Saturday, April 23, 2016

Upstate NY Municipality Takes Fair Housing Discrimination Hit Over Dubious Denial Of Re-Zoning Application From Outfit Providing Services For People w/ Mental Illnesses; Strong Public Opposition Reflecting "Clearly Stereotypical Ideas About Mentally Ill" Sinks City's Position

In Ogdensburg, New York, the Watertown Daily Times reports:
  • A federal judge [] ordered the City Council to approve Step by Step Inc.’s application to rezone the former Lincoln Elementary School on Knox Street from single-family residential to that of a planned development district so that the nonprofit organization can provide services for people with mental illnesses.

    Step by Step had sued the city in U.S. District Court, Utica, in July 2015, alleging that the city intentionally discriminated against its patients in violation of the Fair Housing Act (FHA) and Title II of the Americans With Disabilities Act (ADA) by denying its application to rezone 1515 Knox St.

    In a 35-page ruling [], Judge David N. Hurd wrote that the City Council did not demonstrate that the denial of the application was not influenced by the community’s opposition to the housing project, opposition that included multiple statements made at a public meeting that “reveal a number of clearly stereotypical ideas about the mentally ill; indeed, exactly the kind of unfair bias at which the FHA and ADA are aimed at preventing.”

    “While obtaining public comment on a matter of public concern is commendable, the City Council may not cede its decision-making authority to the public, especially when a significant portion of public opposition was based on improper biases towards SBS’s clients,” Judge Hurd wrote.

    The judge wrote, however, that it is unknown what effect public opposition played in the council’s decision to deny the application “because the City Council failed to articulate any of their reasons for denying SBS’s application.” He wrote that when the matter was put up for a vote at a May 28, 2015, meeting, no council member stated on the record their reason for voting against Step by Step’s application.

    “By completely failing to describe the reasoning and logic behind the denial of SBS’s application, the City Council has effectively created a black box where any justifications are a mystery,” the judge wrote. “While at least a significant portion of the information placed into that box consisted of community opposition based upon impermissible discrimination, the City has asked for a ruling that the denial was free of any improper prejudices. This cannot be done!”

    While Judge Hurd’s order requires the city to approve Step by Step’s application to establish a planned development district at the site, the approval does not permit an approved use for Step by Step to operate a mental health facility immediately. The organization will still be required, under City Code, to submit a final development plan to the Planning Board for site plan review before a building permit will be issued.

    The judge noted that, while the city may still require further submissions, the review of such must be consistent with criteria delineated in City Code, “absent of any improper prejudices, and without additional conditions, unreasonable or overly stringent interpretations of provisions of the zoning regulations, or other undue delay.”

Upstate NY Landlord Belted w/ $16K In Damages, Fines For Refusing To Rent To Prospective Tenant After Finding Out Tenant Had A Disability

In Syracuse, New York, WAER Radio 88.3 reports:
  • Some Central New Yorkers with disabilities have been getting discriminated against when they look for a place to live. Recently, a two year-old case was finalized when a judge sided with CNY Fair Housing.(1)  A judge agreed that a caseworker was illegally asked by a rental property owner if her client had a disability.

    Once the property owner found out the client was disabled, Executive Director Sally Santangelo says the case-worker was told the housing was no longer available. "The housing provider then indicated they would not provide housing for her client, including a statement saying, 'we don't need to rent to crazy people'."

    [The landlords] were handed a $16,000 judgment in damages and fines.
For the story, see Judgment in Housing Discrimination Case Raises Awareness of Ongoing Barriers.

See also, NY orders Bville couple to pay damages for refusing to rent to people with disabilities.

For the court order, see NYS Division of Human Rights v Weichert.
(1) Based in Syracuse, New York, CNY Fair Housing is a private, non-profit organization that, among other things, investigates complaints of suspected cases of housing discrimination and provides free legal representation to victims of illegal housing discrimination in Central and Northern New York. CNY Fair Housing's service area includes Onondaga, Oneida, Cayuga, Oswego, Jefferson and St. Lawrence counties.

Housing Feds: Automatic Rejection Of Prospective Renters, Homebuyers Based Solely On Criminal Record Violates Fair Housing Act; Overbroad Disqualification Policy To Have Disparate Effect On Blacks, Hispanics: HUD

In Washington, D.C., National Public Radio reports:
  • The Department of Housing and Urban Development is making it easier for people with criminal records to find housing.

    In new guidance, released Monday, HUD tells landlords and home sellers that turning down tenants or buyers based on their criminal records may violate the Fair Housing Act.

    People with criminal records aren't a protected class under the Fair Housing Act, and the guidance from HUD's general counsel says that in some cases, turning down an individual tenant because of his or her record can be legally justified.

    But blanket policies of refusing to rent to anybody with a criminal record are de facto discrimination, the department says — because of the systemic disparities of the American criminal justice system.
    HUD's new guidance warns that landlords could be breaking the law when they refuse to rent to people with criminal records — even if they have no intention to discriminate — because such a policy would likely have a disproportionate impact on African-American and Hispanic applicants.

    Housing Secretary Julian Castro puts it another way, NPR's Corley reports: "When landlords refuse to rent to anyone who has an arrest record, they effectively bar the door to millions of folks of color for no good reason."

    HUD notes that whether an individual landlord's policy has a discriminatory impact will need to be determined on a case-by-case basis. But on a national level, HUD provided a list of statistics — direct from the Justice Department — demonstrating disproportionately high rates of arrest and incarceration based on race. They noted African-American men are imprisoned at a rate nearly six times that of white men, and Hispanic men at more than twice the rate of white men.

    All Criminal Records Aren't Created Alike ...

    That doesn't mean landlords are completely barred from considering criminal records — but they'd have to prove that their policy legitimately serves to protect safety or property.

    Saying "criminals are poor tenants" doesn't cut it, HUD says: "Bald assertions based on generalization or stereotype" aren't sufficient.

    Barring people based just on arrest records is no good, HUD says, because arrests alone aren't proof of guilt. And even if you only consider convictions, refusing to rent to all ex-cons — "no matter when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since then," HUD writes — also isn't defensible, since not all ex-cons will pose a risk to safety or property.

    Instead, HUD writes, landlords should have a policy that takes into consideration what the crime was and when it happened, as well as other factors, to reduce the discriminatory impact. (The only exception is if a conviction was for manufacturing or distributing drugs.)

    ... And You Can't Use Records As A Pretext For Discrimination

    HUD also warns landlords that if they do intend to discriminate, and use criminal records as a cover for their actions, they can be found in violation.

    For instance, landlords who reject black or Hispanic applicants ostensibly because of criminal records — but accept a white tenant with a similar criminal record — could be found guilty of violating the Fair Housing Act.

    That discrimination could happen even before a candidate applies, HUD writes:

    "Intentional discrimination may be proven based on evidence that, when responding to inquiries from prospective applicants, a property manager told a African-American individual that her criminal record would disqualify her from renting an apartment, but did not similarly discourage a White individual with a comparable criminal record from applying."

    In both cases — whether the discrimination is accidental or intentional — each instance would have to be considered on a case-by-case basis.

    But "arbitrary and overbroad" policies, as well as any that are mere pretexts to conceal discrimination, aren't protected.

    HUD officials told NPR's Corley that the goal is to make landlords consider: Is their policy toward criminal records about keeping a community safe?

    Or is it about keeping somebody out of a home?

See also, The Wall Street Journal: Landlords Face Pressure on Criminal Background Checks (Technology makes it possible for apartment owners to perform fast, cheap checks on prospective renters).

Nation's Largest Developer Of Multi-Family Housing Found Liable For Designing, Constructing Complexes In Violation Of Disabled Persons' Rights Under Fair Housing Act; Court: Legal Obligations Remain Unaffected By Post-Development Compliance-Dodging Efforts Thru Title Transfers

The law firm Cohen Milstein recently announced:
  • Equity Residential, the nation’s largest developer of multi-family housing, must comply with the Fair Housing Act by ensuring that properties are accessible to people with disabilities before they are occupied, not afterwards, according to a decision by the U. S. District Court for the District of Maryland. The court further ruled in Equal Rights Center v. Equity Residential, that developers cannot avoid compliance with this law by transferring properties to another company following development.

    The lawsuit filed by the Equal Rights Center (ERC), a civil rights nonprofit organization, alleges that Equity Residential engaged in a pattern or practice of designing and constructing most, if not all, of its nearly 300 multi-family housing complexes in violation of the Fair Housing Act. The parties selected eight properties to present to the Court to determine whether the construction violated the law.

    At seven of the eight, the Court found Equity’s involvement significant enough to warrant liability as a matter of law, granting the ERC’s motion. The Court also found that the ERC had presented specific evidence of FHA accessibility violations that were, in some cases, so clear as to warrant a finding of liability without the need for trial. The Court stated that questions of fact need to be resolved at a future trial with respect to Equity’s legal liability for the eighth property and the remaining accessibility violations.

    The case followed ERC’s lengthy investigation of multi-family housing developers, which revealed widespread evidence of multi-family housing construction that was not accessible to people with disabilities.
For more, see Properties Must Be Accessible to People with Disabilities Before Occupancy Federal Court Rules (Equity Residential Cannot Bypass Fair Housing Act Laws by Transferring Properties).

For the court ruling, see Equal Rights Center v. Equity Residential, No. CCB-06-1060 (D. Md. March 31, 2016).

State's Largest Landlord For Affordable Senior Housing Now $80K Poorer Due To Settlement Of Allegations That Disabled Tenants Were Having Problems w/ Reasonable Accommodations Requests; Results Of Probe By Fair Housing Testers Trigger Complaint

In Tacoma, Washington, The News Tribune reports:
  • A senior housing nonprofit that spans five Puget Sound counties has agreed to work with a Tacoma nonprofit to accommodate residents with disabilities, resolving a complaint filed with federal housing authorities.

    Tacoma-based Fair Housing Center of Washington filed a complaint with the U.S. Department of Housing and Urban Development last fall against Seattle-based Senior Housing Assistance Group.

    SHAG has 30 properties in Pierce, Thurston, King, Snohomish and Whatcom counties, and serves about 5,000 residents.

    It is the largest provider of affordable senior housing in the state and more than 45 percent of its residents have a disability, according to its executive director, Jay Woolford.

    In the months leading up to the complaint, the Fair Housing Center received more than two dozen calls about disabled residents having trouble requesting accommodations, said Lauren Walker, the center’s executive director..

    Such accommodations can include a grab bar in a shower to prevent falls, or a reserved parking space close to the entrance of a residence or the housing complex.

    The Fair Housing Center then sent testers to SHAG properties to see if potential residents with disabilities were treated differently than those who did not have a disability, Walker said.

    Reasonable accommodation requests weren’t even being considered,” Walker said, “and in a couple of instances, people were told that it wasn’t reasonable” to ask for a reserved parking spot.

    Woolford said he was surprised when he heard of the allegations in February, but since has moved to come to an agreement with the Fair Housing Center.

    “It was never any intent on our part to discriminate,” he said. “We try to accommodate people as best we can. … Had we been informed that this was going on we would’ve reacted vigorously because we are steadfast in our commitment to making housing available to people.”

    Part of HUD’s process is similar to arbitration, during which both groups try to agree on a remedy.

    In this case, SHAG will pay the Fair Housing Center to train its employees, and to send testers to its properties for two years, Walker said.

    In addition, the nonprofit will pay the center for its attorneys’ fees and the two groups will work on a public service announcement.

    Altogether the cost of the agreement is about $80,000, Walker said.

    Walker said SHAG has been “extremely cooperative and positive since the very beginning, and they look forward to working with us to ensure that their staff know fair housing laws, and that residents are represented well.”
Source: Senior housing group agrees to better accommodate disabled residents (Fair Housing Center of Washington sent testers and found violations).

Friday, April 22, 2016

Another Novice Homebuyer Gets Snagged On Dubious Contract For Deed Deal; Cops Give Couple Five Minutes Advanced Notice Before Giving Them The Boot

In Kansas City, Kansas, KSHB-TV Channel 41 reports:
  • Buying a home straight from the seller may seem like cutting out the middle man, but some say if it's not done right, it can be costly.

    Tina Johnson of Kansas City, Kansas, said she thought she was putting money on a home to purchase. "Within 15 years, we were paying $550 a month for 15 years, we signed a 15-year contract," Johnson explained.

    She said she never got a copy of the contract, though, so she consulted an attorney and was advised to stop payment until she could get a copy.

    Johnson showed copies of some of the payments she made toward the home, but two weeks ago, police came in and kicked her and her husband out. Johnson said, "At 5:00 in the evening with the clothes on our back we were told to vacate in five minutes because we didn't have proof of proper paperwork."

    This type of “contract for deed” agreement isn’t something legal aid Casey Johnson recommends but says he sees it often.

    "I have especially in Wyandotte County, I've seen a lot of contract for deed cases or what is known as rent to own cases," explained the legal aid.

    Casey Johnson explained that the person trying to buy the home usually ends up with less rights than if they owned the home outright. "What it's not supposed to be is a mixed between a mortgage and a landlord tenant lease situation, which is more than often what happens."

    The property owner told 41 Action News that Tina Johnson was delinquent on payments and he took action. Tina Johnson said she just wants her money and belongings back.

    "It might sound crazy but my mom's deceased and she's in there and I feel like I've abandoned her and I can't even get in there to get that out, that's important to me. He doesn't care, " Tina Johnson said.

    Contract for deeds can be done the right way though. Casey Johnson said "contract for deeds" need to be set up the same way as a mortgage where foreclosure would be needed to get a person out of the house and allow for a redemption period, which is usually three months to a year.
(1) Kansas Legal Services is a statewide non-profit law firm and community education organization serving low income Kansans in all 105 counties.

Couple Who Moved Out Of Their Home Discover Stranger Who Subsequently Moved In Without Permission; Cops Refuse To Bring Criminal Charges, Say Its A "Civil Matter"

In Nampa, Idaho, KIVI-TV Channel 6 reports:
  • A shocked Nampa couple who discovered a complete stranger moved in to their vacant home has people across the Treasure Valley talking.

    The woman living inside the house is a single mom claiming she signed a lease to rent the house from a man the true owners have never heard of: Daniel Brink.

    “Well, it just doesn't make any sense,” Boise lawyer and real estate expert Wyatt Johnson said. “You've got a fictitious person here. If somebody doesn't own property, or have title to it or have some sort of a tendency to it, they can't rent it to someone else.”

    Yet, it's happening in neighborhoods across the country, and here in the Treasure Valley leaving property owners like the Prindle family confused on what their rights are as property owners.

    “We had no idea what our rights were to our property,” Renea Prindle said. “Our locks had been changed so we had no way of getting into our home. She's claiming that this third party is the one that changed the locks on the house and handed her the keys.”

    “These forms are really easy to get,” Johnson said. “You can just go online and print out one of these lease agreements.”

    When they discovered strangers staying at their home, the Prindles called law enforcement for assistance, but were shocked by the response.

    The police basically said, 'this is a civil matter and you have to leave, you have to go home and you have to contact an attorney,’ and there was nothing we could do,” Prindle said.

New Maine Law Prohibits Most Private Landlords Statewide From Barring Section 8 Tenants, Others Receiving Gov't Housing Subsidies From Keeping Guns In Their Apartments; Landlords Of Owner-Occupied 1 To 4 Family Homes Exempt From Rule

In Augusta, Maine, the Portland Press Herald reports:
  • Gov. Paul LePage has a signed into law a bill prohibiting most private landlords who accept public housing vouchers from barring guns in their apartments.

    The proposal is backed by the National Rifle Association, which has long fought to strike down gun bans in public housing. The new law, inspired by a shooting last year by a Rockland man who confronted an intruder in his apartment, goes even further. It will determine whether private property owners who receive public subsidies, such as federal Section 8 housing vouchers, can prevent their tenants from possessing guns on the property.

    The new law, which goes into effect in 90 days, applies to landlords receiving federal rent subsidies under the multifamily housing rental assistance program, the housing choice voucher program, the new construction program, the substantial rehabilitation program or the moderate rehabilitation program. It allows landlords to impose “reasonable restrictions” related to the possession, use or transport of a firearm within common areas “as long as those restrictions do not circumvent the use or possession of a firearm in the tenant’s rental unit.”

    Owner-occupied rental housing of four or fewer units are exempted from the bill, meaning those landlords could restrict firearms from being kept on their property.

    Harvey Lembo, the retired lobsterman from Rockland whose skirmish with an intruder prompted the legislation, sued his landlord, Stanford Management Co. of Portland, in federal court after the company told him he had to relinquish his gun to continue living in his apartment.
For more, see LePage signs bill allowing tenants in subsidized apartments to keep guns (The new law builds upon the NRA's 1995 victory over the Portland Housing Authority).

Thursday, April 21, 2016

Co-Op Owner In 'White-Glove' NYC High-Rise Scores $120K Win In Lawsuit Alleging HOA Failed To Comply w/ Proprietary Lease By Taking No Action To Respond To Her Complaints Of 2nd-Hand Smoke Wafting Into Her Apartment

In New York City, lawyer Stuart Saft writes in Habitat Magazine:
  • A recent court ruling on second-hand smoke should push boards to act.

    Earlier this year, state Supreme Court Judge Arthur Engoron awarded a co-op shareholder named Susan Reinhard the staggering sum of $120,000 in back maintenance, plus interest and attorney’s fees. Reinhard claimed in a lawsuit that the co-op board at Connaught Tower at 300 E. 54th Street did nothing to prevent second-hand smoke from wafting into her apartment, and thus failed to comply with the proprietary lease.(1)(2)

    In affirming an earlier opinion in the case delivered in 2011, Judge Engoron delivered the stinging penalty to the co-op. He stated in his opinion:

    “Today's decision may, at first blush, seem unduly harsh on building owners, as it imposes legal, logistical, and financial burdens on them. They must either provide smoke-free excluding smokers from their buildings, which might decrease (or might increase) the rents they could charge; or must smoke-proof their buildings, which, judging by the testimony of defendants' expert, could be mind-bogglingly expensive; or must completely forego rent payments.”

    This decision did not contain much in the way of facts, which has created a great deal of additional concern. However, the fact that the board failed to take any action to address Reinhard’s complaints explains why Judge Engoron was so angry. In any event, until his decision is reversed on appeal, the law in Manhattan and the Bronx is clear: co-op boards have to make apartments smoke-free.

    However, the decision does not indicate how the board or management can accomplish such a herculean task in both pre-war and post-war buildings. I do not think it is possible to stop smoke from entering other apartments or the hallways, so the board needs a powerful tool to stop smokers from creating a problem that the board cannot solve. My solution is for every board to enact a resolution stating that “a resident permitting cigarette, cigar, pipe or marijuana smoke from leaving the resident’s apartment and entering a common hallway or another apartment is objectionable conduct and the board will seek to terminate the proprietary lease of any shareholder permitting such smoke from leaving their apartment.”

    I have found over the years that sending the predicate notice in situations where neighbors are creating nuisances or disturbing other residents is an excellent way to curtail such behavior. In most instances, the notice seems to get the message across. Enacting the resolution will not stop the smoke, but it will make the smoker reconsider where they smoke and how they can keep the smoke within their apartment.

    Although the decision does not apply to condominiums, I can see a judge applying the same theory,(3) so my suggestion is that condominium boards enact resolutions that provide that “a resident permitting cigarette, cigar, pipe or marijuana smoke from leaving a unit and entering a common element or another unit is a nuisance and the board will seek a court order, at the smoker’s expense, to enjoin the unit owner from permitting such smoke from leaving their unit.”
Source: Attorney Tip: Stop the Spread of Smoke Now.
(1) "Reinhard claims that after she purchased her apartment and performed renovations in her apartment, she detected a strong smell of cigarette smoke that was entering into her apartment from other areas of the building. According to Reinhard, the cigarette smoke has caused her to suffer from tightness in her chest, coughing, headaches, and watering eyes." Reinhard v. Connaught Tower Corp., 2011 NY Slip Op 33101 (N.Y. Sup. Ct. New York County, 2011).

(2) See Reinhard v. Connaught Tower Corp., 2011 NY Slip Op 33101 (Sup. Ct. New York County, 2011):
  • Courts have held that secondhand smoke "qualifies as a condition that invokes the protections of Real Property Law § 235-b under the proper circumstances" (Poyck v. Bryant, 13 Misc 3d 699, 702 [Civ Ct, NY County 2006]; see also Upper E. Lease Assoc., LLC v Cannon, 30 Misc 3d 1213 [A], *3, 2011 NY Slip Op 50054 [U] [Dist Ct, Nassau County 2011]). "As such, it is axiomatic that secondhand smoke can be grounds for a constructive eviction" (Poyck, 13 Misc 3d at 702).

    While a "single occurrence" of smoke is insufficient, "the court must look to the operative facts to determine whether or not the secondhand smoke was so pervasive as to actually breach the implied warranty of habitability and/or cause a constructive eviction" (id,; see also East End Temple v Silverman, 199 AD2d 94 [1st Dept 1993] [one time occurrence of smoke did not amount to a substantial and material deprivation of the use and enjoyment of the premises]).
(3) Applying this theory to New York apartment building landlords as well should not be unexpected, either. See, for example, Francis v. Kings Park Manor, Inc., 91 F. Supp. 3d 420 (E.D.N.Y. 2015):
  • "Although a landlord may lack direct control over the actions of another tenant, courts have often applied the implied warranty of habitability to conditions beyond the landlord's direct control." [quoting] Upper E. Lease Associates, LLC v. Cannon, 30 Misc.3d 1213(A), 924 N.Y.S.2d 312, 2011 WL 182091 (Dist.Ct.2011) aff'd, 37 Misc.3d 136(A), 961 N.Y.S.2d 362 (App.Term 2012).

    Furthermore, in Poyck v. Bryant, 13 Misc.3d 699, 705, 820 N.Y.S.2d 774, 780 (Civ.Ct., New York County 2006), the court held that a tenant's smoking habits may give rise to a duty to act, to prevent "unreasonable interference" with the rights of other tenants.
Go here for summaries of some other Secondhand Smoke Cases Involving Tenants.

NY Appellate Court Kiboshes $185K Judgment Against Landlord Who Failed To Provide Reasonable Accommodation For Wheelchair-Bound Tenant; Building Modifications Needed To Construct Requested Ramp Would Create Undue Financial Hardship

In Astoria, Queens, The Real Deal (NYC) reports:
  • A state appellate court last week dismissed a city agency’s $185,000 claim against the Benjamin Companies, finding that the landlord was just in denying a paraplegic tenant a wheelchair ramp to her first floor Astoria apartment because the costs were too burdensome.

    The ruling, handed down March 30, theoretically settles roughly six years of legal wrangling between tenant Irene Politis, the city’s Commission of Human Rights, and Long Island-based Benjamin Companies. Landlords are required under the city’s Human Rights Law to provide reasonable accommodations for disabled tenants unless it causes undue financial hardship.

    In 2008, Politis asked landlord Marine Holdings LLC, an entity controlled by the Benjamin Companies, to install a wheelchair ramp from the building’s stairwell to her first floor apartment at 20-17 18th Street, a building that is part of a housing complex with 441 Section-8 units.

    Marine Holdings could not build a ramp on the stairs, so another idea was hatched — build a ramp out of Politis’ first floor window, converting it into an entrance. The landlord refused.

    In 2010, Politis, bound to a wheelchair since 1979, filed a complaint with the city’s Commission of Human Rights over the lack of accessibility. The next year, the matter went before an administrative law judge, who ruled in favor of Marine Holdings. A structural engineer testified the window-entrance project was “financially infeasible” and there was a “slew of structural issues” with building the ramp, according to the decision.

    But in 2012, the Commission of Human Rights rejected the administrative law judge’s report and imposed a civil penalty of $125,000 to Marine Holdings and awarded $75,000 in damages to Politis. The fine was the highest penalty the commission had levied for a housing discrimination case, according to commission spokesperson.

    A Queens Supreme Court judge upheld the fine in 2013, but cut the damages down to $60,000.

    Last week, the Appellate Division dismissed the case, finding that the landlord would have faced significant hardships in accommodating Politis. The city’s Law Department did not respond to requests for comment.
Source: Appeals court dismisses $185K in fines, damages against Benjamin Companies over ADA accommodations (Judicial panel found the construction of a wheelchair ramp for tenant would have been financial burden).

For the court ruling, see Matter of Marine Holdings, LLC v New York City Commn. on Human Rights, 2016 NY Slip Op 02369 (App. Div. 2nd Dept., March 30, 2016).

See also, A Glimmer Of Hope? NY Court Agrees Accessible Entrance Would Be Structurally Infeasible. fair housing

NYC Tenant Advocate Suspects Some Local Landlords Of Sabotaging Their Own Buildings w/ Code Violations To Provoke City Agencies Into Issuing Vacate Orders To Boot Long-Time, Below-Market Rate-Paying Tenants Who May Otherwise Be Impossible To Evict; One Tenant Group Responds w/ Suit Seeking Court-Appointed 7A Administrator To Seize Control Of Premises From Owner

In Bedford Stuyvesant, Brooklyn, DNAinfo New York reports:
  • Tenants of a Franklin Avenue apartment building were forced out of their homes by the city after their landlord illegally constructed a building in their backyard and made it unsafe for them to live in their homes.

    Najary Torres and her three daughters were awoken at midnight on July 14, 2015 by Red Cross workers, who had come to enforce a full vacate order on the 94 Franklin Ave. property — issued by the city due to the landlord's illegal construction, according to Torres, DOB records and a lawsuit she and two other tenants filed against her landlord.

    They've been living at a homeless shelter ever since, and the whole experience has left her children "traumatized," she said. “They feel very unsafe, everything has been extremely difficult. It’s life changing to them,” Torres said in Spanish through a translator. “What my daughters went though psychologically will never be remedied, it will never be the same for them. My daughters are going through a lot and they’re afraid of a lot of things.”
    Tenants were forced to vacate in the middle of the night, and were unable to take all their belongings, residents and their lawyers aid. [...] When residents were able to return to the building on a occasion to retrieve their belongings, they found that a pipe had burst, leaving water damage throughout their apartments, in addition to other conditions including a rat infestation and rotting floors, according to tenants and court documents.

    So far, the DOB has issued six violations against the property for the illegal construction — including the stop work and full vacate orders — which still remain open, according to the agency's records. The DOB has also issued more than $7,000 in fines, none of which have been paid, records show.
    But so far none of these actions have forced the landlord to remedy the situation, residents are paying for it everyday and the city could do more to help, according to the tenants' lawyers.

    “What’s also very frustrating to us is you have more and more landlords with bad intentions who are for many reasons looking for ways to force out existing tenants either through eviction process or provoking existing city agencies to do their dirty work,” said Brooklyn Legal Services Corporation A(1) attorney Jean Stevens, who represents the tenants.

    “We believe the agencies have good intentions but they can really be empowered to push back against landlords and say, ‘Sorry, this isn’t going to fall on the tenants’ shoulders.”

    Three of the tenants, who have lived in rent-stabilized apartments in the building for at least 9 years, filed a lawsuit against the landlord in housing court on March 9, asking a judge to take the property away from [the landlord].

    They're seeking to let a court-appointed administrator manage the building as part of the 7a program, according to Stevens.
For more, see Family Forced To Live in Shelter Due to Illegal Construction by Landlord.

See also:
(1) Brooklyn Legal Services Corporation A (Brooklyn A) provides neighborhood based civil legal services to low-income individuals, families, community groups, and nonprofit organizations in Brooklyn, New York.

Wednesday, April 20, 2016

Elderly Widow Finds Herself Wresting w/ Her Attorney-Children Over Ten$ Of Million$ In Real Estate Amassed By Dead Hubby; Says They Tricked Her Into Signing Deed To Lakefront Home That Purported To Be 'Do Not Resuscitate' Order For Dying Family Patriarch

In New York City, the New York Post reports:
  • A Brooklyn mob lawyer’s elderly widow is claiming her kids tricked her into signing away her Connecticut vacation home — by pretending the papers were a “do not resuscitate” order for her dying husband, a new lawsuit charges.

    The eldest child named in the bitter suit is legal heavyweight Nicholas Gravante, Jr., who, as a partner to Al Gore attorney David Boies, has repped the Andy Warhol Foundation and the family of vice president Joe Biden.

    She did not understand what she was signing,” lawyers for the angry mom and plaintiff, Elinor Gravante, 81, claim in the Brooklyn federal court lawsuit, filed [recently]. “She believed she was signing a “do not resuscitate” order.”

    The lawsuit also accuses Gravante Jr., and his brother and sister, of pocketing some $600,000 in rental income from their dead dad’s buildings in Park Slope, Bensonhurst and SoHo.

    It’s the latest volley in a raging family feud over tens of millions of dollars in property in Connecticut, Florida and New York, amassed during the 50-year career of longtime Bensonhurst-based Luchese and Gambino family lawyer Nicholas Gravante, Sr., who died in 2015.

    The feud simmered to the surface two weeks ago, when Nicholas Jr., fired off the first lawsuit against his mom in Florida, where she lives.

    The son’s suit asks a Collier County judge to stop the mom from claiming to family, friends, and even the press that her children tricked her out of the lakefront house, a $1.8 million property in New Fairfield.

    The so-called bogus “do not resuscitate” order is a three-page, notorized document that clearly states “Warranty Deed” at the top, Nicholas Jr. said.

    His mom had wanted to give the house to him and his siblings since they’d inherit it anyway, and she had no interest in living there — then cried fraud last summer after an argument with her daughter, Christine Castellano, who now lives there, the lawsuit says.

    The third child, Richard, is a Brooklyn-based lawyer.

    The mom had long agreed that the rental income could be used by her 11 grandchildren toward college tuition, Nicholas Jr. told The Post.

    “It is unfortunate that our mother, who has been dealing with serious health issues, including memory loss, has been advised to take action that delays progress and closure,” the three Gravante children said in a statement Friday.

    “We love her and will continue to support her financially and emotionally through this painful period,” the statement added.

Grandaughter Gets Pinched On Theft By Deception Charge; Accused Of Illegally Obtaining Home Equity Credit Line On Grandma's Home, Then Draining $3K From It

In Boardman, Ohio, The Youngstown Vindicator reports:
  • Township police served a warrant to a Youngstown woman accused of theft by deception against her grandmother.

    Joanna Button, 29, [...] was arrested at her home on the felony charge [...]. Tuesday. She was taken to the Mahoning County jail and is scheduled to appear in Mahoning County Area Court [...].

    The charge, according to a police report, is tied to a case reported in August 2015 in which a female victim, 82, told police that someone opened a home equity line of credit in her name. That person reportedly obtained credit cards tied to the line of credit, and had charged $3,000.

    The arrest report indicates that the victim is Button's grandmother.

Tuesday, April 19, 2016

Florida Appeals Court Reverses Itself On Application Of Statute Of Limitations To Foreclosure Case; Says Missed Mortgage Payment After Initial Failed Foreclosure Lawsuit Starts New 5-Year Clock For Filing Suit

In Miami, Florida, the Daily Business Review reports:
  • The Third District Court of Appeal split 6-4 Wednesday when the full court revisited the application of the five-year statute of limitations in mortgage foreclosures with input from a national array of lending and consumer lawyers.

    The state appellate court reversed itself after an en banc hearing in a case that pitted Deutsche Bank Trust Co. Americas against homeowner Harry Beauvais and Aqua Master Association Inc. in Miami Beach.

    The bank requested a rehearing before the entire court after the Third DCA contradicted a Fifth DCA decision. The Third DCA now agrees with a Fifth DCA ruling that finds a missed mortgage payment after an initial failed foreclosure lawsuit starts a new five-year clock for filing suit.
    "We reverse because we, like our sister courts, find the Florida Supreme Court's decision in Singleton v. Greymar Associates … applicable to the instant action, and that it mandates reversal," Judge Linda Ann Wells wrote for the majority.

    Chief Judge Richard Suarez, Judges Leslie Rothenberg, Barbara Lagoa, Ivan Fernandez and Thomas Logue concurred.

    Singleton is a landmark ruling that allows lenders to bring foreclosure suits even after courts dismiss earlier complaints with prejudice. It held that new defaults after unsuccessful foreclosure suits created grounds for repeat suits. It also makes no distinction between cases where lenders accelerated the loans to collect full payment and others, and allows lenders to maintain separate actions for defaults occurring after acceleration.

    The ruling means borrowers who win in foreclosure must continue to abide by their loan contracts, and lenders can move to foreclose after each breach.
For the story, see Court Sides With Lenders in Prolonged Foreclosure Case (may require paid subscription; if no subscription, TRY HERE, then click the appropriate link for the story).

For an earlier post on the original court ruling, which has now been reversed, see Another Snoozing Bankster Sleeps Through Foreclosure Statute Of Limitations (Court Denies Foreclosure On $1M+ Penthouse, But Also Refuses To Cancel Note & Mortgage, Will Not Quiet Title In Favor Of Property Owner).

Thanks to Deontos for the heads-up on this story.

Despite Paying Full Restitution, Foreclosure Rescue Operator Follows Ex-Hubby To Prison; Gets 27 Months For Role In Racket That Peddled Bogus Loan Mods, Forensic Mortgage Audits, Sale Leaseback Ripoffs, "Skeleton" Bankruptcies That Screwed Over Two Dozen Hispanic Homeowners Out Of At Least $115K

From the Office of the U.S. Attorney (Sacramento, California):
  • Ligia Sandoval Spafford (Sandoval), 48, of Roseville, was sentenced [...] to two years and three months in prison for a scheme to defraud distressed homeowners, United States Attorney Benjamin B. Wagner announced. Sandoval was ordered to self-surrender on June 9, 2016.

    Sandoval paid $115,065.00 in restitution, the full amount of restitution ordered by the Court, to compensate the victims for the losses that they incurred as a result from this fraud scheme. In February 2015, Sandoval and her then husband, Martin Wayne Flanders, 51, of Roseville, pleaded guilty to mail fraud for the fraud scheme. On October 29, 2015, Flanders was sentenced to six years and five months in prison.

    In sentencing, Judge Nunley stated: “She knew what was going on and enticed these people to become part of this scheme. They trusted her. … She ruined some peoples’ lives. That she paid restitution does not do anything to take away from the anxiety and fear they [the victims] had at the time that this was occurring. These victims were devastated.”

    According to court documents, between 2008 and 2010, Flanders charged clients advance fees in exchange for a number of financial services, including loan modifications, mortgage loan audits, credit repair, debt relief, bankruptcy filings, and a program to sell homes to “investors” with a rent-to-own option.

    Sandoval and Flanders marketed these services to economically distressed homeowners with particular emphasis on those who were Spanish speakers. Sandoval, a Spanish-speaker, promoted the services she and Flanders, who was not a fluent Spanish speaker, offered during a radio program that aired twice weekly on a Bay Area Spanish‑language Christian radio station, Radio Luz. Sandoval who was a licensed real estate agent, further assisted Flanders in the fraud scheme by interacting with and explaining the services to Spanish-speaking clients. The services offered by Flanders and Sandoval were also advertised on a Spanish-language television station, Univision, and in Spanish-language magazines. About 98 percent of the defendants’ clients were of Hispanic descent, some of whom spoke little to no English.(1)

    Sandoval and Flanders made numerous false statements to investors as to the success of the programs being offered or refunds that would be available if the programs were not successful. “Ghost offers” – i.e., fictitious offers to purchase the victim’s property through short sale – and “skeleton bankruptcies” – i.e., sham bankruptcy petitions that were quickly dismissed by the bankruptcy court – were also used by Sandoval or Flanders to try to stall the foreclosure process.

    At least 25 to 30 individuals paid for services and did not receive them or did not receive refunds when the programs failed to deliver as promised. The total loss to the victims is at least $115,000. Some homeowners who were not able to obtain relief were foreclosed upon by their lenders.
Source: Roseville Resident Sentenced for Loan Modification and Foreclosure Rescue Scam That Targeted Spanish-Speaking Community.
(1) The fact that Sandoval (a Spanish-speaking, licensed real estate agent) received a significantly lesser sentence than her now-ex husband (a non-Spanish speaker) despite playing an obviously central role in this racket by targeting those of Hispanic descent is probably explained by the fact that she paid the full $115,000 restitution to the victims before sentencing. In essence, she probably 'bought down' the length of the prison time she was looking at, avoiding a potentially stiffer sentence had restitution not been paid.

Oregon Man Gets Pinched On 18 Counts For Allegedly Ripping Off Eight Hispanic Homeowners Out Of Over $63K Peddling Bogus Loan Modification Services

In Polk County, Oregon, the Statesman-Journal reports:
  • A West Salem man has been arrested for allegedly using his position as a mortgage consultant to defraud several of his clients throughout the Willamette Valley of tens of thousands of dollars.

    Oscar Tejeda-Sandoval, 48, is accused of theft, aggravated theft, forgery and aggravated identity theft. He has been charged with a total of 18 counts.

    Salem Police Department detectives conducted a joint investigation with the Oregon Division of Financial Regulation after several victims reported being defrauded by Tejeda-Sandoval.

    According to investigators, Tejeda-Sandoval modified the mortgages of his victims and received their monthly mortgage statements. Instead of paying the mortgages as promised, the consultant kept the victims' money and used it to pay off his own debts. Tejeda-Sandoval is also accused of forging a check from a client for his personal use.

    In total Tejeda-Sandoval is accused of defrauding two financial institutions and eight people out of more than $63,000. Two victims lost their homes to foreclosure after being victimized by Tejeda-Sandoval, police said.

    All of the identified victims were of Hispanic descent and many spoke Spanish as their first language, according to court documents. Tejeda-Sandoval allegedly targeted people in McMinnville, Beaverton, Woodburn, Eugene and Salem, and investigators said they think he may have victimized others in the region. Officials are asking anyone who had questionable dealings with Tejeda-Sandoval to contact the Oregon Department of Financial Regulations at 503-947-7854.

    Tejeda-Sandoval pleaded not guilty [and] is scheduled to appear [...] at Polk County Circuit Court.

Monday, April 18, 2016

Housing Advocates Say HUD's Program Of Unloading Delinquent Mortgages A "Wall Street Giveaway" By Allowing Private Equity Rackets To Snatch Up Bad Loans At Steep Discounts

DS News reports:
  • In recent months, Agency sales of deeply delinquent mortgage loans to private investors have generated considerable objections from both lawmakers and housing advocacy groups, even to the point of a nationwide protest on February 4.

    Now a group of housing advocates and progressive groups have launched a coalition to change Agency distressed loan sales practices and require them to sell more delinquent loans to non-profits. The advocates tagged HUD’s Distressed Asset Stabilization Program (DASP) a “Wall Street Giveaway” because the majority of distressed loans sold through the program are bought by Wall Street investors whom the advocates believe are interested only in benefiting financially from the foreclosure crisis rather than in rebuilding communities and stabilizing neighborhoods.

    “HUD is supposed to help homeowners stay in their home (sic) through its ‘Distressed Asset Stabilization Program,’” the coalition said on its website. “But instead it has been a giveaway for Wall Street: In 2015, 98 percent of homes sold through HUD’s DASP program went straight to Wall Street (15,309 out of 15,624). These homes are often sold at steep discounts, averaging 45 percent off for some of the biggest banks on Wall Street.”

    The coalition’s efforts include a petition directed to HUD Secretary Julián Castro urging him to stop HUD from selling loans through DASP until the program is reformed.

See also,
  • The Wall Street Journal: Liberal Activists Launch Campaign Against HUD Secretary Julián Castro.

    A coalition of liberal activist groups launched a campaign [] against Department of Housing and Urban Development Secretary Julián Castro, questioning his fitness for higher office because they see him as favoring Wall Street firms in HUD’s sales of underwater mortgages.

U.S. Gov't Lets Goldman Sachs Get Away With $5 Billion Sham Settlement; Another Bankster Walks Away Unscathed By Giving Feds, State Authorities Shakedown Money, Cutting Them In On Illicit Profits Fleeced From Public

From Public Citizen Litigation Group's Consumer Law & Policy Blog:
  • This week's settlement between the financial giant and the government is the latest in a string of billion-dollar settlements addressing Wall Street misconduct in the lead-up to the financial crisis of 2008. (The others were with JPMorgan Chase, Bank of America, Citibank, and Morgan Stanley, and the values ranged from approximately $3 billion to $16 billion.)

    Like the other settlements, no individuals will be held accountable. As Public Citizen President Rob Weissman argues in response to the settlements, "Without criminal prosecution, there’s not even the illusion of accountability." Read his statement here.
Source: Goldman to pay $5 billion for selling bad mortgages.

See also, No consequences, no justice in Goldman Sachs settlement (The Justice Department’s failure to punish wrongdoing at major financial institutions stands in stark contrast to its vigorous prosecution of more than 2,700 individuals at the local level – mortgage brokers, borrowers, appraisers – who were small cogs in the corrupt mortgage machine).

See also, Why the Goldman Sachs Settlement Is a $5 Billion Sham (The penalty might sound pretty stiff. But get a load of the real math):
  • The Justice Department announcement in the Goldman case states that between 2005 and 2007, the investment bank marketed and sold mortgage-backed securities to investors that were of lower quality than promised. As a result, Goldman will pay a $2.385 billion civil penalty to the Justice Department, $875 million resolving claims from other state and federal agencies, and $1.8 billion in so-called “consumer relief” measures, like forgiving principal on loans and providing financing for affordable housing. That’s where the much-touted $5 billion figure comes from.

    In The New York Times, Nathaniel Popper took a careful look at the consumer relief provisions, finding that Goldman Sachs could pay up to $1 billion less than advertised, because the company gets extra credit for spending in certain hard-hit communities or for meeting its obligations within the first six months. I appreciate Popper’s precision, but it’s unnecessary. None of this consumer relief represents a penalty on Goldman at all.

    That’s because Goldman Sachs doesn’t own any of the loans it’ll be modifying. They were sold to investors years ago. Goldman will quite literally pay that fine with someone else’s money; in fact, the money comes from the very investors Goldman victimized, by selling them toxic securities under false pretenses.
    And who benefits from Goldman’s payments? Not the investors who were the actual victims of the misconduct; as I noted before they end up paying more money by seeing principal cut on the loans they own. Some homeowners get affordable loans or reduced mortgage debt, even though Goldman Sachs specifically harmed investors. But the biggest beneficiaries in this transaction are the Justice Department, the New York Attorney General’s office, and the other state and federal agencies who receive cash awards, from the civil penalty and the resolution of other claims.

    The upshot: Law enforcement settled a case on behalf of investors and then walked away with the proceeds, while investors got nothing. Goldman Sachs and the Justice Department get to divvy up the profits of a fraud scheme perpetrated on the public.

A Rough Guide To Controversies Surrounding Famous NYC Real Estate Operator & Current Presidential Candidate

The Atlantic reports:
  • The 2016 presidential election could be the most scandal-plagued match-up since James Blaine’s allegedly corrupt business deals squared off against Grover Cleveland’s alleged illegitimate child in 1884. On the Democratic side, Hillary Clinton is poised to win the nomination, bringing with her a train-car’s worth of baggage.

    But the Republican front-runner is at least as saddled with controversy as Clinton is—and while many of the Clinton cases involve suspicion and shadowy links, many of Trump’s are fully documented in court cases and legal proceedings.

    The breadth of Trump’s controversies is truly yuge, ranging from allegations of mafia ties to unscrupulous business dealings, and from racial discrimination to alleged marital rape. The stretch over more than four decades, from the mid-1970s to the present day. To catalogue the full sweep of allegations would require thousands of words and lump together the trivial with the truly scandalous. Including business deals that have simply failed, without any hint of impropriety, would require thousands more. This is a snapshot of some of the most interesting and largest of those scandals.
For more, see The Many Scandals of Donald Trump: A Cheat Sheet (A rough guide to controversies surrounding the Republican front-runner, from mafia ties to anti-trust violations to bankruptcy).

Sunday, April 17, 2016

After Already Serving 12 Months In Jail Pre-Sentencing, Long Island Lawyer Gets Six More Months After Admitting Escrow Theft, Use Of Forged Lien Satisfaction To Pilfer Over $1 Million In Real Estate Deals; Clients Victimized In Two Transactions Score Full Recovery Of Over $700K From State Bar's Client Protection Fund Payout

From the Office of the Nassau County, New York District Attorney:
  • Nassau County District Attorney Madeline Singas announced that a Roslyn Heights attorney who stole $720,000 held in an escrow account, as well as sold an East Hills property owned in the name of his law firm and pocketed more than $700,000 in proceeds, was sentenced [] to six months in prison and restitution of more than $1.2 million.
    The defendant [attorney Steve Weinstock], who has already served a year in jail, was sentenced [] by Judge Delligatti to six months incarceration, five years’ probation, and restitution in the total amount of $1,227,710.15.

    “The defendant’s greed knew no bounds and he stole from his clients, his law partner, a mortgage company and real estate buyers who were unaware that there was an unpaid mortgage on their property,” DA Singas. “These brazen thefts are particularly troubling because the defendant was in business with his then law partner for more than 10 years. My office will continue to aggressively prosecute any and all instances of professional corruption and I encourage anyone who may have been victimized by an attorney to contact our complaint hotline.”

    DA Singas said that in or about April 2014, Weinstock’s then law partner received a package from the defendant that included a handwritten statement by Weinstock that there was escrow money missing in the amount of $720,000. The note also indicated that Weinstock sold an East Hills property without satisfying an outstanding mortgage loan.

    The activities were done without the knowledge or permission of Weinstock’s then law partner. The case was then referred to the NCDA by the former partner.

    The investigation revealed that Weinstock had taken the $720,000 from an escrow account that constituted separate down payments for two sales of commercial condominium units in New York City.

    In addition to the escrow thefts, evidence revealed that Weinstock’s law firm purchased a property in East Hills in 2008 and then took out a mortgage on the property in 2010. Weinstock, on behalf of the law firm, sold the property in 2013 without paying off the outstanding mortgage.

    The buyers’ lender paid approximately $608,000 directly to Weinstock’s law firm. At the closing, the buyers paid Weinstock approximately $117,000, in addition to the $50,000 down payment paid by the purchasers at the time of contract – for a total of approximately $775,000 in proceeds from the sale.

    A forged Satisfaction of Mortgage was filed in the Nassau County Clerk’s office to conceal an outstanding mortgage loan amount of approximately $485,000 on the property.

    After the closing, Weinstock continued to make payments on the outstanding mortgage loan without notifying the lender or the buyers that a lien on the property had not been satisfied. The balance of the loan at the time the scheme was approximately $483,000. The outstanding loan is not included in the total amount stolen by Weinstock as part of the scheme.

    The funds stolen by Weinstock were used for various personal and professional expenses, including substantial loan repayments, credit card payments and cash withdrawals.

    The clients who were victims of Weinstock’s theft of two down payments are receiving full restitution – in the amount of $370,000 and $350,000 – from the Lawyers’ Fund for Client Protection of the State of New York.(1)

    Anyone who believes they may have been a victim of a crime is encouraged to call the NCDA Tip Line at (516) 571-7755.
Source: Roslyn Heights Attorney Sentenced for Stealing More than $1.4 Million (Steve Weinstock stole money held in an escrow account and failed to pay off an outstanding mortgage loan).

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 Lawyers’ Fund For Client Protection Of the State of New York manages and distributes money collected from annual dues paid by members of the state bar to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the New York bar acting as an attorney or 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.

NJ Lawyers' Fund For Client Protection Announces Deadlines For Fleeced Victims Making Ripoff Claim$ Against Ten Garden State Attorneys

From a recent news release from the New Jersey Courts:
  • Daniel R. Hendi, director of the [New Jersey] Lawyers’ Fund for Client Protection, has announced that any person who intends to file a claim with the fund against any of the attorneys listed below must file prior to the deadlines listed.

    The fund’s purpose is to pay on behalf of the honest majority of lawyers for the wrongdoing of a few.(1)

    For a claim to be eligible, the attorney against whom it is filed must have been a member of the bar, acting as either attorney or fiduciary, at the time of the incident; and unless deceased, must have been disbarred, suspended or placed on disability inactive status from the bar, or convicted of embezzlement or other misappropriation of property. The attorney’s conduct giving rise to the claim must have been dishonest rather than negligent.

    The issuance of the Supreme Court’s determination to suspend or disbar an attorney activates the fund’s jurisdiction to receive claims against that attorney. There is a one-year deadline after the discipline is issued to the attorney for clients to file claims. The client’s claim does not need to be included in the ethics determination to be compensable. Discipline of the attorney does not guarantee compensability for any specific claim.

    Attorneys can be disciplined for conduct other than misappropriation.

    An individual client can receive up to $400,000. The fund can provide up to $1.5 million in claims against a lawyer.

    To receive a claim form, write to the New Jersey Lawyers’ Fund for Client Protection, Richard J. Hughes Justice Complex, P.O. Box 961, Trenton, NJ 08625-0961, or call 855-533-FUND (3863). The form must be completed, notarized and returned with copies of any proof of the transaction. There is no filing fee. Claimants assisted in their claims by practicing attorneys receive their representation free of charge. [more]
For more, including the list of ten lawyers for whom claims deadlines were announced in the news release, see Lawyers’ Fund for Client Protection Announces Deadlines for Claims.
(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.

Florida Supremes Discipline Seven Attorneys In Connection w/ Improper Conduct Regarding Their Clients' Cash

The recent edition of the monthly gossip sheet from The Florida Bar is now out, in which the state’s guardian for the integrity of the legal profession, announced that the Florida Supreme Court in recent court orders disciplined 24 attorneys – disbarring seven, revoking the licenses of two, suspending nine and publicly reprimanding six. Three attorneys were also placed on probation, and one attorney was ordered to pay restitution.

Of those disciplined, the following eight attorneys were disciplined in connection with, among other things in some cases, some form of improper conduct in connection with their clients' money:
  • David Joseph Berger, North Miami Beach, disbarred effective immediately, following a Jan. 14 court order. (Admitted to practice: 2010) Berger misappropriated client trust funds and abandoned his law practice and clients. He also failed to comply with a subpoena to produce trust account records. (Case No. SC15-1197)

    Sholom Boyer, North Miami Beach, suspended until further order, effective 30 days from a Jan. 22 court order. (Admitted to practice: 2001) Boyer was found in contempt for non-compliance with a Bar subpoena served on him on Sept. 4, 2015. Boyer was commanded to appear before a grievance committee on Sept. 21, 2015, with trust accounting records and other documents. Boyer did not appear, he did not provide records, and he did not provide an explanation for his failure to comply. (Case No. SC15-1971)

    Charles Jeffrey Broida, Columbia, Md., disbarred effective immediately, following a Jan. 21 court order. (Admitted to practice: 1973) Broida was also a member of the Maryland Bar Association. This is a reciprocal discipline action. A Bar investigation indicated that Broida misappropriated funds from an estate and fabricated account statements to conceal the misappropriation in Maryland. (Case No. SC15-1596)

    Heather Sarah Case, Naples. The Supreme Court granted Case’s request for a disciplinary revocation, effective 30 days from a Jan. 21 court order, with leave to seek readmission after five years. (Admitted to practice: 2005) Disciplinary revocation is tantamount to disbarment. Disciplinary matters pending against Case included allegations that she received funds owed to clients but failed to deliver the funds and the files. (Case No. SC15-1920)

    Francisco D. Coll, Clearwater, suspended until further order, following a Jan. 11 court order. (Admitted to practice: 2007) According to a petition for emergency suspension, Coll appears to be causing great public harm. A Bar investigation revealed that Coll has misappropriated at least $276,726 of client funds from his trust accounts. (Case No. SC15-2342)

    Peter U. Mayas, Plantation, disbarred effective 30 days from a Jan. 28 court order. (Admitted to practice: 2003) Mayas knowingly engaged in the unauthorized practice of law in federal court, falsely represented that he was permitted to practice in federal court, improperly took fees which also were excessive, and abandoned the case. Mayas provided testimony that was untruthful or evasive in related contempt proceedings resulting from his failure to comply with the court’s order to return the fees. In a second, unrelated matter, Mayas represented a client on criminal charges in state court but failed to appear for several hearings resulting in the court issuing an order to show cause. His response to the Bar’s inquiry was untruthful and inaccurate. (Case No. SC14-2147)

    Joseph E. Parrish, Brandon, to be publicly reprimanded and placed on probation, following a Jan. 7 court order. (Admitted to practice: 2003) Parrish’s non-lawyer employee embezzled more than $100,000, including funds from his trust account. In addition, the paralegal caused an insurance company to pay $100,000 for a settlement, while Parrish and the client agreed to a settlement of $30,000. The paralegal embezzled the difference. (Case No. SC15-2305)

    Alex Jay Pearlberg, Sunrise, disbarred effective immediately, following a Jan. 28 court order. Further, Pearlberg shall pay restitution of $12,700 to clients in three separate matters. (Admitted to practice: 1992) After receiving a settlement of $11,000 on behalf of one client, Pearlberg misappropriated the funds from his trust account. He also received $1,000 to represent a man in a civil matter but took no action on the case and failed to respond to the Bar’s inquiry regarding the matter. Another client paid Pearlberg $700 to represent her in a dispute with her condo association. After sending the initial letter to the association, Pearlberg took no other action to further the case, and he failed to answer the client’s communications. Pearlberg failed to diligently represent another client and he was criminally charged for writing worthless checks in a separate case. Pearlberg failed to respond to the Bar’s inquiries regarding the matters. (Case No. SC15-1743)

Editor's Note: Key discipline case files that are public record are posted to attorneys’ individual online Florida Bar profiles. To view discipline documents, follow these steps. Additional information on the discipline system and how to file a complaint are available at

Dozens Of Victims Fleeced For Over $11 Million By Suicide-Committing Lawyer Go After Three Financial Institutions To Recover Losses; Banks Accused Of Aiding/Abetting Fraud & Conversion By Turning Blind Eye To Attorney's Suspicious Transactions

In Dauphin County, Pennsylvania, The Legal Intelligencer reports:
  • Nearly 70 victims of an alleged Ponzi scheme are seeking more than $11 million from three financial institutions for their alleged roles in a scam they claim was perpetrated by a Dauphin County attorney who committed suicide in 2014.

    Sixty-nine plaintiffs have filed suit against Ameriprise Financial Services, Fulton Bank National Association and Riverview Bank for allegedly turning a blind eye to suspicious transactions that should have tipped the banks off to the Ponzi scheme, in which attorney Jeffrey Mottern allegedly lost $11.3 million of his clients' money.

    According to the complaint, filed in Dauphin County by McCausland Keen & Buckman attorney Glenn S. Gitomer, the banks disregarded numerous "red flags" that allowed the alleged scheme to continue from 2004 until 2014.

    "The defendants named in this action provided Mottern with the means to perpetrate the scheme and willfully and/or recklessly disregarded extensive red flags and other evidence at their disposal that placed them on notice that Mottern was perpetrating a fraud on the plaintiffs and others," the complaint said. "Had the defendants acted appropriately and not provided Mottern with the means to perpetuate the scheme, the harm to plaintiffs, which is estimated to exceed $11.3 million, would have been avoided or considerably lessened."

    The plaintiffs in Agostino v. Ameriprise Financial Services are pursuing claims for breach of fiduciary duty, violation of the state Unfair Trade Practices and Consumer Protection Law, and aiding and abetting in fraud and conversion.

    According to the complaint, many of the victims had entrusted Mottern with their savings, believing they were setting up trust ­accounts; however, instead of using the money on low-risk investments, Mottern either spent the money on himself or lost it through "reckless, senseless, highly leveraged, ­excessive trading" in his Ameriprise account.

    The victims did not learn about the ­alleged scheme until after Mottern killed himself in 2014, the complaint said. According to a report from, Mottern committed suicide in March 2014, three days after agents from the FBI and IRS executed a search warrant on his office.

    Records from the Disciplinary Board show that Mottern was admitted to the bar in 1977 and was disbarred on consent in October 2013. The records do not indicate why he was disbarred.

    The complaint said Mottern allegedly sold interests in fake, high-yield certificates of deposit to the plaintiffs, and told the investors he was commingling their funds with other investors to get them competitive interest rates on their money.

    However, according to the complaint, the investment fund did not exist. Instead, he allegedly funneled the money between the two banks and the Ameriprise accounts.

    The plaintiffs contended Mottern ­regularly spoke with an Ameriprise adviser, who then executed the investments, but the firm failed to heed numerous red flags.

    "Because of the extraordinary number of trades and the turnover in the account, the senseless trading, Mottern's seemingly endless capacity to incur massive losses and meet huge margin calls, repeated suspicious wire transfers in and out of the Ameriprise account, and material discrepancies in the unverified information provided to Ameriprise by Mottern about his financial condition, Ameriprise knew or recklessly disregarded the numerous red flags indicating that the source of his funds were highly suspicious and lacked any reasonable, legitimate explanation," the complaint said.

    Mottern also kept Interest on Lawyer Trust Accounts (IOLTA) funds in a Riverview Bank account, and a small business checking account through Fulton Bank. The complaint further alleged that transfers to and from these accounts were also suspicious, but went unheeded by bank officials.

    The complaint said Mottern treated the IOLTA funds as a personal "piggy bank," and said a trail of checks from the account to himself and his wife should have led Riverview to become suspicious of his activity.
Source: Victims of Lawyer’s Alleged Ponzi Scheme Sue Banks for $11M (may require paid subscription; if no subscription, GO HERE, then click the appropriate link for the story).

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.

Issues Of Alleged Lawyer Pilfering Continue To Haunt Estate Of Deceased Brooklyn Judge; Heirs' Questions Concerning Unaccounted For Cash Remain Unanswered

In Brooklyn, New York the New York Post reports:
  • A Queens lawyer accused of looting the estate of a Brooklyn judge is being probed by a grand jury over seven counts of grand larceny that accuse him of pocketing more than $700,000 in inheritance, The Post has learned.

    Attorney Frank Racano — currently serving a 30 day contempt-of-court sentence for not accounting for funds taken from the estate of the late Judge John Phillips — admitted to a Brooklyn surrogate’s court judge in March that he’d written checks to himself from the deceased jurist’s escrow account.

    Phillips was known as the “Kung Fu Judge” because of his black belt and habit of breaking out martial arts moves during court proceedings.

    The Brooklyn DA’s office is “moving forward with an indictment on the criminal charges,” Phillips’ nephew, the Rev. Samuel Boykin, said [].

    “My family and I are alleging that he has ripped the estate off for 713,000,” Boykin said of Racano, who he had hired to help handle the estate.

    A law enforcement source confirmed Racano was “under investigation.”

    The disgruntled nephew also recently filed a $160 million notice of claim against the city, saying he was improperly removed as executor of Phillips’ estate in January 2015 and “illegally” replaced with public administrator Charles Fiori.

    Fiori then went on to settle the family’s $40M wrongful death suit against Prospect Park Residence — where the judge froze to death in 2008 — for just $750G, without consulting any of them, Boykin said.

    None of the seven heirs have any idea what happened to the $750,000. We have no idea where it is,” Boykin told The Post. “Many of my family members believe he stole the money. Fiori has been over the estate since January 2015, and not only do we not know where the money is, but we have no idea what he’s doing with it.

    These people have taken that money, pretended it was theirs, and disappeared,” a frustrated Boykin continued, referring to both Racano and Fiori.

    “All seven heirs are highly upset, and wondering how the courts could let these people get away with this,” he added. “My uncle served as a civil court judge for 17 years, and the system he served so diligently has really let him down.”