Saturday, August 03, 2013

Jury Rejects Home Builder 's 'Not Guilty' Plea To Ripping Off HUD Grant Funds Targeted To Help Navajo Nation Develop Affordable Housing For Its Members

From the Office of the U.S. Attorney (Las Vegas, Nevada):
  • Following a 13-day jury trial, a home builder was convicted by a jury [] of embezzlement crimes for converting, misappropriating and stealing from a federal housing grant program during 2004, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

    William Aubrey, 69, of Mesquite, Nevada, was convicted of two counts of conversion of money and funds from a tribal organization, and is scheduled to be sentenced on Aug. 7, 2013, by U.S. District Judge Kent J. Dawson. Aubrey faces up to five years in prison and a $250,000 fine on each count.

    The Navajo Nation counted on the monies stolen by the defendant to provide housing for its members,” said U.S. Attorney Bogden. “This defendant stole from the tribe and from the American people, and used the monies to finance an extravagant lifestyle.”

    According to the court records and the evidence introduced at trial, the Navajo Nation is a federally recognized sovereign Indian Tribe whose borders encompass a large portion of Arizona and extend into New Mexico and Utah. The Navajo Housing Authority was an official Navajo Nation entity authorized to receive and administer federal housing funds which were awarded annually by the U.S. Department of Housing and Urban Development (HUD). The Navajo Nation receives an average of $90 million from HUD annually in grant funds.

    A Navajo Nation non-profit corporation, the Fort Defiance Housing Corporation, was responsible for the development of safe and affordable housing on the Navajo Nation lands. Fort Defiance was also a sub-grantee for the HUD grant funds.

    Beginning in 1996 and continuing to 2004, Fort Defiance contracted with a private housing development company, Lodgebuilder, to develop the housing projects. Lodgebuilder is owned and operated by William Aubrey. Lodgebuilder and Aubrey managed several housing development projects for Fort Defiance from approximately 2000 to 2004.

    HUD funds, which were supposed to be used to pay vendors, subcontractors and expenses at the housing developments, were converted by Aubrey for his own personal use and used for gambling, and other personal expenses.
For the U.S. Attorney press release, see Home Builder Convicted Of Embezzling From Hud Grant Program.

Ex-Housing Authority Chief Cops Plea To Being A Thief, Illegally Pocketing $30K Intended For Affordable Housing Programs Targeting Eligible Low-Income Families, Elderly

From the Office of the U.S. Attorney (Hartford, Connecticut):
  • Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that ELIZABETH JO GUTIERREZ, 47, of Ridgefield, pleaded guilty [...] in Hartford to embezzling $30,000 from the Fairfield Housing Authority.

    The Fairfield Housing Authority administers federal housing programs for the U.S. Department of Housing and Urban Development with the mission of providing affordable housing for eligible low-income families and the elderly.

    According to court documents and statements made in court, GUTIERREZ served as the Executive Director for the Fairfield Housing Authority from approximately July 2010 to December 2011. In the summer of 2011, GUTIERREZ issued two checks, each in the amount of $15,000, from the Fairfield Housing Authority’s checking account and subsequently deposited them into her own checking account.

South Florida Feds: Hubby, Wife Used Multiple Aliases, Social Security Numbers To Illegally Score Section 8, Other Gov't Benefits While Accumulating Real Estate Holdings

From the Office of the U.S. Attorney (West Palm Beach, Florida):
  • Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, [and other reasonably high-ranking officials], announced the indictment of defendants Gloria Nereida Valle-Clas, 48, and Alexander Gonzalez, 40, of Loxahatchee, Florida.

    According to the indictment, Valle-Clas obtained two social security numbers (SSN), one which was originally associated with her birth name, “Nereida Valle,” and one of which was originally associated with the name “Gloria Lopes Clas.”

    From at least December, 2003, to January, 2013, she used the SSN for “Nereida Valle” to obtain federal housing, social security, food, cash, and medical benefits from HUD, SSA, USDA and HHS.

    At the same time, she used the SSN for “Gloria Lopes Clas” to buy real estate in both Broward and Palm Beach Counties, including over an acre of property in Loxahatchee, Florida on which she built an approximately 2,700 square foot residence.

    Her husband, Gonzalez, also bought real estate in Broward County. When applying for federal benefits, she failed to disclose her or her husband’s ownership of property, as well as other assets and income. In 2009, after obtaining over $330,000 in mortgages on the Loxahatchee Property, Valle-Clas failed to disclose her receipt of federal benefits in obtaining a $145,000 loan charge-off.

    Valle-Clas, who formally changed her name from “Nereida Valle” to “Gloria Nereida Valle-Clas” in 2003, used approximately 12 aliases in perpetrating the scheme, most of which were variations on “Nereida Valle” and “Gloria Lopes Clas.” Gonzalez used approximately eight aliases, most of which were variations on his birth name, “Alexander Jose Gonzalez Flores.”
  • HUD-OIG Special Agent in Charge Lester Fernandez stated, “The United States Department of Housing & Urban Development - Office of Inspector General is dedicated to ensuring these rental assistance funds are properly accounted for and made available to needy recipients. I am proud of the combined investigative efforts which led to this indictment. We will continue to work with our law enforcement partners toward eliminating public assistance fraud in HUD’s programs.”

Another Battle Brews Over Assistance/Emotional Support Animal; Dog Owner: 'She's The Child I Never Had. I Don’t Know What I'd Do Without Her!' HOA: Unit Owner Is Trying To Strong-Arm That Pooch Down Our Throats Without First Following Co-Op Procedures!

In New York City, the New York Post reports:
  • A cuddly cockapoo trained to fetch meds for her master — a Manhattan woman who suffers from post-9/11 posttraumatic stress disorder — may get them both evicted because of her building’s stringent no-pet policy.

    The 14-pound, black-and-white pooch, Ruby, was prescribed to Amy Eisenberg, 56, by her doctor to alleviate her illness.

    “I watched a man plummet to his death, and I can tell you from his suit to his striped tie to his white shirt, and I watched him spiral down,” Eisenberg, her eyes welling with tears, told The Post yesterday.

    “Ruby’s my fur baby,” Eisenberg said. “She’s the reason I get up in the morning. “She is the child I never had. I don’t know what I would do without her.”

    When Eisenberg suffers a heart palpitation from the stress, Ruby springs into action, lying across her lap and even delivering pills if the attack is severe.

    Still, the co-op’s management company filed an eviction proceeding against Eisenberg in 2012, claiming she was “harboring a dog” without written permission.

    Eisenberg’s doctor, Raymond Keller, said in a letter filed in Housing Court that “the presence of the dog is necessary for the emotional health of this patient.’’

    But a lawyer for the Lower East Side housing complex recently argued that Eisenberg hasn’t proved that she is disabled, despite the doctor’s letter and documents from the Health Department saying Ruby is her service dog.

    “I don’t understand how it could not be an ailment, especially after 9/11,” Eisenberg told The Post.

    Co-op attorney Bradley Silverbush doesn’t believe Eisenberg is really ill, and said she didn’t call Ruby a service dog until after getting the eviction notice.

    “Mrs. Eisenberg is trying to strong-arm the co-op by forcing them to accept her dog when she didn’t follow procedures,” he said.

    Eisenberg was working near the Twin Towers as an executive assistant at a financial firm on 9/11.

    She has filed a discrimination complaint with the federal Department of Housing and Urban Development, saying that she should be able to keep the dog in her apartment under the Americans with Disabilities Act.(1)

    Eisenberg has lived at East River Housing on Grand Street since 1966. She’s due back in Housing Court to start a trial Aug. 14.

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

Responding To Stove Blaze, Town Fire & Building Officials Discover Unlawfully Subdivided Single-Family Home Being Used As Boarding House Occupied By 19 Renters; Occupants Now Face The Boot Over Illegal Conditions

In Rockland County, New York, The Journal News reports:
  • A stove fire Tuesday led fire and building officials to discover that 19 people were living in what they said was an illegal boardinghouse infested with bugs and trash.

    Tenants said they were told by a Ramapo building inspector that they would likely be forced to leave the house within 30 days because of the conditions and because boardinghouses, including subdivided apartments, are illegal.

    One of the property managers was heard over the phone admonishing a tenant for calling the Fire Department, essentially alerting authorities to the living conditions in the fairly affluent Oakwood Terrace neighborhood in the Ramapo village.

    The manager, who identified himself to the village fire inspector as Yaniv Razak, told Inez Henriquez: “You don’t call the Fire Department over a spark. You’ll end up sleeping in a car. This is a big problem.”

    Henriquez said she didn’t intend to cause any problems.

    New Hempstead Fire Inspector Chris Kear said the 19 residents, including children, faced dangerous and unsanitary conditions while living in the single-family house at 8 Oakwood Terrace.

    Razak works for Joseph Klein, a New Square resident and property manager who has been called a slumlord and cited for housing violations and running illegal boardinghouses.
  • Kear said eight adults and five children lived on the first floor, where there were six bedrooms with locks on four of the doors.

    In the basement, three adults and three children lived in makeshift apartments, where Kear said he found a 10-year-old boy alone Tuesday while his parents were at work.

    The first-floor tenants paid an average of $500 a month per room, providing the owner with $3,000 a month for the floor. Kear said tenants think a similar room rent was charged for those living in the basement apartment.

    Henriquez, 28, said she moved in two months ago but has spent only six nights in the house because of the bedbugs, mildew and other unsanitary conditions.

    Pointing to the bites and red marks on her legs, Henriquez said that’s why she organized a house cleanup Tuesday, which inadvertently led to the stove catching fire.

    Henriquez said she knows Klein because she lived in his boardinghouse on Pipetown Hill Road. Clarkstown fined Klein $5,000 and forced him to convert the structure back into single-family house.

    Downstairs in the basement, a room she shared with her 8-year-old son had a small window, which Kear said was out of reach so it couldn’t be used as a fire escape.

    Klein has been fined $5,000 each in Haverstraw and Clarkstown during the past two years for operating illegal housing, as well as $20,000 in Spring Valley and $8,500 in Ramapo. Several of his properties have faced foreclosure.

    Beatrice Pierriseme, 23, said she pays $450 a month for one room she shares with her 3-year-old boy, a 6-month-old girl and her fiance. She’s been there for a few months and said the conditions are horrible.

    “We just found out today it’s illegal,” Pierriseme said of the boardinghouse. “Living here isn’t great, but this is what we can afford. We were told they were going to shut it down in 30 days. We’re going to be looking.”
For more, see New Hempstead fire reveals illegal boardinghouse, 'mess' (New Hempstead tenants told they may have to leave).

Pit Bull Tag Team Faces The Boot From Ritzy Downtown NYC Building After HOA Accuses Pet Owner Of Allowing Vicious Pooches To Run Loose & Unmuzzled, Terrorizing Residents, Other Pets

In Battery Park City, the New York Post reports:
  • Two vicious pit bulls are terrorizing a ritzy Battery Park City building filled with young families, and their owner is refusing to keep them muzzled in common areas, residents claim in a new lawsuit seeking the dogs’ ouster.

    The Battery Pointe Condo board on Rector Place off the Hudson River is suing resident Jason Klabal after a series of incidents with the aggressive canines, including in May, when one of his dogs bit a neighbor’s Yorkie mix.

    The guy had the pit bull off the leash, and it just ripped the Yorkie apart,” board member Leslie Lipton told The Post.

    Klabal declined to comment.

Friday, August 02, 2013

Colorado's Largest Foreclosure Mill Sues State AG In Effort To Bury Billing Records, Thwart Probe Into Alleged Inflated Fee Racket

In Denver, Colorado, The Denver Post reports:
  • Colorado's most prolific foreclosure law firm — led by attorney Larry Castle — is the latest to file a lawsuit and formally ask a Denver judge to protect its records from a state investigation into its billing practices.

    The Castle Law Group filed its case late Friday in Denver District Court against Attorney General John Suthers to prevent turning over more than 700 e-mails the firm says are protected by attorney-client privilege.

    Castle has asked District Judge Kenneth Laff to review the e-mails and about 52 pages of documents in chambers to determine whether they fall under protection from disclosure.

    Suthers' office issued a subpoena to Castle's firm — once known best as Castle, Meinhold, Stawiarski,and then as Castle Stawiarski — in April seeking thousands of pages of documents in its investigation of attorneys' billing practices.

    The investigation centers on claims that lawyers representing banks and other lenders pad the expenses they're entitled to recoup, generating profits that investigators say are paid for by homeowners and taxpayers.

    Efforts to reach Castle were unsuccessful, and a spokeswoman for Suthers' office refused to comment.

    Several law firms have refused to cooperate fully with civil investigative subpoenas Suthers has issued since December, nearly all claiming attorney-client protection. Castle is the second to sue Suthers directly over the request for records that the lawyers say are privileged and protected from disclosure.

Financially Strapped Homeowner Duped Out Of $1700 By Loan Modification Scam That Utilized Official-Looking Letter Simulated To Be From, Or Approved By, HUD

In West Palm Beach, Florida, WPEC-TV Channel 12 reports:
  • CBS 12 has helped uncover details about an emerging mortgage scam that's being viewed as a cruel cash stealing system.

    This type of fraud attacks a homeowner when they're at their weakest point and feel like they're cornered with nowhere to turn.

    Lake Park resident Annette Coates doesn't just feel like she's been scammed out of thousands of dollars, it’s something much deeper, more like a personal attack on her and the home she's has lived in for over 20 years.

    It all started earlier this year when a letter landed in her mailbox. Coates admits she, like many, has fallen on hard times and tell us she had not made a mortgage payment on her house for a year and a half. Foreclosure notifications started to pile up.

    The fine print on this letter says if Annette would shell out two payments of $1,700 that the warnings of foreclosure would stop. The letter she received appears to be certified by the “United States Department of Housing and Urban Development” ((HUD)).

    All good right?

    Well looks can be deceiving and this is where the scam rears its ugly head into the picture.

    The phone number on the letter is bogus, a clear sign something was fishy, the letter was a smokescreen for fake company pretending to be HUD. It was too late to stop the scam; Annette had already sent the first payment of $1,700 to some unknown PO Box in California.

    Her money that she thought she was using to end foreclosure notifications quickly landed in the hands of a scammer who used a devious way to make a quick buck.

    We called up the legitimate officials with HUD speaking with public affairs specialist Brian Sullivan.

    Sullivan confirmed that the document had fraud written all over it, he then described how these phony companies trick a weak homeowner into forking of big bucks that they will never see again. In this case Annette’s foreclosure process fell into the wrong hands.

Central Florida Cop Pinched For Allegedly Renting Out Vacant Home She Didn't Own; Suspect Bagged When Actual Owners Returned To Premises

In Orlando, Florida, WESH-TV Channel 2 reports:
  • An Orange County deputy is accused in a realty rip-off, according to investigators. Detectives said Deputy Jocelyn Aviles posed as a property manager and rented out a vacant house that she didn't own.

    Aviles was arrested and relieved of duty without pay from the Orange County Sheriff’s Office. She said nothing as she left the department in an SUV on Friday night.

    Investigators said they found out about the scheme when the actual owners returned to their home. Squatters were living inside.

    Aviles was charged with grand theft, scheming to defraud, and forgery.
Source: Orange County deputy accused in realty rip-off (Deputy rented out vacant home, officials say).

Thursday, August 01, 2013

N. California City Puts Eminent Domain Squeeze On Banksters: 'Either Accept Our Offer To Buy Your Crappy Underwater Home Mortgages At Well Below Collateral Value By August 14 Or We'll Just Wrestle Them Away From You Through Condemnation Proceedings!'

In Richmond, California, CNNMoney reports:
  • The California city of Richmond said Tuesday that it's ready to take an extraordinary step in its bid to stop foreclosures -- threatening to wrest mortgages from the investors who now control them.

    As a first step, the San Francisco Bay city said it will work with an investment firm to try to purchase mortgages of underwater homeowners at a price well below their current balances. It would then try to get those loans restructured to make them affordable.

    But if the holders of the loans, who are mostly investors, refuse to sell by Aug. 14, the city said it will invoke eminent domain to seize the mortgages so it has more control over the process of making them affordable.

    Eminent domain is the legal principle that lets government entities purchase land or structures, usually from reluctant owners who don't want to sell. It is typically invoked for public uses such as parks, roads or utilities -- not mortgages.

    In the case of Richmond, the city argues that eminent domain is in the public interest because it could let people stay in their homes and help keep neighborhoods, especially minority communities and low-income neighborhoods, from fraying.

    "After years of waiting for a comprehensive fix, we're stepping into the void with a local principal reduction program," said Gayle McLaughlin, mayor of Richmond.

    The idea is controversial and reflects the frustration, seven years after the housing market started to collapse, of homeowners and officials in areas that are still reeling.

    The Richmond plan was proposed by a private backer, Mortgage Resolution Partners, which will find the money the city needs to buy the mortgages. It stands to profit by taking a cut when the loans are refinanced.

Miami-Dade County Property Appraiser Ups Ante In Pursuit Of Property Tax Cheats Making Fraudulent Homestead Exemption Claims

In Miami, Florida, The Miami Herald reports:
  • Miami-Dade Property Appraiser Carlos Lopez-Cantera is enlisting the aid of cities and Miami-Dade Public Schools to investigate property-tax cheats in a bid to collect more revenue.

    Cheating on your property taxes in Miami-Dade County is getting riskier.

    Miami-Dade Property Appraiser Carlos Lopez-Cantera is enlisting the help of police officers from at least 10 cities and the school district to investigate homestead-exemption fraud.

    Hungry for revenue, the cities and school district plan to deploy at least one police officer each to investigate what by many accounts is a pervasive problem: improper claims of homestead exemption.

    Those participating include Miami-Dade Public Schools and the cities of Miami, Hialeah, Coral Gables, South Miami, Pinecrest, Key Biscayne, West Miami, Miami Springs, Miami Gardens, and Sweetwater.

    “I believe this is a win-win for all involved,” Lopez-Cantera said of the cooperative effort. “We will continue to be aggressive to find cost-effective ways to identify tax cheats.”

    Miami-Dade plans to hold a training program this week to brief police in techniques for identifying and proving homestead-exemption violations, which include property owners who have more than one homestead exemption and those who rent out a property while still declaring it a primary residence.

    Lopez-Cantera, the 39-year-old former majority leader of the Florida House who took office as property appraiser in January, had vowed to go after homestead-exemption cheats during his election campaign last year against incumbent Pedro J. Garcia, 79.

    The Miami-Dade Police Department has six detectives assigned full-time to investigating homestead-exemption fraud and the property appraiser has seven employees focused on the task.

    Even so, Miami-Dade has a backlog of 2,917 leads, and Lopez-Cantera contends that adding police manpower will generate tax revenue for the county and other taxing authorities.

    Investigators use various techniques to ferret out improper homestead claims, including looking for those with more than one homestead exemption (in Miami-Dade or elsewhere) and crosschecking exemptions with utility bills and drivers licenses and a host of other publicly available data that would generate a red flag.

Federal Jury Belts Credit Bureau For $18M+ In Damages Over Repeated Failures To Fix Consumer's Credit Report

In Portland, Oregon, The Oregonian reports:
  • A jury Friday awarded an Oregon woman $18.6 million after she spent two years unsuccessfully trying to get Equifax Information Services to fix major mistakes on her credit report.

    The judgement, likely to be appealed, appears to be one of the largest awarded to a consumer in a case against one of the nation's major credit bureaus.

    Julie Miller of Marion County, who was awarded $18.4 million in punitive and $180,000 in compensatory damages, contacted Equifax eight times between 2009 and 2011 in an effort to correct inaccuracies, including erroneous accounts and collection attempts, as well as a wrong Social Security number and birthday. Yet over and over, the lawsuit alleged, the Atlanta-based company failed to correct its mistakes.

    "There was damage to her reputation, a breach of her privacy and the lost opportunity to seek credit," said Justin Baxter, the Portland attorney who teamed on the case with his father and law partner, Michael Baxter. "She has a brother who is disabled and who can't get credit on his own and she wasn't able to help him."

    Tim Klein, an Equifax spokesman, said Friday that he didn't have any details about the decision from the Oregon Federal District Court. He declined to comment about the specifics of the case.
  • Miller first discovered a problem when she was denied credit by a bank in early December 2009. She alerted Equifax and filled out multiple forms faxed by the credit agency seeking updated information.

    In addition to requesting the changes, Miller had asked several times for copies of her credit report, the lawsuit alleged. Credit bureaus are required by law to provide reports to consumers for free annually and after that, for a small fee. On numerous occasions, Equifax failed to respond to Miller's requests.

    Miller had found similar problems in her reports with other credit bureaus. However, Baxter said, those companies had corrected their mistakes.

    The issue wasn't a result of identify theft, Baxter said. Instead, the information from another "Julie Miller" had simply been placed in the plaintiff's record by mistake. In at least one case, the lawsuit alleged, the plaintiff's private financial information was sent to companies inquiring about the other Julie Miller.

Wednesday, July 31, 2013

Another Ch. 7 Bankruptcy Trustee Successfully 'Strong-Arms' Lender Out Of Rights Under Homeowner's Mortgage Where Lack Of Proper Indorsement Rendered Promissory Note Unenforceable

  • A chapter 7 trustee sought to use his “strong arm” powers as a hypothetical judgment lien creditor, arguing that a mortgage could be avoided because the mortgagee (which was an assignee of the original mortgagee) was not entitled to enforce the note secured by the mortgage. Although the bankruptcy court did not avoid the mortgage lien, it did conclude that the trustee could sell the mortgaged property free of any claim by the mortgagee assignee.

    The debtors (the Dorseys) executed a note in favor of Popular Financial Services, LLC (PFS) that was secured by a mortgage given to Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for PFS. The debtors executed an Affidavit of Conversion of Real Estate so that the mobile home encumbered by the mortgage was treated as real estate, and the mortgage properly perfected the lien on the mobile home.

    A couple of years later Vanderbilt Mortgage & Finance, Inc. (Vanderbilt) acquired certain installment loan agreements pursuant to a purchase agreement with the parent and an affiliate of PFS to purchase. The schedule of contracts attached to the purchase agreement included a contract with one of the Dorseys, and the Dorsey note was identified as one of the notes that was transferred.

    Vanderbilt obtained possession of the Dorsey note, and MERS’ assignment of the Dorsey mortgage to Vanderbilt was recorded. However, unfortunately for Vanderbilt, there was no indorsement of the note from PFS to Vanderbilt, and PFS was not a party to the purchase agreement.
  • [I]n this case there was no dispute that the mortgage was valid and perfected. Rather the only challenge was to Vanderbilt’s right to enforce the note secured by the mortgage.
  • When asked for evidence that it had a right to enforce the note, Vanderbilt argued that the assignment of the mortgage and the purchase agreement were sufficient.
  • The assignment of the mortgage [] did not cure the problem. In this case the mortgage was granted to MERS as nominee for PFS. When it assigned the mortgage, it could only assign the rights granted by the mortgage, and could not transfer any right with respect to the note.

    In sum, Vanderbilt was not able to establish that it had a right to enforce the note, and therefore the mortgage. Consequently, the court concluded that the trustee was entitled to an order authorizing the sale of the property free and clear of any interests of Vanderbilt under the note and/or the mortgage.

    The court specifically did not determine that the mortgage was not perfected, “which means that it is a lien against the Real Property pending sale free and clear of liens, with liens to attach to the proceeds, pursuant to 11 U.S.C. 363(b) and (f).” It is not at all clear what this will mean when it comes time to distribute proceeds.

    PFS remained the only entity entitled to enforce payment of the note. However, it had assigned its rights under the mortgage. And in any event, the court noted in a footnote that the trustee had already obtained a default judgment against PFS holding that the bankruptcy estate had priority over the interests if any of PFS.

    Once again, the importance of paying attention to detail is brought home with a vengeance. The failure to include PFS as a seller under on the purchase agreement (and/or to indorse the Dorsey note to its parent or affiliate before the sale) caused Vanderbilt to lose all rights with respect to the note and the mortgage.

Man Who Abused POA To Drain Now-Deceased, Dementia-Suffering Sister's Home Equity & Other Accounts Buys His Way Out Of Prison Time With $100K Promise To Pay Restitution In Monthly Payments; Will Dodge Criminal Record Upon Full Compliance With Court Requirements

In Chattanooga, Tennessee, the Chattanooga Times Free Press reports:
  • When Terry Alice Patten began showing signs of early onset dementia, she turned to her brother, George "Zeb" Patten Jr., to run her financial affairs.

    Zeb Patten signed a power-of-attorney in 2007 to manage his sister's estate. Just three years before, he had inherited $2 million when his father died. He was to take no more than $5,000 a year of Terry Patten's money for his own use.

    Two years later he had withdrawn more than $419,000 from her accounts, taken out a $236,000 line of credit on her paid-for home on Signal Mountain and sold her Jaguar car.

    On Tuesday he pleaded guilty to three counts of theft over $10,000 in criminal court. Under a plea agreement, he will be allowed to remain free on probation as long as he pays $100,000 in restitution to the estate of his now-deceased sister in $1,660 monthly payments beginning in February. If he completes the court's requirements, the criminal charges can be erased from his record.

    Zeb Patten declined to comment after the Tuesday hearing.

    But Terry Patten's only son, Bo Patten, said he got some belated relief from the 15 minutes in front of Hamilton County Criminal Court Judge Rebecca Stern. "Today was about two things -- today was about my mother and today was about a criminal admitting his guilt," Bo Patten said.

    He found out about his uncle's spending when bank officers began calling about foreclosing on her home. That news shocked him because he knew his mother had paid cash for the house years before. Shortly afterward, Alexian Brothers, where his ailing mother was being cared for in a dementia-specific unit, reported that monthly bills were not being paid.

    A court-appointed third-party conservator, local attorney Linda Norwood, was appointed to oversee the estate at that point.

    At about the same time in 2009, Zeb Patten filed for bankruptcy, citing "breathing room" from creditors for his business, Z Golf Custom Fittings. In a creditors meeting, he said he was owed $200,000 to $250,000 by his sister, Terry Patten, and he had taken that money to cover past loans he had made to her. He also said at that time that $700,000 to $800,000 went into work on a Minnekahda Road house, a Riverview-area property he had bought and remodeled.

    "No transaction went to my personal life," he said in a bankruptcy meeting.

    But he said in a February meeting this year that he was actually owed $400,000 by Terry Patten and the rest was her investment in the Minnekahda house, from which she would have received a portion of the profits upon its sale, according to court documents. He also claimed in this year's meeting that none of Terry Patten's money went into the Minnekhada house, conflicting with his first statements.

    The house sold in the early stages of the bankruptcy for $600,000.

    For that, bankruptcy attorneys have filed a "false oaths" claim against him. He is scheduled for trial on Nov. 5. Lying while under deposition in bankruptcy court is a civil and criminal offense.

    If Zeb Patten loses, he won't get any relief for the nearly $2 million he's claiming in the bankruptcy and instead will owe that amount, which includes money to Terry Patten's estate, to creditors.

    Bo Patten said much of the work regarding the estate and bankruptcy was being dealt with by lawyers, and he knew little of the details. As for his uncle, they haven't talked in years, and that's not likely to change. "I've moved on with my life," Bo Patten said. "I have no desire to try and reconcile any sort of relationship."

Federal Judge Gives Go-Ahead To Fair Housing Suit Accusing Wall Street Bankster Of Race-Based Discrimination In Connection With Buying, Financing Predatory Home Loans That Allegedly Targeted Minority Neighborhoods

In New York City, Housing Wire reports:
  • A landmark discrimination lawsuit, which alleges Morgan Stanley violated the Fair Housing Act by encouraging lenders to push high-risk mortgage loans on African-American borrowers, can move forward, a federal court ruled.

    The investment bank’s motion to dismiss the case was denied in part by Judge Harold Baer with the U.S. District Court in the Southern District of New York.

    In October, the lawsuit was filed by The American Civil Liberties Union, the ACLU of Michigan, the National Consumer Law Center and the firm of Lieff Cabraser Heimann & Bernstein. The suit was filed on behalf of Michigan Legal Services as well as five African-American homeowners in Detroit who were alleged victim’s of the bank’s practice of purchasing and financing predatory mortgages, which were later bundled into mortgage-backed securities.

    "Targeting communities of color with predatory loans is not acceptable. Morgan Stanley is not above the law," said ACLU Executive Director Anthony D. Romero. "Today’s ruling affirms that Wall Street banks must comply with civil rights laws, and that they will be held accountable if they do not."

    Not only is this the first lawsuit to connect racial discrimination to the securitization of mortgage-backed securities, it is also the first case where the plaintiffs are suing an investment bank directly rather than the subprime lender whose loans the bank bought, the plaintiffs allege.

    As the principal financier of the now-defunct New Century Mortgage Corp., Morgan Stanley orchestrated New Century’s focus on dangerous loans that placed many homeowners on a path to foreclosure, according to the suit.
  • In his ruling, Baer noted that, "Detroit’s recent bankruptcy filing only emphasizes the broader consequences of predatory lending and the foreclosures that inevitably result." The judge ruled that "Morgan Stanley—as a loan purchaser and mortgage securitizer—falls within the scope of the FHA. And as such, the FHA prohibits Morgan Stanley both from discriminating in 'making available' real-estate related transactions as well as discriminating 'in the terms or conditions of such a transaction.'"

    "This ruling gives us the opportunity to present our civil rights claims under the Fair Housing Act against Morgan Stanley in further judicial proceedings. We look forward to proving that investment banks, like Morgan Stanley, cannot maximize their profits at the expense of communities which are victimized by the toxic loans which the banks funded," said Stuart Rossman, director of litigation at the National Consumer Law Center.

Tuesday, July 30, 2013

San Francisco Feds Pinch Bankster For Allegedly Ripping Off Elderly Widow By Drawing Down $1.8M+ On HELOC, Brokerage Accounts He Had Established For Victim

From the Office of the U.S. Attorney (San Francisco, California):
  • A federal indictment charging Adorean Boleancu with twenty-seven counts of bank fraud, wire fraud, money laundering, and aggravated identity theft was unsealed this morning in federal court, announced United States Attorney Melinda Haag. The indictment alleges that Boleancu executed a fraud scheme by forging more than $1.8 million in checks written on accounts of an elderly, widowed client for his personal benefit.

    According to the Indictment, Boleancu, 47, of Napa, Calif., was a Vice President, Senior Financial Consultant in the Wealth Management Group of Wells Fargo Advisors, LLC and, before that, a Vice President, Financial Advisor with Morgan Stanley & Co., Inc.

    The Indictment alleges that Boleancu wrote checks drawn on the client's Morgan Stanley brokerage account and home equity lines of credit Boleancu had established for the victim.

    These checks were made payable to Boleancu's family members, his girlfriend, another female acquaintance, cash, and financial companies where Boleancu had credit card accounts. The Indictment also alleges that Boleancu presented or caused to be presented forged checks in the amount of $750,000 and $600,000 payable to Boleancu's girlfriend, who deposited the checks and transferred much of the proceeds to Boleancu.

Sovereign Citizen Accused Of Filing Billion$ In Phony Retaliatory Liens Against Federal Judges, Prosecutors, Court Officials Persists With Questionable Conduct On Eve Of Trial

In Chicago, Illinois, the Chicago Tribune reports:
  • On the eve of her trial on charges she slapped huge liens on then-U.S. Attorney Patrick Fitzgerald and other high-ranking federal court officials, Cherron Phillips showed just how unpredictable the proceedings could become when testimony begins.

    In an unusual hearing Friday, Phillips filed several unintelligible motions, questioned a federal judge on his loyalty to the Constitution and insisted that U.S. citizens would not comprise a jury of her peers.

    "I hesitate to rank your statements in order of just how bizarre they are," said veteran U.S. District Judge Milton Shadur, who at one point attempted to explain to Phillips the meaning of the phrase, "garbage in, garbage out." As Phillips continued to press him on his allegiance to the Constitution, Shadur finally cut her off.

    "Oh, come on!" he said. "I've had enough of this. We are in recess until Monday at 9:30."

    The Chicago woman is representing herself after rejecting advice from Shadur to have an attorney appointed by the court to help her.

    Phillips faces charges that she targeted Fitzgerald, then-Chief Judge James Holderman and other federal judges, prosecutors and court officials by filing bogus liens on their homes in 2011 that sought tens of billions of dollars.

    Prosecutors allege Phillips was retaliating after she was physically barred from the Dirksen U.S. Courthouse and forbidden from filing documents on behalf of her brother, Devon, who pleaded guilty in 2008 to drug conspiracy charges.
  • Phillips, 43, who also goes by the name of River Tali El Bey, has professed in court that she doesn't recognize the federal system. Her court filings reflect the ideology of sovereign citizens, a rapidly expanding anti-government movement whose adherents often file nonsensical, complex legal documents and refuse to accept or follow court rules.

    Their actions can stall legal proceedings for years and frustrate even the most even-tempered judges. States are responding by passing laws to ban such frivolous filings, and prosecutors are bringing criminal charges despite the painful effort of bringing them to trial.
  • Phillips' troubles at Chicago's federal courthouse stem from her allegedly disruptive behavior at proceedings for her brother's drug conspiracy case. She repeatedly tried to address the court and approach the podium to speak, according to court documents. She also filed documents with sovereign citizen overtones on his behalf, the records show.

    Phillips "has continually shown a pattern of behavior to delay and disrupt the administration of justice," reads the February 2011 executive order that finally barred her from the courthouse and from filing documents.

    A month after the executive order, Phillips allegedly went to the Cook County Recorder of Deeds office and started filing false maritime liens against those connected to her brother's case — some in the outrageous amount of $100 billion. A dozen liens in all were filed.

    Mark Potuk, senior fellow at the Southern Poverty Law Center, which has monitored hate groups for decades, said the filing of such documents is known as "paper terrorism" and it is clogging court systems around the country.

    "One of the classic sovereign techniques for attacking their enemies is these court filings," Potuk said.

    Potuk said the sovereign citizen movement is a shadowy underground without a central structure whose followers generally espouse a belief that most federal tax and criminal laws simply don't apply to them.

    There was a noticeable wave of sovereign citizen activity in the 1990s and then again half a dozen years ago, Potuk said.

    The tactics have spread across the Internet and through jailhouses, holding out some tantalizing promises of not paying taxes or avoiding foreclosure, all rooted in the premise that federal laws hold no sway, Potuk said. They also believe there is a secret treasury account for every citizen containing millions of dollars that can be accessed — if you learn how to file the right paperwork.

    "This is a strange netherworld of people who go from hotel seminar to hotel seminar selling absolutely baseless theories," Potuk said.
For the story, see Chicago woman's trial could get wild (Accused of filing bogus tax liens, she's poised to represent herself as sovereign citizen).

BC Supremes Rebuke Provincial Director Of Civil Forfeiture For Abuse Of Power For Improperly Seizing One Man's Home, Another's Rare Bank Note Collection

In Vancouver, British Columbia, The Vancouver Sun reports:
  • The B.C. Supreme Court has rebuked the provincial director of civil forfeiture for seizing a pensioner's numismatic collection and another man's home.

    Justice Jacqueline Dorgan sitting in Victoria called the actions by director Phil Tawtel, a former commercial crime investigator with the RCMP in Edmonton, "contrary to the interests of justice."

    She was critical of his failure to act on the file for more than a year, for relying on a Vancouver realtor's opinion about a southeastern B.C. property he hadn't seen, for not appearing at an earlier Supreme Court hearing and for seizing the old man's bank note collection - the Mounties left behind his coins.

    "In my view, the director had a perfect opportunity to raise the issues raised today on May 1, 2013, either in the foreclosure action or by seeking to have its petition under the Civil Forfeiture Act heard at the same time or perhaps joining the actions," Justice Dorgan said.

    "I am not going to give the director legal advice. The director knows the rules better than I on how to get before the court under the Civil Forfeiture Act and/or the foreclosure action."

    She dismissed his application for a preservation-and-sale order for the Slocan Valley property.

    In February 2012, Mounties armed with a sketchy search warrant raided the acreage in tiny Winlaw, about 50 kilometres northwest of Nelson.

    William Pundick, 72, was living in a 10-by-14 foot cabin with no plumbing and minimal power.

    "What is found in the cabin he occupied at the Powell Road property?" Justice Dorgan mockingly asked. "Wooden boxes with paper bills neatly filed in envelopes, in boxes beside what appear to be catalogues in respect of paper Canadian currency, all of which is consistent with Mr. Pundick's evidence (that he had been a collector for decades)."

    In an old outbuilding, they found three 600-watt lights, 39 flowering marijuana plants and 32 small plants in cups.

    No money, no guns, no power theft, no other controlled substances.

    Owner Robert Murray said he did not see the inside of a courtroom over the pot because the prosecutor didn't lay charges.

    He and Pundick, though, had to fight to retrieve their assets.

    "I believe the officer's actions in this matter were only for forwarding on information for the director of civil forfeiture's use," Murray complained. "The officer told me to my face after charges were not approved that I would be getting this action against me."

    The justice did not appear amused. "This is not a case where wads of tens or twenties or fifties are rolled up and bound by elastic bands, for example," Justice Dorgan emphasized. "In my view, the evidence does not get the director to the threshold of meeting the test of whether there is a fair question to be tried, that the $9,251 is an strument of crime or acquired as a result of illegal activities."

    Even the cop who confiscated the cash knew that - he said it "looked like a money collection."

    This is the latest example of questionable conduct by the director's office, which seems to go asset-grabbing regardless of conviction, circumstance or fairness.

    Last year it seized about $11 million worth of property.

    Once an asset is confiscated, the forfeiture office squeezes the owner to settle out of court, using the prospect of the high cost of litigation and the interminable delays of the legal system to extract a payoff.

    When it's a drug lord or the Hells Angels, maybe this approach can be justified - they can afford to fight the government.

    People without a criminal record or any evidence of organized crime activity being evicted or dragged into civil court by publicly funded lawyers - they're being hurt.

    Pundick had to hire a lawyer to get back a substantial share of his life savings, worth far more than its face value thanks to a number of rare bills.

    Murray, who has no criminal record, is still battling over the $225,000 property. He said police took his tax returns, mortgage documents and other financial documents.

    "There are more pictures of my financial info documents than there are pictures of marijuana plants," he said, fuming. "This matter has rendered me unemployable in the area; the only job I have had is as a family law legal assistant. I have had to move, list the house, and find alternate employment. They are bullies." Pundick's lawyer also questioned the director's conduct.

    "I feel he has a duty of fairness, not to use the immense resources of the state to bludgeon an innocent person," said Blair Suffredine, Liberal MLA for the area from 2001-05.

    "In this case I repeatedly asked for fairness and suggested there was a duty. There was no evidence to support any causal link between the assets my client owned and any crime having been committed. The director repeatedly offered to settle for a portion of those assets using the cost of litigating as a justification for us to choose that option."

    The justice awarded Pundick costs against the government but normally that means litigants recover about half their legal fees, given the formula used by the court.

    "I hope this decision will cause the office of the director to reflect on their duty to innocent people," Suffredine added.

    Fat chance. "They are now threatening to appeal me into bankruptcy or submission," Murray said.

    "Nice, eh?"

Monday, July 29, 2013

Florida Trial Judge Kiboshes Desperate Bankster's Last Minute Prank To Salvage Foreclosure Action On Multi-Million Dollar Mansion; Homeowner's Attorney: Attempt To Refile Now-Dismissed Case May Face 'Statute Of Limitations' Trouble

In Boca Raton, Florida, The Palm Beach Post reports:
  • A Boca Raton homeowner whose waterfront mansion has been in foreclosure since 2008 had her case voluntarily dismissed by her lender Thursday in Palm Beach County court after a legal misstep during trial.

    Because the case is so old, homeowner attorney Roy Oppenheim said the bank may run into trouble trying to refile it. There is a 5-year statute of limitations on foreclosures.

    Homeowner Valerie Kaan bought the 13,000-square-foot home in 2003 for $8.4 million. Her loan was for $6.8 million from Washington Mutual Bank, which was later purchased by JP Morgan Chase. The outstanding balance as of Thursday was up to about $10 million with late fees, taxes and insurance, Oppenheim said.

    “I always tell my clients that a good settlement is usually in everyone’s best interest but in this case, for some reason, the bank did not recognize their own foibles,” Oppenheim said. “Maybe this will send a message to banks that when people come to the table in good faith with a reasonable offer, they should more seriously consider it.”

    Oppenheim said Kaan was in negotiations for a short sale and loan modification for two years before negotiations broke down. Chase declined comment.

    At Thursday’s foreclosure trial, Oppenheim said the bank tried to introduce the original “wet ink” note, which had allegedly been lost previous to the 2008 foreclosure filing.

    But because the bank did not amend its pleadings to include the note or notify the borrower and the court that it existed, the move violated civil procedure, Oppenheim said.

    The court docket reflects that the original note was filed in the case in 2009, but its existance wasn’t included in Thursday’s pleading.

    The voluntary dismissal was signed by Circuit Judge Roger Colton. He also gave Kaan attorneys’ fees and costs.(1)

    “Our firm _ three lawyers _ were saddled up ready to go to trial and they sprung on us at the last minute a new set of facts,” Oppenheim said. “It was trial by ambush and judges won’t put up with that.” Associate lawyers Jeff Sherman and Jacquelyn Trask worked on the case with Oppenheim.
Source: Boca Raton homeowner wins multi-million dollar foreclosure suit after legal misstep.

(1) Go here for the court order sticking the losing bankster with the tab for the homeowner's attorney fees and costs. For earlier posts on the right of Florida homeowners to stick a foreclosing bankster with the tab for their legal fees when successfully defending against a foreclosure action, see:
For those lawyers who handle these cases on a pro bono or contingency fee basis (ie. non-profit, legal aid attorneys, some private attorneys), see:

Hubby Pinched For Allegedly Filing Billion$ In Fraudulent Retaliatory Liens Against Two Federal Judges, U.S. Attorney, Others Involved In Earlier Conviction Of Wife

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department announced [] that Tyree Davis Sr. of Flossmoor, Ill., was arrested on an eight-count indictment charging him with obstruction of justice and filing fraudulent multi-billion dollar liens against government employees. The indictment was returned on July 24, 2013, by a federal grand jury in Chicago.

    According to the indictment, Davis obstructed justice by sending correspondence threatening to arrest two federal judges: the chief judge of the Northern District of Illinois and the judge who presided over the 2010 tax trial of LaShawn Littrice, whom Davis refers to as his wife. Littrice was convicted by a jury in June 2010 and sentenced to 42 months in prison in December 2010. Davis also filed false liens, titled Notice of Maritime Liens, against both judges and notified others that he had filed the liens.

    In addition to the two judges, Davis filed false liens against the U.S. Attorney and Clerk of Court for the Northern District of Illinois, an Assistant U.S. Attorney and an Internal Revenue Service-Criminal Investigation Special Agent. All the liens were publicly filed with the Cook County Recorder’s Office and claimed that each individual owed $100 billion. The liens were re-recorded two and three times in order to add property descriptions to them.

Whistleblower: Colorado Foreclosure Mill Padded Billing Hours, Destroyed Evidence Sought By State AG In Probe Into Suspected Inflated Fee Racket

In Denver, Colorado, The Denver Post reports:
  • An attorney turned whistle-blower at Colorado's second-largest foreclosure law firm has detailed to state investigators a pattern of abuses that stretch beyond the scope of their investigation into alleged overbilling practices.

    Susan Hendrick testified at a hearing Thursday that she told the state attorney general's office about bill-padding she witnessed while a lawyer at Aronowitz & Mecklenburg in Denver, conduct that investigators say needlessly cost homeowners facing foreclosure millions of dollars. She then laid out a number of other alleged abuses she says happened.

    The abuses ranged from the padding of attorney hours to allegations that the law firm destroyed evidence that prosecutors were seeking in their investigation into billing practices by foreclosure law firms, according to testimony in Denver District Court.

    The hearing before District Judge R. Michael Mullins was to determine whether Hendrick, an associate at Aronowitz since 2007, was a special counsel to the firm in its efforts to clean up the problems she exposed.

    Attorney Robert Aronowitz, 65, testified he was "absolutely shocked" by Hendrick's revelations and that he had hired her as a special counsel to give advice on how to fix the issues she raised in several e-mails. "I'd never seen anything like (the allegations Hendrick made) in my entire practicing career" that spans nearly 40 years, he testified.
  • Hendrick hotly denied ever representing Aronowitz as a special counsel, telling Mullins that she was preparing to file her own whistle-blower lawsuit against the firm, mostly because she said she was threatened with the loss of her job if she refused to sign confidentiality agreements to silence her.

    Aronowitz said the agreements were standard for the industry after nationwide investigations into robo-signing and other misdeeds by the nation's largest mortgage banks and servicers.

Foreclosure Mill Law Firm Accused Of Running Inflated Fee Racket In Connection With Charges For Serving Legal Notices On Homeowners; Colorado AG: Firm Pocketed $5M+ In Profits

In Denver, Colorado, The Denver Post reports:
  • By charging up to six times the market rate for serving foreclosure notices on property owners, Colorado's second-largest foreclosure law firm generated millions of dollars in profits on the backs of homeowners and taxpayers, according to a state attorney-general lawsuit.

    Attorney General John Suthers said his office is investigating whether Aronowitz & Mecklenburg in Denver "misrepresents its posting costs" when it bills homeowners for its foreclosure expenses — charges that hit $150 while the person who does the posting is paid $7 plus mileage, according to the lawsuit filed last week in Denver District Court.

    "The subpoena is necessary to aid the investigation of possible deceptive conduct" under the state's consumer-protection act, Suthers said in the lawsuit.

    By owning Xceleron, the company that posts a pair of notices on a property advising homeowners of their rights during the foreclosure process — notices that are required by law — Aronowitz & Mecklenburg "has generated millions of dollars personally to the three partners (of the firm) by charging a posting fee five to six times the market rate," Suthers' office said in the lawsuit.

    When compared with its actual cost, the mark-up is even higher, Suthers' office said in the lawsuit.

    Investigators with the attorney general's office estimate the profits top $5 million, according to a court affidavit.

    Attorneys at the law firm did not respond to requests for comment.

    The lawsuit seeks to force the law firm to comply with investigative subpoenas that Suthers' office issued in April for detailed documents explaining the charges. The law firm — headed by Robert Aronowitz; his daughter, Stacey Aronowitz; and his son-in-law, Joel Mecklenburg — provided some documents, Suthers said, but has withheld many more, citing attorney-client privilege.

    "The law firm should not be able to charge such costs to the public but then refuse to provide the authority to charge those costs," the attorney general's office said in its court filing.

Sunday, July 28, 2013

Bar Boots San Diego Lawyer For Ripping Off Homeowners While Running Upfront Fee Loan Modification Scam

From the July 2013 issue of the California Bar Journal:
  • TIMOTHY CLARENCE BRYSON [#140798], 61, of San Diego was disbarred May 10, 2013, and was ordered to comply with rule 9.20 of the California Rules of Court and to make restitution.

    Bryson’s default was entered after he failed to respond to charges of misconduct in a matter involving four clients. Because he did not attempt to have the default vacated within 180 days, the charges were deemed admitted as required by rule 5.85 of the State Bar’s Rules of Procedure. Bryson was found culpable of accepting an advanced fee and failing to provide adequate notification in a loan modification matter, failing to deposit and maintain funds in trust, improperly withdrawing disputed funds from trust, failing to promptly disperse or return client funds, failing to account, failing to cooperate in a disciplinary investigation, failing to perform legal services with competence, charging an illegal fee and misappropriation. He was ordered to pay $13,320 in restitution, plus interest.

Lawyer Loses Bar Ticket, Gets The Boot After Admitting To Ripping Off Ten Clients While Running Loan Modification Racket

From the July, 2013 issue of the California Bar Journal:
  • JERRY ALONZO STEVENSON [#262798], 43, of San Diego was disbarred May 10, 2013, and was ordered to comply with rule 9.20 of the California Rules of Court and to make restitution.

    Stevenson stipulated to misconduct in 11 client matters, the majority of which involved home loan modification services. Practicing law using the business names Platinum Law Center, Platinum Law Group, Principal Law Group and La Brea Law Group, Stevenson mailed out letters to homeowners offering loan modification services that sought to confuse, mislead or deceive the public, took advanced fees from 10 clients before performing all the loan modification services he agreed to, failed to return unearned fees, failed to perform legal services with competence, shared fees with a non-lawyer, and failed to respond to reasonable inquiries from clients about their cases, among other misconduct.

    Stevenson also stipulated to similar misconduct in a case he handled on behalf of a woman seeking to restructure her credit card debts. He was ordered to pay more than $26,000 in restitution, plus interest.

Attorney/Defendant Halts Trial, Cops Guilty Plea In Mortgage Fraud Case; Participated In Racket After Having First Ripped Off Clients Of $30K+ From Trust Account

From the Office of the U.S. Attorney (Charlotte, North Carolina):
  • A former Charlotte lawyer pleaded guilty mid-trial [...] to mortgage fraud related charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The former lawyer’s plea of guilty is the latest conviction in Operation Wax House, a mortgage fraud investigation which began in 2007 and has netted 91 defendants to date, 72 of which have pleaded guilty.

    Michelle V. Mallard, 46, of Charlotte, pleaded guilty to mortgage fraud conspiracy, money laundering conspiracy and embezzlement in violation of the wire fraud statute.
  • Mallard, a/k/a Michelle Crawford, was charged with embezzlement and with serving as a mortgage fraud lawyer for a mortgage fraud cell in the Operation Wax House investigation. According to evidence introduced at trial, Mallard agreed to use her law license to further mortgage fraud primarily in South Charlotte and Waxhaw, N.C. According to trial testimony, the co-conspirators purchased houses at inflated prices in exchange for large kickbacks representing the difference between the true price and the inflated price. Trial witnesses testified that Mallard agreed to pay such kickbacks to other members of the conspiracy and, among other things, accepted bogus checks to make it appear as though buyers had provided money when they had not.

    According to trial evidence and statements made by the prosecutors, Mallard participated in the mortgage fraud after having stolen over $30,000 from clients by embezzling from her trust account.

Paralegal To Oakland Feds: 'I Settled Lawsuits & Illegally Pocketed $327K In Settlement Proceeds Without My Boss' Or Injured Clients' Knowledge!'

From the Office of the U.S. Attorney (Oakland, California):
  • Ana Lissa Reyes pleaded guilty in federal court in Oakland [] to mail fraud and tax evasion, announced United States Attorney Melinda Haag.

    In pleading guilty, Reyes admitted to having worked as a secretary, office manager, and paralegal for a Bay Area law firm. Reyes admitted that from about 2006 through June 2011, she, without authorization, settled claims without the knowledge of the law firm or its clients and stole the settlement proceeds.

    Reyes admitted to engaging clients without the law firm’s knowledge and to stealing clients’ retainer fee payments. Reyes also admitted that in carrying out the scheme to defraud, she created a bogus company, Lincoln Litigation, to correspond with clients without the law firm’s knowledge, and to defraud the clients into believing that their cases were ongoing. Reyes admitted to embezzling a total of $327,795.05 from the law firm and its clients.
  • Reyes is currently on pre-trial release on a $100,000 bond. Reyes’ sentencing hearing is scheduled for October 10, 2013 at 2:00 p.m. before the Honorable Yvonne Gonzalez Rogers, U.S. District Court Judge, in Oakland.
For the U.S. Attorney press release, see Bay Area Law Firm Paralegal Pleads Guilty To Fraud.