Saturday, August 10, 2013

Fair Housing Feds' Probe Triggered By HUD Complaint Filed By Legal Guardian For Intellectually Disabled Ward Leads To $80K Settlement With St. Peters In Suit Accusing City Of Discriminatory Zoning Practices

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department announced [] that the city of St. Peters, Mo. will pay $80,000 and make changes to its zoning laws to settle a lawsuit alleging that the city violated the federal Fair Housing Act (FHA) and Title II of the Americans with Disabilities Act (ADA) when it denied a zoning request to operate a group home for four women with intellectual disabilities.

    The lawsuit is part of the Justice Department’s continuing effort to enforce civil rights laws that require states and municipalities to end discrimination against, and unnecessary segregation of, persons with disabilities.(1) The settlement was filed [] and must be approved by the U.S. District Court for the Eastern District of Missouri.

    “The Fair Housing Act and the Americans with Disabilities Act ensure that municipalities cannot enforce discriminatory land use policies that restrict the rights of their residents to live in the housing of their choice,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division. “This important settlement compensates the individuals who were harmed by the city’s practices and will prevent future housing discrimination against the city’s residents who have disabilities.”

    Zoning ordinances that unjustifiably keep group homes out of neighborhoods violate the Fair Housing Act,” said Bryan Greene, U.S. Department of Housing and Urban Development’s (HUD) Acting Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Department of Justice will continue to work together to ensure that everyone, including persons with disabilities, has access to the kind of housing that meets their needs.”

    The settlement resolves the United States’ claims that the city violated the FHA and ADA when it adopted and enforced a facially discriminatory 2,500 foot group-home spacing requirement and when its Board of Adjustment refused, without justification, a variance petition to allow Community Living Inc. (CLI) to operate a group home for four women with disabilities.

    The complaint also alleges that the city refused to make reasonable accommodations to the city’s rules, policies, practices or services that were necessary to afford the residents an opportunity to use and enjoy their home.
  • The case began when a legal guardian for a resident of the group home filed a complaint with HUD after the Board of Adjustment denied the group home’s variance petition. HUD referred the complaint to the Justice Department, which conducted an investigation.
For the Justice Department press release, see Justice Department Settles Allegations of Disability Discrimination Against the City of St. Peters, Mo.


(1) Olmstead v. L.C., 527 U.S. 581 (1999), is a United States Supreme Court case regarding discrimination against people with mental disabilities. The Supreme Court held that under the Americans with Disabilities Act, individuals with mental disabilities have the right to live in the community rather than in institutions if, in the words of the opinion of the Court, "the State's treatment professionals have determined that community placement is appropriate, the transfer from institutional care to a less restrictive setting is not opposed by the affected individual, and the placement can be reasonably accommodated, taking into account the resources available to the State and the needs of others with mental disabilities." (Reference: Wikipedia).

Civil Rights, Brooklyn Feds Score Settlement Agreement In ADA Suit Accusing NYS Of Unnecessarily Segregating/Institutionalizing Thousands With Mental Illness In Adult Homes

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of New York announced [] that they, along with plaintiff adult home residents, entered into a comprehensive settlement agreement with the state of New York under the Americans with Disabilities Act (ADA).

    The settlement agreement will provide relief to thousands of people with mental illness unnecessarily segregated in 23 adult homes in New York City. Adult homes are institutional, segregated settings that house large numbers of people with mental illness.

    Under the settlement agreement, New York will offer supported housing to people with mental illness currently residing in adult homes. Supported housing is apartments scattered throughout the community for which the state provides rental assistance and housing-related support services. Supported housing residents have access to community-based services and supports that promote their inclusion, independence, and full participation in community life. The settlement agreement has been filed with the U.S. District Court for the Eastern District of New York for the court’s approval.

    The Supreme Court made clear in its landmark decision Olmstead v. L.C,(1) that people with disabilities have a civil right under the ADA to receive services in the most integrated setting appropriate to their needs. The state worked cooperatively with the department and private plaintiffs to negotiate a settlement that resolves the allegations that the New York mental health service system violates the ADA by relying on large, institutional adult homes instead of supported housing units that are scattered throughout the community. A state is responsible for segregation when it designs and implements a system that unnecessarily relies on institutional facilities, regardless of whether they are privately owned and operated.
  • Over the next five years, New York will provide scattered-site supported housing to at least 2,000, and potentially more than 4,000, adult home residents. New York has also committed to providing people moving to supported housing with the community-based services and supports that will allow them to thrive in the community. The agreement also will ensure that adult home residents have the information they need to make an informed choice about where to live. If they choose to move to supported housing, they will participate in a person-centered, transition planning process. An independent reviewer with extensive experience in mental health systems will monitor the state’s compliance with the agreement.

    Because of this agreement, people like Ilona Spiegel, one of the named plaintiffs, will get the opportunity to live independently and “become emancipated” after 15 years in an adult home. Spiegel lived independently in her own apartment until she received psychiatric treatment in a hospital in 1998. When she left the hospital, her only discharge option was to move into an adult home. In the adult home, Spiegel shares a small room with a roommate, has scheduled mealtimes and no opportunity to cook for herself, has little privacy as staff have entered her room without permission and finds living in the adult home extremely isolating. Spiegel has said that she cannot wait to live in her own apartment again and have autonomy over her life, including doing her own cooking, cleaning and shopping, have personal privacy in her home, and be free from intrusion into her personal belongings.

    Loretta E. Lynch, U.S. Attorney for the Eastern District of New York stated: “With this agreement, thousands of New Yorkers will be able to leave the shadow of institutional living and instead live in and contribute to their communities. Because of this cooperative effort, their lives will be immeasurably better and our communities all the richer for their presence.”

    The individual plaintiff adult home residents, on behalf of themselves and a class of adult home residents with mental illness, are represented by Paul, Weiss, Rifkind, Wharton & Garrison, LLP; Disability Advocates Inc.; Bazelon Center for Mental Health Law; New York Lawyers for the Public Interest; MFY Legal Services Inc.; and Urban Justice Center.

Civil Rights Feds Tag Florida In ADA Suit Alleging State Unnecessarily Segregates Children With Disabilities In Nursing Facilities Rather Than Placing Them In Their Families' Homes Or Other Community-Based Settings

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department announced [] that it has filed a lawsuit against the state of Florida alleging the state is in violation of the Americans with Disabilities Act (ADA) in its administration of its service system for children with significant medical needs, resulting in nearly 200 children with disabilities being unnecessarily segregated in nursing facilities when they could be served in their family homes or other community-based settings.

    The lawsuit, filed in federal district court in Fort Lauderdale, Fla., further alleges that the state’s policies and practices place other children with significant medical needs in the community at serious risk of institutionalization in nursing facilities.

    The ADA and the Supreme Court’s decision in Olmstead v. L.C.(1) require states to eliminate unnecessary segregation of persons with disabilities. The department’s complaint seeks declaratory and injunctive relief, as well as compensatory damages for affected children.
  • “Florida must ensure that children with significant medical needs are not isolated in nursing facilities, away from their families and communities,” said Eve Hill, Deputy Assistant Attorney General for the Civil Rights Division. “Children have a right to grow up with their families, among their friends and in their own communities. This is the promise of the ADA’s integration mandate as articulated by the Supreme Court in Olmstead. The violations the department has identified are serious, systemic and ongoing and require comprehensive relief for these children and their families.”

    Since late 2012, the department has met with Florida officials on numerous occasions in an attempt to resolve the violations identified in the findings letter cooperatively. While the state has altered some policies that have contributed to the unnecessary institutionalization of children, ongoing violations remain. Nearly two hundred children remain in nursing facilities. Deficient transition planning processes, lengthy waiting lists for community-based services and a lack of sufficient community-based alternatives persist. The department has therefore determined that judicial action is necessary to ensure that the civil rights of Florida’s children are protected.

Brooklyn Landlord Finds Itself In Crosshairs In Federal Fair Housing/Race Discrimination Suit Accusing It Of 'Failing Black/White Test' In Its Treatment Accorded Black Testers As Opposed To Their White Counterparts

In New York City, the Fair Housing Justice Center(1) recently announced:
  • On August 2, 2013, the FHJC and four African American testers filed a lawsuit in federal district court (E.D.N.Y.) alleging that the owners and managers of apartment buildings located in Brooklyn discriminate against African Americans.

    The case resulted from an investigation conducted by the FHJC in which African American and white testers posing as prospective renters were deployed to two rental buildings located at 592-596 E. 22nd Street in Brooklyn to inquire about apartments.

    The investigation was commenced after the FHJC was contacted by the Flatbush Development Corporation. The lawsuit claims that the defendants, East 22nd Street Towers LLC, East 22 St. Realty LLC, Coney Management LLC, Kalman Zimmerman, Samuel Fleischman, Joseph Lichtman, and Mayer Fishman engaged in racially discriminatory practices in violation of fair housing laws.

    The complaint alleges that the rent stabilized buildings on E. 22nd Street were neglected and in serious disrepair when they were occupied almost exclusively by Black tenants. When the defendants acquired the properties, units were eventually remodeled, but it appeared that Black tenants who remained in the building did not receive the same quality of renovations. Concern was expressed by tenant organizers that the owners were seeking to rent newly remodeled units to tenants who were not Black. In response to this concern, the FHJC conducted an investigation.

    According to the lawsuit, African American testers were treated less favorably than their white counterparts on four tests. In stark contrast to the treatment accorded white testers, comparably qualified African American testers met with misinformation, discourtesies, and discouragement when inquiring about apartments for rent.

    On one test, a white tester was told about four apartments that were coming available in several weeks and, on the same day, an African American tester was told no apartments were available and none would be available for a couple of months.

    On the second test, an African American tester was informed that no apartment was available and that it could be “four to six weeks” and none would be available by October 1st. The same day, a white tester was shown an available apartment that was “just about ready” and that would be ready by October.

    On another test, an African American tester was treated rudely and quoted a security deposit requirement that was twice as much as the amount quoted to his white counterpart.
For the press release, see Flatbush Landlord Accused of Racial Bias (FHJC Investigation Documents Race Discrimination In Gentrifying Buildings).

(1) The Fair Housing Justice Center, Inc. (FHJC) is a regional fair housing organization based in New York City. The FHJC provides a full-service fair housing program to New York City and the seven surrounding New York counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester.

NYC Fair Housing Advocates Score $130K In Damages, Legal Fees From Queens Landlord Accused Of Having Policy Of Stiffing Prospective Black Renters Looking For Available Apartments In Favor Of Whites

In New York City, the Fair Housing Justice Center(1) recently announced:
  • On June 27, 2013, Federal District Judge Roslynn R. Mauskopf approved a settlement resolving a fair housing lawsuit filed by the Fair Housing Justice Center (FHJC) and three African American testers against the owners and managers of an apartment building located at 41-41 46th Street in Sunnyside, Queens.

    The lawsuit, filed in December 2012, alleged that Nasa Real Estate Corporation (“Nasa”) and its agents were discriminating based on race and color in the rental of housing in violation of fair housing laws. The complaint was based on the results of a systemic testing investigation conducted by the FHJC in which matched pairs of African American and white testers inquired about renting apartments at the 107-unit apartment building.

    According to the complaint, an agent informed African American testers that no apartments were available, while informing comparably qualified white testers about available apartments and showing them apartments.

    The agreement provides a general injunction requiring that Nasa and its employees abide by fair housing laws. One of the defendants, Irfan Bekdemir, who was tested by the FHJC, acknowledged in the agreement that he told African American testers that no apartments were available and did not show them any apartments while informing white testers about available apartments and showing them vacant units.
  • [Among other terms], the agreement provides that Nasa will pay a total of $130,000 to the plaintiffs for damages, attorney’s fees, and costs. The plaintiffs were represented by Elizabeth S. Saylor, Diane L. Houk, and Vasudha Talla with the law firm of Emery Celli Brinckerhoff & Abady, LLP.
For the press release, see Sunnyside Race Discrimination Case Settled (Agreement Extends Remedy To Other Rental Buildings In NYC).

(1) The Fair Housing Justice Center, Inc. (FHJC) is a regional fair housing organization based in New York City. The FHJC provides a full-service fair housing program to New York City and the seven surrounding New York counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester..

Friday, August 09, 2013

Quicken Loans Refuses To Cough Up Cash In Multi-Million $ Award In Favor Of Screwed-Over Homeowner/Borrower; Opts To File Another Appeal With West Virginia Supremes; Case Exemplifies Importance Of Contingent Fee System That Allows Clients To Afford Representation As Litigation Proceeds: Homeowner's Lawyer

In Wheeling, West Virginia, The West Virginia Record reports:
  • A judgment in a fraud lawsuit against Quicken Loans has only gotten bigger since an appeal to the state Supreme Court, so the company is heading back.

    On July 17, Quicken Loans filed a notice of appeal to the state Supreme Court of a decision in Lourie Jefferson’s lawsuit against it that awarded her $3.5 million in punitive damages and more than $875,000 to attorneys at Bordas & Bordas in Wheeling.

    In November, the Supreme Court found the company committed fraud and violated various provisions of the West Virginia Consumer Credit and Protection Act in a mortgage loan, but sent the case back to Ohio County Circuit Court to adjust an approximately $2.8 million award.

    On June 18, Ohio Circuit Judge David J. Sims, who took over the case from Arthur Recht, awarded Jefferson even more.
  • [Jefferson's attorney Jim] Bordas said the case is an example of the importance of the contingent fee system that has allowed Jefferson and her daughter to afford representation in the case as it proceeds.

    “After a while, enough’s enough,” he said. “I wonder if the Supreme Court is gonna say the same thing.”

Quicken Loans Targeted Again In West Virginia Suit Alleging It Clipped Homeowner With Unauthorized Loan Closing Charges, Misrepresented Home's Value, Extended Credit Without Obtaining An Appraisal

In Wheeling, West Virginia, The West Virginia Record reports:
  • A woman is suing Quicken Loans Inc. after she claims a notary was hired to perform her loan closing and her residence was not even appraised for the refinancing of the loan.

    Title Source Inc., which is doing business as Title Source Inc. of West Virginia Incorporated, and Delmar Barrett were also named as defendants in the suit.

    On June 15, 2011, Stephanie Kemper refinanced her existing mortgage loan through Quicken, who was working in conjunction with Title Source, and hired Barrett, a West Virginia notary, to close the loan, according to a complaint filed July 17 in the U.S. District Court for the Northern District of West Virginia at Wheeling.

    Kemper claims despite the fact that Barrett is not licensed to practice law in West Virginia and was not directly supervised by a West Virginia-licensed lawyer, Barrett reported that he had performed more than 8,000 closings.

    On Kemper’s closing documents, there was a $575 closing fee, far in excess of the $2 maximum fee for notarial services under West Virginia law and more in line with a typical attorneys’ fee for loan-closings, according to the suit.

    Kemper claims because Barrett is not a licensed lawyer, she did not get the benefit of her bargain, as she did not have access to or receive the legal services available through a lawyer-closed loan transaction.

    During the loan origination process and before the closing, Quicken represented to Kemper that her home would be appraised in order to determine that there was sufficient collateral to make the loan and represented in her closing packet that her home was appraised for $180,000, according to the suit.

    Kemper claims she recently learned that Quicken did not even obtain an appraisal of her property and her home did not have a fair market value of $180,000 and would not appraise for an amount equal to or greater than that amount at the time of closing.

    Quicken misrepresented both the existence of an appraisal and the fair market value of the property to Kemper and she materially and justifiably relied on those representations, according to the suit.

    Kemper claims the representations gave her a false sense of security in accepting that loan that now made her solely responsible for repayment obligation, in contract to the loan that she had refinanced, for which she was jointly responsible to pay.

    Kemper is seeking civil penalties and actual damages with pre- and post-judgment interest. She is being represented by James G. Bordas and Jason E. Causey of Bordas & Bordas PLLC and John W. Barrett and Jonathan R. Marshall of Bailey & Glasser LLP.

NJ Appeals Court Reinstates Lawsuit Alleging Foreclosure Mill Law Firm Violated FDCPA, State Fair Foreclosure Act

Law360 reports:
  • A New Jersey appeals court on Tuesday reopened a woman’s claims alleging Zucker Goldberg & Ackerman LLC violated debt collection laws in foreclosure proceedings on her property, finding the trial judge had applied the wrong standard of review.

    A two-judge panel revived claims made by Windy Mazzella, who accused ZGA of negligence and violations of the state’s Fair Debt Collection Practices Act related to a foreclosure action carried out by ZGA on behalf of Deutsche Bank National Trust Co.
For more, see Appeals Court Revives Debt Collection Suit Against NJ Firm (requires subscription).

For the court ruling, see Deutsche Bank National Trust Co. v. Mazella, A-1776-11T1 (August 6, 2013) (unpublished).

Thursday, August 08, 2013

Feds' Failure To Criminally Prosecute Big Banksters Continues As DOJ, SEC File More Civil Suits Targeting BofA

The Washington Post reports:
  • Traders at Bank of America willfully misled investors about the quality of the residential mortgages tucked into the securities the bank sold at the start of the financial crisis, according to separate lawsuits filed Tuesday by the Justice Department and the Securities and Exchange Commission.(1)

    The charges are the latest reckoning for the nation’s second-largest bank, which has been plagued by a series of lawsuits stemming from the housing crisis. The bank has been accused of discriminating against mortgage applicants, saddling the government with billions of dollars in troubled loans and a range of foreclosure abuses.

    Now Bank of America faces civil charges for allegedly hiding the risks associated with $850 million worth of securities backed by home loans. Justice claims the bank knew that more than 40 percent of the 1,191 mortgages it bundled into securities did not meet underwriting guidelines and sold them anyway. Prosecutors estimate that the total losses sustained by investors will exceed $100 million.

    “Bank of America’s reckless and fraudulent origination and securitization practices in the lead-up to the financial crisis caused significant losses to investors,” said Anne Tompkins, the U.S. attorney for the Western District of North Carolina who is in charge of the case. “Now, Bank of America will have to face the consequences of its actions.”

    The Justice lawsuit came out of the Obama administration’s federal mortgage task force, a team of federal and state attorneys assembled in 2009 to hold Wall Street accountable for fraud and other misconduct rooted in the financial crisis. The SEC’s case is based on the same collection of securities that underpins the claims in the Justice lawsuit.

    Federal prosecutors said the exact amount of civil penalties will be determined as the litigation proceeds.

    Bank of America said in a corporate filing last week that it expected federal prosecutors and regulators to take action. On Tuesday, the bank defended the quality of the securities in question and insisted that investors had ample access to the underlying data on the loans.

    “These were prime mortgages sold to sophisticated investors,” Bank of America spokesman Lawrence Grayson said. “The loans in this pool performed better than loans with similar characteristics originated and securitized at the same time by other financial institutions.”

    Grayson added: “We are not responsible for the housing market collapse that caused mortgage loans to default at unprecedented rates and these securities to lose value as a result.”

    In the aftermath of the financial crisis, Bank of America has contended with a barrage of lawsuits over mortgage securities and residential foreclosures.

    The bank’s acquisition of mortgage giant Countrywide Financial in 2009 gave it an edge in the housing market and endless legal headaches. Analysts estimate that Bank of America has lost nearly $40 billion on mortgage litigation and repurchases of soured loans linked to Countrywide.

    Tuesday’s lawsuits, however, are tied to Bank of America’s own mortgage operations. Prosecutors say the bank made its employees churn out mortgages, placing quantity over quality to reap profits. One bank employee told prosecutors that “her superiors pressured her to process applications as quickly as possible but to keep her opinions to herself,” according to the complaint.

    In spite of the continued pursuit of banks accused of misconduct, critics say federal prosecutors and regulators are not being as aggressive as the law allows.

    “No matter how intentional the fraud and how much damage it does, the DOJ refuses to prosecute the elite banks and bankers,” said William Black, an associate professor of economics and law at the University of Missouri-Kansas City. “The conduct they describe was not reckless — it was intentional.”

    There seems to be no end in sight for the legal fallout from the financial crisis. Hours before announcing its case against Bank of America, the SEC said it reached a $50 million settlement with UBS over complex mortgage bonds. Regulators say the Swiss banking giant misled investors about the quality of collateralized debt obligations created in 2007 that caused $130 million in losses.

Self-Proclaimed President Of Sovereign Citizen Nation Gets 18 Years For Peddling Seminars Teaching Attendees How To Create Phony Bonds To Pay Income Taxes, File Retaliatory Liens Against Gov't Officials Who Interfered With Processing The Fictitious Instruments

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department, the Internal Revenue Service (IRS) and the FBI announced [] that James Timothy Turner, also known as Tim Turner, was sentenced to serve 18 years in federal prison for conspiracy to defraud the United States, attempting to pay taxes with fictitious financial instruments, attempting to obstruct and impede the IRS, failing to file a 2009 federal income tax return and falsely testifying under oath in a bankruptcy proceeding.

    In March 2013, following a five-day jury trial, Turner was convicted on 10 counts in the U.S. District Court for the Middle District of Alabama.

    Based on the evidence introduced at trial and in court filings, Turner, the self-proclaimed “president” of the sovereign citizen group Republic for the united States of America (RuSA), traveled the country in 2008 and 2009 conducting seminars teaching attendees how to defraud the IRS by preparing and submitting fictitious bonds to the U.S. government in payment of federal taxes, mortgages, and other debt.

    The evidence at trial revealed the bonds are fictitious and worthless but witnesses testified that Turner used special paper, financial terminology and elaborate borders in an effort to make them look authentic and more likely to succeed in defrauding the recipient. Turner was convicted of sending a $300 million fictitious bond in his own name and of aiding and abetting others in sending fifteen other fictitious bonds to the Treasury Department to pay taxes and other debts.

    The evidence at trial also established that Turner taught people how to file retaliatory liens against government officials who interfered with the processing of fictitious bonds. Turner filed a purported $17.6 billion maritime lien in Montgomery County, Ala., Probate Court against another individual.

    This investigation began after Turner and three other self-proclaimed “Guardian Elders” sent demands to all 50 governors in the United States in March 2010 ordering each governor to resign within three days to be replaced by a “sovereign” leader or be “removed.” The FBI immediately began investigating Turner and IRS- Criminal Investigation (IRS-CI) joined the investigation soon thereafter.

Sovereign Citizen Charged In Alleged Attempt To Title-Hijack Multi-Million $ Memphis Mansion Refuses Judge's Order For Mental Evaluation; Wants To Represent Self

In Memphis, Tennessee, WREG-TV Channel 3 reports:
  • Tabitha Gentry, accused of squatting in a multi-million dollar east Memphis home, was in court Monday. Gentry was recently indicted on charges of theft of property more than $250,000 and aggravated burglary.

    “I’m Abka Rey Bey, Moore American national,” said Gentry as the judge read the charges she was indicted on.

    At issue Monday was a mental evaluation the court has ordered.

    “That is not in my best interest to take any kind of mental or forensic evaluation and there is nothing in the American Constitution of 1791 that you can hold, force me to take a mental evaluation,” said Gentry in court.

    Judge James Lammey asked for another mental evaluation Thursday and then for Gentry to appear back in court on August 13th. “The state of Tennessee cannot bring charges against a flesh-and-blood being,” said Gentry.

    Claiborne Ferguson, who is Gentry’s court-appointed attorney, said Gentry cannot be forced to take a mental evaluation. "They will try one more time and at some point she will either be allowed to represent herself or the court will have to find that she is unable to present herself. At some point the court will have to hold a hearing to determine whether she is competent or not to represent herself,” said Ferguson.

    If found guilty of the theft charge, Gentry faces a minimum 15 years in prison and she faces three to 15 years on the aggravated burglary charge.

Wednesday, August 07, 2013

Ex-Fugitive Foreclosure Rescue Operator Gets 132 Months For Running Fractional Interest Deed Transfer Scam Involving Use Of Bogus Bankruptcy Filings To Fraudulently Delay, Postpone Public Auctions For 800+ Financially Distressed Homeowners

From the U.S. Department of Justice (Washington, D.C.):
  • Glen Alan Ward, 48, a former Los Angeles resident who fled to Canada and was a federal fugitive for 12 years, was sentenced [] to serve 132 months in prison for aggravated identity theft and bankruptcy fraud in connection with his leading role in a nearly 15-year foreclosure-rescue scam that fraudulently postponed foreclosure sales for more than 800 distressed homeowners.
  • According to the plea agreement, Ward led a scheme that solicited and recruited homeowners whose properties were in danger of imminent foreclosure. Ward promised to delay their foreclosures for as long as the homeowners could afford his $700 monthly fee.

    Once a homeowner paid the fee, Ward accessed a public bankruptcy database and retrieved the name of an individual debtor who recently filed bankruptcy. Ward admitted that he obtained copies of unsuspecting debtors’ bankruptcy petitions and directed his clients to execute, notarize and record a grant deed transferring generally a 1/100th fractional interest in their distressed home into the name of the debtor that Ward provided.(1)

    Then, after stealing the debtor’s identity, Ward faxed a copy of the bankruptcy petition, the notarized grant deed and a cover letter to the homeowner’s lender or the lender’s representative, directing it to stop the impending foreclosure sale due to the bankruptcy.

    Because bankruptcy filings give rise to automatic stays that protect debtors’ properties, the receipt of the bankruptcy petitions and deeds in the debtors’ names forced lenders to cancel foreclosure sales. The lenders, which included banks that received government funds under the Troubled Asset Relief Program (TARP), could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts, thereby repeatedly delaying the lenders’ recovery of their money for months and even years.

    In addition, if a distressed homeowner wanted to complete a loan modification or short sale, they were left to the mercy of Ward to send them forged deeds, supposedly signed by the debtors, to re-unify their title as required by most lenders.

    As part of the scheme, Ward delayed the foreclosure sales of approximately 824 distressed properties by using at least 414 bankruptcies filed in 26 judicial districts across the country. During that same period, Ward admitted to collecting from his clients who paid for his illegal foreclosure-delay services more than $1.2 million.
For the Justice Department press release, see Former Federal Fugitive Sentenced in California for Nationwide Foreclosure Scam (Collected More Than $1.2 Million from More Than 800 Distressed Homeowners).

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

Sale Leaseback Peddler Gets 96 Months In Connection With Foreclosure Rescue Equity Stripping Racket That Targeted Financially Strapped High-Equity, No-Cash Homeowners

Fed Up & Fighting Back blog reports that Felix Daniel, an alleged foreclosure rescue operator based in Michigan and who did business as RYM Technology Holdings ("Rymtech" was sentenced in a Chicago, Illinois Federal court to 96 months in federal prison and five years parole and over $4 million in restitution/forfeiture)  in connection with a fraudulent scheme involving the equity stripping from homes of high-equity, no-cash homeowners through the peddling of bogus sale leaseback arrangements.(1)

Source (includes original indictment): Felix Daniel Guilty.

Go here for the Memorandum Opinion & Order denying Daniel's motion for a new trial.

Go here for the Illinois Secretary of State's Order of Prohibition addressing Daniel's racket in an earlier, unrelated administrative proceeding.

Thanks to Linda Spak for the heads-up on the conviction.

(1) For more on this type of foreclosure rescue ripoff, see:

Foreclosure Rescue Operator Gets Five Years For Role In Racket That Clipped 250 Financially Distressed Homeowners Seeking Loan Modification Help Out Of $675K In Upfront Fees

In Phoenix, Arizona, the Phoenix Business Journal reports:
  • A San Diego man has been sentenced to five years in federal prison from his role in a mortgage foreclosure rescue scam that took place in Arizona and California. But his two co-conspirators have fled to Mexico, according to federal investigators.

    Frank Becerra Campos, 66, previously pleaded guilty to federal charges of defrauding 250 distressed homeowners out of $675,000 worth of up-front mortgage modification assistance fees.

    Federal prosecutors and the FBI accused Campos and two other men, Miguel Carrera and Oswaldo Esqueda, of targeting Spanish-speaking homeowners in Arizona and California and promising them mortgage modification help. The scheme promised to reduce mortgage payments by 25 percent and sometimes the trio encouraged homeowners to file for bankruptcy protection to delay losing their homes.

    The trio operated under businesses called Gold Capital Investments LLC and Foreclosure Home Savers LLC.

    Federal prosecutors and the FBI claim Carrera and Oswaldo fled to Mexico. They also claim Carrera may be working in real estate there under the name Mike Beltran.

Tuesday, August 06, 2013

Banksters' Faulty 'Right-To-Cure' Notices Open New Opportunity For Bay State Homeowners To Challenge, Void Foreclosures

In Boston, Massachusetts, The Boston Globe reports:
  • Despite increased scrutiny of mortgage lending practices, many banks are still violating basic legal requirements when foreclosing on properties in Massachusetts, according to housing attorneys who represent borrowers fighting to save their homes.

    In particular, they say, lenders do not always adhere to a 2007 state law, amended in 2010, that provides homeowners 150 days to catch up on missed mortgage payments before a foreclosure can begin.

    Under the law, banks and mortgage companies are required to send so-called right-to-cure notices to delinquent borrowers that provide basic information about the foreclosure process, including whom to contact and who holds the mortgage.

    Some homeowners who say they were not treated fairly during the foreclosure process are going to court and — increasingly — winning rulings that force lenders to reverse completed property seizures.

    Eloise Lawrence, an attorney at the Harvard Legal Aid Bureau in Cambridge, said she has helped more than two dozen homeowners overturn their foreclosures in Lynn alone based on problems with right-to-cure notices.

    Lawrence said it is especially important that lenders follow the letter of the law in Massachusetts, a state where foreclosures do not go before a judge for final review.

    “The bank can take your house without ever going to court, and so properly notifying homeowners of their rights is a critical safeguard against wrongful foreclosures,” she said.

    Jon Skarin, senior vice president of the Massachusetts Bankers Association, said some courts interpret Massachusetts law differently than banks do. Lenders send tens of thousands of such delinquency notices statewide annually without problems, he said.

    “The number that have been successfully challenged is very small compared to the amount of notices that get sent out,” Skarin said.

    The latest allegations follow years of complaints about sloppy and fraudulent practices by mortgage companies here and across the country.

    In May, Massachusetts Attorney General Martha Coakley said the country’s major lenders were disregarding sections of a $25 billion mortgage settlement reached between the companies and attorneys general nationwide to address problems endemic to the foreclosure process.

    Among the problems, Coakley said, is that lenders fail to offer help in a timely fashion, send borrowers inaccurate and confusing information, and deny them assistance without specifying why.

    Coakley declined to comment on complaints about the right-to-cure notices. Brad Puffer, her spokesman, said the agency has received complaints and is “still exploring the extent of those violations.”

    Last month, the debate reached the state Supreme Judicial Court, which agreed to consider the case of a Clinton homeowner who lost his home to foreclosure.

    John Schumacher claims in court documents that in 2008 he was not given adequate notice of his right to resolve his mortgage problems, as required by law, because the official holder of his loan was misidentified in the right-to-cure letter. For that reason, he argues, his 2009 foreclosure should be voided.

    “Attorneys all across the state see violations of the statute all the time,” said Schumacher’s attorney, Max Weinstein, who works with the Jamaica Plain-based Legal Services Center, a Harvard Law School group that helps low-income clients. “You would think banks would be doing their best to cross their ‘i’s and dot their ‘t’s.”

    Concerned about the issue, the nonprofit Massachusetts Alliance Against Predatory Lending recently conducted an investigation into 151 notices filed at the Worcester District Registry of Deeds and found widespread problems.

    The alliance is expected to release a report that claims the country’s biggest lenders — Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citibank, and Ally Financial Inc. — all violated the state law by, among other things, failing to provide the name of the loan’s originator or including the name of a bank contact.

    The alliance contends thousands of foreclosures statewide should be invalidated because of the violations.

    “This is an ongoing issue that the banks continue to disregard our laws,” said Grace Ross, coordinator for the Worcester-based alliance.

    Banks contest the report’s findings. Chase said it meets all “filing requirements,” while Citi officials said they “aim to be compliant” with the law.

    Bank of America said its notices “supply the homeowners with the necessary information required by law,” and Wells Fargo officials said they reject the alliance’s conclusions.

    Ally officials, saying they no longer handle foreclosures, declined to comment.

    Housing attorneys seeking to overturn foreclosures have been bolstered by a May 2012 Suffolk Superior Court decision that supported their claims. Justice Elizabeth M. Fahey ruled in favor of Revere homeowner Maria Vasquez, formerly known as Maria Bravo-Buenrostro, who contested her foreclosure based on a faulty right-to-cure notice.

    Vasquez said her foreclosure was invalid because the mortgage holder was misidentified in the letter she received notifying her of the right to resolve her mortgage problems.

    In court documents, Fahey wrote that Vasquez received the notice from IndyMac Federal when the mortgage was actually held by the Mortgage Electronic Registration Systems Inc., or MERS, a Virginia-based company that serves as mortgage holder for loans registered in its database.

    Fahey ruled the foreclosure void. Vasquez was then able to negotiate a new mortgage payment that allowed her to stay in her home.

    Dan Hyman, Vasquez’s attorney, said identifying the mortgage holder is crucial for troubled homeowners like Vasquez who are trying to stave off foreclosure. Between 2010 and 2012, more than 28,000 Massachusetts homeowners have lost properties to foreclosure, data show.

    “If you don’t have the name of who actually owns the mortgage, how can you possibly come to any sort of agreement?” he asked. “If you are going to sit down at the table, you have to have someone on the other side.”
Source: Banks in Mass. accused of violating foreclosure rules (Law guides process in the state).

Property Owners Fear Loss Of Their Commercial Property Over Unpaid $6M Tab For City Infrastructure Upgrades That Some Call The Most Egregious Abuse Of Local Improvement Assessments In Oregon History

In Keizer, Oregon, the Statesman Journal reports:
  • The City of Keizer is trying to foreclose on two vacant lots near Keizer Station, a move that some legislators and property rights groups call the most egregious abuse of local improvement assessments in state history.

    “I’m not shy about telling Keizer I think they’re misusing a state law,” said Rep. Brian Clem, chairman of the House Land Use Committee.

    Property owners Timm and Linda Rawlins are more than $1.2 million behind on payments toward a $6 million assessment the city levied on their lots to help build infrastructure for the Keizer Station shopping center. Timm’s parents, Jerry and Doreen Rawlins, have a half interest in the property.

    Back in 2005, when the levy was imposed, the Rawlinses, who live in Redmond, objected and filed a lawsuit against the city and an appeal to the state Land Use Board of Appeals.

    “The property was only worth $300,000. They wanted to encumber it for $6 million,” Linda Rawlins said.

    They dropped their lawsuit opposing the assessment and signed the assessment agreement, Linda Rawlins said, after Keizer Station Developer Chuck Sides offered to lease the property for 30 years through his company Northwest National, and make the assessment payments.

    Sides stopped paying the assessments three years ago, and the unpaid amount has been racking up interest and penalties. The total owed is $6.7 million, according to a foreclosure complaint the city has filed in Marion County Circuit Court.The property is worth about $2.23 million, according to the Marion County Assessor.

    Some legislators, though, think the city took advantage of the Rawlins when it imposed the assessment.

    “The facts surrounding this matter are extremely troubling,” state Sen. Tim Knopp and Rep. Gene Whisnant wrote Keizer Mayor Lore Christopher in June.

    Under state law, infrastructure projects that benefit private property can be funded by a local improvement district, where property owners are assessed for part or all of the cost of improvements.

    Keizer divided an assessment of $29 million among 26 properties, based roughly on each property’s acreage. The Rawlins properties, with a total of 16.3 acres, were assessed $5,970,818.

    However, anchor tenants Target, with 10.1 acres, and Lowe’s, with 12.3 acres, were assessed only $1 million and $1.2 million respectively.

    That means the Rawlins properties each were assessed at $366,758 per acre; Target at $98,619 per acre; and Lowe’s at $97,959 per acre.

    The Rawlinses properties remain undeveloped. They did not receive any infrastructure improvements in connection with the Keizer Station development.

    “For these people to be caught up in it and be given an assessment five or six times that of Target and Lowe’s, and then still have no sidewalks, no streetlights, it just seems insane to me,” Clem said. “This is a disaster.”

    Keizer attorney Johnson said he preferred not to comment on the reason those assessments were lower for Target and Lowe’s.

    According to the minutes of the May 4, 2005 Keizer City Council meeting, “Alan Roodhouse, who was hired by the city as (manager)for the project, explained the concessions given to the two anchor stores, adding that because these retailers are highly discounted, their margin of profit is lower, making them unable to pay as much per square foot of building size in assessments as the smaller tenants.”

    David Hunnicutt, president of the property-rights group Oregonians in Action, spoke at a legislative hearing on the matter in June.

    “This case, as I told the Legislature, is the worst case of abuse of a local improvement district that I’ve ever seen,” Hunnicutt said in an interview.

    “It’s a case where the Keizer City Council made a really bad bet, and used the Rawlins property as the investment,” Hunnicutt said. “Now that it’s turned out that their bet was bad, they’re demanding that the Rawlinses pay the cost.”

    Clem said he wants to make sure a similar situation doesn’t happen again — in Keizer or elsewhere. His committee held a hearing on the matter June 20, and a workgroup is putting a bill together for the February session, he said.

    “I’d like to see some changes to make sure if you’re forced to pay in, you’re actually getting some benefit,” Clem said.

    For the Rawlinses, that can’t come soon enough. They bought the property in 1996 as a retirement investment.

    We’ll lose everything if they foreclose,” Linda Rawlins said. “The property pays for our subsistence. We’ll lose our home, our business, our retirement and our children’s inheritance.”
For more, see Lawmakers outraged at Keizer land grab (City abused assessment law for center, leaders say).

Real Estate Operator Faces Multiple Charges In Alleged Short Sale 'Flopping' Scam Involving Eleven Homes

In Columbus, Ohio, The Columbus Dispatch reports:
  • A Far North Side man is accused of orchestrating a $1.2 million mortgage-fraud scheme.

    Donald P. Landers, 42, also known as Dante Brickman, is named in a 24-count indictment that was sealed by a Franklin County judge when it was filed on July 18. The indictment was unsealed on Wednesday after Landers was arrested on a warrant in Las Vegas.

    Landers, of 2424 Shillingham Court, identified properties that were in foreclosure and negotiated short sales with the lenders to buy the properties at a much-reduced rate, according to Prosecutor Ron O’Brien.

    He said Landers used fraudulent information to convince lenders that the properties were worth “much less than market value due to poor condition, poor location or difficulty in selling.”

    Landers also is accused of recruiting so-called straw buyers to purchase the properties from his business — Great American LLC — at an inflated price, fraudulently obtaining financing for the buyers by submitting loan applications that inflated their net worth and understated their debts.

    O’Brien said down payments for the properties were funded through the loan proceeds, not the buyers’ assets. Landers’ company pocketed the difference between the low short-sale amounts and the inflated sale prices, paying a kickback to the straw buyers, he said.

    Landers is accused of using the scheme from January 2007 to January 2008 with 11 Franklin County properties, including two of his own that were in default because of nonpayment of his mortgages. Most of the loans have since gone into default and foreclosure, O’Brien said.

    Landers is charged with one count of engaging in a pattern of corrupt activity, one count of theft, 11 counts of money laundering and 11 counts of receiving stolen property.

Monday, August 05, 2013

Granite State Jury Rejects Sale Leaseback Peddler's 'I'm Not A Swindler Or Thief, Just A Crappy Businessman' Defense; Convicts Ex-Countrywide Loan Officer For Running Foreclosure Rescue, Equity Stripping Racket

In Concord, New Hampshire, Foster's Daily Democrat reports:
  • A New Hampshire businessman was convicted of fraud Thursday for orchestrating an elaborate scheme to strip the equity of homes on the brink of foreclosure by falsifying information on dozens of mortgage applications.

    Beginning in 2005, Michael Prieto of Manchester mailed offers to help bail out distressed homeowners if they signed over to him the deeds to their homes. He then sold those homes at inflated prices to straw buyers he paid to sign off on the false mortgage applications and turn the checks over to him, jurors found after hours of deliberation.

    Prieto dropped his head to his chest at the word "guilty" and later expressed disbelief to his lawyers and family members gathered in the courtroom.

    "I thought we had this won," he said to his lawyers.

    Prieto faces up to 20 years in prison and could get an additional 19 years because some of the lenders were federally insured. Sentencing was scheduled for Nov. 12, and Prieto was allowed to remain free until then.

    "Justice was served," prosecutor Mark Zuckerman said. "We're gratified by that."

    Prieto declined to comment. His attorney, Michael Iacopino, would say only, "We're disappointed."

    Assistant U.S. Attorney Michael Gunnison told jurors that from 2005 to 2008, Prieto targeted distressed homeowners through newspaper legal notices and sent letters offering to bail them out. He persuaded them to turn over the deeds to their homes in exchange for the opportunity to continue living in their homes as rent-paying tenants, and gave them the option to purchase back their homes in two years, Gunnison said.

    Then, prosecutors say, Prieto sold the homes at inflated prices to straw buyers whom he paid to filed mortgage applications that falsified their income, assets, debts and other facts. Prieto then stripped the equity from the homes and pocketed thousands of dollars, Gunnison said, using some proceeds for trips to a casino.

    "Was this a scheme about the defendant helping people?" Gunnison queried. "No. This was a scheme about the defendant helping himself -- to obtain money and live large as long as he could keep the scheme going."

    As a former loan officer for Countrywide mortgage company, Gunnison said Prieto knew the mortgage business, its vulnerabilities and how to exploit them.

    Prieto's lawyer said his client ran a failing business, not a criminal enterprise.

    "He ain't a good ... businessman," Iacopino told jurors, his hand resting on Prieto's shoulder. "But's not a swindler and he's not a thief."

    Earlier in the day, U.S. District Court Judge Steven McAuliffe threw out nine counts of money laundering in furtherance of the mail fraud scheme, saying those charges are part of the overarching scheme alleged by prosecutors.
Source: Guilty of mortgage fraud.

(1) For more on this type of foreclosure rescue ripoff, see:

Foreclosure Rescue Operator Gets 24 Months in Equity Stripping Scam That Peddled Phony Sale Leaseback Deals Purporting To Help Financially Strapped Homeowners Save Their Homes

From the Office of the U.S. Attorney (Minneapolis, Minnesota):
  • [A] 40-year-old Bloomington man was sentenced for his role in defrauding financial institutions and homeowners under the guise of a program to rescue homes from foreclosure.
  • [U]nited States District Court Judge John R. Tunheim sentenced Richard Scott Spady to 24 months in federal prison and two years of supervised release on one count of conspiracy to commit wire and mail fraud and one count of filing a false income tax return. On April 4, 2012, Spady was charged in a superseding indictment, and he pleaded guilty on September 5, 2012.

    On April 22, 2013, Spady’s co-defendant, Michele Denise Sengstock, age 50, also of Bloomington, was sentenced to 14 months in federal prison on one count of wire fraud. Spady and Sengstock were ordered to pay $1,127,129.31 in restitution.

    In his plea agreement, Spady admitted operating his scheme between 2005 and 2007. According to the charges in the case, Spady operated a company called Unified Home Solutions, or UHS, which identified homeowners who were facing mortgage foreclosure or already in foreclosure proceedings. UHS then found third party investors to purchase the homes, planning to sell them back to the original homeowners within one to two years. In the meantime, according to the Indictment in the case, the distressed homeowners could live in their homes.

    Though in foreclosure, because they could not make mortgage payments, the homeowners still had some equity in their homes. When the properties were sold, checks were issued to the original homeowners for their equity. The homeowners then signed over the equity checks and the proceeds were used to pay expenses and divided among the investors, UHS, and others. In some cases, equity from one sale was used to purchase other distressed properties.
For the U.S. Attorney press release, see Second Bloomington Resident Sentenced To Federal Prison For Mortgage Fraud Scam.

(1) For more on this type of foreclosure rescue ripoff, see:

Florida Appeals Court To Rogue Bankster: Not Only Was Your Foreclosure Action Dismissed, But The Trial Judge Did Not Abuse His Discretion By Sanctioning You For Ignoring His Discovery Orders & Sticking You With The $74K+ Tab For The Successful Homeowner's Legal Fees & Costs, So Pay Up!

In Miami, Florida, the state's 3rd District Court of Appeal recently issued the following ruling affirming a trial judge's decision to sanction a rogue bankster (it thumbed its nose at various discovery orders) and stick it with the tab for a homeowner's attorneys fees and costs for a successful defense against a foreclosure action(1) that was ultimately dismissed by the trial judge (by the way, the original foreclosure action was filed some time in 2009,(2) so one wonders how close the bankster is to Florida's 5-year statute of limitations in the event it refiles the foreclosure action - Sec. 95.11(2)(c), Florida Statutes):
  • This appeal stems from a foreclosure case filed by the lender, HSBC Bank USA, N.A., as Trustee for the Registered Holders of Renaissance Equity Loan Asset-Backed Certificates, Series 2007-3 (“the Bank”), against Gayle Williams (“the Homeowner”).

    The underlying foreclosure case was dismissed by the trial court based upon the Bank’s failure to comply with various discovery orders.

    The trial court’s dismissal in that regard was not appealed. In the matter before us, the Bank challenges the trial court’s order awarding the Homeowner $74,429 in costs and attorney’s fees.

    Given the Bank’s history in this case of disobeying court orders, we reject the Bank’s assertion that the trial court abused its discretion in sanctioning the Bank for failing to comply with the court’s scheduling order regarding attorney’s fees.

    Turning to the issue of the amount of the fees, the record contains the following evidence: (1) the time sheets and billing records of the Homeowner’s attorney; (2) the testimony of the Homeowner’s attorney; and (3) the testimony of two attorneys who offered expert opinions in support of the amount of fees.

    Contrary to the contention of the Bank, the record reflects that the Bank had prior written notice of the names of the expert witnesses who testified for the Homeowner on the issue of the amount of the attorney’s fees.

    In light of the substantial competent evidence in the record that supports the trial court’s findings, we conclude that the trial court did not abuse its discretion in awarding the costs and fees in the amount at issue. See Shands Teaching Hosp. & Clinics, Inc. v. Mercury Ins. Co. of Fla., 97 So. 3d 204, 213 (Fla. 2012) (“The standard of review for an award of prevailing party attorney fees is abuse of discretion.”); United Auto Ins. Co. v. Ricardo, 916 So. 2d 44 (Fla. 3d DCA 2005) (same).

For the ruling, see HSBC Bank USA, N.A. v. Williams, No. 3D12-1784 (July, 31, 2013).

(1) 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:
(2) Trial court case number 09-10793, Miami-Dade Circuit Court - Judge David C. Miller. The statute of limitations begins to run on the date of original default, or if there's a grace period (which there usually is), the date after the grace period expires, if I'm not mistaken.

Bankster Fails In Attempt To Have Suit Accusing It Of Mortgage Flipping Racket Heard In Federal Court; U.S. District Judge 'Abstains' From Hearing Suit, Boots Case Back To State Court, Saying There's No Pressing Federal Interest To Decide Matter Entirely Involving Unsettled Issues Of WV Law

In Martinsburg, West Virginia, The West Virginia Record reports:
  • A lawsuit accusing Huntington National Bank of “flipping” is being moved back to where it was originally filed in December 2011.

    U.S. District Judge Gina Groh, of the Northern District of West Virginia, remanded the case back to Kanawha County Circuit Court on July 26. Groh had to decide whether she would hear the case because the claim could be listed as an asset in the plaintiff’s bankruptcy proceeding.

    This matter involves claims arising entirely under state law causes of action and raising unsettled questions of West Virginia law,” she wrote.

    “This Court lacks diversity jurisdiction, but has jurisdiction due to Plaintiff’s bankruptcy proceeding, in which any recovery could potentially serve as an asset.

    “Abstention and remand would not be unduly burdensome, nor would it be inconvenient for a West Virginia court’s judgment to be enforced in the bankruptcy court.

    “At the heart of the doctrine of abstention lies the concept of comity, and, under present circumstances, no pressing federal interest requires this Court to determine unsettled state law issues.”

    Groh, therefore, decided to abstain from the case and remanded it to Kanawha Circuit Court, where it was first filed in December 2011.(1)

    Gary Miller sued Huntington Banks, its mortgage group and three other defendants.

    Miller accused them of “flipping,” or using inflated appraisals and other unlawful practices to induce “unsophisticated” consumers into a series of unwise and expensive loans.

    Flipping maximizes fee income to banks, but strips homeowners of equity in their homes, pushing them into default and, in some cases, foreclosure.

    Miller contends he was “flipped” repeatedly by Huntington Bank, resulting in indebtedness that, he says, “ballooned” from $120,000 to $273,500 over five years and has brought him to the brink of foreclosure.

    Prior to filing the lawsuit, Miller filed for Chapter 7 bankruptcy in federal court for the Northern District of West Virginia. He listed his property but not any possible claims against Huntington Banks.

    The bankruptcy proceeding was discharged more than a year before the lawsuit was filed.

    However, his bankruptcy estate has recently been re-opened to administer the case as a new asset. Special counsel has been hired to pursue the claim.

    The defendants removed the case to federal court for the Southern District of West Virginia on April 20, 2012, and it was transferred to the Northern District to aid in the coordination of the case and the bankruptcy proceedings to ensure jurisdictional issues are properly resolved.(2)

    On May 21, 2012, Miller requested the federal court abstain from hearing the case and remand it to Kanawha Circuit Court. Huntington Banks opposed the motion.
Source: ‘Flipping’ lawsuit sent back to Kanawha court.

For the ruling, see Miller v. Huntington National Bank, N.A., Civil Action No. 3:12-CV-114 (N.D.W.V. July 26, 2013).

(1) See, generally, Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder for more on the 'cat-and-mouse' games played by state court plaintiffs and defendants jockeying around to either move or block moves of state court cases into federal court.

(2) From the court ruling:
  • Defendants in civil actions may remove a matter from state to federal court if the latter forum has original subject matter jurisdiction. The Defendants removed the instant matter based upon allegations of both diversity jurisdiction under 28 U.S.C. §1332 and bankruptcy-related jurisdiction under 28 U.S.C. §1334(a)-(b).

    The burden of demonstrating jurisdiction for removal generally resides with the defendant. Wilson v. Republic Iron & Steel Co., 257 U.S. 92 (1921).

    Likewise, the plaintiff's role in the context of disputes about removability is also clearly defined: the plaintiff is the master of his or her claim. See Oklahoma Tax Com'n v. Graham, 489 U.S. 838 (1989). This means that, "if [the plaintiff] chooses not to assert a federal claim .. . or properly joins a nondiverse party, defendants cannot remove the action to federal court on the ground that an alternative course of conduct available to the plaintiff would have permitted removal of the case." 14B Charles Wright, Federal Practice and Procedure, §3721, p. 59 (2009).

    Moreover, as the Fourth Circuit has indicated, if federal jurisdiction is doubtful, the case must be remanded. Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994).

Sunday, August 04, 2013

San Diego Judge: Now-Defunct City Agency's Behavior In Effort To Use Threat Of Eminent Domain As A Hammer Over Couple's Head To Wrestle Away Their Property “Constitutes Coercive Precondemnation Tactics & Unreasonable Precondemnation Conduct”

In San Diego, California, the Rancho Santa Fe Review reports:
  • Rancho Santa Fe attorney Steven McKinley has won a $1.99 million settlement for his clients, who alleged in a lawsuit that the city of San Diego’s redevelopment agency acted improperly when it sought to obtain their downtown property.

    The settlement, which was finalized July 24 when signed by Mayor Bob Filner, ends a legal saga dating back to 2004. At that time, the San Diego Redevelopment Agency — which is now dissolved — told La Jollans Chris and Margaret LaFornara that it wanted to buy their property at 14th Street and Market in the East Village, as part of a project to build a mixed-use residential and commercial development over a full city block.

    Rather than pursue the acquisition, however, the redevelopment agency put its efforts on hold for about five years, leaving a cloud over the property and preventing the LaFornaras from selling to anyone else, said McKinley.

    In 2011, the LaFornaras lost the property to foreclosure, and the redevelopment agency then bought the property from the bank at a reduced price, McKinley said.

    “So they never took my client’s property. They negotiated with my client in bad faith and kept him strung out for six years until he lost the property to foreclosure,” McKinley said.

    The two-phase trial began last December before Superior Court Judge William Nevitt. In March, Nevitt issued a tentative ruling siding with the LaFornaras.

    In a tentative ruling, Nevitt wrote that the redevelopment agency’s behaviorconstitutes coercive precondemnation tactics and unreasonable precondemnation conduct.”

    A second phase of the trial to determine damages to be paid to the plaintiffs was set for this October, but instead, the city and the LaFornaras agreed to the $1.99 million settlement, McKinley said. Of that amount, $647,000 is for attorney fees.

    In essence, McKinley said the redevelopment agency announced it sought to acquire the LaFornaras’ property, then failed to move forward, causing the property to lose value. One potential buyer was willing to pay $3.4 million for the property, but backed off after learning of the redevelopment agency’s plans, McKinley said.

    The agency did offer the LaFornaras $1.2 million for the property in 2010, which, according to court documents, was less than its value as determined by the agency’s own appraisal.

    In his written ruling, the judge said the agency had made a “lowball offer” intended to “compel or induce an agreement on the price to be paid for the subject property.”

    Deputy City Attorney Carmen Brock, who oversaw the settlement for the city, declined to be interviewed for this story. She referred a reporter’s inquiry to the office of City Attorney Jan Goldsmith, which did not respond to a request for comment by press-time.

    Attorney Andrew Rauch, who represented the city as outside counsel in the case, also did not respond to a request for comment.

    More than 400 redevelopment agencies were established across the state in past decades. Their job was to eliminate blight from urban areas by promoting new development. Among their powers was to acquire private property, through negotiation or eminent domain, and then sell it to private developers for new projects.

    The state of California dissolved all of the redevelopment agencies in February 2012. Successor agencies were given the task of wrapping up their affairs, such as completing projects and paying off debts.

    In San Diego’s case, the city became the successor agency, according to the redevelopment page on the city’s web site. The city has “assumed the former agency’s assets, rights and obligations… subject to some limitations,” said the statement.

    In an email, Brock stressed that the settlement will be paid from the funds of the former redevelopment agency, and not the city’s general fund.

    The settlement was approved by the San Diego City Council, as well as state officials who are in charge of monitoring the dissolution of the redevelopment agencies and the state Department of Finance, said McKinley.

    Under state law, redevelopment agencies received a portion of the property taxes generated through new development in redevelopment areas, called “tax increment.” When Gov. Jerry Brown began the push to abolish redevelopment agencies, he argued that they diverted much-needed property tax revenue from other agencies, such as schools and cities.

    According to McKinley, the settlement should serve as a lesson for government officials about the proper use of their powers of eminent domain. “I just think it’s a huge vindication of property owners’ rights,” he said. “So often, these government agencies get carried away with the enormous power they have, there’s a tendency to abuse the power.”

Colorado Foreclosure Mill Lawyer Faces Federal Sanctions For Allegedly Wrongly Certifying That Copy Of Promissory Note Was "True & Correct" When She Had Never Seen Originals At All

In Denver, Colorado, The Denver Post reports:
  • A foreclosure lawyer whose firm is under state investigation for alleged bill-padding also faces federal discipline for misrepresenting documents she used to take someone's Colorado Springs home.

    Attorney Toni M.N. Dale of Medved Dale Decker & Deere in Lakewood was referred for discipline last month by a federal judge for wrongly certifying that copies of a bank's promissory note — required for any foreclosure in Colorado — were "true and correct" when, in fact, she had never seen the originals at all.

    Additionally, U.S. Bankruptcy Court Judge A. Bruce Campbell said in a written order that not only was Dale's certification in 2011 to the El Paso County public trustee — the overseer of foreclosures in that county — untrue, but so was her verification to the bankruptcy court about the same records.
  • At issue are differing copies of a loan Anthony Semadeni signed with First Magnus Financial in 2007, specifically the endorsement page where a lender transfers ownership with a signature.

    The copies show different or missing signatures, and two key signatures purportedly by the same bank official are markedly dissimilar.

    Dale filed a foreclosure case in 2011 against Semadeni on behalf of Aurora Loan Services, which claimed to be the new holder of the note, and provided a copy of the document — without the endorsement page proving ownership — along with a certification that it was a "true and correct" copy of the original.

    Semadeni filed for bankruptcy protection later that year, essentially freezing the foreclosure process. As is allowed, Dale formally requested that the stay be lifted, filing a copy that she verified was Semadeni's note — this time with the endorsement page showing a pair of stamps and signatures transferring ownership, first from First Magnus to Lehman Brothers Bank, then from Lehman to Aurora.

    A bankruptcy judge granted Dale's request and lifted the stay, and Semadeni's house sold at the trustee's public auction in August 2011 to Aurora Loan Services for $620,000, records show. Semadeni abandoned his bankruptcy case.

    ALS began eviction proceedings on Semadeni in September 2011 in state court. In that proceeding, a different lawyer representing ALS filed copies of Semadeni's note, this time with an endorsement page showing only a single stamp and signature.

    Semadeni filed for bankruptcy again, hoping the automatic stay would help explain the mess. The ALS lawyer, Jamie Siler, filed the same note.

    "Isn't that an admission that it was a dummy note that was submitted to the court (in Semadeni's first bankruptcy)?" Campbell asked Siler in a hearing, referring to the document Dale had used.

    Though Semadeni was eventually evicted last November, he filed a federal lawsuit challenging the validity of the lien.

    It is through that case that Campbell asked Dale to give reason why she shouldn't be held in contempt and sanctioned for allegedly misrepresenting the validity of the documents she used to foreclose. More than two years later, Dale says she can't unravel the discrepancy.

Florida Foreclosure Mill Head Reaches Deal With State Bar, Accepts 91 Day Suspension, Coughs Up $35K+ In Connection With Outfit's Activities Relating To Bankster Robosigning Racket

The South Florida Business Journal reports:
  • Marshall C. Watson, one of the original “robo-signing” attorneys, has been suspended for three months as part of an agreement with the Florida Bar.

    Watson was one of 11 attorneys in South Florida disciplined in the latest action by the Florida Supreme Court.
  • Watson agreed to plead guilty in a proposed consent judgment that accused him of failing to supervise or train his employees in foreclosure-related work. Watson also paid $30,000 for a record-keeping analysis by the Bar, plus $5,931 for its investigation.

    Watson ran a so-called foreclosure mill – Law Offices of Marshall C. Watson – where it became common practice to rush thousands of foreclosures through with quick review and sign-off to attest to accuracy of documents, leading to the coining of the phrase “robo-signing” in the media.

Homeowner's Lawsuit: Now-Foreclosed Neighbor's Landscaping Improperly Redirected Stormwater, Causing Flooding Inside My Home At Least Eight Times; Resulting Mold Problem Renders Now-Abandoned Premises Unlivable

In Pelham, Alabama, The Birmingham News reports:
  • Judy Berneske has dangerous black mold in the common wall of her now abandoned townhome in Pelham. Because of the mold, she can't sell the home except at a give-away price, she said. But living in it makes her sick, so she's been forced to rent an apartment at great financial hardship, she said.

    Getting rid of the mold right now is not possible, until all sources of water intrusion are corrected -- that's the subject of a lawsuit against a former neighbor who owned the townhome next to hers.

    After a 5-year ordeal dealing with insurance companies, lawyers and health officials, Berneske said she still has no relief, stuck with a moldy townhome and lingering health effects from living there. "I didn't see it as a big deal at first" in 2008, she said. "But I ran into nothing but dead ends trying to resolve it."

    As a last resort, she said, in 2010 she filed a lawsuit against a former neighbor whom she said caused water to leak into her home.

    She has an engineering report that points a finger at the neighbor for the water. She has a mold laboratory report confirming the presence of high levels of mold, including the stachybotrys chartarum species, commonly known as black mold. And she has a 2010 letter from a doctor saying she has asthma due to exposure to the mold in her home.

    "I can't live there. I can't rent it. And I can't sell it," said Berneske, a 62-year-old living on a fixed disability income.

    The story begins 10 years after she bought the Pelham townhome in 1998. She says a neighbor's landscaping redirected stormwater, causing flooding inside her house on at least eight occasions.

    Her insurance company paid for an engineers report, which confirmed that the water was coming from the neighbor's property and that changes in landscaping were a key reason. Berneske's insurance company, Traveler's, however was unwilling to get involved, Berneske said. Her insurance company said she needed to make a third-party claim on the neighbor's policy, Allstate.

    Allstate offered her a little more than $5,000 for remediation, Berneske said. However, the insurance company said they couldn't make the neighbor correct his water problems, she said.

    "Why would I take the money to repair my home if it was just going to continue flooding?" she asked. "My home can't be repaired until the flooding is stopped."

    In 2010, she filed the lawsuit.

    A mold testing company found "dangerously high" spore levels in her home.

    When she was diagnosed with asthma she followed her doctor's advice and moved out of her townhome to an apartment in Hoover where she lives now.

    Her former neighbor moved out and rented his place to tenants. It later went into foreclosure, and ownership went to PNC Mortgage. It is owned now by the U.S. Department of Housing and Urban Development (HUD).