NYC Foreclosure Rescue Operator Target Of Federal Lawsuits

New York City foreclosure rescue operator Home Savers Consulting Corp. and Phil Simon have been the targets of two Federal lawsuits containing allegations of equity stripping involving the use of a "straw buyer" in connection with foreclosure rescue deals.

In one case, Johnson vs. Home Savers Consulting Corp., Phil Simon, et al., the allegations in the complaint state that:

• "After applying for what they believed was a refinance loan, plaintiffs discovered that Home Savers, through document trickery, misrepresentations, and outright fraud, had caused them to transfer ownership of their home to an “investor.” Unbeknownst to plaintiffs, the “investor” then mortgaged the property with Argent Mortgage Company for $425,000—a $182,000 increase over plaintiffs’ mortgage."

Neither Home Savers or Simon bothered to answer the allegations, and a default judgment was entered against them. According to the court docket, the victimized homeowners settled the lawsuit as it related to the mortgage lender involved in the transaction who was also named as a defendant in the case; and last week, the judge in the case entered an order against attorney Fred Way for actual and punitive damages of $10,000+ for his involvement in the transaction.

The victimized homeowners in this case were represented by South Brooklyn Legal Services, Brooklyn, NY; and White & Case LLP, New York City.

In another case, Phifer v. Home Savers Consulting Corp., the allegations in the complaint state:

• "After applying for what she believed to be a refinance loan, plaintiff discovered that Home Savers, through document trickery, misrepresentations, and outright fraud, had caused her to transfer ownership of her home to Wayne Griffith, the straw buyer, a person she had never met before. Unbeknownst to plaintiff, Home Savers then arranged for the straw buyer to mortgage plaintiff's home to Fremont Investment & Loan for $415,000--approximately a $170,000 increase over plaintiff's then existing mortgage on which she owed $245,000."

Neither Home Savers nor Simon have, as of yet, bothered to answer the allegations in this case, either. The litigation is currently ongoing and a motion for a default has yet to be filed against them.

The victimized homeowners in this case are represented by Oda C. Friedheim, Legal Aid Society, Queens of Kew Gardens, NY and Noah David Lang, of Seyfarth Shaw LLP, New York City.

Go here for other posts on foreclosure rescue operator, Home Savers Consulting.

New York Foreclosure Rescue Operator Back In The News

In Brooklyn, New York, The New York Times reports:

• In 2005, [Waver Brickhouse] fell behind on her mortgage payments and turned to a so-called rescue firm, which, court papers allege, tricked her into signing away the deed to her Brooklyn home. She says the company, Home Savers Consulting, secretly sold her home, with the help of a mortgage from IndyMac Federal Bank, and ran up huge new debts.

• Now broke, deeply embarrassed and facing the loss of her small row house in the Brownsville neighborhood, Ms. Brickhouse, 69, faces a new problem. She must convince the Federal Deposit Insurance Corporation, which last year took control of IndyMac, now insolvent, that her mortgage payments should not include at least $150,000 tacked on by fraud.

***

• Ms. Brickhouse has sued Home Savers,(1) and her case underscores the conundrum facing the F.D.I.C. as it wades through thousands of troubled mortgages it has inherited from failed banks, 40,000 from IndyMac alone.

***

• F.D.I.C. officials asked Ms. Brickhouse to forward financial information so they could work out arrangements for her to pay some portion of the $380,000 mortgage. Ms. Brickhouse acknowledges that she is responsible for the $213,000 on her original mortgage. But she refuses to pay any part of the mortgage that she said was obtained through fraud.

For more, see Mortgage Fraud Case Poses Federal Quandary.

For some of the legal documents filed in this case, see:

• Brickhouse v. Millett - Complaint & Notice of Removal to Federal Court,
• Brickhouse v. Millett - Memorandum of Law in Opposition to Motion to Dismiss.

Go here for other posts on New York City-area foreclosure rescue operator, Home Savers Consulting Corp.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

(1) According to the story, Ms. Brickhouse’s case has a persuasive ring to it, not least because one of those engaged in the alleged fraud, straw buyer Yolanda Millett, returned her deed and swore out an affidavit describing the scheme. In it, Ms. Millett accused Home Savers of misleading Ms. Brickhouse at every turn. “She did not at any time believe that ownership of the subject property passed to me,” Ms. Millett stated in the affidavit, “and her intent was never to relinquish ownership.”

Reportedly, Home Savers Consulting has been sued by homeowners in Brooklyn, Queens and Staten Island, and nearly every case alleges a similar pattern of deception: An owner behind on a mortgage turns in desperation to Home Savers, which secretly transfers the deed to a “straw buyer” with good credit who qualifies for a cash-out refinancing. Then, it is alleged, Home Savers drains the homes of equity. Jessica Attie, co-director of the South Brooklyn Legal Services Foreclosure Prevention Project, estimates that Home Savers extracted at least $5 million in equity from the homes of people in a handful of her cases. Legal services lawyers have frequently forwarded information on Home Savers to prosecutors, but no criminal cases have been brought.

NJ Feds Squeeze Guilty Plea From Brooklyn-Based Foreclosure Rescue Operator; Admits To Role In Peddling Sale Leaseback, Equity Stripping Scams

From the Office of the U.S. Attorney (Newark, New Jersey):

• A Brooklyn man pleaded guilty [] to conspiracy to commit wire fraud in connection with a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, U.S. Attorney Paul J. Fishman announced. Garth Celestine, 44, of Brooklyn, New York – formerly an owner of Home Savers Consulting Corp., which was located in Brooklyn and Freeport, New York – pleaded guilty [] to the conspiracy charge before U.S. District Judge Dennis M. Cavanaugh.

***

• On August 5, 2009, Celestine was arrested pursuant to a Complaint along with former Home Savers co-owner Phil A. Simon. According to the Information to which Celestine pleaded guilty, other documents filed in this case, and statements made during Celestine’s guilty plea proceeding:

• Celestine and Simon owned and operated Home Savers, which held itself out as a foreclosure rescue company, at 946 Fulton Street, Brooklyn, New York, and 350 North Main Street, Freeport, New York. Celestine and Simon allegedly conspired with each other and others to defraud both homeowners facing foreclosure and mortgage lenders by making materially false representations and promises.(1)

***

• Celestine admitted that as a result of their actions, he and Simon fraudulently obtained more than $1 million and caused the mortgage lenders to fund dozens of fraudulent loans worth more than $10 million.

Reportedly, Simon has pleaded not guilty, and a criminal complaint against him is still pending, said Rebekah Carmichael, a spokeswoman for the U.S. Attorney’s Office. An investigation into the scheme continues, Carmichael reportedly said.

U.S. Attorney Fishman credited Federal investigators with the FBI, and Postal Inspectors of the U.S. Postal Inspection Service for their investigation leading to the guilty plea, and thanked Brooklyn District Attorney Charles J. Hynes for the assistance and cooperation that was provided by his Office.

For the U.S. Attorney press release, see Former Owner of Home Savers Consulting Corp. Pleads Guilty to Mortgage Foreclose Rescue Scheme.

See also, The Record: Brooklyn man pleads guilty to foreclosure scam in Bergenfield, Paterson.

Go here for earlier posts on the now-defunct New York City-area foreclosure rescue operator, Home Savers Consulting Corp.

(1) According to the press release, Celestine admitted that, doing business as Home Savers, he and his partner Simon advertised to homeowners and promised to help them avoid foreclosure, keep their homes, and repair their damaged credit. Celestine told the homeowners that they could avoid foreclosure by signing contracts of sale and transferring title to their homes to individuals who would act as “straw buyers” of the properties. Celestine promised the homeowners that after they transferred their title to these straw buyers, Home Savers would improve their credit ratings, help them obtain more favorable mortgages on their homes, and ultimately direct the straw buyers to transfer the title to their homes back to the homeowners within six months to one year. Celestine and Simon typically told the homeowners that the equity withdrawn from their properties would be kept in a separate account and used to pay the mortgages and expenses on their homes.

NYC Foreclosure Rescue Operator Back In The News

In New York City, WABC-TV Channel 7 ran a follow-up story on Monday on the now well-known area foreclosure rescue operator, Brooklyn based Home Savers Consulting Corp. Two separate criminal investigations are reportedly (still) underway into the rescue firm. Channel 7 investigative reporter Sarah Wallace speaks with two more homeowners who fell victim to the alleged equity stripping scam orchestrated by Home Savers' principal, Phil Simon, by unwittingly signing over their homes to a straw buyer.

Channel 7 was able to catch up with Phil Simon (I mean, they literally caught up with him - when Simon saw the Channel 7 camera, he started running away. Wallace, with microphone in hand and camera person in tow, chased Simon down a Brooklyn street before he relented and consented to speak to her). Simon had little to say, however, other than to refer questions to his attorney. Home Savers' co-principal, Garth Celestine, was conspicuous by his absence in this report.

For the transcript of the story, and a link to the Channel 7 video, see Homes stolen by 'Home Savers'? (Heartbroken people lose homes, equity to "Home Savers").

For the earlier Channel 7 report on Home Savers which aired in late November, see A Home Mortgage Mess.

Go here for other posts on Home Savers Consulting Corp, including links to a couple of the civil lawsuits it has been recently facing.

For a related post, see Foreclosure Rescue - For Criminal Prosecutors Only.

Editor's Note:

According to the law of the State of New York at one time (see Marden v. Dorthy, 160 N. Y. 39 (NY 1899)):

• fraudulently procuring the signature of another to an instrument which he has no intention of signing constituted forgery on the part of the procurer. It was not necessary that the act of forgery be done by the hand of the person being charged. It was sufficient that the forgerer caused or procured it to be done; and


• if the scammed homeowner, during all the time covered by the fraudulent transactions, was in possession of the real property in question, the legal effect of the homeowner's possession constituted notice of the homeowner's rights to the property to all the world, including subsequent purchasers and encumbrancers.

If this is still the law in New York, state and local law enforcement authorities may have grounds to charge these foreclosure rescue operators with forgery. Further, inasmuch as it is generally considered that a forged deed is void, it conveys no title. Accordingly, the scammed homeowners would still own their homes. The burden of the foreclosure rescue scam would be borne by the foreclosure rescue operator, the straw buyer, and the financial institution who financed the equity stripping transaction (and, possibly, the title underwriter who issued the title insurance policies). If anyone knows for sure that Marden v. Dorthy no longer is reflective of New York law, please drop me a line at HomeEquityTheft@yahoo.com and tell me specifically why not (while I understand that the case is over 100 years old, that in itself doesn't make the case obsolete. Unlike a loaf of bread, court decisions of the highest court of the state don't grow stale by the mere passage of time).

One final note. Even if the deed is not considered a forgery, the foreclosure rescue transaction would still have to withstand scrutiny as an equitable mortgage (and, depending on how much profit the operator pocketed, the claim may be that of a usurious equitable mortgage). Possession by the homeowner throughout the transaction would appear to, as noted above, constitute "notice to the world" of the scammed homeowner's rights in the home, thereby denying "bona fide purchaser / encumbrancer" status to the straw buyer, the lending institution financing the deal, or anyone else who subsequently acquired an interest in the home.

NYC Foreclosure Rescue Operator Is At It Again, Back In The News, Being Sued Again, & Under Criminal Investigation

(original post 11-28-07)
Home Savers Consulting Corp., a Brooklyn, New York-based foreclosure rescue operator is back in the news. This time, it's WABC-TV Channel 7 (New York City) that ran a story the other night featuring two more scam victims who unwittingly went to Home Savers for help when they were facing foreclosure. Instead of help, they got their homes sold from out from under them. In addition to the homeowners facing foreclosure, Channel 7 investigative reporter Sarah Wallace also spoke on camera to a couple of the straw buyers that Home Savers hired and were involved in the scam. They claim that they were unwitting participants in the scam as well.

Reportedly, the Home Savers' business office suddenly closed and Garth Celestine, one of the Home Savers' partners, has apparently gone into hiding, which is understandable because, in addition to a number of civil lawsuits filed against Home Savers, criminal investigations in two states are ongoing, according to Channel 7.

To stave off possible foreclosure, one victim has now filed for bankruptcy and the other is considering it.

One of the victims has brought a civil lawsuit against Homesavers and others, alleging a widespread conspiracy of fraud. To read the online transcript of the Channel 7 TV report, see A Home Mortgage Mess.

Go here to watch the WABC-TV Channel 7 report.

Go here for other posts on Home Savers Consulting Corp.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Federal Judge Imposes $10K In Damages Against NY Attorney For Involvement With Foreclosure Rescue Operator

Last week, a Federal judge in Brooklyn, New York entered a judgment for damages in the amount of $10,720.75 against New York attorney Fred Douglas Way, III, Esq., (aka Fred Way) for his involvement in an equity stripping scheme involving New York foreclosure rescue operator Home Savers Consulting Corp. and Phil Simon.

The damages broke down as follows:

• $2,500 for money that he refused to return to the victimized homeowners of a foreclosure rescue scheme,
• $7,500 in punitive damages, and
• $720.75 for the cost of serving a subpoena on him.

According to the record:

• "[W]ay [was served] with notices of court conferences, a request to enter default, and a subpoena duces tecum directing Way to produce documents and appear for deposition. The process server for the subpoena served Way at his office on November 14, 2005, after being forced to wait for forty minutes because of Way's refusal to accept service. Due to the evasion of service, the cost of service of the subpoena was $ 720.75. Way did not appear for the January 9, 2006 deposition noticed in the subpoena served upon him, nor did he produce any documents in response to the subpoena. Plaintiffs' counsel also spoke with an attorney named Domenik Napoletano on January 9 and 31, 2006, who inquired whether plaintiffs would consent to vacate the default against Way. Plaintiffs stated that they would not agree to vacate the default, and neither Napoletano nor Way moved to vacate the default, or made efforts to engage in settlement talks with plaintiffs or respond to the subpoena served upon Way. Despite the numerous notices given to Way and his clear knowledge of the action against him, Way has still failed to appear in this action. Way also has a documented history of failing to appear in other litigation against him and defying court orders."

In addition, the record reveals allegations of other cases in which attorney Fred Way may have been involved in foreclosure rescue schemes:

• "Plaintiffs also point to other litigation involving similar claims against Way. See Attie Decl. PP 27-31; Johnson-Hines v. Freeman, No. 05-cv-5173 (E.D.N.Y. November 4, 2005) (foreclosure rescue scheme in which Way allegedly acted as attorney for investor); Robinson Electrical v. Woods, Index No. 37841/05 (N.Y. Sup. Ct., Kings County) (alleging that Way steered plaintiff into a fraudulent home improvement scheme); Hinds v. Way, Index No. 48329/99 (N.Y. Sup. Ct., Kings County) (alleging that Way took and retained nearly $ 40,000 from the sale of two properties while acting as attorney for an estate)."

The victimized homeowners were represented by South Brooklyn Legal Services, Brooklyn, NY; and White & Case LLP, New York, NY.

To read the Federal Magistrate Judge's Report and Recommendation against attorney Fred Way in this case, including a recitation of the basic facts involving the foreclosure rescue operator and its conduct against the victimized homeowners, see Johnson vs. Home Savers Consulting Corp., Phil Simon, et al., Case # 04-cv-5427 , 2007 U.S. Dist. LEXIS 24288, E.D.N.Y, March 23, 2007.

To read the April 11. 2007 court order entering judgment against Way, see Amended Order - Johnson vs. Way et al.

To read the facts of the case, as alleged by the victimized homeowners, see Complaint - Johnson vs. Home Savers Consulting Corp., Phil Simon, et al.

Go here for other posts on foreclosure rescue operator, Home Savers Consulting.

NYC Foreclosure Rescue Operator Sued Again

New York City foreclosure rescue operator Home Savers Consulting Corp. has again been named in a civil lawsuit, again filed in a Brooklyn Federal Court, and again alleged to have engaged in a foreclosure rescue, equity stripping transaction. The home purportedly "being saved" in this case is in Staten Island. The lawsuit, filed on June 29, names Garth Celestine, Phil Simon, Ophelia Ray (bird dog), Krishna Maharaj, Courtney Callender (straw buyer), Blackacre Title Agency Corp., The New York Mortgage Co. LLC., and several "John Does" and unamed entities as additional defendants.

Among other things, it is alleged that:

1) Ophelia Ray, working as a bird dog for Home Savers, first made face-to-face contact with the homeowners by showing up at the plaintiffs' front door, and "quoted from the Bible and professed to be a religious person who sincerely wanted to help the [plaintiffs],

2) Home Savers obtained well over $100,000 out of the equity in the plaintiffs' home, giving them $12,000, and pocketing the difference,

3) The plaintiffs thought they were getting a mortgage with payments prepaid for a year, but in June, the plaintiffs were served with an eviction notice.

The complaint sets forth the following causes of action:

• (a) equitable mortgage - Section 320 of the New York Real Property Law; (b) numerous violations of the Federal Truth In Lending Act and its implementing regulations (Regulation Z), (c) violation of the Federal Real Estate Settlement Procedures Act, (d) violation of New York Deceptive Pratices Act - Section 349 of the General Business Law, (e) fraud, (f) civil conspiracy to commit fraud, (g) aiding and abetting fraud, (h) conversion, (i) quiet title action - Article 15 of the New York RPAPL (ie. void the mortgage and any other claims that may have arisen as a result of the transaction in question).

Representing the plaintiffs / homeowners in this lawsuit are Christopher D. Lamb, and Sarah T. Gillman, of Counsel, for The Legal Aid Society of New York (Staten Island).

For a copy of the lawsuit, see Harvey vs. Home Savers Consulting Corp., et al.

Go here for other posts on Home Savers Consulting Corp. equitable mortgage yak

NYC Equity Stripping, Foreclosure Rescue Scam Has Happy Ending For Victimized Homeowner

In New York City, National Public Radio reports on the story of Gloria Johnson, a homeowner in the Bushwick section of Brooklyn who was allegedly scammed out of her home equity by foreclosure rescue operator Home Savers Consulting Corp.

Unlike many of these stories, this one had a happy ending for Ms. Johnson. Jessica Attie, Ms. Johnson's lawyer and one of the co-directors of the Foreclosure Prevention Project [at South Brooklyn Legal Services], filed suit against Home Savers, challenging the bona fides of the transaction. Reportedly, Home Savers got scared and sent Johnson back her money and the deed, after which Attie arranged with a legitimate bank to refinance Johnson's house, cutting her mortgage payments in half.

For more, see Housing Pros Seen Working Foreclosure Scams.

***

To read the facts of the case, as alleged in the victimized homeowners lawsuit, see Complaint - Johnson vs. Home Savers Consulting Corp., Phil Simon, et al.

Go here for other posts on New York City-area foreclosure rescue operator, Home Savers Consulting Corp.

Go here for criminal prosecutions of foreclosure rescue operators.

For more on equity stripping, foreclosure rescue scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

More Foreclosure Rescue Victims Fighting Back To Keep Their Homes

The New York Times recently ran a story on the foreclosure rescue business and featured the stories of three victims that were reportedly ripped off by foreclosure rescue operators and are fighting back to keep their homes.

One case involves a Brooklyn, New York couple did business with Home Savers Consulting Corporation, a Brooklyn company that advertised help for people facing foreclosure. The homeowners signed their home away to this company. According to the story:

• "Jessica Attie, co-director of the Foreclosure Prevention Project at South Brooklyn Legal Services and the lawyer for the [Brooklyn homeowners], said her office was overwhelmed with homeowners who had handed over their deeds to people pretending to help “save” their homes. Officials at Home Savers could not be reached; the company’s telephone has been disconnected."

A second case involves a Newark, New Jersey homeowner who responded to a flier from foreclosure rescue operator Equitable Real Estate Solutions and met with Kenneth McKinnon, an official at the company. The homeowner ultimately signed over his home to them. Essex-Newark Legal Services is handling this homeowner's case.

A third case involves a Chicago, Illinois homeowner who did business with foreclosure rescue operator RYM Technologies and Felix Daniel, the head of the company. Within four months after signing up for a program offered by RYM, the home was in foreclosure. Lea Weems, a lawyer at the Home Ownership Preservation Project at the Legal Assistance Foundation of Metropolitan Chicago, represents the Chicago homeowner and has helped her client get back the title to her home. They are also suing the lender who placed the mortgage on the house that was part of the equity stripping transaction. They are seeking to void the mortgage. A hearing in her case is scheduled for mid-July.

Reportedly, securities regulators in Utah have issued a cease and desist order against RYM Tech, and Arizona officials said a hearing was scheduled for this month in its civil suit against the company for offering securities inappropriately.

For more, see Predators Bilk Struggling Homeowners, or

Predators Bilk Struggling Homeowners (The Times Daily).

Go here to watch NY Times video - A Victim Of Equity Stripping.

Go here for other posts on foreclosure rescue operator, Home Savers Consulting.

For copy of one of the above lawsuits, see Johnson vs. Home Savers Consulting Corp., Phil Simon, et al. equitable mortgage yak

Newark Feds Obtain Indictment Of Previously-Charged Brooklyn Man Peddling Sale Leaseback, Equity Stripping Foreclosure Rescue Scams

From the Office of the U.S. Attorney (Newark, New Jersey):

• A federal grand jury indicted former co-owner of Home Savers Consulting Corporation Phil A. Simon today in connection with an alleged mortgage fraud scheme in which he falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, United States Attorney Paul J. Fishman announced.

• Simon, 35, of Brooklyn, N.Y., was previously charged by Complaint with conspiracy to commit wire fraud and arrested by special agents of the FBI on August 5, 2009, in Brooklyn. The Indictment charging Simon adds five substantive counts of wire fraud based on five specific fraudulent transactions regarding properties in Bergenfield, Elizabeth, and Paterson, N.J.

• Former Home Savers co-owner Garth Celestine, who was arrested along with Simon last August, pleaded guilty in March before United States District Judge Dennis M. Cavanaugh to an Information charging him with conspiracy to commit wire fraud. He is scheduled to be sentenced on November 22, 2010.

For the entire press release, see Co-Owner Of Home Savers Consulting Corp. Indicted For Mortgage Foreclosure Rescue Scheme.

For the indictment, see U.S. v. Simon.

Go here for more on the now-defunct Brooklyn-based Home Savers Consulting Corp.

NJ Feds Bag Brooklyn-Based "Home Savers" Equity Stripping Foreclosure Rescue Racket; High Equity Homeowners Allegedly Conned w/ Bogus Sale Leasebacks

From the Newark, New Jersey Office of the FBI:

• It’s the type of story that is becoming increasingly more common: FBI Special Agent In Charge Weysan Dun announced [Wednesday] the arrests of GARTH CELESTINE, age 44, of [...] Brooklyn, New York; and PHIL A. SIMON, age, 34, of Brooklyn – both better known collectively as “Home Savers Consulting Corporation”. Both were arrested this morning at their residences without incident and charged with attempt and conspiracy to commit wire fraud in connection with a home foreclosure scheme.

• Celestine and Simon owned and operated Home Savers, which held itself out as a foreclosure rescue company, [...]. The company conducted business in both New York and New Jersey. According to the complaint, Celestine and Simon allegedly conspired with each other to defraud both homeowners facing foreclosure and mortgage lenders by making materially false representations and promises and causing wire transfers to perpetuate the scheme. A key aspect of the scheme was the targeted victims: homeowners with substantial equity in their homes who were facing foreclosure because of an inability to make the monthly payments.

***

• [Another] victim-group consisted of the straw-buyers. Celestine and Simon allegedly recruited individuals with good credit scores to act as “buyers” of the homes facing foreclosure. This was accomplished by misrepresenting to the straw-buyers that they were helping the true owners to “save” their homes. [...] Celestine and Simon also allegedly applied to different lenders for multiple mortgages on the same properties at the same time to extract the maximum available equity from each property.

***

• [T]he complaint charges that Celestine and Simon eventually failed to make the mortgage payments in nearly every case and caused the loans to default. In the end, Celestine and Simon caused lenders to fund more than $10 million worth of fraudulent loans and stole $1.5 million worth of equity from the properties.

For the entire FBI press release, see “Home Savers” and Misbehaviors! FBI Arrests Two in Foreclosure Scheme.

Go here for more on Brooklyn-based Home Savers Consulting Corp. shotgunning

B'klyn-Based Duo Who Ran Equity Stripping Ripoffs Get Multi-Year Prison Stays After Guilty Pleas; Pair Pinched For Peddling Predatory Sale Leasebacks

From the Office of the U.S. Attorney (Newark, New Jersey):

• Two Brooklyn, N.Y., men were sentenced [] for conspiring with each other and others in a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, U.S. Attorney Paul J. Fishman announced.



• Phil A. Simon, 35, and Garth Celestine, 46, were sentenced to 66 months and 36 months in prison, respectively. Both defendants previously pleaded guilty before U.S. District Judge Dennis M. Cavanaugh to conspiracy to commit wire fraud. Judge Cavanaugh also imposed the sentence [] in Newark federal court.



• According to documents filed in this case and statements made in court:
  
  From 2004 to 2007, Simon and Celestine owned and operated Home Savers Consulting Corp., which held itself out as a foreclosure rescue company with two locations in New York. Simon and Celestine conspired with each other and others to defraud both homeowners facing foreclosure and mortgage lenders by making false statements and promises. Simon and Celestine defrauded more than 40 homeowners and mortgage lenders, causing losses to the victims of more than $3.3 million.
  
  Home Savers advertised to homeowners and promised to help them avoid foreclosure, keep their homes and repair their damaged credit. Simon and Celestine told the homeowners they could avoid foreclosure by signing contracts of sale and transferring title to their homes to individuals who would act as “straw buyers” of the properties.
  
  Simon and Celestine promised the homeowners that after they transferred their title to these straw buyers, Home Savers would help them improve their credit ratings, help them obtain more favorable mortgages on their homes, and ultimately direct the straw buyers to transfer the title to their homes back to the homeowners within six months to one year.
  
  Simon and Celestine typically told the homeowners the equity withdrawn from their properties would be kept in a separate account and used to pay the mortgages and expenses on their homes.
  
  After the homeowners were signed up, Simon and Celestine recruited individuals with good credit scores to act as straw buyers and paid them about $10,000 per property. Using the homeowners’ properties and the good credit ratings of the straw buyers, Simon and Celestine applied for mortgages in the names of the straw buyers to extract the maximum available equity from the homes.(1)

For the U.S. Attorney press release, see Co-Owners of Home Savers Consulting Corp. sentenced to prison for orchestrating mortgage foreclosure rescue scheme.

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

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

Virginia Homeowner Hauls Foreclosure Rescue Operator Into Court

While working on a post last week on New York City foreclosure rescue operator Home Savers ConsultingaCorp., I stumbled into a pending foreclosure rescue lawsuit against a Virginia rescue operator also using the "Home Savers" moniker. The lawsuit, being litigated in a Norfolk, Virginia Federal Court, is captioned Clemons vs. Home Savers LLC, and White and Selkin, and has been filed by Virginia Beach attorney Tanya Bullock of the firm Bullock & Cooper, PC on behalf of the plaintiff.

Among the causes of action asserted in the lawsuit are (1) equitable mortgage, (2) violations of the Federal Truth In Lending Act, Home Ownership & Equity Protection Act, and Federal Reserve Board Regulation Z, (3) breach of fiduciary duty & negligence, (4) fraud, intentional misrepresentation and deceit, (5) conversion, (6) unjust enrichment, (7) breach of the implied covenant of good faith & fair dealing, (8) violations of Federal & Virginia Real Estate Settlement Procedures Acts, (9) constructive trust and resulting trust, (10) action to quiet title, (11) violation of Virginia Mortgage Broker Lender Act.

For a copy of Clemons vs. Home Savers LLC, et al., drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail you a copy.

Go here for information on other foreclosure rescue litigation filed by the law firm Bullock & Cooper. equitable mortgage yak

NYC Foreclosure Rescue Scammer Target Of Lawsuits; Can't Be Found, FBI Investigating

In New York City, The New York Daily News ran an investigative report on foreclosure rescue scams Sunday. Below, an excerpt:

• Heartless scammers who call themselves "angels" are ripping off scores of desperate homeowners facing foreclosure, a Daily News investigation shows. Instead of rescuing them from the financial abyss, they steal their savings, their homes and their dignity. One self-declared "angel" is Maurice McDowall, who ran a string of companies in Brooklyn, Manhattan and Long Island. [...] The FBI is investigating McDowall, and he's the target of numerous lawsuits charging him with fraud. Lawyers looking for him say he has vanished.

McDowall's equity stripping operations bore names like "Lost & Found Recovery" and "Home Mergers," according to The News' investigation. Reportedly, lawyers for one alleged victim tried but failed to serve McDowall with papers at his latest base of operations, Home Savers Consulting Corp., another company that since has been accused of perpetrating foreclosure rescue schemes.

Jessica Attie, a lawyer with South Brooklyn Legal Services, says she sees more and more rescue scam victims coming to her office. For more, see 'Angels' hit desperate homeowners with foreclosure scam.

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

For story updates, see:

• New York Daily News: Two found guilty in mortgage scam and face 30 years in prison,
• The Associated Press: 2 plead guilty in NY mortgage frauds targeting homeowners,
• North Country Gazette: Two Guilty Of Home Foreclosure Rescue Scheme,
• Blog post: NYC Feds Indict Six In Alleged Foreclosure Rescue Scam Operation.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Go here for other posts on foreclosure rescue operator, Home Savers Consulting.

Michigan AG Files Criminal Charges In Separate Cases Alleging Loan Modification Firms Clipped Homeowners For Upfront Fees, Then Failing To Help

From the Office of the Michigan Attorney General:

• Attorney General Mike Cox today announced the filing of three criminal complaints and a total of 10 charges against illegal advanced fee "foreclosure rescue" operations accused of defrauding Michigan families of thousands of dollars. Global Financial Consulting Services of Dearborn Heights, Advanced Mediation Services of Midland and James Klein of Midland are accused of illegally charging homeowners facing foreclosure upfront fees for mortgage modification assistance.(1) The defendants claimed they would help homeowners by working with their lenders in an attempt to modify the borrower's mortgage. After paying the upfront fee, borrowers found that the companies could not secure a modification and were subsequently unable to get their money back.

***

• In addition to [the above] charges, Cox announced that he has partnered with the Federal Trade Commission and delivered Notices of Intended Action (NIAs) to 13 out-of-state companies accused of illegally demanding upfront fees from Michigan consumers for loan modification services.(2)

For the entire press release, see Cox Takes Aim at Advanced Fee "Foreclosure Rescue" Scams.

(1) According to the AG's press release, Global Financial Consulting Services faces four criminal counts including two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and two counts of making misleading statements. Advanced Mediation Services and James Klein each face two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and one count of making misleading statements. Each of the charges carries a penalty of up to 90 days in jail and/or a fine of $1,000 in addition to the requirement that the companies make full restitution to each of their victims.

(2) The companies receiving NIA warnings from Cox today include:

• 1 Global Financial, Inc., of Fort Lauderdale, FL;
• 21st Century Legal Services and Fidelity National Legal Service, of Rancho Cucamonga, CA;
• Best Interest Rate Mortgage, of Westmont, NJ;
• Echo Loans & Financial Solutions, of Foothill Ranch, CA;
• Elect Group LLC, of Oakland Park, FL;
• Federal Home Savers, of Commack, NY;
• Fresh Start Home Modification, of Woodbury Heights, NJ;
• Hope N Housing, of Norwalk, VA;
• IMC Financial, of Clearwater, FL;
• Lifeguard Financial, of Fort Lauderdale, FL;
• National Modification Corp., of Hauppauge, NY;
• North American Relief, LLC, of Costa Mesa, CA; and
• Peoples First Financial Inc., of San Diego, CA.

Search Ongoing For Mom/Son Duo For Allegedly Snatching Possession Of Vacant Foreclosed Homes Throughout South Jersey, Then Selling/Renting Them To 20+ Unwitting Buyers/Renters; Woman's History Includes Real Estate License Revocation For Misappropriating Clients' Funds

In Camden, New Jersey, the Courier-Post reports:

• Authorities say a Philadelphia woman and her son may have duped more than 20 people into turning over cash for bogus real estate transactions across South Jersey.
  
  Lisa Smith, 51, entered foreclosed properties unlawfully, then posed as a real estate agent to purportedly sell or lease the properties to unwitting consumers, the Camden County Prosecutor’s Office alleges.
  
  She allegedly took checks worth $27,500 and $18,000 from people seeking to buy homes for cash in Sicklerville and Camden, respectively, in April 2015.
  
  “Neither victim obtained the property they were attempting to purchase nor received their money back,” the prosecutor’s office said in a statement.
  
  Another victim allegedly paid $3,000 in September 2015 to rent a foreclosed property in Sicklerville.
  
  Some victims realized their formerly vacant homes no longer had plumbing only when they attempted to move in, the prosecutor's office said.
  
  Smith is charged with three counts of theft by deception, but investigators are seeking additional victims. She and her son, Kristian "Frank" Edmonds, 28, also face burglary charges for allegedly entering foreclosed houses without authorization.
  
  An investigation has identified more than 20 potential victims in the tri-county area, the prosecutor’s office said. “Charges are pending further investigation in many of these cases," it said.
  
  Authorities said Smith, who also uses the name Lisa Edmonds, posed as a real estate agent and created a phony purchase agreement for two properties in foreclosure. According to state records, Smith’s real estate license and her eligibility for a broker’s license were revoked for life in March 2010.
  
  At that time, the state Real Estate Commission found Smith had misappropriated clients' funds, had made false statements to a client and had issued a bad check, among other offenses.
  
  According to the prosecutor's office, Smith and her son, whose last known address was in Sicklerville, entered foreclosed properties “by unlawfully using keys from real estate lockboxes or having the properties re-keyed.” Edmonds allegedly posed as a real estate agent while inside a foreclosed property in Winslow, it said.
  
  Warrants for each suspect were outstanding on Thursday.
  
  The transactions were conducted under the name of REQ (Real Estate Queens) Realtors in Turnersville and Sterling Realty Investments in Philadelphia. They also were affiliated with two Collingswood firms — Angel Home Savers and Breeze Capital Consulting Group.
  
  Sterling Realty had its business license revoked by the state for not filing reports in 2009. REQ Realtors has no business filings with the state.
  
  Anyone who believes they were a victim of these companies or suspects is asked to call Prosecutor’s Detective Grace Clodfelter at (856) 225-8479. Information may also be emailed to ccpotips@ccprosecutor.org.

Source: Mother, son charged with real estate scams.