Whistleblower Lawsuits Recently Made Public Shed New Light On Bankster Industry Abuses

The Center for Public Integrity's iWatch News reports:

• Whistleblower lawsuits made public in recent weeks shed new light on abuses in the mortgage industry that led to — and continued well after — the housing crash in 2007.



• The cases suggest that fraud inside the banking industry continued years after the meltdown, some as late as 2011. They have been made public as federal officials put the finishing touches on the $25 billion mortgage fraud settlement with five major lenders.

***

• These cases highlight issues that have been explored by recent Center for Public Integrity investigations. One piece documented evidence that Countrywide worked to silence whistleblowers who tried to report forged documents, inflated income documentation and other misconduct. One of the highest-level employees to complain about fraud inside Countrywide was Mark Zachary, a former vice president who alleged appraisal problems similar to those described in Lagow’s lawsuit. Zachary and Bank of America reached a confidential settlement in 2009.



• Another Center story looked at how homeowners are still struggling to deal with a faulty mortgage modification process.



• The $25 billion mortgage fraud settlement by 49 state attorneys general and several federal agencies included Bank of America and Citibank, as well as JP Morgan Chase, Wells Fargo, and Ally Financial Inc. Although the formal papers have yet to be filed in court, the U.S. Department of Justice announced that under settlement, the majority of the funds would go to principal reductions and loan modifications to borrowers under water. And roughly 750,000 borrowers who lost their homes to foreclosure will receive $2,000.

For more, see New whistleblower cases allege continued bank fraud (Mortgage modifications and appraisal processes in question).

Co-Owner Of Racket That Ran 'Contract For Deed' Scam Cops Guilty Pleas To Multiple Charges Of Securities Fraud, Unlawful Merchandising Practices

In Sprinfield, Missouri, the Springfield News Leader reports:

• A former part owner of Greenleaf Companies has pleaded guilty to 10 counts of securities fraud and nine counts of unlawful merchandising practices.(1) Eric Christian Gagnepain, 39, of Springfield pleaded guilty Feb. 29 in Greene County Circuit Court to the charges for his role in running the Greenleaf Companies and The Real Estate Company in Springfield, said Attorney General Chris Koster. Gagnepain was indicted in February 2011.



• Gagnepain is the second officer of the company to plead guilty. Lane Sanders, former president of Greenleaf Companies, pleaded guilty to securities fraud and unlawful merchandising fraud charges in February 2011. Sanders’ sentence is pending. Gagnepain faces between seven and 10 years in prison, Koster said. His sentencing is set for Aug. 3.(1)

***

• Gagnepain solicited investors to enter into investment contracts under which investors would buy one or more new homes designated by Greenleaf, Koster said. Greenleaf Companies was responsible for the down payment, the closing costs and reselling the homes.



• Under the terms of the investment contracts, Greenleaf would pay the investor $10,000. Prosecutors say Gagnepain failed to advise investors of Greenleaf’s weak financial condition and failed to advise them that financial institutions were being misled about the true source of down payments.



• When Greenleaf and The Real Estate Company resold the homes, Gagnepain failed to advise the purchasers that the title to the homes were held by the investors and failed to advise the consumers when the homes were in danger of foreclosure, according to Koster

For more, see Greenleaf investigation leads to a second guilty plea (Eric Gagnepain is the second officer of real estate company to admit role in securities fraud, unlawful merchandising).

(1) For earlier posts on this contract for deed, home-flipping racket which describe the nature of the scam, see:

• Missouri AG Obtains $338K+ Judgment In Suit Against Alleged Contract For Deed, Payment Skimming Racket That Left Would-Be Homebuyers In Foreclosure,
• Straw Buyer Scheme Coupled With Subsequent Sale Using Contract For Deed Constitutes Sale Of Unregistered Security, Says Arkansas Securities Regulator,
• 21 Missouri Homebuyers File Suit Against Springfield Firm In Failed Contract For Deed Home-Buying Program,
• Missouri "Contract For Deed" Operator Hit With C&D Order By Securities Regulator, Preliminary Injunction By State AG,
• Missouri Feds, State AG, Local Cops Raid "Contract For Deed" Operator; Firm Subject To Numerous Complaints; Company Issues Public Statement,
• More Trouble For Missouri "Contract For Deed" Operator As Homeowners File Federal Suit Seeking $60M In Damages,
• Missouri Couple Sues "Contract For Deed" Operator For Allowing Home To Fall Into Foreclosure.

(2) According to the story, the cases for four other individuals indicted along with Gagnepain last February are pending. Those individuals are:

• Scott Allen Dasal, former president of The Real Estate Company;
• Misty May Perkins, former director of investor relations for Greenleaf;
• William David Strong, former director of finance for Greenleaf; and
• Robert Lee Batchman, former real estate broker for The Real Estate Company.

Shift In Loan Servicers, Mortgage Payment Confusion Leads To Foreclosure, Pending Eviction For South Florida Man

In Pompano Beach, Florida, WSVN-TV Channel 7 reports:

• A South Florida man is facing foreclosure after having life-saving heart surgery. Paul Crowley loves the view from his Pompano Beach condo, but how much longer he will be able to enjoy that view now hangs in jeopardy.



• Crowley now faces eviction. His problems began when he tried to remodify his nearly $750 a month loan to be able to pay for mounting medical costs. "A couple years ago, I had some very serious medical problems, including a quintuple bypass operation," said Crowley.



• Crowley said, when his mortgage got shifted to a different servicer he was told to stop paying to the original bank but never told who to write the checks out to next. "They told me they were going to tell me where they were going to send the new payments," said Crowley, "who the mortgage server was. They never did. It was to a collection agency, not a mortgage server."



• Crowley's foreclosure attorney calls this case extreme and is now fighting to save the condo. "Never communicated with Mr. Crowley regarding making new payments, and they moved immediately into foreclosure," said Johnny Gaspard.



• After years of arguing back and forth with several different entities, the bank officially foreclosed the unit [...]. "At this point, our next step is to file an objection to the foreclosure sale based upon the circumstances, based upon Mr. Crowley's case," said Gaspard. "We believe we'll be successful with it."



• Crowley is not sure what step he will take next if his home is foreclosed. "I don't know where I would go. I have no place to go, really. I just don't know what I would do," he said. Crowley and his attorney hopes to have a hearing. For now, Crowley lives in his condo, just like he has for the past 11 years.

Source: Man's home foreclosed after heart surgery.

Recent Federal Appeals Court Ruling Opens Major Can Of Worms For Banksters Violating HAMP Rules When Jerking Around Homeowners On Loan Modifications

From a press release Issued by the Chicago, Illinois law firm Edelson McGuire announcing their recent big win in Wigod v. Wells Fargo Bank, N.A., in which the U.S. Court of Appeals for the 7th Circuit ruled that, while no Federal cause of action arises when a loan servicer violates the Federal HAMP statute when it fails to modify a home loan, there is nothing in the Federal statute that prevents a homeowner from bringing a state cause of action against a servicer when a violation of HAMP occurs where said violation may constitute a violation of an existing state law, including a state consumer protection law(1) (the consumer protection law at issue in Wigod was the Illinois Consumer Fraud and Deceptive Business Practices Act - "ICFA"), or otherwise gives rise to a state law claim.(2)

• In a landmark decision that promises hope for millions of distressed homeowners across the Country, the United States Court of Appeals for the Seventh Circuit has held that borrowers have enforceable rights under their Home Affordable Modification Program ("HAMP") Trial Plan Agreements. Wigod v. Wells Fargo Bank, N.A., Appeal No. 11-1423 (7th Cir. Mar. 7, 2012).



• Reversing the dismissal of a putative class action complaint challenging Wells Fargo's HAMP modifications, the Court found that Plaintiff Lori Wigod – a Chicago homeowner who had alleged that Wells Fargo breached her HAMP Trial Plan despite her full compliance with its terms – could proceed on her claims for breach of contract and promissory estoppel.



• In the words of the Court, "In short, Wells Fargo's interpretation of the [Trial Plan] turns an otherwise straightforward offer into an illusion." The Court further upheld Wigod's claims for statutory and common law fraud against the bank, stating "Wigod alleges that Wells Fargo made and broke promises of permanent modifications to her and to thousands of other potential class members as well. If true, such a widespread pattern of deception could reasonably be considered a scheme under Illinois law and thus actionable as promissory fraud."



• Although over 80 lawsuits had been filed nationwide challenging the HAMP modification practices of several major banks, relatively few had made it beyond the pleadings, with District Courts dismissing cases in light of the HAMP's lack of a private right of action. The Wigod panel rejected such arguments, finding that no "end run" theory prohibited the claims and that Wigod's claims were not preempted.



• "This is an incredibly important decision for homeowners who have been subjected to Wells Fargo's home loan modification abuses," said attorney Steven L. Woodrow of Edelson McGuire LLC, who represents the Plaintiff/Appellant, Lori Wigod. "For tens of thousands of homeowners like Ms. Wigod it's been nothing but a nightmare of lost paperwork, endless hours on the phone with the bank, inconsistent explanations, and, ultimately, unjustified denials followed by threats of foreclosure," he said. "The Court should be commended for standing up for the rights of borrowers." Woodrow is the Chair of Edelson McGuire's Banking and Financial Services Practice Group.



• The Court itself acknowledged the far-ranging impact of its decision. As expressed in the concurring opinion of Senior Circuit Judge Kenneth Ripple, "Prompt resolution of this matter is necessary not only for the good of the litigants but for the good of the Country."(3)

For the press release, see SEVENTH CIRCUIT: Homeowners May Enforce Rights Under Home Affordable Modification Program ("HAMP") Trial Plan Agreements.

(1) See National Consumer Law Center: CONSUMER PROTECTION IN THE STATES: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes for an overview of state consumer fraud, unfair/deceptive trade practices statutes throughout the states.

(2) The three-judge appellate panel found that the "allegations support garden-variety claims for breach of contract or promissory estoppel" and that the homeowner "also plausibly alleged that Wells Fargo committed fraud under Illinois common law and engaged in unfair or deceptive business practices in violation of the ICFA."

(3) The binding effect of this court ruling by the 7th Circuit Court of Appeals is limited to all lower Federal courts in the states of Illinois, Indiana, and Wisconsin, but may be considered for its persuasive effect by other courts. To find out which Federal appeals court has jurisdiction over appeals from the lower Federal courts in your state, you can check the U.S. Circuit Court of Appeals Map.

Philly Feds Pinch "Slumlord Millionaire" In Connection w/ Allegedly Peddling Shabby Homes In Rent To Own Scam Leaving Wanna Be Homebuyers In F'closure

In Philadelphia, Pennsylvania, the Philadelphia Daily News reports:

• FOR THE alleged victims of Philadelphia's homegrown "Slumlord Millionaire," federal prison for him would be too comfy.



• Robert Coyle Sr. - the real-estate mogul who was widely known for peddling shabby homes to the city's poorest and robbing them of their dream of home ownership - was indicted last week on charges of defrauding banks out of $10 million. If convicted, Coyle could face up to 120 years in prison and $4 million in fines.



• "I'm liking that he might have to pay $4 million in fines - he'll feel that," Inez Ramos, an alleged Coyle victim, said last night. "But if he goes to prison, he'll still have a roof over his head. He is not going to get cold or worry that he's not going to have enough money for food. He'll have a place to sleep and he'll get three meals a day, and taxpayers like us, we'll have to pay for it."



• Ramos is one of dozens of cash-strapped tenants, mostly in Kensington and Port Richmond, who claim that Coyle promised that they could rent-to-own their homes. The hopeful homeowners used what little money they had to make Coyle's rickety homes livable. They spent their life savings to install sinks, toilets, windows, walls, roofs, kitchens and front doors.



• After all that, instead of getting deeds, they got slapped with foreclosure notices and faced eviction.



• In an October 2009 article, the Daily News detailed how Coyle, who ran Landvest and at least 11 other companies, obtained more than $15 million in bank loans on some 300 homes that he owned or rented out, then stopped making bank payments and padlocked his Port Richmond real-estate office.(1)

For the story, see They want 'slumlord' to feel their pain.

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):

• Indictment: U.S. v. Robert Coyle, Sr.;


• Press Release: New Jersey Man Charged With Loan Fraud.

(1) For earlier posts on ths story, see:

• Philly DA, Feds Probe "Dream Killer" In Suspected Rent To Own Scam Peddling Shabby Homes To City's Poorest; Victims Paid Thousand$, Now Face The Boot;



• Probe Continues Into Suspected Philly Rent-To-Own Racket; Unsophisticated Would-Be Buyers Duped Into Fixing Up Decrepit Homes & Ended In Foreclosure.

Buyers Allege Sellers In Possible Contract For Deed Scam Pocketed Monthly Payments Intended To Satisfy Existing Mortgage, Leading To F'closure Threat

In Jefferson County, Texas, The Southeast Texas Record reports:

• Two Jefferson County men have filed suit against the people who sold them their property for defaulting on the lien.



• Mario Espinola and Tomas Espinola claim they purchased property [...] in Port Arthur from the defendants for $125,000 on April 1, 2011. They say they put down $62,500 at the time of the purchase and have been making monthly payments of $5,494.74.



• Despite the Espinolas' payments, defendants Lloyd P. Broussard and Envirotech Services defaulted on the lien on the property, according to the complaint filed Feb. 21 in Jefferson County District Court. In turn, the lien holder, Great Central Mortgage Acceptance Mortgage Co., threatened to sell the property, the suit states."Plaintiffs had to pay four months of note payments, as well as attorneys' fees and late fees, to cure the default and prevent the property from being sold," the complaint says.



• "Additionally, Plaintiffs have continued to pay the monthly note owed to Great Central Mortgage Acceptance Company by defendants so they will not lose the property in which they have invested a large sum of money."



• In their complaint, the Espinolas allege breach of contract and fraud against the defendants.

Source: Homebuyers forced to make additional payments, suit claims.

State Consumer Affairs Advocate Targets Three Unlicensed Loan Modification Outfits For Allegedly Ripping Off 270 New Jersey Homeowners Out Of $400K

In Trenton, New Jersey, newjerseynewsroom.com reports:

• The state Division of Consumer Affairs has issued violation notices to three companies and their operators who took money from consumers for mortgage modification services without being licensed by the state as legally required.(1)



• None of the 270 consumers who have filed complaints were able to get their mortgages modified, Consumer Affairs officials said Friday. The consumers collectively paid $398,059 to the companies.

***

• The notices state that each of the companies and operators violated the state’s Consumer Fraud Act by committing “unconscionable” business practices through not being licensed as debt adjusters by the state.



• “The law is clear – debt adjusters must be licensed by the state Department of Banking and Insurance,” Attorney General Jeffrey S. Chiesa said. “We allege that these parties broke the law. We’ve taken action to hold each accountable and to get money returned to the consumers who were deceived.”



• In addition to restitution, each of the three companies must pay a $5,000 civil penalty to the state and stop advertising, offering to sell, and selling debt adjustment services. Each has the option to accept the settlement terms or contest the notice at an administrative hearing with the Division of Consumer Affairs.

***

• In February, Consumer Affairs won a $469,500 trial decision against two corporate defendants and two individuals accused in a lawsuit of defrauding financially struggling homeowners through a variety of deceptive mortgage foreclosure “rescue” practices.

For the story, see 3 unlicensed mortgage modifiers accused of taking $400K from New Jerseyans (270 people complain they never received help).

(1) Consumer Affairs issued the violation notices to the following to:

• Secure Property Solutions and Joseph A. Gembala, III and Associates, formerly located in Barrington; 250 complaints; $364,147;
• Fresh Start Home Modifications and Thomas R. Mansell, Jr., formerly located in Woodbury Heights; 19 complaints; $32,811;
• Financial Investigators of America and Michael Quellman, formerly located in Red Bank; 1 complaint; $1,100 .

California AG Pinches Trio Of Attorneys For Allegedly Pocketing Illegal Upfront Fees, Peddling Bogus Loan Modification, Forensic Loan Audit Services

From the Office of the California Attorney General:

• Attorney General Kamala D. Harris [] announced the arrests of the owners and managing attorney of a law firm that took thousands of dollars in up-front loan modification fees for services that were never performed for homeowners, many of whom ended up losing their homes.



• Gregory Flahive of El Dorado Hills, 39, Cynthia Flahive of Folsom, 41, and Mike Johnson of Elk Grove, 42, were arrested [] on 19 felony counts, including grand theft by false pretense, conspiracy and false advertising. They were booked at the Sacramento County Jail with bail set at $50,000 bail each.



• "Homeowners facing foreclosure are being targeted by predators, including those who use their law license to gain credibility and scam innocent Californians," Attorney General Harris said. "My office's Mortgage Fraud Strike Force is dedicated full-time to cracking down on these deceptive practices and protecting homeowners from fraud like this."



• Gregory and Cynthia Flahive, ex-spouses and owners of Flahive Law Corporation, and Johnson, the firm's managing attorney, took up-front fees of up to $2,500 from homeowners in Placer, Sacramento, Butte and Yuba counties for loan modification services that were never performed.



• In California, it is illegal for foreclosure consultants to collect money for services before they are performed. The Folsom-based law firm advertised their services on flyers, radio and televised infomercials, offering to provide loan modification services and help clients with bankruptcy, IRS tax relief and credit card modification.



• In a 2010 infomercial, the Flahives said that, as a law firm, they had "extra leverage" with the banks. They described one of their unique services as a "mortgage violation audit" in which they reviewed a client's loan documents to find bank violations that could be used as leverage to modify a client's home loan.



• In fact, the investigation revealed that, in some instances, the client's lender had no record of contact with the Flahive Law Corporation.

For the California AG press release, see Attorney General Kamala D. Harris Announces Arrests of Three Attorneys in Sacramento-area Loan Modification Scam.

Sale Leaseback Peddlers Continue Feeling Heat As Queens DA Indicts Duo For Grand Larceny, Criminal Possession-Stolen Property, Records Falsification

In New York City, Reuters reports:

• A disbarred lawyer was charged [] with taking part in a real estate scam that allegedly bilked a Queens couple out of more than $65,000, the Queens district attorney's office announced Friday.



• Thomas Zacharia, 38, a former lawyer from Staten Island, and investor Jose Toral, 28, were arraigned [] before Acting Supreme Court Justice Fernando Camacho on a seven-count indictment charging them with larceny, criminal possession of stolen property and falsifying business records.



• Zacharia was also charged with criminal facilitation, according to the DA's office. He has pleaded not guilty, according to his lawyer, Stuart Tarshis of Tarshis & Hammerman, who said the charges against his client are without merit.



• According to the DA, a Queens couple agreed in May 2007 to sell their residence to Toral with the understanding that they could continue living in their home while making mortgage payments to the investor. After a year, they would be able to re-purchase their property, while proceeds from the sale were used to pay down their debt, the DA's office said.



• Zacharia allegedly helped Toral arrange for the sale of the property and handled funds given by the couple to Toral, according to the DA's office.



• After the sale of the residence was completed, the couple made monthly cash payments to Toral, prosecutors said. But in 2008, Toral allegedly stopped making monthly payments on the mortgage, and the property went into foreclosure.



• In all, Toral and Zacharia kept $65,000 from the sale of the couple's home,(1) the DA's office said. "[T]he defendants arranged for only a portion of the homeowners' debts to be paid off while retaining a major portion of the mortgage proceeds for themselves," Queens District Attorney Richard Brown said in a statement.



• Zacharia was disbarred in 2008 by the Appellate Division, Second Department. According to the Second Department's decision, Zacharia was under investigation by the local grievance committee for two complaints of professional misconduct alleging that checks from his attorney trust account had bounced due to insufficient funds.



• An attorney for Toral could not immediately be reached for comment [...]. If convicted on all charges, both men face up to 15 years in prison, according to the DA's office.(2)

Source: Lawyer charged in Queens real-estate scam

For the Queens County DA press release, see DA Brown: Real Estate Investor And Attorney Indicted In Alleged Mortgage Fraud Scheme Involving Queens Village Couple (Face Up To 15 Years In Prison).

(1) According to the Queesn DA press release, authorities allege that the victims were represented at the transaction closing by Zacharia. To the extent the now-disbarred attorney Zacharia is found guilty of playing a role in this alleged ripoff and fails to cough up restitution, and inasmuch as Zacharia was a licensed practicing attorney at the time of the alleged ripoff, it may be that the victims in this case could turn to The Lawyers’ Fund For Client Protection Of the State of New York and request that it step up and cover at least some of the losses they suffered. The Fund exists to protect legal consumers from dishonest conduct in the practice of law in the state, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, and to promote public confidence in the administration of justice in the Empire State. It attempts to secure these goals by, among other things, reimbursing client money that is misused in the practice of law.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (now includes Canadian attorney ripoff funds; 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) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Scammer Gets 41 Month Stay In Federal Facility For Peddling Predatory Sale Leaseback Deals To High Equity Maryland Homeowners Facing Foreclosure

From the Office of the U.S. Attorney (Baltimore, Maryland):

• U.S. District Judge William D. Quarles, Jr. sentenced Charles Donaldson, age 58, of Bowie, Maryland, [] to 41 months in prison followed by three years of supervised release for conspiracy to commit wire fraud in connection with a mortgage fraud scheme which caused the issuance of over $4.7 million in fraudulent mortgage loans and homeowners to lose over $1.2 million in equity in their homes.

***

• “Charles Donaldson promised to rescue homeowners who were behind in their mortgage payments, but instead he stole the equity from their homes and used it to buy his own house, “ stated U.S. Attorney Rod J. Rosenstein.

***

• According to Donaldson’s plea agreement and court documents, co-conspirator Mary Dean was a loan originator and operated Sunset Mortgage Company from her home. Donaldson, who was also a loan originator, steered clients to Dean’s mortgage brokerage franchise.



• Beginning in 2005, Donaldson identified homeowners who were in financial distress because they were unable to make the mortgage loan payments on their homes and enticed the homeowners to participate in a foreclosure “rescue” plan.



• Donaldson told the homeowners that he would locate “investors” to purchase their homes and thereafter, the homeowners would pay rent to the “investors,” who would pay the mortgage and receive a small percentage of the homeowners’ equity; that the remainder of the homeowners’ equity would be transferred to Donaldson, who would hold it in escrow; and that the homeowners would buy back their properties after 12 to 18 months, giving them time to “repair” their finances and credit while they continued to live in their homes.(1)

For the U.S. Attorney press release, see Loan Officer Sentenced in Fraudulent Mortgage “Rescue” Scheme Resulting in Losses of over $1.2 Million To Homeowners in Financial Distress (Conspirators Obtained Over $4.7 Million in Fraudulent Mortgage LoansLoan Officer Used Money Taken From Distressed Homeowners to Buy His Own Home).

(1) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Sale Leaseback Peddler Hit With Allegations Of Fair Housing Act Violations In Civil Suit Brought By Screwed-Over Virginia Couple

The Lawyers’ Committee for Civil Rights Under Law(1) announces:

• On March 6, 2012, K&L Gates, LLP, the national Lawyers’ Committee for Civil Rights Under Law (Lawyers’ Committee), and the Washington Lawyers’ Committee for Civil Rights and Urban Affairs (Washington Lawyers’ Committee) filed a lawsuit on behalf of a Woodbridge, Virginia couple who have been victimized by mortgage rescue scammers that allegedly prey on vulnerable homeowners by targeting Hispanics in Northern Virginia. As a result of the alleged scam, the couple has lost title to their home and thousands of dollars.



• The complaint, filed in the United States District Court for the Eastern District of Virginia, alleges that the mortgage rescue scam in this case is operated by Bella Homes LLC (Bella), a Georgia-based company. As alleged in the complaint, local representatives of Bella specifically targeted the scam to Hispanic people in Northern Virginia, like the Virginia couple, who are Hispanic and for whom English is a second language.



• Bella, it is alleged, induced the Virginia couple, who have limited understanding of financial matters, to give the company title to their home for no money; they then entered into a “lease agreement” with Bella whereby the couple paid thousands of dollars to “rent” their home while Bella allegedly worked to purchase their mortgage.



• The complaint further alleges Bella did nothing to help the couple avoid foreclosure, and the representations made by Bella to induce the couple into this scheme, including advice that they need not continue making their mortgage payments, were false. As a result of the scam, the couple has defaulted on their primary mortgage, subjecting them to a risk of foreclosure and of damage to their credit.



• The targeting of this scam on Hispanics is alleged to violate the anti-discrimination provisions of the Fair Housing Act. This is one of first cases filed in federal court that alleges a violation of the Fair Housing Act based on a mortgage rescue scam.



• In addition, the scam allegations in this case contain many hallmarks identified by federal enforcement agencies as typical of predatory mortgage modification and foreclosure rescue scams.



• In fact, the United States Attorney and the state Attorney General in Colorado recently initiated an enforcement action against Bella for similar scamming operations throughout the country. In the Colorado case, Bella agreed to a preliminary injunction ceasing further operations and transferring approximately $500,000 to the government, pending final resolution of the case or further orders from the court (go here for lawsuit: U.S. v Bella Homes LLC, et al.).(2)

For more, see Lawyers' Committee & Partners File Suit Against Bella Homes LLC for Mortgage Rescue Scam Targeted at Hispanics.

For the lawsuit, see Viera v. Bella Homes, LLC, et al.

(1) The Lawyers’ Committee for Civil Rights Under Law is a nonpartisan, nonprofit organization formed in 1963 to involve the private bar in providing legal services to address racial discrimination.

(2) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Some Defaulting Homeowners Make The Best Out Of Tough Situation As Banksters Choke On Their Own Foreclosures

The New York Times reports:

• Forced by the harsh realities of the real estate market, lenders are increasingly likely to allow defaulting owners to remain in their homes — a change in attitude and strategy that is helping to buoy some neighborhoods while further slowing the nation’s foreclosure process.



• Some lenders are now willing to make deals with owners to let them stay after defaulting, offering to pay home insurance, for example, while the resident pays for utilities. Other lenders simply look the other way, quietly putting off foreclosure sale dates, knowing that the costs of the ordeal probably exceed the diminishing value of the properties.

***

• As a result, the relationship between many borrowers and lenders is softening from outright animosity to something that more resembles a détente.



• Michelle Murray-Clark is one of the beneficiaries — or so she calls herself on a good day. A grocery clerk who found work last month after three years of unemployment, Ms. Murray-Clark has not made a mortgage payment in 40 months. American Home Mortgage Servicing, the loan processor, has not taken steps to evict her and is working on a third attempt at a loan modification.



• The company is also paying insurance on her little house with the blue aluminum siding near downtown Orlando. They talk every week.

For more, see When Living in Limbo Avoids Living on the Street.

State AG Foreclosure Settlement: An Epic Failure Of Law

Barry Ritholtz, chief executive of FusionIQ, a quantitative research firm, writes:

• After many months of wrangling, a foreclosure settlement has been reached between 49 state attorneys general and a consortium of banks. It is an epic failure of law and a triumph for bank attorneys. It will accomplish little of value, as I’ll explain. First, let’s recall what the “robosigning” foreclosure scandal was all about.

For more, see Foreclosure settlement a failure of law, a triumph for bank attorneys.

Civil Rights Feds Continue Stepping Up In Fighting Housing Discrimination Against Those With Documented Need For Service Animal

From the Office of the U.S. Attorney (Brooklyn, New York):

• Loretta E. Lynch, United States Attorney for the Eastern District of New York, [] announced the filing of a federal civil rights complaint against the Woodbury Gardens Redevelopment Company Owners Corporation (“Woodbury Gardens”) for violations of the Fair Housing Act. Woodbury Gardens is a 214-unit cooperative residential complex for senior citizens located in Woodbury, New York.



• The Fair Housing Act prohibits discrimination against people with disabilities and requires residential property owners to make reasonable accommodation to allow people with disabilities and their families to use and enjoy their homes.



• According to the government’s complaint, Woodbury Gardens discriminated against Sandra Biegel, a now-deceased disabled senior citizen, by refusing to make reasonable accommodation for her multiple disabling conditions, including severe respiratory problems, depression, anxiety, cirrhosis, diabetes and decreased vision and hearing.



• In particular, the complaint alleges that Woodbury Gardens refused to waive its no pet policy to allow Ms. Biegel to keep her pet comfort animal, a miniature schnauzer, despite medical documentation from four of Ms. Biegel’s health care providers attesting to her need for the animal in coping with her disabilities.



• Woodbury Gardens is alleged to have threatened Ms. Biegel and her husband with eviction and fines, which forced her to give up the animal. Ms. Biegel died a few weeks later. The complaint alleges that even after the death of Ms. Biegel, Woodbury Gardens pursued Mr. Biegel for legal fees and fines, which he paid.



• The lawsuit seeks injunctive relief requiring Woodbury Gardens to bring its practices into compliance with the Fair Housing Act, as well as damages to compensate Ms. Biegel’s estate and her husband for the harm caused by defendant’s discriminatory practices.



• “Our seniors with disabilities want what all seniors want -- to live with dignity, maintain mobility, and retain their connections to the world. Comfort animals play an essential role in helping disabled seniors do just that. Sadly, Mrs. Biegel’s final days were bereft of this vital assistance, due to the actions, as alleged, of the defendant. Under the Fair Housing Act, individuals with disabilities are entitled to reasonable accommodation, and this includes the right, where appropriate, to have a comfort animal reside with them,” stated United States Attorney Lynch. “Building owners or co-op boards that fail to respect the rights of individuals with disabilities will be held to account for their failure to comply with the law.”

For the U.S. Attorney press release, see United States Files Civil Suit Against Long Island Co-Op For Violating Fair Housing Act.

For the lawsuit, see U.S. v. Woodbury Gardens Redevelopment Company Owners Corporation.

Oregon AG, Landlord, Agent Settle Housing Discrimination Charges Involving Renters w/ Kids; 6 Families Pocket $35K, Non-Profit Law Firm $10K

From the Office of the Oregon Attorney General:

• Attorney General John Kroger [] announced an agreement that resolves housing discrimination allegations against the owners and managers of a Southeast Portland apartment complex.

***

• The Department of Justice received several complaints about housing discrimination from current and former tenants with families at Wah Mai Terrace Apartments on Southeast Stark Street. Tenants alleged that Wah Mai Terrace Inc. and property manager, Norris & Stevens, engaged in a pattern or practice of discrimination against families with children.



• Once made aware of the allegations, Norris & Stevens and Wah Mai Terrace Apartment stepped forward to cooperatively resolve fair housing claims. Under the agreement [...], Wah Mai and Norris & Stevens have agreed to remove policies from tenant rules and regulations that prohibit, among other things, children from riding bicycles, tricycles, "Big Wheels," skateboards or roller skates on the property, policies that prohibit children from having toys on private patios, or enforcement of policies that restrict where children can play on the property.



• These policy changes will apply to approximately 8300 units managed by Norris and Stevens. Wah Mai and Norris & Stevens will participate in fair housing trainings and purchase a playground structure for the center courtyard area at Wah Mai Terrace Apartments. Wah Mai and Norris and Stevens further agreed to refrain from collecting on fines and other tenant debts that accrued as a result of enforcement of potentially unlawful policies.



• The agreement also requires Wah Mai and Norris & Stevens to pay a total of $35,000 to 6 current and former tenants. The companies will pay attorney fees and costs of $20,000 to the Department of Justice and $9,816.36 to Legal Aid Services of Oregon.(1)



• "I want to thank Legal Aid Services of Oregon for its help in resolving claims of unlawful housing practices," said Attorney General Kroger. "Discrimination against families is unacceptable."

For the Oregon AG press release, see Civil Rights Agreement Requires Portland Apartment Complex Owners To Cease Discriminatory Practices And Pay $55,000 (Wah Mai Terrace Apartments agrees to eliminate policies that discriminate against children).

(1) Legal Aid Services of Oregon is a non-profit law firm that provides representation on civil cases to low-income clients throughout Oregon.

Hollywood To Unleash Annoying 'Robo-Call' Program In Effort To Combat Roadside Bandit Signs Peddling Foreclosure Scams, Real Estate, Junk Cars, Etc.

In Hollywood, Florida, The Miami Herald reports:

• You see them everywhere — those unsightly and illegal signs advertising companies looking to buy homes or rescue someone from foreclosure that clutter public right-of-ways. Most of them give phone numbers, telling people to call.



• And Now Hollywood Mayor Peter Bober is on a mission to give them what they want — calls, lots of ’em. This week, the city started using a robo-call system to plug in the numbers advertised on signs. The robo-calls will dial the number over and over again, until the company pays a fine for putting the signs up.



• The first offense is $75, the second is $150, the third is $250 and then if there are additional offenses the business must appear in front of a magistrate. “I think this is an opportunity to beat these entrepreneurs at their own game,” Bober said, saying offenders can receive as many as 20 calls a day. “They wanted calls, now they are going to get them.”



• Bober began his mission two years ago with a contest meant to remove the signs. He promised the person who removed the most illegal signs and brought them into City Hall would receive $500. Now, he’s urging residents to participate in the calling campaign.



• “When you see snipe-signs littering the city, I want you to call the number and tell the nice person who answers to stop littering public rights-of-way and remove their ridiculous, plastic, snipe signs,” he wrote in the city newsletter New Horizons.



• Snipe signs are any type of makeshift sign advertising anything from junk cars to real estate to education courses. Although they pop up everywhere, there is a forest of them in the medians and along the sidewalks of main thoroughfares such as Dixie Highway and State Road 441.



• Hollywood Police Maj. Joseph Healey said the signs — which are prohibited by city code — have been a drain on the code enforcement department, with the nearly dozen officers starting everyday with removing the eyesores.

For the story, see ‘Robo-calls’ are Hollywood’s weapon against illegal signs (Companies that advertise with signs stuck in the median may soon be getting more calls than they can handle).

Evicting Landlords That Refused To Be Denied

The New York Post reports:

• There’s a reason they call it a mobile home. When a man who lived in a camper at a Titusville, Fla., trailer park tried to stave off eviction by locking himself inside, the park owner got rid of him by towing the trailer away — with the man inside — all the way to the next county.

***

• In an even weirder eviction, an Idaho landowner got tenants out of a house by tearing it down with them inside. The owner allegedly used a tractor to rip apart the house. Oh, and the tenants refused to testify at the landlord’s trial — because they don’t recognize the legitimacy of the government.

Source: Weird But True (2nd & 3rd blurbs from the top).

7th Circuit: HAMP Violations May Be Actionable By Homeowners Under State Laws Prohibiting Consumer Fraud, Deceptive & Unfair Practices

From a recent ruling from the U.S. Court of Appeals for the 7th Circuit:

• We are asked in this appeal to determine whether Lori Wigod has stated claims under Illinois law against her home mortgage servicer for refusing to modify her loan pursuant to the federal Home Affordable Mortgage Program (HAMP). The U.S. Department of the Treasury implemented HAMP to help homeowners avoid foreclosure amidst the sharp decline in the nation’s housing market in 2008. In 2009, Wells Fargo issued Wigod a four-month “trial” loan modification, under which it agreed to permanently modify the loan if she qualified under HAMP guidelines.



• Wigod alleges that she did qualify and that Wells Fargo refused to grant her a permanent modification. She brought this putative class action alleging violations of Illinois law under common-law contract and tort theories and under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA).



• The district court dismissed the complaint in its entirety under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Wigod v. Wells Fargo Bank, N.A., No. 10 CV 2348, 2011 WL 250501 (N.D. Ill. Jan. 25, 2011).



• The court reasoned that Wigod’s claims were premised on Wells Fargo’s obligations under HAMP, which does not confer a private federal right of action on borrowers to enforce its requirements.



• This appeal followed, and it presents two sets of issues. The first set of issues concerns whether Wigod has stated viable claims under Illinois common law and the ICFA. We conclude that she has on four counts.



• Wigod alleges that Wells Fargo agreed to permanently modify her home loan, deliberately misled her into believing it would do so, and then refused to make good on its promise. These allegations support garden-variety claims for breach of contract or promissory estoppel.



• She has also plausibly alleged that Wells Fargo committed fraud under Illinois common law and engaged in unfair or deceptive business practices in violation of the ICFA.

***

• The second set of issues concerns whether these state-law claims are preempted or otherwise barred by federal law. We hold that they are not. HAMP and its enabling statute do not contain a federal right of action, but neither do they preempt otherwise viable state law claims.



• We accordingly reverse the judgment of the district court on the contract, promissory estoppel, fraudulent misrepresentation, and ICFA claims, and affirm its judgment on the negligence claims and fraudulent concealment claim.(1)

For the entire ruling, and the court's reasoning, see Wigod v. Wells Fargo Bank, N.A., No. 11-1423 (7th Cir. March 7, 2012). (If link expires, TRY HERE).

Thanks to Deontos for the heads-up on this court ruling.

(1) Unless ultimately reversed by the U.S. Supreme Court, this ruling supports the proposition that bankster violations of HAMP and its enabling statute, while not actionable by homeowners under Federal law, may be actionable under an applicable state consumer fraud, or unfair/deceptive trade practices statute.

See National Consumer Law Center: CONSUMER PROTECTION IN THE STATES: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes for an overview of state consumer fraud, unfair/deceptive trade practices statutes throughout the states.

Whistleblower Suit: BofA Routinely Pretended To Lose Homeowners' Docs, Failed To Credit Payments During Trial Mods, Etc.

In Brooklyn, New York, Reuters reports:

• Bank of America NA prevented homeowners from receiving mortgage-loan modifications under a federal program in order to avoid millions of dollars in losses while benefitting from financial incentives for participating in the program, according to a complaint unsealed in federal court Wednesday.



• The suit is the second whistleblower complaint unsealed so far with apparent ties to the $1 billion False Claims Act settlement announced by Bank of America and the U.S. Attorney's Office for the Eastern District of New York on February 9.

***

• The complaint unsealed Wednesday was filed by whistleblower Gregory Mackler, a Colorado resident who said he worked alongside Bank of America executives while an employee at Urban Lending Solutions, a company to which Bank of America contracted some of its HAMP work.



• While working at Urban Lending, Mackler said he saw BofA and its loan servicing subsidiary, BAC Homes Loans Servicing LP, implement "business practices designed to intentionally prevent scores of eligible homeowners from becoming eligible or staying eligible for permanent HAMP modification."



• The bank and its agents routinely pretended to have lost homeowners' documents, failed to credit payments during trial modifications and intentionally misled homeowners about their eligibility for the program, the complaint alleged.



• BoA let through just enough HAMP modifications to avert suspicion and allay congressional critics, while not enough to incur any substantial losses to its own bottom line, according to the complaint.



• "In other words, BoA has had it both ways. BoA has continued to maximize the value of its mortgage portfolio with anti-HAMP modification practices and managed to make money by committing fraud on homeowner," the lawsuit said.

***

• In February, a whistleblower complaint was unsealed from Kyle Lagow, a former employee in a Countrywide appraisal unit which detailed allegations of Countrywide's "corrupt underwriting and appraisal process." Bank of America purchased Countywide in June 2008.



• Under the False Claims Act, successful whistleblower complaints can earn that whistleblower up to 25 percent of the settlement amount.



• According to the docket, the U.S. Department of Justice has until March 16 to decide whether to intervene in both the Mackler and Lagow case. The case is United States of America v. Bank of America NA et al., in the U.S. District Court for the Eastern District of New York, no. 11-3270.

For the story, see Whistleblower says BofA defrauded HAMP.

Ex-Home Flipping King Describes Massive C. Fla. Mortgage Fraud In Effort To Belly Up To Feds, Throw Dozens Under The Bus, Cut Himself Sweet Plea Deal

In Tampa, Florida, the Sarasota Herald Tribune reports:

• At the height of the real estate boom, Craig Adams was a wealthy man. [...] But Adams' wealth was all built on illegal real estate flips and millions upon millions of borrowed money. When banks stopped lending with a precipitous drop in real estate during late 2006 and early 2007, everything Adams had once viewed as an asset soon became a liability.



• Desperate to come up with cash to make interest payments of more than $100,000 per month, he turned from cheating banks out of money to cheating his friends and longtime business associates.



• "The time had come when it was every man for himself," Adams testified this week in U.S. District Court, where he has been recounting his role as the mastermind of one of the largest and longest-lasting flipping fraud cases in Florida history. "I had to protect my mother and my aunt. I had to protect my interests."



• Adams began borrowing heavily from a long list of financial backers and business associates, [...]. At the same time, he refused to distribute about $200,000 to his protégé and chief co-conspirator, Rich Bobka, and he drafted bogus investment documents to defraud a friend of 20 years — David Oriente — out of nearly $500,000. While the cash he raised allowed him to delay the inevitable for a few months, the consequences of his actions are still being felt today in Southwest Florida.



• If he had not cheated Oriente, there is at least the possibility that Adams would not have been indicted. There also is the possibility that the extent of his crimes and the involvement of at least 90 of his friends and business associates might have remained at least partially hidden.



• But when Oriente threatened to go to police, Adams turned himself in and began to help the government round up the participants in his 11-year crime spree.(1)



• So far, 15 have been indicted and pleaded guilty, while three others [...] have opted to go to trial. This week, during their trial, there also were strong indications that the government is not done with the case, and that other co-conspirators may yet be indicted.



• During his three days on the stand, Adams has named 70 people who he said were involved in the scheme — a number that includes 14 loan officers, four title agents, four attorneys and a smattering of other key real estate, investment and accounting professionals. Adams explained how he and these dozens of others inflated real estate prices by flipping properties to one another. He recounted how that allowed them to get larger loans than they could have otherwise by lying about their income and assets on loan applications.(2)

For more, see Adams describes turning on co-conspirators in flip fraud.

(1) "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the prosecutor's office' that breaks out among participants in an 'about-to-fall-apart' criminal conspiracy).

(2) Another example of a squealing schemer abandoning a conspiracy, not unlike a filthy rat jumping off a sinking ship, winning the race to the prosecutor's office and taking down fellow co-conspirators by 'throwing them under the bus' to score a better break on a plea deal. Vrooooom!!!

Scam Targets Distressed Homeowners By Peddling Applications For Loan Help From Unwitting, Legitimate Non-Profit For As Much As $900 A Pop

In Sacramento, California, the Sacramento Business Journal reports:

• Another scam is making the rounds, this one targeting distressed homeowners. Scammers call homeowners, offering help to save their homes with an application for help from Keep Your Home California, bilking the victims for as much as $900.



• But applying for help from Keep Your Home California is always free, from phone calls to getting mortgage help, according to a news release from the organization.



• To avoid potential scams, the organization’s officials ask homeowners to call directly to get information about assistance with mortgages, at 888-954-5337.



• Keep Your Home California, which is federally funded, has helped about 12,000 homeowners in the state keep their homes.

For the story, see Scam targets distressed homeowners.

Brooklyn Trial Judge Indefinitely Suspends F'closure After Bankster Puts Two Separate Notes & Assignments Into Evidence To Support Same Action

In a recent ruling by Brooklyn, New York trial court Justice Herbert Kramer, a foreclosure action was suspended indefinitely when two separate notes with attendant assignments were put into evidence by the foreclosing bankster in support of said foreclosure action.

Judge Kramer was apparently pissed off enough by the apparent fraud that he announced in his ruling that he reporting the matter to the District Attorney, Kings County, the Attorney General of the State of New York and the U.S. Attorney for the Eastern District of New York, presumably for possible criminal prosecution.(1)

The attorneys representing the bankster in this case who will undoubtedly have a few questions to answer when criminal investigators hunt them down (presumably after they wipe the egg off their faces) are Alissa L. Wilson, Esq., and the law firm Shapiro, DiCaro & Barak, LLC, 250 Mile Crossing Blvd., Rochester, NY 14624.

For Justice Kramer ruling, see HSBC Bank USA, N.A, v. Sene, 2012 NY Slip Op 50352 (NY Sup. Ct. Kings County, February 28, 2012).

Thanks to Deontos for the heads-up on the court ruling.

(1) The following excerpt provides an insight into Justice Kramer's feelings with regard to the foreclosure fraud problem and the rampant littering taking place in courtrooms committed by the banksters with their phony document filings:

• This Court emphatically now joins the judicial chorus who have been wary of the paperwork supplied by plaintiffs and their representatives. There is ample reason for Chief Judge's requirement for an attorney affirmation in residential foreclosure cases. As stated by Chief Judge Jonathan Lippman,"we cannot allow the courts in New York State to stand idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs-such as a family home-during this period of economic crisis."

S. Fla Realtors Make 'Bank-Owned' Status Mandatory Disclosure To Buyers, Other Agents In Response To Banksters' Practice Of Withholding Ownership Info

In West Palm Beach, Florida, The Palm Beach Post reports:

• Starting [this week], a service used by real estate agents to list homes for sale will require that agents disclose whether a bank owns the property. The change comes two days after The Palm Beach Post reported that some banks, including Wells Fargo, tell real estate agents not to disclose the bank's ownership on the Multiple Listing Service.



• Until now, the MLS in this region did not require agents to describe a home as being "bank owned," but in other parts of the country, the information is required. Some agents who sell bank-owned property privately said they feared losing business if they went against the wishes of the banks.



• Last week, Tyler Smith, vice president of REO Community Development for Premier Asset services, a Wells Fargo division that sells bank-owned property, said the directive to agents was done so buyers would not avoid bank-owned real estate. Smith said Wells Fargo has been improving the condition of its properties.



• Even though a home's ownership can be obtained through public records, some agents say they would prefer to have the information disclosed on the MLS before they take a client to a home.

For more, see Starting today, MLS real estate holdings must disclose bank ownership.

See also, Agents advised to keep 'bank-owned' quiet.

Florida Federal Judge 'Green-Lights' Force Placed Insurance Class Action Suit Against Wells Fargo, QBE

American Banker reports:

• A class action just approved in federal court involving force-placed insurance(1) increases the likely cost to banks in terms of reputational damage and cash settlements.

For more, see Wells Fargo's Force-Placed Suit Raises Financial, Regulatory Threats.

For an earlier post on this story, see South Florida Homeowners Seek Class Action Status In Lawsuit Tagging Loan Servicer Over Dubious, Force-Placed Insurance 'Gravy Train'.

(1) For more on the banksters' force placed insurance racket, see:

• Ties to Insurers Could Land Mortgage Servicers in More Trouble (When banks buy insurance on the homes of borrowers whose policies have lapsed, they get a great deal. Just not for the homeowners and investors who have to pay for it),
• Losses from Force-Placed Insurance Are Beginning to Rankle Investors,
• New Questions about Banks' Force-Placed Insurance Deals (QBE, carrier used by Wells Fargo and SunTrust, avoids oversight through 'surplus lines' structure),
• South Florida Homeowners Seek Class Action Status In Lawsuit Tagging Loan Servicer Over Dubious, Force-Placed Insurance 'Gravy Train',
• The Continuing Force-Placed Insurance Squeeze,
• Loan Servicers' Force-Placed Insurance Racket Targeted By State AG Settlement Offer,
• BofA's Force-Placed Insurance Unit Hid Foreclosure Information, Say E-Mails Released By Hacker Group,
• GAO Review request in connection with the USA v. Fairbanks litigation. Exhibit T (see page 2), Exhibit U, and Exhibit V will show that HUD-OIG and, therefore, the FTC, US Attorney General's Office, etc. knew about force placed insurance, alleged kickbacks, etc. at least as far back as 2003 (courtesy of GetDShirtz.com).

3 Church Members, Pastor Face Charges In Alleged Vacant Home Hijacking Racket As Criminal Prosecutions Of Adverse Possession-Claiming Scams Gain Steam

In Jacksonville, Florida, WJXT-TV Channel 4 reports:

• Four people -- one of them a recent Jacksonville mayoral candidate -- were charged over the weekend with taking over vacant homes, either to live in themselves or to rent them out to others. "They were living in them, or presented them as their own," Sheriff John Rutherford said Monday. "They squatted there."



• Warren Lee, 46, who ran for mayor last spring, was charged with grand theft, scheme to defraud and acting as a real estate agent without a license. Police called Lee the mastermind of the scheme to take over homes and rent them to others.



• Marcellous Dunbar, 31, who was previously charged with grand theft after being found living in a $500,000 Oakleaf Plantation home in Clay County, also faces grand theft and other charges in the five Jacksonville cases announced Monday.



• State Attorney Angela Corey said Dunbar threatened Channel 4 reporter Tarik Minor, claiming the reporter was trespassing the rightful owner of the Oakleaf house to get off the property, and the homeowner sought the help of Clay County deputies for protection when moving in. In Channel 4's coverage of Dunbar and Lee last year, they claimed they were doing this to help homeless people or veterans.



• Also arrested in the Jacksonville cases were Cleveland Stephens and Rhonda Johnson.



• "These people simply moved into these vacant residences and claimed them as their own, and then became the landlord of these residences," Rutherford said. "The phenomenon of literally stealing someone's house and either living there or renting it out is pretty rare."



• The sheriff said the investigation began five months ago when neighbors of the homes involved became suspicious and contacted authorities. "It is unfair that people who have lost their homes in foreclosure, who are fighting, literally, to keep themselves afloat, are having now to deal with someone cutting the locks and moving into their homes," Corey said. "It's offensive, and beyond that, it's a criminal act."



• Dunbar claimed to Channel 4 last year that he legally took over the property through the controversial Florida statute of adverse possession, which allows change of ownership to an abandoned home. Authorities said he was not in legal possession of the home, which had just been sold to a Navy family. Authorities said Dunbar left the home trashed.



• Police said all four were members of the Fishers of Men World Harvest Church, of which Dunbar was pastor. One of those arrested told a detective that God "wanted them to have the property."

For the story, see 4 'squatters' charged with grand theft (1 of 4 charged Monday was candidate for mayor of Jacksonville last year).

Takedowns Of Scammers Peddling Sale Leaseback Foreclosure Rescue Deals Continue As Sacramento Feds, Local DA Score Another Guilty Plea

In Fresno, California, the Central Valley Business Times reports:

• John Marcus Desenberg of Westlake Village preyed on families in crisis, sucking away what little money they had after gulling them into thinking he was rescuing them from foreclosure. Instead, they lost thousands of dollars each – and their homes.



• Monday, following a lengthy investigation by the Federal Bureau of Investigation and the Merced County District Attorney’s Office, Mr. Desenberg pleaded guilty to two counts of mail fraud in U.S. District Court in Fresno. He also agreed to the forfeiture of all property and proceeds obtained as a result of his crimes, including but not limited to a personal money judgment in the amount of $300,000.



• Mr. Desenberg, doing business as Creative Lending Solutions, devised a scheme targeted at distressed homeowners. It was part of the scheme that Desenberg would get referrals from individuals who marketed a “Fresh Start” program via the Internet, radio, and by advertisements sent through the U.S. mail to California homeowners nearing foreclosure, explains U.S. Attorney Benjamin Wagner.



• He would then contact other individuals with whom he did business in order for them to find an investor to purchase the home from the distressed homeowner. Once this investor was found and the home was sold to the investor, the homeowner would be allowed to stay in their home and would purportedly work on repairing their credit during the specified time period.



• At the end of the period, the distressed homeowner would be given the option of purchasing their home back from the investor.



• But what looked like a rescue turned out to be a trap. Mr. Wagner says investigators found that it was part of the scheme that Mr. Desenberg fraudulently induced homeowners to sign an approval form authorizing some of the sale proceeds to be given to Creative Lending Solutions as payment for fees, including but not limited to a finder’s fee and a consultation fee in an amount typically ranging from $15,000 to $20,000. He also held back money from the distressed homeowner for the purported payment of the mortgage for a specified time period, which was typically twelve months.



• Mr. Desenberg promised the homeowners that he would monitor their situation for the twelve month time period, and that either he would make the mortgage payments out of the hold-back reserve money or that he would ensure that the investor made the mortgage payments, the government says. But the promises were hollow. He did not monitor their situation and did not ensure the mortgage payments were made. Most homes ended up in foreclosure and victims lost more than $300,000, says Mr. Wagner.

For the story, see Guilty plea in Central Valley foreclosure ‘rescue’ scam (His Creative Lending Solutions was more creative than victims realized; Could get decades in prison).

(1) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Five S. California Suspects Get Taken Down, Face Multiple Felony Grand Theft Charges For Allegedly Running Loan Modification Ripoffs

In Santa Ana, California, KABC-TV Channel 7 reports:

• Five Orange County men have been charged with scamming Southern California homeowners seeking help to save their homes from foreclosure. Prosecutors say the five took upfront fees from homeowners promising to deliver loan modifications. They allegedly kept the money and disappeared.



• The men are charged with at least seven felony counts of grand theft, plus other charges. Jacob John Cunningham, 24, of Irvine; Justin Dennis Koelle, 23, of Costa Mesa; Andrew Michael Phalen, 25, of Mission Viejo; Dominic Adam Nolan, 30, of Irvine; and John D. Silva, 27, of Irvine, were all arrested and charged.

Source: 5 OC men charged in SoCal foreclosure scam.

Phoenix Man Gets Five Years For Peddling Bogus Foreclosure Assistance In Racket That Raked In $3M From 1,800 Victimized Homeowners In Ten Months

In Phoenix, Arizona, KNXV-TV Channel 15 reports:

• A Phoenix man has been sentenced to 5 years in prison Monday for defrauding at least 1,800 distressed Valley homeowners in 2009 and 2010 in a mortgage scheme that made his company almost $3 million.



• Luis Belevan pleaded guilty in October to conspiring with Brian Prehoda to target Hispanic homeowners during the mortgage crisis, convincing them to pay an up-front fee of $1,595 to their company with the false promise of mortgage assistance.



• According to the Department of Justice, Belevan told homeowners and mortgage lenders that his company, The Guardian Group, LLC, has the financial backing of a $40 billion hedge fund. An investigation by the FBI found that the company had no financial backing at all.



• In just 10 months of operation, the company managed to defraud at least 1800 distressed homeowners and make nearly $3 million – an amount he has been ordered to repay as restitution to the victims.



• The mortgage crisis in the greater Phoenix Metropolitan area has been devastating to homeowners and the economy," said FBI Special Agent in Charge James L. Turgal Jr. with the Phoenix Division. "Belevan preyed on distressed Hispanic homeowners who were trying to avoid foreclosure on their homes.” The scheme, he said, “resulted in financial losses to homeowners with no resolution of their mortgage concerns.”



• Belevan was also sentenced to 3 years of supervised release following his prison sentence. His associate, Prehoda, is scheduled to be sentenced on March 12, 2012.

Source: Phoenix man sentenced to 5 years in prison for defrauding Hispanic homeowners.

NC AG Scores Consent Judgment Putting Loan Modification Outfit Out Of Business In State

From the Office of the North Carolina Attorney General:

• A Winston-Salem foreclosure assistance outfit that promised to save struggling homeowners from foreclosure is permanently banned from offering foreclosure assistance or credit repair services in North Carolina, Attorney General Roy Cooper announced [].

***

• Late Monday, Wake County Superior Court Judge Michael R. Morgan signed a consent judgment between Cooper and Edward “Eddie” Phillip Long, Jr., doing business as Credit Enhancement Services, banning Long from offering foreclosure and loan modification services in North Carolina. Long will also pay $5,600 for consumer restitution.



• Cooper’s office filed suit against Long in May 2011 and since then Credit Enhancement Services has ceased operating. As alleged in the complaint, Long charged upfront fees of between $300-$500 and promised to obtain favorable loan modifications to save customers’ homes from foreclosure. Despite Long’s assurances, many homeowners were unable to obtain loan modifications, and some lost their homes to foreclosure.

For the North Carolina AG press release, see Winston-Salem foreclosure assistance operation banned from NC (Cooper urges homeowners to seek free help from qualified housing counselors instead).

Idaho AG Lets Law Firm Using Potentially Deceptive Mail Solicitations To Peddle Purported Participations In Mass Joinder Lawsuits Off With Hand Slap

From the Office of the Idaho Attorney General:

• A Utah law firm that files multi-plaintiff lawsuits against mortgage servicers has agreed to change how it solicits clients in Idaho, Attorney General Lawrence Wasden said []. Wasden’s office reached a settlement agreement with Corvus Law Group, LLC, which maintains an office in Post Falls, Idaho. Pursuant to the agreement, the firm has modified its direct mail ads to comply with the Idaho Consumer Protection Act and to better inform potential clients about the law firm’s services.



• The Attorney General’s Office began investigating Corvus Law Group after receiving complaints from consumers about the law firm’s direct mail solicitations. Labeled a “Form CLG 0127 Litigation Settlement Notification,” the form also claimed the consumer was eligible to participate in a pending multi-plaintiff lawsuit against the consumer’s purported mortgage servicer. According to consumers, it was not until they called the toll-free number on the form and spoke to a Corvus Law Group representative that they learned a lawsuit had not been filed and that to participate in a potential lawsuit, the consumer first had to pay Corvus Law Group a $5,000 retainer fee.



• The settlement agreement prohibits Corvus Law Group from using deceptive advertising methods, such as envelopes that appear to originate from the government, and from claiming that the recipient of the solicitation is a party to a lawsuit or a settlement.



• In its legal services solicitations to Idaho consumers, the firm also must disclose the name and Idaho State Bar number of at least one Idaho licensed attorney who will represent the consumer. Corvus Law Group also must pay the Attorney General $3,000 to reimburse him for the cost of the investigation.

For the Idaho AG press release, see Law Firm Agrees to Change Direct Mail Ads.