Saturday, February 16, 2008

Disbarred Lawyer Nailed In Theft Of Dead Dad's I.D. To Pull Off $1.8M Loan Scam

In Westchester County, New York, the North Country Gazette reports:
  • A disbarred attorney has pleaded guilty stealing his dead father’s identity and misrepresenting his status as an attorney in order to perpetrate a $1.8 million loan scam. Rafael Pantoja of Lake St., Hartsdale pleaded guilty [last week] to first and second degree grand larceny during a trial before Westchester County Court Judge James Hubert.

For more, see Disbarred Attorney Convicted In Loan Scam.

Ohio Attorney Admits Pocketing Clients' Money; Will Give Up Law License

In Toledo, Ohio, The Toledo Blade reports:
  • A lawyer who admitted in December that she fabricated a story of being kidnapped from downtown and dumped off in Georgia was found guilty [last month] in Toledo Municipal Court of a misdemeanor charge of making false [claims]. Karyn McConnell Hancock, 35, of 2663 West Village Drive, also admitted guilt yesterday in an unrelated matter in Lucas County Probate Court involving the embezzlement of more than $130,000 from the estate of a murdered Toledo city worker, said her attorney, Jerry Phillips. Similar accusations from other clients are pending against her, and the Lucas County prosecutor’s office continues to investigate theft claims.

Other claims against her include the theft of $37,000 in settlement checks from two separate clients, who have both filed civil lawsuits against her. An additional claim comes from another former client who filed a lawsuit against her, claiming that she was hired to review a real estate sale contract and subsequently pocketed the sale proceeds from property he owned, leaving the taxes and an existing mortgage, now in foreclosure, unpaid.

For more, see Toledo attorney admits role in missing funds, says she'll drop law license.

Attorney Pleads Guilty As "A Broken Man" In Alleged Atlanta-Area $19M Flipping Scam

In Atlanta, Gerogia, Daily Report reports:
  • When Atlanta attorney R. Joseph Costanzo Jr. pleaded guilty to bank fraud this month, he did so as “a broken man,” Costanzo's attorney said. The lawyer's prosecution by federal authorities for his role as a real estate closing attorney in a mortgage fraud ring left him “financially devastated … his career as an attorney over, medically and mentally severely impaired, and greatly suffering shame and remorse,” said his attorney, Edward T.M. Garland. It also garnered Costanzo 41 months in federal prison and an order to pay jointly with his co-defendants more than $7.8 million in restitution to banking, insurance and investment firms—among them Bear Stearns Residential Mortgage.


  • For two years, Costanzo closed fraudulent loans for a mortgage fraud ring that federal authorities believe included at least 21 people—among them builders of multimillion-dollar homes in Atlanta's wealthy northern suburbs, according to a federal indictment issued in January 2005. The fraudsters—many of whom, like Costanzo, have either entered guilty pleas or were found guilty by a federal jury late last year—stole more than $19 million from lenders by “flipping” properties, according to the indictment.

For more, see Fraud case ruins real estate lawyer, attorney says ('Scrivener' pleads guilty to bank fraud, gets 41 months in federal prison).

New Hampshire High Court Opens Misconduct Case Against Judge Who Helped Now-Disbarred Hubby In Attempt To Stiff State Bar; Boot From Bench Possible

In New Hampshire, the Concord Monitor reports:
  • The state Supreme Court opened its misconduct case of Judge Patricia Coffey [last week] with several pointed questions about the trust she created and used to shield her husband's assets from creditors. Among the questions was this one: Did Coffey establish the trust so she and her husband, former lawyer John Coffey, could avoid a $75,000 legal bill John Coffey owed for his disbarment proceedings? And this one: Did Coffey break the law when she moved the couple's property into that trust and beyond the reach of creditors? Coffey answered similar questions for the Judicial Conduct Committee last year when it first investigated the trust. That group can only recommend punishment to the state Supreme Court and voted 8-3 in December that Coffey be suspended without pay for three months.


  • Now it's up to the high court to review the case itself and render its own response, which can range from no punishment to a lengthy suspension. Coffey and her lawyer, Russell Hilliard, initially asked for a public censure only but last month said they would accept a three-month suspension. However, even the state Supreme Court's ruling isn't likely to be the last word on Coffey's future. Two lawmakers are drafting legislation to remove Coffey from the bench for good. Gov. John Lynch, who has publicly asked for Coffey's resignation, supports the measure, according to New Hampshire Public Radio.

For more, see Coffey faces pointed questions.

Go here for earlier posts on the investigation of Judge Patricia Coffey.

For other posts on some of the alleged knuckleheaded members of our esteemed judiciary, go here and go here. knuckleheaded judges zeta

Three Cops Diagnosed With Chemically-Induced Pneumonia, Heart Murmurs In Home-Based Meth Lab Bust Gone Bad

In Butler, Missouri, KCTV Channel 5 recently reported on a meth lab bust that went bad one night back in November. An excerpt from the story:
  • Police said that in a desperate attempt to get rid of the chemicals from the meth lab, [the suspect] started throwing everything into the sump pump and turned on the water. "The chemicals mixed with the water and created a vapor," said [Butler Police Chief Jim] Garnett. "Sulfuric acid, anhydrous ammonia and Coleman fuel." [One officer] was stuck in the basement, breathing in the poisonous vapor. Upstairs, [another cop] had just broken through the front door and was breathing heavily when the fog overcame him. And at the back door was [a third cop], who said "your throat gets very irritated. Then the not being able to breathe and all that stuff -- that was the scariest part of it all."

All three were diagnosed with chemically-induced pneumonia and heart murmurs. One spent several days in the hospital and was out of work for two months. The other two were there for more than a week. Of the two, one returned to work two weeks ago; the other is out indefinitely. For a 10-man department, that one night sidelined almost a third of the Butler police department.

For more, see Special Report: Are Police Prepared To Deal With Meth?

Check the the U.S. Drug Enforcement Agency's (DEA) National Clandestine Laboratory Register for (what the DEA admits is) an incomplete and infrequently updated list of possible locations of former neighborhood meth labs that have been reported to the DEA by local and Federal law enforcement authorities.

Go here for some methamphetamine information resources.

Go here and go here for other posts on home based meth labs. meth lab zeta

More On The "One Pot" aka "Shake & Bake" Method Of Making Meth

In Etowah County, Alabama, the Gadsden Times reports:

  • More methamphetamine labs have popped up in Etowah County in recent weeks, and drug agents believe the increase is linked to a new cooking method. The "one-pot" or the "shake-and-bake" method is quicker and easier and is producing a more pure form of meth, said Scott Entrekin, spokesman for the Etowah County Drug Enforcement Unit. [...] The method of cooking began appearing almost a year ago in some states and has spread to other areas, he said.The meth is cooked using one "pot," usually a 2-liter drink bottle. [...] "It's dangerous because it builds up pressure," Entrekin said. If the pressure isn't released periodically during the two to three hours it takes for the meth to cook, it can explode.
For more, see Meth labs return, new cooking method blamed.

For a related post on meth labs and the problems they cause in homes that once housed them, see The Invisible Legacy Left In Homes Used As Meth Labs.

Go here for some methamphetamine information resources.

Go here and go here for other posts on home based meth labs. meth lab zeta

Hotel & Motel Rooms Now Being Used As Meth Labs?

The television program Inside Edition ran a story last week on the growing use of hotel and motel rooms to manufacture methamphetamine. An excerpt from the story:
  • It's a danger that could be putting you and your family at risk. All across the country, cops say drug dealers are using some hotels and motel rooms to manufacture or "cook" methamphetamine. According to Sergeant Jim Gerhardt, of the Thornton, Colorado police department, near Denver, “It's probably worse now than ever.” [...] However, after drug dealers move on, the toxic chemical residue that results from cooking meth could potentially stay for years. The chemicals are so dangerous police wear full hazmat suits when they raid a meth lab.


  • So how big of a problem is it? INSIDE EDITION tested six Denver area hotels and motels where cops had busted meth labs, some more than two years ago, and the results were disturbing. In one test INSIDE EDITION detected meth on the headboard of one of the beds. Five out of the six rooms tested had traces of meth. Three of them, including two at popular national chains, had levels above what many experts consider safe.

For more, see Was Your Hotel Room A Former Meth Lab?

Go here for some methamphetamine information resources.

Go here and go here for other posts on home based meth labs. meth lab zeta

Recent Home-Based Meth Lab Blurbs

Goffstown, New Hampshire: Two neighbors in a downtown apartment building were busted after a raid uncovered a small meth lab in their apartment. Reportedly, the investigation started early last month when local cops were tipped off by a hardware store about the purchase of toluene, iodine and other materials used to manufacture methamphetamine. See Goffstown pair charged in meth lab raid.

Marshfield, Wisconsin: A meth lab was discovered Wednesday morning during a search warrant on the lower level of a rental duplex by local cops and other agencies, including the Wisconsin State Patrol and Department of Justice. A hazardous materials cleanup of the property was ordered and was conducted by a specialized DEA cleanup team. The property is secured and will be guarded until cleanup is completed. See Meth lab busted in Marshfield.

Austin, Texas: A baby is in the hospital and the parents behind bars after police say they discovered a meth lab in South Austin. Cops, who were serving a warrant, said they were overcome with the smell of chemicals used to make meth when they opened the door. Neighboring homes were not evacuated, but police said it took hazardous materials crews hours to clean up the scene. See Baby Taken To Hospital As Police Investigate Meth Lab.

Atwater, Minnesota: A local man was arraigned on three felony charges for meth manufacture and drug possession after cops found an operating meth lab in an Atwater home. The home was marked as a meth lab by agents and then turned over to a hazardous materials crew for cleanup of the contaminated and hazardous materials. There were 15 chemistry books in the basement bedroom, the complaint states, with pages marked to topics used in the process of cooking meth. See Man charged after meth lab discovered in Atwater home.

Wilmer, Alabama: Cops arrested a local couple accused of running a meth lab in a shed behind their home. In addition to the meth charges, the couple will also face a felony charge of chemical endangerment of a child because a minor was in the home at the time of their arrest. See Husband & Wife Running a Meth Lab.

Williamsburg, Virginia: Local cops arrest three and are searching for two others wanted in connection with the discovery of what officers believe is a home-based meth lab in one unit in an apartment complex. According to a search warrant, the cops began tracking the suspects last month after discovering they had made multiple Sudafed purchases at local drugstores. See Suspected meth lab is busted by police.

South Hills, West Virginia: One man is in jail after a lit cigarette caused his residence, one of four connected townhouses in South Hills, to catch fire and expose a secret methamphetamine lab, investigators said. The firewalls contained the damage to the one unit. See Townhouse burns in meth lab explosion.

Lincoln County, North Carolina: Police arrested two men after they found the makings of a meth lab in their motel room. Police worked off a tip from an informant. More than 30 people staying at the hotel were evacuated for several hours. See Police: Meth Lab Busted.

Perry County, Indiana: A man was found dead inside a burning car in which items used to manufacture meth were found. The evidence leads cops to believe that the car was used as a mobile meth lab, which they say is becoming more and more common. "It is very possible that a meth lab could be in a vehicle next to you while you are traveling down the highway," said Todd Ringle of the Indiana State Police. See Man burns in meth lab fire.

Louisville, Kentucky: Cops bag a portable meth lab inside a car after making a routine traffic stop on a local freeway. One of the officers noticed some paraphernalia and meth inside the car before noticing the meth lab inside. A nearby ramp leading to the freeway was shut down for several hours due to the danger of the chemicals found. See 'Rolling meth lab' shuts down Gene Snyder ramp.

Bloomfield, Ohio: Cops nail two with meth, child endangerment charges in home-based lab bust. The suspects were tracked down through a steady pattern of Sudafed bought at local drug stores. Due to its use in the production of methamphetemine, many pharmacies require consumers to sign a form when buying Sudafed. Two children found in the house and believed to be contaminated by the drugs, which can be absorbed through the skin, were decontaminated before being turned over to relatives. See Meth lab tracked by cold medicine sales.

Brevard County, Florida: In response to a domestic violence call, Brevard County cops find a 7-month-old-baby boy in an active meth lab. Authorities say the baby's mother ran a meth lab out of a home she shared with her husband and a roommate. Deputies found equipment and chemicals used to make meth, in addition to over 100 grams of the drug. The baby was rushed to a local hospital, and the three adults are in police custody. See Baby in Meth Lab.


For a related post on meth labs and the problems they cause in homes that once housed them, see The Invisible Legacy Left In Homes Used As Meth Labs.

Go here for some methamphetamine information resources.

Go here and go here for other posts on home based meth labs. meth lab zeta meth lab yak

Friday, February 15, 2008

UK Sale Leaseback Foreclosure Rescue Operators Form Trade Association To Raise Industry Standards

In the United Kingdom, The Press Association reports:

  • A new trade association for sale-and-rent-back companies was launched this week in a bid to raise standards in the industry. The Property Buyers Association (PROBAS) sets out a strict code of practice that all members have to sign up to, which aims to increase the transparency of the schemes and give consumers greater assurance. Under the terms of the code, members must provide people with key facts about the scheme in line with City watchdog the Financial Service's Authority's policy on treating customers fairly.

  • Sale-and-rent-back companies buy the homes of people who are in danger of having them repossessed and then rent them back to them. But the rapidly growing sector has come in for some bad press, with claims that some companies pay less than 60% of the market value for properties, while others levy steep rent increases and some evicted people after just 12 months. Citizens Advice has branded the schemes a "disaster waiting to happen" and called for the sector to be regulated to help protect vulnerable consumers, while the Council of Mortgage Lenders has also expressed concern about the companies.

For more, see Rent-back firms launch trade body.

Go here for the Property Buyers Association's established PROBAS Code of Practice (go here for pdf version).

Central Florida $13M Home Improvement & Mortgage Fraud Scam Yields Another Guilty Plea

The Florida Attorney General's Office announces:
  • Attorney General Bill McCollum [Wednesday] announced that a Hillsborough County woman pleaded guilty to criminal charges of racketeering and conspiracy to commit racketeering. Adrienne L. White was involved in a multi-million dollar mortgage fraud scam that stretched across the state and involved one of the nation’s largest sub-prime mortgage companies. [...] White, 31, was part of a criminal enterprise which submitted nearly 130 fraudulent documents to Argent Mortgage Company for approximately $13 million in home loans. The three-year investigation was initiated by consumer complaints about incomplete or substandard construction work performed by construction companies affiliated with White’s co-defendants. Her associates would secure fraudulently-obtained mortgages for these homeowners to finance the home repair construction projects.

For more, see the Florida AG's news release: Hillsborough County Woman Pleads to Criminal Racketeering Involving Mortgage Fraud.

Go here for earlier posts on this prosecution.

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

Key Figure In $112M Metro Atlanta Straw Buyer Flipping Scam Gets Seven Years

In Atlanta. Georgia, the Atlanta Business Chronicle reports:
  • Leslie Rector, co-leader of a $112 million mortgage fraud scheme in metro Atlanta, has been sent to prison for seven years. [The sentencing judge] also ordered Rector, 35, of Atlanta, to pay $40.2 million in restitution for being part of a massive mortgage fraud scheme that targeted the metro housing and condo market from 2000 through part of 2003. Rector was convicted in March 2007 on charges of conspiracy, loan fraud, mail and wire fraud, and money laundering. Rector was Phillip Hill's right-hand-man when it came to running Hill's many corporations and orchestrating the massive mortgage fraud scheme that targeted the Atlanta area from 2000 through 2003. In September 2007, Hill was sentenced to 28 years in jail for the mortgage fraud scheme.

For more, see Rector heads to jail for role in largest area mortgage fraud case.

Legal Aid Society of Milwaukee Testifies On Foreclosure Resue Scams

On Wednesday, the U.S. Senate Special Committee on Aging held a hearing addressing the use of foreclosure rescue scams in the preying upon elderly homeowners. Among those testifying was Catherine M. Doyle, Chief Staff Attorney, Civil Division, Legal Aid Society of Milwaukee, Milwaukee, WI. To view the webcast of the Senate hearings, see Foreclosure Aftermath: Preying on Senior Homeowners.

Go here for the text of Ms. Doyle's testimony.

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

FTC Working On Foreclosure Rescue Fraud Prevention Thru Law Enforcement & Consumer Outreach

From the Federal Trade Commision:

For more, see FTC Testifies on Efforts to Stop Mortgage Foreclosure ‘Rescue’ Fraud.

For the text of the FTC testimony, see Prepared Statement of the FTC on Foreclosure Rescue Fraud.

To watch the webcast of the Senate hearings, see Foreclosure Aftermath: Preying on Senior Homeowners.

Go here for links to the text of all the testifying witnesses.

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

Vermont Feds Get Guilty Plea From NY Title Agent For Role In Alleged Scheme To Defraud Homeowners In Mortgage Transactions

According to a press release from the U.S. Attorney for the District of Vermont, title agency owner Nazzara Bernardo, 60, of Manlius, New York, pleaded guilty in a Vermont Federal court earlier this week for his role in a conspiracy with a mortgage broker and an appraiser in which some of the proceeds of each mortgage loan originated by the broker was diverted to him without the borrower's knowledge. Bernardo's title company performed the title work on the mortgages that were being originated and it also served as escrow agent for the lending banks. The disbursement of the diverted funds by Bernardo's title company was not reflected in the closing statements given to the borrowers at the closing of each loan, as required by law.

The appraiser, Gerald Mullaney, has already pled guilty to bank fraud and is awaiting sentencing. The mortgage broker, Richard Shumway (now of Brewerton, NY) has been charged with wire fraud and bank fraud and has pled not guilty to the indictment. Both charges stem from the activities of TSC Funding, a South Burlington-based mortgage brokerage business Shumway owned and operated until 2005.

For more, see the U.S. Attorney's press release: Nazzara Bernardo Pleads Guilty To Mortgage Fraud.

Florida AG Targets Alleged Pennsylvania Rent To Own Scam Artist

In Broward County, Florida, WFOR-TV Channel 4 reports:
  • Jim Platts, 56, is being investigated by the Florida Attorney General after Pennsylvania authorities as early as 2002 arrested the homebuilder for forgery and theft. Now, federal authorities are worried about Platt's business dealings in South Florida. In November of last year, the attorney general in the same state of his arrest accused Platts of tax evasion, and filed a civil lawsuit against his company, Easy Realty Solutions. The charges are that Platts ripped off more than a hundred people in a rent-to-own mortgage scheme. [...] After the Pennsylvania incident, CBS4 learned that state documents show Platts opened up a firm in South Florida called A Realty Prescription in Coral Springs. The office: a post office box.

For more, see Homebuilder Under Investigation In South Florida.

Go here for prior posts on James Platts.

Texas AG Nails Developer For Illegally Subdividing Land; Deposits Refunded To Unwitting Lot Buyers

From the office of the Texas Attorney General:
  • Texas Attorney General Greg Abbott obtained a default judgment against the developer of Tierra Linda Gardens, a residential subdivision development in Cameron County that lacks basic utilities. Thursday’s judgment came less than four months after the Attorney General took action against Manuel J. Montemayor and his company, MG Joint Venture, for violating the state’s colonia-prevention laws. The court ordered Montemayor to pay $30,000 in civil penalties for unlawfully subdividing and selling property without approval from local officials and without providing sewer and water services for residents. Additionally, he must pay the State more than $7,500 for investigative and legal costs. Montemayor also provided refunds of more than $11,000 to each of three consumers who bought his unlawfully-platted lots. The refund amount corresponds to deposits and interest fees the buyers had already paid to the defendant.

For more, see Attorney General Abbott Resolves Legal Action Against Cameron County Colonia Developer (Tierra Linda Gardens developer faces $30,000 in civil penalties for unlawful colonia subdivision).

To view the lawsuit, see State of Texas v. Montemayor.

Indiana Farm Co-Op Sues To Recover $10M Loss From Subprime Junk Investment

In Indiana, The Indianapolis Star reported last week:

  • Farmer-owned Indiana fuel refiner CountryMark Cooperative says it was burned by its investment adviser's decision to sink $10 million of the co-op's money last year into mortgage-backed securities that included now-notorious subprime home loans. In a federal lawsuit filed in Indianapolis last week, CountryMark alleges its $10 million note is in default and worthless because no trading market exists for it. CountryMark's lawsuit against Morgan Keegan & Co. charges the brokerage subsidiary of Regions Financial Corp. with violating federal and state securities laws and asks for recovery of the $10 million.


  • Morgan Keegan faces numerous lawsuits and other complaints by customers who charge they lost money in its funds and other investments based on subprime mortgages. A class-action lawsuit on behalf of investors has been filed in its home state of Tennessee.

For more, see CountryMark sues adviser (Co-op says brokerage bought $10M note backed by mortgages that's now in default).

County Ordinance Requires Clean-Up Or Tear Down Of Homes Formerly Housing Meth Labs

In Kanawha County, West Virginia, The State Journal reports:
  • Five years after a meth lab bust, a Kanawha County mobile home [...] was boarded up Monday. It took so long because the bust happened three years prior to the passage of a county ordinance which requires property owners to clean up the meth or the property is torn down. Neither the county, tenant nor landlord knew of the home's criminal past until Monday. "We acted when we found out about it," said David Armstrong, the deputy emergency services director for the county's planning and community development office. "If I don't know about it, I can't fix it." The tenant [...] brought the lab's history to light after searching federal court records.

For more, see How To Find Out If You're Living In a Former Meth Home.

See also, WOWK-TV Channel 13: Family Lived in Former Meth House for 4 Years (The tenant and her daughter, who were living with 29 times the acceptable limits of meth residue, are now homeless).

For a related post on meth labs and the problems they cause in homes that once housed them, see The Invisible Legacy Left In Homes Used As Meth Labs.

Check the the U.S. Drug Enforcement Agency's (DEA) National Clandestine Laboratory Register for (what the DEA admits to being) an incomplete list of possible locations of former neighborhood meth labs that have been reported to the DEA by local and Federal law enforcement authorities.

Go here for some methamphetamine information resources.

Go here and go here for other posts on home based meth labs. meth lab zeta

Hawaii Lender Trade Group Objects To Proposed Law Prohibiting Strong Arming Of Appraisers

In Hawaii, The Honoluu Advertiser reports:
  • Homebuyers in Hawai'i may have been given mortgage loans based on inflated appraisals derived under pressure from lending and real estate agents. Appraiser coercion is described as part of a national problem that quietly evolved over the past decade or so and helped undermine housing markets around the country, though to a much lesser degree than fraudulent loan practices and subprime lending abuses.


  • A state regulatory agency and local appraisers testified about the industry pressure during a recent state legislative hearing on Senate Bill 2407 that intends to make it illegal for anyone with a financial stake in a real estate transaction to influence an appraiser.


  • Gayle Ishima, legislative committee chairwoman for the Mortgage Bankers Association of Hawaii, said appraisers should address the issue themselves. "It's an ethics issue for appraisers," she said. "It doesn't seem like you would need to add (a law that would punish lending and real estate agents) on top of it."

For more, see Appraisers coerced to raise valuations.

Thursday, February 14, 2008

NBC Nightly News On Foreclosure Pets & Domestic Livestock

NBC Nightly News ran a piece last Saturday on the recent increase in the numbers of pets and domestic livestock at pet shelters and animal sanctuaries. Among the primary reasons, it is believed, are foreclosures and other economic pressures. To view the NBC report, watch Animal House.

For more on foreclosures and abandoned animals, see Foreclosures & Pets I, and see Foreclosures & Pets II. petsII and foreclosures

Nevada Tenants Left Holding The Bag When Leasing From Rent-Skimming Landlords; State Lawmakers To Take No Action

In Nevada, the Las Vegas Review-Journal reports:
  • State legislators learned [recently] that renters who paid for the first month, the last month of their lease and a security deposit can be evicted with three days notice and have no practical way of recovering money from a foreclosed landlord. Some states are enacting laws to provide renters more protection, but Nevada probably will do nothing to deal with the problems until 2009 when the next session of the Legislature meets, lawmakers say.

  • "There is nothing we can do about (renter problems) in the short run," said Assemblyman Marcus Conklin, D-Las Vegas, chairman of the Legislative Subcommittee to Study Mortgage Lending. Gov. Jim Gibbons could call a special session to deal with the residential mortgage implosion, but observers know of no efforts to persuade the governor to do that.

  • State Sen. Bob Beers, R-Las Vegas, a subcommittee member, said Gibbons' administration is making efforts to educate homeowners, but he believes that should be the limit of state involvement. "I don't know even if we were in session that we would do anything (to address the mortgage problems)," Beers said. "This isn't really a government problem," Beers said. Historically, government intervention "just seems to delay the recovery" in the market, he said.

For more, see Officials told of renters' troubles (Little action foreseen; education suggested).

For posts involving rent / equity skimming landlords who pocket rent and allow homes to go into foreclosure, see Tenants Unwittingly Renting Homes In Foreclosure I , II , III , and IV. equity skimming unwittingly gamma

Tampa Broker Continues Dancing Thru Mortgage Fraud Raindrops

In Tampa, Florida, the St. Petersburg Times reports:
  • A few months ago, a state investigator visited mortgage broker Dominic Ferrara to discuss a case of mortgage fraud. An Oregon man's identity had been stolen and his Social Security number used to obtain a mortgage. Ferrara handled the loan. But it wasn't just any loan. It was a 100 percent mortgage for a home that Ferrara's girlfriend was selling. She ended up getting $229,000 for a home valued today at $165,000.

  • After prosecutors gave Ferrara immunity, he admitted that he falsified a key part of the loan application. The buyer, a handyman with a lengthy criminal record, ended up charged with three felonies. But Ferrara came out smelling like a rose. Again. Again, because Ferrara has come to the attention of investigators before.

For more on the details of this and other mortgage fraud investigations in which Ferrara's name came up (including one involving the now-jailed notorious fraudster Matthew B. Cox), see ID theft gins up house loan (The thief gets to keep the home, and the Tampa broker is unscathed - again).

Editor's Note:

According to the story, it was a Florida state prosecutor (as opposed to a Federal prosecutor) that granted Ferrara immunity from prosecution. Unless I'm mistaken, state prosecutors can only grant immunity from prosecution in connection with violations of state criminal statutes (and not Federal criminal statutes - ie. mail fraud, wire fraud, conspiracy, etc.). If so, the FBI may have him on their radar. For Ferrara's sake, I hope I'm wrong.

Home Improvement Contractor Criminal Trial Begins; Men Charged With Failing To Complete Jobs While Pocketing Homeowner Cash

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

  • A defunct Oakland Park-based construction company ripped off South Florida homeowners for four years with its chief executive officer sometimes threatening customers who questioned him, a prosecutor told Broward County jurors on Tuesday. HomeCo Unlimited collected as much in deposits as possible while doing little or none of the work that was promised, Assistant State Attorney Catherine Maus said as the criminal trial began for two of the men who ran the company. HomeCo Chief Executive Officer Douglas Livingston and John Ostendorf, who has been described as a project manager, face dozens of felony charges related to more than 60 customers who say the company never started or failed to finish their jobs. "It was nothing more than a scam," Maus said in her opening statement.


  • Livingston, 41, Ostendorf, 37, and HomeCo's general contractor Barclay Mavis, 48, were arrested in November 2004 on 64 counts of grand theft and one count of organized scheme to defraud, a charge that could carry up to a 30-year prison sentence. In addition, Livingston was charged with five counts of extortion with customers. Maus said he threatened to physically harm some customers and in other cases said he would intentionally delay their projects. [...] Mavis accepted a plea deal and is scheduled to testify as a witness for the state.


  • While out on bond awaiting trial, Ostendorf and Livingston have been running a new construction company, Delray Beach-based Home Team Advantage. The Broward State Attorney's Office opened a new investigation last year into Home Team Advantage after receiving customer complaints. More than 40 former and current Home Team Advantage customers have told the Sun-Sentinel they have had problems with the company, including remodeling jobs taking more than two years, shoddy construction work and Livingston threatening them with liens or lawsuits when they challenge him.

The trial is expected to stretch into April. For more, see Broward builders cheated homeowners, prosecutor says.

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

Homebuilder / Alleged Indoor Pot Farm Financier Charged With Mortgage Fraud, Money Laundering

In Port St. Lucie, Florida, the Palm Beach Post reports:
  • The patriarch of the family whose Port St. Lucie home building company allegedly financed, setup and maintained a sprawling network of marijuana grow houses was arrested Tuesday, records show. Jose Raul Cepero, 69, a Cuban native who founded Global Home Builders Inc., after two stints in prison during the 1980s and 1990s on drug charges, was arrested Tuesday on warrants for money laundering and mortgage fraud. He is being held at the St. Lucie County Jail in lieu of $1.1 million bail.

  • Investigators say Global Home Builders Inc. laundered drug profits and helped its pot growers obtain fraudulent mortgages to buy houses, which company employees would outfit with elaborate indoor gardens, shuttling supplies between Home Depot and the grow houses in trucks bearing the company logo.

For more, see Homebuilder charged with money laundering and mortgage fraud.

Go here for earlier posts on Global Home Builders.

Go here and go here for other posts on Marijuana Grow Houses. pot grow ops alpha

Michigan Accountant Gets 5 Years In $21M Mortgage Scam; Confederate Gets 9 Years

The Detroit Free Press reports:
  • A Dearborn Heights man convicted of stealing $21 million in a mortgage-fraud scheme will spend the next 5 years in prison. U.S. District Judge David Lawson sentenced tax accountant Kalil Khalil, 36, [last week] to 60 months in prison for wire fraud, based on a two-and-a-half-year scheme to defraud mortgage lenders. [...] Khalil and his codefendant, Tariq Hamad, put the loan money they received in bank accounts created in the names of companies, concealing their identities. After his prison term, Khalil must serve a 3-year supervised release and pay $11.1 million to mortgage lenders and an appraisal company. Hamad, 37, of Dearborn pleaded guilty to wire fraud and was sentenced to 9 years in prison.

For more, see Man gets 5 years in prison for mortgage fraud (2nd story from the top).

Top Litigation Firms Ready For Big Scores In Subprime Sewer

Crain's New York Business reports how top litigation firms have geared up to handle the flood of current and future lawsuits arising from the subprime mortgage problem:
  • First came the $211 billion in write-downs of subprime debt, now comes the legal bonanza. In the past four months, nearly 20 law firms have set up subprime practices comprising more than 500 attorneys, many of them in New York. Not since the savings and loan crisis two decades ago have so many law firms moved so fast to create a whole new discipline. "It's a sea change,“ says Marvin Pickholz, the partner in charge of Duane Morris' month-old, 15-lawyer subprime practice group. “These problems are going to expand to such a dimension that it will consume vast amounts of lawyers' time.“


  • So far, much of the work has involved the investment houses that packaged and sold subprime debt. Law firms are being hired to sue or defend such companies as Citigroup, J.P. Morgan Chase, Merrill Lynch and Bear Stearns. The work will by necessity be spread to many firms, as the lawyers who advised banks in the creation of these instruments will face conflicts of interest and most likely be barred from participating.

For more, see Law firms follow money in credit mess (With millions at stake, hundreds assigned to bolster subprime practices).

Ohio Woman Unwittingly Buys Home Once Used As Meth Lab; Sues Former Owner While Fighting Foreclosure; Fears Connection To Kids' Chronic Illnesses

In Stow, Ohio, the Akron Beacon Journal reports:
  • Her Stow home is frozen in time. The kids' clothes, their beds, the family photos, everything they own remains untouched, just as they left it almost a year ago.
    The exodus from her new home was swift. And it was not fueled by ghosts or lousy neighbors. Rather, it was the revelation of what was once inside her Meadowbrook Boulevard home and its potential relation to her children's chronic illnesses.

  • Andrea Wagner has learned she is the owner of a former meth house, one of at least 143 tabulated by local health officials. The 26-year-old single mother of two is now in court fending off foreclosure efforts while at the same time fighting the man who sold her the home. Her lawsuit claims the former owner never revealed its methamphetamine production history.

For more, see Single mom is suing seller of meth house (Home was once drug lab; woman fears for kids' health, might be facing foreclosure).

For a related post on meth labs and the problems they cause in homes that once housed them, see The Invisible Legacy Left In Homes Used As Meth Labs.

Go here for some methamphetamine information resources.

Go here and go here for other posts on home based meth labs.

Check the the U.S. Drug Enforcement Agency's (DEA) National Clandestine Laboratory Register for (what the DEA admits to being) an incomplete list of possible locations of former neighborhood meth labs that have been reported to authorities. meth lab zeta

Wednesday, February 13, 2008

Feds Convict Six In Atlanta-Area Mortgage Fraud Trial

In Atlanta, Georgia, the Atlanta Business Chronicle reports:
  • A federal court jury has found several Atlantans guilty for their roles in a mortgage fraud ring that racked up $6 million in just 10 weeks from SunTrust Mortgage. Guilty verdicts came in late Monday against Keith Garner, 48, Gregg Savage, 24, Shalonda Harris, 36, all of Atlanta, and Latesha Garner, 27, of Durham, N.C., on charges of conspiracy to commit mortgage fraud and wire fraud related to $6 million in fraudulent real estate financing from SunTrust Mortgage Co. in summer 2006.


  • According to court evidence, Keith Garner solicited his daughter, Latesha Garner, a loan processor with SunTrust Mortgage, [...] to handle fraudulent loan applications submitted on behalf of straw borrowers he recruited with co-conspirators. Because she was responsible for verifying borrower employment and asset information and approving closing documentation, Latesha Garner was uniquely positioned to defraud SunTrust Mortgage, which she did by falsely verifying borrower credentials and approving hundreds of thousands of dollars in false payoffs to her father. Keith Garner paid Latesha Garner $33,000 -- a year's salary -- across four transactions to run the scheme.

For more, see Metro Atlanta mortgage fraud ring convicted.

Feds Indict Three More In Erie, Pa. Mortgage Fraud Probe

In Erie, Pennsylvanis, the Erie Times News reports:
  • Three Erie County men now face charges of fraud and conspiracy as part of the ongoing federal investigation into a widespread mortgage scam in Erie. U.S. Attorney Mary Beth Buchanan announced Tuesday the defendants were indicted by a federal grand jury in relation to the probe. Indicted Tuesday were Gregory M. Finney, 34, of [...] Erie; Francis R. Conti, 41, of [...] Waterford; and 49-year-old Keith A. Rice, of [...] Harborcreek Township. The government's 17-count indictment alleges that Finney, Conti, Rice and others were part of a scheme in which they bought run-down houses and sold them at artificially inflated prices. The buyers were mostly low-income people who knew little about how to buy a home.


  • Erie businessman Robert L. Dodsworth, 60, pleaded guilty to conspiracy and money-laundering charges related to the case in November. [...] His business partner, Frank Kartesz II, 39, of Harborcreek, was charged with fraud and conspiracy counts on Jan. 31. Kartesz was expected to plead guilty in federal court in Erie on Thursday, but federal officials said that hearing could be postponed. [...] Dave Pesch, the housing counseling manager at Erie's St. Martin Center Inc., said the case shows how widespread mortgage fraud is in Erie. Pesch's agency assists low- and moderate-income homebuyers and worked with dozens of clients caught up in the probe.

For more, see More mortgage charges (3 more indicted by federal grand jury in ongoing fraud case).

Go here for other posts related to the Erie, Pa. FBI mortgage fraud probe. Robert Dodsworth Pennsylvania

Florida Ameriquest Lawsuit Alleging Title Insurance Homeowner Ripoff Now Certified As Class Action; Damages Could Exceed $13M

In Pinellas County, Florida, The Miami Herald reports:
  • A lawsuit that alleges lender Ameriquest Mortgage overcharged for title insurance on home refinancings can proceed as a class action, a state judge ruled. Coral Gables lawyer Richard Bennett, who filed the lawsuit in Pinellas County in 2006, estimates the class involves about 66,000 Floridians who refinanced their homes with Ameriquest from May 19, 2002 through 2006. Instead of charging the lower ''reissue rate'' for title insurance on refinancings, the suit claims, Ameriquest collected the higher rate charged on home purchases. Bennett said the overcharges on the policies he has reviewed generally have ranged from $200 to $300 per customer. Assuming that range is typical for the class, the potential damage claims could exceed $13 million.
  • The lawsuit may be the first filed against a lender for overcharges on title insurance, Bennett said. Several class-action lawsuits were brought against title insurance companies in recent years, with some leading to out-of-court settlements. Ameriquest was the only party sued in the Pinellas County case because it collected the title-insurance costs from the loan proceeds, which it then sent to title agents. ''We didn't follow the money,'' Bennett said in explaining why Ameriquest was the only defendant.
For more, see Title insurance overcharge suit advances (A lawsuit that accuses Ameriquest Mortgage of overcharging for title insurance on home refinancings has been certified as a class-action) (story no longer available online).

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

Seven Cop Pleas In South Florida "Cash Back" Straw Buyer Mortgage Fraud Scheme

On Monday, the U.S. Attorney for the Southern District of Florida announced the guilty pleas of seven assorted scam artists who participated in a scheme through which they located properties for sale in the Southwest Ranches area of Broward County, Florida, fraudulently purchased the properties using straw buyers, and then received cash back at the closings. This scheme yielded 12 fraudulent loans, totaling approximately $8,300,000, according to the U.S Attorney's office.

Those copping pleas (and the dates of their pleas) were:
  • Maykel Clavero-Gonzalez, 30, of Miami, (January 7, 2008); Luc Bruna, 53, Fort Lauderdale, (January 10, 2008); Ruben Jimenez, 40, of Miami, (January 11,2008); Iliana Lima, 36, of Port St. Lucie, (January 11, 2008); Antonio Ramos, 26, of Miami, (February 5, 2008); and Michele Volcy, 47, of Fort Lauderdale, (February 8, 2008), and Joaquin M. Perea, 63, of Miami, (February 11, 2008).

For more, see the U.S. Attorney news release: Additional Defendants Plead Guilty In "Operation Fastbuck" Mortgage Fraud Scheme.

Go here for the original U.S. Attorney Press Release announcing the original indictment; and go here for the original Indictment.

Bail Set At $1.64M For California Man Facing Foreclosure Fraud, Forgery, Rent Skimming Charges

In Santa Clarita, California, KHTS Radio AM 1220 reports:
  • A Mission Hills man already facing criminal charges involving alleged real estate foreclosure and investment fraud was charged Friday with several more felony counts, including grand theft, identity theft and forgery involving many victims in Santa Clarita. James Anthony Rojas, 51, faced 82 counts, all but three of them felonies. The misdemeanor counts allege rent skimming. Most of the crimes involve real estate foreclosure fraud, in which Rojas allegedly forged grant deeds to take over victims’ homes. Some of the victims had gone to Rojas for help with mortgage problems; most didn’t even know him until the forged grant deeds appeared.

For more, see Real Estate Advisor Faces 82 New Felony Counts (go here for .pdf version).

Go here and go here for other posts on deed theft by forgery, swindle, etc. deed theft yahtzee equity skimming unwittingly gamma foreclosure rescue

Suit Alleges KB Home, Countrywide Conspiracy With Appraisers To Inflate Home Prices, Class Action Status Sought

In Los Angeles, California, The Associated Press reports:
  • Two California couples are suing KB Home (KB) and mortgage lender Countrywide Financial Corp., claiming the companies schemed with real estate appraisers to inflate prices paid for homes as the housing market began to tank. [...] The plaintiffs, Deborah and Lonnie Bolden, and David and Dolores Contreras, all residents of Live Oak, are seeking unspecified restitution as well as compensatory and punitive damages. They also want class-action status to cover KB Home customers in California who obtained financing through Countrywide and closed on their purchases between Aug. 1, 2005, and July 31, 2006. In the lawsuit, the couples claim prospective home buyers were presented with false or misleading data on previously sold homes in order to justify higher asking prices on new purchases.

For more, see Lawsuit claims KB Home, Countrywide inflated home prices.

See also, San Francisco Chronicle: A Court Case That Could Be A Sign of the Times (3-21-08).

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

Federal Appeals Court Reverses Denial Of Class Action Status In Realty "Junk" Closing Fee Suit

Syndicated real estate columnist Kenneth Harney recently wrote:
  • Just about anybody who bought a home or took out a mortgage in the past five years has run into them in some form: mysterious fees from realty brokers, lenders, builders and title agents — "admin", "processing," "doc-prep" and "regulatory compliance" among some of the opaque names — that lumped $200 to $500 extra onto the consumer's bottom line at settlement. [...] Now a federal appellate court has weighed in with a decision involving a realty firm's $149 mandatory add-on fee, and a home buyer who filed suit to challenge it. The 11th U.S. Circuit Court of Appeals reversed a lower court's denial of class-action standing in the suit by Vicki B. Busby of Jefferson, Ala. The class action is intended to cover all consumers forced to pay what the brokerage firm termed its "ABC" fee -- an administrative brokerage commission.

  • Busby filed suit against RealtySouth, a large Birmingham-based broker, charging that in addition to paying a substantial commission to the firm and its sales agent, she was nonetheless required to pay the ABC fee. Busby said there was no evidence that the firm had actually performed any extra services -- above and beyond the brokerage services compensated by the commissions -- and therefore the ABC fee violated federal law. The appeals court ruled that the lower court had erred in not considering the factual issue -- was any specific work done to justify the extra charge? -- in making its decision to deny Busby's request for class-action certification.


  • In an interview, [Washington, D.C. attorney Phillip L.] Schulman said the court's ruling is not the final word on the matter, but it "underscores the importance of performing actual services in exchange for" fees charged in connection with real estate and mortgage transactions. In other words, a brokerage firm cannot simply dream up new fees and force them upon their unwitting clients. Many brokers have imposed extra charges because their sales agents demanded higher splits of the listing and selling commission dollars.

For more, see Brokerage fee lawsuit is revived.

To view the Federal appeals court decision, see Busby v. JRHBW Realty, Inc. (doing business as Realty South) - decided 1-17-2008.

See also, Transaction Fee Scrutiny Creates Uncertainty.

Maryland Lawmakers Move To Cap Legal Fees, Increase Debt Threshold In Tax Sales

In Maryland, The Baltimore Sun reports:
  • In an effort to spare some homeowners the loss of their properties in municipal tax sales, lawmakers are proposing several reform measures. State Sen. George W. Della Jr. has introduced legislation to cap legal fees at the end of the court process and to improve notification. The Baltimore Democrat says he hopes to cut expenses and save homes.


  • The proposed law would cap attorney fees at $500 until a suit to foreclose the right of redemption is filed. Then "reasonable attorney fees" may be sought, not to exceed $1,000. State Sen. Richard Madaleno [...] has proposed a bill to raise the debt threshold for properties sent to tax sale from $100 to $500. [...] Del. Maggie L. McIntosh [...] said that she expects to take up legislation to lengthen the amount of time before a foreclosure results from a tax sale once notice is given, and possibly on changes to the way the city bills its residents. "We want to make sure that the city does everything it can to avert a resident from losing a home due to a water bill," McIntosh said.


  • Baltimore lawyer Jay A. Dackman, who has been among the city's active lawyers in tax-sale cases, said he would welcome greater control of fees. "The law the way it's currently drafted is too open-ended," he said. "It creates abuse in terms of excessive fees being charged by attorneys."

A recent Baltimore Sun investigation showed that at least 400 homes were lost in a recent three-year period by Baltimore homeowners for debts other than property taxes, and that half were for unpaid municipal charges of $500 or less, many of which included unpaid city water bills.

For more, see Lawmakers propose reforms to state tax-sale regulations (Bills would cap attorney fees, raise debt threshold for action). bidding

Unpaid Water Bills Lead New Haven's WPCA To Go On Home Foreclosure Rampage

In New Haven, Connecticut, the New Haven Independent reports:
  • The WPCA continues its foreclosure tear in New Haven. The mayor remains silent. The agency — the quasi-governmental Water Pollution Control Authority — filed eight new lawsuits in State Superior Court on Jan. 14 and 15 to snatch New Haven properties for unpaid bills as low as $1,235. That brings to over 130 the minimum number of New Haven homes the WPCA has filed suit to foreclose on since New Haven relinquished control of the agency in mid-2005 and it became a suburban-controlled independent entity.

For more, see 2 Days, 8 Foreclosure Suits.

For an earlier New Haven Independent article on this story, see WPCA Goes On Foreclosure Binge.

Tuesday, February 12, 2008

Credit, Housing Crisis Now "Sucking In All Borrowers"

The New York Times reports:
  • The credit crisis is no longer just a subprime mortgage problem. As home prices fall and banks tighten lending standards, people with good, or prime, credit histories are falling behind on their payments for home loans, auto loans and credit cards at a quickening pace, according to industry data and economists. The rise in prime delinquencies, while less severe than the one in the subprime market, nonetheless poses a threat to the battered housing market and weakening economy, which some specialists say is in a recession or headed for one. Until recently, people with good credit, who tend to pay their bills on time and manage their finances well, were viewed as a bulwark against the economic strains posed by rising defaults among borrowers with blemished, or subprime, credit. “This collapse in housing value is sucking in all borrowers,” said Mark Zandi, chief economist at Moody’s

For more, see Mortgage Crisis Spreads Past Subprime Loans.

Wachovia Profited By Knowingly Providing Banking Services To Alleged Telemarketing Fraudsters, Says Report

The New York Times reported last week:
  • Last spring, Wachovia bank was accused in a lawsuit of allowing fraudulent telemarketers to use the bank’s accounts to steal millions of dollars from unsuspecting victims. When asked about the suit, bank executives said they had been unaware of the thefts. But newly released documents from that lawsuit now show that Wachovia had long known about allegations of fraud and that the bank, in fact, solicited business from companies it knew had been accused of telemarketing crimes. Internal Wachovia e-mail, for example, show that high-ranking employees at the nation’s fourth-largest bank frequently warned colleagues about telemarketing frauds routed through its accounts. Documents also show that Wachovia was alerted by other banks and federal agencies about ongoing deceptions, but that it continued to provide banking services to multiple companies that helped steal as much as $400 million from unsuspecting victims.

For more, see Papers Show Wachovia Knew of Thefts.

Mortgage Servicing Companies Reluctant To Work Out Loans With Financially Distressed Homeowners

ABC World News Tonight ran a story last Friday regarding the reluctance of mortgage loan servicing companies to work out home loans for homeowners in financial trouble.

The reason: According to the ABC story, mortgage loan servicers are not set up as a customer service business. The personnel is both overwhelmed with the number of cases of homeowners in financial trouble and they are under-trained for working out the loans. The servicing companies also have no financial incentive to work out the loans. In fact, the loan servicing business actually becomes more profitable for the companies when home loans go into default, allowing them to clip homeowners in trouble with late fees and other default-related charges. In addition, the mortgages are turned into securities bought by investors around the world who do not negotiate with individual homeowners.

For more, watch Demystifying the Mortgage Mess.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics xero

Fight With Mortgage Servicer Complicated The Rough Times For Central Florida S&L

In Central Florida, the Orlando Sentinel reports:
  • It's not a stretch to say that these have been the worst of times for Federal Trust Bank. The Sanford-based savings and loan -- and the only publicly traded financial institution headquartered in Metro Orlando -- is grappling with a litany of troubles triggered by the housing and mortgage crisis. Of course, it is not alone. From Citigroup to SunTrust, most major financial institutions have fallen prey to the peculiar boom-and-bust losses of the subprime mortgage meltdown and its resulting investment fallout. But it is still rare for a community bank or thrift to take the kind of hits Federal Trust has taken.


  • Complicating matters last year, Federal Trust became ensnared in a messy lawsuit against its loan servicer Transland Financial Services Inc., which allegedly misappropriated more than $2 million in loan payments. Federal Trust was one of a trio of creditor banks that sued Maitland-based Transland last summer in an attempt to force it into bankruptcy and recover about $22 million in unpaid mortgage proceeds. The creditors later settled on a repayment plan with Transland.

From: Federal Trust is looking for turnaround.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics xero

Two Vero Beach New Home Developments In Foreclosure; Leave Lenders, Subs, Homebuyers In The Lurch

In Vero Beach, Florida, TC Palm reports:
  • A 106-home development started during the real estate boom has landed in court, leaving homebuyers and subcontractors out of tens of thousands of dollars. Seacoast National Bank has sued to foreclose on Eagle Trace, a 40-acre subdivision [...] . The lender also is suing developer Mizner Grande of Vero Beach and related companies, and their principals, Richard F. Rendina of Palm Beach Gardens and Stephen Siegel of Boca Raton. Seacoast charges that Mizner Grande failed to repay loans and credit lines totaling $27 million and file timely financial statements and tax returns. The suit, filed late last month, also alleges Mizner failed to resolve $1.2 million in property liens, most filed by subcontractors seeking payment. The bank asked the court to appoint a receiver to manage the property.


  • Mizner Grande has sold 43 of the 57 homes in the first phase of the project nearest 58th Avenue. Several are now built and occupied. Mizner has started only 19 of the 49 homes in the second phase and has sold none, Rendina said.


  • Separately, Rendina and Siegel and their company, San Messina 23 Realty LLC, face foreclosure on a 22-home project, the Enclave, just north of Eagle Trace on 65th Street. Colonial Bank contends in a separate suit filed in August of last year that the developers defaulted on an $8.2 million loan. No homes in that one-street project are finished. Several homebuyers in Eagle Trace have sued Mizner Grande, attempting to recover their deposits. At least three homebuyers have filed complaints against Mizner Grande with the state Attorney General's Office, claiming Mizner refuses to return their money.

For more, see 40-acre new home project in jeopardy in Vero Beach.

For story update, see Lawsuit alleges bank breached its duty, made false promises in Indian River County.

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

Pennsylvania Homeowner, Deutsche Bank Settle Foreclosure Action

In Pennsylvania, the Erie News-Times reports:
  • Erie resident Eloise Woodsbey, a disabled single mother of three, claimed she was the victim of mortgage fraud, and she sued an international financial giant to try to save her East Ninth Street house from foreclosure. The giant has blinked. Woodsbey and the German-based Deutsche Bank have reached a tentative deal that is expected to prevent the bank from foreclosing on Woodsbey's property, where she still lives. In return, Woodsbey's lawyer is expected to drop an appeal that had the potential to tie up Deutsche Bank in federal court for years as the two sides debated issues that are central to the nation's subprime mortgage crisis. Woodsbey's suit also coincided with the FBI's investigation of allegations of widespread mortgage fraud in the city of Erie -- a probe that has resulted in charges against two Erie developers.


  • Based on prior court filings, [...], Woodsbey's lawyer, Margaret Schuetz, of the nonprofit Community Justice Project in Pittsburgh, had sued Deutsche Bank and others to try to save Woodsbey's house from foreclosure and to make sure she got money to make repairs. [...] The FBI has included Woodsbey's house on a list of 197 properties under review in its local mortgage-fraud probe.

For more, see Fraud suit nears end (Tentative deal with Deutsche Bank likely to stop foreclosure against eastside woman).

Go here for other posts related to the Erie, Pa. FBI mortgage fraud investigation. Robert Dodsworth Pennsylvania

Southern California Foreclosure Consultant At It Again

In Southern California, Fox11 TV reported last week:
  • Foreclosures are sky rocketing in Southern California and as more people lose everything, unscrupulous consultants are taking advantage of the situation. Fox 11's Gina Silva has the story of [local foreclosure consultant Raul Altimarano,] who's accused of destroying the lives of several families.

For more, see Fox 11 Investigates: Investment Scam.

Raul Altimarano was also featured on this 11-26-2007 KCBS-TV Channel 2 video report, in which he was caught on camera offering foreclosure rescue services.

Florida's "Fresh Start" Foreclosure Rescue Operator Targeted By North Carolina AG

In Raleigh, North Carolina, WWAY-TV Channel 3 reports:
  • A consumer alert tonight for homeowners heading toward foreclosure. The state Attorney General's office has a warning. The warning comes after a company in Florida offered foreclosure assistance to some North Carolina residents, but did little or nothing to help them. Melvin Powell of Ogden is one of five people in North Carolina who lost money to a company called Fresh Start. Powell has lived in his home for seven years. He says last March he was close to foreclosure when he got a flyer came in the mail from a company offering help. Powell signed up for the program and paid $1,200, then never heard from Fresh Start again.


  • [Last week], a judge in Wake County ordered Fresh Start to stop offering foreclosure assistance to homeowners in our state. He also ordered the company to turn over its records on all North Carolina customers. State Attorney General Roy Cooper is also trying to help people like Powell get their money back. He's asked the judge in the case to order fresh start to either pay back their customers, or make sure the money they paid goes toward their mortgage.

For more, see Attorney General warns of foreclosure scam.

Saee also North Carolina AG's news release: Cooper stops foreclosure rip off (Fresh Start promised homeowners it could stop foreclosure but failed to deliver).

Go here for other posts on Florida-based Mortgage Assistance Solutions and their "Fresh Start" program.

Monday, February 11, 2008

Mortgage Loan Servicer Faces Class Action; Accused Of Clipping Homeowners With Dubious Fees

In Minneapolis, Minnesota, the Pioneer Press reports:
  • A group of homeowners is suing Homecomings Financial, a Bloomington-based loan servicer handling nearly 800,000 mortgages, accusing it of charging dubious fees as it processes homeowners' monthly payments. The lawsuit, filed Thursday in U.S. District Court in Minneapolis, is the latest in a slew of legal actions around the country against mortgage lenders and the servicers who process payments for them since the crash of the subprime mortgage industry. Attorneys are seeking national class status. The plaintiffs are five homeowners in Michigan, Illinois, California, Kentucky and Florida. They allege that Homecomings uses deceptive fees to deliberately put borrowers into default in order to maximize profits. The charges violate state and federal laws, they charge, including the Fair Debt Collection Practices Act and the Truth in Lending Act. [...] Their attorney, Doug Micko at Sprenger & Lange in Minneapolis, said he doesn't yet know how large the class might be or how many borrowers might be in Minnesota.


  • The company last month lost a somewhat similar lawsuit in Missouri over fees. A jury awarded homeowners $99 million in punitive damages - $92 million from Homecomings. The company said it planned to appeal. Homecomings is part of Residential Capital Corp., also in Bloomington and the mortgage arm of GMAC Financial Services in Detroit.

For more, see Loan servicer Homecomings sued over fees (Firm services 800K mortgages).

See also, Class Action Lawsuit Filed Against Homecomings.

To view lawsuit, see Motley, et al v. Homecomings Financial, LLC.

Co-counsel for plaintiffs in this lawsuit is Mehri & Skalet, PLLC, in Washington, D.C.

For more information on this class action, see the Homecomings Financial Class Action website.

For the attorneys' press release about this case, see Homeowners Allege Illegal Business Practices in Servicing Home-Secured Loans.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics xero

Foreclosed Ohio Homeowner Files Class Action Against Deutsche Bank; Suit Based On "Lack Of Legal Standing"

In Cleveland, Ohio, WKYC-TV Channel 3 reports:

  • The Cleveland law firm of Novak, Robenalt, and Pavlik has filed a class action lawsuit on behalf of local homeowners who lost their homes to foreclosure by Deutsche Bank. "Most of the homeowners had never even heard of Deutsche Bank," said attorney Thomas Robenalt. "There was a rush to file, to sell these mortgages because they were selling them at a profit." Two Cleveland federal judges have dismissed all pending Deutsche Bank foreclosures, and Robenalt's firm has filed a class-action lawsuit. The suit contends the bank began foreclosure action before it had legal standing to do so. Robenalt believes homeowners foreclosed upon by Deutsche Bank may be entitled to recovery of substantial [fees] and damages, and in some cases, where the bank re-purchased the homes at sheriff's sales, could actually recover their homes. "That is the potential upside of this," he said.

  • The law firm, which is also working with the firm of Cohen, Rosenthal, and Kramer, would be interested in hearing from those whose homes have been foreclosed by Deutsche Bank.

Source: Foreclosed homeowners could get their houses back.

For more extensive report, watch the WKYC-TV Channel 3 video, which also reports that Wells Fargo, which has reportedly foreclosed on almost 5,000 Cleveland-area homeowners, may be the next class action target.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha

Ohio AG Turned Away Again In Foreclosure Action "Real Party In Interest" Claim

In Hamilton County, Ohio The Cincinnati Enquirer reports:
  • Ohio Attorney General Marc Dann has lost a second attempt to dismiss a foreclosure lawsuit in Hamilton County, with a Common Pleas Court magistrate ruling that a lender doesn't have to prove it owns the mortgage when it first seeks to take back the property. The decision Thursday in Residential Funding v. Anthony Muhammad, involving a vacant West End rental property, followed similar lines of reasoning as a ruling earlier in the week. Magistrate Michael L. Bachman said that because the state has an interest in the property - a lien for unpaid state income taxes for $1,264 - the attorney general has a conflict of interest. The attorney general's office said it would dispute the rulings to a common pleas judge.

Source: State's attempt to stop foreclosure rejected.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha

Idaho Lawmakers Introduce Bill To Regulate Foreclosure Rescue Transactions

In Boise, Idaho, KBCI-TV Channel 2 reports:
  • The Senate Commerce and Human Resources Committee printed a bill Friday that will increase protections for citizens going through foreclosure. The bill was introduced by Boise lawmakers Sen. Elliot Werk, Rep. Bill Killen, and Rep. Phylis King. The bill addresses the exponential increase in foreclosures statewide and the increased risk that Idahoans will be victimized by bail-out scams. The legislation will require contact information for assistance and a warning about scams when foreclosure notices are served, written contracts from foreclosure rescue service providers, and the ability to opt out of a foreclosure rescue contract within 5 days of signing.

For more, see Idaho lawmakers tackle foreclosure rescue scams.

To view the proposed law, see Idaho Senate Bill 1392.

Alleged Oregon "Rent-To-Own" Scam Artist Flees To Mexico, Leaving Tenants, Straw Buyers Holding The Bag

In Portland, Oregon, KATU-TV Channel 2 reports on alleged "Rent-To-Own" scam artist Jeremy Richardson, 31, of Mount Hood, who reportedly marketed a "Lease to Purchase Option" program which matched up straw buyers who purchased and leased homes and unqualified prospective homebuyers to lease the homes from the straw buyers with a purported right to buy the homes in the future. According to the story, Richardson allegedly collected and pocketed upfont money from the tenant buyers, and also pocketed rents from the tenants without applying the funds to the straw buyers' mortgages as agreed. An excerpt from the story:

  • At least 10 investors quickly bought multiple properties under Richardson's direction. Some purchased three, four, five or even nine homes within a very short period of time. Now they believe it was part of a scheme that would prevent lenders from electronically tracking how many properties each investor really owned or was in the process of purchasing.
Former employees and investigators have reportedly told KATU-TV Channel 2 that there are victims in at least 15 states stretching from Alaska to the East coast.

For more, see Just how shady was Jeremy Richardson?

Go here to watch the more extensive KATU-TV Channel 2 video report.

For complaints against Jeremy Richardson on the Ripoff Report, go here , and go here.

Chicago Feds Indict 25 In Alleged Mortgage Fraud Involving 150+ Properties, Potential Losses Of $25M+

In Chicago, Illinois, WMAQ-TV Channel 5 reports:
  • Twenty-five people have been charged in one of the biggest mortgage fraud schemes ever prosecuted in the area, the FBI announced Friday. The suspects charged were named in three separate indictments returned Thursday by a federal grand jury in Chicago, according to an FBI release. The charges include mail fraud, wire fraud, money laundering and conspiracy, all of which are felonies. The investigation, dubbed "Operation Marvelous" was initiated in 2004 as a joint effort between the FBI's Safe Streets Gang Task Force and the Postal Inspection Service's Mail Fraud Team after the arrest of 47 known and suspected members of a Chicago-based street gang, according to the release.

  • The three indictments allege that more than 150 properties, half of which are in foreclosure, were involved in fraudulent transactions, with potentials losses from fraudulent mortgages in excess of $25 million.

For more, see FBI: Dozens Indicted In Mortgage Fraud Scheme ('Operation Marvelous' Brings Fraud, Conspiracy Charges).

NYC Realty Agent, Loan Officer Facing Charges Of Swiping, Using Former Client's I.D. To Obtain $589K Mortgage

From the office of the Queens District Attorney:
  • Queens District Attorney Richard A. Brown [last week] announced that two Queens women, a realtor and a loan officer, have been charged with stealing the personal identity of a former client to purchase a Brooklyn property. It is alleged that they initially tried to get her to participate in the scheme, then used her identity after she refused. [...] District Attorney Brown identified the defendants as Elba A. Garcia, 50, of [...] Elmhurst, and Yanet Salazar a.k.a. Janet Salazar, 35, of [...] Queens Village.

  • The District Attorney said that the investigation began in August 2007 when Queens resident Aurora Solano received notice in the mail indicating that a mortgage for $589,000 had been issued in her name and that a monthly payment of over $5,000 was due on September 1, 2007. Solano, who did not apply for a mortgage or authorize anyone to use her personal identification, reported the incident to the police. District Attorney Brown said that, according to the charges, Solano provided her personal identification information to defendants Garcia and Salazar, a realtor and loan officer, respectively, in early 2007 for a loan application for a property in Queens. The deal subsequently fell through and the sale did not go forward.


  • Both women are charged with first-degree identity theft and third-degree unlawful possession of personal identific ation information. If convicted, each defendant faces up to seven years in prison.

For more, see the Queens DA press release: Realtor And Loan Officer Charged In Identity Theft Scheme (Allegedly Stole Identity of Former Client To Purchase $589,000 Property). identity theft