Saturday, February 11, 2017

State Bar Ramps Up Enforcement Of Recordkeeping Requirements Targeting Pennsylvania Lawyers That Hold Client Cash & Maintain Crappy Client Trust Account Records

From a recent commentary in The Legal Intelligencer (Pennsylvania):
  • As has been said in many articles and lectured in many ethics CLE courses, the requirements [for Pennsylvania-licensed attorneys] to maintain escrow records were changed several years ago.

    Unfortunately, many lawyers aren't following these rule changes. At the time, many people disputed the then-proposed rule changes believing that recordkeeping itself shouldn't be the basis to discipline a lawyer. But, those arguments were lost.

    One of the biggest problems has been in the past that the Office of Disciplinary Counsel had difficulty prosecuting lawyers timely when there were issues of misuse of funds because the lawyers didn't have any records. This resulted in long delays when the records were obtained from the banks. As a result, the present rules were passed to Rule of Disciplinary Enforcement 221 and Pennsylvania Rule of Professional Conduct 1.15.
    One of the major issues is under Rule 1.15, a lawyer cannot deposit their own funds in a trust account except for a small amount for paying service charges. That has to be a de minimis amount of about $100 to $150 at most.

    The big issue now is that under Pennsylvania Rules of Disciplinary Enforcement 221(g), the fiduciary records for the escrow account have to be readily accessible to the lawyers and available for production to Pennsylvania Lawyers Fund for Client Security and the Office of Disciplinary Counsel in a timely fashion. This is a serious burden, but a requirement now placed on all lawyers because of the above changes.

    Under Pennsylvania Rule of Disciplinary Enforcement 221(g)(1), if Disciplinary Counsel sends a letter requesting the records they have to be produced within 10 business days of the service of the letter. Ten days is an awfully short period of time. If one maintains the records properly, then there is no problem. Unfortunately, many lawyers do not.

    Under Rule of Professional Conduct 221(g)(3), failure to produce the records within that time period can result in a temporary suspension or other relief if the disciplinary counsel seeks enforcement.

    Many of the above rule amendments were made in 2014. The Office of Disciplinary Counsel, of course, publicized the amendments, but did not initially vigorously enforce the 10-day requirement allowing time for lawyers to get in compliance.

    Recently, at least in District I and District II offices (and presumably in District III and District IV), the Office of Disciplinary Counsel has become much more aggressive. If there are questions of lawyer's improper handling of escrow funds and then there is a request for all of the records, including bank statements for, oftentimes, a year or two, checks, deposit slips, the ledger sheets and the reconciliation records. Failure to produce these can result in the disciplinary counsel seeking suspensions on a temporary basis.

    Lawyers should be aware that the Office of Disciplinary Counsel is now starting to seek enforcement of the 10-day production requirement.

    Having said this, these rules are clearly burdensome to small firms and solo practitioners. Monthly reconciliations and maintaining all these records is difficult for a small firm that is living on the margin and not able to hire a full or part-time bookkeeper. But, that's not an excuse anymore.

    These record production requests often arise when a lawyer misuses an escrow account, such as using an escrow check to pay personal expenses, annual fees, CLEs or writing an escrow check that is not honored due to a lack of sufficient funds. When that happens, it goes initially to the client security fund and unless there is some sort of bank error it is referred over to the disciplinary board. When that happens, routinely there is a request for all bank records and depending on the circumstances, that could be for three to six months or it could be for one to two years. ...
For the entire commentary, see The Office of Disciplinary Counsel is enforcing new recordkeeping requirements (Are the recordkeeping requirements set forth in the Rules of Professional Conduct and the Rules of Disciplinary Enforcement being enforced?) (May require subscription; if no subscription, GO HERE, then click appropriate link for the story).

Playing Fast & Loose With Clients' Cash, Five California Attorneys Get Their Law Licenses Yanked

The State Bar of California has recently announced that thirteen (13) California lawyers have been disbarred during the period December 1 to December 31, 2016.

Of the 13, the following five (5) were given the boot, at least in part, for playing fast & loose with their clients' money:
  • DANIEL EUGENE HIBBARD [#138147], 62, of Riverside, was disbarred Dec. 4, 2016 and ordered to comply with rule 9.20 of the California Rules of Court.

    Hibbard misappropriated funds exceeding $25,000 from two clients and made misrepresentations to hide his misconduct. The State Bar Court found him culpable of eight counts of misconduct.

    In one matter, Hibbard failed to maintain $1,954 in his client trust account that was supposed to be used to pay his client’s medical provider. He also did not pay the medical provider despite repeated requests from the client. Hibbard ultimately wrote a check to the medical provider, but it was not honored due to insufficient funds.

    In a second matter, he failed to maintain $23,743.64 in settlement funds in his client trust account. Although Hibbard ultimately paid his clients some of the money and paid two medical providers, he still owed them $13,973 at the time the court recommended his disbarment and made no subsequent payments.

    Hibbard engaged in multiple acts of misconduct and caused significant harm to his clients by misappropriating their money. One client’s unpaid medical bill was referred to collections, while the others still owed money to their medical providers at the time of Hibbard’s disciplinary trial.

    Hibbard had no prior record of discipline and showed remorse for his wrongdoing.

    GREGORY MACKEAN BENTLEY [#275923], 35, of San Francisco, was disbarred Dec. 4, 2016 and ordered to comply with rule 9.20 of the California Rules of Court.

    Bentley mixed personal and client funds in his client trust account, issued checks from his client trust account to pay personal expenses and failed to participate in a State Bar disciplinary investigation.

    Bentley was disbarred after his default was entered for failing to respond to a notice of disciplinary charges. Because he did not seek to have the default set aside or vacated within 90 days as required under the State Bar’s Rules of Procedure, he was disbarred and the charges against him deemed admitted.

    WALTER LEE DAVIS [#98513], 62, of Brentwood, was disbarred Dec. 4, 2016 and ordered to comply with rule 9.20 of the California Rules of Court.

    In one matter, Davis engaged in moral turpitude and dishonesty by signing a release claim on behalf of his client without authorization in a personal injury matter. He also failed to promptly notify his client of the receipt of $9,000 in settlement funds, endorsed a settlement check without his client’s authorization, misappropriated $6,000 and failed to maintain client funds in trust or render an accounting of the settlement funds to his client. In addition, he made misrepresentations to the client including that he had not received the settlement funds, that the funds had been mailed to another address and that his secretary had misappropriated the money.

    In a second matter, he failed to notify a client of his receipt of $7,800 in settlement funds, endorsed a settlement check without his client’s permission, failed to maintain a balance of $5,200 in his client trust account, misappropriated the money and failed to provide an accounting of the settlement funds. As he had in the other matter, Davis claimed to not have received the settlement funds and said his secretary misappropriated the money.

    Davis was disbarred after his default was entered for failing to appear at his disciplinary trial. Because he did not seek to have the default set aside or vacated within 45 days as required by the State Bar’s Rules of Procedure, he was disbarred and the charges against him deemed admitted.

    KRISTIN MARIE SCHUH [#241554], 42, of Los Angeles, was disbarred Dec. 29, 2016 and ordered to comply with rule 9.20 of the California Rules of Court.

    Schuh engaged in two counts of misconduct in a single client matter. She failed to promptly notify a client she had received on his behalf a $19,327.70 bond refund or cooperate in a State Bar disciplinary investigation.

    Schuh was disbarred after her default was entered for failing to respond to a notice of disciplinary charges. Because she did not seek to have the default set aside or vacated within 90 days, the State Bar moved to disbar her under the State Bar’s Rules of Procedure. The charges were deemed admitted.

    AMY LYNN SPENCER [#248069], 41, of Anaheim, was disbarred Dec. 29, 2016 and ordered to comply with rule 9.20 of the California Rules of Court.

    In one matter, Spencer failed to communicate by not responding to nine emails and numerous phone calls from a client and did not respond to four letters from a State Bar investigator. In a second matter, she failed to refund $1,850 in unearned fees, respond to 28 phones calls from her client making reasonable inquiries about the status of her matter or respond to three letters from a State Bar investigator.

    Spencer was disbarred by default after she failed to respond to a notice of disciplinary charges. Because she failed to have the default set aside or vacated within 90 days as required under the State Bar’s Rules of Procedure, she was disbarred and the charges against her deemed admitted.
Source: California Bar Journal - Disbarments (December 1 to December 31, 2016).

NJ Lawyer Faces Bar Complaint That He Allegedly Misappropriated $127K By Clipping Several Thousand Bucks A Piece From A Slew Of Clients In Real Estate Matters; Attorney Denies Ripoff, But Admits That His Crappy Recordkeeping, Alcoholism May Be Issues

In Jersey City, New Jersey, The Jersey Journal reports:
  • A Hudson County attorney who received a three-month suspension of his law license in 2015 over a road rage incident is now facing a 15-count ethics complaint that alleges he knowingly misappropriated $127,844 related to his private law practice.

    The attorney, John Collins, has been on the county payroll since 2010. County officials changed his title from attorney to confidential aide after the newest ethics charges surfaced. A hearing is scheduled for Feb. 6.

    The allegations against Collins are detailed in a 33-page complaint filed on Aug. 25, 2014 by the state Office of Attorney Ethics. The OAE accuses him of misappropriating funds related to 18 clients between 2010 and 2013, taking money intended for matters related to the clients' cases and using it for other purposes. He is also accused of practicing law with a suspended license.

    Collins' attorney declined to comment.

    The clients all retained Collins for real-estate matters, according to the complaint. In a typical example cited in the complaint, Collins represented a man buying a Seventh Street condo in Jersey City. According to the OAE, $382,945.92 was deposited in Collins' attorney trust account from various sources for costs associated with the sale, but Collins only dispersed $373,674.37, stiffing a title company of $2,208.80 and the client of $5,067.75.

    In his response to the OAE, Collins denied the charges of misappropriation, admitting to "poor record-keeping." He also said he "suffered from alcoholism" during the time period the OAE investigated his bank accounts.
For the story, see Hudson County 'road rage' attorney facing new ethics charges. ripoff reimbursement

Now-Disbarred Central Florida Attorney Admits Fleecing Clients Of Over $2.7 Million; Among Victims: Single Mom Of Child Born w/ Severe Brain Damage, Widow Whose Husband Died In Car Crash, Local Mom & Pop Businesses

In Orlando, Florida, the Orlando Sentinel reports:
  • The disbarred Longwood attorney accused of embezzling more than $2 million from her clients on Tuesday [January 24] pleaded guilty in Orlando federal court.(1)

    Julie Kronhaus, 52, was indicted and arrested in September, accused of 18 counts of wire fraud and bank fraud. She pleaded guilty to two counts of wire fraud and one count of bank fraud and is to be sentenced April 24. She could be sent to prison for more than 50 years, but federal sentencing guidelines suggest something far lower — several months.

    During negotiations with federal prosecutors, Kronhaus confessed that she embezzled more than $2.7 million from her clients. She was a lawyer-accountant with an office near Winter Park and specialized in trusts and estates.

    In court she said, “I took money from my client trust accounts and used it for my own benefit.”

    Among the people who say their money disappeared: the single mother of a Lake County child born with severe brain damage; a Casselberry widow whose husband was killed in an automobile crash; and Orlando-area mom-and-pop businesses.

    Many of those victims were in court Tuesday to watch the plea.

    They first went to the authorities in 2014, the year the Florida Bar stripped Kronhaus of her right to practice law. The state of Florida later took away her accounting credentials.

    She began stealing from her clients in 2009 and was still doing it in February 2015, after she’d been disbarred, according to paperwork filed by the U.S. Attorney’s Office.

    She spent much of the money on personal expenses, the government alleges, including “substantial payments to … American Express.”

    She essentially operated a “Ponzi scheme,” the government alleges. If one client demanded payment and his account was empty, she dipped into another’s.

    When she ran out of their money altogether, the government alleges, checks started bouncing. That’s when clients realized something was wrong and went to law enforcement and the Florida Bar.

    The government alleges she also operated “a check kiting scheme” that defrauded Bank of America out of $425,000.

    It’s not clear whether any of Kronhaus’ clients will be repaid. The U.S. Attorney’s Office is asking for restitution but acknowledges that it couldn’t find all the money she stole or the property she bought with it.(2)

    In December, her husband, Lake County cardiologist Kenneth Kronhaus, filed for divorce. The couple own a $900,000 house in a gated community off Markham Woods Road in Seminole County.
Source: Disbarred lawyer pleads guilty to $2.7 million fraud.
(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 (while Professor Miller's essay is over a quarter-century old, it 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 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 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.

Massachusetts-Licensed Lawyer Admits To Providence Feds That He Stole From A Dead Friend, The Poor & A Disabled Client; Prosecutor: Defendant Pocketed Over $685K In Ill-Gotten Gains, Then Failed To Pay Over $225K In Income Taxes On Pilfered Loot

In Providence, Rhode Island, WJAR-TV Channel 10 reports:
  • On Monday [January 23] morning, in a room full of police officers, attorneys, and feds, US Attorney Peter Neronha laid out nine felony counts facing former Bristol Rep. Raymond Gallison Jr., who admitted in a plea deal that he’s guilty of mail and wire fraud, identity theft and filing bogus taxes.(1)

    “He lied and he stole, in a variety of ways and from a variety of people,” said Neronha.

    Rhode Island Attorney General Peter Kilmartin was present for the announcement, now his third former colleague at the state house to be charged or admit to crimes in the last 11 days.

    “Ray Gallison was greedy, pure and simple,” Kilmartin said. “He stole from his clients, people who considered him a trusted attorney and trusted friend.”

    One those victims was Ray Medley, a Barrington bachelor, who died in 2012.

    Gallison was executor of his estate and was instructed by a will to give Medley's money to charities. Instead, investigators said Gallison schemed to steal and transfer bank accounts, cash, checks, stocks and property into his own control, about $677,957.
    Before resigning in May as House finance chair, Gallison received a salary from the non-profit, Alternative Educational Programming, or AEP, along with state grant money. Investigators said he grossly over-stated how many students the group helped financially. One example said AEP helped pay over $77,000 in tuition and fees on behalf of 47 students, when in reality, AEP paid a little over $3,000 to help two students, according to Neronha.

    Separately, as a trustee for a disabled person, Gallison stole money from a special needs trust to pay a bill for AEP. [$8,900, according to the U.S. Attorney press release].
For the story, see Gallison agrees to plead guilty to federal fraud charges.

See also, Fmr. RI House Finance Chairman to Plead Guilty to Fraud, Aggravated Identity Theft, Tax Charges:
  • He failed to claim a total of $622,286.17 in income on joint IRS tax returns for tax years 2012 and 2013, and, as a result of his relevant conduct from 2012-2015, Gallison failed to pay a total of $226,332.31 in taxes.
(1) According to this story, Gallison is an attorney licensed in Massachusetts.

Crooked Lawyer Who Gained Bar Readmission After Serving One Year Disbarment For Stealing $100K From Client Gets Bar Boot Again; License Now Yanked For 20 Years After Pilfering $200K From Another Client; First Two Years To Be Spent In Prison On Heels Of Federal Conviction

In Hartford, Connecticut, The Connecticut Law Tribune reports:
  • A Glastonbury attorney who was previously disbarred for one year and a day for stealing from a client has been disbarred again for the same thing, this time for 20 years.(1)

    Hartford Superior Court Judge Antonio C. Robaina had strong words for Craig Larsen, formerly of Craig Larsen Law Offices, as he disbarred the man for embezzling $200,000 from a client.(2) The disbarment comes after Larsen was sentenced to 24 months in federal prison, 36 months of supervised release and ordered to pay restitution on Nov. 4.

    Larsen previously vowed to never violate a client's trust again after apologizing for stealing $100,000 from a client between 2007 and 2009, a factor Robaina repeatedly noted in handing out the stiffer punishment.

    "Mr. Larsen has violated a duty to his client in the repeated commission of criminal acts against his own client," wrote Robaina, whose order was included in a summary of December disciplines. "In simple words, he stole. He stole often and much. He stole for no good reason, given the fact that his salary and compensation were adequate to support a comfortable lifestyle."

    Robaina added that Larsen also "obstructed the disciplinary process by engaging in perjury before the committee on recommendations."
    After his first disbarment, Larsen filed for an application for readmission to the state bar through the Committee on Recommendations for Admission. In support of his application for reinstatement, which he eventually received, Larsen, at the time, said, "This is a 2 1/2 year (from 2007 to 2009) period of my life where my behavior was abhorrent, and otherwise my life has been, I think, exemplary." In other declarations, Larsen said, "I will never steal again, and I would never steal from a client again."
For the story, see Attorney Who 'Stole Often and Much' Disbarred 20 Years (may require subscription; if no subscription, GO HERE, then click the appropriate link for the story).
(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 (while Professor Miller's essay is over a quarter-century old, it 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 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.

Friday, February 10, 2017

Family That Vacated Vegas Home For Florida Move Now Can't Sell Premises, Being Held Hostage By Over $150K In HOA Fines, Liens Levied After Squatters Moved In

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:
  • It's HOA Hall of Shame meets Squatter Spotters. Contact 13 found a pair of homeowners associations that are adding to our valley's squatter problem by holding a house and homeowner hostage to extreme fines.

    Terrance Flowers put his Southern Highlands home on the market when he moved his family to Florida. And it wasn't long before squatters broke in.

    "They damaged all of the doors," Flowers says as he showed us his property. "They took the pool equipment apart."

    Flowers upended his life for a temporary move back to Las Vegas to confront the squatters.

    "They asked me, 'Who was I?' And I told them, 'I'm the owner of the house.' And they said, 'Well, we stay here now' and slammed the door."

    He had to go through a formal eviction process to get them out and file a claim with his insurance company to repair the damage. "The squatters took the doorbells."

    Flowers put the house back up for sale and returned to his family on the east coast.

    But then it came to a screeching halt.

    "I have no clue. The house was sold three times. Cash offers. And it just blew my mind ... how all of a sudden the sale is no good."

    Turns out, fines from his HOAs were stopping the sales. They were coming from both Solaro, the sub-association, and master association Southern Highlands.

    The fines are for violations such as missing shrubs, dead trees and weeds, even the driveway gate, which the squatters destroyed. "The HOA started fining me every week for that," Flowers says.

    The amount of fines and fees that have racked up against this house isn't just high, it's almost unheard of. In fact, it's so much you can literally use that money to buy a house.

    "$111,000 for fines, fees. It doesn't happen," says Flowers' realtor Julia Suarez.

    She says she's lost five buyers on this property. People who've walked away because of the HOAs. "They will not negotiate at all," Suarez says.

    Flowers says he got no notice that the fines were racking up.

    And when Suarez asked how they got to that exorbitant amount? "We're not getting a complete detailed printout of $111,000," she says.

    The numbers on the documents don't add up. A demand letter from Southern Highlands shows a total amount due of $111,932.19, while the Resident Transaction Detail given to Flowers shows a balance of $57,950. That's for October 2014 through September 2016.

    A collection agency is also looking for $6,039.54 for Solaro, but their transaction detail shows a balance of $7,000.

    "It doesn't make sense," Suarez says. "Even the title companies have never seen anything like this."

    We called both Solaro and Southern Highlands, as well as their management companies. No one agreed to talk to us on camera and so far, no one has answered our questions.

    The house remains in limbo. "We can't close," Suarez says.

    And Flowers' life remains on hold.

    "I would be living in Florida spending time with my kids," he says. "And I have to be here and babysit this house." Flowers says that's the only way to keep squatters at bay while he fights with his HOAs. "They're not allowing me to move forward," he says. "This house would have been sold by now."

    Believe it or not, the fines keep racking up. As of Friday, the Southern Highlands balance is now $157,700.

    But now that they're in the spotlight, the HOA may finally be willing to budge. We learned both Southern Highlands and Solaro reached out to Flowers' realtor, asking him to come to board meetings to discuss waiving some of the fines. ...

Squatters Commandeer Vacated House; Desperate Homeowner Needing To Sell Home To Pay For Husband's Kidney Surgery Finds Herself In A Jam, Offering Unwanted Occupants $1,000 To Stop Destroying Premises, Take A Hike, Facilitate Sale

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:
  • Debbie Marks needs to sell her house so she can pay for her husband’s kidney surgery. But she can’t.

    That’s because squatters have moved in. And now she has made a desperate offer as she fights to get her home back.

    She tried to offer the intruders $1,000 just so she get back her own home. It's an offer she hopes they won't refuse.

    "I'm offering you $1,000 to leave my house," Marks says. Marks moved out of the house on Burnham Avenue last June. Squatters moved in to her home early last month.

    "Anybody could just break in your house and take over your memories," says Marks.

    She filed a complaint against a woman named Betina Merkson on Jan. 15, then an eviction notice on Jan. 25.

    But Marks told 13 Action News they filed their own legal action to stay.

    “This is a travesty that this could be going on in the United States of America," she says.

    Marks decided to take matters into her own hands and went to the house herself. Cardboard now covers a broken front window, a blanket hangs from the frame of what used to be her son's bedroom and old clothes and blankets are piled up on top of furniture.

    "They destroyed my house! They destroyed my little house! Oh my god!" she cries.

    Marks wants to sell her home so she can raise $20,000 to help cover costs around her husband's kidney surgery. But she worries: who will buy a house with squatters inside?

    “I don't think I'm going to come back because I fear for my life," she asks.

Woman Hired As Live-In Caregiver For 90+ Year Old Homeowner's Since-Deceased Spouse Turns Into Unwanted Squatter; Victim Finally Reclaims Possession Of Home Of Nearly 60 Years After Year Of Court Battles

In San Diego, California, KGTV-TV Channel 10 reports:
  • Fran and Alan Breslauer raised their two daughters in the modest College area home they designed and built when they were newlyweds. That was more than 60 years ago. Now, months after Alan died at the age of 91, Fran Breslauer says she's homeless.

    The person living in her home was hired as a live-in caregiver to help 90-year-old Fran take care of her husband during the final months of his life.

    “I thought she was strong enough to help me. She was 20 years younger and 20 pounds heavier. So I thought she was up to the job," said Breslauer, who was impressed by the woman she found through a Craigslist ad.

    “She spoke very nicely. She was on her best behavior, and I thought I was doing a benefit for her because she had a place to live with her dogs.”

    Breslauer said she had a local agency do a background check on Cheryl Sherrell. There were no red flags, so Sherrell moved into Fran's converted art studio at the front of the house.

    It didn't take long, Breslauer said, before Sherrell became a problem.

    "My husband came to me and said Cheryl’s acting inappropriately. I said Alan, what did she do? He said I’m a gentleman, I’m not gonna tell you, but please fire her."

    Fran Breslauer gave a handwritten note to Sherrell in December 2015. It was mistakenly dated December 18, 2016. It read: "I Frances Breslauer owner of [**** **********] Lane do not need services of Cheryl Sherrell to care for my husband -- and I am giving her 30 days notice to leave!"

    Breslauer claims Sherrell not only stayed on, she refused to help. And the situation got even worse after Alan Breslauer died in February. “The day he was dying, he was taking his last breath, she was screaming about money," said Breslauer, calling Sherrell's actions "inappropriate", considering all that was going on.

    Then it got ugly. Both women filed for restraining orders against each other. Breslauer accused Sherrell of turning up the temperature on the hot water heater so Breslauer would be scalded.

    Sherrell accused Breslauer of punching and shoving her and said in a declaration filed with the court: "I need this protective order to ensure my physical and emotional safety. I feel that without a protective order in place respondent (Breslauer) will continue to take advantage of her age. However, I do fear for my safety as she is aggressive and manipulating police officers to believe I am victimizing her. She is making my life impossible."

    Judge Tamila Ipema granted Sherrell's restraining order. It says Breslauer can't "physically or financially abuse, intimidate, contact, molest, harass, attack, strike, threaten, sexually assault, batter, telephone, send any messages to, follow, stalk, keep under surveillance, block movements, destroy the personal property, or take any action to obtain the addresses or locations of Cheryl L. Sherrell."

    Sherrell moved out for a short time, but when Breslauer decided to spend time with one of her daughters in Oregon, Sherrell moved back in, according to court documents.

    Six months later, Sherrell is still living in the house. A legal war is being waged by both sides. Sherrell's attorney claims in documents filed with the court that she has a right to live there since Breslauer had vacated the premises. Breslauer's attorney writes that Sherrell has no claim to the property and should not only move out, she should pay more than $10,000 for rent and utilities during her stay.
For more, see Widow says caregiver has become a squatter: 'How can you do that to a 90-year old woman?' (Fighting a legal battle over her family home).

For story update, see Accused squatter moves belongings out of 91-year-old widow's house (Police on stand-by to keep the peace):
  • Cheryl Sherrell reclaimed her belongings and Fran Breslauer reclaimed her home of nearly 60 years as San Diego Police officers stood by to keep the peace. It was moving day, ordered by two judges involved in both a civil and a criminal case against 71-year-old Sherrell.
    91-year old Fran Breslauer, who owns the house, was absent. She hired Sherrell in 2015 as a live-in helper to take care of her husband Alan, who died in January 2016. His death triggered a chain of events that included restraining orders, a civil lawsuit, and a criminal case following Sherrell’s arrest.

Thursday, February 09, 2017

Missouri Woman Takes Three-Year Fight To Free Elderly Mom From Court-Ordered Guardianship 'Prison' To State Legislature; Victim Said To Want To Be Around Family, Not Involuntarily Confined In Nursing Home w/ Strangers

In Sikeston, Missouri, KFVS-TV Channel 12 reports:
  • The daughter of a Sikeston, Missouri woman who is fighting to get her mom out of a guardianship is taking her battle to Jefferson City.

    Teala Mainzer testified on Wednesday, February 1 before a Senate Committee on behalf of Senate Bill 104.

    Sponsored by Cape Girardeau Republican and Missouri Sen. Wayne Wallingford, the measure would require the court to prove that a spouse or family member is not able to care for that loved one before placing them with a third party like a public administrator.

    Mainzer's been fighting to bring her mom home for nearly three years.

    "My desire is to bring her back home to her family, where she wants to be," Mainzer said. "She never wanted to be in a nursing home. I mean, she wouldn't want to be under the care of a stranger. She wants to be around her children. She's happy when her kids are around."

    Missouri Sen. Wallingford says he's encouraged the measure will be voted out of committee in the next couple of weeks.
Source: Sikeston woman fights to get mother out of a guardianship.

Go here for earlier posts on the abuse of court-ordered guardianship to hijack control of the elderly & infirm, then pillage or otherwise deplete the victims' assets (cash, real estate, etc.) through unnecessary fees, expenditures, etc.

Man Pinched For Allegedly Abusing POA To Fleece Elderly Relative; Nearly $338K In Missing Money Includes Proceeds From Sale Of Victim's Farm; Probe Triggered When Rent Payments For Victim's Residency At Assisted Living Facility Began Bouncing

In Mankato, Minnesota, the Mankato Free Press reports:
  • A North Mankato man allegedly stole more than $300,000 from an elderly relative.

    Dale Scot Tischer, 55, was charged Wednesday [Febtuary 1] with four counts of financial exploitation of the vulnerable adult.

    An exploitation investigation was launched because Tischer's relative's bills weren't being paid, according to the criminal complaint. Automatic withdrawals from the relative's checking account to pay for his medication and residency in a assisted-living facility in Blue Earth County were bouncing. Tischer had power of attorney over his relative.

    The investigation found multiple fund transfers into Tischer's account and withdrawals the investigator believed Tischer made for his own benefit, according to the criminal complaint. The withdrawals and transfers allegedly totaled nearly $338,000.

    Tischer initially claimed his relative had given him $150,000 after the relative's farm was sold. The suspect claimed the remainder of the funds went to pay his relative's medical bills and other expenses.

    But the relative denied giving Tischer any money and the purchases included items such as guns and furniture, according to the complaint.

    When pressed by the investigator, Tischer allegedly admitted to spending some of his relative's money on himself. He claimed not to know how much he spent, according to the complaint.

Wednesday, February 08, 2017

Idaho Supremes Void Foreclosure Purchaser's Tax Deed Where Taxing Authority That Conducted Auction Failed To Serve Written Notice Of Sale On Personal Representative For Deceased Prior Owner's Estate

From a recent Opinion Summary from Justia US Law:
  • Eric and Kathryn Bowen purchased property in Caldwell through a tax deed sale conducted by the Caldwell Irrigation Lateral District (CILD).

    G. Lance Salladay brought suit arguing that the sale was void because the property was part of the Estate of Roger Troutner (the Estate), and Salladay, as personal representative of the Estate, was entitled to notice of the sale and never received such notice.

    The district court ruled that Salladay was entitled to notice and since he had not received notice of the sale there was no final decision regarding issuance of the deed as required by Idaho Code section 43-719(2). The district court then remanded the case to CILD.

    On appeal, Bowens argued the district court erred in its determination that Salladay was entitled to notice and that even if Salladay was entitled to notice, his petition to the district court was untimely. The Supreme Court found that the district court erred in remanding the case back to CILD. The Court concluded CILD failed to provide written notice to the record owner of the property, so the tax deed was void ab initio.
Source: Opinion Summary - Salladay v. Bowen.

For the court ruling, see Salladay v. Bowen, 2017 Opinion No. 5 (Id. January 23, 2017).

State Bar Sidelines Attorney For At Least Six Months For Role In Loan Modification Racket; Order Requires Payment Of $61K In Restitution (Plus Interest) To Ripped-Off Clients To End Suspension

In Los Angeles, California, the Northern California Record reports:
  • The State Bar Court of California recently ruled to suspend attorney Barry Steven Jorgensen of Diamond Bar from practicing law for a period of six months, according to court documents.

    The ruling was made Nov. 11, according to the State Bar's website.

    Steven was found culpable of misconduct for illegally collecting advanced fees for loan-modification services. He will be required to make restitutions in the amount of $61,635 plus interest to end his suspension.

    Jorgensen entered into an agreement with a company targeting clients who either were currently in foreclosure or close to it. The company, Legally Yours, would offer loan-modification legal services to clients and match them with an attorney. Jorgensen was hired to assist with around 300 cases for the company.

    During Jorgensen’s first year with Legally Yours, fees were paid directly to the company who would in turn pay him a monthly salary. In October 2012, clients were instructed to pay Jorgensen directly for his services.

    Jorgensen allegedly violated Civil Code section 2944.7, which prevents attorneys from collecting fees for loan-modification services prior to their completion. The State Bar Court reviewed the five separate counts and found Jorgensen culpable in one. The remaining four were dismissed because Jorgensen provided litigation services in addition to the loan modifications, and therefore the fees collected were not in violation. ...

CFPB: Ring Of Law Firms Revive Previously-Shut Down Illegal Debt Relief Racket & Began Running Same Scam; Purported Bankruptcy Contracts Allegedly Were Used As Ruse To Camouflage Million$ In Unlawful Upfront Fees

From the Consumer Financial Protection Bureau (Washington, D.C.):
  • The Consumer Financial Protection Bureau today [January 30] took action against a ring of law firms and attorneys who collaborated to charge illegal fees to consumers seeking debt relief.

    In a complaint filed in federal court, the CFPB alleges that Howard Law, P.C., the Williamson Law Firm, LLC, and Williamson & Howard, LLP, as well as attorneys Vincent Howard and Lawrence Williamson, ran this debt relief operation along with Morgan Drexen, Inc., which shut down in 2015 following the CFPB’s lawsuit against that company. The CFPB seeks to stop the defendants’ unlawful scheme, obtain relief for harmed consumers, and impose penalties.

    “The defendants exploited consumers who were already suffering financial difficulties by tricking them into paying steep, illegal fees,” said CFPB Director Richard Cordray. “We put a stop to this scam once already, and we intend to do it again.”

    Howard Law and Williamson & Howard are law firms based in Orange County, Calif. The Williamson Law Firm is registered in Kansas. Vincent Howard is the president of Howard Law, and Lawrence Williamson heads the Williamson Law Firm. Both are part owners of Williamson & Howard. These firms and lawyers offer debt relief services to consumers nationwide.

    The Telemarketing Sales Rule generally prohibits debt relief providers from charging a fee until they have actually settled, reduced, or changed the terms of at least one of the consumer’s debts. It also limits the types of fees a debt relief provider can charge for already settled debts. Under this rule, consumers facing financial difficulties should not pay any fees for debt relief until they receive the services they signed up for.

    The CFPB’s complaint alleges that the defendants violated the Telemarketing Sales Rule by collecting illegal fees and deceiving consumers about being charged upfront fees. Consumers seeking debt relief help from the attorneys in this case were given two contracts, one for debt settlement services and the other for bankruptcy-related services. The CFPB alleges that consumers who signed up sought services only for debt relief and not bankruptcy. The contract given to consumers related to bankruptcy was a ruse to disguise illegal upfront fees. The CFPB alleges that the attorneys collected tens of millions of dollars in unlawful fees this way from consumers, and often failed to settle any debts.

    The defendants also assisted illegal debt relief practices by Morgan Drexen, Inc. and its president and chief executive officer, Walter Ledda. In 2015, the CFPB secured a judgment against Ledda for participating in the unlawful debt relief operation. In 2016, the CFPB secured a judgment against Morgan Drexen for the same conduct. The attorneys named in today’s case had worked alongside Morgan Drexen and Ledda to collect illegal fees, and then took over the operation after the CFPB halted Morgan Drexen’s and Ledda’s illegal activities.
For the press release, see CFPB Sues Debt Relief Attorneys for Collecting Illegal Fees from Struggling Consumers (Lawyers Revived an Illegal Debt Relief Scheme that the CFPB Previously Shut Down).

Tuesday, February 07, 2017

Out-Of-State Landlords Lose Rental House In Tax Foreclosure, Despite Having Paid Property Taxes In Full; Claiming Lack Of Notice, Couple Sues City To Rescind Sale Triggered By Separately-Billed & Unpaid $1,100 In Garbage User Fees

In Buffalo, New York, WIVB-TV Channel 4 reports:
  • Daniel and Jennifer Edgell gave their blood, sweat, and tears to improve an apartment house on Buffalo’s West Side, and paid the property taxes, only to lose it in the city’s annual tax foreclosure auction last October.

    Jennifer called the makeover a labor of love for the couple and their extended families, “I had my bridal shower in that house, we spent Christmases in that house. We just cannot believe that it is not ours.”

    If the Edgells paid their property taxes, how did they lose their house in a tax foreclosure auction? The couple moved to Florida to pursue job opportunities, and claim they did not get the separate bills for their garbage user fees.

    The family is going to court in an attempt to rescind the city’s sale of their property, and they are represented by Jeffrey Bochiechio of the Bouvier Law firm, “The total debts were exclusively user fees, and they were only about $1,100. Whereas this couple purchased the home for over $200,000.”

    Daniel said they never knew their house was even in jeopardy, until one of the buyers–investors from Maryland–knocked on the door and rousted their tenants, after the house was sold, “barged her way into their tenant space that they are renting, and was demanding a copy of the leases and the keys.”

    The Edgells contend they never got a warning the city was about to sell their house, although notices are sent out. Paulette Campbell, an attorney with the Western New York Law Center said the city handles user fees separately from taxes, and in separate offices.

    “A lot of times if you have a mortgage, the user fee is not escrowed into the mortgage. So people are paying the mortgage, which includes the homeowners insurance and property taxes, but not the user fee.”

    Daniel and Jennifer said they were on the city’s Landlord Registry, so they are having trouble understanding why they never received notification. A spokesman for the city’s administration said they don’t comment on pending litigation.

    The Edgells’ case is set for a hearing in Erie County Court in two weeks.

Central Florida Lawyer Who Admitted To Pilfering Over $2.7 Million From Clients Also Screwed Over Now-Estranged Hubby By Forging His Signature On $900K Mortgage Secured By Marital Home; Judge Declares Lien Invalid

In Sanford, Florida, the Orlando Sentinel reports:
  • A Sanford judge has ruled that a disbarred Longwood attorney who has admitted cheating clients out of $2.7 million also victimized her husband.

    Julie Kronhaus, 52, pleaded guilty last [month] in federal court to wire fraud and bank fraud. She’s to be sentenced in April.

    In a different court — state circuit court in Sanford — another judge signed an order last [month], ruling that Kronhaus also forged her husband’s signature.

    Her estranged husband, cardiologist Kenneth Kronhaus, sued her last year, accusing her of forging his name on a mortgage deed and mortgage note that gave two of her former clients an interest in the Kronhaus’ $900,000 home in one of Seminole County’s most prestigious gated communities, Alaqua.

    Circuit Judge Jessica Recksiedler ruled that the mortgage deed and note were both invalid because of the forgeries.

Monday, February 06, 2017

Come Up w/ $200K Or You're Going To Jail, Judge Tells Thieving Real Estate Agent Who Accepted Couple's Cash To Apply Towards Proposed Real Estate Buy, Then Kept Money For Himself

In Genesee County, Michigan, the Tri-County Times reports:
  • Thomas (Tommy) Tubbs, 45, of Grand Blanc, the former Fenton real estate agent accused of real estate fraud, may be sentenced to jail time next month if he doesn’t come up with $200,000.

    Investigators with the Genesee County Sheriff’s Office claim Tubbs collected $150,000 from an Atlas Township couple for a real estate transaction, but kept the money for himself.

    Tubbs, who worked for the former Century 21 Park Place in Fenton, was charged with taking money under false pretenses, according to Genesee County court records. He was originally arrested on Aug. 26, 2015.

    During a press conference in March 2016, Genesee County Sheriff Robert Pickell said, “He does not have a drug problem. It doesn’t appear that he has an alcohol problem. He just uses it to live on. He drives nice cars, lives with his parents.

    “The purchase was never completed and they never closed on the residence,” he added. “The residence was eventually purchased by another investment firm.”

    On Aug. 19, 2016, during a pre-trial hearing, Tubbs entered into a plea agreement. He pleaded no contest as charged and requested a deferred sentence in order to allow him to pay restitution in full.

    According to the plea agreement, the prosecutor agreed to reduce the charge to a misdemeanor of larceny $200 to $1,000.

    Sentencing was originally set for Jan. 9, then adjourned to Jan. 26.

    On Jan. 26, Tubbs was led from the courtroom in handcuffs, according to Fox 66 News. He will remain there until he comes up with the money. Tubbs said his father, Jim Tubbs, also a real estate agent, will sell some property to come up with the money.

    If he does not do so by Feb. 10, the next scheduled sentencing date, Judge Geoffrey Neithercut could sentence him to prison.
Source: Tubbs gets one more chance (Has until Feb. 10 to come up with $200,000 or judge says he will be doing prison time). jail prison buy-out

Sticky-Fingered Closing Agent Gets 18 Months Jail Time For Pocketing Loan Proceeds From Real Estate Transactions, Then Failing To Pay Off Existing Mortgages; Unwitting Homebuyers Were Forced To Hire Attorneys To Fight Foreclosure On Unpaid Liens To Keep Their Homes

From the Office of the Alabama Attorney General:
  • Attorney General Luther Strange announced that a Prattville woman pleaded guilty on October 31, 2016, to three counts of residential mortgage fraud and yesterday [February 2] was sentenced to serve time in jail. Lynda Branch, who formerly operated Professional Closing and Title LLC doing business in Prattville as Pro Close, was sentenced in Autauga County Circuit Court to 46 months, which was suspended for her to serve 18 months in jail and to be placed on probation for the remainder of her sentence.

    Branch, acting as closing agent in home sales, was transferred funds by a mortgage lending bank to pay off existing mortgages, but did not pay off those mortgages. This subsequently resulted in the homeowners being held responsible for the outstanding mortgages, threatened with foreclosure, and having to engage in protracted litigation to avoid losing their homes.

    “This defendant’s crimes caused tremendous anguish and difficulties for the homeowner victims,” said Attorney General Strange. “These consumers had acted with responsibility and met their obligations, but had to endure foreclosure notices and severe anxiety. They were forced to hire lawyers and fight to keep their homes. It is appropriate that the defendant now will serve time in jail for her wrongdoing.”

    Attorney General Strange commended Assistant Attorney General Stephanie Billingslea of his Criminal Trials Division and Special Agents of his Investigations Division. He also thanked the Prattville Police Department for its assistance.

Pennsylvania Appeals Court To Title Insurer: OK To Stiff Refinancing Lender On Title Policy Claim Involving Theft Of Loan Proceeds Where Klepto Closing Agent Had Fiduciary Relationship w/ Victimized Bank

From a recent story in The Legal Intelligencer (Pennsylvania):
  • A bank's title insurance policy does not cover losses due to misappropriated lien funds when the insurer was not involved in the transfer of funds, the Pennsylvania Superior Court has ruled.

    In a Jan. 20 opinion, the Superior Court affirmed a ruling of the Butler County Court of Common Pleas, which concluded that Northwest Savings Bank was not entitled to coverage after The Closing Company of PA ["TCCPA"] misappropriated funds it received from Northwest to satisfy liens against a refinanced property. The trial court had granted a motion for summary judgment to Fidelity National Title Insurance Co., Northwest's insurer.

    Senior Judge John L. Musmanno, in an unpublished eight-page opinion, largely agreed with the reasoning of Butler County Court of Common Pleas Judge S. Michael Yeager.

    "It is undisputed that it was not Fidelity who entrusted the funds to TCCPA as its agent; rather it was Northwest who forwarded the funds to TCCPA, and directed TCCPA in the proper procedure to disburse or otherwise transfer the funds," Yeager wrote. "Unfortunately, Northwest seeks to be indemnified by a party that does not properly hold the fault or duty to do so."

    Northwest entered into a mortgage loan agreement with Thomas and Lisa McIntyre in 2009 as the couple sought to refinance their home, Yeager's opinion said. The Closing Company of Pennsylvania was acting as Fidelity's policy issuing agent when it issued Northwest a commitment for title insurance on the McIntyres' loan. However, Yeager said in a footnote, the agreement between TCCPA and Fidelity was limited to countersigning and issuing title insurance commitments, and specifically disallowed TCCPA to receive funds in Fidelity's name.

    After the commitment was issued to Northwest, Northwest sent money to TCCPA and instructed that the funds be used to pay off the McIntyres' mortgage loans. However, it was later found that TCCPA did not use the money for the mortgages, and Jeffrey Garbinski, a TCCPA officer, misappropriated the money.

    In 2013, the mortgage lenders who were not paid commenced a foreclosure on the McIntyres' property, and Northwest sought protection from Fidelity against any losses that might result from the foreclosure. But Fidelity denied coverage, Yeager wrote.

    Yeager determined that it was Northwest's responsibility to pay the pre-existing mortgages, and that Fidelity did not entrust the funds to TCCPA. Because Northwest and TCCPA had a fiduciary relationship, the opinion said, coverage was excluded.

    "The principles of equity cannot dictate that the burden merely shifts to the insurance carrier where the closing agent was fraudulent but the insured is innocent," Yeager wrote. "In fact, such an insurance exclusion has previously been applied in cases concerning the fraud of closing agents."
    [Fidelity's attorney Francis Xavier Riley III] said underwriters routinely deal with a "misperception" that the title issuing agent is the insurer's agent for all purposes.

    "The court's decision shows a recognition that the title's underwriter is not always in the best position … to protect against fraud," Riley said. ...
For the story, see No Title Insurance Coverage for Agent's Fraud, Court Says.

For the court ruling, see Northwest Savings Bank v. Fidelity National Title Insurance Company, No. 451 WDA 2016 (Pa. Super. January 20, 2017) (non-precedential decision).

Sunday, February 05, 2017

Long Island HOA Agrees To Settle Discrimination Suit Alleging It Failed To Make Wheelchair-Friendly Modifications To Common Areas In 126-Unit Condo Complex When Requested By Mobility-Impaired Resident; Determination Of Non-Profit Fair Housing Group's Damages, Injunctive Relief Remains Pending

In Westbury, New York, Newsday reports:
  • A federal housing discrimination lawsuit against a Westbury condominium has been resolved with the building management agreeing to make changes to accommodate mobility disabilities.

    Aimee Farrell, a longtime resident of the 126-unit condominium at 135 Post Ave., alleged in a 2015 lawsuit filed in U.S. District Court for the Eastern District that the Westbury Terrace Condominiums had violated the federal Fair Housing Act, the state Human Rights Law and the Nassau County Administrative Code.

    The building management has agreed to provide reasonable accommodations so that Farrell can have an “equal opportunity to use and enjoy her home” just like any other resident, according to court documents. Farrell discontinued her claims in December.

    Farrell uses a wheelchair, which she said prevented her from accessing many of the building’s common areas. The building’s main entrance and side entries were not wheelchair-accessible, she said in court papers.

    When her requests to the building’s board of managers were not addressed in 2014, Farrell contacted Long Island Housing Services,(1) a fair housing agency, for assistance. Farrell filed the lawsuit after she submitted a complaint with the New York State Division of Human Rights in 2015. The building managers had denied her allegations and initially refused to grant Farrell’s requests for reasonable accommodations, according to court documents.

    Farrell agreed to withdraw her claim with the accommodations being made.

    “Our interest in getting relief was more important than winning a victory over this condo board,” said Farrell’s attorney Robert Schonfeld, of Garden City-based Moritt, Hock, Hamroff & Horowitz LLP.

    The condo management’s attorney A.G. Chancellor III of Melville-based Tromello, McDonnell & Kehoe did not comment on the resolution.

    The board agreed to make several changes: installing a wheelchair-accessible lift for the main lobby’s elevator, installing an overnight buzzer system, automating the entrance and exit doors, and installing an emergency backup generator.

    Schonfeld said that Farrell was unavailable for comment, but that she likely felt “comfortable” with the litigation’s resolution.

    Long Island Housing Services, also a plaintiff in the lawsuit, is still seeking damages and injunctive relief to prevent future discrimination at the building.

    Michelle Santantonio, executive director of the agency, said that it investigates as many as 65 allegations of disability-related discrimination annually.

    The federal Fair Housing Act, amended in 1988, prohibits discrimination based on race, color, religion, gender, familial status, national origin and disability.

    Schonfeld said that many people don’t assert their rights under the law, perhaps because of a lack of awareness or a fear of intimidation by neighbors.

    Either people are afraid to fight for their rights or they don’t know about their rights,” Schonfeld said.
Source: Westbury condominium housing discrimination lawsuit resolved.
(1) Long Island Housing Services is a private, not-for-profit 501(c)(3) fair housing advocacy and enforcement agency serving Nassau and Suffolk counties. Its mission is the elimination of unlawful housing discrimination and promotion of decent and affordable housing through advocacy and education.

Another City Yielded To Public Pressure, Uses Zoning Law To Justify Giving Thumbs Down To Proposed Apartments For Disabled Homeless Vets In 12-Unit Building; Now Finds Itself On Hook For Approx. $2 Million Lawsuit Settlement To Resolve Allegations Of Fair Housing, ADA Violations

In Jacksonville, Florida, WOKV Radio 104.5 FM reports:
  • The City of Jacksonville is poised to settle lawsuits alleging discrimination against disabled veterans.

    Federal court records obtained by WOKV show Ability Housing of Northeast Florida, Disability Rights of Florida, and the City of Jacksonville have come to terms over a pending lawsuit dealing with a project that would have housed homeless, disabled veterans in Springfield. A related case with the Department of Justice has also reached a settlement. In all, the City will pay close to $2 million in fines, attorney’s fees, and other requirements, while making changes to zoning laws. The settlement comes without any admission of wrongdoing.

    Both of the settlements are now pending approval by the City Council before they’re final.

    The history

    The lawsuit stems from a dispute that started in 2013. Ability Housing was poised to purchase a 12-unit apartment building in Springfield to rent to disabled homeless veterans, using special federal vouchers that allow the group to rent to this population at a reduced rate. The non-profit secured $1,355,222 from Florida Housing Finance Corporation to renovate the building, and was only waiting for a Certificate of Use ["COU"] from the Jacksonville Planning Department in order to move forward.

    There was backlash in the community over the planned apartments, however, largely centered on the fact that Ability Housing planned for the residents to be homeless, disabled veterans with a primary diagnosis of mental illness or chronic illness. Ability Housing planned for that because of the apartment’s proximity to a VA clinic, although they did not intend to provide any services on site for the residents.

    The zoning laws give special designations in Springfield that allow for a multiple-family dwelling, but not “special uses” like residential treatment facilities, rooming houses, emergency shelter homes, group care homes, and community residential homes over six residents. Ability Housing believed their plan would be a multiple-family dwelling, because they were renting the apartments and doing nothing further on site, which is similar to the prior use of the building. Springfield residents continued to put pressure on City officials, however, over concerns about the unspecified threat the new residents would pose. The residents, and ultimately the City, believed the proposed use did not fit the definition of multiple-family dwelling under the zoning law.

    Ultimately, the COU was denied. Ability Housing says that led them to lose the Florida Housing Finance Corporation funding, as well as $124,000 in out of pocket expenses they had already put in to the project. Appeals aimed at reversing the City’s decision were heard, but not successful.

    Ability Housing filed a lawsuit in 2015 claiming violations under the Fair Housing Act and Americans with Disabilities Act. The lawsuit claims that, per the City’s interpretation of the Springfield Zoning Overlay, the Overlay itself violates FHA and ADA because it prohibits housing for the disabled. In December 2016, the Justice Department joined in the fight, saying the City discriminated on the basis of disability by preventing this development for persons with disabilities.

    Ability Housing further says the City “retaliated” by cutting off funding through a City program known as the Jacksonville Journey. The federal court records claim the City said they couldn’t provide Ability Housing any Journey funds anymore because of the lawsuit.

    The City of Jacksonville has continually maintained they don’t discriminate against disabled persons, nor do any laws or policies they abide by.

    The settlements

    Federal court records obtained by WOKV show neither side is admitting wrongdoing, and both maintain their arguments. They, nonetheless, decided to reach a settlement, citing the desire to avoid an uncertain trial and the continued cost that would bear.

    Under the settlement, the City of Jacksonville will pay Ability Housing $400,000 for out of pocket expenses that couldn’t be recovered and some attorney’s fees and costs. The City will pay DRF $25,000 for attorney’s fees and costs. They will also establish a $1.5 million grant for the development of “Permanent Supportive Housing” for persons with disabilities. The grant will be awarded to a qualified developer following a competitive bid process.

    A consent decree was also reached in the related case with the Justice Department, which levies a $25,000 civil penalty against the City.

    Other non-monetary terms include the City withdrawing their “Written Interpretation” that prevented this project in Springfield. They will also submit an ordinance to the City Council that would add new procedures for a person with disabilities to get reasonable accommodations, while removing some of the prohibitions at issue in this debate- including some of the provisions of the Springfield overlay. While that ordinance must be introduced, the settlement acknowledges that the City Council can vote it down.

    The Justice Department is also requiring the City designate a person to be the Fair Housing Compliance Officer, or someone who will deal with allegations of housing discrimination. City officers, elected and appointed officials, and employees dealing with zoning and related areas are also now required to be trained on these changes, FHA and provisions on disability discrimination, and ADA and the application to zoning. That training will be done at the City’s expense.

    Ability Housing will also be able to seek Journey funding once again.

    The two-week trial had been slated for February. The settlement agreements have now been filed with the City Council for approval in the coming weeks.
Source: Jacksonville to settle federal suits over disable veteran discrimination (City to pay close to $2 million under settlement agreements, if approved).

Local Zoning Board Yields To Fierce, Stereotypically-Coded Public Pressure In Nixing Proposed Low-Income Housing Complex; Town Now Finds Itself Having To Promote Project & On The Hook For $375K In Developer's Legal Fees In Settlement Of Fair Housing Complaint

In Whitehall Township, Pennsylvania, The Morning Call reports:
  • Over the next year, the federal government will be watching Whitehall to ensure the township erases any barriers to fair housing as part of a settlement with the U.S. Department of Housing and Urban Development.

    The settlement, made public [] on the township's website, will also require Whitehall to take a proactive stance in promoting the Lofts at Fullerton, the controversial affordable housing project proposed by the PathStone Corporation that sparked the HUD complaint. Whitehall is also on the hook for the Rochester, N.Y.-based nonprofit's $375,0000 in legal fees.

    Breaching the settlement, which was finalized in December, would draw the attention of the U.S. Attorney General's Office, according to the terms of the settlement.
    The Lofts housing project was pegged for the former Fuller Sportswear garment mill at 215 Quarry St., but denied by the Whitehall Zoning Hearing Board in May 2014 on the basis that there was inadequate parking for the 49-unit apartment building. Residents turned out in force to oppose the project, complaining that an apartment building would crowd and change the makeup of the neighborhood.

    The comments leveled at these public hearings were the basis of PathStone's appeal, which was filed through HUD in April 2015 rather than through the county court. The nonprofit alleged that Whitehall's denial amounted to fair housing discrimination, and the complaint cited quotes from residents using prejudicial language to oppose the project.(1)(2)

    The HUD complaint threatened to turn off the spigot for federal Community Development Block Grants for Whitehall as well as some costly fines.

    Whitehall has denied any discriminatory action and has admitted no liability in the settlement agreement. Both the township and PathStone have agreed to refrain from any further legal action over the matter.
For the story, see Whitehall must pay $350,000 in legal fees, promote affordable housing project.
(1) From the developer's complaint filed with HUD:
  • At both public hearings, the Board permitted objectors to express stereotypical and discriminatory views concerning the prospective low- and moderate income residents of The Lofts. For instance, one community member objected, worrying about “having HUD in your backyard, what it’s going to do to your property value.” Another objector noted that, “[w]hatever kind of housing goes in there is going to drastically change that entire neighborhood, drastically.” Finally, a community member stated that, “if this is allowed, we’re going to need a lot more police surveillance in the area than what we have now.”1 [complaint indicates that these comments were taken from the transcript of a May 14, 2014 zoning board hearing].

    In denying the relief sought by PathStone for The Lofts, the Board adopted — and was influenced by — the discriminatory views of objectors.
(2) It should also be noted that the Whitehall Township Hearing Board apparently had no problem unanimously approving plans for converting the same site into a multi-unit, market rate condominium housing complex for seniors in 2006 (a project that never got off the ground), but yet rejected plans when the intended development was for affordable housing.

From the complaint:
  • Most pertinent here, on one occasion, in 2006, the Board unanimously granted relief in the appeal of Whitehall Manor Retirement Condos, Inc. to convert the use from a garment factory non-conforming use to a non-conforming use with 43 market-rate condominium units for senior citizens, and reduced the requirement for on-site parking. The Board also granted variances from the maximum impervious coverage and density.

    Apparently, the Whitehall Manor developer did not proceed, and neither did a subsequent applicant for whom the Board again approved a non-conforming use as self-storage units. As a consequence, the parcel remains disused and the buildings continue to deteriorate.

Kansas Landlords Find Themselves In Fair Housing Hot Water For Allegedly Giving Grandma The Boot After She Gained Custody Of Her Grandchild & Asked That Lease Be Modified To Reflect That Status

From the U.S. Department of Housing & Urban Development (Washington, D.C.):
  • The U.S. Department of Housing and Urban Development (HUD) announced [] that it is charging the property owners, operator, and office manager of a multifamily property in Wichita, Kansas with violating the Fair Housing Act by terminating the lease of a resident who had asked that her grandchild be allowed to live with her. Read HUD’s charge.

    The Fair Housing Act makes it unlawful to discriminate against families with children, including denying or limiting housing to families because they have children under the age of 18, making discriminatory statements, and imposing rules or policies that discriminate against families with children.

    “Grandparents shouldn’t have their housing taken from them simply because they’re guardians of young children,” said Gustavo Velasquez, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “This charge reinforces HUD’s commitment to ensuring that housing providers meet their obligation to treat families with children the same as any other resident.”

    The case came to HUD’s attention when a female resident filed a complaint alleging that the owners of Northridge Apartments, a complex in Wichita consisting of 16 one-bedroom units, terminated her lease after she asked if she could add her granddaughter to her lease. The grandmother had obtained custody of the child shortly before she made the request.

    HUD’s charge alleges the property manager told her that her request “may be a problem,” and that the owner “doesn’t want kids on the property.” The charge further alleges that the owners gave notice that they were terminating the lease of another family with a child around the same time.

    The case will be heard in federal district court. If it is determined that illegal discrimination has occurred, a judge may award actual and punitive damages, order injunctive or other equitable relief to deter further discrimination, and order that defendants pay the family’s attorney fees.

Another Developer/Landlord Agrees To Retrofit Recently-Constructed Apartment Building, Agreeing To Cough Up $50K In Damages To Non-Profit Group To Settle Lawsuit Alleging Failure To Follow Handicap Accessibility Requirements Under Fair Housing Act

In Richmond, Virginia, the Richmond Times-Dispatch reports:
  • Housing Opportunities Made Equal of Virginia Inc., a statewide fair housing nonprofit organization based in Richmond, said [] it has settled a discrimination case with a Richmond developer, architect and construction company involving an apartment building in Shockoe Bottom.

    The lawsuit claimed that Historic Housing, SWA Architects and SWA Construction Inc. failed to design and construct The Lofts at River’s Fall at 1810 E. Cary St. in accordance with handicap accessibility requirements for new construction under the federal Fair Housing Act.

    The developer, architect and contractor agreed to retrofit the property to make it accessible and compensate HOME for damages of $50,000. The settlement resolves all claims in this case, according to the nonprofit group.
    The Lofts at River’s Fall is a four-story apartment building with 129 units, a pool and fitness center that was finished about three years ago.

    Also named in the suit were Bacon Housing SCP L.P. and Canal Walk Lofts IV L.P., which are described in the filing as Richmond owners and developers during design and construction of The Lofts.

    Under terms of the agreement, the defendants agreed to retrofit the complex by making extensive modifications, including alterations to ensure accessible bathrooms and kitchens. They also agreed to make parking spaces and storage units accessible.

    “We commend the developers, builders and architects of The Lofts at River’s Fall for their willingness to come to the table with us and work on an accessibility plan that will ultimately make this complex an equal housing opportunity for residents and guests with mobility disabilities,” said Helen Hardiman, vice president of HOME.

    The Fair Housing Act requires all covered multifamily dwellings designed and constructed for first occupancy after March 1991 to be readily accessible to and usable by persons with disabilities.