S. California Man Gets 55 Months For Scoring $5M+ In Mortgage Loans By Pledging Real Estate He Didn't Own As Collateral

From the Office of the U.S. Attorney (Riverside, California):

• A Sylmar man has pleaded guilty to federal conspiracy and tax evasion charges, admitting that he plotted with others to fraudulently obtain four loans for more than $5 million by pledging houses that they didn’t own as collateral, falsely claiming that the houses had enough equity to secure the loans, forging documents and falsifying notary stamps.
  
  
• Hamlet Sardariani, 42, pleaded guilty [...] in United States District Court. Hamlet Sardariani was scheduled to go on trial next week before United States District Judge Virginia A. Phillips.
  
  
• Three other members of the conspiracy have previously pleaded guilty. Hamlet Sardariani’s brother – Henrik Sardariani, 44, of Glendale – pleaded guilty in January and is scheduled to be sentenced by Judge Phillips on August 6 (see: Glendale Man Pleads Guilty In $5 Million Loan Fraud Case).
  
  
• Wanda Tenney, 66, of South Los Angeles, who was an escrow officer, pleaded guilty on December 5, 2011 and is scheduled to be sentenced on October 15. The fourth co-conspirator, Christopher J. Woods, 53, of Beverly Hills, pleaded guilty on November 8, 2011, and is scheduled to be sentenced on July 16.(1)

For the U.S Attorney press release, see Sylmar Man Pleads Guilty In $5.4 Million Loan Fraud Case.

(1) To get a flavor of the kind of civil litigation that was spawned as a result of Sardariani's handiwork, see:

• Bith, LLC v. Downey Savings & Loan Association, FA, (Cal. App. 2nd Dist. Div. 8, August 31, 2010) (unpublished),
• Foremost Investment Properties, LLC v. Gap Fund, LLC, (Cal. App. 2nd Dist. Div. 2, June 8, 2010) (unpublished) .

High-Living Steeltown Closing Agent Gets 55 Months For Looting $1.5M In Real Estate Escrow Cash, Closing Loans Without First Paying Off Existing Liens

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

• A resident of Pittsburgh, Pa., has been sentenced in federal court to 55 months of incarceration on his conviction of wire fraud, United States Attorney David J. Hickton announced []. Senior United States District Judge Maurice Cohill imposed the sentence on Jason Sheppard, 31. Sheppard has been incarcerated since his arrest after he violated the conditions of his bond and fled the jurisdiction. As part of his sentencing, he was ordered to pay approximately $1.5 million in restitution.
  
  
• According to information presented to the court, Sheppard was the president of TruClose Financial Services, which is a company that closed loans collateralized by real estate with an office in Mt. Lebanon. For much of 2009 Sheppard withdrew money from TruClose's accounts, and spent the majority of the money paying off gambling obligations and substantiating his life style.
  
  
• In just a few months (October through December 2009) Sheppard sent nearly $600,000 to casinos from the accounts of TruClose Financial. Sheppard also wire transferred money into his wife's account and used the business's account to pay her substantial credit card bills. The shortfall that Sheppard caused is approximately $1.5 million.
  
  
• As part of the closing of real estate transactions, representatives of TruClose signed settlement statements that represented to the lenders that the liabilities associated with the collateral would be paid off. The payment of those liabilities would ensure that the lenders would be in the first lien position and that the borrowers had only one mortgage on the property.
  
  
• Sheppard withdrew so much money from the accounts of TruClose, however, that TruClose could not pay the liabilities that were required to be paid as part of the closings, and some of the checks used to pay the liabilities bounced. Sheppard knew that TruClose could not pay its liabilities, but he instructed the employees to close the transactions anyway.

For the U.S. Attorney press release, see President Of Real Estate Loan Company Sentenced To 55 Months In Prison, Ordered To Pay $1.5 Million, For Fraud Scheme.

Judge OKs Asset Attachment Against Alleged F'closed Home Hijacker For Renting Out House To Unwitting Family, Charging Pet Deposit For Service Animal

In Auburn, Maine, the Sun Journal reports:

• A Turner family is suing a Leeds man claiming he rented them a house that he didn’t own. John Stetson and Melissa Rollins say they were seeking a rental in December for themselves and their children: two sons, ages 2 and 17, and a 19-year-old daughter. They answered an ad for a house for rent that was posted on the Craigslist website. They recently filed a complaint in Androscoggin County Superior Court against John Gray.
  
  
• When the family called the phone number listed in the online ad, Gray answered. He showed the family a four-bedroom house at 64 Bean St. in Turner with a two-car garage during the two weeks following Christmas.
  
  
• The family signed a one-year lease with Gray on Jan. 6, the complaint said. They paid Gray a security deposit of $500 and a $50 propane fee plus a pet deposit of $250, because their daughter, Brittany, needs a black Labrador service dog for her post-traumatic stress disorder.

***

• At the time the family leased the house from Gray, it belonged to the MSHA. Before a scheduled June 6 eviction hearing, the family agreed to MSHA’s eviction judgment.

***

• In a separate court proceeding shortly after the lawsuit was filed, the family was successful in securing an attachment of Gray’s property and other assets in the amount of $4,300 in the “reasonable likelihood” they would recover judgment against Gray and the Rebis Agency.
  
  
• The family, represented by attorneys Maureen Boston and Matthew Dyer at Pine Tree Legal Assistance,(1) claim Gray falsely represented himself when he signed a lease with the family.
  
  
• The family claims it suffered monetary and emotional damages due to what they said was Gray’s fraudulent misrepresentations. The family is seeking an award of punitive damages as well as attorney’s fees.
  
  
• In addition, the family claims that state law bars landlords from charging tenants damage deposits for service animals.(2)

For more, see Turner tenants sue landlord, claim he rented them house he didn’t own.

(1) Pine Tree Legal Assistance provides free legal help to Maine people with low incomes, and has offices in every part of the state, from Presque Isle to Portland.

(2) The inability to make the distinction between a service animal and a pet can become a very costly problem for landlords, homeowner associations, etc. See, for example:

• Dog Dispute Takes $90K Bite Out Of Largest NYC Housing Complex For Refusal To Allow Resident With Certified Mental Health Issues To Keep Companion Pet,
• County Civil Rights Division To Assert "Prescription Pooch" Claim In Fair Housing Suit Against Condo Association On Behalf Of Elderly S. Florida Widow,
• Civil Rights Feds Continue Stepping Up In Fighting Housing Discrimination Against Those With Documented Need For Service Animal,
• Small Dog Takes $20K 'Bite' Out Of HOA In DOJ Suit Alleging Association Refused To OK Support Animal To Help Disabled Combat Vet Cope With Depression.

Big Apple Homeowners: We're Gettin' Soaked By New Automated Water Meter Readers! Say They're Being Forced To Flush Away Cash To Dodge Lien Foreclosure

In New York City, the Daily News reports:

• Maybe water is liquid gold. The city is on pace to collect a record $3 billion in water bills this year — even as the amount of unpaid invoices has soared to $582 million, the Daily News has learned. The sharp uptick is a 30% spike from the $2.1 billion collected from homeowners and businesses in 2008, according to data obtained via a Freedom of Information Law request.
  
  
• But as the city touts the increased revenues, homeowners are complaining they’re getting soaked — and the new automated water meter readers are at the center of the controversy. The new devices, which cost $252 million to develop and install, are meant to more accurately measure the amount of water each household uses.
  
  
• However, those who feel like they are flushing away their cash believe the meters are full of massive inaccuracies. Sonia Bender said her bill suddenly went from $500 to $700 up to $7,000 after an automated reader was installed in her three-floor Harlem building in 2009.
  
  
• The home health aide hired a plumber to check for leaks at the beauty parlor and 99 cents store she rents to on the ground level. Nothing was found.
  
  
• As her appeal was pending, the city put a lien on the place and threatened to foreclose on the property due to $19,000 in outstanding bills, forcing her to enter into a payment plan. Yet her bill continues to fluctuate wildly, with her latest three-month charge totaling $517.
  
  
• “There has to be something wrong,” she said. “They say I used 1,000 gallons of water over a seven hour stretch last month but the beauty parlor was closed that day.”
  
  
• Many feel Bender’s frustration: 10,266 customers officially disputed their bill last year, up from 7,788 in 2008. Public Advocate Bill de Blasio says the city is picking on the little guy. “We have homeowners facing foreclosure because of these botched bills,” de Blasio charged.
  
  
• “We need to stop these liens and runaway charges now — and that starts with the city fessing up to the problem,” added de Blasio, a 2013 mayoral candidate.

For the story, see Daily News finds city collects millions more in water bills (Nearly $3 billion in water fees are expected to be collected this year, but many customers complain of higher charges stemming from new meters).

Camden Tax Collector Puts Squeeze On Day Care Centers, Social Service Agency Non-Profits; Outfits Considered Exempt In Years Past Now On City Hit List

In Camden, New Jersey, the Courier Post reports:

• The city has published a staggering list of almost 10,000 properties that it says owe money for unpaid property taxes or water and sewer service charges.
  
  
• But some property owners long considered tax-exempt — especially day care centers and nonprofit social service agencies — contend the city has wrongly targeted them and they do not belong on the lien list.
  
  
• The city’s finance director, Glynn Jones, said the decision to assess day care centers and nonprofits was made by the recently resigned municipal assessor, with input from the county’s tax office. Jones said he knows the tax office has been in communication with nonprofits, many of which are appealing.

***

• [W]hile the number of properties and the amount owed might seem out of whack in a cash-strapped city of just over 77,000 citizens, the totals are about the same as last year, according to Jones. That’s because what’s normal elsewhere isn’t normal in Camden.
  
  
• For instance, Trenton, with about 7,000 more residents than Camden, usually has only a few thousand properties on its lien list, owing just a few million dollars, according to its tax collector, Ed Kirkendoll. Jones’ explanation for the discrepancy?
  
  
• “This is Camden,” he said.
  

***

• [One] issue is at play in properties owned by nonprofits and day care centers. They are disproportionately represented on the current lien list of 9,837 properties, according to a Courier-Post review.
  
  
• The city and Camden County’s Board of Taxation have targeted day care centers and nonprofit social service agencies since the completion of a citywide revaluation last August, seeking taxes on holdings considered exempt for years.

For more, see Day care centers, nonprofits on Camden's tax lien list.

Foreclosure Sale Purchaser Unwittingly Buys 'Demo-Listed' Property; Seeks Judicial Help In Slamming Brakes On City Wrecking Ball

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

• Local resident Ronnie Mickles is seeking an injunction to stop the city of Beaumont from demolishing a property he obtained at the Jefferson County Sheriff's sale in April. The petition was filed June 7 in Jefferson County District Court.
  
  
• According to the petition, on April 3 Mickles purchased property at 1140 Roberts Street in Beaumont at the sheriff's sale with the intention of renovating and remodeling the house. However, when he sought a building permit, Mickles learned the city had condemned the house and planned to demolish the structure.
  
  
• Mickles claims he will suffer irreparable harm unless the city is enjoined.

Source: Beaumont man seeks to stop city from demolishing property bought at sheriff's sale.

Another Indiana County Agrees To Contingency Fee Deal With Outfit To Ferret Out Tax Cheats Filing Fraudulent Homestead Claims

In Lafayette, Indiana, the Journal and Courier reports:

• Homeowners are entitled to homestead credits on one property — their primary residence. But some property owners don’t always follow the law, so Tippecanoe County plans to find those who have two or more homestead credits here or in other counties in Indiana.
  
  
• [T]he Tippecanoe County commissioners approved an agreement with SRI Inc. to ferret out those who have received more than one homestead credit. “We’ve done this for the last two years,” said Dawn Rivera, Tippecanoe County chief deputy auditor. “It allows the auditor’s office to bill for fraudulent claims for deductions. It allows them to bill for back taxes and a civil penalty of 10 percent.
  
  
• “The cost of doing this is SRI will charge 20 percent of the civil penalties that we collect,” Rivera told commissioners. “The civil penalty is 10 percent of the taxes.”
  
  
• SRI currently is working with several Indiana counties to find inconsistencies and property owners who have more than one homestead credit, either in Tippecanoe County or in Tippecanoe County and another Indiana county.
  
  
• “We are working with 32 counties in this program right now,” said Glen Luedtke of SRI Inc. “Some of them have generated over $1 million.”

For more, see Tippecanoe County targets fraudulent homestead claims.

Funeral Home Foreclosure Threatens Final Resting Place For Dozens Of Babies, Worries Parents

In Jonesboro, Georgia, WAGA-TV Channel 5 reports:

• Parents are concerned about the fate of a rose garden at funeral home in Jonesboro now in foreclosure. The garden contains the ashes of dozens of babies. When mother Amanda Bartlett heard that the Pope Dickson Funeral Home had gone out of business, she immediately thought of her son's ashes, which are scattered in the property's rose garden. Amanda was seven months pregnant when her son, Preston, was stillborn.
  
  
• The hospital where she delivered, Southern Regional Medical Center, told her about the garden. "We were promised that this would always be here for us to come and it's all we have left of our babies," said Bartlett. However, the funeral home that planted the garden is now out of business. Its property has been placed in foreclosure and is up for sale. A real estate agent said that he doesn't know who will be eligible to buy the property, or if it will remain a funeral home.
  
  
• There are more than 30 markers in the rose garden; one of them dates back to 1962. Amanda says she hopes whoever decides to buy the funeral home will also decide to keep up the rose garden.
  
  
• "They come here and we feel so much comfort. It's like going through it all over again. My concern is that so many people are going to lose that comfort if this is taken away from us," said Bartlett.
  
  
• Southern Regional Medical Center says it has given the rose garden as an option to their patients who've lost loved ones. Hospital spokesperson Justin D. Cooper said, "There was no financial agreement made between Pope Dixon and Southern Regional and the maintenance of the grounds was the sole responsibility of the funeral home. We extend our deepest condolences and empathize with families affected by the actions of Pope Dixon Funeral Home." The property was just listed for sale on Monday.

For the story, see Funeral home foreclosure worries parents.

Judge Pinched For Allegedly Bleeding 90+ Year Old Widow's Assets Of $1.6M; Victim Had No Family At Time Of Death

In Oakland, California, KTVN-TV Channel 2 reports:

• An Alameda County judge has been charged with elder theft for allegedly stealing at least $1.6 million from his 97-year-old neighbor. Paul Seeman was arrested and charged Thursday with one count of elder theft and 11 counts of perjury. He was being held on $525,000 bail.
  
  
• Authorities said Seeman began stealing from Anne Nutting, his neighbor, in 1999 after her husband died. Seeman is accused of slowly bleeding her assets until April 2010 when she died at the age of 97. Nutting didn't have any family when she died. Police said the 57-year-old Seeman became Nutting's durable power of attorney and claimed he found $1 million worth of stock certificates and dividend checks in her house.
  
  
• Seeman was appointed to the bench in 2009 by former Gov. Arnold Schwarzenegger.

Source: Calif judge charged with elder theft.

Ex-'Stagecoach To Hell' Loan Officer Describes Experiences Peddling Subprime Mortgages For Alleged 'Ghetto Loans' Peddler

The Washington Post reports:

• For nearly a decade, Beth Jacobson lived inside the vast machinery of subprime mortgages that shook the nation’s economy.
  
  
• In sworn court testimony, she described watching loan officers comb through heavily African American areas such as Baltimore and Prince George’s County, forging relationships with churches and community groups to sell their members shoddy mortgages.
  
  
• She says she processed loans for homeowners with sterling credit ratings with higher interest rates than they needed to pay. And she says she pumped out millions of dollars in mortgages to people with no paperwork and low incomes, becoming Wells Fargo’s top-producing loan officer.
  
  
• The machine made her rich — the questions came later. Now, she has recast herself as a crusader for consumers in a battle that has pitted her against the system she once pushed.
  
  
• The 51-year-old Maryland resident has emerged as a defining character in the ongoing saga of the country’s housing crisis, from the headiest days of the bubble to the current flood of foreclosures. Her scathing affidavit detailing “the stagecoach to hell” at Wells Fargo is a key part of the groundbreaking lawsuit filed by the city of Baltimore against her former employer. The case spawned copycats across the nation, and federal regulators launched investigations mirroring its allegations.

***

• But some things poked at her conscience, she said. She said she grew uncomfortable after being excluded from meetings about marketing to black churches. She said that she later learned how sales pitches purposefully shunned the word “subprime” and that she was taken off the roster to speak at a “wealth-building” seminar in predominantly black Prince George’s County because she was “too white.”
  
  
• “The point was clear to me: Wells Fargo wanted black potential borrowers talking to black loan officers,” she wrote in the affidavit.

For more, see Ex-loan officer claims Wells Fargo targeted black communities for shoddy loans.

Blogger's Bank Account Freeze Believed To Be Bankster's Response To Negative Publicity On Its Foreclosure Practices

An excerpt from a recent post in The Big Picture:

• ML-Implode.com discovered yesterday (2012-06-12) in the course of its normal banking activities that Wells Fargo had frozen its bank account with no warning. Upon inquiring at the local branch (which had no direct knowledge of the incident), it was discovered the account had been flagged “credit risk”, and slated to be immediately closed.
  
  
• These actions are more than slightly unusual because ML-Implode’s account was a plain checking account and was not an underwritten account. In fact, ML-Implode paid a monthly fee for the account, so Wells Fargo was certainly doing it no favors.

***

• In fact, as part of the freeze, Wells Fargo made a $3500 deposit from ML-Implode’s merchant account processor “disappear”, leaving a short-term advance of $1500 from an affiliate un-covered, and a similar $1500 obligation to another affiliate unpaid. The whereabouts of the monies are unknown.

***

• It is believed that the actions were taken in retaliation for a recent series of articles by ML-Implode blogger Martin Andelman which pulled no punches in criticizing Wells Fargo over its foreclosure practices — in particular the tragic and horrific case of Norm Rousseau who was driven to suicide after Wells Fargo lost a mortgage payment and mistakenly foreclosed on the family’s home, despite a lengthy back-and-forth process which gave the bank ample opportunity to correct the mistake.
  
  
• (Other recent articles by Andelman taking Wells to task that may have angered the bank include this one and this one.)

For more, see ML-Implode Gets “Wikileaks Treatment” As Wells Fargo Freezes, Closes Business Account.

See also, The Huffington Post: Below the Fold: Wells Fargo Freezes Account in Retaliation.

Court Order Slams Brakes On Outfit Targeted By Feds For Alleged Bogus Promises Made In Connection w/ Peddling Forensic Loan Audits To Halt F'closures

From the Federal Trade Commission:

• At the request of the Federal Trade Commission, a U.S. district court has halted an operation that allegedly preyed on financially vulnerable homeowners, convincing them to pay $1,995 or more by holding out bogus promises that they could help them avoid foreclosure and renegotiate their mortgages.
  
  
• The order issued by the court stops the allegedly illegal conduct, freezes the operation’s assets, and appoints a receiver to run the business while the FTC moves forward with the case.
  
  
• According to the FTC complaint, the defendants behind the operation claimed on their website that “up to 95% of mortgages may be legally unenforceable due to defects like lost documents, improper notices, appraisal and/or predatory lending.” Using this claim, several defendants, including Consumer Advocates Group Experts, LLC, virtually guaranteed that they could get mortgage modifications with reduced interest rates and lower monthly mortgage payments for consumers.
  
  
• The defendants offered to review consumers’ mortgage loan documents to determine whether their lenders complied with state and federal mortgage lending laws, and made allegedly false claims that the consumers could use the resulting “forensic audits” to avoid foreclosure and negotiate more favorable terms on their mortgages.

For the FTC press release and links to the related court order, lawsuit, etc., see FTC Action Halts Alleged "Forensic Audit" Scam that Targeted Consumers in Danger of Losing Their Homes (Forensic Mortgage Loan Audit Scams: A New Twist on Foreclosure Rescue Fraud).

Connecticut Feds Charge Dad/Daughter Team Accused Of Targeting Dozens Of Homeowners With Phony Debt Elimination Ripoff

In Hartford, Connecticut, The Hartford Courant reports:

• Federal tax agents on Tuesday accused a father and daughter from Wethersfield of using a far-fetched and phony debt-elimination scam to steal thousands of dollars from new U.S. immigrants living in Connecticut and elsewhere.
  
  
• Because of the scam, through which Deowraj Buddhu and his daughter Sunita collected thousands of dollars in fees from so-called clients, several of the clients were persuaded that they no longer had to make mortgage payments and ultimately lost their homes through foreclosure.
  
  
• The Buddhus are accused of claiming that they could help clients tap a secret government fund created to help homeowners pay mortgages and other debts. The fund was a fiction. But federal tax agents said that, beginning in 2009, the Buddhus convinced immigrants with little education or familiarity with financial instruments that the federal government was providing money for its citizens to pay bills.

***

• A government affidavit filed in court said that Deowraj Buddhu is a citizen of Guyana and is the subject of a federal deportation order. The same affidavit said Sunita Buddhu had reservations on a flight Tuesday from New York to Guyana. Federal authorities would not discuss her whereabouts.

For more, see Man Arrested, Daughter Sought, In Scam That Bilked Immigrants.

See also: NBC Connecticut: Wethersfield Man Charged in Debt Scam: Prosecutors (A federal complaint accuses Deowraj Buddhu of bilking homeowners).

For the criminal charges, see U.S. v. Buddhu.

For earlier posts, see:

• Suspected Connecticut Foreclosure Assistance Scammer Feels The Heat, May Be Readying To Bolt Town; Victims: Target About To Take 'Extended Vacation;
• Alleged Scam Victims' Attorney: Mortgage Assistance-Peddling 'Guru' May Have Ripped Off $1M+ From Nearly 200 Connecticut Residents; Cops Yet To Act.

NY High Court Overturns 2 Lower Court Rulings, OKs B'klyn Loft Renter's 9-Year Stiffing Of Landlord Over Failure To Bring Premises Up To Code

The New York Times reports:

• The state’s highest court ruled [...] that a Brooklyn loft tenant who has not paid rent since 2003 could not be evicted because the landlord had not brought the building up to residential standards.
  
  
• The ruling by the State Court of Appeals could affect tenants in some buildings covered by the 1982 Loft Law, which has allowed hundreds of former manufacturing or commercial buildings to be rented to tenants as long as the landlords make necessary changes, namely in fire protection and other safety measures, to bring them up to residential building codes.
  
  
• The tenant, Margaret Maugenest, has lived and worked as an artist in her Gowanus loft at 280 Nevins Street since 1984. According to her lawyer, Margaret B. Sandercock, Ms. Maugenest began withholding rent in 2003 because of maintenance, fire and safety issues. That rent, Ms. Sandercock said, was under $600 per month.
  
  
• In 2008, the building owner, Chazon L.L.C., sued to evict Ms. Maugenest for nonpayment, and two lower courts ruled in Chazon’s favor. But on Thursday, the appeals court said that because Chazon had missed deadlines for bringing the building up to residential code, and did not receive an extension from the city’s Loft Board, state law prohibited it from evicting tenants, even for nonpayment.
  
  
• “In the absence of compliance, the law’s command is quite clear,” said the decision, written by Judge Robert S. Smith. Thirty years after the passage of the law, about 300 buildings, almost one-third of the total number under the Loft Board’s purview at the time, have still not managed to complete the process and receive residential certificates of occupancy.
  
  
• “Certificate of occupancy work is not just about really nice amenities that make the tenants happier,” Ms. Sandercock said. “It’s fire and safety.” It was unclear Thursday night how many of the about 300 buildings had not received deadline extensions and thus could face the same legal difficulty that Ms. Maugenest’s landlord has.
  
  
• The Loft Board can grant extensions for circumstances beyond a landlord’s control, but in 2006, the court said, the board rejected the landlord’s claim that it deserved an extension. A lawyer for Chazon did not return phone calls Thursday evening.
  
  
• Though Ms. Maugenest has not paid rent for nine years, she has not adopted the habits of someone who lives rent-free either, her lawyer said. Instead, she has put aside her rent money every month and saved it, just in case a court demanded that she pay. She may have just found herself with an extra $60,000.

Source: No Eviction After Renter Didn’t Pay for 9 Years.

For the ruling, see Chazon, LLC v. Maugenest, 2012 NY Slip Op 04373 (NY June 7, 2012).

Insurance Underwriter Sues Title Agent Over Refinancing Screw-Up Where Borrowers Didn't Own The Home Insured

In Madison County, Illinois, The Madison Record reports:

• A title company claims another company caused it to grant insurance to a couple who did not really own the home they had attempted to refinance.
  
  
• First American Title Insurance Company claims American Equity Mortgage refinanced a home at 2158 Hamilton in Granite City to Thomas and Elaine Doak for $75,000. Before the refinance went through, defendant Nations Title Agency of Missouri conducted a title search to ensure that the Doaks owned the property, according to the complaint filed May 25 in Madison County Circuit Court.
  
  
• Nations Title represented to American Equity that the Doaks owned a fee simple interest in the property, thereby clearing the way for a refinance. However, had Nations Title performed proper research it would have learned that the Doaks hold only a life estate interest in the property. In other words, the Doaks owned the property only until they died, the suit states.
  
  
• The Doaks had gained the property through Margaret Doak, who left her home to them in her will. After Thomas and Elaine Doak died, the property was then to be transferred to Margaret Doak's descendants, the complaint says.
  
  
• After receiving clearance from Nations Title, American Equity granted the refinance to the Doaks and Nations issued an insurance policy through First American, which insured the mortgage company from loss due to title disputes, the complaint says.
  
  
• Following the refinancing, Margaret Doak's descendants filed a lawsuit to quiet the title to the property, which would cause the bank to foreclose on the property, First American claims.
  
  
• First American settled a claim in relation to the dispute and purchased the mortgage for $68,757.90, according to the complaint. It then proceeded with foreclosure of the property and incurred attorneys' fees of $15,309.97, the suit states.
  
  
• Since then, First American sold the property for $14,637.20, the complaint says. First American claims it lost tens of thousands of dollars in the ordeal.
  
  
• It sought repayment of the money from Nations Title because the company promised to indemnify First American from any losses. However, Nations Title refused to pay the amount, according to the complaint. "First American's losses prior to this litigation totaling $54,430.67," the suit states.
  
  
• First American is seeking a judgment of more than $50,000, plus pre-judgment interest, attorney's fees, court costs and other relief the court deems just.

Source: First American Title sues over improper title search that led to bad refinance.

Legal Non-Profit Tags Alleged Repeat Home Equity Ripoff Thief w/ Charges Of Targeting Elderly Homeowners In Bogus Home Repair/Reverse Mortgage Racket

In Chicago, Illinois, Courthouse News Service reports:

• A recidivist, unlicensed mortgage broker and home repair contractor targeted elderly black women by draining equity from their homes through reverse mortgages and taking their money without doing repairs, three women claim in Federal Court.
  
  
• Byrdell Walton, 85, and two other women sued Mark Diamond, his attorney Dennis Both, and a slew of mortgage, financial, title and construction companies. All three plaintiffs are elderly, black women who live on fixed incomes on the West Side of Chicago.
  
  
• "Diamond and his companies have been sued numerous times in state and federal court by individual homeowners, the Illinois Attorney General, the Federal Trade Commission, and others for misconduct very similar to that which plaintiffs allege in this case," the complaint states. "Past allegations have included fraud, racial targeting, and taking money from customers to do home repairs then doing little, no, or substandard work. "Diamond has engaged in a pattern and practice of fraudulent and deceptive practices with respect to borrowers similar to the plaintiffs in this case."

***

• Lead plaintiff Walton "has lived in her home for approximately 50 years," the complaint states.

***

• The plaintiffs ask the court to cancel their mortgages and award punitive damages for violations of the Truth in Lending Act, fraud, racial discrimination, violation of the Fair Housing Act, conspiracy, and breach of fiduciary duty. They are represented by Michelle Weinberg of the Legal Assistance Foundation.(1)

For more, see Elderly Black Women Say They Were Victimized.

For the lawsuit, see Walton, et al. v. Diamond, et al.

(1) Legal Assistance Foundation of Metropolitan Chicago (LAF) provides free civil legal assistance to low-income and elderly individuals in Chicago and suburban Cook County, Illinois.

Tax F'closure Buyer Hit w/ 2nd Suit Alleging Failure To Properly Inform Former Owner Of Redemption Rights On Homes It Bought For Pennies On The Dollar

In Charleston, West Virginia, The West Virginia Record reports:

• A second lawsuit alleges a real estate holding company owned by a Charleston attorney failed to conduct due diligence in notifying the former owner of property it bought at a tax sale of her ability to get it back.
  
  
• NAJ, LLC is named as a co-defendant in a lawsuit filed by Amy F. Thomas. In her complaint filed May 23, Thomas, 34, of Cross Lanes, alleges NAJ and its owner, Robert Johns, who is named as a co-defendant, did not properly notify her she could reclaim the home she relinquished in 2010 because of delinquent taxes.
  
  
• Thomas' suit mirrors allegations made earlier this year by a Jackson County woman who claims NAJ, after it bought her home at a tax sale, did not take exhaustive steps to notify her of her ability to buy it back.
  
  Wrong address
  
  
• According to her suit, Thomas, along with Morgan Clark, were co-owners of 161 Lake Shore Drive in the Lake Chaweva subdivision. When they became delinquent on paying the 2009 and 2010 property taxes, NAJ bought it for $573.55 on Nov. 10, 2010 at a tax sale conducted by the Kanawha County Sheriff's Department.
  
  
• By law, before NAJ could formally claim title to the property, it had to notify Thomas of her right to redeem it. In her suit, Thomas says while NAJ did send her notice earlier this year, it sent it to the wrong address.
  
  
• According to Thomas, NAJ sent a notice to redeem to the 161 Lake Shore Drive address. In the notice, NAJ said the property could again become hers if she paid $1,039.45, which included the back taxes, a $345 title search fee and $97.50 in interest. However, Thomas maintains after the tax sale, she stayed in the Lake Chaweva subdivision and moved to 56 Lake Shore Drive. Because NAJ failed to send her the notice to redeem at her current address, she maintains the tax deed the Kanawha County Clerk's Office gave NAJ on April 10 is no good.
  
  
• In her suit, Thomas asks that the tax deed be set aside, and she by allowed to buy the property back. Along with the $1,039.45, Thomas says she's "prepared to reimburse NAJ, LLC all fees. [...].
  
  Similar story in Jackson County
  
  
• In February, Ora B. Thomas failed suit against NAJ in Jackson Circuit Court alleging after a notice to redeem was returned as "undelieverable" it failed to take "additional reasonable steps" to notify her about redeeming the property including "constructive notice by publication" in a newspaper of general circulation. According to her suit, NAJ purchased Thomas' home on Ravenswood Pike in Ripley for $1,563 at a Nov. 19, 2008 tax sale when she failed to pay her 2007 property taxes.
  
  
• Records show NAJ was given title to the property on May 18, 2010. In her suit, Ora Thomas seeks not only a court order setting aside the deed given to NAJ, but also compensation in the amount of taxes require to redeem the property and those paid since 2010 plus 12 percent interest. A trial date in the case has yet to be scheduled.

Source: Second suit filed against Charleston attorney's real estate company.

WV AG Reaches $700K+ Settlement With Five Debt Collectors Over Accusations Related To Unlicensed Activity, Illegal Internet Payday Loans

In Charleston, West Virginia, The West Virginia Record reports:

• West Virginia Attorney General Darrell McGraw announced [] that his office has reached settlements with five out-of-state debt collection agencies, netting more than $700,000 for state consumers. The five companies are Frontier Financial Group of Henderson, Nev.; United Debt Holding of Castle Rock, Colo.; Skutr Financial of Las Vegas; USCB Corp. of Archibald, Pa.; and Mauconduit and Luna of Hapeville, Ga.
  
  
• Under the agreements, the companies are required to pay a total of $772,286 in refunds and cancelled debts to settle charges that they engaged in unlawful debt collection in West Virginia.

***

• The attorney general began investigating the companies after receiving complaints that four of them were not licensed in the state and that all five were collecting illegal Internet payday loans. [...]
  "Internet payday loans are harmful to consumers and have never been legal in West Virginia," the attorney general said. "My office will continue to intervene whenever any agency, licensed or otherwise, is collecting unlawful debts here."

For more, see McGraw settles with collection agencies for more than $700,000.

Elderly Among Those Screwed Over In Alleged Ponzi Scheme That Conned Victims Into Refinancing Homes To Invest In Outfit That Bought & Sold F'closures

In Orange County, California, The Orange County Register reports:

• A Fullerton man has been arrested on charges he co-ran a $1.3 million real estate fraud scheme targeting Latino investors, many of whom were elderly, authorities announced [].
  
  
• Michael Z. Zuniga, 41, was taken into custody earlier this month on multiple counts of grand theft, elder abuse and securities fraud in connection with an alleged Ponzi scheme, state officials said. His bail was set at $50,000.
  
  
• Zuniga and his business partner, Edwin G. Salazar, 34, of Downey, are accused of bilking 18 people out of nearly $700,000 in funds over an 18-month period. The pair used the funds for personal uses, authorities said.
  
  
• Between January 2007 and June 2008, the licensed insurance agents, operating as Omega Investment Group of Downey, issued more than $1.3 million in fraudulent securities, authorities said. "The investor gave them money, and they issued to the investor a security, but it was a false security and there was nothing to back it up," state Department of Justice spokeswoman Lynda Gledhill said Saturday.
  
  
• Authorities said the investors, who were often senior citizens, were convinced to refinance their homes and take out money to invest in Omega. Zuniga and Salazar allegedly promised the investors a guaranteed 15 percent return on investment, claiming it was "risk-free" because of Omega's strong track record of buying and selling homes in foreclosure, authorities said.
  
  
• But in classic Ponzi fashion, the pair used new investments to pay off previous investors, authorities said.

Source: Fullerton man charged in Ponzi scheme targeting elderly (Michael Z. Zuniga and an associate bilked 18 victims out of nearly $700,000).

For the California Attorney general press release, see Attorney General Kamala D. Harris Announces Arrest of Two Individuals in Foreclosure Scam Targeting Latino Community.

FTC Continues Time-Wasting Suits Against Debt Relief Scammers That Require Minimal Penalties; Recent Target Buys Out $3.3M Judgment For 3 Cents On $

From the Federal Trade Commission:

• The Federal Trade Commission put a stop to the allegedly deceptive practices of a debt settlement operation that lured consumers with exaggerated claims about how it could help reduce their debts. The defendants behind the operation have agreed to a settlement that prohibits them from making any further misleading claims.
  
  
• The FTC case against FDN Solutions, LLC and Timothy Daniels is part of the agency’s continuing crackdown on scams that target consumers in financial distress. The defendants claimed, mostly through Google ads and websites they used, such as verestdebtsolutions.com, 1800debtsettlement.com, and everestdebtrelief.com, that they could reduce consumers’ debts, typically by 40 percent to 60 percent, according to the FTC complaint.
  
  However, the FTC charged that these savings claims were misleading, because they did not take into account the consumers who dropped out of the program, or the fact that the fees each client paid totaled 30 percent of the savings achieved.
  
  
• The settlement order imposes a judgment of $3.3 million.
  
  
• Upon their payment of $85,000, the remainder of the judgment is suspended based on the defendants’ inability to pay. If it is later determined that the financial information the defendants provided the FTC was false, the full amount of the judgment will become due.

For the FTC press release, see Debt Relief Operation Settles with FTC for Allegedly Deceiving Consumers by Using Bogus and Unsupported Claims (FDN Solutions, LLC Web Advertisements Claimed Company Could Reduce Debt by 40 to 60 %).

Iowa AG Again Comes Up Empty In Probing Fraud; Loan Mod Scam Outfit Targeted In Civil Suit Was Already Defunct, Operator Need Not Pay $40K Fine

In Des Moines, Iowa, the Des Moines Register reports:

• An Urbandale man has been barred from consulting homeowners about foreclosure and will be required to pay a $40,000 fine if he breaks a consent order, said Iowa Attorney General Tom Miller.
  
  
• Miller alleges that Bruce M. Spurlock, 65, violated Iowa’s consumer fraud act by collecting money for foreclosure consulting services before fully performing all services as a co-owner of the now-defunct Arizona businesses called Discount Mortgage Relief and Mortgage Relief.
  
  
• Discount Mortgage Relief closed in 2010 after the Arizona attorney general sued the company, alleging homeowners had paid the company thousands of dollars for “guaranteed” home-loan modifications they didn’t receive.
  
  
• Spurlock denied violating Iowa’s consumer fraud act but agreed to the consent judgment, officials said.

Source: Urbandale man accused of fraud barred from foreclosure consultations.

'Clear & Convincing' Standard Of Proof Not Applicable When Only 'Preponderance' Of Evidence Is Needed By Homeowner In Evaluating '11th Hour' Allonge

An excerpt from a recent post in Naked Capitalism:

• In a unanimous decision, the Alabama Court of Civil Appeals reversed a lower court decision on a foreclosure case, U.S. Bank v. Congress and remanded the case to trial court.
  

***

• The [foreclosing bankster's] solution in the Congress case [in the trial court] appears to have been a practice that has since become troublingly become common: a fabricated allonge. An allonge is an attachment to a note that is so firmly affixed that it can’t travel separately.
  
  
• The fact that a note was submitted to the court in the Congress case and an allonge that fixed all the problems appeared magically, on the eve of trial, looked highly sus. The allonge also contained signatures that looked less than legitimate: they were digitized (remember, signatures as supposed to be wet ink) and some were shrunk to fit signature lines.
  
  
• These issues were raised at trial by Congress’s attorneys, but the fact that the magic allonge appeared the Thursday evening before Memorial Day weekend 2011 when the trial was set for Tuesday morning meant, among other things, that defense counsel was put on the back foot (for instance, how do you find and engage a signature expert on such short notice? Answer, you can’t).

***

• The [Alabama appeals] court found that the [trial] judge put an improperly high burden of proof on Congress [in determining the validity of the allonge], applying a “clear and convincing evidence” standard.
  
  
• The court said that was a misapplication of precedent based on cases dealing with recorded deeds. The document under dispute was an allonge to an unrecorded note. The appeals court found the evidentiary hurdle should instead be that of a preponderance of evidence.
  
  
• In addition, the court also found that the lower court incorrectly focused on the issue of the validity of the signatures. The appeals court found that even though Congress seemed to be contesting the validity of the signatures (the appeals court notes the argument at points seemed to be a bit confused), her real bone of contention was that the allonge was bogus [...]
  

***

• The fact that a higher court has finally decided to place the question of the legitimacy of suddenly-appearing allonges at the heart of a ruling is a welcome development.

For more, see Alabama Appeals Court Reverses Decision on Chain of Title Case, Ruling Hinges on Question of Bogus Allonges.

For the ruling, see Congress v. U.S. Bank. N.A., No. 2100934 (Ala. Civ. App. June 8, 2012).

Another Force-Placed Insurance Screwing Over, Another Class Action-Seeking Suit By Victimized Homeowner Tagging Banksters For Dirty Deeds

In North Palm Beach, Florida, The Miami Herald reports:

• Think your homeowners insurance is outrageous? Mark Kunzelmann likely has you beat. Kunzelmann, a 49-year-old network specialist, let the policy on his four-bedroom, North Palm Beach home lapse last year. It was a big mistake, he acknowledges.
  
  
• But he can’t believe what the oversight (later remedied) cost him: $10,000 for just a few months worth of coverage. And he has his bank, Wells Fargo, and its insurance partner, Assurant, to thank.
  
  
• As most homeowners are aware, if your property is financed, you have to have insurance to protect the lender. If a bank learns a mortgage holder is not covered, it is allowed to secure a policy and pass the charge on to the customer. In Kunzelmann’s case, Wells Fargo got him a policy that carried a startlingly high cost.
  
  
• How high? Roughly $18,000 a year — of which, he says, the bank got an 11 percent commission. By comparison, Kunzelmann’s old policy, the one he let lapse, was costing him just $2,500. “It left a very bad taste in my mouth,” Kunzelmann said Wednesday. “I told them, ‘If you do this to me, I’m going to sue you and take my business elsewhere.’ ”
  
  
• Kunzelmann has followed through on both threats. He recently refinanced his mortgage with another bank. And he has filed a federal lawsuit intended to recoup not just his lost funds, but also those of the thousands of fellow Wells Fargo customers who suffered the same fate.
  
  
• Kunzelmann, with the help of consumer protection attorney Adam Moskowitz, has petitioned the court to broaden his complaint into a class-action suit against Wells Fargo, claiming the lender’s insurance rates have “driven many of their consumers into foreclosure, and saddled others with excessive debt from which they may never find relief.”
  
  
• Kunzelmann’s suit says Wells Fargo received the same 11 percent commission from Assurant for every other force-placed policy the insurance company issued to the bank’s note holders. Wells Fargo has since stopped accepting those commissions, said bank spokesman Tom Goyda — but not before the bank collected $177 million in “pure profit” from Assurant on such transactions, the suit alleges.
  
  
• Kunzelmann accused Wells Fargo of unjust enrichment, and is seeking damages — for himself and the “hundreds of thousands” who he says have been similarly fleeced. Assurant handles 80 percent of Wells Fargo’s force-placed policies, while QBE Insurance — a defendant named in another Moskowitz suit — issues the rest.
  
  
• “We allege that [these policies] are unjust, that they’re not in good faith, and that they’re deceptive,” Moskowitz said. “We’ve heard some really egregious stories.” [...] The suit is one of three similar actions filed by Moskowitz’s firm — Coral Gables-based Kozyak, Tropin & Throckmorton — against banks over lender-placed (or, as the suit calls it, force-placed) insurance policies, including one set for trial later this year.

For more, see Lender and insurer gouged me — and others — Florida homeowner says (A South Florida homeowner is suing, saying he and many others have been gouged by lenders working in cahoots with insurance companies to enact force-placed policies).

Antitrust Feds Continue Clean-Up In N. California Foreclosure Sale Bid-Rigging Scams As Two More Negotiate Pleas Before Charges Filed

From the U.S. Department of Justice:

• Two Northern California real estate investors have agreed to plead guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
  
  
• Felony charges were filed [Thursday] in the U.S. District Court for the Northern District of California in Oakland, Calif., against Douglas Ditmer of San Ramon, Calif. and Keith Slipper of Oakland.
  
  
• To date, as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 24 individuals, including Ditmer and Slipper, have agreed to plead or have pleaded guilty.

***

• According to court documents, Ditmer and Slipper participated in conspiracies to rig bids and commit mail fraud by agreeing to stop bidding or to refrain from bidding for properties at public foreclosure auctions in Contra Costa and Alameda counties, Calif., negotiating payoffs with other conspirators not to compete, purchasing selected properties at public auctions at suppressed prices, and participating in second, private auctions open only to members of the conspiracy, where the property was awarded to the conspirator who submitted the highest bid.

***

• The department said that the primary purpose of the conspiracies was to suppress and restrain competition in order to obtain selected real estate offered at Contra Costa and Alameda county public foreclosure auctions at non-competitive prices.
  
  
• When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.
  
  
• Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million.

For the Justice Department press release, see Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 24 Plea Agreements to Date).

magicJack A Handy Tool For Overseas Rent Scams & Other Ripoffs To Hide Behind Local Area Codes When Targeting Victims

In Hollywood, Florida, the South Florida Sun Sentinel reports:

• Scammers from overseas could try to con you out of money using a new trick — calling from what you think is a local area code, prosecutors warn. It happened to Stuart Brisgel, 41, a financial adviser, who planned to sell his four-bedroom house in an upscale Hollywood neighborhood, when a scammer in Nigeria had plans of his own.
  
  
• The scammer, possibly using legitimate information Brisgel posted online, was trying to rent the house for $800 a month to unsuspecting victims who didn't know the house wasn't actually for rent. Brisgel learned about the plan after a pregnant woman who had seen the rental posting on Craigslist came to check out the house and, perplexed by the "for sale" sign, called the real estate agent.
  
  
• The scammer had set up a fake email address using Brisgel's name to correspond with potential victims. Using the IP address, Brisgel found out the scammer was in Nigeria. But the phone number provided had an Alabama area code.

***

• Last winter, the attorney general in Mississippi warned consumers there about overseas fraud from callers in India using local area codes in attempts to extort money from Americans. And a woman in Santa Fe told police she had been swindled out of nearly $100,000 she had wired to someone in exchange for collecting millions of dollars in prizes that never came. The caller had a New Mexico area code but the calls originated from Jamaica.
  
  
• In all of the cases, the callers were using magicJack, a telephone device made by a company with corporate headquarters in West Palm Beach. The device can be plugged into overseas phones so calls can be made using a U.S. area code. It is intended to allow somebody abroad — such as an American student in Europe — to make calls to the U.S. at a local rate.
  
  
• When Brisgel searched the phone number with the Alabama area code on Google, he found an alarming post: "owner of this number is a scammer, cheat and a fraud — performing rental scams via Craigslist using this number!" A further Internet search revealed that the owner of that number was magicJack.
  

***

• In the Mississippi case, a resident received a call from the 407 area code from someone who said he was a police officer in Orlando. He told the woman there was a warrant out for her arrest and she would be picked up the next day if she did not pay to settle the charge.
  
  
• The call was really coming from India. At the request of the Mississippi Attorney General's Office, magicJack helped verify the scam and disconnected the phone number.

For more, see Overseas scammers make most of fake local area codes.