Saturday, June 29, 2013

Despite Protection For Seniors Contained In California's Ellis Act, Elderly Tenant Faces Possible Boot From Rent-Controlled Duplex Home Of 34 Years If Premises Is Sold As An Unregulated 'Tenancy-In-Common'

In San Francisco, California, the Los Angeles Times reports:
  • [T]hen there's Ana Gutierrez. For more than three decades, the 67-year-old mother of five has lived in a rent-controlled Mission District duplex. But her property is in demand in today's tech-driven economic boom.

    In November, the landlord notified Gutierrez and her neighbors that they will be evicted under the Ellis Act, which allows building owners to get out of the rental game. There's a good chance the building will be resold as a tenancy-in-common ['TIC'].
  • Condo conversions can be regulated by the city, but there's no legal mechanism for challenging the creation of TICs. Tenants rights advocates believe that if condo conversions are limited, TICs may become less popular.
  • Although tenancies-in-common exist elsewhere, San Francisco's housing scarcity has made them much more prevalent here, said Lyssa Paul, an attorney who advises those who own the units. During the last tech boom, "they sort of exploded."
  • Legislation in 2006 sought to address an eviction surge by banning condo conversions of any building where an elderly or disabled person had been booted under the Ellis Act(1) — and blocking conversion for a decade if two or more evictions of any tenants had occurred.

    Yet the number of tenancy-in-common units continued to rise, and the waiting list for condo conversions grew.

    Ellis Act evictions have increased again during the current tech boom.

    Since Gutierrez is considered elderly under housing laws, her building would be banned from condo conversion. But it could still become a TIC, and she would still lose her home of 34 years.

    "The stress we are going through is massive," she told supervisors at a recent hearing, bursting into tears. "Finding affordable housing in this city is almost impossible. We need protection."
For the story, see S.F. tenants win a battle over rental conversions (New rules will put limits on condo changeovers and the also-dreaded tenancies-in-common).

(1) In California, the Ellis Act is a state law which says that landlords have the unconditional right to evict tenants to "go out of business. Ellis Act evictions generally are used to "change the use" of the building. Most Ellis evictions are used to convert rental units to condominiums, using loopholes in the condo law.

Hubby/Wife "Landlords From Hell" Get 4+ Years, Two Strikes For Attempts To Terrorize San Francisco Tenants Out Of Rent-Controlled Apartments After Initial Effort To "Ellis Act" Building Failed; $500K Parent-Posted Bail Forfeited When Duo Fled To Italy

In San Francisco, California, the Los Angeles Times reports:
  • A software engineer and his real estate agent wife who terrorized their tenants in a twisted attempt to force them out are back after fleeing to Italy, and each has accepted a four-year-plus prison sentence and two strikes,(1) Dist. Atty. George Gascon announced [].

    Nicknamed the "landlords from hell," Kip and Nicole Macy employed tactics "so outlandish and brazen" in attempting to clear their building of renters that "it sounds like the plot of a horror movie," Gascon said.

    Each pleaded guilty to two felony counts of residential burglary, one felony count of stalking and one felony count of attempted grand theft. They are to be sentenced Aug. 22.

    Kip Macy's attorney, Lisa DewBerry, said that they could have faced a maximum of 16 years in prison if tried on all charges, but that Gascon "knew he could not prove everything, so he settled for one-quarter of the time that he charged." She called her client "really a good guy" who was at such a disadvantage in the face of San Francisco laws protecting tenants that "he felt he was backed into a corner."

    Nicole Macy's attorney, George Borges, said he found the sentence excessive but acknowledged that the couple had behaved "in an absurdly ridiculous criminal manner." His client, he said, "is very remorseful. … She realizes she went crazy and she's paying a price for it."

    The story begins in 2005, when Kip, now 38, and Nicole, 37, purchased the building in the South of Market neighborhood with hopes of renovating it and selling its six units. Gascon said they soon set in motion an "insane" two-year campaign against their tenants, replete with antics worthy of cartoon character Wile E. Coyote.

    The couple initially pursued evictions under the Ellis Act, which allows owners to get out of the rental game. After tenant Scott Morrow fought the move and prevailed, the Macys on two occasions sawed holes in his floor. Gascon recounted Morrow's shock as he watched a blade emerge through the boards. A friend of Morrow's grabbed a hammer and smashed the saw.

    Nicole Macy ordered workers to sever weight-bearing joists in the building's basement — an attempt to have the structure red-tagged as uninhabitable, an indictment eventually handed down by a grand jury said. The couple also cut off the gas, power and water on several occasions.

    Nicole Macy also admitted to creating an email account in Morrow's name and sending a message to his attorney, firing him. Another she sent in Morrow's name to her own attorney read: "One day you are going to come home to the Victorian house ... and find [your three children] missing. Then each day a package will arrive with a piece of them."

    In 2006, short on money to pay the mortgage, the couple hired Ricardo "Cachi" Cartagena to be the building manager. They directed him to re-rent units that tenants had vacated — in violation of the Ellis Act. The city later sued the Macys, who were served last week with a $916,000 judgment.

    But problems developed with new tenants who were sharing an apartment: According to prosecutors, the Macys glued their locks shut, doused their belongings in ammonia and stole jewelry and cash.

    Cartagena also became a target for the Macys, who Gascon said threatened the handyman and artist with a handgun.

    In an interview Wednesday, Cartagena said the Macys had destroyed many of his paintings. "They couldn't control their anger," Cartagena said. "They were told their actions were illegal, but they thought, 'This is my building, I can do whatever I want with it.'"

    The couple were first charged in 2008 and the indictment came the following year. They lost the building to foreclosure. Released on bail, they disappeared shortly before a June 2010 court hearing.

    They "got scared, confused, didn't know what to do and made another mistake by fleeing," Borges said.

    Although their passports had been confiscated, Nicole Macy managed to get a new one under her maiden name, saying she had misplaced hers, Assistant Dist. Atty. Kelly Burke said. Kip Macy also secured a new passport, but Burke did not know how.

    Kip Macy's parents had put up $500,000 for the pair to post bail. In 2011, Al Graf Bail Bonds co-owners Ron Lee and Geri Ito-Campana tracked the fugitives to Florence, Italy. Lee spent three days checking out bookstores, computer stores and a bank machine the pair had used — to no avail.

    "Wherever I go around the world, I take a picture of a Chinese restaurant," the former deputy sheriff said. "I found a sign in Florence that said 'Chinatown,' so I figured I'd take the picture." As he raised the camera, he said, he saw the Macys approaching.

    Italian authorities declined to take them into custody because there was no extradition order. By the time the district attorney's office issued one, another year had passed and the window to reinstate bail had closed. The half-million-dollar bond had been forfeited.

    Italian officials arrested the couple in 2012 in Milan, where they spent a year in jail fighting extradition. Last month, U.S. marshals escorted them to San Francisco.
For the story, see San Francisco 'landlords from hell' agree to prison terms (A San Francisco couple who terrorized their tenants to force them to move out and then fled to Italy accept four-year prison terms).

(1) In California, the "three-strikes law" significantly increases the prison sentences of persons convicted of a felony who have been previously convicted of two or more violent crimes or serious felonies, and limits the ability of these offenders to receive a punishment other than a life sentence.

Fight Over Special "Shabbat Elevator" Service Pits Elderly NYC Building Residents Against Orthodox Jewish Neighbors, Leads To Civil Rights Suit

In New York City, the New York Post reports:
  • It’s a lawsuit over a New York minute — a minute and 23 seconds, to be exact.

    The only-in-New-York tale pits elderly residents of a West 65th Street building against their Orthodox Jewish neighbors, who want to operate one of two elevators in a special, slower mode on Friday nights and Saturdays to help them comply with Sabbath rules.

    But rent-stabilized tenants in 33 of the building’s 86 units claim the resulting delay of 83 seconds is an inexcusable convenience.

    The “Shabbat elevator” would stop at each of the six floors automatically, allowing observant residents to abide by the custom of not working or operating machinery on the Sabbath.

    The state authority that regulates rents sided with the old-timers and refused to approve the special elevator service in an April administrative decision.

    So Touro College, the building’s landlord — which rents just under half of the units to observant Jewish students — is suing the agency, claiming the ruling violates civil-rights laws.

    “New York City is a bastion of tolerance — except where the 10 W. 65th Street Tenants Association and Division of Housing and Community Renewal are concerned,” the Manhattan Supreme Court suit states.

    A spokeswoman from DHCR declined to comment.

Co-Op Conversion Of City-Owned, Harlem Rental Building That Gave Tenants Home Ownership Hopes Ends In $5.1M Mess After NYC HPD Subbed Out Administrative Oversight To Non-Profit Outfits

In New York City, the New York Post reports:
  • Residents say the city promised to refurbish their crumbling St. Nicholas Avenue building in Harlem but instead left them $5.1 million in debt for repairs that were done shoddily if at all.

    Now tenants in the seven-story Cliffcrest building are accusing the Department of Housing Preservation and Development of fraud and are fighting foreclosure in Manhattan Supreme Court.

    “There’s no way millions of dollars were spent on this building,” said Carlton Burroughs, 52, president of the 51-unit property near West 157th Street. “Someone saw a quick buck, and they took it. We got shafted from the beginning.”

    It all started in fall 2001, when residents signed on to an HPD program to convert the rental building into an affordable co-op. Under the deal, the city would renovate the property and the tenants would buy their apartments and inherit the mortgage that paid for the rehabilitation.

    But today there’s a leaking roof, exposed wires, craters in the walls, a boiler that’s too small to heat the property — and nothing indicating a multimillion-dollar rehab.

    Residents blast HPD and current US Housing Secretary Shaun Donovan, who was at the helm of the city agency in 2004.

    Back then, an HPD engineer admitted in an October 2004 memo that repairs “clearly have not been done, and I question if the contractor intends to complete them.” “They just didn’t care,” said Tom Winston, a retired MTA bus driver and longtime tenant. “They thought we were poor people and weren’t paying attention.”

    The project was backed by a $2.1 million loan from HPD, a $1.4 million Bank of America loan and a $947,500 federal grant. Construction costs ballooned from $4.5 million to $5.1 million, and residents were each saddled with a mortgage of about $100,000, Burroughs said.

    The renovation plan included a new boiler, a new roof and plumbing and electrical upgrades.

    But HPD didn’t administer the Cliffcrest project itself. It hired two nonprofits. the Settlement Housing Fund and Urban Homesteading Assistance Board, to oversee the conversion. Each has reaped at least $20 million in contracts with the city in the last decade.

    The building is currently in foreclosure proceedings. The tenants’ lawyer, Adam Leitman Bailey, filed a motion against HPD last week to rescind the mortgage and recover at least $6.62 million in damages from the city.

    A spokesman for HPD said “the matter is currently under review.”

Blind, Unemployed NYC Renter Hits Lottery For Low-Income Housing Unit, Then Gets Disqualified For Having Disability Checks That Put Him $23/Month Over Maximum Income Limit; "I Feel Like I Played The Real Lottery, Won, & Then Lost The Ticket!"

In Hell's Kitchen, New York City, DNAinfo New York, reports:
  • A year late and a few bucks short.

    The city and one of its biggest real estate developers used expired and outdated guidelines to reject a blind New Yorker's application for a coveted low-income apartment in Hell's Kitchen, DNAinfo New York has learned.

    Brian Fischler, who lost his vision and his job in 2009, was one of thousands of people who entered a lottery last winter for 682 low- and middle-income units at the "Gotham West" development on West 44th and West 45th streets, which boasts on-site laundry, playgrounds, a fitness center and other amenities.

    Fischler won, and the development opened this spring. But before he had a chance to pack, the city's Department of Housing Preservation and Development (HPD) and Gotham West developer the Gotham Organization called him in April to deliver their regrets.

    Fischler's Social Security disability checks, they said, made him too wealthy for low-income housing — just $23 per month over the limit.

    "To be told I'm making too much, that's ludicrous," said Fischler, 40, who lives alone in Jamaica with his 6-year-old service dog, Nash. "It's depressing. It's insulting. I feel like I played the real lottery, won, and then lost the ticket."

    More than 30,000 people entered the drawing for Gotham West, and Fischler, a former comedian who went on to work on Wall Street, was especially eager to move from Jamaica. Few stores are within walking distance, the main road is a daunting eight-lane thoroughfare, and the roar of airplanes from JFK and LaGuardia airports render his computer's voice-activated technology virtually useless.

    "It's very hard for me to get anywhere," he said.
  • As he sought to move from Jamaica to a more central neighborhood in New York City, Gotham West seemed to offer some hope: A chance to restore at least a portion of the life he had once had, with easier access to city services, stores and friends.

    But his dreams were dashed when his application went through HPD.

    The agency, which oversees the city's affordable-housing lotteries, asked applicants to submit their projected income for 2013, but then measured those figures against lower federal guidelines from 2012 that expired before the lottery was even held.

    Fischler, who expects to earn $29,316 from Social Security in 2013, would have made the cut if Gotham West and HPD used the 2013 guideline of $30,100. He also would have been eligible if his income from 2012, which was slightly lower, was measured against that year's guideline.

    But instead, under the method used by Gotham West and HPD, Fischler missed the mark by just $266.

    "HUD requires that income must be projected, and that is why an applicant’s 2013 income is used in calculating his household income," an HPD spokesman said in a statement, referring to the U.S. Department of Housing and Urban Development, which establishes the federal income guidelines.

    In addition, the spokesman continued, "the income limits that are noted in the advertisement for the development (2012) are the ones that are used when processing applicants."

    In other words, federal and city regulations forced HPD to compare 2013 income estimates with 2012 limits, he explained.

    A HUD spokesman agreed, saying that by rejecting Fischler's application, HPD "acted appropriately."

    Gotham West declined to comment.

    Incensed, Fischler said he felt abandoned by the very agencies charged with safeguarding his interests as a disabled New Yorker in need of affordable housing.

    "It's hard enough when you're blind to find a freaking job," he said, noting that about 75 percent of the country's blind population was unemployed in 2010, according to the American Foundation for the Blind.

    "To be denied for making too much money…" he trailed off. "Blind, no job, on disability — how is someone in my position going to get an apartment without a special low-income situation?"

    Fischler is now considering his few remaining options, which range from moving closer to his parents in Florida, or to a smaller, cheaper town such as Madison, Wisc.

    He also wants to the hit the lottery again and land another low-income housing apartment in Manhattan.

    "I've got to get out of here," he said.

City Of L.A., Bankster Agree To $10M Settlement In Slumlord Suit Accusing Deutsche Bank Of Becoming One Of The Major Slumlords In City By Allowing Hundreds Of Foreclosed REOs In Low-Income Neighborhoods To Fall Into Disrepair

In Los Angeles, California, the Los Angeles Times reports:
  • When lawyers for the city of Los Angeles took Deutsche Bank to court two years ago, they decried the world’s-fourth largest bank as among the city’s worst slumlords and sought hundreds of millions of dollars in penalties and restitution.

    But a settlement announced by city officials Friday only delivered $10 million —none of which will be paid directly by the bank. The bank does, however, have to ensure its foreclosed properties are properly maintained in the city, L.A. officials said.

Friday, June 28, 2013

Mortgage Payment Ripoffs Targeting Vulnerable Non-English Speaking Residents Seeking Gov't Aid Among Scams Allegedly Being Perpetrated By Woman Purporting To Be State-Employed Social Worker

In Seattle, Washington, KIRO-TV Channel 7 reports:
  • Police are warning about a woman posing as a DSHS employee to steal money from very vulnerable victims, and detectives believe there could be many more targets who have not yet come forward, possibly because of the language barrier between themselves and police.

    Oanh Nguyen, 39, is a native Vietnamese speaker who allegedly targeted other Vietnamese-only speakers in [Department of Social and Health Services] offices in White Center and South Seattle, according to investigators with the King County Sheriff’s Office.

    Sgt. Cindi West tells KIRO 7, “A lot of her victims do not speak English. They strictly speak Vietnamese, and they are led to believe that she is an employee of DSHS and so she gains their trust.”

    Nguyen reportedly got away with more than $60,000 by getting at least six victims to deposit fraudulent checks into their accounts. Her victims, investigators say, would then give Nguyen cold hard cash.

    Nguyen also allegedly promised to pay peoples’ mortgages but didn’t, resulting in at least one foreclosure, and apparently lining her own pockets with another $30,000.

    Nguyen was arrested late last week and released from jail on her own recognizance. Monday, no one answered the door at Nguyen’s Beacon Hill home, a new-looking house with a view of the city.

    Not only is Nguyen now banned from DSHS facilities because of the alleged thefts. She’s also under investigation for welfare fraud, because the DSHS tells KIRO 7 that Nguyen is receiving welfare benefits from the state herself. Nguyen could face felony charges of theft, forgery, identity theft and unlawful issuance of bank checks.

Disappearing Florida Attorney Suspected For Role Revolving Around Million$ In Missing Clients' Trust Account Cash Reappears, Turns Himself In To Feds

In West Palm Beach, Florida, the South Florida Sun Sentinel reports:
  • Seventy-six days after a Boca Raton attorney’s wife reported him missing, he re-emerged [last week] as he surrendered to the FBI to face fraud charges.

    Now everyone will know Timothy McCabe’s whereabouts for at least the next month: jail.

    McCabe, 55, arrived at the FBI’s Flagler Drive office shortly after 9:45 a.m., accompanied by his attorney, Robert Gershman. Dressed in a T-shirt and shorts, McCabe did not acknowledge a Sun Sentinel reporter’s questions as he surrendered.

    Four hours later, McCabe made his first court appearance with U.S. Magistrate Judge Dave Lee Brannon ordering he be held in custody until his July 22 arraignment. Assistant U.S. Attorney Ellen L. Cohen told the judge that she believes McCabe is a flight risk if he is allowed out on bond.

    After the brief court hearing, Gershman declined to comment about where McCabe has been.

    McCabe reappeared a day after federal authorities filed a criminal complaint alleging that as much as $8 million of his clients’ money has gone missing. He currently faces two fraud charges related to six real estate transactions he handled.
  • McCabe’s wife reported to authorities that she saw him packing his suitcase on April 2, thinking he was going on a business trip to Tampa. Later that day, she and McCabe’s law partner received emails from McCabe’s account apologizing for “a series of very bad business decisions” and vowing to “make things right.”

    “I made people millions and none for us,” the email to McCabe’s wife read. “I am trying to rectify it. If I cannot then I am going to set my affairs in order and finish a few things.”

    Shortly after receiving the email, McCabe’s law partner, Steve Samiljan, discovered that more than $3 million was missing from the law firm’s trust account and title company’s escrow account, according to Florida Bar records.

    That number, though, has grown with auditors and lawyers working for the firm’s title insurance company determining that between $7 million and $8 million is missing, according to federal court records.

    Samiljan, who has said he knew nothing about McCabe’s wrongdoing, could not be reached for comment despite a phone call on Thursday. The Lake Worth law office of McCabe & Samiljan was closed, its lawn overgrown and a window boarded up.
For the story, see Missing Boca Raton attorney surrenders to FBI (Timothy McCabe vanished in April; FBI says up to $8M of clients' money is missing).

Power Company To Mississippi Supremes: Tax Assessor's Demand For Our Customers' Business Records In Probe To Nab Bogus Homestead Exemption Claims Is "An Impermissible Fishing Expedition" & 'They're Trying To Use Us As The Charter Boat To Catch The Fraudulent Fish!'

In Madison County, Mississippi, the Madison County Journal reports:
  • Entergy Mississippi says it doesn't want to be used as an investigative arm of the government and is fighting Madison County's demand to turn over records on 25,000 ratepayers so the Tax Assessor can better police homestead exemption.

    The utility is calling Madison County's demand "a fishing expedition" in a case that's before the state Supreme Court.

    Entergy says Madison County "does not have specific evidence to suspect a single specific one of them (ratepayers) of engaging in homestead exemption fraud. No such authority does - or should - exist."

    Entergy says the government is trying to use the electric company.

    "Entergy Mississippi is a power company that works hard to bring reliable, affordable electricity to our customers," Joey Lee, communications manager, said.

    "We are not an investigative unit for various government entities and we object to what appears to be nothing more than a fishing expedition for the Madison County Tax Assessor's Office. They're trying to use Entergy as the charter boat to catch alleged fraud."

    Last September, Madison County Circuit Judge John Emfinger denied Entergy's request to quash a county grand jury subpoena, which sought to open the business records.

    Entergy appealed to the Mississippi Supreme Court.

    Both sides filed the last of the court briefs on May 31 and are now awaiting the high court's ruling.

    In court documents, Entergy attorney Linda Cooper of the Wise Carter firm in Jackson said the county is not targeting special individuals but all customers in the Madison area to see who may owe taxes.

    The county's subpoena request, the documents say, is "an impermissible fishing expedition that seeks confidential data for general inquiry purposes that are not based on probable cause as to a crime that may have been committed by any particular identifiable person or group of persons."

    According to briefs filed by Entergy, they believe the subpoenas should be quashed for multiple reasons.

    It states, among other arguments, "(Entergy's) customer information is subject to legal protection as confidential proprietary business information constituting a trade secret under Mississippi law. The Tax Assessor's attempt to use (Entergy) as an investigative arm of its office for purpose of civil tax enforcement is an abuse of process. The Tax Assessor's involvement constitutes an improper influence on grand jury proceedings."

    The briefs also argue that the Tax Assessor's office violates the state Constitution's separation of powers and that the subpoena is an invasion of privacy.

    Tax Assessor Gerald Barber said the information is needed for an ongoing fraud investigation into homeowners who rent their properties but still claim homestead exemption, which reduces the taxes paid to the county.

    "If they're not evading taxes, they have nothing to worry about," he said.

    District Attorney Michael Guest argues that for the last eight to nine months his office and Barber's have been investigating homestead exemption fraud that has recovered nearly $250,000 so far. They believe that access to the private utility records of Madison County citizens will allow them to continue to uncover cases of abuse.

    "A large number of people are actually renting that property," Guest said. "Unless the house is your primary residence, you're not entitled to (homestead exemption)."

    Guest said they presented the case to a county grand jury and they returned the indictment.

    At first, the authorities were looking for information for specific subdivisions - Lake Caroline, Deerfield and Ashbrooke. He said Entergy could not produce limited data to that effect so they went with the next best approach, which was by zip code.

    Barber said that there is possibly "millions" of dollars that haven't' and aren't being paid to the county and that every penny counts. The biggest fraudulent case so far was for over $14,000, but he said some coming out in the near future will be more than that.

    "People are committing felonies and misdemeanors depending on what level they're in," he said. "We have a problem in the rural, unincorporated areas."

    Barber said at first that Entergy appeared to be cooperative but have since gone on the defensive.

    "There's a misunderstanding I think that's being promoted behind the scenes by Entergy," he said. "We're only concerned with people who have filed homestead exemption applications. This is no different than the state of Mississippi looking at people's income tax returns (before beginning a procedure to revoke homestead)."

    When asked if he felt this was an intrusion on 4th Amendment rights limiting warrantless search and seizure, Guest and Barber said no.

    "I believe in the fact that the grand jury was informed of the investigation and there was testimony, the grand jury considered those matters when they returned their indictment," Guest said.

    "We tried to limit the information as best we could - to only residences within those particular geographic areas."

    Guest said one of the things a grand jury is charged with by the Legislature is the ongoing supervision to make sure monies owed to the county are properly collected.

    Barber echoed Guest's comments, saying this effort was led by a grand jury.

    "They made the decision upon our request," he said. "It kind of becomes a question about what do you want - a tax assessor to be aggressive about finding homestead fraud or to be passive. If you're waiting on everybody to be honest the good people lose. The bad people win."

    Entergy officials disagree.

    "We respect the law and want to see those breaking it prosecuted and will cooperate with investigations as much as possible pursuant to court order," Lee said. "If the grand jury has identified possible individuals or specific addresses that it suspects may be committing fraud, we are ready, willing and able to provide them with appropriately court ordered customer information.

    "With all due respect to those involved and their efforts to curb fraud, we object to being used as a de facto general investigative arm of the tax assessor's office," he continued.

    "We believe it's our responsibility to our customers to keep their information confidential, to the greatest extent possible. We are the only electricity provider available to these customers and to receive service from us, customers have to provide us with certain information. We take seriously the confidential nature of our customers' information and will not divulge information without good cause, and pursuant to a court order."

    If the state supreme court affirms the lower court's ruling then the grand jury will receive those records and turn them over to Barber's office, where they will be used in the ongoing fraud investigation.

    In the most extreme cases, homestead fraud can result in a criminal felony charge, punishable by a fine of up to $5,000 and two years imprisonment, or both.
For the story, see Assessor demands records.

Thursday, June 27, 2013

Head Of Document Mill Currently Serving 40 Months To 20 Years In Michigan For Role In Cranking Out Fraudulent Foreclosure Paperwork Gets Five Years In Separate Federal Prosecution For Similar Antics

In Jacksonville, Florida, The Detroit News reports:
  • The former president of a Georgia company that filed more than 1 million forged foreclosure documents in Michigan and other states was sentenced to five years in federal prison Tuesday.

    Lorraine Brown, the former president of the DocX document processing firm in Georgia, was sentenced to five years in prison as well as two years of supervised release and ordered to pay a fine of $15,000 in U.S. District Court for the the Middle District of Florida.

    Brown already is serving a sentence of 40 months to 20 years for fraud in Michigan. The sentence was handed down in May in Kent County Circuit Court.

    “Today’s sentencing represents appropriate punishment for someone who sought to capitalize on the nation’s housing crisis,” said Acting Assistant Attorney General Raman of the Justice Department’s Criminal Division.

    Brown pleaded guilty to the charges in federal court and a related Missouri case in November, and was charged just a few days later in Michigan by Attorney General Bill Schuette.

    DocX is out of business, but its parent company, Loan Processing Systems of Jacksonville, Fla., has cooperated with investigators and is paying out millions in fines and settlements.
  • Complaints about DocX targeted the practice of “robo-signing,” in which legal documents required in foreclosures and other legal filings are signed with faked signatures, illegally back-dated or contain false information. Brown allegedly directed DocX workers to routinely sign the name “Linda Green” on thousands of filings in Michigan with vastly different handwriting.

    Instead of having documents properly signed and legally notarized by authorized people, Brown directed her workers — including temporary help — to forge signatures in order ram through more documents and make more money, according to her plea agreements. Between 2003 and 2009, DocX generated approximately $60 million in gross revenue, according to the U.S. Justice Department.

    The investigation into robo-signing began in April 2011, after several county clerks in Michigan examined their files following an expose of DocX in a “60 Minutes” broadcast. The Michigan Attorney General’s office found more than 1,000 fraudulent documents on file in the state.

    According to a spokeswoman for the Michigan Attorney General’s office, Brown will serve at least her minimum sentence in Michigan, and will be transferred to federal prison to serve any remaining federal time. Brown is now jailed at the Women’s Huron Valley Correctional Facility.
For the story, see Former executive sentenced to 5 years in prison for foreclosure fraud.

For the U.S. Department of Justice press release, see Former Executive at Florida-Based Lender Processing Services Inc. Sentenced to Five Years in Prison for Role in Mortgage-Related Document Fraud Scheme (Over 1 Million Documents Prepared and Filed with Forged and False Signatures, Fraudulent Notarizations).

Head Of Conspiracy That Targeted, Then Impersonated Homeowners With High HELOC Credit Limits To Illegally Draw Down Cash From Accounts Cops Guilty Plea After Spending 4+ Years On The Lam

From the Office of the U.S. Attorney (Alexandria, Virginia):
  • Tobechi Eyinna Onwuhara, 33, of Dallas, Texas, pleaded guilty [] to charges of conspiracy to commit bank fraud, conspiracy to commit money laundering, and computer fraud.
  • Onwuhara was charged with conspiracy to commit bank fraud and a federal warrant was issued for his arrest on Aug. 1, 2008. He was later indicted by a federal grand jury on April 21, 2011. He was arrested in Australia after more than four years as a fugitive. Onwuhara faces a maximum penalty of thirty years in prison on the conspiracy to commit bank fraud charge alone when he is sentenced on September 20, 2013.

    According to court records, Onwuhara is the ringleader of a group of Nigerians who used fee-based web databases to search for potential victim account holders with large balances in home equity line of credit (HELOC) accounts. This information included name, address, date of birth, and social security number. Once the conspirators identified a victim, they used other online databases to obtain information commonly used in security questions, such as the victim’s mother’s maiden name. The conspirators then obtained credit reports on the victims in order to verify personal information and account balances.

    Armed with a victim’s personal information, the conspirators called the victim’s financial institution, impersonated the victim, and transferred the majority of the available money from the HELOC account into an account from which a wire transfer could be sent. The conspirators would then wire transfer hundreds of thousands of dollars to domestic or overseas accounts controlled by members of the conspiracy.

    The conspirators used caller-ID spoofing services, prepaid cell phones and PC wireless Internet access cards, and transferred victims’ home telephone numbers in order to impersonate the victim and avoid identifying themselves.

    Once the fraudulently-transferred funds arrived in the destination bank, a conspirator with access to the account would withdraw funds and transfer them to other members of the conspiracy after taking a portion of the proceeds for himself.

Pair Cop Guilty Pleas For Peddling Foreclosure Rescue Program That Used Fractional Interest Deed Transfers & Bogus Bankruptcy Petitions To Scam Upfront, Monthly Fees Out Of Unwitting Homeowners While Dragging Out Repo Process

In Sacramento, California, The Sacramento Bee reports:
  • Two men have pleaded guilty to bankruptcy fraud in connection with a foreclosure rescue scheme.

    Jesse Wheeler, 36, of Roseville and Brent Medearis, 46, of Modesto entered guilty pleas today in U.S. District Court in Sacramento, according to a federal Department of Justice news release.

    On Dec. 1, 2011, a federal grand jury indicted Wheeler and Medearis along with Jewel L. Hinkles, also known as Cydney Sanchez, 63, of Los Angeles, and Cynthia Corn, 60, of Oakland, for a scheme allegedly run by Hinkles. According to court documents, Wheeler operated JW Financial Solutions in Roseville, and Medearis worked out of a Modesto office, both as affiliates of programs that Hinkles created.

    Hinkles was the founder and general manager of Horizon Property Holdings LLC, in Beverly Hills, according to court documents. From 2008 through 2010, Hinkles offered a service called "Save My Home" or "Homesaver" that promised to rescue financially distressed homeowners from foreclosure and reduce the principal on their mortgages. Horizon offered the program directly to clients and also through "affiliates", who promoted and sold the program to clients, mostly in Northern California. Corn sold the program through Property Relief!, a South San Francisco affiliate, authorities said.

    The defendants allegedly told homeowners that they would save their homes from foreclosure by arranging for investors to purchase their existing mortgage at a discounted price, thereby reducing the homeowner's principal and monthly mortgage payment.

    To prevent foreclosure and to defraud the existing lenders, the defendants allegedly filed fraudulent deeds transferring an interest in the homeowner's property to a fictitious entity called Pacifica Group 49/II.

    In many instances, the defendants also filed fraudulent petitions in bankruptcy court, often naming both the homeowner and Pacific Group 49/II as the debtor. The purpose of these petitions, authorities said, was to invoke the automatic provisions of federal bankruptcy law and bring an immediate halt to any foreclosure actions against a debtor's property.

    Because the fraudulent deeds and bankruptcy petitions delayed foreclosure proceedings, the defendants were able to pretend that they were providing a legitimate service and continue to collect fees from defrauded homeowners, according to federal authorities. To enroll in the Save My Home program, clients were required to make an initial payment of approximately $3,500 and pay monthly fees of up to $1,500. The Homesaver program required an initial payment ranging from $1,750 to $6,500 and monthly fees up to $850.(1)

    In all, the scheme collected at least $5 million from more than 1,000 clients.

    According to court documents, the defendants never arranged for the purchase of a mortgage from any of the clients' lenders and never negotiated a mortgage principal reduction for any of Horizon's clients.

    Wheeler and Medearis are to be sentenced Sept. 16 by U.S. District Judge William B. Shubb.

    Hinkles and Corn are scheduled for trial Aug. 6.
For the story, see Roseville, Modesto men plead guilty to foreclosure rescue scheme.

For the U.S. Attorney (Sacramento, California) press release, see Two Plead Guilty To Foreclosure Rescue Scheme.

(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the bankruptcy courts.

Wednesday, June 26, 2013

Shameless Arizona AG OKs Use Of Fraudulent Documents In Foreclosures As Acceptable "Shortcut" Where No Injustice Exists In Underlying Transaction??? Says "The Fact That There Is A Fraudulent Document May Or May Not Mean That The Foreclosure Is Wrongful!"

In Phoenix, Arizona, KNXV-TV Channel 15 reports:
  • Thousands of Arizona families have lost their homes to illegal foreclosures. Illegal foreclosures are based on forged, faked and phony documents.

    According to Arizona Attorney General Tom Horne, “There’s been a major, really major effort to clean up that situation.”

    But that's not what we found. The ABC15 Investigators spoke to victims and their attorneys who say bogus documents are still being used to put people out of their homes right here in the Valley. We wanted to know why laws that make it a crime to submit forged documents in court don’t apply to those who are using phony records to foreclose on Arizona families.


    Gabriella Westfall has served her community as a police officer for more than 25 years. She says she contacted Horne’s office when she discovered that forged documents were being used in an effort to throw her out of her home. “I contacted the AG to say, ‘Look, I’m a victim,' but I have not heard from anybody in the attorney general’s office,” Westfall said.

    Westfall said she faithfully paid her mortgage every month until the bank inexplicably raised her monthly payment and told her she needed a modification. She could only get one if she defaulted. Until then, bank records show she had never missed a payment.

    But during the process the former detective says she discovered her lender was relying on a forged and fabricated document in an effort to foreclose on her home. Westfall says she was shocked to find the now-infamous signature of Linda Green. “I’m a victim of the system and a victim of fraud,” Westfall said.

    Linda Green was, at one time, an employee of a mortgage document processing company called DocX. Public documents show Linda Green’s name was forged on tens of thousands of foreclosure documents across the country. Her name was signed as if she was a vice president of dozens of different banks.

    According to public records, DocX ran a fake document mill set up to fabricate bogus records to be used in court to foreclose on families and push them out of their homes.
  • Westfall says as a law enforcement officer, she cannot understand why the courts are letting lenders use forged documents -- and as a mother she cannot explain to her daughters why the laws don’t seem to apply equally to all.

    The ABC15 Investigators sat down with Arizona Attorney General Tom Horne to find out.


    We were surprised to hear Horne characterize the use of forged documents as a “shortcut." “Maybe a document was signed, somebody signed someone else’s name as a shortcut, but in the underlying transaction, there was no injustice,” Horne said. Referring to the homeowner facing foreclosure, Horne said, “That person didn’t pay.”

    The ABC15 Investigators pressed Horne on why the laws against forgery and fraud don’t seem to apply equally. “If the homeowner is going to come in and fight their foreclosure and forge their own documents, they are going to jail," we said. "So I don’t think they are going to be so sympathetic to your argument that the underlying premise is that they still didn’t pay. Because many of these people did pay and they were still foreclosed on with fraudulent documents.”

    Attorney General Horne replied, “Don’t misunderstand me. I’m not being sympathetic with fraudulent handling of documents. What I am explaining to you is that the fact that there is a fraudulent document may or may not mean that the foreclosure is wrongful.”

    That answer didn’t sit well with attorneys we spoke to who have been fighting illegal foreclosures in court.

    Dan McCauley says he represents homeowners who are clearly the victims of fraud. He told us, “Every case I have taken, all of the cases I have reviewed, all of the documents are absolutely forged and fake and that needs to be addressed by the system.” Beth Findsen is another one of the small handful of lawyers fighting for families victimized by illegal foreclosures. She said, “Public records are a disaster area." And she warned that the fraud she has seen could have ramifications for years to come.

    McCauley added, “It throws everybody’s chain of title into question now. We don’t know who owns what.”

    Gabriella Westfall is living through the legal nightmare the attorneys describe. She says six different banks have appeared in court and in filings to claim they own her house. “I don’t know who I am supposed to pay my mortgage to,” she explains, “because we don’t know who owns the mortgage”.
For the story, see Arizona homeowners losing their homes to foreclosure through forged documents.

Thanks to Cynthia Stephens for the heads-up on the story.

Failed Foreclosure Fraud/Robosigning Scandal Settlement Reignites Old Feelings Of Anger, Frustration As Victimized Homeowners Continue To Be Left To Fight Battle On Their Own

From a recent USA Today article on the foreclosure fraud/robosigning scandal settlement:
  • The payouts, meant to close the books on an economic catastrophe that staggered millions of American households, have instead reignited feelings of anger and frustration.
  • Regulators initially promised independent case reviews to millions of homeowners involved in foreclosures in 2009 and 2010. They abandoned that pledge this year when they renegotiated the 2011 settlement with the banks, a trade-off they said was necessary to get money in borrowers' hands faster.

    Nearly $3.4 billion has been paid out to 3.9 million borrowers since mid-April. An additional 300,000 or so borrowers will get their payments in the coming weeks.

    The payouts, far from closing the books on an economic catastrophe that rocked millions of households in the worst years of the Great Recession, have instead reignited old feelings of anger and frustration.
  • The renegotiated settlement created a $3.6 billion pot to compensate borrowers for shoddy foreclosure practices that ran the gamut from wrongful foreclosures to lost consumer documents.

    About two-thirds of the recipients received $300 — the smallest possible amount. Fewer than 1,200 got $125,000, the most allowed. The rest fell into one of 10 other categories for compensation, mostly in the $400 to $7,500 range.

    How exactly individual borrowers' compensation was determined is just one of many questions being asked about the settlement's design and fairness. Regulators defined the categories for compensation, set the amounts and laid out the rules for mortgage servicers on how to slot people. Those who fit in more than one category were assigned to the one paying the highest amount, regulators say.

    Some critical details about the settlement remain a mystery to the public and even to members of Congress, including how many foreclosure errors were discovered in a limited number of cases that were actually reviewed.

    "I am deeply concerned by the lack of transparency surrounding this settlement and by the fact that we still have no idea how many illegal foreclosures each bank committed," says Rep. Elijah Cummings, D-Md.

    Sen. Elizabeth Warren, D-Mass., has criticized regulators for allowing companies that allegedly broke mortgage servicing laws to assign borrowers to the various compensation categories for payment. "I just find this one amazing," Warren said at a recent Senate hearing.

    The agreement the government made with the banks leaves consumers little recourse. They cannot appeal their payouts to banks or the regulators. But they can still sue their servicers.
  • Settlement critics question the size of the settlement pot, given that so few reviews were actually done.

    It's impossible to draw any conclusions from the completed reviews about error rates at particular companies, testified Lawrance Evans of the Government Accountability Office at a Senate hearing in April. Not enough reviews were done in a statistically valid way, he said.

    Consumer advocates question how good the actual reviews would have been, given that servicers were paying for them. But they would have provided more insight into foreclosure errors than is known now, housing advocate [Bruce] Marks says.

    The settlement "was going in the right direction. They were going to find harm and provide restitution," he says.

    Instead, just as before the original settlement was announced, borrowers who think they were harmed are left to fight that battle on their own.

Big BofA Shareholder Dumps On Current Chairman, CEO, Saying It's "Deeply Concerned That This Corporate Culture Of Deceit Has Continued To Exist Under Brian Moynihan & Charles Holliday’s Board Of Directors"

In Charlotte, North Carolina, The Charlotte Observer reports:
  • An institutional investor is calling on Bank of America CEO Brian Moynihan and the bank’s board to investigate allegations from former employees that they were encouraged to deny mortgage modifications to homeowners.

    In a letter filed with the Securities and Exchange Commission, the shareholder, Houston-based Finger Interests Number One, blasts the board and the company’s management in light of the employees’ claims, saying “nothing has really changed” under Moynihan and the leadership of Chairman Charles Holliday.

    “The case and, more importantly, the affidavits … say volumes about the failures of senior management and the board of directors to materially change the corporate culture that has long existed at Bank of America prior to Brian Moynihan’s ascendance or most of this board of directors’ inauguration,” says the letter, which the SEC posted on its website Monday.

    “Each new headline chips away at the company’s image and damages its standing with customers and potential customers. In consumer perception of reputation among banking companies, Bank of America ranks dead last.”

    According to securities filings, Finger Interests owns roughly 1 million Bank of America shares, or less than 1 percent of the bank’s outstanding shares. The company’s two key leaders could not be reached for comment Monday because they were traveling, company officials said.

    The letter comes on the heels of statements – six from former employees, one from a contractor – filed this month in federal court in Boston, where class-action status is being sought for a lawsuit against the bank over the federal Home Affordable Modification Program.

    The homeowners in the lawsuit claim that the Charlotte-based bank wrongfully denied them modifications under HAMP and violated the program’s rules. Bank of America, the lawsuit says, would “string homeowners along with no intention of providing actual and permanent modifications.” Among other things, homeowners complained the bank falsely told them their paperwork had not been received.

    According to the former employees’ statements, Bank of America employees were given gift cards and $500 bonuses if they steered homeowners into foreclosure rather than a modification.
  • Finger Interests said Moynihan and the board of directors should look into the employees’ claims and report to shareholders on the findings.

    “If true, the six affidavits … are damning and evidence of unethical behavior and, more importantly, point to a corporate culture of not just ‘short termism,’ but of outright corruption and a disregard for laws, regulation and, of course, customers,” Finger Interests’ letter says.(1)

    Finger Interests sold Charter Bancshares in 1996 to NationsBank, which later acquired BankAmerica Corp. in a deal that led to the bank’s name being changed to Bank of America.

    Over the years, Finger Interests has been a frequent critic of Bank of America’s leadership, even before Moynihan took charge in 2010. The firm opposed Moynihan as a successor to Ken Lewis, saying Moynihan was part of the leadership team involved in the bank’s 2009 purchase of Merrill Lynch.

    Finger is also among investors who sued Bank of America over the Merrill Lynch purchase, an acquisition that angered investors who said they were misled about Merrill’s declining financial health. A federal judge in New York in April approved a $2.42 billion cash deal to settle the claims.

    In its letter, Finger Interests says Bank of America has “made great strides in cleaning up its balance sheet and building capital.”

    But, the company says, it is “deeply concerned that this corporate culture of deceit has continued to exist under Brian Moynihan and Charles Holliday’s board of directors.”

    The firm says it worries Bank of America “will never be a great company until the corporate culture has changed.”

    It’s unclear how much the HAMP case might cost Bank of America. An attorney for homeowners suing the bank said the class members could total in the hundreds of thousands.

    In August, a judge is expected to hold a hearing on the request for class certification.

(1) Affidavits from the Bank of America Employees:
William Wilson, Jr.,
Simone Gordon,
Theresa Terrelonge,
Steven Cupples,
Recorda Simon,
Erika Brown.

Affidavit from Bank of America Contractor:
Bert Sheeks

Tuesday, June 25, 2013

Clock Runs Out On Snoozing Bankster Holding Delinquent Mortgage; Wakes Up After Foreclosure Statute Of Limitations Expires, Leaving It Holding The Bag On Unpaid & Now-Uncollectible $750K Home Loan Secured By $1M Condo

In Miami, Florida, The Miami Herald reports:
  • It is a condominium association’s version of winning the lotto. A big bank missed its deadline to file for foreclosure on a million-dollar condo unit by 10 days.

    As a result, Peninsula Condominium Association in Aventura will get to keep the condo — a fancy three-bedroom, three-bathroom bayfront pad that it took ownership of three years ago in its own foreclosure over $61,313 in unpaid fees.

    “They got a free condo,” said Michael Cotzen, partner at Hollywood law firm Mansfield Bronstein, which represents the condo association. “You don’t get anything free in this world — but they did.’’

    The condo association’s winning argument: The five-year statute of limitations for U.S. Bank to file for foreclosure had passed. Miami-Dade Circuit Judge Peter R. Lopez agreed.

    “We are utterly and completely delighted,” said Edward Steinberg, president of the Peninsula Condominium Association. “It’s a profoundly positive impact for the association.’’

    “This is a significant loss for the bank, an example of a bank getting slapped upside the head,” said Ronnie Bronstein, a partner with Mansfield Bronstein. “I think this is an appropriate remedy in this type of situation where associations are left holding the bag.’’

    The saga over Unit 2507 at 3201 NE 183rd Street in Aventura began in 2007 when Rivka Bichler fell behind on the mortgage and condo fees, according to court papers. Bichler paid $1.5 million for the 3,273-square-foot unit in the frothy days of May 2005.

    In December 2009, the condo association filed to foreclose and was awarded title to the unit in October 2010.

    Since taking possession, the association has rented the unit for much of the time, fully expecting the bank would eventually bring its own superior foreclosure claim as holder of the first mortgage.

    “Twenty-nine of 223 units were in default at one point,” Steinberg said. “Through the legal process, we were able to rent many out, which had a profound positive impact on our cash flow. The banks were in gridlock.”

    U.S. Bank, as trustee for certificate holders of Structured Asset Mortgage Investments II Inc., Prime Mortgage Trust Certificate Series 2005-4, had filed an earlier foreclosure suit on Bichler’s unit in 2008.

    But the lender failed to show up for trial in February 2011, and the court dismissed the case without prejudice, meaning the lender could refile later.

    According to court records, the bank was represented in that case by the law offices of Marshall C. Watson, a Fort Lauderdale foreclosure mill, whose owner last year agreed to Florida Bar disciplinary action that included surrendering his license and shutting down the firm.


    When U.S. Bank finally refiled for foreclosure on Nov. 19, 2012 — claiming it was owed more than $752,000 in principal, interest and fees for its mortgage on the unit in a bid to wrest ownership from the condo association — Peninsula fought back.

    Both sides agreed the statute of limitations for foreclosure actions is five years, but they disagreed over when the clock started ticking.
  • At a hearing May 8, the judge ruled in favor of Peninsula, dismissing the bank’s foreclosure as “untimely.” A 30-day deadline for appeal passed with the bank taking no action.

    While it isn’t uncommon for a homeowner to raise the statute of limitations in a foreclosure case, Bronstein said, he hasn’t seen the law used by a condominium association.

    “What makes this unique is it’s an association arguing the statute of limitations. Associations have really gotten slammed [in the foreclosure crisis,] and there could be 100 other associations in a similar situation,” Bronstein said.
  • The condo association has yet to determine what to do with its windfall. The unit, which isn’t currently rented, would fetch roughly $5,000 a month in rent, according to Steinberg.

    Similar units are selling for $1.1 million to $1.2 million, according to Bronstein.

    While the condominium association’s board is aware of the court win, other unit owners will be notified in an upcoming association newsletter, Steinberg said. “It’s a seismic shift, and we’re elated,” Steinberg said. “We’re deciding how to proceed.”

Loan Modification Scammer Cops Guilty Plea For Pocketing Upfront Fees In Exchange For Phony Foreclosure Avoidance Promises

In San Jose, California, the San Jose Mercury News reports:
  • A real estate agent who targeted the Spanish-speaking community in the South Bay with a refinancing scam has been convicted of what prosecutors called "a vastly underreported crime."

    Michael Mendoza, 56, pleaded guilty this month to accepting advance fees for loan modifications and performing unlicensed real estate activity, according to the Santa Clara County District Attorney's Office.

    According to prosecutors, Mendoza, who owns San Jose-based Broker's Mortgage Investment, would collect $3,000 from victims with a promise that he would negotiate a more affordable home loan, but then do nothing and stop returning calls after a few months.

    Mendoza's employee Maria "Marilou" Jackson, 59, also pleaded guilty. They were sentenced to three years of probation and fined. Mendoza also had to reimburse the victims for their losses.

    Prosecutor David Lim of the county's Real Estate Fraud Unit said it's a common scam, particularly within the Latino community. "I wish I could tell all the victims of this crime that they are not to blame, there are no immigration consequences and to come to us," he said in a news release. "We are only here to stop these financial predators and help victims get their money back."

    In addition to Broker's Mortgage, the pair ran the affiliated Tical Trading Company. They advertised on Spanish-language radio and television channels and promised that they could help homeowners from falling into foreclosure. Anyone with information about a similar refinancing scam can contact prosecutor Lim at 408-808-3754.

Closing Agent Faces Grand Theft Charges After Allegedly Ripping Off Premiums Paid For Title Policies Issued With Expired Insurance License

In West Palm Beach, Florida, the South Florida Sun Sentinel reports:
  • Homeowners and sellers from Jacksonville to Plantation were left swindled out of more than $11,000 in title insurance fees after putting their trust in a Coral Springs woman and her Boca based business, according to a Florida Department of Financial Services Fraud Division report.

    The five victims assumed the policies from Dawn Maria Smith, 44, were legitimate but investigators said otherwise and arrested her on five counts of grand theft [...].

    Despite an insurance agent license that expired in June 2009, investigators said Smith continued to act as a title insurance agent for Fidelity National Title Group Corporation/Common Wealth Land Title Insurance Corporation based in Jacksonville, according to the report.

    Investigators said Smith defrauded her victims by using falsified titles that showed the houses involved were clear of liens and other issues through 24 Hour Title, her suburban Boca business.

    Smith used an old policy number with Rollie Dudik, of Ormond Beach, to defraud him out of $1,550 in title insurance fees. But when he never got his title search or insurance policy, he contacted Fidelity only to find out there was no record of his purchase.

    An investigation into Smith was launched the same month.

    A representative with Fidelity National Title Group confirmed an investigator's suspicions, telling them she never saw any funds from Smith, the home owners and sellers in her policies.

    Smith was booked into Palm Beach County Jail on Wednesday and released the next day after posting $22,500 bail.

Monday, June 24, 2013

1st Circuit: Lower Court Erred In Setting Up Procedure For Forcing Banks, Borrowers Together To Work Out Home Loans In Default; Successful R.I. Foreclosure Mediation Program May Now Be In Jeopardy; Appeals Panel Nixes Outright Reversal & "Chaos," Instead Opts To Boot Case Back To Trial Judge To Fix Problem

In Providence, Rhode Island, The Associated Press reports:
  • A federal appeals court threw more than 700 Rhode Island foreclosure cases into uncertainty by concluding that there are problems with how a judge set up a program designed to force homeowners and banks into mediation.

    The 1st U.S. Circuit Court of Appeals said U.S. District Judge John McConnell did not follow the proper procedures when he instituted his unique order governing foreclosures. A lawyer who represents hundreds of families suing to stop from being foreclosed upon says he fears the appeals court is jeopardizing a program that is helping people.

    McConnell signed an order on Aug. 16, 2011, in which he took over all mortgage foreclosure cases in federal court in Rhode Island. The order halted the cases, suspended all deadlines and required homeowners and financial institutions to engage in ‘‘directed and serious settlement discussions’’ before he would allow any individual case to proceed. He placed no time limits on the discussions.

    The following January, he appointed former bank CEO Merrill Sherman to serve as a special master to help oversee the process and reach settlements, saying that the cases were problematic for both sides.

    ‘‘Plaintiff homeowners are confronted with the emotional and economic devastation of losing their homes to foreclosure. Defendant financial institutions are confronted with countless mortgages on which homeowners have stopped paying,’’ McConnell wrote. ‘‘The problem is exacerbated by a significant downturn in real estate values that has placed many of these properties ‘under water.'’’

    He said it was in the interest of everyone involved to find a system to ‘‘explore all possibilities for the potential settlement of these claims.’’

    About 130 cases had been settled or otherwise dismissed under the program as of April 30, according to a report Sherman filed last month.

    The June 14 appeals court decision is written by retired U.S. Supreme Court Justice David Souter, who was sitting in on the case. He wrote that McConnell’s order violated court procedures because he should have given the banks a hearing on whether the lawsuits were likely to succeed before he ordered mediation. He also said McConnell would have to establish limits on the amount of time and cost spent on mediation.

    McConnell on Wednesday set a July 8 hearing on some of the issues raised in the decision.

    Three lawyers who represented financial institutions before the 1st Circuit declined to comment or did not return phone messages seeking comment on the potential impact of the decision. Sherman also declined to comment.

    George Babcock, a Rhode Island attorney who represents more than 500 families fighting foreclosures, said many of homeowners have reached settlements with the help of the program.

    ‘‘I find it all very unfortunate that a plan that was designed to help people and is really helping people is going to be scuttled,’’ he said. ‘‘I hate to say that the banks are the bad guys, but the banks are the bad guys,’’

    Steven Fischbach of Rhode Island Legal Services, who filed an amicus brief in the case, said the program was devised by the court to deal with a flood of cases, which reflects the severity of the foreclosure crisis.

    ‘‘The program is very important because it provides a certain avenue to speaking with a lender to get a modification of a mortgage,’’ he said. ‘‘It is very hard to get someone on the phone who has authority to respond to and evaluate mortgage modifications.’’

    He said it was too soon to say whether the decision was a death knell, but said it was important to note that the appeals court could have struck it down. Instead, it gave the district court a chance to fix the problem.(1)

    ‘‘I think the court recognized that the court in Rhode Island was faced with an onslaught,’’ he said.

    He called for a state law that would force financial institutions into mediation before foreclosing.
Source: Ruling throws into uncertainty RI foreclosures.

For the ruling, see In re: Mortgage Foreclosure Cases, (1st Cir. June 14, 2013).

(1) From the court's ruling:
  • Although it would be open to this court simply to vacate the injunction and mediation orders, we fear that the practical effect of requiring such immediate action on a docket currently the size of this one would be chaos.

    If the issues resolved here had been addressed by the district court when the volume of cases was at the trickle stage, correction of the errors would have been fairly simple. As the docket now stands, however, nearly 150 cases are consolidated in this appeal, and we are told that at the time of briefing another 550 or so were governed by the orders reviewed here and subject to being affected by this court's action and by the district court's ensuing proceedings on remand.

    We therefore think the prudent course is to tolerate the status quo long enough to give the parties time to plan for contingencies.

    Accordingly, we remand with instructions to take steps expeditiously to correct the errors.

Notorious Foreclosure Trash-Out Contractor Faces Racketeering Accusation In Federal Civil Suit Alleging Repeated Illegal Break-Ins; Homeowners' Lawyer On Clients: "They Weren't Even In Foreclosure!"

In Pittsburgh, Pennsylvania, the Tribune Review reports:
  • A Bethel Park couple claim in a federal lawsuit filed Wednesday that a national property management company that handles foreclosure services had a local contractor repeatedly break into their home in 2012.

    Alexandra and Anthony Hlista claim that Safeguard Properties of Valley View, Ohio, and the local contractor violated federal racketeering laws because they used the mail and electronic communications in setting up the break-ins and also violated state and federal consumer protection laws.

    Michael Malakoff, their lawyer, said the contractor nailed windows shut, damaged screens and storm windows and changed the lock on their back door without any type of court order. “They weren't even in foreclosure,” he said. A company spokeswoman and the local contractor couldn't immediately be reached for comment.

    The couple have a pending federal class-action lawsuit filed in 2011 against Citi Mortgage of New York, IBM Lenders Business Process Service of Oregon and a Philadelphia law firm over mortgage-related fees that they claim are prohibited by state law.

(1) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:
For examples of filed lawsuits involving illegal bank break-in, "trash-out" lockout cases, see:

Nabbed For Proceeding With Foreclosure On Homeowner Who 'Violated' Loan Mod Terms By Paying Too Early & Too Much, Bankster Caves In, Backs Off After Local Media Report Gains Worldwide Attention

In Orlando, Florida, WFTV-TV Channel 9 reports:
  • Etienne Syldor, the hardworking father and Walt Disney World bus driver who found himself in foreclosure received good news Wednesday.

    His attorney said after Channel 9's story aired, she heard from Wells Fargo and said the bank had not only halted foreclosure, but restored his mortgage and even lowered his interest rate and monthly payments.

    Wells Fargo had begun foreclosure proceedings on Syldor's home in May because he didn't follow the fine print on his particular modification.

    Syldor would pay early, and even overpaid, during a mortgage modification with Wells Fargo. "I have never seen a case like this one before," said Syldor's attorney LaMya Henry. He couldn't understand it then, and neither could WFTV viewers.

    Emails and calls poured into the newsroom as Syldor's story was picked up by news outlets around the world. "Doesn't make any sense," Syldor said.

    Syldor was too busy working to sit down with Channel 9 Wednesday. Henry said she'd like to believe the foreclosure was a fluke triggered by a glitch in the massive bank. She said Syldor had been worried his family would be forced out on the streets, until Wednesday.

    "I really believe that had it not been for this story, we may have not gotten this outcome," Henry said.

Sunday, June 23, 2013

Florida AG Tags Rogue Pool Contractor In Civil Suit Alleging It Ripped Off Homeowners By Failing To Complete Projects, Charging Illegal Fees, Stiffing Subs That Led To Mechanics' Lien Filings Against Unwitting Customers' Residences

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • Florida Attorney General Pam Bondi announced [] that her office is suing Nationwide Pools, accusing the Pompano Beach-based company of violating the state’s Unfair and Deceptive Trade Practices Act.

    The 17-page lawsuit alleges Nationwide failed to complete construction of pools, charged illegal fees and didn’t pay subcontractors, who ended up filing liens on customers’ homes.

    The suit filed in Broward County Circuit Court seeks restitution for consumers and a permanent injunction that prevents the company and its officials, including President Keith Stuart, from building more pools.

    Dozens of South Florida homeowners have filed complaints with the Better Business Bureau, which gave the company an “F” rating. Some customers say Nationwide took thousands of dollars but didn’t complete the projects. Others say the company never delivered on promises to fix construction defects.

    “Floridians should be able to trust the companies they do business with, and they should receive the services advertised or promised,” Bondi said in a statement. Stuart could not be reached for comment Tuesday.

    The suit said the company stopped operating in late May. But in its last few weeks and months, Nationwide improperly demanded “progress payments” from customers, according to the suit. “When customers who paid those monies complained about additional delays, (Nationwide) engaged in a series of lies and misrepresentations about ‘supply shortages’ and ‘damaged items’ in order to string them along,” the suit said.

    The suit also accuses the company of selling pools, obtaining new permits and digging up customers’ backyards with no intention of ever finishing the jobs.

    “I’m glad (the state) stepped in; I wish it was sooner,” said Donald Pittman, 45, of Royal Palm Beach. Pittman said he filed a complaint with the Better Business Bureau about two years ago. Nationwide finished his pool, but the concrete deck started cracking and pool tiles fell off. He said he won a $7,300 award in arbitration, but hasn't been paid.

    Last month, the Broward County chapter of the Florida Swimming Pool Association canceled Nationwide's membership and fined the company a maximum $1,000 for ethics violations, said Wendy Parker, executive director of the statewide association.

    Nationwide has been named as a defendant in a dozen lawsuits in Broward County in recent years, records show.

Daughter Pinched For Allegedly Ripping Off $150K+ From Since-Deceased Elderly Mom By Improperly Pocketing Cash From Victim's Home Equity Line Of Credit

In Toms River, New Jersey, the Asbury Park Press reports:
  • A Barnegat woman was indicted Friday on charges she stole more than $150,000 from her mother over four years.

    Evelyn Hendershot, 59, was charged with one count of second-degree theft and one count of second-degree financial facilitation of criminal activity, according to a news release from Ocean County Prosecutor Joseph D. Coronato.

    According to the indictment, from April 2005 until 2009, Hendershot withdrew and transferred $150,400 from her mother’s home equity line of credit to various accounts under Hendershot’s control. She then transferred the money to pay off credit cards or withdrew cash from them through automated teller machines, the indictment alleges.

    Hendershot’s mother, Mary Ann Siskoski Yakes of Manasquan, died in July 2010 at the age of 87, said Al Della Fave, spokesman for the prosecutor’s office.

    Detectives James Conroy and Lindsay Llauget of the prosecutor’s office special investigations unit of the economic crimes bureau investigated the case.

    Hendershot is free on $75,000 cash bail. A court appearance has not been set.

    The Asbury Park Press asked the Prosecutor’s Office for a photo of the suspect, but it declined. State law allows authorities discretion in releasing suspect photos, but they often refuse to do so.

Federal Prison Time Not Enough For NJ Foreclosure Rescue Equity Stripping Duo; Garden State Prosecutors Score Add'l Prison Time In State Slammer For Pair That Targeted Financially Distressed High-Equity/No-Cash Homeowners With Sale Leaseback Ripoffs

In Trenton, New Jersey, the Asbury Park Press reports:
  • A father and son were sentenced Friday to state prison for stealing more $1.3 million in a scheme that offered relief for homeowners facing foreclosure.

    Vito Grippo, 58, of Jackson, was sentenced to 10 years in state prison after pleading guilty in February to charges including theft [by failure to make required disposition of property received] and money laundering. His son, Frederick P. Grippo, 32, of Old Bridge, was sentenced to four years in prison. He pleaded guilty in January to a charge of theft [by deception].

    Both were sentenced by state Superior Court judges in Union County.

    The sentences came a week after Vito Grippo was sentenced to 96 months in federal prison and Frederick Grippo was sentenced to 41 months in federal prison.

    The state and federal sentences will run concurrently, and they will serve in federal prison first.

    According to the state:

    Vito Grippo, who had an office in Holmdel, solicited 12 homeowners facing foreclosure by offering to temporarily transfer title of their home to a company called Morgan Financial. He told them they would keep 80 percent to 90 percent interest in the home; Morgan Financial and an investor would share the rest.

    He told them to make their monthly mortgage payments to Morgan Financial, and Morgan Financial would pay the lender, reducing their payments over time and giving them back title to their homes in a year.

    Grippo also solicited investors who didn’t know they were buying the homes outright; they thought they were investing in income-generating rental properties. He used the identities of the investors to file fraudulent mortgage applications to buy the homes.

    Frederick Grippo, a loan broker, submitted fraudulent applications, the state said.

    Vito Grippo obtained more than $4.5 million to purchase 12 homes in New Jersey and New York. He stole more than $1.3 million in loan proceeds that should have been disbursed to the original homeowners as equity at the closing. And he diverted the money into his companies’ bank accounts, the state said.

    Although Vito Grippo made some mortgage payments in the names of the investors, all of the homes fell into foreclosure. The homeowners lost their properties. And the investors’ credit ratings were ruined, the state said.
For more, see Father and son at Holmdel business get state prison to go along with federal sentence.

See also, The Trentonian: Father and son real estate cheats get prison time:
  • Vito Grippo had the original homeowners and the investors sign documents without giving them time to ascertain what they were signing.