Alleged Arizona-Based Upfront Fee Loan Modification Racket Violated State Law, Says Illinois Homeowner In Lawsuit Seeking Class Action Status

In Chicago, Illinois, Mortgage Relief Group dba Mortgage Assistance Group, an outfit alleged to be headquartered in Glendale, Arizona, cheated people in mortgage rescue scams, a class action claims. The lawsuit, filed in state court in Cook County, alleges violations of the Illinois Mortgage Rescue Fraud Act (765 ILCS 940/1. et seq.), and the Illinois Consumer Fraud And Deceptive Practices Act (815 ILCS 505/1. et seq.).

For the lawsuit, see Von Essen v. Mortgage Relief Group LLC, dba Mortgage Assistance Group (lawsuit available online courtesy of Courthouse News Service).

Some Raise Questions On Judges' Role In Foreclosure Actions In Light Of Rulings Favoring Homeowners

The Wall Street Journal reports:

• A group of state and federal judges presiding over foreclosures are wiping away borrowers' mortgage debt, invalidating foreclosure sales and even barring some foreclosures outright. The decisions in recent months by a handful of judges in states including Massachusetts, New York and Texas mark a new phase in the judiciary's battle to stem the rising tide of foreclosures by punishing mortgage companies for paperwork mistakes and alleged mistreatment of borrowers.(1)

• The number of judges taking such action remains small, and most foreclosures go through without a challenge. But the growing number of rulings against lenders' claims is raising questions among some legal experts about judges' impartiality.

For more, see Foreclosure Challenges Raise Questions About Judicial Role.

(1) For two recent examples, see:

• New York Law Journal: Judge Blasts Bank's Foreclosure Conduct and Cancels Mortgage (A lender's "unconscionable, vexatious and opprobrious" conduct in attempting to foreclose on a Long Island home has prompted a state judge to cancel the mortgage on the property);
• Judge Slams Sloppy Lender Unable To Prove Note Ownership; Voids Debtor's $461K Home Loan; Docs Signed By Multiple Hat-Wearing VP Sinks Servicer, MERS.

Mass. AG Charges Attorney With Recording Forged Mortgage Assignments In Attempt To Hijack $1M+ In Loan Payoff Proceeds From Pending Real Estate Sales

From the Office of the Massachusetts Attorney General:

• [A] Marblehead attorney was arraigned in Cambridge District Court in Medford for his role in a million dollar mortgage hijacking scheme. Leon Gelfgatt, age 49, is charged with Attempted Larceny, and Uttering (2 counts).

• Massachusetts State Police assigned to Massachusetts Attorney General Martha Coakley’s Office arrested Gelfgatt [...] as he allegedly attempted to retrieve over $1.3 million dollars in mortgage funds in connection with a sophisticated mortgage fraud scheme.

***

• According to authorities, Gelfgatt allegedly identified properties which were under agreement and scheduled for an imminent sale. He then allegedly recorded false documents at the Registry of Deeds indicating that his fake company was the new holder of any mortgages on those properties. He allegedly sought through this scheme to cause mortgage payoff funds to be delivered to the fake company, rather than to the rightful mortgage holders.

For the Massachusetts AG press release, see Marblehead Attorney Arraigned in Connection with Million Dollar Mortgage Hijacking Scheme.

(1) According to the press release, Gelfgatt entered a plea of not guilty and was ordered held on $1 million cash bail by Judge Roanne Sragow. In the event that Gelfgatt posts bail, he has to surrender his Russian passport and wear an electronic monitoring bracelet, the press release states.

Massachusetts Closing Attorney Gets 2 To 3 In Mortgage Stacking Racket; Pocketed $2M+ In Scam; Title Insurance Underwriter Left Holding The Bag

From the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office announced the sentence of [...] former Somerville real estate attorney [Kevin Carey, age 49, of Middleboro] in connection with making false statements on mortgage applications and associated documents and using the funds secured from the loans for his own purposes, rather than paying off existing loans as directed by the new lenders. [... S]uperior Court Judge D. Lloyd MacDonald sentenced Carey to two to three years in State Prison, followed by 10 years probation. Carey is also ordered to pay $2.6 million in restitution.(1)

***

• While practicing as a real estate lawyer in Somerville and Medford, Carey engaged in a scheme called “mortgage stacking” on four residential properties he or his family members owned. The scheme involved serially refinancing the loans on these properties, without paying off the existing loans. Carey was also the agent for a New England title insurance company which allowed him to issue title insurance policies on mortgage transactions he processed.

***

• Carey “stacked” three mortgages on a home in Medford, two mortgages each on two different properties in Everett, and one mortgage on his personal residence in Medford. [...] When he received the proceeds of the loans, Carey did not pay off the existing mortgages on these properties, but rather used the funds for his own benefit. Carey issued title insurance policies or commitments in connection with the transactions, and the lenders were therefore protected, but ultimately the title insurance company suffered the financial loss. As a result of this scheme Carey stole over $2 million. The lenders remained unaware of the problem because Carey continued to make monthly payments on all of the loans.(2)

For the Massachusetts AG press release, see Former Somerville Lawyer is Sentenced to 2 – 3 Years in State Prison in Connection with Mortgage Stacking Scheme.

(1) Carey pled guilty to the charges of Larceny Over $250 (8 counts) and Willfully Making a False Statement Regarding Financial Condition or Assets (7 counts), according to the press release.

(2) According to the press release, a database search by Fannie Mae flagged the multiple mortgages on one of the properties, triggering a notification to one of the lenders. The lender then notified the title insurance company of the problem. Lawyers for the title insurance company then referred the matter to the Attorney General’s Office, according to the press release.

Georgia Man Used Stolen IDs In Failed Attempt To Buy His Own Properties Facing Foreclosure Using Short Sales, Say Atlanta Feds

In Atlanta, Georgia, the Atlanta Journal Constitution reports:

• A 37-year-old Atlanta man is accused of stealing people's identities, and then using those identities to attempt to purchase his own foreclosed property. Brent Merriell was arrested Tuesday, according to the U.S. Attorney's Office. He faces two counts of making a false statement to the FDIC and four counts of aggravated identity theft.

• Merriell apparently obtained several million dollars worth of loans in his name, and in the names of family and friends, from Omni National Bank. On March 27, Omni was taken over by the FDIC. By October, Merriell was delinquent on loan repayments and faced foreclosure on 14 properties, according to Patrick Crosby with the U.S. Attorney's Office. Merriell then asked the FDIC to allow him to "short sale" two properties each to seven new purchasers at greatly reduced amounts.

• But the new purchases were being made in the names of people whose identities had been stolen, and the sales contracts were forged and counterfeited, Crosby said. Merriell was arrested before any of the sales could be completed. If convicted, Merriell could face up to 30 years in prison, and fine of up to $1,000 for each false statement charge.

Source: Man accused of attempting to buy homes with stolen identities.

Title Agent Gets Five Years For $1.3M+ Escrow Swindle; Pocketed Cash While Failing To Pay Off Existing Loans In Homeowner Refinancing Transactions

In Fort Lauderdale, Florida, the South Florida Business Journal reports:

• Stephen Lalonde, 43, of Fort Lauderdale, was sentenced [last week] to five years in prison in connection with a $1.3 million mortgage fraud scheme. According to court records and statements made in court, Lalonde stole more than $1.3 million at real estate closings as part of a scheme to defraud legitimate borrowers, lenders and Spectrum Title, an Oakland Park title insurance company in connection with six real estate closings.

• The legitimate borrowers were trying to re-finance and payoff existing mortgages. However, Lalonde kept the loan proceeds and did not use the money to payoff the borrowers’ pre-existing loans. He was charged with mail fraud and making false statements.(1)

Source: Broward man sentenced in $1.3M mortgage fraud.

For the U.S. Attorney (Fort Lauderdale) press release, see Fort Lauderdale Operator Of Title Agency And Mortgage Companies Sentenced To 60 Months On Mortgage Fraud Scheme.

Go here for Ripoff Report on Stephen Lalonde.

(1) According to the Federal prosecutor's press release, Lalonde was also ordered to pay restitution in the amount of $1,897,268.05 to the victims in this case, which included Stewart Title Guaranty Corporation, the insurance company that underwrote the title policies issued in connection with the subject transactions, and that ultimately wound up holding the bag as it had to cover the substantial losses suffered in this matter. EscrowRipOffKappa

Title Agent Accused Of Swiping $2.7M+ In Escrow Funds Due To Lienholders In Home Refinancing Scam; Local Chief Deputy Prosecutor Among 12+ Victims

In Allen County, Indiana, The Journal Gazette reports:

• Just over a month after the state suspended his license, a Fort Wayne title insurance broker faces criminal charges accusing him of misappropriating more than $2.7 million in title funds. Joseph A. Garretson, 36, [...] is charged in Allen Superior Court with conversion or misappropriation of title insurance escrow funds, corrupt business influence and unlawful loan origination activities, all felonies. Garretson is accused of arranging mortgage refinancing loans for a number of area clients and then not using the money to pay off the initial loans, causing mortgage holders to default, according to court documents.

• In October, Allen County Chief Deputy Prosecutor Michael McAlexander took a call from a man expressing concern about the length of time it was taking for his previous mortgage to be paid off after he refinanced using title insurance, settlement and escrow services from Garretson and Fort Wayne Title [...].

• McAlexander realized he also had used the services of Fort Wayne Title and, after contacting his original mortgage holder, found his loan also had not been paid off using the proceeds of the refinancing, according to court documents.

For more, see Mortgage refinancing scheme alleged (Broker accused of arranging new loans, not paying off old).

(1) According to the story, the criminal filing details more than a dozen other instances occurring from January 2006 to November 2009 in which Garretson allegedly failed to pay off mortgage loans in refinancing transactions and regular mortgage transactions, leaving customers on the hook for the remaining original loan amounts. EscrowRipOffKappa

NH Woman To Stand Trial In $550K Vegas Escrow Scam; Blames Now-Convicted Employee For Swindle That Left Existing Mortgage Unpaid In Real Estate Sale

In Hudson, New Hampshire, the Nashua Telegraph reports:

• A Hudson woman is set to stand trial in Las Vegas next month on charges that she stole $550,000 from a lending company while working as an escrow officer several years ago. Sheila K. Jones, 46, of [...] Hudson, has pleaded not guilty to charges of felony theft and insurance fraud and is free on $10,000 bond pending the Jan. 19 trial. Conditions of the bond agreement did not prevent her from leaving Nevada, where she lived before moving to Hudson this past summer.

***

• Jones is accused of stealing the $550,000 from an escrow account that she opened to hold proceeds from the sale of a $650,000 Las Vegas home. She’s also accused of lying to an insurance company by telling them the [trust] deed [ie. mortgage] had or would be paid off, according to an indictment handed down by the Clark County District Attorney in Las Vegas. [...] Reached Tuesday, Jones and her lawyer said it wasn’t Jones who committed the thefts, but employees who were working for her. [...] Jones’ lawyer, T. Augustas Claus of Las Vegas-based Legal Resource Group, said one of Jones’ employees has already pleaded guilty to stealing and is in jail.

Source: Police say Hudson woman stole $550k.

(1) According to the story, Jones currently goes by the name Sheila Mitchell. At the time of the alleged swindle, she reportedly went by the name Sheila K. Williams. EscrowRipOffKappa

Failure To Properly Serve Junior Lienholder Not Fatal To Foreclosure Sale Where 1st Mtg Balance Exceeded Home Value; Court Says "No Harm, No Foul"

The Wisconsin Law Journal reports:

• Last year, the Wisconsin Court of Appeals addressed what remedies were available to a junior lienholder who failed to participate in a foreclosure action. Effectively, the court limited the bank to purchasing the mortgagor’s right of redemption. (JP Morgan Chase Bank, N.A., v. Green, 2008 WI App 78, 753 N.W.2d 536)

• On Dec. 17, it addressed a corollary to that issue – what happens when a junior lienholder did not participate because it was not properly served. Effectively, the court adopted a “no harm, no foul” rule: because the value of the house was insufficient to cover the first mortgage, the junior lienholder suffered no harm from not being served. The court concluded, “the only reasonable inference from the record is that the value of the property at the time of the sheriff’s sale was no more than the amount of the first mortgage. It follows that there is no reason to believe that [the bank] would have benefited from exercising any of the rights of a junior lienholder.”(1)

For more, including the highlights from the case, see Remedy vacated in foreclosure action (Lienholder’s position can’t be improved).

For the court ruling, see Federal National Mortgage Association v. Lewis, No. 2008AP2, 2009 Wisc. App. LEXIS 959 (December 17, 2009).

(1) The issue of whether the first mortgage holder had legal standing to bring the foreclosure action in the first place was not raised by the junior lienholder in this case. If it had, and if it was then determined that the first mortgage holder's legal standing was questionable or lacking, the outcome in this matter may have been different. SewerServiceAlpha sewer service

Florida Bar Puts Heat On Attorney Affiliations With Upfont Fee Loan Modification Outfits; Opens 195 Foreclosure Rescue Probes This Year

In Broward County, Florida, the South Florida Sun Sentinel reports:

• A Coral Springs lawyer is being investigated by the Florida Bar Association for her involvement with a South Florida foreclosure rescue company, as trade regulators continue to file actions against attorneys involved in similar operations. Bar officials confirmed they are investigating Karen Grun and her ties to Housing Assistance Law Center, of Deerfield Beach.(1) The Florida Attorney General's Office filed legal action against the company and three afilliates in July, claiming they illegally took payments in advance and, in some cases, guaranteed a mortgage could be modified in 30 to 60 days.

• The bar has increasingly scrutinized partnerships between lawyers and foreclosure rescue firms, concerned the relationships were forged to skirt state laws barring upfront fees for loan modification work. The professional association, which monitors and disciplines lawyers, opened 195 cases regarding foreclosure rescue practices this year.

For more, see Bar investigating Coral Springs attorney (Lawyers, modification companies may have formed partnerships to bypass upfront fee laws).

(1) According to the story, Grun's name and the phrase "a private law firm" were on Housing Assistance Law Center documents, and state corporate records listed her as the center's director/president from April through June. Housing Assistance since has been dissolved and it's telephone number has been disconnected, the story states.

S. Florida Feds Announce Sentencing Of Four Brothers In Multi-Property, Family-Run Indoor Pot Farm Operation Financed By Mortgage Fraud

From the Office of the U.S. Attorney (Miami, Florida):

• Jeffrey H. Sloman, Acting United States Attorney for the Southern District of Florida, [and other law enforcement authorities], announced [last week's] sentencings of defendants Manuel Pupo, a/k/a Tata [sentenced to 87 months], Elieser Pupo, Serguey Pupo, Elmer Pupo, a/k/a Elmes, [each sentenced to 87 months] all formerly of Miami.

***

• According to the Stipulated Factual Basis, the Pupos and their associates purchased real estate in St. Lucie, Miami-Dade, Lee, Columbia, and Marion Counties, FL, and caused mortgage companies to issue a total of 18 mortgages for the purchase of these houses, by making false representations as to material facts in the mortgage applications.

• With regards to the money laundering charges, the Pupos conspired with each other and others to conduct financial transactions involving the proceeds from the manufacturing and dealing in marijuana and mail fraud. The relevant value of the laundered funds was between $200,000 and $400,000. The Pupos used the proceeds to promote the growing of marijuana by paying the mortgages of the marijuana grow houses.

• In addition, the Pupos would give money to the[ir recruited] marijuana grow farmers and request that the farmers return the money in the form of rent checks, which would be deposited into their accounts under the guise of rental income, for the purpose of concealing and disguising the nature, location, source, ownership, and control of the proceeds.

For the U.S. Attorney press release, see Miami Residents Sentenced In Marijuana Grow House, Mortgage, And Money Laundering Scheme.

Mix Up In Securing Foreclosed Property Results In Missing Items, Says Another Homeowner

In Henderson, Nevada, KLAS-TV Channel 8 reports:

• Imagine coming home and finding out your key no longer works and some of the things in your house are gone. That's what one Henderson man says happen to him, and like other reports in recent days, the homeowner says it's because of a mix up by a real estate agent securing a foreclosed home.

• Vincent Marrero called 8 News Now after watching reports of a foreclosure mix-up. He says the very same thing happened to him, but the good news in his case is not everything was taken. "It was violating because they broke into the unit illegally and took things that they claim they didn't," he said.

For more, see Another Person Claims Theft in Foreclosure Mistake. ForeclosureLockOuts

More On Trouble Facing South Florida Landlord Now In Foreclosure After Being Duped Into Renting High-Priced Condo To Porn Flick Operator

On Fisher Island, Florida, Miami New Times reports:

• Raul Quintana skids his silver Mercedes C550 to a stop in the dirt parking lot outside the trailer housing the management offices of Fisher Island, one of the nation's most expensive residential enclaves. Quintana's salt-and-pepper hair is a mess, his green eyes flicker wildly, and spittle foams from the sides of his mouth. The real estate speculator has just been officially informed he is banned from entering the Fisher Island Club — the lynchpin of society here. He is charged with allowing a hard-core porno flick to be filmed in his condo and on the club's golf links, and then threatening the life of the island executive whose office he now barges into unannounced.

***

• After unwittingly renting a condo to a porn crew, the longtime property owner has gone from island hero to pariah. He claims he is now unable to rent his three multimillion-dollar luxury condos, which are in foreclosure. He's even contemplating bankruptcy.(1)

For more, see Golf porn on ritzy Fisher Island.

(1) According to the story, a woman who claimed to be a representative of a "modeling agency" and wanted to hold a "photo shoot" in the 3,600-square-foot, three-bedroom, furnished condo with a balcony overlooking Biscayne Bay offered $600 for a six-hour shoot. It turns out Quintana had been duped into renting his apartment to Bangbros.com, an online porn giant based in Miami. The incident reportedly earned him a new nickname: "The Porn King of Fisher Island."

On October 8, Quintana filed suit in Miami-Dade Civil Court against Bangbros.com, claiming the porn outfit "knowingly made false and deceptive representations," "caused [Quintana] ridicule," and hurt his business. Bangbros.com has not yet responded to the suit, the story states.

For the lawsuit, see Quintana v. Bangbros.com, Inc. (available online courtesy of Courthouse News Service).

Wells Fargo Violated Veterans Administration Rules, Says Ex-Servicemember Facing Foreclosure In Court Papers; Seeks Dismissal Of Legal Action

In Jacksonville, Florida, First Coast News reports on local homeowner Nancy Gemmill, a retired U.S. armed services veteran, and her experience with Wells Fargo after she fell behind on her house payments on, reportedly, a $49,000 mortgage and asked for a loan modification:

• "When I contacted them, they said send me this paperwork, paperwork, paperwork. Never heard anything back." That is until Wells Fargo sent her a letter a couple of months ago. It was a notice it was foreclosing on her home, with only $49,000 left for her to pay on it. "It was a shock because I thought they were working with me on it."

• The bigger shock for her and her attorney is how they say the company went about it. "I just don't understand it. This company has been given $45 billion by the federal government because it needed assistance. She's looking just for a modification, not looking for a hand out and rather than trying to help, they try to foreclose and take her home," says her attorney, Sean Cronin.

• Cronin says there is another problem. He says Wells Fargo did not follow the rules in dealing with a veteran. Gemmill is retired from the Navy. "There are certain things supposed to be done to try and keep the vet in the home. And rather than do that, they immediately try to foreclose her, and did not follow the required policies and procedures of the vet administration." For now, Gemmill is still in the home. Her attorney has filed a motion to dismiss based on the claims the company did not follow all the veteran procedures.

For the story, see Navy Veteran Asked Mortgage Company For Help, Wells Fargo Answered With Foreclosure.

Wells Fargo Eviction Efforts Against Michigan Animal Sanctuary Expected To Proceed After Holidays

In White Lake Township, Michigan, The Detroit News reports:

• Homeless is not how Joan Tucker envisioned spending the new year with her 24 rescue horses. Her 70-acre farm, tucked inside a grove of trees off of a main road, is in foreclosure. Wells Fargo Bank plans to begin eviction proceedings after Jan. 3, but it will take at least another 45 days before she will have to vacate the premises.(1) Tucker refuses to clean out the horse stalls just yet.

• "I won't feel defeated until the very end," said Tucker, who works part time at Kmart, and full time at the farm. She purchased the farm in 2003 for $850,000, with an inheritance from her parents, to create the Equine Star Foundation, a nonprofit rescue farm for mistreated, unwanted or retired horses.

For more, see Equine Star Foundation horse rescue farm struggles with foreclosure.

(1) Wells Fargo made the news earlier this month with its eviction efforts in connection with another rescue operation for abused, unwanted, and otherwise discarded animals in Glocester, Rhode Island. See:

• Wells Fargo Farm Foreclosure Leaves 100+ Thirsty, Unfed Animals In Limbo After Owner Gets Boot,
• Wells Fargo To Ante Up $25K To Help Fund Care For Animals In Recently Foreclosed Farm.

Storm Clouds Hover Over NYC Tenants In Predatory Equity-Owned Apt Buildings; Deteriorating Conditions, Looming Foreclosures Spell Trouble For Renters

In New York City, local media stories continue to report on, what could be, a looming disaster facing thousands tenants in rent-regulated apartment buildings in need of renovation bought by predatory equity real estate operators shortly before the market tanked. These investors banked on their now-failed plan to "ease out its mainly lower-income residents, rehabilitate the apartments and charge a new generation of younger, more affluent tenants substantially steeper rents," as one report put it. Unable to carry out their plans, the investors are now walking away, leaving the quickly-deteriorating buildings in foreclosure. Once intoxicated by their sophisticated financial projections of great profits, the investors have sobered up from their binge and are leaving the buildings' residents - and the mortgage lenders who financed these fiascos - holding the bag.

For the stories, see:

• Times Online: Rats and bedbugs take over where Dawnay, Day left off in Harlem,
• The New York Times: Tenants Struggle as a British Landlord Goes Bust,
• New York Magazine: As More Landlords Stagger Under Debts, Thousands of Tenants Face Abandonment,
• WNYC Radio 93.9 FM: Speculative Real Estate Deals Put Buildings at Risk,
• New York Daily News: A Christmas carol from an East Harlem group to keep their homes.

Assisted Living Facility Administrator Ordered To Pay Back Elderly Resident In $46K Ripoff; Allegedly Dipped Into Unwitting Victim's Bank Account

In Ebensburg, Pennsylvania, The Tribune Democrat reports:

• A former administrator of a Johnstown assisted-living facility was put on probation for five years and ordered to pay $46,000 restitution for the money she stole from an elderly resident’s bank account by forging his name on checks. Debra Zilch, 44, of [...] Johnstown, also was ordered to pay $1,600 in fines and fees on her guilty pleas to four felony counts of forgery. County detectives had accused her of writing checks drawn on the account of a resident, then 91 years old, and cashing the checks between May 21 and Aug. 6, 2008.

***

• At the time, Zilch was administrator and part owner of Speciality LifeCare Service, 429 Napoleon St. in Johnstown’s Kernville section. The facility later was closed by the state Department of Welfare for a series of deficiencies.

For more, see Ex-administrator sentenced.

Ex-Undertaker Faces Charges In Trust Fund Ripoff; Allegedly Failed To Escrow Cash Received For Prepaid Funeral Services, Used Money For Personal Needs

In Fredericksburg, Virginia, The Free Lance Star reports:

• [Funeral director Ambrose] Bailey is [...] facing 81 charges, including 27 counts each of grand larceny, embezzlement and violating the Pre-need Burial/Funeral Services Act. He is accused of taking money paid in advance for funerals and using it for personal purchases. The money was supposed to be put into escrow accounts. Those 81 cases are scheduled to be resolved on March 12, the same day Bailey will be sentenced on [last week's] convictions [involving the forgery of doctors' signatures on death and cremation certificates].

• As part of an agreement worked out by [special prosecutor Matt] Britton and defense attorney Mark Gardner, Bailey was allowed to remain free on bond at least until his March hearing. Britton said he agreed to allow Bailey time to repay people who gave him money in advance for funerals. Britton said Bailey has already repaid two of the 27 victims. He said it is his understanding that Bailey’s father has gotten a reverse mortgage to help cover the rest of the debt.

For the story, see Ambrose Bailey pleads guilty to 15 felonies. EscrowRipOffKappa

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.

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.

• The Florida Bar's Clients' Security Fund,
• New Jersey Lawyers' Fund for Client Protection,
• The Client Security Fund of The State Bar of Texas (try here for Client Security Fund Newsletter).

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:

• United States: Directory Of Lawyers' Funds For Client Protection (American Bar Association);
• United States: Check the USA Client Protection Funds Map;
• Canada: Check the Canada Client Protection Funds Map.

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.

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:

• Las Vegas Review Journal: Sometimes little people come out on top against arrogant big shots,
• Las Vegas Sun: Court reduces $3 million judgment in wrongful foreclosure case,
• Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008). ForeclosureLockOuts