Saturday, November 05, 2011

No Prompt Help Seen For Struggling Sarasota Condo As Judge Green-Lights Suit Charging Insurer w/ Stiffing HOA On Indemnification Over Bldg. Defects

In Sarasota, Florida, the ABA Journal reports:
  • In the midst of a terrible real estate market, the owners of the 117 units at the Dophin Tower condominium in Sarasota, Fla., have a bigger problem to worry about than most.

  • In addition to owning homes that are probably worth only a fraction of what they paid, their units have been uninhabitable for a year and a half and aren't likely to be occupied again anytime soon, due to a failed concrete slab.

  • Although they won a legal victory in federal court this week, when a judge ruled in their favor in a declaratory judgment action concerning insurance coverage for the design and construction defects that allegedly caused the concrete damage, the condo association for the approximately 35-year-old building is struggling to stay afloat financially as it pursues the case, according to the Sarasota Herald-Tribune.

  • Meanwhile, there's no guarantee that the association will persuade Great American Insurance Co. of New York to pay its repair costs or win enough at trial to reimburse residents, even though a judge has given the case a green light to proceed.

  • Due to a high delinquency rate on assessment payments, the association can't get a loan to pay for repairs while it argues with Great American.

  • In an effort to get the association's finances under control, the condo board is instituting what some consider draconian collection measures, including an 18 percent interest rate on delinquent balances and threatened foreclosure. A number of residents also complain that the board is unduly harsh and unfeeling in the tone it takes with owners who have been dealt a severe financial blow in the form of repair bills that could top $10 million.

  • "At times, the board has had an absolute air of superiority," said former 10th-floor resident Sarita Roche. "A lot of people in the building now are destitute—some people are losing everything—and it's uncalled for."

  • An earlier Herald-Tribune article details what is wrong with the building and a planned fix, which involved jacking the 15-story building up like a car with a flat tire.

Source: Will Insurer of Uninhabitable Fla. Condo Building Have to Pay to Repair Defects?

See also, Sarasota Herald Tribune:

  • Dolphin Tower condo board facing more criticism (Dolphin Tower owners won a legal victory this week against their insurance company, but the troubled downtown condominium faces a growing exodus of paying residents and its board is fielding expanding criticism of its handling of the crisis and dwindling resources to deal with it),

  • Fix calls for jacking up high-rise (To fix severe design and construction flaws that have caused a key concrete support to fail, engineers plan to jack up the 15-story Dolphin Tower like a car with a flat tire).

Vacant, Abandoned Foreclosed Homes Continue Killing Quality Of Life In Some Chicago Neighborhoods

In Chicago, Illinois, Chicago News Cooperative & The New York Times reports:
  • Thomas Burton remembers exactly when he closed on his West Wilcox Street home. It was Sept. 6, 1962, at 3 p.m. Eager to begin a homeowner’s life with his wife and their six children, he got off early from his shift as a driver for C&K Snacks to make the closing.

  • This was my first house,” he said. “I couldn’t forget that date.” Decades later, his children are grown and the 30-year mortgage has been paid off. But the neighborhood is a far cry from what it used to be.

  • The street has been transformed — six foreclosed and abandoned homes now sit on Mr. Burton’s block. There are 28 vacant buildings on West Wilcox, which is less than a mile long.


  • According to city data, there were nearly 15,000 abandoned buildings in Chicago as of Oct. 20, most of them a result of foreclosures. Three neighborhoods account for 20 percent of the total: Englewood, West Englewood and Austin.

  • The city lost 200,000 residents from 2000 to 2010, according to census data. In the area immediately surrounding Mr. Burton’s house, population has dropped by 26 percent. And though some residents are gone, those who remain do not necessarily want to raze the vacant buildings left behind.

  • The empty buildings are magnets for gang activity, depressing the value of nearby properties. Drug abuse violations and burglaries are the most common crimes taking place in abandoned properties, police report. In Austin, burglaries and illegal drug use make up 74 percent of the 66 incidents reported in the past three months. In Englewood, those crimes were 58 percent of the 85 reported cases of illegal activity. In West Englewood, drugs and burglaries constituted 43 percent of 78 incidents.

  • Vacant homes create so many risks to a neighborhood,” said Charles Brown, a retired Chicago police officer living in Englewood. “Murders — we’ve found people dead in them. Attempted murder, rape, all kinds of things. They catch on fire and burn up the house next door — firemen get hurt.”

For more, see Foreclosures Leave Pockets of Neglect and Decay.

Ruptured Propane Line Suspected In Blast That Blew Vacant Home In Foreclosure 60 Feet In Air; Leads To Local High School Lockdown

In Council Bluffs, Iowa, Radio Iowa reports:
  • Investigators say an explosion that destroyed a vacant house in Council Bluffs was caused by a ruptured propane line that let the gas leak into the basement. Tuesday afternoon’s explosion in a neighborhood just south of Interstate 80 blew the house 60-feet into the air and spread debris blocks away.

  • No one was injured. Council Bluffs Fire Chief Alan Byers says the extent of the damage has made the investigation difficult. “Somehow, propane was leaked into the basement, filled the house and there was an ignition source. With the amount of damage and the way the debris was spread out, we’re probably never going to know exactly what happened,” Byers said.

  • Although the house was vacant, there was still propane in a tank and electric service hooked up to the home. Byers said the last known occupant vacated the home three weeks ago.

  • We don’t know if someone got in the house and was using it, was trying to steal something, broke the (propane) line…we’re just not going to know,” Byers said. “Again, we had debris 60 foot up in the trees and scattered out over an almost 2,000 foot diameter area, so it’s just going to be impossible to tell.”

  • The house was in foreclosure and just passed a city inspection in recent weeks. Byers said neighbors were asked about activity at the home. “We had reports of cars in the area the night before, but no license numbers or anything like that,” Byers said. “We’re probably never going to figure out what really happened.”

  • The loud blast led to numerous 9-1-1 calls. Officials locked down the nearby Council Bluffs Abraham Lincoln High School for about 20 minutes as a precaution because the source of the explosion was not immediately known.

Source: Council Bluffs explosion linked to broken propane line.

Consumer Anger Against Banksters Continues; Homeowner Targeted By BofA Foreclosure Action Accused Of Torching Home

In Brown County, Wisconsin, the Green Bay Press Gazette reports:
  • A Pulaski man was accused [] in Brown County Circuit Court with setting fire to his home, which was in foreclosure. Timothy Porter, 46, faces one count of arson, a charge carrying up to 40 years in prison, for allegedly setting the [] fire that damaged his home at 320 W. Pulaski St.

  • The $69,300 home is in a foreclosure action by Bank of America, according to a criminal complaint.

  • Firefighters responded to a fire there about 6:25 p.m. Wednesday. A neighbor said Porter had been removing items from the house earlier in the day and left shortly before smoke and flames started pouring from a basement window, the complaint says.

For the story, see Timothy Porter of Pulaski charged with arson in house fire.

Friday, November 04, 2011

Suspected Head Of N. California Foreclosure Rescue Racket Cops Plea; Accused Of Recording Bogus Land Documents In Attempt To Stall Foreclosure Process

In Alameda County, California, KGO-TV Channel 7 reports:
  • The focus of a 7 On Your Side investigation into a suspected foreclosure rescue scheme pleaded no contest [...] in an Alameda County courthouse. 7 On Your Side has been following this closely for 10 months.

  • Alan David Tikal entered his plea just hours before jury selection was to begin in his trial on a 29 count grand jury indictment on mortgage fraud. Prosecutors say this plea means the 15 victims it named in this case are now eligible for restitution.

  • Alan David Tikal has been in jail since being arrested in Las Vegas on a grand jury indictment in February. Prosecutors accuse him of posing as a private banker, then refinancing the mortgages of distressed homeowners.

  • The grand jury determined it was all part of a conspiracy to defraud people out of their property. On Monday, Tikal pled no contest to one felony count of filing false documents to transfer the property from the bank to himself. He also pled no contest to illegally accepting advanced fees for a loan modification.


  • Tikal agreed to pay any amount of restitution the judge ordered, but it also means the other 27 counts against Tikal have been dropped. [...] Only those victims in Alameda County specifically named in the indictment are eligible for restitution, but the prosecutor says the conviction shows this was all a scam.(1)

For more, see Man pleaded no contest to mortgage fraud scheme.

See Bay Area Grand Jury Indicts Four In Alleged Foreclosure Rescue Racket; Filed Fraudulent Documents In Bogus Attempts To Stall Legal Process: DA for an earlier post on this racket.

(1) In an earlier story (The Modesto Bee: Man jailed in Stanislaus realty scam (He awaits extradition; officials say he peddled phony foreclosure)), Tikal was once famously quoted as making this statement to the prospects to whom he peddled his phony foreclosure rescue scam:

  • "If there's a way for the bleeping banks to put me in jail, I would already be there."

Zombie Debt Buyer Ordered To Release All Liens, Stop Collection Efforts Stemming From From Judgments Obtained Without Valid WV State License

In Charleston, West Virginia, The West Virginia Record reports:
  • Kanawha Circuit Court has entered an order preventing three Cavalry Company debt-buying businesses from collecting debts in West Virginia without a license.

  • The order also required Cavalry to stop all wage garnishments and to release all liens filed against West Virginia consumers' property stemming from judgments obtained by its companies before they became licensed.

  • The court granted West Virginia Attorney General Darrell McGraw's motion for a temporary injunction against Cavalry. It is also ordered the New York-based debt buyers-Cavalry SPV I, Cavalry SPV II and Cavalry Investments plus a collection affiliate, Cavalry Portfolio Services-to fully comply with the attorney general's investigative subpoena.

  • Testimony from McGraw's staff during a series of hearings disclosed that Cavalry debt buyers had filed at least 1,300 collections lawsuits prior to becoming licensed in October 2010. Of those lawsuits, 743 resulted in judgments totaling more than $3 million against West Virginia consumers, with 369 entered by default when the consumers failed to appear or contest the suit.

  • In conjunction with the attorney general, the circuit court also ordered Cavalry to send written notices to all consumers affected by the order. After the notices are sent, Cavalry may accept payments made voluntarily by consumers but must first place them into escrow and report all payments received to the attorney general's office. McGraw's office first subpoenaed Cavalry's West Virginia account records in January 2010.

  • Cavalry objected to complying with the records request and later asserted that the investigative subpoena could not be enforced once the lawsuit was filed. The circuit court disagreed. There has not been a trial date scheduled yet.(1)

Source: McGraw gets order to stop three debt businesses.

(1) Failure to register their business with the state appears to be a major 'Achilles' heel' for some of these zombie debt buyers. Earlier this year, a ruling by an Illinois appeals court indicated that a debt buyer's failure to register with the appropriate state administrative agency was enough to allow a debtor to undo the damage created by an improperly-obtained judgment, finding that said judgment was absolutely void, and not merely voidable. See:

See generally Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration for an FTC report on dealing with bill collectors & zombie debt buyers.

Attorney Gets Eight Years On Deed Forgery, Charging Clients For Unperformed Services

The Cincinnati Business Courier reports:
  • Northern Kentucky attorney Patrick Moeves will serve eight years in prison after pleading guilty to charges of theft and forgery.

  • reports that Moeves charged clients fees for work he didn't perform and forged the name of state Sen. Jack Westwood on a deed. In addition to the prison term, Moeves was ordered pay restitution.

Source: N. Ky. attorney gets 8 years in prison.

Suit: Investment House Biggie Played Role In Deed Forgery In Effort To Thwart $25.3M Creditor From Attaching Interest In Ranch From Dying Cousin

In New York City, Reuters reports:
  • Herbert A. Allen, founder of an annual business conference that draws a host of media moguls, is accused in a lawsuit of aiding a family fraud to stop a dying cousin's creditor collecting $25.3 million.


  • The plaintiff, Excelsior Capital LLC, said Herbert A. Allen and others "forged or arranged for the forgery" of his cousin's signature on a deed for his interest in a family ranch in Arizona. It said the forgery took place on March 2 while he was on his deathbed in a hospital on New York's Long Island while the notarization indicated he signed in Manhattan on that day. He died in hospital seven days later.


  • The complaint said that a close family friend and Allen & Company executive, Terence McCarthy, fraudulently notarized the signature. McCarthy was out of the office on Wednesday and unavailable to comment, the company said.

For the story, see NY investment house CEO Allen sued over "forgery".

Thursday, November 03, 2011

Six-Year Saga Of Long Island Couple Fighting Foreclosure Takes New Twist As Trial Judge Agrees To Reopen Foreclosure Judgment

In Riverhead, New York, Newsday reports:
  • A state judge Monday agreed to reopen the foreclosure judgment against an East Patchogue couple -- a year after his order to wipe out their mortgage was overturned -- in the latest twist in a six-year battle.

  • Judge Jeffrey Arlen Spinner in Riverhead signed an order to temporarily bar IndyMac Mortgage Services from auctioning off the home of Gregory Horoski and his wife, Diana Yano-Horoski.

  • A few weeks ago the couple and their attorney, Ivan Young of Bohemia, accused IndyMac and its former law firm, Steven J. Baum in Amherst, of deception on several key details. They're also suing for $10 million in fraud damages. IndyMac hasn't responded in court yet. "The anxiety that has been caused over the years is much more than the value of the mortgage," Greg Horoski said in an interview.

  • The central allegation is that IndyMac has no right to foreclose because it does not own the mortgage note. The couple alleges in court documents that IndyMac representatives "did actually slip up" in court by admitting the investor owner was Deutsche Bank.

  • Both IndyMac's parent company, One West Bank, and a spokesman for Baum declined to comment. A Deutsche Bank spokesman said the new filing will be reviewed.

  • IndyMac started foreclosure against the couple in 2005 and won the case in 2009. The couple fought the judgment, and in recent years the case has been closely watched by attorneys and lenders.

  • Two years ago Spinner voided the couple's $300,000 mortgage debt.(1) Last year an appellate division of the state Supreme Court reinstated the foreclosure judgment, saying there was no legal basis to erase the debt.(2)

Source: Judge to reopen Patchogue foreclosure judgment.

(1) IndyMac Bank F.S.B. v Yano-Horoski, 26 Misc 3d 717, 890 N.Y.S.2d 313 (NY Sup. Ct. Suffolk Cty. 2009).

(2) IndyMac Bank, F.S.B. v. Yano-Horoski, 78 A.D.3d 895, 912 N.Y.S.2d 239 (App. Div. 2nd Dept., 2010).

See also NY Appellate Court Tells Trial Judge: Cancelling Mortgage, Note Because Of Lender's "Repugnant, Shocking & Repulsive" Conduct Goes A Bit Too Far.

Bay State Appeals Court: Failure To Record Loan Extensions, Passage Of Time Fatal To Mortgages; Lenders Left Holding Bag With Voided Lien Interests

Lexology reports:
  • The Massachusetts Appeals Court recently issued two separate decisions interpreting Massachusetts General Laws c. 260, § 33, the Obsolete Mortgages statute. The result, in both cases, was a finding that each lender's mortgage had been discharged, notwithstanding the fact that the party seeking to obtain the benefit of the discharge had actual knowledge that there was an off-record extension of the mortgage.


  • In Harvard 45 Associates, LLC v. Allied Properties and Mortgages, Inc., & others, 80 Mass. App. Ct. 203 (2011), the plaintiff, Harvard 45 Associates, LLC ("Harvard 45"), brought a quiet title action in the Land Court after acquiring title to property in Westwood, Massachusetts at a sheriff's sale. The complaint alleged that a mortgage granted to Allied Properties and Mortgages, Inc. (the "Allied Mortgage") on May 31, 2001 had been discharged under G.L. c. 260, § 33, due to the fact that it had been greater than five (5) years from the August 31, 2001 term stated in the Allied Mortgage and no extension of the mortgage had been recorded.


  • In Housman v. LBM Financial, LLC, 80 Mass. App. Ct. 213 (2011), the plaintiff, Charles J. Housman, Trustee of Pine Banks Nominee Trust ("Housman"), was the successful bidder at a foreclosure sale of a second mortgage. Subsequent to the foreclosure of the second mortgage, the first mortgagee, LBM Financial, LLC ("LBM"), moved to foreclose a mortgage (the "LBM Mortgage") dated May 9, 2003 and containing a term of four months. While the parties to the LBM Mortgage had executed an extension of the LBM Mortgage prior to the expiration of its original term, the extension was never recorded. The foreclosure sale of the LBM Mortgage was held seven (7) days after the LBM Mortgage would have been discharged based on G.L. c. 260, § 33 and assuming the unrecorded extension of the term of the LBM Mortgage was not recognized. Housman filed an action in the Superior Court, alleging that the foreclosure sale of the LBM Mortgage was a nullity. The Superior Court granted LBM's motion to dismiss, holding that Section 33 did not apply due to Housman's actual knowledge of the extension of the first mortgage. Housman appealed the Superior Court decision.

  • On appeal, the Appeals Court, in two separate decisions rendered on August 25, 2011, held that the Allied Mortgage and the LBM Mortgage had been discharged as a matter of law. In reaching this conclusion, the Appeals Court focused on the issue of whether actual knowledge that a mortgage has been extended is sufficient to prevent the mortgage from being discharged in the absence of a recorded extension.(1)

For more on the appeals court's reasoning on why it left the mortgage lenders holding the bag in each case, see The Importance Of Recording Mortgage Extensions (may require subscription; if no subscription, TRY HERE - then click appropriate link for the story).

(1) In Housman v. LBM Financial, LLC, the court made this observation:

  • We conclude that the meaning of the statute is clear on its face. The language of the statute plainly discharges as matter of law all mortgages five years after the date on which they became due, unless an extension, acknowledgment, or affidavit is recorded within that period of time. The requirements of the statute are clear and must be strictly satisfied.

    Our reading of the statute finds support in Federal court decisions interpreting the same language. Rejecting the argument that § 33 applies only to defunct or inactive mortgages, the United States Bankruptcy Court concluded, "[t]he language of the Obsolete Mortgages [s]tatute is unambiguous and contains no exceptions. A mortgagee's actions, short of timely recording an appropriate document, are ineffective to extend an expired mortgage. Had the legislature intended the Obsolete Mortgages [s]tatute to have a more narrow application, ... it was certainly capable of drafting the statute accordingly."
    In re 201 Forest St., LLC, 404 B.R. 6, 10 (Bankr.D.Mass.2009).

    Reversing on other grounds, the reviewing court agreed that "[t]he effect of the Obsolete Mortgages [s]tatute is to extinguish the mortgagee's rights as mortgagee."
    LBM Fin., LLC v. 201 Forest St., LLC, 422 B.R. 888, 893 n. 7 (B.A.P. 1st Cir.2010).

    The Bankruptcy Court also considered LBM's attempted foreclosure of another property owned, for a period, by Pine Banks, subject to LBM's mortgage on it, and reached the same conclusion we adopt today, finding that a purported extension is invalid if not recorded pursuant to the requirements of § 33. See
    In re Shamus Holdings, LLC, 409 B.R. 598, 602 (Bankr.D.Mass.2009). See also Motta v. Andre, 434 B.R. 193, 201 (Bankr.D.Mass.2010).

    We also find support for our approach in the decisions of other states, which have strictly construed the recording requirements of mortgage extensions.

    The Supreme Court of Iowa concluded that the failure to record an extension precludes an action between mortgagor and mortgagee to foreclose a mortgage that has been discharged pursuant to the state's "Foreclosure of Ancient Mortgages" statute. See
    Willow Tree Invs., Inc. v. Wilhelm, 465 N.W.2d 849, 850 (Iowa 1991).

    See also
    Pro-Max Corp. v. Feenstra, 117 Nev. 90, 95 (2001) (concluding similar statute in Nevada was unambiguous and operated to extinguish any debt on real property secured by a deed of trust ten years after the debt becomes due in the absence of a recorded extension).

Feds Seek Triple Damages, Fines In Suit Alleging Bankster Duped HUD/FHA Into Insuring Crappy Home Mortgage Loans

In New York City, Reuters reports:
  • Prosecutors sued a large U.S. mortgage broker and two top executives for an alleged decade-long fraud that cost the government hundreds of millions of dollars on risky home loans.

  • The lawsuit seeks triple damages and civil fines against Allied Home Mortgage Capital Corp, which once billed itself as the largest privately held U.S. mortgage broker; Jim Hodge, its founder and chief executive; and Jeanne Stell, an executive vice president and compliance director.

  • It contended that Allied violated the federal False Claims Act by misleading the government into believing its loans qualified for federal insurance, when its mortgages were so poor nearly one in three went into default.

  • This "reckless" lending, it said, cost the Department of Housing and Urban Development (HUD) $834 million in insurance claims and forced thousands of homeowners out of their homes.

For more, see U.S. sues Allied Home Mortgage for lending fraud.

For the U.S. Attorney (Manhattan) press release, see Manhattan U.S. Attorney Sues Allied Home Mortgage, CEO, And Executive Vice President For Fraudulent Lending Practices Currently Associated With $834 Million In Insurance Claims Paid By HUD (One of the Nation's Top Privately Held Mortgage Lenders Operated 'Shadow Branches' and Allegedly Lied About Its Compliance With HUD Regulations).

Another Federal F'closure Relief Program Goes Into Effect; Will Purportedly Give Some Borrowers Chance To Have Cases Reviewed For Bankster Wrongdoing

The Washington Post reports:
  • More than 4 million borrowers who have faced foreclosure since early 2009 will have the chance to have their cases reviewed for potential wrongdoing, federal regulators and some of the nation’s largest mortgage servicers announced Tuesday.

  • The reviews stem from a deal forged earlier this year in which 14 servicers agreed to hire independent consultants to evaluate whether borrowers suffered financial injury during the foreclosure process. If a review finds errors or abuses by the financial firms, the consultants will determine what recompense wronged homeowners deserve.

  • On Tuesday, servicers began mailing letters to the estimated 4 million borrowers whose loans were in the process of foreclosure between Jan. 1, 2009, and Dec. 31, 2010, detailing how to request a review of an individual case.

  • Officials at the Office of the Comptroller of the Currency, which crafted the April servicer agreement along with the Federal Reserve, said the mailings would continue through the end of the year and be accompanied by a large-scale marketing campaign to make borrowers aware of the effort. Additional information is available at or 1-888-952-9105. Requests for review must be received by April 30, 2012.

  • There is no cost to the borrower for this review,” Joe Evers, deputy comptroller for large banks at the OCC, said in a call with reporters Tuesday.

For more, see 4 million borrowers eligible for foreclosure review.

Wednesday, November 02, 2011

Sticky-Fingered Title Agents Continue Getting Hammered; Suspect Cops Plea To Mortgaging Home Out From Under Unwitting Owner, Diverting Closing Cash

From the Office of the U.S. Attorney (Baltimore, Maryland):
  • Gary Pierce, age 44, of Edgewater, Maryland, pleaded guilty [] to conspiracy to commit wire fraud in connection with a five year scheme to divert or hold mortgage payoff funds from clients’ closings on 17 Maryland properties.


  • In 2007, Pierce applied for and received a mortgage on a property in Edgewater that he did not own. Pierce used funds obtained from the lender to perpetuate the scheme and diverted $50,000 from the funds provided by the mortgage lender to himself. The true owner of the property had no knowledge that documents were created that purported to show that he had sold the property to Pierce.

  • Beginning in 2007, Pierce and his co-conspirator diverted or held mortgage payoff funds from clients’ closings for a matter of days, weeks and sometimes years. Pierce falsely represented on HUD-1 forms sent to the borrower’s lender that the payoff was made, when in fact Pierce intended to divert the funds.

  • Pierce and his co-conspirator fabricated wire confirmation reports, which purported to be a bank record of the transfer, to include in loan files. These were created in advance of audits by the title insurers in order to deceive the title insurers.

  • Additionally, to forestall discovery by the lenders, Pierce and his co-conspirator contacted the mortgage lender who should have been paid off and posed as the borrower/homeowner. Pierce’s co-conspirator would either create an on-line profile for the borrower and stop any mail from being sent to the borrower, or he would tell the lender that his, the borrower’s, address had changed and he would re-direct the lender to send all correspondence to a post office box owned by Pierce. The co-conspirator would then make monthly mortgage payments to the existing lender. With no delinquency in the account, the scheme went undetected.

  • Because the existing mortgages were not paid off, the liens against the property were not removed and clear title could not be passed to the new lender and borrower. The total amount of diverted or otherwise improperly obtained funds totals $4,971,380.

For the U.S. Attorney press release, see Owner of Gambrills Title Agency Pleads Guilty to Stealing Approximately $5 Million in Mortgage Pay-offs from Closings (Attempted to Conceal the Fraud Scheme by Making Monthly Mortgage Payments to the Original Lenders Whose Mortgages Should Have Been Paid Off).

Feds Score Guilty Verdict As Title Agency Owner Goes Down On RICO Charges; Co-Defendant Who Pocketed Kickbacks Cops Plea, Cooperates w/ Prosecutors

In Cleveland, Ohio, the Plain Dealer reports:
  • A jury yesterday found 34-year-old title company owner Donna Sherman guilty of corrupt activity, theft by deception, money laundering, tampering with records and telecommunications fraud -- a total of 23 counts.

  • Sherman Title Agency was convicted of the same crimes. It's the first case in which a Cuyahoga County jury found the owner and title company guilty under RICO, the Racketeer Influenced and Corrupt Organizations Act.

  • Sherman, of Middleburg Heights, will be sentenced Dec. 1 by Judge Jose Villanueva for fraudulently closing $1.4 million in loans from People's Choice Home Loans to sell 21 houses in Cuyahoga County between 2002 and 2005. Seventeen of the homes fell into tax or mortgage foreclosure.

  • The fraudulent activity began when Sherman worked as an escrow officer for Titles, Etc. in 2002 and 2003. She started her company the following year. Titles, Etc. and one of its owners, Mitchel Petti, were found guilty in January after a bench trial.

  • Sherman received down-payment kickbacks upon closing the homes. And she sent documents to the sellers that showed actual purchase prices, while sending documents to People's Choice that showed higher prices. People's Choice issued the loans at the higher prices.

  • Sherman gave the kickbacks to co-defendant Fred Loewinger, who testified against her after pleading guilty to corrupt activity, money laundering, theft and tampering with records. He is serving six years in prison.

  • The case was investigated by the Cleveland office of the FBI and resulted in a 46-count indictment against her and 37 counts against her company.

Source: Middleburg Heights woman guilty of mortgage fraud, pattern of corrupt activity that led to 17 foreclosed homes.

Clueless Upstate New York Foreclosure Mill Sweatshop Operator Makes Laughable Attempt To Media-Spin Way Out Of 'Halloween' Fiasco

In Buffalo, New York, Buffalo Business First reports on the attempt attorney and foreclosure mill sweatshop operator Steven J. Baum has made to 'positive-spin' his way out of the mess he finds himself in after the columnist Joe Nocera's story (with pictures) of his tasteless 2010 Halloween party was published in The New York Times:
  • The Baum story has gone worldwide. Yahoo, Huffington Post, cable news, everyone is jumping on the chance to vilify a firm that certainly seems anything but sympathetic. I reached back out yesterday for comment from Baum. Sure, I knew he wouldn’t talk to me, but how about a statement?

  • As I was writing this, the statement arrived. Allow me to share it with you, in its entirety so that you can judge it for yourself:

    The images in the photographs that were published in The New York Times obviously were in very poor taste. In fact, we had our annual Halloween party last week at our various locations and we reiterated our company policy as it pertains to wearing appropriate costumes. No one is permitted to wear a costume that could be interpreted as being offensive.

    At this year’s party we raised money for the American Red Cross. Our office continues to be active in the community and has donated to Habitat for Humanity, Hospice of Buffalo and the Ronald McDonald Foundation among others. We have held various fund raisers for our servicemen and women. We are also involved in the Military Warriors Foundation, in having our clients donate foreclosed homes to soldiers in need.On behalf of the firm, I sincerely apologize for what happened last year at our Halloween party

  • Really? All that mortgage money piled up to spend and this is what you came up with? Is it me, or is this statement more about how the firm is donating to charity and less about the act? Using servicemen and women to spin is in poor taste at best and disgraceful at worst.

  • It gets worse. Baum issued a second letter to his clients in which he blames the New York Times for essentially being out to get his firm. I could offer my thoughts on how silly that is, but instead, take a look at the article and photos and decide for yourself.

  • Finally, you know you are fast becoming a pariah when other attorneys turn on you. Western New York is a close-knit legal community so when I logged into my LinkedIn account this morning and saw highly respected attorney Jeffrey Freedman dropping the hammer on Baum, I knew things had reached the point of no return.

  • Your colleagues are turning their backs on you, the media is churning the blood in the water and the sharks are circling the boat. Yet for the law firm of Steven J. Baum, it is Tuesday morning and it is business as usual. And that, I suspect, is the problem.

For the story, see Attorney Steven J. Baum just doesn't get it.

BofA Reaches New High In Low; Takes Out Force Placed Insurance Policy On Empty Slab On 'Ike'-Demolished Home, Then Starts F'closure Over Hiked Premium

In Seabrook, Texas, KPRC-TV Channel 2 reports:
  • Hurricane Ike destroyed dozens of homes in Seabrook. Many families are just now rebuilding, but when Brad Gana tried to pick up the pieces, he learned that Bank of America was trying to take what little he had left. "I was shocked when they said they were foreclosing on it," Gana told investigator Amy Davis.

  • Gana was working overseas when the hurricane hit, destroying his home. But even then, he said he never missed a mortgage payment. It took him days to figure out why Bank of America was foreclosing.

  • "It wasn't until about 20 calls that someone said, 'We had a homeowner's policy on your home that you reside in, and your monthly payments have gone up,'" Gana explained. "But they never notified me that my monthly payments had gone up."

  • That's right. Bank of America took out a forced homeowner's policy on an empty slab.

  • Gana first learned of the foreclosure two days before his property was set to sell. He hired an attorney to stop the proceedings, but even after the foreclosure was halted, Bank of America removed Gana's personal effects from the property, including tools and collectibles that are now also gone.

  • Bank of America wouldn't comment on Gana's belongings, but in an email, a representative told Davis the bank "incorrectly placed insurance" on a home that didn't exist. It said it now has to audit Gana's account to make sure the bank corrects any discrepancies. "Bank of America is ruthless in their incompetency," Gana said.

  • A Bank of America representative said the bank did send multiple notices to Gana about the homeowner's policy and his new mortgage amount, but all of the notices were returned. Gana said that's because his mailbox was also destroyed in the storm. He claims he gave the bank an email address and two phone numbers where he could be reached overseas.

For the story, see Bank Forecloses On Home Destroyed By Ike.

Tuesday, November 01, 2011

Suit: Accused Murderer Swiped $2M Interest In Apt. Bldg. From Elderly Stroke Victim, Used Rent Cash To Pay Legal Fees, Planned To Cash In, Leave Town

In New York City and Morristown, New Jersey, The Star Ledger reports:
  • Accused murderer Kashif Parvaiz cheated an elderly friend recovering from a stroke by taking a $2 million real estate "gift" in 2009 and not paying his bills as promised, according to a complaint filed by the man’s attorney.

  • Parvaiz, 26, of Brooklyn, is accused of conspiring with Antoinette Stephen, 27, of Billerica, Mass., in the Aug. 16, 2011 shooting death on a Boonton street of his wife, Nazish Noorani, 27, who was the mother of his two children.

  • Parvaiz was planning to sell the $2 million stake 74-year-old Martin Ragusa gave him in a Queens apartment building and then "disappear" with Stephen, his "alleged paramour," according to Ragusa’s attorney, James Gavin.

  • Parvaiz, who was granted power of attorney by Ragusa in 2007, failed to pay Ragusa’s mortgage and credit card bills as promised, Gavin said. Ragusa presently owes $100,000 on his credit cards and "pre-foreclosure proceedings" have started on his Manhattan co-op, Gavin said.

  • Ragusa’s legal action, filed in a Queens court, seeks to void the real estate gift on the grounds Parvaiz "wielded improper influence" over Ragusa when he was "a stroke victim confined to a wheelchair" and "dependent" on Parvaiz.(1)

  • The real estate complaint was attached to a motion filed in Superior Court in Morristown earlier this month by Parvaiz’s attorney, Mitchell Ansell. who sought to reduce Parvaiz’s bail from $3 million to $1 million.

  • Ragusa’s legal action will "tie up" the Queens property indefinitely, Ansell said. Thus, Parvaiz cannot sell it and lacks "the economic means to flee" cited by prosecutors when they requested the $3 million bail, Ansell said.

  • Ansell’s brief said that if released, Parvaiz would live in Brooklyn with his parents, who have owned a grocery business there since 1986. Parvaiz would agree to house arrest with electronic monitoring that he would pay for himself, Ansell said.


  • Ragusa’s attorney, Gavin, said yesterday Parvaiz continues to collect $9,000 a month in rent from the Queens apartments while he is held at the Morris County jail and he uses the money to pay his legal expenses.

  • The two men became friends when Parvaiz was about 20 and was doing construction jobs in Ragusa’s Manhattan building, Gavin said. "It was a scam from the start," Gavin said. "My client had no family, was lonely and (Parvaiz) took advantage of him."

  • Ragusa "felt he was supporting him in his endeavors, trying to do good in his life," Gavin said. "To this day, he can’t believe Parvaiz wasn’t at Harvard getting his Ph.D." Parvaiz falsely told friends and family members he was studying architecture at Harvard and told Ragusa he needed money to pay for his education and rent in Boston, Gavin said.

  • Meanwhile, he was taking $10,000 to $15,000 a month from Ragusa’s bank accounts, accoding to the attorney. "He was setting him up to file for bankruptcy and Medicaid," Gavin said.

For the story, see Complaint: Accused Boonton murderer cheated elderly N.Y. man who gave him $2 million real estate gift.

See also, Man accused of killing his wife in Boonton made $2M real estate deal hours before shooting.

(1) There is a long history of civil lawsuits by or on behalf of vulnerable individuals who were allegedly taken advantage of by someone having a confidential relationship with them.

See Sepulveda v. Aviles, 308 AD 2d 1, 762 N.Y.S.2d 358 (NYS Sup. Ct. App. Div. 1st Dept. 2003) for one example in New York, where the co-executors of the estate of a vulnerable victim (elderly, disabled and near death) sucessfully set aside a jury verdict in favor of the alleged scammer in a dubious real estate transfer:

  • Preliminarily, we note that the parties and the trial court erroneously assumed that plaintiffs bore the burden of proof on their equitable claim to rescind the transfer as the product of fraud or undue influence. "Normally, the burden of proving undue influence rests with the party asserting its existence (see, Allen v La Vaud, 213 NY 322).

    However, if a confidential relationship exists, the burden is shifted to the beneficiary of the transaction to prove the transaction fair and free from undue influence (see, Matter of Gordon v Bialystoker Ctr. & Bikur Cholim, 45 NY2d 692, 699; Cowee v Cornell, 75 NY 91, 99-100; McClellan v Grant, 83 App Div 599, 602, affd 181 NY 581)." (Matter of Connelly, 193 AD2d 602, 602-603 [1993], lv denied 82 NY2d 656 [1993].)

    In Matter of Gordon v Bialystoker Ctr. & Bikur Cholim (45 NY2d 692 [1978]), the Court of Appeals held that in light of the fiduciary relationship between the 85-year-old donor and the defendant nursing home-donee at the time of the donor's gift of funds, the burden shifted to the home to establish that it did not acquire the donor's property by fraud, undue influence or coercion, a burden that the nursing home failed to meet. As the Gordon Court (45 NY2d at 698) explained:

    "[W]here a fiduciary relationship exists between parties, `transactions between them are scrutinized with extreme vigilance, and clear evidence is required that the transaction was understood, and that there was no fraud, mistake or undue influence. Where those relations exist there must be clear proof of the integrity and fairness of the transaction, or any instrument thus obtained will be set aside or held as invalid between the parties' (Ten Eyck v Whitbeck, 156 NY 341, 353)."

    Appellate courts in this state have, time and time again, applied this burden-shifting mechanism to evaluate transactions which, at least on the surface, appear to involve the exploitation of elderly or mentally incapacitated persons by those intent on violating the trust reposed in them (see
    Matter of Mazak, 288 AD2d 682, 684 [2001] [no basis to disturb Surrogate's finding that respondent failed to rebut presumption that conveyance by 80-year-old decedent three weeks before her death was result of controlling or undue influence]; Peters v Nicotera, 248 AD2d 969, 969-970 [1998] [nephew failed to meet burden of showing that 80-year-old aunt's execution of deed transferring house to him was not product of undue influence or coercion]; JML Invs. Corp. v Hilton, 231 AD2d 493, 493-494 [1996] [home health aide failed to meet burden of showing that 80-year-old decedent's conveyance of home to aide was not product of undue influence]; Matter of Connelly, 193 AD2d at 602-603 [beneficiary of certificate of deposit failed to sustain burden by clear and convincing evidence that creation of certificate in favor of beneficiary by decedent, who had suffered stroke only months before, was fair and free from undue influence]; see also Matter of Greiff, 92 NY2d 341, 345-347 [1998] [Appellate Division incorrectly placed burden on wife to show that prenuptial agreement was procured by fraud or overreaching; case remanded to consider whether relationship between parties was the type that requires a shifting of burden to the proponent of agreement]).

    In any event, even under the erroneous burden of proof applied in this case, the jury's finding that Aviles did not obtain the property by fraud or undue influence was against the weight of the evidence. It is well settled that a jury verdict may be set aside as against the weight of the evidence only where "the jury could not have reached the verdict on any fair interpretation of the evidence" (Jamal v New York City Health & Hosps. Corp., 280 AD2d 421, 422 [2001]; see also Matter of Clines, 226 AD2d 269, 269-270 [1996], lv dismissed 88 NY2d 1016 [1996]).

    The jury's verdict here was completely at odds with any fair interpretation of the evidence.


Editor's Note: It appears obvious that when attempting to undo any real estate equity ripoff (including sale leaseback equity stripping ripoffs), it could be quite helpful (if not 'near crucial') in a lawsuit to void/set aside a transfer to establish the existence of either a fiduciary relationship, or a confidential relationship (the two are not the same, folks), between the victim and the scammer in order to shift the burden onto the beneficiary of the transaction (ie. the scammer) to prove the transaction was fair and free from undue influence, and consequently, not a ripoff disguised as a legitimate conveyance.

Elderly Owners Of Mortgage-Free Home Face Eviction After Missing $2500 Tax Payment As City Peddles Real Estate Tax Lien To 3rd Party Investor

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:
  • Jadwiga Ortiz, owner of a three-family dwelling at 71 Harrison St., has lost that property, with an assessed valued of almost $200,000. That is not so unusual these days, given the high rate of foreclosures brought on by the big banks that saddled some homebuyers with exorbitant and unconscionable mortgages.

  • Ms. Ortiz’s case is different, however. She is not indebted to any big banks. In fact, she had no mortgage on her property. She and her 65-year-old husband have occupied the three-family home since 1971, along with another on Columbia Street bought by her parents, both of whom have passed away.

  • Ms. Ortiz, however, had fiscal 2009 back taxes amounting to $2,533.58 on the Harrison Street property. This amount essentially represented her missing one of four payments that tax year and not settling water and sewer tax liens totaling $900.

  • But having a city lien these days is akin to being indebted to a predatory credit card company, now that the city is selling those liens to third parties. Those third parties are able to hike the interest rates on the debt, or, as happened in Ms. Ortiz’s case, seize your property.

  • Some will put all the blame on Ms. Ortiz, a 62-year-old crossing guard for the city, for losing her mortgage-unencumbered $200,000 property for the nonpayment of a mere $2,500 debt. They will say that the city and the individual who bought Ms. Ortiz’s lien, Gary Glusgol of Lynnfield, did nothing untoward; that everything was done by the books.


  • Registry of Deeds records show that after securing the lien, Mr. Glusgol, as is customary, filed a foreclosure notice on the property in December 2010. According to a City Hall document, a son of Ms. Ortiz on March 12, 2011, signed for a certified letter addressed to her disclosing the foreclosure proceeding.

  • On July 21, 2011, having not heard from Ms. Ortiz, the court granted Mr. Glusgol the property. Mr. Glusgol has since taken out a $75,000 mortgage on the property and, according to City Hall records, is now the assessed owner.

  • Meanwhile, Ms. Ortiz, who shares the home with five others, including her husband, a daughter, a son and two grandchildren, has been served with an eviction notice.

For more, see Home is gone after missing tax payments.

Cops: Cousin Of Two Autistic Men Took Out HELOC On Their Mortgage-Free Home, Used Proceeds For Herself; Bond Set At $75K As Residence Faces F'closure

In Palm Coast, Florida, The Daytona Beach News Journal reports:
  • The 59-year-old cousin of two disabled men became involved in their financial affairs after their mother died and stole more than $70,000 from them over several years, according to State Attorney's Office officials.

  • Robin Joan Carrig was charged Thursday with exploitation of a disabled person after investigators determined she took out a home equity loan on the paid-for house left to her cousins and used the money herself, reports state. The home on Cortes Court is now in foreclosure.

  • The case came to light in February when Denise Williams of Helping Hands in Flagler County told investigators she had been working with the brothers to ascertain why money kept disappearing from their accounts. Managers at Walmart, where the Carrig brothers work, put them in touch with Williams.

  • Robin Carrig was given limited power of attorney for her 56-year-old twin cousins, who both have a form of autism, in December 2004, two months after their mother died, a report states. She was also named their "designation of health care surrogate."

  • Her name was added to the property deed a year later via a quitclaim, according to the report. The next month, Carrig set up an equity line of credit and had her cousins sign the mortgage.

  • Michael Carrig did not know "why or how" his cousin was added to the deed and told investigators, "We must have did something stupid."


  • Robin Carrig was booked into the Flagler County Inmate Facility where she remained Friday on $75,000 bail.

For more, see Cousin accused of bilking disabled twins in Palm Coast.

Monday, October 31, 2011

NYS F'closure Mill Sweatshop Denies That Employees Came To Holloween Party Dressed In Attire Mocking Booted Homeowners; Pictures Tell Different Story

Author and opinion columnist Joe Nocera writes in The New York Times:
  • On Friday, the law firm of Steven J. Baum threw a Halloween party. The firm, which is located near Buffalo, is what is commonly referred to as a “foreclosure mill” firm, meaning it represents banks and mortgage servicers as they attempt to foreclose on homeowners and evict them from their homes. Steven J. Baum is, in fact, the largest such firm in New York; it represents virtually all the giant mortgage lenders, including Citigroup, JPMorgan Chase, Bank of America and Wells Fargo.

  • The party is the firm’s big annual bash. Employees wear Halloween costumes to the office, where they party until around noon, and then return to work, still in costume. I can’t tell you how people dressed for this year’s party, but I can tell you about last year’s.

  • That’s because a former employee of Steven J. Baum recently sent me snapshots of last year’s party. In an e-mail, she said that she wanted me to see them because they showed an appalling lack of compassion toward the homeowners — invariably poor and down on their luck — that the Baum firm had brought foreclosure proceedings against.

  • When we spoke later, she added that the snapshots are an accurate representation of the firm’s mind-set. “There is this really cavalier attitude,” she said. “It doesn’t matter that people are going to lose their homes.” Nor does the firm try to help people get mortgage modifications; the pressure, always, is to foreclose. I told her I wanted to post the photos on The Times’s Web site so that readers could see them. She agreed, but asked to remain anonymous because she said she fears retaliation.

  • Let me describe a few of the photos. In one, two Baum employees are dressed like homeless people. One is holding a bottle of liquor. The other has a sign around her neck that reads: “3rd party squatter. I lost my home and I was never served.” My source said that “I was never served” is meant to mock “the typical excuse” of the homeowner trying to evade a foreclosure proceeding.

  • A second picture shows a coffin with a picture of a woman whose eyes have been cut out. A sign on the coffin reads: “Rest in Peace. Crazy Susie.” The reference is to Susan Chana Lask, a lawyer who had filed a class-action suit against Steven J. Baum — and had posted a YouTube video denouncing the firm’s foreclosure practices. “She was a thorn in their side,” said my source.

  • A third photograph shows a corner of Baum’s office decorated to look like a row of foreclosed homes. Another shows a sign that reads, “Baum Estates” — needless to say, it’s also full of foreclosed houses. Most of the other pictures show either mock homeless camps or mock foreclosure signs — or both.

  • My source told me that not every Baum department used the party to make fun of the troubled homeowners they made their living suing. But some clearly did. The adjective she’d used when she sent them to me — “appalling” — struck me as exactly right.

  • These pictures are hardly the first piece of evidence that the Baum firm treats homeowners shabbily — or that it uses dubious legal practices to do so. It is under investigation by the New York attorney general, Eric Schneiderman.

  • It recently agreed to pay $2 million to resolve an investigation by the Department of Justice into whether the firm had “filed misleading pleadings, affidavits, and mortgage assignments in the state and federal courts in New York.” (In the press release announcing the settlement, Baum acknowledged only that “it occasionally made inadvertent errors.”)

  • MFY Legal Services, which defends homeowners, and Harwood Feffer, a large class-action firm, have filed a class-action suit claiming that Steven J. Baum has consistently failed to file certain papers that are necessary to allow for a state-mandated settlement conference that can lead to a modification.

  • Judge Arthur Schack of the State Supreme Court in Brooklyn once described Baum’s foreclosure filings as “operating in a parallel mortgage universe, unrelated to the real universe.”(1) (My source told me that one Baum employee dressed up as Judge Schack at a previous Halloween party.)

  • I saw the firm operate up close when I wrote several columns about Lilla Roberts, a 73-year-old homeowner who had spent three years in foreclosure hell. Although she had a steady income and was a good candidate for a modification, the Baum firm treated her mercilessly.

  • When I called a press spokesman for Steven J. Baum to ask about the photographs, he sent me a statement a few hours later. “It has been suggested that some employees dress in ... attire that mocks or attempts to belittle the plight of those who have lost their homes,” the statement read. “Nothing could be further from the truth.” It described this column as “another attempt by The New York Times to attack our firm and our work.”

  • I encourage you to look at the photographs with this column on the Web. Then judge for yourself the veracity of Steven J. Baum’s denial.

For the story and the appalling pictures, see What the Costumes Reveal.

See also, Reuters: Foreclosure Mill's Halloween Party Mocks Homeless, Displaced (A Buffalo, N.Y. law firm specializing in facilitating foreclosure proceedings for large banks received some of the worst PR imaginable over the weekend, when the New York Times ran office Halloween-party photos featuring the firm's staff seeming to mock the homeless and displaced).

Editor's Note: Baum's foreclosure mill sweatshop has since issued an apology for the tasteless party. See Buffalo News: Law firm says party was ‘poor taste’.

(1) 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.

Closing Attorney Found Liable In Civil Suit For Role In Sale Leaseback Peddling, Equity Stripping Ripoff Targeting High-Equity, Low Cash Homeowners

In Marblehead, Massachusetts, The Salem News reports:
  • A suspended Marblehead attorney has been ordered to pay a $70,000 civil penalty and barred from working as a closing attorney or title agent in any real estate transaction, as a result of his role in a fraudulent foreclosure "rescue" scheme, the attorney general's office announced [].(1)

  • James Alberino, who also received a separate 18-month suspension from practicing law last January, was found by a Suffolk Superior Court judge to have "knowingly and willfully engaged in unfair and deceptive conduct."

  • Judge Janet Sanders found, after a trial, that Alberino, 60, who had a law office in Salem, had acted as the closing attorney on two "sham" property transfers, concealing the true nature of the transfers from lenders he represented. The state Supreme Judicial Court also cited a third "sham" transaction by Alberino in its order last January that suspended him.

  • The scheme was orchestrated by a mortgage broker, Leo Desire Sr., who ran a company called Primary Mortgage Resources, prosecutors said. According to court papers, the scheme, called The Trust Program, solicited homeowners facing foreclosure and unable to obtain a refinance by proposing that they transfer their property into a newly created trust in the name of a "straw" buyer.

  • The homeowners were told they could "temporarily" transfer title to their homes to the straw buyer chosen by Desire, and were also told they would actually be made beneficiaries of the trust and would be allowed to remain in their homes while they rebuilt their credit enough to obtain new financing and buy their house back.(2)

For more, see Attorney liable in mortgage fraud.

For the Massachusetts Attorney General press release, see Marblehead Real Estate Attorney Found Liable for Facilitating Illegal Foreclosure Rescue Scheme (Banned from Acting as Closing Attorney in Real Estate Transactions).

(1) It may be that Alberino's victims in this racket could seek reimbursement for some of their losses due to his handiwork from the Massachusetts Clients' Security Board of the Supreme Judicial Court, which manages and distributes monies in their recovery fund to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the Massachusetts bar acting as an attorney or a fiduciary. Go here for Case Summaries for Claims Decided by the Massachusetts Clients' Security Board of the Supreme Judicial Court.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

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

(2) The target here should feel fortunate that criminal charges weren't brought against him. Not all participants in these sale leaseback rackets share the same good fortune.

See, for example, Sale Leaseback Equity Stripping Peddler 'Scores' Guilty Verdict In Equity Stripping Ripoff; Grand Larceny, Scheme To Defraud, Conspiracy, Says Jury.

See generally, Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals.

Cobb County Cops Ramp Up Heat In Probe Into Suspected Vacant Foreclosed Home Hijacking Racket; Say There Could Be Hundreds Of Victims

In Cobb County, Georgia, WSB-TV Channel 2 reports:
  • Cobb County police say there could be hundreds of victims involved in a foreclosure leasing business first uncovered by Channel 2 Action News. Investigators said John Harris broke into homes across metro Atlanta, changed the locks and then leased them.

  • Channel 2's Craig Lucie broke the story and detectives told him this could be a massive investigation. Lucie has tracked down 12 victims, including Kimber Taylor of Austell. Taylor told Lucie she just found out about Harris' arrest and said things seem odd from the beginning.


  • Cobb County police said that's how many people who have done business with New Life Granted find out they're not a customer, but a victim. Investigators said Harris and New Life's staff would find homes before they went into foreclosure, change the locks, lease them, pocket thousands and they have been doing it for months.

  • "We believe that there are going to be possibly hundreds of victims," Sgt. Larry White with the Cobb County Police Department told Lucie. The victims are in DeKalb, Gwinnett, Henry, Fulton, Cobb, Clayton and Carol counties.

For more, see Police: Man renting foreclosed home could have hundreds of victims.

Las Vegas Cops: Scam Artists Seeking Free Housing Now Pose As Victims In Effort To Hijack Possession Of Vacant Foreclosed Homes

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • Metro police say rental scams are on the rise and what makes it difficult to stop is that the fraud can come from many different directions. The classic rental scam works by somebody posing as a landlord and illegally leasing out someone else's property. Now, some scam artists are posing as victims, hoping to con property managers into letting them stay.


  • Metro Police say this is the latest in a growing number of rental scams. "They drive around, they look at the foreclosure list. They just move in. They simply just move in and they'll dummy up a receipt or create a receipt to make it look like they're the victim," Lt. Susan Shingleton of Metro said.

  • Metro Police adds the majority of rental scams usually involve fake landlords preying on families looking for a rental deal.

For the story, see Police Warn of Growing Rental Scams on Foreclosed Properties.

Indiana AG: Fla. Outfits Fleeced Homeowners Seeking F'closure Assistance Out Of Upfront Fees By Failing To Provide Services, Stiffing Them On Refunds

In Indianapolis, Indiana, Legal Newsline reports:
  • Indiana Attorney General Greg Zoeller announced a lawsuit on Thursday against two Florida-based foreclosure assistance companies that allegedly promised to stop home foreclosures and failed to deliver.

  • Community One Law Center and National Law Partners allegedly charged exorbitant fees for their services, with some Indiana residents paying the companies more than $2,500 and obtaining nothing in return.

  • "The lawsuit alleges both companies collected money up front and failed to provide refunds to customers after services were not provided," Zoeller said. "These companies are separate entities, but both worked interchangeably on files and shared employees."(1)


  • Zoeller is also focusing on Legal Home Loan Solutions, which allegedly promised to help consumers avoid foreclosure and charged Indiana residents more than $2,000 in fees.

Source: Ind. AG sues Fla. businesses.

(1) Reportedly, Zoeller alleges that by deceiving these consumers, the companies are in violation of a number of laws, including the Deceptive Consumer Sales Act, the Credit Services Organization Act, the Mortgage Rescue Protection Act and the Home Loan Practices Act.

Sunday, October 30, 2011

Eight More Taken Down In Northern California Foreclosure Sale Bid-Rigging Conspiracies; Feds Run Score Up To 18 & Counting In Continuing Probe

From the U.S. Department of Justice:
  • Eight Northern California real estate investors have agreed to plead guilty [Thursday] for their roles in two separate conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.(1)

  • Charges were filed [Thursday] in U.S. District Court for the Northern District of California in San Francisco against Gary Anderson of Saratoga, Calif.; Patrick Campion of San Francisco; James Doherty of Hillsborough, Calif.; Keith Goodman of San Francisco; Troy Kent of San Mateo, Calif.; Craig Lipton of San Francisco; Henry Pessah of Burlingame, Calif.; and Laith Salma of San Francisco.

  • According to the felony charges, the real estate investors participated in a conspiracy to rig bids by agreeing to refrain from bidding against one another at public real estate foreclosure auctions in San Francisco County and San Mateo County. Doherty, Goodman and Lipton participated in the conspiracy in San Francisco, and Anderson, Campion, Kent, Pessah and Salma participated in the conspiracy in San Mateo.

  • The collusion taking place at these auctions allowed the conspirators to line their pockets with funds that otherwise would have gone to lenders and, at times, financially distressed homeowners,” said Sharis Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.

  • The investigation into collusion at these foreclosure auction markets is ongoing, and the Antitrust Division will continue to pursue the perpetrators of these fraudulent schemes until they are brought to justice.”

For the U.S. Justice Department press release, see Eight Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 18 Plea Agreements to Date).

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

Go here for links to more from the U.S. Justice Department on bid-rigging prosecutions.

Bellyaching BofA Bankster Wails To Employees In Effort To Whitewash Negative Public Image

Bloomberg reports:
  • Bank of America Corp. Chief Executive Officer Brian T. Moynihan said he’s “incensed” by public criticism of his company and is pushing back by reminding local leaders of its contributions to their economies. Moynihan, 52, told employees in a global town hall meeting last week from the firm’s Charlotte, North Carolina, headquarters that the “place to win the battle” over the bank’s battered public image is at the state and municipal level.


  • I, like you, get a little incensed when you think about how much good all of you do, whether it’s volunteer hours, charitable giving we do, serving clients and customers well,” Moynihan said during the Oct. 18 gathering. To the bank’s critics, he said, “You ought to think a little about that before you start yelling at us.”

For more, see ‘Incensed’ Moynihan Fights BofA Critics in Letter Campaign.

NY, Delaware AG 'Tag Team' Partners Begin Firing At MERS With Civil Lawsuit, Subpoena Request In Foreclosure Fraud Probe

Reuters reports:
  • MERS, the electronic mortgage registry used by the banking industry, was sued by Delaware on Thursday and accused of deceptive practices that led to unlawful shortcuts in dealing with the foreclosure crisis.

  • New York's attorney general also took action against MERS, subpoenaing the registry this week for information about how it is used by major banks and a foreclosure law firm, a person familiar with the matter said on Thursday.

  • The suit and subpoena were part of a joint New York-Delaware mortgage probe, the person told Reuters.

For more, see MERS subpoenaed by New York, sued by Delaware.

Nevada AG Pinches Three In Alleged Foreclosure Rescue Racket That Filed Phony Land Documents Purporting To Eliminate Mortgages From Homes

From the Office of the Nevada Attorney General:
  • Nevada Attorney General Catherine Cortez Masto announced [] the arrest of three individuals in connection with the operation of a local mortgage scam. Alex Soria, Sonia Rodis, and Hans Johns have all been charged with two counts of Mortgage Fraud and two counts of Theft in an amount in excess of $2500 for their part in the operation of BioGreen Teck, LLC, a local business which dealt with eliminating mortgages on residential homes.


  • Soria and Rodis, as owners and operators of BioGreen Teck, LLC, conducted a mortgage and foreclosure fraud scam known as the Zero Mortgage Program, which promised to eliminate mortgage obligations and maintain the borrower as title holder of the property.

  • Their scam preyed on homeowners facing foreclosure by their banks and lenders. The scam issued two documents, ‘Affidavits of Fact’ and ‘Deeds of Full Reconveyance’, which the victim homeowners were instructed to file at the Clark County Recorder’s Office.

  • The issued documents were notarized by Johns, an in-house notary. After several months, the banks and lenders would not recognize the legitimacy of this process and moved forward with the foreclosure process, leaving customers worse off than before.

  • Soria was previously advised by the Clark County District Attorney that these documents would have no legal effect but he continued to charge victims to prepare them. Soria is currently in federal custody awaiting trial on similar charges. While in custody, Soria has continued to conduct the scam through Rodis and Johns using the alternate business name, ‘Good Government League’, at the same office location where BioGreen Teck, LLC initiated these fraudulent practices.

For the Nevada AG press release, see Attorney General Announces Arrests In Connection With Mortgage And Foreclosure Fraud.