Saturday, December 19, 2009

"We Goofed!" Says Bank After Billing Homeowner Nearly $500K On Mortgage Earlier Wiped Out By Judge For "Repugnant, Shocking, Etc." Lender Conduct

In Suffolk County, New York, Newsday reports:
  • Nevermind. A California mortgage company admitted Friday it goofed when it sent an East Patchogue couple a letter demanding nearly a half-million dollars - even after a Riverhead judge said the couple did not owe the company a penny following a foreclosure dispute. A spokeswoman for OneWest Bank, the corporate parent of IndyMac Mortgage Services,(1) said the letter was prepared before the judge's ruling. "That particular letter was sent incorrectly," she said.

  • Gregory Horoski and his wife, Diana Yano-Horoski, had their mortgage canceled last month by state Supreme Court Justice Jeffrey Spinner following a dispute with IndyMac. The company has appealed the ruling. The judge excoriated the Pasadena , Calif .-based company's "harsh, repugnant, shocking and repulsive" tactics in proceedings where the Horoskis attempted to work out a loan modification.

  • Earlier this month, two weeks after Spinner's ruling, IndyMac sent the Horoskis a letter that claimed the couple still owed $474,936.78. Spinner ordered the parties back to court to explore the bank's letter "at length." But before a scheduled hearing could be held Friday, the bank owned up to its mistake. "It was sent in error, and we let the family know," the OneWest spokeswoman told Newsday. Richard Horoski declined to comment Friday.(2)

Source: Lender admits foreclosure letter sent in error (requires paid subscription to Newsday; for free version, try here).

(1) Reportedly, it's been a year since OneWest, through a group of investors including billionaire George Soros and computer company founder Michael Dell, agreed to buy IndyMac for what would be nearly $14 billion. Last week, OneWest announced that it bought First Federal Bank of California and its $6.1 billion in assets in a deal brokered by the Federal Deposit Insurance Corporation. See Pasadena Star News: OneWest rises from IndyMac's ashes.

(2) Possibly in an attempt to minimize the damage of the bad publicity brought by cases like this one and the one involving their reported attempt to boot an elderly widow despite being court-ordered not to (see IndyMac Intent On Foreclosing On 89-Year Old Widow, Despite Two Court Orders Telling Them To Stop), One West Bank has reportedly announced that it will temporarily suspend all foreclosure sales and evictions for the holidays (until January 4, 2010) of all single family residential loans it services through its IndyMac Mortgages Services division. The Bank will reportedly implement the moratorium for First Federal Bank of California borrowers as well. See OneWest Bank Announces Moratorium on Foreclosure Sales and Evictions to Assist Borrowers During the Holidays.

Gas Service Shutoff By Rent Skimming Landlord In Foreclosure Leaves Unwitting Tenants Without Heat, Hot Water & Facing The Boot

In Whiting, Indiana, WBBM-TV Channel 2 reports:
  • The owner of a Whiting, Ind. apartment building is leaving his tenants out in the cold -- literally. The residents say he lost the building to a bank without telling them and their heat was shut off before they could move out.

  • Nicole Talavera has to dress her kids in coats just to stay in their apartment. "It's freezing," she said. "And then I have a 9-year-old and a 3-year-old." The thermostat read 50 degrees. Talavera says the gas has been shut off for several days now. "We had no idea about the landlord foreclosing," she said. "We were still paying rent."

  • Last month, tenants say they got a letter from an attorney's office. It said the building was in foreclosure, and the tenants have until Feb. 16 to move out. NIPSCO says the property owner ordered the utility to shut off the gas Dec. 15. Roommates in a second apartment are surviving with a space heater in the living room. No gas means no hot water, either. "We actually were boiling pots of water, dumping them in the bathtub and actually sponge-bathing ourselves," Christopher Spedus said. "We've just been using tons of blankets, staying warm, and that's about it. But everything else is just really cold," another resident, [...] said.(1)

For the story, see: Tenants Lack Heat As Bank Forecloses On Building.

(1) Reportedly, the utility is expected to restore gas service Saturday, but it may not solve the heat problem as it appears vandals damaged the furnace, the story states.

Servicemember Files Federal Suit Against Landlord; Alleges Illegal Eviction Despite Giving Notice Of Activation For Military Duty

In Hammond, Indiana, Chicago Sun-Times Media Wire reports:
  • A northwest Indiana service member is suing an apartment complex for evicting her after she told them she was being activated for duty, according to a lawsuit filed in the U.S. District Court in Hammond. Ciearra Pulliam of Griffith claims in the suit that she received notice on Oct. 23 that she would be sent to Wisconsin from Oct. 26 to Nov. 18. According to the suit, Pulliam notified the Mansards Apartments and was told to give them a copy of her activation papers, which she did. She was having problems paying her rent, though, because of a discrepancy in her military pay, according to a police report filed with the suit.


  • Pulliam's belongings ended up being evicted Nov. 10 and were left outside. She is suing for $10,800, which Pulliam claims is the damage done to her property, or triple that amount for emotional distress.

For the story, see Soldier Suing After Being Evicted From Apartment.

The Federal law known as the Servicemembers’ Civil Relief Act grants troops on active duty various legal protections, including a shield against foreclosure in some cases. The protections in this law are available to troops from all over the country.

Go here for free legal assistance for military servicemembers and their families, and go here for other posts on the Servicemembers Civil Relief Act.

Tenant Beats Down Bully Bank In Illegal Foreclosure Eviction Attempt; Lender, Law Firm Prey On Renters Unable To Assert Rights: Housing Advocate

In Hayward, California, Gabe Treves, Program Coordinator for Tenants Together, California's Statewide Organization for Renter's Rights, writes in News Blaze:
  • Tenants renting a home in Hayward, CA, successfully defended themselves against an illegal eviction lawsuit brought by HSBC Bank. The tenants prevailed in the lawsuit this week and will be able to stay in their homes indefinitely. Under Hayward's just cause for eviction law, blatantly violated by HSBC, a landlord must have a specified reason to evict a tenant, and foreclosure is not recognized as a legitimate basis for evicting a tenant.


  • In October, the McHenry's were served with an eviction lawsuit, called an unlawful detainer, by HSBC's attorneys at the Endres Law Firm, a Sacramento-based law firm notorious for helping banks illegally evict tenants living from foreclosed properties. The eviction lawsuit was in direct violation of the city's just cause for eviction ordinance. [...] McHenry contacted the Endres Law Firm to demand that it honor the city ordinance and dismiss the unlawful detainer action. The firm would not even give the courtesy of a response. As McHenry tells, "I called the Endres Law Firm repeatedly and demanded that they honor my rights under the city ordinance and dismiss the eviction, but they wouldn't even respond. Meanwhile, I was getting scary court notices that the eviction was moving forward to trial."


  • Hayward is one of 15 cities in California with just cause eviction ordinances which, among other things, offer protection to tenants in foreclosure situations. However, as the incident with the McHenry's reveals, banks are all too willing to ignore these laws.(1)

For the story, see Hayward Tenants Fights off Bank Eviction after Foreclosure.

(1) According to Treves, "HSBC Bank and the Endres Law Firm knew that what they were doing was illegal, and that's why they wouldn't respond to all the inquiries. Clearly, their strategy is to prey on tenants who don't know their rights or who don't have the means or time to assert them. Despite the local law, they tried to bully the McHenry out of her home. But she asserted their rights, held her ground, and beat the bank."

Banks' Bullying Tactics Used To Carry Out Illegal Foreclosure Evictions On Tenants, Say D.C. Housing Counselors

In Washington, D.C., United Press International reports:
  • Some banks are using aggressive eviction tactics to push Washington tenants out of their homes as the foreclosure crisis widens, housing counselors say. [...] Housing counselors in the District of Columbia said that tenant buyouts and evictions are becoming more prevalent as banks begin to take over more multi-unit properties.

  • In part it may be that banks don't know the city’s unique tenant laws,” said Farah Fosse, director of affordable housing preservation at the Latino Economic Development Corporation, a non-profit group that offers housing counseling services to D.C. residents. [... T]heDistrict of Columbia has strong tenant protection laws and it is illegal for property owners to evict tenants due to foreclosure.(1)


  • "Lenders aren't in the business to own real estate and certainly aren't in the business to manage properties,” said Marian Siegal, executive director at Housing Counseling Services, a Housing and Urban Development-approved counseling organization based in the Adams Morgan neighborhood of Washington. "As a result we're starting to see not only the owners displacing tenants but also the banks displacing tenants illegally," said Siegal.


  • Fosse said that some of the banks are changing locks on tenants and sending incorrect information to tenants to persuade them to leave. “Some banks are doing really shady things to get people out like turning off utilities when they know there's a tenant there,” said Fosse.

For more, see Banks bully D.C. renters out of foreclosed buildings.

(1) According to the story, the District of Columbia Rental Housing Act of 1985 states that when a rental property is foreclosed on, financial institutions become the new landlord but there is no change in the tenant's rights. This is a problem for banks, which prefer a quick sale to long-term property management, housing counselors say. For more on tenants' rights in the District of Columbia, see:

23 Tenants Land On The Street As Landlord In Foreclosure Pockets Rent, Fails To Correct Fire Code Violations, Resulting In Eviction

In Regina, Saskatchewan, CBC News reports:
  • The Regina landlord who's at the centre of a recent eviction controversy says he may have made mistakes, but he was only trying to help disadvantaged people. [Last] Monday, 23 tenants were evicted from a downtown Regina building co-owned by Paul Ehmann due to fire code violations and other problems. [...] Some of the tenants who were forced out said they had already paid rent to Ehmann's company and were hoping to get their money back. [...] Lack of money [...] prevents him from paying back the tenants, he said.


  • Almost three years ago, [local businessman Larry] Sydor loaned $400,000 to Ehmann, with the building as security, but he's still waiting for payment. "This loan was supposed to be a one-year loan and it's been ... almost three years," Sydor said. Sydor now has a court judgment which means that in less than a week the building will be in foreclosure and put up for sale. The building is worth around $650,000, but there are more than $900,000 worth of liens against it.

For the story, see Controversial landlord says he was only trying to help.

Big Apple Plays Scrooge - Abruptly Yanks 3,000+ Recently Granted Section 8 Rent Subsidy Vouchers To Poor; Pins Blame On Budget $queeze

In New York City, the New York Post reports:
  • More than 3,000 of the city's poorest families face a cruel Christmas because Section 8 vouchers they were given to find apartments are being abruptly yanked under a budget squeeze, officials said yesterday. The unprecedented move elicited howls of protest from advocates for the poor. [...] More than half of the 3,018 families now holding worthless pieces of paper were formerly homeless.


  • [Housing Authority Chairman John Rhea] said a "perfect storm" of events left the city with no choice but to pull back the coveted vouchers, even to 918 families that had already identified private apartments to rent and were waiting to complete the paperwork to "turn on" their subsidies, which average $800 a month.

For the story, see Hou$ing ax freezes out 3,000 poor families.

Hubby Skips After Hitting Florida Lottery; Lets Home Go To Foreclosure, Abandoned Ill Wife Faces The Boot

In Miramar, Florida, the South Florida Sun Sentinel reports:
  • A former skin-care model who sued her husband to claim half his Florida Lotto winnings -- and lost -- is about to be evicted from the house they once shared. Donna Campbell, 49, says ever since she found out her husband won the lottery with his co-workers and tried to keep her from finding out, nothing good has happened. "It almost feels as if that winning ticket has destroyed my life," Campbell said. Her husband, Arnim Ramdass, 53, bought the winning ticket in a pool with his co-workers, mechanics at Miami International Airport, in June 2007. The jackpot was worth $19 million, but they collected a lump sum of $10.2 million, and after taxes, each got about $450,000.


  • In February, their three-bedroom house went into foreclosure and was sold. Campbell's name was never on the title. And the new owners told her she must move. Campbell, who doesn't work, said she has been in and out of the hospital due to an autoimmune disease and relies on the help of friends. She said Monday her sister has offered her a couch she can bunk on temporarily.

For the story, see Wife of lottery winner faces eviction (Miramar woman says husband kept a big secret).

See also, WFOR-TV Channel 4: Wife Of Lotto Winner About To Be Evicted (Husband Split A Lottery Jackpot With Co-Workers, Hid Winnings From Wife; She Sued And Lost).

For follow-up stories, see:

Friday, December 18, 2009

Baltimore Closing Agent Cops Plea For Role In Deed Theft Scam; Phony Documents Used To Transfer Title To Home Belonging To Out-Of-State Senior

The Maryland Mortgage Fraud Task Force members recently highlighted their progress in a press conference, including the filing of criminal, civil, and regulatory actions against more than 250 individuals and companies in 2009, including this successsful criminal prosecution by the Baltimore City State's Attorney's Office:
  • The Baltimore City State’s Attorney’s Office indicted Gregory Todd Alter, age 37, of Hagerstown, co-owner of All Star Settlement Company on charges of conspiracy to commit theft and issuing a counterfeit deed. On May 14, 2008, Alter conducted a settlement in which a home [...] was sold for $40,000. On June 14, 2008 another settlement took place at All Star where the same property was sold to an innocent third party for $90,000.

  • The true owner of the property was [...] an 85 year old woman who lives in Massachusetts and had not been to Maryland in 35 years. She never signed any deed nor was she ever aware her property was being sold. Alter received $7,000 from the first transaction and then forwarded a fraudulent deed to the buyer’s lender for the 2nd transaction. He received an additional $2,000 from the 2nd transaction. The scheme was discovered in September 2008, when [the Massachusetts woman] decided to sell the property and hired a realtor who placed a for sale sign on the property. The buyers who had purchased the property in June 2008 then realized that they had been defrauded. Alter pled guilty to both charges and was sentenced to five years suspended, three years probation.

Source: Maryland Mortgage Fraud Task Force Announces Progress And Plans (State v. Gregory Todd Alter).

Pair Convicted Of Felony Theft For Running Foreclosure Rescue Equity Stripping Scam; Peddled Bogus Sale Leasebacks To Strapped Homeowners Seeking Help

The Maryland Mortgage Fraud Task Force members recently highlighted their progress in a press conference, including the filing of criminal, civil, and regulatory actions against more than 250 individuals and companies in 2009, including this successsful criminal prosecution by the Prince George's County State's Attorney's Office:
  • The Prince George’s County State’s Attorney’s Office Mortgage Fraud Unit prosecuted Nathaniel Wright and Aaron Bowe, who promised victims that their company could save the victims’ homes from going into foreclosure by participating in their rent back program.

  • The defendants then used an unsuspecting straw buyer’s credit information to obtain loans. As a result of the defendants’ false promises, the victims transferred title to their homes and lost approximately $80,000 per victim. Wright and Bowe were convicted of felony theft and violating Protection of Homeowner in Foreclosure Act Law and were ordered to pay restitution totaling $220,000.

Source: Maryland Mortgage Fraud Task Force Announces Progress And Plans (State v. Nathaniel Wright; State v. Aaron Bowe).

Elderly Couple Accuse Attorney Of Tricking Them Into Signing Away Home; Transfer Made In Payment Of Legal Fees, Responds Lawyer

In Springfield, Tennessee, WSMV-TV Channel 7 reports:
  • An elderly Springfield, Tenn., man said a Nashville attorney had him sign his lake house away while recovering from a stroke. W.H. "Blue” Howse, 84, and Ruth Howse, 85, are accusing [Fletcher] Long of taking their lakefront cabin at a time when they were most vulnerable. W.H. said he was on his death bed after a stroke and that his wife wasn’t aware that they were signing over their cabin. "He took advantage of the fact that I hadn’t had any rest and that Blue was just out of intensive care, and (he said), '(I) just want you to come in and sign some papers,'" said Ruth. The couple said they thought they were signing over rights for Fletcher Long to be power of attorney in an unrelated estate matter. "This would have been the perfect crime had I died, but I didn’t,” said W.H.

  • However, Long said he had been representing the couple in various legal matters for many years and they never paid him for his services. He said the Howses said they were signing over the cabin as a way to pay their debt.

For more, see Elderly Man Says Attorney Took His Lake House (Fletcher Long Says Cabin Was Debt Payment).

Feds Bag Bogus Clergyman Accused Of Running Upfront Fee Scam That Preyed On Desperate Developers Seeking Financing

In Central Florida, the St. Petersburg Times reports:
  • Father Barney Canada, a make-believe Roman Catholic priest(1) accused of duping developers of Trump Tower Tampa out of $150,000, has been arrested and charged with swindling $2.7 million from developers across Florida and the United States. A grand jury in South Bend, Ind., charged Byron Levon Canada with 31 counts of wire and mail fraud, money laundering and conspiracy. The indictment was handed down in U.S. District Court on Dec. 9. Taken into custody Monday, Canada pleaded not guilty. Canada was charged with running an "advance fee scheme" that collected millions in application fees for commercial loans he never intended to provide.


  • "Canada represented himself to be a priest and dressed in cleric garb when meeting with victims in order to give the defendants' advance fee scheme an aura of legitimacy and honesty," the indictment said.(2)

For more, see Fake Catholic priest accused of $2.7M fraud that includes Florida developers.

For earlier story, see Father Barney takes fees, leaves a host of developers behind.

(1) Canada has reportedly claimed to be a priest from a shadowy 19th-century offshoot of the Roman Catholic Church, according to this story.

(2) "Father Barney" has a history of being associated with advanced fee scam prosecutions that dates back a long time. See U.S. v. Barney Canada, 960 F.2d 263 (1st Cir. 1992).

Boston "Triple Decker" Condo Converter Facing Suits Over Alleged Misrepresentations Draws FBI Attention; 50%+ Of Units Sold Wind Up In Foreclosure

In Boston, Massachusetts, The Boston Globe reports:
  • When times were good, Michael David Scott did very, very well. The smooth-talking Trinidadian was a natural at selling a piece of the American dream, buying and renovating three-deckers in some of Boston’s toughest neighborhoods, then reselling them as condominiums, often to first-time home buyers eager to cash in on the city’s unstoppable housing boom.


  • From 2004 to 2008, Scott and his partners bought at least 50 buildings for a total of $26.6 million, and converted the units into 169 condominiums that sold for $49.8 million, a Globe analysis shows. Today, 101 of the units - more than half - have gone into foreclosure and are selling for a fraction of their value, according to records on file with the Suffolk County Register of Deeds.


  • More than a dozen home buyers told the Globe they were drawn in by Scott’s pitch and wound up buying properties based on promises that later proved false. Thirteen people who have done business with Scott, including buyers, a lender, a recruiter, and an appraiser, say they have been interviewed by FBI agents about their real estate dealings. The FBI would not confirm or deny an investigation.(1)

For the rest of the story, see Developer’s easy-money pitch left a trail of ruin (Of 169 condos sold, most in Dorchester, more than half are now in foreclosure).

(1) The story refers to at least two civil lawsuits, as well as bankruptcy proceedings, which Scott reportedly faces. In one suit brought by two disgruntled buyers, Scott reportedly denies committing fraud or making any misrepresentations about property sales. In another, Bank of America reportedly alleged in a lawsuit that Scott led a team that defrauded the bank of $1.5 million.

Thursday, December 17, 2009

Ohio AG Slams Servicer With Civil Suit; Says Homeq Peddled One-Sided Loan Modification Agreements, Violated State Consumer Protection Statutes

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Richard Cordray [...] announced a lawsuit filed against Barclays Capital Real Estate dba HomEq Servicing, headquartered in New York, for issuing unfair loan modification agreements and providing inadequate, incompetent customer service to Ohioans who were at risk of losing their homes to foreclosure. HomEq is a participant in the federal Home Affordable Modification Program (HAMP).

  • According to the lawsuit filed [...] in Montgomery County Common Pleas Court, Ohio homeowners in need of loan modifications through HomEq to save their homes from foreclosure were forced to enter into one-sided agreements. The unfair and deceptive agreements released HomEq of all liabilities and required borrowers to waive their rights to defenses and agree to pay additional fees.

  • Additionally, the lawsuit alleges that HomEq violated Ohio's Consumer Sales Practices Act (CSPA) through incompetent and inefficient customer service by failing to return consumer calls or respond to repeated inquiries, losing borrowers’ documents and failing to offer timely and affordable loss mitigation options.

For the Ohio AG press release, see Attorney General Cordray Files Suit Against HAMP Loan Servicer.

For the lawsuit, see State of Ohio v. Barclays Capital Real Estate, Inc., dba Homeq Servicing (see Exhibit A, at page 12 for sample loan modification agreement used by Homeq).

Last Of 11 Defendants Found Liable In Equity Stripping, Sale Leaseback Scam Civil Suit; MD Judge Hands Down $987K Judgment Against Racket Participants

In Baltimore, Maryland, Legal Newsline reports:
  • Baltimore City Circuit Court has handed down a judgment for Maryland Attorney General Douglas Gansler of nearly $1 million against participants in a foreclosure rescue scam.(1) [...] The judgment [among other things] requires payment of $987,030 in damages, restitution and penalties.

  • A complaint filed by the Consumer Protection Division in June 2008 alleged that the defendants had participated in an illegal foreclosure rescue scheme. The complaint alleged that the defendants, working together, promised consumers that they would save their homes from foreclosure and restore their credit ratings. The defendants instead attempted to take the titles of consumers' homes, which they would then strip of equity, a violation of the Maryland Consumer Protection Act, the Maryland Protection of Homeowners in Foreclosure Act and the Maryland Credit Services Businesses Act, it is alleged.


  • At [...] trial, each of the defendants was found to have violated Maryland law and ordered to pay the $987,030 monetary judgment.The case involved a total of 10 consumers' homes. The defendants will pay $757,030 - the amount of equity found by the court to have been stripped from the homes - and penalties amounting to $230,000.

For the story, see Gansler gains victory in foreclosure case.

For the Maryland AG press release, see Attorney General's Consumer Protection Division Stops Foreclosure Rescue Scam (Judgment Entered for Nearly One Million Dollars).

(1) Rodney Spellen, Mid Atlantic Consulting, Inc., Jemel Lyles, Absoloot Ventures Inc., Brian Boyd, 1st Choice Property Management Firm, Inc., Sahar Ali, Alan Muniu, Phillip George, Certified Title & Escrow, Inc., and Reggie Simmons were alleged to have violated Maryland's laws against foreclosure rescue scams.

A summary judgment was entered by the Circuit Court for Baltimore City on Nov. 9 in favor of the Division against each of the defendants except Reggie Simmons. A subsequent trial was held Nov. 23-24 to determine Simmons' liability as well as the appropriate measure of damages, restitution and penalties for each of the defendants.

Alleged Sale Leaseback, Foreclosure Rescue Scammers To Pay $110K & Restore Title To Property Acquired From Unwitting Homeowners Seeking Help

In Ellicott City, Maryland, The Balimore Sun reports:
  • Two Owings Mills-based mortgage firms accused of running a "foreclosure rescue scheme" have agreed to pay $110,000 in cash restitution as part of a settlement that saved the Ellicott City homes of two elderly women, one of whom has since died after becoming a victim.

  • Poor health and related bills left the two women behind on mortgage payments in 2006, when they responded to a refinancing offer contained in packets labeled "Your Best Hope has just arrived." But instead of a promised rescue from the brink of foreclosure, the women found that they had unwittingly signed away the titles to their homes and were facing eviction.

  • That's when Howard County consumer protection officials stepped in, filing suit against Stewart D. Sachs, president of Bay Capital Corp., which sent the letters; and Heavyweight Title Co. They also obtained a temporary restraining order to prevent the eviction of Betty J. Bullock, who was 63 and legally blind at the time she signed the mortgage papers, and Griselda Mason, then 68. Bullock died in October 2008 of a stroke.

  • Both women had been told they could get out of debt in two years, but were then charged rents so high that they could not afford to stay in the homes. County officials announced Tuesday that they had reached a final settlement.

  • Under the agreement, ownership of the two homes was restored to Mason and to Bullock's granddaughter, who was living with Bullock, and Sachs and Heavyweight agreed not to do any commercial lending in Howard County for three years and to never use "unfair deceptive trade practices" again in the county, officials said. In addition, Sachs is to pay $10,000 in investigation costs and restitution, and Heavyweight agreed to pay $100,000 to the victims to settle the suits. "These settlements obviously represent a tremendous victory for the individual consumers who were deceived by this foreclosure rescue scheme," said County Executive Ken Ulman in a statement.

Source: 2 mortgage firms to pay restitution in foreclosure scheme.

Attorney Cops Plea In "Seller Financing" Fraud Scam; Accused Of Using Bogus Docs To Cheat Property-Selling Clients Out Of Thousands In Building Equity

From the Office of the U.S. Attorney (New York City/Southern District):
  • PREET BHARARA, the United States Attorney for the Southern District of New York, announced that HUGH ZUBER -- a lawyer formerly employed by the Office of the Corporation Counsel for the City of New York -- pleaded guilty today to two counts of mail fraud arising from his participation in schemes to defraud two former clients. ZUBER had represented the clients, in a personal capacity, in connection with their sale of real estate to ZUBER's sister and a business associate.


  • In April 2006, a property owner retained ZUBER to represent him in the sale of a building located at 2538 Creston Avenue in Bronx, New York. ZUBER arranged the sale of the property to Alana Property Management LLC for $950,000, without disclosing to his client that his sister managed the company. At ZUBER's urging, his client subsequently agreed to accept a different sales arrangement than was reflected in the contract of sale. Specifically, ZUBER fraudulently convinced his client to accept $400,000 in cash from Alana at closing, plus a 10-year note for the balance of $550,000, which ZUBER falsely told his client would be secured by a mortgage on the property. Following the February 2007 closing, ZUBER made several monthly payments purportedly on the note, then stopped.(1)


  • In 2006, ZUBER also represented a property owner in the sale of a building located at 35 Rose Avenue in Spring Valley, New York. ZUBER arranged the sale of the property for $625,000 to an individual with whom ZUBER had a business relationship. At ZUBER's urging, his client subsequently agreed to accept from the purchaser $425,000 in cash and a $200,000 10-year note, which ZUBER falsely told his client would be secured by a mortgage on the property. Following the July 2007 closing, ZUBER made several monthly payments purportedly on the note, then stopped.(2)(3)

For the U.S. Attorney press release, see Attorney Pleads Guilty In Manhattan Federal Court To Deceiving Clients In Real Estate Deals.

For earlier reports on this story, see:

(1) According to the original charges, unbeknownst to the seller, at or around the closing of sale, Alana Property 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 unsecured note in a position inferior to the 1st mortgage. Zuber initially made periodic payments to the seller on account of the $550,000 note before ultimately stiffing him. See Criminal Complaint: U.S. v. Zuber.

(2) According to the original charges, Zuber and his co-conspirator arranged to obtain a $500,000 institutional 1st mortgage, the proceeds of which were used to fund the $425,000 cash downpayment, leaving the seller's $200,000 unsecured note in a position inferior to the 1st mortgage. Zuber initially made periodic payments to the seller on account of this note before ultimately stiffing him. See Criminal Complaint: U.S. v. Zuber.

(3) The Lawyers’ Fund For Client Protection Of the State of New York, which is in the business of reimbursing client money that is misused in the practice of law, may find itself on the hook for the losses suffered by Zuber's screwed-over clients. According to its website, the Fund may be liable for up to a maximum of $300,000 for each client loss, provided the screwed-over clients apply for reimbursement within two years after they discover their loss. There is no aggregate maximum on awards involving one lawyer, its website states. The Fund lists typical reimbursable losses to include the theft of estate and trust assets, escrow deposits in real property transactions, settlements in personal injury litigation, debt collection receipts, money embezzled in investment transactions with law clients, and unearned fees paid in advance to lawyers who falsely promise their legal services.

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

Maps available courtesy of The National Client Protection Organization, Inc.

Man Cops Plea To Using Forged Deed, Phony Mortgage Satisfactions, Unwitting Notary To Swipe Co-Owner's, Lenders' Interests In Bronx Comm'l Building

From the Office of the U.S. Attorney General (New York City/Southern District):
  • PREET BHARARA, the United States Attorney for the Southern District of New York, announced that MARK M. BENUN pleaded guilty today in Manhattan federal court to perpetrating a mortgage fraud scheme involving the sale of a $5.9 million building on 161st Street in the Bronx.

According to the relevant court documents:

  • In June 2006, BENUN and a real estate company operator (the "co-purchaser") purchased a commercial property located at 67-79 E. 161st Street, near Yankee Stadium, for approximately $9.5 million. BENUN bought the property with $4.5 million in cash that was contributed by the co-purchaser, and a $5 million mortgage to be paid by BENUN and the co-purchaser. The next month, BENUN and the co-purchaser obtained an additional $700,000 mortgage from the seller, and several months after that, BENUN obtained a $2 million line of credit from a bank, guaranteed by the co-purchaser and secured by a further mortgage on the property. BENUN held a 25 percent interest in the property; the co-purchaser held the remaining 75 percent interest.

  • In 2009, BENUN, purporting to be the sole owner of the property, sold it for approximately $5.96 million to another buyer who paid $4 million in cash and gave BENUN a note for the remaining $1.96 million. Shortly after the sale, BENUN sold the note for $1.46 million. To establish his apparent sole ownership of the building, BENUN created false satisfactions of the three mortgages on the property, and a fraudulent transfer of ownership of the co-purchaser's 75 percent interest in the property to BENUN.

  • BENUN persuaded a notary who worked across the hall from his office to notarize the forgeries, claiming that the individuals whose signatures were on the documents were stuck in traffic.

For the U.S. Attorney press release, see Property Owner Pleads Guilty In Manhattan Federal Court To Fraudulently Selling Bronx Building For $5.9 Million.

U.S. Mayors Cite Philadelphia's "Courtroom 676" Foreclosure Diversion Program For Outstanding Achievement

In Philadelphia, Pennsylvania, the Philadelphia Daily News reports:
  • The U.S. Conference of Mayors honored Mayor Nutter and Common Pleas Judge Annette Rizzo [this week] for a city program that helps homeowners who are at risk of losing their homes to foreclosure. "The Mortgage Foreclosure Protection Program was chosen because helping residents maintain home ownership is a priority for the nation's mayors," said Jocelyn Bogen, director of the conference's City Livability Awards Program. The program was picked for this year's Outstanding Achievement Award by former mayors of large cities out of a list of programs in 200 cities.


  • Under the program, outreach groups visit neighborhoods where houses are slated for foreclosure, then residents in trouble can visit Courtroom 676 in City Hall to consult with volunteer lawyers and housing advocates to negotiate their mortgages with their lender.

For the story, see City honored for mortgage-aid program.

See also, Philadelphia Inquirer: U.S. mayors laud Philly’s Mortgage Foreclosure Prevention Program.

Go here for other posts on Philadelphia's Courtroom 676.

Wednesday, December 16, 2009

Thousands Of Distressed Homeowners Left Hanging After Attorney Abruptly Chucks Law License; Calif. State Bar Urges Victims To File Restitution Claims

In San Francisco, California, KGO-TV Channel 7 reports:
  • Thousands of distressed homeowners are looking for a way to get their money back after hiring a lawyer to save their homes. The families were left in a lurch when the lawyer suddenly resigned from the State Bar. But even before his resignation, investigators were raising questions about whether the attorney was doing more harm than good.

  • James Parsa advertised heavily on both television and radio up and down the state. [...] The California State Bar told 7 On Your Side Parsa was one of 300 lawyers under investigation. "Mr. Parsa was being investigated for his loan modification activities by the State Bar based on complaints we have received from clients. And as part of our investigation we learned that Mr. Parsa had a criminal conviction in 2001," said Suzan Anderson from the California State Bar. Prosecutors convicted him of two counts of unlawful intercourse with a minor in Orange County. "The courts are supposed to report any criminal conviction to the State Bar and the attorney is supposed to report the conviction. Apparently it slipped through the system," said Anderson.

  • When the Bar learned of his conviction, it put him on interim suspension and Parsa resigned one week later. Now the State Bar is encouraging Parsa's 4,500 clients to apply for its restitution fund. "We can reimburse for an attorney actually stealing personal injury settlement funds or even taking advance fees for performing no work or any significant amount of work," said Matthew Zawol from the California State Bar. Last year, the Bar received 1,000 requests for restitution. This year that number has already topped 2,000. Many clients claim the lawyers leave them in worse shape than before they came to them.

For the story, see Attorney leaves clients facing foreclosure stranded.

(1) As suggested by the official from the State Bar of California, victims of ripoffs by California attorneys can put in a claim for restitution with the Bar's Client Security Fund which, according to their website (as of 12/16/2009), can reimburse qualified victims up to $50,000 for theft committed by a California lawyer. It covers the loss of money or property resulting from lawyer dishonesty (but not because the lawyer acted incompetently, committed malpractice or failed to take certain actions), according to The State Bar website. (Presumably, should the Client Security Fund begin to run out of cash to pay these restitution claims, The State Bar will keep the Fund replenished by making its remaining members cough up higher fees when their law licenses come up for renewal, thereby sticking them with the bill for the sins of their wayward colleagues - and in some cases, their now-disbarred ex-colleagues).

For those ripped off by dishonest attorneys in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc. loan modification upfront fees

City Of Baltimore/Wells Fargo "Ghetto Loans" Case May Be On Shaky Ground; Judge Questions City's Ability To Prove Huge Losses To Neighborhoods

In Baltimore, Maryland, The Baltimore Sun reports:
  • A federal judge raised doubts Monday about the city's ability to prove huge financial losses from houses left vacant by Wells Fargo foreclosures, the latest development in a landmark civil suit alleging a pattern of racially based, discriminatory lending by the mortgage broker. U.S. District Judge J. Frederick Motz said he might pare the case, if not outright dismiss it.


  • Baltimore's lawsuit was originally touted as the first filed by a city against a mortgage broker to recover money lost from foreclosure, though comparable suits were also filed in Cleveland and Birmingham, Ala. Both of those suits were dismissed, largely for lack of solid evidence.

  • Attorney John Relman, one of a team representing the city in the lawsuit, asked Motz for a chance to show what others could not: actual, specific data. "We can do this analysis," Relman said. "Before you make a decision ... allow us to submit that expert report." In criminal cases, prosecutors hold parties responsible regardless of their contribution to overall crime, and the same should be true here, Relman argued, adding that the case "is not going to cost millions of dollars." "This case cannot and should not be put out prematurely," he said.

For more, see City's lawsuit against Wells Fargo on shaky ground (Judge voices concern about proving foreclosures case against lender).

See also:

Go here for other posts on this lawsuit, in which some of the lender's employees were accused of using racial slurs to describe minority customers and referred to subprime loans as "ghetto loans."

Head Of Illegal House Flipping Operation Gets 27 Years; Scam Lead To 60+ Foreclosures; Collateral Damage To Surrounding Neighborhoods Pegged At $90M

In Charlotte, North Carolina, the Charlotte Observer reports:
  • A man convicted in 2007 for his role in a mortgage fraud scheme affecting homes in the Charlotte area was sentenced Monday to 27 years in federal prison. William Roosevelt Cloud, 62, also was ordered to pay more than $880,000 in restitution to several financial institutions. Cloud was convicted two years ago of crimes including mortgage fraud conspiracy, bank and mail fraud.(1)


  • He and others would recruit people to buy homes, sometimes promising to help them rent out homes and sell them later for a profit. In some cases, promoters and brokers would arrange for an inflated appraisal of a property, purchase the home at the lower fair market value, then sell the property to a buyer at the inflated price. The transactions sometimes would occur on the same day. Eighty percent of the homes purchased with Cloud's direct involvement went into foreclosure, U.S. District Judge Frank Whitney said. [...] Whitney called Cloud the main organizer in the scheme, saying he was able to convince some licensed professionals to breach their responsibilities.

  • The judge and prosecutors also said that Cloud caused or contributed to more than $19 million in losses. An expert who testified for prosecutors, however, pegged the collateral damage to the communities around the more than 61 foreclosed properties at nearly $90 million.

For more, see Mortgage conspirator sentenced to 27 years (80 percent of the homes involved in the scheme, which falsely inflated house values, landed in foreclosure).

(1) Reportedly, at least 19 others have pleaded guilty as co-conspirators in the scheme, including three attorneys, five mortgage brokers and an appraiser.

At Least Ten Individuals, Firms Found Liable In Civil Suit For Running Equity Stripping Racket Disguised As Foreclosure Rescue Help

The Maryland Mortgage Fraud Task Force members recently announced this successsful civil lawsuit by the Office of the Maryland Attorney General - Consumer Protection Division:
  • The Office of the Maryland Attorney General, Consumer Protection Division, filed a complaint in Baltimore City Circuit Court against [a foreclosure rescue group], alleging that the defendants promised to save consumers' homes from foreclosure and restore their credit when, instead, they attempted to take title to the homes and strip the home equity.

  • On November 9, 2009, the court entered summary judgment as to liability in favor of the Consumer Protection Division and against each of the defendants except Reggie Simmons. A trial was held on November 23rd and 24th, 2009 to determine Simmons' liability, and the appropriate measure of damages, restitution, penalties and costs for each of the defendants. A decision has not yet been issued by the court. The case was originally investigated and referred by the Maryland Department of Labor, Licensing and Regulation - Division of Financial Regulation.

Source: Maryland Mortgage Fraud Task Force Announces Progress And Plans (Consumer Protection Division v. Rodney Spellen, et al.).

(1) Those named as defendants were: Rodney Spellen, Mid Atlantic Consulting, Inc., Jemel Lyles, Absoloot Ventures Inc., Brian Boyd, 1st Choice Property Management Firm, Inc., Sahar Ali, Alan Muniu, Phillip George, Certified Title & Escrow, Inc. and Reggie Simmons.

Title/Escrow Agent Swiped $500K+ In Closing Proceeds, Failing To Record Deeds Or Pay Off Existing Liens In The Process, Say Maryland Feds

The Maryland Mortgage Fraud Task Force members recently announced this recently filed federal indictment:
  • A federal grand jury [...] indicted Daniel E. Fink Jr., age 43, of Baltimore, for wire fraud and money laundering. Fink owned and operated Homemaxx Title & Escrow LLC, a title company that conducted residential real estate closings with offices in Middle River and Parkville, Maryland.


  • Fink is alleged to have caused Homemaxx to fail to pay outstanding first mortgages on real estate transactions or to record deeds in the real estate records of local and state governments. Fink allegedly transferred substantial amounts of money from a Homemaxx escrow account into other Homemaxx accounts, as well as to accounts not associated with Homemaxx, and used the money intended to be disbursed pursuant to a HUD-1 for personal expenditures unrelated to real estate transactions. [...] As a result of this scheme, Fink is alleged to have defrauded lenders and homeowners of more than $500,000. The indictment seeks the forfeiture of this amount.

Source: Maryland Mortgage Fraud Task Force Announces Progress And Plans (United States v. Daniel Fink, Jr.).

Tuesday, December 15, 2009

Minnesota Couple Faces Foreclosure, Ruined Credit After Now-Disbarred Closing Attorney Swipes Refinancing Proceeds, Leaving Existing Loans Unpaid

In Forest Lake, Minnesota, the Pioneer Press reports:
  • When Julie Tarlizzo and Reed Erickson refinanced their home and cabin mortgages in April, the transactions should have been routine. [...] But shortly after the closing, the couple received a jolt from the mortgage company that arranged for the refinance: The lender said more than $400,000 wired to an escrow account to pay off the old mortgages had been stolen. Eight months later, the matter has not been resolved and Tarlizzo and Erickson fear they might lose their homes.

  • Despite a seemingly endless series of phone calls and e-mails to lenders, regulators and politicians, the couple remains in a precarious situation because the old mortgages still haven't been paid off. Meanwhile, there's no word of criminal charges against the attorney who allegedly stole the money — even though state Supreme Court records show he was disbarred in the summer after admitting to improperly withdrawing more than $2 million in escrow funds.(1)

For the whole story, see Forest Lake couple mired in mortgages (A Forest Lake couple decided to refinance mortgages on their home and cabin to take advantage of low interest rates. But escrow funds disappeared and the lenders and a title company claim they're victims of fraud, just like the homeowners).

(1) According to the story, the state Supreme Court disbarred attorney Jason E. Fischer, an owner of Real Source Title, in July following a petition for disciplinary action from the court's Office of Lawyers Professional Responsibility, according to court records.

"In connection with the operation of the mortgage closing business (Fischer) received funds that were to be deposited into an escrow account and used to pay off mortgages and other expenses related to residential real estate closing," the petition stated. "Starting in 2006 and continuing through April 2009 respondent improperly withdrew over $2 million in funds from the Real Source Title escrow account and converted them to his own use." In a stipulation that Fischer signed June 30, he unconditionally admitted the allegations of the petition and noted that he self-reported his misconduct to the lawyer discipline group and to the U.S. Attorney, the story states. EscrowRipOffKappa

Loan Mod Firm Facing FTC Charges Continues Leaving Customers Hanging, Say Unhappy Homeowners; Outfit Changes Name & Continues Operating: Feds

In Bradenton, Florida, WFTS ABC Action News Channel 28 reports:
  • The Vanderford's weren't living beyond their means. They have a modest house in a working class Bradenton neighborhood where they've lived for 16 years. But 18 months ago, Tammy [Vanderford] lost her factory job and her husband's hours were cut at his. They could not longer pay their mortgage and they needed help. So the Vanderford's turned to Miami based loan modification company Truman Foreclosure Assistance, which, as it turned out, resulted in matters going from bad to worse.


  • At first there were weekly calls, regular status reports. [...] But then, the Vanderford's say, the updates stopped. The run around began. Their calls were no longer returned. Finally came word Truman was out of business.


  • [T]he Florida Attorney General's office says it received 68 complaints in the past two years against the company, resulting in action by the Federal Trade Commission.(1) But here's another all too common story. According to the FTC, it turns out the owners of Truman didn't go out of business. They simply changed the company's name to the Franklin Financial Group and moved their office to another part of Miami.(2)

For the story, see INVESTIGATION: Loan modification program leaves family with nothing.

In a related story on Truman Foreclosure Assistance, see WTVJ-TV Channel 6: Miami Mortgage Rescue Firm's Vanishing Act (Truman Foreclosure Assistance accused of taking money and skipping town).

(1) The FTC also named Truman Mitigation Services, LLC, Franklin Financial Group, US LLC, Eli Hertz, Benzion Jack Itzkowitz a/k/a Jack Itzkowitz, and Richard Zafrani a/k/a Rick Zafrani as additional defendants in their lawsuit. The FTC alleged that the individual defendants formulated,directed, controlled, had the authority to control, or participated in the acts and practices of the Truman Foreclosure Assistance/Truman Mitigation common enterprise (FTC lawsuit, paragraph 12).

(2) See FTC lawsuit, paragraph 13.

Maryland AG Charges Mortgage Broker With Felony Theft; Accused Of $100K+ Ripoff Of Proceeds From Client's Home Refinance

According to the Office of the U.S. Attorney in Maryland, the Maryland Mortgage Fraud Task Force members recently highlighted their progress in a press conference, including the filing of criminal, civil, and regulatory actions against more than 250 individuals and companies in 2009, including this recently filed case:
  • On December 8, 2009, the Maryland Attorney General’s Office charged David Young Park, age 43, the former President of Capital City Financial Group in Ellicott City, with theft in Baltimore County Circuit Court. In June of 2007, Park was allegedly working as a mortgage broker and assisted the victim with the refinance of her home. The victim intended to use the more than $100,000 in equity to purchase a commercial condo for her business. Following settlement, Park allegedly obtained the victim’s proceeds from the title company without the victim’s knowledge, deposited them into his escrow account and spent the money on various personal and business expenses over the course of two weeks.

Source: Maryland Mortgage Fraud Task Force Announces Progress And Plans (State of Maryland v. David Young Park). EscrowRipOffKappa

Maryland Regulator Suspends Mortgage Originator's License In Connection With Alleged Bogus Sale Leaseback, Foreclosure Rescue Equity Stripping Scam

The Maryland Department of Labor, Licensing and Regulation's Office of the Commissioner of Financial Regulation recently announced enforcement actions against entities and individuals accused of illegal activities that victimized Maryland homeowners, including an outfit accused of violating state law in connection with an alleged bogus sale leaseback, foreclosure rescue equity stripping scam:
  • Summarily suspended the mortgage loan originator license of Nicholas Elko for allegedly engaging in an illegal foreclosure rescue scheme in violation of Maryland's Protection of Homeowners in Foreclosure Act.

  • Elko, who worked with Baltimore-based Equitable Trust Mortgage Corp., obtained the title to a Maryland residential property in foreclosure after promising the homeowner that he would convey title back to her after a period of time. Instead, Elko allegedly refinanced the property multiple times through Equitable Trust Mortgage. Each time that the property was refinanced, Elko stripped more and more equity out of the home, ultimately conveying the property to his mother.

For the press release, see DLLR's Financial Regulation Division Targets More Mortgage Scams.

Dozens Air Out Grievances Against Southern California Attorney Accused Of Pocketing Thousands For Mortgage Litigation Services & Leaving Them Hanging

In Glendale, California, the Glendale News Press reports:
  • Dozens of homeowners claim they paid for loan litigation services with Los Angeles-based Bander Law Firm and never saw any legal action taken in their cases, causing some homes to foreclose. The homeowners gathered Saturday for a news conference inside a Glendale Days Inn Motel banquet hall, where several signs calling for attorney Joel Bander’s disbarment lined on the walls.


  • [H]omeowners at the news conference called on attorneys who are suing the law firm to give them advice on their next move. “You guys have been cheated in the worst way that I could possibly imagine,” attorney Anne Singer said. “Going to a lawyer, asking for help and not only having your money being taken away from you, but many of you losing your homes, and from what I understand some of you have been put in bankruptcy without your knowledge.”


  • Montrose attorney John Miller represents 20 clients who sought help from the law firm. He filed a complaint, which is still pending, with the State Bar of California against the law firm in September, said Singer, who spoke on behalf of Miller.

For the story, see Residents: Attorney cheated us (Group claims Bander Law Firm took money without solving home problems). loan modification

Monday, December 14, 2009

Maryland Loan Officers Charged In Alleged Foreclosure Rescue Scam; Used Bogus Sale Leasebacks To Pocket $650K In Equity Stripping Proceeds, Say Feds

In Annapolis, Maryland, The Capital reports:
  • James William Fox II, 39, of Crofton, and James Hooper Dan, 45, of Annapolis were indicted this week in a mortgage-fraud scheme, officials announced [last week]. The two could face 40 years in prison if they are found guilty. According to the indictment, the two were loan officers employed at Charm City Investment Group LLC in Annapolis. From April 2006 to February 2009, the two allegedly identified victims who were unable to make the mortgage payments on their homes. The two promised to help the victims avoid foreclosure, but instead allegedly obtained new mortgage loans in their own names or in the names of "straw purchasers."


  • Because of the fraud scheme, Fox and Dan allegedly caused lenders to lose more than $1.7 million in fraudulently obtained mortgage loans and caused the individual victims to lose more than $650,000 in equity in their homes. The indictment seeks the forfeiture of the total loss of $2,350,000.

For more, see 2 indicted in mortgage scheme (Local brokers allegedly target struggling homeowners).

See also U.S. Attorney press release: Maryland Mortgage Fraud Task Force Announces Progress And Plans (United States v. James Fox II and James Dan).

Eastern Pennsylvania Man Pocketed $655K+ In Sale Proceeds On Properties He Didn't Own & $168K Due To Investors, Feds Charge

In Doylestown, Pennsylvania, the Allentown Morning Call reports:
  • A 36-year-old Bucks County man is facing federal charges in a real estate investment scheme prosecutors say bilked investors of nearly $1 million. Roman R. Fitzmartin, former operator of the Doylestown Investment Group, was charged with mail fraud in a two-count information [...]. According to the U.S. Department of Justice, Fitzmartin sold interest in three properties -- two of which he did not own -- and diverted the money to his own accounts instead of paying investors, who lost a total of $872,719.(1)

  • Fitzmartin allegedly sold equity interest in a commercial property [...] in Doylestown and a piece of land in Douglassville, Berks County, but he did not have a stake in either property. Federal authorities say he received $655,000 for both properties. He also sold a property he owned at [...] in Doylestown and allegedly kept $168,763 that should have been paid to investors, authorities said.

For more, see Doylestown man charged with real estate fraud.

(1) For additional background on Fitzmartin's real estate operation, see this 4/11/2007 Pennsylvania Securities Commission press release: Commission Halts Unregistered Activity By Doylestown Investment Group, LLC and Roman Fitzmartin:

  • The Pennsylvania Securities Commission issued a Summary Order to Cease and Desist against Doylestown Investment Group, LLC (DIG) and Roman Fitzmartin (Fitzmartin) to halt the offer and sale of unregistered securities in Pennsylvania. MIG, an entity with an address in Doylestown, Pennsylvania, is purportedly in the business of purchasing, developing, and managing various real estate properties, and maintains a web site at (Web Site). Fitzmartin, an individual with an address in Doylestown, Pennsylvania, was the president of DIG.

Boston Feds Charge Two In Alleged Condo Conversion, Straw Buyer Mortgage Scam; Nine Units In Four Triple Deckers Wind Up In Foreclosure

From the Office of the U.S. Attorney (Boston, Massachusetts):
  • A former Dorchester man and a Wrentham mortgage broker were charged in federal court with wire fraud and money laundering in connection with a mortgage fraud scheme which generated more than $1 million in profits and sending nine properties into foreclosure.


  • The Indictment alleges that from about August 2006 through February 2007, [DWIGHT] JENKINS and his associates recruited “straw buyers” for the purchase of nine properties for which [ERIC J.] ARCHAMBAULT brokered the mortgages. The nine properties identified in the Indictment were individual units in triple-deckers at 77, 80 and 85 Draper Street, and 35 Harwood Street, all in Dorchester. These properties had been converted to condominiums shortly before the sales to the straw buyers.

  • It is alleged that, although the straw buyers took title to the properties and obtained mortgages to finance the purchases, none of the straw buyers actually intended to live in the condominiums they bought or intended to repay the loans. Instead, it is alleged that JENKINS and his associates promised the straw buyers that JENKINS, or his company, would pay the mortgages, maintain the properties, find tenants and then re-sell the properties. JENKINS and his associates allegedly promised most buyers they would be paid a fee for the use of their names and credit histories in securing the loans.(1)

For the U.S. Attorney press release, see Two Charged In $1.3M Residential Mortgage Fraud Scheme.

(1) The Feds also allege that a slew of misrepresentations were made to the lenders in obtaining the necessary financing from them.

Philadelphia's Courtroom 676 Featured On ABC News' Nightline

In Philadelphia, Pennsylvania, ABC News' Nightline ran a story last week on Courtroom 676, the home of the city's Residential Mortgage Foreclosure Diversion Pilot Program, a court program that helps strike deals that lower monthly payments for borrowers facing foreclosure with the view of helping them retain their homes. According to an earlier story, when a homeowner cannot afford the home even at modified terms, the program helps to create a graceful exit, in which the borrower accepts cash for vacating the property or signs over the deed in lieu of further payment.

For the story (video only), see Save My Home (See a Philadelphia judge's efforts to fight foreclosure).

Go here for other posts on Philadelphia's Courtroom 676.

In a related story, see WGAL-TV Channel 8: County Judge Recognized For Saving Homes From Foreclosure (Program Helped Save 2,000 Homes From Sheriff Sale):
  • [Philadelphia] Judge Annette Rizzo received an award in Harrisburg Friday from the Housing Alliance of Pennsylvania. Rizzo created a program one year ago that brings all parties face-to-face and has saved more homes from foreclosure than any county in the country.

Sunday, December 13, 2009

State Regulator Issues C&D Order Against Northern Virginia-Based Loan Modification Group Targeting Maryland Homeowners

The Maryland Department of Labor, Licensing and Regulation's Office of the Commissioner of Financial Regulation recently announced enforcement actions against entities and individuals accused of illegal activities that victimized Maryland homeowners, including an outfit accused of violating state law in connection with providing loan modification services:
  • Issued a Summary Order to Cease and Desist against The Shmuckler Group, LLC, Nova Key, LLC, Howard R. Shmuckler, Alon Fisch, and Ted Dubin for allegedly engaging in illegal loan modification activities. They are accused of collecting up-front fees from Maryland homeowners in default on their residential mortgage loans, in exchange for promises to assist them in obtaining a loan modification from their mortgage lender.(1)

For the press release, see DLLR's Financial Regulation Division Targets More Mortgage Scams.

In a related story, see The Huffington Post: Shmuckler Group: Another Mortgage Rescue Firm Accused Of Scam.

(1) According to the press release, by failing to obtain a Maryland credit services business license, and by collecting up-front fees prior to completing all promised services, the group's activities allegedly violated the Maryland Credit Services Businesses Act and the Protection of Homeowners in Foreclosure Act. These Respondents allegedly collected a total of over $1.2 million in up-front fees while promising to modify 372 different Maryland residential mortgage loans (charging an average of $3,440 in up-front fees to each Maryland resident, with amounts varying between $1,750 and $6,000). Respondents allegedly obtained loan modifications or analogous results in only a quarter of those cases, yet refused to provide any refunds to Maryland consumers. These Respondents operate primarily out of Northern Virginia, the press relates states.

Cops Seek Out More Victims After Charging Suspect In Metro Detroit Alleged Loan Modification Scam Probe

In Roseville, Michigan, WDIV-TV Channel 4 reports:
  • 48-year-old Grosse Pointe Woods man who had warrants for his arrest in four metro Detroit communities(1) in connection with a mortgage fraud investigation was charged Friday in a Roseville courtroom. The Roseville Police arrested Bryan Cervier early Thursday morning. Judge Matt Rumora charged Cervier [...] with one count of false pretenses.

  • Cervier is accused of running a fraudulent mortgage consulting business. Investigators said he would pose as a financial adviser and then he would meet with homeowners who were on the verge of losing their homes to foreclosure. Cervier told the victims that for a fee, he would renegotiate the terms of their mortgages in order to stave off foreclosure. The victims would pay the fee, and then they would never hear from Cervier again.

For more, see Man Charged In Mortgage Fraud Scheme (Police Looking For More Victims).

(1) According to the story, investigators said they believe Cervier may have scammed many other people. He's wanted in Redford, Saline and West Bloomfield on no bond felony warrants. Other victims of this mortgage scam are urged to call their local police department.

Struggling Homeowners Accuse Soon-To-Be Suspended & Recently Foreclosed Upon Attorney Of Fleeing With Fees After Promising Loan Modification Help

In Phoenix, Arizona, KPHO-TV Channel 5 reports:
  • Fernando Sanchez was one of the [dozens of people 5 Investigates reportedly found victimized by scam loan modification companies]. He was barely making ends meet when he heard about an opportunity to reduce his mortgage, from $2,300 per month to $900 per month. "They told me to go to this meeting to see what it was about … and these people allegedly have an attorney and a translator," he said. Sanchez paid $1,000 to sit in a garage in a residential neighborhood set up with tables and chairs for the meeting. The attorney charged $6,000 for the loan modification.

  • Dora Fuentes had already lost her home when she signed up to work with the same lawyer. "He never told us that we were in foreclosure or that the house was no longer ours," she said. According to documents Fuentes provided, the lawyer took her money anyway. She lost her house, and the lawyer disappeared.(1)(2)

For more, see Expert: Loan Mod Scams Common (Immigrants Seem Especially Vulnerable, Mortgage Broker Says).

(1) The story states that Robert Jung, the attorney who offered to modify Sanchez and Fuentes' loans, was working with a company known as "Stop Foreclosure Wizard." His law license is set to be suspended Jan. 2, according to the story [Jung's history available on the Arizona Bar website indicates the suspension date is January 4]. Jung did not return numerous phone calls, and when 5 Investigates tried to visit the address listed in its corporate records, they discovered Todd Carpenter's home. According to the story, Carpenter said he recently purchased the home at a foreclosure auction, and for weeks, he wondered why non-English-speaking families would show up looking for Jung. "Finally, I said, 'What are you looking for him for?'" Carpenter said. "And they said, 'Well, we paid him to modify our loan. And I told them I said I don't think you're going to get your loan modified because (Jung) lost this house."

(2) The victims in this story might want to check out the Client Protection Fund of the State Bar of Arizona to see if they can qualify to recover any of their losses from the Fund as a result of the alleged dishonest screwing over by this reportedly not-yet-suspended attorney.

For those victimized by dishonest attorneys in other states and Canada, see:

Financial Hole Becomes Bigger For Struggling Homeowner After Hiring Loan Modification Outfit That Pocketed $2.5K By Promising Help

In San Antonio, Texas, the San Antonio Express News reports:
  • When family medical bills soared, Norma Baker missed a mortgage payment. And when she decided to rectify that financial slip, she and her husband hired a San Antonio mortgage loan modification company to negotiate with Wells Fargo on their behalf. The firm, Xpert Loan Modifications, charged the Bakers $2,500 upfront for its services. But now the Bakers owe the bank around $9,000 and face foreclosure in January.


  • Miguel Gonzalez of Xpert Loan Modifications said he has successfully guided many other families through loan modifications, and that his company provides a valuable service to people who don't have the expertise or time to call the banks themselves. “I didn't just pop up and say, ‘I'm going to scam people,'” said Gonzalez. “They are going to be in the house if she would just let us do our job.” The fee compensates Gonzalez for his work and will be used to hire an attorney,(1) if needed, to try to stop the Baker's foreclosure, he said.


  • Baker said Wells Fargo recently told her there was no loan modification in the works for her property. She is concerned that her family could end up homeless next month.

For more, see Homeowners' woes unresolved.

(1) If the rules in Texas are anything like the rules in California, Florida, Ohio or other states, this character risks being accused of unlicensed practice of law for conduct as an intermediary in hiring out an attorney to represent the homeowner. An attorney taking a case on this basis also risks being slammed for aiding a non-lawyer in the unlicensed/unauthorized pratcice of law, among other things. See:

NC Shuts Down Purported "Non Profit" Loan Mod Outfit; Clipped Homeowners For Up To $1,500 Upfront, Failed To Honor Money Back Guarantee, Says State AG

In Raleigh, North Carolina, North Carolina News Network reports:
  • A judge has barred a Kannapolis-based foreclosure assistance firm from doing business. State Attorney General Roy Cooper had sought the action. Cooper accuses Geoffrey Lamb of Cabarrus County, doing business as The Lamb Group and US Business, of charging consumers up-front fees of as much as $1,500 but doing little to help them. “We’ve made it illegal to take money up-front for foreclosure or loan modification help, and we’re cracking down on violators,” said Cooper.

  • A complaint also alleges that Lamb stated on his website that his firm was a “non-profit foreclosure relief organization” with a “success rate of 97%.” Wake County Superior Court Judge Donald Stephens agreed with Cooper’s request to temporarily bar Lamb from offering foreclosure and loan modification services. Cooper contends that Lamb promised a full refund if a consumer’s lender did not offer to rework their loan. The complaint alleges that Lamb failed to get loans modified but still refused to give consumers their money back.(1)

Source: AG Cooper Cracking Down On Foreclosure Assistance Scams.

(1) According to the North Carolina Attorney General's Office (see AG Cooper stops Kannapolis foreclosure scam), a total of six consumers have filed complaints about Lamb with the Attorney General’s Consumer Protection Division. Nine consumers complained to the Better Business Bureau of the Southern Piedmont, which assisted in the investigation. The case against Lamb is part of a national crackdown on foreclosure rescue and loan modification scams brought by 26 federal and state agencies, the NC AG stated. Also included in the 118 case sweep was another case brought by Cooper last week against Campbell Law Firm and Rudolph C. Campbell of Florida, which is pending in Wake County Superior Court, according to the NC AG press release.

Maine AG Tags Three Out-Of-State Firms With Civil Suits Alleging Illegal Loan Modification Activity

From the Office of the Maine Attorney General:
  • The Maine Attorney General has filed three separate lawsuits in Kennebec County Superior Court against three out-of-state businesses and their principals. The defendants are: Elect Group, LLC, Anthony Ferlanti and Emmanuele Zuccarelli (Florida); Help Modify Now Debt Solutions, Inc., Help Modify Now, Inc. and Chas Bain (California and Nevada); and US Advocate Law Group, P.C. and Jeff Nemerofsky (California).

  • These lawsuits allege that the defendants used deceptive and unfair practices in marketing so-called “debt settlement” services, in the form of foreclosure rescues and mortgage modifications, and that they failed to register as debt management services under Maine law.(1) The suits seek the recovery of fees paid by Maine consumers to these defendants, as well as civil penalties and costs.

For the Maine AG press release, see Attorney General Sues Unlicensed Foreclosure Rescue/Mortgage Modification Companies.

(1) According to the press release, the State alleges that the defendants’ illegally high upfront charges ranged from $1,000.00 to $4,300.00. Maine law prohibits debt management service providers from charging more than a $75 set-up fee and for charging more than 15% of the amount by which the consumer’s debt is reduced as part of each settlement. The State also alleges that the defendants misrepresented the benefits of their programs to consumers and refused to provide refunds when consumers asked for them after the defendants failed to prevent foreclosure. As a result, many Maine consumers found themselves in more dire financial straits than they were before they engaged the defendants, the press release states.

Idaho Joins Nationwide Federal/State Effort To Slam Upfront Fee Loan Modification Rackets

From the Office of the Idaho Attorney General:
  • Attorney General Lawrence Wasden joined the Federal Trade Commission and 26 other state and federal regulatory agencies in Operation Stolen Hope, a nationwide enforcement and consumer education effort to combat foreclosure rescue fraud. [...] Wasden recently filed a lawsuit against a Kootenai County mortgage modification company, APS Northwest Idaho LLC, for numerous violations of the Idaho Consumer Protection Act. A similar lawsuit against Coeur d’Alene based Apply 2 Save is pending, although the now-closed company is in bankruptcy. The Attorney General also reached a separate settlement with a former Apply 2 Save executive.

For the Idaho AG press release, see Idaho Joins Operation Stolen Hope.