Saturday, January 23, 2016

Pittsburgh Landlord Group Sues City Over New Ordinance Prohibiting Landlords From Refusing To Rent To Tenants With Housing Subsidy Vouchers

In Pittsburgh, Pennsylvania, the Pittsburgh Post-Gazette reports:
  • In the latest accusation that City Council overstepped its bounds in 2015, a group representing owners and managers of thousands of units of Pittsburgh rental housing is suing over a law that prevents landlords from refusing tenants with federal housing vouchers.

    The lawsuit, filed Friday in Common Pleas Court by the Apartment Association of Metropolitan Pittsburgh, takes aim at Councilman Ricky Burgess’ legislation, passed in December, that prevents landlords from discriminating based on “source of income,” in part defined as tenants who receive assistance from the U.S. Department of Housing and Urban Development’s voucher program, commonly called Section 8.

    Obviously, it is establishing a precedent across the state that would take a voluntary program ... and make it mandatory,” said James Eichenlaub, the association’s executive director.

Cops Pinch Section 8 Tenant For Allegedly Allowing Son & His Girlfriend To Live In Apartment w/out Notifying Housing Authority & Failing To Report Add'l Household Income While Scoring Over $30K In Housing & Utilities Subsidies

In Monroe County, Pennsylvania, the Pocono Record reports:
  • A Tobyhanna woman is charged with theft by deception for not reporting income while living in Section 8 housing, according to the Monroe County District Attorney’s Office.

    Lisa Gosa, 47, of Bumble Bee Way, was charged with theft by deception-false impression and theft by deception-fail to correct, both felonies.

    The DA was notified by the Housing Authority of Monroe County of an investigation it started on Gosa concerning Section 8 Housing Choice Voucher Program fraud and people living with Gosa not authorized by the housing authority to be living with her, according to court records.

    She failed to report income coming into the household as well, court records said.

    Gosa had received $31,500 in rental assistance and utility assistance that she was not entitled to, court papers alleged.

    Section 8 HCVP is intended to assist low- to very-low-income households in obtaining decent housing. Subsidies are based on the size, composition and the income of the household. Gosa had allegedly been living with her son and his girlfriend, but hadn't told the housing authority.

    Gosa was interviewed by DA investigators, who told her they knew other people have been living with her, court papers said, and showed domestic dispute complaints between her, her son and his girlfriend.

    Gosa said her son’s girlfriend was living with her on and off since February 2014, court papers said, and that she worked at Kalahari water park for a time, but doesn’t currently work there and doesn’t live with Gosa any longer.

    According to police reports, the girlfriend said Gosa had invited her to live with the family.

Cops Arrest Upstate NY Woman For Allegedly Scoring $27K In Section 8 Housing & Other Social Services Benefits While Failing To Report Boyfriend's Income & That He Temporarily Lived At Her Residence

In Colonie, New York, WTEN-TV Channel 10 reports:
  • Colonie Police say a woman was arrested for illegally obtaining social services benefits.

    Colonie Police and the Albany County Department of Social Services Welfare Fraud Unit say they arrested 44-year-old Connie Rogers of Colonie following an investigation into the discovery of $27,131 in fraud.

    Police say Rogers did file for public assistance benefits and failed to report her boyfriend’s income and the fact that he lived at her residence in October and November.

    Officials say she fraudulently received $7,979 from the Albany County Department of Social Services and $19,152 from Section 8 Housing.

    Police say she’s being charged with Welfare Fraud 3rd, Grand Larceny 3rd (2 counts), and Offering a False Instrument for Filing 1st (2 counts) – all felonies

Friday, January 22, 2016

Massachusetts AG Goes To Bat For Banksters, Title Insurers; Says That Ballot Referendum Challenge To New 'Ibanez Defects" Title Clearing Law That Strips Foreclosed Homeowners Out Of Certain Property Rights Is Invalid

In Boston, Massachusetts, reports:
  • Attorney General Maura Healey has ruled that opponents of a new law related to clearing titles of foreclosed homes cannot attempt to repeal the law through a ballot referendum.

    Healey wrote in a letter to Secretary of the Commonwealth William Galvin on Tuesday that the title clearing law "is not lawfully the subject of a referendum petition."

    Sarah McKee, a former federal prosecutor from Amherst who signed a petition to repeal the law that initiated the ballot referendum process, said she is disappointed in Healey's ruling. "I'm disappointed that the attorney general who takes an oath to support the Massachusetts Constitution did not consider the ways in which this new law ... actually violates the Constitution," McKee said.

    The new law, which was signed by Gov. Charlie Baker in November, limits the amount of time a person has to challenge a foreclosure and get his home back. Until this year, someone who believed his home was illegally foreclosed on had 20 years to challenge the foreclosure in court and potentially get his home back. As a result of a spate of improper foreclosures around the time of the 2008 market crash, homeowners who bought foreclosed properties were having trouble selling or refinancing their homes because of uncertainty about whether the title was clear.

    The new law gives the person whose home was foreclosed on three years after a foreclosure or one year after the law was passed, whichever is later, to begin a court challenge to get his home back. After that time, the person can still sue the bank that foreclosed for monetary damages, but he cannot get his house back.

    Supporters of the law say it is a way to protect innocent homeowners who purchased a property that was once foreclosed on. But opponents say the law infringes on the rights of victims of illegal foreclosures.

    A group of anti-foreclosure activists tried to use a referendum to suspend the law and put it on the ballot in November 2016. The referendum process allows activists who can gather enough signatures to ask voters to repeal a law.
    Brian McNiff, a spokesman for Secretary of the Commonwealth William Galvin, who oversees state elections, said now that Healey has ruled, the question will not go on the ballot. "That's it. It doesn't go forward," McNiff said.

    Anti-foreclosure activists have said they plan to challenge the law in court. McKee indicated that while it is too early to announce any next steps, the group is still considering a court challenge. Asked about the possibility of a lawsuit, McKee said, "If you were committed to upholding the rule of law, and you saw a law passed that was fundamentally unconstitutional, what would you do?"

    McKee said she is disappointed that Healey ruled only on the narrow issue of whether the law relates to the courts. She and other members of the Massachusetts Alliance Against Predatory Lending coalition argue that the law is unconstitutional because it disproportionately affects black and Latino families and female heads of household, who were targeted for predatory mortgages and suffered disproportionately from foreclosures. They also say it breaches existing contracts by changing the terms of mortgages, that foreclosures should be handled by the courts and not the Legislature, and that there were technical problems with the law relating to its effective date.

    "It's inconsistent with the Constitution, and it collapses the frame of government that the Constitution establishes," McKee said.

    The coalition could also lobby a branch of government to ask the Supreme Judicial Court for an advisory opinion on whether the law is constitutional. But the House, Senate and governor appear unlikely to do so, since they passed and signed the original law.

    Grace Ross, coordinator of the Massachusetts Alliance Against Predatory Lending, said she hopes Healey would consider asking the Supreme Judicial Court for an opinion. "What is shocking here is having run as she calls herself the chief consumer enforcement officer of our state, the Attorney General did not even let the voters address the unconstitutional taking of our people's property rights," Ross said in a statement. "We can only hope that, having denied the Voters' powers to protect our own constitutional rights through the ballot, she has plans to take the law directly to the SJC herself as her oath of office requires."

Despite Owing $14K In Back Rent & Legal Fees, Court Allows Renter To Regain Possession Of Rent-Controlled Apartment One Month After Being Booted Upon Lump-Sum Payment Of Arrears; Uneasy Judge: Ruling "Forces [NY] Landlords To Serve As De Facto No-Interest Lenders To Low-Income Tenants"

In New York City, the New York Law Journal reports:
  • A Bronx Housing Court judge's decision to return a disabled tenant to his apartment after he was evicted for nonpayment was upheld by an appellate court.

    The Appellate Division, First Department, said Civil Court Judge Javier Vargas had "providently exercised" his discretion, noting that Ronald Pickett had lived in the apartment for 30 years, and a month after being evicted, paid the rent arrears plus the landlord's attorney's fees, totaling $14,000.(1)

    But Justice David Saxe, in a concurrence, said the legal standard for reversing an eviction was too lax and "forces landlords to serve as de facto no-interest lenders to low-income tenants."

    A warrant of eviction was initially awarded to Pickett's landlord, Lafayette Boynton Housing, in October 2011 when his rent was $5,200 in arrears.

    Pickett, with the help of The Legal Aid Society, was able to obtain seven stays of eviction over a two-year period, on the promise of curing the arrears.

    However, new arrears had accrued by the time those promised payments were made, "so the landlord was still not made whole by those eventual payments, and the cycle of extensions and only partial payments continued," Saxe wrote.

    The Bronx Housing Court declined to give Pickett another stay and he was evicted in September 2013.

    An emergency grant from the City's Department of Human Resources allowed Pickett, who lives on Social Security, to pay the rent and attorneys fees. Vargas then granted Pickett's motion to restore the unit to him a month later.

    Saxe, noting that the state's Real Property Actions and Proceedings Law does not expressly allow a court to vacate a warrant of eviction after the eviction has taken place, said such relief should be granted only where "incorrect assumptions or findings were made in issuing the warrant of eviction that undermines the basis for its issuance in the first place," rather than merely "for good cause."

    "It is shameful that we are relying on the private property owners who happen to rent apartments to such tenants, requiring them to cover the shortfall for months, or even years, rather than, as a society, making sure that elderly and disabled low-income tenants have access to the necessary funds in a timely manner so they can stay current on their rent," Saxe said.

    The majority's ruling in Lafayette Boynton Hsg. Corp. v. Pickett, 56887/11 was joined by Justices Angela Mazzarelli, Rolando Acosta and Rosalyn Richter.
Source: Court's Return of Disabled Tenant to Apartment Upheld.
(1) According to the majority:
  • "[T]he Civil Court may, in appropriate circumstances, vacate the warrant of eviction and restore the tenant to possession even after the warrant has been executed" (Brusco, 84 NY2d at 682; see also Harvey 1390 LLC v Bodenheim, 96 AD3d 664, 664 [1st Dept 2012]).

    Here, the Civil Court providently exercised its discretion, as the record shows that the long-term, disabled tenant "did not sit idly by[,]" but instead made appreciable payments towards his rental arrears and "engaged in good faith efforts to secure emergency rental assistance to cover the arrears" (Harvey, 96 AD3d at 665; see also Parkchester, 271 AD2d at 273-274).

    Moreover, the tenant has paid the rental arrears for the unit and the landlord's costs for the underlying proceeding (see Parkchester, 271 AD2d at 273), and the record shows that the delays in payment were, to a certain extent, attributable to others, including the landlord (see 2246 Holding Corp. v Nolasco, 52 AD3d 377, 378 [1st Dept 2008]).

WV Woman Gets Bagged For Allegedly Pocketing $1,600 From Each Of Two Prospective Tenants In Rent Scam; Suspect Accused Of Using Craigslist Postings To Reel In & Fleece Unsuspecting Victims

In Martinsburg, Weat Virgina, The Journal reports:
  • A Falling Waters woman was arraigned [] on two felony counts of obtaining money by false pretenses for renting a townhouse to different people, but not letting them move in.

    Rebecca Denise Fauble, 40, of 18 Appalachian Court was being held in the Eastern Regional Jail on $30,000 cash bond. Berkeley County Sheriff's Cpl. Timothy A. Sherman investigated the case.

    According to Sherman's report, Franklin and Christel Beachley contacted Fauble Dec. 21 through a Craigslist posting about a three-bedroom, four-bath townhouse at 18 Appalachian Court for rent for $800. The Beachleys met with Fauble at 5:30 p.m. that day to look at the residence. The Beachleys signed a one-year lease for the residence starting Jan. 1. They wrote Fauble a personal check for $1,600 - $800 for the first month's rent and $800 for a security deposit - and gave it to her directly.

    On Dec. 22, police say, Christel Beachley contacted the water and sewer company and paid $140 for service.

    Christel Beachley told police that she spoke to Fauble several times after Dec. 22 about moving into the townhouse and received several different stories about why she could no move in yet.

    On Jan. 3, police say, the Beachleys went to the residence and contacted Fauble, confronting her about moving in. Fauble gave them a key to the front door and mailbox and told the Beachleys they could begin to move in.

    On Jan. 4, police say, the Beachleys went to the residence. They found the locks had been changed and they could not get into the townhouse. Christel Beachley also told police that she went to Berkeley County Magistrate Court that day and filed a civil suit, costing her $110.

    "At this point, Christel and Franklin are out $1,850," according to the police report.

    The Beachleys could not reach Fauble. They contacted Sherman Jan. 8.

    On Jan. 6, police say, Sherman was contacted by Sidney Kearnes, who told him that on Dec. 29, she contacted Fauble through a Craigslist posting about a three-bedroom, four-bath townhouse at 18 Appalachian Court for rent for $800. Kearnes met Fauble at the residence that evening to look at the townhouse. Kearnes wrote a personal check for $1,600 - $800 for the first month's rent and $800 security deposit - and gave it to Fauble directly.

    On Dec. 30, police say, Fauble mailed a rental lease agreement to Kearnes, but nothing was filled out on the lease. Kearnes then tried to call Fauble and emailed her, but got no response. Kearnes left a message for her to not cash the check until they had a signed lease. After not getting any response, police say, Kearnes checked her bank and found that Fauble had already cashed the check. Kearnes was not able to reach Fauble. Fauble did not respond to any messages.
    Fauble could face up to 20 years in prison or two years in jail and $5,000 in fines if convicted on both felony charges.

Suspect In String Of Bogus Metro-Atlanta Rent Scams Turns Herself In; Accused Of Illegally Pocketing Cash From Unwitting Tenant Prospects By Using Craigslist To Advertise Fake House Rentals

In Atlanta, Georgia, Fox 5 Atlanta reports:
  • The woman police said ripped off renters across metro Atlanta has turned herself into Gwinnett County Police.

    Investigators believe Sharina Ford, 26, is connected to nine bogus rental scams, stealing about $15,000 from victims in Gwinnett, Fulton, Cobb, and Coweta counties. Police said Ford would advertise fake rentals on craigslist.

    She is charged with burglary, theft by deception and forgery. Police said they expect to file more charges because they think there are more victims out there.

Thursday, January 21, 2016

Lawsuit: Lawyers Fraudulently Glommed $594K+ Received While Acting As Billing/Payment Intermediary For Nat'l Foreclosure Title Services Outfit

In Las Vegas, Nevada, Legal Newsline reports:
  • A national foreclosure title services and products company is suing a law firm and several of its members over claims they fraudulently misappropriated funds.

    ServiceLink NLS LLC filed a lawsuit Jan. 4 in the U.S. District Court for the District of Nevada against Cooper Castle Law Firm LLC, doing business as Cooper Castle Law Firm LLP; Caren Castle; Lawrence Castle; Stephanie Cooper Herdman; and Aaron Waite, alleging breach of contract, unjust enrichment, constructive trust, breach of fiduciary duty, conversion and fraud.

    The suit states Cooper Castle received monies in its capacity as a billing/payment intermediary in residential foreclosure transactions. Cooper Castle was then obligated to transmit earmarked funds to ServiceLink, but the suit states the defendants converted or stole the proceeds to finance Cooper Castle operations and to benefit themselves.

    As a result, ServiceLink has allegedly sustained more than $594,000 in damages.

    ServiceLink seeks damages of $594,199.29, interests, punitive damages and attorney fees and costs. The plaintiff is represented by attorneys Ryan M. Lower and Raleigh C. Thompson of Morris Law Group in Las Vegas, and by attorney James D. Miller of Babst Calland Clements & Zomnir in Pittsburgh, Pennsylvania.

Disbarred NJ Lawyer Gets 3 Years For Fleecing 82 Clients Out Of Legal Fees, Failing To Perform Work; Handiwork Included Bogus Loan Modifications; State Supreme Court's Ripoff Reimbursement Fund Shells Out Over $1.3 Million To Help Cover Victims' Losses

In Bergen County, New Jersey, The Record reports:
  • A lawyer who blamed his addiction to alcohol for the theft of legal fees charged for work he never performed was sentenced Friday to three years in state prison and ordered to reimburse a state fund that paid out more than $1.3 million in claims to his former clients.

    Superior Court Judge Susan Steele imposed the sentence on Louis A. Capazzi Jr., 50, of Harrington Park, who practiced in Oradell before he was disbarred.

    Capazzi, who pleaded guilty last April to charges of theft by deception and admitted bilking dozens of clients, told the judge he had battled with alcoholism but has since turned around his life. He is now working as a paralegal in Pennsylvania.

    Bergen County Assistant Prosecutor Brian Lynch said Capazzi took fees from clients for specific tasks, such as loan modifications, and failed to perform the required work. The stolen fees went to sustain an upper middle class lifestyle that included membership in a country club, Lynch said..

    Michael McCormick, counsel for the New Jersey Lawyers’ Fund for Client Protection, told the judge that the fund received claims from 82 of Capazzi’s former clients and paid out $1,384,738. The fund, which is an entity of the state Supreme Court, assesses an annual $50 fee on every lawyer in the state and reimburses clients who are victims of dishonest conduct.(1)
For more, see Lawyer from Harrington Park sentenced to prison in $1.3M theft scheme.
(1) 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.

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

    When Lawyers Steal the Escrow, a June, 2005 New York Times story describing some cases of client reimbursements ("With real estate business surging and down-payment amounts rising with home prices, the temptation for a lawyer to filch money from a bulging escrow account and later repay it with other clients' money has never been greater, said lawyers who monitor the thefts."),

    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.

Another Elderly Lawyer Winds Up Career Caught w/ Hand In Cookie Jar: 69-Year Old Suspect Pleads Guilty To Looting $600K+ While Acting As Trustee Over Investment Account, Then Lied To Client/Trust Beneficiary By Saying Reduction In Principal Due To Deducted Legal Bills

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 that HAROLD JAMES PICKERSTEIN, 69, of Fairfield, Connecticut, waived his right to indictment and pled guilty [...] in federal court in Bridgeport, Connecticut, to one count of mail fraud related to his theft of more than $600,000 from a client’s investment account.

    According to court documents and statements made in court, PICKERSTEIN, an attorney, represented an individual (“Victim 1”) and served as the trustee for an investment account (the “Trust Account”) held for the benefit of Victim 1. Between approximately August 2011 and October 2013, PICKERSTEIN withdrew $613,216.20 from the Trust Account without authorization from Victim 1 and used the funds to pay for personal expenses, including payments to state and federal tax authorities to satisfy his tax liabilities.

    In November 2013, PICKERSTEIN was to disburse all remaining funds in the Trust Account to Victim 1. After Victim 1 questioned PICKERSTEIN as to why the disbursed funds were less than Victim 1 expected, PICKERSTEIN sent a letter to Victim 1 in which he falsely represented that a portion of the Trust Account’s funds had been deducted to pay legal bills.(1)

    PICKERSTEIN faces a maximum term of 20 years in prison, a maximum fine of approximately $1.2 million, and $633,410.04 in restitution.

    PICKERSTEIN resigned from the Connecticut bar in December 2014.

    This matter has been investigated by Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney William J. Nardini.

    The U.S. Attorney for the Southern District of New York has been overseeing the case because of the recusal of the U.S. Attorney’s Office for the District of Connecticut.
Source: Connecticut Attorney Admits Stealing More Than $600k From Client’s Trust Account.
(1) The victim may be able to recover at least some of his losses by submitting a ripoff claim to the Client Security Fund, a fund established by the rules of the Connecticut Superior Court to provide reimbursement to individuals who have lost money or property as a result of the dishonest conduct of an attorney practicing law in the State of Connecticut, in the course of the attorney-client relationship. The fund provides a remedy for clients who are unable to obtain reimbursement for their loss from any other source.

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.

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

    When Lawyers Steal the Escrow, a June, 2005 New York Times story describing some cases of client reimbursements ("With real estate business surging and down-payment amounts rising with home prices, the temptation for a lawyer to filch money from a bulging escrow account and later repay it with other clients' money has never been greater, said lawyers who monitor the thefts."),

    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.

State Appeals Court To Florida Real Estate Brokers' Ripoff Reimbursement Fund: Quit Stiffing The Victims & Cough Up $325K+ To Seven Prospective Homebuyers Who Got Screwed Out Of Their Downpayments By Builders' Sales Agents

The following facts have been lifted from a recent ruling by a Florida appeals court:
  • Appellants [ie. seven prospective new home buyers] appeal the final orders of the Florida Real Estate Commission (the "FREC") denying their claims against the Florida Real Estate Recovery Fund (the "Recovery Fund").(1) Appellants argue the FREC incorrectly determined that they did not meet the statutory requirements for awards from the Recovery Fund. We agree and reverse with instructions for the FREC to pay Appellants' respective claims.

    Between April 2004 and May 2008, Appellants entered into purchase agreements with Superior Homes and Investments ("Superior") for the construction of single-family residences on lots in an undeveloped subdivision. The purchase agreements stated that Superior contracted with Tousa Homes, Inc. ("Tousa"), to construct the residences. Appellants entered into the purchase agreements upon alleged fraudulent misrepresentations and omissions by Myrna Ambroise, Steve Ambroise, Mark Goldberg, and Tracy Penny, who are all licensed Florida real-estate brokers employed by Superior or its affiliates (the "Licensees").

    In January 2008, before construction began, Tousa filed for bankruptcy. When construction still had not commenced by June 2008, Appellants began demanding that Superior return their deposits. Superior universally refused to refund any of the deposits. In response, Appellants joined one of two civil actions against the Licensees, Superior, and Superior's affiliates. Appellants brought claims against the Licensees for fraudulent inducement and negligent misrepresentation.

    After the Licensees failed to defend the two civil cases, the trial court entered default final judgments for Appellants, finding that the Licensees committed fraud in the underlying transactions. Appellants timely notified the FREC of their judgments, and the FREC held a hearing on Appellants' claims against the Recovery Fund. After the hearing, the FREC entered final orders denying Appellants' claims. The FREC's sole reason for denying Appellants' claims was that Appellants failed to prove the Licensees acted solely in their capacities as real estate licensees, as required by the Recovery Fund statute.

    The Recovery Fund "provides for the reimbursement of persons who suffer monetary losses because of the unscrupulous acts of licensed brokers or salespersons." Moyant v. Beattie, 561 So. 2d 1319, 1320 (Fla. 4th DCA 1990).

    Section 475.482(1), Florida Statutes (2014), allows a claim against the Recovery Fund by any person "adjudged by a court of competent civil jurisdiction in this state to have suffered monetary damages by reason of any act committed, as a part of any real estate brokerage transaction involving real property in this state by any broker or sales associate," if that act "was a violation proscribed in s. 475.25 or s. 475.42."

    Section 475.25(1)(b), Florida Statutes (2014), includes "fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, [and] culpable negligence," among other prohibited acts. In addition, the broker must have acted "solely in the capacity of a real estate licensee in the transaction." Id. § 475.482(1)(c).

After an analysis of the relevant case law, and its application to the facts of the case, the court ruled:
  • Because the FREC erred by denying Appellants' claims against the Recovery Fund, we reverse and remand with instructions for the FREC to pay Appellants' claims as follows: (1) $50,000 for the Bottoms; (2) $50,000 for the Sheppards; (3) $50,000 for the Tilleys; (4) $50,000 for the Watkinses; (5) $50,000 for Steele and Sellwood; (6) $50,000 for Brown; and (7) $28,299 for Hendricks.

For the ruling, see Hendricks v. Dep’t of Bus. & Prof’l Regulation, Nos. 5D14-4051, 5D14-4052, 5D14-4053, 5D14-4054, 5D14-4055, 5D14-4057, 5D14-4058 (Fla. 5th DCA, Jan. 8, 2016).
(1) The Florida Real Estate Recovery Fund has been established to reimburse any person or business that has suffered monetary damages following a fraudulent act committed by a licensee. Claims from the Fund must be made within 2 years of the alleged violation. Reimbursement for a single transaction is limited to a maximum amount of $50,000. If multiple judgments are awarded against one broker or sales associate the maximum reimbursement is $150,000. The Fund is financed by fees and fines paid by licensees; $3.50 per year for brokers and $1.50 per year for sales associates.

Wednesday, January 20, 2016

Sacramento Feds Squeeze Guilty Pleas From Pair Who Peddled Bogus Sale Leaseback Foreclosure Rescue Deals To At Least 69 Financially Distressed California Homeowners, Then Proceeded To Strip The Equity From Their Homes

From the Office of the U.S. Attorney (Sacramento, California):
  • Zalathiel Aguila, 42, and Omar Anabo, 53, both of Vallejo, pleaded guilty [] to conspiracy to make false statements on loan applications, United States Attorney Benjamin B. Wagner announced.

    According to court documents, between October 2004 and May 2007, Aguila and Anabo operated Vallejo‑based Capital Access LLC, an entity targeting homeowners facing foreclosure.

    The defendants’ “Keep Your Home” program purported to be a temporary rescue plan whereby “qualified investors” took over the mortgages while the homeowners paid rent and worked on rebuilding their credit.

    The defendants convinced homeowners to sign over title to their homes, which were then sold to straw buyers. The straw buyers obtained loans under fraudulent pretenses by claiming on loan applications that, for example, they intended to occupy the homes as primary residences and that no part of the down payment for the purchase was borrowed. In fact, Capital Access provided the down payment amounts, and the straw buyers never intended to live in the properties.

    The defendants stripped the equity from the homes and used it to pay the operating expenses of Capital Access, additional fraudulent home purchases, monthly housing payments on the homes for a limited period of time, and personal expenses.

    Many of the distressed homeowners were never told that they were permanently signing over title to their homes to Capital Access. Victim homeowners suffered substantial financial hardship; they lost their homes and were forced to move.

    In all, the scheme caused the fraudulent sale of at least $27 million in home properties, involving at least 69 properties across California, and at least $23.99 million in fraudulently obtained property loans. Lenders lost at least $10.47 million as a result.
Source: Two Vallejo Residents Plead Guilty to Multimillion Dollar Mortgage and Foreclosure Rescue Fraud Scheme.
(1) For more on this type of foreclosure rescue ripoff, see:

Lien Scrum: Homeowner Files Fraudulent Mortgage Satisfaction On Existing Loan, Continues Payments For 4+ Years, Then Scores Two Add'l Mortgages; Subsequent Bankruptcy, Ultimate Default On All Three Leaves Lenders Jockeying For Lien Position; Who's On First?

In Toronto, Ontario, Law Times reports:
  • When fraudsters pull off a scam, they often leave someone else holding the bag. In CIBC Mortgages Inc. v. Computershare Trust Co. of Canada, it fell to the court to determine which of the secured lenders would ultimately suffer the loss.

    The case revolves around Dhanraj Lowtan and Sumatie Lowtan who secured a mortgage for $280,802 on a Brampton, Ont. home from Computershare Trust. The mortgage was later discharged [fraudulently, with a forged satisfaction of mortgage], but the pair continued making the monthly payments. They then sought financing from two other institutions, securing three different mortgages on the same property.

    When the house of cards collapsed and the financial institutions discovered the fraud, they turned to the courts. The Lowtans filed for bankruptcy and they vacated the property.

    The house was subsequently sold for $297,754, falling far short of the money owed to the lenders. CIBC insisted it had first ranking charge against the property and asked for an order declaring that the CIBC mortgage of $252,800 had priority over the Computershare mortgage.

    In maintaining that the discharge was fraudulent, Computershare sought a declaration that it had first charge on the property and asked that the discharge be deleted from the register. Secure Capital MIC Inc. wanted second ranking to CIBC for its $32,000 mortgage.

    “It really comes down to, in the Computershare decision, what the court says,” says Renée Brosseau, a partner with Dentons Canada LLP whose practice focuses on fraud and real estate fraud. “What is the court supposed to do in a situation like that? It really is between a rock and a hard place.”

    The scam breaks down into two parts. The first was discharging the mortgage without Computershare knowing; the second was securing additional mortgages for the same piece of property — essentially selling the same property over and over again.

    The regular payments made for more than four years on a mortgage that had already been discharged served as a clever ruse to cover the fraud and it allowed the pair to access even more money.

    Lenders follow a criteria set out by the Office of the Superintendent of Financial Institutions (OFSI) of what they need to ask those seeking a mortgage. Brosseau says banks typically follow that script and rarely deviate from it to ask more questions.

    The Ontario Superior Court of Justice found in favour of Computershare, as the first to issue a mortgage. CIBC, which provided a mortgage after the first was discharged, should have gone beyond the title to ask additional questions, the court added.

    Justice Ellen B. Murray wrote, “On a balance of probabilities, I have no doubt in concluding that the Lowtans were fully aware of and responsible for the registration of the fraudulent discharge. After the registration of the discharge, they knowingly made false representations to subsequent lenders that their loans would be secured by a first charge in the case of CIBC and a second charge in the case of Secure Capital. The registration of the fraudulent discharge was caused by the Lowtans and relied on by them as part of a scheme to obtain additional financing from subsequent chargees which financing would not otherwise have been available to them. The dishonesty of the Lowtans is made abundantly clear by the evidence.”

    This case is about which innocent party should have the priority of its charge adversely affected because of the fraudulent discharge purported to discharge the first registered Computershare charge,” wrote Murray.

    Lisa Laredo, a sole practitioner whose law practice focuses on real estate, corporate, and estate law, observes that because the fraudsters kept paying the Computershare mortgage for all those years after it had been discharged, there were no obvious signs of the scam. And any innocent parties who became involved after the discharge ended up being defrauded.

    So it’s really up to the third-party lender providing the mortgage to make the necessary inquiries to determine that the borrower can take on a new mortgage and that there are no prior undisclosed mortgages.

    “I would suggest any transactions with the title within the past six months must be scrutinized and questioned so the purchaser can have some comfort that the vendor is entitled to convey what he is purporting to do,” she says. “The inquiry need only go back to the registered owner and his dealings with the property. There is no need to go back two or more prior owners. If the registered owner is acting in a bona fide manner, the fact that he innocently received title from a fraudster will not prevent him from conveying good and marketable title to a subsequent purchaser or mortgagee.”

    At the same time, she adds, a mortgage lender needs to ask the right questions before approving a loan, and a solicitor acting for a lender needs to make similar inquiries as if acting for the purchaser. But because it is not practical for solicitors to conduct a detailed investigation, some fraud could initially go undetected, which is where title insurance plays a role to insure against the consequences of successful fraud.

    Insurer LAWPRO (Lawyers’ Professional Indemnity Company) has been issuing warnings to lawyers about real estate fraud for more than a decade. And while Computershare serves as a further warning, LAWPRO’s Mitch Goldberg, unit director and counsel for the special claims department, and policy analyst Nora Rock point out that there were no lawyers involved for placing the CIBC and Secure Capital mortgages. Nor was a lawyer involved in the discharge of the Computershare mortgage.

    Had a lawyer been involved there would have been potential for a claim by a mortgagee who found itself in second position, Goldberg and Rock add.

    And this situation differs from most frauds they’ve examined in that this one was perpetrated by the homeowner. A more typical real estate fraud scenario involves imposters. And the twist here is the fraudulent discharge.

    “What a lawyer should do is ensure there’s title insurance in place” for the lenders to ensure they’re covered in the event of such a scam, says Goldberg.
Source: Property scam leaves CIBC in the lurch on mortgage (Fraudulent discharge favours first lender).

Monterey County Sues Banksters For Elderly Abuse & Fraud, Alleging 79-Year Old, Developmentally Disabled Homeowner, Induced By Sneaky Son, Mortgaged Her Home While Under Care & Supervision Of Public Guardian's Office, Ultimately Losing It To Foreclosure

In Seaside, California, the Monterey County Weekly reports:
  • The Monterey County Public Guardian is suing a slew of banks on behalf of an elderly woman, claiming fraud and elder abuse after she lost her Seaside house to foreclosure. The twist: Gin Casion, 79, has been under the care of the Public Guardian’s office since 1982 due to a developmental disability and shouldn’t have been allowed to sign loan papers in the first place.
    Casion had lived in her Seaside residence since 1968. Court documents say that she has two developmentally disabled daughters who lived with her.

    The ordeal started in 2006 when Casion’s son contacted the deputy public guardian handling his mother’s financial affairs about taking out a loan on his stake in his mother’s property to help fund a remodel. At the time, the son was a civilian employed at a local military base, and the deputy public guardian believed that Gin Casion’s interest in the property would not be affected.

    But that deputy was unaware that Casion’s son had already taken out a property loan in 2004. He lost his job and the “sky-rocketing variable balloon payments” on the loan became unmanageable, the suit states.

    The county claims that lenders, loan servicers, mortgage brokers and title companies prepared false documents, as they required signatures from Casion, who did not have the legal ability to do so on her own. In addition, some of the documents signed required Casion to provide a driver’s license as proof of identification, and Casion didn’t posess one.

Slew Of Vulnerable Homeowners Accuse Mortgage Broker With Scams That Allegedly Cheated Them Out Of Their Homes

In Hamilton, Ontario, The Hamilton Spectator reports:
  • They were desperate. That's the common connection between the people who accuse a Hamilton mortgage broker of cheating them of their homes.

    So many complaints against Dennis (Dinesh) Khanna, 60, and Metro Financial Planning have poured in that the provincial agency that regulates mortgage brokers has suspended his licence and is moving to put him out of business permanently. Khanna has dismissed the allegations and said last week he has asked for a hearing. No date has been set.

    Randy and Ramona Gallagher are among the people who first thought Metro Financial Planning was like an oasis in the desert, only to find themselves in a lengthy fight to save their home.

    "What he does is prey on the weak and vulnerable," Ramona Gallagher claimed in an interview. "We're into $140,000 in legal fees because of this but we're doing it because we want him shut down." [...]
    Hamilton nurse Janice Abdilla hasn't been able to take her dispute with Khanna to court. She says she lost her home to him in July 2013 and simply can't afford even a small retainer to start a case against him. She is, however, one of the complainants cited in the Financial Services Commission's notice suspending Khanna's licence. [...]
    Tony Anker's case shows another of the allegations made against Khanna — failure to ensure clients are aware of the full details of their mortgages, to account for how money advanced is spent and to provide documents to clients. [...]
    Howard and Lisa Moore, of Hamilton are another of the cases cited in the Financial Services Commission's notice against Khanna.

    Lisa Moore said in an interview her husband approached Khanna for a consolidation loan after being laid off from his trucking job and from there, debts simply piled up.

    "Within three months we had zero equity in that house we'd owned for 20 years," she claimed. "He put three mortgages on the property and within three months I got nothing from that house we'd owned for 20 years."

    "That's what he does," she alleged. "He preys on vulnerable people like my husband." [...]
    In a final case cited in the Financial Services Commission's notice, a Stoney Creek woman identified only as S.C. claims she took out a mortgage for $34,000 with Khanna in 2011 only to discover the pledge registered against her property was for almost twice that amount.

    The woman was eventually sued by the mortgage holder — Khanna's wife Veeru Kantoor — and gave up the property. [...]
    In addition to the Financial Services Commission's effort to revoke his mortgage broker's licence, Khanna has been charged with sexually assaulting a woman he met in the course of his business. He did not return a call seeking comment about the criminal allegation.

Tuesday, January 19, 2016

Loan Modification Scammer Dodges Jail Time On Grand Theft Charge, Gets 30 Days On Work/Steet Cleanup Crew, 3 Years Probation, Ordered To Pay $50K+ In Restitution For Ripping Off 3 Elderly Homeowners

In Los Angeles, California, the Los Angeles Daily News reports:
  • A North Hollywood man who pleaded no contest to grand theft in what prosecutors said was a mortgage modification scam was ordered [] to pay more than $50,000 in restitution to three women in their 60s and 70s.

    Superior Court Judge David Stuart also ordered Jovanny Malka, 30, to complete 30 days of community labor and to serve three years on probation, according to the Los Angeles County District Attorney’s Office.

    Malka pleaded no contest Dec. 1 to one felony count of grand theft of personal property exceeding $950.

    He was charged last year in connection with allegations he bilked thousands of dollars from the three women -- ages 67, 69 and 72 -- who believed he was helping them get mortgage modifications on their properties.

L.A. City Attorney Pinches Two For Alleged Loan Modification Ripoffs In Separate, Unrelated Scams

In Los Angeles, California, KPCC Radio 89.3 FM reports:
  • Even though Los Angeles is no longer in a foreclosure crisis, thousands of Angelenos still have underwater properties and are targets of scam artists promising to modify their home loans.

    On Wednesday, City Attorney Mike Feuer announced he had filed criminal charges against two men who collected money from homeowners seeking loan modifications but failed to do the work.

    Jorge Bolanos Santizo allegedly collected $1,600 from a homeowner in the Valley without performing any loan modification work.

    Eblin Balver allegedly ran a similar scheme on a Bellflower homeowner, who lost his house to foreclosure and never got back the $8,500-plus Balver had charged.

Florida AG Files Civil Lawsuit Accusing Outfit Offering Mortgage Document Reviews, Foreclosure Defense Services Of Ripping Off Homeowners By Failing To Obtain Promised Loan Modifications, Debt Reductions, Other Relief

In Jacksonville, Florida, Courthouse News Service reports:
  • A financial firm took thousands of dollars from customers for mortgage relief services but didn't actually provide the promised help, Florida's attorney general claims in court.

    The office of Florida Attorney General Pam Bondi says in a lawsuit filed [] in Duval County that Heathrow Financial Corp. and owner David Golloher even caused some people to lose their homes.

    Heathrow advertises mortgage assistance relief services such as document reviews, mortgage loan modifications, and foreclosure defense services, according to the Jan. 6 lawsuit. "Defendants target consumers who are in financial distress, behind on their mortgage loans, or in danger of losing their homes to foreclosure," the complaint states.

    The company usually charged consumers $975 up front for mortgage relief services, plus a fee of $175 per month, Bondi's office claims.

    Heathrow allegedly told customers to stop paying their mortgage and start paying Heathrow to start the mortgage modification process.

    When consumers received letters from their mortgage servicers about the possibility of foreclosure because of nonpayment, they contacted Heathrow, which did not "accurately inform consumers about the progress of the represented mortgage modification," according to the lawsuit.

    "As a result of defendants' acts and practices, consumers suffer substantial economic injury, including: paying thousands of dollars to defendants for little or no service in return, going into foreclosure, and even losing their homes," the complaint states. "After consumers have signed up with defendants and paid the requested advance fees, defendants have failed to obtain a loan modification, principal reduction, or other relief to stop foreclosure or make the consumers' mortgage payments affordable."

    Bondi's office alleges violations of the Florida Deceptive and Unfair Trade Practices Act. "In truth and in fact, defendants do not obtain mortgage relief services for their clients," the lawsuit states.

    The state seeks civil penalties, an order granting restitution to consumers damaged by Heathrow and Golloher, and an order freezing their assets.

HUD Invokes Fair Housing Act To Bring Administrative Complaint Against Three Outfits Peddling Forensic Loan Audits & Other Mortgage Rescue Assistance For Allegedly Targeting Hispanic Homeowners w/ Worthless (Or Near Worthless) Services That Failed to Help Them Save Their Homes From Foreclosure

From the Department of Housing & Urban Development (Washington, D.C.):
  • The U.S. Department of Housing and Urban Development announced [] that it is charging three Modesto, California, home loan modification companies and nine of their agents with violating the Fair Housing Act by targeting Hispanic homeowners for illegal or unfair loan audit and loan modification assistance because of their national origin. Read HUD’s charge.

    The Fair Housing Act prohibits discrimination in housing transactions, including those related to home mortgage loans, because of national origin.
    HUD’s charge of discrimination alleges that The Home Loan Auditors, LLC; Century Law Center, LLC; SOE Assistance Center, Inc., and their agents lured struggling Hispanic homeowners into paying thousands of dollars for home loan audits that the homeowners never received and modification services that had little, if any, value.

    The companies allegedly exploited the homeowners’ limited-English proficiency and used deceptive marketing in Spanish, at times making false representations, in order to mislead them. Ultimately, the homeowners lost their properties due to foreclosure.

    HUD’s charge will be heard by a United States Administrative Law Judge unless any party to the charge elects to have the case heard in federal district court. If an administrative law judge finds after a hearing that discrimination has occurred, he or she may award damages to the complainants for their loss as a result of the discrimination. The judge may also order injunctive relief and other equitable relief, to deter further discrimination, as well as payment of attorney fees. In addition, the judge may impose civil penalties in order to vindicate the public interest. If the case is heard in federal court, the judge may also award punitive damages to the complainants.

Monday, January 18, 2016

Queens Law Firm, Affiliated Foreclosure Rescue Outfit Face Additional Lawsuits Accusing Them Of Running Illegal Loan Modification Racket Screwing Long Island Homeowners Out Of Thousand$

On Long Island, New York, Newsday reports:
  • A Queens-based law firm and an affiliated foreclosure “rescue” firm have cheated Long Island homeowners out of thousands of dollars and put them at greater risk of losing their homes, the homeowners have charged in four separate lawsuits.

    The Donado Law Firm and the American Hope Group persuaded the homeowners to pay for mortgage modification services but provided no help, the homeowners stated in court papers. The affiliated companies share office space in the Elmhurst section of Queens, and the American Hope Group also has locations in Hempstead and Amityville, according to the lawsuits.(1)

    Valmiro Donado, who is named in court papers as owner of the two companies, did not return calls and an email seeking comment. In two of the four lawsuits, Donado has asked for more time to respond to the allegations, according to the Manhattan-based nonprofit New York Legal Assistance Group,(2) which is representing the homeowners.

    “As people are in foreclosure longer and longer, they are becoming more susceptible to these scammers who make promises they can’t fulfill,” said Rose Marie Cantanno, a supervising attorney with the nonprofit legal group. “A lot of our clients say, ‘We thought they were from heaven.’”

    The two companies promised to lower homeowners’ monthly mortgage payments, collected as much as $17,000 in fees from each client from 2012 through 2014, and told the homeowners to stop making mortgage payments, the homeowners charged in court papers filed in state Supreme Court in Nassau and Suffolk counties late last year.

    Among the plaintiffs is Jose Ventura, a 58-year-old immigrant from El Salvador who lives with his wife and their three children in a sparsely furnished Bay Shore home. Promising to lower Ventura’s mortgage balance, the companies charged him $15,360, most of it deducted electronically from his bank account, according to his lawsuit.

    A former factory worker, Ventura is now seeking a job in construction. “I had to work a whole lot to get that much money,” Ventura said in Spanish, with his attorney, Julie Howe, translating. “I took all of my money out of my bank account, and all they did was harm people, and they’re still just harming people.”

    Ventura is now current on his mortgage, after receiving a $40,000 loan through the New York State Mortgage Assistance Program, which lends money to homeowners at risk of foreclosure, Howe said.

    The other plaintiffs declined to comment, their attorneys said. Three of the four plaintiffs — including Ventura — were current on their mortgage payments when they signed on with the “rescue” firm, but after they took American Hope’s advice to stop making mortgage payments, their lenders sued to foreclose, the homeowners said in their lawsuits. A fourth homeowner was already in foreclosure.
For the story, see Foreclosure ‘rescue’ firm cheated LIers, lawsuits charge (Queens firm charged thousands; provided no help, suits allege; Some homeowners now in greater danger of losing their houses).
(1) This is not the first time these outfits have been accused of running loan modification rackets. See:
(2) The Manhattan-based New York Legal Assistance Group provides free civil legal services to low-income New Yorkers who cannot afford attorneys. Their services include direct representation, case consultation, advocacy, community education, training, financial counseling, and impact litigation. NYLAG has 125 community offices located in courts, hospitals, and community based organizations in all five boroughs of New York City as well as Westchester, Rockland and Long Island.

Statute Of Limitations Sinks Another Foreclosing Lender As Queens Judge Issues Order Quieting Title, Expunging Mortgage On Borrower's Home From Public Record; Bankster's Attempt To 'De-Accelerate' Loan Maturity Falls On Deaf Ears (Appeal Likely?)

In New York City, reports:
  • On the afternoon of January 11, 2016, New York State Supreme Court Judge Salvatore Modica issued a decision in a Quiet Title case that will send shivers down the spines of mortgage bankers and servicers in the business of foreclosing on loans in default in New York.

    In this case the homeowner’s attorney was able to obtain a dismissal of the prior foreclosure case thereby ending the foreclosure action. The homeowner’s attorney Brian McCaffrey, Esq., then set out to invoke the statute of limitations and sued Citimortgage, Inc., asking the Court to declare the mortgage invalid and have it removed from the public record.

    In an interview on Tuesday January 12, 2016, Mr. McCaffrey stated “we tried for a very long time to obtain a loan modification for our client but Citimortgage, Inc., through their attorney’s Rosicki, Rosicki & Associates, wouldn’t agree to modify the loan.” and “instead Citimortgage tried to continue their foreclosure effort, which we were able to get dismissed.”

    Three days before the statute of limitations expired, Citimortgage sent a letter to the homeowner which attempted to decelerate the mortgage, the letter stated “the maturity of the Loan was previously accelerated by filing a lawsuit to foreclose the mortgage… (and that) the maturity of the Loan is hereby de-accelerated, immediate payment of all sums owed is hereby withdrawn, and the loan is, re-instituted as an installment loan.”

    McCaffrey sued Citimortgage on behalf of the homeowner and argued that this “de-acceleration” was not allowed and that the letter had no effect. He asked Judge Modica for a ruling that the mortgage was invalid and asked the Judge to order the County Clerk to cancel the mortgage.

    In his decision, Judge Modica wrote “Ordered that the subject mortgage held by defendants, Citimortgage, Inc., is declared invalid; and – Ordered that the County Clerk of Queens County is directed to cancel the mortgage held by defendant, Citimortgage, Inc.”

    In New York State, lenders have a limited amount of time to bring a foreclosure action against delinquent borrowers. New York law requires that actions upon a “mortgage of real property” must be commenced within six years. This statute of limitations in a foreclosure lawsuit begins to run upon commencement of the action, according to the Appellate Division 2nd Department of the Supreme Court of the State of New York in the case Zinker v. Makler, 298 AD 2d 516 (NY Appellate Div., 2nd Dept. 2002).

    In the Citimortgage case, the lender began a foreclosure action on March 17, 2009 and McCaffrey was able to get that case dismissed. The statute of limitations began to run on March 17, 2009 and expired on March 17, 2015. On March 13, 2009 Citimortgage attempted to circumvent the statute of limitations by sending out a letter which purported to de-accelerate the mortgage – that attempt was rejected by McCaffrey’s firm in writing. The Court agreed with McCaffrey and has expunged the Citimortgage from the record.
Source: New York Judge issues an order canceling a mortgage held by Citimortgage, Inc.

For the court ruling, see Soroush v. Citimortgage, Inc., Index No. 706506/2015 (Queens County Sup. Ct., January 11, 2016).

Bankster Successfully Establishes Standing To Foreclose, But Appeals Court Slams Brakes On Sale Anyway As Negligent Trial Judge Fails To Appropriately Address Homeowner's Affirmative Defenses

In another reversal of an improvident trial judge's ruling in a foreclosure case (guilty party: Pasco County Senior Judge Wayne L. Cobb), a Florida appeals court recently reminded us that a trial judge can't grant summary judgment in a case where the defendant asserts affirmative defenses and the sneaky bankster fails to refute them.(1)

The bankster merely responded by arguing that each affirmative defense should be stricken as facially insufficient.

For the ruling, see Amstone v. The Bank of New York Mellon f/k/a The Bank of New York, as Trustee, No. 2D14-5480 (Fla. 2d DCA Jan. 6, 2016).
(1) The homeowner's asserted the affirmative defenses of:
  • failure to comply with section 559.715, Florida Statutes (2008);
  • failure to post a cost bond pursuant to section 57.011, Florida Statutes (2008);
  • failure to provide notice of breach and acceleration pursuant to Paragraph 22 of the mortgage; and
  • a violation of the Federal Truth in Lending Act, 15 U.S.C. § 1641 (2008).

Portland-Area County Commissioners To Drop $160 Million Lawsuit, Agree To Comply w/ MERS' 'Gag Order' In Exchange For $9.6 Million Settlement To Resolve Allegations That Bankster Played Central Role In Racket That Bypassed Public Recording Requirements For Mortgage Assignments

In Portland, Oregon, the Portland Tribune reports:
  • Multnomah County commissioners have approved a $9.6 million settlement of a lawsuit alleging fraud against a national mortgage registry company.

    Mortgage Electronic Registration Systems Inc. was used by banks to bypass public recording requirements and fees, and critics have accused it of fueling practices that led to the 2010 national foreclosure crisis. Other lawsuits against the company have been filed around the country, with mixed results.

    Of the total settlement, the county will receive $6.1 million. The remainder will go to three outside law firms the county hired to pursue the case.

    In return for the money, county commissioners will be restricted on what they can say outside of public meetings. According to a script negotiated by the outside lawyers, they can say only that the case was settled and they are happy with the outcome.

    Several commissioners took the opportunity to raise concerns about the "gag order" and decry the corporate behavior that led to the crisis.

    "People lost their jobs, people lost their health care and people lost their homes because of this," said Commissioner Judy Shiprack. The effects are "still rippling though the lives of the people that I represent."

    The county originally filed the case as a $38 million lawsuit, but last May filed an expanded lawsuit seeking damages of $160 million. The case moved from state court to federal court, then to mediation.

    Initially the county only disclosed the primary settlement with MERS for $9 million in response to a records request. A subsequent request produced about a dozen related settlements with banks named in the case, bringing the total received by the county to $9.573 million.

    The commissioners have made no final decision on how the county's share of the settlement will be spent. In late 2012, media reports said that former county Chair Jeff Cogen said the money would be used to help county homeowners who were subjected to non-judicial foreclosures involving MERS.

    But [last week], current chair Deborah Kafoury said she hopes "we use these dollars to help with the very real and very personal affordable housing crisis in Mulntonah county."

Sunday, January 17, 2016

S. Florida Feds Bust Trio For Allegedly Hijacking Possession Of 80+ Homes From Owner-Investor & Renting Them Out, Pocketing Rents, Security Deposits From Unwitting Tenants; Victim's Loss Of Rental Income Could Exceed $100K/Month: Investigators

In West Palm Beach, Florida, the South Florida Sun Sentinel report:
  • Three men are facing federal fraud charges after investigators said they illegally seized control of about 80 homes in Broward and Palm Beach counties, changed the locks and rented the residences to unsuspecting tenants.

    Kesner Joaseus, 46; Wadno Dorneau, 36; and Miguel Tilus, 54, who all live in Palm Beach County, are facing charges of mail fraud conspiracy and mail fraud.

    All three appeared in federal court in West Palm Beach [] and will be held without bond at least until a court hearing next week when a judge will decide if they should remain jailed while the case is pending.

    The men have not yet indicated if they will contest the charges.

    Agents from Homeland Security Investigations said the three men targeted homes owned by HavenBrook Homes, LLC, a Georgia-based company that buys and renovates properties in several states and then rents them out. The fraud operated between November 2014 and December 2015, authorities said.

    Federal prosecutors said the men used a company called RHA Two, LLC in West Palm Beach, which used a similar name to one used by HavenBrook, RHA 2 LLC, to deposit illegally obtained rental payments and "create confusion with the legitimate company."

    The men are accused of stealing the keys to the homes from on-site lockboxes as renovations of the properties were being completed.

    "When construction is nearing completion, [they] remove the Iockbox from a targeted home and call a Iocksmith to change the Iocks on the home. Immediately after having the Iocks changed, sometimes within hours, [they] place signs in high-traffic areas advertising a home for rent and posting one of several prepaid cell phone numbers," agents wrote in court records.

    The men then required renters to pay their first and last months of rent and a security deposit and got them to sign a phony lease, authorities said. The men rented post office boxes to receive payments from renters.

    Lantana police officers, who were also involved in the investigation, said they interviewed several renters who were victimized by the fraud.

    The men illegally rented out homes in Margate, Lantana, Lake Worth, West Palm Beach and other locations in Broward and Palm Beach counties, according to court records.

    Investigators said they used an informant, who was not named in court records, to pose as a customer and meet with Dorneau. The informant signed a lease for one of the Lantana homes, but no money changed hands.

    Officials from HavenBrook Homes told investigators that at least 80 homes owned by the company were taken over in a similar manner, resulting in loss of rental income "that could exceed $100,000 per month," investigators said.

    A bank account controlled by one or more of the men received more than $100,000 in money orders and cashier's checks in the first six months of last year, authorities said.

    Prosecutors said they believe all three men are flight risks and pose an economic danger to the community because of their alleged fraud.

    Joaseus' wife and Tilus have transferred the deeds to a $1 million home in Wellington back and forth between them in recent months, authorities said. Tilus said in court [] that he and his wife own the property, but they have no significant equity in it. He also owns a property in Lake Worth.

    In a separate case, Joaseus is also facing federal bank fraud and identity theft charges.

    Joaseus used stolen identities to open credit card and checking accounts and then used them to pay for numerous personal expenses, including making payments for two Mercedes-Benz vehicles, school and doctor charges, agents from the U.S. Postal Inspection Service wrote in court records.

    Investigators estimated the amount of the credit card and checking account fraud exceeded $260,000, according to court records.

Las Vegas Cops Hunt Local Man For Alleged Role In Series Of Home Rental Scams; Investigators: Suspect Uses Craigslist, Other Online Sites To Lure Prospective Tenants To Fleece Them

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • Las Vegas police are looking for Robert Vito Comito, a 62-year-old man wanted for a series of home-rental scams throughout the valley.

    Financial-crimes detectives said Wednesday that Comito is known to put listings on Craigslist, Trulia and other rental websites before stringing potential renters along and defrauding them of their money — sometimes before he even showed the rentals in the ads.

    He is wanted on multiple charges of obtaining money under false pretenses and one charge of obtaining and using another person's identity, both of which are felonies.

    Court records show Comito was previously convicted of two felony counts of actions that constitute theft in 2001. That same year, he was also convicted of taking a car without the owner's consent, a gross misdemeanor.

    People with information on Comito's location or anyone who believes they may have been victims are asked to call Metro's financial crimes section at 702-828-3483.

Ex-Property Manager Gets 41 Months For Pilfering Funds Collected On Behalf Of Co-Op, Condo Association Clients, Then Failing To Pay Income Taxes On Diverted Dough

From the Office of the U.S. Attorney (District of Columbia):
  • Lorraine Cyr, 58, was sentenced [] to 41 months in prison for embezzling over $380,000 from her employer and properties that she managed, announced U.S. Attorney Channing D. Phillips, [and others]. Cyr, of Palm Bay, Fla., pled guilty [...] to one count each of wire fraud and income tax evasion. [...] Following her prison sentence, Cyr will be placed on three years of supervised release. She also must pay $380,537 in restitution to a property management company and various other victims of her scheme, as well as $96,112 to the IRS. She also must pay a forfeiture money judgment in the amount of $342,917.

    According to a statement of offense submitted at the plea hearing, Cyr worked from 2001 until 2009 for a property management company, referred to in court documents as “Property Management Company A,” in Washington, D.C. She was vice president of operations during her last four years of employment, handling duties such as management of payroll, bank accounts, budgeting, invoicing, and tax preparation for the company and its clients. The clients consisted largely of cooperative and condominium apartment buildings in the District of Columbia.

    In 2009, Cyr started her own property management company, Lorraine Cyr Management Group, Inc., also in  Washington, D.C., in which she performed similar duties for various clients, including some who transitioned to her new firm. In her new role, she had virtually unfettered discretion to manage the business affairs of her clients, who granted her access to bank accounts to manage their operations and expenses.

    Between July and November of 2009, prior to resigning from “Property Management Company A,” Cyr embezzled $37,620, which she used for personal purposes, including spending at casinos and various retailers. Then, between March 2010 and April 2011, while at her own firm, she stole $342,917 in funds from eight clients. She used the money for expenses such as spending at casinos, hotels, amusement parks, clothing stores, restaurants, and other retailers.

    The tax charge stems from Cyr’s evasion of income taxes on the money that she was stealing, as well as the legitimate income that she was earning, during the course of her scheme.
Source: Former Property Manager Sentenced to 41 Months in Prison For Stealing Over $380,000 from Employer and Clients (Defendant Spent Money at Casinos and on Other Personal Expenses).

Ring Leader Gets 97 Months In Conspiracy That Burglarized Rent Collection Drop Boxes At Apartment Complexes Across Florida, Georgia, Hijacking & Altering Tenants' Money Orders, Then Depositing The Loot Into Their Own Bank Accounts

From the Office of the U.S. Attorney (Tampa, Florida):
  • U.S. District Judge Steven D. Merryday [] sentenced Juan Carlos Miranda Noda (29, Tampa) to eight years and one month in federal prison for conspiracy to commit bank fraud. The Court also entered a forfeiture money judgment in the amount of $259,257, which constituted the proceeds of the conspiracy, and a restitution order in the amount of $424,433, to be paid to the victims.

    According to court documents, from in or around May 2013, through 2015, Miranda Noda was the ring leader of a group of conspirators who stole rent payments from rent collection boxes at apartment complexes across the State of Florida and in Georgia.

    The conspirators staked out the drop boxes, burglarized them, and kept the money orders that the victim renters had purchased to pay their rent. The conspirators then washed or altered the original money orders, replacing the original names with their own names, and deposited the stolen money orders into accounts under their control at several banks located throughout Hillsborough and Pinellas Counties. They then shared in the proceeds of the thefts.

    Five other conspirators will be sentenced for their involvement over the coming weeks.