Saturday, August 25, 2012

Final Member Of Trio Pinched For Vandalizing, Torching Biracial Man's Home In Effort To Force Him To Move Sentenced For Housing Rights Interference

From the U.S. Department of Justice (Washington, D.C.):
  • A Missouri man was sentenced [] to 30 months in prison for his role in the vandalism and arson of a biracial man's home in Independence, Mo., the Department of Justice announced. David Martin, 24, of Independence, was sentenced in the Western District of Missouri by U.S. District Judge Dean Whipple.

    On March 7, 2012, Martin pleaded guilty to one count of conspiracy and one count of violating the Fair Housing Act. Martin's co-conspirators, Teresa Witthar and Charles Wilhelm, pleaded guilty on Feb. 2, 2012, and March 8, 2012, respectively, for their roles in vandalizing and burning down Nathaniel Reed's home in Independence.

    According to the plea agreement filed with the court, Martin, Witthar and Wilhelm conspired to intimidate and scare Reed, a biracial man, into moving out of the Highland Manor Mobile Home Park in Independence, in part because of his race.

    On or about June 6, 2006, Martin, along with Witthar and Wilhelm, entered Reed's mobile home, without his permission, and vandalized it by writing at least 15 racially derogatory slurs on the walls of his trailer.

    Two days later, on or about June 8, 2006, Witthar drove Martin and Wilhelm to a neighborhood behind Reed's home so that they could set fire to his home without being detected. Witthar waited in her vehicle for Martin and Wilhelm to set the fire and then provided them a ride back to the Highland Manor Mobile Home Park.

    Every American has the right to live in their homes without fear of racially-motivated violence," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Department of Justice will continue to vigorously enforce the Fair Housing Laws that prohibit these heinous acts."

    Witthar was sentenced to 63 months in prison on June 18, 2012. Wilhelm was sentenced to 42 months in prison on July 24, 2012.

Down-And-Out Woman Seeking Refuge At Hotel For Homeless Scores $50K Settlement Of Suit Accusing Now Ex-Manager Of Sexual Harassment

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department announced [] that the owner and former manager of the Lowrey Hotel and Café in New Richmond, Wis., has agreed to pay $50,000 to settle a lawsuit alleging they had sexually harassed a homeless woman who sought shelter at the hotel [go here for Consent Decree].

    The lawsuit, filed in the U.S. District Court in Madison, Wis., on Nov. 23, 2011, involved the Lowrey Hotel & Café, a residential hotel that often provides housing to homeless people, who have been referred by local social services agencies.

    According to the complaint, Gerald Hoglund, of McClusky, N.D., formerly one of the hotel’s managers, sexually harassed a female tenant, who had been referred to the hotel by a social service agency, by making unwelcome requests to her for sexual favors.

    The complaint also alleged that Stacy Wright, co-manager and owner of the Lowrey Hotel & Café LLC, warned the tenant that Hoglund might ask for sexual favors but failed to take reasonable steps to prevent it.

    It is unacceptable that a woman looking for shelter should be subject to sexual harassment at the very place where she has sought refuge,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
  • A person’s home should be a place of complete safety and security – no one should be subjected to unwanted sexual advances from any landlord,” said John W. Vaudreuil, U.S. Attorney for the Western District of Wisconsin.
  • The federal lawsuit arose when the tenant filed a complaint with the Chicago Regional Office of the Department of Housing and Urban Development (HUD), which conducted an investigation and, after issuing a charge of discrimination, referred the matter to the Department of Justice.

Two Tenants Score $15K, Feds $10K From Landlord After Judge Finds Housing Discrimination In Renting To Families With Kids

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department announced [] that John Wingard Altman has agreed to pay $25,000 to settle a lawsuit involving violations of the Fair Housing Act at Altman Apartments, a 16-unit apartment complex he owns in Summerville, S.C. In July 2012, the court, ruling on a motion filed by the government, found that the defendant had violated the Fair Housing Act by discriminating against families with children.

    Under the consent order, which was approved [] by the U.S. District Court for the District of South Carolina, the defendant must pay $15,000 to two people who were harmed by the defendant’s discriminatory practices and $10,000 to the United States as a civil penalty. In addition, the order prohibits the defendant from engaging in discrimination against families with children in the future and requires that he adopt a non-discrimination policy in addition to receiving training on the Fair Housing Act.
  • Filed in September 2011, the lawsuit alleged that Mr. Altman, through published advertisements and statements to testers, maintained a policy or practice of discouraging families with children from living in the apartment complex. Testers are individuals who pose as renters to gather information about possible discriminatory practices; the evidence in this case was obtained by the department’s Fair Housing Testing Program.

    The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at

    Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at, or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.

Real Estate Investor Files Suit To Derail Demolition Of Two Homes Scheduled For Date With City Wrecking Ball

In Beaumont, Texas, The Southeast Texas Record reports:
  • Diamantis Investments has filed a petition and application for temporary restraining order against the city of Beaumont, seeking to stop the slated demolishment of two properties. The injunction request was filed Aug. 16 in Jefferson County District Court.

    According to the petition, Diamantis Investments owns two homes in Beaumont located at 1785 Elgie St. and 3950 Congress St., both of which have been declared to be dilapidated structures and scheduled to be demolished by the city.

    In its petition, Diamantis Investments argues that if the homes are demolished, the plaintiff will lose almost all the investment in the properties, causing the plaintiff to suffer immediate and irreparable loss.

    Diamantis Investments is asking the court to enjoin the city following an injunction hearing. In addition to the injunction, Diamantis Investments is seeking court costs.

Vacant Home In Foreclosure Since 2008 Likely Cause Of Neighborhood Cockroach Invasion; City Slates Date With Wrecking Ball, But Must 1st Purge Pests

In Hammond, Indiana, The Times of Northwest Indiana reports:
  • An emergency demolition order was issued Thursday for an empty East Hammond house that neighbors claim is the nexus of an expanding cockroach infestation.

    Residents of the 900 block of Eaton Street sought assistance from the Board of Public Works and Safety last week in combating the insect invasion, which they said was spreading to adjacent streets in all directions.

    Before the 91-year-old building can be torn down, the roaches must first be killed, said Kelly Kearney, code enforcement commissioner, or they would immediately occupy neighboring properties.

    "Everything in there is infested," Kearney said. "There's a massive, massive amount of roaches." Residents said the insects first appeared in June after the owner and a tenant moved out, leaving behind mounds of debris and a dead dog in the basement.

    Pest control professionals estimated at one to three weeks could be needed to exterminate all the roaches, Building Commissioner Kurt Koch said.
  • Owner Carl Harris told the works board Thursday he would like to get his property back but doesn't have the money to catch up with his mortgage on the house, which has been in foreclosure since 2008.

City To Tenants: 'Everybody Out!' Sewage Leak/Backup Likely Cause For 36-Unit Apartment Building Shutdown; Renter Return Possible Upon Landlord Fix

In Hopewell, Virginia, The Progress-Index reports:
  • The City of Hopewell has shut down a local apartment complex, deeming it unfit for habitation. Residents of the Broadway East Apartments say that police knocked at their doors Tuesday morning, telling them to pack up and leave by midnight. The city has now extended the deadline until Friday.

    Assistant City Manager March Altman said that living conditions at the property on 600 E. Broadway are unsafe, unsanitary and pose a threat to the health, safety and welfare of the residents. "The city has taken the step of declaring the property unfit for habitation, and requested the tenants vacate the premises," Altman said.

    Human waste and sewage have created unlivable conditions at the apartment complex. "One of the residents called us to complain about the smell of sewer," Altman said. "We went out there last week and after we saw what was going on, we posted a note, ordering people to move," he said.

    Altman said that the it is likely that a sewage leak or backup has caused raw sewage to spread into the hallway and several apartments on the bottom of the 36-unit premises. He also said that black mold was found inside at least one unit.

    Anitra Garland, who has lived at the apartment complex for two years, said that the units on the bottom floor had been closed for quite some and that the sewage problem had never been fixed. "I could smell it in my bedroom, it was that strong," she said. "When I had people over, they would notice the smell as well and they would say that it stinks."
  • Altman said that the city regrets the discomfort that the evacuation causes for residents, but that it was necessary. "The city is acting in the best interests of the tenants of the apartment complex," he said. "While we are sympathetic to the residents' difficult situation, we cannot allow our citizens to live in the conditions that exist on the property."
  • Altman said that residents would be allowed to move back in once the owner has fixed the sewage leak and the affected units are cleaned up.

Friday, August 24, 2012

Iowa Federal Judge OKs MERS' Recording Fee Dodge; Nixes Class Action Suit Filed On Behalf Of Counties Throughout State

In Sioux City, Iowa, the Sioux City Journal reports:
  • A federal judge has dismissed a class-action lawsuit that claimed a national electronic mortgage registry company was enabling banks to avoid paying Iowa mortgage registration fees.

    U.S. District Judge Mark W. Bennett said in his ruling, filed Tuesday, that Iowa law does not support the claims raised by Plymouth County Attorney Darin Raymond, who in March filed the lawsuit in U.S. District Court in Sioux City on behalf of all 99 Iowa counties against MERSCORP Holdings Inc., Mortgage Electronic Registration Systems Inc., known as MERS, and several large banks and mortgage companies.

    Raymond had contended that MERS has allowed banks subscribing to the company's service to skirt Iowa's public information and recording laws by trading mortgages through an electronic registry that lists MERS as the mortgage holder, even though the banks are buying and selling the mortgages. The MERS electronic system tracks changes in ownership so that each buyer doesn't have to record the transaction.

    Raymond cited Iowa law that requires a document called an assignment of mortgage to be filed in the county recorder's office when a mortgage is sold. The MERS system enables banks to avoid that practice and the payment of accompanying filing fees, the lawsuit said.

    Bennett ruled that none of the Iowa statues cited in the lawsuit imposes a requirement on the party assigning a mortgage or receiving an assignment to record the transaction.

    "What the county seeks, on its own behalf and of the putative class of Iowa counties, under the guise of construction of recording statutes, is an extension of those statutes that completely changes the meaning of the statutes, but the courts have no power to grant such an extension," Bennett wrote in his ruling.

Elderly Homeowner Left Having To Pay Twice For Same Roof After Now-Defunct Contractor Stiffs Materials Supplier

In Kensington Park, Florida, the Sarasota Herald Tribune reports:
  • Beverly Boganrief is hopping mad. A retired Kensington Park resident living on social security, Boganrief said she could not believe it when a Tampa company that sells roofing supplies slapped a mechanics lien on her house demanding payment of $3,000 by Aug. 31.

    Boganrief said she paid $6,000 for a new roof in March and it is not her fault if the now defunct Harbour Roofing did not pay its bill Gulfeagle Supply.

    But sprawled across the top of the letter she received from Gulfeagle’s attorney on Aug. 10 are the words:


    Calls to to Gulfeagle’s Tampa headquarters and to its St. Petersburg attorney Robert E. Burguieres were not returned.

    As far as Boganrief is concerned, Florida Eagle and Burguieres are simply harassing seniors in the hope they can be bullied into paying for something twice.

    I’m really upset,” Boganrief said. “This is not my debt. I already paid $6,000 for a brand new roof and I can’t help it if the man who was supposed to pay his bill did not pay it.” “I wonder how many more people are being harassed by this company,” she asked.

Man Who Pledged Home As Loan Collateral To Help Friend Now Faces The Boot As Latter Stops Making Repayments

In Ridgefield, Connecticut, The Ridgefield Press reports:
  • Bob Simonson is known perhaps equally for riding his bicycle all year round for transport rather than sport, and for the mass of miscellany that’s grown around his Branchville Road house over the years. Now he’s at risk of losing that house that he’s called home for more than half a century and teeters on the verge of homelessness.

    Over the years, debt has piled up on the property that two decades ago Mr. Simonson owned free and clear. In a letter to the editors last week, Mr. Simonson asked “Is there anyone here who can do anything to help me buy time enough to save my home?

    He inherited the property in 1989 with no mortgage, and in a fateful moment of what he calls “weakness,” Mr. Simonson said, he used his windfall to help a friend buy a house in Pennsylvania where he sought to start an antiques business.

    He was the grandson of a famous antiques dealer, so he knew his stuff,” Mr. Simonson said. “I figured he was a safe bet.”

    He borrowed $50,000 — $25,000 for a “200-year-old colonial that was falling apart” and $25,000 to fix it up, and he used his Branchville Road house as collateral.

    I knew him for a number of years and I trusted him,” Mr. Simonson said. They had been roommates in town when Mr. Simonson’s parents were alive, he said. “I used to be more trusting.”

    For a couple of years he made payments,” he said. In the mid-1990s, the payments stopped and Mr. Simonson, who has worked retail jobs around town for decades, picked up the slack. “I could have foreclosed on him at any time,” he said.

    Back taxes accrued and the debt swelled to around $70,000 ten years ago, Mr. Simonson said. A man Mr. Simonson describes as a venture capitalist offered him $30,000 for the house. He took it, but was left owing $40,000.

    Then his indebtedness exploded up to around $200,000 today. “It just sort of snowballed over the years,” he said.

Thursday, August 23, 2012

Modular Home Manufacturer/Installer Left Holding The Bag After Being Stiffed By Customer/Property Owners When Bank Forecloses On Underlying Land

The following facts are taken from a recent court ruling by a California appeals court reported on The Lien Blog:
  1. The owners of two vacant lots contracted with a modular home manufacturer ("Vieira") to buy two full-sized, $200K modular homes and have them delivered to and installed on their land.

  2. Vieira completed the contract in full, but the property owners failed to pay the balance owed on their purchase.

  3. The property owners also stiffed a lender which happened to be holding a mortgage secured by the vacant lots, and consequently, the owners of the two vacant lots were foreclosed upon.

  4. As part of the foreclosure, the foreclosing lender wound up with the modular homes on the basis that the homes, once attached to the land, are no longer personal property, but becomes part of the realty.

  5. Needless to say, Vieira did not acquiesce with this result and moved to assert its mechanics lien claim against the modular homes by reason of the unpaid balance on its contract with the now-foreclosed lot owners.
A California Court of Appeals affirmed a decision of the trial court, which concluded that the common law of fixtures applies and the undisputed facts established that the manufactured homes were fixtures to the real property at the time of the foreclosure and therefore Vieira's property interest in the homes had been extinguished.

For more, see
The Lien Blog: California Court Holds Manufactured Home Is One Big (Attached) Fixture.

For the court ruling, see Vieira Enterprises, Inc. v. City Of Palo Alto, No. A132754 (Cal. App. 1st Dist. Div. 2 August 15, 2012) (Certified for Publication).

Editor's Note
: The underlying facts of this case are much more complicated than what's been described above. For those dealing with modular homes, as well as those dealing with mechanics liens and the common law of fixtures, this case may make for some interesting reading.

Maryland Regulator Issues Final Order Directing Fake Lawyer/Loan Mod Scammer To Refund All Upront Fees To Victims & Pay State $236K In Penalties

In Baltimore, Maryland, LegalNewsline reports:
  • Maryland Attorney General Douglas Gansler announced on Friday that his Consumer Protection Division issued a final order against a man claiming to be a lawyer who allegedly took thousands of dollars from consumers.

    Corey W. Hankerson, who operated as Equity Law Group LLC from 2009 to 2011, allegedly told consumers he was a lawyer and offered to provide credit and legal services. The services included foreclosure consulting and loan modification services. The six victims who testified in the case allegedly paid $12,750 in fees to Hankerson for assistance he never provided.
  • The final order requires Hankerson to stop representing his qualifications to consumers and stop offering credit services unless he obtains a license and posts the required bond. Hankerson must also return all the money he took from consumers, including the $12,750 he allegedly took from the six consumers who testified.

    The order penalized Hankerson $300 for each of the 787 days he allegedly illegally advertised his services for a total penalty of $236,100.

Houston City Controller Sells Out Forgery Victims; Testifies As Character Witness On Behalf Of 5-Time Felon Prosecuted For Stealing 23 Area Properties

In Houston, Texas, the Houston Chronicle reports:
  • City Controller Ron Green, Houston's top elected money manager and self-described watchdog, is seeking leniency for a five-time convicted felon and contractor who masterminded an elaborate real estate and forgery scam targeting the city's historically African-American neighborhoods.

    Green is asking a judge for probation for his friend and former next-door neighbor Dwayne K. Jordon, a rogue developer who pleaded guilty to felony theft. According to indictments, Jordon pilfered 23 Houston properties from different owners and then duped unsuspecting buyers into purchasing homes built on stolen ground.

    The ex-con contractor and the city controller have known each other about five years, the same period, according to a Houston Chronicle review of dozens of court records and related real estate documents, that Jordon carried out the series of land thefts, mortgage frauds and deed scams.
  • Victims of the property pilfering say they are stunned to see Green stand up for a man who ripped off people Green was elected to protect.

    "It makes my heart hurt and it makes me sick to my stomach," said Darlene Sims, a native Houstonian whose family land was stolen and whose father's fruit and pecan trees were bulldozed in the scam.
  • Sims, whose family land was taken by Jordon, says she once admired Green as a public servant but won't support him again. Sims doesn't understand why the city controller believes Jordon will repay his victims. A deadbeat dad and con man, Jordon has never paid the Sims family any of the $225,000 a jury awarded them after finding that his company, E. Jordon Inc., stole their land by forging Darlene Sims' dead parents' signatures on a fake deed, according to court records.

    "He didn't pay and he has no regard for the families he has harmed," Sims said.
For the story, see Houston city controller seeks leniency for con man.

In a related story, see Ethics issues arise in rulings by justice of the peace (City controller's wife ordered evictions despite her connections to felon).

Wednesday, August 22, 2012

Nevada Tax Commission Fiddles, Letting Fannie, Freddie Slide On Payment Of Transfer Taxes As Statute Of Limitations 'Clock' Continues To Tick

In Carson City, Nevada, the Las Vegas Review Journal reports:
  • The state Tax Commission on Monday turned down Treasurer Kate Marshall's request that Nevada begin collecting real property transfer taxes on mortgages guaranteed by the federal Fannie Mae and Freddie Mac companies.

    She urged the commission to require the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. to pay the tax of $5.10 for each $500 in property value in Clark County. About half of the tax goes to the state.

    But commission Chairman Robert Barengo said the "law is unsettled" on whether the federal lenders, who hold more than half of all mortgages, can be assessed the tax. He suggested the state wait until additional court decisions. A majority of the eight-member board backed his view, but not all board members attended and two voted "no."

    The state could collect more than $24.5 million in transfer taxes from the past three years if the state sued and won litigation over the issue, Marshall said. Either Fannie Mae, Freddie Mac or the banks that made the loans could be required to pay the taxes, she said.

    "There are district courts that have ruled in our favor and district courts that ruled for Fannie and Freddie," said Marshall, who has been arguing in favor of the tax collection for more than a year.

    Michigan, Illinois and Ohio have won cases and can collect the real estate transfer taxes. But Nevada's Department of Taxation has chosen not to try to collect the tax from the federal government.

    Since there is a four-year statute of limitations on the tax collection, every day the state waits is another day "Fannie and Freddie don't pay," Marshall said. The state and local governments vitally need the money because of the recession and foreclosure crisis, she added.

Ethics Issues Arise For Houston Judge For Rulings Favorable To Convicted Felon Accused Of Pilfering 23 Properties, Hijacking Dead Granddad's Home

In Houston, Texas, the Houston Chronicle reports:
  • Elected Justice of the Peace Hilary Harmon Green repeatedly ordered the eviction of tenants and relatives on behalf of a five-time felon even though she and her husband, City Controller Ron Green, both had financial and personal ties to the home builder.

    In one case involving Dwayne K. Jordon - a convicted thief who has admitted to repeatedly pilfering people's properties for his residential construction projects - Green evicted Jordon's own uncle despite a dispute over whether Jordon held ownership of the family home.

    That ruling, which later was overturned by a county court, came in 2009 - the same year Green's husband, a lawyer, was paid an undisclosed amount of money to advise Jordon on his criminal case, meet with a Harris County prosecutor and recommend a defense attorney.

    Through her clerk, Hilary Green refused to comment on why she did not recuse herself from more than a dozen matters involving Jordon, who has been her neighbor, her home renovation contractor and for whom her husband has served as a character witness in the pending real estate criminal case.
  • In 2007, the year Green became a justice of the peace for Precinct 7, the Greens lived in a rental house next door to Jordon because their own home, which they nearly lost to foreclosure, was uninhabitable due to unfinished renovations they could no longer afford.

    Impressed by the work Jordon was doing in their neighborhood, they agreed in 2008 to pay him more than $200,000 to renovate their own house. Their contract with Jordon helped the Greens land a $508,000 mortgage, though their house had an assessed value in 2008 of only one third that amount, according to Harris County tax records.

    Ruled in family dispute

    Ethically, Hilary Green should have recused herself on legal cases involving Jordon because of her other associations with him, said Lillian Hardwick, an Austin attorney and expert in judicial conduct who co-authored the authoritative Handbook of Texas Lawyer and Judicial Ethics.

    Green's most unusual ruling favored Jordon in a family dispute over the ownership of his grand­father's house in 2009.

    Jordon, who has five prior felony convictions for robbery, kidnapping, firearms, drugs and theft, was raised by his maternal grandfather, Ezekel Jordon Sr., who for decades owned a brick home on Simsbrook Drive only a block from Sims Bayou in Houston, according to records and family members.

    But soon after the elder Jordon died in September 2009 at age 87, Dwayne Jordon changed the locks on his grandfather's house and later claimed to be the true owner by presenting two different wills and a deed that his uncle denounced as forgeries, according to documents filed in related court cases. Dwayne Jordon, who helped manage his grandfather's money, also had taken out a loan against his grandfather's house, according to interviews and public records.

    Even before the funeral, Jordon filed an eviction case in Green's court against his uncle Ezekel Jordon Jr., his grand­father's only son, who had been living in the house for about month before the elder Jordon died.

    Despite disputes over the ownership of the house and the authenticity of documents, Green ruled for Dwayne Jordon and later denied his uncle permission to re-enter the house to collect his personal property, court records show.

    "She illegally evicted me," Ezekel Jordon Jr. told the Chronicle. "She would not let me say anything. … I was trying to tell her that the will was fake and she would cut me off."

    Jurisdiction question

    Ezekel Jordon Jr. said Green never disclosed her relationship to his nephew in court, but he learned of it in a Chronicle article published last week. In November 2009, he won an appeal, according to an order signed by then-County Court at Law Judge Jack Cagle, now a county commissioner.

    Jordon lacked authority to evict his uncle because he never legally established ownership of the property and therefore Green, as a justice of the peace, should not have ruled in the eviction case at all, according to arguments made in the appeal by Jordon's attorney with nonprofit Lonestar Legal Aid.

    According to the Texas Government Code, justices of the peace do not have jurisdiction in matters where more than $20,000 is at stake or in trials to resolve "title to land."

    "Justices of the peace are not supposed to act in an eviction case when there's a dispute about title," said Rich Tomlinson, director of litigation at Lonestar Legal Aid.

    Ezekel Jordon Jr., who was unemployed in 2009 after a recent drug possession conviction, said he was unable to afford a lawyer to fight his nephew's claim to the house by contesting the will and taking it to probate court. Instead, Dwayne Jordon quickly resold the house, records show.

    Lone Star Legal later provided copies of two versions of the disputed wills to the Harris County DA's office for a possible criminal investigation. "The signatures (of the deceased) on the documents do not match," Tomlinson said.

    Jordon's attorney, Chip Lewis, said that Jordon's uncle agreed to give up his rights to the house after being compensated by a $2,500 settlement. Lewis said he knew nothing about the will dispute.

    Jordon is scheduled to be sentenced Friday in the court of Harris County District Judge David Mendoza after pleading guilty to felony theft for his role in a real estate scam. Two 2009 indictments describe how Jordon and an accomplice pilfered 23 different properties, mostly in Sunnyside neighborhoods, used forged deeds to take land from rightful owners and then built houses that were sold to others. Each man blames the other for the thefts.
  • Hilary and Ron Green, one of the city's highest elected officials, appeared in court on Jordon's behalf in March. Ron Green described him as a family "friend" and has urged a lenient sentence for Jordon so that he can pay back his victims. Prosecutors are seeking at least 25 years to life in prison.
For the story, see Ethics issues arise in rulings by justice of the peace (City controller's wife ordered evictions despite her connections to felon).

In a related story, see Houston city controller seeks leniency for con man.

SoCal Law Firm Develops Seemingly Out-Of-Control Rep In Effort To Collect Debts; Stands Out "As Among The Worst Of The Worst" Says One Consumer Lawyer

In El Segundo, California, the Los Angeles Times reports:
  • [B]rachfeld Law Group in El Segundo, one of the nation's largest debt collection law firms, has been contending with allegations that it failed to investigate the facts adequately when it pursued some debts. A spokesman said the firm checks to ensure accuracy. In one case, though, Brachfeld allegedly helped pursue the wrong person for a debt he never owed.

    Several years ago, debt collectors began pursuing state Sen. Lou Correa (D-Santa Ana) for an unpaid Sears bill they said he owed. He told them they had the wrong man, but the debt collectors never wavered.

    "These folks are very aggressive," Correa said. "They'll call back repeatedly and say, 'Tell us some personal information so we can tell it's not you.' When all of a sudden is the burden of proof on me?"

    Last year, Correa discovered his Senate paycheck was being garnisheed because of a $4,329 lien for the Sears debt. Brachfeld had obtained a default judgment in court, even though, Correa said, the lawsuit was never served on him and he knew nothing of the claim or the court hearing.

    He later learned that the debt belonged to a Luis Correa from Santa Ana. The man had a different Social Security number, different address, even different first name — the senator is legally Jose Luis Correa.

    "I always pay my bills on time. Then to have somebody garnish my wages, I thought was pretty astounding," the lawmaker said. He later resolved the problem and stopped the wage garnishment.

    Now Correa is supporting a bill by state Sen. Mark Leno (D-San Francisco) to require debt collectors to document that they are pursuing the right person for the correct amount of money. The bill passed the Senate and is pending in the Assembly.
  • The Brachfeld law practice files several thousand debt-collection lawsuits a month. Consumer lawyers said the firm often files suits with little documentation.

    "They stand out to me as among the worst of the worst," said Aidan Butler, a Los Angeles consumer attorney.

    In 2009, Butler won a $12,000 judgment from Brachfeld in Los Angeles County Superior Court for a consumer who had been sued by the firm to collect a $16,000 Capital One debt.

    Butler had alleged that Brachfeld violated debt collection laws by, among other actions, making harassing phone calls and failing to validate the debt. Butler said he has defended about a dozen clients against suits filed by Brachfeld and each time the suit was dismissed.

    In Alameda County, two consumers filed a class-action suit in 2010 against the Brachfeld firm and Encore [Capital Group, Inc.] subsidiaries, accusing them of illegally sending repayment letters and pursuing collection lawsuits without conducting reasonable investigations of the debt, with little involvement by lawyers and with the use of false affidavits. The suit is pending.
For the story, see Aggressive debt collection tactics are drawing federal scrutiny (Federal regulators and state lawmakers are taking action against aggressive tactics by debt collectors that have been aided by outdated laws and lax oversight).

Tuesday, August 21, 2012

Couple Say Pastor Screwed Them Over In Home Sale; Claim Clergyman Abused Trust Relationship, Language Barrier To Dupe Them Into Signing 'Toxic' Docs

In Austin, Texas, Courthouse News Service reports:
  • After defrauding a married couple in a home sale, their pastor tried to wrongfully evict them, the couple claims in court - and they say they're not the only ones.

    Maximino Medenilla Gonzalez and Janeth Denova Jaimes sued Salvador Villegas, in Travis County Court. They claim they're not the only victims of the pastor, who "perpetuates a relationship of trust, then defrauds individuals when they 'buy' a house from him."

    The couple say they bought a home from Villegas in 2007, after leasing it for a year. They claim Villegas "urged" them to buy the property and preyed upon their language difficulties by having them sign incorrect documents, which left them owing more than the actual balance of the mortgage.

    "Interestingly, defendant knew that plaintiffs were not English speaking, but to take advantage of them had all the documents created in English, despite the fact that he himself the defendant spoke fluent English and Spanish, so to have the documents in Spanish would not have created any inconvenient [sic] whatsoever," the complaint states.

Elderly Woman Duped Into Borrowing Against Home By Convicted Con Man Now Fears F'closure; Cops Bag Suspect On Grand Theft, Elder Embezzlement Charges

In Riverside County, California, the Press Enterprise reports:
  • A Menifee man charged with conning two women in their 70s out of tens of thousands of dollars — using tearful pleas that he needed the money for lifesaving surgeries — was convicted years ago in Orange County in a similar scam, authorities said.

    This guy is a creep,” said Investigator Glenn Johnson of the Riverside County Sheriff’s Department. “His whole life is conning women.”

    Frankie Jay Szabo, 55, who lives in the Sun City area, pleaded not guilty Wednesday, Aug. 15, to two counts each of grand theft and embezzlement from an elder, court records show. He was being held with no bail amount set, jail records show.

    Szabo is accused of convincing a 70-year-old Homeland woman to take out a loan on her house to fund a surgery that was supposedly necessary to save his stepfather’s life, Johnson said.

    In the second case, Johnson said, Szabo took $10,000 from a 71-year-old Lake Elsinore woman on the pretense that it was, again, a loan for a life-saving surgery, this time for himself. The woman took the money out of her retirement fund, he said. Szabo promised both women he would pay them back.

    In fact, neither man was in need of surgery. The money was used to purchase a Mercedes, meals at restaurants and shopping trips, Johnson said. “It’s financing his lifestyle,” he said.

    One of the women fears she may lose her house to foreclosure, Johnson said. “She’s petrified.”
For more, see ELDER FRAUD: Convicted con man faces new charges (Frankie Jay Szabo, 55, is jailed, accused of bilking two women in Homeland and Lake Elsinore).

Homebuyers Accuse BofA Of Helping Insolvent Developer Peddle Lots Subsequently Rendered Unbuildable Due To Failure To Provide Roads, Sewers, Utilities

In Asheville, North Carolina, Courthouse News Service reports:
  • Fifteen frustrated customers claim Bank of America defrauded them by helping a now-bankrupt developer sell lots without mentioning that "roads, sewers, water, gas, or electric service" were not part of the deal.

    In 15 separate federal complaints, homebuyers claim Bank of America aided and abetted the developer of Grey Rock, a subdivision of Lake Lure, N.C. The bank was so aggressive it set up a booth next to the developer at the site to recruit customers, according to Robert Nagle's complaint, which resembles the other 14.

    The plaintiffs claim BofA helped push the lots, but failed to tell buyers that the developer was insolvent and could not complete the promised "amenities," such as roads and utilities.

    After selling 435 lots for $90 million, the developer filed for bankruptcy in 2008, without completing the subdivision, and with only $905 in its bank account, according to the complaint.

Monday, August 20, 2012

Scammer On Lam For 12 Years Bagged In Canada; Allegedly Ran Fractional Interest Deed Transfer F'closure Rescue Scam Involving Unwitting B'krpt Debtors

From the U.S. Department of Justice (Washington, D.C.):
  • Federal authorities have charged a former Los Angeles man with aggravated identity theft and having operated a foreclosure-rescue scam in Southern California and elsewhere that promised to postpone foreclosure sales for more than 800 distressed homeowners.

    Glen Alan Ward, 47, of Canada, was indicted [] in the Central District of California on two counts of bankruptcy fraud, one count of mail fraud and two counts of aggravated identity theft.

    In 2000, Ward became a federal fugitive when he failed to appear in court after signing a plea agreement, which stemmed from federal charges in the Central District of California associated with a similar scheme. On April 5, 2012, Ward was arrested in Canada on a U.S. provisional arrest warrant based on the charges in the Central District of California. His extradition to the United States is pending.

    [The] indictment charges the defendant with identity theft and a scheme to defraud that took place from July 2007 to April 5, 2012, while he was a fugitive. According to the indictment, Ward led a scheme that solicited and recruited homeowners whose properties were in danger of imminent foreclosure. Ward allegedly promised to delay their foreclosures for as long as the homeowners could afford his $700 monthly fee.

    Once a homeowner paid the fee, Ward accessed a public bankruptcy database and retrieved the name of an individual debtor who recently filed bankruptcy. The indictment alleges that Ward also obtained a copy of the debtor’s bankruptcy petition and directed his clients to execute, notarize and record a grant deed transferring a 1/100th fractional interest in their distressed home into the name of the debtor he provided.

    Then, Ward allegedly faxed a copy of the bankruptcy petition, the notarized grant deed and a cover letter to the homeowner’s lender or the lender’s representative, directing it to stop the impending foreclosure sale due to the bankruptcy.

    Because bankruptcy filings give rise to automatic stays that protect debtors’ properties, the receipt of the bankruptcy petitions and deeds in the debtors’ names forced lenders to cancel foreclosure sales. The lenders, which included banks that received government funds under the Troubled Asset Relief Program (TARP), could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts, thereby repeatedly delaying the lenders’ recovery of their money.

    As part of the scheme, Ward delayed the foreclosure sales of approximately 824 distressed properties by using at least 414 bankruptcies filed in 26 judicial districts across the country. During that same period, Ward collected more than $1 million from his clients who paid for his illegal foreclosure-delay services.(1)
For the Justice Department press release, see Twelve-Year Federal Fugitive Indicted for Fraud and Identity Theft in Nationwide Foreclosure Rescue Scam (Defendant Arrested by Canadian Authorities; Allegedly Collected More Than $1 Million from More Than 800 Distressed Homeowners).

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

Mo. AG Scores Securities Fraud Conviction Against Member Of Group That Operated Contract For Deed Racket Financed By Unwitting Straw Buyers

From the Office of the Missouri Attorney General:
  • Attorney General Chris Koster said [] that Greene County Circuit Judge Calvin Holden has convicted William David (Bill) Strong of securities fraud and unlawful merchandising practices for his role in the real estate investment scheme perpetrated by Greenleaf Companies and The Real Estate Company in Springfield.

    When a company misleads Missourians about the risks of an investment, my office will prosecute the responsible parties,” said Koster. “I am pleased that Judge Holden found Mr. Strong guilty for his role in this multi-million dollar fraud.”

    According to Koster, Greenleaf convinced investors to purchase homes chosen by Greenleaf by promising the investors that Greenleaf would pay the down payment, closing costs, and monthly mortgage payments. Greenleaf also promised to purchase the homes from the investors and pay a $10,000 bonus at the end of several years.

    Greenleaf then contracted to sell the homes, which were actually owned by investors and not by Greenleaf, to buyers in the subprime market. Greenleaf did not tell the buyers that investors actually owned the homes Greenleaf was purporting to sell.

    When Greenleaf stopped paying the investors their monthly mortgage payments, and investors were subsequently unable to make the payments themselves, banks began to foreclose on the homes even when the buyers were current on their payments to Greenleaf.

    Evidence at trial showed (1) that Strong misrepresented to investors the creditworthiness of the buyers to whom Greenleaf was reselling the homes; (2) that Strong purposefully failed to advise the buyers that title to the homes was held by the investors, not Greenleaf; (3) that Strong purposely failed to advise the buyers that Greenleaf failed to make timely payments to the investors; and (4) that Strong promised to give a buyer a deed of trust when Greenleaf did not in fact own the property it was selling.

    Strong’s guilty verdict follows guilty pleas by two other officers, Lane Sanders and Eric Gagnepain. Gagnepain, former part-owner of Greenleaf, pleaded guilty earlier this year to ten counts of securities fraud and nine counts of unlawful merchandising practices; his sentencing is scheduled for September 7, 2012. Sanders, former president of Greenleaf, pleaded guilty to securities fraud and unlawful merchandising fraud charges in February 2011; his sentencing is pending.

    Charges against three other officers remain pending: Scott Allen Dasal, former President of The Real Estate Company; Misty May Perkins, former Director of Investor Relations for Greenleaf; and Robert Lee Batchman, former real estate broker for The Real Estate Company.

Arizona AG Targets Three Outfits With Civil Lawsuits In Probe Into Loan Modification Scams

In Phoenix, Arizona, The Arizona Republic reports:
  • The Arizona Attorney General's Office is accusing three loan-modification companies of targeting Spanish-speaking residents with bogus services and guarantees of averting foreclosure.

    In lawsuits filed Wednesday against Making All Homes Affordable in Phoenix and La Paz Source in Tucson, authorities allege the companies illegally charged up-front fees, charged for services available for free and misrepresented contracts written in English to customers who could read only Spanish.

    The owner of Making All Homes Affordable, Albert Figueroa, is accused of charging customers $1,900 to lower interest rates and reduce principal loans. But authorities say homeowners got only standardized forms that are available for free on government websites. They also were charged fake sales tax of 9.3 percent, according to the suit.

    The owners of La Paz, Maria Beltran and Francisco Ramos, are accused of operating without a license. Authorities say they promised modifications that were never delivered, which caused some customers to lose their homes.

    In November, Beltran and Ramos shut down La Paz Source and on the same day launched another modification company called La Placita Multi Services, according to the suit.

    Both La Paz and La Placita "deceptively and willfully target the Spanish-speaking community," the attorney general's office said in a statement.

    "The Defendants verbally explain terms of the agreement to consumers, in Spanish, that are in direct contradiction to the written provisions of the contract provided in English," the statement said.

Sunday, August 19, 2012

Washington Supremes Give MERS' Foreclosures The Boot; Say Outfits Actions May Also Violate State UDAP Statutes

In Olympia, Washington, The Oregonian reports:
  • The Washington Supreme Court ruled unanimously [] that the mortgage industry’s controversial document-recording system lacked authority to start out-of-court foreclosures and might have violated state consumer protection laws.

    The state’s highest court ruled that lenders could not foreclose on homeowners in the name of the Mortgage Electronic Registration Systems Inc. It found that MERS did not meet Washington's definition of a beneficiary and could not foreclose on behalf of a lender that holds the mortgage note.

    Simply put, if MERS does not hold the note, it is not a lawful beneficiary,” the court wrote in an opinion written by Justice Tom Chambers and released today.

    The Oregon Supreme Court also is considering whether MERS can be a beneficiary under Oregon law, said Rick Fernandez, an attorney in Lake Oswego whose cases are before the court.

    In July, the Oregon Court of Appeals ruled that lenders could not use MERS to skirt state law requiring that all mortgage sales be recorded in county offices before launching out-of-court foreclosures.

    Washington's court today also found that MERS's involvement in robo-signing mortgage documents, among other behaviors, appeared to violate Washington’s Consumer Protection Act. But consumers must try such claims on a case-by-case basis, the court said.
  • Melissa Huelsman, a Seattle attorney, represented homeowner Kristin Bain in one of the cases against the court. Bain had sued Metropolitan Mortgage Group, Indymac Bank, Fidelity National Title and MERS.

    Huelsman said the ruling cleared the path for homeowners to recover damages and attorneys fees from lenders found to have wrongfully foreclosed. She called the decision a victory for the rule of law. "Too often we've seen courts twisting themselves into knots to get to a decision that's inconsistent with the statute," Huelsman said.

    Attorneys said they were still evaluating how the decision impacts existing cases and already completed foreclosures.
  • The court cited previous federal court rulings in Washington in favor of MERS as "not well taken."(1) The justices declined to evaluate the legal impact of their ruling, as U.S. District Court Judge John C. Coughenour asked them to last year when he sought their opinion.

    Under the state's Consumer Protection Act, MERS's characterization of itself on deeds of trust as a beneficiary could be considered an unlawful deceptive practice, the court said.

    "The fact that MERS claims to be a beneficiary, when under a plain reading of the statute it was not, presumptively meets the deception element of a CPA action," the court said. So could MERS's participation in robo-signing mortgage documents, the court said.

    "MERS's officers often issue assignments without verifying the underlying information, which has resulted in incorrect or fraudulent transfers," the court said. "Actions like those could well be the basis of a meritorious CPA claim."(2)
For the story, see Washington's highest court rules MERS cannot foreclose on homeowners.

For the ruling, see Bain v. Metropolitan Mortgage Group, Inc., No. 86206-1 (Wn. August 16, 2012).

(1) The state high court was rather gentle in its excoriation of those federal judges for their earlier screw-ups that favored MERS.

(2) The Consumer Protection Act is Washington State's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (generically referred to as state UDAP statutes). For more on UDAP statutes across the U.S., see Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

BofA Drops Suit, Apologizes, Pays Legal Fees To Nashville's Ch. 13 Bankruptcy Trustee Noted For Repeated, Effective Use Of 'Show Me The Note' Strategy

In Nashville, Tennessee, the Nashville Business Journal reports:
  • Charlotte, N.C.-based Bank of America has dropped its legal attack on Nashville’s Chapter 13 bankruptcy trustee. Earlier this year, as part of a consumer bankruptcy proceeding, Bank of America became the first lender to sue a Tennessee trustee of the court.

    In an agreement filed Thursday, Bank of America worked out a deal directly with the debtors — dropping accusations that Chapter 13 trustee Henry "Hank" Hildebrand wasn't dispersing money appropriately.

    "They decided they would dismiss the lawsuit, pay my attorney fess and they apologized," Hildebrand said.

    In essence, Bank of America argued that it shouldn't have to file a claim in the bankruptcy proceedings. That argument is tangential to efforts seeking an end to a common defense tactic used by debtors and foreclosure judges in the aftermath of the mortgage meltdown.

    Known as "show me the note," the tactic forces a lender to offer up physical documentation that they actually own the mortgage. In this case, Bank of America failed to file a timely claim, which included the failure to show documentation they had a right to the home.

Ongoing Antitrust Feds' Probe Into Northern California Foreclosure Sale Bid Rigging Rackets Yields 25th Guilty Plea Agreement

From the U.S. Department of Justice (Washington, D.C.):
  • A Northern California real estate investor has agreed to plead guilty for her role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

    Felony charges were filed [] in the U.S. District Court for the Northern District of California in Oakland against Danli Liu of Fremont, Calif.

    To date, as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 25 individuals, including Liu, have agreed to plead or have pleaded guilty.

    According to court documents, Liu conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County, Calif.

    Liu was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.

    The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.
For the Justice Department press release, see Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 25 Plea Agreements to Date).