Saturday, June 06, 2015

Local Governments, Municipal/Political Subdivisions Not Immune From Housing Discrimination Allegations As HUD Fair Housing Investigators Target Them, Too

Those targeted with allegations of fair housing violations are not limited to your typical, run-of-the-mill, rank-and-file landlords and condo/homeowner associations, as the following recent news releases from the Department of Housing & Urban Development demonstrate:
  • HUD Reaches Settlement With Ohio Housing Authority: Agreement with the City of Medina Housing Authority resolves discrimination claims against African Americans in the administration of its Section 8 Housing Choice Voucher Program. It had a residency preference point system that effectively imposed a residency requirement, thus putting African Americans who did not live or work in Medina County at a disadvantage.
  • HUD Announces Agreement With Anchorage, Alaska To Lift Housing Restrictions For People With Disabilities: Municipality of Anchorage, Alaska resolves allegations that its zoning laws violated the Fair Housing Act and other civil rights laws by discriminating against people with disabilities. Specifically, HUD’s complaint alleged the city’s zoning code imposed restrictions on groups with certain disabilities such as maximum occupancy standards and fees which were not imposed on other groups.
  • HUD Reaches Settlement With Pennsylvania Housing Authority: Agreement with the City of Hazleton Housing Authority resolves claims it violated the housing rights of Spanish-speaking applicants and tenants by requiring them to supply interpreters in order to communicate with housing authority staff and by denying them limited English proficiency services. The case came to HUD’s attention when six Latino families represented by the Community Justice Project, a non-profit public interest law firm serving Pennsylvania, filed a complaint. “When housing authorities accept HUD funding they are obligated to make their programs and services accessible to individuals who have limited English proficiency,” said Gustavo Velasquez, HUD Assistant Secretary for Fair Housing and Equal Opportunity. Under the terms of the agreement, the housing authority will provide the Community Justice Project with a monetary settlement of $14,000 that will be distributed among the residents who filed complaints, and $4,000 for attorney’s fees.
  • HUD And City Of Berlin, New Hampshire Settle Allegations Of Housing Discrimination Against Victims Of Domestic Violence: The agreement settles allegations that the municipality violated the Fair Housing Act when the city of Berlin discriminated against women when it enacted an ordinance requiring landlords to evict tenants cited by police three or more times for “disorderly action” or risk being fined and/or losing their rental license. The ordinance made no exception for victims of domestic violence, which are overwhelmingly women and who needed police assistance. Among a slew of other things, the City of Berlin agreed to amend its ordinance to include language stating that the “…ordinance is not intended to be used against victims of reported incidents of domestic violence.” The city will also modify its definition of “disorderly action” to state that “disorderly action” will not include the actions of victims of reported domestic violence incidents. Payment of monetary damages, penalties, attorney fees, etc. was not required.

Civil Rights Feds Hit Indiana Mobile Home Park Owner With Suit Alleging Failure To Allow Families w/ Children To Live On Premises In Violation Of Fair Housing Act; Action Triggered By Information Obtained By Housing Testers Posing As Renters

In Washington, D.C., the U.S Department of Justice recently announced:
  • The Justice Department [] filed a lawsuit against the corporate owner and agent of the Gentle Manor Estates, a 173-lot mobile home park located in Crown Point, Indiana, for discriminating against families with children in violation of the Fair Housing Act.

    The lawsuit, filed in the U.S. District Court for the Northern District of Indiana, alleges that Gentle Manor Estates, LLC and John Townsend, the corporate owner and agent, respectively, of the Gentle Manor Estates, violated the Fair Housing Act by maintaining and enforcing a discriminatory policy of refusing to allow families with children to live at the mobile home park.

    The allegations are based on evidence generated by the department’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices.(1)


    The lawsuit seeks an order prohibiting the defendants from engaging in future unlawful discrimination. It also seeks the payment of a civil penalty and monetary damages for the individuals who were refused the opportunity to rent at Gentle Manor Estates because of familial status.

    Individuals who may have information related to this lawsuit should contact the Justice Department toll-free at 1-800-896-7743, mailbox 9994, or e-mail the Justice Department at The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at

    The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.
Source: Justice Department Charges Owner of Indiana Mobile Home Park with Discrimination Against Families with Children.

For the lawsuit, see USA v. Gentle Manor Estates, LLC.

(1) In the lawsuit, the Feds describe "testing" as "a simulation of a housing transaction that compares responses given by housing providers to different types of home-seekers to determine whether illegal discrimination is occurring."

Virginia Continuing Care Retirement Community To Be Left $390K Poorer In Settlement Of Housing Discrimination Allegations That It Imposed Certain Prohibitions, Limitations On Disabled Residents (vs. Non-Disabled Residents) & Engaged In Retaliation When They Or Family Members Complained

In Washington, D.C., the U.S. Department of Justice recently announced:
  • The United States announced [] the filing of a consent order that resolves allegations that Fort Norfolk Retirement Community Inc. (Fort Norfolk) violated the Fair Housing Act by instituting policies that discriminated against residents with disabilities at Harbor’s Edge, a continuing care retirement community in Norfolk, Virginia.

    The consent order, which still needs to be approved by the court, was filed [], along with a complaint, in the U.S. District Court of the Eastern District of Virginia. The complaint alleges that beginning in May 2011, Fort Norfolk instituted a series of policies that prohibited, and then limited, residents in the assisted living, nursing and memory support units at Harbor’s Edge from dining in dining rooms or attending community events with independent living residents.

    The complaint also alleges that when residents and family members complained about these policies, Fort Norfolk retaliated against them. In addition, the complaint alleges that Fort Norfolk had polices that discriminated against residents who used motorized wheelchairs by requiring those residents to pay a non-refundable fee, obtain liability insurance and obtain Fort Norfolk’s permission.

    Under the consent order, Fort Norfolk will pay $350,000 into a settlement fund to compensate residents and family members who were harmed by these policies. Fort Norfolk will also pay a $40,000 civil penalty to the United States. In addition, Fort Norfolk will appoint a Fair Housing Act compliance officer and will implement a new dining and events policy, a new reasonable accommodation policy and a new motorized wheelchair policy.

    “This consent order will ensure that all residents with disabilities at Harbor’s Edge are treated equally and that spouses and friends will be able to eat and socialize together,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We are very pleased with Fort Norfolk’s willingness to work with us to achieve this important resolution.”

    Individuals who are entitled to share in the settlement fund will be identified through a process established in the consent order. Persons who believe they were subjected to unlawful discrimination at Harbor’s Edge should contact the Justice Department toll-free at 1-800-896-7743 mailbox #5 or e-mail the Justice Department at

Friday, June 05, 2015

Manhattan DA: Uptown Scammer Squeezed For Pocketing $16K From Five Desperate Victims Seeking Low-Income Rental Housing In "Section 8" Swindle; Suspect Posed As Rep For Gov't Agency, Used Notarized Forms To Lend Racket Air Of Legitimacy: Cops

From the Office of the New York County (Manhattan) District Attorney:
  • Manhattan District Attorney Cyrus R. Vance, Jr., announced the indictment of ENRIQUE GUERRERO, 25, for stealing $16,000 from victims seeking affordable housing in Washington Heights and Westchester County. The defendant is charged in a New York State Supreme Court indictment with Grand Larceny in the Third and Fourth Degrees, and Scheme to Defraud in the First Degree.[1]

    “Enrique Guerrero is accused of stealing from families seeking affordable housing at a time in this city when such housing is so scarce that more than 88,000 people applied for just 55 low-income apartments on the Upper West Side,” said District Attorney Vance. “Using notarized forms to lend his scam an air of legitimacy, he allegedly preyed upon vulnerable members of his community who were desperate for an affordable apartment.

    “Scams like these often target the most defenseless among us, including new immigrants who may not speak fluent English or understand the housing system. If you or someone you know may be a victim of such fraud, I urge you to call my Financial Frauds Hotline at 212-335-8900, or my Immigrant Affairs Hotline at 212-335-3600. My Office is here to help, regardless of your immigration status.”

    According to the indictment and documents filed in court, from October 25, 2014, through November 18, 2014, GUERRERO allegedly stole $16,000 from five victims seeking affordable housing in Washington Heights and Westchester County through the Housing Choice Voucher program, also known as Section 8.

    In each case, GUERRERO is charged with posing as a representative of a government housing agency that could facilitate these requests, and claiming that he could help the victims in exchange for cash payments ranging from $3,000 to $4,500. GUERRERO allegedly signed notarized agreements with each victim in a Washington Heights office, promising them the lease and keys to an apartment within one month of receiving their payments. However, once GUERRERO received the payments, he allegedly stopped answering the victims’ phone calls, and never provided housing to any of the five victims.


    District Attorney Vance thanked the members of the NYPD’s 34th Precinct for their assistance with the case.
Source: DA Vance Announces Indictment Of Enrique Guerrero For Stealing From Individuals Seeking Low Income Housing (Defendant Falsely Claimed to Work for a Government Housing Agency).

NY AG To Fort Drum-Area Landlord: Stop Squeezing Servicemembers Out Of Early Termination Lease Cancellation Fees, Undisclosed Non-Refundable 'Reservation Deposits' In Violation Of Federal, State Law

From the Office of the New York Attorney General:
  • Attorney General Eric T. Schneiderman [] announced that his office has issued a cease and desist letter to LeRay 300, LLC, a Virginia-based company owned by Jeffrey S. Lewis, also of Virginia. The business operates as a rental property company near Fort Drum under the name of Woodcliff Community.

    The letter orders Woodcliff Community to immediately cease charging service members illegal fees in violation of the Servicemember Civil Relief Act and collecting undisclosed, non-refundable "reservation deposits" in violation of New York State law, among other allegations. The rental property, located in Calcium, New York, is approximately one mile from the main gate at Fort Drum and advertises itself as the "finest neighborhood serving the Fort Drum community."

    "Protecting New Yorkers from unscrupulous landlords concerned only with their bottom line, particularly when the tenants are the brave men and women of our nation's military, is a top priority for my office," said Attorney General Schneiderman. "My office will continue to stand with tenants across New York State to ensure landlords follow the law.”

    The Servicemember Civil Relief Act is a vital federal law that provides rights and protections to active duty and recently separated members of the military and their families in order to ensure they are able to devote their time and energy to their military duties. Among the protections provided is the ability to terminate a residential lease without penalty prior to the end of the lease term under certain circumstances, including deployment or a permanent change of station. Attorney General Schneiderman's ongoing investigation has resulted in allegations that Woodcliff Community frequently assesses various move-out penalties when soldiers assert their right to terminate their lease early pursuant to the Servicemember Civil Relief Act.

    Consumers who have unresolved complaints with LeRay 300, LLC, Woodcliff Community or any other business are urged to contact Attorney General Schneiderman's Regional Office in Watertown at 315-523-6080.
Source: A.G. Schneiderman Announces Cease And Desist Letter Sent To Property Management Company For Allegedly Charging Service Members Illegal Fees (Operating Near Fort Drum, Company Accused Of Charging Fees In Violation Of Servicemember Civil Relief Act).

Thursday, June 04, 2015

Jury Drops Hammer On Virginia Real Estate Operator For Running Illegal Short Sale Flipping Racket That Targeted Underwater Homeowners w/ False Promises Of Financial Recovery; Scammer Also Stiffed Gov't Out Of Income Taxes On $700K+ Of Illicit Profits, Then Tendered Fictitious Bonds & Notes In Crackpot Attempt To Satisfy IRS, Mortgage Holder, Other Creditors

From the U.S. Department of Justice (Washington, D.C.):
  • An Ashburn, Virginia resident was convicted [] by a federal jury on 13 charges related to mortgage fraud, passing fictitious financial instruments, and tax fraud, the Department of Justice announced.

    Charise Stone, 46, was indicted on April 15, 2014. According to court records and evidence at trial, Stone targeted distressed homeowners from 2007 to 2010 who owed more on their mortgage loan than the market value of the home with false promises of financial recovery. Stone acquired distressed homeowners’ properties in her own name or under entities she controlled, made false representations to mortgage lenders in order to induce approval of the short sales, and then re-sold the properties – often the same day or the next – to new buyers at a price above the short sale amount, in violation of agreements made with mortgage lenders.

    Jose Marinay owned a settlement company that closed every short sale transaction for Stone. Marinay pleaded guilty to wire-fraud conspiracy on May 27, 2014. At his and Stone’s direction, fraudulent HUD-1 settlement statements were prepared to facilitate the transactions. Marinay destroyed some of the incriminating documents after closings. Financial institutions suffered losses of at least $2.2 million from the scheme. Stone profited more than $700,000 from these transactions but failed to file individual income tax returns. She also sent fictitious bonds to the IRS in an attempt to pay off her tax liability, and she sent fake international promissory notes to creditors purporting to satisfy her credit card debt as well as her mortgage loan.

    Stone faces a maximum penalty of 20 years in prison for each of the wire fraud and wire-fraud conspiracy charges, 30 years in prison for the charges of false statements to a bank, 25 years in prison for the fictitious obligation charges, three years for the charge of corruptly impeding the internal revenue laws, and one year for each count of willful failure to file a tax return at her Aug. 14 sentencing.
Source: Former Short Sale Specialist Convicted of Mortgage and Tax Fraud (Ashburn Resident Did Not Report More Than $720,000 Earned from Scheme).

Partners In Property Management Firm Get Bagged For Allegedly Ripping Off Their HOA-Clients Of At Least $100K By Systematically Using Falsely Inflated Invoices For Work Performed & Similarly Billing For Work Not Performed

From the Office of the Essex, Massachusetts District Attorney:
  • Two executives in a Haverhill-based property management company were arraigned [] in Salem Superior Court on larceny and conspiracy charges following a joint investigation by the Essex District Attorney's Office and the Haverhill Police Department.

    Andrew Raynor, 37, of Dover, NH and Matthew Dykeman, 51, of Salem, MA were arraigned [] on the indictments of Larceny by a Single Scheme (over $250), Conspiracy, and False Entry in Corporate Books charges. Additionally, Shawmut Property Management LLC, a company co-owned by Raynor and Dykeman, was charged with Larceny by a Single Scheme (over $250). Pleas of not guilty were entered on their behalf and they were released on personal recognizance.

    Following reports from multiple former Shawmut employees alleging fraudulent activity at the company, the Haverhill Police Department and the Essex District Attorney's Office launched an investigation in June of 2014. The investigation found that the owners of Shawmut allegedly systematically falsified invoices sent to dozens of the company’s clients without the knowledge of the condominium association boards or the laborers whose work was falsely inflated. Shawmut Property Management provides services to condominium associations in Massachusetts, New Hampshire and Maine.

    Essex Assistant District Attorney Quentin Weld told the court that the defendants allegedly sent false invoices for work not performed to dozens of their client condominium boards, resulting in a total larceny of at least $100,000 dollars between January of 2012 and February 2014. The funds were allegedly paid directly into an account controlled exclusively by Raynor and Dykeman.

Wednesday, June 03, 2015

Incoming Landlord Heads To Court After Allegedly Being Sandbagged By Lawyer For Prior Owner Who Secretly Sneaked New Tenant Into Building On Eve Of Possession Transfer, Giving Her 15-Year, $600/Month Sweetheart Lease While Keeping Mum During Negotiations

In New York City, the New York Post reports:
  • A lawyer sneaked a former divorce client into an illegal sweetheart lease in an Upper East Side building and never told the incoming landlord, according to a lawsuit.

    The Yashar Foundation says it wasn’t told that 179 E. 94th St., a four-story building with one apartment and 19 single-occupancy rooms, had a tenant during months of negotiations to lease the space.

    Yashar, a Brooklyn nonprofit that funnels cash to other charities, took over the space — a four-story building with one apartment and 19 single-occupancy rooms — May 1 and allegedly discovered Sonia Hassan had a 15-year, $600-a-month lease for room 203, according to a Manhattan Supreme Court lawsuit.

    Brian M. Limmer, the lawyer who represented the building’s prior owner, “also acted as Hassan’s divorce attorney,” the foundation charges. Limmer and Hassan did not return messages seeking comment.

    The lease “was put into place collusively,” and was not recorded with the Division of Housing and Community Renewal, which oversaw the building, or the City Register, according to Yashar, which wants the lease voided. Yashar is seeking unspecified damages, and wants Hassan’s lease voided and her booted from the building.

    The lease provides the tenant with a right to sublet, assign, or permit any other person to use the premises,” Yashar claims.

NYC Woman: Lawyer Took Advantage Of My Now-Deceased, Blind, Dementia Stricken Mom, Sucking Legal Fees Out Of Her Realty-Rich, $20M Estate; Used POA To Wrestle Control Of Trust Benefiting Grandson

In New York City, the New York Post reports:
  • A Hamptons judge once censured by the state took advantage of a wealthy, legally blind, dementia-stricken Manhattan woman just so he could suck legal fees out of her estate, according to a lawsuit.

    So many strangers had been worming their way into 85-year-old Frances Coles’ life in the years before she died, her daughter Diana Coles went to court in 2012 to gain control of her mother’s affairs.

    The octogenarian had roughly $20 million in assets, including an Upper East Side apartment, part ownership of an office building in Boston, a waterfront Long Island estate, art, stocks, bonds and mutual funds.

    While she was living out her golden years in a Suffolk County nursing home, Frances Coles’ “overwhelming weaknesses were apparent to anyone who came in contact with her,” her daughter claims.

    The Coles matriarch “fell prey to myriad of opportunists who inserted themselves into her life in attempts to access and/or control her overt wealth,” her daughter says in a Manhattan Supreme Court lawsuit against one of the alleged “opportunists.”

Queens DA Puts Pinch On Attorney For Allegedly Fleecing Dead Client's Estate Out Of $500K+

From the Office of the Queens County, New York District Attorney:
  • Queens District Attorney Richard A. Brown, [] announced that a Brooklyn lawyer retained to oversee the assets of a deceased Queens man has been charged with stealing hundreds of thousands of dollars from the estate between August 2008 through July 2013. District Attorney Brown said, “The defendant is accused of breaching her fiduciary duty as an attorney and unjustly enriching herself at the expense of her client. If convicted, the defendant must be punished.”

    The District Attorney identified the defendant as Debra Ann Purcell-Regis, 55, of Syosset, Long Island. Purcell-Regis was arraigned [...] charges of second-degree grand larceny and first-degree offering a false instrument for filing. The defendant was released on her own recognizance and was ordered back to court on June 18, 2015. If convicted, the defendant faces up to 15 years in prison.

    District Attorney Brown said that, according to the criminal complaint, Purcell-Regis was hired by Thomas Massaro to handle the estate of his deceased half brother, Joseph Filiano, in 2008. Forensic analysis of the estate financial records allegedly show that the defendant removed more than $500,000 from the deceased’s bank account and re-deposited the funds into two separate accounts held at Washington Mutual and Chase banks, both of which were in the defendant’s name. Over the span of five years, the defendant is alleged to have made cash withdrawals and endorsed payments to others unrelated to the Filiano estate totaling $495,000.

    District Attorney Brown said that, according to the charges, the Queens Surrogate Court in 2012 ordered the defendant to make payments on behalf of the estate. It is alleged that the defendant was wired just over $77,000 from an account, not associated with the Filiano estate, on July 3, 2012 and an additional $80,000 was transferred from an individual to the account on July 22, 2013. Only then were payments on behalf of the estate paid. The remainder of the withdrawn funds in the estate account were allegedly unrelated to the Filiano estate.

    District Attorney Brown said, according to the charges, the defendant is alleged to have used estate funds for her personal gain, including paying tuition at Friends Academy, a private Quaker school on Long Island.

    According to the charges, said District Attorney Brown, when Massaro died in February 2013, the defendant prepared records regarding Filiano’s estate for the Queens Surrogate’s Court in which she allegedly claimed that Massaro’s wife had received her husband’s pension of more than $287,000. However records allegedly showed that the funds had actually been deposited into Filiano’s estate and was allegedly spent by the defendant.

    In January 2015, the defendant repaid the estate of Filiano $200,000 and in March 2015 made another payment of $50,000.
Source: Brooklyn Lawyer Charged With Stealing More Than Half A Million Dollars From Estate (Defendant Faces Up To 15 Years In Prison).


(1) In the event the defendant is convicted of the alleged ripoff, the victim may be able to seek some reimbursement for being screwed over by turning to the The Lawyers’ Fund For Client Protection Of the State of New York, which manages and distribute money collected from annual dues paid by members of the state bar to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the bar acting as an attorney or a fiduciary.

(See Thieving Lawyers Draining Client Security Funds, a story published in The New York Times published in 1991 that gives some-real life examples of how client security funds deal with claims and the pressures the administrators of those funds may feel when left insufficiently financed as a result of the misconduct of a handful of lawyer/scoundrels).

For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

Tuesday, June 02, 2015

R.I.P. - Bankruptcy Strip Offs Of Underwater 2nd Mortgages In Chapter 7 Proceedings; Supremes Sound Death Knell For Slick, But Short-Lived Way To Wipe Out Subordinate Home Loans By Some Financially Distressed Homeowners Seeking Fresh Start; 'Green Light' Remains Steady For Similar Lien Stripping In Chapter 13, "Chapter 20" Reorgs

In Washington, D.C., Forbes reports:
  • The U.S. Supreme Court reversed a lower-court decision allowing debtors to “strip off” underwater second liens in Chapter 7 bankruptcy, saying precedent required it to keep such mortgage claims intact.

    Justice Clarence Thomas, caught between his usual adherence to the strict wording of statutes and the competing doctrine of stare decisis, ruled that a prior decision carved out an exception from bankruptcy law for mortgage liens.

    The unanimous decision in Bank of America v. Caulkett is a victory for lenders who said it would be unfair to require them to give up potentially valuable claims simply because a home’s current value is depressed. It’s a defeat for consumer advocates who favor using bankruptcy to reduce the amount borrowers owe against their houses, although borrowers can still strip underwater second liens through the more costly and time-consuming process of Chapter 13 bankruptcy.(1)


    The Supreme Court already has ruled that in Chapter 13 reorganizations
    , where debtors with reliable income set up a plan to repay creditors over time, second mortgages with no collateral value to back them up can be stripped.(2)
For more, see Debtors Can't Void Underwater Mortgages In Bankruptcy, Supreme Court Rules.


(1) See Why the Supreme Court Might Actually Rule Against the Corporate Interest:
  • The reason it matters that you can strip off a second loan in Chapter 13 bankruptcy but not Chapter 7 is that Chapter 7 is a much more affordable part of the bankruptcy code.

    “Chapter 13 has a payment plan, you only get the strip-off if you complete the plan,” said bankruptcy expert Bob Lawless. Only about 40 percent of Chapter 13 cases complete the payment plan, which is three times as expensive as in Chapter 7.
Editor's Note: Strip-offs in so-called "Chapter 20" bankruptcies (the colloquialism for a debtor who first files Chapter 7 bankruptcy to get a discharge of his/her debts, then files Chapter 13 bankruptcy to obtain the lien strip off) also appear to remain unaffected by this Supreme Court ruling.

It notes reminding that, in the "Chapter 20 bankruptcy" context, while the law precludes a debtor from receiving a new discharge of his/her debts in a Chapter 13 bankruptcy within four years of a Chapter 7 petition that ultimately resulted in a discharge, a debtor can still file the Chapter 13 petition without seeking discharge, but to gain the other benefits that Chapter 13 offers - automatic stay, ability to cure arrearages, the ability to adjust interest rates under plan payments, ability to strip off liens that are completely underwater, among other benefits. See generally:
(2) Ibid.

Upstate NY Appraiser Cops Plea For Role In Mortgage Fraud Scheme/Rent-To-Own Racket That Unloaded Dilapidated HUD Homes Onto Unwitting First-Time Homebuyers With Crappy Credit, Then Pocketed Refinancing Proceeds Without Paying Off Existing Liens

From the Office of the New York Attorney General:
  • Attorney General Eric T. Schneiderman announced [] the conviction of Steven Essig, a licensed appraiser and the owner of an appraisal company in Syracuse, on a felony charge stemming from making false entries in an appraisal report. The falsified report was used to obtain a mortgage as part of a million dollar mortgage fraud scheme.

    “It is simply appalling that any individual would seek to take advantage of new homeowners in this manner,” said Attorney General Eric Schneiderman. “[This] conviction sends a message that my office is committed to protecting New York families from predatory fraudsters.”

    Essig, of Syracuse, today entered a guilty plea before the Honorable Anthony F. Aloi, Onondaga County Court Judge, to the charge of Falsifying Business Records in the First Degree, a Class E felony. As part of his plea, Essig is expected to be sentenced to five years’ probation and must surrender his appraisal license, preventing him from conducting any further appraisals in New York State.

    Essig was charged as part of a Syracuse-based mortgage fraud ring that operated for several years and netted more than $1 million by preying upon first-time home buyers and institutional lenders. The ring purchased dozens of dilapidated homes in and around the City of Syracuse from the United States Department of Housing and Urban Development, and then had them appraised, sometimes for more than what they had just paid for them.

    After paying for the properties, the ring took mortgages out on each of the homes, usually in the names of family members. The homes were advertised as rent-to-own opportunities to entice first-time home buyers with low credit by offering the chance to own their own homes with no down payments and no closing costs. Members of the ring then applied for what they told lenders were refinance loans in the names of these first-time home buyers, despite the fact that the first-time home buyers had never before owned the homes they were refinancing. Lenders, believing they were paying off underlying mortgages, wired closing funds to accounts controlled by the ring, who then pocketed the money.

    Essig is the owner and operator of Essig Appraisals, an appraisal company that specialized in residential appraisals.
Source: A.G. Schneiderman Announces Conviction Of Syracuse Appraiser Involved In Mortgage Fraud Scheme (Defendant Steven Essig Pleads Guilty To Felony Charge For Falsifying Appraisal Records; Schneiderman: We Are Committed To Protecting New York Families From Predatory Fraudsters).

In a related story in this case, see A.G. Schneiderman Announces Prison Sentence For Attorney Who Ran Million-Dollar Mortgage Fraud Scheme (Defendant Theresa Sanders Sentenced To Up To 7 Years in Prison, Ordered to Pay Over $500,000 in Restitution, And Must Surrender Law License).

DC AG Tags 'Fix & Flip' Couple With Lawsuit Accusing Pair Of Performing Illegal, Shoddy Renovations On Recently-Bought Houses, Using Unlicensed Contractors, Failing To Pull Proper Permits Or Comply w/ Inspection Requirements, Damaging Neighboring Properties; Crappy End Product Ultimately Unloaded Onto Unwitting Homebuyers, Leaving Them Holding The Bag

In Washington, D.C., WAMU Radio 88.5 (American University Radio) reports (via Public Citizen's Consumer Law & Policy Blog):
  • D.C. Attorney General Karl Racine [] filed a complaint against Insun Hofgard, a Virginia developer who has renovated and sold dozens of properties in D.C. in recent years, accusing her of illegal and shoddy work on those homes.

    In the complaint, Racine says Hofgard and her husband renovated and sold 15 homes since 2013 that had not been properly permitted or inspected. Work was conducted without permits and by unlicensed contractors, he says, and the Hofgards ignored repeated attempts by D.C. regulators that they stop.

    "They represent that the properties are safe and sound and have been fully renovated and they mark up the price. People are left holding the bag, oftentimes having to go back and fix things that were represented to be fixed and otherwise live in a state not knowing if a new patio is going to hold. These are serious offenses," said Racine in an interview with WAMU.

    In the complaint, Racine asks a judge to stop the Hofgards from selling any of the 22 properties they currently own and are renovating unless they are properly permitted and inspected. He also asks that they pay restitution to buyers who found problems in their homes, and that the Hofgards pay $1,000 per offense of the city's Consumer Protection Act.

    Hofgard was one of the developers featured in WAMU's three-part series on house-flipping in D.C. and the risks that badly flipped homes can pose to residents. According to the WAMU investigation, Hofgard bought, renovated and sold over a dozen properties in recent years, and has since faced a pair of lawsuits from her buyers and tens of thousands of dollars in fines from city regulators.

    The attorney general's office launched an investigation late last year, shortly after Hofgard signed an agreement with the D.C. Department of Consumer and Regulatory Affairs not to sell any more properties that had code violations. According to WAMU's reporting and the attorney general's investigation, she sold a property that had not been legally constructed or inspected the same day she signed the agreement.

    In written responses to questions posed by WAMU for its series, Hofgard blamed her contractors for the majority of the problems, and says that she had offered to fix the majority of the problems that buyers had pointed out.

    But the attorney general's suit identifies a host of other violations, from failures to get proper permits to incomplete inspections, all of which are required before a renovation can be completed. In one case, certificates of occupancy for two condo units were not obtained before their sales, meaning that their owners are occupying them illegally.

    The complaint also accused the Hofgards of continuing work on properties despite DCRA having stopped it, and of damaging adjacent properties during construction.

    "[The Hofgards] flaunt the law and disregard their promises to DCRA, continuing with their construction spree despite Stop Work Orders, Notices of Infraction, and settlement agreements issued or obtained by DCRA, " it claims. "[They] do not even respect neighboring property lines, as they trespass and damage the homes of neighboring D.C. residents."

    Racine told WAMU that the complaint is an important tool to help protect other homebuyers, especially as the buying season picks up.

    "Spring brings the homebuyers out, and obviously the market in D.C. is very important," said Racine.

    "This case should be a message to people who are in business, sell houses, that every representation they make should be true. It should also be a message to renovators and contractors and the like that they need to do their job in a professional and honest way, and if they're not doing so the office of the attorney general will investigate them," he said.

Monday, June 01, 2015

Montana Supremes Say 'No Way' To Tax Lien Investor Who Ostensibly Attempted To Screw Property Interest Owners Out Of Their Redemption Rights By Taking Title To Tax-Delinquent Premises Without First Obtaining Mandatory Property Title Guarantee & Providing Them w/ Proper Notice

From an Opinion Summary from Justia US Law:
  • Catherine E.W. Hansen Trust (Hansen Trust), which was issued a tax lien and a tax deed on certain property, filed a complaint to quiet title to the tax deed.

    The district court granted summary judgment for [the current property owner and the former owner, who holds a purchase money deed of trust] and declared the tax deed void as a matter of law, finding that Hansen Trust had not obtained the required property title guarantee and had not provided notice to parties listed in the title guarantee.

    The court subsequently directed payment of the tax lien and entered final judgment. The district court denied Hansen Trust’s post-judgment motions.

    The Supreme Court affirmed, holding that the district court (1) correctly granted summary judgment and declared the tax deed void after determining that Hansen Trust failed to provide adequate notice or obtain a property title guarantee; (2) did not err when it directed payment of Hansen Trust’s tax lien; and (3) did not err when it denied Hansen Trust’s post-judgment motions.(1)
Go here for the Justia Opinion Summary.

For the court ruling, see Catherine E.W. Hansen Trust v. Ward, 2015 MT 131 (May 19, 2015).

(1) With regard to the voiding of the tax deed, the Montana Supreme Court stated:
  • ¶30 Under the plain language of the statute, the purchaser must notify all parties listed on the property title guarantee, excluding utilities, of the possibility that a tax deed will be issued unless the tax lien is redeemed. Section 15-18-212(1)(b), 4(a), MCA. Although "property title guarantee" is not defined, the notice requirement is mandatory. Section 15-18-212(1)(b), MCA.

    Moreover, the statute clearly dictates the manner in which the notice must be made (certified mail), as well as the method for determining the parties who are due notice (a property title guarantee). Section 15-18-212(4)(a), MCA; Certain, ¶ 17. Notice is a necessary aspect of due process, essential to the redemption rights of the interested parties.

    The plain language of the statute does not make the title guarantee optional, rather it mandates that the notice must be made to "each party . . . listed on a property title guarantee."

    ¶31 The District Court correctly granted summary judgment after determining that Hansen Trust failed to provide adequate notice or obtain a property title guarantee. It is undisputed that Hansen Trust did not obtain the mandatory property title guarantee. Failure to comply with this mandatory obligation renders the tax deed void.

2nd Circuit: Zombie Debt Buyers Prohibited From Invoking Federal Shield Against State Usury Claims When Buying Delinquent Accounts From Exempt National Banks; Court: "Extending Those Protections To [Non-Exempt] Third Parties Would Create An End-Run Around Usury Laws ..."

In New York City, Reuters reports (via Public Citizen's Consumer Law & Policy Blog):
  • A federal appeals court [...] made it easier for consumers to challenge interest rates in debt collection cases, as it revived a lawsuit in New York against units of Encore Capital Group Inc, one of the largest U.S. debt collectors.

    The 2nd U.S. Circuit Court of Appeals in New York said Encore's Midland Funding and Midland Credit Management units did not qualify as national banks, and did not deserve protections such banks get against claims brought under state usury laws.

    [The] decision allows the plaintiff Saliha Madden to try to win class-action status against the Midland units, on behalf of potentially 50,000 consumers.

    Debt collection firms typically buy debt from banks and other creditors for pennies on the dollar, and try to collect higher amounts.

    Madden objected to a 27 percent interest rate that Midland sought to impose on a roughly $5,000 debt it had bought, and which she had incurred on a credit card account opened years earlier at Bank of America, court papers show.

    Writing for the appeals court, Circuit Judge Chester Straub said the Midland units "acted solely on their own behalves, as the owners of the debt," and did not deserve protections of the federal National Bank Act, including against claims that they violated the federal Fair Debt Collection Practices Act.

    "Extending those protections to third parties would create an end-run around usury laws for non-national bank entities that are not acting on behalf of a national bank," Straub wrote.

    [The] decision reversed a dismissal of Madden's lawsuit by U.S. District Judge Cathy Seibel in White Plains, New York.

    The 2nd Circuit directed Seibel to consider whether Delaware law, which may allow the interest rate Midland wanted to charge, should apply, rather than New York law.

    Daniel Schlanger, a lawyer for Madden, said "we're obviously very pleased" with the decision, which "provides meaningful protections to New York consumers against unlawfully high interest rates." Encore and its lawyer did not immediately respond to requests for comment. The company is based in San Diego.
Source: Lawsuit revived against big debt collection firm in New York.

For the court ruling, see Madden v Midland Funding LLC, No. 14-2131 (2d Cir. May 22, 2015).

Sunday, May 31, 2015

Long Island Homeowner Facing Foreclosure Pinched For Allegedly Filing $1.5M+ In Bogus Retaliation Liens Against Judges, Court-Appointed Referee As Payback For Ordering Sale of Home

In Central Islip, New York, the New York Law Journal reports:
  • Federal prosecutors say a Long Island man filed bogus liens against three Suffolk County judges as payback for adverse rulings in a foreclosure action against him (See Indictment).

    Jerry Campora Jr. was arraigned [] on eight mail fraud charges for allegedly filing false affidavits and liens in Georgia against three judges and a private attorney appointed by the court as a referee in Campora's case.

    Eastern District Judge Joanna Seybert, sitting in Central Islip, released Campora on $50,000 bond and ordered him not to file any other liens or affidavits in other jurisdictions without prior court approval. Campora pleaded not guilty. He was represented by Tracey Gaffey of the Federal Defenders.

    After Campora's house was ordered to be auctioned in a foreclosure action where he appeared pro se, Campora allegedly filed the liens, totaling more than $1.5 million, in October and November 2013. The targeted judges and attorney were not identified in the release. But Suffolk County Supreme Court Justice Arthur Pitts in June 2014 granted the court system a preliminary injunction and restrained Campora from filing in New York or elsewhere any lien or security interest against Acting Supreme Court Justices Mark Cohen, Joseph Farneti, then-Justice Melvyn Tanenbaum and Louis England of England & England, or anyone affiliated with the state court system, without prior court permission.

    In November, Pitts rejected Campora's bid to vacate the injunction. If convicted in the federal case, Campora, 46, faces a maximum 30-year sentence.
Source: Man Charged With Filing Bogus Liens Against Judges.

For the U.S. Attorney (Central Islip, New York) press release, see Suffolk County Resident Indicted For Fraudulent Lien Scheme Perpetrated Against Suffolk County State Court Judges (Defendant Retaliated Against Court Personnel Following Adverse Decision in Suffolk County Foreclosure Action).

Billionaire NYC Developer & Heirs Of Now-Deceased Wealthy Real Estate Tycoon Square Off In Court Over $244/Month, 3 Bedroom Park Avenue Rental Allegedly Being Illegally Sublet For $10K/Month; Unit Said To Be Worth $9.7M In Soon-To-Be Condo-Converted Building Bought For $360M

In New York City, the New York Post reports:
  • An only-in-Manhattan $9.7 million legal battle is raging over a $244.37-a-month Park Avenue pad. Billionaire developer Harry Macklowe’s case against three siblings from the Katz real-estate family will go to trial to decide the fate of the dirt-cheap unit at 737 Park Ave.

    The siblings — Laura Goldblatt, Seth Katz and Tracy Edwards — inherited the lease on the three-bedroom pad before Macklowe bought the legendary Lenox Hill building in 2011.

    Macklowe is converting the 20-story residential tower to luxury condos — and wants to force out the siblings so he can sell their terraced pad for $9.7 million, according to their court papers. But none of the litigious heirs even lives in the city, Macklowe counters. Further, he gripes, they have been “illegally profiteering” by subletting the apartment for $10,000 a month.

    The siblings counter that they had a deal with Macklowe to let them sublet. The agreement says they control the 17th-floor unit until the last of their two surviving aunts, who also live in the building, dies, they say. The youngest is 69.

    The siblings’ grandfather, L. Katz, purchased the East 71st Street building in 1944. A few years later he gave some of the most sought-after units in the building to his family members for nominal rents.

    Earlier this week, Justice Shlomo Hagler said the “raging controversy” must be decided at trial.

    The case comes down to the question of whether the siblings have “an unfettered right to sublet their apartment at monthly rates that substantially exceed the last registered rent for the apartment . . . without the consent of the landlord.” Parties for both sides declined to comment.

    The siblings say the developer bought the marquee building for $360 million — a price that reflected known “encumbrances,” namely their long-term budget rents. Their troubles with Macklowe started after they rejected a low-ball buyout offer, according to court papers.

    That’s when Macklowe began his “campaign . . . to acquire the Katz family apartment by any means,” including by threatening to evict their subletter and by trying to re-write their sweetheart lease.

    “The tenant should not be allowed to rent out the apartment at a profit relative to his or her own rent, and thus use the apartment instead as a money-making machine,” Macklowe fumes in his 2013 suit.

    He adds that the unit was listed as rent-stabilized in the previous owner’s records and that the siblings’ major markup violates housing laws because the apartment isn’t their primary residence.

    The law also prohibits a landlord from waiving restrictions related to rent-stabilized apartments, Macklowe says, suggesting whatever deal the Katz family cites is unenforceable.

    Macklowe, whose other projects include 432 Park Ave. and 150 E. 72nd St., has also filed suit against other tenants.
Source: Billionaire developer wages war over $244-a-month pad.

Tenants In One Lower East Side Building Take Fight Against Owner To Court, Saying Landlord's Gas, Hot Water Shutoffs Are Part Of Larger Harassment Campaign Aimed At Driving Them Out Of Their Below-Market, Rent-Regulated Apartments; Buyout Offers To Renters Reaching $50K Have Been Turned Down: Resident

On Manhattan's Lower East Side, the New York Daily News reports:
  • Tired of living without gas, heat and hot water, a group of Lower East Side tenants have banded together to sue their landlord and his lackeys — a group that includes a disgraced ex-cop.

    The frustrated tenants — mostly Mexican immigrants — claim Goldmark Property Management has waged a campaign of harassment aimed at driving them out of their rent-regulated apartments.

    They claim they've been without the basic services since April 17 and have endured racist taunts and threats to call immigration from the landlord's aggressive agents.

    "They don't know the reality," said tenant Angel Salazar, 39. "Most of us are legal. That's why we are not afraid."

    Tenants' lawyer Stephanie Rudolph said "this threat of retaliation and racial discrimination is egregious." She said only nine of the 18 units remain occupied — everybody else has been forced out.

    "There are tape recorded conversations where the landlord is threatening to drop dynamite on the building and then let everyone 'figure it out themselves,'" said Rudolph, a staff attorney at the Urban Justice Center.

    There was no immediate response from Goldmark, whose agents include former NYPD Sgt. Miguel Cueto. The cop cost the city $2 million after he and his partner ran over and killed a Brooklyn man in their squad car three years ago.

    City inspectors are no strangers to the six-story building at 444 East 13th St.

    The city's department of Housing Preservation and Development has cited the building for 84 code violations — the vast majority of them since April, records show. Seventy are for serious violations like failure to provide adequate gas, water leaks and shoddy repairs.

    Tenants say their ordeal began in January when Goldmark bought the building, which is located in a rapidly gentrifying neighborhood.

    Residents in rent-stabilized apartments say they pay between $800 and $1,400 a month for tiny one- and two-bedroom pads that could fetch up to $4,000 a month on the open market.

    Tenants said Goldmark immediately began offering $15,000 buyouts to get them to leave. At the same time, the landlord began stripping "everything down to the studs" and kicking up so much dust that one family with two asthmatic daughters was forced to move.

    By March, Goldmark was offering $50,000, but the holdouts — most of whom were paying between $800 and $1,400-a-month in rent — still wouldn't budge, said Salazar.

    Then, in April, things got nasty. "That's when the threats started," he said.

    Claiming that the building was rife with drugs and prostitution, the landlord installed an electric key system and demanded tenants turn over their keys. They refused.

    Then, the tenants claim, the landlord began dispatching Cueto and his other agents after midnight to knock on their doors and cajole befuddled residents who speak little English into signing agreements to vacate.

    In one case, Salazar said, the tenant's son "translated what he could understand, then the father signed the paper. "The lawyers are telling us that's illegal," he said.

    Then came the gas and hot water shut-offs. "Two months without gas," said Adolfo Bello, 42, who has lived in the building with his wife and two kids for 20 years. "They are killing us. They don't have any feelings and they think everything's about money."

    Cesar Bello, who shares a two-bedroom with his parents, his wife and their two children, said they were living in hell. "We have to wake up at five in the morning so everybody can shower," said Bello, 26. "We cannot make home-cooked meals anymore."
Source: Lower East Side tenants plot to sue landlord, ex-cop-turned-agent over alleged racist taunts, lack of gas, hot water.

For other stories on New York City landlords attempting to drive out rent-regulated tenants in rapidly gentrifying neighborhoods, see: