Saturday, September 12, 2009

Seattle-Area Man Faces Multiple Charges Of Pocketing Tenant Deposits From Would-Be Renters On Homes Belonging To Others

In King County, Washington, The Seattle Times reports:
  • Paul Bakovich, who was arrested last month after authorities said he took nearly $4,300 in deposits from seven people he allegedly scammed into believing he owned rental properties, has been arrested again -- for allegedly using the same ruse. Bakovich was charged on Sept. 2 with four counts of second-degree theft in the most recent incident. He was already facing three counts of second-degree theft filed on Aug. 26.

  • Bakovich, 36, was arrested on Aug. 22 for fraudulently claiming to be a landlord and taking thousands of dollars in deposits from would-be renters, according to charging papers. He wasn't caught until one potential renter looked his name up on the Internet and found warnings from other people who had been scammed. But by that point the renter, a woman who was interested in a Redmond home, was out $900.(1) Soon after bailing out of jail on Aug. 27, Bakovich alleged tried to collect money from another person interested in the Redmond home, according to charging papers filed in King County Superior Court. [...] Bakovich is now being held at the King County Jail on $60,000 bail.

For more, see Alleged phony landlord in trouble again.

(1) Reportedly, the woman met Bakovich after seeing a Craigslist ad for a three-bedroom house in Redmond for $885 per month. The house was in foreclosure and was never owned by Bakovich. KappaPhonyLandlordScam

Arizona Vendor Of Items Stripped From Foreclosed Homes Faces Sentencing This Month; Used Craigslist, Consignment Shop, Estate Sales To Unload Goods

In Fountain Hills, Arizona, The Arizona Republic reports:
  • A Fountain Hills man will be sentenced later this month for stripping foreclosed homes of their appliances, a crime which officials say is rapidly on the rise. Mark Sydnor, 54, was a middleman in the sale of items from foreclosed homes, according to a fraud task force investigating that and similar crimes. He sold anything that could be knocked out of the home - like cabinets, counters, doors - and would sell them on Craigslist, on online sales site. Whatever Sydnor couldn't sell over Craigslist he would sell at his consignment shop - also in Fountain Hills - or in estate sales, authorities said, keeping keep 25% of the profit and giving the rest to the owners of the home.

For more, see Fountain Hills man in appliance thefts to be sentenced. foreclosure fixture stripping apple foreclosure stripping

Housing Discrimination Based On Race, National Origin, Familial Status All On Massachusetts AG Radar

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office filed a housing discrimination complaint against two Somerville property owners for allegedly refusing to rent an apartment to a prospective tenant and his family on the basis of their race and national origin. The complaint [...] alleges that Jardelina and Olivero Costa of Somerville violated state anti-discrimination and consumer protection laws by refusing to rent to a prospective tenant and his family because they are of Indian national origin. [...] The complaint alleges that in September 2008, the prospective tenant and his cousin inquired at a local real estate company about a Somerville apartment, owned by the Costas, advertised for rent on the Internet. After viewing the apartment with the real estate agent, the prospective tenant returned to the real estate office to provide the deposit required by the owners to secure the rental property. The complaint alleges that at this time the real estate agent relayed a conversation she had with the Costas, in which they told the agent that they did not want to rent to the family because they were of Indian national origin and “their food stinks.”

For the AG's press release, see AG Coakley Files Suit Against Somerville Property Owners in Housing Discrimination Case.


  • Attorney General Martha Coakley’s Office reached a settlement with a Dedham real estate company and one of its employees, resolving allegations that they unfairly discriminated against a prospective homebuyer, causing her proposed home purchase not to go forward. The Assurance of Discontinuance [...] against Discover Real Estate Corporation and its employee, Virginia E. Bethoney, alleges that the company and the employee violated state anti-discrimination laws by denying an African-American woman the opportunity to negotiate the purchase of a home in Dedham. “It is against the law to deny someone the opportunity to purchase a home because of their race,” said Attorney General Martha Coakley. [...] According to the allegations in the prospective buyer’s complaint filed with the Massachusetts Commission Against Discrimination, the real estate company failed to communicate the seller's response to the prospective buyer's offer and refused to negotiate with the prospective buyer's broker. Under Massachusetts law, it is illegal to refuse to negotiate the sale of property with a person due to the person’s race.

In addition to other sanctions contained in the settlement, the alleged violator agreed to pay the victim $2,500 in damages.

For the AG's press release, see AG Coakley Reaches Settlement with Dedham Real Estate Company Resolving Allegations of Unlawful Real Estate Broker Practices.


  • Attorney General Martha Coakley’s office obtained a consent judgment against ABG Residential, a Cambridge-based realty company, and its agent, Georgina Zala, resolving claims that the company refused to rent an apartment to a couple because they had a nine-month old child whose presence would require abatement of lead paint hazards under state law. The consent judgment [...] orders the defendants to pay $3,500 to the couple and bars the defendants from future acts of discrimination. [...] It is illegal [in Massachusetts] to discriminate against families with children in order to avoid compliance with the lead paint law.

For the AG's press release, see AG Coakley Settles with Cambridge Real Estate Company That Discriminated Against Family with Young Child.


  • Attorney General Martha Coakley’s Office has filed a lawsuit against Cornerstone Corporation, a for-profit property management company that manages the Roxse Homes residential housing development in Boston, alleging that the company and one of its employees discriminated against a tenant because she is a foster parent. Under state and federal law, it is illegal to discriminate against a person based on his or her familial status which can include foster parent relationships. “It is a violation of state and federal law to discriminate against foster parents because of the familial status or composition of their family,” said Attorney General Coakley. “Foster parents serve a critical need in supporting the care, welfare and safety of children across the Commonwealth.”

  • According to the complaint, the tenant had been a licensed foster parent for the Massachusetts Department of Children and Families for many years and had lived in Roxse Homes with her family, including foster children, since 2006. The complaint alleges that despite knowing that the tenant was a licensed foster parent, the defendants falsely accused the tenant of operating a day-care center in her apartment in violation of the lease and later twice threatened to evict her and her family unless she ceased such activity.

For the AG's press release, see AG Coakley Sues Boston Property Management Company and its Manager for Discrimination Against Foster Parent.

Florida AG, Developer Settle Civil Rights Allegations Of Violating State Fair Housing Act Accessibility Standards

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [...] announced that his office has obtained a settlement for a Central Florida couple resolving allegations of civil rights violations related to their condominium. Under the settlement, Brevard County developer Tricon Development Corporation paid $15,000 in civil damages to Josephine and Dominic DeRusso, which included the cost of retrofitting the couple’s home. [...] The lawsuit alleged that Tricon had failed to meet the Florida Fair Housing Act’s accessibility standards when it developed the DeRusso’s condominium in Indiatlantic, Florida. Mrs. DeRusso is disabled and needed her home and certain common areas made accessible.


  • The DeRussos asked the Attorney General to file the lawsuit to enforce the provisions of the Fair Housing Act following an investigation and reasonable cause determination by the Florida Commission on Human Relations. In addition to paying civil damages to the DeRussos and retrofitting their home, Tricon will make several modifications to the common areas at Topaz Oceanfront Condominium. The modifications include installing grab bars in the appropriate locations at the pool area and adapting the threshold at a door connecting the pool area and the pool restrooms.

For the Florida AG press release, see McCollum Obtains Civil Rights Settlement for Central Florida Couple.

Home-Based Meth Labs A Threat To Health & Pocketbook

From the Rim Country of Central Arizona, The Payson Roundup reports:
  • Health and law enforcement officials across the country are becoming increasingly alarmed at the number of homes being sold that were once used as meth houses or laboratories. The problem developing is that former homes where meth was either used or manufactured are in fact health hazards to anyone currently residing in them due to the residual poisons that were soaked into the walls, window treatments and flooring.(1)


  • In 2005, nearly 17,000 homes were seized by authorities (many ending up in foreclosure) and unknown to those subsequently purchasing these homes, the families inhabiting them are exposed to the dangers of the toxic chemical waste left behind. While at this time there are no federal guidelines for cleanup of these materials, in 12 states (Arizona included), it is illegal to occupy a dwelling before it’s been decontaminated. However, in most states there are few protections in place.

  • Fourteen states (including Arizona) require property owners to disclose if the property offered was a former drug house and 13 states (Arizona being one of them) have actually established a guideline for cleanup. The cost of cleaning and decontaminating a former meth lab is astronomical. It can cost anywhere from $30,000 to $100,000 to complete. Unfortunately, with no federal assistance in place, the price tag is up to the property owner to absorb.

  • Right now there are literally tens of thousands of contaminated residences across the United States. Living in one of these former drug houses can very easily cause a family to face financial ruin between having to pay for any possible cleanup, developing health-related illnesses and having to throw away any personal possessions that can’t be cleaned. Add to that the cost of acquiring another residence and then moving. It is a nationwide nightmare.

For the story, see Meth houses need to be decontaminated.

In a related story, see The National Law Journal: Meth Lab Residue in Homes Triggers Litigation (Lawsuits over contaminated homes focus on failure to disclose issue).

(1) Reportedly, for every pound of meth that is cooked in a home, five to seven pounds of chemical waste products are created. From this waste, a variety of long term health problems can occur including but not limited to: headaches, blisters, damaged lungs, liver or kidneys. meth lab yak

Friday, September 11, 2009

"Zombie Debt" Buyers Now Required To Produce Documentation Tracing Their Ownership As Part Of Collection Lawsuits Brought In NC Under New State Law

In Raleigh, North Carolina, the Asheville Citizen Times reports:
  • Companies that buy up unpaid debt and pressure consumers to pay it off are being targeted under a new state law that requires them to prove the people they're chasing actually owe them money. Supporters say the regulations appear to be the first in the nation to target debt buyers.


  • Advocates who pushed for the regulations on debt buyers say the collectors scare consumers into paying up, even if the debt has been paid or a statute of limitations for collection has expired. “These people would send them money, and they’d never mark the debt paid, and they’d sell it to somebody else,” said state Sen. Martin Nesbitt, D-Buncombe, “and lo and behold, here they’d come again.”

  • In other cases, the collectors simply pursue the wrong person, Attorney General Roy Cooper said. Cooper said a worsening economy has led more companies into the debt buying business, where they can pay pennies on the dollar to buy up debt that businesses like credit card companies have given up on collecting. They use “very aggressive tactics to try to collect this money,” he said.

  • The law requires documentation as part of any lawsuit tracing how the debt has changed hands. It mandates 30 days written notice before a lawsuit. When debt buyers receive a payment, they must issue a detailed receipt. Violators can face fines up to $4,000.

For the story, see NC cracks down on debt buyers. zombie debt zeta

Title Agent Gets 7 Years For Looting $3.4M From Escrow; Used Phony Docs, "Ponzi" Approach To Conceal Scam Involving 16 Properties With Unpaid Liens

From the Office of the U.S. Attorney (Baltimore, Maryland):
  • U.S. District Judge Catherine C. Blake sentenced Deborah Williams, age 57, of Pasadena, Maryland, the owner of [Day Title, Inc.,] a Severna Park title company, [...] to 84 months in prison followed by two years of supervised release for mail fraud related to a scheme to divert settlement funds to her own benefit, [...].


  • According to her plea agreement, [...] Williams used for her own benefit settlement funds from real estate closings that were deposited in Day Title’s escrow account and were intended to pay off the lien holders on those properties. [...] Williams attempted to conceal her illegal transactions by falsely representing on the settlement documents that her company had paid off lien holders, [...] In fact, Williams either initiated stop payments of payoff checks that had been disbursed or intentionally failed to mail the payoff checks to the lien holder.

  • Day Title’s failure to make the payoffs to the lien holders was not detected until sellers began receiving delinquency notices from their mortgage companies. The time delay between the settlement and the date when Day Title made the payoffs to the lien holders allowed Williams to replenish the escrow account with proceeds from new unrelated real estate settlements.

  • A title insurance company that had issued policies through Day Title began to receive claims from lien holders who had not been paid off and conducted an audit of Day Title. The title insurance company found over 16 properties where Williams had not paid off the lien holder. The company paid out a total of $3.443 million to these entities, as required under the title insurance policies that guaranteed that the buyer was receiving a title free of prior liens.

For the U.S. Attorney press release, see Pasadena Title Company Owner Sentenced to over 7 Years in Prison for Defrauding Lenders of over $3.4 Million (Diverted Real Estate Proceeds to Personal Use and Created False Settlement Documents). EscrowRipOffKappa

Connecticut Woman Charged With Ripping Off Her 89-Year Old Mother Of Home, Cash

In Ansonia, Connecticut, WTNH-TV Channel 8 reports:
  • An Ansonia woman was arrested [last week] for allegedly violating the court-ordered fiduciary duties for her 89-year-old mother. Donna D. Kingston, 61, allegedly withdrew more than $72,000 by closing a CD account and withdrawing funds from her mother's bank account in May and June 2007. Less than $4,500 was left in the bank account, the warrant states.

  • In May 2008, Ms. Kingston quit-claimed full ownership of her mother's Ansonia home to herself. Although the deed allowed the mother life use of the property, she has repeatedly demanded the return of her home and assets without result. Kingston was charged with three counts of larceny.

Source: Woman accused of stealing from mother. DeedContraTheft FinancialAbuseOfElderlyAlpha

Ailing Senior Loses Home To Foreclosure Despite Paying $3K To Foreclosure Rescue Operator To Resolve Mortgage Problem

In Tauranga, New Zealand, The New Zealand Herald reports:
  • An ailing retired man has lost his home of 22 years and thousands of dollars after agreeing to have his mortgage handled by a supposed charitable trust. [... Don Clark, 65,] first fell into debt after a vicious assault in 2006 left him with serious head injuries and impaired vision. He was unable to work for 18 months. Still suffering from chronic headaches two years later, he tried to resolve his escalating mortgage problem to reduce the stress on his health.

  • A friend recommended Hamilton-based group Home Rescue, which offers help to homeowners who have lost their income or are facing foreclosure from the bank. [...] But despite paying the group $3000, his finance company Liberty Financial took him to court in July, and repossessed the house he had been living in since 1987. Home Rescue did not return his calls. The trust, which he gave power of attorney for his house, did not appear for him in court, and his property was forfeited.

For more, see Ill man blames charitable trust for losing home.

See also, Bay of Plenty Times: Bashing victim loses house.

Foreclosure Flood Means Brisk Business For Phoenix-Area "Home Strippers" - Craigslist A Favored Outlet For Unloading Loot

In Phoenix, Arizona, The Arizona Republic reports on the recent rash of "foreclosure stripping" incidents taking place in the area:
  • Julie Halferty, a special agent who oversees the Phoenix FBI Mortgage Fraud Task Force, said no one knows exactly how many foreclosed houses in the Valley have been stripped by former owners, neighbors or strangers. Those who work in real estate believe the number is in the thousands. "Without question, probably 85 to 90 percent of houses on the market under $200,000 have been stripped," said Tempe real-estate agent Kim Baker. "Appliances are the most commonly poached item, but plumbing fixtures and faucets, ceiling fans, light fixtures, water heaters and air-conditioning units are fair game" in the eyes of the strippers, she said. Halferty said she and her fellow FBI agents "haven't been able to quantify it, but we know it is rampant."


  • "Take a look at Craigslist," [one real estate agent] said. "It's full of things that have been stripped out of houses." Halferty said tipped the fraud task force to the extent of the problem. "It is so blatant," Halferty said. "People would advertise that they were selling cabinets in a foreclosure sale."

For the story, see Theft of fixtures becomes major risk in foreclosures.

Thursday, September 10, 2009

Deadbeat Landlord/Condo Converter Ordered To Turn Over Title To 15 Units After Pocketing Rent, Stiffing Association Out Of $175K In Maintenance Fees

In Miami, Florida, The Miami Herald reports:
  • A South Florida condominium converter who was renting out units but ducking his maintenance fees has been ordered to turn over ownership of 15 units to the condo association, plus rent checks that had been improperly collected. Facing possible jail time for contempt of court, developer Robert Wolfarth, the managing member of the Village at Dadeland Associates, agreed to hand over title to the units in about 90 days. He also was ordered to pay the association $11,700 in rent owed under a blanket receivership established in June.(1) [...] Once the condo association gets possession of the units, it plans to continue renting them out and using the money to pay off Wolfarth's old debts -- that is until Wolfarth's mortgage lender comes calling.

Reportedly, Wolfarth was collecting rents from his units while dodging more than $175,000 in maintenance fees.

For more, see Condo converter ordered to turn over 15 units to association (A condo converter must turn over 15 units to the condo association because he failed to follow a court order).

In a related story, see Condo associations turn to receivers to fight deadbeat investors (Condo associations across South Florida and the state are increasingly turning to court receivers - appointed by a county circuit court judge to collect rents and profits of lands involved in a dispute - to save them from deadbeat investor owners.).

(1) Under a blanket receivership, a judge appoints a single custodian to collect rents from all tenants living in units subject to foreclosure by a condo association. Such receiverships are a relatively new legal tool being used by associations to collect maintenance fees. The order against Wolfarth, issued Aug. 27, demonstrates how effectively they can be used, said attorneys representing the Village at Dadeland Condo Association.

Upstate NY Couple Charged In Alleged "Shotgunning" Mortgage Fraud Scam As Multiple First Mortgages Are Obtained On Same Properties

In Saratoga Springs, New York, The Business Review reports:
  • A Saratoga Springs couple is accused of stealing $2.5 million from several banks in a mortgage scheme in which they obtained multiple first mortgages on six properties they bought more than two years ago. Stephen Sutliff, 37, and his wife Nikole Sutliff, 32, [...] were [...] charged with nine counts each of grand larceny and one count each of conspiracy in Saratoga County Court, according to the Albany County District Attorney’s office which is prosecuting the case.

  • Financial Crimes Bureau Chief Chris Baynes said he has never seen a scheme involving so many properties and so many mortgages obtained on the same day. Baynes said the Sutliffs legally closed on four Saratoga Springs properties on March 27, 2007, and later that day obtained between seven and eight mortgages worth $250,000 to $300,000 apiece.

  • According to prosecutors, Nikole Sutliff allegedly acted as a mortgage broker and worked in concert with a third party who acted as the settlement company representing several banks. Baynes said the Saratoga County resident who worked in conjunction with the Sutliffs is expected to be charged at a later date. All of the banks were operating under the understanding that they were issuing first mortgages and held the primary position in securing the home, Baynes said. The Sutliffs also allegedly carried out the same scheme a few weeks earlier when they closed on two other Saratoga Springs properties, Baynes said.

For the story, see Saratoga couple accused in $2.5 million mortgage scheme.

200+ Poor Tenants Face The Boot As Lender Threatens Foreclosure Of Mold-Infested Complex; Failed Inspections Could Result In Rent Subsidy Cut-Off

In Daytona Beach, Florida, the Daytona Beach News Journal reports:
  • For the past few years, some residents of the Daytona Village Apartments say mold has mushroomed on their walls and ceilings, their homes have been invaded by cockroaches and spiders, and their refrigerators have conked out and not been replaced. Now some of the roughly 230 tenants could find themselves homeless in a few weeks. Unless a new owner comes along pretty quickly and makes repairs, federal rent subsidies could be cut off at the Keech Street apartments.


  • The complex has failed recent U.S. Housing and Urban Development inspections, and the man who has owned the property since 2006 was under a contract to keep the property in better condition to continue receiving roughly $30,000 every month in rental assistance, officials said.


  • At a hearing Tuesday in circuit court, an attorney for the bank that handled [landlord Surujnauth "Oscar"] Bharrat's loan said there's a tentative agreement on the table for the deed in lieu of foreclosure. That's according to Debbie Hallisky, a Community Legal Services attorney helping tenants. [...] "According to the bank, there has been a potential settlement and the owner has agreed to sign over the property to the bank," she said.

For more, see Apartments' disrepair may force evictions. RentSigmaSkimming

Student Film Documentary On Subprime Crisis Results In Legal Threats From Brooklyn Developer

In Brooklyn, New York, The New York Times reports on three Hunter College students, a film documentary called "Subprimed" that they are working on that reportedly exposes the exploitation that lies behind much of the foreclosure and subprime crisis in Brooklyn, and a local real estate development company that has its owners, brothers Michael and Joseph Makhani, pretty ticked off. The story highlights 14 residents on two streets in East New York who were in danger of losing their homes, and who had all bought the properties from them.(1)

For the story, see Student Filmmakers, Not Ceasing or Desisting.

(1) Being the target of bad publicity is apparently not new for the brothers. Reportedly, both Makhani brothers pleaded guilty in federal court in 1999 to taking part in a scheme involving foreclosed properties in Queens; they were fined and sentenced to three months in prison. And last December, their company, HPD, LLC and two other companies in which Joseph Makhani is a principal pleaded guilty to filing false deeds as part of a housing scam in Queens. The companies were fined $5,000 each.

Wednesday, September 09, 2009

Texas Homeowner: Updated Flood-Plain Maps, Retroactively Charged Force-Placed Insurance Leave Me Facing Foreclosure

In Waco, Texas, the Waco Tribune Herald reports:
  • The Federal Emergency Management Agency’s policy requiring flood insurance in flood plains is meant to protect life and property. But in East Waco, it may cost a single mom her home. Charrie Rollins, 36, is facing foreclosure on the $81,000 brick home she bought three years ago [...]. She says she has fallen behind on her payments because she can’t afford the flood insurance her lender began requiring after FEMA determined last summer that her home was in a flood plain. FEMA last September reclassified the area [within which her home sits] to be in the 100-year flood plain, which means it has a 1 percent chance of flooding in a given year. The area [...] includes more than 30 small homes as well as Toliver Chapel Baptist Church.


  • Rollins said that requirement set in motion a vicious cycle that has left her $2,600 behind on her payments to her mortgage company, even though she has continued to pay her customary principal and interest payment of $459 a month.


  • Rollins said that after learning she was in a flood plain she attempted to get private flood insurance but did not have it as of May.(1) That month, Rollins’ mortgage company created an escrow and force-placed the flood insurance policy on her at a rate of $158 a month, her paperwork shows. [...] Rollins’ lender, American Home Mortgage Servicing Inc., of Irving, Texas, could not be reached to verify her claims that she was retroactively charged for flood insurance.


  • [Local NeighborWorks' housing counselor Reuben] Andrade said Rollins’ situation is a “strange case,” but other mortgage holders may be affected too. “It’s really been a hassle and a mess,” he said. “In all honesty, I wouldn’t be surprised if there are others who still have mortgages who are accumulating debt from force-placed insurance.”

For more, see Waco woman may lose home after FEMA rules she lives in a flood plain.

In a related story, see KXXV-TV Channel 25: East Waco homes under new flood plane; FEMA says way to lower costs of insurance (A dramatic change could put Waco homeowners at risk of foreclosure. F.E.M.A has redesigned their flood plane, which now effects many homes in East Waco, adding extra monthly costs of flood insurance.).

(1) Rollins was urged to purchase her own flood insurance policy, which she was told costs about a third as much as the force-placed insurance. But she said no local companies will sell her the insurance without getting an engineer to study the house and write a certificate of elevation, which costs about $600. County Commissioner Lester Gibson, who heard about Rollins’ plight from a pastor, raised the funds for the certificate at a recent meeting of his weekly public-affairs forum. Last week, she hired the engineer and is waiting for the certificate.

Title To Landmark Minneapolis Mansion Stolen By Forged Deed, Say Owners

In Minneapolis, Minnesota, the Star Tribune reports on claims that someone has tried to steal the title to the Van Dusen mansion, a 117-year-old landmark on LaSalle Avenue which resembles a Gothic castle with its thick, pink limestone walls, from its current owners. The owners allege that their signatures -- and the signature of the notary public that all appear on the warranty deed are forgeries.

For more, see Who owns the Van Dusen mansion? (An investment adviser and his wife say someone forged signatures in an attempt to steal the Van Dusen mansion).

Ohio Woman Concerned Over Claim Of Lien On Home For "Zombie" Debt That's Not Hers

In Batavia, Ohio, WKRC-TV Channel 12 reports:
  • A Batavia woman was surprised to receive a letter saying a lien was placed against her property, but doesn't know how to put a stop to it. Beverly Townsend received such a letter in July from a Columbus lawyer. It says a lien has been placed against her real estate as a result of a 16 year old debt. She says the debt is not hers and she's worried. "I'm just concerned that they could possibly garnish my wages, interfere if I had to refinance my house. I'm not planning to, but you never know in this economy, and that could throw that all off," says Townsend.

  • The notice that upset her was this letter saying a judgment lien was filed on her real estate and is subject to foreclosure. Beverly's daughter, Tanya, says the person who owes the debt is not her mother. "A debt owed to Abbott Foods for a restaurant she owned in Middletown. She's never owned a restaurant. She's never lived in Middletown," says Tanya.


  • Beverly Townsend is clearly not the debtor named in the judgment, but her name will remain on the books. When she refinances or sells her home, she will simply have to fill out what's called a "not me" affidavit(1) stating she's not the person named in the judgment.

For more, see Batavia Woman Finds Lien Wrongly Placed On Her Home.

(1) Go here for more on judgment, or "not me," affidavits. zombie debt zeta

Unlawful Use Of POA To Get Reverse Mortgage On 90-Year Old Mom's Home Among Charges Facing Clemson Councilwoman

In Clemson, South Carolina, the Greenville News reports:
  • A Clemson city councilwoman was arrested [...] and charged with several counts of fraud in what authorities allege was a scheme to solicit money to pay for her daughter's legal troubles by claiming in part that her daughter had cancer. Elouise James, 66, [...] was charged in Greenville and Pickens counties with two counts of forgery, two counts of obtaining goods by false pretenses and one count each of obstruction of justice and financial exploitation of an adult, according to arrest warrants.


  • [13th Circuit Solicitor Bob] Ariail said that in an effort to help her daughter avoid legal problems, James “misrepresented that her daughter had cancer and collected money on her daughter's behalf, forged a statement from the Cancer Centers of the Carolinas to avoid her daughter's prosecution … and used her power of attorney to obtain a reverse mortgage on her mother's home in order to pay restitution and probation fees for her daughter.”(1)

For the story, see Clemson councilwoman Elouise James faces fraud charges.

(1) Reportedly, a warrant charges that James unlawfully used power of attorney in relation to her 90-year-old mother to take out a reverse mortgage on her mother's home and used the $15,000 from the mortgage to pay her daughter's restitution balance a few days before a probation revocation hearing.

Tuesday, September 08, 2009

Ex-Mortgage Broker Cops Fraud Plea In D.C.-Area Straw Buyer, Sale Leaseback Foreclosure Rescue Scam

From the Office of the FBI (Washington, D.C. Field Office):
  • Rasheeda M. Canty, a former mortgage broker, pled guilty [...] to engaging in an extensive mortgage fraud scheme involving properties in the District of Columbia and Maryland, [Federal authorities] announced [Friday].


  • From about June of 2005, Canty and others conspired to defraud financial institutions whose deposits were insured by the FDIC for the purpose of influencing the financial institutions to approve mortgage loans. Canty and others conspirators perpetrated this scheme by identifying distressed homeowners whose properties in Washington, D.C., and Maryland were facing imminent foreclosure and offering to purchase their properties. The conspirators told some of the homeowners that they could repurchase their properties within one year.


  • The conspirators would then seek out unsophisticated individuals, with good credit scores or credit scores that could be fraudulently raised, to act as “straw purchasers,” also known as “credit partners,” for these transactions, often in exchange for a $5,000 to $10,000 fee to the straw purchaser for the use of his or her personal information to purchase the respective property.(1) [...] In furtherance of the conspiracy, Canty obtained financial information from the straw purchasers which she then falsified in order to qualify the applicants for their mortgage loans.

For the entire FBI press release, see Maryland Woman Pleads Guilty to Her Role in Extensive Mortgage Fraud Scheme.

(1) According to the FBI, the straw purchasers understood that one of the conspirators would make the monthly mortgage payments, and the straw purchaser would not be otherwise financially responsible for the property or required to live there. On some occasions, the conspirators would use the identification of innocent, unknowing victims to make these purchases.

Bankruptcy Judge Allows Arizona Homeowner Seeking Loan Modification To Grill Wells Fargo Senior Exec Under Oath On Servicer's Poor Customer Service

In Phoenix, Arizona, The New York Times reports:
  • Bobbi Giguere had no luck in securing a loan modification from her mortgage servicer, Wells Fargo. For months, she had sent the bank the financial documents it requested to process her modification. But each time she called to check on the request, she was told to send her paperwork again. “I submitted the paperwork three times, and nothing happened,” said Mrs. Giguere, 41, who has a high school education and worked as restaurant manager before losing her job.

  • On Thursday, something happened. She questioned a Wells Fargo official about the bank’s lack of response — under oath. The spectacle of a high-ranking banking executive being grilled by an ordinary homeowner was the result of an unusual decision by Judge Randolph J. Haines of the United States Bankruptcy Court to summon a senior executive from Wells Fargo to appear in Mrs. Giguere’s bankruptcy case. At the hearing, Judge Haines made it clear that he was acting out of concerns about Wells Fargo’s mortgage modification practices generally.

  • This is certainly not an isolated case,” he said. “The kind of story I hear from this debtor is one that I and other bankruptcy judges around the country are hearing over and over and over again.”

For more, see Judges’ Frustration Grows With Mortgage Servicers.

See also, KPHO-TV Channel 5:

DA's Office Charges One, Seeks Another In Alleged "Principal Reduction" Foreclosure Rescue Scam; Suspects Believed To Have Illegally Pocketed $2M+

From the Office of the Santa Clara, California District Attorney:
  • 39-year old Rene Alvarez of San Jose was arrested yesterday by investigators with the Santa Clara County District Attorney’s Office on charges that he defrauded hundreds of homeowners, whose homes were in foreclosure, in a wide-ranging loan modification scam. There is an outstanding arrest warrant on the same charges for his cohort, 34-year old Mariano Ortega of San Jose.

  • Since mid-2008, Alvarez and Ortega have owned and operated M & R Contemporary Solutions, Inc. a Campbell foreclosure consulting firm. M & R recruited approximately 500 mainly Hispanic homeowners throughout California by pitching a “principal reduction” program. Homeowners were told that M & R would save their residences from foreclosure by facilitating the purchase of their existing lender’s loan by a third party at a discounted price. The homeowners were then to be offered a new reduced principal loan that would have significantly lower monthly payments.

  • According to numerous ex-employees of M & R, no homeowners were ever helped in this manner. M & R collected thousands of dollars in up front fees from each homeowner, which is a felony under California law regulating the conduct of foreclosure consultants. It is believed that M & R has illegally collected over $2 million in advance fee payments from homeowners.

For the DA's press release, see Co-Owner of Campbell Foreclosure Consulting Firm Arrested for Defrauding Hundreds of Homeowners. loan modification

Bay-Area Mega-Landlord Barred From Clipping Tenants For Illegal Rent Hikes In Failed Attempt To Exploit "Small Landlord" Loophole Around Rent Limits

In East Palo Alto, California, Beyond Chron reports on the story of a local major residential landlord that has been barred by court order in the Oberle v. Page Mill Properties class action lawsuit from collecting or enforcing rent increases that do not comply with the limits of the East Palo Alto Rent Stabilization Ordinance.(1) Landlord Page Mill Properties, which reportedly controls over 1700 units, has been accused of attempting to dance around the local ordinance that restricts rental increases that can be imposed on residential tenants by exploiting a legal loophole intended for small landlords.

  • After gobbling up more than half of the rent-controlled apartments in East Palo Alto, Page Mill Properties immediately began imposing huge rent increases and evicting tenants at unprecedented rates. The company has repeatedly sued the city over local laws protecting tenants and filed unsuccessful petitions to raise rents. Page Mill Properties has also invoked the controversial Ellis Act to evict outspoken tenant activists, prompting accusations that the evictions are retaliatory. The [...] litigation involves Page Mill's effort to exploit a "mom-and-pop" exemption from the local rent law. Under the exemption, owners of four or fewer units are not subject to the rent increase limitations of the [East Palo Alto Rent Stabilization Ordinance]. Page Mill created numerous companies, each to own four or fewer units, and then these companies imposed huge rent increases claiming to be exempt from the ordinance.(2)

For more, see Predatory Landlord Scheme Starts To Unravel in East Palo Alto (Court Grants Injunction Against Illegal Rent Increases).

In related stories, see:

(1) Reportedly, on the same day as last week's court hearing, the San Jose Mercury News reported (see Page Mill could lose ownership of East Palo Alto properties) that Page Mill is facing financing problems that could lead to foreclosure. According to the Mercury News article, "ownership of more than 1,700 units in East Palo Alto is in question after the company failed to make a $50 million payment to Wells Fargo Bank last month." Page Mill is urging Wells Fargo to renegotiate the terms of the loan, but tenant advocates question why Wells Fargo should renegotiate with a property owner with Page Mill's track record, the story states. The article also notes maintenance problems at Page Mill buildings, with pools recently being shut down by city health officials (including one that is bright green with algae), raising further questions about why Page Mill should be allowed to continue managing the property.

(2) In granting the tenant/plaintiff's motion for a preliminary injunction, the Court rejected the landlord's argument that each of its corporate entities was to be considered separately. Applying the alter ego doctrine, the court disregarded the corporate forms set up by Page Mill in evaluating whether these entities could qualify for the exemption as owners of less than five units. The Court found that the tenant plaintiffs had shown such a "unity of interest" that the separate corporate personalities "do not in reality exist," and that the multiple entities had been used as conduits for a single enterprise. The court determined that recognizing the corporate entities would lead to an inequitable result.

For more on the alter ego doctrine, as applied in California, see:

Monday, September 07, 2009

System Overrun With People Peddling False Promises & Dispensing Horrible Advice Claims Another Victim

In Arverne, Queens, New York Magazine recounts the saga Jacqueline Tamaklo, a local resident who was born in Liberia and immigrated from Ghana, and the two-family house she bought in 2006 and is fighting to keep from losing to foreclosure. Her saga starts when she misplaced her trust in her preacher, a bishop and leader of a local church who also happened to moonlight in the real estate business, who, in her view, set her up for the major screwing over she is currently going through. On how she got herself into the mess she finds herself in:
  • Looking back, she believes it wasn’t only naïveté and ignorance that led her here; it was an excess of trust she placed in a system that had long since lost all safeguards, that was overrun with people peddling false promises and dispensing horrible advice. It’s a situation lots of homeowners find themselves in, though in Jackie’s case, the betrayal of trust felt especially steep.

For her story, see Last Home Standing (Jacqueline Tamaklo lives in one of New York’s most foreclosure-ridden neighborhoods. And now she’s fighting not to end up like the Joneses) (go here for entire story on one page).

More Contract For Deed Horror Stories - Texas Homebuyers Lose Home To Foreclosure Despite Making All Payments As Seller Pockets Cash & Stiffs Bank

In Edna, Texas, The Victoria Advocate reports on the story of Clara and Jose Carrera and their kids, a local family who just lost their home to foreclosure, despite paying in full all payments required under their purchase agreement and making significant improvements to their home:
  • Although the family thought they had paid off their Edna home a year ago, a series of events put [the Carreras] in the precarious position they found themselves in [...]. It began in September 2000, when Clara and Jose Carrera decided to purchase the home off County Road 306 near Edna from James Glenn Whitley.

  • They entered a contract for deed, meaning once they paid it off, the property was theirs, said Bobby Bell, Jackson County district attorney. The family paid the $53,000 they owed for the 10-year contract two years early.(1) The family approached Whitley and asked for the title, Clara Carrera said, but Whitley always said he was working on it. "We waited three or four months," she said. "We waited and waited, but he never answered." The Carreras got their answer when the bank sent them a note in the spring alerting them of the pending foreclosure.

  • Whitley had approached Prosperity Bank in 2006 and pledged the property. When he filed for bankruptcy, he listed the Carreras as leasees, limiting their legal rights, Bell said.(2)


  • The Carreras' property wasn't the only one up for sale. Jerry and Stacey Berry's home also went to auction. They too had been duped by Whitley. The couple paid $10,000 down for property they purchased from Whitley and paid $1,280 a month, Bell said. Of that, $200 was to go for taxes and insurance. When a grass fire on the Berrys' land damaged a neighbor's shed, they went to collect insurance money, said Brian Rogers, the family's attorney. The problem? There wasn't any insurance.

  • Whitley didn't own the property when the family purchased it, Rogers said. After Whitley received the $10,000, he purchased it from someone else, Bell said, but never paid the insurance. Whitley borrowed the money to make the purchase from Bill and Miriam Ackley, who acted as private lenders, Rogers said.

For more, see Jackson County foreclosure auction brings tears, questions.

(1) Reportedly, Jose Carrera and his 14-year-old son, also named Jose Carrera, added their own touches on their home, building on a living room, car port and even remodeling the bathroom, the younger Jose said.

(2) According to this story, the Carreras entered into the contract for deed with Whitley in September, 2000. Presumably, they took possession of the property at that time; also presumably, they failed to record their contract in the county land records office. The story then goes on to state that it wasn't until about six years later (2006) that Whitley pledged the property as collateral for the loan that the lender ultimately foreclosed (presumably, the lender recorded its mortgage in the local land records office promptly after making the loan to Whitley). Based on these facts, it appears that the Carreras' legal interest in the home, albeit unrecorded, is actually superior to the lender's subsequently created, recorded interest (as a mortgagee) in the property.

The general rule when it comes to recording real property interests at the local land records office can be described as "first in time, first in right" (ie. an earlier recorded interest has priority over a later recorded interest, irrespective of when the interests were actually created). Based on this alone, it would appear to the uninitiated that the bank's recorded mortgage has priority over the Carreras' earlier created, but unrecorded, land contract. Those who assert this position generally point to their state recording statutes as support for their position.

However, the relevant legal analysis (as it would apply in this particlar story) does not end there. What is often (and regrettably) overlooked when reading the state recording statutes (particulary when it comes to undoing or unwinding foreclosure rescue and other real estate scams) is that those laws usually apply only when the party first recording its real property interest acquired it "for value" and "without notice" (ie. without actual notice of the claim of another, or without constructive notice of certain facts a party should have become aware of which, if investigated, would reveal the claim of another). Stated another way, the state recording statutes generally only serve to protect those acquiring interests in real property when acting as bona fide purchasers (in the case of real estate buyers) and bona fide encumbrancers (in the case of mortgage lenders). Therefore, if a party is not a bona fide purchaser/encumbrancer, the "first in time, first in right" rule does not apply. In that case, the owner of the earlier created real property interest has priority over any subsequently created interest, irrespective of when recording takes place.

Further, in this analysis, it is generally true that one acquiring an interest in real estate does so with notice of all the legal and equitable rights and claims in the premises, and in subordination to these rights and claims, of any person or persons, other than the record owner, in open, notorious (ie. visible), exclusive and unequivocal possession of the property.

In the case that the Carreras' find themselves in, the relevant question appears to be:

  • Is the foreclosing mortgage lender (which acquired and recorded its interest in the Carrera home some six years after the Carreras acquired their interest and took possession of the home by reason of its unrecorded contract for deed from Whitley) entitled to the special protection of the recording statutes as a bona fide purchaser/encumbrancer, thereby giving its recorded interest priority over the Carreras' unrecorded contract for deed?

Even if one assumes, for sake of argument, that the foreclosing lender paid value for its interest, and had neither any actual knowledge of the scam perpetrated by Whitley on the Carreras, nor any actual knowledge of the Carreras' open, notorious, exclusive, and unequivocal possession of their home, the answer seems to be a definitive no. Further, since Carrera has paid off the contract for deed, it is Carrera who appears to be entitled to the home free and clear of any right the foreclosing lender may claim.

A review of some of the Texas case law appears to lend some support to this position.

The Texas Supreme Court, in Madison v. Gordon, 39 S.W.3d 604; 2001 Tex. LEXIS 5; 44 Tex. Sup. J. 410, (Tex. 2001), made this observation (some citations omitted, any bold text is my emphasis):

  • Status as a bona fide purchaser is an affirmative defense to a title dispute. A bona fide purchaser is not subject to certain claims or defenses. To receive this special protection, one must acquire property in good faith, for value, and without notice of any third-party claim or interest. Notice may be constructive or actual. Actual notice rests on personal information or knowledge. Constructive notice is notice the law imputes to a person not having personal information or knowledge.

  • One purchasing land may be charged with constructive notice of an occupant's claims. This implied-notice doctrine applies if a court determines that the purchaser has a duty to ascertain the rights of a third-party possessor. See Collum v. Sanger Bros., 98 Tex. 162, 82 S.W. 459, 460 (Tex. 1904); American Surety Co., 82 S.W.2d at 183. When this duty arises, the purchaser is charged with notice of all the occupant's claims the purchaser might have reasonably discovered on proper inquiry. Dixon v. Cargill, 104 S.W.2d 101, 102 (Tex. Civ. App.--Eastland 1937, writ ref'd); see also Flack, 226 S.W.2d at 632. The duty arises, however, only if the possession is visible, open, exclusive, and unequivocal. See Strong v. Strong, 128 Tex. 470, 98 S.W.2d 346, 350 (Tex. 1936).


  • In Strong, we described the kind of possession sufficient to give constructive notice as "consisting of open, visible, and unequivocal acts of occupancy in their nature referable to exclusive dominion over the property, sufficient upon observation to put an intending purchaser on inquiry as to the rights of such possessor." Strong, 98 S.W.2d at 350. Possession that meets these requirements--visible, open, exclusive, and unequivocal possession -- affords notice of title equivalent to the constructive notice deed registration affords. Strong, 98 S.W.2d at 348.

A Texas appeals court, in Cohen v. Hawkins, NO. 14-07-00043-CV, 2008 Tex. App. LEXIS 2647 (Tex. App. Houston [14th Dist] 2008, pet. denied), made the following observation (in footnote 6), describing a purchaser's duty to inquire of those in possession of the subject real estate:

  • A purchaser of land is charged with constructive notice of all claims of a party in possession of the property that the purchaser might have discovered had he made proper inquiry. Apex Fin. Corp. v. Garza, 155 S.W.3d 230, 234 (Tex. App.--Dallas 2004, pet. denied); see also Madison, 39 S.W.3d at 606. More specifically, possession by a third party requires that the purchaser make such inquiries as a reasonable person would, and the failure to make such inquiries charges the purchaser with knowledge of the claims and facts such inquiry would have revealed. See Collum v. Sanger Bros., 98 Tex. 162, 82 S.W. 459, 460 (1904); Aldridge v. N.E. I.S.D., 428 S.W.2d 447, 449 (Tex. Civ. App.--San Antonio 1968, writ ref'd n.r.e.); Astin v. Martin, 289 S.W. 442, 444 (Tex. Civ. App.--Austin), rev'd on other grounds, 295 S.W. 584 (1926).

In Fletcher v. Minton, 217 S.W.3d 755; 2007 Tex. App. LEXIS 2225 (Tex. App. - Dallas 2007), a Texas appeals court made this statement:

  • The unrecorded instrument is binding . . . on a subsequent purchaser who does not pay a valuable consideration or who has notice of the instrument. TEX. PROP. CODE ANN. § 13.001 (Vernon 2006). Thus, an unrecorded conveyance is binding on those who have knowledge of the conveyance. Burris v. McDougald, 832 S.W.2d 707, 709 (Tex. App.-Corpus Christi 1992, no writ). A person who acquires property in good faith, for value, and without notice of any third-party claim or interest is a bona fide purchaser. Status as a bona fide purchaser is an affirmative defense to a title dispute. Madison v. Gordon, 39 S.W.3d 604, 606, 44 Tex. Sup. Ct. J. 410 (Tex.2001).

  • Notice will defeat the protection otherwise afforded a bona fide purchaser. City of Richland Hills v. Bertelsen, 724 S.W.2d 428, 429 (Tex.App.-Fort Worth 1987, no writ). "Notice" is broadly defined as information concerning a fact actually communicated to a person, derived by him from a proper source, or presumed by law to have been acquired. Flack v. First Nat'l Bank, 148 Tex. 495, 226 S.W.2d 628, 631 (Tex.1950). Notice may be actual or constructive. Id. Actual notice results from personal information or knowledge, as well as those facts which reasonable inquiry would have disclosed. Constructive notice is notice the law imputes to a person not having personal information or knowledge. Madison, 39 S.W.3d at 606; Flack, 226 S.W.2d at 631-632.

  • A purchaser of land is charged with constructive notice of all claims of a party in possession of the property that the purchaser might have discovered had he made proper inquiry. Apex Fin. Corp. v. Garza, 155 S.W.3d 230, 234 (Tex.App.-Dallas 2004, pet. denied). This duty to ascertain the rights of a party in possession of the property arises when the possession is open, visible, exclusive, and unequivocal. Id. see also, Madison, 39 S.W.3d at 606.

In Morgan v. Chase Home Fin., LLC, No. 08-50288, 306 Fed. Appx. 49; 2008 U.S. App. LEXIS 26894 (5th Cir. 2008), a Federal appeals court gave the following discussion of In re Hayes, 2004 WL 2926006 (W.D. Tex. Dec. 15, 2004), which addressed the bona fide purchaser doctrine, and its application to mortgage lenders, under Texas law:

  • There, Elizabeth Hayes sold her house to John Henderson but failed to transfer the property by general warranty deed. After payment had been made and Henderson had moved in, Hayes received a loan from a bank using the house as collateral. When Hayes later declared Chapter 7 bankruptcy, the bank asserted its lien. Henderson objected, arguing that he had superior equitable title; the bank responded that it had no notice of Henderson's claim to the house and so was a bona fide purchaser for value. Under Texas law, open, visible, exclusive, and unequivocal possession of property is constructive notice to any subsequent purchaser and triggers a duty of inquiry. Id. at *9. The bank in Hayes, however, argued that lenders should not be held to the same duty of inquiry as individual purchasers, because "the valuation model and desktop appraisal methods it used . . . did not require physical inspection of the subject real property." Id. at *12. The court disagreed, finding that Texas law did not distinguish between lenders and individuals regarding bona fide purchaser status.

In conclusion, the foregoing application of the doctrine of bona fide purchaser/encumbrancer when applying the protection of the state recording statutes, when property is occupied by a person or persons other than the seller or legal title holder, is not unique to Texas. See Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire. See also, The Bona Fide Purchaser for Value of a Legal Estate Without Notice. rent to own lease purchase option scams yellowstone

Sentencing Hearing Begins For Maryland Man Convicted For Role In Equity Stripping Foreclosure Rescue Scam

In Baltimore, Maryland, WBAL-TV Channel 11 reports:
  • A Maryland man who ran television ads claiming he could save homes from foreclosure was in court Thursday for the first day of his mortgage fraud sentencing. Michael K. Lewis pleaded guilty in May to conspiracy and bankruptcy fraud in a foreclosure rescue scheme.(1) He was supposed to be sentenced Thursday, but part of the hearing was suspended so the defense could locate six of its witnesses.

  • "I thought this plan was there to help people," Lewis told 11 News I-Team reporter Barry Simms as he left the courthouse. Lewis still defended his plan to get financially strapped homeowners out of debt, something he called the "MKL Financial Diet." He blamed others for the fall of his business network. "Circumstances that were out of my control and things were being done that I knew nothing about," he said. [...] Lewis will be back in court Sept. 11. He could get up to 25 years in federal prison.

For the story, see Man Convicted Of Mortgage Fraud Claims Innocence (Sentencing Begins In Michael K. Lewis Fraud Case).

(1) See U.S. Attorney press release: Leader of Mortgage Fraud Scheme Confesses and Agrees to Forfeit $2 Million for Targeting Victims with TV Ads.

Straw Buyer To Cough Up $6.5K To Settle Civil Charges For Role In Massachusetts Equity Stripping Foreclosure Rescue Scam

From the Office of the Massachusetts Attorney General:
  • [Last week], Attorney General Martha Coakley’s Office entered into a settlement with Marie Bettie Mereus, resolving allegations that she participated in a foreclosure rescue scheme in which nineteen defendants – mortgage brokers, real estate brokers, closing attorneys and straw buyers – deceived homeowners facing foreclosure into selling their homes under the false promise of avoiding foreclosure and maintaining their homes and their homes’ equity.(1) [...] According to the complaint, Mereus received a payment for allowing the defendant mortgage brokers to use her in name in applying for a loan to purchase one of the properties identified. Contrary to representations made to the lenders in the completed loan application, Mereus took title to that property without paying any deposits or closing costs, and without intending to occupy the property.


  • Mereus is the second defendant and first straw buyer out of the original 19 defendants to settle.(2) In June, the Attorney General’s Office reached a settlement with closing attorney Valerie Hanserd. [...] Trial is scheduled to commence against the remaining defendants in the foreclosure rescue scheme case on November 9, 2009, [...] in Suffolk Superior Court.

For the Massachusetts AG press release, see Straw Buyer Defendant Who Participated in Unfair and Deceptive Foreclosure Rescue Scheme Enters Into Consent Judgment with Attorney General Martha Coakley’s Office.

(1) On March 30, 2007, the Attorney General’s Office filed a complaint against Mereus and 18 other defendants that participated in a foreclosure rescue scheme targeted at distressed homeowners facing foreclosure. Each of the defendants allegedly conspired through their respective roles as mortgage brokers, real estate brokers, closing attorneys or straw buyers to deceive homeowners into selling their homes under the false promise of avoiding foreclosure and maintaining their homes and their homes’ equity. The Attorney General’s Office alleges that the defendants not only obtained the titles to the homeowners’ residences but also stripped most of the homes’ equity by failing to account for deposits and other monies due from the buyers, disbursing sale proceeds for unearned brokers’ fees and other fictitious services, and drafted and submitted to lenders HUD Settlement Statements that did not accurately reflect the disbursements made in the transactions. In certain cases, the defendants allegedly resold the homes in multiple transactions amongst themselves, thereby stripping the homes of all their equity.

(2) Under the terms of the consent judgment, Mereus is prohibited from acting as a straw buyer or otherwise obtaining loans through misrepresentation and must pay $5,000 in restitution and $1,500 in attorney’s fees and costs to the Commonwealth. The $5,000 represents the money Mereus was paid for her role as a straw buyer in the transaction.

Bronx DA Charges Two With Bilking $1.3M From Three Victims In Bogus Sales Of Real Estate They Didn't Own

From the Office of the Bronx County, New York District Attorney:
  • Bronx District Attorney Robert T. Johnson announced [...] that two Bronx men(1) have been charged with bilking three people out of more than one point three million dollars ($1,300,000) in an alleged scam involving the sale of property that the defendants did not own and were not authorized to sell. It is alleged that the victims were led to believe that they were purchasing property that had been owned by the City of New York because the previous owners had either failed to pay taxes or correct numerous building code violations.


  • It is alleged that in May 2008, the defendants approached real estate investors Jacob Selechnik and Robin Shimoff and offered to sell them various properties which [Celestino] Orta said that he either had bought or was in the process of buying from the City of New York. Selechnik and Shimoff examined the real estate and agreed on a purchase price of $710,000, to be paid up front. A few months later in July 2008, the victims allegedly were offered additional properties in the Bronx, Brooklyn, and Queens for which they paid another $502,000. A third victim, Nir Cohen, allegedly also was approached by the defendants in May 2008 and made a $70,000 down payment for a vacant lot at 539 Union Avenue near Southern Boulevard. The alleged scam began to unravel when the victims filed complaints against [Mario] Tolisano and Orta after repeated attempts to schedule closings on the properties were ignored. The defendants, in fact, never had ownership of the properties or authorization to sell them.

For the Bronx DA press release, see Bronx Man And Associate Charged With Stealing Nearly $1.3 Million Dollars In An Alleged Real Estate Scam Involving The Sale Of Property That The Defendants Did Not Own.

(1) Mario Tolisano, 59, of 1669 Astor Avenue, and Celestino Orta, 40, of 588 Timpson Street, have been charged with 1 count of Grand Larceny in the 1st degree, 3 counts of Grand Larceny in the 2nd degree, 1 count of Criminal Possession of Stolen Property in the 1st degree and 3 counts of Criminal Possession of Stolen Property in the 2nd degree. Tolisano also was charged with 7 additional counts of Practicing or Appearing as Attorney-At-Law without being Admitted and Registered.

Sunday, September 06, 2009

SW Fla. Alleged Rent-To-Own Straw Buyer Scam Leaves Would-Be Buyers Booted From Homes, Investors w/ Ruined Credit, Foreclosing Lenders Holding The Bag

In Fort Myers, Florida, The News Press reports:
  • A Fort Myers real estate sales associate was arrested Thursday and charged with 61 counts related to a multimillion dollar mortgage fraud scheme in Southwest Florida. Mark Wallen, 38, [...] was booked into the Lee County Jail [...] and is being held on $100,000 bond, state attorney’s office spokeswoman Samantha Syoen said.

  • The state alleges Wallen worked with a group of real estate professionals(1) who were filing fraudulent loan applications - taking advantage of those with both good and bad credit - and getting more than $3 million from fees and defaulted loans. [...] Investigators with the Florida Department of Law Enforcement have said that between 2002 and 2004, Fort Myers-based Alternative Home Finance would find renters with bad credit ratings and allow them to pick out a house to rent and eventually own. The company would then allegedly find people with good credit and take out multiple loan applications in the name of one borrower while falsifying applications. After collecting money from a bank, they would allow the house to go into foreclosure, leaving renters without a home, borrowers with bad credit and banks to foot the bill.

For the story, see Fort Myers man charged in mortgage fraud scheme.

(1) Reportedly, the State Attorney's Office filed charges in January against five people — Trinity Hansen, James Dalonzo, Jeremy Hatlee, Paul Bosnyak and Brian Chili. Of those, Dalonzo has yet to be arrested. Hansen, who runs Safe Harbor Title Co. of Fort Myers, was formerly engaged to Wallen. The State Attorney's Office alleges Hansen, Dalonzo, Hatlee, Bosnyak and Chili worked as part of the scheme with Christopher Kim Jack, Erich Heckler and Erling Hall. Heckler was a fugitive until he was picked up last month in Costa Rica (see Private investigator who caught Lee County fugitive talks to WINK News (Eric Heckler was on the run for over one year)). rent to own lease purchase option scams yellowstone

South Florida Non-Profit Legal Services Offices Score $700K In Countrywide Lawsuit Settlement Cash To Fund Foreclosure Defense Efforts

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum and The Florida Bar Foundation [...] awarded approximately $700,000 in grants to several South Florida non-profit organizations to fund free foreclosure legal defense work. A total of $4 million will be available statewide over two years to fund attorneys and paralegals who will provide free legal assistance to homeowners facing foreclosure. The grants were funded by the Attorney General’s settlement with Countrywide Financial last October. [...] Legal Aid Service of Broward County, Inc. will receive $340,000 in grant funding; the Cuban American Bar Association, the Spanish American League Against Discrimination, Inc., and the Legal Services of Greater Miami, Inc. in collaboration with the Haitian Lawyers Association will each receive $85,000; Legal Services of Greater Miami, Inc. will also receive an additional $104,700 in funding.

For the Florida AG press release, see Attorney General Presents $700,000 in Grants Through Mortgage Foreclosure Defense Fund.

Justice Department Continues Effort In Targeting Housing Discrimination Against Individuals With Disabilities

From the U.S. Department of Justice:
  • The Justice Department [...] filed a lawsuit against the developer of the Riverwalk Condominiums, a condominium apartment complex in Post Falls, Idaho, for violating the Fair Housing Act by constructing apartments that do not have required accessibility for individuals with disabilities.(1) The lawsuit, filed in federal court in Idaho, charges that Riverwalk Condominiums LLC, the developer of the 36-unit condominium complex on Greensferry Road, failed to comply with the Fair Housing Act accessibility provisions which apply to 18 ground-floor units. [...] "Architectural barriers can be as big an obstacle to the housing rights of people with disabilities as an outright refusal to rent to them," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.

For the Justice Department press release, see Justice Department Files Lawsuit Alleging Disability-Based Housing Discrimination Against Idaho Condominium Developer.


  • The Justice Department [...] announced an agreement with the former owners and managers of Valley View Apartments in Longview, Wash., to settle allegations that they violated the Fair Housing Act by intentionally discriminating against an individual with a disability. Under the settlement, which must be approved by the U.S. District Court for the Western District of Washington, the defendants must pay a total of $35,000 to the complainant.

  • The lawsuit originated from charges filed by the Department of Housing and Urban Development (HUD) on behalf of a tenant of Valley View Apartments. In 2004, the tenant, who has a mobility impairment that limits his ability to enter or exit a car, asked to use two contiguous parking spaces in the apartment complex’s lot until a handicap accessible space became available. The complaint alleged that the former owners and managers of the apartments, John E. and Shirley L. Price, violated the Fair Housing Act when they intentionally discriminated against the tenant by refusing his request and by initiating retaliatory eviction proceedings. The complaint also alleged that the tenant’s request was reasonable and necessary to afford him an equal opportunity to use and enjoy his dwelling.

For the Justice Department press release, see Justice Department Obtains $35,000 in Disability-Based Housing Discrimination Settlement with Apartment Complex in Longview, Washington.


  • The Justice Department [...] announced that the operator and manager of the Rathbone Retirement Community in Evansville, Ind., has agreed to pay up to $116,000 to resolve a housing discrimination lawsuit. The November 2008 lawsuit alleged that the defendants violated the Fair Housing Act by prohibiting the use of motorized wheelchairs and scooters in residents’ apartments and in the home’s common dining room during meals. [...] The agreement, which must be approved by the U.S. District Court for the Southern District of Indiana, requires Rathbone Retirement Community Inc. and its resident manager Norma Helm to pay a total of $70,000 to three former residents. It also requires them to establish a $25,000 settlement fund for others who may have been injured by the policy and pay the government a $21,000 civil penalty. The agreement requires the defendants to provide fair housing training for employees, adopt nondiscrimination and reasonable accommodation policies, and maintain and submit records to the United States for the two-year term of the agreement.

For the Justice Department press release, see Justice Department Resolves Disability Discrimination Lawsuit Against Indiana Provider of Retirement Housing.


(1) Among other things, the complaint alleges that the public and common use areas are not accessible to people with disabilities; the routes to some units are not accessible; some kitchens and bathrooms are not fully usable by people in wheelchairs; and electrical outlets and environmental controls are mounted too high or too low for access by people in wheelchairs. The lawsuit also alleges that the defendants’ conduct constitutes a pattern or practice of discrimination or a denial of rights to a group of persons.

Cross Burning Incident Results In Federal Felony Charge Against Indiana Man For Interfering With The Housing Rights Of Another

From the U.S. Department of Justice:
  • The Justice Department announced that Bruce Mikulyuk, of Mishawaka, Ind., has been indicted by a federal grand jury for charges stemming from a cross burning in September 2007. Mikulyuk made his first court appearance [...] in South Bend, Ind. A trial has been scheduled for Nov. 3, 2009. Mikulyuk was charged with one count of interfering with the housing rights of another and one count of using fire in the commission of a felony. According to the indictment, Mikulyuk burned a cross at the home of an African American man and white woman and returned later with a knife and made threats.

For the Justice Department press release, see Indiana Man Indicted for Cross Burning.

Mass AG Files Suits, Obtains Civil Rights Injunctions Involving Discrimination, Harassment Allegations Affecting Victims' Housing Rights

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office has obtained a civil rights injunction against a Norwood woman, Deborah May, based on allegations of her repeated and severe harassment and intimidation of a gay neighbor.(1) The order [...] prohibits May from threatening, intimidating, or coercing the victim or anyone else in the Commonwealth on the basis of their actual or perceived sexual orientation. It further prevents May from contacting or communicating with the victim or his family and requires her to stay at least 500 yards from his place of employment.

For more, see Attorney General Martha Coakley Obtains Civil Rights Injunction Against Norwood Woman for Severe Harassment and Intimidation of Neighbor.


  • Attorney General Martha Coakley’s Office obtained a civil rights injunction against two Holyoke brothers, Jesse and Roman Jedrzejczyk, who are accused of harassing, threatening and intimidating their neighbors, a single mother and her two six year-old daughters. The adult victim is a political asylee to the United States who, in 2001, fled political persecution in Haiti out of fear for her life.(2) The order [...] prohibits the Jedrzejczyks from threatening, intimidating or coercing the victims, or anyone else in the Commonwealth, because of their actual or perceived race or ethnicity. The order also prohibits the Jedrzejczyks from knowingly coming within ten feet of the victims.

For more, see AG Obtains Civil Rights Injunction Against Holyoke Brothers for Harassment and Intimidation of Neighbors.


  • Attorney General Martha Coakley’s Office obtained a civil rights injunction against a Pittsfield woman, Tammy L. Haddad, accused of harassing, threatening and intimidating a family living next door on the basis of their race.(3) The order [...] prohibits Haddad from threatening, intimidating or coercing the victims, or anyone else in the Commonwealth, on the basis of their actual or perceived race. The order further prevents Haddad from knowingly coming within 20 feet of the victims and their family and or within 500 yards of the place of employment of the victims.

For more, see Attorney General Martha Coakley Obtains Civil Rights Injunction Against Woman Accused of Racial Harassment and Intimidation of Neighbors.


According to AG Coakley's office, violations of the above-referenced orders are criminal offenses punishable by a fine of up to $5,000 and two and a half years in a House of Correction, or if bodily injury results from such a violation, a $10,000 fine and up to 10 years in State Prison. Among AG Coakley's comments when making the above announcements:

  • Bias-motivated conduct, such as the harassment and intimidation we allege in this case, are devastating to victims not only because of the immediate physical and emotional harm they cause, but because feelings of fear, anxiety and profound loss of personal security often last far longer than the incident. Beyond their impact on individual victims, hate crimes and other forms of bias-motivated activity are very detrimental to communities, and this type of behavior will not be tolerated.”

  • All Massachusetts residents are entitled to live in their homes and raise their families free from the type of bias-motivated harassment and intimidation alleged [...]. Victims and their communities suffer when racial harassment goes unchecked, and this type of behavior will not be tolerated.”


(1) According to the complaint, Deborah May allegedly continually harassed the victim who is a tenant in the apartment building where May also resides. In November 2007, May allegedly began spreading false rumors that the victim is a sexual predator and pedophile. The complaint further states that six months later, May complained to her landlords about the victim’s display of a gay pride flag outside of his apartment and had the flag removed. Soon thereafter, on multiple occasions, May screamed anti-gay epithets at the victim in the presence of other tenants and physically confronted the victim in the yard of his home. The complaint further alleges that on August 31, 2008, May made a baseless report to the Norwood Police Department falsely claiming that the victim had exposed himself. As a result of May’s alleged pattern of harassment and intimidation, the victim feared for his safety and well-being at home and was forced to alter his daily routine and other behavior in order to avoid May.

(2) According to the complaint, the Jedrzejczyks repeatedly and regularly harassed the victims using racial slurs and threats over the course of the past three years. The defendants’ actions have caused the victim to become concerned for her personal safety after threats were made to break her windshield. In addition, a “For Sale” sign was placed in front of her house. The intimidation culminated recently when the victim responded to racial slurs being directed at her by imploring Jesse Jedrzejczyk to leave her alone. In response, Mr. Jedrzejczyk threatened, “I will never leave you alone until you move. If you don’t move, I’ll move you!” The Commonwealth’s lawsuit alleges the Jedrzejczyks’ bias-motivated harassment has seriously interfered with the victims’ ability to live and feel safe at home.

(3) According to the complaint, Haddad allegedly engaged in a campaign of racial harassment and intimidation by regularly directing racial epithets and racist imagery against her African-American neighbors. The complaint further alleges that Haddad filed baseless complaints with law enforcement agencies against one of the victims and repeatedly interfered with her neighbor’s property. The Commonwealth alleges that Ms. Haddad’s bias-motivated acts significantly interfered with her neighbors’ right to use and enjoy their home free from harassment and intimidation.