Saturday, April 18, 2009

Individuals In Legal Proceedings Unrepresented By Counsel On The Upswing, Say Courthouse Insiders

The New York Times reports:
  • [F]inancially pressed people [...] are representing themselves more and more in court, according to judges, lawyers and courthouse officials across the country, raising questions of how just the outcomes are and clogging courthouses already facing their own budget woes as clerks spend more time helping people unfamiliar with forms, filings and fees.

  • We all know that the numbers are through the roof,” said James K. Borbely, a circuit court judge in Vermilion County, Ill. “You just look at the courtrooms.” Judges complain that people miss deadlines, fail to bring the right documents or evidence and are simply unprepared for legal proceedings. Such mistakes make it more likely they will fare poorly — no matter the merit of their cases.

  • Reliable numbers for people representing themselves in noncriminal cases are hard to come by. Nationally there is no tracking system, and each state’s court system follows its own rules. Many people hire a lawyer for one phase of a proceeding but then drop them later. (In criminal cases, of course, defendants have a right to an appointed lawyer.)

For more, see In a Downturn, More Act as Their Own Lawyers.

Orange County Non-Profit Legal Services Report Record Demand

In Orange County, California, the Orange County Register reports:
  • [T]he Legal Aid Society – as well as the Public Law Center – report that more and more individuals [...] have spiraled into poverty and are now coming to their clinics seeking help. Dozens of other legal nonprofits statewide also attest to increased demand. "We have more foreclosures, we have more everything,'' said Bob Cohen, executive director of the Legal Aid Society. "We've never seen this need. Families are falling apart because they have no money." At the center, there has been a 337-percent increase in the number of clients seeking help with their foreclosures, and a 135-percent rise in foreclosure cases from 2006-2008.

For more, see Bankruptcy? Foreclosure? Many asking for free legal aid (Legal nonprofits in Orange County report record number of demand).

Indiana AG, Local Officials Warn Against Scammers Using Forged Documents To Steal, Borrow Against, Houses

In Indianapolis, Indiana, The Fort Wayne Journal Gazette reports:
  • The Indiana attorney general cautioned homeowners Thursday against a new mortgage fraud that lets thieves steal homes and walk away with thousands of dollars in fraudulent loans. Attorney General Greg Zoeller joined the Indiana Recorders Association and the Association of Indiana Counties in Indianapolis to publicize the scheme.

  • The Journal Gazette exposed the practice in an April 5 story by “stealing” the Lincoln Tower in downtown Fort Wayne in less than an hour, identifying the new property owner as Johnny Appleseed. The newspaper prepared a fake deed transferring ownership in the iconic building, which Allen County Recorder John McGauley said his office would have no choice but to accept.


  • Thieves are not interested in the property they steal – they’re interested in showing ownership so they can obtain a fraudulent loan and disappear with the money. That can leave the true property owner holding the bag. “The actual homeowners, through no fault of their own, are at risk of losing their home to foreclosure,” Zoeller said. “Correcting the problem and clearing the cloud off the title could cost the homeowners thousands of dollars.”

  • McGauley said the state’s recorders are looking at legislation similar to a law in California that would require a thumbprint along with a notarized signature. A similar requirement takes effect in Illinois this summer.

For the story, see State warns of home-theft threat (County recorders want law tightened on deed filing).

Prosecutor Seeks Jail Time For Property Owner On "Weed Possession" Charges

In Chandler, Arizona, The Arizona Republic reports:
  • A Chandler prosecutor wants former downtown business owner Pablo Pescador to go to jail for leaving weeds and debris on his property. The businessman's lawyer said that would be outrageous. "This is ludicrous; the case is out of control," said Jonathan Dessaules, attorney for 48-year-old Pescador, who lives in Queen Creek. [...] "I have never heard of anyone going to jail for weeds. When I mention it to other attorneys, they ask, 'you mean pot?' And I say, 'no, weeds'."

For more, see Businessman could face jail time for overgrown weeds.

Squatter Living In $700K Foreclosed Home Rigged Meter In Theft Of City Water, Say Cops

In Sugar Grove, Illinois, WLS-TV Channel 7 reports:
  • Suburban police arrested a man accused of illegally moving into a mansion after its owners were evicted. The alleged squatter is charged with two felonies. [...] Sugar Grove police suspect this is happening more than anyone is aware but they say the suspect in this case was brazen. [42-year old Steven Hawthorne allegedly] took over a $700,000 home and moved furniture in, including a couple of big screen television. And he acted like he owned it.


  • Hawthorne had [...] no legal right to move in. But with no mortgage company clamoring to evict him, authorities had no reason to get involved. Until they discovered he was allegedly using city utility, specifically water. Police works department shut the water off and put a lock on the valve.

  • "He cut the lock off. We put another lock on, he cut that one off. We put a boot on for the lock, cut that one off and put his own on," said Detective John Sizer, Sugar Grove Police. Hawthorne had also apparently illegally arranged to get free gas and electricity. Finally, the county sheriff's department got the authority to evict him. Police charged him with theft of government property and criminal damage to state-supported property, both felonies.

For the story, see Police arrest alleged mansion squatter.

In a related story, see With Advocates’ Help, Squatters Call Foreclosures Home.

Go here for posts on squatters moving into vacant homes, foreclosures. squatter foreclosure zebra

Friday, April 17, 2009

L.A. Bar To Train Volunteers For Foreclosure Defense Effort

In Los Angeles, California, Metropolitan News Enterprise reports:
  • The Los Angeles County Bar Association Barristers are seeking volunteers to counsel homeowners facing foreclosure at one-day clinics to be held May 2. The organization said yesterday it has partnered with the Legal Aid Foundation of Los Angeles, Neighborhood Legal Services, Public Counsel and Bet Tzedek to provide the clinic, at which attorney volunteers “will assist homeowners in evaluating their loan documents to see if they qualify for the newly available loan modifications or if other forms of relief are available.”

  • No experience is necessary, the group said, because all volunteers will be trained at one of three sessions that have been scheduled beginning Monday.

For more, see Barristers Seeking Volunteers for Law Day Counseling.

County Turns On The Tap At S. Florida Condo Ravaged By Maintenance Fee Delinquencies, Foreclosures

The Miami Herald reports:
  • Water is flowing again at the 310-unit Miarassou Condos in Miami-Dade County. County officials shut off water to the residents earlier in the week because the condo's association bounced a check and failed to pay a $109,000 past due bill. Condo residents say the problem stems from a large number of foreclosures - roughly a third of the units are bank-owned or in foreclosure. After the county turned off the water, residents allegedly tampered with the meter to keep it running illegally. On Thursday evening, the county and the association agreed on a payment plan, and the water was turned on again.

Source: Water is back on for Miami condo.

No Foreclosure Fraud Problems On Staten Island, Says Prosecutor's Office As DA Donovan Slumbers Cluelessly At The Wheel

In New York City, The New York Times reports:
  • [F]or years many district attorneys viewed mortgage fraud as taking a second seat to traditional show-stoppers: homicides, counterfeiting, burglaries and even gambling. At least one New York district attorney still takes that view. “Our natural inclination is that these are civil cases,” said William Smith, spokesman for the Staten Island district attorney, Daniel M. Donovan.


  • Mr. Donovan, on Staten Island, is the only New York City district attorney who says his county has no mortgage fraud problem, although his county ranks near the top in foreclosures per capita statewide. “We don’t see many complaints,” said Mr. White, his spokesman. But lawyers with Staten Island Legal Services and State Senator Diane J. Savino, who represents parts of Brooklyn and Staten Island, say they get many reports of fraud and have walked some cases over to Mr. Donovan’s office. “We’ve gotten very little response,” Ms. Savino said.

For more, see Prosecutions Lag as N.Y. Foreclosure Frauds Surge.

Miami Judge Gives Struggling Condo Associations New Tool In Battle Against Rent-Skimming Unit Owners Delinquent On Maintenance Fees

In Opa Locka, Florida, the Miami Daily Business Review reports:
  • Ebenezer Boakyee’s condo board should be collecting nearly $11,000 in maintenance fees every month. Instead, it barely banks $3,000 because many of the units are owned by investors who have stopped paying their association fees. Because of the short-fall, Opa-locka’s The Oaks at Miami Gardens condo association is struggling to survive even as absentee unit owners collect rent from tenants.


  • Last month, The Oaks board finally got some help when a judge appointed a receiver to collectively go after the rent of tenants whose landlords have stopped paying maintenance fees. The receiver’s job is limited to collecting rent on behalf of the association; he or she can only go after rent on units the condo has begun foreclosure action against over the owner’s failure to pay condo fees. Condo boards have always had the option to ask courts to appoint receivers, but previously, each unit was dealt with as a separate case.

  • For already financially distressed boards, that was a costly and time-consuming option. By combining cases, Miami-Dade Circuit Judge Ellen Leesfield has made the process more cost-effective. So far, court-appointed receiver Seth Heller has nine units for rent collection at The Oaks. That number will grow as the association initiates foreclosure actions on other units, he said.


  • When Judge Leesfield appointed the receiver on March 24 to collect rent from nine tenants in units the board is seeking foreclosure against, she gave boards an important new tool to boost the collection process. “That’s the brilliance and the beauty of this [approach;] it is really, really revolutionary,” said Mitchell Drimmer, whose company, Miami’s Association Financial, handles collections for The Oaks. Drimmer helped the board petition for the receiver. Receiver Heller said he charges $25 a month for each unit, but bills the unit owner, not the association. Lawyers who work with condo associations welcome Leesfield’s ruling.

  • That’s new; that’s something I haven’t heard before,” [one attorney] said. “[The ruling] is a great step in the right direction, and it shows you the amount of creative thinking from the condo associations and their attorneys to try to maximize their cash flows.”

For more, see Judge taps receiver to collect rents on units in foreclosure.

Go here for Judge Leesfield's Order Appointing Receiver.

Hundreds Of Residents In 310-Unit S. Florida Condo Face Water Shutoff As Delinquent Maintenance Fees Result In Unpaid Bills; 100+ Units In Foreclosure

In Hialeah, Florida, the The Miami Herald reports:
  • The cash crisis plaguing South Florida's foreclosure-wracked condominiums reached a apex Wednesday for the Mirassou Condominium in Hialeah after county government shut off the water to residents because the association failed to pay its water bill. Miami-Dade Water and Sewer Department said it turned off the water supply to the 310-unit building after the association failed to abide by three separate repayment plans over the last seven months. The association has an outstanding balance of $124,581.04, the department said.


  • South Florida condos have been particularly battered in the region's foreclosure crisis because they rely on association fees from residents to pay for basic utilities, maintenance and other services. When owners stop paying, often associations are forced to scale back on services or increase fees for residents in good standing. [...] About 104 units, or nearly one-third of the building, are in foreclosure in the Mirassou.

For more, see County shuts off water at foreclosure-ridden Hialeah condominium.

For story update, see Water is back on for Miami condo:

  • Water is flowing again at the 310-unit Miarassou Condos in Miami-Dade County. County officials shut off water to the residents earlier in the week because the condo's association bounced a check and failed to pay a $109,000 past due bill. Condo residents say the problem stems from a large number of foreclosures - roughly a third of the units are bank-owned or in foreclosure. After the county turned off the water, residents allegedly tampered with the meter to keep it running illegally. On Thursday evening, the county and the association agreed on a payment plan, and the water was turned on again.

L.A. City Attorney Files Forgery, Grand Theft Charges In Alleged Refinancing Scam That Left One Couple Facing Foreclosure

In Los Angeles, California, The Daily Breeze reports:
  • The Los Angeles City Attorney's Office announced Tuesday it has filed criminal charges against five real estate and loan brokers who allegedly refinanced a Harbor Gateway couple's mortgage with forged documents, ripping them off and putting them in jeopardy of foreclosure.


  • For the Armijos, life changed in January when they received a "cold-call" from John DiBona, 22, a loan consultant for Liberty One Financial Group in Van Nuys. [City Attorney Rocky] Delgadillo said DiBona, working with sales director Layne Nocera, 53, offered the Armijos a refinancing plan that seemed like a good deal.(1)

  • The Armijos, who had no trouble making their $2,600-a-month mortgage, took the bait and applied for a plan that ended up giving them a higher payment, Delgadillo said. Soon, they received a $7,000 property tax bill they never expected, Michael Armijo said. When they looked into it, they learned their signatures had been forged on loan documents and that their income and assets had been changed. By the time they figured out what was up, they were threatened with foreclosure.(2)

For more, see Delgadillo targets housing `cheaters' in Harbor Gateway.

See also, L.A. City Attorney press release.

(1) According to the story, DiBona and Nocera, both of Northridge, have each been charged with 21 criminal counts, including conspiracy, grand theft, forgery and false advertising. If convicted of all counts, they face more than 18 years in jail and $35,000 in fines. Facing the same charges are notary public Vighen Mkrtoumian, 29, of Glendale, who allegedly notarized fake documents; Garnik Poghosyan, 30, of Van Nuys; and Wayne Stimson, 55, a loan broker at Liberty One Financial Group.

(2) The couple also has a civil legal battle ongoing. Reportedly, the couple's attorney, Foley and Lardner in Los Angeles, worked for free to get them a settlement that has helped to put them back on track.

Thursday, April 16, 2009

Basic Training In Wisconsin Foreclosure Defense

From the State Bar of Wisconsin:
  • Attend an upcoming presentation of the Representing Homeowners in Default and Foreclosure seminar. This program is designed to give you the basic training and skills you need to join attorneys around the state who are working to help Wisconsin homeowners in financial distress. This full-day course will cover vital topics such as negotiating loan modifications or other foreclosure prevention solutions, using the new federal “Making Home Affordable” program to refinance, taking advantage of lender-initiated programs, mounting legal defenses and counterclaims, and understanding bankruptcy and foreclosure.


For more, see Free training to fight the flood of foreclosures – help homeowners; strengthen communities.

Live seminars:

  1. April 20, 2009 – Milwaukee,
  2. April 27, 2009 – Green Bay,
  3. April 30, 2009 – Madison,
  4. May 4, 2009 – Eau Claire.

Live webcast:

NYC Prosecutors Slow To Prosecute Foreclosure Rescue Scams? "We Gift-Wrapped These Cases" Complains Brooklyn Legal Services Attorney

In New York City, The New York Times reports:
  • Many New York City prosecutors reacted slowly and brought few indictments as foreclosure swindles and mortgage fraud swept the city during the past decade, allowing problematic operators to flourish even as the nation’s housing market rose and crashed, according to housing lawyers, prosecutors and federal reports.


  • [T]he lawyers who have pleaded with district attorneys, chased witnesses and pointed out the same suspected law breakers for years say that prosecutors failed to stop fraud when it was most rampant. “We gift-wrapped these cases,” said Jessica Attie, co-director of the foreclosure prevention project at South Brooklyn Legal Services. “These are crimes committed in plain sight.”

For more, see Prosecutions Lag as N.Y. Foreclosure Frauds Surge.

Son Accused Of Swiping $158K In Cash, Property From Alzheimer's-Suffering Mom

In Pompano Beach, Florida, WTVJ-TV Channel 6 reports:
  • With Mother's Day just around the corner (May 10, kids), Marco Secolo gave his mother perhaps the worst early gift in the history of the mom-worshipping holiday -- he ripped her off. Rose Secolo, 74, is suffering from Alzheimer's, and so her 39-year-old son, taking a page from the Anthony Marshall playbook, schemed her out of about $158,000 in cash and property.

  • Marco is charged with a litany of offenses on poor Rose. After moving in with his elderly mother in 2007 and fraudulently signing a deed claiming half ownership of her Pompano Beach condo, he set to work draining all her assets. He transferred more than $50,000 from her bank account to his, then stole her social security check and transferred the title of her 2002 Mercedes-Benz into his name. The scamming son turned himself in to Broward Police Monday on a charge of exploitation of the elderly. Rose has been transferred to an assisted living facility.

Source: Son Scams Sick, Elderly Mom Takes nearly $158,000 from ailing mother.

California Man Charged With Misappropriating Proceeds From Reverse Mortgage Secured By Elderly Woman's Home

From the Office of the San Francisco, California District Attorney:
  • San Francisco District Attorney Kamala D. Harris announced today that John McTaggart, age 45, [...] was arraigned on charges of residential burglary, grand theft and grand theft from an elder for allegedly stealing $140,000 from an 86-year-old San Francisco woman as part of an annuity scam.


  • According to court documents, in February 2008 defendant McTaggart, a former broker, convinced his elderly victim to sign over $140,000 in monies received through a legitimate reverse mortgage he had helped the victim secure. Once the victim received the money from the reverse mortgage, the defendant allegedly convinced her to dedicate a portion of the funds to two separate annuity accounts. Instead of depositing the victim’s money into actual annuity accounts, he deposited the money into his personal account. The defendant then allegedly attempted to mask this fraud, by sending monthly checks to the victim, essentially paying her "dividends" from the money he had stolen directly from her. Defendant McTaggart then fled to Tennessee, where he resided until he was arrested on the DA arrest warrant that was issued on November 24, 2008.

For more, see DA Extradites Man to Face Charges of Elder Abuse and Fraud in Annuity Scam (Prosecution is Part of a DA-led Crackdown on Financial Predators).

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

Land Registry Fraud A Concern In GB; £36M In Payouts For Errors, Deed Thefts Since '05

In London, England, the BBC reports:
  • A major reform of property registration in England and Wales is needed to prevent "an exponential rise in fraud", a building society boss has said. Nationwide executive director Matthew Wyles said: "The system is too open and needs a root and branch review." Mr Wyles was responding to a BBC investigation which applied to change details of house ownership, without being asked for proof of identity.


  • Last November Land Registry introduced new identity checks to be carried out on everyone involved in buying or selling property, but not for changes of correspondence address on the register. The body has paid out £36m in compensation for mistakes and fraud since 2005.

  • Organised criminals have increasingly used Land Registry to help them transfer the ownership of a house fraudulently, to sell it or take out a huge mortgage on the property. [...] Julie Jenkins, head of fraud at Land Registry, told the BBC: "We need to ensure there's a balance between protecting the individual and protecting the property and that's what we're here to do, protect people's assets - one of the most important assets they've got."

For more, see Land register 'too open to fraud' (A major reform of property registration in England and Wales is needed to prevent "an exponential rise in fraud", a building society boss has said). DeedZetaTheft

Mortgage Servicing "Scoundrels" Among Six To Receive Up To $9.9B In Incentive Payments To Rework Troubled Home Loans

The Associated Press reports:
  • The Obama administration on Wednesday named the first six companies participating in a $75 billion program designed to help millions of struggling homeowners avoid foreclosure. The administration said the companies - including some of the mortgage industry's biggest players - will receive a maximum of $9.9 billion in incentive payments, which are designed to encourage mortgage companies to lower borrowers' monthly bills. The government expects to finish arrangements with other companies in the coming months.

  • Chase Home Finance, part of JPMorgan Chase & Co., will receive up to $3.6 billion, the largest amount among the six companies. The other recipients are: Wells Fargo & Co., GMAC Mortgage Inc., Citigroup Inc.'s CitiMortgage unit, Select Portfolio Servicing and Saxon Mortgage Services Inc.

For more, see 6 companies to get $9.9B under mortgage program.

Wednesday, April 15, 2009

Final Conspirator Goes Down In "MKL Financial Diet" Equity Stripping Foreclosure Rescue Scam

From the Office of the U.S. Attorney in Maryland:
  • Earnest Lewis, age 52, of Takoma Park, Maryland, pleaded guilty [Wednesday] to conspiracy to commit wire fraud arising from a scheme in which he and his conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.


  • Earnest Lewis, Michael Lewis and Winston Thomas specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The co-conspirators fraudulently represented to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes.

  • Michael Lewis and Winston Thomas, a senior loan officer with a mortgage lender, told the homeowners that the “good credit” of Earnest Lewis would be used to temporarily refinance their homes, that they had to sign their homes over to Earnest Lewis and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes by paying “rent” and fees to Earnest Lewis by having their bank accounts directly debited by an account belonging to co-conspirator Cheryl Brooke’s company “In the House Technologies.”(1)

For the entire press release, see Fourth Conspirator Pleads Guilty and Agrees to Forfeit $2 Million in Mortgage Fraud Scheme Targeting Victims with TV Ads.

(1) Earlier this week, Cheryl Brooke, age 52, of Upper Marlboro, Maryland, and Winston Thomas, age 43, of New Carrollton, Maryland and Michael K. Lewis, age 57, of Takoma Park, Maryland all pleaded guilty in connection with the scheme.

Head Of Maryland Equity Stripping Foreclosure Rescue Scam Cops Plea; Bogus Sale Leaseback Deals Used To Rip Off Victims' Home Equity

From the Office of the U.S. Attorney in Maryland:
  • Michael K. Lewis, age 57, of Takoma Park, Maryland pleaded guilty [Tuesday] to conspiracy and bankruptcy fraud arising from a scheme in which he and his conspirators(1) offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

  • Michael Lewis led a group of conspirators who stole the homeowners’ equity by inducing financially vulnerable homeowners to sell their properties and convert the sale proceeds to the use of the conspirators,” said U.S. Attorney Rod J. Rosenstein. “The mortgage fraud conspiracy cases that we are prosecuting in Maryland should serve both to hold criminals accountable and to warn homeowners about the many smooth-talking con artists who take advantage of people who fall behind on their mortgage payments.”


  • According to his plea agreement, from at least 2004 until May 2008, Lewis aired television advertisements that targeted financially vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy.


  • Lewis specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments.

For the entire press release, see Leader of Mortgage Fraud Scheme Confesses and Agrees to Forfeit $2 Million for Targeting Victims with TV Ads.

See also, WBAL-TV Channel 11: Michael K. Lewis Pleads Guilty To Fraud Charges.

(1) On April 13, Cheryl Brooke, age 52, of Upper Marlboro, Maryland, and Winston Thomas, age 43, of New Carrollton, Maryland pleaded guilty to their participation in the scheme. See Senior Loan Officer and Conspirator Plead Guilty in Mortgage Fraud Scheme That Targeted Victims Through Local TV Ads (Defendants Agree to Forfeit Over $2 Million). No word on the case status of Lewis' brother, Earnest, who was the fourth member of the group charged.

Maryland Feds Bag Two Guilty Pleas In Alleged "MKL Financial Diet" Equity Stripping, Sale Leaseback, Foreclosure Rescue Scam

From the Office of the U.S. Attorney in Maryland:
  • Cheryl Brooke, age 52, of Upper Marlboro, Maryland, and Winston Thomas, age 43, of New Carrollton, Maryland pleaded guilty [Monday] to their participation in a scheme(1) in which they offered to help financially-vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.


  • Thomas, who was then a senior loan officer with a mortgage lender, and Brooke specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The defendants fraudulently represented to the homeowners that their “ lease/buy-back program” would help the homeowners to keep their homes. The homeowners were told that the “good credit” of another co-conspirator would be used to temporarily refinance their homes, that they had to sign their homes over to such co-conspirator and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes by paying “rent” and fees to the co-conspirator by having their bank accounts directly debited by an account belonging to Brooke’s company “In the House Technologies” (IHT). Brooke allowed the IHT account to be used to deposit the proceeds of the equity-stripping scheme.

For the entire press release, see Senior Loan Officer and Conspirator Plead Guilty in Mortgage Fraud Scheme That Targeted Victims Through Local TV Ads (Defendants Agree to Forfeit Over $2 Million).

For the Statement of Facts contained in the Defendants' guilty pleas, see:

(1) The alleged scheme was referred to as the "MKL financial diet" purportedly headed by Michael K. Lewis, who is also currently under indictment. See Michael K. Lewis and Three Others Indicted in Mortgage Fraud Scheme - Allegedly Targeted Victims Through Local TV Ads.

MERS Was Set Up By Lenders To Handle Predatory Loans & Keep Their Hands Clean, Says Reno Attorney

In Reno, Nevada, KOLO-TV Channel 8 reports:
  • A local woman wins an 11th-hour temporary restraining order halting the foreclosure on her home. Her attorney says her case could be the key to keeping thousands more in their homes.


  • [Attorney Bob] Hager says the real significance of this case is that, in addition to Executive Trustee Services and GMAC Mortgage, it exposes and names MERS...the Mortgage Electronic Registration System which he says was set up by mortgage banks and AIG to handle predatory loans while keeping their hands clean. "It was set up to conceal from the public, regulators and the courts the actual owners of these deeds of trust. When they figured out how to make money off of bad loans, they brakes were off and they started writing these bad loans as fast as they could so they could get them into the hands of investors without worrying about the risk associated with these loans going into default. They needed MERS to do that."

  • Now Hager says MERS is the important target. "If these MERS deeds of trust are unlawful as we contend in lawsuits here, and in Arizona and California, we could stop 70 percent of the foreclosures across the country." A hearing on [his client's] suit is set for April 27 in Reno Federal Court. In the meantime, she can breathe a little easier, but relaxing is still a long court fight away.

For more, see Foreclosure Stalled, Attorney Says a Win for Thousands More (read story) (watch video).

Attorney, Justice Of The Peace Held Liable For Damages In Now-Deceased Husband's Forgery Of Wife's Signature To Refinance Home

In New South Wales, Australia, On Line Opinion reports:
  • [W]hen [Kaylene] Hall's husband found himself in financial difficulties, he told a friend he would refinance the family home to pay his debts. His wife was the only obstacle. If she found out how badly he was running his tank manufacturing business, their marriage would be over. However, he confided to his friend, he would solve this problem by forging his wife's signature and not telling her anything. The friend warned him not to do this, or Mr Hall would go to jail. Mr Hall ignored this advice and went not to jail, but to his grave. He died two years after carrying out his wicked plan and obtaining a private mortgage-secured loan [...].


  • Mr Hall had at the time instructed Ben Gelin, a Bathurst-based solicitor, to act for him and Mrs Hall in effecting [the lender's] mortgage and supervising its registration. When the solicitor explained that both Halls would have to sign documents with him, Mr Hall said his wife was dying of cancer and could not go to the solicitor's office. When Mr Hall then offered to take the papers away for her signature, Mr Gelin said he would need to talk to Mrs Hall. Mr Hall replied that his wife would not agree to this because she was still bitter about how he, Mr Gelin, had behaved when he previously acted for a creditor against Mr Hall. Mr Gelin believed Mr Hall's lies, and had no contact with Mrs Hall. She did not have cancer. She knew nothing of her husband's financial difficulties, the mortgage loan or of her husband's visit to Mr Gelin.

In addition to finding Gelin liable to Mrs. Hall for his negligence, a court found that Justice of the Peace David Graham breached the duty of care he owed Mrs. Hall when he purported to witness forgeries of her signature on the mortgage documents without knowing her or seeing her sign. The court ruled that he had to pay 40 per cent of Mrs. Hall’s damages while 60 per cent fell to Mr. Gelin because of his failings.

For the entire story, see Thou shalt not bear false witness. DeedZetaTheft

Tuesday, April 14, 2009

Caregiver Charged With Manipulating Stroke Victim Into Refinancing Home, Misapplying Proceeds For Personal Expenses

In Stamford, Connecticut, The Advocate reports:
  • A 50-year-old Stamford woman is charged with scamming $66,000 from a former co-worker who was recovering from a stroke, police said, though the victim lost about $100,000 more in the alleged scheme. Bridget Gleason-Paniccia [...] was arrested after an investigation that began in 2007, when Stamford police received a complaint from the victim, now 57, who reported that 13 fraudulent credit card accounts worth $72,273 were opened in her name while she was hospitalized with a severe stroke in 2003, Sgt. Peter diSpagna said.


  • Gleason-Paniccia moved into the victim's home weeks before a stroke put her into a hospital for two months, police said. During the victim's hospital stay, Gleason-Paniccia allegedly racked up thousands in credit card bills and convinced the victim it was her debt, police said. The stroke left the victim with several physical ailments and brain injuries, police said. When the hospital released her, Gleason-Paniccia became her care-giver, police said.


  • Gleason-Paniccia allegedly manipulated the victim into refinancing her mortgage to pay off the credit card bills, police said. The victim got a $163,000 loan and paid off the credit card bills, but Gleason-Paniccia allegedly convinced her to open a joint bank account to keep the remaining $88,000, police said. [...] Gleason-Paniccia withdrew $66,000 from the account in increments, police said.

  • It took four years for the victim to realize the extent of the scam. As she regained her awareness and mental capabilities, the victim turned to police and handed them 82 checks forged in her name, diSpagna said.

For more, see Stamford woman charged with scamming stroke victim. DeedZetaTheft

I.D. Theft Suspect Convicted Of Swiping Property Title From Fellow Inmate To Post Bail, Then Fleeing Country With Girlfriend

In Southern California, The Orange County Register reports:
  • A Tustin man who had tried to flee to Mexico was convicted [last week] of committing a $2.8 million fraud by stealing the identities of more than a dozen people who hoped to invest in real estate. Gene Anthony Franklin Jr., 34, held himself out as a legitimate real estate investor to secure his victims' personal information, then used the data to buy a home, obtain credit cards and pay his bills, said Deputy District Attorney Yvette Patko. He also illegally transferred properties from a fellow jail inmate to post his own criminal bail and flee the country, prosecutors said.


  • While in custody [on identity theft charges], he was rooming in jail with Marvin Vernis Smith, who was convicted of killing his wife. Franklin became friends with Smith, and learned that Smith had transferred one of his properties to his daughter so she could pay for legal fees, prosecutors said. Franklin forged property transfer documents that showed that his ex-girlfriend – Iris Orozco – owned three of Smith's properties, valued at almost $2 million, around October 2007, prosecutors said.

  • Using one of the properties as collateral, Franklin posted his $1 million and fled to Mexico with Orozco, prosecutors said. He was caught in March 2008, and brought back to Orange County.

For more, see Ex-fugitive is convicted in $2.8 million identity theft (Gene Anthony Franklin of Tustin duped convicted murderer so he could post bail, prosecutors said).

Go here, 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. DeedZetaTheft

Foreclosed Texas Homeowner Accuses Loan Modification Firm Of Taking Money, Doing Nothing

In Fort Worth, Texas, the Fort Worth Star Telegram reports:
  • First the mortgage payments went up after he refinanced; then he broke his collarbone and was out of work for months during rehab. When the bills began to mount and Ramiro Diaz found himself behind on the mortgage in August 2006, he contacted Your Mortgage Solutions in North Richland Hills. A representative promised Diaz that the company would intercede to help prevent the lender from foreclosing on the family home, Diaz said.
    "I paid him $1,500," Diaz said. "He said, 'I got you covered.’"

  • Instead, like other homeowners across the country, the North Richland Hills man and his family lost their house to foreclosure in what appears to be a nationwide outbreak of mortgage "rescue" operations that aren’t rescues at all.


  • A Your Mortgage Solutions representative rebuts Diaz’s complaint, saying Diaz did not complete necessary paperwork or submit a separate attorney’s fee on time. "They can’t just send the paperwork back without the attorney’s fee," said Duane Hatchett, YMS’ director of operations.(1) "He [Diaz] knows he didn’t send it back."

For more, see Beware of foreclosure 'rescue' outfits, feds say.

(1) Non-attorneys that solicit, advertise or otherwise offer legal services to homeowners for mortgage foreclosure defense and/or foreclosure-related rescue services, collect legal fees on behalf of an attorney, and/or make a business to solicit or procure legal business for attorneys is generally illegal in other states. I suspect Texas may have a similar law.

Monday, April 13, 2009

Investment Program Promoted By Condo Conversion Marketer To Unload Unsold Inventory Leaves Investors Holding The Bag

In San Diego County, California, The San Diego Union Tribune reports:
  • [Frances] Greenspan is one of a number of investors across California who said they agreed to effectively trade their good credit for a promise of $5,000 to $10,000 per mortgage they took out. They understood that the homes purchased on their behalf would be quickly transferred out of their names, and gone would be any financial obligation.

  • Instead, their names stayed on the deeds, and they remained on the hook for hundreds of thousands of dollars in loans. They claim they were lured to this scheme by James McConville, of Diamond House Development, a Fremont company whose corporate status is listed as suspended by the secretary of state.(1)


  • Investors say they were recruited by McConville to buy into three condo conversion projects in North County [...]. In all, roughly 80 units were involved in purchases that buyers allege were arranged though McConville, and nearly all of them are in the process of being foreclosed on by lenders. Many of the condos are rented out, with some units scheduled to be auctioned off in a matter of days.

  • Some investors say they recently discovered disturbing details about their transactions, based on final settlement agreements provided them by The statements show that 3 Mac Asset Portfolio – a company with the same address as McConville's home – received a substantial “marketing fee” on individual sales.

  • In several cases shared with The San Diego Union-Tribune, the fee was $180,454 on a two-bedroom unit purchased for $310,000. A more routine six percent real estate commission on a $310,000 sale would be $18,600.

For more, see Investors are duped in condo scheme (Investors say they were recruited to buy into three condo conversion projects in North County, one of which was the the 112-unit Sommerset Woods in Escondido).

For another part to this story, see Renters become unwitting victims in condominium mortgage scheme.

(1) According to the story, Greenspan said one of the investors has contacted the District Attorney's Office in Alameda County where McConville is based to report what had occurred. That office would not confirm whether an investigation is ongoing. However, Senior Deputy District Attorney William Denny reportedly said McConville was convicted of grand theft and sentenced in 1998 to five years probation. He was ordered to pay $242,000 in restitution to two lenders after admitting he diverted insurance funds owed them in connection with a fire that destroyed a hotel McConville owned in the city of Richmond, according to the story.

Arizona Feds Indict Pair In Alleged Scheme Using Homeowners Facing Foreclosure, Abusing HUD "Short Sale" Program To Pocket Illegal Profits

From the Office of the United States Attorney (Arizona):
  • A federal grand jury in Phoenix returned a 19-count indictment [Wednesday] against Kenneth D. Perkins, 51, and Robert Lee Burdiak, 66, both of Gilbert, Ariz. , alleging wire fraud and false statements to the government and to financial institutions. The indictment alleges that from May 2003 through June 4, 2004, Perkins and Burdiak defrauded the Department of Housing and Urban Development (HUD).


  • Perkins, operating through Virtual Realty Funding Corporation and Virtual Realty Company, found homeowners in default and arranged for their participation in the [HUD Pre-Foreclosure Sale Program] as their realtor. But instead of marketing their properties, he purchased them at a discount of as much as 82% of their appraised value utilizing Burdiak as a straw-buyer. The homes were then sold for a profit, sometimes on the same day. Perkins and Burdiak concealed from the lending institutions, and thus HUD, the fact that the properties had not been marketed by submitting false documents to them. Perkins acquired approximately 20 properties at a discount which resulted in HUD paying an additional sum of a substantial amount to lenders in order to cover the shortfall in the mortgage balances.

For the entire U.S. Attorney press release, see Foreclosure-Rescue Schemers Indicted.


In an unrelated story from the U.S. Attorney's Office in Arizona:

  • On April 8, 2009, Dustin Michael Thompson, 30, and Sean Paul McLaughlin, 29, were indicted on four counts of Wire Fraud and one count of Conspiracy to Commit Wire Fraud as a result of their involvement in a cash back mortgage fraud scheme. Thompson and McLaughlin submitted mortgage loan applications on behalf of buyers, that included friends and family members, containing false information. Following the funding of the loans, Thompson and McLaughlin received cash back that they used for personal expenses and to perpetuate the scheme. Most of the homes purchased during the conspiracy have foreclosed.

For the entire press release, see Real Estate Investor And Loan Officer Indicted For Mortgage Fraud.

Obama Administration Big Shots On The War On Foreclosure Rescue, Loan Modification Scams

U.S. Treasury Secretary Timothy F. Geithner, Attorney General Eric Holder, and Secretary of Housing and Urban Development Shaun Donovan issued a joint press release last week on combatting foreclosure rescue and loan modification scams:
  • [I]n a major step [last] week, the Department of the Treasury, the Department of Justice, the Department of Housing and Urban Development and the Federal Trade Commission announced a new joint effort that cuts across federal and state governments and the private sector to combat foreclosure rescue scams. Led by the Treasury's Financial Crimes Enforcement Network, this effort creates an advanced targeting process to streamline investigations and prosecutions and provides financial institutions with a new advisory to spot and report questionable loan modification schemes.

  • For American homeowners, this means that fraudulent companies will be shut down more quickly; companies that otherwise would have gone unnoticed will be identified and investigated; and the government's ability to identify and prosecute anyone involved in mortgage rescue scams will be bolstered.

For more, see Crackdown on fraud.

See also, The Washington Post: 'We Will Find You and We Will Punish You':

  • There was tough talk out of Washington [last week] aimed at loan-modification scammers. Attorney General Eric Holder had this message for people and companies ripping off homeowners on the verge of foreclosure: "If you prey on vulnerable homeowners with fraudulent mortgage schemes, or discriminate against borrowers, we will find you and we will punish you."

Some Loan Modification Firms Have Their Own Financial Baggage

In Hampton Roads, Virginia, The Virginian Pilot recently did a story on some of the upfront fee loan modification firms that have recently sprouted up locally. The owner of one firm who was interviewed for the story reportedly described her business model as one where she charges from $500 to $1,500 upfront, collects basic information from the homeowner, and then passes along the file to an attorney who then tacks on an additional fee for handling the actual negotiation. When asked how many homeowners she has helped obtain successful loan modifications, she told the reporter that because her buisness was new, she hadn't helped any yet (which reportedly contradicts the testimonials from satisfied customers that appear on the firm's website).

Before she opened her loan modification firm, she owned a now-defunct subprime mortgage business that currently is a defendant in a civil mortgage fraud lawsuit, according to the story. She claimed that the suit was due to the actions of an employee and that she had no knowledge of those actions. In addition, she apparently was unable to reach successful loan modifications on her own distressed real estate, as the story reports that her recent bankruptcy filing indicates that three houses she owned were repossessed by banks, and that she offered to give up three additional properties as she liquidated her assets in a Chapter 7 bankruptcy.

For the story, see As mortgage services pop up, regulators warn of scams.

Sunday, April 12, 2009

B.C. Appellate Court Sides With Victims Who Lost Homes In Deed/Refinance Scams Involving Use Of Forged Documents; Duped Lenders End Up Holding The Bag

In Vancouver, British Columbia, The Canadian Press reports:
  • The B.C. Court of Appeal wants the province to come up with stricter laws forcing lenders to do a better job of vetting mortgage applicants to ensure they aren't securing property that's been stolen. In a ruling issued [last] Monday, the Court of Appeal concluded that it shouldn't be good enough for anyone lending money for a mortgage to rely only on a title search to show who is the rightful owner of a property.
  • But under the B.C. Land Title Act as it is currently written, the court found that lenders have only to do a search. A lower court judge concluded that if the property shows no liens and a lender gives out a mortgage based on that search, the lender has a valid mortgage and is entitled to be repaid. In other words, even if the rightful property owners get their property back, they are still stuck paying for mortgages they didn't take out, according to the lower court ruling.
  • The Court of Appeal disagreed and instead concluded that the lender — not the rightful property owner — is the one out of luck in a fraudulent mortgage scheme.
  • The Court of Appeal was examining two cases(1) where people fraudulently had their property transferred to someone else without their knowledge. Mortgages were obtained on the properties after the fraudster went to some people for a loan based on the equity in the property. The lenders advanced the money after doing a titles search and finding no liens on the properties.(2)
  • But then the fraudster disappeared and the crime was discovered after the lenders began foreclosure proceedings. The victims of the frauds went to court(3) to have the mortgages declared void, but the lower court ruled the lenders followed the rules and the owners were out of luck. However, the Court of Appeal concluded lenders must ensure their mortgages are valid by taking steps to ensure that the registered owner obtained title to the property legally.(4)
For the story, see B.C. Court of Appeal overturns ruling on mortgage fraud.

See also,The Lawyers Weekly: Fraudulent mortgages nullified by British Columbia’s top court.

Go here
, 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.

(1) Gill v. Bucholtz, 2009 BCCA 137 (April 6, 2009); Re Oehlerking Estate, 2009 BCCA 138 (April 6, 2009).

The story and the cases are silent as to whether the lender obtained a title insurance policy to insure its interest in the property. (Could it may be that no such insurance is available in British Columbia? Is it possible that the burden is on the homeowner to obtain insurance covering against the risk of having the title to his/her home stolen?) In the United States, the risk that title was obtained by forged documents is generally referred to as an "off-record risk" or "hidden hazard" that is typically covered by a title insurance policy. In the case of a mortgage company that lends money on a title acquired by forgery, having acquired a title policy to insure its interest would generally entitle it to indemnification for its loss, leaving the title insurer holding the bag. For a list of 35 off-record risks, or hidden hazards, that a title insurance policy generally protects a homeowner and mortgage lender against, see Title Insurance: What Risks Does It Protect A Property Owner Against? (footnote 1).

It is important to note that the victimized homeowner has the burden in these types of cases to go to court (preferably with a real estate attorney who knows what he/she is doing) and file a civil lawsuit seeking to void the forged deed and mortgage. Failure to do so will likely result in a loss of the home. For an example of what could happen when the victim fails to go to court to void the forged deed and mortgage, see
Oshawa mother faces eviction after alleged mortgage scam. For a story of a victim with legal bills piling up in his effort to get back the title to his home after he had it stolen out from under him, see Scam artists steal house (Richmond RCMP are investigating what is believed to the city's first-ever case of house theft).

A little over a year ago, an Ontario Superior Court addressed a similar situation - one where a then-88 year old man had his home stolen from out from under him through the use of a forged power of attorney. The scammer subsequently pocketed the proceeds from a fraudulently obtained mortgage. The Superior Court decided the case in his favor, ruling that the mortgage lender should rightfully be left stuck holding the bag. For more on this story, see:

Evicted Homeowner Claims Loan Modification Firm Collected Loan Payments, Let Mortgage Go Into Default, Bought House At Foreclosure Sale

In Ogden, Utah, KTVX-TV Channel 4 reports:
  • [Ron Chavez] was evicted from his home after twenty two years. Last year he fell behind on his mortgage. [...] He turned to a loan modification specialist. [...] "I talked to an attorney who was supposed to help us out and I got offered a brochure to contact these people,” Chavez said. Chavez entered into an agreement with the company. He was told to continue paying the mortgage, but the company put the money into an escrow account. He said the company let the house go into foreclosure and then bought it below market value. For a small fee, the company [would resell] it to Chavez at a reduced price. And Chavez was supposed to get a lower mortgage payment, but he never got a chance to buy it back. He was evicted.

For the story, see Homeowners facing foreclosure duped.

Feds Begin "Lampoon" Attack On Firm Offering Free Credit Reports With Parody Advertising

The Washington Post reports:
  • If you watch television, chances are you've seen the jingles where the young guy sings a campy song about his troubles with identity theft, in a bid to pitch a site called

  • Well, now the Federal Trade Commission is getting in on the act, running a series of hilarious public service announcements to point out that such services often are not free at all, and instead pointing consumers to, a site mandated by Uncle Sam and probably the only place online consumers can truly go to get a free copy of their credit reports from each of the three major credit reporting bureaus.

Source: FTC Takes on

For the videos, see:

Homeowner Faces Foreclosure For Continued Refusal To Use Leash When Walking Dog

In Tarpon Springs, Florida, the St. Petersburg Times reports:
  • Robert Wirth Jr. may lose his house — all because of walking his dog in a deed-restricted community without a leash. What seems like a relatively minor infraction has snowballed into a protracted court battle that he claims has cost him more than $100,000 in legal fees.


  • It all started more than seven years ago because Wirth insisted on walking his black Labrador, Cole, regularly without a leash. In January 2003, the River Watch Homeowners Association fined Wirth and his wife, Sandra L. Blaker, $1,000 for doing so. The couple didn't pay. So the association filed a lien and in April of that year foreclosed on their home to collect the debt. The case has dragged on for years. Last year, a circuit judge ordered Wirth and his wife to pay the fine, plus interest, attorney fees and other costs or the house would be sold. Wirth now owes more than $40,000, he said.


  • Wirth remains adamant about his case and is not backing down. [...] Wirth admits he still walks Cole without a leash. [...] Meanwhile, Wirth's frustration has escalated. He said that he would shoot and kill one of the board members if things don't go his way.


  • Foreclosure cases like Wirth's are "unusual, but not unheard of, " said Gary W. Lyons, a Clearwater attorney whose specialties include real estate law. Lyons is also aware of foreclosure proceedings that stemmed from painting homes the wrong colors or improper shingles on roofs.

For more, see Foreclosure looms over Tarpon Springs man who walked dog off leash.

See also, Tarpon Springs dog owners knew the leash rules and defied them.

Chinese Drywall Problem A "Sleeping Beast" In Thousands Of Bank-Owned Condos, Houses?

The Associated Press reports:
  • At the height of the U.S. housing boom, when building materials were in short supply, American construction companies used millions of pounds of Chinese-made drywall because it was abundant and cheap. Now that decision is haunting hundreds of homeowners and apartment dwellers who are concerned that the wallboard gives off fumes that can corrode copper pipes, blacken jewelry and silverware, and possibly sicken people.


  • Dozens of homeowners in the Southeast have sued builders, suppliers and manufacturers, claiming the very walls around them are emitting smelly sulfur compounds that are poisoning their families and rendering their homes uninhabitable. "It's like your hopes and dreams are just gone," said Mary Ann Schultheis, who has suffered burning eyes, sinus headaches, and a general heaviness in her chest since moving into her brand-new, 4,000-square foot house in this tidy South Florida suburb a few years ago. She has few options. Her builder is in bankruptcy, the government is not helping and her lender will not give her a break. "I'm just going to cry," she said. "We don't know what we're going to do."


  • In another cruel twist, some of the very communities that have been hit hardest by the collapse of the housing market and skyrocketing foreclosure rates are now at the epicenter of the drywall problem. [Construction consultant Michael] Foreman warns of a "sleeping beast" in the thousands of bank-owned condos and houses across the country, with no one in them to complain.

For more, see AP IMPACT: Chinese drywall poses potential risks (Chinese drywall imported during housing boom causes corrosion, possible health risk).

See also, ABC News: Some China-Made Drywall Causing a Stink (Homeowners Have Complained of Sulfur Smells and Corroding Metals).

Go here for other posts on Chinese drywall.

Go here for links to recent media reports on the problems with "Chinese drywall."