Thursday, December 24, 2009

Idaho AG Settles Claims Against Loan Modification Outfit; Firm To Refund $12K+ To Homeowners

In Boise, Idaho, KIVI-TV Channel 6 reports:
  • Twelve Idaho homeowners who paid a Meridian man, Paul Clarence Aughtry, IV, for mortgage loan modifications will receive refunds totaling $12,400 as a result of settlement agreements with State Attorney General Lawrence Wasden and the Idaho Department of Finance. As a result, Aughtry is prohibited from engaging in loan modification activities in Idaho. According to Attorney's General spokesman Bob Cooper, "Aughtry operated International Co-Op LLC and accepted money from several consumers, offering to negotiate mortgage modifications with their loan servicers. Aughtry was not licensed to perform such modifications. He allegedly failed to contact many of the consumers' servicers as promised, and failed to effect the mortgage modifications his clients paid for."

For the story, see Refunds Coming for Idaho Mortgage Modification Victims.

Current Cardinal, Ex-Sox Shortstop Among Those Swindled In Major Dominican Deed Theft Operation; Forged Docs Allegedly Used In Land Scam

In Santo Domingo, Dominican Republic, Dominican Today reports:
  • An alleged ring which forged property titles, involving a suspect of conning the baseball player Julio Lugo out of RD$50 million, Judicial Branch employees, a Supreme Court auditor among them, and a Police colonel, was uncovered, with four people arrested and two others being sought. [...] In press conference accompanied by Titles Registry director Wilson Gomez, National District prosecutor Alejandro Moscoso said it was a powerful ring which forged property titles, formed by recognized forgers, military, employees of the Supreme Court and of the Real Estate Jurisdiction.(1)

  • [Among those] arrested was Edwin Baquero, who has a pending process together with another person for the forgery of a deed to a lot in the upscale sector Las Praderas, with which Julio Lugo was swindled.
For more, see Authorities bust a major deed forgery ring. DeedContraTheft

NH Pair Accuse Local Real Estate Agent Of Pocketing Upfront Cash In Owner-Finance, Lease-Option Deals, Then Failing to Pay Now-Foreclosed Mortgages

In Hudson, New Hampshire, The Telegraph reports:
  • [Sheila K.] Jones, who is currently going by the name Sheila Mitchell, called The Telegraph last week to complain about the Hudson real estate agent who provided owner financing for her unit in a duplex. Her husband, Garlan Troy Mitchell, has since filed a lawsuit in Nashua District Court against the agent, Matthew Trudel, for $14,000 in real estate earnest money.

  • Garlan Troy Mitchell signed a purchase and sales agreement with Trudel in May to buy the newly-constructed three bedroom unit. Trudel, who owned the property, agreed to carry the mortgage for one year while Mitchell made payments. The deal called for Mitchell to secure his own financing by July 30, 2010, and transfer the deed. In an interview with The Telegraph in her home last week, Jones claimed she and Mitchell lost their $4,800 deposit when the property was sold at a foreclosure auction in October.

  • Debra Garman, 41, a teacher who lives with her family in [the same complex], claims Trudel owes her $3,900 for the security deposit and first month’s rent. She also said he hasn’t finished all of the construction on the property as promised. The unit was new last spring when Garman moved in, signing a lease agreement with an option to buy.

For the story, see Police say Hudson woman stole $550k. rent to own lease purchase option scams yellowstone

Mass. AG Indicts Six In Alleged Mortgage Fraud Flipping Scam; $12M+ In Fraudulently Obtained Loan Proceeds Used In Purchase & Sale Of 26 Homes

In Boston, Massachusetts, The Patriot Ledger reports:
  • Six people, including a 29-year-old Brockton resident and a Walpole man who used to have a law practice in Quincy, were charged in a $2 million mortgage fraud scheme. They offered to buy long-unsold properties for below the listing prices, and recruited others to buy the properties as an investment with a promise to renovate them, Attorney General Martha Coakley said. Instead, they allegedly failed to upgrade the units, obtained inflated appraisals, and pocketed the difference.

***

  • [Boston Equity Investments (“BEI”)] asked homeowners to give them an option to [buy] the properties at below-list price, prosecutors said, and recruited out-of-state buyers willing to buy the properties as investments. BEI obtained false purchase-and-sale agreements on the properties, so investors received far less money than banks had offered in financing, Coakley said.(2) BEI allegedly garnered a windfall of $50,000 to $100,000 at the closings of each property.

  • The attorney general’s office began an investigation after complaints from buyers who were facing foreclosure. [...] The alleged scheme involved 26 properties in Greater Boston, Coakley said.

For the story, see Six charged in mortgage fraud scheme (Brockton man, disbarred Quincy attorney among those indicted in Ponzi-like scam).

For the Massachusetts AG press release, see AGO Announces Indictments in Elaborate Mortgage Fraud Scheme.

(1) According to the story, a Suffolk County grand jury indicted three principals in a Boston real estate company, two mortgage brokers and a disbarred lawyer from Walpole. Joshua Brown, 29, of Brockton, Brian Frank, 32, of New Hartford, N.Y., and John Sweetland, 28, of Yorba Linda, Calif., were charged with multiple counts of larceny over $250 and making false statements. Brown operated Boston Equity Investment in Boston, and Frank ran a real estate company in New Jersey, prosecutors said. Sweetland operated Boston Investment Marketing, which was based in Canton and allegedly recruited potential investors, the story states. Mortgage brokers Brian Arrington, 39, of Boston and Linda Defeo, 28, of Springfield were charged with larceny over $250 and making false statements. Bruce Namenson, 47, of Walpole, was charged with larceny over $250 and making false statements. Namenson had worked as a lawyer in Quincy, but he was recently disbarred, Coakley said.

(2) According to the press release issued by the Massachusetts Attorney General's Office, authorities allege that after the home sellers gave the option to buy to BEI, BEI obtained purchase and sale agreements between the homebuyers and sellers. They ultimately fraudulently obtained approximately $12.5 million in loans from more than a dozen financial lending institutions to purchase multi-family homes, from which they made approximately $2 million dollars in proceeds, the Massachusetts Attorney General alleges.

Wednesday, December 23, 2009

Florida AG Tags Loan Modification Company & Affiliated Attorneys With Civil Suit Alleging Illegal Upfront Fee Racket

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [...] announced he has filed a lawsuit against three businesses operating in Miami-Dade County, their principles and affiliated attorneys on allegations of deceptive and unfair trade practices regarding their involvement in a foreclosure rescue scam affecting homeowners nationwide.

  • The Attorney General’s Economic Crimes Division began investigating Kirkland Young LLC, in July after receiving numerous consumer complaints against the company. During the course of the investigation it was discovered that Attorney Aid LLC and ABK Consultants were affiliated with Kirkland Young LLC.(1)

  • The companies allegedly charged up-front fees for loan modification services, and misrepresented to consumers that lenders required “qualifying payments” in order to qualify for modifications. The companies also charged “back end” fees upwards of $1,299 for the first mortgage modification and approximately $499 to $699 for a second mortgage modification. To facilitate the collection of additional fees, consumers were required to set up escrow accounts with the attorneys affiliated with the companies, misleading consumers into believing they were retaining attorney representation for their loan modification. The funds fraudulently collected in the attorney escrow accounts were used for the benefit of all the defendants.(2)

For the Florida AG press release, see Attorney General Sues Three Companies for Loan Modification Scam.

For the lawsuit, see State of Florida v. Kirkland Young LLC, et al.

(1) Other named defendants are:

  • David Botton, owner, manager, member and/or officer of Kirkland Young LLC,
  • Bridget Grant, owner, manager, member and/or officer of Attorney Aid LLC
  • April Botton Krawiecki, owner, manager, member and/or officer of Kirkland Young LLC, and owner, officer and/or director of ABK Consultants Incorporated,
  • Samy Botton, owner, manager, member and/or officer of Kirkland Young LLC
  • Michael Botton, attorney - licensed in New Jersey,
  • Ryan Matthew Grant, attorney - licensed in Texas,
  • Brian Michael Rokaw, attorney - licensed in Florida.

(2) The alleged racket involved an attorney licensed in New Jersey, one licensed in Texas, and one licensed in Florida. To the extent the Florida AG can prove damages that can be attributed to one or more of these three attorneys, the client protection fund for the state in which the attorney(s) causing the provable damage is licensed could have liability for a portion of the losses.

To locate the client security funds for other states, see Directory Of Lawyers' Funds For Client Protection (American Bar Association); in Canada, check the Canada Client Protection Funds Map.

Foreclosure Rescue Operator Accused Of Misappropriating $25K+ From Escrow Account Set Up In Connection With Sale Leaseback Of Home

In Chisago County, Minnesota, the Isanti-Chisago County Star reports:
  • An Anoka man was charged with felony theft by swindle for allegedly stealing $25,425 from an escrow account his business was handling while acting as a middleman. Chris Alan Caliguire, 39, was charged in Chisago County Court on Wednesday, Dec. 16.

***

  • According to the complainant, in March 2006, a Shafer couple was experiencing financial difficulties, and their residence had gone into foreclosure and had been sold to another couple for $223,000.00. After the mortgage had been finalized on the property, the couples had an agreement to rent the property back to the original buyer. The original buyer, now renter, took the proceeds from the sale and their subsequent mortgage on the property and placed it into what they understood to be an escrow account with a business called Minnesota Home Mortgage, aka CAC Enterprises, Inc., based out of North Branch. CAC Enterprises was owned by Caliguire.

***

  • An investigator received [...] subpoenaed bank records, along with [...] information provided by the owner and renter, and provided them to Jason Olson from Eide Bailly Forensic Accounting and Investigation Services. Olson conducted a forensic audit of the records and determined that from March 2006 through December 2007, Caliguire had misappropriated $25,425.73 from the escrow account without authorization. Caliguire had allegedly misappropriated the funds by paying expenses not related to the mortgage, by failing to deposit funds into the account, and transferring monies paid into a personal account that he used for personal expenses.

For the story, see Man in charge of escrow allegedly steals $25,425.

Florida Judge's Writ Of Bodily Attachment Sends Wake-Up Call To Rent Skimming Condo Owners Delinquent On Maintenance Fees - Jail Time Could Await Them

In Fort Lauderdale, Florida, The Miami Herald reports:
  • Condo investors delinquent on association fees could face jail time for thumbing their noses at court-ordered blanket receiverships. In a new first for distressed condo associations, a Broward circuit court judge last week commanded the sheriff, via a writ of bodily attachment, to physically bring owner Timothy Mohn to court to explain why he should not be found in contempt for failing to fork over rent to a receiver on two units he owns in the Villas de Venezia in Sunrise.

***

  • [A]ttorneys for Villas de Venezia condo association claim the writ demonstrates [...] the sharp teeth of blanket receiverships and just how serious judges are taking their enforcement. [...] Ben Solomon, a partner with Association Law Group and the attorney for the Villas, said the writ would have represented the first time that "a foreclosure debtor may be put in jail for a foreclosure-related issue.''

***

  • Judge Lynch's order should be a wake-up call, since judges rarely resort to sending the sheriff out in real estate-related civil cases, he said. "Hopefully, this will send another signal, at least symbolically, to the real estate market that owners and their tenants are going to have to comply with these court orders or face being held in contempt and put in jail,'' Solomon said.(1)

For more, see Sheriff sent to pick up delinquent condo investor (A Broward circuit court judge sent the sheriff out to get a condo investor because he failed to appear in court to explain why he wasn't turning over rent to cover his past due association fees).

(1) According to the story, a writ of bodily attachment is not an arrest in the typical sense, but the sheriff does go to collect the person and forceably take them to court. They are handcuffed and placed in a patrol car, Solomon said. If the judge is unable to see them, the person waits in jail, where they could spend the night.

Philly Feds Probe Alleged Rogue Paralegal For Fraud, Theft; Six-Figure Sums Stolen From Law Clients; Bad Acts Lead To Boss' Disbarment: Attorney

In Bucks County, Pennsylvania, the Philadelphia Inquirer reports:
  • [O]netime paralegal [Bonnie Sweeten] is accused of getting her former boss' law license suspended, masquerading as a lawyer, stealing six-figure sums from clients, defrauding a lender, and using forgery and a fake passport to pose as her employer at a mortgage closing, according to documents filed in civil lawsuits and state disciplinary proceedings.

  • Sweeten, 38, was even listed as a lawyer in the 2008 and 2009 editions of the Philadelphia Bar Association's legal directory. Lawyers for Sweeten and her accusers have said the FBI is probing allegations of fraud and massive thefts involving Sweeten and the Feasterville law office of attorney Debbie Carlitz, where Sweeten worked. No federal charges have been filed.

***

  • Carlitz, 48, whose Pennsylvania law license had been suspended since 2008, was disbarred Dec. 1 by the state Supreme Court. Because Carlitz consented to the punishment, the underlying allegations against her were not made public.(1) But her attorney blamed Carlitz's fall largely on misplaced faith in Sweeten, her friend and assistant since 1995. Lawyer Ellen Brotman said, "Ms. Carlitz has lost more than just money as a result of her trust in Bonnie Sweeten."

For the story, see Kidnap hoaxer seeking reprieve (Bonnie Sweeten, a former paralegal imprisoned for faking her abduction, is alleged to have posed as a lawyer and stolen money from clients).

(1) Pennsylvania Lawyers Fund for Client Security, which, according to is website, was established by the Supreme Court of Pennsylvania in 1982 to reimburse clients who have suffered a loss as a result of a misappropriation of funds by their Pennsylvania attorney, could potentially find itself on the hook for the losses suffered by Carlitz' screwed-over clients. According to its website, The Fund does not have jurisdiction over claims alleging malpractice or ineffective representation. An appropriate claim:

  • Is based upon an attorney/client relationship or fiduciary relationship customary to the practice of law, and
  • Is seeking the return of money or property that was received by the attorney on behalf of the client, which money or property was then converted by the attorney.

Awards are discretionary. No one has an entitlement to an award from the Fund. The Fund has a $75,000 maximum award per claimant, according to its website.

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

For those clients ripped off of their money and property by reason of the dishonest conduct of their attorneys in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

Pair From New York Bench Hailed For Meritorious Service In Home Foreclosure Cases

POPULAR(1) announced the year-end recipients of its bi-annual "Restore Integrity Award." Among the recipients are two New York judges who have received past mention here:
  • Judge Arthur M. Schack for his appropriately strict scrutiny of foreclosure cases before him and corresponding mantra, “(i)f you are going to take away someone’s house, everything should be legal and correct.”

  • Judge Arlen Spinner for his bold step of preempting $525,000 in mortgage payments demanded by a California bank “so as to deter it from imposing further mortifying abuse” on a Long Island couple appearing before him in the underlying foreclosure dispute.

POPULAR notes that these judges "[r]esisted powerful private interests without waiting for a groundswell of public support for their actions.”

Source: Judges Dominate Group’s Year-end “Restore Integrity Award”.

(1) According to its website, Power Over Poverty Under Laws of America Restored (POPULAR) is an association of public interest attorneys and law school graduates committed to helping poor and other disadvantaged people access affordable and competent legal representation, important civil and criminal justice system reforms, as well as appropriate judicial oversight.

Tuesday, December 22, 2009

Closing Agent Accused Of Forging Subordination Agreement In Home Refinance, Pocketing Premiums w/out Issuing About 100 Title Insurance Policies

The Minnesota Department of Commerce: has recently accused the three companies, including Morris Abstract & Title Inc. of New Prague, of allegedly forging signatures or endorsements to gain access to and misappropriate consumer funds. According to their press release:
  • In the spring of 2009, the department received a complaint from a bank that was refinancing a mortgage on a property in Scott County. The bank reported to the department that Morris Abstract & Title, which performed the closing on the loan, had allegedly forged the property owners' signature on an agreement required by the bank.

  • That agreement would have given the refinanced mortgage first priority over a previous mortgage the homeowner obtained on the property. In fact, the property owner did not authorize or otherwise consent to the agreement, the department alleges. In order to facilitate the transaction, Morris allegedly forged the property owners' signature. Morris Abstract & Title then sold a mortgagor's title policy on the property, the department alleges.

  • Another complaint from an attorney who claimed Morris allegedly failed to record a mortgage as part of a 2003 transaction involving her client led the department to conduct an inspection at Morris' home. During that inspection, Morris allegedly admitted that he had approximately 100 loan files from transactions as old as 2004 in which a [title] policy still needed to be issued even though he received title premiums and other fees at closing.(1)

  • Last [month], the department issued a statement of charges and notice of hearing against Andrew Morris and Morris Abstract & Title. The prehearing conference is scheduled for Monday, December 21.

For the press release, see Minnesota Collection Agencies, Title Insurer accessed personal information.

(1) The Minnesota Department of Commerce's Real Estate Education, Research and Recovery Fund could potentially find itself on the hook for some or all of the monetary losses suffered by any victims of the alleged improper conduct. According to their website:

  • The purpose of the Real Estate Education, Research and Recovery Fund is to compensate any person who has lost money due to a licensed real estate broker, salesperson, or closing agent’s fraudulent, deceptive or dishonest practices, or conversion of trust funds. The improper action that was committed must be an activity that required a license. [...] Applicants may be awarded any amount from $0 to $150,000, [...].

Fine Print In Standard HAMP Loan Mod Deal Allows Lenders To Sell Homes Out From Under Borrowers In Foreclosure, Despite Prompt Trial Period Payments

McClatchy Newspapers reports:
  • Ten months after the Obama administration began pressing lenders to do more to prevent foreclosures, many struggling homeowners are holding up their end of the bargain but still find themselves rejected, and some are even having their homes sold out from under them without notice.

  • These borrowers, rich and poor, completed trial modifications of their distressed mortgage, and made all the payments, only to learn, often indirectly, that they won't get help after all. How many is hard to tell. Lenders participating in the administration's Home Affordable Modification Program, or HAMP, still don't provide the government with information about who's rejected and why.

***

  • In the fine print of the form homeowners fill out to apply for Obama's program, which lowers monthly payments for three months while the lender decides whether to provide permanent relief, borrowers must waive important notification rights. This clause allows banks to reject borrowers without any written notification and move straight to auctioning off their homes without any warning.

***

  • A glance past [the lender's] hopeful promise [to save a home from foreclosure] finds a different story in the fine print of HAMP document, which contains standardized language drafted by the Obama Treasury Department and is used uniformly by lenders. The document warns that foreclosure "may be immediately resumed from the point at which it was suspended if this plan terminates, and no new notice of default, notice of intent to accelerate, notice of acceleration, or similar notice will be necessary to continue the foreclosure action, all rights to such notices being hereby waived to the extent permitted by applicable law."

  • This means that even when a borrower makes all the trial payments, a lender can put the house up for auction if it decides that the homeowner doesn't qualify — assuming that foreclosure proceedings had been started before the trial period — without telling the homeowner. Until now, lenders haven't even had to notify borrowers in writing that they'd been rejected for permanent modifications.(2)(3)

For more, see Homeowners often rejected under Obama's loan plan.

(1) Reportedly, more than 759,000 trial loan modifications have been started to date, but just 31,382 have been converted to permanent new loans. That's averages out to 4 percent, far below the 75 percent conversion rate President Barack Obama has said he seeks, the story states.

(2) In January, 11 months after Obama's plan was announced, homeowners will begin receiving written rejection notices, and the Treasury Department finally will begin receiving data on rejection rates and reasons for rejections, the story states.

(3) In the case of one homeowner highlighted in the story, Bank of America reportedly backed down from an alleged threat to sell the home out from under after receiving an inquiry from the media about the situation.

Bank Pockets Five Payments On Trial Loan Mod, Then Hammers Homeowner With Foreclosure Threat; Lender To Take 2nd Look After Media Reporter's Inquiry

In Tucson, Arizona, the Arizona Daily Star reports on the recent experience of Lori Ann Mitchell, a local homeowner who, while battling ovarian cancer, applied for a home loan modification from Wells Fargo to help her get back on her feet. Wells Fargo reportedly accepted her for a trial modification this summer under the federal Making Home Affordable plan, which reduced her monthly payments from $1,457.23 to $941.83.
  • She was supposed to make three trial payments under the program, but instead she said she made five as she waited and waited to hear from the bank. She'd call for updates, but could never get a set answer. She could never speak to the same person twice. And then ... "They just dropped me. Boom," Mitchell said. "It's devastating. First of all I had put a lot of hope in this. I don't find hope a lot with cancer. ... But when I hit the third month, and they hadn't rejected me; and I hit my fourth month, and they hadn't rejected me, I started getting high hopes."

  • Those hopes were dashed a few days ago with the ring of a phone. The voice on the other end of the line said Mitchell needed to pay the difference between her previous payments and the modification payments she had been making for the past five months. And that difference, about $2,500, was due by the start of the year. "I didn't expect them to call me and start harassing me for money, telling me 'in two weeks it's going into foreclosure,' " she said.

  • When Mitchell was pursuing her modification, she said she struggled to reach a human being at Wells Fargo. Now that she was being threatened with a potential foreclosure, she had no problem connecting with the bank. [...] Now that a reporter has called about Mitchell's loan, though, Wells Fargo is taking a second look. [...] That's good of the bank, but it shouldn't be this way.
For more, see Foreclosure threat comes out of blue.

Foreclosure Screw-Up Leads To "Trash-Out" Of Las Vegas Woman's Home; Offered $5K For Her Trouble; "Suspects" Decline Comment

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • A Las Vegas woman says she is the victim of a horrible mistake that has left her with an empty condominium and lots of questions. Nilly Mauck lived in her condominium for two years and said she never had problem until this week when a series of strange events eventually lead to a company coming into her home and throwing away everything she owned.

***

  • [M]auck says the reason for it is a mistake of address numbers. Her address is 1157 which is close to 1156 a condo that is in foreclosure. A few weeks ago the foreclosed home was suppose to get locks changed but Mauck says that's not what happened. "I came home to pick up something and there was a note on my door from the Brenkus Team of Keller and Williams Realty stating that they accidentally re-keyed the wrong door," she said.

  • It was a problem Mauck thought was fixed until she came home to find a man going into her home. Mauck says everything in her home was missing. She says she later learned her home had been "trashed out" - a process done to foreclosures where everything left inside is thrown away.(1)(2)

For the story, see Las Vegas Woman Victim of Foreclosure Mistake.

In follow-up story, see Attorney Claims Woman is Inflating her Loss in Foreclosure Mix Up.

(1) Mauck reportedly asked for $100K - $200K for her missing belongings and was offered $5,000, the story states.

(2) In a similar case, the Nevada Supreme Court last year approved damages of over $1 million to the Las Vegas homeowners of a house that was trashed out as a result of its misidentification as a foreclosed home. See:

Monday, December 21, 2009

State Recovery Fund To Cough Up $116K+ To Compensate Elderly Victim Of Bogus Sale Leaseback Equity Stripping Scam Involving Licensed Real Estate Agent

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:
  • An 87-year-old woman who was cheated out of her home of 50 years will receive $116,972 from the state, the largest pay-out in recent memory from a fund for victims of unscrupulous real estate professionals. Telsche Paulson's compensation from the Real Estate Education, Research and Recovery Fund was approved Wednesday by Hennepin County District Judge Susan Burke after Paulson's lawyers and the state Department of Commerce reached an agreement on her claim. The ruling is a milestone in Paulson's long and frustrating legal journey, at a time of life that she expected to spend in comfortable retirement.

***

  • She took [an] offer of a foreclosure "rescue," only to find out three years later that her home actually had been sold twice in a scheme orchestrated by the real estate company's owner, Timothy Lynn Beliveau. Paulson was forced to move out of the duplex in September 2008, despite the efforts of a team of lawyers working pro bono on her behalf. Since then, she has seen the wheels of justice move.

  • In December 2008, a federal judge ruled [in a civil lawsuit](1) that Beliveau's wife at the time, Shelley Lee Milless, used her real estate license to take away Paulson's title to her house, steal $104,872.65 of her equity and another $12,100 in what Paulson thought were mortgage payments, according to court records.(2)

***

  • The couple have since divorced and seen their cars and homes repossessed. With little hope of collecting money from them, Paulson turned to the [state's] real estate recovery fund. The fund gets its money from a fee assessed to licensed real estate professionals in Minnesota. It's designed to compensate victims of "fraudulent, deceptive or dishonest practices, or conversion of trust funds" perpetrated by licensed real estate brokers, salespeople or closing agents.(3)

For the story, see Money for her stolen home (An 87-year-old's compensation from the state's real estate recovery fund is the largest payout in 13 years).

(1) See Minneapolis Star Tribune: Bittersweet victory for victim of swindle (A court ruled that Telsche Paulson had indeed been cheated out of her south Minneapolis home, but it's too late to recover it).

(2) According to the story, Beliveau has since been indicted in October on 12 counts, including conspiracy, mail fraud and tax evasion, that federal prosecutors say involved a real estate fraud scheme that swindled 14 investors and their lenders out of more than $2.5 million (for the indictment, see U.S. v. Beliveau). Milless faces up to five years in prison after pleading guilty in federal court last month to scheming with Beliveau to pocket $900,000 from his mortgage brokerage company that should have gone to the IRS.

(3) Those who have been screwed out of money due to the fraudulent, deceptive or dishonest practices, or conversion of trust funds by a Minnesota licensed real estate broker, salesperson, or closing agent can apply to the Minnesota Department of Commerce's Real Estate Education, Research and Recovery Fund to try and recover some or all of their losses. According to their website:

  • The improper action that was committed must be an activity that required a license,
  • Applicants may be awarded any amount from $0 to $150,000, depending on a number of factors.

According to the Fund's website, there is no guarantee that a claim will be paid. Whether an applicant will receive payment from the fund depends on the specific facts of the case. The story states that the compensation of victimized homeowner Telsche Paulson is the largest from the fund in at least 13 years, according to Commerce Department spokeswoman Nicole Garrison-Sprenger. The order requires the Fund to cough up the cash by July 2010. foreclosure rescue

Mississippi Man Gets 9+ Years For Abuse Of Bankruptcy Court System In $300K+ Foreclosure Rescue Ripoff Targeting Financially Distressed Homeowners

In Jackson, Mississippi, WAPT-TV Channel 16 reports:
  • A Jackson couple who admitted to defrauding several homeowners have been sentenced in federal court. Prosecutors said Robert and Deaundrea Power promised to help save their clients' homes, but took their money instead, leaving at least 10 victims with more than $300,000 in losses.(1) According to a March federal indictment, the Powers created Yorkshire Financial in 2006. The company promised to save homeowners from foreclosure and to rehabilitate their clients' loans. In exchange, the homeowner would sign over their deed and pay the Powers a monthly fee. [...] Prosecutors said Robert Power would put the property in bankruptcy and pocket the payments. Robinson said Robert Power sold her house without her knowledge and kept a $28,000 profit.

For the story, see Jackson Couple Who Defrauded Homeowners Sentenced (Spouses Promised To Save Clients' Homes, Took Money).

For more on the fraudulent use of the Federal bankruptcy court system in foreclosure rescue scams, see Final Report Of The Bankruptcy Foreclosure Scam Task Force.

(1) According to the story, the couple copped a guilty plea to avoid a trial. Robert Power was sentenced to 53 months in prison for conspiracy to commit mail fraud and 52 months for bankruptcy fraud. The sentences will run consecutively, followed by three years probation. He was also ordered to pay more than $300,000 in restitution. He was then taken to another federal courtroom where he was sentenced to an additional 10 months in federal prison for a tax fraud conviction. Deaundrea Power was sentenced to 12 months and one day in prison with one year probation after her release. She was also ordered to pay restitution.

Atlanta Man Indicted For Racketeering In Alleged Upfront Fee Foreclosure Rescue Scam That Fleeced Homeowners Seeking Help

In Atlanta, Georgia, Fox 5 Atlanta reports:
  • Homeowners featured in a FOX 5 I-Team investigation helped indict [Dwayne Green, aka Kelvin Anthony] in a foreclosure scheme. That investigation brought the scheme to the attention of investigators two years ago. [Last] week, the DeKalb County district attorney's office caught up with the man in the scheme. The I-Team investigation revealed that the man offered to help families save their homes from foreclosure. He used different aliases and different pitches, but one thing was consistent. The man took people's money then never gave them anything in return.

For more, see I-Team: Foreclosure Scheme Arrest. loan modification

Bogus Representations About Mortgage-Backed Securities Leads To $296M Hit, Says MBIA In Suit; Claims 50%+ Of Insured Portfolio Face Value Charged Off

In New York City, Bloomberg reports:
  • A Credit Suisse Group AG unit was accused in a lawsuit by MBIA Insurance Corp. of making fraudulent misrepresentations about mortgage-backed securities, causing the insurer to pay more than $296 million in claims. The complaint against Credit Suisse Securities (USA) LLC, filed [last week] in New York State Supreme Court in Manhattan, also names as defendants two other units of the bank, DLJ Mortgage Capital Inc. and Select Portfolio Servicing Inc. [the firm formerly known as Fairbanks Capital].

***

  • Credit Suisse Securities pointed to its “strong institutional pedigree” while addressing the novelty of the transaction and touted its “due diligence” on the loans, MBIA said. [...] Since the transaction closed, the securitized loans have defaulted “at a remarkable rate,” MBIA said.

  • Through Oct. 31, 2009, loans representing more than 51 percent of the original loan balance, or approximately $464 million, have defaulted and been charged-off, requiring MBIA to make over $296 million in claim payments,” MBIA said. MBIA said that a review of the defects of the loans included in the transaction show they were “systematically originated with virtually no regard for the borrowers’ ability or willingness to repay their obligations.”

For more, see Credit Suisse Sued By MBIA Over Mortgage Securities.

For the lawsuit, see MBIA Insurance Corp. v. Credit Suisse Securities (USA) LLC, 603751/2009, New York State Supreme Court (Manhattan).

Thanks to nationally recognized mortgage servicing fraud watchdog Mike Dillon at GetDShirtz.com for the heads-up on the story and a copy of the lawsuit.

Fannie, Freddie, Citi Announce Holiday Foreclosure Eviction Moratorium

United Press International reports:
  • [Last week] Fannie Mae, Freddie Mac joined Citigroup Inc. in announcing they will suspend evictions of foreclosed homeowners until after the holidays. [...] This year, Citicorp beat out Fannie and Freddie to the holiday moratorium PR prize. Citi suspended evictions for 30 days, until January 17, for some 4,000 former borrowers. [...] Not only were Fannie and Freddie 27 days later this year than last announcing their moratorium, they're giving families facing foreclosures only 15 days of holiday peace, [until] January 3, 2010. Tenants living in foreclosed properties backed by Fannie Mae mortgages will also not be subject to evictions during the holiday timeframe, according to Fannie Mae.

Source: Some Foreclosure Evictions Break for the Holidays.

Sunday, December 20, 2009

Plaintiff's Attorney In Wells Fargo "Ghetto Loans" Litigation Pegged To Pursue Similar Suit On Behalf Of City Of Memphis, Shelby County

In Memphis, Tennessee, the Memphis Daily News reports:
  • Memphis and Shelby County governments have reloaded in preparation for a high-profile court battle over the area’s foreclosures and the lending practices that accompany them. Relman & Dane PLLC, a Washington-based law firm, is the new outside counsel chosen to work with the two local governments in preparing, filing and litigating a long-delayed federal lawsuit. The firm is replacing a 30-year-old Montgomery, Ala.-based firm originally tapped as outside counsel for the suit, which will target a bevy of national mortgage lenders whose practices may have worsened the local foreclosure problem.

  • The choice of Relman & Dane is a sign of local government’s resolve to go after companies for unscrupulous lending practices in Shelby County. The firm, which has racked up wins in several civil rights cases with national scope, also represents the city of Baltimore in its closely watched suit against Wells Fargo(1) over discriminatory lending practices.

  • Local officials have pointed to the Baltimore suit several times as a model for what will get filed here. That suit was one of the first in the country by a municipality to seek damages because of foreclosures that allegedly sprang from abusive lending.

For more, see Washington Firm Chosen to Fight Foreclosure Courtroom Battle.

(1) Go here for posts on the City Of Baltimore lawsuit against Wells Fargo, in which some of the lender's employees were accused of using racial slurs to describe minority customers and referred to subprime loans as "ghetto loans."

Detroit Man Gets 11 Years For Use Of Phony Quit Claim Deed To Steal, Flip Church; Pastor: "I Lost My Life's Work"

In Detroit, Michigan, The Detroit News reports:
  • A man involved in a complicated scam to sell a church he didn't own has been found guilty on 11 counts of fraud. Tracy Carmichael, 46, of Detroit in 2007 offered to sell the Temple of God Deliverance on Mount Elliot to a woman who was interested in the property as a land investment.

  • The scam involved Carmichael finding a "straw buyer" with good credit to take out a mortgage on the church property, said Abed Hammoud, head of the Deeds and Mortgage Fraud Unit, a task force involving the Wayne County Prosecutor's, Sheriff's and Register's offices. "Carmichael got a quit claim deed without the knowledge of the real owner," Hammoud said. "Then he got the victim to take out a $149,500 mortgage on the property. She thought she was doing it to help out the church."(1)(2)

For the story, see Detroiter who tried to sell church guilty of fraud.

(1) Pastor Robert Lodge, who owned the property, later found out that the deed to the church and other documents were false. Lodge never authorized Carmichael to sell the property and discovered his signatures had been forged on the documents. Lodge only became aware of the crime when his congregation was served eviction papers because they hadn't paid the mortgage. "I lost my life's work," Lodge said. "I built a ministry for the last 16 years, and it literally was stripped from me. Not only did I lose property and money, but I've lost my church family. We're not set up anywhere else because of the financial hardship this has caused."

(2) At most, a successful criminal prosecution can result in the scammer being tossed in jail, and possibly, a court order compelling the scammer to pay restitution to the victim which, if the scammer is broke, is probably worthless. To go about having the title to the property restored in the name of the rightful owner would require the victim to file a civil lawsuit to establish the deed forgery, and if successful, to quiet the title to the property in the name of the victim, voiding the interest of all subsequent title holders and mortgagees in the process. Typically, in the case of a deed forgery, the bona fide purchaser defense is not available to the subsequent owner and lender so that a successful civil lawsuit in this regard would, while making the rightful owner whole by restoring his/her title to the property, leave the subsequent owner and lender (and possibly, the insurance company that issued any title policies in connection with the fraudulent title transfer and the associated mortgage financing) holding the bag.

Real Estate Agent Gets 8 Years For Selling Homes Out From Under Owners, Using Stolen IDs To Fraudulently Obtain Financing

From the Office of the U.S. Attorney (Los Angeles):
  • A Lancaster man was sentenced [...] to eight years in federal prison and ordered to pay restitution of $777,000 in relation to a mortgage fraud scheme in which he “purchased” homes in Altadena and Riverside. Felix Pichardo, 27, was sentenced by United States District Judge Stephen V. Wilson. Pichardo pleaded guilty [...] in September, admitting that he used the identities of two victims to obtain mortgage loans for properties that were not for sale.

***

  • According to court documents, Pichardo, a licensed real estate agent, and his co-defendant Latrice Shaunte Borders, 29, of Long Beach, participated in two separate fraudulent real estate sales transactions. Pichardo, using identities appropriated from other people, caused loan applications to be submitted to AmTrust bank in the amounts of $417,000 and $360,000. The loan applications were submitted without the property owner's knowledge for real estate which was not for sale. The proceeds of the two loans were deposited into bank accounts under the control of Pichardo and Borders.

For the U.S. Attorney press release, see Lancaster Real Estate Agent Sentenced To Eight Years In Federal Prison For Mortgage Fraud Scheme.

(1) In sentencing Pichardo, Judge Wilson cited the “callousness” of the offense, noting that Pichardo sought out elderly vulnerable victims and that he poses a danger to the community, the press release states.

Closing Attorney Arrested, Charged With Illegally Dipping Into Escrow Account, Pocketing Client Cash From Real Estate Purchase

In Lackawanna County, Pennsylvania, The Times Tribune reports:
  • A Scranton lawyer has been arrested on charges he stole money from an escrow account involving a real estate transaction in Old Forge. Attorney Richard Hallock, 33, of North Bromley Avenue, was arrested Monday by the Lackawanna County district attorney's office and charged with theft and receiving stolen property in connection with a purchase of two properties in Old Forge on June 17, 2008, according to court papers. The alleged theft involves $4,410.

***

  • According to court papers, Josephine Lubiejewski, a representative from Penn Attorneys Title Insurance Co., told Detective Lisa Bauer of the district attorney's office that she was informed by Mr. Hallock that he was holding the taxes in escrow because of a tax dispute. Ms. Lubiejewski determined about $12,000 in Old Forge taxes were never paid by Mr. Hallock, and that Mr. Hallock "neither paid the taxes, nor took the required steps toward an appeal," court papers state.

  • When Mr. Hallock was asked to explain "what was going on" by Penn Attorneys Title Insurance Co., he "ignored the letters," court papers state. The court papers filed by Detective Bauer state [alleged victim Walter] Stocki has been notified by the disciplinary board of the Supreme Court of Pennsylvania that it is investigating the complaint Stocki filed against Mr. Hallock.

For more, see Lawyer charged with theft in Old Forge real estate deal.

Alleged Land Records Search Screw Up, Issuance Of Unauthorized Coverage Lands Attorney In Hot Water With Title Insurance Underwriter, Says Suit

In Winfield, West Virginia, The West Virginia Record reports:
  • A California insurance company is suing a Putnam County attorney to recoup losses it incurred from the attorney's failure to conduct a thorough title search, and obtain the sufficient amount of [title] insurance for the purchase of commercial real estate in Hurricane. Alexander J. Ross is named in a two-count professional negligence suit filed by First American Title Insurance Company. In its complaint [...], the Santa Ana, Calif.-based firm alleges Ross not only failed to discover a 50-year-old conveyance on a .6 acre parcel of property being developed for a strip mall, but also obtain the additional [title] insurance to cover the nearly $500,000 purchase price.(1)(2)

For more, see Inadequate title search, insurance results in suit against Putnam attorney.

(1) Pursuant to their agreement, Ross was authorized to act on First American's behalf on purchases of property up to $250,000, the story states. Reportedly, the agreement also called for Ross to "conduct a search of all relevant public records affecting the real property at issue." However, Ross insured the property for full amount of the $495,000 purchase price. Pursuant to their original agreement, Ross was to obtain authorization from First American to insure for amounts exceeding $250,000. Also, First American alleges Ross only conducted a title search going back 40 years instead of the customary 60. It was later discovered that one of the previous owners conveyed .2 acres of the property to the state of West Virginia through a corrective deed on July 18, 1958. The "outconveyance" reduced the true acreage the buyer purchased from .68 to between .452 to .498. The deed Ross prepared for the buyer, First American alleges, did not account for the outconveyance. First American says they had to pay a claim made against them, the story states.

(2) The two factors to consider when shopping for title insurance are the:

  • quality of insurance, and
  • quality of the title search.

The goal is to find a title company or attorney that will do a thorough search (in order to avoid the alleged title screw-up described in the story above) and an underwriter (insurance company) that will be there in 10 or 15 years if there's a problem. In many states, the title insurance premiums are regulated so there won't be much of a price difference between companies. See Bankrate.com: 6 questions to ask about title insurance. title insurance legal issues

Saturday, December 19, 2009

"We Goofed!" Says Bank After Billing Homeowner Nearly $500K On Mortgage Earlier Wiped Out By Judge For "Repugnant, Shocking, Etc." Lender Conduct

In Suffolk County, New York, Newsday reports:
  • Nevermind. A California mortgage company admitted Friday it goofed when it sent an East Patchogue couple a letter demanding nearly a half-million dollars - even after a Riverhead judge said the couple did not owe the company a penny following a foreclosure dispute. A spokeswoman for OneWest Bank, the corporate parent of IndyMac Mortgage Services,(1) said the letter was prepared before the judge's ruling. "That particular letter was sent incorrectly," she said.

  • Gregory Horoski and his wife, Diana Yano-Horoski, had their mortgage canceled last month by state Supreme Court Justice Jeffrey Spinner following a dispute with IndyMac. The company has appealed the ruling. The judge excoriated the Pasadena , Calif .-based company's "harsh, repugnant, shocking and repulsive" tactics in proceedings where the Horoskis attempted to work out a loan modification.

  • Earlier this month, two weeks after Spinner's ruling, IndyMac sent the Horoskis a letter that claimed the couple still owed $474,936.78. Spinner ordered the parties back to court to explore the bank's letter "at length." But before a scheduled hearing could be held Friday, the bank owned up to its mistake. "It was sent in error, and we let the family know," the OneWest spokeswoman told Newsday. Richard Horoski declined to comment Friday.(2)

Source: Lender admits foreclosure letter sent in error (requires paid subscription to Newsday; for free version, try here).

(1) Reportedly, it's been a year since OneWest, through a group of investors including billionaire George Soros and computer company founder Michael Dell, agreed to buy IndyMac for what would be nearly $14 billion. Last week, OneWest announced that it bought First Federal Bank of California and its $6.1 billion in assets in a deal brokered by the Federal Deposit Insurance Corporation. See Pasadena Star News: OneWest rises from IndyMac's ashes.

(2) Possibly in an attempt to minimize the damage of the bad publicity brought by cases like this one and the one involving their reported attempt to boot an elderly widow despite being court-ordered not to (see IndyMac Intent On Foreclosing On 89-Year Old Widow, Despite Two Court Orders Telling Them To Stop), One West Bank has reportedly announced that it will temporarily suspend all foreclosure sales and evictions for the holidays (until January 4, 2010) of all single family residential loans it services through its IndyMac Mortgages Services division. The Bank will reportedly implement the moratorium for First Federal Bank of California borrowers as well. See OneWest Bank Announces Moratorium on Foreclosure Sales and Evictions to Assist Borrowers During the Holidays.

Gas Service Shutoff By Rent Skimming Landlord In Foreclosure Leaves Unwitting Tenants Without Heat, Hot Water & Facing The Boot

In Whiting, Indiana, WBBM-TV Channel 2 reports:
  • The owner of a Whiting, Ind. apartment building is leaving his tenants out in the cold -- literally. The residents say he lost the building to a bank without telling them and their heat was shut off before they could move out.

  • Nicole Talavera has to dress her kids in coats just to stay in their apartment. "It's freezing," she said. "And then I have a 9-year-old and a 3-year-old." The thermostat read 50 degrees. Talavera says the gas has been shut off for several days now. "We had no idea about the landlord foreclosing," she said. "We were still paying rent."

  • Last month, tenants say they got a letter from an attorney's office. It said the building was in foreclosure, and the tenants have until Feb. 16 to move out. NIPSCO says the property owner ordered the utility to shut off the gas Dec. 15. Roommates in a second apartment are surviving with a space heater in the living room. No gas means no hot water, either. "We actually were boiling pots of water, dumping them in the bathtub and actually sponge-bathing ourselves," Christopher Spedus said. "We've just been using tons of blankets, staying warm, and that's about it. But everything else is just really cold," another resident, [...] said.(1)

For the story, see: Tenants Lack Heat As Bank Forecloses On Building.

(1) Reportedly, the utility is expected to restore gas service Saturday, but it may not solve the heat problem as it appears vandals damaged the furnace, the story states.

Servicemember Files Federal Suit Against Landlord; Alleges Illegal Eviction Despite Giving Notice Of Activation For Military Duty

In Hammond, Indiana, Chicago Sun-Times Media Wire reports:
  • A northwest Indiana service member is suing an apartment complex for evicting her after she told them she was being activated for duty, according to a lawsuit filed in the U.S. District Court in Hammond. Ciearra Pulliam of Griffith claims in the suit that she received notice on Oct. 23 that she would be sent to Wisconsin from Oct. 26 to Nov. 18. According to the suit, Pulliam notified the Mansards Apartments and was told to give them a copy of her activation papers, which she did. She was having problems paying her rent, though, because of a discrepancy in her military pay, according to a police report filed with the suit.

***

  • Pulliam's belongings ended up being evicted Nov. 10 and were left outside. She is suing for $10,800, which Pulliam claims is the damage done to her property, or triple that amount for emotional distress.

For the story, see Soldier Suing After Being Evicted From Apartment.

The Federal law known as the Servicemembers’ Civil Relief Act grants troops on active duty various legal protections, including a shield against foreclosure in some cases. The protections in this law are available to troops from all over the country.

Go here for free legal assistance for military servicemembers and their families, and go here for other posts on the Servicemembers Civil Relief Act.

Tenant Beats Down Bully Bank In Illegal Foreclosure Eviction Attempt; Lender, Law Firm Prey On Renters Unable To Assert Rights: Housing Advocate

In Hayward, California, Gabe Treves, Program Coordinator for Tenants Together, California's Statewide Organization for Renter's Rights, writes in News Blaze:
  • Tenants renting a home in Hayward, CA, successfully defended themselves against an illegal eviction lawsuit brought by HSBC Bank. The tenants prevailed in the lawsuit this week and will be able to stay in their homes indefinitely. Under Hayward's just cause for eviction law, blatantly violated by HSBC, a landlord must have a specified reason to evict a tenant, and foreclosure is not recognized as a legitimate basis for evicting a tenant.

***

  • In October, the McHenry's were served with an eviction lawsuit, called an unlawful detainer, by HSBC's attorneys at the Endres Law Firm, a Sacramento-based law firm notorious for helping banks illegally evict tenants living from foreclosed properties. The eviction lawsuit was in direct violation of the city's just cause for eviction ordinance. [...] McHenry contacted the Endres Law Firm to demand that it honor the city ordinance and dismiss the unlawful detainer action. The firm would not even give the courtesy of a response. As McHenry tells, "I called the Endres Law Firm repeatedly and demanded that they honor my rights under the city ordinance and dismiss the eviction, but they wouldn't even respond. Meanwhile, I was getting scary court notices that the eviction was moving forward to trial."

***

  • Hayward is one of 15 cities in California with just cause eviction ordinances which, among other things, offer protection to tenants in foreclosure situations. However, as the incident with the McHenry's reveals, banks are all too willing to ignore these laws.(1)

For the story, see Hayward Tenants Fights off Bank Eviction after Foreclosure.

(1) According to Treves, "HSBC Bank and the Endres Law Firm knew that what they were doing was illegal, and that's why they wouldn't respond to all the inquiries. Clearly, their strategy is to prey on tenants who don't know their rights or who don't have the means or time to assert them. Despite the local law, they tried to bully the McHenry out of her home. But she asserted their rights, held her ground, and beat the bank."

Banks' Bullying Tactics Used To Carry Out Illegal Foreclosure Evictions On Tenants, Say D.C. Housing Counselors

In Washington, D.C., United Press International reports:
  • Some banks are using aggressive eviction tactics to push Washington tenants out of their homes as the foreclosure crisis widens, housing counselors say. [...] Housing counselors in the District of Columbia said that tenant buyouts and evictions are becoming more prevalent as banks begin to take over more multi-unit properties.

  • In part it may be that banks don't know the city’s unique tenant laws,” said Farah Fosse, director of affordable housing preservation at the Latino Economic Development Corporation, a non-profit group that offers housing counseling services to D.C. residents. [... T]heDistrict of Columbia has strong tenant protection laws and it is illegal for property owners to evict tenants due to foreclosure.(1)

***

  • "Lenders aren't in the business to own real estate and certainly aren't in the business to manage properties,” said Marian Siegal, executive director at Housing Counseling Services, a Housing and Urban Development-approved counseling organization based in the Adams Morgan neighborhood of Washington. "As a result we're starting to see not only the owners displacing tenants but also the banks displacing tenants illegally," said Siegal.

***

  • Fosse said that some of the banks are changing locks on tenants and sending incorrect information to tenants to persuade them to leave. “Some banks are doing really shady things to get people out like turning off utilities when they know there's a tenant there,” said Fosse.

For more, see Banks bully D.C. renters out of foreclosed buildings.

(1) According to the story, the District of Columbia Rental Housing Act of 1985 states that when a rental property is foreclosed on, financial institutions become the new landlord but there is no change in the tenant's rights. This is a problem for banks, which prefer a quick sale to long-term property management, housing counselors say. For more on tenants' rights in the District of Columbia, see:

23 Tenants Land On The Street As Landlord In Foreclosure Pockets Rent, Fails To Correct Fire Code Violations, Resulting In Eviction

In Regina, Saskatchewan, CBC News reports:
  • The Regina landlord who's at the centre of a recent eviction controversy says he may have made mistakes, but he was only trying to help disadvantaged people. [Last] Monday, 23 tenants were evicted from a downtown Regina building co-owned by Paul Ehmann due to fire code violations and other problems. [...] Some of the tenants who were forced out said they had already paid rent to Ehmann's company and were hoping to get their money back. [...] Lack of money [...] prevents him from paying back the tenants, he said.

***

  • Almost three years ago, [local businessman Larry] Sydor loaned $400,000 to Ehmann, with the building as security, but he's still waiting for payment. "This loan was supposed to be a one-year loan and it's been ... almost three years," Sydor said. Sydor now has a court judgment which means that in less than a week the building will be in foreclosure and put up for sale. The building is worth around $650,000, but there are more than $900,000 worth of liens against it.

For the story, see Controversial landlord says he was only trying to help.

Big Apple Plays Scrooge - Abruptly Yanks 3,000+ Recently Granted Section 8 Rent Subsidy Vouchers To Poor; Pins Blame On Budget $queeze

In New York City, the New York Post reports:
  • More than 3,000 of the city's poorest families face a cruel Christmas because Section 8 vouchers they were given to find apartments are being abruptly yanked under a budget squeeze, officials said yesterday. The unprecedented move elicited howls of protest from advocates for the poor. [...] More than half of the 3,018 families now holding worthless pieces of paper were formerly homeless.

***

  • [Housing Authority Chairman John Rhea] said a "perfect storm" of events left the city with no choice but to pull back the coveted vouchers, even to 918 families that had already identified private apartments to rent and were waiting to complete the paperwork to "turn on" their subsidies, which average $800 a month.

For the story, see Hou$ing ax freezes out 3,000 poor families.

Hubby Skips After Hitting Florida Lottery; Lets Home Go To Foreclosure, Abandoned Ill Wife Faces The Boot

In Miramar, Florida, the South Florida Sun Sentinel reports:
  • A former skin-care model who sued her husband to claim half his Florida Lotto winnings -- and lost -- is about to be evicted from the house they once shared. Donna Campbell, 49, says ever since she found out her husband won the lottery with his co-workers and tried to keep her from finding out, nothing good has happened. "It almost feels as if that winning ticket has destroyed my life," Campbell said. Her husband, Arnim Ramdass, 53, bought the winning ticket in a pool with his co-workers, mechanics at Miami International Airport, in June 2007. The jackpot was worth $19 million, but they collected a lump sum of $10.2 million, and after taxes, each got about $450,000.

***

  • In February, their three-bedroom house went into foreclosure and was sold. Campbell's name was never on the title. And the new owners told her she must move. Campbell, who doesn't work, said she has been in and out of the hospital due to an autoimmune disease and relies on the help of friends. She said Monday her sister has offered her a couch she can bunk on temporarily.

For the story, see Wife of lottery winner faces eviction (Miramar woman says husband kept a big secret).

See also, WFOR-TV Channel 4: Wife Of Lotto Winner About To Be Evicted (Husband Split A Lottery Jackpot With Co-Workers, Hid Winnings From Wife; She Sued And Lost).

For follow-up stories, see:

Friday, December 18, 2009

Baltimore Closing Agent Cops Plea For Role In Deed Theft Scam; Phony Documents Used To Transfer Title To Home Belonging To Out-Of-State Senior

The Maryland Mortgage Fraud Task Force members recently highlighted their progress in a press conference, including the filing of criminal, civil, and regulatory actions against more than 250 individuals and companies in 2009, including this successsful criminal prosecution by the Baltimore City State's Attorney's Office:
  • The Baltimore City State’s Attorney’s Office indicted Gregory Todd Alter, age 37, of Hagerstown, co-owner of All Star Settlement Company on charges of conspiracy to commit theft and issuing a counterfeit deed. On May 14, 2008, Alter conducted a settlement in which a home [...] was sold for $40,000. On June 14, 2008 another settlement took place at All Star where the same property was sold to an innocent third party for $90,000.

  • The true owner of the property was [...] an 85 year old woman who lives in Massachusetts and had not been to Maryland in 35 years. She never signed any deed nor was she ever aware her property was being sold. Alter received $7,000 from the first transaction and then forwarded a fraudulent deed to the buyer’s lender for the 2nd transaction. He received an additional $2,000 from the 2nd transaction. The scheme was discovered in September 2008, when [the Massachusetts woman] decided to sell the property and hired a realtor who placed a for sale sign on the property. The buyers who had purchased the property in June 2008 then realized that they had been defrauded. Alter pled guilty to both charges and was sentenced to five years suspended, three years probation.

Source: Maryland Mortgage Fraud Task Force Announces Progress And Plans (State v. Gregory Todd Alter).

Pair Convicted Of Felony Theft For Running Foreclosure Rescue Equity Stripping Scam; Peddled Bogus Sale Leasebacks To Strapped Homeowners Seeking Help

The Maryland Mortgage Fraud Task Force members recently highlighted their progress in a press conference, including the filing of criminal, civil, and regulatory actions against more than 250 individuals and companies in 2009, including this successsful criminal prosecution by the Prince George's County State's Attorney's Office:
  • The Prince George’s County State’s Attorney’s Office Mortgage Fraud Unit prosecuted Nathaniel Wright and Aaron Bowe, who promised victims that their company could save the victims’ homes from going into foreclosure by participating in their rent back program.

  • The defendants then used an unsuspecting straw buyer’s credit information to obtain loans. As a result of the defendants’ false promises, the victims transferred title to their homes and lost approximately $80,000 per victim. Wright and Bowe were convicted of felony theft and violating Protection of Homeowner in Foreclosure Act Law and were ordered to pay restitution totaling $220,000.

Source: Maryland Mortgage Fraud Task Force Announces Progress And Plans (State v. Nathaniel Wright; State v. Aaron Bowe).

Elderly Couple Accuse Attorney Of Tricking Them Into Signing Away Home; Transfer Made In Payment Of Legal Fees, Responds Lawyer

In Springfield, Tennessee, WSMV-TV Channel 7 reports:
  • An elderly Springfield, Tenn., man said a Nashville attorney had him sign his lake house away while recovering from a stroke. W.H. "Blue” Howse, 84, and Ruth Howse, 85, are accusing [Fletcher] Long of taking their lakefront cabin at a time when they were most vulnerable. W.H. said he was on his death bed after a stroke and that his wife wasn’t aware that they were signing over their cabin. "He took advantage of the fact that I hadn’t had any rest and that Blue was just out of intensive care, and (he said), '(I) just want you to come in and sign some papers,'" said Ruth. The couple said they thought they were signing over rights for Fletcher Long to be power of attorney in an unrelated estate matter. "This would have been the perfect crime had I died, but I didn’t,” said W.H.

  • However, Long said he had been representing the couple in various legal matters for many years and they never paid him for his services. He said the Howses said they were signing over the cabin as a way to pay their debt.

For more, see Elderly Man Says Attorney Took His Lake House (Fletcher Long Says Cabin Was Debt Payment).

Feds Bag Bogus Clergyman Accused Of Running Upfront Fee Scam That Preyed On Desperate Developers Seeking Financing

In Central Florida, the St. Petersburg Times reports:
  • Father Barney Canada, a make-believe Roman Catholic priest(1) accused of duping developers of Trump Tower Tampa out of $150,000, has been arrested and charged with swindling $2.7 million from developers across Florida and the United States. A grand jury in South Bend, Ind., charged Byron Levon Canada with 31 counts of wire and mail fraud, money laundering and conspiracy. The indictment was handed down in U.S. District Court on Dec. 9. Taken into custody Monday, Canada pleaded not guilty. Canada was charged with running an "advance fee scheme" that collected millions in application fees for commercial loans he never intended to provide.

***

  • "Canada represented himself to be a priest and dressed in cleric garb when meeting with victims in order to give the defendants' advance fee scheme an aura of legitimacy and honesty," the indictment said.(2)

For more, see Fake Catholic priest accused of $2.7M fraud that includes Florida developers.

For earlier story, see Father Barney takes fees, leaves a host of developers behind.

(1) Canada has reportedly claimed to be a priest from a shadowy 19th-century offshoot of the Roman Catholic Church, according to this story.

(2) "Father Barney" has a history of being associated with advanced fee scam prosecutions that dates back a long time. See U.S. v. Barney Canada, 960 F.2d 263 (1st Cir. 1992).

Boston "Triple Decker" Condo Converter Facing Suits Over Alleged Misrepresentations Draws FBI Attention; 50%+ Of Units Sold Wind Up In Foreclosure

In Boston, Massachusetts, The Boston Globe reports:
  • When times were good, Michael David Scott did very, very well. The smooth-talking Trinidadian was a natural at selling a piece of the American dream, buying and renovating three-deckers in some of Boston’s toughest neighborhoods, then reselling them as condominiums, often to first-time home buyers eager to cash in on the city’s unstoppable housing boom.

***

  • From 2004 to 2008, Scott and his partners bought at least 50 buildings for a total of $26.6 million, and converted the units into 169 condominiums that sold for $49.8 million, a Globe analysis shows. Today, 101 of the units - more than half - have gone into foreclosure and are selling for a fraction of their value, according to records on file with the Suffolk County Register of Deeds.

***

  • More than a dozen home buyers told the Globe they were drawn in by Scott’s pitch and wound up buying properties based on promises that later proved false. Thirteen people who have done business with Scott, including buyers, a lender, a recruiter, and an appraiser, say they have been interviewed by FBI agents about their real estate dealings. The FBI would not confirm or deny an investigation.(1)

For the rest of the story, see Developer’s easy-money pitch left a trail of ruin (Of 169 condos sold, most in Dorchester, more than half are now in foreclosure).

(1) The story refers to at least two civil lawsuits, as well as bankruptcy proceedings, which Scott reportedly faces. In one suit brought by two disgruntled buyers, Scott reportedly denies committing fraud or making any misrepresentations about property sales. In another, Bank of America reportedly alleged in a lawsuit that Scott led a team that defrauded the bank of $1.5 million.