Saturday, October 27, 2007

Recent Central Florida Copper Theft Stings Nail Eight

In Manatee County, Florida, the Bradenton Herald reports:

  • Targeting the "middleman" in a recent spree of copper thefts, the Manatee County Sheriff's Office on Wednesday arrested seven people on charges of buying stolen metal. The arrests at two scrap yards and two private homes - where detectives had received tips that illegal activity was taking place - culminated a six-week sting operation dubbed "Operation Hot Wire." [...] "This was an effort to go after the middleman, the people buying stolen copper," said Manatee County Sheriff Brad Steube. "We told these people this stuff was stolen, and they took took it anyway."

  • Two years ago, copper was being sold for about $1 per pound. On Wednesday, copper closed at $3.45 per pound in trading on the New York Mercantile Exchange. The price increase has fueled a nationwide epidemic of copper theft from businesses and residences, according to sheriff's Sgt. John Andrews.

  • Manatee County has been hit so hard, the sheriff's office this summer assigned two detectives solely to investigate copper thefts. Most recently, thefts of copper and brass backflow preventers have frustrated victims and investigators. A backflow preventer keeps wastewater from being sucked back into water supplies.

  • In September, someone was brazen enough to steal the backflow preventer from the rear of the sheriff's office's headquarters, leaving employees without water for hours.

  • Accounts from search warrants in the sheriff's office "Operation Hot Wire" have buyers showing detectives how to take brand new wire and make it look used by soaking it in acid.

For more, see Copper sting snares seven, and 'Hot Wire' copper theft sting detailed.


In another recent Central Florida metal theft sting, The Lakeland Ledger reported:

  • The selling of stolen metal - a growing problem in Polk County - landed the owner of a recycling company in jail ... . Jerome Hayes, 43, of St. Cloud, was arrested by Polk County Sheriff's Office undercover detectives after he purchased items from them that were made to look like stolen property, a press release from the office said. [...] In the last year, the Sheriff's Office has investigated hundreds of cases of stolen copper wire in unincorporated Polk County.

For more, see St. Cloud Man Arrested in Stolen Metal Sting.

Go here for other posts on copper & metal theft. copper metal theft zebra

$20 Copper Theft In Vacant Home Leads To Owner's Death

In Onawa, Iowa, KCCI-TV Channel 8 (Des Moines) reports:
  • A $20 copper theft in August led to the death of an Iowa man, and local authorities said ... that they need the public's help to solve the crime. Earl Thelander, 80, died in late August after an explosion in a home he owns outside of Onawa. His son, Doug, said his father was preparing the property for a new renter. In the process, someone raided the inside of the home, police said, stealing wiring and tubing and cutting a gas line into the home. Doug Thelander said his father aired out the gas smell in the house for almost three hours the next day, then plugged in a fan to move the air around. "He said, 'Doug, I didn't smell anything, but that spark there was just a tremendous explosion,'" Thelander said, recalling one of his last conversations with his father. Earl Thelander had second- and third-degree burns over 80 percent of his body. He died in a hospital four days later. "It's tough to watch. It's tough to watch somebody like that just fade away," Doug Thelander said.

For more, see Man Dies After $20 Copper Theft (Onawa Police Seek Informants) (if link expires, try here).

Go here for other posts on copper and other metal thefts. copper metal theft zebra

Temporarily Vacant Rental Home Hit By Copper Thieves Posing As Repairmen

In Jackson, Mississippi, WLBT-TV Channel 3 reports:

  • A south Jackson property owner warns you to be on the look out for copper thieves pretending to be repairmen. It is a costly crime which damages property and contributes to the decline of many neighborhoods. Mike Crook has owned a rental house ... for over five years. Until recently he has not had a problem with break ins while waiting for a new family to move in. But the damage he said thieves did while robbing the residence is almost unbelieveable. "I was shocked they took the toilet and the water heater," said Crook.

  • But the Ridgeland resident was most surprised the third time thieves stole copper from the rental house. In just about three weeks Crook said the vacant house has been robbed of copper wiring from the air conditioning unit, plumbing and other appliances.
For more, see Copper Thieves Pose as Workmen at Vacant Houses.

Go here for other posts on copper and other metal thefts. copper metal theft zebra

Copper Thefts Putting Lives In Danger

In Great Britain, The Argus reports:
  • Thieves risked causing a huge gas explosion after they ripped copper piping connected to the mains supply off walls of houses. Firefighters were called to properties ... after neighbours smelled gas leaks. Police believe the thefts are down to the high price currently being offered for copper by scrap merchants.


  • A spokeswoman for company Scotia, which has responsibility for the gas network in the South, said: "There has been a recent spate of problems happening to households where the copper pipe that comes out of the gas meter has been ripped off the wall to be sold for profit. Our involvement is that we go out to make everything safe as the pipes are owned by the householders. We are only called because it's an uncontrolled gas leak as the pipes are ripped off the walls. It's an extremely dangerous situation because they are just ripping the pipes off the wall. It just takes somebody to throw a cigarette away or smoke near it for it to be an issue of safety."

For more, see Copper theft puts lives in danger.

Go here for other posts on copper and other metal thefts. copper metal theft zebra

Active Gas Line Cut In Abandoned Home; Copper Thieves Suspected

In Attleboro, Massachusetts, The Sun Chronicle reports:

  • Thieves looking for copper plumbing could have accidentally cut a propane gas line inside an abandoned house on County Street Monday night. Detective James Cote said Tuesday that evidence in the abandoned duplex ... indicates thieves broke into the duplex looking for copper tubing, and cut the line not realizing it was an active gas line. [...] The detective said the duplex, which is at least 50 yards from the nearest house, has been abandoned for some time.

  • The leak ... was reported about 6:15 p.m. Monday by a Bay State Gas employee who was working in the area, according to police. Police and fire officials had to evacuate three nearby homes for about an hour and close a section of County Street around the area of the leak.
For more, see Police: Gas line could have been cut by thieves.

Go here for other posts on copper and other metal thefts. copper metal theft zebra

Friday, October 26, 2007

Victims Of A $43 Million California Real Estate Ponzi Scheme Being Victimized Again; This Time By The Federal Bankruptcy Process

Excerpts from a recent story in the San Jose Mercury News:
  • After losing nearly all of his savings in a Bay Area real estate scam, Mel Nashban's life quickly fell apart. The retired trucking company owner suffered through a divorce, was forced to sell his Carmel home and found himself living on $1,040 a month in Social Security income. Now, Nashban, 79, and many of the dozens of other elderly victims who lost a combined $43 million to scam artist Michael Schneider, feel they are being victimized again - this time by the bankruptcy process.

  • Schneider pleaded no contest in July to 173 felony counts for his role in swindling dozens of elderly victims in Santa Clara and Santa Cruz counties. And now his assets - liquidated for about $11.3 million, according to court documents - remain tied up in a lengthy bankruptcy court proceeding that underscores the growing concern about a system designed to divvy up the scraps when an enterprise goes bad.

  • At the rate attorneys and trustees are racking up fees, the fraud victims fear they have already lost any chance of recouping even a small portion of their losses.
For more, see Scam victims fight in bankruptcy court to regain some lost money (Bankruptcy assets go to legal fees). (if link expired, try here).

See also, Where the money is going.

Pennsylvania Cash Back Mortgage Fraud Scammer Gets 14 Years In Federal Pen

The Lancaster Intelligencer Journal reports:
  • Mickey Allen Weicksel, a former Lancaster real estate investor who obtained about $4 million in kickbacks through a real estate scam, was sentenced Tuesday to 14 years in prison. Federal District Judge Barclay Surrick in Philadelphia also sentenced Weicksel, 40, to serve five years probation after his release from prison and ordered him to pay $750,324 in restitution. Weicksel was convicted in March 2006 of 14 counts of wire fraud, three counts of bank fraud and one count of conspiracy to commit money laundering. Weicksel will join his former business partner, Barrylee Paul Beers, in federal prison. Beers, who previously pleaded guilty to wire fraud, bank fraud and conspiracy to commit money laundering, is serving a four-year prison term.
The scam involved (1) submitting false information to lenders to fraudulently obtain mortgage loans, (2) receiving "cash back" at closing from the sellers whose property was being purchased, and (3) use of a bogus repair company used to falsely create or inflate repair costs on the purchased properties when in fact no significant work had ever been done, according to prosecutors. The money being paid for the purported repair costs came out of the mortgage loan proceeds and were, in effect, the "kickbacks" paid to the scammers.

Beers and Weicksel purchased more than 100 properties in the Lancaster area. For more, see Man gets prison for house scam.

North Dakota Feds Charge Title Abstractor With Forging Title Opinions

In Fargo, North Dakota, WXMC-TV Channel 13 reports:
  • A Cando woman is accused in an elaborate scheme in which she allegedly used a fake law degree and a fictitious employee to forge real estate title opinions. Twenty-seven-year-old Diane Slaubaugh (SLAY'-baw) has pleaded not guilty in federal court in Fargo to 36 felony counts, including wire fraud and identify theft. Her trial is scheduled to begin December 10th. Authorities say Slaubaugh and her abstract company, Midland Services, forged the name and initials of Fargo attorney Brenda Rosten on 34 separate title opinions. A title opinion is a document prepared by an attorney that indicates the ownership and outstanding liens for a property. Assistant U.S. Attorney Jan Morley says what it boils down to is identity fraud. Slaubaugh's attorney had no comment.

Source: Woman accused of forging real estate title opinions.

Minnesota Groups Providing Help To Mortgage Fraud Victims; Training To Attorneys Representing Them

The Minneapolis Star Tribune reports on the ongoing efforts in Minnesota that are aimed at addressing the many layers of the housing crisis in which mortgage fraud has played a significant role. For a list of organizations involved in these efforts, providing assistance both to homeowners victimized by mortgage fraud and foreclosure rescue scams, as well as to Minnesota attorneys by providing them training to represent individual homeowners in foreclosure, see Mortgage fraud victims deserve our help (Government does its part to prosecute unscrupulous brokers and predatory lenders. But there are ways the community can aid those hurt by this unnatural disaster.).

Short Sales: A Pain In The Neck? (Part 2)

For more "short sale anecdotes" describing the difficulties that some claim to be experiencing in consummating a short sale, see Real Estate Investors and Agents Decry Short-Sale Process, posted at Mortgage News Daily.

For an earlier post on Mortgage News Daily on short sale problems, see What Is Happening Out There?

Crooked Qualified Intermediaries Hurting The 1031 Exchange Industry

The Denver Post recently ran a story on what could happen to you if, in the course of doing a tax free, Section 1031 exchange of real estate (in order to defer tax liability on the appreciatioon of investment real estate), you entrust the proceeds of your sale with a qualified intermediary who turns out to be a crook. If your interested, see Legal tax deal could cost you.

Go here for other posts on 1031 exchange ripoffs.

Thursday, October 25, 2007

Texas AG Slams Another Upfront Fee Foreclosure Rescue Consultant; Obtains TRO & Asset Freeze

From the Office of the Texas Attorney General:
  • Texas Attorney General Greg Abbott [yesterday] obtained a temporary restraining order and asset freeze against an unlawful Texas-based foreclosure rescue operation targeting struggling homeowners in the state and across the country. According to court documents, Southern Residential, LLC, and its director and manager, Edward Casey, fraudulently advertised that the company could save homeowners from imminent foreclosure. The enforcement action also names affiliated defendants National Homeowners Assistance, Stephanie Casey, Matthew Casey and Linda McCann. Under the temporary restraining order, the defendants must stop falsely soliciting distressed homeowners immediately. Although the order only applies in Texas, homeowners nationwide are protected by the asset freeze. [...] Last week, Attorney General Abbott secured a temporary injunction against Foreclosure Assistance Solutions, a Florida-based “foreclosure rescue” scheme that targeted Texans who fell behind on their mortgage payments.

For the rest of the Texas AG's press release, see Attorney General Abbott Takes Legal Action Against Foreclosure Rescue Firm's Unlawful Texas Operations (Clients of Southern Residential urged to call their lenders immediately).

For links to documents, etc. in this case, see:

Ringleader In Colorado Straw Buyer / Rent Skimming / "Rent To Own" Scam Convicted Of Racketeering

The Pueblo Chieftain reports:
  • A real estate mogul will trade his upscale lifestyle of luxury cars, fine dining and posh homes for a stretch in the big house. Maurice Goring, 41, was convicted Tuesday on two counts of racketeering under the Colorado Organized Crime Act. He faces up to 48 years in prison. [...] Prosecutors said Goring stole or fraudulently obtained mortgage loans totaling about $2 million.

  • Goring enlisted acquaintances he met at church to serve as the listed owners on distressed properties he purchased. Goring then pocketed the mortgage loan proceeds, often taking out a second mortgage immediately at closing. He let the houses lapse into foreclosure. In the process, he ruined the credit of the people who agreed to serve as the registered owners of the homes.

For more, see Goring guilty of racketeering (Former real estate professional faces up to 48 years in prison).

For story update, see Man gets 10 years in real-estate scam.

Go here for other posts on Maurice Goring.

Miami Mortgage Fraud Prosecutions Of Title Insurance Agents Expected To Increase

In Miami-Dade County, Florida, the South Florida Daily Business Review reports:
  • Title insurance agents, the last people most home buyers and sellers see before a deal closes, are increasingly among the first being prosecuted for mortgage fraud. That is raising questions among prosecutors and investigators about agents’ training, employee supervision and whether agents should play a bigger role in stopping fraud. “I’m seeing an increase in them being involved in the whole [fraudulent] transaction and with knowledge of how bad the situation is,” said Sgt. Richard Davis of the Miami-Dade Police economic crimes division. Davis, a member of the new multi-agency mortgage fraud task force in Miami-Dade County, said arrests of more title agents are imminent.

For more, see More title insurance agents being prosecuted for mortgage fraud (if link expired, try here).

South Florida Condo Speculators Filing Suits To Wiggle Out Of Purchase Contracts

In the Greater Fort Lauderdale area, the South Florida Sun Sentinel ran a story yesterday on the trend of real estate speculators who entered into contracts to purchase real estate in developments that were being constructed at the height of the real estate boom that are now looking to back out of the deals because the reversal in the real estate market is making it impossible for them to profitably flip their purchase contracts. Many are going to court seeking the court's blessing, as well as a court order directing the developer to return the contract deposits. Excerpts from the story:
  • Brad Hunter, director of the South Florida region for Metrostudy, a housing market research firm, said more lawsuits are being filed because "there is a lot of buyer's remorse out there. Naturally people will be looking for ways to get out."

  • About 40 percent to 60 percent of buyers are trying to wiggle out of their contracts, said Gary Poliakoff, a Fort Lauderdale attorney, referring to a dozen projects in South Florida that his firm represents, ... . "The claims and the suits are namely a means for an end for investor-buyers to get out of deals where they weren't able to realize the profits they expected, but it doesn't mean the reasons are legitimate," Poliakoff said. Developers are not budging, Poliakoff said, because they "built the buildings on the reliance that the buyers are ready, willing and able to close."

  • John Mike, chairman of the Realtors Association of the Palm Beaches, said those most upset are buyers who had no intention of living in their properties. "A lot of those condos, unfortunately, were bought by speculators with the same business plans — to flip their properties, and unfortunately that has created a glut of units. Now we are seeing a large number of people trying to get their money back by hiring lawyers."
For more, see Housing slump has South Florida condo investors heading for the exits (Suits mount as condo investors seek money back) (if link expired, try here).

Go here for other stories on real estate speculators looking to back out of purchase contracts. zebra

Federal Court Takes Jurisdiction Of Alleged Mortgage Investment Scam Class Action Suit

In Philadelphia, Pennsylvania, the Lancaster Intelligencer Journal (Lancaster Online) reports:

  • Some homeowners who owe much more than they thought they did due to alleged mortgage broker fraud by OPFM Inc. lost one form of temporary relief Wednesday but gained another. A federal judge in Philadelphia Wednesday took charge of the case and tossed a temporary injunction that had shielded about 800 customers from mortgage debts discovered when OPFM filed for bankruptcy Sept. 18.

  • Instead, a new agreement allows mortgage customers to pay 75 percent of the higher mortgage payments, or the original payment, whichever is higher, and mortgage companies promised not to foreclose if the payments are made.

  • U.S. District Judge James T. Giles made the decision after taking jurisdiction of a class-action lawsuit filed Sept. 25 in Berks County court. The suit seeks to void mortgages of 25 lenders named in the suit. The mortgages were brokered by Personal Financial, allegedly without the knowledge of the customers, who thought they were signing on for lower mortgages.

For more, see Federal judge takes OPFM suit (Revises deal for homeowners who allege mortgage broker fraud).

See also, WGAL-TV Channel 8, which reports:
  • Wednesday morning a federal judge in Philadelphia threw out a ruling that had temporarily protected homeowners who had been affected by the sudden closure of Personal Financial Management, a local mortgage company. The judge then directed attorneys representing homeowners and the mortgage companies to come up with an agreement that can be overseen by the federal court. The judge's decision supersedes a Berks County judge's ruling two weeks ago that had temporarily protected homeowners from being forced to make higher payments.

For more, see Judge Tells Homeowners, New Mortgage Holders To Work Together.

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving Wesley Snyder, OPFM, Image Masters.

Wednesday, October 24, 2007

Michigan Man Gets 4 Months In Jail For Pocketing Proceeds Of Foreclosure Rescue Deal

In Grand Rapids, Michigan, WOOD-TV Channel 8 reports:
  • Tony O'Neal is in the Kent County Jail starting a four-month sentence for cashing a check belonging to a couple whose home was facing foreclosure. O'Neal brokered a deal in which Carl and Dreama Henderson sold their threatened home to a third party, who rented it back to them. In the process, the Hendersons were supposed to get some $30,000 back from the equity in their home. O'Neal offered to cash the check for them. He kept the money. [...] The Hendersons trusted O'Neal. He worked for a major national mortgage company at the time, and did foreclosure rescue deals on the side. Last fall the Hendersons asked Target 8 Investigators to look into the matter. They also contacted Grand Rapids police detectives. They caught up with O'Neal in December and got a warrant charging him with larceny by conversion.

O'Neal was sent to jail for four months, put on probation for four years and ordered to repay the Hendersons some $27,000. Aside from the proceeds of the cashed check illegally pocketed by O'Neal, no word on how much more the Hendersons got ripped off on the actual foreclosure rescue deal itself. For more, see Man jailed for 'foreclosure rescue' theft.

Go here to watch the WOOD-TV Channel 8 video report.

Editor's Note: In a prior post, a foreclosure rescue, sale leaseback transaction was described involving a homeowner facing foreclosure that took place in the same general area of Western Michigan as this story. In that case, the homeowner sued the foreclosure rescue operator and successfully voided the foreclosure rescue transaction. For more, see Foreclosure Rescue Operator Violates Federal Law, State Usury Law. Representing the homeowner in that case was attorney Phillip C. Rogers, of Grand Rapids, Michigan. Maybe the homeowners in this case should look into getting an attorney to pursue voiding the foreclosure rescue transaction altogether.

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.).

Texas AG Obtains Temporary Injunction Freezing Foreclosure Rescue Operator's Assets Indefinitely

An emergency restraining order obtained by Texas Attorney General Greg Abbott in September which froze the assets belonging to upfront fee foreclosure rescue operator Foreclosure Assistance Solutions of Clearwater, Florida was replaced last week by a temporary injunction issued by a Texas state court. Under the court order, Foreclosure Assistance Solutions, and its principal operators, Herb Zerden and Adolfo Quintero, as well as J.W.W. Services, Inc. of California and owner John Woodruff, are prohibited from targeting and deceiving Texans who fall behind on their mortgage payments. The temporary injunction issued last week extends the initial September order, securing approximately $750,000 in fees that the defendants charged more than 700 Texans who paid for its services. The monies will remain frozen pending further orders from the court. For more, see Texas AG Press release, Attorney General Abbott Halts Foreclosure Rescue Scam's Unlawful Texas Operations (Clients of Foreclosure Assistance Solutions urged to call their lenders immediately).

For related court documents filed against Foreclsoure Assistance Solutions, see:

Go here for other posts on Foreclosure Assistance Solutions.

FBI, NY AG's Office Attend Buffalo Tax Foreclosure Sale; Warn "No Flipping Allowed!"

In Buffalo, New York, The Buffalo News reports:
  • Buffalo’s annual foreclosure auction is attracting more than just buyers looking for bargains this year. The three-day sale of troubled properties also attracted the FBI and the state attorney general’s office. “We’re keeping track of who’s doing what,” said Kathleen Lynch, coordinator for the city’s Anti-Flipping Task Force. The task force, formed to combat the practice of real estate flipping, joined several law enforcement agencies Monday in monitoring the first day of the auction in the Buffalo Niagara Convention Center. [...] One of the tools the task force is using this year is an affidavit all buyers are required to sign. The document is designed to prohibit a buyer from selling his property for a profit of more than 20 percent during the first six months of ownership. The goal is to curtail flipping, the practice of buying low-priced housing and quickly selling it at inflated prices without making improvements to the property.

For more, see Foreclosure auction has a warning: No flipping (if link expired, try here).

See also, Flushing out flippers (WKBW-TV Channel 7, Buffalo, NY). Go here to watch WKBW-TV Channel 7 video report.

Frank Proposes Bill Targeting Institutions That Securitize Mortgages

Financial News Online reports:
  • A congressman has proposed a bill to punish any institution that securitizes mortgages as Washington renews its scrutiny of Wall Street before next year’s elections. Congresman Barney Frank, chairman of the House Financial Services Committee, has co-sponsored the bill, which would hold financial firms liable if they securitize loans that violate minimum lending standards. Borrowers could sue to recover the cost, if Frank’s bill passes. The bill would also cut out lending arrangements that many have blamed for this summer’s credit squeeze, including abolishing penalty charges for borrowers who make their payments early and penalizing brokers who push consumers toward high-cost loans. Frank said he hopes to push the bill through before the end of the current Congressional session.

The proposed legislation is contained in bill H.R. 3915 - The Mortgage Reform and Anti-Predatory Lending Act of 2007. For more, see Congress takes aim at securitizations ahead of elections.

Countrywide Proposes To Refinance Or Restructure Up To $16 Billion In Loans

Reuters reports:

  • Countrywide Financial Corp , the largest U.S. mortgage lender, on Tuesday offered to refinance or restructure up to $16 billion of adjustable-rate mortgages through the end of 2008. The lender said its program may help about 82,000 borrowers who face higher payments stay in their homes. It announced the program as pressure mounts on the mortgage industry from politicians and consumer groups worried about rising foreclosures to clean up lending excesses, and make only home loans that consumers can afford in the first place.

For more, see Countrywide to modify $16 billion mortgages.

Recent political pressure in the form of proposed bankruptcy law changes that would force lenders to accept loan modifications in connection with homeowners filing Chapter 13 bankruptcy (see More On Proposed "Forced Mortgage Modifications" In Chapter 13 Bankruptcy) may be having an influence on Countrywide's position. The recent Countrywide protests by consumer activists may also be having an effect (go here for Countrywide under attack). The proposed Federal class action lawsuit against Countrywide alleging race discrimination might also be contributing (or could it be that Countrywide is just posturing to take the heat off?). countrywide pressure zebra

Tuesday, October 23, 2007

Feds Confirm Raid Of Home Of Pennsylvania Mortgage Broker

Lancaster Online reports:
  • The U.S. Postal Inspection Service confirmed Monday that it has raided the home of Wesley A. Snyder, the president of a bankrupt mortgage-brokerage business that has saddled 800 homeowners with tens of thousands of dollars of additional, unexpected mortgage debt. Oriey Glenn, the acting inspector in charge of the Philadelphia Postal Inspection Service, said items were taken during an Oct. 12 raid involving Snyder's companies Personal Financial Management Inc. and Image Masters, which operated offices in Lancaster and Berks counties. [...] No fewer than five agencies — the postal inspectors, the Pennsylvania Securities Commission, the state Department of Banking, the state attorney general's office and the U.S. Attorney's office — are investigating Snyder's businesses.

For more, see Mortgage broker raided (Postal inspectors seize items from home of Wesley Snyder).

For story update, see Judge Tells Homeowners, New Mortgage Holders To Work Together (WGAL-TV Channel 8, 10-24-07).

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving Wesley Snyder, OPFM, Image Masters.

Twin Cities-Area Builder Charged With Mortgage Fraud Conspiracy

The Minneapolis Star Tribune reports:

  • An alleged mortgage fraud conspiracy that pocked some southern Twin Cities suburbs with foreclosures and led to an estimated $50 million in losses on nearly 200 houses has boiled down in criminal charges to a much smaller number: $114,465.60. That's the amount the government alleges that Parish Marketing and Development Corp., founder Michael Parish of Eagan and son-in-law Christopher Troup laundered from the conspiracy. [...] Michael Parish and his wife, Ardith, were charged quietly Thursday along with their company and Troup in an alleged mortgage fraud conspiracy that ran from 2003 through last May. [...] So what happened to the rest of the estimated $50 million in losses?

  • Government prosecutors aren't commenting yet. The defendants agreed to be charged directly by the U.S. attorney's office in lieu of an indictment. Additional information may emerge Nov. 2, when the defendants are scheduled to be arraigned and enter guilty pleas.

For more, see Developer Parish is charged (Longtime home builders Michael and Ardith Parish are expected to plead guilty in an alleged mortgage fraud conspiracy that has pocked some southern Twin Cities suburbs with foreclosures and led to an estimated $50 million in losses on nearly 200 houses).

See also, Developers expected to plead guilty in mortgage fraud case (KARE-TV Channel 11, The Associated Press).

Go here for other posts on Minnesota homebuilder Parish Marketing and Development.

Fla. Foreclosure Rescue Operator, Others Tagged With Federal Lawsuit; Allege RICO, Criminal Usury, Conspiracy, TILA Violation; Seek To Void Mortgages

The St. Petersburg Times reports:
  • Calvin Lewendowski, a 55-year-old Sarasota house remodeler, turned to the Safe Harbour Foundation last year after he was promised the nonprofit would save his home from foreclosure. Instead, Lewendowski found himself in the jaws of a loan shark. Safe Harbour referred Lewendowski to a second company, Silverstone Lending, which used illegal fees and usurious interest to take away the home, an action Lewendowski called cold-blooded.

  • On Friday [October 12], Lewendowski and other victims struck back, filing a $40-million federal lawsuit against 18 individuals and companies, including Safe Harbour, Silverstone Lending and Peter C. Porcelli, a Clearwater businessman who operated the lending business despite being banned by a federal judge in 2004 from offering such credit products to consumers.

  • The lawsuit, filed in Tampa by attorney Michael A. Wasylik, tracks a St. Petersburg Times investigation of the questionable loan operation published in May. The suit accuses Porcelli and his associates of engaging in racketeering by making false promises through the mail in order to obtain borrowers' homes through fraud.

  • The suit alleges that Porcelli and others arranged bailout loans with usurious rates as high as 500 percent, violated truth-in-lending laws and charged illegal brokerage or servicing fees.

  • The plaintiffs seek millions in actual and punitive damages, an injunction declaring usurious loan deals unenforceable and an order restoring ownership of homes to the original owners.
For more, see Victims strike back at shady lenders (The companies promised foreclosure protection only to wind up taking the homes themselves).

For a prior St. Petersburg Times story on Peter Porcelli, who currently awaits an October 29 felony sentencing on an unrelated scam, see Facing new fields of fraud (Guilty in one scam, an Oldsmar man is scrutinized in a high-risk loan scheme that preyed on those facing foreclosure) (5-20-07).

Editor's Note: The typical equity stripping, foreclosure rescue transaction generally involves a home sale by a financially hard-up homeowner, coupled with a leaseback of the home, and an option to repurchase it at a future date. According to the lawsuit (paragraphs 46 through 54) filed in this case, however:
  1. the money advanced by the foreclosure rescue operator actually took the form of a loan, and not a home sale with leaseback and repurchase option,
  2. while most homeowners needed only a few thousand dollars to avoid foreclosure, loans were arranged that incorporated finance charges, origination fees, and underwriting fees that doubled or tripled the size of the loan,
  3. the charges and fees were received by the operators and the others involved in the alleged conspiracy,
  4. in some cases, the loans arranged had effective annual interest rates of 500% or greater. In all cases, they exceeded the 45% threshold set in Fla. Stat. Chapter 687 for criminal usury,
  5. in addition to the criminally usurious interest rates, the loans incorporated a purchase option for the benefit of the lender, effective upon the default of the borrower; the option purchase price was calculated by subtracting the current equity in the home from the estimated value of the home, thereby allowing the purported option purchaser to obtain all the equity in the home by simply paying off any liens senior to its own, with little or no money going to the homeowner. Because of the criminal usury, the homeowners found it difficult or impossible to avoid default, thereby triggering the lender’s option and effectively forfeiting all of the homeowner’s equity. One member of the alleged conspiracy was an attorney who aided the operators in enforcing these purchase options by filing lawsuits for specific performance in state court against the financially strapped homeowners.

To view a copy of the lawsuit, see Heise, et al. vs. Porcelli, et al. (U.S. District Court, M.D. Fla.).

Representing the homeowners is Michael Alex Wasylik, Esq., with the law firm Ricardo & Wasylik PL, Dade City, Florida.

For story update, see Scam artist wants a break (Peter Porcelli says he deserves leniency for his cooperation).

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 Court Order Freezing Assets In Pennsylvania Mortgage Investment Program

As reported in earlier media reports and posts, a Pennsylvania Federal Court has issued an order freezing the assets of Wesley A. Snyder, who operated a self-described Equity Slide/Wrap-Around-Mortgage program, in which he is alleged to have scammed 800 investors out of millions of dollars. Snyder operated through companies named Image Masters and OPFM, Inc., among others.

To view the Federal Court documents recently filed in this case, see:

The temporary restraining order freezing Snyder's assets expires on November 2, 2007. A hearing in which the U.S. Attorney's office seeks to replace the temporary restraining order with a preliminary injunction is scheduled for October 30, 2007, at 1:30 pm.

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving Wesley Snyder, OPFM, Image Masters.

Chase Manhattan Participated In Builder Fraud, Says Lawsuit

The Morning Call (Allentown, Pennsylvania) reports:
  • The Chase Manhattan Mortgage Corp. helped create and implement a promotional program for a Pocono home builder that fraudulently qualified hundreds of unwitting customers for mortgages they couldn't afford, according to new claims filed in federal court as part of a lawsuit.

  • Chase also paid a $6,000 kickback to Tannersville developer Gene Percudani for every mortgage it approved under the program, the new documents allege, amounting to a $1.8 million payoff. Filed Wednesday by attorneys representing nearly 100 plaintiffs, the documents were in response to a motion by Chase to dismiss the suit. Chase has previously maintained it was duped by Perdudani.

  • ''We have direct evidence that the home builder told Chase what it was doing, and Chase approved it,'' said Mark Cukor, one of several attorneys representing the plaintiffs.

For more, see Chase Manhattan aided fraud, suit says (Papers in 2002 action say lender was part of Pocono builder's scam).

Reading Fine Print A Must When Bidding At Auction

In Miami, Florida, CBS4 TV reports, among other things, the story of one winning bidder who reportedly got a great deal on a brand new condo which, along with 19 others, was being unloaded at a real estate auction by a local builder, only to find out that the builder exercised a clause in the fine print forcing the buyer to close within ten days or forfeit his deposit. Fortunately for the buyer, who had been planning on financing his purchase, he reportedly was able to close on the sale, but believed that he got such a good deal that the builder, by exercising the clause in the purchase documents, was trying get out of the sale and screw him out of a $32,000 deposit in the process. The buyer warns to read all the fine print if your're thinking of bidding at these auctions. For more, see Not All Foreclosure Auctions Are What They Seem.

Go here to watch the CBS4 TV report, Read Fine Print If Going To A Foreclosure Auction.

Go here for other posts related to the Miami condo market problem.

Monday, October 22, 2007

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:

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.

Another Court Recharacterizes A Sale Leaseback As An Equitable Mortgage

(originally posted 10-19-07)
Last week, a court decision from the Iowa Court of Appeals ruled that an arrangement involving the sale of a home to "an investor" coupled with a contemporaneously executed leaseback giving the homeowner an option to repurchase the home was, in substance, a mortgage and not a true sale. The effect of this decision was to void the sale to the investor and continue to treat the the homeowner as the true owner of the property, even though she actually signed over the deed purportedly transferring title to her home to the investor.

In the case (not technically a foreclosure rescue; the homeowner apparently owned her home free and clear of any liens), a homeowner ("Ms. Tullis") in need of money to pay a number of bills went to a local mortgage company for a loan to be secured by her lifelong home that she inherited from her deceased father. The mortgage company turned her down for a mortgage. The employee at the mortgage company ("Ms. Christy"), wanting to be ever so helpful, told Tullis that she would help her make other arrangements. Coincidentally, Ms. Christy had "a fiance" ("Weeks") who just so happened to be in the business of offering sale-leaseback arrangements to financially hard-up homeowners.

Tullis the homeowner ended up doing business with Weeks whereby she sold Weeks a $90,000 home for $40,000, and then rented back the home for two years. She ultimately fell behind on her rent, and Weeks claimed that her default on the lease voided the lease and repurchase agreement, thereby making Weeks the true owner of the home. Tullis sued Weeks.

Unfortunately for Tullis, the lower local court ruled that Weeks was, in fact, the true owner and that Tullis was out of luck. Had Tullis not pursued the matter further, she would have lost all her equity in her lifelong home. Fortunately for her, however, she was represented by legal counsel who no doubt felt that the court decision was clearly erroneous and accordingly, filed an appeal with the Iowa Court of Appeals.

In reversing the lower court (thereby ruling that Ms. Tullis continued to be the true owner, despite that the legal documents signed by her stated otherwise), the Iowa appeals court ruled that the equitable mortgage doctrine applied in this case. Among other things, the court stated:

  • In arriving at the intention of the parties courts look behind the form of the instruments to the real relationship between the parties. The instruments will be read in the light of the surrounding circumstances and the practical construction the parties themselves placed thereon.

For more on this case, including excepts from the Iowa appeals court decision, see Iowa Appellate Court Recharacterizes Sale Leaseback As A Mortgage on the companion blog to this blog.

For the actual case itself, see Tullis v. Weeks, Iowa Court of Appeals, October 12, 2007.

Representing the homeowner in this case was Laura Lockard, of Iowa Legal Aid, Des Moines, Iowa.

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.). foreclosure rescue

Congress Proposes Law To Clean Up Mortgage Servicing, Appraisal Practices

In an attempt to, among other things, (1) improve the mortgage servicing industry for consumers, (2) address unfair and deceptive practices in connection with real estate appraisals made in transactions involving the borrower's primary home, and (3) require the establishment of escrow accounts (for real estate taxes, insurance, etc.) for certain mortgage loans, the U.S. House of Representatives has introduced a proposed new law, H.R. 3837 - Escrow, Appraisal, and Mortgage Servicing Improvements Act.

In the context mortgage servicing, Congress is calling for a study into the following issues:
  • (A) A survey of the industry in order to examine the issue of the timely posting of payments by servicers, (B) The use of force-placed insurance, (C) The employment of daily interest when payments are made after a due date, (D) The charging of late fees on the entire outstanding principal, (E) The charging of interest on servicing fees, (F) The utilization of abusive collection practices, (G) The charging of prepayment penalties when not authorized by either the note or law, (H) The employment of unconscionable forbearance agreements, (I) Foreclosure abuses.

Whether the call for this study is a tacit acknowledgement by Congress that these servicing practices exist to such an extent that they need to be addressed through legislation, or whether Congress is simply trying the prod the industry into doing a better job of self-regulating, only time will tell.

For the proposed statute, in its current form (as of 10-16-07), see H.R. 3837 - Escrow, Appraisal, and Mortgage Servicing Improvements Act.

Townhouse Development Plagued With Foreclosures; Remaining Owners "On Verge Of Losing Everything"

In St. Paul, Minnesota, the Pioneer Press reports:
  • When he moved to Grey's Riverview Terrace three years ago, Christopher Rocco figured the town home association that runs the complex was in good enough shape. It had about $25,000 on hand, and most of the units had just been reroofed. He never envisioned the jam Riverview Terrace finds itself in today. The wave of foreclosures sweeping across the Twin Cities has hammered the little community on St. Paul's West Side.

  • Of the 21 town homes, nine are in foreclosure, according to Rocco, the association's 37-year-old president. The group can't fix Riverview's rotting siding because it has just $37 - plus $5,000 in debt it can't pay and a ledger filled with unpaid monthly dues and late fees totaling more than $35,000. "We are on the verge of losing everything," Rocco said. "It's a lot of stress." [...] Now, five of the nine units in foreclosure sit empty.

  • Complicating matters, the remaining owners can't foot the bill to replace the damaged siding, a type of engineered wood. To fix it, Rocco estimates, his association would have to levy a special assessment on remaining homeowners for $5,000 to $10,000 each. That's just too much, he said, given that pretty much everyone in the complex lives from paycheck to paycheck. [...] The eyesore siding compounds the challenge of selling the empty units in a market glutted with offerings.

For more, see Foreclosures 'like a cancer' for some communities (A West Side development struggles to stay afloat as town homes sit empty). (if link expired, try here).

Federal Judge Freezes Assets Of OPFM / Image Masters Principal

(originally posted 10-20-07)
The Associated Press reports:

  • A federal judge on Friday froze the assets of a mortgage broker that prosecutors suspect of defrauding hundreds of people out of millions of dollars. U.S. District Judge Yvette Kane issued the order late Friday afternoon against the assets and bank accounts belonging to Wesley A. Snyder. Snyder, 71, of Oley, filed for bankruptcy last month for six businesses and told about 800 customers in central Pennsylvania that he could no longer make mortgage payments on their behalf. Snyder has not been charged.

  • Government lawyers provided probable cause to believe Snyder is running a Ponzi mail fraud scheme that has affected the customers and "numerous" financial institutions, Kane said. Officials believe he is trying to sell or otherwise encumber his property and assets.


  • Federal prosecutors said his customers were primarily located in Lancaster, Lebanon, Cumberland, York, Berks and Schuylkill counties. The Lancaster Intelligencer Journal reported last week that the company's collapse also affected customers in at least six other states: Maryland, Delaware, Florida, North Carolina, Michigan and New York.

A civil lawsuit was filed late September alleging that Snyder and his companies have ripped off $40 million from 800 Pennsylvania residents in a so-called "wrap around mortgage" investment program.

For more, see Judge freezes assets of Pa. mortgage broker under investigation.

See also, Feds say mortgage scandal was fraud (In filing, U.S. Attorney's office makes accusation for first time) (Lancaster Online - 10-20-07).

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving Wesley Snyder, OPFM, Image Masters.

Sunday, October 21, 2007

Countrywide Financial Under Attack Again

In Boston, Massachusetts, the Jamaica Plain Gazette reports:
  • Over 150 activists with the JP-based Neighborhood Assistance Corporation of America (NACA) and the Massachusetts Coalition to Stop Predatory Lenders descended on Countrywide Financial’s Centre Street offices Thursday to declare a boycott against the national lender. Over 50 of the activists entered the 708 Centre St. office, where NACA Executive Director Bruce Marks announced the boycott through a bullhorn.
For more, see Rally kicks off boycott of lender.

See also, Neighborhood Assistance Corporation of America Press Release. countrywide pressure zebra

Code Problems In Building In Foreclosure Threaten Tenants With Loss Of Homes

In Albany, New York, the Albany Times Union reports:

  • As their foreclosed building awaits sale, the dozen or so residents of 180 Washington Ave. may be turned out of their apartments Monday because of lingering code violations. The seven-story brick-and-limestone building just below Lark Street has eight occupied units and has been the focus of legal action for inadequate smoke detectors and corridor lighting for about a year, according to Valerie Scott, division supervisor for the city Department of Building and Codes.

  • Six months ago, a foreclosure proceeding was brought against former owner Hatzlocha Realty. Tenants now pay rent to a designated trustee, lawyer Daniel Centi, but say that until a new owner is found, no one will make needed repairs to the building. [...] Sandy Levan, an advocate with United Tenants of Albany, faulted the city for not being more stringent in enforcing building codes. A law passed in 2006 gives municipal courts the power to mandate repairs, something not done in the case of 180 Washington Ave. [...] "We all pay our rent and we want to stay," said Shirley Castle, 74, a retiree who has lived in the building for 13 years.
For more, see Tenants threatened by code problems (Foreclosed Albany building could be declared uninhabitable).

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. equity skimming unwittingly delta

Homeless Foreclosure Pets In San Diego

In San Diego, California, KNSD-TV Channel 7/39 reports:
  • The impact of high interest rates and home foreclosures is making its way into animal shelters, according to a local humane society. According to officials at the Escondido Humane Society, they are receiving 20 to 30 calls a day, from people who need to give up their pets because they're losing their homes in foreclosure. People moving from houses to apartments often can't take their dogs or cats with them, so many are ending up at local shelters.

For more, see Foreclosures Leaving Pets Homeless. Go here to watch KNSD-TV video report, Foreclosures Separating Families, Pets.

Go here for more on pets and foreclosures.

Massachusetts Foreclosures Hammering Tenants

The Boston Globe reports:
  • The foreclosure crisis increasingly is claiming the homes of people who never made the mistake of taking out an unaffordable mortgage: renters. Hundreds of tenants in foreclosed buildings have been evicted or are facing eviction by mortgage companies that do not want to be landlords. [...] Through mid-August this year, 1,376 multifamily properties in Massachusetts had been foreclosed, according to new research by the Federal Reserve Bank of Boston. There were 750 multifamily foreclosures in Massachusetts in 2006. The one-two punch of foreclosure and eviction often thrusts three or more families into a sudden housing search.

  • Tomorrow, US Representative Barney Frank said he plans to introduce federal legislation on foreclosures that includes a provision that tenant leases remain in effect after foreclosure, and that tenants without leases must receive 90 days notice before eviction. "Banks will no longer be able to put their convenience ahead of people's ability to live," said Frank, who chairs the House Committee on Financial Services. "We have asked lenders, saying, 'You really shouldn't do this.' Now the next step is to make it mandatory."

For more, see Default crisis is evicting renters (Tenants forced out by foreclosures) (if link expired, try here).

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. equity skimming unwittingly delta

Wall Street Journal Reports On The Growing National Copper Theft Problem

A September, 2006 article in The Wall Street Journal on the surge in copper thefts throughout the country seemed to be a relevant story to mention, given the high levels of home foreclosures that are resulting in homes being left vacant, and thus, vulnerable to copper thieves. While the article is over a year old, the guts of the story remain consistent with my recent posts on copper thefts (as well as other metals). Some of the highlights from the story:
  • The high price of copper is hitting home -- literally. The metal's skyrocketing scrap value is inspiring criminals to hit houses, making off with copper coils in air-conditioning units, copper wires, even the copper pipes used for plumbing, leaving some perplexed residents without running water.

  • Police have reported everything from copper vases swiped from gravesites to more serious thefts, such as the copper wire stolen recently from a power substation in Oklahoma City that utility officials say caused a six-hour power outage for 4,000 customers.

  • Copper isn't the only metal sought by thieves. Products made from aluminum and steel are also being targeted -- everything from beer kegs to aluminum luggage carts. But thefts of copper -- which commands a higher price -- are especially onerous for homeowners and builders [Editor's note: not to mention mortgage lenders stuck holding repossessed homes] , as the metal is used throughout modern homes, including the inner coil of central air-conditioning units, electrical systems, gutters and water pipes.

Reportedly, the copper insides of a condensing unit -- the portion of a central-air system that sits outside -- can fetch $50 to $150 at a scrapyard, while replacing an entire unit that's been destroyed in the course of the theft can cost upwards of $2,000. One victimized homeowner commented that the theives who ripped off the copper from his air conditioner probably "didn't even get the market value for it. I would have preferred if they had just knocked on my door and asked for $100."

For more, see Copper and Robbers:Homeowners' Latest Worry (Thieves Target Wires, Pipes, Air Conditioners As Price of Hot Commodity Soars).

Go here for other posts on copper and other metal thefts. copper metal theft zebra

Recent Copper Theft Stories

The following list of links are to recent stories of thieves helping themselves to the copper building components in vacant homes, at construction sites, and from other sources (some links no longer available online).

(Some links no longer available online).

For more stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft zebra

Metro Phoenix Foreclosures Hammering Tenants

In Metro Phoenix, Arizona, the East Valley Tribune reports:
  • The rising number of foreclosures in the Valley isn’t just hurting property owners — it’s also pinching hundreds of renters who are being forced out when the properties go back to the bank. Ken Volk, president and founder of Arizona Tenants Advocates in Tempe, said he’s getting dozens of calls from renters asking if it’s illegal for landlords to break a lease because of foreclosure. No exact number of displaced tenants were available, but Volk estimated it might be thousands of people across the Valley.

For more, see Increase in foreclosures taking toll on renters.

See also, Record foreclosures hurt Valley apartment renters.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here.

Editor's Note: As the tenants are forced out, the foreclosing lenders must be vigilant in keeping the squatters, drug dealers, and copper thieves from moving in. equity skimming unwittingly delta

"Bear The Cat" Added To List Of Abandoned Foreclosure Pets

In Joliet, Illinois, the Joliet Herald News reports:
  • A 9-year-old black cat with big green eyes is in desperate need of a home. His name is Bear and his people had no choice but to leave him behind. He had lived with Sandra Fairbairn and her grown son, Brian Watson, until they became homeless. [...] Bear became homeless when his owners lost their home to foreclosure.

For more, see Homeless Cat Needs Place To Call Home.

Go here for more on pets and foreclosures.

Indiana Couple Facing Foreclosure Involved In Murder-Suicide

In Jasper, Indiana, WRTV Channel 6 (Indainapolis) reports:
  • A house foreclosure may have led to a homicide-suicide of a husband and wife in southern Indiana. Police said [the homeowners] were found dead in their home Monday night of gunshot wounds. Investigators said they think [the wife] shot her husband and then turned the gun on herself. A Dubois Circuit Court judgment and decree of foreclosure on the couple's house was filed earlier this year and was recently placed on their front door.

Source: Foreclosure May Have Led To Homicide-Suicide (Couple Found Dead In Home Monday).

See also, Slayings astonish small town (Neighbor describes couple as friendly).

Go here for other posts on foreclosures and suicide. suicide homeowner foreclosure zeta