Saturday, January 21, 2017

Tennessee Lawyer Gets Bagged For Allegedly Fleecing Dead Client's Estate Of At Least $60K As State Authorities Raid His Home

In Hendersonville, Tennessee, WKRN-TV Channel 2 reports:
  • The Tennessee Bureau of Investigation is actively investigating a well-known lawyer out of Hendersonville.

    The TBI was asked to look into Andy Allman and his law firm last December by Sumner County DA Ray Whitley.

    Allman is facing allegations of theft, although details on the allegations have not been released.

    Officials said his home on Bonita Drive was searched [last week] as part of the investigation, which is active and ongoing.

    Records also indicate Allman was booked into the Davidson County jail [last week] and released a few hours later. He was charged with theft between $60,000 and $200,000.

    According to an indictment filed in Davidson County, Allman is accused of knowingly obtaining money and property from his victim as a personal representative of an estate without consent and with the intent to deprive the victim.

    Further details weren’t immediately released.

Judge Hits Lawyer w/ 5-Year License Suspension For Pocketing Clients' Upfront Fees In Three Separate Foreclosure Cases, Then Failing To Provide Them A Defense In Court

In Hartford, Connecticut, The Connecticut Law Tribune reports:
  • A New Britain attorney was suspended for five years and ordered to pay restitution after a Hartford Superior Court judge ruled he took on three clients in separate foreclosure matters and never defended them in court.

    In a six-page decision issued Dec. 28, Judge Antonio Robaina wrote that attorney Anthony V. Zeolla had a pattern of deception that factored into the discipline that was doled out. Zeolla was also reprimanded in 2014 for failing to communicate to a client the scope of his legal representation and the basis for attorney fees.

    Robaina wrote "the court has considered his prior disciplinary history, the pattern of misconduct, the aforementioned failure to appeal and file answers in his disciplinary matters, the failure to address the issue of restitution and the failure to rectify the damage caused by his misconduct."

    The Office of Chief Disciplinary Counsel filed a summons laying out the complaint against Zeolla in April. Documents show Zeolla used similar tactics against all three clients: he'd collect their money in a foreclosure case and then either never or rarely speak to them again...

Vegas Attorney Hit With Indictment For Alleged Theft Of $2.1 Million In Client Funds; Prosecutor: "This Is Just The Tip Of The Iceberg!" More Victims Expected, Embezzled Loot Could Exceed $15 Million

In Las Vegas, Nevada, the Las Vegas Review-Journal reports:
  • Embattled probate lawyer Robert Graham was arrested [] after being indicted by a Clark County grand jury in connection with the theft of $2.1 million from clients.(1)

    He faces three felony counts each of theft and exploitation of an older/vulnerable person, and two gross misdemeanor counts of destroying evidence.

    Chief Deputy District Attorney J.P. Raman said in court [] that Graham may have stolen more than $15 million from his clients.(2)

    Records show that Graham was booked into the Clark County Detention Center on $5 million bail.

    District Attorney Steve Wolfson said in a news release that the investigation is ongoing and he expects to file more charges.

    We felt it was necessary to quickly seek an indictment on this case to ensure that evidence was preserved and that Mr. Graham was unable to cause any further financial damage to families in our community,” Wolfson said. ”Attorneys are held to a high ethical standard, which evokes a certain level of trust from their clients, and the violation of that trust is unacceptable.”

    The State Bar of Nevada filed a complaint against Graham last month alleging that he stole millions of dollars from dozens of clients before abruptly closing his Lawyers West office in Summerlin on Dec. 2.

    Las Vegas police and the FBI have been jointly investigating the disappearance of the funds.

    The indictment alleges Graham stole $2.1 million from clients in three of his cases between July 9, 2013, and Dec. 2, 2016. Two of the cases involved elderly victims and one involved a “vulnerable” victim, according to the indictment.

    “But this is just the tip of the iceberg,” Raman said. “There will be many, many more victims and much more monetary theft.”

    While Graham shuttered his firm, he logged into a corporate “Dropbox” account and deleted nearly 3,000 files that related to clients, wire transfers and operations, according to the prosecutor.

    “He’s facing extremely serious criminal charges — not only what we have on him today, but what we’ll be bringing in the future,” Raman said. “He will obviously be facing significant punishment when he answers to the full scope of the crimes committed.”
    Just days after shutting down his office, Graham turned over possession of a $1 million home in Fort Collins, Colorado, to his wife.
For more, see Las Vegas lawyer accused of stealing millions from clients arrested.
(1) 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 (although Professor Miller's essay is over a quarter-century old, it sure as hell appears that his observations maintain their vitality to this day):
  • 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.
(2) The State Bar of Nevada established the Clients’ Security Fund in 1970 to compensate victims of lawyer theft.

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.

Bay State Lawyer Gets Bar Boot For Pilfering A Lousy $13K Held In Escrow On Behalf Of Client; Denies He Meant To Actual Steal The Loot, But Unsuspecting Victim Yet To Receive Reimbursement Of Filched Funds

In Winchendon, Massachusetts, the Worcester Telegram reports:
  • A Winchendon lawyer was disbarred after acknowledging that he misused $13,352 of funds held in escrow in connection with a bankruptcy case for his personal or business purposes.(1)

    On Dec. 19, Laird James Heal of 8 Linden St., Winchendon, filed an amended affidavit of resignation with the Supreme Judicial Court, with a recommendation that the affidavit be accepted and an order of disbarment entered.

    In his amended affidavit, Mr. Heal acknowledged that he willfully or intentionally misused $13,352 of funds held in escrow in connection with a bankruptcy case for his personal or business purposes by withdrawing the funds from his Interest on Lawyer Trust Accounts without prior notice to the client or to the court.

    Mr. Heal admitted that he made these withdrawals knowingly, without accident or mistake, from August 2011 to August 2012, while the bankruptcy case was pending.

    In his affidavit, Mr. Heal denied he had any intent to deprive the client of the funds but admitted his misuse was intentional and deprivation resulted and is continuing.(2)

    On Dec. 22, the Board of Bar Overseers entered a judgment accepting the affidavit of resignation and entered an order of disbarment effective Sept. 9, 2015, the date of Mr. Heal's disability inactive status, and the lawyer's name is forthwith stricken from the roll of attorney.
Source: Winchendon lawyer disbarred for misuse of funds.
(1) 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 (although Professor Miller's essay is over a quarter-century old, it sure as hell appears that his observations maintain their vitality to this day):
  • 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.
(2) The Clients' Security Fund of the Massachusetts Supreme Judicial Court was created to help compensate members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the Massachusetts bar acting as an attorney or a fiduciary.

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.

Disbarred Lawyer Cops Guilty Plea To Looting Dead Client's Estate; Defendant Pays His Way Out Of Hard Prison Time, Instead Gets 12 Months In County Jail, Two Years Probation After Cutting Check To Victims For $43K+ In Full Reimbursement Of Pilfered Proceeds

In Grafton County, New Hampshire, Valley News reports:
  • A former Woodsville attorney pleaded guilty [] to pocketing nearly $44,000 that should have been paid to the estate of a Haverhill resident.(1)

    Gary J. Wood, 63, was sentenced to one year in the Grafton County jail in connection with the felony-level theft by misappropriation charge.

    Upon release, he will be put on probation for two years.

    Wood already has reimbursed the stolen funds by issuing a check for $43,927 to the estate of Haverhill farmer Irving W. Thayer in the name of its executor, Alan Rutherford. Thayer died in 2014. The money will be disbursed among 11 of Thayer’s relatives, including his niece Irene Fournier.(2)

    “I am very happy that we all will be receiving our money,” Fournier said in a telephone interview on Wednesday. “I just don’t understand why people do the things they do. I realize it is the way of the world, but it is a hard pill to swallow when it hits you in your backyard.”

    Rutherford, a Haverhill real estate appraiser and registered tax preparer, said on Wednesday there are a couple of legal steps that need to be cleared before he could distribute the money among Thayer’s relatives.

    If everything goes as planned, they should receive their money within a couple of weeks, he said.

    Rutherford said he felt the outcome of the case was appropriate. “The family got their money,” Rutherford said. “That was the ultimate goal.”

    Grafton County Attorney Jack Bell, who prosecuted the case, agreed.

    Given the fact that Mr. Wood made the victims whole immediately, that he had no prior criminal record and was cooperative with both the investigation by the New Hampshire Bar (Association) and the police and admitted his guilt, I thought it was appropriate,” Bell said.

    Once Wood is released from jail and put on probation, he won’t be allowed to drink alcohol and will have to undergo a substance abuse evaluation, according to court documents.

    A message left for Wood’s public defender, Constantine Hutchins, wasn’t returned.

    Wood was disbarred from practicing over the summer, and would need to petition in order to have his license reinstated.

    At Rutherford’s request, Wood deposited the estate money into his own attorney trust account, according to the January 2015 indictment.

    The attorney was supposed to later return the money to Thayer’s estate, but failed to do so. He instead treated the “funds as his own,” the indictment said.
Source: Former Woodsville Attorney Pleads Guilty to Theft.
(1) 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 (although Professor Miller's essay is over a quarter-century old, it sure as hell appears that his observations maintain their vitality to this day):
  • 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.
(2) The New Hampshire Public Protection Fund has been established, in the words of the New Hampshire Supreme Court, at Rule 55, ". . . to provide a public service and to promote confidence in the administration of justice and the integrity of the legal profession by providing some measure of reimbursement to victims who have lost money or property. . ." because of theft or misappropriation by a New Hampshire attorney, and occurring in New Hampshire during the course of a client-attorney or fiduciary relationship between the attorney and the ripped-off client.

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.

State Bar To Ohio Supremes: Give Sticky-Fingered Lawyer The Boot; No Criminal Charges (Yet?), But Disbarment Recommended For Alleged Misappropriation Of Over $360K From 23 Clients

In Columbus, Ohio, The Columbus Dispatch reports:
  • Three Columbus-area lawyers accused of misconduct face the loss of their law licenses before the Ohio Supreme Court.

    The Board of Professional Conduct has recommended two of the lawyers be permanently disbarred and the third receive an indefinite suspension.

    Shawn Andrea Little faces disbarment for misappropriating $363,444 from 23 clients between 2007 and 2014.

    Filings claim she received settlements on behalf of clients, largely in personal-injury cases, and failed to disperse all funds. She also is accused of keeping settlement funds that were to be paid to third parties, such as medical providers.

    Records show that Little has repaid all but $104,990 of the misappropriated funds, which the complaint states she used for personal purposes.(1) She faces no criminal charges.
For the story, see Three Columbus lawyers face loss of licenses.
(1) The Ohio Lawyers’ Fund for Client Protection is an agency of the Supreme Court of Ohio created to reimburse victims of attorney theft, embezzlement or misappropriation. The fund is not taxpayer funded, but is funded by registration fees paid by every Ohio attorney. The Board of Commissioners of the Lawyers' Fund for Client Protection determines which claims are eligible for reimbursement. After the Lawyers' Fund for Client Protection staff investigates the claims, they are submitted to the Board for a determination of eligibility.

The maximum award amount is $75,000 per client. Clients who believe they have sustained financial losses resulting from theft, embezzlement or misappropriation by an Ohio attorney should contact the fund at 614.387.9390 or toll free in Ohio at 1.800.231.1680.

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.

Friday, January 20, 2017

SW Florida Man Gets Pinched For Allegedly Fleecing Would-Be Tenant Out Of $1,500 In Craigslist Rent Scam; Cops Use Victim's Smartphone Video Recording To Finger Suspect

In Lee County, Florida, WFTX-TV Channel 4 reports:
  • The Lee County Sheriff's Office is warning people about a rental scam becoming more popular in southwest Florida, and Four in Your Corner spoke to one woman who fell victim to it.

    Stephanie Erausquin saw a home available for rent on Craigslist. She recorded a video of herself signing the lease. She's now out $1,500 due to a scam, but the video allowed the Lee County Sheriff's Office to make an arrest.

    "It sounds perfect. It was a four bedroom, two bathroom. The price was good for me. Just perfect," she said.

    She and Lee County deputies said she was scammed by Jamie Jenks of North Fort Myers, but Erausquin knew him by a different name: Scott Lacey.

    Erausquin said at first, he seemed legitimate. He prepared a lease that was similar to one she'd signed to rent a home before, complete with how much rent would be and what days it would be due.

    Jenks, acting as "Scott Lacey" told her his aunt owned the house. Once Erausquin paid him a deposit and the first month's rent, she started to move her stuff in. That's when she said Jenks started acting strange about when she could finish moving in. Erausquin decided to take a video of him. "Just in case. You never know," she said.

    To make matters worse, when she was at the house one day, the actual homeowner showed up. "She's asking me 'What the hell are you doing?' I was like 'What do you mean, I'm moving in, this is my house,'" Erausquin said.

    She called the Lee County Sheriff's Office. Their Fraud Specialist said stories like Erausquin's spiked last year.

    "We had well over 60 calls just into the fraud line about this, and I know that's certainly not all of them," Beth Schell said.

    "I was crying. I was in tears. I didn't have anywhere to go. My night was to stay in my car," Erausquin said.

    She said her last text from Jenks before he was arrested said if she wanted her money back, he'd see her in court, and she told Four in Your Corner she can't wait to see him come February 6th.

Captured On Camera & Reported By Local Media Troubleshooter, Premature Trash-Out Of Home Facing Foreclosure Leads To Cash $ettlement For Homeowner

In St. Louis, Missouri, KTVI-TV Channel 2 reports:
  • You wouldn't believe his story if he didn't capture it on camera. He brought it to Fox 2, who he credits with helping him make a remarkable turnaround.

    In July, Brent Evans told us how he was trying to save his home, while the mortgage company was starting foreclosure. He said he was still the legal owner when the mortgage company sent people who ravaged his home. Now he says, thanks in part to our reporting, he's been paid and the suspects could be arrested at any time.

    Evans said, "I was ecstatic you guys were able to do something. It really did help me out, seriously."

    In May 2016, a mortgage company's subcontractor put a notice on his front door - "Warning. This property has been winterized."

    Evans explained, "They were supposed to come out and just secure the property and make sure that it was vacant and then winterize it if it was vacant. Then they were supposed to leave, but that's not what happened. They winterized the property and then cleaned the house for me as well. Ha, ha."

    Four cameras capture what happened.

    Evans described, "Once they got in, then it was just a flood of everything coming out of the house."

    Video shows a man walk out with a tool set. Someone takes a large hunting bow. One box appears to be so heavy the man struggles with it.

    It sometimes looks like a treasure hunt. One guy used his phone light to look. At one point someone notices a camera and points it down. The new camera angle later captures what appears to be more thefts from Evans` trade as an auto technician.

    Evans estimated about $10,000 worth of property stolen.

    He reports much better news today. Evans can`t give specifics, because of a non-disclosure agreement, but he credits our story with getting him action.

    He said, "The story absolutely made a difference contacting you. I was laying on the couch thinking `Should I contact FOX 2? Is this something they could really help me out with?` You see stories all the time where people have problems and they`re helped out and it makes you feel good and in this case you guys did a phenomenal job for me.'"

    Wells Fargo was the mortgage company, which hired a company called MCS to secure Evans' home. Both of those companies not only worked with Evans on his losses, but cooperated with police in identifying suspects from a third subcontractor that was responsible for the burglary.

    Evans says he`s been told police know who the suspects are and they will get them.

Ex-Homeowner Threatened With Jail Over Failure To Pay Tickets For Code Enforcement Violations On Abandoned Home Subsequently Lost To Foreclosure & Demolition

In Alton, Illinois, the St. Louis Post-Dispatch reports:
  • The city of Alton wants to lock up a former city resident if she doesn’t pay her tickets for failure to maintain the property she abandoned years ago.

    Shawna Nelson used to own a home on East Ninth Street. When her teenage daughter was expecting a baby in 2010, Nelson abandoned the house because she couldn’t make several repairs it needed to be safe for her new granddaughter.

    Madison County demolished the house in 2012, purchased the property out of foreclosure in 2014 and sold it to another Alton resident. Now it’s an empty lot.

    Today, Nelson, 54, owes the city of Alton more than $1,300 for a series of tickets she was issued in 2011 and 2012, most of them for junk or high weeds on the property after she had moved out.

    Earlier this month, the Madison County Circuit Court issued an arrest warrant on the city of Alton’s case against her.

    “Even if she got rid of the lot, she still incurred those costs to her personal property paid for by public monies, so she’s responsible for her property,” Alton Mayor Brant Walker said.

    Court records show she paid off some of the tickets. After she was arrested in April for failing to answer to the violations, she promised to make payments of $50 a month to satisfy her debt.

    The court dates were on the fourth Friday of each month. Records indicate that she made each payment on time through the end of October.

Cops Pinch Squatter Who Allegedly Broke Into Property Owner's Unoccupied House & Made Himself At Home

In Bristol, Connecticut, The Bristol Press reports:
  • A city man was arrested [] after a resident found him squatting in his home, according to police.

    Allan Degourville, 43, of no certain address in Bristol, has been charged with third-degree burglary, second-degree criminal mischief and sixth-degree larceny.

    Police said he was found in a vacant Summerberry Circle home at about 12:11 p.m. The owner of the property went to check on the home and found that the back glass door was smashed.

    The homeowner went inside to make sure whoever broke in was not still inside. He then saw Degourville walking from the master bedroom, according to the police report. Degourville told the man he had permission to be there.

    Police responded shortly thereafter and detained Degourville. Officers said it appeared that he broke in because he needed a place to stay. A fire was lit, food was strewn about all over the kitchen and it looked as though Degourville had a load of laundry he was going to wash, police said.

    The owner of the home told police it would likely cost $1,500 to repair the damage to the house.

    Degourville was arraigned [] in Bristol Superior Court, where bail was set at $20,000. He is due back in court on Jan. 30 to enter a plea.

Thursday, January 19, 2017

Despite Lack Of Bad Faith, Property Insurer That Initially Stiffed Homeowner On Sinkhole Damage Claim Before Paying Up Gets Stuck With Latter's Tab For Legal Fees After He Brought Suit To Enforce Insurance Policy

From a client alert from the law firm Lewis Brisbois Bisgaard & Smith LLP:
  • This decision involved a homeowner who filed a claim under her homeowner's insurance policy for sinkhole damage. The homeowner's insurer, Omega Insurance Company, conducted an investigation and concluded there were no sinkholes on the insured property. Accordingly, Omega denied the claim. The homeowner then filed suit against Omega alleging breach of contract.

    In response to the suit, Omega ordered a second evaluation of the property, which revealed sinkhole activity was present on the property, in contradiction to Omega's original investigation. Thereafter, Omega agreed to pay the claim and filed an Answer to the lawsuit admitting that sinkhole damage was covered under the policy and that the insured was entitled to benefits. Thereafter, the Insured filed a motion for confession of judgment and a motion for attorney's fees, costs and interest, contending that Omega's admissions amounted to a confession of judgment.

    In response to the Insured's motions, Omega argued the Insured was required to show that it acted wrongfully or in bad faith to be eligible for attorney's fees under the Florida statute. The Insured disagreed, arguing that a finding of bad faith was not required as a prerequisite to an award of attorney's fees under the statute.

    At the trial of the matter, the court considered whether the insured homeowner was entitled to attorneys' fees. In holding in favor of the insured homeowner, the trial court reasoned that Omega's agreeing to pay the claim was an admission of liability, effectively a "confession of judgment," and that Fla. Stat. 627.428 required Omega to pay the insured homeowner's attorneys' fee.

    The intermediate appellate court reversed, concluding that although Omega was initially mistaken about the presence of sinkholes, it did not act in bad faith in refusing to pay the claim. Thus, the appellate court held the statute did not apply and Omega was not obligated to pay the insured homeowner's attorney's fees.

    The Florida Supreme Court agreed with the trial court and overruled the appellate court decision. The Supreme Court noted it was well settled that payment of a previously denied claim following the initiation of an action for recovery, but prior to the issuance of a final judgment, constituted the functional equivalent of a confession of judgment.

    Further, considering that the Florida statute clearly provided that attorneys' fees shall be awarded against an insurer when judgment is rendered in favor of an insured, the Supreme Court held the insured homeowner was entitled to recovery of her attorneys' fees.

    The Supreme Court held that a bad faith denial of benefits was not a prerequisite for recovering attorneys' fees but rather, the insurer need only incorrectly reject a valid claim under the policy. In closing, the Florida Supreme Court noted: "We cannot, as the court below held and Omega requests here, discourage insureds from seeking to correct the incorrect denials of valid claims by allowing insurers to deny benefits to which insureds are entitled without ramifications."

Over 600 Jacksonville-Area Property Owners Get Slapped With Liens Totaling $3.1+ Million In 2016 For Improper Tax Break Claims Under State's Homestead Exemption; Local Official Says He's Shooting For $5 Million In Liens For 2017

In Jacksonville, Florida, WJAX-TV Channel 47 reports:
  • Duval County taxpayers could save $3 million thanks to a record year by the Property Appraiser's Office.

    Investigators are cracking down on fraud and non-compliance, collecting money owed to taxpayers.

    The Property Appraiser’s Office did over 600 liens in 2016, and said in 2017 it's coming for those who owe taxes, whether they're intentionally committing fraud or not.

    Duval County Property Appraiser Jerry Holland said 2016 was a big year for his office.

    “Our noncompliance division has liened over $3.1 million in back taxes for people who did not or were not entitled to their homestead exemption,” Holland said.

    Holland tells Action News Jax that means people were claiming a home as their primary residence even when it was not. “They may be renting the home out or part of the home out,” Holland said.
    Holland said not everyone is intentionally trying to defraud the city, and the amount of the liens can vary. “Sometimes just a thousand, $1,200 to as much as $40 (thousand) to $50,000. Average is about $8 (thousand) to $10,000,” Holland said.

    Liens that Holland said will keep happening in 2017. The goal this year is $5 million in liens for taxes not paid.

    The majority of them go back six to eight to 10 years, which is not a good sign because it means they've been getting away with it for quite some time,” Holland said. [...] The money is collected by the Tax Collector's Office. Holland says a portion goes to the city of Jacksonville, the school district, the state and other entities, so they get their share of back taxes.

Chicago Housing Authority Agrees To Replacement Of 525 Low-Income Section 8 Apartments That Will Be Lost To Redevelopment Of Aging North Side Public Housing Complex

In Chicago, Illinois, the Chicago Reader reports:
  • In a win for fair housing advocates, [] a federal court issued an [agreed] order committing the Chicago Housing Authority to retaining 525 subsidized housing units on the north side. These units will replace the 525 public housing units that will be lost on the site of the Lathrop Homes as a result of the redevelopment anticipated to begin in 2017.

    Though advocates consider the court order a victory in the ongoing fight to preserve affordable housing in integrated north-side neighborhoods, the terms of the order also raise concerns about how long low-income families could count on these new units, and how long they may have to wait for them.
    "I think this is a good order—this is what the community asked to have happen," says Kate Walz, an attorney with the Sargent Shriver National Center on Poverty Law who represents community groups advocating for the preservation of the lost Lathrop units. However, Walz also argues that observers should "be vigilant" regarding the sort of units that are actually produced—ones large enough to accommodate families struggling to find affordable housing in the private market, or ones that will serve the most easy-to-house CHA families.

    "It would be a hollow victory if in the end most of the units are one-bedroom units," says Walz. "We know larger families struggle in the voucher program to identify larger housing."

    Another point of concern is the possibility that project-based vouchers—a five-to-20 year contract between a private owner and a housing authority to maintain a privately owned unit as public housing—will make up the bulk of the replacement units. The court order specifies that to count as a replacement unit the contract must be made for 20 years; if the CHA enters into a project-based voucher contract for, say, ten years, then the unit only counts as half of a replacement. It remains to be seen whether the court order will lead to the creation of lots of short-term affordable housing units, or provide housing approaching the long-term affordability of true public housing units.

    Lathrop residents and their allies had wanted the court to require at least a 99-year commitment for affordability.

    "But I guess some gain is better than no gain," says J.L. Gross, a veteran and 27-year resident of Lathrop who has been a leading voice for the community. "We'll accept it, but it doesn't mean we're not gonna push for something longer."

    The order doesn't commit the CHA to any time line for delivering the 525 replacement units. And history has shown that the CHA is more than able to drag its feet on nonlegally binding promises—the so-called Plan for Transformation was supposed to deliver 25,000 units of public housing by 2010 but remains unfinished nearly seven years past that deadline.

    The CHA didn't respond to a request for comment.

Wednesday, January 18, 2017

New York Times On "Housing That Ruins Your Finances and Your Health"

From an op-ed column in The New York York Times:
  • Of the nearly one million foreclosed houses sold by Fannie Mae, the government-run mortgage giant, since the housing bust, tens of thousands were decrepit, moldy and unfit for human habitation.

    Investor groups rounded them up anyway and turned them into cash cows by using “rent-to-own” leases or “contracts for deed.” These arrangements, which are basically long-term, high-interest installment contracts, require a resident to make an upfront, nonrefundable payment upon moving in and then make monthly payments to the investors. The resident is also responsible for all repairs.

    The deals are pitched as a way for the resident to eventually own a home, but most occupants, who are typically poor people of color, are forced to walk away with nothing as the costs become unmanageable. When that happens, the investors, who generally paid less than $10,000 for each house, enter into new deals with new occupants.

    It gets worse. The Times’s Alexandra Stevenson and Matthew Goldstein reported recently that doctors and health officials in many states are now warning that the dilapidated homes are connected to an increase in lead poisoning in children. Yet even as the warnings have become more urgent, the owners of the properties seem to care more about their profits than about children’s health.

    One such owner noted in the article is Vision Property Management, based in Columbia, S.C., which has more than 6,000 homes across the nation. In Maryland, where the company has been fined and sued for lead contamination, it has argued that its contracts held the occupants wholly responsible for repairs. In Minnesota, where it was sued for a lead paint problem, it has argued that the occupants should have seen a posted warning sign.

    Another big player, Harbour Portfolio Advisors of Dallas, recently refused to comply with a formal request for information from the Consumer Financial Protection Bureau, which is investigating potential abuse, deception and predation in contracts for deed. The agency has sued the company in federal court in Michigan to obtain the information.

    Rent-to-own and similar housing schemes exist in a legal gray area in which owners can maneuver to avoid consumer-protection laws, norms and regulations that apply to landlords and mortgage lenders. Landlords are generally responsible for keeping rental homes in good repair, including lead abatement, while renters are usually entitled to get their deposits back when they move. No such safeguards exist in the murky world of installment contracts.
For more, see Housing That Ruins Your Finances and Your Health. land contract for deed

D.C. Officials Agree To Settle Class Action Suit Accusing It Of Using Often-Abused Tax Lien Collection System That Allowed Investors To Use Inflated Fee Racket To Unconstitutionally Strip Homeowners Out Of The Equity In Their Homes Over Small Tax Debts

In Washington, D.C., The Washington Post reports:
  • The District government has agreed to pay about $1 million to settle a federal class-action lawsuit brought by homeowners to stop tax-lien investors from taking homes in the city through foreclosure, attorneys for both sides said.

    In a proposed settlement made public in court [], the District agreed to pay up to 65 percent of a property’s assessed value to homeowners or surviving relatives whose residences were taken by an often-abusive tax-collection system in which even small tax debts triggered property sales, said class attorney Bill Isaacson of the Boies, Schiller & Flexner law firm.

    The agreement calls for average payments of tens of thousands of dollars each to 21 known class members, 13 of whom have been found, Isaacson said, including lead plaintiff Bennie Coleman, an 81-year-old veteran who lost his home over a $134 bill. Owners of blighted properties who did not reside in the homes that were sold would receive 35 percent of assessed value.
    The lawsuit was brought after a 2013 Washington Post investigation identified problems in a city program that imposed liens on properties when homeowners failed to pay their tax bills.(1) The liens then were sold at public auctions to private investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid.

    The Post found that some investors also demanded thousands in fees from homeowners that far exceeded the owner’s original tax debts and then took homes when owners couldn’t pay. About 500 properties were lost since 2005, The Post found, most in the city’s poorest neighborhoods and about one-third from owners who owed less than $1,000.

    “It was tough on my mother and our family when she lost her home . . . but we are pleased to get this settlement to help others in the same situation,” Wendell Robinson, son of Jean Robinson, whose estate is a plaintiff, said in a statement.

    Robert Bunn, the court-appointed conservator and guardian for Coleman, said the settlement “will help him and others live out their lives in peace. We’re also grateful that the D.C. Council took action to make sure that this injustice does not happen again.”

    Coleman stands to receive $70,000 to $125,000 from the settlement, based on his home’s $197,000 value and proposed sliding scale set by the agreement.

    Isaacson, working pro bono, said it was an unconstitutional abuse of power for the government to allow investors to strip owners of all of the equity in their homes over small tax debts, particularly owners incapable of caring for themselves, such as Coleman, who has severe dementia.
For more, see D.C. to pay $1 million to settle families’ claims for homes taken by tax-lien program.

For earlier posts on this story, see:
(1) See The Washington Post 2013 series: Homes for the taking.

Lot-Leasing Homeowners Continue Getting Screwed Over; Six Years After Shelling Out $28K For Aging Mobile Home & Making Prompt Payments Of Space Rent, Family Gets Unexplained Boot

In Nashville, Tennessee, Nashville Public Radio reports:
  • Mobile home parks are positioning themselves as a key piece of Nashville’s affordable housing market, filling a niche traditional developers can’t keep up with. As rents rise across the city, companies that operate these parks are expanding. But with few legal protections, residents can feel powerless.

    Victor and his family came to the U.S. from Mexico 18 years ago to chase the American dream: A house. A steady income. Better opportunities. Because Victor is undocumented, he assumed getting a mortgage was out of the question. So instead, he scrimped and saved, working long hours at his landscaping job, to pay $28,000 for a two-bedroom mobile home. Today, the preferred term is manufactured home.

    Six years ago, the family settled at Holiday Village, a mobile home park just off Dickerson Pike. It was safe and filled with many other Mexican families. His kids were able to enroll in a high-performing charter school nearby. And the family managed to pay the $467 rent, on time every month.

    "It was calm. You could have the door open. No robbers or nothing," says Victor's teenage son, Victor Jr., who translated for his dad. Because of Victor's legal status, he asked that only his first name be used.

    They’re inside the family’s tidy manufactured home, next to a brightly lit Christmas tree topped with a glowing angel. The walls are covered with children’s drawings and the shelves are packed with awards and soccer trophies.

    So everything was pretty stable at Holiday Village. Then, in 2013 it was purchased by a large New Jersey-based company, UMH Properties.

    At the end of October, Victor got a letter in the mail. After six years of renting the lot, his month-to-month lease was being terminated.

    "We had paid all our payments on time, but in the letter," Victor Jr. says, "it didn’t say the reason why she was kicking us out. So we don’t know."

    The letter gave no reason. And by Tennessee law, it didn’t have to. So, Victor, his wife, and their five children had 30 days to move.

    It turns out, nearly a dozen families received the same letter. Some lived in a park nearby, also recently acquired by UMH.

    Looking for help, the families connected with attorney and former state senate candidate Erin Coleman. She was able to convince Holiday Village to let Victor’s family stay one more month to get through the holidays. But that was all.

    On a recent evening inside Victor’s trailer, he and another family facing eviction sit in his living room, venting.

    "What we understand that’s happening is that they are trying to update the mobile home park," Coleman says in English as a family member translates.

    She’s not sure why UMH chose to terminate their leases, she says. Yes, the trailers were older, but they’re in decent shape.

    UMH declined WPLN’s request for an interview. But in a statement, a company spokesman says UMH was well within its legal rights, adding the terminations were due to residents violating community rules. The company representative declined to offer specifics, citing privacy concerns.

    The confusion around these sudden lease terminations points to the obvious tension with mobile home parks. You own the structure you live in, but you rent the land it’s on. And in Tennessee, unlike states such as California, New York or New Hampshire, there are few — if any — protections for these residents.

    "I’d say 18 states in the country probably have fairly protective laws," says Frank Latimer, director of housing education at Affordable Housing Resources, a Nashville non-profit. "The strange part about it," he adds, "is the largest percentage of manufactured homes are located here in the south and we probably have the least laws that help the tenants than in any other part of the country."

    In Tennessee, with little oversight from local or state government, it’s up to the park owners to decide how they want to do business — even if a resident own their manufactured home outright. For example, if your lease is terminated and you can’t move the home immediately, a park can take possession and re-rent it as theirs.

    "If they told you in 30 days that you had to move your home — and that’s a minimum of $5,000 — most of these people are not even able to move the home, so they lose everything that they have," Latimer says. "So they are left with no place to live and no place to go."

    The folks who own and operate these parks range from mom and pop shops to Wall Street. UMH, the company that owns Holiday Village where Victor lives, is a publicly traded real estate investment trust, or REIT. It has big plans to expand in Nashville. In fact, this week it’s asking for permission to add 155 more manufactured homes to Holiday Village. The company currently owns five parks, which they call communities, in and around Nashville.

    And this isn’t the only city where UMH is growing. Since 2011, UMH has more than doubled the number of parks it owns and manages. The growth is fueled, in large part, by a new push to rent, sell and finance manufactured homes, rather than just lease the land they’re on. And the move has paid off. UMH’s stock price surged by 50 percent over the past year, and its revenue has grown by 68 percent since 2012.

    But some of its strategies, while good for investors, don’t sit well with industry folks.

    Paul Bradley is the president of ROC USA, a company that helps mobile home residents band together to buy the parks they live in. The notion that upgrading the park could be the reason for terminating leases troubles him.

    "Upgrading mobile home parks over time by buying older units as they come up for sale is done all the time. And it’s the appropriate way to do it," Bradley says. "Evicting people for the age of their home on 30 days’ notice isn’t the right way to do it."

    Back in the trailer, families are realizing that despite their grievances, there is little they can do.

    "So right now we still can’t take this to court," Coleman tells them. What Coleman has done, though, is get a law firm to write a letter to UMH, since all the impacted families are Latino, "letting them know that we are investigating discrimination actions."

    In a statement, UMH denied any discrimination claims. But this isn’t the first time the company has received such complaints. In 2011, 29 residents of a Memphis mobile home park tried unsuccessfully to sue the company over the same issue.

    Victor and the other family breathe a sigh of relief when Coleman tells them she found spots in new parks and money to cover their move.

    But Victor is still struggling. He hasn’t been able to work due to an injury, and the family is really tight for money. Through his son, he says he put all the money he saved into the trailer. Victor adds that he wishes he'd used the money for a down payment on a house — a house on a piece of land he actually owned.

Tuesday, January 17, 2017

Operators Of "Mass Joinder" Mortgage Relief Racket That Bilked Over $18 Million From Financially Distressed Homeowners Continue To Successfully Avoid Criminal Prosecution, Subject Only To Ongoing FTC Civil Actions; Outfit Promised Victims Voided Mortgages, Or At Least $75K Scores

The U.S. Federal Trade Commission recently announced:
  • Damian Kutzner, one of the operators of a mortgage relief scheme that bilked millions of dollars from financially distressed homeowners, has agreed to a court order banning him from the debt relief business.

    The stipulated order resolves the Federal Trade Commission's complaint and the contempt charges against Kutzner. It also bans him from providing certain financial products and services, and from making misrepresentations about any products or services. In addition, the order imposes a judgment of more than $18.3 million, representing the amount of consumer harm.

    The settlement resolves FTC charges filed in May 2016 against Kutzner and four attorneys operating as Brookstone Law and Advantis Law. The FTC alleged that the defendants told homeowners they were likely to obtain “at least $75,000” or their homes “free and clear” through so-called “mass joinder” lawsuits, when in fact no consumer ever achieved, or was likely to achieve, any mortgage relief. The FTC also filed a contempt action against Kutzner, alleging that his actions violated a 2003 FTC court order against him.

    The promise of a mass joinder lawsuit is a ruse that some mortgage relief scammers use to bilk money from struggling homeowners. Unlike class-action lawsuits, in the event of trial each plaintiff in a mass joinder suit would have to prove his or her case separately.

    In Kutzner’s case, he and the other defendants did not win any such cases, and most were dismissed by the courts because the defendants did not pursue them. Following the filing of the Commission’s complaint, a judge halted the operation on June 1, 2016, pending the outcome of this litigation.

    Under a separate order [], Jonathan Tarkowski, an attorney, will be banned from the debt relief business, and prohibited from making misrepresentations about financial and other products and services. The order imposes a judgment of more than $1.1 million, which will be suspended upon payment of essentially all of his assets, valued at $5,307. The full judgment will become due immediately if he is found to have misrepresented his financial condition.

    Kutzner and Tarkowski are prohibited from selling or otherwise benefitting from customers’ personal information and failing to dispose of it properly. Litigation continues against the remaining defendants.
Source: Mortgage Relief Defendant Banned from Debt Relief Business (Falsely claimed ‘mass joinder’ lawsuits would void mortgage or get consumers $75,000 cash).

Bay State Attorney Gets No Prison Time After Admitting To Forging 17 Mortgage Assignments On Soon-To-Be Sold Homes, Then Providing Closing Agents With Forged Statements In Effort To Pocket Loan Payoff Proceeds; Gets 10 Years Probation, Agrees To Surrender Law License

In Marblehead, Massachusetts, The Salem News reports:
  • A Marblehead lawyer has pleaded guilty to orchestrating a $1.3 million mortgage fraud scheme in 2009 and has agreed to give up his law license.

    Leon Gelfgatt, 56, [...], was charged after investigators were tipped off by a bank that Gelfgatt was filing forged mortgage assignments in several counties so the proceeds of upcoming sales would be transferred to him, rather than the rightful owners or mortgage holders.

    On Oct. 20, seven years after the scheme was first uncovered, Gelfgatt was sentenced to 10 years of probation and agreed to surrender his law license, as well as perform 250 hours of community service, during a hearing in Suffolk Superior Court, court documents show.

    Gelfgatt pleaded guilty to 16 counts of forgery, 18 counts of passing forged documents, and three counts of attempting to commit a crime.

    The state’s Board of Bar Overseers ordered his suspension on Dec. 12.

    Investigators were contacted in November 2009, by officials at Wainright Bank and Trust, who had discovered that over the course of four months, Gelfgatt spotted and targeted 14 high-value properties for sale in eastern Massachusetts, mostly in Suffolk, Norfolk and Middlesex counties. He was also charged with one count in Essex County. The cases were consolidated in Suffolk Superior Court.

    Gelfgatt forged and filed 17 bogus mortgage assignments at local deed registries, documents that appeared to transfer existing mortgages on those properties to one of two inactive corporations he’d found being sold on the internet, prosecutors said after his arrest.

    Gelfgatt used computers to create a series of email addresses, phone numbers and fax numbers to make it appear that these two firms were actually still in business.

    Then, he would wait for the lawyers involved in the closing to contact the businesses to get the payoff amount. Gelfgatt would then forge payoff statements directing the closing attorney to send the payoff amount by overnight mail to an office address he had set up in Boston.

    He was arrested when he showed up and tried to collect the funds.

    In November 2011, prosecutors filed a motion seeking to compel Gelfgatt to enter his password to unlock the encryption software he installed on his computers, which investigators had seized during a warrant.

    That request led to a 2 1/2 year delay in the case while that issue was presented to the Supreme Judicial Court. Gelfgatt refused to provide the password, saying it was a violation of his Fifth Amendment right against self-incrimination to require him to do so.

    The SJC finally ruled in 2014 that the government could compel Gelfgatt to disclose the password, which he eventually did, following a series of contempt proceedings in Suffolk Superior Court, the court docket shows.

    After a motion to suppress evidence against him was denied, a series of lobby conferences, sessions usually held in a judge’s chambers to discuss a possible resolution of the case, was held throughout 2015 and 2016.

    A plea agreement was finally reached in October.

Real Estate Broker Gets Bagged In Alleged Racket That Fleeced At Least 32 Victims Out Of $498K In Purchase Deposits On Homes Fraudulently Marketed As Short Sales

In Norwalk, California, City News Service reports:
  • Sheriff’s investigators were asking for the public’s help in identifying victims of an alleged escrow fee scam, authorities said [].

    Broker Mario Gonzalez of MCR Escrow Division was arrested [...] at the firm’s offices [...] by investigators with the sheriff’s Fraud and Cyber Crimes Bureau, said Deputy Tina Schrader of the Sheriff’s Information Bureau.

    Gonzalez was suspected of being involved in an escrow fee scam involving 32 victims with a total loss of $498,000, Schrader said.

    The alleged scam began in 2014 and involved homes fraudulently listed as short sale properties, she said. Victims submitted bids and once chosen were asked to provide escrow fees to secure the properties. Sales were never finalized and fees were not returned to the victims, investigators allege.

    The 45-year-old Gonzalez was booked into the Norwalk Sheriff’s Station for suspicion of grand theft and was released on $70,000 bail, according to sheriff’s inmate records. [...] Anyone with information about additional victims was asked to call Detective Keith Clark at (562) 946-7217 or tips can be made anonymously at Crime Stoppers, (800) 222-TIPS (8477).

Monday, January 16, 2017

State Appeals Court Hears Senior Citizen's Request To Hold NYC Responsible For Accepting & Recording Forged Deed Used By Since-Convicted Scammer To Swipe Her Unoccupied, Inherited Queens Home

In New York City, Habitat Magazine reports:
  • Fraudulent deeds have become so widespread that the city’s Department of Finance (DOF) has both a website and a booklet devoted to it. The DOF has also instituted a notification process for property-owners whenever any deed- or mortgage-related documents affecting ownership are recorded. To receive such notifications, you can fill out an online form here or print out the form here to mail in. (Condo units have deeds; co-ops unit do not.)

    But the notification of deed changes may not be adequate protection. In disclaimers on its website and on the form, the DOF says it "assumes no liability for failure to provide the requested notice of recorded documents" – and moreover, the city "assumes no liability for fulfilling [its] legal duty to record documents, even if those documents are in some instances later determined to be erroneous, fraudulent or invalid." One woman, however, is fighting back.

    On Friday, January 13, the case of Merin v. The City of New York [was scheduled to] be heard by the state Appellate Court in Queens, and it could determine whether the city bears any legal responsibility for improperly handing over deeds.

    The appeals court is being asked to overturn an earlier ruling by a state Supreme Court judge that a city recording clerk "owed no duty…and indeed had no authority, to investigate the authenticity of the underlying transaction…and thus whether or not the deed was fraudulent…."

    "Basically, the city's stance is that they are not responsible for anything more than stamping the paper and collecting the fee," says Jennifer Merin, the senior citizen fighting for damages after the city gave away her house – forcing her to wipe out her life savings in legal fees in order to get it back. "Their position," she maintains, "undermines the security of all deed-holders' – [including] condo-owners' – rights."

    Merin, who lives in Manhattan, inherited her late mother's home in Queens, and she keeps many belongings there. In May 2014, noticing a spike in the water bill, she went to investigate – and found the locks changed, the car she stored there gone, and furniture and heirlooms missing or piled in a broken heap.

    She notified police, but the new resident, ex-con Darrell Beatty, showed the responding officers a fraudulent March 2013 deed purporting that one Edith Moore – a dead woman, Merin later discovered – had transferred the property to him. Merin had to gather proof that she was the rightful owner and then file to evict Beatty, his two sons, and their pit bull. The case took four months – during which time Merin was still paying property taxes and utility fees. It took even longer, until March 2015, to get the fraudulent deed set aside. Merin filed suit against the city five months later. Queens prosecutors did charge Beatty, who pled guilty in June 2016 to criminal possession of a forged instrument.

    If Merin, who's seeking restitution for legal fees and stolen/destroyed property, doesn't win on appeal, it likely will take a legislative change to make the city take responsibility when it gives away your home.

Victim Of Sleazy Chicago Home Improvement Scammer Readies To Leave Home Of Over Half-Century After Elderly, Dementia-Stricken Mom Gets Duped Out Of Her Home Equity By Signing Reverse Mortgage To Purportedly Finance Repairs

In Chicago, Illinois, WBBM-TV Channel 2 reports:
  • She’s lived in her North Lawndale home for more than half a century. Now, Barbara Herron is facing eviction after what she calls a fraudulent reverse mortgage.
    Herron starts packing up 55 years’ worth of memories. She says her mother, Effie Herron, had dementia and signed what she thought was paperwork for home improvements, to be done by Mark Diamond.

    In 2013, Effie died. Soon after, her daughter says, she started getting letters that $180,000 was owed to Reverse Mortgage Solutions.

    Herron says her family never saw a dime and Diamond kept the reverse mortgage loan proceeds.

    The house had been paid off.

    “I planned to live her and to die here, in this house. All my mother wanted was a place for her children to live,” Barbara Herron says.

    The home went into foreclosure and has been sold.

    Herron, who has severe asthma and uses a nebulizer to breathe, is now facing eviction.

    When I found out I needed a lawyer, it was too late,” she says.

    Herron contacted a community activist, Rev. Robin Hood, for help. He set up a Go Fund Me page for her and says reforms are needed.

    Illinois Attorney General Lisa Madigan permanently banned Diamond from operating his business in the state. Her office is also looking into what can be done to stop Herron’s eviction.

    Reverse Mortgage Solutions tells CBS 2 take these issues very seriously and will work directly with Herron to address her concerns.

    Mark Diamond could not be reached for comment.

Frail, Elderly Montana Man Accuses POA-Holding Stepdaughter Of Selling His Home Out From Under Him, Draining His Bank & Credit Card Accounts While He Was Hospitalized In Critical Condition, Assuring Him Medicaid Would Pick Up Tab For His Care; Charges Of Exploitation, Forgery, Deceptive Practices Pending

In Laurel, Montana, KTVQ-TV Channel 2 reports:
  • A Laurel woman is accused of charging more than $70,000 to her 70-year-old stepfather’s credit cards and selling his house while he was hospitalized.

    Terry Stokes, 33, was set to appear [] in Yellowstone County Justice Court on six felony charges. Stokes is charged with exploitation of a person with a developmental disability, forgery, and four counts of deceptive practices.

    According to court documents, Stokes was designated the victim’s power of attorney in 2011 when the man was admitted to the hospital.

    For the next four years, Stokes allegedly drained the victim’s bank account of more than $3,000 and ran up charges on four of her stepfather’s credit cards. The charges totaled nearly $72,000 in fraudulent transactions.

    Investigators determined that the victim had transferred the deed to his Laurel home to Stokes.

    The victim said Stokes had pressured him into signing his home over to her and assured him Medicaid would pay for his care.

    Stokes allegedly also took possession of several of the victim’s belongings, including family heirlooms, numerous guns, an RV, tools, furniture, and ashes of his son.

    Detectives also learned that Stokes has taken several of the victim’s vehicles, according to court documents.

    The victim told authorities that he had given his wallet to Stokes for safe keeping when he was admitted to the hospital in critical condition. The man said he never gave Stokes permission to use his credit cards.

    Detectives made several attempts to speak with Stokes, but she was never available.

    Stokes is being held at the Yellowstone County jail.

Sunday, January 15, 2017

18 Months After Giving Up Law License Amid Theft Allegations, Ex-Lawyer Finally Cops Guilty Plea For Filching Over $800K From Terminally Ill & Dead Clients (& Their Heirs) In Estate Settlements & Real Property Transactions

From the Office of the U.S. Attorney (New Haven, Connecticut):
  • Deirdre M. Daly, United States Attorney for the District of Connecticut, [] announced that JOHN O’BRIEN, 53, waived his right to be indicted and pleaded guilty [] in New Haven federal court to one count of wire fraud related to his stealing more than $824,000 from clients of his law practice.

    According to court documents and statements made in court, O’BRIEN was an attorney with an office located in Fairfield. Between approximately April 2011 and June 2014, O’BRIEN defrauded four clients by using funds from one client to pay off debts owed in connection with his representation of other clients, and also to pay for personal expenses, including the tuition for one of his children at a private high school.

    In approximately May 2012, O’BRIEN accepted $458,343.06 into his Interest on Lawyer Trust Account (“IOLTA”) as proceeds of a reverse mortgage taken by a client (“Client 1”) and his client’s wife, both of whom are now deceased. The funds from the reverse mortgage were intended to pay debts that would keep the client’s family business sustainable. Between June 2012 and February 2014, O’BRIEN disbursed only $204,000 to the family business. In approximately July 2013, O’BRIEN received an additional $194,636.89 from bank accounts held in the name of his client and one of his client’s children. The funds were supposed to be distributed to the client’s children. Only $104,008 was distributed. In approximately April 2014, O’BRIEN accepted $837,250 into his IOLTA as proceeds of a sale of his client’s real property. Only $470,000 of that amount was disbursed to his client’s heirs. The first check written from O’BRIEN’s IOLTA account upon receipt of the $837,250 was to a prior unrelated client for a debt owed to that client. In total, O’BRIEN defrauded Client 1 of $712,221.95.

    In May 2011, O’BRIEN deposited $74,250 from a second client (“Client 2”) into his IOLTA. The money was never disbursed to the client.

    In approximately September 2011, O’BRIEN agreed to represent a terminally ill woman (“Client 3”) for estate planning. Upon this client’s death in January 2013, O’BRIEN received $137,000 from the estate into his IOLTA. After the deposit, O’BRIEN paid personal expenses from the IOLTA, including his son’s private school tuition and thousands of dollars to his ex-wife. Only $112,283.20 was distributed to the heirs of O’ BRIEN’s client. Upon a review of this matter by the Connecticut Bar Statewide Grievance Committee, O’BRIEN produced fraudulent memos allegedly written to the daughter of his client requesting “release” of various amounts. One of the memos included payment to the family business of Client 1 for a $15,000 lawnmower, which was paid for from Client 3’s estate. Client 3 did not purchase a lawnmower from the family business of Client 1.

    O’BRIEN represented a client (“Client 4”) in the purchase of the client’s deceased mother’s home in Westport. In two payments in August 2013 and February 2014, the client transferred to O’BRIEN approximately $199,332 for purchase of the home, which O’BRIEN was supposed to pay to the fiduciary of the estate to complete the sale. In approximately April 2014, O’BRIEN finally paid the fiduciary of the estate to complete the sale. The check to the fiduciary of Client 4’s mother’s estate was the first check written from the defendant’s IOLTA upon receipt of the $837,250 in Client 1’s real estate sale proceeds. Because of the delay in the defendant’s transfer of payment to the fiduciary of the estate, Client 4 incurred approximately $13,558.38 in storage fees for belongings while the property was unavailable for occupancy by Client 4.

    While O’BRIEN was engaged in the above conduct, he made withdrawals of thousands of dollars in cash from his IOLTA. On several occasions, deposits of the same or similar amounts were made into his personal bank account on the same day that the funds were withdrawn from his IOLTA.

    O’BRIEN is scheduled to sentenced by Chief U.S. District Judge Janet C. Hall on March 23, 2017, at which time he faces a maximum term of imprisonment of 20 years, a fine of up to approximately $1.6 million, and restitution in the amount of $824,747.13.(1)

    O’BRIEN resigned from the Connecticut bar in June 2015.
Source: Former Attorney Pleads Guilty to Defrauding Clients of More Than $824K.
(1) The Client Security Fund is a fund established by the rules of the Connecticut Superior Court to provide reimbursement to individuals who have lost money or property as a result of the dishonest conduct of an attorney practicing law in the State of Connecticut, in the course of the attorney-client relationship. The fund provides a remedy for clients who are unable to obtain reimbursement for their loss from any other source.

For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

Kansas Supremes Repudiate 'No Harm, No Foul' Defense In Giving (Another) Aging Attorney The Bar Boot For Improperly Helping Himself To Clients' (ie. Dementia Victim, Widow) Cash; Court: Lawyer's Payment Of Restitution For Illegally Converted Loot Is No Factor In Throwing The Book At Him

In Topeka, Kansas, The Topeka Capital-Journal reports:
  • Bruce C. Harrington, a Kansas lawyer for 48 years, was disbarred from practice [] based on his handling of estates of two clients, the Kansas Supreme Court said.

    In a 28-page decision, the Supreme Court unanimously disbarred Harrington, saying he “violated his duties to his clients, to the legal system, to the profession, and to the public.”

    The violations “caused actual injury to his clients, the legal system and the profession,” the Supreme Court decision said.

    The ruling said Harrington, a Topeka lawyer, over a number of years had written himself checks on the checking account of one client and spent more than $25,000 from a second client’s estate, the document said.

    In the first case, Harrington used his durable power of attorney to write a series of checks totaling $30,946 on the account of a woman suffering dementia, the disciplinary document said. Another attorney representing the client’s estate and Harrington negotiated a settlement in which Harrington returned $10,000.

    In the second case, Harrington redeemed $53,484 worth of U.S. Savings Bonds from a client’s estate and paid half the money in even portions to two children of the dead man. $25,505 was to be paid to the man’s widow and $2,475 was paid to Harrington for fees, the Supreme Court said.

    The widow couldn’t be found, and “over time, (Harrington) converted the funds belonging to (the widow) and used the proceeds for personal expenses,” the Supreme Court said.

    When one of the children instructed Harrington to deposit the $25,505 in the Kansas Unclaimed Property Fund, Harrington borrowed $25,000 and placed it in the fund, the document said.

    Harrington had contended that his $25,000 payment in the Kansas Unclaimed Property Fund resulted in no harm to his client, making disbarment unwarranted.

    “That argument fails on more than one level,” the Supreme Court said.

    Harrington’s contention he made a full restitution on the $25,000 “is simply false,” the court said, noting the payment to the unclaimed property fund was $504 short. At the same time, Harrington paid himself $3,000, which was $525 more than the court-approved attorney fees.

    More importantly, however, even a full restitution at that point would not have negated the fact that (Harrington) converted his client’s funds for his personal use, an ethical violation of the highest order,” the court wrote. “Moreover, this court has consistently repudiated ‘no harm, no foul’ arguments in disciplinary cases.”

    The Supreme Court disbarred Harrington finding he violated rules regarding diligence, attorney fees, using information to the disadvantage of the client, safekeeping property, failure to produce trust account records for examination, candor toward the tribunal, engaging in conduct involving dishonesty, fraud, deceit or misrepresentation, engaging in conduct prejudicial to the administration of justice, failure to disclose a fact necessary to correct a misapprehension known by Harrington, and failure to cooperate in a disciplinary investigation, the disciplinary action said.

    Harrington represented himself in the disciplinary action.
Source: Supreme Court disbars Topeka attorney in mishandling money (Court makes unanimous ruling in Harrington disciplinary action).

For the court's ruling, see In re Harrington, No. 115,250 (Kan. Decenber 23, 2016).

Dishonest vs. Mere Grossly Negligent Misappropriation? State Bar Probes Into $955K Of Missing Client Funds Allegedly Never Deposited By Attorney Into Her Trust Account

In Bakersfield, California, reports:
  • A local family law attorney is accused by the State Bar of misappropriating nearly $1 million that was supposed to be held in trust on behalf of a client.

    Heather Stanley took two checks totaling $1,052,311.57 and deposited them into an account she controlled at Kern Schools Federal Credit Union, according to documents filed by The State Bar of California on Dec. 5.

    She was supposed to maintain the full amount on behalf of the client, but "dishonestly or grossly negligently misappropriated" $955,000 for her own purposes, the documents said.

    According to the documents, the checks were received on or about Aug. 5, 2010 and May 2, 2011. Stanley failed to give the client an appropriate accounting of the funds, despite eight requests issued by the client, the documents allege.

    The misappropriation of the funds occurred between July 25, 2013, and Nov. 14, 2013, the documents said.

    Stanley wrote to a state bar investigator in August that she purchased cashier's checks and had returned all the funds to the trust held on behalf of her client, documents said. She also provided a "client ledger card" to show the funds had been disbursed.

    Those statements were false, the state bar said in its filing.

    The state bar filed notice of disciplinary charges including failure to deposit the funds in a trust account, misappropriation, failure to maintain client funds and misrepresentation. The filing said she had 20 days to file a response.
Source: Local attorney accused of misappropriating nearly $1 million.
(1) The California State Bar's Client Security Fund is a public service of the California legal profession. The State Bar sponsored the creation of this fund to help protect consumers of legal services by alleviating losses resulting from the dishonest conduct of attorneys. The amount the fund may reimburse for theft committed by a California lawyer depends on when the loss occurred. A maximum of $50,000 is reimbursable if the loss occurred before January 1, 2009. A maximum of $100,000 is reimbursable if the loss occurred on or after January 1, 2009.

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.

Disbarred For Fleecing Three Clients Out Of Nearly $200K, Lawyer Now Faces Criminal Charges For Alleged Embezzlement, Concealment Of Assets In Connection With Bankrupt Client

In Winter Haven, Florida, The Ledger reports:
  • A Winter Haven lawyer who was disbarred in June has been indicted in federal court on charges of misappropriating nearly $93,255 of a bankruptcy client's money.

    Josiah Ewing Hutton, 60, is charged with concealment of assets and embezzlement against a bankruptcy estate, and could face a maximum five years in prison on each of the two counts if he's convicted in U.S. District Court in Tampa.
    The federal indictment against Hutton states that a client retained him to represent her in a bankruptcy case, and she gave him a $93,255 settlement check in anticipation of that filing.

    He deposited the check, representing the client's bankruptcy estate, in an escrow account. When preparing the bankruptcy filing, Hutton didn't list the check as an asset, according to a news release from the Department of Justice office in Tampa. After filing the bankruptcy case, Hutton is accused of embezzling a large portion of the settlement check for his own use.

    Hutton was arrested [] and released from custody after posting a $10,000 bond.

    In a separate proceeding before the Florida Supreme Court in June, Hutton was disbarred for misappropriating funds and ordered to pay nearly $200,000 in restitution to three clients.(1)
Source: Winter Haven lawyer accused of misappropriating $93,255 from client.
(1) The Clients' Security Fund was created by The Florida Bar to help compensate persons who have suffered a loss of money or property due to misappropriation or embezzlement by a Florida-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.

Bank Blows Whistle On $86 Overdraw From Lawyer's Trust Account, Triggering Bar Probe That Lands Attorney In Hot Water; Maryland Supremes Nix Disbarment Request, Indefinitely Suspend His License Instead (Based On No Client Harm) For Deceitless Mismanagement Of Client Cash, Keeping Crappy Fiduciary Accounting Records

In Frederick, Maryland, The Frederick News-Post reports:
  • A Frederick lawyer has been suspended indefinitely for mismanaging client funds.

    The Maryland Court of Appeals, the state’s highest court, [] suspended Willie Mahone, an attorney focused on civil rights law.

    Sandy Spring Bank notified the Maryland Attorney Grievance Commission that Mahone’s attorney trust account was overdrawn by $86, a court filing stated.

    When the commission investigated Mahone’s finances, it found that he failed to maintain accurate account records, mixed personal money with client funds and withdrew cash from the trust account, overdrawing on multiple client accounts.

    While the Court of Appeals agreed that Mahone mishandled funds, it rejected the Bar Counsel’s request to disbar him because the grievance commission did not show that Mahone intended to defraud his clients.(1)

    The commission on Feb. 29 charged Mahone with several violations of the Maryland Lawyers’ Rules of Professional Conduct.

    On Sept. 9, 2014, he made a $100 donation to his church using his attorney trust account, the commission found, and had negative balances in nine client accounts.

    Additionally, Mahone did not respond to repeated requests for client ledgers and deposit slips in the accounts, according court records.

    The attorney said he did not mean to ignore the requests. He said he did not see them because he had moved his office. Mahone also denied overdrawing accounts and mixing personal money with client funds.
For the story, see Frederick civil rights attorney Willie Mahone suspended indefinitely. no harm, no foul
(1) See Attorney Grievance Commission v. Mahone, Misc. Docket AG No. 82 September Term, 2015 (Md. December 19, 2016):
  • For the careless mishandling of funds that did not result in financial loss to the client, typically the appropriate sanction is indefinite suspension. [Att'y Grievance Comm'n v. Obi, 393 Md. 643, 658 (2006)] (collecting cases).

    Here, it is clear that Mahone did not act with a dishonest or selfish intent and there is no evidence that any of Mahone's clients lost money due to his mismanagement. Furthermore, there is no evidence that Mahone's mismanagement of his attorney trust account impacted the quality of his legal representation, and Mahone has taken steps to remedy his admittedly "sloppy recordkeeping." He has resolved to more closely examine his monthly statements and has contacted an accountant who agreed to monitor his attorney trust account.