Saturday, March 01, 2008

Water Shut-Offs Hurting Oakland-Area Tenants In Foreclosed Homes; Rent-Skimming Landlords Stiffing Local Utility District

In Oakland, California, the Contra Costa Times reports:
  • With five kids at home, including an infant, Kimberly Isaac-Ray knows her family cannot go without water. But when her landlord went into foreclosure, and a bank took over the duplex where she lives, Isaac-Ray found herself without utilities. She was able to convince the East Bay Municipal Utility District to restore her water service after one day.

  • Ida Hancox and her family weren't as lucky. They went three days without water in their foreclosed-upon apartment. Their foreclosed landlord had disappeared, and the bank stopped paying the utilities. "Tenants should not suffer because of someone else's mistake," Hancox told the board of directors this week.

  • Directors agreed and set a moratorium on water utility shutoffs in any situation where a tenant is left in a foreclosed building. The moratorium will continue through March 11, when the directors plan to consider policy changes to deal with foreclosures and utility shutoffs, including changes suggested by Just Cause Oakland, a tenant group.

For more, see Group argues for tenant rights in case of landlord foreclosure (East Bay residents say their utilities were turned off because their landlords missed mortgage payments).

For story update, see Panel considers ban on water shut-off to tenants in foreclosed buildings. (3-7-2008)

For posts involving rent / equity skimming landlords who pocket rent and allow homes to go into foreclosure, go here, go here, go here, go here, and go here. equity skimming unwittingly epsilon

Builder Price Reduction Upsets Recent Homebuyers; Hurts Resale, Refinance Propsects

In Nashville, Tennessee, WKRN-TV Channel 2 reports:
  • Neighbors in one Brentwood community are furious after their home builder lowered his prices on new homes by as much as $80,000. “We want them to sell what they said they’d sell and if they’re going to do this, we’re going to prohibit their sales,” said Rob Kusserow, who purchased a home in The Hills at Concord Place in Brentwood, a property developed by Centex Homes, one of the nation's largest builders. [...] “[It] kills resale. If you're a person who wants to refinance a mortgage you wouldn't be appraised at the level you owe” [said one homeowner].

For more, see Home Builder Lowers Prices, Neighbors Angry.

Overseas Internet Scammers Running Rental Hoaxes Hit Alaska; Bogus Ads Showing Up On Craigslist

In Alaska, the Anchorage Daily News reports:
  • Overseas Internet scammers are including Anchorage residents among their targets in the latest scheme to hit online sites featuring classified ads, according to Anchorage police. The scam, which involves residential rental ads being listed by someone other than the property owner, has been making its way around the country for some time, but has just recently been reported here with at least three homes being fraudulently listed on Craigslist, said Detective Sgt. Ron Tidler, supervisor of the Anchorage police computer crimes unit. "I haven't come across anybody that has actually been duped by it, but sometimes people can be too embarrassed to report it," he said.

For more, see Rental hoax arrives from abroad (Internet Ads: Scammers pose as Anchorage property owners, police say).

Go here for other posts on tenant victims of rent hoaxes. unwitting tenant rent scam zebra

Two Ohio Alligators 'Evicted' From Alleged Drug House Now Homeless, Seek New Home

In Montgomery County, Ohio, WHIO-TV Channel 7 reports:
  • Animal authorities are still looking for a new home for two exotic pets seized from an alleged drug house Monday. Workers at Montgomery County's Animal Resource Center are currently caring for the alligators. The animals were discovered by U.S. marshals who were looking for a man on a probation violation. Officials said they are looking for a suitable animal rescue agency to take the animals. Alligators are illegal in Dayton.

Source: Alligators Still Need New Home.

See also WHIO Radio 1290 AM: Alligators Need a Home.

Georgia Cop Cops Plea To $80K "Drug Money" Embezzlement; Needed Extra Cash For Personal Expenses, House Payments, Avoiding Foreclosure

In Georgia, the Rome News Tribune reports:
  • Former Bartow County Sheriff’s Office Captain Brenton James Garmon pleaded guilty in federal court [Wednesday] of embezzling about $80,500 from the department between 2004 and 2007. Prosecutors say Garmon used the money, which had been seized during drug investigations, to pay personal bills. At one point, they say, Garmon used some of the money to help him avoid foreclosure on his private residence.

For more, see Former Bartow officer pleads guilty to stealing $80,000.

Friday, February 29, 2008

Baltimore Non-Profit Waging Battle Against Foreclosures, Mortgage Rescue Scams

The Baltimore Sun reports:
  • The attorneys in the modest office on Fayette Street are continually busy, never mind that clients find them only by word-of-mouth. They've got a service that few offer but many want: legal help for homeowners in foreclosure. [...] A foreclosure case for the borrower, [...] can look like a recipe for unbillable hours [for the homeowner's attorney] with dim hope of success. Little money from the cash-strapped clients. Little time allowed by the state's foreclosure law to prepare a case before auction. Little chance of winning.

  • Civil Justice is trying to change that. It's suggesting changes in state law. It's advising private-practice attorneys who want to help homeowners. And it's litigating wrongful-foreclosure cases it thinks could in one fell swoop save homeowners' investments, pave the way for lawsuits and show attorneys how foreclosure cases can be won - profitably.


  • Anticipating a flood of new pleas for help, Civil Justice wants to get more attorneys trained to take cases. It's organizing classes across the state. That's the way Civil Justice can make a bigger impact, [executive director Phillip R.] Robinson says, because it can never handle the cases of all the desperate homeowners who come calling. "We're pretty maxed out," he said.

For more, see Waging the fight for homeowners (Tiny nonprofit challenges foreclosures).

Go here for earlier posts on Civil Justice.

Mortgage Lenders Concerned By Nearing Federal Appeals Court Decision On Homeowner Class Actions In "Truth In Lending" Cases

(original post 2-28-08)
The Washington Post reports:
  • A federal appeals court is nearing a decision on a battle between Chevy Chase Bank and a Wisconsin couple that could for the first time enable homeowners across the country to band together in class-action lawsuits against mortgage firms and get their loans canceled. The case is alarming Wall Street's biggest banks, which could bear the hefty cost of reimbursing all mortgage interest, closing costs and broker fees to groups of homeowners who uncover even minor mistakes in their loan documents.


  • [B]y allowing plaintiffs to file class-action suits, the ruling would make it much easier and more affordable for groups of homeowners to get that relief, several lawyers and mortgage analysts said. Dozens of class-action homeowner lawsuits have been filed in California and elsewhere against the nation's largest banks. The success of these claims could turn on the decision in the Chevy Chase case.


  • The law states that even a minuscule violation by a lender can lead to a mortgage cancellation, or rescission. For example, if the annual percentage rate calculation is off by one-eighth of a percent between preliminary and final loan documents or if a monthly payment schedule does not conform precisely to federal guidelines, some borrowers could get a refund for all they have paid to live in their homes for years. They would have to pay back the entire amount of the loan, but they could then seek a new mortgage on better terms.

  • According to the inspector general for the Federal Deposit Insurance Corp., 83 percent of federally supervised banks that issued loans at the height of the housing boom in 2005 have been cited for "significant compliance violations." Lending abuses were more frequent among the tens of thousands of state-regulated banks and thrifts, such as the now-bankrupt New Century Financial, industry analysts said.

  • But few homeowners have been successful in getting their loans canceled. Most people are unaware they have this right, consumer advocates said. Others have found the process too arduous and expensive, often requiring long legal battles. Chevy Chase said it negotiated two mortgage cancellations all of last year. That could change if the U.S. Court of Appeals for the 7th Circuit rules in favor of allowing homeowners to join class-action suits. Plaintiff attorneys also would have far greater financial incentive to take up such cases.

  • "It's preposterous to think an individual can fight the bank on a loan," said [attorney Kevin] Demet, the lawyer for the Wisconsin plaintiffs. "And any attorney who's worth his salt does not want to pursue individual action. You could spend $50,000 to $70,000 on a case where you are going up against huge law firms that want to delay and hassle you for several years."

For more, see Door Could Open To Class Actions (When Borrowers Fight Back: Banks watch closely to see if a couple's legal struggle with their lender will launch a new front in the battle over troubled mortgages).

For stories on the Chevy Chase, option ARM class action lawsuit, see:

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, and Go Here. undo mortgage loans TILA alpha

Two L.I. Women Charged With Pocketing $800K In Refinance, Forgery Scam, Says DA; 93 Year Old Alzheimer's Victim Now Faces Foreclosure

In New York City, the North Country Gazette reports:

  • Two Long Island women, one of whom has since relocated to Pennsylvania, have been charged under New York State’s Hate Crime Law with stealing a total of $800,000 from a 93-year-old Queens man suffering from Alzheimer’s disease by fraudulently refinancing a property that he owned in Bayside to steal its equity and by using a “straw buyer” to steal his primary residence in Jamaica, Queens, out from under him. One of the women is also charged with stealing the elderly man’s identity to apply for credit cards in his name.

The suspects, Alexandra Gilmore, 36, formerly of Massapequa, Long Island and presently of 1550 Clark St., Pittsburgh, Pa., and Rebecca Tharpe, 30, of Brentwood, Long Island are variously charged with multiple counts of:

  1. second-degree grand larceny as a hate crime,
  2. second-degree grand larceny,
  3. second-degree criminal possession of stolen property,
  4. second-degree criminal possession of a forged instrument,
  5. first-degree falsifying business records, and
  6. first-degree and second-degree identity theft.

The prosecution is being handled by the Queens District Attorney's Office. For the details of the alleged scam, see:

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

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

Crowded Jails Keep Two Convicted Foreclosure Rescue Scam Artists From Doing Hard Time

In Stanislaus County, California, The Modesto Bee reports on the story of Lonni Ashlock and Ronald Buhler, two men who last year pleaded no contest to six felony counts of ripping off troubled and vulnerable homeowners.
  • Sentenced in September to a year in the county jail, these con artists have spent no time behind bars. They haven't had to eat jail food or even pick up trash as part of a work crew. To the contrary, they live at home and wear electronic monitoring ankle bracelets. The devices don't track their whereabouts -- only whether they are at home. They're supposed to leave only to go to work during a specified window of time, Stanislaus County Sheriff's deputy Royjindar Singh said.

  • That stated, Ashlock and Buhler have been spotted in restaurants and movie theaters around town -- wearing their ankle bracelets, of course. That isn't part of the program, Singh said. "They're definitely not allowed to be going to restaurants for dinner, and to movies," he said. It's an honor system, Sheriff Adam Christianson said, and some of them aren't particularly honorable, or they wouldn't be in trouble in the first place. "These are two guys, in my opinion, who deserve to be in custody," the sheriff said. "We don't have the jail space. I'm as upset as anyone about this."


  • Ashlock and Buhler preyed on people about to lose their homes to foreclosure, in some cases praying with them to get them to sign over their deeds for pennies on the dollar. [...] They scammed an 86-year-old woman with dementia, a 66-year-old schizophrenic, a woman with brain lesions and several other disabled people, according to court documents and testimony.


  • They agreed last fall to do a year in jail for the six felony counts rather than face 50 counts and state prison time, if convicted. It already was a light sentence, considering that Bee reporter Garth Stapley found they had acquired at least 142 properties following a similar pattern. Ashlock and Buhler agreed to pay restitution to 19 and 20 families, respectively, and they've been going to court to watch their attorneys hash out how much they'll pay.

For more, see Scam artists avoid jail time, enjoy 'custody'.

Go here for earlier posts on Ashlock & Buhler.

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

Maryland Lawmakers Consider Slamming Brakes On Baltimore's "Water Bill" Foreclosures

In Maryland, The Baltimore Sun reports:
  • State lawmakers are considering a moratorium on foreclosures stemming from unpaid water bills, a move that faces stiff opposition from Baltimore City officials who say that many property owners would not pay without the threat of losing their homes. Sen. James Brochin called Baltimore's tax-sale system under which homeowners face foreclosure over unpaid water and sewer bills "absolutely obscene." He said the city should rely on other means of leaning on residents who don't pay their bills, such as shutting off service or assessing late charges and liens that must be paid when a property is sold or refinanced.


  • Increased scrutiny of tax-sale cases began after an investigation by The Sun last year showed that homeowners who owe just a few hundred dollars in municipal debts - including Baltimore City water bills - often are hit with thousands of dollars in fees from private debt collectors and can lose their homes if they don't pay. At least 400 city homes were lost over debts other than property taxes over a recent three-year period, an analysis of city tax records and court filings by The Sun found. Most stemmed from unpaid water and sewer bills, though some also included alley re-paving charges, sidewalk repairs and even fees to register rental property.

For more, see Lawmakers ponder halting foreclosures over water bills (Senator Brochin says Baltimore's system is 'absolutely obscene'). bidding

SEC Files Suit Against 3 In Alleged Scam That Sucked $11M From 75 Investors; Left Lenders With $120M In Bad Loans, 100+ Foreclosed Homes

In Murrieta, California, the North County Times reports:
  • A federal agency alleged Wednesday that three Murrieta-area men sucked $11 million from 75 amateur investors they recruited through networks of church friends and military comrades and then left a trail of more than 100 foreclosed houses in their wake. The complaint, filed in U.S. District Court in Riverside by the U.S. Securities and Exchange Commission, seeks a federal court order barring James Duncan, Hendrix Montecastro and Maurice McLeod from continuing to offer the sort of investments that it alleges to be fraud.


  • The securities commission Wednesday also demanded in the complaint that the three men repay an unspecified sum to their investors and potentially to lenders, who were left holding $120 million in bad mortgages. Some of Murrieta's most upscale neighborhoods, including Bear Creek, Copper Canyon and Greer Ranch, are dotted with foreclosed homes that the three men and their clients bought and later abandoned.

For more, see Feds take action against real estate group.

See also The Press Enterprise: SEC sues Pacific Wealth Management; investors welcome action against Murrieta group.

For SEC news release, see SEC Charges Three Promoters for Victimizing Military Families in Real Estate Investment Scheme.

Colorado AG Files Consumer Fraud Suit Against So-Called "Legal Aid" Firm

In Denver, Colorado, the state Attorney General's Office announced last month:
  • Colorado Attorney General John W. Suthers [...] announced that his office filed a consumer fraud lawsuit on January 29, 2008, against Legal Aid National Services, Inc., commonly known as The LANS Corp. Also named in the lawsuit are LANS founder and president Kendrick E. White [...], White’s wife Jasmine Ewing [...], and White’s half-brother Derrich E. Brown [...], both of whom assisted with the company. [...] Although the defendants claimed that trained professionals would provide legal services, the complaint alleges that consumers were charged for legal advice by staff with little or no legal training.

Among the Colorado AG's allegations:

  • [T]he defendants purposely used business names that incorporated terms such as “legal aid” in order to confuse consumers looking for free or low-cost legal services. According to the complaint, consumers who called directory assistance and requested “legal aid” were frequently provided the phone number for LANS. Throughout the country, the defendants purchased local phone numbers so that consumers believed they were dealing with a local entity when, in fact, their call was routed to the defendants’ Colorado offices. The complaint alleges that LANS’ sales representatives were trained to answer the phones with the words “legal aid” to further confuse consumers.

For more, see Attorney General Suthers Files Consumer Protection Suit Against Legal Aid Company.

Go here for Ripoff Report on Legal Aid National Services.

Colorado AG Targeting Mortgage Brokers; Files Suit Against Firm Alleging Deception In "Teaser Rate" Ads

In Colorado, CBS4-TV reports:
  • The Colorado Attorney General's Office is cracking down on mortgage fraud. The target: ads from mortgage brokers. The ads have been appearing in newspapers. The attorney general's office is investigating 13 companies. One investigation involves a mortgage broker in Arapahoe County that the attorney general claims deceived, misled and financially injured Colorado consumers. The case involves people seeking new mortgages and those who were re-financing at a lower rate. They saw ads in Denver newspapers and the rates were appealing -- promising fixed rate mortgages. One ad stated, "We ask that you refrain from kissing our loan officers."

  • Attorney General John Suthers said such ads are often not what they seem. "If you look at them, you would be led to believe you could get a fixed rate loan at some extremely low rate," Suthers said. His lawsuit claims the advertised rates were not fixed, but rather teaser rates that would re-adjust in one to three months. The company being sued is Wholesale Mortgage Lending in Centennial. It also goes by Jupiter Lending and numerous other names.

For more, see Attorney General Cracks Down On Mortgage Fraud.

Feds Seek Home Forfeiture From Alleged Scam Artist; Two Victims Say They Refinanced Their Homes To Invest In Phony Fund

In Sacramento, California, The Sacramento Bee reports:
  • Federal prosecutors are preparing to take a Folsom man's million-dollar home away from him because, they say, he bought the home with part of at least $7 million stolen from victims of his investment fraud. In 18 months in 2006 and 2007, according to a civil forfeiture complaint filed by the prosecutors against the home, Stefan Andre Wilson collected more than $9 million from 45 investors and paid investors $2 million in purported "capital appreciation." The bulk of the balance - $5.1 million - was lost by Wilson day trading in the stock market, the complaint alleges.


  • At least two victims interviewed by IRS agents said they refinanced their homes to make large investments in Christians in Crisis or CIC Investment Fund, the vehicle through which Wilson employed his scheme.

For more, see Folsom man's home to be seized over alleged investment fraud.

Thursday, February 28, 2008

Oregon Foreclosure Rescue Operator Facing Lawsuits Alleging Dubious Sale Leasebacks, Accusations Of False Statements Made In Bankruptcy Filings

In Oregon, the Clackamas Review reports:
  • A year ago, Yulanden Moore owned a two-story, three-bedroom house in Aloha with her husband, Jimmy, where they helped former prison inmates get back on their feet. But now, the Moores are the ones who are relying on the kindness of others. That’s because when the Moores fell behind on their mortgage payments last year, they signed up with a “foreclosure rescue” service that promised to turn their financial nightmare around through a complex series of financial deals. But instead of ensuring that the Moores could keep their house, the deal they signed with DK Investments gave ownership of their house over to a group of investors and had the Moores “rent” their house back. The Moores fell behind on the rent, set higher than the previous mortgage payment, and were eventually evicted.


  • The Moores are suing Jeremy Killian, the Oregon City man behind DK Investments, and his associates, for $1.1 million in damages. In a lawsuit filed in Washington County Circuit Court in April 2007, the Moores allege that Killian’s offer of help was a ruse and that he intended all along to take their property.


  • Two other property owners, Enrique Moreno, of Hillsboro, and Ron Knox, of Portland have filed similar suits. Killian’s former business partners have also filed a lawsuit against him, accusing him of siphoning off money into his own accounts and participating in “unlawful business practices.”

  • And a lawyer at the U.S. Trustee’s office has lodged filings in Bankruptcy Court that accuse Killian of understating his assets and filing for bankruptcy to avoid the flurry of lawsuits. [...] “The debtors made misrepresentations on their bankruptcy documents and during their meeting of creditors intended to invoke the automatic stay to defeat state court litigation related to Mr. Killian’s ‘special financing business,’” [Carla McClurg, an Oregon attorney for the United States Trustee] said in bankruptcy documents. McClurg also said Killian’s operation was much larger than the three lawsuits currently filed. “This scheme involved the purchase by individual investors of at least 75 parcels of real property from homeowners faced with foreclosure and the lease-back of the property to the original homeowner with a two-year option to repurchase the real property,” she said in bankruptcy documents.

For more, see ‘We’re homeless - we lost everything’ (Families are accusing an Oregon City man of fraudulently taking their homes).

Foreclosure Rescue Scams Utilizing Bogus Bankruptcy Filings Reported In Kansas

The Kansas City Star reports:
  • Federal investigators in Kansas are trying to derail a foreclosure scam that began in California and is sweeping the United States using bogus bankruptcies to dupe homeowners and lenders. The scams take advantage of the fact that a bankruptcy automatically delays home foreclosures, which are at record levels. Experts warn that homeowners who buy into the deals still end up losing their homes when the fraudulent bankruptcies are exposed. And lenders often wind up paying thousands of dollars in legal fees chasing down the phony filings. “Even though it’s all bogus, you have to track it down and prove it, and these things take time,” said Los Angeles Bankruptcy Judge Maureen A. Tighe.


  1. Generally, the fraud works like this: Scammers approach people facing foreclosure and offer to save their property for an upfront or monthly fee. They persuade the homeowner to assign them a legal interest in the property.

  2. Then the scammers — often without the homeowner’s knowledge — transfer fractional shares in the property, often 5 percent or less, to third parties. These third parties are usually fictional, investigators say, although in some cases the scam artists have recruited homeless individuals.

  3. They then file bankruptcy petitions in the names of these third parties. Sometimes, as in the Kansas cases, it is in courts thousands of miles from where the property is located.

  4. The scammers profit off the delays in several ways. Sometimes they reap monthly fees ranging from $250 to $850 or more from homeowners who think — because debt collectors are not calling anymore — that the foreclosure is stopped. Some homeowners may be led to think the fees are paying off their loans.

  5. In other cases, the scammers take over the property and rent it for months to unsuspecting tenants, who are evicted after the ruse is discovered.
For more, see Foreclosure rescue scam makes its way to Kansas (if link expires, try here or try here). fractional interest

CBS Evening News On Florida Foreclosure Rescue Operator Now Targeted By State AG

The CBS Evening News recently ran a story on a Florida homeowner who allegedly had the title to her home scammed by foreclosure rescue operator National Foreclosure Management. Florida's Attorney General has filed suit against National Foreclosure Management for bilking at least 80 homeowners of nearly $2 million. "There are at least 20 other businesses being investigated right now, and I suspect we will unearth more as we go through this," [Florida AG Bill] McCollum said.

For the story, see Scam Leaves Homeowners Empty-Handed (A Foreclosure Scam Is Turning Mortgage Holders Into Victims) (watch video) (read transcript).

For the Florida AG's news release announcing the civil lawsuit in this case, see McCollum Sues "Foreclosure Rescue" Company, Announces Legislation to Fight Mortgage-Related Fraud.

To view the lawsuit, see Office of the Attorney General, et al. v. National Foreclosure Management, Inc., et al.

To view the bill summary, history, staff analysis of the proposed foreclosure rescue statute currently being considered by the Florida legislature, see:

Illinois AG, Foreclosure Rescue Operator Reach Settlement In Civil Suit

From the Office of the Illinois Attorney General:
  • As part of her ongoing efforts to target scam artists committing mortgage fraud, Attorney General Lisa Madigan has successfully reached a settlement agreement with a Charlotte, North Carolina-based business operating a mortgage rescue scheme that falsely promised to help financially distressed homeowners who were facing foreclosure.

  • According to the settlement announced [yesterday], HomeSavers USA, Inc. and its CEO, David Moakler, will cease offering and accepting money for foreclosure rescue services in Illinois. Customers of HomeSavers USA have until March 21, 2008, to file a complaint with the Illinois Attorney General’s office for full or partial refund of the fees they paid to the defendants.

For the entire Illinois AG news release, see Madigan Reaches Settlement With Mortgage Rescue Firm.

Illinois Feds Get Mortgage Fraud Guilty Plea From Notorious Chicago-Area Foreclosure Rescue Operator

In Chicago, Illinois, the Chicago Tribune reports:
  • Flashy mortgage broker Edwin Evans once trolled the South Side in a Lexus sedan and promised cash-strapped homeowners that he could help them stave off foreclosure. Now he's likely to trade his pinstripe suit for orange prison coveralls. On Wednesday, Evans pleaded guilty in a mortgage fraud case, and federal prosecutors say they will ask a judge to sentence him to at least 27 months in prison. His detailed plea agreement put a spotlight on mortgage fraud, the growing crime in which swindlers use forgery and face-to-face scams to secure loans that are never repaid. Because the houses often fall vacant, the crime can threaten entire neighborhoods, as well as financially victimize homeowners and lenders.


  • He specialized in controversial bailout deals, in which a homeowner deeded his house to Evans or an investor for a year, believing the reprieve would allow time to get out of debt and repurchase the home with a fresh mortgage. But his property deals often unraveled amid contradictory records and civil court allegations of fraud, records show. And in the end, the homes were lost in the process, not rescued.

For more, see Guilty plea in mortgage fraud (Edwin Evans, a convicted rapist turned mortgage broker whose schemes were detailed in stories two years ago, could face a 27-month prison sentence).

Stockton Man Gets Three Years In State Pen For Swiping Grandparents' Home Equity

In San Joaquin County, California, the Stockton Record reports:
  • A 28-year-old man was sentenced Monday to spend three years in a state prison program working off part of a $177,000 debt that stems from a conviction for cheating his grandparents out of their Stockton condominium. Rodney Jackson has to turn himself in [next week], when he will be transported under a judge's recommendation to the Restitution Center for Men, a Los Angeles work program under contract by the California Department of Corrections and Rehabilitation. San Joaquin County Superior Court Judge F. Clark Sueyres also ordered the Calandria Street home of Jackson's grandparents, Herman and Audrey Percy, to be sold off to recoup some of the loss.


  • A jury in December found Jackson guilty on eight felony counts, including theft from an elder, loan fraud, identity theft and an enhancement for committing a white-collar crime with a loss of more than $100,000. San Joaquin County Deputy District Attorney James Lewis said Jackson was entrusted with helping his elderly grandparents find a new home. A flight of stairs leading up to the second-floor condominium proved too strenuous for the couple, who are in their early 70s.

  • Jackson instead took out a loan on the home and pocketed the money, which triggered foreclosure, Lewis said. Herman Percy now lives with friends, while Audrey Percy is in a hospital, Lewis said.

For more, see Man to work off debt in prison program (Grandparents were cheated out of their home).

For an earlier report on this story, see Man guilty of defrauding elders.

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

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

Three Face Felony Charges For Pocketing $600K In Home Theft, Says DA; Use Of Forged Docs Alleged

In California, the San Bernardino County District Attorney's Office announces:
  • Investigators from the San Bernardino County District Attorney’s Real Estate Fraud Unit arrested Stephen Rowe, 48, outside his El Monte residence regarding felony charges connected to real estate fraud. Rowe was arrested for several counts including grand theft, forgery, and filing forged documents with the County Recorder’s Office – all felonies. Two co-conspirators, Jennifer Partlow, 32, of Los Angeles and Sheila Villanueva, 31, of North Hollywood, were arrested outside of their residences [...] . In July 2006, the suspects forged the victim's signature on numerous documents and sold his Upland property without his permission or knowledge. The three suspects stole over $600,000 from the sale of the property. [...] Bail for all three suspects is set at $1,000,000 each.

Source: DA's press release: Three Arrested for Real Estate Fraud Conspiracy.

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

Countrywide Padded Legal, Other Fees When Servicing Mortgages, Says Suit; Class Action Status Sought

The Tampa Tribune reports:
  • Countrywide Financial Corp., the largest U.S. mortgage lender, is being sued by the estate of a Florida woman and accused of charging borrowers improper foreclosure fees. Starting in February 2002, Countrywide overcharged for attorneys' fees tied to foreclosures and imposed unjustified interest, escrow and late charges, according to a complaint filed Monday in federal court in Wilmington, Del.

  • "As a result of Countrywide's improper practice of overcharging fees and expenses, those borrowers who have enough funds to pay past due debt and other foreclosure costs, but are unable to pay the greater sums, remain subject to losing their homes," lawyers for Gregory O'Gara, who sued as executor of the estate of Tamara Portnick, said in the complaint.


  • O'Gara accused Countrywide of making arrangements with attorneys for flat, per-case rates of about $300 to $500 and then charging the homeowners $1,200 to $2,000 for the expenses. The company also was accused of charging excessive fees for appraisals, from $300 to $500, regardless of whether an appraisal is really done on the property. If fees are not paid by borrowers, they are added to the settlement amount on a foreclosure sale of the property, the complaint states. [...] O'Gara asked for class-action status for the lawsuit, [...].

For more, see Countrywide Sued Over Borrowers' Foreclosure Fees.

See also, Reuters: Countrywide Sued Over 'Excessive' Fees on Defaults.

Representing the homeowners are Carmella P. Keener, of Rosenthal, Monhait, & Goddess, P.A., Wilmington, DE; and Jeffrey M. Norton, of Harwood Feffer LLP, New York City.

To view the lawsuit, go to this this direct link on the PACER system (approx. 2 MB - PACER registration required - 52 pages - $2.40); or drop me a line at

and I'll e-mail it to you (please put "O'Gara v. Countrywide Complaint" in the subject line).

For an earlier post on a similar lawsuit filed by these same attorneys against Mortgage Electronic Registration Systems (aka "MERS"), see Homeowners In Foreclosure Being Clipped For Illegally Inflated Legal & Appraisal Fees, Says Lawsuit.

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

Wednesday, February 27, 2008

Mortgage Fraud Led To Home Being Transferred Three Times While Dead Owner 'Unwittingly' Sat Inside

In Chicago, Illinois, the Chicago Tribune reports:

  • The new buyers of a rundown graystone on the South Side showed up Jan. 9 to look at the house they won at a foreclosure auction. They took the plywood off the front door and went inside to make sure the utilities had been shut off. Then they called the police. Sitting upright in the corner of a bedroom off the kitchen was a human skeleton in a red tracksuit. Next to him lay a dead dog. Neighbors told police the corpse was almost certainly Randy Johnson, a middle-age man who lived alone in the North Kenwood house.

  • The cause of Johnson's death has not yet been determined, but it is just one of the mysteries about 4578 S. Oakenwald Ave. Somehow, Johnson's house was transferred three times to new owners without anyone noticing he was inside.

  • It's a story involving forged deeds, a corrupt title company and a South Side family that has been under investigation for mortgage fraud. Left holding the bag is Countrywide Home Loans, the nation's largest mortgage lender and a company whose practices are being scrutinized by the Illinois attorney general's office. Countrywide made mortgages of $450,000 on the property. Now it is likely to lose it all because it financed the sale of a home whose rightful owner was in no condition to sell.


  • Last week, Countrywide vacated the recent sale of 4578 S. Oakenwald and returned the buyer's money. That happened only after Cook County officials announced they would fight to put the house back in the Johnson family's name.

For all the details, see This house was a steal (How fraud led to this property changing hands 3 times as son of owner sat dead inside) (if link expires, try here).

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

State Court Judge Halts Fremont Foreclosures In Massachusetts

In Massachusetts, The Boston Globe reports:
  • A Massachusetts court, in an unprecedented decision yesterday, ordered the California subprime lender Fremont Investment & Loan to halt all foreclosures to give state officials time to review each mortgage. The order, issued yesterday by the Suffolk Superior Court, is the latest action in an October lawsuit filed by Massachusetts Attorney General Martha Coakley that alleged Fremont engaged in predatory and unfair lending when it made home loans to individuals who often could not afford them.

  • In a 29-page order, Justice Ralph Gants said a large share of Fremont's mortgage loans could potentially be considered "structurally unfair" under the state's lending laws. The mortgages were unfair, he said, if they met four criteria, including low introductory rates that shot up once that initial period ended. The attorney general's office said the order applies to about 2,200 mortgages. The state is also seeking financial relief for borrowers, an unknown number of whom are in foreclosure. "There are no precedents like this in Massachusetts," said Boston lawyer Gary Klein, who represents borrowers in suits against mortgage companies. "It's an extremely important decision that recognizes the extreme hardship that predatory lending has on Massachusetts borrowers."

For more, see Lender ordered to halt foreclosures.

See also, The Boston Herald: Judge slows foreclosures (Lender’s loans called ‘unfair’ under Mass. law):

  • [G]ants’ decision only covers owner-occupied units bought with certain loans, such as no-money-down, two- or three-year adjustable-rate mortgages (ARMs). The judge also stressed that he’s not permanently excusing homeowners from repaying loans. “The spirit of this decision is (merely) that Fremont, having helped borrowers get into this mess, now must take reasonable steps to help them get out of it,” Gants wrote.

Lenders, Subprime Loans, & The Mortgage Frenzy In South Florida

In South Florida, the South Florida Sun Sentinel reports:

  • Some of the largest subprime lenders in the United States found fertile ground in South Florida. Familiar names, such as Countrywide, Washington Mutual and JP Morgan Chase, were among the biggest originators of subprime home loans in Broward and Palm Beach counties in 2006, according to data supplied by lenders under the Home Mortgage Disclosure Act. To a much lesser degree, South Florida's biggest commercial banks — including Bank of America, Wachovia, SunTrust and Wells Fargo also offered the loans, which soared in popularity during the housing boom years, to borrowers with blemished credit or whose income could not be verified.

  • There's plenty of blame to go around for the subprime mortgage mess that has put a record number of South Floridians on the brink of losing their homes. Besides the lenders' zeal, many consumers bought homes they couldn't afford during the housing heyday from 2000 to 2005.

For more, see Lenders in South Florida fed mortage frenzy with risky home loans.

Florida AG Files Civil Suit Against Alleged Real Estate Scammer Currently Awaiting Trial On Tax Evasion Charges; Tipped Off By Pennsylvania AG

From the Florida Attorney General's Office:
  • Attorney General Bill McCollum [last week] sued a Florida real estate company and its Pennsylvania owner, alleging the company has engaged in deceptive advertising to make Florida property sales. Neither Jim Platts nor his company, A Realty Rx, LLC, have licenses to operate as Florida real estate brokers. Additionally, the company allegedly uses false testimonials and other deceptive practices to advertise Florida real estate. [...] According to an investigation conducted by the Broward Sheriff’s Office, Platts has also attempted to negotiate at least one telephone sale from Pennsylvania, where he is currently serving pretrial house arrest pending trial on Federal tax evasion charges.


  • The Attorney General’s Economic Crimes Division was alerted to Platts’ deceptive practices by the Pennsylvania Attorney General's Office, which recently filed a similar lawsuit against Platts and his Pennsylvania company. The lawsuit alleges a litany of deceptive practices, including the use of false and misleading advertising, acting as a real estate broker without a license, wrongfully filing notices of pending lawsuits, engaging in the business of secondary mortgage lending without a license, foreclosure rescue through fraudulent short sale negotiations, and other violations of Pennsylvania real estate and residential mortgage loan statutes.

For more, see Pennsylvania Man Sued for Attempting Deceptive Property Sales in Florida (Individual tried to take advantage of Floridians while out on bond for tax evasion charges).

For a related story, see North Hills businessman convicted of tax evasion (A federal jury found James C. Platts, 56, former owner of Pinnacle Building Co., guilty on five counts.).

Go here for prior posts on James Platts.

To view the Florida AG's lawsuit, see State of Florida v. A Realty Rx, LLC., and Jim Platts (among the practices Platts has been accused of in the past is foreclosure rescue through
fraudulent short sale negotiations).

Custom Homebuilder Under Investigation For Pocketing Customer Cash Without Completing Construction; Stiffed Subs Suing One Alleged Victim For Payment

In Kern County, California, The Bakersfield Californian reports:
  • [B]akersfield homebuilder [Donald Juhasz and his business, DMJ Customs Inc.] who allegedly engaged in various fraudulent real estate activities is being investigated by the Kern County District Attorney’s office and the United States Attorney’s office, according to Deputy District Attorney Don Mingleton. [...] Two former customers who say Juhasz promised to build them homes, but instead stole the money meant to finance their homes’ construction, expressed frustration [last week] over the pace of the investigation. Police raided Juhasz’s property nearly five months ago.


  • [Customer Amanda] Meek’s credit has been damaged, and stiffed subcontractors are suing her seeking payment, she said.

For more, see Homebuilder scrutinized by prosecutors.

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

Wisconsin Businessman Gets 11+ Years In Loan Scam Perpetrated With Ex-President Of Now-Defunct Bank

In Madison, Wisconsin, The Capital Times reports:
  • The former owner of the Dells Motor Speedway whose $7.136 million in fraudulent loans helped put a Blanchardville bank out of business in 2003 was sentenced Wednesday in federal court to 11 years and eight months in prison. District Judge Barbara Crabb said Bryan J. Severson, 34, of Blanchardville, and Mark Hardyman, former First National Bank of Blanchardville president, engaged in a "stupid, stupid, stupid, stupid (loan) scheme" to prop up Severson's failing businesses with unsecured and unrecorded loans. "(Hardyman's) and your business decision caused an enormous amount of financial harm" to the community and individuals and "caused the First National Bank of Blanchardville to close in May 2003," Crabb said.


  • Between 2000 and 2003, Hardyman ran the bank without regard to the bank's loan policies or federal regulations. Severson got the money to purchase the Dells Motor Speedway and signed only a blank document, which Hardyman later filled out as a mortgage, [Severson's attorney, Christopher] Kelly said. When Hardyman learned bank examiners were coming to perform an audit, Hardyman had Severson and others deposit worthless checks drawn on other banks to conceal non-performing loans totaling millions of dollars, [Assistant U.S. Attorney Grant] Johnson said.

For more, see Man gets 11 years in "stupid" loan scheme.

Two Men Charged With Stealing Home, Pocketing $215K; Suspects Forged Signatures Of Deceased Couple, Says DA's Office

In San Bernardino County, California, the Victorville Daily Press reports:
  • Two men were arrested for selling the Apple Valley home of a deceased couple after forging signatures on the grant deed, officials announced Monday. Investigators from the San Bernardino County District Attorney’s Real Estate Fraud Unit arrested Daniel Rudat, 43, outside of his residence in the City of Orange regarding felony charges connected to real estate fraud, officials said. Rudat was arrested for several counts including forgery, conspiracy and filing forged documents with the County Recorder’s Office. On Thursday, Ronald Fauria, 71, a co-conspirator of Rudat, was arrested at his Irvine home for similar charges. In 2005, the two forged the signatures on a grant deed of a husband and wife who had died in 1977 and 2004, respectively, officials said. They subsequently sold the victims’ Apple Valley property for approximately $215,000.

Source: Two men arrested in fraudulent sale of Apple Valley home.

See also DA's press release: Two Orange County Men Arrested in Real Estate Fraud Conspiracy.

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

Woman Gets 16 Months In State Pen In Deed Theft & Mortgage Scam

In California, the San Bernardino County District Attorney's Office recently announced:
  • Goldie Vicencio Santiago, 28, of Redlands was sentenced to state prison resulting from felony charges connected to real estate fraud. Santiago [...] was sentenced, as part of a plea agreement, to sixteen months in state prison for filing a false deed and forgery. The issue of $225,000 in restitution has been reserved for an upcoming hearing. In May and June 2006, Santiago forged the victim’s name on Quitclaim deeds. She then took out loans against at least two separate parcels of property in the County of San Bernardino for approximately $752,000, without the victim’s knowledge. The residential properties were located in the cities of Hesperia and Colton.

Source: DA's press release: Redlands Woman Pleads Guilty to Forgery in Real Estate Scheme.

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

Florida Lawyer Disbarred For Screwing Clients Out Of Cash In Real Estate Transactions Now Facing Felony Charge

In Clearwater, Florida, the St. Petersburg Times reports:

  • A local lawyer who was disbarred last year has been charged with stealing $400,000 from a client weeks after he lost his license to practice law. Richard Joseph Da Fonte, 50, of Clearwater was charged this month with withholding the money from Kenneth Yang of Texas, one of three people Da Fonte represented in a real estate transaction in late October.


  • The transaction involving [Yang] took place about two weeks after Da Fonte lost his license to practice law. In mid October, the Florida Supreme Court approved a consent agreement in which Da Fonte agreed to be disbarred over his involvement in two [other] real estate transactions where money went missing.


  • And there is another case where a former client says he has been unable to get money that he gave Da Fonte to hold in trust for him. Shakawat Hossain, 46, of St. Petersburg said he had planned to use money he got from the sale of his business, a store he built up by working 18-hour days, to buy a gas station and convenience store. But Hossain said that plan has fallen apart because he can't get more than $250,000 from Da Fonte. That's about half the sum he said he gave the lawyer to hold in trust.

For more, including the details on the screwing over Da Fonte gave to his trusting clients, see Lawyer faces theft charge (The man was disbarred last year. Now he's accused of stealing $400,000 from a client).

For the earlier St. Pete Times story on Da Fonte's disbarment, see Lawyer disbarred, two others are disciplined (Diverted mortgage funds led to the disbarment).

See Theft Of Escrow Funds I and Theft Of Escrow Funds II for other stories of trust account / escrow account theft of funds.

If a Florida attorney is representing you and screws you out of money or property through dishonest conduct, go to The Florida Bar's Clients' Security Fund for more information. For other states, see:

Tuesday, February 26, 2008

Jacksonville Mortgage Broker Awarded Seven Years In Federal Pen In Cash Back Mortgage Fraud Scam Involving Inflated Sale Prices & Appraisals

The U.S. Attorney's Office, Middle District of Florida, announces:
  • [Last week], U.S. District Judge Henry Lee Adams, Jr., sentenced Justin D. Barker, 31, of Jacksonville to seven years' imprisonment for his participation in a mortgage fraud scheme. After his release from prison, Barker will be on supervised release for five years. Barker entered a plea of guilty to conspiracy to commit wire and bank fraud on September 24, 2007. At his sentencing, Barker was ordered to pay restitution in the amount of $2,353,339.91 and to forfeit $4,419,024.15, jointly and severally with other conspirators.


  • During the course of the scheme, fraudulent loans totaling about $17.7 million were obtained on more than 40 properties. These loans would not have been approved but for the fraud. Barker received approximately $4.4 million in gross proceeds from the fraudulent transactions. To recover some of these illicit proceeds, the government seized from Barker a 2004 Bentley Continental, a 2007 Cadillac Escalade, a 2002 BMW 745Li, a 2005 Chaparral 330 Signature 36' boat, a 1997 19' Wellcraft boat, a 2006 Yamaha motorcycle, a 2001 Yamaha motorcycle, a 2-carat loose diamond, a 1-carat diamond necklace, a .5-carat diamond necklace, diamond stud earrings, and two Movado watches.

For more, see Jacksonville Man Sentenced To Seven Years For Mortgage Fraud Scheme.

Oregon Lawmakers Pass Foreclosure Rescue Legislation

In Salem, Oregon, a news release from the Senate Majority Office of the Oregon State Legislature reports:
  • The Senate [...] approved HB 3630 [Friday]. The bill will help Oregon families facing foreclosure by cracking down on mortgage “rescue” scams. Additionally, HB 3630 requires that mortgage lenders provide borrowers facing foreclosure with a written, plain language notice of the potential consequences of their situation and ways to avoid foreclosure. These pieces of legislation will help Oregonians when they need it most – when their homes are at risk and they are facing foreclosure.

For the news release, see Legislation promoting fairness for Oregon homeowners passed by Senate ( Enhanced oversight, crackdown on foreclosure ‘consulting,’ plain language requirements key pieces of Senate Democrats’ February agenda).

See also, New legislation helps Oregonians facing foreclosure.

Florida AG Gets Guilty Plea In Statewide Mortgage Fraud / Home Improvement Scam

In Central Florida, WFTS-TV reports:
  • Attorney General Bill McCollum announced Monday that a former Hillsborough County resident was convicted of multiple charges of racketeering and conspiracy to commit racketeering and was sentenced to eight years in prison. Bradford C. Peck was the point person for a multi-million dollar mortgage fraud scam that stretched across the state and involved one of the nation’s largest sub-prime mortgage companies.


  • "This scheme preyed on people who were trying to make improvements to their homes and instead were victimized and cheated out of not only the home repairs but also their hard-earned money," said Attorney General McCollum. "Without the cooperation of state and local law enforcement, this criminal operation might still be in business." Peck, 31, was part of a criminal enterprise which submitted nearly 130 loan applications to Argent Mortgage Company which resulted in funding for approximately $13 million in home loans. [...] The construction work, when provided, was often substandard and incomplete. [...] Argent executives and outside counsel cooperated with the investigation and assisted the victims in this case, many of whom were facing potential foreclosure actions.

For more, see Hillsborough man pleads guilty to mortgage fraud.

See also, St. Petersburg Times: Mortgage fraud figure gets 8 years in prison.

For Florida AG's news release, see Key Player in Mortgage Fraud Scheme Gets 8 Years in Prison (Statewide scheme victimized dozens of individuals).

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

Title/Escrow Firm Owner Cops Plea In Scam That Siphoned Off $2.5M In Proceeds In Real Estate Deals

In Minnesota, the Minneapolis Star Tribune reports:
  • A 50-year-old Chaska woman who had owned Profile Title and Escrow Corp. pleaded guilty Wednesday in a federal fraud and money-laundering scheme that siphoned off more than $2.5 million. Molly L. Heise had been sole shareholder and president of the title company in 2002 and 2003. It primarily closed loans on residential properties. Profile Title's underwriter, Chicago Title Insurance Co., required the company to deposit its mortgage loan proceeds into an escrow account at Eagle Valley Bank, where they could be monitored. But Heise secretly diverted substantial sums into an escrow account at EastBank and into an account at U.S. Bank, where she mixed personal and business money.


  • Heise allegedly spent more than $2 million on houses, landscaping, a Hummer, a motorhome, a Wisconsin cabin and a boat. [...] The former chief financial officer for Profile Title, Christine Hein, pleaded guilty in the case last month. Hein admitted diverting nearly $135,000 from a secret escrow account for a down payment on her home in Buffalo.

For more, see Title company owner from Chaska pleads guilty in fraud case.

See Theft Of Escrow Funds I and Theft Of Escrow Funds II for other stories of trust account / escrow account theft of funds. sneaky slick escrow agents beta

Mortgage Fraud Cases "Streaming Through The Door" At One California DA's Office; Budget Shortfalls Make Staff Cutbacks Possible

In California, The San Jose Mercury News reports:
  • The Santa Clara County District Attorney's Office has been hit with a surge in complaints about home-loan fraud, even as funding to prosecute these cases is plunging. The district attorney's office opened 125 new investigations into mortgage scams last year, four times as many as in 2006, prompting one prosecutor to call 2007 "the year of lending dangerously." The total loss to victims topped $40 million during the 2006-07 fiscal year, the office said. Funding to prosecute these cases is tied in part to the real estate market, so the slowdown in home sales has led to a drop in the amount of money coming into the district attorney's office.


  • "The cases are streaming through the door, and we're doing our best to cover it," said Deputy District Attorney Mike Fitzsimmons, one of only two lawyers assigned full time to real estate fraud. Fitzsimmons said he's working nights and weekends to keep up with the volume. The budget shortfall could exacerbate the problem. If funding continues to decline, the office may have to cut staffing, the district attorney said in a report to the board of supervisors this month.
For more, see Santa Clara County prosecutors besieged by mortgage complaints (Funding For DA's Office To Fight Fraud Is Down).

Go here for the Foreclosure Rescue Warning Letter sent by DA's Office to homeowners receiving Notices of Default in connection with their home mortgages. The letter warns the homeowners about the onslaught of foreclosure rescue operators that they should be expecting and invites the financially strapped homeowner to report them to the DA's Office if they think a crime has been committed.

Three Banks Added As Defendants In Multi Million $ North Carolina Civil Fraud Case

In North Carolina, The Charlotte Observer reports:
  • BB&T of Winston-Salem and two other banks from outside North Carolina were added as defendants Thursday to a multi-million dollar real estate fraud case. A fourth bank, First Charter of Charlotte, was not included in the suit because it is involved in a virtually identical court case in Mecklenburg County. The civil case involves the collapse of a 1,300-acre mountain development in Mitchell County known as the Village of Penland, about an hour northeast of Asheville. Attorneys for investors in the development argued Thursday in Wake Superior Court that the financing scheme used to sell lots at Penland was impossible without the banks' participation. The court's eventual decision is critical to investors because those who borrowed money are required to keep making payments on the loans even though the land is worth far less than the money they owe.


  • A former bank investigator at BB&T also has filed a suit, alleging she was fired from her job for refusing to participate in a coverup of a $20 million loan fraud connected to Penland. And the N.C. Attorney General's Office has a suit pending against the developers of the project alleging securities and mortgage fraud. When the Penland development failed in May, dozens of investors owed the banks as much as $100 million. [...] The banks from outside North Carolina are United Community Bank of Georgia and Carolina First of South Carolina. All four have denied involvement, saying they were tricked by the developers and are victims of the fraud.

For more, see BB&T added to mountain fraud lawsuit.

Go here for other posts on the alleged scheme underlying the failed North Carolina Village of Penland project. Tony Porter

Convicted Securities Scam Artist Drifts Into Selling Reverse Mortgages While Waiting To Begin Prison Sentence

In Washington State, The Associated Press reports:
  • The Spokane Spokesman-Review reports that a man convicted of securities fraud in Colorado has been selling reverse mortgages in Spokane, while waiting to begin his prison term. Michael Duane Smith is listed in a brochure issued by Golf Savings, a mortgage subsidiary of Sterling Savings Bank of Spokane. A spokeswoman said yesterday that he no longer works there. He was convicted of securities fraud in May in federal court in Denver for a scheme in which investors lost nearly $50 million. No sentencing date has been set. Smith's lawyer, Richard Stuckey of Denver, says Smith would have further comment. The Washington Department of Financial Institutions says Smith applied for a loan originator's license but was denied because of his felony conviction. He needs the license to work for a mortgage company, but not a bank.
Source: Man convicted of fraud sells reverse mortgages in Spokane.

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

Monday, February 25, 2008

SEC Seeks Order Compelling Broker To Fork Over $6.9M For Selling Investments Tied To Subprime To Elderly, Others

In West Palm Beach, Florida, The Miami Herald reports:
  • The Securities and Exchange Commission is asking a federal judge to order Hillsboro Beach securities broker Jamie Solow to pay $6.9 million for ''deceitful conduct'' that ravaged the accounts of his customers and put a firm that employed him out of business. [...] A civil jury in West Palm Beach found Solow liable late last month for running a fraudulent trading scheme in which he racked up huge commissions selling complex investments known as inverse floating collateralized mortgage obligations (CMOs).

  • Solow's nine-day trial focused attention on a less-publicized aspect of the nation's expanding credit crisis -- the many average investors who lost big money after putting their retirement savings into volatile mortgage-related securities. Regulators have said such investments are only suitable for sophisticated investors who understand the risks. At trial, government prosecutors presented evidence that Solow, 46, used deception to peddle millions of dollars of those risky, mortgage-backed bonds to hundreds of retail clients looking for safe investments for their retirement accounts. Investors such as Tony Stevens, 81, of Sunrise, lost their entire life savings.

For more, see SEC wants broker to pay $6.9M for fraud (Government lawyers want a U.S. judge to throw the book at a South Florida stockbroker who preyed on the elderly while running up millions of dollars in commissions) (if link expires, try here).

For earlier Miami Herald story, Jury: Stockbroker liable for fraud scheme (The SEC said it will ask a judge to take steps to kick a Hillsboro Beach stockbroker out of the securities industry).

Salt Lake City Foreclosure Rescue Operator Facing Five Felonies In Dubious Sale Leaseback Deals With Financially Strapped Homeowners

In Salt Lake City, Utah, KUTV Channel 2 reports:
  • A lot of people sign important documents without really reading them, but for an elderly Utah couple that oversight cost them their home. Emery and June Mitton were visited recently by the owner of a company called "Residential Resolve," which claims to help homeowners with financial troubles. In fact, the company motto holds, "We save homes."


  • Seeking a resolution to their mortgage troubles, the Mittons eagerly paid attention to [Residential Resolve owner Jeff] Wangsgard's proposal. A short time later, Wangsgard then accompanied the couple to a bank and paid $13,000 toward their delinquent mortgage payments. After Wangsgard's grand gesture, the Mittons signed some documents on the spot without really reading over the fine print. What they didn't know was that one of the documents was an "assignment of beneficial interest and land trust" -- which essentially handed over the home and property to Wangsgard. Believing that the documents were merely an application for a new loan arrangement, the Mittons were shocked when, days later, Wangsgard showed up at their home with a locksmith and demanded that they leave. "He said, 'I'm here to evict you,'" June recalled. "'I'll give you some time to pack some clothes, then we are changing the locks.'"
  • Apparently, though, several of Wangsgard's other "customers" were not OK with their deals. [Last] week, the "Residential Resolve" owner appeared in Davis County court and was charged with five felonies stemming from his dealings with the Mittons and other clients. The charges against Wangsgard include communications fraud and exploitation of a vulnerable adult.

  • "Other people came forward," said assistant state attorney general Charlene Barlow. "If you have one occurrence, maybe someone is confused. But when you have two or three different people coming forward... it's a much easier case to present to a jury." The charges against Wangsgard are a direct result from the Mittons' case and two others that are similar in nature.
For more, see How A Utah Couple Was Kicked Out Of Their Home By Mortgage "Helper." (read story) (watch video).

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

Go here and go here for criminal prosecutions of foreclosure rescue, refinancing, and other deed scams. whale

Buffalo Mayor Vows Action On Foreclosing Lenders Who Saddle City With Demolition Costs On Vacant Homes; Announces Suit Against 36 Banks To Recover $2M

In Buffalo, New York, The Buffalo News reports on Mayor Byron W. Brown and his State of the City speech last Thursday. Buried in the story is this highlight from the mayor's speech:
  • A crackdown on banks that hold mortgages on vacant properties that are in foreclosure and saddle the city with demolition costs and other expenses. Brown said the city filed a lawsuit Thursday seeking to recover up to $2 million in costs from 36 banks that have mortgages on 57 properties.

For the entire story, see Mayor Brown paints the picture of a city on the upswing ($4.5 billion in projects completed or now under way).

To view Buffalo's lawsuit against a host of lenders on account of the blight caused by the abandoned houses in foreclosure, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al. (3.67 MB; available online courtesy of the law firm Skadden, Arps, Slate, Meagher & Flom LLP). If there's a problem with this link, email me at and I'll email it to you (please put "City of Buffalo v. ABN Amro" in the subject line).

Go here for other posts on the City of Buffalo lawsuit against lenders abandoning foreclosed properties.

Florida Bank Accused Of Hiding Losses On Sour Mortgage Loans

In Manatee County, Florida, the Sarasota Herald Tribune reports:
  • Freedom Bank lost $5.8 million in 2007, a major hit for the 21/2-year-old community bank. But it may be worse. Freedom's former senior lending officer has accused the bank of concealing its true financial condition by downplaying its bad loans. In a lawsuit, Mark S. Williams claims he quit the Bradenton-based bank last month after being pressured to understate its problem assets. Williams, who was also the bank's executive vice president, calculated that the bank needed to expense $11 million in the fourth quarter to downgrade and reserve for bad loans and real estate it owned from foreclosed borrowers.


  • In his lawsuit, Williams says an unidentified member of Freedom's board of directors urged him several times to shred his original report that recommended the $11 million in loan-loss reserves. He also says [Freedom president/chief executive officer Gerald] Anthony forced him to fire two loan officers so they could not talk to incoming examiners from the Federal Deposit Insurance Corp.

For more, see Bank accused of hiding losses (A former Freedom Bank executive alleges pressure to downplay bad loans).

Florida Builder Countersues Lender In Foreclosure Action; Subs, Prospective Homebuyers Still Holding The Bag

In Vero Beach, Florida, TC Palm reports:
  • Seacoast National Bank and its Indian River County president, Jay W. Hart, are to blame for leaving homebuyers and contractors in the Eagle Trace subdivision out hundreds of thousands of dollars, according to documents filed in circuit court this week. In a countersuit against Seacoast and Hart, Mizner Grande of Vero Beach claims the bank breached its duty as a lender in a “willful and wanton” manner when it stopped loaning money on the 106-home development [...]. Seacoast acted in December to foreclose on the 40-acre subdivision, claiming the developer failed to repay loans and credit lines.



  • Hatch, who is not a defendant in the suit, sits in Indian River County Jail in lieu of $3 million bail on 55 criminal counts ranging from money laundering to racketeering in connection with his defunct company, Coastal Escrow Services, and former law firm Hatch & Doty. [...] None of the charges are related to Eagle Trace.


  • Meanwhile, several homebuyers in Eagle Trace have sued Mizner Grande for their deposits and have filed complaints with state regulators. Subcontractors also have sued Mizner Grande seeking payment for work performed in the development. Several companies have filed liens against the property totaling $1.2 million.
For more, see Lawsuit alleges bank breached its duty, made false promises in Indian River County.

For earlier Jan.31 TC Palm report on this story, see 40-acre new home project in jeopardy in Vero Beach.

Race Biased Code Enforcement Actions Used To Force Out Poor Black Tenants, "Placate Racist Constituents," "Further Political Agendas," Says Suit

In St. Paul, Minnesota, the Pioneer Press reports:
  • An Eagan man who owned and managed low-income apartments in St. Paul has sued the city, alleging that officials subjected his buildings to "discriminatory and illegal" code enforcement actions designed to hurt his business and get poor black residents to move elsewhere. In the suit filed in federal court in Minneapolis on Friday, Robert McCampbell, 52, and his company, Raven Property Management, outlined what he called a "confrontational, heavy-handed approach" to low-income landlords through its so-called problem properties code enforcement. The city's actions drove McCampbell to lose money and tenants and eventually forced him into foreclosure, he claimed.

  • In contrast, McCampbell alleged, the city had a "cozy" relationship with the St. Paul Public Housing Agency, subjecting it to a much lower standard of code enforcement. The housing agency runs about 4,200 federally subsidized units for low-income tenants throughout St. Paul.


  • McCampbell cites federal housing and civil rights violations and violations of state business laws. The suit seeks compensatory damages, attorneys' fees and injunctive relief to keep the city from "continuing its wrongful conduct."

For more, see St. Paul landlord files racial-bias suit, alleging city sought to drive out low-income black renters, their landlords (It says city sought to drive out poor black tenants, their landlords).

See also Minneapolis Star Tribune: St. Paul sued on housing enforcement (An Eagan property manager alleges city leaders are trying to keep out poor tenants. An official says that's not happening).

To view the Federal lawsuit and the detailed allegations, see Complaint - McCampbell v. City of St. Paul ("Certain of defendant's officials and code enforcement officials and inspectors pursued discriminatory code enforcement operations to placate racist constituents and to further political agendas." - at paragraph 13). race bias predatory lending

Sunday, February 24, 2008

NBC Today Show On Miami's Foreclosure District

NBC's Today Show ran a piece last Friday featuring a section of Miami, Florida that, with reportedly 23,000 condos currently on the market and another 25,000 new units slated to come on the market in the short term, is referred to by area real estate agents as Miami's "foreclosure district." From condo owners desperate to unload their units, to others going into foreclosure, to developers demanding refunds of prepaid commissions from real estate agents on deals where the condo buyer has backed out of his/her purchase contract, this niche of the market sounds like a horror show with the worst yet to come. The one positive point in the story was that, with units selling at steep discounts coupled with the highly inflated value of the euro, some European investors are coming over and making buys at prices that reportedly amount to buying at 50 cents on the dollar. To watch the piece, see Miami Monopoly (regrettably preceded by a 15-30 second TV commercial).

For related stories, see Reuters News service:
  • Banks taking back Miami homes at high rate: broker ("Private equity and hedge funds from Canada, Europe, the Middle East and Asia -- buoyed by their own strong currencies in relation to the U.S. dollar -- are showing interest in bulk purchases of south Florida apartments"),
  • Miami condos are "for sale" for foreign buyers ("Realtors, analysts and buyers say the strength of the Canadian dollar, the euro and other foreign currencies, on top of a falling real estate market, is making the United States an enticing place for foreigners looking to buy property").
For an earlier post on the trouble facing Miami's real estate market, see 191 Condo Projects Make Miami-Based Bank's "No Mortgage" Blacklist.

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