Relatives Charged w/ Selling Home From Out From Under Elderly Oregon Widow; Used POA To Pocket $235K Sale Proceeds, Cash Out Bank Accounts, Annuities

In Portland, Oregon, The Oregonian reports:

• Shortly after two women gained power of attorney from a dying 83-year-old relative, they took all of her possessions and sold her house of 56 years, police said. The pair pocketed the $235,000 from the house sale and cleaned out the elderly woman's bank accounts and savings, sharing the money among themselves and family members, police and prosecutors say.(1) They also arranged and pre-paid for her funeral. However, Evelyn Roth made an amazing recovery and had no idea what her relatives were up to.

• Now the two suspects, Roth's cousin Virginia Ann Kuehn, 66, and her niece Kathleen Sue Jingling, 53, face a 35-count felony indictment charging them with first-degree criminal mistreatment, aggravated theft and first-degree theft. They've pleaded not guilty. [...] "They robbed me blind," Roth said. "Everything was for money, just to get money, money, money. That's not the way it should be." Roth said she pursued criminal charges because she's lost her savings and all her possessions to relatives who betrayed her trust.

For more, see Dying woman recovers, says relatives "robbed me blind" (if link expires, try here).

(1) Police said the two women cleaned out $35,000 in Evelyn Roth's checking account and also cashed her two annuities totaling $88,000. FinancialAbuseOfElderlyAlpha

Two Sentenced For Roles In Theft Of $126M In Client Funds Held In Connection With Real Estate Tax Free Exchange Transactions

From the U.S. Department of Justice:

• Two former employees of Edward H. Okun, who was sentenced to 100 years in prison on Aug. 4, 2009, after a three-week jury trial, were sentenced [...] for their roles in a scheme to defraud and obtain approximately $126 million in client funds held by The 1031 Tax Group LLP (1031TG).

***

• According to the plea agreement and statement of facts, [Lara] Coleman and others(1) used 1031TG and its subsidiaries in a scheme to obtain millions of dollars of client funds by false pretenses. [...] In the plea agreement and statement of facts, Coleman admitted that 1031TG falsely represented that it would hold client funds solely to complete the clients' [Section] 1031 exchanges.(2) Coleman admitted that after obtaining clients’ exchange proceeds with that false promise, she and others misappropriated approximately $132 million in client funds to support the lavish lifestyle of the owner of 1031TG, pay operating expenses for the owner’s various companies, invest in commercial real estate and purchase additional qualified intermediary companies to obtain access to additional client funds. In addition, Coleman admitted that she lied to federal investigators about statements she made in 2006 to internal attorneys for Investment Properties of America about the amount of money she and others had misappropriated.

For the Justice Department press release, see Two Virginia Residents Sentenced for Their Role in Scheme to Defraud Clients of Funds Allegedly Held in Trust.

(1) Coleman was sentenced to 10 years in prison and ordered to pay full restitution. In addition, Robert D. Field II was sentenced to five years in prison and was ordered to pay full restitution for his participation in the conspiracy.

(2) Section 1031 of the Internal Revenue Code allows investment property owners to defer the capital gains tax that would otherwise be due on properties sold, if the proceeds are used to purchase new property in a specified time frame. To facilitate such exchanges, investment property owners deposit the proceeds from the sale of their property with qualified intermediaries and sign exchange agreements, which include various promises by the qualified intermediaries to clients regarding the safekeeping of exchange funds in trust. EscrowRipOffKappa

Nebraska Couple Loses Home After Being Duped By Nationwide Loan Modification Racket

In Lincoln, Nebraska, the Lincoln Journal Star reports:

• One night in February, [Denise and Kevin Barret] saw a television ad for the Federal Loan Modification Law Center, a very official-sounding entity that promised it could reduce homeowners' payments while saving their homes from foreclosure. So the Barrets called the number and were told that for an initial payment of $995 the company could renegotiate the couple's delinquent mortgage and get them a better interest rate and more affordable payments. It sounded like a good deal, and the company at the time had a reasonable rating with the Better Business Bureau, Denise Barret said. So the Barrets signed up.

***

• While purporting to be helping the Barrets, the Federal Loan Modification Law Center was racking up complaints all over the country. In April, the Federal Trade Commission filed a federal lawsuit against the company, alleging it misrepresented that it could obtain a loan modification or stop foreclosure in all cases. The complaint also alleged that the company falsely claimed in radio and TV ads to be affiliated with the federal government.(1)

• Nabile "Bill" Anz, managing attorney for Federal Loan Modification and one of the people named in the FTC's complaint, told the Orange County Register in April that the company may have been aggressive, but it had obeyed the law. Since then, Anz seems to have changed his tune. On Aug. 4 he voluntarily resigned from the California State Bar Association, with charges pending against him.

• According to a news release, the bar filed an application in July to have Anz declared "involuntarily inactive," alleging he failed to perform for clients of the Federal Loan Modification Law Center and failed to refund fees to clients of the business. The news release said Anz admitted the misconduct that was alleged in the application. Some states have also taken action against Anz and his company.

For more, see Caught in foreclosure relief scam, a couple loses their home.

(1) Go here for links to the FTC press release and some of the relevant court documents filed in the lawsuit against Federal Loan Modification Law Center. Reportedly, Mike Cameron, an attorney with the Nebraska Department of Banking and Finance, said the department has fielded a couple of complaints about the Federal Loan Modification Law Center. Cameron said that because the company is already the subject of an FTC investigation, he refers complaints to the federal government.

Central Florida Legal Aid Office Scores $84K In AG Cash To Fund Foreclosure Defense Effort For The Poor

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum and The Florida Bar Foundation today awarded $84,000 to the Legal Aid Society of the Orange County Bar Association, Inc. to be used for a new foreclosure defense assistance program.(1) The program is funded by money obtained by the Attorney General through a settlement with Countrywide Financial. A total of $4 million will be available over two years to fund additional lawyer and paralegal positions devoted to providing free assistance to homeowners facing foreclosures who cannot afford legal defense. “With these funds, we can provide direct legal assistance to Central Florida homeowners trying to save their homes,” said Attorney General McCollum.

For more, see McCollum: Orange County Legal Aid to Get $84,000 Through Mortgage Foreclosure Defense Fund.

(1) Orange County, Florida residents who need legal assistance to avoid foreclosure may contact the Orange County Bar Association's Legal Aid Society at 407-841-8310 or visit the website at http://www.legalaidocba.org. Assistance is also available in several languages, including Spanish and Creole.

Brooklyn Foreclosure Intervention Seminar: Settlement Conferences & Advanced Foreclosure Defense Techniques

In Brooklyn, New York, the Brooklyn Daily Eagle announces:

• Thurs. Sept. 10, CLE: Foreclosure Intervention: Settlement Conferences & Advanced Foreclosure Defense Techniques, 6-8 p.m.: Speakers: Jaime Lathrop, director, and Jennifer Sinton, deputy director, both of South Brooklyn Legal Services' Foreclosure Prevention Project. Approved for (2) CLE credits toward Professional Practice. Free for attorneys who accept a pro bono assignment through the Volunteer Brooklyn Bar Association's Volunteer Lawyers Project before April 5, 2010. Held at the Brooklyn Bar Association, 123 Remsen St. For information or to register, contact Jessica Spiegel, pro bono coordinator: (718) 624-3894 x4.

• Tues. Sept. 22, Public Education Foreclosure Program, 6 p.m.: Free and open to the public. Sponsored by the Brooklyn Bar Foundation. Held at the Brooklyn Bar Association, 123 Remsen St. For information, see the BBA’s web site: http://www.brooklynbar.org/.

Source: Upcoming Events in the Legal Community: August 31, 2009.

More On The City Of Baltimore v. Wells Fargo "Ghetto Loans" Predatory Lending Case

In a recent interview with Democracy Now!, Wells Fargo whistleblower and ex-subprime loan officer and sales manager Elizabeth Jacobson speaks out on some of the predatory lending practices allegedly engaged in by her former employer.(1)

I) On the incentives for Wells Fargo loan officers to allegedly bulldoze every would-be borrower into a subprime loan:

• I was at Wells Fargo for nine years, and I originated loans. Wells Fargo had two separate divisions: the prime division and the subprime division. And you could not originate prime loans if you were in the subprime division. So that’s what I did for nine years at Wells Fargo, is originate the subprime loans.

• In the beginning years at Wells Fargo when I started, there was no filter system. So, if you had somebody come into your office and you could sell them a subprime loan, even if they qualified for a prime loan, that’s what you did. The compensation worked out that you had a huge incentive to put people into a subprime loan. Even the prime loan officers would make as much money on a [...] subprime loan, referring it over to the subprime division, that they would make doing a prime loan. So there was an incentive for the prime loan officers to refer the business to the subprime side.

II) On her company training putting borrowers into exploding adjustable rate mortgages:

• Well, when I was hired by Wells Fargo, I had never worked in the mortgage industry at all. I had been a paralegal. So I took everything that Wells Fargo was telling me, that this is the way things were done. I didn’t question the fact that we were putting people in a 55 percent debt-to-income ratio and that we were only qualifying them based on the two years at the lower interest rate. The whole goal was, every two years you’re going to refinance that loan. So, it was sold as a two-year loan. These people were never intended to be in the loan for thirty years.

III) On her experience on the question of allegedly seeking the assistance of African American churches in Baltimore to target their members for subprime loans:

• A lot of this was information that I would receive on conference calls as a sales manager. And people on the call, the management there, would encourage the loan officers, the subprime loan officers, to go into Baltimore city and target the churches, the African American churches, to get a relationship going with the minister or the reverend at the church and try to get that person to schedule some sort of meeting. They would call it a “wealth-building seminar” to get the parishioners of the church to attend. And any loan that was funded by Wells Fargo, whether a purchase or a refinance, $350 would then be donated to the church. And so, that was the incentive for the church to want to have these seminars there.

• But what would happen is the only loan officers that would attend these seminars were generally the subprime loan officers. And on these conference calls, at one point, somebody made a joke who happened to be a white loan officer and said, “Well, will I be able to go to these seminars?” And they were told right there on the conference call, unless you were of color, you could not attend these conferences, these wealth-building conferences. So it seemed me—Wells Fargo didn’t come right out and say this; this is just what I saw—is that they wanted the African American Wells Fargo loan officers to sell loans to the African American community.

IV) On her resignation from her position as sales manager and top producer in the subprime division at Wells Fargo (originating approximately $55 million a year in subprime loans):

• I happened to see a news report with the CFO of Wells Fargo, and he was questioned about the subprime division and denied at that point that Wells Fargo even had a subprime division. So here he is, the chief financial officer, where the subprime loans were supposed to be paying for the fixed costs of the company, and he’s denying that Wells Fargo even did subprime loans. That was just the final straw of total disillusionment, and then I put my resignation in.

For the transcript of the interview, and link to view the television interview, see Former Wells Fargo Subprime Loan Officer: Bank Targeted Black Churches as Part of Predatory Subprime Lending Scheme.

(1) Earlier this summer, Jacobson filed a sworn affidavit with a federal court in support of the city of Baltimore’s lawsuit against Wells Fargo for pushing high-interest, subprime loans onto African Americans in Baltimore and the Maryland suburbs, leading hundreds into foreclosure. She and another whistleblower allege Wells Fargo targeted African Americans for subprime loans and routinely steered customers qualified for prime loans toward subprime loans.

The Federal lawsuit and earlier media reports on the Baltimore City predatory lending action against Wells Fargo indicate that Jacobson and fellow whistleblower Tony Paschal allege, in sworn affidavits filed in Federal court, that:

• Wells' "Subprime managers joked that Prince George's County was the 'subprime capitol of Maryland'" (see Jacobson Declaration, at paragraph 26), Wells' loan officers targeted black ZIP codes (see Paschal Declaration, at paragraph 10) and churches (see Jacobson Declaration, at paragraph 27), used software to “translate” marketing materials into African-American vernacular (see Paschal Declaration, at paragraph 11), referred to subprime loans in minority communities as “ghetto loans” and to borrowers as “mud people” (see Paschal Declaration, at paragraph 8), use of the words "nigger" in referring to African Americans and "'hoods" and "slums" in speaking on how African Americans live (see Paschal Declaration, at paragraph 16; see also Paschal Declaration - Exhibits B and C for email exchange in which Tony Paschal addresses these points with two Wells Fargo higher-ups - one supervisor actually acknowledged in one of the emails the use of the racial slur), and loan officers joked that, in making these subprime loans, they were “riding the stagecoach to Hell” (see Jacobson Declaration, at paragraph 31).

For the Federal lawsuit (including affidavits, evidence, and other court filings ) and earlier media reports, see:

• Lawsuit - First Amended Complaint (filed June 1, 2009): Mayor and City Council of Baltimore v. Wells Fargo Bank N.A. et al., (links to a 12 MB+ "zip" folder containing a total of 24 court documents filed in Federal court, including the first amended complaint, and the above-referenced declarations and evidence from Jacobson and Paschal, declarations from Baltimore residents living near vacant Wells Fargo foreclosures that describe the state of these properties and the conditions that contribute to injury to the City by increasing the costs incurred by City departments and decreasing the City’s property tax revenues); link to "zip" folder also available on the home page of Relman & Dane, the law firm representing the City of Baltimore.
• The Maryland Daily Record: Ex-workers allege race-based loan approach at Wells Fargo,
• The New York Times: Bank Accused of Pushing Subprime Deals on Blacks.

New York Times Profiles Brooklyn Trial Judge Known For Holding Lenders' Feet To The Fire When Seeking Mortgage Foreclosure

The New York Times recently ran a profile on Brooklyn, New York trial judge Arthur M. Schack, a jurist who has developed a reputation for being a thorn in the side of those foreclosing lenders and their attorneys who, in cases over which he presides, persist on filing court papers that are filled with errors and omissions, and who otherwise come to court unprepared to prove that they actually own the promissory note secured by the mortgage they seek to foreclose.

• [Justice Schack] has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.

***

• Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage. Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.

For more, see A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style.

In a somewhat related story, see New York Magazine: Brooklyn Judge’s Influences Include Obscure Bruce Willis Movies.

For an earlier post on Justice Schack, with links to over 30 of his court rulings in which he bounced unprepared foreclosing lenders and their lawyers out of his courtroom, see Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced.

Enabling "Buy & Bail" Scams, Breaking Into Foreclosed Homes All In A Day's Work For Las Vegas Real Estate Agents??? Everybody's Doing It, Says One

In Las Vegas, Nevada, the Las Vegas Sun reports:

• A Las Vegas real estate agent who landed a prominent role in a Time magazine cover story is being scrutinized by state licensing officials because of her comments, has left her employer and is lying low. The story by Joel Stein in the Aug. 24 issue, “Less Vegas,” is a high-spirited and high-altitude view of the troubles facing Las Vegas, which he calls both “our most American city” and “an entire city of John Dillingers.”

• In the story, Brooke Boemio — “a bouncy, sweet, recently remarried 31-year-old mom” — is cast as one of the Dillingers. She helps Stein break into a foreclosed home and brags about helping clients who are underwater on their mortgages buy a second house on the cheap and stop making payments on their first mortgages, pressuring the bank into selling the houses for a loss.

• Everybody’s doing it, she says in the story. In fact, she said, she did it herself. Since the story appeared, Boemio and her employer have, in the words of Coldwell Banker Wardley Real Estate President Jeff Sommers, “parted ways.”

***

• The buy-and-bail tactics described in the story, he said, are serious allegations and “really just in direct opposition to everything in our policies.” [...] When the story was published, it referenced a video on Time’s Web site titled “Breaking and Entering,” of Stein and Boemio entering an unoccupied home on the west side of town. Since then, the video has been removed from the Web site for what Time spokeswoman Betsy Burton described as “some sensitivity with various issues.”

For more, see Unflattering Time magazine story puts agent in hot water (Since bragging to magazine about unethical practices she’s off job, under scrutiny).

For the Time magazine article, see Less Vegas: The Casino Town Bets on a Comeback (the description of the above referenced scams begins on page 2 of the story).

For more on "Buy & Bail" real estate scams, see:

• The Wall Street Journal: Some Buy a New Home to Bail on the Old (Fannie Plans Rules To Avoid Practice Described as Fraud),
• ABC News: In Foreclosure? Buy a Second Home ('Buy and Bail' Is the Answer Some People Have Found to Threat of Losing Home),
• Las Vegas Review Journal: Buying & Bailing: Walking away from 'underwater' mortgage has pitfalls. BuyAndBail

South Florida Landlord To Cough Up $200K+ In Settlement With Feds Over Civil Charges Of Race Discrimination In Apartment Rentals

From the U.S. Department of Justice:

• The Justice Department [Thursday] announced an agreement with the owner of College Square Apartments, in Davie, Fla., to settle allegations of discrimination against African Americans. Under the consent decree, approved [Thursday] in U.S. District Court in Miami, the defendants must pay a total of up to $140,000 to victims of discrimination(1) and a civil penalty of $74,000 to the government.

• The lawsuit, filed in August 2008 and later amended, alleged that the property manager at the time, Don Murroni, acting under the direction of Craig Forman, the president and sole shareholder of C.F. Enterprises, falsely told African Americans that no apartments were available and discouraged African Americans from applying. Murroni also allegedly offered to waive the application fee or other costs for white applicants, and told white testers that a selling point of College Square Apartments was the absence of black tenants. The allegations were based on evidence obtained through the Department’s fair housing testing unit, where individuals present as potential renters to gather information about possible discriminatory practices. [Thursday's] settlement resolves the government’s claims against C.F. Enterprises and Craig Forman.(1)

For the entire Justice Department press release, see Justice Department Settles Race Discrimination Allegations Against Davie, Florida, Apartment Complex.

(1) Individuals who believe that they may have been victims of housing discrimination at College Square Apartments should call the U.S. Justice Department at 1-800-896-7743 extension 992.

Cuyahoga Prosecutor Indicts 1st 12 In Alleged $14M+ Cleveland-Area Mortgage Fraud Operation

In Cleveland, Ohio, WKYC-TV Channel 3 reports:

• The first 12 defendants(1) in a $14.7 million mortgage fraud case were indicted by the Cuyahoga County Prosecutor on offenses involving homes located at 615 North Main Street in Chagrin Falls, 2105 Woodstock Road in Gates Mills, Port Clinton and Toledo, among others. These defendants, including individuals from Wickliffe, Chesterland and Mayfield Village, were indicted on mortgage fraud offenses including engaging in a pattern of corrupt activity, a first degree felony, according to Cuyahoga County Prosecutor Bill Mason's office.(2)

***

• According to Mason's office, these twelve defendants and three companies -- The Equator Group, Century 21 Homestar Realty, and Homestar Title Agency -- were indicted for engaging in a pattern of corrupt activity that secured $14,766,515 in fraudulent loans used to purchase seven homes in Cuyahoga, Ottawa and Lucas counties. [...] Six of the seven houses fell into foreclosure.

For more, see Prosecutor: 12 indicted in $14 million mortgage fraud case.

(1) The defendants include: Deborah Brazalovics, 56, of Wickiffe; Paul Brazalovics, 33, of Wickliffe; Anthony Geraci, 39, of Mayfield Village; Richard Kilfoyle, 50, of Chesterland; William Werner, 39, of Cleveland; Andrew Fishman, 35, of Hollywood, FL; James Trungale, 40, of Austin, TX; Diane Marciel, 48, of Woodland Hills, CA; Susan Alt, 56, of Santa Monica, CA; Joanne Schmidt, 56, and her husband, Howard Schmidt, 56, both of Agoura Hills, CA; and Charlotte Gill, 38, of Southwest Harbor, ME.

(2) Reportedly, the investigation was conducted by the Cuyahoga County Mortgage Fraud Task Force operating under authorization of Ohio Attorney General Richard Cordray and Ohio's Organized Crime Investigations Commission.

Florida Closing Agent Admits Pocketing Client's Refi Proceeds, Leaving Retiree Facing Foreclosure; Scammer Moved To State After NY Fraud Conviction

In Archer, Florida, The Wall Street Journal reports:

• Last summer, Lawrence Ford jumped into the fast-growing market for so-called reverse mortgages. The retired auto mechanic and horse trainer used the money he received to pay off his existing $70,000 mortgage and "piddled away" the remaining $24,000 on things like restaurant meals for his four girlfriends, he says. Or so Mr. Ford thought. Last month, the owner of the Orlando, Fla., title company that handled his loan admitted to stealing more than $1 million from several reverse-mortgage holders, including Mr. Ford. Bank of America Home Loans, a unit of Bank of America Corp., says the title agent never sent it the money required to pay off Mr. Ford's mortgage. As a result, Mr. Ford says, the bank recently threatened to foreclose on his seven-acre ranch in Archer, Fla. "That will put me on the streets with my cars and horses and tools," says the 68-year-old Mr. Ford. Bank of America, which says there is no immediate danger of foreclosure, adds that it is working with Mr. Ford "to find a home-retention solution."

***

• Before moving to Orlando in 2008, Garry Martin, 37, the title agent on Mr. Ford's reverse mortgage, was convicted of mortgage fraud in New York. In Florida, Mr. Martin orchestrated about 10 reverse-mortgage schemes,(1) pocketing about $1 million, prosecutors say. As title agent, Mr. Martin was obligated to distribute funds from his victims' reverse mortgages to retire their conventional mortgage loans. But according to prosecutors, he kept much of the money. To prevent his victims from catching on, he arranged for their monthly mortgage statements to be mailed to an address he controlled. The scheme unraveled when the banks contacted the victims about their missed mortgage payments.

• Mr. Martin, who pleaded guilty to stealing over $5 million from more than 50 victims of mortgage-related frauds, faces up to 20 years in prison. His attorney declined to comment. Mr. Ford, meanwhile, fears he may be running out of options. Unless the bank agrees to modify his loan, he says, "I don't see a way out."

For the story, see Mortgage Fraud: A Classic Crime's Latest Twists (As 'Reverse' Loans Grow More Popular, Scams Put Older Adults at Risk).

(1) Referring to this ripoff as a "reverse mortgage scheme" is somewhat misleading. What was done in this case was simply nothing more than a flat out theft of escrow funds by a corrupt closing agent, where the refinancing proceeds that were derived just happened to come from a reverse mortgage. There is nothing inherent about a reverse mortgage that makes pulling off this scam any easier than if a conventional mortgage was involved. EscrowRipOffKappa

Iowa Woman Fights Foreclosure Claiming Estranged Hubby Forged Her Signature On Loan Documents; Files Quiet Title Action In Attempt To Void Mortgage

In Hamilton County, Iowa, The Daily Freeman Journal reports:

• Diana Messerly claims she didn't sign most of the loan documents that First State Bank of Webster City holds against her home, implying in a countersuit to the bank's foreclosure measures that her estranged husband, Doug Messerly, forged her signature on at least five separate occasions. She's also is claiming, in a suit filed in the Iowa District Court for Hamilton County, that Linda Cormaney, a First State Bank vice president and notary, notarized the loan documents against the Messerly home [...] even though they had not been signed by Diana Messerly in Cormaney's presence.

***

• But, perhaps more importantly, Messerly's countersuit also seeks an action of quiet title to end the dispute over who has a right to the property - First State Bank, which holds mortgage liens that amount to nearly $200,000 against the $170,790 home and property, or Diana Messerly, who lives there. An action of quiet title in Diana Messerly's favor would "quiet" any challenges or claims to her right to the title of the home and property, effectively freeing her - forever - of any claims against it.(1)

For more, see Accountant’s estranged wife fights foreclosure (Diana Messerly’s countersuit claims she didn’t sign loans against her home).

(1) In a separate matter, the article reports that a settlement is imminent in a lawsuit filed this spring in Webster County alleging Messerly, a former Webster City accountant, forged longtime client Margaret Stark's signature to documents selling off $260,000 in her investments, which he then deposited into his personal bank account at First State Bank, according to an attorney for the bank. DeedContraTheft

"Greek" Alumni Seek To Void Dubious Sale Leaseback Of College Fraternity House Now Facing Imminent Foreclosure; Criminal Probe Possible

In Springfield, Missouri, the Springfield News Leader reports:

• Seven months after a group of Alpha Gamma Sigma alumni sued over what they said was the illegal sale of their fraternity house, the property is threatened with foreclosure. Should that come true, the eight students in the house must find a new place to live. It would also mean the 38-year-old organization would lose its place on the Greek Row. [... T]he agriculture fraternity's house is set for a trustee sale Tuesday, said Leland Gannaway, an attorney for Citizens National Bank of Springfield. The bank has loaned nearly $200,000 on the house. Officials at Missouri State University said they'll find space for the eight fraternity members should they be evicted.

***

• Meanwhile, the Springfield Police Department is looking into the matter. "Based on preliminary reports, we believe there is enough information to start a criminal investigation," Lt. David Millsap said.

• The disputes apparently stem from a 2005 sale of the house to two individuals, who at the time were on the board of directors of Alpha Gamma Sigma of Springfield, Inc. The corporation owned and managed the assets of the fraternity. [... Charles] Marshall, then the president of Alpha Gamma Sigma of Springfield Inc., said no formal vote was taken [approving the sale]. Interested members agreed to the sale over phone calls.

• Other alumni, nearly four years later, now argue the sale was invalid because the deal was not authorized by the corporation's board of directors, according to the petition they have filed in the Greene County Circuit Court. Since the sale, Marshall said he and [co-owner Robert] Ferber remodeled the property and leased it [back] to the fraternity. County records show the duo soon refinanced the initial note with a $120,000 loan from Citizens National Bank and, in 2006, borrowed another $78,895 against the fraternity house from the same bank.

For more, see Fraternity house faced with foreclosure.

For story update (9-2-2009), see Bank buys fraternity house at auction (Members will be able to work out lease arrangement).

Feds Convict Ex-NYS Trial Judge For Attempting To Put A $10K Squeeze On Attorney With Cases Pending Before Him

From the U.S. Department of Justice:

• Former New York State Supreme Court Justice Thomas J. Spargo was convicted [Thursday] by a federal jury in Albany, N.Y., of attempted extortion and soliciting a bribe. Spargo, 66, was convicted following a three-day jury trial. Evidenced introduced at trial showed that on Nov. 13, 2003, Spargo solicited a $10,000 payment from an attorney with cases pending before him in Ulster County, while Spargo was serving as a state supreme court justice. The trial evidence showed that when the attorney declined to pay the money, Spargo increased the pressure by a second solicitation communicated through an associate.

• According to evidence presented at trial, on Dec. 19, 2003, Spargo directly told the attorney in a telephone conversation that he and another judge close to him had been assigned to handle cases in Ulster County, including the attorney’s personal divorce case. According to the evidence at trial, the attorney felt that if he did not pay the money, both the cases handled by his law firm and his personal divorce proceeding would be in jeopardy.

For the entire Justice Department press release, see Former New York State Supreme Court Justice Thomas J. Spargo Convicted of Attempted Extortion and Bribery.

Recording Artist Sues Lender In Attempt To Fend Off Foreclosure; Says WaMu Reps Put Bogus Info In Loan Application, Tricked Couple Into Signing

In Kaua'i, Hawaii, The Honolulu Advertiser reports:

• A singer who gained popularity in the late 1960s with the song "Hello It's Me" has filed a lawsuit here against a Washington-based bank, asking a judge to stop the financial institution from foreclosing on his Kaua'i home. Todd Rundgren filed the complaint Wednesday in state Circuit Court and alleged that representatives from Washington Mutual misled him and his wife, Michele, when the couple refinanced a loan on their property in Kilauea. The lawsuit, filed by attorney Gary Dubin, lists as defendants Washington Mutual Bank and JP Morgan Chase, which acquired WaMu in September 2008. The Rundgrens are asking for a temporary restraining order to halt foreclosure actions, as well as an undetermined amount in damages and attorneys fees.

***

• The Rundgrens allege they refinanced a mortgage on their Kaua'i home in February 2008 for $3 million. But they said WaMu representatives created a false loan application that exaggerated their gross monthly income and then tricked them into signing the application. [... Dubin] acknowledged that the Rundgrens did not read the mortgage document at the time they signed it, but he said very few people do. "I can tell you this: I never read mine either," he said. "The clients who come to see me, the single word they always use is 'trust.' They trust the loan broker who was so nice to them. They trust that it was a big-looking company."

For the story, see Singer sues bank in foreclosure (Rundgren suit stems from $3M Kauai home refinancing).

Condo Association Trend Seeking "Blanket Receiverships" In Attempt To Avert Financial Disaster Begins To Take Hold In Central Florida

In Central Florida, the Orlando Sentinel reports:

• Condominiums in Central Florida are cutting back on things like tennis-court lights and are seeking help from the courts because so many condo owners are abandoning their fast-depreciating units and refusing to pay required maintenance fees. "It's a major crisis right now," said Bill Raphan, a supervisor with the state Division of Condominiums.

• Desperate condo associations are starting to seek court-appointed receivers — a trend that started in South Florida but has spread to this part of the state. It's a sign of how dire the situation is, said Donna Berger, executive director of the Community Advocacy Network, a nonprofit group representing more than 1,500 condo and homeowner associations. "The current economic downturn and foreclosure crisis have placed many associations on the brink of disaster," she said.

***

• Last week, state Circuit Judge Alan A. Dickey appointed Seth R. Heller and Co. to collect fees at the Villas. More than 60 percent of the 294 unit owners are delinquent, with individual tabs of as much as $11,000 for some owners of multiple units. Total unpaid fees: $720,000. If those condo owners or their tenants don't pay up soon, they will be held in contempt of court and at some point could face arrest. "Without this order, the association was really facing financial collapse," said Fort Lauderdale lawyer Stuart Zoberg, who represented the Villas board. "And all along you have these landlords laughing, because they are collecting rents, and they still siphon off as much money as they can from their renters without paying association fees."

For more, see Condos sic judges on owners for back fees.

In a related post, see Florida Appeals Court OKs "Blanket Receivership" In Condo Association Battle Against Rent Skimming Unit Owners, Deadbeat Investors.

Dozens Of Brooklyn Condo Projects Face Financial Trouble

In Brooklyn, New York, Crain's New York Business reports:

• Sixty-five residential buildings in central Brooklyn are either financially troubled or on the verge of distress, according to a recent survey conducted by Democratic Assemblyman Hakeem Jeffries. These properties are market-rate residential buildings at least four stories high located in the neighborhoods of Fort Greene, Clinton Hill, Prospect Heights, Crown Heights and Bedford–Stuyvesant. Many are luxury developments in different stages of completion. Some projects are completed and unoccupied, while others are stalled. Some of the projects’ developers are also defaulting on their construction loans, said Mr. Jeffries.

For more, see 65 central Brooklyn condos in or near financial distress (The list of properties, compiled from a survey conducted by Democratic Assemblyman Hakeem Jeffries, includes a number of high-profile new developments).

In a related story, see Goldman Sachs' Brooklyn condo bet sours (The company, along with partner The Clarett Group, is negotiating with German lender Eurohypo Bank to turn over the 30-story Forté tower after sales went nowhere).

Oregon Man Cops Plea To Foreclosure Stripping His Own Home

In Damascus, Oregon, The Oregonian reports:

• After stripping his foreclosed home of everything from the air conditioning system to the kitchen sink, Grigoriy Bogoslavets was convicted of a crime that is often witnessed but rarely reported. The 33-year-old electrician pleaded no contest last month to aggravated theft after stealing more than $50,000 of property attached to his former Damascus home, one of the few such cases in Oregon or across the country to result in prosecution. He will be sentenced Sept. 22.

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• Departing homeowners' taking off with fixtures that are legally part of the house -- generally anything attached or installed -- is nothing new to real estate brokers. What's changing, especially in the nation's worst housing markets, is the recognition that such acts can be criminal.

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• Neighbors tipped off police when they saw Bogoslavets return to his former home with a van after vacating the premises. Investigators discovered Bogoslavets had taken nearly everything he could remove, including the kitchen island, fireplace, bathtubs, the doorbell and electrical outlets.

For more, see Damascus man even took the kitchen sink from foreclosed home (if link expires, try here).foreclosure fixture stripping apple

Struggles Continue For Homeowners Seeking Loan Modifications

A recent story in The Tampa Tribune contained anecdotes of three Central Florida homeowners and their troubles trying to get their mortgage loans modified. For example:

• It's been more than a year since David Austin asked his mortgage company to modify his loan. He says he was told to stop making payments while he waits. He doesn't receive phone calls or letters, and the lender hasn't filed for foreclosure. "It's like they forgot about me," Austin said. "Every month, I get more behind and my house value drops further."

For more, see Homeowners' worlds, mortgages upside down.

Involvement In Failed Real Estate Scheme Results In Big Drop In Credit Score For Navy Officer, Leaving His Security Clearance, Service Status In Limbo

In Fresno, California, KGO-TV Channel 7 reports:

• The ABC7 I-Team has been investigating a statewide, multi-million dollar real estate scheme that ruined credit scores for dozens of Bay Area investors, but one man's story stands out. He's a Navy officer who just volunteered for a tour of duty in Afghanistan. The condos he bought for more than $1 million are now virtually worthless. But even worse, he says, he can't be deployed overseas because of the huge drop in his credit score.

***

• Late last year, he got a default letter from a bank. Then a call from the Naval Criminal Investigative Service saying his security clearance was under review. That's because his credit score had dropped from more than 800 to around 500. [... His] deployment was [placed] on hold.

For more, see Scheme ruins war veteran's credit score.

California Real Estate Agent Gets 90 Days After Admitting To Forging Unwitting Victim's Name On $900K+ In Loan Documents To Purchase Home

In San Bernardino, California, the Contra Costa Times reports:

• A Chino Hills real estate agent was sentenced to 90 days in jail [last week] after pleading guilty to forging more than $900,000 in loan documents. Anita Mendoza, 44, was accused of forging another person's signature to obtain the loans, which she used to purchase a home in Chino Hills in 2006. In addition to the jail time - which Mendoza can serve on weekends - the Realtor was placed on three years' probation Friday in San Bernardino Superior Court and ordered to attend a counseling program. [...] She will be required to pay back $180,000 lost by a mortgage company victimized in her scheme, Deputy District Attorney Vance Welch said last month. When Mendoza was interviewed by investigators last month, she confessed to forging loan documents to purchase her home.

For the story, see Chino Hills Realtor sentenced to 90 days for loan forgery.

Role Of Licensed Loan Modification Consultants In Nevada Mandatory Foreclosure Mediations An Unanswered Question

In Las Vegas, Nevada, the Las Vegas Review Journal reports:

• Permanent regulations that require licenses for home mortgage modification and foreclosure consultants are expected to become effective [this week], but one important question remains unanswered. Can these licensed consultants represent clients in mediation sessions with mortgage lenders?

For more, see License rules leave questions (Whether consultants can represent clients in mortgage mediation unclear).

In a related story, see Las Vegas Sun: Agency gets authority to set fines for bilked homeowners (Nevada commissioner of mortgage lending adopted rules Tuesday giving his agency authority to license loan modification & foreclosure consultants and to take disciplinary action, including fines up to $10,000 for violations):

• These companies or agents must place the up-front money collected from the homeowner in a trust account and can draw down only when they deliver a service. Education requirements are in place that those in the business must get anywhere from 15 hours to 25 hours of instruction. Bonds must be posted with the lowest amount at $75,000.

Role Of Attorneys Representing Homeowners In Mandatory Foreclosure Mediations Questioned

In Las Vegas, Nevada, the Las Vegas Sun reports:

• The Nevada legal community is getting behind a new mediation program designed to reduce the state’s ongoing foreclosure problem, but some attorneys are facing criticism for trying to profit from it. [...] One legal advocate for the poor has criticized the program, sayings attorneys are preying on homeowners for a service they don’t need. Many attorneys, however, said it never hurts to have legal representation in the complicated process to keep a home.

• Michael Joe, an attorney and foreclosure specialist for the Legal Aid Center of Southern Nevada, said he has seen attorneys advertise their services for $1,500 to $3,500 to help homeowners in mediation. It’s piggybacking on attorneys’ ads to help homeowners modify loans, he said. Joe called it no different from an attorney waiting outside of a hospital for injured patients who are brought in by ambulance.

***

• Robert Noggle, a real estate and business attorney with Black & LoBello, said attorneys have helped people stay in their homes by working with lenders and helping negotiate short sales. In mediation, attorneys may need to advise the homeowner on what is offered by lenders. Although attorneys aren’t necessary, not every homeowner who goes into mediation has the time or inclination to understand the rules, Noggle said.

For more, see Lawyers’ role in foreclosure mediations sparks debate (At issue: Are homeowners buying what they don’t need?).

In a related story, see License rules leave questions (Whether consultants can represent clients in mortgage mediation unclear).

Tennessee Real Estate Operator Screwed Us In Bogus Real Estate Deals, Say Clients

In Dickson, Tennessee, WSMV-TV Channel 4 reports:

• Some families who Jimmy Greene has done business with seem to end up losing their homes. Karen and Doug Young said Greene caused them to lose their house in Dickson to foreclosure. [...] The Youngs wanted to sell their house, and so they signed a contract with Greene and Greene Custom Homes. The deal was that if it didn't sell, Greene would make the payments. But he didn't. "They did not pay for May, June, July or August of 2008, and that was why it was in foreclosure," said Doug Young. They never saw it coming, they said, because Greene intercepted the correspondence from their mortgage company. "All of the contact numbers were changed, down to the e-mail address, so that everything would go to him and we wouldn't know," Karen Young said. The two ended up losing the house.(1) And they aren't the only ones who have said their real estate deals with Greene ended badly.

***

• [Marsha Hargrove] and her husband were buying a home they ended up losing. They had signed a rent-to-own contract with Greene, then found out after two and half years that Greene didn't own the house and all the improvements they made were down the drain.

***

• Deborah Branham's family was renting to own from Greene but found out he wasn't paying the mortgage on the family's house, either. It, too, was in foreclosure, and they lost their $5,000 down payment.

For the story, see Clients Say Company Ruined Homeownership (Greene And Greene Custom Homes Faces String Of Lawsuits).

(1) Reportedly, the Youngs went to court and won, but they have yet to collect on their $25,000 judgment.

Oregon AG Settles Suits With Two Firms, Begins Probe Into At Least Six Others In Effort To Find & Prosecute Crooked Loan Modification Rackets

From the Oregon Department of Justice:

• Attorney General John Kroger [Wednesday] announced a new enforcement effort to protect Oregon homeowners by targeting loan modification companies that engage in deceptive and misleading business practices. [...] The attorney general announced that his Financial Fraud and Consumer Protection Unit has opened more than half a dozen investigations related to loan modification companies and mortgage fraud. Kroger also announced the results of two cases.

• [Wednesday's] settlements are with National Homeowners Assistance Services, Inc. [$4,000 in legal costs reimbursement], based in Lake Forest, Calif., and American Mitigation Group [$4,000 in restitution], based in Newport Beach, Calif. The companies offered loan modification assistance and related services to homeowners facing foreclosure. The companies purposefully used tactics that could confuse homeowners, including implying they were affiliated with government agencies or programs.

***

• [Wednesday's] settlements are one part of an overall Oregon Department of Justice strategy to protect Oregon homeowners. The Department of Justice will vigorously pursue crooked loan modification companies.

For the Oregon AG press release, see Attorney General John Kroger Cracks Down On Loan Modification Scammers (Two California loan modification companies must stop misleading Oregon consumers).

Mortgage Servicer's Insurance Payment Screw Up Left Texas Couple "Naked" During Hurricane Ike & Stuck w/ Force-Placed Policy, Says Suit

In Galveston, Texas, The Southeast Texas Record reports:

• A Galveston County couple is suing a subsidiary of Citigroup for failing to pay their insurance premium payment on time. Garry and Karrie Higgs' breach of contract suit alleges St. Louis-based CitiMortgage mishandled a payment that was essential to the renewal of their policy with the Texas Windstorm Insurance Association ["TWIA"].

***

• According to the complaint, CitiMortgage was responsible for initiating premium payments from an escrow account. The suit states that CitiMortgage was informed by Nationwide in late July 2008 that the Higgs' coverage was set to expire in two months. Nationwide then established a three-week window for payment. The plaintiffs claim CitiMortgage did not properly heed Nationwide's request, but CitiMortgage claims it made the payment but accidentally mailed it to a wrong location.

• Both Nationwide and the Higgs claim they repeatedly tried to contact CitiMortgage regarding the payment, only to be told by the defendant it was already issued. The payment finally surfaced on Sept. 10, 2008, a week after the deadline and three days before Hurricane Ike. Ike, a Category 2 storm, came ashore and inflicted a significant amount of damage to the plaintiffs' residence. The Higgs say their new TWIA policy did not include the events during Ike and was cancelled. "As a result, CitiMortgage purchased its own force-placed insurance policy and charged the plaintiffs a higher and more expensive premium," the suit says.

For the story, see Galveston couple blames Citigroup for failing to pay TWIA premiums.

Ohio AG, Cuyahoga County Task Force Bust 41 People In Alleged Straw Buyer Mortgage Scam Involving 453 Houses, $44M In Fraudulently Obtained Loans

In Cleveland, Ohio, Crain's Cleveland Business reports:

• Four companies and 41 people(1) have been indicted in an alleged mortgage fraud scheme spearheaded in Beachwood. The scam allegedly included 453 homes and $44 million of fraudulent loans. The Cuyahoga County Mortgage Fraud Task Force(2) and the Ohio Organized Crime Investigations Commission allege that Beachwood resident Uri Gofman convinced friends and relatives to invest in his real estate company, Real Asset Fund. He began the business with seed money from Latvia, the officials said in a press release, but used “straw buyers” to purchase homes. The company then falsely claimed that improvements were made to the homes so they could be refinanced, the attorney general's office alleged. The houses were then sold to unqualified buyers.

For more, see Indictments handed up in alleged mortgage fraud scheme.

See also:

• Ohio Attorney General press release: Task Force Cracks Mortgage Fraud Case Involving 453 Homes,
• The Cleveland Plain Dealer: 41 indicted in $44 million county mortgage-fraud scam (Scheme helped bring down home values, worsen blight, prosecutors say).

Go here to see a complete list of the defendants and charges.

(1) The 45 individuals and outfits busted were: Uri Gofman, 36, of Beachwood, Tony Viola, 43, of Cleveland, Igor Gofman, 47, of Beachwood, Samyel Goldshtein, 51, of Highland Hts., Alex Kurlienko, 27, of South Euclid, Kevin Landrum, 30, of Solon, The Real Asset Fund, 2120 Green Rd. South Euclid, Yan Satanovskiy, 61, of Lyndhurst, Irina Satanovskiy, 61, of Lyndhurst, Ester Simkhovich, 35, of Lakewood, New Jersey, Leonid Simkhovich, 31, of Wickliffe, Gennadiy Simkhovich, 52, of Highland Hts., Marina Simkhovich, 47, of Highland Hts., Alexander Vinokur, 39, of Solon, Eric Gesis, 45, of Highland Hts., Tigran Babloyan, 44, of Reminderville, Karka Inc., 2120 Green Rd. South Euclid, James Alexander, 42, of Warrensville Hts., Tiffany Alexander, 39, of Beachwood, Farah Dailey, 30, of Euclid, George F. Gardner III, 38, of Euclid, Donnie Eatmon, 44, of Macedonia, Rochelle Huffman, 35, of Cleveland Hts., Brian P. Jordan, 48, of Cleveland, Crystal McCoy, 53, of Cleveland, Maura McKissic, 32, of Cleveland Hts., Steve Greenwald, 43, of Solon, Zakkiyya Mumin, 32, of Warrensville Hts., Sulieman Mumin, 30, of Warrensville Hts., Troy E. Spencer, 47, Cleveland Hts., Shirley Board (Vannerson), 59, of Cleveland Hts., Nathan Prusak, 35, of Bay Village, Dale M. Adams, 34, of Solon, Miroslav Simkhovich, 35, of Willoughby, Ronald Medley, 45, of Cleveland, Darrin Harsley, 39, of University Hts., Dave Pirichy, 38, of Burton, Linas Puskorius, 51, of Cleveland, Howard Sieferd, 58, of Euclid, James M. Leoni, 35, Lyndhurst, Realty Corporation of America, 815 Superior Ave. Cleveland, Tiffeney Dennis, 35, of Cleveland Hts., Alicia McKnight, 25, of Bedford Hts., Gregory L. Krainess, 44, of Beachwood, JN & DH Investments, 3213 Portman Ave. Cleveland.

(2) Task Force members include:

• Ohio Organized Crime Investigations Commission
• Cuyahoga County Prosecutor's Office
• Ohio Bureau of Criminal Identification and Investigation
• Cuyahoga County Sheriff's Office
• Cleveland Heights Police Department
• Solon Police Department
• Beachwood Police Department
• Pepper Pike Police Department
• HUD Inspector General's Office
• Cuyahoga County Recorder
• Cuyahoga County Auditor
• Cuyahoga County Treasurer
• Ohio Department of Commerce-Division of Financial Institutions
• F.B.I.
• U.S. Attorney's Office
• U.S. Postal Inspector

South Florida-Based Loan Servicer Scores No Points In New Report

The South Florida Business Journal reports:

• West Palm Beach-based Ocwen Financial Corp. and other subprime lenders are the subject of a critical report released Wednesday by The Center for Public Integrity. Public records show 21 of the top 25 participants in a $21 billion federal program to bail out home borrowers were involved in the subprime loan industry, the center said. The report gives more ammunition to critics who say some of the nation's largest financial institutions are profiting from bailout funds after helping to cause the economic mess in the first place.

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• The new report by the Center for Public Integrity says Ocwen has received $553.4 million in funds from federal Home Affordable Modification Program (HAMP). The report cites SEC filings that say Ocwen is the subject of about 64 lawsuits accusing it of abusive collection practices.

For more, see Ocwen target of critical report.

For the report by The Center For Public Integrity, see Who's Behind The Financial Meltdown (The Top 25 Subprime Lenders And Their Wall Street Backers).

Conn. AG Files Civil Suit Against "Renegade Real Estate Ring" Putting Customers Into Unaffordable Mortgages; Referral To Criminal Prosecutors Possible

In Hartford, Connecticut, The Connecticut Post reports:

• Latinos throughout Southwestern Connecticut were victims of a wide-ranging predatory-lending scheme that used a Stamford real estate office to guide them into unaffordable mortgages, Attorney General Richard Blumenthal charged on Tuesday.(1) Many of the 120 or so victims are unable to speak English and about 33 homes have already been lost through foreclosure, said Blumenthal during an interview in which he said the case will be referred to state and federal prosecutors for possible criminal investigation.

• He detailed a "renegade real estate ring" in which customers dealing with Roman Realty, a Century 21 affiliate on Bedford Street, would be taken to an adjacent mortgage company and later have their incomes falsified by a third company for use on loan applications.

For more, see Blumenthal says Latinos were victims of predatory lending scheme.

(1) According to the story, Blumenthal, representing the state Department of Banking and the Department of Consumer Protection, has sued VRM Mortgage Company, Inc. and Roman Realty, Inc. and the companies' owner, Victor Roman, as well as VRM's office manager, Tony Mojica. He's also filed a lawsuit against Jose Flores, the owner of Harvard Financial Services, located on Virgil Street in Stamford.

California Real Estate Agent Cops Plea To Investment Scam That Pulled In $1.25M+; Victims Include Senior Who Invested Bulk Of Life Savings

From the Office of the Ventura County, California District Attorney:

• District Attorney Gregory D. Totten announced [...] that Veronica Sanchez Gallegos, a licensed real estate agent residing in Ventura, pled guilty on August 6, 2009, to one felony count of theft from an elder, five felony counts of grand theft, and admitted a special allegation of taking more than $500,000. In an investigation conducted by the District Attorney's Office Bureau of Investigation, it was determined that Gallegos conducted a fraudulent investment scheme where six victims entrusted her with a total $1,289,000. Victims invested money with Gallegos after relying on false assurances made by Gallegos that their investments were being pooled into short term construction, real estate, and similar “secured” loans [...] and were protected by an escrow fund in the event of default.

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• One 65 year-old victim invested the bulk of his life savings for a total of $284,000 and suffered a net loss of $244,000. Other investors invested amounts ranging from $40,000 to $622,000.

Go here for the Ventura County DA press release.

Westchester DA Indicts Eight In Alleged Equity Stripping Foreclosure Rescue Scam After Joint Probe w/ NYS Banking Dept.; Four Families Victimized

In White Plains, New York, The Journal News reports:

• Eight people(1) were indicted for a countywide mortgage scheme that defrauded four families and two mortgage lenders of $1.4 million, Westchester authorities announced [Tuesday]. The perpetrators "induced desperate property owners fearing the threat of foreclosure to deed their homes to 'investors' with the promise that they could re-purchase their property in 12 to 24 months," District Attorney Janet DiFiore stated in a news release. "In fact, the defendants colluded to strip the property of its equity by obtaining inflated mortgages based on fictitious purchase prices using 'show' checks to deceive the banks as to the actual purchase price." The arrests followed a nine-month probe by DiFiore's office and the state Banking Department. The targeted families were from Croton-on-Hudson, Yorktown, Cortlandt and Mount Vernon.

Reportedly, Westchester DA Fiore said that four members of the alleged racket were attorneys,(2) and that the four victims who had their home equity ripped off in the sale-buyback deals would have to bring civil lawsuits against the alleged perpetrators to try to get their homes back.(3)

Source: Eight indicted in Westchester mortgage scheme.

For the Westchester DA press release, see Indictment Unsealed In Countywide Mortgage Fraud Scheme (Eight Individuals Defrauded 4 Families For 1.4 Million Dollars).

(1) Arrested were Doreen Swenson, 60, and Herbert "Phil" Hall, 60, of Tarrytown; Mildred Didio, 44, of Manhattan; David Reback, 67, of Rye Brook; Amerigo DiPietro, 59, of Brewster; Eileen Potash, 52, of Queen; Wilma Shkreli, also known as Wilma Gecay, of Westwood, N.J.; and Frank Corgiliano, 44, of Newtown, Conn.

(2) The lawyers were identified as Didio, Reback, Potash, Corigliano. The four lawyers, along with the four others, were indicted Tuesday, each on charges of grand larceny, fraud and conspiracy. They pleaded not guilty. See 4 lawyers indicted in $1.4M NY scam.

(3) See DA: Lawyers taking desperate owners' NY homes.

Ten State AGs, Feds Form Posse To Target Equity Skimming, Bogus Foreclosure Rescue, Straw Purchases, Unethical Lending Practices

The New York Times reports:

• Ten state attorneys general and four federal agencies have announced the formation of a task force to combat mortgage fraud. According to a statement issued by Washington state Attorney General Rob McKenna, targets of the enforcement effort include equity skimming, bogus foreclosure rescue, straw purchases and unethical lending practices.(1)

• The group is headed by McKenna and Iowa Attorney General Tom Miller. Other members include the attorneys general of Arizona, Colorado, Illinois, Nevada, North Carolina, Massachusetts, Missouri and Ohio, as well as representatives from the Department of Justice, Federal Treasury, Department of Housing and Urban Development and Federal Trade Commission. McKenna says the task force is the result of meetings on July 15 in Washington, DC, between federal regulators and a number of state attorneys general.

Source: Attorneys General Form Mortgage Fraud Task Force.

(1) “Scammers and opportunists need to know that they’re in the crosshairs of a tough, well-armed posse with a presence in every state,” McKenna said. McKenna said that by combining their enforcement powers and expertise, state and federal authorities are in a stronger position than ever before to take on equity skimmers, foreclosure rescuer schemers, straw purchasers and unethical lenders who deceive or discriminate.

Mississippi Couple Cops Pleas In Bankruptcy Fraud-Related, Deed Transfer Foreclosure Rescue Scam; Wife Goes Down For Failing To Turn In Hubby

In Jackson, Mississippi, The Clarion Ledger reports:

• A Jackson couple will be sentenced Nov. 5 in federal court after pleading guilty to fraud related charges. Robert E. Power Jr. pleaded guilty Friday to conspiracy to commit bank and wire fraud, and bankruptcy fraud. His wife, Deaundrea Power, pleaded guilty to misprision of a felony for failure to report bankruptcy fraud committed by her husband.

• The couple had operated a business, Yorkshire Financial Services on Ridgewood Road in Jackson, which targeted homeowners at risk of foreclosure. The couple had represented to the homeowners that in exchange for transfer of their property to Yorkshire and a monthly rental payment, the company would negotiate mortgages or refinance mortgages to allow homeowners to remain in their homes, according to the United States Attorney’s Office. But the Powers would then place the property in bankruptcy unbeknownst to the homeowners and either the home would eventually be forclosed upon, or sold through straw buyers, via fraudulent loans, where the Powers would obtain cash money from the sale. As a result of the Powers’ actions, the homeowners lost their homes while the Powers gained a profit from the fraudulent activity, according to the federal investigation.

Source: Jackson couple pleads to fraud charges.

For the U.S. Attorney press release, see Couple Pleads Guilty To Mail Fraud, Bankruptcy Fraud And Falsifying Documents In Bankruptcy Cases. loan modification

Mississippi Feds Hit Title Agents With 38-Count Indictment For Role In Alleged Scam To Fraudulently Obtain $9M+ In Mortgage Loans

From the Office of the U.S. Attorney (Jackson, Mississippi):

• Acting United States Attorney Stan Harris announced [...] that a federal grand jury has returned a 38 count indictment charging J. Larry Kennedy and Keith M. Kennedy with conspiracy to commit mail and wire fraud, conspiracy to launder money, multiple counts of wire fraud, and multiple counts of money laundering in relation to their roles in a mortgage fraud conspiracy and scheme with Mark J. Calhoun, April Calhoun and Willie Jones to obtain fraudulent loans totaling in excess of $9 million.

For the U.S. Attorney press release, see Former Real Estate Loan Closing Agents Are Charged With $9 Million Mortgage Loan Fraud.

(1) The indictment alleges that between September 2004, and at least through September 2006, while operating in the Jackson-metro area as Loan Closing & Title Services, Inc., the Kennedys were the closing agents involved with the fraudulent mortgage loans charged in the indictment. The indictment alleges that during the conspiracy and scheme, the Kennedys and their co-conspirators provided fraudulent loan documents to various lenders; thereafter, the Kennedys disbursed proceeds from the fraudulent loans to Mark J. Calhoun, April Calhoun, Willie Jones, and their respective companies as fictitious creditors. According to the indictment, as part of the conspiracy and scheme, on some of the fraudulent loans the Kennedys falsely notarized loan documents during the loan closing process that were relied upon by the lenders to demonstrate that the specific borrower personally appeared at the loan closing and signed the closing documents in the presence of the loan closing agent in order to retrieve the mortgage loan proceeds.

Cook County Court Clerk Sits On $18M+ Belonging To Foreclosed Homeowners Who Failed To Claim Surplus Money From Courthouse Sales

In Chicago, Illinois, WLS-TV Channel 7 reports:

• Cook County Circuit Court Clerk Dorothy Brown says her office has found more than $18 million in mortgage surplus money that belongs to people who lost their homes to foreclosure in the last two decades. The surpluses occur when the bank sells foreclosed homes for more than the homeowners owe. The clerk's database found about 1,900 people are due surplus money. The surpluses mostly involve foreclosures from the 1990s and not the recent subprime mortgage collapse.

Source: Clerk: $18M due to foreclosed homeowners.