Federal Judge Jails Pair in Home Improvement Scams

The Philadelphia Business Journal reported that two partners running a predatory lending home improvement scam, bilking low income homeowners, were sentenced to jail.

Both were convicted of mail and wire fraud targeting the local Latino community to take out high-interest loans for home improvements that were left uncompleted.

According to prosecutors, the scam artists were able to gain the trust of the victims by speaking their language and, once the victims agreed to go forward with the work on their homes, they were steered -- many of whom spoke only Spanish -- to funding sources which specialized in high interest-high cost loans designed for people with poor credit.

California AG Lockyer Announces Arrests In "Squatter" Scam Victimizing Elderly, Infirm

Following up on a prior post, Attorney General Bill Lockyer's announcement of felony arrests of two alleged scam artists in connection with a “squatter” scam in which the defendants victimized elderly and other homeowners by unlawfully taking possession of roughly 100 houses, and subsequently renting out the property and keeping the income for themselves can be found here.

Probable Cause and Arrest Affidavit available here.

Ohio Man Indicted in “Operation Truth Or Consequences” Involving "Foreclosure Rescue" Scheme

Federal authorities obtained an indictment an Ohio man, charging him with bankruptcy fraud in connection with a scheme that defrauded homeowners who were in danger of losing their homes through foreclosure.

The following is an excerpt from the Department of Justice News Release issued by U.S. Attorney Gregory G. Lockhart.

The indictment alleges that in February, 2004, (the "rescue" operator) began contacting homeowners in the Dayton and Cincinnati areas, typically by direct mail, offering to help them save their homes from foreclosures and sheriff’s sales. (He) met with homeowners who responded to his ads and promised to help them save their homes in exchange for a fee of between $500 and $800 that he collected up front. (He) promised that he would create new payment plans with the homeowners’ mortgage companies and make mortgage and arrearage payments on their home loans with money they would provide him.

(He) also instructed the homeowners not to talk to their mortgage companies anymore and promised that he would handle all of the communication for them. (He) never created new payment plans for any of the homeowners.

(He) also told some homeowners that they would not have to file bankruptcy while leading others to believe that the mere filing of bankruptcy would save their homes for them. (He) allegedly filed bankruptcy on behalf some homeowners without their knowledge then told them not to attend court proceedings when the bankruptcy court contacted them.

(He) is currently in state custody following conviction on fraud charges filed in Montgomery County.

(He) faces a punishment of up to five years imprisonment on each of the three bankruptcy fraud counts. The two charges of making false oaths carry the same potential penalties. The mail fraud count and each of the three charges of making false oaths carries penalties of up to 20 years. Each crime carries a potential fine of up to $250,000.

(His) indictment is part of Operation Truth or Consequences, a nationwide sweep that demonstrates the breadth of enforcement actions taken by the Department of Justice to combat bankruptcy fraud and protect the integrity of the bankruptcy system.

See also:

Prosecutors: Foreclosure help was a lie

Feds Charge 2 Lawyers With Stripping Clients' Home Equity

In separate cases, two Chicago bankruptcy attorneys were accused of running sale-and-leaseback programs for financially strapped homeowners that federal authorities claim were schemes allowing the lawyers to strip and keep the equity from their clients’ homes.

As reported by Crain's Chicago Business, these defendants were 2 of 11 defendants charged in Chicago as part of Operation Truth or Consequences, a nationwide sweep run by the U.S. Department of Justice designed to crack down on bankruptcy fraud and protect the integrity of the bankruptcy system. A total of 78 defendants were charged across the nation.

According to the Justice Department's Operation Truth or Consequences Case Summaries, one of the attorney's activities was described as offering a "mortgage bailout"
program to homeowners facing foreclosure. The program allegedly consisted of transferring the properties to investors, who would then hold the properties, with the homeowners being given the chance to repurchase their homes after a predetermined period of time. The attorney allegedly also offered this "service" himself directly to clients through a separate company that he owned.

In the other case, it is alleged that the lawyer, working with a confederate who was also indicted, convinced homeowners to sell their homes to "investors" while in bankruptcy or shortly before filing. Allegedly, with the use of phony paperwork, the closings took place, the sale proceeds disbursed to the confederate and not the homeowners, and the sale and existence of the sale proceeds were concealed from the court, trustees, and creditors. The approximate amount of this fraud was $500,000.

Click here for U.S. Justice Department News Release

Michigan Man Charged with Bilking Senior's Home Equity

In an article appearing in The Detroit News, a Michigan loan officer was charged with scamming an 84 year old woman out of $42,000 in a mortgage scheme. The victim reportedly believed she was obtaining a reverse mortgage (which is paid back only when the homeowner dies or moves out of her home) against her home for $61,000. The loan officer allegedly obtained a $103,000 loan and secretly kept $42,000 for himself. She only learned about it when she began receiving bills which, including interest, totaled $131,000.

The loan officer is also suspected of scamming dozens of other elderly homeowners at a loss of more than $1 million in Wayne and Oakland counties, according to authorities.

The complete article is available from The Detroit News online archives for $2.95.

Go here for other posts on reverse mortgage problems. zebra

Maryland Attorney General to Review Criminal Complaint Against State Legislator For "Foreclosure Rescue" Activities

A criminal complaint regarding the "foreclosure rescue" activities engaged in by a Maryland state legislator has been referred to the Maryland Attorney General's Office for review, according to this report originally published in the Baltimore Sun on October 26.

This post is a follow-up to my November 24 post about this matter.

DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes Through Equity-stripping Foreclosure 'Rescue' Scams

What arguably is the definitive work on the national epidemic that is often referred to as "home equity theft", "equity stripping", foreclosure/mortgage "rescue" scams, and other descriptive names is the June, 2005 report titled:

• DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes Through Equity-stripping Foreclosure "Rescue" Scams

Written by Steve Tripoli and Elizabeth Renuart of the National Consumer Law Center ("NCLC"), this is an exhaustive, sixty eight page report that is based on their experiences, numerous interviews conducted by the NCLC plus a review of cases and reports from consumer attorneys, law enforcement officials and the news media in seventeen states plus the District of Columbia.

The report is divivided into several sections that are captioned as follows:

1. INTRODUCTION: THE BLIND SPOT 100,000 HOMES WIDE, which gives an overview of the report, including pictures of actual road signs that are commonly used by "rescue" operators,
2. PART 1: STEALING WHATEVER IS NAILED DOWN, which describes what apparently are the three predominant types of "rescue" scams, why homeowners fall for these scams, and gives a taste of what these scams mean to real people by telling the story of two victims in the hard hit region of Southern California,
3. PART 2: THE HIDING-IN-PLAIN-SIGHT PANDEMIC, which goes into some detail and includes stories of similar scams from seventeen states and the District of Columbia, for the NCLC's stated purposes of (a) "want(ing) to definitively prove that a common rebuttal to news of consumer scams, that 'it’s just a few bad apples doing it,' is categorically beyond rational claim when it comes to foreclosure "rescue" scams", (b) "want(ing) the public and the news media to be aware of the many different tactics these scammers employ to cash in other people's home equity", and (c) "want(ing) to show, through others' experience, the difficulties of fighting these scams ..., in order to bolster the case for reform that (is made) later in the report",
4. PART 3. DO-IT-YOURSELF EQUITY STRIPPING: THE INFORMAL INDUSTRY TEACHING "RESCUE" TACTICS, which discusses the "educational industry" that teaches foreclosure rescue and is commonly advertised on late-night television. The report quickly and fairly points out that not all of the businesses in this educational industry are scams. Interesting references are made to well-known TV real estate gurus "Millionaire Maker Ron LeGrand" and Carleton Sheets (and in a later section of the report, Robert Allen),
5. PART 4. FIGHTING BACK: WHAT REGULATORS, THE LAW, ENFORCEMENT, AND CONSUMERS CAN DO, which (a) addresses whether homeowners can fight back effectively, (b) admonishes the states to "beef up (their) laws or witness a mounting loss of home ownership", (c) discusses consumer "do's and don'ts, (d) offers, as a model, one way of responding to this epidemic by decribing an outreach and support program involving the Clergy Against Senior Exploitation (CASE) Partnership and the Denver District Attorney's Office that is funded by the United States Department of Justice,
6. APPENDIX A: EXHIBITS, which includes a number of samples of the type of solicitations used by "foreclosure rescue" operators,
7. APPENDIX B: OVERVIEW OF EXISTING STATE LAWS, which describes (a) the types of activities covered, (b) the scope of the laws, (c) notice and cancellation rights (d) substantive protections.

For anyone interested in quickly getting up to speed on the "foreclosure rescue" / "home equity theft" /"deed theft" epidemic that has infected the entire country, I vigorously urge you to obtain and read this report.

Click here for DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes Through Equity-stripping Foreclosure "Rescue" Scams

Rhode Island Attorney General Settles Suit With 'Rescue' Company; Judge Orders Return of Homes, Operations Shut Down

According to a report summary appearing on the Community Choice web site, the Rhode Island Attorney General has reached a settlement in a civil lawsuit brought against a 'foreclosure assistance' company in connection with a home acquisition operation whereby it acquired homes from financially distressed homeowners under the guise of foreclosure rescue 'buy back' program.

Superior Court Judge Daniel Procaccini granted the attorney general's request for a permanent injunction prohibiting the operator or its affiliates from transferring or selling any of the 16 properties already enrolled in the buyback program. It also requires a return of ownership of two of the homes back to the original owners, and prevents the company or its affiliates from using the 'buy back' program to acquire any more properties.

According to a Rhode Island Attorney General news release issued prior to the settlement, the cases had two characteristics common with a 'foreclosure rescue' scam:

1. sparse documentation provided to consumers, and
2. unknowing conveyance of ownersip by the victim to the operator.

This story was originally reported by The Providence Journal.

Click here for the Community Choice summary

Click here for Attorney General's News Release

Click here for one of The Providence Journal's articles

Federal Charges Against Eight; 100+ S. Cal. Homeowners Victimized in $12 Million "Rescue" Scam

DSNews.com reports that eight people have been charged with mail fraud and aggravated identity theft involving a 'foreclosure rescue' operation that targeted over 100 homeowners. According to the report,

1. the victims were identified by using databases of current foreclosure actions,
2. approached with offers of short term loans and refinancing with a co-signer with good credit,
3. mortgages were fraudulently placed on the victim's homes which subsequently went into default, resulting in a stripping of the victims' home equity.

The scam took place in several areas of Southern California.

Click here for the whole story.

Go here for updated posts with links to media reports & FBI press releases relating to the initial charges. Seung Ok

Maryland State Legislator Sued For Alleged "Foreclosure Rescue" Scam; Police Investigation Ongoing

The Capital Online (Annapolis, MD) reports that state legislator Tony McConkeyhas been sued by a local woman for allegedly taking her ownership in her home under the guise of providing foreclosure rescue services.

The local police are conducting their own investigation in this matter, unrelated to the alleged victim's civil lawsuit, according to the local State Attorney's office. Both the state attorney and the local police have withheld any comment.

The legislator, who reportedly is both a disbarred attorney and was a real estate broker until the revocation of his broker's license, has been sued in the past by another homeowner where allegations of the same nature were made, according to this story.

Click here for the details.

Click here for an article first appearing on October 25, 2006 in the Baltimore Sun about the police investigation of the Maryland state legislator.

Click here for article: State delegate accused in lawsuit of defrauding homeowner that appeared in Examiner.com.

Go here for other posts on Tony McConkey.