More On Alleged South Florida Bogus Foreclosure Document Manufacturing Foreclosure Mill

Mother Jones recently ran a profile on South Florida foreclosure mill operated by attorney David J. Stern and the alleged manufacturing and backdating of bogus foreclosure documents that this firm his accused of engaging in.(1) An excerpt:

• LATE ONE NIGHT IN February 2009, Ariane Ice sat poring over records on the website of Florida's Palm Beach County. She'd been at it for weeks, forsaking sleep to sift through thousands of legal documents. She and her husband, Tom, an attorney, ran a boutique foreclosure defense firm called Ice Legal. (Slogan: "Your home is your castle. Defend it.") Now they were up against one of Florida's biggest foreclosure law firms: Founded by multimillionaire attorney David J. Stern, it controlled one-fifth of the state's booming market in foreclosure-related services. Ice had a strong hunch that Stern's operation was up to something, and that night she found her smoking gun.

***

• A Florida notary's stamp is valid for four years, and its expiration date is visible on the imprint. But here in front of Ice were dozens of assignments notarized with stamps that hadn't even existed until months—in some cases nearly a year—after the foreclosures were filed. Which meant Stern's people were foreclosing first and doing their legal paperwork later. In effect, it also meant they were lying to the court—an act that could get a lawyer disbarred or even prosecuted. "There's no question that it's pervasive," says Tom Ice of the backdated documents—nearly two dozen of which were verified by Mother Jones. "We've found tons of them."

***

• But the Ices had uncovered what looked like a pattern, so Tom booked a deposition with Stern's top deputy, Cheryl Samons, and confronted her with the backdated documents—including two from cases her firm had filed against Ice Legal's clients. Samons, whose counsel was present, insisted that the filings were just a mistake. She refused to elaborate, so the Ices moved to depose the notaries and other Stern employees whose names were on the evidence. On the eve of those depositions, however, the firm dropped foreclosure proceedings against the Ices' clients.

• It was a bittersweet victory: The Ices had won their cases, but Stern's practices remained under wraps. "This was done to cover up fraud," Tom fumes. "It was done precisely so they could try to hit a reset button and keep us from getting the real goods."

For the entire story, see EXCLUSIVE: Fannie and Freddie's Foreclosure Barons (How the federal housing agencies and bailed-out banks are helping shady lawyers make millions by pushing families out of their homes).

Thanks to Mike Dillon of GetDShirtz.com for the heads-up on the story.

(1) Mother Jones has made the following documents available online in connection with allegations made against this operation:

• Federal Securities Fraud Suit, Cooper and Methi v. DJSP Enterprises, David J. Stern, and Kumar Gursahaney, July 2010;
• Class Action Racketeering Suit, Figueroa v. MERSCORP, Law Offices of David J. Stern, and David J. Stern, July 2010;
• Fair Debt Collection Violation Suit, Hugo San Martin and Melissa San Martin v. Law Offices of David J. Stern, July 2010;
• Class Action Suit for Fair Debt Collecting Violations, Rory Hewitt v. Law Offices of David J. Stern and David J. Stern, October 2009;
• Florida Bar, Public Reprimand, Complaint Against David J. Stern, Sept. 2002;
• Florida Bar, Public Reprimand, Consent Judgment Against David J. Stern, Oct. 2002;
• Freddie Mac Designated Counsel, Retention Agreement with Law Offices of David J. Stern, April 2003;
• Freddie Mac Designated Counsel, Memo to Law Offices of David J. Stern, March 2006;
• Amended Complaint Alleging Sexual Harassment, Bridgette Balboni v. Law Offices of David J. Stern and David J. Stern, July 1999.

Countrywide To Cough Up $600M To Settle Shareholder Lawsuits Alleging Failure To Disclose Loose Lending Standards

In Los Angeles, California, USA Today reports:

• Countrywide Financial will pay $600 million to end shareholder lawsuits alleging that it misled investors, in the largest settlement to emerge so far from the subprime mortgage meltdown. The agreement has received preliminary approval from a U.S. District judge in Los Angeles, and a final approval and hearing is scheduled Nov. 15. Countrywide's accounting firm, KPMG, also agreed to pay $24 million. The defendants admitted no wrongdoing in the agreement. The proposed settlement was first announced in May. "We haven't heard of any larger settlement being reported," says Joel Bernstein, lawyer for the lead plaintiffs, the New York state and city pension funds.

• The lawsuits claimed that Countrywide, once the USA's largest mortgage lender, loosened its lending standards during the housing boom and made loans that entailed greater risks than disclosed to shareholders. Countrywide was near collapse when Bank of America acquired it in July 2008.

For more, see Countrywide to pay $600 million to settle lawsuits.

S. Florida Foreclosure Mill Faces Civil RICO Charges In Suit Seeking Class Action Status; Allegations Include Manufacturing Phony Mortgage Assignments

In Fort Lauderdale, Florida, The Palm Beach Post reports:

• Florida's purported largest foreclosure law firm filed thousands of documents to take people's homes that contained deceptive and intentionally ambiguous information, according to a proposed class action lawsuit.

• The suit, filed last month in U.S. District Court, Southern District of Florida, says David J. Stern and his Plantation-based legal team violated the Racketeer Influenced and Corrupt Organizations Act by generating fraudulent mortgage assignments when pursuing foreclosures. An assignment is held by the entity that has the right to receive mortgage payments.

• Stern's practice, which the lawsuit claims filed up to 7,000 new foreclosure cases in Florida every month last year, is also alleged to have pursued foreclosures for lenders that didn't own the debt on the homes. "There really is no proper plaintiff to sue and foreclose and that's what this charade is designed to cover," said Fort Lauderdale Attorney Kenneth Eric Trent, who is seeking class action status and filed the suit on behalf of Oakland Park resident Ignacio Damian Figueroa. "There is no real holder of the note and the mortgage anymore because they broke it up and sold it to 10, 12, 20 people."

***

• Tracking the true owner of the debt sometimes can be a challenge. When pressed for proof of debt ownership, Trent said Stern's office would create an assignment signed by a Stern employee instead of a representative of the lender attempting to foreclose. "The assignments were meaningless shells designed to pull the wool over the eyes of the judiciary and ease the burden upon the unknown real parties of interest," the lawsuit states.

***

• Trent also named the Mortgage Electronic Registration Service Corp. as a defendant. The private entity, known as MERS, was created by banks in 1995 to track mortgage ownership electronically and reduce paper documents. Trent says MERS helps hide the identity of loan ownership and that it conspired with Stern to "confuse everyone as to who owned what."

***

• West Palm Beach foreclosure defense Attorney Thomas Ice found 21 examples last year of assignments from Stern's office that had been executed with a date before the notary's commission was issued. In a deposition, a Stern employee agreed with Ice that "sloppiness" was to blame for the irregularity.

For the story, see Lawsuit claims that Florida's largest foreclosure firm faked documents.

For the lawsuit, see Figueroa v. Merscorp, et al.

In a related story, see Daily Business Review: Homeowner files fraud suit against firm, lawyer:

• An unrelated class action suit filed in 2007, which claims Stern’s firm overcharged borrowers, is pending in Palm Beach Circuit Court. Judge Thomas Barkdull recently certified the case as a class action. The suit claims the firm charged excessive fees to borrowers being foreclosed by Wells Fargo, a Stern client. The lead plaintiff is Loren Banner, who sought to pay the bank the money he owed and get his mortgage reinstated. Stern’s firm sent him a reinstatement letter that included charges for services his firm didn’t provide, according to the suit.

Attorney Accused In Civil Suit Of Milking Deceased Client's Estate; Damages Estimated At $6M+

In Annapolis, Maryland, The Capital reports:

• When Robert Blackburn Hewitt died of a heart attack in 2007, the Arnold resident's longtime attorney estimated his estate at almost $4.7 million. He told Hewitt's widow that she and her two sons "would never have to want anything," according to a lawsuit filed in Circuit Court.

• But two years later, that same attorney, Steven B. Preller, turned around and told Tina Hewitt Sargent she was broke and facing foreclosure on an investment property she didn't know she owned.

• Attorneys for Sargent and her sons, Robert Brett Hewitt and Ryan Hewitt, now claim Preller entered into at least six "self-dealing" business transactions over the past three years to reduce the estate "to nothing more than a series of empty investments" while lining his own pockets and the pockets of his friends and family. They put the damages at more than $6 million. [...] No criminal charges have been filed against Preller, a partner with Preller, Fastow & Klein, LLC in Windsor Mill.

***

• The family learned last year that within weeks of Hewitt's death, Preller allegedly began orchestrating self-serving business transactions. They argued Preller did not have the legal right "to sell or otherwise transfer any money or other assets" from the estate.

• The lawsuit acknowledged that Sargent and her oldest son signed off on some of the deals, but argued those signatures were provided without "informed consent." "Ms. Sargent and Robert Brett Hewitt signed various documents in reliance of defendant Preller's false misrepresentation that these documents were ordinary documents that had to be signed to 'settle your late husband's estate,' " the lawsuit said.

For more, see Widow, sons sue attorney to reclaim millions (Claims he stole from her late husband's estate).

Woman Recovers Title To Home As Judge Invalidates Deed In Lieu Unwittingly Signed When Obtaining Loan

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:

• When federal securities officials closed Robert Stinson Jr.'s real estate investment firm - Life's Good Inc. - for alleged investment fraud in June, they said it had no "significant" property holdings. There was no way they could have known how much the house at 1200 S. Ruby St. in Southwest Philadelphia meant to Joan Porterfield. She had inherited the house from her mother, but lost it to Life's Good after mortgaging it in September 2007 for $25,000.

• "On the papers they filed at City Hall, it shows like I gave them my property," even though she had no intention of doing so, Porterfield said. Porterfield, 47, has since won a judge's order to have the Ruby Street house put back in her name. But she remains shaken by the ordeal, choking back tears as she talks about the small rowhouse as the only thing she has left from her mother.

***

• In the packet of loan documents Porterfield signed for the mortgage on 1200 S. Ruby St. was a deed in lieu of foreclosure, which allowed Life's Good to take the house without going through foreclosure. Life's Good did so in November 2008. [...] Fortunately for Porterfield, her attorney argued successfully in court that the deed in lieu of foreclosure for 1200 S. Ruby St. should be invalidated because Life's Good did not register it within 90 days of its signing, as required by Pennsylvania law, according to court documents. Porterfield said she still owed her attorney $3,618. "That's why I don't have the deed right now. He needs his money," she said.

For the story, see Despite mortgage fraud, woman gets her house back.

Illinois Steps In To Stop Niece From Selling 100-Year Old Aunt's Farm Out From Under Her As State Probes Dubious Land Transactions

In Will County, Illinois, the SouthtownStar reports:

• State officials have told the niece of a 100-year-old Monee woman known as "Aunt Aggie" to stop trying to sell the woman's 70-acre farm. A cease and desist order was issued against Bridget Gruzdis and her firm, Phoenix Horizon LLC, to immediately stop marketing and attempting to sell the home of Agnes Albinger.

***

• For the past few months, the SouthtownStar has chronicled Aunt Aggie's struggle to stay on her farm. Aunt Aggie's niece formed Phoenix Horizon and engaged in a series of transactions with her aunt that resulted in the farm being subdivided and annexed to the village for commercial development in 2003. The state, after learning of transactions between Aunt Aggie and her niece through news reports, launched an investigation into why the farm was at risk for foreclosure.

***

• Phoenix Horizon annexed the land to the village of Monee in 2003 with hopes of developing hotels and shopping centers. Gruzdis borrowed $700,000 against the property but paid back only $49 before the bank filed for foreclosure in 2006.(1)

• The Monee police launched an investigation into whether Aunt Aggie knew what she was doing when she was signing transactions with Phoenix over the past decade. They turned over their findings to the Will County state's attorney's office. The state's attorney's financial crimes prosecutor is still investigating, Will County state's attorney's office spokesman Chuck Pelkie said Thursday.

• Aunt Aggie, who turns 101 in August, has farmed the Monee property since 1949. Her husband died in 1956, and Aunt Aggie is well known in her community for raising as many as 40 foster children over the course of nearly five decades. On May 3, Gruzdis sent Aunt Aggie an eviction notice giving her 30 days to vacate the farm - a threat that was never carried out. Jim Armstrong is a longtime friend of Aunt Aggie's who acted as a whistleblower by alerting the media to Aggie's predicament.

For the story, see State to Aunt Aggie's niece: Stop right there (Woman blocked from trying to sell centenarian's property).

In a follow-up story, see In summer heat, Aunt Aggie finds strength.

For another story on an Illinois property owner falling victim in a real estate equity ripoff, see Blind Victim Of Sale Leaseback, Equity Stripping Scam Peddled As A Refinance Now Faces The Boot, Despite "Successful" Civil Prosecution By Illinois AG.

(1) With some exceptions, under Illinois law, a lender looking to take real estate as collateral for a loan generally has a duty to inquire into the rights and equities of anyone in open possession of the premises who is not the owner of record. Failure to do so could leave the lender's security interest subordinate to any legal rights and equities the party in possession who is not the owner of record can establish.

See Ambrosius v. Katz, 2 Ill. 2d 173; 117 N.E.2d 69; 1954 Ill. LEXIS 321 (Ill. 1954) (bold text is my emphasis, not in the original text):

• A purchaser is bound to inquire of the person in possession by what tenure he holds and what interest he claims in the premises. It is well settled that whatever is sufficient to put a party on inquiry is notice of all facts which pursuit of such inquiry would disclose, and without such inquiry no one can claim to be an innocent purchaser as against him whose possession raises the inquiry. (Bryant v. Lakeside Galleries, Inc. 402 Ill. 466; Miller v. Bullington, 381 Ill. 238.)

• This rule protects a grantor whose grant was induced by fraud, but who, remaining in possession, can show such possession as notice of his equity against a subsequent grantee. (White v. White, 89 Ill. 460; Ronan v. Bluhm, 173 Ill. 277.) The purchaser cannot excuse himself by merely obtaining information as to how possession was obtained or inquiring of the grantor or of other persons as to the rights of the person in possession, but he is bound to inquire of the person in possession by what tenure he holds and what interest he claims. Open possession is sufficient to charge such purchaser with notice of all legal and equitable claims of the occupant. German-American Nat. Bank v. Martin, 277 Ill. 629.

See also, Bullard v. Turner, 357 Ill. 279, 192 N.E. 223 (Ill. 1934) (bold text is my emphasis, not in the original text):

• Under the system of recording the evidences of title to real estate in force in this State, the actual occupancy of land is equivalent to the record of the instrument under which the occupant claims so far as notice to subsequent purchasers and incumbrancers is concerned. McDonnell v. Holden, 352 Ill. 362; Garlick v. Imgruet, 340 id. 136; Moore v. Machinery Sales Co. 297 id. 564; Merchants and Farmers State Bank v. Dawdy, 230 id. 199; Coari v. Olsen, 91 id. 273.

• A purchaser or incumbrancer is bound to inquire of a person in possession of real estate by what right he holds possession and what interest he claims; and in case the purchaser or incumbrancer fails to make such inquiry, the law charges him with constructive notice of all those facts which he would have ascertained respecting the claim or title of the person in possession had inquiry been made of him. (Nelson v. Joshel, 305 Ill. 420; Williams v. Brown, 14 id. 200; White v. White, 89 id. 460; Coari v. Olsen, 91 id. 273; Ford v. Marcall, 107 id. 136; Tillotson v. Mitchell, 111 id. 518; Rock Island and Peoria Railway Co. v. Dimick, 144 id. 628; German-American Nat. Bank v. Martin, 277 id. 629; Moore v. Machinery Sales Co. 297 id. 564).

The foregoing principles were applied by a Federal court in Chicago last year in Davis v. Elite Mortg. Servs., 592 F. Supp. 2d 1052 (USDC D. Ill., East. Div. 2009), in the context of a foreclosure rescue scam. The Court found that the mortgage lender that unwittingly financed the scam was not entitled to the protection accorded to a bona fide purchaser, saying that, despite the lack of evidence that the lender had any actual knowledge of the scam, it had constructive notice of any claim the screwed-over homeowner can establish in the property by reason of his open, exclusive possession thereof.

For more on the duty to inquire of persons in possession in real estate transactions in Illinois, see Illinois Bona Fide Purchaser, Possession, Duty Of Inquiry (Illinois Supreme Court cases), and Illinois Bona Fide Purchaser, Possession, Duty Of Inquiry - State Appellate Cases, Federal Cases.

For more on this duty to inquire in other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Pennsylvania Joins Baltimore, Memphis With Pending Lawsuit Accusing Alleged "Ghetto Loans" Peddler With Reverse Redlining In Philly Neighborhoods

In Philadelphia, Pennsylvania, Philadelphia Weekly reports:

• The Pennsylvania Human Relations Commission filed a complaint against Wells Fargo Bank early this month, claiming that the bank used reverse redlining in Philadelphia neighborhoods. In other words, Wells Fargo is accused of exploiting poor, African-American residents by allowing an abundant of sub-prime loans in densely black-populated neighborhoods that ultimately caused thousands of vacant properties.

***

• Philadelphia joins Baltimore and Memphis, cities that also have filed similar suits against the bank for racial discrimination.

For more, see PA Human Relations Commission Alleges ‘Reverse Redlining’ Against Wells Fargo.

For the lawsuit, see Commonwealth of Pennsylvania v. Wells Fargo Bank, N.A.

Go here for earlier posts on the "ghetto loans" allegations made against Wells Fargo.

Media Report Probes Into Minister's Activities Involving Dubious Loan Modification Services

In Atlanta, Georgia, MyFox Atlanta reports:

• Some thought a minister who modifies mortgages would be a godsend. A FOX 5 I-Team investigation found that while one man had a Bible in one hand, the other one was in people's wallets. The I-Team's Dana Fowle went undercover to hear just what Mike Surgent and Trinity Corporation is preaching.

• One of the first things Surgent does when you go to his office looking for help to save your home from foreclosure is to ask you to call him Uncle Mike. He then tells you about his religious conversation. But Uncle Mike wraps it up by asking for a lot of money.

For more, see I-Team: Trinity Corporation.

For a follow-up stories, see:

• I-Team: Trinity Corporation Part 2,
• I-Team: Trinity McCoy Lawsuit.

Technicality Leads To Dismissal Of Criminal Case Against Ex-Homeowner Accused Of Stripping $1M In Fixtures From Foreclosed Home; DA To Refile Charges

In Southern California, North County Times reports:

• Suzy Brown, who was accused of stripping $1 million worth of property from the bank-foreclosed home her Encinitas neighbors dubbed the "monster house," won a legal victory Thursday when a judge dismissed criminal charges against her on a technicality. Brown, 45, was facing one charge of grand theft and one charge of felony vandalism for allegedly taking truckloads of lavish fixtures when she moved out of the bank-owned mansion in March 2009.

***

• However, Superior Court Judge Aaron Katz ruled Thursday after a preliminary hearing at the Vista Courthouse that Eacret failed to prove that the bank ---- not Brown ---- owned the house last year when a real estate broker for Chevy Chase Bank discovered its doors, windows and 18 toilets, among other property, were missing.

For more, see Judge dismisses case against ex-owner of 'monster house'.

For story update, see Prosecutors to refile charges against ex-owner of 'monster house':

• Prosecutors will refile charges against Suzy Brown, the woman accused of stripping $1 million worth of lavish fixtures from the foreclosed home her Encinitas neighbors dubbed the "monster house," according to a deputy district attorney. Superior Court Judge Aaron Katz dismissed felony theft and vandalism charges against Brown on Thursday after a preliminary hearing at the Vista Courthouse.

• Katz said Deputy District Attorney Robert Eacret had shown evidence at the hearing that Brown, 45, had taken truckloads of toilets, windows and appliances from the Olivenhain mansion after she moved out in March 2009, but the judge said he had to dismiss the charges on a technicality.

Forensic Loan Audit Operation Hit With Class Action Suit; Accused By Others Of Clipping Homeowners Out Of Thousand$ With No Results

In Rancho Cordova, California, cbs13.com reports:

• U.S. Loan Auditors claims it will review your loan documents to see if you're a victim of predatory lending, and will then help you go after your lender. Several customers have called [CBS 13 investigative reporter] Kurtis Ming saying they invested thousands, but got no results. Customers paid $3,000, sometimes $4,000 or more for their forensic loan audit. They say U.S. Loan Auditors looked thru their loan documents claiming what was found could stop a foreclosure, help them get a better loan, even money back from their lender.

***

• A class action lawsuit (click here) filed on behalf of other former customers alleges U.S. Loan Auditors and its sister company U.S. Legal engaged in false advertising and intended to deceive customers. The complaint asks the court to stop the company from operating and require restitution to the alleged victims.

For more, see Call Kurtis: U.S. Loan Auditors Sued (Former Customers File Class Action Lawsuit, And Claim False Advertising).

For the class action complaint, see Ma, etal. v. U.S. Loan Auditors, LLC, et al.

Foreclosure Rescue Operator Gets Six Years In Sale Leaseback Scams That Ripped Off $880K From Lenders, Financially Strapped Homeowners

In Honolulu, Hawaii, KITV-TV Channel 4 reports:

• A man who prosecutors say used religion to lure victims into a mortgage fraud scheme was sentenced to prison Thursday. John Mendoza, 59, was sentenced to six years behind bar. That's not enough says a woman who said she was lured into one of his deals, which he still claims were intended to save homes for people facing foreclosure.

• "The only thing I can call this person is that he is a monster,” said Laura Cristo, who said Mendoza ingratiated himself by coming to her Waianae restaurant and praying with her and her family.

***

• Federal prosecutor Clare Connors said Mendoza would talk distressed homeowners into selling their property in paper to his friends, on the promise they’d be able to buy the home back. Instead, Connors said, Mendoza kept hundreds of thousands in profits from refinancing the homes.

***

• In court Thursday, Mendoza repeatedly mentioned his faith as he proclaimed his innocence and said he was only trying to help people. But U.S. District Judge Michael Seabright said the evidence was clear that Mendoza had used his faith to sucker in his victims, and then suck away the equity in their homes. “Mr. Mendoza operated with a clean intent to defraud, to benefit himself and hurt others.” Seabright said. “He used religion to spot and hood vulnerable victims.”

• Despite his harsh words, Seabright sentenced Mendoza to the lower-end of federal guidelines. Mendoza will spend six years in prison. There is no parole in the federal system. After prison he will serve five years supervised release and must pay $881,514.98 in restitution to the former homeowners, one of whom recently died of cancer.

***

• Mendoza told the court he plans to fire his publicly funded attorney and file an appeal. He complained that his attorney didn’t understand the sophisticated real estate transactions involved in the case. The judge replied that while the individual transactions may have been complex, taken as a whole, the jury correctly determined Mendoza’s intent was to steal the equity in the two homes and leave homeowners devastated.

For the story, see Foreclosure Fraud Defendant Gets Six Years (John Mendoza Continues To Deny Wrongdoing).

Michigan AG Files 19 Criminal Complaints Setting Forth 69 Charges Against Individuals, Firms Running Alleged Advanced-Fee Loan Modification Operations

From the Office of the Michigan Attorney General:

• Attorney General Mike Cox [] announced the filing of 19 criminal complaints and a total of 69 charges against illegal advanced fee "foreclosure rescue" operations accused of defrauding Michigan families of thousands of dollars. Nine Michigan mortgage companies are accused of illegally charging homeowners facing foreclosure upfront fees for mortgage modification assistance.

• The defendants claimed they would help homeowners by working with their lenders in an attempt to modify the borrower's mortgage. After paying the upfront fee, borrowers found that the companies made no real attempt to secure a modification and were subsequently unable to get their money back. Many of the victims lost their homes to foreclosure.

***

• Several companies and individuals charged are accused of obtaining money through false statements to consumers. This charge is a five year felony. In addition several are accused of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and with making misleading statements. Each of the charges carries a penalty of up to 90 days in jail and/or a fine of $1,000 in addition to the requirement that the companies make full restitution to each of their victims.

For the list of criminal defendants, and the charges attributable to each, see Cox Files Criminal Charges Against 19 for "Foreclosure Rescue" Scams.

For a story update, see Livingston Daily: Felonies dropped in mortgage-fraud case (A Howell businesswoman admitted Friday to charging customers money upfront for loan-modification services, but she denied failing to perform the services promised and denied pocketing any money).

Arizona Slams Outfit For Allegedly Peddling Home Refi Scam; Firm's Claims That It Would Buy Homeowners' Loans, Then Modify Terms Were Bogus, Says AG

From the Office of the Arizona Attorney General:

• Arizona Attorney General Terry Goddard [] announced he has filed a lawsuit against The Guardian Group, LLC (“Guardian Group”) for engaging in allegedly deceptive mortgage loan reduction services that have cost more than 2,500 consumers millions of dollars. Goddard also called attention to a new state law taking effect [last week] that prohibits foreclosure consultants and mortgage “rescue” companies from charging upfront fees. The Attorney General supported passage of the law.

***

• The lawsuit, filed in Maricopa County Superior Court, alleges that the Scottsdale-based Guardian Group fraudulently represented itself as providing loan reduction services to homeowners struggling to make their mortgage payments. The company charged consumers an average advance fee of $1,595 for mortgage loan refinancing services, which it rarely provided. It collected fees from more than 2,500 consumers for enrollment in its Principal Reduction Program since August 2009.

• The company, which markets nationally, made claims it would negotiate with lenders to purchase a consumer’s note for less than face value and sell the note in an investment package to a third-party investor. Guardian Group then told the consumer that it would modify the rates and terms of the consumer’s mortgage loans and reduce the principal owed to 90 percent of current market value.

• Guardian Group fraudulently represented to consumers that it had $5 billion allocated for its “Principal Reduction Program” because it had multiple investors prepared to purchase mortgage notes. The Attorney General’s Office learned that not one of the supposed investors actually invested money in the company.

For the Arizona AG press release, see Terry Goddard Accuses Scottsdale Mortgage Company of Deceptive Practices.

For the lawsuit, see State of Arizona v. The Guardian Group, LLC, et al.

Colorado AG Shuts Down Loan Modification Racket That Used Obama Video, FDIC Materials To Fake Affiliation With Federal Government

In Denver, Colorado, INDenver Times reports:

• Colorado Attorney General John Suthers announced [] that his office has obtained a judgment against American Mortgage Consultants, its owner, Oliver Paul Maldonado, 37, and its principal employee, Santiago Fabian Pineda, 32, barring the company and its officers from engaging in mortgage fraud or any aspect of the mortgage business. American Mortgage Consultants, Maldonado and Pineda will be required under the consent judgment to pay a total of at least $75,000 in fines and restitution to the state.

***

• According to the lawsuit, American Mortgage Consultants used deceptive advertisements to attract approximately 170 consumers to the loan modification company from January 2009 through March 2010. Maldonado also used video of President Barack Obama and materials from the Federal Deposit Insurance Corp. to give consumers the impression that the company was affiliated with the federal government. American Mortgage Consultants did little if anything to help its customers renegotiate or modify their home loans beyond shipping off their applications to an Ohio-based company.

For the story, see Suthers shuts down mortgage scammer.

For the Colorado AG press release, see Attorney General announces judgment against fraudulent loan modification company.

For the court judgment obtained by the AG's office, see State of Colorado v. American Mortgage Consultants, et al.

Non-Attorney Defendant Clipped Homeowners Out Of Upfront Fees For Bogus Legal Services, Says Colorado AG In Civil Lawsuit

From the Office of the Colorado Attorney General:

• Colorado Attorney General John Suthers announced [] that his office has filed a lawsuit against a Denver man suspected of defrauding homeowners in foreclosure, including the elderly and disabled, by collecting upfront fees in exchange for fraudulent legal services. According to the complaint, Sherron L. Lewis, Jr., (DOB: 9/26/1956) attracted homeowners facing foreclosure through his Web site, http://www.illegalforeclosures.com/, and mail advertising and informed consumers that they could defeat the foreclosure process and eliminate their mortgages.

• Lewis, who is not licensed to practice law, is suspected of providing consumers with legal advice on how to combat their foreclosures through the use of frivolous lawsuits. According to the complaint, Lewis’ lawsuits, often leveled against judges, public trustees and even one of his victims, have been routinely dismissed as meritless.

• As part of his services, Lewis is suspected of requiring his victims to pay upfront fees for his services, which is illegal under the Colorado Foreclosure Protection Act, and he has acquired an interest in his victims’ properties as part of his agreements. In some cases, Lewis has rented out properties he has acquired an interest in while he delays foreclosure through his frivolous lawsuits.

For the Colorado AG press release, see Attorney General announces lawsuit against Denver man suspected of providing fraudulent foreclosure-rescue legal services.

For the lawsuit, see State of Colorado v. Lewis, et al.

(1) According to the AG's press release, Lewis is suspected of advising a quadriplegic victim in Jefferson County to file multiple lawsuits to challenge foreclosures on his home and two other properties in one case. In another, Lewis is suspected of charging the man more than $20,000 in exchange for the “legal work” he performed for the victim. In a third case, Lewis is suspected of occupying an elderly Illinois woman’s home rent-free for more than a year. When the woman attempted to repossess her own home, Lewis filed a lawsuit against her claiming racial discrimination.

Northern California DA Has Another Ex-Homeowner In Crosshairs For Allegedly Stripping $100K In Fixtures From Now-Foreclosed Home

In Ripon, California, KXTV-TV Channel 10 reports:

• For the second time in a week, the San Joaquin County district attorney's office is expected to charge a Ripon couple with "stripping" a house they had to leave. The large and beautiful home had nearly $100,000 worth of fixtures taken, allegedly by the previous owners.

• "They took everything from doorbells to appliances, even furnaces in the attic," said Ray Davidson, who bought the home at auction after the foreclosure. Although the home is nearly put back together, holes remain where trees were removed, and not all the window coverings have been replaced. The district attorney's office has completed an investigation against the previous owners, and charges were expected by the end of the week.

• This home is right around the corner from another home in Ripon that was also stripped. The couple who owned that home appeared in court last week after being charged with grand theft and extortion. [... P]rosecutor Stephen Taylor promised last week the district attorney is starting to investigate and prosecute these incidents.

For the story, see Another foreclosed upscale Ripon house stripped.

Failing To Remit Mortgage Payments Collected From Client, Allowing Home To Be Lost To Foreclosure Among Acts That Lead To Disbarment For SC Attorney

In a recent ruling by the South Carolina Supreme Court, an attorney licensed in the state was disbarred over seven separate incidents of misconduct and was ordered to pay full restitution to all clients, banks, and other persons and entities, including the Lawyers' Fund for Client Protection (ie. South Carolina's "attorney ripoff reimbursement fund"),(1) who have incurred losses as a result of her misconduct and reimburse the Commission on Lawyer Conduct and Office of Disciplinary Counsel for costs incurred in this matter.

Among the matters was one incident (designated in the ruling as Matter 1) where the attorney ("Respondent") received checks and money orders from clients for payments to the clients' mortgage lender.

• Respondent admits she failed to make the mortgage payments for the clients, used the checks and money orders entrusted to her for purposes other than payment of the clients' mortgage, made material misrepresentations to the court at the foreclosure hearing regarding her clients' home, and that her failure to make her clients' mortgage payments resulted in the clients' home being sold at foreclosure.

• Respondent acknowledges she failed to communicate with her clients regarding the foreclosure action. Respondent's clients only learned that their home was sold at the foreclosure sale when approached by the lender's real estate agent. Due to respondent's misconduct, her clients had to obtain new counsel in an effort to save their home.(2)

• Respondent admits she failed to safeguard her clients' funds. Further, she admits she wrote checks from her trust accounts for expenses such as employee payroll, her children's school programs, parking tickets, and restaurant charges.(3)

For the full laundry list of escapades that left a slew of other screwed over clients in her wake, see In the Matter of Sherry Bingley Crummey, No. 26840 (S.C. July 26, 2010).

(1) For similar funds established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in other states and Canada, see:

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

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

(2) The court noted that clients' new counsel was able to persuade the court to set aside the foreclosure sale.

(3) In addition, the Respondent acknowledged that her trust accounts were completely out of whack. She carried a negative balance and she had trust account checks returned for insufficient funds. She admitted she did not reconcile her trust accounts, did not keep individual client ledgers, and did not retain the bank statements for her trust accounts, all of which are required by state bar rules. In addition, she admitted her records were such a disaster that the trust accounts cannot be reconciled. She also acknowledged that she failed to cooperate with Office of Disciplinary Counsel as she failed to respond to the Notice of Full Investigation in this matter.

Relentless, Taunting Phone Calls From Loan Servicer Constitutes Illegal Harassment, Says Delinquent Borrower/Homeowner In Recent Lawsuit

In Jupiter, Florida, The Palm Beach Post reports:

• A Palm Beach County woman diagnosed with terminal brain cancer is suing her home loan servicer following what she said were relentless harassing phone calls that further harmed her health when she fell behind on payments. The suit, filed by Angela Birster, 45, along with her husband, Paul Birster, 47, accuses American Home Mortgage Servicing Inc. of violating state and federal consumer collection laws, as well as intentionally inflicting emotional distress.

***

• The Birsters, who live in a Jupiter Farms home they bought in 2002, say employees of American Home Mortgage Servicing lied about foreclosure sales being scheduled for their home, taunted them by saying they would be "living in the streets in 120-degree heat," and sent people to their home who wandered the property and took pictures.

• On one occasion, the lawsuit says, Angela Birster collapsed in her front yard and had to be hospitalized after a distressing collection call. The calls allegedly persisted even after the Birsters sent a cease-and-desist notice requiring that communication go through their attorney.

• "The company's conduct is outrageous, beyond all bounds of decency, and cannot be tolerated by a reasonable society," said Henry Hicks, lead attorney for the Birsters. "The thing about debt collectors is they know the actions that get the most results are threats and lies and intimidation, even if it's against the law."

• Florida law forbids debt collectors from using abusive language, calling "with such frequency as can reasonably be expected to harass the debtor," and communicating with the debtor when he or she is represented by an attorney handling the specific debt case.(2) The Federal Fair Debt Collection Practices Act includes similar language.

For more, see Terminally ill Jupiter Farms woman behind on home loan alleges collector taunted, harassed her.

(1) Reportedly, the Texas-based company requested that the case, originally filed in state court, be moved to federal court.

(2) See the Florida Consumer Collection Practices Act (Florida Statutes Chapter 559 - Part VI - Sections 559.55-559.785).

Michigan Woman Fears Loss Of Business Due To Typo; Foreclosing Lender's Screw-Up With Wrong Property Leads To $35K Loss, Says Victim

In Clio, Michigan, WJRT-TV Channel 12 reports:

• A well-known master gardener in Mid-Michigan says her business could be headed for closure, all because of a paperwork error. She is speaking out and warning others to beware. After 12 years of doing business as Jenny B's Garden Party on Clio Road near Clio, Jenny Burrows says there's a chance her once-thriving business might not survive past next year because of a typo. "I just wanted a simple address changed, and that snowballed into a catastrophe for my business," she said.

• Because of the typo in a foreclosure address, her business instead of her neighbor's house was posted for foreclosure, even though she owns the property outright. So in the cold of January when the store was closed, a company hired by a California bank moved in to seize the property and winterize the building.

• "When they left they didn't lock the doors, the gates were left open in month of January," Burrows said. "They all froze, my seedlings. Right now, just physical property, I've lost $35,000 worth of stuff."

• Even though the property was never seized, she remains with the massive loss, and if there's no resolution with the bank for reimbursement, Burrows doesn't see how she'll survive. "I've actually started paperwork for discontinuance with the state of Michigan," she said. "It's hard to do."

• Burrows says she's spent the past seven months fighting with the California bank, hiring a lawyer and trying to let customers know she's still in business. In the meantime, she's still fighting to stay around for another 12 years. But part of her fight is a warning to others to not take what you may think is junk mail from a bank lightly. "If you get information from a bank, open it up," she said. "See if you have been a victim of a typographical error. It can cost you your home. It has almost cost me my business."

• For the business to stay afloat, Burrows says she'll need someone to reimburse her for damages by December. A spokeswoman for One West Bank in California says, quote: "Unfortunately, things like this happen from time to time. We would like to rectify it."(1)

Source: Typo could cost longstanding local business.

(1) A recent court ruling found a lender liable for $150,000 in exemplary (punitive) damages (in addition to $5,000+ in actual damages) in a trespassing case involving an improper padlocking by a foreclosing lender. In that case, the lender actually padlocked the right property, but was found to be a bit premature in entering the premises since the delinquent borrower was still the legal owner of the property. See Long Island Judge Hammers Wells w/ $155K Tab For Oppressive, Heavy Handed, Egregious Conduct For Pre-Sale Lockout Of Homeowner In Foreclosure.

Foreclosed Homeowner Dodges Boot With Help From Local Media; Servicer Acknowledges Screw-Up In Handling Loan Modification

In Stockton, California, KXTV-TV Channel 10 reports:

• It has been an uneasy few days for homeowner Teena Blanco ever since she found a notice on her door informing her she had three days to vacate her Stockton home. Despite working for months with her bank to modify her mortgage, the house was sold on July 13 -- and the bank wanted her out.

• Her first clue, however, occured the week before when she noticed a stranger at her door and asked him what he wanted. "He said, 'I'm here to re-key your house,'" Blanco said. "I said, 'I'm sorry, you must have the wrong house.'" He left, but he didn't have the wrong house. Several days later, Blanco came home to find the three-day notice, just days after making her last mortgage payment.

***

• After News10 contacted Wells Fargo to inquire about the situation, the bank called back, telling Blanco their subsequent research revealed certain things had slipped through the cracks. They told her they would rescind the sale and continue to work with her on a possible modification.(1)

For the story see, Stockton homeowner crashes into modification mess nightmare.

(1) Reportedly, the bank itself bought the house at auction, so that any legal complications in attempting to rescind the sale involving the "bona fide purchaser" rights of a third party bidder are not present here.

Indicted NYC Real Estate Agent Identified By Queens Homeowner As Perpetrator Of Home Equity Ripoff

On Staten Island, New York, the Staten Island Advance reports:

• A New Springville man was part of a scheme that illegally obtained $1.6 million in mortgages for properties in Brooklyn and Queens, prosecutors allege. Nir Zeer, 30, [...] and four others are charged with conspiracy to commit wire fraud, said Manhattan federal prosecutor Preet Bharara. [...] The alleged crimes occurred in 2007 and 2008.

• Prosecutors said three defendants, Joan Powell, 46; Darlene Ritter, 45, and Orit Tuil, 39,(1) held themselves out as real-estate agents and recruited straw buyers to purchase the properties. [...] The trio allegedly submitted loan applications with inflated incomes on behalf of buyers and were aided by a mortgage broker, now cooperating with authorities. Another defendant, Annette Shereshevsky Fonte, 28, of Westbury, L.I., worked at a bank. She supplied phony deposit verifications in two instances to beef up purchasers' assets, said authorities.

For the story, see Islander charged for role in scam.

For the U.S. Attorney press release, see Manhattan U.S. Attorney Charges 38 Defendants As Part Of Nationwide Mortgage Fraud Sweep (p. 10 - U.S. v. Tuil, et al.)

(1) Orit Tuil was identified through property records, according to a recent New York Daily News story (see Foreclosure scam victim staying put for now), as the individual a Queens homeowner said duped her in an apparent sale leaseback, equity stripping foreclosure rescue scam. Reportedly Tuil came to the homeowner's door in 2006 claiming to be a foreclosure specialist after the homeowner and her stepmother missed payments on a $180,000 mortgage. Reportedly, the homeowner said she had to signed over the deed to her home to Tuil, and that the $180,000 mortgage was paid back in an apparent equity stripping scam when Tuil took out two mortgages totaling $405,000, according to property records.

Iraq War Vet, Wife Get Back $300K+ Home Lost In Lien Foreclosure Sale Over $977 In Unpaid HOA Dues

In Frisco, Texas, The Dallas Morning News reports:

• The Frisco soldier and his family who lost their home to foreclosure while he was serving in Iraq will get the house back. Army National Guard Capt. Michael Clauer and his wife, May, lost their $315,000 southwest Frisco home in May 2008 after falling behind on Heritage Lakes Homeowners Association dues.(1)

• The Clauers sued the association and subsequent buyers in federal court. A court-ordered settlement conference led to an agreement this week that gives the house back to the Clauers. A gag order prevents those involved from sharing details. But the bottom line is that the Clauers once again will own the home in the Heritage Lakes subdivision. [...] The Clauers' attorney couldn't say whether the couple had to pay any money to get back the house, which they owned mortgage-free.

For more, see Frisco soldier who lost home to foreclosure while in Iraq gets it back.

(1) Reportedly, the Heritage Lakes Homeowners Association was initially owed $977.55 in dues on the house. The association sent multiple notices by certified mail, demanding payment. All went unanswered. The two-story brick home was auction off for $3,201, and subsequently resold for $135,000.

Oregon Homeowner Gets Clipped Out Of $3K For Bogus Loan Modification By California Outfit Owned By Now-Disbarred Attorney

In White City, Oregon, the Mail Tribune reports:

• Saul Cervantes thought he was making a smart financial move by accepting the services of a company claiming it would help him negotiate with his bank to lower his monthly mortgage payment. Instead, Cervantes was bilked out of $3,000 in a mortgage scam that has struck a handful of Southern Oregon households, according to Larry Kahn, the executive director of Help Now! Advocacy Center based in Medford. [...] Cervantes received a letter from a California-based company called Ideal Real Estate Solutions promising it would do the leg work required to qualify for government programs meant to help people with troubled mortgages.

***

• Out of desperation, Cervantes called Help Now! volunteers, who work with attorneys across the state to fight predatory lenders. It is illegal in Oregon to charge an up-front fee for loan modification.

• Help Now! contacted the California attorney who owned the company. They soon learned that the California Bar Association had word on owner Brian Columbana's practices. He has since been disbarred. Help Now! added Cervantes' name to an Oregon Department of Justice complaint with several other mortgage scam victims allegedly targeted by Columbana.

For the story, see Mortgage-payment scam trips up owner.

Judge Tacks 3 Years Prison Time Onto Scammer's Sentence For Failure To Pay $25K Upfront Restitution; Man Accused Of Ripping Off $227K From Mom's HELOC

In Norwalk, Connecticut, The Hour reports:

• A Westport man was sentenced to three years in prison [] at Norwalk Superior Court for stealing hundreds of thousands of dollars from his elderly mother. Charles Gamer, 54, [...] was also given a 10-year suspended prison sentence and five years of probation. He must also pay $234,933.24 in restitution.

***

• Gamer, who claims to have opened multiple computer technology businesses, was also arrested by Norwalk Police in 2009 for writing a bad check for more than $5,000 to his dentist, Dr. Michael Hodish, police said. Charges relating to that incident were dropped because of the plea deal. He agreed to the plea deal in March in which he would be given a [suspended] 10-year prison sentence and five years of probation in exchange for pleading guilty to one count of first-degree larceny and paying $25,000 toward the restitution by his sentencing date. He received a three-year prison sentence because he did not pay the restitution.

• Gamer turned himself in to Wilton Police on Jan. 30, 2009, after illegally withdrawing about $227,000 from his mother's Washington Mutual home equity account at the Wilton branch of the bank. He was living with his mother when the crime took place. The manager of the bank, who was later fired, told investigators that Gamer showed him documentation and said he had been authorized to access the account. [...] State's Attorney Donna Krusinski said Gamer's family almost faced foreclosure because of his financial misdeeds.

For the story, see Son who stole from mother to go to prison.

Cook County Continues Sitting On $18M Pile Of Unclaimed Surplus Foreclosure Sale Cash Belonging To Ex-Homeowners With Few Takers To Be Found

In Chicago, Illinois, CBS2chicago reports:

• Nearly $18 million; it's money that belongs to thousands of Chicago-area families who've lost their homes through foreclosure. But CBS 2's Vince Gerasole reports, many of those families haven't seen a cent. One former owner of a condo in Wrigleyville is owed $3,485 after losing a unit to foreclosure. Another former condo owner is owed $45,423 for a unit in a condo tower along North Lake Shore Drive.

• "When you lose your property to foreclosure you think you lost everything," Cook County Circuit Court Clerk Dorothy Brown said. But sometimes they haven't. If a bank sells a foreclosed property for more than it was owed, the surplus belongs to the original owner. Nearly $18 million from foreclosed properties in Cook County alone is sitting in a fund waiting to be disbursed. "We've collected almost $400,000 this year from surplus sales," Brown said.

***

• With relatively few people coming forward, the clerk's office has debuted a website where foreclosed-upon families can begin to learn whether they are owed surplus mortgage funds. In spite of the effort and the high number of mortgage filings, only 37 individuals have gone through the process so far this year and the call continues to go out to distressed families who might have thousands of dollars coming their way. "We still have an average of almost 2,000 individuals on this list, so it's very difficult," Brown said. Individuals on the list are owed as little as 13 cents and others are owed as much as $460,000.

For the story, see Some Foreclosure Victims Due Thousands Of Dollars (Clerk's Office Holding Millions Owed To Former Homeowners).

Ongoing Probe Turns Up The Heat On Two Phoenix Cops Accused Of Ripping Off Homeowners Using Fraudulent Sale Leaseback Scam

In Phoenix, Arizona, KPHO-TV Channel 5 reports:

• For the past seven years, Tim and Ellie Gray have been forced to live with their parents. They are the latest victims to come forward claiming they were scammed by two Phoenix police lieutenants, Lee Brent Shaw and Mark Tallman. "They took our house, you know? They took our home. They were just lying to us all the way through and it's a big vicious scam. This in particular, because they were able to hide behind their badges," said Tim Gray.

• The Grays were facing foreclosure, so they signed a "quit claim" deed that they thought would keep them in their home. It's supposed to allow the Grays to repurchase their home over time. But after Better Choice Investments, run by Tallman and Shaw, took control of the Gray's property, the company didn't make the mortgage payments as promised. The Grays said Lt. Shaw even threatened them with eviction and jail time when they complained.

• They said Shaw said, "Get the (expletive) out of my house. It's my house now, not yours." Without warning, the Grays were suddenly being evicted. They were given only 15 minutes to grab what they could. "I got out with a pair of shoes and a bag of clothes," said Ellie Gray.

• The Grays showed CBS5 pictures of all of their belongings simply thrown about in the backyard and stacked haphazardly in the carport as Better Choice Investments gutted the home. In three days, they say Better Choice Investments destroyed or stole everything they owned. "Even our car. Our car was in the driveway. We lost everything," said Ellie Gray.

• Lts. Tallman and Shaw are currently facing civil punishment from the attorney general, and sources close to the investigation told CBS5 News the two will soon face new internal allegations of public corruption fraud and racketeering.

• "They need to be fired, first of all. They should not be police," said Ellie Gray. "It scares me because people are able to do it behind a badge. That makes me really scared. And I haven't talked about it to anybody until now," said Tim Gray.

• Lieutenants Tallman and Shaw are not currently facing any criminal charges, but the internal allegations include committing fraud against at least nine other officers who lost thousands as investors. If the allegations stick, the lieutenants will most likely lose their jobs. That investigation will be concluded after the attorney general gets a turn at them. That process should take about a month.

Source: Two Phoenix Cops Accused Of Fraud, Racketeering (Lieutenants Lee Brent Shaw And Mark Tallman Face Multiple Investigations).

See also, The Arizona Republic: Phoenix lieutenants face probe over real-estate business (Two Phoenix police lieutenants are under investigation after residents complained that some of the 120 real-estate purchases conducted by their off-duty business were unethical or illegal).

Feds Settle Civil Suits With Operators Of Loan Modification Rackets In Three Separate Cases

The Federal Trade Commission recently announced:

• Eight marketers are banned from selling mortgage modification or foreclosure relief services under settlements with the Federal Trade Commission. The FTC alleged that the marketers charged homeowners up-front fees and falsely claimed they could get their mortgage loans modified or prevent foreclosure on their homes. The settlements in three separate actions are part of the FTC’s ongoing efforts against scams that target financially distressed consumers.

The FTC settled with the following defendants:

• Federal Loan Modification Law Center and Steven Oscherowitz;
• Loss Mitigation Services, Dean Shafer, Marion Anthony “Tony” Perry, and Bernadette Perry, also known as Bernadette Carr and Bernadette Carr-Perry;
• Hope Now Modifications LLC, Hope Now Financial Services Corporation, Salvatore Puglia and Nicholas Puglia.

For the details of these cases and links to the relevant court documents, see Deceptive Marketers Banned from Selling Mortgage Relief Services; One Defendant Ordered to Pay $11.5 Million.

Use Of Obama Name & Likeness, Federal Logo Popular With Scammers Running Loan Modification Ripoffs

The New York Daily News reports:

• Scammers are using President Obama's mortgage relief program - and his photo - to squeeze bogus fees from homeowners trying to avoid foreclosure. Across the country, dubious loan modification firms are claiming affiliation with the Obama administration's $75 billion program to help struggling homeowners trim mortgage payments. Some are running websites with photos and video of Obama and the logos of federal government agencies.

***

• The hucksters mail solicitations to foreclosed homes in official-looking letters that make reference to the Obama program. For a hefty upfront fee, they offer to negotiate an Obama loan modification, but do virtually nothing to get payments lowered.

For more, see Scams use Obama's picture, federal logos to lure customers into phony loan modification programs.

Vegas Trio Charged With Ripping Off Homeowners Facing Foreclosure While Running Alleged Loan Modification Racket

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:

• Rena Starks was a homeowner advocate who said she wanted to stand up for Nevadans hit hard by our housing crisis. A TV commercial for her company, Homekeepers, said the business "modified all types of home loans." "Do you owe more on your mortgage than your home is currently worth," an announcer asked. "Are you on the verge or in foreclosure? Homekeepers can help." "If you're in trouble, call me," Starks said in the ad.

• Now, Starks is in trouble with the law. A criminal complaint alleges Rena Starks, her husband Terry, her daughter Tracey, and employee Lourdes Damian stole money from their clients. "There's at least $25,000 to $40,000 involved in this case," said Chief Deputy Attorney General Conrad Hafen. "There may be more."

• Hafen says the defendants would rip off homeowners who feared foreclosure by taking their money and not contacting the homeowners' lenders as promised. "This is clearly a case of individuals who are preying on the bad luck of other people," Hafen said.

For more, see Las Vegas Mortgage Broker Charged with Theft.