Saturday, February 06, 2016

Novice Renter Goes For The Bait, Gets Reeled In By Rent Scammer After Seeing Craigslist Ad; Victim Now $580 Poorer

In Salina, Kansas, the Salina Journal reports:
  • A teen who paid a rent deposit on a house after seeing an ad on Craig's List realized she'd been scammed and didn't send more money for the first month's rent, a police department spokesman said.

    Capt. Mike Sweeney said the 19-year-old woman sent a Moneygram for $580 as a deposit for a house on Birch Street, but when no one met her at the house to show her the inside she became suspicious.

    Sweeney said she recontacted the people in Germansville, Pa., who said they were renting the house. When she was told to send more money, she instead reported the incident to police.

    Sweeney said the teen sent the money at 3 p.m. Jan. 9. She reported the scam Friday.

    Generally, Sweeney said, prospective renters can see the inside of a house or apartment before paying money to anyone. He said landlords do not typically require payment by Moneygram, but people conducting scams often do because Moneygrams can be picked up and cashed anywhere.

Bogus Pre-Rental 'Lead-Free' Certificates Peddled To Landlords By Unamed Inspector At Center Of Effort By State Officials Urging Nearly 400 Maryland Families To Have Their Kids Tested For Lead Poisoning

In Baltimore, Maryland, The Baltimore Sun reports:
  • State officials are urging nearly 400 families to find out whether their children may have lead poisoning after launching an investigation of a private inspector who they say improperly certified rental properties as lead-free.

    The Maryland Department of the Environment said it is partnering with the U.S. Environmental Protection Agency in the investigation of an unnamed individual involved in 384 inspections in Maryland, including Baltimore and its suburbs. The investigation was launched after officials determined that seven properties certified as lead-free actually had lead paint or weren't properly tested, the agency said.

    The remaining properties with certificates issued by the inspector are now under review.

    Flaking or peeling paint is a primary source of poisoning for children, who studies have found are more likely to struggle in school and to get in trouble, both as juveniles and adults. Under state law, properties built before 1978, when lead paint was banned nationally, must be inspected and certified as safe before they can be rented.

    Jay Apperson, a spokesman for the environment department, said officials didn't want to wait for the results of the investigation to inform the public.

    "We wanted people to be aware this is going on so they can take steps to protect the health of their families," Apperson said.

    The investigation began when state officials received a complaint concerning the validity of a lead-free certificate issued by the inspector, who performed work for American Homeowner Services LLC, based in Lusby in Southern Maryland. State officials said they determined the certificate was invalid — and then discovered six more of the inspector's certificates were also invalid.

    American Homeowner Services LLC paid a $5,000 fine to settle the matter, state officials said. The company did not respond to a request for comment.
    State officials are now sending letters to the residents and owners of the 384 properties certified lead-free from 2010 to 2014, when the inspector's accreditation expired. The largest number is in Prince George's County, but other affected jurisdictions include Baltimore City and Anne Arundel, Baltimore, Calvert, Charles, Howard, Montgomery and St. Mary's counties. Eighteen properties have a Baltimore address.

    The letter urges parents living at the properties to have their children visit a doctor, and report to the state how many children live in the house and whether there is flaking or chipping paint visible on the property.
    A Baltimore Sun investigation, published in December,(1) found that the inspection system Maryland has set up to protect youngsters from deteriorating lead-based paint is inadequately enforced and relies on data riddled with errors. While lead-poisoning cases have fallen significantly, at least 4,900 Maryland children have been poisoned in the past decade.

    State auditors have repeatedly criticized the environment department's oversight of its registry of rental properties, finding that, over the years, thousands of properties have dropped off the list without explanation.

    The Public Justice Center, in a recent survey of renters facing eviction, showed 41 percent reported flaking or peeling paint at their homes. The survey showed many of the properties were not registered with the state and, if registered, had not passed safety inspections.

    The Maryland Department of the Environment has fewer than a dozen inspectors to cover as many as 400,000 rental units statewide.

Home Depot Subsidiary To Cough Up $37K To Settle Allegations It Violated Lead-Based Paint Rules In Connection w/ Home Renovation Project

From the U.S. Environmental Protection Agency (Denver, Colorado):
  • The U.S. Environmental Protection Agency has reached a $37,065 settlement with Atlanta, Georgia-based THD At-Home Services following a June 2015 compliance inspection that revealed alleged violations of the lead-based paint Renovation, Repair, and Painting (RRP) Rule at a project site in Arvada, Colorado.

    THD At-Home Services, a subsidiary of The Home Depot, was the general contractor for the Colorado home renovation project, where prior testing confirmed the presence of lead-based paint. The settlement alleges that the company failed to ensure that waste debris and dust at the project site were properly contained and that the work area was fully cleaned of dust, debris, and residue in accordance with RRP Rule requirements.

    EPA’s Renovation, Repair, and Painting rule provides important, front-line protection for children and others vulnerable to exposure to lead dust that can cause lead poisoning,” said Suzanne Bohan, director of EPA’s enforcement program in Denver. “EPA will continue to take steps to ensure that contractors comply with the rule’s requirements to contain waste, control dust, and prevent exposure.”

    The RRP Rule, issued under the authority of the Toxic Substances Control Act, requires that contractors that work on pre-1978 dwellings and child-occupied facilities are trained and certified in lead-safe work practices and that those work practices are used on jobsites. This ensures that renovation and repair activities that disturb surfaces with lead paint, like sanding or cutting walls or replacing windows, minimize the creation and spread of dangerous lead dust. The rule took effect on June 23, 2008.

    The U.S. banned lead-based paint from housing in 1978, however EPA estimates that it is still present in more than 30 million homes across the nation. Lead exposure can cause a range of adverse health effects, from behavioral disorders and learning disabilities to seizures and death, with young children at the greatest risk due to their developing nervous systems.

    [Go here f]or more information on the RRP requirements.

Friday, February 05, 2016

237 Jacksonville-Area Homeowners Slammed w/ $1.1 Million In Property Tax Liens In Last Six Months Arising From Improper Homestead Exemption Claims; County Official: "We Haven't Seen Any Willing Cases [Of Fraud] ... There's Nothing We See To Turn Over To The State Attorney's Office"

In Jacksonville, Florida, WJXT-TV Channel 4 reports:
  • Duval County property appraiser Jerry Holland continues his crackdown on homeowners who file more than one homestead exemption.

    The practice, perpetrated by hundreds of Jacksonville property owners, costs the city thousands of dollars. It happens when homeowners, who are eligible for a property tax break on a home they own and live in, claim a second exemption for a property they own but don't reside in.

    The homestead exemption can not be claimed on a rental property or a secondary residence.

    But within the last six months, Holland and his staff have found 237 people with bogus claims, and he there are a lot more out there.

    Some of the perpetrators are actually unsuspecting.

    William Richardson inherited a house from his father, but it came with a problem he was not aware of: a homestead exemption in his father's name. Richardson never changed the paperwork and the property appraiser found out about the false claim and placed a $36,000 lien on the house.

    “That blows you away. It's hard to sleep at night ever since I learned that,” Richardson said. “I have no choice but to take care of it.”

    Holland hired two new staff members and their job, along with others, is to track down those who are not paying their fair share.

    I do believe there are many people who did not intend to commit fraud,” Holland said. “So in those cases we believe that. We haven't seen any willing cases where there was an attempt to do this. There's nothing we see to turn over to the State Attorney's Office.”

    In the last six months, Holland's office has uncovered $1.1 million in money that will eventually end up paying for city services. In all, 237 liens have been filed against property owners in that time.

    Compare that to the same time a year ago when $445,000 was billed with only 68 liens.

    Holland said this is just a start.

    “We are also looking to contract an outside firm that can do more data research for us,” Holland said. “They can check more out of state records for us. Do things our department can't do within their own confines.”

    Many homeowners said they just did not know and were just made aware that they were not in compliance.

    Officials advise double-checking all exemptions, particularly for homeowners who live in a house once owned by their parents. They said it's important to switch all the paperwork into your name if you're the owner.
Source: Crackdown on property tax fraud continues (Property appraiser places liens on 237 homes for false exemption claims).

NYC Officials: Real Estate Title Hijacking Racket Has Become Such A Thriving Industry That Deed Snatchers Now Have Their Own Corps Of Lawyers, Banksters, Notaries, & Real Estate Brokers

In New York City, the New York Post reports:
  • Property fraud — involving crooks who steal homes from people using fake deeds and other trickery — has become such a thriving industry that the hucksters now have their own corps of lawyers, mortgage bankers, notaries and real estate brokers, city officials said Monday.(1)

    “Perpetrators operate as an organized gang,’’ Finance Commissioner Jacques Jiha told a City Council panel.(2)

    The hearing also drew city Sheriff Joseph Fucito and victims’ advocates, including the Legal Aid Society, which called for a crackdown.

    The sheriff ’s office has a total of 671 open investigations into allegations of deed fraud, with the most, 326, in Brooklyn.

    There have been only 17 arrests so far, at least partly because of the complexity of the cases, authorities said. “It’s a form of organized crime . . . [with] a very complicated type of prosecution,’’ Fucito said.
Source: Property fraud alert.
(1) See The City’s Efforts to Combat Real Property Deed Fraud, Testimony of Jacques Jiha, Ph.D., New York City Commissioner of Finance (February 1, 2016).

(2) Ibid.

Lawsuit: Rich Hubby Who Secretly Divorced His Wife Months After Marrying Her Over 20 Years Ago Now Seeks To Sell Their $1+ Million Midtown Condo Out From Under Her

In New York City, the New York Post reports:
  • They were married for 20 years, raising a son and living the good life jetting between homes in New York and France.

    It was all perfect, except for one thing: He had secretly divorced her just months after their wedding, in an apparent attempt to shield his assets.

    Now Cristina Carta Villa, 59, is suing her 90-year-old “husband,” Gabriel Villa, to nullify the divorce she never knew about — and keep him from selling an apartment they shared.
    Even though the couple didn’t live in the Dominican Republic, Gabriel launched the legal dissolution there. He hired lawyers to represent each spouse and cited “incompatibility of temperaments” as the reason for the split, Cristina claims in a Manhattan Supreme Court lawsuit.

    Cristina found out about it only in November when a tax bill arrived for their Manhattan home and her name wasn’t on it. She hired a lawyer to investigate, only to learn that Gabriel had tried to remove her name from the deed, using the Dominican Republic proceeding as proof she was not an owner, she charges. [...] She believes her husband wants to sell the apartment to his adult daughter, Marina Villa, who lives in Rome. One-bedroom condos in the Midtown building sell for roughly $1.4 million, records show.

Thursday, February 04, 2016

Indiana AG: Out-Of State Foreclosure Sale Surplus Snatchers Duped Dozens Of Homeowners Out Of Million$; Defendants Allegedly Paid Approx. $13K For Rights To Over $3.2 Million In "Overage" Claims

In Indianapolis, Indiana, The Indianapolis Star reports:
  • Three out-of-state business owners attempted to swindle financially strapped Hoosier property owners out of more than $3 million, according to a lawsuit filed [this week] by Indiana Attorney General Greg Zoeller.

    The lawsuit filed in Marion Superior Court seeks more than $9 million in damages, fines and penalties. It alleges the companies based in Florida, Oklahoma and Nevada "took advantage of vulnerable Hoosiers who had fallen behind in their real-estate taxes and who did not understand the tax sale process."

    In the complicated scam, the alleged unscrupulous predators would swoop in after a property was sold for delinquent taxes — but before it was redeemed by the tax-sale buyer — and pay the owner a few hundred dollars to turn over their remaining legal rights to the property.

    At least 48 property owners in Marion, Allen, Johnson and Lake counties were caught up in the scheme, which focused on properties that had sold at tax sales for significantly more than the amount of delinquent taxes owed.

    In such cases, the property owner can collect the "overage" paid in the tax sale — the amount above the taxes due, plus interest and other fees owed to the county and new buyer.

    What's left over basically amounts to the owner's "equity" in the home and belongs to the owner if there are no other liens, such as mortgages, on the property.

    In one instance, the lawsuit alleges, one of the defendants paid a property owner $450 for a quitclaim deed, which transferred the ownership to the defendant. Along with that ownership came the right to collect the "overage" of $900,000 that was paid by the new buyer above the amount of delinquent taxes due.

    That money had been due to the original owner but, according to the lawsuit, the defendant "used misrepresentations" about the owner's legal rights. That helped the defendant persuade the owner to sell and allowed the defendant to claim the windfall, which the owner did not know about.

    A statement from the attorney general's office said "it is estimated that the defendants paid the 48 original owners a combined total of $13,640 for signing the quitclaim deeds, and after defrauding the owners out of their legal rights to the tax-sale surplus amounts, the defendants were eligible to submit claims for $3,265,204 in tax-sale surplus payments."

    That amounts to more than a 23,800 percent return on their modest investments.

    “Rarely have we seen a scam that so brazenly exploited desperate property owners and took advantage of their lack of understanding of a complicated legal process," Zoeller said in the statement. "Victims not only lost their property but money that was rightfully owed to them.”

    Zoeller said he suspects there are other victims in Indiana and that the scam was perpetrated in other states as well.

    “My office will use every legal tool available to halt this fraud, hold the defendants accountable and assist the victims,” he said.

    The lawsuit names FLRC LLC, and Coastal Title Inc. of Florida, and Oak Tree Title Inc. of Stillwater, Okla. Also named in the case are Diana Castro, David Fuqua and Craig Talkington, who are identified in the attorney general's statement as owners of the three businesses.
For more, see Indiana Attorney General Greg Zoeller files suit in tax-sale scam (Attorney General Greg Zoeller: Complicated scam "took advantage of vulnerable Hoosiers who had fallen behind in their real-estate taxes and who did not understand the tax sale process.")

Foreclosure Surplus Snatchers Begin Making Their Return

From a following op-ed article in The Denver Post by Debra Johnson, the city of Denver's elected clerk and recorder:
  • As Denver's clerk and recorder, I returned more than $2 million in excess funds in 2015 to people who lost their homes in foreclosure.

    But "finders" try to take some of that money from the people who need it most. These people tell those whose homes sold at a foreclosure auction that the only way to get the excess funds is to pay the finder to get it for them.

    Properties that sell in a foreclosure auction are selling at higher and higher prices. Often that means the property sells for more than was owed. The difference in the selling price and what is owed is called excess funds.

    Excess funds belong to the people who went through foreclosure, and my office gladly gets those funds back to them free of charge.

    Finders tell people that we're sending the money out of state. Finders tell people that we don't want to give them the money. Finders contact people before their home is even sold and persuade them to give the finder money to use their services — unnecessary services.
    We don't have any illusion that this money will fix [foreclosed homeowners] lives and make it whole again. But it can help. [...] You might know someone on the excess funds list. We currently have more than $2.1 million in excess funds we're holding for people.

    There is no cost to these people to get their money.

    Please check the list at Click on "Foreclosure & Auction Information," then "Did Your House Sell?" The current list of properties with excess funds is there, along with the claim form and instructions.

Sleazy Ex-Judge Reverses Course On 'No Contest' Plea, Goes To Trial & Is Convicted Of Defrauding Couple By Selling Them Home Using Contract For Deed & Failing To Pay Existing Mortgage; Gets 9-Year Suspended Sentence, Promises To Pay Restitution

In Las Cruces, New Mexico, the Las Cruces Sun-News reports:
  • Former El Paso County Judge Anthony Cobos received a nine-year suspended sentence, five years’ probation and was ordered to pay restitution after defrauding a couple in a Chaparral, New Mexico, property deal.

    Cobos will begin the probation after he completes his four-year sentence on a 2013 federal corruption charge for accepting bribes while he was the El Paso county judge.

    He could be released on that charge as early as October, depending on credit for good time served, defense attorney Joshua Boone said.

    Cobos faced a maximum of nine years in prison in the Chaparral embezzlement case. He was found guilty of one count of embezzlement over $20,000 earlier this month.

    During the sentencing in Las Cruces District Court on Friday, Judge Marci Beyer agreed to defer the sentence so Cobos could begin paying restitution to the victims earlier.

    Cobos was accused of failing to use payments he received from a couple in a land and home deal in Chaparral to pay the mortgage on the property.

    Maribel Samaniego and Jesus "Mike" Zamora testified earlier this year that they paid Cobos monthly payments of $506 from September 2009 to May 2013 for the property, located in the 300 block of Oasis Drive in Chaparral. They also paid a lump sum of $20,000 in several payments as part of another contract between them and Cobos involving the property.

    The couple said they believed Cobos would sign the property's deed over to them and that the money was being used to pay the mortgage.

    They said they stopped paying in June 2013 when the bank holding the mortgage said the property was subject to foreclosure and that no payment had been made on the mortgage since December 2012.

    The restitution Cobos must pay depends on whether the couple can acquire the property, which is in foreclosure.

    If they don't acquire it, Cobos must pay them $28,675.60, the amount the couple had paid him.

    If they do acquire it, either before the foreclosure process ends or at auction, Cobos must pay them the fair market value of the property — estimated at $90,000 – minus the $28,765.60 they have paid him, minus what they paid to get the property.

    Boone said he hopes Cobos will be able to find a job and be able to start paying restitution after he gets out of prison. He called the sentence “fair.”

    Doña Ana County District Attorney Mark D’Antonio attended the sentencing, at one point arguing for prison time for Cobos.

    “I thought it was important for the district attorney to be involved in a white color crime and demonstrate we take these cases very seriously,” D’Antonio, who is running for re-election this year, said after the hearing. “White collar crime is not a victimless crime. It has severe consequences.”

    Beyer argued against prison time if the victims primarily want to “be made whole” through restitution, noting prison time would prevent Cobos from paying restitution.

    Beyer asked Samaniego about her preference.

    “We want to be made whole, and, if that’s not possible, then incarceration is what we want to do,” Samaniego told the judge.

    Samaniego declined to speak with reporters after the sentencing.

    “The loss of money by corrupt individuals has a devastating effect,” D’Antonio said. “Our victim in this case was severely — and her family — damaged.”
Source: Ex-El Paso judge gets 9-year suspended sentence.

For an earlier post on this story, see Already Serving Four Years In Federal Pen For Pocketing Palm Grease, Ex-Judge To Now Take 'No Contest' Plea (Unloaded Home Belonging To Deceased Stepmom, Using Contract For Deed To Collect Monthly Payments While Failing To Pay Existing Mortgage, Leaving Unwitting Buyer-Couple Facing Foreclosure After Having Made At Least $20K In Payments).

Wednesday, February 03, 2016

Illinois AG Scores Court Order Directing Notorious Chicago Businessman To Compensate Five Homeowners & Pay $340K Fine In Connection w/ Equity Stripping, Home Improvement Racket That Used Victims' Reverse Mortgage Proceeds To Pay For Shoddy Repairs (If Any Were Done At All)

In Chicago, Illinois, The Chicago Defender reports:
  • A Cook County judge has ordered a Chicago businessman behind a reverse mortgage scam targeting elderly African-Americans to compensate five of his victims and quit operating his business while his case winds through the courts.

    Mark Diamond, who may have defrauded more than 100 homeowners in a mortgage and home repair scheme, was also ordered to pay a fine of $340,000 by Cook County Circuit Court Judge David B. Atkins last week.

    Illinois Attorney General Lisa Madigan sought the injunction against Diamond; testimony from the five people who will receive restitution was included in her office’s request for the injunction.

    “This is a significant victory for people whose lives were destroyed by Mark Diamond,” Madigan said in an email. “Diamond’s equity-stripping schemes financially devastated too many older African Americans and their families. This win will prevent him from conning people out of their life savings and homes in Illinois.”

    Diamond could not be reached for comment.

    Reverse mortgages are a tool for senior citizens to convert a portion of their home’s value into cash. The loan doesn’t have to be repaid until the person moves out of the house or dies. If family members want to keep the house, they have to pay off the debt.

    Last January, The Chicago Reporter wrote about how Diamond has been accused in many federal cases of swindling elderly black homeowners on the city’s South and West sides and sued dozens of times in Circuit Court. Diamond would convince the homeowner to take out the mortgage by saying the money would pay for home repairs, maneuver to get most or all of the money from the transaction, and perform shoddy work, if anything was done at all, according to several of the lawsuits.

    Madigan said she filed the injunction request in October 2014 after an uptick in the number of complaints against Diamond.

    The goal of the injunction was to stop Diamond from conducting business while a 2009 case she filed on behalf of dozens of elderly black homeowners is adjudicated, she said. The 2009 lawsuit alleged that Diamond and other mortgage and home repair companies had stripped nearly $1.3 million in equity from the homeowners, many of whom lost their houses in foreclosure.

Notorious Motown-Area Real Estate Operator Who Targeted Naive Homebuyers By Using Worthless Land Contracts To Sell Them Dilapidated Homes In Some Stage Of Foreclosure Gets 15 Months To Five Years On Multiple False Pretenses Charges

In Detroit, Michigan, WXYZ-TV Channel 7 reports:
  • A man who was the subject of several 7 Investigators reports for selling properties he didn't own will be spending the next 15 months to 5 years in prison.

    Leonard Bale was sentenced by Judge Timothy Kenny today. He was found guilty of 6 counts of false pretenses earlier this month.

    Bale was selling properties to people on land contract, despite there being mortgages on them. Many times the mortgages were in default and the homes were in foreclosure.

    Bale was tried in a bench trial, along with Jerald Payton. Payton was acquitted on all counts.

    In sentencing Bale, the court said he took advantage of people who were vulnerable and he was motivated by greed. He was remanded into custody.

Florida Supremes Discipline Four Attorneys For Conduct Related To Mishandling Or Misappropriating Cash In Clients' Trust Account

The latest edition of The Florida Bar's gossip sheet is out, in which the state's guardian for the integrity of the legal profession, announced that the Florida Supreme Court has disciplined 15 attorneys – disbarring two, revoking the license of one, suspending seven attorneys and publicly reprimanding five.

Of the 15 lawyers, the following four were variously disciplined for, at a minimum, playing fast & loose with money entrusted to them by their clients and/or others (two getting the boot; one getting an indefinite suspension, and the fourth suspended for 90 days for apparently taking his eye off the ball in getting carelessly but unwittingly caught up in a bad situation):
  • John Charles Archer, Englewood. The Supreme Court granted Archer’s request for a disciplinary revocation, effective 30 days from a Nov. 12, 2015, court order, with leave to seek readmission after five years. (Admitted to practice: 1991) Disciplinary revocation is equivalent to disbarment. Disciplinary charges pending against Archer included allegations of failing to properly supervise non-lawyer employees, sharing fees with a non-lawyer employee, false advertising, mishandling of client funds, failure to properly maintain trust account records, and accepting prohibited up-front legal fees for out-of-state clients seeking modification of their home loans. (Case No. SC15-1661)

    William Thomas Edy, Cape Coral, permanently disbarred effective 30 days from a Dec. 10, 2015, court order. (Admitted to practice: 1977) In several instances, Edy was paid thousands of dollars to handle cases and he failed to provide services. Edy also misappropriated and commingled client funds, he failed to properly supervise non-lawyer employees, and he fraudulently used the credit card of a deceased person. Edy was subsequently arrested for Second Degree Grand Theft related to the misappropriated funds. (Case No. SC15-1196)

    Charles Francis McKinnon, Homestead, suspended until further order, following a Dec. 3, 2015, court order. (Admitted to practice: 1996) According to a petition for emergency suspension order, McKinnon appeared to be causing great public harm by misappropriating and/or diverting funds entrusted to him, and by his failure to respond to official Bar inquiries and subpoenas. (Case No. SC15-2147)

    Michael Lynn Moore, Orlando, suspended for 90 days, effective 30 days from a Nov. 12, 2015, court order. (Admitted to practice: 1990) Moore was hired to receive and remit investment funds through his trust account. Ultimately, the investment scheme proved to be a scam. While Moore had no involvement in it and did not draft documents regarding the investment scheme, he was negligent in not closely scrutinizing the one-sided investment agreements and strategies. Moore's trust account was not fully compliant with the rules. While Moore was on vacation, an employee, who was also a client, withdrew her settlement funds while there were liens against those funds. The employee was prosecuted and ordered to pay restitution. No clients lost funds resulting from her actions. There was no misappropriation by Moore. (Case No. SC15-1888)
Source: Supreme Court Disciplines 15 Attorneys.

Editor's Note: To view discipline documents, follow these steps. Additional information on the discipline system and how to file a complaint are available here.

Tuesday, February 02, 2016

S. California Jury Convicts Ponzi Scheme Operator Who Used "Hard Money Real Estate Lending" Cover As Conduit To Funnel Cash From Unwitting Mortgage Investors Into His Own Pocket, Failing To Make Promised Loans; Suspect Recorded Fraudulent, Forged Lien Documents, Made Lulling Payments To Delay Victims' Discovery Of $3+ Million Ripoff

From the Office of the Orange County, California District Attorney:
  • A “hard money” lender was convicted [] of embezzling over $3 million from investors in a Ponzi real estate-mortgage investment fraud scheme.

    Thomas Franklin Tarbutton, 56, Newport Beach, was found guilty by a jury of 18 felony counts of grand theft, nine felony counts of forgery, 11 felony counts of using an untrue statement in the purchase or sale of a security, and one felony count of the use of a device or scheme to defraud. Sentencing enhancements for loss of over $100,000, property loss over $3.2 million, and aggravated white collar crime of over $500,000 were found true.

    Tarbutton faces a maximum sentence of 34 years and four months in state prison at his sentencing on March 4, 2016, at 9:00 a.m. in Department W-9, West Justice Center, Westminster.

    Between 2004 and 2010, Tarbutton operated Villa Capital Inc. as a “hard money” lender who solicited money from private investors for borrowers looking for funds from non-bank lenders. The defendant defrauded eleven people in a Ponzi real estate mortgage investment fraud scheme. A “Ponzi” scheme is a fraudulent scheme that offers investors high, short-term returns on investments. Instead of using the money to generate actual income and legitimate profits, the money from the investors is kept for the benefit of the defendant or used to repay earlier investors.

    Tarbutton embezzled money from his private investors by keeping the money they lent for borrowers and not funding the loans as promised. He gave his victims fraudulent and forged real estate documents from both the Orange County Clerk-Recorder and the Los Angeles County Registrar-Recorder /County Clerk Departments showing that they were lien holders on property deeds, and supplied investors with false and forged mortgage payments and fraudulent documents of investment of the mortgage payments.

    The defendant supplied his investors with small interest payments using funds from their investments [ie. "lulling payments"] to prevent them from discovering that the loans were either no longer preforming or, in several instances, that the loans had never been funded in the first place. Tarbutton then stopped making any and all payments in the summer of 2010, after the real estate market had completely collapsed.

    The fraud was reported by four victims to the Federal Bureau of Investigation (FBI) in October 2010. The FBI, with assistance from Orange County District Attorney’s Office (OCDA) Investigators, investigated this case.

    In October 2011, charges were filed against Tarbutton and a $2 million warrant was issued for his arrest. The defendant fled the country, ultimately living in Brazil.

    In December 2013, Tarbutton flew from Brazil to Panama. He was detained by Panamanian authorities on the Orange County warrant on Dec. 14, 2013, for attempting to cross the border from Panama to Costa Rica. Panamanian officials returned Tarbutton to Los Angeles International Airport to the custody of the FBI and OCDA on Dec. 17, 2013.
Thanks to Deontos for the heads-up on this story.

New Haven Feds Pinch Seven California Residents In Alleged Loan Modification Racket That Screwed Homeowners Nationwide Out Of Thousand$ In Upfront Fees

From the Office of the U.S. Attorney (New Haven, Connecticut):
  • A federal grand jury in New Haven has returned an indictment charging seven California residents with conspiracy and fraud offenses stemming from an alleged scheme to defraud homeowners across the United States who were seeking mortgage loan modifications. The 14-count indictment was returned under seal on January 21 and all seven defendants were arrested this morning.

    Charged in the indictment are:

    ARIA MALEKI, 33, of Santa Ana, Calif.
    MEHDI MOAREFIAN, a.k.a. “Michael Miller,” 36, of Irvine, Calif.
    KOWIT YUKTANON, a.k.a. “Eric Cannon,” 31, of Huntington Beach, Calif.
    CUONG HUY KING, a.k.a. “James Nolan” and “Jimmy, 32, of Westminster, Calif.
    DANIEL SHIAU, a.k.a. “Scott Decker,” 30, of Irvine, Calif.
    SERJ GEUTTSOYAN, a.k.a. “Anthony Kirk,” 33, of Santa Ana, Calif.
    MICHELLE LEFAOSEU, a.k.a. “Michelle Bennett,” 41, of Huntington Beach, Calif.
    The indictment alleges that, acting as representatives of these entities, the defendants and their co-conspirators cold-called homeowners and offered to provide mortgage loan modification services to those who were having difficulty repaying their home mortgage loans. The defendants charged homeowners fees that typically ranged from approximately $2,500 to $4,300 for their services.

    To induce homeowners to pay these fees, the defendants falsely represented that the homeowners already had been approved for mortgage loan modifications on extremely favorable terms; the mortgage loan modifications already had been negotiated with the homeowners’ lenders; the homeowners qualified for and would receive financial assistance under various government mortgage relief programs, including the Troubled Asset Relief Program and the Home Affordable Modification Program; and if for some reason the mortgage loan modifications fell through, the homeowners would be entitled to a full refund of their fees.

    The indictment alleges that the homeowners had not been preapproved for mortgage loan modifications with lenders, mortgage loan modifications had not been negotiated with the lenders, homeowners did not qualify for and did not receive any financial assistance through government mortgage relief programs, and homeowners did not receive a refund of their fees upon request. Few homeowners ever received any type of mortgage loan modification through the defendants’ companies, and few homeowners received refunds of their fees.

    The indictment further alleges that the defendants used pseudonyms and periodically changed their business and operating names to evade detection. The defendants also directed homeowners to mail their checks to addresses and mail boxes that the defendants and their co-conspirators had set up in states other than California.

    According to the indictment, the defendants routinely ignored cease and desist orders directed at them, including a December 17, 2013, order from the State of Connecticut Department of Banking to cease and desist from charging advance fees to Connecticut residents for mortgage modification services.

Real Estate Broker, Firm Lose Licenses For Playing Fast & Loose With Customers' Cash Held In Company's Trust Account

In Oromcto, New Brunswick, CBC News reports:
  • Oromocto realtor K. Walter Moore and his Town & Country Market Realty Ltd. have had their licences to operate in New Brunswick cancelled by the director of consumer affairs for the province's Financial and Consumer Services Commission.(1)

    Walter Moore, owner and manager of Town & Country Market Realty Ltd. K. Walter Moore is the owner and manager of of Town & Country Market Realty Ltd. in Oromocto. Both have had their licences to operate in New Brunswick cancelled.

    Moore is the owner and manager of Town & Country Market Realty in Oromocto.

    A news release from the commission states the licences were cancelled after breaches of the Real Estate Agents Act were identified during a recent review of Moore's business.

    The breaches identified include improper use of a trust account by failing to deposit money directly into trust and withdrawing money from trust funds to pay operating expenses.

    "The Real Estate Agents Act is very clear on the obligations surrounding trust funds, and the commission's role is to protect consumers by ensuring compliance with the act," said the commission's chief executive officer Rick Hancox in a news release.
For more, see Oromocto real estate agent, firm lose licences (K. Walter Moore, Town & Country Market Realty have licences cancelled by consumer services commission).
(1) For the ruling of the director of consumer affairs, see In re K. Walter Moore, et ano.

Monday, February 01, 2016

Married Duo Face Charges Of Exploiting Vulnerable Adult For Screwing Hubby's Elderly Mom Out Of $300K+ In Real Estate, $42K In Cash, & Stiffing Nursing Home Out Of Living/Care Expenses For Victim

In Minneapolis, Minnesota, The Associated Press reports:
  • Warrants have been issued in Minnesota for a Montana man and his wife who prosecutors say financed their lifestyles by exploiting the man’s elderly mother for over $42,000 while overseeing her estate.

    Court documents show Michael Christie and Martina Christie failed to show up to court in Chippewa County last week for their first appearances. Both are charged with 12 felonies each, including conspiracy to commit financial exploitation of a vulnerable adult.

    Michael Christie became the conservator for his mother’s estate in 2012. Minnesota investigators allege the couple spent thousands of her savings, including over $7,000 on clothing alone.

    Michael Christie also allegedly sold his wife two pieces of his mother’s land valued at over $300,000 for less than $500 and failed to pay expenses for his mother’s nursing home.

Boulder Jury Slams Hammer On Colorado Woman Who Conned Half-Blind, 73-Year Old Man Into Signing Over Title To His Home, Then Successfully Sued Him For Eviction While He Was About To Have Cataract Surgery; 11th Hour Scramble By Deputy DA, Cops, Court Officials, County Protective Services Agency Needed To Block The Boot

In Boulder, Colorado, the Longmont Times-Call reports:
  • A Boulder jury [last week] convicted a woman of swindling a half-blind 73-year-old man out of his trailer home after he said he'd give it to her if she agreed to take care of his cat after he died.

    Catharine Pierce, 58, was found guilty of felony theft and criminal exploitation of an at-risk elder. Pierce gained notoriety in Boulder in 2009 when she was involved in a dispute over her practice of gardening while topless.

    She faces up to 12 years in prison when she is sentenced March 18.

    According to an arrest warrant affidavit from Boulder police, Pierce and her husband, Robert Pierce, moved in with an elderly man who owned a trailer in Boulder in 2014, staying rent-free for about seven months.

    Police said the victim in the case told the Pierces that they could have his trailer after he died if they agreed to look after his cat — which he said was the only thing he cared about in the world.

    While she lived with the victim, Catharine Pierce convinced him to sign what he thought was an agreement to that effect, but he had actually signed over the sold her his trailer for $1, according to police.

    She later attempted to have him evicted.

    Catharine Pierce successfully sued the man — who could not attend the court hearing because he was scheduled to have cataract surgery the following day — and a judgement was entered against him to turn over his home.

    Boulder County Deputy District Attorney Jane Walsh, who prosecuted the case, worked with local law enforcement, court officials and county protective services to block the eviction about a week before it happened.

    Robert Pierce was not charged, but he has an unrelated assault case still open against him in Boulder County Court.
    District Attorney Stan Garnett said the case was important because it involved the exploitation of an elderly person, and cases like this one are often complex and challenging for prosecutors.

    "The community should know that if they are concerned about a senior who they know in the family — or a friend or neighbor — who may be a victim of exploitation, the should call Adult Protective Services or my office," Garnett said.
For the story, see Boulder's topless gardener convicted of swindling 73-year-old out of his home (Jury finds Catharine Pierce guilty of felony theft, criminal exploitation of an at-risk elder).

Florida Bar's Client Security Fund Faces Potentially Heavy Payouts Attributable To Sticky-Fingered, Now-Disbarred Lowlife Lawyer

In Central Florida, the Orlando Sentinel reports:
  • Brooklynn Jones, 9, was born with severe disabilities. When her mother, Brittany Jones, went into labor, a nurse was supposed to give her penicillin every four hours but didn't, and Brooklynn was born with an infection that had devastating consequences.

    "She has epilepsy. … She's developmentally delayed, mentally impaired. She's probably the age of a 3- or 4-year-old, and she's 9," said the child's mother, who lives in Lake County.

    The family sued for medical malpractice and settled, money intended to help pay for the child's extraordinary needs. But now Brittany Jones is fighting to get a big chunk of it back, $180,000 that, in a complaint to the Florida Bar, she says disappeared from the child's trust fund while it was under the control of former Winter Park attorney Julie Kronhaus.

    "We can barely survive," said Jones. "I have to borrow money just to pay property taxes."

    Kronhaus was disbarred last year.

    Jones is one of a string of former clients who have accused Kronhaus, 51, of embezzling more than $2 million, according to court records, law enforcement records and those at the Florida Bar.

    Some of those who accuse Kronhaus of wrongdoing are business people who hired her to set up or manage trust funds, but she's also accused of misappropriating money from children, including Brooklynn Jones.

    Orlando attorney Cary Moss helped the Jones family after Kronhaus was disbarred. It is troubling, she said, when people are taken advantage of. "When you see it happening to a disabled child, it's a stab in the heart," Moss said.

    Jones filed a complaint with the Florida Bar, writing that Kronhaus embezzled $180,670.32, money that she's asked the Bar to repay from its Client Security Fund, an account set up to reimburse people who have been cheated by Florida lawyers.(1)

    Jones provided the Orlando Sentinel with a copy of the Florida Bar complaint and repayment request, as well as a hand-written note Kronhaus signed on March 2, promising to transfer the trust account to a new trustee by the end of that week.

    She did not, Jones said.

    Another former client, Erica Stoner, 41, of Casselberry, says $90,000 meant for her and her then-13-year-old son is now missing. Stoner's husband and the boy's father, Richard "Danny" Stoner, 38, was killed in an automobile crash in 2012. The money was from the family's insurer. Through her lawyer, Stoner hired Kronhaus to set up a guardianship for her son and create a secured account for the money that was to be set aside for him, she said.

    "I never saw the check for $90,000," Erica Stoner wrote in a statement on file at the Seminole County Sheriff's Office that she provided to the Sentinel.

    Kronhaus, who lives in a house valued at more than $1 million in Alaqua, a gated community near Longwood, would not comment.

    Julie Kronhaus has not been arrested or charged, although an investigator at the Seminole County Sheriff's Office spent several months in 2014 interviewing victims and gathering financial records then turned the case over to the FBI, according to Sheriff's Office records.

    Several people who accuse Kronhaus of looting their accounts say they've been interviewed by an FBI agent who works in Maitland and are frustrated that Kronhaus has not been charged.

    David Couvertier, an FBI spokesman and agent, would not comment or confirm that an investigation was underway.

    Alan Cook, an Oviedo businessman, and his wife, Brenda, say Kronhaus misappropriated $1 million from them, "and we're just sitting by, watching Julie Kronhaus spend our money, if it's still available."

    Kronhaus, whose office used to be in Winter Park, was permanently disbarred by the Florida Supreme Court last year. It found her guilty of misconduct, misappropriating funds, violating accounting standards and failing to shut down her practice in 2014 when she had been ordered to do so.

    The state also stripped her of her certified public accounting license.

    After the Sentinel published a story Jan. 5 describing the allegations against her by the Cooks and four other former clients, Kronhaus hired an attorney, August J. Stanton Jr. of Winter Park.(2)
For more, see Disbarred attorney embezzled money from disabled girl, records allege.

For an earlier post on this lawyer, see Disbarred For Fleecing Clients Out Of $1.5 Million In Entrusted Funds, Ex-Lawyer Yet To Be Arrested, Continues Living High Life ("It's Almost Too Hard To Believe," Says One Victim).
(1) For similar "attorney ripoff reimbursement funds" that sometimes help cover 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.
(2) Hiring an attorney at this point appears to be an implicit recognition on Kronhaus part that the objects in her mirror are closer than they appear (ie. Feds, local prosecutor, major area newspaper).

Sunday, January 31, 2016

Hospitalized For Over A Year, Legally Blind, Elderly Quadriplegic Faces The Boot From Rented Apartment After 15 Years Because Sleazy Landlord Claims Tenant Is Not Using Premises As Primary Residence

In Berkeley, California, the Contra Costa Times reports:
  • A quadriplegic who has been hospitalized for over a year with life-threatening sores faces eviction from his apartment because his landlord's agent contends he is not using it as his primary residence.

    "If you do not move back into or vacate your apartment on or before November 10, 2015, the John Stewart Company will have no choice but to have its legal counsel initiate legal action against you," property manager Patrice Gunther-Hill informed tenant Michael Pachovas in an Oct. 27 "Written Notice to Cease" addressed to him at John Muir Medical Center in Walnut Creek.

    "Please note that by not giving up possession of your apartment, you are preventing other low-income people from being able to live at William Byron Rumford Sr. Plaza."

    Pachovas said he pays $761 a month rent for his apartment. The government-subsidized Rumford Plaza complex has 43 units, many of them affordable (rent determined by a set formula) under conditions of a series of loans from the city.

    Pachovas, who is 67 and legally blind, as well as diabetic, has rented a unit at the Rumford Plaza complex in South Berkeley since 2000. He has been hospitalized at John Muir since around October 2014 for what initially appeared to be a cyst but turned out to be a subcutaneous pressure wound that reached all the way to the right thighbone, requiring extensive removal of necrotic tissue, he said. Doctors eventually discovered a similar wound on the left side, requiring a second surgery.

    All told, Pachovas has had eight or more surgeries to remove necrotic tissue since he was hospitalized in 2014, he recalled.

    "I have no choice but to be in the hospital. Believe me, I'd rather be at home," he said last week during a bedside interview.

    Pachovas additionally failed to fill out annual recertification forms, according to a Dec. 9 "Notice to Cure" from the Stewart company. He said last week that he never received the current forms.

    He is being represented by the East Bay Community Law Center.(1) EBCLC attorney Meghan Gordon declined to comment on Pachovas' case other than to confirm her office is representing him.

    "It just infuriates me that they would do something like this, with someone with as many disability issues," said Pachovas, who broke his neck in 1969 when he dove into a lake in Ethiopia while he was a Peace Corps volunteer. He has total paralysis of his lower limbs and limited motion in both arms.

    In the 1970s, Pachovas moved from his native Indiana to the Bay Area, enrolling at UC Berkeley and becoming an advocate for disability rights, the environment and social justice.

    "Have we gone that far, not only in our rent control practices but our humanity, that we throw somebody out who's blind, who's quadriplegic and diabetic, not to mention being a senior?" he said last week. "A landlord shouldn't be allowed to do this."
For the story, see Disabled Berkeley tenant faces apartment eviction over prolonged hospital stay.
(1) East Bay Community Law Center is a community-based teaching clinic of University of California at Berkeley’s Boalt Hall School of Law, providing training and supervision to law students and legal services to low-income clients in Alameda County. Seventeen lawyers and more than 100 law students under their supervision provide free legal services to over 5,000 clients annually.

Living Out Of Pickup-Camper, Oregon Man Trades In Vehicle & Discovers (From Credit Report Run By Auto Dealership) That He Still Owns Home Thought To Have Been Lost To Foreclosure

In Medford, Oregon, the Mail Tribune reports:
  • If Louie Painter hadn't purchased a new car in April, he wouldn't have a home.

    The 71-year-old retired veteran had been living a nomadic life in the wake of his divorce in 2007, traveling to military bases across the country while living in the back of his truck. But that began to change in April when he traded in the truck, and by May he was living in the 2,600-square-foot east Medford home he previously thought he no longer owned.

    It was while Painter was at the Lithia Chrysler Superstore trading in his truck for a new black Dodge Challenger that friend and salesman Dave Struber told him he would've qualified for a lower interest rate if he didn't have a house in foreclosure. “If the car dealer who was selling him a car didn’t tell him, he still wouldn’t know,” ACCESS housing counselor Jodie Barnes said.

    The news was a complete surprise to Painter, who was renting a home at the time he bought the vehicle. "He was just living his merry way, assuming he was not a homeowner anymore," Barnes said.

    Painter had purchased the home in 2006 with his former wife, Nancy, but when they divorced, he left possession of it with her, or so he thought. He recalled signing documents authorizing a short sale while on the road and sending them to his ex-wife via fax. He had put the home along with much of his previous life behind him.

    Assisting someone who didn't know he had a house was atypical for housing counselors at ACCESS. "That in and of itself was new for us," Barnes said.

    The Veterans Affairs' Southern Oregon Rehabilitation Center and Clinics in White City put Painter in touch with housing counselor Barnes at the ACCESS Homeownership Center. After verifying that Painter met income and debt criteria — Painter said he'd lived simply on his pension and Social Security after his divorce — Barnes met with him to explain the loan modification process on April 30.
    Days after Painter's loan modification application, ACCESS heard from the mortgage company with an offer. [...] Barnes said specific figures in the loan modification are confidential, and Painter was unclear on exact figures, but according to property records, the 2,684-square-foot home in the 4000 block of Park Ridge Drive, near Vista Pointe, was purchased new in 2006 by Louie and his wife for $517,500. The home's current appraised value is $327,500.

    "It's got a money view," Painter said.

    The one-story hillside home with a basement is a significant change from the pickup camper Painter was living in a year before. He called it a "mini-mansion," because the home is comparatively smaller than others in his neighborhood. "This is not one of those homes, but it's mine," Painter said.

Out-Of-Control, Crooked Florida Contractor At It Again, Blatantly Ripping Off Homeowners While Dodging Felony Charges & Thumbing Nose At State AG

In Collier County, Florida, the Naples Daily News reports:
  • A Collier County man who was banned from doing construction work and taking deposits is back at it, bilking homeowners and an investor in recent months, according to complaints filed with the Florida Attorney General's Office.

    In a petition filed earlier this month, the Attorney General's Office said it has received two complaints that Richard Leli Jr., a former construction company founder, has violated terms of a settlement reached in 2008. Under the agreement, which stemmed from Leli failing to deliver $1.6 million worth of construction work, Leli agreed to surrender his construction license, stop building in Florida and stop accepting advance deposits.

    But in December 2014, about six years after the settlement was reached, a Naples woman said she gave Leli a deposit of $6,375 to buy hardware to create Litecoin, an electronic cryptocurrency similar to Bitcoin. She said she never saw any evidence of work done to fulfill her agreement with Leli.

    And in a complaint filed last month, a Sarasota County woman, Doris Gomez, said that Leli represented himself as an affiliate of her husband's contracting company, taking about $300,000 from six Florida homeowners. Leli, who was only supposed to be a go-between with her husband's company and another contractor, took deposits and pledged to construct pools, then never started or finished the work, Gomez said.

    "He got almost 50 percent of the deposit up front. He had no intention of doing these pools. He just wanted the money," Gomez said in an interview.

    The Attorney General's Office opened its own investigation following the December 2014 complaint, but Leli has failed to comply with a subpoena for financial records and tax returns, according to the petition.

    When reached by phone Wednesday, Leli said he hadn't seen the Attorney General's Office filing and wanted to read it before commenting. He didn't respond to a follow-up request for comment. Leli hasn't been charged with any crimes related to the complaints or the 2008 settlement.

    The Attorney General's Office first investigated Leli amid reports in the mid-2000s that he was failing to build homes as promised. At the time of the settlement, more than 100 contracts for incomplete homes were found, with buyers owed $1,625,075. The settlement allowed homeowners to seek up to $50,000 per claim from a state recovery fund.(1)

    Leli filed for bankruptcy several months before the settlement was reached, citing an asset deficit of about $1.3 million. Available records don't show how much Leli repaid to homeowners following the 2008 settlement.

    Leli has three pending misdemeanor cases in Collier County, all accusing him of forging checks totaling $4,157 in December 2014.
Source: Florida Attorney General says former Collier County contractor Richard Leli Jr. back cheating homeowners.
(1) The Florida Homeowners' Construction Recovery Fund is a fund of last resort that is available to a natural person who has suffered monetary damages by the financial mismanagement or misconduct of a contractor, and who has exhausted all other resources of payment. The Construction Industry Licensing Board makes the determination of eligibility for an award. (information sheet, claim form).

But see, Action 9 investigates state recovery fund meant to help homeowners for a story on how some homeowners claimed they got the run-around from this fund.