Saturday, May 12, 2012

Effect Of Co-Ownership On Operation Of Florida Homestead Law

An excerpt from a recent article in The Florida Bar Journal (footnotes omitted):
  • As the Florida Supreme Court noted in Snyder v. Davis, 699 So. 2d 999, 1001-02 (Fla. 1997), there are three kinds of homestead, all with one purpose: preserving the family home for its owner and heirs.

  • The first kind provides homestead with an exemption from taxes. The second protects homestead from forced sale by creditors. The third delineates the restrictions a homestead owner faces when attempting to alienate or devise homestead property.

  • Home ownership is not limited to a single person or family. Instead, homes may be owned in a variety of different forms, and in a down economy in which banks have stricter lending policies, co-ownership of property becomes even more common.

  • Consequently, how does co-ownership of property impact the three kinds of homestead? This article examines the effects of owning property as tenants by the entirety, tenants in common, joint tenants with right of survivorship, and with life estates.

Florida High Court Leans In Favor Of Approving Homestead Claim By Non-Resident Aliens Whose Minor Kids Live In Home & Are U.S. Citizens

In Tallahasse, Florida, WINK News reports:
  • The Florida Supreme Court heard arguments Monday in the case of a Honduras couple that could determine if they and other non-resident homeowners, whether they are from foreign countries or other states, can obtain homestead property tax exemptions.

  • The decision will affect non-residents who seek exemptions if they have legal or natural dependents, including minor children or elderly or disabled adults, living in their primary homes who are permanent residents of Florida. The justices did not indicate when they will rule.

  • "This is not an immigration case," said Assistant Miami-Dade County Attorney Melinda Thornton. "This would apply to anyone from out of state." No one disputed that assertion, but several justices questioned Thornton's views on a state constitutional provision that grants exemptions for homes occupied by permanent resident dependents.

  • She contended David and Ana Andonie, who came to Florida from Honduras on investment visas, should be denied a 2006 exemption on their $1 million Key Biscayne home despite the fact their three then-minor children were born in Miami, were U.S. citizens and never lived anywhere else.

  • Arguing on behalf of Miami-Dade Property Appraiser Pedro J. Garcia, Thornton said under common law the children were residents of Honduras because that was the permanent residence of their parents. Therefore, an exemption should not have been allowed, she said.

  • The county's Value Adjustment Board overruled the appraiser's office and granted the exemption. Garcia is appealing a 3rd District Court of Appeal ruling that affirmed a trial court's ruling upholding the board's decision.

  • In support of the exemption, David Andonie had submitted a sworn statement saying the children were permanent Florida residents. Thornton argued that wasn't good enough to ensure they would not leave Florida if their parents returned to Honduras. "The property appraiser really, I think, is here on what-ifs, what if something happens in the future," said the Andonies' lawyer, Daniel A. Weiss.

  • Chief Justice Charles Canady then noted even permanent residents always have the option of leaving Florida. "To rely on that to establish ineligibility here seems to be quite bizarre," Canady said. "I'm sure you would agree." Weiss did.

  • Justice Barbara Pariente said the claim the children were residents of Honduras was "absolutely incredible." Thornton suggested the parents could have overcome the common law presumption the children were Honduras residents if they had obtained a court order appointing a guardian to take care of them in Florida if the mother and father were to leave the state.

  • Justice R. Fred Lewis, though, noted there's nothing in the constitution or state law requiring a court order. Thornton acknowledged that and said there were other ways to ensure the children would stay in Florida. "We're saying that's the cleanest way," she said, later adding that property appraisers should "not be expected to grant or deny homestead exemptions just upon self-serving statements."

  • Pariente, though, questioned why the sworn statement wasn't good enough, noting there was no evidence of fraud or manipulation. "I just don't see where the problem is," she said. While one of the children is 12 and still a minor, the other two now are adults, ages 18 and 19, Weiss said.

  • The appraisers' office also denied the family's exemption for subsequent tax years, and the adjustment panel continued to overrule those decisions, Thornton said.

  • Homeowners could get a $25,000 exemption in 2006. Now, they can get an additional $25,000 exemption on non-school taxes. Another benefit is a 3 percent cap on annual assessment increases for homesteads.

  • The Florida Association of Property Appraisers has submitted a "friend of the court" brief supporting Garcia's argument. The Florida Department of Revenue has filed a brief siding with the Andonies. The case is Pedro J. Garcia, etc., et al. v. David Andonie, et al., SC11-554.
For the court ruling now on appeal, see De La Mora v. Andonie, 51 So. 3d 517 (Fla. 3d DCA 2010).
Go here for links to the briefs and other documents filed in this case.
Go here to view the oral arguments in this case.

New Texas Law Designed To Curb Improper Real Property Tax Benefits On Fraudulent Homestead Claims Trips Up Half Of All Recent Applicants

In Houston, Texas, the Houston Chronicle reports:
  • If you’re one of the roughly 125,000 people applying for a homestead exemption on your property taxes this year, there’s a good chance you goofed up the application and will need to submit your form again.

  • A new state law has led to about half of all new homestead exemption applications being denied since the law took effect last September, Harris County Appraisal District chief appraiser Jim Robinson said.

  • Harris County homeowners claim about 800,000 such exemptions, which give homeowners up to a 20 percent discount on their property taxes at their primary residence. Those over 65, disabled veterans and others also can claim exemptions.

  • The new rules are intended to prevent fraudulent exemption claims, the most common of which typically entail a Houstonian claiming an exemption here and then also claiming one on a lake house elsewhere in the state, Robinson said.
  • Though the new rules are a hassle and have run up his postage budget as so many applicants need to be notified of the errors on their forms, Robinson said the new law has put a “dramatic dent” in fraudulent exemption claims.

  • When that occurs, you might as well go into one of the school districts and steal that much money,” he said. “In essence that’s what you’re doing. It was a significant problem. We at times have found people that had as many as 20 homestead exemptions in Harris County.”

  • HCAD normally finds about 15,000 duplicate homestead exemption claims each year, Robinson said, and is then required to cancel one of the duplicates and assess the full tax bill dating back five years. That civil penalty alone is fairly stiff, he said, but criminal charges also can follow.

  • In some cases if the District Attorney feels it’s egregious they will do a felony tampering with a government record charge,” he said. “The civil penalty itself when you go back for five years is pretty tremendous.”

  • If you pull up a homestead exemption form and notice the deadline is listed as April 30, don’t panic. In reality, Robinson said, the deadline is immediately before a given year’s taxes become delinquent. For instance, property owners needing to claim homestead exemptions for the 2011 tax year can do so until Jan. 31, 2013.

  • If you have a mortgage and you delay that long in claiming the exemption, however, your bank likely will pay your tax bill at the higher amount, Robinson said, and that could lead to a hassle when you’re arranging to get that money back later.

Orlando-Area Pair Feel Pinch On Burglary, Larceny, Fraud Charges For Allegedly Hijacking Possession Of Vacant F'closed Homes, Falsely Renting Them Out

In Winter Park, Florida, the Winter Park/Maitland Observer reports:
  • It was too easy, Randy Lutz said of his family’s cross-county move from Providence, R.I., to the Winter Park area. After a 1,200-mile drive, and a brief stay with his brother in Sanford, Lutz, his girlfriend, Contance Young, and their 6-year-old son, J.J., had found the perfect house near Winter Park listed for rent on in mid-February.
  • Less than two weeks after they had moved in, Young said, [...] they found out it all was too good to be true. The house had been foreclosed on and was owned by Bank of America.
  • Seminole County Sheriff’s Office deputies arrested Natasha Ortiz, 28, of Winter Park, and David Rivas, 27, of Orlando, on May 3 on charges of burglary, larceny and fraud, according to arrest reports, for allegedly breaking into and falsely renting two homes near Winter Park, including the one in which Young and Lutz were living.
  • Until this incident, the Seminole County Sheriff’s Office said it hadn’t had any reported cases like this in recent history. [...] The Orange County Sheriff’s office couldn’t quantify how often these crimes are reported to them, but a public information officer said the department has seen an uptick in rental fraud crimes in the last six to eight months.

  • Representatives from the Winter Park and Oviedo police departments say neither city has a documented record of these crimes, but that it doesn’t mean it’s not happening.
For more, see Rental fraud hits home.

Bond Set At $70K For Suspect In Vacant Foreclosed Home-Hijacking Racket That Targeted Would-Be Tenants

In Jacksonville, Florida, WJXT-TV Channel 4 reports:
  • What seemed like a peaceful and safe neighborhood on the Westside turned out to be the center of a scam. A handful of families that once lived in some beautiful, two-story houses are now homeless.

  • Jason Abad is accused of breaking into homes in foreclosure, changing the locks and pretending his company owned the houses. He did it repeatedly, according to police, and each time demanded the renters pay only in cash.
  • Detectives said Abad filled family after family in home after home in Westside subdivisions. [...] Abad remains in the Duval County jail with bail set at $70,000.
For more, see Police: Man scammed Westside renters (Families worried they'll be homeless after being fooled).

Owner-Occupant Landlord Considers Giving Up Multi-Unit NYC Brownstone After Rent Control Challenge Falls Flat

In New York City, the New York Post reports:
  • The lawsuit that almost overturned the city’s rent-control laws only succeeded in upending the lives of the Upper West Side couple who brought the case. After the Supreme Court refused to hear New York’s highest-profile lawsuit challenging rent control, landlords James and Jeanne Harmon said they may have to sell the five-story town house at the center of the battle — a brownstone their family has called home for three generations.

  • The case has been costly. The couple had to put off retirement, they cannot provide homes for their grandchildren and they are treated like pariahs by some neighbors on West 76th Street. “We feel total uncertainty about the future at age 69,” James Harmon, a Vietnam veteran and former federal prosecutor, told The Post. “This was devastating to our family because the house is part of our family. This is the place I grew up, and this is the place my mother died. We should be able to keep this house, but we don’t know if we can continue to do that.”

  • Harmon argued the city’s 43-year-old rent-regulation laws violated the Fifth Amendment, which protects private property from seizure for public use without “just compensation.” Harmon claimed the rent law denies him that compensation, forcing him to bankroll the lifestyles and second homes of his tenants.

  • The Harmons occupy an elegant one-bedroom apartment on the building’s parlor floor. They rent six one-bedroom units: three at market value and three at rent-stabilized rates 59 percent below market.
For more, see ‘Ruined’ by rent control (Landlords may lose home).

NYC Landlord Agrees To Cough Up $2M To Settle Sexual Harassment, Fair Housing Suits In Connection With Tenants' 'Sex For Reduced Rent' Allegations

In New York City, the New York Post reports:
  • The rent’s due NOW, buster! An Upper West Side landlord who knowingly employed a child rapist as his building super will cough up $2 million to settle lawsuits after The Post reported allegations that the sicko pressured female tenants to have sex in exchange for reduced rent.

  • I’m very happy,” Carol Engle, one of six women who will split the settlement, told The Post [] after signing the agreement with landlord Stanley Katz. For years, Katz had stoutly defended his registered-sex-offender super, William Barnason, as a “prized employee.”

  • Engle said that when she once complained to Katz about her high rent, he told her, “You should have been nicer to Billy,’’ suggesting that if she’d slept with him, he’d have cut her a financial break. “I said, ‘Stan, Billy is going to be the end of you, you can’t do this to people.’ And he shrugged,” she recalled.
  • In 2010, The Post, in the first of a series of articles, revealed claims by Engle and other women that Barnason — who had spent 14 years in prison for raping and molesting three young Long Island girls — tried shaking them down for sex, often drunk, sometimes while trying to barge into their rooms. The women said that complaints to Katz and his son, Stephen, fell on deaf ears — and that all three men routinely referred to them as “just another whore looking for a free ride.”
  • Months afterward, the Manhattan US Attorney’s Office sued the Katzes and Barnason for violating the federal Fair Housing Act by sexually harassing female tenants — believed to be the first-ever lawsuit of its type. [...] A jury trial in the case was supposed to begin Monday — but was canceled after the Katzes and Barnason signed off on the deal.
  • US Attorney Preet Bharara said: “The conduct alleged in this case subjected Stanley Katz’s female tenants to forms of harassment that would be unacceptable in any environment, let alone in their homes. It was also blatantly illegal.”

Friday, May 11, 2012

Head Of Suspected Southeast Michigan Loan Modification Racket Feels State AG's Pinch, Faces Felony Racketeering, False Pretenses Charges

From the Office of the Michigan Attorney General:
  • Attorney General Bill Schuette [] announced charges against a Westland man for his role in an extensive foreclosure-rescue fraud operation that scammed at least 360 victims out of $800,000. Rickey White, 46, of Westland, and his company, Braunstein & Associates, face criminal charges for collecting upfront fees and impersonating a mortgage modification company.
  • The criminal charges come as the result of an investigation by the Attorney General after complaints against the company were filed with Attorney General Schuette's Consumer Protection Division. The investigation revealed that from December 2009 through May 2011 White allegedly operated two companies that were marketed as mortgage modification businesses: Braunstein & Associates and Expert Financial.

  • It is alleged White offered prospective clients mortgage loan modifications for a fee, with a full money-back guarantee. White allegedly told victims his companies employed expert attorneys who would review their lender files to pre-qualify the homeowner for a mortgage loan modification. White allegedly assured clients his attorneys would file the modification proposals with the homeowner's lender on their behalf.

  • Investigation revealed that White allegedly had no attorneys on staff, and that modification proposals were either incomplete or never actually submitted to the banks.

  • Schuette alleges White operated Expert Financial from December 2009 through September 2010. During this time, White allegedly victimized more than 300 clients, who lost a total of $700,000.

  • When White learned the Attorney General was investigating his company, it is alleged he closed Expert Financial and opened Braunstein & Associates. From September 2010 through May 2011, Schuette alleges White victimized at least 60 homeowners, who were scammed out of more than $100,000.

  • White and his company, Braunstein & Associates are each charged with the following:

    One count of Conducting Criminal Enterprises (Racketeering), a felony punishable by up to twenty years in prison;

    Two counts of False Pretenses - $1,000-$20,000, a felony punishable by up to five years in prison and/or three times the value of money or property involved.

Fla. High Court Hears Arguments In Lawsuit That Could Undo Thousands Of Foreclosures & Leave Banksters Holding Reams Of Unenforceable Mortgage Paper

Reuters reports:
  • The Florida Supreme Court [heard] oral arguments Thursday in a lawsuit that could undo hundreds of thousands of foreclosures and open up banks to severe financial liabilities in the state where they face the bulk of their foreclosure-fraud litigation.

  • The court is deciding whether banks who used fraudulent documents to file foreclosure lawsuits can dismiss the cases and refile them later with different paperwork.

  • The decision, which may take up to eight months to render, could affect hundreds of thousands of homeowners in Florida, and could also influence judges in the other 26 states that require lawsuits in foreclosures.
  • The case at issue, known as Roman Pino v. Bank of New York Mellon, stems from the so-called robo-signing scandal that emerged in 2010 when it was revealed that banks and their law firms had hired low-wage workers to sign legal documents without checking their accuracy as is required by law.

  • "This was a case of an intentionally fraudulent document fabricated to use in a court proceeding," says former U.S. Attorney Kendall Coffey, author of the book Foreclosures in Florida.

  • If the Supreme Court rules against the banks, "a broad universe of mortgages could be rendered unenforceable," Coffey says. "The cost to the financial industry is difficult to estimate, but it could be substantial."

  • For comparison, some legal experts point to the Massachusetts Supreme Court's decision in January 2011 that ruled a foreclosure invalid because at the time of the foreclosure the bank couldn't prove it had a valid assignment of mortgage - a similar issue to the one in the Pino case.

  • In the wake of the decision, hundreds of house titles in Massachusetts became void, says foreclosure attorney Tom Cox, who brought what was one of the first foreclosure fraud suits in the country.

  • "If the Florida court takes a strong stand, it sends a strong signal to the mortgage servicing industry in the rest of the country," says Cox. Judges in other states could start penalizing banks with sanctions and overturning foreclosure suits, he says.
  • Last summer, Pino's case was headed to the Florida Supreme Court, which said it was of "great public importance" because "many mortgage foreclosure cases appear to be tainted with suspect documents."

  • But on July 22, just before the case was scheduled for oral argument, Bank of New York Mellon struck a confidential settlement with Pino. The same day, Bank of New York Mellon, which declined comment for the story, filed a "satisfaction of mortgage" document with the Palm Beach County property recorder's office. Pino now owned the house, free and clear.

  • Even though Pino and the bank have settled, the Supreme Court decided to rule on the issue of voluntary dismissal anyway, settling a question that has vexed Florida's lower courts for nearly five years. Its decision won't affect Pino's case.

  • Voluntary dismissal is the banks' main strategy in judicial states for dealing with homeowners who challenge foreclosures, says Georgetown University consumer and housing finance professor Adam Levitin, who has served as special counsel to the Congressional Oversight Panel.

  • After a dismissal, the banks can then refile their case using different documents. "If that fails, strategy number two is to buy them off," says Levitin.

  • If the court rules against voluntary dismissal, the banks face the costly specter of not being able to simply refile cases and expect homeowners to not challenge the suits. [...] Advocates say upholding the use of voluntary dismissal could empower the banks to do nothing to change their questionable foreclosure practices.

  • "The banks have a bully business model. You pick on the weak consumer, you demand his lunch money and he runs away," says Levitin. "But what if he pushes back -- what if he's Roman Pino?"

Land Contracts: A Handy Tool For Con Artists To Perpetrate Predatory Real Estate Sales Rackets Targeting Naive, Unsophisticated Wanna-Be Buyers

In Albuquerque, New Mexico, KOB-TV Channel 4 reports:
  • There are consumer protections in place for credit cards, student loans, car deals, even loans to buy furniture. But 4 On Your Side discovered New Mexico has holes in consumer protections when it comes to buying real estate, leaving the poor to be taken advantage of.

  • Miguel Roman bought land in 1982 on the Pajarito Mesa in Bernalillo County where there is no running water, no power, and no utility connections. He didn’t qualify for a mortgage, so he bought the land through a real estate contract(1). "I wanted some freedom out of the city,” Roman said.

  • A few years after Roman moved in, he discovered he had been duped. The person who sold him the land did not own it. "By the time I owned this property, I paid double," Roman said. To keep the land, Roman paid for the lot twice; first to a conman, then to the legal owner of the lot.

  • Sandra Bustillos and her husband found themselves in the same situation a year after buying their land through a real estate contract. Bustillos and her family worked extra hours to pay off their property in full, only to find out that they were paying the money to someone who didn’t even own the land.

  • Bustillos bought the land through a contract from Tomasita Atencio. But Atencio had been paying for the same parcel of land from Charles Wright. Atencio sold property that wasn’t even hers.

  • Attorneys with the Center on Law and Poverty are now trying to figure out if Wright was in the plot. Even though Bustillos finished her payments, Wright didn’t recognize the money. He now forces Bustillos to pay for land she thought she already owned.

  • "It's a very informal, shadowy process," said Craig Acorn, managing attorney at the NM Center on Law and Poverty. "Terrible things are happening to people, the fact of the matter is, (real estate contracts) are being used as a predatory instrument," said Kelsey Heilman, staff attorney for the NM Center on Law and Poverty.

  • Acorn and Heilman said these kinds of shady transactions happen all the time through real estate contracts. In an interview with 4 On Your Side, the attorneys said they have heard stories where after one missed payment, the seller repossess the property and forces the buyer to start a new contract, losing out on all money already paid. In some cases the interest rates are astronomical or never disclosed. "There is no law in New Mexico that provides protection for those folks," Acorn said.
(1) This purchasing arrangement involving the use of a real estate contract in New Mexico to pay off deferred payments to the seller of real estate is, in other parts of the country, referred to as a contract for deed, agreement for deed, land contract, and installment sale contract (among possibly other similarly-worded references, depending on the part of the country), and are not, in any material way, significantly different than lease-purchase and rent-to-own arrangements.

Thursday, May 10, 2012

US Appeals Court: Not Necessary To File TILA Mortgage Rescission Suit w/in 3 Yrs Of Loan Closing, Provided Notice To Rescind Is Given Within That Time

An excerpt from a legal alert from the Consumer Financial Services Group of the law firm Ballard Spahr:
  • In a decision that possibly opens the door for renewed foreclosure delays, the U.S. Court of Appeals for the Fourth Circuit has held that a lawsuit seeking rescission is timely where the consumer provided notice of rescission to the subservicer within three years of closing but did not file suit until after the three-year deadline had passed.

  • The May 3, 2012, decision in Gilbert v. Residential Funding LLC is the first by a federal appellate court to hold that a borrower need only send notice of rescission within the three-year period to validly exercise a right to rescind.
  • The Fourth Circuit’s decision represents a victory for the Consumer Financial Protection Bureau, which had filed an amicus brief in Wolf v. Federal National Mortgage Association, another Fourth Circuit appeal involving the same rescission issue. In its brief, the CFPB took the position that notice within the three-year period is all that is required to validly exercise a right to rescind. The CFPB has filed amicus briefs taking the same position in the Third, Eighth, and 10th Circuits. (To read our blog posts on the CFPB’s amicus briefs, click here and here.)
For the ruling, see Gilbert v. Residential Funding LLC, No. 10-2295 (4th Cir. May 3, 2012).

BBB: Watch Out For 'Risk Free' Mortgage Audit Rackets Targeting Borrowers Implying They May Be Owed Refunds Due To Lender Overcharges

From a press release from the St. Louis, Missouri office of the Better Business Bureau:
  • A Utah company charged homeowners hundreds of dollars each for “risk freemortgage audits, then either delayed their promised refunds for months or never paid them at all, customers told the Better Business Bureau (BBB).

  • Consumers from Missouri, Illinois and several other states also said AMT Auditing Services of American Fork, Utah, added unauthorized charges to their charge cards and/or forced them to deal with long, frustrating delays when the homeowners tried to contact customer service representatives to resolve their issues. “They did nothing at all, other than take my money,” said a woman from St. Charles, Mo., who said she lost $300 to the company.

  • AMT Auditing Services has an “F” grade with the BBB, the lowest grade possible, with complaints and reports from 25 states. The BBB in Salt Lake City identifies Colton Moody as manager of the company. CRM Ventures LP, Enlightened, LLC and Mortgage Auditing Program are alternative business names.
  • Several Missouri and Illinois homeowners said they received mailings from AMT similar to one sent to a Wisconsin consumer in March. That mailing said: “This notice is to inform you that you may be owed a refund of several thousand dollars from your mortgage lender. Your monthly mortgage payment may have been miscalculated and you may be due a refund from either your current or previous mortgage lender.”

  • The letter says that the average refund is $1,497 and one-third of the refunds are $3,000 to $7,500.” In fine print at the bottom, the letter says it is not a mortgage modification offer, a forensic mortgage audit offer nor an offer to prevent foreclosure.
  • On its website,, AMT offers a mortgage audit at a sale price of $299. The site says AMT will determine whether a consumer has been overcharged and then notify the homeowner so he or she can obtain refunds from the lender.

  • Some customers who filed complaints with the BBB said that AMT took months to complete audits that it promised to complete in a few weeks. They also said the company delayed or reneged on promises of full refunds if the audit uncovered no overcharges.

Florida High Court Boots Three Attorneys, Disciplines Eight Others For Playing Fast & Loose With Clients' Cash

According to the latest issue of The Florida Bar's 'gossip sheet' which lists the names of twenty-one (21) attorneys who have been recently disciplined for a variety violations of ethical rules, the following eight (8) have been disciplined for playing fast and loose with their clients' money:
  1. Andrea Ruth Bateman, P.O. Box 104, Winter Park, suspended for 30 days, effective 30 days from a March 19 court order. (Admitted to practice: 1974) Bateman was found in contempt for violating the terms of an October 2009 probation. She failed to submit quarterly trust account CPA reports and also failed to remit the quarterly monitoring fee on several occasions, accumulating arrearages of $700. (Case No. SC11-2323);

  2. Jennifer Aycock Bonifield, 1025 Professional Park Drive, Brandon, suspended until further order, effective 30 days from an April 4 court order. (Admitted to practice: 2002) Bonifield was found in contempt for willfully failing to comply with a subpoena without good cause. The Bar was seeking copies of all Bonifield’s trust and operating account records. In July 2009, deposits to Bonifield’s escrow account totaled more than $856,000. Since that time, more than $575,000 has been electronically transferred from the account to Bonifield’s checking account. Bonifield failed to provide documentation for the transfers. She also failed to appear at the non-compliance hearing before the grievance committee in February. Stephan Tabano has been appointed as inventory attorney. (Case No. SC12-264);

  3. Robert W. Frazier Jr., 507 S.E. 11th Court, Fort Lauderdale, publicly reprimanded following a March 8 court order. (Admitted to practice: 1977) Frazier failed to comply with a March 2, 2011, court order mandating that he immediately furnish a copy of his emergency suspension order, (which is currently in effect) to all of his clients and the bank. Frazier notified his clients 30 days later, and he failed to notify the bank of the suspension. Because of his failure to immediately inform his clients, one client wired more than $156,000 to Frazier’s law firm’s trust account while he was suspended. Multiple other deposits and withdrawals went in and out of the account during that time as well. The transactions were completed without Frazier seeking approval of the Florida Supreme Court or referee, as the court order mandates. (Case No. SC11-867);

  4. Clifford Gorman, 3807 Ave. H, Unit B, Austin, Texas, disbarred, effective immediately, following a March 8 court order. (Admitted to practice: 1988) Gorman received an inquiry from The Florida Bar regarding trust account funds that were requested by a client, but not disbursed. Gorman responded to the Bar by invoking the Fifth Amendment to the U.S. Constitution. Subsequently, a trust account subpoena was served upon Gorman, with which he has failed to comply. (Case No. SC12-324);

  5. Patricia A. Johnston, Calle Cesar Chavez 84, Arrecife de Lanzarote, Canary, Spain, disbarred for 10 years, following a March 8 court order. (Admitted to practice: 2001) Johnston was the subject of several Bar complaints. She misappropriated client funds and engaged in other unethical conduct. In one instance, Johnston was removed as personal representative after she failed to provide information upon request about a $3 million estate, from which she took funds without authorization. In another matter, Johnston provided false misleading testimony in a civil collection matter in an attempt to hide the true nature of her spouse’s assets. Johnston abandoned her Orlando law practice, changed her bar status to retired and moved to Spain. (Case No. SC11-1767);

  6. Bruce Allan Lamchick, 9200 S. Dadeland Blvd., Suite 518, Miami, suspended for 90 days following an April 9 court order. (Admitted to practice: 1974) After being served a subpoena, Lamchick failed to provide complete bank and trust account records to the Bar. He also engaged in misconduct while serving as the closing agent for numerous real estate transactions. In another matter, while serving as a settlement agent, Lamchick notarized two signatures on a mortgage deed that were not signed in his presence. (Case No. SC11-1781);

  7. Doris Wellman Sanders, 2181 Crawfordville Highway, Crawfordville, disbarred, effective immediately, following a March 27 court order. (Admitted to practice: 1997) A Bar investigation indicated theft of funds by Sanders from a client’s revocable trust. The Bar's complaint contained the following allegations: While serving as the sole trustee of the trust, Sanders gave gifts to her boyfriend and relatives totaling more than $41,000. She also paid off two personal mortgages worth $95,000 and paid herself nearly $25,000 in attorney’s fees, but failed to provide a sufficient explanation as to what she did to earn the fees. Sanders agreed to disbarment. (Case No. SC11-1990);

  8. David M. Sostchin, 797 W. 18th St., Hialeah, publicly reprimanded following a March 8 court order. (Admitted to practice: 1978) Sostchin was retained to represent a client in a foreclosure proceeding in which a final order of foreclosure had already been issued and a sale date had been set. Although there were no defects in the underlying proceeding, Sostchin failed to ensure that the client was adequately informed of the status of the representation, and notwithstanding the eventual sale of the property, continued to accept monthly payments until the client ceased making payment. Upon learning of the sale of the property, the client went to the office and demanded an explanation. The firm issued a refund check in the amount of $2,295. (Case No. SC11-1471).
For the gossip sheet, see Supreme Court Disciplines 21 Attorneys.

Purchaser Buys Foreclosed Home, Sinks Thousand$ Into Fix-Up, Then Finds Out She Bought The Wrong House

In Senatobia, Mississippi, WREG-TV Channel 3 reports:
  • Terry Jordan, of Tate County Mississippi, quickly fell in love with a home in Senatobia. It was a foreclosure and needed a lot of work. Her husband had just lost his job. He was going to fix it up and sell it for a profit to help them while they got through a tough time.

  • Jordan says she visited the home three times, her realtor taking the keys out of the lockbox on the door, and she went through an act of sale. She says she immediately got to work, spending thousands of dollars. “I have had a new roof put on, new electrical in it, I have had plumbing done to it,” said Jordan.

  • She had the property surveyed, after seeing records at City Hall that didn’t look quite right. After the survey she learned the bad news from her realtor. “She’s like I don’t know how to tell you this but we might have sold you the wrong house,” said Jordan.

  • Just to the right of the home she thought she bought was another one, it’s seems that’s the one that was supposed to be sold, the one she legally bought. The home was listed by Bob Leigh Realtors. A representative told us the mortgage company gave them misinformation. We contacted the company’s namesake with no luck.

  • Ms. Jordan says she’s been waiting for a solution for months, and she’s spent money fixing a house she doesn’t even own.

Wednesday, May 09, 2012

More BofA Controversies? Dubious Practices Now Include Possibly Illegal Homebuyer Steering In Connection w/ Sale, Financing Of F'closed Home Inventory

In Portland, Oregon, The Portland Tribune reports:
  • [M]any Portland-area real estate agents and mortgage brokers say it's increasingly common -- and harmful to their clients -- for B of A and other large banks selling foreclosed properties to insist that buyers first get prequalified with their own lending departments. Then, critics say, the banks try to coax bidders into taking out home loans with them.

  • Bank of America does require all bidders on its foreclosed properties to first be prequalified for loans with the bank's lending department, says bank spokeswoman Kris Yamamoto. It's not an uncommon practice in the industry these days, she says.

  • "It's just to determine if someone is eligible to finance the property," says Yamamoto, a senior vice president for corporate communications. If a buyer comes in with a loan prequalification from another lender, she says, "We don't always understand the underwriting guidelines of the other lender."

  • But critics say the big banks' practices can be costly to homebuyers who forego shopping around for the best loan terms. They also could hurt buyers' negotiating positions and delay sales of foreclosed homes at a time when the Portland real estate market is hampered by a glut of distressed properties. And, it's another potential black eye for mega banks, which helped spark the Great Recession and housing slump.
  • David Feathers, president of Avelloe Mortgage in Lake Oswego, says he recently obtained an email that appears to document illegal steering by B of A, from David Churchill, retail sales manager at the bank's Pearl District office.

  • In the email, Churchill notes that B of A's listing agent for a foreclosed property is supposed to include the "assigned loan officer contact info" for the bank with the Regional Multiple Listing Service, where most Portland-area homes are listed for sale. "Then we pick and choose the loans we want to take on," Churchill states. "If the agents don't have a good conversion rate we replace them."

  • That conversion rate presumably measures the proportion of bidders who wind up taking out B of A loans. "That's blatantly illegal," Feathers says. It's saying "if we don't have enough people steering to us, we will fire them."
  • Bof A spokeswoman Yamamoto denies there have been any RESPA violations and says the email is "misleading" and taken out of context from a larger string of emails. However, she declined to provide those other emails or permit the Tribune to interview Churchill. Feathers forwarded the email to the Oregon Department of Justice and to state banking regulators.
  • Bank of America isn't the only Portland-area lender requiring bidders on foreclosed properties to get prequalified through its own lending arm. "Chase does it, as well," Feathers says, but in his experience B of A is being the most aggressive.

Duo Get 3 Yrs In Scam That Left Home Buyers w/ Loans On Homes That Didn't Exist; One Victim Gets 'Debt Forgiveness' 1099 For Money She Never Borrowed

In Myrtle Beach, South Carolina, The Sun News reports:
  • Former Conway manufactured home dealer Glenn Vaught and his mortgage broker accomplice, Michael Fortenberry, will spend the next three years in federal prison for their roles in a fraud scheme that cost two banks more than $1.5 million and left prospective buyers with six-figure loans on homes that didn’t exist.

  • Vaught and Fortenberry were sentenced last week after pleading guilty to one felony charge each of conspiracy to commit loan application fraud in a case that was first brought to light after an investigation by The Sun News in 2006.
  • That’s good news, but it’s not enough,” said Brenda Myers, one of the victims of the fraud. Myers thought she was buying a home from Vaught’s G&E Home Center in 2006. She learned a few months later that Vaught had taken proceeds from the $129,000 mortgage he helped to arrange but never ordered her home. By early 2007, Myers was getting past-due notices from the mortgage company for a home that did not exist.
  • Vaught was supposed to order manufactured homes for his buyers and then close on the loans after the homes were set up on land and ready to occupy. Instead, Vaught told banks the homes were ready even though they had not yet been ordered.
  • Vaught and Fortenberry split the money they got from banks and never ordered homes for their customers. That left buyers with 30-year mortgages for homes that did not exist, creating a credit nightmare for some customers that continue to this day.

  • Myers, for example, moved out of her apartment in 2006 because Vaught kept telling her a home would be ready any day. She wound up living in a hotel room for months, with her furniture and belongings in a storage building. Myers said she has been hounded by debt collectors ever since, including one that filed a foreclosure lawsuit trying to take back a non-existent home.

  • The process has been repeated each time a new collection agency purchases the debt. When Myers convinced the most recent creditor that she was not liable for the loan, the collection efforts were dropped. She then received a Form-1099 from that creditor stating that she owes federal and state taxes on the “forgiven” loan. “It’s been a nightmare,” Myers said. “You think it’ll never end.”

Central Florida HOA Uses Court Process To Hijack Another Homeowner's Unit, Evicts Existing Tenant, Finds New Renter

In Wesley Chapel, Florida, The Tampa Tribune reports:
  • The Bridgewater homeowner's association doesn't own the house Connie Hicks rented. But that didn't stop the association from evicting Hicks, giving her 24 hours to pack up and leave. Now, a new family lives there and they're paying $250 more a month more in rent. What's more, the money is going to help pay off a lien the association filed against the homeowner.

  • "It created a big mess for me," said Hicks, who lived there for seven months. "I wouldn't want any other renter to go through this." Hicks was shocked because she thought she did everything she was asked to by the association and by the courts.

  • Still, she was booted from the house as part of Bridgewater's controversial legal strategy, first reported by The Tampa Tribune earlier this month and now the subject of news coverage nationwide.

  • The association's aggressive interpretation of Florida law has legal experts debating how much power a homeowner's association has. [...] Court records show that so far this year, the association tried to evict tenants in six houses. The association is using a Florida law that says an association can evict a tenant if the homeowner fails to pay association fees.

  • Bridgewater goes through the legal process of evicting, but what happens next has some real estate attorneys and homeowners crying foul.

Tuesday, May 08, 2012

Profile Of A Suspected Upfront Fee Real Estate Ripoff Scammer

From Phoenix, Arizona, the following excerpt has been taken from a recent investigative report by KPNX-TV Channel 12 and The Arizona Republic on upfront fee real estate ripoffs:
  • [E]lizabeth Kingsley-Young, 57, runs a San Tan Valley firm called Insight Investment Group LLC that offers to help people with poor credit and previous foreclosures fund new-home purchases through private equity loans. All for an up-front fee.

  • Kingsley-Young promises to find housing for families with bad credit, bankruptcies and low incomes. On its website, Insight Investment offers residential and commercial financing, rent-to-own properties, no-money-down loans, housing grants and financing seminars.

  • Through its non-profit partner, Empowering Resources, the company's website says it offers "hope and restoration in the lives of individuals and families affected by poverty or any of life's other crippling obstacles."

  • However, Kingsley-Young has about 15 aliases, a criminal history dating back at least 30 years and has served prison time in Texas, California and Minnesota for fraud, counterfeiting and forgery, records show.

  • In Arizona, she has identified herself as a doctor, a lawyer and as having an MBA. Kingsley-Young was born and raised in Texas. An investigation by The Arizona Republic found she has been hired as a bookkeeper, mortgage-company clerk, grant writer and non-profit manager; records show those jobs all ended amid allegations of fraud.

  • "You can't judge somebody's present by their pasts," Kingsley-Young said in an interview in late April. "This is a situation that has two sides." She has not been charged with any crime in Arizona. In interviews at her home and by phone, Kingsley-Young declined to answer specific questions about her business or about any of her clients.

  • State records show neither Kingsley-Young nor her companies are licensed as mortgage lenders or real-estate agents. Her companies are also not registered as valid corporations in Arizona. And the IRS has no record of granting tax-exempt status to her companies, meaning they are not valid non-profits.

  • Kingsley-Young rents "virtual office" space at a building in east Mesa, uses a post-office box as her corporate mailing address and does most of her business out of a home near Ironwood and Ocotillo roads in Pinal County, records and interviews show.

  • An analysis of the Insight Investment Group website found that the biography of its president was picked up nearly verbatim from another company's website. Educational, vocational and property records searches found nobody living in the United States who matched the names and backgrounds of Insight's listed corporate officers.
  • On her contract signature line, Kingsley-Young has identified herself as "Dr. Liz A. Kingsley, MBA, JD, PhD." In interviews, Kingsley-Young admitted that she is not a lawyer and does not have a law degree. She would not discuss her other credentials, but extensive records searches were unable to verify her MBA or doctorate.

  • Kingsley-Young acknowledged arrests and convictions on white-collar fraud charges in Texas, California and Minnesota since the 1980s. She also has a string of civil judgments and liens for unpaid state and federal taxes since 1994.

Homeowner In Foreclosure Falls For Upfront Fee Loan Modification Scam That Used Deceptive Mailers Simulating Official Documents From HUD; Faces Boot

In Moline, Illinois, KWQC-TV Channel 6 reports:
  • [D]iana Dreifurst of Moline is facing foreclosure on her home of ten years. Several months ago she received a letter in the mail. "From what I thought was HUD in February," said Dreifurst, "I called the number on there and they took my application over the phone."

  • She thought she was applying for a loan modification through the Department of Housing and Urban Development, that would give her financial situation relief. The document looked official to her and so did the papers that came in the mail after that. "We got papers saying we were approved."

  • Dreifurst sent checks totaling almost $2,000 to the agency for fees, and the next monthly payment. The checks were cashed at an account in California. But then Dreifurst was shocked to receive a court summons to put a sale date on the house. She tried calling the 888 number from the agency she sent the money to and only heard a busy tone.

  • "He said you guys got scammed, don't send them any more money." Those are the words of an attorney Dreifurst said she consulted. She learned she's not only out $2,000, but could still be out of her home. "You don't know who to trust, you don't know where to turn," said Dreifurst.

Two California Attorneys Near Disbarment, Another Faces Disciplinary Trial In Connection With Upfront Fee 'Mass Joinder' Loan Modification Racket

In San Francisco, California, The State Bar of California recently announced:
  • Two Southern California attorneys are facing disbarment and a third faces a disciplinary trial after a joint investigation by the State Bar’s Office of Chief Trial Counsel and the Attorney General’s Office into a loan modification scam that targeted distressed homeowners, the State Bar of California announced [].

  • The proposed discipline is the result of a coordinated effort in August 2011, when the State Bar and the Attorney General’s Office shut down law firms and marketing companies suspected of running a so-called “mass joinder” scam.

  • Philip A. Kramer (bar number 113969), 52 of Calabasas, has agreed to be disbarred. In a stipulation accepted Friday by the State Bar Court, Kramer admitted to numerous counts of misconduct including his collection of illegal fees, failure to return advanced fees, and accepting employment in states where he was not licensed to practice law. Kramer also agreed to pay $122,000 in restitution to 27 former clients as part of the stipulation.

  • Paul W. Petersen (bar number 170922), 51, of Irvine, is facing disbarment by default after he failed to appear in State Bar Court for a March 27 trial on various counts of misconduct including allegations of improper solicitation, unlawful collection of advance fees, failure to refund fees, and failure to perform services competently. Under the State Bar’s Rules of Procedure, unless the default is set aside, the State Bar Court will recommend Petersen’s disbarment to the California Supreme Court.

  • Anthony J. Kassas (bar number 227647), 35, of Diamond Bar, faces trial on 285 counts of disciplinary charges. The formal charges, filed April 6 by the Office of Chief Trial Counsel, include allegations that Kassas improperly solicited clients, collected unlawful advance fees, failed to provide proper accounting of funds and aided the unauthorized practice of law by non-lawyers.
  • According to papers filed in Los Angeles County and Orange County superior courts, the attorneys involved had contacted homeowners through deceptive mailers that looked like official documents from mortgage lenders.

  • The mailers contained language such as “Litigation Settlement Notification” that caused homeowners to think they were potential plaintiffs in a “national litigation settlement.” Directing homeowners to a toll-free number for assistance, the mailers contained exaggerated promises.

  • They stated that by joining a “mass joinder” lawsuit, foreclosures would be stayed, loan balances would be reduced and the homeowners would receive monetary benefits or their homes free and clear of their mortgage. Homeowners often paid retainer fees ranging from $3,500 to $10,000 but were never contacted by an attorney or included in a mass joinder lawsuit.

Nevada Regulator Belts Unlicensed Loan Modification Operation With $50K Fine, Demand For Refunds, Accounting Of Fees Clipped From Homeowners

In Carson City, Nevada, the Las Vegas Sun reports:
  • The state is imposing a $50,000 fine on an unlicensed Las Vegas company accused of boasting that it can help troubled homeowners get relief from their loan burdens. The state Division of Mortgage Lending has issued an order for My State Processing, Minerva V. Young and David Young to stop promoting they can negotiate loans.

  • The order directs My State, [...], to refund $13,475 to six homeowners who hired the company but never got any results. An attempt to reach My State or the Youngs was unsuccessful. Their listed telephone number was not in service.

  • The state’s cease-and-desist order bars My State from advertising itself as a loan modification or foreclosure consultant and conducting that type of business. My State can ask for a hearing within 20 days to challenge the state order.

  • The order directs My State to pay the $50,000 fine within 30 days and orders the company to submit to the state a list of every client, their contract and the amount paid to the Las Vegas firm. The division also ordered My State to reimburse the state $1,020 it spent in its investigation.

Monday, May 07, 2012

NYC Attorney, Associate Use Owner Financing Scam To Swindle Elderly Woman's Multi-Million $ Harlem Building, Pocketing $1.8M In Mortgage Proceeds

From the Office of the U.S. Attorney (Manhattan):
  • Preet Bharara, the United States Attorney for the Southern District of New York, [and others] announced charges [] against IFEANYICHUKWU ERIC ABAKPORO and LATANYA PIERCE for allegedly swindling an elderly woman out of her multi-million-dollar property in Harlem that she had owned for more than 40 years, and then deceiving a bank into giving them a $1.8 million mortgage loan secured by the property. ABAKPORO was arrested Monday in Queens, New York, and PIERCE was arrested yesterday after voluntarily surrendering to the FBI.
  • Beginning in March 2006, ABAKPORO, a lawyer with an office in Brooklyn, New York, and PIERCE, who worked for ABAKPORO, cultivated a relationship with an elderly woman (“the Victim”) who owned a residential apartment building worth millions of dollars located at 1070 St. Nicholas Avenue in Harlem (the “Property”).
  • As part of the fraud scheme, ABAKPORO and PIERCE earned the Victim’s trust by, among other things, offering to help her manage the Property. This included collecting rent from its tenants on her behalf. However, instead of providing the Victim with the renters’ money, ABAKPORO and PIERCE pocketed it.
  • ABAKPORO and PIERCE then convinced the Victim to sell her property to them for $3.1 million. While they contracted to buy the property for that amount, at the closing, they presented the Victim with multiple fake and fraudulent checks to make it appear as if they had paid the contracted sale amount, when in fact they had not.
  • Moreover, after the Victim’s attorney had left the closing, ABAKPORO and PIERCE fraudulently induced her to return all of the checks to them by representing that they would safeguard her money and give her a “private mortgage” in the Property, which they explained would include monthly payments made to her based on the money she had effectively loaned them.
  • As part of the scheme, ABAKPORO and PIERCE signed and provided the Victim with a written agreement representing that she had loaned them approximately $1.9 million and in return held a “private mortgage” in the Property. Unbeknownst to the Victim, ABAKPORO and PIERCE never recorded the private mortgage and subsequently submitted a fraudulent application to Washington Mutual Bank seeking a $1.8 mortgage loan secured by the Property.
  • As a result of the alleged fraud, the defendants obtained substantially all of the Victim’s assets, and $1.8 million in fraudulently obtained mortgage proceeds. The Property went into default.

Sale Leaseback Peddler Pinched On Multiple Larceny By False Pretense Charges In Alleged Racket Targeting Homeowners w/ Bad Credit, Facing Foreclosure

In South Easton, Massachusetts, WPRI-TV Channel 12 reports:
  • After ten months of investigating, Joshua Leventhal was arrested on ten counts of larceny over $250 by false pretense. Easton Police and Norton Police officers arrested 41-year-old Leventhal after executing a search warrant of his house.

  • Authorities say Leventhal would offer to purchase property from the victims and rent it to them on a rent-to-own basis - usually taking a $1,000 “commitment deposit" from the victims, police said. The victims were contacted through websites such as , , and and lost between $1,000 and $8,000.

  • Investigators say Leventhal targeted people with bad credit or those who were losing their homes. He is accused of scamming people around the country. Police say they believe there are a large number of victims. The incident remains under investigation. If you believe you have been a victim or know someone who was involved, please contact Easton Police at 508-230-3322.
Source: Suspect arrested in rent-to-own scam (Victims found on various sites lost thousands).

Homeowner, Wanna-Be Homebuyer Under Rent-To-Own Contract Left In Financial Ruins As Shady Broker Keeps Real Estate License, Faces No Criminal Charges

In San Jose, California, San reports:
  • [A]fter nearly three decades of saving, J.R. [Sandoval] and his wife, Marcelina, parents of three children, had done it. Buying a home for the first time never seemed so simple, and they put $40,000 in life savings to improving their new house. In reality, though, the Sandovals owned nothing.

  • According to the Sandovals, [real estate broker Ken] Gervais told the unsophisticated homebuyers they were signing up for a rent-to-own contract, yet Gervais was pocketing at least a portion the rent—with no intention of ever transfering ownership. In early 2006, when the Sandovals started to prepare their taxes, and claim a first-time homebuyer’s credit, Gervais’ scheme started to unravel. The broker offered to file their returns for them, which seemed fishy to them.

  • I went to see my tax guy and he did a little checking for me,’ Sandoval says. “He called me up two or three days later and he said, ‘J.R., you don’t even own the home.’ And the nightmare began.’

  • On April 18, 2006, Sandoval and one of his sons returned home to find the house locks changed. Almost two years later, a Superior Court judge would agree with an arbitrator’s ruling that Gervais created a fraudulent contract and illegally evicted the family.

  • Gervais has not faced criminal charges. Gervais was ordered to pay half of a $469,798 judgment along with the house’s true owners—the second victim in this story.

  • While Gervais duped the Sandovals, he also playing Rakesh Vazir and his wife[, the home's owners]. He told the Vazirs—who wanted to invest in property before moving from San Jose to Texas—that they qualified to buy a home without so much as a down payment. A tenant’s monthly rent, the Vazirs say Gervais told them, would cover the monthly mortgage.

  • But when the Sandovals were evicted, rent payments ceased and the Vazirs found themselves not only facing a foreclosure but also liable for damages from Gervais’ fraudulent contract to sell the home to the Sandovals.

  • It’s hard for me to trust anybody now because of what happened,’ Vazir says over the phone. He says the ordeal has left him financially ruined aside from a motel his family owns in San Antonio, Texas. “We are victims to this as well. I feel bad for what happened to [the Sandovals], but we are victims of [Gervais], too.’

  • John Crowley, an attorney who has represented the Sandovals since they were evicted in 2006—and is owed about $230,000 of the settlement in attorney fees, costs—is of the opinion that Gervais is “a danger to the community.’ When Crowley informed officials at the state Department of Real Estate of Gervais’ actions, they seemed to agree. Surprisingly, the agency that licenses Gervais says it’s helpless to stop him.

  • Gervais didn’t return multiple messages seeking comment. He continues to sell homes in the South Bay.
  • The [California Department of Real Estate] does offer a provisional recovery fund. If a consumer cannot collect on fraud by an broker, the license will be suspended and a maximum payout of $50,000 could be awarded. But that would still leave the Sandovals owing their attorneys more than $230,000.
For more, see Real Estate Agents Losing Licenses in California (A family loses its home, money to a shady real estate broker—one of many operating in California).

Disbarred Attorney Gets 18 Months For $1M+ Real Estate Escrow Ripoff; Funds Intended To Pay Off Clients' Mortgage, Property Taxes, Insurance

In Providence, Rhode Island, WPRI-TV Channel 12 reports:
  • A disbarred former Cranston lawyer has been sentenced to 18 months in prison for stealing about $1.1 million from his clients. The Providence Journal reports that Robert Natal of East Greenwich cried and took responsibility for his crimes during Tuesday's sentencing in Providence Superior Court. He pleaded guilty in February to 10 counts of unlawful appropriation.(1)

  • Authorities say the married father of five took money his clients gave him to pay off mortgages, taxes and insurance premiums and spent it on travel, groceries and restaurant meals.One of his victims was retired Army officer Albert Rose, who hired Natal to handle a real estate closing in 2009. Rose's son, Staff Sgt. Scott Rose, had recently been killed in Iraq. Natal is set to begin his prison term June 11.
Source: Disbarred lawyer sentenced to 18 months (Convicted of stealing about $1.1M from clients).
(1) The Rhode Island Bar Association's Client Reimbursement Fund was established to provide a public service and to promote confidence in the administration of justice and the integrity of the legal profession by providing some measure of reimbursement to victims who have lost money or property because of theft or misappropriation by a Rhode Island attorney, and occurring in Rhode Island during the course of a client-attorney relationship.
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.

Sunday, May 06, 2012

Woman Who Copped Guilty Plea For Peddling Fraudulently-Obtained Mortgage Loans Used To Finance Sale Leaseback Equity Stripping Ripoffs Gets 37 Months

In Baltimore, Maryland, The Baltimore Sun reports:
  • A Severna Park woman was sentenced Tuesday to just over three years in prison after pleading guilty to a mortgage scam involving $4.7 million in fraudulent loans, the Maryland U.S. attorney's office said.

  • Mary Anne Dean, 60, brokered loans in a scheme pitched to homeowners trying to avoid foreclosure, according to her plea agreement. The homeowners were told they could sell to investors, stay on as renters, and then buy back their homes after getting their finances in order.

  • Dean, who ran a mortgage brokerage firm called Sunset Mortgage Co. from her home, submitted falsified mortgage applications to secure the loans for the "investors" — relatives and acquaintances of a co-defendant, Charles Donaldson of Bowie. Donaldson said he would set aside most of the homeowners' equity to help with the rent and mortgage payments, but instead he spent it on himself, according to the plea agreements.

  • Donaldson was sentenced in March to three years and five months in prison. As a result of the scheme, homeowners lost at least $1.2 million in equity, lenders lost more than $940,000 and 13 homes have been foreclosed on, the Maryland U.S. attorney's office said.

3 Get Multi-Year Prison Terms For Roles In Mortgage Scam; One Victim Lost Equity, Title To Home After Signing Papers Purporting To Be Home Equity Loan

From the Office of the U.S. Attorney (Houston, Texas):
  • Claymon “Butch” Trammell along with his wife and daughter, all of Houston, have been sentenced to federal prison for their respective roles in a multi-million dollar mortgage fraud scheme, United States Attorney Kenneth Magidson announced today. Trammell, 62, his daughter Michelle Trammell, 40, and wife Jeannettea Williams, 57, all previously entered guilty pleas for one count of conspiracy to commit wire fraud.

  • Today, United States District Court Judge Vanessa Gilmore heard testimony from a an man victimized by North Belt Mortgage, the business from which defendants ran their fraud scheme until 2005. The victim reported he went to North Belt looking for a home equity loan to help him buy an 18-wheeler for his business.

  • The victim, who did not speak English, had been paying on his home mortgage for 21 years and was close to having the home paid in full. He testified that Claymon Trammell and others, using a translator, told him to sign papers for a home equity loan.

  • Unbeknownst to the victim, however, he actually signed papers selling the home with Claymon Trammell receiving the equity from the sale. Not only did the victim get no money, but he was later forcibly evicted from his home because he no longer owned it, leaving him and his family homeless for a period of time.

  • Following the testimony, Judge Gilmore assessed the maximum punishment of 60 months each for Claymon Trammell and Williams, while Michelle Trammell was sentenced to 36 months. Each defendant was also ordered to pay $907,000 restitution to various mortgage lenders.

  • There were more than 70 homes involved in the scheme, all of which went into payment default and most into foreclosure. The defendants caused lenders to fund loans to purchase more than 70 homes in the Houston area and personally benefitted, jointly, by funneling some of the loan proceeds to themselves via businesses they controlled and/or owned via bogus repair invoices and realtor and loan officer commissions.
For the U.S. Attorney press release, see Three Family Members Land in Federal Prison for Mortgage Fraud (Each Ordered to Pay Nearly $1 Million in Restitution).

Texas Man Gets 61 Months For Running Foreclosure Rescue Racket Involving Fractional Interest Deed Transfers To Unwitting Debtors In Bankruptcy

In Austin, Texas, the Austin American Statesman reports:
  • A Lakeway man who pleaded guilty this year to bankruptcy fraud and aggravated identity theft after he was paid to fraudulently delay foreclosures was sentenced Thursday to two consecutive prison terms totaling 61 months.

  • Frederic Alan Gladle, 53, also was ordered to pay $214,258 in restitution and was told that after his prison term he won't be allowed to work in the mortgage or financial industries during his three-year supervised release. He also had to forfeit belongings, including prepaid debit cards and cash, seized during an investigation. Gladle has 14 days to appeal the sentence.
  • From 2007 until his arrest in October, Gladle operated a business that helped distressed property owners delay foreclosure by paying a monthly fee — usually about $750 a month, according to prosecutors and charging documents. Through the course of the scheme, Gladle and his unnamed associates collected $1.6 million from clients and delayed the foreclosure sales of more than 1,100 properties, according to the documents.

  • After clients signed up for Gladle's services, one of his salespeople had them sign deeds transferring a fractional share — usually one one-hundredth — of their distressed property, the documents said. The shares were transferred to an unrelated person who had previously filed a bankruptcy petition in court, the documents said. Those people were unaware that Gladle was using their names, which were obtained from online court records, the documents said.

  • Gladle, or "a co-schemer operating at his direction," would then send a copy of the fractional deed and a copy of the unrelated person's bankruptcy petition to the lender that was expected to foreclose, the documents said. Because bankruptcy proceedings automatically delay foreclosure actions, the lender would not be able to immediately foreclose on Gladle's client's property, the documents said.

  • Eventually, after the unrelated debtors claimed they knew nothing about owning the fractional interest, the foreclosure continued, according to the documents. Gladle would then go through the process again, causing further delay, the documents said.

Cash-Out Refinance Ripoffs Among Bad Acts Leading To Conviction OF N.Virginia Real Estate Operator; Overall Scheme Involved Over Two Dozen Homes

From the Office of the U.S. Attorney (Norfolk, Virginia):
  • Nadin Samnang, 29, of Ashburn, Va., has been convicted by a federal jury for his role in fraudulent mortgage loan transactions involving at least 25 homes in northern Virginia and more than $7 million in losses to lenders. Samnang is a District of Columbia real estate developer and was formerly a realtor with Monorom Realty and Fairfax Realty in Virginia.
  • According to court records and evidence at trial, from 2006 to 2008, Samnang used his position as a realtor and the owner of a title company to engage in a scheme to defraud mortgage lenders and profit from loan proceeds, commissions, and bonus payments. Samnang and other members of the conspiracy recruited unqualified buyers — usually individuals with good credit but insufficient assets or income to qualify for a particular loan — and used them as nominal purchasers in residential real estate transactions.

  • As part of the conspiracy and fraud scheme, Samnang and others falsified mortgage loan applications, created fake documents to support the fraudulent applications, and added the unqualified buyers as signatories on their bank accounts to make it appear to lenders as though the buyers possessed sufficient assets to qualify for the loans.
  • [As part of the scheme,] Samnang would [] profit by arranging for cash-out refinances to be done for these borrowers, retaining most of the loan proceeds for himself, and paying kickbacks to the loan officer who had processed the fraudulent loans.
For the U.S. Attorney press release, see Ashburn Realtor Convicted In $7 Million Mortgage Fraud Scheme.