Saturday, May 19, 2012

Jury Convicts Suspect On 34 Counts In Home-Hijacking Racket That Commandeered Possession Of Vacant Homes, Then Rented Them To Tenants

In Cobb County, Georgia, WSB-TV Channel 2 reports:
  • A Cobb County jury convicted a man accused of taking over homes on the verge of foreclosure and renting them to unsuspecting tenants. Jurors found John Harris, the CEO of New Life Granted, guilty of 34 counts, including racketeering, burglary, theft, forgery and criminal trespass. It’s believed there were more than 20 victims in the case.

  • Harris testified on his own behalf [], stating that his company would find homes that looked abandoned take them over and then move in their own tenants. His company promised to help people facing foreclosure by restoring their credit and finding them a place to live – the abandoned homes.
  • Police discovered what Harris was doing when the real homeowners showed up. Harris said that’s when he’d remove his signs and move tenants out of the home.

  • Harris told jurors that he started to have second thoughts about his business model, but prosecutors said that only came after he placed tenants and collected rent. “I no longer felt comfortable taking over the houses as I was, so I was making a more concerted effort to get quit-claim deeds or leases,” Harris said. Four other people were charged in the case.

90-Year Old Tenant Dodges Foreclosure Boot; Court Holds BofA To Remaining 3.5 Years On Lease, Sinking Bankster's Effort To Disregard Federal Law

In Porterville, California, the Porterville Recorder reports:
  • Eve Ball is going to stay in her home after all. Local attorney Alex Krase said last week that the 90-year-old resident won her case against Bank of the America and got a court order that will allow her to stay in her home until October of 2015.

  • I think it was the right outcome. I’m happy she gets to stay,” said Krase. Judge Glade Roper made his ruling April 25 and Bank of America had five days in which to appeal. It did not. “We know it’s final now,” said the young attorney.

  • Eve Ball has lived in the two-bedroom, one-bathroom home on Road 223 for 11 years. She has three and a half years remaining on her lease, but then got an eviction notice from the large bank. “It’s quite a relief. She’s pretty excited about it,” said her son, Barry Ball.

  • According to records, the bank seized possession of the property late last year after the previous property owner foreclosed. Barry Ball had purchased the property — which includes two other small homes and a total of about one quarter of an acre of land — in 2002 but sold it three years later.

  • In 2005, the son negotiated with the new owner a 10-year lease for his mother to continue living in the home. The lease, which is set to expire in October 2015, has her paying $425 a month in rent.

  • Last October, Eve Ball received a letter from Bank of America informing her that the property owner had foreclosed. She was told to contact the bank immediately if she had a lease. She did, sending a copy of the escrow papers and asking the bank’s attorneys where she could send her payments.

  • According to Barry Ball, his mother did not hear back from the bank until January, when she was served with an eviction notice. Barry Ball said a section in the Protecting Tenants at Foreclosure Act of 2009 should allow his mother to keep her lease because it was agreed upon before foreclosure and she is not related to the previous property owner. Krase said that is true, but what made the case a big sticky is she had a verbal lease.

  • Krase had sought to have Eve Ball stay in her home until the law sunsets on Dec. 31, 2014, but was pleased the judge gave the extra 10 months. “The client is happy. She just wants to stay in her home,” said Krase. “That’s the most important part. She doesn’t have to worry any more,” added her son. He said she is glad to remain with her rose garden she planted.

Miami Woman Loses Home Of 40+ Years After Being Scammed In Home Improvement Ripoff

In Miami, Florida, WPLG-TV Channel 10 reports:
  • From the driver's seat of her large forest green sedan, Angela Samuels looked on her parents' modest pink-hued Liberty City home with a glazed expression Wednesday. Fellow community activists picked from the pile of belongings scattered across the front lawn and placed them in the car for her. There were buckets stuffed with clothes wedged into the trunk and back seat.

  • After years of fighting her eviction, Samuels seemed a bit stunned that this is how it would end. Maybe her optimism kept her from ever processing this possibility, that she would be kicked out of the home she's lived in for more than 40 years.

  • Samuels' problems started after her parents died. According to Occupy Miami community organizer Kevin Young, her parents didn't leave a will, and so the home ended up in probate.

  • At the time, he said, there was a mortgage of $7,000, and while Samuels was trying to work out a loan to pay off the debt, she said someone duped her.

  • A man promising to help her fix up the home conned her, she said, into taking equity out of the home, and then he vanished with the cash without making any improvements. Now faced with a loan bigger than she could afford, Samuels was stuck and her family home was in jeopardy.
  • Samuels said her father was a pastor, and her mother a missionary. That home was the community's home. Those in pain, those who were homeless, those who needed a meal, she said, all knew they could come to 1740 NW 46th St. That's why her favorite room was the "great room," the big room in the front where everyone would come and hang out, in some cases crash for the night.

Six Would-Be Renters Get Taken For $10K By Swindler Showing Vacant Apartments, Then Taking Off After Pocketing Security Deposits

In Corona, Queens, the New York Post reports:
  • A con artist [] tricked six people into giving him nearly $10,000 by posing as a realtor and showing vacant apartments in Corona, police said. One victim was smart enough to catch him in the act on video, sources said.

  • After the swindler took security deposits ranging from $1,400 to $2,300 from apartment seekers between Oct. 21 and Nov. 25, one victim had a friend call the fraudster for another showing. The friend videotaped the suspect inside 100-22 40th Rd., where he had lured three victims, then left without turning over any cash, sources said.

  • Police are asking for the public’s help finding the con man, who also allegedly showed homes and ripped people off on 42nd Avenue and Denman Street.
Source: NYPD Daily Blotter (1st story).

Mystery Surrounds Disappearance Of County Real Estate Tax Payments As 77 Fort Lauderdale- Area Property Owners Get Hit With Delinquency Notices

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • Seventy-seven Broward property owners paid their taxes last November but got a piece of mail no taxpayer wants to receive — a delinquent tax notice. They say they were among the victims of a mysterious disappearance of property tax payments mailed by diligent property owners last fall. The checks just vanished.

  • Broward officials say the tally of missing checks is at 1,075 now — the last 77 of which were discovered after the delinquent tax notices went out. Taxpayers who hadn’t noticed until now that their checks never were deposited by the county face a steeper climb to clear up the problem, and the stakes are higher.

  • If the taxes aren’t paid by May 22, the delinquent tax bill can carry an interest rate up to 18 percent, or, the notice warns ominously, “your property may be sold at a later date.’’ [...] “There are legitimate people who are just now finding this out, for whatever reason,’’ said Claudio Manicone, operations manager in the county’s tax and deeds department.
  • Broward officials determined earlier this year that hundreds of checks mailed in November never made it to their destination.

Cop Booted From Force Over Fraudulently-Obtained Mortgage; Dodges Criminal Charges As Bank Fails To Follow Up On Cooperation With Prosecutors

In Naples, Florida, the Naples Daily News reports:
  • Cpl. Michael Kovar, a detective in the North Naples district who had been with the Sheriff's Office since 2000, was dismissed for inflating his salary on paperwork that allowed him to fraudulently receive a $2.2 million loan in 2007, reports show.

  • On a loan application, Kovar said he made $510,000 a year at his second job as owner of Marbella Fabrics in Bonita Springs, a figure that was not supported by information on his tax returns. The actual income from the business was about $88,000 a year, reports said.

  • Kovar later told internal investigators the application was completed by a law firm and said he signed the document without proofreading it. The Sheriff's Office economics crime unit began investigating in October 2010 after receiving a report created by JPMorgan Chase. Kovar told investigators he felt his actual income would qualify for the high mortgage. "We applied and they gave it to us, so I assumed that yes," he told investigators.

  • The investigation also revealed that Kovar, who was hoping to buy a $2.2 million home, received $300,000 in two equity loans from the home's seller based on two other properties Kovar owned. Kovar then used the $300,000 as a down payment on a $1.7 million loan. "We purchased the property with the intent on flipping it and we were hoping for the best," he told investigators.

  • Instead, he later defaulted on the loan with a loss of more than $500,000, according to the report given to the Sheriff's Office. All of his mortgages ended in foreclosure, he said.

  • Documents indicate the bank, JPMorgan Chase, did not wish to press charges or provide pertinent paperwork. The State Attorney's Office said it would not issue an arrest warrant without the bank's cooperation.

  • Kovar was fired from the Sheriff's Office in mid-March for unlawful or improper conduct on- or off-duty, and for failing to pay just debts and liabilities. His appeal was later denied, said agency spokeswoman Michelle Batten.

Friday, May 18, 2012

State AG Charges Michigan Woman With Racketeering, False Pretenses For Allegedly Running Loan Modification Scam That Ripped Off Dozens Out Of $250K

From the Office of the Michigan Attorney General's Office:
  • Attorney General Bill Schuette [] announced charges against a Holly woman for her role in a foreclosure-rescue fraud operation that scammed at least 60 victims across the state out of $250,000. Tashia Winstanley, 38, of Holly, and her company, TLW Mortgage Solutions, 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 September 2009 through January 2012 Winstanley allegedly operated TLW Mortgage Solutions as a mortgage modification business.

  • It is alleged Winstanley offered prospective clients mortgage loan modifications for a fee. Winstanley allegedly promised victims she would secure a mortgage loan modification for them. Some victims even made their mortgage payments directly to Winstanley instead of their lenders, but instead of remitting those payments to the banks, Winstanley allegedly pocketed the funds for her own personal use. Investigation subsequently revealed that Winstanley allegedly made no efforts to secure loan modifications for any of the victims.

  • Affected victims reside in the following counties: Grand Traverse, Leelanau, Kalkaska, Roscommon, Oakland, Genesee, Benzie and Macomb. Winstanley and her company, TLW Mortgage Solutions are each charged in Grand Traverse County's 86th District Court with the following:

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

    One count of False Pretenses - More than $20,000, a felony punishable by up to ten years in prison and

    Three 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.

  • Winstanley is currently incarcerated in Huron Valley Women's Correctional Facility serving time for previous convictions for Larceny by Conversion - $1,000-$20,000 charged in Leelanau and Kalkaska counties.

More Media Heat On Detroit-Area Real Estate Operator Suspected Of Using Land Contracts To Peddle Illusory Home Ownership Dreams To Wanna-Be Homebuyers

In Wayne County, Michigan, WXYZ-TV Channel 7 reports:
  • 7 Action News Investigator Bill Proctor broke the story about Leonard Bale, a West Bloomfield real estate investor who has been selling homes that buyers later found to be in some stage of foreclosure, according to property records.

  • We’ve now learned from our own news archives that Bale has been in business a long time and that there have been many complaints about the way he conducts business. In a troubling scenario involving your tax dollars, Bale admitted guilt but only received a slap on the wrist. These days his business has grown, but many who have dealt with Bale over the years continue to ask: What can be done about Bale?

  • Bale sells mostly Wayne County houses that are in some state of foreclosure. Local real estate experts reviewed the land contract deals and other records involving Bale’s properties. They say what he has done could result in criminal charges. We know the Wayne County Prosecutor is looking into him.
  • Bale sells houses on land contract. But many buyers, [...] discovered the home they were buying was in foreclosure. They didn’t learn this until it was too late. That means the bank or county owns the house, not Bale. Those buyers were out thousands of dollars in cash they put down, as well as the money each shelled out to fix up the property.

  • But the people we talked to are just a handful of the many who have crossed Bales’ path. Bale has been around a long time—and he has been dodging questions along the way.
  • 7 Action News was there when a half dozen people went to complain to the Wayne County Prosecutor’s office. They say they never heard back. Why no answer, and why hasn’t Bale been considered for charges? “All I can say is it’s under investigation, so I can’t comment on the facts,” said Wayne County Prosecutor Kym Worthy.

  • Why should it take months to determine if a crime has been committed? Worthy said, “Most of our deed-fraud cases, and mortgage fraud cases take a long time…because they’re very paper intensive. So, they generally take quite a while to organize and decide if there are going to be charges issued.”

  • Attorney Mike Jaafar is not waiting. “Shocks the senses. It really shocks the senses,” he said when asked about the land contract deals Bale had provided his customers. Jaafar represents 10 people he says are frustrated with waiting on local government to go after Bale. He filed a lawsuit against Bale, alleging fraud and civil conspiracy to commit fraud. He and his law partner say there is plenty of evidence to support criminal charges.

  • There should be criminal charges pressed because we’ve seen a regular, and ongoing pattern of obtaining money from unsuspecting people by false pretences,” says attorney Kassem Dakhlallah, who says it is laid out thoroughly in their lawsuit against Bale.

  • There’s a road map to those charges in the complaint,” added Dakhalallah. “If somebody should choose to read it.”

  • The same people who took complaints to the Wayne County Prosecutor say they also complained to with the State Attorney General’s office. A spokesman tells 7 Action News the Attorney General is no longer Investigating Bale.(1)

(1) Observers in Michigan and elsewhere may find it interesting that the Michigan Attorney General's office has not been shy about criminally prosecuting loan modification rackets (see, for example, State AG Charges Michigan Woman With Racketeering, False Pretenses For Allegedly Running Loan Modification Scam That Ripped Off Dozens Out Of $250K). Yet, however, the state AG apparently has little interest in using the same legal theories in prosecuting one who, operating in a similar manner but in a slightly different context, reportedly has a long history of talking people out of their cash and failing to give those same people what they thought they were bargaining for.

As a reminder to those who mistakenly believe that these apparent ripoff deals are nothing more than civil cases, it is clear that all the sophisticated paperwork in the world (ie. business/purchase contracts, leases, closing statements, etc.) isn't enough to permit scammers to insulate themselves from criminal prosecution when they target their victims with legitimate-looking business propositions when screwing their victims over. Criminal prosecutors have the authority to "pierce through" such attempts to disguise a blatant criminal real estate ripoff as a common, legitimate business deal.

Clear precedent exists for such a "pierce through" approach to overcome any objections that will certainly arise when the scammers make the argument that the arrangement was just a civil transaction that, if challenged, should be done with a civil lawsuit, not a criminal prosecution. See, for example:

  • People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

    The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (
    People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)

  • People v. Jones, (1943) 61 Cal.App.2d 608, 620 [143 P.2d 726]:

    Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.


    Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.

    The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

Multiple New Jersey Tax Lien Auction Bid Rigging Class Action Suits Face Consolidation In Federal Court

In Lebanon Township, New Jersey, the Hunterdon County Democrat reports:
  • A class action lawsuit initiated by a township woman facing foreclosure could be consolidated with two other similar lawsuits.

  • Jeanne Boyer who has been fighting to save her own home from foreclosure, filed the suit in March on behalf of herself and potentially thousands of other homeowners in similar situations. Boyer alleges that she is one of many victims of an illegal scheme that allowed tax lien investors to charge the highest amount of interest allowed by law by eliminating the competitive bidding process.

  • The suit was filed in Hunterdon County Superior Court on March 13 and removed to federal court on March 28. Since then two other similar suits have been filed in Federal District Court.

  • One of the suits was filed by Raymond Contarino, of Newfield. A New York company, M.A. Sass, bought the lien on his home at the March 2007 auction for $5,224. That company has not been charged by the Department of Justice but so far there have been nine other guilty pleas in connection with the scheme. The investigation is still open.

  • According Contarino’s suit, “as a direct result of defendants’ unlawful combination, collusion, conspiracy and agreement,” all 59 tax liens auctioned at the March 2007 tax lien sale in Newfield, were purchased “by defendants and/or unnamed co-conspirators, at the artificially elevated, maximum bid rate of 18%.”

  • Another suit was filed by MSC, LLC, of Cherry Hill. The three suits name many of the same people or companies as defendants. A motion to consolidate is now pending in federal court.

  • All three suits ask the court to stop the people who have pleaded guilty from enforcing any tax liens they currently hold, return title to properties already foreclosed upon and turning over proceeds from sales of properties they received because of the bid-rigging scheme. Such proceeds are the “fruits of the illegal conduct” of the people now awaiting sentencing.

Thursday, May 17, 2012

Title Agent Pinched In $500K+ Escrow Ripoff That Left Ref'ncing Out-Of-State Couple In F'closure; Insurance Underwriter Steps Up To Make Victims Whole

From the Florida Keys, The Keys Reporter reports:
  • An owner of a mortgage title company with offices in Homestead and Key Largo is facing up to 90 years in prison for allegedly stealing money from one of her client's escrow accounts. State Division of Insurance Fraud detectives say Marie L. Girard, 52, owner of Girard Title Company, used more than $580,400 from a Minnesota client's mortgage escrow account for her own personal use.

  • The couple, Paul and Peggy Bruci, did not discover what was going on until they received a notice of foreclosure on their home they refinanced through Girard [...] in Key Largo.

  • Detective John Swope wants to know if there are any more victims out there. If you suspect you were victimized by Girard or any other title agent, call (954)-321-2995. Girard could not be reached for comment.

  • According to Girard's arrest warrant, Girard was the closing agent for the refinancing on the Bruci's home in May 2008. The couple was obtaining a loan from Bank United FSB for the house. Girard was acting as an agent for First American Title Insurance Company. That company was responsible for paying the Bruci's first mortgage under the refinancing agreement, according to the arrest warrant submitted by Swope.

  • On May 28, 2008, Girard allegedly filled out forms stating the Bruci's $508,000 mortgage was paid off. But Swope said Girard instead converted the entire $584,000 from the Bank United loan to herself.

  • According to the warrant, Girard changed the Bruci's mailing address for the borrower's monthly mortgage payment information to her Key Largo office at 230 Homestead Avenue. Swope said she then used the Bank United money to pay mortgage payments on that Key Largo office.

  • In February 2009, Girard met with an attorney for First American Title and admitted misappropriating the escrow funds. She worked out an agreement with the company to repay $112,726 up front and to take out mortgages on her two offices to repay the remaining $389,422 balance for the Bruci's mortgage before it was refinanced.

  • Since that money was never actually paid to the original lender, First Magnus Mortgage, First American was on the hook for the funds. Girard allegedly promised to pay First American the balance by Feb. 12, 2009, but instead allowed the mortgages on both her offices to default.

  • She is facing one grand theft charge, one charge of misappropriating funds of more than $100,000 and one charge of misappropriating escrow funds. Each charge carries with it up to 30 years in prison. At press time Tuesday, Girard was being held on $175,000 bond.

Ohio AG Continues Attack On Loan Mod Scams w/ Civil Suit; Alleges Outfit Clipped Homeowners For Upfront Fees, Stiffed Them On Providing Meaningful Aid

From the Office of the Ohio Attorney General:
  • Attorney General Mike DeWine [] announced a lawsuit against K&R Marketing, LLC, doing business as Fix My Mortgage Problem. The lawsuit charges the business and its owner with multiple violations of Ohio’s consumer laws, including failure to deliver.

  • This company was misleading consumers,” Attorney General DeWine said. “Consumers said they paid fees for loan modification help, but never received assistance. Homeowners who are trying to prevent foreclosure on their homes should avoid businesses that charge up-front fees for their services.” [...] All of the complaints the Ohio Attorney General’s Office has received are from out-of-state consumers.
  • Christopher Bray, the owner of K&R Marketing, told consumers that he would work with their mortgage companies to modify their loans for up-front fees between $500 and $1,000. After accepting the down payment, Bray did little to aid consumers and did not provide refunds.

Indiana AG Targets Five More Out-Of-State Outfits For Allegedly Running Loan Modification Rackets

From the Office of the Indiana Attorney General:
  • More out-of-state scammers who profited off of Hoosiers desperate to keep their homes now face lawsuits by Indiana Attorney General Greg Zoeller.

  • Five lawsuits were recently filed against Freedom Equity Savings of Ohio, Integrity Mortgage and Credit Solutions of Florida, Provident Law Group, Inc. of California, Nationwide Mediation Services of California and Global Equity Solutions also know as Peachtree Consultants of Georgia.
  • The companies are all accused of violating Indiana's consumer protection laws and taking more than $11,300 total from six customers living in Hamilton, Lake, Marion, Parke and Union counties. In all cases, the businesses promised to reduce homeowners’ interest rates or monthly payments in exchange for an upfront fee.

  • Consumers made payments ranging from $791 to $3,000 before realizing little or no progress had been made on their home loans. The state seeks an injunction, restitution and civil penalties against the companies.
For the Indiana AG press release, see State lawsuits target home loan modification companies.
For the lawsuits, see:

Wednesday, May 16, 2012

Bankster Accused Of Theft, Trespassing, Reckless Indifference In 'Illegal Trashout' Civil Suit; Homebuyer: Chase OK'd Short Sale That I Paid Cash For!

In Kansas City, Missouri, KMBC-TV Channel 9 reports:
  • A Kansas City man is taking on banking giant JPMorgan Chase, accusing the company of something that he said would have landed anyone else in handcuffs.

  • Allan Danforth bought a house in a short sale in fall 2010. JPMorgan Chase held the previous owner's mortgage. Danforth said two months later, without notice, the bank changed the locks and hauled away $25,000 worth of furniture, appliances and family heirlooms.

  • "I had to bust in through the basement window here," Danforth said, pointing to the house that he was forced to break into more than 18 months ago. He said JPMorgan Chase's contractor, Safeguard Properties, ignored "No Trespassing" signs on the garage, changed the locks on his home and cleaned it out two months after he paid cash for the property.

  • "It was basically stuff that was 150 years of family history," Danforth said. "I feel violated and I felt like the house wasn't even safe to go into for a while."
  • "We fully intend to go into court and have a Jackson County jury try to decide the eventual outcome of this case in the only language JPMorgan Chase understands," [Danforth's attorney Tony] Stein said. "The language of money." In his lawsuit, Stein accuses JPMorgan Chase of theft, trespassing and reckless indifference.

  • Jackson County court records show that on Sept. 9, the previous homeowners transferred the house to Danforth. The bank signed off 12 days later. "For the very company to release their deed of trust and thereby release all their rights against this property, and then two months later, send in a company to clean this thing out? You'll have to ask them why they'd do something like that," Stein said. "It defies logic."
  • Under law, Stein said members of Danforth's family could be entitled to recover as much as $1.5 million in punitive damages.(1)
For more, see KC Man Sues Bank Over Foreclosure Error (Claim: JPMorgan Chase Changed Locks, Seized New Owner's Property).

(1) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:

For examples of filed lawsuits involving illegal bank break-in, "trash-out" & lockout cases, see:

Tennessee Appeals Court Nixes Zombie Debt Buyer's Attempt To Enforce Money Claim Based On Crappy Paperwork

From a recent press release from the law firm Ballard Spahr LLP:
  • A recent decision by the Tennessee Court of Appeals illustrates the documentation-related challenges faced by creditors and debt buyers in credit card collection actions.

  • In its April 30, 2012, opinion in LVNV Funding, LLC v. Mastaw, the appellate court held that the buyer of a credit card account cannot rely on affidavits of an “authorized representative” of the debt buyer and its parent corporation to establish in a collection action that the defendant owed a debt or the amount owed.

  • The buyer had purchased the account from its parent corporation, which, in turn, had purchased the account from a bank that was either the card issuer or had purchased the account from the issuer.

  • With the debt buyer’s trial witness having conceded that she had no personal knowledge of the information in the affidavits, the appellate court found that the affidavits could be properly admitted as evidence only under the business records exception to the hearsay rule. That exception allows the admission of records made and maintained in the regular course of business.

  • As described by the appellate court, the affidavits did not identify or attach any specific records that included the debtor’s identity or his account number but sought to establish that information based on references to unspecified records that were described as maintained by the debt buyer as part of its normal business records.

  • In addition, the affidavits claimed such unspecified records were “represented” to include information provided by the original creditor without identifying who made such representation. They also did not explain the affiant’s relationship to the parent company or the basis for her designation as “authorized representative” of the debt buyer and parent company.
For the Court ruling, see LVNV Funding, LLC v. Mastaw, No. M2011-00990-COA-R3-CV (Tenn. App. April 30, 2012).

Participant In Racket That Bilked Homeowners In 'Mortgage Elimination" Ponzi Scheme Gets 29 Months

In Baltimore, Maryland, The Washington Examiner reports:
  • A District woman has been sentenced to more than two years in prison for her role in a mortgage fraud scheme that authorities say bilked people in the D.C. region and across the country out of $78 million.

  • U.S. District Judge Roger Titus sentenced 53-year-old Carole Nelson on Monday in federal court in Greenbelt to two years and five months behind bars and ordered her to pay more than $34 million in restitution.

  • Nelson and others ran a fake mortgage-payment program called the "Dream Homes Program" beginning in 2005, according to prosecutors and court documents. They promised homeowners that they would pay off their mortgages in exchange for an initial investment of at least $50,000 and administrative fees. But the Dream Homes Program officials never paid the mortgages, leaving the homeowners to fend for themselves.

  • Prosecutors said more than 1,000 investors lost $78 million through the scheme. The program had offices in Maryland, D.C., Virginia, North Carolina, New York, Delaware, Florida, Georgia and California.
  • Nelson pleaded guilty in April 2009. Other Dream Homes officials were convicted at trials, including founder Andrew Hamilton Williams, of Hollywood, Fla., who is now serving a 150-year prison sentence.
For the U.S. Attorney press release, see Chief Financial Officer Sentenced in $78 Million “Dream Home” Mortgage Fraud Scheme (Received $413,075 in Compensation During Her 20 Months of Employment Despite Knowing That No Revenue Was Being Made to Pay Off Investors’ Mortgages).

Tuesday, May 15, 2012

NY Foreclosure Mill Attorneys' Failure To Submit Mandatory Paperwork When Filing Foreclosures Clog Courts, Leave Cases Languishing In Limbo

In New York City, the New York Post reports:
  • Foreclosure-mill attorneys are routinely breaking the law and clogging New York courts with unresolved cases, an explosive new study shows.

  • In a report set to be released this week, MFY Legal Services shows that foreclosure-mill law firms are still failing to file required documents in an astonishing 43 percent of foreclosure cases started in November 2010 and March 2011. The percentage was even higher for cases in October 2011. These trends suggest that as many as 5,200 of 12,142 residential foreclosures begun in New York last year are languishing in limbo.

  • It’s a huge problem,” said Jacob Inwald, Director of Foreclosure Prevention Litigation for Legal Services NYC. “Once you are sued in foreclosure, you are frozen and can’t resolve your situation.”

  • At issue is the October 2010 rule requiring foreclosure law firms to verify the accuracy of their filings. Created after the robo-signing scandal, the rule was meant to curtail false filings. But because lawyers can begin a case and file two documents afterwards — the accuracy affirmation and a request for a settlement conference — they have a loophole to exploit.

  • Troubled borrowers pay a steep price. Foreclosure fees and charges rack up, but the borrower cannot attend a settlement conference. As the delays drag on, homeowners become ineligible for certain modification deals, or too deeply in debt to climb out.

Another Real Estate Investor Goes Down In Ongoing Federal Probe Into Foreclosure Auction Bid Rigging Racket

In Mobile, Alabama, the Press Register reports:
  • A local real estate investor last week became the latest businessman to acknowledge guilt in a years-long conspiracy to rig foreclosure auctions to artificially depress prices by limiting competition. Steven J. Cox, 58, pleaded guilty to conspiracy to violate the Sherman Antitrust Act and conspiracy to commit mail fraud from 2004 to at least 2010.

  • If Chief U.S. District Judge William Steele accepts the plea agreement, Cox will be sentenced to a year in prison at a minimum-security camp. He also would pay a $10,000 fine and make restitution in the amount of $82,101 to lien-holders who were cheated by the rigged auctions.

  • Cox also has agreed to cooperate with the U.S. Department of Justice’s ongoing investigation. Four other Mobile-area investors have pleaded guilty so far.

  • Cox and other members of the conspiracy would agree to designate one person to bid on properties at foreclosure auctions at the county courthouse, according to court records. After one investor would acquire property cheaply, according to court records, participants in the scheme would hold a secret second auction among themselves.

HOA Property Manager Gets 21 Months For Grand Theft In $400K+ Condo Cash Ripoff

In Miami, Florida, the South Florida Sun Sentinel reports:
  • Steal from a condominium association, go to prison: That's the message sent by a judge who sentenced a former South Florida property manager to nearly two years in prison for theft of about $500,000 from bank accounts of the community she was supposed to be protecting.

  • On Friday, 49-year-old Lourdes Rodriguez of Pembroke Pines was sentenced in Miami-Dade Circuit Court to 21 months in the state penitentiary for one count of first degree grand theft. Rodriguez pled guilty to the charge on May 10, according to a press release from Miami-Dade State Attorney Katherine Fernandez Rundle.

Monday, May 14, 2012

Three Get Multi-Year Sentences In Hawai'ian Sale Leaseback Equity Stripping Foreclosure Rescue Racket

In Honolulu, Hawai'i, KHON-TV Channel 2 reports:
  • Three former Honolulu mortgage brokers have been sentenced to federal prison terms as a result of their participation in a mortgage fraud and money laundering scheme. The individuals and the sentences imposed were as follows:

    Welton Kalani, 49, was sentenced [] to a term of imprisonment of 70 months and ordered to pay total restitution of approximately $714,216.

    Stephen Balino, 51, was sentenced on April 30, 2012 to a term of imprisonment of 27 months.

    Bobby Wood, 51, was sentenced on February 2, 2012 to time served, which amounted to 32 months in jail, and ordered to pay restitution of approximately $740,000.

  • U.S. Attorney Florence Nakakuni said that, according to information produced in court, Kalani and Balino owned mortgage brokerage companies [Accel Mortgage, LLC, and New Horizons Financial, respectively] offering loans to the public. [...] According to evidence produced at trial, both individuals conspired with others to engage in fraudulent real estate transactions designed to pull equity out of properties about to go into foreclosure.

  • Kalani, Balino and others identified homeowners facing financial difficulties, and offered them the chance to stay in their homes, rent free, by transferring title to others temporarily. Kalani and Balino promised the homeowners that a "buyer" would purchase the property, and make mortgage payments until the homeowners were able to buy the property back.

  • Kalani and Balino then recruited persons to serve as "straw buyers" by promising them money to induce them to make false loan applications to fund the sham purchases. [...] Following each sale, the brokers were paid fees and commissions for procuring the loans.

  • The equity in the property was also diverted away from the seller, and channeled through third parties to Kalani, Balino or others working with them. In the sale of one property, Balino directed the deposit of $98,000 into the account of a third party, and then instructed the individual to divert $92,000 to Kalani. In a second sale, $78,000 was diverted to a company coowned by Wood. In the third sale, $51,000 was diverted into [his corporate] account.

  • After learning of the criminal investigation, Kalani contacted two witnesses, telling them to destroy documents and to lie to investigators. These acts formed the basis of two obstruction of justice convictions.

  • According to Nakakuni, eight other individuals pled guilty to charges arising out of the same transactions, and testified for the government during the trial.(1) Five of those individuals worked with Kalani at Accel Mortgage, which is no longer in business.(2)

(1) Another example of squealing schemers abandoning a 'sinking conspiratorial ship', winning the race to the prosecutor's office and seeking to take down fellow co-conspirators by 'throwing them under the bus' to score a better break on a plea deal. Vrooooom!!! As noted by one learned Federal judge in referring to the not-uncommon 'race to the prosecutor's office' that breaks out among participants in an 'about-to-fall-apart' criminal conspiracy:

  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring).

(2) For more on this type of foreclosure rescue ripoff, see:

Mortgage Broker Clubbed With $342K Jury Award For Liability In Peddling 'Pick-A-Pay' Mortgage That Left Homeowner "Down In The Bottom Of The Muck!"

In Anne Arundel County, Maryland, The Baltimore Sun reports:
  • A 78-year-old Annapolis man who said he was duped into getting unsuitable mortgages — sending the home he had owned for decades into foreclosure — was awarded $342,000 by an Anne Arundel County jury this week.

  • The jury found that Dennis Hollidayoke's mortgage broker violated state and federal law when arranging a "payment option" adjustable-rate mortgage for him in 2006 and then refinancing it into another payment option loan seven months later. The mortgages are also known as negative amortization loans because the lowest payment option adds to what's owed on the mortgage rather than subtracting from it.

  • Hollidayoke said no one mentioned this aspect of the loan to him upfront, and his attorney said it never was made clear in the paperwork. "It's been a very bad experience," said Hollidayoke, who is trying to short-sell his home of more than 40 years to avoid foreclosure. "I worked hard all my life, tried to keep a pretty good reputation, and this has put me down in the bottom of the muck."

  • The trial was the latest in a long-running national argument about whom to blame after many Americans signed up for complex loans they couldn't afford — the borrowers or the financial professionals who sold them the products. Hollidayoke's broker, Brian Lynn Blonder of JBL Mortgage Network, contended in court that he did nothing wrong.

  • "That was their defense, and the jury flatly rejected it," said Hollidayoke's attorney, Phillip Robinson, who represented him on behalf of the nonprofit Civil Justice in Baltimore.
  • Real estate agent Sandy Wing, who is trying to arrange the short sale of his home, said Hollidayoke was "distraught" when he came to her for assistance. He didn't understand what had happened. She sorted through his boxes of records and — appalled by what she found — connected him with legal help.

  • "I just felt, something has to be done about this," Wing said. "This is really, really wrong."
For more, see Annapolis retiree awarded $342,000 in bad-mortgage case (Anne Arundel County jury finds mortgage broker violated laws).

Accused Deed Scammer Bagged, Charged With Obtaining Property By Fraud, Organized Scheme To Defraud In 3-Year Racket Peddling Foreclosure Rescue Deals

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Guilfort Dieuvil hopscotched across Florida, and even into Georgia, picking up deeds to homes like jacks in a game that homeowners say left them the losers.

  • The president of the West Palm Beach-based Nationwide Investment Firm Corp., law enforcement officials say, led a grand three-year scheme to defraud struggling homeowners by promising to pay off their mortgages in exchange for signing over their deeds.

  • The ruse varied by borrower, police said. Sometimes it was a pledge to buy the home and sell it back to the owner at its current value.

  • Other homeowners say they were told a short sale would be conducted or a loan modification negotiated, but were instead evicted. Nationwide allegedly rented out the houses, keeping the monthly payments for itself.

  • In an investigation that included the Boca Raton and Boynton Beach police departments and the Florida Office of Financial Regulation, detectives found that Nationwide had acquired 104 properties in Florida and Georgia worth $9.5 million.

  • For 15 Nationwide Investment Firm clients interviewed by investigators, the end was always the same – they still owed their mortgage debt, but no longer owned their homes, according to a police report made public Friday.

  • "Nationwide stole my home," Frazilia Prospere, who spoke with investigators, said in a 2010 complaint to the Florida Attorney General's office. "I was promised a foreclosure rescue by a short sale, but they made me sign a lot of papers I can't read or understand."(1)

  • Dievuil, 38, was arrested Thursday and charged with 16 counts of obtaining property by fraud, each of which carries a maximum of up to five years in prison, according to the state attorney's office. He also faces one count of organized scheme to defraud in the first degree, which carries a penalty of up to 30 years in prison.

  • Standing in front of Palm Beach County Circuit Court Judge Ted Booras on Friday morning, Dieuvil's public defender said he could afford no more than $10,000 bond. Dieuvil, who lives in a Boynton Beach home he bought for $1.1 million in 2007, said he is represented by Fort Lauderdale-based attorney Alvin Entin. Entin's office had no comment when contacted Friday for this story.

  • Dieuvil's bond remained set at $60,000 Friday. He is scheduled for another court appearance today . Dieuvil had not made bail Friday afternoon, if he does, he must surrender his passport, Booras ordered.

(1) In considering whether or not to bring charges, some criminal prosecutors are beginning to embrace the idea that all the sophisticated paperwork in the world (ie. business/purchase contracts, leases, closing statements, etc.) isn't enough to permit scammers to insulate themselves from prosecution when targeting their victims simply by entering into legitimate-looking business contracts when screwing them over in an attempt to disguise a blatant criminal real estate ripoff as a common, legitimate business deal.

Certainly, this is not the first time that a court and a jury will be asked to pierce through the acrobatics involved in creating the 'business-deal disguise' when the scammers make the argument that the arrangement was just a civil transaction that, if challenged, should be done with a civil lawsuit, not a criminal prosecution. See, for example:

  • People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

    The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (
    People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)

  • People v. Jones, (1943) 61 Cal.App.2d 608, 620 [143 P.2d 726]:

    Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.


    Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.

    The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

'Re-Branded' Foreclosure Mill Still Plagued w/ Problems; Homeowners Allegedly Stiffed On 'Cash For Keys' Come-Ons After Vacating Homes Leave Screaming

In Central Florida, WFTV-TV Channel 9 reports:
  • WFTV’s 9 Investigates looked into serious concerns about one of the biggest foreclosure law firms in the state. If the bank has foreclosed on your property or you were the tenant in a foreclosure, chances are you've heard of the Florida Default Law Group. But now, investigative reporter George Spencer has uncovered hundreds of complaints and a major state investigation.

  • Christian Flint jumped at a chance to make $2,000 by leaving his rented home in Winter Springs more quickly than he had to after it went into foreclosure. However, not only did Flint not get $2,000, he didn’t get any money at all. “It makes me furious,” Flint said.

  • Flint, who suffers from cerebral palsy, said he was deceived by the Florida Default Law Group and a local Realtor the group employed in his case. Because he's disabled, Flint said he needed money to pay for help in his move. He said he met every requirement on the very basic "cash for keys" checklist and was ready to leave.

  • But when an inspector walked around the property, following a new, more detailed checklist, he told Flint the cash offer was suddenly gone, even though Flint already moved out. “I thought he was crazy,” said Flint. As it turns out, many other renters have had the same problems.

  • Florida Attorney General Pam Bondi opened an investigation into the Florida Default Law Group after receiving 241 complaints. Flint also plans to file a complaint against the real estate agent who worked on his case for the group. “I look at them as just fraudulent bullies,” said Flint. “There are people out there that are just looking to prey on the ignorance of so many people.”

  • At the end of April, a secretary at the Florida Default Law Group's telephone number said the firm's name had just been changed to Ronald R. Wolfe and Associates. But the new name may carry similar baggage: Wolfe has two open foreclosure-related complaints against him personally with the Florida bar.

  • Wolfe told WFTV he has been working with the Attorney General's Office to address concerns about the Florida Default Law Group, but he did not say specifically how.

Sunday, May 13, 2012

Foreclosing Bankster Agrees To Wipe Out South Florida Homeowner's Mortgage After Document Review Reveals Scott Anderson-Robosigned Paperwork

In Fort Lauderdale, Florida, WTVJ-TV Channel 6 reports:
  • A South Florida woman succeeded with the unheard of when she was able to get her mortgage wiped out by a lender. In an effort to save her mother’s home, Idania Castro waged a two-year battle with the bank.

  • The mortgage got wiped out, so I have no mortgage payment, everything was completely satisfied,” Castro said.

  • The woman, who took it upon herself to go through every document related to the mortgage, finally discovered robo-signing. She said the signatures on her foreclosure documents appeared to have been signed by different people. “The signatures varied five times and it made me suspicious,” she said.(1)

  • With the help of attorney Omar Arcia, she won her case. The lender decided to stop all legal proceedings against her because the documents were deemed fraudulent. Castro now owes nothing.

  • The moment that we brought that information to light and we brought it to the judge, the parties resolved the case and in that particular case the bank agreed to forgive her entire mortgage debt,” Arcia said.

  • The attorney stressed the importance of investigating. “You have to do your legwork and find out if there is anything wrong that was done in connection with your transaction,” Arcia said. “You may have something that you can go back to the bank with and either negotiate better terms for your loan or sometimes get your mortgage wiped out altogether.”
Source: SoFla Woman's 2-Year Battle Gets Mortgage Wiped Out (In an effort to save her mother?s home, Idania Castro waged a two-year battle with the bank. With the help of attorney Omar Arcia, she won her case. The lender decided to stop all legal proceedings against her because the documents were deemed fraudulent . Castro now owes nothing).

(1) A viewing of the WTVJ-TV Channel 6 video report (link embedded in original story) reveals that certain documents apparently at issue in this case were signed by the prolific, nationally-reknown robosigner Scott Anderson.

Bank Of America: A RICO Enterprise?

An excerpt from a recent column in the American Banker:
  • While shareholders queue up for a seat at the annual Bank of America extravaganza [...] and the forces of Occupy get ready to mount major protests, a small group of lawyers plots its own campaign to take on what they call the "predatory mortgage banking cartel."

  • They are pained at the lack of real regulatory enforcement actions in the wake of the financial meltdown, and angry about how easy it's been for the megabanks – B of A, in particular – to "get over" on the American public, continuing a pattern of foreclosure behavior despite tongue-lashings by the Federal Trade Commission and Department of Housing and Urban Development.

  • So, how do they spell relief for this fraud-induced indigestion? R-I-C-O.Yes, RICO, that iconic legal strategy developed in the 1970s – one with teeth – that spelled calamity for the bosses of the Genovese and Gambino crime families, restored some semblance of order to mob-run Teamster Local 560 in New Jersey, and sent the immensely popular mayor of Providence Rhode Island, Vincent "Buddy" Cianci, to the can for running his office as a financially self-serving criminal enterprise.

  • But the case that took it beyond the boundaries of common thugdom was RICO's successful prosecution of Wall Street junk bond peddler, Michael Milken. While controversial, the case emphasized the expansive nature of the statute in pursuing corporate crime, and the fact that RICO provides for both criminal penalties and a civil cause of action for financial damages, has this group of attorneys intrigued.

  • So, how might B of A qualify as a likely target? It's definitely an "enterprise," one of the criteria of a RICO prosecution. According to several lawyers, there's a pattern of activities, mainly surrounding B of A's 2008 acquisition of Angelo Mozilo's Frankenstein, a/k/a Countrywide Financial, that provide potential prosecutorial fodder insofar as securities fraud and consumer protection violations are concerned.

  • One crusader in this tight-knit group – Dave Angle, a consumer attorney formerly with the Missouri Attorney General's office – points specifically to the Federal Trade Commission's 2010 settlement with B of A, where the bank agreed to pay $108 million to settle claims that Countrywide had laid excessive servicing fees on cash-strapped homeowners.

  • The upshot, according to Angle, was, essentially, an upraised B of A middle finger as the company continued servicing practices as usual, until the FTC got wise and forced another settlement in February of this year, charging the bank with ignoring the initial settlement and demanding a return to homeowners of an additional $36 million, the ill-gotten gains accumulated in the interim.

  • The Inspector General at HUD also noted this blatant nose-thumbing in a report issued in March, which took B of A, along with four of its brethren, to task for "widespread questionable foreclosure practices involving the use of foreclosure 'mills' and a practice known as 'robosigning' of sworn documents in thousands of foreclosures throughout the United States."

  • Every day seems to bring another horror story designed to fuel public rage against Bank of America, whether it's the case of Louise Davidson of Loma, Colorado (whom I wrote about in previous blogs), still sans home thanks to a B of A/Fannie Mae eviction; Los Angeles mother Dirma Rodriguez, fighting B of A to stay in her home with a severely disabled daughter; or a 74 year-old veteran, Larry Anderson, now on the verge of losing his family home to the relentless maws of the B of A foreclosure machine.

  • But, Mark Malone – a former U.S. and New Jersey prosecutor with RICO experience – firmly believes that the statute could prove a legal trumpet that could bring down the Jericho-style battlements of B of A.
For related material, see:

Proud Bank Of America Founder: Is He Turning Over In His Grave?

The Wall Street Journal reports:
  • Amadeo "A.P."' Giannini, the story goes, learned early about how money can make or break people's lives. When he was a child, a man shot his Italian immigrant father to death because the elder Giannini owed the assailant a dollar.

  • The younger Giannini, of course, went on to have a much different relationship with money. In 1904, he started the Bank of Italy in San Francisco. At the end of the 1920s, he changed the name to Bank of America.

  • Mr. Giannini's bank was a place where working immigrants could save and get a loan. Bigger, more established banks shunned the community Mr. Giannini served. He made loans on the streets after the 1906 earthquake. San Francisco was still smoldering, and the banking industry learned a lesson about how opportunity and responsibility could go hand in hand.

  • When California was desperate for funds to finish the Golden Gate Bridge in the Great Depression, Mr. Giannini's Bank of America bought the bonds that funded the bridge's completion. The Bay Area is celebrating the bridge's 75th birthday this year.

  • There's more to the legacy, but when Mr. Giannini died in 1949, he had built the West Coast's biggest bank and a different breed of bank, at least in reputation. Bank of America was admired and seemed to know instinctively how to make popular and profitable investments.

  • These days, you have to wonder if Mr. Giannini would recognize the bank he nurtured to life.