Tuesday, September 08, 2009

Ex-Mortgage Broker Cops Fraud Plea In D.C.-Area Straw Buyer, Sale Leaseback Foreclosure Rescue Scam

From the Office of the FBI (Washington, D.C. Field Office):
  • Rasheeda M. Canty, a former mortgage broker, pled guilty [...] to engaging in an extensive mortgage fraud scheme involving properties in the District of Columbia and Maryland, [Federal authorities] announced [Friday].

***

  • From about June of 2005, Canty and others conspired to defraud financial institutions whose deposits were insured by the FDIC for the purpose of influencing the financial institutions to approve mortgage loans. Canty and others conspirators perpetrated this scheme by identifying distressed homeowners whose properties in Washington, D.C., and Maryland were facing imminent foreclosure and offering to purchase their properties. The conspirators told some of the homeowners that they could repurchase their properties within one year.

***

  • The conspirators would then seek out unsophisticated individuals, with good credit scores or credit scores that could be fraudulently raised, to act as “straw purchasers,” also known as “credit partners,” for these transactions, often in exchange for a $5,000 to $10,000 fee to the straw purchaser for the use of his or her personal information to purchase the respective property.(1) [...] In furtherance of the conspiracy, Canty obtained financial information from the straw purchasers which she then falsified in order to qualify the applicants for their mortgage loans.

For the entire FBI press release, see Maryland Woman Pleads Guilty to Her Role in Extensive Mortgage Fraud Scheme.

(1) According to the FBI, the straw purchasers understood that one of the conspirators would make the monthly mortgage payments, and the straw purchaser would not be otherwise financially responsible for the property or required to live there. On some occasions, the conspirators would use the identification of innocent, unknowing victims to make these purchases.

Bankruptcy Judge Allows Arizona Homeowner Seeking Loan Modification To Grill Wells Fargo Senior Exec Under Oath On Servicer's Poor Customer Service

In Phoenix, Arizona, The New York Times reports:
  • Bobbi Giguere had no luck in securing a loan modification from her mortgage servicer, Wells Fargo. For months, she had sent the bank the financial documents it requested to process her modification. But each time she called to check on the request, she was told to send her paperwork again. “I submitted the paperwork three times, and nothing happened,” said Mrs. Giguere, 41, who has a high school education and worked as restaurant manager before losing her job.

  • On Thursday, something happened. She questioned a Wells Fargo official about the bank’s lack of response — under oath. The spectacle of a high-ranking banking executive being grilled by an ordinary homeowner was the result of an unusual decision by Judge Randolph J. Haines of the United States Bankruptcy Court to summon a senior executive from Wells Fargo to appear in Mrs. Giguere’s bankruptcy case. At the hearing, Judge Haines made it clear that he was acting out of concerns about Wells Fargo’s mortgage modification practices generally.

  • This is certainly not an isolated case,” he said. “The kind of story I hear from this debtor is one that I and other bankruptcy judges around the country are hearing over and over and over again.”

For more, see Judges’ Frustration Grows With Mortgage Servicers.

See also, KPHO-TV Channel 5:

DA's Office Charges One, Seeks Another In Alleged "Principal Reduction" Foreclosure Rescue Scam; Suspects Believed To Have Illegally Pocketed $2M+

From the Office of the Santa Clara, California District Attorney:
  • 39-year old Rene Alvarez of San Jose was arrested yesterday by investigators with the Santa Clara County District Attorney’s Office on charges that he defrauded hundreds of homeowners, whose homes were in foreclosure, in a wide-ranging loan modification scam. There is an outstanding arrest warrant on the same charges for his cohort, 34-year old Mariano Ortega of San Jose.

  • Since mid-2008, Alvarez and Ortega have owned and operated M & R Contemporary Solutions, Inc. a Campbell foreclosure consulting firm. M & R recruited approximately 500 mainly Hispanic homeowners throughout California by pitching a “principal reduction” program. Homeowners were told that M & R would save their residences from foreclosure by facilitating the purchase of their existing lender’s loan by a third party at a discounted price. The homeowners were then to be offered a new reduced principal loan that would have significantly lower monthly payments.

  • According to numerous ex-employees of M & R, no homeowners were ever helped in this manner. M & R collected thousands of dollars in up front fees from each homeowner, which is a felony under California law regulating the conduct of foreclosure consultants. It is believed that M & R has illegally collected over $2 million in advance fee payments from homeowners.

For the DA's press release, see Co-Owner of Campbell Foreclosure Consulting Firm Arrested for Defrauding Hundreds of Homeowners. loan modification

Bay-Area Mega-Landlord Barred From Clipping Tenants For Illegal Rent Hikes In Failed Attempt To Exploit "Small Landlord" Loophole Around Rent Limits

In East Palo Alto, California, Beyond Chron reports on the story of a local major residential landlord that has been barred by court order in the Oberle v. Page Mill Properties class action lawsuit from collecting or enforcing rent increases that do not comply with the limits of the East Palo Alto Rent Stabilization Ordinance.(1) Landlord Page Mill Properties, which reportedly controls over 1700 units, has been accused of attempting to dance around the local ordinance that restricts rental increases that can be imposed on residential tenants by exploiting a legal loophole intended for small landlords.

  • After gobbling up more than half of the rent-controlled apartments in East Palo Alto, Page Mill Properties immediately began imposing huge rent increases and evicting tenants at unprecedented rates. The company has repeatedly sued the city over local laws protecting tenants and filed unsuccessful petitions to raise rents. Page Mill Properties has also invoked the controversial Ellis Act to evict outspoken tenant activists, prompting accusations that the evictions are retaliatory. The [...] litigation involves Page Mill's effort to exploit a "mom-and-pop" exemption from the local rent law. Under the exemption, owners of four or fewer units are not subject to the rent increase limitations of the [East Palo Alto Rent Stabilization Ordinance]. Page Mill created numerous companies, each to own four or fewer units, and then these companies imposed huge rent increases claiming to be exempt from the ordinance.(2)

For more, see Predatory Landlord Scheme Starts To Unravel in East Palo Alto (Court Grants Injunction Against Illegal Rent Increases).

In related stories, see:

(1) Reportedly, on the same day as last week's court hearing, the San Jose Mercury News reported (see Page Mill could lose ownership of East Palo Alto properties) that Page Mill is facing financing problems that could lead to foreclosure. According to the Mercury News article, "ownership of more than 1,700 units in East Palo Alto is in question after the company failed to make a $50 million payment to Wells Fargo Bank last month." Page Mill is urging Wells Fargo to renegotiate the terms of the loan, but tenant advocates question why Wells Fargo should renegotiate with a property owner with Page Mill's track record, the story states. The article also notes maintenance problems at Page Mill buildings, with pools recently being shut down by city health officials (including one that is bright green with algae), raising further questions about why Page Mill should be allowed to continue managing the property.

(2) In granting the tenant/plaintiff's motion for a preliminary injunction, the Court rejected the landlord's argument that each of its corporate entities was to be considered separately. Applying the alter ego doctrine, the court disregarded the corporate forms set up by Page Mill in evaluating whether these entities could qualify for the exemption as owners of less than five units. The Court found that the tenant plaintiffs had shown such a "unity of interest" that the separate corporate personalities "do not in reality exist," and that the multiple entities had been used as conduits for a single enterprise. The court determined that recognizing the corporate entities would lead to an inequitable result.

For more on the alter ego doctrine, as applied in California, see:

Monday, September 07, 2009

System Overrun With People Peddling False Promises & Dispensing Horrible Advice Claims Another Victim

In Arverne, Queens, New York Magazine recounts the saga Jacqueline Tamaklo, a local resident who was born in Liberia and immigrated from Ghana, and the two-family house she bought in 2006 and is fighting to keep from losing to foreclosure. Her saga starts when she misplaced her trust in her preacher, a bishop and leader of a local church who also happened to moonlight in the real estate business, who, in her view, set her up for the major screwing over she is currently going through. On how she got herself into the mess she finds herself in:
  • Looking back, she believes it wasn’t only naïveté and ignorance that led her here; it was an excess of trust she placed in a system that had long since lost all safeguards, that was overrun with people peddling false promises and dispensing horrible advice. It’s a situation lots of homeowners find themselves in, though in Jackie’s case, the betrayal of trust felt especially steep.

For her story, see Last Home Standing (Jacqueline Tamaklo lives in one of New York’s most foreclosure-ridden neighborhoods. And now she’s fighting not to end up like the Joneses) (go here for entire story on one page).

More Contract For Deed Horror Stories - Texas Homebuyers Lose Home To Foreclosure Despite Making All Payments As Seller Pockets Cash & Stiffs Bank

In Edna, Texas, The Victoria Advocate reports on the story of Clara and Jose Carrera and their kids, a local family who just lost their home to foreclosure, despite paying in full all payments required under their purchase agreement and making significant improvements to their home:
  • Although the family thought they had paid off their Edna home a year ago, a series of events put [the Carreras] in the precarious position they found themselves in [...]. It began in September 2000, when Clara and Jose Carrera decided to purchase the home off County Road 306 near Edna from James Glenn Whitley.

  • They entered a contract for deed, meaning once they paid it off, the property was theirs, said Bobby Bell, Jackson County district attorney. The family paid the $53,000 they owed for the 10-year contract two years early.(1) The family approached Whitley and asked for the title, Clara Carrera said, but Whitley always said he was working on it. "We waited three or four months," she said. "We waited and waited, but he never answered." The Carreras got their answer when the bank sent them a note in the spring alerting them of the pending foreclosure.

  • Whitley had approached Prosperity Bank in 2006 and pledged the property. When he filed for bankruptcy, he listed the Carreras as leasees, limiting their legal rights, Bell said.(2)

***

  • The Carreras' property wasn't the only one up for sale. Jerry and Stacey Berry's home also went to auction. They too had been duped by Whitley. The couple paid $10,000 down for property they purchased from Whitley and paid $1,280 a month, Bell said. Of that, $200 was to go for taxes and insurance. When a grass fire on the Berrys' land damaged a neighbor's shed, they went to collect insurance money, said Brian Rogers, the family's attorney. The problem? There wasn't any insurance.

  • Whitley didn't own the property when the family purchased it, Rogers said. After Whitley received the $10,000, he purchased it from someone else, Bell said, but never paid the insurance. Whitley borrowed the money to make the purchase from Bill and Miriam Ackley, who acted as private lenders, Rogers said.

For more, see Jackson County foreclosure auction brings tears, questions.

(1) Reportedly, Jose Carrera and his 14-year-old son, also named Jose Carrera, added their own touches on their home, building on a living room, car port and even remodeling the bathroom, the younger Jose said.

(2) According to this story, the Carreras entered into the contract for deed with Whitley in September, 2000. Presumably, they took possession of the property at that time; also presumably, they failed to record their contract in the county land records office. The story then goes on to state that it wasn't until about six years later (2006) that Whitley pledged the property as collateral for the loan that the lender ultimately foreclosed (presumably, the lender recorded its mortgage in the local land records office promptly after making the loan to Whitley). Based on these facts, it appears that the Carreras' legal interest in the home, albeit unrecorded, is actually superior to the lender's subsequently created, recorded interest (as a mortgagee) in the property.

The general rule when it comes to recording real property interests at the local land records office can be described as "first in time, first in right" (ie. an earlier recorded interest has priority over a later recorded interest, irrespective of when the interests were actually created). Based on this alone, it would appear to the uninitiated that the bank's recorded mortgage has priority over the Carreras' earlier created, but unrecorded, land contract. Those who assert this position generally point to their state recording statutes as support for their position.

However, the relevant legal analysis (as it would apply in this particlar story) does not end there. What is often (and regrettably) overlooked when reading the state recording statutes (particulary when it comes to undoing or unwinding foreclosure rescue and other real estate scams) is that those laws usually apply only when the party first recording its real property interest acquired it "for value" and "without notice" (ie. without actual notice of the claim of another, or without constructive notice of certain facts a party should have become aware of which, if investigated, would reveal the claim of another). Stated another way, the state recording statutes generally only serve to protect those acquiring interests in real property when acting as bona fide purchasers (in the case of real estate buyers) and bona fide encumbrancers (in the case of mortgage lenders). Therefore, if a party is not a bona fide purchaser/encumbrancer, the "first in time, first in right" rule does not apply. In that case, the owner of the earlier created real property interest has priority over any subsequently created interest, irrespective of when recording takes place.

Further, in this analysis, it is generally true that one acquiring an interest in real estate does so with notice of all the legal and equitable rights and claims in the premises, and in subordination to these rights and claims, of any person or persons, other than the record owner, in open, notorious (ie. visible), exclusive and unequivocal possession of the property.

In the case that the Carreras' find themselves in, the relevant question appears to be:

  • Is the foreclosing mortgage lender (which acquired and recorded its interest in the Carrera home some six years after the Carreras acquired their interest and took possession of the home by reason of its unrecorded contract for deed from Whitley) entitled to the special protection of the recording statutes as a bona fide purchaser/encumbrancer, thereby giving its recorded interest priority over the Carreras' unrecorded contract for deed?

Even if one assumes, for sake of argument, that the foreclosing lender paid value for its interest, and had neither any actual knowledge of the scam perpetrated by Whitley on the Carreras, nor any actual knowledge of the Carreras' open, notorious, exclusive, and unequivocal possession of their home, the answer seems to be a definitive no. Further, since Carrera has paid off the contract for deed, it is Carrera who appears to be entitled to the home free and clear of any right the foreclosing lender may claim.

A review of some of the Texas case law appears to lend some support to this position.

The Texas Supreme Court, in Madison v. Gordon, 39 S.W.3d 604; 2001 Tex. LEXIS 5; 44 Tex. Sup. J. 410, (Tex. 2001), made this observation (some citations omitted, any bold text is my emphasis):

  • Status as a bona fide purchaser is an affirmative defense to a title dispute. A bona fide purchaser is not subject to certain claims or defenses. To receive this special protection, one must acquire property in good faith, for value, and without notice of any third-party claim or interest. Notice may be constructive or actual. Actual notice rests on personal information or knowledge. Constructive notice is notice the law imputes to a person not having personal information or knowledge.

  • One purchasing land may be charged with constructive notice of an occupant's claims. This implied-notice doctrine applies if a court determines that the purchaser has a duty to ascertain the rights of a third-party possessor. See Collum v. Sanger Bros., 98 Tex. 162, 82 S.W. 459, 460 (Tex. 1904); American Surety Co., 82 S.W.2d at 183. When this duty arises, the purchaser is charged with notice of all the occupant's claims the purchaser might have reasonably discovered on proper inquiry. Dixon v. Cargill, 104 S.W.2d 101, 102 (Tex. Civ. App.--Eastland 1937, writ ref'd); see also Flack, 226 S.W.2d at 632. The duty arises, however, only if the possession is visible, open, exclusive, and unequivocal. See Strong v. Strong, 128 Tex. 470, 98 S.W.2d 346, 350 (Tex. 1936).

***

  • In Strong, we described the kind of possession sufficient to give constructive notice as "consisting of open, visible, and unequivocal acts of occupancy in their nature referable to exclusive dominion over the property, sufficient upon observation to put an intending purchaser on inquiry as to the rights of such possessor." Strong, 98 S.W.2d at 350. Possession that meets these requirements--visible, open, exclusive, and unequivocal possession -- affords notice of title equivalent to the constructive notice deed registration affords. Strong, 98 S.W.2d at 348.

A Texas appeals court, in Cohen v. Hawkins, NO. 14-07-00043-CV, 2008 Tex. App. LEXIS 2647 (Tex. App. Houston [14th Dist] 2008, pet. denied), made the following observation (in footnote 6), describing a purchaser's duty to inquire of those in possession of the subject real estate:

  • A purchaser of land is charged with constructive notice of all claims of a party in possession of the property that the purchaser might have discovered had he made proper inquiry. Apex Fin. Corp. v. Garza, 155 S.W.3d 230, 234 (Tex. App.--Dallas 2004, pet. denied); see also Madison, 39 S.W.3d at 606. More specifically, possession by a third party requires that the purchaser make such inquiries as a reasonable person would, and the failure to make such inquiries charges the purchaser with knowledge of the claims and facts such inquiry would have revealed. See Collum v. Sanger Bros., 98 Tex. 162, 82 S.W. 459, 460 (1904); Aldridge v. N.E. I.S.D., 428 S.W.2d 447, 449 (Tex. Civ. App.--San Antonio 1968, writ ref'd n.r.e.); Astin v. Martin, 289 S.W. 442, 444 (Tex. Civ. App.--Austin), rev'd on other grounds, 295 S.W. 584 (1926).

In Fletcher v. Minton, 217 S.W.3d 755; 2007 Tex. App. LEXIS 2225 (Tex. App. - Dallas 2007), a Texas appeals court made this statement:

  • The unrecorded instrument is binding . . . on a subsequent purchaser who does not pay a valuable consideration or who has notice of the instrument. TEX. PROP. CODE ANN. § 13.001 (Vernon 2006). Thus, an unrecorded conveyance is binding on those who have knowledge of the conveyance. Burris v. McDougald, 832 S.W.2d 707, 709 (Tex. App.-Corpus Christi 1992, no writ). A person who acquires property in good faith, for value, and without notice of any third-party claim or interest is a bona fide purchaser. Status as a bona fide purchaser is an affirmative defense to a title dispute. Madison v. Gordon, 39 S.W.3d 604, 606, 44 Tex. Sup. Ct. J. 410 (Tex.2001).

  • Notice will defeat the protection otherwise afforded a bona fide purchaser. City of Richland Hills v. Bertelsen, 724 S.W.2d 428, 429 (Tex.App.-Fort Worth 1987, no writ). "Notice" is broadly defined as information concerning a fact actually communicated to a person, derived by him from a proper source, or presumed by law to have been acquired. Flack v. First Nat'l Bank, 148 Tex. 495, 226 S.W.2d 628, 631 (Tex.1950). Notice may be actual or constructive. Id. Actual notice results from personal information or knowledge, as well as those facts which reasonable inquiry would have disclosed. Constructive notice is notice the law imputes to a person not having personal information or knowledge. Madison, 39 S.W.3d at 606; Flack, 226 S.W.2d at 631-632.

  • A purchaser of land is charged with constructive notice of all claims of a party in possession of the property that the purchaser might have discovered had he made proper inquiry. Apex Fin. Corp. v. Garza, 155 S.W.3d 230, 234 (Tex.App.-Dallas 2004, pet. denied). This duty to ascertain the rights of a party in possession of the property arises when the possession is open, visible, exclusive, and unequivocal. Id. see also, Madison, 39 S.W.3d at 606.

In Morgan v. Chase Home Fin., LLC, No. 08-50288, 306 Fed. Appx. 49; 2008 U.S. App. LEXIS 26894 (5th Cir. 2008), a Federal appeals court gave the following discussion of In re Hayes, 2004 WL 2926006 (W.D. Tex. Dec. 15, 2004), which addressed the bona fide purchaser doctrine, and its application to mortgage lenders, under Texas law:

  • There, Elizabeth Hayes sold her house to John Henderson but failed to transfer the property by general warranty deed. After payment had been made and Henderson had moved in, Hayes received a loan from a bank using the house as collateral. When Hayes later declared Chapter 7 bankruptcy, the bank asserted its lien. Henderson objected, arguing that he had superior equitable title; the bank responded that it had no notice of Henderson's claim to the house and so was a bona fide purchaser for value. Under Texas law, open, visible, exclusive, and unequivocal possession of property is constructive notice to any subsequent purchaser and triggers a duty of inquiry. Id. at *9. The bank in Hayes, however, argued that lenders should not be held to the same duty of inquiry as individual purchasers, because "the valuation model and desktop appraisal methods it used . . . did not require physical inspection of the subject real property." Id. at *12. The court disagreed, finding that Texas law did not distinguish between lenders and individuals regarding bona fide purchaser status.

In conclusion, the foregoing application of the doctrine of bona fide purchaser/encumbrancer when applying the protection of the state recording statutes, when property is occupied by a person or persons other than the seller or legal title holder, is not unique to Texas. See Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire. See also, The Bona Fide Purchaser for Value of a Legal Estate Without Notice. rent to own lease purchase option scams yellowstone

Sentencing Hearing Begins For Maryland Man Convicted For Role In Equity Stripping Foreclosure Rescue Scam

In Baltimore, Maryland, WBAL-TV Channel 11 reports:
  • A Maryland man who ran television ads claiming he could save homes from foreclosure was in court Thursday for the first day of his mortgage fraud sentencing. Michael K. Lewis pleaded guilty in May to conspiracy and bankruptcy fraud in a foreclosure rescue scheme.(1) He was supposed to be sentenced Thursday, but part of the hearing was suspended so the defense could locate six of its witnesses.

  • "I thought this plan was there to help people," Lewis told 11 News I-Team reporter Barry Simms as he left the courthouse. Lewis still defended his plan to get financially strapped homeowners out of debt, something he called the "MKL Financial Diet." He blamed others for the fall of his business network. "Circumstances that were out of my control and things were being done that I knew nothing about," he said. [...] Lewis will be back in court Sept. 11. He could get up to 25 years in federal prison.

For the story, see Man Convicted Of Mortgage Fraud Claims Innocence (Sentencing Begins In Michael K. Lewis Fraud Case).

(1) See U.S. Attorney press release: Leader of Mortgage Fraud Scheme Confesses and Agrees to Forfeit $2 Million for Targeting Victims with TV Ads.

Straw Buyer To Cough Up $6.5K To Settle Civil Charges For Role In Massachusetts Equity Stripping Foreclosure Rescue Scam

From the Office of the Massachusetts Attorney General:
  • [Last week], Attorney General Martha Coakley’s Office entered into a settlement with Marie Bettie Mereus, resolving allegations that she participated in a foreclosure rescue scheme in which nineteen defendants – mortgage brokers, real estate brokers, closing attorneys and straw buyers – deceived homeowners facing foreclosure into selling their homes under the false promise of avoiding foreclosure and maintaining their homes and their homes’ equity.(1) [...] According to the complaint, Mereus received a payment for allowing the defendant mortgage brokers to use her in name in applying for a loan to purchase one of the properties identified. Contrary to representations made to the lenders in the completed loan application, Mereus took title to that property without paying any deposits or closing costs, and without intending to occupy the property.

***

  • Mereus is the second defendant and first straw buyer out of the original 19 defendants to settle.(2) In June, the Attorney General’s Office reached a settlement with closing attorney Valerie Hanserd. [...] Trial is scheduled to commence against the remaining defendants in the foreclosure rescue scheme case on November 9, 2009, [...] in Suffolk Superior Court.

For the Massachusetts AG press release, see Straw Buyer Defendant Who Participated in Unfair and Deceptive Foreclosure Rescue Scheme Enters Into Consent Judgment with Attorney General Martha Coakley’s Office.

(1) On March 30, 2007, the Attorney General’s Office filed a complaint against Mereus and 18 other defendants that participated in a foreclosure rescue scheme targeted at distressed homeowners facing foreclosure. Each of the defendants allegedly conspired through their respective roles as mortgage brokers, real estate brokers, closing attorneys or straw buyers to deceive homeowners into selling their homes under the false promise of avoiding foreclosure and maintaining their homes and their homes’ equity. The Attorney General’s Office alleges that the defendants not only obtained the titles to the homeowners’ residences but also stripped most of the homes’ equity by failing to account for deposits and other monies due from the buyers, disbursing sale proceeds for unearned brokers’ fees and other fictitious services, and drafted and submitted to lenders HUD Settlement Statements that did not accurately reflect the disbursements made in the transactions. In certain cases, the defendants allegedly resold the homes in multiple transactions amongst themselves, thereby stripping the homes of all their equity.

(2) Under the terms of the consent judgment, Mereus is prohibited from acting as a straw buyer or otherwise obtaining loans through misrepresentation and must pay $5,000 in restitution and $1,500 in attorney’s fees and costs to the Commonwealth. The $5,000 represents the money Mereus was paid for her role as a straw buyer in the transaction.

Bronx DA Charges Two With Bilking $1.3M From Three Victims In Bogus Sales Of Real Estate They Didn't Own

From the Office of the Bronx County, New York District Attorney:
  • Bronx District Attorney Robert T. Johnson announced [...] that two Bronx men(1) have been charged with bilking three people out of more than one point three million dollars ($1,300,000) in an alleged scam involving the sale of property that the defendants did not own and were not authorized to sell. It is alleged that the victims were led to believe that they were purchasing property that had been owned by the City of New York because the previous owners had either failed to pay taxes or correct numerous building code violations.

***

  • It is alleged that in May 2008, the defendants approached real estate investors Jacob Selechnik and Robin Shimoff and offered to sell them various properties which [Celestino] Orta said that he either had bought or was in the process of buying from the City of New York. Selechnik and Shimoff examined the real estate and agreed on a purchase price of $710,000, to be paid up front. A few months later in July 2008, the victims allegedly were offered additional properties in the Bronx, Brooklyn, and Queens for which they paid another $502,000. A third victim, Nir Cohen, allegedly also was approached by the defendants in May 2008 and made a $70,000 down payment for a vacant lot at 539 Union Avenue near Southern Boulevard. The alleged scam began to unravel when the victims filed complaints against [Mario] Tolisano and Orta after repeated attempts to schedule closings on the properties were ignored. The defendants, in fact, never had ownership of the properties or authorization to sell them.

For the Bronx DA press release, see Bronx Man And Associate Charged With Stealing Nearly $1.3 Million Dollars In An Alleged Real Estate Scam Involving The Sale Of Property That The Defendants Did Not Own.

(1) Mario Tolisano, 59, of 1669 Astor Avenue, and Celestino Orta, 40, of 588 Timpson Street, have been charged with 1 count of Grand Larceny in the 1st degree, 3 counts of Grand Larceny in the 2nd degree, 1 count of Criminal Possession of Stolen Property in the 1st degree and 3 counts of Criminal Possession of Stolen Property in the 2nd degree. Tolisano also was charged with 7 additional counts of Practicing or Appearing as Attorney-At-Law without being Admitted and Registered.

Sunday, September 06, 2009

SW Fla. Alleged Rent-To-Own Straw Buyer Scam Leaves Would-Be Buyers Booted From Homes, Investors w/ Ruined Credit, Foreclosing Lenders Holding The Bag

In Fort Myers, Florida, The News Press reports:
  • A Fort Myers real estate sales associate was arrested Thursday and charged with 61 counts related to a multimillion dollar mortgage fraud scheme in Southwest Florida. Mark Wallen, 38, [...] was booked into the Lee County Jail [...] and is being held on $100,000 bond, state attorney’s office spokeswoman Samantha Syoen said.

  • The state alleges Wallen worked with a group of real estate professionals(1) who were filing fraudulent loan applications - taking advantage of those with both good and bad credit - and getting more than $3 million from fees and defaulted loans. [...] Investigators with the Florida Department of Law Enforcement have said that between 2002 and 2004, Fort Myers-based Alternative Home Finance would find renters with bad credit ratings and allow them to pick out a house to rent and eventually own. The company would then allegedly find people with good credit and take out multiple loan applications in the name of one borrower while falsifying applications. After collecting money from a bank, they would allow the house to go into foreclosure, leaving renters without a home, borrowers with bad credit and banks to foot the bill.

For the story, see Fort Myers man charged in mortgage fraud scheme.

(1) Reportedly, the State Attorney's Office filed charges in January against five people — Trinity Hansen, James Dalonzo, Jeremy Hatlee, Paul Bosnyak and Brian Chili. Of those, Dalonzo has yet to be arrested. Hansen, who runs Safe Harbor Title Co. of Fort Myers, was formerly engaged to Wallen. The State Attorney's Office alleges Hansen, Dalonzo, Hatlee, Bosnyak and Chili worked as part of the scheme with Christopher Kim Jack, Erich Heckler and Erling Hall. Heckler was a fugitive until he was picked up last month in Costa Rica (see Private investigator who caught Lee County fugitive talks to WINK News (Eric Heckler was on the run for over one year)). rent to own lease purchase option scams yellowstone

South Florida Non-Profit Legal Services Offices Score $700K In Countrywide Lawsuit Settlement Cash To Fund Foreclosure Defense Efforts

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum and The Florida Bar Foundation [...] awarded approximately $700,000 in grants to several South Florida non-profit organizations to fund free foreclosure legal defense work. A total of $4 million will be available statewide over two years to fund attorneys and paralegals who will provide free legal assistance to homeowners facing foreclosure. The grants were funded by the Attorney General’s settlement with Countrywide Financial last October. [...] Legal Aid Service of Broward County, Inc. will receive $340,000 in grant funding; the Cuban American Bar Association, the Spanish American League Against Discrimination, Inc., and the Legal Services of Greater Miami, Inc. in collaboration with the Haitian Lawyers Association will each receive $85,000; Legal Services of Greater Miami, Inc. will also receive an additional $104,700 in funding.

For the Florida AG press release, see Attorney General Presents $700,000 in Grants Through Mortgage Foreclosure Defense Fund.

Justice Department Continues Effort In Targeting Housing Discrimination Against Individuals With Disabilities

From the U.S. Department of Justice:
  • The Justice Department [...] filed a lawsuit against the developer of the Riverwalk Condominiums, a condominium apartment complex in Post Falls, Idaho, for violating the Fair Housing Act by constructing apartments that do not have required accessibility for individuals with disabilities.(1) The lawsuit, filed in federal court in Idaho, charges that Riverwalk Condominiums LLC, the developer of the 36-unit condominium complex on Greensferry Road, failed to comply with the Fair Housing Act accessibility provisions which apply to 18 ground-floor units. [...] "Architectural barriers can be as big an obstacle to the housing rights of people with disabilities as an outright refusal to rent to them," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.

For the Justice Department press release, see Justice Department Files Lawsuit Alleging Disability-Based Housing Discrimination Against Idaho Condominium Developer.

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

  • The Justice Department [...] announced an agreement with the former owners and managers of Valley View Apartments in Longview, Wash., to settle allegations that they violated the Fair Housing Act by intentionally discriminating against an individual with a disability. Under the settlement, which must be approved by the U.S. District Court for the Western District of Washington, the defendants must pay a total of $35,000 to the complainant.

  • The lawsuit originated from charges filed by the Department of Housing and Urban Development (HUD) on behalf of a tenant of Valley View Apartments. In 2004, the tenant, who has a mobility impairment that limits his ability to enter or exit a car, asked to use two contiguous parking spaces in the apartment complex’s lot until a handicap accessible space became available. The complaint alleged that the former owners and managers of the apartments, John E. and Shirley L. Price, violated the Fair Housing Act when they intentionally discriminated against the tenant by refusing his request and by initiating retaliatory eviction proceedings. The complaint also alleged that the tenant’s request was reasonable and necessary to afford him an equal opportunity to use and enjoy his dwelling.

For the Justice Department press release, see Justice Department Obtains $35,000 in Disability-Based Housing Discrimination Settlement with Apartment Complex in Longview, Washington.

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  • The Justice Department [...] announced that the operator and manager of the Rathbone Retirement Community in Evansville, Ind., has agreed to pay up to $116,000 to resolve a housing discrimination lawsuit. The November 2008 lawsuit alleged that the defendants violated the Fair Housing Act by prohibiting the use of motorized wheelchairs and scooters in residents’ apartments and in the home’s common dining room during meals. [...] The agreement, which must be approved by the U.S. District Court for the Southern District of Indiana, requires Rathbone Retirement Community Inc. and its resident manager Norma Helm to pay a total of $70,000 to three former residents. It also requires them to establish a $25,000 settlement fund for others who may have been injured by the policy and pay the government a $21,000 civil penalty. The agreement requires the defendants to provide fair housing training for employees, adopt nondiscrimination and reasonable accommodation policies, and maintain and submit records to the United States for the two-year term of the agreement.

For the Justice Department press release, see Justice Department Resolves Disability Discrimination Lawsuit Against Indiana Provider of Retirement Housing.

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(1) Among other things, the complaint alleges that the public and common use areas are not accessible to people with disabilities; the routes to some units are not accessible; some kitchens and bathrooms are not fully usable by people in wheelchairs; and electrical outlets and environmental controls are mounted too high or too low for access by people in wheelchairs. The lawsuit also alleges that the defendants’ conduct constitutes a pattern or practice of discrimination or a denial of rights to a group of persons.

Cross Burning Incident Results In Federal Felony Charge Against Indiana Man For Interfering With The Housing Rights Of Another

From the U.S. Department of Justice:
  • The Justice Department announced that Bruce Mikulyuk, of Mishawaka, Ind., has been indicted by a federal grand jury for charges stemming from a cross burning in September 2007. Mikulyuk made his first court appearance [...] in South Bend, Ind. A trial has been scheduled for Nov. 3, 2009. Mikulyuk was charged with one count of interfering with the housing rights of another and one count of using fire in the commission of a felony. According to the indictment, Mikulyuk burned a cross at the home of an African American man and white woman and returned later with a knife and made threats.

For the Justice Department press release, see Indiana Man Indicted for Cross Burning.

Mass AG Files Suits, Obtains Civil Rights Injunctions Involving Discrimination, Harassment Allegations Affecting Victims' Housing Rights

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office has obtained a civil rights injunction against a Norwood woman, Deborah May, based on allegations of her repeated and severe harassment and intimidation of a gay neighbor.(1) The order [...] prohibits May from threatening, intimidating, or coercing the victim or anyone else in the Commonwealth on the basis of their actual or perceived sexual orientation. It further prevents May from contacting or communicating with the victim or his family and requires her to stay at least 500 yards from his place of employment.

For more, see Attorney General Martha Coakley Obtains Civil Rights Injunction Against Norwood Woman for Severe Harassment and Intimidation of Neighbor.

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  • Attorney General Martha Coakley’s Office obtained a civil rights injunction against two Holyoke brothers, Jesse and Roman Jedrzejczyk, who are accused of harassing, threatening and intimidating their neighbors, a single mother and her two six year-old daughters. The adult victim is a political asylee to the United States who, in 2001, fled political persecution in Haiti out of fear for her life.(2) The order [...] prohibits the Jedrzejczyks from threatening, intimidating or coercing the victims, or anyone else in the Commonwealth, because of their actual or perceived race or ethnicity. The order also prohibits the Jedrzejczyks from knowingly coming within ten feet of the victims.

For more, see AG Obtains Civil Rights Injunction Against Holyoke Brothers for Harassment and Intimidation of Neighbors.

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  • Attorney General Martha Coakley’s Office obtained a civil rights injunction against a Pittsfield woman, Tammy L. Haddad, accused of harassing, threatening and intimidating a family living next door on the basis of their race.(3) The order [...] prohibits Haddad from threatening, intimidating or coercing the victims, or anyone else in the Commonwealth, on the basis of their actual or perceived race. The order further prevents Haddad from knowingly coming within 20 feet of the victims and their family and or within 500 yards of the place of employment of the victims.

For more, see Attorney General Martha Coakley Obtains Civil Rights Injunction Against Woman Accused of Racial Harassment and Intimidation of Neighbors.

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According to AG Coakley's office, violations of the above-referenced orders are criminal offenses punishable by a fine of up to $5,000 and two and a half years in a House of Correction, or if bodily injury results from such a violation, a $10,000 fine and up to 10 years in State Prison. Among AG Coakley's comments when making the above announcements:

  • Bias-motivated conduct, such as the harassment and intimidation we allege in this case, are devastating to victims not only because of the immediate physical and emotional harm they cause, but because feelings of fear, anxiety and profound loss of personal security often last far longer than the incident. Beyond their impact on individual victims, hate crimes and other forms of bias-motivated activity are very detrimental to communities, and this type of behavior will not be tolerated.”

  • All Massachusetts residents are entitled to live in their homes and raise their families free from the type of bias-motivated harassment and intimidation alleged [...]. Victims and their communities suffer when racial harassment goes unchecked, and this type of behavior will not be tolerated.”

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(1) According to the complaint, Deborah May allegedly continually harassed the victim who is a tenant in the apartment building where May also resides. In November 2007, May allegedly began spreading false rumors that the victim is a sexual predator and pedophile. The complaint further states that six months later, May complained to her landlords about the victim’s display of a gay pride flag outside of his apartment and had the flag removed. Soon thereafter, on multiple occasions, May screamed anti-gay epithets at the victim in the presence of other tenants and physically confronted the victim in the yard of his home. The complaint further alleges that on August 31, 2008, May made a baseless report to the Norwood Police Department falsely claiming that the victim had exposed himself. As a result of May’s alleged pattern of harassment and intimidation, the victim feared for his safety and well-being at home and was forced to alter his daily routine and other behavior in order to avoid May.

(2) According to the complaint, the Jedrzejczyks repeatedly and regularly harassed the victims using racial slurs and threats over the course of the past three years. The defendants’ actions have caused the victim to become concerned for her personal safety after threats were made to break her windshield. In addition, a “For Sale” sign was placed in front of her house. The intimidation culminated recently when the victim responded to racial slurs being directed at her by imploring Jesse Jedrzejczyk to leave her alone. In response, Mr. Jedrzejczyk threatened, “I will never leave you alone until you move. If you don’t move, I’ll move you!” The Commonwealth’s lawsuit alleges the Jedrzejczyks’ bias-motivated harassment has seriously interfered with the victims’ ability to live and feel safe at home.

(3) According to the complaint, Haddad allegedly engaged in a campaign of racial harassment and intimidation by regularly directing racial epithets and racist imagery against her African-American neighbors. The complaint further alleges that Haddad filed baseless complaints with law enforcement agencies against one of the victims and repeatedly interfered with her neighbor’s property. The Commonwealth alleges that Ms. Haddad’s bias-motivated acts significantly interfered with her neighbors’ right to use and enjoy their home free from harassment and intimidation.

Saturday, September 05, 2009

Bad Timing Leaves Central Florida Residents Without Financing On Newly Constructed Homes As Lower Values Lead Lenders To Back Out Of Loan Commitments

In Central Florida, The Tampa Tribune reports:
  • Every day, Mary McCarthy must drive past the finished dream home in her front yard to the mobile home where she has lived for 20 years. The new home was finished in February, but she can't move in. The home is not legally hers, though it sits on her property. The best she can do is open the front door and feel the rush of the air conditioning that she is paying for so mold won't grow inside.

***

  • McCarthy's empty home is a symbol of poor timing amid the worst mortgage crisis in decades. As property values plummet, those caught midway through new home construction learn an awful fact: They can't find a lender willing to give them a loan. The three-bedroom, 1,800-square-foot home is in limbo. Just before the closing, the lender backed out, saying the home was no longer worth the original loan amount.(1) The builder hasn't been paid and has sued the lender. McCarthy can't find another lender willing to give her a loan and now faces liens on the one-acre property.

***

  • All this sounds familiar to Carol Robinson of Ocala. She, too, decided to build a home on land where she lives in a mobile home. When her lender, Ocala National Bank, shut its doors in January, the lender that took over did not want her construction loan. Instead of going through a builder, Robinson had hired subcontractors to do all the work, one part of the home at a time. The home is now 60 percent complete, and she doesn't have the money to finish it.

For the story, see Dream of new home turns into a nightmare.

(1) Reportedly, as home values continue to fall, lenders increasingly are deciding not to fund loans for new homes - even those that are partially or completely finished - because they're worth so much less than the originally agreed upon loan amounts.

Home Interior Ruined After Roofers Begin, Stop Repairs On Wrong House, Leaving Premises Open To Elements, Says Suit

In Galveston, Texas, The Southeast Texas Record reports:
  • A Tiki Island man claims workers started roof repairs on his house by mistake while he was out of town, and then left his home exposed to the elements when they learned of their error. Paul Rice is suing Kevin Mitchell of Montgomery, doing business as South Texas RES-COM, and Galveston Flooring Co. in Galveston County District Court for wrongfully performing repairs to the roof of his house.

***

  • [T]he suit claims the workers did not go to their client's home, but to Rice's house by mistake. "Galveston Flooring's employees began said work on the wrong home - that owned by plaintiff, Paul Rice, while he was out of town," the original petition says. Rice says by that the time Galveston Flooring realized it had made a mistake, a large section of his roof had been stripped of shingles but did nothing to rectify the error. He claims the un-shingled roof allowed water and debris to enter his home, ruining the interior.

For the story, see Suit claims roofers worked on wrong house then left job unfinished.

Arizona AG Files Suit Against California-Based Alleged "Property Tax Reduction" Racket

From the Office of the Arizona Attorney General:
  • Attorney General Terry Goddard [...] announced that he has filed a lawsuit and obtained a temporary restraining order to stop the perpetrators of an alleged fraud that claimed a homeowner’s property qualified for a "property tax reduction review." The official-looking advertisement appeared to be an attempt to scam homeowners who were looking to reduce their property tax bill.(1) [...] Goddard’s office and county assessors across Arizona have received hundreds of complaints regarding the solicitation since they became aware of it at the beginning of [August]. The offer, which requests a $189 processing fee, is not affiliated with any government entity. According to court documents, the document attempts to appear official and contains a "notice number" and deadline for prompt processing.

For the entire Arizona AG press release, see Terry Goddard Files Lawsuit to Stop Alleged Property Tax Scam.

For more from the Arizona AG:

(1) The lawsuit names Property Tax Review Board, Inc., a Granada Hill, Calif.-based company; Property Tax Review Board’s President and CEO Michael McConville, of Simi Valley, Calif., and Carmen Mercer, of Tombstone, owner of the Post Office box included in the solicitation.

Florida Woman Sick Over Living In "Chinese Drywall Prison;" Sunk Life Savings Into Now-Worthless House; Safer To Live In Car, Says Doc

In Port St. Lucie, Florida, WPTV-TV Channel 5 reports:
  • Gloria Berson loved her house. She had the kitchen she always wanted and big plans to turn it into her private paradise. "It was our dream home," she says. Then things started getting weird. The AC blew and the pipes turned black. The TV started losing its color. The jewelry and silverware turned splotchy. All symptoms that the 26-hundred square feet of drywall in this home came courtesy of China.

  • "We're stuck in a beautiful toxic house," says Berson. Then she started getting sick. She has nose bleeds and she's constantly tired and she wonders what her house is doing to her while she sleeps. "Nobody knows what the long term side-effects are going to be. It could be brain tumor, heart attack. Who knows what it's going to do to me."

  • Berson is currently fighting with her insurance company, but they told her they'd never heard of Chinese drywall prior to her claim. She's also involved in a class action lawsuit against her home builder and the drywall manufacturers. That suit however could take years. The problem for Berson is she's got nowhere to go. Before she was laid off, she'd sunk her life savings into the place. Now, it's worth nothing. She can't sell it. She can't afford to leave it. All that's left for her is foreclosure, but even then, she'll be homeless. That leaves her with few options, except for the advice her own doctor gave her. "He said you'd be safer living in your car. I'm thinking about it."

Source: This prison made of drywall.

Man Faces Charges Of Ripping Off Senior After Promising To Help Him Get Out Of Reverse Mortgage

In Kansas City, Missouri, the Kansas City Star reports:
  • Police have arrested a man accused of cheating a senior citizen out of $4,000. Anthony C. Washington faces charges of forgery, theft and financial exploitation of the elderly. Washington allegedly promised to help a 78-year-old man out of a reverse mortgage but instead stole his checks and cash. Officers arrested Washington Friday when he appeared for a hearing at the Jackson County Courthouse. His bond has been set at $150,000.

Source: Man arrested in alleged theft from elderly.

Friday, September 04, 2009

Home To HUD Regional Office Falls To Foreclosure; Can Eviction Of Federal Housing Agency Be Next?

In Atlanta, Georgia, The Atlanta Journal Constitution reports:
  • In another troubling sign for commercial real estate, a downtown office tower housing the Atlanta HUD office was sold at a foreclosure auction this week for $7 million. [...] The Atlanta regional office of the U.S. Department of Housing and Urban Development is the sole occupant of the 17-story Marietta Street building. HUD’s mission includes overseeing programs to help homeowners avoid foreclosure. A HUD Atlanta spokesman said more than 400 people work in the building. “There has been no interruption to the operation,” said Joseph Phillips. “We are continuing to operate as usual.”

For the story, see Atlanta HUD office building sold at foreclosure auction.

Ex-Cowboy "Hitting Machine" Hit With Indictment With Eight Others In Alleged Straw Buyer Mortgage Scam Involving $20M+ In Fraudulently Obtained Loans

In Dallas, Texas, The Dallas Morning News reports:
  • Former Dallas Cowboys linebacker Eugene Lockhart Jr., known in his playing days as Mean Gene the Hitting Machine, was arrested Thursday after being indicted on charges related to an alleged mortgage fraud scheme, federal prosecutors said. Lockhart, 48, and eight others(1) allegedly arranged approximately 54 home closings that resulted in the funding of $20.5 million in fraudulent loans between 2001 and 2005, according to the indictment. The indictment detailed transactions in Murphy, Rowlett, Plano and McKinney in which it said the defendants profited by arranging mortgages based on inflated sale prices.

For more, see Former Cowboy Eugene Lockhart Jr. indicted in suspected mortgage fraud scheme.

For the U.S. Attorney (Dallas, Texas) press release, see Former Dallas Cowboys Football Player, Eugene Lockhart, And Eight Others, Charged In Mortgage Fraud Scheme (Federal Indictment Charges Conspiracy, Bank Fraud and Wire Fraud).

(1) The other eight defendants named in the indictment are: Lendell Beacham, 50, of DeSoto, Texas; William Randolph Tisdale, Jr., 45, formerly of Dallas, but currently serving a federal sentence on unrelated charges; Hubert Jones, III, 39, of Garland, Texas; Patricia Ortega Suarez, 55, of Dallas; Suzette Switzer Hinds, 45, of Dallas; Michael Anthony Caldwell, 49, of Arlington, Texas; Donna Lois Kneeland, 45, of Grand Prairie, Texas; and Bryan J. Moorman, 67, of Mesquite, Texas.

Ex-Met, Phillie "Nailed" With Accusation By Creditor Of "Foreclosure Stripping" Home

In Los Angeles, California, Bloomberg News reports:
  • Lenny Dykstra, who helped the New York Mets win the World Series in 1986, was accused of taking goods from his home including a $40,000 French stove two weeks before a bankruptcy judge appointed a trustee to oversee his finances. Fixtures and furniture were “removed and presumably sold” by the former Major League Baseball All-Star, who filed for bankruptcy in July, according to court papers filed by the mortgage lender Index Investors LLC, a creditor in the case.

***

  • Dykstra was “apparently in the process of stripping furnishings, fixtures and equipment from the estate property,” Index Investors said in an Aug. 19 court memorandum, “doubtlessly to fuel his lifestyle at the expense of his creditors.”

***

  • He filed for bankruptcy to stop Index Investors from holding “a scheduled illegal foreclosure sale,” he said. The lender subsequently asked the court to let it start foreclosing, and to convert Dykstra’s Chapter 11 proceedings to a Chapter 7 liquidation.

***

  • Dykstra, 46, known as “Nails” by fans for his aggressive playing style, became an entrepreneur after injuries ended his career, opening a chain of car washes, a subscription Web site that offered stock picks and The Players Club.

For more, see Ex-Met Dykstra Accused of Taking $40,000 French Stove. foreclosure fixture stripping apple

Sarasota House Flipper Faces Grand Theft Charge In Alleged "Foreclosure Stripping" Incident

In Sarasota, Florida, the Sarasota Herald Tribune reports:
  • Mark P. Riley, one of the Sarasota area's most successful property flippers, was arrested Friday, accused of gutting a home that he could no longer afford. Riley, 48, and his domestic partner, Richard Waid, 49, were arrested on charges of grand theft related to the disappearance of appliances from their former Lakewood Ranch home.

  • For years during the real estate boom, Riley and Waid traded in million-dollar houses and condos and drove a $300,000 Mercedes. But when the real estate market cooled and Riley and Waid stopped paying their mortgages, they gutted their home and left the bank to foreclose on a multimillion-dollar house stripped bare, according to a Manatee County Sheriff's Office incident report.(1)

For the story, see Housing flipper facing charges (One of the Sarasota area's most successful property flippers is accused of gutting a home that he could no longer afford).

Go here for Mark Riley arrest report.

(1) Officials with First Bank of Florida, which bought the house out of foreclosure, discovered the items missing in April. Granite counter tops and cabinets had been taken from the kitchen. In the bathrooms, toilets were stripped from the floor. Ceiling fans, a wet bar and a kitchen island were missing. Thieves took doorknobs off doors, tore the trim off the walls and walked away with the carpet. Bank officials filed an incident report in April saying about $150,000 in appliances and other items were stolen. The men were arrested Friday.

Phoenix-Area Authorities Get Serious About "Foreclosure Stripping" As Probes, Prosecutions Begin To Pile Up

In Phoenix, Arizona, KNXV-TV Channel 15 reports:
  • Maricopa County Attorney Andrew Thomas announced Tuesday that there has been a significant increase in the number of people charged with gutting vacant or foreclosed homes in Maricopa County. The act, known as “home stripping,” has been on the rise in neighborhoods and dramatically reduces property values, according to Thomas. Multiple cases of home stripping are currently undergoing prosecution and some have led to hefty jail time.(1) [...] "The real estate market is tough enough without neighborhoods having to contend with this new form of blight,” says Thomas. “These prosecutions are important to hold these offenders accountable and to protect property owners in the affected neighborhoods."

Source: County attorney cracks down on 'home stripping' crimes.

(1) Alonzo Patterson, 48, was arrested in February after police reportedly caught him stealing copper piping out of a vacant Phoenix home and intending to sell it as scrap. Patterson was convicted on charges of burglary and possession of burglary tools in July and was sentenced to about 10 years in prison. Police reportedly caught Phillip Mora, 33, after he stripped copper wires and tubing from an empty home in Phoenix. According to authorities, Mora caused more than $14,000 in damage to the home and is facing charges of burglary and aggravated damage. Mark Sydnor, 54, was arrested in April by the FBI Mortgage Task Force after he was reportedly accused of selling countertops, cabinets, and plumbing fixtures on Craigslist from a foreclosed Scottsdale home. According to authorities, Sydnor told undercover police that he frequently removed and sold items from homes and gave the homeowner two-thirds of the proceeds. Sydnor pleaded guilty to defrauding a secured creditor and awaits sentencing. Realtor Kailash Bhatt, 43, was also arrested by the FBI in April and charged with defrauding a secured creditor and theft. Bhatt allegedly sold kitchen fixtures from an Anthem home on Craigslist. And Randolph Guzman, 42, was arrested in April, charged with theft, after offering two air conditioning units on Craigslist from a home in foreclosure in Surprise. Guzman allegedly told the FBI that the house was in foreclosure and he was trying to recoup his losses.T homas said these are only the tip of the iceberg when it comes to the piling amount of cases involving home stripping. foreclosure fixture stripping apple

South Carolina Woman Faces Charges Of Using Relative's Social Security Number To Obtain Credit; Victim Finds Out When Rejected For Home Loan

In Greenwood, South Carolina, The Index Journal reports:
  • Greenwood woman is charged with stealing a relative’s identity and using her Social Security number to make several large purchases and racked up more than $29,500 in debt. Dixie Lee Nelson, 53, [...] is charged with identity theft and financial transaction card forgery.

  • According to the police report, Nelson’s relative went to apply for a home loan on July 31 and was told she already had things in her name and she had a poor credit score. After further research, the victim found out Nelson had “gotten credit at a number of places and was buying a house, car and had a credit card.” Nelson used her own name, but the victim’s Social Security number. One of the fraudulent accounts was $5,973 and the other was $23,535.

Source: Woman faces identity theft, forgery charges.

California AG Obtains $1M Judgment Against "Fast Cash" Lender Accused Of Loan Shark Tactics

From the Office of the California Attorney General:
  • Attorney General Edmund G. Brown Jr. [...] forced CashCall, Inc., an Anaheim-based fast-money lender, to stop using "loan shark tactics" in collecting debt, including abusive calls at all hours of the day and night and empty threats of law enforcement action.(1) The court-ordered judgment also forces CashCall to stop misleading consumers with deceptive advertising and pay $1 million in civil penalties and legal expenses. CashCall used former child actor Gary Coleman as its television spokesman. "CashCall preyed on consumers desperate for cash, charging triple digit interest rates and using loan shark tactics to collect on their debts," Brown said. "This judgment forces CashCall to stop harassing its customers and should serve as a warning to consumers to be wary of fast-money lenders."

For the entire Cailfornia AG press release, see Brown Forces Predatory Lender to End Illegal and Abusive Debt Collection Practices.

For the lawsuit & judgment, see:

(1) Brown contends that CashCall used illegal and abusive debt collection practices when customers were unable to make on-time payments, in violation of California Business and Professions Code Section 17200. These practices included:

  • Making excessive and verbally abusive telephone calls at all hours of the day and night;
  • Causing borrowers to incur bank fees by repeatedly trying to collect payments despite knowing there were insufficient funds in the borrowers' accounts;
  • Threatening to initiate law enforcement and wage garnishment proceedings against borrowers without any basis for doing so;
  • Improperly discussing private financial information with borrowers' friends, colleagues and neighbors;
  • Failing to honor borrowers' requests to cancel automatic withdrawals from checking accounts; and
  • Continuing to contact borrowers by phone after receiving requests to only contact them in writing.

Thursday, September 03, 2009

Posing As Cops, Threatening Arrest Or Physical Harm, Abuse & Humiliation All In A Day's Work For Debt Collection Group, Says NY AG In Lawsuit

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced that his office has filed a lawsuit seeking to shut down a Buffalo-based debt collection operation consisting of 13 debt collection companies run by Buffalo residents Omar Smith, Narvell Benning and Keith Marshall (collectively, the "Benning-Smith Group”).(1) [...] According to the more than 850 consumer complaints filed with the Office of the Attorney General, the Federal Trade Commission and the Better Business Bureau, the Benning-Smith Group's employees violated state and federal law by routinely posing as law enforcement officials and threatening to arrest or to physically harm consumers unless they made arrangements to pay the company immediately. Additionally, the Benning-Smith Group made abuse and humiliation a trademark of their collection practices by verbally abusing consumers and, in some instances, sexually harassing them. To date, the Attorney General’s investigation has identified more than a thousand instances in which the Benning-Smith Group breached state and federal statutes.(2)

For the New York AG press release, see Attorney General Cuomo Sues To Shut Down Buffalo-Based Debt Collection Operation That Illegally Harassed And Threatened Consumers Nationwide (Employees Used Verbal Abuse and Sexual Harassment to Intimidate Consumers Into Paying Debts; Latest Action in Cuomo's Ongoing Probe into Unlawful Debt Collection Practices).

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For another story on debt collectors using threats of criminal prosecution to collect debts, see Public Citizen: California Court Approves Class-Action Lawsuit Against Debt Collector Accused of Abusive Tactics (Suit Says Company Wrongly Threatened Consumers With Criminal Prosecution):

  • ACCS [American Corrective Counseling Services, Inc.] uses its contract with local prosecutors to send out letters on official stationary, threatening consumers who have written bad checks with criminal prosecution or jail unless they pay collection fees. Many of these consumers were threatened with criminal charges, even though no prosecutor had reviewed their cases and ACCS, as a private debt collector, lacks the authority to make such threats. Go here to read the documents in the case.(3)

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(1) According to the NY AG, the Benning-Smith Group operated under several names, including: Abrams, Burke & Associates; Benning and Smith Acquisitions, Inc.; Brady and Caruso, LLC; DebtPayments.com; DebtPayments.com, LLC; Fredericks, Goldstein & Zoe; Graham, Noble & Associates Bookkeeping; Graham, Noble & Associates LLC; Graham, Beagle & Associates LLC; Kingman, Cole and Associates, LCC; Marshall and Ziolkowski Enterprise, LLC; Marshall Ziolkowski Acquisitions, LLC; Lansky, Goldstein, Zoe; OLS Payment Services; and University Debt Collection.

(2) According to the press release, Attorney General Cuomo’s investigation revealed that collectors regularly demanded payment for non-existent debts or substantially inflated the amount owed on an actual debt. Using their false law enforcement identities, collectors coerced and cajoled terrified consumers into agreeing to make payments. Frightened at the prospect of arrest and humiliation, consumers authorized withdrawals from their checking accounts, sent Western Union moneygrams and/or money orders out of fear. In one instance, a Benning-Smith collector kept repeating the name of a consumer’s daughter, describing various sexual things he would do to her unless the debt was paid. Another collector told a female consumer that if both she and her husband would engage in sexual acts with him, he would pay their debt himself. Collectors routinely called consumers “drunks,” “scumbags,” “deadbeats,” and, in one instance, “a low-life piece of trash.”

(3) Public Citizen Litigation Group, attorney for the debtor, describes this case as one that "challenges arrangements under which local prosecutors rent their name and authority to private debt collectors, who use false threats of prosecution to coerce people who have written bad checks to pay various fees. The fees are then split between the debt collectors and the prosecutors."

Vacant Land Affinity Fraud Fleeces 1,000+ Miami-Area Haitians Out Of $10.6M, Say Feds; Bogus Deeds, Closing Docs Used To Make Phony Sales Look Legit

In Miami, Florida, the South Florida Business Journal reports on a recent federal indictment in an alleged affinity fraud targeting members of the local Haitian community:
  • Three South Floridians have been indicted in a land scheme that authorities say defrauded more than 1,000 mostly Haitian victims out of some $10.6 million. Daniel Stephen, 42, of Miami Shores; Clotilde Jean, 43, of Miramar; and Patricia DePons, 53, of Miami Shores, were charged with conspiracy to commit mail fraud and mail fraud for their participation in a scheme to sell vacant land, according to a news release from the acting U.S. attorney for the Southern District of Florida. The case involved the sale of property in North Florida and Georgia by First Loan Solution, a company owned and operated by Stephen and his partner, Jean.

  • According to the indictment, Stephen, Jean and other First Loan Solution employees sold land to members of the Haitian community in Miami-Dade County using advertisements on Haitian radio, leaflets in the community, bus trips to North Florida and direct solicitations of the buyers. In some cases, neither Stephen nor First Solution owned the land that was being sold. In other cases, buyers were told they were purchasing individual parcels of land on which they could build when, in fact, they were purchasing land with other buyers through a limited liability company, and could not build individually on the property, according to the news release.

  • DePons is alleged to have conducted the closings on the sales, and collected money from the buyers. At the closings, DePons allegedly issued fraudulent warranty deeds and closing [statements]. The buyers never received title to the land nor, in most cases, refunds.

Source: South Floridians charged in land scam.

For the U.S. Attorney press release, see Three Charged In Multi-Million Dollar Vacant Land Fraud Scheme.

Cook County Sheriff Faces Federal Suit For Slowdown In Tenant Evictions; Local Landlord Feels Squeezed By Lenient Approach To Booting Problem Renters

In Cook County, Illinois, NBC Chicago reports:
  • What made him a star has now made him a defendant. With so many rental properties in foreclosure last year, Cook County Sheriff Tom Dart for a time halted evictions. It was his contention that many tenants who had been paying their rent were being unfairly removed from their homes, when it was, in fact, their landlords who had not been paying mortgages and were the real culprits. That firm stance led Time Magazine to honor Dart as a "leader and revolutionary," but Lyons landlord Mike Slinkman says the pace at which tenants are now being evicted is wreaking havoc on his business.

***

  • Slinkman is so serious that he and his father plan to file a federal lawsuit Wednesday claiming what Dart and a Cook County Judge have done to his business is unconstituitional, that apartment evicitions have slowed to a crawl and that the Judge's order to halt evictions in bad weather has been taken to an extreme.

  • "It's running us out of business," Slinkman said. "We're on the brink of not making it, in large part because we can't get our product back." Slinkman and his father own 50 buildings -- roughly 700 units -- in Cook County, but right now they say that so many of their tenants are behind in rent that their cash flow is down $20K to $25K per month.

  • The apartment owners claim the overcrowded apartment of one deadbeat tenant at their property in Lyons and a BBQ held in the lviing room at another building in Justice are also jeopardizing the the lives of the rest of their tenants.

For the story, see Landlord: Pace of Evictions Wreaking Havoc on Business (Property manager to sue Cook County Sheriff Tom Dart).

In a related story, see The Southtown Star: Too much compassion exists in Cook County (Landlord Mike Slinkman claims that Cook County Sheriff Tom Dart's political grandstanding is threatening to put him out of business).

Texas AG Seeks $4.6M From "Debt Settlement" Outfit For Allegedly Ripping Off Consumers, Violating State Registration & Bond Requirements

From the Office of the Texas Attorney General:
  • Texas Attorney General Greg Abbott [...] took legal action to recover $4.6 million that a bankrupt “debt settlement” company wrongly withheld from its clients in Texas and other states. In June, Debt Relief USA Inc. of Addison filed for bankruptcy protection in the Northern District of Texas. As a result, more than 2,500 financially distressed customers did not receive the debt relief they were promised. In fact, debtors’ problems were exacerbated by the bankruptcy because some of Debt Relief USA’s clients received no assistance and are now being pursued by collection companies.

For the entire Texas AG press release, see Attorney General Abbott Pursues Restitution for Texans from ‘Debt Settlement’ Company in Bankruptcy Court (Bankrupt Debt Relief USA said to hold $4.6 million in client funds).

For the Texas AG lawsuit, see State of Texas v. Debt Relief USA Inc.

Wednesday, September 02, 2009

Moderate Income Housing Plans For Half-Finished, Half-Empty Condo Projects Cluttering NYC Skyline Face Complications

In New York City, The New York Times reports:
  • As a rising number of half-finished and half-empty condo projects clutter the skyline, state and city officials have begun developing programs to turn hundreds of these apartments into moderate-income housing. But those efforts have proved far from easy. With budgets tighter than ever, there are few financial incentives to entice developers and lenders. And there are the practical challenges of selling apartments to buyers for far less than what their neighbors paid, not least among them possible complications for market-rent buyers, whose mortgages often depend on the building’s financial status.

For more, see City Seeks to Turn Stalled Projects Into Moderate-Income Housing.

Florida Judge Removes Himself From Foreclosure Case After Making Intemperate Remarks To Lender's Attorney Who Missed Several Court Hearings

In Volusia County, Florida, the Daytona Beach News Journal reports:
  • Tensions over how some lawyers from far and wide are handling large numbers of foreclosures for banks came to a head in DeLand on Monday when a veteran judge removed himself from a case after complaints about his comments [to bank attorney Farzad Milani].(1) Circuit Judge John Doyle, who has been hearing a growing number of foreclosures in West Volusia since he was assigned the mortgage dispute cases in January, was asked to step aside from [one] case [...].

***

  • The judge explained Monday about 20 percent of those losing their homes were showing up in court, but some attorneys representing the banks weren't. The result would be canceled or delayed hearings. [...] Like other local judges, Doyle was allowing attorneys representing banks from across the state the option to "appear" by telephone, but sometimes they wouldn't answer his calls. [...] He said many of the firms representing banks, which he called "foreclosure mills," hire young attorneys fresh out of law school who handle cases for a flat fee. "They are being trained that it's not a big deal to miss a hearing," the judge said. "Well it is, and if you miss one, relief will be granted against your client."

  • After the incident with Milani last month, the judge decided to stop allowing hearings by telephone in the 3,000 pending foreclosure cases before him. [...] Milani missed several hearings and could not be reached by phone when called, Doyle said. "He was the fellow that broke the camel's back." [...] It will be up to another judge to decide whether Milani should be held in contempt for not showing in court.

For the story, see Judge steps down in foreclosure case.

(1) At an earlier hearing, the judge told attorney Farzad Milani, who was representing the bank, "that he would not do his work while (Milani) sits in his office in Fort Lauderdale smoking his Cohiba cigars and drinking his lattes," according to court records. Doyle also told Milani, according to motion for the judge's recusal filed in court, that he was going to "make an example of him and do whatever he could to have him disbarred." Attorneys for Milani said the judge made "inferences of a racial or ethnic bias" against Milani.

Daughter, Son-In-Law Convicted Of Scamming Alzheimer's-Afflicted Widowed Mom Into Borrowing $350K Against Home & Using It Towards Luxury Home Purchase

In Clackamas County, Oregon, The Oregonian reports:
  • Ask Clara Philpot how she's doing, and she'll answer with a beaming smile and a hearty "Fantastic." Ask the 87-year-old who is president or the name of the dog napping in her lap and she can't say. Philpot, who was diagnosed with Alzheimer's disease in 2002, also can't explain how or why she borrowed almost $1 million to finance a luxury home in Sherwood and immediately deeded half to Gayla and Jeff Ross, a daughter and son-in-law who took care of her.(1) After looking at the evidence, however, a Clackamas County jury took less than two hours to find Gayla Ross guilty of aggravated theft and first-degree criminal mistreatment.

  • Ross now faces prison. She will be sentenced Sept. 8 along with her husband, Jeff Ross, a former Washington County sheriff's deputy who was convicted of first-degree criminal mistreatment. Philpot's net worth now is zero -- she gets by on Social Security -- and she could soon be homeless. The debt on the Molalla house she and her husband bought 43 years ago, and once owned free and clear, now exceeds the property's value, and she hasn't made a mortgage payment for two years.

For more, see Stealing from mom and dad in Oregon (if link expires, try here).

For story update, see King City woman gets prison time for bilking elderly mother (A King City woman convicted of taking her elderly mother's money was sentenced Tuesday in Clackamas County Circuit Court to 16 months in prison and ordered to pay more than $441,000 in restitution) (if link expires, try here).

(1) Under Gayla Ross' direction, Clara Philpot took out a $352,000 mortgage on her Molalla home. Ross used that money as a down payment on a home in Sherwood and obtained a $609,000 mortgage in Philpot's name, the story states. The day after the deal closed, Philpot reportedly transferred a 50 percent interest to the Rosses. Legally, Philpot had sole responsibility for mortgage payments that exceeded $5,600 a month -- more than four times her monthly income. Within a week, one of Philpot's relatives anonymously notified state welfare workers about the deals, and the Sherwood house was lost to foreclosure. FinancialAbuseOfElderlyAlpha