Friday, March 24, 2017

Family Buys $900K Dream Home Out Of Foreclosure, Then Finds Out Structure Was Improperly Built On Sewer Easement; County Orders Demolition After Finding Sewer Line Leaks, Citing Potential Sinkhole Danger, Prevention Of 'Malodorous Surprises' Backing Up Into Neighboring Basements

In Farmington Hills, Michigan, WDIV-TV Channel 4 reports:
  • A Farmington Hills family is battling the water resources commissioner after being told that it has to tear down its $900,000 home.

    The Dhillon family bought the nearly $1 million house out of foreclosure thinking they got a real bargain. But now, the house has turned out to be the money pit of all money pits.

    Six years ago, the Dhillons got a letter that told them they had to tear down their home and pick up the tab for the entire demolition. The Dhillons have been waging that battle with the county ever since.

    The house sits atop a sewerage easement installed in the 1970s that went in before a house ever sat there.

    When the house was built in the early 2000s, the legal filings said the builder, who was also the homeowner at the time, removed a manhole to the sewer, sealed it off and put the house on top of it.

    The county has since sent video robots inside the sewer line and discovered leaks.

    "According to the drain code, if a drain is obstructed, the drain commissioner shall cause the obstruction to be removed," the water resources commissioner said. "This is an obligation, not an option."

    That means the Dhillons have to level their home to prevent sewage from backing up in neighboring basements.

    The Dhillons said they don't have enough money to demolish their own home and find somewhere else to live. In their court filings, they said, "The Dhillons are innocent homeowners. They were not involved in any way with design, construction or inspection of the home, or with the home's connection to the sewer line. They are not to blame for the situation."

    The Dhillons want to go to mediation, but the county, which has tried to figure out ways around tearing down the house, said it's against mediation and a teardown is the only answer.
Source: Farmington Hills family told to tear down $900K home to prevent sewage backup (Infrastructure issue could cause sewage to back up in neighboring basement).

See also, Oakland County: $900,000 home has to go — and owner must pay (Drain officials want to bulldoze $900K house built atop sewer line that is leaking and could cause sinkhole).

Court Slams Brakes On Eviction By Nationwide R/E Operator That Uses 'Rent-To-Own' Racket To Peddle 'Money-Pit' Houses To Unsophisticated, Low-Income Buyers; Outfit Lost Title To Home Over Property Tax Non-Payment, But Moved To Boot Renter Anyway; 79-Year Old Victim Had Already Spent $20K In Fix-Up Costs; Legal Aidsters Seek $3K In Lawyer Fees From Landlord

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:
  • It took a month, but Kaja Holdings 2 LLC admitted in court this week that it cannot evict Jesse White from the house he has rented since 2015.

    The reason: Kaja "has recently learned that (it) no longer owns the subject property," the firm confessed in a motion to dismiss the eviction action it filed against the 79-year-old White on Feb. 16.

    White's response: He's asking the court to order Kaja to pay his lawyer's fees of $2,940, a sum that is slightly more than five months rent that White used to pay Kaja.

    Kaja "and its attorneys knew that the (eviction) complaint was without any reasonable basis in law or equity when they filed it, but decided to file it anyway," Amanda Adrian, White's Legal Aid Society of Milwaukee attorney,(1) wrote in her motion seeking fees of $300 per hour.

    The court motions are the latest twists in the strange case in which Kaja sued to evict White more than three months after the company lost title to the house White rented on the 4100 block of N. 26th St.

    The tale began in March 2015 when White signed a lease with an option to buy that called for him to pay $570 a month in rent and made him responsible for all repairs and maintenance for the three-bedroom house.

    About $41 of the rent was to go toward the $40,000 purchase price. The lease states that White was responsible for any taxes due at the time it was signed, though it does not state whether he was responsible for future taxes.

    City treasurer records had listed Kaja as the property owner until Oct. 31, when the city took title.

    White has told city officials that the house was in terrible condition when he moved in. It lacked plumbing fixtures, working water, water meters and electricity. White has said he spent $20,000 of his own money making repairs.

    Unknown to White at the time is that Kaja is affiliated with Vision Property Management, a South Carolina company that manages about 5,500 rent-to-own properties nationwide. The company is under investigation by the state Department of Justice and has come under scrutiny from the various media outlets and U.S. Rep. Elijah Cummings, the ranking Democrat on the House Committee on Oversight and Government Reform.

    Former tenants have complained that they were evicted from their homes by affiliates of Kaja after they spent thousands of their own dollars to renovate and repair the rental properties thinking that one day they would be homeowners.

    When the tenants, who are generally low-income, were evicted from their homes they were left with nothing to show for the time and money they invested in the properties.

    White's story has an unusual twist, in that Kaja lost title because it owed $8,199 in back property taxes for 2014-'16. Combined, 22 companies linked to Vision Property Management owe the city about $152,000 in delinquent taxes, a review of city records conducted at the beginning of March showed.

    The city seized the property on Oct. 31 and informed White of its action the next day.

    "Do not pay any future rent to your former landlord," the Nov. 1 notice from the Department of City Development states. White is currently renting the house from the city for $500 a month. Amy Turim, the Department of City Development's real estate development services manager, hopes to sell the house to White.

    "We're working on a couple of different pathways to turn a tough situation for Mr. White into an opportunity," she said, explaining that the city and White are looking at various programs to make the purchase affordable for White, who is retired and lives in the house with his two teenage sons.

    City records show the house still needs about $45,000 worth of work, including a new roof, to bring it up to code.

    Despite losing title to the house, Kaja filed to evict White, alleging he had not paid rent since June 2016. White said he paid each month's rent.

    Adrian, White's attorney, contends that despite its claims that it recently found out that it did not own White's home, Kaja's own actions prove it knew it didn't own the house when it sought to evict White.

    On Jan. 27, Kaja applied to regain possession of the house by paying its back taxes and other fees, Adrian wrote in her motion seeking fees. That was about three weeks before the company sued to evict White.

    Kaja and its lawyers "knew that (Kaja) did not own the property — and was therefore not entitled to possession of it — when they commenced this (eviction) action," Adrian wrote.

    In addition to dismissing the eviction suit and paying her fees of $300 an hour, Adrian is asking Milwaukee County Circuit Judge Ellen Brostrom to also remove White's name from state's online court record system known as CCAP.

    If Kaja is ordered to pay the fees, the money would go to Legal Aid, which does not charge clients for its legal services. The $300 rate Legal Aid is seeking is based on Adrian's experience, rates charged in the Milwaukee market and the type of work she did on behalf of White.

    In her motion, Adrian argued the sanctions were warranted because Kaja "has wasted judicial resources, sullied defendant's CCAP record, and forced defendant to respond to a meritless action."

    Central city landlords frequently check CCAP before renting to a person and frequently will not rent to people who have an eviction on their record even if the eviction action is dismissed, she wrote.

    Kaja's attorney, Thomas Cassady, declined comment on Adrian's requests.
For the story, see Firm admits it can't evict Milwaukee man from home it doesn't own.
----------------------
(1) The Legal Aid Society of Milwaukee is a non-profit, public interest law firm that provides free legal services to Milwaukee’s most vulnerable residents who are too poor to afford legal counsel.

Tenant Spent About $50K To Renovate Home (Special Bathrooms, Ramps, Etc.) To House Eight Wheelchair-Bound Residents, Now Landlord Decides Not To Renew Lease, Telling Everyone To Pack Their Bags & Take A Hike!

In Granada Hills, California, KTTV-TV Channel 11 reports:
  • Eight paraplegics are being forced out of the place they call home.

    The organization Freedom to Live rented the Granada Hills house for the last five years, but on Sunday [March 5], the landlord issued a 60-day-notice for all the tenants to move out.

    “It’s not an easy life being a paraplegic and quadriplegic, it’s one of the hardest things,” tenant Juan Elisarraras said. “We’ve been put through a grilling test and now we’re being put out on the street.”

    Elisarraras, who is paralyzed from the chest down from a gunshot wound, just moved to the house in March and he’s afraid to unpack if he can’t stay.

    This home is specifically set up for quadriplegics and paraplegics with wheel chair ramps and special bathrooms.

    The founder of Freedom to Live, Sian Welch, said she put about $50,000 into renovating it.

    Now the landlord doesn’t want to renew the lease, citing on the 60-day-notice that he wants to move back in.

    Welch said she asked for an extension, since it’s difficult to move eight wheelchair-bound patients who have come to find freedom and independence living here.

    “I can take the bus. I can travel to places that I’ve never been to before, go shopping and live the life a normal person in this world does,” Elisarraras said.

    FOX 11 reached out to the landlord on Thursday afternoon, but has not heard back.

    Freedom to Live is asking for the public’s help fundraising for a future move or a permanent home for tenants in the program.

Thursday, March 23, 2017

Lawsuit: Midwest Landlord Of Complexes Built & Financed With Affordable Housing Tax Credits Is Using 'Friendly Foreclosures' To Foreclose On Himself To Weasel Out Of 30-Year Gov't Commitments To Offer Reduced Rents To Low-Income Tenants; Concerns Raised That Legal Maneuver May Be Growing Business Model To Improperly Jack Up Rents

In Grand Rapids, Michigan, The Grand Rapids Press reports:
  • A prominent and influential West Michigan landlord is dodging its commitments to provide low-income housing for its tenants, housing advocates say.

    Eenhoorn LLC has arranged foreclosures for least seven of its low-income housing developments in Michigan and other Midwest states, said John Smith, a lawyer with Legal Aid of West Michigan.(1)

    Those foreclosures allow Eenhoorn to get out of 30-year commitments to offer reduced rents to low-income tenants at their properties. The commitments were made by the original developers when they used government-issued tax credits to build the housing projects.

    The Michigan Housing Development Authority has asked the Internal Revenue Service to rule on whether Eenhoorn should be denied the ability to convert their subsidized apartments into market rate units.

    "We seek guidance from the IRS to protect the residents of affordable housing in this state from planned foreclosure schemes," then-MSHDA director Kevin Elsenheimer wrote to the IRS on Sept. 19, 2016.
    ***
    the foreclosures do mean Eenhoorn can now charge higher market rate rents when its low-income units open up, Smith said.

    "This process could eliminate more than 540 units of subsidized housing that would have been offered to low-income tenants for another 30 years," Smith said in an April 7, 2016 letter alerting MSHDA to the foreclosures.

    'A growing business model'

    Smith and other housing advocates said they fear the foreclosures will become a trend unless the federal government steps in to stop the practice.

    "We are concerned that these are not isolated incidents, but rather what might be a growing business model," Smith said. "I don't think anyone has seen anything this extensive before."
    ***
    Mark Schwartz, executive director of Regional Housing Legal Services in Philadelphia, said he has been watching similar foreclosures develop in Virginia, Texas and New Jersey in recent years.

    "The trouble is that in the 30-year history of the program, the Treasury Department has never provided any guidance as to what that provision means," said Schwartz, who has become an informal clearinghouse on planned foreclosures for housing advocates.

    Low income housing projects funded by tax credits have been successful, but the IRS has done little to stop the foreclosures that have siphoned off the number of available low income housing units, he said.

    "I think this is something that caught the local agencies by surprise. They weren't looking for it," Schwartz said.

    Eenhoorn's foreclosures

    According to a paper trail unearthed by Smith and other Legal Aid lawyers, Eenhoorn bought ownership control of the properties and loaned them money backed by mortgages. The entities that held the mortgages took the properties back through a legal process called "deed in lieu of foreclosure" when the properties fell behind on the mortgages.

    The foreclosures allowed Eenhoorn to get out of the final 15 years of its 30-year obligation to provide low-income housing at the properties, said Smith, who discovered the foreclosures while representing a low-income and disabled resident of The Lofts, a downtown Grand Rapids apartment project at 26 Sheldon Blvd. SE.

    [Eenhoorn attorney Nyal] Deems said the mortgages were extended to revive unprofitable housing developments. Eenhoorn owned the properties for between nine and 12 years before foreclosing on them, he said.
    ***
    At the apartments Smith has identified, Eenhoorn purchased properties that were financed with low-income housing tax credits, a federal program in which developers are given tax credits that offer their investors full tax write-offs for 10 years.

    Although the tax write-offs disappear after 10 years, the developers are required by the IRS to subsidize rents to low-income residents for up to 30 years.

    A foreclosure cancels those requirements and allows landlords to charge higher rents for the final 15 years, provided they give their low-income tenants a three-year grace period to find new housing after the foreclosure.

    In a 2014 newsletter, the IRS asked state housing agencies to notify them of "planned foreclosures" that appeared to intentionally shorten the period in which low income rents are supposed to be available.

    Little appears to have been done since then, according to Schwartz.
For the story, see Is prominent landlord using foreclosure loophole to ditch low income tenants?

For story update, see:
------------------------
(1) Legal Aid of Western Michigan provides free legal assistance to low income persons and Seniors in non-criminal, non-fee generating matters. It currently serves people in 17 counties in the lower Western part of Michigan with offices in Grand Rapids, Holland, Kalamazoo, Muskegon, Niles and St. Joseph. section 8

Section 8 Housing Benefit On Road To Worthlessness In Hot Bay Area Rental Market; Soaring Rents That Exceed HUD Maximums Lead Landlords To Exit Program, Leaving Renters Holding Vouchers That Property Owners Won't Accept

In San Francisco, California, KALW-Radio 91.7 FM reports:
  • Eva Castillo* thinks of herself as a strong person. She was raised in the Sunnydale projects in San Francisco, sharing a bedroom with three brothers. Now, she works construction — often as the only woman on the job. But when she was evicted, she says she felt truly helpless for the first time in her life.

    “I ain’t never been in this situation before,” she says. “I've been working ever since I've been eight — and it feels like I’m working for nothing.”

    Castillo has been in homeless limbo ever since the eviction, a year ago. She and her four teenage daughters are scattered now, crashing at five different places.

    “You don't know what tomorrow's going to hold, having to figure out where you're going to sleep at and all those things — it’s stressful.”

    Castillo was evicted not through any fault of her own, but because she was using Section 8 vouchers to help pay her rent, and her landlord decided to leave the program. So, after eight years in her home in the Bayview District of San Francisco, Castillo and her daughters moved out.

    The way the section 8 program works is voucher-holders pay what they can afford — about 30% of their income — and then the voucher pays the rest. The local housing authority, along with Castillo’s landlord, decided the fair market rate for her three-bedroom spot was $2,800. Castillo makes pretty good money, so she paid $2,500. Then the voucher picks up the difference, in this case, the remaining $300.

    But the thing is, anyone who knows San Francisco real estate knows you can find someone willing to pay more than $2,800 for a three bedroom these days — even in a less-fancy neighborhood like The Bayview. Castillo’s landlord knew she could get more from her property, so she quit the program. And because so many other landlords are opting out too, Castillo's having a hard time finding anywhere to go.

    “I find myself looking further and further out. I'm looking in Brentwood now,” says Castillo. "My whole life is out here [in San Francisco], my work...”

    Because Castillo can’t find anyone to take her voucher in San Francisco, she’s going to have to transfer her registration to wherever she’ll move. It’s called “porting” — it’s a little bureaucratic shuffle that takes about two weeks. But that means that whenever she gets close to landing a place, she has to ask the landlord to wait. She says several houses have slipped through her fingers because the landlords have gone with a tenant that’s ready to move in right now.

    In fact, just last night, a place she was hopeful about fell through.

    Since I first met Castillo, six months ago, her voucher has expired. So, now she’s looking for a place she can afford without assistance. She thinks it’s doable, since it’s just for her and her youngest. But if this had happened when her daughters were all kids, she doesn’t know what she’d do.

    Castillo says she feels like she did everything right and still collapsed into homelessness. And the story is the same all around her.

    “Everybody that I grew up with is either on drugs, living in another county or another state,” she says. “Because California is too rich for us poor people to be too poor.”

    The Promise of Section 8 reform

    The Section 8 program has never been big enough to subsidize everyone that qualifies to be on it. But in the past, if you won that lottery, you were safe. The program was a good deal for landlords with property in low-rent districts. But in today’s Bay Area housing market, low-rent districts are quickly getting bid up.

    Eric Johnson, the director of the Oakland Housing Authority, says Section 8 participation in gentrifying neighborhoods has “dropped to nothing.”

Northern California Real Estate Operator Gets 12 Months Prison Time, $240K In Fines, Restitution For Role In Bid Rigging Racket At Courthouse-Held Foreclosure Auctions

From the U.S. Department of Justice (Washington, D.C.):
  • A Northern California real estate investor was sentenced yesterday [March 15] for his role in a conspiracy to rig bids at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

    John Michael Galloway was charged on Dec. 3, 2014, in an indictment returned by a federal grand jury in the Northern District of California. He pleaded guilty to one count of bid rigging in Oakland, California, on Nov. 16, 2016. Yesterday, Galloway was sentenced to serve 12 months of imprisonment and ordered to pay a $74,899 criminal fine and $265,050 in restitution.

    Between June 2008 and January 2011, Galloway conspired with others not to bid against one another, instead designating a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County.

    The members of the conspiracy then held second, private auctions to award the properties to members of the conspiracy and determine payoffs for other conspirators who had agreed not to bid against each other at the public auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held. The primary purpose of the conspiracies was to suppress and eliminate competition in order to obtain selected real estate offered at Contra Costa County public foreclosure auctions at noncompetitive prices. When real estate properties are sold at public auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with the remaining proceeds, if any, paid to the homeowner.

Wednesday, March 22, 2017

NJ Woman Gets Seven Years For Abusing POA To Pilfer Over $120K From 87-Year Old Woman; Pocketed Cash Included $90K+ Mortgage Refinancing Proceeds Secured By Victim's Home

In Phillipsburg, New Jersey, lehighvalleylive.com reports:
  • A 59-year-old woman who faced up to 30 years behind bars was sentenced to seven years in prison for stealing more than $120,000 from an 87-year-old lifelong Phillipsburg woman.

    Frances M. Wise, of the first block of Woodlawn Road in Phillipsburg, was convicted by a jury in October of theft, theft by deception and misapplication of entrusted property -- all second-degree crimes that each carry a sentence of up to 10 years.

    The theft counts were merged for sentencing purposes and she was sentenced Feb. 10, the Warren County Prosecutor's Office said in a news release.

    Wise, who had power of attorney from 2009-13, drained Josephine Bacskai's bank account of more than $30,000 and took out two mortgages totaling more than $90,000 on the Stanley Street home, authorities charged.

    Shortly after she was found guilty, Wise told lehighvalleylive.com that she didn't commit the crimes. She provided documents showing the mortgage and numerous small charges on the victim's account, but said they were done at Bacskai's request. Wise said she had been railroaded by the legal system.

    She was ordered at sentencing to pay Bacskai $143,000 in restitution, the prosecutor's office sad.

    Lisa Martinelli, who took over the power of attorney in 2013, noticed the thefts, the prosecutor's office said. She spoke at the sentencing.

Lender Accepts Mortgage Payments ($8,500) From Woman For 10 Months On Her Recently-Deceased Dad's Home, Then Invokes Death Default Clause To Foreclose Anyway

In Powhatan County, Virginia, WTVR-TV Channel 6 reports:
  • A family home was sold to the highest bidder Friday [March 10]; it was an auction overshadowed by tears. Peggy Stroud wept as a bidder bought the home she grew up in on Urbine Road.

    Stroud said the home is the place where her mother took her last breath, and her father was shot to death on the porch two years ago.

    For months after his death, Stroud says she paid the bank her dad's mortgage, nearly $8,500 total. She was stunned to learn that all of those payments still did not stop a foreclosure.

    "The mortgage lady said there was a death default on the promissory note he signed and that means when he died the entire balance was due upon his death,” Stroud said.

    No one told me that for about 10 months after he passed away,” she continued. “They accepted every payment.”

    Several local attorneys said that the promissory note her father signed decades ago, is legally binding, and that the bank was within its right to foreclose on the property.

    "It's hard for me,” Stroud said. “Legal and moral are two different things. I think ethically that at least I deserve my money back.” “If you are not going to work with me to save the house, the only thing I have left of my parents, then give me my money back," she said.

    Local real estate attorney Shane Frick, who is not affiliated with this case, said death default provisions are not that common, but they do exist. "Depending on the circumstances, it certainly can mean they can foreclose on you,” Frick said.

    He said it is a default under the mortgage and that continued payment doesn't mean the clause can be stopped. “Again, each situation is different," Frick explained.

    Stroud said the death default clause was something she had never heard of, and had no idea to ask about. Now she hopes her story will be an eye-opener for others.

    "If you inherit property and it still has a lien or a mortgage, absolutely ask if there's a death default on the promissory note," Stroud said.

    That something Frick says is sound advice, whether you are buying or inheriting property. "It's an important question to ask,” Frick explained. “You really want to do your due diligence so you fully understand what you're getting yourself into.”

Lawsuit Tags South Beach HOA For Allegedly Clipping Prospective Buyers & Renters For Non-Refundable Application Fees In Excess Of Maximum Amount Allowable Under Florida Law; Plaintiff Seeks Class Action Status

In Miami Beach, Florida, The Real Deal (South Florida) reports:
  • A recently filed lawsuit alleges the Icon South Beach’s condominium association charges non-refundable application fees in excess of what is allowed by Florida law.

    The suit, which seeks class action status, was filed in Miami-Dade Circuit Court by Icon South Beach renter Derek Schwartz, but could end up involving more than 100 plaintiffs, according to the complaint.

    Attorneys representing Schwartz and Icon Condominium Association did not immediately return phone calls seeking comment.

    In order to rent or purchase one of the 290 units at Icon South Beach, a 42-story luxury tower at 450 Alton Road, a potential buyer or tenant must fill out an application and seek approval from the condo association, the lawsuit states. However, the Icon board charges applicants a $250 processing fee that is $150 more than the Florida Condominium Act allows, the lawsuit says.

    “This deceptive and unfair scheme was used by Icon to line its pockets at the expense of Florida consumers,” the lawsuit says. “The Florida Condominium Act prohibits condominium associations from charging transfer fees of more than $100 per applicant.”

    Schwartz is seeking unspecified damages for himself and anyone who qualifies for the class action, as well as an injunction from the court to stop Icon Condominium Association “from charging such illegal transfer fees in the future.”

    The lawsuit also accuses the condo association of violating the state’s law against deceptive and unfair trade practices. If the court authorizes the class action status, anyone who paid the $250 application fee would be able to join the lawsuit.
For the story, see Icon South Beach renter pursues class action lawsuit against condo association over application fees (Suit says board charges applicants $250 fee, $150 more than the Florida law allows).

For earlier posts on the excessive application fee racket allegedly being run by Florida condominium associations, see:

Tuesday, March 21, 2017

Strong Evidence, But Not Strong Enough, Says Florida Appeals Court In Throwing Out $8.3 Million Judgment Against Foreclosure Rescue Operator Who Allegedly Used Unfair, Deceptive Trade Practices When Peddling Forensic Loan Audits, Foreclosure Defense Services; Unresolved Issues Of Material Fact Precluded Summary Judgment, Case Kicked Back To Trial Judge For Further Proceedings

In Fort Lauderdale, Florida, the Daily Business Review reports:
  • An $8.3 million judgment against Margate-based mortgage company Outreach Housing LLC for allegedly defrauding clients facing foreclosure after the housing market collapse has been overturned.

    The company faced allegations from the Office of the Attorney General, accusing it of unfair and deceptive trade practices to mislead homeowners with delinquent mortgages into paying Outreach—instead of their lenders—as a means of escaping foreclosure.

    Outreach lost the first leg of the litigation when Broward Circuit Judge Michael L. Gates determined liability by summary judgment. The case turned in its favor on appeal, however, when a state judicial panel found unresolved questions precluded summary judgment.(1)
    ***
    Clients claimed Outreach solicited business through homeowner interviews eliciting information about inaccuracies in loan documents to convince prospective customers of a legal basis for challenging their contracts. They said it offered loan mitigation and foreclosure defense to clients who provided two-thirds of their monthly mortgage payments to negotiate on their behalf.

    But the Attorney General's Office claimed the company violated Florida's Deceptive and Unfair Trade Practices Act by misleading homeowners, while it only strategically delayed foreclosure to keep them paying.
For more, see Judgment Against Mortgage Company for Defrauding Clients Overturned.
--------------------
(1) From the court's ruling:
  • "In sum, the summary judgment evidence and the affidavit in opposition showed that material issues of fact remain. While the OAG's evidence is strong, if believed by the trier of fact, Outreach had a different version and explanation of what occurred," Warner wrote. "The OAG did not erase the doubt created by the opposing evidence. We must reverse."

Ex-Cop/Ex-Con Gets Pinched For Allegedly Passing Himself Off As An Attorney Providing Foreclosure Defense Services, Filing Fraudulent Liens On Behalf Of Financially Strapped Homeowners

In Fort Lauderdale, Florida, WPLG-TV Channel 10 reports:
  • Over the course of the past four years those who met Kenneth Anthony Frank were told he was an attorney – but it turns out no one by that name is in the Florida Bar.

    Frank was arrested Wednesday [March 8] after a complicated, winding investigation through financial records and real estate transactions.

    "Hard work, research, getting victims to actually talk about and helping to explain the complexity of the crime," Robbie Werner, an intern with a private investigator, said about the arrest.

    In fact, Werner decided to become a private investigator specifically to help put together a case against Frank – who now faces 21 counts of fraud, forgery, theft, filing false legal papers and practicing law without a license.

    He field false legal papers in both county and federal courts, according to court documents. Investigators were able to get a sworn testimony in May from Garry Saunders, who told them that he met Frank in 2012, shortly after his Deerfield Beach went into foreclosure.

    That case closed in May 2012 – but even after the final judgment was issued there was civil litigation, with many of those filings signed "Garry Saunders Pro Se."

    Saunders testified that most of the filings under that name were prepared Frank. Eventually Saunders' home was sold and that's when he and Frank retaliated against the people and entities involved in the purchase of Saunders’ home by filing fraudulent liens.

    Frank prepared the liens, which were issued to three properties for $1 million and one property for $90,000.

    And that wasn’t the only case that appeared in court documents of Frank allegedly posing as an attorney.

    Detectives report Frank would swoop in to help as a real estate professional or lawyer, collect fees and rents and file court papers -- all without any license in an alleged scheme to steal.

    There are other people out there who claim to be victims, but those detailed in the arrest report spool a story of an ex-con from New York who essentially gamed the real estate and foreclosure processes.

    "He was introduced to me as an attorney. He started to do a foreclosure defense on my house," Charles Nixon said.

    Werner said he’s not surprised. "He knew it front to back, soup to nuts, from the appellate court to bringing things federal, " he said.

NJ Appeals Court Throws Out Scammer's Conviction For Admittedly Pocketing $138K Of Sister-In-Law's Money Meant To Pay Home Mortgage; Prosecutor Failed To Prove Intent To Deceive At Time Defendant Was Given The Cash

In Washington Township, New Jersey, nj.com reports:
  • A man who was convicted in 2013 of misappropriating money he was given to pay a family member's mortgage won a partial victory under an appellate court ruling released Thursday [March 9].

    Robert Schwartz, 56, of Washington Township, pleaded guilty to a third-degree charge of theft by deception and was sentenced to five years probation and ordered to pay $138,352 in restitution to his sister-in-law, Karen Giosa, and her husband, Frank.

    Frank Giosa gave Schwartz [...] $175,000 in 2007 with the understanding that the money would be used to pay the Giosa family's mortgage on their Gloucester Township home.

    At some point, he stopped making the mortgage payments, but didn't tell the Giosas. They learned they were in trouble when they received a foreclosure notice in 2009, the family previously said.

    Schwartz was indicted on a second-degree theft by deception charge and entered a guilty plea to the third-degree charge in October 2013 as part of a plea agreement.

    Seven months after he was sentenced, Schwartz filed a motion to vacate his guilty plea. That motion was rejected. He also filed a motion to vacate his indictment on statute of limitation grounds, which was also rejected.

    Schwartz appealed both rulings and appellate judges agreed with him on one -- vacating his guilty plea.

    The appellate court found that the trial judge erred in denying the motion to withdraw his guilty plea because the charge of theft by deception requires proof that Schwartz obtained the money "by creating a false impression" of how it would be used.

    According to trial testimony, Schwartz began putting money toward mortgage payments, meaning that his initial intention was honorable. It was only later that he began keeping money for himself, according to court testimony.

    "Because defendant failed to admit, and the admitted facts failed to show, that he deceived or created a false impression at the time he obtained Giosa's money, he did not give an adequate factual basis for theft by deception," the court found. "If he later formed a criminal intent, and purposely retained the money for himself rather than pay off the mortgage, that might constitute theft by failure to make required disposition of property received ... but that crime was neither admitted nor charged."

    As a result, his conviction and sentence are vacated and Schwartz is now permitted to re-plead or take the case to trial.

Monday, March 20, 2017

NYC Feds Score Extradition Of Fugitive Pinched By Ukrainian Cops; Defendant Allegedly Ran Scheme That Used Offers Of Loan Modification Help To Target, Then Trick, Financially Desperate Homeowners Into Signing Away Title To Their Homes

From the Office of the U.S. Attorney (New York City):
  • Preet Bharara, the [now-former] United States Attorney for the Southern District of New York, [among other federal and state officials], announced [on March 10] the extradition from Ukraine of HERZEL MEIRI, who was indicted on March 16, 2016, on fraud and money laundering charges in connection with a scheme to fraudulently induce distressed homeowners to sell their homes to a company he owned and controlled. MEIRI, who arrived in the District yesterday, had been arrested by Ukrainian authorities on October 27, 2016.
    ***
    U.S. Attorney Preet Bharara said: “Herzel Meiri allegedly concocted a callous scheme to swindle desperate homeowners out of their homes. As alleged, Meiri lied to his victims, who thought that they were getting the financial help they needed but instead were being tricked into signing over their homes.
    ***
    According to the allegations in the Fourth Superseding Indictment, which was unsealed in November 2016, as well as the Complaints previously filed in this action[1]:

    Since at least 2013, MEIRI and his co-defendants have defrauded distressed homeowners throughout the Bronx, Brooklyn, and Queens. MEIRI and others falsely represented to these homeowners – some of whom were elderly or in poor health – that they could assist them with a loan modification or similar relief from foreclosure that would allow the homeowners to save their homes. But rather than actually assisting these homeowners, the defendants deceived them into selling their homes to Launch Development LLC (“Launch Development”), a for-profit real estate company owned and controlled by MEIRI.

    MEIRI and others lured victims through Homeowners Assistance Service of New York (“HASNY”), which purported to provide assistance to homeowners who were seeking to avoid foreclosure of their homes. As part of the scheme, MEIRI directed employees of Launch Development to solicit owners of distressed properties and invite them to meet with HASNY representatives so that they could learn more about avoiding foreclosure and saving their homes.

Federal Jury Slams Foreclosure Relief Scammer Who Ran Bogus Loan Elimination Scheme; Defendant Pocketed Hefty Upfront Fees, Monthly Payments In Exchange For False Promises That Victimized Homeowners Could Wipe Out Unpaid Mortgages, Own Their Homes "Free & Clear"

From the Office of the U.S. Attorney (Fresno, California):
  • After a four-day trial, a federal jury found Martin Calzada, 29, of Norwalk, guilty today [March 10] of one count of conspiracy to commit mail fraud and eight counts of mail fraud affecting a financial institution, [...]. The trial was held before United States Chief District Judge Lawrence J. O'Neill.

    According to evidence presented at trial, Calzada conspired to defraud homeowners facing foreclosure. Calzada and other employees of Star Reliable Mortgage, which had offices in Bakersfield, Visalia, and Salinas, targeted distressed homeowners with a fraudulent “loan elimination” scheme.

    Between approximately August 2010 and October 2011, Star Reliable charged clients an upfront fee for its services – ranging from $2,500 up to $4,500 – as well as monthly fees, based on false promises that the clients could own their homes “free and clear” as a result of Star Reliable’s services. Clients paid hundreds of thousands of dollars to Star Reliable and at least $300,000 was transferred from Star Reliable into Calzada’s bank accounts.

    In furtherance of the scheme, Calzada and other employees at Star Reliable filed at county recorders’ offices fraudulent documents on behalf of the homeowner-clients, which purported to replace the legitimate property trustees with fictitious trusts affiliated with the defendant and Star Reliable, all in an effort to “cloud title” and halt or stall the foreclosure process.

    Additionally, Calzada, and other employees working at his direction told Star Reliable clients to stop paying their mortgages. They also falsely represented that Star Reliable clients had one million dollars in a U.S. government account that could be used to pay-off a homeowner’s mortgage.

    This case was the product of an investigation by the Federal Bureau of Investigation and the Tulare County District Attorney’s Office.

Another Attorney Takes Hit For Role In Loan Modification/Foreclosure Defense Racket; Voluntarily Submits Bar Resignation, Gets Disbarred On Consent For Screwing Financially Strapped Homeowners Seeking Help Saving Their Homes, Making False Promises To Pocket Hefty Upfront Fees, Monthly Payments

In Pittsburgh, Pennsylvania, the Pennsylvania Record reports:
  • The state Supreme Court decided Feb. 23 to disbar attorney Daniel Domenick, 19 days after he tendered his resignation from practicing law.

    In its decision, the Court said that Domenick was disbarred on consent from the Bar of the Commonwealth of Pennsylvania and ordered that he pay costs to the Office of Disciplinary Counsel ["ODC"], according to Pennsylvania Rule of Disciplinary Enforcement 208(g).

    According to the decision, Domenick had agreed to represent clients in financial hardship and wrongful foreclosure cases, in which he would advise clients, draft pleadings and try to negotiate on behalf of his clients with mortgage lenders and loan providers.

    Domenick had agreed to do this for a large payment in advance and monthly payments of the fees he charged, which would usually be debited from his clients' bank accounts after they gave written permission.

    Domenick failed, according to the Office of Disciplinary Counsel, to do work that merited the fees and failed to keep those advance fee payments separate of his property. The ODC also explained that Domenick tried to get help from local attorneys for clients in areas where he couldn't practice, but that he failed to retain those attorneys' services and ended up doing illegal work in many jurisdictions.

    The ODC explained Domenick charged and collected illegal fees and/or overcharged fees for his work both in areas he could legally practice and areas he couldn't legally practice.

    The ODC also explained that Domenick took exorbitant fee payments from clients in mortgage foreclosure cases, including some who could not afford such fees. According to the decision, Domenick also did not refund his clients these illegal and/or outrageous fees.

    The ODC explained that Domenick opened up his own law firm, Domenick Legal Group, which he ran in association with Williams Legal Group, a firm run by a non-lawyer that presented itself as specializing in mortgage debt relief.

    The ODC said that the operator of Williams Legal Group required Domenick to use a fee structure that his firm put into place. The ODC also explained that this person, who lost his Ohio real estate license in 2009, lied to Domenick when he told Domenick that his business model cleared disciplinary challenges in the past and that his way of doing business was found ethically proper. The decision said that Domenick took this person at his word regarding ethical matters.

    The ODC explained that this person collected a percentage of the legal fees that Domenick took from his clients and that Domenick knew and gave permission to that person to do so. Domenick kept 12 to 27 percent of the gross receipts that his clients gave him. The operator of Williams Legal Group could access and control Domenick's bank accounts, which Domenick also knew about and reluctantly allowed, and this person gave one of his employees a bookkeeping job at Domenick's law firm.

    The decision said that Domenick had his clients sign forms allowing direct debits from their bank accounts, allowing the operator of Williams Legal Group to issue electronic checks that were payable to Domenick's law firm and drawn from the accounts of each of Domenick's clients.

    Eventually, as the ODC found, Domenick began to regret working with this person and developed depression. According to the decision, this led Domenick to seek counseling through Lawyers Concerned for Lawyers in the fall of 2015 and go through inpatient treatment last year.

    The ODC explained that Domenick worked to distance himself from the operator of Williams Legal Group in late 2015 and by January 2016 had cut ties with this person entirely, running his law firm by himself for a short time.

    The 34 clients spanning 13 states who were harmed by Domenick paid him $509,853.

Sunday, March 19, 2017

Massachusetts AG Squeezes $60K (Tenant's Share: $40K) Out Of Boston Landlord For Its Alleged Lack Of Responsiveness To Wheelchair-Bound Tenant's Accessibility-Related Requests In Violation Of State Fair Housing Requirements

From the Office of the Massachusetts Attorney General:
  • Multiple individuals will receive monetary damages and several property owners and management companies across the state will strengthen their anti-discrimination and fair housing policies after three separate settlements were reached over claims of disability-based housing discrimination against tenants, Attorney General Maura Healey announced [recently].

    The AG’s Office finalized settlements in three separate cases resolving allegations that the defendants, mainly property owners and managers, discriminated against tenants by failing to reasonably accommodate their disabilities.
In one case:
  • Mission Park and RTH together own residential apartments located in several buildings in the Roxbury neighborhood of Boston, including the Mission Park properties, which are managed by Trinity.

    According a complaint filed by the AG’s Office, these three entities engaged in a pattern of discriminatory and unlawful housing practices against a tenant on the basis of her disability by repeatedly failing to provide reasonable accommodations and modifications to her residence. The tenant has spina bifida and uses a wheelchair.

    The tenant’s mother repeatedly expressed her need for a wheelchair-accessible unit, including an accessible bathroom, doorways, kitchen counters, and entrances. The tenant also asked for permission to keep an emotional support dog. In each instance, the defendants allegedly failed to engage in an interactive dialogue, required burdensome and unnecessary paperwork, and unreasonably delayed or refused to provide the reasonable modifications or accommodations.

    Pursuant to a consent judgment filed in Suffolk Superior Court, the defendants have agreed to pay a total of $60,000, including $40,000 in damages to the complainants, $15,000 to the Commonwealth, and $5,000 to be used for education programs for tenants with disabilities. The defendants are also required institute comprehensive anti-discrimination policies and provide fair housing training for staff.
For more, see AG Healey Obtains Multiple Settlements in Fair Housing Cases on Behalf of Tenants With Disabilities (Properties Located in Worcester, Roxbury, and East Wareham; Settlements Secure $155,000 in Restitution for Tenants, Penalties and Funding for Educational Programs).

Massachusetts AG Shakes $75K (Tenant's Share: $60K) Out Of Landlord In Settlement Of Fair Housing Allegations That Wheelchair-Bound Tenant's Requests For Accessibility Modifications To Their Home Were Either Met With Undue Delays Or Improperly Denied Altogether

From the Office of the Massachusetts Attorney General:
  • Multiple individuals will receive monetary damages and several property owners and management companies across the state will strengthen their anti-discrimination and fair housing policies after three separate settlements were reached over claims of disability-based housing discrimination against tenants, Attorney General Maura Healey announced [recently].

    The AG’s Office finalized settlements in three separate cases resolving allegations that the defendants, mainly property owners and managers, discriminated against tenants by failing to reasonably accommodate their disabilities.
In one case:
  • The Related Companies, Inc., Related Washington Heights, LLC, and Related Management Company, L.P., own or manage Washington Heights, a large housing complex in Worcester.

    According to a complaint filed by the AG’s Office, these defendants engaged in discriminatory and unlawful housing practices against a tenant on the basis of her disabilities by failing to provide reasonable accommodations and modifications. The tenant began using a wheelchair after suffering a stroke during childbirth.

    In January 2013, the tenant and her husband requested an accessible unit with a wheelchair ramp but allegedly were told the waitlist was years long and they would be better off moving elsewhere. At that time, they began requesting reasonable modifications to make their home accessible, the majority of which allegedly were met with undue delays by the defendants and some requests were denied altogether, including making the sidewalk ramp to the entryway of the apartment safe and usable for the tenant.

    The AG’s Office alleged that the tenant’s recovery was adversely impacted by the lack of accessibility. She was unable to leave her home on her own and, at times, unable to even move from one room to another. Her husband’s health was also adversely impacted by the delays after he injured his back while caring for his wife.

    Pursuant to a consent judgement filed in Suffolk Superior Court, the defendants have agreed to pay a total of $75,000, including $60,000 in damages to the tenant and $15,000 to the Commonwealth. The companies will also be required to update their antidiscrimination policies, pay for training on fair housing laws for all employees and for educational programs for residents regarding their rights as tenants and resources available for tenants with disabilities. As a condition of the consent judgment, the defendants will also work with the U.S. Department of Housing and Urban Development on an assessment of the property’s compliance with applicable federal law.
For more, see AG Healey Obtains Multiple Settlements in Fair Housing Cases on Behalf of Tenants With Disabilities (Properties Located in Worcester, Roxbury, and East Wareham; Settlements Secure $155,000 in Restitution for Tenants, Penalties and Funding for Educational Programs).

Condo Developer To Cough Up $60K To Settle NAACP Fair Housing Lawsuit Alleging That All Prospective Buyers Were Discriminated Against Unless They Were Ultra-Orthodox Jews

In Spring Valley, New York, The Journal News reports:
  • The NAACP and Park View Condominiums have reached a financial settlement on the civil rights organization's allegations that only religious Jews were offered housing in the complex on Main Street and Maple Avenue.

    The NAACP filed a complaint in 2013 with the U.S. Department of Housing and Urban Development alleging that Route 45 LLC discriminated against potential buyers who were not ultra-Orthodox Jews based on their race, religion and national origin.

    The agreement, reached through HUD under the Fair Housing Act, mandates the townhouse complex pay the NAACP branch $60,000, with $35,000 going into escrow for people denied access to the housing based on discrimination, according to the agreement. At least two people will get $3,000 and $12,000 respectively.

    "All applicants who did not belong to that group were told all units were sold out while several units remained available for purchase," Wilbur Aldridge, regional director of the Mid-Hudson/Westchester NAACP, and Spring Valley NAACP President Willie Trotman said in a joint statement.

    "In several instances," they said. "Employees refused to return calls to applicants of color and of other religious groups, failed to market the property to the general public and violated county building code by including religious spaces for a single group to accommodate specific religious practices."

    Aldridge said HUD also agreed to increase its monitoring.

NYC Feds Squeeze Another Developer/Landlord On Allegations Of Fair Housing Violations; Defendant Agrees To Fork Over Up To $500K To Compensate Aggrieved Persons & Retrofit Over 800 Rental Units As Needed To Increase Accessibility For Persons With Disabilities

From the Office of the U.S. Attorney (New York City):
  • Preet Bharara, the [now-former] United States Attorney for the Southern District of New York, announced [on February 14] that the United States has settled a federal civil rights lawsuit against ALBANESE ORGANIZATION, INC. (“ALBANESE”) and three of its affiliates, [...] , by consent decree.

    Under the settlement, ALBANESE has agreed to make retrofits at The Verdesian, a rental complex located at 211 North End Avenue in Manhattan, in order to comply with the federal Fair Housing Act (“FHA”) and make The Verdesian more accessible to individuals with disabilities. The DEVELOPER DEFENDANTS also have agreed to inspect two additional rental complexes in Manhattan, The Solaire and The Vanguard Chelsea, and, where necessary, make retrofits at those buildings as well.

    Additionally, ALBANESE commits in the consent decree to establish procedures to ensure that its ongoing and future development projects will comply with the accessibility requirements of the FHA. Finally, as part of the consent decree, the DEVELOPER DEFENDANTS have agreed to provide up to $500,000 to compensate aggrieved persons and pay a civil penalty of $45,000.(1)
    ***
    The FHA’s accessible design and construction provisions require new multifamily housing complexes constructed after January 1993 to have basic features accessible to persons with disabilities.

    According to the allegations in the Complaint, Verdesian, a rental complex with 253 rental units, was designed and constructed with numerous inaccessible features, including excessively high thresholds interfering with accessible routes in the public and common areas as well as into and within individual units, and insufficient widths, clearance, and clear floor space in bedrooms, bathrooms, closets, and kitchens for maneuvering by people who use wheelchairs.
    ***
    Together, The Verdesian, The Solaire, and The Vanguard Chelsea contain more than 800 rental apartments.
    ***
    The government’s lawsuit also asserts claims against the architect of The Verdesian, SLCE Architects, LLP. Those claims remain pending.
Source: U.S. Attorney Files Suit And Reaches Agreement With Real Estate Developer To Increase Accessibility At Three Manhattan Apartment Buildings.
-----------------------
(1) According to the settlement, aggrieved individuals that may be entitled to monetary compensation from the fund created through the settlement include those who:
  • Were discouraged from living at The Verdesian, Vanguard Chelsea, or The Solaire because of the lack of accessible features;
  • Have been hurt in any way by the lack of accessible features at The Verdesian, Vanguard Chelsea, or The Solaire;
  • Paid to have an apartment at The Verdesian, Vanguard Chelsea, or The Solaire made more accessible to persons with disabilities; or
  • Otherwise were discriminated against on the basis of disability at The Verdesian, Vanguard Chelsea, or The Solaire as a result of the inaccessible design and construction of the properties.
Any individual who may be entitled to compensation should file a claim by contacting the Civil Rights Complaint Line at (212) 637-0840, using the Civil Rights Complaint Form available on the United States Attorney’s Office’s website, or by sending a written claim to:

U.S. Attorney’s Office, Southern District of New York
86 Chambers Street, 3rd Floor
New York, New York 10007
Attention: Chief, Civil Rights Unit

NYC Feds: Compliance With Fair Housing Accessibility Requirements For Those With Disabilities Continues Being An Issue With Downstate NY Developers, Construction Outfits, Architects

In Mount Kisco, New York, the Mount Kisco Daily Voice reports:
  • The developer, architectural firm and construction company behind the Sutton Manor condominium complex are being sued by [the U.S. Attorney's Office] for allegedly failing to provide access for handicapped people.

    The lawsuit, which is being brought under the Fair Housing Act, names developer Robert Pascucci as a defendant, along with two companies that he owns, Bedford Development, LLC and Carnegie Construction Corp. The suit also names a company called Jobco, Inc, which Pascucci is president of.

    “The Fair Housing Act mandates accessibility in design and construction," [the U.S. Attorney] said in a statement. "Through this lawsuit – like the many other similar suits brought by this Office – we intend to hold these defendants accountable for their failure to adhere to the laws that ensure equal access to housing for New Yorkers with disabilities.”

    A copy of the lawsuit announcement can be found here.

    The project's architect, Warshauer Mellusi Warshauer, P.C. (WMW) is also a defendant. Former Pound Ridge Town Supervisor Gary Warshauer, served until 2013, is a partner in the architectural company.

    Sutton Manor is a condominium complex geared towards people who are ages 55 and over, and was built in the 2000s on a hilly site behind a local Burger King. The complex is comprised of a three-story building with 47 units, [the] office notes.

    [The U.S Attorney]'s office cites a litany of alleged violations, claiming it "was designed and constructed with numerous inaccessible features, including
  • insufficient clear opening width at, and excessive force required to operate, the doors to the elevator lobbies,
  • excessively high thresholds at the entrances to the patios or balconies from within individual units and from the community room,
  • insufficient clear opening width of each panel of the double-leaf doors leading to the patio or balcony in individual units,
  • excessively high thresholds at the entrances to showers, and
  • insufficient clear floor space in the hallways and kitchens for maneuvering by persons who use wheelchairs."
  • The federal lawsuit was brought in response to complaints from several condo owners, who purchased their units in 2007. The complainants are Mark and Gloria Koller, Michael and Linda Tracey, and Ina Grober. The units were advertised as being accessible to people with disabilities, [the] office says.

    "Ms. Tracey, Ms. Koller, and Ms. Grober each has a disability that limits her mobility," the office stated. "Ms. Tracey uses an electric wheelchair and Ms. Koller and Ms. Grober each use a walker."

    [The U.S. Attorney]'s office alleges that the complainants repeatedly notified the defendants about issues between 2007 to 2010 and that the problems were not addressed.

    The residents reported their concerns to the U.S. Department of Housing and Urban Development (HUD), which determined that there was "reasonable cause" to believe there was a Fair Housing Act violation, [the] office added. After HUD's determination, [the] office noted, the complainants decided to have their matter decided in federal court. The U.S. Department of Justice, [...], is allowed to sue on behalf of Fair Housing Act complainants.