlement proceeds belonging to third-party lien holders while handling a personal injury matter and failed to maintain complete records for his client trust account. The suspension is effective on October 13, 2016.

    Vincent J. O'Brien, Chicago
    Mr. O’Brien, who was licensed in 1987, was suspended for nine months, with the suspension stayed after four months by a twelve-month period of conditional probation. He did not diligently pursue two personal injury matters and a pending estate matter and he did not inform his clients of, or respond to their requests for information about, the status of their cases. Also, in one of the personal injury matters, he misrepresented the actual status of the case to the client and, in the estate matter, he did not provide his client with an accounting for more than four months after the client’s request. The suspension is effective on October 13, 2016.

    Douglas Alan Shenk, Northbrook
    Mr. Shenk, who was licensed in 1976, was suspended for thirty days and required to complete the ARDC professionalism seminar. He converted $3,210.35 of client and third party funds by using them for his own business or personal purposes. The suspension is effective on October 13, 2016.

    James E. Taylor, Chicago
    Mr. Taylor, who was licensed in 1992, was suspended for one year, with the suspension stayed after sixty days by a two-year period of conditional probation. He did not diligently represent four different clients in a variety of legal matters, failed respond to client requests for information, and did not timely refund unearned legal fees. He also did not deposit the advance payments of legal fees provided by those clients into a client trust account. The suspension is effective on October 13, 2016.

    Francis Joseph Coyle, Jr., Rock Island
    Mr. Coyle, who was licensed in 1974, was suspended on an interim basis and until further order of the Court. An ARDC hearing panel earlier found that he had misappropriated $100,000 in escrow funds and made intentional misrepresentations to another attorney about the status of those funds. The panel recommended that he be disbarred.

    Richard Carl Moenning, Chicago
    Mr. Moenning, who was licensed in 1962, was suspended on an interim basis and until further order of the Court. An ARDC hearing panel earlier found that he had engaged in multiple acts of misconduct in connection with his role as attorney for, and trustee of, two trusts, as well as in his role as attorney in two separate probate matters. The panel found that he had intentionally taken an excessive amount of fees and recommended that he be disbarred.
Source: Illinois Supreme Court disbars 13, suspends 16 in latest disciplinary filing.

Editor's Note: The Client Protection Program of the Attorney Registration and Disciplinary Commission (ARDC) was established by the Supreme Court of Illinois to provide reimbursement to clients who have lost money or property because of dishonest conduct by lawyers admitted to practice law in the State of Illinois. The Program reimburses clients who cannot get reimbursement from the lawyers who caused their losses, or from other sources such as insurance. (But see Stolen Inheritances: I-Team lawyer warning, in which one Illinois victim said of the program, "Their rules are vague, ambiguous and they are applied at their own discretion, and you can't get a straight answer[.]")

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

Bail Set At $100K For Attorney Pinched For Practicing Law With Suspended License & Receiving, Misapplying Over $500K In Entrusted Client Funds

From the Office of the Bergen County Prosecutor:
  • Acting Bergen County Prosecutor Gurbir S. GREWAL announced the arrest of JAY I. LAZEROWITZ, a 58-year-old Franklin Lakes, New Jersey man, on Unauthorized Practice of Law and Misapplication of Entrusted Property charges.
    ***
    The investigation, which was based on civilian complaints and information received from the New Jersey Office of Attorney Ethics revealed the following:

    Jay I. LAZEROWITZ, whose license to practice law was suspended on January 27, 2016, failed to comply with Attorney Ethics regulations and continued to practice law. Even though his Attorney Trust Account was frozen as a result of his suspension, Mr. LAZEROWITZ continued to receive monies in trust. Mr. LAZEROWITZ received those entrusted funds and placed them into regular, business type checking accounts.

    During the course of the investigation, it was determined that Mr. LAZEROWITZ also misapplied entrusted funds by moving and/or utilizing funds outside the terms of the established escrow agreements. The funds lost to date are in excess of $500,000.

    On September 19, 2016, Jay I. LAZEROWITZ was charged on a Warrant issued by the Bergen County Central Municipal Court. On September 23, 2016, Mr. LAZEROWITZ was arrested by members of the Bergen County Prosecutor’s Office White Collar Crimes Unit. [...] Mr. LAZEROWITZ was remanded to the Bergen County Jail in lieu of bail set at $100,000 with a ten percent cash alternative [...].

State Supremes Disbar Illinois Attorney Facing Criminal Charges For Allegedly Glomming Over $2 Million Of His Clients' Money; Dementia-Suffering Senior, Dead Client's Estate Among Unwitting Victims; Suspicious Bank Investigator Blows Whistle, Triggers Probe

In DuPage County, Illinois, the Daily Herald reports:
  • A Wheaton attorney facing criminal charges for stealing more than $2 million from his clients has been disbarred.

    The Illinois Supreme Court and the Attorney Registration and Disciplinary Commission orders released Thursday [September 23] state that Robert Beck, licensed in 1995, was disbarred because he "intentionally misappropriated funds in excess of $700,000 from two elderly clients, one of whom suffered from dementia, and an additional $189,500 from the estate of a third client following that client's death."(1)

    In his criminal case, Beck, 49, [...], is accused of bilking the estates of four former and three current clients of $1 million from July 2011 through January 2015. He is free on $250,000 bail.

    Prosecutors have alleged Beck would steal money from a client's trust for the estate and use that money for personal and business expenses. He would then steal money from another client's trust for the estate and use that money to pay back the estate of his previous victims.

    Beck also is accused of shifting roughly $1.3 million among the trusts using one to pay the heirs of another to cover up the thefts.

    Beck's alleged scheme came to light when a bank investigator became suspicious of the transactions.
Source: Wheaton attorney facing theft charges is disbarred.
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(1) The Client Protection Program of the Attorney Registration and Disciplinary Commission (ARDC) was established by the Supreme Court of Illinois to provide reimbursement to clients who have lost money or property because of dishonest conduct by lawyers admitted to practice law in the State of Illinois. The Program reimburses clients who cannot get reimbursement from the lawyers who caused their losses, or from other sources such as insurance. (But see Stolen Inheritances: I-Team lawyer warning, in which one Illinois victim said of the program, "Their rules are vague, ambiguous and they are applied at their own discretion, and you can't get a straight answer[.]")

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

Attorney Gets Hammered With 60-Day License Suspension Over Technical Bar Violation That Harmed No One (Except Himself); Lawyer Failed To Promptly Remove His Earned Fees From Client Trust Account, Paying Business & Personal Expenses Out Of His Own Money Using Trust Checks

Anyone wondering how strictly attorney regulatory bodies will enforce client trust account rules against their members may find the following story of some interest, courtesy of the Northern California Record:
  • The California State Bar Court placed [a] San Jose attorney [] on a 60-day suspension from practicing law and gave him a two-year probation with specific requirements that include completion of the multistate professional responsibility examination.

    [His] failure to meet the requirements of his probation can lead to a two-year suspension.

    The sanction is based on [his] commingling of funds during a 10-month period in 2009. He deposited advance fees into a client trust account and failed to remove them in a timely fashion and as soon as his interest in the funds became fixed. He used the funds to pay businesses and personal expenses that included a membership to Gold’s Gym and utilities.

    In weighing [his] violations, the court found that although his use of funds from the client trust account indicated misuse and mismanagement, there was no evidence that he “actually endangered client funds, left insufficient funds in his account or otherwise used client funds to pay personal expenses.”

    Furthermore, the court found no evidence that any client was harmed, as a result of respondent’s misconduct, because the money he used was earned via fees.

    In its report, the court supported its decision to deviate from the standard suspension time of 90 days.

    “Taken together, the mitigating circumstances suggest a low risk of recidivism. [He] demonstrated remorse at the first opportunity and took significant steps to reduce potential misconduct from reoccurring. Under the circumstances, including the fact that the misconduct occurred over five years ago, and that it was isolated to one year in an otherwise discipline-free practice of over 25 years, a deviation from the 90 days minimum is appropriate.”

    As part of his discipline, [he] must pay $2,797 related to the cost of disciplinary proceedings.
    ***
    The court also gave [him] points for cooperating with the investigation and admitting to his violations rather than pushing the issue to trial, thus sparing State Bar resources.