Saturday, January 09, 2010

Ex-Cop Fleeces Dementia-Suffering Aunt Of £140,000; 97-Year Old Victim Lived In £450,000 House, Now Relegated To Nursing Home

In Portsmouth, U.K., Portsmouth Today reports:
  • A FORMER police officer fleeced his 97-year-old aunt out of £140,000 so that he could live the high life. Jonathan Bowerman – the equivalent of a Detective Inspector in Australia before retiring – had taken control of her finances as she suffered from dementia. In doing so, the 64-year-old helped himself to her money, spending thousands on business-class flights, putting his two daughters through private school and eating at top restaurants. He bought himself a brand new £18,000 Volvo, visited the London Eye and Madame Tussauds and cleared debts of 50,000 Australian dollars. His aunt, Phyllis Boxer, lived in a £450,000 house in Portsmouth Road, Horndean, but following Bowerman's deceit is now in a care home on Hayling Island.

For more, see Former police officer helped himself 97-year-old aunt's money.

Attorney Disbarred For Using Jailed Client's I.D. To Open Four Credit Cards; Lawyer Also Held POA Over Sale Of Home

In Gloucester, Massachusetts, the Gloucester Daily Times reports:
  • Ennio Cataldo, 47, who lived in Gloucester and had a practice [...] in Peabody, had admitted in court last May to credit card fraud, identity fraud and felony larceny, according to notice from the state's Board of Bar Overseers. The charges stemmed from his use of a client's identity to open four credit cards. The client had given Cataldo power of attorney over several matters, including her divorce and the sale of her home, while she was serving a jail term.(1) [...] The Board of Bar Overseers — which works under the state's Supreme Judicial Court — formally issued its formal judgment of disbarment for Cataldo in a letter mailed Dec. 18.

For the story, see Lawyer disbarred over fraud, other misconduct (Gloucester resident who worked as a lawyer out of Peabody has been disbarred after a series of misdeeds — including committing identity fraud against a client while she was in jail, and taking money to file a trademark application and then never sending it in).

(1) Reportedly, Cataldo had used the credit cards to purchase tires for his car, pay for dry cleaning and buy tickets to see singer Andrea Bocelli, among other expenditures. I suppose the jailed woman should consider herself lucky that Cataldo didn't exercise the power of attorney to sell her home out from under her.

Nursing Home Resident Fleeced Of $160K+ By Power Of Attorney-Holding Employee, Say Cops

In Shenendoah, Pennsylvania, the Republican Herald reports:
  • A Girardville woman charged with stealing more than $160,000 over a two-year period from an elderly woman she befriended waived her right to a preliminary hearing Wednesday [...]. Michelle A. Connors, [...] is charged with two felony counts each of theft by unlawful taking and receiving stolen property. By waiving her right to a hearing, Connors will now have to answer to the charges in Schuylkill County Court. The woman remains free on $5,000 bail that was posted for her at the time of her arraignment earlier this year.

  • Connors was arrested by Shenandoah police Patrolman Joseph Hall and Dolores Malec of the Schuylkill County District Attorney's Elder Abuse Unit and charged with taking the money between November 2006 and September 2008. Investigators said the thefts occurred while Connors had power of attorney for Mary O'Connell, now in her 90s. Hall said that in November 2006, Connors took over the woman's assets that totaled $222,692.61 and had control of the money until Sept. 11, 2008.

  • During that time, both Hall and Malec said Connors, who befriended O'Connell when she was a resident of a local nursing facility where Connors worked, bought items including a camera, computer and a cell phone using money from the woman's account. Connors also made numerous ATM withdrawals and large counter withdrawals from the bank, including $5,000 that she used to fix a roof, Hall said. He said Connors also withdrew $10,000 she said was to prepay for O'Connell's funeral. The prepayment was actually $7,110 and Hall said Connors never returned the remaining $2,890.

  • In all, Hall said Connors stole $160,468.93 in addition to the money never returned after paying for the funeral.

Source: Girardville woman waives hearing in elder abuse case.

San Francisco Court System Slammed For Judicial Bias Against Renters; Area Judges Refuse To Follow Laws Protecting Tenants, Advocate Says

Dean Preston, an attorney and director of Tenants Together, California’s Statewide Organization for Renters’ Rights, writes in BeyondChron:
  • As 2009 drew to a close, the Appellate Panel at SF Superior Court quietly upheld the eviction of long-term San Francisco resident, Susan Suval. Without any explanation, the court rubber-stamped the erroneous trial court ruling that allowed a landlord to invoke the Ellis Act(1) despite a written agreement with the City that he would do no such thing. The case stands as the latest example of judicial bias against renters in San Francisco’s Superior Courts. Despite its progressive political climate, San Francisco continues to be one of the worst places in California when it comes to judicial bias against tenants.

For more, see Judicial Bias Out of Control in SF Superior Court.

(1) The Ellis Act is a California state law that allows a landlord to boot a tenant against whom there may be no apparent reason for eviction if the landlord intends to move into and occupy the property.

Miami Foreclosure Actions Stall As Mediators Have Trouble Locating Delinquent Homeowners

In Miami, Florida, Miami Today reports:
  • Since Miami-Dade County launched a pilot program to mediate home foreclosures filed in the clogged court system seven months ago, about half the cases have stalled because mediators can't find borrowers. Of 14,000-plus foreclosures referred to mediation to seek agreement with a lender and avoid foreclosure in court, about 7,000 haven't advanced because mediators can't reach homebuyers. Sometimes the borrower has left the home or the address provided is wrong, said Rod Petrey, president of Collins Center for Public Policy, a non-profit running the pilot.

  • An area that needs work is definitely making sure lenders provide accurate contact information, Miami-Dade Civil Division Administrative Judge Jennifer Bailey says. Of the remaining cases, about 65% have reached workouts, Mr. Petrey said.

For more, see Miami-Dade foreclosure cases stall: 50% vanish.

Woman Returns To Previously-Vacated Home After Lender Abandons Foreclosure Suit; Seeks To Stop Demolition, Says City Failed To Serve Her With Notice

In Mansfield, Ohio, the Mansfield News Journal reports:
  • The City Planning Commission gave Tina L. Smith-Powell two weeks to explain how she'll manage to make $50,000 to $60,000 worth of repairs to a deteriorated house. Smith-Powell is appealing a demolition order on 152 W. First St.


  • Attorney Joe Olecki said Smith-Powell never received official notice of pending demolition, raising legal issues. "They (building and codes) were sending it to the mortgage company's address, and not to her," he said. [...] Building and codes manager Linda Price said the demolition notices were sent to the address listed on the county auditor's Web site -- which listed Smith-Powell's name, but an address for the mortgage company.

  • Smith-Powell said she moved out of the house after the mortgage company began foreclosing, believing she no longer owned it. The mortgage company later declared bankruptcy, abandoning the foreclosure action -- but she was not aware of that until October. [...] Commission members tabled making a decision on the appeal, saying Smith-Powell has many questions to answer. She was asked to return in two weeks with cost estimates for all repairs needed to bring the house to code, a plan for how she'd pay for or accomplish that, and a timeline.

For the story, see Woman tries to save her First Street home.

Friday, January 08, 2010

Operators Of Section 1031 Qualified Intermediary Ripped Off Real Estate Investors' Escrow Deposits In $25M Ponzi Scheme, Say N. California Feds

From the Office of the U.S. Attorney (San Jose, California):
  • John D. Terzakis, of Hinsdale, Ill., and Robert E. Estupinian, of San Jose, Calif., were arraigned [...] in federal court for 12 felony counts of wire fraud, money laundering, and conspiracy to commit wire fraud and money laundering, in an indictment that accused the pair of operating their company, Vesta Strategies, as a Ponzi-scheme, United States Attorney Joseph P. Russoniello announced.
  • The indictment alleges that Terzakis and Estupinian solicited and caused others to solicit prospective clients to deposit funds with Vesta based upon, among other false representations and promises, the promise that Vesta would hold those deposits and return them as promised. Instead, the defendants stole client funds for their own use, and also that they used new client deposits to pay redemptions owed to earlier clients.(2)
For the U.S. Attorney press release, see Owners Of Vesta Strategies Indicted For $25 Million Ponzi Scheme (Indictment alleges John Terzakis and Robert Estupinian Used Vesta to Steal Clients’ Section 1031 Exchange Deposits).

Go here for other posts on Section 1031 exchange ripoffs.

(1) According to the press release, a Section 1031 exchange generally allows taxpayers to avoid paying tax on capital gains by depositing the proceeds from an investment real estate sale, that would otherwise qualify as a taxable capital gain, with a qualified intermediary for up to 180 days. Under Section 1031, if the taxpayer purchases another investment property within those 180 days, the proceeds from the first sale may be rolled over into the new investment without being taxed as capital gains.

(2) This type of ripoff also triggers the Federal income tax liability that the real estate investors were looking to defer through this arrangement, leaving them in a bind if they lack other available sources of funds from which to pay the tax.

Active Duty Servicemembers Also Forced To Fight Sloppy Lenders & Landlords In Foreclosure, Eviction, Auto Repo Actions In Violation Of Federal Law

In Greenacres, Florida, the The Palm Beach Post reports:
  • It is one thing to worry about the safety of your spouse who is serving in Iraq or Afghanistan. It is another thing to be afraid that, while he or she is gone, the bank will take away your house and your loved one will have nowhere to come home to. Linda Kellam, 50, knows both those fears. Her husband, James, 49, is serving in Afghanistan with the 1218 Transportation Unit of the Army National Guard, which is based in West Palm Beach. By the time he was deployed July 8, they had both lost their jobs in layoffs and then the bank tried to foreclose on their Greenacres condo.


  • Elaine Martens, a Palm Beach Legal Aid Society attorney, works with the Armed Services Advocacy Project and with [non-profit] agencies [...]. Using the terms of the Servicemembers’ Civil Relief Act of 2004 Martens can, in many cases, fight foreclosures and evictions due to failure to pay rent, head off the repossession of vehicles or other goods bought in installments, and limit how much interest credit card issuers charge military families even on balances accrued before active service began.


  • Martens currently is fighting a local bank that foreclosed on a man while he was home after serving in Iraq and who is back in Iraq now. "One of the forms the bank has to file is an affidavit saying whether the owner is in the military," Martens said. "The affidavit the bank filed said this person wasn't in the military, but when he bought the house the proof of income he showed was a check stub from the military. Their claim that they didn't know his status is pretty far-fetched."

For the story, see Nonprofits work to spare deployed soldiers and their families from foreclosure.

Go here for other posts on the Servicemembers’ Civil Relief Act.

NYS Court System Institutes Volunteer Program To Attract Retired Attorneys In Effort To Reduce Lopsided Lawsuits Against Poor Defendants

The New York Times reports:
  • The recession has swelled the number of people showing up in New York State courts who cannot afford lawyers to 2.1 million annually, often turning eviction, foreclosure, debt collection and other civil cases into lopsided battles that raise questions about the fairness of the legal system.

  • In response, the state court system is beginning an unusual new program this week to try to fill the gap with volunteer retired lawyers, hoping partly to attract Baby Boomer lawyers who may be ready to slow down but are not keen on full-time golf.

  • New York’s chief judge, Jonathan Lippman, said in an interview that officials changed the state’s rules this week to add a new category of lawyer, attorney emeritus, that will free lawyers of some burdens of full-time practice, like paying for malpractice insurance, while channeling them to dozens of legal programs around the state that represent low-income people without charge. Until now, lawyers were required to register with the state as either active or retired.


  • In the New York program, lawyers over 55 who register in the attorney emeritus category will be trained and supervised in the work for low-income clients. [...] Bar associations and other groups around the country have worked for decades to increase lawyers’ volunteer efforts. Court officials said that at least six states, including Florida, Illinois and Nevada, have attorney emeritus programs like the one New York is adopting.

For more, see Courts Seek More Lawyers to Help the Poor.

Attorney Faces Charges Of Illegally Pocketing $85K In Proceeds From Client's Home Refinancing

In Allegheny County, Pennsylvania, the Pittsburgh Tribune Review reports:
  • A Plum attorney is accused of taking about $85,000 from a client instead of depositing the money into the right account about four years ago. [Last week], Robert L. Williams, 47, [...] surrendered to Allegheny County detectives to face multiple charges of theft by deception and theft by failing to deposit a client's money as required.


  • According a detective's affidavit, Williams helped Alisha L. Branson to obtain a $197,000 mortgage to settle Branson's bankruptcy and improve a house that Branson would then rent out at a residence in Pittsburgh's East End. Prosecutors allege that Williams took about $85,300 from the money after the bankruptcy was settled.

For more, see Plum attorney to face theft charges.

Thursday, January 07, 2010

Federal Judge Dismisses City Of Baltimore's "Ghetto Loans" Suit; Leaves Door Open For Amended Complaint

In Baltimore, Maryland, The Daily Record reports:
  • A federal judge has dismissed the city of Baltimore’s reverse-redlining lawsuit against Wells Fargo Bank and one of its units, giving it the option to narrow its complaint or appeal. Judge J. Frederick Motz said the city can tailor its claims to specific housing vacancies or their effect on a given neighborhood, if it can show a “plausible causal relationship” between the allegedly improper loans and the damages asserted.

  • It may be entirely reasonable to posit — as the city’s allegations amply support — that unscrupulous lenders took advantage of inner city residents living in a dysfunctional environment to induce them to make loans they could not afford,” Motz wrote in the opinion published Wednesday by the U.S. District Court. “It does not follow, however, that it is reasonable to infer — as the City argues — that the unscrupulous lenders themselves created the dysfunctional environment they exploited.”

  • Motz’s ruling is a mandate to “sharpen our pencils,” City Solicitor George A. Nilson said. He could not say immediately which course of action the city would pursue.

For more, see Judge dismisses Baltimore’s reverse redlining suit.

See also, The Baltimore Sun: City's Wells Fargo lawsuit dismissed (U.S. judge calls claims of millions in predatory lending damages 'not plausible').

For the court ruling, see Mayor And City Council Of Baltimore v. Wells Fargo Bank, N.A. and Wells Fargo Financial Leasing, Inc.

"Zombie Debt" Buyers Among Those Ordered By Feds To Turn Over Information About Business Practices

From the Federal Trade Commission:
  • The Federal Trade Commission has ordered the nation’s largest consumer debt buyers to turn over information about their practices in buying and collecting consumer debt, which the FTC intends to use for a study of the debt-buying industry. Consumers have reported that debt collectors frequently try to collect from the wrong consumers or the wrong amounts, or both. The FTC is seeking information to determine whether buyers of consumer debt are contributing to these problems.

  • The FTC sent the orders to nine companies that are in the business of buying consumer debts and then trying to collect on those debts, either on their own or by hiring debt collection firms. These nine companies collectively purchase about 75 percent of the debt sold in the United States.

  • Creditors often sell debt they have been unable to collect to companies known as debt buyers. When debts are sold, the buyers receive information about the debtor and the debt from the sellers. Debt buyers try to collect on the debt they purchase, and if they do not get paid, they often sell the debt to other debt buyers. Many debts are purchased and resold several times over a period of years before all collection efforts finally cease.

Source: FTC Orders Buyers of Consumer Debt to Submit Information for Study of Debt Buying Industry.

In related stories, see:

Go here and go here for more on zombie debt.

Los Angeles Pair Sentenced For Filing Fraudulent Bankruptcy Petitions In Running "Fractional Interest" Deed Transfer Foreclosure Rescue Racket

From the Office of the U.S. Attorney (Topeka, Kansas):
  • Two Los Angeles men have been sentenced for running a scam in which homeowners who were behind on their mortgage payments paid them to hold off foreclosure by filing fraudulent bankruptcy petitions. U.S. Attorney Lanny Welch announced [...] that Isaac Yass, 43, a citizen of Israel who has been living in Los Angeles, Calif., and Andrew Blechman, 40, Culver City, Calif., were sentenced on January 4, 2010, in United States District Court, Topeka, Kansas. Yass was sentenced to 60 months and Blechman was sentenced to 18 months in federal prison. A forfeiture order in the amount of $1,063,176.30 was entered against Yass and Blechman, jointly and severally.
  • During the trial, prosecutors presented evidence that Yass and Blechman conspired to operate a fraudulent service called Stopco claiming to be able to save homeowners who where behind on their mortgage payments from losing their homes.(1)
For the U.S. Attorney press release, see Los Angeles Men Sentenced For Filing False Claims In Kansas Bankruptcy Courts.

For a report issued by a California Federal Bankruptcy Court task force that details the types of foreclosure scams involving the abuse of the bankruptcy courts, see Final Report Of The Bankruptcy Foreclosure Scam Task Force.

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

(1) According to the press release, evidence at trial showed that:
  • Yass solicited homeowners who were going through foreclosure proceedings. He told them that for a fee he could help them keep their houses;
  • Yass and Blechman filed fraudulent bankruptcy petitions in federal bankruptcy courts in Topeka, Wichita, and Kansas City, Kan. The petitions were filed in the name of nonexistent individuals with businesses that claimed to be part-owners of properties that were in foreclosure;
  • The result was an automatic stay in the foreclosures, halting any further actions by creditors against the properties;
  • The petitions contained false names and Social Security numbers, and addresses for the creditors that were in fact mailboxes or UPS Store locations in Kansas.

Media Spotlight, Police Report Alleging Theft By Deception Force Refund From Alleged Loan Mod Racket; Outfit Booted From NC, Now Operates In Georgia

In Decatur, Georgia, WGCL-TV reports:
  • An Atlanta woman who tried and failed to get her money back from a mortgage modification company got a different answer after filing a police report(1) and calling CBS Atlanta News. Latarese Johnson wanted her $60 deposit back from Loan Help Solutions in Decatur after discovering the company and its CEO Nathaniel Livingston had a shady past.


  • According the Better Business Bureau in North Carolina, Livingston's company, then called Mortgage Help Services, had 23 complaints lodged against it in 2009. In June of 2009, a North Carolina judge ordered Livingston to cease doing business. The North Carolina Attorney General's Office also asked to the court to permanently ban the company and order it to refund money to customers. Loan Help Solutions has been advertising in metro Atlanta for months.

For the story, see Woman Gets Money Back From Loan Company (Atlanta Woman Files Theft Charges Against Loan Company).

(1) Latarese Johnson filed a theft by deception complaint against the company last week with the Decatur Police Department, the story states.

Wednesday, January 06, 2010

Ex-Loss Mitigation Negotiator Cops Plea, Faces Up To 5 Years, $250K In Fines For Ripping Off Lender-Employer In Short Sale Scam

In Central Florida, the Orlando Sentinel reports:
  • According to court documents, [former loss-mitigation negotiator with Taylor, Bean & Whitaker Richard] Nanan was part of a short-sale scheme with Victor Cedeno, a fellow Taylor, Bean & Whitaker employee. Nanan and Cedeno worked with real-estate agents, home buyers, title agents and lenders during short sales financed by Taylor, Bean & Whitaker, according to court documents.

  • Nanan negotiated and approved short sales of foreclosed homes owned by Taylor, Bean & Whitaker with mortgages for about 90 percent of the mortgaged value of properties, according to his plea agreement. Then, they falsely reported they approved the sales at about 80 percent of the mortgaged value, court records said.

  • Cedeno and Nanan intercepted the payoff checks, which were then fraudulently endorsed by Cedeno, Nanan's plea agreement said. Cedeno and his girlfriend, Genesis Valdez, would retain any amount from the closing in excess of that 80 percent, and paid Nanan for his role. Nanan, who pleaded to a conspiracy charge, spoke briefly during the hearing. He faces up to five years in prison and a fine of $250,000.

Source: Two men plead guilty in mortgage fraud cases.

Colorado Homeowner Demands Note, Alleges Fraud In Suit Seeking To Block Foreclosure

In Platt Park, Colorado, The Denver Daily News reports:
  • Platt Park resident Vicki Dillard is demanding that the bank that controls her mortgage “show me the note” if it wants to foreclose on her home. Dillard is joining a national movement in which homeowners are attempting to delay or block foreclosures by asking that banks produce the original mortgage note if they want to foreclose on a home. Because mortgages are sold and packaged into bonds many times over after a lender issues a mortgage note, many banks have been having trouble producing the original note.


  • She has filed a lawsuit seeking to block the foreclosure. In addition to her “show me the note” argument, Dillard also is arguing that her lenders violated federal regulations requiring them to be completely honest and disclose all terms and conditions of the mortgage agreements. The lenders have signed an affidavit of lost note acknowledging that they have lost the original mortgage documents, which Dillard believes will bolster her case.

  • But the law is vague when it comes to requiring banks to produce the note. It’s unclear whether in Colorado the “show me the note” argument is an acceptable defense. Mortgage counselors warn against the defense, instead counseling their clients to work with lenders to save their homes.

For more, see ‘Show me the note’ (Woman asks lenders to show original mortgage note in foreclosure).

Register Of Deeds Implements New System To Alert Property Owners To Forged Deed, Real Estate Title-Hijacking Scams

In Grand Haven, Michigan, the Muskegon Chronicle reports:
  • The Ottawa County Register of Deeds office is encouraging everyone in the county who owns land to sign up for a simple program that might save property owners thousands of dollars and years of aggravation. The program, Property Fraud Alert, allows those registered to be notified every time a property with their name on it is registered with the county. “Most people don’t realize that property and mortgage fraud is the fastest growing white-collar crime in the country according to statistics provided by the FBI,” said Ottawa County Register of Deeds Gary Scholten. [...] “It’s like a smoke detector for your property,” Scholten said.


  • Scammers usually record a fraudulent quit-claim deed with a county register of deeds office, complete with the all of the legal transaction information and forged signatures and then let it sit for several weeks unbeknownst to the property owner. “Then, the scammers go to a local bank and apply for a mortgage for upgrades to the home and often walk away with $100,000 or more,” said Ernest Riggen, chief executive officer of the Fidlar Technologies.(1)

  • While the real owner of the property does not owe the money, the bank or mortgage company often comes after the homeowner and tries to collect the money the bank has now lost. It can cost the homeowner thousands of dollars to get the matter resolved. It is a lot like identity theft.” Often, Fidlar said, scammers hit the homes of “snowbirds” who are gone for months at a time and don’t know there is a problem until it is too late.

For the story, see Ottawa County launches new program for property owners (Electronic recording system one of three operating in Michigan counties).

(1) Even if cases like this result in successful criminal prosecutions against the scammers, the burden typically remains on the victimized property owner to file a civil lawsuit to establish that the forgery occurred in order to void or cancel both the illegal title transfer and any fraudulently-obtained mortgage scored by the scammer, thereby quieting the title to the property in the rightful owner's name.

Florida Man Faces Charges Of Swindling Elderly Dementia-Stricken Couple In Alleged Home Repair Ripoff

In Hernando County, Florida, the St. Petersburg Times reports:
  • A Spring Hill man has been accused of swindling an elderly couple suffering from Alzheimer's disease out of more than $1,000 for home repairs that he never did, according to the Hernando County Sheriff's Office. John Elmer Baker Jr., 34, was served with a warrant in Pasco on Monday and transported to the Hernando County Jail, where he was arrested Tuesday. He remained behind bars Wednesday in lieu of $10,000 bail. "Unfortunately, there are people out there who specifically prey on the elderly," said Lt. Cinda Moore, a spokeswoman for the Hernando County Sheriff's Office.


  • Investigators determined that Baker "apparently realized the mental state of the (victims) and exploited this by returning several times and obtaining money under false pretenses" and that his "services were never needed but due to the mental deficiencies of the (victims) the suspect was allowed to complete work that he apparently solicited."

For more, see Man swindled elderly couple with Alzheimer's, Hernando authorities say.

Tuesday, January 05, 2010

New State Law May Help Nevada Homeowner Hammer Lender, Others For Trashing Home Misidentified As Foreclosure

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • A Las Vegas woman whose condo was mistakenly emptied in a bungled foreclosure action could be the first person to benefit from a new state law. [...] A crew that clears out foreclosed properties had been sent into [Nilly] Mauck’s condo by the Brenkus Team, a Henderson real estate group. Brenkus has accepted responsibility, saying it was just a mix-up. The foreclosure was a neighboring condo unit.


  • It all appears to add up to a solid lawsuit for Mauck, and she has a law that took effect Oct. 1 that will work in her favor. Under the state’s old law for a case like hers, aggrieved homeowners could collect triple the amount of damages only for the real estate — for the loss of the property if it was sold out from under the real owner or for loss of use of the property if the real owner was locked out, or if the building itself was damaged, for example. The change allows for triple damages for personal property. So Mauck could be awarded three times the value of what was removed from her condo.(1)

For more, see They foreclosed on the wrong house (A neighboring property was going into foreclosure, but her condo was cleaned out. A new law might help).

(1) According to the story, the lawyer representing Brenkus in Mauck’s case is Albert Marquis, who ironically, was the attorney who represented a Las Vegas couple in a high-profile foreclosure mix-up a few years ago — the one that spurred the Nevada Legislature and Gov. Jim Gibbons to approve the new law. The couple, Gerald and Katrina Thitchener, were mistakenly placed on a foreclosure list in 2002 and were out of town when their residence was cleaned out. They won a $3.1 million judgment against Countrywide Home Loans, but that award was reduced by the Nevada Supreme Court. The high court disallowed the tripling of damages for the loss of personal property. For the Nevada Supreme Court ruling in that case, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008).

Tensions Escalate As Mortgage Insurers Stiff Lenders On Policy Claims On Defaulted Home Loans Allegedly Originated Through Fraud

In San Francsico, California, Insurance Networking News reports:
  • Bank of America Corp.'s lawsuit against MGIC Investment Corp. reflects escalating tensions in the industry over mortgage insurers' denials of claims that lenders submit for defaulted home loans. In a complaint filed in the Superior Court of California for San Francisco, B of A alleged that MGIC is denying "millions of dollars in valid mortgage insurance claims" the lender has submitted. A spokeswoman for B of A would not elaborate on the dollar amount of claims in dispute.


  • B of A alleged that MGIC "has adopted unreasonable interpretations of its mortgage insurance policy language to justify its failure to pay claims" because of steep losses during the downturn. The Charlotte banking company asked the court to determine the appropriate interpretation of terms of its policies with MGIC. Among other things, B of A said, MGIC has improperly taken the position that the lender must prove it was not aware of an alleged borrower misrepresentation to avoid rescission of a policy.

For more, see B of A Suit Against Mortgage Insurer Shows Growing Rift.

More On Mortgage Lender's Employee Who Was Allegedly Fired For Speaking With Law Enforcement About Fraud-Laced Home Loan

In Denver, Colorado, another story on former Aurora Loan Services' quality control employee Michael Walker was published in The Denver Post:
  • His job was to uncover mortgage fraud. But he claims he was fired for doing it. In a lawsuit recently filed in Denver District Court, he claims Lehman's mortgage subsidiary wanted to remain profitably unaware of fraud.

  • Aurora Loan Services is a subsidiary of Aurora Bank FSB, a $4.7 billion savings and loan based in Wilmington, Del., that used to be called Lehman Brothers Bank. Aurora and its affiliates weren't part of Lehman's bankruptcy filing. But Aurora Loan Services made all kinds of exotic loans — Alt-A, Alt-B, subprime — for Lehman to wrap into securitized bundles. This contributed not only to Lehman's demise, but what almost became the next Great Depression, the lawsuit alleges.(1)

  • The case "is yet another example of a mortgage industry that believes it is above the law," said Walker's attorney, Mari Newman of Killmer Lane & Newman LLP in Denver. "Apparently, Aurora Loan Services was more interested in concealing potentially fraudulent loans than it was in allowing an honest and hardworking employee to respond to legitimate requests from federal law enforcement," she said.

For more, see Fired for doing his job, fraud finder sues.

(1) According to the story, Aurora made its loans through independent mortgage brokers, who often didn't have to meet any criteria to be brokers, not even criminal background checks in some cases. Inevitably, some percentage of the mortgage applications they took would be laced with fraud, the story states. But like everyone else, they reportedly got paid by loan volume, not by loan quality.

Closing Agent Loses State License After Conviction For Forgery, Swindle; Admits Buying House With $300K+ Drawn From Title Company-Employer's Accounts

In St. Paul, Minnesota, the Minneapolis Star Tribune's The Whistleblower blog reports:
  • The Minnesota Department of Commerce revoked a Rosemount woman’s insurance license and notary commission and fined her $100,000 after she pleaded guilty to felony forgery and theft by swindle, according to an order signed Dec. 1. In May, Patrice Pouliot pleaded guilty to forging signatures on 38 checks while working for Title One, Inc., a title company. Pouliot deposited the checks, totaling $63,316.65, into her own bank account.

  • Prior to working for Title One, Pouliot worked for Midwest Guaranty Title Company. She admitted to buying a house during her employment there by falsifying closing documents and paying the seller $308,760 from Midwest Guaranty’s accounts, rather than using her own money.

  • Pouliot, 46, is currently serving a 17-month sentence at the women’s prison in Shakopee.

Source: Public record: Insurance license revoked after forgery and swindle.

Maryland Couple Faces Foreclosure After Closing Agent Allegedly Fails To Pay Off Existing Mortgage In Home Refi; Others Find Themselves In Same Shoes

In Owings Mills, Maryland, WBAL-TV Channel 11 reports:
  • A local family who refinanced their home said they found out their original mortgage was never paid, and before they could get the problem resolved, the title company that did the leg work went out of business. According to state records, Maple Leaf Title Company had been in business since March 1999. But after August 2009, the company could not legally operate in Maryland because it did not renew its license.

  • "We get closer and closer to foreclosure, so it's stressful for us, because in a month we may have our house going up for auction," said Owings Mills resident Jim Wilkerson. The Wilkerson family recently received a notice to foreclose from a bank that they believed they had paid. This past summer, the couple refinanced their home and thought everything was fine until they started getting statements from two banks. They said they found it difficult to get answers.

  • "I think that's been the most shocking. When we refinanced, you never think you're putting everything at risk until that check makes it from the title company to your lender," Jen Wilkerson said.

  • The Wilkersons said they have plenty of questions for Maple Leaf Title, and so do other customers of the title company. All said they want to know what happened to the money that was supposed to pay off their original mortgages. The 11 News I-Team found Maple Leaf's offices closed and the phone disconnected. Company President Anthony Weis only told the I-Team to talk to his attorney, with whom reporter Barry Simms was not able to get in touch.

  • The I-Team discovered that a title insurance company is suing Maple Leaf. According to a civil lawsuit, Fidelity National Title Insurance asked Maple Leaf to terminate an agreement on Oct. 2, but then on Oct. 20, Fidelity National learned of a $600,000 misappropriation of funds by a former Maple Leaf employee. Maple Leaf took no action and did not report the theft to police, according to the lawsuit. On Oct. 21, Fidelity National discovered $3.3 million was missing from another escrow account.

  • The Maryland Insurance Administration regulates title companies and said it couldn't say if they were investigating the case. "I can't talk about our investigative activities. I can tell you that any consumers that have been harmed or fear they've been harmed, we urge them to contact us," said Maryland Insurance Commissioner Ralph Tyler. Tyler said in the past few years, his office has noticed an enormous increase in similar complaints of alleged theft of funds as the economy slowed.

Source: Family: Title Co. Never Paid Our Mortgage (Title Company Has Since Gone Out Of Business).

Monday, January 04, 2010

Assembly Line Foreclosure Mills Dominate Fla. Law Market For Home Repo Suits; Judge Exoriates Law Firm, Wells For Mindlessly Cranking Out Legal Papers

In Tampa, Florida, the The Tampa Tribune reports:
  • Few areas of the legal field are so dominated by a handful of players as foreclosure law. Florida Default Law Group is one of four foreclosure mills operating in Florida that appear to be winning the lion's share of business from lenders or their representatives. Along with Florida Default, other big firms include the law offices of David J. Stern in Plantation, the law offices of Marshall C. Watson in Fort Lauderdale and Shapiro & Fishman in Boca Raton.

  • The Tribune looked at 1,994 initial foreclosure documents filed in October to see which firms were handling the most foreclosures. Combined, those four industry heavyweights filed 1,049 foreclosure cases in October, or 53 percent of all new foreclosures filed in Hillsborough County that month. Florida Default filed 323 new foreclosure cases in October, second only to the 352 cases filed by David J. Stern. Florida Default operates in Florida's 66 other counties, the firm's managing partner testified in a court deposition.

  • To handle the workload, foreclosure mills have developed a common model: use lower-paid paralegals and support staff for much of the routine legwork, and hire young lawyers to sign off on the lawsuits and handle complications.


  • John Olson, a U.S. Bankruptcy Court judge in Fort Lauderdale, had no problem taking Florida Default and a big client, Wells Fargo, to task. After the firm made errors in up to 50 cases in court, Olson called out the firm in October 2008 in a strongly worded opinion. Florida Default made the errors when an employee pulled information from the wrong computer screen, according to court documents. Florida Default and Wells Fargo "have engaged in the systematic process of churning out unrefined and unexamined form pleadings, instead of producing and filing carefully considered legal papers," Olson wrote.(1)

For more, see Law firm gorges on home defaults (Florida Default and Wells Fargo "have engaged in the systematic process of churning out unrefined and unexamined form pleadings, instead of producing and filing carefully considered legal papers," a bankruptcy judge wrote).

(1) In Sarasota County, Lee Haworth, chief judge in the state's 12th Judicial Circuit, started noticing a trend in foreclosure filings: Foreclosure law firms would start a foreclosure lawsuit against a homeowner but push it to the back burner if complications arose. Meanwhile, the stalled cases began to languish in Sarasota and Bradenton courts, the story states. Foreclosure mills seemed to think pursuing such cases was too much trouble for the $1,200 fee, he reportedly said.

Rhode Island Lawyer Suspended From Practice For Forging Client's Name On Satisfaction Of Mortgage & Failing To Pay Off Debt

In Providence, Rhode Island, The Providence Journal reports:
  • The state Supreme Court has barred Newport lawyer John T. Sheehan from practicing law indefinitely for violating a court order that he repay a loan to a former client. The court also suspended Sheehan’s law license for 42 months upon the resolution of that matter for a series of disciplinary infractions.


  • Sheehan asked client Mona Woo in 2006 to loan him $50,000, saying it would be secured by a mortgage on a Providence property. Sheehan executed a promissory note agreeing he would repay the loan, plus 12 percent interest, in monthly increments of $500. Sheehan also executed a mortgage deed in Woo’s name on the 61 Bergen St. property in Providence.

  • In September 2006, the owner of that property, Bergen 59 Associates, sold 61 Bergen St. Sheehan, at the time, was named as managing partner of Bergen 59 Associates. Sheehan provided the buyer’s lawyer with a “discharge of mortgage” purportedly signed by Woo that released her interest in the property. Woo did not sign the discharge, and Sheehan later admitted he signed her name without her knowledge or consent, the court said.(1) Sheehan did not tell Woo the property had been sold, or that Bergen 59 Associates received $27,725 in net proceeds from the sale. He did not give her money from the sale and continued to make sporadic $500 monthly payments.

For the story, see Newport lawyer barred from practicing law.

(1) Reportedly, Sheehan, said the court, violated court rules of conduct by not informing Woo to seek independent professional advice before loaning him money and by failing to get her consent before selling the property. In addition, he engaged in dishonest conduct by forging her name and falsely notarizing her forged signature, the story states.

Alleged "Ghetto Loans" Peddler Hit With Another Fair Housing Suit; Memphis, Shelby County Claim "Reverse Redlining" In Making Predatory Mortgages

In Memphis, Tennessee, The Commercial Appeal reports:
  • The city of Memphis and Shelby County, joining a host of governments across the country hit hard by the foreclosure crisis, filed a federal lawsuit [last] Wednesday against financial services giant Wells Fargo. The suit alleges that "unlawful, irresponsible, unfair, deceptive and discriminatory" lending practices by Wells Fargo in Memphis and Shelby County violated the Fair Housing Act.(1)

  • "We're here because we want to go on record affirming our belief that the unfair lending practices that have wreaked havoc on individuals and families have also impacted the larger community," said Mayor A C Wharton during a news conference at the National Civil Rights Museum. "Many of the bad loans that have been doled out by unscrupulous lenders have been like giving families boats with crepe-paper bottoms. No bucket brigade and no amount of hard work can keep you from sinking in a vessel that is doomed from the very start."(2)


  • The complaint unveiled Wednesday includes testimony from two former high-ranking Wells Fargo employees involved in [a] Baltimore suit [accusing Wells Fargo of similar conduct] who say Wells Fargo intentionally made bad loans to African-Americans. The employees, who worked out of Virginia and Maryland but are knowledgeable about the company's national lending practices, said Wells Fargo marketed subprime loans to predominantly African-American ZIP codes and that company officials referred to the loans as "ghetto loans." The complaint also says Wells Fargo steered black clients who qualified for prime loans into more costly subprime loans, which produced greater profits for Wells Fargo and its agents.


  • "They know how to make good loans, yet they aren't making them in the black community," said John Relman of Relman & Dane, the Washington-based firm that is representing the city and county in the lawsuit, along with [Webb] Brewer and Steve Barlow. Relman & Dane also represents Baltimore in its suit.(3) "They did it because they could make more money," said Relman. "They made the money and let Memphis and Shelby County hold the bag."(4)

For the story, see Memphis, Shelby County sue Wells Fargo over lending practices (Allege actions violated Fair Housing Act).

For the lawsuit, see City of Memphis & Shelby County v. Wells Fargo Bank N.A., et al.

See also:

Go here for other posts on Wells Fargo and its alleged ghetto loans peddling.

(1) According to this report, so many homes are lost each year in Memphis to foreclosure sales that occur on the Shelby County Courthouse steps that the problem attracted national attention last year. A film crew for the PBS television show “NOW with David Brancaccio” came to Memphis and studied the problem, talked to politicians such as Shelby County Mayor A C Wharton Jr. and even ventured out to foreclosure hotspots like Frayser. Go here for the video of the PBS' NOW program on the foreclosure problem in Shelby County, and here for the transcript of the NOW program.

(2) According to another report, Mayor Wharton was quoted further:

  • These are very astute people who knew the difference between a good loan and a bad loan. Sure, there was federal pressure to make loans to groups who were customarily ‘non-banked,’ as we often say, who didn’t have access to traditional credit. Sure, and that’s a good motive. But, as is the case with most federal programs, there’s going to be abuse. And we think that this is one instance in which what was intended for good was exploited to be used for ill.”

(3) For the City of Baltimore lawsuit, see Mayor and City Council of Baltimore v. Wells Fargo Bank N.A. et al.

This story adds that Illinois Attorney General Lisa Madigan also filed a lawsuit last summer accusing Wells Fargo of marketing high-cost mortgage loans to black and Latino customers while selling lower-cost loans to white borrowers with similar incomes. The cumulative effect, Ms. Madigan argued, was to turn the black and Latino neighborhoods of the nation’s cities “into ground zero for subprime lending.” See:

In addition, in March, 2009, the National Association for the Advancement of Colored People ("NAACP") also filed suit against Wells Fargo alleging systematic, institutionalized racism in sub-prime home mortgage lending. See:

(4) For related links on the problems in the subprime mortgage market, see:

Vegas Homeowners Hit BofA With Lawsuit Seeking To Halt Foreclosures/Evictons & Force Lender Into Good Faith Negotiations On Loan Modifications

In Las Vegas, Nevada. KLAS-TV Channel 8 reports:
  • A group of homeowners on the brink of foreclosure has formed a class-action lawsuit against their lender Bank of America. That lawsuit -- which represents 50 homeowners -- accuses the bank of wrongful foreclosure, breach of contract, and unfair lending practices.

  • According to federal law, lenders that accepted government bailout funds are required to take part in good faith negotiations with homeowners who are at imminent risk of default. But after months of getting nowhere with their lender, dozens of homeowners say they are now suing Bank of America in an attempt to force them to follow the law.


  • Las Vegas attorney Matthew Callister has filed a class-action lawsuit on behalf of more than 50 homeowners against Bank of America. "We've been compelled to bring a series of class action suits to put a proverbial gun to the head of the lending institutions to force them to do what they are already obligated to do," said Callister.

  • He is also pushing for a hearing before a judge as soon as possible to get an injunction or stay to postpone any foreclosures and evictions against the homeowners taking part in the class-action suit. Callister also has a suit against IndyMac on behalf of about 60 homeowners. He also plans to file suits against Chase Bank and Wells Fargo Bank in the near future.

For the story, see Las Vegas Homeowners in Default File Suit Against Bank.

Sunday, January 03, 2010

New Hampshire, California Chief Justices Call For "Limited-Scope Representation" In Effort To Assist Pro Se Litigants Navigate Through Court System

John T. Broderick Jr. and Ronald M. George, the chief justices of the New Hampshire and California Supreme Courts, respectively, wrote in The New York Times recently, calling for promoting efforts to close the “justice gap” for litigants in civil cases who cannot afford a lawyer, and either do not qualify for legal aid or are unable to have a lawyer assigned to them because of dwindling budgets.
  • One such effort involves the “unbundling” of legal services. Forty-one states, including California and New Hampshire, have adopted a model rule drafted by the American Bar Association, or similar provisions, which allow lawyers to unbundle their services and take only part of a case, a cost-saving practice known as “limited-scope representation” that, with proper ethical safeguards, is responsive to new realities.

  • Traditionally, lawyers have been required to stay with a case from beginning to end, unless a court has excused them from this obligation. Now, in those states that explicitly or implicitly allow unbundling, people or businesses can hire a lawyer on a limited basis to help them fill out forms, to prepare documents, to coach them on how to present in court or to appear in court for one or two hearings.

For more, see A Nation of Do-It-Yourself Lawyers.

See also, The Business Insider: Judges Argue For Assistance For The Do-It-Yourself Lawyer.

Woman Loses Life Savings In Alleged $31M Ponzi Scheme That Bilked Investors Through Forged Deeds, Sale Of Same Lots To Multiple Victims

In Pocatello, Idaho, the Idaho State Journal reports:
  • One of the victims of an alleged Ponzi scheme that used a Pocatello property as part of an elaborate scam to bilk investors of $31 million said she lost a six-figure sum. “I was absolutely devastated,” Carolyn White said about the moment she realized [her] savings was gone. “I had to take sleeping pills that night. I lost everything.”

  • White “owned” 12 of the 70 lots at the 16.5-acre mobile home subdivision on Philbin Road that was used as part of the scheme. Or so she thought. It turns out most of the title deeds issued to the 400 investors affected by the scheme are worthless because they were forged or deeds for the same lots were sold to multiple investors. [...] The alleged scheme involved purchasing existing mobile home parks and converting them to mobile home subdivisions by dividing them into individual lots.(1)

For more, see Alleged scam cost woman her life savings.

(1) The owners and operators of Valley Investments of Grand Junction, Colo., Philip R. Lochmiller, 61, and his son, Philip R.Lochmiller II, 38, as well as a company employee, Shawnee N.Carver, 33, were indicted by a federal grand jury in Denver Dec. 15 on conspiracy and fraud charges. According to one investor, at least one affected investor has committed suicide because of the alleged scam, an earlier story reports. See $31 Million scam: Pocatello property used in alleged Ponzi scheme.

California Man Surrenders Real Estate License Amid Allegations Of Pocketing Upfront Fees On Loan Modifications, Failing To Properly Handle Trust Funds

From the California Department of Real Estate:
  • Whitfield Financial Services Inc. (Whitfield), which operated a statewide loan modification business, surrendered its real estate license in lieu of defending accusations of violations of the real estate law at an administrative hearing. The license surrender, effective December 21, 2009, effectively puts Whitfield and its designated broker, Raymond Lorenzo Jeter (Jeter), out of business.

  • The license surrender comes on the heels of an accusation filed against Whitfield and Jeter by the California Department of Real Estate (DRE) accusing the licensees of failing to properly handle trust funds and illegally collecting advance fees in connection with loan modification services. Jeter was also separately accused of failing to exercise proper supervision over the activities of Whitfield. While Jeter admitted no wrongdoing by either himself or Whitfield for purposes outside of the DRE action, he nonetheless surrendered all license rights and can no longer engage in real estate brokerage activity, including loan modifications.(1)

For the press release, see California Department of Real Estate Shuts Down Loan Modification Company (Loan Modification Firm Surrenders License).

(1) Consumers who have been cheated out of money by Whitfield, Jeter, or any other licensed California real estate agent may be eligible to put in a claim with the Real Estate Recovery Account, a victim's fund administered by the California Department of Real Estate. According to its website, if a claim is granted, the applicant will be paid an amount for his or her actual and direct loss in a transaction, up to a statutory maximum of $50,000 per transaction, with a possible total aggregate maximum of $250,000 per licensee.

Idaho AG Settles Allegations With NJ Upfront Fee Loan Modification Outfit; Firm To Cough Up $19K In Refunds To 12 Homeowners

In Boise, Idaho, The Associated Press reports:
  • Attorney General Lawrence Wasden says Idaho homeowners who were duped into paying a New Jersey company to help them modify their mortgages will get more than $19,000 in a settlement. Wasden says the investigation into Weston, New Jersey-based Best Interest Rate Mortgage Co. LLC began with a complaint about a direct-mail advertisement.

  • The ad offered a special loan modification programs as part of the "Economic Stimulus Act of 2008" and appeared to have come from the U.S. government. The attorney general's office says the company charged Idaho homeowners upfront fees ranging from $1,000 to $1,800 before the mortgage modifications were completed, which Idaho law prohibits. The company, which has denied wrongdoing, was ordered to pay the 12 homeowners $19,710.

Source: Idaho AG: Cheated Homeowners Get $19K Settlement (Idaho's attorney general says homeowners win $19,000 in settlement with New Jersey company).