South Florida Feds Get Guilty Verdict In "Operation Whose House" Mortgage Fraud

Ishmael Grant, of Lauderhill, Florida, one of the lead defendants in a $10,000,000 scheme to defraud mortgage lenders, was found guilty by a jury in a Fort Lauderdale, Florida Federal Court. The joint announcement, by authorities from a number of Federal agencies involved in the case, was made late Friday afternoon (4/13/07).

The verdict was the culmination of a two week trial in which 32 witnesses testified. Grant was found guilty on one count of conspiracy to commit mail fraud, wire fraud and aggravated identity theft , three counts of mail fraud, and three counts of wire fraud.

Ishmael Grant is the eighth defendant to plead guilty or be convicted after trial in connection with “Operation Whose House.” Presently, one defendant is awaiting trial and two defendants are fugitives in a foreign country. According to the evidence produced at trial, the scam involved fraudulently obtaining over 30 mortgage loans from lenders on property throughout Broward County, Florida and involved:

• paying individuals to act as straw buyers, the submission of false documentation (ie. false loan applications, false employment verification forms, false salary statements, false bank account statements reflecting high account balances), and identity theft (ie. using false or stolen Florida’s driver’s licenses, identification cards, and social security numbers as their personal identification to buy the homes in other people's names).

For more, see the 4-16-07 USDOJ Press Release, Operation Whose House Mortgage Fraud Defendant Guilty In Mortgage Fraud Scheme.

For a local media report on the case, see Lauderhill man found guilty of multimillion-dollar mortgage fraud, reported in the South Florida Sun-Sentinel.

For earlier USDOJ Press Releases announcing the guilty pleas of other defendants, see

• Five defendants Plead Guilty To Motgage Fraud Scheme (2-23-07),
• Two More Plead Guilty In Operation Whose House Mortgage Fraud And Identity Theft Ring (3-16-07)

For a copy of the indictment in this case, see Indictment - USA vs. Patterson, Brown, McGuire, et al., (detailing the Federal Grand Jury's 47 charges against the 11 person fraud ring)

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Florida Court Rules That "Foreclosure Rescue Eviction" Not A Landlord-Tenant Matter

A Florida appellate court ruled last month that a Miami-area foreclosure rescue operator cannot evict a homeowner who signed away title to her home in a "sale-leaseback-buyback option" arrangement until a determination is made as to who the true owner of the property is and effectively ruling that the Florida Residential Landlord Tenant Act is not applicable to such a transaction unless and until such a determination favorable to the operator is made.

The case involved a situation where, at some point after a financially strapped homeowner signed away the title to her home to a foreclosure rescue operator, the operator attempted to evict her. The homeowner asserted the defense that she was the true owner. The lower court ruled that, pursuant to the applicable provisions of the Florida Residential Landlord Tenant Act, she had to pay into the court registry the rent that was called for in the leaseback of her home while the court proceedings were pending.

According to the appellate court's opinion:

• "[The homeowner] alleges she was tricked into conveying her home to Equinamics in a transaction which is impressed with characteristics of a sale, but in reality is a disguised loan secured by her home. If this is accurate, then Equinamics is not an owner of [the homeowner's] residence but rather a lender who must proceed to oust [her] via a foreclosure action."

The court then made this observation:

• "Based upon the facts of this case, it is apparent that the transaction by which Equinamics received title to the Minalla residence was not an ordinary real estate transaction. Likewise, the circumstances under which Minalla continued to remain on the property after she executed the special warranty deed to Equimanics was not possessed of the trappings of a usual landlord tenant relationship."

Ultimately, in reversing the lower court ruling to the contrary, the appellate court ruled as follows:

• "[T]here is a factual dispute in this case concerning who is the true owner of the property. Because the trial court's order requiring payments by Minalla of monies into the registry was made without conducting an evidentiary hearing concerning the nature of the transaction and who is the true owner of the residence, the court erred in imposing the payment requirement upon her."

The homeowner is being represented by attorney James A. Bonfiglio, Boynton Beach, Florida.
Minalla v. Equinamics Corp., (Fla. App. Ct., 3rd Dist. March 21, 2007) (Court decision made available online courtesy of the Florida Third District Court of Appeal)

Postscript:

The court in this case reveals the following in a footnote:

• that the homeowner has brought claims against the foreclosure rescue operator under the Federal Truth in Lending Act giving her a right to rescind under 15 U.S.C. § 1635 and Reg. Z 226.23, and damages under 15 U.S.C. § 1640 (a);
• that the arrangement is alleged to be a Home Ownership and Equity Protection Act Amendments (HOEPA) loan under 15 U.S.C. § 1602 (aa) and Reg. Z 226.31, giving right to an additional basis to rescind under § 1635 and enhanced actual damages under § 1640 (a)(4);
• that the arrangement is alleged to violate Florida's usury statute, § 687.02(1), Florida Statutes (2005);
• that the homeowner has brought a quiet title claim; and
• that the homeowner seeks declaratory relief on the basis that enforcing the arrangement as a true "sale lease option" would enforce an illegal equity skimming contract in violation of section 697.08, a third degree felony, which it claims allows Minalla civil damages as being "against public policy.

There seems to be some pretty interesting issues for Florida practitioners in this case, particularly the usury and illegal equity skimming claims coupled with the equitable mortgage / disguised loan issue. This may be a case worth keeping an eye on.
For more on attorney James A. Bonfiglio, see:

• West Palm Beach Attorney Representing "A Dozen" Foreclosure Rescue Victims; and
• Facing foreclosure? Beware of 'rescue firms' offering to help you. equitable mortgage zebra

Another NYC Foreclosure Rescue Federal Lawsuit Settled

A foreclosure rescue lawsuit brought by a couple in a Brooklyn, New York Federal Court was settled privately by the parties involved earlier this year. The homeowners in this case brought suit against foreclosure rescue operator Principle Investors Realty, and individuals Frankie L. Freeman, Edith A. Lorick, attorneys Fred D. Way, III (remember him from yesterday's posts) and Appolo Pitton, and Kevin Waite, who ultimately ended up with the title to the home. When the homeowners approached the operators for help in "saving" their home, they (the foreclosure rescue operator) allegedly proceeded to engage in an equity stripping, foreclosure rescue deal that ultimately forced the homeowners out of their home. According to the allegations contained in the lawsuit:

• "But instead of helping the Hineses save their home, Freeman induced them to transfer their deed to his associate, defendant Edith A. Lorick ("Lorick"), who took out a new mortgage on the property that exceeded the Hines's previous mortgage by more than $100,000; distributed the proceeds of the new mortgage to himself and his co-conspirators; and demanded monthly rental payments from the Hineses that he knew they could not afford. Unable to make the payments, the Hineses were forced to move out of their home."

According to the lawsuit, the property was ultimately sold for $100,000 more than the amount of the subsequent mortgage taken out by Lorick, and nearly $200,000 more than the payoff amount on the homeowners' original mortgage. The homeowners allegedly only received $10,000 in the transaction.

This lawsuit brought claims (not unlike many of the claims brought in those New York cases I reported on in yesterday's posts) against those involved for:

• Equitable Mortgage (NY Real Property Law Sec. 320),
• Violations of the Federal Truth In Lending Act,
• Violations of the Federal Real Estate Settlement Procedures Act,
• Common law fraud,
• Conspiracy to commit fraud,
• Violations of New York State General Business Law Sections 349 & 350 ("The Deceptive Practices Act"),
• Conversion,
• Unjust Enrichment and Constructive Trust,
• Legal Malpractice

Representing the homeowners in this case were attorneys from the firms Chadbourne & Parke, LLP and Patterson Belknap Webb & Tyler LLP.

For the complete lawsuit, see Complaint - Hines-Johnson vs. Principle Investors Realty, Frankie L. Freeman, et al.

Editor's Note:

It's hard not to notice that the attorneys and law firms representing the homeowners who are alleged foreclosure rescue victims are no longer only sole practitioners and attorneys from the non-profit legal services firms. Some law firms that are getting involved in these cases (such as those in this case and in the New York cases I reported on yesterday) appear to be pretty large firms that are better known for corporate law and complex litigation. Further, given the financial straits that these homeowners are invariably in, it's hard to imagine that the cases are being handled on anything other than a pro bono or contingency fee basis. It may very well be that the area of consumer protection law involving the representation of homeowners who have had business dealings with foreclosure rescue operators is becoming an emerging area of law for civil litigators.

For commentary on the emergence of this area of law, see, for example, Litigating Foreclosure Rescue Scams (An Emerging Area of Consumer Law), and my April 5, 2007 post on this point, Litigating Foreclosure Rescue Scams. equitable mortgage zebra

Washington State Assistant AG Has Eye On Foreclosure Rescue Fraud

The News Tribune in Tacoma, Washington has a story on Washington State Assistant Attorney General Dave Huey and his work in the AG's Consumer Protection Division. When asked about the type of lending fraud he is seeing today in the state, he said:

• "We’ve sort of shifted our focus to foreclosure rescue fraud, because that’s where con artists can make a living. They don’t have the inflated values anymore. So now if you’re looking to make your fortune in real estate, you have to find new ways to exploit people, and we’re seeing that in foreclosure rescue scams."

For more, see He’s got your back.

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Washington AG Charges Two In Foreclosure Rescue Scam

The Washington State Office of the Attorney General Rob McKenna has filed criminal charges against a Bellingham, Washington mortgage broker and his wife in what investigators have called a foreclosure rescue scheme to get title to a local couple’s home, according to an article in The Bellingham Herald. The state has accused Peter and Julia Torkild of theft, forgery, money laundering and use of proceeds of criminal profiteering in connection with the scheme to acquire the victims' home.

Based on the information in the article, it appears that the impetus for the criminal charges in this case was a civil lawsuit, and an investigation conducted in connection therewith, that was brought by the victims against the Torkilds last May. For all the details, see Mortgage broker faces crime charges (Couple allegedly schemed to get Lummi Island home).

If any resident of the State of Washington thinks they may have been defrauded in a mortgage or other financial transaction, contact the Washington Department of Financial Institutions ("DFI"): (360) 902-8811; or go here for Online Complaint Filing with the Washington DFI.
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NYC Foreclosure Rescue Operator Target Of Federal Lawsuits

New York City foreclosure rescue operator Home Savers Consulting Corp. and Phil Simon have been the targets of two Federal lawsuits containing allegations of equity stripping involving the use of a "straw buyer" in connection with foreclosure rescue deals.

In one case, Johnson vs. Home Savers Consulting Corp., Phil Simon, et al., the allegations in the complaint state that:

• "After applying for what they believed was a refinance loan, plaintiffs discovered that Home Savers, through document trickery, misrepresentations, and outright fraud, had caused them to transfer ownership of their home to an “investor.” Unbeknownst to plaintiffs, the “investor” then mortgaged the property with Argent Mortgage Company for $425,000—a $182,000 increase over plaintiffs’ mortgage."

Neither Home Savers or Simon bothered to answer the allegations, and a default judgment was entered against them. According to the court docket, the victimized homeowners settled the lawsuit as it related to the mortgage lender involved in the transaction who was also named as a defendant in the case; and last week, the judge in the case entered an order against attorney Fred Way for actual and punitive damages of $10,000+ for his involvement in the transaction.

The victimized homeowners in this case were represented by South Brooklyn Legal Services, Brooklyn, NY; and White & Case LLP, New York City.

In another case, Phifer v. Home Savers Consulting Corp., the allegations in the complaint state:

• "After applying for what she believed to be a refinance loan, plaintiff discovered that Home Savers, through document trickery, misrepresentations, and outright fraud, had caused her to transfer ownership of her home to Wayne Griffith, the straw buyer, a person she had never met before. Unbeknownst to plaintiff, Home Savers then arranged for the straw buyer to mortgage plaintiff's home to Fremont Investment & Loan for $415,000--approximately a $170,000 increase over plaintiff's then existing mortgage on which she owed $245,000."

Neither Home Savers nor Simon have, as of yet, bothered to answer the allegations in this case, either. The litigation is currently ongoing and a motion for a default has yet to be filed against them.

The victimized homeowners in this case are represented by Oda C. Friedheim, Legal Aid Society, Queens of Kew Gardens, NY and Noah David Lang, of Seyfarth Shaw LLP, New York City.

Go here for other posts on foreclosure rescue operator, Home Savers Consulting.

Federal Judge Imposes $10K In Damages Against NY Attorney For Involvement With Foreclosure Rescue Operator

Last week, a Federal judge in Brooklyn, New York entered a judgment for damages in the amount of $10,720.75 against New York attorney Fred Douglas Way, III, Esq., (aka Fred Way) for his involvement in an equity stripping scheme involving New York foreclosure rescue operator Home Savers Consulting Corp. and Phil Simon.

The damages broke down as follows:

• $2,500 for money that he refused to return to the victimized homeowners of a foreclosure rescue scheme,
• $7,500 in punitive damages, and
• $720.75 for the cost of serving a subpoena on him.

According to the record:

• "[W]ay [was served] with notices of court conferences, a request to enter default, and a subpoena duces tecum directing Way to produce documents and appear for deposition. The process server for the subpoena served Way at his office on November 14, 2005, after being forced to wait for forty minutes because of Way's refusal to accept service. Due to the evasion of service, the cost of service of the subpoena was $ 720.75. Way did not appear for the January 9, 2006 deposition noticed in the subpoena served upon him, nor did he produce any documents in response to the subpoena. Plaintiffs' counsel also spoke with an attorney named Domenik Napoletano on January 9 and 31, 2006, who inquired whether plaintiffs would consent to vacate the default against Way. Plaintiffs stated that they would not agree to vacate the default, and neither Napoletano nor Way moved to vacate the default, or made efforts to engage in settlement talks with plaintiffs or respond to the subpoena served upon Way. Despite the numerous notices given to Way and his clear knowledge of the action against him, Way has still failed to appear in this action. Way also has a documented history of failing to appear in other litigation against him and defying court orders."

In addition, the record reveals allegations of other cases in which attorney Fred Way may have been involved in foreclosure rescue schemes:

• "Plaintiffs also point to other litigation involving similar claims against Way. See Attie Decl. PP 27-31; Johnson-Hines v. Freeman, No. 05-cv-5173 (E.D.N.Y. November 4, 2005) (foreclosure rescue scheme in which Way allegedly acted as attorney for investor); Robinson Electrical v. Woods, Index No. 37841/05 (N.Y. Sup. Ct., Kings County) (alleging that Way steered plaintiff into a fraudulent home improvement scheme); Hinds v. Way, Index No. 48329/99 (N.Y. Sup. Ct., Kings County) (alleging that Way took and retained nearly $ 40,000 from the sale of two properties while acting as attorney for an estate)."

The victimized homeowners were represented by South Brooklyn Legal Services, Brooklyn, NY; and White & Case LLP, New York, NY.

To read the Federal Magistrate Judge's Report and Recommendation against attorney Fred Way in this case, including a recitation of the basic facts involving the foreclosure rescue operator and its conduct against the victimized homeowners, see Johnson vs. Home Savers Consulting Corp., Phil Simon, et al., Case # 04-cv-5427 , 2007 U.S. Dist. LEXIS 24288, E.D.N.Y, March 23, 2007.

To read the April 11. 2007 court order entering judgment against Way, see Amended Order - Johnson vs. Way et al.

To read the facts of the case, as alleged by the victimized homeowners, see Complaint - Johnson vs. Home Savers Consulting Corp., Phil Simon, et al.

Go here for other posts on foreclosure rescue operator, Home Savers Consulting.

Victim Of Massachusetts Foreclosure Rescue Operator Fights Back

The Boston Herald recently reported of the story of Diane Rayford, a very determined nurse, who had hundreds of thousands of dollars allegedly stolen from her by a local foreclosure rescue operator who targeted distressed homeowners facing foreclosure. The article reports that:

• "[I]t took the feisty Trinidad native two years of endless lobbying of every conceivable law enforcement agency, hundreds of phone calls and even treks to suburban police stations before authorities took action."

Her persistent efforts to get law enforcement authorities to take her seriously finally culminated last week when Massachusetts Attorney General Martha Coakley filed civil suits against 19 companies and individuals for allegedly tricking Rayford and several other Massachusetts residents into signing away their homes in a foreclosure rescue scheme.

For the rest of Diane Rayford's story, see Nurse overcomes odds in fight for home.

For the Massachusetts AG's Press Release announcing the foreclosure rescue operator lawsuits, see Attorney General Coakley Files Lawsuits Against Individuals and Businesses Involved In Foreclosure Rescue and Mortgage Fraud Ring.

For other posts on this story, see Massachusetts AG Going After Foreclosure Rescue Operators.

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Massachusetts Foreclosure Rescue Operator Allegedly Scams Cross-Section Of Boston Area Residents

The Boston Herald reports:

• "A Mattapan pastor, a Natick attorney and a Dorchester nurse were among those who lost their homes to a “foreclosure rescue scam” that targeted distressed homeowners, authorities said yesterday."

The defendants allegedly conspired to deceive homeowners into selling their homes, falsely promising that the homeowners would be able to avoid foreclosure and keep their property.

For more, see ‘Mortgage fraud’: AG sues 19, alleges foreclosure scams.
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Convicted Brooklyn Couple In More Hot Water; This Time For I.D. Theft In Real Estate Scam

Emerick Martin and his wife, Donna Martin of Brooklyn, New York were arrested again late last week; this time by local authorities on charges involving (1) an identity theft of a Queens man and (2) the use of the victim's identity to get $1.1 million in financing to buy a home in Dix Hills, Long Island, according to a Newsday article appearing online on am-NewYork.

Reportedly, it wasn't until the Martins and another engaged in a failed attempt to get an additional $180,000 by mortgaging the victim's home in Rosedale, Queens without his knowledge that their scheme was uncovered. When the victim received documents relating to this fraudulent financing attempt in the mail, he got suspicious and reported the matter to local law enforcement authorities.

Mr. Martin was sentenced to five years probation in June 2005, in connection with Federal charges against him, his wife and others involving allegations of filing of false mortgage applications. Reportedly, he was arrested on the new charges while on his way to check in with his parole officer on the old charges.

Mrs. Martin pleaded guilty in 2006 to mail fraud in that same case and was currently awaiting sentencing in Federal Court when she was arrested on the new charges. Reportedly, the Martins also engaged in a failed attempt to finance $90,000 to buy a late model Mercedes-Benz S550.

For more, see Brooklyn couple arrested for identity theft (no longer available online).

Go here for other deed theft posts. deed theft zorro

For other stories involving the use of identity theft to buy real estate, or to sell or mortgage an I.D. theft victim's home from out from under him/her, see:

• Two arrested for housing fraud,
• Homebuyers Used As Pawns In Mortgage Fraud Scheme,
• Four Sentenced for Bank Fraud and Aggravated Identity Theft, Reports U.S. Attorney,
• Mortgage Fraudsters Targeting Homes With "For Sale" Signs,
• Apple Valley man charged with identity theft and forgery,
• Florida Feds Get Guilty Pleas On Two In "Operation Whose House",
• New Arrests Made In Deed Scam,
• Boston Cops, Feds Sting Alleged Home Thieves,
• Detroit Area Law Enforcement Targeting Deed Theft With Dedicated Units.

I.D. Thieves 'Stung' In Attempted Massachusetts Home Theft Scam

In another story, this time reported by Boston, Massachusetts television station WCVB-TV Channel 5 on their website, TheBostonChannel.com, involving the use of identity theft to engage in a real estate scam to steal the home of a potential victim, the U.S. Attorney's office said Andre J. Lamerique of Sharon, Massachusetts, Carmella F. Lessegue of Boston, and Judy Bonas of New York City, were charged with using stolen I.D.s to fraudulently obtain a mortgage loan on a bogus purchase of a home in Dorchester, Massachusetts. Prosecutors allege that Lamerique orchestrated the phony sale to obtain the proceeds of a $440,000 mortgage to finance the purchase.

According to the report, "Law enforcement agencies got a tip about the scheme and used an undercover Massachusetts State Trooper to act as the attorney who was supposed to close the deal."

All three were previously arrested and charged in Massachusetts state court back in January on state charges involving the same incident. For more, see Feds Prosecuting ID Theft Home Purchase Case (Trio Charged With Using Stolen IDs In Fake Home Sale). sting
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Weekend I.D. Theft Blotter

The following recent reports involve alleged identity theft stories involving:

• a pizza delivery driver (Pizza delivery man accused of identity theft),
• a manager of an antiques business, for running up over $1,000 in charges on an account belonging to his ex-girlfriend (Police make arrest in identity theft case),
• a hospital employee who, according to police, used a hospital computer to steal social security and credit card numbers from 20 hospital patients (Guilty Plea in Identity Theft Case),
• a former Social Security Administration employee charged with illegally disclosing personal information she took off a government computer that was then used to rack up $2.5 million in credit card charges (Social Security Administration Worker Charged In Identity Theft Scheme),
• Nurse charged with stealing patient info and identity theft.

In addition, Credit Cards GB reports that a study by Visa reveals, "[t]he most common place where 40% of identity theft is found is in restaurants." The problems are caused by fraudsters who hack into the restaurant computers, which contain all of the customer details and transactions. To read more, see "Where do you think identity theft is most commonly started?"

Also, KOAA-TV in Colorado reports that Pueblo, Colorado police say that "[e]very year people learn they've fallen victim to identity theft after they file their taxes and find out they owe money for work they've never done." One identity theft victim may have had his identity stolen while he was in prison, since he recently learned he owed nearly $20,000 in back taxes for income the IRS says was earned during a period of time in which he says he spent in a state penitentiary. For more, see Pueblo man falls victim to identity theft.

Also, a Community Shred Day was held in Flint, Michigan yesterday. Dan Milliken, owner of iSHRED, an on-site document destruction company, supplied an industrial-sized document shredder, a monster machine inside a 35-foot semitrailer to promote document shredding as a way to combat identity theft. (Monster machine helps tear identity theft fears to shreds).

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Oklahoma Jury Convicts 6 In Cash Back Real Estate Scam

A jury in an Oklahoma Federal Court convicted six people in a cash back mortgage fraud scam involving artificially inflated home sale prices and submitted false loan applications, reports The Edmond Sun. Those convicted include Brandon L. Baum, of Joplin, Mo.; Joseph Conrad Therrien, of Oklahoma City; and Gayle L. Caldwell, Charles E. Caldwell Jr., Teresa M. Therrien, and Rusty Real Therrien, all from Edmond, Oklahoma.

It was alleged "that each of the defendants intended to personally profit by funneling substantial sums of money back to themselves and others from the excess sales proceeds under the guise of remodeling, repair costs or marketing service fees." For more, see 6 guilty in Oak Tree home fraud.
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Cash Back Scams Not Limited To Real Estate

KTEN Channel 10 in Oklahoma reports that David Dwain Redden, the former city manager of Roland was sentenced in an Oklahoma Federal Court to 27 months in prison and ordered to pay the city about $225,000 in restitution. Redden was accused of inflating purchase orders used to acquire supplies from a vendor and getting cash back from the business. For more, see Former city manager sentenced.
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A View Of The Mortgage Fraud Phenomenon

The Washington Post takes an interesting look at the mortgage fraud phenomenon in the recent article, Housing Boom Tied To Sham Mortgages (Lax Lending Aided Real Estate Fraud)
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Kansas City Real Estate Operator Under Investigation

The Kansas City Star reports, in two recent articles, their investigation of transactions involving indicted real estate wheeler dealer Ray Zwego; transactions The Star believes may cost dozens of sellers, buyers and tenants millions of dollars in losses from bad loans and foreclosures. According to The Star, the transactions involved:

• Used inflated appraisals to jack up prices on at least two dozen homes and obtain loans far exceeding the properties’ values,
• Used the credit ratings of "straw buyers" to get an estimated $18 million or more in mortgages through his . The straw buyers often were left "holding the bag" on unpaid loans when Zwego failed to make mortgage payments, and
• Compromised portions of the Heartland Multiple Listing Service (MLS).

He was indicted in January with former Jackson County Executive Katheryn Shields and her husband, Philip Cardarella, who are accused of inflating the value of their home in Kansas City to $1.2 million in an effort to defraud lenders. Zwego stood to net $414,000 in “management fees” in the sale, according to the indictment.

Reportedly, Zwego’s operation is only one of at least five metro Kansas City real estate operator groups that the local FBI is investigating. For more on The Star's investigation and Ray Zwego, see:

• Dealmaker cuts a path of financial anguish (no longer available online), and
• Zwego’s history of wheeling, dealing (The real estate, car and mattress salesman has a long rap sheet) (no longer available online).

Investor Alleges Fraud In Federal Lawsuit

Dunn, North Carolina's The Daily Record reports that a Virginia woman filed an amended lawsuit last month in a North Carolina Federal Court alleging that a group of 12 area citizens including an attorney, a builder, a paralegal and a loan officer engaged in a mortgage scam that cost her thousands of dollars. She accused the group of selling her homes for more than the properties' fair market value, buying homes in her name without her knowledge, and taking kickbacks.

Those being sued are: law firm Spence and Spence P.A., attorney Robert Spence, employee Sylvia Pickard, paralegal Patsy Narron, investors Mark Lowery and Spencer Jenkins, loan officer Annetha Dunn, builders Elizabeth and Eldon Standridge, builders Gregory and Elizabeth Johnson, Rodney Taylor, Carol Daniels, and Fremont Investment and Loan.

There are no criminal indictments to date in this case; the Attorney General's Office has reportedly been notified.

To read more, see Mortgage Scam Alleged In Federal Lawsuit.

To see the full details of the allegations as set forth in the Federal lawsuit, see Complaint - Higgins vs. Spence & Spence, P.A., et al.
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Massachusetts AG Going After Foreclosure Rescue Operators

Massachusetts Attorney General Martha Coakley has announced the filing of two companion civil lawsuits against a ring of 19 individuals and companies allegedly running a foreclosure rescue business who have allegedly deceived financially strapped homeowners into signing away their homes and stripped the equity out of the homes through:

• inflated mortgages,
• false fees for fictitious services,
• false certifications by closing attorneys,
• subsequent resales of the homes amongst themselves.

According to AG Coakley:

• "These defendants, many of whom were professionals, preyed on vulnerable homeowners facing foreclosure to deceive them out of their home and their life savings ... With the number of foreclosures increasing daily, this type of mortgage fraud is particularly troubling and we will take aggressive action to ensure that this predatory conduct does not continue in Massachusetts."

Named as defendants are: Leo Desire, Sr., Primary Mortgage Resource, Inc., mortgage broker, attorneys James Alberino, Robert Marks, and Valerie Hanserd, Universal Plus Realty & Financial Services Inc. and Home Pride Management, Leo Desire Jr., President and Treasurer of Home Pride Management, Robin Hayes, sole officer, owner and director of Universal Plus Realty & Financial Services Inc., Dr. Joel Charles (d/b/a Sourie Corp.). In addition, Louis R. Joseph, Pierre N. Joseph and his wife Daphne Mompoint, Robens Joseph, Paul A. Joseph, Jean N. Joseph, Advie Charles, Neville Francis and Marie Betey Mereus, all property buyers, were also named as defendants.

There is no indication whether the Massachusetts AG's office intends to bring criminal prosecution against these defendants. Depending on (1) what records are turned over and (2) what statements are made by the defendants during the discovery stage of the litigation, a subsequent criminal prosecution by the state is always an option. It is also unknown whether the office of Massachusetts U.S Attorney Michael J. Sullivan has its eye on this case.

For more, see Attorney General Coakley Files Lawsuits Against Individuals and Businesses Involved In Foreclosure Rescue and Mortgage Fraud Ring.

For a related post, see Massachusetts Attorney Involved In Equity Stripping / Rescue Operation Loses Beacon Hill Landmark In Foreclosure Sale.

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For other cases where U.S. Attorneys have brought criminal prosecutions against foreclosure rescue operators containing somewhat similar facts , see:

U.S. Attorney - Central District of California

• U.S. vs. Valenzuela - Plea Bargain Agreement; Stipulated Statement of Facts, pages 15 through 21, describing the foreclosure rescue deals, the subsequent mortgaging of the victims' homes using straw buyers, and the ultimate default on the newly obtained mortgages
• Two Arrested On Federal Fraud Charges In Foreclosure Scam (USDOJ Press Release 11-30-05)
• Three Defendants Added To Federal Indictment In Foreclosure Scam (USDOJ Press Release 7-20-06)
• Two Plead Guilty In Combined Foreclosure Rescue / "Straw Buyer" Mortgage Fraud Scam.

U.S. Attorney - Middle District of Florida

• Indictment - U.S. vs. Moumneh, et al., a prosecution involving a foreclosure rescue operation and bank fraud,
• Tampa Federal Jury Convicts Five Persons In Home Equity / Bank Fraud Scheme (USDOJ Press Release 3-29-07)

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Two Arrested For Purchasing Home With Stolen I.D.

Fanny Velasquez and her daughter Paola Garzon were both arrested by the San Bernadino County, California District Attorney’s Real Estate Fraud Unit and accused of purchasing a home and financing it with someone else's stolen identity, according to an article in the Victorville Daily Press. They were charged with identity theft, false impersonation and forgery.

They purchased the home in December 2003 and apparently lived in it for over three years. Reportedly, in December 2004, the victim learned of the crime when she was turned down for financing when trying to buy her own place because her credit report showed she already owned a home. The arrest of the suspects went down this past Monday. For more, see Two arrested for housing fraud.
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Help Homeowners Dump Subprime Loans, Change FHA Guidelines, Urges NAR

As a way to help homeowners stuck with subprime mortgage loans on their homes, the National Association of Realtors is strongly urging HUD to change FHA rules and waive the requirement that a homeowner’s mortgage be “current” in order to refinance into an FHA loan product. The idea is to enable homeowners to unload the subprime mortgages encumbering their homes by refinancing them utilizing FHA insured mortgages. The goal is to help homeowners who are currently finding it difficult making their payments after subprime rate adjustments avoid losing their homes. For more, see NAR urges HUD to revamp FHA program.
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Mortgage Servicer Donates 200K To Foreclosure Prevention Counseling Group

The Homeownership Preservation Foundation recently announced that it had received a $200,000 from Ocwen Loan Servicing, LLC to help the foundation’s efforts in preventing foreclosure. HPF operates one of the nation’s largest national consumer hotlines for troubled borrowers; a 24 hour a day, 7 day a week hotline at 888-995-HOPE, and online at www.995hope.org. For more, see Ocwen Donates $200K to Foreclosure Prevention, reported by Housing Wire.
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Philadelphia Foreclosure Prevention Program Gets Heavy Support

A new program designed to help Philadelphia, Pennsylvania homeowners avoid foreclosure is being kicked off with the support of The Urban League of Philadelphia, together with The National Urban League and the Homeownership Preservation Foundation, according to a report at Housing Wire.

As part of the joint effort, the National Urban League will support the promotion of the Homeownership Preservation Foundation's 888-995-HOPE hotline, which is available 24/7 nationwide to homeowners concerned about facing foreclosure, either now or in the near future. Callers receive free, confidential advice from expert counselors from HUD-approved counseling agencies. Those who are in need of additional face-to-face counseling and education will be referred to the Urban League affiliate in their city. For more, see Philly Mayor Throws Support Behind City-wide Foreclosure Prevention Program.

Victim Of Foreclosure Rescue Operator Loses Home; Vows To Keep Fighting

The Orange County Register reports that the home of an Anaheim woman, victimized by a Southern California foreclosure rescue operator, was sold at a foreclosure sale to the lender holding the mortgage on the home; it was the only bidder for the home. She currently has a civil lawsuit pending whereby she alleges that:

• she and her family were victims of a forged deed transferring the property to a sham buyer,
• the original loan on the home was paid off by a new mortgage,
• she never received the excess cash that was issued in the new loan, and
• since she never authorized the new loan, the lender has no right to evict her or her family.

Attorneys involved in the case agree that the lender may not be able to recover the full amount of its loan, but could be entitled to reimbursement for paying off the homeowner's original loan. For more, see Anaheim family loses title to home (A woman claiming to be the victim of a mortgage scam said the lender repossessed the home last week. She vowed, however, to contest the change in ownership)

For a related story, see Let the borrower beware (Officials say a growing number of 'foreclosure rescue scams' are targeting property owners who fall behind on their loans, siphoning off their equity and causing them to lose their houses)

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The Subprime Mortgage Problem From Various Prospectives

A recent MSNBC article gives an interesting overview of the subprime mortgage lending problem. It reports the story of a New Jersey couple who is currently struggling to survive a negative amortization mortgage. It also reports of a Virginia couple who luckily dodged a bullet a couple of years ago when shopping for a home.

Also reported in the story are comments from the head of HUD's Inspector General's office, a state regulator, a couple of real estate appraisers, and Texas civil trial lawyer David Berg, who is reportedly gearing up to represent defrauded consumers who were duped into subprime mortgages.

For more, see Special Report: The Mortgage Mess.
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Kentucky Fights I.D. Theft With "Free Shred Day"

In an effort to combat identity theft, a "Free Shred Day" is being held in Frankfort, Kentucky today and again on April 27, allowing citizens to bring sensitive documents for shredding, reports The State Journal. For more, see The shredders are coming to fight identity theft.

For a related shredding article, see Internet age means erasing paper trails (Shredding event a good reminder that amidst identity theft and on line scams, wise people cover their tracks).

Go here for more on Community Shredding Days to fight identity theft.
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