Saturday, December 15, 2012

Detroit Law Students Make Last Ditch Effort To Kibosh Court Order Obtained Without Notice To Victims Essentially Stripping 70+ Local Residents Of Their Homes Bought Using Land Contracts

In Detroit, Michigan, the University of Detroit Mercy School of Law recently announced:
  • University of Detroit Mercy School of Law Mortgage Foreclosure Defense Clinic(1) is set to argue a motion to set aside an order effectively stripping over 70 Wayne County homeowners of ownership interests, leaving them faced with wrongful eviction from their homes. A large number of the affected homeowners are expected to be present for the motion hearing scheduled for Monday, December 17, 2012 at 9:00 a.m. at the Wayne County Circuit Court, Rm. #1901.

    Paramount Land Holdings, locally funded by the Detroit Police and Fire Pension Fund, purchased foreclosed properties for as little as $10. Through land contracts, it sold them for inflated prices to buyers who were assured that Paramount had paid all back taxes. Homeowners learned otherwise when Wayne County began foreclosure proceedings for back taxes. As a result, many homeowners stopped making their monthly payments to Paramount.

    The Receiver, appointed by the Wayne County Circuit Court to maintain Paramount properties, obtained a Court Order to Terminate Land Contract Interests, to gain exclusive possession, and to quiet title.

    Essentially, the Order seeks to strip the homeowners from their property and evict them from their homes.

    Shockingly, the Receiver obtained the order without providing the homeowners any opportunity to contest the motion. The Receiver failed to serve notice on the affected homeowners stating that their rights would be affected through the motion. The Receiver seeks to take the properties without filing a complaint, obtaining a summons, or even adding the homeowners as parties to the proceeding.

    The Mortgage Foreclosure Defense Clinic represents some of the homeowners who face loss of their homes, eviction, and homelessness as a result of the Receiver's hasty actions. The Clinic seeks to correct this injustice through its motion to set aside the Court's Order to strip the homeowner's property rights and give exclusive possession to the Receiver.

    Media are invited to attend the hearing and UDM representatives can speak about the case over the phone or before/after the hearing (Contacts: Gary D. Lichtman, UDM Media Relations, 313-993-1254; Joon Sung, Mortgage Foreclosure Defense Clinic, office 313.596.9847, mobile 734-718-9794).
  • Students represent victims of predatory lending practices in federal and state courts to stop homeowners from losing their homes due to foreclosure. Clinic students handle cases involving mortgage fraud, foreclosure rescue scams, and loan servicing errors. They have the opportunity to interview clients, argue motions, negotiate settlements, and conduct trials. In addition, students engage in community outreach through presentations and development of written materials to educate homeowners on foreclosure remedy options and rescue scams.

Another Assistance Pooch Sinks Fangs Into Landlord's Wallet; Property Owners To Cough Up $15K To Tenant, Bay State To Settle Fair Housing Charges Surrounding Renter's Care-Canine

From the Office of the Massachusetts Attorney General:
  • A property owner from Newton has agreed to pay $15,000 and make extensive policy changes at his businesses, settling allegations that a manager at one of his apartment complexes discriminated against a disabled tenant with an assistance dog, Attorney General Martha Coakley announced [].

    According to the assurance of discontinuance, filed Thursday in Suffolk Superior Court, Kevin Regan, the property manager at the Lord Baron Apartments in Burlington, allegedly refused to rent to a prospective tenant because she requested permission to reside with an assistance dog. Regan later agreed to rent to the tenant after being contacted by the AG’s Office and informed that his refusal to rent violated fair housing laws. Subsequent to the AG Coakley’s involvement, Regan allegedly threatened the victim with eviction if he received any complaints about her assistance dog.
  • The other defendants named in the assurance are the L.B. Nominee Trust, doing business as the Lord Baron Apartments, and its trustees, Kosow Construction Corporation and owner Marvin P. Kosow, both located in Newton. Regan is a resident of Westwood.

    The assurance requires the defendants to pay a total of $15,000 in restitution and penalties to the tenant and the Commonwealth.(1)
For the Massachusetts AG press release, see Property Owner Settles Claims of Housing Discrimination Against Tenant with Assistance Dog (Owner to Pay $15,000 and Implement New Policies to Avoid Violation of Fair Housing Laws).

(1) The inability or refusal to make the distinction between a household pet and either a service animal or an emotional support/assistance animal can give rise to a very costly legal problem for landlords, homeowner associations, municipalities purporting to enforce code restrictions, etc. Both the Housing Feds, the Civil Rights Feds, and others have shown a high degree of interest when these situations arise. See, for example:
See, generally, A Comparative Study: Service Animals and Emotional Support Animals under the Fair Housing Act and the Americans with Disabilities Act & An Overview of Assistance Animal Laws of Select States.

Feds, County, Planning & Zoning Commission Settle Fair Housing Allegations That Denial Of Land Use Approval Was Based Partly On Race, Color, National Origin

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department announced [] that it has settled a lawsuit against Sussex County, Del., and the Planning and Zoning Commission of Sussex County for race and national origin discrimination in violation of the Fair Housing Act.

    The lawsuit, filed [] in the U.S. District Court for the District of Delaware, alleges that the county’s planning and zoning commission denied land use approval for a 50-lot affordable housing subdivision proposed by Diamond State Community Land Trust, a Delaware affordable housing developer, in southwestern Sussex County near the town of Laurel, Del.

    The suit alleges that the Sussex County Council later affirmed the denial of the proposed development. The suit alleges that opposition to the proposal was based partly on the assumption that the subdivision’s residents would be Latino and African-American and on stereotypes based on race, color and national origin. The lawsuit arose from a complaint to the U.S. Department of Housing and Urban Development (HUD) that was referred to the Department of Justice.(1)

Massachusetts Landlord Pinched In Connection With Alleged Racial Harassment Charges Directed Against Mom, Infant Child; Behavior Constitutes Violation Of Earlier-Issued Civil Rights Injunction: State AG

From the Office of the Massachusetts Attorney General:
  • A Holyoke man has been indicted in connection with the racial harassment of his tenant in violation of a civil rights injunction obtained by the Attorney General’s Office in 2009, Attorney General Martha Coakley announced [].

    Jesse Jedrzejczyk, 57, of Holyoke, has been indicted on charges of Violation of a Permanent Injunction, Criminal Harassment, and Civil Rights Violation.

    In 2009, the Attorney General’s Office filed a Superior Court civil action against Jedrzejczyk pursuant to the Massachusetts Civil Rights Act and obtained a permanent injunction against him based on allegations that he threatened, intimidated, and harassed a neighbor and her young daughters because of their perceived race.

    Despite being subject to the Superior Court order, authorities allege that Jedrzejczyk recently engaged in substantially similar behavior toward another neighbor and her infant child because of their perceived race. Authorities allege that Jedrzejczyk regularly used racial slurs and physical harassment to intimidate his tenant and create concern for her infant’s safety.
For the Massachusetts AG press release, see Holyoke Man Indicted in Connection with Violating Permanent Civil Rights Injunction (Defendant Allegedly Continues to Engage in Race-Based Harassment of Neighbors).

Massachusetts AG Suit: Unlicensed Contractor Abandoned Projects After Pocketing Upfront Cash From Homeowners

From the Office of the Massachusetts Attorney General:
  • A Framingham man has been sued and ordered to stop any contracting services without a license after allegedly engaging in home improvement projects without proper registration, failing to complete the work, and misappropriating tens of thousands of dollars from a consumer, Attorney General Martha Coakley announced today.

    The lawsuit filed against Kyle Buckminster last week in Suffolk Superior Court seeks civil penalties and consumer restitution for violations of the Massachusetts Consumer Protection Act, due to allegations he misrepresented himself as a licensed home improvement contractor and abandoned projects for which he had received payment.
For the Massachusetts AG press release, see Framingham Man Sued for Illegal Home Improvement Practices (AG Coakley Obtains Injunction Prohibiting Defendant from Operating Without a License).

Friday, December 14, 2012

Antitrust Feds Score Two More Guilty Pleas In Probe Into Foreclosure Sale Bid Rigging Rackets

From the U.S. Department of Justice (Washington, D.C.):
  • Two Alabama real estate investors and their company pleaded guilty [] for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced.

    Robert M. Brannon, of Laurel, Miss.; his son, Jason R. Brannon, of Mobile, Ala.; and their Mobile-based company, J & R Properties LLC, pleaded guilty [] to an indictment originally returned on June 28, 2012 in the U.S. District Court for the Southern District of Alabama charging each of them with one count of bid rigging and one count of conspiracy to commit mail fraud.

    According to court documents, the Brannons and their company conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at a public auction, which typically takes place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.

    The Brannons and their company were also charged with conspiring to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators, and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. The Brannons and their company are charged with participating in the bid-rigging and mail fraud conspiracies from as early as October 2004 until at least August 2007.

    “The conspirators subverted the competitive bidding process by engaging in a collusive scheme to artificially depress prices at real estate foreclosure auctions and to defraud financial institutions and homeowners out of money and property,” said Renata B. Hesse, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.(1)
For the Justice Department press release, see Two Alabama Real Estate Investors and Their Company Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions (Investigation Has Yielded 10 Guilty Pleas to Date).

(1) Real estate operators and others who have gotten themselves pinched on charges alleging participation in an illegal bid rigging scam at a public auction may wish to consider whether to mount a defense before deciding to 'race to the prosecutor's office' and spill their guts about the racket (and, in the process, throwing their co-conspirators under the bus in an attempt to beat the rap, or at least reduce any anticipated prison sentence). For more, see:

Vegas Real Estate Operator Gets 37 Months For Screwing Over Underwater Homeowners By Taking Upfront Fees In Exchange For False TARP-Associated Debt Reduction Promises

From the U.S. Department of Justice (Washington, D.C.):
  • A Las Vegas man was sentenced [] to 37 months in prison for operating a foreclosure rescue scam that defrauded distressed homeowners who were struggling to pay their mortgages, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.

    Alex P. Soria, 65, was sentenced [] by U.S. District Judge Lloyd D. George in the District of Nevada. In addition to his prison term, Soria was sentenced to serve three years of supervised release and ordered to pay $320,266 in restitution.
  • According to court documents, Soria identified homeowners whose mortgage debt exceeded the value of their homes and charged them a fee purportedly to reduce the principal balance of their mortgages using money from the Department of the Treasury’s Troubled Asset Relief Program (TARP).

    Soria admitted in court that he lied to homeowners about his affiliation with several mortgage lenders and that he provided victims with fraudulent letters stating they had been approved for loans. Soria also admitted he falsely told victims that his loan program had been successful in the past and charged homeowners for loan modifications he knew he could not deliver. Court documents show that Soria concealed from homeowners the fact that the state of Nevada had issued a cease and desist order which legally prohibited him from working in the mortgage industry.

    Soria collected over $100,000 in fees from distressed homeowners, many of whom lost their homes to foreclosure after Soria failed to deliver the loan modifications he promised.

Milwaukee-Area Real Estate Operator Pinched For Allegedly Running Straw Buyer/Short Sale Scam; Accused Of Illegally Pocketing $1M+

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:
  • Three of the key figures in a 2007 deal in which a learning disabled man was duped into buying an inner city home are facing unrelated federal mortgage fraud charges.

    Randez Long this week pleaded not guilty to charges that he collected more than $1 million by leading a crew of people who scammed lenders into writing inflated mortgage loans during a three-year period when the housing market was booming.

    Unlike mortgage fraud schemes that involve one loan, Long is charged with using fraudulent information to have lenders provide two loans for the same property - one when it was initially purchased by one of his associates and a second when the property was later sold to different Long associates.

    Long, 33, is charged with money laundering, bank and wire fraud. He is scheduled for trial in February.
  • In the Long indictment, the grand jury charged that he recruited individuals, including his mother and sister, to buy properties in Milwaukee and to obtain inflated mortgages by providing lenders with false information about the buyer's finances and employment. The buyers would quickly default on the loans and arrange for the properties to be sold in a "short sale."

    In a short sale, the property is sold for less than the amount owed on the mortgage, and the lender agrees to accept that sale amount.

    "In fact, these 'short sales' were fictitious and never occurred," the indictment states.

    Instead, the properties were sold to others at a price greater than the amount told to the lenders and new mortgages - again based on fraudulent applications - were received from other lenders, the indictment charges, noting that "Long again received a substantial portion of the sale proceeds."

    The case was investigated by the Internal Revenue Service criminal investigation division and the FBI. Though the indictment describes transactions involving two north side properties, a source familiar with the case said Long was involved in the purchase and sale of at least 30 area properties.

Thursday, December 13, 2012

Detroit Couple Finds Their Recently-Purchased Home Reduced To Rubble As County Auctioned Tax-Foreclosed Real Estate To Public Despite Knowing Properties Were Slated For Demo

In Detroit, Michigan, the Motor City Muckraker reports:
  • Artists Kristine Diven and Micho Detronik thought they found the perfect home in Detroit. The fixer-upper was spacious with a second-floor balcony, a new roof and beautiful fireplaces. The east-side house needed a little work – new bathtubs, doors and electrical wiring.

    But less than a month after getting the house at a Wayne County foreclosure auction, the couple were shocked Thursday when they found rubble in the place of their two-story brick house on Berkshire.

    Turns out, the Michigan Land Bank, an economic development engine for the state, has demolished an estimated 20 houses that were purchased at the recent auction. It planned to raze even more.

    Even worse, the Michigan Land Bank and Wayne County Treasurer’s Office knew homes were being auctioned off even though they were slated for demolition, the Motor City Muckraker has discovered.
  • What’s also disturbing about the demolition is the quality of houses that have been razed or are on the demo list. Many are large, gorgeous homes that only need a few repairs.

    With more than 40,000 vacant houses, the city is rife with homes that have been burned or are falling over. It’s unclear why the state would target homes that can be fixed up, rather razing houses that are a danger to the public.

Feds Score Asset Freeze, Temporary Halt Of Operations Of Two Outfits Alleged To Be Running Nationwide Loan Modification Racket

From the Consumer Financial Protection Bureau (Washington, D.C.):
  • The Consumer Financial Protection Bureau [] announced actions to halt two alleged mortgage loan modification scams it believes ripped-off thousands of struggling homeowners across the country. In total, these operations took in more than $10 million by charging consumers for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.
  • At the request of the CFPB, U.S. District Court Judges in the State of California have ordered a halt to both operations, the Gordon Law Firm and the National Legal Help Center, and frozen their assets while the CFPB moves forward with the cases. The case involving the National Legal Help Center was initially referred to the CFPB by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and Treasury’s Office of Financial Stability, which have coordinated closely with the Bureau throughout the investigation.

    “It is absolutely unacceptable for unscrupulous con artists to take advantage of our nation’s housing crisis by targeting homeowners looking for help from TARP’s Home Affordable Modification Program,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “We thank the CFPB for protecting homeowners. SIGTARP will continue to stop these scams and educate homeowners that mortgage modifications through HAMP are free.”

    The CFPB is targeting loan modification operations that attempt to disguise their false promises of relief for struggling homeowners with claims that they are performing legal work or are a law firm. The Bureau is also particularly concerned with schemes that attract victims with false claims that they are endorsed by or represent the government. These tactics are used by mortgage relief scams to attract victims, add credibility to their schemes, or exploit certain legal exemptions for the practice of law.
For more, see Consumer Financial Protection Bureau halts alleged nationwide mortgage loan modification scams (Operations targeted financially distressed consumers in danger of losing their homes).

Referral From Bay State High Court's Attorney Ripoff Reimbursement Fund Leads To Indictments For Now-Twice Disbarred Attorney Accused Of Ripping Off Client Cash Intended For Mortgage Loan Payoffs

From the Office of the Massachusetts Attorney General:
  • A former Tewksbury attorney has been arraigned in connection with stealing more than $400,000 from multiple clients, one of whom is disabled, Attorney General Martha Coakley announced []. The defendant allegedly stole money which had been entrusted to him by clients seeking help to pay off mortgages or as part of the probate of an estate.

    Raymond Paczkowski, Jr., age 77, of Tewksbury, was arraigned [] in Middlesex Superior Court on one count of Larceny over $250 from a Disabled Person and seven counts of Larceny over $250 (7 counts). At the arraignment, Paczkowski pleaded not guilty and was released on personal recognizance, with the condition that he have no contact with the victims.

    In 2010, the AG’s Office began an investigation after the matter was referred from the Tewksbury Police Department and the Massachusetts Clients' Security Board of the Supreme Judicial Court, which manages a fund that is supported, in part, by annual fees paid by members of the bar.

    The Clients’ Security Board distributes fund money to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the bar acting as an attorney or a fiduciary.(1)

    Paczkowski worked as an attorney specializing in conveyancing and probate work, and also did some work with insurance claims and litigation. In 2008, authorities allege that Paczkowski began stealing from several of his clients.

    According to investigators, Paczkowski received $75,000 in 2008 from a disabled client in order to pay off a mortgage on her home. Several months later, however, the client received a letter indicting that the loan was still outstanding. It is alleged that Paczkowski never gave the money to the lender and instead stole it for his personal use.

    Authorities further allege that Paczkowski took money from several other clients who had sought help in paying off their mortgages. In one case, a client gave Paczkowski $175,000, with the intent that Paczkowski immediately use those funds to pay off the existing mortgage on his property. The client, however, continued to receive monthly mortgage statements and it is alleged that Paczkowski stole the money instead of paying off the clients’ mortgage.

    In other instances, Paczkowski allegedly stole money from clients who had hired him to assist with the handling or disposing of estate property after experiencing a death in the family.

    In one case, a client who assumed the full title to his mother’s property after she passed sought Paczkowski’s assistance in paying off a mortgage in order to refinance. The client’s mother owed roughly $109,000 to the company that held a mortgage on the property and Paczkowski allegedly received $158,100 from a new lender. According to investigators, Paczkowski forwarded the proceeds to the client, but failed to pay off the original mortgage company. Authorities allege that the client realized the theft when he received multiple late notices on his mother’s mortgage statement.
  • On November 24, 2010 Paczkowski was disbarred, after having been administratively suspended that October. Paczkowski had previously been disbarred in August 1985 for conduct similar to the present allegations.
For the Massachusetts AG press release, see Former Tewksbury Attorney Arraigned in Connection with Stealing More Than $400,000 from Clients (Defendant Allegedly Stole Money Entrusted to Him by Clients for His Personal Use; Also Allegedly Stole from Disabled Client).

(1) For similar "attorney ripoff reimbursement funds" established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in other states and Canada, see:

Wednesday, December 12, 2012

WV Supremes: OK To Include $600K In Court-Awarded Legal Fees, Litigation Costs Before Tripling Total Damages When Calculating Punitives Under State UDAP Statute

In Charleston, West Virginia, The West Virginia Record reports:
  • An attorney involved in a recent state Supreme Court decision is pleased the court decided attorneys fees can be applied when calculating punitive damages.

    Jim Bordas, of the Wheeling firm Bordas and Bordas, said the court was right to affirm Ohio County Circuit Court Judge Arthur Recht’s 2011 decision. Recht awarded almost $600,000 in attorneys fees and litigation costs, then used that amount to help determine the amount of punitive damages owed to Lourie Brown.

    “We… consider it to be a significant victory for the Browns and consumers throughout the State of West Virginia that the Supreme Court found that the attorneys fees that the Browns were awarded as a result of the tremendous amount of work done by their attorneys can be considered as part of the ratio when analyzing the appropriate amount of punitive damages to be awarded,” Bordas said.

    On Feb. 17, 2011, Recht awarded more than $2.1 million in punitive damages – an amount that represented three times the amount of compensatory damages, attorneys fees and litigation costs combined. He had awarded almost $500,000 in attorneys fees and $100,000 in litigation costs.

    He followed a 1991 decision to calculate the amount of punitive damages. Recht wrote the Quicken Loans case was “one of the more confusing, confounding and complex cases both factually and legal that has ever been before” him. Quicken Loans did not challenge the amount of attorneys fees.

    On Nov. 21, the state Supreme Court, in an opinion authored by Justice Thomas McHugh, found that Quicken Loans committed fraud and violated various provisions of the West Virginia Consumer Credit and Protection Act in a mortgage loan with Brown,(1) an Ohio County resident.

    Brown had responded to a pop-up advertisement on her computer in May 2006 and submitted an online application in an effort to consolidate debt and lower monthly payments. She was contacted by Quicken Loans.

    Brown alleged the company gave her a larger loan than necessary after an inflated appraisal and lied about refinancing after the loan was in place. Eventually, she defaulted on the loan.

    Recht agreed with her argument, and he added attorneys fees and costs in with the compensatory damages awarded to arrive at the $2.1 million figure. The Supreme Court affirmed that decision, with McHugh writing that attorneys fees and costs awarded under the WVCCPA should be included in the formula.

    With a $700,000 settlement from two other defendants, Brown’s total recovery was nearly $3.7 million – a figure that didn’t sit well with Quicken Loans given the cost of the loan was $145,000.

    The court, though, found Quicken did not disclose an “enormous” balloon payment of more than $100,000.

    The case was remanded for a new calculation of damages.

    The court agreed with Quicken that it should receive a $700,000 credit for the settlement between Brown and the other defendants – the appraiser and appraisal company. Most likely, the credit will offset the compensatory damages awarded, leaving a balance of zero.

    That credit, however, will not apply to any punitive damages. As to the punitive damages issue, the court ruled Recht did not conduct a “meaningful and adequate” analysis under the 1991 decision.
For the story, see Bordas: Quicken Loans ruling a win for consumers.

For the court ruling, see Quicken Loans, Inc. v. Brown, No. 11-0190 (WV. November 21, 2012).

For an earlier post, see WV High Court Says Quicken Loan Terms "Unconscionable", Violate State UDAP Statute, But Nixes Mortgage Cancellation & Directs Lower Court To Reconsider Screwed Over Homeowners' $2.8M Damages Award.

(1) The Consumer Credit and Protection Act is West Virginia's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (generically referred to as state UDAP statutes).

For more on UDAP statutes across the U.S., see Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

Foreign Outfit Armed With Eminent Domain Power Scores Favorable Appeals Court Ruling In Effort To Grab Property From Texas Landowners For Pipeline Construction

In Beaumont, Texas, The Southeast Texas Record reports:
  • The Ninth Court of Appeals affirmed on Nov. 29 a ruling that denied summary judgment against TransCanada Keystone Pipeline – a foreign company armed with the power of eminent domain.

    TransCanada had filed a petition for condemnation against Rhinoceros Ventures Group Inc. and Batson Corridor, asserting that it is the owner and economic operator of the Keystone Pipeline System, which includes the Keystone Gulf Coast Section, court papers say.

    According to TransCanada, Gulf Coast is a common carrier pipeline that, upon completion, will extend from across Texas from Fannin County to Nederland in Jefferson County. The entity claims it enjoys common carrier status, giving it the right to take land from landowners for the construction of its pipeline.

Feds Confirm Bad Holiday News To Family Facing Foreclosure: She's Been Victimized By Nationwide Loan Modification Scam

In Omaha, Nebraska, WOWT-TV Channel 6 reports:
  • An Omaha mother of five opened something that was hardly a holiday gift. It was an email from federal authorities confirming she's a victim of a mortgage scam. Now the family is fighting to keep their home.

    Estes family members are victims of a bad call by a loan modification company. “They've taken our money and not done anything they said they would do,” says Melissa Estes.

    The family paid 1st American Law Center of Oceanside, California $3,500 to negotiate a lower monthly rate with their lender and advised Melissa to stop mortgage payments until that was done. It was bad advice because the lender never agreed and is threatening foreclosure. “I just hope and pray they will let us slowly pay so we would be able to remain in this house.”

    The 1st American Law Center has been exposed by consumer advocates and busted by federal authorities. “It’s justice to know they won't be dong that to anyone else." But justice doesn't pay the mortgage.

    The victims of this loan scam are now getting threatening calls from their mortgage company. Still, they don't want their children to feel victimized as well so they promise gifts will be under the Christmas tree this year.

Tuesday, December 11, 2012

Scammer Gets 12 Years For Running Mortgage Elimination Racket That Purported To Invalidate Loans Through Lawsuits Against Lienholders

From the Office of the U.S. Attorney (San Francisco, California):
  • Sergio Gutierrez was sentenced [] to twelve years in federal prison after a jury convicted him of running a scheme in which he defrauded victims by telling them to stop paying their mortgages, United States Attorney Melinda Haag announced.
  • Gutierrez defrauded investors by falsely telling them that they would be able to own their homes outright if they paid him for documents that he claimed would dispute the validity of their mortgages that various banks held on their properties.

    The lawsuits filed by the victims were dismissed by various courts throughout California, and most of the victims ended up losing their homes through foreclosure. Gutierrez’s purported mortgage elimination program specifically targeted victims who had little or no ability to read or write English. From 2008 to 2009, Gutierrez received more than $89,000 from individual victims who paid him for this program.

Florida Supremes Spank Four Lawyers For Playing Fast & Loose With Clients' Trust Account Cash; Belt Another For Actions Related To Loan Modification/Foreclosure Litigation Cases

The Florida Bar News reports that the Florida Supreme Court in recent court orders disciplined the following five attorneys for allegedly either playing fast and loose with their clients' trust account money, or for conduct in connection with loan modification/foreclosure litigation cases:
  • Delaila Jannette Estefano, 3850 Bird Road, Suite 901, Miami, suspended for 90 days, effective retroactive to March 9, 2009, following an October 24 court order. (Admitted to practice: 1999) From January 2007 through September 2008, due to a lack of timely deposits, there were some instances in which Estefano’s trust account had insufficient funds. Estefano also failed to maintain proper trust account records, and she failed to follow proper trust accounting procedures. (Case No. SC12-1676);
  • Howard Joseph Milchman, 9900 W. Sample Road, Suite 300, Coral Springs, suspended until further order, effective 30 days from an October 17 court order. (Admitted to practice: 1987) According to a petition for emergency suspension, Milchman appeared to be causing great public harm by misappropriating trust funds or property. In one matter, Milchman used the estate of one client as a source of funds to make a restitution disbursement of more than $45,000 to another client, similar to a Ponzi scheme. In multiple instances, he has not applied funds entrusted to him for specific purposes. (Case No. SC12-2106);
  • Clarence Edward Porch, Jr., 2674 S.E. Willoughby Blvd., Stuart, suspended for 91 days, effective 30 days from an October 9 court order. (Admitted to practice: 1969) For three months, Porch accepted clients from a nonlawyer company that he knew was not an approved lawyer referral service. Porch failed to supervise nonlawyer employees and failed to review any work they did regarding loan modification and foreclosure litigation cases. Porch also purchased leads of prospective clients’ names and paid an employee to call those prospective clients. (Case No. SC12-1674);
  • Gene Stuart Rosen, 1550 N.E. Miami Gardens Drive, North Miami Beach, suspended until further order, effective 30 days from an October 9 court order. (Admitted to practice: 1974) According to a petition for emergency suspension, Rosen appeared to be causing great public harm by misappropriating and/or diverting funds entrusted to him and by breaching his fiduciary duties with respect to the handling of those funds held in trust. (Case No. SC12-2003);
  • Kelly Earlise Speer, P.O. Box 172067, Tampa, suspended until further order effective immediately, following an October 11 court order. (Admitted to practice: 2006) Speer was held in contempt for failing to comply with the terms of a December 14, 2011, court order. Speer was ordered to respond to The Florida Bar regarding a trust account overdraft inquiry of September 8, 2011. (Case No. SC11-1866).
Source: The Florida Bar News: Disciplinary Actions (December 15, 2012).

Settlement Of Race-Based Discrimination Complaint To Cost Wisconsin Landlord $57,500; Manager Allegedly Told Black Renters No Apartments Were Available While Telling Whites Otherwise

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department announced [] that the manager and owner of the Geneva Terrace Apartments Inc. in La Crosse, Wis., have agreed to pay $57,500 to settle a lawsuit alleging they violated the Fair Housing Act by discriminating against African-Americans who were seeking to rent apartments at the complex.

    The complaint, filed in the U.S. District Court for the Western District of Wisconsin on Oct. 26, 2011, alleged that Nicolai Quinn, the manager of the apartment complex, told prospective African-American renters that apartments were not available when they were, while telling prospective white renters that there were apartments available.
  • As alleged in the complaint, in 2009 and 2010, Quinn told an African-American couple who were interested in renting an apartment in Geneva Terrace that there were no apartments available, even though the complex had posted a sign advertising vacancies.

    The couple found it suspicious and asked a white friend to contact the complex. Quinn told the white friend that he had available apartments.

    The couple then reported their experience to the Metropolitan Milwaukee Fair Housing Council (MMFHC),(1) a nonprofit fair housing organization. MMFHC conducted fair housing tests, which confirmed that Quinn was telling African Americans that apartments were not available while showing available apartments to white persons.

    The couple also filed a complaint with HUD, which conducted an investigation and, after issuing a charge of discrimination, referred the matter to the Department of Justice.

    Under the terms of the settlement, which is subject to approval by the U.S. District Court, the defendants will pay the complainants $47,500 in damages.(2)   Defendants will also pay a civil penalty of $10,000 to the United States. Defendant Geneva Terrace Apartments LLC will also develop and maintain non-discrimination housing policies and attend fair housing training.
For the Justice Department press release, see Justice Department Settles Lawsuit Against Wisconsin Landlord and Former Manager for Discriminating on the Basis of Race.

For the lawsuit, see U.S. v. Geneva Terrace Apartments, Inc. (go here for the settlement agreement).

(1) The Metropolitan Milwaukee Fair Housing Council is a private, non-profit, membership-based organization that promotes fair housing throughout the State of Wisconsin by combating illegal housing discrimination

(2) This amount is inclusive of the couple's attorney fees.

Monday, December 10, 2012

L.A. Man's Identity Hijacked, Used In Foreclosure Rescue Bankruptcy Scam; Petition Filed Under His Name & Used To Dump Eight Homes In Foreclosure On Opened Case

In Los Angeles, California, KPCC Radio 89.3 FM reports:
  • Software systems engineer Ajamu Azibo seems to have it all. He's young and healthy, with a great job at UCLA, a happy marriage, and dreams of owning a house someday.

    But during a coffee break on campus he recalled the day, five months ago, when everything seemed to fall apart. He'd been waiting for a call to hear whether he qualified for a new car loan.

    "I was sitting at work; I got a phone call from my car company, from the loan. And they asked me if I planned on going forward with the bankruptcy that I'd filed on June 22nd. This was completely out of the blue, I hadn't gone to the court to file, so I had no idea what they were talking about," Azibo said.

    He rushed to the federal courthouse in downtown Los Angeles and asked whether someone had filed for bankruptcy under his name. A clerk handed him a folder with documents containing signatures that were not his.

    The report listed that he was single and that he owned a Honda Accord, a property in San Diego and another in Carson. None of that was true. He discussed this with one of the agents at the bankruptcy court-and soon they realized that someone else had filed for him. Unfortunately, the court told him, his case is typical.

    Maureen Tighe is a federal bankruptcy court judge for the Central District of California.

    "We had a lot of people coming to court saying 'there's been a bankruptcy filed on my name, and I've never authorized the bankruptcy filing. And once you got talking to the person, they usually had some sort of a foreclosure problem. And they had consulted one of these outfits that do loan modifications, or foreclosure rescue," Tighe says.

    Azibo hadn't sought a loan modification, or a foreclosure. But he remembers meeting four years ago with a friend of a friend, a man who identified himself as a lawyer. This person suggested that Azibo could solve his money problems by filing for bankruptcy. Without thinking twice about it, he gave the man his name and Social Security number, and the rest is history. No one knows if this same man is responsible for Azibo's bogus bankruptcy filing.

    Since the summer, Azibo has become the victim of yet another scam: a bankruptcy hijacking. That's when a third party fraudulently files for a loan, or property, on behalf of someone's bankruptcy case without his or her knowledge. Turns out that somebody dumped eight different properties facing foreclosure on Azibo's open bankruptcy case. That further complicated his financial record.

Clock Begins To Tick On 300+ Seniors Who Face Decision To Either Voluntarily Abandon Their Homes Or Get The Boot As Mortgage Holder Refuses To Modify Loan Secured By Land Underlying Mobile Home Park

In Martin County, Florida, The Palm Beach Post reports:
  • Betty Johnson, 73, has lived in Ocean Breeze Park in Martin County for many decades, longer than she can remember. Her little mobile home in the back corner of the 55-and-older community is full of knickknacks, and little sailboats she painted herself decorate the side of the home.

    But next year could be her last in the 45-acre, riverfront community after the Ocean Breeze Park Homeowners Association filed for bankruptcy in August.

    She and about 350 other residents learned Friday they could have until Nov. 30, 2013 to leave their homes if the HOA accepts a deal presented by the mortgage lenders.

    "I've been here a long, long time," Johnson said. "I don't know what the hell is going on here, but it's got me very upset."

    She's not alone in her frustration, as was evident at the meeting Friday attended by more than 100 residents where the HOA board members broke the news and had three police officers there to keep the peace.

    The lenders and owners of the property, Gary Hendry, Cathie Teal and Marcia Hendry-Coker, are descendants of the original property owners Harry and Queena Hoke, who founded the park in 1938.

    About 130 residents, including Johnson, united to buy the property from the Hoke descendants in 2008, but the cost proved too much, resulting in more than $20 million in debt.

    Hendry, Teal and Hendry-Coker offered Aaron Wernick, bankruptcy attorney for the HOA, the deal that would allow residents to stay on the property until the end of November 2013 while still paying rent, mortgages and property taxes. Then, the residents must leave or risk eviction.

    "What kind of heart do these people have?" Diane Kim, 56, shouted out at the meeting. Wernick said, "We proposed every which way to try to keep this a park and they were firm. They just want the property back."

    Wernick's words were met with the angry mutters and occasional community outcries during the hour and a half HOA meeting. "I love it here, and I'm not moving!" said Frank Unterberger, 84, who has been living in Ocean Breeze Park as a snowbird for 35 years. "It's sad, really, to think about it," said Ruth White, 79, who has lived in the park for 25 years.

    The final decision to dismiss the bankruptcy, which protected the community from foreclosure, is Dec. 16. If the HOA board accepts the deal from the lenders, the clock begins ticking for residents to find other living arrangements within a year. If the deal is turned down, residents could face eviction even sooner.

    Harry Bartlett, president of the Ocean Breeze Park Homeowners' Association, said he wished things had turned out differently. "This board has tried their very best," Bartlett said. His voice cracked as he spoke the last words before the meeting adjourned. "I'm sorry."

Phoenix Renter Out $500 After Stumbling Into 'House Sitting' Scam That Purportedly Offers Cheap, Short Term Rentals Of Vacant Homes In Foreclosure

In Phoenix, Arizona, KTVK-TV Channel 3 reports:
  • A Phoenix woman said she thought she was getting a great deal on a rental home, but the deal turned into a financial loss. She lost $500 over the whole deal.

    Nicole Abreu said she was looking for a house to rent and came across a Craigslist ad indicating Valley homes for rent for as little as $500 with no credit check. Just move in.

    Abreu said she called and eventually met with Sydnee Bollwinkel and even gave her $500 for a home that was reportedly available in Glendale. "We were trying to find a place that was big enough for all of us," Abreu said.

    But, after forking over $500, some guy claiming to be Bollwinkel's assistant called her. "He was like, 'Oh, we made a mistake, that house has been rented so you have to pick a new one,'" Abreu recalled. Abreu said she tried but Bollwinkel never responded to her and she remains out $500.

    After refusing to return 3 On Your Side's phone calls and emails, we showed up at Bollwinkel's doorstep in Gilbert, but she bolted and threatened to call the police.

    According to paperwork Bollwinkel had given Abreu, Bollwinkel claims to run a company that works with a group of investors who allow her to rent out vacant homes that are facing foreclosure or short sale.

    Tenants, like Abreu, are reportedly allowed to be "house sitters" for the vacant homes in exchange for cheap rent, at least until the homes sell or are auctioned off -- homes like the one in Glendale that Abreu was initially interested in for only $500 a month.

    3 On Your Side went to that home and caught up with the actual owner of the house, who was shocked and said, "I've never listed this house for rent."

    The homeowner told 3 On Your Side that his house at one time was facing foreclosure, but he was able to save his house and never moved out and he certainly never gave anyone permission to move in. "That's a pretty scary thought that somebody's trying to rent out my house without my knowing it," he said.

    Bollwinkel and her husband, Derek, have been hot water before. In fact, an Avondale Police report details how "the suspects rent out a house, which they have no right to rent..."

    Bollwinkel was never charged, but her husband was convicted and is currently on probation for the scheme.

    Abreu said something needs to be done. By the way, Abreu isn't the only who says she lost money, other consumers have contacted 3 On Your Side with similar complaints. As for now, Abreu continues to look for a house to rent.

Sunday, December 09, 2012

CPA Gets 12 Months For Writing Fraudulent Letters To Dupe Banks Into Funding Equity Stripping Sale Leaseback Ripoffs

From the U.S. Department of Justice (Washington, D.C.):
  • Barrington Coombs, 58, of Weston, Fla., was sentenced [] to serve a year and a day in prison for his role in a foreclosure rescue scheme that victimized desperate homeowners on the brink of losing their homes, the Justice Department announced.
  • According to the indictment and evidence presented at trial, two of Coombs’ accomplices, Lisa Wright and Cathy Saffer, operated Foreclosure Solution Specialists (FSS) from 2006 to 2009. FSS targeted homeowners facing foreclosure, advertising that it could assist those homeowners in remaining in their homes.

    When contacted by distressed homeowners seeking assistance, FSS misrepresented to those homeowners that their homes would be sold to investors. According to the indictment and evidence presented at trial , FSS also claimed that customers could remain in their homes after the sales and promised them an opportunity to repurchase the homes at a later date. Rather than selling the homes to legitimate investors, FSS designed sham sales to straw purchasers whom they paid to participate in the scheme.

    According to the indictment and evidence presented at trial, FSS paid Certified Public Accountant Barrington Coombs to write a fraudulent letter that vouched for the false information on various loan applications. Lenders relied on Coombs’ fraudulent letter in deciding to fund the loans.

    “The individual sentenced today lent his credibility as a professional accountant to a foreclosure scheme and, in doing so, caused lenders and consumers to suffer substantial losses,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division.
  • Coombs is the last member of the scheme to be sentenced. In November 2012, the two individuals who operated FSS were sentenced. Lisa Wright was sentenced to a 66 month term of imprisonment, while Cathy Saffer received a sentence of 60 months.

    Mortgage transactions completed by FSS drew equity out of the homes, which FSS’ principals pocketed for their own purposes. After doing so, FSS allowed the loans to go into foreclosure. Homeowners ultimately lost all of the equity in their homes, and most of the victims were forced to move out of their homes.
For the Justice Department press release, see Florida CPA Sentenced for Role in Foreclosure Scheme (Scheme Resulted in Many Victims Losing Their Homes).

NYS Regulator Orders Loan Servicer To Hire Watchdog To Ensure Compliance With Its Mortgage Servicing Reform Promises

From the Office of the New York State Department of Financial Services:
  • Superintendent Benjamin M. Lawsky [] announced that the Department of Financial Services is requiring Ocwen Financial Corporation to hire a monitor to ensure that the company complies with an agreement to reform its mortgage servicing practices. The action was taken after an examination by the Department found indications of Ocwen violating the agreement. The monitor will be in place for two years.

    Ocwen is one of the largest mortgage servicers and has been growing rapidly, servicing more than 764,000 residential mortgages nationally as of August. In New York, the company services more than 40,000 residential home loan accounts held largely by distressed homeowners

    “It is not enough to have banks and mortgage servicers sign agreements promising to reform their businesses. The best unrealized reforms won’t protect homeowners. To protect homeowners facing the risk of losing their homes, we must ensure that the companies are actually living up to their promises,” Superintendent Lawsky said.

    “Following complaints about Ocwen’s servicing practices, we conducted a targeted exam of Ocwen’s performance and discovered gaps in the company’s compliance. The Department is requiring the company to hire a monitor so that we can be sure that the reforms are implemented and homeowners have a real chance to avoid foreclosure.”
For the NYS Department of Financial Services press release, see Cuomo Administration Requires Major Mortgage Servicer To Install Monitor To Ensure Promised Reforms Are Implemented (Exam Finds Indications that Problems Remain at Ocwen).

Go here for the new Consent Order.

Thanks to Bill Collins of Frontier Abstract for the heads-up on the story.

Idaho Man Gets 37 Months For Duping Homeowner Into Mortgaging Home Under False Promise Of Assistance In Developing Her Land Into Condos, Then Pocketing Most Of The Cash

From the Office of the U.S. Attorney (Coeur D'Alene, Idaho):
  • United States Attorney Wendy Olson announced [] that Samuel Thomas Geren Jones, 32, of Spokane, Washington, was sentenced in federal court in Coeur d’Alene to 37 months in prison followed by three years of supervised release.

    Jones was convicted by a federal jury in July 2012 on 19 counts of wire fraud and one count of interstate transportation in aid of racketeering enterprises. U.S. District Judge Edward J. Lodge also ordered Jones to pay $366,290.45 in restitution. Jones will be required to pay a special assessment on each count for a total of $2,000.

    During the seven-day trial, the jury heard evidence that Jones and his co-defendant, Travis Justin Sneed, schemed to defraud a home and property owner in Coeur d'Alene who had entered into an agreement with the men to develop her land into condominiums along the Spokane River.

    According to testimony, the homeowner mortgaged her property, and the majority of the money—almost $600,000—went to Jones and Sneed. The money was sent to an out-of-state attorney, who then transferred the money into the defendants' bank account; this allowed Sneed and Jones total control over the loan proceeds. Sneed and Jones also directed the attorney to make five loan payments, which led the property owner to believe the project was moving forward.

    In reality, the bulk of the funds was not used as promised; the land was not developed as Sneed and Jones represented; and within six months, they had spent loan funds for their own personal benefit.
  • Travis Sneed was sentenced in August 2011 to 63 months in prison for interstate transportation in aid of racketeering enterprises and three counts of wire fraud. Sneed was also ordered to pay restitution to the victim.
For the U.S. Attorney press release, see Spokane Man Sentenced In Idaho Federal Court For Wire Fraud (Defendant Ordered to Pay Restitution of $366,290.45).