Monday, August 06, 2007

Representing Homeowners In Foreclosure Rescue Deals

(originally posted 8-3-07)

For those of you in the practice of law, as well as those who work with attorneys (ie. paralegals, law clerks, private investigators doing class action work, law students, and others) who are looking for a clear, cogent reference dealing with the legal issues involved in representing (or working with those who represent) victims of foreclosure rescue, sale-leaseback deals, you might want to check out the following two works that I found floating around the the Internet.

1) The first source of reference is simply identified as Chapter 11 - Foreclosure Rescue Scams that can be found on the website of CALegalAdvocates, A Project Of The Legal Aid Association Of California.

2) The second source of reference is also titled Foreclosure Rescue Scams, a 77-page work appearing on the website of the Office of the Washington State Attorney General. For the MS Word version, see Foreclosure Rescue Scams - doc.; or for the html version, see Foreclosure Rescue Scams - html.
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For the longer version of this post, see Representing Homeowners In Foreclosure Rescue Deals, on the companion blog, The Home Equity Theft Reporter Cases & Articles.

More On Arizona "Green Pools," Weeds, & Trashed Vacant Foreclosure Homes

The Arizona Republic reports:
  • "City code enforcers and county mosquito patrols across the Valley say they're seeing a spate of weeds and green pools in places they never used to: newer neighborhoods with higher-priced homes. Increasing numbers of these properties are being abandoned by cash-strapped owners, leaving messes and headaches for neighbors and municipal officials. Chandler real-estate agent Liz Morganroth said she dons a disposable face mask before she inspects new foreclosure listings but can't always escape the stench."

For more, see Homes left behind (Neighbors, communities stuck cleaning up after).

Illinois AG Brings Civil Suit Against Foreclosure Rescue Service

(revised 8-17-07)
From the Illinois Attorney General:
  • "Attorney General Lisa Madigan [last Thursday] filed a lawsuit against a mortgage foreclosure rescue company for violating Illinois ' recently-enacted Mortgage Rescue Fraud Act, as well as the Consumer Fraud and Deceptive Business Practices Act. Madigan's lawsuit, filed against American Housing Authority, Inc., a Nevada corporation, and its president, Brandon Roberts, alleges that the defendants defrauded homeowners by falsely promising to help them escape foreclosure, taking their money [$1,400] as a fee, and then failing to provide any real help. [...] In the complaint, Madigan's office asks the court to order the defendants to pay restitution to defrauded homeowners and to stop all deceptive business practices. The suit also seeks a civil penalty of $50,000 and additional penalties of $50,000 for each violation found to have been committed with the intent to defraud."

For more, see Illinois AG Press Release - Madigan Sues Mortgage Company For Deceiving Homeowners In Foreclosure (Attorney General Seeks to Shut Down Business and Obtain Restitution for Homeowners).

For a copy of the lawsuit (thanks to the Illinois AG's office), see State of Illinois vs. American Housing Authority, or if there's a problem with the link, drop me a line at HomeEquityTheft@yahoo.com (be sure and put "Illinois vs. American Housing Authority" in the "Subject" line) and I'll e-mail you a copy.

See also Illinois AG Sues Mortgage Company For Deceiving Homeowners In Foreclosure (All American Patriots).

Go here for other posts on American Housing Authority and Brandon Roberts. upfront fee

Indiana Feds Indict Closing Agent In Escrow Scam; Customer Loses Home

The Times (Munster, Indiana) reports that a federal grand jury indicted Therese Hundley, 52, of Lowell, Indiana on two counts of mail fraud, Hundley stands accused of mailing fraudulent checks worth more than $35,000. Reportedly, she operated Statewide Escrow Services in Crown Point, and, according to the story:
  • "is accused of taking money and checks for paying real estate tax and homeowner insurance bills and then not paying the taxes or the bills. Customers' insurance was cancelled, and Lake County sold a customer's home for nonpayment of taxes ..."

For more, see Lowell resident faces mail fraud charges.

Go here for stories on other alleged escrow agent mishandling of funds. sneaky slick escrow agents alpha

Sunday, August 05, 2007

Ex-Real Estate Investment Guru Sentenced To 7+ Years In Tax Fraud

The Los Angeles Times reports the following out of Seattle, Washington:
  • "Former investment guru, author and speaker Wade Cook has been sentenced to more than seven years in prison and ordered to pay millions in back taxes on underreported income as part of a tax evasion case. Cook was sentenced Thursday in federal court for repeatedly defrauding the Internal Revenue Service."

Reportedly, Cook shut down his business operations in February 2003, a month after his publicly traded company, Wade Cook Financial Corp. of Tukwila, Washington, filed for Chapter 11 bankruptcy protection. His net worth had been estimated at over $200 million at one point. For more, see Investment guru sentenced in fraud.

Clearwater Couple File 13 Chapter 13s To Keep Home

WTVT Channel 13 in Tampa, Florida reports on the Joyce and Bryan Maryon of Clearwater and their odyssey in the Federal Bankruptcy Court. According to the story:
  • "Court records show they’ve taken turns filing Chapter 13 and have skipped mortgage payments while living in a large two-story home in the upscale neighborhood of Coachman Ridge. FOX 13 first took a close look at the Maryons’ bankruptcy records back in 2004. Each time one of them filed Chapter 13, it automatically stopped the bank from foreclosing on their house. But records also show the couple never followed through on a plan to pay off their debts. In May of 2004, the Maryons owed $188,000 on their home [and] had together filed Chapter 13 a total of 10 times. According to the court trustee in May of 2004, they hadn't made a payment since 1999."

Reportedly, they have since refinanced their home and, according to the story, "they now owe more than $500,000 on that same house and together have filed chapter 13 a total of 13 times."

For more, watch investigative reporter Doug Smith's Fox 13 TV news report (click screen to activate video) or, to read the online report, see Thirteen times for Chapter 13.

Go here for other posts on serial bankruptcy filings. SerialBankruptcyFilings

Are Foreclosures Flaming The Fires Of Arson?

The following stories are on homes facing foreclosure that were recently paid visits by local fire departrments.

1) In Michigan, the Midland Daily News reports that Edenville Township firefighters got a call to battle a blaze at an unoccupied mobile home home recently. Neighbors said the home was being foreclosed on and that the people who had lived there recently moved out. The cause is being investigated. Source: Maplecrest Drive house fire Thursday under investigation.

2) In upstate New York, The Post Star reports that investigators are looking into whether a dispute over ownership of a home destroyed in a fire determined to be arson played a part in the fire. At the time of the fire, the home was unoccupied for eight months and in foreclosure, according to the attorney for the foreclosing party. For more, see Fire deemed arson.

3) The Colorado Springs Gazette reports that a homeowner was charged with first-degree arson for allegedly setting fire to his Woodland Park, Colorado home on the same day he was to be evicted in a foreclosure. For more, see Man accused of burning his home (Woodland Park resident was to be evicted that day).

4) In North Dakots, The Bismarck Tribune reports that, according to a Bismarck fire investigator, a fire to a home earlier this week "may have started under "suspicious circumstances" but later said it appeared more "unusual" than suspicious." Coincidentally, however, the home was in foreclosure and was sold at auction this past Wednesday (8-1-07); the lender (Wells Fargo) got stuck taking the property back. For more, see Fire only causes smoke damage to Bismarck home.

Miscellaneous Foreclosure Related Stories

Colorado Cops Bust Boulder Beer Bash
Possession of a vacant home in foreclosure was taken over by over 30 individuals (mostly teenagers) on a recent Saturday night and used to host a keg party, according to a story in The Denver Post. Boulder County Sheriff's deputies broke up the party and cited thirty one people for trespass, twenty seven of whom, under the age of 21, were also cited for underage possession and consumption of alcohol. For more, see Boulder keg party busted.

Homeowner Facing Foreclosure Leaves 20 Pounds Of Meat In Sink Before Abandoning Home
DSNews.com reports on the experience that an Ocala, Florida real estate agent recently had when, along with a locksmith, she succeeded in gaining entry into her new listing, a bank foreclosure. One of the more "noticeable" features in the home was the 20 pounds of meat that was left sitting in the sink for a couple of months, presumably by the former owner (a house warming gift for the new owner, no doubt). For more, see REO Horror Story: Not Quite A Meat Locker.
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Foreclosure Eyesores Throughout Modesto, California
The Modesto Bee ran a story asking why some mortgage lenders that take possession of a foreclosed home let the yards become complete eyesores. For more, see Whoever holds the mortgage should clean up the yard.

Vacant Foreclosures Throughout Dallas County, Texas
WFAA-TV Channel 8 in Dallas - Fort Worth reports on the effect on neighborhoods throughout Dallas County as a result of vacant houses due to foreclosure. For more, see Foreclosures leave behind empty homes. or go here to watch the Channel 8 TV report, 'Foreclosure Crisis'.

Vacant Foreclosures In Aurora, Colorado

The Aurora Sentinel reports: "In recent years, homeowners throughout the city have lost neighbors to foreclosures, but they also fear their neighborhoods have lost value, safety and beauty as more and more empty properties inhabit each block." For more, see Nobody's home (When foreclosures come, the burden of maintenance, cleaning often goes ignored).

Homeowner Facing Foreclosure Killed In Accident At His Going-Away Party

The Grand Rapids Press reports:
  • "Gary Bregg's family threw him a farewell party as he prepared to leave Michigan to drive trucks in an attempt to save his family's home from foreclosure. But Bregg, 50, was killed ... during the party at a family member's home on Cascade Road SE when he struck a drainage ditch while riding a motorcycle about 4 p.m. Rescue efforts by family friends and medical responders were unsuccessful. Bregg was pronounced dead at the scene."
For more, see Man dies at going-away party. teen parties vacant homes

Saturday, August 04, 2007

Fort Lauderdale-Area "Contractor Cops" In Pursuit Of Contractor Fraud

WTVJ-TV Channel 6 in South Florida recently ran a story of the duo working for the Broward County Sheriff's Office Contractor Fraud Unit who are sometimes referred to as "Batman & Robin" for the work they do in going after home improvement and repair contractors operating on the wrong side of the law. According to the Channel 6 online story:
  • "A special team of detectives has been dedicated to going after contractors that customers have complained about in South Florida. [...] [Detective John] Beach and Deputy Dan Belyeu work together to stop contractors who do poor or illegal work or contractors who take the money and run. In addition to working for the sheriff's office, Beach is also a general contractor and Belyeu is an electrician. "It does lend a certain benefit to John and I having those capabilities to walk out and immediately recognize someone who may not be a licensed contractor," Belyeu said. Beach said he does specialized investigations into contractor fraud, and being a licensed general contractor gives him insight to the job."

For residents of Broward County, the Broward County Sheriff's Office Contractor and Licensing Fraud Unit can be reached at 954-659-3526. For the Channel 6 TV report, watch Contractor Cops.

For the online report, see Broward Detectives Investigate Bad Contractors.

Go here for the Broward Sheriff Office's Contractor Licensing and Fraud Unit, and go here for Florida's construction lien laws (sections 713.001 - 713.37).

Go here for other posts on contractor arrests by Broward Sheriff's Office.

California Investigators Sting Six More Unlicensed Contractors

In South Lake Tahoe, California, the Tahoe Daily Tribune reports another undercover sting last week that netted investigators six unlicensed contractors. It marked the third sting operation by authorities in July in the Angora disaster zone that was ravaged by fire several weeks ago. Earlier in July, several people were arrested for not having the correct permits to haul hazardous waste, while a sting July 4 nabbed a couple of people for not having a contractor's license. For more, see Six arrests made in contracting sting.

New Hampshire Contractor Guilty In Scamming Senior In Home Repair Ripoff

The Manchester Union Leader reports:

  • "A local contractor was convicted of scamming a 72-year-old Manchester man of $4,000 and failing to re-roof his house as promised, Attorney General Kelly Ayotte announced ... . After a trial in Hillsborough County Superior Court, the state found George Sideris of Manchester committed an unfair or deceptive business act or practice in violation of the New Hampshire Consumer Protection Act, Ayotte said. The Elder Abuse and Financial Exploitation Unit of the Attorney General's office reported that Sideris took the $4,000 as a deposit to buy building materials for the job, then failed to perform the work and never returned the money despite the man's repeated requests to do so."
For more, see Contractor convicted of defrauding elderly man.

Go here , go here , and go here for other posts on elder financial abuse. yak elder financial abuse

North Florida Unlicensed New Home Contractor Charged In $700K Scam

WESH-TV Channel 2 (Orlando, Florida) reports:
  • "The Flagler County Sheriff’s Office has busted an unlicensed contractor that they say stole hundreds of thousands of dollars from would-be homeowners in Palm Coast. At least 18 people have been victimized by this scheme, WESH 2 News reported. Investigators said Gregory Bleyl illegally operated Osprey Custom Homebuilders and took advantage of homebuyers. Victims who signed contracts with Osprey Homes lost at least $700,000. Empty lots sat for months, and some victims lost the construction money. Some also lost their property and are going into foreclosure."

For more, watch the WESH-TV report, or to read the online report, see Unlicensed Contractor Schemes Homebuyers Out Of Thousands.

For a story update, see Friends call jailed contractor 'good guy' (8-17-07 - Daytona Beach News-Journal).

Connecticut Contractor Charged With Fraud; Home In Ruins

Hartford, Connecticut TV station WFSB Channel 3 reports on contractor John Nelson, who took over $40,000 to repair the home of a Bantam, Connecticut couple, but never performed the work. The home is now in ruins, as Channel 3 I-Team reporter Eric Parker reported that all that remains of the couple's home are about half-a-dozen beams. Nelson has now been charged in another incident with a different homeowner in a neighboring town for taking money for home improvements and not doing the work. For more, watch Channel 3 TV report, or to read the online article, see Accused Contractor Faces Charges (Couple Says Home Lost After Contractor's Failed Work).

Friday, August 03, 2007

L.A. Feds Indict Two Realty Agents, Two Appraisers In $40+ Million Loan Fraud

(revised 8-4-07; 8-8-07)
The Los Angeles Times reports:
  • "Two high-profile Beverly Hills real estate agents and two licensed appraisers were indicted Thursday on charges of joining in a sophisticated scheme that lenders said cost them more than $40 million in fraudulent loans for homes in some of Southern California's most expensive neighborhoods. Joseph Babajian and Kyle Grasso, agents with Prudential California Realty, along with appraisers Lila Rizk of Trabuco Canyon and Scott Robinson of Dana Point, were each indicted on multiple counts of conspiracy, bank fraud and loan fraud. [...] Babajian and Grasso are also charged with money laundering."

For more, see Brokers to Westside elite accused of fraud (2 Beverly Hills agents and appraisers are indicted in a scam that allegedly inflated home prices and loan amounts).

For the L.A. Times follow-up story, see Two Beverly Hills agents suspended by brokerage.

Prosecutors filed a two part indictment. For Part 1, see U.S. vs. Babajian, et al - Part 1 (22 pages, .83 MB approx.).

Unfortunately, Part 2 of the indictment is a little too large for me to upload on this humble blog of limited resources. If you want Part 1 & 2, you can drop me an e-mail at HomeEquityTheft@yahoo.com and I'll be glad to send it to you (Be sure to put the words "U.S. vs. Babajian, et al - Part 2" in the subject line).
Alternatively, you can go directly to the document link on the U.S. Courts' PACER website and get it there directly (link #2 - "Part II Indictment" - 63 pages; approx 2.5 MB - $2.40 cost). PACER registration required.
Go here for the official FBI Press Release - Westside Real Estate Agents And Appraisers Indicted In Multi-Million Dollar 'Property-Flipping’ Fraud Scheme.
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Go here for all posts on this story.

FTC, Mortgage Servicer Modify Settlement Agreement

The Federal Trade Commission reports:
  • "The Federal Trade Commission [Thursday] announced that it has reached an agreement with [Select Portfolio Servicing, Inc. - the former Fairbanks Capital Corp.] to modify certain terms of a 2003 court settlement, providing substantial benefits to consumers beyond those in the original settlement, including account adjustments and reimbursements or refunds of fees paid in certain circumstances."

The settlement relates to charges brought by the FTC several years ago of abusive and predatory mortgage servicing practices allegedly engaged in by the former Fairbanks Capital Corp.

For more, see FTC Press Release - FTC, Subprime Mortgage Servicer Agree to Modified Settlement (Agreement With Former Fairbanks Capital Provides Additional Consumer Benefits).

For a copy of the settlement, see U.S. v. Select Portfolio Services - Modified Stipulated Final Judgment And Order (12.4 MB, available online courtesy of the FTC).

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra

Plea Deal In The Works For Foreclosure Rescue Operators?

In Northern California, The Modesto Bee reports:

  • "Two men awaiting trial on charges of swindling people out of their homes took the uncommon step Wednesday of waiving their right to a preliminary hearing on similar additional counts. A possibly pending plea bargain and civil settlement factored into the waiver by Lonni Ashlock and Ronald Buhler, defense attorneys said Thursday. [...] Witnesses from throughout Stanislaus County at a fall hearing said they faced foreclosure when Ashlock and Buhler gained their confidence, then duped them into signing over deeds for pennies on the dollar."

For more, see Plea deal for men accused of fraud? (Prosecutor tells judge both sides talking in Ashlock-Buhler case).

For prior reports on these defendants, see:

New York AG Charges Man With eBay House Flipping Scheme

(revised 8-23-07)
The Niagara Gazette reports:
  • "A Town of Niagara [New York] man was charged Thursday with defrauding investors through an eBay house-flipping scheme involving properties across the region. Joseph Furan, 39, ... was charged with fraud by state Attorney General Andrew Cuomo. Furan is accused of falsely representing himself as a property flipper, or someone who buys homes with the intent to renovate them and sell them at a profit, according to a release from Cuomo’s office."

For more, see Town of Niagara man charged in housing scam.

Go here for New York AG Press Release (Cuomo files suit against Niagara Falls man who tried to sell bogus properties in and around Buffalo).

For follow-up stories, see:

Investor defends actions (Accused Town of Niagara man denies some charges from state; Falls woman says he swindled her).

Property investor in court today (Attorney general’s suit alleges Joseph Furan defrauded homebuyers on Internet) (8-22-07).

Loan Overpayment Trips Up Mortgage Fraud / Identity Theft Scammer

WRC-TV Channel 4 in Washington, D.C. reports:
  • "A Fairfax County [Virginia] woman has pleaded guilty to stealing someone's identity to buy a house. Elizabeth Cabrera-Rivera was having trouble getting a mortgage. So when she happened to find Jose Lara's lost wallet, she used his identity to buy a $419,000 townhouse in Springfield. Cabrera-Rivera made the payments on time. In fact, she paid too much. Lara found out about it when he got a check in the mail for almost $2,800. The bank said it was an overpayment."

Source: Woman Uses Lost Wallet To Buy House (Stolen Identity Victim Gets Overpayment Check In Mail).

For the full story, see Stolen ID leads to mortgage fraud (Con-artist uses identification to buy a $419,000 house, with no money down) (The Washington Post - reported at MSNBC).

Thursday, August 02, 2007

California Real Estate Broker Cops Plea To $43+ Million Swindle

The San Jose Mercury News reports:
  • "A Hillsborough man who preyed on the elderly through a real estate scam and swindled many people out of their life savings pleaded no contest Tuesday in a Santa Clara County courtroom to 173 felony counts, and may spend the rest of his life in prison. Michael Schneider, 45, took more than $43 million from his victims, according to the Santa Clara County District Attorney's Office. The complaint was filed jointly by the district attorney's offices in Santa Clara and Santa Cruz counties. [...] Some of the elderly victims "don't have a life anymore," said Saratoga resident Saeed Fazeli, a retired engineer who says he lost about $6.8 million in the scam. [...] Fazeli estimated that more than 50 people lost their life's savings.

Schneider's attorney, Daniel Horowitz claims that there is currently available enough funds in the bankruptcy court to return to victims about 30 percent of what they lost, but that "bankruptcy attorneys are gutting all the money." For more, see Man enters no contest plea in real estate scam.

See also, Broker pleads no contest to 173 felonies (Man could face up to 169 years in alleged pyramid scheme).

New Jersey Social Worker Pleads Guilty To Scamming Senior In Home Sale Proceeds Ripoff

In New Jersey, the Bridgeton News reports:
  • "A 45-year-old Egg Harbor man pleaded guilty [last week] to stealing more than $70,000 from an elderly nursing home patient. [Alexander] Gotay, a Cumberland County social worker, admitted ... [that] he stole approximately $70,000 from an elderly patient, who has since died, who had resided at Lincoln Specialty Care Center in Vineland. He admitted withdrawing the victim's life savings from her various bank accounts and stealing the proceeds from the sale of her former residence."

For more, see Social worker pleads guilty to theft.

Go here , go here , and go here for other posts on elder financial abuse. yak elder financial abuse

Pennsylvania AG Investigating "Short Sale" Flipping Scam

(revised 8-23-07)
The Pittsburgh Post-Gazette reports that the Pennsylvania Attorney General's office is investigating a residential real estate transaction involving a short sale, a quick flip, the alleged use of falsified double HUD-1 settlement statements, and possible mortgage fraud. The individual at the center of the deal is James Platts, of Easy Realty Solutions. Platts has, in the past, reportedly pleaded guilty to a dozen counts of fraud and theft in connection with the home building business he once ran, and he was indicted earlier this year on charges of tax evasion. He has also been the subject of complaints by dozens of couples in connection with other real estate transactions, according to the story. He has also reportedly been connected with a "rent-to-own" program offered to consumers. For more, see Confusion reigns in murky house sale.

For more on Jim Platts (and a similar operation he runs in Florida), see Company under investigation in Pa. seems to have a twin in Florida (Realty pitch sounds familiar).

Go here for other posts on James Platts.

Missouri Feds Indict Broker In Mortgage Fraud / Identity Theft Scam

The Kansas City Star reports:

  • "A federal grand jury [last week] indicted a Lee’s Summit woman in a purported scheme to defraud hundreds of thousands of dollars from mortgage lenders. Kimberly M. Davis, 42, was charged with eight counts of wire fraud, five counts of aggravated identity theft and one mail fraud count. Davis worked as a mortgage broker for two Northland firms between November 2003 and January 2005, according to court records. Prosecutors alleged that Davis illegally used the identities of three men to prepare bogus mortgage loan applications. She allegedly used the money to purchase two homes, prosecutors said."
For more, see Lee’s Summit woman accused of mortgage fraud, identity theft.

For KCTV Channel 5 reports on this story, watch Mortgage Broker Accused Of Fraud; or see Woman Accused In Mortgage Fraud Scheme (Kimberly Davis Charged With 14 Counts Relating To Identity Fraud).

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For story update, see The Examiner: LS woman guilty of mortgage fraud ("Kimberly M. Davis, 42, pleaded guilty [December 19, 2007] to charges contained in a July 24 federal indictment. Davis admitted to using the names, social security numbers and birth dates of three separate victims, without their permission, to purchase two homes in Lee's Summit.").

North Carolina Mortgage Broker Loses License

The Charlotte Observer reports:
  • "Matthews-based Hall Financial Services has lost its license and has agreed to reimburse consumers up to $250,000 in an agreement with the N.C. Commissioner of Banks and the N.C. Attorney General. [...] The NCCOB permanently pulled Hall Financial's mortgage broker license as well as the license of its owner James M. Hall. The agency's investigators found Hall originated mortgages without considering borrowers' ability to repay the loans and made misstatements on loan documents. More than 40 percent of loans originated by Hall Financial in a three-year timespan have gone into foreclosure."

For more, see Matthews mortgage broker loses license.

See also, U.S mortgage scammer losing own home to repay victims.

Go here for other posts on Hall Financial Services.

Wednesday, August 01, 2007

Beazer Homes Hitting More Turbulent Waters

(revised 8-11-07; 8-16-07)
The Charlotte Observer is reporting today:
  • "Shares of Beazer Homes USA Inc. fell sharply Wednesday amid worries about the ability of builders to pay their bills as subprime lending woes expand to other parts of the market and push housing prices down. [...] As for the [federal investigations] involving the company, Beazer Homes previously disclosed that it received a subpoena from the United States Attorney's office in the Western District of North Carolina, seeking the production of documents focusing on the company's mortgage origination services. The investigation followed a March Observer series that found Beazer's mortgage arm arranged larger loans than some customers could afford, among other problems. The Observer found Beazer's sales practices contributed to an unusually high foreclosure rate in its Mecklenburg developments."

For more, see Beazer shares plunge on rumors.

For later stories, see:

Go here for prior posts and links to The Observer's investigative reports on Beazer.

Massachusetts Establishes Pro Bono Foreclosure Hotline

The following announcement came out of Massachusetts on Tuesday:
  • "Massachusetts Attorney General Martha Coakley, in partnership with several bar associations, legal services organizations and advocacy groups, announced the establishment of a Pro Bono Foreclosure Assistance Hotline. Low-income Massachusetts residents who are facing foreclosure on their homes may call (800) 342-5297 or (617) 603-1700 and leave a message in the "foreclosure assistance" voice mail box. Each day, Legal Advocacy and Resource Center (LARC) will return the calls, determine how to best assist the caller and provide general advice. If the homeowner meets the eligibility criteria, LARC will refer the homeowner to Volunteer Lawyers Project (VLP), who will assign each case to a pro bono lawyer."

For more, see Massachusetts AG Press Release.

7 Charged In Alleged Cleveland-Area Straw Buyer Flipping Scam

The Cleveland Plain Dealer reports:
  • "Seven people indicted Tuesday on charges of racketeering and conspiracy of mortgage fraud are the first targets of a task force formed to crack down on predatory lending in Cuyahoga County. Among those accused in the 65-count indictment are an unemployed single mother who bought five Cleveland houses in one day and two area property managers who investigators say sold nine rundown houses at inflated prices."

Forged and falsified documents were used to secure subprime mortgage loans from Argent Mortgage Co., (the same mortgage company that provided the loans - believed to be $18 million - in the alleged home improvement scam in the Tampa-St. Petersburg area of Florida recently - see Loan scam hits dozens).

The alleged ringleaders have been identified as Joan Shinkaruk, owner of Elite Investors Corp. of Parma, and Daryle Rutherford of J. Rutherford and Associates, a Cleveland area investment property management company. Each face 49 felony counts. Also indicted were straw buyers Angela Brown, David Crosby and Marvin Hill, along with Michael Wojciechowski, a partner of Shinkaruk, and real estate broker Chad Cook. For more, see 7 indicted in Cuyahoga predatory lending crackdown.

Mortgage Servicer Wins Again On Right To Represent Lenders In Foreclosure Actions

Law.com reports:
  • "A federal judge has dismissed a proposed class action lawsuit filed by homeowners who cast doubt on the legitimacy of the nation's leading mortgage registration firm to represent lenders in foreclosures. U.S. District Judge Timothy J. Corrigan in Jacksonville, Fla., ruled that Mortgage Electronic Registration Systems did not misrepresent itself or hide its role as a nominee for mortgage lenders."

For more, see Federal Judge Rejects Homeowners' Lawsuit Against Major Mortgage Registry.

Three Tennessee Mortgage Brokers Sentenced To Federal Prison

The Chattanooga Times Free Press reports that former mortgage brokers Darren Todd Moyer (2+ years), Phillip Howard McKinnish (1+ year) and Jennifer Jewel Henson (1+ year) were sentenced on bank fraud charges in a Tennessee Federal Court last week. They were also ordered to pay $1.12 million in restitution. In April, they each waived their right to a jury trial and copped a plea instead. According to court records, the scheme involved the standard stuff - creating false and fictitious documents, preparing false loan applications and inflating the sales prices of multiple properties. For more, see Three sentenced for bank fraud.

New Defaults On Crisp & Cole Property Flips

(revised 8-5-07)
The Bakersfield Californian reports:
  • "Four new defaults have rolled in for former Crisp & Cole Real Estate partners and spouses in less than a week, public records show. The latest default notices add more than $1.7 million in primary loans to a growing list of Crisp & Cole-related properties in some stage of foreclosure."

This story update involves the suspected property flips in the Bakersfield, California area involving David Crisp, Carl Cole, business associates and family members. For more, see New defaults for Crisp, Cole, records show (Cole says one of homes has offer on it already).

See also, Crisp & Cole defaults: Nightmare on Ordsall Street (Agent: Crisp & Cole took advantage of weak for gain) (The Bakersfield Californian - 8-4-07).

Go here for other posts on the Crisp & Cole ongoing saga.

Tuesday, July 31, 2007

Ohio Feds Charge Two With Bank & Bankruptcy Fraud In Alleged Intrafamily Flipping Scam

The Toledo Blade reports:
  • "Federal prosecutors have charged two Lima, Ohio, real-estate investors with bank fraud and bankruptcy fraud, saying the men defrauded lenders of $2.2 million by “flipping” properties to inflate values, creating phony rental and purchase agreements, and failing to disclose the actual buyers and their debts. Charged in U.S. District Court in Toledo are Robert Frye and Matthew Ebbeskotte, who prosecutors say formed Skyway Partnership Investments LLC in 1999 and arranged for the purchase of 46 properties through falsified mortgage-loan documents. [...] Lima housing officials found “a pattern of purchases and foreclosures” that seemed suspect."

Not charged were the defendants' wives and parents, who allegedly also participated in the scheme. For more, see Bankruptcy fraud laid to 2 Lima men.

Misapplication Of Construction Funds Results In Consumers Paying Twice For Unfinished, Defective Homes

Florida Trend Magazine reports:

  • "The fallout from the downturn in Florida’s housing market: More than 21,000 new foreclosure cases in June alone — up 144% from a year earlier — and a skyrocketing number of complaints against home builders over construction defects. Meanwhile, home builders in financial trouble have simply abandoned hundreds of customers, many of whom end up paying twice. “Contractors and consumers had both better hold onto their chairs,” says one attorney."

Among other things, the story highlights the practice by some in the construction industry of accepting deposits from customers (new-home buyers as well as existing homeowners desiring home improvements) and/or drawing down on customers' construction loans, and using the proceeds for things other than building the home or home improvement. In some cases, the builder or general contractor will simply "go out of business," stiffing in the process subcontractors or materials suppliers for labor and materials already provided. This results in mechanics liens being placed on the property, ultimately resulting in the customer either paying twice for an unfinished or defective home (or home improvement) or risk losing his/her home or building lot.

For more, see Left in the Lurch (Florida has one of the highest foreclosure rates in the nation. But the downturn in the residential housing market has left plenty of other problems in its wake, including increasing numbers of construction defects).

For related stories, see:

Foreclosure Rescue Civil Lawsuit Reads Like A Federal Criminal Indictment

In reading through the recent class action lawsuit filed on behalf of three Maryland homeowners against Metropolitan Money Store and a number of others, the complaint reads much like a criminal indictment would read that was handed up by a Federal grand jury to a Federal prosecutor. For example:

1) reference is made to a "Foreclosure Reversal Program," which was the name that the defendants allegedly gave to the scheme they are accused of using to cheat financially strapped homeowners out of their home equity. The lawsuit describes this Foreclosure Reversal Program as "a criminal enterprise which was made up of an association in fact consisting of [several of the named defendants],"

2) the complaint accuses the defendants of "hav[ing] engaged in willful, systemic and widespread violations of the Federal Racketeer Influenced And Corrupt Organizations Act ("RICO"), ...",

3) accusations are made of payments of "illegal kickbacks and unearned fees", preparation of "false HUD-1s" by the two named title insurance agency defendants, and that the homeowners were "robbed blind",

4) the complaint alleges that "The systematic false representations on HUD-1 Settlement Statements in the transactions ... were designed to conceal the illegalities of the transactions, ..."

5) allegations are made of conduct constituting wire fraud and mail fraud, and that "the false HUD-1 Settlement statements were utilized to launder the money being paid to the RICO defendants for the purpose of evading taxes ..."

6) allegations are made of charging and collecting interest and compensation on the "Foreclosure Reversal Program" loans in an amount that violated state law.

The defendants in this case include two title insurance agencies which, among other things, allegedly acted as the settlement/closing agents in the foreclosure rescue transactions described in the lawsuit, and two title insurers, for their alleged failure to properly supervise the title insurance agents who issued the title policies and handled the closings.

The defendants in this case are: Metropolitan Money Store Corp.; Fordham and Fordham Investment Group, Ltd.; RTE Title & Escrow, LLC; Sussex Title, LLC - formerly known as Cap Title, LLC; Diane Linda Jones; Leticia Nicholls; Jamie Armand Clark; Joy Jenis Jackson; Kurt Fordham; Alexander Jamil Chaudhry; Valeria Tomlin; Jennifer McCall; Southern Title Insurance Corp.; Chicago Title Insurance Company; and fifty unknown individuals that are currently referred to in the lawsuit as John Doe #1 through John Doe # 50, inclusive.

For a copy of the complaint, see Proctor, et al. v. Metropolitan Money Store, et al. (no exhibits).

You can also go here for direct links to the lawsuit (76 pages - $2.40) and the 28 accompanying exhibits (50+ pages - $.08/page) on the U.S. Courts' PACER website. PACER registration required.

Go here for other posts on the Maryland foreclosure rescue class action, which now also covers those homeowners in Washington, D.C. and Virginia who were allegedly ripped off by the named defendants.