Saturday, December 11, 2010

Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals

This post is an attempt to organize the links for some of the posts appearing on this blog on criminal prosecutions of alleged sale leaseback, equity stripping scams by the various law enforcement authorities throughout the country, which I expect to update occasionally, as time permits.
  1. California (Los Angeles County DA): Convicted Foreclosure Rescue Scammer Could Face Life Sentence On New Charges In Alleged Sale Leaseback, Equity Stripping Ripoff That Fleeced 5 Victims,
  2. California (San Diego County DA): Foreclosure Rescue Scam Mastermind Found Guilty Of Dozens Of Felonies; Ran Upfront Fee Land Grant Scheme, Sale Leaseback Rent Skimming Racket,
  3. California (San Diego County DA): Judge Hammers Mastermind In San Diego-Area Foreclosure Rescue Racket That Ran Land Grant & Sale Leaseback Scams On 400-500 Victims w/ 46 Years In Pen,
  4. California (Sacramento County County DA): Victim Of Sale Leaseback Foreclosure Rescue Scam Still Waiting For Installment Restitution Payments As County Falls Short In Enforcing Court Order,
  5. California (U.S. Attorney - Central District): Co-Ringleaders In S. California Sale Leaseback Racket Get 15, 10 Years For $12M+ Equity Stripping Ripoff Of Homeowners Seeking Foreclosure Rescue,
  6. California (U.S. Attorney - Central District): Foreclosure Rescue Sale Leaseback Racket That Drained Equity From Unwitting Victims' Homes Among Scams California Man Pleads Guilty To,
  7. California (U.S. Attorney - Central District): 100+ Victims Of Sale Leaseback Foreclosure Rescue Operators Get Stiffed; Scammers Left Such A Convoluted Mess That Judge Unable To Order Restitution,
  8. California (U.S Attorney - Eastern District): F'closure Rescue Hit Parade Continues As Sacramento Feds Slam Four; Charges Describe Sale Leaseback Peddling, Equity Stripping, Rent Skimming Racket,
  9. California (U.S Attorney - Eastern District): Feds "Operation Homewrecker" Bust Of Nationwide Alleged Sale Leaseback Scam,
  10. Delaware (state AG's office): Delaware AG Levels 21-Count Indictment Against Alleged Foreclosure Rescue Racket Using "Divine" Cover In Sale Leaseback, Equity Stripping Ripoff,
  11. Florida (state AG's office/Orange County DA): Central Florida Sale Leaseback Peddler Linked To 50 Ripoff Deals Gets 10 Years On Racketeering Charge; Targeted Cash-Strapped, High-Equity Homeowners,
  12. Florida (state AG's office/Orange County DA): 85-Year Old Victim Of Convicted Sale Leaseback, Equity Stripping Peddler Temporarily Dodges The Boot As Judge Grants '11th Hour' Stay Of Eviction,
  13. Hawaii (U.S. Attorney): Foreclosure Rescue Operator Gets Six Years In Sale Leaseback Scams That Ripped Off $880K From Lenders, Financially Strapped Homeowners,
  14. Hawaii (U.S. Attorney): Hawaii Feds Win Conviction Of Man Who Used Straw Buyers In Sale Leaseback Foreclosure Rescue Ripoffs; Pocketed $430K+ In Two Equity Stripping Scams,
  15. Hawaii (U.S. Attorney): Loan Officer Gets Five Months In Sale Leaseback, Foreclosure Rescue Scam; Equity Stripping Victim Hopes To Recover Title To Home,
  16. Hawaii (U.S. Attorney): FBI Manhunt For Hawaiian Sale Leaseback Peddlers Continues; Couple Who Copped Pleas To Ripping Off Homeowners Failed To Show Up For Sentencing,
  17. Illinois (U.S. Attorney - Northern District): Chicago Federal Jury Slams Ex-Attorney With Guilty Verdict In Sale Leaseback, Equity Stripping Foreclosure Rescue Ripoff,
  18. Illinois (Chisago County DA): Foreclosure Rescue Operator Accused Of Misappropriating $25K+ From Escrow Account Set Up In Connection With Sale Leaseback Of Home,
  19. Maryland (U.S. Attorney): Maryland Man Cops Plea In Sale Leaseback, Equity Stripping Ripoff That Targeted High-Equity Homeowners With Unaffordable House Payments,
  20. Maryland (U.S. Attorney): MD Feds Obtain Guilty Plea From Loan Officer Who Screwed Homeowners By Stripping & Pocketing Their Home Equity In Sale Leaseback F'closure Rescue Scam,
  21. Maryland (U.S. Attorney): Maryland Feds Continue "Money Store" Sale Leaseback, Equity Stripping, F'closure Rescue Racket Prosecution; Nail Loan Officer With 11-Count Indictment,
  22. Maryland (U.S. Attorney): MD Feds Wrap Up Metropolitan Money Store Sale Leaseback, Equity Stripping Foreclosure Rescue Criminal Prosecution As Final Defendant Cops Guilty Plea,
  23. Massachusetts (state AG's office): Alleged Mastermind In Sale Leaseback F'closure Rescue Scam Arraigned On 25 Counts; Investors Left Holding Bag As Homeowners Got Boot, Say Prosecutors,
  24. Massachusetts (state AG's office): Massachusetts Foreclosure Rescue Operator Gets 2-2.5 Years As Mastermind In Fraud Scam; Sale Leaseback Deals Among Ripoffs Run On Desperate Homeowners,
  25. Massachusetts (U.S. Attorney): Boston Feds Pinch Mortgage Broker In Fraudulent Sale Leaseback Foreclosure Rescue Scam; Suspect Stripped Home Equity, Leaving Owner With More Debt,
  26. Minnesota (U.S. Attorney): Minnesota Man Accused Of Sale Leaseback, Foreclosure Rescue Ripoffs Cops Plea To Money Laundering, Tax Dodging Charges; 50+ Victims Clipped For $2.46M,
  27. Minnesota (U.S. Attorney): Foreclosure Rescue Operator Gets 7+ Years For Tax Evasion, Money Laundering In Connection With Equity Stripping, Sale Leaseback Peddling Racket,
  28. Minnesota (U.S. Attorney): Federal Judge Clobbers Sobbing Sale Leaseback Peddler With 270 Months For Victimizing 17 Minn. Homeowners In Equity Stripping, F'closure Rescue Ripoff,
  29. Missouri (U.S. Attorney - Eastern District): St. Louis Feds Squeeze Guilty Plea From Alleged Rent Skimming, Sale Leaseback, Foreclosure Rescue Peddler Accused Of Causing $439K In Losses,
  30. New Jersey (U.S. Attorney): Newark Feds Charge Trio In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Ripoff,
  31. New Jersey (U.S. Attorney): NJ Feds Squeeze Guilty Plea From Brooklyn-Based Foreclosure Rescue Operator; Admits To Role In Peddling Sale Leaseback, Equity Stripping Scams,
  32. New Jersey (U.S. Attorney): Newark Feds Obtain Indictment Of Previously-Charged Brooklyn Man Peddling Sale Leaseback, Equity Stripping Foreclosure Rescue Scams,
  33. New Jersey (U.S. Attorney): Veteran Fraudster Gets 97 Months For Running Realty Scams; Bogus Sale Leaseback Foreclosure Rescue Deals Among Rackets Resulting In $1M+ In Losses,
  34. New York (state AG's office): Five Face Criminal Charges For Roles In Now-Defunct Upstate NY Sale Leaseback, Equity Stripping Foreclosure Rescue Peddling Operation,
  35. New York (state AG's office): NY AG Squeezes Guilty Pleas From 4 For Roles In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket; 1 Awaits Trial On 23 Felony Counts,
  36. New York (Westchester County DA): NY Couple Gets 2 To 6 Years For Roles In Equity Stripping, Sale Leaseback Scam; Homeowners Who Sought Foreclosure Rescue Have Civil Suits Pending,
  37. New York (Westchester County DA): Westchester County Sale Leaseback, Equity Stripping Foreclosure Rescue Ripoff Leads To Six Convictions, One Acquittal; One Mistrial,
  38. New York (Rockland County DA): Rockland County DA Charges Duo In Equity Stripping Foreclosure Rescue Scam; Allegedly Duped Struggling Homeowner Into Bogus Sale Leaseback Ripoff,
  39. New York (Queens County DA): Queens DA Bags Seventeen Suspects In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket,
  40. New York (U.S. Attorney - Southern District): Paralegal Gets Three Years For Role In Sale Leaseback Foreclosure Rescue Ripoff Targeting Financially Distressed Homeowners In Brooklyn, The Bronx,
  41. Pennsylvania: (U.S. Attorney - Eastern District): Philly Feds Continue Attack On Equity Stripping Sale Leaseback Peddlers; Indict 4, File Civil Suit In Alleged Racket Involving 120 Properties,
  42. Pennsylvania: (U.S. Attorney - Eastern District): Philly Feds: F'clsure Rescue Operator In Sale Leaseback, Rent Skimming Scam Stalled Lenders w/ Bogus Bankrptcy Filings, Stiffed IRS On Illegal Profits,
  43. Pennsylvania (U.S. Attorney - Eastern District): Pennsylvania Attorney First To Cop Plea In Alleged Sale Leaseback, Equity Stripping Ripoff Targeting Homeowners Seeking Foreclosure Rescue,
  44. Utah (state AG's office): Sale Leaseback Peddler Aquitted Of Charges Accusing Him Of Tricking Couple Facing Foreclosure Into Signing Over Deed To Home,
  45. Virginia (U.S. Attorney - Eastern District): Norfolk Feds Score Guilty Plea From Foreclosure Rescue Operator Involving Sale Leaseback Equity Stripping Ripoffs.

Homeowner Files Suit Seeking Class Action Status; Says Wells Told Her To Stop Mortgage Payments To Qualify For Loan Modification, Then Foreclosed

In Cobb County, Georgia, Courthouse News Service reports:
  • A homeowner claims Wells Fargo instructed her to stop making her monthly mortgage payments to qualify for its loan modification program, then foreclosed after she followed the bank's instructions. The class action seeks damages for RICO fraud, in Cobb County Court.

  • Lisa Smoak Reid claims the bank "lulled [her] into inaction by offering to work out options to resolve her delinquency, but failed to provide any means to do so, and has failed to provide the plaintiff with the amount of the deficiency."


  • Reid wants an emergency hearing and injunction to stop the foreclosure proceedings and set aside the foreclosure permanently. She also wants $15 million in punitive damages for RICO fraud, breach of fiduciary duty, breach of contract and emotional distress.

For more, see Mortgage 'Modification' Called RICO Fraud.

For the lawsuit, see Reid v. Wells Fargo Bank NA.

Incidents Of Wrongful Foreclosures Growing, Say Lawyers, Consumer Advocates

The Associated Press reports:
  • People have always loved to complain about their banks. The push-button circus that passes for customer service. The larding on of fees. But the false foreclosure cases are hardly the usual complaints. These homeowners paid their mortgages — or loan modifications — on time. Some even paid off their loans. Worse, those on the receiving end of a bad foreclosure claim tell similar stories of getting bounced from one bank official to the next with no resolution while the foreclosure process continues apace.

  • Many have to resort to paying a lawyer, even after presenting documentation. They say they have to sue not only to stop the wrongful foreclosure but also to attempt to win back their costs. There are no official statistics for these homeowners, but lawyers, real estate agents and consumer advocates say their ranks are growing.

For more, see Wrongful Foreclosures Puzzle Homeowners.

South Florida Synagogue Dodges Foreclosure; Torahs, Ark, Other Religious Artifacts Receive Repo Reprieve From Earlier Yom Kippur Threat

In Boynton Beach, Florida, The Wall Street Journal reports:
  • Is it a Hanukkah miracle? Congregation Chabad-Lubavitch Greater Boynton resolved a loan dispute with lender Stonegate Bank [last week], paving the way for the Florida synagogue to say goodbye to bankruptcy. The dispute involves a lawsuit the bank filed against the synagogue, to which it had given a $3.8 million mortgage loan, to foreclose on the property. In the agreement, the synagogue agreed to raise a minimum sum of $1.2 million. Court documents say that $800,000 of the $1.2 million is to be escrowed pending closing.

  • In addition to Stonegate providing a partial release of the mortgage, it must also release its lien on all of the synagogue’s religious artifacts, including all Torahs, prayer books, talit (prayer shawls), the ark where the Torahs are housed and memorial boards.

  • According to the Sun-Sentinel, Rabbi Sholom Ciment kvelled that the congregation rallied to help pay part of the loan by the deadline, which was Nov. 30. “We are joyfully grateful that all of this will be put behind us,” he said.

  • This isn’t the first synagogue’s first lender kerfuffle that’s taken place during the holidays. Stonegate sought to recoup some of the aforementioned religious artifacts a few months ago during Yom Kippur.

Source: Florida Synagogue Resolves Foreclosure Dispute.

See also The Palm Beach Post: On eve of Hanukkah, synagogue near Boynton Beach gets best gift of all.

For an earlier post on this story, see Lender Threatens To Grab Five Torahs In F'closure Action Against Synagogue; "Oh, Too Bad!" Says Bank Prez When Told It Was Holiest Time Of Jewish Year.

Indiana AG: Loan Modification Outfit, Out-Of-State Attorney Illegally Peddled Loan Modification Services To State Homeowners

In Evansville, Indiana, the Evansville Courier & Press reports:
  • Indiana Attorney General Greg Zoeller personally filed a lawsuit in Vanderburgh Circuit Court [] claiming a for-profit foreclosure consulting company violated state consumer protection law.

  • The lawsuit alleges that the California-based Hope4Homes signed contracts with an Evansville couple and 10 other Indiana residents for services as credit services organization and foreclosure consultant. The lawsuit claims the company is owned and operated by attorney Mahan Abbasi.

  • According to the complaint, the company promised Harold and Sharon Matthews of Evansville that it would lower the interest rate on their mortgage by 2 percent. The couple signed numerous documents and an agreement to pay Hope4Homes $2,250 in three installments and they did pay $1,800 for the company's services, according to the complaint.

  • The company then told the couple to stop making payments on their mortgage while it was "negotiating" a loan modification for them. The couple had been current on their mortgage payments, but as a result of agreement they fell three months behind and new loan terms were never negotiated, Zoeller said.

  • No refund was provided, according to the complaint, even though the company advertised a complete money back guarantee and the couple demanded a refund.

  • Molly Butters, the attorney general office's spokeswoman on consumer issues, said the Hope4Homes name was deceiving. "The name Hope4Homes is playing on some of those nationally recognized organizations that are legitimate," she said.

  • Zoeller said the company is not registered to do business in Indiana and Abbasi is a licensed attorney in California but not Indiana. Additionally, the company had not registered with the attorney general's office with proof that it had a $25,000 surety bond.

For the story, see Greg Zoeller visits Evansville to sue foreclosure counselor.

South Florida Foreclosure Mill Files Lawsuit On Behalf Of Lender Against Woman For Foreclosure On Home She Sold In 1994

The South Florida Sun Sentinel reports:
  • Cathy Hammers was abruptly awakened by a continuous loud banging on the front door of her Virginia home the Saturday night after Thanksgiving. She was then served foreclosure papers by Texas-based Nationstar Mortgage and the Fort Lauderdale law firm of Marshall Watson on a Port St. Lucie home Hammers and her parents sold in 1994 — 15 years ago, reports The Palm Beach Post.

  • When I talked to Marshall Watson, Sonya in their litigation department, and asked why I was being served foreclosure papers on a mortgage I did not sign, on a property I haven’t lived in for almost 20 years, she got snippety with me and asked if I had an attorney. Why would I need an attorney when they’ve made the mistake?” Hammers told The Palm Beach Post.

  • By Thursday, Hammers said Marshall Watson had completely changed their tune. However, Hammers said she still planned to file her complaint with the Florida Attorney General’s Office to document Marshall Watson’s treatment of the situation, according to The Palm Beach Post.

For the full story, see Virginia resident gets foreclosure notice on Port St. Lucie home she sold in 1994.

Friday, December 10, 2010

ACLU Jumps Into Robosigner Fray; Files Motion To Reverse Lower Court Injunction Prohibiting Posting, Distributing Of Depositions On YouTube

In Central Florida, the Sarasota Herald Tribune reports:
  • The ACLU of Florida filed a motion [] appealing Sarasota Judge Rick DeFuria's decision not to allow a law firm to put depositions of so-called “foreclosure robo-signers” on its web site.

  • The motion in Florida's Second District Court of Appeal asked the court to reverse an injunction directing Christopher Forrest and The Forrest Law Firm, of Tampa, to remove video depositions of mortgage robo-signers from YouTube, and barring Forrest and others from distributing the depositions, according to a statement from the ACLU. Forrest represents Sarasota homeowners Peter and Barbara Morlon in a foreclosure proceeding.

  • Putting the videotaped depositions of “robo-signers” on YouTube gives the world an opportunity to see how the practices of banks and title companies are affecting homeowners facing serious financial problems,” Howard Simon, ACLU of Florida Executive Director, said in the statement. “This is a public service that shouldn't be subject to a court-imposed gag order.”

For more, see Court fight over 'robo-signer' depositions.

See Forrest v. Deutsch Bank National Trust Company for the initial appellate brief filed by the ACLU.

Florida Retiree Dodges House Payments For 25 Years; Holds Off Foreclosing Lenders By Tying Them In Legal Knots

In Okeechobee County, Florida, The Wall Street Journal reports:
  • Patsy Campbell could tell you a thing or two about fighting foreclosure. She's been fighting hers for 25 years. The 71-year-old retired insurance saleswoman has been living in her house, a two-story on a half acre in a tidy middle-class neighborhood here in central Florida, since 1978. The last time she made a mortgage payment was October 1985.


  • Ms. Campbell has challenged her foreclosure on the grounds that her mortgage was improperly transferred between banks and federal agencies,(1) that lawyers for the bank had waited too long to prosecute the case, that a Florida law shields her from all her creditors, and for dozens of other reasons. Once, she questioned whether there really was a debt at all, saying the lender improperly separated the note from the mortgage contract.

  • She has managed to stave off the banks partly because several courts have recognized that some of her legal arguments have some merit—however minor. Two foreclosure actions against her, for example, were thrown out because her lender sat on its hands too long after filing a case and lost its window to foreclose.

  • Ms. Campbell, who is handling her case these days without a lawyer, has learned how to work the ropes of the legal system so well that she has met every attempt by a lender to repossess her home with multiple appeals and counteractions, burying the plaintiffs facing her under piles of paperwork. She offers no apologies for not paying her mortgage for 25 years, saying that when a foreclosure is in dispute, borrowers are entitled to stop making payments until the courts resolve the matter.

For more, see The 25-Year 'Foreclosure From Hell'.

(1) Reportedly, Ms. Campbell stopped making mortgage payments in 1985 because of an illness that caused her to lose income and get behind on her bills, she says. By then, the savings-and-loan crisis had begun to take hold. First Federal merged with First Fidelity Savings and Loan, which assumed ownership of the Campbell loan. In 1987, First Fidelity sold the mortgage to American Pioneer Savings Bank, an Orlando-based lender that collapsed in the early 1990s. The loan would change hands four more times, and four different lenders would try to foreclose on her. But every lender that held her loan either merged or collapsed. Each time ownership of the lender changed, the foreclosure case against Ms. Campbell would be dropped.

The loan eventually made its way to the Resolution Trust Corp., the federally owned asset manager that liquidated assets of insolvent S&Ls, and later, to the Federal Deposit Insurance Corp. In June 1998, the FDIC sold the mortgage to Commercial Services of Perry, which filed to foreclose in 2000. After another illness, Ms. Campbell deeded the house to her daughter, Deborah Pyper. Years later, after Ms. Campbell recovered, the house was deeded back to her. Ms. Pyper declined to comment.

She maintains that at this point, no one owns her mortgage note, and that because of fraud and paperwork mistakes by the banks that transferred it over and over again in the 1990s, the debt has been made void, the story states.

'Zombie Debt' Buyer Hit With Federal Lawsuit For Allegedly Calling Consumer A "Lowlife S.O.B." In Attempt To Squeeze Him For Payment Of 'Stale' Debt

In Beaumont, Texas, The Southeast Texas Record reports:
  • A debt collection agency is being sued after one of its debt collectors allegedly referred to the debtor as a "lowlife." Tommy Hubert filed suit against Capital Management Services on Nov. 18 in the Eastern District of Texas, Beaumont Division.

  • Hubert states the defendant called his home after 9 p.m.,(1) a time which was inconvenient, and called Hubert a "lowlife S.O.B." The plaintiff states he has been called the abusive name after he repeatedly refused to pay any monies towards the debt as the alleged debt is more than 15 years old. Hubert claims that Capital Management made multiple phone calls regarding the debt and made false representations about the debt.

  • "Defendant's actions were done maliciously and in willful, wanton and reckless disregard for the rights of the Plaintiff," the lawsuit states. The defendant is accused of violations of the Fair Debt Collection Practices Act, the Texas Debt Collection Practices Act and the [Texas] Deceptive Trade Practices Act.

  • Hubert is asking for an award of statutory and actual damages, attorney's fees and interest and for an injunction prohibiting Capital management from continuing the behavior.(2)

Source: Debt collector is sued after calling debtor abusive names.

(1) The Federal Fair Debt Collection Practices Act generally prohibits debt collectors from contacting consumers before 8:00 am and after 9:00 pm. 15 USC 1692c(a)(1).

(2) See 'Zombie Debt' Buyer Slammed For $300K+ In Damages, $100K+ In Consumer's Attorney Fees For Pursuing Lawsuit On 'Stale' Debt for another story where a debt buyer files a lawsuit after the expiration of the applicable statute of limitations in an attempt to collect a 'stale' debt.

Incarceration Over Unpaid Debts On The Upswing? De Facto 'Debtors' Prisons' May Be Making A Comeback As Market For 'Zombie Debt' Zooms

In Anoka, Minnesota, the Minneapolis Star Tribune reports:
  • As a sheriff's deputy dumped the contents of Joy Uhlmeyer's purse into a sealed bag, she begged to know why she had just been arrested while driving home to Richfield after an Easter visit with her elderly mother.

  • No one had an answer. Uhlmeyer spent a sleepless night in a frigid Anoka County holding cell, her hands tucked under her armpits for warmth. Then, handcuffed in a squad car, she was taken to downtown Minneapolis for booking. Finally, after 16 hours in limbo, jail officials fingerprinted Uhlmeyer and explained her offense -- missing a court hearing over an unpaid debt. "They have no right to do this to me," said the 57-year-old patient care advocate, her voice as soft as a whisper. "Not for a stupid credit card."(1)

  • It's not a crime to owe money, and debtors' prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts. In Minnesota, which has some of the most creditor-friendly laws in the country, the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009, a Star Tribune analysis of state court data has found.

  • Not every warrant results in an arrest, but in Minnesota many debtors spend up to 48 hours in cells with criminals. Consumer attorneys say such arrests are increasing in many states, including Arkansas, Arizona and Washington, driven by a bad economy, high consumer debt and a growing industry that buys bad debts and employs every means available to collect.

  • Whether a debtor is locked up depends largely on where the person lives, because enforcement is inconsistent from state to state, and even county to county. In Illinois and southwest Indiana, some judges jail debtors for missing court-ordered debt payments. In extreme cases, people stay in jail until they raise a minimum payment. In January, a judge sentenced a Kenney, Ill., man "to indefinite incarceration" until he came up with $300 toward a lumber yard debt.


  • How often are debtors arrested across the country? No one can say. No national statistics are kept, and the practice is largely unnoticed outside legal circles. "My suspicion is the debt collection industry does not want the world to know these arrests are happening, because the practice would be widely condemned," said Robert Hobbs, deputy director of the National Consumer Law Center in Boston.


  • The laws allowing for the arrest of someone for an unpaid debt are not new. What is new is the rise of well-funded, aggressive and centralized collection firms, in many cases run by attorneys, that buy up unpaid debt and use the courts to collect.

  • Three debt buyers -- Unifund CCR Partners, Portfolio Recovery Associates Inc. and Debt Equities LLC -- accounted for 15 percent of all debt-related arrest warrants issued in Minnesota since 2005, court data show.(2) The debt buyers also file tens of thousands of other collection actions in the state, seeking court orders to make people pay. The debts -- often five or six years old -- are purchased from companies like cellphone providers and credit card issuers, and cost a few cents on the dollar.


  • Todd Lansky, chief operating officer at Resurgence Financial LLC, a Northbrook, Ill.-based debt buyer, said firms like his operate within the law, which says people who ignore court orders can be arrested for contempt. By the time a warrant is issued, a debtor may have been contacted up to 12 times, he said. "This is a last-ditch effort to say, 'Look, just show up in court,'" he said.

  • Few debtors realize they can land in jail simply for ignoring debt-collection legal matters. Debtors also may not recognize the names of companies seeking to collect old debts. Some people are contacted by three or four firms as delinquent debts are bought and sold multiple times after the original creditor writes off the account.


  • A year ago, Legal Aid attorneys proposed a change in state law that would have required law enforcement officials to let debtors fill out financial disclosure forms when they are apprehended rather than book them into jail. No legislator introduced the measure.


  • Many debtors, like Robert Vee, 36, of Brooklyn Park, get a second surprise after being arrested -- their bail is exactly the amount of money owed. Hennepin County automatically sets bail at the judgment amount or $2,500, whichever is less. This policy was adopted four years ago in response to the high volume of debtor default cases, say court officials. Some judges say the practice distorts the purpose of bail, which is to make sure people show up in court.

For more, see In jail for being in debt (You committed no crime, but an officer is knocking on your door. More Minnesotans are surprised to find themselves being locked up over debts).

In related stories, see:

  • St. Petersburg Times: Debtors' prison— again (In a little-noticed trend blamed on the state's hard economic times, several courts in Florida have resurrected the de facto debtor's prison — having thousands of Floridians jailed for failing to pay assessed court fees and fines),

  • Atlanta Journal Constitution: Deal frees 'debtor prison' woman (A woman held in a halfway house for months beyond her original sentence because she could not pay a $705 fine was released Tuesday after an agreement between the state Department of Corrections and the Southern Center for Human Rights. Ora Lee Hurley had been caught in a legal Catch-22 that kept her confined to the Gateway Diversion Center in Atlanta for eight months beyond her initial 120-day sentence for a probation violation),

  • AlterNet: Owe Money? Be Careful, or You Might End Up in Jail (Owing money is not a criminal offense in the USA. But big business has found a way to end-run this process. Reports of mild-mannered Americans getting arrested for being in debt are starting to pop up in states across the country. All over the Net, we've been reading about these poor saps snatched off the street -- right in front of their horrified children -- by glowering cops and locked up just for missing a few credit card payments),

  • Public News Service: A Return to Debtor’s Prisons? (Debtor's prisons were outlawed in the 19th century, but recent practices by debt collectors in Iowa have civil rights experts wondering if the prisons are back in a new form. Here's the tactic being used by some collection agencies - ask a judge to issue a warrant for the arrest of a debtor if they don't make good on a court-ordered payment).

(1) Reportedly, Uhlmeyer walked free after her nephew posted $2,500 bail. It took another $187 to retrieve her car from the city impound lot. Her 86-year-old mother later asked why she didn't call home after leaving Duluth. Not wanting to tell the truth, Uhlmeyer said her car broke down and her cell phone died.

(2) See Top Five Companies Using Debt Arrest Warrants in Minnesota (To their credit, the Minneapolis Star Tribune confesses to using these warrants four times during 2005-2009).

Thursday, December 09, 2010

Upstate New York Foreclosure Mill Operation Continues To Attract Media Spotlight

Bloomberg News recently ran a less-than-flattering 'profile' on Buffalo, NY-based foreclosure mill law firm Steven J. Baum, P.C. that highlights some of the attention this outfit has recently attracted. A couple of excerpts:
  • Steven J. Baum’s New York foreclosure law firm has attracted lawsuits and fines for its actions during the housing crisis, with one judge likening its arguments to something out of theTwilight Zone.” As recently as last month, Baum’s firm, which one lawyer for homeowners said processes about half the foreclosures in New York state, was ordered to pay $14,532.50 in legal fees and costs and a $5,000 fine by Nassau County District Court Judge Scott Fairgrieve in Hempstead, New York.

  • The judge said that when Paul Raia refused to vacate a Garden City co-op after foreclosure, Baum’s firm filed an eviction petition that misidentified the lender. “Falsities were contained in five paragraphs out of only ten paragraphs in the entire petition,” Fairgrieve wrote in his Nov. 23 decision.(1)


  • New York State Supreme Court Justice Arthur M. Schack in Brooklyn called the firm’s explanations in one case “so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling.” [...] “Steven J. Baum PC appears to be operating in a parallel mortgage universe, unrelated to the real universe,” the judge wrote in that May decision.(2)Next stop, the Twilight Zone,” he said, quoting from Serling’s TV series about science fiction and the supernatural.


  • In January, Diana Adams, the U.S. trustee monitoring bankruptcy cases in Manhattan, reserved the right to seek sanctions against Baum’s firm in the bankruptcy case of a Bronx homeowner. The trustee accused Baum client JPMorgan of filing documents “that appear to be either patently false or misleading,” according to a court a filing recommending sanctions against the bank.

For more, see `Twilight Zone' Foreclosure Law Firm Draws Fine, Suits in New York Courts.

See also:

(1) Federal Home Loan Mtge. Corp. v Raia, 2010 NY Slip Op 52003 (Dist. Ct. Nassau Cty, 1st Dist., November 23, 2010).

See also Federal Home Loan Mtge. Corp. v Raia, 28 Misc 3d 1212, 2010 NY Slip Op 51287 (Dist. Ct. Nassau Cty, 1st Dist., July 22, 2010) for an earlier ruling in this litigation from Judge Fairgrieve that ultimately led to the sanctions imposed on the Baum law office in the latest ruling.

(2) HSBC Bank USA, N.A. v Yeasmin, 27 Misc 3d 1227, 2010 NY Slip Op 50927 (NYS Sup. Ct. Kings County, May 24, 2010).

See also Brooklyn Judge Journeys Through "The Twilight Zone" In Recent Ruling Slamming Standing Lacking Lender, Notorious Foreclosure Mill Law Firm.

In his ruling, Justice Schack gives this parting shot that merits some note if you're a plaintiff's attorney or stockholder in HSBC Bank contemplating a future stockholder derivative action against HSBC:

  • The Court can only wonder if this journey through the mortgage twilight zone and the dissemination of this decision will result in [Vice President Loan Documentation Thomas] Westmoreland's affidavit used as evidence in future stockholder derivative actions against plaintiff HSBC. It can't be comforting to investors to know that an officer of a financial behemoth such as plaintiff HSBC admits that "[a]n investigation of each and every loan included in a particular mortgage pool, however, is not conducted, nor is it feasible" and that "the fact that a particular mortgage pool may include loans that are already in default is an ordinary risk of participating in the secondary market."

Wells Fargo, Upstate NY Foreclosure Mill To Face The Heat In Explaining Dubious Documents Filed In Foreclosure Matter

Attorney Abigail Field writes at AOL's Daily Finance:
  • The banks' constant refrain during this mortgage mess is that the paperwork issues are mere technicalities -- nothing to be concerned about. The documents are all true, they assert, we just didn't honor the proper procedures.

  • But it doesn't take much digging into the issue to find a case like that of Tandala Mims of New York, which calls into question the whole foreclosure process and the systems that support it. In Mims's case, which will be argued again on Thursday, her lawyer, consumer bankruptcy attorney Linda Tirelli, argues that Wells Fargo should not be able to foreclose during Mims's bankruptcy because the bank's documents claiming ownership of the mortgage appear to be false in several ways.(1)

For more, see A Foreclosure Fiasco: The Case of Tandala Mims v. Wells Fargo.

(1) See In re Mims - Objection To Motion for Automatic Relief From Automatic Stay etc. etc. for bankruptcy attorney Linda Tirelli's motion setting forth the ostensible indicators of fraud in the filed foreclosure documents in the matter being litigated.

The motion features the activities of prolific robosigner John Kennerty; the outfit listed as representing the lender in this case is the notorious, Buffalo, NY-based foreclosure mill Office of Steven J. Baum, P.C.).

Report: LPS Shifted Robosigning Operations To Others In Response To Heat About Phony F'closure Docs Allegations; Notaries w/ Too Many Questions Axed

A recent investigative report by Reuters contains this excerpt reporting how foreclosure services outfit Lender Processing Services reacted to the heat brought upon on when it began being hit with allegations manufacturing bogus documents in foreclosure cases:
  • Reuters has learned that rather than stamping out the practice, LPS in December 2009 began transferring signing operations out of its own offices and into those of firms it has close relationships with. [LPS spokeswoman Michelle] Kersch confirmed that LPS sent personnel to work "at client locations to assist clients during this period."

  • For example, LPS arranged through a local employment service to hire about a dozen notaries, sending them to work at a new signing operation set up in the Jacksonville office of American Home Mortgage Servicing, one of LPS's biggest clients.

  • Records from county recorders' offices show that at least as recently as October, American Home Mortgage Servicing employees signed exactly the same type of questionable mortgages assignments that LPS staffers at DocX and in Minnesota had signed. These included assignments done on behalf of defunct companies like American Brokers Conduit, and after foreclosure actions already had been filed. Reuters obtained a partial list of the names of the LPS-hired notaries. Copies of mortgage assignments available publicly show that these notaries notarized many of these assignments, including ones signed on behalf of defunct companies.

  • In interviews, two of the notaries, who asked that they not be identified, said the American Home Mortgage Servicing office also set up a "robosigning" operation for affidavits, another type of document required in foreclosure cases. The employees who signed the affidavits were swearing that they had verified the facts listed in them, such as the specific amounts owed by homeowners.

  • But the two notaries, who said they were dismissed after raising questions with supervisors about the practices, said that each morning about a half-dozen American Home Mortgage Servicing employees in about an hour would sign some 200 affidavits received via LPS's computer system, without reading them, let alone verifying the facts they contained. "In that time, come on, you have not verified figures in 200 documents. That's impossible," one of the notaries said.

For the story, see Special report: Legal woes mount for a foreclosure kingpin (requires a five-page "click-through" to read the entire story; for those who prefer the entire story on one web page, TRY HERE, TRY HERE, or TRY HERE).

Minnesota AG: Loan Modification Rackets Touted 'Attorney' & 'Charitable' Status To Dupe Homeowners Into Paying Illegal Upfront Fees

From the Office of the Minnesota Attorney General:
  • Minnesota Attorney General Lori Swanson [] filed lawsuits against two out-of-state companies that charged Minnesota homeowners up to $3,500 in unlawful fees to help them renegotiate their home mortgages. [...] The first lawsuit was filed against Balanced Legal Group of California and its attorney, Deepak Parwatikar, which charged homeowners up to $3,500 for supposed mortgage help. The second lawsuit was filed against Home Protection Coalition of Wyoming, which charged homeowners up to $2,300.

  • As regulators around the country have cracked down on widespread mortgage assistance scams, Attorney General Swanson said that her Office has seen an uptick of complaints involving companies that (1) tout their attorney status to build credibility to get people to sign up for their services, and (2) get people to sign up for expensive services by warning homeowners to hire them because there are other fraudulent companies that make false promises of mortgage help.(1)

For the Minnesota AG press release, see Attorney General Swanson Files Lawsuits Against Two Companies That Use The Threat Of Foreclosure Scams To Dupe Citizens Into Paying Thousands Of Dollars In Unlawful Fees For Supposed Mortgage Help (Attorney General warns citizens not to pay advance fees to companies for assistance in renegotiating their home mortgages).

(1) In connection with the lawsuit against Balanced Legal Group of California and its attorney, Deepak Parwatikar, the AG alleges that they peddles the following pitches on its website:

  • The banks have attorneys so you need to have a law firm on your side to protect your interests. Your home is one of your most treasured assets. DON’T use a non-attorney company that claims to work with attorneys to try and negotiate a solution concerning this treasured asset” and

  • BEWARE of brokers, ‘attorney based’, ‘attorney assisted’ and other boiler room type providers. Remember this is a relatively new industry and there is little regulatory control. The laws are constantly changing and these entities often skirt or break laws.”

Regarding the lawsuit against Home Protection Coalition of Wyoming, the AG alleges:

  • [I]n 2009, the United States Congress funded a campaign called the “Loan Modification Scam Alert” to warn homeowners of fraudulent modification scams. The lawsuit against Home Protection Coalition alleges that the organization falsely posed as 501(c)(3) corporation and mailed Minnesota homeowners solicitations that bear an almost identical logo to theLoan Modification Scam Alert.” Home Protection Coalition’s website also states as follows:

    Due to the current foreclosure crisis, a bill has been introduced to Congress. This bill allows Home Protection Coalition to offer assistance to homeowners through the Economic Foreclosure Stimulus Plan.

    This initiative may reduce your mortgage payment by as much as 40%. . . . Home Protection Coalition is a not for profit housing counseling agency that employs forensic mortgage auditors, paralegals, attorneys and highly skilled lender specific negotiators that will write a loan modification that fits your specific financial needs

  • To further deceive consumers, Home Protection Coalition calls its $2,300 fee a charitabledonation.” In addition to charging the company with violations of Minnesota’s mortgage modification laws which prohibit advance fees, the lawsuit alleges that the organization engaged in charitable solicitation fraud.

Wednesday, December 08, 2010

Long Island Judge Smacks Upstate NY Foreclosure Mill w/ $5K In Fines, Order To Pay $15K+ Legal Fees To Lawyer For Foreclosed-Upon Homeowner

In Hempstead, New York, a recent court ruling by Nassau County District Court Judge Scott Fairgrieve hammered the notorious foreclosure mill law office of Steven J. Baum, P.C. for filing what he (Fairgrieve) said were a number of sworn allegations that were false.

The following excerpts from Judge Fairgrieve's opinion reflect some of what went on in this action, an attempt to boot a local foreclosed homeowner (bold text is my emphasis, not in the original text):
  • At the hearing, the attorney for Baum repeatedly attempted to excuse the firm's past conduct on the basis that it is sometimes acceptable to swear to false statements if the statements are immaterial.

    Further, counsel exacerbated the situation by trying to evade questions concerning whether false statements had been made, apparently trying to appeal to a substantive difference between the terms "incorrect" and "false." Conversely, every statement in the petition was material to a determination by this court in this case.

    The misrepresentation of the material statements here was outrageous. If not for the false statements, this case could have been dismissed more easily for lack of standing. Baum has not convinced this court that they have acted professionally responsible either in submitting truthful documents or accepting accountability for their mistakes.

    ***************************** ***

    While it may be possible to overlook an error in one paragraph of a petition, despite thorough proofreading, overlooking falsities in five paragraphs is repugnant and will not be tolerated in this court. This is especially the case when falsities were contained in five paragraphs out of only ten paragraphs in the entire petition, one of the truthful paragraphs being that the petitioner's attorney correctly swore to counsel's own name. A brief proofreading of the petition before submission should have led to the production of a petition that was more than half correct.

    Willful carelessness of this sort will not be accepted. Also, substituting reasoned and considered statements for computer generated ones displaces the verifying attorney's responsibility to make even a cursory investigation into the truthfulness of the statements to which he swears.


    The attention and time of the Volunteer Lawyers Project have been unnecessarily diverted in dealing with the underlying case and Baum's behavior. Mr. de Winter appeared in the sincere interest of and commitment to justice. In this regard, this court finds it appropriate to award attorney's fees and costs of $14,532.50 to go to the benefit of the Volunteer Lawyers Project.

    Specifically, this represents attorney's fees at $250.00 per hour for 57.75 hours and $95.00 in costs. This court also imposes monetary sanctions on Steven J. Baum, P.C. in the amount of $5,000.00. This amount is appropriate for the foregoing reasons.

    Further, it has come to this court's attention that this is not the first time Baum has been unethical. In Ameriquest Mortg. Co., Baum fought the imposition of sanctions on substantially similar facts only three years ago. [Ameriquest Mortg. Co. v. Basevich, 16 Misc 3d 1104(A), 841 NYS2d 825 (2007).] Analogous to the facts here, in Ameriquest Mortg. Co. Baum faced sanctions concerning Baum's submission of incorrect documents in an attempt to bypass lack of standing. There the court declined to sanction Baum. The relief granted to Baum therein stood as a reminder to be more cautious in the future, especially concerning standing issues. It is apparent from this case, such a short time later, that Baum has failed to heed this command.
For Judge Fairgrieve's ruling, see Federal Home Loan Mtge. Corp. v Raia, 2010 NY Slip Op 52003 (Dist. Ct. Nassau Cty, 1st Dist., November 23, 2010).

(1) See also NY Trial Judge: Buffalo-Based Foreclosure Mill Law Firm's Actions "A Dereliction Of Professional Responsibility!" for additional evidence that Baum has ostensibly failed to heed this command, and in which is reported that Suffolk County, New York State Supreme Court Justice Melvyn Tanenbaum has recently issued these short form copies of 30 recent orders excoriating the Baum firm over court filings in which "The court deems plaintiff's counsel's actions to be an intentional failure to comply with the directions of the court and a dereliction of professional responsibility").

Media Report: Storm Clouds Continue To Darken Over Accused Bogus F'closure Document Manufacturing Racket; Feds Impanel Grand Jury, Join Class Action

In Jacksonville, Florida, an invetigative report by Reuters on the alleged fraudulent foreclosure document manufacturing racket Lender Processing Services ("LPS") reveals that LPS' legal problems are more serious than the outfit's CEO Jeff Carbiener recently let on to Wall Street analysts in an October 29, 2010 conference call:

  • Questionable signing and notarization practices weren't limited to its subsidiary, called DocX, but occurred in at least one of LPS's own offices, mortgage assignments filed in county recorders' offices show.

  • And rather than halt such practices after the federal investigation got underway, the company shifted the signing to firms with which it has close business ties. LPS provided personnel to work in the new signing operations, according to information from an LPS spokeswoman and court records including an October 21 ruling by a judge in Brooklyn, New York.(1) Records in county recorders' offices, and in the judge's opinion, show that "robosigning" and preparation of apparently false documents went on at these sites on a large scale.


  • A spokeswoman for LPS confirmed to Reuters that it had helped other firms establish operations that performed the same function. [...] Interviews with key players and court records also show that pending investigations and lawsuits pose a bigger threat to the company than Carbiener let on.


  • The criminal investigation in Jacksonville by federal prosecutors and the Federal Bureau of Investigation is intensifying. The same goes for a separate inquiry by the Florida attorney general's office. Individuals with direct knowledge of the federal inquiry said that prosecutors have impaneled a grand jury, begun calling witnesses and subpoenaed records from LPS.


  • Meanwhile, the threats from four class action lawsuits filed in federal courts appear to be greater than the company has indicated, especially one filed in Mississippi. In a highly unusual move, a unit of the U.S. Justice Department has joined that suit as a plaintiff.

  • The lawsuit alleges that LPS extracted many millions of dollars in kickbacks from law firms through an illegal fee-sharing arrangement, in exchange for doling out lucrative foreclosure work to them. The lawsuit also charges that LPS illegally practices law and routinely misleads homeowners and federal bankruptcy judges.


  • Copies of LPS internal documents obtained by Reuters and testimony in lawsuits shed new light on the company's unusual dealings with its vast network of law firms. LPS relentlessly pressed them for speed. The result was almost instant filing of foreclosure documents, mostly prepared by clerical workers, not lawyers, according to court records, including deposition testimony by LPS officials. Several judicial opinions from around the country and evidence from investigations in Florida show that these documents often were riddled with inaccurate information about the amount homeowners owed, and were signed and notarized en masse without anyone at the firms checking the information in them.


  • In an April 2009 court decision, Diane Weiss Sigmund, a federal bankruptcy judge in Philadelphia, specifically faulted lawyers whose firm filed LPS-transmitted documents in court using clerical workers to sign the name of a lawyer who hadn't looked at them. In that case, it turned out that, contrary to the documents supplied via the LPS system, the homeowners weren't in default on their mortgage.

  • Referring to the LPS computer system, the judge stated, "the flaws in this automated process become apparent." She added: "An attorney must cease processing files and act like a lawyer."(2)

For more, see Special report: Legal woes mount for a foreclosure kingpin (requires a five-page "click-through" to read the entire story; for those who prefer the entire story on one web page, TRY HERE, TRY HERE, or TRY HERE).

(1) For Justice Arthur M. Schack's ruling, see OneWest Bank, F.S.B. v Drayton, 2010 NY Slip Op 20429 (NY Sup. Ct., Kings County, October 21, 2010).

(2) In re Taylor, Case No. 07-15385-DWS (Bankr. E.D. Pa., April 15, 2009), at page 32. Judge Sigmund concludes her 58-page opinion with this parting shot at robosigning foreclosure document processor outfits and the foreclosure mill law firms they hop into bed with:

  • At issue in these cases are the homes of poor and unfortunate debtors, more and more of whom are threatened with foreclosure due to the historic job loss and housing crisis in this country. Congress, in its wisdom, has fashioned a bankruptcy law which balances the rights and duties of debtors and creditors. Chapter 13 is a rehabilitative process with a goal of saving the family home. The thoughtless mechanical employment of computer·driven models and communications to inexpensively traverse the path to foreclosure offends the integrity of our American bankruptcy system. It is for those involved in the process to step back and assess how they can fulfill their professional obligations and responsibly reap the benefits of technology. Nothing less should be tolerated.

MERS: The Central Player Responsible For Clouding The Title To Millions Of Homes Through Destruction Of The U.S. Land-Record System?

Attorney Abigail Field writes at AOL's Daily Finance:

  • Petersen detailed how the banks, Fannie Mae, Freddie Mac and Ginnie Mae destroyed America's land-record system, a method of tracking property sales that's existed since colonial times. Instead, they put in place a system called "MERS" (for Mortgage Electronic Registration Systems) that's legally shaky, makes tracking mortgage-note ownership extremely hard and may be clouding the title of millions of properties.

  • But the MERS situation could be even worse than Petersen described to Congress: Millions of documents, including millions of foreclosure documents, may have been signed in MERS's name by people without the power to do so. A lack of authority would call into question the validity of all those documents. While the ramifications are uncertain, the bottom line is, as Petersen told me: "This issue injects yet another level of uncertainty into the already murky swamp of foreclosure nonsense."

For more, see MERS: The Mortgage Database That's Clouding Millions of Titles.

Vacant Foreclosed Home Hijacker Scraps "Adverse Possession" Defense; Cops Plea To Organized Fraud, Dodges Jail Time, Gets Two Years Probation

In Fort Lauderdale, Florida, Broward-Palm Beach New Times reports:
  • The State Attorney's Office has wrapped up its case against Mark Guerette, the guy written about in the New York Times and here on the Juice for his work leasing empty, foreclosed homes to families in need by way of an antiquated squatter's-rights law.

  • Guerette found around 100 foreclosed homes that had been neglected in Broward County, particularly North Lauderdale, and informed the banks that he intended to move in and start renting them out. He used "adverse possession," an old clause in the Florida Statutes that grants someone ownership of a neglected property if he takes care of it for seven years.

  • After multiple meetings with detectives and Broward prosecutors in which Guerette and his lawyer say they cooperated fully, he pleaded "no contest" to charges of organized fraud in the second degree. He was then adjudicated guilty without a trial and given two years' probation. Guerette says he wanted to avoid a trial because he needs to deal with his own foreclosure and take care of his two children. [...] As part of his plea deal, Guerette agreed not to file any more claims of adverse possession for two years.

For more, see Fraud Case Ends With Probation for Rogue Foreclosure Landlord Mark Guerette.

Norfolk Feds Score Guilty Plea From Foreclosure Rescue Operator Involving Sale Leaseback Equity Stripping Ripoffs

From the Office of the U.S. Attorney (Norfolk, Virginia):
  • Shanita Lacy, age 34, of Chesapeake, VA, pleaded guilty [] in Norfolk federal court to conspiring to commit mail and wire fraud in connection with a scheme to fraudulently obtain home mortgages.


  • According to court documents, Lacy admitted that, during 2007 and 2008, she conspired with others to fraudulently obtain eight mortgage loans worth $1,549,170. Through her Virginia Beach business known as Clean Slate Financial Services, Lacy targeted homeowners in financial distress with false promises of credit repair and action to enable them to save their homes from foreclosure.

  • Lacy then oversaw the sale of the homes at inflated prices to straw buyers, who Lacy helped to obtain mortgage loans based upon falsified income and down payment data. At or soon after the closings, Lacy liquidated and made off with the homeowners’ equity. Soon thereafter, the straw buyers defaulted on the mortgage loans and the homes were foreclosed upon.

For the U.S. Attorney press release, see Chesapeake Woman Pleads Guilty to “Foreclosure Rescue” Mortgage Fraud Scheme.

Tuesday, December 07, 2010

Bank of America In Middle Of Another Mortgage Servicing Screw-Up; Promises To Give Back Home It Now Admits Was Foreclosed On In Error

In Jamaica, Queens, author and New York Times' columnist Joe Nocera gives his account of another Bank of America foreclosure fiasco resulting in the wrongful foreclosure of the home of 73-year old Lilla Roberts, and the subsequent efforts to fight back with the help of her attorney, Elizabeth Lynch with MFY Legal Services.(1) Combined with some 'media heat', Bank of America and Fannie Mae ultimately acknowledged that foreclosing on Ms. Roberts home had been a mistake.(2)

He concludes his column with this less-than-optimistic observation:

  • Let’s face it: Ms. Roberts got a break. Because she had a dogged lawyer, who had the wit to get a New York Times columnist interested in her case, a terrible mistake was uncovered. As a result, an unjustified foreclosure may well be reversed. But it has to make you wonder how many other people have lost their homes because of similar mistakes. I can’t bear to venture a guess. It’s too sickening to contemplate.
For the story, see A Happy Ending to a Raw, but Common, Tale.

(1) MFY Legal Services is a not-for-profit law firm in New York City that provides free legal advice, counsel and representation to low-income New Yorkers on a wide range of civil legal issues, including housing, public benefits and entitlements, employment, mental health and adult home issues, consumer problems, and adoptions by foster care parents.

(2) According to the story, the notorious Buffalo, NY-based foreclosure mill law firm of Steven J. Baum, P.C. participated in the foreclosure process, and which, at one point, tried to get Ms. Roberts to waive her legal rights as a condition for a loan modification agreement.

Disbarred South Florida Title Attorney Gets 70 Months For Looting $2.7M From Escrow Account; Cash Intended To Pay Off Mortgages In R/E Closings

The South Florida Sun Sentinel reports:
  • Disbarred Boca Raton attorney James B. Hayes was sentenced Friday to 70 months in federal prison for stealing clients' funds. Hayes, who pled guilty in September to making false statements on residential real estate settlement documents, was also ordered to pay more than $2.7 million in resititution.

  • According to a release from U.S. Attorney Wilfredo Ferrer, Hayes, 57, a title attorney, withheld funds from clients and mortgage lenders during real estate transactions. The money was supposed to be used to pay off loans and cover transaction costs. The Florida Bar suspended his license to practice law last spring, but it found Hayes continued to practice law until he was permanently disbarred in August.

Source: Boca Raton attorney who stole $2.7 million from clients' funds jailed 70 months.

For the U.S. Attorney (Miami, Florida) press release, see Title Lawyer Sentenced For Stealing Trust Funds (Among those ccoperating in the investigation were The Florida Bar and title insurance companies Attorneys Title, Old Republic and Chicago Title).

Buyer Of Foreclosed Home Illegally Gives Unwitting Tenants The Boot Without Prior Notice, Ignoring Federal Protections Against Foreclosure Evictions

In Mableton, Georgia, WXIA-TV Channel 11 reports:
  • It should not have happened: A family's belongings in heaps; and the family -- Patrick Duff, Sasha Davis and their now 10-day-old daughter Mia -- evicted from their rented house in Mableton on Thursday morning, without any warning, they say, insisting they did not know that their landlords had lost the home in a foreclosure on the Cobb County Courthouse steps. "The rug was yanked out from under us," Duff said on Thursday.

  • "It says to me that something is very awry," Karen Gandolfo, an Atlanta mortgage and foreclosure consultant, said on Friday. "It says to me that there's the possibility that due process wasn't served."


  • Maggie Kinnear of Atlanta Legal Aid told 11Alive News that what happened to Duff and Davis "should not happen anymore," because of the federal law signed by President Barack Obama in May, 2009 called the "Protecting Tenants At Foreclosure Act." She said the law was meant to prevent evictions of tenants when the landlords lose the houses in foreclosure.

  • "If the tenant has a lease," which Duff and Davis did, from February, 2010 until February, 2011, "the law says they cannot be evicted after the foreclosure, they can stay on the property until the lease expires." If the buyer of the foreclosed house is not a financial institution or private investor, if it is someone who intends to move into it and live in it, then the tenants' lease is null and void, but "they must receive 90 days' notice to vacate," Kinnear said.(1)


  • Duff and Davis said about the only contact they've had with the [foreclosed landlords] in recent weeks was on Thursday afternoon, a few hours after the eviction, when the[y] gave them their deposit back, a check for $1,600 -- their first and last months' rent.(2)

For the story, see Family Evicted Despite Law Protecting Tenants From Landlord's Foreclosure.

(1) According to the foreclosure deed recorded in this matter, the foreclosure sale took place on October 5, 2010, and the property was purchased by an outfit called REO Funding Solutions, LLC.

(2) While failing to tell the family the home was in some stage of foreclosure wasn't a very nice thing to do on the part of the now-foreclosed landlord, the Federal Protecting Tenants At Foreclosure Act takes the former owner off the hook for any responsibility for illegal evictions in violation of the statute and places it on the purchaser at the foreclosure sale, and any subsequent purchasers. The attention given in this story to the former landlords for failing to inform the tenants of the foreclosure (but who at least refunded the family of their security deposit) should be redirected to the lowlife(s) who now own(s) the home, and, if applicable, the snoozing judge who rubber-stamped the eviction proceeding without regard to the legal rights under the Federal law of any non-owner-occupants in possession of the home.

'Zombie Debt' Buyer Slammed For $300K+ In Damages, $100K+ In Consumer's Attorney Fees For Pursuing Lawsuit On 'Stale' Debt

Buried in a story on explosion of debt collection lawsuits by 'zombie debt" buyers, which recently appeared in The Wall Street Journal, contained these excerpts:
  • Once debt buyers sue to retrieve debt, they are subject to state laws that impose a statute of limitations, often between five and seven years after the borrower stops making loan payments.

  • In 2007, CACV, a unit of debt collector SquareTwo Financial Corp., sued Timothy McCollough in state court in Montana to recover $3,800 on a credit card from J.P. Morgan Chase & Co., and another $5,500 in interest, collection costs and $480 in lawyer's fees.

  • Mr. McCollough wrote to the court in March 2008, explaining that he had been living on Social Security income since suffering a head injury in 1990. He says that he hadn't made any payments or used the credit card for more than eight years, putting his account beyond the state's statute of limitations for debt collection. He asked the court to dismiss the suit, saying: "This is the third time they have brought me to court on this account. Do I have to sue them so I can live quietly in pain?"

  • In April 2009, a judge awarded damages of $310,000 plus $108,000 in legal fees and costs to Mr. McCollough.

Source: Boom in Debt Buying Fuels Another Boom—in Lawsuit.

Monday, December 06, 2010

Pittsburgh Bankruptcy Chief Sanctions Lying Lawyer, Foreclosure Mill Firm For Filing Manufactured Docs; Orders Both To Report To Disciplinary Board

In Pittsburgh, Pennsylvania, the Pittsburgh Tribune Review reports:
  • The chief bankruptcy judge for Western Pennsylvania sanctioned an attorney and her Philadelphia law firm for filing deceptive documents in a foreclosure proceeding and then lying about them in a case against a Monroeville woman.

  • The firm filed copies of three key letters created after the fact and never sent to the homeowner or her lawyer, U.S. District Judge Thomas O. Agresti ruled. Under Agresti's order last week, attorney Leslie A. Puida and the firm Goldbeck, McCafferty and McKeever must report to the Disciplinary Board of the state Supreme Court, which could impose penalties.(1)

  • Puida could not be reached. The firm did not respond to a request for comment [last week]. A partner in the firm told the judge it initiated practices and procedures to avoid a recurrence.

For more, see Judge sanctions attorney, law firm in Monroeville case.

In related stories, see:

(1) Under Judge Agresti's order, the court declined to slam the firm with monetary sanctions (the Trustee suggested the firm cough up $50K), "[g]iven the magnitude of the financial loss which GMM has already experienced in the form of attorney fees and lost client revenue as a result of this matter" (around $400K in out-of-pocket expenses which will not be reimbursed by insurance coverage), saying that banging them for more cash "could jeopardize the continued operation of GMM, possibly threatening the livelihoods of innocent employees who had nothing to do with the violations addressed in the Rule."

Likewise, Judge Agresti declined to impose monetary fines on Puida or suspend her from practicing in the bankruptcy court in the state's Western District (the Trustee suggested one year), for reasons that can be described as practical (and possibly humanitarian) as set forth in his order.

Judge Agresti's ruling is the latest in the ongoing litigation involving Countrywide Home Loans, and alleged fabricated evidence, suspected forgeries, and requests for allegedly improper fees or payments from bankrupt homeowners filed in this and other cases he has overseen in the U.S. Bankruptcy Court in Pittsburgh. See:

(2) The following comment to the ABA Journal story was left by William A. Roper, Jr. which merits attention:

Widespread Unauthorized Practice Of Law Under Cover Of Philadelphia Foreclosure Mill To Throw Title To Foreclosed Homes Into Question?

Attorney Abigail Field writes at AOL's Daily Finance:
  • Two Pennsylvania cases, one state and one federal, have exposed new types of document problems in foreclosure cases. One of the cases has potentially transformative consequences for thousands of troubled Pennsylvania homeowners.

  • At the center of each is the same law firm: Goldbeck McCafferty & McKeever (GMM). A lawsuit filed by Patrick Loughren against GMM details how the firm allowed -- and perhaps still allows -- nonlawyers in its firm to file and prosecute thousands(1) of foreclosures. As long as a lawyer supervises foreclosure filings, and at least reads them before they're submitted to the court, that is acceptable.

  • But Loughren is suing because all three named partners of GMM, Joseph Goldbeck, Gary McCafferty and Michael McKeever, have admitted under oath -- during depositions last September and in a separate case in December 2009 -- that no attorney ever read the filings.(2) The partners made clear that the practice has gone on for the past several years.


  • [L]oughren's complaint is so detailed, and the partners' admissions so damning, that if this case is decided on the merits, it's hard to see how Loughren could lose. If Loughren does win, the consequences could be far-reaching: All current foreclosure actions filed by GMM could be dismissed on the grounds that lawsuits filed by nonlawyers are a "nullity," meaning they don't count. That's hundreds, potentially thousands, of cases across Pennsylvania.

  • All completed foreclosures that were brought using this method could also be called into question for the same reason, and given that the practice has been going on for years, a Loughren win could throw into question the title to thousands of Pennsylvania properties. In addition, any homeowners who paid legal fees to the banks and GMM during their foreclosures could get that money back.


  • Although the practice of having nonlawyers file suit wasn't at issue in that case, learning of it upset U.S. Bankruptcy Court Judge Thomas Agresti [in an unrelated case] so much he wrote in his Oct. 5, 2010 order:(3)

    "During the trial the Court also became aware of some apparently routine practices at GMM that raise issues that cannot be ignored. McKeever testified to a procedure at his firm whereby foreclosure complaints are prepared and filed by non-attorneys and never reviewed by an attorney, even though the "signature" of an attorney appears on the document. . . . Even though these actions are not being filed in this Court. . .concern for our sister courts in this Commonwealth compel the Court to at least make publicly known what it learned during the trial. Furthermore, often these fundamentally flawed foreclosure actions, form the basis for related relief in this Court should the state court defendant subsequently file a bankruptcy petition. Therefore, the Court is concerned about the continuation of this practice by GMM."

For more, see Thousands of Pennsylvania Foreclosures Could Be on Shaky Ground.

See also, ABA Journal: Law Firm Accused of UPL, After Admittedly Filing Foreclosures Without Attorney Review.

(1) Robinson v. Countrywide Home Loans, Inc. et al. (W.D. Pa. Motion to Compel - filed Oct. 8, 2010).

(2) Loughren v. Lion, et al. (Court of Common Pleas, Allegheny County, Pennsylvania - Complaint In Equity).

(3) DeAngelis v. Countywide Home Loans, Inc., et al. (In re Hill) (Bankr. W.D. Pa. Oct. 5, 2010 - Memorandum Opinion And Order sanctioning Countrywide).