Saturday, December 24, 2011

Nevada AG: Ex-HOA Treasurer Hijacked $800K+ In Fire Insurance Proceeds, Leaving Damaged Premises Unrepaired, Elderly Residents Homeless

From the Office of the Nevada Attorney General:
  • Nevada Attorney General Catherine Cortez Masto announced [] that on Dec. 16 a Clark County Grand Jury returned a six count indictment against Massoud Aaron Yashouafar, 50, of Beverly Hills, Calif., for his actions in allegedly defrauding the Paradise Spa Home Owners Association of over $1 million dollars.

  • This type of crime is particularly jarring when you realize that older victims, many of whom were living on fixed incomes in Paradise Spa, were forced to find and pay for alternative living quarters when they were still obligated to make mortgage payments on their burned condo units, while waiting for repairs that would never be made,” said Masto.


  • In his capacity as treasurer of the Home Owners Association he was provided two checks, one over $400,000 and the other check over $430,000 issued by the Civil Service Employees Insurance Group, for property damage to two separate buildings caused by fires.

  • The insurance checks were issued to repair the damaged buildings. Rather than repair the buildings, Yashouafar deposited the checks in an out of state bank account on which he was the sole signator. As a result, numerous condo owners, many of them senior citizens, were forced to find other living arrangements, while still making mortgage payments on their damaged, uninhabitable units.

  • In some cases, Yashouafar rented units he owned to the displaced condo owners, resulting in them paying him rent while they waited for repairs that were never done because of the alleged theft.

For the Nevada AG press release, see Attorney General Announces Indictment In Paradise Spa Home Owners Association Embezzlement Scheme.

For the indictment, see State of Nevada v. Yashouafar.

Dozens Of Renters Face Possible Boot From Buildings In Foreclosure Over Code Violations, Dangerous Living Conditions

In St. Paul, Minnesota, Minnesota Public Radio reports:
  • About 60 families in St. Paul might be forced out of their apartments next month because of dangerous living conditions. City officials say the scope of the problems and the number of potentially displaced tenants are especially troubling.

  • City inspectors cited nearly 600 code violations in two rental buildings near Interstate 35E and Maryland Avenue, such as missing sinks, a gas leak and an infestation of mice and cockroaches. "It's not safe, it's not sanitary, it's not healthy," said City Council member Lee Helgen. "We don't want to kick people out, but at the same time, we're not going to tolerate these kinds of conditions." Reports of drug deals and prostitution are common. Since 2000, police have received more than 700 calls involving just one of the buildings.

  • City officials say part of the problem is that the landlord, Peggy Chun, is failing to screen her tenants. Some of the renters are immigrants who are afraid to report the problems.

  • Marcia Moermond, the city's legislative hearing officer, said the city will revoke the buildings' certificates of occupancy Jan. 18th if the problems aren't resolved. [...] Moermond said the properties are in foreclosure. A hearing next week will determine whether the bank, Wells Fargo, can appoint a receiver.

For the story, see Dangerous conditions could evict 60 families from St. Paul apartments.

Owners Of Another Riverside County Mobile Home Park Forced To Relinquish Control Over Expensive Code Violations, Health & Safety Issues

In Riverside County, California, The Desert Sun reports:
  • The conditions at a Thermal mobile home park are so bad they threaten the health and safety of the 90 or so residents there, a Riverside County Superior Court judge declared Wednesday.

  • Accordingly, owners of the Hernandez mobile home park, [...] must now hand control of the property to a court-appointed receiver who is expected to start making arrangements for repairs within 30 days.


  • It's a victory in the residents' lawsuit against the Hernandez park owners. Residents filed suit in 2010, claiming they endured more than a month without electricity during the sweltering summer heat. [...] The outages intermittently returned this past summer to the park, which lacks the proper Riverside County permits. Park residents, many of them farmworkers, also deal with sewage spills and an on-site well that has tested positive for potentially harmful bacteria.

  • Scores of other east valley mobile home parks lack permits and have similar hazards. Wednesday's action makes the neglected Hernandez park the latest where conditions grew so bad, compiling expensive code violations, that the owners were forced to relinquish control.

For more, see Judge orders owner to give up Hernandez mobile home park over health violations.

Homeless Take Pass On Local Shelters, Opt For Wide Selection Of Vacant Foreclosures Instead

The Los Angeles Times reports:
  • [N]ew York would seem to offer an ideal setting for squatters, with its ubiquitous apartment blocs providing safe hiding for people who can't afford the sky-high rents or stomach life in the shelters. The cutoff of funding this year for a program called Advantage, which helped needy renters pay for housing, has deepened the dilemma for people like [Tasha] Glasgow, 30, who has two children, one of them autistic. Her 9-year-old girl and 5-year-old boy have been taught to adapt to the idiosyncrasies of life in a squat, which is a bit like life during wartime.

  • There is no heat. Empty jugs sit on the kitchen counter, waiting to be filled when the water comes on. Toilet-flushing and bathing are timed according to the faucets' erratic flow. Bare bulbs jut from ceiling fixtures, the wood floors are bare of carpeting, and tattered drapes cover the windows. There are none of the signs of regular family life: no dishes in the sink from the last meal, no dining table, no mail to be opened.

  • Still, it's better than a shelter. "I didn't want to be in a shelter. It was depressing. I wasn't getting support trying to find a place to live," said Glasgow, who has occupied this apartment near the ocean, on the foggy tip of Queens, on and off since 2007.


  • If all goes well, Glasgow and the children soon will move to another, better squat — a vacant Brooklyn house. The children's father, Alfredo Carrasquillo, entered it Dec. 6 as part of a nationwide effort by homeless advocates to highlight the housing crisis, which included public occupations of bank-owned properties. He won't move the rest of the family in until he has made it more suitable for habitation.

  • "Honestly, we just thought it would be a great opportunity," Carrasquillo said of taking over the vacant house in a public manner, which included a march through the neighborhood and a party on the quiet street, complete with balloons and housewarming gifts. "This is for everyone who doesn't have a house right now — to show people they can fight back."

For more, see Squatters say foreclosed homes beat homeless shelters (They may lack heat and a consistent water supply, but the vacant dwellings aren't as 'depressing,' as one New York mother puts it. Advocates say the number of squatters nationwide is rising).

S. Fla. Volunteer Group's Effort To Save Canine Victims Of F'closure, Recession Runs Out Of Cash; Dog Dumping In Predator-Packed Everglades Continues

In Miami, Florida, Miami New Times reports:
  • The past four months have been a horror show for local animal rescuer Amy Restucci. Along with a group of volunteers, she has spent every weekend in rural South Dade rounding up dogs -- all of them former pets abandoned on the edge of the Everglades by feckless owners.

  • When she finds the animals, they're usually emaciated and sick from being tossed to the streets. "Some of them have needed leg amputations," Restucci says. "They have missing eyes. They have infections."

  • But here's the really bad news: After rescuing 178 dogs -- and three cats -- and spending roughly $65,000 on vet bills, Restucci can't afford to rescue the animals anymore. She first heard about the packs of recently dumped dogs in September.

  • They're found in Kendall, Homestead, Florida City, and -- most harrowing for the pets -- the predator-packed Everglades. They're not longtime strays: Many of them nuzzle Restucci when she approaches. It's unclear if the mass abandonment is a longtime phenomenon only now being discovered or a new by-product of the foreclosure spike and recession gripping the county.

  • A public service announcement for the cretinous dog owners doing the dumping: Fido is not embarking on a fun Milo & Otis adventure with, like, talking owls. If you abandon your pet in the Glades, it will most likely die of starvation or under the wheels of a car. Miami-Dade Animal Services picks up the dogs only when called. Because the animals are in bad shape, Restucci says, they are almost always quickly euthanized.

  • None of the animals she has rescued has been put to sleep. She raised all of the cash through donations -- documented in detail on the effort's Facebook page -- and swung discounted vet care and boarding at Acacia Animal Hospital in Pompano Beach. But she ran out of funds a couple of weeks ago. (Want to help by donating cash or adopting a rescued animal? Visit the effort's Facebook page or contact

  • "My heart is broken," Restucci says. "We've saved more than one hundred, but it should be one thousand. There are countless more out there suffering."

Source: With Hundreds of Dogs Abandoned Near Everglades, Rescuers Are Out of Funds.

Friday, December 23, 2011

State AG: F'closure Sweatshop's Response To Suit "Another Example Of LPS' Complete Disregard For Its Fraudulent Conduct In Nevada, Across The Country"

The Las Vegas Review Journal reports:
  • Nevada Attorney General Catherine Cortez Masto called allegations that her office improperly outsourced a foreclosure document robosigning investigation "groundless." The claim was made by Lender Processing Services Inc., the nation's largest lender services company, after Masto filed a lawsuit on Friday claiming the company participated in a widespread fraud involving robosignings and other deceptive practices.

  • Based in Jacksonville, Fla., LPS responded to the 39-page fraud lawsuit by saying it "seeks to sensationalize a variety of false allegations in a misleading manner." The company also said Masto's office decision to outsource its investigation to Cohen Milstein Sellers & Toll PLLC in Washington D.C. was an "apparent violation of Nevada law."

  • "The spurious allegations by LPS are yet another example of LPS' complete disregard for its fraudulent conduct in Nevada and across the country," Masto said in an email. "Instead of acting responsibly, LPS chooses to deflect its nefarious actions with groundless allegations."

  • Masto said her office was prepared to move forward with the case and was confident that the "courts will recognize a red herring when they see it."

Source: Nevada AG says outsourcing claims by lender 'groundless'.

San Diego Feds Squeeze Guilty Pleas Out Of Five Charged With Running Fraudulent Loan Modification Ripoff Operation

From the Office of the U.S. Attorney (San Diego, California):
  • United States Attorney Laura E. Duffy [] announced the guilty pleas of five defendants in connection with a loan modification scheme involving an Oceanside company called 1st American Law Center. Gary Bobel, Scott Thomas Spencer (a.k.a. Thomas Cole), Mark Andrew Spencer (a.k.a. Mark Andrews), and Travis Iverson each pled guilty [] before Magistrate Judge William McCurine to conspiracy charges related to their commission of wire fraud, money laundering and tax evasion, and criminal forfeiture.


  • According to documents filed in court, Gary Bobel opened up a loan modification business in Northen San Diego County in 2008. Bobel hired telemarketers to sell his services, including defendants Scott Spencer, Mark Spencer, Roger Jones, and dozens of others. Defendant Travis Iverson ran a separate call center in Riverside for Bobel.

  • Court records reveal that the defendants and their co-conspirators at 1st American Law Center preyed on homeowners who were struggling to make their monthly mortgage payments and at risk of losing their homes to foreclosure.

  • The Defendants used high-pressure sales tactics and outright lies to induce their customers to purchase loan modification services – for payments from $1,995 to $4,495 – such as falsely claiming to have a team of attorneys who pre-screened clients and having a 98% success rate in obtaining loan modifications.

  • As detailed in the guilty pleas entered by the defendants, 1st American Law Center’s telemarketers were encouraged to say virtually anything it took to close the deal.

For the U.S. Attorney press release, see Five Defendants Admit Stealing More Than $11 Million From Desperate Homeowners In Loan Modification Scam.

California AG Sues Fannie, Freddie In Effort To Compel Mortgage Giants To Fork Over Information On Foreclosed Homes

In San Francisco, Courthouse News Service reports:
  • California's attorney general says Fannie Mae and Freddie Mac refused to provide information to the state's Mortgage Fraud Strike Force, which is investigating the mortgage and foreclosure crisis in California, which has cost more than 768,000 families their homes.

  • Attorney General Kamala Harris filed separate petitions to enforce investigative interrogatories against Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation.)

For more, see California Sues Freddie & Fannie for Info.

For one of the lawsuits, see People v. Federal Home Loan Mortgage Corporation.

Texas AG Civil Lawsuit: Bill Collector Threatened Consumers With Arrest, Prosecution, Imprisonment In Effort To Collect Delinquent Debts

From the Office of the Texas Attorney General:
  • Texas Attorney General Greg Abbott [] charged a third-party Houston debt collection firm with violating the Texas Finance Code. First Integral Recovery, LLC is a third-party collector hired by creditors to collect outstanding, short-term payday loan payments.

  • According to the State’s enforcement action, First Integral Recovery’s representatives unlawfully claimed that the firm is associated with law enforcement agencies. After falsely citing their purported law enforcement ties, the defendant’s staff told debtors they faced arrest, prosecution and imprisonment because of their delinquent debt.

  • In addition to improperly misleading debtors about First Integral Recovery’s law enforcement ties, the State’s enforcement action cited the defendant for attempting to intimidate debtors and using profanity during debt collection calls.

  • According to state investigators, First Integral Recovery also failed to properly verify whether the alleged debtor actually owed the debt in question – even after those contacted by the firm sought additional information or insisted they did not incur the indebtedness in question.

  • Although Texas law requires that debt collectors identify the name of the creditor, First Integral Recovery representatives routinely refused to identify the alleged creditor on whose behalf they were calling. Finally, the firm also operated for seven months during 2010 without having posted a surety bond with the Texas Secretary of State, a legal requirement of third-party debt collectors. The attorney general seeks civil penalties for violations of the Finance Code and Texas Deceptive Trade Practices Act.

For the Texas AG press release, see Texas Attorney General Charges Houston Debt Collection Firm with Deceiving Consumers (First Integral Recovery threatens debtors with arrest, prison).

For the Texas Attorney General's lawsuit, see State of Texas v. First Integral Recovery, LLC.

Thursday, December 22, 2011

Utah AG Files Criminal Theft, Racketeering, Communications Fraud Charges Against Owner Of Loan Modification Ripoff Shop

From the Office of the Utah Attorney General:
  • The owner of a loan modification business with offices in Lehi and St. George has been charged with 9 felony counts for allegedly defrauding hundreds of desperate homeowners. David Shawn Moffitt, 34, operated Fortified Financial, Fortified Academy and Wasatch Rent 2 Own between 2009 and 2010.

  • According to court documents, Moffitt charged between $2,500 to $3,000 to modify a loan so they would not lose their homes. Customers were promised a full refund if they were not satisfied.

  • However, Moffitt allegedly refused to give refunds to as many as 200 eligible clients money because the money was being used to pay for personal expenses, including food, rent, entertainment and even $4,000 for his wife’s plastic surgery.


  • Company accountants found that Moffitt and his wife took $124,000 in 2009 and $72,000 in 2010 from Fortified and and other $33,000 was transferred to Wasatch Rent 2 Own during those two years. During the same time, Fortified employee paychecks started to bounce and bonuses were not paid.

  • "This scam should be a warning to everyone to take a hard look at anyone before trusting them with your money and especially your home," says Department of Commerce Executive Director Francine Giani. "I would like to personally thank Assistant Attorney General Che Arguello and the entire Criminal Justice Division of the Attorneys General’s Office for their tireless efforts in assisting the Department of Commerce fight fraud in Utah."

  • After an investigation by Utah Division of Real Estate Chief Investigator Kent Nelson, Assistant Attorney General Che Arguello filed 7 second-degree felony counts of communications fraud, theft and racketeering and 2 third-degree felony counts of theft.


  • Last March, Moffitt was ordered to pay $92,000 in actual damages and $2 million in punitive damages after a civil lawsuit was filed by former clients.

For the Utah AG press release, see Loan Modifier Faces Felonies For Defrauding Homeowners.

Illinois AG Tags Three More Loan Modification Outfits With Civil Suits; Runs Total Number Of Legal Actions Against Suspected 'Rescue' Rackets To Fifty

In Chicago, Illinois, the Chicago Tribune reports:
  • The state attorney general's office filed suit Monday against three Chicago-area firms and their principals who allegedly operated mortgage rescue schemes that conned homeowners out of more than $44,000 in upfront fees and provided them with little or no help.

  • The cases share many similarities, including preying on consumers for whom English is a second language, collecting upfront fees and telling consumers to ignore any mail sent to them by their mortgage companies.

  • In Illinois, it is illegal to charge consumers upfront fees for loan modification services not yet provided. In at least one of the cases, a homeowner lost his home to foreclosure as a result of the purported fraud.

  • "People are desperate to save their home, and they're so intimidated by even the thought of trying to deal with their bank," said Illinois Atty. Gen. Lisa Madigan. "For many people, they got a mortgage through a broker and their only contact since then has been writing a check. The idea that they have to find someone to interface with, especially when they're not fluent, scares them. When someone says 'I can handle this, give me $500 and I can get you a modification,' they are relieved. People don't think they can do this on their own."

For more, see Madigan sues 3 local firms over mortgage modifications.

For the Illinois AG press release, see Madigan Files 50th Suit Against Mortgage 'Rescue' Scheme, Leads Nation In Crackdown On Scams Targeting Distressed Homeowners.

Dubious Wayne County Real Estate Operator Continues Operating Despite Increasing Consumer Complaints, Media Spotlight

In Wayne County, Michigan, WXYZ-TV Channel 7 reports:
  • What would you think of a man who rents houses that aren’t fit to live in? He’s well known in Wayne County where he’s taken thousands of dollars from the poor and disabled, for houses without permits to rent. When the city tells them the house has no occupancy permit, the man who took their money for deposits and rent leaves those families homeless, and he’s been doing so for years.

  • His name is Leonard Bale. His company is Wolverine Investors. That might sound familiar because in a previous 7 Action News investigation we found Mr. Bale selling houses on land contract that were in some stage of foreclosure.

  • Now, we’ve heard from more single mothers who say Bale rented them houses no one can live in.


  • Bale and his company, Wolverine Investors, have hundreds of properties in Wayne County. He offers them on Craig’s list. But people who’ve told us about their experience doing business with Leonard Bale have a warning for you.

  • [One victim] says “to everybody out there, please, do not rent a house from Leonard Bale.” [Another] says “do your homework. I thought he was legit.” He ads “I checked with the Better Business Bureau. He had an a plus rating.”

  • But after 7 Action News aired our first investigation on Leonard Bale selling houses he knew were in foreclosure, the Better Business Bureau took him off their list of rated companies.

  • We’re still hearing from people who feel they’ve been victimized by Leonard Bale, so we’ll stay on this story to follow complaints that have been made to the Wayne County prosecutor and the State attorney general.

For the story, see Tenants say man is renting homes not fit for human habitation.

See also, They thought they were buying homes for their families, but a dream come true has become a nightmare (Many are discovering what they thought was a blessing, has turned into a curse. The homes they thought they were buying are in various stages of foreclosure – and they say the man who sold them, Leonard Bale, never told them).

Suspected Illegal Loan Mod Racket Continues To Operate Unabated Despite State Cease & Desist Order, Ongoing State Bar Probe

In Bakersfield, California, KGET-TV Channel 17 reports:
  • More than a half dozen homeowners turned to 17 News for help.They say a man promised to modify their mortgages but instead swindled them out of thousands of dollars. nd, they're frustrated that man is still in business. Charlie Yong wasn't happy to see us.

  • The Department of Real Estate has ordered him to stop offering loan modification assistance because he's not a lawyer and not a real estate broker.(1) And, they say that means he's breaking the law. But, so far, for Yong, it's business as usual.


  • Here's how [one victim] says it worked: Yong told perspective clients he represented an attorney named Travis Jack who would perform their loan modification. Salas says Yong asked for an upfront fee, about $2,500, for his services. [... He] says Yong told him the mortgage company wanted his money placed in a separate holding account: a sign of good faith he would continue to make on-time mortgage payments. Instead, [he] says Yong simply kept the money.


  • We found attorney Travis Jack works across the hallway from Yong in the same office space. He didn't want to be interviewed on camera, but Jack told us off camera he did about 80 home loan modifications with Yong and was paid about $6,500, far less than he was promised.

  • Now, he is under investigation by the State Bar Association, and he has been sued by several clients. In fact, a check of state records shows the bar suspended Jack's license for a year in May 2010.(2) As part of the hearing, Jack admitted he and Yong took $500 from a woman and promised to help modify her home loan. But, the woman's bank sold her home through foreclosure four days later. And, it was a full two weeks after the sale before one of Yong's employees even made the first attempt to try to stop the sale.

  • The bar says in so doing, Jack violated professional rules by refusing to refund the woman's money. And, they say Jack assisted Yong in the unauthorized practice of law.

For more, see 17 News Investigation: homeowners say they were scammed.

(1) DRE Yong Order to Desist and Refrain.

(2) Jack State Bar Suspension.

Wednesday, December 21, 2011

NY AG Escalates Mortgage Securities-Peddling Probe; Strikes Deal With Federal IG To Share Info, Pool Resources In Investigation Into Bankster Conduct

Financial Tmes reports:
  • The federal watchdog overseeing US mortgage finance companies Fannie Mae and Freddie Mac is joining forces with New York’s attorney-general to investigate banks’ mortgage securitisation practices, a partnership that could make it easier for authorities to bring fraud charges against Wall Street companies.

  • Investigators will be able to share documents and findings, and pool resources, according to people familiar with the co-operation agreement. It was signed in recent weeks by Eric Schneiderman, New York attorney-general, and Steve Linick, the inspector general supervising Fannie and Freddie as well as , the regulator responsible for the two taxpayer-owned home loan financiers.

  • The collaboration escalates Mr Schneiderman’s probe of about a dozen banks and mortgage insurers as part of a broad investigation into whether banks properly bundled hundreds of billions of dollars worth of home loans into now-soured securities sold to investors.

  • The New York attorney-general is armed with the state’s Martin Act, considered one of the most powerful prosecutorial tools in the country. The law allows Mr Schneiderman to investigate anyone doing business in New York and to bring cases without having to show that the accused intended to commit fraud. State prosecutors need only prove that a fraud was committed, which state courts have defined as “all deceitful practices contrary to the plain rules of common honesty”.

  • The law allows Mr Schneiderman to pursue civil and criminal probes, and to seek felony criminal convictions. The Martin Act confers broader powers than federal securities laws used by agencies like the US Securities and Exchange Commission, which must show intent when bringing fraud cases. Previous New York prosecutors such as Eliot Spitzer have wielded the law to extract billions of dollars from Wall Street firms for alleged wrongdoing.

  • Representatives for Mr Schneiderman and Mr Linick confirmed they were co-operating but declined to give details.

Source: US investigators join forces in mortgage probe.

Loan Peddler Gets 41 Months In Scam That Targeted Seniors Involving Hijacked Refinancing Proceeds From Fraudulently-Obtained Reverse Mortgages

From the U.S. Justice Department:
  • A Florida loan officer was sentenced [] by U.S. District Court Judge William P. Dimitrouleas in Ft. Lauderdale, Fla., for his participation in a nationwide $2.5 million reverse mortgage fraud scheme, the Justice Department announced.

  • John Incandela, 25, of Palm Beach, Fla., was sentenced to 41 months in prison, three years of supervised release and ordered to pay over $1.9 million in restitution. Louis Gendason, 42, of Delray Beach, Fla., is scheduled to be sentenced on Jan. 20, 2012.


  • According to the information and statements made during the August 2011 hearing in the case, from May 2009 through November 2010, the defendants engaged in a reverse mortgage scheme that defrauded unwitting borrowers, Genworth Financial Home Equity Access Inc. and the Federal Housing Administration (FHA).

  • Working as a loan officer, Incandela, along with co-defendant Marcos Echevarria, 29, of Palm Beach, solicited seniors to refinance their existing mortgages with a reverse mortgage loan financed by Genworth. To qualify the borrowers for these loans, co-defendant Gendason altered real estate appraisals to fraudulently inflate the value of the borrowers’ properties.

  • In fact, however, none of the borrowers had sufficient equity in their properties to qualify for a reverse mortgage. The defendants then submitted the fraudulently inflated appraisals to Genworth. Based on the false documentation, Genworth approved and the FHA insured more than $2.5 million in reverse mortgage loans.

  • As part of the scheme, co-defendant Kimberly Mackey, 47, of Pittsburgh, a licensed title agent, fraudulently closed the Genworth loans and did not pay off the borrowers’ existing mortgage loans.

  • The defendants divided up the loan proceeds and used the money for their personal benefit.

  • On Nov. 3, 2011, Mackey and Echevarria received prison sentences of 60 and 24 months, respectively, for their roles in the scheme.


  • The masterminds of this mortgage fraud scheme targeted elders who were looking for a little financial security in their golden years,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division.

For the U.S. Justice press release, see Florida Loan Officer Sentenced in Connection with $2.5 Million Reverse Mortgage and Loan Modification Scheme.

Testimony In Preliminary Hearing Begins For Trio Accused Of Abusing POA To Rip Off Now-Deceased 90-Year Old Woman Of Two Homes, Cash

In Lehigh County, Pennsylvania, The Morning Call reports:
  • [T]he first day of testimony at a preliminary hearing for the three people accused of stealing almost everything from [90-year-old Queen E.] Hersh, including her longtime home in Emmaus and a vacation home in the Poconos, focused on Penelope Veronikis, who authorities say masterminded the alleged thefts.

  • Hersh would die months after learning she had been taken for more than $260,000, authorities say, adding that the "despair and devastation" she felt may have contributed to her deteriorating health and, possibly, her death.

  • Authorities said two days after Hersh's sister died in June 2006, Veronikis, 49, of Hanover Township, Northampton County, allegedly persuaded Hersh to sign over power of attorney so Veronikis could help manage the elderly woman's finances.

  • The lawyer who prepared the paperwork testified Monday that Veronikis approached her about preparing the power of attorney for a "lady who needed help paying her bills." Ewalde Cook, an attorney from Bethlehem, said Hersh, who was 88 at the time, appeared to know what she was doing. "There is no doubt in my mind, she understood," she testified.

  • Months later, in December 2006, Veronikis sold Hersh's vacation home in the Poconos for $170,000 without Hersh knowing, authorities said. With the money, Veronikis reportedly got a tummy tuck and a breast lift and her then-boyfriend bought a 1974 muscle car from Veronikis' brother.

  • Veronikis would later change Hersh's will to make herself the sole beneficiary, refinance Hersh's Emmaus home to obtain a $50,000 loan and open and max out two credit cards in Hersh's name, authorities said. Veronikis' then-boyfriend, Hristos "Chris" Dimou, 49, owner of the Emmaus Diner, and her daughter, Barbara Paxos, 26, are also charged.


  • Veronikis and Paxos, both of 1246 Granite Drive, Hanover Township, and Dimou, of 3744 Church View Road, Upper Milford Township, are charged with dealing in proceeds of unlawful activities, reckless endangerment, criminal conspiracy, theft, theft by deception, theft by failure to make required disposition of funds received and receiving stolen property. Veronikis and Dimou are also charged with reckless endangerment.

  • Before she died, Hersh told her lawyer she never gave Veronikis permission to sell or refinance her homes and she never lent Veronikis any money. Hersh's will was later destroyed and Emmaus police were contacted. She suffered a stroke the day she was to write a new will and died weeks later, according to testimony Monday. She was never evicted from her home because she died before anything could happen.

For the story, see Three face charges in bilking Emmaus woman of $260,000 (The 90-year-old died before she faced eviction from her home).

Failure To Appear In Court Leads To Arrest Warrant Issued For Lawyer Accused Of Illegally Snatching Unclaimed Foreclosure Surplus Cash

In Milwaukee, Wisconsin, the Brookfield Patch reports:
  • An arrest warrant was issued Monday for a Brookfield lawyer accused in a $500,000 fraud case when he failed to appear in court for a hearing to change his not guilty plea.

  • Thomas E. Bielinski, 52, did not show up for his scheduled 8:30 a.m. hearing before Milwaukee County Circuit Judge J.D. Watts, according to online court records.

  • Bielinski is accused in a criminal complaint of stealing more than $500,000 in unclaimed foreclosure funds, according to this story.

Source: Brookfield Lawyer Accused in $500K Fraud Fails to Appear for Plea (An arrest warrant was issued for lawyer Thomas E. Bielinski after he failed to show for his court hearing in Milwaukee Monday).

See also, Milwaukee Journal Sentinel: Brookfield lawyer charged with stealing $542,000 in unclaimed funds (Man accused of falsely claiming to represent people entitled to the money):

  • Every two years, the Milwaukee County treasurer's office publishes a list of unclaimed amounts and the names of the people entitled to collect them. While investigators say that list served as a very productive tip sheet for Bielinski, it hasn't spurred similar crimes or attempts recently, Milwaukee County Treasurer Daniel Diliberti said.


  • But it wouldn't be the first time a lawyer stole unclaimed funds from the court clerk and treasurer. Robert Kuhnmuench pleaded guilty in 1999 to a similar scheme that netted him $66,000 and was sentenced to two years in prison, according to a Supreme Court order revoking his license to practice law. He died in 2009.

Tuesday, December 20, 2011

Cal. Appeals Court: No Bond Required To Stall F'closure Where Lender Violates State Statute Requiring It To Contact Borrower Before Declaring Default

In Sacramento County, California, Metropolitan News Network reports:
  • A homeowner facing foreclosure is not required to post a bond in order to forestall a trustee’s sale where the lender has violated a recent statute requiring that it contact the borrower about possible alternatives, the Third District Court of Appeal has ruled.

  • The court Thursday reinstated an injunction that bars J.P. Morgan Chase from foreclosing on a home in the Sacramento County community of Orangevale. The homeowners, Brenda and Matt Bardasian, bought their home in 2005 but fell $100,000 behind in the payments—the loan was for nearly $614,000—and the bank sought to foreclose.

  • The Badasians, represented by Sacramento’s United Law Center, sued the bank and the mortgage servicer, and moved for a preliminary injunction under Civil Code Sec. 2923.5. The statute requires a lender, prior to the issuance of a notice of default, to contact the borrower by phone or in person, assess their financial condition, and discuss alternatives to foreclosure.

  • Sacramento Superior Court Judge David I. Brown found that the statute had not been complied with, and granted an injunction barring the trustee’s sale from going forward until the defendants complied. But he found that it would be “inequitable to allow [the Bardasians] to continue to live in the house for free” and ordered them to post $20,000 bond and pay the lender $500 per month until the case was concluded.

  • The bond was not posted, and the judge granted the lender’s motion to dissolve the injunction. The Court of Appeal, however, granted a stay while the order was appealed. Justice Ronald Robie, writing for the court, said that once the trial judge determined that the lender had violated the statute, it was an abuse of discretion to require a bond.

  • The purpose of a bond or undertaking for a preliminary injunction, the justice explained, is to protect the defendant from damages it might suffer if it prevails on the merits.

  • Here, however, there was no such possibility because the judge ruled that the defendants violated the statute, rejecting their substantive defenses—that a loan modification in 2007 contained adequate notice, and that adequate notice was contained in a form attached to the notice of default, Robie said.

  • The trial judge, he pointed out, determined that the defendants were “not telling the truth” about alleged compliance by a previous mortgage servicer, crediting Brenda Bardasian’s declaration to the contrary. “Such compliance was the only issue in this suit,” Robie wrote. “Because it ruled on the merits of the Bardasians’ claim, the court could not order the Bardasians to provide an undertaking.”

Source: Homeowners Not Required to Post Bond Under New Foreclosure Law—C.A.

For the court ruling, see Bardasian v. Superior Court, No. C068488 (Cal. App, 3rd Dist., December 15, 2011).

Heat Continues For Florida AG As Critics Say Bondi's Failure To Probe Fraudulent Mortgage Practices Is Giving Banksters A Pass

In Orlando, Florida, the Orlando Sentinel reports:
  • As attorneys general in other foreclosure-battered states step up their investigations into fraudulent mortgage practices by large U.S. banks, some Florida groups are accusing state Attorney General Pam Bondi of being soft on the giant lenders.

  • Florida's Democratic state senators recently released a video that targets Bondi, a Republican elected to a nonpartisan office. Titled "Ignoring the Florida Foreclosure Crisis," the video contrasts new fraud investigations launched by California Attorney General Kamala Harris with controversial forced resignations of two key mortgage-fraud investigators in Bondi's Fort Lauderdale office.

For more, see Critics: Bondi lax in pursuing big mortgage lenders amid continuing foreclosure crisis.

Lawsuit: BofA's Misapplication Of Couple's Loan Modification Payments Among Misdeeds Leading To Foreclosure; Homeowners Seek Class Action Status

In Franklin County, Ohio, The Columbus Dispatch reports:
  • After falling behind on their bills, Joseph and Jennifer Woodruff arranged to modify the loan that Bank of America held on the couple’s Canal Winchester home. The couple regularly made all the payments, but the bank foreclosed anyway.

  • Yesterday, the Woodruffs fired back by suing Bank of America in Franklin County Common Pleas Court. The couple accuses the lender of failing to live up to the terms of the loan-modification agreement and of diverting money from the payments to other accounts.

  • John Sherrod, the couple’s attorney, contends that the Woodruffs are among thousands of Ohio homeowners who were foreclosed upon illegally by Bank of America. He is asking the court to certify the suit as a class-action case and to stop Bank of America from foreclosing on any Ohio homeowner who is current on loan payments.

  • Mr. and Mrs. Woodruff made modification payments for nothing,” said Sherrod, an attorney with the Jump Legal Group. “Bank of America foreclosed on the Woodruffs even though they said, in their own documents, that they would not.”

For more, see Modified home loan is focus of lawsuit (Bank of America foreclosed despite payments, suit says).

Monday, December 19, 2011

LPS, Confederates Next On Nevada AG Hit List As Foreclosure Document Assembly-Line Sweatshop Faces Robosigner Allegations In Civil Suit

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • Nevada's Attorney General is going after the nation's largest home default company. Lender Processing Services, or LPS, has its hand in tens of thousands of Nevada home evictions and foreclosures.

  • Initially, the Nevada Attorney General's office went after LPS's middle managers. Now, they're going after the top bosses claiming they lied under oath and created a company filled with fraud.

  • Former title officer Gary Trafford arrived from California to face a Nevada judge for the first time. While working for LPS, he's accused of managing a robo-signing scheme. He's charged with ordering notaries to forge hundreds of signatures a day. Trafford plead not guilty to a 606-count state indictment.

  • Both Trafford and fellow title officer Gerri Sheppard face trial in September. At the same time, Attorney General Catherine Cortez Masto announces she's going after their bosses at LPS. She says she is focusing on LPS because they are a big player in the default servicing component of mortgages and their processes and procedures were violating laws.

  • "So, the civil action is to stop them, prohibit them from continuing to utilize the procedures that they've been using in violation of our law," Cortez Masto said.

  • She says employees were required to notarize and forge up to 4,000 documents a day. One confidential witness told investigators it didn't matter some of his notary co-workers "couldn't read English well because reading documents wasn't part of the job."

For more, see NV Attorney General Sues Company for Robo-Signing.

See also, the The Associated Press: Nev. AG, Fla. firm trade barbs on 'robo-signing':

  • "The robo-signing crisis in Nevada has been fueled by two main problems: chaos and speed," Masto said in a statement announcing the civil case had been filed Thursday in Clark County District Court.

  • "Former employees and industry players describe LPS as an assembly-line sweatshop, churning out documents and foreclosures as fast as new requests came in and punishing network attorneys who failed to keep up the pace," the statement said.

For the Nevada Attorney General lawsuit, see State of Nevada v. Lender Processing Services, Inc., et al.

For the Nevada AG press release, see Nevada Attorney General Sues Lender Processing Services For Consumer Fraud.

Adverse Possession Rackets Keep Grand County Cops Busy With Probes Into Alleged Home-Snatching Scams Involving Foreclosed Homes

In Grand County, Colorado., the Sky-Hi Daily News reports:
  • A man arrested in Denver for rental and real-estate fraud has been under investigation here in Grand County. Alfonso Carrillo, 50, who in October was charged with filing phony deeds on houses vacated through foreclosure and posing as the owner, is suspected of having at least three similar dealings in the Winter Park area.


  • Carrillo has been released from custody on a $10,000 bond and is scheduled to reappear in court on Jan. 6. Another man, Rudy Breda, 53, is also wanted in connection with the alleged scam, according to the Denver District Attonrey's office. He is accused of recording phony deeds with the Denver Clerk and Recorder's Office.

  • In Grand County, both the Fraser-Winter Park Police Department and the Grand County Sheriff's Office have been involved in three separate investigations concerning individuals illegally living in homes, all in connection with Carrillo's dealings.

  • This summer, the Sheriff's Office was called out to a home in Meadow Ridge in the Fraser Valley by neighbors who noticed people occupying a bank-owned home believed to be in foreclosure. The woman living in the bank-owned home presented the Sheriff with a paper-labeled deed, but through further investigation, it was determined the deed — with the name “Rudy Breda” on it — was “false and forged,” according to Grand County Sheriff Rod Johnson.


  • In another case, Winter Park Police arrested two individuals in late November who since late July had been sporadically living in a home pending foreclosure in the Rendezvous subdivision. German Jasso, 42, and his wife Laura Guitierrez, 41, of Fraser, moved belongings into the home and conducted renovation work.

  • According to assessor and trustee documents at the time, the home still belonged to someone else. The home, the finished construction of which had not been completed, was in pending foreclosure with Bank of America, according to the initial police report in court documents.

  • In the course of a few months, Jasso conducted work on the home to try and obtain a certificate of occupancy, including installing a propane tank and changing locks on doors. He told police that he believed he had legal access to the home through a legal instrument called “adverse possession,” and said his real estate “consultant” was Carrillo.

  • But even after police repeatedly warned him to vacate the property, Jasso and family remained in the home. After police went to the home and changed locks to keep the family out, Jasso filed a civil protection order claiming that he had been wrongfully evicted by police.

  • According to Fraser-Winter Park Police Chief Glen Trainor, “State law is very specific about the time periodof adverse possession, or ownership of property through long-term use of it, which is defined as 18 years.

  • Jasso and Guitierrez were charged with theft, a class three felony, first degree criminal trespassing, a class five felony, and offering a false instrument for recording, a class five felony. Jasso was arrested on Nov. 21 and released on a $10,000 bond. His wife was arrested later and released on Dec. 6 on a $20,000 personal recognizance bond.

  • Most people legitimately don't know it's a scam,” said real estate broker Gary Glenn, who himself is dealing with a similar case in Lakota near Winter Park. Glenn was hired by a national bank to market the bank's-owned home in that subdivision, but cannot start because people have been living in it without any legitimate legal interest since last spring — again, orchestrated through Carrillo, according to police.

  • But banks are more tentative than owners who still have possession of homes to act on such situations for concerns of foreclosure liability. The individual who moved into the Lakota home, described as a restaurateur in the Fraser Valley, gained access by way of a bogus $5,000 deed to a home, according to Glenn, where the next-door property is for sale for $400,000.

  • Through what's alleged to be Carrillo's coaching, the tenant gained access during the bank foreclosure process, which according to new federal laws kicks in a 90-day time period preventing a bank from evicting individuals. An eviction process took more time, and when the eviction notice finally was served to the alleged squatter, a proof of bankruptcy document was presented to the sheriff's deputy, which Carrillo filed on behalf of the tenant, according to Glenn. This caused the bank to slow down its eviction while it now complies with all federal bankruptcy laws.

  • We have to be totally legal while they're being totally illegal,” Glenn said. “People gaming the system are intentionally taking advantage of laws intended to help homeowners.”

For the story, see Banks, police battle foreclosure 'squatters' in Grand County, elsewhere.

Feds, Six Defendants Settle Civil Suit Alleging Upfront Fee Loan Modification Ripoffs, Foreclosure Relief Racket

From the Federal Trade Commission:
  • Six defendants have agreed to settle Federal Trade Commission charges that they participated in a fraudulent mortgage modification and foreclosure relief scheme. The settlement orders require five defendants to pay back millions in ill-gotten gains, and permanently ban all six from selling any mortgage assistance or debt relief products. The settlements with the U.S. Homeowners Relief defendants are part of the agency’s ongoing crackdown on frauds targeting consumers in financial distress.

  • Acording to the complaint filed last year by the FTC, the defendants touted a “Government Mortgage Relief Program” that would supposedly reduce mortgage payments as part of the “Obama Act” or the “federal stimulus program,” even though the defendants had no affiliation with the government.

  • Claiming a 90 percent or higher success rate, they charged consumers up to $4,250 and promised to reduce their mortgage payments, their interest rates, and sometimes even their principal loan amounts.

  • The FTC also alleged that although the defendants promised full refunds if they were unsuccessful, once consumers paid the fee, they received nothing, did not get refunds, and the defendants did not respond to their calls or e-mails.

  • According to the complaint, the defendants disconnected their telephones and changed the name of their business while continuing to make promises and take money from other consumers.

For the entire FTC press release, see FTC Settlement Requires "U.S. Homeowners Relief" Defendants to Pay Millions, Bans Them from Debt and Mortgage Relief Business.

Sunday, December 18, 2011

Add One More To List Of Florida Appeals Court Reversals Of Trial Judge Screw-Ups In F'closure Litigation; Lender Must Own Note At Time Of Case Filing

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Home­owners in foreclosure may have a better chance of getting a true trial, instead of a quickie judgment, following a 4th District Court of Appeal decision that requires banks to prove ownership of the note at the time they file for repossession.

  • The ruling Wednesday in Palm Beach County was heralded by foreclosure defense attorneys who said it may even force banks to dismiss some cases and start over with new paperwork.

  • Tom Ice, founder of the Royal Palm Beach-based foreclosure defense firm Ice Legal, called the decision a "sea change" in the way courts are looking at foreclosure cases and the importance of assignments of mortgage.

  • "No longer can banks just walk in and have their attorney wave around a piece of paper saying this is the note," Ice said. "The good news for homeowners is now they have an opportunity to prove their case and get a trial on its merits."

  • The 4th DCA ruling follows a rare Florida Supreme Court decision last week to take up an already settled Greenacres foreclosure case that involved an allegedly backdated assignment of mortgage that the bank used to show ownership. The court said it wanted to rule on the case, in which the homeowner was defended by Ice's firm, because its opinion could have an impact on the "mortgage foreclosure crisis throughout the state."

  • Wednesday's ruling was on the case of Robert McLean vs. JPMorgan Chase, and involved a 2009 Broward County foreclosure. According to the decision, which reversed a lower court's verdict in favor of the bank, Chase originally filed the foreclosure claiming the note - basically the IOU from the borrower - was "lost, stolen or destroyed."

  • The claim has been made thousands of times as lenders rushed without the proper documentation to take back homes tangled up in the real estate boom's securitization frenzy.

  • Although most notes are found before a final foreclosure judgment is entered, the 4th DCA said the note also must be correctly dated and endorsed to show ownership before the foreclosure was initially filed - something that Chase didn't have, according to the ruling. The court also questioned a mortgage assignment made to Chase that was dated three days after the foreclosure was initially filed.

  • If there is substantial doubt about the note, the bank should dismiss and refile the case or the home­owner should be entitled to an evidentiary hearing instead of a more hasty "summary judgment," the ruling said. Chase did not respond to a request for comment.

  • Summary judgments, although rare in traditional court cases, have become a norm for foreclosures, Ice said. They are supposed to be used only when there is no genuine argument as to the facts in a case.

  • One leading West Palm Beach attorney downplayed the significance of the 4th DCA decision, calling it a technicality that doesn't impact the legitimacy of the foreclosure. Gerald Richman, who represents the Boca Raton-based foreclosure firm Shapiro & Fishman, also said the ruling could force an unnecessary expense on lenders if they have to refile a complaint. "It doesn't mean there wasn't merit to foreclose," Richman said. "Why should you have to file a whole new complaint?" Richman said he couldn't measure the impact the ruling will have on Florida's already overwhelmed courts because he doesn't know how many similar cases are out there.

  • But Tampa-area foreclosure defense attorney Mark Stopa said the ruling will apply to the majority of his cases. "In my view, this is the biggest foreclosure case in Florida, ever," he said of Wednesday's ruling.

Source: Struggling homeowners gain favor in key ruling.

For the court ruling, see McLean v. JP Morgan Chase Bank National Association, 4D10-3429 (Fla. App. 4th DCA, December 14, 2011)

California Man Pleads Guilty, To Get 12 Years For Duping Homeowners Into Signing Over Property Titles; Racket Also Involved Forged Deeds, I.D. Theft

In San Diego, California, KGTV-TV Channel 10 reports:
  • A man who participated in a $6 million foreclosure fraud scheme in which he stole the identities of several notaries and forged hundreds of deeds across California pleaded guilty Thursday to multiple felony charges, including rent skimming, forgery, identity theft and conspiracy to commit grand theft.

  • John Zepeda, 60, agreed to pay restitution and will be sentenced to 12 years in prison on February 21. Zepeda's brother, David, also is charged in the case but remains at large, Deputy District Attorney Nida Rice said.

  • The conspiracy, which prosecutors called "huge" and "brazen," involved hundreds of victims in San Diego, Santa Barbara, San Bernardino, Orange, Ventura, Riverside and Los Angeles counties, as well as Clark County in Nevada, prosecutors said.

  • According to prosecutors, the defendants would hold seminars for people hoping to save their homes from foreclosures.

  • Authorities said the Zepeda brothers identified properties in foreclosure and acquired title either by forging a quitclaim dead -- which transfers the property into a trust -- or convincing homeowners to transfer the property to them by promising the homeowner they would help avoid foreclosure.

  • Once they had acquired the title, the Zepedas would rent out the property, prosecutors said. In order to forestall the foreclosure process and to extend the period over which they collected rent, the brothers also filed bankruptcy petitions, authorities said.

  • Money was diverted away from the lenders and owners and into accounts, where the cash was used to support the defendants' lavish lifestyle, including the purchase of exotic, high-end cars, prosecutors said.

For the story, see Man Pleads Guilty To Role In Foreclosure Scam (John Zepeda Agrees To Pay Restitution, To Be Given 12 Year Prison Term).

L.A. Feds Pinch Texas Man In Alleged Fractional Interest Deed Transfer Foreclosure Rescue Scam; Suspect Intends To Cop Guilty Plea

From the Office of the U.S. Attorney (Los Angeles, California):
  • Federal authorities have charged an Austin, Texas man with having operated a foreclosure-rescue scam in Los Angeles and elsewhere that falsely promised the owners of more than a thousand distressed properties that they could indefinitely postpone foreclosure sales.

  • Frederic Alan Gladle, of Austin, Texas, was charged late this morning in United States District Court with one count of bankruptcy fraud and one count of aggravated identity theft. He stated in court in Austin that he intends to plead guilty to the charges, as part of a plea agreement. The defendant used five aliases to avoid detection in the scheme, including stealing the identity of at least one person and setting up a cell phone account in that victim’s name. As a result of the four-year scheme, which continued through Gladle’s arrest in October of 2011, Gladle and his associates collected more than $1.6 million in fees from distressed homeowners.

  • According to the charges, Gladle was involved in a scheme that recruited homeowners whose properties were in danger of imminent foreclosure and falsely promised to delay the foreclosures for homeowners for up to six months.

  • Once a homeowner paid a fee of around $750 per month, Gladle, either directly or through salespersons, had the homeowner sign a deed granting a 1/100th interest in the house to a debtor in a bankruptcy whose name Gladle had found by searching bankruptcy records.

  • The debtors had no idea that their names and bankruptcy cases were being used by Gladle in his scheme. Gladle would print out the unsuspecting debtor’s bankruptcy petition, attach the petition to the 1/100th deed in the debtor’s name, and fax the two documents to a homeowner’s lender to stop foreclosure proceedings.

  • Because the filing of a bankruptcy gives rise to an “automatic stay” that protects a debtor’s property, the receipt of the bankruptcy petitions and 1/100th deeds in the debtor’s name forced lenders to cancel foreclosure sales.

  • The lenders – which included banks who received government funds under the Troubled Asset Relief Program (TARP) – could not move forward to collect money that was owed to them until getting permission from the bankruptcy court, thereby repeatedly delaying the lenders’ recovery of their money.

  • When homeowners wanted to void the 1/100th deeds to the unsuspecting debtors, Gladle would forge the debtors’ signatures on papers voiding the 1/100th deeds.
  • Peter Anderson, United States Trustee for the Central District of California (Region 16), stated: "Criminal bankruptcy fraud and, in particular, foreclosure rescue fraud schemes threaten the integrity of the bankruptcy system, as well as public confidence in that system. We deeply appreciate the strong commitment of U.S. Attorney André Birotte Jr., the Federal Bureau of Investigation and SIGTARP to combating bankruptcy fraud and abuse, as demonstrated by this case."(1)
For the U.S. Attorney press release, see Austin, Texas Man Charged with Fraud and Identity Theft in Nationwide Foreclosure-Rescue Scheme (Defendant Agrees to Plead Guilty; Collected $1.6 million from 1,100 Distressed Homeowners).

(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the bankruptcy courts.

Lawsuit: Real Agent Agent 'Misdirected' $1M In Downpayment Deposits Held In Escrow Belonging To At Least 15 Homebuyers

In Boca Raton, Florida, the South Florida Sun Sentinel reports:
  • Mizner Grande Realty of Boca Raton has filed a lawsuit against one of its former real estate agents for fraud and breach of contract, alleging he misdirected $1 million held in escrow for clients.

  • Delray Beach Police are investigating the allegations, said Sgt. Nicole Guerriero, a department spokeswoman. The agency has not made any arrests, and “we’re not releasing any information at this point,” she said.

  • In the lawsuit filed Dec. 2 in Palm Beach County Circuit Court, Mizner Grande said former agent Jon Rashotsky had clients put money in escrow accounts. Then Rashotsky instructed Boca Raton lawyer Edgar Benes to disburse the money to “third-party-held banks,” the lawsuit says.

  • Benes, the escrow agent, is not a defendant in the lawsuit.The suit says Rashotsky broke his agreement with Mizner by instructing the agent to disburse the money so he “could retain the escrowed funds to his own use.”

  • The payments were made without the knowledge of Rashotsky’s clients or other interested parties in the real estate transactions, the suit said. Benes distributed at least $1 million belonging to at least 15 clients, the suit said. The clients have made claims for return of the money, according to the suit. “We’re taking every legal recourse to obtain the money back for the victims,” said Ari Albinder, founding broker of Mizner Grande.

  • To cover up the missing money, “Rashotsky would make false representations to the clients regarding the status of their pending real estate transactions, which would often include complete fabrications of the existence of a negotiated agreement for the purchase of real estate,” the suit said.

For more, see Real estate firm: $1 million in homebuyer escrow payments missing.

See also, Boca News Now: