Saturday, July 29, 2017

Affordable Housing Complex Financed By Federal Tax Credits Falls To Foreclosure; Blindsided Residents In 24-Unit Complex For Senior Citizens All Get The Boot

In Auburn, Kansas, The Topeka Capital-Journal reports:
  • Donna Silsby had begun settling into her apartment at Valley Springs in Auburn when she received a startling letter saying she had to vacate her residence by the end of this month.

    The 24-unit property, an affordable apartment complex for seniors, was foreclosed on.

    Silsby moved into the apartment in March and said she found it to be clean and comfortable. Having to uproot herself again is frustrating.

    “This is making me age fast,” the good-natured, 88-year-old joked.

    Surrounded by boxes and packing supplies, Silsby said one of her four children helped her buy a home in Auburn.

    Valley Springs is part of the federal Section 42 housing program that helps investors develop affordable housing by providing tax credits. It’s administered by the Kansas Housing Resources Corporation.

    Fred Bentley, the organization’s director of rental housing allocation, said the situation in Auburn is unusual. “This is not the norm,” he said.

    Bentley said loan payments weren’t being made by the property owners, which led to the foreclosure. Tenants were asked to leave in late June. KHRC has assisted some of the residents with relocation.

    The Section 42 program has about 30,000 units in Kansas, with an average household of two to three people. Bentley said it has helped provide decent, affordable housing and that overall, the program has worked well across the country.

    Susan Harris, the executive director of Jayhawk Area Agency on Aging, said the local demand for safe and affordable housing for seniors far outpaces the supply.

    “It’s definitely a challenge,” she said. “Folks on the lower income range are not going to have options to adequately meet their needs.”

    Those seeking housing often run into limited availability and wait lists. Harris said finding affordable housing in safe neighborhoods is a challenge, as is securing housing that can accommodate seniors who have disabilities.

    Another resident at Valley Springs who didn’t want to be identified, said the foreclosure blindsided residents. After living at Valley Springs for more than four years, he said he plans on moving to Atria Hearthstone.

    According to the Shawnee County appraiser’s website, the property is owned by Auburn Senior Housing LP.

    A phone number listed for Valley Springs management was not in service.
Source: Residents of Auburn senior community forced to find housing after property’s foreclosure (Affordable housing demand surpasses supply, local organization head says).

Another Affordable Housing Complex With Soon-To-Expire Federal Rent Subsidy Contract Falls Victim To Gentrifying Landlord; Plans To Renovate. Re-Rent 60-Unit Property Don't Include Current Low-Income Residents (Mostly Seniors & Tenants With Disabilities)

In Raleigh, North Carolina, The News & Observer reports:
  • Ann Gardner remembers the date she moved into Wintershaven Apartments on East Hargett Street: Dec. 1, 1979.

    After growing up in Moore County and living in Asheboro for a while, Gardner came to Raleigh and rented an affordable apartment at Wintershaven on the eastern edge of downtown. The 60-unit complex is federally subsidized for low-income residents, mostly senior citizens and people with disabilities.

    By next summer, Gardner and her neighbors at Wintershaven will have to find somewhere else to live – not an easy task as rent prices in Raleigh continue to rise.

    In June, an investment group in Austin, Texas, bought the apartment building. The buyers plan to upfit the property and convert the one-bedroom units into traditional apartments that won’t be subsidized, said Ed Batchelor, president and part-owner of Trademark Residential, which manages Wintershaven.

    Trademark is working with the U.S. Department of Housing and Urban Development to secure Section 8 housing vouchers for residents who can’t afford to stay when the rent subsidies end in August 2018, Batchelor said.

    “I can’t talk much about it without crying,” Gardner said. “It’s hard for me to accept. And it’s just not fair, when the people here are doing everything we can to survive. We do what’s required of us. We pay our rent, whatever we can afford.”

    The sale of Wintershaven is another blow to affordable housing in downtown Raleigh, which is seeing lots of new development. Sir Walter Apartments, a 140-unit senior-housing complex on Fayetteville Street where rent is subsidized by HUD, is under contract to be purchased.

    The developer wants to turn the 10-story building into a hotel, offices or apartments. Residents, all of them age 62 and older, must find a new home by the time the HUD contract expires in 2020.

    Wintershaven is a block away from The Lincoln, a 224-unit apartment complex that opened in 2015 where one-bedroom apartments rent for more than $1,000 a month. Hargett Place, a development of luxury townhomes, is under construction nearby.

    Many residents at Wintershaven live solely on Social Security income, said assistant property manager Dinorah Czigler. So their options are limited.

    “Especially for the people who are disabled, there aren’t too many places to go,” Czigler said. “It’s very difficult for them. We’re trying to do as much as possible to help them, to see if we can get vouchers for them and let them know we’re doing the best we can.”

    Czigler said she tries hard to make life comfortable at Wintershaven, where she greets residents by name. She organizes holiday events, bingo games and church services in the community room.

    The complex was built in 1979 by John Winters Sr., a real estate investor and Raleigh’s first African-American to serve on the City Council. He died in 2004.

    Gardner said she has fond memories of Winters, and it’s tough to see this part of his legacy being uprooted.

    “He was a caring person,” Gardner said. “He didn’t care who you were, where you came from. He just tried to provide.”

    Now, Gardner isn’t sure where she will move.

    “I’d like to stay in Raleigh,” she said. “I don’t have many friends, and the ones I do have are here, in this building.”

    Wayman Turner, 87, doesn’t know where he will end up, either. He’s lived at Wintershaven for four years. He said a social worker is helping him fill out applications for new housing.

    “We’ve all built this love and that connection,” Czigler said. “Then, oh my God, we realize they’re going to split up. It’s hard for them, but it’s hard for us as well, because we want for them to be happy.”

Proposed Rent Hike Nixed By Rent Control Board, Offer To Sell To Tenants Rejected; Landlord Left With No Choice But To Announce Shutdown Of Mobile Home Park, Giving Residents 2-Year Notice To Pack Their Bags & Take A Hike

In Easton, Massachusetts, The Enterprise reports:
  • Morgan Management has notified the town and its tenants that it plans to discontinue the Easton Mobile Home Park by the end of August 2019.

    This latest action follows several years of dispute among the Turnpike Street park’s owners, the tenants and the town over rent costs and park improvements.

    Robert Kraus, the attorney representing park owner Morgan Management, said at the end of June that his client had three options: raise the rent, sell the park to the residents, or discontinue the park.

    The management company has been unsuccessful with the first two options, and has now decided to move forward with the third.

    We extended an offer (to sell the park to the tenants) and that offer was rejected,” Kraus said Monday. “My clients can no longer operate or maintain this community.”

    The letter announcing the park discontinuance, written by Kraus, was issued July 20.

    “The owner/operator has determined that it no longer is financially able to maintain the Park given the current rents,” the letter said, “despite repeated efforts to work not only with the Rent Control Board of Easton but also with the residents.”

    In 2011, Morgan Management raised the monthly rent from $358 to $468 per unit to cover infrastructure improvements, they said.

    In 2015, the Easton Board of Selectmen, acting as the town’s Rent Control Board, cut rents to $200 a month after Morgan Management failed to fix a sewerage treatment, water and drainage systems, pave roads and remove abandoned trailers.

    The Rent Control Board rejected a rent increase request in February and again on Monday, July 24.

    Mobile Home Park resident Beth Blair said she and other residents who attended the July 24 meeting “thought we’d won,” before hearing about the discontinuance letter.

    “I didn’t expect (the letter) at all,” Blair said.

    The discontinuance letter stated Morgan Management is in the process of selling all of its “manufactured housing assets” in Massachusetts, and attempted multiple times to sell the Easton park to a third party or the residents “without success or interest.”

    According to the Attorney General’s office, each park resident is entitled to at least two years’ written notice before a discontinuance or change of use for a park will occur.

    Morgan Management’s discontinuance will be effective Aug. 31, 2019.

    Blair said Tuesday that “there are still a lot of questions to be answered” about whether the management company is within their rights to dissolve the park.

    According to the Massachusetts General Law, the discontinuance process also requires the park owner give notice to tenants of all manufactured housing communities within a 100-mile radius. The owner is also required to pay tenants relocation costs or appraised value of their home.

Landlord's Water Shutoff, Court's Shutdown Order Leave Dozens Of Mobile Home Park Residents Facing The Boot

In Windsor, New York, the Press & Sun-Bulletin reports:
  • A landlord cut off water from anywhere between 50 and 70 residents in a Windsor trailer park on Saturday, the county said Wednesday.

    The residents at Tuscarora Mobile Home Park are now relying on drinking water provided by the county, but have had to go to the houses of friends of relatives to shower or bathe, said Chris Coddington, director of environmental health at the Broome County Department of Health.

    The county is looking to take legal action against the owner, John Zhang, who, before cutting off water, told trailer park residents he was evicting them. It's unclear whether those evictions were legal, Coddington said.

    Broome is also trying to shut down the park, and will take legal action against residents if they decide to stay, said Broome County Attorney Robert Behnke.

    According to court records, Broome County Judge Jeffrey Tait ordered Zhang in May to shut down the park "as immediately as practicable."

    On Wednesday, Tait issued an order requiring the county to serve papers to Zhang, and setting a court hearing for Aug. 23.

Friday, July 28, 2017

Another Reverse Mortgage Horror Story: Bankster Gives 91-Year Old Woman Foreclosure Boot From Her Home Of 60+ Years Over Dispute Stemming From Allegedly Unpaid $853 Insurance Bill She Claims Was Paid Electronically; Last Minute TRO Halts Eviction In Progress, Allows Homeowner To Stay Pending Further Court Proceedings

In Houston, Texas, KPRC-TV Channel 2 reports:
  • After calling this home on Ashburn Street for more than 60 years, 91-year-old Jane Scott was kicked out on Monday [July 24].

    “All of my taxes are paid for the year,” Scott said.

    Scott’s attorney, Eraka Childs, said the eviction stems from a 2015 insurance bill for $853 on Scott’s reverse mortgage.

    She claims even though Scott paid the bill electronically on April 21, 2015, Scott found out her home had already been foreclosed on when she went to court earlier this year.

    “There was a gap in the communication and they moved forward with the foreclosure not knowing she had paid. That’s what it looks like,” said LaTrice Martin, a community activist who’s been working with Scott.

    As part of the court’s order, deputies with the Harris County Precinct 7 Constable’s office spent much of the morning monitoring the removal of Scott’s personal belongings from the home, including furniture and clothes. A third party was hired to move her things out and police stayed at the house to make sure everything remained peaceful.

    Scott was so upset, she couldn’t bear to watch.

    One of the deputies, who is also a real estate agent, recently tried talking to the lender.

    “She wanted to try to get them to change things and they would not,” a spokeswoman said.

    Late Monday afternoon, Scott was told she could move back into her house for the time being, after the court granted her a temporary restraining order. But by no means is it a permanent fix.

    “We're going to fight it. We are going to get her back in her home. Get this property rescinded and then we are going to begin educating our people. That's what we are going to do,” Martin said.

    Scott is due back in court on Aug. 11.

Low-Income Cincinnati Homeowners Make For Easy Targets For City Code Enforcement Inspectors Using Threats Of Criminal Prosecution For Inability To Make Unaffordable Home Repairs

In Cincinnati, Ohio, City Beat reports:
  • As it stands, Cincinnati residents can face steep consequences — big fines and even monitoring devices or stays in the Hamilton County jail — if their houses aren’t in order.

    Multiple Cincinnati residents face serious criminal penalties for property-related problems even as city officials say they’re trying to find solutions to ease the burdens posed by home repairs facing low-and moderate-income homeowners.

    “The people that we are continuing to hear from are people who won’t qualify for a loan,” Councilman Wendell Young says. “So if a lending institution isn’t likely to give them money, but they need repairs to stay in their homes, then I’m concerned about what happens to that group of people.”

    Young and other Cincinnati City Council members have called for boosts to nonprofit programs that help low-income people make home repairs. Mayor John Cranley has asked the city to pursue code orders as civil cases, not criminal ones. And a partnership between the city, a nonprofit and area banks looks to extend loans and grants to low-and moderate-income homeowners.

    But while the city works on solutions, some residents still face the prospect of going to jail for code violations.

    On a recent Monday, Earl Starr stood outside his house in Evanston, trimming bushes and sweeping up yard waste. On his right ankle, he wore an electronic monitoring device — one of the conditions of his ongoing fight with the city over his code orders.

    After a protracted wrestling match with the courts and the city’s Department of Building and Inspections, Starr faces six months in jail if he doesn’t resolve his code issues in the next month. He’s permitted to be away from home up to 60 hours a week to work as a barber and to take his kids to school and daycare, but otherwise must stay at his house.

    In early 2015, Starr purchased his two-family house in Evanston for about $8,000. His son’s mother was dying of cancer, and Starr, who was bouncing back from a stint in prison and who has engineering knowledge from eight years working at Hamilton’s Smart Papers, thought he could fix it for his son and himself to live in. It had standing code orders related to the structure’s windows, chimney and downspouts, which Starr says he was unaware of.

    Starr began fixing up the house and soon moved into its second and third floors, working on the first so that it could someday generate rental income. After the city informed him the house needed repairs due to the code orders, Starr began a series of back-and-forth exchanges with the city’s Department of Building and Inspections.

    Starr says during this stretch of time last year, building inspector Kevin Rhodes failed to show up for scheduled inspections multiple times and that he was unable to get documentation related to the orders he needed to comply with.

    The city acknowledges that Rhodes missed one inspection due to an urgent issue elsewhere, but says that Starr has missed several himself. Department of Building and Inspections director Art Dahlberg says that Starr "ignored" attempts to work with him. Starr denies this.

    Eventually, Starr had his chimney tuck-pointed and got his roof and downspouts up to code. He was also able to get Cincinnati nonprofit the Home Ownership Center ["HOC"] to replace his windows.

    He thought he was all squared away, he says. But inspectors wrote up more orders related to permits for the house’s plumbing, HVAC units, an uninstalled Jacuzzi the previous owners left on the third floor and other issues.

    You’re putting so many violations on me, and I have to call contractors when I can’t afford to,” Starr says. “And then I’ll lose my house. I’m scared. I’ve got a kid to worry about, and my own future.”

    CityBeat first reported in early March on difficulties some Mount Auburn residents faced with code compliance following the city’s Neighborhood Enhancement Program.
    In the meantime, HOC is looking to help Starr secure ways to fix up the rest of the orders on his house. That could be vital — though after what he’s been through, Starr says he’s waiting before he gets too optimistic.

    “I’m scared,” he says. “I bought this with my own hard work and money, and I put two years of work into it. My house and my life are at stake here.”
For more, see As some Cincinnati residents face jail time over home repairs, the city searches for a fix (Wendell Young and other Cincinnati City Council members have called for boosts to nonprofit programs that help low-income people make home repairs).

See also, A neighborhood revitalization program in Mount Auburn raises questions about equity in city code enforcement (The Neighborhood Enhancement Program, which was supposed to help clean up the neighborhood, left residents deluged with code violations).

Thursday, July 27, 2017

Scorned, Longtime Wife Succeeds In 3-Year Legal Battle To Void Gift Of $1.8 Million House, Plus Cars & Cash Given By Billionaire Bad-Boy Hubby To His Now-Ex-Mistress; California Appeals Court Says Assets Constituted Community Property That Could Not Be Conveyed Without Wife's OK

In Los Angeles, California, The Real Deal (Los Angeles) reports:
  • Hell hath no fury like a woman scorned — especially if the woman is the longtime wife of a billionaire real estate investor.

    After a three-year legal battle, Shelly Sterling, the wife of former Los Angeles Clippers owner Donald Sterling, succeeded in reclaiming $2.6 million worth of gifts that her husband gave to a former mistress.

    A California appeals court ruled Thursday [July 20]  that the gifts — which include a $1.8 million house, $400,000 worth of cars, and $400,000 in cash — are part of the community assets of the Sterling marriage and that they were bestowed upon the mistress without Shelly’s permission, Law360 reported.

    After a falling out with Donald, his ex-mistress, V. Stiviano, released recordings of Donald making racist comments. The backlash led to Donald’s ban from the NBA, and he was forced to sell the Clippers and pay a $2.5 million fine.

    Shelly and Donald were headed for divorce, but called it off in March 2016.

    Shelly’s attorney Pierce O’Donnell told Law360 the case will help other women in similar situations.

    I hope [Stiviano] slinks back into the shadows from which she came,” he said.

    Donald is worth an estimated $3.5 billion, with significant multifamily holdings on the Westside and Koreatown, as well as the Beverly Hills Plaza Hotel.

    Shelly isn’t the only wife scorned by a powerful real estate figure. Linda Macklowe, New York developer Harry Macklowe’s wife of 57 years, is challenging him to make good on his promise of a $1 billion divorce settlement.
Source: Donald Sterling’s wife prevails over mogul’s ex-squeeze, who must return $1.8M pad (Appeals court ruled Thursday in favor of Shelly Sterling).

NYC Feds Score Largest Civil Forfeiture Jury Verdict In U.S. History, Snatching Away Title To 36-Story, $500 Million Fifth Avenue Office Building, Other Real Estate & Cash From Iran In Connection With Sanctions Violations, Related Money Laundering Charges

From the Office of the U.S. Attorney (New York City):
  • Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that a federal jury today [June 29] found the 36-story office building at 650 Fifth Avenue (the “Building”), worth at least $500 million, and other real property and bank accounts forfeitable to the United States as proceeds of violations of the Iran sanctions and property involved in laundering the proceeds of those sanctions violations. The jury’s verdict, which represents the largest civil forfeiture jury verdict and the largest terrorism-related civil forfeiture in United States history, came after a five-week trial before the Honorable Katherine B. Forrest.

    Acting U.S. Attorney Joon H. Kim said: “For over a decade, hiding in plain sight, this 36-story Manhattan office tower secretly served as a front for the Iranian government and as a gateway for millions of dollars to be funneled to Iran in clear violation of U.S. sanctions laws. In this trial, 650 Fifth Avenue’s secret was laid bare for all to see, and today’s jury verdict affirms what we have been alleging since 2008: that through all the efforts to sanction and isolate Iran, a state sponsor of terrorism, the owners of 650 Fifth Avenue gave the Iranian government a critical foothold in the very heart of Manhattan through which Iran successfully circumvented U.S. economic sanctions.

    The jury’s verdict finding forfeitable a building valued at over $500 million dollars, as well as other real estate and funds, represents the largest civil forfeiture jury verdict and the largest terrorism-related civil forfeiture in U.S. history. This verdict not only vindicates the exemplary work of all the career prosecutors and law enforcement partners who have doggedly pursued this case for almost a decade, but importantly, it also allows for substantial recovery for victims of Iran-sponsored terrorism.”

Wednesday, July 26, 2017

Ripping Off College Fraternity For Over $100K In Refinancing Proceeds On House It Owned Among Bad Acts That Leaves Businessman Facing Federal Prison Time After Guilty Plea

In Richmond, Virginia, Richmond BizSense reports:
  • Already on the hook for a $6 million civil judgement, a Charlottesville businessman now faces a federal prison sentence for defrauding the widow of a Richmond investment banker, a western Virginia bank and a UVA fraternity.

    Victor M. Dandridge III pleaded guilty Wednesday [July 19] to three criminal charges: two counts of wire fraud and one count of bank fraud.
    [I]n bilking the fraternity, Dandridge, a UVA grad, admitted to helping the organization refinance a loan on a house it owns in Charlottesville for $330,000, even though the balance on the mortgage was only $204,000. He then had the closing agent wire the difference into his personal bank account.

Jury Takes Three Hours To Slam Minister With Guilty Verdict For Forging, Recording Phony Deed In Attempt To Swipe Title To Home He Was Renting From Out-Of-State Landlord

In Syracuse, New York, reports:
  • A Syracuse minister was found guilty last week of filing a fake deed in an attempt to take possession of a South Side residence.

    The Rev. L. Micah Dexter was found guilty Thursday [July 13] of possessing a forged instrument and filing it, both felonies. He faces up to 2 1/3 to 7 years in prison when sentenced. He remains free on bail until sentencing.

    Dexter, minister of Greater New Salem Missionary Baptist Church, filed the fake deed in 2013 during a long landlord-tenant dispute with a South Carolina man, James Greene.

    At issue was a deed that Dexter filed with a copied signature page, purporting to show that Greene had signed over his rights to the house.

    In fact, that signature page was copied from another document. Greene flew in from South Carolina for the trial, as did the notary public who stamped the original document.

    Dexter took the stand in his own defense, but was unable to sway the jury.

    State Supreme Court Justice John Brunetti had said that if Dexter took the stand and lied, he would sentence the defendant to incarceration.

    Given that the jury decided against Dexter, the judge could very well send the minister to prison. The jury deliberated for about three hours Thursday before finding Dexter guilty, prosecutor Lindsey Luczka said.

    Luczka said she would push for state prison, "given the defendant's criminal history, actions in this case and performance on the witness stand."

    Dexter's previous conviction of obstructing police during a 2014 confrontation was fair game after Dexter took the witness stand in his own defense.

    A lawsuit filed by Greene in civil court included a copy of the original signature page of a deed he signed and another one that he said Dexter stole to create the phony deed. (That lawsuit has since been dismissed on procedural -- not factual -- grounds.)

Tuesday, July 25, 2017

Short Sale, Buyback Scam That Duped Bank Into Taking $700K+ Haircut On Underwater Mortgage Among Bad Acts That Lands Homeowner 57 Months In Prison Time

From the Office of the U.S., Attorney (Fort Myers, Florida):
  • A Florida businessman was sentenced today [July 17] to 57 months in prison in U.S. District Court for the Middle District of Florida for conspiring to commit tax and bank fraud, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
    In addition to the tax fraud, Padula also conspired with others to commit bank fraud. Padula had a mortgage on his Port Charlotte, Florida home of approximately $1.5 million with Bank of America (BoA). In 2012, he sent a letter to the bank stating that he could no longer repay his loan.

    At the same time, Padula provided Robert Robinson III, 43, who acted as a nominee buyer, with more than $625,000 from his IPPI bank account in Belize to fund a short sale of Padula’s home. Padula and Robinson signed a contract, which falsely represented that the property was sold through an “arms-length transaction,” and agreed that Padula would not be permitted to remain in the property after the sale. Padula in fact never moved from his home and less than two months after the closing, Robinson conveyed it back to Padula by transferring ownership to one of Padula’s Belizean entities for $1. Robinson was also sentenced today to five years of probation for signing a false Form HUD-1 in connection with his role in the scheme.
    In addition to the term of prison imposed by U.S. District Court Judge Sherri Polster Chappell, Padula was ordered to serve three years of supervised release and to pay a fine of $100,000 and to pay restitution of $728,609 to the IRS and to BoA in the amount of $739,459.90. He was remanded into custody.

Jury Conviction Leads To Combined 39 Years In Prison For Trio For Roles In Loan Modification Racket That Screwed 3,000+ Financially Struggling Homeowners Out Of At Least $11 Million

From the Office of the Special Inspector General For The Troubled Asset Relief Program (Washington, D.C.):
  • Three California residents were sentenced today [July 19] to a combined 39 years in prison for their roles in a nationwide, multi-year “home mortgage modification” fraud that scammed thousands of vulnerable victims out of at least $11 million.

    Sammy Araya, 41, of Santa Ana, was sentenced to 20 years, Michael Henderson, 49, of Costa Mesa, was sentenced to 12 years, and Jen Seko, 36, of Anaheim, was sentenced to 7 years in prison, respectively. All three defendants were convicted by a federal jury on April 21, of multiple counts of mail fraud, wire fraud, and conspiracy to commit mail and wire fraud.

    “For Sammy Araya, Michael Henderson, and Jen Seko, the financial struggles of more than 3,000 homeowners were an opportunity for theft,” said Special Inspector General Christy Goldsmith Romero.
    According to court documents, from at least March 2011 through September 2014, Araya and his coconspirators targeted struggling homeowners and made a series of misrepresentations to induce them to make payments of thousands of dollars each in exchange for supposed “mortgage modification” assistance.

    The conspirators lured vulnerable victims into the scam through targeted mass mailers sent to homeowners facing foreclosure through Seko’s company, Seko Direct Marketing. In the mailers and in subsequent phone calls, the defendants and their co-conspirators falsely held themselves out as a nonprofit organization or as affiliated with a real government program, the Home Affordable Modification Program, designed to help homeowners at risk of foreclosure. Henderson and other “customer service representatives” in the scam convinced victims to send “reinstatement fees” and “trial mortgage payments” to the conspiracy, based on the false representations that the funds would be used to modify their mortgages. In reality, however, the defendants did nothing to help modify any mortgages.

    Instead, they used the victims’ payments for their own personal benefit and to further the fraud scheme. Araya, the ringleader of the scam, used the fraud proceeds 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.”
    Twelve defendants have been convicted in the Eastern District of Virginia in this case and a related case in connection with this same scam.

Monday, July 24, 2017

Title Scammer Pleads Guilty To Using Sham Companies, Collusive Lawsuits, Fraudulently-Obtained Court Judgments To Create Impression That Mortgages Were Invalidated, Then Pocketing $1.7+ Million In Proceeds From Subsequent Sale Of Purportedly 'Free & Clear' Homes

From the Office of the U.S. Attorney (San Francisco, California):
  • Robert Jacobsen pleaded guilty today [July 19] to wire fraud and money laundering charges(1) in connection with a scheme to use sham companies and collusive lawsuits to create the appearance that mortgage liens had been invalidated, [...].

    According to the plea agreement, Jacobsen, 69, formerly of Lafayette, Calif., admitted that from October 2012 through October 2013, he executed a scheme to sell homes to buyers who were duped into believing that the homes had clear title.

    Jacobsen admitted that he identified homes with mortgage deeds of trust that were recorded for the benefit of an entity called “American Brokers Conduit” (ABC). Jacobsen also admitted that he registered a separate entity in New York called “American Brokers Conduit Corporation” (ABC Corp.). Jacobsen then hired an attorney to file lawsuits against his phony ABC Corp., claiming that mortgages that had been originated by the real ABC were invalid.

    Controlling both sides of the lawsuits, Jacobsen caused the attorneys to enter into stipulated judgments, agreeing that the mortgage deeds of trust were invalid. The courts then entered judgment based on these fraudulent agreements, which Jacobsen recorded with county recorder’s offices. The result created the impression that the deeds of trust had been legitimately invalidated by federal or state courts.

    Jacobsen admitted that two homes that were the subjects of such lawsuits were in Danville, Calif., and San Francisco, Calif. Jacobsen admitted that, after obtaining fraudulent judgments, he sold the Danville home for $540,000 and the San Francisco home for $1.2 million. Jacobsen admitted that in both cases, his representations regarding the fraudulent court judgments had a natural tendency to influence the buyers to purchase the homes.

    As part of his plea agreement, Jacobsen further admitted that proceeds from the sale of the Danville and San Francisco homes were used to pay for a 54’ Hylas sailboat that the government seized at a marina in Beaufort, North Carolina on November 18, 2015. Jacobsen agreed that his interest in this sailboat was subject to forfeiture.
Source: East Bay Real Estate Agent Pleads Guilty To Wire Fraud And Money Laundering In Connection With Scheme To Defraud Homeowners And Mortgage Holders (Defendant Admits to Orchestrating Sham Lawsuits to Create the Appearance that Mortgages Were Invalidated).
(1) See Indictment - U.S. v. Jacobsen.

D.C. Man Gets 1 Year, 1 Day Prison Time After Copping Guilty Plea For Role In Creating, Recording Forged Satisfactions Of Mortgage On Home In Foreclosure, Then Splitting $330K+ Proceeds On Subsequent Sale Of Purportedly 'Free & Clear' Property; Title Insurer Left Holding The Bag

From the Office of the U.S. Attorney (District of Columbia):
  • David Tyrone Johnson, 48, of Washington, D.C., was sentenced today [July 17] to a year and a day in prison on federal charges arising from a real estate scheme involving forged mortgage satisfaction documents, announced U.S. Attorney Channing D. Phillips and Andrew Vale, Assistant Director in Charge of the FBI’s Washington Field Office.

    Johnson pled guilty in April 2017, in the U.S. District Court for the District of Columbia, to charges of bank fraud and making false statements. He was sentenced by the Honorable Ketanji Brown Jackson. Following his prison term, Johnson will be placed on two years of supervised release. He also must pay $337,105 in restitution to Fidelity National Title Insurance Company, as well as a forfeiture money judgment of $170,688.

    According to a statement of offense submitted at the time of the guilty plea, SunTrust Mortgage, Inc. loaned a friend of Johnson’s approximately $470,000 in 2008 to purchase residential real estate in the 100 block of 57th Street SE. By 2009, the friend had failed to repay the mortgage loans, and in 2010, SunTrust Mortgage filed a notice of foreclosure with the District of Columbia’s Recorder of Deeds. In April 2013, SunTrust Mortgage began the process of foreclosing on the mortgage and taking possession of the property, due to the friend’s failure to make good and timely payments on the mortgage loans.

    Sometime before Oct. 2, 2013, Johnson caused the creation of two phony and forged certificates of satisfaction, which falsely represented that the SunTrust Mortgage loans at the property on 57th Street SE had been paid and that his friend owned the property “free and clear.” According to the statement of offense, on Oct. 2, 2013, Johnson filed these two phony certificates of satisfaction with the Recorder of Deeds.

    In or about December 2013, after the fake certificates of satisfaction allowed the friend to sell the property without paying the outstanding mortgages, the title and escrow company wired out the sales proceeds of $337,105, of which approximately $170,688 was obtained by Johnson.

    In addition, in 2015, Johnson was required to submit a financial disclosure form to his government agency employer; however, on that form, Johnson failed to disclose the money he obtained from the sales proceeds of the property, knowing that he had obtained the money. This failure to inform his government agency employer was material or important to his employer, and one that resulted in a false statement on his financial disclosure form.
Source: District Man Sentenced to Year in Prison For Carrying Out Bank Fraud Scheme (Admitted Filing Forged Documents, Leading to Nearly $340,000 in Ill-Gotten Gains).

Sunday, July 23, 2017

Seeking Harsher Penalties For Sleazy Lawyer Suspected Of Pilfering $1.9 Million From Unwitting Clients, Local Prosecutor Gets Feds To Step In, Take Over Criminal Prosecution

In McCracken County, Kentucky, The Paducah Sun reports:
  • A Paducah personal injury attorney accused of stealing more than $1 million from clients will soon face federal charges.

    James Grant King, 43, of J. Grant King Law, is charged in McCracken County with three counts of theft by failure to make required disposition of property, $10,000 or more, in two separate cases.

    But Commonwealth Attorney Mark Blankenship said the U.S. Attorney's Office has expressed interest in the case and will proceed next week with federal charges. "When I got to looking at what the feds could do in this case versus what I could do -- I mean this guy stole more than $1 million from his clients -- and in the federal court systems they have charges related to mail and wire fraud," Blankenship said.

    "So I called over there and told them … all I can do is stack up these (Class) D felonies, which aren't going to amount to much, and I asked them to take a look at it and they agreed."

    In the federal system, Blankenship said, King is likely to face harsher penalties than he would in the state system.

    "In the federal system, he'll most likely serve a decent amount of time," he said.

    "In the state system, our case would have most likely have capped out at about 20 years and he would have been eligible for parole after he'd serve 15 or 20 percent of that, so he might have served four years," Blankenship said. "But under the federal system - where there is no probation and there are guidelines regarding the amount of time a person serves - he could end up serving twice that time, which is more in line with the kind of theft we're talking about."

    The charges against King stem from a months-long investigation that began when a local couple reported King had failed to pay them $93,000 collected from an accident settlement.

    King was initially arrested on April 27 and charged with two counts of theft. A third charge was filed the next day after a second victim reported King failed to pay $17,500.

    Since then McCracken Detective Matt Carter estimated 33 additional victims have come forward with proven complaints.

    Carter said the total monetary amount involved in these cases has reached approximately $1.9 million.

    Of that, "about $1 million is tied to cases that have already resulted in charges or cases that are currently being investigated," he said.

    Blankenship said King has already waived his right to grand jury indictments on both the state and federal level. By doing so, he said, King is basically acknowledging he would most likely be indicted and agreeing to "proceed by information."(1)

    "The defendant basically is agreeing that the prosecutor himself can bring the charges," Blankenship said.
    Then, the commonwealth attorney said, he will start the process of dropping the state charges, though he plans to dismiss them with prejudice, meaning they could be filed again if necessary.

    "This is really one of the worst attorney theft cases I've seen," he said. "The public already doesn't have a very good opinion of lawyers, so when this kind of thing happens, it really hurts the profession. But what's really sad is these clients put their trust in this attorney to get them the best settlement possible, and everything that they were entitled to under the law is gone. It's just terrible."
Source: Attorney to face federal charges.

For the U.S. Attorney news release, see McCracken County, Kentucky, Attorney Charged With Defrauding Clients of Insurance Settlements.
(1) See U.S. v. King. ripoff reimbursement

Pennsylvania Supremes Reject Attorney's 'Not Dishonest, Just A Sloppy Recordkeeper w/ Mental Health Issues' Defense; Court Says Helping Himself To Client Funds In Trust Accounts For Personal Use (Despite Paying It All Back) Merits Bar Boot

In Harrisburg, Pennsylvania, the Pocono Record reports:
  • The Pennsylvania Supreme Court ordered the disbarment of Stroudsburg attorney Peter Quigley for the mishandling of client funds.

    The decision affirmed a disciplinary board finding that, on five occasions, Quigley misappropriated funds from trust accounts set up on behalf of clients’ awards for various civil judgments.

    Quigley said his mishandling of funds was more the result of negligence, poor record keeping and a lack of understanding of trust account principles, than dishonesty. The justices were not totally unsympathetic.

    The court handed down the decision on June 20.

    One of those cases involved a client who Quigley represented in a wrongful death suit of the client’s wife following her death in 2012, along with the administration of the wife’s estate. According to court records, Quigley and the client agreed that Quigley’s fee would be one-third of any gross recovery from the insurance claims connected to the suit.

    Quigley settled five insurance claims that totaled $557,705 and was entitled to a fee of $185,902, with the client receiving the balance of $371,803. The funds were deposited into a trust account held on behalf of the client.

    Quigley made two payments to the client from the account totaling $133,500 in 2012. Quigley, according to the disciplinary board findings, withdrew funds in arbitrary amounts from Aug. 2012 to July 2013. On Jan. 2, 2013, according to court documents, Quigley obtained a cashier’s check for $165,000 drawn from the account to satisfy a lien by his former law partner, with whom the two shared an office building.

    After the withdrawal, the trust account held a balance of $148,988 despite that Quigley had not disbursed the remaining $238,303 still owed to the client.

    In April 2013, Quigley paid the client $117,000. Following the initiation of disciplinary proceedings, Quigley paid the remaining settlement funds owed to the client.

    Quigley conceded that his behavior violated professional conduct rules for attorneys, according to court documents.

    Four other cases were cited in the supreme court’s decision with similar features of the mishandling of client funds. In each case, Quigley admitted to violating professional conduct rules.

For more, see Local attorney Quigley disbarred for mishandling funds.

See also, Split High Court Upholds Disbarment for Mishandling Client Funds:
  • Justice Sallie Updyke Mundy, writing for the majority, said Quigley's arguments that he did not possess criminal intent in mishandling the funds and that all of his clients have since been paid in full were unavailing.

    "This court is unpersuaded that these circumstances mitigate the serious violations Quigley committed, as Quigley's misconduct involved five separate clients over a three-year period," Mundy said. "Further, he made full restitution to four of the clients only after disciplinary proceedings were initiated."

    Mundy was joined by Chief Justice Thomas Saylor and Justices Max Baer, Debra Todd and Kevin Dougherty.

    The majority also rejected Quigley's claims that several personal difficulties and mental health issues contributed to his actions and therefore mitigated the seriousness of the conduct.
ripoff reimbursement

Florida Supremes Issue Emergency Suspension Against Attorney Accused Of Ponzi-Like Scheme, Playing Fast & Loose With Hundred$ Of Thousand$ Of Clients' Cash

In Tallahassee, Florida, the Florida Record reports:
  • Pensacola attorney James M. Corrigan was placed on a suspension following the review of a Petition for Emergency Suspension filed with the Florida Supreme Court.

    The order for suspension was given April 7 and was set to remain in effect until a further order is given. The attorney had allegedly been misappropriating client funds, according to the Florida Bar.

    Corrigan is accused of “causing great public harm” through his conduct, described in the petition as a Ponzi-like scheme in which he “robs Peter to pay Paul,” according to the petition. Corrigan allegedly issued hundreds of thousands of dollars worth of client trust money to himself and later to other clients to cover for the funds he no longer had available for them. In one instance, the attorney issued 10 checks to himself for a total of $106,160.74, the petition states. The checks were issued with no client information or the documentation listed a client who had no funds in the client trust at the time.

    Attorney Steve E. Quinnell reviewed Corrigan’s trust account in a case in which Corrigan received settlement funds on behalf of Quinnell's client. Corrigan was issued $700,000 for Quinnell’s client when his client trust had a balance of just under $394.33. Corrigan dispersed the funds to himself and another law firm that had worked on the case and later issued a check to Quinnell’s client for $47,500.23.

    Corrigan allegedly used this account and, therefore, Quinnell’s client’s funds to issue a $21,167.15 check to a person unrelated to the case. Corrigan also allegedly paid himself a total of $260,461 when he was only entitled to $238,333.33, according to court records. Quinnell later reviewed the account and determined his client was still owed $129,238.96, which he requested. At the time of filing, the funds still had not been paid.

Attorney Gets 3-Year License Suspension For Helping Herself To Client's Trust Account Cash Without Permission For Personal Use, Despite Paying It All Back Later On

In Tallahassee, Florida, the Florida Record reports:
  • Jacksonville attorney Keirsten Klatch was recently suspended for three years after a complaint against the attorney uncovered that she had borrowed funds from a client trust without permission.

    The order was signed by the Florida Supreme Court and is retroactive to June 16.
    The client filed [a] complaint in 2015, and an investigation found that Klatch had borrowed money from the account and later replaced the funds.

    Klatch will be suspended from practice for three years, after which she will serve three years of probation.
For the story, see Jacksonville attorney suspended for borrowing client funds. ripoff reimbursement

Misappropriating Over $40K In Clients' Trust Account Cash, Failing To Provide An Accounting Of The Funds, Failing To Promptly Pay Clients Their Money Earns Attorney Bar Boot

In Los Angeles, California, the Northern California Record reports:
  • Lawrence Allan Moy, an Irvine attorney, was recently disbarred from the practice of law by the State Bar Court of California.

    Moy was found culpable Feb. 10 in five counts of misconduct in several client matters, although he was initially charged with 23. Four of the counts involved the attorney’s alleged inability to maintain client trust accounts and one count of failure to adequately communicate with a client about case status.

    In the first matter, Moy allegedly failed to keep his client trust account at $33,333 after a client’s settlement was deposited. Moy was also charged with misappropriating funds, failing to provide an accounting of the funds, failing to promptly pay out settlement funds and for not cooperating with the state bar’s investigation.

    The second matter involved a failure to maintain a client trust account of $6,666. Moy’s charges were the same as in the first matter with the addition of his alleged failure to provide his client with the requested files.

    Moy was charged with failing to communicate with a client about a case, failing to inform his client of documents that needed to be completed and failing to respond to the state bar’s inquiries. He was not found guilty in one charge of failing to preform legal services.

    The attorney was charged in a fourth matter for co-mingling funds in a client trust. Moy allegedly deposited his own money into a client trust and issued several checks from the account. He received two additional charges for not responding to the state bar’s investigation and for failing to update his mailing address.

    Three charges were made against Moy in the final matter, including failing to maintain a $4,300 balance in a client trust, misappropriating funds and failing to promptly pay a client.

    Based on the amount of charges and separate instances, disbarment was recommended and enacted.