Saturday, June 24, 2017

With Collaborative Help From Mobile Home Park Landlord & Affordable Housing Non-Profits, 41 Lot-Leasing Residents Form Co-Op To Buy Out The Land Underneath Their Homes For $1.55 Million

In Kalispell, Montana, the Daily Inter Lake reports:
  • Residents of Morning Star mobile-home park in Kalispell have purchased their park for $1.55 million through a resident-owned community loan program that enables them to keep their lot rent affordable and have control over the property in perpetuity.

    Morning Star Community Homes is the second resident-owned community in Kalispell — and the 202nd such community in the United States. It has 41 mobile homes and is located on South Woodland Drive, next to Green Acres, which became the first resident-owned community in the Flathead Valley six years ago.

    When Morning Star owner Tim Ohler decided to sell the mobile home park, he contacted NeighborWorks Montana about creating a resident-owned community, said Danielle Maiden, a cooperative housing specialist with NeighborWorks.

    “The owner knew about Green Acres and when he got ready to sell he reached out to us,” Maiden said. “We came in and knocked on doors and told them what we could offer.”

    The biggest advantage of a resident-owned community is that it gives residents control over their housing future and keeps the lot rent affordable, she said.

    Resident ownership provides rent stability, control over maintenance and repairs and the security of knowing the community will not be closed.

    To establish a resident-owned community, a minimum of 60 percent of the mobile-home park residents create their own nonprofit organization. ROC USA,(1) based in New Hampshire, provided the 30-year loan, while NeighborWorks provided a secondary loan and offers technical assistance over a 10-year period.

    “We have a special structure [that] makes it so their down payment is membership in the cooperative,” Maiden said. “It’s a really amazing program.”

    There is a $100 one-time membership fee to belong to the resident-owned community that is refunded when a mobile-home owner moves out of the community. Incoming residents will be required to belong to the community.

    Members set the lot rent, and if a large maintenance project needs to be funded, members vote whether to raise the lot rent to cover the expense.

    “The beauty is it really secures them having a home,” Maiden said. “This keeps things affordable in perpetuity. It gives them pride of ownership. It’s really security in the long run for their housing.

    “It’s really amazing what it does for residents, how empowering it is for them,” she added.

    The Flathead Valley, which struggles to provide affordable housing, is one of NeighborWorks Montana’s priority areas, Maiden said. The organization strives to facilitate the purchase of two resident-owned communities each year in Montana.

    Its first successful project was with homeowners in Mountain Springs Villa in Red Lodge. There are now eight resident-owned communities in Montana. Others include two in Missoula, two in Great Falls and one in Pablo.

    Tom Tornow, a Whitefish attorney who provided the legal assistance with the Morning Star acquisition, said he sees the potential for resident-owned communities in Whitefish, where the lack of affordable housing has reached a critical level.

    “We’ve lost two of our largest mobile-home parks in the last few years,” said Tornow, who chairs the Whitefish Affordable Workforce Housing Task Force. “It’s a real blow to the affordable housing in our community.”

    In 2006 the 55 mobile-home owners in the Greenwood Trailer Court, many of them senior citizens, were forced to leave the trailer court when the property owner decided to put the 12-acre site up for sale. Eleven years later the property is vacant land, and still for sale.

    Lot rent in resident-owned communities are 17 percent, or about $86 per month lower than the market lot-rent rate, according to NeighborWorks. Almost 14 percent of homes in Montana are manufactured, nearly twice the national average. Of those homes, 76 percent are owner-occupied.

    The resident-ownership model was developed 30 years ago by the New Hampshire community Loan Fund, which has helped more than 100 mobile-home communities in that state become resident-owned. ROC USA was created in 2008 to make the model available nationwide.
Source: Kalispell Mobile-Home Residents Buy Their Park.
(1) ROC USA, LLC is a non-profit organization with a mission of making quality resident ownership possible nationwide by helping lot-leasing mobile home owners form co-operatives to buy their manufactured home communities or “mobile home parks” from their landlords.

Mobile Homes: Cheap Housing ... But With A Catch

From a recent story in the Houston Press (Houston, Texas):
  • [W]ith costs significantly lower than standard houses, mobile homes have become the main source of unsubsidized affordable housing in the United States. Almost two million Texans live in mobile homes, according to the 2015 American Community Survey, including more than 130,000 people in Harris County.

    But while these parks offer bargain prices, they don’t always provide stability. That’s because they lease their land. In Texas, residents can be evicted from a property with 60-day notice, even if they’ve owned their homes for decades.

    When trailer parks are sold or forced to close, the void often leaves hundreds of low-income families searching for a new place to put their home — as well as the funds necessary to move it. Esther Sullivan, a sociologist at the University of Colorado Denver, spent two years living at trailer parks in Texas and Florida. Her study, published in April, looks at what happens when people are evicted from trailer parks in these states.(1)

    Texas has one of the highest numbers of trailer park residents in the country, but provides no aid for people evicted from them.

    The costs of a mobile park eviction can easily eat up a lower-income resident's finances, Sullivan found. She also discovered that Texas trailer parks don’t always give the appropriate legal notice before evicting tenants. A common theme among residents was the desire to control the “terms and timing” of a move-out, Sullivan said.

    For many, evictions became a semi-regular part of life. “These aren’t one-time traumas,” Sullivan said. “There were significant numbers of residents in parks that had previously been evicted.”

    In her study, she proposes community ownership as a way to give trailer park residents more stability. That would make trailer parks more like condominiums, leaving residents in charge of their park’s destiny.

    Sullivan spent time at five parks that were closing or in a precarious position. She lived for eight months in 2013 at Ramos y Ramos, a trailer park in the town of Alvin, near Pearland. The Alvin City Council had passed an ordinance in 2007 requiring expensive upgrades to parks. Ramos y Ramos survived, but she watched as two other parks were forced into closure. (Sullivan used pseudonyms for the names of the parks she studied to protect the identities of residents.)

    There would be three generations of the same family living in these parks,” she said. “Evictions were extremely traumatic.”

    Trailer park residents have about the same legal protections as normal renters. The problem, she says, is that the stakes are higher. Renters don’t own or maintain their apartments. If they’re evicted, they don’t have to take their apartment with them.

    Theoretically, a mobile home can be moved and reinstalled elsewhere. But after transportation, reinstallation and permits, the cost of moving a mobile home even a modest distance could run from around $5,000 to $12,000, according to estimates given by people in the mobile-home business.

    So long as a trailer park wasn’t closing, mobile-home residents could choose to sell their homes instead of transporting them. But unlike standard houses, mobile homes almost never appreciate in value. Like cars, they lose value as soon as they leave the factory or sales lot.

    How many mobile-home owners face the prospect of eviction? Sullivan says it’s almost impossible to know for sure. Property deeds and tax filings record the name of the trailer park and its owners — not every resident. Many residents don’t even have real addresses. Unless an eviction goes to court, there could be no public record that it happened.

    Nor is it easy to get data on how many trailer parks are closing, Sullivan says. There are no federal or state registries of trailer park closures. For her study, Sullivan had to collect some of this data herself, by recording whenever a trailer park changed its zoning.

    Loopnet, a commercial real-estate website, shows 85 mobile home parks for sale in Texas, including a few in the Houston area. The Houston Press called one seeking comment for this story. When a reporter mentioned evictions, an employee hung up and did not answer again.

    The median listing price for a home in Houston is $319,000, according to real-estate website Zillow. A brand-new mobile home can go for around $60,000, said DJ Pendleton, executive director of the Texas Manufactured Housing Association.

    “When I say affordable housing, what image pops into your brain?” he asked rhetorically. “You need a $65,000 house for it to be truly affordable.”

    When asked about evictions, Pendleton points out that not all mobile home owners live in trailer parks. Some build their homes on family land, or buy a plot way out in the country.

    He said around 90 percent of mobile home sales were “personal property transactions,” meaning the purchaser was not also buying land. He didn’t think all those people lived at trailer parks, but admitted it was hard to know for sure. Census data on mobile homes don’t record how many people own their land.

    Sometimes, Pendleton said, a trailer park decides to sell. This was more of a problem in cities, where land was a hot commodity. But often, he said, mobile homes are driven out when local governments impose zoning changes or make expensive demands for upgrades.

    Pendleton said he sees a classist and racist tinge in the hostility to mobile homes. “Nobody will say at an open city council hearing, ‘We’re going to create all these pretenses, but the real intent is, we just kind of want to move all the poor people out and we don’t really care where they go,’” he said.


Failing Sewage Lagoon, Inability To Tap Into City Waste Disposal System May Lead To The Boot For Dozens Of Lot-Leasing Mobile Home Park Residents

In Prince Albert, Saskatchewan, the Prince Albert Daily Herald reports:
  • Residents of the North Bay trailer park have formed a committee to save themselves from eviction.

    They met on Wednesday [May 31] in a dark, dusty warehouse in Red Wing. Seated in a circle on ten wooden chairs, they tried to figure out a plan. The province’s Water Security Agency has issued an order to shut down the park’s aging sewage lagoon. If nothing’s done by a September deadline, more than 50 homeowners will have to vacate their lots.

    “We all want to stay here,” resident Linda Dewhurst said. “The majority can’t afford to move.”

    The night before, a few of the committee members sat in on a call with the park’s owner, James Wankel. The existing lagoon, he told them, is almost impossible to upgrade. There’s a patch of government land about 1.5 kilometres south, and Wankel says he’s looking into it. But he fears it could cost about a million dollars to build a sewage system from scratch.

    “Like James said, he’s only willing to spend up $350,000 for a lagoon,” Mike Layton told the committee. “He probably won’t go that far. So the city probably is our only option.”

    Wankel has been pushing the City of Prince Albert to approve a hookup to their sewage system. But Mayor Greg Dionne has come out strongly against the idea. He said the city has some spare capacity, but it’s reserved for new development within city limits.

    “So what’s the next plan of action then, go to the city somehow?” Mick Kuchirka asked.

    “That’s our next plan of attack,” said Greg Howat.

    The first leg of their strategy will focus on the administration: the planning department, public works, the city manager. They’ll try to schedule appointments and argue their case. Then they’ll push for an audience with council. If they hit a wall with the city, they’ll try to win support from the citizens of Prince Albert.

    “I think we write up a petition and we take it to a few businesses in the city,” said Howat, “because we all work, we all shop, we all pay our bills in the city of Prince Albert.”

    Wankel has proposed to spend about $250,000 on a hookup to the city line – the amount he was quoted by the rural water utility. The residents don’t understand why the city won’t sign off on the deal.

    “We’re not asking them to pay for it,” Howat said.

    “Approve it,” said Layton. “All you need is approval. Then James signs the cheque.”

    Apart from capacity issues, Dionne said he has concerns about liability. The sewage lines could overflow, he warned, putting the city at risk of a lawsuit.
Source: Plan of attack. failing sewer

Failing Sewage System In Aging Mobile Home Park Forces Judge To Boot Over A Dozen Lot-Leasing Homeowners Due To Health Concerns; Landlord Objects To Town's Financial Support In Helping Residents Move Their Trailers, Claiming To Have An Innkeeper's Lien On Them For Unpaid Rent

In Zionsville, Indiana, Current In Zionsville reports:
  • More than half of the tenants at Zionsville Mobile Home Park are being forced to relocate after a judge ordered parts of it shut down because of what it deemed broken sewage systems.

    “The eastern and central sewage systems were failing, causing health concerns for the residents,” stated Corey Elliott, press secretary for the Indiana attorney general’s office, in an email.

    But the mobile home park manager, Laura Lei, denies those claims. She said that the septic system is aged but not failing and that none of the residents have experienced any health issues or other major problems as a result of sewage problems. If anything, they’re feeling “miserable” and “depressed” from being displaced, she said.

    “Everybody is very upset,” Lei said. “They said they have no (drain or sewage) issues and (wonder) why the court ordered them to go.”

    Lei said the problems stemmed from three clogged pipes – a problem the homeowners were required to fix but didn’t. She said she hired plumbers who successfully unclogged the drains and that the system is working as it should.

    “We fixed the issue,” she said.

    But Boone Circuit Court Judge Justin Hunter ruled Jan. 30 that all but 12 of the 31 tenants move out of the park at 9111 E 600 S by April 30. As of early June, some of the tenants required to move were still on the property, according to court documents. Lei said June 15 that she believes all of the tenants but one were gone.

    Hunter ordered Jan. 30 that Lei provide the Indiana State Dept. of Health with “proof that all sewage materials that have discharged from the ground surface under the unoccupied home on lot 6017 has been bagged and hauled to a sanitary landfill and that lime has been applied to the contaminated ground.” The state said it did not receive proof as of June 6 that Lei had met that requirement, but Lei said she cleaned up the site as required.

    Court records show that Lei and the mobile home park have been ordered to pay $279,950 in restitution and that the park is operating without a license. According to the ISDH website, its license expired at the end of 2015.

    Lei said she sent in the fee for the license but that the state has been refusing to renew it until the sewage problems are fixed. She said the state is refusing to acknowledge the work she’s done.

    Zionsville Director of Communications Amanda Vela said that the town is providing financial support to displaced Zionsville Mobile Home Park tenants without the resources to accomplish the relocation of their homes through its public assistance program.

    Lei said that the court order required the people to move, not the mobile homes. She said the park has an innkeeper lien on most of the homes, as their owners are behind on lot rent payments, and she doesn’t believe that that the town should have spent approximately $15,000 to help former tenants relocate.

    “The people can move out to rent an apartment or another house/home,” she stated in an email. “They don’t have to and shouldn’t have taken their mobile home with them due to the existing innkeeper lien against their mobile homes.”

Mobile Home Park Landlord's Sale Of Premises May Leave Some Lot-Leasing Homeowners Homeless; City's $2,500 Offer To Relocate Aging, Unmovable Trailers Gives No Assistance To Residents Getting The Boot

In Fairborn Ohio, WDTN-TV Channel 2 reports:
  • Residents of Glen Acres mobile home park in Fairborn will soon be looking for a place to live.

    The owners of the park sent the eviction notices because they plan to sell the land to the city of Fairborn.

    City officials say they’re willing to pay the mobile home residents to relocate, however some people don’t have any place to go.

    Patricia Ann Collins has lived in the Glen Acre’s trailer park since 1986. She’s one of six units facing eviction.

    “It makes me feel like anyone that lives in a mobile home is always looked down on to begin with and him not calling back makes me feel like I’m a piece of trash,”sad Collins.

    Collins is referring to Fairborn’s Community Development Director and Assistant City Manager, Michael Gebhart.

    Gebhart’s name is in the eviction letters from the property owners lawyers along with an offer of $2,500 from the city to help relocate the remaining trailers at Glen Acres.

    However, residents say they haven’t been able to reach the city and say trailers can’t be moved.

    One man feared being on camera, but explained the situation as, “You can’t relocate a 25-year-old trailer. The axle and everything underneath is too old. None of the companies around here are willing to do it.”

    Taxpayer money will be used to relocate the trailers and officials say the city will not purchase the land unless the tenants are gone.

    “It’s called a mobile home for a reason. Not to be insensitive, but for us to put up $2,500 to help with that move , that’s the most we can do,” said Michael Gebhart.

    Some residents have left, while others don’t have a place to go.

    “I have no where to go and live, and I’m just going to sit here tell the end I guess,” said Collins.

    The owners of the park did not respond to 2 NEWS when we called them and their lawyers.
Source: Pending sale of mobile home park to City of Fairborn leaves residents worried.

See also, Glenn Acres Mobile Home Park residents ordered to leave property (The mobile home park, located on Zimmerman Road, has approximately 12 mobile homes on it and six of those are still occupied by residents).

Friday, June 23, 2017

Cops: Pastor Used Forged Deed To Sell Church Valued At $1.5 Million To Himself For $1

In Bridgeport, Connecticut, the Connecticut Post reports:
  • The pastor of the Fountain of Youth Cathedral won the hearts of his congregation — then stole their church, police said.

    Bishop Franklin L. Fountain may eventually have to answer to a higher authority but in the meantime he will face a Superior Court judge.

    Fountain is charged with first-degree larceny and second-degree forgery after police said he forged deed documents and sold the Madison Avenue church to himself for $1.

    City property records show Fountain is now the owner of the church and property valued at $1.5 million.

    “Isn’t this all ridiculous,” Fountain, 55, said Wednesday [June 14] after being released on a promise to appear in court. “I am the pastor and I deserve respect and I expect that this will all be worked out.”

    He could face more than 20 years in prison if convicted of the charges. His lawyer, Erroll Skyers, said he is anxiously waiting to see the police report before commenting.

    Police Detective Francis Podpolucha said they had received a complaint from the church’s Board of Directors, Fountain’s younger brother James Fountain and his uncle Donald Fountain that without authorization from the board, Bishop Fountain had altered the deed documents and sold the church at 324 Madison Ave. to himself.

    Franklin L. Fountain took over as pastor of the church, which was founded in 1960, from his father, Franklin D. Fountain who died in 2005.

Cops: Caretaker's $100K+ Ripoff Included $68K In Loan Proceeds Pocketed After Duping Elderly Homeowner Into Getting Reverse Mortgage On Her Home

In Bridgeton, New Jersey, The Daily Journal reports:
  • A criminal case is moving ahead against a Vineland woman charged more than two years ago with stealing more than $100,000 from an elderly woman and her disabled son.

    A Cumberland County grand jury in May issued an 11-count indictment against Tami. A. Harold, 51, of the 500 block of North 6th Street. Harold was heavily involved in a 2014 movement to remove then-Vineland Mayor Ruben Bermudez from office.

    The alleged crimes took place between September 2011 and September 2014. Millville police charged her in October 2014, and she was released after posting a bond and denied the allegations.

    The indictment identifies the victims as Millville residents Mary R. Smith, now in her early 90s, and Bryan J. Smith. Harold had taken responsibility for caring for the family, police said at the time.

    A police investigation indicated Harold had the woman “unknowingly” agree to a reverse mortgage on her home involving a loan of more than $68,000, took more than $33,000 from a checking account, and passed about $9,000 worth of bad checks.

    The indictment charges Harold with four counts of theft; two counts of misapplication of entrusted property; two counts of forgery; securing execution of documents by deception; unlawful theft or receipt of a credit card; and fraudulent use of a credit card.

Cops: Son Abused POA To Drain Over $100K From Dementia-Stricken Dad's Bank Account, But Fails In Attempt To Swipe Home Equity By Obtaining Reverse Mortgage On Victim's House

In Hernando County, Florida, the Tampa Bay Times reports:
  • A man has been accused of stealing more than $100,000 from his father and trying to obtain a reverse mortgage on his home.

    Vincent Caliendo, 39, was arrested May 30 in South Carolina, more than a year after Hernando deputies issued a warrant for his arrest, and brought to the Hernando County Detention Center on June 11.

    In October 2015, Caliendo obtained power of attorney over his father, Bernard, who was diagnosed with early-stage dementia, according to a Sheriff's Office news release.

    On March 29, 2016, Bernard Caliendo reported missing funds from his bank account to the Sheriff's Office. Authorities found that his son had withdrawn $105,888.99 from both his father's checking and savings accounts between March 17 and March 28, then transferred the money to his account, which previously had a negative balance, according to the Sheriff's Office.

    Authorities said Vincent spent $16,128.37 on hotels, restaurants, retailers and bills. None of the purchases were for his father's benefit.

    When his father confronted him over the phone about the missing funds, Vincent told him he'd never see the money again, according to the Sheriff's Office report.

    Vincent's largest withdraw was $100,864 at Wells Fargo Bank in Spring Hill on March 28. He was given a cashier's check, which he deposited the next day at a Wells Fargo Bank in Clermont.

    On April 4, he returned to the bank in Clermont, asked for cash and was given $10,000. Two days later, he came back, asking for $89,473.

    Because Wells Fargo had placed notes on both the father's and son's accounts regarding the Sheriff's Office investigation, Clermont police were notified, and they apprehended Vincent before he left the bank. That money was later returned to his father and Vincent was let go at the Clermont bank since the offenses took place in Hernando, the Sheriff's Office said.

    During the investigation, Hernando deputies learned that Vincent had tried to obtain a reverse mortgage for $48,070 on his father's home.

    Detectives obtained a warrant to arrest Vincent on May 12, 2016. However, deputies were unable to locate him. He was apprehended in Lexington County, S.C., last month, on May 30, as a result of a Crime Stoppers tip.

    He was arrested on charges of exploitation of an elderly person or disabled adult and grand theft, and remained in custody this week in lieu of $20,000 bail.

Thursday, June 22, 2017

L.A. Feds Bag Alleged Head Of Foreclosure Rescue Racket That Abused Bankruptcy Process To Stall Forced Sales, Evictions; Defendant Pocketed Over $7 Million By Using Fractional Interest Deed Transfers To, & Court Filings On Behalf Of, Phony 3rd Parties To Trigger Automatic Stay Provisions In Effort To Keep Homeowners From Losing Their Homes, Getting The Boot: Prosecutors

From the Office of the U.S. Attorney (Los Angeles, California):
  • The alleged mastermind of a foreclosure-avoidance scam that targeted distressed homeowners has been arrested on federal charges that he orchestrated a bankruptcy fraud scheme that brought in more than $7 million from victims.

    Michael “Mickey” Henschel, 68, of Van Nuys, was arrested Wednesday morning [June 14] by federal agents with the FBI and the Federal Housing Finance Agency’s Office of Inspector General (FHFA-OIG). Henschel was arrested pursuant to an 11-count indictment returned by a federal grand jury on June 8.

    During a court hearing this afternoon [June 16], Henschel was ordered detained pending trial.

    According to the indictment unsealed after his arrest, Henschel owned a Van Nuys-based company he operated under several names, including Valueline. Henschel and several co-conspirators marketed illegal foreclosure- and eviction-delay services to homeowners who had defaulted on their mortgages and renters who were facing eviction.

    As part of the scheme, Henschel and the others allegedly convinced homeowners to sign fake grant deeds that purported to show the homeowners had conveyed an interest in their properties to fictional third parties.

    Henschel and his co-conspirators allegedly filed bankruptcies in the names of fictional persons and entities to trigger the automatic stay provision of the Bankruptcy Code, which meant that foreclosure sales were stalled.

    Henschel allegedly delayed evictions in a similar way, filing fraudulent documents in state eviction actions and sending similar documents to sheriff’s offices.

    Henschel allegedly charged some homeowners large fees before agreeing to clear title to their properties, in addition to the monthly fees paid for the illegal services. During the course of the scheme, from October 2010 through July 2013, Henschel and his co-conspirators collected more than $7 million, according to the indictment.

    The indictment charges Henschel with one count of conspiracy, eight counts of bankruptcy fraud and two counts of wire fraud.
Source: Van Nuys Man Named in Federal Fraud Indictment Alleging $7 Million Foreclosure-Delay Scam Targeting Struggling Homeowners.

See, generally, Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the bankruptcy courts.

L.A. Man Cops Guilty Plea To Peddling Phony Rental Lists To Apartment-Seeking Tenants, Clipping $200 From Over 1,000 Victims

In Los Angeles, California, KNBC-TV Channel 4 reports:
  • The man who state authorities called the "mastermind" of rental scams pleaded guilty Wednesday [June 14] to a felony charge of defrauding Southern California customers who were looking for affordable rental homes and apartments.

    As part of a plea agreement, Richard Rodriguez of Alhambra received a three-year suspended jail sentence and five years supervised probation in exchange for pleading guilty to conspiracy to defraud customers of his rental listing business, Superior Consulting in Rowland Heights. Superior is just one of numerous rental listing agencies run by Rodriguez over the last 20 years.

    "As a term and condition of probation, he has to provide restitution to the over one thousand victims and he's no longer allowed to be in any location where rental services are offered," Los Angeles Deputy District Attorney Jessie McGrath said.

    The NBC4 first exposed Rodriguez and his "rental listing" businesses in 2012. The I-Team reported that Rodriguez or his employees asked customers to pay them $200 cash, and in return they promised to provide listings of affordable apartments and homes to rent.
For more, see Rental Scam 'Mastermind' Pleads Guilty to Defrauding Customers (The guilty plea comes after years of investigations by the NBC4 I-Team).

Wednesday, June 21, 2017

After Investing Time, Money Into Repairing Recently-Purchased Fixer-Upper, 1st Time Homebuyer Stunned To Discover That Title Transfer Didn't Include Backyard, Shed, Part Of Back Deck

In Salmon River, Nova Scotia, CBC News reports:
  • Imagine buying a home with a deck, a shed and a big fenced backyard, only to discover you own neither the backyard nor the shed and only part of the back deck.

    That's what happened to Ryan Manning of Salmon River, N.S., who has since spent months looking for answers from everyone from the real estate agent and lawyer to the previous owner and the company that sold him title insurance.

    "It was a huge shock," Manning told CBC News, recalling the moment last fall when a man knocked on his door and offered to sell him the back half of what he thought was already his property.

    "I didn't know what to do at that point. I wouldn't have bought my house knowing that situation."
    He started working on the fixer-upper, hoping to live in half and rent out the other side to help cover his mortgage.

    Everything was going as planned until that fateful knock on his door in October 2016.

    Manning was stunned to learn the land his home sat on was one legal parcel of land while his backyard was on another. Each has a separate parcel identifier, commonly known as a PID.

    "I seen pictures [of the backyard] right there in my listing," said Manning, adding he believed the real estate agent.

    "They're the ones that are supposed to be there for me to tell me the truth about my property, to know what I'm buying."
    Not covered by title insurance

    Manning's lawyer, who has also since retired, did initially advise him to have a full survey completed or a location certificate obtained before purchasing the property.

    In a letter from Patterson Law, Manning was told an alternative was title insurance, which "would step in to compensate you if the property you purchased had issues with respect to location and boundaries, water potability, etc."

    It went on to say "a mortgage company will generally accept a title insurance policy in lieu of a location certificate or survey."

    Stewart Title Guaranty, the company from which he purchased title insurance, said the insurance covered the lender, not him.
    Agreement reached, says law firm

    Since CBC News contacted Patterson Law, which originally handled the purchase for Manning, it has been working with him to resolve the matter.

    In an email late Wednesday afternoon [June 14], managing partner George White said "we are pleased to advise that an agreement has been entered into between the parties which should result in a successful conclusion." It thanked CBC for bringing the matter to its attention.

    Manning isn't suggesting anyone intentionally deceived him. A lawyer for Genworth, the company selling the foreclosed property, said in a letter: "I don't think anyone knew of the second PID prior to the sale, including the purchaser and/or the Realtors."

    But the first-time homebuyer said the whole situation has created a huge amount of stress since he can't sell the property as it currently exists and he doesn't have the money to buy what he thought was his backyard.

    "It's something that could financially cripple you," he said.

    "I put so much money into my home to fix it up, to try to make it an income property."
Source: 1st-time homebuyer stunned to discover new backyard isn't his (Nova Scotia man told he doesn't own the backyard he thought he'd purchased with his home).

Aspiring Homebuyer/Couple Under Rent-To-Own Deal Lose Their Home After Two Years Despite Not Missing Any Payments & After Making Significant Repairs; Rent-Skimming Seller Pocketed Deposits, Monthly Payments, Then Stiffed Bank On Undisclosed Mortgage, Allowing House To Go Into Foreclosure

In Clay, Alabama, WBRC-TV Channel 6 reports:
  • Nakecia Stone scrolls through photos of her old home. With a flick of her finger, an image of her daughters cuddling in their bedroom flashes across the screen, followed by another of them in the front yard.

    “I loved the area, I loved my neighbors,” Stone said of the Clay-Chalkville home.

    She says they moved to the single-family home in 2013 under a rent-to-own agreement. It required a $5,000 down payment and $1,000 per month, she said, and promised they could own the house one day in the future.

    “The reason the down payment was so low was that we agreed to do all repairs,” Stone said.

    She recalls they spent about a month and a half cleaning the house of debris, installing new flooring and bathrooms, and refurbishing the outdoor swimming pool.

    “My husband is a workaholic, so him working on the house thinking it was going to be our house…that was over the top for him,” she remembered.

    They enjoyed the home for about two years, until one summer day in 2015. The dream of home ownership was interrupted.

    “My neighbor was coming over to see me one day and she said ‘you’ve got a note on your door.’ A note? I got the note and it says 'You’ve got 30 days to vacate. The house has been placed into foreclosure,'” Stone explained.

    A baffling moment for Stone because she says they always paid the bills on time. But as she would learn, it was not their delinquency that cut her dream short.

    The sellers had a mortgage on the home and had stopped paying the bank, prompting the foreclosure, costing the Stone family their home and investment.

    “When I saw them sell it, I knew it was over,” Stone said with tears in her eyes.

    Some say rent-to-own property agreements, which are like lease-purchase contracts, give people who cannot qualify for a home loan an opportunity to achieve the American dream that would otherwise elude them.

    But, housing lawyers say the agreements are too risky. In Alabama, there is virtually no regulatory oversight. And the agreements promising a chance at home ownership attract people who often cannot afford a lawyer to review the agreements.

    “This is an area where we need some regulatory help,” said Nancy Yarbrough, Executive Director of Birmingham Volunteer Lawyers.(1) She says acquiring the deed to a home through a rent-to-own deed is “like winning the lottery.”
    Internet posts suggest the prevalence of the rent-to-own offerings across the state. Searching listings for about 6 hours over the course of several days revealed nearly 400 properties offered for rent-to-own.

    But, the lack of public records makes it impossible to know with certainty how many properties have been sold through a rent-to-own transaction, or how many have failed.

    No governmental entity tracks rent-to-own properties. The contracts are not recorded with public offices.

    Lawyers in Texas surveyed about 1,300 people who had rent-to-own agreements. Their findings, reflected in the report “The Contract for Deed Prevalence Project,” show that the deals failed nearly 45 percent of the time.

    “The problem with a lot of these transactions is that the family never ends up with title, they never end up actually owning the home,” explained Professor Heather Way, The University of Texas at Austin. “And families end up spending thousands and thousands of dollars. They think it’s going towards ownership, but it’s not.”

    The Alabama Office of the Attorney General received 99 complaints about landlord-tenant issues in 2016. These would include rent-to-own issues, though those cases are not separately counted.

    Yarbrough, of Volunteer Lawyers, said her team of 500 lawyers volunteering time to help low-income people of Birmingham, assisted with more than 540 housing cases. Many, she says, were rent-to-own agreements.

    And, [lead housing lawyer for Legal Services of Alabama(2) Chris] McCary estimates he gets around 40 cases of rent-to-own issues every year.

    “I know it’s just a drop in the bucket of what’s out there,” said McCary. “I may have just one case on the docket for that day, but I’ll see several cases go in front of me.”

    And he believes there is room for success too.

    “I only see the ones where the dream has been interrupted, but it could be that some that are successful,” he said. “It would be hard to predict the other way how many are successful. There’s no regulation of it, there’s nothing to keep up with it,” explained McCary.

    But Yarbrough isn’t as optimistic.

    “It’s like winning the lottery,” she said of getting deed through a rent-to-own deal.

    Losing the house can happen in under a month.

    When there’s a breach of a rent-to-own agreement, through non-payment or otherwise, and a lawsuit is filed, usually it’s in district court. It’s called an “unlawful detainer.”

    “It is a fast mechanism, probably the fastest we have in Alabama to get someone off the property,” said attorney McCary. Someone can be forced out of the home in under a month.

    Landlords file unlawful detainer actions on the fast track against tenants when agreements do not make the promise of ownership and don’t require larger down payments.

    But lawsuits against property owners, where there is an ownership interest, a deed or mortgage, must be filed in a different court, called the circuit court. There, the process can take months.

    McCary says when sellers in rent-to-own agreements sue, they typically file on the faster track in district court.

    “I would assume that’s why some try to file in the district court,” said Judge Robert P. Bynon, Jr. He presides over the district court for Jefferson County in Birmingham.

    “Sometimes, you have a seller trying to take advantage of a buyer, or a buyer trying to take advantage of a seller, and you’ve got to work in good faith with one another. That’s the only way this is going to work,” Bynon explained.

    When he sees disputes over rent-to-own agreements filed in the district court, he throws them out.

    That’s got to go to circuit court for an ejectment action. It’s a completely different process and it takes a little longer than an unlawful detainer,” said Bynon.

    But many times it’s hard to know when to toss the case because often buyers represent themselves and may not know the significance of the down payment they made, and how that could potentially get them more time in circuit court.

    Sometimes, nobody, the seller nor the buyer, will not tell the court that they paid $20,000 down to have the option to buy and rent this house. You find out way after the case is over with,” said Bynon.

    And that’s how, McCary says, buyers in the rent-to-own deals are often forced out of the home on the fast court track.

    “Over the 90 percent of the time, they treat them like a tenant,” explained McCary. "Someone can be out in under a month.”

For the story, see On Your Side Investigation: Do unregulated rent-to-own contracts deliver what they promise?
(1) The Birmingham Bar Volunteer Lawyers Program (BBVLP) is a non-profit program that matches income-qualifying residents of Jefferson County, Alabama, with volunteer attorneys to help with legal matters. Applicants must meet certain financial criteria before they can be assisted through the Program.

(2) Legal Services Alabama is a non-profit, public interest law firm that serves low-income people throughout the state by providing civil legal aid and by promoting collaboration to find solutions to problems of poverty. It has seven offices, located in Birmingham, Dothan, Huntsville, Mobile, Montgomery, Selma and Tuscaloosa. land contract for deed

Rent-To-Own Rackets Not Limited To Dilapidated Homes; Many Trucking Outfits Use Business Model To Rope Their Drivers Into One-Sided, 'Take-It-Or Leave-It' Lease Contracts For Company Trucks In Arrangements That Leave Many Working For Peanuts & Under Threat Of Losing Everything They've Paid If They Miss One Payment

In Los Angeles, California, USA Today reports:
  • Samuel Talavera Jr. did everything his bosses asked.

    Most days, the trucker would drive more than 16 hours straight hauling LG dishwashers and Kumho tires to warehouses around Los Angeles, on their way to retail stores nationwide.

    He rarely went home to his family. At night, he crawled into the back of his cab and slept in the company parking lot.

    For all of that, he took home as little as 67 cents a week.

    Then, in October 2013, the truck he leased from his employer, QTS, broke down.

    When Talavera could not afford repairs, the company fired him and seized the truck -- along with $78,000 he had paid towards owning it.

    Talavera was a modern-day indentured servant. And there are hundreds, likely thousands more, still on the road, hauling containers for trucking companies that move goods for America’s most beloved retailers, from Costco to Target to Home Depot.

    These port truckers -- many of them poor immigrants who speak little English -- are responsible for moving almost half of the nation’s container imports out of Los Angeles’ ports. They don't deliver goods to stores. Instead they drive them short distances to warehouses and rail yards, one small step on their journey to a store near you.

    A yearlong investigation by the USA TODAY Network found that port trucking companies in southern California have spent the past decade forcing drivers to finance their own trucks by taking on debt they could not afford. Companies then used that debt as leverage to extract forced labor and trap drivers in jobs that left them destitute.

    If a driver quit, the company seized his truck and kept everything he had paid towards owning it.

    If drivers missed payments, or if they got sick or became too exhausted to go on, their companies fired them and kept everything. Then they turned around and leased the trucks to someone else.

    Drivers who manage to hang on to their jobs sometimes end up owing money to their employers – essentially working for free. Reporters identified seven different companies that have told their employees they owe money at week’s end.

    The USA TODAY Network pieced together accounts from more than 300 drivers, listened to hundreds of hours of sworn labor dispute testimony and reviewed contracts that have never been seen by the public.

    Using the contracts, submitted as evidence in labor complaints, and shipping manifests, reporters matched the trucking companies with the most labor violations to dozens of retail brands, including Target, Hewlett-Packard, Home Depot, Hasbro, J.Crew, UPS, Goodyear, Costco, Ralph Lauren and more.
    There are 800 companies regularly operating at the LA ports. Almost all of them turned to some form of a lease-to-own model, some without thinking through the consequences, said industry consultant and lobbyist Alex Cherin.

    “Flying by the seat of their pants and making it up as they went along,” he said of the scramble to find trucks for drivers. “Ultimately what they were trying to do was survive in a business with very thin margins.”

    Truckers at dozens of companies describe the same basic scene. They were handed a lease-to-own contract by their employer and given a choice: Sign immediately or be fired. Many drivers who spoke little English said managers gave them no time to seek legal advice or even an interpreter to read the contract.

    It was "take it or leave it," according to Fidel Vasquez, a driver for Total Transportation who said he couldn’t read the contract because it was in English.

    Jose Juan Rodriguez owned his own truck and drove primarily for Morgan Southern, where two dozen drivers have filed claims for back pay at the California labor commission and civil court. Like many drivers, Rodriguez said he didn’t understand what he was signing, but felt he had no choice.

    His wife has stage three breast cancer and his adult son has severe brain damage requiring frequent doctor visits.

    “Where do I sign?” Rodriguez recalled asking right away. “The only thing I had to worry about is work, because I have a family.”

    One-sided contracts

    The contracts work like sub-leases. Knowing drivers could not qualify for their own loans or leases, trucking companies arranged to finance their fleets. Then they had drivers sign up for individual trucks.

    Drivers gave their old trucks – many of which they owned outright – to their company as a down payment. And just like that they were up to $100,000 in debt to their own employer. The same guys would have had a tough time qualifying for a Hyundai days earlier.

    As far back as August 2008, a trucking finance firm warned Port of Long Beach board members that 40% of drivers were likely to default on truck leases. But no one stopped the deals, which place almost all of the financial risk onto the workers.

    Drivers' names were not on the truck titles. And many contracts effectively barred drivers from using their truck to work for other companies.

    The companies also retained the power to decide how much work to give their drivers. They decide who gets the easiest and most lucrative routes -- and who gets to work at all.

    That leaves drivers in constant fear of upsetting managers, who can fire them for any reason, or simply stop sending them business, a process some call “starving” them out of the truck.

    On a five-year lease, drivers could pay in for four years and 11 months. If they got sick, fell behind on the lease or were fired in the last month, they could lose everything – as if they had never paid a dime.


Tuesday, June 20, 2017

Another Ex-Boyfriend Gets Pinched For Allegedly Forging Deed To Remove Former Girlfriend's Name From Title To Jointly-Owned Home

In West Palm Beach, Florida, the Palm Beach Post reports:
  • Two Palm Beach County Sheriff’s Office corrections deputies were arrested Wednesday [June 14] after they allegedly had the name of a fellow corrections employee removed from a property deed without her knowing, according to a sheriff’s office report. This isn’t the first time the two deputies have been arrested, either, records show.

    Willie Cone III, 35, and Saida Douglas, 36, each face one count of fraud. Both Douglas and Cone were released on $3,000 bond each Wednesday afternoon from the Palm Beach County Jail.

    A 40-year-old woman filed a police report that her ex-boyfriend, Cone, had removed her name without her consent from the deed to a Loxahatchee home they bought together worth about $140,000.

    She said the pair dated between 2011 and 2013 and while she had mentioned to him about removing her name from the deed after they split up, she never gave permission for him to take her off the document. She told investigators she had just happened to check to property appraiser’s website and saw the allegedly fake document.

    The woman who notarized the document told investigators that she met Cone, Douglas and the other corrections employee at the main jail near West Palm Beach because they all worked there. Cone not only works at the western facility in Belle Glade, but the other corrections employee also was out on family leave the day she allegedly signed the document.

    Additionally, investigators noted the “witness” on the quit-claim deed was Douglas’ mother. According to the U.S. Department of Homeland Security, the mother was out of the county when the document was signed. She resides in Haiti, according to the report.

    Though the notary is listed in the report and investigators note there is probable cause to charge her with fraud, jail and court records do not indicate she had been arrested as of Thursday.

    Cone was arrested twice before for domestic violence in Palm Beach County in 2011 and 2013. In both cases, it was the same woman who bought the home with him and each time charges were not filed. According to media reports in 2011, Douglas was arrested after she alleged fired a gun into a bedroom wall as she fought with her then-husband in Lauderhill. The outcome of the case is unknown, because the records do not appear in the online records of the Broward County clerk’s office.

Pittsburgh-Area Man Dumps Girlfriend, Allegedly Forges Deed To Remove Her From Title To Jointly-Owned Home, Pledges It As Collateral To Pocket $76K HELOC Proceeds, Then Bolts For Parts Unknown

In Mount Oliver, Pennsylvania, WPXI-TV Channel 11 reports:
  • An arrest warrant has been issued for a man accused of forging a deed to his house and taking his ex-girlfriend’s name off of it after their relationship ended.

    Lynne Harr claims Dennis Mueller was leading a double life, using a dating service in New Jersey. Harr has been living in a Mount Oliver home since moving in with her now ex-boyfriend in 2011.

    According to police documents, Dennis Mueller legally added Harr’s name to the deed in 2016.

    But when he moved out, Harr started going through her own documents.

    “And I came across the copy of the deed and it didn't look right,” Harr said. She discovered Mueller had taken her name off the deed to the home, without her knowing.

    He legally put me on the house, then very illegally took me off of that house,” Harr said.

    According to the criminal complaint, Harr found boxes where it appeared Mueller had been practicing signatures for local notaries, and even admitted to detectives the deed transfer wasn’t done legally.

    Harr also found he took out a line of credit, using the house as collateral, getting a $76,000 cash advance. “All for him, and now he wants me to pay it back,” Harr said.

    And the secrets, Harr said, didn’t stop there. She found receipts for a dating service she says he signed up for called “South Jersey Matchmaker” while he was traveling for his job.

    Her attorney says they’ve seen cases where people have forged deeds before and is hoping they can get it fixed, so Harr can stay in the home she thought was partly hers.

    “We're hoping he's willing to right his wrong, and there's a lot of work to do and help to become whole again,” attorney Kushal Dave said.

    “He was very good at it,” Harr said. “He was very good at acquiring the information he needed to achieve his goal.”

    Channel 11 reached out to Mueller’s attorney who said he’s handling any civil cases, and has advised Mueller to get a criminal attorney.

    He had no further comment.

Monday, June 19, 2017

Scams Targeting Real Estate Agents, Attorneys & Title Closers: Scammers Hack Into Their Emails, Then Create & Use Spoof Email Accounts To Hijack Closing Funds With Phony Wiring Instructions; Repercussions Astronomical

From a recent post in the New England Real Estate Journal:
  • As if real estate conveyancers and title insurance companies did not have enough to worry about with tracking down missing assignments/discharges, or determining whether or not a lender has followed the guidelines to perfect its rights of foreclosure, they now face a growing threat that has dire financial consequences. Unfortunately, a disturbing number of conveyancers are becoming victims. According to estimates published by the Wall Street Journal, computer hackers perpetrating wire fraud have accounted for approximately $1 billion in losses from October 2013 to June 2015.

    Hackers are acquiring information by infiltrating and monitoring emails of the real estate community. They learn who the parties are to the transaction, the amount of the purchase, the date of the closing, and most importantly, if any of the funds are being wired. Once the information is learned, the hacker generates an identity very similar to one of the parties involved in the transaction. For example, the seller’s attorney’s correct email address of is altered slightly to The fake email is set up to appear exactly the same as the correct email address, and could even contain the official logo of the seller’s attorney.

    On the day of the transaction, an email is sent from the fake address to the buyer’s attorney indicating that there is a change in the wire instructions, and instructing the attorney to wire the seller’s proceeds or a payoff to a new address. An unsuspecting conveyancing attorney may look quickly at the email address and not realize that the email transmission was coming from a criminal third party. The wire is sent to the fraudulent address and the funds are forever lost.

    This scheme could even affect real estate conveyancers who believe they are protected against cyber-crime because all of their emails are encrypted. Hackers are targeting not only the real estate conveyancers, but also the real estate agents who are involved in the transaction. The unprotected emails of the realtors are compromised by the hacker. From there, the hackers can monitor the information being exchanged and learn the information they will later need to set up the fake email account. The fact that a real estate conveyancer uses encrypted email to send out information does not protect him or her from an incoming email from a fraudulent third party.

    Conveyancers who fall victim to wire fraud and attempt to cover the loss with a claim to their malpractice insurance may be informed by their carrier that they lack coverage. Some malpractice companies are taking the position that the sending out of wire fund is not considered the practice of law; rather it is considered a ministerial task and not a covered risk under the policy. Attorneys are being forced to seek court determination if wire fraud is a covered risk.

    In Stark & Knoll Co., L.P.A. v. ProAssurance Cas. Co., 2013 WL 1411229 (N.D. Ohio 2013), a malpractice insurer made such an argument; however, the court found in favor of the attorney referring to Nardella Chong v. Medmarc Casualty Ins. Co., 642 F.3d 941, 942 (11th Cir. 2011), which ruled that the insurance policy covered actions which included those of a “trustee” or “similar fiduciary capacity.” While in this instance the attorney was successful in obtaining coverage, the firm still had to incur out of pocket expenses to enforce the provisions of the malpractice policy to cover the wire fraud claim.

    From a title insurance perspective, this issue becomes extremely problematic with the wiring of payoffs for mortgages or outstanding municipal taxes. Using the same email scheme, hackers can supply false mortgage payoffs requesting funds be paid to fraudulent accounts. In such a scenario, claims could be made under both the Closing Protection Letter and the title policies for the current transaction because the lien on the property would not be paid or discharged. Considering the size of many mortgage payoffs, the repercussions of these hacker attacks are astronomical.

    According to the American Land Title Association, title companies have reported an increase of wire fraud scams in the amount of 480% in 2016. In an effort to combat these hacker attacks, there are a number of measures designed to increase security. Such measures include: avoid web-based email accounts such as yahoo or gmail to transmit business communications; secure your wireless network; change computer passwords regularly; keep virus and firewall software up to date; and most importantly, in the event there is a change in wire instructions during a transaction, call the receiver of the wire directly and verify the requested change.

    Considering the increased reliance on electronic communications and the wiring of funds during transactions, it does not appear that the end of these cyber-attacks is coming anytime soon. In addition to the measures discussed previously, conveyancers and title companies need to be vigilant in keeping up to date with the latest schemes in order to make sure they know what to look for if faced with a similar circumstance. If you unfortunately become a victim of a scheme, contact your local Federal Bureau of Investigation (FBI) office and file a complaint with
Source: Wire fraud: A new nightmare for real estate conveyancers and title companies.

See, generally:

U.S. Secret Service Probes Closing Funds Hijacking Scams Targeting Real Estate Agents, Attorneys & Title Closers; Six Known Cases Result In Losses Approaching $500K In SC Lowcountry

In Charleston, South Carolina, WCSC-TV Channel 5 reports:
  • The United States Secret Service is investigating a half-dozen real estate scam incidents in the Lowcountry.

    "We have six known cases in the low country in the last four weeks with total losses approaching half a million dollars," Agent John Kenney said.

    The scam targets emails being exchanged between closing attorneys and realtors as a real estate deal is about to close, Kenney said.

    Hackers have accessed the closing attorneys' email accounts and created a spoof account which closely mirrors the attorneys' actual email addresses, he said. Investigators say the hackers then send an email with "new" or "updated" wiring instructions for the closing funds from the spoof account, which may only vary by one or two letters from the actual account.

    When the attorney executes the wire transfer of funds from escrow, the money goes to the hackers, not the actual seller, Kenney said.

    "We are working with victims, banks and other law enforcement partners to identify and arrest offenders," he said. "While the scheme operates in a similar manner, we do not believe that the cases are related at this time."

    Kenney said there are several things those involved in real estate deals can protect themselves:
  • Be especially wary of new or updated wiring instructions.
  • Read email addresses letter for letter and confirm by phone with known business associates.
  • Confirm all details, including banking information, by phone prior to authorizing the wire.
  • Do not be rushed or hurried. Do not attempt execution of wires just prior to close of business.
  • Have all escrow account insurance policies up to date.
  • If you've fallen victim to such a scam, Kenney says you should contact your local law enforcement and your bank.

Long Island Homeowner/Couple That Recently Beat Foreclosure With Statute Of Limitations Defense Can Now Begin Popping Champagne Bottles As Bankster's Appeal Deadline To State's Highest Court Expires

In Sound Beach, New York, Newsday reports:
  • A Sound Beach couple fighting foreclosure for nearly 10 years “can finally close that chapter of their lives” now that their lender has missed court deadlines to continue the legal battle, the couple’s lawyer said Tuesday [June 13].

    Fred and Theresa Tovar’s mortgage lender — originally Beneficial Homeowner Service Corp., and later U.S. Bank Trust N.A. — had until Friday [June 9] to file a motion seeking permission to take the case to the state’s highest court, the Court of Appeals.

    The lender could still seek an extension of time, or it could try to re-argue the case before the Appellate Division of the state Supreme Court, which last month upheld a lower-court ruling in favor of the homeowners.(1)

    However, the Tovars’ attorney, Ivan Young of Bohemia, said he believed such an effort would be “futile.”

    U.S. Bancorp, the lender’s parent company, referred questions to the mortgage servicer, Caliber Home Loans. A spokesman for Caliber declined to comment.

    The court fight turned on whether the lender missed the six-year statute of limitations to file a foreclosure lawsuit. The lender sued to foreclose in 2007, and the case was dismissed in 2012. The new lawsuit was not filed until 2014.

    By then, the six-year deadline had passed, a state Supreme Court justice in Suffolk County ruled in 2014. That decision was upheld unanimously by a four-judge panel of the Appellate Division last month.
Source: LI couple evades foreclosure as deadline passes.
(1) Beneficial Homeowner Serv. Corp. v. Tovar, 2017 NY Slip Op 3471 (N.Y. App. Div. 2nd Dept. May 3, 2017).

Sunday, June 18, 2017

Illinois Bar Officials Say Grievance Filings Against Attorneys Are Down While Payouts To Indemnify Victims Of Sleazy Lawyers Are Substantially Up; $3+ Million Payout For 2016 Caps Off Recent 4-Year Total Of About $8-9 Million

In Chicago, Illinois, the Cook County Record reports:
  • The Illinois Attorney Registration and Disciplinary Commission (ARDC) recently released its 2016 annual report, which shows the fewest number of grievances since 1988.

    According to the ARDC report, people filed 5,401 grievances, which also reflects the fourth year in a row that the number of grievances has gone down.
    The drop in grievances and the fact that every Illinois lawyer had to contribute to the Client Protection Program jumped out at Grogan as highlights in the report.

    "All Illinois lawyers paid $25 to a fund called the Client Protection Program," he said. "Every lawyer pays to this indemnity fund, and there's a cap of a million dollars per lawyer and $100,000 per claim."

    The ARDC reported that 48 lawyers paid out nearly $3.1 million to cover 146 claims.

    "The numbers are so substantial," Grogan said. "I think that's the biggest thing, the big numbers we're dealing with."

    Grogan said payouts in the early part of the 2000s were below $1 million, and in 2006, Illinois lawyers paid out $843,000 in awards.

    "In the early 2000s, we'd see payouts annually of $800,000, $700,000, $600,000," Grogan said. "And now, for the last couple years, we're seeing a million-dollar plus. The last four years ... (brought) about $8 or $9 million in payout, so a substantial amount."
For the story, see ARDC report shows lowest grievance total since 1988.
(1) In Illinois, the Client Protection Program was created to help (at least partially) compensate persons who have suffered a loss of money or property due to misappropriation or embezzlement by an Illinois-licensed attorney.

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

Now-Disbarred Central Florida Lawyer Who Fleeced Widow, Brain-Damaged Child, Others Out Of Over $2.7 Million In Entrusted Funds Gets 10 Years In Federal Prison

From the Office of the U.S. Attorney (Orlando, Florida):
  • U.S. District Judge Roy B. Dalton, Jr. has sentenced Julie W. Kronhaus (52, Winter Park) to 10 years in federal prison for wire and bank fraud. In addition, she was ordered to pay over $2.7 million in restitution.(1)

    Kronhaus pleaded guilty on January 24, 2017.

    According to court documents, from June 2009 to February 17, 2015, Kronhaus, who was a licensed attorney and Certified Public Accountant in Florida, defrauded her clients and banks of approximately $2.7 million. As part of her practice, Kronhaus acted as a trustee for her clients and also held their money in various bank accounts. Rather than using the funds for the purpose intended by her clients, Kronhaus diverted the money into her law firm’s bank accounts and paid for her personal expenses.

    In addition, Kronhaus engaged in a check kiting scheme where she wrote checks from accounts that had insufficient funds. She deposited the worthless checks into her trust account at another bank to give the appearance that there were sufficient funds in the account. She then issued checks from her trust account to her clients, taking advantage of the bank’s float time.
Source: Disbarred Winter Park Attorney Sentenced To 10 Years For Defrauding Clients And Banks Of $2.7 Million.

See also, 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).
(1) In Florida, the Clients' Security Fund was created by The Florida Bar to help (at least partially) compensate persons who have suffered a loss of money or property due to misappropriation or embezzlement by a Florida-licensed attorney.

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

Attorney Who Voluntarily Turned In Law License In Lieu Of Getting The Boot Now Pleads Guilty To Pilfering Over $2.5 Million Of Entrusted Money From Unwitting Clients

In San Antonio, Texas, the San Antonio Express-News reports:
  • Disgraced former San Antonio lawyer Todd Prins, who has been accused of fabricating court documents, forging judges’ signatures and stealing money out of his law firm’s trust account for his own use, has agreed to plead guilty.

    Prins, 51, this week [June 9] signed a plea deal in which he agreed to plead guilty to one count of wire fraud. He voluntarily gave up his law license earlier this year in lieu of being disciplined by the State Bar of Texas. Prins was charged by prosecutors in a court filing that was made public Friday [June 9].
    Prins’ legal troubles surfaced in his bankruptcy case in November when he was accused of fabricating court documents and forging judges’ signatures in an elaborate scheme to conceal from two clients the status of a lawsuit they filed in 2009.

    Court filings contained copies of allegedly manufactured court rulings bearing the signatures of various judges, from U.S. District Judge Fred Biery to Texas Supreme Court Justice Nathan Hecht to state District Judge Solomon J. Casseb III.

    “My clients were completely bamboozled,” Jason Davis, an attorney for William and Karen Ozer, said during a Nov. 7 bankruptcy court hearing in San Antonio. The Ozers have sued Prins, alleging he committed fraud and breached his fiduciary duty to them.

    Prins issued the Ozers a $1.6 million promissory note, which he claimed was settlement proceeds from a judgment they received in the lawsuit. In actuality, the plea agreement said, there was no such settlement.

    Under the terms of his plea deal, Prins has agreed to repay $225,264 to the Ozers.

    Prins’ troubles worsened last fall when he faced arrest in a Houston bankruptcy court for allegedly pocketing $2.4 million from a Oct. 4 foreclosure sale he conducted for a client. But the sale was done without a judge’s approval and then Prins failed to turn over the proceeds from the sale, according to a December court order.

    According to the plea deal, Prins transferred the $2.4 million from his law firm’s trust account to his law firm’s bank account at Wells Fargo Bank and kept $800,000 for himself.

    U.S. Bankruptcy Judge Jeff Bohm in Houston previously found Prins used the Wells Fargo account to purchase four plane tickets for almost $1,900 and vacation lodging for more than $5,000 at

    “Prins continued to charge tens of thousands of dollars” to the Wells Fargo account to fund a “lavish European vacation” over the next few weeks with stops in London, Edinburgh, Scotland, and Copenhagen, Denmark for him and his family, Bohm said.

    In March, Bohm imposed $800,000 in sanctions plus more than $56,000 in attorneys' fees against Prins after he failed to turn over the proceeds from the foreclosure sale, as previously ordered. The $800,000 in sanctions imposed by Bohm represented the difference between the property’s $2.4 million sales price and $1.6 million that was seized by the government.

    Bohm referred the matter to the U.S. attorney's office for potential criminal prosecution.

    As part of the plea deal, Prins has agreed to repay the $2.4 million to Elbar Investments Inc. It paid Prins the money to acquire a foreclosed residential property, but it never took title to the house and was out of its money.

    In another legal case Prins handled for two clients, he is accused of stealing $150,000 that was supposed to be held in his law firm’s trust account, the plea agreement said. The document added that in another case Prins negotiated a $75,000 legal settlement but kept the money for himself.

    Prins, in yet another case he handled, received $125,000 as a partial settlement of a lawsuit. But rather than delivering the funds to the rightful owner, the plea agreement said Prins kept the money for his own use.

    Prins has agreed to complete a financial statement as part of the plea agreement.(1)
For more, see Disgraced ex-lawyer Prins agrees to plead guilty.
(1) In Texas, the Client Security Fund was created to help (at least partially) compensate persons who have suffered a loss of money or property due to misappropriation or embezzlement by a Texas-licensed attorney.

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

Another Aging Lawyer Wraps Up Career By Copping Guilty Pleas To Fleecing Clients Out Of Entrusted Funds; Defendant Admits Looting Trust Account Of At Least $3.4 Million Of His Victims' Cash

From the Office of the U.S. Attorney (Hartford, Connecticut):
  • Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that PETER RESSLER, 70, of Woodbridge, waived his right to be indicted and pleaded guilty today [June 7] before Senior U.S. District Judge Alfred V. Covello in Hartford to embezzling millions of dollars from his bankruptcy clients, and to related fraud offenses.

    According to court documents and statements made in court, RESSLER, an attorney with a bankruptcy practice based in New Haven, defrauded numerous clients in various ways. First, RESSLER took retainers from at least 30 clients for various legal matters on their behalf, including protection under Chapters 7, 11, and 13 of the bankruptcy code. Although RESSLER represented that he would hold the funds in trust until he provided legal services, he used the monies for other expenses.

    In addition, RESSLER required certain clients who were seeking a Chapter 11 or Chapter 13 reorganization to deposit funds and represented that such monies would be held in trust for purposes of the anticipated reorganization. RESSLER obtained the funds after he had filed formal bankruptcy actions, which created relevant bankruptcy estates for which he had a continuing duty to maintain client assets under his control and to give appropriate accountings to the U.S. bankruptcy court. RESSLER was entrusted with hundreds of thousands of dollars from at least 10 businesses involved with Chapter 11 reorganizations. Instead of holding the funds in trust, he used the monies for other purposes.
    The investigation revealed that RESSLER took $64,000 from a client purportedly to purchase property; $180,000 from a client to hold money in escrow; $45,000 from another client purportedly to buy back a home in foreclosure; $100,000 from a client to hold money in escrow; $97,000 from a client to hold money in escrow; $102,000 and $50,000 from two other clients purportedly to settle tax obligations with the IRS; at least $199,000 from a client to negotiate a settlement with the IRS; $141,000 from a client to settle debts with IRS and a lender; and $165,000 from a client purportedly to negotiate a loan modification with a lender. In each instance, RESSLER used the monies for other purposes.

    In the spring of 2016, the U.S. bankruptcy court identified criminal conduct by RESSLER in cases involving debtors that were his clients. In one case, the debtor entrusted RESSLER with $450,000, which were proceeds of a legal settlement, to be held by RESSLER’s firm for the benefit of the debtor and its creditors. In a second case, the debtor entrusted RESSLER’s firm with approximately $321,409. In both cases, most of the deposited funds were used by RESSLER for other purposes than on behalf of the relevant clients.

    In total, RESSLER misappropriated at least $3.4 million in client funds and used the money for personal and family living expenses, to cover the expenses of his practice, and to fund payments relating to other clients and other bankruptcy estates from which he had previously improperly taken monies.(1)

    RESSLER pleaded guilty to one count of wire fraud, two counts of embezzlement from a bankruptcy estate, and one count of bankruptcy fraud. Judge Covello scheduled sentencing for September 6, 2017, at which time RESSLER faces a maximum term of imprisonment of 35 years and a fine of up to approximately $6.8 million.

    RESSLER has been released on a $100,000 bond since his arrest on April 25, 2016. He resigned from the Connecticut bar in March 2016.
Source: Former Bankruptcy Attorney Admits to Stealing Millions from Clients.
(1) In Connecticut, the Client Security Fund was created to help (at least partially) compensate persons who have suffered a loss of money or property due to misappropriation or embezzlement by a Connecticut-licensed attorney.

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

Two Years After Pleading Guilty & Getting Four Years Prison Time For Fleecing Dead Client's Estate (& Its Beneficiaries) Out Of About $2.3 Million, Another Aging Attorney Finally Gets Formally Disbarred By Pennsylvania Authorities (After He Voluntarily Surrendered His Law License)

In Bucks County, Pennsylvania, the Philadelphia Business Journal reports:
  • A Bucks County lawyer sentenced to prison almost two years ago for defrauding a client’s estate of more than $2.3 million was disbarred by consent.(1)

    Randolph Scott, 74, of Doylestown, Pa., had been practicing law since 1969 and was placed on retired status by the Pennsylvania Supreme Court in 2012. The court made its latest decision Friday [June 9], retroactive to Nov. 25, 2015 after Scott voluntarily surrendered his law license.

    Scott pleaded guilty on March 26, 2015 to one count each of mail fraud, tax evasion, attempting to interfere with administration of internal revenue laws and three counts of failure to file income tax returns. He was sentenced to four years in prison in U.S. District Court in Philadelphia on Sept. 12, 2015.

    Scott, who maintained his own law firm in Warrington, Pa., was indicted four years ago.

    According to the indictment, between December 2005 and October 2011, while representing the estate of John C. Bready, Scott diverted about $2.3 million of estate funds to his law office accounts. Because the estate was valued at more than $6 million at the time of Bready’s death in 2005, federal law required that a federal estate tax return be filed that would have resulted in $520,351 being paid to the Internal Revenue Service.

    The indictment alleges that Scott purposely failed to file the required form in order to keep enough money in the estate to pay its beneficiaries and to avoid detection of the theft.

    Prosecutors also said after the estate’s executor died in 2009, Scott failed to disclose the death so that the investment account manager would continue to send the executor’s checks to Scott’s law firm.

    Scott then allegedly forged the executor’s signature and deposited the checks into his law firm’s account. Prosecutors said Scott also had the successor executor sign a document renouncing the position so that he could continue to forge the signature of the deceased executor and divert money belonging to the estate.
Source: Bucks lawyer disbarred after sentenced to prison for $2.3M fraud scheme.
(1) The Pennsylvania Lawyers Fund for Client Security was created to help (at least partially) compensate persons who have suffered a loss of money or property due to misappropriation or embezzlement by a Pennsylvania-licensed attorney.

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