Saturday, September 05, 2015

Recent S. Florida Airport Expansion Triggers New Round Of Homeowner Lawsuits; Shaky Homes, Noisy Planes Leaving Droppings All Over The Place Among Residents' Complaints; Local Lawyers Begin Peddling Their Services To About 24,000 Area Homeowners

In Fort Lauderdale, Florida, the South Florida Sun-Sentinel reports:
  • The runway was completed a year ago, decades of lawsuits settled and, for a while, peace. But that was shortlived.

    A team of lawyers from three law firms announced [...] they've filed two new lawsuits against Broward County regarding runway noise and delays in soundproofing for homes near Fort Lauderdale-Hollywood International Airport.

    Among the homeowners listed as plaintiffs are those who bought their homes as early as 1979, and as recently as 2013, during construction of the runway on the south side of the airport.

    The homeowners' complaints go beyond mere noise. They say the airplanes vibrate their homes and leave droppings on houses and vehicles.

    One homeowner worried the overflights would affect the biodiversity in her butterfly friendly backyard, the lawsuit says. A couple allege they can't "converse, speak over the telephone, listen to television, or sleep in their own homes.'' And another couple complains of "depression, feelings of hopelessness, frustration, loss of sleep, and an increase in allergies.''

    The controversial second major runway at FLL airport opened to its first flight on Sept. 18, 2014. It carries roughly 30 percent of the air traffic.

    Complaints began shortly thereafter, from homeowners not used to the constant roar.

    The county agreed to soundproof some homes in the highest noise zones, and compensate some homeowners who sell for a loss. A relatively small pool of nearby homeowners also will have the option of taking a cash payment to make up for their loss in home value.

    But in the dual lawsuits, the attorneys say soundproofing is delayed, and the programs for homeowners who want to sell or receive cash payments are not yet in place.

    One lawsuit is filed on behalf of homeowners accepted into soundproofing and compensation programs but not yet helped by them, and the other lawsuit was filed on behalf of homeowners rejected by the county from the compensation and soundproofing programs.

    The homeowners say the county's opening of the runway, sending jets coursing within 500 feet of their homes, amounted to a "taking'' for which they should be compensated.(1) They're asking for money, and for a speeding up of the soundproofing. The attorneys also want to conduct noise level testing independently, on behalf of homeowners who were rejected from the programs, and they seek to expand the county's help to homeowners not currently eligible.

    In a letter the attorneys said they sent to about 24,000 homeowners, mostly west of the runway in Fort Lauderdale, Hollywood and Dania Beach, attorney Stephen Malove offered to represent those suffering "economic losses'' including pain and suffering and "loss of quiet enjoyment'' of the property.

    Attorney Lawrence Caplan said the county made promises to homeowners that it hasn't kept. "Not only are we trying to right some wrongs,'' Caplan said, "we're also trying to hold their feet to the fire.''
Source: Homeowners file new lawsuits over runway noise.

(1) This is typically referred to as an inverse condemnation, "[a] term used in the law to describe a situation in which the government takes private property but fails to pay the compensation required by the 5th Amendment of Constitution. In some states the term also includes damaging of property as well as taking it. In order to be compensated, the owner must then sue the government. In such cases the owner is the plaintiff and that is why the action is called inverse – the order of parties is reversed, as compared to the usual procedure in direct condemnation where the government is the plaintiff who sues a defendant-owner to take his or her property." Reference: Wikipedia.

NJ Man Gets 15 Months For Engaging In Bias Intimidation Against Neighbors; Defendant Carved Swastika On Victims' Front Lawn, Yelled Anti-Semitic/Anti-Gay Slurs At Them; Wrote Letters Including Racial Slurs To Investigating Detective

In Toms River, New Jersey, reports:
  • A Lakewood man was sentenced to 15 months in prison [] for carving a swastika into his neighbors' lawn.

    Scott F. Cooney's sentence was three months longer than his attorney had requested because Superior Court Judge James Blaney found Cooney continued to harass the victims even after he was ordered to have no contact with them, said Al Della Fave, spokesman for the Ocean County Prosecutor's Office.

    Cooney was arrested Aug. 13, 2014, was charged with bias intimidation three days after his neighbors watched him carve a swastika into their front lawn in a Lakewood housing development, Della Fave said.

    Della Fave said Cooney, who lived in his parents' home in that development, had harassed the neighbors for several months before the swastika-carving incident by yelling disparaging and threatening remarks that included anti-Semitic and anti-gay slurs.

    Cooney pleaded guilty June 22 and was in jail awaiting sentencing when he wrote threatening and disparaging letters to the victims, who are men, and letters including racial slurs to Lakewood detective Sgt. Leroy Marshall, who investigated the case, Della Fave said.

    In rejecting the defense attorney's request for a year-long sentence, Blaney noted that those letters clearly violated his order that Cooney have no contact with the victims, Della Fave said.

    Assistant Ocean County Prosecutor Heidi Tannenbaum-Newman argued for a term longer than one year, Della Fave said.

    At the sentencing, Blaney again ordered Cooney to have no contact with the victims and noted that he will ask the state Department of Corrections to review Cooney's outgoing mail to ensure against contact.

    The victims told authorities they saw Cooney on Aug. 10 in their front yard using what appeared to be a lead pipe to carve something into their lawn. Avoiding a confrontation, the victims stayed inside until he left, Della Fave said. He said they took a photograph of the swastika and called police.

    Marshall and Lakewood police Sgt. Greg Staffordsmith arrested Cooney at his East Dorchester Drive home in the Leisure Village adult community.

    Cooney initially posted bail but was jailed again June 5 after threatening the victims, Della Fave said.

See also, Ocean County Prosecutor's Office news release: Sentencing In Lakewood Lawn Swastika Carving.

Go here for other posts on use of bias intimidation to interfere with the housing rights of others.

Friday, September 04, 2015

Despite Court-Granted Extension, County Tax Collector Rejects Homeowner's Late Payment Of Real Estate Taxes; Files Appeal In Effort To Snatch Title To Home Instead

In Tuscola County, Michigan, WNEM-TV Channel 5 reports:
  • Jennifer Dupuis fell behind on her property taxes. The county tried to foreclose on her home, and she came up with the cash.

    But county officials are telling her to keep her money, they want the house.

    "I just didn't understand it, they got their money back," Dupuis said. "I was four years behind, it was my fault. They penalized me got me with fines and I paid all that."

    Even though Dupuis missed the deadline to catch up on her past due taxes, a Tuscola County judge granted a 10-day extension, allowing her to pay the nearly $10,000 she was behind.

    "Felt relieved, I felt all the pressure was off. Then I get this letter," Dupuis said.

    The letter was from the Tuscola County Treasurer’s Office. It notified her that the office was appealing the judge’s decision and now wants to continue the foreclosure process, even though Dupuis has paid up.

    "I raised my kids here. I want to stay here. I worked hard to get it," Dupuis said.

    But why would a county pay an attorney to give back money, take possession of a home and then sell it to get back the money it already has?

    According to the Treasurer’s Office:

    "What the county doesn't want is to set a court precedent of allowing those in foreclosure for unpaid taxes to be able to go beyond the deadline and in this case - the homeowner passed the deadline."

    Dupuis’s attorney, Phil Ellison said there is a simple solution to what he calls an unnecessary and ridiculous problem for his client. "The easiest way to solve this problem is to drop this appeal and let this woman keep her home because her taxes are all paid up," Ellison said.

    Dupuis said she hopes the county has a heart and lets her keep her home.

    "I'll do whatever you want. I just want to save my home," Dupuis said. "This is where I want to live, this is where I want to die. This is where I want to be."

    As far as a legal precedent, if this case makes it to the state court of appeals and Dupuis wins, a foreclosure deadline for unpaid taxes could be deemed unconstitutional.

Another Tenant Falls Victim To Rental Scam, Unwittingly Renting Vacant City-Owned Home & Paying Cash To Fake Landlord

In Lincoln Park, Michigan, The News-Herald reports:
  • A woman who believed she was renting a house heading into foreclosure is the latest victim of a rental scam, according to Lincoln Park officials.

    The woman reportedly began paying cash to a man claiming to be the landlord of a two-bedroom house in the 1500 block of Pagel Avenue, which the city obtained in June from the Wayne County Treasurer’s Office through a quit claim deed.

    Doreen Christian, assistant community planning and development director, said the city planned to use federal Community Development Block Grant money to repair and upgrade the house for a low- to moderate-income family. While checking on the house Aug. 3, she saw a vehicle in the driveway and the front door open, when the house was supposed to be vacant.

    Police arrived and spoke to a 24-year-old woman who said she and her 7-year-old daughter had been living in the house since the beginning of June and rented it from a man who said he was the homeowner. The woman told police she agreed to pay $400 a month to rent the house until the foreclosure process was finished. To date, she had paid $800 in cash to stay in the house.

    Christian said the city gave the woman 30 days to look for other living arrangements.

    “My heart broke; I did not feel it was her fault at all,” Christian said. “She is the victim of fraud and I wasn’t going to put her and her daughter on the street.” The woman now has a new house lined up, in a different city, and will be out by Sept. 1, according to Christian.

    Police Chief Ray Watters said his department has identified the suspect who fraudulently rented the house to the woman, adding that “we are looking into charges at this time and cannot release his name.”

    According to the police report, the suspect’s name was checked and there is no record of him owning the Pagel Avenue house or being affiliated with it in any way. Christian said there are no set plans with the house, as the city remedies the scam incident.

Thursday, September 03, 2015

Mass AG: Mortgage Broker, Insurance Agent Tag-Team Targeted Elderly With Scheme That Conned Them Into Pledging Their Home Equity To Get Reverse Mortgages, Then Using Proceeds To Buy Risky Annuities, Other Unsuitable Investments

From the Office of the Massachusetts Attorney General:
  • A Norwell-based mortgage broker, one of its loan originators, and an outside insurance agent have been sued for sales tactics that convinced elderly homeowners to apply for reverse mortgages and invest their proceeds in risky financial products, including variable annuities, Attorney General Maura Healey announced [].

    The complaint, filed [] in Suffolk Superior Court against mortgage broker Direct Finance Corp. (DFC), its employee Daniel Matthews, and insurance agent James Moniz, alleges they earned significant commissions as a result of their scheme. Several of these consumers were widows who wanted ready access to their money but instead faced severe withdrawal penalties if they accessed more than a small percentage of their proceeds for the first several years the annuities were in place.

    It is wrong to take advantage of seniors who spend decades building up equity in their homes,” AG Healey said. “We allege these defendants preyed on elderly homeowners so they could earn more money at their clients’ expense. Individuals and businesses who target vulnerable populations by promoting these risky transactions will be held accountable.”

    The complaint alleges that the defendants worked together to convince seniors to apply for reverse mortgage loans, which freed up money to invest in risky annuities and other financial products. In one case, Moniz and Matthews allegedly convinced a widow unfamiliar with financial products to invest her reverse mortgage proceeds in an annuity that tied up her money for several years. Moniz allegedly convinced the widow to sign blank forms in order to place her money into an annuity without her knowledge.


    Last fall, the AG’s Office settled allegations with Moniz’s former employer, John Hancock Life Insurance Company (U.S.A.) that it unfairly failed to effectively supervise Moniz, permitting him to sell unsuitable variable life insurance policies, variable annuities, and other insurance and financial products. The settlement also alleged that Moniz developed an association with Matthews to induce senior clients to apply for reverse mortgages and invest the proceeds in unsuitable variable annuities. John Hancock paid more than $550,000 to seniors in Massachusetts to resolve those allegations.
For more, see AG Healey Sues Mortgage Broker and Insurance Agent for Taking Advantage of Elderly Homeowners (Defendants Allegedly Convinced Senior Clients to Invest in Risky Financial Products in Order to Earn Commissions).

Illinois Appeals Court To Greedy Bankster: Nothing In Judgment Entitles You To Keep $4M+ Of Foreclosed Property Owner's Professional Equipment, So Let Him Back Onto Premises To Get His Stuff; Ruling Reverses Another Snoozing Trial Judge

In Lake County, Illinois, The Cook Couny Record reports:
  • An appellate panel has restored a Lake County man’s right to access expensive professional equipment inside a building he lost to foreclosure.

    Baldev Raj Bhutani was the guarantor of a mortgage held by pharmaceutical preparation company Avtar LLC for a property in north suburban Gurnee in Lake County. Following foreclosure proceedings initiated in 2011 by Charter National Bank & Trust, of Hoffman Estates — now succeeded by Barrington Bank & Trust Co., the named defendant — Bhutani sought access to the property in order to remove pharmaceutical equipment worth more than $4 million.

    The bank obtained its foreclosure judgement on Dev. 7, 2011. Lake County Sheriff’s deputies attempted to complete an eviction on June 26, 2012, according to court documents, but being unsure of the chemicals present, they secured the building and left. After the bank denied a series of Bhutani’s oral and written requests to retrieve his property, he filed legal paperwork Jan. 14, 2014, a two-count complaint for conversion and replevin. The bank successfully moved to dismiss his complaint, arguing the foreclosure judgment prevented Bhutani from any rights to access the equipment.

    Bhutani filed a motion to reconsider, asserting the Lake County Circuit Court misinterpreted the law, but the court denied his motion. However, on Aug. 13, a three-justice panel of the Second District Appellate Court upheld Bhutani’s appeal and overturned the earlier decision.

    Nothing in the foreclosure judgment gave the bank a possessory interest in the equipment superior to Bhutani’s interest,” wrote Justice Donald C. Hudson, who authored the opinion. Justices Joseph E. Birkett and Robert B. Spence concurred in the decision.

    The appellate ruling affirms the bank’s right to take ownership of the building, but notes possession of the equipment therein was not a necessary component of exercising the foreclosure rights: “Case law supports the conclusion that, when a person who has been lawfully evicted from real property leaves behind personal property, that person generally retains a right to recover the personal property.”

    Further, the court noted the bank in no way tied “its claimed right to the equipment to the mortgage or a related transaction.” Though the bank attempted to make a collateral estoppel argument, Betar wrote the foreclosure litigation didn’t address either of Bhutani’s claims. He further notes the bank’s attempts to paint Bhutani’s request to access his equipment as an attempt to challenge his loss of possession of the real estate.

Wednesday, September 02, 2015

Oops! It Was Just A Glitch In The System: City Of Phoenix To Homeowner-Couple After Erroneously Sending Them Foreclosure Notice On Home They Recently Paid All-Cash For

In Phoenix, Arizona, KTVK-TV Channel 3 reports:
  • Having your home paid off is quite an accomplishment.

    Imagine how shocked a Phoenix couple who achieved that were when they received a letter threatening to take their home away from them.

    That foreclosure actually came from the City of Phoenix and according to the couple, it was pretty intimidating because they almost lost their home over a simple mistake.

    Tiffany Halstead is proud of her family's recent accomplishment. “We were very blessed that we were able to buy our very first, well it's our second - we bought our home and paid cash," she said.

    That's right, they were able to pay cash for their Phoenix home, and have no mortgage, giving them a sense of financial security. "It was nice to know we didn't have to worry about a mortgage payment and that I could just stay at home," Halstead said.

    Halstead's sense of security came to a screeching halt after going to her mailbox a couple of weeks ago and finding a letter saying the City of Phoenix wanted to foreclose on her home.

    Halstead said she contacted the City of Phoenix to inquire and was told there were some previous, unpaid liens on the house.

    "We had 10 days to vacate the property if we couldn't pay the $3,000 in the back liens," she explained.

    Halstead panicked but remembered she had purchased title insurance for her home in case something like this ever happened.

    The title company told Halstead they discovered the City of Phoenix liens prior to her buying her home. The title company didn't worry about the liens because they had already been paid off, resolved by the previous homeowner.

    So, why in the world is the City of Phoenix threatening to take Halstead's home?

    "I don't know how far that would go, if all of a sudden a sheriff's officer is at my front door telling me we need to get out," she said. "It's a little nerve-wracking."

    3 On Your Side contacted the City of Phoenix, which looked into the matter and acknowledged there was in glitch in their system that generated that letter.

    The City also discovered those liens had been paid, just like the title company indicated. The City apologized and eventually sent Halstead a letter say the matter has been cleared.

    Halstead said if hadn't been for 3 On Your Side, she might have been stuck paying $3,000 she didn't even owe.

    "[I'm] absolutely relieved," she said. "I'm not gonna have to worry about it again and if somebody comes knocking I'll be able to pull that right out and say, 'No, this is a mistake; here you go,' and that will be the end of it."

Lawyer Gets Bar Ticket Yanked After Convictions For Embezzling $1.77M From One Client In Attempt To Replace $1M+ He Glommed From Other Clients' Real Estate Escrow Accounts

In Staten Island, New York, the Staten Island Advance reports:
  • A lawyer convicted of embezzling nearly $2 million from a Richmond cemetery has been disbarred.

    The Appellate Division, Second Department, has stripped Timothy G. Griffin of his law license, based on his conviction earlier this year for ripping off $1.77 million from United Hebrew Cemetery.

    Griffin, 55, who was based in Bronxville, was suspended in November of last year and did not respond to a motion by the Ninth Judicial Department to disbar him, the court said.

    In April, Griffin was sentenced in state Supreme Court, St. George, to four and a third to 13 years in prison and signed a $1.77 million confession of judgment in favor of United Hebrew Cemetery.(1) He had previously pleaded guilty to first-degree grand larceny.

    State Attorney General Eric T. Schneiderman said Griffin had ripped off the cemetery to try to replace the cash he stole from his Westchester County real-estate clients' escrow accounts.

    Griffin fueled his family's extravagant lifestyle with the cash, paying for a country club membership and buying a BMW, Lexus and pricey jewelry, said Schneiderman.

    Griffin had been brought in to keep an eye on the books after a cemetery official had helped herself to more than $850,000, said authorities.

    Griffin made six unauthorized wire transfers from the cemetery's account to his own attorney escrow account between October 2012 and early January 2014, Schneiderman said.

    In all, he glommed $1.9 million, said the attorney general.

    In September of last year, Schneiderman announced that Griffin had also been charged in Westchester County with embezzling more than $1 million from his real-estate clients' escrow accounts. He pleaded guilty to grand larceny charges in May in Westchester County state Supreme Court, Schneiderman said.

    He is expected to be sentenced Sept. 8 to a prison term of four and a third to 13 years to run concurrent to the Staten Island case and must also fork over $850,000 to clients in judgments and restitution, said Schneiderman.

    A Connecticut resident, Griffin has been convicted of federal tax evasion in that state.
Source: Cemetery-scam lawyer disbarred.

(1) Clients found to have been victimized by any alleged trust fund theft 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 generally:
  • N.Y. fund for cheated clients wants thieving lawyers disbarred, a July, 2015 Associated Press story on this Fund reporting that the Fund's executive director, among other things, is calling for prompt referral to the local district attorney when the disciplinary committee has uncontested evidence of theft by a lawyer injuring a client or an admission of culpability;

    Thieving Lawyers Draining Client Security Funds, a December, 1991 New York Times story 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, September 01, 2015

High-End Homeowners Begin Plans To Flee Ritzy, 21-Story Midtown NYC Co-Op That Sits On Leased Land; Painful Ground Rent Increases On The Horizon, Expected To Be In The Million$, Threaten To Drive Building's Apartment Values Into Toilet Despite Otherwise Bullish Market

In New York City, Bloomberg News reports (via The Real Deal (NYC)):
  • On a street with some of New York’s most expensive homes, a two-bedroom apartment can be found for $849,000 -- a relative bargain in supply-strapped Manhattan.

    But there’s a catch.

    Carnegie House, a 21-story co-op on 57th Street near Central Park, doesn’t own the ground beneath the building and its shareholders pay rent to the investors who do, an expense that cuts into what the units are worth. The annual bill may jump fivefold or more in a decade, when the lease terms are scheduled to reset based on Manhattan land values.

    Many residents aren’t waiting that long. Listings at the tower have surged this year, with 49 of the 324 apartments coming to the market, as owners choose to escape the specter of added costs that could further erode the value of their homes. The situation is rare in Manhattan, where most co-op dwellers have benefited from the escalating buyer demand that’s pushed marketwide apartment prices to an all-time high.

    “It’s not very often that we see no growth in asking prices in this market,” said Alan Lightfeldt, data scientist at real estate website StreetEasy. “Sellers elsewhere in Manhattan are feeling quite bullish.”


    Board Outbid

    The co-op’s board tried last year to buy the land but was outbid by a partnership including investors David Werner and Rubin Schron, who paid $261 million for the 25,000-square-foot (2,300-square-meter) parcel. It was the most expensive lot purchase in Manhattan in 2014, according to research firm Real Capital Analytics Inc.

    When the ground lease is up for renewal in 2025, the co-op will be “going up against two professional investors,” said Peter Hauspurg, chief executive officer of brokerage Eastern Consolidated, who had no role in the transaction. “I’m sure some deal will be cut, but knowing the guys involved, it’s going to be painful.”

    Another New York co-op with a ground lease, Trump Plaza on East 61st Street, was able to avoid a showdown with investors by purchasing its own land. Shareholders were assessed for their portions of the $185 million price tag -- forcing many to take on new mortgages and personal loans -- and the deal closed in February, extinguishing any rent obligations to an outside owner.

    Since then, unit values have increased, based on sales that have gone under contract, said Jonathan Miller, president of appraiser Miller Samuel Inc., who advised Trump Plaza’s board.
    Land Value

    At Carnegie House, the annual ground rent, currently $4.1 million, is scheduled to reset in March 2025 to a rate equal to 8.2 percent of the land’s market value at that time, according to documents connected to a mortgage for the investors’ purchase.

    The lot at the time of the Werner and Schron deal was appraised at $260 million, the documents show. If the property simply remains at that value 10 years from now, the rent burden -- paid for largely through maintenance fees charged to co-op shareholders -- would jump to $21.2 million.

    “If you’re a person who can’t afford the increase, sell today,” said Adam Leitman Bailey, a New York real estate attorney who isn’t involved in the building.

    Should the co-op default on the lease, the land owners could take possession of the tower, according to Bailey. If that happened, shareholders would lose all the equity in their units, he said.

    Christa Segalini, a spokeswoman for Schron’s Cammeby’s International, declined to comment on any plans for the land. Ronald Cook, identified in documents as president of the Carnegie House co-op board, also declined to comment.


    With the lease reset approaching, “some people have put their apartments on the market that wouldn’t have otherwise,” said Harry DiOrio, a Douglas Elliman broker who is marketing five apartments at Carnegie House. Others are simply moving on, he said.

    Among DiOrio’s listings is a 1,500-square-foot unit whose owners are offering to convert the formal dining area into a third bedroom at their expense. The asking price, $1.2 million, is 24 percent less than the Manhattan median for two-bedroom co-op sales in the second quarter.

    The array of listings may be an opportunity to get an apartment at a discount in an attractive Midtown neighborhood, said Joshua Stein, a New York commercial real estate lawyer who isn’t connected to the property.

    “If you get a cheap enough purchase price, it may more than compensate you for the burden of having to pay all that maintenance down the road,” Stein said. “Some buyers might say, ‘I’m willing to live with that risk.’”

Monday, August 31, 2015

Trump Buys Out $3.65M Defaulted Mortgage Owed By Failed Company Co-Founded By Son, Two Others, Then Begins Foreclosure In Apparent Squeeze Play To Eliminate Unwanted Partner, Wipe Out Slew Of Subordinate Lienholders

In North Charleston, South Carolina, The Post and Courier reports:
  • Donald Trump, who explained his four corporate bankruptcies at the Fox News GOP debate by saying he’d “taken advantage of the laws of this country,” could turn a profit from the financial wreckage of a North Charleston manufacturing company his eldest son co-founded.

    The unusual business deal is apparently the “very interesting” investment in the Charleston area that Trump, the Republican presidential front-runner, mentioned during an April campaign stop. Trump created a company in late 2014 to acquire a multimillion-dollar bank loan secured by the North Charleston company’s assets, and now he’s trying to collect the debt through foreclosure.

    Titan Atlas Manufacturing, a specialty construction products firm, operated for barely two years and shut down in 2012, leaving a trail of litigation, unpaid bills and unpaid taxes.

    Donald Trump Jr. and two partners in Titan had personally guaranteed payment of a $3.65 million loan from Deutsche Bank. With roughly the full amount coming due in November, the senior Trump stepped in and bought the note, through a new company called D B Pace Acquisition.

    The scenario allows Donald Trump to potentially turn a profit on the debt, which is worth more now than when he acquired it, while relieving his son of personal liability to Deutsche Bank. If the presidential candidate’s attempt to foreclose on the North Charleston business is successful, the company’s unpaid taxes and other debts could go uncollected.

    “It makes perfect sense,” said William Harrison Jr., a real estate professional who lectures at University of South Carolina’s Darla Moore School of Business. “Father steps in to essentially protect his son’s investment and strip away the unsecured investors.”

    Real estate law experts described the deal as smart and sophisticated, while some of the creditors who may never see the money Titan Atlas Manufacturing owes them said it was unfair, or dishonorable.


    “This is a legitimate business tactic that few people know is available,” Harrison said. “It’s fairly sophisticated.”

    Trump acquired the loan from a private wealth lending arm of Deutsche Bank, a lender involved in several high-profile Trump deals. The amount Trump paid for the loan was not disclosed, but banks typically sell debts at a discount, and that’s one way buyers can gain control of distressed property for ownership or investment.

    “What a bank does is factor in their costs and the possibility of recovery, sell the note at a discount,” said College of Charleston real estate law professor John F. Martin. “Anybody can buy a note, as long as the bank is willing to sell it.”

    “It’s not an ‘average Joe’ kind of deal,” Martin said. “This is a very smart play, and not everybody would have the resources to do this.”

    As owner of the debt, Trump could ignore loan guarantees made by his son and Titan co-founder Lee Eickmeyer, or pursue them after attempting to collect the full value of the debt through foreclosure on Titan’s assets. Trump’s foreclosure suit reserves the right “to further seek a judgment against each of the guarantors jointly and severally.”

    Eickmeyer, a Washington state farmer, originally owned a one-third share of Titan, as did Trump Jr., and Mount Pleasant resident Jeremy Blackburn. Eickmeyer also loaned Titan $950,000.

    Each of the three company founders personally guaranteed the $3.65 million loan from Deutsche Bank, allowing the bank to pursue them together or individually if it were not repaid. However, Blackburn declared personal bankruptcy in 2013, wiping away his debts and liabilities.

    Eickmeyer’s Charleston lawyer, Jason Smith, said in a legal filing that D B Pace Acquisition — the company controlled by Donald Trump — is engaging in unfair trade practices and purposefully caused Titan to default on the loan. Smith’s filing accuses Trump’s company of being “owned or controlled by individuals who owed and breached fiduciary duties and made misrepresentations” to Eickmeyer.

    Smith declined to elaborate on those claims or otherwise comment on the case.

    Mount Pleasant resident Franz Meier owns a company, XJM Co., that sold land and a building in North Charleston to Titan in 2010, for $1.5 million according to Charleston County records. In legal filings, Meier said he was never fully paid, and a $351,908 judgment won by XJM in 2012 is still outstanding against Titan, according to Trump’s foreclosure filing.

    “It’s very interesting, but it’s not very honorable,” Meier said of Trump’s move to purchase and foreclose on the loan. “That’s what he said in the debate, that he takes advantage of the laws like bankruptcy.”


    Philadelphia law firm Mendelsohn Drucker & Dunleavy is another company with a significant claim against Titan. The firm won a judgment of more than $400,000 in 2013, after not being fully paid for work on a patent lawsuit.


    Titan also left taxpayers on the hook, failing to pay nearly $115,000 in South Carolina sales tax, workers compensation tax and federal taxes. The state and federal governments have placed 24 liens on Titan’s property in the hope of someday collecting those taxes, but if Titan’s assets are sold through foreclosure and fetch less than Trump’s loan is worth, other creditors would get nothing.

    Meanwhile, the value of the loan owned by Donald Trump’s company is growing by $1,716 per day, because it’s in default and high-interest penalties are being assessed. So, the value of Trump’s investment grows ever larger as a result of the company co-founded by his son defaulting on the loan.

    “What the father is apparently banking on is wiping out the other creditors and recovering his investment,” Martin said.

    Creditors could have faced a similar scenario if Deutsche Bank had retained ownership of the loan, and in that scenario the younger Trump and Eickmeyer could also have faced personal liability.

Notorious Foreclosure Trash-Out Contractor 'Respectfully Disagrees' With Maryland AG's Illegal Lock-Out Allegations, But Agrees To Fork Over $167K For Homeowner Restitution To Make Him Go Away

In Baltimore, Maryland, The Baltimore Sun reports:
  • Ohio-based Safeguard Properties, which has faced claims across the country that it locked people out of their homes or took their belongings before the foreclosure process was complete, settled a complaint from the Maryland attorney general's office [].

    Under the settlement, Safeguard, the nation's largest mortgage field services company, agreed to a host of reforms to its practices and to pay $167,000 in restitution to Marylanders allegedly harmed.

    Safeguard has faced lawsuits in other states from homeowners and in June settled a lawsuit brought by the Illinois attorney general for $1 million.

    Safeguard is responsible for inspecting, maintaining and repairing homes in default or foreclosure. Maryland Attorney General Brian E. Frosh alleged that the company failed to supervise and train its vendors who work in Maryland.

    Safeguard "respectfully disagreed" with the allegations, spokeswoman Megan Greenwalt said in a statement, adding that the agreement did not include findings of liability or wrongdoing by Safeguard or its contractors.

    "The assurance agreement memorializes those procedures that were materially already in place at Safeguard prior to the inquiry and will allow us to continue to deploy industry best practices within the State of Maryland," Greenwalt said.

    The company agreed to changes including new background checks for employees, not removing nonhazardous personal property prior to foreclosure, and clearly posting notice when its agents have entered a property.

    The Consumer Protection Division of the attorney general's office will contact consumers who are eligible for restitution, and payments will be distributed through a claims process. For more information, residents can contact the division at 410-576-6569.
Source: Maryland attorney general settles with Safeguard Properties.

For the Maryland AG news release, see AG Frosh Secures Settlement with Company That Allegedly Locked Residents From Homes And Damaged Property (Nation's Largest Mortgage Services Company Agrees to Improve Practices).

Go here for earlier posts on Safeguard Properties.

Sunday, August 30, 2015

Crackpot Serving Five Years For Obtaining Property By False Pretenses When He Attempted To Hijack Title To Vacant $800K NC Home To Ask State Supremes To Nix Conviction

In Raleigh, North Carolina, The Associated Press reports:
  • North Carolina's crippled housing market was limping along when Shawn Pendergraft decided he'd take over a foreclosed Raleigh home in 2011. He backed up a moving van, unpacked his belongings and changed the locks.

    But he never paid for the $800,000 house, instead filing a bogus document with the Wake County register of deeds staking an ownership claim he had no legal right to make.

    Pendergraft, 43, was convicted of a felony for obtaining property by false pretenses and sentenced to more than five years in prison. On Wednesday, his lawyer will ask the state Supreme Court to throw out his conviction.

    Pendergraft's squatting scheme was part of a wave of hundreds of frivolous property claims at a time registrars were already dealing with a flood of foreclosures amid the Great Recession's housing market collapse. Flimflam artists were occupying foreclosed homes in Virginia, Georgia, New Jersey, California and elsewhere across the country.

    In North Carolina's most populous county, more than 200 of the bad filings were filed in 2011, said J. David Granberry, Mecklenburg County's register of deeds. Many were written in confusing pseudo-legal jargon, some making outlandish claims about being exempt from U.S. law.

    “Lump ‘em together in the wacky document category and we still get a lot of them,” Granberry said. “They don't really mean anything. They have a lot of jibber-jabber and some quotes from statutes.”

    But since this spring there's been a sharp drop in fake deeds transferring ownership, such as Pendergraft used, through the misguided application of the actual legal concept of adverse possession, Granberry said.

Title Hijacking Victim Sues NYC For Accepting, Recording Crappy Deed From Alleged Scammer

In New York City, the New York Post reports:
  • A woman whose Queens home was allegedly stolen by a scheming squatter says her nightmare never would have happened if bone-headed city bureaucrats hadn’t given him a fraudulent deed — and now she wants the city to pay up, court papers show.

    Jennifer Merin, 71, is seeking nearly $600,000 for the debacle, including the $400,000 in property that ex-con Darrell Beatty stole from her family home while living there, her Manhattan Supreme Court suit says.

    “[The city] was negligent in the way in which they allowed the deed to be registered,” a bitter Merin told The Post on Friday. “There was no indication that any of those signatures were related to my family or the property.”

    Beatty, a 50-year-old convicted armed robber, had simply presented the city Finance Department with a forged deed that claimed to transfer the Laurelton home to him, Merin says.

    A Law Department spokesperson said the “agency will review ­[Merin’s suit] upon receipt.”

Another NYC Landlord Probed For Alleged Attempts To Strong-Arm Tenants Out Of Below-Market Rate, Rent-Regulated Apartments; Renters Nix Buyout Offers Of Up To $50K To Relinquish Rights, Prefer To Stay Put

In New York City, the New York Daily News reports (via The Real Deal (NYC)):
  • State officials have launched an investigation into an East Village landlord accused of strong-arming tenants into giving up their rent-regulated apartments, the Daily News has learned.

    The state’s tenant protection unit served subpoenas on companies controlled by landlord Raphael Toledano as part of a probe into claims of abusive behavior by his agents, including threats of eviction and the shutting off of gas and other essential services, officials said.

    State officials were made aware of the accusations against Toledano by the Urban Justice Center, which is representing a group of tenants — mostly Mexican immigrants — at 444 E. 13th St. in a lawsuit against the Toledano-controlled Goldmark Property Management.

    “There has been repeated pressure, repeated intimidation to push them out,’ said Keriann Pauls, a staff attorney at the Urban Justice Center.

    Pauls said tenants secretly recorded Toledano’s agents making trumped-up claims of looming police and immigration raids, rent hikes and structural problems in an effort to force them to sign agreements surrendering their rights to their apartments.

    Jeffrey Goldman, an attorney for Toledano, denied his client was harassing tenants.

    “I have not seen him engage in any behavior or conduct that would give rise to an investigation let alone a finding of harassment,” said Goldman.

    The Cuomo administration said it has “zero tolerance” for anyone trying to harass tenants out of their apartments. “We created the tenant protection unit to crack down on these shameful practices and, with this most recent action, we’re sending a clear message that abhorrent behavior has no place in New York,” the governor’s office told The News.

    Toledano purchased the building in January. Rent-stabilized tenants in the building pay between $800 and $1,400 a month for small one- and two-bedroom units that could be worth up to $4,000 a month in the gentrifying neighborhood.

    Tenants claim Goldmark immediately offered $15,000 buyouts to get them to leave and later upped the offer to $50,000. Many tenants, however, refused to budge.