"Fractional Interest Deed Transfer" Foreclosure Rescue Bankruptcy Scam Alleged As Two Face Multiple Felony Charges In Southern California
In Southern California, the Los Angeles Times reports:
- Michael D. Henschel of Van Nuys, who has had a long history of legal run-ins, was arrested Thursday by Los Angeles County authorities, who accused him of operating foreclosure scams that took in hundreds of homeowners, costing some their houses. Henschel, 59, faces 71 [state] charges, including forgery and conspiracy counts, in an alleged scheme to defraud homeowners from 2000 to 2004. Canoga Park resident Alan Mitchell, 70, also was arrested and faces 32 charges.
- Henschel and Mitchell are accused of offering to save homeowners from foreclosure if they paid a monthly consulting fee and transferred part-ownership of the properties -- often to a fictitious entity. While pretending to renegotiate loans, the pair charged rent to homeowners, Christopher said. The two men would file for bankruptcy protection using phony debt and made-up names to hold off the banks and extend the "rental" period for several months, he said. After a protracted, expensive process, the banks would reclaim the properties and evict the homeowners anyway, Christopher said. Although only seven victims are mentioned in the complaint, the scheme extended to hundreds of homeowners, he said. [...] Bail was set at $800,000 for Henschel and $400,000 for Mitchell.
- In the past, Henschel has faced a slew of misdemeanor and felony charges and has been convicted at least five times, but he has always managed to dodge prison time. In 1995, he was charged and acquitted in Los Angeles of stealing nearly $90,000 from family friends by filing phony bankruptcies and deed transfers against two properties. In an Arizona case that mirrors the current one, Henschel pleaded guilty in federal court in 2004 to filing more than 200 fraudulent bankruptcies and pocketing more than $50,000 in rental income and fees from homeowners with shaky mortgages. He was sentenced to probation, community service and restitution.
For more, see 2 arrested in alleged foreclosure fraud (The men are accused of operating a scam that took in hundreds of homeowners).
For a 1998 report issued by a California Federal Bankruptcy Court task force that details the types of foreclosure scams involving the abuse of the bankruptcy court system, see Final Report Of The Bankruptcy Foreclosure Scam Task Force (available online courtesy of the Loyola of Los Angeles Law Review).
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