Saturday, May 06, 2017

Airbnb Agrees To Allow State Of California To Conduct Fair Housing Testing Of Certain Hosts In Settlement Of Racial Discrimination, "#AirbnbWhileBlack" Lawsuit

In San Francisco, California, The Guardian reports:
  • Airbnb will allow the government to test for racial discrimination by hosts as part of an agreement with California that is the first of its kind and could pave the way for stricter regulations and greater public scrutiny.

    The California Department of Fair Employment and Housing (DFEH) announced Thursday [April 27] that it had resolved a complaint it filed against Airbnb with an agreement that forces the company to permit the state to conduct “fair housing testing” of certain hosts. That means that for the first time the San Francisco-based company is giving a regulatory body permission to conduct the kind of racial discrimination audits that officials have long used to enforce fair housing laws against traditional landlords.

    The resolution of the state’s ten-month investigation is significant given that Airbnb, like many popular “sharing economy” companies such as Uber and Instacart, has repeatedly resisted existing industry regulations, arguing that it is a “platform” and not subject to local laws and requirements that apply to similar businesses.

    The DFEH’s original complaint – which had not previously been disclosed – was based on research and a growing number of reports suggesting that hosts regularly refuse to rent to guests due to their race, a problem exposed last year under the hashtag #AirbnbWhileBlack.

    On social media, black Airbnb users reported experiences of facing a rejection by a host, who later accepted them when they changed their profile to a white person. Earlier this month, an Asian American woman’s account of discrimination in California went viral after she said a host cancelled on her last minute specifically because of her race, leaving her stranded in a storm.
For more, see Airbnb gives in to regulator's demand to test for racial discrimination by hosts (San Francisco-based company reached an agreement with California’s housing agency amid complaints of guests being rejected for their race).

See, generally, #AirbnbWhileBlack: How Hidden Bias Shapes The Sharing Economy.

Municipality Denies Fair Housing Wrongdoing, But Agrees To $2.45 Million Payout To Settle Real Estate Developer's Lawsuit Accusing Town Of Illegally Blocking Plans To Build 47-Unit Low-Income Apartment Complex; Gov't Insurer Left Holding The Bag For Most Of The Cost; Separate Action By Civil Rights Feds Remains Pending

In Tinley Park, Illinois, the Daily Southtown reports:
  • With a quick, uneventful vote at Tuesday's [April 18] Village Board meeting, Tinley Park officials laid to rest one legal controversy stemming from plans, now abandoned, to build apartments in the village that would target low-income renters.

    The settlement with Buckeye Community Hope Foundation, the Ohio-based nonprofit that proposed to build the 47-unit The Reserve, means the apartment project won't be built but it's unclear whether the agreement will also help in settling a separate lawsuit against the village, brought by the Justice Department, alleging violations of federal fair housing laws.

    On Wednesday, a year to the day since Buckeye filed its federal lawsuit, a check for $2.45 million was to have been delivered to the Chicago offices of the law firm Holland & Knight, which represented Buckeye in the lawsuit.

    Per the terms of the settlement, Tinley Park will pay Buckeye $75,392 from the village's general fund. Buckeye will receive an additional $684,608 from a legal settlement fund held on the village's behalf by its insurer, the Intergovernmental Risk Management Association. IRMA will then pay Buckeye another $1.69 million out of its own fund, for a total settlement of $2.45 million.

    Dave Niemeyer, Tinley Park's village manager, said that IRMA had urged the village to settle the Buckeye matter and was also involved in negotiating the amount of the settlement.
    Village officials said that the continuing cost of pursuing its defense of the lawsuit was a major factor in agreeing to settle. Trustee Brian Younker, prior to the board vote, said that the legal fees for the village could have been "well in excess" of $1 million had the matter gone to trial and the outcome of the case been appealed by either side.

    Buckeye sued after the village's Plan Commission, in early February of last year, tabled a vote that would have cleared the way for The Reserve to be built. Buckeye alleged that village officials had improperly interfered in blocking the project and discriminated against prospective tenants of building.

    As part of the settlement, Tinley Park denies any wrongful conduct on its part.
    Separate from the Buckeye settlement, attorneys for the village are awaiting a judge's decision on Tinley Park's motion to dismiss a lawsuit brought last November by the Justice Department alleging village officials violated federal fair housing laws by not approving the apartments.

Another Town Finds Itself In Possible Fair Housing Hot Water; Lawsuit Accuses Local Officials Of Using Zoning, Tax Laws In Concerted Effort To Bully Social Services Group Out Of Using Single-Family Home As Community Residence For Six Men With Mental Health Diagnoses

In Cromwell, Connecticut, The Connecticut Law Tribune reports:
  • A community services group that places mentally disabled residents in housing has filed a federal lawsuit against the town of Cromwell and its leaders for allegedly "fanning the flames" of opposition to its single-family residence to the point it was forced to shut its doors.

    The lawsuit claims the town used zoning and tax laws, a cease and desist order, and public pressure to force out the house and its occupants. An attorney representing plaintiffs Gilead Community Services Inc.(1) and the Rainbow Housing Corp. called the issue a blatant example of discrimination.

    "This is about the stereotyping of people with disabilities. It's very clear," said one of Gilead's attorneys, Greg Kirschner, of the Connecticut Fair Housing Center Inc.(2) "There is a belief by some that people with disabilities are inherently dangerous and a threat to the community."

    In the 24-page lawsuit filed Monday [April 17] in U.S. District Court for the District of Connecticut in Bridgeport, Gilead takes aim at Mayor Enzo Faienza, Police Chief and Town Manager Anthony Salvatore, and then-zoning enforcement officer Jillian Massey, who no longer works for the town.

    The town is accused of violating the Americans with Disabilities Act and the Fair Housing Act.

    According to the lawsuit, the town called a public hearing on the home even though it was exempt from zoning laws and public hearing requirements. The town also issued a cease and desist order wrongly claiming the house was operating without proper zoning permits, and denied Gilead a property tax exemption it was entitled to, the lawsuit claims.

    At one point, Faienza suggested group homes for people with disabilities ought to be limited "the way package [liquor] stores are limited in a town," according to the lawsuit.

    Faienza and Massey couldn't be reached for comment. Salvatore declined to comment.

    Town officials did everything they could to close down the house, located on Reiman Drive, even though "the law is clear and it says that people with disabilities have a right to live in the housing of their choice," Kirschner said.

    The house was supposed to serve as a home to six men, but it ultimately closed after just two months of operating with only two occupants on July 1, 2015.

    Cromwell town attorney Kari Olson declined to comment on the allegations, but said "we wholeheartedly disagree with the claims in the lawsuit and feel the claims are not justified, especially with respect to the individual defendants that have been named."

    Gilead seeks compensation tied to its purchase and renovation of the home.

    Gilead purchased the 3,000-square-foot home for $350,000, according to the lawsuit. It spent almost $150,000 preparing the house for occupancy but had to sell it for $280,000. Gilead also lost a $900,000 annual contract with the state Department of Mental Health and Addiction Services when the house closed.

    In addition to Kirschner, Gilead is represented by Michael Allen and Yiyang Wu, of Relman, Dane & Colfax, PLLC in Washington, D.C.
Source: Town Accused of Using Tax, Zoning Laws to Block Home for Disabled (may require subscription; if no subscription, TRY HERE, then click the appropriate link).

For the lawsuit, see Gilead Community Services Inc., et. al. v. Town of Cromwell, et. al.
(1) Gilead Community Services Inc. is a social services agency serving Middlesex County, Connecticut that provides services such as housing, clinical support, and skills teaching to help people who experience mental health conditions.

(2) The Connecticut Fair Housing Center is a non-profit law firm that provides investigative and legal services to residents who believe they have been the victims of housing discrimination. The Center also has provided education and conducted outreach on fair housing and fair lending issues throughout Connecticut.

Fair Housing Lawsuit: Credit Union Refused Granting Mortgage Loans To Women While They Were On Or About To Go On Maternity Leave

In Denver, Colorado, The Denver Channel reports:
  • Greenwood Village-based home loan lender Bellco Credit Union faces accusations it broke federal fair housing laws by not giving mortgage loans to women while they were on or about to go on maternity leave.

    Bellco Credit Union was sued by the Denver Metro Fair Housing Center(1) in March in U.S. District Court of Colorado for allegedly discriminating against people based on their sex and familial status, the suit says. It was assigned earlier this month to a judge, and a scheduling conference in the case is set for May 26.

    According to the suit, Bellco has continued to deny mortgage loans to women who are either on or facing impending maternity leave until the women return to work for at least 30 days, which DMFHC says is a direct violation of both state and federal fair housing laws, as well as underlying rules for loans issued by Fannie Mae.

    Bellco has more than 20 branches across Colorado.

    Over a period of several months last year, DMFHC used five women to test Bellco’s rules by applying for mortgage loans either while they were already on maternity leave, or by saying they were about to go on it.

    The women were all white in order to control the test, the suit says, and all had credit scores in the mid-700s, household incomes with two earners and money in their savings. Two of the women were not on our about to go on maternity leave so as to control the test, the suit says.

    In all three cases in which the women said they were on or about to go on maternity leave, loan representatives from Bellco told the women they would have to return to work and provide one month’s worth of pay stubs in order to close on a home, despite some of them having alternate incomes from their husbands and, in one case, $72,000 in savings, according to the suit.

    In one case, one of the Belco workers “unequivocally communicated that women on maternity leave must return to work as a threshold condition to potentially qualify for a home mortgage loan from Bellco,” according to the suit.

    But the U.S. Department of Housing and Urban Development (HUD) has issued numerous guidance memos over the past seven years showing that women do have the right to obtain a mortgage loan while on maternity leave.

    From 2010 to 2014, HUD received approximately 190 complaints regarding home loans and pregnancy or parental leave, around 40 of which were settled by the end of 2014, according to the suit.

    When HUD settled with Houston-based lender Cornerstone Mortgage Company in 2011, an assistant secretary for HUD said that explicitly.

    “Pregnancy is not a basis to deny or delay a loan. It’s just that simple,” HUD Assistant Secretary for Fair Housing and Equal Opportunity John Trasvina said at the time. “Mortgage professionals may verify income and other resources and have eligibility standards, but they may not single out women on maternity leave to deny or delay loans that they are otherwise eligible for.”
For more, see Bellco Credit Union sued for alleged mortgage loan discrimination against women on maternity leave.

For the lawsuit, see Denver Metro Fair Housing Center, Inc. v. Bellco Credit Union.
(1) The Denver Metro Fair Housing Center is a non-profit fair housing organization dedicated to eliminating housing discrimination and promoting housing choice for all people through education, advocacy, and enforcement of fair housing law.

Accused Of Denying Homeowner Insurance Price Quotes To Blacks, Hispanics Who Declined To Provide Social Security Numbers, While Failing To Apply Same Standard To Whites, Insurance Agency Denies Wrongdoing, But Agrees To Resolve Fair Housing Complaint

In South Whitehall Township, Pennsylvania, The Morning Call reports:
  • A South Whitehall Township insurance company, saying it was a "misunderstanding," resolved a fair housing complaint about minority callers who requested quotes for homeowners insurance.

    Arbor Insurance Group will volunteer to help first-time homebuyers as part of the agreement with the Housing Equality Center of Pennsylvania,(1) a nonprofit based in Fort Washington, according to a press release.

    The agreement, which included Arbor's denial of wrongdoing, arose from a Housing Equality Center investigation that alleged that from August 2012 to October 2014, an Arbor agent didn't give homeowners insurance quotes to African-American and Hispanic callers who declined to provide their Social Security number, the press release said.

    White callers, however, did not have to provide their Social Security number to obtain a quote, the press release said.

    Such behavior violates the federal Fair Housing Act, which bans discrimination in housing matters based on race, color, religion, national origin, sex, disability or familial status, said Rachel Wentworth, the Housing Equality Center executive director.

    Arbor President William Hacker said he was surprised to learn of the allegations because the company is dedicated to promoting a culture of diversity and inclusion. He said his company helps all aspects of the community, supports nonprofits and has a foundation that distributes thousands of dollars to the elderly and underprivileged.

    The company was also featured in a Morning Call story in 1996 for hiring one of two Latino insurance agents in the Lehigh Valley at the time.

    "We think it's a misunderstanding," Hacker said.

    Wentworth said having access to homeowners insurance directly impacts consumers' ability to purchase a home. Asking minorities for additional information is an impediment.

    "It's like an extra hurdle that they need to overcome in order to purchase a home on a level playing field as a white consumer would have," she said.

    Wentworth filed a complaint with the federal Department of Housing and Urban Development (HUD), which was resolved earlier this year when Arbor and the Housing Equality Center reached their agreement.
Source: South Whitehall insurance company settles fair housing complaint.
(1) The Housing Equality Center of Pennsylvania is a non-profit, fair housing organization that offers a variety of programs and services to the general public, including counseling and conducting testing investigations to help housing discrimination victims, to ensure that consumers have access to housing and understand their rights under fair housing laws. Its service area includes the Pennsylvania counties of Bucks, Chester, Delaware, Lehigh, Montgomery, Northampton and Philadelphia.

Friday, May 05, 2017

Major NYC Landlord Targeted In Lawsuit Alleging Rent Overcharges For Rent-Stabilized Tenants, Violating Terms Of Local Property Tax Abatements

In New York City, The Real Deal (NYC) reports:
  • Larry Gluck’s Stellar Management is facing a lawsuit for allegedly overcharging dozens of rent-stabilized tenants, violating the terms of property tax abatements the company receives from the city.

    Fifty-nine tenants from more than a dozen of Stellar’s buildings say the landlord abused the J-51 tax abatement, a city subsidy for multifamily properties that requires landlords to keep apartments in the rent-stabilization program, the Wall Street Journal reported.

    The action against Stellar in New York State Supreme Court came together following an investigation by the Housing Rights Initiative ["HRI"],(1) a nonprofit that’s inspired similar actions against New York City landlords receiving J-51, such as A&E Real Estate Holdings. It also comes in the wake of a mildly successful initiative by Gov. Cuomo to crack down on landlords who flouted J-51 regulations.
    According to the HRI’s Aaron Carr, Gluck filed 3,900 eviction cases against tenants between 2013 and 2015 alone.
For more, see 59 tenants sue Gluck’s Stellar Management claiming rent overcharges (Group organized by nonprofit HRI seeking class-action status).

See also, A group of about 60 apartment residents contends in a lawsuit filed in Manhattan that Stellar Management illegally overcharged them.
(1) The Housing Rights Initiative is a nonprofit community organizer dedicated to the advocacy of the rights of rent-stabilized tenants in New York City.

State AG: Hell To Pay For NY Landlords Who Use Immigration-Related Threats To Harass Tenants Out Of Their Apartments

From the Office of the New York Attorney General:
  • Attorney General Eric T. Schneiderman today [April 12] released a new "Know Your Rights" guidance [go here for the Spanish version], providing immigrant tenants in New York State with legal guidance in the event that they face landlord harassment on the basis of immigration status.

    With fear on the rise in immigrant communities, the Attorney General’s office has received a number of reports of tenant harassment; in particular, tenants and advocates have reported an increase of cases in which renters have been specifically targeted based on immigration status, including landlords threatening to call federal immigration officials and have the tenants deported in an attempt to illegally displace the tenants.

    “Every New York tenant has a basic legal right to live in peace in their home. Harassment of tenants based on immigration status is not only appalling – it’s unlawful,” said Attorney General Schneiderman. “This guidance will help ensure that all tenants know their rights – and should serve as a reminder: my office will pursue to the fullest extent of the law any landlord who illegally harasses tenants.”
For more, see With Fear On The Rise In New York’s Immigrant Communities, A.G. Schneiderman Releases Tenants’ Rights Guidance For Immigrants Facing Landlord Harassment (A.G. Warns: My Office Will Pursue Any Landlord Who Harasses Tenants On The Basis Of Immigration Status).

Out-Of-Control California Landlord Gets Five Days Jail Time For Contempt Of Court In Connection w/ Allegations By Ex-Tenant That Ellis Act Was Improperly Used As Pretext To Illegally Boot Him From Apartment

In West Hollywood, California, WEHOville reports:
  • The City of West Hollywood has prevailed in court against West Hollywood landlord Anne Kihagi, who has been ordered to serve five days in Los Angeles County Jail and to pay the city’s attorney fees and costs.

    Kihagi was held in contempt of court on Feb. 21 for violating a preliminary injunction that prohibited her from re-renting certain units at her property, an eight-unit building located at 1263 N. Crescent Heights Blvd.

    The preliminary injunction was obtained after the City of West Hollywood intervened in a case against Kihagi, filed by a former tenant, who contends he was wrongly evicted when Kihagi used the Ellis Act(1) as a pretext to terminate all of the leases in the building. Kihagi violated the injunction by re-renting the former tenant’s unit.
    Kihagi also owns apartments in San Francisco, where she has been charged with illegally evicting tenants in what a city official said was the “most egregious” conduct by a landlord that he had seen in 13 years.

    An article in 2015 in reported that San Francisco City Attorney Dennis Herrera filed suit against Kihagi, alleging she “waged a war of harassment, intimidation and retaliation” to force tenants from rent-controlled apartments she owned in San Francisco so that she could raise the rents to market rates.(2)

    Herrera said Kihagi bought apartment buildings whose tenants were paying below-market rates and tried to force them out. Herrera said that Kihagi offered to pay tenants to move. If they declined her offer, Herrara said that Kihagi claimed that she or relatives were moving into the building. Under the state’s Ellis Act, a rental property can be removed from rent control quickly if it is to be occupied by its owner or his or her family. Otherwise the property must remain off the market for a specified period of time before it can be re-rented at market rates.

    Herrera said Kihagi also tried to force tenants out by setting strict rules for their usage of storage rooms, laundry facilities and other things and was known to cut off utility services such as electricity and water.
For the story, see WeHo Landlord Sentenced to Jail for Ellis Act Violation.
(1) According to the story:
  • The Ellis Act is a California State Law enacted in 1985 that allows property owners to evict tenants without cause if they intend to remove properties from the residential rental market. Displaced tenants and local governments may file a legal action against landlords if the property is returned to the rental market without following the Ellis Act’s restrictions,

Judge Nixes Legal Aid Lawyers' Request To Wrestle Away Control Of Dilapidated Apartment Building Thru Receivership, But Will Give It 2nd Thought If Long List Of Ordered Repairs Are Not Made

In Austin, Texas, KVUE-TV reports:
  • Once again, tenants of a North Austin apartment complex that has been at the center of several safety complaints are speaking out.

    People living in Cross Creek Apartments said since the complex's owner died last month, conditions have worsened. However, those handling the property said they've spent more than a million dollars making changes.

    Wednesday, tenants said there's still a lot of problems that need to be fixed and this morning they headed to court with their legal representation, Texas RioGrande Legal Aid, to try and make some changes.

    Attorneys with Texas RioGrande Legal Aid(1) asked the Travis County District Court to take control of the complex following the owner's death last month and give it to a third party. The third party would collect rent money and use it to make repairs that were court-ordered more than a year ago. Texas RioGrande Legal Aid Attorney Robert Doggett said they didn't get that outcome, but are still satisfied.

    "The judge at the end ordered them to make a bunch of repairs," Doggett said. "That included a six-page order that the judge is going to enter probably later this evening. The judge did not sign an order authorizing the removal of them as controlling the property, which is what the tenants requested. All in all, good day. What we went in for is to get the defendant's attention, get some repairs started and send a message that if this isn't done we're going to go to the next level."
    Doggett said the judge let everyone know that if repairs aren't made in a timely fashion, he will once again consider who has control of the complex.
Source: Tenants fight North Austin apartments in court.
(1) Texas RioGrande Legal Aid (TRLA) is a non-profit organization that provides free legal services to low-income residents in sixty-eight counties of Southwest Texas, and represents migrant and seasonal farm workers throughout the state of Texas and six southern states: Kentucky, Tennessee, Alabama, Mississippi, Louisiana and Arkansas. In addition, TRLA operates public defender programs in several Southwest Texas counties, representing the poor who are accused of felonies, misdemeanors and juvenile crimes.

Legal Aid Lawyers Step In w/ Lawsuit On Behalf Of Low-Income Tenants' Battle w/ Landlord Over Living Conditions (Collapsing Ceilings, Broken Heating System, Rats & Roaches Running Rampant) In Bronx Apartment Building

In The Bronx, New York, DNA Info (New York) reports:
  • A group of Bronx tenants suffering from rat infestations, collapsing ceilings and broken heating systems are taking their landlord to court to force him to make repairs.

    "We’ve always got to be calling 311 to make complaints," tenant Marilyn Rivera said in Spanish, speaking through a translator. "After you make complaints one, two, three times, then they might come to address them."

    Rivera and other tenants filed a lawsuit last week in Bronx Supreme Civil Court against their landlord Robert Khomari of Universal Heights 18 LLC in an effort to force him to make improvements to the building.

    Tenants organized with the help of the [community organizer] Northwest Bronx Community & Clergy Coalition, and in a Feb. 14 letter to Khomari, they attempted to draw his attention to problems in their homes, which included a lack of heat and hot water, collapsing ceilings, broken mailboxes and infestations of rodents and roaches.

    The letter demanded that Khomari take "immediate steps to cure the issues" and meet with tenants at the building, but more than two months later, residents said living conditions at the building remained poor.

    Rivera, who has lived in the building for 33 years, said the problems with mice and rats have persisted and that even when repairs at the building are done, they are not done very well.

    "They put this door here, as you can see, and they made copies of the key, and they’re charging us to get the key to our door," she said. "$16 just to be able to enter."

    Rivera often catches three or more mice per week in her home, while tenant Felipa Rodriguez was at one point catching more than 15 mice over just a few weeks, according to the suit.

    The building currently has 12 open violations with the Department of Buildings and 29 open violations with the Department of Housing Preservation and Development.

    Whitney Viets, a staff attorney at Bronx Legal Services,(1) said they decided to file a lawsuit over conditions at the building in housing in order to force Khomari to make repairs to the building.

    "This is a landlord that has been disregarding the rights of tenants for some time, it appears," she said, "and I think we’re just very excited to assist these tenants in getting the relief that they deserve."
For more, see Rat Infestation, Collapsing Ceilings Prompt Tenant Suit Against Landlord.
(1) Bronx Legal Services is part of Legal Services NYC, a non-profit organization of legal aid lawyers providing legal services for low-income residents of New York City.

Thursday, May 04, 2017

Despite Serving Six Years Prison Time & Losing Law License In Earlier Million Dollar Ripoff, Career Lowlife Now Gets Add'l 11 To 22 Years For Screwing Over Homeowners In Foreclosure, Home Buyers Out Of Over $1 Million

In Brooklyn, New York, the New York Daily News reports:
  • A brilliant but disbarred lawyer was sentenced to 11 to 22 years in prison Friday [April 21] for masterminding a series of real estate schemes that bilked unwitting clients and home buyers out of more than $1 million.

    Brooklyn Supreme Court Judge Alexander Jeong handed down the stiff punishment to ex-attorney Domenick Crispino, calling his crimes “reprehensible” because he used his impressive intelligence for evil.

    “It kills me that you used that intelligence to victimize these people,” Jeong said to Crispino, who graduated from Georgetown University’s prestigious law school.

    Crispino was convicted last month on a litany of charges, including grand larceny, criminal possession of a forged instrument and falsifying business records.

    A jury found him guilty of preying on financially strapped Brooklyn homeowners between 2011 and 2015 by promising to help save their properties from foreclosure.

    Despite losing his law license in 1999, Crispino held himself out as an attorney to gain his victim’s trust, prosecutors said.

    Instead of helping them, he siphoned away hundreds of thousands of dollars that the homeowners had given him to hold in escrow accounts to pay down their mortgages.

    In one con, he swindled nearly $600,000 from a man trying to help his elderly friend save his Bath Beach home.

    In another scheme, he forged a satisfaction of mortgage record and a deed transfer in which he claimed a financially strapped homeowner sold him her Gravesend property for $10. Then he swindled a $47,5000 down payment out of a prospective buyer.

    In all he stole nearly $1.1 million, according to prosecutors.

    “This defendant can only be described as a financial predator, stealing as much money as he could from as many victims as he could find,” acting Brooklyn District Attorney Eric Gonzalez said.

    “Using his knowledge of the law, he repeatedly exploited the victims to enrich himself. I will not allow con artists to profit from Brooklyn's rising home values, and my office will continue to target shameful frauds like these."

    Crispino, who is married, has a daughter and lives in Staten Island, declined to address his conviction before his sentencing Friday, telling the judge he planned to appeal the verdict.

    This won’t be Crispino’s first prison stint.

    He previously served nearly six years after he was disbarred and convicted in 1999 of defrauding clients out of more than $1 million.

    Before sentencing Crispino, Jeong marveled at the defendant’s smarts.

    Crispino represented himself during the trial. Jeong said that Crispino’s legal knowledge and ability to cite cases off the top of his head was impressive.

    “I just don’t understand a man of your intelligence doing this,” Jeong said.

Trio Get Slammed by Federal Jury For Running S. California-Based Loan Modification Scam That Fleeced Unwitting Homeowners In Foreclosure Out Of At Least $10 Million

From the Office of the U.S. Attorney (Alexandria, Virginia):
  • Three co-conspirators who operated a nationwide, multi-year “home mortgage modification” fraud that scammed hundreds of victims out of at least $10 million were convicted today [April 21] by a federal jury.

    “These defendants scammed hundreds of individuals and families who were trying desperately to save their homes,” said Dana J. Boente, U.S. Attorney for the Eastern District of Virginia. “Their crimes were rooted in dishonesty and greed, and they shamelessly enriched themselves at their victims’ expense. I am very pleased with the convictions and want to commend the efforts of the Assistant United States Attorneys and our investigative partners for their terrific work on this important and complex case.”

    According to court records and evidence presented at trial, Sammy Araya, Michael Henderson, and Jen Seko, all from the greater Los Angeles area, operated a large-scale “home mortgage modification” scam that victimized vulnerable individuals and families across the country for several years.
    According to court records and evidence presented at trial, after being contacted by another member of the conspiracy and told that their mortgage modification had been approved, the victim homeowner would be told that their lender required a “reinstatement fee,” usually in the amount of thousands of dollars. Victims were also told that they were required to make several “trial” mortgage modification payments. After these so-called “trial payments” were completed, their modification would be complete and their new lower mortgage payment would become permanent for the life of the loan.
    The victims of this scheme dutifully sent their payments to the fraudulent entities as instructed by the conspirators, only to discover that they had not been granted a mortgage modification by their lenders. When victims confronted the members of the conspiracy about this fact, the conspirators would make lulling statements designed to reassure the victims, such as telling them that the mortgage modification process takes time, and that they were dealing with individuals at a higher level at the bank than the lender representatives with whom the victims had spoken.

    In reality, however, the members of the conspiracy were simply diverting the victims’ payments for their own personal benefit, without doing anything to assist in modifying the victims’ mortgages. Araya, the ringleader of the scheme, used the proceeds of the fraud to purchase expensive vehicles, a racehorse, and a variety of luxury goods, as well as to fund his personal travel and a reality television show he produced called “Make It Rain.TV.”

Wednesday, May 03, 2017

NH Homeseller's Nasty Surprise: Title To Portion Of Premises Sitting In Neighboring County Was Seized By Town 10 Years Earlier For Unpaid Real Estate Taxes

In Hooksett, New Hampshire, the New Hampshire Union Leader reports:
  • A Manchester homeowner was at an impasse when he went to sell his home, only to find out that part of his Crestview Road property was in Hooksett and tens of thousands of dollars was owed on it in back taxes.

    In 1966, property plans were registered with the Hillsborough County Register of Deeds, showing that the property was in both Manchester and Hooksett. Up until 1975, there was only one deed for the property. But that year, one was made through Merrimack County for the Hooksett part of the property.

    “So now we had two deeds, one for Manchester and one for Hooksett,” said Town Administrator Dean Shankle. “No problem there, but the person who owned in 1997 lost the property by foreclosure.”

    At that point, the bank didn’t know that the property had two deeds, as it was not listed on the plans registered in Hillsborough County. The property was bought in 1997 by Gerard Gamache, according to online records.

    So Hooksett kept sending tax bills to the property, which went unpaid since they weren’t sent to the correct owner. In 2006, the Hooksett part of the property was seized in lieu of the unpaid taxes.

    “So now we own 5,227-square-feet on Crestview Road that has a Manchester resident’s driveway on our property,” Shankle said. “Nobody would have noticed this except the current owners — the Gamaches — are trying to sell their property.”

    The Town Council approved the sale of the property to the Gamaches on Wednesday [April 26] so that they can continue with their sale. The land was sold for $68,000, which is its assessed value. A condition will also be put on the deed, stating that the Hooksett portion is not meant to be built on.

    In all, about $65,000 was owed on the property. “If we get $68,000, we would have gotten back everything we lost,” Shankle said.

    This isn’t the only property like this in town. There are others along the Manchester border that have things like swimming pools and outdoor bathrooms on the Hooksett side of the line.

    “Those we actually tax and the people know it so they pay,” Shankle said.”This just got lost because the bank screwed up when they transferred the property after they foreclosed it.”

Title Search Error, Missed Lien: Despite Making Prompt House Payments On His Own Loan, Utah Resident Finds Himself Facing Foreclosure On Prior Owner's Unsatisfied Mortgage Eight Years After Home Purchase, Then Finds Himself Forced To Hire Lawyer & Complain To Local Media Consumer Troubleshooter To Pressure Title Insurer To Finally Fix Screw-Up

In West Jordan, Utah, KUTV-TV Channel 2 reports:
  • Clint Lowry's has owned his West Jordan home for eight years.

    He calls it his “dream house,” but last summer, his he was facing a nightmare. Someone slapped a notice to his door that his home was facing foreclosure and was about to be sold to the highest bidder. "They are, basically, going to throw me and my family out on the street," he said.

    Lowry makes all of his mortgage payments and his credit report shows no indication he is behind.

    So, why is he on the verge of losing his home?

    It turns out, the home is being foreclosed over a debt owed by the guy who owned the home before him. "Because of this guy's 2006 debt, 10 years later, they're coming after me for his debt for the original owner," Lowry said.

    Desperate to save his home, Lowry asked if he could pay off that debt. He was told, no. In fact, because the debt isn't Lowry’s, the lender won't even tell him how much is owed.

    Lowry also filed a claim with his title insurance but, after several months, he said they haven’t stepped up to resolve the problem.

    "I'm pissed!” he said. “I'm emotional. I don't know what to do. I'm losing everything I've worked for -- everything!"

    Lowry decided it was time to [local media consumer troubleshooter] Get Gephardt.

    When we reached out to Lowry’s title company to ask how this could have happened, a spokesperson told us they were working, "to obtain additional information," about the situation. In the meantime, good news for Lowry: "The previously scheduled foreclosure sale has been canceled,” a spokesperson wrote.

    Lowry also hired attorney Lonn Litchfield who was able to pressure the title company and lender to stop the sale before it was too late. Litchfield said it happened with just in the nick of time.

    "The foreclosure process takes four months and, about one week before that four months was over they finally said, ‘Oh, OK, I guess we do have [pay the claim]."

    Lowry’s title company, Fidelity National Title, stated in an email they "met and even exceeded" their "obligations" under Lowry’s title insurance policy.

Mass AG Squeezes $130K Refund From Mortgage Broker, Insurance Agent In Alleged Racket That Duped Elderly Homeowners Into Mortgaging Their Homes & Investing Proceeds In Crappy Annuities; Settlement Adds To Nearly $900K Received In Connection w/ Previously-Resolved Allegations Against Insurance Underwriter For Failing To Prevent Ripoff Due To Ineffective Employee Supervision

From the Office of the Massachusetts Attorney General:
  • Massachusetts seniors will receive more than $130,000 in refunds as a result of a settlement with a mortgage broker, its employee and an insurance agent that resolves claims they induced elderly clients to take out reverse mortgages and invest the proceeds in unsuitable variable annuities, Attorney General Maura Healey announced today [April 11].

    This settlement resolves allegations from a lawsuit filed by AG Healey in August 2015 against mortgage broker Direct Finance Corp., its employee Daniel Matthews, and insurance agent James Moniz.

    “We found that these defendants took advantage of elderly homeowners who spent decades building equity in their homes,” said AG Healey. “My office is focused on stopping the financial abuse of seniors.”

    The AG’s lawsuit alleged that while employed by John Hancock Life Insurance Company (U.S.A.), Moniz developed an association with Matthews to induce elderly clients to take out reverse mortgages through Direct Finance and invest the proceeds in unsuitable variable annuities. John Hancock terminated Moniz for conduct uncovered during the investigation.

    As a result of this settlement, affected consumers will receive a total of $137,500 in refunds that will be distributed by the AG’s Office. Eligible consumers will be contacted by the AG’s Office.

    In addition to monetary relief, the settlement imposes restrictions on Moniz, Matthews, and Direct Finance to prevent improper association between the origination of reverse mortgages and the investment of the proceeds in annuities or other investment products. The defendants are also prohibited from misrepresenting the sources of investments or investment intentions of their clients.

    The AG’s Office previously settled allegations with John Hancock that it unfairly failed to effectively supervise Moniz, permitting him to sell unsuitable variable life insurance policies, variable annuities, and other insurance and financial products. In September 2014, John Hancock paid nearly $900,000 to seniors in Massachusetts to resolve those allegations.
Source: Seniors to Receive More Than $130,000 in Settlement With Insurance Agent and Mortgage Broker Over Deceptive Practices (Refunds to Supplement Nearly $900,000 Paid by the Insurance Agent’s Former Employer).

Tuesday, May 02, 2017

Scranton Feds Catch Up w/ Local Real Estate Broker Who Allegedly Swindled Over $750K From Prospective Buyers By Peddling Vacant FHA-Foreclosed Homes He Didn't Own; Prosecutor Says Guilty Plea Likely

From the Office of the U.S. Attorney (Scranton, Pennsylvania):
  • The United States Attorney’s Office for the Middle District of Pennsylvania announced today [April 27] that Ignacio Beato, age 46, of Hazleton, Pennsylvania, was charged in a one count criminal information on April 26, 2017, with conspiracy to engage in monetary transactions through a financial institution, with funds that were the proceeds of wire fraud.

    According to United States Attorney Bruce D. Brandler, the information alleges that Beato, who was a licensed realtor, and his coconspirators, engaged in interstate wire communications and Beato falsely represented to potential purchasers that he was authorized to sell vacant conventional and Federal Housing Administration insured mortgaged properties in Hazleton, when in fact, he did not have such authority.

    The information further alleges that Beato solicited and accepted money in the total amount of $751,082 from individuals who believed they were purchasing properties. Beato and his coconspirators fraudulently converted that money to their own personal use.

    The United States also filed a plea agreement, which is subject to the approval of the Court, wherein it is indicated that Beato intends to plead guilty to the charges when he appears in federal court for his arraignment.

Tennessee Supremes Give Sticky-Fingered Lawyer Bar Boot For Pilfering $200K In Closing Proceeds From Real Estate Transaction

In Jacksboro, Tennessee, the Independent Herald reports:
  • A Campbell County attorney has been disbarred by the Supreme Court of Tennessee for misappropriating funds in a real estate transaction.

    Conrad Mark Troutman was disbarred from the practice of law by the Supreme Court on Tuesday, March 28. According to the court's Board of Professional Responsibility, Troutman was found to have misappropriated funds while serving as the closing attorney in a real estate transaction, and misused his trust account to pay personal and business expenses.

    The Board of Professional Responsibility filed a petition for discipline against Troutman on Feb. 3, 2016, based on two complaints of misconduct. The petition alleged that Troutman misappropriated $200,000 from his trust account and misused the trust account to pay personal and business expenses.(1) He later agreed to a conditional guilty plea that acknowledged his unethical conduct.

    Troutman is not permitted to return to an active law practice until an order of reinstatement has been entered by the Supreme Court.
Source: Campbell County attorney disbarred by state.
(1) The Tennessee Lawyers’ Fund for Client Protection was established to reimburse claimants for losses caused by dishonest conduct committed by lawyers duly licensed to practice in the state.

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.

Mass AG Bags Boston Man For Allegedly Stealing Approx. $50K In Escrow Deposits From Prospective Homebuyers While Masquerading As A Real Estate Broker

From the Office of the Massachusetts Attorney General:
  • A Roxbury man posing as a real estate broker has been charged in connection with stealing thousands of dollars from potential homebuyers in Boston, Attorney General Maura Healey announced today [April 24].

    Cornell Mills, age 42, of Roxbury, was arraigned [] in Suffolk Superior Court on the charges of Larceny Over $250 (8 counts), Fiduciary Embezzlement (7 counts), Acting as a Broker without a License (7 counts) and Being a Common and Notorious Thief (1 count). Mills pleaded not guilty to the charges.

    The AG’s Office began an investigation in 2016 after referrals from the Division of Professional Licensure and the Suffolk County District Attorney’s Office.

    To carry out this scheme, Mills, who does not have a broker’s license, allegedly posed as a real estate broker and solicited potential homebuyers in Boston to give him thousands of dollars, which he claimed he would hold in escrow pending their purchase of a home. Mills allegedly had no escrow account, and instead used these funds for his personal use.

    Authorities found that in some instances, Mills would represent homeowners facing foreclosure, and offered to help them by selling their homes through a short sale. Authorities allege that Mills did not fulfill his promise to sell these homes, and instead ignored the homeowner’s attempts to contact him after he spent the deposits he received from potential buyers.

    The AG’s Office alleges Mills stole approximately $50,000 through this scheme.

    These charges are allegations and the defendant is presumed innocent until proven guilty. Consumers who feel that they could have been a victim of this or similar scams should contact the Attorney General’s Consumer Advocacy and Response Division at (617) 727-8400.

Monday, May 01, 2017

'Incorrigible' Lowlife Gets Nine Years For Using False Loan Payoff Promises To Dupe Homeowners In Foreclosure Into Signing Away Ownership/Control Of Their Homes, Then Use Properties To Take In Million$ In Massive Rent-Skimming Racket

In Hartford, Connecticut, The Day reports:
  • U.S. District Judge Michael P. Shea sentenced con man Timothy W. Burke to 9 years in prison Friday [April 28], saying the scheme in which Burke took in millions at the expense of financially troubled homeowners was one of the most serious white-collar crimes the judge had seen.

    Shea went beyond the maximum eight-year prison term recommended under federal sentencing guidelines, in part he said because Burke, 65, previously had served three sentences, the longest for five years, for committing the same or similar crimes.

    "Imagine, Mr. Burke, if you were robbed at gunpoint by someone who previously had received a relatively short sentence for the same crime. You'd be outraged," Shea said.

    Burke, described by victims as a charmer who would take them out to dinner, stop by their homes often and promise to relieve them of their underwater properties, would disappear as soon as the victims realized he had not fulfilled his promise, according to Assistant U.S. Attorney David T. Huang. Burke, described in sentencing documents as an "incorrigible fraudster," used more than a dozen aliases to prevent his victims from learning his true identify and his criminal past.
    Burke and his attorney, Bradford Barneys, were the subject of a series of stories published by The Day beginning in November 2014. The scheme involved homeowners in Bridgeport, New London, Griswold, Ledyard, Waterbury, Plymouth, Portland, Andover, New Haven and West Haven. The Day's investigation found more than a half-dozen cases in which Burke and his associates sent out mass mailings to people whose homes were in foreclosure, then allegedly bilked them out of thousands of dollars after promising to purchase their homes and free them of their mortgages.

    The government launched its own investigation and determined that between 2010 and November 2015, Burke engaged in a scheme to defraud individuals, mortgage lenders and the U.S. Department of Housing and Urban Development by falsely representing to homeowners who were in, or facing, foreclosure on their homes that he would purchase their homes and pay off their mortgages.

    The distressed homeowners agreed to sign various documents, including quitclaim deeds, indemnification agreements, management agreements and third-party authorization letters, which Burke presented to them on the understanding that, by signing the documents, they would be able to walk away from their homes without the burdens of their mortgage or other costs associated with home ownership.

    The government found that Burke told homeowners that the process of negotiating with the lenders can take time and that, in the meantime, to ignore any notices regarding foreclosure. After he gained control of these houses, Burke rented out the properties to tenants by advertising the properties on and other means and falsely representing to tenants that he owned the properties.

    Burke or one of his agents then collected rent from tenants, and Burke used the funds for his own benefit, according to the government. He liked to deal in cash and structured his bank deposits to avoid making mandatory government disclosures, according to testimony. He failed to negotiate with the homeowners' mortgage lenders and failed to pay expenses associated with the homes, including the mortgages and property taxes, and he failed to pay any rental income he was collecting to the homeowners. Many of the properties ultimately were foreclosed upon by the mortgage lenders.

    Burke went to great lengths to disguise his true identity through the use of more than a dozen aliases, including Pat Riley, Jim Caldwell, Jim Saunders and M. Soler, to conceal the sources of and expenditures from his criminal proceedings. He has been associated with multiple business entities, including Birmingham Investments LLC; Saunders Associates; New Haven Investments; Realty Partners Group; Preston Associates II; Turnkey Construction Services LLC; The Complete Handyman LLC; and Woodbridge Associates.

    One victim, Kendra Jones, said she had traveled all the way from South Carolina to attend the sentencing. A single mother of two children, she was living in Bridgeport when she lost her job at Cablevision and was forced to file for bankruptcy. Her condominium was being foreclosed, and one day in 2013 she called the number on a card that had been left on her door by a company that claimed it would take over her mortgage.

    She met Burke and was comforted that he was working with an attorney, Barneys, she said. But by 2013, she started getting calls and letters from attorneys and learned that there were tenants in her condominium and she still was incurring condominium fees. She said she contacted attorneys, who told her it sounded like she'd been scammed.

    Burke resigned as the "property manager" of her condo and said the tenant would pay her directly, but she never received a dime, Jones said.

    "The last message I left on his phone was that he's going to pay for this. I didn't know how, but he would," she said in the courthouse hallway during a recess. "And today's the day."

    Barneys, who also was charged in the scheme, has pleaded guilty and is awaiting sentencing.

Cops Bag Phony Real Estate Operator For Allegedly Using 'Dirty Deeds', Other Forged Documents To Snatch & Flip Title To Five Vacant Homes To Unwitting Buyers; Consummated Transactions Were Informal Cash Deals That Lacked Traditional Closings, Purchase Of Title Insurance

In Norristown, Pennsylvania, The Times Herald reports:
  • A local man is facing an extensive list of charges stemming from a scheme in which authorities say he illegally assumed ownership of several homes in the municipality, and either rented them out or sold them to prospective investors.

    Troy Pickens, 27, of West Airy street, is accused of forging the documents of sale of at least five vacant Norristown properties, getting the records of sale fraudulently notarized, then obtaining deeds for the houses in his name or in the name of his company.

    According to the affidavit of probable cause, Pickens’ real estate ruse began to unravel on Dec. 27, 2016, when police responded to a report of a burglary in progress at 221 E. Oak Street. Officers detained the suspect, who was spotted in an upstairs window and took him in for questioning.

    The suspect claimed the residence, which police later discovered was supposed to be vacant and condemned, was rented by his girlfriend, who said she leased the apartment from Pickens a few weeks prior.

    She told investigators she paid Pickens a down payment of $1,600 for first and last months’ rent and security before moving in, and an additional $800, which included one month’s rent, and one month credited for electrical work that still needed to be done on the property.

    That electrical work, detectives would subsequently find out, was a bypass of PECO electrical boxes.

    Police spoke with Pickens, who, they say, represented himself as the property’s manager working for Pick 1 Real Estate. He produced a letter, purportedly from the property’s owner, which heightened investigators’ suspicions.

    “The letter lacked credibility,” according to the criminal complaint, and was replete with technical errors and spelling and grammar mistakes. A phone contact on the letter turned out to belong to Pickens’ ex-girlfriend, police said. And when they called it, they heard a greeting in Pickens’ voice, representing Pick 1 Real Estate Company.

    On April 3, police conducting a follow-up investigation discovered that five Norristown properties had been purchased by Troy Pickens or Pick 1 Real Estate.

    Detectives found that all of the properties were sold at “extraordinarily large discounted prices” then immediately resold to third parties on the cheap.

    Police began tracking down the owners of the properties and learned that none of them had actually sold to Pickens.

    One of the owners said his ex-wife — who’s signature had been allegedly forged on the deed — co-owned their property, and had been out of the country for the last 20 years, so there was no way he could have completed such a sale.

    The daughter of another owner told police it was impossible that her father signed the deed over to Pickens, since he died in 1992.

    A couple owning another one of the properties confirmed with authorities that the signatures on the deed were not theirs.

    And a woman reported to police that one of the buyers who had unwittingly “bought” her mother’s home from Pickens had contacted the family seeking to recover county tax payments he made on their property.

    Upon further investigation, police allege Pickens fraudulently used the stamp and signature of his aunt, a registered notary in Philadelphia, on the deeds of the homes he “purchased.”

    He allegedly used a different notary, based in Montgomery County, to notarize the “sale” of five properties to two individuals; one of whom bought four of the properties from Pickens; and the other, who bought one.
    The buyer who purchased the bulk of the properties was interviewed by police and gave a statement, but refused to sign it, the affidavit said.

    He reportedly told investigators that he could be out $26,000 as the result of the fraud, without including back taxes and renovation costs he had already poured into the homes.

    The other buyer — who had requested county taxes back from the original owner — was told by police not to contact the family again, but to seek restitution from Pickens after the case is adjudicated.

    Both buyers reportedly paid Pickens in cash and no title insurance was obtained for the purchase or sale of any of the properties

    The charges leveled at Pickens include corrupt organization, theft by unlawful taking, dealing in proceeds from illegal activity, identity theft, deceptive or fraudulent business practices, forgery and tampering with records.
    “None of the sales adhered to the guidelines of National Association of Realtors,” the affidavit states. “None of the sales appeared to go through a recognized brokerage. None of the sales involved a sales agreement, according to (the notary who notarized the sale from Pickens) and (the man who bought four houses from him). And “no additional paperwork, other than the paperwork required by the county, was completed...”

Jury Hands Down Guilty Verdict Against Foreclosed Homeowner Who Recorded Two Forged Deeds In Attempt To Reclaim Former Home

From the Office of the San Bernardino County, California District Attorney:
  • On April 14, a San Bernardino County jury returned a verdict of guilty on 6 counts of real estate fraud against 58-year-old Barbara Rae Bratton of Upland. Bratton was taken into custody immediately following the guilty finding.

    In May 2013, the Ontario Police Department investigated Bratton on suspicion of filing two false grant deeds with the San Bernardino County Recorder’s Office on a house in the 900 block of Locust Street in Ontario. The false deeds were filed a month earlier by Bratton in a fraudulent attempt to take possession of a house she once owned and had lost to foreclosure.

    According to District Attorney Sr. Investigation John Vega, who was assigned to the case, the house had been sold to new buyers who then purchased it legally.

    “Ms. Bratton owned the house at one time, but had not made a mortgage payment on it for approximately four years resulting in the foreclosure, and two evictions, to finally remove her from the property,” Sr. Investigator Vega said.

    Bratton argued in court that the house still belonged to her in spite of years of not making payments on the property. She continuously cited flawed legal theories that some people use to not pay home loans.

    “The defendant intentionally attempted to deprive the new owners of the home by placing the house back in her name and then filing a civil lawsuit against them that she eventually lost in court,” said Deputy District Attorney Vance Welch, who prosecuted the case.

    Bratton is due back in court May 17. She faces 6 years in state prison.

Sunday, April 30, 2017

NJ Bar Announces 'Last Call' For Claims From Victimized Clients Ripped Off By 15 Recently-Disciplined Attorneys

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

    The fund’s purpose is to pay on behalf of the honest majority of [New Jersey-licensed] lawyers for the wrongdoing of a few.(1) For a claim to be eligible, the attorney against whom it is filed must have been a member of the bar, acting as either attorney or fiduciary, at the time of the incident; and unless deceased, must have been disbarred, suspended or placed on disability inactive status from the bar, or convicted of embezzlement or other misappropriation of property. The attorney’s conduct giving rise to the claim must have been dishonest rather than negligent.

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

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

    To receive a claim form, write to the New Jersey Lawyers’ Fund for Client Protection, Richard J. Hughes Justice Complex, P.O. Box 961, Trenton, NJ 08625-0961, or call 855-533-FUND (3863). The form must be completed, notarized and returned with copies of any proof of the transaction. There is no filing fee. Claimants assisted in their claims by practicing attorneys receive their representation free of charge.

    Any person having a claim that has not been filed involving the following attorneys must file a claim with the New Jersey Lawyers’ Fund for Client Protection prior to the deadline dates indicated below:


    Buckley, Christopher J., Hudson, October 21, 2017
    Collins, John J., Hudson, October 21, 2017
    Field, Arthur M., Out of State (FL), November 10, 2017
    Kusnirik, Andrew Michael III, Mercer, November 7, 2017
    Malanga, Anthony F. Jr., Union, October 20, 2017
    Mandale, Michael Z., Out of State (PA), December 7, 2017
    Noonan, Gregory R., Camden, October 14, 2017
    Paragano, John O., Union, December 16, 2017
    Rubin, Merrill N., Out of State (NY), December 7, 2017
    Scher, William G., Passaic, November 9, 2017
    Sison, Victor G., Hudson, December 16, 2017
    Smith, Nestor, Atlantic, November 4, 2017
    Suarez-Silverio, Arturo S., Essex, November 1, 2017
    Tosi, Lawrence G., Passaic, November 1, 2017
    Weichsel, John L., Bergen, December 16, 2017
Source: Lawyers’ Fund for Client Protection Announces Deadlines for Claims.
(1) For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

With Probation About To Expire, Broke Ex-Lawyer Who Got Off Easy After Fleecing Clients Out Of Over $1 Million Now Seeks To Beat State's Client Security Fund Out Of $200K Reimbursement He Owes For Money It Shelled Out To His Theft Victims

In Woburn, Massachusetts, the Wilmington Patch reports:
  • A disbarred Wilmington attorney, who served time for swindling clients out of more than $1 million, begged a court official for a probation hearing so he can get out from under more than $200,000 in restitution he is supposed to pay before his probation expires.(1)

    Former attorney Michael F. Germano, 53, of Wilmington, told Middlesex Clerk-Magistrate Michael Sullivan on Wednesday [March 29] that he is in "dire straits'' having lost "everything'' since he pleaded guilty in 2014 to a scheme with his former Boston law partner Peter Lagorio to create" false victims'' of a 2006 ink-plant explosion in Danverport and other cases, then pocketing the settlement payments.

    None of the actual victims of the blast were impacted by this scheme.

    In January of 2014, Germano pleaded guilty to a total of 17 counts of embezzlement, uttering, larceny, conspiracy, and attempted larceny. He was sentenced to one year in jail with six months to serve and the balance suspended for three years while he is on probation. He was ordered to pay restitution.

    The Massachusetts Bar Association used money from its victims' compensation fund to repay the victims of the two lawyers,(1) but Probation Department says Germano was ordered to repay the fund about $200,000.

    Some money has been paid over the years, but a large amount is still owed and cannot be repaid before Germano's probation ends. Prior to a 2016 decision by the state's highest court, judges would either extend a defendant's probation until restitution is paid or invoke the remainder of the jail sentence.

    The state Supreme Judicial Court ruled that defendants can't be held hostage by unpaid restitution.(2)
Source: Disbarred Wilmington Attorney Pleads for Probation Hearing (Michael F. Germano says financially he is in 'dire straits').
(1) In Massachusetts, the Client Security Fund is a fund established by the state Supreme Judicial Court (and financed by a portion of the annual fees paid by each member of the bar) to provide at least some reimbursement to 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.

(2) See Commonwealth v. Henry, 475 Mass. 117, 55 NE 3d 943 (Mass. 2016):
  • [W]e invoke our superintendence power to declare that a judge may not extend the length of probation where a probationer violated an order of restitution due solely to an inability to pay.[6],[7]
Editor's Note: In footnotes 6 and 7 of the court's decision in Commonwealth v. Henry, the court elaborated on this mandate:
  • [6] A judge remains free to revoke probation or to extend the term of probation where a probationer violates a condition of probation by willfully failing to pay a restitution amount he or she had the ability to pay. See Bearden v. Georgia, 461 U.S. 660, 668 (1983) ("If the probationer has willfully refused to pay the fine or restitution when he has the means to pay, the State is perfectly justified in using imprisonment as a sanction to enforce collection"); Commonwealth v. Avram A., 83 Mass. App. Ct. 208, 212-213 (2013).

    [7] We acknowledge that extending the length of probation in such circumstances has not been recognized to be in violation of Federal constitutional law. See Bearden, 461 U.S. at 674 (where defendant on probation is unable to pay fine, court may extend time for payment).

Client Protection Fund Files Lawsuit To Recover $285K That It Shelled Out To Reimburse Losses Suffered By Fleeced Former Clients Of Disbarred Lawyer

In Edmonton, Alberta, the Edmonton Sun reports:
  • The Law Society of Alberta is suing disbarred lawyer Shawn Beaver to recover money he lost through misuse of client trust accounts.

    The society is seeking a judgement to compel Beaver to pay over $400,000 to cover trust safety insurance payments made to Beaver's former clients and debt accrued through his business.

    Beaver was stripped of his licence to practise law in February after a disciplinary hearing found he had misappropriated money that clients had entrusted to him.

    The Law Society of Alberta — the professional association that disbarred Beaver — operates an insurance policy that paid money to Beaver's former clients.(1) In a statement of claim filed in late March, the society claims Beaver needs to pay back $285,491.11 to cover the misappropriated funds.

    Allegations made in the statement of claim have not been proven in court.

    Beaver is also being sued for allegedly racking up $135,795.91 with Bank of Montreal through a guarantee, an operating loan and a corporate Mastercard account.

    The society paid Bank of Montreal a valuable consideration to take over Beaver's debt in November 2015.
For more, see Shawn Beaver sued by Law Society of Alberta for misused client money.
(1) The Alberta Lawyers Insurance Association (ALIA) is a wholly-owned subsidiary of the Law Society of Alberta (the organization that regulates lawyers in the province of Alberta, Canada), created to manage the insurance program for Alberta lawyers. It administers both professional liability claims made against the lawyers, as well as client claims from those members of the public who have sustained a financial loss by theft, embezzlement, etc. caused by the dishonest conduct of any lawyer practicing in the province. All lawyers in private practice in the province must purchase mandatory insurance coverage through ALIA. Excess coverage is voluntary and is available through the Canadian Lawyers Insurance Association.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other Canadian provinces and states throughout the U.S., see:
Maps available courtesy of The National Client Protection Organization, Inc.

Connecticut Feds Catch Up With Sleazy Ex-Lawyer, Bagging Him For Allegedly Swiping $900K+ From Clients In Connection w/ Real Estate Deals; Defendant Recently Responded To Three Grievance Complaints By 'Voluntarily' Relinquishing Law License & Moving To Michigan In Lieu Of Bar Boot

From the Office of the U.S. Attorney (New Haven, Connecticut):
  • Deirdre M. Daly, United States Attorney for the District of Connecticut, today [April 7] announced that THOMAS M. MURTHA, 61, of Newtown, has been charged by a federal criminal complaint with wire fraud related to his alleged theft of more than $900,000 from victims.

    MURTHA was arrested on April 5, 2017, in Michigan. He appeared before U.S. Magistrate Judge Patricia T. Morris in Bay City, Michigan, and was released on a $10,000 bond.

    As alleged in the criminal complaint, MURTHA operated a law practice under the name Maher & Murtha LLC in Bridgeport. Beginning in approximately August 2015, MURTHA defrauded five victims of a total of more than $900,000. As part of the scheme, MURTHA made materially false statements to induce one victim to invest more than $600,000, purportedly for real estate investments. He also was retained to handle real estate transactions on behalf of other victims and, instead of remitting funds to the appropriate parties, converted the funds to his own use.(1)

    The complaint further alleges, in December 2015, MURTHA told the victim of his real estate investment scheme that he needed an additional $100,000 to purchase a $1.5 million commercial property in Bethel, and that a buyer would purchase the property in four to six months to convert it to condominiums. After the victim wired the money, MURTHA used the funds in connection with the purchase, in his own name, of a $725,000 house in Birmingham, Michigan.

    In September 2016, MURTHA resigned from the bar after three grievance complaints were filed against him.
Source: Attorney Charged with Defrauding Clients.
(1) In Connecticut, 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 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.

Indiana Supremes Apparently Apply Modified 'No Harm, No Foul' Approach In Refusing To Disbar Lawyer For Misappropriating Trust Account Funds, Then Lying About It & Submitting Falsified Records; Give Partially-Stayed 180-Day Hand-Slap Instead, Finding No Criminal Intent, No Financial Losses For Any Client, Corrective Measures Taken Upon Discovery Of Depth Of Mismanagement

In Indianapolis, Indiana, The Indiana Lawyer reports:
  • An Indianapolis attorney accused of mismanaging trust funds for both himself and other attorneys and clients has been suspended from the practice of law in Indiana for 180 days [with 90 days actively served and the remaining time stayed subject to completion of at least one year of probation, including trust account monitoring by a certified public accountant].

    According to the disciplinary order handed down Wednesday [March 29], Tarek E. Mercho of Indianapolis law firm Mercho Caughey “misappropriate funds from his attorney trust account over a period of several years, making dozens of disbursements of client funds for purely personal purposes.” On at least two occasions, Mercho disbursed funds that were held in trust for another attorney and that attorney’s client.

    After the Indiana Supreme Court Disciplinary Commission began an investigation into Mercho’s conduct, the attorney made false statements to the commission and submitted a client ledger with false entries to extricate himself from the disciplinary process, the order says. Both the commission and the hearing officer found that Mercho had violated Professional Conduct Rules 1.15(a) and 8.1(a) and Admission and Discipline Rules 23(29)(a)(4)(2016) and 23(29)(1)(5)(2016) in connection with the funds mismanagement and his dishonesty during the investigation.(1)
For the story, see Supreme Court suspends attorney for mismanaging funds.
(1) According to the disciplinary order:
  • The hearing officer also appears to have credited other evidence tending to reflect the absence of criminal intent, including that no clients ultimately were denied funds or services and that Respondent took corrective measures upon discovering the depth of his trust account mismanagement.