Saturday, February 02, 2013

Foreclosed Homeowner Jailed On $1.5M Bond For Allegedly Torching Former Home In Blaze That Severely Injured First Responder

In Stuart, Florida, TC Palm reports:
  • A judge Friday refused to lower the $1.5 million bond that's holding a Lake Park man accused of torching a home he lost to foreclosure and critically injuring a firefighter who fought the blaze.

    Joseph Edward Haas, 47, remained at the Martin County jail after a brief appearance in court to face charges of arson, grand theft and arson resulting in injury. "I didn't burn the house down intentionally," Haas said Thursday in handcuffs as Martin County sheriff's deputies took him into custody.

    Investigators say on Dec. 27, Haas went to his former home at 1151 S.W. Blue Water Way, doused it with gasoline and set it on fire. His motive, authorities have said, was to prevent anyone else from living in the western Martin County home he built that was taken by the bank in a foreclosure action.

    The blaze severely burned Martin County firefighter Jahwann McIntyre, who remains hospitalized, and injured two other firefighters.

    Chief Assistant State Prosecutor Tom Bakkedahl on Friday said given the extent of McIntyre's injuries, Haas could have faced a murder charge instead of arson. "But for the heroic efforts of two of this young man's co-workers, he was probably seconds away from losing his life and this guy (Haas) would be facing the death penalty today," Bakkedahl said. "That's how severe this case is, and we'll go forward from there."

    Haas' public defender on Friday argued that his client's bond was "excessive," but a judge declined to lower the amount.

    In court, Haas said he has lived in Martin County for nine years, but resides in Lake Park. He said he is unemployed, and his only assets are the $2.20 in his bank account and his Ford Ranger truck. Bakkedahl though, said authorities seized Haas' truck following his arrest.

    Sheriff's reports show Aaron Grosko, who lived at the torched home with Haas' daughter, told investigators Joseph Haas was upset the house was being lost in a foreclosure and that he would "burn his house down" before Haas let the bank or anyone else take it.

    Haas' former girlfriend April Finch on Friday told WPTV NewsChannel 5 she dated Haas for 8 months and they lived together at the house for months before their relationship soured. When she learned of the fire, she said her first thought was of Haas.

    "I thought of him, because he made that comment all of the time: 'If I can't have this house, nobody will,'" Finch told WPTV.

County Seeks To Snatch Cleveland Resident's Mortgage-Free Home For Missing Payment Deadline On Back-Tax Installment Remittance By One Day

In Cleveland, Ohio, Newschannel 5 reports:
  • Ronald Hasinski owns his Cleveland home free and clear, but confusion over a delinquent property tax bill has sent his home into foreclosure, and to a Feb. 11 sheriff's sale.

    Hasinski told NewsChannel5 he arranged a payment plan with the Cuyahoga County Treasure's Office to make up for the $5,800 he owes in back property taxes. But Hasinski said everything went wrong when he was just one day late on one of the $152 payments. A notice from the treasure's office said he would be losing his home. The notice sent to Hasinski included a bill, but did not include how much he was to pay to get current with his payments.

    "I'm just devastated. I'd cry but the tears haven't sunk in yet," said Hasinski. "I've put a lot of money into this house and now I'm told it's being sold to the highest bidder."

    Hansinki claims he contacted the treasure's office several times, but said he couldn't get any answers about the confusing tax bill, or how he could save his home. Hansinski called on the NewsChannel5 Troubleshooter Unit and Cleveland Councilwoman Dona Brady.

    Brady contacted the treasure's office about Hansinki's case, promising it would conduct a full investigation within the next 24 hours. "Why would he receive a bill that says don't pay anything and you're going into foreclosure? It doesn't make any sense," said Brady. "We do not want another foreclosed home but, more importantly, we don't want Mr. Hasinski out on the streets."
For more, see Cleveland man could lose home after being one day late on delinquent property tax payment (Councilwoman Dona Brady: tax bill was confusing).

Convicted Low-Level Rent Scammer Pinched Again For Allegedly Ripping Off Prospective Tenant Out Of Upfront Lease Deposit On Home Facing Foreclosure

In Tamarac, Florida, the South Florida Sun Sentinel reports:
  • An elderly couple turned to Craigslist to find a room to rent for an adult handicapped daughter, and discovered a Tamarac residence that was being leased by Wendy Richland. They paid Richland a $50 check and art worth $325 as a deposit, the Broward Sheriff's Office says, and the tenant was to move in to the home on the 8500 block of Northwest 83rd Street on Dec. 3.

    But on Dec. 1, Richland, 57, who lived in Boca Raton and had cashed the check, told the couple the deal was off, the Broward Sheriff's Office says. She declined to return the cash and claimed the art was a gift.

    Broward Sheriff's Detective Monica Jean arrested Richland on Jan. 2, and charged her with larceny of less than $10,000 from a person 65 or older, and violation of probation. Jean hopes to hear from others who may have attempted to rent the property.

    Richland's attorneys from previous court cases could not be reached for comment. She has served brief prison terms for forgery and grand theft convictions, a Florida Department of Corrections spokeswoman said.

    In 2009, Jean arrested Richland and charged her with two counts of grand theft for taking rent deposits for the Tamarac property of $2,400 and $1,800 from two women.

    One of the victims found other tenants unpacking boxes before she could move in, and Richland told the second woman that she changed her mind and wasn't renting the house to her, according to complaint affidavits.

    In those cases, Richland received probation after pleading no contest, according to Broward County online court records.

    Richland's Tamarac property is in foreclosure, county records show. Jean asks anyone with information to call 954-720-2298.
Source: Tamarac landlord accused of cheating prospective tenants (Broward Sheriff's detective seeks other victims).

'Stay Out Of Idaho!' Says State Regulator To S. Florida Lawyer Peddling Participations In 'Mass Joinder' Lawsuit Against Lenders Alleging Deceptive Foreclosure, Lending Practices

In North Palm Beach, Florida, The Palm Beach Post reports:
  • A North Palm Beach law firm was ordered by the State of Idaho to stop soliciting residents to join a foreclosure-related lawsuit that allegedly required them to pay thousands of dollars in up-front fees and monthly payments.

    The Residential Litigation Group was given a cease and desist order by the Idaho Department of Finance after an investigation that included a department employee posing as a prospective client. The company also has a complaint against it filed with the Florida Attorney General from a New Jersey resident who said he paid $1,000 after getting information from the group in the mail.

    The firm changed its name to the Hoffman Law Group in November, according to Florida Department of State records. Its managing partner, attorney Marc H. Hoffman, is under investigation by the Florida Bar for sending out misleading mailings. Hoffman could not be reached for comment Tuesday.

    In the Idaho order, the Residential Litigation Group is accused of violating the state’s Financial Fraud Prevention Act by sending “confusing, misleading, and deceptive” information to the public in documents that purport to be a “litigation notification” but are actually an advertisement.

    A website for the group says it is suing the nation’s biggest banks and lenders for fraudulent use of paperwork in foreclosures, deceptive mortgage modification practices and deceptive loan practices. A copy of a lawsuit with the names of hundreds of defendants filed in Kings County New York on Dec. 5 is posted on the website.

    When a representative from the Idaho Department of Finance called to ask about the lawsuit, she was told it would cost a retainer fee of $6,000 to join, which would be refunded after the lawsuit is settled, and a monthly fee of $450.

Friday, February 01, 2013

Ex-Michigan High Court Justice Cops Guilty Plea To Illegal 'Short Sale Shuffle' As Feds Drop Related Pending Forfeiture Snatch On Her Florida Home

In Ann Arbor, Michigan, The Detroit News reports:
  • U.S. Attorney Barbara McQuade says her office will pursue prison time for former state Supreme Court Justice Diane Hathaway, who pleaded guilty Tuesday to a felony bank fraud charge stemming from personal real estate transactions.

    Whether U.S. District Court John Corbett O'Meara gives Hathaway jail time could depend on how much he determines she defrauded mortgage lender ING Direct by hiding assets and misleading bank officers to secure a financial hardship and unload a $1.5 million Grosse Pointe Park home for $850,000 on a short sale.
  • Hathaway appeared Tuesday morning before O'Meara in his Ann Arbor courthouse just eight days after stepping down from the high court. [...] O'Meara set a May 28 sentencing date. Depending on how much the judge rules Hathaway defrauded her bank in a scheme to get a short sale, she'll pay up to $90,000 in restitution, according to her attorney, Steve Fishman.

    Federal prosecutors have accused Hathaway of concealing assets and transferring homes to stepchildren in a scheme to get mortgage lender ING Direct to forgive $600,000 owed on a $1.5 million Grosse Pointe Park home and unload the lakefront property in a November 2011 short sale.

    Outside the Ann Arbor courthouse, Hathaway attorney Steve Fishman could not explain why his client shuffled the homes around, resulting in the fraud. "It was dumb," Fishman told reporters. "There wasn't any reason for it. It made no sense."

    Prosecutors are letting Hathaway keep her posh second home in Florida she transferred to a stepchild in an effort to conceal her assets from the bank while applying for the short sale.

    Fishman said Tuesday he'll argue Hathaway and her husband, attorney Michael Kingsley, saved the bank $150,000 by negotiating a short sale of their home rather then letting it be sold at a foreclosure auction.

    But prosecutors have tripped up Hathaway on a fraud charge because she and Kingsley deeded the Windermere, Fla., home, valued at $664,000, to one of Kingsley's daughters while applying for the short sale — and then got the house back after selling the Grosse Pointe Park home.
  • During the short sale process, in 2010 and 2011, Hathaway also acquired two other homes in Grosse Pointe Park on Windmill Pointe and Balfour Street and transferred them to her stepchildren. Hathaway's stepdaughter, Sarah Kingsley, transferred the Balfour Street back to Hathaway after the short sale of the home on Lakeview Court, public records show.
  • Kingsley, whose name was on the Lakeview Court mortgage in question, was not charged and neither were his children who participated in the housing shuffle.

    "The government determined there is insufficient evidence to charge anyone else but Justice Hathaway," Assistant U.S. Attorney Daniel Lemisch. told the judge. [...] During the Detroit press conference, McQuade said Hathaway was the only person involved in the scheme who had "criminal intent."
  • McQuade had sought to seize the Florida home Hathaway and Kingsley own that prosecutors allege was transferred to Kingsley's daughter, Kathryn Sterr, to hide the asset from ING Direct during the short sale application process. The U.S. Attorney's office is dropping the forfeiture case contingent upon the restitution being paid, McQuade said.

    Until the sentencing date, Hathaway is free on her own recognizance and able to travel to her Florida home. The judge gave her one guideline, though.

    "The defendant will not transfer ownership of any property unless authorized by the court," O'Meara said.

S. Florida County Official Calls For End To State Adverse Possession Law; Points To Recent Bogus Crackpot Claims On Temporarily Unoccupied Homes To Justify Changes

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • The attempted takeover of a $2.5 million Boca Raton mansion using an obscure real estate law now has copycat cases — including one involving a $4.6 million oceanfront mansion complete with tennis court and pool.

    Broward County Property Appraiser Lori Parrish — whose office accepted three more filings for "adverse possession" Tuesday — said she's had enough.

    She's started asking the area's state legislators to strike the law from the books, once and for all. "It's not a 21st century law — they ought to abolish it," Parrish said, pointing out that it was passed when Florida was vast swaths of agricultural land that sometimes fell into disuse.
  • Parrish says that in most cases — and Broward now has 22 of them — the filing is not worth the paper it's printed on, particularly in one case of a filing on a beach house that is not in foreclosure.

    "Why should someone take possession of a house that money isn't even owed on?" she said. "What this is doing is legitimizing breaking and entering."
  • A Sun Sentinel investigation found that in Broward County in April, there were an estimated 8,000 dormant foreclosure cases in which there had been no movement for 120 days or more. In Palm Beach County at the same time, about 7,100 foreclosure actions showed no activity for a full year.

    But one of Broward's most recent adverse possession cases, at 1333 N. Atlantic Blvd., is not part of that backlog. It's for sale and it's empty.

    So someone named Tommie L. Milton Jr. filed an adverse possession form on the 4-bedroom oceanfront home that's listed for $4.6 million.

    Milton did not return a call seeking comment. But he was caught by police on the property on Friday, the day after he filed for adverse possession, according to Mila Schwartzreich, co-counsel for the property appraiser.

    Fort Lauderdale attorney Max Hagen, who represents the property owner, said he would have needed to file a civil suit to eject Milton — if he hadn't been caught. A security guard has since been posted at the home, Hagen said.

    For Property Appraiser Parrish, this case is another indication of just how absurd adverse possession is. "In 1876, it served a purpose it doesn't serve in 2013," said Parrish, who said her own neighborhood was bedeviled by a squatter. "Why should people have to spend money on asserting their property rights because of an antiquated law that doesn't belong on the books?"
For the story, see Broward Property Appraiser moves to repeal squatting law ("Loki Boy" copy cats bedevil Broward County).

L.A. Feds Indict Pair In Alleged Mortgage Elimination Scam Based On Sovereign Citizen Arguments

In Los Angeles, California, the Inland Valley Daily Bulletin reports:
  • In at early morning raid at a Cello Drive home, FBI agents Wednesday arrested a Diamond Bar man in connection with a scheme that allegedly defrauded as many as 400 people who paid into a mortgage debt elimination scheme, officials said.

    Jude Lopez was taken into custody without incident, FBI spokeswoman Laura Eimiller said. [...] A woman, identified as Marcela Gonzalez, was also indicted by authorities in connection with the mortgage debt elimination scheme. She is suspected of six counts of mail fraud, Eimiller said.

    "Investigators believe approximately 400 clients were defrauded of approximately $5 million over approximately two years," Eimiller said. "(The) defendants allegedly pitched a `sovereign citizen' argument to homeowners, suggesting that the original liens were invalid."
  • Court documents indicate the FBI, the Montebello Police Department and the Los Angeles Police Department were involved in the investigation. The U.S. Attorney's Office asked that Lopez be held as a flight risk, according to court documents.

    Prosecutors allege that Lopez, working on behalf of a company identified as Crown Point, filed bankruptcy paperwork for Crown Point clients. The paperwork was intended to delay foreclosure proceedings, officials said.

    "From at least in or about September 2010, through in or about May 2012, defendant Lopez who was not a lawyer prepared and filed, and caused to be prepared and filed, legal papers including ... bankruptcy petitions on behalf of clients in order to delay foreclosure and eviction actions."

    The complaints alleges that in some cases Lopez filed paperwork without the client's knowledge. Some of the petitions contained forged signatures, according to court documents.

Thursday, January 31, 2013

Post-Foreclosure 'Eviction Rescue' Services The Latest In Schemes Designed To Squeeze Cash From Beleaguered Homeowners

In Sacramento, California, KOVR-TV Channel 13 reports:
  • Just about everyone knows a family affected by foreclosure. A West Sacramento homeowner called Kurtis, after a company swooped in, just hours after her home was foreclosed, promising to keep her in her home longer.

    We’re told it’s a common M.O.; companies claiming to “guarantee” you more time in your home, before being forced out. Our viewer didn’t buy it, and she wondered: is this even legal?

    Seventy-seven-year-old Helena Helmold is packing up everything and preparing to move. “I’ve got my son’s little memorial outside,” said Helmold.

    She’s forced to leave behind 25 years of memories after the bank foreclosed on her home. But the day her home sold on the courthouse steps, a company named Eviction Rescue came calling.

    “And she says, ‘Well we can fix it so that you can stay there at least five months and maybe longer,’” said Helmold.

    They sent emails asking for $395 up front and $395 a month for their services. The company “guarantees” five or more months in the home and tells her to not answer a summons to court.

    “They know that you’re kind of like, in shock or whatever and then they’re going to jump right on you and take your money,” said Helmold. She didn’t pay them any money, but showed the emails to Legal Services of Northern California.(1)

    “Unfortunately, a lot people come to me after they’ve already paid thousands of dollars,” said LSNC Staff Attorney Salma Enan. Enan has helped Helmold file complaints with several agencies claiming what they’re doing is illegal.

    “It is definitely misrepresentation, fraud and unfair and deceptive business practice to guarantee something that you truly can’t guarantee,” said Enan.

    One state agency has already taken action. After the State Bar learned about Eviction Rescue’s advice for Helmold, they determined it’s unauthorized practice of law and ordered the company to cease and desist.

    We asked Eviction Rescue how they can guarantee customers five or more months in homes that have already been foreclosed.

    They told us, “Effective January 1, 2013, Eviction Rescue does not offer any guarantee for 5 or more months eviction delay. While we have been quite successful in obtaining this time, there are absolutely no guarantees…”

    Really? Because a screen shot of the company’s website on January 23rd clearly states they “guarantee 5-7 more months before you have to move out.”

    Helmold saved a couple thousand dollars by not paying eviction rescue, but she’ll still have to move. “I wish I’d have been a little bit more observant a few years ago when I first got a couple of these loans,” said Helmold.

    Legal Services of Northern California helped her stay in her home for a few extra months. Helmold was living there with a tenant. Under federal law, month-to-month tenants have at least 90 days before eviction.

    California law prohibits companies offering loan modifications from taking payments up front. But, this company doesn’t do modifications. they do eviction rescues, which the law doesn’t address.
For more, see Call Kurtis: Foreclosed Homeowner Guaranteed Months More In Home; Is That Possible?

(1) Legal Services of Northern California is a non-profit law firm providing legal services on behalf of low-income individuals and families in northern California.

Man Linked To Now-Defunct Loan Modification Outfit Shut Down By State Of Georgia Opens Up Shop Under New Name

In Atlanta, Georgia, CBS Atlanta Channel 46 reports:
  • Some consumers told CBS Atlanta News they paid NAARI Housing Counseling Agency to save their homes from foreclosure, but they never got any help.

    CBS Atlanta News tracked down NAARI's former director of operations Monday.

    A tip led CBS Atlanta News to his new company on Buckeye Road in Atlanta called All American Home Assistance Services. CBS Atlanta News asked NAARI's former director if he'd resolved all issues over at NAARI since consumers are still complaining.

    "NAARI filed Chapter 7 bankruptcy and they went through the court process and that was that with them," former NAARI Director of Operations Derek Harris said.

    Harris said he is no longer affiliated with NAARI.

    This was after the Georgia Department of Banking and Finance ordered the business to stop operating when they discovered the company was involved in mortgage brokering and lending without a license.

    Harris insisted that All American Home Assistance Services is operating legally.

    "We do counseling only. We do not talk with the bank, we do not negotiate with the bank. We just work with the homeowner and what to say to the bank and how to handle them."

    So what do former NAARI customers like Magrieta Segers do? She said she paid NAARI $1,500 to save her home from foreclosure, but she never received assistance.

    Now All American Assistance Services has offered to provide counseling.

    CBS Atlanta News asked Harris how customers can trust that he's operating legally this time.

    "Well because NAARI was talking to the bank. They had processes of talking to the bank. We don't have that process. We just counsel the homeowner and the homeowner talks to the bank only," Harris said.
Source: NAARI's former director of operations opens shop under new name.

In a related story, see Woman claims she was scammed by local foreclosure assistance company:
  • CBS Atlanta News began investigating NAARI Housing Counseling Agency in Tucker on Friday after a local woman said she paid the company $1,500 to help her save her home from foreclosure, but didn't get what she paid for.

Kentucky Joins Hit Parade Of State, Local Governments Suing MERS For Allegedly Illegally Dodging Recording Fees When Making Mortgage Assignments

In Frankfort, Kentucky, WFPL Radio 89.3 FM reports:
  • Claiming they committed fraud, Kentucky Attorney General Jack Conway has filed a suit against a mortgage company.

    Mortgage Electronic Registration Systems, or MERS, provides a marketplace for banks to trade mortgages and mortgage-backed securities.

    Conway says it was set up by banks to avoid the fees that must be paid when mortgages are sold and to hide the true owners of those mortgages.

    Conway's suit alleges MERS did not pay the proper fees in Kentucky. He's also suing under the Consumer Protection Act, because MERS foreclosed on many homes.

    “About 300,000 mortgages in Kentucky are MERS mortgages right now," Conway said. "We are able to fine up to $2,000 per violation of the Kentucky Consumer Protection Act.(1) We have that avenue of damages. And we also have the avenue to go after the recording fees that have been dodged as a result of this mortgage transfer scheme.”

    New York, Delaware and Massachusetts have also filed suit against MERS.
For the story, see Conway Alleges Mortgage Swapping Company Violated State Law.

(1) The Kentucky Consumer Protection Act is the state's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (commonly known 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.

Wednesday, January 30, 2013

California AG-Led Joint Probe Bags Three In 'Mortgage Killer' Upfront Fee Debt Elimination Racket

From the Office of the California Attorney General:
  • Attorney General Kamala D. Harris [] announced the arrest of three suspects who have been charged in a mortgage fraud scheme targeting struggling Northern California homeowners. Six websites allegedly used by the suspects to advertise their scheme have been intercepted and redirected to a resource page on the California Attorney General’s website.

    The felony complaint alleges that Ronald Vernon Cupp, 58, of Santa Rosa, deceived homeowners by falsely advertising a way to “kill” their mortgage debt on six websites including

    Cupp was assisted by Randall Gilbert Heyden, 69, of San Rafael, and Angelle Wertz, 38, of Santa Rosa, a public notary who allegedly certified phony legal documents. Cupp allegedly recorded fraudulent documents, which would only delay a foreclosure, not actually satisfy the preexisting mortgage debt.
  • Cupp, Heyden and Wertz are charged in a 57-count complaint alleging theft, forgery, notary fraud and recording of false documents. They were booked at the Sonoma County Jail on Wednesday, January 23. Cupp and Heyden are being held with bail set at $500,000 and $75,000 respectively. Wertz was released but ordered to appear for arraignment on Friday, January 25.

    Through Cupp’s business, North Bay Trust Services, homeowners would often allegedly pay upfront fees of between $1,000 and $10,000 and sign a promissory note or new mortgage for a phony offer to eliminate their mortgage debt. Requiring up-front fees is illegal in California.

    The suspects would then allegedly record fraudulent documentation purporting to be the attorney for the homeowner’s actual lender and then relinquish the mortgage and record a new deed of trust in favor of North Bay Trust Services. The debt to the original lender was never actually satisfied.
  • The arrests were a result of a joint investigation by the California Department of Justice Mortgage Fraud Strike Force, Northern California Computer Crimes Task Force, Marin County District Attorney’s office, Sonoma County District Attorney’s Office and Santa Rosa Police Department.
For the California AG press release, see Attorney General Kamala D. Harris Announces Arrests in ‘We Kill Your Mortgage’ Scheme; Seizure of Fraudulent Websites.

For the formal felony charges, see People v. Cupp, et al.

(1) The websites that were shut down are:
These pages have been redirected to the California Attorney General’s website ( where individuals are able to file an online complaint form if they believe they may have been the victim of the scheme.

Trial Pressure Forces Accused Scammers To Cop Guilty Pleas After Testimony Begins In Mortgage Fraud Case That Included Ripping Off Unwitting Lenders, Underwater Homeowners By Profiting Off 'Simultaneous Closing' Short Sale 'Flips'

From the Office of the U.S. Attorney (Columbus, Ohio):
  • Deborah L. Kistner, 50, and her husband, Mark A. Kistner, 52, both of Hilliard, pleaded guilty three days after their trial started on a $7 million mortgage fraud scheme they carried out between June 2006 and July 2010.
  • Deborah Kistner pleaded guilty to three counts of conspiracy to commit bank fraud, three counts of conspiracy to commit money laundering, and one count of bank fraud. Mark Kistner pleaded guilty to one count of conspiracy to commit money laundering.

    Deborah Kistner operated Premiere Title Company in Hilliard. She deceived lenders in connection with the purchases of real estate in Ohio and Florida. Evidence presented during the first three days of the trial showed that she conspired with others to secure inflated loans for real estate and kept the excess proceeds or used them to pay others involved in the conspiracy. Deborah Kistner intentionally failed to provide lenders with critical purchase contract language and accurate settlement statements.

    Deborah and Mark Kistner also schemed to defraud lenders and launder the money they received through simultaneous “short sale” closings where the lenders would agree to absorb losses on existing mortgage loans while Deborah Kistner actually sold those properties on the same day for a profit and laundered the profits through bank accounts controlled by Mark Kistner. The government was prepared to show that they secured as much as $7 million in fraudulent loans through their schemes.
For the U.S. Attorney press release, see Hilliard Couple Plead Guilty In $7 Million Mortgage Fraud Scheme.

Extradited Scammer Who Admitted Peddling Bogus Multi-Level Early Mortgage Payoff Scheme Gets 100 Months

From the Office of the U.S. Attorney (Las Vegas, Nevada):
  • A former resident of Las Vegas who defrauded 17 individuals of almost $1.5 million in an investment fraud and marketing scheme involving early mortgage payoffs, was sentenced [] to just over eight years in prison for his guilty pleas to fraud and tax evasion charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

    “Mr. Maharaj repeatedly solicited victims through fraud and deception knowing that they would never receive the monetary rewards he pitched,” said U.S. Attorney Bogden. “Although he tried to avoid facing the reality of a conviction by fleeing to Fiji and causing the United States to extradite him, he was eventually brought to justice and will spend much of the next decade behind bars.”

    Aneal Maharaj, 65, currently in custody, was sentenced by U.S. District Judge James C. Mahan to 100 months in prison, five years of supervised release, and ordered to pay $1,473,111 in restitution. Maharaj received a greater sentence because of the significant loss amount and number of victims, and because he obstructed justice by failing to appear for trial in the case and fled to Fiji to avoid prosecution. Maharaj pleaded guilty on Oct. 18, 2012, to one count of mail fraud, two counts of wire fraud, one count of tax evasion, six counts of bank fraud, and one count of making a false declaration in a bankruptcy petition.

    Beginning in about 1990 and continuing to about October 2004, Maharaj operated a multi-level marketing program from Las Vegas wherein he promised persons that they could pay off a 30-year mortgage in five years or less by investing and becoming franchise owners in a business he called “PowerNet Marketing Systems,” and a “home loan plan” he called Systematic Mortgage Amortization Reduction Technology (SMART).

    The system required the investors to recruit additional persons into the program, which Maharaj told them would entitle them to substantial commissions and income. Maharaj knew that no individual had ever paid off a 30-year mortgage in five years or less using the SMART plan, and that he had no intention of paying the commissions and income to the participants.

    At least 17 individuals each invested a minimum of $25,000 and up to $500,000 with Maharaj to become franchise owners in his fraudulent marketing program. The plea agreement states that Maharaj convinced one victim to sign over his interest in his $100,000 life insurance benefit.

Tuesday, January 29, 2013

Fannie, Freddie To Begin Deed-In-Lieu Program Allowing Eligible Homeowners With On-Time Mortgage Payments To Walk Away From Underwater Homes

Bloomberg reports:
  • Fannie Mae and Freddie Mac will let some borrowers who kept up payments as their homes lost value erase their debts by giving up the properties, helping Americans escape underwater loans while adding to losses at the mortgage giants bailed out with $190 billion of taxpayer money.

    Non-delinquent borrowers with illness, job changes or other reasons they need to move will become eligible in March to apply for a so-called deed-in-lieu transaction that erases the shortfall between a property’s value and the size of its mortgage.

    It follows a change in November that lets on-time borrowers sell properties for less than they owe, known as short sales, wiping out the remaining mortgage debt. Normally, the lenders could pursue people to recoup their losses.
  • The deed-in-lieu transactions, which require homeowners to leave properties in good condition, preserve the value of homes by preventing owners from abandoning them to take a new job or cope with an illness, Gordon said. Vacant and dilapidated real estate drags down values of nearby houses, increases expenses for Fannie Mae and Freddie Mac, and reduces the amount they’ll recover when the property is sold, she said.

Widow Files Wrongful Death Suit Against Local Sheriff, Others In Connection With Shooting Death Of Locksmith/Hubby During Forcible Eviction Of Occupant In Foreclosed Apartment

In Fresno, California, Courthouse News Service reports:
  • A widow's husband was killed because the sheriff sent him to drill open the door of a heavily armed, deranged man, who shot him to death during a forcible eviction, the widow claims in court.

    Irina Engert sued Stanislaus County, Sheriff Adam Christianson, three of his officers, and RT Financial, the owner of the apartment where Jim Ferrario, 45, lived. Engert's husband, Glendon, was shot to death on April 12, 2012, by Ferrario, who "had been subject to foreclosure proceedings since January 2012," according to the federal complaint.

    The complaint states: "On April 12, 2012, the Stanislaus Sheriffs' Office sent a young civilian locksmith, Glendon Engert, into a situation the sheriffs knew was dangerous and life-threatening.

    Mr. Engert was hired to accompany two sheriffs deputies to assist in an eviction by drilling open the door lock of a residence inhabited by a man known to sheriffs as being mentally disordered, who possessed a cache of weapons, including high-powered automatic military-style rifles, and who had military training, with surveillance cameras mounted inside and outside the residence, who had threatened others in the past, and who was a clear and present danger to himself and anyone who approached him.

    The sheriffs, as well as the property owner, gave no warning to Mr. Engert about the danger in which they were placing him, did nothing to protect him, and failed to take alternative measures that could have kept him out of harm's way."
  • Irina Engert seeks punitive damages for wrongful death, negligence, civil rights violations, and municipal liability.

Closing Agent Gets Two Years For Illegally Dipping Into Escrow Accounts, Pocketing $1.5M+ Intended To Satisfy Prior Liens, Pay Recording Fees, Insurance Premiums; Title Underwriter Left Holding The Bag

From the Office of the U.S. Attorney (Baltimore, Maryland):
  • U.S. District Judge William D. Quarles, Jr. sentenced Harriet M. Taylor, age 57, of Ellicott City, Maryland, [] to two years in prison followed by five years of supervised release for wire fraud in connection with a scheme to use over $1.5 million in mortgage closing funds for her personal use and to operate her title companies. Judge Quarles also ordered Taylor to pay restitution of $1,256,635.70 to Old Republic and $253,750.84 to CAN Surety, the insurer on Taylor’s errors and omissions policies.
  • According to her plea agreement, Taylor co-owned and managed two title insurance companies, Regal Title Company, LLC and Loyalty Title Company, LLC, located in Columbia, Maryland. Pursuant to an agreement with a national title insurance underwriter, and as required by Maryland state law, escrow accounts for Regal and Loyalty were established, separate from company operating accounts, for the purpose of holding and disbursing funds received from lenders for real estate closings.

    Beginning in 2009, however, Taylor caused some mortgage lenders to wire their funds entrusted for real estate settlements to Regal’s operating account, rather than to the escrow accounts. Taylor also caused funds in Regal’s and Loyalty’s escrow accounts to be transferred back and forth to the companies’ respective operating accounts. By using commingled funds throughout 2009, Taylor kept her two businesses afloat, while enriching herself with both company and escrow funds. From January through December 2009, Taylor paid herself $477,877.50 from three company operating accounts.

    As shortfalls in the escrow accounts increased, Taylor failed to remit insurance premiums to the title insurance underwriter, Old Republic National Title Insurance Company (Old Republic), pay recording fees for deeds and pay off prior liens, including four of which belonged to the government sponsored entities, Fannie Mae and Freddie Mac.

    Old Republic learned of the commingling of escrow and operating funds during a 2009 audit of Regal. They directed Taylor to stop the practice. Five months later during a further audit of both companies, Old Republic discovered that in nine cases Taylor used the payoff checks that were supposed to pay prior lien holders, and immediately terminated her as an agent.

    Old Republic was obligated to satisfy the prior liens against the properties affected by the misuse of settlement funds and to complete other transactions Regal and Loyalty failed to perform. Accordingly, in January 2010, Old Republic incurred a total loss of $1,518,532 which resulted from paying off prior liens, paying recording fees, and for insurance premiums collected by Regal and Loyalty but not forwarded to Old Republic.
For the U.S. Attorney press release, see Title Company Owner Sentenced in $1.5 Million Fraud Scheme.

Monday, January 28, 2013

Court Allows Couple To Stay In Their Home & Continue Making House Payments After Getting A Loan Modification Screwing-Over From Wells Fargo

In St. Augustine, Florida, the Jacksonville Business Journal reports:
  • Something just isn’t going right for Wells Fargo in St. Augustine. The bank, which is the third-largest in Northeast Florida, is on the wrong end of a court ruling that will allow a St. Augustine couple to stay in their home.

    The couple, facing foreclosure, was going through a loan modification when the bank advised them to make a lump sum payment of nearly $7,000 to bring their loan out of default. After the couple made the payment, the bank moved to foreclose on the home a month later, prompting the couple to defend the foreclosure with an attorney, according to a news release.

    The end game? The couple gets to keep their home, and continue to pay their original mortgage.

    Last November, a St. Augustine woman filed foreclosure on an area Wells Fargo branch after the bank tried to forclosure on her home.(1) A judge subsequently ruled she could keep her home and the bank owed her nearly $20,000 in legal fees, but at the time of the suit the bank hadn't paid the fees.(2)
For more, see St. Augustine couple wins foreclosure case against Wells Fargo, will stay in home.

(1) See Local woman wants to shut down big bank.

(2) In a typical Florida foreclosure action that allows a foreclosing lender to recover its attorney fees from the homeowner when successfuly foreclosing its mortgage, state statute (F.S. 57.105(7)) similarly allows a homeowner to recover his/her legal fees from the lender in the event he/she successfully defends against a foreclosure. See:
For an example of how an attorney can screw-up and deprive his/her client out of a recovery of legal fees paid in a successful foreclosure defense (and possibly leave him/herself open to a professional malpractice claim), see:
See Pleading Requirements for a Claim for Attorneys' Fees for an old (July/August, 2000) article in The Florida Bar Journal that may be of some value in providing guidance to Florida lawyers in requesting court-ordered, prevailing party attorneys fees from losing defendants (ie. lenders, servicers, etc.).

Judge Smacks Down Feds In Attempt To Swipe Elderly Mom & Pop's Motel Using Forfeiture Law In Connection With Uncharged Drug Crime Allegations

In Boston, Massachusetts, WBUR Radio 90.3 FM reports:
  • In what is being called a triumph for property rights, a federal judge in Boston has rejected the federal government’s attempt to seize a family-owned motel in Tewksbury under a controversial civil forfeiture law.

    The owners of Motel Caswell have never been charged with any crimes and have never come under police suspicion. But in a trial last November, the U.S. attorney’s office sought to take the property because it alleged the motel — the building — had “facilitated” drug crimes.

    “I’m in shock right now,” said 69-year-old Russell Caswell. “Been three and a half years of this garbage. Takes a while to comprehend it’s finally over with.”

    Caswell had all his savings tied in the family motel that charges $57 a night for a room. He never had any trouble getting license renewals from the town. He’d never received any warnings from the police when he got a letter from the U.S. attorney’s office a few years ago announcing they were coming after his property because of crimes committed by some of his guests.

    At trial, federal prosecutors introduced information about 15 specific drug-related incidents that occurred in a 14 year period. “It should be noted” wrote Magistrate Judge Judith Dein in Thursday’s decision, that during that time period, Russ Caswell had rented out 196,000 rooms.

    “I don’t know how I can see through the doors,” Caswell said last November in reference to the fact that those alleged crimes took place in closed rooms.

    Now, even after winning, Caswell can’t forget his years under threat.

    “You’ve just been going through this stuff every day thinking about it, scratching your head like, ‘What the heck is this all about?’ You know? ‘Where’d this come from?’ It’s just hard to believe this stuff can happen to people when you’ve done absolutely nothing,” Caswell said. “And they even say I’ve done nothing.”

    The judge concluded that there was no evidence that Caswell knew of any drug activities which he did not report to the police.

    After spending a $100,000 defending himself, Caswell turned to the Institute of Justice, a libertarian public-interest law firm. Scott Bullock, who defended him, says the judge pulled no punches.

    “She saw Russ as someone who did all he could do to try to prevent drug crimes on his property,” Bullock said. “And recognized he had no control of what people did behind closed doors out of the view of him and his employees.”

    Judge Dein faulted the government for engaging in “gross exaggeration,” misstatements of fact and “highly derogatory argument.”

    “Punishing Mr. Caswell by forfeiting the Motel obviously would not punish those engaged in the criminal conduct,” Judge Dein wrote.

    During the four-day trial in November, U.S. Attorney Carmen Ortiz released a statement saying her office wanted to send a message by going after the motel. But just up the street from the mom-and-pop run Motel Caswell, the Motel 6, Walmart and Home Depot had all experienced a similar rate of drug crimes, according to Caswell’s attorneys, without the government going after them.(1)

    “I mean, the government’s got all the money in the world to throw at these things and they just bully people is what it is,” Caswell said. “And it’s completely wrong. It’s just not American.”

    The idea to go after the Motel Caswell sprung from the Drug Enforcement Administration, the trial revealed. The DEA has an agent who testified his job is to seek out targets for forfeiture by watching television news and reading newspapers. When he finds a property where drug crimes occur he goes to the Registry of Deeds. Finding the Motel Caswell had no mortgage and was worth almost $1.5 million, the DEA teamed up with the Tewksbury Police, who were offered 80 percent of the taking, the agent testified.

    After widespread criticism following the death of defendant Aaron Swartz, U.S. Attorney Carmen Ortiz, has been dealt a second major setback in two weeks. Attorney Scott Bullock accuses her of abusing a draconian power of civil forfeiture.

    This case epitomizes what an aggressive U.S. attorney wielding these laws can do to a small and even innocent property owner like Russ Caswell,” Bullock said.

    The U.S. attorney’s office says it is reviewing the decision. Having lost its effort to take the Motel Caswell, the government is now obligated to pay for both Caswell’s legal expenses and the legal work of the Institute of Justice, which will come to at least $500,000.
Source: Judge Dismisses Government Seizure Attempt Of Tewksbury Motel.

See also IJ Scores Major Federal Court Victory In Massachusetts Civil Forfeiture Case (Motel Caswell is Safe from Federal Seizure):
  • “This outrageous forfeiture action should never have been filed in the first place,” said Larry Salzman, an IJ attorney. “What the government did amounted to little more than a grab for what they saw as quick cash under the guise of civil forfeiture.”

    Caswell said, “I couldn’t have fought this fight without the help of the Institute for Justice. It is hard to believe anything like this goes on in our country, but the government goes after people they think can’t afford to fight. But with IJ’s help, we put up a heck of a fight and have won. The public needs to stand up against these abuses of power.”
For the court ruling, see U.S v. 434 Main Street, Tewksbury, Massachusetts.

See Inequitable Justice: How Federal “Equitable Sharing” Encourages Local Police and Prosecutors to Evade State Civil Forfeiture Law for Financial Gain, an Institute for Justice report documenting how the problem of the use of the civil forfeiture law by U.S. Attorneys to snatch property to pocket quick cash is apparently growing.

(1) It should be noted that Mr. Caswell lived right next door to the Motel, with his 71-year old wife who is in poor health, his 92 year old mother-in-law, one of his two sons, his son's wife, and their 9 year old daughter. He has lived there since at least 1994. (See court ruling, paragraphs 6-7) Apparently, they appeared ripe for the pickings, in the view of the Boston U.S Attorney Carmen Ortiz.

San Bernardino County Scraps Thoughts Of Using Eminent Domain To Bail Out Underwater Homeowners

In San Bernardino, California, the Contra Costa Times reports:
  • More than seven months after announcing it was entertaining a proposal to use eminent domain to acquire underwater mortgages to help stabilize the local housing market, a San Bernardino County joint powers authority on Thursday rejected the proposal.

    The proposal, rolled out by San Francisco investment firm Mortgage Resolution Partners last summer, intrigued cities and counties across the nation hardest hit by the subprime mortgage crisis and garnered national opposition by the real estate and mortgage industries, which joined forces in an effort to stop the proposal in its tracks.

    But it was potential risk and a lack of community support, not threats of litigation and the cutting of credit to homebuyers in San Bernardino County, that prompted the Homeownership Protection Program - the joint powers authority (JPA) composed of the county and the cities of Fontana and Ontario - to back away from the proposal, said Greg Devereaux, chief executive officer of both the county and the JPA.

Sunday, January 27, 2013

Another Adverse Possession Crackpot Stakes Claim To Foreclosed Home; Recent Target: Vacant $2.5M Boca Raton Waterfront Mansion; Cops Befuddled As BofA Fiddles

In Boca Raton, Florida, ABC News reports:
  • The neighbor of a Florida man invoking an obscure real estate law to stake a claim to an empty $2.5 million mansion said he believes that the man is a pawn in a attempt to cash in on the empty property.

    Andre "Loki" Barbosa has lived in the five-bedroom Boca Raton, Fla., waterside property since July, and police have reportedly been unable to remove him. The Brazilian national, 23, who reportedly refers to himself as "Loki Boy," cites Florida's "adverse possession" law in which a party may acquire title from another by openly occupying their land and paying real property tax for at least seven years.

    The house is listed as being owned by Bank of America as of July 2012, and that an adverse possession was filed in July.

    After Bank of America foreclosed on the property last year, the Palm Beach County Property Appraiser's Office was notified that Barbosa would be moving in, according to the South Florida Sun-Sentinel.

    The Sun-Sentinel reported that he posted a notice in the front window of the house naming him as a "living beneficiary to the Divine Estate being superior of commerce and usury."

    On Facebook, a man named Andre Barbosa calls the property "Templo de Kamisamar."

    A neighbor of the Boca property, who asked not be named, told that he entered the empty home just before Christmas to find four people inside, one of who said the group is establishing an embassy for their mission, and that families would be moving in and out of the property. Barbosa was also among them.

    Police were called Dec. 26 to the home but did not remove Barbosa, according to the Sentinel. Barbosa reportedly presented authorities with the adverse possession paperwork at the time.

    The neighbor said he believes that Barbosa is a"patsy."

    "This young guy is caught up in this thing," the neighbor said. "I think it's going on on a bigger scale."

    Bank of America responded to, saying that it is in communication with the Boca Raton police department regarding concerns at the house.(1)

    "There is a certain legal process we are required by law to follow and we have filed the appropriate action. The bank is taking this situation seriously and we will work diligently to resolve this matter," the bank said in a statement.

    Barbosa could not be reached for comment.

    The Florida Department of revenue even posts the form to establish adverse possession on its website, but it is not the equivalent of a lease.

    The neighbor says that although the lights have been turned on at the house, the water has not, adding that this makes it clear it is not a permanent residence. The neighbor also says that the form posted in the window is "total gibberish," which indicated that the house is an embassy, and that those who enter must present two forms of identification, and respect the rights of its indigenous people.

    "I think it's a group of people that see an opportunity to get some money from the bank," the neighbor said. "If they're going to hold the house ransom, then the bank is going to have to go through an eviction process.

    "They're taking advantage of banks, where the right hand doesn't know where the left hand is. They can't clap."
Source: Brazilian Man Attempting 'Adverse Possession' of $2.5 Million Boca Mansion.

For story update, see Bank files to evict Boca Raton mansion squatter.

(1) Regrettably, the longer this crackpot is able to continue his charade, the more the Boca Raton cops come away looking stupid. It is clear that legitimate adverse possession claims only apply to property that is abandoned. The mere fact that the home has been vacant for some time, without the existence of other factors, doesn't establish abandonment. It seems to me that since the premises was the subject of a recently-concluded foreclosure action by the bankster, that, in itself, is enough to establish that the property is not abandoned and, consequently, enough to establish probable cause for the befuddled cops to arrest this idiot.

By the way, adverse possession claims and other bogus claims like the one made here have not insulated the crackpots making them from arrest in other jurisdictions. See, for example:

Nevada AG Bags Loan Modification Operator On Multiple Felony Charges Alleging Upfront Fee Ripoffs

From the Office of the Nevada Attorney General:
  • Nevada Attorney General Catherine Cortez Masto announced a preliminary hearing has been set for Xochitl Cervantes, 35 of Las Vegas, for her involvement in a mortgage lending fraud case involving several victims operating under the name of CSR Services.
  • Xochitl Cervantes is charged with two felony counts of mortgage lending fraud, one felony counts of embezzlement, eight felony counts of uttering a forged instrument, one felony count of multiple transactions involving fraud and deceit in the course of enterprise and occupation, and one felony count of pattern of mortgage lending fraud.

    From approximately March 2009 to May 2010, Cervantes made false representations that she was capable of rescuing homeowners who were looking to refinance their mortgages by negotiating loan modifications. She collected up-front fees, in most cases ranging from $2,100 to $2,500, for the proposed services that were never performed or refunds provided.

22 Elderly Plaintiffs File Suit Accusing Landlord Of Unconscionably Jacking Up Rents To Drive Them Out Of Their Homes & Give Complex A More Youthful Appearance

In Greenwich, Connecticut, Greenwich reports:
  • Dogged for years by complaints of onerous rent hikes, a revolving door of owners and disruptive construction, a Glenville apartment complex now faces a legal battle over how much it charges its renters.

    More than 20 residents of Greenwich Oaks are suing the property's parent company, alleging it has attempted to levy excessive rent increases against some tenants. The suit was filed against Greenwich Oaks, the management or owner of the apartments on Weaver Street, according to a complaint submitted at state Superior Court in Norwalk in August 2012.

    The complaint document claims "the defendant has attempted to raise the rent of each of the plaintiffs by an amount which exceeds that which is fair and equitable," based on state law.

    "The defendant is attempting to raise the rents of each plaintiff to unconscionable levels in order to force the plaintiffs to vacate their apartments and create a more youthful appear in the rental complex," the document states.

    Tenants complained of age discrimination several years ago, when an ill-fated condominium conversion by a Greenwich-based real estate developer collapsed after the complex's mostly elderly residents claimed they were being strong-armed out of their apartments to make way for a younger clientele.
  • [2]2 plaintiffs were listed on the suit, which is seeking over $15,000 in damages in addition to the fair market value determination. Included in the document is a complaint that the company said residents would be charged $250 if they failed to sign their leases.

    "As persons over the age of sixty two the plaintiffs are not required by law to sign new leases and therefore may not be charged a $250 penalty for not signing said leases," the document indicates. "Said leases are therefore void as contracts of adhesion and are further void as being entered into through deception and misrepresentation."

    The acts of the defendant are unfair or deceptive under the Connecticut Unfair Trade Practices Act,(1) the lawsuit alleges.
For more, see Lawsuit alleges unfair apartment rent hikes.

(1) The Connecticut Unfair Trade Practices Act is Connecticut's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (commonly known 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.