Thursday, November 22, 2012

Feds, Missouri AG Announce Guilty Pleas In Separate Criminal Prosecutions Of Ex-LPS Exec For Her Role In Flooding Property Recorders' Offices Throughout U.S. With Crappy Mortgage-Related Paperwork

From the U.S. Department of Justice (Washington, D.C.):
  • A former executive of Lender Processing Services Inc. (LPS) – a publicly traded company based in Jacksonville, Fla. – pleaded guilty [], admitting her participation in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the United States.

    The guilty plea of Lorraine Brown, 56, of Alpharetta, Ga., was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Middle District of Florida Robert E. O’Neill; and Michael Steinbach, Special Agent in Charge of the FBI’s Jacksonville Field Office.(1)

    The plea, to conspiracy to commit mail and wire fraud, was entered before U.S. Magistrate Judge Monte C. Richardson in Jacksonville federal court. Brown faces a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the crime. The date for sentencing has not yet been set.

    “Lorraine Brown participated in a scheme to fabricate mortgage-related documents at the height of the financial crisis,” said Assistant Attorney General Breuer. “She was responsible for more than a million fraudulent documents entering the system, directing company employees to forge and falsify documents relied on by property recorders, title insurers and others. Appropriately, she now faces the prospect of prison time.”

    “Homeownership is a huge step for American citizens,” said U.S. Attorney O’Neill. “The process itself is often intimidating and lengthy. Consumers rely heavily on the integrity and due diligence of those serving as representatives throughout this process to secure their investments. When the integrity of this process is compromised, illegally, public confidence is eroded. We must work to assure the public that their investments are sound, worthy, and protected.”

    Special Agent in Charge Steinbach stated, “Our country is increasingly faced with more pervasive and sophisticated fraud schemes that have the potential to disrupt entire markets and the economy as a whole. The FBI, with our partners, is committed to addressing these schemes. As these schemes continue to evolve and become more sophisticated, so too will we.”

    Brown was the chief executive of DocX LLC, which was involved in the preparation and recordation of mortgage-related documents throughout the country since the 1990s. DocX was acquired by an LPS predecessor company, and was part of LPS’s business when LPS was formed as a stand-alone company in 2008. At that time, DocX was rebranded as “LPS Document Solutions, a Division of LPS.” Brown was the president and senior managing director of LPS Document Solutions, which constituted DocX’s operations.

    DocX’s main clients were residential mortgage servicers, which typically undertake certain actions for the owners of mortgage-backed promissory notes. Servicers hired DocX to, among other things, assist in creating and executing mortgage-related documents filed with recorders’ offices. Only specific personnel at DocX were authorized by the clients to sign the documents.

    According to plea documents [], employees of DocX, at the direction of Brown and others, began forging and falsifying signatures on the mortgage-related documents that they had been hired to prepare and file with property recorders’ offices. Unbeknownst to the clients, Brown directed the authorized signers to allow other DocX employees, who were not authorized signers, to sign the mortgage-related documents and have them notarized as if actually executed by the authorized DocX employee.

    Also according to plea documents, Brown implemented these signing practices at DocX to enable DocX and Brown to generate greater profit. Specifically, DocX was able to create, execute and file larger volumes of documents using these signing and notarization practices. To further increase profits, DocX also hired temporary workers to sign as authorized signers. These temporary employees worked for much lower costs and without the quality control represented by Brown to DocX’s clients. Some of these temporary workers were able to sign thousands of mortgage-related instruments a day. Between 2003 and 2009, DocX generated approximately $60 million in gross revenue.

    After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employees to file and record them with local county property records offices across the country. Many of these documents – particularly mortgage assignments, lost note affidavits and lost assignment affidavits – were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions. Brown admitted she understood that property recorders, courts, title insurers and homeowners relied upon the documents as genuine.

    Brown also admitted that she and others also took various steps to conceal their actions from clients, LPS corporate headquarters, law enforcement authorities and others. These actions included testing new employees to ensure they could mimic signatures, lying to LPS internal audit personnel during reviews of the operation in 2009, making false exculpatory statements after being confronted by LPS corporate officials about the acts and lying to the FBI during its investigation. LPS closed DocX in early 2010.
For the U.S. Justice Department press release, see Former Executive at Florida-Based Lender Processing Services Inc. Admits Role in Mortgage-Related Document Fraud Scheme (Over 1 Million Documents Prepared and Filed with Forged and False Signatures, Fraudulent Notarizations).

(1) In a seperate prosecution, the Office of the Missouri Attorney General announced that Brown will also be pleading guilty to state criminal charges for her role in flooding the State of Missouri with bogus land documents.

For more, see St. Louis Post-Dispatch: Missouri Attorney General Chris Koster announces plea in mortgage forgery case.

Sale Leaseback Peddler Gets 3+ Years For Role In Equity Stripping Foreclosure Rescue Scam That Screwed Over Financially Strapped DC/Maryland Homeowners

From the Office of the U.S. Attorney (District of Columbia):
  • Carline M. Charles, 41, who ran a business that supposedly would rescue distressed homeowners from foreclosure, has been sentenced to 3 ½ years in prison for her role in a mortgage fraud scheme that cost homeowners over $774,000 and lenders more than $1 million, U.S. Attorney Ronald C. Machen Jr. and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, announced [].
***
  • According to a statement of offense, signed by the defendant as well as the government, Charles represented herself as the owner of C & O Property Solutions, LLC, a company that offered refinancing options to homeowners in the District of Columbia and Maryland whose properties were facing imminent foreclosure. In fact, she was operating a scheme that ultimately involved 12 homes along with fraudulently obtained mortgages, financial losses for lenders, and evictions for many of the people who turned to her for help.

    Charles and others contacted homeowners through solicitation postcards or by telephone, using foreclosure and land records to identify people who were in financial distress. Charles told the homeowners that they could refinance their mortgage loans with the assistance of financial partners or investors so they could buy time to repair their credit. She assured them that their names would remain on the property deeds after this “refinancing.” Later, after a period of about six months, according to Charles, the homeowners could refinance the mortgages and remove the partners or investors from the property deeds.

    While the homeowners believed they were refinancing their mortgage loans, in actuality they were selling outright their properties to straw purchasers recruited by Charles. Charles and others paid the straw purchasers fees of up to $10,000 per transaction in return for use of their personal information to purchase properties. All told, these actions led to mortgage lenders issuing loans of approximately $4 million. Charles arranged to siphon out roughly $1 million of this money from the properties for herself or her company. She used the money to pay her own personal expenses and to continue perpetuating the scheme.

    In addition, Charles required many of the distressed homeowners to pay a monthly “mortgage” payment, which she claimed would be forwarded to the lenders or placed in escrow. Many homeowners paid her, as required, providing a total of about $114,000. Charles forwarded the mortgage payments for a period of time, but eventually stopped doing so. This led to the foreclosure of 12 properties that had the fraudulently obtained mortgages, the evictions of most of the homeowners, and a loss to the lenders in excess of $1 million.(1)
For the U.S. Attorney press release, see Business Owner Sentenced to 3 ½ Years in Prison In $1.7 Million Mortgage Fraud Scheme (Homeowners Turned to Her to Avoid Foreclosure, Wound up Evicted).

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

Phoenix Condo Owner Who Paid Cash For Unit The Latest Victim Of Illegal Foreclosure Lockout; Fannie Reportedly Giggles About Screw-Up, Then Responds: 'Oops, It Was The Real Estate Agent's Fault!'

In Phoenix, Arizona, KTVK-TV Channel 3 reports:
  • A Phoenix man is outraged that he found himself locked out of this own condo. Kevin Hunter has a free and clear mortgage on his unit, since he paid cash. So he was shocked when he tried to get in one day, and his key didn't work. New locks had been installed on his doors.

    And now those new door locks have Hunter keyed up. “I'm mad,” he said. “It’s breaking and entering as far as I'm concerned!”

    The locks come from his west Phoenix condo that he paid cash for years ago. He rents the condo out. But since he doesn't currently have a tenant, only Hunter is supposed to have access inside.

    Apparently, that's not the case, because someone recently drilled out Hunter's locks and installed their own, preventing him from entering.

    “It looked just like this,” he said, pointing to his front door. “But none of it was mine. I have smart keys on it so every time I have a new renter I can rekey it without having a locksmith come. They drilled these out; they cut my lockbox off.”

    Hunter later found out that representatives from Fannie Mae were responsible for removing the locks and installing their own. Hunter says he spoke with the representative, who immediately acknowledged that a mistake had been made.

    They told me that they had drilled into the wrong unit. They drilled into 205 instead of 250 and laughed and thought it was funny,” he recalled.

    Turns out, Fannie Mae actually tried to take possession of Hunter's condo, unit 205, when they should have been at unit 250.

    Hunter immediately took Fannie Mae's locks off and put his own back on. But still, he says, he's outraged and feels that Fannie Mae should pay his $368 repair bill. “It’s public record who this belongs to and if it’s paid for or not,” he said.

    3 On Your Side wanted to know how Fannie Mae made such a mistake. Fannie Mae tells us unit 250 was in foreclosure and that was the unit they were attempting to take back. Fannie Mae representatives acknowledged when they went to Desert Breeze Villas, they mistakenly went to unit 205 instead, which is the unit which Hunter owns.

    But, Fannie Mae blamed the confusion on a real estate company called West USA Realty, which cut Hunter a check for $368, the amount he spent to repair his locks.

    Kevin says it was the right thing to do.(1)
Source: Locks changed at wrong home being called a mistake.

(1) For Kevin and other homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:
For examples of filed lawsuits involving illegal bank break-in, "trash-out" lockout cases, see:

Wednesday, November 21, 2012

Florida Regulators OK New Form Of Title Insurance For Loan Modifications

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Efforts to reduce or even review Florida title insurance rates have stalled for 20 years, but state regulators said Monday they have approved three insurers to offer a new lower-priced form of title insurance for loan modifications designed to help struggling homeowners avoid foreclosure.

    A new product, a Mortgage Priority Guarantee Policy, comes at a minimal flat cost of $125, instead of the many hundreds of dollars otherwise required, state officials said.

    This product is being offered at a time when innovative solutions from the insurance industry are needed to assist businesses and consumers,” Florida’s Insurance Commissioner Kevin McCarty said in a statement.

    Approved to offer it: Old Republic National Title Insurance Co., Westcor Land Title Insurance Co. and WFG National Title Insurance Co.

    The new product “is used when lenders amend an existing mortgage loan agreement in order to help a struggling homeowner remain in their home and prevent a foreclosure,” officials said.

Dozens Of Jacksonville-Area Homeowners Slapped With Mechanics Liens After Local Roofer Pocketed Their Cash & Stiffed Materials Supplier; Will Either Pay Twice For Same Job Of Face Foreclosure; Victims Seek Criminal Charges

In Jacksonville, Florida, First Coast News reports:
  • You pay thousands for a new roof and the last thing you want is to pay twice. That could happen to dozens of homeowners on the First Coast. First Coast News has learned that they're faced with liens against their properties, after Mann's Roofing failed to pay its suppliers.

    "They never paid the supplier, so even though I paid for the job in full, I received a lien on my home from the supplier, protecting their interest," homeowner Edmond Godreau said.

    Godreau is one of about 40 homeowners since January of this year who say they had Mann's install a new roof on their home. They explained they paid to have the work done. The company put the new roof on, but they allege the roofer never paid the roofing supplier for the materials. These customers say they carefully checked out Mann's before they used them, and they checked out well.

    "I had three other neighbors who had their house done my Mann's Roofing, they were all happy," said Gary Fusani.

    The suppliers are not only going after Mann's Roofing, they have also placed liens on the homes. "And also they've filed a lawsuit to foreclosure on my mortgage to get the money they're owed," Godreau said.

    Now this group is asking the State Attorney's Office to look into criminal charges against those behind Mann's Roofing.

Loan Sharks Find Safe Havens On Native American Tribal Lands To Carry Out Their Handiwork

In Portland, Oregon, KATU-TV Channel 2 reports:
  • Online loan sharks are exploiting a gaping loophole to get their hands on your money - and local lawmakers are fighting back hard. What are these loan sharks doing that's so wrong?

    They're setting up shop on Native American reservations so they can avoid state and federal laws that protect consumers. It's one of the worst cases of online crime the KATU On Your Side Investigators have ever come across.

    Oregon Democratic Senator Jeff Merkley told KATU he has been fighting for years to stop it. "What they're doing is morally wrong," Merkley said. "It breaks state law. It destroys families and we have to stop it."

    We’ve been talking to a Salem woman – hard working but behind on her bills like a lot of us – who is in over her head with a payday loan company – way, way over her head.

    Elena Peralta, 20, took out $150 to pay her car insurance – but in a matter of weeks, she was on the hook for $4,500 and teetering on the brink of bankruptcy. The business she got the loan from is called US Fast Cash, which operates on the Ottawa tribe's reservation in Oklahoma.

    The loan company, Peralta found out, had the right to raid her bank account at will. And when that money ran out, she started getting phone calls from ‘collection agents’ every day and night, and even at work, threatening her with legal action and harassing her.

    And the payments Peralta did manage to make never touched the principal – just the outrageous triple-digit interest rates the loan company was charging her. "It affected my family," she said. "Not just myself, my whole family."

    Everything about this loan sounds illegal under Oregon law. Regulators agree - so much so that the state has already red-flagged these online lenders in this consumer alert.

    But here's what we found out when we started looking into this - nothing can be done to stop them, or bring the worst of these cyber loan sharks to justice. Not yet at least.

    This woman’s case – and thousands like it – is now at the center of a legal battle at the highest levels of the U.S. Government –a story that’s taken us from Portland, to the halls of Congress, to a dusty town in Oklahoma - and deep into the pages of one of the murkiest chapters in America’s history. Millions of dollars hangs in the balance as the rights of you, the consumer, are pitted against the rights of all Native Americans.

    Their treaties with the United States are century-old binding contracts upheld by numerous court decisions. But the issue of tribal sovereignty is taking center stage in the fight to stop online loan sharks.
***
  • Merkley is now trying to push a bill that he authored through the U.S. Senate. It would stop the lending from tribal lands in its tracks. "It simply says that you can't operate out of a tribal reservation or overseas, or anywhere else, and violate the state laws," Merkley said.

    If the bill becomes law, the Consumer Fraud Protection Bureau will also have the power to stop the loan sharks at the source, making it impossible for them to dip their electronic fingers into the bank accounts of anyone.

    Merkley expects a fight. He says lenders and their lobbyists will line up to stop the bill’s passage.

Tuesday, November 20, 2012

Lawsuits Accusing MERS Of Mortgage Assignment Recording Fee Ripoffs Continue

In Multnomah County, Oregon, The Oregonian reports:
  • Emotional testimony from people who recently lost houses through bank foreclosures punctuated a meeting Thursday, during which Multnomah County's commissioners voted to proceed with a lawsuit against a mortgage giant linked to countless foreclosures nationally.

    The lawsuit, expected to be filed within weeks in Multnomah County Circuit Court, will seek damages for allegedly unpaid document-recording fees from Mortgage Electronic Registration Systems, or MERS.
***
  • Although MERS has been previously sued in Oregon by private parties and by counties in other states, this lawsuit will mark the first time an Oregon county has moved ahead with legal action.

    The lawsuit will claim that MERS has avoided paying anywhere from $3 million to nearly $25 million in local recording fees. The actual amount will be determined by how many mortgages are involved, how many times each of those mortgages was bought and sold without new transaction fees being paid, and by laws that may allow triple damages in certain instances.

Feds Use Forfeiture Proceeding To Snatch Downtown NYC Condo Bought With Bribe Cash

In New York City, the New York Post reports:
  • Never mind the skeletons in the closet.

    The feds have taken ownership of a luxury Chelsea condo that was bought with bribe money paid to the former first lady of Taiwan.

    The two-bedroom apartment in the Onyx Chelsea, which sold for nearly $1.6 million in 2008, was one of two American properties that the family of ex-Taiwanese President Shui-Bian Chen bought to help launder the illicit payoffs.

    The $6 million pocketed by Sue-Jen Wu came from Yuanta Securities Co. to ensure her hubby’s government wouldn’t oppose its bid to acquire a financial holding company, according to US Immigrations and Customs Enforcement.

    A forfeiture deal with the shell company that held title to the condo and another property in Virginia means the feds will get some 85 percent of net sales proceeds.

Sixth Defendant Sentenced, Gets 37 Months In Northern NJ Sale Leaseback Equity Stripping Racket

In Trenton, New Jersey, The Alternative Press reports:
  • What began as a joint investigation between the FBI and the IRS known as “Operation Follow The Money,” resulted in the subsequent arrest of several individuals, in July 2009, including Sussex County resident, Crystal Paling.

    On November 9, 2012, in a Trenton Federal Court, U.S. District Judge Peter G. Sheridan sentenced Paling, 52, of Sussex, to 37 months in prison, and imposed a three-year supervised probationary period. Paling was also ordered to pay $532,497 in restitution. [...] In March of 2012, Paling was found guilty of conspiracy to commit wire fraud, and money laundering, for her participation in a mortgage fraud scheme, that occurred in both New Jersey and Florida.
***
  • Per the original complaint, Paling and co-conspirators Daniel Verdia, 54, of Mahwah, N.J., Jaye Miller, of Pocono Lake, Pa., and Sandra Mainardi, 52, of Wayne, N.J., participated in a foreclosure bailout scheme working out of an office in Hasbrouck Heights, N.J. Between the periods of February and September of 2005 unsuspecting homeowners who were experiencing financial hardships, sought to either sell or refinance their homes.

    Homeowners were told that they would have the opportunity to repurchase their homes once they were in a more financially stable position. The homes eventually went into default, and the victim homeowners received little monetary return, or no compensation at all for their homes. Paling and her co-conspirators all profited from these transactions estimated at $1 million dollars.

    Paling facilitated these fraudulent transactions by recruiting buyers and sellers. She also falsified documents, and assisted in the transfer of monies.
***
  • After the arrests of the defendants in 2009, Wesyan Dun, FBI Special Agent in Charge, said of the individuals involved, "Those who are engaged in foreclosure bailout schemes are opportunistic thieves. The defendants in this matter are charged with preying on the financially weak and desperate, our lending industry, and ultimately the taxpayers. To swindle people out of the roofs over their heads is just deplorable. But we will continue working with our partners in uncovering these schemes, bringing the fraudsters to justice, and educating the public."
***
  • In addition to Paling, Verdia pled guilty to one count of conspiring to commit wire fraud, and money laundering. He was sentenced to 30 months in prison. Miller pled guilty to one count of conspiring to commit wire fraud, and money laundering, and has been sentenced to six months in prison. Apolito pled guilty to tax evasion, and was sentenced to five years probation. Robert Gorman, 64 of Long Valley, N.J., another defendant in the case, pled guilty to subscribing to false tax returns, and has been sentenced to two years probation. Mainardi received a 46-month prison sentence for her plea in Florida Federal Court to one count of wire fraud.(1)
For the story, see Sussex County Woman Receives 37 Month Prison Sentence For Committing Mortgage Fraud.

For the U.S. Attorney press release, see Sussex County, N.J., Woman Sentenced To 37 Months In Prison For Phony Mortgage Loan Scheme.

See Targeting Scammers Who Prey On Distressed Homeowners for a U.S. Attorney (Dist. of New Jersey) press release summarizing the sale leaseback equity stripping prosecutions brought by the office during the fiscal year ended September 30, 2012.

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

Monday, November 19, 2012

Unresolved Issues May Leave Recent Ohio High Court Court Foreclosure Ruling In Limbo; Losing Bankster Asks State Supremes To Address 'Lack Of Standing' v. 'Lack Of Subject Matter Jurisdiction'; 'Void Judgment' v. 'Voidable Judgment'

The foreclosure litigation in a recent big homeowner victory in the Ohio Supreme Court in Fed. Home Loan Mtge. Corp. v. Schwartzwald is apparently not over as the bankster in this case filed a motion for reconsideration in which it asks the court to clarify certain matters that weren't resolved in the ruling.

From the Motion For Reconsideration:
  1. The Court should clarify whether a plaintiff's failure to prove standing as of the filing of a complaint deprives a common pleas court of subject matter jurisdiction;
    .........................
  2. If the Court in fact held that a plaintiff's lack of standing as of the filing of a complaint deprives a common pleas court of subject matter jurisdiction, then the Court should only apply that rule prospectively;
    ........................
  3. Because Defendants-Appellants Duane and Julie Schwartzwald did not seek a stay of the execution proceedings and the property at issue has since been sold to a third party, the Court should remand this case to the common pleas court to permit Freddie Mac to prove that it in fact had standing as of the filing of the Complaint, and to instruct the common pleas court to only dismiss the case without prejudice if Freddie Mac cannot do so.
From the Memorandum In Support Of Motion For Reconsideration:
  • The Opinion is unclear as to whether the Court intended to hold that a plaintiff's failure to have standing and its inability to "invoke the jurisdiction" of the court deprives a common pleas court of subject matter jurisdiction. That distinction is crucial, as a judgment rendered by a court without subject matter jurisdiction is void (and not merely voidable).

    If the Court did intend to hold that a plaintiff's failure to have standing deprives a common pleas court of subject matter jurisdiction, then the Opinion changed the law of Ohio,and threw into question judgments rendered in literally hundreds of thousands of foreclosure actions (and potentially every judgment ever rendered in this state). If a plaintiff's lack of standing deprives a common pleas court of subject matter jurisdiction, then Plaintiff-Appellee Federal Home Loan Mortgage Corporation ("Freddie Mac") respectfully suggests that the Opinion be limited to prospective application only.

    Finally, following the common pleas court's judgment in this case, Defendants-Appellants Duane and Julie Schwartzwald did not seek a stay of the sheriff's sale, and the property has been sold to a third party.1 The Opinion's dismissal of this case without prejudice leaves the parties in an unusual position. To avoid this case once again being returned to the appellate process, Freddie Mac requests that this case be remanded to the common pleas court and that it be afforded the opportunity to show that it in fact had standing as of the filing of the Complaint.
Go here for the entire Motion For Reconsideration and the accompanying Memorandum in support thereof for the full discussion of the issues as contained in the recent court filings.

Thanks to Deontos for the heads-up on these latest developments.

NJ Appeals Court: Excessive Delay In Raising 'Standing' Issue In State Court Proceeding Fatal To Foreclosure Defense; Judgment Obtained By Standing-Lacking Lender Not Necessarily Void

Law 360 reports:
  • A New Jersey appeals court ruled Wednesday that a homeowner couldn't use standing arguments to disrupt a foreclosure decision after excessive delay, adding that a foreclosure judgment won by a party that lacked standing isn't necessarily “void” under the meaning of a key court rule.(1)
For more, see Delayed Standing Defense Can't Upset Foreclosure: NJ Court.

For the ruling, see Deutsche Bank National Trust Co. v. Russo, Docket No. A-2437-11T1 (NJ App. Div. November 14, 2012) (for publication).

(1) In this regard, the court stated:
  • Based on our reading of Guillaume and Deutsche Bank, we conclude that, even if plaintiff did not have the note or a valid assignment when it filed the complaint, but obtained either or both before entry of judgment, dismissal of the complaint would not have been an appropriate remedy here because of defendants' unexcused, years-long delay in asserting that defense. Therefore, in this post-judgment context, lack of standing would not constitute a meritorious defense to the foreclosure complaint.

    In reaching that conclusion, we note that, contrary to defendants' contention, standing is not a jurisdictional issue in our State court system and, therefore, a foreclosure judgment obtained by a party that lacked standing is not "void" within the meaning of Rule 4:50-1(d).

    In the federal courts, standing is a jurisdictional concept, because Article III of the United States Constitution limits the jurisdiction of the federal courts to cases and controversies. See Raftogianis, supra, 418 N.J. Super. at 353 (citing In re Foreclosure Cases, 521 F. Supp.2d 650, 653-54 (S.D. Ohio 2007)).

    By contrast, the Superior Court of New Jersey is a court of general jurisdiction, Swede v. Clifton, 22 N.J. 303, 314 (1956), and in our courts, the requirement that a party have standing is a matter of judicial policy not constitutional command. See DeVesa v. Dorsey, 134 N.J. 420, 428 (1993) ("Unlike the Federal Constitution, the New Jersey Constitution does not confine the exercise of the judicial power to actual cases and controversies. See U.S. Const. art. III, § 2, cl. 1; N.J. Const. art. VI, § 1, para. 1.") (Pollock, J., concurring); Salorio v. Glaser, 82 N.J. 482, 490-91, cert. denied, 449 U.S. 804, 101 S. Ct. 49, 66 L. Ed. 2d 7 (1980).

    "Because standing affects whether a matter is appropriate for judicial review rather than whether the court has the power to review the matter, and standing is a judicially constructed and self-imposed limitation, it is an element of justiciability rather than an element of jurisdiction." N.J. Citizen Action v. Riviera Motel Corp., 296 N.J. Super. 402, 411 (App. Div. 1997), appeal dismissed, 152 N.J. 361 (1998); see also Gilbert v. Gladden, 87 N.J. 275, 280-81 (1981) (distinguishing the concept of justiciability from that of subject matter jurisdiction).4

Picture Becoming Clearer On How Banksters Are Skating Out Of Paying Foreclosure Fraud Settlement From Their Own Pockets

David Dayen writes in Firedoglake:
  • This one offers a bit of vindication. I cannot tell you how much grief I got from “official sources” over the clear reality that banks would be able to pay off their penalties in the foreclosure fraud settlement with investor money.

    HUD Secretary Shaun Donovan flat-out said it, and then had to backtrack and obfuscate. But it was clearly set up by the terms of the settlement. Banks would get credit under the settlement for modifying loans in private label mortgage backed securities, which means the investors take the hit.

Sunday, November 18, 2012

Another Homeowner Files Lawsuit Alleging Illegal Foreclosure Lock-Out; Round Up The Usual 'Suspects'

In Chicago, Illinois, WLS Radio 890 AM reports:
  • A former Lake Villa couple is suing Bank of America, claiming the bank wrongfully started foreclosure proceedings and locked them out of their home when the property was supposed to be up for a short sale.

    Plaintiffs Kevin and Christine McKee filed the lawsuit in U.S. District Court Tuesday. They claim Bank of America had filed a foreclosure complaint against their former home in the 3700 block of North Columbus Avenue in Lake Villa, but that the bank agreed to a short sale of the property when they moved out in November 2010.

    The couple and their teenage daughter moved to Florida, to seek medical treatment for Kevin McKee’s injuries from a car crash two years earlier, the suit said.

    The McKees claim that while they were away, the bank went ahead with the foreclosure without notifying them, and sent a crew from Miken Construction to winterize the home and change the locks, according to the suit.

    They only learned workers had been in their home after a neighbor called them saying people were inside their house, according to the McKees, who claim their house was supposed to be secured and shown by realtors.

    Crews allegedly ripped out their new kitchen cabinets and took all of their personal belongings still inside the house -- among them family antiques, sensitive personal information, tax returns and baby pictures of their daughter.

    The McKees have since sold the home, but claim Bank of America still has their belongings. The suit claims the bank had no right to enter their home or send remission crews.

    A spokesperson for Bank of America declined to comment on the pending litigation Tuesday night. A message left for Miken Construction was not immediately returned.

    The suit accuses Bank of America, its subsidiary BAC Home Servicing and Miken Construction of trespassing, conversion, negligence, intentional infliction of emotional distress, invasion of privacy and willful and wanton conduct. They also accuse Bank of America of breach of contract. The suit seeks an unspecified amount in damages, plus court costs.(1)
Source: Former Lake Villa couple sues Bank of America over ‘illegal’ lockout.

For the lawsuit, see McKee et al v. Bank of America, N.A.

(1) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:
For examples of filed lawsuits involving illegal bank break-in, "trash-out" lockout cases, see:

Miniature Swine A Therapy Animal, Says Homeowner After City Nixes Waiver Request To Keep Cuddly 3-Pound Pig; Situation May Be Federal Case In The Making If City Not Careful

In Coral Springs, Florida, the WTVJ-TV Channel 6 reports:
  • Kason Ray smiled big Friday as he played with Twinkie, his pet pig. The 8-year-old boy’s family in Coral Springs considers Twinkie a domesticated lifesaver. “She's very calming to him,” said Heather Ray, whose son has Down syndrome. “He'll scoop her up and love on her and pet on her. He really interacts with her so well.”

    But keeping the pig is against a city ban on livestock. Heather Ray said she was denied a waiver to keep Twinkie, but said she hasn’t been kicked out. "It's important for us to have something for Kason that he feels accepted," Ray said. "This animal loves him no matter what."

    Twinkie helps Kason get through his days. It's something psychotherapist Alina Gastesi-de Armas recommends. "The unconditional love a pet gives them allows them to grow and to have empathy," Gastesi-de Armas said. "People are sometimes not as open to their needs as a pet might be."

    In keeping the pig, the Ray family invokes the American Disability Act, a law that gives civil rights protections to individuals with disabilities that are like those provided to individuals on the basis of race, sex, national origin and religion.

    Even though the city told the Ray family they could not keep their pig, the ordinance hasn’t been enforced, the family said. It is something the family said it is happy about.

    "If we do get fined or get notices to get rid of her, then we will go to the Department of Justice and take it one step further," Ray said.(1)

    Why not get a cat or dog? Kason's father is allergic to them, and Twinkie doesn't make anyone cough or sneeze, the family said.

    In Volusia County, a 2-year-old autistic boy and his family are facing a similar problem – using animals to help cope with everyday life, while breaking a city code.

    "It doesn't take into consideration the uniqueness of each person's situation," Gastesi-de Armas said. "This child obviously has a great deal of fondness for this pet and hopefully people will take that into consideration when they make their decision."
Source: Pig Is Part of Coral Springs Family Despite City Livestock Ban (A Coral Springs family plans to keep their pet pig, even though there is a city livestock ban).

See also, South Florida Sun Sentinel: Twinkie the pig may have to move out of Coral Springs:
  • Convinced the pig was in the best interest of her child, Ray decided she'd deal with City Hall later. She bought the pig from a farm in Texas for $1,300. The pig costs the family about $25 a month for food and vet bills.

    Twinkie is one of nearly 300 miniature pigs sold every year, said Lona Morris, owner of Texas Tiny Pigs in Waco, Texas. She said families with allergies are among her top customers, as well as people looking for therapy animals.

    The city shouldn't consider Twinkie livestock because she wasn't bred for food or clothing fiber, argues Susan Magidson, president of the Society for the Advancement of Pet Pigs in Pennsylvania.

    "That's very sad," she said of the Rays' situation. "Pigs are the finest companion animal ... They cause no illnesses to people, with rare exceptions, they don't bark at night. They are very, very quiet."

    Jerry Brown, spokesman for the federal Department of Housing and Urban Development in Washington, D.C., said if a medical professional prescribes the pig as a therapy animal, then the Ray family might be protected under the Fair Housing Act.(2) Ray said she has a note from her pediatrician.

    Ray argues that pigs are increasingly being used as animal-assisted therapy. Shriners Hospitals for Children in Northern California, for example, has used pigs as therapy.
(1) The inability to make the distinction between a service animal, an emotional support/assistance animal and a household pet can give rise to a very costly legal problem for landlords, homeowner associations, municipalities purporting to enforce code restrictions, etc. Both the Housing Feds, the Civil Rights Feds, and others have shown a high degree of interest when these situations arise. See, for example:
In other cases in which the four-legged animals have prevailed over their two-legged antagonist-counterparts in actions attempting to mischaracterize them as livestock, see:
  • Gebauer v. Lake Forest Property Owners Ass'n, 723 So. 2d 1288 (Ala. Civ. App 1988) (in ruling against a homeowners' association and in favor of a family and its Vietnamese pot-bellied pig, the civil appeals court of Alabama pointedly observed "This is not a case in which a family is treating a farm animal like a pet, such as Arnold the pig of television's "Green Acres" fame. Gebauer bought a breed of pig that is bred specifically as a pet. The breed is much smaller than a farm pig and differs from a farm pig in several respects...");
    ...............................
  • James v. Smith, 537 So. 2d 1074 (Fla. 5th DCA 1989) (under the specific facts of the case, a Florida appellate court concluded that two ponies kept by a landowner were "domestic pets" within an exception to an anti-livestock covenant in a housing subdivision's deed restrictions, and accordingly, were permitted to stay on the premises. 537 So.2d at 1076-77);
    ............................
  • 'The Swine Stays!' Says Judge To HOA; Well-Behaved Wilbur The Pot-Bellied Porker Dodges Boot As Effort To Evict Beloved Family Pet Deemed 'Not Kosher' (homeowners association was successfully sued for threatening foreclosure on a family if they didn't give their family pet, a pot-bellied pig, the boot. Go here for the persuasive arguments, including case law authorities, made by the homeowner in this case; and go here for a deposition transcript from the family veterinarian, who was able to persuasively articulate to the court the difference between a breed of pig that is considered to be a 'household pet' and a regular farm pig that is generally considered 'livestock' - a consumption pig).
(2) Ibid.

Failure To Cough Up Homeowner's $20K Attorney Fee Award For Failed Foreclosure Attempt Leaves Delinquent Bankster Facing Foreclosure

In St. Augustine, Florida, WTEV-TV Channel 30 reports:
  • A local woman is taking on a monster megabank by filing a foreclosure of her own. Wells Fargo tried to take her home. A judge ruled she could keep it and Wells Fargo owes her for the trouble, but the bank still hasn't paid up.

    Rebecca Sharp likes to come home to this house every night. But seven years ago, she thought, that might change. "I was served with a summons pending foreclosure," said Sharp.

    Wells Fargo said she was six months behind on her mortgage. But she fought the foreclosure, and eventually the case was dismissed. The judge also ruled Wells Fargo should pay Sharp. She and the bank settled on nearly 20 thousand dollars for attorney's fees.(1) Eight months later she still hasn't seen that money.

    So, to try and get it, Sharp and her attorney turned the tables on Wells Fargo. "We filed a foreclosure notice to get our client the money she's owed," said attorney Tom Pycraft.

    It was filed against a local Wells Fargo branch down in St. Johns County. "Foreclosure cases are based on borrowers not paying bills. Now, Wells Fargo has not paid its bills. There's an irony there," said Pycraft.
For more, see Local woman wants to shut down big bank.

(1) For more on homeowners scoring thousands in attorney fee awards when successfully fending off bankster foreclosure attempts, see:

Cash-Poor City Approves Amnesty For Unpaid Code Enforcement Fines; Will Take Conditional $.15 On Dollar To Let Property Owners Off Hook

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • Fort Lauderdale property owners who have run afoul of the city's code enforcement inspectors and owe money in unpaid liens may get some relief – at least for a while. A month ago, city staffers proposed a Code Enforcement Lien Amnesty Program, and last week the City Commission approved the measure unanimously.

    The program allows homeowners with unpaid liens to pay only 15 percent of the total under certain conditions. Owe $100,000? You pay only $15,000. A whopping $85,000 is forgiven.

    Conditions include a provision that homeowners must pay for any repairs and renovations that caused the liens, as well as any costs incurred by the city.

    The Code Enforcement Lien Amnesty Program expires June 28.

    The program "will provide the city with a mechanism to clear many old and cumbersome liens from the books," City Manager Lee Feldman wrote in the original proposal. It will "stimulate the sale of many abandoned properties" and "allow homeowners suffering foreclosure to obtain clear title and renegotiate their mortgage."(1)

    The program could also be a way for the city to raise money when it's having cash problems, said Tim Smith, a former commissioner in Fort Lauderdale. "We did it in 2004 to avoid laying off public safety aides. And it makes people come into code compliance. It's saying, 'Here's the carrot. Clean up your house.'"
For more, see City revives lien amnesty initiative.

(1) With regard to a Florida property owner who was living in the subject home at the time the code enforcement fines were imposed, and has continuously made the premises their primary residence/homestead since then, the state homestead exemption from forced sales (under Article X, Section 4 of the state constitution) prevents the attachment of a lien against said home so long as the property remains the owner's homestead. The homeowner still may owe the fines, but that debt is not collectible through the enforcement of a lien, since no lien exists in these cases.

Hopefully, the City of Fort Lauderdale will inform their homestead-protected citizens that the unpaid code enforcement fines relating to their homes don't constitute liens on said homes (fat chance).


For examples where the City of Fort Lauderdale and two other Florida cities disregarded the state homestead law against forced sales and tried to screw their citizens anyway by attempting foreclosure on their homes over unpaid code enforcement fines (and - in the cases of the other two Florida cities - almost got away with it; they conned two of Broward County's snoozing trial court judges into believing the homeowner was not entitled to homestead protection, only to suffer reversal by a state appeals court), see:

Saturday, November 17, 2012

Billing Mechanism Allowing For Tax Liens, Foreclosure Over Unpaid Garbage Collection Fees Reaches Georgia High Court

In Duluth, Georgia, DuluthPatch reports:
  • The Supreme Court recently heard oral arguments by attorneys for Robert Mesteller, a Snellville resident who is taking on Gwinnett County about its way of collecting payment on sanitation services. The issue is that the money is collected on tax bills, something Mesteller claims is illegal and unconstitutional.

    The outcome of Mesteller’s appeal won’t be heard for several weeks. However, even if it fails, state Rep. Brett Harrell, whose district includes Snellville and parts of Loganville and Grayson, is also taking on the issue. He is re-introducing legislation in January to prevent municipalities using tax bills to collect anything other than taxes. Harrell said his reason for re-introducing House Bill 291 is not opposition to any particular program, just with the billing mechanism.

    In Georgia, we have non-judicial foreclosure; so, the lien is placed on your home and you are not even afforded an opportunity to stand before a judge and plead your case - again for non-taxes,” Harrell said, adding he had 60 co-signers to the bill when originally introduced. He acknowledges that he does face opposition.

    The associations of Counties and Cities representing corporate government rather than the citizens of those counties and cities are the primary opponents at the capitol. Around the state, the opponents are those elected and staff members that are more concerned with revenue to the corporate government rather than protecting those they serve.”

    Gwinnett County officials, however, say that if either Mesteller’s lawsuit or Harrell’s legislation is successful, the outcome might not be so good for county taxpayers. Joe Sorenson, communications director for Gwinnett County, warns that if the county were unable to bill for solid waste and recovery services via the property tax billing system, it would have to create a new billing system or significantly modify an existing one.
For more, see Lawsuit Win Could Increase Trash Pickup Cost (Gwinnett trash collection back in courts and at State Capitol. County warns outcome of either could result in increased costs for county residents).

Se also, Ga. Supreme Court to Take A Look At Gwinnett Trash Plan.

Miami 'As-Is' Foreclosed Condo Buy Comes Complete With Squatters; A Chilling New Trend? Maybe So, As Chance To Score Free Rent, Water, Cable TV Too Tough To Pass Up For Some

In Miami, Florida, WFOR-TV Channel 4 reports:
  • Unmasking suspected squatters isn’t simple because they are turning up in homes that are up for sale.

    It used to be that if you bought a house “as is” you got a great deal. Well, a chilling new trend is to buy the house “as is” and that means complete with squatters inside and it’s the buyers’ responsibility to get them out.

    Christina Malloy is living the nightmare as she buys a condo in Downtown Miami.

    For months, CBS4 Investigates has been following her as she purchases and tries to close on a one bedroom apartment; squatters somehow moved in and keep changing the locks and have figured out how to sneak in and out of the building. “What’s your message to them,” CBS4’s Chief Investigative Michele Gillen asked Malloy. “Get out because I am coming for you,” Malloy said.

    As someone who buys and sells property for a living, Malloy said it’s frightening how often she now comes face to face with squatters.

    I go to open the door and there’s people inside. There’s furniture. There’s beds. There’s personal items,” Malloy said.

    And that’s exactly what she finds when she finally gets to see the inside of her unit and videotapes the possessions of the squatter living there; TV hooked up to cable, a place to eat, but no living room furniture. "I absolutely consider them criminals,” said a property manager who is fed up with the problem.

    He describes them as out of control in multiple buildings decorating our skyline. He asked that we mask his identity to protect his condo’s reputation.

    Some people who have no rights to this property move in, use the free water, use the free cable, destroy property and for what? So they can live for free,” he said.

    For months, CBS4 Investigates has been documenting cases across South Florida where police or banks have been notified that people living in vacant and foreclosed homes or apartments – allegedly – don’t legally belong there.

    They are getting a free ride,” said Miami Commissioner Marc Sarnoff. Sarnoff said the number of absentee owners coupled with banks so slow to foreclose is a recipe for disaster.

    Unfortunately, the police are ill-equipped to deal with this because if someone just shows a document, a quit claim deed, a lease, the police treat it as a civil matter. And then you go before a judge that takes time, you have to hire a lawyer and next thing you know you are months, weeks, sometimes almost a year away to get a person out that doesn’t belong in the property,” Sarnoff said.

    When police are called, squatters often say they are the victims. And, in some cases, they may be victims of crooks posing as realtors or property owners.

    On a recent day, Miami-Dade police were called out to a house in Miami-Dade County to investigate a burglary. The alleged criminal: a mother of two who says she was duped by a make believe realtor who took her money and disappeared after renting her the house – a foreclosure not available for rent.

    She was just so convincing,” the woman said describing the demeanor of a realtor who turned out to be a fake. “Did you write a check?” Gillen asked. “No, I gave her cash,” the woman said. Just hours after this exchange, the woman found herself an efficiency apartment and moved her family out of this house.

    There are some honest victims, usually the ones willing to negotiate with you. They are the ones who say, ‘Do I need to pay’,’” said the property manager. But countless numbers are conning the system and you never know whose property they might move into next.

    You don’t know what they have behind that door. But who knows if they have a gun. Who knows if they are going to attack you. Who knows what I’m going to find. Will I find a dog, will I find drugs, will I find guns, will I find someone dead? I just don’t know,” said the property manager.

Financially Strapped Condo Owner Walks Away From Home, Loan Payments; Returns To 'Un-Foreclosed' Apartment Three Years Later To Find A Foreclosed Neighbor Squatting Comfortably On Premises; Complaints To Cops Fall On Deaf Ears

In Little Tokyo, Los Angeles, KABC-TV Channel 7 reports:
  • What would you do if you left your home only to return to find a stranger moved in, changed the locks and won't leave?

    In 2007, Jeff Cote bought a condo in the Little Tokyo Lofts in downtown Los Angeles, Two years later, he lost his job and could no longer make the payments on his loft. Thinking it would go into foreclosure, he packed up and moved out. Cote left it locked and empty.

    But a few months ago, Cote found out his loft, which did not go into foreclosure, is not empty. A stranger is living in his home and has been for three years. "Memorial Day weekend, I found out a squatter was living in my loft," Cote said.

    Cote said the alleged squatter is Johnathan Glover, who Cote said changed the locks, painted a wall and won't leave.

    Court records obtained by Eyewitness News indicate Glover was evicted from his last two residences. One of those residences is the loft right next door to Cote's.

    "He was evicted from 311 and he moved right into my loft, which is 312," Cote said.

    When Cote found out about Glover, he asked him to leave. Glover said he would and even signed an agreement to move out in August. Cote thought the matter was closed and listed his loft as a short sale. That was several months ago. Since then, the squatter has refused to leave, Cote said.

    Cote filed a police report claiming Glover is a trespasser, but was told there was no evidence a crime had been committed, so there was nothing law enforcement could do.

    Dennis Block, an attorney who specializes in evictions, said by law the rightful owner cannot remove a squatter by force. In most cases, the homeowner has to file a civil action in court, prove it's their property and evict the squatter. That process can take months or even more than a year.

    "I think they're tantamount to being thieves, it's as simple as that," Block said. "Somehow the law doesn't look at them like that, they deem this to be a civil dispute and make a landlord file a civil lawsuit. But it's clean and simple, they're stealing."

    Adding to Cote's problems, no one has been paying the homeowner association dues on his loft and he recently received a bill from the association. The bill is nearly $36,000.
***
  • Glover denies he is a squatter because he claims he makes monthly rent payments of $2,150 to another landlord. When asked for some proof of the payments, Glover said he always pays with cash or a money order, not checks. He also said the rent was last paid in June.

    [Glover's rental] agreement states the payments are to be made to a Thomas Marx with Countrywide Property Management in Citrus Heights near Sacramento. But when Eyewitness News tried to contact Marx, his cellphone number didn't work and his email came back unanswered.
***
  • "The squatter claims he is going to be out about mid month," Coter said. "He told me that via text, although he has told me a lot of lies."

    Over this past weekend, an Eyewitness News producer spotted Glover outside the loft and asked who he was. He denied he was Glover, but later confessed to his identity. Eyewitness News followed him into the loft. He said he was in the process of moving out after three years of living there.

    This week, Cote finally got his loft back and his first task was to get the locks changed.

Blind, Disabled Thief Scores Big Win; $.11 On The Dollar Deal Allows Him To Pay $50/Month For 2 Years To Buy Out Of Felony Burglary Charge, Jail Time After Boosting $11K In Property From F'closed Neighbor's Home; Victim Left In Tears

In Paris, Maine, the Bangor Daily News reports:
  • A Rumford man who pleaded guilty to stealing items valued at $11,000 from his neighbor’s house in May will get no jail time.

    Charles E. Hamilton, 47, of 26 Rangeley Place, was given a two-year deferred disposition in Oxford County Superior Court on Wednesday. That means he has to make restitution of $1,200 at $50 a month through the district attorney’s office and refrain from committing another crime, said Joseph O’Connor, assistant district attorney.

    If Hamilton meets those conditions, the case against him would be dismissed after two years.

    That did not sit well with Jodi McKenna, who identified herself before Justice Robert W. Clifford as the single mother from whom Hamilton stole home furnishings and irreplaceable family mementos.

    There were things in that house that can’t be replaced, family items,” said an emotionally distraught McKenna, formerly of 30 Rangeley Place. “It upsets me to no end that someone I trusted could do this to me.”

    O’Connor acknowledged that Hamilton is legally blind and on disability. “Obviously, the amount that would be paid in restitution does not come close to the amount lost by Miss McKenna,” O’Connor said.

    Clifford said the amount of restitution was based on Hamilton’s financial condition. If he fails to meet the obligation, he will face up to five years in prison and a $5,000 fine.

    Twelve hundred dollars doesn’t even come close to what I lost,” McKenna said, starting to sob. “I’m unemployed and trying to support my daughter.”

    The case began Wednesday when Hamilton gingerly approached the judge, sweeping a walking cane for the blind from side to side ahead of him. He stood beside his court-appointed lawyer, Maurice Porter, who told Clifford he and the DA’s office had agreed to a plea deal wherein a felony burglary charge stemming from the May 3 incident and arrest would be dismissed.

    Hamilton pleaded guilty to a felony theft charge and Clifford read into the record a lengthy list of McKenna’s belongings that were stolen by Hamilton.

    They included a ¾-cut diamond ring and assorted jewelry, five rolls of insulation, a cooler, napkins with rings, compact discs, two step ladders, a training potty, a dog dish, a Coleman stove, a boot dryer, tree injections, a lamp, a memory-foam bed roll, a safety helmet, Christmas decorations, three gas cans, two pitchforks, solar lights, a state quarter book with quarters, a 32-inch television set, a Nintendo Wii, a Dell computer, Stihl and Black & Decker weed whackers, silverware, a nightstand, furniture, five blankets, four pillows, assorted children’s toys, Hallmark Christmas ornaments, a scanner, a Hewlett Packard printer, an antique bassinet, a Coleman tent, assorted tools, a pocketbook, a clock, paintings, darts, a Sony video camera, three baskets and a home gym system.

    O’Connor told the court that had Hamilton not pleaded guilty, he would have said that McKenna was forced to move out of her home in January 2012 when a bank started foreclosure proceedings. He said the bank changed the locks on the building.

    McKenna returned this past spring to discover her house had been ransacked and that the thief entered through a broken window in the basement. She contacted Rumford police Cpl. Lawrence Winson, who interviewed Hamilton and got a confession.

    Hamilton, however, said McKenna told him he could take the belongings, which McKenna denied, O’Connor said. Hamilton claimed the door was unlocked; McKenna said the bank locked it up.

Dozens Of Confused Rent-Paying Tenants Worry About Possible Pre-Xmas Boot After Discovering Foreclosure Notice Directed To Their Landlord

In Greenville, North Carolina, WITN-TV reports:
  • There was concern and confusion from dozens of apartment residents in Greenville Tuesday after a notice of pending eviction was posted on several buildings. Some said it would mean they need to move out just days before Christmas.

    One resident told WITN he talked to the property management company who said a notice was taken to the wrong apartments, but the sheriff's office says it was posted correctly.

    Resident William Ward looked over the summons posted by the Pitt County Sheriff's Office Monday on the apartment building where he lives on Caldwell Court. It ignited confusion over whether or not he and other residents in the area would have a place to live at the end of the month.

    "You've been paying your rent on time, you don't expect to be left in the dark until the last minute and then boom all of the sudden this pops up," said Ward.

    The papers which include a notice on a foreclosure hearing set for December 4th, names four owners to appear. If the ruling is against the owners, a notice of ejection is also attached that has people thinking they may be removed days before Christmas. The summons lists the debt owed as more than $743,000 to BB&T as of October 18th.

Friday, November 16, 2012

Attorney Faces Heat Over Missing Trust Account Cash, Failure To Pay Off Mortgages At Real Estate Settlements; Invokes 'Victim' Card, Pins Blame On Estranged Wife For Allegedly Taking $2M+ Dip Into Closing Proceeds

In Columbus, Georgia, the Ledger-Enquirer reports:
  • A year into a Columbus real estate fallout, the State Bar of Georgia has begun disciplinary proceedings against attorney Michael A. Eddings, alleging a list of professional conduct violations that could jeopardize his law license.

    The bar this month filed a thick formal complaint outlining 10 disciplinary matters that involve hundreds of thousands of dollars diverted from his firm's trust account. The allegations come as federal agents conducted an apparent search of Eddings' north Columbus law office Tuesday, carting off bins of documents sealed with FBI evidence tape.

    Investigators wouldn't comment on their activity at 860 Brookstone Centre Parkway or the prospect of criminal charges, but the seizure seemed to highlight an intensifying law enforcement interest in the firm's dealings, even as Eddings remains mired in civil litigation. Eddings and his defense attorney, Rob Poydasheff, were seen conversing with the FBI, suggesting Eddings has continued to cooperate with investigators.

    The bar complaint and FBI search marked the latest legal turmoil for Eddings, a well-known attorney and business owner whose fall from grace has stunned fellow attorneys and the local real estate community. Over the past year, Eddings, a former Army infantry officer, has seen his cafés and downtown restaurant shuttered and faced a flurry of lawsuits from clients whose lives were affected when Eddings' firm failed to pay off their mortgages at real estate closings.

    "What's frustrating is we've done nothing wrong, but we're the ones that are paying the price," said Christa Humphrey, a former Columbus resident who fears Eddings' failure to pay off the mortgage on her home last year could affect her husband's credit and delay his retirement from the military. "I am a little bit frustrated by it because it is taking so long."

    Eddings, 48, has filed for divorce and blamed his estranged wife for his firm's legal issues, portraying himself as a victim and accusing Sonya L. Eddings of converting more than $2 million from the escrow account. But the bar's 44-page complaint points out Michael Eddings' responsibilities as an attorney.

    It claims he "allowed" improper withdrawals from his trust account and failed to keep "measures giving reasonable assurance that the conduct of non-lawyers employed or retained by him were compatible with his professional obligations." The bar requested a special master be appointed to hear the disciplinary proceedings, and Michael Eddings was given until early next month to respond to the allegations.

    He referred a request for comment to Poydasheff, who did not return repeated messages Tuesday from the Ledger-Enquirer.

    The fallout came to light about a year ago when Eddings' trust account was frozen and he was suspended from closing transactions amid an audit of his finances. Sonya Eddings told the auditors of a title insurance company more than a year ago that she failed to make several payoffs from closings and began, in 2007, transferring "small amounts" from the firm's escrow account to cover expenses for another business.

    Sonya Eddings -- whose current address is listed as "unknown" in the bar complaint -- has insisted that no one else at the firm was aware of her actions. She also is accused of creating false wire confirmations to cover her actions but has not yet been charged.

    First American Title Insurance Company has sued the Eddingses for conversion and fraud, claiming they failed to disburse more than $2 million after various real estate transactions.

    The bar complaint rests on similar allegations, including the case of Humphrey, a typical victim of the missing payoffs.

    Michael Eddings represented Humphrey and her husband, Dustin Humphrey, an Afghanistan war veteran formerly stationed on Fort Benning, when they sold their home in September 2011. According to the bar complaint, the lender deposited about $142,000 into Eddings' trust account, but the firm did not pay off the mortgage on the Humphreys' property.

    Community Bankers Mortgage called the Humphreys in October 2011 asking for the mortgage payment, apparently unaware that the property had been sold. Dustin Humphrey called Eddings' office, the complaint says, and an unidentified employee "knowingly and falsely" told him the payment had been made via wire transfer "and that the situation would be remedied."

    The Humphreys later received notice from Community Bankers Mortgage that a check drawn on Eddings' trust account had been returned due to a stop payment. The complaint says this led to foreclosure proceedings.

    Christa Humphrey, who now lives in Springdale, Ark., said she fears the foreclosure will go forward now that her husband has returned from overseas. A foreclosure likely would mean her husband won't be able to retire from the military in four or five years as he planned, and it could hurt his credit and limit their ability to buy another home.

    "The fact that this could affect his military career is just beyond me," she said. "How could anybody let that happen? It's not the bank's fault, but it's not our fault, either."
Source: Local attorney Michael Eddings accused of professional conduct violations.

(1) The Clients' Security Fund of the State Bar of Georgia (Part X - Rule 10-101 et.seq., Georgia Bar Rules Handbook) was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Georgia-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

State Bar Shuts Down Attorney's Operations In Another Law License Rental Racket Involving Convicted Felon, Loan Modification Ripoffs

The State Bar of California recently announced:
  • The State Bar of California announced [] it has shut down the operations of an Ontario lawyer who allowed his name and law license to be used in a scheme to defraud distressed homeowners.

    The bar obtained a court order [...] to assume jurisdiction over the law practice of Gary David Tracy, 50, (bar # 167212). His firm, known as Realty Attorney Group APC and Realty Group & Consulting LLC, gave false hope to dozens of clients whose homes were already in foreclosure. Many of the clients’ homes had already been sold.

    In return for thousands of dollars in fees, the firm filed shell petitions in U.S. Bankruptcy Court that only delayed the inevitable loss of the clients’ homes.

    The bankruptcy fraud scheme represents the newest variation of the loan modification scams emerging from the housing crisis. Since February 2009, the State Bar’s Office of Chief Trial Counsel has received thousands of complaints against attorneys regarding loan modification fraud. More than 100 attorneys have been disciplined so far, including 22 who have been disbarred.

    Tracy formed an illegal partnership with a convicted felon and abdicated responsibility and control of his law practice to non-attorneys, Deputy Trial Counsels Mia R. Ellis and Lara Bairamian alleged in their petition to assume jurisdiction of the practice.

    The clients in these situations are desperate and in financial turmoil,” the petition said. “They are vulnerable and seeking a lifeline from a legal professional that can save their home.”

    In July, the U.S. Bankruptcy Court for the Central District in Santa Ana sanctioned Tracy $10,000 after it found his firm was responsible for 80 bankruptcy filings, most of which did not identify the firm as the preparer of the petition.

    The State Bar has identified at least nine clients who paid money to the firm and were abandoned. One woman paid the firm $12,400, including an $800 payment deducted from her account after she lost her home and was evicted. Many of the clients had never met Tracy.

    [The] order by San Bernardino County Superior Court Judge Brian S. McCarville authorized the bar to secure the firm’s files, freeze its bank accounts and notify its clients to seek new counsel. Clients who have additional questions are advised to call the State Bar at 213-765-1778.
For the California State Bar press release, see State Bar Shuts Down Law Firm Involved In Bankruptcy Fraud Scheme.

(1) The State Bar of California Client Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a California-licensed attorney.

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

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

Recently-Disbarred South Florida Lawyer Agrees To Plead Guilty To Trust Account Ripoff Of Cash Belonging To Unwitting Clients

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A recently disbarred lawyer who admits he stole about $1 million — including money from the widow and three young children of a friend who died in an accident — was jailed [] on a fraud charge.

    Scott Rovenger, 59, who practiced in Fort Lauderdale and Plantation, expects to serve eight years in state prison under the terms of a plea agreement reached with the Broward State Attorney's Office, his attorney, Howard Greitzer, said. Rovenger will formally plead guilty to scheming to defraud in the next few weeks and will remain locked up until he has served his full punishment, Greitzer said.

    Rovenger admitted that he stole from many of his clients during the past 20 years and entered into fraudulent and bogus settlements that he lied about, according to a sworn statement he gave to state prosecutors and the Broward Sheriff's Office.
***
  • Rovenger agreed to be disbarred in May after a Florida Bar investigation uncovered a small part of his misconduct — that he inappropriately removed money from one trust account. He was previously admonished in 2009 over a fees dispute with another lawyer.

    Rovenger stole money from another account to settle the case that was questioned by the Bar, court records show. He realized in the past several months that he couldn't keep doing what he'd been doing for years and decided to confess and face the consequences, his lawyer said.

    He confessed and provided sworn statements to former clients and others to try to help them get as much money back as possible from him and a Florida Bar fund that helps repay wronged clients.(1)
For more, see Disbarred lawyer jailed after admitting he stole about $1 million from clients.

(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.