Saturday, May 16, 2009

Utilities Shutoff Force Out Residents In 128-Unit Complex As Landlord Leaves Gas & Water Bills Unpaid

In Rantoul, Illinois, The News Gazette reports:
  • Natural-gas service has been shut off to a large Rantoul apartment complex, and the village has posted the apartments as unfit for occupancy. Tenants of Autumn Glen apartments, on Hobson Drive on Rantoul's northeast side, have until 5 p.m. May 27 to move out. Water service will be shut off on that date. Notices have been posted alerting tenants.

  • Nicor officials said they shut off natural gas Wednesday morning because the owner, Evergreen Property Management, had not paid its bills. Autumn Glen Property Manager Terry Flick said he and the tenants had known since early May that the action was imminent. Many tenants began looking for new homes right away. Flick estimated on Thursday that 60 of the 128 apartments were occupied, with more residents moving out by the day.

For more, see Residents of Autumn Glen apartments get deadline to move. RentSigmaSkimming

Forged Documents Used To Swipe $140K+ In Home Sale Proceeds, Says Infamous Ex-Long Island Car Mechanic Says In Civil Lawsuit

In Chatsworth, California, Courthouse News Service reports:
  • Joey Buttafuoco, the former car mechanic who became famous after his underage girlfriend shot his wife in 1992, has filed a suit against a real estate agent and a home buyer that claims they cheated him out of the proceeds of a house sale. Buttafuoco and wife Evanka, in a Superior Court complaint, alleged that agent Ronald Berlinsky and LLC Investments, Inc. forged documents in connection with a $1.5 million house sale that purported to pay Berlinsky $62,000 for a "personal debt" and credit buyer Stewart Sank $75,000 for "funds paid by the buyer directly to the seller, outside of escrow."

  • Most of the money from the sale was to go pay off loans against the property. The Buttafuocos told Berlinsky they needed to sell the property quickly to avoid a foreclosure, the suit said. After the sale, the plaintiffs say they should have received at least $143,293 but they did not get any of the money.

Source: Buttafuoco Says Documents Forged in $1.5M House Sale. TheftOfDeedMeta

Arizona Mortgage Fraud Feds Targeting Strippers In Crackdown Against Gutting Of Homes In Foreclosure

In Phoenix, Arizona, The Arizona Republic reports:
  • The Northeast Valley's battered real-estate market is getting a federal bailout of sorts from an unusual source. FBI agents and local law-enforcement personnel have arrested five people in the past month for stripping their foreclosed homes of appliances, cabinets, countertops and plumbing fixtures. That includes cases in Fountain Hills, Anthem, Phoenix and Surprise of some of the more egregious violators who are taking everything they can out of homes, said Julie Halferty, a supervising special agent who oversees the FBI Mortgage Task Force.


  • To combat the theft, the task force is going after violators who have stripped multiple investment properties that they are losing to foreclosure, rather than homeowners who have lost their home, Halferty said. But the enforcement effort is also trying to discourage those thefts as well, she said.

For more, see Home strippers face arrest in crackdown.

Go here for other posts on pre-foreclosure homeowner fixture stripping. foreclosure fixture stripping apple

NY AG Thwarts Contractor's Attempt To Hide Assets In Effort To Avoid Paying Restitution To Screwed Over Homeowners

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced that his office has obtained a court order to obtain a contractor’s property, which will be sold to help pay back consumers he defrauded in his home improvement contract business.

  • Brian Tyrrell was previously ordered to pay restitution(1) to the victims of his shoddy and incomplete home improvement work. In an attempt to hide his assets and avoid making payment, Tyrrell fraudulently transferred land he owned in Ulster County to a friend after the Attorney General’s lawsuit was filed. The property was then given to Tyrrell’s brother.

  • As a result of the Attorney General’s intervention and the Ulster County Supreme Court order, the property will now be sold by the state and the proceeds distributed to the consumers to whom Tyrrell owes restitution.

For the entire press release, see Attorney General Cuome Obtains Order To Sell Contractor's Property To Pay Back Ripped Off Consumers (Contractor transferred Port Ewen property to others to hide assets).

For more on homeowners left in the lurch due to actions by builders/contractors, go here, go here, go here, go here, and go here.

Go here for other posts on other home improvement contractors hammered by the NY AG.

(1) According to the NY AG press release, Tyrrell, of Vienna, Virginia (formerly of Macks Road in Highland), demanded large up-front payments for home repair projects and then either failed to complete the jobs or did the work in an unprofessional, shoddy manner. Tyrrell also failed to return to repair the defective work or refund customers’ money, the press release states. In 2005 the Attorney General’s Office sued Tyrrell and won a judgment of more than $124,000 in restitution to consumers he defrauded in his home improvement contract businesses, Tyrrell Construction Corp and Dura-Crete LLC. StiffingContractorsTheta Cuomo hammers contractors

NY AG Sues Firm Accused Of Peddling Deceptive Home Warranty Plans That Ripped Off Homeowners Nationwide; Obtains Court Order Freezing Company Cash

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced that his office has filed suit against National Home Protection, Inc. (NHP), a New York City-based company, and three principals, Leo Serrur, David Seruya, and Victor Hakim in New York Supreme Court in Manhattan for a deceptive home warranty scheme that defrauded consumers in New York and across the country out of hundreds of thousands of dollars.

  • The Attorney General also applied for and was granted a temporary restraining order freezing the bank accounts and other assets of the company and principals, and preventing NHP from selling any more of its home warranty plans out of New York pending further order by the Court.


  • NHP sells yearly home warranty plans that include promises to repair or replace consumers’ household systems and appliances that break during the contract term. However, the Attorney General’s investigation into the company revealed [among other things] that, more often than not, the company failed to honor these warranties and routinely denied customers’ valid claims for fraudulent reasons.

For the rest of the allegations, see AG Cuomo Sues National Home Protection, Inc. For Home Warranty Scheme That Defrauded Consumers Nationwide Out Of Hundreds Of Thousands Of Dollars (New York-Based National Home Protection Victimized Consumers Across The Country By Failing to Honor Expensive Home Appliance and House System Warranties; To Ensure Restitution for Defrauded Consumers, Court Freezes Company and Principal Assets).

Unpaid Utility Bills, Shutoffs, Likely Condemnation Send Tenants Scrambling As Out-Of-State Landlords Appear To Throw In Towel On Converted Motel

In Champaign, Illinois, The News Gazette reports:
  • City officials were scrambling Monday to find housing for about 30 people who remained in apartments at Gateway Studios ahead of an expected shutoff of power and likely condemnation [Tuesday].

  • AmerenIP on Monday reaffirmed its intention to cut electricity to the former motel building [...] after turning off natural gas – needed to provide hot water – on Monday. City officials say Gateway Studios owes AmerenIP in excess of $44,000 in utility bills.


  • [Property manager Rose] Touchstone said she works for a group of about 15 California investors, owners of Gateway Studios, who have suffered significant financial setbacks and now appear likely to give the building up in foreclosure. She said the hotel suffered two floods last fall and then suffered frozen water pipes this winter. In all, the hotel suffered more than $1.5 million in damages during the past year, she said.

For the story, see 30 Gateway Studios residents still without homes.

For story updates, see:

California's Ghost Towns

In Los Angeles, California, KTTV Channel 11 reports:
  • The sky-high foreclosure rate in California has wrecked families and battered the banks. But there's another casualty that isn't talked about as much; the neighborhoods. There are communities that have been blighted by vacant and abandoned homes. We take a look at California's new ghost towns.

For more (video only, approx. 4 minutes), see California's Ghost Towns.

Go here, Go here, Go here, Go here, and Go here for posts on vacant homes leaving their mark on neighborhoods. BetaVacantForeclosure

Friday, May 15, 2009

Indiana Woman Facing Foreclosure Cops Plea To Torching Home

In Tippecanoe County, Indiana, the Journal and Courier reports:
  • A Lafayette woman faces between six and 20 years in prison for setting her home, which was the subject of a foreclosure proceeding, on fire a year ago. Amy Jo Keith, 34, pleaded guilty Thursday morning in Tippecanoe Superior Court 2 to arson, a Class B felony.

For more, see Woman pleads guilty to arson of foreclosed home.

Ninth Defendant Goes Down In Maryland $35M+ Equity Stripping, Foreclosure Rescue Scam

From the Office of the U.S. Attorney (Maryland):
  • Wilbur Ballesteros, age 33, of Lanham, Maryland, pleaded guilty [Thursday] 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.


  • According to his plea agreement, in May 2005, co-defendants Joy Jackson and Jennifer McCall incorporated Metropolitan Money Store, located in Lanham, Maryland, which offered foreclosure consultation and credit services to financially distressed homeowners. From September 2004 to June 2007, Ballesteros conspired with others to fraudulently promise to help homeowners, who had substantial equity in their homes but were facing foreclosure because of their inability to make monthly mortgage payments, avoid foreclosure and repair their damaged credit. [...] Ballesteros is the ninth defendant to plead guilty in the Metropolitan Money Store mortgage fraud scheme.

For the entire press release, see Real Estate Agent Pleads Guilty in over $35 Million Mortgage Fraud Scheme.

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

(1) Eight other defendants have pleaded guilty to the conspiracy and are facing a maximum sentencing of 30 years in prison: Joy Jackson, age 41, President of Metropolitan Money Store, and Jennifer McCall, age 47, both of Ft. Washington, Maryland, a chief executive officer of Metropolitan Money Store and owner of JC and JC Investments LLC; Jackson’s husband Kurt Fordham, age 39, of Ft. Washington, Maryland, president of Fordham & Fordham Investment Group, Ltd. (F&F) and a director of F&F and Burroughs & Smythe Financial Services, Inc. (B&S) Katisha Fordham, age 35, of Washington, D.C., a loan processor at the Metropolitan Money Store; Richard Allison, age 37, of Camp Springs, Maryland, an attorney and employee of the U.S. Census Bureau; Clifford McCall, age 47, of Lanham, Maryland, president of Burroughs & Smythe Financial Services, Inc., based in Lanham and a director of the Fordham & Fordham Investment Group, Ltd., a foreclosure consulting and credit servicing business based in Lanham and Greenbelt, Maryland; Carlisha Dixon, age 31, of Hyattsville, Maryland, vice president and a director of Burroughs & Smythe Financial Services, Inc.; and Chandra Jones, age 31, of Lanham, Maryland, the daughter of co-defendants Jennifer and Clifford McCall.

C. Florida Court Opts For "Rubber Stamp Method" In Effort To Bulldoze Undefended Foreclosures Thru Legal System, Despite Myriad Of Paperwork Errors

In Sarasota, Florida, the Sarasota Herald Tribune reports:
  • Starting Friday, hundreds of people could lose their property each month in foreclosure hearings scheduled to take less than two minutes. Often called a "rocket docket," the streamlined foreclosure court can schedule up to 250 cases per day, sending properties to auction in cases where the owners never showed up to defend themselves.

  • Speeding those cases through the court system will help unclog a glut of foreclosure cases, allowing civil judges to focus on cases where homeowners are fighting to save their property, as well as the other lawsuits they normally oversee. [...] "I don't want to have these undefended cases stacking up," 12th Circuit Chief Judge Lee Haworth said. "It just seemed to be the right thing to do."


  • Foreclosure defense attorneys, who have seen case after case where lawyers representing banks are giving false statements in court, worry that some homeowners will slip through the cracks and lose property they should not. [...] A retired attorney living in Sarasota, whose study of 180 Sarasota County cases found only one in four had complete paperwork, said the fast docket leaves less time to catch those kinds of mistakes. "There is no check, no screen, to make sure the most obvious, egregious errors are corrected," Richard Kessler said. "It's not a hearing, it's a hanging."

  • Haworth said the system puts the burden on the person being foreclosed on to point out any flaws there may be in the case against them. "If they decide for whatever reason they choose not to defend it, then they are defaulted," he said.

For more, see Two minutes, and home goes away.

For story update, see 'Rocket docket' for foreclosures begins.

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here. EpsilonMissingDocsMtg

Clarification Of Judges' Legal, Ethical Duties In Hearing Uncontested Securitized Mortgage Foreclosure Cases To Be Addressed By Florida Task Force

The Miami Daily Business Review reports:
  • Florida Supreme Court task force on home foreclosures plans to propose uniform case management and design a model mediation program to deal with the glut of foreclosure cases tying up the state’s legal system. In an interim report released this week, the task force said uniform statewide solutions are needed “to avoid a patchwork of independent and confusing requirements.” But the task force is short on details, making it difficult for those working on foreclosure cases to comment on the proposals.


  • The task force plans to offer recommendations that would be cost-effective and affordable while staying consistent with existing laws and policies. A pending issue is the “clarification of legal and ethical obligations of circuit judges in hearing uncontested securitized mortgage foreclosure cases.”

  • Homeowner defense attorney Roy Oppenheim of Oppenheim Pilelsky in Weston seized on that point, claiming the constitutional rights of distressed homeowners may be sacrificed at the hands of overworked judges. “Why do we need clarifications if judges are really, really doing their jobs?” he asked. “It’s saying in a nice way that judges are not fulfilling constitutional obligations to protect those people not represented by counsel.”

  • On Sunday, the Sarasota Herald-Tribune reported(1) foreclosure lawyers for lenders are giving false statements in court and the lies and errors are slipping past overworked judges.

For more, see Task force hopes to standardize management of excessive foreclosures.

(1) See Lies a new tool in foreclosure (Lawyers, in rush to regain properties, can exploit judges' workload). Also from the Sarasota Herald Tribune this week:

San Jose Cops, DA's Office Probe Outfit Suspected Of Masquerading As Loan Modification Law Firm; 100+ Homeowners Get Stiffed, File Complaints

In San Jose, California, KGO-TV Channel 7 reports:
  • Police in San Jose are investigating a business that claims to be a loan modification company but is suspected of preying on more than 100 homeowners. "Legal Support Services" says on its website that it is a law firm specializing in loan modifications, but police question whether it's a law firm at all.


  • Both [Adam] Bajaras and [Kenneth] Relloma hired Legal Support Services in San Jose in hopes of rescuing themselves from foreclosure. Bajaras said he paid $3,200. Kenneth said he paid $7,500. Both also said they did not get much for their money.


  • The Santa Clara County District Attorney's Office says more than 100 complaints have been received about the company. San Jose police have launched an investigation. "It's mortgage rescue fraud. It's obviously portraying to do something or provide a service and then somehow fraudulently defrauding victims," explained Sgt. Ronnie Lopez with the San Jose Police Department. Police say many of those who complained hired Legal Support Services thinking they were hiring an attorney.(1)

For more, see SJ 'law firm' accused of mortgage fraud.

(1) According to the story, the company's website says it was founded by attorneys Russell Koch and Leo Kolligian. However, records from the California Bar Association show a Russell Milton Koch who is not eligible to practice law and Kolligian's license has been inactive since 2003. Police do not know if Koch and Kolligian are victims of identity theft or knowing participants with the company. A search warrant filed by police and obtained by 7 On Your Side also indicates that Kolligian is dead. That search warrant was served on the offices of Legal Support Services back in February. The office closed shortly after.

2nd Man Gets Jail Time On Contempt Charges For Role In South Carolina Alleged Foreclosure Rescue Scam

In Horry County, South Carolina, The Horry Independent reports:
  • A second man has been sentenced to jail in connection with a scheme that landed multiple distressed homeowners in foreclosure. Joseph R. Guernsey, 36, of Myrtle Beach was sentenced yesterday in Horry County Court to six months in jail after Judge Michael Baxley found him guilty of contempt of court.

  • Guernsey is associated with Jolly & Associates. Robert Steve Jolly, 60, of Lexington, N.C., was sentenced to jail April 16, also on contempt of court charges. [...] Jolly was sent to jail recently on contempt of court charges after seeking out financially distressed South Carolina homeowners and titleholders to real property and offering to help them avoid foreclosure of their homes.


  • Jolly encouraged homeowners to give his company a quitclaim deed, or a similar document, giving him rights to their property, according to a civil lawsuit filed by the S.C. Attorney General’s Office. In exchange, he promised to pay off their mortgages and, in turn, they agreed to make monthly payments to Jolly and Associates to pay down their debt, according to the lawsuit. [...] Jolly is connected with more than 45 mortgage foreclosures in Horry County and possibly some in Georgetown County.

  • Guernsey, the court found Wednesday, was directly involved with the scheme that took from people who were about to lose their homes and was sentenced to six months for his principal activities and 90 days for contempt of court to be served immediately. [...] Allen Myrick, of the S.C. Attorney General’s office, said there are no criminal proceedings against Guernsey at this time, but did say the investigation is continuing and Guernsey’s case may be presented to the Horry County Grand Jury at a future time. Two other bench warrants were filed at Wednesday’s hearing for other persons involved in the matter.

For the story, see Guernsey gets 90 days for contempt (Second to be implicated in foreclosure scheme).

For earlier report on this story, see State Attorney General mounts fight for distressed borrowers.

Recent Illinois Law Saves Homeowner From Failure To Obtain Lien Waiver & Paying Twice For Home Improvements When Fully Paid Contractor Stiffs Subs

In Chicago, Illinois, NBC Chicago reports:
  • There's a piece of paper that can stand between a homeowner and a construction calamity, between being done with a job and having it come back to drain you of more money. The waiver of lien is easy to get, yet many consumers don't hear about it until it's too late. Such was the case with the Harney family. A year after their kitchen renovation was done and paid for, they received a notice of lien on their home. It demanded payment of $3,900 within 10 days or the home would be foreclosed upon.(1)


  • But a "waiver of lien" can protect the homeowner from all the headache. A contractor who provides it "releases" and "waives" rights to placing a lien on the property, guaranteeing that "all suppliers" connected to the job "have been paid." It's a crucial document that many even in the industry don't comprehend. And while the Harneys are worried of what might happen, their lawyer is not.

  • "They can't do this," said attorney Dan Edelman, pointing to a relatively new state law that says that if consumers have paid once, and can prove it, they cannot be made to pay again. "It's to protect homeowners against exactly this type of problem. If the homeowner deals with the contractor in good faith and pays them, that ends their obligation," Edelman said.

For more, see Lien Times (Waiver of lien protects homeowners who have paid in good faith).

For more on homeowners left in the lurch due to actions by builders/contractors, go here, go here, go here, go here, and go here.

(1) Reportedly, at the root of the problem was a dispute between the Harney's general contractor and the company that supplied the cabinetry. The companies reportedly sued and countersued each other, leaving the Harney's stuck in the middle. When the cabinet company didn't receive payment, it came after the Harney's home and slapped a lien against it. The problem in many cases is that the homeowners have paid the general contractor, who they assume will pay everyone else. StiffingContractorsTheta

Thursday, May 14, 2009

Cops Barely Beat 4-Year Statute Of Limitations; Charge Realty Agent With Duping Client Into Signing Over Condo; Victim Now Lives In Homeless Shelter

In Long Beach, California, the Press Telegram reports:
  • A felony embezzlement charge was filed [...] against a Long Beach real estate agent who allegedly conned a client into signing over his property, leaving the victim homeless. Donald Marshall Otis is accused of conning a former neighbor to sign over his Downtown Long Beach condominium, which the victim owned free and clear, in 2005 and then selling the property for more than $200,000, said Sgt. Rick Farfan, of the Long Beach Police Department's Forgery and Fraud Division. The victim, now 41, knew Otis as a neighbor and also knew Otis was a licensed real estate agent, Farfan said.


  • Farfan said it appeared as though Otis used the mountain of paperwork home owners must sign when selling a property to disguise the deed transfer. The victim, he said, was very naive and easily led by the accused, like many victims of forgery and fraud. "Anyone who has ever sold or bought a home knows there is a lot of paper work, it's easy to lose track, especially if you don't know anything about (the process)," Farfan said. Adding to the scheme, Farfan said, was the fact Otis was a licensed real estate agent and therefore trusted.


  • This case took about a year to put together, and was brought to the Los Angeles County District Attorney's Office for filing just before the four-year statute of limitations (for property crimes) was up, he said. Although the crime took place in 2005, police did not begin their investigation until 2008, when it was finally reported to authorities, Farfan said.

  • The victim first went to an attorney in 2005, who sued Otis over the matter and won a default civil judgment for the victim last year. But with the money already spent and Otis not working or holding any property in his name, the victim has not recouped a single penny of his loss, Farfan said. "The really sad thing is our victim is now homeless," the sergeant said, adding that the man lives in a homeless shelter in Carson.

For the story, see Long Beach real estate agent charged with embezzlement.

Go here, 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. TheftOfDeedMeta

Illinois Man Gets Five Years For Using Forged, Fraudulent Documents To Steal Homes From Elderly Widow, Deceased Man's Estate

From the Office of the Illinois Attorney General:
  • Attorney General Lisa Madigan [last week] secured a guilty plea from a Calumet Park man on two counts of theft over $100,000 for forging documents as part of a scheme to sell real estate right out from under elderly victims and their estates. Judge Douglas Simpson of the Circuit Court of Cook County, 6th District, Markham, sentenced Adrian Garner, 38, of Calumet Park, Ill., to five years in the Illinois Department of Corrections as a result of [last week's] plea.

  • During 2004 and 2005, Garner used fraudulent documents as part of two separate schemes to obtain real estate. In May 2005, Garner used forged documents to fraudulently establish that he possessed the power of attorney on behalf of Myrtle Hickson, a 76-year-old widow. Garner misled Hickson, who is now deceased, and her family into believing he would help renovate Hickson’s home and sell it for the family at a profit. Instead, Garner obtained the home’s deed by using the unauthorized documents with the alleged power of attorney for Hickson. Garner then sold the home to his father in June 2005, and transferred nearly $114,000 in profit from the transaction to his business account.

  • In the second scheme, Garner executed and used fake documents in December 2005 to fraudulently obtain part of approximately $100,000 in proceeds from the sale of a deceased man’s Chicago home.

For the Illinois AG press release, see Madigan: Calmut Park Man Guilty of Defrauding Chicago Senior in Real Estate Scam.

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

Thieves Used Forged Signatures & Documents, Fraudulent Notarizations To Steal Two Tennessee Homes, Says Victimized Memphis Man

In Memphis, Tennessee, WREG-TV Channel 3 reports:
  • It's not a burglary or a home invasion, but thieves across the Mid-South are on a mission to steal your greatest possession. They're looking for more than what's in your house -- they want the home itself. "I called 911, my son called 911. And we told the police officers, someone had broke into my house," Abdul Zarif said.But someone didn't just break into Abdul Zarif's North Memphis home, they stole it.

  • Zarif says forged signatures and fraudulent documents cost him a second home, this time in Haywood County. Zarif blames two men -- Willie Lynch, the man who claims to own the house, and Talut El-Amin, the Notary Public who made it possible. When we first caught up with Lynch, he didn't have much to say. "I got deeds on it, I bought the house. That's all I'm gonna tell yall!" Lynch said. Talut El-Amin talked to us on the phone. He said he notarized the deeds for Abdul Zarif, but refused to talk to us on camera.


  • The process of stealing a home is so simple, it just takes a few steps. All a thief needs is a blank deed, a forged signature, and a notary stamp. Once it's filed, the house is considered "sold". But new legislation, introduced after the WREG News Channel 3 Investigators exposed the problem, is designed to stop it. [...] As Zarif waits for help from Nashville, he's heading to court to fight for his homes. It's taken five months of trying to prove ownership of the property in Haywood County, but finally a judge agreed that Zarif is the true owner.

For more, see NC3 Investigates: House Stealing Scheme (New legislation could cut down on the problem, by raising penalties and jail time).

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) Reportedly, the house stealing bill is gaining support in Nashville will soon face a judiciary committee vote. You can keep tabs on the bill's progress by clicking here: DeedZetaTheft

New Mexico Couple Charged With Swiping Seven Properties Using Forged Deeds, Fraudulent Notarizations

In Valencia County, New Mexico, The News Bulletin reports:
  • A former employee of the Valencia County treasurer's department and her husband have been arrested and charged with a slew of crimes involving felony fraud and forgery involving ownership of land in the county. On April 30, Gladys Vigil, a former clerk in the treasurer's office, and her husband, Victor Paul Vigil, were arrested on a criminal complaint filed in magistrate court by state police. Police allege the Vigils deeded property over to a company they owned without the knowledge of the current property owners. The initial investigation cites seven such properties and alleged false deeds.(1)


  • [County Treasurer Dorothy] Lovato said all of the property was vacant, with no buildings. The criminal complaint charges that most of the property deed transfers were notarized by Gladys Vigil and signed by a Paul Vigil on behalf of Vigil Enterprises.

For more, see Ex-county employee charged with forgery (Complaint alleges woman, husband deeded property without owners' knowledge).

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) The investigation was triggered by a phone call from a woman who had not received a property tax bill for her deceased father's land and needed the information to complete the arrangements of his estate. Reportedly, the investigation revealed that the fraudulent deed transfer was puportedly executed by the father in 2006. Unbeknowst to the perpetrators, however, he died in 2005. DeedZetaTheft

Mortgage Company Employees Accused Of Stealing Refinancing Proceeds Intended To Pay Off Existing Lien; Leaves Customer With Ruined Credit, Unpaid Debt

In New Orleans, Louisiana, The Times Picayune reports:
  • A lawsuit filed in civil district court in New Orleans accuses a loan originator and branch manager at Allied Home Mortgage Capital Corp. of stealing money during a mortgage refinance and then conspiring with their employer to cover it up.

  • The suit contains sensational allegations against Allied employees Terri-Lynn Killett and branch manager Shane Smith, who purportedly had money wired to a personal bank account that was supposed to be used to pay off a mortgage for customer Sarada LeBourgeois. LeBourgeois asserts that their actions ruined her credit, stuck her with a mortgage on a home she no longer owns and sullied her reputation in the real estate community, where she works as a marketing manager for a home warranty company.


  • Allied Home Mortgage has moved to have the case transferred to federal district court in New Orleans, an action that LeBourgeois and her attorneys oppose.(1)

For more, see Lawsuit alleges that loan originator stole money from a client.

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

(1) Attempting to transfer a state court case to federal court is commonly used as a tactic by some defendants in civil cases to forum-shop for a friendlier venue, as well as to delay, discourage, and make more expensive, meritorious lawsuits for aggrieved plaintiffs. See:

Wednesday, May 13, 2009

2nd Co-Conspirator Goes Down In Metro Dream Homes' Alleged $70M Ponzi Scheme

From the Office of the U.S. Attorney (Maryland):
  • Charlotte Melissa Josephine Hardmon, age 39, of Bowie, Maryland pleaded guilty [Monday] to conspiracy to commit wire fraud in connection with her participation in a massive mortgage fraud scheme which promised to pay off homeowners’ mortgages on their “Dream Homes,” but left them to fend for themselves, announced United States Attorney for the District of Maryland Rod J. Rosenstein.


  • According to her plea agreement, beginning in 2005, co-conspirators targeted homeowners and home purchasers to participate in a purported mortgage payment program called the “Dream Homes Program.” In exchange for a minimum of $50,000 initial investment and an “administrative fee” of up to $5,000, the conspirators promised to make the homeowners’ future monthly mortgage payments, and pay off the homeowners’ mortgage within five to seven years.

For the entire press release, see Second Conspirator Pleads Guilty in $70 Million “Dream Home” Mortgage Fraud Scheme.

For the indictment of four of the other alleged co-conspirators, see U.S. v. Williams, et al.

Go here for earlier posts on Metro Dream Homes.

Thousands Of Foreclosure Lawsuits Brought By Companies Lacking Standing To Sue Continue To Slip Through The Court System In Uncontested Actions

In Sarasota, Florida, the Sarasota Herald Tribune reports:
  • As a lawyer helping homeowners grapple with foreclosure, April Charney has praised Sarasota's Lee Haworth, chief judge of the 12th Judicial Circuit. But Charney now puts an asterisk in her rave review.


  • Though Haworth makes foreclosure mills follow the letter of the law when taking someone's homestead, Charney says that's only when a defense lawyer is involved. Spot checks indicate thousands of other cases going uncontested are filed without proof the filer has standing to be in court. Some include false claims that a homeowner declined to negotiate, or incorrectly say the house was not a homestead.

  • Charney insists those aren't mistakes. It happens because convenient lies usually go undetected and unpunished. "Whatever is expedient, they will do," Charney insists. So even when a property owner doesn't fight, Charney says judges and their staffs have a responsibility to check cases and hammer lenders' lawyers who make false claims.

For more, see Enforce letter of the law and check for little lies. EpsilonMissingDocsMtg

More On The Use Of Multiple Corporate Hat-Wearing Dummy Vice Presidents By Lenders & Mortgage Servicers In Foreclosure Actions

The issue of employees of so-called foreclosure / bankruptcy services firms being allowed to sign legal documents (with said documents to be filed in court in connection with foreclosure actions) as officers of multiple, foreclosing financial institutions was the topic of several past posts.

Examples of how one company, Fidelity National Foreclosure Services and affiliates, of Mendota Heights, Minnesota, has made available dozens of its employees to foreclosing lenders & mortgage servicers to act as authorized corporate officers for the limited purpose of signing necessary documents to be filed in court in the effort to obtain foreclosure judgments can be found in the following documents filed in the Massachusetts land records.

To access the following five links below, first go to, then come back to this page and click the following linked Book/Pages:(1)

With respect to one of the Fidelity National employees whose name appears as an authorized corporate officer for all of the above listed companies (a certain Laura Hescott), a quick search of the online New York court cases reveals that Ms. Hescott receives mention in at least the following four foreclosure actions in her capacity as a vice president of one of the entities having some involvement in the foreclosure action:

  • Deutsche Bank Trust Co. Ams. v Peabody, 2008 NY Slip Op 51286(U) [20 Misc 3d 1108(A)]; June 26, 2008, Supreme Court, Saratoga County, Nolan, J.; (Hescott was identified as vice president of Deutsche Bank, according to the decision);

  • Deutsche Bank National Trust Company v. Harris, 2008 NY Slip Op 30308(U); February 5, 2008, Supreme Court, Kings County, Schack, J.; (Hescott was identified as vice president of Mortgage Electronic Registration Systems, according to the decision);

  • IndyMac Bank, FSB v Bethley, 2009 NY Slip Op 50186(U) [22 Misc 3d 1119(A)]; February 6, 2009, Supreme Court, Kings County, Schack, J.; (Hescott was identified as vice president of both Mortgage Electronic Registration Systems and vice president of IndyMac, according to the decision);

  • Indymac Bank, FSB v Boyd, 2009 NY Slip Op 50094(U) [22 Misc 3d 1112(A)]; January 22, 2009, Supreme Court, Kings County, Schack, J.; (Hescott was identified as vice president of IndyMac, according to the decision).

Note that in none of these four New York cases is it reflected that Laura Hescott, although signing documents as a vice president for one of the financial institutions, appears to actually be an employee of Fidelity National who is merely out on loan to the institution.

Thanks to Mike Dillon at for the heads-up on the foregoing information.

(1) For evidence of additional similar arrangements between Fidelity National and other lenders and loan servicers in Massachusetts & New Hampshire (sorry, no direct links to the New Hampshire documents):


First go to - then come back to this page and click the following link:

New Hampshire (requires Java-enabled browsers):

First go to (Hillsborough County) - then do a "document search" by entering the Book & Page number for the following documents in the appropriate boxes in the upper right hand corner of the "search screen":

  • Book 8000 / Page 2106 (HSBC Consumer Lending (USA) Inc., Beneficial Company LLC, & HFC Company LLC.);
  • Book 8035 / Page 583 (Wachovia Mortgage Corporation; power of attorney that lists the functions that the "dummy" assistant vice presidents (employees of Fidelity National) are authorized to perform on behalf of Wachovia);
  • Book 8037 / Page 142 (Beneficial New Hampshire Inc.);
  • Book 8023 / Page 51 (Washington Mutual Bank Affidavit stating that Laura Hescott signed an assignment of mortgage as an assistant vice president for Washington Mutual);
  • Book 7833/ Page 2052 (HSBC Mortgage Corp.; Laura Hescott signs foreclosure deed as "attorney in fact" on behalf of HSBC).

First go to (Rockingham County) - then do a "document search" by entering the Book & Page number for the following documents in the appropriate boxes in the upper right hand corner of the "search screen":

  • Book 4922/ Page 2932 (Household Finance Corporation II);
  • Book 4945/ Page 2067 (Beneficial Mortgage Company of New Hampshire). EpsilonMissingDocsMtg Arthur M. Schack

Boston Non-Profits, Housing Advocates Lead Effort In Helping Area Homeowners, Existing Tenants Stay In Bank-Foreclosed Homes Thru Buy-Back Program

In Boston, Massachusetts, The Boston Globe reports:
  • Thomas Quinn did something that most people who lose their homes to foreclosure can only dream about: He bought back his family's Hyde Park house. [...] "I'm a happy homeowner again with a payment I can live with," he said. "It is saving me over $1,000 a month." Quinn is one of a small but growing group of former owners who are not only staying in foreclosed homes but are buying them back, with the help of nonprofit groups and housing advocates. And in some cases, they are getting their homes at significant discount the second time around, because real estate values have plunged.

  • "We are in the process of helping a lot of people buy back their homes," said Zoe K. Cronin, a housing attorney for Greater Boston Legal Services. "There is not likely going to be another buyer. If there is someone willing to buy it back at a real value, that's probably the best option" for lenders, she said.

  • Boston Community Capital, a 25-year-old agency with a mission to help create healthy communities, is at the forefront of the effort, with about 30 borrowers - tenants and former homeowners - already in the process of purchasing their homes. In Quinn's case, the nonprofit bought his house from Wells Fargo Home Mortgage in February and weeks later sold it back to him for $198,750 - about what he owed the bank.

For more, see Still there, foreclosed no longer (Nonprofits help occupants buy back homes).

Oakland Tenant Walks Away With $4K Settlement, Over A Year Of Free Rent In Battle Against Lender & Its Illegal Foreclosure Eviction Attempt

In Oakland, California, Beyond Chron reports the story of one tenant's battle against a foreclosing mortgage lender and its attempt to carry out an illegal eviction, despite the city's Just Cause Ordinance, which, with exceptions, prohibits a lender from doing so. He ultimately sought out the assistance of the local non-profit law firm Eviction Defense Center to fight the lender:
  • [H]ughs said that his experience with the Center was user-friendly, unlike the rest of the legal system; he paid $40 for a consultation and to file papers, and it cost him $90 to go to court. Considering all the money he was saving while on rent strike, the minimal fees seemed worth it. Hughs first approached the Eviction Defense Center on Nov. 20, 2008. The Center filed a demand for a jury trial, and on Feb. 6 they represented him at a court appearance. A week later, Hughs got his settlement: After a year and a half of maintaining his home and living rent-free, he promised to leave the property within 30 days in exchange for $4,000.

For the story, see Oakland Resident Squats Bank-Owned Home.

(1) Reportedly, the Eviction Defense Center does not represent prior owners who have been foreclosed on, only tenants, who are protected by Oakland’s Just Cause Ordinance. According to executive director Anne Omura, many attorneys who represent banks are from out of county and are unfamiliar with local laws, the story states. When they do know the laws, they reportedly try to circumvent them. Numerous real estate agents and law firms are said to be on watch lists for continually filing lawsuits with no legal merit. Or for using intimidation. “Banks hire aggressive and often times unscrupulous agents who will bang on the door and threaten [tenants],” Omura said, “and a lot of people don’t know their rights and end up getting displaced.” RentSigmaSkimming

Tuesday, May 12, 2009

Gotti's Gotta Go, Says NY Appeals Court As Foreclosing Lender Gets Green Light To Give Late Crime Family Boss' Daughter The Boot From L.I. Mansion

In Brooklyn, New York, the New York Post reports:
  • Here's the reality: the Gotti's gotta go. The bank has been given the go-ahead to foreclose on Victoria Gotti's palatial estate on Long Island -- the same used in the TV reality show "Growing Up Gotti" -- saying she owes a whopping $650,000 in mortgage payments, according to court paper made public [Monday]. Gotti's lender, JP Morgan Chase, claims the daughter of the late Gambino crime family boss John "Dapper Don" Gotti -- owes them the staggering amount after she failed to make payments for two years starting in September 2006, court records reveal. [...] The bank said in court records that the mafia princess owed them $25,000 a month -- and that she never made all the payments.


  • The ruling reversed a 2007 decision by Nassau County Supreme Court Justice Roy Mahon who determined foreclosure proceedings were too early at the time. Gotti could not immediately be reached for comment, but her mother, also named Victoria, blamed the whole thing on her former son-in-law. "She's not in the mood to talk to anybody," her mother told The Post. Asked about [Gotti's ex-husband Carmine] Agnello's involvement, she barked, "The creep that he is, he took out a mortgage behind her back. She can't afford to pay."


For the court ruling, see JP Morgan Chase Bank, N.A. v Agnello, 2009 NY Slip Op 03695, May 5, 2009, Appellate Division, Second Department.

Mortgage Scammer Admits Running Home Equity Ripoffs To Perpetrate Ponzi Scheme

On Long Island, New York, ABC News reports:
  • Peter Dawson was a mini-Bernie Madoff -- on the surface, a charming family man with a big house, on the make in working class neighborhoods of Long Island, N.Y. Now, he has been sentenced to state prison for at least five years for running an elaborate mortgage scam.


  • Dawson admitted he ran a Ponzi scheme: He convinced his clients to take equity out of their homes and invest it in his hedge fund. But that "hedge fund" didn't actually exist, he said, and he pocketed the money. When he had to, he paid off old investors with new investors' money. During the housing boom, Dawson took advantage of desperate homeowners, eager-to-lend banks and lax regulations to steal millions.

For more, see Exclusive: Confessions of a Mortgage Scammer (Mini-Madoff Admits Crime But Blames Banks and Brokers for Not 'Stopping the Madness').

Mass AG Squeezes $60M Settlement From Goldman Sachs In Connection With Subprime Mortgage Probe

In Boston, Massachusetts, The Boston Globe reports:
  • More than 700 Massachusetts homeowners struggling with subprime mortgages will have their monthly payments reduced - some by as much as 35 percent - as part of a $60 million settlement Attorney General Martha Coakley reached with Goldman Sachs Group Inc.

  • Goldman Sachs owns those homeowners' mortgages through subsidiaries and has agreed to rewrite the terms of their loans in order to stave off legal action by Coakley. The attorney general has been investigating the role investment banks played in promoting subprime mortgages that borrowers ultimately couldn't afford.


  • As part of the settlement, Goldman Sachs will reduce the outstanding balances of subprime mortgages for those 714 homeowners, most of whom live in Boston, Brockton, Lawrence, Springfield, and Worcester. Homeowners seeking to refinance or sell their properties could see a reduction in their first mortgages of up to 35 percent as well as much as a 100 percent cut in second mortgages.

  • Reducing those loan amounts will cost Goldman Sachs $50 million. It has also agreed to have its subsidiary, Litton Loan Servicing LP, help qualified borrowers who are in trouble on their loans to avoid foreclosure. Goldman will also pay the state $10 million.

For more, see State reaches $60m subprime deal with Goldman Sachs.

For the Massachusetts Attorney general press release, see AG Coakley and Goldman Sachs Reach Settlement Regarding Subprime Lending Issues.

Go here for:

Ignoring The Rule Of Caveat Emptor In The Application Of Consumer Protection Statutes

In a recent court victory (go here for court ruling) against a foreclosure rescue operator accused of preying on financially distressed homeowners and using equity stripping techniques to rip them off, the Washington State Attorney General's Office successfuly applied its state's Consumer Protection Act in seeking to have the operator's conduct to be found in violation of the statute.

In its Trial Memorandum, the AG's office cited a decision of the U.S. Supreme Court in support of the proposition that the rule of caveat emptor has no application when applying consumer protection laws, and in my view, deserves highlighting here:
  • There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception.

FTC v. Standard Education Society, 302 U.S. 112, 116 (1937).

Securitization A Key Stumbling Block To Completing Successful Short Sales

The Huffington Post reports:
  • [A]ccording to one analysis, short sales resulted in loan losses of only 19 percent, compared with an average loss of 40 percent on homes sold after foreclosure. So why aren't these sales more widely used?


  • [Rep. Brad Miller (D-N.C.)] points his finger at securitization. Once the mortgages are bundled and sliced up into different pieces, known as tranches, the owners of the pieces get paid back according to a certain pecking order. Senior investors get paid back first and if there's a loss, the most junior investors won't get anything. It's those investors who are blocking short sales.

  • "The people with the least senior tranches have no reason to agree to the modification because they take a complete loss and the people in the most senior tranches don't lose anything. So they've managed to structure their mortgages in a way that makes it almost impossible to modify or sell short," said Miller.

  • Miller sponsored legislation to reform the bankruptcy code to allow judges to rewrite those contracts, taking away the ability of junior investors to sue and encouraging them to negotiate. But the House-approved measure died in the Senate, 51-45, killed last week by Republicans and 12 Democrats, leaving it 15 votes short of the 60 needed to overcome a filibuster.

For more, see Short Sales: Banks Blocking Way Out Of Foreclosure Crisis.

New Mexico AG Files Separate Suits Against Lenders, Mortgage Brokers For Actions That Left Elderly Homeowners Facing Foreclosure

In Santa Fe, New Mexico, KRQE-TV Channel 13 reports:
  • New Mexico's attorney general is going after everyone from mortgage brokers to banks after accusing them of mortgage frauds that took advantage of two homeowners now facing foreclosure. In two civil lawsuits filed Friday morning the AG is asking a judge for immediate action to stop foreclosures on the two properties. Both incidents involve elderly residents.

  • In one suit is based on a Los Lunas couple who said they gave money to their brokers and bank to pay off bills. They claimed that money never made it to creditors and that they were cheated and overcharged by their mortgage company. According to the AG the second case showed lenders ignored numerous red flags in working with a 78-year-old Chimayó woman who clearly couldn't afford her mortgage. The woman had filed a complaint with the AG's office alleging her signature was forged and other information on the mortgage application falsified.

For more, see AG casts wide net in mortgage suits (Fraud victims face foreclosure, AG says).

For the New Mexico AG press release, see Alleged Mortgage Loan Fraud Brings Two AG Lawsuits...Banks, Loan Servicers and Brokers Targeted.

Monday, May 11, 2009

Sloppy Lender Lawyers Making False Statements Running Rampant In C. Florida Foreclosures? Chief Judge To Recruit Law Students To Review Court Files

In Central Florida, the Sarasota Herald Tribune reports:
  • Foreclosure lawyers want to take back property as fast as possible, and sometimes they do not let the facts slow them down. In case after case, lawyers representing banks are giving false statements in court about who owns mortgages, or whether the homeowner is willing to negotiate, or whether they have completed all the legal steps to put a foreclosed house back on the market.

  • The errors and fabrications in the court files are seldom caught by judges with hundreds of foreclosure cases before them.(1) The judges say they can only hope to catch a few of the offending lawyers in hopes of keeping the rest honest. The courts usually rely on defendants to point out problems in the cases against them.


  • Nobody knows how common it is for foreclosure cases to be based on untrue statements or incomplete proof. More than half of all foreclosure defendants simply walk away, and never show up in court to defend themselves.

  • A Sarasota attorney, Richard Kessler, enlisted a few friends to go through 180 foreclosure cases in Sarasota County looking for errors. They found three out of four cases proceeded with incomplete or improper documentation. For instance, the survey found that only one in 12 cases had the documents to prove the company foreclosing on the property was also the company holding the mortgage note. In half of the cases reviewed, the plaintiff said the mortgage note had been lost.

  • Kessler contacted [Florida's 12th Judicial Circuit Chief Judge Lee] Haworth and offered to have his business double check the paperwork for the courts, proposing that his fee could be charged to the company filing the case. Haworth declined, saying he cannot add such a filing fee, and the courts have no money to pay for the service.

  • Instead, Haworth is recruiting volunteer law students to review all the cases for foreclosure judges this summer to verify documents. "We think having cops on the beat will help," Haworth said.


  • A judge in Miami fined Wells Fargo bank $95,000 late last year because of sloppy paperwork filed by Florida Default Law Group, one of a handful of companies that handle the majority of foreclosures in the state. Judge John K. Olson blasted Florida Default, saying the firm seemed to believe that "filing any old pleading without undertaking any investigation into its accuracy is perfectly acceptable practice."

For more, see Lies a new tool in foreclosure (Lawyers, in rush to regain properties, can exploit judges' workload).

Go here for other posts on sloppy foreclosures and assembly line lawyering.

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here.

(1) In one case cited in the article, minutes after a foreclosure attorney told her everything was in order in a recent case, Circuit Judge Donna Berlin was ready to sign off. Then she happened to glance at the file, and realized that the two properties were in Miami, a few hundred miles outside her jurisdiction. "I didn't have time to go through and read it," Berlin told a group of attorneys at a meeting last weekend. "And it was not something that I normally look at." SloppyForeclosuresAlpha EpsilonMissingDocsMtg

Central Florida Loan Modification Firm Added To Florida AG Lawsuit Hit List; Accused of Pocketing Upfron Fees In Violation Of State Law

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [Friday] announced that his office has filed a lawsuit against an Orlando loan modification company alleging the company was committing foreclosure rescue fraud. Three Angels Community Action Network(1) and company president Sherrard A. Haugabrooks are named in the lawsuit filed [...] in Seminole County Circuit Court. The lawsuit specifically alleges violations of Florida’s Foreclosure Rescue Law, §501.1377. [...] The company allegedly charged homeowners an up-front fee generally equal to a monthly mortgage payment prior to providing loan modification services.

For the entire press release, see Attorney General Sues Orlando Loan Modification Company for Foreclosure Fraud.

For the lawsuit, see State of Florida v. Three Angels Community Action Network, et al.

(1) According to the press release, the company also does business as 3ACN; US Loss Mitigation Services of FL, Inc.; Appraisal Technology and Valuation Inc.; and 3ACN Loss Mitigation Services, Inc.

NY AG Files Criminal Charges & Parallel Civil Suit Against Process Serving Firm & Its CEO Alleging Massive "Nail & Mail Sewer Service" Operation

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced criminal charges against Long Island-based American Legal Process (“ALP”) and its CEO and President William Singler for a fraudulent business scheme in which the company allegedly failed to provide proper legal notification to thousands of New Yorkers facing debt-related lawsuits, causing them unknowingly to default and have costly judgments entered against them without the chance to respond or defend themselves.

  • According to the court papers filed [...], ALP, as a legal process server, was hired by high-volume debt collection law firms in New York to serve legal papers, usually a summons and complaint, notifying individuals that they are being sued and must answer the complaint. ALP, however, allegedly engaged in “sewer service,” where process servers take advantage of individuals facing lawsuits by failing to properly alert them and denying them the chance to respond.

  • As a result, thousands of judgments were allegedly obtained against unsuspecting New Yorkers, many of whom first learned they were being sued when they found their bank accounts frozen or their wages garnished. ALP allegedly covered up the fraud by falsifying sworn affidavits of service in courts across New York. The Attorney General’s Office also filed a parallel civil suit against ALP and Singler seeking a court order prohibiting them from engaging in improper service of process, monetary damages and substantial penalties.


  • With respect to the notice sent to the law firm of Forster & Garbus, the Attorney General said: "I am putting all law firms on notice that they are responsible for the conduct of the companies they use to serve complaints and other legal documents. Law firms cannot turn a blind-eye to abuses perpetrated on their behalf.”


  • According to the court papers [...], between January 2007 and October 2008, ALP claimed to have served 98,000 summons and complaints throughout New York State to New Yorkers alleged to owe debt. The majority of these were done through “nail and mail,” the method of service that is easiest to abuse. The Attorney General’s investigation revealed that thousands of legal documents were not properly served, or served at all, to the individuals they were intended for.(1)

For the entire NY AG press release, see AG Cuomo Announces Arrest Of Long Island Business Owner For Denying Thousands Of New Yorkers Their Day In Court (American Legal Process Provided “Sewer Service” to Thousands of New Yorkers Owing Debt According to Criminal Complaint and Civil Suit; Failed to Properly Notify the Individuals That They Faced Lawsuits As a Result, Individuals Would Unknowingly Default and Have Judgments Entered Against Them Without the Chance to Defend Themselves). Go here for version En español.

Go here for other posts on "sewer service" (a reference to the illegal process server practice of filing a sworn affidavit of proper service in court when none was actually made).

(1) Carolyn Coffey, an attorney with MFY Legal Services, a nonprofit provider of free legal services, said: “The consequences of sewer service are profound, especially on vulnerable New Yorkers. In MFY’s 2008 report, Justice Disserved, we documented many victims of improper service who had judgments unknowingly entered against them, often to devastating effect. [...] MFY applauds Attorney General Cuomo for taking the initiative to combat this illegal practice, especially because sewer service often injures the elderly, disabled and working poor of New York.” SewerServiceAlpha

Owner Of Northern California Loan Modification Firm Faces Foreclosure, Files Bankruptcy; Some Customers, Ex-Employees Call Him A Con Man

In Northern California, KPIX-TV Channel 5 reports:
  • Some customers and even former employees of the company called "Saving California", which promised to help save homes in foreclosure, have told CBS 5 Investigates the company didn't deliver on its promises and call the man who runs it a "con man."


  • A CBS 5 investigation found customer after customer of [Ray] Jeter's [...] loan modification company [...] complaining his company took their money and didn't deliver on its promises. [...] And anyone who wants money back from Jeter may have little chance of ever seeing it. Jeter's filed for bankruptcy.


  • [His bankruptcy filings show] there's a debt of $1.75 million. What for? Jeter has a mansion at the top of a hill in Soquel. It also turns out the man who promised to save other people's homes didn't pay for his own; it's in foreclosure.

For more, see NorCal Loan Modifying Firm Owner Files Bankruptcy.

Sunday, May 10, 2009

Foreclosed Arizona Homeowner Thwarts Lender's Illegal Lawsuit In Attempt To Collect Unpaid, Non-Recourse 2nd Mortgage Used To Purchase Home

From a press release from the office of Harper Law PLC:
  • In a[n Arizona] foreclosure proceeding, the first mortgage is given preference over the subordinate or subsequent mortgages. In today's Arizona home market this process frequently leaves subordinate mortgages entirely unpaid after a foreclosure. Understandably, these lenders are pursuing all means possible to recover their losses, but oftentimes they have no legal recourse.

  • Recently, Arizona Attorney Kevin Harper represented a homeowner who lost her home to foreclosure in late 2008. The lender on the homeowner's second mortgage filed a lawsuit to recover over $40,000 it alleged was owed on the second mortgage, which was money the homeowner used to purchase the house in 2006. Mr. Harper filed a Motion to Dismiss the lender's lawsuit pursuant to [Arizona statute] A.R.S. § 33-729(A), which states that a lender is barred from pursuing any action against a[n Arizona] borrower if the mortgage was obtained to purchase the [Arizona] home. After receiving Harper Law's Motion to Dismiss, the lender realized the futility of its action and immediately offered to dismiss the case and pay the client's attorneys' fees.

For more, see Arizona Real Estate Lawyer Warns of Frivolous Lawsuits by Second Mortgage Lenders.

Florida Man Cops Plea To Stealing Title To Vacant Homes, Then Pocketing $500K+ In Subsequent Mortgage Refinancing Proceeds

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [last week] announced that a Columbia County man has pleaded guilty to his involvement in a mortgage fraud scheme. [... Rory V.] Porter, 42, was arrested in November 2007 by the Alachua County Sheriff’s Office after detectives from the Alachua and Columbia County Sheriffs’ Offices discovered Porter’s involvement in a mortgage fraud scheme with elements of identity theft.

  • The investigation revealed that, between May 2007 and August 2007, Porter befriended owners of homes which were free of any liens, vacant, and for sale. Using information he obtained through his relationship with the homeowners and from public records, Porter forged documents and recorded deeds to transfer the homes to his possession. He would then locate private lenders and borrow money using the homes as collateral. Authorities believe Porter stole homes in the Gainesville and Lake City areas worth in excess of $800,000 and obtained loans against those homes in excess of $500,000.

For the entire press release, see Columbia County Man Pleads Guilty to Mortgage Fraud Scheme.

Debt Renegotiation Scams Not Limited To Foreclosure Rescue, Loan Modification Firms As Illinois AG Hammers Settlement Outfits In Separate Civil Suits

From the Office of the Illinois Attorney General and the Illinois Department of Financial and Professional Regulation:
  • Attorney General Lisa Madigan and Acting Secretary of the Illinois Department of Financial and Professional Regulation (IDFPR) Michael T. McRaith warned consumers facing significant credit card debt about the risks of debt settlement offers as she announced two lawsuits filed against debt settlement firms.(1) Attorney General Madigan's lawsuits allege that these companies engage in deceptive marketing practices, charge excessive fees and do little or nothing to improve consumers financial standing.


  • Madigan said her office has seen an increase in advertisements for debt settlement companies that promise to significantly reduce consumers credit card debt and provide them with an alternative to bankruptcy protection. Typically, after consumers enroll in debt settlement programs, the companies charge excessive upfront fees and advise consumers to stop paying their credit card bills. Despite this advice, the debt settlement companies fail to begin negotiations with consumers credit card companies for several months. As a result, credit card companies add fees and penalties to consumers credit card balances and often even begin collection efforts to recoup the debt, all of which puts the consumers in a worse financial situation. In many instances, while consumers were enrolled in debt settlement programs, credit card companies have sued the consumers to collect the balance on the consumers accounts.

For the entire Illinois AG press release, including a summary of the specific allegations against each outfit, see AG Madigan Sues Two Debt Settlement Firms (Attorney General, IDFPR Warn Consumers About Firms Promising to Reduce Credit Card Debt).

(1) AG Madigan sued the following defendants:

  • 1st lawsuit: SDS West Corporation, an Aliso Viejo, Calif.-based debt settlement agency; Bruce Hood, the Chief Operating Officer of SDS West; SDS West's Chief Executive Officer, Raymond Dorso; Nationwide Support Services, Inc., an Irvine, Calif.-based debt settlement servicer; and Joanne Garneau, President of Nationwide Support Services.
  • 2nd lawsuit: Debt Relief USA, Inc., a debt settlement firm based in Addison, Texas and Kelly E. Reilly, the President of Debt Relief USA.

NY AG Subpoenas Fourteen Debt Settlement Companies & One Law Firm In Nationwide Probe; Seeks To "Rein In A Renegade Industry"

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [Thursday] announced a nationwide investigation into the debt settlement industry, subpoenaing fourteen debt settlement companies and one law firm.(1) Companies in the debt settlement industry often prey upon consumers who find themselves unable to keep up with credit card payments during these difficult economic times.

  • Today, millions of hardworking Americans are finding themselves imprisoned by debt. In response, a rogue industry has stepped in, offering consumers false hope, charging tremendous fees, and leaving them in a worse financial situation,” said Attorney General Cuomo. “Our mission is clear: to hold unscrupulous businesses accountable; to rein in a renegade industry; and to ensure that people are not victimized when faced with financial hardship.”


  • The subpoenas include requests designed to uncover the companies’ fee structures, how many people have benefitted from the companies’ services, and what kind of relief the companies are actually providing.(2)

In what appears to be an attempt to literally squeeze the blood out of aggrieved debtors, at least one of these firms has been accused of suggesting to the debtors to sell their blood plasma as an additional source of funds to apply towards their debt settlement "program," according to the press release.

For the entire NY AG press release, see AG Cuomo Announces Nationwide Investigation Into Debt Settlement Industry (Subpoenas Fourteen Debt Settlement Companies and One Law Firm in Connection with Probe; Debt Settlement Companies Often Charge Huge Fees for Misleading Plans, Suggest Selling Blood Plasma to Raise Funds, and Leave Consumers in Worse Financial Shape).

(1) The fifteen firms receiving AG Cuomo's "invitations to cooperate" are:

  • American Debt Foundation, Inc.; American Financial Service; Consumer Debt Solutions; Credit Answers, LLC; Debt Remedy Solutions, LLC; Debt Settlement America; Debt Settlement USA; Debtmerica Relief; DMB Financial, LLC; Freedom Debt Relief; New Era Debt Solutions; New Horizons Debt Relief Inc.; Preferred Financial Services, Inc.; U.S. Financial Management Inc. (d.b.a. My Debt Negotiation); and the Allegro Law Firm.

Cuomo is also currently investigating Nationwide Asset Services, Inc., based in Phoenix, Arizona, and Credit Solutions of America, Inc., based in Addison, Texas, according to the press release.

(2) According to the press release, the debt settlement plans are generally premised on consumers aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their precarious financial situation.

Some of the companies also urge consumers to seek additional sources of funds through means such as selling their blood plasma, mowing lawns, cutting down on car insurance, and borrowing from their neighbors and church. Even for those consumers who can meet the requirements set out by a plan, their amount of aggregated savings is ordinarily insufficient to settle their debts. As a result, many consumers find themselves worse off financially because of these debt settlement plans.

More On Now-Defunct, Alleged Attorney-Based Loan Modification Scam That Victimized 2000+ Homeowners

In San Francisco, California, SF Weekly recently ran a column on an alleged loan modification foreclosure rescue scam that clipped homeowners in foreclosure out of thousands of dollars and that is now out of business:

  • The apparent swindle, fi[r]st described in the September, 2008 SF Weekly column "Facing foreclosure? Con man Paul Noe II has a deal for you," involved a boiler room of agents who would contact Spanish-speaking homeowners behind on their mortgage payments. Roth's canvassers would convince apparent victims they might save their homes by entering into a business deal with convicted con artist Noe, scion of a legendary con artist dynasty. Under the terms of the deal, Roth's employees would offer a complex contract to prospective clients. The deal required the client to pay monthly fees to a Noe-formed company. That company -- which happened to be partially owned by Roth's wife -- would in turn hire Roth as counsel for the client, supposedly to fend off foreclosure via lawsuits.


  • Attorneys now suing him on behalf of former clients say the scheme involved Roth stringing homeowners along long enough to collect thousands of dollars in fees, then months later claiming to have lost the lawsuit, despite his best efforts.

For more, see State Bar Takes Over 'Son of Super Swindler' Law Firm -- 2,000 Con Jobs Too Late. UnauthPractOfLawTheta