Saturday, April 09, 2016

Illinois Supremes Yank Bar Tickets From Five Attorneys, Issue Lesser Discipline To A Dozen Others; Lawyer Hanky-Panky Primarily Revolved Around Ripping Off Client Cash Or Otherwise Mishandling Their Funds

The Cook County Record reports:
  • Five attorneys were disbarred in Illinois and an additional dozen were suspended in the latest round of disciplinary actions handed down by the Illinois Supreme Court.

    Among those disbarred was attorney Christian Chenoweth, of Chicago. According to disciplinary reports posted by the Illinois Attorney Registration and Disciplinary Commission, which serves as an advisory body to the state high court on professional lawyer discipline, Chenoweth pleaded guilty in October 2014 to a charge of retail theft in Cook County Circuit Court.

    Further, the ARDC said Chenoweth’s alleged list of improprieties contributing to his disbarment included mishandling at least $10,000 of money related to clients’ real estate transactions. According to the ARDC report, Chenoweth received $10,000 in earnest money from a client who was selling some property, and was to hold it in escrow until the closing of the sale. Chenoweth, however, deposited the money into his business bank account, spent at least some of the money and, as of March 22, had not repaid the money to his former client, the report said.

    Further, the report said Chenoweth may have also mishandled more than $120,000 of another client’s money, held in a trust, related to other land transactions in Chicago. The report alleged Chenoweth also spent some of that money “for his own business or personal purposes.”

    Other lawyers disbarred by the state Supreme Court included:

    - Tanya Y. Brockington, of Homewood, who had been similarly disbarred in Georgia “for neglecting three immigration matters” and “failing to return unearned fees;”

    - Raymond L. Huff, of Peoria, who allegedly practiced law in 2015 while still serving a one-year suspension;

    - Larry J. Meyer, of Chicago, who allegedly “misappropriated more than $150,000 in client funds, provided incorrect information to clients about the funds that he received on their behalf, and borrowed $10,000 from a client without making the required conflict of interest disclosures;”

    - Emmanuel E. Okere, of Chicago, who allegedly misled “an elderly client” into giving him $20,000 to invest in a “fraudulent investment scheme,” as well as persuading the client to personally loan him additional money. The Supreme Court release said Okere also “charged excessive fees.”

    In addition to those disbarred, the state Supreme Court also suspended 12 other Illinois lawyers, including:

    - John W. Pleta, of Mokena, suspended on an interim basis and until further order of the court, after he was “charged in a disciplinary complaint with misappropriating more than $1.2 million in funds belonging to a probate estate,” the release from the court said;

    - Edmund B. Moran, of Chicago, for two years, effective April 12, 2016, and until he satisfies a judgment against him over his alleged mishandling of $360,000 in a family trust;

    - Bryan R. Bagdady, of Lisle, for one year. The court said Bagdady was accused of persuading a client to invest money “in two different ventures in which he had an ownership interest.” The client lost her investment, the court said;

    - David J. Fitzpatrick, of Des Plaines, one year, effective April 12, 2016, and ordered to pay restitution for his alleged actions to “not promptly pay approximately $30,000 he withheld from client settlements … and later converted those funds to his own use;”

    - Kenneth A. Leeds, of St. Louis, one year and until further order of the court, with the suspension fully stayed by a two-year probation retroactive to Sept. 30, 2014. According to the court, Leeds had also been suspended indefinitely in Missouri, with the suspension fully stayed by a two-year conditional probation period, for allegedly improperly mixing client money with his own and improperly advancing $6,000 to clients;

    - Anne Marie Beckert, of Chicago, for six months and until further order of the court, with the suspension stayed after 90 days by a one year period of probation, for allegedly failing to refund client costs and mishandling other client matters;

    - Steven W. Berg, of Springfield, 6 months, effective April 12, 2016, and ordered to pay restitution for unearned fees he received in connection with two workers compensation cases;

    - Cassidy A. David, of Chicago, 6 months, effective April 12, 2016, for allegedly writing a “backdated letter purporting to show that she had timely mailed a document to the county recorder,” and then telling her employer and the ARDC the letter was genuine;

    - James P. Greene, of Chicago, 90 days, effective April 12, 2016, and ordered to pay restitution after allegedly borrowing $10,000 from a client without making required interest disclosures and delaying in repaying the money, among other alleged ethical violations;

    - James A. Hajek, of St. Louis, Mo., six months and until further order of the court, with the suspension fully stayed by a one-year probation, retroactive to Oct. 28, 2014. According to the court, Hajek had been suspended indefinitely in Missouri for blending client money with his own business funds and paying personal expenses from that account.

    - James L. Karraker, of Anna, 90 days, effective April 12, 2016, and ordered to pay restitution for allegedly not returning an unearned fee to a client he had represented in a criminal case; and

    - David J. Peilet, of Chicago, 90 days, with the suspension stayed by a one-year conditional probation. According to the state, Peilet was accused of neglecting a client’s criminal appeal.

    The court also censured attorney Daniel G. Koryn, of Los Angeles, placing him on two year probation, retroactive to Oct. 16, 2014; and reprimanded attorney Ronald J. Kurpiers II, of Tampa, Fla.
Source: State Supreme Court disbars five lawyers, suspends dozen more for ethical violations.

See, generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession:
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression. [...] The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
(1) The Client Protection Program of the Attorney Registration and Disciplinary Commission (ARDC) was established by the Supreme Court of Illinois to provide reimbursement to clients who have lost money or property because of dishonest conduct by lawyers admitted to practice law in the State of Illinois. The Program reimburses clients who cannot get reimbursement from the lawyers who caused their losses, or from other sources such as insurance. (But see Stolen Inheritances: I-Team lawyer warning, in which one Illinois victim said of the program, "Their rules are vague, ambiguous and they are applied at their own discretion, and you can't get a straight answer[.]")

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.

Atlanta Feds Pinch Attorney For Allegedly Concocting Sham Real Estate Deal To Fleece $2 Million From Elderly Client

From the Office of the U.S. Attorney (Atlanta, Georgia):
  • Attorney Bennett L. Kight was arraigned on a federal indictment [] charging him with mail fraud while serving as a trustee and manager for assets, investments, and real estate owned by one of his clients.

    “Kight was trusted to properly manage assets and investments belonging to an elderly client,” said U. S. Attorney John Horn. “This indictment alleges that he instead misappropriated $2 million from her by orchestrating a sham real estate transaction involving his former personal residence.”

    According to U.S. Attorney Horn, the charges, and other information presented in court: Kight is a lawyer licensed to practice law in the State of Georgia since 1966. Kight represented F.B. and members of her family, as well as serving as a trustee and manager for assets, investments, and real estate owned and held for the benefit of F.B. and her family.

    In January 2006, Kight used his responsibility over F.B.’s assets to misappropriate approximately $2 million from accounts owned by or held for the benefit of F.B. Kight used the money he took from F.B.’s accounts to pay off the $500,000 mortgage on his former home in Atlanta and to fund investments for his benefit. Without informing F.B., Kight obtained the money by purporting to sell F.B. his former home. To facilitate the sale, Kight formed and used two limited liability companies that were supposed to hold title to the house for F.B.’s benefit. However, no deed transferring Kight’s former home to F.B. or these companies was publicly recorded, and Kight later dissolved these companies.

    Kight’s son ultimately moved into the property Kight allegedly “sold” to F.B. and caused a back dated deed to the property to be prepared and publicly recorded on March 21, 2011. The back dated deed purported to show that an entity owned and controlled by Kight had owned the house since July 2005, which was several months before Kight obtained $2 million from F.B.’s assets by allegedly selling her the property.(1)
Source: Lawyer Charged with Defrauding Elderly Client.

See, generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession:
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression. [...] The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
(1) The Clients' Security Fund of the State Bar of Georgia (Part X - Rule 10-101 et.seq., Georgia Bar Rules Handbook) was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Georgia-licensed attorney.

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.

Yet To Be Hit w/ Criminal Charges, Sticky-Fingered Lawyer Gets 30 Days In Jail For Contempt Of Court For Failing To Comply w/ Court Order Demanding An Accounting For Over $2 Million In Sale Proceeds From Auction Of Real Estate Owned By Estate Of Local Judge

In Brooklyn, New York, the New York Daily News reports:
  • A Queens attorney was thrown into jail for 30 days after admitting he raided the late Judge John (Kung Fu) Phillips’ estate for two years, the Daily News has learned.

    Frank Racano, who worked as an attorney for Rev. Samuel Boykin — Phillips’s nephew — has been locked up since March 1 for not complying with a court order telling him to account for funds from the more than $2 million auction of the Slave Theater building and nearby property in Bedford Stuyvesant, Brooklyn.

    Racano, 54 of Howard Beach, was hauled into Brooklyn Supreme Court by city sheriffs []. He wore an orange jumpsuit and needed a cane to walk because of a foot injury.

    I tried to stay afloat and it all just snowballed,” Racano told Brooklyn Supreme Court Judge Laura Lee Jacobson.

    Racano admitted that he “robbed from Peter to pay Paul” by writing checks from Phillips’ estate’s escrow account and putting the money into his personal accounts to pay off debts.

    “This estate was used as everyone’s honey pot ... He took an oath as an officer of the court and he violated them,” said Jacobson.

    The judge sentenced Racano to 30 days in jail — on top of the 23 days he spent locked up waiting to go before the judge — and gave him a $1,000 fine. Sources familiar with the case said it is very rare for an attorney to be jailed for contempt of court.
    The Brooklyn District Attorney's Office is investigating Racano, a spokeswoman confirmed.

    This, unfortunately, was not the first time Phillips or his estate have been targeted.

    In 2008, Phillips' former guardian, Emani Taylor, was ordered to repay $403,000 to his estate. And in 2006, Maria Leyna Albertina pleaded guilty for stealing the deeds of several homes in Brooklyn, including one that belonged to Phillips.

Disbarred For Ripping Off Over $300K From Client, Ex-Lawyer Finally Gets Slammed w/ Criminal Indictment

In Hammond, Indiana, the Northwest Indiana Times reports:
  • A former Merrillville attorney was indicted in federal court last week, accused of stealing more than $300,000 from a client.

    Robert Stochel was charged with one count of mail fraud in Hammond's U.S. District Court.

    According to the indictment, Stochel was appointed a receiver in 1999 over the corporation Tip Top Supermarket Inc. following a civil lawsuit between the two brothers who owned the company.

    Stochel allegedly opened a bank account to hold money in the receivership. The indictment alleges between January 2001 and June 2012, Stochel withdrew money from the account for his personal benefit. It also alleges he would periodically replace money in the account from his funds in an attempt to cover up the previous withdrawals.

    In total, Stochel allegedly stole $331,840 from the account.

    Stochel was disbarred from practicing law in Indiana by the Indiana Supreme Court in February 2015.(1)(2)(3)
Source: Disbarred Merrillville attorney indicted for mail fraud.
(1) The Clients’ Financial Assistance Fund of the Indiana State Bar Association provides compensation, as a matter of grace, and not as a right, to qualified applicants who have suffered a monetary loss as a result of dishonest acts of an Indiana lawyer, acting either as a lawyer or as a fiduciary.

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.
(2) According to the Indiana Supreme Court ruling ordering the disbarment, Stochel's dirty deeds also included actively concealing that receivership theft for nearly a decade, stealing trust account funds belonging to a former law partner and that partner's clients in an unrelated ripoff, and refusing to cooperate with the Attorney Disciplinary Commission's investigations into his actions. In Re Stochel, 34 NE 3d 1207 (Ind. 2015).

(3) Stochel apparently had a past history of being the subject of disciplinary action for playing fast & loose with clients' money. See In re Stochel, 792 NE 2d 874 (Ind. 2003).

Convicted Ex-High-Living Lawyer Featured On CNBC's "American Greed" Who Counted Desperate Widows, Orphans, People w/ High Medical Expenses Among Three Dozen Clients Fleeced Out Of $6.7 Million In Settlement Funds Sits In Prison As Lender Unloads His Former 25-Room Lakefront Estate For $1.3 Million

In Carmel, Indiana, The Indianapolis Star reports:
  • A 25-room Carmel home that belonged to a disgraced attorney known for expensive taste sold March 15, as its former owner sat in prison.

    William F. Conour's 9,784-square-foot house at 10858 Sedgemoor Circle sold for $1.3 million, according to the Hamilton County assessor's office. The house is in Carmel's gated Bridlebourne subdivision.

    Conour, once a leading personal injury and wrongful death attorney in Indianapolis, was sentenced in 2013 to 10 years in federal prison after prosecutors said he stole $6.7 million in settlement money from 36 clients in what amounted to a Ponzi scheme. He lost his Carmel mansion to foreclosure in 2014 while serving his prison sentence.

    The six-bedroom, nine-bathroom Georgian-style house is among several properties Conour owned, including another Carmel house and a horse farm in northern Hamilton County. A listing for the Bridlebourne house said it includes a guest house, pool, hot tub, gazebo and dock that stretches out onto a lake. The house also has a library and six fireplaces.
    Conour, who was a sought-after attorney for construction accident victims, pleaded guilty in 2013 to federal wire fraud. Prosecutors said he spent clients' settlement money and tried to replace it with subsequent settlements. Victims included widows, orphans and people with large medical expenses.

    In addition to prison time, Conour was sentenced to pay almost $7 million in restitution to his victims. He has since sought in court filings to reduce that restitution to as little as $450,000. Conour late last year also filed a motion seeking to be freed from his prison sentence, which he is serving in West Virginia.

    The CNBC series "American Greed" featured Conour's case in October, noting his lavish lifestyle that included multiple residences, luxury cars, $1,000 bottles of wine and long stays in Scotland. Conour's former 25-room estate makes several appearances in the episode.

Friday, April 08, 2016

Rogue Contractor Allegedly Left Homeowners, Subs High & Dry After Pocketing Deposits Peddling Over $1 Million Of Solar Panels While Failing To Complete Installations/Improvements; Stiffed Suppliers File Over 150 Mechanics' Liens, Leaving Homeowners In Position Of Having To Pay Twice For Incompleted Work

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • Summerlin Energy Las Vegas, the subject of the largest investigation in the Nevada State Contractors Board’s history, had its license with the regulator revoked after a hearing [recently].

    The firm filed for bankruptcy last month, facing a lawsuit from a supplier that claimed it was owed more than $700,000 for parts and complaints from customers who said Summerlin Energy failed to finish work on their homes. The board began receiving complaints from customers last fall. It now has more than 100 complaints.
    [The] hearing lasted two hours but only dealt with a sliver of the complaints related to Summerlin Energy. It concerned nine complaints, such as abandonment of the project and failure to pay suppliers. Several Summerlin Energy customers, who served as witnesses, testified that the company had failed to install or complete the installation of solar panels, even when they had paid hefty deposits or the cost of the entire project.

    Solar panels can cost as much as $50,000.
    Customers have few options for recourse. The board has a recovery fund, but it is capped at $400,000.(1) Many customers believe they are unlikely to see any funds from the bankruptcy. Customers could, however, pursue separate litigation against the company.

    In addition to customers, at least two companies had filed complaints with the contractors board, which was established in the 1940s. Both matters were taken up at [the recent] hearing.

    Summerlin Energy had failed to pay the two companies — Sun Valley Electric Supply Co. and Soligent — for equipment and solar panels that the companies had supplied and delivered to Summerlin Energy. Sun Valley Electric said it was owed more than $725,000 and Soligent said it was owed about $500,000 in missed payments.

    The missed payments have had a trickle-down effect on customers.

    Both suppliers have placed liens, ranging from $1,000 to more than $20,000, on Summerlin Energy customers’ homes, which is a statutory right of subcontractors. This has put some customers in the position of having to pay twice, once to Summerlin Energy for the panels and a second time to the subcontractor for the lien.

    As of early March, the two companies had cumulatively placed more than 150 liens on homes, according to Clark County records.

    According to its bankruptcy filing, Summerlin Energy had clients in Arizona, California and Texas. The contractors board in California said it had an open investigation targeting the firm.
For the story, see Bankrupt Las Vegas solar installer loses license to contract.
(1) The Nevada Residential Recovery Fund was established to offer protection for Nevada homeowners who contract with licensed contractors and, under certain conditions, are harmed by failure of that contractor to properly perform qualified services. All Nevada-licensed contractors and sub-contractors, who engage in residential construction, pay a semi-annual assessment into the Residential Recovery Fund. The Nevada State Contractors Board has been charged with the responsibility of administering the Fund.

Owner-occupants of single-family residences who contract with residential contractors for the performance of any construction, remodeling, repair or improvement. The claimant must be able to show the Board that he/she has suffered a reimbursable loss, which resulted from the conduct of a licensed contractor. The claimant may also request payment when he/she has sued the general contractor in civil court and obtained a judgment, which has not been paid by the contractor and remains unsatisfied. The law provides that the maximum amount paid for a claim against the Recovery Fund cannot exceed $35,000.

Mortgage Elimination Scam Involving Use Of Forged Lien Satisfactions, Followed By Subsequent Home Sales To Hijack Sales Proceeds Away From Mortgage Holders Results In Tax Evasion Guilty Pleas For Three Co-Conspirators

From the Los Angeles, California office of the Internal Revenue Service:
  • [A]maziah Yahalom, who also goes by Andre C. Page, 35, pleaded guilty to one count of tax evasion, admitting in court [] that the mortgage fraud scheme in which he participated caused losses of $800,000 to WMC Mortgage and $425,000 to PHH Mortgage.

    According to documents filed with the court, in 2005, after falling behind on his mortgage payments for his Beachwood Drive home in Los Angeles, co-schemer William Beard was referred to Yahalom and another unidentified co-defendant for assistance in eliminating his mortgage on the property. That scheme involved a series of false documents, including a fraudulent Full Reconveyance purportedly authorized by the lender that was instead signed by Beard’s two roommates.

    The purpose of the Reconveyance was to make it appear as if Beard had paid off his mortgage through the false representation that Beard’s roommates were authorized to declare the mortgage satisfied.

    In June of 2005, Yahalom obtained an $800,000 loan from WMC Mortgage through providing false information about his income and employment, and purchased Beard’s Los Angeles home. Beard caused a payoff demand to be sent from the unidentified co-defendant’s company North West Capital for the false loan. Based on that payoff demand, the escrow company sent $800,000 to North West Capital’s bank account in the state of Washington. No proceeds were paid to Wells Fargo Mortgage, the true holder of the mortgage lien, because the title company did not recognize the Reconveyance as fraudulent and treated the Wells Fargo Mortgage lien as having been satisfied. The $800,000 was divided amongst the co-schemers with Yahalom receiving $130,000.

    Yahalom filed his 2005 tax return failing to report the $130,000 of scheme proceeds.

    In a separate but similar scheme, in 2007, Beard introduced his friend JohnPierre Rivera to Yahalom and the unidentified co-defendant, so that Rivera could eliminate the mortgage on a property he owned on Division Street in Los Angeles. Through the use of another false Reconveyance, Beard, Rivera, the unidentified co-defendant, and Yahalom caused a title company to believe that the first mortgage on the Division property had been satisfied.

    An unsuspecting buyer offered to purchase Rivera’s real property and obtained a loan of at least $414,150 from PHH Mortgage. The title company did not recognize that the Reconveyance was fraudulent and Rivera’s lender did not receive any proceeds from the sale of the Division property. Again, the proceeds of the fraudulent loan were distributed amongst the co-defendants, with Yahalom receiving $130,000 in 2008.

    The specific count to which Yahalom pleaded guilty [] relates to the filing of his 2008 tax return. Again, the fraudulent proceeds of the loan were never reported to the IRS. Yahalom failed to file his 2008 federal income tax return, thus never reporting the $130,000 of loan proceeds received as income in 2008.

    For the 2005 and 2008 tax years, Yahalom evaded the payment of income tax of approximately $45,000.

    In June of 2014, Beard received a sentence of 16 months imprisonment and was ordered to pay restitution of over $1.3 million for his role in the scheme. In 2010, Rivera pleaded guilty to one count of tax evasion and is scheduled to be sentenced on June 6, 2016.
Source: Los Angeles Man Pleads Guilty to his Participation in a Mortgage Fraud Scheme (Defendant Failed to Report Proceeds of the Fraud on His Tax Return).

Quintet Cop Guilty Pleas For Roles In Nationwide Racket That Peddled Phony Loan Modification Services; More Than 400 Homeowners Were Fleeced Out Of Over $3.8 Million

From the Office of the U.S. Attorney (Alexandria, Virginia):
  • Five California men have pleaded guilty for their roles in a nationwide home loan modification scam that defrauded over 400 homeowners out of over $3.8 million.

    Roscoe Umali, 38; Jefferson Maniscan, 34; Raymund Dacanay, 47; Isaac Perez, 33; and Joshua Johnson, 36, all resided in the greater Los Angeles area.

    According to statements of facts filed with their plea agreements, from at least October 2012 through September 2014, the defendants and their co-conspirators targeted struggling homeowners and made a series of misrepresentations to induce those homeowners to make payments of thousands of dollars in exchange for supposed home loan modification assistance.

    Operating under the names of fictional companies like “Equity Restoration Group,” the defendants falsely held themselves out as a non-profit organization or as affiliated with a real government program, the “Home Affordable Modification Program” (HAMP), designed to help homeowners at risk of foreclosure.

    Through mass mailings, phone calls, faxes, and emails with their victims, the defendants convinced homeowners to send them “reinstatement fees” and to make several monthly “trial mortgage payments” to the conspiracy, rather than to the homeowners’ lenders. The defendants then did nothing to help modify any mortgages. Instead, they used the victims’ payments for their own personal benefit and to further the fraud scheme.

    This scam victimized over 400 individuals and families nationwide, resulting in a total loss of over $3.8 million. It also resulted in many victims losing their homes, despite the victims’ efforts to modify their mortgages and continue to make payments on their loans.

Thursday, April 07, 2016

Bid Rigging Conspiracy At Real Estate Tax Lien Auction Lands Participant One Year Prison Stay; Actions Led To Inflated Costs For Financially Distressed Homeowners To Redeem Their Tax-Delinquent Homes

From the U.S. Department of Justice (Washington, D.C.):
  • A former bidder for a Pennsylvania tax liens investment company was sentenced to serve a prison term of 12 months and one day and pay a $25,000 criminal fine for conspiring to rig bids at New Jersey tax lien auctions, the Department of Justice announced today.

    James Jeffers Jr., of Mount Holly, New Jersey, was sentenced [] by U.S. District Judge Susan D. Wigenton of the District of New Jersey. Jeffers was convicted by a jury on Oct. 2, 2015 after a multi-week criminal trial. The jury found Jeffers guilty of violating Section One of the Sherman Act by conspiring to allocate and rig bids at municipal tax lien auctions that were held in the state of New Jersey from at least 1998 until at least February 2009.

    Jeffers’s conviction resulted from his conduct as a bidder for Crusader Servicing Corp., which pleaded guilty in September 2012 to participating in the same conspiracy. Jeffers also bid for Crusader’s successor company during the conspiratorial period.

    Jeffers participated with others in the conspiracy not to bid against one another at municipal tax lien auctions. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.
Source: Judge Orders New Jersey Investor to Serve a Year in Prison for Bid Rigging at Tax Lien Auctions (Thirteen Individuals and Three Companies Have Been Convicted or Pleaded Guilty in the Investigation to Date).

Start-Up Outfit Looks To Act As Middleman Representing Rent Regulated Tenants Paying Below-Market Rates Seeking Lease Buyouts From Their Landlords

In San Francisco, California, Newsweek reports:
  • As San Francisco’s housing shortage gets worse, there’s increasing pressure on tenants living in rent-controlled apartments to vacate so their landlords can start charging a market rate in the rapidly gentrifying city. This pressure often comes in the form of a buyout. Three years ago, for instance, a single mother with kids paid $1,600 per month for a two-bedroom apartment on 18th Street in the increasingly hip Mission neighborhood, where she'd been for 20 years. Her landlord offered her a buyout of $50,000 to leave her rent-controlled apartment, which she accepted. Now the apartment is going for more than $3,200, closer to the market price in the gentrifying neighborhood.

    Prior to March 2015, these buyouts were mainly off the books. Unlike the more notorious evictions allowed by the Ellis Act, a California law that grants landlords rights to evict tenants by removing all units in any building from the rental market, buyouts had less government oversight and shorter time periods to settle. Generally invoked to convert apartments into condominiums in San Francisco, Ellis Act evictions require at least 120 days and a $5,800 compensation per unit.

    But the city of San Francisco intervened last year with new laws requiring that landlords have documented buyouts with tenants leaving rent-controlled units. The hope from rent-control advocates was that the buyout documentation will help hold landlords accountable and accurately measure the displacements.

    But one startup has entered the fray to make some money from the new niche in the ever-evolving and scrutinized San Francisco rental market. RentMasters, which began operating a month ago, hopes to play the middleman between tenant and landlord during these buyout negotiations. The founder believes, in classic Silicon Valley fashion, that there were inefficiencies in this market that the power of technology could help solve.

    “It is quite a complicated and important puzzle in the housing market,” says RentMasters founder Brian Bensch. “The best market for a startup to go after is niche markets that have a problem to solve. Buyouts can and should be a mutual scenario. I’m a big fan of the buyout laws.”

    RentMasters has a streamlined four-step process to help tenants thinking about cashing in on their rent-controlled apartments. First, tenants will get an estimate for how much of a relocation bonus they can earn, based on the neighborhood and the house itself. “As you might expect, landlords in the Tenderloin can’t afford to be as generous as those in Hayes Valley or Russian Hill,” reads the website, referring to San Francisco neighborhoods.

    Then tenants get a free 30-minute consultation. RentMasters, which will charge anywhere from a $99 onetime fee to 20 percent of the buyout, will then negotiate with the landlord for the best buyout price. Once both sides agree to a price, the new buyout laws require a 45-day cooling-off period for the tenant to think it over.

    The average buyout price is around $43,000, according to the San Francisco Chronicle.
    Tenant rights attorneys and nonprofits raised concerns when Newsweek brought RentMasters to their attention. The main one rested with the fact that RentMasters may be practicing law without a law license. “Buyouts are extremely legally complex,” says tenant rights attorney Joseph Tobener. “They are like snowflakes. They are all individual.”

Concrete Slab, Rubble Is All That's Left Of Home Demolished In Error; Wrecking Contractor Blames Error In Google Maps For Leading It To Wrong Address

In Rowlett, Texas, BGR reports:
  • Alan Cutter and Lindsay Diaz each owned one half of a duplex at 7601 and 7603 Calypso Drive in Rowlett, a town right outside of Dallas, Texas. The house had been hit by tornadoes over the holidays, but rather than completely rebuild her half, Diaz had planned on simply repairing it. Unfortunately, that’s never going to happen.

    Hours after applying for a builders permit [], Diaz received a distressing call from Alan Cutter’s wife. Diaz tells KERA News, which had been following her story in its series One Crisis Away: Rebuilding A Life, that Mrs. Cutter was frantic, and when she asked what was going on, Mrs. Cutter told her that “a company came and demolished the house by mistake.”

    Sure enough, by the time Diaz pulled up, all that was left was a concrete slab and the wrecked remains of what used to be her home.

    WFAA, an ABC affiliate in Dallas, reports that Billy L. Nabors Demolition was scheduled to tear down a house at 7601 Cousteau Drive. The company is blaming Google Maps for the error, which sounds convenient, but if you enter “7601 Cousteau Drive” into Google Maps, it directs you to 7601 Calypso Drive.

    We like to poke fun at Apple Maps on occasion, but as Engadget notes, both addresses are correct in Apple’s app. Regardless, the fact that the demolition company was careless enough not to double-check the location is appalling.

Wednesday, April 06, 2016

Cops Bag Real Estate Agent For Allegedly Pocketing Over $100K In Sales Deposits, Then Blowing It On Personal Expenses Instead Of Closing Deals

In Fenton, Michigan, reports:
  • A Grand Blanc real estate agent faces felony charges in two cases after police say he accepted payments for properties but used the money for his own living expenses rather than closing the sales.

    Thomas Tubbs, 45, faces a count of false pretenses -- $100,000 or more in an incident that occurred in 2015. He also faces a count of larceny by conversion -- $20,000 for an incident that occurred in 2013.

    Genesee County Sheriff Robert Pickell said it's believed that Tubbs, in both cases, agreed to sell properties in the Fenton area but instead of closing the sale with the payments, took the money for himself.

Ohio AG: Out-Of-State Attorney w/out Ohio Law License Ripped Off Homeowners By Peddling Legal Services Promising Loan Modification Assistance, Then Failing To Deliver Services Or Requested Refunds

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Mike DeWine [] announced a lawsuit against a Pennsylvania attorney accused of taking thousands of dollars from Ohio consumers while falsely promising to help save their homes.

    The lawsuit accuses Pittsburgh-based Michael A. Rabel & Associates LLC and Michael A. Rabel, individually, of violating Ohio’s Consumer Sales Practices Act and Debt Adjuster’s Act by failing to deliver promised loan modification services, making misrepresentations, and charging excessive fees.

    “Consumers assumed they were working with a law firm that was going to help them,” Attorney General DeWine said. “Instead we found the opposite to be true.”

    According to the lawsuit, Rabel contacted Ohio consumers to offer loan modification services, claiming he could help consumers avoid foreclosure. He said he would provide “legal services” and charged “attorney fees” even though he was never licensed to practice law in Ohio and none of his employees were Ohio-licensed attorneys.

    Consumers paid upfront fees ranging from about $1,000 to $3,000 but did not receive loan modifications and did not receive refunds. Three Ohio consumers filed complaints against Rabel reporting total losses of $6,500. Additional consumers may be affected.

Long Island Man Faces Charges Of Fleecing Over $30K From Homeowner Facing Foreclosure; Allegedly Made False Loan Modification Promises To Clip Victim Out Of $4K Upfront Retainer, Subsequent Monthly Payments For Almost Two Years That He Purportedly Was Remitting To Bank

From the Office of the Nassau County, New York District Attorney:
  • Nassau County District Attorney Madeline Singas announced that an East Rockaway mortgage modification advisor was arrested [] for stealing more than $30,000 from an Orange County, NY homeowner he had been hired by to prevent a foreclosure.

    Jeffrey Halpern, 60, who did business as JCK Marketing, Inc., was arrested by DA Investigators yesterday and charged with Grand Larceny in the 3rd Degree (a D felony). He was conditionally released to probation by Nassau County District Court Judge Joseph Girardi, and is due back in court on April 18. Halpern faces a maximum sentence of 2-1/3 to seven years in prison if convicted.

    “This defendant is alleged to have taken advantage of a homeowner who was already in financial trouble by stealing more than $30,000 from her in a time of need,” DA Singas said. “Anyone who suspects they may have been defrauded by this defendant should contact my office’s tipline at 516-571-7755.”

    DA Singas said that in September, 2011, a 52-year-old Rock Tavern, NY woman allegedly hired Halpern, working under JCK Marketing, Inc., in an effort to avoid the foreclosure of her home and to obtain a loan modification with CitiMortgage. The victim paid Halpern a $4,000 retainer fee.

    Thereafter, Halpern would allegedly call the victim every month, and sometimes weekly, requesting payment for the bank. When the victim would question Halpern, he would tell her that the bank required such payments in order to continue processing her modification application and informed her that all monies are forwarded by him to CitiMortgage and applied to her mortgage payments. Based on this information, the victim continued to make payments, as directed by Halpern, from February 2012 until December 2013. The payments totaled $31,310.

    The victim became suspicious after she received several calls from CitiMortgage in which a CitiMortgage representative informed her that they have never heard of the defendant and had no knowledge of any loan modification set up on her behalf. The bank informed her that her home is headed to foreclosure and that they have not received any payments from the defendant. In or about December 2013, the victim stopped making payments to Halpern.

    The investigation revealed that none of the payments totaling $31,310 made by the victim to Halpern from February 2012 to December 2013 were ever applied to her mortgage, nor was a loan modification obtained by Halpern.

    A review of Halpern’s bank accounts showed that the victim’s funds were almost immediately withdrawn via cash withdrawals from ATMs from Halpern’s account. Halpern allegedly used the funds for personal and business purposes unrelated to the victim’s mortgage or loan modification with CitiMortgage.
Source: Mortgage Modification Advisor Arrested for $30k Theft from Client (East Rockaway businessman allegedly stole from Orange County homeowner).

Tuesday, April 05, 2016

Home Builder Gets Two Years For Using Forged Lien Waivers To Screw Construction Lender Out Of Over $300K, Then Left It Holding The Bag For Over $800K Loss On Foreclosure Of Partially-Finished House

From the Office of the U.S. Attorney (Springfield, Missouri):
  • Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Bois D’Arc, Mo., business owner was sentenced in federal court [] for a bank fraud scheme related to the construction of his $1.6 million residence.

    Michael R. Ussery, 58, of Bois D’Arc, was sentenced [...] to two years in federal prison without parole. The court also ordered Ussery to pay $1.3 million in restitution to Mid-Missouri Bank.

    On Oct. 30, 2015, Ussery was convicted at trial of 12 counts of bank fraud. Ussery was the owner/operator of two businesses in 2007, USS Properties and Villa Properties, both of which purchased real estate for residential development.

    During this time, Ussery also was building a $1.6 million home for himself in Bois D’Arc. Mid-Missouri Bank agreed to provide a $1.6 million construction loan to build the residence; $1.15 million was used to pay off the previous bank which had financed the construction of the residence up to that point, and the remaining $450,000 was supposed to have gone to completing the construction of the residence.

    When persons worked on the house, Ussery was supposed to obtain an invoice and a lien waiver from the contractors
    and submit these documents to Mid-Missouri Bank, which would then make a disbursement of the amount owed to Ussery’s personal bank account.

    A dozen invoices and lien waivers totaling $315,417 were submitted to Mid-Missouri Bank from May 29 to June 25, 2007, purportedly from persons or companies building the residence, to draw money from the $1.6 million loan amount for construction of the residence. In fact, each invoice and lien waiver was false, faked or forged. They were either created by, or caused to be submitted by, Ussery, and contained materially false or fraudulent representations.

    The companies or persons who were indicated on the fraudulent invoices and lien waivers did not prepare or submit the invoices and lien waivers, did not perform the work on the property as indicated in the invoices, did not agree to waive any lien on the residence for work actually done on the property, and did not receive any payments for work done as indicated in the invoices. A handwriting expert testified that Ussery’s handwriting was on every false lien waiver document.
    Mid-Missouri Bank actually deposited $315,417 into Ussery’s personal bank account based upon the fraudulent representations contained in the lien waiver and invoice documents.
    Ussery eventually stopped construction on the Bois D’Arc property and the bank had to foreclose on the loan. The bank took a $782,349 loss after the sale of the property with its partially finished house. The bank also paid a total of $103,257 to settle mechanic liens placed on the residence by the contractors that Ussery claimed he had paid in the false lien waivers. Ussery filed for bankruptcy relief in 2011.

    Although not charged in the indictment, evidence introduced during the trial indicated that Ussery also committed similar fraudulent activity against a husband and wife who hired him to build a personal residence in Greene County, Mo. Ussery started construction of the house in 2007, but did not complete the project. The victim clients discovered that Ussery was providing false lien waivers to Great Southern Bank to obtain loan draws from the construction loan.

Detroit Jury Slams Scammer For Hijacking Vacant Foreclosed Homes While On Parole For Armed Robbery/Carjacking, Then Peddling Them On Craigslist; Used Bogus Land Contracts To Fleece Unsophisticated Homebuyers Out Of Deposits, Monthly Payments; Victims Also Lost Funds Used To Renovate Houses, Ultimately Getting The Boot

In Detroit, Michigan, the Detroit Free Press reports:
  • A pair of Detroit residents involved in a scam to "sell" properties they did not actually own to unsuspecting buyers using phony paperwork will have to face a judge for sentencing in the coming weeks.

    A Wayne County Circuit Court jury on Wednesday [March 23] found Bernard Hardrick, 28, guilty of 22 charges, including conducting criminal enterprises and filing a fraudulent conveyance affecting real property.

    Latonia Fletcher, 29, pleaded guilty Feb. 26 to charges involving forgery and false pretenses, according to the Wayne County Prosecutor's Office. Fletcher, who is expected to receive probation in exchange for her plea,(1) is to be sentenced on April 1, and Hardrick is to be sentenced on April 15.

    A news release from the office of Wayne County Register of Deeds Bernard Youngblood said the jury "wasted no time" in finding Hardrick guilty for crimes "related to property theft, deed fraud and selling stolen property" on Craigslist.

    "Compounding the severity of Hardrick’s crimes is the fact he was a repeat offender on parole during these transactions," the release said, noting that Hardrick had represented himself after the first day of trial and that he "proudly exclaimed he would have continued selling the properties he didn't own because he deemed them vacant and abandoned at the time." A message seeking comment was left for the defense attorney listed on his court file, Steve Lockhart of Detroit.

    A previous news release from the Wayne County Sheriff's Office said Hardrick, while he was in jail, had even tried to continue collecting payments from some victims of land-contract arrangements he was involved in. He is also a parolee with previous convictions on charges including armed robbery and carjacking.

    The release had noted that the pair used phony paperwork to sell properties in Detroit for thousands of dollars in down payments and they also collected monthly payments of hundreds of dollars. One of those properties had been owned by a woman who died in 2012 before it reverted back to Bank of America, which had a mortgage interest in the property.

    The victims lost their money, were out whatever they spent on renovations and had to find new places to live.

    The Register of Deeds advises those interested in buying property to check the "chain of title detailing ownership records" at the Register of Deeds Office.
Source: Pair to be sentenced in fake-property sales scam.
(1) No doubt the the criminal case against Hardrick became easier to prosecute when his accomplice agreed to plead guilty in exchange for a lenient sentence and, in all liklihood, she probably testified against him.  See generally, United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) on the dynamics of plea bargaining when multiple defendants are charged for their roles in an alleged crime:
  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed. contract for deed

Notary Pinched For Allegedly Using Forged Conveyance To Hijack Title To Her Dead Ex-Hubby's Real Estate To Give To Her Son; Dubious Deed Indicated It Was Signed By Deceased In 2015 When His Date Of Death Actually Occurred Four Years Earlier

In Pryor Creek, Oklahoma, the Pryor Daily Times reports:
  • A Strang woman is being charged with forgery after she allegedly forged her deceased ex-husband’s signature on a land deed.

    Ruby Shipman is facing a felony count of second degree forgery after she allegedly, notarized a quit claim deed stating her ex-husband signed the deed on May 9, 2015 when he died May 21, 2011, conveying the land to her son.

    Information filed in the case said Shipman, “did willfully, voluntarily and with intent to defraud within Mayes County...sign and affix her notary seal upon a legal document.”

    Records show Shipman “did not have her notary public at the time, and only in 2015 did she notarize the deed prior to filing it with the Mayes County Clerk.”

    Though the incident reportedly took place last year, charges were filed in Mayes County District Court last week.

Monday, April 04, 2016

Ex-FDIC Lawyer Gets 12 Months For Orchestrating Sham Short Sale Of Her Underwater Home To Her Live-In Boyfriend, Falsely Certifying That Deal Was Made At Arms-Length; Defendant Also Pocketed $3K In Relocation Assistance Despite Not Actually Moving Out While Duping Lender Into Taking $300K 'Haircut'

From the Office of the U.S. Attorney (Alexandria, Virginia):
  • Michelle M. Borzillo, 59, of Bristow, was sentenced [] to 12 months and one day in prison, followed by two years of supervised release, for defrauding Wells Fargo Bank in connection with the sham short sale of her home to her live-in boyfriend. She was also ordered to pay $288,497 in restitution and to forfeit the proceeds of her offense.

    Borzillo pleaded guilty on Nov. 17, 2015 to committing bank fraud. According to court documents, the defendant was a senior attorney at the Federal Deposit Insurance Corporation (FDIC) until September 2014. In 2007, she purchased a home in Nokesville for $850,000, with mortgages totaling $807,500 from Wells Fargo Bank. In 2013, she engineered the short sale of her Nokesville home to her boyfriend, who had been living with her at the property for several years.

    In order to induce Wells Fargo Bank to approve the short sale and relieve the defendant of her mortgage obligations, the defendant falsely represented to her lender that the sale of the property was an arm’s-length transaction to someone with whom she had no close personal relationship. She also falsely certified that she was moving out of the property, and claimed she was suffering a financial hardship due to the then-federal pay freeze.

    In reality, as the defendant has admitted, she had no intention of moving out of the property, despite accepting $3,000 in relocation assistance in connection with a federal program designed to assist financially distressed short sellers. As a senior FDIC employee, the defendant also had not been subject to the federal pay freeze, and her base annual pay had steadily increased during the time she owned the home, to $230,000 at the time of the short sale. As a result of the fraudulent short sale transaction, Wells Fargo Bank was required to write off nearly $300,000 in losses.

Battered Single Mom Of Two Who Was Nearly Evicted For Calling 911 Too Often Scores $40K Settlement From Arizona City Over Local Nuisance Ordinance That Threatened Landlords w/ Punishment For Failing To 'Abate The Nuisance' (ie. Give Her The Boot)

In Surprise, Arizona, Phoenix New Times reports:
  • The city of Surprise will pay $40,000 to a battered woman who was pushed out of her home for calling 911 too many times, according to a settlement agreement.

    City officials also agreed to repeal the ordinance that nearly got Nancy Markham, a single mother of two, evicted in August of 2014 after her ex-boyfriend, among other things, broke into her house, attempted to strangle her, and stole her car.

    The ordinance, aiming to cut back on crime, labeled someone a "nuisance" if they called the cops more than three times in 30 days and held property owners accountable for resolving the issue.

    Markham's landlords, under threat of being held criminally liable for crime that occurred on the property, told her to move out or get kicked out.

    Dan Pachoda, senior counsel for the American Civil Liberties Union, which sued the city in the U.S. District Court for the District of Arizona, argued the provision violated Markham's First Amendment right to seek police assistance.

    Pachoda said he was "very pleased" with the settlement and hoped it would "be a lesson" to other cities throughout the state, including Phoenix, that have similar nuisance ordinances.

    "The concept of these ordinances is horrific," he said. "They don't reduce crime. They cause harm to crime victims."

    Surprise maintained that the provisions were "completely legal," City Attorney Robert Wingo told New Times in a written statement.

    "The City Council had to decide whether they are so crucial to the health and safety of the community that their preservation is worth the expenditure of city resources during a litigation process," he said.

    Because the Surprise Police Department has "not once issued a citation or taken any formal action against a landlord" under the provision, the city decided its "resources would best be used elsewhere."

    Under the settlement terms, Surprise is barred from adopting any ordinance or policy that "punishes tenants, residents, or landlords for calls for police service" or "punishes them for criminal activity of which they are the victims."

    Moving forward, Wingo said law enforcement officials will use state law to "address any nuisance properties within the community."

    State Representative Celeste Plumlee (D-Tempe) is pushing a bill to block all cities, towns, and boards of supervisors from adopting or enforcing nuisance ordinances that discourage victims of domestic violence, such as Markham, from calling police. But the measure hasn't gained much momentum and it appears unlikely to pass this session.

    While the ACLU called Plumlee's proposal "an improvement," Pachoda criticized it for only protecting victims of domestic violence and not victims of other crimes.
Source: Surprise, Arizona to Pay $40,000 to Battered Woman Threatened With Eviction for Calling 911.

For the original 44-page lawsuit, see Markham v. City of Surprise.

See generally, With nuisance laws, has ‘serve and protect’ turned into ‘silence and evict’? (Instead of serving and protecting her, the police department of Surprise, Arizona, tried to silence and get Nancy Markham evicted from her rental home — all because of an ill-conceived nuisance ordinance the city passed in 2010).

Housing Authority's Allegedly Improper Termination Of 75-Year Old Tenant's Section 8 Rent Subsidy Leads To Lawsuit Seeking Reinstatement Of Benefit; Dispute Centers Around Alleged Violation Of Renter's Due Process Rights

In Victoria, Texas, the Victoria Advocate reports:
  • A 75-year-old retired school bus driver will ask a judge this week to compel the Victoria Housing Authority to resume providing her with rental assistance.

    Dorothy Cunningham, a Section 8 program participant since 1999, stopped receiving her $612 subsidy in August after police arrested her daughter, Lucy Arlene Lescuer Cunningham, on suspicion of possessing cocaine.

    The District Attorney's Office declined to charge Lucy with a crime, but housing authority officials said that is of little consequence.

    Lucy listed her mother's address on her Texas driver's license, which was used when she was booked into the Victoria County Jail and later bonded out.

    Because of that, the housing authority thinks Lucy lives with Cunningham. They said that turning a blind eye on a misbehaving, unauthorized occupant and the possibility of unreported income is unfair to those who must wait more than a year to receive rental assistance.

    Cunningham has seven children, 17 grandchildren and 18 great grandchildren, but swears the only person living with her is 18-year-old granddaughter, K'Liyah Cunningham, a senior at Victoria West High School.
    "This is not about proving Mrs. Cunningham's daughter didn't live with her. If we have to, we will," said Christina Trejo, a Texas RioGrande Legal Aid attorney.(1) "What this lawsuit is about is how the housing authority did not follow its rules and doing so violated her due process rights."

    Trejo thought the housing authority played "hide the ball" when Cunningham came to its office Aug. 18 to contest its decision to end her rental assistance.

    Cunningham's due process rights were violated because she was not told beforehand that the housing authority's proof of an unauthorized occupant was the address listed on her daughter's driver's license, Trejo said.

    "She went there unprepared," Trejo said, and the only person who presented evidence was Louis Boldt, then the director of the Section 8 Housing Program.

    "It was the equivalent of a prosecutor calling himself to testify and just saying, 'This person did it. I know because I read it,'" Trejo said. "Mrs. Cunningham has worked hard her whole life. She deserves this help. She put into our state and our country, and so this is a property right that she has. She did nothing to jeopardize it, and it should not be taken away from her."
    In court documents, the housing authority has also filed a counter-claim against Cunningham. It claims it overpaid Cunningham $14,200 because of her unauthorized occupant.

    Since August, Cunningham has been able to pay her rent both because her landlord lowered it and because of the donations of others. But she said she cannot cobble together the amount forever.
For the story, see Victoria woman sues housing authority to reinstate assistance.

For a story update, see Woman wins lawsuit against Victoria housing authority (A judge reinstated an elderly Victoria woman's rental subsidy after a lengthy and contentious hearing was limited to whether the woman's due process rights were violated. He also ordered the housing authority to pay her Texas RioGrande Legal Aid attorney $7,750 for the work she put into the case.).

For the lawsuit, see Cunningham v. Housing Authority of the City of Victoria.

For other posts on various housing authorities accused of violating low-income tenants' due process rights while improperly screwing around w/ their Section 8 housing subsidies, see:
(1) Texas RioGrande Legal Aid is a non-profit organization that provides free legal services to low-income residents in sixty-eight counties of Southwest Texas, and represents migrant and seasonal farm workers throughout the state of Texas and six southern states: Kentucky, Tennessee, Alabama, Mississippi, Louisiana and Arkansas.

Sunday, April 03, 2016

U.S. Appeals Court: Affluent, Overwhelming White Long Island Town's Abrupt Shift To Pass Restrictive Zoning Rules In Response To Vocal Opposition To Proposed Housing Project Amounted To Discrimination Against Minorities; Opponents Avoided Use Of Overtly Racist Remarks At Public Hearings, Instead Used Euphemisms That Amounted To "Code Words For Racial Animus"

In Garden City, Long Island, The Associated Press reports:
  • Officials in an affluent suburban New York village acquiesced to race-based opposition to a housing project and changed zoning codes to discriminate against minorities, a federal appeals court said [] as it also opened the door to one of America's most affluent counties facing claims it steered affordable housing to its lowest-income communities.

    The 2nd U.S. Circuit Court of Appeals in Manhattan upheld a judge's finding that the village of Garden City on Long Island discriminated against minorities in a zoning decision made after Nassau County decided to sell some land. The court noted village residents used racially biased code words to convince public officials to exclude minorities by changing the land's zoning to mostly exclude multi-family dwellings.

    The appeals court said that Garden City residents at public hearings, for instance, claimed multi-family housing would change the "flavor" and "character" of the village and that any construction should involve "upscale" units. It also highlighted residents' claims that their community might become like Brooklyn and Queens, New York City boroughs where minorities are the majority.

    "Garden City's argument appears to boil down to the following — because no one ever said anything overtly race-based, this was all just business as usual," the 2nd Circuit said in a decision written by Circuit Judge Rosemary Pooler. "But the district court was entitled to conclude ... that something was amiss here, and that Garden City's abrupt shift in zoning in the face of vocal citizen opposition to changing the character of Garden City represented acquiescence to race-based animus."
    In its opinion, the 2nd Circuit reinstated Nassau County as a defendant, saying Spatt must consider whether the county of more than 1.3 million people adjacent to New York City intentionally steers affordable housing to low-income, mostly-minority communities.

    The appeals court recounted at length a series of public hearings attended mostly by whites, saying Garden City residents used "recognized code words about low-income, minority housing" in making subtle references to immigrant families by complaining that full families might live in one-bedroom townhouses or that the wrong kind of housing complex might cause 10 people to live in an apartment and lead to overcrowded schools.

    "Citizen opposition, though not overtly race-based, was directed at a potential influx of poor, minority residents," the appeals court said, adding that a description of a Garden City public hearing was "eerily reminiscent" of a scene in an earlier court case involving housing discrimination in Yonkers.(1)
For the story, see Court: Racially Biased Code Words Used in NY Housing Case.

For the court ruling, see MHANY Mgmt., Inc. v. Cty. of Nassau et al., 14‐1634‐cv (2nd Cir. March 23, 2016).
(1) See Long Island Housing Bias Ruling Affirmed by 2nd Circ.:
  • Unlike the Yonkers case, Garden City's opponents did not make overtly racist remarks at public hearings. But the panel found that their euphemisms for preserving the village's "flavor" and "character" amounted to "code words for racial animus." restrictive zoning

U.S. Appeals Court Reinstates R/E Developer's Fair Housing Suit Accusing Mostly-White Arizona City Of Racial Animus In Alleged Stonewalling Of Proposed Affordable Housing Project; City Council Ignored Its Own Experts' Recommendations To Green-Light Construction; Judge: Fierce Community Opposition Avoided Explicit References To Ethnicity, Instead Used 'Code Words' Referring To "Stereotypes Of Hispanics That Would Be Well-Understood In Yuma"

Courthouse News Service reports:
  • A city council for a mostly white city in Arizona must face claims that racial animus inspired its stonewalling of affordable housing, the Ninth Circuit ruled [last week].

    Two real estate developers, Avenue 6E Investments and Saguaro Desert Land Inc., brought the challenge in 2009 after Yuma's city council denied their request to rezone a parcel of land to permit higher-density housing developments.

    Avenue and Saguaro's rezoning request had been the only rejection of 76 applications the council had considered in the three preceding years, [last week's] opinion on the case notes.

    The ruling also notes that Avenue and Saguaro have "a reputation as a developer of Hispanic neighborhoods based upon their development of several affordable housing projects in Yuma in which the majority of homes were sold to Hispanics."

    Though the developers accused the council of equal-protection clause and Fair Housing Act violations, a federal judge dismissed the complaint at summary judgment for failure to state a claim.

    Today's reversal by a three-judge panel in San Francisco blasts the lower court for not considering evidence that the city council capitulated to the protests of the development's opponents, "in the face of the city's own expert's recommendation to approve the request and its practice of generally granting these requests."

    Elizabeth Brancart, an attorney for the developers with the Pescadero, Calif., firm Brancart & Brancart, applauded the outcome. "We are very pleased with the decision and gratified that the Ninth Circuit recognized both the historical and current importance of the federal Fair Housing Act," Brancart said in an email.

    The 39-page opinion notes that the property at issue is on the western boundary of an area in Yuma's southeast portion, where most residents are white. Many homeowners there sent letters to the city council opposing the proposed development, according to the ruling.

    Although none of the letters specifically mentioned Hispanic people as a group, they contained such complaints as the development would create "a low-cost, high-crime neighborhood" and would be "catering" to low-income people.

    Finding that the developers' complaint "contains sufficient allegations that the city's decision was driven by animus to state a plausible claim for relief," the federal appeals court called dismissal of the disparate-treatment claim improper.

    "Community members' opposition to the developers' application, using language indicating animus toward a protected class, provides circumstantial evidence of discriminatory intent by the city," Judge Stephen Reinhardt wrote for a three-judge panel.

    There is precedent in which the use of "code words" may indicate discriminatory intent, according to the ruling.

    Although none of the statements by community members "expressly refers to race or national origin," they did "raise various concerns about issues including large families, unattended children, parking and crime," the ruling states.

    Reinhardt said these concerns consist of "stereotypes of Hispanics that would be well-understood in Yuma."

    And "in denying the rezoning, the city council's decision ran contrary to the unanimous recommendation provided by the city's planning and zoning commission, as well as the recommendation of the city planning staff," the ruling continues.

    Yuma's "singling out" of the developers' zoning request for denial "supports the developers' contention that the city had a discriminatory intent," Reinhardt added.

    Meanwhile the "sole ground" for summary judgment Yuma had raised alleged that southeast Yuma offered similarly priced housing elsewhere, the court noted.

    "We reject that ground and hold that when a developer seeks to rezone land to permit the construction of housing that is more affordable, a city cannot defeat a showing of disparate impact on a minority group by simply stating that other similarly-priced and similarly-modeled housing is available in the general area," Reinhardt said.

    Yuma's obligation to establish a "legitimate and credible basis" for its rezoning denial "is not an unreasonable burden," the judge added.

For the court ruling, see Avenue 6E Investments LLC v. City of Yuma, No. 13-16159 (9th Cir. March 25, 2016).

Allegedly Restrictive Zoning Regulations At Center Of Another Civil Rights Suit; Ultra-Orthodox Jewish Rabbi Says Central Jersey Town's Land Use Laws Prohibiting Small Weekly Prayer Service In His Home Violates Fair Housing, Religious Land Use Laws

In Toms River, New Jersey, the Asbury Park Press reports:
  • A federal civil rights lawsuit charges that "anti-Semitic hostility" and local opposition to the township's ultra-Orthodox Jewish population are the reasons why the Chabad Jewish Center has been told it needs a variance to operate as a house of worship.(1)

    The Chabad Jewish Center and Rabbi Moshe Gourarie filed the lawsuit against the township and the Board of Adjustment, claiming the Chabad has become the target of community opposition to the ultra-Orthodox Jewish population in Toms River.

    The lawsuit, filed in U.S. District Court, challenges the township's zoning laws and the board's decision that the rabbi needs a variance to continue to operate a house of worship out of his Church Road home. A hearing on the variance is scheduled for next month.

    The lawsuit says the Chabad has become a target in spite of its "negligible land use effect on the local community and its existence at this location and another residential home in Toms River for 12 years without negative impacts.".

    Gourarie previously operated the Chabad from a home he was renting on New Hampshire Avenue.

    In 2011, Gourarie purchased a home on Church Road, where he has testified that he's operated a Jewish community center and weekly prayer services, which draw about 15 to 20 people. A 2009 revision to the township's zoning ordinance banned churches in the residential zone that includes Gourarie's property.

    "Substantial community opposition to both the Chabad's use and the ultra-Orthodox Jewish population in general, has targeted the Chabad," according to lawyer Roman P. Storzer, of Storzer & Greene in New York and Washington, D.C., who represents the Chabad Jewish Center.(2)
Source: Chabad files suit, challenges TR zoning laws.

For the lawsuit, see Chabad Jewish Center of Toms River Inc., et ano, v. Township of Toms River, N.J., et ano. (Editor's Note: lawsuit contains highly-charged allegations; not recommended reading for those who are highly sensitive or easily offended).
(1) The lawsuit alleges violations of both the federal Fair Housing Act and Religious Land Use and Institutionalized Persons Act.

(2) Storzer reportedly noted that more than 1,200 residents attended the board’s hearing on the Chabad’s application for a use variance, which had to be moved to accommodate everyone who wanted to attend. See Chabad Suit Claims 'Rising Tide Of Anti-Semitism' Influenced Toms River Zoners (Federal lawsuit says refusal to allow religious services in rabbi's home violates 1st, 14th Amendments, was spurred by public opinion). restrictive zoning

U.S. Appeals Court Gives The Boot To Downstate NY Yeshiva's Fair Housing, Other Civil Rights Claims That Communities Used Restrictive Zoning To Curtail Expansion Of Hasidic Neighborhoods; Rabbi's Lawsuit Seeking $100 Million In Damages Based On "Nothing More Than Conclusory, Unsubstantiated Assertions" Of Civil Rights Violations

In Rockland County, New York, The Journal News reports:
  • A Ramapo yeshiva that had accused several villages of anti-Hasidic bias never provided any evidence to support its accusations, a federal appeals court ruled [] in dismissing its civil rights lawsuit.

    The 2nd Circuit Court of Appeals ruling upheld a decision by U.S. District Judge Kenneth Karas last March to throw out the lawsuit filed by Modos Chofetz Chaim.(1)

    The latest decision will likely end the yeshiva's long legal fight against Pomona, Chestnut Ridge, Wesley Hills and Montebello and their officials, according to attorney Greg Sarcino, representing Pomona.
    The yeshiva accused the communities of incorporating as villages to curtail the expansion of Hasidic neighborhoods through restrictive zoning. It also claimed the villages tried to hide behind environmental laws in an attempt to block the construction of housing and a study center on Grandview Avenue — a use allowed under the town of Ramapo's adult student housing zone.

    Rabbi Aryeh Zaks, his family and other Chofetz Chaim officials claimed in their lawsuit that the villages conspired to deprive the yeshiva of its civil, religious and equal protection clause rights under the U.S. Constitution and the Fair Housing Act.

    Chofetz Chaim sought $100 million in damages.

    The yeshiva and Ramapo have also battled the same villages in state court since 2004 over accusations of zoning and fire violations at the development.

    In the federal case, the appeals court upheld Karas' 76-page decision, in which he ruled the rabbis "have offered nothing more than conclusory, unsubstantiated assertions" of civil rights violations.
For the story, see Appeals court: Ramapo yeshiva provided no proof of bias (Mosdos Chofetz Chaim can appeal to the U.S. Supreme Court, but would need to claim a constitutional issue).
(1) Bernstein v. Village of Wesley Hills, 15-1192-cv (2nd Cir. March 23, 2016), aff'g 95 F. Supp. 3d 547 (S.D.N.Y. 2015).

Fair Housing Lawsuit KO'd Over Alleged Use Of Fraudulent Documents To Support Reasonable Accommodation Request; Issue Involved Homeowners' Construction Of Enclosed 12'x8' Therapeutic Playhouse For Their Disabled Child In Violation Of HOA Rules, Deed Restrictions

In Lexington, Kentucky, the Lexington Herald-Leader reports:
  • A federal lawsuit against the Andover Forest Homeowners Association over a therapeutic playhouse built for a disabled child has been dismissed, and attorneys for the association say it’s because medical documents provided in the case were not authentic.

    In April 2011, Dr. George and Tiffiney Veloudis installed a 12-foot by 8-foot enclosed playhouse on their property in Andover Forest for their son Cooper, who has cerebral palsy.

    But the homeowners association said the structure violated deed restrictions.

    The family filed a federal fair housing complaint with the U.S. Department of Housing and Urban Development in 2012.

    The U.S. Department of Justice sued the homeowners association in December 2014, alleging that the association had violated the Fair Housing Act, and discriminated and retaliated against the family by refusing to make accommodations.

    On Monday, U.S. District Judge Karen Caldwell issued an order dismissing the case with prejudice.

    Attorneys for the justice department and for the homeowners association and its management company had asked for the case to be dismissed, stating in a court document that “the evidence does not support the United States’ claims.”

    A news release issued Monday by the homeowners association’s attorneys stated that “it was discovered that multiple medical documents that had been used to support the Veloudises’ request for an accommodation were not authentic.”

    Attempts to reach the Veloudis family Monday night were not successful.

    After more than a year of litigation, attorneys for the association found evidence that certain documents that the Veloudises, through their attorney, had supplied to the association and relied upon to support their claim that ‘Cooper’s House’ was medically necessary for their son’s therapy were in fact fraudulent,” the news release stated.

    Christopher Thacker, an attorney for Andover Forest Homeowners Association, said Monday that the documents “had been altered or never prepared by the person whose name was on them.” “I have no way of knowing who made the alterations to the documents,” he said.

    They were from three medical providers, according to the news release.

    The family has since moved, and they removed the playhouse, Thacker said.