New Hampshire Couple Battling Foreclosure Rescue Operator Over Home

A Manchester, New Hampshire couple with five young children is currently engaged in two court battles with MAK Investments, a local foreclosure rescue operator, over title and possession of the couple's home, according to a story on the Concord Monitor Online, at concordmonitor.com.

Further, the New Hampshire Banking Department issued a cease-and-desist order to the company last summer, in which it claims that MAK's lending practices violate state banking laws. The Department's staff attorney handling the case also asserts that MAK has used unethical business practices, like changing the terms of loans discussed verbally with homeowners when it comes time to sign the paperwork.

In investigating the company, the state found that over 10 homeowners facing foreclosure have lost their homes to MAK. A March hearing is scheduled where fines could be issued, restitution could be ordered and, in a few of the cases, homeowners might be able to get their homes back, according to a state spokesman. The state is also reportedly investigating two other companies for engaging in similar foreclosure rescue practices. For the whole story, see

Predatory lenders
(A growing fear of foreclosure has led many to lose their property to mortgage 'rescuers')
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South Carolina Manufactured Home Dealer Facing Fraud Allegations

Glenn Vaught, owner of Conway, South Carolina manufacured home dealer G&E Home Center has been named in two lawsuits by mortgage lenders in the past five months containing allegations that, in ten deals, he took over $1.5 million in loan proceeds for non-existent homes, according to an article in The Sun News' online presence, MyrtleBeachOnline.com. Two mortgage brokers have also been named in the suits as participants in the alleged fraud. No home buyers or appraisers were named in either suit.

The following points were reported in the article:

One of the brokers, Nancy Peterson, claims to have been duped by Vaught in the transactions she was involved in and, reportedly, is cooperating with the mortgage lender in one case (although she remains as a named defendant). She reportedly did confess, however, to being "a little too trusting and a little too lazy" in the application process by obtaining prospective buyers' loan application documentation from Vaught rather than getting the paperwork directly from the home buyer/borrowers thmselves.

The other broker, Mike Fortenberry, was unlicensed to originate these loans, now lives in Tennessee, and did not return telephone calls and e-mail messages.

Vaught is facing at least three other lawsuits brought by his home buyer customers, in addition to the two by the lenders.

Falsified borrowers' income statements, altered bank balances, phantom downpayments, and altered appraisals were involved in the fraud, according to court documents. The appraisers whose property valuations were allegedly altered are reportedly cooperating with the mortgage lender in one suit.

(There is no indication in the article as to the existence of any law enforcement investigations into the allegations made in the civil suits.) For the entire story, see

Conway home seller accused of loan fraud
(Horry's manufactured house problems continue to mount)
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Is The Real Estate Appraisal Profession In Trouble?

In his blog, Whitecaps, blogger Bill McCrory of Coeur d'Alene, Idaho writes of appraisal fraud in real estate in which he includes links to a series of Realty Times articles that describe ways that appraisers are both:

• pressured by lenders, loan officers, mortgage brokers and real estate agents to "not come up short" on their property valuations, and
• stifled in their attempts to do something about ongoing frauds.

Links are also included to:

• a 69 page report by the Federal Financial Institutions Examining Council that listed appraisal fraud "at the top of a list of third party mortgage fraud schemes that included such intriguing names as builder bailout, chunking, double selling, equity skimming, false down payment, fictitious mortgage loan, land flip, phantom sale, and straw borrower" and
• a 12 page article that explains how widespread appraisal fraud puts homeowners at risk.

For more, including the aforementioned links, see:

Appraisal Fraud in Real Estate
("You cannot participate in the real estate business without committing felonies.")

In related Information...

1) See an online Appraiser's Petition containing the names of approximately 9,500 appraisers petitioning the Appraisal Subcomittee of the Federal Financial Institutions Examination Council ("FFIEC") for assistance in dealing with the pressure put upon them by lenders and others in the real estate industry to satisfactorily "hit the mark" on their property appraisals.

The mission of the FFIEC Appraisal Subcomittee "[i]s to ensure that real estate appraisers, who perform appraisals in real estate transactions that could expose the United States government to financial loss, are sufficiently trained and tested to assure competency and independent judgment according to uniform high professional standards and ethics." (see Mission of the ASC)

2) See Senate panel backs bill to crack down on appraisal fraud, an Associated Press article reporting about Senate Bill 85 currently pending in the Colorado state legislature that, if passed, would seek to prosecute anyone who pressures an appraiser to inflate property values.

The measure would prohibit mortgage brokers from pressuring or compensating an appraiser for an inflated appraisal. Violators would be fined $1,000 for their first offense and between $1,000 and $2,000 for later offenses. Appraisers, real estate agents and investors who participate in an appraisal scheme could also be prosecuted or sued and subject to triple damages. Mortgage brokers who have been sued and prevented from working in other states for unfair trade practices would lose their right to practice in Colorado as well.

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Houston Area Law Enforcement Going Undercover To Fight Mortgage Fraud

The division chief over major fraud in the Harris County, Texas District Attorney’s Office has announced that they are beginning to go undercover to infiltrate mortgage fraud groups to fight mortgage fraud. “If you are involved in this type of crime, you just might be dealing with a Houston police officer,” said division chief Lester Blizzard. One undercover bust, involving an investigation of a title closing agent, has recently been made. To read more, see Mortgage fraud: the new white-collar crime, reported by KHOU-TV Channel 11 at their website, KHOU.com.

Click here for KHOU-TV's video report on the new undercover investigations, by Jeff McShan.

For a recent undercover bust involving Boston police and federal investigators, see

• Bid to swindle ex-nun thwarted: Three nabbed in home scam, and
• More busts expected in identity theft, home-sale scam

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New York Lawyer Pleads Guilty To Stealing $20 Million From Clients, Banks

Pleasantville attorney Anthony Bellettieri pleaded guilty in a White Plains Federal Court to one count of bank fraud and one count of mail fraud. A plea agreement entered into with federal prosecutors calls for a likely sentencing range of 10 years and one month to 12 years and seven months. In addition, Bellettieri agreed to pay up to $22 million in restitution to those he bilked and forfeit the properties he purchased with the ill gotten gains. Reportedly, the stolen money was lavishly spent on vacation condos, home improvements, a family wedding, high salaries for his law firm's employees, and new cars. Sentencing is May 18. To read more, see:

• Pleasantville lawyer admits stealing $20 million, reported by The Journal News at thejournalnews.com, and
• Real Estate Lawyer Stole $20 Million for Wedding, Condos and Staff Salaries, reported by the Associated Press and appearing, among a slew of other places, at Law.com.
• The original Bellettieri charges filed by the U.S. Attorney

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Former NBA Great Mentioned In Atlanta Mortgage Fraud Trial

Former Atlanta Hawk great Dominique Wilkins has had his name thrown around in sworn testimony in the Atlanta Federal Court trial of Phillip E. Hill, Sr. and others involving an alleged "straw buyer" mortgage fraud flipping scam that has reportedly cost mortgage lenders tens of millions of dollars. To read more, see:

• NBA All-Star Weekend leads to break for NBA Great Caught Up in Mortgage Fraud Case, and
• Athletes caught up in mortgage fraud case (Two testify that deals with defendant Phil Hill cost a total of $350,000) (link no longer available)
• Federal Grand Jury Indictment (approx. 2 MB) (link no longer available)

Go here for other posts on the Phillip E. Hill property flipping operation.

"Straw Scams" Lure Home Sellers & Buyers

Home sellers can find themselves lured into a "cash back" mortgage fraud "straw scam" by an unethical "buying team" (comprised of an agent, a knowing straw buyer, loan officer, and appraiser) making "above asking price" purchase offers (see for example, "Cash Back" Mortgage Fraudsters Target Home Sellers In Weak Markets).

Home buyers can also get lured into this scam. Sometimes, the scam will involve identity theft (see for example, Two charged with identity theft), where a knowing "straw buyer," when applying for the mortgage loan, uses the stolen identity of someone else who ends up being an "unknowing buyer" (and who only finds out about his/her victimization after the transaction is funded). Other times, the buyer is simply duped into believing that they are making a "hassle-free" real estate investment (see for example, Dayton Area Task Force Fighting Flipping). At times, the buyer will purchase the property and be paid a "fee" after the transaction is funded (see for example, Guilty plea in mortgage scam, where "buyers" were offered $1,000 for each deal they participated in).

These are just some examples of how people can unwittingly find themselves involved in mortgage fraud scams.
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Five Reverse Mortgage Scams To Watch Out For

For those looking for a basic understanding of what to look out for when protecting yourself against a possible reverse mortgage scam, see Five Reverse Home Mortgage Scams To Watch Out For.

Go here for other posts on reverse mortgage problems. zebra
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Two Plead Guilty In Augusta Area "Cash Back" Fraud

Robert C. Thigpen and Erich J. Haskell pleaded guilty in an Augusta, Georgia Federal Court yesterday to a "cash back" scheme where HUD money was obtained and diverted to themselves and third party buyer Vance Johnson. The money was earmarked for repairs that were never done.

Reportedly, Augusta attorney William O. Key Jr. was in on the arrangement and served as the closing attorney on the fraudulent transactions. Mortgage fraud charges against him are currently pending.

To read more, see Two plead guilty to mortgage fraud, reported by The Augusta Chronicle.
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More On Minnesota "Cash Back" Fraud Investigation

This post follows up on the Minnesota mortgage fraud investigation referenced in my Tuesday post, Feds Probing "Cash Back" Scam Involving Over 60 Deals, involving closing agent Jill Lehn.

Reportedly, Ms. Lehn has written a four page article for the upcoming March issue of Minnesota Realtor magazine which details her misdeeds while working as a closing agent at First Advantage Title Company.

Lehn and co-defendant Isadore Stewart, a Bloomington real estate investor who has also pleaded guilty to one count of wire fraud in relation to three properties he purchased at inflated prices, are continuing their cooperation with the Internal Revenue Service in an ongoing investigation expected to net more arrests.

For more, see:

the St. Paul Pioneer Press report (at twincities.com)

Mortgage fraud's 'very hard lesson' (Jill Lehn pleaded guilty and lost her real estate license. Now she's sharing her story in a magazine article) (no longer available online).

and the Star Tribune story (at StarTribune.com)

Anatomy of a real estate fraud (A simple favor plus $3 million in fraud add up to regrets - and a pending prison sentence - for a former metro-area mortgage closer) (no longer available online).

California Home Equity Sales Contract Act - Articles & Cases

The Home Equity Sales Contract Act is the California statute (section 1695 of the California Civil Code) that regulates home sales contracts between home sellers facing foreclosure and their prospective buyers.

For two online articles that refer to this statute, see:

Seller in Default, Buyers Take Care, and
Preforeclosure Sales in California

In addition, for those of you who like reading court cases (available online courtesy of Findlaw.com), see:

Boquilon v. Beckwith, 49 Cal. App. 4th 1697; 57 Cal. Rptr. 2d 503; (Cal. App. Ct., 1st Dist., Div. 2, 1996)

• about a California real estate agent who violated this law. The case involved a husband and wife facing foreclosure who sought out a real estate agent to discuss a refinancing of the home. The agent convinced the homeowners to deed the property over to her, after which the agent refinanced the property, but paid no equity to the homeowners and eventually evicted them. The homeowner was awarded damages against the real estate agent of approximately $39,500. In addition, the court found the real estate agent liable for an additional $19,500 in attorney's fees to be paid to the homeowner's attorney.

In re Phelps (2001) 93 Cal.App.4th 451 , 113 Cal.Rptr.2d 217 (Cal. App. Ct., 4th Dist. Div. 2)

• about an individual who pleaded guilty to criminal violations of the Act. Subsequent thereto, the individual filed a petition for writ of habeas corpus. The court found that the individual's "[c]ounsel rendered constitutionally deficient assistance in advising, or permitting, him to plead guilty to violating the "Home Equity Sales Contracts" law." The appellate court granted the petition for writ of habeas corpus. The individual was permitted to withdraw his plea of guilty and the matter was sent back to the lower court for further proceedings.

Segura v. McBride (1992) 5 Cal.App.4th 1028 , 7 Cal.Rptr.2d 436 (Cal. App. Ct., 1st Dist. Div 4)

• a case which raised "first impression questions concerning the class of persons regulated pursuant to [the Home Equity Sales Contract Act], as well as the measure of damages available thereunder."

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North Carolina "Cash Back", "Straw Buyer" Scam Nets 2

Businessman James Thomas Davis was sentenced to 200 months in prison in Raleigh Federal Court on conspiracy and fraud charges for his role in a mortgage fraud where he would target builders who had new homes on the market and offer them more than the asking price for the homes. In exchange, the builders would allow Davis to keep the difference between the asking price and the inflated offer, according to investigators.

Mr. Davis was convicted after a jury trial. Residential home builder David Layton, who admitted to prosecutors to conspiring with Davis in using phony real estate closing documents in the sale of the homes, was reportedly sentenced to four months in prison.

The scheme:

• involved the use of "straw buyers" in consummating the bogus sales,
• recruited renters to live in the properties and pay rent under a "rent-to-own" arrangement, and
• used what essentially was a pyramid scheme by luring additional straw buyers and tenants to obtain new money to cover the cash shortfall between the monthly rents collected by the scammer and the higher house payments made to mortgage lenders.

To read more, see Two sentenced in mortgage fraud scheme, reported by The News & Observer, at newsobserver.com.

Go here for other posts on "rent to own" scams. rent to own lease purchase option scams zebra

Some NY Attorneys In Hot Water For Real Estate Related Fraud

Eight lawyers or former lawyers from the Lower Hudson Valley have been charged, pleaded guilty, sentenced, or investigated by state or federal prosecutors in the past two months, according to an article in The Journal News, reported at nynews.com.

Among the lawyers in hot water is Pleasantville attorney Anthony Bellettieri, who is currently under a federal investigation in the theft of more than $10 million from real estate escrow accounts of clients. Further, J.P. Morgan Chase has sued him and his firm in December, saying $17 million was stolen through a check-kiting scheme. The attorney representing Bellettieri's law partners - Robert Fonte and Tara Anne Laudonio - claims that his clients are also victims in the case.

For the full story, see Lots of lawyers are making headlines, but as defendants.

For other recent attorney related investigations for real estate fraud, see:

• Lawyer Nailed In Shady "Cash Back" Land Deal
• Theft Of Client Funds Concerns Connecticut Bar Association
• Massachusetts Cops Probe Attorney Involvement In Loan Scams
• Attorney Charged With Theft of 300K+ Home Sale Proceeds
• Westchester DA Nabs Attorneys For Alleged Theft Of "Home Sale Proceeds"
• FBI Investigate NY Attorney For Alleged $600,000+ Theft Of Home Sale Proceeds

For other stories involving real estate related fraud by attorneys and closing agents, see this collection of reports at The Mortgage Fraud Blog, presented by The Prieston Group.
Go here for stories on other alleged escrow agent mishandling of funds. sneaky slick escrow agents alpha

$29 Million In Bad Loans In Chicago "Straw Buyer" Scam; Ringleader, 3 Appraisers Plea Guilty

Mohammad "Mike" Taghie Kakvand pleaded guilty in Chicago Federal Court Monday to one count of wire fraud in a mortgage fraud scam where units in 33 Chicago apartment buildings were sold off as renovated condominiums at artificially inflated prices using "straw buyers" who ultimately defaulted on $29 million in loans. A sentencing agreement with prosecutors has yet to be worked out. Sentencing is scheduled for May 9.

Bogus appraisals misrepresented the condition of the units as being rehabilitated when, in fact, no renovation had ever taken place. Real estate appraisers Thomas M. Groh, Eric L. Dorsey and Britt J. Pierre, have already pleaded guilty for their roles in the operation.

A fifth individual, Syed Ali Mohammed Razvi, was also charged in the fraud and is currently on the lam.

In addition to mortgage lenders such as Washington Mutual and Wells Fargo, the scheme victimized the community by reportedly

• displacing renters,
• leaving decaying, crime-plagued buildings,
• increasing real estate taxes on surrounding property owners as a result of the artificial inflation of home prices, and
• decreasing the amount of available rental housing.

To read more, see Guilty plea in mortgage scam, reported by the Chicago Sun-Times at suntimes.com.
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Feds Probing "Cash Back" Scam Involving Over 60 Deals

Federal investigators in Minnesota are reviewing more than 60 real estate transactions handled by one former closing agent who, authorities say, prepared loan documents that overstated the purchase price of the properties, hid the overpayments from lenders, and allowed buyers to pocket the difference between the actual price paid and the inflated mortgage amounts (adding up to over $3 million).

The closing agent, Jill Lehn, who was the buyer in a half dozen of the transactions, will forego a criminal trial and instead, has pleaded guilty to one count of wire fraud and one count of money laundering in Minneapolis Federal Court. She is currently cooperating with investigators as the investigation continues while she awaits sentencing.

To read more, see the Star Tribune story, reported at StarTribune.com:

Mortgage scam nets $3 million
(A former Prior Lake closing agent has been charged in an investigation of 60 transactions with inflated purchase prices
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Federal Lawsuit Alleges Racketeering Conspiracy

Two Rialto residents have filed suit last week in a Riverside County, California Federal Court claiming that they have been defrauded of over $600,000 by an alleged racketeering conspiracy that is said to have cheated over 700 investors in multiple states, according to an article in The Press Enterprise, reported at PE.com.

The men who have been named as defendants in the suit include James Duncan, Maurice McLeod and Hendrix Montecastro, who are also defendants in a Riverside County Superior Court for their alleged roles in a related mortgage fraud scam affecting hundreds of Filipino investors in southwest Riverside County.

Temecula attorney Richard Ackerman represents the plaintiffs in both Riverside lawsuits, who said that, as of Monday, he had identified 867 victims.

For the whole story, see:

Investors file federal fraud lawsuit
(HUNDREDS AFFECTED: Two Rialto residents say they sustained losses of more than $600,000)

For earlier reports regarding the state court lawsuit, see these reports in The Californian / North County Times:

• Suit alleges massive mortgage scam
• Real-estate investors bought on faith
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Connecticut TV Station Finds Felon Originating Mortgages; State Caught With Pants Down

The WFSB-TV Channel 3 I-Team (Hartford, Connecticut) has found convicted felons originating mortgage loans in the state of Connecticut. They discovered that Kyle Gwynn, a registered felon in Florida, was working as a loan officer in Connecticut. Gwynn had pleaded guilty in Florida to stealing money from a former employer. Reportedly, Gwynn was hired as a loan officer in May 2005, but his registration application was not received for almost 18 months.

For the full story (including a link to the I-Team Video Report by Len Besthoff), reported by WFSB-TV Channel 3 on their website, see:

Conn. Blind To Loan Officers' Backgrounds
(Registered Felon Found Writing Loans)

Senator Troubled By Loan-Officer Registration
(Changes May Be Made To Process Of Registering Loan Officers)
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