Saturday, October 06, 2012

BofA Continues Relentless Attack On Homeowners w/ Baseless F'closure Threats Triggered By Sloppy Recordkeeping; Another Victim Ends Up With Empty Apologies After Media Intervention

In Portland, Oregon, KGW-TV Channel 8 reports:
  • Four months after Bank of America admitted making mistakes in threatening to foreclose on a Portland woman’s home, the bank is back at it again. “It’s a slap in the face,” that homeowner, Polly Brown, told Unit 8. “It looks like to me they're just a bureaucratic mess and the left hand doesn't know what the right hand is doing, it’s just a mess.”

    In April, Unit 8 helped Brown get an apology and correction to her credit scores from Bank of America. She thought her mortgage mess had ended, until she got a recent letter from the bank.
    That’s when she contacted Unit 8 for help again.
  • After she [initially] called Unit 8 in April, we contacted the Oregon Attorney General. Bank of America eventually apologized for making mistakes, and promised to correct inaccurate information they had sent to credit bureaus.

    Those actions satisfied Brown. She told Unit 8, “I got results when you [Unit 8] and the Attorney General got involved. I got results. Bank of America cleaned up my credit and corrected their accounting mistakes.”

    She thought her troubles were over. Then, in September, she got a certified letter from Bank of America warning her that her payments were past due. The letter stated, “It is important that we receive full payment as soon as possible so you can avoid foreclosure on your home.”

    Bank of America’s letter continued, “According to our records, your home loan payments of $.00, which includes any late charges or applicable fees, for the month(s) of July 2012 through September 2012, are past due.”

    So I owe zero dollars,” said Brown. “It’s almost laughable but then I checked my credit report,” Brown said the credit bureau Equifax shows that in July, Bank of America reported she had a past due payment of $1,694.00. “I’m angry,” said Brown. “I paid those [mortgage payments]. How can B of A say that?

    Brown again contacted Unit 8, and we took the new information to the Oregon Attorney General. “Unfortunately, we still see a lot of mistakes still happening, ”Assistant Attorney General Simon Whang told us.
  • From what I can see, it looks like they're in violation of this term of the [$25 billion settlement] agreement, yes,” Whang said to Unit 8. “Here you have an erroneous situation where she actually did make the payment, but a false statement went to the credit reporting bureaus.”

    In a written statement to KGW, Bank of America spokesperson Jumana Bauwens wrote, “We apologize to Ms. Brown for the error in applying her payments to her mortgage. The situation is already being addressed to ensure all payments and credit reporting are reflected properly. Ms. Brown now has a permanent modification on her mortgage.”

    Brown said for all her trouble she got her mortgage modified by less than a hundred dollars a month.

Another HOA Gets 'Bitten' By 'Companion Pooch'; Association To Cough Up $40K To Settle Suit With Civil Rights Feds Over Condo Resident's Right To Keep 'Depression' Dog

From the Office of the U.S. Attorney (Phialdelphia, Pennsylvania):
  • The United States [] announced a $40,000 consent decree that resolves a dispute alleging that the condominium association for The Philadelphian violated the Fair Housing Act by refusing to grant a resident’s request for a reasonable accommodation, announced United States Attorney Zane David Memeger. The Philadelphian consists of 776 units and is located on the Benjamin Franklin Parkway.

    The consent decree was filed today, with a complaint, in U.S. District Court for the Eastern District of Pennsylvania. The complaint alleges that The Philadelphian refused to grant a reasonable accommodation so that a resident with a disability could keep a small dog, named “Lucy,” in the condominium she owned in order to help her cope with the effects of depression.(1) The lawsuit further alleges that the defendant’s policy, with respect to reasonable accommodation, violated the Fair Housing Act with respect to this individual specifically, and constituted an illegal pattern or practice.

    Under the consent decree, the defendants will pay $15,000 to the resident with a disability, $10,000 as a civil penalty to the United States, and $15,000 into a fund to pay any other residents of The Philadelphian who may have claims based on The Philadelphian’s policy. Additionally, the defendants will attend fair housing education and training; implement a new reasonable accommodation policy for owners of assistance animals; and comply with notice, monitoring and reporting requirements. The consent decree requests that the Court maintain jurisdiction over this case for three years.

    Enforcing the fair housing rights of persons with disabilities in the Eastern District of Pennsylvania, including those with mental health disabilities, is a priority of this office,” said Memeger. “We will continue to work to ensure that those individuals with disabilities are not denied accommodations they need to live independently.”

    Assistance animals are not pets. They play a vital role in helping people with disabilities live their lives fully,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Department of Justice will continue to ensure that condominium associations grant reasonable accommodations when they are needed.”

    The lawsuit arose as a result of a complaint that the resident filed with the U.S. Department of Housing and Urban Development (“HUD”). After an investigation of the complaint, HUD issued a charge of discrimination. Based on this complaint, other complaints filed by other residents of The Philadelphian, and the written policies issued by The Philadelphian, the Assistant Secretary of HUD determined that this defendant had engaged in a pattern or practice of discrimination. The resident and the board of The Philadelphian elected to have the case heard in federal court.
For the U.S. Attorney press release, see United States Settles Disability Discrimination Case Involving A Resident With A Disability At The Philadelphian.

For the settlement agreement, see U.S. v. Philadelphian Owners Association.

(1) "Lucy" is apparently an example of what the literature generally refers to as an emotional support animal, an assistance animal that does not receive any specialized training to assist those with mental disabilities, but whose function is to simply provide motivation and emotional support to their owners (and that apparently qualifies as a 'reasonable accommodation' in connection with the enforcement of the federal Fair Housing Act; however such an assistance animal may not qualify as a 'service animal' in connection with the enforcement of the federal Americans With Disabilities Act). Emotional support animals are to be contrasted with what the literature refers to as 'service animals', animals that do receive specifice training to do work or perform tasks for those with disabilities. See generally:
It should be noted that, in enforcing the Americans with Disabilities Act, it appears that 'service animals' may be limited to dogs, and that said dogs must have received the necessary training to do work or perform tasks for their owners (see Revised ADA Requirements - Service Animals). It doesn't appear that, in enforcing the Fair Housing Act, there are similar requirements for an animal to qualify as an emotional support/assistance animal constituting a 'reasonable accommodation' for its owner in connection with the enforcement of that owner's housing rights (although I suspect that the animal's owner will at least need a doctor's note prescribing the animal for the owner/patient's emotional stability, or possibly some other objective proof). See Reasonable Accomodations Under The Fair Housing Act - Q & A # 6, 11, 17.

Attorney Accused Of Allowing Tenant To Move Into Unwitting Clients' Vacated Underwater Home, Then Skimming Rent; Allegedly Pocketed $20K In Section 8 Cash While Allowing Home To Fall To Foreclosure

In Bolingbrook, Illinois, The Hearld News reports:
  • For more than a year, Constance Coleman complained to anyone who would listen that the lawyer who rented her a Bolingbrook home didn’t tell her the house was in foreclosure and he didn’t own the home or have permission to rent it.

    As Coleman continued her quest to avoid eviction and shed light on her situation, she found out that the home’s real owners, Jennifer and Steven Gibson, had no idea their house at 560 N. Pinecrest Road was rented out by attorney Joseph P. McCaffery after they moved away.

    The Gibsons say they believe McCaffery of Aurora purposely delayed their foreclosure so he could collect more rent money. McCaffery, who denies all of the allegations leveled against him, was hired to expedite the foreclosure case, Jennifer Gibson said.

    Someone finally listened to Coleman and Gibson and investigated the women’s complaints.

    ARDC complaint

    On Sept. 20, the Illinois Attorney Registration and Disciplinary Commission (ARDC) filed a complaint that alleges McCaffery rented out the home without permission.

    The document also claims that McCaffery misrepresented himself as the owner’s agent to the Housing Authority of Joliet to collect about $20,000 in rent from the agency’s Section 8 housing assistance program. Coleman paid an additional $8,000 in rent.

    The housing authority would have rejected the rental contract if it had known the property was in foreclosure and that McCaffery didn’t have permission to rent out the Pinecrest Road home, according to the ARDC complaint.

    The complaint also says there is evidence McCaffery “took no action to expedite the foreclosure as directed by the Gibsons.”

    McCaffery denies he did anything wrong. He said he told Coleman the home was in foreclosure. And he said he had power of attorney over the residence and that he collected the rent as payment for his legal services. “It gives me all power with respect to that property,” he said. “I could have sold it. I could have rented it. I could have lived in it. ... I can burn it down if I want to.”

    Rental nightmare

    Coleman’s story started back in late 2009 when she was forced to move from another Bolingbrook home because it was in foreclosure. She vowed then to stay in the neighborhood she loved and to find a place that wasn’t mired in mortgage trouble.

    That’s why she was thrilled when a “for rent” sign popped up in the yard of a nearby three-bedroom, brick ranch home. Coleman agreed to rent the new home on Pinecrest Road from McCaffery and a partner who said they had purchased the home in a short sale as an investment, Coleman said. “I thought it was a grace from God,” she said. “I’m like, ‘Thank you Jesus.’ ”

    Instead of being a blessing, the rental turned into a nightmare for Coleman. After renting the home without incident starting in January 2010, Coleman said she was shocked when she found out in April 2011 that the home was in foreclosure, she was going to be evicted and that McCaffery was not the owner.

    Now Coleman is being evicted because the home was sold back to the mortgage holder, CitiMortgage, in May 2011. She has until Monday to be out of the home. Because she knew it would be tough to find another home to rent, Coleman fought in court to stay in the home as long as she could, and she contacted any agency she could think of for help.

    But she received a mixed bag of advice from federal, state and local legal and banking agencies ranging from “sit tight” to being told to stop paying rent. “It’s so stressful. You don’t sleep. The worry is unbelievable. You just don’t want this to happen to other people.”

    Gibsons had ‘no idea’

    Jennifer Gibson said McCaffery never had permission to rent the home. “He did not do that much work for us, and he did not have permission to rent the home,” she said by phone from her new home in Wisconsin. The Gibsons left the home when Steven got a new job in Kansas and they were underwater on their Bolingbrook mortgage and couldn’t sell the house.

    Jennifer Gibson said she didn’t know anything was amiss until she returned to the home in June 2011 to check its condition and found all of the locks had been changed and that Coleman was living in the house. “We had no idea he (McCaffery) was renting it, and we never saw any of the money,” Gibson said.

    While McCaffery said the rent payments were for his work on the foreclosure, Jennifer Gibson said the lawyer received a flat payment of $2,500. She also said he didn’t seem to be expediting it as instructed. “He went for eight months without talking to us,” she said.

    The Gibsons weren’t the only people who didn’t know what was going on at the home. The housing authority paid its portion of the home’s rent even after the foreclosure was complete. Some of the money went to pay off an IRS lien for McCaffery’s unpaid taxes.

    Joyce Johnson, Section 8 Housing Choice Voucher Program coordinator for the housing authority, said McCaffery told the agency he was managing the property. “As soon as we found out something was going on, we stopped the payments,” Johnson said.

New California Law: Existing Tenants In Recently Foreclosed Homes Now Get To Stay Rent-Free Until New Owner Provides Proper Notice Of Ownership Change

Tenants Together, a California statewide renters' rights organization, recently announced:
  • California Governor Jerry Brown has signed an important new law to protect tenants after rental property ownership changes. Authored by Assemblymember Tom Ammiano (D-San Francisco), the bill will prevent unfair and unnecessary evictions when a new owner buys rental property and fails to communicate with tenants.

    Bill author, Assemblymember Tom Ammiano (D - San Francisco), authored the bill to stop unfair evictions. "Too many tenants have been scammed out of their homes by the confusion of an ownership change. We're putting a stop to that."

    Sponsored by Tenants Together, California's statewide organization for renters' rights, the new law addresses rising complaints across the state that new owners, especially banks and investors after foreclosure, are not communicating with tenants and then forcing them out unfairly. "Many good tenants will be able to stay in their homes as a result of this bill," commented Dean Preston, Executive Director of Tenants Together.

    The bill provides that a new owner who delays beyond 15 days in notifying a tenant where to pay rent cannot later evict the tenant for nonpayment of rent that accrued before the notification. The bill seeks to increase communication and transparency when a new owner takes over and protect tenants from unnecessary confusion and evictions. Advocates noted that this is the first state law in years to expressly outlaw any type of eviction.

    "The success of this bill reflects the growing tenant movement in California," commented Preston. "With 15 million renters in the state, a figure that is growing every day with all the homeowners-turned-renters in the foreclosure crisis, this sleeping giant of California politics has awoken." Indeed, the bill's supporters in the Legislature included Republicans and Democrats who have historically opposed tenants' rights measures.

    The new will take effect on January 1, 2013.

    Tenants Together urges tenants [throughout California] with questions about their rights to contact the organization's free, bilingual hotline at 1.888.495.8020 or visit Tenants Together on the web at

Bankster Successfully Unloads Toxic REO On Unwitting Oregon Family Of Three; Victims Pass On Inspections Of Home Once Used As Meth Lab Prior To 'As-Is' Buy

In Klamath Falls, Oregon, Medical Daily reports:
  • The home was in need of fresh paint and some cosmetic fixes, but the Hankins family saw its potential. At $36,000, the house was perfect for a young family trying to make ends meet in Klamath Falls, Oregon.

    "We said, 'It needs a little bit of love, but it's got good bones,'" Jonathan Hankins said. "We just had no idea that those bones were poisonous."

    But days after settling in last summer, the Hankins found the move taking a toll on its health. Beth Hankins, an emergency room nurse, began suffering from respiratory problems. Jonathan Hankins suffered from migraine-like headaches and nosebleeds. Three weeks into their stay, their 2-year-old son Ezra Hankins developed mouth sores so bad that it hurt him to drink water.

    Just as they were about to schedule doctor's appointments, a neighbor shared with them the bad news. Their home on 2427 Radcliffe had formerly been a house used to cook methamphetamine.

    Methamphetamine, an illegal drug in the United States, is a white odorless powder that is easily dissolved in water or alcohol. It is taken orally, by injection, or by smoking. It also can be snorted. The drug is extremely dangerous to cook and to take; 15 percent of meth labs are destroyed through explosions or fires.

    The family ordered a $50 meth-testing kit and ordered the lab to expedite the results. The laboratory reported that the house was contaminated at a level 80 percent higher than what is considered legal by the Oregon Health Authority.

    The family quickly moved to a rental home. They currently are still paying rent and their mortgage. And, since decontaminating a meth house can run upwards of $15,000, Jonathan Hankins says that he is currently being quoted a clean-up cost that is more than the house is worth.

    Freddie Mac, the government-sponsored foreclosure company, warned the family about detecting risks like asbestos and lead paint. But the Hankins family says that no one warned them about drug activity. Freddie Mac says that is because no one knew about it.

    The family, who was buying the home as is, chose to cut costs and to skip the traditional health inspection, which would have only caught superficial damage like paint chips.
  • [Jonathan's] calls to Freddie Mac have gone unanswered and he is angry that this whole ordeal could have been avoided by a $50 kit purchased by the foreclosure firm. Unfortunately though, attorneys have told the family that the "as-is" clause leaves them with little legal recourse.
For more, see Family Becomes Violently Ill After Accidentally Buying Home That Used to Be a Meth Lab (At $36,000, the house was perfect for a young family trying to make ends meet in Klamath Falls, Oregon).

See also, CBS News: Family: New home's meth lab past made us sick.

NJ Attorney Gets Seven Years For Role In ID Theft Scam That Led To Home Purchase & Financing In Name Of Dead Man

From the Office of the New Jersey Attorney General:
  • Attorney General Jeffrey S. Chiesa announced that a lawyer from Morris County was sentenced to prison today for his role in a scheme to defraud a mortgage lender of $431,200 by filing a false loan application and purchasing a home in Newark in the name of a man who was deceased.

    Paul DiGiacomo, 46, of Madison, was sentenced to seven years in state prison by Superior Court Judge Thomas V. Manahan in Morris County. He was ordered to pay $42,404 in restitution and a fine of $150,000 for money laundering. DiGiacomo pleaded guilty on May 21 to second-degree money laundering. He admitted that he laundered the stolen loan proceeds through his attorney trust account. Deputy Attorney General Marysol Rosero prosecuted the case and handled the sentencing for the Division of Criminal Justice Financial & Computer Crimes Bureau.

    The leader of the scheme, Genilza R. Nunes, 38, of Kearny (aka Leticia Wilchez, Geny Silva, Gena Nunez and Genilza Borges), pleaded guilty on May 8 to second-degree money laundering. She is scheduled to be sentenced on Oct. 12. The state will recommend that she be sentenced to 10 years in state prison, including two years of parole ineligibility, and be ordered to pay a $150,000 fine.
For the New Jersey AG press release, see Morris County Lawyer Sentenced to Seven Years in Prison in Scheme to Defraud Lender of $431,200 (False Mortgage Application Resulted in Loan Issued to Dead Man).

'Stung' Central Florida Family Seeks City Help In Booting 'Unwelcome Occupants' Residing In Vacant JPMorgan Chase Foreclosure

In Port Orange, Florida, WFTV-TV Channel 9 reports:
  • A Port Orange family said it is being attacked by bees, and no one will help get rid of them. WFTV's Blaine Tolison found out that's because the giant bee hive is attached to a foreclosed home on Lafayette Street.

    The city's animal control division doesn't deal with bee hives. And one private bee keeper quoted $300 to remove the giant bee hive. But it's not just a matter of finding somebody to remove it. It's a matter of holding someone responsible for the house.

    A mass of honey combs covered in thousands of bees keeps the area off limits to neighbors. To get video, WFTV's crew approached them nice and slow.

    Stephanie Ball said it wasn't always like this living in her family's rental home on Lafayette Street. She always knew about the bees but said the hive has grown from a few inches to a mountain. And recently they became a serious problem.

    "Just three weeks ago, we were in the pool, and my husband got stung in the head, so we don't go back there at all anymore. We can't go in our back yard at all anymore," said Ball. The bees were using Ball's pool as a watering hole. It had to be drained to keep them away. She still doesn't allow her children to in the back yard. "I have three kids. They can't even play in their pool anymore," she said.

    With the help of Ball's cousin, Gregory, the family has called beekeepers and the city of Port Orange, and has tried to track down the homeowner responsible, with no luck. "They have to take care of it themselves, but you can't find anybody. Somebody's got to do something about it," said Ball.

    According to the Volusia County property appraiser, the home belonged to a man who was issued a notice of foreclosure in 2010. Neighbors said the home has been sitting empty for years and has always been a nuisance but nothing quite this bad.

    Port Orange officials confirmed that Chase Morgan now owns the home. Port Orange city workers are working to contact the bank to try to get someone out to the house.

Friday, October 05, 2012

Four Families Attribute Victimized Parents' Deaths To Devastation Caused By Sale Leaseback Peddler Who Ran Equity Stripping, Foreclosure Rescue Ripoff; Judge: "Punishment Here Is Required In Heavy Dose!"

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:
  • For Karlene Cheesman, Raymond Oesterle, Kevin Michael, and Cynthia Thorne, the 25-year prison term given Monday to Anthony J. DeMarco 3d for massive mortgage fraud was almost meaningless next to their losses.

    At DeMarco's sentencing hearing in federal court in Philadelphia, each attributed the death of a parent to the devastation their families felt after losing their houses to DeMarco's scam, which was sold to victims as a foreclosure-rescue program.

    "She gave up the will to live when this came to light," Cheesman said of her mother, Gloria Cheesman.

    Oesterle said his father, Joseph S. Oesterle Jr., collapsed from a heart attack shortly after hearing from a state banking investigator that he had fallen victim to fraud and had lost the equity in his home.

    Michael recalled having to explain to his mother, who was in the hospital, that she had no home to go back to.

    During victim testimony, Thorne glared at DeMarco, 33, and said: "You took my mother from me."

    Those parents were among the owners of 117 properties that fell to DeMarco REI Inc., a Center City company that offered to buy the houses of people facing foreclosure, allowing victims to stay in the houses and pay rent until they could afford to buy the houses back, according to a 15-count indictment filed in December 2010. The scam operated from mid-2006 to 2009.

    In reality, DeMarco lined up straw buyers for the houses, used fraudulent documents to obtain mortgages, and stole $11 million of the homeowners' equity. Eventually, the new lenders, who lost $6 million in the fraud, foreclosed on the houses.

    DeMarco used the proceeds not just to run DeMarco REI, but also to drive a Bentley and live for a time in the Residences at the Ritz-Carlton in Center City.

    DeMarco, who in court appearances since his arrest in December 2010 has smirked and made sarcastic remarks, added to the drama Monday by voicing dissatisfaction with his court-appointed lawyer and disputing several calculations under federal sentencing guidelines.

    U.S. District Judge Michael M. Baylson rejected most of his arguments and set the prison term at 25 years for conspiracy and fraud charges, saying, "Punishment here is required in heavy dose."

    Three codefendants were also sentenced to prison Monday: Michael Richard Roberts, 30, of Swedesboro, to 10 years; Sean Ryan McBride, 38, of Pittsburgh, to 63 months; and Eric Bascove, 39, of Blue Bell, to 41 months.

    "I don't think it was enough," Andre Bullard, who lost his house in Bensalem, said of DeMarco's sentence. "They said they would help me. I believed them." Now, what used to be his house in Bensalem has been torn down. "It's an empty lot," he said. "I can't get it back."(1)
Source: 25-year prison term for foreclosure-rescue scammer.

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

Trial Court Nixes Foreclosure Mill Practice Of Clipping Homeowners For Add'l Process Service Fees Naming 'John/Jane Doe' As Lawsuit Defendants To Designate Unknown Parties

In West Palm Beach, Florida, The Palm Beach Post reports:
  • A foreclosure law firm violated state law by charging homeowners for summonses served on “John and Jane Doe” and other unknown parties who may have claims on the property, a Palm Beach County judge has ruled.(1)

    It is common practice for law firms to serve foreclosure paperwork on homeowners, as well as separate summonses for “unknown tenant,” or “unknown spouse,” even if the borrower is single and is not renting out the property. The borrower is usually billed for the additional summonses at about $45 each.

    Law firms have said the practice is necessary because they need to sue every person or entity who may have a claim on the home in order to ensure clear title at the end of the suit.

    But Circuit Judge Lucy Chernow Brown said in a ruling last week there is no legal basis or justification for issuing a summons made out to an unknown party, and that attempts to collect payment on those summonses violates the Florida Consumer Collection Practices Act and the Florida Deceptive and Unfair Trade Practices Act.

    Further, the court finds that the defendants, who are a law firm and its managing partner, have knowledge of the law and have knowledge that they are attempting to collect a debt that is not legitimate,” the order says.

    The ruling was made in the 2009 class action lawsuit of Loxahatchee resident Rory Hewitt vs. the Law Offices of David J. Stern. Once the largest so-called “foreclosure mill” in Florida, Stern’s firm shut down last year after losing clients following the robo-signing scandal and an investigation by the Florida attorney general’s office.

    Philly 'Dream-Killing Slumlord' Cops Plea To Loan Fraud In Connection With Rent To Own Racket That Left Wanna-Be Homeowners Screwed Over

    From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
    • Robert Coyle, Sr., 67, of Glassboro, New Jersey, pleaded guilty [] to two counts of loan fraud. Coyle owned and/or rented more than 300 properties in Philadelphia and operated a real estate business out of 2332 E. Allegheny Avenue. Among his business entities were Landvest, LLP, Alivest, LLP, and Otay, LLC, to name few.

      Through those business entities, Coyle borrowed more than $3 million from East River Bank (“ERB”) and more than $6.6 million from Republic First Bank (“RFB”). Polonia Bank was a 49% participant in the ERB loans after settlement. The purpose of the loans was purportedly to refinance existing loans, make improvements on some of the properties Coyle owned, and/or to allow Coyle to pursue other real estate opportunities.

      Coyle pledged approximately 71 properties to secure the ERB loans and approximately 117 other properties to secure the RFB loan. The banks anticipated that the loans would be repaid through rental income that Coyle was collecting and, if necessary, through the sale of the collateral properties.

      But Coyle had entered into various ownership agreements, including rent-to-own, with the occupants of several of the properties and he, therefore, did not hold good title for all of the properties he pledged. The loans that were submitted totaled more than $10 million.

      U.S. District Court Judge Stewart Dalzell scheduled a sentencing hearing for January 4, 2013. Coyle faces a maximum possible sentence of 60 years in prison, five years of supervised release, $2 million in fines, restitution to the banks, and a $200 special assessment.

      The defendant also agrees to pay restitution as directed by the court to individuals who had entered into rent-to-own, house swap, or similar ownership agreements with the defendant, or any entity controlled by the defendant, for properties that were pledged as collateral.

    Thursday, October 04, 2012

    Philly Feds Score 25 Year Prison Stay For Sale Leaseback Peddler Who Targeted High-Equity, No Cash Homeowners Facing Foreclosure; Co-Conspirators Also Land Multi-Year Sentences

    From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
    • Anthony J. DeMarco, III, 33, of Conshohocken, PA, was sentenced [] to 25 years in prison for conspiracy and fraud charges in connection with a mortgage fraud scheme involving more than $30 million in loans. Between 2006 and 2009, DeMarco owned and operated DeMarco REI, Inc., a foreclosure rescue company.

      Three others charged in the conspiracy with DeMarco also pleaded guilty and were also sentenced []. Michael Richard Roberts, 30, of Swedesboro, NJ, was sentenced to 10 years; Sean Ryan McBride, 38, of Pittsburgh, PA, was sentenced to 63 months in prison; and Eric Bascove, 39, of Blue Bell, PA, was sentenced to 41 months in prison. [...] Fines and restitution are pending.

      DeMarco REI, Inc. was headquartered in Center City and employed Roberts and Bascove. DeMarco’s business claimed to be able to assist homeowners facing imminent foreclosure. Between June and December 2008, the defendants would scour public records filings to find homeowners in financial distress and pitch a “sale-leaseback” arrangement to them.

      The pitch was that DeMarco REI would buy the homeowner’s house, the homeowner would remain in the house and pay rent to DeMarco REI, and when the homeowner got back on his or her feet financially, the homeowner could buy back the house.

      The defendants solicited straw buyers for properties, used fraudulent documents to obtain mortgage loans from lenders, stole the sellers’ equity in the homes at closing, and eventually failed to make the monthly mortgage payments. DeMarco used the sellers’ equity to run his company and to pay lavish personal expenses.

      The houses went into foreclosure with the straw buyers listed on the mortgage, the original homeowners facing eviction from their own homes, and the mortgage lenders stuck with loans in default. Only one couple ever acquired the means to repurchase their home but, after they wired approximately $245,000 to DeMarco at his direction and for that purpose, DeMarco instead used their money to purchase a Ferrari for himself, jewelry for his girlfriend, and to pay miscellaneous expenses.

      McBride was a title agent and Chief Financial Officer at Settlement Engine, Inc. in Pittsburgh, Pennsylvania. Settlement Engine closed approximately 30 loans for DeMarco REI from June 2008 to early December 2008.
    • At the time of indictment, the U.S. Attorney's Office Civil Division filed a verified complaint and temporary restraining order to help the original homeowners save their homes. The complaint and temporary restraining order sought novel relief that would bring all the individuals and entities that have a stake in the homes before the Court in an orderly process by which the damage caused by the defendants’ alleged fraud could be mitigated.

      In 2011, U.S. District Court Judge Michael Baylson approved conversion of the temporary restraining order into an injunction that stopped foreclosures and evictions that were related to the alleged fraud, and that set forth the details of the mediation process. Currently, the majority of the banks and the original homeowners are still in the process of attempting to reach resolutions.(1)
    For the U.S. Attorney press release, see Foreclosure Rescue Scammers Sentenced To Prison Terms.

    See also, Use Of Novel Dual Criminal/Civil Prosecution Targeting Sale Leaseback-Peddling Racket Yields Guilty Pleas, Keeps Victims From Getting Boot From Homes.

    Go here for earlier posts on this story.

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

    Sacramento Feds Pinch Pair For Peddling Alleged Frauds Targeting Distressed Homeowners Involving Sham Bankruptcies, Phony Forensic Mortgage Audits, Bogus Loan Mods, Sale Leaseback/Rent To Own Ripoffs

    From the Office of the U.S. Attorney (Sacramento, California):
    • Martin Wayne Flanders, 48, and Ligia Sandoval Spafford, 46, of Roseville, were arrested [] on a complaint charging them with orchestrating a fraud scheme targeting distressed homeowners, United States Attorney Benjamin B. Wagner announced.

      Flanders was also charged with conspiracy to commit bankruptcy fraud for filing sham bankruptcy petitions as part of the fraud scheme. The complaint was filed in Sacramento on September 28, 2012 and unsealed after the arrest today.

      According to court documents, Flanders charged clients advance fees in exchange for a number of financial services, including loan modifications, mortgage loan audits, credit repair, debt relief, bankruptcy filings, and a program to sell homes to “investors” with a rent-to-own option.

      Flanders and Sandoval marketed these services to economically distressed homeowners with particular emphasis on those who were Spanish-speakers. During a radio program aired twice weekly by a Bay Area Spanish-language Christian radio station, Radio Luz, Sandoval promoted the services she and Flanders offered.

      Flanders also advertised on a Spanish-language television station, Univision, and in Spanish-language magazines. About 98 percent of Flanders’s and Sandoval’s clients were of Hispanic descent, some of whom spoke little to no English. Sandoval speaks Spanish; Flanders does not.

      The investigation to date has identified 25 to 30 individuals who paid for services and did not receive them for a total loss of approximately $120,000. Some homeowners who were not able to obtain relief were foreclosed upon by their lenders.

    San Diego Feds Bag Attorney, Three Others In Alleged Foreclosure Rescue Ripoff That Screwed 1000's Of Homeowners In $11M Loan Mod Racket

    From the Office of the U.S. Attorney (San Diego, California):
    • United States Attorney Laura E. Duffy announced that Oceanside attorney Dean G. Chandler and telemarketing salesman Shelveen Singh were arraigned [] in federal court in San Diego on a 50-count indictment charging them with defrauding thousands of homeowners in an $11 million “loan modification” fraud scheme.

      According to the indictment, these defendants (and two others previously arraigned) used Chandler’s Oceanside-based law firm, 1st American Law Center (“1ALC”), to persuade victims to pay thousands of dollars each by deceptively touting 1ALC’s purported success and legal resources, and falsely promising that 1ALC would successfully modify their residential mortgage loans.
    • 1st American Law Center's telemarketers were encouraged (using call “scripts” and other training) to say virtually anything to customers in order to close the deal. The indictment alleges that among other ruses, employees pretended that that they had helped “thousands” of happy homeowners save their homes, that 1ALC had been in business for 20 years, that clients' fees would be deposited into a client-trust account and remain untouched until the client was satisfied, and that there was a money-back guarantee. Conspirators even persuaded financially strapped homeowners to pay 1ALC’s fees, instead of the clients’ monthly mortgage payment.

      According to the indictment, lead defendant Dean G. Chandler was the Oceanside attorney at the head of 1st American Law Center. He appeared in television commercials and on the company's websites as the attorney in charge of the company, soliciting customers throughout the United States.

      Chandler is charged along with telemarketers Shelveen Singh, Anthony Calandriello, and call center manager Michael Eccles, with conspiring to commit the offenses of mail fraud and wire fraud through the operation of 1st American Law Center. Defendant Chandler is also charged with money laundering because he conducted financial transactions with the proceeds of the fraudulent conspiracy.
    • Nine other participants in 1ALC’s telemarketing scheme have already entered guilty pleas in federal court for their roles in the criminal enterprise and the subsequent cover-up.
    For the U.S. Attorney press release, see Oceanside Attorney Indicted for Operating $11 Million Loan Modification Scam.

    See also, Courthouse News Service: Accused Loan Scammers Appear in Court.

    For the indictment, see U.S. v. Chandler, et al.

    Scammer Faces Hard Prison Time For Loan Mod Ripoffs; Multiple Felony Convictions Involving 'Residential Burglary' Count As 'Prior Offenses' Under California 'Three-Strikes' Law

    In Monterey County, California, The Monterey County Herald reports:
    • Sentencing has been set for Oct. 30 for Blanca Sanchez, also known as Blanca Maciel, on 13 felony counts arising from what prosecutors termed a "foreclosure rescue" scam.

      Sanchez was found guilty [last week] by a jury and faces a sentence of up to 16 years in prison when she appears before Monterey County Superior Court Judge Mark Hood, District Attorney Dean Flippo said.

      Four of the five felonies, he said, involve residential burglary, making the convictions count as prior offenses under the state's "Three Strikes" law.

      Sanchez was arrested in December 2010 after Salinas police searched her home and found evidence she was running an unlicensed loan modification business, Flippo said.

      Evidence presented at her trial showed she had persuaded clients to pay her thousands of dollars in fraudulent fees and charges, then abandoned them, he said, and all but one of the victims lost their homes.

      Prosecutor was Deputy District Attorney John Hubanks of the DA's real estate fraud unit, assisted by investigators Alicia Cox and Manuel Infante, and legal assistant Louis Santa Ana.

    Wednesday, October 03, 2012

    Homeowners Have Standing To Challenge Faulty Mortgage Assignments From One Bankster To Another, But Only Where Defects Render Conveyance Absolutely Void, Not Merely Voidable

    A common gimmick banksters often get away with in attempting to thwart homeowners that challenge foreclosures because of defective assignments of mortgage is to assert that the homeowners have no standing to challenge transactions (the assignment of a mortgage from one bankster to another) to which the homeowner wasn't a party.

    A recent ruling by a Texas Federal court addressed such a gimmick and, in applying Texas law, said that homeowners do, in fact, have standing to challenge defective assignments to which they were not a party, but only when the defects render the assignments absolutely void, and not merely voidable.

    From the ruling:
    • Defendants argue alternatively that plaintiffs have no standing to challenge an assignment of the security interest because they were not parties to the assignment. In support of their argument defendants cite nine recent decisions from federal district courts in this state (six of which were issued by the same magistrate judge), which do indeed affirm that proposition.[9]

      However, none of these decisions cite any Texas case law or statute, and all but one explicitly rely upon a single federal case, Eskridge v. Fed. Home Loan Mortgage Corp, 2011 WL 2163989, at *5 (W.D. Tex. Feb. 24, 2011), which cites no authority at all, state or federal.

      In fact, Texas has long followed the common law rule which permits a debtor to assert against an assignee any ground that renders the assignment void or invalid. See Tri-Cities Const., Inc. v. American Nat. Ins. Co., 523 S.W. 2d 426, 430 (Tex. Civ. App.-Houston [1st Dist. 1975, no writ); Glass v. Carpenter, 330 S.W. 2d 530, 537 (Tex. Civ. App.-San Antonio 1959, writ ref'd n.r.e.). The Glass court endorsed as authoritative the following summary of the rule, which still appears in the current version of Corpus Juris Secundum:

      "A debtor may, generally, assert against an assignee all equities or defenses existing against the assignor prior to notice of the assignment, any matters rendering the assignment absolutely invalid or ineffective, and the lack of plaintiffs title or right to sue; but if the assignment is effective to pass legal title, the debtor cannot interpose defects or objections which merely render the assignment voidable at the election of the assignor or those standing in his or her shoes."

      6A C.J.S. Assignments § 132 (database updated May 2012) (emphasis added). The current edition of American Jurisprudence states the same rule more succinctly, while adding the rationale:

      "The obligor of an assigned claim may defend a suit brought by the assignee on any ground that renders the assignment void or invalid, but may not defend on any ground that renders the assignment voidable only, because the only interest or right that an obligor of a claim has in the assignment is to ensure that he or she will not have to pay the same claim twice."

      6 Am.Jur. 2d Assignments § 119 (database updated May 2012). Examples of "voidable" defenses include the statute of frauds, Harding Co. v. Sendero Res., Inc., 2012 Tex.App. LEXIS 1754, *33 n.28 (Tex. App.-Texarkana 2012); fraud in the inducement, Kansas Life Ins. Co. v. First Bank of Truscott, 78 S.W. 2d 584, 587 (Tex. 1935); lack of capacity as a minor, Dairyland County Mut. Ins. Co. v. Roman, 498 S.W. 2d 154, 158 (Tex. 1973); and mutual mistake, Chase, Inc., v. Bostick, 551 S.W. 2d 116, 119 (Tex. Civ. App.-Texarkana 1977, writ ref'd n.r.e.).

      Plaintiffs here do not assert these or any other "voidable" defenses to Mellon's assignment. Instead, plaintiffs assert that, standing alone, this single assignment from a third party is ineffective to establish a right to foreclose, because it does not show a proper assignment of the original security instrument to the third party.

      Texas courts routinely allow a homeowner to challenge the chain of assignments by which a party claims the right to foreclose. See Martin v. New Century Mortgage Co., 2012 Tex. App. LEXIS 4705 (Tex. App Houston [1st Dist.] 2012); Austin v. Countrywide Home Loans, 261 S.W. 3d 68 (Tex. App.-Houston [1st Dist.] 2008); Leavings v. Mills, 175 S.W. 3d 301 (Tex. App.-Houston [1st Dist.] 2004, no pet.); Shepard v. Boone, 99 S.W.3d 263 (Tex. App.-Eastland 2003); Priesmeyer v. Pacific Southwest Bank, F.S.B., 917 S.W. 2d 937 (Tex. App.-Austin 1996).

      Federal district courts in this state have also entertained chain of title claims by mortgage debtors challenging foreclosure proceedings. See Millet v. JP Morgan Chase, N.A., 2012 WL 1029497, *4 (W.D. Tex. 2012); Norwood v. Chase Home Finance LLC, 2011 WL 197874 (W.D. Tex. 2011). Nor is Texas alone among non-judicial foreclosure states in permitting such suits. U.S. Bank Nat'I Ass'n v. Ibanez, 941 N.E.2d 40, 53 (Mass. 2011).

      Defendants' final (and weakest) argument is that homeowners like plaintiffs "will not be prejudiced" if the chain of assignments from original lender to foreclosing entity were immune to debtor challenge. After all, the argument apparently goes, the Millers owe the money to somebody. In truth, the potential prejudice is both plain and severe — foreclosure by the wrong entity does not discharge the homeowner's debt, and leaves them vulnerable to another action on the same note by the true creditor.

      Banks are neither private attorneys general nor bounty hunters, armed with a roving commission to seek out defaulting homeowners and take away their homes in satisfaction of some other bank's deed of trust. MasterCard has no right to sue for debts rung up on a Visa card, and that remains true even if MasterCard has been assigned the rights of another third party like American Express. Unless and until a complete chain of transactions back to the original lender is shown, MasterCard remains a stranger to the original transaction with no claim against the debtor. And that is a fair description of this case in its present posture.

      In sum, a standing issue is lurking here, but only as to the defendants, not the plaintiffs. The court concludes that under Texas law homeowners have legal standing to challenge the validity or effectiveness of any assignment or chain of assignments under which a party claims the right to foreclose on their property.

      Accordingly, plaintiffs have properly stated claims for declaratory and injunctive relief based on wrongful foreclosure, trespass to try title and quiet title.
    For the court ruling, see Miller v. Homecomings Financial, LLC, Civil Action No. 4:11-cv-04416 (S.D. Tx. August 8, 2012).

    Thanks to Deontos for the heads-up on the ruling.

    Banksters' New Racket: Forgiving Homeowner Loans That Are No Longer Enforceable; Could Cause Unwarranted Debt-Cancellation Income Tax Issues

    The New York Times reports:
    • GREETINGS, unhappy homeowners! Here’s some wonderful news:

      We are canceling the remaining amount you owe Chase!” says a letter that JPMorgan Chase sent recently to thousands of home loan borrowers. “You are approved for a full principal forgiveness of your Home Equity Account,” says another, from Bank of America.

      Jackie Esposito, of Guilford, Conn., got a letter like that. But she wasn’t elated — because she doesn’t owe the money anymore. She and her husband filed for bankruptcy three years ago. The roughly $64,000 they owed Chase has been legally wiped out.

      What’s going on?

      Cast your mind back to February. Five of the nation’s big banks, including Chase and Bank of America, agreed to pay $25 billion to settle state and federal claims over questionable mortgage practices and promised to work harder to help borrowers who were in trouble. To prod the banks, the government said it would give them credits against the amounts they agreed to pay.

      So, to the ire of customers who couldn’t get banks to work with them before, banks are now forgiving debts that no longer exist. “When I got this letter that said they were going to relieve our debt, I just about fell over,” Ms. Esposito said last week. “You can’t forgive a debt that you’re legally unable to collect.”

      Others have received similar letters about phantom debts. A borrower in Florida received word this month that Chase was erasing $190,065.10 of debt that had already been wiped out. Bank of America told a Virginia resident that a $231,767 home equity loan was being forgiven, even though the debt was discharged last May.

      Neil Crane is a lawyer in Hamden, Conn., who represented Ms. Esposito and her husband in their bankruptcy. He says four of his other clients have recently received letters from banks claiming to forgive discharged debt.

      I never thought in my wildest dreams that the banks would do this properly,” Mr. Crane said last week. “But I think it’s really wrong to be foreclosing on mortgages you don’t own and relinquishing debt you don’t own.”

      It’s bad enough that these letters are inaccurate. But even worse are the tax problems that they may create for people like Ms. Esposito. In most cases, the Internal Revenue Service considers debt that is forgiven to be taxable income. One exception occurs in bankruptcy; when a debt is discharged, it is not taxable.

      But the letters sent by Chase and Bank of America clearly warn that the forgiveness will be reported to the I.R.S. If so, these borrowers may have to prove that the banks erred in claiming to have forgiven the debts.

      I ASKED spokesmen for Chase and Bank of America how they could forgive debts that no longer existed. Both gave the same unsatisfying answer.

    Nevada Supreme Court: OK To Foreclose When Note, Mortgage Are Split, Provided Ownership Of Both Are Reunified When Process Is Initiated

    In Las Vegas, Nevada, the Las Vegas Review-Journal reports:
    • The Nevada Supreme Court has sided with banks by validating a key cog in the foreclosure enforcement machinery that has sparked legal disputes all over the country.

      In a 26-page ruling delivered Thursday, all seven justices agreed that hundreds of thousands of home mortgages in the state involving the Mortgage Electronic Registration System Inc. could be put into foreclosure after technical adjustments.
    • In Nevada, attorney Jacob Hafter said, who argued the case for homeowner David Edelstein, "the court has cleared a path to begin foreclosing in a mass effort."

    • Hafter had argued that once a loan has different note and deed holders, it is permanently flawed and precludes foreclosure. But the court concluded that returning the deed to the lender that holds the note fixes the defect, which is what happened in Edelstein's case. "Because nothing in Nevada law prohibits MERS' actions, we reject Edelstein's argument," the court wrote.
    For more, see Supreme Court gives banks foreclosure win.

    For the ruling, see Edelstein v. Bank of New York Mellon, 128 Nev. Adv. Op. 48 (September 27, 2012):
    • "We conclude that when MERS is the named beneficiary and a different entity holds the promissory note, the note and the deed of trust are split, making nonjudicial foreclosure by either improper.

      However, any split is cured when the promissory note and deed of trust are reunified. Because the foreclosing bank in this case became both the holder of the promissory note and the beneficiary of the deed of trust, we conclude that it had standing to proceed through the FMP [Nevada's Foreclosure Mediation Program]

    Tuesday, October 02, 2012

    Once-Obscure 'Hyperlocal' Dispute Between City & Ex-Marine Over Now-Destroyed $17K Houseboat Reaches U.S. High Court Threatening To Turn Nation's Entire Maritime Industry Inside Out

    In Riviera Beach, Florida, The Palm Beach Post reports:
    • Made of plywood with three sets of French doors, the squat two-story building tied up to a dock at the Riviera Beach Marina didn’t look like your average boat. So, perhaps it is fitting that the battle over Fane Lozman’s $17,000 floating home has spawned a nationwide and potentially far-reaching debate over exactly what constitutes a vessel.

      But no one saw it coming.

      At the beginning, it appeared to be yet another in a long line of petty disagreements between Riviera Beach officials and the former U.S. Marine turned financial trader turned self-styled corruption fighter — a city newcomer who was regularly hauled out of commission meetings for accusing elected officials of all manner of wrongdoing.

      But during the legal battle, both sides inadvertently unleashed uncertainty in a centuries-old area of law that affects everything that floats and anyone who makes their living in the multibillion-dollar maritime industry.

      So, when the U.S. Supreme Court sits Monday to hear Fane Lozman v. The City of Riviera Beach, hundreds of people with millions of dollars at stake will be watching.

      It impacts everything in maritime law,” said Michael McLeod, a Boca Raton lawyer who is chairman of the Admiralty Law Committee of the Florida Bar. “It’s huge in South Florida because we live in the yachting capital of the world, but there’s humongous ramifications for the entire industry.”

      The list of groups that have joined the fight is impressive. There’s the National Marine Bankers Association, the American Gaming Association, the United Brotherhood of Carpenters and Joiners of America, and Floating Home Associations in Seattle, Wash., and Sausalito, Calif.

      Not to be overlooked, the U.S. solicitor general has weighed in, claiming the high court’s decision could have ripple effects for the U.S. Department of Homeland Security, the U.S. Coast Guard and myriad other federal agencies that could be forced to change policies and possibly increase manpower if the definition of vessel is changed.

      Some of the claims are dramatic.

      If Lozman convinces the high court that his floating home is not a vessel, boats no longer could be used as collateral for loans, marine bankers claim in briefs filed with the court. The impact would be catastrophic for their industry and costly for anyone buying a boat. “The recreational boating industry would be crippled,” their attorneys claim.

      If the city wins its argument that if it floats it’s probably a boat, blackjack dealers on casino barges could be turned into federally protected seamen, which would have huge and expensive consequences, counters the gaming association, whose members operate 61 neon-covered barges across the nation.

      Stanford University law Professor Jeffrey Fisher, who will be making his 18th appearance before the high court when he argues Lozman’s case, laughed when asked how what began as a hyperlocal dispute about a floating house at a city marina could attract such widespread interest.

      It’s the “funny reality” that most Supreme Court cases areplucked out of obscurity,” he said. While everyone understands the import of a decision on the Affordable Health Care Act or other such momentous cases as Roe v. Wade, “the bread and butter of the Supreme Court docket” are cases that highlight inconsistencies in what is supposed to be the law of the land. Often, the law of unintended consequences produces landmark decisions.
    For more, see U.S. high court decision in ‘hyperlocal’ Riviera Beach case could help rewrite national maritime law.

    See also, The Miami Herald: Floating home or vessel? South Florida man’s case going before U.S. Supreme Court (When Riviera Beach seized and later destroyed Fane Lozman’s floating home, no one expected it would create a legal battle that will have profound implications for the nation’s maritime industry).

    For the Federal appeals court ruling currently under U.S. Supreme Court review, see City of Riviera Beach v. That Certain Unnamed Gray, Two-Story Vessel Approximately Fifty-Seven Feet In Length, 649 F.3d 1259 (11th Cir. 2011).

    Suit: HOA President Gets The Snub For Crappy 'Buy' Offer, Then Goes All Out With Jerk-Around To Submarine Estate's $27.5M NYC Co-Op Sale To Someone Else

    In New York City, the New York Post reports:
    • Hell hath no fury like a co-op board president scorned. Upset that the sellers of a sprawling penthouse apartment with eye-popping panoramic views spurned her lowball offer, 1107 Fifth Ave. board president Maureen Klinsky has set out to sabotage their $27.5 million deal with someone else, court papers say.

      Klinsky abruptly decided that the full-floor apartment’s prime selling point — a private wraparound terrace with city and Central Park views — can be used by everyone in the building to get onto a newly proposed roof deck.

      The estate of Monique Uzielli says that’s not fair and that’s not legal — her lease held that the terrace and the roof were private. In papers filed in Manhattan Supreme Court, the estate noted that the board’s moves came after it turned down Klinsky’s $21 million offer on the apartment they had on the market for $29.5 million.

      The timing is no mere coincidence. Rather, Klinsky, aided and abetted by other board members . . . is abusing her authority as the president of the board to prevent the sale from closing so she can purchase the penthouse for an amount substantially below market value, or damage the estate for rejecting her offers,” the suit says.

      The estate wants $5 million in damages — and a court order declaring that the terrace is private.

      While Uzielli’s 4,180-square-foot, 10-room apartment is spectacular, the terrace is the crown jewel — at 4,870 square feet, it’s larger than the interior living space and one of the largest in the city, the suit says.

      While the board approved the sale to the unidentified buyer in April, it then tried to revoke their approval unless both the buyer and the estate signed a deal making the roof intoa common area accessible to all residents.”

      It’s also refused to hand over documents the estate needs to proceed with the closing, the suit says — leaving the sellers worried the deal will fall apart. A hearing on the balcony brouhaha is scheduled for Oct. 4. Klinsky declined to comment through her doorman.

    'Freemen,' 'Sovereign Citizens,' 'Moorish Law' & Other Movements (& The Crackpots Who Peddle Them To The Desperate Looking To Dodge Debts, Taxes, Criminal Charges)

    Legal blogger Adam Wagner writes in the UK Human Rights Blog:
    • Almost a year ago, I and some other legal bloggers wrote about a phenomenon known as the Freemen on the Land movement. I called the post Freemen of the dangerous nonsense, for that is exactly what the movement is, for those desperate enough to sign up to it.

      Now a Canadian judge has done many judges around the world a huge favour by exploding the movement’s ideas and leaders (or “gurus”) in a carefully referenced and forensic 192-page judgment, which should be read by anyone who has ever taken a passing interest in this issue, and certainly by any judge faced by a litigant attempting the arguments in court.

      The Freemen, alongside other groups with similar creeds, believe that if you change your name and deny the jurisdiction of the courts, you will be able to escape debt collectors, council tax and even criminal charges. As this member of the Occupy London movement, “commonly known as dom” wrote in (of all places) “if you don’t consent to be that “person”, you step outside the system“.

      As you may have guessed, this magical technique never works in the courts, but judges are often flummoxed when faced with the arguments, which are odd and in many ways risible. But what has been lacking is an authoritative, systematic judgment explaining, in detail, why that is. Until now, that is.

      Associate Chief Justice J.D. Rooke in the Court of Queen’s Bench of Alberta, Canada has published a ruling which deals exhaustively with the movements’ (there are a number of similar ones of varying craziness and scariness) history and arguments.

      He groups the various movements including the Freemen under the title “Organized Pseudolegal Commercial Argument litigants” (OPCA).

      Clearly, this is Judge who has had enough. After “[o]ver a decade of reported cases” which “have proven that the individual concepts advanced by OPCA litigants are invalid”,

      "What remains is to categorize these schemes and concepts, identify global defects to simplify future response to variations of identified and invalid OPCA themes, and develop court procedures and sanctions for persons who adopt and advance these vexatious litigation strategies."

      His aim? To “uncover, expose, collate, and publish the tactics employed by the OPCA community, as a part of a process to eradicate the growing abuse that these litigants direct towards the justice and legal system we otherwise enjoy in Alberta and across Canada“. Good for him. Somebody needed to do it.
    • What the judgment says

      This is a long judgment, on the scale of a reasonably sized book. I will try my best to point out a few interesting bits but I would recommend that you read it. It is well set out and easy to follow. My numbered references are to paragraphs.

      Justice Rooke begins with a fascinating summary of the (surprisingly recent, only beginning in the last 20 years or so) history of movements such as the Freemen [172], Detaxers [169], Sovereign Men/Citizens [176], the Church of the Ecumenical Redemption International [183], and Moorish Law [189].

      One thing which is crucial to understand is that despite its anarchical tone, the movement has leaders or “gurus” who peddle its ideas to people. This is (you might have guessed) usually for a fee. The gurus focus on people who are at crunch points in their lives, such as those facing bankruptcy, foreclosure on their home or difficult litigation involving access to their children.
    For more (including a very useful set of questions for the targets of these scams to ask of those gurus peddling the ideas to them), see Freemen on the Land are “parasites” peddling “pseudolegal nonsense”: Canadian judge fights back.

    For the ruling, see Meads v. Meads, 2012 ABQB 571 (includes links to case law cited therein; go here for .pdf version - sans links to cited cases).

    Monday, October 01, 2012

    Theft By Deception/Failure To Make Required Disposition Of Property Received Among Charges Facing Pair Pinched By NJ AG In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Peddling Racket

    From the Office of the New Jersey Attorney General:
    • Attorney General Jeffrey S. Chiesa announced that a father and son from New Jersey were charged []  in an alleged scheme in which the father promised to rescue homeowners who were facing foreclosure, but instead sold their homes to unwitting investors and conspired with the son to steal $4.5 million from lenders by filing fraudulent mortgage applications in the investors’ names.

      Vito Grippo, 57, of Jackson, and his son, Frederick P. Grippo, 32, of Old Bridge, were each charged by complaint-summons with second-degree offenses of conspiracy and theft by deception. In addition, the father alone was charged with second-degree offenses of money laundering and theft by failure to make required disposition of property received. Each of the second-degree charges carries a sentence of five to 10 years in state prison. The charges are the result of an investigation by the Division of Criminal Justice Financial & Computer Crimes Bureau.

      We allege that Vito Grippo preyed on homeowners who were facing foreclosure, cheating 12 victims out of their homes and stealing $1.3 million in equity they had built up,” said Attorney General Chiesa. “He allegedly solicited investors and bought the homes in their names without their knowledge, so that he and his son could fraudulently obtain $4.5 million in loans and divert the proceeds. The end results were lost homes for former homeowners, ruined credit for investors, and major losses for lenders.”
    • Vito Grippo had an office in Holmdel and operated several companies, including Morgan Financial Equity Shares, Inc., Jandevar, LLC, and Vanick Holdings, LLC. He allegedly solicited financially distressed homeowners, saying he could rescue them from foreclosure and fix their credit rating by transferring title to their homes temporarily to a company called Morgan Financial. He allegedly represented that the homeowner would retain an 80 to 90 percent interest in the home, while Morgan Financial and an investor would share the remaining 10 to 20 percent interest. He allegedly told the homeowners to make their monthly mortgage payments to Morgan Financial, and Morgan would pay the lender, reducing their payments over time and giving them back full title to their homes in a year. He later sent letters to the homeowners telling them their mortgage payments had greatly increased.

      Meanwhile, Vito Grippo allegedly solicited investors who were led to believe that they would be investing through Morgan Financial in income generating rental properties. The investors did not know that they were actually buying the homes outright. He allegedly used the identities of the investors to file fraudulent mortgage applications to purchase the homes. His son, Frederick Grippo, who was a loan broker, allegedly conspired with the father to submit fraudulent applications. They allegedly created and submitted false documents for investors, including W-2 forms and bank statements, and asserted that the investors planned to live in the homes as their primary residences. Vito Grippo allegedly had both the original homeowners and the investors sign documents without giving them time to ascertain what they were signing.

      Vito Grippo was charged in connection with 12 homes in Elizabeth, N.J., Brooklyn, N.Y. (3 homes), Jersey City, N.J., Staten Island, N.Y. (2 homes), Rutherford, N.J., Monroe, N.J., Somerville, N.J., Mine Hill, N.J., and Cambria Heights, N.Y. He allegedly submitted fraudulent loan applications to obtain a total of more than $4.5 million to purchase the homes.

      It is alleged that Vito Grippo in turn stole more than $1.3 million in loan proceeds that should have been disbursed to the original homeowners as equity at closing. He allegedly diverted those funds into bank accounts of his companies to launder the money. It is further alleged that he then disbursed the funds to himself and other co-conspirators.

      Frederick Grippo allegedly was involved in seven of the fraudulent loan applications and received checks from Morgan Financial for his participation in the fraud. The defendants allegedly filed false HUD forms to conceal the improper payments. Although Vito Grippo made some mortgage payments on the loans in the names of the investors, he did not continue them and all of the homes fell into foreclosure. The original homeowners lost the properties and the investors’ credit ratings were ruined.

      Another man, John Pereless, 44, of Colts Neck, was involved in this type of mortgage fraud, and he allegedly conspired with Vito Grippo in connection with four of the 12 home sales with which Grippo is charged.

      Pereless pleaded guilty on July 2, 2012, before Superior Court Judge Verna G. Leath in Essex County to an accusation filed by the Division of Criminal Justice charging him with two counts of second-degree theft by deception for filing fraudulent mortgage loan applications and stealing $661,261 in equity due to home sellers in connection with 14 homes, including the four transactions involving Vito Grippo.

      Under his plea agreement, Pereless faces a 10-year prison sentence, which will run concurrently with an eight-year sentence stemming from his conviction at trial in 2010 in another mortgage fraud case prosecuted by the Monmouth County Prosecutor’s Office.
    For the New Jersey AG press release, see Father and Son Charged with Conspiring to Defraud Lenders of $4.5 Million and Steal Equity from Struggling Homeowners (Investigation by New Jersey Division of Criminal Justice revealed that the father allegedly promised to rescue homeowners from foreclosure, but instead sold their homes to unwitting investors).

    Sacramento Feds, California AG Pinch Suspected Foreclosure Rescue Scammer For Allegedly Peddling Mortgage Debt Reduction Scheme; 1,200+ Victims Fell For Ripoffs: Authorities

    In Sacramento, California, The Modesto Bee reports:
    • Authorities on Friday arrested a Bay Area man accused of running a mortgage-relief scam that reached into the Northern San Joaquin Valley and beyond.

      Alan David Tikal, 44, was arrested at his home in Brentwood, in Contra Costa County, on charges that he defrauded more than 1,000 homeowners, U.S. Attorney Benjamin Wagner announced.

      He and state Attorney General Kamala Harris said Tikal persuaded homeowners that he could pay off their mortgage debt and replace it with new debt to his company, KATN Trust, reducing the principal to 25 percent of the original.

      Victims paid thousands of dollars in fees and made regular payments on their new loans, according to an affidavit filed Friday. Tikal's attorney, Fanya Young of San Francisco, said she could not comment because she had not reviewed the charges. Tikal was scheduled to appear in U.S. District Court in Sacramento on Friday afternoon.

      Tikal, who faces numerous counts of mail fraud, could be sentenced to up to 30 years in prison if convicted, Wagner said. Tikal pleaded no contest to fraud charges in a separate Alameda County case last year and was freed to await sentencing.

      The affidavit related to Friday's arrest said it involved "approximately 1,215" victims, 95 percent of them in California. About 185 were in the court's eastern district, which covers inland areas from Bakersfield to the Oregon border. The locations were not listed, but officials at the Stanislaus County district attorney's office estimate there are about 25 victims locally. The Stanislaus County district attorney's office helped state and federal agencies pursue the case, Wagner said. The fraud is said to have occurred from January 2010 to the present.

      As an example of how it worked, the affidavit says Tikal told "Mr. and Mrs. A.L. of Stockton" that he or his investors "could purchase a participant's home and sell it back to them for 25 percent of their current loan amount." The affidavit was written by special agent Joseph Camillucci of the Troubled Asset Relief Program, created in 2008 as part of the federal response to the financial crisis.

      That crisis happened in part because of mortgages on homes that had ballooned in value, then declined, leaving the owners at risk of foreclosure. The north valley was among the hardest-hit areas and still feels the effects in high jobless rates and sluggish home prices.

      Camillucci wrote that victims were "counseled to ignore the demands for payment by the original lenders whose claims are purportedly contrary to law … Tikal and his associates are enriched, and the homeowners fall behind or default on their mortgage loans."

      The state attorney general is joining in the prosecution. "As the foreclosure crisis continues, we are seeing a rise in scams that target struggling homeowners," Harris said in a news release. "These predators rob innocent families of their life savings and their piece of the American dream."

    Closing Agent, Attorney Each Cop Guilty Pleas In Real Estate Escrow Ripoffs; Existing Mortgages Left Unpaid For Five Victimized Homeowners, Including One Scammer's Own Elderly Dad

    From the Office of the Westchester County, New York District Attorney:
    • Westchester County District Attorney Janet DiFiore announced that Loronda Murphy (DOB 07/13/64) of 4 Heather Lane, Greenwich, Connecticut, pled guilty [] to:

      · one count of Residential Mortgage Fraud in the First Degree, a class “B” Felony,
      · one count of Residential Mortgage Fraud in the Second Degree, a class “C” Felony,

      In addition, Scott Forcino (DOB 04/12/66) of 400 Wilmot Road, New Rochelle, New York pled guilty to: one count of Criminal Facilitation in the Fourth Degree, a class “A” Misdemeanor.

      From April 2009 to June 2009, operating under the home mortgage closing company Settle One Corporation, with an office located at 428 Main Street in Armonk, New York, the defendants, Loronda Murphy and real estate attorney Scott Forcino, engaged in what amounted to a home mortgage fraud "Ponzi" scheme.

      The targeted homeowner/victims each took out a new mortgage on their home through Settle One Corporation with the understanding that real estate attorney Scott Forcino would oversee their closing and that money from their new mortgage would pay off their pre-existing mortgage.

      However, Forcino instead allowed Murphy to fraudulently assume the role of attorney for each closing, and, much to the homeowner's surprise, rather than paying off their pre-existing mortgage, Murphy instead stole portions of their new loan money and left their pre-existing mortgage unpaid.

      Murphy's theft then left the homeowner with the unsustainable burden of having multiple mortgages on their family home at one time.

      Over this time period the pair defrauded five victims including Murphy’s father. In addition to skimming money out of the Settle One Corporation bank account for her own personal benefit, Murphy also attempted to conceal her crimes by using money left in the Settle One bank account to make monthly mortgage payments on various unpaid mortgages and, in some cases, Murphy even stole one homeowner's new mortgage loan money and used it to pay off another homeowner's previously unpaid mortgage.

      In the three months, beginning in April of 2009 and ending in June of 2009, Murphy orchestrated the preparation and submission of a series of false mortgage documents in connection with five mortgage loan closings that resulted in her, through the Settle One bank account, receiving over one million dollars from two home mortgage lenders: Wells Fargo Bank and Live Well Financial.

      In turn, Murphy then stole over fifty thousand dollars in loan money from each of five Westchester County homeowners, including her own elderly father, all for her own personal financial gain and to cover up her continuing criminal activity.

      In September 2010, search warrants were executed leading to an eleven month investigation by the District Attorney’s office with the assistance of the Town of North Castle Police Department.
    • Murphy faces a maximum of twenty five years in state prison. As a condition of her plea, Murphy will have to pay $720,288 in restitution. The amount paid before sentencing will determine the length of her prison term.

      Forcino faces a maximum of one year jail. As a condition of his plea, Forcino will resign from the New York State Bar.

      Assistant District Attorney Brian Fitzgerald of the Economic Crimes Bureau – Mortgage Fraud Unit - prosecuted the case.

    Texas Trial Judge OKs Foreign Company's Exercise Of Eminent Domain Right To Wrestle Land Away From Lone Star State Farmers To Construct Pipeline

    In Beaumont, Texas, The Southeast Texas Record reports:
    • A Beaumont judge [last week] granted a foreign company’s petition to condemn land for the construction of a crude oil pipeline.

      Last June, TransCanada Keystone Pipeline filed the petition for condemnation against Texas Rice Land Partners, James and David Holland and Mike and Walter Latta. TransCanada filed the petition seeking to build a pipeline to carry crude from Alberta to the Gulf Coast.

      On Sept. 24 Judge Tom Rugg, Jefferson County Court at Law No. 1, ruled that the company has the right to sieze land in Jefferson County for the pipeline.

      TransCanada has posted bonds to compensate landowners if a higher court finds that the company ultimately did not have the right to damage the sought after property, court records show.

      During a Sept. 12 hearing, Terry Wood, the attorney for the rice farmers, attempted to link the TransCanda case to a ruling made by the Texas Supreme Court last August denying Denbury Green common carrier status in a pipeline project of its own.

      However, the Denbury pipeline would have carried CO2, not crude oil.

    Sunday, September 30, 2012

    Banksters' Foreclosure Trash-Out Contractors Claim Another Homeowner/Victim; Break Into Premises When No One Home, Allegedly Took About $10K Of Personal Stuff, Leaving Damage

    In Des Moines, Iowa, KCCI-TV Channel 8 reports:
    • A Des Moines woman came home to find her belongings gone. A police report shows that last Thursday a crew that cleans out foreclosed homes arrived at the house on University Avenue and broke the lock off the back door when the homeowner was not home.

      The team entered the home and removed items. The homeowner confronted the supervisor who said there had been a mistake.

      The woman asked if she could get her items back from storage because they were supposed to be held for 30 days, but according to the police report she was told the items had been destroyed.

      On the door of the home Friday was a hand written note that reads "This is private property. No trespassing. If you coming in here, you won't be leaving."

      The police report shows the items had an estimated value of $10,000. There was also damage to a fence, back door and interior doors.(1)
    (1) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:
    For examples of filed lawsuits involving illegal bank break-in, "trash-out" & lockout cases, see:

    Indiana AG Tags Five More Out-Of-State Outfits For Alleged Loan Modification Ripoffs, Running Up Total To 140 Civil Lawsuits Throughout State Against Suspected Upfront Fee Rackets

    From the South Bend (Indiana) Tribune:
    • You want to modify your home loan to stop foreclosure and a company offers to help for an upfront fee. You pay the fee. And your home winds up in foreclosure while the company that took your money disappears.

      On Wednesday, five out-of-state foreclosure consulting companies were sued by the state of Indiana for allegedly ripping off homeowners in St. Joseph, Elkhart, Allen and LaPorte counties.

      Indiana Attorney General Greg Zoeller filed five lawsuits -- three in St. Joseph Circuit Court and two in Elkhart County -- charging four companies and one law firm with violating the Credit Services Organization Act, the Mortgage Rescue Protection Fraud Act, the Home Loan Practices Act and the Deceptive Consumer Sales Act.

      American Home Relief Foundation of Delaware, CC Brown Law of Utah, Legacy Holding Group of Arizona, and Right Away Doc Preparations Inc. and Property Solutions Center, both of California, "... promised to modify customers' home loans in exchange for an upfront fee but didn't complete the job or provide a refund," Zoeller charged in the suit.
    • In South Bend, homeowners can call the Notre Dame Clinical Law Center, said Notre Dame law professor Judy Fox. "We represent you for free," Fox said. Contact the Clinical Law Center at 574-631-7795.

      Since 2006, the attorney general's office has filed 140 lawsuits against foreclosure consultant companies in more than 30 counties across Indiana. Zoeller urged those who may have been victimized by a mortgage relief scam to file a complaint with the Indiana State Attorney General's Office.