Saturday, March 28, 2009

Sleazy Debt Collection Tactics Featured On Dateline NBC

Dateline NBC ran an investigative report Friday night on the debt epidemic and the sleazy tactics used by some bill collection agencies and "debt scavengers" in hounding consumers into making payments on delinquent credit accounts.

To watch the full broadcast, see Inside The Financial Fiasco: Debt Trap.

Loan Modification Firm Workers Flee Offices As ACORN Demonstrators Prepare To Protest; Accuse Company Of Clipping Homeowners Out Of Upfront Fees

In Los Angeles, California, the Los Angeles Times reports:
  • Consumers trying to warn the public about so-called loan modification scams found themselves tripping an alarm of another sort Wednesday: About 15 of them got stuck in a Buena Park office building's elevator during a demonstration.

  • The failed protest was the latest in a string of tough breaks for a group of about 30 mostly elderly and Latino homeowners who gathered Wednesday outside the offices of a company called Centre Legal. Many of the demonstrators are about to lose their homes to foreclosure. Several had paid Centre Legal or one of its affiliates(1) thousands of dollars to help them work out easier payment terms, but said they received nothing in return.


  • [W]hen protesters entered the building, they found Centre Legal's fourth-floor offices empty. Neighboring tenants said the company's workers fled minutes earlier down a set of back stairs, perhaps tipped off by the gathering of homeowners in the parking lot.

For more, see Protest of alleged loan modification scam goes nowhere (An elevator mishap adds to the frustration of homeowners gathered at the offices of Centre Legal, a company they say took their money but did nothing to help them).

(1) According to the story, ACORN alleges that a number of Southern California homeowners have paid fees to Centre Legal but received nothing in return. ACORN said the company has also operated under the names Centro Legal, Modificate and Gigante Mortgage.

Florida High Court Issues Administrative Order Creating Task Force On Residential Mortgage Foreclosure Cases

The Florida Bar News reports:
  • The [Florida] Supreme Court has created a Task Force on Residential Mortgage Foreclosure Cases to recommend policies, procedures, strategies, and methods for easing the backlog of pending foreclosure cases while protecting the rights of parties. Chief Justice Peggy Quince, in a March 9 administrative order, said the residential mortgage foreclosure crisis is of statewide proportions and should, to the extent possible, be addressed on a statewide basis with uniform rules, policies, and procedures to manage cases, protect the rights of homeowners and lenders, and to ease the burden on the courts. The chief justice asked the task force to submit an interim report and recommendations no later than May 8 and a final report no later than August 15.

For more, see Supreme Court creates task force to study foreclosures.

Go here for the Florida Supreme Court's administrative order.

Recovering Damages From Those Engaged In The Unauthorized Practice Of Law

A recent story in The Florida Bar News may be of interest to those in Florida who have suffered monetary damages when doing business with individuals and companies whose activities constitute the unauthorized practice of law (which could include non-attorney loan modification firms engaged in providing forensic loan audits in search of violations of relevant lending and consumer protection laws):
  • Florida residents have legal recourses when they have been damaged by those committing the unlicensed practice of law, according to The Florida Bar. The Bar has provided the above response to a request from the Supreme Court, which is considering an appeal from the Fourth District Court of Appeal in Goldberg v. Merrill Lynch Credit Corporation, 981 So. 2d 550 (Fla. 4th DCA 2008).

  • The appeal is two consolidated class action cases where the plaintiffs sued alleging that corporations engaged in the unlicensed practice of law when they prepared closing documents and other paperwork in connection with mortgages. The Fourth DCA dismissed the case, saying the plaintiffs could not seek civil remedies absent the finding by the Supreme Court of unlicensed practice of law.

For more, see Damaged by UPL? The Bar argues the public has a right to redress.

Go here for The Florida Bar's amicus brief.

Go here for links to all the briefs filed in this case (scroll down to case #SC08-1360 Goldberg, et al. v. Merrill Lynch Credit Corporation, et al.).

Go here for information on Filing an Unlicensed Practice of Law Complaint with The Florida Bar. UnauthPractOfLawTheta

Unpaid Bill Results In Water Shutoff For One South Florida Townhome Community; 60+% Of Homeowners Delinquent On Monthly Maintenance Fees

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • When Peter Lynch went to make coffee in his Blue Lake townhouse Wednesday morning, the tap was dry. "I looked outside and saw the people from the county turning the water off," said Lynch, who is president of the townhome condo association. A Broward County official said after 2 1/2 months of unpaid bills and with $8,100 owed, the shut-off after 24 hours' notice was proper. [...] More than 60 percent of the homeowners are delinquent on [monthly maintenance] fees, Lynch and J.D. Keating of Phoenix Property Management both said.


  • Each month, homeowners pay $328 maintenance that includes water use charged on master meters, not to individual units.

For more, see Broward County cuts off water to townhouse community ($8,100 owed to Broward; 60 percent of owners delinquent on fees).

Fire Officials Give Two Dozen Tenants In Unfinished Building The Boot; Developer Nearing Foreclosure Allowed Renters To Move In, Despite No COs

In Pawtucket, Rhode Island, The Providence Journal reports:
  • A scene of desperate economic times played out [Wednesday] inside a former mill, where fire officials evicted as many as 28 people because their new apartments were so unfinished as to be fire hazards. The project manager said she allowed the tenants in — even though their apartments lacked sprinklers or occupancy certificates — because she feared losing them as customers.


  • Fire officials made a surprise visit to the complex Tuesday after receiving a tip that people were living in what amounts to an active construction site. Fire Chief Timothy P. McLaughlin said they discovered that the project had no working fire alarm or sprinkler system and limited emergency lighting, and that people had unrestricted access to areas under construction and demolition.


  • McLaughlin said First National Development began moving people in last fall to stave off a threat of foreclosure.

For more, see Fire officials evict tenants at unfinished apartment complex.

Rent Scam Victim Plays Key Role In Apprehending Suspect While In The Process Of Ripping Off Another

In Houston, Texas, KVUE-TV Channel 11 reports on a woman who, after being ripped off out of $2,500 by an alleged scam artist who rented her a vacant home he didn't own, turned the tables on him and played a key part in apprehending him while he was in the process of running the same scam on another prospective renter. He reportedly told the prospective tenants that he worked for an investor who was saving homes from foreclosure, and then renting them out.

For the story, see Woman helps police catch alleged scam artist.

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

Friday, March 27, 2009

Court Temporarily Prohibits Central Florida Loan Modification Firm From Charging Upfront Fees

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [Thursday] announced that his office has obtained an emergency court order temporarily prohibiting a Central Florida company from charging up-front fees for foreclosure-related rescue services. According to the order issued by the Orange County Circuit Court, Wineberg, Lopez, & Rodriguez Company is barred from charging homeowners any fee in advance for providing foreclosure-related rescue services.

For the entire press release, see Court Grants Emergency Request to Halt Central Florida Foreclosure Rescue Company's Up-Front Fees.

Go here for more on the lawsuit against Wineberg, Lopez, & Rodriguez (press release, lawsuit).

Intentional Torching Of Historic Inn Facing Foreclosure Forces 14 Brides To Can Wedding Reservations

In Asheville, North Carolina, WYFF-TV Channel 4 reports:
  • After an arson fire gutted one of the buildings at an inn complex, 14 brides who had weddings planned at the Asheville inn have canceled their reservations. [...] The mansion was built in 1889 as the private residence of Ambassador and Rep. Richmond Pearson. It was considered one of the area's premier public inns. The ownership of Richmond Hill Inn sent out a statement thanking the Asheville Fire Department for its efforts to try to save the historic Mansion Inn building and the heirlooms inside.


  • In the statement, the owners said that Richmond Hill Inn has been having financial difficulty because of the economy, and they filed for Chapter 11 reorganization more than a month ago. They also said that the insurance claims from the fire do not in any way benefit the current owners and that “any claims from the destruction of the property at this time would be paid to the current mortgage holders that forced the foreclosure.”

For more, see 14 Brides Cancel Weddings After Fire (Historic Inn Gutted By Arson Fire).

Ex-Home Health Aide Gets 10 Years For Scamming Elderly Couple; Home Lost To Foreclosure

In Norwalk, Connecticut, Norwalk News reports:
  • A former home health aide who scammed an elderly couple out of hundreds of thousands of dollars, forcing them so far into debt that their home was foreclosed upon, was sentenced in Stamford Superior Court on Thursday to 10 years in prison. Nuria Reyes, 61, was given 10 years in prison, time served after five years. She must also pay $70,000 in restitution to her victims and has to give the victims 50 percent of the restitution up front.


  • While working as a home health aide for Lee and Mary Kent from 2003 to 2006, Reyes applied for and obtained mortgages and a home equity line of credit on the victims' home at 14 Saranac St. during her employment.

For more, see Aide who scammed Norwalk couple given 10-year sentence.

Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc.

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

Foreclosure Scam Alerts Coming Soon To A Theater Near You

The Wall Street Journal reports:
  • The Federal Reserve is coming soon to a theater near you. The subject won't be the drama inside the central bank or its role in the current financial crisis. Rather, Fed officials plan to launch advertisements in movie theaters to warn homeowners about foreclosure scams. Intended to extend the reach of consumer warnings on the Fed's Web site, the ads will run in 14 cities with high-foreclosure housing markets and an outbreak of scam artists charging for guidance that is free from nonprofits working with the government.

For more, see Fed Features: Ads at Movies Warn Against Scams.

Virginia Closing Attorney Gets Two Years In Richmond-Area Equity Stripping Foreclosure Rescue Scam

In Richmond, Virginia, WTVR-TV Channel 6 reports:
  • [A] key player in a local mortgage rescue scheme is going to prison. [...] Prosecutors say Colin Connelly conspired with others from Walkwood Properties to commit mortgage fraud and Connelly admits to preparing fraudulent Housing and Urban Development documents and will now spend two years in prison.


  • Prosecutors say Connelly was hired by Darrell Underwood, owner of Walkwood Properties to close on a number of homes under Walkwood's real estate program. The court documents say the housing deals were done without full disclosure to the sellers about how the transactions worked and a huge portion of the equity in the victims' homes was skimmed to Walkwood and other entities.


  • Connelly begins his sentence next month. Once released from prison, he must pay back $376,000 to his victims. As for Darryl Underwood, he's been indicted on 41 charges including bank fraud and money laundering. He goes on trial in June.

For the story, see Lawyer Sentenced In Foreclosure Scheme.

For the criminal charges against Connelly, see:

San Diego DA Seeks Help Rounding Up Add'l Victims Of Land Patent Foreclosure Rescue Scam

In San Diego, California, XETV-TV Channel 6 reports:
  • Authorities asked for the public's help Wednesday in locating additional victims of a San Diego foreclosure fraud scam in which victims were falsely told that "land patents" would protect their properties from foreclosure. District Attorney Bonnie Dumanis said 61-year-old Larry Smith and five alleged accomplices sold the bogus "land patents" to homeowners, claiming the victims could pay only 10 percent of their mortgage payment each month and could force lenders to "re-contract" the loan amounts.(1)


  • So far, more than 20 victims have come forward saying they lost tens of thousands of dollars in the real estate scam, Dumanis said. Anyone who believes they may be a victim in the case was asked to call (619) 531-4475.

For more, see Victims Sought in Mortgage Foreclosure Scheme.

For some of the documents related to this scam:

Go here for other posts on the land patent allegations against this group.

(1) The defendants -- Smith, Maria Candida Capa, Margarita Gaviola, Jessica Refuerzo, Julita Whittingham and Edgardo Orcino -- are accused of defrauding homeowners out of more than $100,000 in 2007 and 2008.

Mass AG Files Civil Charges Against Loan Modification Firm; Alleges Collection Of Illegal Upfront Fees, Violations Of State Consumer Protection Act

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office has obtained a temporary restraining order against Express Modifications, Inc., d/b/a “Loan Mods By Lawyers, Inc.,” which ran prominent advertisements in a local newspaper last month offering to help homeowners avoid foreclosure. In a complaint filed in Suffolk Superior Court [Wednesday], the Attorney General’s Office alleges that the advertisements were unfair and deceptive, in violation of the Massachusetts Consumer Protection Act, because they falsely give the impression that Express Modifications would provide the homeowner with the services of an attorney, and would guarantee a loan modification that would improve the homeowner’s financial situation dramatically and save the home from foreclosure.(1)

For the entire press release, see Attorney General Martha Coakley Obtains Temporary Restraining Order Against Company for Deceptively Advertising Foreclosure Relief Services and Soliciting Illegal Advance Fees.

(1) According to the Massachusetts AG, the advertisements in question ran on three dates in February 2009 in the Boston Metro newspaper. The company offered to assist homeowners to “Save Your Home, Modify Your Loan,” and “Stop Foreclosure; Call NOW!” and directed homeowners to the website The Attorney General’s investigation of the company and its operations also revealed that the company demands a $1,500 up-front fee before providing services to help homeowners avoid foreclosure. Such advance fees are illegal under regulations issued by the Attorney General’s Office in 2007 to combat various unfair business practices that target homeowners facing foreclosure. The Attorney General’s Office also determined that although the company used the name “Loan Mods By Lawyers,” there appeared to be no licensed attorneys on staff.

Florida Bar Issues Ethics Alert For Lawyers Working With Loan Modification Firms

The Florida Bar has recently issued an "Ethics Alert" in which it provides Florida attorneys some guidance as to what activities they should steer clear from when forging working relationships with non-attorney loan modification firms.
  • [T]his alert does not address every potential problem or concern. Lawyers should not assume that conduct is permissible merely because it is not listed [herein].(1)

For more, see Ethics Alert: Lawyers should be very wary of loan modifiers.

For more from The Florida Bar:

Go here and Go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law.

(1) The list of prohibited activities contained in the alert:

  • Cannot pay a referral fee or give anything of value to a nonlawyer for referring distressed homeowners to the lawyer. [Rule 4-7.2(c)(14)]
  • Cannot be paid by a nonlawyer to provide services to distressed homeowners. [Rule 4-5.4(a)]
  • Cannot directly or indirectly divide fees with a nonlawyer. [Rule 4-5.5(a)]
  • Cannot assist in the unauthorized practice of law by: (a) providing legal services for a distressed homeowner while employed as in-house counsel for a nonlawyer company; (b) forming a company with a nonlawyer to perform foreclosure related services if any of the services are the practice of law; or (c) assisting a nonlawyer individual or company in providing services that the individual or company is not authorized to provide or are otherwise illegal.[Rule 4-5.5(a)]
  • Cannot assist a nonlawyer in violating the provisions of the Foreclosure Rescue Act, Section 501.1377, Florida Statutes. [Rule 4-8.4(d)]
  • Cannot directly contact distressed homeowners to offer representation (including by telephone or facsimile) and cannot allow someone else to directly contact distressed homeowners on the lawyer’s behalf. [Rules 4-7.4(a) and 4-8.4(a)]
  • Cannot accept referrals from non-lawyers acting in the guise of a “lawyer referral service” (legitimate lawyer referral services must comply with a rule which requires all advertisements and contact with prospective clients to be in compliance with the attorney advertising rules, in addition to other requirements) [Rule 4-7.10]
  • Must have a direct relationship with distressed homeowners who hire the lawyer for representation. [Rules 4-1.1, 4-1.2 and 4-1.4]
  • Cannot allow a nonlawyer to choose a lawyer for a distressed homeowner or direct a lawyer’s representation of a distressed homeowner. [Rules 4-1.1, 4-1.2, 4-1.4, and 4-5.5(a)]

The above cited rules can be found in Chapter 4 of the Rules Regulating The Florida Bar: Rules of Professional Conduct (for pdf version, try here - 139 pages).

According to the Ethics Alert, several ethics opinions, Opinions 92-3 and 95-1 in particular, discuss similar proposals and the ethics problems that arise when lawyers enter business arrangements with nonattorneys. UnauthPractOfLawTheta

Indianapolis-Area Prosecutor Considering Mortgage Fraud Charges In Alleged Rent Skimming Scam

In Indianapolis, Indiana, WISH-TV Channel 8 reports:
  • The Keystone Towers were once an upscale apartment complex, the home of professional athletes and up-and-comers. The towers, which sit on the main highway between Indianapolis and Fishers, have deteriorated to the point of blight. They are infested with rats, human feces and sometimes, the homeless.


  • Documents compiled by investigators show the building has been owned by a number of people, most recently Southeastern Partners of Hickory, North Carolina. But investigators believe the problems of Keystone Towers can be traced to one man, Jorges Newberry, who they say bought the towers in 2003 and then abandoned it.

  • Indianapolis Housing Agency Executive Director Bud Myers said, "What Jorges has done is take money off the top, put it in his pocket and moved on to other communities, other cities, other states."

  • Marion County Deputy Prosecutor David Wyser is reviewing charges, including welfare and mortgage fraud against the Newberry. He believes it's all part of a scam. "They buy these properties, they obtain loans, they default on these loans. They take all the money, they leave and they leave it in foreclosure -- then transfer title. They obtain payments through HUD programs even after the property has been sold," explained Wyser.

For more, see Special Report: Indy Eyesore (A once prominent landmark has becomea mess). RentSigmaSkimming

Thursday, March 26, 2009

Florida AG's Assault On Upfront Fee Loan Modification Firms Continues; Accuses Group Of Violating UPL, Foreclosure Rescue Fraud Statutes In Civil Suit

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum today announced that his office has obtained an injunction against a South Florida loan modification company and its owner to freeze the company’s assets until a lawsuit filed against the company could be heard in court. Miami-based Mortgage Crisis Solutions Association, LLC and owner Donald Gillette are accused of charging homeowners in foreclosure up-front fees as high as $2,995 for loan modification services, but never providing the services. Additionally, the lawsuit alleges Gillette and his company improperly advertised legal services and counsel.


  • The lawsuit alleges multiple violations of the Foreclosure Rescue Fraud Prevention Act and the Florida Deceptive and Unfair Trade Practices Act. Full victim restitution has also been requested.(1) A copy of the lawsuit has been served on Gillette and his employee, Flynn McCarthy.

For the entire Florida AG press release, see Attorney General Files Injunction to Freeze Assets of South Florida Loan Modification Company.

For more from the Florida AG's office:

(1) The lawsuit also accuses the group of engaging in the unauthorized practice of law. See lawsuit - paragraph 27. A related company, Property Solutions Specialists, Inc., is also named in the lawsuit and allegedly guaranteed to make available all laws applicable to the homeowners’ situation to better assist them with the defense against foreclosure, even though the company is not a legal services entity. Also named as defendants are One Source Communications, Inc. and Nationwide Financial Partners, Inc.UnauthPractOfLawTheta

Lawyer, NYC Dominatrix Bagged In Alleged $50M Mortgage Scam; Scores Of High End Homes End Up Foreclosed; Fetish Customers "Posed" As Straw Buyers: DA

In Suffolk County, New York, Newsday reports:
  • A former Suffolk legislator, a Manhattan dominatrix and several other people were charged Wednesday in what Suffolk prosecutors said was a $50 million web of mortgage fraud that began in a Manhattan fetish club and ended with scores of pricey Southampton homes ownerless and in foreclosure. George Guldi, 57, of Westhampton Beach, a private attorney since leaving the Suffolk Legislature in 2003, acted as the lawyer in dozens of fraudulent transactions that made him millions, prosecutors said. Guldi and others took out mortgages for more than 50 East End homes on behalf of fake buyers, pocketed the money, then left the houses to languish once payments came due, prosecutors said.


  • Prosecutors said the fake borrowers, or straw buyers, were recruited by a Manhattan couple, Donald MacPherson, 65, and Carrie Coakley, 38, from among the clientele of their Manhattan sexual fetish fantasy business, Arena Studios.(1)

For more, see DA: Ex-pol, dominatrix ran mortgage fraud scheme.

See also, Prosecutors: Here's how mortgage scam worked.

For story update, see Attorney to Challenge Office Raid After Arrest in Mortgage Scam Tied to Dominatrix Club.

(1) According to Arena Studio's Web site, the Broome Street company provides space for dominatrixes to meet clients, boasts a "beautifully decorated and fully equipped private dungeon," and, among other items, rents out "medieval torture" implements, bondage furniture and three kinds of whips, Newsday reports. In return for payments of $5,000 to $10,000, clients of the dungeon and others posed on paper as buyers of expensive homes all over the Town of Southampton, Suffolk DA Thomas Spota said.

Mueller: FBI Swamped By Mortgage Fraud Cases

New York Newsday reports:
  • FBI Director Robert Mueller told a congressional panel Wednesday that financial fraud investigations are straining the bureau's resources to fight crime. Mueller said his agency has seen mortgage fraud cases balloon to more than 2,000, in addition to more than 566 open corporate fraud investigations. He also said the bureau has had to shift resources from other criminal work.(1)

For more, see FBI: We're swamped by mortgage fraud cases.

(1) That growing caseload includes "in excess of 100" mortgage fraud investigations being run out of the New York office, which covers Long Island, the five boroughs and six northern counties, a spokesman said. The bulk of the local caseload - ranging from mortgage schemes involving straw buyers to bogus foreclosure rescue scams - is in Brooklyn and Queens.

Seventh Defendant In Maryland-Based Equity Stripping Foreclosure Rescue Scam Cops Plea; Responsible For $16.8M+ In Lender Losses

From the Office of the U.S. Attorney in Maryland:
  • Joy Jackson, age 41, of Fort Washington, Maryland, pleaded guilty today to conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

  • Joy Jackson presided over a ‘money store’ that was in the business of ripping off homeowners and mortgage lenders by submitting fraudulent paperwork to support over $16 million of loans that were never intended to be repaid,” said U.S. Attorney Rod J. Rosenstein. “Instead of helping financially distressed homeowners keep their homes as promised, she secretly used their home equity to buy luxuries for herself, including furs, jewelry and over $800,000 on her wedding.”


  • Jackson is the seventh defendant to plead guilty in the Metropolitan Money Store mortgage fraud scheme. [...] Three defendants remain scheduled for trial on July 7, 2009.

For the entire press release, see President of Metropolitan Money Store Pleads Guilty in over $35 Million Mortgage Fraud Scheme (Jackson Personally Responsible for Over $16.8 Million in Losses to Mortgage Lenders and Used Over $800,000 of Fraudulently Obtained Proceeds to Pay for Her Wedding).

See also, The Washington Post: Woman Pleads Guilty in Mortgage Fraud Scam:

  • [I]nstead of helping people hold onto their homes, as they promised, Jackson and her co-conspirators took titles to properties, drained them of equity and charged exorbitant transaction fees, according to prosecutors. [...] Already, 115 victims have been identified in Maryland, and that number is expected to grow, a prosecutor said. Jackson's sentencing is Nov. 16.

For the indictment in this case, see U.S. v. JoyJackson, et al.

Firm With History Of Some Controversy Gets Freddie Mac Loan Servicing Contract

ProPublica reports:
  • Last month, Freddie Mac introduced a pilot program designed to guide 5,000 homeowners with high-risk mortgages through the loan-modification process, but it outsourced the job to [Ocwen Financial Corp.,] a subprime loan servicer with a history of customer dissatisfaction and run-ins with the federal government.(1)
ProPublica’s Alexandra Andrews reports on the past problems Ocwen Financial Corp. has had in its private and government business dealings.

For more, see Freddie Mac Loan Contractor Has Spotty Record.

(1) Among its run-ins with the federal government, according to the story, Ocwen got a lucrative contract in 2003 to manage and sell thousands of foreclosed properties owned by the Department of Veterans Affairs, but a report from the Government Accountability Office in 2007 panned Ocwen's performance and said the "VA also has not been satisfied with Ocwen's performance": Ocwen racked up $1.3 million in penalties from the VA in the last three quarters of 2005 (at the height of the housing boom) for failing to meet sales targets. There were other problems too: Ocwen charged the VA for home-upkeep repairs that were never made, the GAO reported. Houses fell into disrepair and were covered in "trash and debris," which the GAO suspects might have lowered property values.

Disbarred Florida Attorney Gets 14 Years For Pocketing $1.7M+ From Escrow Accounts Involving Clients' Real Estate Transactions

In Pinellas County, Florida, the St. Petersburg Times reports:
  • Richard Da Fonte, the disbarred Clearwater lawyer accused of stealing more than $1.7 million from clients, was sentenced to 14 years in prison and 15 years' probation.(1)


  • [His lawyer, Larry] Sandefer said his client had hoped to pay back his victims from the sale of his business, real estate and life insurance. The business, though, which Da Fonte sold to a former associate, is tied up in a legal dispute. Foreclosure is pending on his office condominium, and his home is in foreclosure, Sandefer said. His $3 million life insurance has lapsed.

For more, see Disbarred lawyer Richard Da Fonte gets 14 years for stealing from clients.

Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds.

(1) The story describes some of Da Fonte's victimized clients as follows:

  • Shakawat Hossain of St. Petersburg hired Da Fonte in 2003. He said the lawyer stole about $235,000, money he planned to use to buy a gas station and convenience store;
  • Pinellas Park resident Sharon Dore and her family lost $110,000 when they hired Da Fonte to handle the sale of her late mother's St. Petersburg home. The money was supposed to go to Dore, her daughter and a brother;
  • Joan Kelly, a widow, paid for her Seminole home in full in April 2007. That summer, while she was in Cape Cod, she began getting calls from lawyers offering help with a problem. It was foreclosure. Da Fonte had taken almost $200,000 meant to pay her home's previous owners;
  • Winnie Yang of Clearwater couldn't wait to have her say during the lengthy hearing. The lawyer stole $400,000 from her brother-in-law Kenneth Yang, who lives in Texas. The money was from a real estate transaction involving Yang, her husband and her brother-in-law. EscrowRipOffAlpha

Police Detective: "Rent Skimming, It Is Epidemic In The City Of L.A. Right Now"

PBS' NewsHour with Jim Lehrer reports:
  • With the national foreclosure rate still climbing, some chose to live in foreclosed homes while others have been the victims of "rent skimmers," people who pretend to own a foreclosed property and scam tenants out of thousands of dollars in security deposits and fees.

For more, including link to the video broadcast of the story, see Glut of Foreclosed Homes Encourages Scams, Desperation.

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

Ohio Woman Cops Plea To Theft From Disabled Siblings, Allowing Home To Go Into Foreclosure Despite Having Power Of Attorney

In Cuyahoga County, Ohio, The Cleveland Plain Dealer reports:
  • A 56-year-old Brooklyn woman entered a guilty plea on Monday in Cuyahoga County Common Pleas Court to theft charges after authorities said she stole more than $38,000 from her mentally disabled sisters. Irene Schultz faces up to eight years in prison when she is sentenced in April.

  • Schultz had been accused of allowing a Cleveland home in which her two sisters lived to go into foreclosure by not making payments. The Cuyahoga County Prosecutor's Office said the county's Board of Mental Retardation and Developmental Disabilities conducted an audit that revealed Schultz's alleged theft. The office said Schultz was responsible for her sisters' finances and had been granted power of attorney from 2001 to 2007.

Source: Woman admits stealing from sisters.

Foreclosure Assistance Firms Continue Clipping Florida Homeowners For Upfront Fees, Despite Prohibitions In State Law

In Palm Coast, Florida, the Daytona Beach News Journal reports:
  • William Hangan had a gut feeling that something was just not right when a California-based foreclosure consulting company sent him a postcard promising him thousands of dollars to help him move from his Palm Coast home that was being foreclosed. He should have listened to his gut.

  • Hangan, 26, now living in Rhode Island with his wife and daughter, is fighting to get back $1,200 because he has not received a penny in moving expenses from Homeowner Assistance Center.(1) Company officials have cut off communication with Hangan after numerous, frequent and repeated telephone calls and e-mails company president Ken Moorhead has termed "harassing."

For more, see Owners facing foreclosure forced to walk scam tightrope.

(1) Since October 1, 2008, charging up-front fees for loan modification and foreclosure related services violates the Florida Foreclosure Rescue Fraud Prevention Act. The Florida Attorney General's office urges those who believe they have been victimized by mortgage rescue companies to file a complaint at the their Fraud Hotline, 1-866-966-7226, or at their website.

Texas Woman Gets 99 Years In Alleged Mortgage Fraud, Payment Skimming Scam; Homeowners In Foreclosure, HUD Left Holding The Bag

From the Office of the Texas Attorney General:
  • A Henderson County woman was [Monday] sentenced to 99 years in prison for her role in a mortgage fraud scheme. On Tuesday, a Navarro County jury found the defendant, Kandace Yancy Marriott, 52, of Gun Barrel City, guilty of engaging in organized criminal activity. According to prosecutors, evidence presented at the punishment stage showed Marriott received monthly mortgage payments from her clients, failed to remit those payments to the mortgage lender, embezzled the homeowners’ funds, and therefore caused her clients to default on their home loans.


  • The scheme involved predominantly low-income purchasers whose residential loans were guaranteed by the U.S. Department of Housing and Urban Development. As a result, when the unqualified buyers defaulted on their home loans, their mortgage lenders did not suffer financial losses. Instead, HUD – and therefore the taxpayers – had to cover the default costs. Investigators believe the defendants’ scheme cost the taxpayers more than $3 million.(1)

For the Texas AG's press release, see East Texas Woman Sentenced To 99 Years In Prison For Mortgage Fraud (Kandace Yancy Marriott convicted, three additional suspects await trial in alleged scheme).

(1) According to state investigators, the defendants illegally forged home buyers’ signatures, inaccurately completed loan applications, and falsified supporting documents, including the buyers’ rent payment verification statements, proof of employment, and Social Security Administration benefits data, among other items. Court documents filed by the state indicate that the defendants conduct was intended to ensure that unqualified home buyers loans were approved by mortgage lenders.

Wednesday, March 25, 2009

Feds File Civil Charges Against Two New Jersey Loan Modification Firms Promoting "HOPE"

From the Federal Trade Commission:
  • At the request of the Federal Trade Commission, a U.S. district court has ordered two companies to stop falsely advertising that they are part of a government-endorsed mortgage assistance network and that they successfully modify mortgages for almost all of their clients or else give refunds. In fact, the FTC alleges that the defendants are not affiliated with the legitimate HOPE NOW Alliance mortgage assistance network, often divert one month’s mortgage payment as a fee from distressed homeowners, fail to help them modify their mortgages, and then deny them refunds.


  • The New Hope and Hope Now scammers have given consumers false hope under the guise of the government-endorsed HOPE NOW Alliance. We won’t hesitate to take action against these types of con artists now and in the future,” [FTC Chairman Jon Leibowitz said].


  • Seeking to capitalize on its name, the defendants called their firms New Hope Modifications and Hope Now Modifications,(1) and used telephone numbers that included “HOPE,” to mimic the real HOPE NOW Alliance hotline which is 888-995-HOPE.

For the FTC press release, see Court Halts Bogus Mortgage Loan Modification Operations (Two Firms Falsely Claimed to be Affiliated with Non-Profit HOPE NOW Alliance).

For the FTC court documents, see:

(1) These are the same two firms that were recently sued by the New Jersey Attorney General for similar allegations.

Hundreds Show Up At Miami Loan Modification Firm Headquarters Clamoring For Refunds Of Their Upfront Fees

In Miami, Florida, WFOR-TV Channel 4 reports:
  • Hundreds of people crowded outside a building in Miami on Tuesday trying to get their money back from Lincoln [Lending] Services, a mortgage "rescue" company. Florida's attorney general filed suit against the company (press release, lawsuit) Monday, alleging it has illegally collected thousands of dollars in up front fees from people looking for help in restructuring their mortgages or avoiding foreclosure.


  • Retiree Roberto Salcido said he gave Lincoln [Lending] $4,400 and got "nothing" for his money. "My wife and I are retired," Salcido said, clutching a batch of Lincoln Financial paperwork in a clenched fist.


  • A woman who answered the phone at the company Tuesday said Lincoln [Lending] is no longer in business and has been "absorbed" by an outfit called the Foreclosure Law Center. The woman, who did not give her name, said the Foreclosure Law Center would make good on promises made to clients or refund their money "if no services have been provided to them."


  • The attorney general's office urged those who believe they have been victimized by Lincoln [Lending] or other mortgage rescue companies to file a complaint at the their Fraud Hotline, 1-866-966-7226, or at their website.(1)

For more, see Mortgage "Rescue" Company Sued By Atty. General (Attorney General Says "Scam" Targeted Most Vulnerable) (read story) (watch video).

(1) Based on the Florida Attorney General's lawsuit against Lincoln Lending Services, complaints to The Florida Bar alleging the unauthorized practice of law, which is one of the Florida AG's allegations against Lincoln (see Florida AG's lawsuit, at paragraph 30), may also be advisable. Go here for information on Filing an Unlicensed Practice of Law Complaint with The Florida Bar.

State Bar Cautions Attorneys On Working With Loan Modification Firms

The Florida Bar News reports:
  • Florida lawyers are being approached about working with nonlawyers offering foreclosure-related services to consumers, but the proposals present a veritable minefield of ethical problems. Bar Ethics Counsel Elizabeth Tarbert said the Ethics Hotline has received many calls from attorneys who have been approached by companies or individuals that call themselves foreclosure-related rescue services, experts on loan modifications, or short sales consultants. (See separate Ethics Alert) “Some of them are offering to set up lawyers in offices; some are offering to open partnerships with lawyers; some are offering to hire lawyers in-house to represent clients,” Tarbert said.

  • The catch: None of that, or many other proposals by the companies, are allowed by Bar rules.


  • Janet Morgan, counsel in the Bar’s Ft. Lauderdale office, has headed up the UPL investigation of [loan modification firm] Outreach Housing. “They had a Web site and a television ad offering legal services of attorneys through a nonattorney entity. . . . A nonlawyer company can’t do that,” Morgan said. “And then when they brought people in the door, they promised to analyze their loan documents and determine whether there were any violations [of truth in lending and closing procedure laws] that occurred during closing.”

  • Not surprisingly, Morgan said in every case investigated by the Bar, customers reported that the company found an actionable lending “violation,” and the Attorney General found the same in its probe. The company then proceeded to advise clients they had a basis for a federal suit and would arrange an attorney for them.

  • Clients were also told to send all communications from lenders to the company. The company tried to hire attorneys to work in-house representing clients. When they found that was impermissible, Outreach created a captive in-house law firm, but that too caused problems. So the “law firm” was split off, but it was eventually dissolved, Morgan said.

  • Every time they would find there was a problem, they would change the way they did things,” she said. “They recreated themselves over and over. There were actual attorneys signing the lawsuits that were filed in federal court. However, we also found instances where our complainants did not understand a lawsuit was being filed in their name.”

For more, see Take care when working with foreclosure rescue services.

Go here for The Florida Bar's Ethics Alert: Lawyers should be very wary of loan modifiers.

Go here and Go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law. UnauthPractOfLawTheta

Ex-Brookyn Mortgage Company Exec Gets 97 Months For Pocketing $43M+ In Refinancing Proceeds, Leaving Fannie Mae Holding The Bag

From the U.S. Attorney's Office (Brooklyn, New York):
  • [L]eib Pinter, a former executive of Olympia Mortgage Corp., was sentenced [last week] to 97 months in prison for orchestrating a scheme to defraud Fannie Mae in connection with mortgage loans which Fannie Mae owned but were refinanced through Olympia. Pinter was also ordered to pay more than $43 million in restitution to the victims of his fraud scheme.


  • Olympia, formerly headquartered in Brooklyn, New York, originated and serviced mortgage loans owned by Fannie Mae. When Olympia refinanced a Fannie Mae mortgage loan, Fannie Mae typically wire transferred the money to an Olympia bank account. Olympia was then required to pay off the underlying mortgage loan by remitting the outstanding balance to Fannie Mae. Instead, Pinter misappropriated these proceeds for the benefit of Olympia. When the fraudulent scheme was revealed, Fannie Mae held nearly $44 million in unpaid principal in refinanced mortgage loans.

For the U.S. Attorney's press release, see Former Executive Of Olympia Mortgage Corp. Sentenced For Wire Fraud Conspiracy.

Madoff Using Florida Homestead Protection To Shield Palm Beach Mansion?

A recent story in the Palm Beach Post addresses the possibility that the admitted $50+ billion Ponzi scheme operator Bernard Madoff may be attempting to use the Florida law prohibiting a forced sale of a homestead to protect a Palm Beach mansion titled in his wife's name:
  • [Federal prosecutors] served notice [...] that they want to seize a vast array of assets in Ruth Madoff's name, including the Palm Beach home. Federal officials could try to pierce state homestead protection by arguing that the money used to buy the home in 1994 came from fraud or other criminal activity and that federal law is preemptive, [...].


  • "It seems to me that the federal prosecutors are fairly confident that they will be able to demonstrate that Mrs. Madoff used the proceeds of a criminal enterprise" to buy the home, said New York attorney Richard Greenfield, who said he represents a group of Palm Beach investors. "They may employ RICO, a law aimed at racketeers to obtain the proceeds of the enterprise. They are already contending, contrary to Madoff's contention that the scheme began in the 1990s, that it began at least in the 1980s, well before she purchased the home."

For the story, see Madoff's $9 million Palm Beach property's size could leave small part vulnerable to creditors.

For story update (4-1-09), see Along with Palm Beach home, feds seize other Madoff assets.

Tenants In Apartment Building In Foreclosure Face An Early Boot As Unpaid Bill Results In Water Shutoff

In Avondale, Ohio, WLWT-TV Channel 5 reports:
  • One group of Avondale residents said the foreclosure crisis is hitting close to home -- and they don't even own their home. Several people living at the Glenwood Commons complex said Friday that they have been without running water for four days because of a $10,000 bill that's gone unpaid.


  • [One tenant] is using his stove to stay warm. Others are buying water to drink and flush the toilet. The situation has gotten so bad that the health department declared the apartments unsanitary and said that if the water is not paid within a few days, an official order to vacate will be issued. That would leave the building's residents out on the street.


  • The complex has about 70 units, but not all are occupied. Residents said the complex has been in foreclosure since October.

For more, see Apartment Residents Claim No Water In 4 Days (Complex In Foreclosure Facing Mounting Issues, Residents Say).

For other posts involving the problems tenants face in homes in foreclosure, go here, go here, go here, go here, and go here. RentSigmaSkimming

Tuesday, March 24, 2009

Advanced Consumer Rights Litigation Boot Camp

From The Ultimate Litigation Boot Camp website:
  • The Advanced Consumer Rights Litigation Boot Camp is an intensive two and one-half day learning experience that teaches you all you need to know about the litigation experience. You will learn the art of drafting a complaint, taking depositions with an actual court reporter and continue all the way through the litigation experience ending in a real life courtroom with a real trial judge for an actual trial experience.

For more, see Advanced Consumer Rights Litigation Boot Camp.

In a related story, see North Carolina Lawyers Weekly: Bankruptcy Boot Camp - O. Max Gardner drills lawyers from around U.S. on strategies of foreclosure combat.

Northern Florida Bar, Law Students, Legal Aid Team Up To Train Local Lawyers In Foreclosure Defense

In Jacksonville, Florida, The Financial News & Daily Record reports:
  • An upcoming class being offered by the Jacksonville Bar Association, Florida Coastal School of Law and Jacksonville Area Legal Aid is aiming to help local attorneys meet the needs of one of the groups hit hardest by the down economy: foreclosure defendants who have turned to JALA for assistance in saving their homes.


  • It’s a tutorial on foreclosures with an obvious goal of providing information to Jacksonville lawyers and Florida Coastal students so they can assist JALA’s efforts in defending foreclosures,” said [JBA President-elect Dan] Bean.


  • Right now, JALA has a model that works to stop foreclosures,” said [JALA Executive Director Michael] Figgins. “What we need is a community response to help JALA get the resources it needs so that we can help more and turn away less.”

For more, see Upcoming class to assist in local foreclosure problem.

Loan Mod Firm Took Upfront Fees For "Forensic Analysis" Of Loan Docs, Says Florida AG; Accuses Company Of Violating UPL, Foreclosure Rescue Fraud Laws

From the Florida Attorney General's Office:
  • Attorney General Bill McCollum [Monday] filed a lawsuit against a Miami company and its owner alleging the company is engaged in foreclosure rescue fraud. According to the lawsuit, Lincoln Lending Services, LLC targeted Hispanics facing foreclosure and charged up-front fees for loan modification services, both in violation of the Foreclosure Rescue Fraud Prevention Act.


  • According to consumer complaints, Lincoln Lending advertised for mortgage foreclosure assistance and rescue services. The complaint alleges that to get around the statutory prohibition against up front charges, the company would have consumers pay $2,700 for "forensic analysis" services, then sign a contract for alleged modification services. The forensic analysis fee was allegedly created to circumvent the new law, which the Attorney General helped create last year.

  • Lincoln's business of offering legal services, directly or indirectly, constitutes the unauthorized practice of law and violates FS 877.02(1).(1) The Attorney General’s Economic Crimes Division determined Lincoln Lending also forwards consumers to an attorney working under the business names of Florida Foreclosure Law Center, LLC and Florida Homeowner Assistance Center, LLC.(2)

For the Florida AG's press release, see Attorney General Sues Company Targeting Hispanic Community with Foreclosure Rescue Fraud Scam.

For the lawsuit, see State of Florida v. Lincoln Lending Services, LLC.


See also, The Miami Herald: Florida sues Miami's Lincoln Lending over mortgage fees (Florida's attorney general has accused a Miami firm that promised to modify delinquent home loans of taking upfront fees from customers in violation of a state law):

  • [L]incoln also told customers a $999 fee it charged for ''loan-modification'' services would be paid by their mortgage lender through President Barack Obama's stimulus package, the lawsuit alleges.


Go here for information on Filing an Unlicensed Practice of Law Complaint with The Florida Bar.

Go here and Go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law.

(1) See lawsuit, at paragraph 30:

  • Defendant's business in offering legal services to the public directly, or indirectly through Florida licensed attorneys which Defendants engage or otherwise involve and/or compensate, constitutes the unauthorized practice of law in accordance with the principles of the Florida Supreme Court pursuant to The Florida Bar v. Consolidated Business and Legal Forms, Inc., 386 So.2d 797 (1980).

(2) With respect to the attorneys involved with this loan modification firm, no word at this point as to whether they are in hot water for possible charges of:

  • using a person or organization to recommend or promote the lawyers’ services,
  • aiding nonlawyers in the unauthorized practice of law,
  • improperly sharing legal fees with nonlawyers.

See The Florida Bar's Ethics Alert: Lawyers should be very wary of loan modifiers. See also. Cincinnati Bar Assn. v. Mullaney, 119 Ohio St.3d 412, 2008-Ohio-4541 (2008). UnauthPractOfLawTheta

ABC News' 20/20 Probes Into San Diego Loan Modification Firm

A recent investigative report on ABC News' 20/20 program probed into the activities of San Diego, California loan modification firm People's First Financial:
  • [L]ast year, [Jay] Nichols was employed as a salesman at what he describes as an aggressive loan modification company, People's First Financial in San Diego. He said the mantra was: "Sell -- sell hard ... trying to get as much money as they could, as quickly as they could." He said the sales staff was revved up at training sessions that included such movies as "Boiler Room," which glamorized a hard sell.

  • Negotiating loan modifications can be a legitimate service, but a current People's First Financial employee who asked not to be identified said customers were signed up even when they had almost no chance of qualifying for bank renegotiation. "And sometimes the salesperson just didn't care to check if they even could," the employee said.

  • Former customers said they were lured in by talk of huge cuts in monthly payments, and some say they were even told it was a government-sponsored program. Nichols confirmed that other salesman made this kind of false claim.


  • People's First was doing big business, with as many as 40 salespeople selling to hundreds of often desperate homeowners. But in the back room, where the actual bank negotiations took place, for months a handful of workers were completely overwhelmed, "surrounded by files," said Nichols. "We have files in there since last June and July that we still have, and the reason they weren't worked on is because they were lost," said the current employee.


  • [One couple] said People's First refused to honor their money back guarantee. Several other former customers had similar complaints about collecting on that refund. Former employees confirm that their bosses were very resistant to paying anyone back.

For more, see 'Bad to Really Bad': Foreclosure Rescue Gone Wrong ('20/20' Seeks Answers From CEO of One Loan Modification Company).

Virginia Feds Turn Up Heat On Foreclosure Rescue Scams

In Newport News, Virginia, the Daily Press reports:
  • [A]lex J. Turner, the FBI's special agent in charge of the Hampton Roads region, said the bureau was shifting resources to fight foreclosure scammers. [FBI special agent Tom] Tierney wouldn't provide details of how many cases the FBI is actively investigating in Hampton Roads, saying only that the number is "substantially" higher than a year or two ago. Few of the FBI investigations have gone to court so far, though that could change, given the increased focus.

  • Some private lawyers have also become involved, representing the scammed clients in civil proceedings. Robin Abbott is an attorney with Consumer Litigation Associates, a Newport News law firm. She said she's handled at least 20 foreclosure scam cases so far. "A day does not go by that I do not get calls" from people who've been swindled, Abbott said. The types of scams, she said, are many, varied and "getting more and more complex."

  • But there's one common theme, she said: a rush to get you to sign documents that you don't understand and an effort to ensure you don't consult other experts. "It's usually late in the afternoon when they send you the documents, and they tell you to get them back to them right away," Abbott said. "You don't have time to read them, and you don't get a copy. They'll tell you they'll get you a copy later."'

For more, see Scams on the rise with increased foreclosures.

San Bernardino DA Arrests 2, Seeks 3 Others In Alleged Cash Back Mortgage Fraud; Accused Of Using Stolen I.D. To Finance Purchase Of Two Homes

From the San Bernardino County, California District Attorney's Office:
  • [I]nvestigators with San Bernardino County District Attorney’s Real Estate Fraud Unit arrested Michael Moon Park, 60, and his wife, Bu Yun Park, 60, of Helendale, on felony charges of identity theft, forgery, grand theft, money laundering, and conspiracy. Three additional suspects remain outstanding and are currently being sought. They are: Kenneth Sung Park, Jason S. Kim, and Duk Sung Jin.

  • Jason Kim obtained a fictitious driver’s license in the name of the victim in order to steal the victim's identity and purchase two homes [...]. Michael Park, who is a licensed real estate agent, represented himself as the broker and his wife as the seller during the fraudulent transactions. After the homes were sold, proceeds were wired into the Parks’ bank account and then some of the proceeds were electronically transferred to another account in Vancouver, Canada. The homes subsequently went into foreclosure with the estimated loss of over 1.2 million dollars.

For the San Bernardino DA's press release, see Couple Arrested for ID Theft, Forgery, Grand Theft and Conspiracy.

Monday, March 23, 2009

More Mortgage Lending Insiders Blow The Whistle On Shady Subprime Loan Practices

Dateline NBC ran a story last night in which it:
  • [G]ets to the bottom of how bad loans and greed wrecked the U.S. economy in this hour-long investigation. Hear from Countrywide insiders and whistleblowers who have never spoken publicly before.

For the story, see 'If you had a pulse, we give you a loan' (Inside the fiasco that led to the mortgage mess and Countrywide's collapse) (read story) (watch video).

Go here for Dateline NBC home page.

In a related story, see Forbes: Follow The Mortgage (How the American taxpayer and a swanky Manhattan hedge fund ended up with a Liberian immigrant's busted mortgage).

California AG Bags Two In Alleged Loan Mod Scam Involving 160+ Victims; Suspects Charged With Grand Theft, State Foreclosure Consultant Law Violations

From the Office of the California Attorney General:
  • Attorney General Edmund G. Brown Jr. [Thursday] announced the arrest of two scam artists -- Mary Alice Yraceburu and Marianne Curtis -- who "coldly and heartlessly" conned over one hundred and sixty victims out of thousands of dollars for non-existent loan modification services.


  • Yraceburu was arrested [Thursday] in Fresno County and Curtis was arrested [Thursday] in Orange County on the following charges: - 24-counts of grand theft; - 25-counts of violations of California's foreclosure consultant statutes; - One special allegation that the total value of theft was over $65,000; - One special allegation that the total value of theft was over $100,000; Both women are convicted felons who have served time in state and federal prisons.

  • The two women operated a company called Foreclosure Freedom, which sent hundreds of fliers to Californians promising help in stopping the foreclosure of their homes. The fliers read: "FINAL NOTICE - Respond only to this notice immediately."

  • This is similar to First Gov scam, which the Attorney General stopped late last year. When homeowners called the number on the flyer, they were told their mortgages could be renegotiated to a lower monthly payment. Victims, however, were required to pay thousands of dollars in up-front fees and were instructed not to contact their lenders. Victims were assured the company had "private lenders and specialists exclusive to their company who are very experienced in the options and methods used to renegotiate home loans," yet neither of the women who operated the company had real estate licenses, legal training, or any experience in the home mortgage market. Investigators found no evidence of any successful loan modifications and most of the victims were either forced into bankruptcy or lost their homes to foreclosure.

For the California AG press release, see Brown Announces Arrest of Two Scam Artists Who Committed Loan Modification Fraud.

For the California AG's charging documents, see:

NY Feds Indict Two In Equity Stripping, Straw Buyer Scam

In The Bronx, New York, the Daily News reports:
  • A Bronx real estate broker who hosted a radio show on WBLS and WLIB inviting distressed homeowners to contact her for help was charged Thursday with ripping them off instead. Lavette Bills, head of MTC Real Estate, was charged along with Kirk Lacey, a Jamaican who lives in Florida, in a brazen $800,000 mortgage fraud scheme that allegedly preyed on people fearful of foreclosure.

  • In one case, Bills, 36, persuaded a Bronx homeowner who had called the show for help to put Bills' name on the deed to her house on Tinton Ave. by promising to get the homeowner a loan to pay off the $38,000 mortgage. Bills sold the home to a straw buyer, according to the U.S. attorney's office and the FBI. Bills allegedly made $150,000 on the crooked deal, including taking a $50,000 broker's fee for the bogus sale.

  • The homeowner, who just wanted to pay off the small mortgage, is now in foreclosure. Thanks to Bills, the new mortgage on the house totals $337,500, prosecutors said.

For the story, see Radio 'foreclosure specialist' Lavette Bills held in $800G mortgage con.

See also, The Journal News: Broker from Briarcliff faces charge.

  • [T]he papers detail another transaction in which the pair allegedly used another straw buyer to get a $495,000 loan to buy a Bronx property. The defendants paid $300,000 for the property, the complaint says. The FBI interviewed the straw buyers involved in the transactions but the criminal complaint does not name them. The loan application contained a number of false statements, including misinformation about the straw buyer's job, income and residence, authorities said.

From the U.S Attorney's Office (Southern District, New York):

Investigative Report: Firm Uses Quit Claim Deed Home Transfers Into Trusts As Part Of Loan Modification Efforts

In San Diego, California, an investigative report by the San Diego Union Tribune attempts to shine light on one area loan modification firm:
  • [E]dmundo Rubi now does business under the names Apocalypse Trust and Amerisian Trust. Since July, he and a pair of real estate brokers have persuaded more than a dozen desperate families in San Diego County to transfer ownership of their homes to the trusts as a way of saving them, a San Diego Union-Tribune investigation has found. So far, at least 23 individuals in California, Nevada and Arizona have signed over 35 properties, using a simple document called a quitclaim deed. No one contacted by the Union-Tribune has received a modified mortgage. Two have lost their homes to foreclosure.


  • The operation has similarities with Rubi's past businesses in that all focused on Filipinos in National City and Chula Vista. Federal prosecutors characterized Rubi's previous activities as a Ponzi scheme. Investors were told his companies would purchase U.S. government obligations at a discount and investors would get 6 percent returns monthly.

  • Rubi pleaded guilty in 2005 to money laundering and conspiracy to commit mail fraud after swindling $25 million from about 425 people. He was sentenced to five years and 10 months in prison, and three years' supervised release. Rubi was let out in July, which is when many of the San Diego quitclaims to Amerisian and Apocalypse were filed.

  • Officials with the state attorney general and San Diego district attorney would not comment on Amerisian or Apocalypse trusts, nor whether they are investigating them.

For more, see Empty promises (To avoid foreclosure, families put home ownership in felon-run trusts; not one loan has been modified).

Illinois Attorney Disbarred For Actions In Alleged Equity Stripping Foreclosure Rescue Scam

In Aurora, Illinois, The Beacon News reports:
  • [A]urora attorney Edward Varga was disbarred for neglecting 18 bankruptcy cases and failing to refund the clients' fees in those cases. He failed to appear for his disciplinary hearing, according to the Illinois Attorney Registration & Disciplinary Commission. According to IARDC documents, Varga took between $300 and $2,760 from several clients, then failed to return calls or make court appearances for them.

  • In 2006, federal prosecutors charged Varga with defrauding clients, trustees and creditors of $500,000. According to the U.S. Department of Justice, Varga and a woman, under the guise of assisting individuals facing foreclosure, convinced these homeowners to sell their homes to "investors" while in bankruptcy or just before entering bankruptcy.

  • Varga, through the use of false statements and documents, ensured that the closings took place, the Justice Department said. Then the sale proceeds were signed over to the woman and not the sellers, prosecutors said. The sale and existence of the proceeds were concealed from the Bankruptcy Court, the trustees and creditors, prosecutors said.

For the story, see Attorney is disbarred after cheating bankruptcy clients.

For earlier reports on the criminal indictment, see:

Lender Files Civil Lawsuit Against Players In Alleged South Florida Flipping Scam

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • In the two years Patrick R. Newman lived in South Florida, he bought and sold more than a dozen condos — flipping some several times within hours or days — in a mortgage fraud strategy that allegedly duped a bank into approving millions of dollars in questionable loans. Newman died in 2006, as FBI authorities were investigating his multimillion dollar condo-flipping operation. Now, National City Bank — the lending institution that approved more than $14 million in mortgage loans that ultimately were defaulted on — is suing several attorneys, appraisers and businesses who the bank contends assisted Newman.


  • The Newman case spotlights a trend many legal experts predict will escalate in coming months. They expect a surge in litigation as more banks try to recover losses caused by what they contend was mortgage fraud. This is especially true in Florida, which ranked among the top three states in mortgage fraud the past three years.

For more, see Bank sues appraisers and attorneys, alleging fraud in flipping condos (Bank sues appraisers and attorneys, alleging they helped straw buyers and a flipping operation that cost it millions).

Sunday, March 22, 2009

New Jesrey Man Cops Plea To Recruiting Straw Buyers In Mortgage Fraud Scam

In Newark, New Jersey, The Star Ledger reports:
  • A truck driver from Paterson admitted in federal court to recruiting people who posed as home buyers for a mortgage-fraud scheme that led to a dozen guilty pleas. Appearing in U.S. District Court in Newark, Renford Davis, 47, said he worked with real estate agents, lawyers, loan officers and others to falsify mortgage applications as part of a scheme officials said netted up to $2.5 million.

  • The plot hinged on buying dilapidated two- and three-family houses in Paterson and quickly reselling them at inflated prices to obtain higher mortgages from banks. The houses -- rented by tenants receiving federal Section 8 assistance -- were sold to buyers with no money down and often ended up in foreclosure. Davis said he recruited those buyers and helped them doctor their mortgage applications.

For more, see Paterson man pleads guilty in mortgage-fraud scheme.

Feds Charge Title Agent With $900K+ Heist From House Closings; Homeowners Left In Foreclosure; Underwriter Says Suspect Unauthorized To Issue Policies

In Louisville, Kentucky, The Courier Journal reports:
  • [A] former lawyer, Wavy Curtis Shain, 26, was charged [last week] with carrying out various schemes to defraud banks and mortgage companies. He is accused of using businesses he owned and operated, Derby City Title and Capital Distribution LLC, to carry out the schemes.

  • He also is charged with misappropriating substantial amounts of money received on behalf of borrowers using Derby City Title to obtain loans to purchase homes. In doing so, he allegedly failed to pay off existing loans and mortgage held by the sellers of those houses. Shain also is charged in the indictment with perpetrating a check-kiting scheme using business and personal accounts maintained with US Bank and BB&T bank.

For the story, see Suspended, former lawyers charged.

In a related story, WAVE-TV Channel 3 reports:

  • Seven families could lose their homes any day now, even though they did nothing wrong. They made their house payments on time, but their homes are still going into foreclosure. They say it happened after a Louisville man scammed them out of almost a million dollars during a re-finance of their mortgage.


  • Federal investigators believe [Wavy Curtis] Shain pocketed more than $900,000 from seven families. The FBI has charged him with theft.

According to the WAVE-TV Channel 3 story, Shain, through his company, Derby City Title, purportedly wrote insurance policies for underwriter Investors Title Insurance Company. Officials from Investors Title reportedly told Channel 3 that Derby City Title was never authorized to issue policies for them.

For more, see Title company's failure to make loan payments means families could lose homes.

Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds. EscrowRipOffAlpha

Michigan Police Seek Scam Artist Using Extortion Threats To Squeeze Cash From Homeowners In Foreclosure

In Genesee County, Michigan, WJRT-TV Channel 12 reports:
  • Genesee County Sheriff Bob Pickell is alerting homeowners about a suspicious man who's preying on foreclosure victims. An investigation is underway after a Genesee County woman complained that a man came to her door urging her to get out of her house or to give him money.


  • Tina and Frank First say their home isn't in foreclosure, but there have been disagreements with their mortgage company that led to a threatened eviction. In the middle of all that, a man came to their door. "He says, 'Give me $2,000 to stay in the house,' or he'll pop the locks and he'd put on a lockbox and I'd have to leave," Tina First said.


  • "You cannot extort people out of their house. He didn't know the bank, he didn't have the papers, he had no legal identification. He had nothing," Capt. Chris Swanson said. "He was playing on the fears of the homeowner, who did not expect someone to be there."

For more, see Authorities warn of foreclosure scheme.

Another Florida Court To Implement Mandatory Mediation In Home Foreclosure Actions

In Pensacola, Florida, the Pensacola News Journal reports:
  • A judge's order signed [last] week could bring relief to local home owners and the local court system, both overwhelmed by mortgage foreclosures. [Florida's] First Judicial Circuit Chief Judge Kim Skievaski signed the order, effective April 1, that will send all new foreclosure lawsuits in Escambia, Santa Rosa, Okaloosa and Walton counties into mandatory mediation. Mediation can give homeowners a chance to renegotiate the terms of their mortgages, continue to make payments and stay in their homes.


  • The order will affect mortgages of owner-occupied homes and those made through institutional, investment or commercial lenders. It does not extend to investment, vacation or commercial properties. [...] The financial institution that is suing the borrower must pay $750 for the cost of the mediation for each case.(1)

For more, see Judicial order diverts foreclosures (Judge detours local cases to mandatory mediation).

For the judge's order, see Administrative Order 2009-18: Case Management Order And Mandatory Referral Of Residential Mortgage Foreclosure Cases To Mediation.

(1) According to the story, mortgage lawsuits still will be filed with the Clerk of Court's office, but the new order requires the financial institution to file a mediation notice with the Collins Center for Public Policy, a nonprofit organization that will manage the program.