Thursday, December 16, 2010

Philly Feds Continue Attack On Equity Stripping Sale Leaseback Peddlers; Indict 4, File Civil Suit In Alleged Racket Involving 120 Properties

In Philadelphia, Pennsylvania, the Philadelphia Inquirer reports:
  • The U.S. Attorney's Office in Philadelphia filed criminal charges Tuesday against the operator of a local mortgage foreclosure rescue scheme involving $31 million in fraudulent loans on 120 properties.

  • Anthony J. DeMarco III offered to buy the houses of people facing foreclosure, allowing victims to stay in the houses and pay rent until they recovered financially and could buy the house back, the government said. In reality, the indictment alleged, DeMarco's real estate companies, DeMarco REI Inc. in Philadelphia and OPM Group L.L.C. in King of Prussia, lined up straw buyers for the houses, used fraudulent documents to obtain mortgage loans, and stole $11 million in the process.

  • Authorities arrested DeMarco, 31, of Conshohocken, on Tuesday. He is being held pending a detention hearing Friday. His attorney, Chris Warren, did not return a call seeking comment. A call to DeMarco's residence in Conshohocken before the arrest was not returned.


  • In what it called a novel move, the U.S. Attorney's Office on Tuesday asked U.S. District Judge Michael M. Baylson for broad relief that would stop evictions and foreclosures related to DeMarco's companies.(1)

  • Robert P. Cocco, a Philadelphia consumer lawyer who has several cases pending against DeMarco, welcomed that effort. "It helps save the victimized homeowner the emotional and financial burden of foreclosure defense or stay of sheriff sale," he said.

  • Also charged in the 15-count indictment were DeMarco REI employees Michael R. Roberts and Eric Boscove, as well as Sean Ryan, a title agent at Settlement Engine Inc. of Pittsburgh. Ryan allegedly played a vital role in the scheme by helping to make fake the down payments needed for the loans. Charges include conspiracy, mail fraud, bank fraud, and money laundering. Only Ryan could be reached Tuesday. Contacted at his work number, he said: "No comment."

Source: U.S. charges local foreclosure-rescue operator with fraud.

For the U.S. Attorney (Philadelphia) press release, see Charges & Civil Complaint Filed In Foreclosure Rescue Scheme (Civil Complaint Seeks Help For Scam Victims Facing Foreclosure).

For the charges brought in this criminal/civil, 'dual' prosecution, see:

See Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals for other incidents that led to criminal prosecutions in sale leaseback deals.

(1) The novel move here is that, in addition to bringing the criminal indictment against the four suspects, the U.S. Attorney's Office has also filed a civil lawsuit against DeMarco and his two companies in an attempt to, according to the civil complaint (see U.S. v. DeMarco REI, Inc., et al, at paragraph 5):

  • "seek[] relief that will extend beyond the parties to reach the homeowners, the "straw" purchasers, and the mortgage lenders. One purpose of the action is to bring all the individuals and entities that have a stake in the properties before the Court to create an orderly process by which the damage caused by the defendants' fraud can be mitigated. That process, sanctioned by the applicable statutes, will mean that non-party, non-defendants should be enjoined from engaging in any transactions that will affect the properties at issue here."