Saturday, August 01, 2015

Detroit-Area Class Actions Target Two County Treasurers Over Allegations Of Improper Foreclosures For Unpaid Real Estate Taxes; Homeowners Say Faulty Process Results In Property Forfeitures Without Just Compensation

In Detroit, Michigan, The Detroit News reports:
  • Thousands of properties in Oakland and Wayne counties have been taken improperly in tax delinquency foreclosures, reaping millions of dollars for government coffers at the expense of cash-strapped property owners, according to class-action lawsuits filed this month in both counties.

    The complaints allege treasurers in both counties have seized properties without providing the former owners with due process, equal protection and just compensation.

    In some instances, owners claim they were never notified before their property was auctioned, often for tens of thousands of dollars below market value.

    The treasurers in both counties, however, insist taxpayers are contacted multiple times over tax delinquencies, given an opportunity to be heard and offered payment plans.

    Andre Ohanessian says he was informed by a neighbor that a 2.7-acre lot he owned in Orchard Lake Village had been sold at auction last year to cover $6,000 in alleged tax delinquencies from 2011 to 2013. In an interview, he said he was never notified his taxes were overdue.

    The property, off a private road and nature trail in a wooded neighborhood of $1 million homes, netted $82,000. It’s listed for sale at $349,000.

    “I learned of the auction sale by a phone call from an Orchard Lake neighbor,” said Ohanessian, 67, a jewelry wholesaler who now lives in Sunland, California. “He called, ‘Did you know they auctioned off your property?’ I was shocked. I had notified the treasurer’s office that I had moved from Michigan.”

    The complaints say Oakland County Treasurer Andy Meisner and Wayne County Treasurer Raymond Wojtowicz don’t give delinquent taxpayers the chance to argue why their properties should not be taken. Instead, both have conducted informal, nonjudicial “show cause hearings,” the suits allege.

Inability Of Former-Renting Unit Owners To Overcome Tenant Mindset May Spell Doom For Some Low-Income NYC Co-Ops; Lack Of Management Experience, Failure To Raise Maintenance Fees Leave Themselves Unable To Adequately Upkeep Building, Pay Operating Expenses While Real Estate Tax Delinquencies Threaten To Wipe Out Their Home Equity

In New York City, The Real Deal (NYC) reports:
  • Nearly one-third of New York City’s low-income co-op buildings are struggling to pay their tax bills — just one sign of their poor overall financial health. The city has 1,000 low-income co-ops and more than 4,800 co-op buildings overall.

    But despite making up about a fifth of the total, low-income co-ops account for nearly half of all delinquent tax bills from co-ops, according to the Wall Street Journal.

    Housing experts say that management in the buildings is too hands-off, and many buildings have failed to raise their maintenance fees sufficiently to upkeep the buildings and pay bills.

    They view themselves as tenants rather than as apartment owners,” said Steven Wagner, a co-op and condo lawyer. “They are not used to the responsibility of managing a building or running what can be a multi-million-dollar business.”

    Some buildings, such as the 38-unit property at 401 West 143rd Street, are facing foreclosure by the city, in which case they would be turned over to a nonprofit and converted to rentals.(1)

    The 1,000 co-ops that still exist today were created beginning in 1981 from abandoned buildings seized by the city, as a way to encourage homeownership among the poor.

    “Most of the co-ops are well-functioning, affordable housing resource for their shareholders, and they have stabilized thousands of lives,” said Christopher Allred, an assistant city housing commissioner for asset management.
Source: Limited income co-ops accounted for nearly half of co-op delinquent tax payments: report (Residents “view themselves as tenants rather than as apartment owners," lawyer says).

(1) See The Wall Street Journal: New York’s Struggling ‘Low-Income’ Co-ops (Many are in arrears in taxes owed to the city) (requires subscription; if no subscription, go here - then click appropriate link for the story):
  • [Managing agent Yvette] Hanon said there is plenty of blame to go around. She said the board had raised maintenance only twice in 25 years, while owners acted like tenants and called the city for repairs, racking up violations on the apartments they own. There are now more than 300 housing violations on the building.

Friday, July 31, 2015

Another Contract For Deed/Land Contract Racket Claims At Least Five Victims; Unsophisticated Homebuyers Paid Downpayments & Monthly Payments To Seller But Lost Homes To Foreclosure Anyway Due To Seller's Non-Payment Of Undisclosed Liens

In Phoenix, Arizona, the Phoenix Business Journal reports:
  • The founder of a Phoenix co-working space and one of its companies are facing accusations from the Arizona Attorney General’s Office for defrauding at least five people who believed they were purchasing homes from the company.

    The five Spanish-speaking victims made down payments and monthly mortgage payments to this company, believing they were homeowners, but ultimately lost their homes to foreclosure.

    The company, Montecristo Properties LLC, which leases space at the Office Pile co-working space on Seventh Street in Phoenix, had obtained hard money loans using these victims’ homes as collateral, unbeknownst to the victims, according to the search warrant affidavit obtained by the Phoenix Business Journal.

    Montecristo, also known as Montecristo Property Investments LLC and San Marino Property Investments LLC, fell behind on payments to its lenders, causing the foreclosures. Montecristo failed to disclose that the company had obtained or planned to obtain a hard money loan on these homes, and that the victims never had the title recorded in their names, according to the affidavit.


     A spokeswoman with the Attorney General’s Office said no one has been charged or arrested and the investigation is continuing.

    The victims met with the four listed Montecristo employees at the Office Pile, where they signed documents to buy their homes. The victims believed their mortgage with Montecristo was the only encumbrance on their home, according to the affidavit.

    The investigator noted that documents the victims signed were “worthless” and did not transfer ownership of property.

    The victims lived in the homes and made their mortgage payments to Montecristo, while believing they were the homeowners. They only learned of their homes being encumbered by a third party lender after they received foreclosure notices, according to the affidavit.(1)

    Aguirre and Montecristo took out the loans via hard money lenders on each of the homes, and then stopped paying each of the lenders, causing the homes to go into foreclosure, according to the affidavit.

    A search warrant was issued earlier this month, and the Office Pile and Montecristo office was searched on July 14. Many items were seized during the search, including receipts, client list information, notebooks, more than 60 binders labeled with different addresses, external hard drives, laptops and 10 cellphones.
For the story, see The Office Pile founder, real estate company accused of defrauding five people out of their homes.

Editor's Note: I think it's fair to infer that customary practices for transacting real estate conveyances (ie. use of standard real estate closing, escrow agent, issuance of closing statements and title insurance, etc.) were not employed here.

(1) Go here for earlier stories on screwed over homebuyers who have been peddled properties through the use of the predatory instruments of choice for real estate scammers: the troublesome contract for deed, and its "kissin' cousin", the equally problematic land contract.

Another Title Insurance Agent Gets Pinched For Allegedly Slipping Sticky Fingers Into Escrow Account; Accused Of Snatching $750K+ For Personal Use Instead Of Using Cash To Satisfy Existing Liens, Close Real Estate Deals

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
  • Richard C. Roney, Jr., 46, of Laurel Springs, New Jersey, was charged [] by information with four counts of wire fraud related to an alleged scheme that cost lenders more than $750,000, announced United States Attorney Zane David Memeger.

    Roney was the owner of a title company called Park Avenue Abstract, Inc., based in Somerdale, New Jersey, which served as the title company on home mortgage transactions. According to the information, between June 2009 and April 2013, Roney unlawfully withdrew money from his company’s escrow accounts for his personal use and to pay for Park Avenue Abstract’s operating expenses, instead of using that money to close the mortgage transactions.

    It is further alleged that while Roney returned much of the money, his misuse of Park Avenue Abstract escrow account funds prevented Park Avenue Abstract from timely satisfying outstanding first mortgages, which ultimately caused lenders to sustain actual losses of over $750,000.(1)

    Roney faces a likely advisory sentencing guideline sentence of 27-33 months, as well as a $4,000,000 fine, a $400 special assessment, and full restitution of as much as $751,750.
Source: Former Owner Of Title Agency Charged With Defrauding Lenders.

For the formal charges, see USA v. Roney.

(1) According to the formal charges, Park Avenue Abstract was a title agent for national title insurance underwriter Commonwealth Land Title Insurance Company.

"Man In The Email" Racket Now Targeting Real Estate, Title Agents? Hackers Break Into Email Accounts, ID Homebuyers In Pending Deals, Then Dupe Them Into Wiring Money To Scammer-Controlled Accounts

From the Office of the Monroe County, Pennsylvania District Attorney:
  • The Monroe County Office of the District Attorney is warning citizens of a scam targeting homebuyers with pending purchases in Monroe County.

    In this scam, dubbed the “Man in the Email” scam(1) by the FBI, unwitting buyers are duped into wiring the closing costs and down payment to an out-of-state bank account when they receive closing instructions from their realtor or title company.

    In reality, the email was sent by someone who had hacked into the email account of the realtor or title agent, and the instructions are bogus – directing the homebuyer to wire the funds to a bank account under the control of the scammers.

    These hackers start by identify the email accounts of real estate agents, brokers, or title company agents and then gain unauthorized access into those accounts. Once they have access to those accounts, they can view all of the sent and received emails, including those referencing pending real estate deals. The hackers pull out details specific to the transaction, such as the buyer’s and seller’s names, the title company involved, and the property information, and then use that information to pose as the realtor or title agent.

    The scammers then send an email to the buyer, or title company holding the funds, instructing them to wire the funds to an out-of-state bank account. What makes this scam so hard for buyers to recognize is that the scammers send this email from the real email account of the realtor or title company so buyers have no reason to doubt its legitimacy.

    The bank account that the funds are wired to is a real bank account that has been compromised by the scammers. The owner of that account may have no idea that their account is being used to “middle man” this scam. As soon as the funds arrive in that account, they are transferred to another bank account under control of the scammers, which is often outside the U.S. The funds are then quickly withdrawn.

    The buyer doesn’t learn of the fraud until they speak with their agent and discover that the email containing the wire transfer instructions wasn’t legitimate. And by then, it’s usually too late.

    Within the past several weeks, there have been two confirmed instances of buyers in Monroe County being targeted in this scam – one in Stroudsburg and one in Mount Pocono. In one instance, investigators have confirmed that the fraudulent communications originated in South Africa.

Thursday, July 30, 2015

NYC-Area Race-Discriminating Landlords Beware: Sophisticated Mapping Software, Professional Actors As Fair Housing Testers Armed w/ Recording Devices Are Being Used To Bag You Next!

A December, 2012 investigative report by ProPublica describes the approach used in employing fair housing testers to prove race discrimination in rental housing by the New York City non-profit fair housing group Fair Housing Justice Center(1) and its excecutive director, Fred Freiberg, in the following excerpt:
  • The best way to detect such [race disriminatory] practices today, experts and housing officials say, is to send actors of different races posing as renters and homebuyers.

    But HUD opted to fund non-profits around the country to perform such tests and bring the majority of lawsuits involving housing discrimination. More than two decades later, these groups, which on average have just five staff members, process 65 percent of the nation's fair housing complaints and account for nearly all of the fair housing testing conducted in the United States.

    Officials at non-profit groups say most of the testing that is done is in response to complaints. Tight resources mean they do not work to bring to light previously unknown individuals or companies that systematically discriminate, but rather to build a case on behalf of people who say they were victimized and who want to file a case.

    Freiberg said that approach is unlikely to detect the larger patterns of discrimination or catch serial, systemic perpetrators. At his organization, Freiberg begins his inquiries with sophisticated mapping software that identifies enclaves in New York City where the racial patterns of housing conflict with area demographics and income.

    When he identifies a suspect neighborhood in what is the nation's third most segregated city, Freiberg sends in teams of professional actors to work as testers.

    Adrienne, an actor and director, joined the testing program in 2005. She didn't expect the gig to last because she doubted they'd find much discrimination.

    The 45-year-old black woman grew up on a Brooklyn block that, she said, evoked the multi-cultural ideals of Sesame Street. Her two best childhood friends were Jewish and Puerto Rican.

    Freiberg agreed to allow Adrienne to describe her experiences as a tester as long as her full name was not published. She said her work has forever changed her view of a city she once viewed as a melting pot, and she remains particularly haunted by a case she investigated three years ago.

    Freiberg had tapped Adrienne to test in an area of Queens he wanted to target because it was just 3 percent black. The borough, however, was 17 percent black and the entire city 27 percent black. Armed with a recording device, Adrienne headed to a leafy block in Astoria to ask about a renting an apartment in a well-maintained 72-unit building.

    "Hi, my name is, Adrienne," she told the super, offering her hand. "How are you?" he said, introducing himself as Louie.

    Adrienne asked if any apartments were available. She needed something, she said, by the first of the month. In the recording, Louie Dodaj seemed regretful as he explained that the only open apartment had just been rented. He politely answered each of Adrienne's questions, took her number and promised to call when something opened up.

    Adrienne remembers feeling certain that Dodaj was sincerely trying to help her, that he "would have totally put me in that apartment if he'd had one." Less than 20 minutes later, a white actor asked Dodaj about renting an apartment. "Want to take a look?" he asked.

    Though the apartment had sat vacant for more than a month, it was the third time Louie had been caught on tape turning black testers away while just a few moments later welcoming white ones with similar backgrounds, credit and income.

    With evidence from Adrienne and others, the Fair Housing Justice Center sued the property owner, Broadway Crescent Realty, for housing discrimination. In November 2011, the non-profit settled the case for $341,000 and the company's promise to submit to monitoring and set up new procedures to insure that its 30 properties comply with the Fair Housing Act.

    A representative at Broadway Crescent Realty said the company would not comment on the case. Dodaj's attorney also declined to comment, and attempts to reach Dodaj were unsuccessful. The company and Dodaj denied wrongdoing in the settlement documents.

    Adrienne said she's disheartened by the experience of being politely denied housing again and again and can't understand why the federal government is not doing more to root out a problem that seems so pervasive.

    "I can't change the color of my skin. I can't change your opinion about that," she said. "Someone has to have a way of finding out in order to help me fight it, because there wouldn't have been a way for me to know on my own. That's why it keeps happening, because there is no consequence."

    Over the past several years, Freiberg's organization has brought cases in neighborhoods across New York City. It settled a suit with a Bronx apartment building and its real estate agent for steering away black buyers. It brought a case against a Brooklyn landlord who could not prove he had ever rented to an African American in 40 years. The center also reached a settlement in Brooklyn with a real estate company that had refused to serve black renters.

    Testing was the crucial element in each of these cases, Freiberg said. It provided indisputable, tape-recorded evidence that housing professionals were turning away Adrienne and others of color while offering the same properties to white home seekers.
For the rest of the story, see No Sting: Feds Won’t Go Undercover to Prove Housing Discrimination.

(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.

Cleveland Feds Pinch Pair In Alleged Scam Involving Use Of Straw Buyer To Fraudulently 'Short Sell' 9-Bedroom Home & Several Gas Stations, Enabling Property Owner To Dupe Lenders Into Reducing Mortgage Loan Balances While Maintaining Control Of Home, Business Realty

From the Office of the U.S. Attorney (Cleveland, Ohio):
  • A man from Warren, Ohio, and an Indiana man were named in 10-count federal indictment for their roles in a conspiracy to defraud banks out of millions of dollars through fraudulent short sales of gas stations in the Youngstown area and other means, law enforcement officials said.

    Shaukat Sindhu, 56, of Warren, and Tahir Iqbal, 48, of Crown Point, Indiana, were each indicted on two counts of conspiracy to commit bank fraud, two counts of bank fraud, one count of making false statements to a financial institution. Sindhu is also charged with one count of corrupt interference with the administration of the IRS and four tax counts.

    Sindhu owned several gas stations and other commercial property, but at times failed to make mortgage payments on these properties. Sindhu, Iqbal and others defrauded First Midwest and Consumers National banks by making false and misleading omission and representations about ownership of the properties between 2008 and 2013. Iqbal acted as a straw buyer for Sindhu in a short sale, enriching Sindhu by reducing or eliminating the principle owned on the properties, according to the indictment.

    Iqbal also served as a straw buyer for Sindhu for a 6,800-square foot, nine-bedroom home in Oak Park, Illinois, according to the indictment.

Wednesday, July 29, 2015

Fake Broker Suspected Of Forging & Flipping Phony Dallas-Area Deeds, Fleecing Unsophisticated Homebuyers Out Of Life Savings; Six Victimized Families Come Forward So Far As Serial Property Pilferer Remains On The Loose

In Dallas, Texas, KTVT-TV Channel 11 reports:
  • CBS 11 News has learned that a Dallas County government building is being used as a front in a huge housing scam. Families going there to finalize home sales find out after they move in that they have become victims of fraud.

    A fake broker is using a false identity and forged deeds is collecting the life savings of prospective buyers while the actual owner has no idea it’s happening.

    The number of families that have come forward about it is already up to six but expected to grow. Yuritzy Mauldin thought she was buying a vacant, boarded up house back in April. It was going to be the dream home she wanted for her young son and husband. “I wanted to have a house to call mine to start my family with,” she says.

    Mauldin found a home on Craigslist in a South Dallas neighborhood where run down homes can sell for less than $10,000. So she met the broker at the Dallas County Records Building to pay $9,000 cash, sign the deed and immediately started remodeling.

    “We thought that it was a legitimate thing,” she says. It wasn’t.

    Even though the deed was notarized in the building, the paperwork was forged. Mauldin was evicted by the actual owner a few weeks ago. “If it wasn’t for my parents we would be out on the street,” says Mauldin.

    At least Mauldin didn’t spend thousands of extra dollars on renovations like Abel Castro-Rodriguez did. He thought he bought this home and added carpet, door knobs, windows and even wired it for electricity. “We immediately started to make renovations because we wanted to make it livable,” he says.

    Castro-Rodriguez says his family just received their eviction letter after three months living inside.

    “It’s horrible what’s going on the community,” says Monte Brown, a realtor who represents the real property owner. He says four of his clients homes have been illegally sold. “He’s forging my client signature,” says Brown.

    Six families have sought help from a realtor is helping them get an attorney. “What we’re concerned about is an eviction,” says Lisette Caraballo, owner of I Realty.

    That’s a real fear these families with small children like the Castro’s face. “We are scared we are going to be thrown out on the street,” says Castro-Rodriguez.

    The families have contacted Dallas Police and plan to file a complaint with the DA’s office.

Honolulu Woman Admits Role In Racket That Recorded Fraudulent Lien Satisfactions On Mortgage-Encumbered Homes Before Flipping Them Onto Unwitting Buyers, Illegally Pocketing $3.1M+

From the Office of the U.S. Attorney (Honolulu, Hawaii):
  • Jennifer McTigue, age 48, of Honolulu, [] pled guilty to conspiring to commit wire fraud, mail fraud, and money laundering, as well as committing wire fraud, mail fraud and money laundering. McTigue pled guilty in federal district court before Senior District Judge Consuelo B. Marshall a day after jury selection for her trial was to have commenced.

    Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to information produced in court, McTigue and codefendants Marc Melton and Sakara Blackwell operated a scheme to defraud lending institutions, buyers of real property and title insurance companies through a process of filing fraudulent mortgage release documents with the Hawaii Bureau of Conveyances. Once the Bureau of Conveyances accepted and filed the defendants’ fraudulent "satisfaction of mortgage" forms, McTigue, Melton and Blackwell were able to market and sell properties at substantial profit, since the lending institution holding the mortgage was never paid its outstanding debt.

    The scheme resulted in the defrauding of not only mortgage lenders, but also innocent buyers who unwittingly bought properties that appeared to be free and clear but were still subject to the existing mortgages. Documents filed in court allege that the defendants defrauded others of over $3.1 million through the operation of their scheme.

Tuesday, July 28, 2015

Philly Feds Pinch Convicted Scammer For Allegedly Masterminding 'Family-Operated' Title-Hijacking Racket While Sitting In Out-Of-State Prison Cell; Directed Brother, Son, Fiance To File & Flip Forged Deeds For Profit On Vacant Homes Owned By Recently-Deceased Owners

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:
  • Not even a stint in a Kentucky prison cell could stop serial counterfeiter and forger Kenneth Hampton from engaging in one of Philadelphia's oldest real estate scams, federal prosecutors said.

    In an indictment unsealed [last week], Hampton, 54, was charged with recruiting three family members in a scheme to steal two West Philadelphia rowhouses by filing fraudulent deeds with the city's Department of Records.

    All told, investigators say, Hampton caused $87,000 in losses and kept potential property buyers tied up in court for months.

    From his prison cell, Hampton directed his family on how to forge deeds of transfer and helped select apparently abandoned properties whose registered owners had recently died, prosecutors said.

    At the time, he was serving a seven-year sentence for a scheme to bleach $5 bills in hopes of turning them into counterfeit $100s, a strategy he cooked up while on probation at a federal halfway house. Hampton's rap sheet also includes convictions for staging car accidents to file false insurance claims, cocaine trafficking, and using fake IDs to apply for Best Buy credit cards.

    In the real estate scam, Hampton and his kin first set their sights on a two-story, three-bedroom rowhouse on South 58th Street.

    In 2009, Hampton's brother, Ellis, allegedly filed a deed of transfer with forged signatures from the property's previous owners, claiming they were his grandparents.

    The next year, he sold the property for $27,000 to WERE Inventory L.L.C., an affordable-housing developer.

    Prosecutors say the Hampton family ran its scheme again in July 2010, taking a $20,000, three-bedroom house on the 5300 block of Delancey Street and selling it for $10,000.

    The Philadelphia Department of Records, which handles deed transfers, has long been plagued by scammers filing forged documents.

    The office is required to record any deed that bears a notary's stamp and has the signatures of both the buyer and the seller. Officials have complained for years that they lack the ability or personnel to verify authenticity or check for forgeries.

    Hampton, who has since been moved to a federal prison in Hopewell, Va., now faces charges that include conspiracy, wire fraud, and identity theft.

    Hampton's brother, Ellis, of Darby and his son, Terrell, and fiancée, Roxanne Mason, both of Philadelphia, have also been charged. It was unclear Wednesday whether Hampton had retained a lawyer.

Duo Facing Burglary, Theft Charges For Allegedly Recording Bogus Documents To Hijack Control Of Over Two Dozen Vacant Chicago-Area Foreclosures, Then Renting Them Out To Unwitting Tenants Get Hauled Back To Jail After Violating Release Terms; Defendants' Crackpot Claims Include Adverse Possession, 'Sovereign Citizen'

In Chicago, Illinois, WFLD-TV Channel 32 reports:
  • Two men suspected of running a scam in which they took over and rented out abandoned properties are behind bars [] after prosecutors lobbied a judge to raise their bonds, the Sun-Times is reporting.

    Chicagoans Torrez Moore and David Farr were released on their own recognizance, with home monitoring, July 1 after allegedly living in and renting out over two dozen foreclosed homes in a scheme Cook County State’s Attorney Anita Alvarez described as “disturbing” and “bold and brazen.”

    But in court Wednesday, Judge Peggy Chiampas raised bond to $1 million for Farr. Prosecutors asked for the increase, claiming he violated the conditions of his electronic monitoring and showed up at the Cook County Recorder of Deeds office. Moore’s bond was raised to $500,000.

    Both remained in the Cook County Jail as of late Wednesday afternoon.

    Moore and Farr, who identify as “anti-government sovereign citizens,” took advantage of the mortgage crisis and filed bogus documents with the Recorder of Deeds to pose as landlords, Alvarez said earlier this month. She detailed the scam with other law enforcement officials involved in the investigation, the Sun-Times reported at the time.

    Self-styled “sovereign citizens” claim federal and state laws do not apply to them.

    Moore and Farr lived in two of the 14 dilapidated properties in question and changed locks so real estate agents couldn’t get in, Assistant State’s Attorney Wayne Jakalski said at their initial bond hearing.

    They also allegedly posted “No Trespassing” signs in front of the homes, where families lived—many knowing their occupancy was unlawful.

    Eight to nine “squatters” were living in one of the single-family homes, Jakalski said. Most of the families paid $500 a month in rent, and Moore was tutoring the others in the scheme, Alvarez said.

    Moore, 55; and Farr, 45, also known as Fahim Ali, are charged with burglary, theft and financial institution fraud. Arrest warrants have also been issued for two alleged accomplices: Raymond Trimble, 52, of Markham; and Arshad Thomas, 26.

    All fourteen properties have since been boarded and secured, Alvarez said.

    Moore was living at 10821 S. Wood St., one of the homes targeted in the investigation, and claimed he owned four others, prosecutors said. Farr was living at 10941 S. Wood, and had illegal possession of eight other homes, prosecutors said. Trimble allegedly claimed adverse possession of a home at 5501 N. Virginia Ave.
Source: Pair charged in 'squatter scheme' back in jail after judge sets higher bonds.

In a follow-up story, see Alleged 'criminal masterminds' claim they've done nothing wrong, following law (may require subscription; try here, then click appropriate link if no subscription):
  • "Torrez Moore and Fahim Ali (also known as David Farr and Javani Ali) filed adverse possession applications or mechanics liens on 107 properties, mostly houses in foreclosure, several in the Beverly and Morgan Park communities."

NYC Judge Hammers Bad-Faith Banksters For $100K+ Forfeiture Of Unpaid Interest For Its Unresponsiveness To Homeowners' Loan Mod Requests, Unprepared Lawyers, General Four-Year Foot-Dragging

In New York City, the New York Law Journal reports:
  • Two mortgage banks will forfeit more than $100,000 of interest on loans to a Manhattan couple, a judge ruled Wednesday, as a sanction for not acting in good faith in responding to requests for a mortgage modification.

    Manhattan Supreme Court Justice Peter Moulton said Bonnie and Lawrence Singer were "thwarted by unresponsive loan servicers, unprepared lawyers, boilerplate form letters, and the banks' or servicers' often-changing and repetitive demands for financial information," in their four-year quest to "climb out of default." (Federal National Mortgage Assoc. v. Singer, 850039/2011.)

    Citing two prior rulings by courts in Suffolk and Kings counties, Emigrant Mortg. Co. v. Corcione, 28 Misc 3d 161 (2010), and HSBC Bank USA v. McKenna, 37 Misc 3d 885 (2012), holding that tolling of interest back to the date of a borrower's default was a proper sanction for the banks' bad faith, Mouton granted the Singer's motion to the extent of eliminating interest above 2 percent that accrued on the loans from the 2010 default.

Monday, July 27, 2015

Brooklyn Pol Whose Statute Of Limitations Claim Enabled Him To Dodge Criminal Charges For Allegedly Snatching $440K Of Surplus Proceeds From Homeowners' Foreclosure Sales Gets Slammed Anyway By Federal Jury For Attempting To Cover Up His Handiwork

In Brooklyn, New York, The New York Times reports:
  • State Senator John L. Sampson was convicted on Friday of trying to thwart a federal investigation, becoming the latest New York lawmaker to face a prison sentence.

    He was found guilty of three of nine charges, the most serious of which, obstructing justice, carries a maximum term of 10 years. He was acquitted of charges carrying sentences of up to 20 years.

    Mr. Sampson, who previously served as the Democratic leader in the Senate, was also found guilty on two charges of making false statements. The jury in Federal District Court in Brooklyn delivered its verdict after six days of deliberations.

    As a result of his felony conviction, Mr. Sampson immediately lost his seat in the Legislature. He is the second state senator to be found guilty this week, after Thomas W. Libous, a Republican, was convicted on Wednesday and forfeited his seat.

    During the three-week trial, federal prosecutors argued that Mr. Sampson, 50, of Brooklyn, had embezzled state funds when he was appointed to oversee the sales of properties in foreclosure and then covered up the embezzlement. The embezzlement charges had been thrown out by Judge Dora L. Irizarry, who said the statute of limitations had passed. Prosecutors said on Friday that they would appeal the decision once it was officially issued.

    Prosecutors said the embezzlement occurred when Mr. Sampson, a lawyer, was a court-appointed referee for foreclosed properties in Brooklyn. Rather than returning the surplus money from the real estate sales to the State Supreme Court, as he was supposed to do, Mr. Sampson kept about $440,000, prosecutors said. Mr. Sampson set the funds aside for his own use, including to help his unsuccessful bid in 2005 for Brooklyn district attorney.

    In a proceeding last year, Mr. Sampson’s lawyers did not contest that the embezzlement occurred but said it had taken place so long ago that the statute of limitations had expired.

    The six counts the jury acquitted Mr. Sampson of included two counts of witness tampering and one count each of conspiracy to obstruct justice, evidence tampering, concealing records and making a false statement.

    Federal guidelines suggest a prison sentence of “north of 10 years,” said Kelly T. Currie, the acting United States attorney for the Eastern District.

Head Of Northern Ohio Loan Modification Racket Gets 33 Months For Illegally Clipping 90+ Homeowners Out Of $286K; Used Heavily-Weighted One-Sided Agreements In His Favor, Allowing For Bogus Reasons To Void Contract To Purportedly Justify Stiffing Victims Out Of Promised Refunds

From the Office of the U.S. Attorney (Cleveland, Ohio):
  • A North Royalton man was sentenced to nearly three years in prison for operating a loan-modification scheme in which he defrauded more than 90 homeowners struggling to make their mortgage payments out of $286,000, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office.

    Robert Walker, age 44, was sentenced ot 33 months in prison after previously pleading guilty to five counts of fraud.

    Walker convinced homeowners on the verge of foreclosure to pay himself and his company an up-front fee of at least $1,995 but then did little or no work to get a loan modification for customers. He also promised customers that, if not modification was obtained, 80 percent of the fee would be reimbursed. But Walker never intended to reimburse those fees and when he failed to obtain a loan modification, he regularly refused the promised reimbursement, according to court documents.

    According to court documents:

    Walker incorporated and owned The Modification Group, or TMG, where he supervised and directed the employees. TMG did business under various names, including The Modification Group 4, U.S. Modification Group and Loan Modification Group, among others. It had offices at various times in Broadview Heights, Middleburg Heights, Bedford, Parma Heights, Ravenna and Cleveland.


    Walker, through TMG, required consumers to pay $1,995 or 1 percent of the mortgage balance, whichever was greater, up front, before TMG worked on obtaining a loan modification.

    Walker directed his employees at TMG to solicit and accept clients for whom he knew TMG would not be able to obtain loan modifications on terms that that customers could realistically afford.

    Through TMG, he required customers to enter into written service agreements that were substantially one-sided, in favor of TMG. He also directed employees to tell potential customers that TMG would refund 80 percent of the fee paid if TMG failed to obtain a loan modification, when Walker had no intention of refunding the fee.

    Walker, through TMG, prohibited customers from contacting their lending institution and directed customers to send any and all correspondence from their lenders to TMG.

    TMG often failed to obtain any loan modification for the customer. In some cases, TMG never contacted its customer’s lending institution to discuss a modification even though the customer had paid substantial monies to Walker and TMG to do so.

    Walker and his employees at TMG often created illegitimate reasons that they claimed voided TMG’s contract to avoid refunding customer’s fees. For example, TMG often told customers that they had not provided requested documents quickly enough, and terminated their contracts without a refund.

    Walker, through TMG, told customers who attempted to cancel their contracts that doing so was a breach that voided their right to a refund. He often refused to issue a refund for customers for whom TMG had failed to obtain a loan modification unless the customer filed a complaint with a consumer protection agency.

N. California Woman Gets 45 Months For Role In Foreclosure Rescue Scam That Clipped 1000+ Financially Distressed Homeowners Out Of $5.8M+, Promising Victims To Refinance Existing Mortgages At 75% Discount

From the Office of the U.S. Attorney (Sacramento, California):
  • Tamara Tikal, 45, of Rio Vista, was sentenced [...] to three years and nine months in prison for her conviction for conspiring to commit mail fraud in relation to a foreclosure rescue scam, United States Attorney Benjamin B. Wagner announced. Tamara Tikal was also ordered to pay $3,671,000 in restitution to victims of the offense.

    Tamara Tikal’s husband Alan Tikal was convicted following a bench trial and sentenced to 24 years in prison. Tamara Tikal pleaded guilty to the conspiracy in August 2014, as did co-defendant Ray Kornfeld, who was sentenced to five years in prison.

    According to her plea agreement, between January 2010 and August 2013, Alan Tikal was the principal behind a business known as KATN, which targeted distressed homeowners experiencing difficulties making their existing monthly mortgage payments. Many of the victims did not speak English. Alan Tikal promised to reduce their outstanding mortgage debt by 75 percent, falsely claiming he was a registered private banker with access to an enormous line of credit and the ability to pay off homeowners’ mortgage debts in full. Homeowners were told that in return for various fees and payments, their existing loan obligations would be extinguished, and the homeowners would then owe new loans to Tikal in an amount equaling 25 percent of their original obligation. In reliance upon these misrepresentations, many of these homeowners stopped making payments on their existing mortgage loans and lost their homes to foreclosure as a result.

    Tamara Tikal filled a variety of roles in the business, including paying the salaries of various employees, serving as a notary for various documents utilized in furtherance of the scheme, and opening and maintaining post-office boxes and bank accounts that received homeowner payments. She also communicated with individual homeowners, assuring them of the legitimacy of the program.

    In fact, the Tikals never made any payments to financial institutions on behalf of homeowners in satisfaction of their pre-existing mortgage debt obligations; the money for the purported “loan” payments were simply spent by the Tikals and their associates for personal use; and there was not a single instance in which a homeowner’s debt was paid, forgiven or otherwise extinguished as a result of the mortgage relief program.

    In all, more than 1,000 homeowners in California and other states were convinced to participate in the program. As a result of their participation, many homeowners became delinquent on their loans and ultimately had their homes foreclosed upon. Those homeowners paid more than $5,800,000 in fees and monthly payments into the program. Of that, more than $2,500,000 was paid into accounts controlled by the Tikals.

Sunday, July 26, 2015

NYC Building Inspector To Serve 2 To 7 Years In Massive Palm-Greasing Scandal Involving $450K In Bribes, 50 Gov't Employees, Landlords, Contractors; Bad Acts Included Engineering Phony Eviction Orders To Boot Below-Market Renters To Make Room For Higher-Paying Tenants: Manhattan DA

In New York City, the Staten Island Advance reports:
  • A building inspector from Staten Island was sentenced [] to up seven and a half years in prison for his role in a massive bribery scandal involving two city agencies and more than 100 properties in Manhattan and Brooklyn.

    Luis Soto was among the 50 defendants charged, including six Staten Islanders, in the scam, which included top officials at the city Buildings Department and the Department of Housing Preservation and Development (HPD).

    In announcing the indictments in February, Manhattan prosecutors said 16 city inspectors and dozens of landlords and contractors formed a network that exchanged $450,000 in payoffs to get safety violations dismissed and procure phony orders to toss out tenants.

    In all, 11 Buildings employees, five HPD employees, and a slew of property managers and owners were hit with multiple felony charges.

    The defendants conspired to whitewash violations, help builders jump the line on inspections, and, in some cases, engineer bogus evictions to make room for new tenants paying higher rent, authorities allege.

    The schemes involved $450,000 worth of bribes and 106 properties, mainly in Manhattan and Brooklyn, said Manhattan District Attorney Cyrus R. Vance Jr.

    Soto, then 51, an HPD buildings inspector, and fellow inspector Oliver Ortiz of Brooklyn, dismissed 778 violations from 24 properties in Brooklyn in exchange for more than $41,000 in bribes, prosecutors said.

    The violations ranged from the presence of mice and roaches, to missing smoke detectors and carbon monoxide detectors, to a rotted doorframe, said officials.

    Soto also tried to vacate and evict tenants of two Bushwick buildings under false pretenses in exchange for a cash bribe, so the owners could charge higher rents, prosecutors allege.

    Two months ago, Soto pleaded guilty in Manhattan state Supreme Court to 20 counts, including felony charges of receiving a bribe, tampering with public records and falsifying business records, said a spokeswoman for Vance.

    Prosecutors requested a sentence of four to 12 years in prison, plus a $30,000 forfeiture, said the spokeswoman.

    The judge allowed Soto to take an open plea with a promised sentence of no less than two to six years behind bars and no more than three to nine years, without forfeiture, the spokeswoman said.

    The judge sentenced him [] to two and a half years to seven and a half years in prison, said prosecutors.

    "It's a sad thing," Soto's lawyer, Laurence Rothstein of Manhattan, said in a brief telephone interview. "He was a decent guy who got hooked on drugs. He had a lifetime of helping people, he was very generous to a lot of people ... (but) he let cocaine take over his life."

    Rothstein said his client had raised five children as well as a number of foster kids.
Source: Prison for building inspector from Staten Island in bribery scandal.

For a primer on palm-greasing, see The Economist: The etiquette of bribery: How to grease a palm (Corruption has its own elaborate etiquette).

Outfit Given "No-Bid" Contract By Central Florida Court Official To Conduct Forensic Audits Of Banksters' Mortgage Documents Recorded With County Was Owned By 1990's Anti-Government Felon Convicted In $64 Million Scam

In Central Florida, the Orlando Sentinel reports:
  • Osceola County Clerk of Court Armando Ramirez hired a company owned by a felon — convicted in a $64 million scam in the 1990s that stole money from the U.S. government — to review county mortgage records last year.

    Ramirez employed David Paul Krieger's company, DK Consultants LLC of San Antonio, in June 2014 and paid the company $34,500 to find out whether Wall Street banks had illegally foreclosed on hundreds of local homes, records show.

    Foreclosures remain a hot-button issue in Osceola County, where slightly more than 58,277 owners have lost their homes since 2007. That's 45.6 percent of total housing, the country's second-highest foreclosure rate, according to

    Ramirez selected Krieger's company to audit Osceola foreclosures without seeking other bids, records show. Krieger is director and managing member of the company, records show.

    "[It] shall be for the purpose of supplying forensic evidence to the State's Attorney for criminal and eventual civil prosecution," according to the contract Ramirez signed July 12, 2014. "The clerk agrees that he has exercised care and due diligence in determining the competency of [Krieger] to conduct such a forensic examination."

    But federal court records show Krieger took part in an anti-government movement in the 1990s that funded itself through nationwide mortgage fraud.

    Known as Family Farm Preservation, Krieger and others sold fake money orders to those seeking to pay off government-insured mortgages, according to an indictment unsealed May 16, 1996, in federal court in Milwaukee.

    That was the same day Krieger, now 62, was arrested in east Texas by FBI agents after a three-year investigation. Records show there were many involved in selling the money orders, but only nine were charged in the scheme.

    Krieger was held for five days in the Smith County Jail in Tyler, Texas, and charged with conspiracy to defraud the United States and six lesser felony charges involving three counts of fraud and three counts of swindling.

    The indictment stated that in a single week in 1993 Krieger sold and mailed $344,733 in bogus money orders for clients to banks, government offices and mortgage companies. Not just a dealer, Krieger used the worthless money orders to try to pay his own debts, including $5,984 owed in Kansas for child support, records show.

    Krieger avoided prison by testifying during the federal trial in Milwaukee against his co-defendants, who received up to 16 years in prison. He was convicted of conspiracy to defraud the U.S. and sentenced Feb. 5, 1997, to three months of home confinement followed by three years of probation and a $1,000 fine. The other charges against Krieger were dropped as part of the plea bargain.