Saturday, July 14, 2007

Four Marylanders Indicted In Alleged I.D. Theft Scheme Involving Personal Data Stolen From Mortgage Company

(modified 8-17-07)
The Dundalk Eagle reports that, according to a U.S. Attorney press release, a Maryland federal grand jury last week indicted Sherrel Peters, 30, of Dundalk, Maryland along with three others, Nekia Ishawn Hunter, 28, Lavon Caldwell, 25, and Faye Marie Jones, 51, all of Baltimore. The four are reportedly accused of using personal identity and financial information stolen from mortgage applicants to make fraudulent purchases, including cars. Peters was also reportedly charged separately in Baltimore County with identify theft. For more, see Dundalk Woman Indicted In Identity Theft Scheme, and U.S. Attorney Press Release.

For story update, see Woman, 29, pleads guilty in identity theft scheme (Baltimore woman opened false credit accounts, spent more than $400,000).

NY Attorney Going To Prison For Ripping Off Aunt & Leaving Her Homeless

In Westchester County, New York, The Journal News reports:
  • "Annette Rivera made plans to buy their dream house in Riverdale even as she was grieving over the death of her husband, Latin jazz great Ray Barretto. But on the closing date last October, most of the $860,000 she needed was missing. She had put it in escrow with her lawyer and niece, Shelley Ann Rivera. But the woman she once loved as a sister had kept the escrow money for herself and absconded to Las Vegas. Annette Rivera, her son and several of their friends were in Westchester County Court [July 11] as the suspended lawyer was sentenced to one to three years in state prison and ordered to repay $700,000 she still owes her aunt."
The victimized aunt stated in court that she (1) developed ulcers and other medical problems from the stress, (2) has been unable to pay for her son's college education, (3) was living with her son in her niece's home but had to leave when it was foreclosed upon, and (4) along with her son, are now homeless, relying on friends for loans to cover legal bills and places to stay.

For more, see Lawyer with penchant for gambling sentenced in theft from aunt.

For a prior story, see Attorney pleads guilty to defrauding her aunt of cash (Mid Hudson News).

Go here for stories on other alleged escrow agent mishandling of funds. sneaky slick escrow agents alpha

Friday, July 13, 2007

The Next Big Mortgage Fraud Scheme No One Knows About

An online article at Best Syndication describes what sounds like a mortgage fraud scheme reportedly unknown to most people that is "clothed" as a mortgage principal reduction program and involves refinancing an existing mortgage every three months, doing it with a different lender, and splitting the yield spread premium, or YSP, with the borrower on each refinance. I don't know what to make of this, but if your interested, see The Next Big Mortgage Fraud Scheme, No One Knows About.

Three Indicted In Massachusetts Alleged I.D. Theft / Attempted Home Theft

Massachusetts U.S. Attorney Michael J. Sullivan, along with a slew of other Federal and State law enforcement officials have announced the indictment of Andre Lamerique, 25, of Sharon, Massachusetts, Judy Bonas, 51, of New York City, and Carmella Lassegue, 25, of Hyde Park, Massachusetts, for conspiracy and identity fraud for fraudulently obtaining mortgage financing in connection with the fictitious sale of a Dorchester residence that they did not own.

They are alleged to have attempted to sell a home from out from underneath the owner without the owner's knowledge, trying to pocket more than $420,000 from a mortgage company in the process. The "closing agent" who handled the phony sale was actually an undercover Massachusetts state trooper who was part of a sting operation conducted by law enforcement. For more, see U.S. Attorney Press Release - Three people Indicted On Fraud Charges In Connection With Bogus "Sale"Of Dorchester Property.

Editorial Note:
If I'm not mistaken, the prosecution of these three suspects in connection with the alleged incident has been going on since January. I'm trying to figure out exactly what the July 11, 2007 announcement and corresponding press release was all about. Go here for the other posts on this story.

More On Maryland Foreclosure Rescue Class Action Lawsuit

The Daily Times recently ran a story on the class-action civil lawsuit that has been filed against several Prince George's County businesses on behalf of hundreds of homeowners who say they lost millions of dollars in equity through an elaborate foreclosure rescue, equity stripping scheme.

Phillip Robinson, a lawyer and executive director of Civil Justice Inc., a Baltimore nonprofit group that helped prepare the lawsuit, said that most of the advertising for the mortgage foreclosure rescues was done on street signs and on radio and television stations that catered to black residents.

Attorney Stan Brown, who represents about 20 Prince George's plaintiffs, said he obtained an injunction last month to stop his clients' homes from going into foreclosure. Go here for more on attorney Stan Brown.

For more on the story, see Homeowners sue mortgage companies, alleging fraud, and Mortgage Companies Sued in Pr. George's (Homeowners Say They Were Cheated of Equity) (reported in The Washington Post).

For earlier post on this story, see Class Action Lawsuit Filed Against Maryland Foreclosure Rescue Operators.

Brooklyn Attorney Charged In Straw Buyer Scheme reports:
  • "Federal and New York officials Thursday announced the arrest of Brooklyn attorney, Alexander Kaplan, on charges of participating in a multimillion-dollar sub-prime mortgage fraud scheme. The arrest was made based on a Complaint filed in Manhattan federal court. The allegations against Kaplan relate to charges contained in a superseding Indictment, unsealed Wednesday in Manhattan federal court, charging 26 other individuals with participating in a wide-ranging scheme to commit mortgage fraud by submitting to sub-prime lenders loan applications and supporting documents that contained false information and material omissions."
Among those charged in the superseding indictment are three New York brokerage firms, Northside Capital, AGA Capital and its successor Lending Universe, and AGA Capital owner Galina Zhigun.

For more, see Brooklyn attorney charged with multi-million dollar sub-prime mortgage fraud scheme.

See also, Brooklyn Attorney Charged In Mortgage Fraud Scheme (North Country Gazette).

For an earlier post on this story, see NYC Feds Charge 26 In $200 Million Straw Buyer, Identity Theft Mortgage Scam.

Louisiana Feds Get Guilty Plea In Straw Buyer, House Flipping Scam

The Times -Picayune reports:
  • "As part of a plea deal with the government, Calvin Davis admitted to three felony charges: conspiracy to commit mail fraud, filing false loan paperwork and income tax evasion. He is scheduled to be sentenced Nov. 8. [...] Davis is the sixth person to plead guilty to charges related to the "house flipping" scam. His guilty plea comes on the heels of the recent grand jury indictment of Michael O'Keefe Jr., owner of Citywide Mortgage Co. and son of former state Sen. President Michael O'Keefe. Michael O'Keefe Jr. was indicted June 18 and is accused of defrauding the federal government into guaranteeing $600,000 in Citywide loans to unqualified borrowers."

Davis admitted to purchasing blighted or run-down properties and obtaining fraudulent appraisals that boosted the homes' values after minimal repairs were made. Straw buyers were then recruited by him to purchase the houses at their inflated prices. Phony employment and credit documents and tax returns were used to dupe mortgage lenders into providing the straw buyers with financing. Three of the straw buyers -- Timothy Falls, Dennis LeBlanc and Dennis Addison -- admitted in court to lying about their income, credit and the value of the houses they intended to buy and a fourth participant, Robert Green, pleaded guilty in April to charges that he prepared the false tax returns. Michelle Cochran, an underwriter for Citywide Mortgage, pleaded guilty to approving the fraudulent applications.

For more, see Abuse of loan program admitted (False information was filed with HUD).

Go here for related posts on Calvin Davis.

Bidders Passing On Foreclosure Sales - Leaving Homes On Lenders Laps

In California, The Mercury News reports on a story that is becoming more and more common throughout the country - a segment of residential real estate that is a "growing category in the housing market: homes that fail to sell at foreclosure auctions and are repossessed by lenders." According to the article:
  • "In May, $2.8 billion worth of California real estate went up for sale in foreclosure auctions, according to, a Discovery Bay company that sells foreclosure information to subscribers. Of that amount, about $2.6 billion worth failed to find buyers, and so became bank-owned. The figures represent the total value of the outstanding loans that went up for auction."
Based on this, I raise the following question:
  • Can we expect our neighborhoods to be flooded with billions of dollars of vacant (and possibly boarded up) homes, possibly with untended pools (mosquitos?) and uncut high grass and weeds (rats, snakes, etc.?), attracting an occasional vandal or two (to swipe appliances, copper tubing, and other assorted items of value from the home), thereby helping drive neighboring property values that much further into the ground than they already are?

For the story, see Once rare in valley, lender-owned homes on the rise.

In a related story, NBC Nightly News had a report last night on California and how hard hit it has been with foreclosures. Among other things, reporter George Lewis speaks with one concerned homeowner whose home is surrounded by empty, untended foreclosed homes. For more, watch the NBC Nightly News report, California Hit Hard With Foreclosures.

See also, The Newest Homeowners: Big Banks (The Motley Fool - reported on MSNBC).

Home Improvement Rip Offs Made Easy

In New Jersey, two articles recently appeared in the Herald News that report on how some savvy, but unscrupulous contractors, often times in concert with a crooked mortgage broker or loan officer, rip off homeowners by selling home improvement jobs in which the contractor steers the financing to a third party lender. The rip off takes place when, after the lender pays the contractor most or all of the price of the job upfront, the contractor proceeds to perform shoddy work on the home. Since the contractor is already paid in full and the homeowner's debt is to the third party lender, they are unable to "hold back" part of the contract price that is a common remedy used when the homeowner owes the money directly to the contractor. According to one of the stories:
  • "Contractors can help homeowners find financing to pay for their renovations, and a segment specifically target low-income residents. Too often, experts say, some of these companies steer customers into a second mortgage with above-average interest rates, huge fees and terms homeowners don't understand. These loans typically get sold to another bank without the borrowers' knowledge. If a customer stops paying the contractor because of poor work, the new loan holder will require reimbursement of the full loan amount, setting up a homeowner for possible foreclosure -- the loss of their home. Contractors, however, have a win-win setup. Home repair provides a powerful incentive for someone to take out a loan. Once the financing comes through, the contractor often gets the bulk of payment before work starts. A contractor's fingerprints rarely show up on mortgage documents. And if a client sues, lawyers often find it difficult to prove criminal intent by the company."

For more, see:

For more on homeowners left in the lurch due to actions by builders/contractors, go here, go here, go here, go here, and go here. StiffingContractorsTheta

California CSLB "Stings" More Unlicensed Contractors

The Associated Press reports that California authorities have arrested five unlicensed contractors as part of an undercover sting operation recently conducted in the aftermath of the Angora fire in South Lake Tahoe, California. According to the report:
  • "Investigators posed as people whose homes were destroyed during last week's fire, that destroyed 254 homes and 75 other structures. They invited suspected unlicensed contractors to bid on debris removal and various reconstruction projects."

The sting operation was conducted by investigators with the California Contractors State License Board ("CSLB") in cooperation with the California Department of Insurance, and the El Dorado County district attorney's office and sheriff's department. For more, see Five arrested in undercover Lake Tahoe contractor sting.

Thursday, July 12, 2007

NAACP Files Subprime Lending Suit; Seeks Class Action Status

The Associated Press reports:
  • "The NAACP sued a dozen mortgage lenders Wednesday, claiming the companies discriminated against blacks by steering them into higher-interest subprime loans while giving more-favorable loan terms to white borrowers. The lawsuit, which seeks class-action status, was filed in U.S. District Court in Los Angeles. It demands a court order barring the lenders from discriminating against blacks and compelling them to comply with fair-housing and credit laws. Among the defendants named in the suit are Ameriquest Mortgage Co., Citigroup Inc., HSBC Finance Corp. and Washington Mutual Inc."

A similar suit is currently being litigated in Cleveland, Ohio (see Cleveland Fair Housing Lawyer Files Predatory Lending Class Action Lawsuit).

For more on the NAACP lawsuit, see Mortgage lenders discriminated against blacks, NAACP suit alleges.

For a copy of the lawsuit, see NAACP vs. Ameriquest Mortgage Corporation, et al., made available online courtesy of the NAACP.

For the NAACP press release, see NAACP Files Landmark Lawsuit Against Major Home Mortgage Companies For Discriminatory Lending.

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

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

The High Cost Of "No Closing Cost" Mortgages

Another "Beazer Homes" investigative report appeared in the Charlotte Observer recently. This time, The Observer talks about Beazer's reported use of so-called "no closing cost" mortgage loans in financing their home sales. More specifically, the focus is on Beazer's reported practice of arranging for no-cost mortgages for its homebuyers through its mortgage affiliate, which reportedly charged a higher rate of interest for providing such a loan without informing the homebuyer, and collected yield spread premiums in the process . For more, see `No closing costs' add up fast (When Beazer offers incentives, homebuyers think they'll save money. Some don't.).

Go here for other posts on so-called no cost mortgages.

Go here for other posts on the Charlotte Observer's investigative reports on Beazer Homes.

Cleveland Fair Housing Lawyer Files Predatory Lending Class Action Lawsuit

The Cleveland Free Times recently featured fair housing attorney Ed Kramer and his firm, Housing Advocates Inc., of Cleveland, Ohio. Regarding Kramer's predatory lending, foreclosure clients, the report states:
  • "[T]here was an unmistakable pattern: Nearly all were poor people of color, and all had been locked into unaffordable loans, with high interest rates and exorbitant broker fees."
Kramer determined that there was no way to represent everyone in need, and that the problem wasn't going away and couldn't be solved on a piecemeal basis. According to the story:
  • "So, after 32 years of applying state and federal fair housing statutes to defend clients against unfair housing providers, Kramer decided it was time to use the same laws differently. In April, Kramer turned plaintiff and filed a class-action complaint that goes past individual brokers and at the banks and mortgage companies that, he says, paid the brokers to target African Americans. The suit represents a tectonic shift in how predatory lending cases are handled. Case-by-case approaches have left attorneys and investigators unable to detect larger patterns of racially motivated lending. But now, Kramer's new approach, and pricing data available only since 2004, has emboldened a host of players - all separately coming to the conclusion that it's time to switch targets: to the banks and investment firms."

Kramer's firm itself filed the suit against Argent Mortgage Co., reputed to be the biggest subprime lender in Cleveland, in addition to Wells Fargo Bank. Reportedly, the Fair Housing Act allows organizations to file complaints if the discrimination in question is taxing their resources.

The article also describes the efforts of Ohio Attorney General Marc Dann, who is pursuing both criminal and civil actions through the statewide Predatory Lending Task Force which he created. He is also using Ohio's racketeering statutes and working with other law enforcement agencies and coordinating cases around racketeering charges.

For more, see Sue The *astards! (What To Do About Mortgage Brokers And Lenders Who Don't Play Fair?)

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

California Man Ordered To Pay $100K In Illegal Deal With Homeowner Facing Foreclosure

(original post 7-12-07; revised 7-14-07)
The Monterey Herald reports that Robert Janssen, of Abbey Management, Inc., has settled a civil lawsuit filed against him by the consumer protection unit of the Monterey County, California District Attorney's office. Without admitting to wrongdoing, Janssen agreed to a judgment of $47,588 in civil penalties and $52,412 in restitution — his profits from a transaction involving the home of a woman facing foreclosure in which he apparently attempted to execute an "equity sharing", foreclosure rescue agreement with her. Janssen's lawyer, criminal defense attorney Richard Rosen, said his client settled to avoid protracted litigation and the threat of criminal prosecution. For more, see Man settles real estate charge (Sold house without Realtor's license).

Wednesday, July 11, 2007

Michigan ACORN "Subprime" Protestors Storm Washington Mutual Subsidiary; Cops Called In

The Detroit News reports:
  • "Police had to quell a sit-in Tuesday afternoon after angry protesters complaining about lending practices stormed into a mortgage office [in Livonia, Michigan]. More than a dozen members of the Association of Community Organizers for Reform Now descended on an office of Long Beach Mortgage about 4:30 p.m. They chanted "predatory lender, criminal offender." The company is the sub-prime branch of Washington Mutual Mortgage Co."

For more, see Livonia:Protesters storm mortgage firm.

NYC Feds Charge 26 In $200 Million Straw Buyer, Identity Theft Mortgage Scam

The Financial Times reports:
  • "US officials charged 26 people with conspiracy and fraud, alleging in a criminal indictment unsealed on Tuesday that they used invented purchasers, stolen identities and inflated appraisals to fraudulently obtain subprime mortgages on more than $200m in property in and around New York City. Those who have been charged include real estate appraisers, a loan settlement agent, mortgage brokers and loan processors in addition to people who purchased the property. They allegedly conspired to lie to a series of lenders to obtain mortgages between 2004 and 2007."

Among those charged are three New York brokerage firms, Northside Capital, AGA Capital and its successor Lending Universe, and AGA Capital owner Galina Zhigun.

Among the victimized mortgage lenders include Countrywide Financial, New Century Financial, Washington Mutual and National City Corporation. For more, see:

U.S. atty indicts 26 for mortgage fraud in New York (Reuters).

Retired NY Judge Reportedly Left Homeless & Broke By Guardianship Process

The Brooklyn Daily Eagle reports on what sounds like a cesspool that may exist in the guardianship process in New York. The story involves a retired judge with a once-sizable estate who was declared incapacitated by a state court and whose estate was placed under the supervision of a court-appointed guardian. Since that time, the retired judge's bones sound like they were picked clean. By the time a Brooklyn, New York District Attorney's criminal investigation found that there was no evidence of criminal wrongdoing, the story reports that "the once-proud judge was left homeless, without the ability to pay his own utility bills."

For more, see Were Funds Pilfered from a Retired Judge’s Estate? (Supporters Say Accounting Should Reopen Criminal Probe).

For story update, see Watchdog Group Looks at Brooklyn Court’s Handling of Retired Judge’s Estate (Brooklyn Daily Eagle - 9-14-07) - which reports:
  • A respected judicial watchdog group that maintains a Web site and a paid subscription service has taken on one of the more intransigent cases to have appeared on a court docket in recent years — the guardianship case of retired Civil Court Judge John Phillips, whose supporters have cried foul over the way his once vast estate has been mishandled by a series of court-appointed attorneys, experts and judges over the years. Go here for more.
For additional reporting on the story of the alleged ripoff of the judge's assets by court-appointed guardians, see Fallen Guardian Angels - by Leah Nelson (reported in Judicial Reports).

Go here for other posts on this story.

Go here for other posts on the escapades of the public administrator's offices in New York City. daily eagle retired judge granny-snatching racket

Another Upstate NY Straw Buyer Cops Plea In "Andersen" Affair reports that Mark Slagen, 53 of Schenectady, New York pleaded guilty in an Albany, NY Federal Court to conspiring in a mortgage fraud scheme with the currently-under-indictment Anthony Andersen and others. Slagen admitted in substance that he acted as a straw borrower in the charged scheme, allowing Andersen to use his name and personal information to obtain loans secured by real estate in the upstate New York cities of Troy and Rensselaer. For more, see Man pleads guilty in mortgage fraud scheme.

Go here for other posts on this alleged mortgage fraud scheme.

Denver Pastor Accused Of Duping Church Members Into Being Straw Buyers

Two former members of a Denver, Colorado church claim that they unwittingly participated in a real estate straw buyer scam orchestrated by their pastor, Rev. Harold Hicks, of Mount Carmel Community Baptist Church, according to an investigative report by the Rocky Mountain News. One straw buyer reportedly ended up buying seven rental properties for about $845,000, according to public records. The total monthly mortgage payments on the seven properties are about $6,000 and are now in foreclosure. According to the story:

  • "An investigation by the Rocky Mountain News into claims made by [the unwitting straw buyers], shows that on several occasions in 2005 Hicks used his power of attorney to sign real estate documents that contained false information. The two women maintain that Hicks provided the false information on the documents and that they signed them because they trusted him as their pastor. Doing so, they said, led to ruinous financial consequences."
The article states that one of the houses in foreclosure is currently being used as a crack house. No criminal charges have been brought, although the state Division of Real Estate has reportedly taken steps to revoke the license of the appraiser who valued the properties involved and fined him $22,500.

For more, see Signing on faith (Ex-church members say pastor misused trust to conduct shady real estate deals).

Go here for updates on this Rocky Mountain News investigation.

SEC Investigating Alleged $100 Million Mortgage Fraud

The alleged mortgage fraud scam that reportedly occurred in Murrietta, California and the surrounding area and that is the subject of a number of civil lawsuits is now the subject of an investigation by the Securities Exchange Commission, according to media reports. Reportedly, evidence obtained by the plaintiffs in the civil lawsuits is being shared with the SEC by plaintiffs attorney Richard Ackerman. Those individuals who are of interest to the SEC and the plaintiffs in the civil lawsuits are:
  • James Duncan, Maurice McLeod, Chris Oetting, companies linked to Steve Kayden and Dennis Dewitt Jr., Hendrix Montecastro and his Murrieta mortgage brokerage, Stonewood Consulting Inc.

The alleged scam reportedly left unwitting investors with close to $100 million in mortgage debt. For more see:

Feds probing investment ring (North County Times)

SEC investigating alleged Inland scam (The Press Enterprise)

Go here for other posts on this alleged mortgage fraud.

Tuesday, July 10, 2007

Missouri Foreclosure Rescue Operator Facing Felony Theft Charge; Allegedly Cheated 80 Year Old Woman Out Of Home

An article from The Kansas City Star and appearing in The Columbia Daily Tribune reports that reputed real estate guru and foreclosure rescue operator J. Michael Ledman is facing a felony theft charge alleging that he bilked an 80-year-old Johnson County, Missouri woman out of her home of 38 years, causing her to lose $150,000 in home equity. Local authorities allege that Ledman induced the woman to surrender the title to her $450,000 home without her knowledge. They contend that Ledman deceived her into thinking she was signing papers that would keep her house out of foreclosure. The woman reportedly believed that she was signing a lease with Ledman that would allow her to stay in the house for two years while she made arrangements to pay off what she owed using a pension that was due her.

Involved in the foreclosure rescue transaction was the use of a "land trust" agreement that essentially placed the title to her home in a trust in which Ledman’s wife was named trustee. The elderly woman reportedly also signed over her beneficial interest in the trust to Ledman’s company, J. Michael Properties Inc., giving it the authority to transfer ownership of the house.

In addition to the hot water Ledman currently finds himself in, the real estate investment guru, who reportedly charged $2,900 and up per person for how-to training and gave out advice on his weekly radio show about everything from credit scores to how to buy and sell distressed property with no money down, also finds himself with financial problems. The Star reports that he was evicted from his office, a bank foreclosed on his $500,000 home, and in April, he lost his radio show when he ran out of money to pay for it. He reportedly has also left in his wake unhappy sellers, buyers and investors who lost money in his debt repair and get-rich-quick programs.

For more, see Real estate’s market crash ensnares guru (No-money-down leader in legal trouble).

NJ Man Facing Felonies In Equity Stripping, Straw Buyer Scam

The Jersey Journal reports that Kamal Ghobryl, 41 of Bayonne, New Jersey, has been charged with two counts of theft by deception in excess of $75,000, as a result of his transferring the ownership of a friend's home to his company and then selling it to a straw buyer without her knowledge. While the charges are a state crime, he was arrested by detectives from both the Hudson County, New Jersey Prosecutor's Office and FBI agents, which may mean that Federal charges could also be forthcoming (ie. mail fraud, wire fraud, money laundering, false statement on loan application, conspiracy, etc.).

While the incident does not appear to have occurred in the context of a foreclosure rescue context, the suspect's alleged conduct essentially mirrors that of an equity stripping, foreclosure rescue transaction.
Because of the victim's limited capacity to read and write English, Ghobryl volunteered to help the victim sell her house. He had the victim sign paperwork that transferred her property to his company, K&G Financial, without explaining what she was signing, followed by obtaining a $270,000 mortgage in the name of the straw buyer using phony financial and employment documents, according to authorities. Ghobryl allegedly pocketed the money, made no payments on the mortgage, and allowed the property to go into foreclosure. The victim, who was still living in the house when all this went on, first learned that the property had been sold when she received a water bill in the name of the straw buyer, who has not been charged with committing any crimes (yet). For more, see Charge he fleeced friend in $270G real estate scam.

More On Minnesota Feds' Foreclosure Rescue Prosecution

As reported in a prior post, Twin Cities mortgage brokers Michael Fiorito, 39, of Prior Lake, and Kristin Louise Jerde, 21, of Eagan, were indicted in a Minneapolis Federal Court a couple of weeks ago on charges that they sought out financially strapped homeowners facing foreclosure and stripped the equity from their homes using a variety of schemes.

They were charged with (1) conspiracy to commit mail fraud, (2) mail fraud - 3 counts, (3) engaging in a financial transaction with criminally derived property (money laundering). The government is also seeking forfeiture of all property obtained, connected with, or traceable to the proceeds of the alleged scam.

For the Federal grand jury charges, see - Indictment - United States vs. Fiorito & Jerde.

Go here for other posts on this story.

Criminal Cases Involving Foreclosure Rescue Arrangements Not Unheard Of

Transactions involving foreclosure rescue arrangements have occasionally been the subject of criminal prosecutions. The cases involved (1) those taking upfront fees and/or ongoing periodic fees for services never performed, (2) those who acquired overleveraged homes with no equity who proceeded to pocket the rent from the home without paying on the existing mortgage (ie. equity skimming / rent skimming), and (3) those who engaged in the so-called foreclosure bailout, foreclosure rescue, equity stripping arrangements.

For links to stories and cases involving criminal prosecutions in these situations, see Criminal Prosecutions Of Foreclosure Rescue Operators (posted on the companion blog, The Home Equity Theft Reporter Cases & Articles).

Monday, July 09, 2007

Wisconsin Widow Sues Foreclosure Rescue Operator To Keep Home

A battle is currently going on in a Milwaukee, Wisconsin court between an 80+ year old widow and local foreclosure rescue operator Pamela Johnson in which Johnson and her business, PAJ Investments, are accused of having engaged in an equity stripping, foreclosure rescue arrangement involving the widow's home of 30+ years, according to a story recently reported in the Milwaukee Journal Sentinel.

According to the report, the transaction involved the use of trust documents purportedly establishing a "family trust" that were signed by the widow and that was one element in the overall arrangement that resulted in the home being sold out from underneath the widow to a straw buyer. Attorneys from the Legal Aid Society of Milwaukee are representing the widow in an attempt to help her keep her home and void the foreclosure rescue transaction.

In addition to the "main event" in this court battle between the widow and the operator, other fights on the "undercard" involve (1) the straw buyer, who has reportedly filed a claim against Johnson, saying she was duped, and (2) the lenders, who have reportedly filed a counterclaim and are seeking damages against the appraiser involved in the transaction, saying he overvalued the widow's home.

For more, see Facing eviction, widow sues (Lawmakers consider bill against 'rescue scams').

For other foreclosure rescue stories involving the attorneys from the Legal Aid Society of Milwaukee, reported in the Milwaukee Journal Sentinel, see:

From foreclosure fire into eviction frying pan (Desperate homeowners are targets of buyback plans),
Beware those offering help on foreclosures.

Editor's Note:

The use of trust agreements (and, in connection therewith, the use of assignments of beneficial interests) in foreclosure rescue transactions appear to be relatively common. It is undeniable that using trusts is a legitimate way of establishing and maintaining a businessperson's privacy in connection with legitimate business and family transactions. In my view, however, using complicated trust agreements in an attempt to conceal or otherwise obscure transactions that are ultimately found by a court to be based in fraud, deception, or any other act of overreaching can only exacerbate the situation for a foreclosure rescue operator when a court (after finding such fraud, etc.) determines that the imposition of punitive damages against the operator is warranted. For punitive damage awards in foreclosure rescue situations, see for example, Foreclosure Rescue Victim Wins $3.3+ Million Verdict Against Operator.

New York Times On Foreclosure Rescue / Equity Stripping

The New York Times has recently posted a video on the story of a Chicago homeowner who was victimized in a foreclosure rescue, equity stripping transaction by Birmingham, Michigan-based foreclosure rescue operator RYM Technology Holdings and owner Felix Daniel.

Lea Weems, a lawyer at the Home Ownership Preservation Project at the Legal Assistance Foundation of Metropolitan Chicago, represents the Chicago homeowner and reportedly has helped her client get the title to her house back. As far as the lender who provided the mortgage in the equity stripping transaction is concerned, the victimized homeowner is currently suing them to declare the mortgage void because of the fraud involved when she signed away the title to her home. A hearing in her case is scheduled for mid-July.

For more, watch A Victim Of Equity Stripping (By New York Times reporters Gretchen Morgenson and Rob Harris).

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

Foreclosure Rescue Scams Growing

KOMO-TV Channel 4 in Seattle, Washington reports on the growing problem of foreclosure rescue scams in Washington. The types of scams are described in the report. Interviewed for the story is Seattle-area attorney Melissa Huelsman, who reportedly is swamped with victims of real estate foreclosure scams, with her office file cabinets beiing filled with case upon case of local homeowners tricked out of their homes by people claiming to help them keep their homes. She reports that she has clients in foreclosure receiving 20 to 30 pieces of mail each day from people and companies marketing their services to them.

Go here to watch KOMO-TV Channel 4 report (by reporter Connie Thompson) or, to read the online story, see Beware of foreclosure rescue scams.

Facing Foreclosure? Say No To Bird Dogs!

In a column by attorney Benny L. Kass appearing recently in The Washington Post, he cautions homeowners facing foreclosure (potential foreclosure rescue victims) to "say no to bird dogs." Reference is made to the 2005 report from the National Consumer Law Center which highlights three types of rescues. For more, see When Foreclosure Threatens, Beware the Bird Dogs.

For the 2005 report, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (file size - 4.61 MB).

Sunday, July 08, 2007

Foreclosure Consequences On The Community

The consequences of homeowners unable to make their mortgage payments and maintain their homes often affects more than just the borrower and mortgage holder. Today's posts illustrates some of the effects foreclosures can have on the community.

Lack Of Maintenance Results In Loss Of Home For Owner & Headaches For Upstate NY Town

One homeowner's inability to maintain her home resulted in both her loss of ownership, an unsafe health condition for the community, and a potentially significant bill for demolition for the village board, as reported in a recent story appearing in the Binghamton Press & Sun-Bulletin.

The home, in the upstate New York Village of Owego, ended up being sold to the local municipality in a tax foreclosure sale when the prior owner failed to pay real estate taxes. However, the problems dated back prior to the foreclosure when the village worked with the Tioga County Health Department to evict the owner, after her inability to maintain the home resulted in unsanitary living conditions that affected the entire neighborhood. According to the story:
  • "Shortly after the eviction, the village contracted three companies to clean up trash inside and outside the two-story home. Exterminators removed at least 280 rats... [T]he garbage was about 3 feet high in every room and was full of feces... [C]leanup costs totaling $7,222.89 were attached to [the owner's] property taxes... [F]urther fees included routine outdoor maintenance, according to village bills."

Reportedly, the owner sufferred from a medical condition that restricted her from standing on her feet for long periods of time. Neighbors and a local church had cleaned the property on several occasions, but the owner simply couldn't maintain the home. According to the story, the owner's husband told her not to pay the taxes because the property would be condemned anyway.

The village board is now considering when to demolish the home, the average cost of which reportedly ranges from $20,000 to $25,000. For more, see Owego takes over house that had rats.

California Court Orders Forcible House Cleaning Of Home Nearing Foreclosure

In Oceanside, California, the North County Times reports:
  • "Citing health and fire code violations, and an ongoing rat infestation, the city will remove accumulated trash and other debris from a private home in Oceanside's Capistrano Park neighborhood. [The Oceanside manager of the city's code enforcement division] said his department has received 14 complaints about conditions at the property and added that the enforcement action is likely to cost $5,000 to $7,000 and will be billed to property owner ..."
Reportedly, the owner is four months late on the mortgage and is nearing foreclosure. Her failure to maintain the home may be based on medical reasons. She says that she suffers from a chronic medical condition that causes widespread pain in her muscles that prevents her from lifting anything very heavy; the condition also makes it very difficult for her to sleep. For more, see Oceanside asks judge to allow forcible house cleaning.

Ohio Man Killed, Wife Injured In Accident With Fire Truck Responding To Suspicious Vacant (Foreclosure) House Fire

In Canton, Ohio, the Canton Repository reports:
  • "A World War II veteran was killed and his wife critically injured Wednesday when their car was struck by a fire truck on the way to a vacant house fire. [They] were celebrating their 53rd wedding anniversary, said friends at the nearby American Legion post they had just left."

Firefighters were responding to a burning 2 1/2-story wood-frame vacant house, which also caused some damage to the house next door. No injuries were reported at the site of the fire.

Reportedly, the house was in foreclosure and was scheduled for sheriff's sale Monday. The cause of the fire, while not yet declared arson, remains suspicious and is under investigation. For more, see Tragic end to wedding anniversary. zebra

Another Suspicious Fire Burns Down Vacant Yakima Condo Project

A condominium project which sat empty and in limbo for years has been reduced to charred remains in the largest in a string of local suspicious fires last week in Yakima, Washington, according to press reports. Construction of the condo project began seven years ago and its ownership has passed through several hands over the years.

Reportedly, the original owner lost the condos to foreclosure, and the current owners bought the property in a Sheriff's sale for $450,000 two years ago. Yakima Fire Chief Charlie Hines says damage estimates could easily be into the millions. Authorities said it's unclear whether the property was insured. The current owner, Deerfalls Property, reportedly filed for Chapter 11 bankruptcy last month. It also owes more than $25,000 in delinquent property taxes for the past three years. Jacques Von Speyer and Alexa Petschek-Von Speyer, who are listed as the debtors on the bankruptcy petition, could not be reached Thursday.

Federal Alcohol, Tobacco & Firearms agents will be working on the investigation with Yakima Fire and Police investigators to figure out what caused the empty condos to burn down. While not yet calling it arson, they are calling the fire suspicious. For more, see:

ATF Agents Join Investigation Into Fire That Burned Down Empty Condos. (KNDO-23/KNDU-25).

Go here to watch the KNDO-23/KNDU-25 video report (Brian Levitan reports) (no longer available online).

Condo project destroyed in latest suspicious fire (Yakima Herald-Republic). zebra

South Dakota Man Cops Plea In Foreclosure Arson

An Associated Press article reports that Dustin Bomford, 19, pleaded guilty to second degree arson and was given a ten-year prison sentence with five years suspended for torching a home that was in foreclosure. Bomford claimed that the homeowner had asked him to help burn down the home for the insurance money. The homeowner was not charged. Bomford was also ordered to pay about $76,000 in restitution to reimburse the insurance company for the money it coughed up to the lender holding the mortgage. For more, see Arsonist ordered to reimburse insurance company. zebra

More On Foreclosure Eyesores

A Detroit Free Press article reports on the glut of empty houses - both for sale and foreclosed - unkempt properties can be widely found that are decreasing everyone's property value. For more, see Unsold properties create neighborhood eyesores.

USA Today recently ran a story on the mosquito problem in parts of Arizona, Southern Nevada, and California due to the untended pools of vacant and abandoned homes. See Vacant pools leave neighbors swimming in mosquitoes.

Concerned that high grass attracts rats and snakes from the river, the borough council in Scottdale, Pennsylvania has recently passed a "tall grass" ordinance that can result in a $600 fine per offense and as long as 90 days in jail for violators, according to the Connellsville Daily Courier. Reportedly, the borough has spent much time with problem properties owned by banks and other lenders. See Scottdale adopts high grass ordinance.

In Binghampton, New York, the Press & Sun-Bulletin reports on the plight of one area homeowner who has been pressuring local code enforcement for ten years to force her neighbors living next door to clean up their home. The home is described as a hodgepodge of cracked paneling, broken windows and faded paint. Asphalt roofing shingles are multicolored and mismatched. And trash is strewn throughout the yard. While the neighbors have since lost their home to the city in a tax foreclosure sale, the homeowner is still waiting for the cleanup. See 10 years later, woman still waits for cleanup of adjoining property.