Georgia Chief Justice Violates State Ethics Rules; Fined $3,100

In Atlanta, Georgia, The Associated Press reported late last month:

• Georgia's top judge has agreed to pay $3,100 in fines for violating state ethics laws. Chief Justice Leah Ward Sears will pay the sum from her own wallet, not her campaign coffers, as part of a pair of consent orders approved by the state Ethics Commission [late last month]. Sears was facing ethics complaints from her 2004 re-election campaign. They alleged that the state's first female chief justice accepted contributions exceeding the state's $5,000 legal limit, including one $20,000 donation from a law firm. Sears also acknowledged misreporting some campaign finance information as part of Thursday's consent order.

Source: Chief Justice Agrees To Ethics Fine.

Go here for posts on other knuckleheaded members of our esteemed judiciary. naughty judges

Florida Man Charged In Alleged Home Repair Scam That Defrauded Six Seniors

In Florida, the Daytona Beach News-Journal reported recently:

• An Ocala man accused of promising home repairs in east Volusia County, then disappearing with homeowners' deposits, was arrested ... by the State Attorney's Office. Timothy W. Gladden, 52, systematically defrauded six elderly Volusia County residents by promising home repairs that were never made after collecting thousands of dollars, according to the charging affidavit. All of the victims, who were at least 70 years old, were given a "free inspection" of their homes between late September and mid-October, the affidavit states. Gladden then presented a list of recommended repairs he offered to fix for a fee. Gladden collected just under $20,000 from his victims.

For more, see Ocala man charged in home repair scam.

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

1031 Exchange Intermediary Under Fire; Facing Accusations Of Pocketing $160M Of Clients' Cash

The Miami Herald recently ran a story on Edward Okun, the owner of 1031 Exchange Group, a company in the business of holding, in trust, the money of investors wanting to defer their tax bills on sales of investment real estate. The story describes the hot water he finds himself in for allegedly misappropriating millions in those funds that were held in trust. An excerpt from the story:

• The flashy 59-year-old businessman amassed a reported personal fortune of $659 million -- with all the trappings: a 130-foot yacht, a fleet of luxury cars, a helicopter and several private jets. But the empire Okun built is now unraveling amid a federal investigation, lawsuits and claims by hundreds of investors who say they were fleeced of $160 million in one of the largest business collapses of its kind.

For more, see Miami Beach investor accused of misspending $160 million (A Miami Beach businessman is accused of squandering $160 million from investors. He signed an agreement that let him keep his two multimillion-dollar homes).

Go here for other posts on Edward Okun.

Go here for other posts on problems with 1031 exchange intermediaries. sneaky slick escrow agents beta

Cops I.D. Eight More Victims In Norfolk Home Repair Scam Targeting Seniors

In Norfolk, Virginia, The Virginian-Pilot reports:

• Police on Friday identified eight additional victims of a local home repair scam, and said there may be more who have yet to come forward. Police say the scam involved a man and a woman approaching elderly residents and telling them that their homes had water or termite damage, according to a news release. The couple required the residents to pay up front by check. Then they cashed it and disappeared, police said.

• On Nov. 30, police announced the arrest of two people in connection with the crime. Timothy Shawn Levine, 31, ..., and Keaton Taylor, 28, ..., both were charged with two felony counts of obtaining money by false pretenses and conspiracy to commit a felony.

Source: Norfolk police identify eight more victims of home repair scam.

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

Orlando Cops Bust Local Woman Running Meth Lab Out Of Her Home

In Orlando, Florida, WFTV Channel 9 reports:

• Orlando police shut down a meth lab Friday. Cops described the operation as big and dangerous. The extensive operation was found in a residential neighborhood [in downtown Orlando]. Police said neighbors are lucky no one was hurt from the lab for two reasons. Firstly, it's a duplex and the fumes could have come through the ducts and affected the people who live next door. Second, police said, the lab easily could have exploded, putting the whole block at risk. [...] The next step is to call Code Enforcement. Investigators said the house is contaminated, but the state can't legally take control of it.

For more, see Meth Lab Bust Near Downtown Orlando Is City's Largest.

For WFTV Channel 9 video report, see Woman Arrested After Police Find Orlando Meth Lab.

For a post related to meth labs, generally, see Beware Of Homes Used As Indoor Pot Farms & Meth Labs.

Go here for some methamphetamine information resources.

Go here and go here for other posts on home based meth labs. meth lab zeta

More Fires Linked To Copper Thefts, Say Firefighters

In Cincinnati, Ohio, WKRC-TV Channel 12 reported last month:

• A dangerous trend emerges as more thieves break into homes to steal copper. Firefighters, particularly on Cincinnati's West Side, say those thieves are starting more fires. In some cases, firefighters say copper thieves are starting fires on purpose, sometimes it's accidental. But regardless, it's often very close to homes where neighbors may not be aware of the danger next door.

***

• "[T]hey'll either sometimes set the fire to cover up the theft or in trying to remove the copper say with a torch, they may start a fire," said Anson Turley, District 3 Fire Chief.
  Firefighters say usually vacant houses are the targets. Whether the fires are deliberately set, or accidental, the risk some copper thieves are posing to neighbors is real. [...] Firefighters are asking people fixing up homes to make sure they're secure, especially at night. They're also urging people who live next door to vacant homes to keep a close eye on them.

Local firefighters also say the damage associated with copper theft is escalating. In one recent case, thieves caused $500 in damage for just $10 worth of metal.

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft yak

Copper Thefts In Vacant / Unoccupied Homes

Recent copper theft stories from vacant or unoccupied homes:

Chicago, Illinois: Copper pipe stolen from home ($2,000 copper theft discovered when home seller was giving the home's new owners a tour of the property),

Syracuse, New York: Police investigate three copper pipe thefts ($1,500 pipe theft from home under construction; similar theft at vacant home; basement break-in, stolen pipe results in damaged furnace),

Woodbury, Connecticut: Copper pipes stolen from Woodbury home (Out of town woman who owns a local home found nasty surprise - someone broke in through basement door and stole her plumbing),

Ross County, Ohio: Police blotter (Vacant home broken into and copper pipe was reported stolen from basement of one home; 75 feet of copper tubing was stolen from another home),

Canton, Ohio: Two arrested in vacant house with copper wire, police say (Canton police arrested two men in a vacant house alongside rolls of copper wire, electrical outlets, a hammer, crow bar and wire cutters. Someone saw men enter vacant home & called cops to report the men were “smashing up the place”),

Antioch, California: Police Log (Man found vacant rental house vandalized, with the compressor and copper lines removed from refrigerator),

Hawkins County, Tennessee: Copper theft victim offers reward (Hawkins County detectives are investigating two copper burglaries. One victim's vacant rental property was robbed of its wiring. In another, daughter of out-of state owner discovers copper theft and associated damage when she stopped by to check on unoccupied home),

Crafton, Pennsylvania: Police blotter (Copper pipe was stolen Nov. 20 from the basement of a vacant home. A basement door was forced open; Police Log: Copper pipe stolen from vacant home - in another incident, both copper pipe and the water meter were stolen from a vacant home on Nov. 28 - the piping is valued at $200),

Dearborn, Michigan: Resident alerts police to suspects in Orchard copper theft (Aware of reports that copper had been stolen from vacant homes in the area, a local resident contacted cops when she saw two men wearing DTE vests and carrying a meter approach an unoccupied home and attempt to enter it. Police responded and apprehended two men while they were in the basement of the home. Officers said the men later admitted to involvement in other copper thefts in the area),

Tuscaloosa, Alabama: Police blotter (Kitchen sink and copper tubing were taken from a vacant house),

Hillsdale, Michigan: Brown Introduces bill aimed at stopping copper theft (Copper thefts widely reported in Hillsdale County. Victims include owners of seasonal and vacant properties; buildings under construction. Thefts have included plumbing materials as well as lines run from propane tanks to structures).

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft yak

Cops Arrest Indiana Woman Facing Foreclosure In Alleged Attempt To Torch Home, Pocket Insurance Cash

In Putnam County, Indiana, WRTV Channel 6 reports:

• A Putnam County woman asked a neighbor to burn her house and help her blame someone they would allege tried to rape her, the county prosecutor said. Authorities alleged Christina Snyder, 31, concocted the scheme so she could collect insurance money. Snyder was arrested after the neighbor told police of the plot and that she offered him $5,000 to participate, authorities said. Snyder was charged with attempted arson, attempted insurance fraud and conspiracy to commit arson, 6News' Jack Rinehart reported.

• According to court records, a bank had filed for a mortgage foreclosure on Snyder's rural home.

For more, see Police: Woman Planned To Burn Home, Allege Rape (Authorities: She Wanted Insurance Money, Asked Neighbor To Help).

Go here to watch the WRTV Channel 6 video report.

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

Florida Attorney Gets 15 Years For $13.5M Client Ripoff

In Miami, Florida, the North Country Gazette reports:

• Former Miami-attorney Louis S. Robles has been sentenced to 15 years in prison and ordered to pay $13.5 million in restitution to the victims of his offenses after pleading guilty of three counts of mail fraud in connection with his misappropriation of settlement monies from clients afflicted with asbestos-related injuries and illnesses.

U.S. Attorney R. Alexander Acosta, whose office prosecuted the case, said:

• “Attorney Louis Robles abused the special trust that his clients placed in him. Robles sought out clients who were dying and cheated them out of millions of dollars, so that he could finance his own extravagant lifestyle. We hope that today’s sentence and court-ordered restitution will alleviate some of the suffering he caused to asbestos victims and their families."

For more, see Asbestos Attorney Robles Imprisoned For Client Ripoff.

For the U.S. Attorney press release, see Former Miami Attorney Sentenced To 15 Years For Misappropriating $13.5 Million In Client Settlement Money.

If a Florida attorney is representing you and screws you out of money or property through dishonest conduct, go to The Florida Bar's Clients' Security Fund for more information.

For other states, see:

• Directory Of Lawyers' Funds For Client Protection (American Bar Association - November, 2007);
• Check the USA Client Protection Funds Map; or
• try this "Google" search.

Specter, Others To Intervene In $29.2M Pennsylvania Ponzi Scheme

Lancaster Online reports:

• Michelle Weaver's relentless phone calls, e-mails, faxes and pestering of government officials have finally paid off. Weaver, the de facto leader of a group of more than 800 homeowners stung by Wesley A. Snyder's $29.2 million mortgage fraud, has convinced U.S. Sen. Arlen Specter to hold a hearing on the subject at 3 p.m. Monday at Penn State's Harrisburg campus. [...] Specter's office said Friday the hearing will examine the mortgage crisis that soaked homeowners, including 300 from Lancaster County, for more than $26 million and ripped off 31 investors for $3 million. The event will take place in Room 210 of the school's student center on West Harrisburg Pike in Middletown. Representatives from loan services Snyder used, as well as Fannie Mae and Freddie Mac, are scheduled to testify regarding what they can do to help distressed homeowners.

For more, see Hearing set on loan mess (Senators to probe Snyder case).

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving OPFM, Image Masters, and other companies operated by Wesley Snyder.

Tax Lien Filed Against Bakersfield Flipper

The Bakersfield Californian reports:

• State tax officials filed a lien against David and Jennifer Crisp this week for taxes owed from 2005. The $35,746.55 lien from the California Franchise Tax Board, which was filed at the county recorder's office Tuesday, is the latest in a string of financial, regulatory and possibly criminal troubles dogging principals, family members, employees and business associates of former Crisp, Cole & Associates companies. David Crisp could not be reached Friday by cell phone. The 28-year-old real estate agent previously ran Crisp & Cole operations with one-time partner Carl Cole, 60.

***

• As of Friday, at least 105 defaulted and foreclosed properties are linked to associates of the former Crisp & Cole companies, according to an ongoing Californian tally. More than $64.6 million in total loans were taken out against the homes, according to The Californian's analysis. So far, 61 have foreclosed. Of $36.9 million in first and second loans taken out against those 61 properties, public foreclosure auctions have netted $28.1 million, county filings show. All auctions so far have resulted in lender repossessions.

For more, see IRS files lien on Crisp, his wife from '05 taxes.

Go here for special section on the Crisp & Cole "escapades" compiled by The Bakersfield Californian.

Go here for other posts and links to stories on the David Crisp / Carl Cole alleged flipping operation.

Recent Copper Theft Stories

Recent copper / other metal theft stories from around the country:

Grand Rapids, Michigan: Copper theft suspect arrested (Cops kill copper caper; plant roll of copper, then follow suspect home and arrest him),

Hawaii: Copper Thieves Hit H-1 Freeway Near Waikele (Copper thieves strike again, leave H-1 Freeway in the dark. Thieves hit 20 electrical pull boxes, making off with 1500 feet of wire. Code prevents locking or welding boxes shut),

Houston, Texas: Copper thieves shelve library activities for day (Thieves cut wiring leading to generator and emergency panel for downtown library complex, leaving it "in the dark"), see also Copper Thieves Cause Power Outage, Damage at Houston Library,

Charleston, South Carolina: Salon A/C Unit Stolen Twice In 6 Months ("I just can't believe that someone would do this for a few hundred dollars when it costs us $9000 if not more when this is all over," said victimized business owner),

Farmington, New Mexico: Copper thefts on rise across New Mexico (Three times this fall, thieves cut ground wires, make off with up to 275 feet of insulated copper from electrical poles and switching station. Last month, thieves took 6+ miles of copper wire from Rail Runner Express track between Albuquerque and Santa Fe, causing up to $350,000 in damage),

McHenry County, Illinois: Thieves nab manhole covers (Troubling trend across McHenry County - about 40 manhole covers and other steel grates have gone missing during the past few weeks. “They’re stealing them on the same basis that they steal copper,” [says local cop]. “It’s for the metal.”),

York, Pennsylvania: Metal Thieves Snatch Three 1,000-Pound Transformers (Three 1,000-pound Met-Ed transformers perched 20 feet above the ground were swiped by metal thieves. It's just one in a string of metal thefts in the city in recent months. In most cases, thieves have been hitting vacant homes.).

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft yak

Two Dozen Cats Abandoned In Home Facing Foreclosure

KSPR-TV in Springfield, Missouri reports:

• Twenty-five cats were left with nothing but a bowl of beans and an abandoned home more than two months ago. Finally after lots of legal red tape the Southwest Missouri Humane Society got permission to rescue most of the cats off of Farm Road 88 in northern Greene County. Several stray cats put up a fight as the Southwest Missouri Humane Society tried to rescue them from squalor. Executive Director Bonnie Miller says, "The strategy was to use their hunger." Employees placed food inside cages luring the cats inside.

Reportedly, the cats' owners moved out of state and abandoned them in the house. Without their permission or a warrant, nothing could be done to rescue the cats until a pending foreclosure action reached the stage where the bank could allow entry onto the premises to the Humane Society for the rescue For more, see Cats Rescued After Long Legal Ordeal.

Go here for more on pets and foreclosures.

NY Feds Targeting Foreclosure Rescue, Inflated Appraisal Scams

Reuters reports:

• The FBI has roughly tripled the number of agents in New York over the past year working on cases involving conduct such as fraudulent foreclosure rescue schemes and inflated home appraisals. Supervisory Special Agent Ben Berry told Reuters in an interview at the FBI's New York office that the agency expects more cases to be brought. "We are now starting to reap some of the benefits of having ramped up a bit here," Berry said. "It takes a while sometimes to bring a case to prosecution."

***

• Earlier this week, six people were charged with fraudulently obtaining titles to scores of homes and taking out bad bank loans against them worth more than $20 million as part of a home foreclosure "rescue" scheme. [...] In New York, [Berry] said federal prosecutors in Manhattan and Brooklyn had been taking an increased interest in such cases.

For more, see FBI: Mortgage fraud cases up "exponentially".

For more on the foreclosure rescue indictment reported earlier this week, see NYC Feds Indict Six In Alleged Foreclosure Rescue / Equity Stripping Scam Operation.

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.).

Massachusetts Attorney Involved In Equity Stripping / Rescue Operation Loses Beacon Hill Landmark In Foreclosure Sale

There's a column in the The Boston Globe on James Alberino, a Massachusetts closing attorney from Marblehead, and his ownership for the last four years of 22 Beacon Street, a building described as:

• [A] Beacon Hill landmark treasured by the powerful since famed architect Charles Bulfinch designed it 200 years ago, shortly after he finished his work on the State House.

Alberino reportedly paid $10 million for the landmark four years ago. However, times apparently haven't been so good for him lately as the column summarizes Alberino's 2007 legal problems - which includes a January bankruptcy filing, a civil lawsuit filed by the Massachusetts Attorney General this spring accusing him and 18 others of involvement in a foreclosure rescue scam, an ongoing investigation of him by the Massachusetts Board of Bar Overseers, and finally, this week's foreclosure sale in which he lost ownership of the majestic building at 22 Beacon Street.

The column appears to be, in part, a commentary on the once-booming real estate market, as I understood it, and is encapsulized by this excerpt:

• When markets are rising - whether real estate or stocks or tulips - all things seem possible. It is what prompts ordinary people to buy houses they can't afford, brilliant traders to buy billions in questionable debt, and a nobody closing attorney from Marblehead to think he belongs in a trophy building at the intersection of commerce and politics.

For more, see Justice, more or less.

Go here for the April, 2007 Massachusets AG Press Release (no longer available online) announcing the filing of the civil lawsuit against Alberino and 18 others, accusing them of involvement in the aforementioned foreclosure rescue scam.

Go here for more on 22 Beacon Street.

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.).

Dozens Charged In Alleged Houston-Area Straw Buyer Fraud Scam

In Harris County, Texas, KTRK-TV Channel 13 (Houston) reports:

• Authorities are trying to track down the remaining suspects in a multimillion dollar mortgage scam here in Harris County. Thirty-seven people are accused of lying to get millions of dollars from a complex and illegal mortgage fraud ring. Some of the suspects were in court overnight. The judge called each name, including that of the alleged ringleaders, husband and wife, Obbie and Joyce Toliver. The Harris County district attorney's office unsealed the indictments yesterday, which reveals the alleged scam as one of the state's largest ever mortgage fraud scams. Obbie Toliver is accused of fraudulently buying 17 homes using other people's credit, ... . "At first blush, the pitch sounds kind of reasonable to you," said Harris County Assistant District Attorney Lester Blizzard. "The first pitch is, 'Hey, we need your credit. Put your name down. Just put your name down and everything will be just fine'." Authorities estimate at least 25 other people are involved in the alleged scam.

For more, see Dozens indicted of mortgage loan fraud.

For a related story involving Toliver, see Fraud suspect connected to county case (A Brazoria County indictment alleges a mortgage fraud was perpetrated by former Lake Jackson minister Harold Higgins and Obbie Toliver, whom Harris County prosecutors called a leader of a suspected Harris County scheme. Toliver is named in Higgins’ indictment but was not himself indicted in Brazoria County).

Combined Church-Immigrant Based Affinity Fraud Possible In Alleged Bay Area Mortgage Scam

The Wall Street Journal recently ran a story about Naira Costa, a church-going Brazilian immigrant who belonged to an evangelical church that is a spiritual and social haven for Brazilians in the San Francisco, California Bay Area, and her and others' experiences with the church's head deacon, Soario Santos, and other church officers in connection with the purchase of area homes. According to the story:

• Mr. Santos, a fellow Brazilian, served the Pentecostal church on nights and weekends. During the day, he worked as a loan officer at a mortgage brokerage owned by a Brazilian immigrant. Mr. Santos and other church officers also working at the same real-estate business routinely approached churchgoers to encourage them to buy homes.

• Weak credit and low wages weren't barriers, Ms. Costa recalls. "He told us that a house easily would appreciate $100,000 in a year," enabling the owner to refinance, says Ms. Costa. "We trusted him implicitly. Everyone at the church was buying houses from him."

• Today, Ms. Costa and other former Message of Peace parishioners claim that Mr. Santos was a key part of a mostly Brazilian ring that allegedly conspired to defraud people by persuading them to buy homes they couldn't afford. Ms. Costa, the housekeeper, secured a $713,000 sub-prime mortgage. In another instance, a Brazilian baby sitter borrowed $495,000. Now, the home buyers are beset by foreclosures and additional stains on their already-tainted credit.

***

• A lawsuit filed by Ms. Costa and several others in California superior court alleges that a network of real-estate agents, loan officers and mortgage brokers targeted "vulnerable immigrants," falsified financial records, forged documents and misled the home buyers about the real costs of their mortgages. The suit seeks unspecified damages for the plaintiffs.

For more, see How the Subprime Mess Hit Poor Immigrant Groups (may require subscription; if no subscription, go here).

Unraveling Missouri Flipping Scam Forcing Tenants Onto The Streets

Among the after effects of a massive house flipping scam in Sikeston, Missouri that has left over 300 homes in foreclosure are the problems facing unwitting tenants who are being "foreclosure evicted" out of their rented homes on short notice, despite being current on their rent. Among the reported problems faced by some of the city's displaced residents:

• Unrefunded security deposits, local homeless shelter unable to meet increased demand for services, ruined furniture due to uncontrollable circumstances in one case, receiving a letter giving one tenant a week to vacate -- two days after she gave birth, children facing confusion as to their new living circumstances - living out of a car one day and bouncing in and out of friends' and family members’ homes on other days as space is available, shortage of rental housing in the area given the recent spike in demand for rentals from others in the same predicament, increased rental rates due to the increased demand.

For more, see Mortgage fraud scheme: Families displaced by housing fraud ("Lost in the shuffle").

For an earlier post on the unraveling Sikeston, Missouri flipping scam, see KFVS-TV "Housejacking" Investigation Reveals Flipping Scam; 300+ Homes In Foreclosure.

For other posts involving rent skimming landlords who pocket rent and allow homes to go into foreclosure, see Tenants Unwittingly Renting Homes In Foreclosure I , II , III , and IV. equity skimming unwittingly gamma

North Carolina Feds Indict Attorney & Broker In Alleged Flipping Scam

In Charlotte, North Carolina, the Charlotte Observer reports:

• A federal grand jury in Charlotte has indicted a real estate attorney and a mortgage broker, accusing them of defrauding banks and clients during illegal real estate transactions in 2001 and 2002. The attorney, Victoria Sprouse, and the broker, Michael Pahutski, both of Charlotte, were indicted Nov. 16 on charges of mail, wire and bank fraud, conspiracy and money laundering. Sprouse was also indicted on a perjury count. Stephen Hawfield, a Charlotte real estate investor, was named as an unindicted co-conspirator. According to the indictment, Sprouse and Pahutski prepared false mortgage loan applications, submitted false documentation in the applications and illegally held money during the closing of home sales.

***

• In February, a jury in U.S. District Court awarded a company that had sued Sprouse $1.15 million in damages, although the amount was later reduced. The company, SouthStar Funding, accused Sprouse of defrauding them during real estate transactions.

For more, see Attorney, broker indicted (Pair accused of creating false documents to profit from home sales).

Foer story update (April 2, 2009), see Sprouse guilty of mortgage fraud (Real estate lawyer weeps after jury convicts her of 18 charges of conspiracy, fraud, money laundering).

Go here for other posts on this case.

County Prosecutor's Office Has Foreclosure Rescue On Its Radar Screen

In Ventura County, California, the Ventura County Star reports:

• [P]rosecutors are seeing a rise in the number of complaints from people who have been wronged in real estate transactions. "We generally categorize it as foreclosure rescue fraud," said Senior Deputy District Attorney Miles Weiss. "Basically, false promises about being able to save people, their credit, the equity in their home, etc." [...] As head of the Real Estate Fraud Prosecution Unit, Weiss is working with people [facing foreclosure] who feel they were cheated ... .

In one active case being investigated, a couple facing foreclosure responded to an offer of foreclosure help. Reportedly, it wasn't until some time after the transaction was consummated and the couple again fell behind in their payments that they learned that they no longer owned their home and had been unknowingly renting the house from the foreclosure rescue operator. They ultimately found out that they had sold their home to the operator for $55,000 less than the market value and paid him an additional $50,000 fee for doing so.

Ventura County District Attorney Gregory Totten vowed at a news conference to end the type of deals that snagged the couple. For more, see Realty fraud gripes rising (Coalition to help owners in distress).

Go here for Ventura County DA's:

• Description of Real Estate Fraud Prosecution Program (go here for Spanish version),
• Real Estate Fraud Complaint Form (go here for Spanish version).

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.).

Are "Contingent Interest" Reverse Mortgages A Scam?

In South Florida, a reader of The Miami Herald's Action Line recently wrote in:

• As the personal representative for an elderly friend's estate we had to pay $321,000 to pay off a 10-year-old $60,000 reverse mortgage. The culprit? A clause titled ''contingent interest,'' which gave the mortgage company 50 percent of the appreciation in property value over the term of the note. The property appraised at $125,000 in 1996 and at $430,000 in 2006. In addition to the hefty interest and fees, the mortgage company got a further $152,000 under the clause. Please warn your readers.

For Action Line's response:

• This is why we stressed the importance of doing your homework. Fortunately, these equity-sharing or appreciation-sharing clauses are no longer used, according to Bronwyn Belling, AARP's Washington-based reverse mortgage expert. Only a handful of lenders offered reverse mortgages that included them but ''some of these loans are still out there,'' and Florida had a higher proportion of them, she said.

• A class-action suit filed on behalf of Californian seniors who had taken out Transamerica Homefirst's ''Lifetime'' reverse mortgages, which contained such terms, was settled in 2003 with an $8 million award to the plaintiffs.

• Belling warns, however, that with the high demand for reverse mortgages, new variations on contingent-interest loans are beginning to emerge. Counseling -- provided for free -- is required when applying for a federally backed Home Equity Conversion Loan, or HECM, but only California makes counseling mandatory for all types of reverse mortgages. About 90 percent of reverse mortgage loans are HECMs, which have ''lots more consumer protection'' built into them, Belling said. AARP-trained and -tested counselors can be located online at www.hecmresources.org/network.cfm. All local HECM counselors can be located by calling, toll-free, 800-569-4287. ''Getting the free counseling is the best step,'' Belling said, to preventing shocks like this.

For the Action Line column, see When shopping for reverse mortgages, counseling's crucial (no longer available online - courtesy of The Miami Herald).

Go here for other posts on problems relating to reverse mortgages. zebra

Rent Scammers Using Fake Ads On Craigslist Cop Plea

In San Diego, California, KGTV Channel 10 reports that Anthony Zoccolillo, 30, and Robert Ramus, 68, struck a deal with the district attorney and pleaded guilty last week to one count of conspiracy and two counts of grand theft in a rent scam in which they purported to offer for rent homes they didn't own and pocketed the cash paid to them by unwitting rental prospects. According to the story:

• Zoccolillo and Ramus used the Internet to their advantage, posting fake rental ads on Craigslist and pretending to rent out upscale, vacant homes that were actually for sale and listed on the Multiple Listings Service (MLS). The MLS is a database used by real estate agents, and that is how the pair had information on the homes, including the code to open the lock boxes.

The Channel 10 I-Team brought this scam to light when they set up a sting, offering the two men cash for a rental deposit for a Pacific Beach home. They worked with a private investigator / former cop who pretended to be the sucker in the sting. For more, see Men Plead Guilty In Home Rental Scam, or go here to watch the Channel 10 I-Team video coverage.

Go here for other posts on tenant victims of rent scams. unwitting tenant rent scam zebra

New Hampshire Establishes Statewide Foreclosure Hotline

In Concord, New Hampshre, The Union Leader reports:

• The state has set up a new hotline for consumers who face foreclosure on subprime mortgage loans they used to buy their homes. [...] The Banking Department set up a special phone number, 1-800-437-5991, to handle calls from consumers who either face foreclosure or are worried about their loans. Department staff will handle the calls during regular business hours, 8 a.m. to 4:30 p.m.

For more, see NH foreclosure hotline set up.

Florida Lifts Freeze On Fund Holding Investments Tied To Subprime Mortgages; Concerned Municipalities Promptly Pull Out Another $1.2 Billion

Bloomberg News reports today:

• Schools and towns in a Florida fund that lost almost half its assets to withdrawals last month pulled out another $1.2 billion today when the state lifted a freeze on their accounts, officials said in a statement. Cities and counties that use the Local Government Investment Pool like a bank account are able to tap their funds on a limited basis ... . [...] Participants will have full access to new deposits and 86 percent of existing balances, from which removals are limited to the greater of $2 million or 15 percent.

For more, see Florida Fund Reopens, Has $1.2 Billion of Withdrawals.

See also, Florida Fund Caps Withdrawals as Towns Face Hardships.

For story updates, see:

• Florida Fund Assets Reduced By $1.9 Billion After SIV Losses (Bloomberg News - 12-12-07),
• Crist: State won't bail out investment fund (The Miami Herald - 12-12-07),
• Florida says $9B can't be pulled from fund (Local governments can't pull out more than $3B for now) (Orlando Sentinel - 12-12-07),
• Florida-run investment fund wobbles to recovery (Sarasota Herald Tribune - 12-12-07),
• State to investigate Local Government Investment Pool (The Miami Herald - 12-11-07)

Go here for related posts on this story. state run subprime

Municipal Governments May Be Stuck Holding Investments Tied To Subprime Junk

A story appearing last month on Bloomberg News reported on the belief of many municipal government finance managers throughout the country that their investment of taxpayer money in state-run government agency investment pools is risk-free and easy. An excerpt from the story:

• It may be easy, but it's not risk free. What [one local official] didn't know in October -- and what thousands of municipal finance managers like him across the country still haven't been told -- is that state-run pools have parked taxpayers' money in some of the most confusing, opaque and illiquid debt investments ever devised. These include so-called structured investment vehicles, or SIVs, which are among the subprime mortgage debt-filled contrivances that have blown up at the biggest banks in the world.

For more, see Public School Funds Hit by SIV Debts Hidden in Investment Pools.

See also a Miami Herald story (12-6-07): State's investment loss of $2.5B falls below standards (The State Board of Administration reported that it has more than $2.5 billion in downgraded investments in several accounts, including the state retirement fund):

• The damage caused to Florida by the turmoil in the mortgage industry is growing. Florida's troubled agency in charge of handling investments, under fire for not disclosing the extent of questionable investments it made on behalf of cities and counties across the state, acknowledged Wednesday it holds more than $2.5 billion in investments that have fallen below the state's quality guidelines.

Go here for related posts on how investors are being affected by investments tied to subprime mortgages, including how a Florida state-run fund recently experienced the equivalent of "a run on the bank" when municipal finance managers throughout the state started frantically pulling their cash from the fund before the state stepped in and froze the fund's assets.

Investments Tied To Subprime Junk May Leave Florida Pension Fund "Holding The Bag"

In Florida, Bloomberg News reported this week:

• Florida's pension fund owns more than $1 billion of the same downgraded and defaulted debt that sparked a run on a state investment pool for local governments and led officials to freeze withdrawals, according to documents obtained by Bloomberg News through an open records request.

Some of the notable quotes in the story:

• "These were highly inappropriate investments for taxpayers' money,'' said Joseph Mason, a finance professor at Drexel University in Philadelphia. "This is the tip of the iceberg for pension funds. We know the paper is sitting there. There are substantial subprime-related losses that haven't shown up yet.''

• "Garbage is garbage,'' said Harvey Pitt, former chairman of the Securities and Exchange Commission. "Once they recognize it's not fit for human consumption, they have to exercise their fiduciary obligation and get rid of it.''

For more, see Florida Pension Fund Has `Suspect' Debt Held by Pool.

Go here for related posts on how investors are being affected by investments tied to subprime mortgages, including how a Florida state-run fund recently experienced the equivalent of "a run on the bank" when municipal finance managers throughout the state started frantically pulling their cash from the fund before the state stepped in and froze the fund's assets.

NBC News On Equity Stripping, Foreclosure Rescue Operator Metropolitan Money Store

NBC Nightly News recently ran stories on the now-defunct foreclosure rescue / equity stripping operator, Maryland-based Metropolitan Money Store. Included in the stories are interviews with some of the scam victims, comments by D.C. Attorney General Linda Singer, clips of the Joy Jackson / Kurt Fordham wedding. To watch the NBC News videos of the stories, by Senior Investigative Correspondent Lisa Myers, see:

• Vulnerable homeowners target of scams,
• Homeowners sue mortgage company.

To read the online story, see Homeowners sue mortgage company (D.C. residents allege fraud, say they were vulnerable targets).

Go here for other posts on Metropolitan Money Store.

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.).

Cuomo Keeps Promise; Nails Wall Street With Subpoenas In Continuing Subprime Junk Mortgage Investigation

In New York City, Reuters reports:

• New York state prosecutors have sent subpoenas to Wall Street firms seeking information related to the packaging and selling of debt tied to high-risk mortgages, a person familiar with the matter said on Wednesday. The subpoenas, sent by the office of New York Attorney General Andrew Cuomo, requested information from a number of Wall Street firms. [...] Cuomo last month said he would subpoena investment banks as part of an expanding probe into the $10 trillion U.S. mortgage industry. [...] Last month, Cuomo sued First American Corp and one of its property appraisal units for colluding with Washington Mutual, one of the largest U.S. home lenders, to inflate property appraisals. A week later, he announced the office had sent subpoenas to Fannie Mae and Freddie Mac, giant mortgage agencies sponsored by the U.S. government.

For more, see New York subpoenas Wall Street on mortgages. OFHEO

Miami-Dade Cops Round Up Closing Agents, Loan Originators, Straw Buyer Among Seven Charged In Alleged Fraud Scams

In Miami, Florida, the Miami Herald reports:

• Seven new suspects accused of mortgage fraud were rounded up by police, as Miami-Dade County Mayor Carlos Alvarez unveiled new legislation to increase criminal penalties for people convicted of real estate fraud. [Editor's Note: Actually, it was only six new suspects, plus one old suspect, arrested last month on fraud charges, who has now been arrested again on an unrelated charge].

• [One arrest involved] Mariana Navarrete, 44, the registered owner of Confin Home Mortgage & Loan and United Consultants Group, who was arrested last month and accused of recruiting family members to steal the identity of an employee and using it to take out loans. This time, Navarrete is accused of selling a home to a victim twice, each time for $415,000.

• In [another arrest involving] a mortgage scheme often refered to as an ''air loan,'' Richard Gutierrez, 37, was arrested and charged with grand theft for allegedly getting proceeds from a $250,000 mortgage to buy a property that does not physically exist.

• In a [third] scheme, police also arrested Rafael Diaz, 47, who ran a straw buyer scheme in the [Florida] Keys on at least one property. Police say he recruited Justo Santana, 50, to act as a straw buyer for a property in Tavernier that was falsely overappraised by $100,000. Also charged were closing agents, Evelyn Marrero, 36, and Gilbert Oquendo, 48, and loan officer Rayner Aguiar, 24. All five face charges of mortgage fraud, grand theft, and participating in an organized scheme to defraud.

For more, see Seven more arrested in mortgage fraud (no longer available online).

Funding For Arizona Mortgage Fraud Probes Cut Off By Legislature

In Arizona, The Associated Press reports:

• At least 40 investigations of mortgage fraud and other illegal lending practices in Arizona are stalled because of a funding shortage. The Arizona Department of Financial Institutions has only two consumer investigators to keep up with more than 800 mortgage complaints this year. [...] To tackle the flood of complaints this year, the regulator hired independent investigators. But a plan to keep paying those contractors stalled during the last legislative session because some lawmakers said the mortgage industry should self-regulate. Now, dozens of investigations into mortgage fraud and other bad loans are waiting until the agency's investigators can get to them.

For more, see Lack of funds stalling Az probes into mortgage fraud.

NYC Feds Indict Six In Alleged Foreclosure Rescue / Equity Stripping Scam Operation

In New York City, Reuters reports:

• Six people were charged with fraudulently obtaining titles to scores of homes and taking out bad bank loans against them worth more than $20 million as part of a home foreclosure "rescue" scheme, according to a federal indictment unsealed in New York on Tuesday. [...] The defendants were accused of inducing people in danger of losing homes to deed the homes to third parties whose good credit would be used to take out new, larger mortgages or home equity loans to pay off previous mortgages and prevent default or foreclosure.

• Homeowners were allegedly told that the third party buyers, called "straw buyers", would hold the titles to the homes for a year, pay off the original mortgages and make payments on the new mortgages while the homeowners cleaned up their credit. Instead, the indictment said, the defendants kept excess cash after paying off the original loans.

***

• Five of the defendants -- Maurice McDowall, Andrea Moore, Kerri Clarke, Marina Dubin, and Michael Irving -- were connected to two so-called foreclosure rescue specialist companies called Lost and Found Recovery LLC and Homes R Us USA LLC. The sixth, Alexsander Lipkin, was a mortgage broker for AGA Capital NY Inc. Lost and Found and Homes R Us reaped more than $1.4 million on the loans, the indictment said.

For more, see Six indicted in "foreclosure rescue" in New York.

For other reports, see:

• Gang of foreclosure rescue 'angels' indicted in multimillion-dollar scam (New York Daily News),
• FBI Press Release.

To view the criminal charges and the specifics of the alleged scheme, see Indictment - U.S. vs. McDowall, et al.

For prior post on Maurice McDowall, see NYC Foreclosure Rescue Scammer Target Of Lawsuits; Can't Be Found, FBI Investigating.

---------------

For June 6, 2008 story update, see:

• New York Daily News: Two found guilty in mortgage scam and face 30 years in prison,
• The Associated Press: 2 plead guilty in NY mortgage frauds targeting homeowners.
• North Country Gazette: Two Guilty Of Home Foreclosure Rescue Scheme.

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.).

Maryland Man Who Lost Home To Foreclosure Despite Making All Payments Has Appeal Heard

The Baltimore Sun reports:

• Kwaku Atta Poku, the Columbia cab owner who lost his family's townhouse to foreclosure after a refinancing, despite having made every mortgage payment, [got] another chance to present his case [Monday] in Maryland's highest court. In arguments that could change how lower courts handle foreclosure cases, attorneys for the immigrant from Ghana are fighting to overturn rulings in favor of Washington Mutual Inc., the national mortgage company that took and resold his Howard County house in 2005.

***

• Atta Poku is worried that his distant relatives and friends still think he did something wrong, even though Shane Winn, a spokesman for Washington Mutual, has said the company doesn't blame him for the foreclosure. Winn said his firm never received payment for the first mortgage, and Atta Poku was unable to prove it was paid off when he refinanced, partly because crucial financial documents were lost by the financial institutions involved in the transaction.

***

• Phillip Robinson, executive director of Civil Justice, Inc. public-interest law firm, said there is more at stake than one man and his family. "With Atta Poku's case, they'll [Court of Appeals] have an opportunity to reshape the Maryland foreclosure process." Robinson said more people are losing their homes to mortgage companies and banks, and the court can decide if Maryland's foreclosure process "adequately meets various constitutional standards."

For more, see Evicted owner to air appeal (Md. court gets case that could change foreclosure rules) (Baltimore Sun - 12-3-07).

For story update, see (5-4-08) New laws too late in loss of home (Ghanaian immigrant continues struggle, says options limited).

For additional background on this story:

• Foreclosure victim seeks relief from Maryland Court of Appeals (Baltimore Sun - 12-4-07),
• Watch archived webcast of Monday's oral arguments in the Maryland Court of Appeals,
• Links to earlier Baltimore Sun articles on this story,
• Prior posts on this story.

Undercover Sting Nails Three In California Home Theft Try

In San Bernadino County, California, The Press Enterprise reports:

• San Bernardino County district attorney officials arrested three San Bernardino women in an undercover sting last week after they attempted to fraudulently transfer property belonging to a 72-year-old cancer victim from Georgia. District attorney's officials announced Monday that the women were lured to the First American Title office, 303 W. Court St., where they gave undercover investigators a fake license and forged a signature. Kayla Stewart, 47, Lisha Lee, 36, and Valerie Nabors, 26, each were charged with conspiracy to commit forgery, identity theft and financial elder abuse. More arrests are possible, Landrum said.

Source: Three arrested in real-estate case (3rd blurb from the top).

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

KFVS-TV "Housejacking" Investigation Reveals Flipping Scam; 300+ Homes In Foreclosure

(post modified - 12-5-07)
In Sikeston, Missouri, KFVS-TV Channel 12 recently ran a three part investigative report on a home flipping operation involving the now-defunct Century Mortgage and its president, local real estate operator Todd McBride, involving forged deeds, inflated appraisals, home sales to out-of-town straw buyers with promises to supply property management services, etc.

The end result has been: (1) a legitimate property owner filing suit to reclaim title to rental houses that were stolen from him, (2) 40-50 unwitting straw buyers that are heavily indebted with ruined credit, (3) 300+ homes in foreclosure with mortgages far in excess of their value, (4) tenants that are in the process of being "foreclosure evicted," even though they've made all their rent payments, and (5) a city trying to collect on fines for code violations on the homes that have fallen into extreme disrepair and having to bear the cost of cleaning up or even tearing down derelict homes. One straw buyer victimized by the scam reportedly has a warrant out for his arrest due to all the code violations on homes in his name.

The scam came to light when a large number of the homes involved started to get hit with code violations all at the same time.

To watch the KFVS-TV Channel 12 story by investigative reporter Kathy Sweeney:

• Housejacked - Part 1 , Part 2 , Part 3.

To read online highlights of the story, see Housejacked: How it Works, Who's Involved, and Who Got Hurt.

--------------------

For print coverage on this story from The Standard Democrat, see:

• Mortgage fraud scheme: Despite the woes, some walked away winners from foreclosures (Original sellers profited, Scott County earned fees),
• Mortgage fraud scheme: How it worked,
• Mortgage fraud scheme: Families displaced by housing fraud ("Lost in the shuffle").

Go here for other posts on this story.

Wall Street Journal On Credit Worthy Borrowers Steered Into Subprime Loans

The Wall Street Journal reports:

• One common assumption about the subprime mortgage crisis is that it revolves around borrowers with sketchy credit who couldn't have bought a home without paying punitively high interest rates. But it turns out that plenty of people with seemingly good credit are also caught in the subprime trap. An analysis for The Wall Street Journal of more than $2.5 trillion in subprime loans made since 2000 shows that as the number of subprime loans mushroomed, an increasing proportion of them went to people with credit scores high enough to often qualify for conventional loans with far better terms.

For more, see Subprime Debacle Traps Even Very Credit-Worthy (As Housing Boomed, Industry Pushed Loans To a Broader Market) (might require subscription; if no subscription, try here, courtesy of The Denver Post).

Alabama Escrow Agent, Loan Originator Get Jail Time In Straw Buyer Mortgage Scam

In Mobile, Alabama, The Press-Register reports:

• Federal judges in Mobile last week handed down prison sentences to a Mobile County pair who helped pull off a mortgage scheme that investigators said defrauded lenders of more than $1 million. U.S. District Judge William Steele on Thursday sentenced Joycelyn Easter, 50, to two years in prison and ordered her to repay more than $467,000. On Tuesday, Chief U.S. District Judge Ginny Granade sentenced Antonio Devon Harrison to a year and nine months. The ringleader of the plot, Darlene Hill, is scheduled to be sentenced later this month.

***

• Tracy Williamson, who works as a closing agent for Title Assurance Co., where Easter also worked, said her former colleague's actions have threatened the company's insurance. Easter was responsible for disbursing loans provided by Regions Mortgage. [... Harrison] admitted to processing loan applications and submitting them for approval at various financial institutions despite knowing that they were bad deals.

For more, see Pair sentenced in mortgage fraud.

Go here for earlier post on this story.

Prospective Homebuyer Dodges Death In Copper Theft Incident

In Ontario, Ohio, the Mansfield News Journal reports:

• Springfield Township Fire Chief Ron Henry said thieves who cut copper pipes in a vacant house could potentially have caused a fatal explosion. It took firefighters two hours [last week] to clear the home of natural gas from a leak triggered by the theft. [...] “A prospective buyer was opening it up to take a look at the house and smelled the gas and called 911,” Henry said. Copper pipe typically is used for water. However, in that house some copper pipe was being used in the heating system. Thieves “ripped it out,” the fire chief said. By the time the leak was discovered, gas levels were “very high,” he said. “It was unsafe for us to enter.” “If the buyer had went in very far and turned on a light, it could have caused a death,” Henry said.

For more, see Fire chief says copper pipe theft could’ve led to fatal explosion in Ontario (no longer availablle online).

For a story of one property owner victimized by copper theft who wasn't as fortunate as this prospective buyer, see $20 Copper Theft In Vacant Home Leads To Owner's Death.

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft zebra

The Fleecing Of Frances Taylor

In Seattle, Washington, The Seattle Times reports:

• Seven years ago, Frances Joy Taylor was living in her own house, singing in her church choir and baking apple pies for friends. The 89-year-old widow had about $2 million in assets — which she intended to leave to her church to help children in Africa. Today, Frances lives at an adult-care home and spends her days napping in front of a television. Her care is paid for largely by taxpayers, because Frances is now bankrupt. Frances' memory is fading as fast as winter daylight, the result of a steady assault by Alzheimer's over the past eight years. Her financial demise began around the same time, when a businessman named Tyrone Dash took over her affairs.

For more on how a now-96 year old Alzheimer's patient had her mortgage-free home and other assets scammed from her, see The fleecing of Frances Taylor.

For other recent articles from The Seattle Times related to this story, see:

• Homeowners in debt, seniors prime targets of riskiest loans,
• Investigation reveals exploitation of vulnerable.

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

Judges Begin To Hammer "Foreclosure Mill" Law Firms For Trampling On Homeowners' Rights

In a recent article that should be "must reading" for any judge (state or Federal) who presides over foreclosure cases, The Wall Street Journal reports:

• Law firms handling thousands of foreclosure cases on behalf of mortgage lenders and servicers are drawing criticism from judges, who say roughshod filing practices are trampling borrowers' rights.

***

• Lately, judges are faulting law firms for what has become a common practice: filing a foreclosure suit, in states that require them, without showing proof that the plaintiff actually holds the mortgage and has the right to foreclose. (Such plaintiffs are often banks that act as trustees for investors of securities backed by mortgages.) The situation occurs in part because mortgage documents and the contracts between borrowers and lenders may change hands multiple times and may not be assigned to the plaintiffs at the time the suits are filed.

In addition to the recently reported dismissal of foreclosure actions by Ohio Federal judges for lack of proper paperwork, WSJ reports three separate incidents where law firms were fined $65,000, $75,000, and $125,000 by judges in foreclosure actions for what amounts to "playing fast and loose" with the court system. There's also a fourth incident reported where a judge is currently considering imposing sanctions on the attorney.

For more, see Judges Tackle 'Foreclosure Mills' (High-Volume Firms That Cut Corners Are Rebuked, Fined) (subscription required; if no subscription, try here).

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 ForeclosureMillAttorneysAlpha

Criminal Investigation Targets Twin Cities Area Mortgage Company

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:

• Hennepin County investigators are probing mortgage fraud complaints involving a Brooklyn Park mortgage company that allegedly used straw buyers to buy property at inflated prices. The county is investigating Universal Mortgage and several of its employees, according to a search warrant affidavit filed by a county investigator.

• Universal's practice of using straw buyers was detailed by the Star Tribune in June. One of those straw buyers was a 22-year-old exotic dancer who said she bought 10 properties through Universal; she's now cooperating with the county attorney's office, according to the affidavit. She and four other buyers whose experiences are detailed in the affidavit said they purchased a total of 25 properties through Universal.

***

• The affidavit was written in support of a search by investigators of records of property dealings involving Universal and several related companies. Also sought were property records involving Donald Walthall, Universal's owner; Andre Bellfield, a former employee; and Marlon Pratt, who also worked at Universal. Walthall didn't return a call and the others couldn't be reached for comment.

For more, see Mortgage firm is focus of Hennepin Co. fraud probe (Hennepin County is investigating Universal Mortgage of Brooklyn Park and several of its employees).

For a related June, 2007 article on this story, see see 'Straw buyer' deals fuel tidal wave of foreclosures (Real estate speculators out for profit can manipulate the system, experts say. A woman says she fell victim to a Twin Cities scheme).

Go here for other posts on the alleged Universal Mortgage straw buyer, home flipping scams.

---------------

In a related Federal civil racketeering (RICO) lawsuit brought against Universal Mortgage, Andre Bellfield, and Marlon Pratt by Homestead Mortgage Company, a motion is currently pending seeking a default judgment against Andre Bellfield for approximately $700,000. It appears from Federal Court records that Bellfield has either left town, gone into hiding or has otherwise made himself scarce because the process server in this case couldn't find him to serve him with the legal papers. Homestead Mortgage was forced to serve him with notice of the lawsuit by taking out a legal notice in a newspaper. Go here for information on the pending motion for a default judgment against Andre Bellfield.

For copy of Federal racketeering lawsuit, contact me at HomeEquityTheft@yahoo.com and I'll e-mail it to you (be sure and put "Homestead Mortgage vs. Universal Mortgage, Pratt and Bellfield" in the subject line).

Minnesota Feds Investigating Mortgage Company Linked To Suspicious Deals

In Minneapolis, Minnesota, WCCO-TV Channel 4 reports:

• Newly-released documents confirm that the FBI is investigating [TJ Waconia,] a Roseville, Minn. company for alleged mortgage fraud. The case involves hundreds of properties in several counties. If the allegations are proven, it would be one of the largest cases of its kind in the metro.

• "The number of people involved in the scheme was really very large," said Barbara Johnson, President of the Minneapolis City Council. Johnson said for too long she had been hearing from neighbors on the north side who were concerned about real estate transactions involving the same investment company. Documents and data were compiled for months then Johnson looked for someone willing to look into the complex case.

Johnson said she "shopped" her information around to state and local prosecutors before finally getting the FBI to take the case. Complaints of boarded-up foreclosures throughout the area from her constituents compelled her to take action. For more, see FBI Investigates MN Mortgage Company For Fraud. Go here for the WCCO Channel 4 video coverage.

See also, FBI targeting Roseville company in fraud case (Minnesota Public Radio).

Ohio House Flipper Gets 2 Years For Using Phony Docs To Scam HUD

In Columbus, Ohio, The Columbus Dispatch reports:

• A former Bexley real-estate agent who made millions selling homes in the Hilltop and North Linden areas using false credit documents was sentenced yesterday to two years in prison. Steven E. Winter, 45, was convicted of filing a false federal income-tax return and using false documents to defraud a federal housing agency. Winter sold more than 170 properties from 1997 to 2004 at an average markup of 85 percent. He was sentenced yesterday by U.S. District Judge John D. Holschuh to 24 months in prison and three years of supervised release.

***

• Winter attracted many low-income, first-time buyers with ads reading "$500 GETS KEYS." Dozens of the homebuyers ended up in foreclosure. Of those, 22 bought homes with mortgages guaranteed by HUD. As a result, HUD's insurance has paid lenders more than $1.6 million when Winter's buyers defaulted. In a 2004 Dispatch story, several buyers said Winter had altered their loan applications and that they paid far more than the homes' appraised values.

For more, see House flipper sentenced for fraud.

Wall Street Journal On Investigations Of Possible Phony Claims By Mortgage Servicers & Lenders In Homeowners' Bankruptcy Cases

The Wall Street Journal is the latest to chime in on reports that mortgage servicing companies and lenders, when claiming amounts owed from homeowners in bankruptcy, are submitting inflated amounts to the bankruptcy court, and are allegedly engaging in questionable practices in the handling of homeowners' mortgage payments. The Journal reports:

• Attorneys from the U.S. Trustee Program, a division of the Justice Deparment, have taken aim at mortgage lenders, servicers and their lawyers in at least six states, including Georgia, Massachusetts and Pennsylvania, since last year, according to court records. The agency is probing representations made to courts about what homeowners owe and the handling of their payments during bankruptcy, both areas in which consumer advocates say there are pervasive problems.

(Editor's note: While the concerns being expressed lately relates to servicers' and lenders' claims and conduct occurring in the context of homeowners' bankruptcy cases, equal concern should also be directed to similar claims and conduct when servicers and lenders file non-bankruptcy, foreclosure lawsuits against homeowners, which are currently flooding the court system.)

For more, see U.S. Expands Scrutiny of Home Lenders (subscription required; if no subscription, try here - then click link for the article).

Go here, Go here and Go here for more on recent Countrywide problems with consumers.

For more on allegedly false claims being made by home lenders and mortgage servicing companies both in bankruptcy and non-bankruptcy proceedings, see:

• Foreclosure Charges by Lender Investigated (New York Times - 11-28-07) (may require subscription; if no subscription, try here).
• Borrowers Face Dubious Charges in Foreclosures (New York Times - 11-6-07) (may require subscription; if no subscription, try here),
• Bankruptcy Trustees Taking Action Against Dishonest Lenders, (Warren Reports On The Middle Class),
• Countrywide Subpoenaed; Possible False Foreclosure Claims Against Homeowners Being Investigated,
• Homeowners In Foreclosure Being Clipped For Illegally Inflated Legal & Appraisal Fees, Says Lawsuit,
• Fairbanks Capital Screwing Mortgage Lender Too, Says Lawsuit,
• Class action lawsuit - Trevino vs. Mortgage Electronic Registration Systems (aka "MERS"),
• Lawsuit - Ellington Credit Fund, Ltd. vs. Select Portfolio, Inc., et al., available online courtesy of Michael Dillon and GetDShirtz.com.

Disbarred Florida Attorney To Plead Guilty To Misleading Lenders; Swiping Loan Proceeds From Foreclosure Rescue Transactions

This is a story that even a yet-to-be criminally charged foreclosure rescue operator named ARO Properties Corp. (who has been referred to by Federal prosecutors as a co-conspirator in an equity stripping operation) was screwed over by a now-disbarred attorney it hired to oversee dozens of Central Florida real estate transactions in a so-called "Fresh Start Lease Back" home rescue program for homeowners facing foreclosure. The St. Petersburg Times reports:

• Disbarred Clearwater lawyer Graham Kligerman is scheduled to plead guilty this month to federal charges of stealing more than $1-million in a multistate equity-skimming fraud. [...] Two years ago, the Florida Supreme Court [in a separate, unrelated incident] disbarred Kligerman. In its complaint against him, the Florida Bar said he diverted money from one of his practice's trust accounts.

***

• Now prosecutors say that at that time Kligerman was involved in a real estate scam with two co-conspirators from California. Federal prosecutors accuse Kligerman of diverting money from the fraudulent real estate transactions' trust accounts without the knowledge of his co-conspirators. Over two years, Kligerman acted as the closing agent on about 60 fraudulent real estate transactions in which banks were misled into making millions of dollars in loans, prosecutors say. And without the knowledge of two co-conspirators in California who hired him to oversee the transactions here, Kligerman diverted at least $1-million from trust accounts to himself and unwitting clients of his practice, authorities say.

***

• [Kligerman's attorney] said his client has taken responsibility and is cooperating with prosecutors investigating the two co-conspirators [the foreclosure rescue operators]. [...] The federal complaint states that as part of the real estate scheme, the conspirators used false representations to obtain loans from banks and homes from people facing foreclosure. The main aim of the scheme, prosecutors said, was to strip the homes - most in Florida, a few in Georgia - of their equity.

• ARO [the California-based foreclosure rescue operator named as a co-conspirator] advertised a product called "Fresh Start Lease Backs." The company found homeowners who could not make payments on their mortgages but had a lot of equity in their homes, according to prosecutors. ARO then found investors to supposedly buy the homes, lease them back to the original homeowners and eventually sell the properties back to them.

• But banks were not told the real arrangement of the transactions, prosecutors said. The banks were not told that the down payments were being provided by the co-conspirators, not the loan applicants. The down payments that swayed the banks to make the loans came from the equity of the actual homes, prosecutors allege. Nor were the banks told that the buyers had no plans to live in the homes as their applications claimed. The buyers were unsophisticated investors with good credit who paid ARO $2,500 to be buyers, according to the complaint. They unwittingly submitted fraudulent loan applications.

Kligerman's plea agreement requires him to pay a yet-to-be determined amount of restitution to at least two loan processors, four banks, 53 homeowners and 18 unwitting straw buyers. For more, see Disbarred lawyer to plead guilty to fraud (Prosecutors say Graham Kligerman misled banks into making millions of dollars in loans).

For story update, see Former Lawyer Cuts Plea Deal In Real Estate Scam (Disbarred Clearwater lawyer Graham Kligerman pleaded guilty on Tuesday (12-17-07) to conspiracy and wire fraud, admitting he stole millions in a real estate scheme).

Go here for a description of ARO's Fresh Start Lease Backs program (no longer available online).

To view the relevant federal court documents in this case:

• Criminal Complaint (Information) - U.S. v. Kligerman, or

• (PACER registration required) go here for the Criminal Complaint (Information) filed by prosecutors (13 pages - $1.04), and here for the Plea Agreement (22 pages - $1.76; the admitted facts of the scheme are found at paragraph B-9, pages 19-21).

For more on Graham Kligerman, see:

• Disbarred Florida Attorney Gets 10 Years For His Part In Alleged Sale Leaseback, Foreclosure Rescue Scam That Defrauded 50+ Homeowners,
• Disbarment yields a case of frustration (A Largo woman must start her case from scratch after hiring a lawyer who had been facing misconduct charges) (St. Petersburg Times),
• Florida Supreme Court Disbarment.

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.).