Houston Courts Handing Out Stiff Sentences In Mortgage Fraud Prosecutions

In Houston, Texas, the Houston Chronicle reports on the stiff sentencing going on in mortgage fraud cases. According to the story:

• As the meltdown of the subprime mortgage market plays itself out in Houston, prosecutors are getting some stiff sentences fighting fraud that grew from weaknesses in the industry.

***

• The mortgage-fraud defendants are winding up with more severe sentences than the Enron crew ... . The highest penalty meted out in Enron was the 24-year sentence for ex-CEO Jeff Skilling. But in the last month in Harris County courts, three people have been sentenced to 25 years in prison for mortgage fraud, and a fourth received a 40-year sentence.

For more, see Mortgage fraud cases yield tough sentences (Man received 40 years in prison for his role in skimming scheme).

Pennsylvania Man Cops Federal Plea In House Flipping Operation; Investigation Focusing On About 200 Deals Continues

In Erie, Pennsylvania, the Erie Times-News reports:

• [Robert L.] Dodsworth -- a central figure in [an] ongoing federal mortgage-fraud investigation in Erie -- pleaded guilty in U.S. District Court in Erie on Monday to felony conspiracy and money-laundering charges related to the probe. With the plea, Dodsworth, 60, became the first and, so far, only person to admit wrongdoing in the mortgage-fraud investigation, which the FBI, Internal Revenue Service and other agencies initiated in 2004.

• Dodsworth admitted to working with others to falsify mortgage applications for homebuyers, most of them poor and unsophisticated, who otherwise would have been unable to afford mortgages and buy houses.

• The investigation that included Dodsworth has focused on the sale of nearly 200 Erie homes. The FBI and other agencies have been looking at whether the sales involved inflated appraisals or other fraudulent information that led those buyers to pay far more than market value for their homes. Most of the sales occurred in low-income Erie neighborhoods, and most of the financing was arranged through subprime mortgages ... .

For more, see Guilty as charged (Restitution part of plea in mortgage-fraud case).

For more on this scam, see Money from suburbs helped finance inner-city fraud.

For story update, see Fraud probe figure seeks lawyer (Court appoints public defender for businessman) ("Another local businessman has been connected to the federal criminal probe of suspected mortgage and housing fraud in Erie. Several low-income homebuyers claim the businessman, Keith A. Rice, acted as an ad-hoc real estate agent when they purchased their properties. Rice, 49, last week requested that a federal public defender be appointed to represent him as part of a criminal case in U.S. District Court in Erie.").

Go here for other posts related to this story.

Pennsylvania AG Files Civil Suit Against Man For Bilking Consumers In Unlicensed Real Estate / Mortgage Activity

The Pittsburgh Post-Gazette reports:

• Pennsylvania Attorney General Tom Corbett yesterday said he would ask federal prosecutors to open an investigation into a North Hills real estate broker and his associates, saying James C. Platts and his company, Easy Realty Solutions, flagrantly violated state and federal laws. "This guy's a con artist. He just keeps shifting schemes," said Mr. Corbett, whose office had previously won fines against a Platts-operated rent-to-own scam.

• This time, investigators say he moved on to a wide-ranging home sales operation that falsified incomes to enable unqualified buyers to obtain mortgages, filed fraudulent liens against homes he was selling to extract money from the sellers, created fraudulent second mortgages and practiced law without a license. The liens, known as "lis pendens," were used to guarantee Mr. Platts a profit on sales because his real estate license had been revoked several years ago and he would not have been permitted to collect a sales commission.

The Pennsylvania AG filed a 54-page, 13-count complaint against Platts which noted that his deals frequently included duplicate and conflicting settlement papers, called HUD-1s. The suit asks the court to declare more than $1.2 million in second mortgages void; void an estimated 159 lis pendens that Platts recorded against various properties; and force Platts to refund defrauded parties in an estimated 115 home sale deals since 2004. The suit asserts that Platts engaged in the unlicensed practice of real estate and mortgage brokerage.

For more, see State going after real estate broker.

See also:

• Bradford Woods businessman accused in real estate scam (Pittsburgh Tribune-Review),
• Pensylvania AG Press Release - Attorney General Corbett announces lawsuit in Pittsburgh area real estate and mortgage fraud case,
• Man Charged In Pittsburgh-Area Mortgage Scheme (WTAE-TV Channel 4, Pittsburgh),
• State accuses real estate company president of W. Pa. scam. (The Associated Press).

For earlier reports on Platts, see:

• Confusion reigns in murky house sale,
• The impossible loan: The murky path to a couple's dream home,
• Company under investigation in Pa. seems to have a twin in Florida (Realty pitch sounds familiar),
• Pennsylvania AG Investigating "Short Sale" Flipping Scam.

Two Sentenced For Selling Elderly Couple's Home Out From Under Them

In Louisville, Kentucky, The Courier-Journal reports:

• Two of the four people involved in a scheme to sell a Cherokee Triangle home they did not own have been sentenced in U.S. District Court. Freddie Johnson, 39, and Marilyn Rainey, 60, both of Chicago, had pleaded guilty to aggravated identity theft and mail fraud in connection with two fraudulent loans on the home of Russell and Sally Riggs ... last November. The group managed to sell the Riggses' home -- without the couple's knowledge -- twice within a week. The Riggses have lived in the century-old home since 1966. Johnson was sentenced to more than six years in prison, and Rainey received more than two years in prison, according to U.S. Attorney David Huber's office.

***

• Russell Riggs, who is retired from a large law firm, and his wife were able to clear up the property's deed with the help of a few legal associates who contacted him after the story was in the local media.

For more, see 2 sentenced in home-selling scheme.

Upstate NY Man Sells Elderly Parents Home Out From Under Them

In New Windsor, New York, the Times Herald-Record reports:

• It took just five months for Paul Tartaglia Jr. to be arrested, spill his guts to police and shuffle off to state prison for selling his parents' house out from beneath them. Now comes the hard part for Paul Tartaglia Sr. and his wife, Angela: getting back their house.

• When their son took a plea-bargain in September, he pleaded guilty to grand larceny, which covered the money from the bogus home sale and money he took from a former girlfriend who bore him a son. Between all his victims, Tartaglia's on the hook for $338,000. But Tartaglia's plea didn't provide an explanation for how he stole the money. He didn't explain the sale of his parents' house.

• That leaves Paul and Angela Tartaglia mired in a civil suit with, among others, their son, a mortgage company, a bank, a title insurance company and a Bronx man who somehow received legal authority — called power of attorney — to act on behalf of the Tartaglias and sell the house on a placid block in New Windsor, where they've lived for nearly 40 years.

• Paul Tartaglia Sr. says he found out about the sale by accident earlier this year, when he went to Town Hall to pay a water bill and discovered it had already been paid by a complete stranger. The Tartagalias also found out that someone had taken out a new mortgage on their house.

For more, see House-selling scam leaves parents in bind.

For story update, see Fake legal form tangles case of home-sale scam (Times Herald-Record - 11-24-07).

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

Go here for other deed theft posts. deed theft zorro yak

Convicted Disbarred Lawyer Land Swindles Another While In Jail, Says Report

In Chicago, Illinois, the Chicago Tribune reports:

• A disbarred Berwyn lawyer awaiting sentencing for selling vacant lots that belonged to a Chicago church pulled off a similar scam while incarcerated in Cook County Jail, according to records and interviews. In the latest bogus transaction, Phillip Radmer sold property on the city's West Side that belonged to Providence-St. Mel School -- without the school's knowledge -- to a savvy real estate investor and developer.

***

• A Tribune investigation last year disclosed a series of complicated real estate transactions in which Radmer created dozens of sham corporations and phony buyers to steal more than 60 vacant lots from poor churches, non-profits and corporations. Following the reports by the Tribune, Radmer was arrested in June 2006 at his Berwyn home and has been in County Jail since.

For more, see Records show land swindler at it again -- from jail (Ex-lawyer sold lot belonging to school).

See also, Land swindler pulls off another scam while jailed.

For an earlier story on the theft of lots, see Report: Land Sold Without Church's Permission (cbs2chicago.com).

Go here for story update on Phillip Radmer.

Buyers Of Condo Conversions In Aging Buildings Beginning To Have Nightmares

In South Florida, the Miami Herald reports:

• Their first home should be their joy. But Michelle Fernandez and her fiancé, Efrain Uribe, are bitterly regretting buying a place from a developer converting a high-rise apartment complex into condos in North Miami Beach. Now, they say, they're stuck with shaking elevators, exposed pipes, badly stained hallway carpets, a flooded laundry room and even mold in the couple's air conditioning closet.

***

• Others who have bought condo conversions have discovered they're on their own to fix code violations, an aging infrastructure and faulty equipment. In some cases, that means the new condo associations are levying thousands of dollars in special assessments for repairs.

***

• Some new owners complain cities don't find code violations in converted buildings until after the developers have sold all the units, says state assistant condo ombudsman Bill Raphan. In fact, some developers did little more than cosmetic work while converting aging apartment buildings, he says.

• One woman [said] that she had to take out a $15,000 line of credit to pay a special assessment for repairs after she moved into her converted unit -- only to discover that her new condo association was planning another assessment to cover more work.

Once the condo owners in these old buildings (at least those who financed 70% or more of the purchase price) figure out that they now have little or no equity to salvage in their units, I suspect many will opt for "mailing in the keys" to the mortgage holder rather than having to foot the bill for stiff repair assessments. The mortgage holders will once again be left holding the bag; my condolences to those unit owners who paid cash.

For more, see New condo conversions bring broken promises (Unhappy owners are complaining about units in disrepair and faulty equipment) (when link expires, try here).

Go here for other posts related to the Miami condo market problem.

Notorious Scam Artist Cries In Court As Federal Judge Comes Down On Him With Both Feet

In Atlanta, Georgia, WXIA-TV Channel 11 reports:

• The now-infamous, confessed scam artist Matthew Cox, who once fancied himself sometimes as Robin Hood and other times as the evil Mr. Burns from “The Simpsons,” using elaborate mortgage fraud and identity theft schemes to bilk more than 100 homeowners and lenders in eight states out of millions of dollars, wept in US District Court in Atlanta Friday as he apologized to his victims and hoped for a merciful sentence. Instead, Cox was sentenced to more time than similar fraudsters receive -- 26 years in federal prison.

***

• Cox would steal a homeowner’s’ identity, and steal others’ identities, fraudulently obtain multiple mortgage loans on the same home, then take the money and run. The legitimate homeowner would lose his or her home and never get a dime in sales proceeds. The homeowner would also start receiving foreclosure notices. And multiple lenders would suddenly be coming out of the woodwork, all trying to take possession of the same house that they thought was security for the fraudulent loans each had given to Cox.

***

• Matthew Cox still hopes to make one more deal. Because he is cooperating with the feds in other mortgage fraud cases, he will be eligible to apply for a reduced sentence once those cases are adjudicated.

Go here to view the WXIA-TV Channel 11 video coverage. To read the online story, see Scam Artist Weeps, Gets 26 Years.

See also, Swindler Cox gets 26 years (Matthew Cox used stolen identities and mortgage fraud to reap millions). ("In his crime rampage through five Southern states, the 38-year-old rose to the top of the U.S. Secret Service list, committing so much fraud the FBI had trouble keeping an inventory of it all. In Tampa, it amounted to $8.6-million, involving 77 properties, mostly in Tampa Heights and Ybor City. In Tennessee, it totaled $2.35-million on 22 properties. Millions more were added to the tally in Georgia and the Carolinas.").

Go here for other posts on Matthew Cox.

Long Island Loan Originator At Center Of A Foreclosure Controversy

On Long Island, New York, Newsday reports on Aaron Wider, a Garden City mortgage banker who finds himself in the middle of a controversy involving over a dozen former customers who now find themselves facing foreclosure. According to the story, the:

• [h]omeowners say Wider sold them homes at inflated prices and arranged mortgages they could never afford. Of three cases examined by Newsday, two buyers were first-time homeowners. The third closed on a house while his wife was in a coma. She died the next month. In all three cases, the buyers -- motivated by a combination of optimism, naivete and desperation to own a home -- placed their financial future in the hands of someone they barely knew.

• In an interview, Wider said the homes were worth what the buyers paid for them and that he was serving his community by lending in an area, East Massapequa, that is underserved by mainstream banks. "Banks will not lend to the minorities in the neighborhood," Wider said. "Nobody will lend in that area." However, two of the three buyers interviewed by Newsday are white; one is Hispanic.

The story describes how a couple of the homeowners came about getting involved with Wider. In addition, at least in one case, what seems to be a technique not uncommon in foreclosure rescue and other real estate scams is reportedly used - the use of a "chaotic closing" - in which the homeowners being scammed feel pressured and intimidated by two or more of those present at the closing / settlement table into signing a pile of papers without reading them and, if represented by an attorney, the attorney representing them is provided to the homeowner by the alleged scammer.

For more, see Loan was too good to be true (if link expires, try here).

For a more extensive Newsday investigative report on some of Aaron Wider's real estate transactions, see Homeowners entangled in loan scheme (if link expires, try here).

For more on Aaron Wider, see GreenPoint Bank Lawsuit For $15 Million Claims Federal Bank Fraud ("International Mortgage Center Inc. and its CEO, Aaron Wider have filed a lawsuit in the Supreme Court of the State of New York/County of Queens against GreenPoint Bank seeking relief in the amount of $15 million ...").

Los Angeles Retiree Alleges Fraud In Suit To Unwind Foreclosure Rescue Deal

The Los Angeles Times reported some time back on the story of one victim of a foreclosure rescue deal. The story reports:

• When Eddie Baker Jr. retired in 2000, he found himself struggling to make the $1,100 monthly payments on his three-bedroom Los Angeles home and eventually fell behind on the $205,000 mortgage. Facing foreclosure, Baker, a devout Christian, prayed for assistance. And in June 2005, his prayers seemingly were answered in the form of an offer to help save him from foreclosure and credit ruin. But that offer turned into a nightmare instead. In May of this year, attorneys for Baker, 69, filed a civil suit in Los Angeles Superior Court against several co-defendants, alleging fraud related to the retired photo technician losing title to his home.

***

• [A]ccording to the court documents filed in May, defendant Timothy Barnett would assume Baker's home loan, pay the outstanding mortgage debts, maintain and restore Baker's credit and advance him $12,000. For doing this, Barnett would take control of the property and hold title for three years. In return, Baker agreed to pay Barnett about $1,000 a month for three years. Baker said Barnett promised to transfer the title back to him at the end of the third year, the documents assert. [Baker's attorney] said her client unknowingly signed away the rights to his home and his most valuable asset (currently valued at about $600,000, according to online valuation provider Zillow.com) to Barnett for $226,000.

Court documents stated that Barnett represented himself as a "man of God." Over time, trust was built, so when Barnett allegedly asked him to sign and initial the mountainous stack of documents, the trusting retiree signed without question.

According to Baker's attorney, Barnett then sold the home for $285,000. The home was then subsequently sold twice more between October 2005 and March 2007, once for $440,000 and once for $560,000, and refinanced multiple times without Baker's knowledge, despite Baker's right to buy back the property. At last check, the home is in foreclosure.

The following area Los Angeles-area consumer advocates commented for the story:

• Maritza Gutierrez, a supervising investigator for the Los Angeles County Department of Consumer Affairs' real estate fraud unit, said that from April to June, her section recorded about 50 cases involving alleged foreclosure scams.

• Cynthia Reed, Baker's attorney, said Public Counsel has about a dozen cases of alleged foreclosure fraud pending. "Two years ago, maybe we had one," she added. The pro bono group provides free legal services to residents who can't afford private representation.

• Equity thieves will offer people facing foreclosure a short-term loan to cover their debts or agree to refinance the loan, said Manuel Duran, an attorney with Duran & Flanagan in Los Angeles who has served as prosecutor in foreclosure scam cases. [...] "Many of my clients say they heard about foreclosure scams on TV but trusted the guy anyway. But when this happens, their equity gets stolen. In many cases, we can unwind the loan," Duran added.

Reportedly, Barnett pleaded no contest in 1997 to multiple felonies and was sentenced to state prison for defrauding over 20 people out of their money and their homes over a period of eight years. Most were elderly. For more, see It's scam season (Scrambling to avoid foreclosure, more owners are falling prey to rescue fraud).

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Bond Revoked For Los Angeles Area Foreclosure Rescue Operator Facing Criminal Charges; Allegedly Engaged In More Stripping Scams While Awaiting Trial

(original post 11-16-07)
After being released on bond and awaiting trial (originally scheduled for November 13, 2007) on criminal charges relating to an alleged foreclosure rescue, equity stripping scam that allegedly victimized more than 100 homeowners by stripping them of at least $12 million in home equity, Southern California foreclosure rescue operator Maria Juarez (aka Maria G. Juarez), has been charged again for allegedly engaging in additional equity stripping scams of homeowners facing foreclosure.

She was initially charged back in 2006 by being added as a defendant in a grand jury indictment that was originally handed up in 2005. She was facing charges along with the following four confederates (all from California): Martha Rodriguez, of Downey, Edward Seung Ok, of Torrance, Cynthia Valenzuela, of Downey, Vladimir Stefanovic, of Lancaster. By the summer of this year, her four confederates had agreed to plea guilty and were awaiting sentencing, pending Juarez' November 13 trial (presumably, they were all cooperating with prosecutors and prepared to testify against her).

A superceding indictment adding additional equity stripping charges against Juarez involving transactions occurring after she was released on bond was filed on November 1. Needless to say, she is now in the custody of the U.S. Marshal and is being held with no bail; her November 13 trial has also been postponed. Go here for earlier posts with links to media reports & FBI press releases relating to the initial charges.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Another Ohio Federal Judge Demands Docs In 27 More Foreclosure Cases; Warns Attorney "Don't Do It Again!"

(original post 11-17-07)
The New York Times reports:

• After the recent dismissal of 14 foreclosure cases by a federal judge in Cleveland, another federal judge in Ohio has given lenders 30 days to prove that they own the properties they intend to seize from troubled homeowners in 27 other cases. The second judge, Thomas M. Rose of Federal District Court, in Dayton, ruled Thursday that while the lawyer filing 26 of the cases had claimed his clients owned the properties at the time the foreclosures began, he had not submitted the necessary proof to the court.

• “Failure in the future by this attorney to comply with the filing requirements,” Judge Rose said, “may only be considered to be willful.” [ie. Do it again and I'll scorch you!].

***

• A recent study of 1,733 foreclosures by Katherine M. Porter, an associate professor of law at the University of Iowa, found that 40 percent of the creditors foreclosing on borrowers did not show proof of ownership. Such proof gives a creditor standing to foreclose against a borrower and is required by law. Judge Rose cited Ms. Porter’s study in his ruling.

For more, see Judge Demands Documentation in Foreclosures.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha

More On "Hijacking" Of Foreclosure Process By Mortgage Lenders

(original post 11-17-07)
Cuyahoga County, Ohio (Cleveland and surrounding municipalities) is one area that is reportedly taking a tremendous beating when it comes to its residents losing their homes to foreclosure. So when word got out that Federal Judge Christopher Boyko slammed Deutsche Bank National Trust Co. in a court ruling recently for attempting to foreclose on Cleveland-area homes without being able to provide the legal documentation demonstrating that it actually owned the mortgages, the Cleveland Plain Dealer chimed in with several pieces that ran in its publication. For those interested, see:

• Federal judge accuses mortgage lenders of hijacking foreclosure system for profits (Criticism joins wave of dismissed cases ),
• Judge's order trips up banks trying to foreclose (Judge insists on key document),
• Excerpts from Judge Boyko's comments on mortgage lenders,
• Judges are right to make lenders follow the rules before foreclosing on peoples' homes (an editorial) (Cleveland federal judge's ruling puts lenders on notice that the rules apply to them as well as to borrowers).

Some of the highlights from the Plain Dealer coverage:

• Boyko's colleague, Judge Kathleen O'Malley ... , threw out 32 foreclosure cases this week for the same reason.

• Stephen Bucha, chief magistrate of Cuyahoga County Common Pleas Court, has dismissed hundreds of foreclosure cases for not having paperwork. He said it can be time-consuming and expensive for lenders to produce and record the documents, adding, "They wait until they have to do it." Bucha said judges in his court, which has about 10,000 pending foreclosure cases, are studying ways to adopt the federal court's rule.

• In an interview Friday, U.S. District Judge Dan Polster said he expected more foreclosure cases dismissed in federal court, including from his own docket. [...] Polster said the court has become more vigilant in foreclosure cases because they are too one-sided. Many homeowners do not contest the foreclosure, so the lenders face no defense lawyers in court proceedings. "It's up to us to supervise it," said Polster. "When you're taking people's homes, it falls to the integrity of the court."

• It's true, even now, that the banks are free to refile the cases. But the symbolism of Boyko's well-reasoned and well-written ruling is huge. It puts investment banks on notice that although many of them suspended careful lending practices and other rules in the rush to buy and pool subprime loans into junky bonds and drive up profits at almost any cost, the courts won't be taking such holidays from their rules.

• In the frenzy to underwrite and sell these bonds, lenders got sloppy. It's inevitable that some won't be able to hand over the proper documentation showing which mortgages they legally hold. That means thousands of foreclosure suits stand a good chance of getting tossed out or at least delayed.

Go here to view Judge Boyko's Court ruling.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha

Federal Court Dismisses 14 Foreclosure Cases; Deutsche Bank Fails To Provide Proof Of Mortgage Note Ownership

(original post 11-16-07)
In Cleveland, Ohio, The New York Times reports:

• A federal judge in Ohio has ruled against a longstanding foreclosure practice, potentially creating an obstacle for lenders trying to reclaim properties from troubled borrowers and raising questions about the legal standing of investors in mortgage securities pools. Judge Christopher A. Boyko of Federal District Court in Cleveland dismissed 14 foreclosure cases brought on behalf of mortgage investors, ruling that they had failed to prove that they owned the properties they were trying to seize.

***

• [T]he Ohio ruling indicates that the intricacies of the mortgage pools are starting to create problems for lenders as well. Lawyers for troubled homeowners are expected to seize upon the district judge’s opinion as a way to impede foreclosures across the country or force investors to settle with homeowners.

***

• Saying that Deutsche Bank’s arguments of legal standing fell woefully short, the judge wrote: “The institutions seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance. Finally put to the test, their weak legal arguments compel the court to stop them at the gate.”

***

• Because most foreclosures proceed without challenges from borrowers, few judges have forced trustees like Deutsche Bank and Bank of New York to prove ownership by producing a mortgage note in each case. Borrower advocates cheered Judge Boyko’s ruling.

• The plaintiff’s argument that “‘Judge, you just don’t understand how things work,’” the judge wrote, “reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process.” The cases could be filed again in state court, however.

The court made clear that Deutsch Bank can refile these foreclosure cases with the appropriate documentation establishing proof of ownership of the mortgages and mortgage notes they are attempting to foreclose (assuming, of course, that they can actually find the physical paperwork - ie. the actual mortgage notes, assignments, affidavits, etc.; no photocopies).

For more, see Foreclosures Hit a Snag for Lenders (may need subscription; if no subscription, try here).

See also, Court Challenges Trust on Foreclosures (Federal Judge Tells Trust to Show Clear Mortgage Documentation in Foreclosures) (if link expires, try Federal judge tells trust to show clear mortgage documentation in foreclosures - same story, different headline).

Go here to view the Federal Court ruling.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha

Home In Foreclosure Goes Up In Flames; Purchased With 100% Financing Less Than Year Ago

In Lathrop, California, News 10 reports:

• Less than a year ago, the house at 16671 Ore Claim Trail in Lathrop sold for $650,000, but neighbors say they never saw anyone move in. Three weeks ago, the lender filed a notice of default against the owner. And on Monday night, an unusually violent fire blew out the windows of the home before the first firefighters arrived. Inside, they found the body of an unidentified man. [...] Property records show the house is owned by Emmanuel Sibug, who owes about $100,000 more than the home is worth.

***

• The fire appears to be the second bit of misfortune to strike the same family in the same neighborhood this year. On January 12, federal drug agents raided an indoor marijuana growing operation at 700 Pioneer Avenue, less than a half mile away. The former pot house is owned by Jesus Sibug. It remains vacant and still shows signs of the raid ten months ago. Both houses were purchased at about the same time using the same lender with 100 percent financing. News10 tried contacting members of the Sibug family. A woman who answered the phone at a Sibug listing in Mountain View said Emmanuel and Jesus are brothers.

For the story, see Lathrop Foreclosure Fire Leads to Homicide Investigation; go here for News 10 video (no longer available online).

See also, Answers sought on fire, dead body (Man discovered during blaze at foreclosed Lathrop home) ("Like many of the homes on the block, the home was empty and in the foreclosure process.")

For more on fires & foreclosures, go here and go here. foreclosure arson yak

Compensation For Those Ripped Off By NJ Attorneys May Go Up To $400K

According to a story in the publication New Jersey Lawyer, the New Jersey Lawyers' Fund for Client Protection is sitting on a record $18 million surplus. The fund represents money that is available to victims who have been ripped off by a New Jersey attorney. The fund is financed by clipping the estmated 50,000 New Jersey attorneys $50 per year in assessments. Reportedly, the New Jersey State Bar Association for years has pressed unsuccessfully to eliminate the annual assesment of its members. According to the story:

• Since 1996, the fund's payouts to clients ripped off by unscrupulous lawyers have been limited to $250,000 per victim and a total $1 million per lawyer. Currently, the New Jersey Supreme Court, at the fund's request, is considering increasing the caps to $400,000 and $2 million.

***

• "As long as the fund is telling people who've been hurt by a lawyer that they can't get all their money back, the notion of removing the assessment is simply misguided," [Kenneth J. Bossong, the fund's director] said.

For more, see Fat surplus but no break for lawyers.

For those ripped off by New York attorneys, see The Lawyers Fund for Client Protection of the State of New York.

For other states, see:

• Directory Of Lawyers' Funds For Client Protection (American Bar Association - July, 2007); or
• try here (for a "Google search").

Atlanta, GA; Elk Grove, CA Neighborhoods Among Many Dealing With Crime, Public Safety Concerns That Follow Foreclosures

The Associated Press reports:

• Eighty-five bungalows dot the cul-de-sac that joins West Ontario Avenue and East Ontario Avenue in Atlanta. Twenty-two are vacant, victims of mortgage fraud and foreclosure. Now house fires, prostitution, vandals and burglaries terrorize the residents left in this historic neighborhood called Westview Village. [...] "They've seen a lot of prostitution in the area, vagrants wandering in and out of the empty houses and drug activity," said Officer Dakarta Richardson of the Atlanta Police Department. "Some people that I talked to are afraid to walk out of their homes at night."

***

• In the Franklin Reserve neighborhood of Elk Grove, Calif., full of subdivisions with half-million dollar homes, homeowners are fighting inner-city problems like gangs, drugs, theft and graffiti. During the boom, the suburb just south of Sacramento sprouted 10,000 homes in four years, attracting investors from the San Francisco area. Now many houses stand empty, weeds overtaking lawns, signs lining the street: "Bank Repo," "For Rent," "No trespassing -- bank owned property." A typical home's value has dropped from about $570,000 to the low $400,000s.

***

• The homeowners sometimes have no options but to accept any renters they can get, said Norm Schriever, a local real estate and loan agent. "You get some bad renters in there and the weeds start growing and a few windows are broken and it starts descending into a feeling of chaos," he said.

• Thieves also have looted some empty homes, stripping them of electrical appliances or valuable copper wiring and pipes that can be sold as scrap, he said. Banks aren't watching foreclosed properties closely, said Modesto, Calif., Police Chief Roy Wasden. "As it gets colder, (squatters) will start building fires in these structures and it's quite dangerous," he said.

• Franklin Reserve resident Susan McDonald said two of the homes on her block were turned into indoor marijuana farms. Both caught fire last summer after the pot growers tapped into the city's electric grid with faulty wiring.

For more, see Empty Houses Home to Crime As Loans Fail (Neighborhoods Suffer As Crime Follows Foreclosures Into Vacant Houses).

Go here for posts on vacant homes, foreclosures and squatters. squatter foreclosure zebra pot grow ops alpha

Foreclosures Squeezing Tenants, Cops, City Governments

In Minneapolis, Minnesota, The Associated Press reports:

• Homeowners who can't keep up with their mortgages aren't the only ones being hit by the foreclosure crisis. City governments and city officials are losing time and money to the problem, too. [...] A bright orange notice on the front door [of one tenant] warns that the water will be shut off unless the landlord pays a bill of $117. The duplex is also in foreclosure, so either way [the tenant] has to find new housing.

Among the enumerated consequences of foreclosed homes for municipalities are:

1. Unoccupied houses don't use utilities such as water, sewer and garbage service, meaning the costs have to be spread among fewer people citywide,
2. Cops spend more time chasing people out of foreclosed properties,
3. Inspectors spend more time citing properties for uncut grass or unshoveled snow,
4. Government property appraisers have a tougher time calculating fair market value of homes for tax assessment purposes.

In nearby New Prague, the city has to decide whether or not to foot the bill for electricity to keep sump pumps running to a pocket of foreclosed homes in one subdivision. If they don't, the risk of possible water damage to the homes will make them tougher to sell and keep them off tax rolls longer. For more, see Cities, tenants also feel foreclosure effects.

Go here for other municipalities getting squeezed by foreclosures. delinquent tax problem

850+ FHA Loans Originated In Alleged Scam End Up In Foreclsoure; Six indicted

The San Bernadino County Sun reports:

• Four San Bernardino County residents and two other people have been indicted in a mortgage fraud scheme that federal officials said cost the government and private lenders more than $10 million.

• John Richard Varner, 54, of Hesperia; Stephen Ray Harper, 50, of Ontario; Katherine Ann Kilmer, 52, of Hesperia; Ricardo Bonilla, 46, of Fontana; Abraham Julian Rezex, 59, of Downey; and Richard Elroy Giddens, 67, of Riverside face federal charges of conspiracy, bank fraud and tax violations, according to a news release issued by the Department of Justice.

• Investigators with the Department of Justice said that from 1997 to 2002, all six ran a scheme out of the Mortgage One Corporation, formerly based in Hesperia, and M-1 Capital Corporation, formerly based in Riverside and Rancho Cucamonga. The companies had been in the business of approving, funding and then selling home mortgage loans, Assistant U.S. Attorney Sheri Pym said. Many of those loans were insured through the Federal Housing Administration, an agency within Housing and Urban Development.

***

• HUD has since identified more than 850 FHA-insured loans approved by Mortgage One and M-1 Capital that went into foreclosure and made insurance claims to HUD. The estimated losses suffered by the government and the private lenders are at least $10 million, officials said.

For more, see 6 indicted in mortgage fraud (Officials say scheme cost government, lenders $10M).

See also, U.S. Attorney Press Release.

Bond Revoked For Foreclosure Rescue Operator Facing Criminal Charges; Allegedly Engaged In More Equity Stripping Scams While Awaiting Trial

After being released on bond and awaiting trial (originally scheduled for November 13, 2007) on criminal charges relating to an alleged foreclosure rescue, equity stripping scam that allegedly victimized more than 100 homeowners by stripping them of at least $12 million in home equity, Southern California foreclosure rescue operator Maria Juarez (aka Maria G. Juarez), has been charged again for allegedly engaging in additional equity stripping scams of homeowners facing foreclosure.

She was initially charged back in 2006 by being added as a defendant in a grand jury indictment that was originally handed up in 2005. She was facing charges along with the following four confederates (all from California): Martha Rodriguez, of Downey, Edward Seung Ok, of Torrance, Cynthia Valenzuela, of Downey, Vladimir Stefanovic, of Lancaster. By the summer of this year, her four confederates had agreed to plea guilty and were awaiting sentencing, pending Juarez' November 13 trial (presumably, they were all cooperating with prosecutors and prepared to testify against her).

A superceding indictment adding additional equity stripping charges against Juarez involving transactions occurring after she was released on bond was filed on November 1. Needless to say, she is now in the custody of the U.S. Marshal and is being held with no bail; her November 13 trial has also been postponed. Go here for earlier posts with links to media reports & FBI press releases relating to the initial charges.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Metropolitan Grapevine / POS Metro Dream Homes Receivership Website

(original post - 11-15-07)
A website has been established by Invotex, Inc., the company who has been appointed by a Maryland state court as the Temporary Receiver to communicate information to the public regarding the Metropolitan Grapevine / POS Dream Homes fiasco. Go here for the POS DH LLC et al in Receivership website.

If you are an investor who has been screwed out of money, you can go here to file an Investor Proof of Claim. Go here for the Instructions for the Proof of Claim.

The receiver is currently attempting to recover the vehicles owned by POS Dream Homes. Anyone with information on the whereabouts of the vehicles owned by POS Dream Homes and used by the individuals associated with it and the related companies is being asked to contact the POS Receiver (this link includes the list of the POS Dream Homes vehicles being sought - includes description, make, model, tag and VIN numbers, and last known location).

Go here for a copy of the latest court Order Freezing Assets And Appointing A Temporary Receiver (11-14-2007). For a list of all the entities covered by the receivership, go to Exhibit A on pages 7-8 of this Order. The list of real property and bank accounts frozen by this order is also in Exhibit A, on page 9.

For earlier court orders and related documents, as well as any and all information currently being made available to the public by the POS Receiver, visit the POS Receiver website.

Go here for other posts & links to other stories on Metropolitan Grapevine / POS Metro Dream Homes.

Florida Attorney Disbarred For Swiping $110K From Dead Client; Criminal Charges Pending

In Florida, the St. Petersburg Times reports:

• The Florida Supreme Court recently disbarred attorney Angelo Cappelli, 37, a former Republican state House candidate from St. Petersburg who is facing charges of grand theft and perjury. Cappelli was one of eight attorneys disbarred statewide by the court, according to the Florida Bar. [...] Cappelli, a wealth and investment adviser at SunTrust Bank, was considered a hot political newcomer.

***

• St. Petersburg police arrested Cappelli in August, alleging that he stole $110,500 from the trust account of a deceased SunTrust client. Cappelli's attorney Frank Louderback recently said SunTrust has been reimbursed.

For more, see High court disbars former candidate.

See Theft Of Escrow Funds I and Theft Of Escrow Funds II for other stories of trust account / escrow account theft of funds. sneaky slick escrow agents beta

Iranian National Sentenced In Texas Home Flipping Scam

The Austin American-Statesman reports that Firooz Deljavan, the leader of a sprawling Austin-area real estate scheme that prosecutors say defrauded banks of millions of dollars, was sentenced in a Texas Federal Court Tuesday to five years in prison for conspiracy to commit money laundering and conspiracy to commit bank, wire and mail fraud. According to the story:

• Deljavan, 56, was the lead defendant among 25 real estate professionals and buyers indicted in 2004. They were accused of submitting fraudulent documents in buying dozens of homes in the Austin area, misrepresenting the value with bogus appraisals and then selling the houses to associates who had secured about $15 million in mortgages. [...] Deljavan's lawyer, Gerardo Montalvo of Houston, said that his client's plea saved the government money in avoiding a trial.

***

• Deljavan, an Iranian citizen, fled Austin with his wife, Rosemary Rios, and his brother after the FBI and IRS began investigating them in 2004. Deljavan and Rios were extradited to Austin last year after they were arrested at a border crossing between Turkey and Iran. Turkish authorities refused to extradite Deljavan's brother, a Turkish citizen. Rios pleaded guilty this year to making a false statement to obtain a real estate loan and was sentenced to time served. In addition to Deljavan's brother, one other defendant in the case is a fugitive. One defendant committed suicide after he was indicted, and charges against another were dismissed.

Of the 21 others involved, all were previously sentenced; the two longest sentences assessed were for two years.

For more, see Austin real estate exec gets 5 years in house-flipping scheme (Sentencing guidelines had suggested minimum of 21-plus years).

Oregon Cops Charge Phony Landlord In Rent Scam; Used Craigslist to Lure Victims

In Portland, Oregon, KGW-TV Channel 8 reports:

• Portland Police arrested a woman for scamming people out of rent or real estate money in a Craigslist scam. Detectives charged 33-year-old Lynne Sisto Tuesday for theft and aggravated theft. She had previously faced similar charges. Investigators said Sisto would contact people looking for places to live through the Web site, and pass herself off as the property owner. Then police said she would get deposit or rent money before the victims realized what had happened.

According to the television report, police estimate that victims were scammed out of over $100,000. Go here to view KGW-TV Channel 8 video report.

To read online report, see Woman accused of elaborate Craigslist house sale scam.

See also, Woman Posing As Landlord Arrested Again (KPTV Channel 12).

Go here for other stories on prospective tenants being scammed out of rent money when looking to rent a home. unwitting tenant rent scam zebra

$20M+ Escrow / Check Kiting Scam Lands NY Attorney Ten Year Prison Sentence

In Westchester County, New York, The Journal News reports:

• Anthony Bellettieri thought he could make the numbers add up. The Harrison real estate lawyer played the float between his firm's two accounts, writing checks in an amount that gave the appearance that the more than $20 million he stole was still there. He gambled he could beat the system. But there was one number Bellettieri didn't take into account in the scheme: 60. That's how many victims have come forward to say they lost the money they entrusted to Bellettieri, money that turned up gone when the scheme went belly up.

***

• One of Bellettieri's victims sat with more than 20 friends and family members during the sentencing. Another victim, 81-year-old Michael Williams of Harrison, also was in court. He lost $200,000 he was supposed to get when he refinanced his home to help his grandson buy a house. His daughter, Deborah Annunziata, told [Federal District Court Judge Charles] Brieant the theft has had a terrible impact on her family. "We're just devastated by all this," she said.

***

• Bellettieri took advantage of a printing mistake on checks issued to the firm for two accounts, one of which was a funding account, the other an escrow account. Money was supposed to be released from the escrow account to the funding account for closings. As one account was credited, the other was supposed to be debited, making for a zero-sum transaction. But the printing mistake caused a two-day hiccup in the debiting, giving the appearance that the accounts were flush when they were actually empty. Bellettieri wrote $15 million to $18 million worth of checks daily to keep up that appearance, according to the suit.

For more, see White Plains real estate lawyer gets 10 years for $22 million fraud.

See also, Real estate lawyer gets 10 years for fraud (Mid-Hudson News).

For other posts on theft of escrow money, go here and go here. sneaky slick escrow agents beta

"Wild West" Lending Practices Blamed For Cleveland-Area Foreclosure Problems

In Cleveland / Cuyahoga County, Ohio, CNNMoney reports:

• As the Treasurer of Cuyahoga County in Ohio, Jim Rokakis spends a lot of his time trying to deal with Cleveland's foreclosure crisis. When asked recently just how bad it is, Rokakis unfurled a six-foot by four-foot Cleveland city plot map. Each lot was covered with dots of red ink where foreclosed homes filled the plots. From a few feet away, the map looked heavily freckled, while some neighborhoods nearly melted together in crimson masses.

***

• According to Rokakis, Cleveland got hammered because lax governmental oversight from the state allowed Wild-West lending. "No one was watching," he said. "There was no sheriff in town. The state legislature was dominated by banking interests."

For more, see Where Cleveland went wrong (It's too easy to blame the city's housing collapse on Rust-belt economics. How bad government and greed made it one of the nation's foreclosure capitals) (if link expires, try here).

See also, Mortgage fraud task force opens command center in Cleveland ("Federal, state and Cuyahoga County agencies will fill the office with seven full-time and six part-time staff, county Prosecutor Bill Mason said. Investigators will collaborate on cases that may number in the thousands and involve hundreds of millions of dollars. [...] Mason's office already has charged more than 140 people in cases involving more than 200 properties and $37.5 million in loans.").

Wisconsin Legislature Hears Testimony On Proposed Foreclosure Rescue Statute

The Associated Press reports:

• Some Wisconsin homeowners desperate to keep their houses have fallen prey to scam artists who falsely promise to help them avoid foreclosure, [Wisconsin] lawmakers said Tuesday. The salesmen use deceptive practices to convince homeowners to transfer ownership of their properties, which they refinance and sell for a profit, lawmakers and victims' advocates said. They testified during a public hearing in favor of a bill that would create new regulations governing so-called foreclosure rescues.

• Typically, those transactions involve a homeowner facing foreclosure transferring the property to an investor in exchange for assurances he can continue to live there under a rent-to-own agreement. The investor pays off the amount owed in foreclosure.

***

• In written testimony, Louise Kirk said she faced foreclosure on her Milwaukee home after her husband had open heart surgery and lung cancer. She responded to a flier from a woman who promised help selling the home. The woman insisted she be granted power of attorney and Kirk agreed. The woman then sold the house without telling Kirk and made tens of thousands of dollars in profit, said Kirk, whose husband died around the same time. "My nerves were shattered with the death of my husband, but the fact that there was money taken from me, took me over the edge," Kirk wrote.

• Backed by the Legal Aid Society of Milwaukee, Kirk sued the woman last month in Milwaukee County Circuit Court for fraud. Legal Aid Society lawyer Catherine Doyle said another one of her clients agreed to a transaction in which she would rent her home from an investor for one year and then buy it. She still could not afford the home after one year because of high fees and rent charged by the investor, who sold it at a $50,000 profit.

• "She got nothing," Doyle said. Of her clients, she said: "When they find out how much money these people have taken from them, it is a devastating moment."

For more, see Wisconsin lawmakers say desperate homeowners are being swindled.

Go here for other posts on the Legal Aid Society of Milwaukee.

For more on equity stripping scams, generally,see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Secret Service Investigating Central Florida Foreclosure Rescue Operator; Resident Loses Home To Scam

In Osceola County, Florida, Central Florida News 13 (Orlando) reports:

• The Secret Service is now investigating a possible case of mortgage fraud that possibly includes hundreds of local homeowners. Teodoro Flores lost his home in Poinciana Wednesday. It all surrounds a company called 4 Solutions. It's accused of attracting families in Central Florida and throughout the state posing as a foreclosure prevention company and running away with people's money.

According to the television report, Flores unwittingly signed over title to the home in a transaction orchestrated by the Tampa-based 4 Solutions in a sale-leaseback scam. After coming home from work recently, he found all of his belongings out on the street, a result of a foreclosure eviction. In addition to the Tampa office of the U.S. Secret Service, the local Tampa cops are also investigating 4 Solutions.

Go here to watch television coverage on this story.

To read the online story, see Home Lost In Foreclosure Scheme.

Go here for 4 Solutions website (no longer online).

Go here for other posts on 4Solutions.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

North Jersey House Flipping Operator Cops Plea To Federal Conspiracy Charge

In Newark, New Jersey, the Herald News reports:

• A Bergen County real estate magnate who for years exploited unsuspecting Paterson homebuyers while bribing low-level city employees, pleaded guilty Wednesday to conspiracy to commit money laundering. Michael Eliasof, of Mahwah, agreed to a plea deal with federal prosecutors in U.S. District Court for overseeing a wide-ranging, house-flipping scheme between 2002 and 2005 that undermined an already shaky Paterson housing market. Eliasof, who at one time was a major operator in Paterson's Section 8 program, was charged with taking between $1 million and $2.5 million in illegal proceeds from the sale of overvalued properties to buyers not qualified to purchase them.

• The circle of professionals Eliasof worked with included Garfield Municipal Judge William C. Colacino Jr., who was the closing attorney for dozens of deals Eliasof lined up with inexperienced buyers. Colacino was not in court Wednesday and has not been indicted. He declined to comment Wednesday.

• Eliasof and 10 co-conspirators, including mortgage brokers, loan officers and appraisers, artificially inflated the values of properties throughout Paterson. They then falsified loan applications and income levels for those buyers whom Eliasof lured in with "no money-down" deals, according to the federal charges.

For more, see Magnate guilty in housing scheme.

See also:

• Corruption trial kicks off (Herald News - 12-5-07),
• Agent 'made us poorer' (Herald News - 11-1-07),
• Property scam retold to court (Architect of scheme admits money launder) (The Star Ledger - 11-15-07).

Go here for other posts on this ongoing investigation.

Miami Condo The Poster Child For Cash Back Mortgage Fraud Scams

In Miami, Florida, Reuters reports:

• At first glance, the 43-story building in Miami's international banking district seems little different from other high-rise condominiums overlooking the turquoise waters of Biscayne Bay. But the 643-unit condo known as the Club at Brickell is a leader in mortgage foreclosures and it appears also to stand at ground zero in a blizzard of fraud that may lie behind many of the failed loans threatening to bury the U.S. property market.

***

• The Club at Brickell has the highest current number of foreclosure proceedings involving any single south Florida property. [...] Doug Dewitt, a real estate broker contracted to work with several lenders on the valuation and disposal of foreclosed properties, said nearly 70 percent of the sales or closings at the Club over the last 18 months were questionable. That works out to more than 200 possibly shady deals in a single building, he said. The dubious transactions all fit a pattern that [Glenn Theobald, head of a mortgage fraud task force formed in south Florida's Miami-Dade County ] said should trigger "bells and whistles" for law enforcement anywhere -- time and time again properties that failed to sell for months when listed at around $450,000 were pulled from the market and then suddenly sold for more than $800,000.

For more, see Miami condo at ground zero in mortgage fraud.

See also, Buying In Brickell? Proceed At Own Risk (Report Says Brickell Condo Ground Zero For Mortgage Fraud, Foreclosures).

Go here for other posts related to the Miami condo market problem.

Erie, Pennsylvania Mortgage Fraud Scam Alleged In Both Criminal & Civil Proceedings

In Erie, Pennsylvania, the Erie Times-News reports that last Friday, mortgage broker Frank Conti, who used to head the local office of Regal Financial Services, was at the center of a series of claims that one of his customers -- Eloise Woodsbey, made in a civil case filed in Erie Federal Court. Woodsbey claims that she was defrauded when she bought her home in 2004.

Earlier on Friday, Regal Financial Services was mentioned in court documents outlining a federal criminal case against Erie home redeveloper Robert L. Dodsworth, who is accused of helping to run a mortgage fraud scheme. Conti has not been charged in the criminal case, and he has said he did nothing wrong in the civil case. According to the story:

• Court filings in the Dodsworth and Woodsbey cases claim Conti or Regal Financial, which also has an office in Pittsburgh, participated in mortgage transactions that have led to allegations of fraud. Both cases will unfold in U.S. District Court in Erie in the coming weeks. Dodsworth, 60, the owner of RLD Enterprises, is scheduled to appear at a plea hearing on Nov. 19, and court records indicate he plans to plead guilty to the felonies of money laundering and conspiracy to commit mail fraud, wire fraud and bank fraud.

***

• Woodsbey's house ... was one of nearly 200 properties that became the focus of the FBI and Internal Revenue Service as agents investigated the suspected fraud scheme. And Woodsbey's civil suit makes claims similar to the allegations the U.S. Attorney's Office in Erie is making against Dodsworth.

• In the criminal case, the government is alleging Dodsworth and other "unnamed co-conspirators" manipulated financial records to make prospective homeowners, many of them unsophisticated and poor, eligible for mortgages they otherwise would have been unable to afford between January 2003 and March 2006. The criminal information filed against Dodsworth alleges he and the others artificially inflated customers' bank accounts.

Representing Woodsbey in her civil case is Margaret Schuetz, of the nonprofit Community Justice Project in Pittsburgh.

For more, see Suit names mortgage broker (Man headed office also mentioned in criminal housing fraud case).

For story update, see:

• Erie businessman pleads guilty in mortgage-fraud case (Erie Times-News - 11-19-07)
• Plea expected in fraud case (Erie Times-News - 11-19-07).

Go here for other posts related to this story.

Six Indicted In Alleged $14M Mortgage Fraud Scam

The Kansas City Star reports:

• A federal grand jury in Kansas has charged six Kansas City area individuals in a $14 million mortgage fraud that preyed on low-income homebuyers. The indictment described a scheme that relied on false real estate appraisals that inflated the value of homes, so banks would lend more money than property was worth. The indictment said the additional funds ended up in defendants’ accounts.

• The indictment names Wildor Washington Jr., 37, of Leawood; Maurice Ragland, 33, of Lee’s Summit; Victoria Bennett, 34, of Leawood; Kara E. Robinson-Franks, 37, of Grandview; Scott Alexander, 69, of Merriam; and Terrence Cole, 41, of Kansas City, Kan.

***

• The defendants owned or worked for several businesses involved in the alleged scheme: Heritage Financial Investments, Legacy Enterprises, B&L Custom Development, Liberty Escrow, TERM Appraisers, the Real Estate Group, JTF Enterprises and Atlantic Mortgage.

• The fraud’s targets were homebuyers with low incomes or little knowledge about real estate, according to the indictment. It said these homebuyers were unaware of the fraudulent information in the loan applications.

***

• The group validated the fraud by stealing the identities of legitimate real estate appraisers, according to the charges. They found appraisers’ license numbers on the Internet and forged signatures, or in some cases “cut and paste” legitimate signatures onto false appraisals, the indictment said. The fraud also relied on nonexistent appraisers whose identities the group created.

For more, see Six area individuals charged in $14 million mortgage fraud scheme.

Inside Edition Investigates Florida Upfront Fee Foreclosure Rescue Operator

Tonight, the syndicated television show Inside Edition will run an investigative report on a Clearwater, Florida foreclosure rescue operator that is accused of shortchanging customers. The show alleges Foreclosure Assistance Solutions, or F.A.S, charged homeowners more than $1,000 apiece but failed in some cases to salvage homes from foreclosure. F.A.S. disputes the allegations and points to its many satisfied customers. Go here to watch the promo for tonight's show (no longer available online).

Go here to find out where Inside Edition is showing in your area (no longer available online).

Go here for a partial transcript of the Inside Edition investigative report (no longer available online).

Use Caution When Tapping Into 401(k) To Make Mortgage Payments

The Baltimore Sun reports:

• Some companies that manage 401(k)s for employers report an increase in loans or hardship withdrawals from plans this year. Principal Financial, for instance, says hardship withdrawals to stave off eviction or foreclosure doubled in August from July. Baltimore's T. Rowe Price Associates reports a 9 percent increase in loans over a year ago. And Hewitt Associates has seen a "marginal uptick' in loans in recent months. With loans - unlike hardship withdrawals - workers don't have to say why they want the money. So it's hard to say how many desperate homeowners are using their savings this way. But David Wray, president of the Profit Sharing/401(k) Council of America, has no doubt that the uptick in loans is tied to the mortgage mess. Workers are just starting to deal with rate resets on mortgages and home equity loans, Wray says.

***

• But dipping into retirement accounts should be the last resort. Even then, do it only if you're sure that your housing troubles are short-term. If they're not, you could end up losing your house and your retirement.

***

• When loans are permitted, you can borrow up to half the balance but no more than $50,000. You generally get five years to repay through payroll deductions. [...] Leave or lose your job before the loan is repaid, and you might have to repay it immediately. If you can't, the loan is considered a distribution. You will owe regular income tax on the money and possibly a 10 percent penalty for early withdrawal. (The penalty usually applies if you take money out before age 59 1/2 , but the age limit is 55 if you're leaving your employer.)

For more, see Using 401(k) for mortgage payment can worsen plight (if link expires, try here).

See also:

• Don't get caught losing your home and retirement fund (Chicago Tribune) and
• 401(k) Loans: At Your Own Risk (Borrowing Rises a Bit Despite Long-Term Danger) (Wall Street Journal - 10-6-07; may need subscription).