Thursday, December 31, 2009

Title Agent Gets Five Years For $1.3M+ Escrow Swindle; Pocketed Cash While Failing To Pay Off Existing Loans In Homeowner Refinancing Transactions

In Fort Lauderdale, Florida, the South Florida Business Journal reports:

  • Stephen Lalonde, 43, of Fort Lauderdale, was sentenced [last week] to five years in prison in connection with a $1.3 million mortgage fraud scheme. According to court records and statements made in court, Lalonde stole more than $1.3 million at real estate closings as part of a scheme to defraud legitimate borrowers, lenders and Spectrum Title, an Oakland Park title insurance company in connection with six real estate closings.

  • The legitimate borrowers were trying to re-finance and payoff existing mortgages. However, Lalonde kept the loan proceeds and did not use the money to payoff the borrowers’ pre-existing loans. He was charged with mail fraud and making false statements.(1)

Source: Broward man sentenced in $1.3M mortgage fraud.

For the U.S. Attorney (Fort Lauderdale) press release, see Fort Lauderdale Operator Of Title Agency And Mortgage Companies Sentenced To 60 Months On Mortgage Fraud Scheme.

Go here for Ripoff Report on Stephen Lalonde.

(1) According to the Federal prosecutor's press release, Lalonde was also ordered to pay restitution in the amount of $1,897,268.05 to the victims in this case, which included Stewart Title Guaranty Corporation, the insurance company that underwrote the title policies issued in connection with the subject transactions, and that ultimately wound up holding the bag as it had to cover the substantial losses suffered in this matter. EscrowRipOffKappa

Massachusetts AG Charges Attorney With Recording Forged Mortgage Assignments To Hijack $1M+ In Loan Payoff Proceeds From Pending Real Estate Sales

From the Office of the Massachusetts Attorney General:

  • [A] Marblehead attorney was arraigned in Cambridge District Court in Medford for his role in a million dollar mortgage hijacking scheme. Leon Gelfgatt, age 49, is charged with Attempted Larceny, and Uttering (2 counts).

  • Massachusetts State Police assigned to Massachusetts Attorney General Martha Coakley’s Office arrested Gelfgatt yesterday as he allegedly attempted to retrieve over $1.3 million dollars in mortgage funds in connection with a sophisticated mortgage fraud scheme.


  • According to authorities, Gelfgatt allegedly identified properties which were under agreement and scheduled for an imminent sale. He then allegedly recorded false documents at the Registry of Deeds indicating that his fake company was the new holder of any mortgages on those properties. He allegedly sought through this scheme to cause mortgage payoff funds to be delivered to the fake company, rather than to the rightful mortgage holders.

For the Massachusetts AG press release, see Marblehead Attorney Arraigned in Connection with Million Dollar Mortgage Hijacking Scheme.

(1) According to the press release, Gelfgatt entered a plea of not guilty and was ordered held on $1 million cash bail by Judge Roanne Sragow. In the event that Gelfgatt posts bail, he has to surrender his Russian passport and wear an electronic monitoring bracelet, the press release states.

Title Agent Accused Of Swiping $2.7M+ In Escrow Funds Due To Lienholders In Home Refinancing Scam; Local Chief Deputy Prosecutor Among 12+ Victims

In Allen County, Indiana, The Journal Gazette reports:

  • Just over a month after the state suspended his license, a Fort Wayne title insurance broker faces criminal charges accusing him of misappropriating more than $2.7 million in title funds. Joseph A. Garretson, 36, [...] is charged in Allen Superior Court with conversion or misappropriation of title insurance escrow funds, corrupt business influence and unlawful loan origination activities, all felonies. Garretson is accused of arranging mortgage refinancing loans for a number of area clients and then not using the money to pay off the initial loans, causing mortgage holders to default, according to court documents.

  • In October, Allen County Chief Deputy Prosecutor Michael McAlexander took a call from a man expressing concern about the length of time it was taking for his previous mortgage to be paid off after he refinanced using title insurance, settlement and escrow services from Garretson and Fort Wayne Title [...].

  • McAlexander realized he also had used the services of Fort Wayne Title and, after contacting his original mortgage holder, found his loan also had not been paid off using the proceeds of the refinancing, according to court documents.

For more, see Mortgage refinancing scheme alleged (Broker accused of arranging new loans, not paying off old).

(1) According to the story, the criminal filing details more than a dozen other instances occurring from January 2006 to November 2009 in which Garretson allegedly failed to pay off mortgage loans in refinancing transactions and regular mortgage transactions, leaving customers on the hook for the remaining original loan amounts. EscrowRipOffKappa

Massachusetts Closing Attorney Gets 2 To 3 In Mortgage Stacking Racket; Pocketed $2M+ In Scam; Title Insurance Underwriter Left Holding The Bag

From the Office of the Massachusetts Attorney General:

  • Attorney General Martha Coakley’s Office announced the sentence of [...] former Somerville real estate attorney [Kevin Carey, age 49, of Middleboro] in connection with making false statements on mortgage applications and associated documents and using the funds secured from the loans for his own purposes, rather than paying off existing loans as directed by the new lenders. [... S]uperior Court Judge D. Lloyd MacDonald sentenced Carey to two to three years in State Prison, followed by 10 years probation. Carey is also ordered to pay $2.6 million in restitution.(1)


  • While practicing as a real estate lawyer in Somerville and Medford, Carey engaged in a scheme called “mortgage stacking” on four residential properties he or his family members owned. The scheme involved serially refinancing the loans on these properties, without paying off the existing loans. Carey was also the agent for a New England title insurance company which allowed him to issue title insurance policies on mortgage transactions he processed.


  • Carey “stacked” three mortgages on a home in Medford, two mortgages each on two different properties in Everett, and one mortgage on his personal residence in Medford. [...] When he received the proceeds of the loans, Carey did not pay off the existing mortgages on these properties, but rather used the funds for his own benefit. Carey issued title insurance policies or commitments in connection with the transactions, and the lenders were therefore protected, but ultimately the title insurance company suffered the financial loss. As a result of this scheme Carey stole over $2 million. The lenders remained unaware of the problem because Carey continued to make monthly payments on all of the loans.(2)

For the Massachusetts AG press release, see Former Somerville Lawyer is Sentenced to 2 – 3 Years in State Prison in Connection with Mortgage Stacking Scheme.

(1) Carey pled guilty to the charges of Larceny Over $250 (8 counts) and Willfully Making a False Statement Regarding Financial Condition or Assets (7 counts), according to the press release.

(2) According to the press release, a database search by Fannie Mae flagged the multiple mortgages on one of the properties, triggering a notification to one of the lenders. The lender then notified the title insurance company of the problem. Lawyers for the title insurance company then referred the matter to the Attorney General’s Office, according to the press release.

Wednesday, December 30, 2009

NH Woman To Stand Trial In $550K Vegas Escrow Scam; Blames Now-Convicted Employee For Swindle That Left Existing Mortgage Unpaid In Real Estate Sale

In Hudson, New Hampshire, the Nashua Telegraph reports:

  • A Hudson woman is set to stand trial in Las Vegas next month on charges that she stole $550,000 from a lending company while working as an escrow officer several years ago. Sheila K. Jones, 46, of [...] Hudson, has pleaded not guilty to charges of felony theft and insurance fraud and is free on $10,000 bond pending the Jan. 19 trial. Conditions of the bond agreement did not prevent her from leaving Nevada, where she lived before moving to Hudson this past summer.


  • Jones is accused of stealing the $550,000 from an escrow account that she opened to hold proceeds from the sale of a $650,000 Las Vegas home. She’s also accused of lying to an insurance company by telling them the [trust] deed [ie. mortgage] had or would be paid off, according to an indictment handed down by the Clark County District Attorney in Las Vegas. [...] Reached Tuesday, Jones and her lawyer said it wasn’t Jones who committed the thefts, but employees who were working for her. [...] Jones’ lawyer, T. Augustas Claus of Las Vegas-based Legal Resource Group, said one of Jones’ employees has already pleaded guilty to stealing and is in jail.

Source: Police say Hudson woman stole $550k.

(1) According to the story, Jones currently goes by the name Sheila Mitchell. At the time of the alleged swindle, she reportedly went by the name Sheila K. Williams. EscrowRipOffKappa

Ex-Undertaker Faces Charges In Trust Fund Ripoff; Allegedly Failed To Escrow Cash Received For Prepaid Funeral Services, Used Money For Personal Needs

In Fredericksburg, Virginia, The Free Lance Star reports:

  • [Funeral director Ambrose] Bailey is [...] facing 81 charges, including 27 counts each of grand larceny, embezzlement and violating the Pre-need Burial/Funeral Services Act. He is accused of taking money paid in advance for funerals and using it for personal purchases. The money was supposed to be put into escrow accounts. Those 81 cases are scheduled to be resolved on March 12, the same day Bailey will be sentenced on [last week's] convictions [involving the forgery of doctors' signatures on death and cremation certificates].

  • As part of an agreement worked out by [special prosecutor Matt] Britton and defense attorney Mark Gardner, Bailey was allowed to remain free on bond at least until his March hearing. Britton said he agreed to allow Bailey time to repay people who gave him money in advance for funerals. Britton said Bailey has already repaid two of the 27 victims. He said it is his understanding that Bailey’s father has gotten a reverse mortgage to help cover the rest of the debt.

For the story, see Ambrose Bailey pleads guilty to 15 felonies. EscrowRipOffKappa

Foreclosure Rescue Operator Accused Of Misappropriating $25K+ From Escrow Account Set Up In Connection With Sale Leaseback Of Home

In Chisago County, Minnesota, the Isanti-Chisago County Star reports:

  • An Anoka man was charged with felony theft by swindle for allegedly stealing $25,425 from an escrow account his business was handling while acting as a middleman. Chris Alan Caliguire, 39, was charged in Chisago County Court on Wednesday, Dec. 16.


  • According to the complainant, in March 2006, a Shafer couple was experiencing financial difficulties, and their residence had gone into foreclosure and had been sold to another couple for $223,000.00. After the mortgage had been finalized on the property, the couples had an agreement to rent the property back to the original buyer. The original buyer, now renter, took the proceeds from the sale and their subsequent mortgage on the property and placed it into what they understood to be an escrow account with a business called Minnesota Home Mortgage, aka CAC Enterprises, Inc., based out of North Branch. CAC Enterprises was owned by Caliguire.


  • An investigator received [...] subpoenaed bank records, along with [...] information provided by the owner and renter, and provided them to Jason Olson from Eide Bailly Forensic Accounting and Investigation Services. Olson conducted a forensic audit of the records and determined that from March 2006 through December 2007, Caliguire had misappropriated $25,425.73 from the escrow account without authorization. Caliguire had allegedly misappropriated the funds by paying expenses not related to the mortgage, by failing to deposit funds into the account, and transferring monies paid into a personal account that he used for personal expenses.

For the story, see Man in charge of escrow allegedly steals $25,425.

Philly Feds Probe Alleged Rogue Paralegal For Fraud, Theft; Six-Figure Sums Stolen From Law Clients; Bad Acts Lead To Boss' Disbarment: Attorney

In Bucks County, Pennsylvania, the Philadelphia Inquirer reports:

  • [O]netime paralegal [Bonnie Sweeten] is accused of getting her former boss' law license suspended, masquerading as a lawyer, stealing six-figure sums from clients, defrauding a lender, and using forgery and a fake passport to pose as her employer at a mortgage closing, according to documents filed in civil lawsuits and state disciplinary proceedings.

  • Sweeten, 38, was even listed as a lawyer in the 2008 and 2009 editions of the Philadelphia Bar Association's legal directory. Lawyers for Sweeten and her accusers have said the FBI is probing allegations of fraud and massive thefts involving Sweeten and the Feasterville law office of attorney Debbie Carlitz, where Sweeten worked. No federal charges have been filed.


  • Carlitz, 48, whose Pennsylvania law license had been suspended since 2008, was disbarred Dec. 1 by the state Supreme Court. Because Carlitz consented to the punishment, the underlying allegations against her were not made public.(1) But her attorney blamed Carlitz's fall largely on misplaced faith in Sweeten, her friend and assistant since 1995. Lawyer Ellen Brotman said, "Ms. Carlitz has lost more than just money as a result of her trust in Bonnie Sweeten."

For the story, see Kidnap hoaxer seeking reprieve (Bonnie Sweeten, a former paralegal imprisoned for faking her abduction, is alleged to have posed as a lawyer and stolen money from clients).

(1) Pennsylvania Lawyers Fund for Client Security, which, according to is website, was established by the Supreme Court of Pennsylvania in 1982 to reimburse clients who have suffered a loss as a result of a misappropriation of funds by their Pennsylvania attorney, could potentially find itself on the hook for the losses suffered by Carlitz' screwed-over clients. According to its website, The Fund does not have jurisdiction over claims alleging malpractice or ineffective representation. An appropriate claim:

  • Is based upon an attorney/client relationship or fiduciary relationship customary to the practice of law, and
  • Is seeking the return of money or property that was received by the attorney on behalf of the client, which money or property was then converted by the attorney.

Awards are discretionary. No one has an entitlement to an award from the Fund. The Fund has a $75,000 maximum award per claimant, according to its website.


For those clients ripped off of their money and property by reason of the dishonest conduct of their attorneys in other states and Canada, see:

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

Closing Agent Accused Of Forging Subordination Agreement In Home Refinance, Pocketing Premiums w/out Issuing About 100 Title Insurance Policies

The Minnesota Department of Commerce: has recently accused the three companies, including Morris Abstract & Title Inc. of New Prague, of allegedly forging signatures or endorsements to gain access to and misappropriate consumer funds. According to their press release:

  • In the spring of 2009, the department received a complaint from a bank that was refinancing a mortgage on a property in Scott County. The bank reported to the department that Morris Abstract & Title, which performed the closing on the loan, had allegedly forged the property owners' signature on an agreement required by the bank.

  • That agreement would have given the refinanced mortgage first priority over a previous mortgage the homeowner obtained on the property. In fact, the property owner did not authorize or otherwise consent to the agreement, the department alleges. In order to facilitate the transaction, Morris allegedly forged the property owners' signature. Morris Abstract & Title then sold a mortgagor's title policy on the property, the department alleges.

  • Another complaint from an attorney who claimed Morris allegedly failed to record a mortgage as part of a 2003 transaction involving her client led the department to conduct an inspection at Morris' home. During that inspection, Morris allegedly admitted that he had approximately 100 loan files from transactions as old as 2004 in which a [title] policy still needed to be issued even though he received title premiums and other fees at closing.(1)

  • Last [month], the department issued a statement of charges and notice of hearing against Andrew Morris and Morris Abstract & Title. The prehearing conference is scheduled for Monday, December 21.

For the press release, see Minnesota Collection Agencies, Title Insurer accessed personal information.

(1) The Minnesota Department of Commerce's Real Estate Education, Research and Recovery Fund could potentially find itself on the hook for some or all of the monetary losses suffered by any victims of the alleged improper conduct. According to their website:

  • The purpose of the Real Estate Education, Research and Recovery Fund is to compensate any person who has lost money due to a licensed real estate broker, salesperson, or closing agent’s fraudulent, deceptive or dishonest practices, or conversion of trust funds. The improper action that was committed must be an activity that required a license. [...] Applicants may be awarded any amount from $0 to $150,000, [...].

Tuesday, December 29, 2009

Wells Fargo Violated Veterans Administration Rules, Says Ex-Servicemember Facing Foreclosure In Court Papers; Seeks Dismissal Of Legal Action

In Jacksonville, Florida, First Coast News reports on local homeowner Nancy Gemmill, a retired U.S. armed services veteran, and her experience with Wells Fargo after she fell behind on her house payments on, reportedly, a $49,000 mortgage and asked for a loan modification:

  • "When I contacted them, they said send me this paperwork, paperwork, paperwork. Never heard anything back." That is until Wells Fargo sent her a letter a couple of months ago. It was a notice it was foreclosing on her home, with only $49,000 left for her to pay on it. "It was a shock because I thought they were working with me on it."

  • The bigger shock for her and her attorney is how they say the company went about it. "I just don't understand it. This company has been given $45 billion by the federal government because it needed assistance. She's looking just for a modification, not looking for a hand out and rather than trying to help, they try to foreclose and take her home," says her attorney, Sean Cronin.

  • Cronin says there is another problem. He says Wells Fargo did not follow the rules in dealing with a veteran. Gemmill is retired from the Navy. "There are certain things supposed to be done to try and keep the vet in the home. And rather than do that, they immediately try to foreclose her, and did not follow the required policies and procedures of the vet administration." For now, Gemmill is still in the home. Her attorney has filed a motion to dismiss based on the claims the company did not follow all the veteran procedures.

For the story, see Navy Veteran Asked Mortgage Company For Help, Wells Fargo Answered With Foreclosure.

NH Pair Accuse Local Real Estate Agent Of Pocketing Upfront Cash In Owner-Finance, Lease-Option Deals, Then Failing to Pay Now-Foreclosed Mortgages

In Hudson, New Hampshire, The Telegraph reports:

  • [Sheila K.] Jones, who is currently going by the name Sheila Mitchell, called The Telegraph last week to complain about the Hudson real estate agent who provided owner financing for her unit in a duplex. Her husband, Garlan Troy Mitchell, has since filed a lawsuit in Nashua District Court against the agent, Matthew Trudel, for $14,000 in real estate earnest money.

  • Garlan Troy Mitchell signed a purchase and sales agreement with Trudel in May to buy the newly-constructed three bedroom unit. Trudel, who owned the property, agreed to carry the mortgage for one year while Mitchell made payments. The deal called for Mitchell to secure his own financing by July 30, 2010, and transfer the deed. In an interview with The Telegraph in her home last week, Jones claimed she and Mitchell lost their $4,800 deposit when the property was sold at a foreclosure auction in October.

  • Debra Garman, 41, a teacher who lives with her family in [the same complex], claims Trudel owes her $3,900 for the security deposit and first month’s rent. She also said he hasn’t finished all of the construction on the property as promised. The unit was new last spring when Garman moved in, signing a lease agreement with an option to buy.

For the story, see Police say Hudson woman stole $550k. rent to own lease purchase option scams yellowstone

Mix Up In Securing Foreclosed Property Results In Missing Items, Says Another Homeowner

In Henderson, Nevada, KLAS-TV Channel 8 reports:

  • Imagine coming home and finding out your key no longer works and some of the things in your house are gone. That's what one Henderson man says happen to him, and like other reports in recent days, the homeowner says it's because of a mix up by a real estate agent securing a foreclosed home.

  • Vincent Marrero called 8 News Now after watching reports of a foreclosure mix-up. He says the very same thing happened to him, but the good news in his case is not everything was taken. "It was violating because they broke into the unit illegally and took things that they claim they didn't," he said.

For more, see Another Person Claims Theft in Foreclosure Mistake. ForeclosureLockOuts

Foreclosure Screw-Up Leads To "Trash-Out" Of Las Vegas Woman's Home; Offered $5K For Her Trouble; "Suspects" Decline Comment

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

  • A Las Vegas woman says she is the victim of a horrible mistake that has left her with an empty condominium and lots of questions. Nilly Mauck lived in her condominium for two years and said she never had problem until this week when a series of strange events eventually lead to a company coming into her home and throwing away everything she owned.


  • [M]auck says the reason for it is a mistake of address numbers. Her address is 1157 which is close to 1156 a condo that is in foreclosure. A few weeks ago the foreclosed home was suppose to get locks changed but Mauck says that's not what happened. "I came home to pick up something and there was a note on my door from the Brenkus Team of Keller and Williams Realty stating that they accidentally re-keyed the wrong door," she said.

  • It was a problem Mauck thought was fixed until she came home to find a man going into her home. Mauck says everything in her home was missing. She says she later learned her home had been "trashed out" - a process done to foreclosures where everything left inside is thrown away.(1)(2)

For the story, see Las Vegas Woman Victim of Foreclosure Mistake.

In follow-up story, see Attorney Claims Woman is Inflating her Loss in Foreclosure Mix Up.

(1) Mauck reportedly asked for $100K - $200K for her missing belongings and was offered $5,000, the story states.

(2) In a similar case, the Nevada Supreme Court last year approved damages of over $1 million to the Las Vegas homeowners of a house that was trashed out as a result of its misidentification as a foreclosed home. See:

Monday, December 28, 2009

Alleged Arizona-Based Upfront Fee Loan Modification Racket Violated State Law, Says Illinois Homeowner In Lawsuit Seeking Class Action Status

In Chicago, Illinois, Mortgage Relief Group dba Mortgage Assistance Group, an outfit alleged to be headquartered in Glendale, Arizona, cheated people in mortgage rescue scams, a class action claims. The lawsuit, filed in state court in Cook County, alleges violations of the Illinois Mortgage Rescue Fraud Act (765 ILCS 940/1. et seq.), and the Illinois Consumer Fraud And Deceptive Practices Act (815 ILCS 505/1. et seq.).

For the lawsuit, see Von Essen v. Mortgage Relief Group LLC, dba Mortgage Assistance Group (lawsuit available online courtesy of Courthouse News Service).

Florida Bar Puts Heat On Attorney Affiliations With Upfont Fee Loan Modification Outfits; Opens 195 Foreclosure Rescue Probes This Year

In Broward County, Florida, the South Florida Sun Sentinel reports:

  • A Coral Springs lawyer is being investigated by the Florida Bar Association for her involvement with a South Florida foreclosure rescue company, as trade regulators continue to file actions against attorneys involved in similar operations. Bar officials confirmed they are investigating Karen Grun and her ties to Housing Assistance Law Center, of Deerfield Beach.(1) The Florida Attorney General's Office filed legal action against the company and three afilliates in July, claiming they illegally took payments in advance and, in some cases, guaranteed a mortgage could be modified in 30 to 60 days.

  • The bar has increasingly scrutinized partnerships between lawyers and foreclosure rescue firms, concerned the relationships were forged to skirt state laws barring upfront fees for loan modification work. The professional association, which monitors and disciplines lawyers, opened 195 cases regarding foreclosure rescue practices this year.

For more, see Bar investigating Coral Springs attorney (Lawyers, modification companies may have formed partnerships to bypass upfront fee laws).

(1) According to the story, Grun's name and the phrase "a private law firm" were on Housing Assistance Law Center documents, and state corporate records listed her as the center's director/president from April through June. Housing Assistance since has been dissolved and it's telephone number has been disconnected, the story states.

Idaho AG Settles Claims Against Loan Modification Outfit; Firm To Refund $12K+ To Homeowners

In Boise, Idaho, KIVI-TV Channel 6 reports:

  • Twelve Idaho homeowners who paid a Meridian man, Paul Clarence Aughtry, IV, for mortgage loan modifications will receive refunds totaling $12,400 as a result of settlement agreements with State Attorney General Lawrence Wasden and the Idaho Department of Finance. As a result, Aughtry is prohibited from engaging in loan modification activities in Idaho. According to Attorney's General spokesman Bob Cooper, "Aughtry operated International Co-Op LLC and accepted money from several consumers, offering to negotiate mortgage modifications with their loan servicers. Aughtry was not licensed to perform such modifications. He allegedly failed to contact many of the consumers' servicers as promised, and failed to effect the mortgage modifications his clients paid for."

For the story, see Refunds Coming for Idaho Mortgage Modification Victims.

Florida AG Tags Loan Modification Company & Affiliated Attorneys With Civil Suit Alleging Illegal Upfront Fee Racket

From the Office of the Florida Attorney General:

  • Attorney General Bill McCollum [...] announced he has filed a lawsuit against three businesses operating in Miami-Dade County, their principles and affiliated attorneys on allegations of deceptive and unfair trade practices regarding their involvement in a foreclosure rescue scam affecting homeowners nationwide.

  • The Attorney General’s Economic Crimes Division began investigating Kirkland Young LLC, in July after receiving numerous consumer complaints against the company. During the course of the investigation it was discovered that Attorney Aid LLC and ABK Consultants were affiliated with Kirkland Young LLC.(1)

  • The companies allegedly charged up-front fees for loan modification services, and misrepresented to consumers that lenders required “qualifying payments” in order to qualify for modifications. The companies also charged “back end” fees upwards of $1,299 for the first mortgage modification and approximately $499 to $699 for a second mortgage modification. To facilitate the collection of additional fees, consumers were required to set up escrow accounts with the attorneys affiliated with the companies, misleading consumers into believing they were retaining attorney representation for their loan modification. The funds fraudulently collected in the attorney escrow accounts were used for the benefit of all the defendants.(2)

For the Florida AG press release, see Attorney General Sues Three Companies for Loan Modification Scam.

For the lawsuit, see State of Florida v. Kirkland Young LLC, et al.

(1) Other named defendants are:

  • David Botton, owner, manager, member and/or officer of Kirkland Young LLC,
  • Bridget Grant, owner, manager, member and/or officer of Attorney Aid LLC
  • April Botton Krawiecki, owner, manager, member and/or officer of Kirkland Young LLC, and owner, officer and/or director of ABK Consultants Incorporated,
  • Samy Botton, owner, manager, member and/or officer of Kirkland Young LLC
  • Michael Botton, attorney - licensed in New Jersey,
  • Ryan Matthew Grant, attorney - licensed in Texas,
  • Brian Michael Rokaw, attorney - licensed in Florida.

(2) The alleged racket involved an attorney licensed in New Jersey, one licensed in Texas, and one licensed in Florida. To the extent the Florida AG can prove damages that can be attributed to one or more of these three attorneys, the client protection fund for the state in which the attorney(s) causing the provable damage is licensed could have liability for a portion of the losses.

To locate the client security funds for other states, see Directory Of Lawyers' Funds For Client Protection (American Bar Association); in Canada, check the Canada Client Protection Funds Map.

Fine Print In Standard HAMP Loan Mod Deal Allows Lenders To Sell Homes Out From Under Borrowers In Foreclosure, Despite Prompt Trial Period Payments

McClatchy Newspapers reports:

  • Ten months after the Obama administration began pressing lenders to do more to prevent foreclosures, many struggling homeowners are holding up their end of the bargain but still find themselves rejected, and some are even having their homes sold out from under them without notice.

  • These borrowers, rich and poor, completed trial modifications of their distressed mortgage, and made all the payments, only to learn, often indirectly, that they won't get help after all. How many is hard to tell. Lenders participating in the administration's Home Affordable Modification Program, or HAMP, still don't provide the government with information about who's rejected and why.


  • In the fine print of the form homeowners fill out to apply for Obama's program, which lowers monthly payments for three months while the lender decides whether to provide permanent relief, borrowers must waive important notification rights. This clause allows banks to reject borrowers without any written notification and move straight to auctioning off their homes without any warning.


  • A glance past [the lender's] hopeful promise [to save a home from foreclosure] finds a different story in the fine print of HAMP document, which contains standardized language drafted by the Obama Treasury Department and is used uniformly by lenders. The document warns that foreclosure "may be immediately resumed from the point at which it was suspended if this plan terminates, and no new notice of default, notice of intent to accelerate, notice of acceleration, or similar notice will be necessary to continue the foreclosure action, all rights to such notices being hereby waived to the extent permitted by applicable law."

  • This means that even when a borrower makes all the trial payments, a lender can put the house up for auction if it decides that the homeowner doesn't qualify — assuming that foreclosure proceedings had been started before the trial period — without telling the homeowner. Until now, lenders haven't even had to notify borrowers in writing that they'd been rejected for permanent modifications.(2)(3)

For more, see Homeowners often rejected under Obama's loan plan.

(1) Reportedly, more than 759,000 trial loan modifications have been started to date, but just 31,382 have been converted to permanent new loans. That's averages out to 4 percent, far below the 75 percent conversion rate President Barack Obama has said he seeks, the story states.

(2) In January, 11 months after Obama's plan was announced, homeowners will begin receiving written rejection notices, and the Treasury Department finally will begin receiving data on rejection rates and reasons for rejections, the story states.

(3) In the case of one homeowner highlighted in the story, Bank of America reportedly backed down from an alleged threat to sell the home out from under after receiving an inquiry from the media about the situation.

Bank Pockets Five Payments On Trial Loan Mod, Then Hammers Homeowner With Foreclosure Threat; Lender To Take 2nd Look After Media Reporter's Inquiry

In Tucson, Arizona, the Arizona Daily Star reports on the recent experience of Lori Ann Mitchell, a local homeowner who, while battling ovarian cancer, applied for a home loan modification from Wells Fargo to help her get back on her feet. Wells Fargo reportedly accepted her for a trial modification this summer under the federal Making Home Affordable plan, which reduced her monthly payments from $1,457.23 to $941.83.

  • She was supposed to make three trial payments under the program, but instead she said she made five as she waited and waited to hear from the bank. She'd call for updates, but could never get a set answer. She could never speak to the same person twice. And then ... "They just dropped me. Boom," Mitchell said. "It's devastating. First of all I had put a lot of hope in this. I don't find hope a lot with cancer. ... But when I hit the third month, and they hadn't rejected me; and I hit my fourth month, and they hadn't rejected me, I started getting high hopes."

  • Those hopes were dashed a few days ago with the ring of a phone. The voice on the other end of the line said Mitchell needed to pay the difference between her previous payments and the modification payments she had been making for the past five months. And that difference, about $2,500, was due by the start of the year. "I didn't expect them to call me and start harassing me for money, telling me 'in two weeks it's going into foreclosure,' " she said.

  • When Mitchell was pursuing her modification, she said she struggled to reach a human being at Wells Fargo. Now that she was being threatened with a potential foreclosure, she had no problem connecting with the bank. [...] Now that a reporter has called about Mitchell's loan, though, Wells Fargo is taking a second look. [...] That's good of the bank, but it shouldn't be this way.
For more, see Foreclosure threat comes out of blue.

Sunday, December 27, 2009

Florida Judge's Writ Of Bodily Attachment Sends Wake-Up Call To Rent Skimming Condo Owners Delinquent On Maintenance Fees - Jail Time Could Await Them

In Fort Lauderdale, Florida, The Miami Herald reports:

  • Condo investors delinquent on association fees could face jail time for thumbing their noses at court-ordered blanket receiverships. In a new first for distressed condo associations, a Broward circuit court judge last week commanded the sheriff, via a writ of bodily attachment, to physically bring owner Timothy Mohn to court to explain why he should not be found in contempt for failing to fork over rent to a receiver on two units he owns in the Villas de Venezia in Sunrise.


  • [A]ttorneys for Villas de Venezia condo association claim the writ demonstrates [...] the sharp teeth of blanket receiverships and just how serious judges are taking their enforcement. [...] Ben Solomon, a partner with Association Law Group and the attorney for the Villas, said the writ would have represented the first time that "a foreclosure debtor may be put in jail for a foreclosure-related issue.''


  • Judge Lynch's order should be a wake-up call, since judges rarely resort to sending the sheriff out in real estate-related civil cases, he said. "Hopefully, this will send another signal, at least symbolically, to the real estate market that owners and their tenants are going to have to comply with these court orders or face being held in contempt and put in jail,'' Solomon said.(1)

For more, see Sheriff sent to pick up delinquent condo investor (A Broward circuit court judge sent the sheriff out to get a condo investor because he failed to appear in court to explain why he wasn't turning over rent to cover his past due association fees).

(1) According to the story, a writ of bodily attachment is not an arrest in the typical sense, but the sheriff does go to collect the person and forceably take them to court. They are handcuffed and placed in a patrol car, Solomon said. If the judge is unable to see them, the person waits in jail, where they could spend the night.

Bogus Claims About Mortgage-Backed Securities Leads To $296M Hit, Says MBIA In Lawsuit; Claims 50%+ Of Insured Portfolio Face Value Charged Off

In New York City, Bloomberg reports:

  • A Credit Suisse Group AG unit was accused in a lawsuit by MBIA Insurance Corp. of making fraudulent misrepresentations about mortgage-backed securities, causing the insurer to pay more than $296 million in claims. The complaint against Credit Suisse Securities (USA) LLC, filed [last week] in New York State Supreme Court in Manhattan, also names as defendants two other units of the bank, DLJ Mortgage Capital Inc. and Select Portfolio Servicing Inc. [the firm formerly known as Fairbanks Capital].


  • Credit Suisse Securities pointed to its “strong institutional pedigree” while addressing the novelty of the transaction and touted its “due diligence” on the loans, MBIA said. [...] Since the transaction closed, the securitized loans have defaulted “at a remarkable rate,” MBIA said.

  • Through Oct. 31, 2009, loans representing more than 51 percent of the original loan balance, or approximately $464 million, have defaulted and been charged-off, requiring MBIA to make over $296 million in claim payments,” MBIA said. MBIA said that a review of the defects of the loans included in the transaction show they were “systematically originated with virtually no regard for the borrowers’ ability or willingness to repay their obligations.”

For more, see Credit Suisse Sued By MBIA Over Mortgage Securities.

For the lawsuit, see MBIA Insurance Corp. v. Credit Suisse Securities (USA) LLC, 603751/2009, New York State Supreme Court (Manhattan).

Thanks to nationally recognized mortgage servicing fraud watchdog Mike Dillon at for the heads-up on the story and a copy of the lawsuit.

Plaintiff's Attorney In Wells Fargo "Ghetto Loans" Litigation Pegged To Pursue Similar Suit On Behalf Of City Of Memphis, Shelby County

In Memphis, Tennessee, the Memphis Daily News reports:

  • Memphis and Shelby County governments have reloaded in preparation for a high-profile court battle over the area’s foreclosures and the lending practices that accompany them. Relman & Dane PLLC, a Washington-based law firm, is the new outside counsel chosen to work with the two local governments in preparing, filing and litigating a long-delayed federal lawsuit. The firm is replacing a 30-year-old Montgomery, Ala.-based firm originally tapped as outside counsel for the suit, which will target a bevy of national mortgage lenders whose practices may have worsened the local foreclosure problem.

  • The choice of Relman & Dane is a sign of local government’s resolve to go after companies for unscrupulous lending practices in Shelby County. The firm, which has racked up wins in several civil rights cases with national scope, also represents the city of Baltimore in its closely watched suit against Wells Fargo(1) over discriminatory lending practices.

  • Local officials have pointed to the Baltimore suit several times as a model for what will get filed here. That suit was one of the first in the country by a municipality to seek damages because of foreclosures that allegedly sprang from abusive lending.

For more, see Washington Firm Chosen to Fight Foreclosure Courtroom Battle.

(1) Go here for posts on the City Of Baltimore lawsuit against Wells Fargo, in which some of the lender's employees were accused of using racial slurs to describe minority customers and referred to subprime loans as "ghetto loans."

Detroit Man Gets 11 Years For Use Of Phony Quit Claim Deed To Steal, Flip Church; Pastor: "I Lost My Life's Work"

In Detroit, Michigan, The Detroit News reports:

  • A man involved in a complicated scam to sell a church he didn't own has been found guilty on 11 counts of fraud. Tracy Carmichael, 46, of Detroit in 2007 offered to sell the Temple of God Deliverance on Mount Elliot to a woman who was interested in the property as a land investment.

  • The scam involved Carmichael finding a "straw buyer" with good credit to take out a mortgage on the church property, said Abed Hammoud, head of the Deeds and Mortgage Fraud Unit, a task force involving the Wayne County Prosecutor's, Sheriff's and Register's offices. "Carmichael got a quit claim deed without the knowledge of the real owner," Hammoud said. "Then he got the victim to take out a $149,500 mortgage on the property. She thought she was doing it to help out the church."(1)(2)

For the story, see Detroiter who tried to sell church guilty of fraud.

(1) Pastor Robert Lodge, who owned the property, later found out that the deed to the church and other documents were false. Lodge never authorized Carmichael to sell the property and discovered his signatures had been forged on the documents. Lodge only became aware of the crime when his congregation was served eviction papers because they hadn't paid the mortgage. "I lost my life's work," Lodge said. "I built a ministry for the last 16 years, and it literally was stripped from me. Not only did I lose property and money, but I've lost my church family. We're not set up anywhere else because of the financial hardship this has caused."

(2) At most, a successful criminal prosecution can result in the scammer being tossed in jail, and possibly, a court order compelling the scammer to pay restitution to the victim which, if the scammer is broke, is probably worthless. To go about having the title to the property restored in the name of the rightful owner would require the victim to file a civil lawsuit to establish the deed forgery, and if successful, to quiet the title to the property in the name of the victim, voiding the interest of all subsequent title holders and mortgagees in the process. Typically, in the case of a deed forgery, the bona fide purchaser defense is not available to the subsequent owner and lender so that a successful civil lawsuit in this regard would, while making the rightful owner whole by restoring his/her title to the property, leave the subsequent owner and lender (and possibly, the insurance company that issued any title policies in connection with the fraudulent title transfer and the associated mortgage financing) holding the bag.

Saturday, December 26, 2009

Gas Service Shutoff By Rent Skimming Landlord In Foreclosure Leaves Unwitting Tenants Without Heat, Hot Water & Facing The Boot

In Whiting, Indiana, WBBM-TV Channel 2 reports:

  • The owner of a Whiting, Ind. apartment building is leaving his tenants out in the cold -- literally. The residents say he lost the building to a bank without telling them and their heat was shut off before they could move out.

  • Nicole Talavera has to dress her kids in coats just to stay in their apartment. "It's freezing," she said. "And then I have a 9-year-old and a 3-year-old." The thermostat read 50 degrees. Talavera says the gas has been shut off for several days now. "We had no idea about the landlord foreclosing," she said. "We were still paying rent."

  • Last month, tenants say they got a letter from an attorney's office. It said the building was in foreclosure, and the tenants have until Feb. 16 to move out. NIPSCO says the property owner ordered the utility to shut off the gas Dec. 15. Roommates in a second apartment are surviving with a space heater in the living room. No gas means no hot water, either. "We actually were boiling pots of water, dumping them in the bathtub and actually sponge-bathing ourselves," Christopher Spedus said. "We've just been using tons of blankets, staying warm, and that's about it. But everything else is just really cold," another resident, [...] said.(1)

For the story, see: Tenants Lack Heat As Bank Forecloses On Building.

(1) Reportedly, the utility is expected to restore gas service Saturday, but it may not solve the heat problem as it appears vandals damaged the furnace, the story states.

Tenant Beats Down Bully Bank In Illegal Foreclosure Eviction Attempt; Lender, Law Firm Prey On Renters Unable To Assert Rights: Housing Advocate

In Hayward, California, Gabe Treves, Program Coordinator for Tenants Together, California's Statewide Organization for Renter's Rights, writes in News Blaze:

  • Tenants renting a home in Hayward, CA, successfully defended themselves against an illegal eviction lawsuit brought by HSBC Bank. The tenants prevailed in the lawsuit this week and will be able to stay in their homes indefinitely. Under Hayward's just cause for eviction law, blatantly violated by HSBC, a landlord must have a specified reason to evict a tenant, and foreclosure is not recognized as a legitimate basis for evicting a tenant.


  • In October, the McHenry's were served with an eviction lawsuit, called an unlawful detainer, by HSBC's attorneys at the Endres Law Firm, a Sacramento-based law firm notorious for helping banks illegally evict tenants living from foreclosed properties. The eviction lawsuit was in direct violation of the city's just cause for eviction ordinance. [...] McHenry contacted the Endres Law Firm to demand that it honor the city ordinance and dismiss the unlawful detainer action. The firm would not even give the courtesy of a response. As McHenry tells, "I called the Endres Law Firm repeatedly and demanded that they honor my rights under the city ordinance and dismiss the eviction, but they wouldn't even respond. Meanwhile, I was getting scary court notices that the eviction was moving forward to trial."


  • Hayward is one of 15 cities in California with just cause eviction ordinances which, among other things, offer protection to tenants in foreclosure situations. However, as the incident with the McHenry's reveals, banks are all too willing to ignore these laws.(1)

For the story, see Hayward Tenants Fights off Bank Eviction after Foreclosure.

(1) According to Treves, "HSBC Bank and the Endres Law Firm knew that what they were doing was illegal, and that's why they wouldn't respond to all the inquiries. Clearly, their strategy is to prey on tenants who don't know their rights or who don't have the means or time to assert them. Despite the local law, they tried to bully the McHenry out of her home. But she asserted their rights, held her ground, and beat the bank."

Servicemember Files Federal Suit Against Landlord; Alleges Illegal Eviction Despite Giving Notice Of Activation For Military Duty

In Hammond, Indiana, Chicago Sun-Times Media Wire reports:

  • A northwest Indiana service member is suing an apartment complex for evicting her after she told them she was being activated for duty, according to a lawsuit filed in the U.S. District Court in Hammond. Ciearra Pulliam of Griffith claims in the suit that she received notice on Oct. 23 that she would be sent to Wisconsin from Oct. 26 to Nov. 18. According to the suit, Pulliam notified the Mansards Apartments and was told to give them a copy of her activation papers, which she did. She was having problems paying her rent, though, because of a discrepancy in her military pay, according to a police report filed with the suit.


  • Pulliam's belongings ended up being evicted Nov. 10 and were left outside. She is suing for $10,800, which Pulliam claims is the damage done to her property, or triple that amount for emotional distress.

For the story, see Soldier Suing After Being Evicted From Apartment.

The Federal law known as the Servicemembers’ Civil Relief Act grants troops on active duty various legal protections, including a shield against foreclosure in some cases. The protections in this law are available to troops from all over the country.

Go here for free legal assistance for military servicemembers and their families, and go here for other posts on the Servicemembers Civil Relief Act.

Banks' Bullying Tactics Used To Carry Out Illegal Foreclosure Evictions On Tenants, Say D.C. Housing Counselors

In Washington, D.C., United Press International reports:

  • Some banks are using aggressive eviction tactics to push Washington tenants out of their homes as the foreclosure crisis widens, housing counselors say. [...] Housing counselors in the District of Columbia said that tenant buyouts and evictions are becoming more prevalent as banks begin to take over more multi-unit properties.

  • In part it may be that banks don't know the city’s unique tenant laws,” said Farah Fosse, director of affordable housing preservation at the Latino Economic Development Corporation, a non-profit group that offers housing counseling services to D.C. residents. [... T]heDistrict of Columbia has strong tenant protection laws and it is illegal for property owners to evict tenants due to foreclosure.(1)


  • "Lenders aren't in the business to own real estate and certainly aren't in the business to manage properties,” said Marian Siegal, executive director at Housing Counseling Services, a Housing and Urban Development-approved counseling organization based in the Adams Morgan neighborhood of Washington. "As a result we're starting to see not only the owners displacing tenants but also the banks displacing tenants illegally," said Siegal.


  • Fosse said that some of the banks are changing locks on tenants and sending incorrect information to tenants to persuade them to leave. “Some banks are doing really shady things to get people out like turning off utilities when they know there's a tenant there,” said Fosse.

For more, see Banks bully D.C. renters out of foreclosed buildings.

(1) According to the story, the District of Columbia Rental Housing Act of 1985 states that when a rental property is foreclosed on, financial institutions become the new landlord but there is no change in the tenant's rights. This is a problem for banks, which prefer a quick sale to long-term property management, housing counselors say. For more on tenants' rights in the District of Columbia, see:

23 Tenants Land On The Street As Landlord In Foreclosure Pockets Rent, Fails To Correct Fire Code Violations, Resulting In Eviction

In Regina, Saskatchewan, CBC News reports:

  • The Regina landlord who's at the centre of a recent eviction controversy says he may have made mistakes, but he was only trying to help disadvantaged people. [Last] Monday, 23 tenants were evicted from a downtown Regina building co-owned by Paul Ehmann due to fire code violations and other problems. [...] Some of the tenants who were forced out said they had already paid rent to Ehmann's company and were hoping to get their money back. [...] Lack of money [...] prevents him from paying back the tenants, he said.


  • Almost three years ago, [local businessman Larry] Sydor loaned $400,000 to Ehmann, with the building as security, but he's still waiting for payment. "This loan was supposed to be a one-year loan and it's been ... almost three years," Sydor said. Sydor now has a court judgment which means that in less than a week the building will be in foreclosure and put up for sale. The building is worth around $650,000, but there are more than $900,000 worth of liens against it.

For the story, see Controversial landlord says he was only trying to help.

Big Apple Plays Scrooge - Abruptly Yanks 3,000+ Recently Granted Section 8 Rent Subsidy Vouchers To Poor; Pins Blame On Budget $queeze

In New York City, the New York Post reports:

  • More than 3,000 of the city's poorest families face a cruel Christmas because Section 8 vouchers they were given to find apartments are being abruptly yanked under a budget squeeze, officials said yesterday. The unprecedented move elicited howls of protest from advocates for the poor. [...] More than half of the 3,018 families now holding worthless pieces of paper were formerly homeless.


  • [Housing Authority Chairman John Rhea] said a "perfect storm" of events left the city with no choice but to pull back the coveted vouchers, even to 918 families that had already identified private apartments to rent and were waiting to complete the paperwork to "turn on" their subsidies, which average $800 a month.

For the story, see Hou$ing ax freezes out 3,000 poor families.

Friday, December 25, 2009

Real Estate Agent Gets 8 Years For Selling Homes Out From Under Owners, Using Stolen IDs To Fraudulently Obtain Financing

From the Office of the U.S. Attorney (Los Angeles):

  • A Lancaster man was sentenced [...] to eight years in federal prison and ordered to pay restitution of $777,000 in relation to a mortgage fraud scheme in which he “purchased” homes in Altadena and Riverside. Felix Pichardo, 27, was sentenced by United States District Judge Stephen V. Wilson. Pichardo pleaded guilty [...] in September, admitting that he used the identities of two victims to obtain mortgage loans for properties that were not for sale.


  • According to court documents, Pichardo, a licensed real estate agent, and his co-defendant Latrice Shaunte Borders, 29, of Long Beach, participated in two separate fraudulent real estate sales transactions. Pichardo, using identities appropriated from other people, caused loan applications to be submitted to AmTrust bank in the amounts of $417,000 and $360,000. The loan applications were submitted without the property owner's knowledge for real estate which was not for sale. The proceeds of the two loans were deposited into bank accounts under the control of Pichardo and Borders.

For the U.S. Attorney press release, see Lancaster Real Estate Agent Sentenced To Eight Years In Federal Prison For Mortgage Fraud Scheme.

(1) In sentencing Pichardo, Judge Wilson cited the “callousness” of the offense, noting that Pichardo sought out elderly vulnerable victims and that he poses a danger to the community, the press release states.

Alleged Land Records Search Screw Up, Issuance Of Unauthorized Coverage Lands Attorney In Hot Water With Title Insurance Underwriter, Says Suit

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

  • A California insurance company is suing a Putnam County attorney to recoup losses it incurred from the attorney's failure to conduct a thorough title search, and obtain the sufficient amount of [title] insurance for the purchase of commercial real estate in Hurricane. Alexander J. Ross is named in a two-count professional negligence suit filed by First American Title Insurance Company. In its complaint [...], the Santa Ana, Calif.-based firm alleges Ross not only failed to discover a 50-year-old conveyance on a .6 acre parcel of property being developed for a strip mall, but also obtain the additional [title] insurance to cover the nearly $500,000 purchase price.(1)(2)

For more, see Inadequate title search, insurance results in suit against Putnam attorney.

(1) Pursuant to their agreement, Ross was authorized to act on First American's behalf on purchases of property up to $250,000, the story states. Reportedly, the agreement also called for Ross to "conduct a search of all relevant public records affecting the real property at issue." However, Ross insured the property for full amount of the $495,000 purchase price. Pursuant to their original agreement, Ross was to obtain authorization from First American to insure for amounts exceeding $250,000. Also, First American alleges Ross only conducted a title search going back 40 years instead of the customary 60. It was later discovered that one of the previous owners conveyed .2 acres of the property to the state of West Virginia through a corrective deed on July 18, 1958. The "outconveyance" reduced the true acreage the buyer purchased from .68 to between .452 to .498. The deed Ross prepared for the buyer, First American alleges, did not account for the outconveyance. First American says they had to pay a claim made against them, the story states.

(2) The two factors to consider when shopping for title insurance are the:

  • quality of insurance, and
  • quality of the title search.

The goal is to find a title company or attorney that will do a thorough search (in order to avoid the alleged title screw-up described in the story above) and an underwriter (insurance company) that will be there in 10 or 15 years if there's a problem. In many states, the title insurance premiums are regulated so there won't be much of a price difference between companies. See 6 questions to ask about title insurance. title insurance legal issues

Feds Bag Bogus Clergyman Accused Of Running Upfront Fee Scam That Preyed On Desperate Developers Seeking Financing

In Central Florida, the St. Petersburg Times reports:

  • Father Barney Canada, a make-believe Roman Catholic priest(1) accused of duping developers of Trump Tower Tampa out of $150,000, has been arrested and charged with swindling $2.7 million from developers across Florida and the United States. A grand jury in South Bend, Ind., charged Byron Levon Canada with 31 counts of wire and mail fraud, money laundering and conspiracy. The indictment was handed down in U.S. District Court on Dec. 9. Taken into custody Monday, Canada pleaded not guilty. Canada was charged with running an "advance fee scheme" that collected millions in application fees for commercial loans he never intended to provide.


  • "Canada represented himself to be a priest and dressed in cleric garb when meeting with victims in order to give the defendants' advance fee scheme an aura of legitimacy and honesty," the indictment said.(2)

For more, see Fake Catholic priest accused of $2.7M fraud that includes Florida developers.

For earlier story, see Father Barney takes fees, leaves a host of developers behind.

(1) Canada has reportedly claimed to be a priest from a shadowy 19th-century offshoot of the Roman Catholic Church, according to this story.

(2) "Father Barney" has a history of being associated with advanced fee scam prosecutions that dates back a long time. See U.S. v. Barney Canada, 960 F.2d 263 (1st Cir. 1992).

U.S. Mayors Cite Philadelphia's "Courtroom 676" Foreclosure Diversion Program For Outstanding Achievement

In Philadelphia, Pennsylvania, the Philadelphia Daily News reports:

  • The U.S. Conference of Mayors honored Mayor Nutter and Common Pleas Judge Annette Rizzo [this week] for a city program that helps homeowners who are at risk of losing their homes to foreclosure. "The Mortgage Foreclosure Protection Program was chosen because helping residents maintain home ownership is a priority for the nation's mayors," said Jocelyn Bogen, director of the conference's City Livability Awards Program. The program was picked for this year's Outstanding Achievement Award by former mayors of large cities out of a list of programs in 200 cities.


  • Under the program, outreach groups visit neighborhoods where houses are slated for foreclosure, then residents in trouble can visit Courtroom 676 in City Hall to consult with volunteer lawyers and housing advocates to negotiate their mortgages with their lender.

For the story, see City honored for mortgage-aid program.

See also, Philadelphia Inquirer: U.S. mayors laud Philly’s Mortgage Foreclosure Prevention Program.

Go here for other posts on Philadelphia's Courtroom 676.

Thursday, December 24, 2009

Ohio AG Slams Servicer With Civil Suit; Says Homeq Peddled One-Sided Loan Modification Agreements, Violated State Consumer Protection Statutes

From the Office of the Ohio Attorney General:

  • Ohio Attorney General Richard Cordray [...] announced a lawsuit filed against Barclays Capital Real Estate dba HomEq Servicing, headquartered in New York, for issuing unfair loan modification agreements and providing inadequate, incompetent customer service to Ohioans who were at risk of losing their homes to foreclosure. HomEq is a participant in the federal Home Affordable Modification Program (HAMP).

  • According to the lawsuit filed [...] in Montgomery County Common Pleas Court, Ohio homeowners in need of loan modifications through HomEq to save their homes from foreclosure were forced to enter into one-sided agreements. The unfair and deceptive agreements released HomEq of all liabilities and required borrowers to waive their rights to defenses and agree to pay additional fees.

  • Additionally, the lawsuit alleges that HomEq violated Ohio's Consumer Sales Practices Act (CSPA) through incompetent and inefficient customer service by failing to return consumer calls or respond to repeated inquiries, losing borrowers’ documents and failing to offer timely and affordable loss mitigation options.

For the Ohio AG press release, see Attorney General Cordray Files Suit Against HAMP Loan Servicer.

For the lawsuit, see State of Ohio v. Barclays Capital Real Estate, Inc., dba Homeq Servicing (see Exhibit A, at page 12 for sample loan modification agreement used by Homeq).

Thousands Of Distressed Homeowners Left Hanging After Attorney Abruptly Chucks Law License; Calif. State Bar Urges Victims To File Restitution Claims

In San Francisco, California, KGO-TV Channel 7 reports:

  • Thousands of distressed homeowners are looking for a way to get their money back after hiring a lawyer to save their homes. The families were left in a lurch when the lawyer suddenly resigned from the State Bar. But even before his resignation, investigators were raising questions about whether the attorney was doing more harm than good.

  • James Parsa advertised heavily on both television and radio up and down the state. [...] The California State Bar told 7 On Your Side Parsa was one of 300 lawyers under investigation. "Mr. Parsa was being investigated for his loan modification activities by the State Bar based on complaints we have received from clients. And as part of our investigation we learned that Mr. Parsa had a criminal conviction in 2001," said Suzan Anderson from the California State Bar. Prosecutors convicted him of two counts of unlawful intercourse with a minor in Orange County. "The courts are supposed to report any criminal conviction to the State Bar and the attorney is supposed to report the conviction. Apparently it slipped through the system," said Anderson.

  • When the Bar learned of his conviction, it put him on interim suspension and Parsa resigned one week later. Now the State Bar is encouraging Parsa's 4,500 clients to apply for its restitution fund. "We can reimburse for an attorney actually stealing personal injury settlement funds or even taking advance fees for performing no work or any significant amount of work," said Matthew Zawol from the California State Bar. Last year, the Bar received 1,000 requests for restitution. This year that number has already topped 2,000. Many clients claim the lawyers leave them in worse shape than before they came to them.

For the story, see Attorney leaves clients facing foreclosure stranded.

(1) As suggested by the official from the State Bar of California, victims of ripoffs by California attorneys can put in a claim for restitution with the Bar's Client Security Fund which, according to their website (as of 12/16/2009), can reimburse qualified victims up to $50,000 for theft committed by a California lawyer. It covers the loss of money or property resulting from lawyer dishonesty (but not because the lawyer acted incompetently, committed malpractice or failed to take certain actions), according to The State Bar website. (Presumably, should the Client Security Fund begin to run out of cash to pay these restitution claims, The State Bar will keep the Fund replenished by making its remaining members cough up higher fees when their law licenses come up for renewal, thereby sticking them with the bill for the sins of their wayward colleagues - and in some cases, their now-disbarred, ex-colleagues).

For those ripped off by dishonest attorneys in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc. loan modification upfront fees

Loan Mod Firm Facing FTC Charges Continues Leaving Customers Hanging, Say Unhappy Homeowners; Outfit Changes Name & Continues Operating: Feds

In Bradenton, Florida, WFTS ABC Action News Channel 28 reports:

  • The Vanderford's weren't living beyond their means. They have a modest house in a working class Bradenton neighborhood where they've lived for 16 years. But 18 months ago, Tammy [Vanderford] lost her factory job and her husband's hours were cut at his. They could not longer pay their mortgage and they needed help. So the Vanderford's turned to Miami based loan modification company Truman Foreclosure Assistance, which, as it turned out, resulted in matters going from bad to worse.


  • At first there were weekly calls, regular status reports. [...] But then, the Vanderford's say, the updates stopped. The run around began. Their calls were no longer returned. Finally came word Truman was out of business.


  • [T]he Florida Attorney General's office says it received 68 complaints in the past two years against the company, resulting in action by the Federal Trade Commission.(1) But here's another all too common story. According to the FTC, it turns out the owners of Truman didn't go out of business. They simply changed the company's name to the Franklin Financial Group and moved their office to another part of Miami.(2)

For the story, see INVESTIGATION: Loan modification program leaves family with nothing.

In a related story on Truman Foreclosure Assistance, see WTVJ-TV Channel 6: Miami Mortgage Rescue Firm's Vanishing Act (Truman Foreclosure Assistance accused of taking money and skipping town).

(1) The FTC also named Truman Mitigation Services, LLC, Franklin Financial Group, US LLC, Eli Hertz, Benzion Jack Itzkowitz a/k/a Jack Itzkowitz, and Richard Zafrani a/k/a Rick Zafrani as additional defendants in their lawsuit. The FTC alleged that the individual defendants formulated,directed, controlled, had the authority to control, or participated in the acts and practices of the Truman Foreclosure Assistance/Truman Mitigation common enterprise (FTC lawsuit, paragraph 12).

(2) See FTC lawsuit, paragraph 13.

Dozens Air Out Grievances Against Southern California Attorney Accused Of Pocketing Thousands For Mortgage Litigation Services & Leaving Them Hanging

In Glendale, California, the Glendale News Press reports:

  • Dozens of homeowners claim they paid for loan litigation services with Los Angeles-based Bander Law Firm and never saw any legal action taken in their cases, causing some homes to foreclose. The homeowners gathered Saturday for a news conference inside a Glendale Days Inn Motel banquet hall, where several signs calling for attorney Joel Bander’s disbarment lined on the walls.


  • [H]omeowners at the news conference called on attorneys who are suing the law firm to give them advice on their next move. “You guys have been cheated in the worst way that I could possibly imagine,” attorney Anne Singer said. “Going to a lawyer, asking for help and not only having your money being taken away from you, but many of you losing your homes, and from what I understand some of you have been put in bankruptcy without your knowledge.”


  • Montrose attorney John Miller represents 20 clients who sought help from the law firm. He filed a complaint, which is still pending, with the State Bar of California against the law firm in September, said Singer, who spoke on behalf of Miller.

For the story, see Residents: Attorney cheated us (Group claims Bander Law Firm took money without solving home problems). loan modification

Wednesday, December 23, 2009

Baltimore Closing Agent Cops Plea For Role In Deed Theft Scam; Phony Documents Used To Transfer Title To Home Belonging To Out-Of-State Senior

The Maryland Mortgage Fraud Task Force members recently highlighted their progress in a press conference, including the filing of criminal, civil, and regulatory actions against more than 250 individuals and companies in 2009, including this successsful criminal prosecution by the Baltimore City State's Attorney's Office:

  • The Baltimore City State’s Attorney’s Office indicted Gregory Todd Alter, age 37, of Hagerstown, co-owner of All Star Settlement Company on charges of conspiracy to commit theft and issuing a counterfeit deed. On May 14, 2008, Alter conducted a settlement in which a home [...] was sold for $40,000. On June 14, 2008 another settlement took place at All Star where the same property was sold to an innocent third party for $90,000.

  • The true owner of the property was [...] an 85 year old woman who lives in Massachusetts and had not been to Maryland in 35 years. She never signed any deed nor was she ever aware her property was being sold. Alter received $7,000 from the first transaction and then forwarded a fraudulent deed to the buyer’s lender for the 2nd transaction. He received an additional $2,000 from the 2nd transaction. The scheme was discovered in September 2008, when [the Massachusetts woman] decided to sell the property and hired a realtor who placed a for sale sign on the property. The buyers who had purchased the property in June 2008 then realized that they had been defrauded. Alter pled guilty to both charges and was sentenced to five years suspended, three years probation.

Source: Maryland Mortgage Fraud Task Force Announces Progress And Plans (State v. Gregory Todd Alter).

Closing Attorney Arrested, Charged With Illegally Dipping Into Escrow Account, Pocketing Client Cash From Real Estate Purchase

In Lackawanna County, Pennsylvania, The Times Tribune reports:

  • A Scranton lawyer has been arrested on charges he stole money from an escrow account involving a real estate transaction in Old Forge. Attorney Richard Hallock, 33, of North Bromley Avenue, was arrested Monday by the Lackawanna County district attorney's office and charged with theft and receiving stolen property in connection with a purchase of two properties in Old Forge on June 17, 2008, according to court papers. The alleged theft involves $4,410.


  • According to court papers, Josephine Lubiejewski, a representative from Penn Attorneys Title Insurance Co., told Detective Lisa Bauer of the district attorney's office that she was informed by Mr. Hallock that he was holding the taxes in escrow because of a tax dispute. Ms. Lubiejewski determined about $12,000 in Old Forge taxes were never paid by Mr. Hallock, and that Mr. Hallock "neither paid the taxes, nor took the required steps toward an appeal," court papers state.

  • When Mr. Hallock was asked to explain "what was going on" by Penn Attorneys Title Insurance Co., he "ignored the letters," court papers state. The court papers filed by Detective Bauer state [alleged victim Walter] Stocki has been notified by the disciplinary board of the Supreme Court of Pennsylvania that it is investigating the complaint Stocki filed against Mr. Hallock.

For more, see Lawyer charged with theft in Old Forge real estate deal.

Elderly Couple Accuse Attorney Of Tricking Them Into Signing Away Home; Transfer Made In Payment Of Legal Fees, Responds Lawyer

In Springfield, Tennessee, WSMV-TV Channel 7 reports:

  • An elderly Springfield, Tenn., man said a Nashville attorney had him sign his lake house away while recovering from a stroke. W.H. "Blue” Howse, 84, and Ruth Howse, 85, are accusing [Fletcher] Long of taking their lakefront cabin at a time when they were most vulnerable. W.H. said he was on his death bed after a stroke and that his wife wasn’t aware that they were signing over their cabin. "He took advantage of the fact that I hadn’t had any rest and that Blue was just out of intensive care, and (he said), '(I) just want you to come in and sign some papers,'" said Ruth. The couple said they thought they were signing over rights for Fletcher Long to be power of attorney in an unrelated estate matter. "This would have been the perfect crime had I died, but I didn’t,” said W.H.

  • However, Long said he had been representing the couple in various legal matters for many years and they never paid him for his services. He said the Howses said they were signing over the cabin as a way to pay their debt.

For more, see Elderly Man Says Attorney Took His Lake House (Fletcher Long Says Cabin Was Debt Payment).

Attorney Cops Plea In "Seller Financing" Fraud Scam; Accused Of Using Bogus Docs To Cheat Property-Selling Clients Out Of Thousands In Building Equity

From the Office of the U.S. Attorney (New York City/Southern District):

  • PREET BHARARA, the United States Attorney for the Southern District of New York, announced that HUGH ZUBER -- a lawyer formerly employed by the Office of the Corporation Counsel for the City of New York -- pleaded guilty today to two counts of mail fraud arising from his participation in schemes to defraud two former clients. ZUBER had represented the clients, in a personal capacity, in connection with their sale of real estate to ZUBER's sister and a business associate.


  • In April 2006, a property owner retained ZUBER to represent him in the sale of a building located at 2538 Creston Avenue in Bronx, New York. ZUBER arranged the sale of the property to Alana Property Management LLC for $950,000, without disclosing to his client that his sister managed the company. At ZUBER's urging, his client subsequently agreed to accept a different sales arrangement than was reflected in the contract of sale. Specifically, ZUBER fraudulently convinced his client to accept $400,000 in cash from Alana at closing, plus a 10-year note for the balance of $550,000, which ZUBER falsely told his client would be secured by a mortgage on the property. Following the February 2007 closing, ZUBER made several monthly payments purportedly on the note, then stopped.(1)


  • In 2006, ZUBER also represented a property owner in the sale of a building located at 35 Rose Avenue in Spring Valley, New York. ZUBER arranged the sale of the property for $625,000 to an individual with whom ZUBER had a business relationship. At ZUBER's urging, his client subsequently agreed to accept from the purchaser $425,000 in cash and a $200,000 10-year note, which ZUBER falsely told his client would be secured by a mortgage on the property. Following the July 2007 closing, ZUBER made several monthly payments purportedly on the note, then stopped.(2)(3)

For the U.S. Attorney press release, see Attorney Pleads Guilty In Manhattan Federal Court To Deceiving Clients In Real Estate Deals.

For earlier reports on this story, see:

(1) According to the original charges, unbeknownst to the seller, at or around the closing of sale, Alana Property allegedly used false information to secure a $705,000 first mortgage from a lending institution, using $400,000 to fund the downpayment owed to the seller, with Zuber and his co-conspirator pocketing the difference, and leaving the seller's $550,000 unsecured note in a position inferior to the 1st mortgage. Zuber initially made periodic payments to the seller on account of the $550,000 note before ultimately stiffing him. See Criminal Complaint: U.S. v. Zuber.

(2) According to the original charges, Zuber and his co-conspirator arranged to obtain a $500,000 institutional 1st mortgage, the proceeds of which were used to fund the $425,000 cash downpayment, leaving the seller's $200,000 unsecured note in a position inferior to the 1st mortgage. Zuber initially made periodic payments to the seller on account of this note before ultimately stiffing him. See Criminal Complaint: U.S. v. Zuber.

(3) The Lawyers’ Fund For Client Protection Of the State of New York, which is in the business of reimbursing client money that is misused in the practice of law, may find itself on the hook for the losses suffered by Zuber's screwed-over clients. According to its website, the Fund may be liable for up to a maximum of $300,000 for each client loss, provided the screwed-over clients apply for reimbursement within two years after they discover their loss. There is no aggregate maximum on awards involving one lawyer, its website states. The Fund lists typical reimbursable losses to include the theft of estate and trust assets, escrow deposits in real property transactions, settlements in personal injury litigation, debt collection receipts, money embezzled in investment transactions with law clients, and unearned fees paid in advance to lawyers who falsely promise their legal services.

For those clients ripped off of their money and property by reason of the dishonest conduct of their attorneys in other states and Canada, see:

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