Saturday, April 14, 2007

Oklahoma Jury Convicts 6 In Cash Back Real Estate Scam

A jury in an Oklahoma Federal Court convicted six people in a cash back mortgage fraud scam involving artificially inflated home sale prices and submitted false loan applications, reports The Edmond Sun. Those convicted include Brandon L. Baum, of Joplin, Mo.; Joseph Conrad Therrien, of Oklahoma City; and Gayle L. Caldwell, Charles E. Caldwell Jr., Teresa M. Therrien, and Rusty Real Therrien, all from Edmond, Oklahoma.

It was alleged "that each of the defendants intended to personally profit by funneling substantial sums of money back to themselves and others from the excess sales proceeds under the guise of remodeling, repair costs or marketing service fees." For more, see 6 guilty in Oak Tree home fraud.

Cash Back Scams Not Limited To Real Estate

KTEN Channel 10 in Oklahoma reports that David Dwain Redden, the former city manager of Roland was sentenced in an Oklahoma Federal Court to 27 months in prison and ordered to pay the city about $225,000 in restitution. Redden was accused of inflating purchase orders used to acquire supplies from a vendor and getting cash back from the business. For more, see Former city manager sentenced.

A View Of The Mortgage Fraud Phenomenon

The Washington Post takes an interesting look at the mortgage fraud phenomenon in the recent article, Housing Boom Tied To Sham Mortgages (Lax Lending Aided Real Estate Fraud)

Friday, April 13, 2007

Kansas City Real Estate Operator Under Investigation

The Kansas City Star reports, in two recent articles, their investigation of transactions involving indicted real estate wheeler dealer Ray Zwego; transactions The Star believes may cost dozens of sellers, buyers and tenants millions of dollars in losses from bad loans and foreclosures. According to The Star, the transactions involved:

  • Used inflated appraisals to jack up prices on at least two dozen homes and obtain loans far exceeding the properties’ values,
  • Used the credit ratings of "straw buyers" to get an estimated $18 million or more in mortgages through his . The straw buyers often were left "holding the bag" on unpaid loans when Zwego failed to make mortgage payments, and
  • Compromised portions of the Heartland Multiple Listing Service (MLS).

He was indicted in January with former Jackson County Executive Katheryn Shields and her husband, Philip Cardarella, who are accused of inflating the value of their home in Kansas City to $1.2 million in an effort to defraud lenders. Zwego stood to net $414,000 in “management fees” in the sale, according to the indictment.

Reportedly, Zwego’s operation is only one of at least five metro Kansas City real estate operator groups that the local FBI is investigating. For more on The Star's investigation and Ray Zwego, see:

Investor Alleges Fraud In Federal Lawsuit

Dunn, North Carolina's The Daily Record reports that a Virginia woman filed an amended lawsuit last month in a North Carolina Federal Court alleging that a group of 12 area citizens including an attorney, a builder, a paralegal and a loan officer engaged in a mortgage scam that cost her thousands of dollars. She accused the group of selling her homes for more than the properties' fair market value, buying homes in her name without her knowledge, and taking kickbacks.

Those being sued are: law firm Spence and Spence P.A., attorney Robert Spence, employee Sylvia Pickard, paralegal Patsy Narron, investors Mark Lowery and Spencer Jenkins, loan officer Annetha Dunn, builders Elizabeth and Eldon Standridge, builders Gregory and Elizabeth Johnson, Rodney Taylor, Carol Daniels, and Fremont Investment and Loan.

There are no criminal indictments to date in this case; the Attorney General's Office has reportedly been notified.

To read more, see Mortgage Scam Alleged In Federal Lawsuit.

To see the full details of the allegations as set forth in the Federal lawsuit, see Complaint - Higgins vs. Spence & Spence, P.A., et al.

Thursday, April 12, 2007

Massachusetts AG Going After Foreclosure Rescue Operators

Massachusetts Attorney General Martha Coakley has announced the filing of two companion civil lawsuits against a ring of 19 individuals and companies allegedly running a foreclosure rescue business who have allegedly deceived financially strapped homeowners into signing away their homes and stripped the equity out of the homes through:
  • inflated mortgages,
  • false fees for fictitious services,
  • false certifications by closing attorneys,
  • subsequent resales of the homes amongst themselves.
According to AG Coakley:
  • "These defendants, many of whom were professionals, preyed on vulnerable homeowners facing foreclosure to deceive them out of their home and their life savings ... With the number of foreclosures increasing daily, this type of mortgage fraud is particularly troubling and we will take aggressive action to ensure that this predatory conduct does not continue in Massachusetts."

Named as defendants are: Leo Desire, Sr., Primary Mortgage Resource, Inc., mortgage broker, attorneys James Alberino, Robert Marks, and Valerie Hanserd, Universal Plus Realty & Financial Services Inc. and Home Pride Management, Leo Desire Jr., President and Treasurer of Home Pride Management, Robin Hayes, sole officer, owner and director of Universal Plus Realty & Financial Services Inc., Dr. Joel Charles (d/b/a Sourie Corp.). In addition, Louis R. Joseph, Pierre N. Joseph and his wife Daphne Mompoint, Robens Joseph, Paul A. Joseph, Jean N. Joseph, Advie Charles, Neville Francis and Marie Betey Mereus, all property buyers, were also named as defendants.

There is no indication whether the Massachusetts AG's office intends to bring criminal prosecution against these defendants. Depending on (1) what records are turned over and (2) what statements are made by the defendants during the discovery stage of the litigation, a subsequent criminal prosecution by the state is always an option. It is also unknown whether the office of Massachusetts U.S Attorney Michael J. Sullivan has its eye on this case.

For more, see Attorney General Coakley Files Lawsuits Against Individuals and Businesses Involved In Foreclosure Rescue and Mortgage Fraud Ring.

For a related post, see Massachusetts Attorney Involved In Equity Stripping / Rescue Operation Loses Beacon Hill Landmark In Foreclosure Sale.


For other cases where U.S. Attorneys have brought criminal prosecutions against foreclosure rescue operators containing somewhat similar facts , see:

U.S. Attorney - Central District of California

U.S. Attorney - Middle District of Florida


Two Arrested For Purchasing Home With Stolen I.D.

Fanny Velasquez and her daughter Paola Garzon were both arrested by the San Bernadino County, California District Attorney’s Real Estate Fraud Unit and accused of purchasing a home and financing it with someone else's stolen identity, according to an article in the Victorville Daily Press. They were charged with identity theft, false impersonation and forgery.

They purchased the home in December 2003 and apparently lived in it for over three years. Reportedly, in December 2004, the victim learned of the crime when she was turned down for financing when trying to buy her own place because her credit report showed she already owned a home. The arrest of the suspects went down this past Monday. For more, see Two arrested for housing fraud.

Help Homeowners Dump Subprime Loans, Change FHA Guidelines, Urges NAR

As a way to help homeowners stuck with subprime mortgage loans on their homes, the National Association of Realtors is strongly urging HUD to change FHA rules and waive the requirement that a homeowner’s mortgage be “current” in order to refinance into an FHA loan product. The idea is to enable homeowners to unload the subprime mortgages encumbering their homes by refinancing them utilizing FHA insured mortgages. The goal is to help homeowners who are currently finding it difficult making their payments after subprime rate adjustments avoid losing their homes. For more, see NAR urges HUD to revamp FHA program.

Mortgage Servicer Donates 200K To Foreclosure Prevention Counseling Group

The Homeownership Preservation Foundation recently announced that it had received a $200,000 from Ocwen Loan Servicing, LLC to help the foundation’s efforts in preventing foreclosure. HPF operates one of the nation’s largest national consumer hotlines for troubled borrowers; a 24 hour a day, 7 day a week hotline at 888-995-HOPE, and online at For more, see Ocwen Donates $200K to Foreclosure Prevention, reported by Housing Wire.

Philadelphia Foreclosure Prevention Program Gets Heavy Support

A new program designed to help Philadelphia, Pennsylvania homeowners avoid foreclosure is being kicked off with the support of The Urban League of Philadelphia, together with The National Urban League and the Homeownership Preservation Foundation, according to a report at Housing Wire.

As part of the joint effort, the National Urban League will support the promotion of the Homeownership Preservation Foundation's 888-995-HOPE hotline, which is available 24/7 nationwide to homeowners concerned about facing foreclosure, either now or in the near future. Callers receive free, confidential advice from expert counselors from HUD-approved counseling agencies. Those who are in need of additional face-to-face counseling and education will be referred to the Urban League affiliate in their city. For more, see Philly Mayor Throws Support Behind City-wide Foreclosure Prevention Program.

Wednesday, April 11, 2007

Victim Of Foreclosure Rescue Operator Loses Home; Vows To Keep Fighting

The Orange County Register reports that the home of an Anaheim woman, victimized by a Southern California foreclosure rescue operator, was sold at a foreclosure sale to the lender holding the mortgage on the home; it was the only bidder for the home. She currently has a civil lawsuit pending whereby she alleges that:
  • she and her family were victims of a forged deed transferring the property to a sham buyer,
  • the original loan on the home was paid off by a new mortgage,
  • she never received the excess cash that was issued in the new loan, and
  • since she never authorized the new loan, the lender has no right to evict her or her family.

Attorneys involved in the case agree that the lender may not be able to recover the full amount of its loan, but could be entitled to reimbursement for paying off the homeowner's original loan. For more, see Anaheim family loses title to home (A woman claiming to be the victim of a mortgage scam said the lender repossessed the home last week. She vowed, however, to contest the change in ownership)

For a related story, see Let the borrower beware (Officials say a growing number of 'foreclosure rescue scams' are targeting property owners who fall behind on their loans, siphoning off their equity and causing them to lose their houses)


The Subprime Mortgage Problem From Various Prospectives

A recent MSNBC article gives an interesting overview of the subprime mortgage lending problem. It reports the story of a New Jersey couple who is currently struggling to survive a negative amortization mortgage. It also reports of a Virginia couple who luckily dodged a bullet a couple of years ago when shopping for a home.

Also reported in the story are comments from the head of HUD's Inspector General's office, a state regulator, a couple of real estate appraisers, and Texas civil trial lawyer David Berg, who is reportedly gearing up to represent defrauded consumers who were duped into subprime mortgages.

For more, see Special Report: The Mortgage Mess.

Kentucky Fights I.D. Theft With "Free Shred Day"

In an effort to combat identity theft, a "Free Shred Day" is being held in Frankfort, Kentucky today and again on April 27, allowing citizens to bring sensitive documents for shredding, reports The State Journal. For more, see The shredders are coming to fight identity theft.

For a related shredding article, see Internet age means erasing paper trails (Shredding event a good reminder that amidst identity theft and on line scams, wise people cover their tracks).

Go here for more on Community Shredding Days to fight identity theft.

Tuesday, April 10, 2007

Matthew Cox Pleads Guilty To Multi State Mortgage Fraud

Former art student and aspiring fiction writer Matthew Cox, better known for his mortgage fraud exploits, pleaded guilty today in an Atlanta Federal Court to multiple counts of mortgage fraud and identity theft in Georgia, Florida and Tennessee—crimes that could land him in the pokey for up to 54 years, along with earning him obligations for a $2 million fine and millions in restitution, according to an online report by Daily Report, at In addition, the Feds have seized all of his assets in civil forfeiture actions, including a number of his own highly distinctive paintings. Sentencing is scheduled on August 22.

To read more, see Book closes on elaborate mortgage fraud scheme (Man who was on Secret Service’s Ten Most Wanted list pleads guilty after running scam in four states, including Georgia)

To read the grand jury charges, see Indictment - U.S. vs. Matthew Cox (2.27 MB - 63 pages).

For related stories, see:
Go here for other posts on Matthew Cox (including link to NBC Dateline one hour feature).

Multi State Alleged Mortgage Fraudster Matthew Cox Expected To Plead Guilty Today

The St. Petersburg Times reports that alleged multi-state mortgage fraudster Matthew Cox is expected to plead guilty in an Atlanta Federal Court today in connection both with a 42 count indictment as well as recently filed charges involving alleged mortgage fraud scams in Tampa, Florida and Nashville, Tennessee. To read more, see Fraud leader had a lot of help (Matthew B. Cox had 22 co-conspirators in his mortgage schemes, new charges say).

Indiana To Give Permanent Status To Homeowners Protection Unit

Indiana Attorney General Steve Carter is applauding Indiana lawmakers for passing a measure that would give permanent status to the Homeowner Protection Unit (HPU) created nearly two years ago as a test program administered by the attorney general’s office. The Unit investigates complaints and files disciplinary actions against licensed appraisers and licensed real estate agents & salespersons for alleged misconduct relating to real estate and mortgage fraud. Carter states:
  • By raising awareness of the Unit, we hope that more people will recognize that there is a place to turn to for help if they believe they have been the victim of, or suspect, questionable business practices by individuals or companies in these professions.”

To read more, see Attorney General’s Homeowner Protection Unit Nears Permanent Status with Latest Action by the Legislature (Attorney General Steve Carter says Consumers Benefit from the Unit’s Focus on Mortgage Fraud)

For a related article, see Attorney general team hits real estate fraud hard, reported at


Indiana Authorities Scrutinize Land Contract, Rent-To-Own Schemes

Two recent articles by The Times of Northwest Indiana, reported at, report on land contract and rent-to-own deals that are currently part of a larger probe into mortgage fraud statewide by the homeowner protection unit of Indiana Attorney General Steve Carter's office. Reported is the story of one home that was reportedly sold by its owners on a land contract to a company called TotalBiz 247, and then sold on a "rent-to-own" basis to a prospective buyer. Non-payment of existing mortgages by TotalBiz, which is owned and operated by real estate broker Kurtis Kintzel, is reportedly one reason why his business operation, which has been described as basically flipping schemes with a delayed closing is getting increased scrutiny by authorities. For more, see:

Go here for other posts on "rent to own" scams. rent to own lease purchase option scams zebra

Using Consumer Protection Laws To Pursue Illegal Real Estate Scams

On his Indiana Consumer Lawyer Blog, attorney Robert Duff comments on the real estate scams currently being investigated by the Indiana Attorney General's office and points out that Indiana consumers have a way to pursue compensation for unlawful business practices by licensed real estate appraisers and real estate agents through legal actions under the Indiana Deceptive Consumer Sales Act. He notes that actions under this statute must be brought within two years, and points out that one notable advantage of bringing legal action under this statute is that it provides for the payment of the consumers' attorney fees by the losing defendant.

This advantage, typical of state and Federal consumer protection laws throughout the U.S., is meant to encourage enforcement of these laws by individual consumers through their own private lawsuits, encourage attorneys to take on consumer protection cases on behalf of aggrieved consumers, and to make the culpable business engaging in the illegal conduct foot the consumer's legal bill.

For more, see Indiana Real Estate Appraisers and Agents Apparently Need More Oversight.

Monday, April 09, 2007

NYS Banking Dept.To Launch Campaign Targeting Abusive Practices

The New York State Banking Department is launching a "Campaign to Halt Abusive Lending Transactions and Mortgage Fraud" this week in Manhattan whereby the state Banking Department will bring together the banking industry with state and nonprofit groups in an effort to solve the problem, according to the Albany Times-Union. One item expected on the agenda is the enforcement of the New York Home Equity Theft Prevention Act, which the state passed last year and went into effect this past February 1 with the view to eliminate illegal foreclosure rescue scams that take unfair and illegal advantage of New York homeowners facing foreclosure without targeting ethical investors. According to Steve Kirchgraber, deputy superintendent of the consumer services division with the state Banking Department:

  • "The legitimate investors who aren't looking to scam people will play by the rules ... This is designed to make the market unappealing to those who would run a scam, because now there are penalties, including jail time."
Similar conferences are expected later this year in Albany, Buffalo and, possibly, Watertown. For more, see State targets abusive lending (Schumer pushes subprime rules, says 6,000 in Capital Region could lose homes).

Go here for other posts on NY Home Equity Theft Prevention Act.

Home Lenders Would Rather Modify Than Foreclose

A recent Associated Press article (reported on the MSNBC website) reports on efforts by EMC Mortgage Corporation's "Mod Squad" to reach out to their loan customers in default in order to help them calculate a workable payment plan on their mortgages, rather than immediately forclosing on their homes. They are shooting for up to 2,000 loan modifications a month; six months ago EMC only modified about 400 loans a month. Litton Loan Servicing in Houston also claims that it is modifying about 1,000 loans a month; up from 300 to 400 about six months ago.

The nonprofit Home Ownership Preservation Foundation, a national organization that offers free foreclosure counseling, prevention and intervention services, is reporting that calls to it have picked up markedly over the last 12 months. Its 24-hour hotline, (888) 995-4673 (888-995-HOPE), is getting 300 calls a day, up from 75 daily in the first quarter of 2006. To read more, see Lenders willing to help struggling homeowners (To stop rise in foreclosures, mortgage modifications are more common).

Lack Of Mandatory Escrows Contribute To Subprime Lending Troubles

Federal regulators believe that a key contributing factor with so many subprime mortgage loans going bad is that many of these loans came without mandatory escrow accounts, which are accounts that the borrower pay into every month and out of which the home's real estate taxes and property insurance premiums are paid from. These loans are contrasted with conventional mortgage loans made to those with excellent credit, which typically require these escrow accounts.

One consumer advocate says "It's an upside-down world ... The people you'd think need an escrow the most are not required to have them, and the people who need them the least are forced to use them."

To read more, see syndicated columnist Kenneth Harney's article, Feds, Consumer Advocates Focus on Lack of Escrows in Subprime Mortgages, reported online at Realty Times.

Sunday, April 08, 2007

Feds Get Indictment Of Alleged Upfront Fee Scammer

The Originator Times reports the indictment of Maryland resident Robin Neil Snyder and Mortgage Bankers, Ltd. for, according to Federal prosecutors, wire fraud and money laundering arising from a scheme to defraud loan applicants.

Snyder allegedly collected nonrefundable upfront fees from prospective loan applicants as well as business plans, appraisals, tax returns and insurance information in support of borrowers’ loan applications for loans that he never processed or submitted for independent underwriting. He reportedly collected approximately $339,500 in fees. For more, see Broker Indicted After Collecting Advance Fees.

Mortgage Lender Alleges Fraud In 149 Deals

A recent article in the Journal Gazette (Fort Wayne, Indiana) features a Federal lawsuit filed in December 2004 by mortgage lender ABN Amro filed against 15 partitcipants in a mortgage fraud scheme involving 149 houses and fraudulently obtained mortgages in Fort Wayne, Indiana. The lawsuit paints a story of three people who, wanting to get into real estate investing, were allegedly duped by the alleged scammers into buying, what was represented as, "turnkey" investments and obtained mortgages for $2.5 million more than what the properties were worth. All 149 mortgages ultimately went into default.

The participants in the alleged scams include Rex Wells, described as one of the biggest landlords in the Fort Wayne rental market, Justin Stuckey, the owner and broker at Maximum Mortgage in Fort Wayne, appraiser Greg Chevalier, who appraised each of the 149 houses, and James Pappas, a title closing agent and owner of Accelerated Title, where most of the sales were closed.

Amro’s suit claims breach of contract, fraud, negligence, breach of fiduciary duty, unjust enrichment, civil conspiracy, defrauding a financial institution, deception and criminal mischief. Further, any corporate insulation from personal liability that Stuckey and Pappas believe they have is also being attacked as Amro is requesting a court judgment that both be held personally liable.

To read more, see Mortgage fraud alleged in 149 transactions (Lawsuit blames price scheme; novice investors go bust)

To read ABN Amro's actual lawsuit, setting off their version of the facts, see First Amended Complaint - ABN Amro vs. Maximum Mortgage Inc., Stuckey, Wells, et al.