Saturday, December 29, 2007

Deed Theft Suspect Cops Plea; Gets 10 Years In Texas Prison For Conning Senior Into Signing Away Home

This is an old story (October, 2006) which took place in Texas and originally reported by the San Antonio Express-News about a woman, named Charlotte Smith, who befriended 81 year old Wallace Moore, and subsequently proceeded to bleed Mr. Moore's accounts and transferred the ownership of his home into her name, according to criminal prosecutor's allegations. In carrying out the scam, Smith essentially "hid" Mr. Moore by placing him in a nursing home without telling his relatives. According to the story:
  • After he fell and his health declined, Smith placed him in a facility referred to as "Hilltop Lodge," negotiating a lower rate because she said all he had was his Social Security check. "She put a note on his file that he was to have no visitors, especially family members," said Assistant District Attorney Joanne Woodruff. The staff at Hilltop would spend their own money to buy Moore clothes, shoes and personal items because he had become so tattered, she said. "In fact, she finally brought a bag of the oldest shoes you could imagine, and they didn't even fit him," Woodruff said. "I did see the shoes." Moore wanted to remain at Hilltop, which seemed like a well-run facility, Woodruff said.
Charlotte Smith was sentenced to 10 years in prison and ordered to pay more than $380,000 in restitution after pleading no contest to two counts of securing execution of documents by deception. For more, see:
Go here , go here , and go here for other posts on elder financial abuse.

Go here for other deed theft posts. deed theft zorro elder financial abuse xero

Texas AG Files Civil Suit To Void Deed Stolen From 85-Year Old Homeowner

This is an old story (August, 2005) coming from the office of Texas Attorney General Greg Abbott in which it filed suit to void a deed the execution of which was allegedly secured by a foreclosure rescue operator from an 85-year old homeowner through deception. According to the Texas AG's press release:
  • The action cites Bobbie Heckard with fraudulently taking possession of the home of an 85-year-old Houston man under the guise of helping the homeowner prevent foreclosure. The man allegedly was led to believe he was only allowing Heckard to consult with his mortgage company, but in fact the transaction allowed her to take ownership of his home.


  • Heckard’s scheme is designed to induce homeowners into transactions they would never consider if they knew the consequences. Heckard obtains a list of homes facing foreclosure, then tries to convince the homeowners that she offers foreclosure rescue services and will correspond with mortgage companies to resolve the problems. She then persuades homeowners to sign forms allegedly authorizing her to contact the mortgage companies on their behalf. In fact, the forms the homeowners sign are deeds transferring ownership in the homes to Heckard. Once Heckard obtains title to the property, she sells it, pockets the equity and threatens to evict the original homeowner.

For more, see:

  1. Texas AG press release - Attorney General Abbott Files Emergency Action Halting Bogus Foreclosure Rescue Operation (Asset freeze and restraining order granted by judge severely restricts activities of pair scamming homeowners) (Go here for Spanish version of the press release),
  2. Texas AG original lawsuit,
  3. Temporary Restraining Order issued in this case.

Go here , go here , and go here for other posts on elder financial abuse.

Go here for other deed theft posts. deed theft zorro elder financial abuse xero

Deed Theft Stories From North Of The Border

The Toronto Star has run a number of stories on homeowners getting their homes stolen from out from under over the last year or so, and can be found at the following links:
  1. ID thief stole home — from his mom (He `destroyed my life,' she says Son got $450K, mother, 70, evicted),
  2. Man, 90, off hook for loan: Court (Landmark ruling lifts $300,000 burden),
  3. When a house is not a home ('My sense of security in Canada is gone' says Paul Reviczky, who learned about identity theft the hard way),
  4. Court asked to reject mortgage ruling (Critics say decision in previous case favours banks and mortgage firms over fraud victims),
  5. Judge chides bank in mortgage fraud (Couple's identity stolen, home lost; TD Bank not 'innocent victim,' judge says),
  6. Identity thieves target condo (Shocked owners hit with $250,000 mortgage; Bank says it's a victim too, refuses to wipe out debt),
  7. Marital mortgage fraud (Husband gained from deal, judge says; Bank backs off ultimatum to wife),
  8. Province seeks to aid mortgage fraud victim (Set to intervene in widow's appeal; Problem `a priority,' minister says),
  9. Actress taken in by tenants (Renters took out a mortgage, sold absentee owner's house; Police believe fraud artists are part of ring operating in GTA).

Go here for deed theft posts from south of the border. deed theft zorro

Deed Theft On The TV News

The following links go to videos of stories of people having thier homes sold out from under them as a result of identity theft and/or forged instruments (deeds, powers of attorneys, etc).

  1. Sue Lawrence - Mortgage Fraud Victim (CBC - Canada),
  2. Fake Deeds Steal Homes (NBC 10 - Philadelphia),
  3. Cook County Alerting Homeowners of Possible Fraud (CBS2 - Chicago),
  4. Quitclaim deed theft in Southwest Florida (NBC 2 - Fort Myers),
  5. Brooklyn Pastor May Lose His Church After Fraud (WCBS-TV Channel 2 - NYC).

Go here for other deed theft posts. deed theft zorro

Friday, December 28, 2007

Reverse Mortgage Lender Denies Equity Stripping Charges reports:
  • Financial Freedom, the Irvine, California-based reverse mortgage lender, denies any wrongdoing in a case charging they used unlawful sales practices targeting seniors by inflating fees and using the proceeds to purchase additional financial products. The U.S. Senate Special Committee on Aging heard testimony [December 12] following its heightened concern over lawsuits recently filed against companies offering these types of loans.


  • In a separate story, a suit filed on behalf of Ernestine Boach against Financial Freedom states that she was allegedly conned into purchasing a reverse mortgage with exceptionally high fees and then sold several insurance and annuity products with the proceeds. The case, Ernestine Boach v. Financial Freedom Senior Funding Corporation was filed in San Diego Superior Court on January 11, 2007 and alleges that the Boach was advised to take out a reverse mortgage from Defendant Financial Freedom Senior Funding Corporation for $171,000 on the home she owned. The proceeds of which were to be used to purchase insurance products, including, a Fidelity and Guaranty deferred annuity with enormous surrender charges for $80,000, and a $44,350 immediate annuity to fund payments on a $250,000 flexible premium life insurance policy (also containing surrender charges).

  • Boach’s San Diego attorney Ronald A. Marron claims that this is an instance of a pervasive “equity stripping scheme” which involves Financial Freedom’s agents working in tandem with insurance brokers using reverse mortgage proceeds.

For more, see Reverse Mortgage Lender Denies Abuse against Seniors Charges.

Go here , go here , and go here for other posts on elder financial abuse.

Go here for stories related to Reverse Mortgage Problems. xero zebra

Reverse Mortgage, Elderly Homeowner With Dementia May Be Recipe For Family Disaster

In Denver, Colorado, KUSA-TV Channel 9 reports on the story of a woman who finds out that not only was her elderly mother suffering from dementia, but that her mother obtained a $200,000 reverse mortgage on her home some time back and ended up going into foreclosure.

Jose Vasquez, an attorney with the non-profit group Colorado Legal Services, a non-profit legal services firm for low-income and elderly Coloradans, says for seniors who have a lot of equity in their homes should be cautions when refinancing. He suggests that children of elderly people keep track of their parents' activities.

For more, see Woman urges others to keep close tabs on elderly parents' financial affairs (read story) (watch video).

Go here , go here , and go here for other posts on elder financial abuse.

Go here for stories related to Reverse Mortgage Problems. xero elder financial abuse zebra

Gary Man Victim Of Deed Theft; Recent Incidents Creating Near "Epidemic," Say Cops

In Gary, Indiana, the Post-Tribune reports:

  • It's a piece of land with a boarded-up brick bungalow across the street from the Emerson School for Visual and Performing Arts. It's worth just $11,000, according to county records, and owned by Allison Linton Clare Jr. of Chicago. But Herod Jackson says it's his, that he planned to fix up the house, but it was stolen out from under him with a questionable quit-claim deed. Financial crime investigators for the Gary Police Department say they are hearing more and more of these complaints. Detective Joseph Moxley said it has nearly become an "epidemic."


  • Jackson took the whole family [who allegedly stole his property] to small claims court last month, hoping to get his property back. Magistrate Michael Pagano dismissed the case, telling Jackson he had to take the case to a superior court. [...] But Jackson said it's not fair that he has to spend money on an attorney to fight his case. "The average poor person does not have the money to hire a lawyer," Jackson said. However, Jackson has filed a complaint at the Gary Police Department, and Moxley said he is continuing to investigate. Similar cases are beginning to pile up, Moxley said, and all of them are time-consuming.
For more, see Property deed theft becoming an 'epidemic'.

Go here for other deed theft posts. deed theft zorro

Rescue Scams, Servicing Abuses A Concern To Virginia Consumer Advocates

In reporting on the growing numbers of foreclosures in the state of Virginia, a story in The Richmond Times-Dispatch points out that legal aid offices are seeing an explosion in foreclosure rescue scams, according to Jay Speer, executive director of the Virginia Poverty Law Center, a state-sponsored center for legal aid offices across the state. In these cases, perpetrators convince homeowners that they can help them save their homes, when their real purpose is to take ownership and possession of the homes.

Reportedly, all kinds of abuses with mortgage loan servicers are also being seen, according to Connie Chamberlin, president and chief executive officer of Housing Opportunities Made Equal Inc., a housing advocacy group in Richmond. She also pointed out that Virginia has one of the fastest foreclosure processes in the country, which only serves to exacerbate the foreclosure problem. She points out that once a lender notifies a borrower of the intent to foreclose, a person can lose their home in as quickly as two weeks.

For the story, see Virginia foreclosures rising (State taking steps to curb defaults; more expected as subprime loans reset).

Thursday, December 27, 2007

90 Year Old Victim Of Forgery, Deed Theft, Equity Stripping Finally Gets House Back; Mortgage Voided

In Toronto, Canada, The Toronto Star reports:

  • For Paul Reviczky, a 90-year-old victim of mortgage fraud, it's the best possible ending to a two-year nightmare. In a precedent-setting decision, Ontario superior court has taken another step toward protecting victims like Reviczky from being on the hook for hundreds of thousands of dollars. The court ruled this week that the Hungarian immigrant isn't responsible for the $300,000 mortgage taken out on his home, after it was sold in 2005 without his knowledge.


  • The decision is the first of its kind in the province since a landmark Court of Appeal ruling in February. That decision found that even a bona fide purchaser can't legally buy property from a fraudster.

  • This decision expands on the previous one by finding that a $300,000 mortgage, obtained by the people who purchased Reviczky's home, was invalid because the basis for the transaction was a fake power of attorney document forged by the fraudsters who sold the elderly man's home.


  • Justice John Macdonald's ruling hands the weighty bill back to the mortgage dispenser, which is HSBC and its insurer (presumably the title insurance underwriter).

For more, including how the victim lost his house in the first place, see Man, 90, off hook for loan: Court (Landmark ruling lifts $300,000 burden).

For follow-up stories, see:

For those looking to get some idea of what the concept of "bona fide purchaser" is all about, see The Bona Fide Purchaser for Value of a Legal Estate Without Notice, and then check the case law of your home state to see how your state's judiciary has applied the legal principles that underlie "bona fide purchaser" status.

Go here , go here , and go here for other posts on elder financial abuse.

Go here for other deed theft posts. deed theft zorro xero

Elder Protection vs. Elder Free Will

Golden Opportunities is a series of articles from The New York Times examining how individuals, businesses and investors seek to profit from the soaring number of older Americans in ways helpful and harmful. The most recent column in the series starts as follows:
  • Eight years ago, when Robert J. Pyle was 73 years old, he had about $500,000 in the bank and owned a house in Northern California worth about $650,000. He was looking forward to a comfortable retirement. Today, at 81, he has lost everything. Mr. Pyle, a retired aerospace engineer, now lives in his stepdaughter’s tiny, mountainside home in a room not much larger than his bed.

For more on what happened to Mr. Pyle, see Shielding Money Clashes With Elders’ Free Will.

Go here for links to all of the columns in Golden Opportunities - A Series From The New York Times.

Go here , go here , and go here for other posts on elder financial abuse. xero

California Man Guilty Of Fleecing Grandparents; Sending Home Into Foreclosure

In Stockton, Calfornia, The Stockton Record reports:
  • A Stockton man who was entrusted to help his elderly grandparents find a new home but instead sent their Calandria Street condominium into foreclosure was found guilty [last] Thursday of identity theft and fraud charges. Rodney Jackson Jr., 28, awaits a Feb. 11 sentencing on eight felony counts and an enhancement for committing a white-collar crime with a loss greater than $100,000, San Joaquin County Deputy District Attorney James Lewis said. Jackson's guilty counts include theft from an elder, identity theft, forgery and loan fraud. A Feb. 25 court hearing was set to decide what happens to the condominium. The foreclosure was frozen in April pending the outcome of Jackson's trial.

For more, see Man guilty of defrauding elders.

Go here , go here , and go here for other posts on elder financial abuse.

Go here for other deed theft posts. deed theft zorro xero

Senior Scammed In Phony Deed, Refinancing Scam

In Lehigh Acres, Florida, WINK News reports:
  • Deputies say an East Naples Woman has scammed one hundred ninety nine thousand dollars from at least two women. Investigators discovered that Yvonne Forbes asked Yvonne Rose of Lehigh Acres to split the cost of a Golden Gate Estates property with her. Instead, deputies say Forbes took the money, and used it to pay off her own home. On top of that, deputies say Forbes convinced Rose to refinance her home, and wired money into Forbes' personal bank account.

For more, including link to the video report, see Victim speaks in real estate scam.

See also, East Naples woman accused of bilking $190K out of 2 women (Naples Daily News, 12-19-07).

Maryland Homeowner Loses Home To Foreclosure Without Prior Notice Of Sale; Now Fights To Get Back Title

The Washington Post recently ran a column on Anne Arundel County, Maryland homeowner Joyce Griffin, who is currently involved in a court battle to keep her home after it was sold in a foreclosure sale in which she asserts she received no prior notice of. One of the points highlighted in the column is that in the State of Maryland, proof that a homeowner behind in mortgage payments received a notice of foreclosure is not necessary to proceed with a public sale. In this case, Ms. Griffin asserts that she had no notice of the sale and only found out about the foreclosure after the public auction had already taken place. An excerpt from the column:
  • Maryland law requires only that banks send notice of foreclosure. There is no requirement of proof that the notice has been received. Griffin maintains she never received a foreclosure notice. "For every other kind of lawsuit, there is a requirement that notice is received, except for foreclosures," said Phillip Robinson, an attorney with the nonprofit legal aid group Civil Justice, who is helping Griffin fight her foreclosure in court. "How many other people in Maryland are being foreclosed on this Christmas that don't even know about it?"

Reportedly, she has been able to stay in her home by reason of a $13,000 appeal bond that was put up in court on her behalf, and which keeps her from being evicted, pending the result of her appeal.

For the column, see The Pain of Foreclosure (For Joyce Griffin and Thousands of Others Who Face Losing Their Homes, Sadness and Uncertainty Overshadow a Season of Cheer).

For more on this story:

  1. Go here for a description of the pending case in Griffin v. Bierman, et al. in the Maryland Court of Special Appeals, as described by one of Griffin's attorneys, Public Citizen Litigation Group,
  2. Go here to view the appellate brief filed on the homeowner's behalf, Griffin v. Bierman, et al.,
  3. For earlier post, see Maryland’s System for Home Foreclosures Tramples Due Process, Argues Appeal.

Elite Detroit Neighborhoods Being Hammered By Foreclosures

In Detroit, Michigan, the Detroit Free Press reports:
  • Palmer Woods never really looked like the rest of Detroit. It has baronial homes, gently curving streets with such names as Suffolk and Argyle Crescent, and flourishing Norway maples and red oaks that cast a sun-dappled screen across much of the neighborhood.
  • George Galster lives in Palmer Woods. He's also an expert on neighborhoods and has a Ph.D. in economics from the Massachusetts Institute of Technology and is a professor at Wayne State University. Galster said the housing crisis hitting Detroit in 2007 is "fundamentally different" from the long-term problem, which has occurred mostly in marginal areas of the city and which he attributes to metro Detroit building more housing units over the years than it can fill.
  • Historically, the least desirable houses are the ones that nobody is living in. After the owner can't find anyone to rent or buy the house, he or she often simply walks away from it. What's different now, Galster said, is that for the past couple of years "we're seeing the abandonment of some of the city's most desirable housing." Palmer Woods has experienced problems with squatters and scrappers stripping homes of valuable metals from pipes and wiring. Said Galster: "All of a sudden, neighborhoods that are well up the food chain in Detroit are subject to the same desperation, or desperadoes -- the insurance burning, the stripping, the mortgage scams, the occupancy by inappropriate individuals."

Palmer Woods is not the only elite neighborhood in Detroit that finds itself fighting an escalating battle with types of problems that have destroyed large swaths of the city. For more, see Elite neighborhoods try to stay that way (2 of city's worst problems creep into some of its upscale areas). BetaVacantForeclosure

Wednesday, December 26, 2007

Careful Use Of Reverse Mortgages Can Help Seniors Get Out Of Bad Loans, Say Legal Aid Lawyers, Elder Advocates

The Wall Street Journal reports:
  • Reverse mortgages used to be a way for homeowners to get extra cash during retirement. Now they're also being used for a more-pressing purpose: helping people who are struggling to meet payments on high-interest-rate loans to keep their homes. The strategy, which is relatively novel but gaining popularity among legal-aid attorneys and housing advocates around the country, calls for persuading lenders to take the cash generated by a reverse mortgage in lieu of foreclosing on older homeowners.

For more, see A Way for Older Homeowners To Back Out of a Bind (Some Find Banks Are Willing To Accept Reverse Mortgages To Retire Troubled Loans) (may require subscription; if no subscription, try here - then click link for story - then "refresh" the page, if needed; or try here, courtesy of the Arkansas Democrat Gazette).

Go here for stories related to potential Reverse Mortgage Problems. zebra

Shortage Of Resources Hinder Mortgage Fraud Investigations; Low Risks, High Profits Luring Many From Other Criminal Endeavors

The New York Times reports:
  • The number of mortgage fraud cases has grown so fast that government agencies that investigate and prosecute them cannot keep up, lenders and law enforcement officials have said. [...] “I don’t think any law enforcement agency can keep up with mortgage fraud, because it’s such a growth industry,” said Chuck Cross, vice president of mortgage regulatory policy for the conference of state bank supervisors, an organization of regulators and bankers. “There’s too many cases, not enough agents.”


  • Law enforcement agencies say they are overwhelmed, especially because investigating and prosecuting fraud can be complex and time consuming. The officials say career criminals and organized-crime rings have increasingly turned from other crimes to mortgage fraud because it offers lower risks and high profits. “I could hire a dozen investigators and a dozen prosecutors and only scratch the surface,” said David McLaughlin, a senior assistant attorney general in Georgia who coordinates prosecutions of mortgage fraud.

For more, see Officials Falling Behind on Mortgage Fraud Cases.

Illinois AG Nails 3 More Foreclosure Rescue Operators With Civil Suits

(original post 12-24-07)
From the office of the Illinois Attorney General:
  • Attorney General Lisa Madigan has filed three lawsuits against mortgage rescue companies for allegedly violating the Illinois Mortgage Rescue Fraud Act and the Consumer Fraud and Deceptive Business Practices Act. [...] With today's filings, the Attorney General has sued 11 mortgage rescue companies. Madigan filed suit against Homeowners' Assistance Association, Lender's Foreclosure Relief, Inc., and United Home Savers, LLP, based on allegations that these three companies falsely promised to help consumers save their homes after falling behind on their mortgage payments.

  • Madigan filed the Homeowners' Assistance Association complaint against the company and Casimar Cerniaukas (also known as “Casey Cerni”) and Jim Hamilton. The complaint also names as a defendant Foreclosure LMS, an affiliated company that purportedly trained people to conduct mortgage rescue services. Homeowners' Assistance Association is registered as an Illinois nonprofit corporation and deceptively claims to be affiliated with the City of Chicago 's foreclosure prevention program . The lawsuit alleges that the defendants charged homeowners illegal upfront fees of between $500 and $2,000 for mortgage foreclosure rescue services which either were never authorized by the consumer or proved ineffective.

  • Madigan filed the Homeowners' Assistance Association complaint against the company and Casimar Cerniaukas (also known as “Casey Cerni”) and Jim Hamilton. The complaint also names as a defendant Foreclosure LMS, an affiliated company that purportedly trained people to conduct mortgage rescue services. Homeowners' Assistance Association is registered as an Illinois nonprofit corporation and deceptively claims to be affiliated with the City of Chicago 's foreclosure prevention program . The lawsuit alleges that the defendants charged homeowners illegal upfront fees of between $500 and $2,000 for mortgage foreclosure rescue services which either were never authorized by the consumer or proved ineffective.

  • Madigan's suit against California-based Lender's Foreclosure Relief, Inc., alleges that the defendant charged Illinois homeowners illegal upfront enrollment fees of $1,395 for a “Pre-Foreclosure Workout Program.”

  • The third lawsuit, filed against Florida-based United Home Savers, LLP, alleges that the company similarly required an illegal $1,200 upfront fee for services. Both Lender's Foreclosure Relief and United Home Savers failed to provide refunds for the illegal fees upon consumers' request.

For more, see Madigan Sues Three Mortgage Rescue Companies (Attorney General Seeks to Shut Down Businesses and Obtain Restitution for Distressed Homeowners).

Go here for other posts on foreclosure rescue lawsuits brought by the Illinois AG.

Phoenix-Area Head Foreclosure Rescue Operation Under Federal Scrutiny

(original post - 12-22-07)
In Phoenix, Arizona, we find investigative reporter Josh Bernstein, now with television station ABC 15, shining the spotlight on another apparently shady real estate operation. This time, the company in the spotlight is Mesa-based Financial Enterprises LLC, a foreclosure rescue operation involving Jeremy Michael Head and his business partners.

The focus of the report is an equity stripping transaction, under the guise of a home sale and leaseback, that one local homeowner facing foreclosure unwittingly entered into after turning to Financial Enterprises for help. The homeowner has since filed a lawsuit alleging fraud against the company, naming among others, Jeremy Michael Head, his brother Charles Head, mortgage broker Sonny Rock, and straw buyer Sarah Mattson, who ended up on the title to the victim's home, as defendants.

This operation is reportedly part of the nationwide operation that is currently under criminal investigation. An excerpt from the story:
  • According to documents obtained by the Investigators the FBI has raided several offices across the country, including the offices of Financial Enterprises LLC in Mesa, Arizona. The FBI has seized lavish sports cars, thousands of documents and a condominium in Miami as well. Sarah Mattson's attorney tells ABC15 "the United States Attorney and the FBI have told me there is no doubt my client is going to be indicted."


  • The Investigators have learned there are more than 350 victims nationwide, involving more than thirty five million dollars in fraud. The FBI's investigation involves homes from Hawaii to New Jersey. There are more than a dozen victims here in Phoenix and the surrounding area.

For more, including the link to watch the ABC 15 video report, see Valley teacher, former business partners tied to federal mortgage probe.

Go here to read more about the key players in this investigation.

Go here for other posts on the Head nationwide foreclosure rescue operation.


Go here for earlier posts and links to media reports on a series of investigative reports by Josh Bernstein, then with KCRA 3 in Sacramento, that led to a break up of a local mortgage fraud ring and the Federal indictments of the ring operators.

Update On Unraveling Virginia Real Estate Operation / Alleged Mortgage Fraud Ponzi Scheme

The Virginian-Pilot recently ran stories updating and reviewing their investigation on the Hampton Roads straw buyer financed, real estate flipping operation of Cary McEntee and CM Development. Both are now in bankruptcy court, where McEntee reportedly has testified to falsifying numerous loan documents in a flipping operation fueled largely by so-called "no-doc" mortgage loans. Excerpts from the stories:
  • Financial records, experts' analysis, investor interviews and McEntee's own testimony show CM Development's business model was a prime example of a Ponzi scheme. McEntee offered investors a couple of ways in: He'd either borrow their cash for a short time at a generous interest rate or he'd pay a flat fee for using their names and their good credit to get bank loans. This money, he said, would be used to buy houses in low-income areas, renovate them and rent them out. Yet the rental income on most properties couldn't even cover the houses' mortgages. And the company's constant property sales - it sold houses repeatedly among its investors at ever higher prices to eke out every bit of equity - apparently didn't generate enough to pay the bills.


  • CM Development and its investors received more than $19 million in loans from more than 20 banks over [...] 2-1/2 years. But by March of this year, more than half of the roughly 250 properties controlled by the company sat vacant and efforts to renovate many had stalled.

According to The Virginian-Pilot, McEntee has testified that the company falsified about 80 percent of mortgage loan-related documents, representing to mortgage lenders that property buyers brought money to the real estate closings when they hadn't. Further, these loans reportedly financed CM Development's daily operations and supported McEntee's lavish lifestyle, including his $1 million Church Point home in Virginia Beach, the luxury vehicles he and his wife drove, and the condo he kept at the Oceanfront, according to the story.

According to an earlier Virginian-Pilot story, the unraveling of the flipping operation also spread its negative effects on:

  1. renters, whose rent payments have not been applied to satisfy the typical landlord responsibilities, leaving them to deal with deteriorating living conditions, water shutoffs, foreclosure evictions, and unrefunded security deposits;
  2. contractors and suppliers, who have been stiffed on payments due them for materials and labor, resulting in liens and legal claims against McEntee, CM Development and its investors; and
  3. the surrounding neighborhoods where the flipped homes are located, resulting in code violations, demolition orders, vandalism, vagrancy, and plans to issue criminal warrants to the group’s various property owners for failing to maintain the properties.

While no criminal charges have been brought against CM Development or McEntee at this time, the FBI is reportedly looking into the company. For more, see:

Go here for links to earlier Virginian-Pilot stories on CM Development.

Go here for other posts on the CM Development flipping operation.

Reverse Mortgages: The Next Subprime? Part 1

An opinion column in Salon magazine describes the consideration currently being given by Congress to the reverse mortgage industry, and the concerns raised because of some in the industry being accused of ripping off a significant part of the home equity accumulated by senior citizens over the years by combining a granting of a reverse mortgage with the contemporaneous purchase of deferred annuities [Editor's Note: Another technique used by some scam artists is to combine a reverse mortgage with the making of required home improvements, where the loan salesperson and the home repair contractor are in cohoots]. For the article, see The next subprime: Reverse mortgages.

Go here , go here , and go here for other posts on elder financial abuse.

Go here for stories related to Reverse Mortgage Problems. xero zebra

Tuesday, December 25, 2007

Lenders' Subtle Screw-Ups Letting Homeowners Off The Hook On Toxic Refinancings

Reporter Amir Efrati, of The Wall Street Journal, reports:

  • Having buyer's remorse about a mortgage? It can pay to scrutinize the fine print. Amid the housing-market turmoil, homeowners have been increasingly turning to a little-known process for renegotiating or exiting a loan. Even seemingly minor paperwork slip-ups can be enough to get a "rescission" (basically, a loan cancellation) based on the Truth in Lending Act, a federal law requiring disclosure of a loan's key terms. Under a rescission, while a homeowner still owes the principal, the lender won't be able to foreclose. Plus, all loan-related fees and interest that were paid are subtracted from the principal, which can mean substantial savings for the borrower. After a rescission, the borrower must pay off the loan, typically with a new mortgage, or sell the house. Other times, lenders will modify the terms of a mortgage instead of doing a rescission.

  • It isn't for everyone. Borrowers have just three years after the loan is made to make a rescission claim. It is available only to people who refinanced their original mortgage on their primary residences.

  • People who haven't refinanced can still use a bevy of state laws to seek damages from lenders, mortgage brokers, real-estate agents or appraisers who committed similar mistakes (or outright fraud) during loan origination.


  • Consumer lawyers say rescissions are on the rise. Pamela Simmons of Simmons and Purdy says the Soquel [California] law firm has done more than 300 this year, up from 200 last year. Until recently, some judges were loathe to cancel loans where the only violations were paperwork mistakes, says Ira Rheingold of the National Association of Consumer Advocates, a group of consumer attorneys. Now that foreclosures are mounting, "courts have gotten more sensitive" to violations, he says.

  • Many seemingly small foul-ups can qualify. If the APR, or annual percentage rate, is off by a fraction of a percent between the preliminary and final loan documents, the loan may be rescindable. Same goes if the total in fees is off by more than $100 (or $35, if the borrower is facing foreclosure).
In one case cited in the story, the lender's failure to provide the homeowner couple with two copies of a disclosure form informing them of their three day right to cancel the loan was enough to get a toxic loan canceled, saving the couple about $60,000. They were then able to refinance their way out of the bad loan with a mortgage with better terms from a different lender.

For more, see How minor mistakes can upend a mortgage (Many seemingly small discrepancies in paperwork can qualify for a loan rescission) (story appears in the Contra Costa Times - may require free registration; or try here - courtesy of the The Press Enterprise)

Go here for other posts on using the Truth In Lending Act to Undo Bad Mortgage Loans.

For those stuck with bad loans who want to find out if their mortgage lender screwed up with the loan documents, and need a starting point for finding a consumer protection attorney to look over the paperwork, go here , or go here , or go here. (Don't hesitate to ask them if they work on a "contingency fee" basis - where they are entitled to their fee only if they succeed. In the context of consumer protection litigation, your attorney, if successful, will generally obtain a court order compelling the mortgage lender who screwed up to cough up the fee, therby costing you nothing out-of-pocket. Also ask the attorney if there is a charge for an initial consultation - don't be shy!)

These sources may also be a good place to begin a search for a consumer protection attorney if you're stuck with an unreasonable mortgage servicing company. Go here , go here , and go here for posts on questionable mortgage servicing practices and for those who think their mortgage servicing company is screwing them over. undo mortgage loans TILA alpha

Wisconsin Contractor To Pay $500K Or Face Stiff Sentence For Stiffing Subs, Leaving Homeowners Holding The Bag

In Wisconsin, the LaCrosse Tribune reports:
  • A former Onalaska building contractor whose failure to pay $500,000 to subcontractors left four homeowners stuck with the bills was ordered [last week] to make restitution or face a stiff prison term. La Crosse County Circuit Judge Ramona Gonzalez gave Kasimir M. Oganowski, 36, two years on electronic monitoring and 10 years of probation, along with 100 hours of community service each year.

  • But Oganowski will not spend time behind bars, despite calls for prison time by a Department of Corrections agent, the prosecutor and victims. Gonzalez said she would rather see Oganowski repay his victims than live in prison at taxpayers’ expense.


  • Oganowski pleaded guilty in September to two counts of felony theft by contractor. He moved earlier this year to Greenwood, Ind., and will be allowed to serve his electronic monitoring there. He must annually pay at least $20,000 in restitution, Gonzalez said. [...] If he fails, she said, he still can receive up to 20 years in prison and extended supervision. [...] Oganowski admitted in court he took money from one project to cover costs on another, and left the homeowners — who also were his close friends — with unfinished homes and potential foreclosures from unpaid subcontractors.

For more, see Man gets probation in fraud case.

For other posts on contractors accused of stiffing subs & homeowners, go here and go here. contractors stiff subs customers zeta

Church Pastor On Denver DA's Radar; May Involve Alleged Straw Buyer Flipping Operation

In Denver, Colorado, the Rocky Mountain News reports:
  • The Denver District Attorney's Office is investigating the Rev. Harold Hicks, pastor of the Mount Carmel Community Baptist Church in northeast Denver, a spokeswoman confirmed [earlier this month]. The nature of the inquiry was not disclosed, but Hicks was the subject of a Rocky Mountain News investigation in July in which two former members of his church said they were unwitting participants in a "straw buyer" real estate scheme.

  • Records supplied by former member Sherri Wrightsil indicated she bought seven properties for about $845,000, although she was financially unqualified to do so. A company with ties to Hicks rented them out before they went into foreclosure. In addition, Wrightsil lent Hicks $10,000 for a real estate deal. [...] Mortgage broker Jim Spray, who had helped the Rocky review more than 10 pounds of documents supplied by Wrightsil and Deborah Richardson, another former church member, said their names appeared to have been used as straw buyers, paying inflated prices for dilapidated housing units.


  • In a separate development, Gerald Johnson, an electrician who worked on Hicks' properties, has stepped forward to charge that Hicks painted over mold in some units he was renting out and covered asbestos with sheet rock. [...] "My anger has been simmering for several years," Johnson said. "I have prayed about this. He should be held accountable for what he has done."

For more, see Pastor under DA's scrutiny (Hicks subject of Rocky report on straw buyer scam).

For the earlier Rocky Mountain News story on their investigation of Rev. Harold Hicks, see Signing on faith (Ex-church members say pastor misused trust to conduct shady real estate deals).

Florida Man Scams Girlfriend Out Of $100K+ From HELOC Account, Say Court Docs

In St. Petersburg, Florida, The Tampa Tribune reports:
  • A 43-year-old St. Petersburg man defrauded his girlfriend out of more than $100,000, most of it by persuading her to open a home equity line of credit ["HELOC"], according to court documents released [earlier this month]. Richard Butler was arrested [...] on a charge of scheming to defraud. Bail was set at $50,000.


  • Butler persuaded his girlfriend to open a line of credit to provide him $20,000 so his home would not be foreclosed upon, according to the documents. She opened a $150,000 line at her bank, SunTrust, and gave him $28,000, the documents state. [... Subsequently,] he persuaded her to put her name on a signature card for his bank account at Colonial Bank, though she didn't bank there, according to the documents. When he got his hands on checks for the home equity line of credit, he would sign her name or his name and hers and then deposit the money in the Colonial account, the documents state. He deposited $97,000 in the account at Colonial before withdrawing it for personal use, the documents state.

For more, see Beau's Scam Netted $100,000, Files Say.

Baltimore Judge Orders Flat Fees For Attorneys Clipping Homeowners For Fat Fees In Tax Sale Foreclosures

In Baltimore, Maryland, The Baltimore Sun reported earlier this month:
  • A Baltimore circuit judge ruled [earlier this month] that attorneys handling tax-sale foreclosure cases in the city can charge only flat fees instead of billing by the hour, a move aimed at reducing the amount of money homeowners have to pay to keep their homes. The ruling by Evelyn Omega Cannon, the judge in charge of the Baltimore Circuit Court civil docket, capped a yearlong review that she began after realizing that many requests for fees and expense reimbursement in tax-sale cases were not documented.

  • Her ruling comes as federal authorities look into possible mail fraud and restraint-of-trade violations in tax-sale auctions in the city and a number of counties around Maryland, and at a time when foreclosure rates in Maryland are rising rapidly. [...] In her 51-page opinion, Cannon set the fees at $1,300 or $1,500, depending on how far along the case has gotten ...
For more, see Judge limits lawyers' fees in tax-sale cases (when link expires, go here for story courtesy of LexisNexis). bidding

Slow Refunds Rile REO Investors At H&M Auction

In Stockton, California, The Stockton Record reports:
  • A couple of top bidders in a no-minimum-bid auction of foreclosed homes nearly a month ago in Stockton are not only unhappy that banks didn't accept their bids or even negotiate a sale, they haven't gotten back thousands of dollars in deposits. "It was a waste of my time," said Lewis Stallworth Jr., a Stockton man who put in a top bid of $135,000 for a north Stockton house. "I feel like it was almost a scam. There's no use in going to an auction if they're going to act like that." The Dallas-based auctioneering firm of Hudson & Marshall staged an auction of 61 foreclosed homes Nov. 15 in Stockton, one of a number of auctions last month in Northern California. [...] Stallworth said Hudson & Marshall needs to fix its auction process to make it fair. "It's a simple system," he said. "All they have to do is say, 'This house has a minimum bid,' or whatever, and everybody knows right off the top so they're not wasting your time."

For more, see Rejected top bidders await deposit refunds.

Monday, December 24, 2007

Landlord Holds Connecticut Hostage With Threat To Cut Off Heat, A/C To Agency Offices, Says State AG

A number of Connecticut state agencies have effectively been threatened with the loss of their homes, according to a press release from the office of the Connecticut Attorney General:
  • Attorney General Richard Blumenthal [last week] sued TEN Companies, Inc. for threatening to cut off heating and cooling to 10 key state buildings -- effectively crippling large swaths of state government -- unless the state drops a separate lawsuit seeking $14 million that the company overcharged the state. [...] Because all but one of the 10 buildings have no independent heating or cooling systems, TEN's actions would effectively force a shutdown of vital state agencies, including the State Armory, the Emergency Operations Center, the Department of Environmental Protection and the State Health Lab.


  • "We must stop TEN's brazen, blatant extortion -- its thuggish threat to shut down state buildings and cripple critical services as we pursue taxpayer legal rights," Blumenthal said. "A court order must block TEN from holding us hostage. If we fight for $14 million TEN overcharged taxpayers, TEN is prepared to make our buildings uninhabitable and state services undeliverable. TEN's termination of heating and cooling would force shutdown of the State Armory, the State Emergency Operations Center, the State Health Lab, the Department of Environmental Protection and other key state agencies. This company's arrogant disregard for citizen safety and well-being is shameful and shocking. [...] The company's demand that we withdraw our overcharge claims and apologize for bringing them is the height of arrogance and disregard for citizen safety and health -- unfair, unethical, unconscionable and unacceptable."

For more, see Connecticut AG Press Release - Attorney General, DPW, DCP Sue, Seek Injunction To Prevent Cut Off Of Heat, Cooling To State Buildings.

Law Firm, Mortgage Company, Real Estate Broker To Pay $700K Fine In Alleged Connecticut Kickback Racket

From the Connecticut Attorney General's office:
  • Attorney General Richard Blumenthal, Insurance Commissioner Thomas R. Sullivan and Department of Consumer Protection (DCP) Commissioner Jerry Farrell, Jr. [recently] announced that a law firm, mortgage company and real estate broker will pay $700,000 in fines, forfeitures and restitution to settle allegations they engaged in illegal kickback and inducement schemes. Paying the $700,000 are the law firm Reiner, Reiner & Bendett, P.C., of Farmington, Absolute Mortgage Solutions, LLC, of East Hartford and Access America, LCC, DBA Century 21 Access America of Wethersfield. Of the money, $125,000 will pay restitution to about 500 Absolute consumers who overpaid for certain mortgage-related services as a result of one of the schemes.


  • "This law firm used service and other sham contracts to camouflage kickbacks and sidetrack state law," Blumenthal said. "Consumers were overcharged because of this underhanded scheme. Reiner and Absolute conspired to conceal illegal payments as fake fees, secretly forcing consumers to cover the cost of kickbacks. The law firm hid illicit payments to Access in phony 'marketing' and 'rental' agreements. These steering schemes increased consumers' costs and denied choice, while unjustly enriching the lawbreakers.

For more, see Connecticut AG Press Release - Attorney General, Consumer Protection, Insurance Dept Announce $700,000 Settlement In Alleged Title Insurance Kickback Scheme.

Go here for other posts involving legal issues related to title insurance. title insurance legal issues

Florida AG Announces Criminal Racketeering Charges In Phony Docs Mortgage Scam

From the Florida Attorney General's office:
  • Attorney General Bill McCollum and Office of Financial Regulation Commissioner Don Saxon [Friday] announced that criminal charges of racketeering, conspiracy to commit racketeering and grand theft were filed against a mortgage brokerage business and a law firm, both formerly located in Leon County, as well as three employees of the brokerage business and the firm. Belinda Dearing Mortgage and law firm Stephen C. Willis, P.A., were named in the charging document as well as Belinda Dearing Willis, Terinda Denise Watson and Clifford Lee Cummings.


  • The law firm of Stephen C. Willis, P.A., also known as the Willis Law Firm, participated in the fraud by deceptively reporting the amount of down payments and closing costs and by giving misinformation about how the lender’s loan proceeds were distributed when closing the transactions and preparing the settlement statements for the U.S. Department of Housing and Urban Development.

For more, see Racketeering Charges Filed Against Mortgage Company, Local Law Firm (Elaborate scheme to defraud included fraudulent application documents, fictitious bank statements).

Akron-Area Mortgage Fraud Indictments Linked To Strip Joint, Say Prosecutors

In Summit County, Ohio, the Akron Beacon Journal reports:
  • Summit County prosecutors, who on Thursday announced a 147-count indictment in an alleged mortgage fraud and money laundering scheme, say they have linked the multimillion-dollar operation to the purchase of an Akron strip club. Stripped, a nightclub on Brittain Road south of Tallmadge Avenue, was run by Brianna Fullerton, the girlfriend of a key figure in the investigation — Evergreen Investment and Evergreen Homes President David B. Willan. Fullerton and Willan were among the 17 indicted Thursday and are tied by public records to Stripped and companies that purchased the club in May 2006.

For more, see Prosecutors say purchase of strip club, fraud linked (Girlfriend of key figure ran business, official says; seven plead not guilty on Friday).

Go here for other posts on the 147-count indictment.

Countrywide Steered Homeowners Into Risky Loans, Says Lawsuit; Class Action Sought

In Los Angeles, California, The Associated Press reports:
  • Several people who took on home loans from Countrywide Financial Corp. are suing the company, claiming they and other borrowers were steered unnecessarily into taking on risky loans with built-in payment hikes, which ultimately led them to go bankrupt or lose their homes. The seven plaintiffs filed an amended complaint Friday against the Calabasas-based company and several of its subsidiaries. Among the allegations are claims that Countrywide tried to “induce as many borrowers as possible into expensive and dangerous subprime loans, because such loans are the most lucrative for Countrywide.” The lawsuit, which was originally filed in U.S. District Court in Los Angeles in September, seeks unspecified damages and class-action status.

For more, see Countrywide Financial steered borrowers wrong.

Go here, Go here and Go here for more on recent Countrywide problems with consumers.

Repeat Mortgage Fraudster Violates Probation; Gets 25 Years In Prison

From the office of the Florida Attorney General:
  • Attorney General Bill McCollum [last week] announced that a Broward County man was sentenced to 25 years in prison after he violated terms of his criminal probation by committing mortgage fraud. Nicholas Dimonda was originally prosecuted more than 10 years ago for orchestrating a mortgage fraud scheme that defrauded banks, private investors, homeowners and a nationwide title insurance company out of more than $1 million. Dimonda was convicted in 1999 of multiple criminal charges including grand theft, racketeering and forgery and was sentenced to jail time and 14 years of house arrest and probation, which was violated in 2005 when he became involved in a new mortgage fraud scheme.


  • Dimonda convinced another individual to open a mortgage brokerage company in Hallandale, FL, then named his minor daughter as an officer of the company, assumed the identity of the original owner of the company, and continued to broker mortgages under the false identity. As part of the fraudulent mortgage brokering he engaged in, Dimonda often falsified employment records for individuals to qualify them for loans they otherwise could not have obtained.

For more, see Repeat Mortgage Fraud Offender Sent Back to Prison (Broward County man violated terms of criminal probation with new mortgage fraud scheme).

Sunday, December 23, 2007

Subprime Mess Great News For White-Collar Criminal Defense Bar?

The Recorder (appearing at reports:
  • From a fees standpoint, white-collar defense lawyers couldn't be blamed for casting hungry eyes at the subprime mortgage mess. Take New Century Financial Corp. In February, just as the mortgage meltdown began, the Orange County, Ca.-based subprime lender announced it would restate earnings by an as yet undetermined amount. That caught the Securities and Exchange Commission's attention. A federal grand jury in the Central District of California fired off a subpoena. That has quickly translated into a classic white-collar boondoggle, generating work for defense lawyers at multiple big firms.


  • The question on defense lawyers' minds beyond New Century is whether large-scale investigations will surface elsewhere in California. So far, they haven't. Defense lawyers chalk much of that up to the slow pace with which the government responds to any scandal du jour. When federal prosecutors do wade into the subprime mess, though, white-collar lawyers wonder whether they will merely ramp up simple fraud cases against brokers, or if more complicated investigations against subprime lenders and investment banks are in the offing.

For more, see Subprime Loans Could Yield Lots of Work for White-Collar Defense Lawyers.

Fraud Ring Member Admits Forging Signatures On Mortgages

In Northern New Jersey, The Associated Press reports:
  • Another guilty plea in a Paterson mortgage scam. Frank Corallo admitted he forged signatures on mortgages he'd helped falsify. The bogus mortgages helped otherwise unqualified buyers purchase houses whose value was artificially inflated by an appraiser who was in on the scam. Banks were left holding more than $1 million in worthless loans. Authorities say the scheme was run by Mahwah real estate mogul Michael Eliasof. He has already pleaded guilty to conspiracy to commit wire fraud. Eliasof used white-collar professionals to sell the properties while bribing public employees to keep poor tenants in substandard housing.

Source: Another Man Pleads Guilty In N.J. Mortgage Scam.

Go here for other posts on the Michael Eliasof flipping scam operation.

California Contractor Charged With Screwing Fifteen Homeowners Out Of $670K

In Santa Ana, California, The Associated Press reports:
  • An Orange County contractor accused of bilking homeowners out of $670,000 in payments has been captured in Kansas. Authorities say Ira Jay Messing, 60, was arrested Dec. 3 in Wichita, Kan. Messing ran a design and remodeling company that accepted about $670,000 in payments from 15 homeowners to install sunrooms in their residences between 2003 and 2005. But county prosecutors say little or no work was ever done. Instead, Messing allegedly used the money to complete other contracts. He eventually closed his company and filed for bankruptcy last year. Messing is being held at a county jail on $1 million bail. He's set to be arraigned [...] on charges of diverting construction funds and grand theft.

For more, see OC contractor accused of bilking homeowners arrested in Kansas.

For other posts on contractors accused of stiffing subs & homeowners, go here and go here. contractors stiff subs customers zeta

Nine Home Repair Contractors Screwed Illinois Homeowners, Says State AG

From the office of the Illinois Attorney General:
  • Attorney General Lisa Madigan filed lawsuits [last] week against nine separate home repair businesses operating around the state, alleging that they defrauded Illinois consumers of more than $625,453 in down payments by performing substandard work or no work at all.


  • In each suit, Madigan's office is seeking a permanent injunction preventing the defendants from engaging in the home repair trade, restitution to consumers, a civil penalty of $50,000 per defendant, additional penalties of $50,000 for each act committed with intent to defraud and an additional $10,000 for each act committed against a senior citizen, and costs.

For more, see Madigan Sues Nine Illinois Businesses For Alleged Home Repair Fraud (Reminds Consumers to Make Informed Decisions When Choosing Contractors).

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, and go here. contractors stiff subs customers alpha

Operation AC/DC "Stings" Unlicensed Florida Contractors

In Belleview, Florida, the Ocala Star Banner reports:
  • On Friday, sheriff's deputies, along with the State Attorney's Office, the Department of Business and Professional Regulation and the county's building department, organized a sting operation in an effort to crack down on unlicensed contractors. Labeled Operation AC/DC, deputies conducted the sting with the permission of a Silver Springs Shores homeowner who allowed his home to be used as bait for the probe.

Officials had arrest warrants for 14 unlicensed contractors. All the people arrested Friday were charged with unlicensed electrical contracting. Some were also charged with contracting without a license. For more, see Sheriff's deputies drop the hammer on unlicensed contractors.

Lehigh Valley Home Improvement Contractors In Hot Water

In eastern Pennsylvania, The Express Times reported earlier this month:
  1. Michael Caprista, 45, of Nazareth, is sentenced to 90 days in jail and is required to pay $163,000 of restitution. He admitted taking money for poor or incomplete work from more than 20 customers and businesses in the Lehigh Valley and northwest New Jersey.
  2. Robert Paul Westwood, 38, who previously lived in Bethlehem and operated Quality Construction and R&C Contracting in Nazareth, pleads guilty in Lehigh County Court to two counts of felony fraudulent business practices. He admitted to ripping off nine customers for more than $150,000.
  3. Ronald A. Schmidt, 50, of Easton pleads no contest to taking $10,500 from a customer for work he never completed.

Source: Cracking Down on Crooked Contractors.

Go here for other posts on builders & contractors accused of stiffing customers. contractors stiff subs customers alpha

Failure To Complete Work Leads To Arrest Of Repair Contractor

In Harrington, Delaware, WBOC-TV Channel 16 reports:
  • Harrington police have arrested a 49-year-old Smyrna man for home improvement fraud. Police [...] charged Steven M. Hewes for one count of home improvement fraud. Police say that on Nov. 5 they were notified of an agreement between Hewes and the victim to remodel the victim's home. According to police, the victim paid Hewes a down payment, however, Hewes failed to complete the work.

Source: Smyrna Man Charged With Home Improvement Fraud.

Go here for other posts on builders & contractors accused of stiffing customers. contractors stiff subs customers alpha