Saturday, March 23, 2013

Bully Bankster Dodges Bullet When Foreclosing Loan Backed By Dubious Evidence; Gets 11th Hour Cold Feet On Eve Of Trial, Dismisses Case

In Sandusky, Ohio, the Sandusky Register published a recent account [by local attorney Dan McGookey] involving an area-homeowner who had reportedly been screwed over by the financial institution holding her home loan after successfully emerging from a Chapter 13 bankruptcy. The loan ultimately went into foreclosure, she responded with a fight, and the following excerpt describes what happened when the parties were about to go to trial:
  • Then on the eve of trial, without explanation her bank suddenly dismissed the case, abandoning its 9-year-long effort. Why, after all that time and expense, would the bank get cold feet and reverse course?

    We will never know for sure, but a good guess is that it didn’t want its evidence exposed to the scrutiny a trial would bring.

    Keep in mind, that chances are that like Stephanie’s, your mortgage is in a trust bundled with thousands of other loans, and the bank may not want to risk putting all its loans into play should it lose one case.

Head Cook County Cop Hits Chi-Town Property Management Firm With Demand Over Its Alleged Improper Booting Of Unwitting Renters In Foreclosed Homes By Using Written Notices That Misrepresent Law

In Chicago, Illinois, the Chicago Sun Times reports:
  • Luis Islas was at home with his wife earlier this month, when a crew began boarding up the basement windows and the first floor units of the building where he lives in West Rogers Park.

    Islas, a father of two, suspects the boards would have darkened his own windows on the second floor, had he not confronted the workers and explained he was still living there. “I was really scared for my entire family,” Islas, 41, explained Wednesday.

    Islas is now a little less panicked after reaching out to the city and learning he’s legally entitled to 90 days notice before being evicted from his apartment, which is in foreclosure proceedings, he says.

    On Wednesday, Islas was out with about two dozen community activists — and Cook County Sheriff Tom Dart — in front of ChiProperties, the Near North property management company they say illegally tried to force the Islas family from their home.

    “This is outrageous conduct,” said Dart, who has made national headlines in recent years, crusading against unjust foreclosure evictions. “What you have here is a situation where people are living here, paying their rent. They’d done nothing wrong at all. The bank wants them out. They hire a company that comes in there and completely misrepresents the law.”

    Dart said his office is demanding CHIProperties provide his office with every property in Cook County in which these “illegal notices” have been distributed.

    Islas said his sister-in-law originally owned the building where he lives, but she had financial problems and then the bank foreclosed on the property.

    In early February, Islas came home to find a note on the front door that, he says, instructed him and his family to immediately leave the unit they’d called home for three years. If Islas didn’t leave — and take all of his stuff with him — the locks would be changed on the foreclosed property and a Cook County Sheriff’s deputy would escort him out the front door.

    Islas reached out to the city for help, and soon Dart got wind of the situation. On Wednesday, Dart urged any other renters who’ve received similar vacate notices to call his office at 773-674-7710.

    If you’re getting these notices, they’re not legal, they’re not from our offices, and please call us,” Dart said. “We’d love to find out who is doing it.” [...] Dart said he’s doing research now to figure out what if any laws might have been broken in trying to evict the Islas family.

    Meanwhile, Islas said he understands that under the law he has until mid-May to move out.

Son Uses Surrogate's Court Proceeding In Effort To Wrestle Control Of Dementia-Stricken Mom's $4M Home Of 45 Years, Then Give Her, Live-In Caretaker (His Brother) The Boot

In New York City, the New York Post reports:
  • “Have you ever seen so many gorgeous blouses?” retired fashion designer Frances Rappaport exclaimed as she sat in her 25th-floor, Central Park South apartment this week, admiring a rack of her colorful silk creations.

    The 95-year-old may soon be stripped of that simple pleasure while in her spectacular home.

    Rappaport’s three sons are battling in court over their dementia-stricken mom’s $4 million co-op off Seventh Avenue, her home for 45 years.

    Michael, 71, the eldest son of late fashion designer David Rappaport and David’s partner-wife, Frances, wants to eject his mom from her three-bedroom spread, according to papers filed in Manhattan Surrogate’s Court.

    But middle son Errol, 68, an unemployed, self-described black sheep, wants to keep Mom in her Central Park digs. “I don’t want to bad-mouth my brother,” Errol said. “I just want justice for my mother.”

    David, who died in 2010, named his sons co-executors of his will. Born in Harlem to Russian Jewish immigrants, David climbed the fashion ladder, taking his multimillion-dollar Italian knitwear enterprise, Damon Creations, public in 1967.

    Frances had her own women’s-wear line, Francesca di Damon. Stars like Lucille Ball coveted her intricate blouses and canary-yellow suits.

    Michael, a real-estate investor, told a judge last week that he’ll put his mother up in his own Upper East Side penthouse until he finds her a rental.

    Errol lives with his mom rent-free and gets a $2,500 monthly stipend while caring for Frances.

    Michael, who declined to comment, is also hitting up his late father’s dwindling estate for $133,000 he claims his parents owe him.

    “The administration of [David’s] estate brings to mind Marcellus in Shakespeare’s play ‘Hamlet,’ ” court-appointed evaluator Demarest Duckworth wrote in a February 2012 report. “Something is rotten in the state of Denmark.”

Financially-Savvy Hubby & Wife Go Down After Jury Conviction For Duping Dementia-Stricken 94-Year Old Woman Into Signing Over Her $10M Estate

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A former Hollywood stockbroker and her financial-planner husband were convicted [...] of tricking a 94-year-old woman with dementia into signing over her $10 million estate, according to the Broward State Attorney's Office.

    Cynthia Franke, 51, and Tyrone Javellana, 47, were found guilty of financial exploitation of an elderly person after two hours of jury deliberation, prosecutors said. They were accused of befriending Josephine Troisi and her since-deceased sister Mary Teris and then becoming their financial advisors.

    Experts testified Troisi lacked the capacity to make sound decisions when Franke took her to an attorney to change her will and her trust in 2009.

    Troisi's son uncovered the exploitation and investigators found several transfers of between $400 and $32,000 from the sisters to Franke and Javellana, police said.

    Franke and Javellana face up to 30 years in prison for the first-degree felony conviction. Their sentencing is scheduled for April 19. Javellana also faces another charge of exploiting Teris, prosecutors said.
Source: Hollywood couple convicted of elderly exploitation (They took $10 million estate from woman, 94, prosecutors said).

Developer/Landlord Of Multi-Unit Residential Buildings Settles Fair Housing Suit Tagging It For Allegedly Failing To Provide Accessibility Features For Persons With Disabilities

The National Fair Housing Alliance reports:
  • The National Fair Housing Alliance (NFHA) and West Palm Beach Coalition for Independent Living Options (CILO) have settled a federal housing discrimination lawsuit against Cornerstone Group Development Corporation, one of the largest multifamily housing developers in Florida and the United States. Cornerstone has agreed to make modifications at more than fifty residential developments in Florida, which include over 5,000 apartments covered under the accessibility requirements of the Fair Housing Act. The modifications will make apartments and common areas accessible for people with disabilities.

    The agreement settles claims by NFHA and West Palm Beach CILO that Cornerstone Group and
    several of its affiliates discriminated against people with disabilities by designing and/or constructing multifamily dwellings, and common- and public-use areas, without the required accessibility features. Cornerstone Group develops, constructs and operates affordable housing properties throughout Florida.

    As part of this resolution, Cornerstone has agreed to create and subsidize a Housing Accessibility Fund supervised by NFHA. This fund will help Floridians with disabilities make their homes more accessible. In addition, Cornerstone will pay $1.35 million in damages, expenses, attorney fees and other costs to NFHA and West Palm Beach CILO. Cornerstone will also provide training on the Fair Housing Act’s accessibility requirements for its executives and on-site construction managers.
  • The lawsuit and settlement underscore the importance and need for affordable accessible housing for persons with disabilities. In order for persons with disabilities to have an equal opportunity to use and enjoy their homes, they need to have paths free of steps; kitchens and bathrooms with sufficient maneuvering space for wheelchair users at sinks and toilets; wide doorways; lowered thermostats; and accessible parking with access aisles.

Friday, March 22, 2013

Jury Convicts Daughter Of Receiving Dad's 50% Interest In Home After Latter Had Filed Bankruptcy, Then Refinanced Premises To Drain Equity Out From Under Ch. 7 Trustee

From the Office of the U.S. Attorney (San Francisco, California):
  • A federal jury convicted Vallejo resident Myra Holmes [] of one count of bankruptcy fraud, one count of bank fraud, and three counts of making a false statement to a bank, United States Attorney Melinda Haag announced.
  •  Evidence at trial showed that Holmes, 55, enriched herself by knowingly receiving from her father his half-interest in a Vallejo residence in which she lived. Holmes knew at the time she received this property that her father had previously declared bankruptcy and that, as a result, his half-interest in the Vallejo property now belonged to his Chapter 7 bankruptcy estate.

    Holmes took this half-interest in the Vallejo property without paying anything to the bankruptcy estate and also without notifying or obtaining the permission of the United States Bankruptcy Court or the bankruptcy trustee.

    After Holmes received her father’s half-interest in the Vallejo property, she drained the equity from the property through a fraudulent refinancing mortgage loan application. [...] Evidence at trial showed that Holmes knew at the time she filed her refinancing mortgage applications that she was overstating her monthly income and account balance and also knew that the bankruptcy trustee had recently filed a lawsuit against her seeking to recover the bankruptcy estate’s half-interest in the Vallejo property.

    As a result of her bankruptcy fraud and mortgage fraud, Holmes received approximately $147,000 directly and arranged for personal debts to be paid (including her debts to Neiman Marcus, Lord & Taylor, Macy’s, and Spiegel).

    By the end of April 2006, Holmes had spent on personal expenses (including gambling and shopping) all the approximately $147,000 that she had fraudulently received as a result of the November 2005 refinancing of the Vallejo property. To date, Holmes has not repaid the bankruptcy estate for the funds she took out of the Vallejo property in the November 2005 refinancing.
For the U.S. Attorney press release, see Federal Jury Convicts Vallejo Woman of Bankruptcy and Mortgage Fraud Scheme (Defendant Used Illegal Property Transfer and Fraudulent Mortgage Application to Drain More Than $147,000 in Equity from Residence in Bankruptcy Proceeding).

NH Supremes: Common Law 'Self-Help' Remedy To Boot Residential Holdover Renter By Purchaser At Foreclosure Sale No Longer Available In Granite State

From an Opinion Summary from US Law:
  • Respondent J Four Realty, LLC appealed a circuit court order that found it violated RSA 540-A:2 and :3, II (2007) by using self-help to evict petitioner Mary Evans, and awarding her actual damages of $3,000 and attorney’s fees and costs.

    Petitioner did not have a written lease; she resided in the apartment as a tenant at will pursuant to an informal agreement with the prior owner.

    Respondent purchased the property from a foreclosure sale. Petitioner continued to pay rent to the prior owner. Respondent dispatched an agent to evict petitioner. She then brought suit and won at trial.

    Upon review, the Supreme Court concluded that petitioner was a tenant at sufferance, and that respondent was not her landlord under New Hampshire law. However, pursuant to case law and statutory authority, even though respondent was not petitioner's landlord, respondent was not entitled to use self help to evict petitioner.(1)

    The case was affirmed in part, reversed in part, and remanded for further proceedings.
Source: Opinion Summary - Evans v. J Four Realty, LLC.

For the ruling, see Evans v. J Four Realty, LLC., No. 2012-198 (N.H. February 13, 2013).

(1) On this point, the New Hampshire Supreme Court gave the following explanation on the availability of the self-help remedy to recover possession of real estate by a foreclosure purchaser from a residential renter:
  • The respondent argues that because it was not the petitioner's "landlord" within the meaning of RSA chapter 540-A, it was entitled to use self-help to evict her.

    To the contrary, a purchaser at a foreclosure sale may not use self-help to evict a tenant at sufferance. See Greelish v. Wood, 154 N.H. 521, 527 (2006); RSA 540:12 (2007) ("The owner, lessor, or purchaser at a mortgage foreclosure sale of any tenement or real estate may recover possession thereof from a lessee, occupant, mortgagor, or other person in possession, holding it without right, after notice in writing to quit the same as herein prescribed.").

    Our decision in Greelish is dispositive. The defendant in Greelish had a life estate in certain residential property. Greelish, 154 N.H. at 521. When the property was sold to the plaintiff at a foreclosure sale, the life estate was terminated. Id. Thereafter, although the plaintiff filed a landlord-tenant writ to establish his right to possession, he also engaged in conduct intended to force the defendant to leave. Id. at 521-22. Each party sued for damages. Id. at 522.

    The trial court found that the plaintiff's harassment of the defendant, whom the court found to be a tenant at sufferance, constituted "an attempted self-help constructive eviction." Id. (quotation omitted).

    On appeal, the plaintiff argued that he was entitled to use self-help to evict the defendant because her tenancy at sufferance, unlike the tenancy at sufferance in Hill, arose outside of the rental or leasehold context. See id. at 524.

    After reviewing development of the common law and the statutory process for eviction, we disagreed. Id. at 524-27. We concluded both that "the statutory summary process in RSA chapter 540 was available to the plaintiff," id. at 527; see RSA 540:12, and that "the time when the public interest required the existence of self-help for a purchaser at a foreclosure sale to recover possession from a tenant at sufferance has passed." Greelish, 154 N.H. at 527.
While the use by real property owners of the common law remedy of self-help to boot their unwanted tenants or other occupants has generally been abolished throughout the United States, it apparently hasn't been abolished everywhere. See, for example, Maryland High Court: Centuries-Old 'Self-Help' Remedy OK When Booting Holdover Homeowners Post-Foreclosure Sale, But Handle Occupants' Personal Property With Care.

Alexandria Feds: Pair Impersonated Lawyers To Loot Escrow Cash Raised From Investors For Bogus Real Estate Deal

From the Office of the U.S. Attorney (Alexandria, Virginia):
  • Brett A. Amendola, 38, of Ashburn, Va., was sentenced to 84 months in prison [] for carrying out a $5 million Ponzi scheme involving his purported purchase of a golf course in Loudoun County, Va. The scheme resulted in losses of at least $2.8 million to more than a dozen victims who had invested with Amendola.
  • According to court records, during 2010 and 2011, Amendola persuaded various investors to provide him with short-term funding that would be held in escrow to fulfill a requirement by his lender to purchase the Beacon Hill Golf Course in Loudoun County.

    He promised that the money would be returned to the investors – with interest – in a matter of days. In reality, Amendola diverted the investors’ money to his own use, including funding his and family members’ trading accounts, making payments to investors in this and other schemes, and paying for personal expenses, including gambling.

    To carry out his fraud, Amendola posed as the attorney representing the escrow account both over the phone and through various email messages, leading investors to believe that they were wiring funds to financial accounts controlled by the escrow attorney, when in reality the financial accounts were controlled by Amendola and quickly looted for his personal use. In sentencing Amendola, the Court found that the fraud was sophisticated and that Amendola abused a position of trust when he impersonated the lawyer.

    In a related case, Jerry J. Mckerac, 61, of Las Vegas, Nev., and Fond du Lac, Wis., was charged [] in an indictment with conspiracy to commit wire fraud and aggravated identify theft for his involvement in the scheme, which the indictment alleges included similarly impersonating the escrow attorney as well as Amendola’s father while dealing with the victims.

Thursday, March 21, 2013

BofA Banged With $220K Sanction For Ignoring Court Orders, Stiffing Homeowner-Couple On Court-Approved Loan Modification; Judge To Bankster: Pay Up In 30 Days Or Loan Will Be Deemed Fully Satisfied!

In Orlando, Florida, the Orlando Sentinel reports:
  • A federal bankruptcy judge in Orlando has slapped Bank of America Corp. with a $220,000 sanction — one of the largest fines on record in the local court — for ignoring the judge's orders and refusing an Orange County couple's court-approved mortgage-loan modification.

    U.S. Bankruptcy Judge Karen Jennemann sanctioned the giant bank earlier this month after it failed to appear at a series of hearings but continued trying to collect unauthorized mortgage payments from the homeowners, according to a court filing.

    The judge ruled March 5 that Bank of America had 30 days in which to pay the fine — or the couple's mortgage debt, which totals about $223,000, will be "deemed fully satisfied."

    Jennemann acted in the case of Warren and Mary Grant-Hougland, who live in the southwest Orange County community of Gotha. They filed personal bankruptcy in 2010 under Chapter 13 of the federal code to restructure their debts and to fend off the foreclosure of their 1,900-square-foot home.

    Clermont lawyer Jimmy Crawford, who represents the couple, would not comment on the case or the sanction, which is still subject to appeal by the bank.
  • The Houglands' is just the latest in a series of local bankruptcy cases in which Bank of America has missed court hearings, failed to file motions or otherwise been labeled missing in action when it comes to foreclosure-related and loan-modification issues, according to some local lawyers. But though it may be a big offender, Bank of America is not alone, they said.

    "When you see a sanction this large, there is clearly a sense of frustration on the part of the judge with this kind of behavior by the banks," said Amy Goodblatt, a veteran bankruptcy lawyer in Orlando and a board member of Community Legal Services of Mid-Florida. "When you can't even get the banks to respond in court, well, judges take a dim view of that. In a sanction like this, a judge is saying enough is enough."
  • Consumer advocates say mortgage miscues, foul-ups and outright abuse by banks have continued across the country in recent years, despite those multibillion-dollar settlements.

    In June, a Texas judge hit Bank of America with a $300,000 sanction after it was accused of breaking two loan-modification agreements with a homeowner and continuing to harass her for higher mortgage payments. In November, a Virginia judge fined the bank, one of the nation's largest, $7,500 for failing to comply with terms of a $70,000 settlement in the case of a homeowner who had accused the bank of wrongful foreclosure, fraud and defamation.

    A year ago, Orlando bankruptcy Judge Arthur Briskman fined Bank of America $11,500 in the case of Anita Smith, now 80, who was hounded by the bank's bill collectors for years even though she had surrendered her home as part of a Chapter 7 liquidation bankruptcy, according to court records. Despite the federal judge's 2008 order discharging Smith's debt, the bank called her nearly 100 times seeking additional mortgage payments.

Feds Slam Landlord For Stiffing Rent-Paying Servicemember Out Of Security Deposit, Extra Fees On Broken Lease Properly Terminated Pursuant To SCRA

From the Office of the U.S. Attorney (Alexandria, Virginia):
  • A federal judge has ordered the landlord of a rental property in Manassas, Va., to return money owed a servicemember after he was penalized for breaking the rental lease because the military ordered him to move.(1)
  • According to court records, Occoquan Forest Drive LLC and its registered agent, John Williams, of Alexandria, Va., leased a residential property in Manassas, Va., to a servicemember tenant and his wife. After receiving permanent change of station orders to move to Nevada, the tenants properly terminated the lease pursuant to the Servicemember Civil Relief Act (SCRA), which protects the rights of servicemembers while on active duty in the military by suspending or modifying certain civil obligations.

    The United States brought suit against Occoquan and Williams under the SCRA for refusing to return the tenants’ security deposit and charging early termination fees. In a memorandum opinion issued on Feb. 15, 2013, Judge Hilton found both Occoquan and Williams liable under the statute, ordered them to return the tenants’ security deposit, and enjoined them from imposing early termination charges.
For the U.S. Attorney press release, see Landlord Ordered To Pay Back Servicemember For Illegally Penalizing Him For Moving To New Post.

For the ruling, see U.S. v. Williams, No. 1:12-cv-551 (D.Va. February 14, 2013).

(1) In addition, the court ruling provides that the Plaintiff is entitled to the injunctive and monetary relief requested in the Complaint. For the lawsuit filed by the U.S. Government on behalf of the servicemember, see Complaint - U.S. v. Williams, et ano.

Insurance Agent Hit w/ $500K Bail After Pinch For Allegedly Duping Two Seniors Into Refinancing Homes, Applying Proceeds To Pay For Annuity Contracts; Suspect Then Allegedly Pocketed Premiums; Elderly Victims Left w/o Expected Periodic Payments, Lose Homes To Foreclosure

In Los Angeles, California, the California Department of Insurance recently announced:
  • The California Department of Insurance (CDI) announced [] that Harold John Shields of Hawthorne, CA, 57, was extradited from Houston, Texas on March 7, 2013 and booked in the Century Sheriff Station in Lynwood, CA. The suspect has been arraigned and charged with two felony counts of grand theft and two felony counts of theft from elder. Shields is being held on $500,000 bail.

    "I will not tolerate insurance brokers or agents who scam innocent policyholders, especially the elderly," said Commissioner Jones. "The alleged illegal actions of Shields resulted in the loss of two homes. My department will make sure he is brought to justice and no longer allowed to prey upon seniors."

    According to CDI Investigators, from October 2006 through April 2007, Shields doing business as Wolfe Capitol Group, accepted $30,000 in premium each from two elderly victims for annuity contracts but did not remit the premium to an insurer, and failed to refund the premium to the victims.

    In addition, Shields assisted the victims in refinancing their mortgages and persuaded them to use the funds toward the payment of the annuity policy and a real estate investment. This resulted in each victim giving Shields an additional $50,000, bringing the total loss for both victims to $160,000. As a result of Shields' alleged scheme, both victims lost their residences to foreclosure.

    Shields faces a maximum of six years in prison if convicted on all charges. The case was investigated by CDI's Investigation Division, Los Angeles Regional office and is being prosecuted by the Los Angeles County District Attorney's, Elder Abuse Unit.
For the California Department of Insurance press release, see Annuity and home refinance scam cause homeowners' foreclosure (As home values rebound the potential for scams may also increase).

Wednesday, March 20, 2013

Four Cop Pleas To D.C. Title-Hijacking Conspiracy Targeting Property That Was Vacant Or Owned By Dead/Incapacitated Owners By Identifying Real Estate With Overdue Tax Bills

From the Office of the U.S. Attorney (Alexandria, Virginia):
  • Four individuals – including two settlement agents in Annandale, Va. – have pleaded guilty to conspiring to fraudulently taking over the titles of homes in Washington, D.C., without the real property owners’ knowledge, selling those homes, and keeping the profit.
  • According to court records, Jamaul Roberts, 25, College Park, Md., conspired with others to visit the D.C. tax courts to identify properties with overdue property tax bills. They would use sources such as and the D.C. property tax database to locate vulnerable properties where they could take over the home’s title without the real owners’ knowledge. These homes included those left vacant, passed on to heirs after the owner’s death, or owned by the elderly in nursing homes who did not understand the transactions taking place.

    The fraudulent sales were facilitated by two settlement agents, Patricia Mantilla, 35, of Lorton, Va., and Melissa McWilliams, 35, Chantilly, Va., who worked at Ace Title & Escrow in Annandale. The agents knew the home sales were fraudulent and that the owners appearing at settlement were not the rightful owners. They also assisted the conspirators in hiding profits on the property sales from other parties involved in the sale through fictitious invoices to be paid at closing.

    The conspirators, including Michael Brown, 41, Hyattsville, Md., recruited straw sellers to sign documents and falsely represent themselves as the owners of the properties. Brown, for example, appointed himself the personal representative of the rightful owner of a property and prepared a fake death certificate for the owner, although the owner was still living. He attempted to sell the property to another member of the conspiracy for $350,000.

    During the course of the scheme, numerous properties were fraudulently sold, resulting in more than $1 million in actual and intended losses.

Trio Working As BofA Trash-Out Subcontractors Get Away With Hand Slap For Swiping Muscle Car Out Of Unoccupied Home Facing Foreclosure

In Worcester, Massachusetts, the Worcester Telegram reports:
  • The saga of the purloined purple hot rod, which pitted a lone muscle car enthusiast against a mega-bank with more than $2 trillion in assets, ended this afternoon in a Main Street courtroom, where three New Hampshire men pleaded guilty to reduced charges of unauthorized use of a motor vehicle.

    The car in question, a classic 1973 Dodge Challenger that had been restored into a “plum crazy” purple hot rod by a Worcester man and his son, was taken last March from a Burncoat home the day after a Bank of America subcontractor had been there to winterize and secure the house.

    The owner of the car, Aaron Dahrooge of Worcester, had stored the Challenger for the winter in his deceased mother's garage. Bank of America was in the process of foreclosing on the property, but Mr. Dahrooge had legal control of the house in the meantime as the executor of his mother's estate.

    Neighbors told Mr. Dahrooge that workers who had been at the vacant house to secure and winterize it on behalf of Bank of America returned the next day with a trailer and hauled away his prized Challenger.

    Mr. Dahrooge reported the car stolen to police and then contacted the North Carolina-based bank to find out the name of the company that had been hired to secure the house. When bank officials refused to disclose the name of the contractor, Mr. Dahrooge went to the news media to tell his story.

    Five months later, in August, police in Manchester, N.H., found the car stashed in a detached garage. It was a bit battered, with a blown transmission and rear tires scorched bald by untold burnouts, but the classic American muscle car had not been stripped to the frame as Mr. Dahrooge feared.

    New Hampshire police arrested the Manchester men, Patrick Peryer, 23, and Kurtis Lavigne, 28, on Massachusetts warrants for receiving a stolen motor vehicle. A third Manchester man, Steven Montanez, 36, owner of the property company hired to secure the house, was later charged with motor vehicle larceny.

    The accounts the three men gave to Worcester police were complicated and contradictory in parts, as evidenced by the fact that it took Assistant District Attorney John A. O'Leary more than 10 minutes to lay out the basic facts of the case in court today. But all three defendants were in agreement that they wished to plead guilty to the lesser charge of unauthorized use of a motor vehicle.

    Each was sentenced to a year in jail, but the sentences were suspended to a year of probation. Mr. Peryer and Mr. Lavigne initially spent several weeks in jail after their arrests last summer.

    The information that Mr. Dahrooge had fought so hard to pry out of Bank of America is now a matter of public record.

    The foreclosure subcontractor that went to his late mother's home a year ago was JRM Properties, owned by Mr. Montanez. JRM Properties, which has since gone out of business, in turn worked for Bank of America's foreclosure winterization vendor Homestead Field Services LLC of Cicero, N.Y.

    In August, Mr. Dahrooge's David vs. Goliath tussle with Bank of America prompted the company to temporarily stop doing business with Homestead until the vendor could verify that all of its employees and subcontractors have up-to-date background checks.

Budget Cuts To Force Closure Of Most L.A. County Courts Hearing Evictions; Legal Aid Groups Respond w/ Federal Suit Alleging Shutdown Screws Over Poor & Disabled, Violating Fair Housing, ADA, Due Process Rights

In Los Angeles, California, the Los Angeles Daily News reports:
  • Several legal services organizations said they plan to sue the Los Angeles Superior Court today to force it to drop plans to stop hearing eviction cases in dozens of courtrooms, arguing that cost-cutting move would be devastating to poor and disabled tenants trying to save their homes.

    Neighborhood Legal Services of Los Angeles County, the Legal Aid Foundation of Los Angeles, the Western Center on Law and Poverty, and the Disability Rights Legal Center said the Superior Court's plans to slash the number of courtrooms hearing eviction cases from 26 to five would force tenants to travel for several hours to fight for their rights, and many of them cannot make that journey.

    "These changes will leave countless individuals and families without access to justice in cases where basic human needs are at stake," said Neal Dudovitz, executive director of Neighborhood Legal Services.

    "For these families - many of whom depend on public transport - the prospect of traveling so far outside their own community to have their day in court is tantamount to having the door to justice slammed in their face," he added.

    Plaintiffs in the lawsuit include the Coalition for Economic Survival, People Organized for Westside Renewal, Union de Vecinos and the Independent Living Center of Southern California.

    The Superior Court's "consolidation plan," slated for implementation March 18, is intended to close a projected $56 million to $85 million budget deficit in the 2013-2014 fiscal year.

    Aside from closing or "repurposing" 10 courthouses - including Malibu, West Los Angeles, Whittier and Pomona North - the Superior Court also plans to have the remaining courthouses handle only certain cases.

    Currently, there are 26 courthouses handling the 70,000 unlawful detainers - eviction cases - and 60,000 small claims that go through the Superior Court each year.

    If the consolidation plan goes through, unlawful detainers would be heard in only five courthouses, and small claims in six courthouses.

    Maria Palomares, a lawyer with Neighborhood Legal Services, said tenants at risk of being kicked out their homes in the San Fernando Valley currently go to courtrooms in Van Nuys and Chatsworth. The consolidation plan would mean new cases would instead have to be heard in Santa Monica and Pasadena - 30 miles away.

    Palomares said that for many of her clients having to make that trip is not just inconvenient but impossible. She noted many of them are poor, disabled, or homeless, and those with jobs cannot afford to skip work to spend hours commuting to the courthouse, and do not have child care options.

    "The reality is that people are not going to be able to get there, given the other considerations of mental health, language access, transportation, etc.," Palomares said. "What this will do is effectively shut the court doors for the most vulnerable people."

Tuesday, March 19, 2013

HOA's Use Of Gate Access Restrictions As Debt Collection Tool To Squeeze Unpaid Maintenance Fees From Non-Paying Homeowners

In Lake Mary, Florida, the Orlando Sentinel reports:
  • A standoff of sorts has occurred at the gates of one of the region's most prestigious country clubs.

    Alaqua resident David Acosta owes as much as $100,000, possibly a record for the Orlando area, in homeowner-association fees. The exclusive Seminole County community has responded by trying to limit others' access to his home and by forcing Acosta to stop and get permission each time before passing through the subdivision's entrance gate.

    The fight over those pending restrictions has gone to court, where Acosta has been representing himself against lawyers for the association.
  • Gate restrictions are a debt-collection tool advocated by Winter Garden lawyer James Gustino, who represents not only Alaqua's homeowner association but also those for Stoneybrook East, Stoneybrook West and Lake Butler Sound. The gate-access question pending before Circuit Judge Marlene Alva in Acosta's case could determine whether such communities can restrict homeowners' use of common areas.

    "Anyone who is a full-time member of the family can get access, but not guests," Gustino said recently. "It's not that draconian in that sense. When you enter into a purchase contract, subject to covenants, conditions and deed restrictions, you enter into a contract with everyone else in the community, and their fortunes are impacted based on whether you comply."

Published Faulty Information By Online Real Estate Websites Causes Headaches For Some Homeowners

In Chicago, Illinois, WMAQ-TV Channel 5 reports:
  • For a homeowner who says she has never missed a mortgage payment, the word "foreclosure” listed next to her Sycamore home shocked Kristin Miller.

    Miller said she recently found the false foreclosure listing on Zillow, the wildly popular website where consumers turn for information on home values, price histories and foreclosures. "We were very worried when we saw it," she said. "The first thing my husband said is we better run our credit to make sure it has not been affected."

    Her concern isn't unique. Online forums offer dozens of angry homeowners complaining about false foreclosure listings on the site.

    "My jaw totally dropped," said Cassandra Jo Terry.

    The North Carolina woman said she has lived trouble-free in her house for decades and was stunned to see the "F" word next to her listing. "It is not in foreclosure at this time nor has it ever been at the point of foreclosure," she said.

    How does it happen? Zillow gets its information from public records, and public records are notoriously inaccurate. That much explains why the company's home value estimates are sometimes way off. But how does something as specific -- and potentially damaging -- as a foreclosure get into the system?

    Zillow refused to name its sources, the companies it hires to aggregate data. That makes a frustrating mistake even harder for homeowners to disprove.

    "That's when you start running into problems because you don't know where the data is actually coming from because it's an aggregation of different sources," explained Matt Farrell, the President-elect of the Chicago Association of Realtors.

    And agents, often at odds with online services, say bad data is becoming an everyday headache.
For more, see Homeowners: Real Estate Site Lists False Foreclosures (Experts say it's unlikely homeowners who find a "false foreclosure" on any online website will see negative ramifications to their credit record).

Kentucky Housing Advocates: Inflated Fee Rackets Associated With Tax Lien Investing That Put Financial Squeeze On Homeowners May Now Be Easier To Pull Off

In Louisville, Kentucky, the Courier-Journal reports:
  • A low-profile bill that sailed through the 2013 Kentucky General Assembly would make it easier for investors who buy property tax liens to charge homeowners up to $2,000 in legal fees, some Louisville advocates say.

    Under state law, tax lien investors are entitled to recoup interest from homeowners when they settle delinquent property taxes on the homeowner’s behalf. (American Tax Funding, Tax Ease and Nebraska Alliance Realty are examples lien buyers who have operated in Louisville).

    Lien buyers can also bill the homeowner for “reasonable” attorney’s fees incurred while preparing a foreclosure or protecting their interest in the property.

    Between the interest, late fees and the attorney’s fees, an unpaid property tax bill can double or triple in a year or two, making it very expensive for homeowners to remove a tax lien from their property.

    SB 27 appears to set “reasonable” attorney fees at $2,000. If tax lienholders want to charge more, they’d have to get approval from a court.

    Anne Marie Regan, an attorney with the Kentucky Equal Justice Center, said the bill encourages lienholders to charge $2,000 in legal fees as a matter of course.

    Cathy Hinko, executive director of the Metropolitan Housing Coalition, said $2,000 is too high “without support for the actual work done.”

    The bill does say fees should be ”based upon documented work performed at a rate commensurate with hourly rates customarily charged by private attorneys in that jurisdiction for similar services.”

    Sen. Tom Buford, the Nicholasville Republican who sponsored the bill, was not in his Frankfort office Thursday, and the line at his home was busy.

    Gov. Steve Beshear is “reviewing” whether to sign the bill, spokeswoman Kerri Richardson said.

Monday, March 18, 2013

Despite Jury's Actual Damage Award Of $0, Booted WV Homeowner Walks Away With $32K In Inflation-Adjusted Civil Penalties, $30K In Attorney Fees Anyway In Connection With Foreclosing Lender's Unlawful Debt Collection Practices

From US Law:
  • In 1996, Terri Cole and her husband financed the purchase of a home through a loan secured by a deed of trust on the home and the underlying property.

    In 2005, Vanderbilt Mortgage and Finance, Inc. became the servicer of the loan. Code defaulted on her loan in 2010. Vanderbilt foreclosed and purchased the home and real property at a trustee's sale.

    Thereafter, Cole refused to vacate the home. Vanderbilt filed an unlawful detainer action. Cole counterclaimed, alleging that Vanderbilt had violated the West Virginia Consumer Credit and Protection Act (WVCCPA).

    Regarding the unlawful detainer claim, the circuit court found in favor of Vanderbilt.

    As to the remaining issues, the jury found Vanderbilt engaged in several violations of the WVCCPA.

    The circuit court subsequently awarded civil penalties to Cole totaling $32,125,(1) and, some weeks later, granted Cole's motion for attorney fees and costs.(2)

    The Supreme Court affirmed the circuit court's civil penalties order and award of attorney fees, holding that the circuit court did not commit error with regard to either the civil penalties order or the attorney fees order.(3)
Source: Opinion Summary - Vanderbilt Mortgage and Finance, Inc. v. Cole.

For the ruling, see Vanderbilt Mortgage and Finance, Inc. v. Cole, Nos. 11-1288, 11-1604 (WV. March 8, 2013).

(1) After a trial, the jury reached a unanimous verdict that the foreclosing lender engaged in 13 acts of unlawful debt collection, and awarded the foreclosed homeowner a total of $0 in actual damages.

Despite the lack of actual damages, the West Virginia high court agreed with the trial judge that the West Virginia Consumer Credit and Protection Act (WVCCPA) nevertheless allows for a discretionary award of civil penalties to the homeowner in addition to, and apart from, an award of actual damages, if any. The $32,125.24 award in civil penalties to the homeowner ("Ms. Cole") broke down as follows:
  • One civil penalty at $4,583.45 for failure to provide a statement of account upon written request.
  • Ten civil penalties at $2,250.00 for each penalty, totaling $22,500, regarding the placement of repeated and unsolicited calls to Ms. Cole's mother and third parties despite specific requests to cease.
  • One civil penalty at $458.34 for the use of language intended to unreasonably abuse the hearer.
  • One civil penalty at $4,583.45 for unreasonable publication of indebtedness to a third party.
The court noted that WVCCPA (§ 46A-5-101(1)) only allows for a civil penalty of no more than one thousand dollars for each violation. However, the court also noted that "[a]ny civil penalty enforced against them may be adjusted for inflation pursuant to W. Va. Code § 46A-5-106 (1994)" to account for inflation from the time the WVCCPA became operative - 12:01 am on September 1, 1974.

By the way, and unlike a case involving an award of punitive damages, an award of civil penalties in a civil case where no actual damages were awarded is permitted and not unusual, as the West Virginia Supreme Court observed:
  • We are by no means the first jurisdiction to allow an award of civil penalties in the absence of an award of actual damages.

    A number of courts, including the United States Supreme Court, have awarded civil penalties without awarding actual damages.

    See, e.g., F. W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233 (1952) ("Even for uninjurious and unprofitable invasions of copyright the court may, if it deems just, impose a liability within statutory limits to sanction and vindicate the statutory policy."); St. Louis, Iron Mountain & S. Ry. Co. v. Williams, 251 U.S. 63, 66 (1919) ("Nor does giving the penalty to the aggrieved passenger require that it be confined or proportioned to his loss or damages . . . as it is imposed as a punishment for the violation of a public law . . . ."); Baker v. G. C. Servs. Corp., 677 F.2d 775, 781 (9th Cir. 1982) (concluding that under the FDCPA, "statutory damages are available without proof of actual damages"); Knoll v. Allied Interstate, Inc., 502 F. Supp. 2d 943 (D. Minn. 2007) (finding that the FDCPA is a remedial, strict liability statute, and thus, the debtor was not required to prove deception or actual damages to recover); McCammon v. Bibler, Newman & Reynolds, P.A., 493 F. Supp. 2d 1166 (D. Kan. 2007) (finding that actual damages are not required for standing under FDCPA because the FDCPA permits recovery of statutory damages in absence of actual damages); In re Hobbs, No. 10-42736 (Bkrtcy. E.D. Tex. filed 2012) ("[I]n light of the statutory damage provision, the Plaintiff need not show actual damages in order to recover under [the Code]."); DirectTV, Inc. v. Cantu, No. SA-04-CV-136-RF, 2004 WL 2623932, at *4 (W.D. Tex. Sept. 29, 2004) ("The law has held for many years that statutes may provide for damages even where a plaintiff cannot prove actual damages.").
(2) As to the amount of attorneys fees awarded by the trial court (foreclosing lender to be stuck with the tab), the West Virginia high court stated:
  • The court awarded $30,000 of the $48,852.00 requested in attorney fees to Ms. Cole pursuant to W. Va. Code §46A-5-104,[6] reasoning that, upon analyzing the facts pursuant to case law, Ms. Cole deserved attorney fees, but that the award should be limited "due to the mixed degree of success that was achieved."
The homeowner, Ms. Cole, was successful in 13 out of a total of 57 claims she made in her lawsuit against the foreclosing lender.

(3) Representing the homeowner was Sara Bird, Esq., with Mountain State Justice, Inc., a non-profit public interest law office dedicated to pursuing litigation focusing primarily on combating predatory lending and abusive debt collection techniques on behalf of low-income West Virginians, and which provides free legal services in its areas of practice to qualifying individuals.

Rent Skimming By Real Estate Investors Buying HOA-Lien Foreclosed Homes May Lead To Unneeded Stress, Uncertainty For Unwitting Tenants

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Cunning South Florida real estate investors are buying titles to homes on the cheap through community association foreclosures then renting them out until the bank catches up.

    It’s the latest tactic aimed at capitalizing on South Florida’s quagmire of vacant and foreclosed homes.

    And since banks — the primary lien holder on the homes — sometimes take years to foreclose, the strategy could offer the investor a hefty return. Homeowner association foreclosures are usually based on unpaid dues, with judgments far less than what is owed on the mortgage. A savvy investor can pick up a home for a few thousand dollars from an association foreclosure auction and make that money back in several months’ worth of rent.

    But while the method pays starving homeowners associations their back dues and puts money in the investor’s pocket, unwitting tenants may get a surprise when a lender comes calling to repossess the home.

    That’s what Daniel Torres said happened to his elderly parents after renting a home in the Covered Bridge community west of Lake Worth.

    It was bought for $10,800 in April by a West Palm Beach-based firm after the community association foreclosed on it for unpaid dues. The unit in the quiet neighborhood was not yet in bank foreclosure, although the previous owner had died two years earlier and the last mortgage payment was made in October 2010, according to court records.

    The Torreses moved into the home in August. Chase filed foreclosure papers in November against the heirs to the previous owner’s estate. A property management company was soon knocking on the Torres’ door saying they needed to leave because the house was in foreclosure and the locks were being changed.

    “It scared me,” said Tony Torres, 75. “I love it here. It’s peaceful, and there are a lot of nice people.”

    Dennis Sickle, principal of the home’s title owner, Milan Investments Inc., said the company does not tell tenants the property was purchased subject to a bank mortgage because they are shielded from a bank eviction by the federal Protecting Tenants at Foreclosure Act of 2009. The act says the bank must honor the terms of a lease unless the property is sold to someone who will occupy it as a primary residence. In that case, they must be given a 90-day notice to leave.
  • Attorneys who specialize in real estate law say the method of buying title to homes out of a community association foreclosure and renting them out until a bank takes final possession is both a legal and sound business model that can turn a profit.(1)
  • Sickle’s company picked up its buying pace in April and now holds title to about 20 Palm Beach County properties, according to the property appraiser.(2)
  • In the Torres case, the association didn’t get paid and put a lien on the home in November for $2,924. The Torreses soon got a letter, which they showed to The Post, demanding they send their rent checks directly to the association or face a termination of their rental agreement. The move, which bypasses the landlord, is something allowed in law.

    They don’t need this kind of stress and uncertainty,” said the couple’s son, Daniel Torres, who is involved in a separate fight with the landlord to let his mother keep her Chihuahua.

    Daniel Torres said he feels he should have been told the home was purchased subject to a bank mortgage. He found the condominium on Craigslist and dealt with Realtor Adriann Dorbuck, who represented him in the transaction. Dorbuck said she didn’t know that it was an association foreclosure purchase either.

    “I was in total shock,” she said. “How could it not be disclosed to us?”
For the story, see Renters, be aware: Foreclosure maneuver affects you.

(1) Depending on how a semi-creative criminal prosecutor interprets and applies state law, engaging in rent skimming (also known as equity skimming) two or more times within a 3-year period might constitute a third-degree felony in Florida. See Section 697.08, Florida Statutes:
  • 697.08 Equity skimming.—

     (1) It is unlawful for any person, with intent to defraud the owner of real property, to engage in equity skimming, which is, to:

    (a) Purchase, within a 3-year period, two or more single-family dwellings, two-family dwellings, three-family dwellings, or four-family dwellings, or a combination thereof, that are subject to a loan that is in default at the time of purchase or within 1 year after the time of purchase, which loan is secured by a mortgage or deed of trust;

    (b) Fail to make payments under the mortgage or deed of trust as the payments become due, regardless of whether the purchaser is obligated on the loan; and

    (c) Apply, or authorize the application of, rents from such dwellings for the person’s own use.

    (2) A violation of subsection (1) constitutes a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
Rent/equity skimming may also be illegal in other jurisdictions. See People v. Phelps, 837 P.2d 755 (Colo. 1992), quoting with approval from United States v. Capano, 786 F.2d 122 (3d Cir.1986):
  • "Equity skimming is the practice of diverting revenues generated by mortgaged property in default to purposes other than property maintenance or mortgage payments."
(2) Ibid.

Real Estate Agent Cops Plea To Fraudulently Scoring $17M+ In Refinance Proceeds Out From Under 50+ Unwitting Land Trust Beneficiaries

In Fort Myers, Florida, WBBH-TV Channel 2 reports:
  • A stunning admission of guilt [] from a well-known real estate agent in Cape Coral.

    Greg Eagle admitted to duping dozens of people by mortgaging property without telling the beneficiaries. Federal agents say his actions are a part of an alarming trend in Southwest Florida. So common, this year, they've opened a new Federal Reserve inspector general office in Fort Myers to tackle criminals like this.

    When Sharon Bauer's mother passed away she was left with this inheritance – two percent of a land trust in Cape Coral. I know my mother trusted the whole thing. She did," said Bauer.

    In 1991, two percent of the land trust on Pine Island Road cost $82,000. In 2006, an appraisal estimated it at $600,000. "Plans were to build a huge mall out here and make that the hub of Cape Coral," explained Bauer.

    But now, the money is gone. The investor, Gregory Eagle admitted he mortgaged 101 acres of land behind the back of 52 interest holders, including Bauer's mother. Thursday, the 62-year-old pleaded guilty in federal court to fraud charges.

    "I was sick to my stomach. I was angry. Then I got depressed," said Bauer.

    Federal agents tell us investor fraud is on the rise at an alarming rate in Southwest Florida. The economic downturn in 2008 spurred it on. The Lee County Sheriff's Office couldn't give us an exact number of complaints, but says the numbers go up each year.

    "I think we just have the correct population. It's a very large population. A lot of people are retired with a lot of money and that makes a breeding ground for fraud," said Nicole Waid, with the U.S. Attorney's Office.

    Eagle now faces 30 years in federal prison on each of the six counts. He is out on $100,000 bond. One of the conditions of his release is that he surrendered his passport. His sentence date has not been set yet.
Source: Cape real estate broker pleads guilty to fraud.

See also, U.S. Attorney (Fort Myers) press release: Fort Myers Man Pleads Guilty To Bank Fraud And Investor Fraud:
  • [E]agle [] executed a number of loan documents in which he falsely claimed he was the sole beneficiary and that he had authorization to mortgage the property. In the first mortgage loan in 2002, Eagle received $2 million from Florida Community Bank.

    He paid off that loan in 2006 with a mortgage loan from First National Bank of Pennsylvania. The 2006 loan was for an amount exceeding $17 million. Eagle used most of the proceeds of the second loan for his own personal use, mainly to fund other projects.

    Eagle defaulted on the First National Bank of Pennsylvania mortgage loan, causing the bank to initiate foreclosure proceedings in October 2009. The unpaid principal balance is $17.03 million.

    The beneficiaries to the Pine Island 101 Land Trust have not received compensation for their initial payments as interest holders, yearly mortgage, taxes, insurance, and administrative payments, nor for the increase in the value of the Trust property from the time the Trust was created in June 1990.

Sunday, March 17, 2013

Indiana Regulator Invokes State Securities Law In Civil Suit Tagging Real Estate Broker With Peddling Crappy Investments In Rental Property, Pocketing $10.7M From Elderly

In Indianapolis, Indiana, the Indianapolis Business Journal reports:
  • Three Carmel family members who sold $10.4 million in ownership interests in rental properties to elderly clients are accused by the Indiana Secretary of State’s Office of committing securities fraud.

    The office’s securities division this month filed suit in Hamilton Circuit Court against attorney Charles Blackwelder, his son Chad Blackwelder and his daughter Cara Grumme. The three own CFS Inc., which also is named in the suit.

    CFS, located in the Village of West Clay, is a licensed brokerage that has provided “real estate investment opportunities” since 1998, according to the company’s website.

    The court appointed a receiver Feb. 20 to oversee CFS investor assets and issued a preliminary injunction barring the trio from selling securities pending the outcome of the lawsuit. “The defendants’ actions show that they have and will continue to misappropriate investors’ funds,” the securities division argued in requesting the injunction.

    The division wants the three to pay restitution to investors and civil penalties of $10,000 for each part of the Indiana Securities Act they are found to have violated.

    According to the complaint, CFS did not register its securities offerings with the state, and Charles Blackwelder, who sold the securities, is not registered to sell them.

    Their attorney, Mark Barnes, refuted the allegations by arguing that real estate is not considered a security under the law. “There aren’t any securities present in this case,” he said. “What Chuck did was sell interest in real estate, and real estate isn’t a security.”

    Former Indiana securities commissioner Mark Maddox, an Indianapolis attorney who has represented investors in disputes against investment firms for more than two decades, disagreed.

    Lots of real estate investments turn out to be securities,” said Maddox, who is not involved in the case. He cited real estate limited partnerships and real estate investment trusts as examples.

    According to the lawsuit, CFS sold $10.4 million in ownership interests in rental properties to investors. The company’s portfolio contains 35 commercial and residential properties in the Indianapolis area valued at $7.1 million, the complaint says. It does not specify how much money investors have lost.

    That is screwing investors right out of the gate, to the tune of almost 50 percent, if I’m reading that correctly,” Maddox said.

    Some clients last year began receiving foreclosure notices on at least six properties while several other homes in CFS’s portfolio became overleveraged because the entire equity in the properties had already been sold to previous investors, the suit says.

DC Lawyer Cops Plea To $100K+ Client Ripoff; Resolved Lawsuits Without Telling Victims, Then Pocketed Settlement Proceeds

From the Office of the U.S. Attorney (District of Columbia):
  • Deairich R. Hunter, 47, an attorney from Washington, D.C., pled guilty [] to a federal charge stemming from his theft of $109,830 in payments from insurance companies that were intended to settle some of his clients’ disability and personal injury claims.
  • Hunter pled guilty to a charge of theft or embezzlement in connection with health care. He is to be sentenced April 26, 2013 by the Honorable Beryl A. Howell. The charge carries a maximum statutory sentence of 10 years in prison and a fine of up to $250,000. As part of his plea agreement, Hunter agreed to pay $109,830 in restitution to his clients and a medical provider whose bills were to be paid out of the settlement funds.
  • [Among other things,] Hunter generally agreed to notify these clients of any offers of settlement and to inform clients of significant developments, among other things. In some cases, he agreed to pay his clients’ health care expenses directly from the proceeds of the recovery in their cases.

    However, on a number of occasions, Hunter settled such claims without notifying his clients and without authority to do so and then the defendant stole the settlement proceeds, resulting in a total loss amount from this scheme of $109,830.
For the U.S. Attorney press release, see Lawyer Pleads Guilty to Stealing Money Intended For His Clients (Scheme Cost Victims More Than $100,000).

(1) The Clients' Security Fund of the District of Columbia Bar manages and distributes monies to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the DC Bar. It reimburses clients up to a limit of $75,000, according to its website.

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:

Now-Disbarred Bay State Lawyer Cops Plea To Pilfering $900K From Dead Clients; Used Some Proceeds From One Ripoff To Pay Victims Of Another

From the Office of the Massachusetts Attorney General:
  • A now-disbarred attorney has pleaded guilty in connection with stealing a total of nearly $900,000 dollars from an estate she represented, a beneficiary of that estate whose funds were in a trust she managed, and an elderly client, Attorney General Martha Coakley’s Office announced today.

    Maureen F. Pomeroy, age 46, of Bedford, pleaded guilty on Monday in Middlesex Superior Court to charges of Larceny over $250 from a Person 60 or Older (2 counts), Larceny over $250, and Embezzlement by Fiduciary. After the plea was entered, Middlesex Superior Court Judge Kimberly Budd scheduled a sentencing hearing for March 11, 2013.

    In May 2010, the AG’s Office began an investigation into Pomeroy’s activities after receiving a complaint from one of her former clients. During the time she practiced as an attorney, Pomeroy specialized in real estate and estate planning, and would routinely draft wills or other financial documents for her clients.

    According to authorities, one of Pomeroy’s clients was an 85-year-old man who had retained her services to prepare a will and other estate planning documents for him, and to assist him in obtaining funds from several bank accounts. Authorities allege that from July 2008 through October 2008, Pomeroy stole over $810,000 from this client. Pomeroy used these funds for her personal benefit and used some of the elderly client’s funds to repay two clients from whom she had earlier misappropriated money.

    According to authorities, Pomeroy defrauded the estate of a man and his son. In October 2007, Pomeroy attended a closing on the sale of the deceased man’s home under a power of attorney and concealed her receipt of over $32,000 of the sale proceeds.

    In addition, Pomeroy set up a trust for one of the deceased man’s adult sons. Pomeroy, who was trustee for the man, deposited amounts the man received into bank accounts she set up, but withdrew substantial sums (over and above her fees) from the account for her own benefit from January to June 2008.

    Pomeroy repaid the estate in September 2008, and also paid over $50,000 from her personal account on the deceased man’s son’s behalf in October 2008. In each instance she used funds belonging to the elderly client.(1)
For the Massachusetts AG press release, see Disbarred Attorney Pleads Guilty in Connection with Stealing Nearly $900,000 from Elderly Client, Estate, and Trust.

(1) The Massachusetts Clients' Security Board of the Supreme Judicial Court manages and distributes monies from the court's Clients' Security Fund to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the Massachusetts bar acting as an attorney or a fiduciary.

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: