Saturday, January 26, 2008

Angry Volunteer Firefighters Sound Off At Arson Sentencing Of Financially Strapped Homeowner Seeking Quick Cash

In Windsor, Ontario, The Windsor Star reports that 28-year-old William Donald Rushlow was sentenced in Ontario Superior Court Wednesday to a year in jail for torching his home to collect the insurance proceeds. According to the story, the evidence at trial showed that he paid off his delinquent insurance premium the day before he set fire to his house. Deeply in debt, Rushlow sought to walk off with $297,000 from the fire. In sentencing Rushlow, the judge claimed that she was greatly influenced by the victim impact statements filed by the volunteer firefighters called to put out the blaze:
  • Many of the firefighters wrote that they felt a trust had been violated when they discovered that they had put their lives on the line, not in service to a fellow citizen in trouble, but to a man hoping to cash in on his insurance policy. Firefighter Cindy Feurth stated she felt "very afraid" as she risked her life to crawl on her stomach up a set of stairs to bring a water line into the flames. "It angers me now to know it was intentional," she said. "I do not appreciate putting my life at risk ... for someone else's financial gain."

Reportedly, he was convicted on five of the six arson and fraud-related charges after more than four weeks of trial in which he pleaded not guilty and defended himself without the help of a lawyer. The trial also revealed on three prior occasions, Rushlow filed successful insurance claims totalling almost $24,000 for fire losses to cars he owned. For more, see Lakeshore man who set fraudulent blaze sent to jail.

Editor's Note: Getting only a year in jail after forcing prosecutors to go to trial in a case resulting in convictions on five (presumably all felony) charges might go a long way not to deter, but to encourage, others in "arson for insurance cash" schemes.

Suspicious Blaze Hits Vacant Vero Home; Evidence Points To Foreclosure Problem

In Vero Beach, Florida, TC Palm reports:
  • Authorities are calling a fire at a unoccupied home in Vero Lake Estates on Monday suspicious. Firefighters and the Indian River County Sheriff's Office responded to 911 calls about the blaze at 10 p.m. Monday at 8715 103rd St. Flames from the blaze were rising as much as 15 feet above the single-story home, said a deputy who arrived before firefighters. [...] Authorities said they found an empty garage, a sparse collection of furniture and a mostly empty refrigerator in the home after the fire was extinguished. Furniture, such as dressers, was in the bedrooms, but little clothing was found, the report said. Mail found inside the kitchen indicates the home may be in foreclosure, the Sheriff's Office report said.

For more, see Fire at empty Vero Lake Estates home deemed suspicious.

For other stories on fires & foreclosures, go here , go here , and go here. foreclosure arson xerox

Realtors-Turned-Animal Rescuers Seek Adoptive Homes For Four-Legged Foreclosure Victims

In East Contra Costa County, California, KGO-TV Channel 7 reports:
  • People aren't the only ones losing their homes to the worsening mortgage crisis. Here in the Bay Area, pets are being abandoned when their owners are forced to move out. However, a group of realtors in East Contra Costa County has taken it upon themselves to offer these animals a helping hand.
For more, see Canine casualties of the mortgage crisis.

For more on foreclosures and family pets, go here, and go here. petsII and foreclosures

Akron Animal Shelter Affected By Area Foreclosures

In Akron, Ohio, the Akron Beacon Journal reports:
  • The Humane Society of Greater Akron, which rescues ill, injured, abused or neglected animals, is struggling to house 200 dogs and 200 or so cats in a facility designed for only 125 animals, said new executive director Karen Conklin. She has issued a plea for adoptions. The animals ''just keep coming,'' she said this week inside the ramshackle shelter -- a former barn attached to a two-story building on Quick Road in Boston Township. [...] Conklin speculated that the the high foreclosure rate is contributing to the overcrowding. She theorized that pet owners are forced to move into properties that don't allow pets. ''Our humane officers are definitely seeing people leaving animals behind'' in foreclosed properties, said Conklin [...] .

For more, see Akron area Humane Society shelter packed with dogs and cats.

For more on foreclosures and family pets, go here, and go here. petsII and foreclosures

Friday, January 25, 2008

WaMu Blacklisted Real Estate Appraiser For Refusing To "Play Their Games," Says Suit

A Washington Post story appearing in the Chicago Daily Herald reports:
  • [A] California appraiser has filed suit against the country's largest thrift institution, Washington Mutual Bank, charging that she was blacklisted for refusing to provide favorable appraised values despite declining market conditions. The suit by Jennifer Wertz comes just two months after the state of New York sued an appraisal management company, First American eAppraiseIT, for allegedly giving in to pressure from Washington Mutual to inflate property values for loan applications -- thereby contributing to ongoing mortgage market losses. EAppraiseIT and LSI, a unit of Fidelity National Information Services, were also cited in Wertz's suit as contractors to WaMu.


  • Pamela Crowley, an appraiser in Cape Canaveral, Fla., said the California suit should be a siren in the night for lenders. "They have threatened and taken so much business away from competent and ethical appraisers who refused to play their games that now we have nothing to lose. We are going to fight, and we're going to tell everybody what's been going on."

For more, see Suit blows whistle on bank-influenced appraisals.

DA Paperwork Screw-Up Lands Mortgage Fraud Indictments Of 28 "Down The Drain"

KHOU-TV Channel 11 in Houston, Texas reports:

  • A new grand jury is now on the job in a high profile mortgage fraud investigation. The original indictments of 28 people in this case were thrown out after a paperwork mistake at the DA’s office. That error sent all the grand jury work from the last two months down the drain. The new grand jury is deciding whether to indict the suspects in the mortgage fraud case again.

Source: Newly formed grand jury hearing mortgage fraud case.

See also:

For story update, see

Watch Out For Reverse Mortgage Scams, Says Florida AG

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [yesterday] issued a consumer advisory warning Florida’s senior citizens about a mortgage-related scam that may target them directly. As he unveiled legislation this week to combat mortgage “foreclosure rescue” scams, the Attorney General also cautioned senior citizens about scams associated with reverse mortgages, a type of home equity loan frequently abused by con artists and scammers. These loans are often popular options for senior citizens because they offer a cash source which can help meet unexpected medical expenses, supplement social security and more.


  • Unfortunately, as the popularity of reverse mortgages grows, so does the potential for fraud. Predatory lenders, unscrupulous loan agents and dishonest brokers may target senior citizens who may be anxious about their financial security. Deceptive practices and allegations of high-pressure sales tactics are being more frequently encountered as senior citizens are being taken advantage of under the guise of a helpful and legitimate reverse mortgage. Borrowers also run the risk of being steered into inappropriate loans and annuities by sales agents and insurance brokers who could be working together without disclosing that relationship to the borrower. Attorney General McCollum noted that reverse mortgages can serve a purpose when financed through legitimate lenders.

For more, see Florida AG News Release: Seniors Should be Wary of Reverse Mortgages Scams.

For other posts related to reverse mortgages, go here , and go here. reverse mortgage yak

Public Hearing Today On Washington State Foreclosure Rescue Bill

In Washington State, the following blurb is buried at the end of a page in The Olympian:
  • A bill requested by Attorney General Rob McKenna aimed at preventing mortgage-foreclosure scams is scheduled for a public hearing. The Senate Committee on Consumer Protection and Housing will hear SB 6431 at 8:30 a.m. The bill would help reduce foreclosure-rescue schemes that include an option to allow the original homeowner to buy or lease back the property from a buyer, McKenna said. [...] The law would require that a written contract with terms be completed, signed and dated by the homeowner and the purchaser before the property's transfer; allow the foreclosed homeowner to cancel the contract within five days; and require that the purchaser demonstrate the former homeowner is able to meet the terms of the contract, including making interest and lease payments.

Source: McKenna Bill Heard.

Go here for SB 6431 (bill history, links to relevant documents) (entire text).

Go here for companion bill HB 2791 (bill history, links to relevant documents) (entire text).


For story update (3-14-08), see Washington State Passes Foreclosure Rescue Legislation; Currently Awaits Governor's Signature.

"For Profit" Foreclosure Rescue To Be A Felony, Says Proposed Virginia Statute

In Richmond, Virginia, the Daily Press reports:
  • Del. G. Glenn Oder has introduced legislation to prohibit people from participating in or servicing foreclosure rescues for profit. A violation would be a felony. Oder, R-Newport News, said he is working with the lenders, real estate investors, HOME [Housing Opportunities Made Equal of Virginia Inc.] and other stakeholders to ensure that the legislation doesn't unwittingly outlaw legitimate efforts to help financially squeezed homeowners. [...] The bill likely will be considered by a House of Delegates committee next Tuesday. It's one of several introduced in the 2007 General Assembly as a result of problems in the housing market, including the subprime mortgage collapse that has led to a spike in foreclosures.


  • One of the most common foreclosure rescue scams is a lease-buyback arrangement, according to HOME. The troubled homeowner surrenders title with the aim of renting the home and buying it back later. But the rent is usually so high that the deal is unworkable, and the homeowner loses the property to the "rescuer."


  • Del. Sal Iaquinto, R-Virginia Beach, also has introduced legislation addressing the problem. His bill would require foreclosure rescuers to fully disclose their services, allow homeowners to rescind a contract and authorize the attorney general to enforce violations. Iaquinto's bill is well-intended but does not go as far as Oder's, which is modeled after a Massachusetts law, [HOME spokesperson Helen] O'Beirne said. She said the two bills may be merged before reaching the House floor.

For more, see Bill would make foreclosure scams a felony.

For Del. Oder's proposed law, see HB 408 (summary and status report) (full text),

For Del. Iaquinto's proposed law, see HB 947 (summary and status report) (full text).

March 13, 2008 update:

Go here for the current version of HB 408 (summary and status report) (full text), which, as of 3-13-2008, has been passed by the House and Senate and awaits the Governor's signature.

More On The Torching Of Financially Strapped Texas Supreme Court Justice's Home

The Southeast Texas Record ran a column recently on the unusual case of the financially strapped, Texas Supreme Court Justice David Medina who, along with his wife, was indicted recently in connection with a fire to their home that fire investigators called arson. Fire investigators grew suspicious when they discovered the use of an accelerant to set the blaze, coupled with Medina's financial problems, including a mortgage foreclosure action against him that was settled only about six months before the home was torched.

The story took an interesting twist when, within one day of the indictment, the Harris County (Houston) District Attorney sought and obtained a dismissal of the indictment. The story also describes the reaction to the decision to dismiss the indictments by the foreman and assistant foreman of the grand jury that handed them down, as well as the possible "fire" they face for going public with their reaction to the dismissals (grand jury deliberations are supposed to be secret).

For more, see A Judicial Career Up in Flames? The Strange Case of David Medina.

See also:

Go here for other posts on David Medina. foreclosure arson xerox

Thursday, January 24, 2008

Ohio AG Slams Freddie In Suit Alleging It Hid Billion$ In Sub-Prime Mortgage Lending Losses

From the Ohio Attorney General's office:

  • Alleging that the Federal Home Loan Mortgage Corporation, more commonly known as Freddie Mac, "secretly and intentionally participated in one of the largest housing investment deceptions in modern U.S. economic times," Ohio Attorney General Marc Dann last Friday filed a securities fraud class action lawsuit in federal court in Youngstown, Ohio. The action was filed on behalf of the Ohio Public Employees Retirement System (OPERS) to benefit the fund and all other shareholders similarly harmed by the company’s investment in securities backed by sub-prime mortgage loans. OPERS losses as a result of the alleged fraud could be as high as $27.2 million.

  • This lawsuit is evidence of the Attorney General’s commitment on behalf of Ohio’s pension funds to recover billions of dollars lost as a result of the collapse of the sub-prime mortgage industry. OPERS was the Lead Plaintiff in an earlier case against Freddie Mac and won a $410 million settlement in that case.

For more, see the Ohio AG News Release - Attorney General Marc Dann Sues Freddie Mac on Behalf of Ohio Public Employees Retirement Fund.

Buy Back Agreement In Foreclosure Rescue Sale Leaseback Deals To Be Presumed An Equitable Mortgage, Says Proposed Florida Statute

One of the key provisions in the recently proposed Florida law intended to regulate foreclosure rescue transactions can be found in Section 6 of both Florida House Bill 643 and Senate Bill 992:
  • Rebuttable presumption.--Any foreclosure-rescue transaction involving a lease option or other repurchase agreement creates a rebuttable presumption that the transaction is a loan transaction and the conveyance from the homeowner to the equity purchaser is a mortgage.

For more, see HB 643 and SB 992.

Editor's Note:

If the Florida legislature passes a law containing this provision, it will presumably become much easier to go after foreclosure rescue operators in Florida, both in civil and criminal cases, on charges of usury. Go here for more on foreclosure rescue and usury in Florida.

Cleveland-Area Mortgage Fraud Task Force Rings Up 170+ Arrests; Hundreds More Suspected In "Tedious, Mind-Numbing" Investigation

In Cuyahoga County, Ohio, The Cleveland Plain Dealer reports:
  • Today, law enforcement agencies on the federal, state and local levels are trying to crack one of the biggest white-collar capers in U.S. history: the heist of billions of dollars in the value of America's homes. In Cuyahoga County alone, investigators estimate that as many as 5,000 mortgages were obtained fraudulently over the last decade. The FBI office in Cleveland has three agents working full time on mortgage fraud. They are part of a task force that includes state, county and local investigators. So far, they have made more than 170 arrests. Hundreds of other suspects are under investigation. One case has generated 100 boxes of files. "It's extremely paper-intensive," said FBI agent Scott Gilbert. "It's tedious, mind-numbing work."
For more, see Loose lending rules gave criminals chance to flourish.

Victims Of Alleged Condo Investment Scam Wind Up With $300K Parking Spots, Storage Spaces

In Toronto, Canada, The Toronto Star reports:
  • Five Toronto-area residents face more than 100 fraud-related charges in an alleged real estate scam that sold parking spaces as condos to innocent investors, police say. Bankers, developers, a lawyer and real estate agents allegedly worked together to defraud TD Bank of $3.8 million in bogus mortgage loans. "I have never seen such a tight-knit and closed circuit," Det. Craig Ellis said. "The owners, the agents, the bank employees, the lawyers ... everybody that had anything to do with it: It was all baloney." The alleged scheme ran from 1998 to 2000. Police claim two brothers, Kam Cheung Chan and Patrick Chan, enticed their victims to invest in two condominiums. Police said the Chan brothers had victims fill out a mortgage application but didn't ask for any money up front, waiving the down payment. Bank employees who were allegedly in on the scam made sure the mortgage loans sailed through. Then the suspects kept the cash. The thieves were apparently selling parking and storage spaces, not condos, for about $300,000 each.

For more, see Parking spots sold as condos (Alleged fraudsters stole $3.8M from TD Bank; lawyer, bankers involved).

Wednesday, January 23, 2008

Florida AG Tags Foreclosure Rescue Operator, Title Agency, Others With Civil Suit In Alleged Sale Leaseback Scam; State "Rescue" Statute Proposed

In Broward County, Florida, the South Florida Sun Sentinel reports:

  • Attorney General Bill McCollum has sued a South Florida-based foreclosure rescue company, alleging the firm defrauded dozens of homeowners, and is seeking legislation to strength protections for those facing foreclosure. The civil suit — filed jointly with the Office of Financial Regulation in Broward County Circuit Court — charges National Foreclosure Management Inc. and multiple affiliates violated the state's deceptive and unfair trade laws. The suit claims the foreclosure rescue firm or its affiliates defrauded at least 80 homeowners of about $1.7 million in home equity. The company, which also does business as American Home Rescue Inc., selected homeowners who were facing foreclosure and had substantial equity in their homes, the suit said. The company offered to hold the homeowners' property titles for a year, and refinance the debt while allowing the homeowners to stay in their houses. [...] Representatives of National Foreclosure Management and its agent, Wyman F. Roberts, and American Home Rescue Inc. and its agent, Bernard Williams, could not be reached for comment.


  • On Tuesday, state Sen. Mike Fasano, R-New Port Richey, and state Rep. Clay Ford, R-Gulf Breeze, filed legislation — the Foreclosure Rescue Fraud Prevention Act — to provide a safeguard system to protect homeowners. [...] House Bill 643 — and the companion Senate Bill 992 — would guarantee homeowners a five-day period to cancel any contract agreement with a foreclosure rescue firm. It would require specific definitions be provided to consumers for job titles such as "equity purchaser" or "foreclosure consultant," and prohibit foreclosure consultants from accepting payment until all services are completed. Violators would face up to $15,000 in fines for each infraction.

For more, see Florida attorney general sues foreclosure rescue firm.

For other stories, see:

To view the lawsuit, filed in Fort Lauderdale, FL, see Office of the Attorney General, et al. v. National Foreclosure Management, Inc., et al.

To view the proposed Florida legislation, see:

Mortgage Broker, Questionable Practices The Focus Of "Globe" Report

In Boston, Massachusetts, the Boston Globe ran an investigative report on area mortgage broker, Nicole Lyder, who is suspected of engaging in questionable conduct in originating mortgages for local mortgage companies:
  • Fake documents, a phantom borrower, and other irregularities were common features of five subprime mortgages brokered by Lyder between November 2005 and June 2006 that were examined by the Boston Globe. Lyder's clients ranged from the barely employed to struggling working-class couples; one had just left a homeless shelter and two others gave up government-subsidized housing to buy homes. They said Lyder arranged loans that they later realized had monthly payments that far exceeded their means. All five loans are now in foreclosure.

For more, see Broker's clients detail web of dashed dreams (Irregularities cited in five mortgages).

Pittsburgh Feds Indict Man For Alleged Use Of Phony Deed Transfers To Get Mortgage Cash

In Pittsburgh, Pennsylvania, the Pittsburgh Tribune-Review reports:
  • A federal grand jury in Pittsburgh [last] week indicted a Washington County man accused of defrauding three financial institutions out of $1 million by falsifying loan documents. Matthew McConaghy, 42, of Peters, is accused of falsifying documents and deed transfers to obtain the money from August through November 2006 and falsifying signatures to show he was sole owner of a property he actually co-owned.

For more, see Jury indicts man in $1M loan fraud.

Go here and go here for other posts on deed theft by forgery, swindle, etc. deed theft yahtzee

Senior Fraud Victims Confront California Con Man In $43M Ponzi Scheme

In San Jose, California, the San Jose Mercury News reports:
  • One by one, a succession of elderly fraud victims spoke in a San Jose courtroom [last] Thursday, many struggling for words and composure as they described how a dishonest mortgage broker took their life savings as part of a $43 million scam - and left them bereft. "Our savings are completely gone. We've had to sell every item we could. We are very depressed, and feel so frustrated, that we must count every penny," said 76-year-old Henry Bertrand, a retired military man whose voice grew hoarse as he explained that he had trusted broker Michael Schneider, only to become the victim of an elaborate scheme.
    "I was shaken to the core," added 80-year-old Mel Nashban, explaining that he had come to think of the earnest, boyish-looking 45-year-old as a member of his own family. On discovering Schneider's betrayal, Nashban said: "It was like he had taken a knife and put it in my heart." Fourteen others spoke in Santa Clara County Superior Court, most urging Judge Ray Cunningham to give the defendant a stiff prison sentence. Schneider pleaded no contest in August to 173 felony counts of burglary, embezzlement, elder financial abuse, grand theft and forgery. The maximum possible sentence is 169 years.

For more, see Elderly fraud victims confront swindler in court (Charming Swindler In Real Estate Case Confronted In Court).

For story update, see Santa Clara man gets 28 years for defrauding clients out of $43 million.

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

Tuesday, January 22, 2008

Who's To Blame For The Subprime Mortgage Mess?

The New York Times explores this question:
  • Everyone wants to know who is to blame for the losses paining Wall Street and homeowners. The answer, it seems, is someone else. A wave of lawsuits is beginning to wash over the troubled mortgage market and the rest of the financial world. Homeowners are suing mortgage lenders. Mortgage lenders are suing Wall Street banks. Wall Street banks are suing loan specialists. And investors are suing everyone.

For the rest of the story, see If Everyone’s Finger-Pointing, Who’s to Blame?

Metropolitan Grapevine / POS Metro Dream Homes Update

The following legal documents have been filed in the Metropolitan Grapevine / POS Metro Dream Homes matter so far in the month of January:

Additionally, as mentioned yesterday, the auction for the POS and related entities office furniture and equipment will be held tomorrow, January 23, 2008 at:

14228 Cherry Lane Ct., Laurel, MD 20707

For more information on the auction, please go to:

For periodic updates on the case itself, check the POS, et al in Receivership website.

Go here for earlier posts on the Metropolitan Grapevine / POS Metro Dream Homes alleged Ponzi Scheme.

Florida AG Investigating 20 Foreclosure Rescue Cases; One Firm Allegedly Ripped Off 80+ Homeowners Of $1.7M In Home Equity

In Florida, WFOR-TV Channel 4 reports:
  • State investigators are concerned that as foreclosures rise, scams by people claiming to rescue homes from foreclosures will rise as well, so Tuesday the Florida Attorney General's Office is expected to make a big announcement that will help many homeowners to keep their homes. Investigators say they are looking at some 20 cases right now, [...] . "We're investigating a particular South Florida company, National Foreclosure Management, who has allegedly defrauded more than 80 homeowners out of their home equity more than $1.7 million in home equity to be exact," said Sandi Copes, Florida Attorney General Press Secretary.

For more, see Florida To Launch Campaign Against Mortgage Fraud (read story) (watch video).

Out Of Town Investors Stuck With Inflated Mortgages In Alleged Columbus-Area Real Estate Investment Scam

In Columbus, Ohio, The Columbus Dispatch reports:
  • More out-of-towners have reported being stuck with inflated mortgages on houses in low-income Columbus neighborhoods, where they were directed by real-estate investment classes. A Virginia couple and their Maryland son took the advice of an investment club and bought four homes from Mid-State Homes of Columbus with the help of Summertyme Mortgage of Sunbury. The family has since sued Mid-State and Summertyme in Franklin County Common Pleas Court, contending that appraisers either negligently or fraudulently inflated the value of the properties so lenders would lend more than they were worth. The defendants then shared in the extra cash, the suit says.

For more, see Inflated mortgages: Investor property problem deepens.

Minneapolis-Area Mortgage Broker Facing Eight More Charges

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:
  • A mortgage broker already charged by Hennepin County as part of an alleged mortgage fraud ring now faces eight additional theft charges for earlier home loans. The county charged Donald L. Walthall of Anoka with eight counts of theft by swindle for mortgage transactions for eight homes bought from eight lenders in 2005. Seven of the properties were in Minneapolis, and the other was in St. Paul. [...] Walthall was president of Universal Mortgage Inc., of Brooklyn Park, and also did business as Superior Mortgage Inc., the county said.

For more, see Mortgage broker faces eight more charges.

Go here for other posts on the alleged Universal Mortgage straw buyer, home flipping scams.

Sacramento Feds Get Guilty Plea In Mortgage Fraud Case

From the U.S Attorney's Office in Sacramento, California:
  • United States Attorney McGregor W. Scott announced today that Sennett H. Swift, 25, of Sacramento, pleaded guilty today to bank fraud and money laundering. [...] According to [the prosecutor in the case], Swift defrauded two homeowners and the corresponding lenders by fraudulently refinancing the two homes, the goal of which was to receive the substantial loan broker commissions.

For more, see the U.S. Attorney News Release - Unlicensed Loan Officer Pleads Guilty To Fraud.

Go here for an earlier post on the arrest of Sennett Swift. jim martin

Legal Aid Lawyers Muzzled In Mortgage Mess

A recent article in The Nation describes some of the problems faced by legal aid attorneys around the country in their attempts to represent the poor and point to these impediments as a key reason why the mortgage crisis has been allowed to fester for over a decade.
  • Civil legal aid lawyers, who work for non-profit organizations around the country, represent low-income people in the sorts of civil cases most important to their daily lives: housing issues, child custody, wage and hour law violations and consumer fraud. They are an essential part of our nation's law enforcement apparatus, because they ensure that the businesses and government agencies that operate in low-income communities do so according to the rule of law. Civil legal aid attorneys also serve as a detection and warning system for problems plaguing low-income communities. As the people most familiar with the legal problems of the communities in which they work, often they are the first to learn of new legal abuses occurring in those communities. Over the years, civil legal aid lawyers have spoken out and prompted change when the police refuse to respond to domestic violence calls, when foster care agencies place children in unsafe foster homes and when local employers repeatedly fail to pay the minimum wage.

  • But since 1996, civil legal aid attorneys have been muzzled. Congress has barred them from using some of the legal tactics that are most effective at enforcing the law for entire communities. Civil legal aid lawyers who receive any Congressional funding through the federal Legal Services Corporation cannot call legislators to warn of new problems facing their communities and suggest legislative fixes. They cannot represent clients seeking to use the class action mechanism to compel repeat offenders to obey the law. They cannot use statutorily available fee awards to make it too expensive for repeat offenders to continue breaking the law. They cannot use private funds, donated by private foundations or individuals, to provide client communities with any of these services. And because their funding has eroded over the years, they cannot represent millions of people who seek help every year.

For more, see Lawyers for the Poor Muzzled in Subprime Mess.

Monday, January 21, 2008

Long Island Homeowner Gains $3.5 Million Judgment In Foreclosure Rescue Scam

On Long Island, New York, Newsday reports:
  • A Great Neck woman victimized in a mortgage fraud in which she unknowingly gave away her house has won a $3.5-million judgment against the mortgage broker who scammed her, court documents show. Priscila Nano, 66, said she was "scared" and on the brink of losing her longtime home to foreclosure in 2004 when she received an advertisement from the Westbury-based Foreclosure Options Inc., and called the company's number. In court papers, Nano's attorneys described her as "an underemployed, senior citizen and immigrant with a modest command of the English language ... desperate to keep her home." Nano's attorney, Douglas Good of Uniondale, said the company, headed by Moses Crawford III, was so predatory that it even sent a town car to Nano's home to bring her to what she believed was a closing of a refinance of her home.


  • The Uniondale firm of Ruskin Moscou Faltischek took Nano's case pro bono, and worked out a settlement in which she recouped from her mortgage carrier most of the value of her home. Good and associate Jennifer Hillman then sued Crawford seeking punitive damages. When Crawford did not respond to the suit, State Supreme Court Justice John Galasso last month awarded Nano a $3.5-million judgment.

For more, see Woman gets $3.5M judgment in mortgage scam.

Metropolitan Grapevine "Alleged Ponzi Scheme" Office Equipment To Be Auctioned Off

According to the website of American Auctions & Appraisals, Inc., an auction for the Metropolitan Grapevine, POS Metro Dream Homes and related entities office furniture and equipment will be held on January 23, 2008 at: 14228 Cherry Lane Ct., Laurel, MD 20707. Go here for more information on the Metropolitan Grapevine auction.

Go here for earlier posts on the Metropolitan Grapevine / POS Metro Dream Homes alleged Ponzi Scheme.

D.C. Foreclosure Rescue Operator Settles One Sale Leaseback Lawsuit; Denied In Request To Set Aside Verdict In Another

In Washington, D.C., The Washington Post reports:
  • Five D.C. residents who say they were tricked into signing away their homes have reached out-of-court settlements that enabled them to regain ownership and a total of $455,000. The settlements end a three-year-old lawsuit, a rare happy ending for the growing number of people who claim to be victims of foreclosure rescue scams. In the suit, the elderly plaintiffs alleged that to stave off foreclosure they signed paperwork for what they thought were loans that would cover missed mortgage payments. Instead, they had signed away their homes to Washington businessman Vincent L. Abell and his associates.

With respect to the buyback terms called for in the arrangements:

  • "The buyback terms were so onerous that there was no way to meet them," said N. Thomas Connally III, a lawyer at Hogan & Hartson, who, with AARP, represented the plaintiffs. "The arrangements were designed to fail from the start, and they allowed Mr. Abell to take ownership of the property by paying the former owner almost nothing." The monthly payments were often so high that many of the plaintiffs fell behind, lost their buyback option and ended up facing eviction, said Connally, whose firm worked on the case pro bono.

Regarding another case involving foreclosure rescue operator Vincent L. Abell:

  • Abell's legal troubles are not over. In March, after a two-week trial in D.C. Superior Court, a jury awarded more than $3 million in punitive damages and $60,000 in compensatory damages to Maria Wilson of the District, who had separately accused Abell, his company and Baltimore of defrauding her in a similar foreclosure rescue operation. On Jan. 9, Judge Mary A. Gooden Terrell denied the defendants' motions to set aside or reduce the verdict, Connally said. "Whether she'll ultimately be able to collect from those folks, who knows?" said Connally, who represented Wilson.

For more, see Homeowners in Alleged Scam Get Settlement (Payments to 5 D.C. Residents Conclude 3-Year Legal Battle).

Go here for other posts on Vincent Abell and his associate, Calvin Baltimore. elder financial abuse whale

Cleveland-Area Prosecutors Gain Convictions In Foreclosure Rescue Scam

Buried in a recent mortgage fraud article in The Cleveland Plain Dealer is the story of one foreclosure rescue scam that ripped off approximately $56,000 from a Clevland-area homeowner and resulted in an attempt to evict the homeowner. The foreclosure rescue group, Sammy Quick, 29, of Brook Park and Brian Cicerchi, 29, of Middleburg Heights, partners in First Primary Mortgage Inc., and Lesley Loney, 34, of North Ridgeville were all arrested in the scam. According to the story:
  • The outcome: Loney pleaded guilty to unauthorized use of property and testified against Quick and Cicerchi. She was sentenced to 12 months probation and fined $1,000. Quick and Cicerchi were convicted in a jury trial this month. Both were found guilty of theft by deception, securing a writing by deception and telecommunications fraud. Quick was also found guilty of mortgage broker prohibitions and receiving stolen property. They are scheduled for sentencing next month.

Source: Loose lending rules gave criminals chance to flourish.

Iowa AG Calls For Laws To Fight Foreclosure Rescue Scams

The Iowa Attorney General announces:

Among the measures being sought is a law specifically targeting foreclosure rescue scams.

  • Miller also asked the Legislature to pass a bill to fight “mortgage foreclosure rescue fraud” – scams that prey on people facing foreclosure by asking them to pay hundreds of dollars for so called assistance or “rescue” from the danger of foreclosure. “The problem is these ‘rescue scams’ just take people’s money and fail to do almost anything to help them avoid foreclosure,” Miller said at a news conference Friday at his office. “And they take precious funds from people who are vulnerable and who can least afford to be cheated. This is the definition of adding insult to injury.”

For more, see AG Miller Offers laws to protect home buyers.

Sunday, January 20, 2008

More On Family Pets Displaced By Foreclosure

The following links are to recent stories on the stress placed on local pet shelters due to families losing their homes to foreclosure:

Salem, New Hampshire: Shelter houses pets homeless due to foreclosure (Over the past month, those over at the Salem Animal Rescue League have noticed a trend of pets being given up by people who have lost their homes in the subprime mortgage crisis),

Placer County, California: Mortgage crisis is hurting pets, too (In January, at least 20 percent of dogs and cats surrendered to the Placer SPCA shelter came from people who "lost their homes or were having such extreme financial difficulties" that they could no longer afford to care for them),

Vero Beach, Florida: As owners lose homes, so do many Treasure Coast pets (Since September, about six people a month have been saying their loss of housing is the reason they're giving their pets to the Humane Society of Vero Beach and Indian River County),

Fremont, Ohio: Overabundance of animals (Fremont shelter has no room for pets after drop-offs) (The number of animals at the Humane Society of Sandusky County has multiplied since a year ago. And part of the problem is attributed to animals being dropped off in the night. Several of them have been severely malnourished. A local animal cruelty investigator said the recent spike could be attributed to the housing-foreclosure issue that is affecting so many people in the area. "It's an ongoing problem with the foreclosures," Hammond said. "People are finding out their dogs don't fit with them. They're leaving their animals behind."),

Saugerties, New York: Foreclosures force farm animals out (In addition to pets, foreclosures are hitting horses, mules and donkeys. The Catskill Animal Sanctuary in Ulster County has seen a dramatic rise in calls — sometimes five a day — from people looking for a shelter for their large animals. Other local shelters have not yet noticed an uptick in animals because of foreclosures. "Most people don't go into detail — 'The house is being foreclosed on' — that might be more personal than they want to get with me," said Adam Saunders, shelter manager of the Ulster County SPCA, "but the most common reason is, 'I have to move, I can't take the pet with me.' It would make sense that that is happening more because there are more foreclosures going on."). See also, Money woes bring animals to shelter (NY Daily News).

Brentwood, California: Pets a growing casualty of the real estate market (As the real estate market continues to languish and foreclosures become more and more common, unwanted furniture isn’t the only thing being left behind when a mortgage turns upside down).

Illinois: Dogs, cats latest victims of subprime-mortgage mess (Animals lose families as owners lose homes) ("We're seeing quite a few animals being surrendered due to economic reasons, including foreclosure," said Angie Wood, assistant executive director of the Naperville Area Humane Society, [...] "We're probably getting 25 [animals] a week coming to us for those reasons," said Terri Sparks, a spokesman for The Animal Welfare League in Chicago, which works with 53 municipalities on animal-control issues. "It's probably increased a lot in the past six to seven months." Linda Gelb, president of Community Animal Rescue Effort, which works through the Evanston Animal Shelter, said her group has taken in four dogs in the past three weeks because their owners were losing their homes. [...] Authorities around the country in recent months have reported numerous findings of cats, dogs, birds, horses and other animals at foreclosed houses and farms. Among the more notorious cases, animals were found in large number -- three dogs and 20 birds in a house in Lorain, Ohio; 24 horses on a farm in Bixby, Okla.; and 63 cats in a house in Cincinnati. It was too late when authorities got to a foreclosed house in Bradford, Pa., to discover the bodies of 21 Great Danes. The owner on Thursday pleaded guilty to 21 counts of animal cruelty.)

For more on foreclosures and family pets, see Foreclosures & Pets I, and see Foreclosures & Pets II. petsII and foreclosures

More On Now-Defunct 1031 Exchange Intermediary, $160M In Trust Money Missing

In Indiana, the Indianapolis Business Journal reports on embattled businessman Edward Okun and his Richmond, Va.-based Investment Properties of America:
  • A high-flying Carmel businessman who moved his base of operations to Miami a couple of years ago is accused of burning through $160 million of investors’ money in the collapse of his real estate empire. [...] Investigators believe [Edward] Okun [...] used investor money to fund a lavish lifestyle that included four mansions, a helicopter, three airplanes, 20 automobiles and a 130-foot yacht. Investment Properties filed for Chapter 11 bankruptcy in November.

  • His investment firm, The 1031 Tax Group, and more than a dozen affiliated companies around the country, sought bankruptcy in May. The 1031 Tax Group was named after a section of federal tax code that allows certain commercial property owners to defer capital gains taxes by reinvesting proceeds from property sales into other real estate. Money held by 1031 Tax Group was sheltered from taxes until investors put their gains into other properties later. But last year, investors began complaining that money they entrusted to Okun had vanished. In fact, Okun and his Investment Properties had “borrowed” funds investors had placed in 1031 Tax Group, according to a report by James Lukenda, a managing director of Huron Consulting Group. A New York bankruptcy court appointed Lukenda as 1031’s chief restructuring officer last year.

For more, see Empire crumbles (Real estate exec with lavish lifestyle accused of $160M fraud).

Go here for more on Edward Okun.

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More On 1031 Exchanges

Realty Times recently ran two stories explaining the mechanics of, and the benefits in using, so-called 1031 exchanges, in which real estate investors are able to defer payment of income taxes due (and possibly avoid the income taxes altogether if this tax deferral technique is continued by an investor indefinitely) on their profitable real estate investments. For those who are interested, see:

Success in using this tax deferral technique will depend on the level of expertise and integrity of the company used as a 1031 exchange intermediary. For some real estate investor horror stories that have occurred when the wrong intermediary is used to conduct the exchange, see 1031 Exchange Intermediaries - Problems.