Saturday, September 26, 2015

Consumer Feds Sue, Score Preliminary Injunction Against Suspected Debt Relief Racket Accused Of Pocketing $67M In Illegal Upfront Fees From At Least 21,000 Consumers

From a recent post on Public Citizen's Consumer Law & Policy Blog:
  • The Consumer Financial Protection Bureau [] obtained a preliminary injunction against World Law Group and its senior leaders for running a debt-relief scheme that the CFPB alleged charged consumers exorbitant, illegal upfront fees.

    The CFPB alleges the debt-relief scheme falsely promised consumers a team of attorneys to help negotiate debt settlements with creditors, failed to provide legal representation, and rarely settled consumers’ debts.

    World Law is alleged to have taken $67 million from at least 21,000 consumers before providing any debt-relief services. The preliminary injunction order halts World Law’s operations and freezes the defendants’ assets while the case is pending.

    Details and a link to the order are available from the CFPB, here.

Novice Homebuyer Says She Trusted Wrong Person; Says Fake Real Estate Agent Bilked Her Family For $10K

In Phoenix, Arizona, KTVK-TV Channel 3 reports:
  • Alba Hernandez recently gave birth to her baby boy, and says it's important to her to provide a home for her entire family.

    So, when her landlord indicated he was going to sell the house that Hernandez's family has rented for years, she and her family jumped at the chance to buy it.

    “That's kind of your dream, your dream you know? To buy your first home, at a young age especially," says Hernandez.

    The Hernandez family hired Gilberto Gordillo to oversee all of the real estate paperwork. He runs a company called Las Americas, which specializes in home sales and taxes.

    Hernandez says Gordillo reassured the family that buying the home would be a simple process. He just needed money to get started.

    “Me being young and my parents not knowing how this process works, he would just ask for money," says Hernandez.

    And according to the Hernandez family, Gordillo claimed that all that money was a normal part of the transaction.

    “He was asking for, like, earnest deposit and pretty much, like, fees, like application stuff," says Hernandez. "Then he said he needed $4,000-plus for the down payment of the house.”

    Hernandez says, not only did Gordillo ask for money, he also asked for cash, and it really added up.

    I've given him $10,000, but I pretty much don't have anything anymore," Hernandez says.

    Then, the Hernandez family says after handing over all that money, Gordillo stopped calling them. It's now been months since they've heard from him.

    Hernandez and her family aren't the only ones who lost money to Gordillo.

    Angelica Duran says she and her family gave $2,000 to Gordillo who was operating under the company name GRG & Associates

    Gordillo reportedly promised he could help Duran with a home modification and needed the $2,000 up front to get started.

    But after handing over all the money, Duran says Gordillo did absolutely nothing and she wound up losing her house to foreclosure.

    In Spanish Duran told us, "He hurt my family a lot; he took away so much from us, what we had, because we had a home. We were established. He took that; he took away our stability."

    3 On Your Side got involved and discovered Gordillo doesn't even have a real estate license.

    So, we went to a sparse little office that Gordillo rents in Phoenix.

    "Hi, I'm Gary Harper with Channel 3.”

    Analia Gordillo: “OK?”

    Gary Harper: “I was wanting to talk to Gilberto Gordillo?”

    Analia Gordillo: “Um, no why? Well he is not here but why? What is the reason?"

    She tells us she's related to Gordillo, but claims she doesn't know about the Hernandez family or their $10,000. She also says she'll have Gordillo call us, but he never did.

    So, 3 On Your Side went to his Glendale home.

    A Spanish-speaking woman who says she's married to Gordillo claimed her husband wasn't home but also indicated she would have Gordillo call 3 On Your Side. But like so many other empty promises, he never did, which just might explain why Gordillo is laughing all the way to the bank.

    Meantime, the Hernandez family is devastated.

    “It's like, where are we gonna go? $10,000 means to me and my family, like, all our life savings.”

Friday, September 25, 2015

NYC Feds Squeeze Pair For Guilty Pleas For Their Roles In Running Loan Modification Racket That Ripped Off $18.5M+ From Over 8,000 Homeowners Across Country

From the Office of the U.S. Attorney (New York City):
  • Preet Bharara, the United States Attorney for the Southern District of New York, announced today that PED ABGHARI, a/k/a “Ted Allen,” and JUSTIN ROMANO pled guilty for their roles in orchestrating a massive mortgage modification scheme that collectively defrauded over 8,000 homeowners out of over $18.5 million. ABGHARI and ROMANO each pled guilty to wire fraud and conspiracy to commit wire fraud, and ABGHARI also pled guilty to misprision of a felony. ROMANO pled on September 14, 2015, and ABGHARI pled on September 15, 2015, before U.S. District Judge. John F. Keenan.

    Manhattan U.S. Attorney Preet Bharara said: “As they have now admitted, Ped Abghari and Justin Romano took advantage of thousands of homeowners under water with debt and in need of assistance from the Home Affordable Modification Program and similar mortgage modification programs. Instead of helping to lift desperate homeowners out of debt, Abghari and Romano pushed them deeper in through exorbitant fees for mortgage modification services they never intended to provide.

    More than 8,000 homeowners were victimized by the defendants’ greed, but thanks to the extraordinary efforts of the Office of the Special Inspector General for the Troubled Asset Relief Program, those victims now can find some comfort in knowing that those who preyed on their suffering have been forced to admit to their crimes.”

Tampa-Area Foreclosure Rescue Operator Accused Of Peddling Bogus Sale-Leaseback Deals, Filing Phony Bankruptcy Petitions On Behalf Of Unwitting Homeowners Without Their Consent, Lying To Feds Pleads Guilty To Fraud Charges

In Tampa, Florida, The Tampa Tribune reports:
  • Some people facing foreclosure and desperate to keep their homes have become targets for crooks.

    One accused scammer, David W. Griffin, [pleaded] guilty ... to bankruptcy fraud and false oath in a bankruptcy proceeding. The federal charges each carry up to five years in prison, though Griffin, 44, of Lutz, is likely to receive less time behind bars under the terms of a plea agreement on file in U.S. District Court.

    Federal authorities say Griffin defrauded homeowners facing foreclosure, filed bankruptcy petitions for them without consent and lied about the scheme to investigators.(1)

    Investigators interviewed scores of Griffin’s victims, many of whom had lost their homes or had bankruptcies filed without their knowledge or consent, according to prosecution court filings.

    After his arrest, according to the prosecution, Griffin continued to own and operate a real estate business. Griffin reported to the court’s probation office that the business purchased some foreclosure properties for rent or resale.

    A federal judge allowed Griffing to continue in that business so long as he didn’t represent to property owners that he could help them avoid foreclosure or suggest that he would return the property to the owners in the future. He was barred from involvement in any foreclosure rescue activity and bankruptcy proceedings.

    An indictment handed up in May charged Griffin with nine counts of bankruptcy fraud, two counts of lying under oath during a bankruptcy proceeding, one count of mail fraud and one count of aggravated identity theft in a scheme that spanned from 2012 to 2015.

    According to his signed plea agreement, Griffin operated a foreclosure rescue scheme through his companies, Bay2Bay Area Holding and Business Development Consultants, to obtain quitclaim or warranty deeds from distressed homeowners.

    Griffin found the homeowners through advertisements offering to rescue them from foreclosure.

    In return for the deeds, Griffin made false promises to rescue their homes by negotiating with creditors, back-leasing the property or falsely promising that the homeowner could repurchase the property,(2) federal authorities say.

    The victims paid Griffin rent and relied on his promise to help them save their homes, his plea agreement states.

    According to the indictment, he also schemed to prevent creditors and guarantors, including Fannie Mae and the Federal Housing Administration, from pursuing foreclosures against homeowners. To do so, he filed bogus bankruptcy petitions in the names of the homeowners without their knowledge or consent, prosecutors said.

    Griffin also admits in his plea agreement that he lied before the Office of the United States Trustee and the bankruptcy trustee. Under penalty of perjury, Griffin stated he had no knowledge of a bankruptcy filed through his company.
Source: Lutz man preyed on those facing foreclosure, prosecutors say.

(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of the various other foreclosure rescue rackets that involve the abuse of the bankruptcy courts..

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

Another Attorney Goes Down In Smoke For Ripping Off Financially Distressed Homeowners Out Of Hundred$ Of Thousand$ By Making False Loan Modification Promises w/ Most Victims Losing Homes To Foreclosure; Cops Guilty Plea To Running A Criminal Enterprise

In Detroit, Michigan, The Detroit News reports:
  • An Orchard Lake man has pleaded guilty to stealing hundreds of thousands of dollars from Michigan residents who were facing mortgage foreclosures.

    [M]ichigan Attorney General Bill Schuette announced that his Home Protection Unit had secured a guilty plea from Steven Ruza, 52, and his company, Home Legal Group, Inc., on Sept. 2.

    According to Schuette, Ruza promised victims they could obtain mortgage modifications that would then save their homes from foreclosure.

    But Ruza did nothing, or little, to obtain the modifications.

    “In many cases, Ruza even filed false documents with the bank,” Schuette said. “The victims never received a modification through Ruza and Home Legal Group and most lost their homes to foreclosure.”

    As part of the plea agreement, Ruza will pay restitution to the victims, with the possibility of additional restitution at the determination of a judge.

    The initial payment of restitution will be made by Ruza with additional restitution being paid to qualifying victims by the Homeowners Protection Fund to ensure they receive timely payments.

    Ruza will then be required to reimburse those funds to the state.

    On Sept. 2, Ruza pleaded guilty to one count of conducting a criminal enterprise, a 20-year felony, before Oakland County District Court Judge Marc Barron.

    The plea agreement contains the following requirements:

    ■ Provide a list of the 50 satisfied Home Legal Group clients by Oct. 1.

    Pay $250,000 in restitution [...] as well as any remaining restitution as ordered by the court as a condition of parole or probation.

    ■ Agree to a psychological exam and complete any recommended counseling.

    He will be sentenced by Oakland County circuit Court Judge Nancy Grant on Oct. 15.

    Under the agreement, the court agreed to a sentence guideline range of 24-40 months for the minimum sentence to a maximum of 20 years, on the charge.

    The guilty plea also ensures that Ruza cannot operate as an attorney or run this kind of business again in the future.

    “Scams that take advantage of Michigan residents trying to save their homes are unacceptable,” Schuette said in a statement. “These are hardworking men and women who needed a little bit of extra help. Instead of help, they got cheated out of money they could not afford to lose.”

    Schuette worked with the Legislature and Gov. Rick Snyder to establish the Michigan Homeowner Protection Fund to ensure these funds are directed toward victims of foreclosure scams or fraud.

    On Aug. 1, 2012, Snyder signed legislation creating the $97 Million Homeowner Protection Fund.

    Anyone who believes they may have been victims of Steven Ruza and/or Home Legal Group should file a complaint with the Attorney General’s Office at by clicking “File a Complaint.”
Source: Orchard Lake man pleads guilty to mortgage scheme.

(1) Clients found to have been victimized by any alleged theft by a Michigan-licensed attorney may be able to seek some reimbursement for being screwed over by turning to the Client Protection Fund Of the State Bar of Michigan, 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 the client protection fund in New York, 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.

Thursday, September 24, 2015

Overheated Housing Market May Spell Doom For Owners Of 'Immobile' Mobile Homes Sitting On Rented Lots As Trailer Park Landlord/Operators Look To Sell Underlying Land Out From Under Residents To Developers For High-Priced Housing; Many Left Facing Unsatisfactory Displacement Buyout$ & Fearing The Boot

In San Jose, California, Bloomberg News reports:
  • The free market wouldn't plop down a trailer park just a few miles from downtown San Jose. At least not today, in a sharply spiking housing market that has made the metropolitan area one of the most expensive in the U.S. But that's where you'll find Winchester Ranch and its 111 mobile-home lots, just down the street from an upscale shopping mall, a newly created development zone, and a major highway interchange.

    "The best use for that land is probably apartments," said Gary Hansen, a senior vice president at Cushman Wakefield, the commercial real estate firm with offices just across Winchester Boulevard from the mobile homes. You don't need to be a broker to reach Hansen's conclusion: “It's a premier location.”

    That made Winchester Ranch look like a potential bonanza for home builder PulteGroup when it agreed to purchase the property from its longtime owner. The idea was to develop the site with a mix of market-rate and affordable apartments alongside a new hotel. To compensate residents that the project would displace, the Atlanta-based company plans to offer buyout packages "somewhere from $140,000 to more than $200,000," said Jacque Petroulakis, a spokeswoman for Pulte. The company declined to comment on the price of the deal, which hasn't yet closed.

    Those payouts, however, didn't prove sweet enough to win over residents and housing activists. The San Jose City Council is expected Tuesday to vote on a six-month moratorium that would prevent the closure of Winchester Ranch and 58 other mobile parks within city limits. If the measure passes, lawmakers would use the time to work out the delicate balance between the desires to spur growth and to avoid booting seniors out of their homes.

    "Over the years, the most traumatic and difficult deals you can do have been conversions of mobile-home parks," said Hansen, a former city council member in nearby Santa Clara. “If you want to make a lot of enemies quick, talk about converting mobile parks in your community.”

    California has about 4,500 mobile-home parks that can hold more than 393,000 residences, creating a particularly tricky problem in parts of the state with fast-climbing housing prices. Those living in mobile homes are typically older and poorer than other local residents. Lots at Winchester Ranch, for instance, are available only to residents 55 and older. Most mobile-home residents find themselves in the complicated situation of owning their dwellings but not the land underneath. Developers envision much better ways to make money than collecting modest monthly payments from mobile-home tenants.

    The state tried to get around this dynamic in the 1980s with the passage of rules discouraging mobile-home park owners from kicking out residents. But rising land values in recent years have changed the economics of the business, giving park owners and developers greater incentive to pay the costs of removing residents while taking on affordable-housing advocates who oppose park closures.

    Buyouts to residents of Winchester Ranch under the current offer could add at least $15 million to development costs. Pulte plans to apportion a piece of the 16-acre plot for a hotel to be built by an outside developer, helping to offset the costs of the buyouts. The builder is counting on a prime location in a hot housing market whose median listing price for a single-family home in August reached $878,000, the country's second-highest level, according to the National Association of Realtors.

    The same market dynamics that allow Pulte to promise rich buyouts may also prevent Winchester Ranch residents from finding new homes. A household in San Jose needs to earn $109,000 a year to afford the average market-rate apartment, and most income-restricted housing developments have long waiting lists, according to a recent staff memo from the city council. There are more than 19,000 mobile-home spaces in Santa Clara County, which contains San Jose, but only 78 active listings. The memo put the average price for those listings at $197,000.

    “They’re not building any new mobile parks,” said Terri Pohrman, vice president for the Golden State Manufactured-Home Owners League. “If you drive people out, where are they going to go?”

    Part of the problem is that mobile homes aren’t truly mobile—about 70 percent of mobile homes have never been moved from their first location, according to U.S. Census figures—and for the most part don't even qualify for home loans. The term "mobile home" persists, in part, because it’s less evocative of exurban poverty than the once-popular phrase “trailer park.” It’s also less vague than “manufactured homes,” the industry’s preferred nomenclature. Across the U.S. there are about 2 million such homes situated in mobile parks with at least 21 lots, according to the Census Bureau’s American Housing Survey, and about 8.6 million mobile homes in total.

    The typical mobile-home resident is older, whiter, and poorer than the U.S. population, according to the census. Forty-five percent were eligible for food stamps in 2013, and 28 percent of mobile-home households are led by someone who lacks a high school diploma.

    Since mobile-home residents don’t own land, they generally don’t qualify for home loans, foreclosure protection, or other benefits of homeownership. “Instead of like a traditional site-built home where the value is going to increase over time, it winds up being like a car that depreciates every day,” said Mike Bullard, a marketing manager for ROC USA, a New Hampshire-based nonprofit lender that helps resident groups pool their funds to buy mobile parks.

    Attempts to block mobile-home park conversions have spread across California areas with skyrocketing home prices. Huntington Beach passed a temporary ban on conversions in 2013 so the city could decide what to do with displaced senior citizens. Subsequent attempts to redevelop mobile parks have been challenged in courts up and down the coast. The best-known case involves an effort by the municipal government of Palo Alto to raise $38 million to buy a 117-lot mobile park that has been slated for redevelopment—an outcome with the potential to disappoint those who think the land should be put to higher use, as well as those who believe there are more efficient ways to support low-income residents.

    “Basically, they have to come up with the money to pay for the land at luxury prices,” William Constantine, a housing lawyer who has represented mobile-home residents seeking to block conversions, said of Palo Alto's predicament. “It’s a waste of public resources needed to preserve other housing.”

    One alternative would be for local governments to apply a new state law requiring a municipal plan to preserve existing affordable housing. Local governments could also use eminent domain to help residents acquire mobile parks at prices that reflect the value of a mobile-home business, not what the land is worth to developers. Constantine has drafted legislation for Santa Cruz County, Sonoma County, and the city of Watsonville that would let the government pursue that path as a last resort.

    “It’s reasonable, if you’re a park owner, that you want to make as much money as you can,” said Constantine. “But the state has a right to limit land use to provide low-income housing.”
Source: The Battle Over Prized Land Under Silicon Valley's Trailer Parks (Mobile homes will not be easily moved out of California's hottest real-estate markets).

Brits Not Immune To Title Hijacking Ripoffs; Indemnification Payouts By UK Land Registry Ripoff Reimbursement Fund At Three Year High & Could Get Even Worse, Says Title Insurer

In London, England, reports:
  • There's been an increase in property title fraud over the past few years, a Freedom of Information request submitted by specialist insurer Titlesolv has revealed.

    A total of £23.3 million-worth of claims were received by the Land Registry last year, with almost £10 million paid out in compensation. That's a three-year high.

    The Land Registry Indemnity Fund has received more than £59 million in claims since 2012 and paid out more than £31 million against them since 2012, the request revealed.

    What's more, Titlesolv reckons it could get even worse.

    Chris Taylor, chief executive of the firm, said: “If interest rates go up, and more mortgages fall into arrears, the registry is likely to face another wave of claims as defaults tend to reveal or highlight allegations of fraud."

    What is property title fraud?

    Property title fraud occurs when someone takes out a mortgage claiming to be the property owner when they’re not, keeping the mortgage money for themselves.

    It creates a significant problem for the person who actually owns the property as they have to answer to the mortgage company that thinks that they owe money.

    The mortgage company is the worst off as it has no claim over the property in question. The Land Registry also has to pay out compensation for adding a non-proprietor to the property deed.

    This type of fraud can take quite a long time to spot. It only becomes suspicious when the mortgage firm realises that repayments aren’t being made and they try to trace the property ‘owner’.

    What to do if you’re affected

    If you think you're a victim of property title fraud contact the Land Registry as soon as possible and then get in touch with the police to report the fraud. It’s also worth contacting a solicitor to see if they can help with your situation.

    To prevent fraud in the first place, you can enter a Restriction at the Land Registry which stops anyone placing a charge against the property without your consent. You’ll need to fill in an RX1 form, with a processing fee of £40.

    You can also get an official Land Registry title document for as little as £3.

Wednesday, September 23, 2015

DC's Past Abusive Use Of Tax Foreclosures To Snatch Poor Homeowners' Home Equity, Pocketing Surplus Proceeds From Sale, Failing To Pay Just Compensation In Apparent Violation Of Fifth Amendment At Issue In Current Litigation

From an opinion piece in The Blaze by members of the Pacific Legal Foundation, a donor-supported legal watchdog organization that litigates for limited government, property rights, and free enterprise in courts nationwide, representing all of its clients without charge:
  • Can the government take a person’s home to pay a $134 tax, sell it, and pocket tens of thousands of dollars in net proceeds without paying the homeowner a penny?

    Washington, D.C. officials think so.

    Until 2013, the District sold thousands of liens that led to hundreds of properties being seized to pay back taxes, including small tax debts, and the sellers kept the windfall proceeds. As The Washington Post’s moving and consequential investigation two years ago showed,(1) the foreclosure process was unconscionable in many ways, including that private collectors were allowed to tack on high legal and other fees that were many times the original debt.

    Quite predictably, the residents most often victimized by District’s unjust rules were the elderly, impoverished, and sick, which included a disproportionate number of minority residents in poorer neighborhoods. District officials usually claim to have special affinity for the downtrodden—but apparently not when it’s convenient to seize their homes.

    When the Post exposed this abusive system, Mayor Vincent Grey suspended some sales and the D.C. Council amended the tax foreclosure law in 2014 to better protect property owners, with councilmembers conceding that the prior procedures were outrageous. Among other changes, the current law provides that the excess proceeds from the sale of any property will go to the dispossessed. Yet instead of admitting that the former law unconstitutionally took property without compensation, the District is still fighting homeowners who lost everything.

    One former homeowner, Benjamin Coleman, a retired Marine sergeant who suffered from dementia, lost his Northeast Washington home that he’d bought with cash two decades earlier.

    He neglected to pay $133.88 in property taxes during a time when neighbors said he forgot to buy food. The District placed a lien on his home, adding another $183.47 in penalties and then sold the lien to a private investment company in 2007. The company added $4,999 in fees, costs, and interest onto Coleman’s debt. Under District law at the time, Coleman had to pay the overdue taxes, penalties, fees, costs, and interest within six months. His son tried to make payments but couldn’t pay the higher amount, so the company evicted Coleman, foreclosed on his house and sold it for $71,000 (its assessed value was about $200,000). Because the law allowed it, the company kept all the profits, a windfall of nearly $65,000 (over $70,000 if the $4,999 in fees is excluded) that the Fifth Amendment provides Coleman should receive.

    Coleman wasn’t alone. Of the hundreds of properties taken by the District since 2005 through the tax-sale foreclosure process, about one third were for debts of less than $1,000, according to the Post’s investigation. Coleman and other foreclosed homeowners sued the District, claiming that the government’s tax-sale act violated the Takings Clause of the Fifth Amendment, which provides that government may not take property unless it is for a public purpose and it pays just compensation.

    For purposes of this suit, Coleman and the other plaintiffs concede that the District could legally take their property to settle overdue tax debts. The suit seeks the return of their equity—the value of their home that exceeded the cost of the lien, and any reasonable costs, fees, penalties, and interest.

    There is no doubt that the Takings Clause applies to a person’s home. The District even admits that Coleman had a protected property interest in his home. But the District claims that government may define the terms under which a homeowner forfeits both his property and his constitutional rights to just compensation. Because Coleman failed to pay the overdue taxes, penalties, costs, and interest in the time provided by District law, officials claim that they had a right to take much more than was owed and keep the difference. According to them, the Constitution does not require that any compensation be paid for the excess equity that they seized along with the debt. The District is wrong, and our Foundation filed an amicus brief in U.S. District Court(2) explaining why that is so.

    The Supreme Court has repeatedly rejected government attempts to “shape and define property rights” in a manner that would effectively “put an expiration date on the Takings Clause” or extinguish well-established property rights.

    If state and federal governments were allowed the final say on what constitutes a valid forfeiture of constitutional rights, then they would find it all too easy to take property without paying compensation.

    Indeed, they could “redefine” when almost any other constitutional right is forfeited as well. No time limit would be too short, no ground for forfeiture too trivial, and no one’s home or other rights would be safe. For the sake of everyone’s rights, the District should concede its error and compensate Coleman and the others for what it took in excess of what they owed.(3)
Source: DC’s Reverse Robin Hood Scam: Steal from the Poor, Pocket the Loot.

See also, D.C. doubles down on the dispossessed.

(1) See The Washington Post: Homes for the Taking (Liens, losses and profiteers).

(2) Pacific Legal Foundation Amicus Brief, arguing that the Fifth Amendment of the U.S. Constitution applies to a property owner's home equity.

(3) For some of the court rulings that provide additional background information on this litigation, see:

Court Nixes Feds' Attempted Forfeiture Snatch Against Recipient Of Quit Claim Deed, Despite Grantor's Subsequent Wire Fraud Indictment; Grantee's Release Of Claims In Exchange For Property Transfer, Lack Of Knowledge Of Seller's Use Of Embezzled Cash To Originally Buy Premises Enough To Trigger "Innocent Owner" Protection

From a news release, from the law firm Bryan Cave LLP:
  • In a rare defeat for the United States, Bryan Cave persuaded a federal judge in the Middle District of Florida to enter summary judgment against the government in a civil forfeiture case.

    The case concerned the validity of a quit claim deed to real property in New York. The deed’s grantor conveyed the property as part of a settlement of disputed fraud claims with the grantee. One month later, the United States sued to invalidate the quit claim deed and to forfeit the grantee’s interest in underlying property. Shortly thereafter, a grand jury indicted the grantor for wire fraud.

    Bryan Cave successfully argued that the grantee was an "innocent owner" under 18 U.S.C. § 983. The court’s forty-page opinion, [...], is noteworthy for three reasons.

    First, the court found that the innocent owner defense applied so long as the grantee did not know that the property at issue was purchased with money obtained through fraud. Knowledge of the grantor’s criminal activity in general does not defeat the innocent owner defense.

    Second, the court found that the grantee had given value in exchange for the deed simply by releasing claims for fraud against the grantee. No exchange of money was necessary for the grantee to qualify as a purchaser for value.

    Third, the court held that the grantee’s inability to record the quit claim deed was of no consequence. The innocent owner defense applies even where the ownership interest is founded upon a deed that has not yet been recorded.

    Further, the grantee had standing to defend against forfeiture even though he never maintained possession of the property. The grantee exercised sufficient "dominion and control" over the property by, among other things, negotiating for the quit claim deed and hiring counsel to enforce his rights under that deed and to defend against forfeiture.
Source: Florida federal court addresses the scope of the innocent owner defense in civil forfeiture.

For the court ruling, see U.S. v. Real Property, Including All Improvements Thereon And Appurtenances Thereto, Located At 246 Main Street, Dansville, Livingston County, New York, Case No. 3:13-cv-1210-J-39PDB (M.D. Fla. July 13, 2015).

Tuesday, September 22, 2015

Attorney Who Gave Up Bar Ticket Pending Accusations Of Misappropriating Client Cash, Fraud, Forgery. Etc. Cops Plea In Unrelated Case For Stealing Ex-Boyfriend's $1M+ Home; Dodges Prison Time (Gets 3-Year Deferred Sentence) By Agreeing To Give Him His House Back

In Claremore, Oklahoma, The Oklahoman reports:
  • A former Delaware County attorney charged with stealing a $1 million Grand Lake home from her ex-boyfriend received a three-year deferred sentence, District Attorney Kenny Wright said [].

    Betty Pitts-Cartwright, 61, of Afton, pleaded no contest [] to obtaining property by fraud. The court found her guilty, and she received the deferred sentence and agreed to relinquish any claim to the residence and its contents, Wright said.

    Pitts-Cartwright also pleaded guilty to perjury and received a three-year deferred sentence. Two other perjury counts were dismissed, Wright said.

    Rogers County Special Judge Stephen Pazzo held the hearing in Claremore after Delaware County judges recused themselves from the proceedings.

    Julie Anne Pitts, 37, of Langley, Pitts-Cartwright’s daughter, and Heather Hogshooter, 25, of Spavinaw, a former employee, also were charged with obtaining property by fraud, Wright said. Charges were dismissed against Pitts under a two-year deferred prosecution agreement. She agreed to relinquish any claim to the house and its contents. Hogshooter received a nine-month deferred prosecution agreement.

    The three women prepared a phony land deed and a bogus Oklahoma corporation to obtain ownership of a 5,500-square-foot, four-bedroom waterfront residence that sits along an 18-hole golf course, prosecutors said.

    The residence belonged to Tor Staubo, a Norwegian professional boat racer, who was involved in a romantic relationship with Cartwright from the summer of 2011 to August 2012.

    Staubo paid $1.2 million in cash for the luxurious Grand Lake residence, then spent $250,000 to furnish the residence, according to an arrest affidavit. He became aware of the wrongdoing after receiving an anonymous letter saying Pitts was the homeowner, the affidavit states.

    Pitts-Cartwright resigned June 24 from the Oklahoma Bar Association pending disciplinary proceedings related to failure to communicate with clients, failure to appear on behalf of clients, failure to file pleadings, misappropriation of client funds, fraud and forgery.

    Cartwright faces a civil case in Delaware County regarding the residence.
Source: Ex-attorney pleads no contest in Oklahoma property fraud case (Former lawyer Betty Pitts-Cartwright, 61, pleaded no contest Friday to obtaining property by fraud, and also pleaded guilty to perjury. She was charged with stealing a $1 million Grand Lake home from her ex-boyfriend).

Suspected Lowlife Facing False Pretenses, B&E Charges For Hijacking Possession Of Vacant Home, Then Pocketing $800 By Renting It To Unwitting Tenant Declared A 'No-Show' At Arraignment; Judge Issues Arrest Warrant

In Lincoln Park, Illinois, The News Herald reports:
  • The 35-year-old man accused of fraudulently renting out a city-owned house did not appear for his arraignment Sept. 3 and a bench warrant has been issued.

    Police say Andrew Robert Myrick, of Melvindale, collected at least $800 cash from a 24-year-old woman who moved into the two bedroom in the 1500 block of Pagel Avenue with her 7-year-old daughter in June. He was cited for breaking and entering and larceny by trick/false pretenses.

    In August, city officials went to check on the house they expected to be vacant and found the family settled in. The city gave them 30 days to find new living arrangements.

    Authorities say Myrick had no connections to the house and allegedly told the tenant that the home was heading into foreclosure, but could be rented out at $400 a month in the meantime.

    According to Doreen Christian, assistant community planning and development director, the house was obtained through a quit claim deed from the Wayne County Treasurer’s Office and was originally going to be revamped for a low- to moderate-income family using grant money.

    The house is now empty, but there are no set plans, she said.

For earlier story, see Woman falls victim to Lincoln Park rental scam; phony landlord collects cash.

Central Florida Pastor Accused Of Using POA To Take His Elderly Relative's Name Off Deed To Her Home While She Was In Assisted Care Facility, Pocketing Rent, Draining Retirement Accounts

In Sanford, Florida, News 13 reports:
  • A Sanford pastor was arrested and is now facing fraud, theft and exploitation of the elderly charges. Investigators said the church leader took thousands of dollars from an elderly woman, who is also a relative.

    “It almost made me sick. I couldn’t believe it, that my second cousin would do something like that to me,” said Inez Smith.

    With health problems getting worse, Smith appointed her second cousin, Anthony Miller, as her power of attorney in 2000. Miller had control over all of her assets. Miller is the pastor of Mt. Sinai Baptist Church in Sanford.

    “I guess he figured I wouldn’t know what he did to me, because I went to the bank to get money to pay my bills and the lady in accounting said you don’t have any money,” said Smith.

    Smith told investigators back in 2012 she wanted to move out of an assisted living facility and into her Sanford home. However she soon discovered that Miller took her name off the deed to the property.

    “I just stood in the middle of the floor and cried, I was shocked,” said Smith.

    Investigators with the Seminole County Financial Crimes Task Force said Miller rented out Smith’s home without her permission, and never gave her rent money from the property.

    Investigators said from 2008 to 2012, Miller drained Smith’s retirement account by making nearly $40,000 of withdrawals. Investigators said Miller deposited the money into his own account for his own use.

    When we reached Reverend Miller by phone Wednesday, Miller said he did not want to comment.

    Miller is out of jail on $5,000 bond after he was arrested [].

    The 83-year-old Smith worries there could be other victims. “So if he did me like that, he could do somebody else like that,” said Smith.

    The State Attorney’s Office said they don’t know of any other victims in this case, but if anyone feels they might be a victim of fraud they encourage them to come forward.

Monday, September 21, 2015

Florida Supremes: Foot-Dragging Bankster Waited Too Long In Attempt To Vacate Unfavorable Defective Judgment Against It In Quiet Title Action Initiated By Condo Association, Saying Defect Rendered Judgment Merely Voidable, Not Void; Ruling Leaves Lender With Worthless Mortgage, HOA With Free & Clear Apartment

In Tallahassee, Florida, the Daily Business Review reports:
  • In a setback for mortgage lenders, the Florida Supreme Court on Thursday ruled the Bank of New York Mellon Corp. waited too long to try to vacate an adverse judgment in a title dispute following foreclosure.

    The case pitted BNY Mellon against Condominium Association of La Mer Estates Inc. and raised the question of whether a judgment becomes void—treated as if it never existed—or is voidable if based on a complaint with no cause of action.

    "The failure to state a cause of action is a procedural irregularity and does not render a judgment void—just voidable," La Mer attorney Michael David Heidt of the Law Office of Gable & Heidt in Hollywood, said after the ruling.

    The case dates back to February 2011 when the Hallandale Beach condo association won a second default judgment on a complaint to quiet the bank's title on a La Mer unit.

    The association gained control of the unit after the former owner defaulted on the mortgage. It obtained a final foreclosure judgment in July 2009, but the mortgage securing the condominium unit was assigned to BNY Mellon before the foreclosure sale. The association was the only bidder at the sale and received a certificate of title to the condo.

    "Concerned about the continuing unpaid monthly assessments, the association wrote to the bank offering to convey to it the title to the condominium, but the bank did not respond," Justice James Perry wrote in the 6-1 ruling.

    Chief Judge Jorge Labarga and Justices Barbara Pariente, Peggy Quince, Charles Canady and Ricky Polston concurred. Justice Fred Lewis dissented.

    The association filed a complaint to quiet title to the property and won two default judgments.

    The bank took no action for more than 18 months until it was well past the deadline for challenging the judgment. It August 2012, BNY Mellon moved to vacate the quiet title judgment, arguing the order was void because the association's complaint failed to state a cause of action. BNY Mellon argued the deadline that applied to other grounds for relief did not apply because the order was void.

    The bank maintained it possessed a superior title interest and the Hallandale Beach association had not proven otherwise.

    The circuit court found the order was void and vacated it, but the Fourth District Court of Appeal sided with the condo association, denying BNY Mellon's motion to vacate.

    The high court found the lack of a cause of action rendered the judgment voidable rather than wiping it out. It also found the bank had proper notice and enough opportunity to raise a challenge.

    "Because we agree that the default judgment was voidable … the default judgment could not be collaterally attacked one and one-half years later when BNY Mellon finally decided to respond," Perry wrote.

    Lewis insisted the case involved a non-existent cause of action and maintained the majority was setting a "dangerous precedent."

    Randolph Liebler, Tricia Julie Duthiers and Joshua Robert Levine of Liebler Gonzalez & Portuondo in Miami represented BNY Mellon. They did not respond to requests for comment by deadline.

Report: MERS Continues Flooding County Recording Offices With Crappy (Defective) Mortgage Assignments

Columnist David Dayen writes in The Intercept:
  • A Seattle[, Washington] housing activist on Wednesday uploaded an explosive land-record audit that the local City Council had been sitting on, revealing its far-reaching conclusion: that all assignments of mortgages the auditors studied are void.

    That makes any foreclosures in the city based on these documents illegal and unenforceable, and makes the King County recording offices where the documents are located a massive crime scene.

    The problems stem from the Mortgage Electronic Registration Systems (MERS), an entity banks created so they could transfer mortgages privately, saving them billions of dollars in transfer fees to public recording offices. In Washington state, MERS’ practices were found illegal by the State Supreme Court in 2012. But MERS continued those practices with only cosmetic changes, the audit found.

    That finding has national implications. Every state has its own mortgage laws, and some of the audit’s conclusions may not necessarily apply elsewhere. But it shows how MERS reacted to being caught defrauding the public by trying to sneak through foreclosures anyway. Combined with evidence in other parts of the country, like the failure to register out-of-state business trusts in Montana, it suggests that the mortgage industry has been inattentive to and dismissive of state foreclosure laws. [...]

Foreclosing Bay State Banksters Primed For Another Big Win As Massachusetts Lawmakers Begin Push To Pass Law That Effectively Ratifies Prior Bad Conduct (Cleaning The Mess That Led To Crappy Real Estate Titles)

On the heels of the recent court ruling by the Massachusetts Supreme Judicial Court, which minimized the negative effect on illegally foreclosing banksters by refusing to give retroactive effect to a ruling in which it declared certain foreclosures absolutely void,(1) State House News Service gives the following report on Bay State lawmakers looking to give the banksters one more big win while contemporaneously giving illegally foreclosed homeowners in the state one final screwing-over:
  • The Senate took a big step on Thursday toward giving some legal assurances to those who purchase homes in foreclosure, a controversial step opposed by the branch's liberal wing.

    On a 31 to 7 vote in its first formal session since July, the Senate passed a measure that would limit property title challenges to a three-year window going forward. The bill now goes to the House.

    Proponents of the bill (S 1981) argue that lengthy periods when the home's former owner can dispute the title leave new owners unable to sell the home or refinance a mortgage. Opponents say the change will strip recourse from those who were forced out of their homes in an illegal foreclosure.

    Senate Majority Leader Harriette Chandler, of Worcester, said the bill has been a frequent topic of conversation among senators and industry officials, recalling how title examiners and insurers and real estate lawyers had described the Massachusetts foreclosure laws as "a mess." Chandler said the bill "solves a small part of a very big problem" and expressed hope for "broader scale" solutions.

    A Chandler amendment adopted by the Senate would require the attorney general and the commissioner of banks to alert people to the effect of the proposed law through a website.

    Last year, former Gov. Deval Patrick returned a similar bill with an amendment extending the period of time former owners could seek to reclaim foreclosed property, which stopped its progress through the branches. This year the Senate had a fuller debate on the topic after delaying action until after the summer recess so more senators could get comfortable with the bill.

    "You establish a three-year statute of limitation," said Sen. Michael Moore, a Millbury Democrat who sponsored the bill. Moore said he had been approached about the matter by a title association representative.

    According to Moore's office, the bill would allow an affidavit recorded during the resale of a property to be used as "conclusive evidence" that the foreclosing lender is in compliance, giving others three years to challenge that. The window would be one year for foreclosures that already occurred.

    "I'm very concerned about homeowners that were taken advantage of during the foreclosure crisis and fiscal crisis of 2008, and unfortunately what this bill does is it limits people's abilities to sue the banks and title insurance companies," Sen. Jamie Eldridge, an Acton Democrat, who voted against the bill, told reporters.

    Before passing the bill, senators revisited the problem of improper foreclosures and passed an amendment to the bill making punitive damages an option in cases where there were unfair or deceptive practices. Eldridge said the damages option was warranted, in part, because he said large banks had not been held accountable for their actions.

    The Senate rejected, on a 15-23 vote, another Eldridge amendment that would have allowed homeowners facing foreclosures to remain in their homes and pay fair market rents until banks decide to sell the homes.

    Eldridge and Democratic Sens. Linda Dorcena Forry, of Dorchester, and Sonia Chang-Diaz, of Jamaica Plain, argued that in addition to benefits for the individuals involved, the amendment would ensure that fewer properties are vacant for months, dragging down surrounding home values and serving as bases for criminal activity.

    Critics of the right-to-rent amendment said the idea is pending in separate legislation before the Judiciary Committee and strayed from the scope of the bill at hand.

    "All we're doing is prolonging the agony," Judiciary Chairman Will Brownsberger, a Belmont Democrat, said of the proposal. He said it would extend "the limbo period."

    Forry said banks are not unloading their properties, allowing them to sit vacant, and called the measure "common sense," saying it wouldn't mean "free rent."

    Sen. John Keenan, a Quincy Democrat, argued unsuccessfully in favor of a measure that would have required notification to the Registry of Deeds as mortgage assignments change. The chain of custody in mortgages is often difficult to follow, which added confusion during the mass of defaults during the financial collapse.

    "I think it's equally important that we try to prevent that in the future," Keenan said.

    Brownsberger argued that such a requirement would complicate the paperwork for the mortgage secondary market.

    Voting against passage of the bill were Senate Ways and Means Vice-Chairman Sal DiDomenico, Ways and Means Assistant Vice-Chairwoman Patricia Jehlen, Sen. Ken Donnelly, Chang-Diaz, Forry, Keenan and Eldridge.

    Critics of the legislation contended that it could prove to be unworkable and discriminatory against communities of color, who they said were disproportionately impacted by the subprime mortgage crisis.

    In a letter written to Senate President Stanley Rosenberg and members of the Senate, some minority community leaders, including Mel King, Boston City Councilor Tito Jackson and Harvard law professor Charles Ogletree, argued that the bill would have a "racially biased impact" and "ratify the lending practices that have ravaged many communities in our state."

    The leaders said that the subprime mortgage crisis helped speed Massachusetts to its current position of having the largest disparity in homeownership between whites and minorities, which they said would only worsen under the bill.

    Grace Ross, of the Massachusetts Alliance Against Predatory Lending, also questioned the constitutionality of the bill, and furnished an email from a title examiner that was reviewed by the News Service claiming the language of the bill could make it difficult to enforce.

    Ross said that giving those who were foreclosed upon just one year to try to claim the title to their property violates the contract clause of the U.S. Constitution. "This building can't rewrite private contracts, and certainly can't do it retrospectively," she said.

    Eldridge said he too had constitutionality concerns both at the state and federal level, including the bill's limiting of property rights.

    "I don't think it's a good bill. I think it extinguishes the claims of some broadly or illegally foreclosed homeowners, and that's why I voted no," he said.

Sunday, September 20, 2015

Sleazy, Disbarred Ex-Florida Foreclosure King Looks To Unload His 'Humble Abode' By Slapping $32 Million Price Tag On Luxury Megamansion After Career Of Running Outfit That Allegedly Falsified Foreclosure Docs For Profit

In Fort Lauderdale, Florida, reports:
  • David J. Stern, the Florida attorney who made millions during the mortgage crisis—and who was later disbarred after falsifying foreclosure documents at his law firm—is selling his megamansion in Fort Lauderdale, FL, for $32 million.

    The 17,000-square-foot house sits on three lots on a private island. It has 500 feet of water frontage—ample space for yachts—and a few thousand square feet of outdoor terraces, according to listing agent Dennis Stevick of DND Associates.

    “The outdoor entertaining opportunities are pretty much endless,” Stevick says.

    Inside, the six-bedroom, seven-bathroom home is crammed with luxury. Much of the custom woodwork in the house is made from “wood pieced together by craftsmen from all over the world,” says Stevick.

    The property also features a 12-seat home theater, five fireplaces, a gym, an executive office, an outdoor tennis court, a cabana, an infinity pool, and a six-car garage.

    Stern had the home custom-built for him in 2007. At its peak in 2009, his law firm made over $260 million a year, earning him the “Foreclosure King” moniker.
For the story, along with pictures and video of the mansion, see Former ‘Foreclosure King’ Is Selling $32M Megamansion in Fort Lauderdale.

Central Florida Trio Bagged On Suspicion Of Running Title Hijacking Racket, Allegedly Forging, Recording Quit Claim Deeds, Then Renting Out Premises To Unwitting Tenants

In Osceola County, Florida, WFTV-TV Channel 9 reports:
  • Some Osceola County residents said they’re unsure about what to do after they found out the company they rented from doesn’t own the homes they were living in.

    Three suspects are being held in Osceola County Jail after investigators said they made thousands of dollars off the scam.

    Encio Encev, Michael Frederiksen and Eric Rabicoff lived in a home in Poinciana, but the real owner lived in Georgia and had no idea the three had legally taken over his property and moved in.

    We've identified eight homes that these companies did these quit claim deeds with, but there could be additional homes out there under different names,” Twis Lizasuain of the Osceola County Sheriff's Office said.

    Osceola County detectives said Encev, Frederiksen and Rabicoff used a company called Eur-invest to steal the homes. They forged a notary’s signature, filed a quit claim deed at the courthouse and showed the property to renters.

    The tenants said they gave a woman named Jennifer thousands of dollars in cash to move into the four-bedroom home. “She had no knowledge that the home she was renting was from criminals who didn't even own the property," Lizasuain said. The tenants said they don’t know where to go or if they can get their money back.

    Officials said the home will eventually be returned to the original owner without much hassle.

    Deputies said they could file more charges against the three suspects and there may be more arrests made.

Convicted Armed Robbery, Carjacking Felon Out On Parole Now Gets Pinched For Allegedly Using Phony Quit Claim Deeds, Dubious Land Contract Deals To Snatch & Flip Vacant Motown-Area Houses He Doesn't Own; Unwitting Victims Lose Downpayments, Renovation Costs; Sheriff: “We’re Seeing More & More Of This Scam ..."

In Detroit, Michigan, the Detroit Free Press reports:
  • Talk about a real estate scam.

    A man and a woman from Detroit are accused of selling properties, which they did not actually own, to unsuspecting buyers using phony paperwork.

    The man, Bernard Hardrick, 27, even tried to continue collecting payments for the land-contract arrangements from his victims while in jail, according to a news release from the Wayne County Sheriff’s Office. Hardrick is a parolee with previous convictions on charges including armed robbery and carjacking.

    The pair used phony quit-claim deeds to sell a property in the 3200 block of Sherbourne in Detroit for a $3,000 down payment and monthly payments of $650, and a property in the 18300 block of Gastonbury for a $3,000 down payment and monthly payments of $400, the release said.

    The Sherbourne property had been owned by a woman who died in 2012 before it reverted back to Bank of America, which had a mortgage interest in the property, the release said.

    The individuals who were victims of the scam are not only out of the money they paid, but also any renovations they might have started, the release said. And now, they have to find new places to live.

    We’re seeing more and more of this scam, which victimizes the potential homeowner in many ways — it steals their cash, their dreams of homeownership and their sense of trust,” Sheriff Benny Napoleon said in the release. “On top of that, the real property owner now has to work to clear the title.”

    Sheriff’s office investigators began working the case a week or two ago after the office received a tip, according to Paula Bridges, a spokeswoman for the sheriff’s office.

    Both suspects are expected to face charges including forgery and deed fraud.

    The woman, who is not being named because she has not been arraigned, is also wanted on seven misdemeanor traffic warrants out of Detroit, Ypsilanti, Dearborn, Romulus and Ferndale, the release said. She was arrested by investigators with the sheriff's office.

    Hardrick was arraigned Tuesday on 28 counts of fraud relating to cases in Redford Township that also violated his parole, the release said.