Saturday, June 13, 2009

County Clerk, Legal Services Firm Join To Provide Worksops To Help Foreclosure Scam Victims

In Atlantic County, New Jersey, WMGM-TV Channel 40 reports:
  • With the current recession climate, as more homeowners fall prey to the foreclosure crisis, scam artists are working even harder to find new victims. But in Atlantic County, the clerk's office is doing its part to fight foreclosure scams and help its victims. Atlantic County Clerk, Ed McGettigan, announced today his office will be teaming up with South Jersey Legal Services Inc. in sponsoring community workshops that will give prospective scam victims direct, personal attention and information.(1) The first workshop is open to the public and is scheduled for June 17th in Mays Landing. For more information and to register, you can contact the Atlantic County Clerk's Office at (609) 625-4011 ext. 5390.

Source: Atl. Co. Clerk's Office Helping foreclosure Scam Victims.

(1) According to McGettigan, his office has already been sending out information to borrowers who are facing possible foreclosure action to protect them from scammers. "As soon as a lender files a lis pendens against a borrower's property indicating loan default we notify the homeowner and send current information about how to get help and what to do."

Foreclosed Homeowner Accused Of Booby-Trapping Former House Skips Arraignment, Heads For Parts Unknown; Bond Revoked

In Riverside, California, The Desert Sun reports:
  • A Riverside man accused of planting fake explosive devices around a property he owned but lost in foreclosure(1) failed to make a scheduled court appearance today, prompting a judge to issue an arrest warrant. Daniel Gherman, 41, faces one felony count each of assembling a booby trap, planting a facsimile bomb and burglary for allegedly hiding dangerous-looking devices outside a [his former] home [...]. Gherman was slated to appear for arraignment [Wednesday] afternoon [...]. However, the defendant was a no-show, prompting [the judge] to revoke Gherman's current bail bond and issue a bench warrant for his arrest, a court clerk said. [...] Gherman was [originally] arrested the night of May 12. He was freed on $42,000 bail the following day, according to jail records.

For the story, see Man accused of planting booby trap in foreclosed home a court no-show.

(1) According to the story, a real estate agent working for the foreclosing bank was checking the property when he spotted what appeared to be bombs and immediately contacted police, authorities said. Members of the Riverside Police Department's Hazardous Devices Team cordoned off the area, evacuating nearby homes, while technicians determined whether the devices posed a threat. Technicians used a remote-controlled, armor-plated robot to disable several suspicious objects and detonated others. The operation ran well into the night and resumed the following day, until authorities were satisfied the property was safe. An FBI agent joined the investigation, but no federal charges have been filed. DeputyEvictionTheta

Arizona Crackdown On Foreclosure Stripping Continues As Homeowner Indicted On Charges Of Defrauding A Secure Creditor, Criminal Damage

In Surprise, Arizona, The Arizona Republic reports:
  • A Surprise resident suspected of stripping his foreclosed home of fixtures and other equipment was arrested Tuesday for a common crime that has been ignored too long, Surprise officials said. In late February, a neighbor called police to report that Roberto Javier Garcia, 34, was removing fixtures from his home [...] said Sgt. Mark Ortega, a Surprise police spokesman. [...] Due to the complicated nature of foreclosure-related crimes, police were unable to [immediately] arrest him, Ortega said.


  • In the months before the arrest, detectives tracked the status of the home in the hopes they could pursue criminal charges against Garcia. Investigators later submitted the case to the Maricopa County Attorney's Office. A grand jury indicted Garcia on charges of criminal damage and defrauding a secure creditor, giving police probable cause to arrest the former Surprise resident [...] on Tuesday.(1)

For the story, see Police: Surprise man stripped his foreclosed home.

Go here for other posts on foreclosure fixture stripping.

(1) According to the story, Surprise city manager Randy Oliver noted that the arrest was an attempt to deter those who believe stripping a foreclosed home is a civil offense. "We made the decision to pursue this because we want people to stop," Surprise Police Chief Dan Hughes said. "Too many people think that this (type of offense) is civil. It's not. It's a crime." foreclosure fixture stripping apple

Foreclosed Homes Easy Targets For Owners, Others For Fixture Stripping, Sabotage

In Naperville, Illinois, the Naperville Sun reports:
  • [F]rom missing air conditioning units to kitchen cabinets denuded of their hardware, from bannisters coated with fecal matter to that huge hole in the living room wall where the fireplace used to be, legions of homeowners are venting their anger on financial institutions and potential buyers by stripping their foreclosed properties of anything and everything of value.


  • And it isn't just the foreclosed-upon who are doing the pillaging. Unscrupulous builders, contractors and citizens who learn the locations of foreclosed properties sometimes make their way inside to steal doors, lighting fixtures, cabinets and anything else that might remain there.


  • [Inspection service company Ron] Ewald said his employees also have seen cases of sabotage instigated by disgruntled homeowners who have done everything from shutting off natural gas and water valves to "just gently loosening the fitting under a toilet or an upstairs sink."(1) Potential homebuyers "almost need three or four people to be on their toes in different parts of the house" when testing the plumbing, for example, Ewald said. That has become necessary to ensure water does not flood a room or open area because of tampering by the previous owners.

For the story, see Looks can be deceiving ...

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

(1) In another story of foreclosed homeowner sabotage, see Foreclosed home apparently booby-trapped (Bomb disposal experts are at a foreclosed home in Riverside, California that was apparently booby-trapped. Several suspicious devices were also located on the property). foreclosure fixture stripping apple

City Of Minneapolis Boards Up Foreclosed House With Ex-Homeowner Still Inside

In Minneapolis, Minnesota, the Star Tribune reports:
  • On May 12, the day the city inspector came to board up his house, Ted Poetsch was eating lunch. After living all of his 53 years at 823 Penn Av. N., Poetsch had an hour left to pack his stuff and get out. Cane in hand, he lurched around, throwing a few things in bags, putting Kitty in the carrier. He heard the contractor outside starting to drill into the door frame.

  • Poetsch made his way down his narrow stairway, resigned to the end he had resisted for three years, through personal financial missteps, the false promise of a foreclosure "rescue" and a court victory that gave him short-lived hope.

  • He came to the door and realized that he was too late. A truck had driven away from the house, prompting those outside to think the tenants were gone. Poetsch had been boarded up inside his house.

For the rest of the story, see Minneapolis man accidentally boarded in his house (In many ways, Ted Poetsch's experience is emblematic of the forces that have fastened plywood over so much of the North Side and urban neighborhoods across America).

Go here for other posts on foreclosure & eviction screw ups. ForeclosureLockOuts

Friday, June 12, 2009

"Secret Lien" On Farm Purchase Ruins Buyers' Retirement Plans

In Dixie County, Florida, The Gainseville Sun reports the story of how the purchase of a 70-acre farm that, unbeknownst to the buyer, contained a "secret lien"(1) that was owed by the seller and that was missed by the company doing the title search, screwed up the retirement plans of the unwitting purchasers. The secret lien, coupled with the buyers' lack of understanding that their title insurance policy obtained when they bought the property requires the insurance company to defend the title against such a claim, and foot the legal bills associated with the defense, led to a 3-year ordeal that left them with lawyer expenses "way up in the six digits" incurred in defending the title to the land and a missed opportunity to develop the property during the real estate boom of a couple of years ago.(2)

For the story, see Couple's legal battle over farm finally settled (The three-year ordeal has left the Old Town couple saddled with legal fees).

For the associated Florida appellate court ruling referenced in the story, see Orix Fin. Servs. v. MacLeod, 977 So. 2d 658 (1st DCA 2008) (which ruled that the buyers' remedy for the screw up, if any, will lie against the title insurer or abstractor or against the clerk of the circuit court itself).

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

(1) According to the story, the "secret lien" arose as a result of a judgment creditor’s proper recordation of a lien followed by a screw up in the county recorder's office whereby the clerk failed to properly index (ie. alphabetize) the lien on its records, which explained why the title company missed it when searching the public records for liens and other encumbrances on the property. The Dixie County Clerk of the Court ultimately agreed to pay the judgment creditor $200,000, the state's cap on suits against a government entity, on account of the screw up (although the clerk's attorney was quoted as saying that the settlement was not an admission of liability, but was in the best interests of all parties), the story reports.

(2) Unexplained in this story is why the buyers hired an attorney to defend the title to the property through litigation (and who ran up considerable fees throughout the legal process), and why the attorney failed to inform his clients at the outset that they should simply file a claim with their title insurance company. Under the standard title insurance policy in Florida and other states, the insurance company is required not only to indemnify a property owner for losses resulting from claims against title (up to the dollar amount of the policy), but to supply and pay for the legal defense against adverse title claims when they manifest themselves. title insurance legal issues

Virginia Couple Plead Guilty In Foreclosure Rescue Ponzi Scheme

In Richmond, Virginia, the Richmond Times Dispatch reports:
  • A Chesterfield County couple who defrauded fellow church members and others in a Ponzi scheme pleaded guilty yesterday and agreed to repay victims more than $9.7 million. Darrell Underwood, 42, faces up to 10 years in prison and Cynthia Underwood, 41, five years when sentenced on Sept. 17. Each was found guilty of conspiracy to commit mail fraud. Darrell Underwood also pleaded guilty to engaging in unlawful transactions.

  • The two owned Walkwood Properties in Midlothian, which specialized in helping homeowners about to lose their homes to foreclosure. They attracted many investors from their church, the Mount Gilead Full Gospel International Ministries.


  • The government alleges that of the $18.4 million the Underwoods took in from April 2007 through Dec. 13, 2007, promising to invest in distressed properties, about $13.4 million was used to pay back investors while about $2 million was used in real estate deals. Some of the money was used by the Underwoods to help pay their own mortgage and to make payments on expensive cars.

For more, see Chesterfield couple plead guilty in Ponzi scheme.

Disbarred Rhode Island Attorney Cops Plea To Stealing $2.5M+ In Clients' Sale/Refinancing Proceeds Intended To Satisfy Existing Liens

In Providence, Rhode Island, ABC6 reports:
  • A disbarred Cranston attorney has pleaded guilty to stealing more than $2.5 million from clients who were refinancing or buying new homes. Pasquale Scavitti III, who handled real estate transactions, pleaded guilty Tuesday to wire fraud. He admitted using for personal expenses client money that was supposed to pay off existing mortgage loans. Prosecutors say he committed 13 fraudulent transactions between 2003 and 2008, resulting in total losses of more than $2.5 million. [...] He was disbarred by the Rhode Island Supreme Court in August.

Source: Cranston Man Pleads Guilty for $2.5M Worth of Real Estate Fraud.

For the U.S. Attorney press release, see Defendant pleads guilty to Wire Fraud relating to Mortgage Fraud Scheme.

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

(1) If it hasn't already, the Rhode Island Bar Association Lawyer's Fund For Client Reimbursement may be footing the bill for some of the losses in this case. For those clients screwed out of their money and property by reason of the dishonest conduct of their attorneys and seek some reimbursement in other states and Canada, see:

Foreclosing Lender Dodges Major Headache; Unloads 141 Repossessed Luxury Units For $24M Cash Before Recent Discovery Of Chinese Drywall In Building

In West Palm Beach, Florida, WPBF-TV Channel 25 reports on The Whitney, a newly-constructed luxury condominium that opened in 2007, but was facing foreclosure by the lender by the end of 2008, and the health problems being complained about by a couple of the condominium residents (no word on the headaches now being felt by the foreign company who plunked down big bucks in February for the remaining unsold units). In a recent letter,(1) the management company has recently informed all the residents of the likely presence of Chinese drywall in the building.
  • The Whitney's property manager, Paul Wilkis, told WPBF News 25's investigative reporter Terri Parker that he was not authorized to talk about the drywall problem, but in the letter he sent to residents, he said the board is hiring an engineer to determine the presence and extent of defective Chinese drywall and whether or not it poses hazards to the property.


For the story, see Downtown West Palm Beach Condo Has Chinese Drywall (The Whitney Sends Letter To Residents).

In a related story, see South Florida Business Journal: Whitney units sold in bulk for $24M (A Scandinavian investment company has paid $24 million in cash for 141 units of the Whitney condominium in West Palm Beach).

Go here for other posts on Chinese drywall.

(1) According to the story, the letter to all residents said an air-conditioning leak sparked an investigation that led to the discovery of "the likely presence of Chinese drywall."

Four South Florida Residents Charged With Illegally Dodging $100K+ In Real Estate Taxes Using Tax Breaks Granted To Dead Relatives

In Miami, Florida, The Miami Herald reports:
  • For 18 years, Julian Grande received a special tax break for disabled homeowners from the Miami-Dade property appraiser. But Grande was more than disabled. He's been dead since 1990. Grande's daughter, Maria, is one of four people now facing criminal charges for allegedly exploiting property-tax breaks meant for relatives long dead. According to investigators with Miami-Dade's inspector general and the state attorney's office, the four people continued to file property-tax records indicating their disabled relatives were alive -- forging signatures, in some cases. Along with Maria Grande, those arrested were: Dane Taylor, 60, of Palmetto Bay; Philip Espinosa, 50, of Miami; and Telenia Piedra, 59, of Miami.


  • Each of the four charged had relatives who legitimately qualified for the tax exemption, sparing them from paying any property taxes on their homes. But the new owners were obliged to inform the county when they died, prosecutors say. In all, the four defendants avoided more than $100,000 in taxes, Inspector General Chris Mazzella said.

For more, see 4 accused of cheating on Miami-Dade property taxes (Four people are accused of using tax breaks for their dead relatives to avoid paying property taxes on their homes).

Thursday, June 11, 2009

California Lawmakers Seek To Crackdown On Foreclosing Banks Forcing Buyers Of Repossessed Homes To Use Title & Escrow Firms Picked By Lender

The underreported (and unprosecuted) scam currently being perpetrated by lenders looking to unload foreclosed homes whereby they force the buyers of those homes to use their (the lender's) title insurance and escrow companies(1) is now drawing attention from the California state legislature, as evidenced by this excerpt in a recent story reported by the Merced Sun Star:
  • A bill to help California's smaller title companies compete in the foreclosure resale market has cleared the Assembly and is now in the Senate. [...] The bill's passage would be a boost to title companies that have been hard-up for business as the market has shifted from real estate agents selling new homes for developers to unloading foreclosed ones for banks. The bill, AB 957 [the Buyer’s Choice Act, go here to check bill status], would establish penalties for banks that force buyers to use a particular title and escrow company.


  • The practice of forcing buyers to use certain title insurance companies is illegal under the federal government's Real Estate Settlement Procedures Act, though there's been little enforcement. State leaders are looking to crack down by allowing buyers to seek a fine against banks that forced them to use a particular title company.


  • Banks would be forced to pay the buyer three times what was spent on the title and escrow services. Locally, title transaction fees can run about $1,000, though agents have seen bills double or triple that from other firms. In such instances, banks could be paying thousands back to the home buyer. [...] So far, there hasn't been any opposition to the bill. It passed the Assembly with a 77-0 vote. No title companies or lobbyists have come out against it.

For the story, see Galgiani's title bill on its way to state Senate.

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

(1) Lenders holding foreclosed homes with potentially defective titles as a result of errors, irregularities, and other sloppiness in the foreclosure process (ie. lenders lacking standing to foreclose, failure to physically possess the mortgage note when foreclosing, failure to satisfy all "notice" requirements in the legal process, etc.), and who are using "friendly" title & escrow companies over whom they can possibly exert control in the title-clearing & sale-closing process (for the possible purpose of "slipping something past" an unwitting home buyer), appear to be among those that could be affected by this proposed law. title insurance legal issues

Alleged Scammer Leaves Friends Homeless; Becomes Fugitive, Forcing Federal Judge To Order Forfeiture Of Real Estate Posted To Secure Bail Bond

In Brooklyn, New York, the New York Post reports:
  • A former Credit Suisse broker who became a fugitive to escape trial for fraud now has two more victims -- the friends who put their homes on the line to back his $3 million bail. Brooklyn Federal Judge Jack Weinstein angrily ordered prosecutors to seize $3 million in assets that were posted as bail for Julian Tzolov, 36, including a friend's Manhattan apartment and a Miami Beach home belonging to his girlfriend's brother. The feds launched a massive manhunt for Tzolov on May 9 after he vanished from his posh Fifth Avenue condo, where he'd been under house arrest for eight months, complete with an electronic monitoring device around his ankle.


  • "Everything should be forfeited," Weinstein said [Monday] in reference to the friends who signed Tzolov's bail bond. "They're going to lose everything."


FTC Targets Loan Modification Outfit With Civil Contempt Action; Accuses Firm Of Ripping Off Homeowners Facing Foreclosure With Upfront Fees

From the Federal Trade Commission:
  • The Federal Trade Commission has filed a civil contempt action charging a deceptive mortgage foreclosure rescue and loan modification operation with violating a 2001 court order.(1) Many homeowners paid the defendants up to $5,500 in advance and ultimately lost their homes to foreclosure. The FTC has asked the court to halt the unlawful practices, freeze the defendants’ assets, and seek compensation for victims.

  • According to papers the FTC filed with the court, the defendants told consumers that they would stop foreclosures. They claimed they were “100% successful and had never lost a customer’s home to foreclosure” and advised consumers to pay them instead of making mortgage payments. They also claimed that they would negotiate modified mortgages with lower interest rates, monthly payments, and principal balances. The FTC charged that, in fact, they obtained few, if any, loan modifications for customers.

  • The defendants also claimed that their selectivity in choosing customers helped them succeed, but they took on nearly every consumer willing to pay, according to the FTC. In addition, the defendants falsely claimed that they would provide experienced real estate attorneys who would represent customers nationwide, and would review consumers’ loan documents to look for fraud and other lending violations.

For the entire press release, see FTC Charges Foreclosure Prevention and Loan Modification Marketers with Contempt.

Go here for the FTC's Temporary Restraining Order With Asset Freeze, Appointment of a Temporary Receiver and Other Equitable Relief.

Go here for links to other court documents available in connection with this case.

(1) According to the FTC, Bryan D’Antonio and three companies he controls, The Rodis Law Group Inc., America’s Law Group Inc., and The Financial Group Inc., doing business as Tax Relief ASAP, violated a 2001 order that banned D’Antonio from telemarketing and misrepresenting material facts about goods or services. The FTC obtained the order against D’Antonio and his former company, Data Medical Capital Inc., for operating a work-at-home medical billing opportunity scheme. D’Antonio pleaded guilty to mail fraud for his involvement in the scam and served almost three years in prison.

Nevada Lawsuit Alleges Lender Used Deceptive & Unfair Practices, Lacked Good Faith When Making Unsustainable Home Loans; Seeks Class Action Status

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • The foreclosure crisis is far from over in southern Nevada. Now a group of homeowners are fighting back against one lender. They've filed a class action lawsuit to stop foreclosures and to get restitution for those who've already lost their homes. They are going after California's Indymac, one of the first banks to fail during the meltdown.

  • The lawsuit claims the lender did not deal in good faith with their borrowers and used deceptive and unfair practices. "They focused in on minority groups and attempted to sell them on loans that they knew that those borrowers could never ever satisfy," said attorney Matthew Callister.(1) Callister is representing the lawsuit against Indymac, who was taken over by OneWest Bank. He says tens of thousands of valley homeowners have loans through the company and he wants to stop more from becoming victims of bad lending practices.

For more, see Las Vegas Attorney Files Class Action Against Home Lender.

For other posts on homeowners using state & federal consumer protection laws to stave off foreclosures, Go Here, Go Here, and Go Here.

(1) Last year, the Massachusetts Supreme Judicial Court ruled that the making of subprime loans that lenders either knew or should have known were unsustainable constituted unfair and deceptive business practices in violation of the applicable state consumer protection statute (M.G.L. c. 93A, §2). See:

California Woman Loses Home To Foreclosure After Miscommunication Involving One Payment On Loan Modification Agreement

In Simi Valley, California, the Ventura County Star reports on a local homeowner who lost her home to foreclosure after a screw-up in the handling of one payment made on a loan modification agreement:
  • [F]or [Josie] Lowe, the [foreclosure] sale came as an unexpected blow after more than a year of trying to work out a loan modification with her bank. At one point, she was given a payment plan to help her catch up with payments she had missed during a tough period while her mother was ill. She made payments regularly, feeling that she was upholding her end of the bargain.


  • In all, she paid the bank, then IndyMac, more than $21,500 from April 2008 to February. She has the MoneyGram receipts to prove it in a packet full of documents from the whole ordeal. But when she called on May 11 about a returned payment, she was told her home was being foreclosed and going up for auction the next day. Lowe couldn’t believe it. “I don’t know what I’m going to do, because I thought I was doing all the right things,” she said.

For more, see Simi Valley woman says she's shocked to learn of foreclosure, auction, buyer (Caught in the cracks). ForeclosureLockOuts

Bridgeport Resident Faces Loss Of Home Due To Loan Servicer Screw Up In Failing To Remit Real Estate Taxes To City

In Bridgeport, Connecticut, the Connecticut Post reports:
  • Ever since he came to this country from Haiti, Jean Castro just wanted to live the American dream. He worked as a mechanic in Stamford before finally saving enough money to buy a house here for himself, his wife and three children. Now, three years later, the city is foreclosing on the single-family home [...] because Castro owes $51.69 in back taxes.

  • "It's unbelievable," said the 49-year-old Castro as he stood beneath the large grape arbor alongside his home. "I pay my mortgage every month, I do everything I'm supposed to do and now you tell me the city is taking my home. I'm shocked."

  • Last week, a Superior Court judge granted the city's foreclosure action and ordered the home to be sold in December to satisfy the back taxes as well as the $2,705 in attorneys' fees and foreclosure costs. [...] Castro maintains he didn't know his house was in foreclosure. He said he received a letter from the city stating he had back taxes and he turned the letter over to his mortgage company, which pays his taxes. "The bank said it was going to take care of the back taxes and that's the last I knew of it," he said. In fact, court records show that nearly $3,000 in back taxes were paid on the house, leaving a balance of $51.69.

For more, see Family to lose home over $50 tax bill (A Bridgeport homeowner gets served foreclosure papers because he owes).

For story follow-up, see Bridgeport claims man facing foreclosure not innocent victim. ForeclosureLockOuts

Wednesday, June 10, 2009

Massachusetts Court Ruling Gums Up Resales Of Foreclosed Homes Across State; Title Insurance Unavailable For Clouded Ownership Due To Faulty Paperwork

In Springfield, Massachusetts, the Boston Herald reports:
  • A Springfield judge’s ruling has thrown the entire Massachusetts foreclosure market into disarray by bolstering claims that lenders improperly seized thousands of Bay State homes. Experts say Land Court Judge Richard Long’s recent decision to void two Springfield-area foreclosures over procedural flaws has gummed up resale of foreclosed homes across the state. “It’s just stopped everything,” said North Andover broker Linda Kody, who specializes in reselling foreclosed properties for banks.

  • Kody said Long’s ruling, first reported yesterday by industry publication Banker & Tradesman, has halted at least 12 of her resale deals. Would-be buyers can’t get title insurance on homes with “clouded” ownership, Kody said, and banks, in turn, generally won’t OK mortgages without title coverage. Long ruled that due to faulty paperwork, U.S. Bank and Wells Fargo Bank don’t really own the Greater Springfield homes that each foreclosed upon separately in 2007.

  • The judge found that the banks held foreclosure auctions even though both lacked documents at the time proving that they really owned the homeowners’ mortgages. That “clouded” each property’s title, discouraging any third party from bidding on the homes, Long ruled.


  • Lawyer Gary Klein, who’s filed a federal class-action lawsuit aimed at undoing some 2,000 Bay State foreclosures on such grounds, said Long’s ruling strengthens his case.(1)Lenders simply stopped following the law for their own convenience,” Klein said.

For the story, see Court puts legal cloud over foreclosure sales (requires fee; for free version, try here, courtesy of Mortgage Servicing

Go here for the consolidated court ruling (U.S. Bank v. Ibanez; LaSalle Bank v. Rosario; and Wells Fargo v. Larace), available online courtesy of attorney Glenn Russell, Jr., of the Law Office of Glenn F. Russell, Jr., Fall River, Massachusetts.

See also:

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) For more on this point, see:

"Entire Industry Is A Scam," Says NY AG As Subpoenas Go Out To 14 Loan Modification Firms; "Intent To Sue" Sent To Another

Bloomberg News reports:
  • New York Attorney General Andrew Cuomo subpoenaed 14 loan-modification companies and plans to sue [another] as part of a probe of the “foreclosure rescue” industry.(1) [...] "Many of these companies charge upfront fees which are specifically prohibited by law,” Cuomo said in a conference call. “Sometimes homeowners even end up paying a higher cost after one of these companies gets involved.” Cuomo said that in many ways the “entire industry is a scam” because the U.S. Department of Housing and Urban Development provides assistance to struggling homeowners for free.

For the story, see Cuomo Subpoenas 14 Loan Modifiers, Plans Lawsuit.

See also: New York AG press release, see Cuomo Announces Intent To Sue ‘Amerimod’ Loan Modification Company In Investigation Of Foreclosure Rescue Scams Targeting Homeowners Nationwide (Long Island-Based American Modification Agency Charged Illegal Up-Front Fees and Used Deceptive Marketing to Target Homeowners Facing Foreclosure; Cuomo Also Issues Subpoenas to Fourteen Other Loan Modification Companies Across the Country in Nationwide Investigation).

(1) According to the NY AG's office, it has served a notice of intent to sue on American Modification Agency, Inc. (“Amerimod”) and its owner and President Salvatore Pane, Jr., accusing the company of charging illegal upfront fees and using false advertising to reel in struggling homeowners. Amerimod is headquartered in Uniondale, NY and claims to operate in all 50 states, servicing thousands of consumers nationwide.

Cuomo has also issued subpoenas to fourteen loan modification companies: American Home Recovery Corporation; CloseMore Financial Corporation; Elite Results Group, Inc.; FLM Law Center LLP, a/k/a Federal Loan Modification Law Center and Federal Loan Modification; Hometown U.S.A., Inc.; Global Modifications, Inc. a/k/a The Law Office of Brett Margolin, P.C.; Loan Modification Affiliate Exchange, Ltd, a/k/a LoanMAE; Nationwide Modification Agency, Inc.; NMA Legal Services, P.C.; Northeast Mortgage Services; People’s First Financial, Inc.; Raymond Lewis & Fitch, Inc.; Settled For Less, Inc.; and the Law Depot, Inc. a/k/a the Loss Mitigation Legal Network.

NY Attorney Charged In "Seller Financing" Mortgage Fraud Scam; Accused Of Using Bogus Documents To Cheat Property Sellers, Banks

In New York City, the New York Law Journal & the Office of the Manhattan U.S. Attorney announce:
  • An attorney with the New York City Law Department who had a gambling problem was arrested [last week] for mortgage fraud that involved inventing a lawsuit and forging the signature of a bankruptcy judge. Hugh Zuber, 38, of Monsey, N.Y., allegedly used the Corporation Counsel's office for a meeting with one of his victims in one of two schemes to defraud property sellers in the Bronx and Spring Valley of hundreds of thousands of dollars.

According to the criminal complaint, in one case, Zuber agreed to represent a Bronx property owner in the sale of an 11-unit rental building on Creston Avenue in April 2006. Zuber arranged to sell the building to Alana Property Management LLC for $950,000 in February 2007. What Zuber did not disclose was that he had formed Alana Property himself and that it was controlled by his brother. The terms of sale were $400,000 in cash with the remaining $550,000 to be in the form of seller-financing (ie. a ten year note secured by a first mortgage on the subject property) to the seller. Unbeknownst to the seller, at or around the closing of sale, Alana Property then allegedly used false information to secure a $705,000 first mortgage from a lending institution, using $400,000 to fund the downpayment owed to the seller, with Zuber and his co-conspirator pocketing the difference, and leaving the seller's $550,000 note in second collateral position. Zuber initially made periodic payments to the seller on account of the $550,000 note before ultimately stiffing him.

In the second case, according to the criminal complaint, Zuber represented the seller of a 6-unit rental house in Spring Valley, which sold for $625,000. Zuber did not disclose to the seller that he had a business relationship with the purchaser. Zuber and his co-conspirator arranged to obtain a $500,000 mortgage with an application that failed to disclose some important facts, including that $200,000 of the purchase price was directly financed by the seller. Once this sale closed, Zuber began making payments to the Spring Valley victim on account of the $200,000 in seller financing. The deferred payments to this victim eventually ceased as well, according to the allegations.

For more, see:

(1) If the charges prove true that attorney Zuber screwed his clients out of their money and property, The Lawyers’ Fund For Client Protection Of the State of New York may find itself on the hook for the losses up to a maximum of $300,000 for each client loss, provided the clients apply for reimbursement within two years after they discover their loss.

For those clients screwed out of their money and property by reason of the dishonest conduct of their attorneys in other states and Canada, see:

Lawyers' Client Compensation Fund Left Holding The Bag On $38.4M Bill Due To Closing Attorney's Escrow Funds Theft In Real Estate Deals

In Vancouver, British Columbia, The Vancouver Sun reports:
  • Both the B.C. Crown counsel who is prosecuting former Vancouver lawyer Martin Wirick for perpetrating the biggest fraud in Canadian legal history, and the lawyer who is defending him have recommended a seven-year prison sentence.


  • According to an agreed statement of facts, the total value of the frauds captured by Wirick's guilty plea was $31.2 million, of which $26 million was actually lost. In all cases, victims were reimbursed by the B.C. Law Society's special compensation fund, which protects clients from lawyer fraud.(1)(2)


  • Wirick fooled lenders and purchasers [in real estate sales] into thinking that prior mortgages had been repaid by filing forged discharge documents with the Land Titles Office. He also kept undischarged mortgages current so that the holders of those mortgages wouldn't get suspicious and discover that the property had been re-registered in somebody else's name. When he was pressed to provide evidence that he had discharged mortgages, he would use funds from an unrelated property sale or re-financing to pay them off.

For more, see 7-year term recommended for Wirick.

See also, CBC News: Former Vancouver lawyer pleads guilty to $42M mortgage fraud.

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

(1) According to the law society, the total payout on account of all Wirick and Gill-related frauds was $38.4 million. To pay the bill, the law society increased the annual assessment for its 10,000 lawyer-members to $600 from $250. It also revamped property transaction procedures to avoid similar frauds, and restructured its insurance coverage to prevent such massive payouts in future.

(2) For those in Canada, if a Canadian attorney, in the course of representing you, screws you out of money or property through dishonest conduct, click on your province on the Canada Client Protection Funds Map to contact the appropriate Law Society Client Compensation Fund about filing a claim to seek some reimbursement for your losses.

For those screwed out of money or property through dishonest conduct by a lawyer in the United States, see:

Massachusetts AG Settles Subprime Suit; Fremont To Cough Up $10M

In Boston, Massachusetts, The Associated Press reports:
  • A bankrupt California-based subprime mortgage lender has agreed to pay $10 million to settle allegations of unfair practices that contributed to the current spike in Massachusetts home foreclosures. Massachusetts Attorney General Martha Coakley said Tuesday that Fremont Investment & Loan and its parent company, Fremont General Corp., will pay $8 million in consumer relief, $1 million in civil penalties and $1 million in costs, including attorney fees.


  • The settlement also makes permanent a preliminary injunction issued by the Superior Court last year, barring the company from pursuing foreclosure of "presumptively unfair" mortgage loans without court approval.

Source: Massachusetts settles with mortgage lender.

For more from the Massachusetts Attorney General's Office, see:

For the Massachusetts Supreme Judicial Court decision ruling that subprime loans that lenders knew or should have known were unsustainable are illegal (ie. as unfair and deceptive business practices in violation of M.G.L. c. 93A, § 4 of the Massachusetts statutes), see Commonwealth of Massachusetts v. Fremont Investment & Loan, 452 Mass. 733; 897 N.E.2d 548; 2008 Mass. LEXIS 797 (Ma. 2008) (for a possibly easier to read version with all the footnotes appearing at the end of the case, try here). UndoMortgageLoans TILAdelta

Tuesday, June 09, 2009

Conn AG Probe Into Foreclosure Lawyers, Homeowner Complaints About Not Receiving Proper Notice Focuses On Lender Processing Services, Fannie, Freddie

In Hartford, Connecticut, The Wall Street Journal reports:
  • Connecticut's attorney general is seeking information from mortgage lenders Fannie Mae and Freddie Mac and mortgage-processing services company Lender Processing Services Inc. on how they select law firms for foreclosure services.

  • In a statement Monday, Connecticut Attorney General Richard Blumenthal said his office is probing complaints that the majority of the state's foreclosures are assigned to a select group of law firms and complaints from consumers that they didn't receive proper foreclosure notices from marshals.

  • "Dominance over foreclosure service by a few select law firms and marshals has spurred complaints about improper or illegal practices - wrongfully allocating work to non-marshals, forging papers, failing to serve papers, and making kickbacks," Blumenthal said in a statement. "Concentrating this work in a few hands can be severely problematic - causing unconscionable costs and failed notice delivery."

  • Blumenthal's office initially said he was seeking information from banking technology company Fidelity National Information Services Inc. (FIS), but later clarified Blumenthal was seeking information from LPS. LPS was spun off from Fidelity National last year.

  • Blumenthal said he is seeking the identity of all Connecticut law firms employed for foreclosure actions from 2007 to the present, details on the criteria used in selecting those firms, information on fees paid to those law firms and any fees paid by the law firms to the lenders and any complaints by Connecticut consumers regarding failures to provide proper notice.(1)

For the story, see Conn AG Seeks Information On Foreclosure Law Firms (requires subscription; if no subscription, try here, then click link for the story).

For the Connecticut Attorney general press release, see Attorney General Investigates Selection Process For Law Firms, Marshals Handling Foreclosures.

(1) Go here for Connecticut AG Blumenthal's letters to LPS , Fannie, Freddie requesting the information. SloppyForeclosuresAlpha SewerServiceAlpha

Countrywide Vets Look To Score Big Profits Buying, Fixing, Reselling Bad Loans

The San Francisco Chronicle reports:
  • Can folks who made millions peddling subprime loans use that same Midas touch to mint money from the housing market downturn? Former top executives from Countrywide Financial, once the nation's largest mortgage firm and a poster child for loose lending standards, have launched a company to buy distressed mortgages from banks and the government at a discount, modify the loans so borrowers can afford them and pocket the profits from reselling them.


  • The fact that some architects of subprime lending now hope to profit from the crisis spawned by the practice doesn't sit well with many. "It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it," Margot Saunders of the National Consumer Law Center in Washington told the New York Times. Times columnist Gail Collins was more graphic. "It's like Jeffrey Dahmer selling body parts to a clinic," she wrote.

  • Ironically, PennyMac's approach could benefit struggling homeowners, which has consumer advocates offering cautious compliments. Most banks and investors who own mortgages still seem to find foreclosure preferable to so-called workout solutions; homeowners continue to report that their pleas for loan modifications fall on deaf ears. But PennyMac's business model is predicated on trying to keep people in their homes.

  • Since PennyMac plans to buy toxic loans at pennies on the dollar - and is buying whole mortgages, not ones sliced and diced into securities owned by multiple investors - it has the liberty to slash homeowners' monthly payments and even the principal they owe.


  • PennyMac's "model suggests the great promise of an aggressive modification strategy; creating win-win opportunities for borrowers and investors," said Paul Leonard, director of the California office in Oakland for the Center for Responsible Lending. Still, he added: "It's hard to overlook the fact that these are Countrywide veterans who no doubt contributed to some of the sophisticated schemes to sell bad loans to borrowers and make great profits, who are now finding profitable ways of fixing those loans."

For more, see Former subprime lenders stand to profit again.

Expiring Statute Of Limitations Saves Alleged Scammers From Prosecution; Accused Of Recording "Obviously Phony" Forged Lien Satisfaction

In Stanislaus County, California, The Modesto Bee reports:
  • A judge Friday threw out six felony charges in the 1993 sale of a Modesto home, saying fraud allegations against a doctor, a real estate broker and a notary public are too old to take to trial.

  • As he handed down his ruling, Stanislaus County Superior Court Judge Donald Shaver noted that a document filed with the clerk-recorder's office in 1999, to extinguish a $22,400 loan, is obviously phony, because it purportedly is signed by Jewel Young, who died in 1995.

  • The judge also said the document alone could not support a host of charges filed by the district attorney's office, because Young's nephew, Steven Harris of Atwater, did not bring claims of wrongdoing to the authorities until long after the statute of limitations lapsed.

For more, see Judge dismisses charges of fraud (Says document wiping out home loan fake, but statute of limitations ran out).

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

Colorado Mortgage Broker Charged With Using Phony Documents To Obtain Loan In Property Sale, Then Stealing Portion Of Proceeds From Seller, Buyer

In Aurora, Colorado, The Denver Post reports:
  • The owner of an Aurora mortgage service company has been indicted by the state grand jury for fraudulently obtaining a home loan for a client and then stealing some of the proceeds from the subsequent real estate transaction. The indictment alleges that 50-year-old Ernie Colter, owner of PMCS mortgage services company, convinced a woman identified as Joyce Hoffman to buy a $700,000 home as an investment property.

  • As an incentive to buy the home, the grand jury alleged that he promised Hoffman she would receive $60,000 after the closing. In order to qualify Hoffman for the $700,000 home, Colter allegedly submitted fraudulent earnings and asset statements along with other falsified documents to Countrywide Mortgage. As a result, Colter "tricked" Countrywide Mortgage into giving Hoffman a loan of more than $20,000, when she didn't qualify, said the indictment.

  • Then, said the grand jury, Colter stole money from both Hoffman and Phillip Newby, the seller of the home. Colter allegedly diverted approximately $61,000 of Newby's proceeds from the sale into his - Colter's - bank account. In order to pull off the scam, Colter allegedly submitted a fraudulent payoff to a title company that allowed $61,000 to be wired to a bank account of a financial company owned by his cousin, Derrick Washington. The money was then transferred to Colter, said the indictment. In addition, Colter only gave Hoffman $34,000 of the $60,000 he had promised. Colter is charged with three counts of theft including theft from Countrywide Mortgage, theft from Newby and theft from Hoffman. He was also indicted on one count of forgery.

Source: Owner of Aurora mortgage service company indicted.

Go here for the indictment: People v. Colter.

Connecticut Voluntary Foreclosure Mediation Program Now Becomes Mandatory

The Connecticut Law Tribune reports:
  • A voluntary foreclosure mediation program has worked so well in the eyes of [Connecticut] legislators that the General Assembly pushed through a measure to make the program mandatory starting July 1. Nearly 60 percent of those participating in the voluntary program have remained in their homes, and supporters contend that even more distressed mortgage holders will benefit from being forced into mediation. To date, only about 34 percent of those eligible for mediation have made use of the voluntary program, according to the Judicial Branch.

For more, see Foreclosure Mediation Becomes Mandatory (Program staffing, caseload expected to double).

Delaware AG, State Regulators Form Task Force To Aggressively Attack Foreclosure Scams

In Dover, Delaware, WGMD Radio 92.7 FM reports:
  • A [Delaware Attorney General] mortgage fraud task force has been formed to help homeowners stay in their homes. The task force is dedicated to reducing foreclosure and foreclosure-related fraud in Delaware by providing information about mortgages and the foreclosure process, directing homeowners to certified housing counselors and agencies that offer free services, linking homeowners with state and federal programs that provide mortgage assistance and taking aggressive law enforcement action against foreclosure scams. The Task Force is taking this action in conjunction with the Delaware State Housing Authority and the Office of the State Bank Commissioner.

Source: Mortgage Fraud Task Force formed to protect homeowners.

Go her for more on the Delaware Attorney General mortgage fraud task force.

California Feds, Local DAs Create Task Force To Target Foreclosure Scams, Mortgage Fraud

In California's San Joaquin Valley, the Contra Costa Times reports:
  • Mortgage fraud has increased so dramatically in the San Joaquin Valley that a task force of federal, state and local agencies has been formed to fight back. The FBI, IRS, Secret Service, Department of Housing and district attorneys in Fresno, Tulare and other counties are among those involved. Their assignment: investigate mortgage fraud and foreclosure-rescue scams connected to the real estate boom and the bust that followed.

  • The FBI has helped set up 65 similar groups to combat a nationwide epidemic of mortgage fraud blamed for $4 billion to $6 billion in losses, according to estimates. While the FBI helps organize such task forces fairly regularly, usually they're set up in response to violent crimes. The fresh focus on mortgage fraud reflects how prevalent it has become, said Steve Dupre, an FBI spokesman in Sacramento.

For more, see Feds fighting back (Agencies band together against rise in mortgage fraud).

Monday, June 08, 2009

Racial Steering, Bonuses For Referring Prime Borrowers To Subprime Loans Among Accusations By Ex-Wells Fargo Employees In Discriminatory Lending Suit

The New York Times reports:
  • As she describes it, Beth Jacobson and her fellow loan officers at Wells Fargo Bank “rode the stagecoach from hell” for a decade, systematically singling out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages. These loans, Baltimore officials have claimed in a federal lawsuit against Wells Fargo, tipped hundreds of homeowners into foreclosure and cost the city tens of millions of dollars in taxes and city services.


  • Ms. Jacobson’s account and that of the other loan officer who gave an affidavit, Tony Paschal, both of whom have left Wells Fargo, provide the first detailed accusations of deliberate racial steering into subprimes by one of the nation’s top banks.


  • The affidavits of the two loan officers seem to bolster Baltimore’s lawsuit. Mr. Paschal, who is black and worked as a loan officer in Wells Fargo’s office in Annandale, Va., from 1997 to 2007, offers a sort of primer on Wells Fargo’s subprime marketing strategy by race. [...] “They referred to subprime loans made in minority communities as ghetto loans and minority customers as ‘those people have bad credit’, ‘those people don’t pay their bills’ and ‘mud people,’ ” Mr. Paschal said in his affidavit. [...] “The company put ‘bounties’ on minority borrowers,” Mr. Paschal said. “By this I mean that loan officers received cash incentives to aggressively market subprime loans in minority communities.” Both loan officers said the bank had given bonuses to loan officers who referred borrowers who should have qualified for a prime loan to the subprime division.

For more, see Bank Accused of Pushing Subprime Deals on Blacks.

Go here, Go here, and Go here for other posts on alleged discrimination in real estate transactions. DiscriminationPredatoryLendingAlpha

Arizona Loan Modification Scammer Gets 5 Years For Scamming 47 Struggling Homeowners Out Of Upfront Fees In Exchange For Phony Promises Of Help

From the Office of the Arizona Attorney General:
  • Attorney General Terry Goddard [Friday] announced that Bobby John Herrera, 33, of Glendale, has been sentenced to five years in prison as the result of a mortgage loan assistance scam he orchestrated that victimized 47 Valley homeowners. Herrera was also ordered to pay $80,541 in restitution to victims.

  • In December 2008, Herrera was arrested by Surprise and Peoria police in connection with the scheme. He pleaded guilty to one count of fraudulent schemes and artifices, a Class 2 felony, in Maricopa County Superior Court in April.(1)

  • According to investigators, Herrera solicited struggling homeowners with fraudulent claims that he could modify mortgage terms or provide other assistance to help them prevent foreclosure. Herrera allegedly claimed to have "connections" and expertise negotiating with mortgage lenders to reduce consumers’ monthly payments and prevent foreclosure. In exchange for the services he claimed to provide, investigators said Herrera often charged the victims upfront fees of $1,245. Herrera is alleged to have not provided any such mortgage loan modification or foreclosure relief assistance, using the money instead for personal expenses.

For the entire press release, see Fraud Artist who Victimized 47 Homeowners Gets Five-Year Prison Term.

(1) According to the indictment, Herrera originally faced charges of:

  • one count of fraudulent schemes and artifices (ie. knowingly obtaining any benefit by means of false or fraudulent pretenses, representations, promises or material omissions, pursuant to a scheme or artifice to defraud, in violation of § 13-2310 of the Arizona Revised Statutes),
  • one count of money laundering (A.R.S. § 13-2317),
  • one count of illegal control of an enterprise (A.R.S. § 13-2312(A)), and
  • six counts of theft (A.R.S. § 13-1802(A)(1)).

Sue First & Ask Questions Later!

A Pew Mortgage Investigations report by primary author, Nye Lavalle, describes the practice of using fraudulent affidavits and methods to assign promissory notes and conceal wrongdoing that some mortgage servicers and lenders are being suspected of. Among other things, this report shines light on the conduct of a certain Ocwen Loan Servicing employee, one Scott Anderson, who has received mention on at least seven occasions(1) by a certain Brooklyn, New York trial judge presiding over foreclosure actions in which Anderson appears to have acted as a multiple corporate hat wearing vice president when signing legal documents on behalf of more than one company having some involvement in various lawsuits.

For the report, see SUE FIRST & ASK QUESTIONS LATER!

Go here for more on multiple corporate hat wearing "vice presidents."

(1) HSBC Bank USA, N.A. v Betts, 04/23/2008, 2008 NYSlipOp 31170(U), Schack, J.;
HSBC Bank USA, N.A. v Cherry, 12/17/2007, 18 Misc 3d 1102(A), 2007 NYSlipOp 52378(U), Schack, J.;
Deutsche Bank Natl. Trust Co. v Castellanos, 01/14/2008, 18 Misc 3d 1115(A), 2008 NYSlipOp 50033(U), Schack, J.;
HSBC Bank USA, N.A. v Valentin ("Valentin I"), 01/30/2008, 18 Misc 3d 1123(A), 2008 NYSlipOp 50164(U), Schack, J.;
HSBC Bank USA v Antrobus, 07/31/2008, 20 Misc 3d 1127(A), 2008 NYSlipOp 51639(U), Schack, J.;
HSBC Bank USA, N.A. v Charlevagne, 08/04/2008, 20 Misc 3d 1128(A), 2008 NYSlipOp 51652(U), Schack, J.;
HSBC Bank USA, N.A. v Valentin ("Valentin II"), 11/03/2008, 21 Misc 3d 1124(A), 2008 NYSlipOp 52167(U), Schack, J. Arthur M. Schack

Judge Throws Alleged Foreclosure Rescue Scammer In Jail; Accused Of Engaging In Real Estate Business While Awaiting Criminal Trial, Violating Bond

In Orange County, Florida, WFTV Channel 9 reports:
  • The accused ringleader in a major mortgage fraud case is back in jail because of an Eyewitness News investigation that found he was already back in business even though he was out on bond. Friday, a judge revoked it. It's become a familiar feeling for John Pavao of Windermere. Bailiffs slapped cuffs on him again and took him back to jail less than three months after he got out on bond.

  • Prosecutors said Pavao just couldn't help himself. Eyewitness News first discovered signs he was getting back into real estate, even before he goes on trial for $6 million in mortgage fraud. Investigators say he offered to help people in financial trouble, but then took their homes. [... T]he judge said that testimony proved Pavao was trying to buy real estate, a clear violation of his bond. [...] John Pavao could remain locked up until he goes to trial later this year. His wife and daughter are also accused in the mortgage fraud, but they're still out on bond.

For more, see Accused Mortgage Fraud Ringleader Back In Jail.

For an earlier post on the pending charges, see Central Florida Foreclosure Rescue Operators With Massachusetts Connections Charged With Grand Theft, Racketeering In Alleged Equity Stripping Scam.

Sunday, June 07, 2009

Brooklyn Feds Charge Nine In Straw Buyer Scam That Left Two Lenders Holding The Bag On $92M In Fraudulently Obtained Mortgages

From the Office of the United States Attorney (Brooklyn, New York):
  • A federal grand jury in Brooklyn returned an indictment charging nine defendants with a mortgage fraud scheme that resulted in losses exceeding $90 million. The indictment alleges the defendants conspired to defraud Washington Mutual Bank (“WAMU”) and DLJ Mortgage Capital, Inc. (“DLJ”), a subsidiary of Credit Suisse, in connection with the development of two tracts of land located in Brooklyn and Queens by staging the sales of the same properties to straw buyers in order to obtain multiple mortgages on those properties.


  • As part of the fraud scheme, in an attempt to conceal the multiple sales of the same properties, [Thomas] Kontogiannis allegedly changed the addresses of properties located in East New York, Brooklyn, to addresses in neighboring Howard Beach, Queens. In addition, the indictment charges that Kontogiannis and [Nadia] Konstantinadou caused entities controlled by Kontogiannis to make monthly payments on the mortgages, ensuring that none of the mortgages became delinquent. However, the payments ceased in 2007, with approximately $92 million in principal outstanding on the fraudulent mortgages.

For the entire U.S. Attorney press release, see NINE INDICTED IN $92 MILLION MORTGAGE FRAUD SCHEME.

(1) Thomas Kontogiannis, John Michael, Elias Apergis, Steven Martini, Nadia Konstantinadou, Stefan Deligiannis, Ted Doumazios, Edward Hogan, and Jonathan Rubin are charged with conspiracy to commit bank and wire fraud. In addition, Kontogiannis, Apergis, Konstantinadou, Deligiannis, Martini, and Doumazios are charged with bank fraud, and Kontogiannis and Konstantinadou are charged with money laundering and money laundering conspiracy.

Using "Gifts" & "Bonuses" To Screw Over The Unwitting New Home Buyer

In Washington, D.C., Public Citizen reports:
  • Millions of new home purchasers each year are forced into binding mandatory arbitration by deceptive “warranties,” and those warranties may violate the law in as many as 17 states, Public Citizen has found.

  • This conclusion is contained in a report titled “Home Court Advantage: How the Building Industry Uses Forced Arbitration to Evade Accountability.” These warranties are particularly insidious because consumers often do not learn of their details until after moving into their new houses. Although builders often portray the warranties as gifts, bonuses or extra protections, the warranties actually serve to exempt the builder from liability for all sorts of problems (such as mold, building code violations and “consequential damages”) while relegating buyers to pursue legal disputes in a private forum chosen by the warranty company.

For the entire press release, see Warrantless Injustice (Public Citizen Report Exposes Builders’ Use of Forced Arbitration and Deceptive Warranties to Escape Accountability for Construction Flaws).

For the 65-page Public Citizen report, see Home Court Advantage: (How the Building Industry Uses Forced Arbitration to Evade Accountability).

For more on the screwing over of consumers through the use of arbitration clauses buried in "standard" contracts, see Fair Arbitration NOW.

Straw Buyer Scheme Coupled With Subsequent Sale Using Contract For Deed Constitutes Sale Of Unregistered Security, Says Arkansas Securities Regulator

In Little Rock, Arkansas, Arkansas Business reports:

  • The Arkansas Securities Department announced Wednesday that it had ordered Greenleaf Cos. LLC of Springfield, Mo., and two of its officers, Eric C. Gagnepain and Misty Perkins, to stop peddling an unregistered scheme in which investors' good credit is used to buy houses that were then turned over to Greenleaf.

  • "Greenleaf would then manage the property and find a potential purchaser to lease the residential house until the purchaser/renter could purchase the residential house from the investor," according to a press release from ASD. "The investor was promised a $10,000.00 payment from Greenleaf for participating in the scheme."

  • The securities offered by Greenleaf, Gagnepain and Perkins were not registered with the ASD, according to the order, and the sales literature distributed to potential investors fraudulently stated that Greenleaf and its process all but nullified the risk of loss for investors.

Source: Missouri-based Greenleaf Cos. Ordered to Stop Selling Investments in Arkansas.

See also: Firm said to steer investors to Quail Ridge.

For more from the Arkansas Securities Department, see:

Go here for other posts involving Greenleaf Companies.

NC AG Obtains Court Order Temporarily Shutting Down Loan Modification Firm Taking Upfront Fees; Seeks Permanent Ban, Penalties, Homeowner Refunds

In Raleigh, North Carolina, WRAL-TV Channel 5 reports:
  • A Superior Court judge has ordered a Raleigh company that advertised on local gospel radio that it could save homes from foreclosure to stop doing business in North Carolina, Attorney General Roy Cooper said Thursday. Judge Howard Manning agreed Wednesday with Cooper’s request to stop Mortgage Help Services Inc. and Chief Executive Nathaniel Livingston from advertising, performing or taking money for loan modification and foreclosure assistance services. Cooper is asking the court to ban the company permanently and order it to pay refunds to consumers and civil penalties.


  • Mortgage Help Services and Livingston claimed in ads to be experts in modifying mortgage loans and rescuing homes from foreclosure. A lawsuit filed by the Attorney General's Office alleges that consumers who paid Mortgage Help Services between $500 and $1,500 upfront got little or no help modifying their loans to lower their interest rates or monthly payments.

  • A North Carolina law that Cooper lobbied for makes it illegal to charge an upfront fee for foreclosure assistance or mortgage loan modification services. The company often encouraged homeowners to stop making their mortgage payments and cease communicating with their lender, which put them deeper in debt and closer to foreclosure, Cooper said.

For more, see Judge shuts down foreclosure scheme.

For the North Carolina AG press release, see AG Cooper shuts down Raleigh foreclosure fraudster (Mortgage Help Services took struggling homeowners’ money but failed to help them).

Developers Knew Of Chinese Drywall "Stench" & Installed The Defective Wallboard Anyway?

In South Florida, the Broward-Palm Beach New Times reports:
  • [S]everal sources involved with the investigation of Chinese drywall tell [New Times] that they've discovered that the developers and their employees knew about the stench while they were installing the defective wall board. Some union workers even refused to work with the Chinese drywall because of the severe sulfur-like smell. They feared that the smell was an indication that the drywall was rotted and could lead to liability later.

  • Other employees of developers figured out that the smell would subside after the drywall was painted, so workers were told to paint quickly in order to mask the smell. Such [admissions] have come as law firms suing the developers talk to construction workers who hung the defective drywall. One worker told a law firm investigator that records regarding the drywall were kept in a truck "because they didn't want it in one place."


  • Most of the Chinese drywall lawsuits are now on hold until a federal court called the U.S. Judicial Panel on Multidistrict Litigation decides whether to have all the cases heard by one judge. The panel held a hearing last week in Kentucky and is expected to decide in a couple weeks whether to combine them and, if so, where. If the suits are combined, there's a good chance it could end up in Florida, where 15,000 homeowners have joined 150 separate lawsuits.Besides, it wouldn't be hard to find their way to Florida. Just follow the smell from the developers.

For more, see Construction Workers Admit They Installed a Stink Bomb with Chinese Drywall.

Go here for other posts on Chinese drywall.

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

Las Vegas Landowner Prohibited From Developing Property Due To Airspace Restrictions Imposed By County To Pocket $15M In Lawsuit Settlement

In Clark County, Nevada, the Las Vegas Review Journal reports:
  • A Las Vegas family that missed out on a chance to develop land near McCarran International Airport and blamed airspace restrictions will receive nearly $15 million from Clark County, an attorney for the family said Tuesday. The money represents the outcome of a lawsuit filed 16 years ago by the Heers family, former owners of Vacation Village.

  • The family lost the property to foreclosure -- and their dream to redevelop it with three seven-story hotel towers -- after airspace restrictions were imposed on the land to accommodate jet traffic on a proposed runway at McCarran. The lawsuit asserted that the airspace restrictions amounted to a taking of the property, which would require the county to pay compensation.

For more, see Family awarded $15 million after bitter airspace fight.

See also, the Las Vegas Sun: Family settles over taking of airspace by McCarran.