Saturday, November 28, 2015

Home Equity Thefts By Naughty Children Not Limited To U.S.: Son 'Shanghais' $250K Loan Proceeds Using Forged Docs Pledging Unwitting Parents' Home As Collateral; Gets 10+ Years In Chinese Prison

In Shanghai, China, the Shanghai Daily reports:
  • A MAN who used forged documents to secure a 1.6 million yuan (US$250,000) mortgage against his parents’ home has been sentenced to 10 and a half years in prison, Jing’an District People’s Court said [].

    The 33-year-old defendant, identified only by his surname Li, was found guilty of contract fraud after employing a forger to replicate a title deed and other documents.

    The counterfeiter, surnamed Fu, was given a 10-month prison sentence for his part in the crime, while Li’s girlfriend, surnamed Tao, was jailed for three years for aiding and abetting after posing as the defendant’s wife during the loan application process.

    Prosecutors said in court that Li was a gambling addict who turned to crime after running up debts of more than 2 million yuan. The court did not say which company extended the loan, but said the fraud came to light in January of this year when officials from the lender noticed the repayments were not being met, and contacted the defendant’s father.

    The father was unaware of the crime, but pointed police in the direction of his son who was living in Chongming County.

    Li was detained soon after, while Tao surrendered herself to the police in April and provided information that led to Fu’s arrest.

Habitual Criminal Who Professed Her Love For 88-Year Old Man Gets 200 Years In Prison For Taking Advantage Of Him; Victim Spent Thousands, Put Up His Home As Collateral To Continue Bailing Her Out Of Jail

In Arvada, Colorado, KUSA-TV Channel 9 reports:
  • A woman who took advantage of an elderly man was sentenced to more than 200 years behind bars [last week].

    Jack Woods, 88, posted an ad in the paper for a housekeeper.

    Jana Bergman, who was in jail at the time, answered the ad. Not long after, Bergman confessed her love for Woods. Bergman was a habitual criminal and was in and out of jail frequently. Woods continued to bail her out, spending thousands of dollars.

    At one point, Woods put his house up as collateral to bail her out.

    Bergman was physically abusive. Officials say she punched and kicked Woods down the stairs. Bergman was found guilty on numerous charges including attempted manslaughter and robbing an at-risk adult. Bergman still has five criminal cases pending in the Denver metro area.

Accused Cop Killer Who Successfully Fended Off Murder Charges Gets Convicted Years Later For Threatening To Kill His Criminal Defense Attorney When Latter Foreclosed On His Home Over $200K+ In Unpaid Legal Fees

In Knoxville, Tennessee, the Cleveland Daily Banner reports:
  • A Roane County man has been convicted on charges of threatening to kill a Cleveland attorney.

    Leon Houston was found guilty by a jury [] in the U.S. District Court in Knoxville on the charge of making a threat via interstate commerce.

    Houston had been defended by attorney James Logan during two trials on state murder charges in the killings of Roane County Deputy Bill Jones and former law enforcement officer Mike Brown.

    A mistrial was declared in the case in 2008; however, a jury acquitted Houston during a second trial in 2009.

    Logan eventually foreclosed on Houston’s property, which had been held as security of payment of services, after the attorney sought payment for his services.

    The attorney had previously testified his cost for representing Houston was more than $200,000.

    Houston was in the Blount County Jail when, as stated in his charge, he called his girlfriend and repeated said either he or any of “his people” would kill Logan.

    Houston had said the remarks in the conversation were only made in jest.

    The maximum sentence for the charge is five years, but Houston will get credit for the three years he has already been in custody when he is sentenced later next month.

    Last year Logan purchased three of the available tracts of land for $150,000 at a foreclosure sale in 2011.

    He later donated two of those tracts, which totaled 75 acres and were valued at $296,000, to the Roane County Habitat for Humanity.

Fresno Feds Score Guilty Verdict Against Crackpot Who Harassed Two Bankruptcy Judges By Filing Bogus Liens On Their Personal Property

From the Office of the U.S. Attorney (Fresno, California):
  • After a one-day bench trial, Barry Halajian, 56, of Fresno, was found guilty of two counts of filing false liens on federal bankruptcy judges, United States Attorney Benjamin B. Wagner announced.

    According to court documents and evidence presented at trial, in 2010, Halajian initiated a Chapter 7 bankruptcy proceeding in the U.S. Bankruptcy Court in Fresno. Two years later, he initiated a Chapter 9 bankruptcy proceeding in the same court. On June 29, 2012, the Chapter 9 bankruptcy was dismissed. On July 17, 2012, Halajian filed with the California Secretary of State a series of liens on the personal property of two federal bankruptcy judges in the Eastern District of California, listing them as debtors and himself as the secured party

    “Filing bogus liens against federal officials for purposes of harassment is a crime,” said U.S. Attorney Wagner. “Those who commit it are asking to be prosecuted.”

Friday, November 27, 2015

City Of Dallas Files Suit In Renewed Effort To Put Notorious Slumlord Out Of Business; Similar Suit Filed Twenty-One Years Earlier Fell Flat; Ongoing Battle Dates Back Over Thirty Years

In Dallas, Texas, The Dallas Morning News reports:
  • “In the City of Dallas, the name ‘Topletz’ is synonymous with dilapidated and often crime-ridden, single-family rental property located primarily in the southern area of Dallas.”

    So begins a lawsuit filed [] by Dallas city attorneys trying once and for all to chase Dennis Topletz and his relatives out of the business of low-income rentals in southern Dallas.

    The lawsuit, filled with exhibits cataloging drug busts and code violations at Topletz-owned properties, echoes countless newspaper, TV and magazine reports over two decades documenting the hundreds of citations the family has received from City Hall.

    Despite efforts to crack down on their business practices, the family has continued to operate a substandard business and paid pennies on the dollar in fines, city officials argue.

    And Dallas City Hall says that must end: The lawsuit asks for the court to appoint a receiver to “take charge and possession” of the 190 properties owned by Dennis Topletz, family members or one of his myriad subsidiaries. That receiver would be tasked with repairing properties, collecting rents and evicting residents who refuse to pay their rents — all the duties normally associated with a landlord. The receiver would only be prohibited from actually selling the properties, including a handful of houses cited as havens for drug sales.

    Dennis runs the family business started by his late father Harold and uncle Jack, who died in 2013.

    The city says it’s asking for a receiver due to “the Topletz Defendants’ ongoing and repeated mismanagement of the Topletz Properties through placement of tenants in substandard conditions; failure to provide the necessary repairs and maintenance of the Topletz Properties while collecting rents from tenants, the mistreatment of tenants in contravention of tenants’ rights provided by state law; and the substantial danger of injury or adverse health impact to the Topletz’ tenants and adverse effects to neighboring properties.”
    When reached at his office on Inwood Road Wednesday afternoon, Dennis Topletz said he had not yet seen the just-filed suit and suggested calling back for comment sometime next week, after he and his lawyers had reviewed its contents. But he didn’t seem overly concerned when informed of the city’s request for a receiver to seize control of the rent houses.

    The city has “deep pockets,” says Topletz, who’s tussled with city attorneys for decades. “I don’t see where it would go, other than the lawyers need something to do. I am really surprised they would spend the effort to do it. We’ll have to address it when they come forward. It’s one more thing to do.”

    The family has long escaped punishment and defended its actions. Jack Topletz, who died in 2013 at the age of 100, told D in 1987 that “we’re in the investment business, not the rental business.”

    Twelve years later, in a cover story headlined “How the Slumlord Beats the City Every Time,” the Dallas Observer chronicled how the Topletzes beat back the city’s crackdown efforts — by fighting every ticket and appealing every verdict, sometimes to the Texas Supreme Court, and waiting out a city attorney’s office trying to put out bigger fires than drug houses in South Dallas.

    Twenty-one years ago, the city filed a massive lawsuit against the Topletzes and other relatives that isn’t much different from the one taken to the courthouse today. It too sought an injunction stopping the Topletzes from renting out their properties; it too tried to force them to repair their rotten homes. But the case never went anywhere, and by 1997 it was tossed by a judge for “want of prosecution.” Tom Korosec, then writing for the Observer, noted that “the lawsuit hardly got off to a fast start, and as the file shows, the city did almost nothing to push it along.”

    [Dallas Mayor Mike] Rawlings says this time, things will be different.

Bail Bondsman w/ Dubious History Gets Pinched After Allegedly Filing Fraudulent Deed To Customer's Property, Then Rent Skimming Premises & Allowing Home To Go Into Foreclosure

In Farmington, New Mexico, the The Farmington Daily Times reports:
  • Daniel Goldberg Sr. has been charged for a third time in magistrate court with fraud in connection to his alleged activities as a bail bondsman.

    The 55-year-old former candidate for San Juan County sheriff was charged [] in Farmington Magistrate Court with eight counts of fourth-degree felony fraud.

    He was previously charged in two separate cases filed in July and August in Aztec Magistrate Court with an additional eight counts of felony fraud, four counts of extortion, five counts of misdemeanor fraud and racketeering.

    Goldberg was arrested Thursday and is being held at the San Juan County Adult Detention Center on a $80,000 bond, according to court records.
    [T]he Daily Times requested and received a copy of the arrest warrant affidavit from the court [].

    Police allege in the affidavit that Goldberg filed a fraudulent quitclaim deed with the San Juan County Clerk's Office on September 26, 2013, to seize a property at 2807 E. 30th St. in Farmington.

    The property was owned by Christie Donnelly, the affidavit states. Donnelly, 44, contacted Farmington police detectives in April 2015 to report the alleged fraud, the affidavit states.

    She told detectives she had signed an agreement with Goldberg in September 2013 that allowed Goldberg to collect rent and make mortgage payments at the property, which would provide him a net monthly sum of $298.

    In exchange, Goldberg would post a $6,000 cash bond for her husband, according to the affidavit. Instead, Goldberg filed the quitclaim deed and sold the property to himself for the sum of $10, the affidavit states.

    According to the San Juan County Assessor's website, the property is currently owned by Daniel Goldberg Sr. and his son, Daniel Goldberg Jr. It has an actual value of $170,440, according to the county assessor.

    Donnelly told detectives she never signed a quitclaim deed, but she did sign the contract that allowed Goldberg to collect rent at the property. Donnelly said she learned the property had been seized in August 2014 after she received a foreclosure notice for it.

    Police learned from the property's tenants that Goldberg had collected $11,500 in property rent between October 2013 and August 2014.
    Goldberg Sr. is not authorized by the state of New Mexico to act as a bail bondsman after regulators refused to renew his license in 2007, according to state records. He previously had a Florida bail bondsman license suspended in 1991 after he was accused of issuing bail bonds while employed as a police officer.

    In November 1990, He was also criminally charged for issuing a bail bond while employed as a law enforcement officer and pleaded no contest to a misdemeanor offense.

    An investigation by The Daily Times in October also showed Goldberg used the alias "Daniel Zbras" to conduct business and register to vote in Florida.

Having Signed Contract To Unload Dilapidated Foreclosed 25-Unit Jackson Hole Motel, Bank Sends Dozens Of Long-Term Tenants Onto The Street Scrambling For Shelter After Giving Them The Boot; Dispossessed Join Ex-Trailer Park Residents As Casualties Of Local Affordable Housing Shortage, Increased Development

In Jackson Hole, Wyoming, the Jackson Hole News & Guide reports:
  • Dozens of long-term tenants have been forced out of a dilapidated motel on North Cache Street because the building was deemed unsafe by the owner, the Bank of Jackson Hole.

    Residents of the Pioneer Motel reported regular power outages and, at times, no running water. The bank had been warning people for months that they would have to move soon because of the motel’s condition. Chief Executive Pete Lawton said there were a variety of code violations. “It’s truly a safety issue,” Lawton said.

    Social workers from the Community Resource Center helped some of the displaced people over the past few weeks and said the motel was potentially dangerous for tenants. “A lot of them didn’t have electricity,” said Carmina Oaks, a case manager with the nonprofit. “Some of them were telling me they had holes in the floor. Others didn’t get water all the time.”

    The tenants, who were all Latino, have been scrambling to find places to stay. Some landed with family members, Oaks said, while others found rooms in other motels.

    The Pioneer, which was built in 1958, has 25 units spread out through several buildings and is located just blocks from upscale hotels and Jackson’s historic Town Square. Some of the motel rooms have broken window panes that are covered with plastic.

    While the conditions weren’t ideal, some tenants said they didn’t mind the motel because of the low rent. And given Jackson Hole’s housing shortage, it at least offered a roof to sleep under.


    Former tenants of the Pioneer Motel are just the latest casualties in Jackson Hole’s housing shortage. Earlier this year residents of a downtown trailer park were given short notice to move because of the impending development of a 121-room Marriott Hotel. Another cluster of mobile homes was cleared [...] to make way for new apartments, which will rent for an estimated $1,800 a month.


    The fate of the Pioneer Motel remains uncertain. The bank owns the property and several nearby parcels because of a 2013 foreclosure. Lawton pointed out that the bank never set out to be a landlord or developer. The property is under contract, but uncertainties about zoning have made it difficult to close a deal in the past, Lawton said. The Jackson Town Council has gone back and forth debating new zoning rules, and housing has been at the crux of the issue. Town officials have butted heads with each other and community organizations about how much more commercial development should be allowed versus housing.

    Unsure of the motel’s future, bank officials warned tenants several times over the past few months that they might soon have to leave. The Community Resource Center distributed a list to tenants in September listing other motels around the valley that had openings. That gave some people a chance to relocate, but Oaks said many of the motel rentals around town only last through the spring. People may soon have to look for housing again.

Thursday, November 26, 2015

Ohio AG Files Civil Suit Targeting California-Based Loan Modification Racket That Held Itself Out As Law Firm Using "Legal Aid Services" Moniker For Allegedly Using False Promises To Fleece Homeowners Seeking Mortgage Help

From the Dayton [Ohio] Business Journal:
  • Ohio Attorney General Mike DeWine [] announced a lawsuit against a California company accused of failing to deliver promised mortgage loan modification services to Ohio consumers.

    The lawsuit accuses Legal Aid Services Inc., last operating in California, of violating Ohio's Consumer Sales Practices Act and Debt Adjuster's Act.

    "Consumers paid this company thousands of dollars thinking they would receive assistance from a professional law firm," DeWine said. "Instead, they received no meaningful help and were left in a worse financial position."

    According to the lawsuit, Legal Aid Services Inc. promised mortgage loan modification services, including interest rate reductions, to Ohio consumers and represented itself as a law firm, even though it did not employ attorneys who were licensed in Ohio.

    Three Ohio consumers filed complaints saying they paid Legal Aid Services Inc. more than $3,000 each but the company failed to provide the promised services or to return the money.

    The Attorney General's lawsuit, filed yesterday in the Delaware County Common Pleas Court, seeks damages for affected consumers, civil penalties, and an end to any violations of Ohio consumer protection laws from the business and its owner, Floyd George Belsito.

    Consumers who want help modifying their mortgage loan or avoiding foreclosure should not trust companies that charge upfront fees before providing any services.

    Consumers who suspect unfair business practices should contact the Ohio Attorney General's Office at or 800-282-0515.

    A copy of the lawsuit is available on the Ohio Attorney General's website.

Elderly Breast Cancer Victim Speaks Out On Since-Shuttered Loan Modification Racket That Fleeced Her Out Of $2,100+ & Duped Her To Stop Making Mortgage Payments

In Round Rock, Texas, KXAN-TV Channel 21 reports:
  • Clara Howerton, 72, has lived in her house in Round Rock for 26 years. “I just fell in love with it. It was just the kind of home I liked. I’ve been very comfortable here for all the years,” said Howerton.

    The last few years haven’t been easy though. Breast cancer forced her to quit her job and she has been struggling to pay the bills ever since. A call came in from Legal Educators USA in Beverly Hills offering Howerton a solution to her financial problems. The company told her they could lower her monthly mortgage payments and her interest rate for a small fee.

    As told, she had to act fast and soon wrote the company three checks, each more than $700 and agreed to stop making her regular mortgage payment.

    “I thought this is a godsend. This is really going to help me get on my feet and get my house taken care of.”

    Six months went by and letters from the bank were piling up. $6,000 behind on her payment and close to losing her home, she finally heard back from the person in charge at Legal Educators USA, Veronica Sesma.

    “She told me I want you to quit worrying about this, I want you to settle down, you just need to be patient.” Howerton trusted the woman on the other line. “I guess I just got suckered, really suckered.”
    KXAN discovered dozens of complaints across the country and multiple variations of Sesma’s company. To avoid detection, it appears Sesma renames the company repeatedly to approach new, unsuspecting homeowners. After a recent nation-wide investigation, the Federal Trade Commission finally shut her down this fall, revealing the total amount authorities believe she took from consumers over several years tallied up to nearly $900,000.

Wednesday, November 25, 2015

New Haven Feds Bag Real Estate Operator Who Allegedly Ran Rent Skimming Racket After First Duping Financially Distressed Homeowners Into Signing Over Title, Control Of Their Homes Under False Pretense That Suspect Would Pay Off Mortgages

In New Haven, Connecticut, the Connecticut Post reports:
  • A 64-year-old Easton man - using 13 different alias names - has been arrested in what federal officials call a long-running fraud scheme that targeted distressed homeowners.

    Timothy W. Burke was arrested [] for a using a scheme he alllegedly created to defraud individuals, mortgage lenders and the U.S. Department of Housing and Urban Development by falsely representing to homeowners who were in, or facing, foreclosure on their homes that he would purchase their homes and pay off their mortgages.

    How it worked

    Federal officials said the distressed homeowners agreed to sign various documents, including quit claim deeds, indemnification agreements, management agreements and third-party authorization letters, which Burke presented to them on the understanding that, by signing the documents, they would be able to walk away from their homes without the burdens of their mortgage or other costs associated with home ownership.

    Burke also told homeowners that the process of negotiating with the lenders “can take time and that, in the meantime, to ignore any notices regarding foreclosure.”

    Sounds too good to be true? According to federal investigators, it was.

    After he gained control of these houses, Burke rented out the properties to tenants by advertising the properties on and other means and falsely representing to tenants that Burke owned the property.

    The complaint further alleges that Burke - or one of his agents - then collected rent from tenants, in person, and Burke used the funds for his own benefit.

    Federal investigators say Burke failed to negotiate with the homeowners’ mortgage lender or pay expenses associated with the home, including the homeowner’s mortgages, taxes, insurance, association dues, or other expenses. And he failed to pay any rental income he was collecting to the homeowners, who thought he was helping them out.

    The investigation also revealed that homeowners often discovered on their own, and to their surprise, that Burke had rented out their houses.

    In the end, many of the properties Burke purportedly purchased were ultimately foreclosed upon by the mortgage lender.
For the U.S. Attorney (New Haven) press release, see Easton Man Charged with Defrauding Distressed Homeowners.

South Florida Man Gets 30 Months, Agrees To Forfeit 10-Acre Residential Property After Getting Bagged For Duping Bank Into Taking $1.2 Million 'Haircut' In Deal Purporting To Be Arms-Length Short Sale

From the Office of the U.S. Attorney (Miami, Florida):
  • A defendant was sentenced to 30 months in prison, followed by three years of supervised release for arranging a fraudulent short sale of a 10-acre residential property in Southwest Ranches, Florida. A restitution hearing is scheduled for January 22, 2015.
    Jaime Olaya Marroquin, a/k/a Jaime Olaya, 53, previously pled guilty to one count of bank fraud, in violation of Title 18, United States Code, Section 1344. As part of his plea agreement, Olaya agreed to forfeit the 10-acre property involved in this transaction.

    According to court documents, in 2005, Olaya purchased a 10-acre residential property in Southwest Ranches, Florida. In 2008, he quitclaimed ½ of the property to AJZ Investments (AJZ), a company he controlled. To avoid having to continue making payments on the $1.6 million mortgage debt, Olaya submitted a request to the bank for a short sale on the property while intentionally excluding the portion of the property he quitclaimed to AJZ.

    Olaya arranged for his family member to make a written offer to purchase the property for $430,000, but he did not inform the bank that the buyer was a family member. The defendant represented to the bank that the buyer would be putting her own money into a cash purchase of the property, but in reality the buyer did not put any money into the purchase. Olaya wired the money to the U.S. from a bank in Colombia after telling the bank that he did not have sufficient assets to pay the original mortgage debt.

    The bank approved the short sale of the property for $430,000, and canceled Olaya’s remaining $1.2 million debt and released the mortgages encumbering the entire 10 acres. As a result of the fraud, Olaya was successful in preventing the bank from obtaining the benefit of the approximately $421,000 value of the property that was quitclaimed to AJZ.

Real Estate Operator Cops Guilty Plea For Role In Bay State Short Sale Leaseback Racket; Duped Banksters Into Taking 'Haircuts,' Releasing Mortgages At Discount While Believing Transactions Were Arms-Length Deals, Losing Million$

From the Office of the U.S. Attorney (Boston, Massachusetts):
  • A Methuen business executive pleaded guilty [] to participating in a conspiracy to defraud banks and mortgage companies by engaging in sham “short” sales of residential properties in the Merrimack Valley of Massachusetts.

    Dahianara Moran, 40, pleaded guilty to one count of conspiracy to commit bank fraud. U.S. District Court Judge Rya W. Zobel scheduled sentencing for Feb. 17, 2016.

    Moran conspired with others – including a Methuen loan officer and a Haverhill real estate agent who were not identified in the charging document – to defraud various banks via bogus short sales of homes in Haverhill, Lawrence and Methuen.

    A short sale is a sale of real estate for less than the value of any mortgage debt on the property. Short sales are an alternative to foreclosure that typically occur only with the consent of the mortgage lender, and that generally result in the lender absorbing a loss on the loan and releasing the borrower from the unpaid balance. By their very nature, short sales are intended to be arms-length transactions in which the buyers and sellers are unrelated, and in which the sellers cede their control of the subject properties in exchange for the short-selling bank’s agreement to release them from their unpaid debt.
    As part of the scheme, Moran and her co-conspirators submitted materially false and misleading documents to numerous banks in an effort to induce them to permit the short-sales – and thereby to release the purported sellers from their unpaid mortgage debts – while simultaneously inducing the purported buyers’ banks to provide financing for the deals. In fact, the purported sellers simply stayed in the homes, with their debt substantially reduced. In some cases, the conspirators then re-sold the properties in genuine arms-length transactions for a profit. Meanwhile, the short-selling banks lost millions of dollars.

    As part of the conspiracy:

    The conspirators falsely led banks to believe that the sales were arms-length transactions between unrelated parties, when in fact, the transactions were not arms-length, and the sellers retained control of (and frequently continued to live in) the properties after the sale. For example, Moran purported to sell two properties she owned to third parties who were, in fact, her close relatives, while actually maintaining control of both properties.

    The conspirators submitted phony earnings statements that Moran prepared in support of loan applications that they submitted to banks in order to obtain financing for the purported sales.

    The conspirators submitted phony HUD-1 Settlement Statements to banks, as well as to the Federal Housing Administration, that did not accurately reflect the disbursement of funds in the transactions. (A HUD-1 Settlement Statement is a standard form, developed by the U.S. Department of Housing and Urban Development, that is used to document the flow of funds in real estate transactions.HUD-1 Settlement Statements are required for all transactions involving federally related mortgage loans, including all mortgages insured by the Federal Housing Administration.)

    Hayacinth Bellerose, a real estate attorney from Dunstable, Mass., pleaded guilty last month to the same charge and is scheduled to be sentenced on Feb. 4, 2016.
For the U.S. Attorney press release, see Methuen Executive Convicted in Mortgage Fraud Conspiracy.

Attorney For Defendant Accused Of Bid-Rigging At Foreclosure Auctions Urges Judge To Supress Certain Evidence, Accusing Feds Of Illegally Bugging Courthouse So It Could Capture Alleged Conspirators' Conversations

In Los Angeles, California, Law360 reports:
  • Latham & Watkins LLP has told a California federal judge that the FBI illegally bugged a courthouse so it could capture conversations proving its allegations of bid-rigging at real estate foreclosure auctions, and urged the judge to block any evidence from the alleged eavesdropping.

    [Last week], in a motion to suppress evidence, Latham — which is representing one of the defendants who allegedly rigged bids to obtain properties at public auctions — argued that FBI agents planted electronic recording devices outside the San Mateo County courthouse...

Tuesday, November 24, 2015

Washington Post To D.C. City Council: You Did Wrong! Now Do Right & Quit Fighting Class Action Lawsuit & Compensate Ex-Homeowners Who Got Screwed Out Of Their Home Equity By Your Abusive Tax Lien System

From an editorial in The Washington Post:
  • D.C. OFFICIALS wasted no time in reforming the city’s tax collection system in the wake of an exposé detailing abuses that resulted in people losing their homes. Clearly, they knew they were in the wrong — and yet they still refuse to compensate the people they victimized. Instead of spending taxpayer dollars on a court fight, city officials should explore ways to settle the claims of vulnerable residents who were taken advantage of by an unfair system.

    An investigation by Post reporters in 2013 revealed that the city’s tax lien system for collecting delinquent taxes resulted in disastrous consequences for residents vulnerable because of their age or mental capacity. Residents who owed even small sums in property taxes lost their homes altogether through foreclosure by private investors who had purchased property liens imposed by the city. Among those featured was Benjamin Coleman, a 76-year-old retired Marine sergeant who suffered from dementia and was turned out of his home after he neglected to pay a $133.88 property- tax bill.

    After the Post series, the D.C. Council put safeguards in place , but they are no help to Mr. Coleman. He lost his home and all the equity he had poured into it to a private investor who resold it for a big profit; Mr. Coleman now lives in a group home.

    A class-action lawsuit seeking redress for him and about 30 similarly affected residents has been filed in U.S. district court. The D.C. attorney general’s office is vigorously fighting the suit, arguing unsuccessfully for summary dismissal. The District contends that the constitutional bar against unlawful taking doesn’t apply in the lien cases because home equity is not really property, and these residents forfeited their rights when they failed to pay taxes.

    “Doubling down on the dispossessed” was the apt characterization of this position in a recent essay in The Post’s Local Opinions section. A spokesman for D.C. Attorney General Karl A. Racine stressed that his office’s job is to protect the interests of the city, which could be on the hook for millions of dollars if the unfortunate former homeowners prevail. But surely it’s also his job to do the right thing. We urge Mr. Racine to reassess decisions about this suit and consult with the mayor and D.C. Council about how to compensate these residents for their losses.

Fort Lauderdale Building Owner Takes Financial Hit As City Commission Saddles Property w/ Historic Status Designation; City Offers No Program To Compensate Owner For Lost Property Value

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A piece of the city's history was saved Tuesday — over the objections of its owner. City commissioners awarded historic status to the former Towers Apartments building, a 1925 Mediterranean Revival structure by famed architect Luis Abreu.

    The building, currently the Towers Retirement Home at 824 SE Second St. in the Beverly Heights community, operates as an assisted living facility for people with mental health issues. The historic designation was requested by the Broward Trust for Historic Preservation. Property owner Mark Nelson said it would create an economic hardship for his family.

    "If the city thinks the building is that important, I would be willing to sell it to you at fair market value," Nelson said, questioning its historic value. "It's an ugly, square commercial building."

    Commissioners sympathized with Nelson and were concerned about possibly infringing on his property rights, but said the building was clearly historic and met the city's requirements for designation.

    Only Vice Mayor Robert McKinzie voted against the action. "I can't support the ordinance because it's someone's property rights," McKinzie said.

    Other commissioners approved the measure with reservations, asking city staff to bring them options showing ways that might be of help to Nelson and others put in a similar position. "I think we need to look for some type of solution to help the property owner," Commissioner Bruce Roberts said.

    The move comes after commissioners recently rejected historic designations for a pair of 1930s beach properties that are going to be torn down to make way for a new AC Hotel by Marriott.

    Mayor Jack Seiler said those situations were different because of alterations made to the buildings over the years and because the neighbors seeking the historic designations were just as interested in blocking the hotel's development. "Those were of questionable historical value. They were of questionable historical significance," Seiler said. "This building's different."

    The Towers building features barrel tile, stucco facades, square columns, conical towers and a central courtyard, all typical of its style. It was the largest apartment building in Broward County for years and catered to a wealthy clientele of snowbirds.

    Its designation doesn't prevent changes to the building, but requires those changes to be approved by the city's Historic Preservation Board.

    Steve Glassman, president of the Broward Trust, encouraged commissioners to work with Nelson to see whether tax abatements, tax credits or other assistance is available. "Not designating this site would be unconscionable," Glassman told commissioners.

    Stephen Tilbrook, an attorney for Nelson, said potential buyers lose interest because of the historic designation. "It certainly impairs the value of the property," Tilbrook said. "This owner has had two contracts [to sell the property] that have been canceled since this application has been filed."
Source: Lauderdale retirement home gets historic designation.

See also, Lauderdale wrestles with preservation vs. property rights:
  • The city's preservation rules don't require an owner's consent for designation, but taking such a step has given commissioners pause because of the perceived infringement on property rights.

    "I have some serious concerns [that] anybody can file an application on anybody else's property," Commissioner Bruce Roberts said. "Personally, I don't think it's appropriate for somebody to come in and say, 'I'm designating your property historic and therefore you can't do anything to it until you go through A, B and C again.' I don't think that's correct."

    Preservationists say sometimes that's the only way a building can be saved when faced with an uncooperative owner.

    But Nelson said property rights need to be respected.

    "This has been a nightmare for me and my family," Nelson said. "It's nearly impossible to operate a business in this environment. We can't sell the property. We can't sell the business. We can't even freely improve our property."

    If the designation is approved, any alterations to the building would have to be approved by the preservation board. Preservation isn't cheap and the city has no program to compensate owners for lost property value.

    Nelson told the preservation board that he has had offers of $5.5 million for the property. He said potential developers were talking about tearing the building down, not restoring it, offers that he said would disappear if the building is given protected status.

    "What are they going to do for the property owners? What are they going to do to make this right?" Nelson asked. "They need to change the ordinance."

NYC Landlord/Developer Who Allegedly Sneaked Early Termination Clauses Into Tenant Leases In Effort To Ultimately Give Them The Boot As Part Of 150-Unit Building Condo Conversion Agrees To Cough Up $1.5 Million To Get State AG Off Its Back

From the Office of the New York State Attorney General:
  • Attorney General Eric T. Schneiderman [] announced that he has reached a settlement with 165 E Residences, LLC – the developer of a condominium conversion at 165 East 66th Street on Manhattan’s Upper East Side – for improperly terminating leases for market-rate tenants.

    An investigation by the Attorney General’s Real Estate Finance Bureau found that the developer terminated 82 leases during the conversion and only allowed tenants to stay for an additional six months if they waived standard legal protections. The settlement, which offers new leases to the 82 residents and legal protections for the tenants, brings to a close the investigation.


    The 150-unit East 66th Street building has been home to residential renters, including rent-stabilized tenants, for more than 50 years. The developer, 165 E 66 Residences, LLC, bought the almost fully-occupied building in late 2013. Soon thereafter and continuing over the next year, the developer began inserting early termination clauses into market-rate lease renewals, which some residents alleged were inserted under false pretenses, including oral promises that the developer would not exercise the termination clause.

    Then, beginning in November 2014, the developer sent notices terminating leases by declaring that a tenant’s apartment would be undergoing substantial renovations, and also attempted to identify tenants for buy-outs. Soon thereafter, the Attorney General launched an investigation into the developer’s tactics, which has resulted in today’s announced settlement.

    Under the settlement obtained by Attorney General Schneiderman, 165 E 66 Residences, LLC has agreed to pay $1.5 million to New York City’s Affordable Housing - AG Settlement Fund, which was established in June 2014 to help finance affordable housing for low-income New Yorkers. This brings the total funds from AG settlements to more than $7 million. An additional $225,000 will be paid to the Attorney General’s Office to cover the costs and expenses of the investigation.

    Under the agreement, the developer will offer all remaining tenants new leases, which will extend to at least June 30, 2016, and ensure that tenants receive an exclusive right to purchase their unit. Additionally, the developer will ensure that the offering plan allows market-rate senior and disabled tenants to elect to become non-purchasing tenants, thereby guaranteeing them the right to annual lease renewals and ensuring there will be no unconscionable rent increases if they choose to remain renters.
For the entire news release, see A.G. Schneiderman Announces $1.75 Million Settlement With NYC Developer Over Improper Condo Conversion Tactics (Developer Disregarded Rights of Renters During Upper East Side Building Conversion).

For the settlement terms, see In re: 165 E. 66 Residences, LLC.

State AG Puts Kibosh On Sneaky NYC Landlord Who Abused Unintended Exemption From Rent Limitations By 'Disguising' 44-Unit Building As A Co-Op, Yet Operating It As A For-Profit, Market-Rate Rental Building, Screwing Tenants Out Of Rent Protections

From the Office of the New York State Attorney General:
  • Attorney General Eric T. Schneiderman [] announced the settlement of a dissolution action against a cooperative housing corporation, Ft. George Apt. Corp., and its shareholders, the affiliated entities Fort George Property, LLC, Fort George Realty, LLC, and NY Tryon Realty LLC. The settlement resolves allegations that Ft. George Apt. Corp. exploited the rent stabilization exemption available to housing cooperatives – an exemption that is meant to promote homeownership by protecting individual homeowners, not landlords.

    Under the settlement, all tenants residing in the building will be entitled to rent-stabilized leases at affordable rents. Additionally, the developer can either restate the existing cooperative plan to provide an exclusive opportunity for tenants to purchase their apartment at a 25% discount from market prices, with access to first time homebuyer counseling, down payment assistance, and access to conventional financing at competitive rates, or the developer may convert the building to a limited-equity housing cooperative into the future.


    The Martin Act regulates the conversion of rental buildings to cooperative status – providing protections for tenants while promoting homeownership. After the conversion, however, newly leased apartments in a cooperative are exempt from providing rent-stabilized apartments, in order to promote homeownership.

    The building, at 121-131 Ft. George Avenue, is a 44- unit apartment building in Washington Heights. Prior to its conversion from a residential rental building to a housing cooperative in 1987, all tenants in the building enjoyed rent stabilization or rent control protections.

    Soon after the conversion, however, the original developer stopped selling shares to homebuyers, and instead reacquired all of the shares that had been sold and began renting out all of the apartments at market rate. In January 2014, all shares of the housing cooperative were sold to Fort George Property, LLC, Fort George Realty, LLC, and NY Tryon Realty LLC, who immediately attempted to raise rents substantially on expiring leases.

    In January of 2015, the Attorney General filed legal papers seeking to dissolve the corporation after receiving complaints from long-time tenants who were facing massive rent hikes. The Attorney General sought a temporary restraining order barring Fort George Property, LLC, Fort George Realty, LLC, and NY Tryon Realty LLC from evicting tenants or bringing eviction proceedings against any tenant for failure to pay any rent increases.

    The papers alleged that the housing cooperative was subject to dissolution for acting contrary to its corporate purpose – to sell shares to apartments to use as residences. It was also alleged that the cooperative was exploiting an unintended exemption from rent stabilization by operating under the guise of a cooperative, yet acting as a for-profit rental building.

    The settlement [] will protect tenants by returning all apartments to rent stabilization while providing an avenue for homeownership opportunities into the future. All apartments will immediately be subject to rent stabilization protections and the developer can either amend the existing cooperative plan and offer a 25% discount to tenants or seek to convert the building to a limited-equity housing cooperative – two options that will make the dream of first-time home ownership a reality. Tenants will also be connected with mortgage assistance groups who specialize in working with low-income tenants and first time homebuyers.

    This case marks the first time the first time the Attorney General’s office has used dissolution powers to stop the abuse of rent stabilization exemptions that are meant to promote homeownership in housing cooperatives. ...
For the entire news release, see A.G. Schneiderman Announces Settlement That Returns Manhattan Apartment Building To Rent Stabilization, Provides Tenants With Homeownership Opportunities (Landlord Operated Market-Rate Rental Building Despite Official Status As Co-Op Will Return Rental Units To Rent Stabilization And Explore Homeownership; Case Marks First Time Attorney General’s Office Has Used Dissolution Power Against A Housing Cooperative To Protect Tenants).

Monday, November 23, 2015

Illinois Supremes OK Right Of Rescission For Corporate Trustee Of Illinois Land Trust In Reverse Mortgage Transaction Where Lender Failed To Provide TILA Disclosure Docs To Both Trustee & Since-Deceased Homeowner

From a recent article in The National Law Review:
  • The Illinois Supreme Court held in Financial Freedom Acquisition v. Standard Bank & Trust Co. et al., 2015 IL 117950 (2015) that a trustee of a land trust qualified as a consumer under the Truth in Lending Act (TILA) and had the statutory right to rescind a reverse mortgage transaction and obtain damages if it did not receive TILA disclosures.

    Although the trustee had no independent liability in the transaction, the trustee fell within TILA’s definition of a consumer as the legal and equitable owner of the mortgaged property. The decision serves as a reminder that careful loan documentation and delivery of all disclosures are critical to protecting creditors’ rights and limiting exposure to lender liability claims.


    In Financial Freedom, an individual borrower obtained a reverse mortgage on her condominium, which was held in a land trust. The transaction was evidenced by a mortgage granted by the corporate trustee of the land trust, and a note signed by both the individual and the trustee. The land trustee had no personal liability under the note, and the lender’s only recourse was to foreclose its security interest on the property.

    The individual borrower received the required TILA disclosures, but they were not delivered to the trustee. The loan became immediately due upon the individual borrower’s death, and the lender filed suit against the trustee and other potential claimants to foreclose its mortgage. After the foreclosure complaint was filed, the trustee served notice of its intent to rescind the transaction on the lender because it was not given the required TILA disclosures and filed a counterclaim seeking both rescission and statutory damages under TILA.

    During the foreclosure, the trustee paid off the loan, terminated the trust, and deeded its interest in the property to a third party. The lender then voluntarily dismissed the foreclosure and also moved to dismiss the trustee’s counterclaim. The trial court dismissed the counterclaim, and the appellate court affirmed, holding that the trustee had no right of rescission because it had no liability under the note, and thus only the individual borrower was an obligor entitled to rescission.

    The Illinois Supreme Court reversed the appellate court, finding that the trustee stated a viable counterclaim under TILA.(1)
    TILA violations are frequently raised both as counterclaims in foreclosure actions and in consumer class action lawsuits. The Illinois Supreme Court’s decision in Financial Freedom reinforces the importance of providing TILA disclosures to all persons whose ownership interest in mortgaged property may be subject to the lender’s security interest.
For more, see Illinois Supreme Court Holds Trustee of Land Trust is Entitled to Rescind Reverse Mortgage For Failure to Comply With TILA.
(1) The intermediate appeals court ruling that was reversed was a 2-1 ruling with a dissenting opinion, a dissent that was accorded attention by the Illinois Supreme Court as part of its analysis when reaching its unanimous, 7-0 reversal in favor of the homeowner. Another situation where the lone voice of a dissenting, intermediate appeals court judge ultimately won the day. Financial Freedom v. Standard Bank, 13 NE 3d 776 (Ill. App. 1st Dist., 6th Div. 2014) (Gordon, J. dissenting).

Indiana Appeals Court To Notorious Foreclosure Judgment-Buying Vulture: Since Bank Already Forfeited Right To Collect Deficiency Funds Before It Assigned You The Judgment, Garnishment Of Ex-Homeowner's Paycheck Was Improper, So Stop Squeezing Him & Give Him Back The Money You Already Took!

From a recent client alert from the law firm Bradley Arant Boult Cummings LLP:
  • The Indiana Court of Appeals recently held that creditors must move for an in personam remedy in the original foreclosure judgment or forfeit their right to collect deficiency funds.

    In Elliott v. Dyck O’Neal, the bank foreclosed upon a borrower’s residence, and sought judgment against the borrowers for the full amount of the outstanding balance in the complaint. The motion for default judgment, and accompanying order, however, only sought an order in rem for the outstanding debt—omitting any mention of an in personam remedy.

    The judgment was eventually assigned to a third party creditor, who sought to collect the deficiency balance through wage garnishment. The Indiana court held that the judgment creditor was not entitled to collect any deficiency from the borrower due to the failure to seek proper relief in the judgment.

    More significantly for those seeking to recover deficiency funds, the court also held that the third party creditor was required to refund all monies it had collected from the borrower related to the deficiency—as the judgment order did not allow for collection against the borrower personally.

NJ Judge Cautions Bankster Against Sleazy Secret Double-Dipping On Hurricane Sandy Foreclosures; Orders Disclosure Of Any Pocketed Insurance Proceeds Yet To Be Used To Repair Home Damages To Avoid Bidding Suppression At Public Sale

In Toms River, New Jersey, reports:
  • A mortgage lender has to disclose before a property is sold through foreclosure whether it has insurance money to repair any damages, otherwise there's the potential for double-dipping, a Superior Court judge has said.

    The ruling by Judge Francis Hodgson Jr. in Ocean County attempts to make the foreclosure process – particularly of properties damaged by Hurricane Sandy – a more open and fair one to bidders and the property owner, attorneys for the property owner said.

    "By permitting the lender to hold the insurance proceeds secretly through the sale suppresses the fair market value, discourages bidders and allows the lender to potentially retain excess collateral, thereby prejudicing the borrower," Hodgson said in his decision.

    Hodgson ruled on a case involving a home in the Ortley Beach section of Toms River that was in foreclosure before Hurricane Sandy. After the 2012 storm, the property owner, Nicole Strumeier, got $190,000 from her insurance company for flood damage, but her lender, HSBC, kept the money, as permitted by the terms of the mortgage.

    Under the mortgage terms, the lender could either apply the money to decrease the debt owed on the property or it could use the money to make the necessary repairs.

    HSBC said it would use the money to make the repairs, according to court documents. It said the repairs would be done after the sheriff's sale.

    The legal fight, however, came when HSBC tried to set the price for the house through the sheriff's sale. HSBC had no plans to disclose to potential bidders that it was holding an insurance check for $190,000 to go toward repairs, the decision said.

    Hodgson said that gave the mortgage lender an unfair advantage. Without knowing that there was money available to make the repairs and without a price reduction to reflect the amount of repairs, bidders would be discouraged from making an offer on the property and the lender would wind up purchasing it at a nominal amount, Hodgson said.

    Hodgson made the ruling verbally in June but he expounded on it in a written opinion on Oct. 30.

    R. Jared Stepp, an attorney for the Westwood lawfirm Denbeaux & Denbeaux that represented the homeowner, said the ruling was a reasonable one.

    "His decision was good for homeowners, which is a refreshing change," Stepp said.

    He said that without HSBC disclosing the existence of the insurance funds and not reducing the sale price by that amount, potential bidders would have been at a double disadvantage: they would be making an offer that didn't reflect true fair market value or they would have been dissuaded from bidding altogether out of concern they couldn't afford the repairs.

    Because the house has not yet been the subject of a sheriff's sale, Stepp noted the case did not get to the point to test whether HSBC would have disclosed the existence of the funds at any point in the foreclosure process.

    "The money should go to the purchaser at sheriff's sale," Stepp said. "But if (the bank) neglects to transfer the money to them, that's a situation where the bank would get a windfall, which is what the judge was trying to avoid."

"Sewer Service" Victims Score $59 Million Settlement In Class Action Suit Accusing Sleazy Law Firm, Process Servers & Zombie Debt Buyers Of Obtaining Default Judgments Against Consumers Without Properly Serving Them w/ Court Papers

In New York City, The New York Times reports:
  • Tens of thousands of New Yorkers who had their wages garnished or bank accounts frozen in a surreptitious debt-collection scheme will receive $59 million in a class-action settlement that also bars a major network of collectors from continuing the practice.

    The settlement, which was filed [...] in Federal District Court in Manhattan, deals a significant blow to an industry that in recent years fed off a recessionary rise in consumer debt actions as companies bought up charged-off debt at low rates and then sought to recover the full debt for themselves.

    It also gives hope to a larger group of mainly low-income, minority New Yorkers who are under a cloud of about $800 million in default judgments that the collectors won using fraudulent documents in court, according to legal filings. The plaintiffs will probably have those judgments vacated, and a major network of firms will be forced to stop buying and collecting debt, according to the settlement terms.

    “I’m happy that it’s finished — that these companies pay for what they did, and they will not be able to do that again,” said Rea Veerabadren, 63, a plaintiff who had her bank account restrained after a default judgment in 2006. “Maybe one day I will be able to forget, but this was the worst time of my life.”

    A class-action lawsuit filed in 2009 accused debt collectors of using a practice known as “sewer service.” That meant debt collectors failed to serve a notice of complaint but filed a false affidavit claiming that the notice had been properly served and that they had evidence of the money owed. People with the alleged debt, unaware of the complaint, did not show up in court, setting off a legal proceeding under which the collector almost always won a default judgment against them.

    In Ms. Veerabadren’s case, the lawsuit says a process server swore in an affidavit to leaving papers with a man at her Queens home whom she had never heard of. Ms. Veerabadren, a nanny from Mauritius, said she panicked and did not know where to turn when the bank froze her account and charged her a $125 legal processing fee.

    Consumer advocates say victims often first learn they are being targeted when property is seized. A default judgment on its own can follow someone for decades, making it difficult for that person to rent an apartment, open a bank account or get a job.

    “There’s wealth being systematically extracted, which will be restored through this settlement,” said Sarah Ludwig, the founder and a co-director of the advocacy group the New Economy Project, which filed the lawsuit along with MFY Legal Services and the law firm of Emery Celli Brinckerhoff & Abady.

    Ms. Ludwig said a vast majority of the judgments were entered against people living in minority neighborhoods. “They end up on people’s credit reports,” she said. “This has a spiraling effect.”

    The settlement, which advocates say is unprecedented in its scale, curtails the activity of companies along the whole debt-collection chain, including the debt-buying companies, the law firm hired to collect the debt and the process-serving firm that is supposed to notify debtors.

    The law firm that had collected the debt, Mel S. Harris & Associates, went out of business in September.

    The process-serving company named in the lawsuit, Samserv Inc., of Brooklyn, agreed to stop serving process in consumer debt-collection cases and to start paying process servers as much money for unsuccessful attempts as for successful ones, according to the settlement. Advocates say unbalanced rates put pressure on servers to lie about whether they had actually served notice, and state inquiries have suggested that servers sometimes claim to be in several places at once.

    Advocates said the monetary scale of the settlement would probably reverberate across the industry. Debt collectors have already become more constrained by state reforms enacted after the suit was filed that require them to provide more evidence in cases, said Carolyn Coffey, the supervising attorney at MFY.

    Matthew D. Brinckerhoff, of the law firm, said, “This sends a huge message to other debt buyers and other debt collection firms.”

    Mr. Brinckerhoff said the firm’s projections showed that people who participated in the settlement would get all of their money back, and maybe more. About 75,000 people are expected to receive monetary compensation under the settlement, which also sets in motion the vacating of about 115,000 additional default judgments.

    The settlement names several debt-buyer firms with variations on the name L-Credit, which are subsidiaries of Leucadia National, a publicly traded holding company. A Leucadia spokeswoman said the company had no comment on the settlement.

    Representatives for Samserv could not be reached for comment on Friday. A person who answered the phone at the law firm Stephen Einstein & Associates, which is now processing the accounts, declined to comment.
Source: Victims of Debt Collection Scheme in New York Win $59 Million in Settlement.

For more on "sewer service" practices in New York City, see Justice Disserved: A Preliminary Analysis of the Exceptionally Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York.

Sunday, November 22, 2015

Banksters That Unwittingly Foreclosed On Homes With Environmental Liabilities (Unauthorized Wetlands Alterations, Heating Oil Spillage) Get Belted By Bay State Regulator w/ Fines & Stuck w/ Remediation Tab

From a recent client alert from the law firm Beveridge & Diamond PC:
  • The Massachusetts Department of Environmental Protection (“MassDEP”) recently entered into consent orders with two financial institutions to resolve alleged Massachusetts environmental law violations occurring at two bank owned properties.

    Long Beach Mortgage Loan Trust (“Long Beach”) entered into a consent order in September 2015 with MassDEP to resolve Massachusetts Wetland Protection Act violations that allegedly occurred at a lender-owned property in Haverhill.

    In April 2012, MassDEP executed a consent order with the owner (at that time) of the property for unauthorized filling and alterations made to 10,000 square feet of bordering vegetated wetlands, and for unauthorized activity in the buffer zone; that order required full restoration.

    Long Beach took ownership of the property by foreclosure in July 2013 prior to any restoration work being done. Long Beach agreed to restore all of the altered area, including re-vegetation, by June 30, 2016, and to pay a $105,000 penalty, of which $30,000 will be paid immediately and $75,000 will be suspended provided a wetlands scientist submits documentation demonstrating the restored area has been maintained for five consecutive growing seasons through October 31, 2020.

    In October 2015, Wells Fargo Bank, N.A. (“Wells Fargo”) entered into a consent order with MassDEP to resolve allegations of noncompliance associated with a release of heating oil in the basement of a two-family house located in Fitchburg, Massachusetts. MassDEP found that the bank failed to take timely action to address the release, and failed to submit to MassDEP the required documentation addressing the spill, in violation of Massachusetts oil and hazardous materials cleanup regulations. MassDEP was first notified of the release in December 2013 by the Fitchburg Board of Health, but was unable to successfully make contact with Wells Fargo. MassDEP initiated a state-funded cleanup of the oil spill and issued a written request to Wells Fargo to provide notification and acknowledge continuation of cleanup actions at the site. However, according to MassDEP, Wells Fargo failed to perform response actions as required, to submit the required documentation, and to respond to a subsequent written notice of noncompliance.

    Wells Fargo agreed to pay a $38,190 penalty, to perform all necessary cleanup actions, to establish a point of contact for environmental matters within the Commonwealth and to provide that person’s contact information to all of its real estate brokers for its properties within the Commonwealth, including providing the brokers with instructions in the event of a future release of oil or hazardous materials.

    These consent orders are a good reminder to financial institutions to identify and evaluate actual and potential environmental liabilities before purchasing or foreclosing on a property, and to conduct routine inspections of their properties to identify potential hazards and to implement appropriate measures to minimize those hazards.
Source: MassDEP Agrees to Settlements with Financial Institutions to Resolve Alleged Violations of Massachusetts Environmental Laws at Bank Owned Properties.

Editor's Note: The MassDEP also hit Fannie Mae with a $43,463.25 penalty for violating oil and hazardous materials cleanup regulations at a residence it had foreclosed on. See Federal National Mortgage Association Assessed $43,463 Penalty for Waste Site Cleanup Violations at Property in Winchendon.

State AG Shakes $151K Out Of NYC Landlord To Resolve Alleged Violations Of Laws Governing Safe Handling, Storage Of Home Heating Oil At 25 Fuel-Burning Apartment Buildings

From the Office of the New York State Attorney General:
  • Attorney General Eric T. Schneiderman [] announced a settlement with New York City landlord Florence Edelstein over widespread violations of state oil spill prevention laws that govern the safe handling and storage of heating oil at residential properties.

    The Attorney General filed a lawsuit against Edelstein in December 2014 to enforce a New York State Department of Environmental Conservation order that found her liable for 90 violations of state oil spill prevention laws at 25 properties, three in the Bronx and the others located in Upper Manhattan and on the Upper West Side of Manhattan.

    [The] settlement requires Edelstein to pay a penalty of $151,000. All violations were corrected by Edelstein’s company after the Attorney General commenced the 2014 lawsuit.

    “New York has adopted oil spill prevention laws for a reason: to ensure spills and leaks do not contaminate our land and water or threaten public health,” Attorney General Schneiderman said.
    Oil spills can cause serious harm to human health and safety, as well as to New York’s water, land, and other natural resources. To prevent spills from large fuel storage tanks, including tanks used in residential buildings to hold heating oil, the state has adopted petroleum bulk storage (“PBS”) laws and related regulations applicable to tanks or groups of tanks that can hold more than 1,100 gallons of petroleum. The regulations require proper registration, installation, operation, maintenance, inspection, and, when applicable, closure of PBS tanks to prevent leaks and large-volume oil spills.

    In his December 2014 lawsuit, Attorney General Schneiderman detailed the 90 violations of state PBS laws by Edelstein – the owner and chief executive officer of Edel Family Management Corporation, located at 2207 Coney Island Avenue in Brooklyn – that DEC found at the properties. Among other violations, the properties were cited for failing to accurately register storage tanks with the state, failing to properly label tanks, gauges, and fill ports, failing to maintain spill prevention equipment and records of monthly tank inspections. These requirements individually, and in combination, are important to preventing spills related to the handling and storage of oil.

    According to the original complaint, DEC investigators uncovered a pattern of PBS violations at Edelstein’s buildings in April and May of 2013. When Edelstein rejected the agency’s offer to resolve the violations by settlement, DEC brought an administrative enforcement action which resulted in a July 18 order by the DEC Commissioner. The agency assessed a civil penalty of $113,500 and ordered her to correct all 90 violations, both within 30 days. Although Edelstein did not challenge the DEC order, she failed to pay the penalty or correct the PBS violations as ordered.
For the entire press release, see A.G. Schneiderman Reaches Settlement With NYC Landlord Responsible For Widespread Violations Of State Oil Spill Prevention Laws (Settlement Requires Florence Edelstein To Pay $151,000 In Penalties For Amassing 90 Violations Of Oil Storage Laws At 25 Properties In Manhattan And The Bronx; Oil Spills Pollute Land And Water, Pose Serious Risks To Public Health).

Operator Of Long-Term Care Facility For Elderly Psychiatric, Disabled Patients To (Literally) Cough Up At Least $50K In Fines, Agrees To Comply With State Environmental Laws To Resolve Allegations Of Improper Removal, Handling, Disposition Of Asbestos-Containing Construction Debris

From the Office of the Massachusetts Attorney General:
  • A Rowley based corporation will pay up to $75,000 to settle allegations that workers improperly removed, handled, and disposed of asbestos-containing debris during renovations at a long-term care facility for elderly psychiatric and disabled patients in Worcester, Attorney General Maura Healey announced [].

    According to a consent judgment [...], West Side Corporation has also agreed to have a licensed asbestos inspector investigate the West Side House in Worcester and similar facilities owned by six affiliated corporations for any asbestos that may have to be removed in accordance with applicable laws.

    “We are pleased to have resolved allegations that West Side Corporation removed asbestos without using licensed contractors and without following proper abatement procedures. Improper asbestos removal places the health of workers and those who live, visit and work at places where asbestos removal is taking place at risk,” said AG Healey. “This is a public health issue and we will prosecute anyone who puts members of the public at risk by improperly handling asbestos-containing waste materials.”

    “The Commonwealth’s asbestos regulations require property owners to identify asbestos-containing materials before beginning any demolition or renovation activity, so the materials can be properly removed and handled safely,” said Commissioner Martin Suuberg of the Massachusetts Department of Environmental Protection (MassDEP). “Asbestos is a known carcinogen, and following required handling and disposal practices to protect the public health is imperative for any project.”

    According to the complaint, West Side Corporation’s in-house workers removed asbestos-containing demolition debris, including floor tiles, textured ceiling plaster and sheet rock, during an April 2014 renovation of West Side House’s human resource office. The company performed this work without giving required pre-work notice to MassDEP and without following required procedures for the proper abatement of asbestos. The in-house workers allegedly removed the asbestos-containing debris without wearing appropriate protective equipment.

    The complaint also alleges that in-house workers at the facility rolled open trash barrels containing asbestos debris through a hallway in West Side House and disposed of the waste in a trash compactor outside of the building. The AG’s Office is alleging that West Side Corporation violated the portion of the state’s Public Health Law that addresses air pollution prevention, the state’s Solid Waste Management Act, and these statutes’ implementing regulations.

    The regulation of asbestos handling is important to protect human health. Airborne friable asbestos taken into the lungs by breathing may over time cause serious lung diseases, including asbestosis, lung cancer or mesothelioma. Asbestosis is a serious, progressive, long-term, non-cancer disease of the lungs for which there is no known effective treatment. Lung cancer causes the largest number of deaths related to asbestos exposure. Mesothelioma is a rare form of cancer that is found in the thin membranes of the lung, chest, abdomen and heart and may not show up until many years after exposure.
    Of the $75,000 in civil penalties, $25,000 will be suspended and will be waived if West Side Corporation complies in full with the terms of the Consent Judgment over its full term.
For more, see Operator of Worcester Assisted Living Facility to Pay Up to $75,000 to Settle Allegations of Asbestors Violations (Settlement Requires Asbestos Assessments and Any Needed Asbestos Removal at Affiliated Facilities).

New Big Apple Law Creates Minefield For HOAs; Forbids Inquiries Into Job Applicant's Criminal History Until After A Conditional Job Offer Is Made

In New York City, Habitat Magazine reports:
  • On October 27, a new [local] law [went] into effect that will alter the hiring practices of every co-op and condo board in [New York City]. It's a minefield. Be careful where you step.

    Last summer, Mayor Bill de Blasio signed a new law called Introduction 318-A, commonly known as the Fair Chance Act, which has the noble purpose of prohibiting discrimination against job seekers based on their prior arrests or criminal convictions. At the signing, the mayor said, "This bill opens the door to jobs for New Yorkers who have already paid their debt to society, rather than condemning them to a grim economic future."

    The tool intended to open that door is the criminal background check. Under the Fair Chance Act, employers with at least four employees, including co-op and condo boards, are forbidden to inquire about a job applicant's criminal history until after they have made a conditional job offer. The law further requires that the employer give a written copy of the criminal background search to the job applicant.

    If an employer decides to withdraw a conditional job offer after examining the applicant's criminal history, the employer is then required to give the applicant a written copy of the analysis of the criminal history, and the reasons the job offer was revoked.

    Acceptable grounds for revoking a job offer are if there's a "direct relationship" between the criminal offense and the job's requirements, or if the hiring would create a "reasonable risk" to property or personal safety. Some factors boards can consider are the severity of the criminal offense, when it occurred, how old the applicant was at the time of the crime, and any evidence of rehabilitation and good conduct.

    "Did the guy get out of Sing Sing last week for breaking and entering? That's a legitimate concern," says labor lawyer Robert Sparer, a partner in the firm Clifton Budd & DeMaria. "I've seen a job applicant who'd done time for second-degree murder, and no one did a criminal background check. Boards can still take appropriate action under the Fair Chance Act. But it's not clear where the line lies."
    The first step boards should take, according to attorneys and property managers, is to remove any questions about an applicant's criminal history from job application forms. The second step is to refrain from asking an applicant about his or her criminal history during the job interview — which should be easy for most boards, since they've been conditioned to the perils of even the appearance of discrimination during the interview process.

    But be advised: a misstep can be costly. If job applicants can prove that a board violated the Fair Chance Act, they can file a lawsuit seeking compensatory and punitive damages, as well as attorneys' fees. Wronged applicants can also seek an injunction, forcing the unwilling board to hire them, after all.