Saturday, July 06, 2013

After Feeling Forced To Move, Disabled Tenant Scores $16.5K In Suit Settlement Over Landlord's Alleged Failure To Respond & Engage In Interactive Process In Connection With Request To Make Building Wheelchair-Friendlier By Either Fixing Often-Broken Elevators Or Installing Ramp

From the Office of the Massachusetts Attorney General:
  • A Worcester housing complex and its property management company will pay $20,000 to resolve allegations of disability-based housing discrimination, Attorney General Martha Coakley announced [].

    The assurance of discontinuance (AOD), filed with the Suffolk Superior Court today, resolves allegations that Federal Square Condominium Trust, owner of a 76-unit condominium complex with four commercial units in Worcester, and its property management company Alpine Property Management, failed to respond to a tenant’s requests to make the building wheelchair accessible.

    Specifically, the tenant requested that the defendants fix the often-broken elevators or install a ramp. Because of the failure to respond and to make the requested modifications, the tenant and her disabled partner were forced to move out of the building.

    “Massachusetts law requires landlords to communicate with and provide reasonable accommodations for their tenants with disabilities,” AG Coakley said. “Landlords must meet their obligations under the law in a timely manner especially when it comes to tenants who have every right to safe access to their own home.”

    Under Massachusetts law, when a property owner or manager receives a request from a tenant with disabilities for an accommodation, the owner or manager has to take steps to communicate with the tenant to identify whether or not it is reasonable to provide such an accommodation. They may ultimately deny the tenant’s request, but they have to engage in an interactive process.

    Under the terms of the agreement, Federal Square and Alpine will pay a total of $20,000, including $16,500 to the tenant and $3,500 to the Commonwealth. In addition, Alpine will implement new policies to ensure that it properly responds to requests for reasonable accommodations in the future within 15 business days and to maintain a written log of all requests to ensure compliance.

Craigslist Ad Indicating Unwillingness To Rent To Families With Kids Under Age 6 To Dodge Duty To Delead Apartment To Cost Landlord $38K+ In Penalties, Legal Fees, Costs

From the Office of the Massachusetts Attorney General:
  • A Melrose landlord and property manager have been ordered to pay more than $38,000 in a housing discrimination case that resulted from posting a Craigslist advertisement indicating their unwillingness to rent to families with children because of the lead status of a rental unit, Attorney General Martha Coakley announced [].

    [A] civil judgment was entered in Suffolk Superior Court against landlord Nicholas Keramaris and MT. V.M. Realty Trust (MT. V.M.) – the owner of a 20-unit rental property in Melrose – who were found to have violated both the state anti-discrimination law and consumer protection law by posting an advertisement on the popular classified advertising website stating that an apartmentis not deleaded, therefore it cannot be rented to families with children under six years old.”

    “Massachusetts law is very clear – landlords cannot avoid their obligations under the state’s lead paint laws by refusing to rent to families with young children,” AG Coakley said. “This judgment demonstrates that there are serious consequences for violating anti-discrimination laws.”

    In 2010, the AG’s Office filed a complaint against Keramaris and MT. V.M., alleging that their advertisements were discriminatory against families with young children. Under Massachusetts law, it is illegal to refuse to rent or steer families away from rental properties because they have young children whose presence triggers an owner’s duty to eliminate lead hazards that pose serious health risks.

    The Court has ordered Keramaris and MT. V.M. to pay a civil penalty of $10,000, and more than $28,000 in attorneys’ fees and costs. They have also been ordered to cease from posting any discriminatory advertisements, and delead the next two-bedroom apartment in the building that becomes available for rent that is not yet deleaded. Additionally, both Nicholas Keramaris and George Keramaris, the trustee, are required to attend fair housing training.
For the Massachusetts AG press release, see Melrose Landlord and Property Manager Ordered to Pay More Than $38,000 for Discriminatory Craigslist Ad (Court Judgment Requires Defendants to Delead Unit, Attend Fair Housing Training).

Massachusetts AG Indicts Landlord For Allegedly Using Forged Lead Inspection Compliance Letter In Attempt To Qualify For Receipt Of Section 8, State-Subsidized Rental Assistance Payments On Behalf Of Tenant With Three Kids Under Age 6

From the Office of the Massachusetts Attorney General:
  • A Chelsea area property owner and real estate broker has been indicted in connection with procurement fraud and falsifying a lead inspection report, Attorney General Martha Coakley announced [].

    Nidia Peguero, age 39, of Chelsea, was indicted [...] by a Suffolk County Grand Jury on the charges of Procurement Fraud (2 counts) and Uttering False or Forged Records.

    “Exposure to lead can be extremely dangerous, especially for young children,” AG Coakley said. “We allege that this defendant falsified a lead inspection report in order to be able to accept government-funded housing assistance payments from a tenant with three children under six years old.”

    The AG’s Office began an investigation to this matter after it was referred by the Department of Public Health. Authorities allege that in October 2011, Peguero, a licensed realtor, submitted a falsified lead inspection compliance letter for a Chelsea property her husband owned to the Metropolitan Boston Housing Partnership (MBHP) in order for him to be approved as a landlord eligible to receive government-funded rental assistance payments.

    MBHP serves as a regional administrator for the state Massachusetts Department of Housing and Community Development (DHCD) and administers both the Section 8 and HomeBase housing assistance programs in the Boston metropolitan area. A landlord must submit appropriate documentation to MBHP to become eligible to receive rental assistance payments.

    Further, if there are to be children under the age of six living in the unit, a landlord must submit documentation showing that a passing lead paint inspection was conducted on the property.

    According to authorities, after a tenant of the Chelsea property, who at the time had three children under the age of six, applied to receive housing assistance, MBHP received a letter of lead inspection compliance from Peguero. The letter was purportedly signed by a licensed lead inspector.

    However, a review of the letter conducted by MBHP and inspectors from the Massachusetts Department of Public Health's Child Lead Poisoning Prevention Program determined the documentation to be fraudulent. Investigators allege that Peguero altered a prior proper lead inspection report prepared for her parents for a different property and submitted the falsified document to MBHP.

    Further investigation revealed that Peguero submitted the same forged lead letter in May 2010 to Children’s Services of Roxbury in order to receive payments under a different state housing subsidy program called Flex Fund, which is administered by DHCD.

Bay State Landlord Gets Jail Time In State Hate Crimes Prosecution For Use Of Racial Slurs To Harass, Intimidate Once-Pregnant, White Tenant Who Since Delivered, Brought Home Newborn Biracial Infant, Forcing Her To Move From Residence

From the Office of the Massachusetts Attorney General:
  • A Holyoke man has been found guilty in connection with the racial harassment of his tenant in violation of her civil rights and sentenced to jail, Attorney General Martha Coakley announced [].

    Following a two day trial, a Hampden Superior Court jury found Jesse Jedrzejczyk, 58, guilty on the charge of Civil Rights Violation. Following the verdict Judge Daniel Ford sentenced Jedrzejczyk to one year in the house of correction, six months to serve with the balance suspended for one year. Jedrzejczyk was further ordered to attend counseling per his probation, comply with the permanent injunction, engage in substance abuse evaluations, and stay away from and have no contact with the victims.

    “The defendant harassed and intimidated victims despite being subject to a court order due to similar behavior in the past,” AG Coakley said. "This verdict and sentence shows that bias and hate-motivated conduct is not tolerated in Massachusetts.”

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

    Despite being subject to the Superior Court order, Jedrzejczyk engaged in substantially similar behavior toward his tenant and her infant child because of their perceived race. Jedrzejczyk rented the first floor apartment in his building to his tenant. The tenant, a white female, was three months pregnant at the time she moved into the defendant’s building.

    After the tenant brought home her newborn biracial infant, Jedrzejczyk regularly harassed his tenant using racial slurs thereby intimidating his tenant, creating concern for her infant’s safety and, ultimately, forcing her to move from her home.

    A Hampden County grand jury returned indictments against Jedrzejczyk on October 23, 2012. Jedrzejczyk was arraigned in Hampden Superior Court on November 8, 2012 where he pleaded not guilty and was ordered held on $10,000 bail. Jedrzejczyk was found guilty on May 24 by a Hampden Superior Court jury following a two day trial and was sentenced to jail.

    AG Coakley’s Civil Rights Division works to protect the civil rights of all residents and visitors to Massachusetts. The Attorney General’s Office may obtain an injunction if an individual is the victim of threats, intimidation, or coercion on the basis of a protected category or a protected activity pursuant to the Massachusetts Civil Rights Act, commonly referred to as the “hate crimesstatute.
For the Massachusetts AG press release, see Holyoke Man Found Guilty, Sentenced to Jail in Connection with Violating Civil Rights (Defendant Engaged in Race-Based Harassment of Neighbors).

Friday, July 05, 2013

FTC Tags Alleged Loan Modification Racket In Civil Suit For Upfront Fee Homeowner Ripoffs Peddling Purported Forensic Audits, Bankruptcy Advice, Credit Counseling; Scores Court Order Shutting Down Outfit's Websites & Freezing Its Assets Pending Trial

From the Federal Trade Commission (Washington, D.C.):a
  • The Federal Trade Commission filed suit in federal court to halt a mortgage relief scheme that allegedly deceived and preyed on distressed homeowners by charging them $2,000 to $4,000 based on bogus foreclosure rescue claims.

    The defendants allegedly falsely claimed they would provide legal help to save consumers’ homes from foreclosure and lower their mortgage payments, then charged them up-front fees in violation of federal law, delivering little or no help, and driving them deeper into debt.

    The temporary restraining order signed by the court shuts down the defendants’ websites, freezes their assets, and provides for appointment of a receiver pending trial.

    The defendants marketed their scheme in a variety of ways, which included using an official looking mailer that implores consumers to act quickly before they “FORFEIT LEGAL RIGHTS,” or face a “statute of limitations and government program deadlines,” according to the FTC. Three individuals – Ratan Baid, Madhulika Baid, and William D. Goodrich – and seven companies falsely promised lower monthly payments and interest rates, and conversion of adjustable-rate mortgages to fixed ones, the FTC complaint alleged.

    Many consumers who called the toll-free numbers were falsely guaranteed a loan modification that supposedly would make their payments more affordable, that they would get results within 60 to 90 days, or that Goodrich, an attorney, would use his impressive legal experience on their behalf, according to the complaint.

    The defendants also marketed their scheme online, through telemarketing calls and with television and radio ads, according to the complaint. The defendants’ websites touted a range of financial services, including bankruptcy advice, credit counseling, and “forensic mortgage audits.” One of the sites described how these “audits” can help consumers hold onto their homes or lower their mortgage payments. It falsely claimed that the “audits” could uncover any “lending violations” committed by lenders, and that the information could be used “to gain leverage in a successful loan modification,” the complaint stated.

    In reality, however, the defendants generally did not provide the promised loan modification or help consumers avoid foreclosure, either directly or through the “forensic mortgage audits.”

    The complaint charges the defendants with violating the Federal Trade Commission Act and with violating the Mortgage Assistance Relief Services Rule, which bans mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.

    The complaint also names as defendants Apex Solutions, Inc.; William D. Goodrich, Attorney, Inc.; A to Z Marketing, Inc.; Apex Members, LLC; Backend Inc.; Expert Processing Center, Inc.; and Smart Funding Corp.
For the FTC press release, see FTC Halts Allegedly Phony Mortgage Relief Scheme (Victimizing Thousands of Consumers, Marketers Falsely Touted Legal Assistance and "Forensic Audits" for Homeowners Facing Foreclosure).

Go here for links to the lawsuit and the restraining order and asset freeze.

St. Louis Feds: Needing Quick Loot To Fund Outfit's Operations, Closing Agency Manager Illegally Dipped Into Clients' Cash Held In Real Estate Escrow Account, Then Doctored Financial Records In Effort To Dupe Insurer; One Sour Deal Left Title Insurance Underwriter Holding The Bag For $200K+

From the Office of the U.S. Attorney (St. Louis, Missouri):
  • Elizabeth Glosemeyer of St. Louis County, was indicted on two counts of wire fraud.

    According to the indictment, while the manager of Lenders Guarantee Title Company of St. Louis, Glosemeyer raided the company’s escrow account to fund operations.

    The escrow account consisted of clients’ money and was to be used only for clients’ real estate transactions.

    The indictment further alleges that Glosemeyer doctored financial records to cover up her raiding of the escrow account from Lenders’ underwriters. In the summer of 2012, an audit uncovered Glosemeyer’s scheme and Lenders went out of business soon thereafter.

    Due to the deficit in the escrow account Glosemeyer created, at least one transaction in excess of $200,000 had to be closed with the underwriters’ funds.

Warning To Brooklyn Residents, Property Owners Who Die Without A Will Or Next Of Kin: The Institutional Grave-Robbing Of Dead New Yorkers Continues, So Prepare To Be Fleeced!

In Brooklyn, New York, the New York Post reports:
  • They’ve done a ghastly job.

    Public administrators responsible for the estates of people who die in Brooklyn mishandled more than $2.2 million in assets — losing a fur coat and forgetting to collect $50,000 in cash, an audit has found.

    Among its missteps, the Kings County Public Administrator’s Office left $50,000 it knew about sitting in a safe-deposit box for five years and failed to credit an estate after selling a six-family home for $140,000, said a report by Comptroller John Liu. The $50,000 in cash was claimed only after auditors pointed it out.

    The administrator’s office, which deals with estates of those who die without wills or next of kin, also misplaced a $1,000 fur coat it had stored in a vault at the Macy’s in Kings Plaza back in 2004. When auditors asked what happened to the coat, administrator staffers frankly admitted, “We have no idea what happened regarding the fur coat.”

    This was the same office where a bookkeeper was indicted last year in the theft of $2.6 million from the deceased.

    “The missing valuables and cash uncovered by this audit read like a blooper reel,” said Liu, a mayoral candidate dogged by campaign irregularities. “It would be funny if the Brooklyn public administrator wasn’t responsible for protecting estates worth millions of dollars. They need to show they are capable of safeguarding the estates entrusted to their care.”

    His audit identified the mishandling of assets in more than half of the 50 estates that were examined.

    But the administrator’s office had been responsible for more than 3,300 estates, valued at nearly $75 million, as of June 2011.

    Public Administrator Bruce Stein wrote a six-page response to Liu’s audit with an item-by-item refutation of its findings. He blasted a chart detailing the minimum $2.2 million in mishandled assets as “riddled with errors” and full of “false information.” He also charged that Liu’s auditors had a “complete lack of understanding of the authority of the public administrator and our handling of estate matters.”

    Stein’s office did not immediately respond to a request for comment.

    But Liu’s audit found plenty of other concerns with Stein’s office, including its charging of excessive legal fees, poor record-keeping and slow pace at closing estate cases. More than 92 percent of estates hadn’t been fully distributed within two years.

    Liu also noted that the administrator failed to deactivate information-sensitive user accounts for seven former staffers — including the one charged with swindling $2.6 million by writing fraudulent checks.
Source: Administrators mishandled more than $2.2M for estates of people who died in Brooklyn, audit shows.

For earlier stories on the fleecing of dead New Yorkers, see:
    Those old-timers who have some familiarity with the sleaze that has been associated with the public administrators' offices in New York City know that recent media reports don't bring anything new to light - they are mere reminders of the ongoing ripoffs that have been going on for decades. See, for example, these two New York Times' stories that date back 25+ years:
    Institutional grave robbing is not limited to New York City. Go here for links to earlier stories of similar fleecings of the dead, both in New York City and elsewhere.

    Thursday, July 04, 2013

    Disciplinary Actions By Florida Supreme Court

    The Florida Bar recently published its periodic 'gossip sheet' announcing the discipline recently meted out by the Florida Supreme Court to some of the Bar's wayward members.

    The following lawyers were disciplined for either playing fast & loose with client's trust funds, improperly ripping off clients out of unwarranted legal fees/gifts, or otherwise not dealing on the up & up with their clients:
    • Ronald George Baker, 2655 S. Le Jeune Road, Ph. II-B, Coral Gables, suspended for 91 days, effective July 14, following a May 15 court order. (Admitted to practice: 1976) Baker had a long-time business relationship with a client whom he assisted in an estate planning matter. A restatement of the trust provided that Baker, who prepared the documents at the instruction of the client, would receive $250,000 as a beneficiary of the reinstatement. Upon the death of the client, Baker disbursed the funds to himself and he additionally collected $110,000 for serving as trustee, personal representative and attorney. Baker violated Bar rules involving conflict of interest. His acceptance of a substantial gift from a client was inappropriate and also violated Bar rules. (Case No. SC12-2725)
    • Jennifer Aycock Bonifield, 1025 Professional Park Drive, Brandon, disbarred effective immediately, following a May 15 court order. (Admitted to practice: 2002) Bonifield abandoned her law practice and converted funds held in trust. She was found guilty of the following offenses: committing a criminal act, charging excessive fees, fraud and misrepresentation, and engaging in a pattern of neglect. In several instances, Bonifield failed to maintain adequate communication with clients, failed to work diligently on cases, and failed to respond to the Bar's inquiries. (Case No. SC12-1188)
    • Libio Calejo, 2500 N.W. 79th Ave., Suite 102, Doral, suspended for one year, effective 30 days from a May 15 court order. Further, Calejo was ordered to pay restitution of $9,700 to six separate clients. (Admitted to practice: 2004) Calejo represented approximately 20 debtors in federal bankruptcy court. Many of the petitions and schedules he filed contained inaccuracies, leading to amendments that also contained inaccuracies and resulted in unreasonable delays. Calejo’s failure to appear at a number of scheduled creditors’ meetings resulted in the dismissal of most of the bankruptcy cases. Calejo also failed to adequately communicate with clients, often leaving that responsibility to his non-lawyer personnel. (Case No. SC12-2729)
    • Stewart Lawrence Jacobson, P.O. Box 120007, Clermont, to be publicly reprimanded following a May 15 court order. (Admitted to practice: 1977) The Bar’s audit of Jacobson’s trust account revealed a shortage of approximately $30,000, but found no indication of intentional misappropriation. The shortage was due to negligent record keeping. (Case No. SC12-1941)

      Stephen Gilman Kolody, 3625 Hidden Tree Lane, Fort Myers, suspended for 91 days with reinstatement under Rule 3-7.10, effective 30 days from a May 15 court order. Further, Kolody shall pay restitution of more than $10,000 to two clients. (Admitted to practice: 1980) Kolody was found in contempt for noncompliance with a subpoena to produce trust accounting records. Kolody accepted fees in advance in two instances and subsequently failed to perform the services. (Case Nos. SC11-721 & SC12-1420)
    • Charles Edward Pellicer, 28 Cordova St.,Saint Augustine, to be publicly reprimanded and placed on probation for two years, following a May 15 court order. (Admitted to practice: 1976) Pellicer took out a $20,000 loan from an elderly blind woman who was a former client. He also handled several legal matters for her after obtaining the loan. He failed to advise her to obtain independent legal advice regarding the loan. Pellicer failed to make the required loan payments for six months but later paid off the loan. Pellicer also commingled his personal funds with trust funds and failed to maintain his trust account records in substantial compliance with the rules. (Case No. SC12-1190)
    • James Herbert Rainey, 1117 Clare Ave., West Palm Beach, suspended until further order, following a May 22 court order. (Admitted to practice: 1983) According to a petition for emergency suspension, Rainey appeared to be causing great public harm. A Bar investigation found that Rainey misappropriated client funds. He also misrepresented facts in a written response to a Florida Bar inquiry. (Case No. SC13-881)
    • Mark David Tucker, P.O. Box 557818, Miami, disbarred effective 30 days from an April 30 court order. (Admitted to practice: 1981) Tucker was found in contempt for failing to comply with the terms of a November 2010 suspension order that also placed him on probation for three years. Tucker failed to pay $72,950 to a former client within the three-year probationary period as required. (Case No. SC12-952)

    78-Year Old Ex-Lawyer Gets Two Years House Arrest For Screwing Over Clients By Pocketing $400K+ Of Entrusted Funds Intended To Be Used To Pay Off Mortgages; Probe Triggered By Referral From State High Court's Attorney Ripoff Reimbursement Fund

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

      Raymond Paczkowski, Jr., age 78, of Tewksbury, pleaded guilty [...] in Middlesex Superior Court to Larceny over $250 from a Disabled Person and Larceny over $250 (7 counts). After the plea was entered, Superior Court Judge Edward P. Leibensperger sentenced Paczkowski to two years of home confinement, with the conditions that he be monitored by GPS and complete 400 hours of community service. Judge Leibensperger also ordered Paczkowski to serve three years of probation upon completion of his period of home confinement and to pay $479,000 in restitution.

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

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

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

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

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

      In other instances, Paczkowski stole money from clients who had hired him to assist with the handling or disposing of estate property after experiencing a death in the family. In one case, a client who assumed the full title to his mother’s property after she passed sought Paczkowski’s assistance in paying off a mortgage in order to refinance. The client’s mother owed roughly $109,000 to the company that held a mortgage on the property and Paczkowski received $158,100 from a new lender. According to investigators, Paczkowski forwarded the proceeds to the client, but failed to pay off the original mortgage company. The client realized the theft when he received multiple late notices on his mother’s mortgage statement.
    For the Massachusetts AG press release, see Former Tewksbury Attorney Pleads Guilty, Sentenced in Connection with Stealing More Than $400,000 from Clients (Defendant Stole Money Entrusted to Him by Clients for His Personal Use; Stole from Disabled Client).

    Massachusetts AG Pinches Now-Disbarred Attorney For Various Client Ripoffs Totalling $900K+; Alleged To Have Failed To Pay Off Existing Loans When Retained To Handle Real Estate Transactions

    From the Office of the Massachusetts Attorney General:
    • A now-disbarred Lawrence attorney has been indicted in connection with stealing more than $900,000 from multiple clients, one of them elderly, Attorney General Martha Coakley announced [].

      Phillip Thompson, age 35, of Lawrence, was indicted [] by Statewide Grand Jury on charges of Larceny over $250 from a Person over Sixty, Larceny over $250 (7 counts) and Unauthorized Practice of Law.

      “This defendant abused his stature as an attorney to take advantage of vulnerable clients,” AG Coakley said. “We allege that he stole hundreds of thousands of dollars for his own personal use.”

      The AG’s Office began an investigation in 2011 after the matter was referred by the Essex County District Attorney’s Office. Thompson worked as an attorney out of his Lawrence law office, primarily specializing in real estate, and also ran a debt collection agency out of his office. Authorities allege that between July 2007 and June 2011, Thompson stole more than $900,000 from at least seven clients.

      The investigation revealed that Thompson represented clients in several real estate transactions, allegedly failing to pay off loans and failing to give funds to clients who were owed money.

      In one case, Thompson allegedly represented an elderly man and his wife who were seeking to obtain a settlement from their insurance company after their home burned down. When the insurance company issued more than $416,000 in checks jointly to the clients and Thompson, Thompson allegedly converted the funds for his own use and the clients never received any of the money.

      In another instance, a reverend gave Thompson $60,000 to hold in escrow pending a closing on land that his church intended to purchase. When the closing fell through, Thompson allegedly never returned the money and kept it for his personal use.

      According to investigators, Thompson continued to solicit legal business and represent himself as an attorney after he was suspended from practice in June 2010. Thompson was later disbarred in July 2012.
    For the Massachusetts AG press release, see Former Lawrence Attorney Indicted for Stealing More Than $900,000 From Clients (Defendant Allegedly Stole Money for His Personal Use; Stole from Elderly Client).

    Now-Disbarred Lawyer Gets Year In Jail, 18 Months House Arrest After Copping Plea To Ripping Off Elderly Clients Of Nearly $900K

    From the Office of the Massachusetts Attorney General:
    • A disbarred attorney has been sentenced to jail and ordered to pay restitution in connection with stealing a total of nearly $900,000 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 [].

      Maureen F. Pomeroy, age 46, of Bedford, pleaded guilty on [] 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.

      [M]iddlesex Superior Court Judge Kimberly Budd sentenced Pomeroy to two-and-a-half years in the House of Correction, with one year to serve and the balance suspended with probation for two-and-a-half years. As a condition of probation, Pomeroy must remain on house arrest for one-and-a-half years and pay restitution in the amount of $277,292.

      “This defendant took advantage of clients who entrusted her with access to their funds and believed that she would assist them with their best interests in mind,” said AG Coakley. “It is particularly appalling that she stole more than $800,000 from an elderly client and from someone who was grieving the loss of a family member. This defendant is being held accountable for these injustices and is no longer able to practice law.”

      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, an 85-year-old man 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 more than $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, in October 2007, Pomeroy handled a closing on the sale of a deceased man’s home under a power of attorney and concealed her receipt of more than $32,000 of 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, totaling more than her fees, from the account for her own benefit from January 2008 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.

    Wednesday, July 03, 2013

    Last Of Four Defendants In Sale Leaseback, Home Title Theft Racket Was About To Be Sentenced To 15+ Years When He Asks Judge To Withdraw Guilty Pleas; Says He Was Under Duress When Agreeing To Mid-Trial Deal Last Month

    In San Diego, California, KGTV Channel 10 reports:
    • A 60-year-old man who previously admitted guilt in a massive foreclosure fraud scam asked a judge [] to withdraw his guilty pleas.

      David Zepeda was about a week into trial last month when he pleaded guilty to numerous counts of conspiracy to commit grand theft, identity theft and recording false documents, Deputy District Attorney Valerie Tanney said.

      He is the last of four defendants to go through criminal proceedings in the case.

      Prosecutors said the defendants acquired the titles to properties by forging quitclaim deeds or convincing homeowners to transfer the property to them by promising the homeowner they would help avoid foreclosure.

      "I never thought they'd steal from me. I thought they were helping," said Escondido resident Benito Cristobal.

      Cristobal told Team 10 he went to a large foreclosure seminar and unknowingly signed over the title to his home that he later lost.

      Once they had acquired the title, David Zepeda and his brother John would rent out the property, according to prosecutors, who said more than 1,000 victims were discovered in San Diego, Los Angeles, Orange, Riverside, Santa Barbara and San Bernardino counties, as well as in Clark County Nevada.

      They attracted their victims by holding seminars for people hoping to save their homes from foreclosure. Money was diverted from lenders and owners into the defendants' accounts, where the cash was used to support lavish lifestyles, prosecutors said.

      Authorities seized $335,000 in uncashed checks, $33,000 in cash, more than $8,000 in silver coins, gold watches and rings, and a Bentley automobile when they searched David Zepeda's home.

      He was set to be sentenced Friday to 15 years and eight months in prison, but instead asked for a hearing to convince Superior Court Judge Amalia Meza that he should be allowed to withdraw his pleas.

      Defense attorney Tim Brackney said his client, who is being held in county jail in lieu of $5 million bail, felt like he was under "duress" when he pleaded guilty. The defendant suffered a stroke a few years ago and appeared in court on a gurney.

      The judge set an Aug. 2 hearing on Zepeda's motion.

      The other defendants pleaded guilty to various charges last year.

      John Zepeda pleaded guilty to rent skimming, forgery, identity theft and conspiracy to commit grand theft and was sentenced to 12 years in state prison. He agreed to pay $6 million restitution.

      The state said money has been collected to help pay back the victims, but Cristobal told Team 10 he just wants justice.

    After 10-Day Trial, Jury Takes One Hour To Convict Scammer Who Peddled Phony Debt Elimination Scheme To Financially Struggling Homeowners

    In Hartford, Connecticut, NBC Connecticut reports:
    • Deowraj Buddhu's federal trial lasted ten days, but it took a jury less than one hour to convict him of six counts of mail fraud and seven counts of issuing, selling and passing fictitious financial instruments. The Wethersfield business owner, 70, faces up to 30 years in prison.

      The jury agreed with what prosecutors said in their opening and closing arguments, that Buddhu is a "con man."

      Court documents reveal Buddhu's scheme targeted struggling homeowners. Many of them were non-English speakers. Buddhu charged his clients for access to a supposed secret stash of federal money. No such fund exists, according to the federal government.

      Prosecutors said because Buddhu had told customers to stop paying their bills and mortgages, many wound up in foreclosure.

      Buddhu represented himself during his trial. “I went into the business only to help individuals get out of debt,” Buddhu said during his closing argument. “My ignorance is what I’m guilty of.”

      Buddhu's daughter, Sunita, notarized many of her father's documents. She pleaded guilty to issuing, selling and passing fictitious financial instruments.

      Buddhu's standby attorney said the case was too complex for someone without access to a law library to defend himself. However, Buddhu plans to appeal. His sentencing is scheduled for September 17.
    Source: Wethersfield Businessman Guilty of Fraud (A federal jury convicted Deowraj Buddhu on Tuesday).

    For the U.S. Attorney press release, see Federal Jury Convicts Wethersfield Resident of Running Fraudulent Debt Elimination Scheme.

    Indiana AG Tags Two Out-Of-State Law Firms In Separate Civil Suits Alleging Illegal Loan Modification Ripoffs

    From the Office of the Indiana Attorney General:
    • Two Florida-based foreclosure consultant companies face state lawsuits [] after taking more than $7,500 from local homeowners and not providing services or refunds.

      Indiana Attorney General Greg Zoeller filed lawsuits in Morgan County against CapLaw, P.A. and Jeffrey A. Smith Law Group, P.A. According to the complaints, the companies illegally solicited Indiana residents and entered into contracts with homeowners promising to obtain home loan modifications in exchange for upfront fees.
    • Defendant CapLaw, P.A., also known as the Law Office of James F. Caplan, P.A., and its owner James F. Caplan collected $1,200 to $3,300 in up-front fees from two consumers.

      Jeffrey A. Smith Law Group, P.A., also known as JAS Law Group and Jeffrey A. Smith Law Firm, and its owner Jeffrey A. Smith are accused of taking $3,034 from a Martinsville resident after promising to obtain a home loan modification.

      Both defendants are accused of taking the money and not rendering the promised services or providing refunds. The companies did not register $25,000 surety bonds with the Attorney General’s Office. These bonds are required before services can be performed, including collecting money up front. They also did not obtain certificates of authority from the Indiana Secretary of State’s Office to conduct business in Indiana.

      According to the lawsuits, both businesses violated the Credit Services Organization Act, the Mortgage Rescue Protection Act, the Home Loan Practices Act and Indiana’s Deceptive Consumer Sales Act. Zoeller is seeking injunctions against the companies, restitution for the victims, civil penalties and attorneys' fees.

    Loan Modification Racket Continues Unabated For Years, Jumping From State To State Ripping Off Homeowners While Flying Under Criminal Law Enforcement Radar

    In Houston, Texas, KHOU-TV Channel 11 reports:
    • Customers say a Houston company that promised to help save their homes from foreclosure, really did little more than drain their bank accounts.

      The KHOU 11 News I-Team had barely started its investigation into Sunbelt Fidelity Corporation, when the president of the company, Janice McCarthy, sent a letter threatening a lawsuit.

      But a trail of complaints and court filings accuse McCarthy of having a record of involvement with companies accused of ripping off consumers.

      Customers like Richey Tanksley.

      “Every bit of pride that you have is gone,” explained Tanksley as he walked through the door of a friend’s San Antonio apartment. Without the generosity of that friend, Tanksley would be on the streets. “I pull my little pillows off the couch and I pull the bed out, I unfold it and that’s where I sleep,” demonstrated Tanksley.

      It’s a life he never dreamed of when he bought a home near Austin five years ago. Unfortunately, Tanksley eventually ran into some financial trouble. Fearing foreclosure, he hired the Sunbelt Fidelity Corporation.

      “Basically they were a company that just helped people with their foreclosures,” said Tanksley citing the company’s pitch. “They came in and made it possible to keep their homes.” He says he made an initial $1,200 payment to Sunbelt Fidelity. In exchange, he says the company told him they’d take care of the rest including handling his bank.

      “They told me not to communicate with Wells Fargo because that's what they were going to do,” Tanksley said. “So if I had any calls from Wells Fargo, don't answer them.”

      He says Sunbelt Fidelity also told him not to send his lender the monthly mortgage payment. Instead, Tanksley says he was instructed to send Sunbelt Fidelity nearly $500 a month. “I just thought that money that I sent them was going to make my life alright again,” Tanksley explained. But a few months later, his lender contacted him: He’d lost the house to foreclosure.

      “I was in absolute disbelief,” recalled Tanksley. “I was like, ‘well, wait a minute. What's going on here?” Tanksley called his lender. “They said they had never been contacted by Sunbelt Fidelity,” Tanksley said. “Wells Fargo had never had any contact. They had no communication with anybody.”

      But the complaints don’t stop with Tanksley.

      The 11 News I-Team found similar complaints from Sunbelt Fidelity Customers in at least five other states. In December, the North Carolina Department of Justice ordered Sunbelt Fidelity Corporation to cease and desist providing “illegal loan modifications” in the state.

      It turns out, those are familiar accusations for McCarthy, Sunbelt’s president.

      The I-Team discovered McCarthy’s former company, East Coast Fidelity, was shut down by the Rhode Island Attorney General in 2011. In court filings, investigators claimed they were unaware of even one homeowner who received payment help from McCarthy’s company.

       Florida records show McCarthy was also a former officer of Ameridebt Relief Corp.

      The New Hampshire Banking Department obtained a cease and desist order against Ameridebt Relief Corp. and fined the company $10,000 after investigators say the company collected $4,512 from a customer but failed to provide the mortgage modification promised. New Hampshire investigators say some of those payments were made to Ameridebt Relief Corp. during the same time McCarthy was the company’s director.

      “I think that what's alarming is that they've managed to continue this scam for years now and basically have jumped from state to state,” said Monica Russo with the Better Business Bureau.

    Tuesday, July 02, 2013

    Lawsuit: Real Estate Agent/Grandaughter Duped Granny Out Of Two Multi-Million $ Hell's Kitchen Properties, Leaving Her Broke & Facing The Boot

    In New York City, the New York Daily News reports:
    • Her grandmother is broke, and now her mother is heartbroken. The sobbing mom of a New York woman accused of duping her 73-year-old grandmom out of millions of dollars was devastated Saturday by the charges of cross-generational greed.

      “I gave her everything,” Iris Weinberg said of daughter Danielle Kaminsky. “I gave her my heart and soul. How could she do this to her family?”

      Kaminsky was named in a $16 million lawsuit filed last week by Sarah Weinberg, whose family fled Europe in 1939 to escape the Nazis.

      Sarah Weinberg claims her rapacious 23-year-old granddaughter cheated her out of a pair of multimillion-dollar Hell’s Kitchen properties after the grandmother was struck by a car in early 2012.

      The money-grabbing grandkid also is accused of trying to evict Sarah Weinberg from her Restaurant Row home, allegedly giving the grandma a one-word order: “Pack.”

      The lawsuit charges that Kaminsky and her father, real estate lawyer David Kaminsky, collaborated to scam the senior citizen. “I’d expect this from him, but not from her,” said Iris Weinberg, wiping away tears while speaking about her former husband and daughter. “My mother would do anything for her.”

      Sarah Weinberg is nearly broke after $6 million in borrowed cash has disappeared, her lawyer said. "It’s gone,” said attorney Kenneth Glassman. “Everyone spent Grandma’s money.”

      He also claimed that his septuagenarian client was mentally incapable of comprehending the deal that sold one building on W. 46th St. and transferred a second to Danielle Kaminsky.

      The three generations of women were sharing a W. 46th St. home when the plot was hatched, according to the lawsuit.

      The granddaughter and Sarah Weinberg’s former son-in-law preyed on her “fears and anxieties to confuse, isolate and terrorize” their victim, the suit said. Court documents say that the building at 371 W. 46th St. was sold to a pal of David Kaminsky for $3.5 million — well below its $5.3 million market value.

      David Kaminsky pocketed a $200,000 “consultancy fee” after the sale, the suit charges. Danielle Kaminsky then coerced her grandmother into transferring the deed on 402 W. 46th St. into a trust — controlled by the grandkid.

      A weepy Danielle Kaminsky insisted on her innocence outside a Manhattan courtroom before a Thursday hearing in the case. She and her boyfriend are currently living rent-free in a penthouse apartment once owned by her grandma.
    Source: Mom of NY woman who allegedly swindled grandma: ‘I gave her my heart and soul’ (‘I gave her everything,” Iris Weinberg said of her daughter Danielle, named in a $16 million lawsuit filed last week by Sarah Weinberg claiming her 23-year-old granddaughter cheated her out of multimillion-dollar NYC properties. ‘I gave her my heart and soul. How could she do this to her family?’).

    See also, New York Post: Holocaust-survivor granny sues granddaughter, claims she’s homeless after being tricked into selling her property.

    For the ruling, see Weinberg v. Sultan, et al.

    Loan Modification Scammer Cops Plea To Grand Theft, Money Laundering For Ripping Off Homeowners Of $34K; Remains In Can In Lieu If $250K Bail Until August Sentencing

    In Ventura County, California, the Ventura County Star reports:
    • A Rancho Cucamonga man pleaded guilty to several counts of grand theft and money laundering [], according to the Ventura County District Attorney’s Office.

      Jose Miguel Aguilar, 50, admitted he ran an illegal foreclosure rescue business that victimized people in Ventura County and elsewhere in Southern California.

      He operated foreclosure rescue scams under business names including SB Management, 21st Century Management and USA Home Recovery Service, officials said.

      Aguilar and four co-defendants targeted Spanish-speaking residents who were struggling to pay their mortgages.

      The homeowners were promised home loan modifications and charged thousands of dollars in upfront fees. Losses exceeded $34,000, according to the District Attorney’s Office.

      Aguilar pleaded guilty to two counts of grand theft and one count of money laundering, all felonies.

      A warrant for Aguilar’s arrest was issued in September. He was taken into custody in Bakersfield on May 20, officials said.

      His sentencing hearing is scheduled for Aug. 1. He faces up to four years and four months in custody. He remained in Ventura County jail in lieu of $250,000 bail, officials said.

    5th Circuit: Original Note Not Needed To Foreclose Under Texas Law; Photocopy Of Original With Accompanying Affidavit Swearing It Is A True & Correct Copy Is Sufficient

    Housing Wire reports:
    • The U.S. Fifth Circuit Court of Appeals gave servicers foreclosing in Texas the green light to proceed with a foreclosure even when the servicer lacks possession of the note.

      In a case called, Martins v. Bac Home Loan Servicing, the Fifth Circuit interpreted Texas law as granting servicers a right to foreclose without the note as long as they have a viable mortgage assignment.
    • The argument made is that a servicer must posses both the note and mortgage assignment to obtain foreclosure rights. The process of banks recording multiple mortgage assignments through the Mortgage Electronic Registration Systems registry prompted many of these challenges.

      The Fifth Circuit quashed this specific claim, holding the split-the-note theory "is inapplicable under Texas law where the foreclosing party is a mortgage servicer and the mortgage has been properly assigned." The court added, "the party to foreclose need not possess the note itself."

      The decision also provided clarity on whether servicers are expected to produce the original note when trying to foreclose.

      The court held production of the "original note" is not required in Texas as long as the servicer files a photocopy of the promissory note along with a supporting affidavit.(1)
    For the story, see Fifth Circuit gives servicers green light to foreclose without note.

    For the ruling, see Martins v. Bac Home Loan Servicing, No. 12-20559 (5th Cir. June 26, 2013.

    (1) On this point, the court said:
    • In Texas, existence of a note may be established by "[a] photocopy of the promissory note, attached to an affidavit in which the affiant swears that the photocopy is a true and correct copy of the original note." Blankenship v. Robins, 899 S.W.2d 236, 238 (Tex. App.-Houston [14th Dist.] 1994, no writ). We find no contrary Texas authority requiring production of the "original" note. The original, signed note need not be produced in order to foreclose.
    Editor's Note: At the risk of stating the obvious, keep in mind that Texas law also requires that the bankster's affidavit "is competent and sufficient to support the summary judgment." Blankenship v. Robins, supra. As many already know, the banksters have been notorious for littering the court systems and land document recording offices throughout the U.S.  with crappy, fraudulent paperwork.

    In Martins v. Bac Home Loan Servicing, supra, the homeowner apparently did little to nothing to attack the competency or sufficiency of the affidavit, or otherwise challenge the bankster's standing to foreclose in this case. From the court's ruling:
    • Martins questions BAC's "standing" to foreclose. Martins presents an incoherent and rambling argument conflating ownership of a note with constitutional standing. Interpreting those arguments most charitably, we conclude that Martins contends that the note was not properly transferred to BAC and that the assignment was "robosigned" and therefore "forged." Because of that, Martins's logic goes, BAC was not the holder of the note, did not own the mortgage, and could not foreclose.

      This argument fails. There is no doubt that the mortgage was transferred by MERS to BAC, which presented a signed, notarized assignment document that had also been recorded by the county clerk. Martins's allegations of forgery rest on the fact (based on counsel's research) that MERS does not have a Texas office and that the assignment was "robosigned." That alone is hardly sufficient to maintain a claim for fraud, much less to avoid summary judgment.[1] BAC has offered sufficient evidence, through its recorded assignment, that it was the rightful holder of the mortgage, and Martins failed to present evidence creating a genuine issue of fact.

    Monday, July 01, 2013

    BofA Back In The Headlights, Accused Of Deliberate Effort To Dodge Obligations Under Major Lawsuit Settlements While Pocketing Upfront & Periodic Cash By Unloading Loan "Sub"-Servicing Rights To Fly-By-Night, Non-Bank Outfits Not Subject To Bankster-Agreed-To Practices

    Freelance writer David Dayen writes in Salon Magazine:
    • Last week, I detailed bombshell revelations from Bank of America whistle-blowers, in which former employees of the bank detailed systematic fraud and deceptive practices inside their loan modification department — including bonuses and Target gift cards for staff who racked up foreclosures.

      Now, another new lawsuit, featuring a separate whistle-blower, contains additional remarkable revelations – and may shed light on Bank of America’s strategy in getting out from under the mountain of legal exposure and costs in which it now finds itself.

      Simply put, the bank seeks to pocket quick cash and evade practices set forth in major settlements – by cashing out of the subprime mortgage servicing business. The result would be to leave struggling homeowners back at square one, with even fewer protections to avoid foreclosure.

      First, some background. Over the past year, non-bank servicers like Nationstar and Ocwen have been buying up servicing rights to millions of mortgages, gradually positioning themselves to become the biggest companies in the space.

      These non-bank servicers, which process monthly payments and deal with foreclosures but do not originate loans, have an asset not available to their big bank colleagues: They haven’t yet been officially caught scamming customers. Therefore, they are not a party to the various servicer settlements brought by state and federal regulators, and they need not submit to those settlement guidelines. This includes rules like establishing a single point of contact for borrowers, stopping foreclosure operations when a modification is in process (ending what is known as “dual track”) and facilitating proper payment processing.

      All of this has come to a head in a class-action lawsuit filed by Leonard Law Office in Massachusetts against Green Tree Servicing, a non-bank servicer based in St. Paul, Minn. As detailed by an insider at Bank of America in a packet of documents, in January 2013, BofA sold servicing rights to 650,000 mortgages (worth $93 billion) to the parent company for Green Tree.

      Like Nationstar and Ocwen, Green Tree is not part of any servicing settlements, nor do they have to abide by any guidelines set by those agreements, even though the loans they purchased were subject to those guidelines when they were in the hands of BofA. Moreover, as a non-bank servicer, Green Tree has traditionally had less stringent oversight from federal regulators, though the Consumer Financial Protection Bureau is fixing to change that.

      Of course, servicers like Green Tree, Nationstar and Ocwen have terrible reputations as among the worst servicers in the country (worse than Bank of America, if you can imagine that). Among the charges Leonard Law Office made against Green Tree were claims that the servicer imposed illegal fees to process any kind of payment; failed to process mailed payments on time; harassed borrowers by calling them at all hours of the night and using abusive language to try to collect on debts; and delayed or denied timely modifications. These practices violate such federal laws as the Fair Debt Collection Practices Act, the Telephone Consumer Protections Act, and others. Complaints about Green Tree’s practices litter theInternet.

      And some complaints have gone to court, like the case of a Florida widow who claimed that Green Tree debt collectors called her husband, as well as his co-workers and relatives, nine times a day about a mortgage debt. Nationstar and Ocwen have seen their share of complaints as well. One innovative Ocwen scam involves sending homeowners a check for $3.50, and claiming that cashing the check automatically enrolls the customer in an appliance insurance plan, which costs $54.95 a month.

      Here’s where Bank of America comes in. According to a bank insider, this is part of a deliberate effort to flip the servicing rights for a quick buck and get out from under the scrutiny of the various settlements. “Brian Moynihan, Ron Sturzenegger and Tony Meola are well aware of the reputations of these servicers,” says the insider, referring to Bank of America’s CEO and two high-level executives. “Ron is a dealmaker, not an operations guy. He was brought in to sell the stuff.”

      Sturzenegger runs Bank of America’s Legacy Asset Servicing Division, $1 trillion or so of the shakiest loans at the bank. By selling off servicing rights, suddenly the bank doesn’t have to comply with settlement practices, nor do they have to increase staff for compliance purposes. So not only do they get some ready cash, they lower their labor costs.

      Sturzenegger worked with Meola, the executive of Fulfillment Operations, to put together the “Bulk Transfer Program,” selling off these mostly delinquent loans to disreputable servicers like Green Tree and Nationstar (the more reputable ones didn’t want any part of them).

      But they only sold the “subservicing” rights. Non-bank servicers like Green Tree service the loans, but Bank of America held onto the so-called master servicing rights. This means that the bank still gets some of the profits from servicing the loans, and none of the responsibility to comply with settlements. Bank of America added a million-plus current loans to the mix of shakier loans to sweeten the pot for the subservicers.

      In the most damning charge, the insider noted that, “It may mean that any modification currently in process with BAC (Bank of America) will not be recognized and the borrower will proceed into foreclosure.” This is almost certainly true, and it’s a very common practice. Servicers who purchase servicing rights are not obligated to follow through on prior agreements with homeowners on loan modifications that have not yet been made permanent. So the homeowner, who thought they were well on their way to saving their home, instead has to start all over with a new servicer.

      Here’s one example from a former Bank of America customer in Puget Sound, Wash., whose switch to Green Tree voided his short sale and put him back in modification hell. Even if the borrower was getting special treatment because of a natural disaster like Hurricane Sandy, that treatment would be voided once the new subservicer entered the picture.

      The Fitch rating agency has recognized the danger of selling off distressed servicing rights to these non-bank operations, saying in a research note that “the growth and outsized scale of larger nonbank servicers may pose challenges to a potential orderly transfer of servicing.” Struggling homeowners will bear the brunt of these challenges.

      Once Charles Giannotti, a friend of Bank of America CEO Brian Moynihan, found out that his servicing transferred to Nationstar, he emailed in a fit of rage. “Are you aware of the fact that your bank is turning its customers over to a processor that based on the complaints posted appears to not only lack basic competency but also poor customer service?” Giannotti fumed. This set off a flood of CYA emails within the bank from senior executives, responding to Moynihan’s queries about the scheme.

      Regardless of how Bank of America resolves this situation, the damage to homeowners has already been done. Homeowners don’t get to choose their servicer – they just get passed around at the whim of big mortgage companies. And every time the servicing rights get transferred, they have to deal with a whole new set of practices. If they were fighting foreclosure at the time of the switch, then they have to start over, under typically disadvantageous circumstances. And that’s especially true when their new servicer sits outside the glare of strict oversight.

      Bank of America’s reputation is already unsalvageable. But avoiding requirements they were forced to make to homeowners to compensate for an initial round of illegal practices, by selling the servicing rights off to fly-by-night organizations that specialize in abusing customers, just about takes the cake. And they’re profiting from it, too.
    Source: New Bank of America whistle-blower emerges: More customer abuse secrets (Bank of America whistle-blower details latest scheme to abuse homeowners, evade settlement rules and pocket cash).

    Hawaii Borrower Scores $675K, Gets $200K Residence Free & Clear In Bankruptcy Court Settlement With Bankster Accused Of Conducting Sneaky Foreclosure Designed To Lead To Poorly-Attended Auction; Homeowner's Attorney On Lender Hanky-Panky: Local Banks Not At Fault, Big Mainland Loan 'Bundlers' To Blame

    In Honolulu, Hawaii, KHON-TV Channel 2 reports:
    • Everybody knows the rules. Skip your mortgage and you could face foreclosure. But what about when the banks themselves are accused of skipping some of their duties?

      Thousands of people are thought to be potentially affected by banking practices that appear headed toward class action lawsuits in Hawaii.

      A recently settled case could influence the outcome.

      A widow, Margery Kekauoha-Alisa, has ended a years-long foreclosure battle that led to bankruptcy. She thought the Hawaii Belt Road home she had owned on the Big Island with her now deceased husband was gone.

      The case record shows they had missed their mortgage eight times. The bank had to foreclose.

      That was 2005 and she wasn’t alone. Banks were taking homes en masse.

      “Just looking at the four largest ones, we’ve calculated that just between them they took about 4,000 homes in this method in Hawaii alone, just in this state,” attorney Jim Bickerton said.

      They had a right to do it, right there in black and white in the mortgage. Can’t pay your bills? The bank is going to sell your home.

      By the same token, the bank promised to sell it according to law and for a fair price. And that’s what the banks weren’t doing.

      “For example in Mrs. Kekauoha’s case the bank didn’t tell anyone when the auction was going to be. So how is she ever going to get a fair price for her home?” Bickerton said.

      That led to a long and costly case for Kekauoha-Alisa against Ameriquest and JP Morgan Chase that was settled last week in U.S. bankruptcy court.

      According to case records, a local law firm assistant who was supposed to postpone a foreclosure auction for Ameriquest did not.

      In the settlement last week, Ameriquest agreed to pay Kekauoha $675,000, and she gets the house back free and clear. Kekauoha-Alisa had bought the house for $147,606 in 2005, and now the home is worth $203,300.

      Does this case set a precedent for others who lost or may lose their homes to foreclosure?

      “It’s a settled case so it doesn’t set a binding precedent. But it does give some guidance to people in other cases,” replied Bickerton.

      Cases like those pending in Hawaii against four banks; Wells Fargo, Bank of America, Deutsche Bank, and U.S. Bank.

      What are some of the other ways the banks allegedly caused harm to people?

      They bait and switch and get the auctions to run the way they want them to,” responded Bickerton. “The whole idea of a foreclosure auction it’s a knockdown price, it’s very cheap, the bank doesn’t want to let it go that cheap.”

      Attorneys say there could be a class action here with potentially several thousand people in Hawaii.

      Attorneys for Ameriquest settlement and for the other pending cases did not yet respond to calls for comment.

      The local banks aren’t involved in this. All of these practices came out of the system where loans were bought in bundles. Packaged and resold on the mainland. One mainland bank allegedly sold foreclosed houses for $10 million more by scooping them up themselves at poorly-attended auctions, then selling on the private market,” Bickerton said.

      A person’s home is their castle, it’s not the bank’s castle.

      “If you’re going to mess around with that, you better be prepared to pay some big damages if you’re called out,” Bickerton said.

    WV Courts Continue Pounding 'Unconscionable Home Loan' Peddler In 'Quicken Loans' Case; After Earlier Review By State Supremes, Trial Judge Responds By Banging Bankster For $3.5M In Punitives, $116K In Compensatories, $875K In Attorney Fees For Screwing Homeowner In Violation Of State UDAP Statute

    In Ohio County, West Virginia, The State Journal reoprts:
    • In a strongly-worded judgment, an Ohio County circuit judge granted a Wheeling homeowner $3,500,000 in punitive damages against Quicken Loans after the state Supreme Court determined the company fraudulently promised the homeowner could refinance her loan and fraudulently concealed an "enormous" balloon payment.(1)

      The case started when Lourie Brown and her daughter Monique purchased a duplex in 1988 for $35,000. When Lourie died in 2002, Monique became "solely responsible," the state Supreme Court opinion states.

      Deciding to refinance the project, Brown alleged the loan was higher than the price she expected on the Internet pop-up ad she had seen earlier. Although the property was deeded to her daughter, Brown later obtained the title and continued with the loan process.

      As a result, she called Quicken and said she no longer wanted to go through with the loan, but the $181,700 appraisal was approved the next day, according to the order.

      After the loan was approved, Quicken informed Brown that it was ready to move forward. Yet, Brown did not respond to Quicken's phone calls regarding the consummation of the loan.

      Brown said she intended to purchase a new car and pay the existing debt with the loan proceeds.

      According to the opinion, Brown had the understanding that once the loan was in place, Quicken would refinance the loan in three to four months and she could get a cheaper rate.

      Court documents state Quicken ultimately refused to refinance the loan but told her that if she dedicated more money toward the closing cost that the interest rate would be reduced.

      Brown closed on the $144,800 loan in July 2006. According to court documents, the interest rate was not reduced even though Brown paid more money.

      The court also outlined a balloon feature in the loan which "amortizes over 40 years but becomes due after 30 years leaving a large balloon payment."

      Brown was required to make 360 monthly payments totaling $550,084 but would still owe a $107,015 lump-sum balloon payment to repay a $144,800 loan, or nearly four times the amount financed, the order states.

      "It is uncontroverted that Quicken Loans committed fraud and engaged in unconscionable conduct in this matter. The mere terms of the loan made to the plaintiffs boggles the mind," the state court judgment states, citing the $144,800 loan on the $46,000 home.

      Court documents state Brown did not know about this balloon feature until the loan was closed.

      "Their only likely future option was foreclosure and the loss of their home," the circuit court order states. "Their only recourse to save their home was litigation."

      The state's highest court concluded that the company was unconscionable because it falsely promised refinancing, introduced a balloon payment feature at closing, misrepresented that the plaintiff was buying the interest rate down, negligently conducted the appraisal review and failed "to realize the highly inflated appraisal."

      Justices did not, however, determine whether Brown was entitled to punitive damages, saying analysis belongs at the state court level upon remand.

      In a recent judgment, Ohio County Circuit Court Judge David Sims said Brown will have "no further legal obligation" to repay Quicken Loans the note and deed of trust.

      If Brown decides to sell her property, then at the closing of the sale, Quicken will be entitled to receive all net proceeds up to $144,800, the principal amount of the loan, the judgment states.

      "There is a recklessness and inherent greed in Quicken Loans' conduct," the circuit court order states. "Quicken Loans has shown no concern for any of the consequences of its conduct. Quicken Loans' only motive in procuring plaintiffs' mortgage loan was to turn an immediate profit and then quickly unload what it had to know would eventually be a non-performing loan, to some other entity."

      Sims said the total potential finance charge on the mortgage loan was $520,065.

      "This is an enormous potential profit, which Quicken Loans could have reaped had the plaintiffs not instituted this litigation," the circuit court order states.

      In addition to punitive damages, the court also granted plaintiffs $116,276.72 in compensatory damages and judgment for attorney fees and costs against Quicken Loans in the amount of $875,233.44.(2)
    Source: WV Judge grants homeowner damages in Quicken Loans case.

    Representing the now no-longer-screwed over homeowner is the law firm Bordas and Bordas, PLLC, Wheeling, West Virginia.

    (1) For earlier posts on this case, see:
    (2) The complaint in this case included violations of the state Consumer Credit and Protection Act, West Virginia's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (generically referred to as state UDAP statutes).

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

    Add One More Bankster Left Holding The Bag With Underwater 2nd Mortgage In Another Chapter 13 'Strip-Off'

    From the South Florida Trial Practice blog:
    • In Chapter 13 bankruptcy cases, debtors and unsecured creditors have the ability to strip-off wholly unsecured liens pursuant to 11 U.S.C. 506(d).

      By example, in the recent case of In re Smith, Case No. 6:12-02333-ABB in the Bankruptcy Court in and for the Middle District of Florida, the Court granted the debtor's motion to strip-off a creditor's second mortgage of approximately $400,000.00 where two parcels of real property were valued at $111,000.00 and a first mortgage of $215,000.00 encumbered the parcels. The Smith Court found that the creditor's second lien was wholly unsecured and accordingly, void and subject to strip-off pursuant to 11 U.S.C. 506(d).

      This decision shows the importance of considering a property's value and potential real property value fluctuations prior to a creditor taking a second mortgage on non-homestead property owned by an individual. Failure to have at least $1.00 of equity at the time of a Chapter 13 bankruptcy filing could result in a creditor's entire lien being voided.(1)
    Source: Beware Of Lien-Stripping In Chapter 13.

    For the ruling, see In re Smith, Case No. 6:12-02333-ABB (M.D. Fla. January 31, 2013).

    (1) From the court's ruling:
    • "Section 506(a) defines the secured and unsecured components of debts according to the value of the underlying collateral." Tanner v. FirstPlus Fin., Inc. (In re Tanner), 217 F.3d 1357, 1358 (11th Cir. 2000). Where a lien is "wholly unsecured" it is subject to "stripoff" pursuant to 11 U.S.C. Section 506(d). In re Tanner, 217 F.3d at 1360. A wholly unsecured lien claim is void. 11 U.S.C. § 506(d); In re Sadala, 294 B.R. 180, 185 (Bankr. M.D. Fla. 2003).

      The combined value of the vacant lot and Trojan Ave. property ($111,000.00) is exceeded by the $215,000.00 security interest the holder of the Johnson mortgage has in these real properties. Zaslavsky's subordinate lien is wholly unsecured. 11 U.S.C. § 506(a)(1). No equity exists in the vacant lot and Trojan Ave. property to support Zaslavsky's second-priority lien. The lien attaches to no collateral.

      Zaslavsky's lien on the vacant lot and Trojan Ave. property is void and may be stripped off pursuant to 11 U.S.C. Section 506(d). In re Tanner, 217 F.3d at 1360. The extinguishment of the lien is not effective until the Debtor receives a discharge pursuant to 11 U.S.C. Section 1328(f) because a mortgage lien cannot be modified or stripped off without a Chapter 13 discharge. In re Sadala, 294 B.R. at 185; In re Gerardin, 447 B.R. 342, 349 (Bankr. S.D. Fla. 2011) (en banc).

    Sunday, June 30, 2013

    Antitrust Feds Run Up Score To 35 After Four More Real Estate Investors Agree To Plead Guilty In Ongoing Probe Into Northern California Foreclosure Sale Bid Rigging Rackets

    From the U.S. Department of Justice (Washington, D.C.):
    • Four Northern California real estate investors have agreed to plead guilty for their role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

      Felony charges were filed [] in the U.S. District Court for the Northern District of California in Oakland against Wesley Barta of Oakland, Irma Galvez of Pacheco, Calif., Stan Kahan of Berkeley, Calif., and Joseph Vesce of San Francisco.

      To date, as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 35 individuals, including Barta, Galvez, Kahan and Vesce, have agreed to plead or have pleaded guilty.

      “These conspirators manipulated and suppressed the competitive process through their fraudulent and collusive conduct to the detriment of lenders and distressed homeowners,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will continue to pursue those responsible for these illegal activities.”
    • The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Alameda and Contra Costa County public foreclosure auctions at non-competitive prices.

      When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.
    For the Justice Department press release, see Four Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigations Have Yielded 35 Plea Agreements to Date).

    Financially Struggling Attorney Facing Foreclosure Dodges Jail Time, Gets 30 Days House Arrest For Allegedly Ripping Off Nearly $100K From Dead Client's Estate

    In San Juan County, Washington, the San Juan Journal reports:
    • The seemingly successful career of a Whidbey Island attorney came to an apparent end two weeks ago in a San Juan County courtroom.

      On June 14, Douglas Allen Saar, 39, formerly of the law offices of Skinner & Saar, pleaded guilty in San Juan County Superior Court to one count of first-degree theft, a Class B felony. Convicted felons are typically barred from practicing law in Washington state.

      He was ordered by Judge Don Eaton to serve 60 days in jail and to pay $1,000 in fines and fees; however, under a sentencing alternative agreed to by local prosectors and the defense as part of a plea agreement, and approved by the judge, Saar will serve no jail time.

      In lieu of 60 days in jail, Saar will be allowed to serve 30 days under house arrest and to perform 240 hours of community restitution. The court-ordered fines and fees were paid by Saar on the day the sentence was handed down.

      As part of a statement to the court, Saar said he agreed to go on inactive status with the Washington State Bar Association beginning in July, and faces possible disciplinary action. He intends to form a company that provides ongoing education to lawyers in under-represented areas of the state.

      According to court documents, Saar reportedly admitted to a detective that he forged signatures on four checks totaling nearly $100,000 from the estate of Gwendolyn Wilson and deposited the money into his personal checking account. He reportedly paid the money back to the San Juan Island estate, along with interest, while the alleged theft was under investigation.

      A minority partner in the Skinner & Saar law practice, Saar was forced to withdraw from the firm in February after his former partner received paperwork detailing alleged improprieties and over-billing by Saar in an unrelated case involving a Whidbey Island estate.

      The Oak-Harbor based firm established a branch office in Friday Harbor several years ago after purchasing the private practice of the late John Linde.

      Saar reportedly violated the firm's policies by representing the Whidbey Island estate independently and is alleged to have misappropriated $42,000 of estate funds and deposited the money into a personal bank account. He has since reimbursed the family of that estate.

      Following Saar's departure from the firm, his former partner notified law enforcement officials in San Juan County of possible theft involving the San Juan Island estate after he reportedly discovered a series of billing discrepancies.

      According to court records, Saar had been struggling to fend off a foreclosure action involving personal property of his own.

    Pair Of Ex-Law Office Employees Walk Away With 1+ Year Hand-Slap After Being Pinched For Looting $788K+ From Firm's Client Trust Funds, Operating Accounts

    From the Office of the U.S. Attorney (Trenton, New Jersey):
    • Two former employees of a law firm based in Edison, N.J., were sentenced to prison terms [] for conspiring to defraud their former employer by improperly diverting more than $788,000 from the law firm, U.S. Attorney Paul J. Fishman announced.

      Marla Deptula, 46, of Sayreville, N.J., previously pleaded guilty to an information charging her with one count of conspiracy to commit mail fraud and one count of subscribing to a false tax return. She was sentenced to 20 months in prison. Rose L. Crabbe, 32, of Plainfield, N.J., pleaded guilty to an information charging her with one count of conspiracy to commit mail fraud. She was sentenced to 15 months in prison. Both defendants previously entered their guilty pleas before U.S. District Judge Peter G. Sheridan, who imposed the sentences [] in Trenton federal court.

      According to documents filed in this case and statements made in court:

      Deptula and Crabbe each admitted that between February 2005 and September 2007, they conspired to embezzle, and did, in fact, embezzle, from their former employer, referred to in court documents only as the “Law Firm,” by wrongfully writing checks from the law firm’s trust and business accounts to themselves and their personal creditors to pay for their personal expenses, including credit card bills, real estate taxes and child care expenses. Deptula and Crabbe then mailed some of the checks to their personal creditors. They further admitted to attempting to hide their theft by altering the payee information in the law firm’s accounting records.

      Deptula, who had access to the law firm’s bank accounts in order to perform her duties as a secretary in the law firm’s real estate section, used that access to divert more than $788,000 from the attorney trust and business accounts for her and Crabbe’s personal benefit. Deptula received the vast majority of the stolen funds and failed to report any of the income on her federal tax returns.

      In addition to the prison terms, Deptula and Crabbe were both sentenced to three years of supervised release. Deptula was ordered to pay $705,093 in restitution and Crabbe was ordered to pay $74,206 in restitution.