Saturday, September 15, 2012

Ventura County Jacks Up Recording Fees For Certain Docs To $10 To Continue Funding For Law Enforcement Efforts Targeting Local Real Estate Ripoffs

In Ventura County, California, the Ventura County Star reports:
  • Recording a deed of trust, lease, lien, reconveyance or other real estate transaction now will cost $10 in Ventura County.

    The Ventura County Board of Supervisors this week raised the fee from $3 on certain "real estate instruments" filed with the Ventura County Clerk and Recorder's Office.

    County officials said the fee increase will help raise funds to deter, investigate and prosecute real estate fraud. The potential revenue from the $10 fee is estimated at about $1 million a year.

    "Our homes are the single biggest investment in life, and (real estate fraud) is a crime that many people have suffered and will continue to suffer," County Clerk-Recorder Mark Lunn said. "I think it's a great step to move forward in terms of law enforcement."

    California leads the nation in residences pending foreclosure, with almost 40,000. About 2.2 million people, or one-third of all California homeowners, are "upside down" on their mortgages, or owe more than the value of their homes. Fifty percent of nonprofit housing counselors have reported that fraud is "very common."

    In a report to the supervisors, District Attorney Greg Totten said foreclosure rescue and related schemes are the most prevalent type of real estate fraud and that older people and those who only speak Spanish are frequently targeted.

    In 2005, supervisors authorized a $2 fee for recording of real estate instruments for the fraud deterrent program. The fee later was increased to $3.

    The District Attorney's Office also received an approximately $1.6 million federal grant providing money for two prosecutors, two investigators, a legal processing assistant and an investigative assistant for two years. In addition, the California Attorney General's Office awarded $423,573 to the District Attorney's Office.

    While the grant and award will temporarily fund some of the real estate fraud program's annual budget of $974,093, "It is abundantly clear that recent annual fee revenue falls well short of this mark" to address more than 100 criminal investigations pending at any time, Totten said.

    Assemblyman Jeff Gorell, R-Camarillo, co-authored SB 1342, which gives county supervisors in California the authority to raise real estate transaction fees to $10 to provide a consistent funding stream for law enforcement to fight real estate fraud.

    Some of the money also goes to the county Clerk-Recorder's Office to support fraud prevention programs. Totten said the District Attorney's Office would like to hire another investigator for the program.

    "Literally, tens of millions of dollars have been stolen in this county from homeowners, sellers. We're trying to do our best to end that," Totten said.

    State law mandates that the $10 fee return to the Board of Supervisors for an annual review. The fee does not apply to documents associated with "point of sale" or transfers, such as grant deeds.

    Local real estate groups, including the Ventura County Coastal Association of Realtors, support the increase.

    Supervisor Peter Foy said the district attorney's approach to tackling the real estate fraud problem in the county is a "model program for the entire state."

NFL QB Victimized By Abused POA Seeks To Vacate Judgment Obtained By Lender w/ History Of Preying On Football Players By Loaning Cash On Onerous Terms

In New York City, Courthouse News Service reports:
  • NFL quarterback Vince Young claims in court that his former financial adviser and sports agent fraudulently took out a nearly $1.9 million loan in his name from a predatory lender.

    Young is suing the lender, Pro Player Loan, in New York County Supreme Court in an effort to get the lender off his back.

    "Young has never received a penny from the purported Pro Player 'loan' proceeds, nor has he ever communicated with anyone from Pro Player or knowingly executed any loan agreements with Pro Player," the lawsuit states.

    Young says the loan was fraudulently obtained by his former financial adviser, Ronnie Peoples, and his former agent, Major Adams II, neither of whom are defendants in the lawsuit. Young says he gave Peoples and his company, Peoples Financial Services, power of attorney to act on his behalf financially.

    Peoples and Adams allegedly took out a nearly $1.9 million from Pro Player Funding, which the lawsuit describes as "a predatory lender with a history of loaning funds to football players on extraordinarily onerous terms."

    Under the terms of the loan, Pro Player disbursed just 59 percent of the total loan amount after prepaid interest and fees, and demanded 30 percent interest when the loan went into default in June, according to the lawsuit.

    Despite Young's insistence that he never took out the loan, "Pro Player has subjected Young -- and his former football team, the Buffalo Bills -- to a barrage of threats and excessive and needless discovery requests in an effort to enforce its judgment."

    He says the lender even tried to serve him with papers at the Buffalo Bills' training camp in early August.

    Pro Player allegedly won a judgment by confession in July, requiring Young to pay $1.69 million in outstanding principal plus 9 percent interest until the judgment has been paid in full.
  • The athlete wants the court to vacate the judgment, claiming Pro Player failed to take "reasonable steps to ensure that Young was aware of the transaction, that he authorized it, or that he would benefit from it."

    "Indeed, the circumstances of this loan should have given rise to grave suspicions on the part of Pro Player as to whether the transaction was legitimate," Young claims. "Pro Player, however, turned a blind eye to those circumstances, motivated by its rapacious desire to earn the exorbitant profits on the loan."

    Young was released from the Buffalo Bills on Aug. 27 and is now a free agent.
For the story, see QB Says He's Not Liable for Bogus $1.9M Loan.

For the lawsuit, see Young v. Pro Player Funding LLC.

Thanks to Deontos for the heads-up on this story.

HOA Prez/Developer Accused Of Creating "Well-Oiled Machine" To Rip Off Homeowners Out Of $500K+ In Dues, Fines Gets The Pinch On Felony Fraud Charges

In Polk County, Florida, the Orlando Sentinel reports:
  • Orlando area developer David Meadows was arrested [] on four felony fraud charges after authorities said he stole hundreds of thousands of dollars from owners of his Bimini Bay vacation resort in Davenport.

    The Orlando Sentinel in December detailed a wide array of problems at the community just a few miles from Walt Disney World, which was marketed to international investors and others who wanted to be near Orlando's tourist attractions.

    The management fees Meadows collected for overseeing the Bimini Bay community had increased tenfold during a time when owners complained about poorly maintained public areas, a condemned clubhouse, illegal trash piles and above-ground cable wiring that failed to meet building codes.

    Meadows blanketed owners of Bimini Bay's 200 homes with $100-a-day fines for infractions such as using vertical blinds instead of horizontal ones, the Sentinel reported.

    On Tuesday, state investigators reported that the revenues he collected padded Meadows' development company and that he "maintained a dictatorial control" over the homeowners association.

    "Meadows made his development company the HOA's primary vendor and engaged in self-dealing contracts for personal benefit," the state attorney's investigative report reads.

    A 17-page investigation report released Tuesday by the economic crimes division of the State Attorney's Office for Polk County also charged Meadows with double billing the association for management fees.

    The report stated that Meadows transferred $511,538 from the homeowner association into his development company from March 2010 through July 2011 and a "significant portion" of that became evidence of his "scheme to defraud."
  • Construction started on Bimini Bay in 2000 and proceeded slowly until it halted with the real estate crash of 2007. The project was originally slated to have about 500 townhome-style units. Ultimately fewer than half that amount were built.

    Once development stopped, "revenues needed to be generated to cover up expenses," Deanna Meixner, accountant for Meadows from 2002 to 2009, told investigators. During a 3.5-year period that started in April 2008, Meadows' operations filed 509 liens on the 200 units in the development.

    And since 2008, the developer failed to pay association fees for his own units and should not have had a position on the association board, but he disregarded bylaws, investigators reported.

    One of Meadows' employees told investigators that Meadows created a "well-oiled machine" dedicated to cranking out estoppels letters, foreclosure notices, attorney fees, utility charges and association dues and fees. One owner, Sandra Friedle, faced $31,612 in liens for infractions such as a bent window screen.

    Another accountant who worked for Meadows, Sandra Andrews, told authorities that transferring funds from the homeowner association to Meadows companies "occurred on a routine basis." She is quoted in the investigation report saying she felt as though there was a "shell game going on."
For the story, see Bimini Bay developer charged with fraud.

See also, The Lakeland Ledger: HOA president accused of $500,000 theft.

Foreclosed, Now Ex-Homeowner Shines Light On Bankster, Local Authorities For Allowing Vacant Meth-Infected Home To Go Back On The Market

In Holden, Louisiana, WAFB-TV Channel 9 reports:
  • A house in Livingston Parish that has tested positive for meth is back on the market. The bank foreclosed on the house, but bought it back. Now, the previous owner is taking some serious action to make potential buyers aware.

    The small wood-framed house in Holden has been at the center of attention for more than a year.

    The graffiti on the front claims the house is being condemned because the soil won't support the house, it is contaminated by meth and mold, has bad electric and a bad foundation. It also lists a YouTube address where anyone can view video of its interior.

    Katherine Doughty, the former owner of the house, said she is behind the brazen warnings. "We had our fireplace lit this winter and the doors blew out at 2 a.m., glass shattered all over our living room," Doughty said.

    That's what Doughty said last August after learning the house she said she bought from HUD had been exposed to crystal meth and other dangerous chemicals.

    Doughty and her family stayed in the house, but have since been taking steps to get it condemned. She said Citi Mortgage suddenly stopped accepting her payments, the house went through foreclosure and she and her family were evicted in July. The house is back on the market.

    "I was shocked. I could not believe that they would want somebody else to live in that house. It needs to be torn down," Doughty said.

    Last year, Chuck Vincent the building director for Livingston Parish, sent the Doughty family a letter regarding his inspection of the house. He wrote, "There appears to be mold/mildew...the flooring in several of the rooms is rotten to the point of falling in. He added, "after he left his eyes started watering and burning and I developed a headache."

    Doughty said she thought the parish was working on getting the house demolished. But now, she is not so sure. "We are not getting our calls returned anymore. We were told to let it go and let someone else deal with the problem," Doughty said.

    Doughty said the last letter she got was on April 13, 2012. Sam Digirolamo, Livingston Parish Planning director, wrote, "The house was to be condemned, demolished and disposed of."

    Six months later, the house is for sale.

    "It's a three-bedroom, two-bath in the Livingston Parish school district. I know it's going to sell to a family and I don't want another family to go through what my family's been through," Doughty explained.

    Parish President Layton Ricks said the house was never demolished because the complaint never went to the full council for a vote. He added, the parish is in the process of reworking how it condemns property to speed up the process.

    A spokesman for Citi Mortgage, the current owner, said the company is looking into the history of the property.

Ambushed Locksmith's Widow Files Wrongful Death Claim; Says Cops Should Have Done More To Protect Him From Armed F'closed Homeowner Resisting The Boot

In Modesto, California, The Modesto Bee reports:
  • Authorities should have done more to protect a locksmith from a distraught, armed homeowner who gunned down the man and a deputy sheriff, the locksmith's widow says in a wrongful death claim against Stanislaus County.

    Before they tried to carry out the April eviction, deputies were warned that the homeowner had weapons, the claim says, contradicting Sheriff Adam Christianson's statements since that the men walked into an ambush with no idea that danger lurked inside.

    Also, locksmith Glendon Engert paused while disabling the lock on a metal security door when he heard something inside, but deputies directed him to keep drilling, the claim says.

    "Mr. Engert was lulled into a false sense of security," the document reads. Moments later, Engert, 35, and deputy Bob Paris, 53, were killed by armor-piercing bullets from an assault rifle fired through the screen door. Deputy Mike Glinskas, 51, was not hit and was honored for bravery last month.

    The shooting deaths started an 11-hour standoff that ended as flames engulfed the Chrysler Drive fourplex. The body of Jim Richard Ferrario, who committed suicide, was found inside with an arsenal of weapons.

    The deputies "owed (Engert) a duty to protect him," says the claim, filed Aug. 24 by San Francisco lawyers on behalf of Irina Engert and made public by the county Monday. "It's unspeakably sad," said attorney Richard Schoenberger. "She remains devastated. Glendon was her life."

Chicago-Area Man Charged With Felony Hate Crime After Allegedly Hurling Racial Slurs, Beer Can, Brick At Man Hired By Bank To Maintain Foreclosed Home

In Chicago, Illinois, the Chicago Tribune reports:
  • A Tinley Park man was charged with a felony hate crime for allegedly attacking a man who had been hired by a bank to maintain a neighbor's foreclosed home earlier this month.

    Joseph Berndt, 47, allegedly shouted racial slurs at the 51-year-old African-American man as he was working outside a house in the 6200 block of West 179th Street, then threw a beer can and a brick at the man, chased him through the yard while brandishing a pipe and attempted to strangle him, prosecutors said.

    The victim said Berndt approached him as he was checking the gas and electric meters at the house, which he had been hired to maintain and had visited several times during the week prior, according to a Tinley Park Police report on the Sept. 1 incident.

    "Hey, what are you doing? You are probably breaking in you (expletive)," Berndt said, the report states.

    The victim explained he had permission to be at the house, and resumed working in the yard. Berndt left his house, which was adjacent to the foreclosed home, threw a beer can at the man and said "I'm gonna kill your (expletive)," the report states. The man ran behind a fence, but said Berndt threw a "large landscaping brick at him."
For more, see Tinley Park man charged with hate crime for alleged attack (Police say victim had been hired by a bank to maintain a neighbor's foreclosed home and was attacked while at house).

State Bar Files Administrative Charges Against Lawyer Who Allegedly Screwed Over Elderly, Grieving Client Out Of $400K & Left Her With $1.4M Tax Bill

From The State Bar of California:
  • The State Bar of California has charged a Glendale attorney with 18 counts of misconduct for his part in a scheme in which an elderly widow was charged excessive legal fees and left with $1.4 million tax bill.

    According to the notice of disciplinary charges filed Friday, Joseph Bernard McHugh Jr. (Bar. No. 128665) billed the victim more than $407,000 for bogus estate planning services and worked alongside a convicted felon, who had taken over the woman’s financial affairs.

    McHugh is accused of misconduct including charging illegal and unconscionable fees, defrauding the Internal Revenue Service, failing to disclose a conflict of interest to his client and numerous counts of moral turpitude.

    McHugh and Naomi Campbell, a self-styled financial adviser who had prior convictions for defrauding the elderly, met with 88-year-old Helen Sprinkle on Oct. 8, 2005, just three days after the death of Sprinkle’s only child, Donna. Sprinkle had also recently lost her sister and pet dog.

    Over the course of four months, McHugh, 59, charged Sprinkle thousands of dollars for work he claimed was done to update her estate plan, including $363,882 for supposed paralegal services, much of which went to Campbell and her husband, Ron, neither of whom had any paralegal training.

    The following May, according to prosecutors, McHugh made changes to one of the Sprinkle family’s trusts to list the Church of God of the Twin Cities Inc., based in Illinois, as a charitable beneficiary. McHugh also failed to disclose to Sprinkle that Campbell’s relatives served as the church’s president and head pastor, the treasurer and secretary.

    McHugh also authorized the sale of stocks and liquidation of other assets in the Sprinkle family trusts to purchase three annuities totaling roughly $5.5 million. The annuities, purchased from Campbell’s husband Ron, who received large commissions, were inappropriate investments for Sprinkle due to her age. As a result of McHugh’s actions, Sprinkle incurred $1,409,809 in federal and state taxes.
For the State Bar press release, see Glendale Attorney Charged With Elder Fraud Misconduct.

North Las Vegas City Manager Allegedly Pocketed 'Cash For Keys' Deal As A Tenant In Foreclosure Home While Concurrently Stiffing Landlord Out Of Rent

In North Las Vegas, Nevada, KSNV-TV Channel 3 reports:
  • The city of North Las Vegas may be drowning in red ink but the man in charge knows how to save a buck, or in this case, make one.

    Earlier this year News 3 reported on City Manager Tim Hacker failing to pay rent for several months while living in this house he said he planned to buy while he was actually in escrow to buy another home.

    Now News 3 has obtained an email from the broker who sold the house confirming Hacker received assistance known asCash for Keys” to move out of the home, which was in foreclosure.

    The woman who says Hacker owes her rent tells News 3 she's attempting to serve the Hackers with a summons to appear in North Las Vegas court. News 3 attempted to reach Hacker but the city of North Las Vegas is closed on Fridays.

Friday, September 14, 2012

Crooked Banksters & Their Immunity From Criminal Prosecution

Richard (RJ) Eskow writes in The Huffington Post:
  • If a recent report is true the Justice Department will need a new name - and some of us will have to step up and admit we were wrong.

    It was clear that the foreclosure fraud settlement which the Administration and most states reached with major US banks was a great deal for the big banks - and a lousy deal for the public. But some of us found reason to hope against hope that the settlement would be accompanied by real investigation of crooked bankers, after years of flim-flammery and disgraceful inaction by the Justice Department.

    Not that we were entirely naïve. The Administration's track record was poor. and even had a slight resonance of bad faith. when it came to prosecuting Wall Street criminality. So, speaking only for myself, that cautious support came with renewed pressure on the Administration to back its words with action.

    Some of us knew that, pace Pete Townshend, we very well might get fooled again.

Foreclosed Homeowner Who Used Sovereign Citizen Racket In Attempt To Reclaim Title & Possession To Home Cops Plea To Georgia RICO Charges

In DeKalb County, Georgia, The Atlanta Journal Constitution reports:
  • One of a dozen so-called sovereign citizens indicted on racketeering charges for essentially stealing 18 high-end homes in eight counties pleaded guilty Monday in court. "I plead guilty because I’m tired,” David B. Graham told DeKalb County Superior Court Judge Courtney L. Johnson. “I’m guilty because I’m guilty.”

    Graham was accused of moving back into the Gwinnett County home he lost to foreclosure by illegally using the quit claim process to transfer the deed back into his own name. Graham pleaded guilty to violating Georgia's RICO or influenced and Corrupt Organizations Act, and to conspiracy to violate the RICO Act.

    He was one of many in a group that, between January and July 2010, exploited loopholes in the legal property deeding system to gum up an already tedious process. Graham said he was directed to a loosely organized sovereign citizen group to help him save his home.
  • That scheme, prosecutors say, involved members of the group breaking into more than a dozen properties in DeKalb, Gwinnett, Henry, Spaulding, Fulton, Fayette, Richmond and Newton counties, including a Buckhead strip mall, forging notarized deeds for themselves and one another to file with the respective county clerks, then threatening litigation against the rightful owners if those owners tried to evict the sovereigns or sell the properties. Prosecutors called it putting “a cloud on the title.”
For more, see Gwinnett man pleads guilty to stealing foreclosed home (Attorney: ‘He bought into sovereign citizen scheme’).

Alleged Scammer Charged w/ Peddling Phony Real Estate Adverse Possession Claims, Rent-To-Own Ripoffs Pinched Again On Income Tax Refund Fraud Charges

In Land O' Lakes, Florida, the Tampa Bay Times reports:
  • A 37-year-old Land O'Lakes man faces several fraud charges after, authorities say, he cashed fraudulent tax refund checks worth $58,732. Demetrius Antonio Lewis was booked into the Pasco County Jail on one count of organized fraud and eight counts of criminal use of personal identification, according to the Florida Department of Law Enforcement.
  • FDLE Commissioner Gerald Bailey said in a statement the agency is pursuing similar cases. Tax refund fraud is a billion-dollar national problem, and the Tampa area is at the forefront. Last year, Tampa thieves stole $468 million from the IRS, according to a federal watchdog.(1) Authorities often take months to investigate and build a case.

    Last November, Lewis was charged with organized fraud in a different crime, authorities say. He ran a business named Help is Here Foreclosure Prevention and Credit Repair. Under that business name, he would gather the addresses of vacant homes and for $1,000 teach anyone how to occupy them using an obscure loophole called "adverse possession," according to the FDLE.
  • In th[e real estate] scam, the FDLE said that between December 2008 and May 2011, Lewis and a codefendant found properties listed for sale, in default or in foreclosure.

    Without the knowledge or consent of the property owners, the two entered the vacant houses, changed the locks and rented the properties to tenants who paid the defendants and thought they were participating in a "lease to own" program, officials said.

(1) See U.S. Treasury Department Inspector General Report: There Are Billions of Dollars in Undetected Tax Refund Fraud Resulting From Identity Theft (July 19, 2012).

Thursday, September 13, 2012

Rent Skimming Racket, Use Of Forged Lien Releases To Illegally Pull Cash From Properties Lead To 10-Year Prison Stay For One, Six Years For Another

From the Office of the U.S. Attorney (District of Columbia):
  • Bryan W. Talbott, 49, the president of a property management company, was sentenced [] to 10 years in prison for defrauding his clients, mortgage lenders, and the government of more than $2.8 million.
  • Along with business partner Chester D. Ransom, Jr., 45, Talbott pleaded guilty in January 2012 in the U.S. District Court for the District of Columbia to charges of conspiracy to commit bank fraud, conspiracy to commit mail fraud, and conspiracy to defraud the government. [...] As part of their plea agreements, Talbott and Ransom agreed to criminal forfeiture of the proceeds of their crimes and restitution of more than $2.8 million.

    Ransom was sentenced in June 2012 to a six-year prison term.
Rent Skimming:
  • As part of their fraudulent scheme, the defendants frequently collected rental payments from tenants but did not pay the bills for the properties, despite falsely representing to the property owners that the bills had been paid.

    Instead, the defendants used these funds for their own benefit. In addition, the defendants also sent forged bank statements to some of their clients, misstating the balances in their clients’ accounts. Through this fraudulent scheme, the defendants defrauded at least 54 clients out of a total of $1,269,278.
Use Of Forged Satisfactions Of Mortgages To Pocket Mortgage Proceeds:
  • On June 30, 2004, Ransom purchased the property on North Portal Drive NW for $975,000, financing the purchase, in part, with two loans in the total amount of $731,250 from WMC Mortgage Corp., a mortgage lender. Ransom executed two deeds of trust on the property, granting WMC a security interest in the property.

    On December 29, 2005, Ransom filed with the District of Columbia Recorder of Deeds two forged Certificates of Satisfaction, purporting to release the WMC liens on the Portal property.

    Then, on January 13, 2006, Ransom sold the Portal property to Talbott for $1,110,000. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan in the amount of $750,000 from Fremont Investment and Loan. Talbott executed a deed of trust on the property, granting Fremont a security interest in the property. Ransom received a check in the amount of $515,034 from the settlement.

    Less than a month later, on February 2, 2006, Ransom again “sold” the Portal property to Talbott, this time for $1,250,000, despite the fact that Talbott was already the legal owner. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan of $890,000 from First National Bank of Arizona. Talbott executed a deed of trust on the property, granting First National Bank of Arizona a security interest in the property. Ransom received a check in the amount of $801,280 from the settlement.

Calif. Lt. Gov Calls For Federal Probe Into Threats Targeting Local Communities Considering Use Of Eminent Domain To Restructure Underwater Mortgages

Reuters reports:
  • California Lieutenant Governor Gavin Newsom says he wants the U.S. Department of Justice to investigate "threats" against local communities that are considering using eminent domain to seize and restructure poorly performing mortgages to benefit cash-strapped homeowners.

    Newsom sent a letter on Monday to U.S. Attorney General Eric Holder asking federal prosecutors to investigate any attempts by Wall Street investors and government agencies to "boycott" California communities that are considering such moves.

    "I am most disturbed by threats leveled by the mortgage industry and some in the federal government who have coercively urged local governments to reject consideration" of eminent domain," he wrote in a letter that was also sent to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.

'Borrower Fatigue' May Cause Some Homeowners To Trash Legit Bankster Loan Mod Offers; "If It Looks Too Good To Be True, It Actually Might Be True!"

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • Some Nevada homeowners may be ignoring valid offers from banks to reduce their mortgages because of "borrower fatigue." Real estate attorneys say many Nevadans are so used to hearing no from lending banks, they might miss out on a valid offer from a bank.

    Charmagne Balean didn't like checking her mail for four years because it usually meant bad news from the bank. For four years, her family attempted to get their bank to agree to a loan modification. "This is my pile of hard labor and heartaches," homeowner Charmagne Balean said.

    This family of electrical contractors bought their home in 1999. When their bank finally agreed to cut their monthly payments nearly in half, they almost didn't believe it. "You get so confused, you don't even know what to believe, or what not to believe," Balean said.

    "The bank, they didn't have an answer. It was confusing at best," homeowner Mark Stuhmer said. He said the bank reduced the amount he owed on his home/office by more than $300,000. He initially thought the offer was fraudulent.

    "Oddly enough, today, if it looks too good to be true, it actually might be true," attorney Tisha Black said.

    Black deals with homeowners trying to save their homes from foreclosure. She said there are often scams targeting those desperate homeowners.

    "There's literally businesses that have copied the stationary of some of the big banks and offer reductions in principal or things like that if they forward some money."

Wednesday, September 12, 2012

Arizona AG, Out-Of-State Law Firm Settle Suit Alleging Upfront Fee Ripoffs In Racket That Peddled Loan Mods, Legal Services To Strapped Homeowners

From the Office of the Arizona Attorney General:
  • Arizona Attorney General Tom Horne has reached a settlement with The Mortgage Law Group a/k/a Macey Aleman & Searns, a Chicago-based law firm that the State accused, in a consumer fraud lawsuit, of participating in a deceptive scheme designed to collect advance fees from consumers looking for assistance in obtaining mortgage loan modifications. In nearly all cases, it is illegal for businesses to charge consumers upfront fees for loan modifications.
  • The State alleged that, along with co-defendant, Scottsdale, Arizona- based Underwater Property Solutions, The Mortgage Law Group (“TMLG”) marketed mortgage modification services to consumers as legal services that they represented would be performed by TMLG’s attorneys, including local "partners" in the states where TMLG's clients resided.

    The State alleged that Underwater Property Solutions’ non-lawyer employees did nearly all of the substantive work for consumers who paid "retainer fees" to TMLG.
  • The settlement permanently prohibits TMLG from engaging in any consumer debt or loan modification activities in Arizona or on behalf of Arizona consumers and requires TMLG to pay $39,280 in restitution and $60,000 in attorney's fees.

    In entering into the settlement with the State, TMLG did not admit that it violated the law nor did the court make findings that it did so. A consent judgment with co-defendant Underwater Property Solutions was approved in May, 2012.

Some City Residents Accuse Key West Of Giving 'Bailout' To Greedy Bankster In Code Compliance Dispute

In Key West, Florida, the Florida Keys Keynoter reports:
  • After rejecting a $20,000 code compliance settlement from the Bank of New York Mellon, the Key West City Commission on Wednesday agreed to take $30,000.

    Mellon bank via foreclosure bought the house at 923 Eaton Street from the mortgage holder, JP Morgan Chase in 2009. The property fell into disrepair, eventually becoming the subject of action from the city's Code Compliance Department, leading to a $186,750 accrued fine.

    Although commissioners on Aug. 21 voted 5-2 to reject the $20,000 offer, City Attorney Shawn Smith said this week he had done more research on the property and found the city's lien on the property could be invalidated.

    "The current offer of $30,000 is something the city should accept given the fact there are questions to the validity of the lien," Smith said. "$30,000 certainly is far in excess of the actual cost the city has in this particular issue."

    Smith also pointed out that the $30,000 figure equates to the fines related to the 120 days that Mellon owned the house and it was not in compliance with municipal code.

    Residents opposing continued to frame their objection in terms of little Key West giving a bailout to a greedy financial giant.

Discharging Student Loan In Bankruptcy: Proving "Certainty Of Hopelessness" May Be Hopeless Cause

The New York Times reports:
  • It isn’t easy to stand up in an open courtroom and bear witness to the abject wretchedness of your financial situation, but by the time Doug Wallace Jr. was 31 years old, he had little to lose by trying.

    Diabetes had rendered him legally blind and unemployed just a few years after graduating from Eastern Kentucky University. He filed for bankruptcy protection and quickly got rid of thousands of dollars of medical and other debt.

    But his $89,000 in student loans were another story. Federal bankruptcy law requires those who wish to erase that debt to prove that repaying it will cause an “undue hardship.” And one component of that test is often convincing a federal judge that there is a “certainty of hopelessness” to their financial lives for much of the repayment period.

    It’s like you’re not worth much in society,” Mr. Wallace said.

    Nevertheless, Mr. Wallace made his case. And on Wednesday, nearly six years after he first filed for bankruptcy, he may finally get a signal as to whether his situation is sufficiently bleak to merit the cancellation of his loans.

    The gantlet he has run so far is so forbidding that a large majority of bankrupt people do not attempt it. Yet for a small number of debtors like Mr. Wallace who persist, some academic research shows there may be a reasonable shot at shedding at least part of their debt. So they try.

    Before the mid-1970s, debtors were able to get rid of student loans in bankruptcy court just as they could credit card debt or auto loans. But after scattered reports of new doctors and lawyers filing for bankruptcy and wiping away their student debt, resentful members of Congress changed the law in 1976.

    In an effort to protect the taxpayer money that is on the line every time a student or parent signs for a new federal loan, Congress toughened the law again in 1990 and again in 1998. In 2005, for-profit companies that lend money to students persuaded Congress to extend the same rules to their private loans.

    But with each change, lawmakers never defined what debtors had to do to prove that their financial hardship was “undue.” Instead, federal bankruptcy judges have spent years struggling to do it themselves.

    Most have settled on something called the Brunner test, named after a case that laid out a three-pronged standard for judges to use when determining whether they should discharge someone’s student loan debt [see Brunner v. New York State Higher Educ. Services, 831 F. 2d 395 (2d Cir., 1987].

    It calls on judges to examine whether debtors have made a good-faith effort to repay their debt by trying to find a job, earning as much as they can and minimizing expenses. Then comes an examination of a debtor’s budget, with an allowance for a “minimal” standard of living that generally does not allow for much beyond basics like food, shelter and health insurance, and some inexpensive recreation.

    The third prong, which looks at a debtor’s future prospects during the loan repayment period, has proved to be especially squirm-inducing for bankruptcy judges because it puts them in the prediction business. This has only been complicated by the fact that many federal judicial circuits have established the “certainty of hopelessness” test that Mr. Wallace must pass in Ohio.

Tuesday, September 11, 2012

More On Banksters' Big Win In Foreclosure Fraud Mess

David Dayen at Firedoglake writes:
  • I don’t need a source to tell me that there will be no criminal charges arising from the Residential Mortgage Backed Securities working group, the task force set up to “hold accountable” those financial institutions who crashed the economy through misdeeds in the securitization process.

    Take only this piece of evidence: all of the subpoenas so far issued by the RMBS working group have been civil in nature, not criminal. That’s about all the evidence I need.

Possible Influx Of Section 8 Renters Into High-End Community Has One HOA, Some Neighbors 'Running Around With Their Hair On Fire'

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • Here's an odd side effect of South Florida's foreclosure crisis: Some immense homes with pools and three-car garages in gated communities are being rented out to unlikely tenants — poor people paying with Section 8 aid.

    Among the properties are homes with up to 4,500 square feet of space in private communities with guardhouses and regal names such as "Monarch Lakes" and "Bellagio at Vizcaya."

    Some of the owners are teetering on foreclosure and gambling they can earn enough money from the federal housing vouchers to stave off the banks. Others bought the properties cheap in foreclosure auctions and want the guaranteed rental income.

    Housing advocates and the government view the turnabout as a win-win for homeowners and the poor, who have access to safer communities and better schools.

    But some neighbors are aghast.

    After a single mother and her nine children rented a house in the exclusive Isles neighborhood of Coral Springs, the homeowners association adopted an amendment to its governing documents stating: "No Section 8 or government leasing assistance is permitted."

    The association is threatening eviction.

    Federal law does not expressly outlaw such bans. But the prohibition can't be used as a pretext for other illegal acts, such as denying housing to people because of their race, gender, national origin, disability or number of children.

    The owner of the Coral Springs house, Henri-Claude Marcellus, has hired a lawyer to challenge the restriction, claiming his mostly white neighbors are discriminating against him because he is Haitian and his tenants are African-American.

    A retired software engineer, real estate investor and radio show host, Marcellus said he confronted the association's officers, demanding to know: "What do you have against blacks?" "I hit a very sensitive nerve," he said in a recent interview.

    The association's lawyer and directors did not respond to requests for comment.(1)

(1) While Federal law may not prohibit it, the state law of at least one state, Massachusetts, prohibits discrimination against prospective renters on the basis of their receiving public assistance. See, for example:

Now-Disbarred Lawyer Agrees To Cough Up $32K+ In Restitution For Pocketing Upfront Fees, Then Failing Provide Services In Nine Loan Mod-Related Cases

From the California Bar Journal (August 2012):
  • Kent C. Wilson [#58652], 66, of San Diego was disbarred June 16, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.

    Wilson stipulated to 30 counts of misconduct in nine cases. Most of the cases involved loan modifications or potential lawsuits against lenders. He did not do the work he was hired to do, closed his office without notifying his clients and did not account for or refund their unearned fees.
  • In mitigation, Wilson has no prior discipline record, cooperated with the bar and tried to resign from practice when he was overwhelmed by work. He agreed to make restitution totaling $32,600.

Monday, September 10, 2012

NJ Man Gets 66 Months For Role In Mortgage Fraud Scam That Included Targeting Homeowners Facing Foreclosure

From the Office of the U.S. Attorney (Newark, New Jersey):
  • A Newark, N.J., man was sentenced [] to 66 months in prison for his role in a $40.8 million mortgage fraud conspiracy, recruiting “straw buyers” to purchase real estate properties in New Jersey, South Carolina, and Georgia and causing lenders to release more than $18 million based on fraudulent mortgage loan applications, U.S. Attorney Paul J. Fishman announced.

    William Brown, 60, previously pleaded guilty before U.S. District Judge Joseph E. Irenas to an Information charging him with conspiracy to commit wire fraud and conspiracy to commit money laundering. Judge Irenas imposed the sentence [] in Camden federal court.

    According to documents filed in this case and statements made in court:

    Brown recruited “straw buyers” for his co-conspirators to purchase oceanfront condominiums overbuilt by financially distressed developers in Wildwood Crest, N.J., premier real estate in vacation destinations in Georgia and South Carolina, and properties in New Jersey owned by financially distressed homeowners facing foreclosure.

    Brown’s co-conspirators caused fraudulent mortgage loan applications and supporting documents to be submitted to mortgage lenders in the straw buyers’ names, attributing to them inflated income and assets in order to induce the mortgage lenders to approve the loans.

    Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with the real estate closings on the properties, Brown’s co-conspirators took a portion of the proceeds from the fraudulent mortgage loans. Brown also admitted that he and his co-conspirators laundered the proceeds of the mortgage fraud by having some of those proceeds transferred to the recruiters and straw buyers. Brown received $96,000 for his role.

Loan Mod Scammer Pleads Guilty To Ripping Off 48 Known Victims Out Of Upfront Fees, Monthly Mortgage Payments

From the Maryland Department of Labor, Licensing and Regulation:
  • Rodney Getlan, age 45, of Owings Mills, entered a guilty plea to nine counts of mortgage fraud and faces up to 90 years in prison. Pursuant to the plea, the State is requesting 40 years with 10 years suspended and 30 years of incarceration to serve as well as restitution to all 48 known victims in the area of $400,000.

    Judge Ballou-Watts scheduled sentencing for December 3, 2012. Getlan was charged earlier this year with felony theft, operating as a credit service business without a license, mortgage fraud, and related charges.

    An investigation by the Maryland Department of Labor, Licensing & Regulation’s (DLLR) Office of the Commissioner of Financial Regulation and the Baltimore County Police Department led to Getlan’s arrest in March for defrauding homeowners of considerable upfront fees for mortgage modifications and stealing their monthly mortgage payments.
  • Getlan’s 46-count charging document stated that Getlan offered loan modification services from January 2009 through January 2012. The charges specifically referred to nine separate homeowners who fell victim to Getlan’s scheme, in which he forged documents to support his claim that lenders of the homeowners had approved their loan modifications.

    Homeowners believed that their monthly payments were going to their lenders; however, the investigation determined that Getlan deposited those payments into his own accounts.
For the Maryland DLLR press release, see Mortgage Fraud Schemer Convicted (Getlan found guilty of defrauding Maryland homeowners).

Adverse Possession-Claiming Squatter Hijacks Vacant Home, Refuses To Budge Days After Homeowner Takes Bank's 'Cash For Keys' Offer & Moves Out

In Houston, Texas, KTRK-TV Channel 13 reports:
  • One local woman is locked in a real estate headache. She moved out of her home to avoid foreclosure and now she says someone is squatting in her former house. That's causing big problems with the mortgage company.

    Days after she moved out, Katrina Collins says she got a call from her mortgage company, questioning her as to who she let move into her home. She had no idea what they where talking about. Now she knows. They're squatters refusing to leave.

    Collins moved out of her home of 14 years last month. Days later, she discovered a squatter had settled in and refused to leave.

    "She said, 'I'm not going to argue with you, but I'm not going anywhere. If you want me out you need to evict me.' That's what she said to me," Collins told Eyewitness News.

    Collins was in a financial bind and to avoid foreclosure she agreed to a "deed in lieu." The mortgage company paid her $2,000 to relocate and they took possession of the home. After she moved out, the mortgage company learned someone else moved in, and even brought the family pet.

    "I got a call from the mortgage company asking me had I leased out the property because there was someone living here that said that they were leasing the property from me," said Collins.

    The squatter wouldn't come to the door, but claimed to Collins she filed adverse possession on the home. It's a real law, but doesn't allow for someone to just move in.

Sunday, September 09, 2012

Another Home Mistakenly Trashed-Out By Bankster's Contractor; Wells Fargo Offers No Help To Victims To Mitigate Screw-Up Until Media Begins Calling

In Twentynine Palms, California, KABC-TV Channel 7 reports:
  • A local couple's dreams have been shattered by a foreclosure mistake that left their retirement home in ruins.

    When banks take over foreclosed homes, they often try to salvage the contents inside to recoup their losses. But what if they have no right to those contents in the first place? Alvin Tjosaas says that scenario is all too real for him.

    Back in 1961, a 14-year-old Tjosaas literally helped his father build a vacation home in Twentynine Palms. He's taken his family there ever since, sharing unforgettable moments.

    "I put my whole life into this place, building it for my mom and dad," said Tjosaas.

    The house recently had valuables stored in the garage, including decades worth of family heirlooms. But the house was in ruins after Tjosaas says subcontractors hired by Wells Fargo entered the property with a foreclosure notice in hand. The notice had the name Stephen A. Janosik on it, but the address for the Tjosaas family home.

    "It's the wrong house, simple as that. It's a big mistake, but sort of a simple mistake," said Tjosaas.

    Tjosaas says the subcontractors broke down doors, smashed windows, tore down walls, taking anything of value to sell later on.

    He says they took three tractor mowers and three golf carts. Their camper trailer was badly damaged. His wife, Patricia, couldn't believe her eyes.

    "We had all of his masonry tools, all of his carpenter tools, all of his plumbing tools, everything that he owned," she said.

    Tjosaas said his dad's WWI uniform and flag were also gone. The Tjosaas say they've tried to reach out to Wells Fargo for answers, but to no avail.

    "The way it's been going, I don't think they really care. That's the way it's been for the three months. Now, all of a sudden, it's you guys. Now, all of sudden, they call me," said Tjosaas.

    After repeated calls from Eyewitness News, Wells Fargo released a statement, saying, "We are deeply sorry for the very personal losses the Tjosaas family suffered as a result of their home being mistakenly secured and entered by an outside party hired to address a different nearby property. We are moving quickly to reach out to the Tjosaas family to resolve this unfortunate situation in an attempt to right this wrong."

    Tjosaas says because of the media calls, a Wells Fargo representative asked to meet with him in person on Thursday to apologize. He hired a lawyer, who will be at that meeting. They hope they can reach an agreement and avoid legal action.

Wells Fargo OKs Loan Modification, Then Forecloses On Home Anyway Without Telling Homeowner; Screw-Up Discovered When Latter Finds Prospective Buyer

In Moreno Valley, California, KCBS-TV Channel 2 reports:
  • A Moreno Valley woman tried to sell her home, only to find out the bank mistakenly foreclosed it.

    Real estate agent Lisa Duarte had been showing Lily Diaz’s home in Riverside County. The house, priced at $235,000, got two quick offers. However, a title search showed Wells Fargo, not Diaz, owned the home.

    The property was actually foreclosed on in January of this year and when I found that out, I called my client and let her know,” said Duarte.

    Diaz said she was shocked because she has the paperwork that shows she completed a loan modification with Wells Fargo in January. She said she made every monthly payment on time since it was approved.

    Wells Fargo apparently didn’t let title know the modification was accepted and they let the foreclosure proceedings continue,” said Duarte. “Wells Fargo knows they made the mistake. They don’t know how to fix it.”

    As it stands now, the home can’t be sold. “As far as I’m concerned, we lost two good offers because of (the situation),” said Diaz. Wells Fargo called Diaz to work out the mix up.

Misconduct In Connection With Bankruptcy, Loan Modification Cases Leads To License Revocation For California Attorney

From the California Bar Journal (August 2012):
  • Zachary Ian Gonzalez [#259663], 32, of West Covina was disbarred June 16, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.

    Gonzalez stipulated to 43 counts of misconduct in 14 cases involving his failures to provide competent legal services in bankruptcy and loan modification matters.

    In 12 matters, he became ineligible to practice law and as a result could not complete his clients’ cases. However, he did not refund unearned fees and in some cases the clients’ bankruptcies were dismissed. Two matters were dismissed because Gonzalez didn’t file 13 required documents. In two other cases, he was not permitted to prepare and file the required documents. He also violated California law by twice agreeing to negotiate a loan modification and collecting advance fees before the work was completed. Gonzalez also did not return his clients’ files.

    He was suspended and placed on probation in 2011 for failing to refund unearned fees or account for advance fees, forming a partnership with a person who is not a lawyer, splitting legal fees with a non-lawyer, soliciting prospective clients with whom he had no family or professional relationship and committing acts of moral turpitude. In mitigation, he stipulated to disbarment.

    He agreed to make restitution totaling $60,855 to the clients in the 14 disciplinary matters.