Real Estate Agent Charged In Staten Island Gas Station Heist; Used Phony Deed To Transfer Title To Client's Business Property To Son, Say Cops

The following excerpt appeared in a recent NYPD Daily Blotter column in the New York Post:

• A real-estate agent was busted after he tried to steal a million-dollar Tompkinsville property from the owner, sources said. Mike Odeh, 53, was hired by the owner to sell a gas station on Bay Street and Hannah Street, the sources said.

• The owner changed his mind about the sale and notified Odeh, but the agent allegedly forged a phony deed and on Feb. 17 filed it with the County Clerk's Office, police said. The phony deed transferred the property to Odeh's son, who tried to sell the property for $300,000, cops said. The property is worth about $1.5 million, according to court papers.

• The owner learned of the scheme from another agent, and cops arrested Odeh at his Grasmere home Thursday. He was charged with grand larceny and criminal possession of a forged instrument.

Source: NYPD Daily Blotter (excerpt appears halfway down page).

Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedGammaTheft

Report: Supply Of Publicly Funded Legal Aid, Pro Bono Services "Entirely Inadequate" To Meet State's Needs

Buried at the end of a New York Law Journal article on a new volunteer attorney initiative to assist unrepresented defendants in civil cases [credit for the idea for this program attributed to former New York Court of Appeals' Chief Judge Judith S. Kaye](1) is this excerpt on the state of publicly funded legal aid and pro bono services in New York:

• In a report earlier this month, the Office of the Deputy Chief Administrative Judge for Justice Initiatives termed the supply of publicly funded legal aid and pro bono services "entirely inadequate" to meet the need. In 2007, Kaye estimated that about 1.8 million litigants appeared without a lawyer in New York state courts.

Source: Economy Prompts N.Y. Courts' New Program for Volunteer Attorneys.

For the March, 2009 report, see Expanding Access To Justice In New York State (A Ten-Year Report Prepared By The Office Of The Deputy Chief Administrative Judge For Justice Initiatives).

(1) In an interview Wednesday, Kaye said she had been thinking of ways to bring the "regrettably increasing supply side of lawyer time" caused by the failing economy to the "aid of the regrettably increasing demand side" of people needing legal services. "I am so heartbroken every day to read the lead news item in the [New York] Law Journal about more lawyers being suspended, exited, encouraged to do something other than their law firm work," Kaye said. "And there are the courts just flooded with foreclosure cases, flooded with credit card debt cases, flooded with Family Court filings."

IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions & Abandonments

Those who are trying to figure out how to handle the tax ramifications of a cancellation of debt on a short sale, foreclosure sale, loan modification, or any other debt cancellation might want to consult IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments.

While this publication indicates that it is for use in preparing 2007 tax returns (as opposed to 2008 returns), it is the most recent version of the publication put out by the Internal Revenue Service and, accordingly, the information contained therein may be useful.

For more from the IRS on cancellation of debt, see:

• IR-2008-17 - Mortgage Workouts, Now Tax-Free for Many Homeowners; Claim Relief on Newly-Revised IRS Form,
• The Mortgage Forgiveness Debt Relief Act and Debt Cancellation. short sale income tax

Loan Modification Firm Workers Flee Offices As ACORN Demonstrators Prepare To Protest; Accuse Company Of Clipping Homeowners Out Of Upfront Fees

In Los Angeles, California, the Los Angeles Times reports:

• Consumers trying to warn the public about so-called loan modification scams found themselves tripping an alarm of another sort Wednesday: About 15 of them got stuck in a Buena Park office building's elevator during a demonstration.

• The failed protest was the latest in a string of tough breaks for a group of about 30 mostly elderly and Latino homeowners who gathered Wednesday outside the offices of a company called Centre Legal. Many of the demonstrators are about to lose their homes to foreclosure. Several had paid Centre Legal or one of its affiliates(1) thousands of dollars to help them work out easier payment terms, but said they received nothing in return.

***

• [W]hen protesters entered the building, they found Centre Legal's fourth-floor offices empty. Neighboring tenants said the company's workers fled minutes earlier down a set of back stairs, perhaps tipped off by the gathering of homeowners in the parking lot.

For more, see Protest of alleged loan modification scam goes nowhere (An elevator mishap adds to the frustration of homeowners gathered at the offices of Centre Legal, a company they say took their money but did nothing to help them).

(1) According to the story, ACORN alleges that a number of Southern California homeowners have paid fees to Centre Legal but received nothing in return. ACORN said the company has also operated under the names Centro Legal, Modificate and Gigante Mortgage.

Disbarred Florida Attorney Gets 14 Years For Pocketing $1.7M+ From Escrow Accounts Involving Clients' Real Estate Transactions

In Pinellas County, Florida, the St. Petersburg Times reports:

• Richard Da Fonte, the disbarred Clearwater lawyer accused of stealing more than $1.7 million from clients, was sentenced to 14 years in prison and 15 years' probation.(1)

***

• [His lawyer, Larry] Sandefer said his client had hoped to pay back his victims from the sale of his business, real estate and life insurance. The business, though, which Da Fonte sold to a former associate, is tied up in a legal dispute. Foreclosure is pending on his office condominium, and his home is in foreclosure, Sandefer said. His $3 million life insurance has lapsed.

For more, see Disbarred lawyer Richard Da Fonte gets 14 years for stealing from clients.

Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds.

(1) The story describes some of Da Fonte's victimized clients as follows:

• Shakawat Hossain of St. Petersburg hired Da Fonte in 2003. He said the lawyer stole about $235,000, money he planned to use to buy a gas station and convenience store;
• Pinellas Park resident Sharon Dore and her family lost $110,000 when they hired Da Fonte to handle the sale of her late mother's St. Petersburg home. The money was supposed to go to Dore, her daughter and a brother;
• Joan Kelly, a widow, paid for her Seminole home in full in April 2007. That summer, while she was in Cape Cod, she began getting calls from lawyers offering help with a problem. It was foreclosure. Da Fonte had taken almost $200,000 meant to pay her home's previous owners;
• Winnie Yang of Clearwater couldn't wait to have her say during the lengthy hearing. The lawyer stole $400,000 from her brother-in-law Kenneth Yang, who lives in Texas. The money was from a real estate transaction involving Yang, her husband and her brother-in-law. EscrowRipOffAlpha

Court Orders Temporary Shut Down Of Miami Loan Modification Firm; Company Directed To Refund Upfront Fees Within 90 Days

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [Friday] obtained a temporary injunction against Lincoln Lending Services, LLC and owner Rita Gomez, prohibiting the company from engaging in any type of consumer-debt related service or mortgage modification service and from taking payment from consumers for such services until further order of the court. The company will also be required to preserve and allow inspection of its records and refrain from liquidating its assets.

• In addition to freezing the company’s assets, the order requires that the company refund any up-front payments made by consumers for foreclosure-related rescue services subsequent to October 1, 2008, the effective date of the law prohibiting up-front charges.

• These refunds should be completed within 90 days and will be made without the necessity of consumers filing a claim. The Attorney General's Economic Crimes Division sued Lincoln Lending and Gomez earlier this week (press release, lawsuit) for allegedly charging up-front fees for loan modification services in violation of the Foreclosure Rescue Fraud Prevention Act. The Attorney General’s office has received hundreds of complaints regarding this case since the lawsuit was filed. Both parties agreed to this order.

For the Florida AG's press release, see Temporary Injunction Obtained in Foreclosure Rescue Fraud Lawsuit.

Ex-Subprime Mortgage Peddlers Now Running Loan Modification Scams

Bloomberg News ran a lengthy story describing how loan modification scam artists have popped up all over the country. Many of the players are described as out-of-work real estate professionals who peddled subprime mortgages during the boom who are now pocketing hundreds of thousands of dollars in advance fees and disappear or bleed their victims by charging monthly payments. The following excerpt describes one mortgage broker who jumped on the loan modification bandwagon and who now finds herself in hot water:

• In early 2008, Cheryl Ann Montero, a California mortgage broker, held a series of free seminars [for homeowners facing foreclosure] in the clubhouse of the Lone Tree Golf Course in Contra Costa County, a suburban area near San Francisco. [...] She said her firm, Freedom Financial Solutions, could pressure lenders to stop foreclosures by challenging the legality of loan agreements, according to court records. Her fee: $2,500 upfront and a $2,000 monthly payment to cover legal costs. Promoting her services on the Web site Craigslist, Montero, a blond-haired, blue-eyed woman who looked like a soccer mom, became known as a foreclosure escape artist.

***

• She was also ripping people off, says Ken McCormick, a prosecutor in the Contra Costa County District Attorney’s office. A player in a new confidence game exploiting soaring defaults, Montero didn’t have a team of attorneys to confront lenders. Instead, her firm took a small ownership stake in some of her clients’ houses and filed for bankruptcy, temporarily suspending foreclosure proceedings on those homes, according to an investigative report filed in court by prosecutors.

***

• “She couldn’t make it in real estate anymore, so she just changed hats,” McCormick says. “But she was taking money and doing nothing.” The prosecutor charged Montero with 36 counts of grand theft and related charges in December. She pleaded not guilty and is free on $100,000 bail.(1)

For the entire story, see Subprime Swindlers Reconnect to Homeowners in Foreclosure Scams.

(1) According to the story, Montero ran a three-person operation in which she told homeowners that she could find technical violations committed by lenders in loan contracts, an investigative report filed in court says. Montero blundered during one of her seminars by dropping the name of an attorney who she claimed was working with her, the report says. One of Montero’s clients called the lawyer, who had never heard of Montero, and he in turn complained to the authorities. “That’s what gave us a heads up,” says McCormick, the prosecutor.

Assignee Liability Essential In Enforcement Of Lending, Consumer Protection Laws

A recent op-ed column in the Atlanta Journal Constitution makes an observation on a weakness in Georgia state law in connection with the enforcement of lending and consumer protection laws:

• Many consumer advocates support the lending law revisions in Senate Bill 57, but the changes are window dressing for those of us who represent poor people faced with foreclosure. The law falls short in one crucial area — assignee liability.

• Assignee liability entitles a bilked borrower facing foreclosure to sue not only the originator of the loan but also the current holder. It’s important because most loans are sold and transferred into mortgage-backed security pools. SB 57 doesn’t mandate assignee liability, which means that homeowners would be left with no clear recourse.

For more, see Once mortgages sold, homeowners often left stranded.

Ohio Woman Cops Plea To Theft From Disabled Siblings, Allowing Home To Go Into Foreclosure Despite Having Power Of Attorney

In Cuyahoga County, Ohio, The Cleveland Plain Dealer reports:

• A 56-year-old Brooklyn woman entered a guilty plea on Monday in Cuyahoga County Common Pleas Court to theft charges after authorities said she stole more than $38,000 from her mentally disabled sisters. Irene Schultz faces up to eight years in prison when she is sentenced in April.

• Schultz had been accused of allowing a Cleveland home in which her two sisters lived to go into foreclosure by not making payments. The Cuyahoga County Prosecutor's Office said the county's Board of Mental Retardation and Developmental Disabilities conducted an audit that revealed Schultz's alleged theft. The office said Schultz was responsible for her sisters' finances and had been granted power of attorney from 2001 to 2007.

Source: Woman admits stealing from sisters.

Texas Woman Gets 99 Years In Alleged Mortgage Fraud, Payment Skimming Scam; Homeowners In Foreclosure, HUD Left Holding The Bag

From the Office of the Texas Attorney General:

• A Henderson County woman was [Monday] sentenced to 99 years in prison for her role in a mortgage fraud scheme. On Tuesday, a Navarro County jury found the defendant, Kandace Yancy Marriott, 52, of Gun Barrel City, guilty of engaging in organized criminal activity. According to prosecutors, evidence presented at the punishment stage showed Marriott received monthly mortgage payments from her clients, failed to remit those payments to the mortgage lender, embezzled the homeowners’ funds, and therefore caused her clients to default on their home loans.

***

• The scheme involved predominantly low-income purchasers whose residential loans were guaranteed by the U.S. Department of Housing and Urban Development. As a result, when the unqualified buyers defaulted on their home loans, their mortgage lenders did not suffer financial losses. Instead, HUD – and therefore the taxpayers – had to cover the default costs. Investigators believe the defendants’ scheme cost the taxpayers more than $3 million.(1)

For the Texas AG's press release, see East Texas Woman Sentenced To 99 Years In Prison For Mortgage Fraud (Kandace Yancy Marriott convicted, three additional suspects await trial in alleged scheme).

(1) According to state investigators, the defendants illegally forged home buyers’ signatures, inaccurately completed loan applications, and falsified supporting documents, including the buyers’ rent payment verification statements, proof of employment, and Social Security Administration benefits data, among other items. Court documents filed by the state indicate that the defendants conduct was intended to ensure that unqualified home buyers loans were approved by mortgage lenders.

Buying Residential Mortgage Loans? Documentation Issues & Risks Increase As "Produce The Note" Strategy Gains In Popularity

An article on mondaq.com advises that:

• Investors considering the purchase of residential mortgage loans should include on their diligence checklists verifying the mortgage loan documentation to ensure they will be in a position to enforce the Note and realize on the mortgage if necessary. This entails making sure there is a proper negotiation of all Notes in accordance with UCC requirements, obtaining physical custody of the original Notes, and obtaining written assignments of mortgages in recordable form.

The article highlights the following issues that investors can expect to be raised if they fail in their due diligence:

• [O]ne issue that has become an increasing focus of litigation between residential mortgage lenders and borrowers is the adequacy of the "paper trail" of mortgage loan securitizations. [...] Consumer lawyers around the country have sought to capitalize on the inability of some mortgage servicers and foreclosure counsel to adequately "prove up" the mortgage loan documentation to prevent or delay foreclosure of defaulted loans.

***

• The principal points of contention have been, first, whether possession of the borrower's original promissory note is a prerequisite to exercise of foreclosure remedies; and, second, whether the foreclosing creditor must show a complete "chain of title" tracing assignment of the mortgage from the loan originator or other party named in the mortgage.

***

• Increasingly, at the urging of debtors and debtor's counsel, state courts and in particular bankruptcy courts presented with motions for relief from the automatic stay to foreclose defaulted residential mortgage loans are requiring creditors to produce original Notes.

***

• A related issue concerns who is entitled to enforce the Note. It has been held that "[i]f a loan has been securitized, the real party in interest is the trustee of the securitization trust, not the servicing agent." In re Hwang, 396 B.R. 757, 767 (Bankr. C.D. Cal. 2008). Enforcement and foreclosure proceedings are often brought by the loan servicer, sometimes in its own name and sometimes in the name of its principal pursuant to a power of attorney. Any claimant who is not the "holder" of the Note within the meaning of the Uniform Commercial Code and in actual physical possession of the Note may find its standing challenged by borrowers and courts.

***

• The other principal line of attack by borrowers and their counsel concerns the validity of written assignments of mortgages.

***

• Another complication concerns the role of MERS-- the Mortgage Electronic Registration System, Inc. MERS was established to maintain an electronic off-record mortgage registry, thus eliminating the need for filings in the public land records whenever a mortgage changes hands.

For the article, see Documentation Issues And Risks In Purchasing Residential Mortgage Loans (article starts half way down the webpage).

Tulsa Bar Response To Call To Ante Up Financial Help For Legal Aid Underwhelming As Governor, Others Attempt To Bridge "Justice Gap"

In Tulsa, Oklahoma, an op-ed column in Tulsa World reports:

• Two hundred Tulsa law firms that had not contributed to Legal Aid Services of Oklahoma in past fund drives recently received an appeal to help match a $35,000 challenge grant from the George Kaiser Family Foundation. So far, response is underwhelming; four firms dug deep and gave a total of $1,000. The annual public fund drive continues, led by Gov. Brad Henry and first lady Kim Henry.

***

• [I]f this were a typical year — LASO again would serve 20,000 clients, who could not otherwise afford a lawyer to aid them with civil legal matters. And LASO again, lamentably, would turn away another 20,000 Oklahomans because it did not have enough staff to get them past the front door. Even in good times demand far outstrips resources. "We call it the 'justice gap,' " says LASO's Gayla Machell. "They're all the people who cannot afford an attorney's help but cannot make it to the front of the line at Legal Aid."

• This, however, will not be an ordinary year. Here and nationally Legal Aid groups are witnessing crushing demand. LASO staff across the state can only hope that the number they must turn away remains at 20,000 because the figure could go far higher.

For more, see Justice for all? Not really (Lack of Legal Aid funding creates unbalanced system).

NY Courts Roll Out Attorney-Assisted Self Help Initiative For State Residents Fighting Foreclosure, Personal Debt, Landlord-Tenant, Other Lawsuits

The New York Law Journal reports:

• Administrators of New York courts rolled out a new program Thursday to enlist attorneys, many of whom may be laid off or on reduced work schedules due to the sour economy, to provide legal advice and expertise to pro se litigants. The initiative will differ from traditional pro bono work in that lawyers will not represent poor clients in court nor provide assistance throughout their cases.

• Rather, lawyers in the new Volunteer Attorney Program will make themselves available to multiple pro se litigants to help them prepare petitions and other court paperwork, advise them about what might happen in court and interpret orders from courts, Chief Administrative Judge Ann Pfau said.(1) The program at first will focus on providing legal services in courts in New York City and in Westchester, Suffolk and Nassau counties.

***

• Free training will be available, and attorneys will earn CLE credit for volunteering under the program, according to court administrators. [...] Lawyers in the program will be shielded from liability for the advice they dispense under §17 of the Public Officers Law, according to Lawrence Marks, director of administration for the Unified Court System.

For more, see Economy Prompts N.Y. Courts' New Program for Volunteer Attorneys.

(1) According to the story, Pfau said the need for attorneys to help pro se litigants is particularly acute in cases that reflect the bad economy, such as foreclosures, tenant-landlord disputes, personal debt, child support and other matters in Family Court and small estate settlements in Surrogate's Court. Both employed and unemployed lawyers can participate, Pfau said. Applications and other information about the program are available on the Unified Court System's Web site:

http://www.courts.state.ny.us/attorneys/volunteer.shtml

Court officials will give examples of the types of matters where attorneys can provide legal advice and volunteering lawyers can express preferences for counties where they want to serve. There is no minimum time commitment.

Florida High Court Issues Administrative Order Creating Task Force On Residential Mortgage Foreclosure Cases

The Florida Bar News reports:

• The [Florida] Supreme Court has created a Task Force on Residential Mortgage Foreclosure Cases to recommend policies, procedures, strategies, and methods for easing the backlog of pending foreclosure cases while protecting the rights of parties. Chief Justice Peggy Quince, in a March 9 administrative order, said the residential mortgage foreclosure crisis is of statewide proportions and should, to the extent possible, be addressed on a statewide basis with uniform rules, policies, and procedures to manage cases, protect the rights of homeowners and lenders, and to ease the burden on the courts. The chief justice asked the task force to submit an interim report and recommendations no later than May 8 and a final report no later than August 15.

For more, see Supreme Court creates task force to study foreclosures.

Go here for the Florida Supreme Court's administrative order.

Madoff Using Florida Homestead Protection To Shield Palm Beach Mansion?

A recent story in the Palm Beach Post addresses the possibility that the admitted $50+ billion Ponzi scheme operator Bernard Madoff may be attempting to use the Florida law prohibiting a forced sale of a homestead to protect a Palm Beach mansion titled in his wife's name:

• [Federal prosecutors] served notice [...] that they want to seize a vast array of assets in Ruth Madoff's name, including the Palm Beach home. Federal officials could try to pierce state homestead protection by arguing that the money used to buy the home in 1994 came from fraud or other criminal activity and that federal law is preemptive, [...].

***

• "It seems to me that the federal prosecutors are fairly confident that they will be able to demonstrate that Mrs. Madoff used the proceeds of a criminal enterprise" to buy the home, said New York attorney Richard Greenfield, who said he represents a group of Palm Beach investors. "They may employ RICO, a law aimed at racketeers to obtain the proceeds of the enterprise. They are already contending, contrary to Madoff's contention that the scheme began in the 1990s, that it began at least in the 1980s, well before she purchased the home."

For the story, see Madoff's $9 million Palm Beach property's size could leave small part vulnerable to creditors.

Utah AG Charges Couple With Multiple Felonies In Alleged Equity Stripping Foreclosure Rescue Scam; Seeks Asset Freeze, Criminal Forfeiture, $500K Bail

From the Office of the Utah Attorney General:

• The Utah Attorney General's Office [Friday] charged the CEO of Utah Financial Inc., Midvale, Utah, and his wife with 18 second-degree felony counts for allegedly running a lucrative mortgage fraud scheme. Utah Financial President Brendan Tyler Cassity, 36, and Olivia Cassity, 29, were both charged with 15 counts of communications fraud, one count of racketeering and two counts of money laundering.

***

• According to court documents, the Cassitys allegedly prepared their own appraisals using the name of a separate licensed appraiser and substituting photos of more lavish homes as part of those appraisals to inflate the value of the real estate described in those appraisals. They then allegedly used straw buyers to obtain loans far in excess of the true value of the properties. Equity was then allegedly skimmed from the properties in order to gain tax advantages and buy other properties. The alleged scheme may have netted several million dollars. The Attorney General's Office has asked a judge to freeze the assets of the defendants and is seeking criminal forfeiture of their business at 193 East Fort Union Boulevard in Midvale and their home in Salt Lake City. Prosecutors are also asking that bail be set at $500,000 for each defendant.(1)

For the Utah AG's press release, see Midvale Mortgage Company Owners Charged With Fraud.

For earlier post on this case, see Utah AG Raids Foreclosure Rescue Operator's Office, Home; Investigators Mum About What They're Looking For.

(1) "The ripple effect of mortgage fraud schemes across the country is far-reaching and significant," says Attorney General Mark L. Shurtleff. "The Utah Attorney General's Office places a high priority on uncovering and squelching predatory practices of unscrupulous mortgage brokers. Some of these so-called ‘mortgage assistance' programs are merely schemes to defraud people of their money and their homes."

Jointly Owned Marital Real Estate Facing Foreclosure - Did Both Spouses Sign The Paperwork?

In a recent column appearing in The Herald News (Fall River, Massachusetts), foreclosure defense and bankruptcy attorney Glenn Russell Jr. writes about one problem facing lenders in some foreclosure actions that has gone pretty much unnoticed in general media reports - What happens if a sloppy loan originator and/or title closer obtained only one spouse's signature on a promissory note and mortgage in connection with property owned by husband and wife jointly as tenants by the entirety?

• If your lender is seeking to foreclose on your home, and you live in a state like Massachusetts that recognizes a type of property ownership known as “Tenancy by the Entirety,” you have some protection.(1) Both spouses’ signatures are required to be on all of the loan and property documentation when you purchased your home.

***

• During the mortgage frenzy over the past 7 years, mortgage brokers could not keep up with the paperwork and became very sloppy, or worse. Many times, these people were in too much of a rush, and lacked the necessary knowledge about this issue, to even ask for both signatures.

For the entire column, see Tell bank where to stick its foreclosure note.

(1) According to Russell, tenancy by the entirety is recognized in 28 states, including Massachusetts. In most cases the foreclosing lender will not be able to foreclose and sell your property, but will be able to place a lien on the property equal to the spouse’s share who did sign the loan documents, as long as the couple remains married and alive. He goes on to point out, however, that this share is only a “contingent” interest, meaning that the lender would only take actual ownership of the property if the non-signing spouse pre-deceased the signing spouse. If the married couple divorce, the lender can proceed with the foreclosure process.

I would add to this point by observing that in the State of Florida, a mortgage on a primary residence (ie. homestead property) signed only by one spouse (irrespective of how title is held) is treated as null and void pursuant to the provisions of Article X Section 4 of the Florida Constitution (relating to the state homestead exemption from forced sale) and the state court interpretations thereof. In that case, the foreclosing lender will find itself having no recourse at all against the property and, accordingly, will be left holding the bag.

While I have yet to see specific recent cases recounted in general media reports on incidents where only one spouse signed the note and mortgage on property owned as tenants by the entirety that is facing foreclosure, anectdotes thereon are definitely out there. ThetaMissingDocsMtg

Recovering Damages From Those Engaged In The Unauthorized Practice Of Law

A recent story in The Florida Bar News may be of interest to those in Florida who have suffered monetary damages when doing business with individuals and companies whose activities constitute the unauthorized practice of law (which could include non-attorney loan modification firms engaged in providing forensic loan audits in search of violations of relevant lending and consumer protection laws):

• Florida residents have legal recourses when they have been damaged by those committing the unlicensed practice of law, according to The Florida Bar. The Bar has provided the above response to a request from the Supreme Court, which is considering an appeal from the Fourth District Court of Appeal in Goldberg v. Merrill Lynch Credit Corporation, 981 So. 2d 550 (Fla. 4th DCA 2008).

• The appeal is two consolidated class action cases where the plaintiffs sued alleging that corporations engaged in the unlicensed practice of law when they prepared closing documents and other paperwork in connection with mortgages. The Fourth DCA dismissed the case, saying the plaintiffs could not seek civil remedies absent the finding by the Supreme Court of unlicensed practice of law.

• The case was appealed to the high court, which in turn asked the Bar’s unlicensed practice of law office for an amicus brief “focusing on the existence and adequacy of remedies that may be available to those claiming to have been harmed by persons engaging in the unauthorized practice of law.”

For more, see Damaged by UPL? The Bar argues the public has a right to redress.

Go here for The Florida Bar's amicus brief.

Go here for links to all the briefs filed in this case (scroll down to case #SC08-1360 Goldberg, et al. v. Merrill Lynch Credit Corporation, et al.).

Go here for information on Filing an Unlicensed Practice of Law Complaint with The Florida Bar. UnauthPractOfLawTheta

Florida Bar Issues Ethics Alert For Lawyers Working With Loan Modification Firms

The Florida Bar has recently issued an "Ethics Alert" in which it provides Florida attorneys some guidance as to what activities they should steer clear from when forging working relationships with non-attorney loan modification firms.

• [T]his alert does not address every potential problem or concern. Lawyers should not assume that conduct is permissible merely because it is not listed [herein].(1)

For more, see Ethics Alert: Lawyers should be very wary of loan modifiers.

For more from The Florida Bar:

• Florida Bar Ethics Opinions,
• Rules Regulating The Florida Bar: Chapter 4. Rules of Professional Conduct (for pdf version, try here - 139 pages),
• Go here for the complete set of Florida Bar Rules - Chapters 1 through 20.

Go here and Go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law.

(1) The list of prohibited activities contained in the alert:

• Cannot pay a referral fee or give anything of value to a nonlawyer for referring distressed homeowners to the lawyer. [Rule 4-7.2(c)(14)]
• Cannot be paid by a nonlawyer to provide services to distressed homeowners. [Rule 4-5.4(a)]
• Cannot directly or indirectly divide fees with a nonlawyer. [Rule 4-5.5(a)]
• Cannot assist in the unauthorized practice of law by: (a) providing legal services for a distressed homeowner while employed as in-house counsel for a nonlawyer company; (b) forming a company with a nonlawyer to perform foreclosure related services if any of the services are the practice of law; or (c) assisting a nonlawyer individual or company in providing services that the individual or company is not authorized to provide or are otherwise illegal.[Rule 4-5.5(a)]
• Cannot assist a nonlawyer in violating the provisions of the Foreclosure Rescue Act, Section 501.1377, Florida Statutes. [Rule 4-8.4(d)]
• Cannot directly contact distressed homeowners to offer representation (including by telephone or facsimile) and cannot allow someone else to directly contact distressed homeowners on the lawyer’s behalf. [Rules 4-7.4(a) and 4-8.4(a)]
• Cannot accept referrals from non-lawyers acting in the guise of a “lawyer referral service” (legitimate lawyer referral services must comply with a rule which requires all advertisements and contact with prospective clients to be in compliance with the attorney advertising rules, in addition to other requirements) [Rule 4-7.10]
• Must have a direct relationship with distressed homeowners who hire the lawyer for representation. [Rules 4-1.1, 4-1.2 and 4-1.4]
• Cannot allow a nonlawyer to choose a lawyer for a distressed homeowner or direct a lawyer’s representation of a distressed homeowner. [Rules 4-1.1, 4-1.2, 4-1.4, and 4-5.5(a)]

The above cited rules can be found in Chapter 4 of the Rules Regulating The Florida Bar: Rules of Professional Conduct (for pdf version, try here - 139 pages).

According to the Ethics Alert, several ethics opinions, Opinions 92-3 and 95-1 in particular, discuss similar proposals and the ethics problems that arise when lawyers enter business arrangements with nonattorneys. UnauthPractOfLawTheta

Police Detective: "Rent Skimming, It Is Epidemic In The City Of L.A. Right Now"

PBS' NewsHour with Jim Lehrer reports:

• With the national foreclosure rate still climbing, some chose to live in foreclosed homes while others have been the victims of "rent skimmers," people who pretend to own a foreclosed property and scam tenants out of thousands of dollars in security deposits and fees.

For more, including link to the video broadcast of the story, see Glut of Foreclosed Homes Encourages Scams, Desperation.

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

Court Temporarily Prohibits Central Florida Loan Modification Firm From Charging Upfront Fees

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [Thursday] announced that his office has obtained an emergency court order temporarily prohibiting a Central Florida company from charging up-front fees for foreclosure-related rescue services. According to the order issued by the Orange County Circuit Court, Wineberg, Lopez, & Rodriguez Company is barred from charging homeowners any fee in advance for providing foreclosure-related rescue services.

For the entire press release, see Court Grants Emergency Request to Halt Central Florida Foreclosure Rescue Company's Up-Front Fees.

Go here for more on the lawsuit against Wineberg, Lopez, & Rodriguez (press release, lawsuit).

Mass AG Files Civil Charges Against Loan Modification Firm; Alleges Collection Of Illegal Upfront Fees, Violations Of State Consumer Protection Act

From the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office has obtained a temporary restraining order against Express Modifications, Inc., d/b/a “Loan Mods By Lawyers, Inc.,” which ran prominent advertisements in a local newspaper last month offering to help homeowners avoid foreclosure. In a complaint filed in Suffolk Superior Court [Wednesday], the Attorney General’s Office alleges that the advertisements were unfair and deceptive, in violation of the Massachusetts Consumer Protection Act, because they falsely give the impression that Express Modifications would provide the homeowner with the services of an attorney, and would guarantee a loan modification that would improve the homeowner’s financial situation dramatically and save the home from foreclosure.(1)

For the entire press release, see Attorney General Martha Coakley Obtains Temporary Restraining Order Against Company for Deceptively Advertising Foreclosure Relief Services and Soliciting Illegal Advance Fees.

(1) According to the Massachusetts AG, the advertisements in question ran on three dates in February 2009 in the Boston Metro newspaper. The company offered to assist homeowners to “Save Your Home, Modify Your Loan,” and “Stop Foreclosure; Call NOW!” and directed homeowners to the website LoanModsByLawyers.com. The Attorney General’s investigation of the company and its operations also revealed that the company demands a $1,500 up-front fee before providing services to help homeowners avoid foreclosure. Such advance fees are illegal under regulations issued by the Attorney General’s Office in 2007 to combat various unfair business practices that target homeowners facing foreclosure. The Attorney General’s Office also determined that although the company used the name “Loan Mods By Lawyers,” there appeared to be no licensed attorneys on staff.

Virginia Closing Attorney Gets Two Years In Richmond-Area Equity Stripping Foreclosure Rescue Scam

In Richmond, Virginia, WTVR-TV Channel 6 reports:

• [A] key player in a local mortgage rescue scheme is going to prison. [...] Prosecutors say Colin Connelly conspired with others from Walkwood Properties to commit mortgage fraud and Connelly admits to preparing fraudulent Housing and Urban Development documents and will now spend two years in prison.

***

• Prosecutors say Connelly was hired by Darrell Underwood, owner of Walkwood Properties to close on a number of homes under Walkwood's real estate program. The court documents say the housing deals were done without full disclosure to the sellers about how the transactions worked and a huge portion of the equity in the victims' homes was skimmed to Walkwood and other entities.

***

• Connelly begins his sentence next month. Once released from prison, he must pay back $376,000 to his victims. As for Darryl Underwood, he's been indicted on 41 charges including bank fraud and money laundering. He goes on trial in June.

For the story, see Lawyer Sentenced In Foreclosure Scheme.

For the criminal charges against Connelly, see:

• U.S. v. Connelly (Criminal Information).

Ex-Home Health Aide Gets 10 Years For Scamming Elderly Couple; Home Lost To Foreclosure

In Norwalk, Connecticut, Norwalk News reports:

• A former home health aide who scammed an elderly couple out of hundreds of thousands of dollars, forcing them so far into debt that their home was foreclosed upon, was sentenced in Stamford Superior Court on Thursday to 10 years in prison. Nuria Reyes, 61, was given 10 years in prison, time served after five years. She must also pay $70,000 in restitution to her victims and has to give the victims 50 percent of the restitution up front.

***

• While working as a home health aide for Lee and Mary Kent from 2003 to 2006, Reyes applied for and obtained mortgages and a home equity line of credit on the victims' home at 14 Saranac St. during her employment.

For more, see Aide who scammed Norwalk couple given 10-year sentence.

Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc.

Go here, here, here, here, here, and here for other posts on elder financial abuse. FinancialAbuseOfElderlyAlpha DeedGammaTheft

San Diego DA Seeks Help Rounding Up Add'l Victims Of Land Patent Foreclosure Rescue Scam

In San Diego, California, XETV-TV Channel 6 reports:

• Authorities asked for the public's help Wednesday in locating additional victims of a San Diego foreclosure fraud scam in which victims were falsely told that "land patents" would protect their properties from foreclosure. District Attorney Bonnie Dumanis said 61-year-old Larry Smith and five alleged accomplices sold the bogus "land patents" to homeowners, claiming the victims could pay only 10 percent of their mortgage payment each month and could force lenders to "re-contract" the loan amounts.(1)

***

• So far, more than 20 victims have come forward saying they lost tens of thousands of dollars in the real estate scam, Dumanis said. Anyone who believes they may be a victim in the case was asked to call (619) 531-4475.

For more, see Victims Sought in Mortgage Foreclosure Scheme.

For some of the documents related to this scam:

• Criminal charges against Larry Smith,
• Typical Larry Smith Land Patent,
• Bogus paperwork surrounding "land patents".

Go here for other posts on the land patent allegations against this group.

(1) The defendants -- Smith, Maria Candida Capa, Margarita Gaviola, Jessica Refuerzo, Julita Whittingham and Edgardo Orcino -- are accused of defrauding homeowners out of more than $100,000 in 2007 and 2008.

Florida AG's Assault On Upfront Fee Loan Modification Firms Continues; Accuses Group Of Violating UPL, Foreclosure Rescue Fraud Statutes In Civil Suit

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum today announced that his office has obtained an injunction against a South Florida loan modification company and its owner to freeze the company’s assets until a lawsuit filed against the company could be heard in court. Miami-based Mortgage Crisis Solutions Association, LLC and owner Donald Gillette are accused of charging homeowners in foreclosure up-front fees as high as $2,995 for loan modification services, but never providing the services. Additionally, the lawsuit alleges Gillette and his company improperly advertised legal services and counsel.

***

• The lawsuit alleges multiple violations of the Foreclosure Rescue Fraud Prevention Act and the Florida Deceptive and Unfair Trade Practices Act. Full victim restitution has also been requested.(1) A copy of the lawsuit has been served on Gillette and his employee, Flynn McCarthy.

For the entire Florida AG press release, see Attorney General Files Injunction to Freeze Assets of South Florida Loan Modification Company.

For more from the Florida AG's office:

• Lawsuit - State of Florida v. Gillette, et al.,
• Memorandum of Law in Support of Emergency Injunction Request,
• Go here to file a consumer complaint against these companies with the Florida AG's office.

(1) The lawsuit also accuses the group of engaging in the unauthorized practice of law. See lawsuit - paragraph 27. A related company, Property Solutions Specialists, Inc., is also named in the lawsuit and allegedly guaranteed to make available all laws applicable to the homeowners’ situation to better assist them with the defense against foreclosure, even though the company is not a legal services entity. Also named as defendants are One Source Communications, Inc. and Nationwide Financial Partners, Inc.UnauthPractOfLawTheta

Seventh Defendant In Maryland-Based Equity Stripping Foreclosure Rescue Scam Cops Plea; Responsible For $16.8M+ In Lender Losses

From the Office of the U.S. Attorney in Maryland:

• Joy Jackson, age 41, of Fort Washington, Maryland, pleaded guilty today to conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

• “Joy Jackson presided over a ‘money store’ that was in the business of ripping off homeowners and mortgage lenders by submitting fraudulent paperwork to support over $16 million of loans that were never intended to be repaid,” said U.S. Attorney Rod J. Rosenstein. “Instead of helping financially distressed homeowners keep their homes as promised, she secretly used their home equity to buy luxuries for herself, including furs, jewelry and over $800,000 on her wedding.”

***

• Jackson is the seventh defendant to plead guilty in the Metropolitan Money Store mortgage fraud scheme. [...] Three defendants remain scheduled for trial on July 7, 2009.

For the entire press release, see President of Metropolitan Money Store Pleads Guilty in over $35 Million Mortgage Fraud Scheme (Jackson Personally Responsible for Over $16.8 Million in Losses to Mortgage Lenders and Used Over $800,000 of Fraudulently Obtained Proceeds to Pay for Her Wedding).

See also, The Washington Post: Woman Pleads Guilty in Mortgage Fraud Scam:

• [I]nstead of helping people hold onto their homes, as they promised, Jackson and her co-conspirators took titles to properties, drained them of equity and charged exorbitant transaction fees, according to prosecutors. [...] Already, 115 victims have been identified in Maryland, and that number is expected to grow, a prosecutor said. Jackson's sentencing is Nov. 16.

For the indictment in this case, see U.S. v. JoyJackson, et al.

Feds File Civil Charges Against Two New Jersey Loan Modification Firms Promoting "HOPE"

From the Federal Trade Commission:

• At the request of the Federal Trade Commission, a U.S. district court has ordered two companies to stop falsely advertising that they are part of a government-endorsed mortgage assistance network and that they successfully modify mortgages for almost all of their clients or else give refunds. In fact, the FTC alleges that the defendants are not affiliated with the legitimate HOPE NOW Alliance mortgage assistance network, often divert one month’s mortgage payment as a fee from distressed homeowners, fail to help them modify their mortgages, and then deny them refunds.

***

• “The New Hope and Hope Now scammers have given consumers false hope under the guise of the government-endorsed HOPE NOW Alliance. We won’t hesitate to take action against these types of con artists now and in the future,” [FTC Chairman Jon Leibowitz said].

***

• Seeking to capitalize on its name, the defendants called their firms New Hope Modifications and Hope Now Modifications,(1) and used telephone numbers that included “HOPE,” to mimic the real HOPE NOW Alliance hotline which is 888-995-HOPE.

For the FTC press release, see Court Halts Bogus Mortgage Loan Modification Operations (Two Firms Falsely Claimed to be Affiliated with Non-Profit HOPE NOW Alliance).

For the FTC court documents, see:

• FTC v. New Hope Property LLC, Brian Mammoccio, and Donna Fisher (Complaint; Temporary Restraining Order),
• FTC v. Hope Now Modifications, Nick Puglia, Salvatore Puglia (Complaint, Temporary Restraining Order).

(1) These are the same two firms that were recently sued by the New Jersey Attorney General for similar allegations.

Hundreds Show Up At Miami Loan Modification Firm Headquarters Clamoring For Refunds Of Their Upfront Fees

In Miami, Florida, WFOR-TV Channel 4 reports:

• Hundreds of people crowded outside a building in Miami on Tuesday trying to get their money back from Lincoln [Lending] Services, a mortgage "rescue" company. Florida's attorney general filed suit against the company (press release, lawsuit) Monday, alleging it has illegally collected thousands of dollars in up front fees from people looking for help in restructuring their mortgages or avoiding foreclosure.

***

• Retiree Roberto Salcido said he gave Lincoln [Lending] $4,400 and got "nothing" for his money. "My wife and I are retired," Salcido said, clutching a batch of Lincoln Financial paperwork in a clenched fist.

***

• A woman who answered the phone at the company Tuesday said Lincoln [Lending] is no longer in business and has been "absorbed" by an outfit called the Foreclosure Law Center. The woman, who did not give her name, said the Foreclosure Law Center would make good on promises made to clients or refund their money "if no services have been provided to them."

***

• The attorney general's office urged those who believe they have been victimized by Lincoln [Lending] or other mortgage rescue companies to file a complaint at the their Fraud Hotline, 1-866-966-7226, or at their website.(1)

For more, see Mortgage "Rescue" Company Sued By Atty. General (Attorney General Says "Scam" Targeted Most Vulnerable) (read story) (watch video).

(1) Based on the Florida Attorney General's lawsuit against Lincoln Lending Services, complaints to The Florida Bar alleging the unauthorized practice of law, which is one of the Florida AG's allegations against Lincoln (see Florida AG's lawsuit, at paragraph 30), may also be advisable. Go here for information on Filing an Unlicensed Practice of Law Complaint with The Florida Bar.

State Bar Cautions Attorneys On Working With Loan Modification Firms

The Florida Bar News reports:

• Florida lawyers are being approached about working with nonlawyers offering foreclosure-related services to consumers, but the proposals present a veritable minefield of ethical problems. Bar Ethics Counsel Elizabeth Tarbert said the Ethics Hotline has received many calls from attorneys who have been approached by companies or individuals that call themselves foreclosure-related rescue services, experts on loan modifications, or short sales consultants. (See separate Ethics Alert) “Some of them are offering to set up lawyers in offices; some are offering to open partnerships with lawyers; some are offering to hire lawyers in-house to represent clients,” Tarbert said.

• The catch: None of that, or many other proposals by the companies, are allowed by Bar rules.

***

• Janet Morgan, counsel in the Bar’s Ft. Lauderdale office, has headed up the UPL investigation of [loan modification firm] Outreach Housing. “They had a Web site and a television ad offering legal services of attorneys through a nonattorney entity. . . . A nonlawyer company can’t do that,” Morgan said. “And then when they brought people in the door, they promised to analyze their loan documents and determine whether there were any violations [of truth in lending and closing procedure laws] that occurred during closing.”

• Not surprisingly, Morgan said in every case investigated by the Bar, customers reported that the company found an actionable lending “violation,” and the Attorney General found the same in its probe. The company then proceeded to advise clients they had a basis for a federal suit and would arrange an attorney for them.

• Clients were also told to send all communications from lenders to the company. The company tried to hire attorneys to work in-house representing clients. When they found that was impermissible, Outreach created a captive in-house law firm, but that too caused problems. So the “law firm” was split off, but it was eventually dissolved, Morgan said.

• “Every time they would find there was a problem, they would change the way they did things,” she said. “They recreated themselves over and over. There were actual attorneys signing the lawsuits that were filed in federal court. However, we also found instances where our complainants did not understand a lawsuit was being filed in their name.”

For more, see Take care when working with foreclosure rescue services.

Go here for The Florida Bar's Ethics Alert: Lawyers should be very wary of loan modifiers.

Go here and Go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law. UnauthPractOfLawTheta

Sleazy Debt Collection Tactics Featured On Dateline NBC

Dateline NBC ran an investigative report Friday night on the debt epidemic and the sleazy tactics used by some bill collection agencies and "debt scavengers" in hounding consumers into making payments on delinquent credit accounts.

To watch the full broadcast, see Inside The Financial Fiasco: Debt Trap.

Advanced Consumer Rights Litigation Boot Camp

From The Ultimate Litigation Boot Camp website:

• The Advanced Consumer Rights Litigation Boot Camp is an intensive two and one-half day learning experience that teaches you all you need to know about the litigation experience. You will learn the art of drafting a complaint, taking depositions with an actual court reporter and continue all the way through the litigation experience ending in a real life courtroom with a real trial judge for an actual trial experience.

For more, see Advanced Consumer Rights Litigation Boot Camp.

In a related story, see North Carolina Lawyers Weekly: Bankruptcy Boot Camp - O. Max Gardner drills lawyers from around U.S. on strategies of foreclosure combat.

Loan Mod Firm Took Upfront Fees For "Forensic Analysis" Of Loan Docs, Says Florida AG; Accuses Company Of Violating UPL, Foreclosure Rescue Fraud Laws

From the Florida Attorney General's Office:

• Attorney General Bill McCollum [Monday] filed a lawsuit against a Miami company and its owner alleging the company is engaged in foreclosure rescue fraud. According to the lawsuit, Lincoln Lending Services, LLC targeted Hispanics facing foreclosure and charged up-front fees for loan modification services, both in violation of the Foreclosure Rescue Fraud Prevention Act.

***

• According to consumer complaints, Lincoln Lending advertised for mortgage foreclosure assistance and rescue services. The complaint alleges that to get around the statutory prohibition against up front charges, the company would have consumers pay $2,700 for "forensic analysis" services, then sign a contract for alleged modification services. The forensic analysis fee was allegedly created to circumvent the new law, which the Attorney General helped create last year.

• Lincoln's business of offering legal services, directly or indirectly, constitutes the unauthorized practice of law and violates FS 877.02(1).(1) The Attorney General’s Economic Crimes Division determined Lincoln Lending also forwards consumers to an attorney working under the business names of Florida Foreclosure Law Center, LLC and Florida Homeowner Assistance Center, LLC.(2)

For the Florida AG's press release, see Attorney General Sues Company Targeting Hispanic Community with Foreclosure Rescue Fraud Scam.

For the lawsuit, see State of Florida v. Lincoln Lending Services, LLC.

***************

See also, The Miami Herald: Florida sues Miami's Lincoln Lending over mortgage fees (Florida's attorney general has accused a Miami firm that promised to modify delinquent home loans of taking upfront fees from customers in violation of a state law):

• [L]incoln also told customers a $999 fee it charged for ''loan-modification'' services would be paid by their mortgage lender through President Barack Obama's stimulus package, the lawsuit alleges.

*****************

Go here for information on Filing an Unlicensed Practice of Law Complaint with The Florida Bar.

Go here and Go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law.

(1) See lawsuit, at paragraph 30:

• Defendant's business in offering legal services to the public directly, or indirectly through Florida licensed attorneys which Defendants engage or otherwise involve and/or compensate, constitutes the unauthorized practice of law in accordance with the principles of the Florida Supreme Court pursuant to The Florida Bar v. Consolidated Business and Legal Forms, Inc., 386 So.2d 797 (1980).

(2) With respect to the attorneys involved with this loan modification firm, no word at this point as to whether they are in hot water for possible charges of:

• using a person or organization to recommend or promote the lawyers’ services,
• aiding nonlawyers in the unauthorized practice of law,
• improperly sharing legal fees with nonlawyers.

See The Florida Bar's Ethics Alert: Lawyers should be very wary of loan modifiers. See also. Cincinnati Bar Assn. v. Mullaney, 119 Ohio St.3d 412, 2008-Ohio-4541 (2008). UnauthPractOfLawTheta

ABC News' 20/20 Probes Into San Diego Loan Modification Firm

A recent investigative report on ABC News' 20/20 program probed into the activities of San Diego, California loan modification firm People's First Financial:

• [L]ast year, [Jay] Nichols was employed as a salesman at what he describes as an aggressive loan modification company, People's First Financial in San Diego. He said the mantra was: "Sell -- sell hard ... trying to get as much money as they could, as quickly as they could." He said the sales staff was revved up at training sessions that included such movies as "Boiler Room," which glamorized a hard sell.

• Negotiating loan modifications can be a legitimate service, but a current People's First Financial employee who asked not to be identified said customers were signed up even when they had almost no chance of qualifying for bank renegotiation. "And sometimes the salesperson just didn't care to check if they even could," the employee said.

• Former customers said they were lured in by talk of huge cuts in monthly payments, and some say they were even told it was a government-sponsored program. Nichols confirmed that other salesman made this kind of false claim.

***

• People's First was doing big business, with as many as 40 salespeople selling to hundreds of often desperate homeowners. But in the back room, where the actual bank negotiations took place, for months a handful of workers were completely overwhelmed, "surrounded by files," said Nichols. "We have files in there since last June and July that we still have, and the reason they weren't worked on is because they were lost," said the current employee.

***

• [One couple] said People's First refused to honor their money back guarantee. Several other former customers had similar complaints about collecting on that refund. Former employees confirm that their bosses were very resistant to paying anyone back.

For more, see 'Bad to Really Bad': Foreclosure Rescue Gone Wrong ('20/20' Seeks Answers From CEO of One Loan Modification Company).

San Bernardino DA Arrests 2, Seeks 3 Others In Alleged Cash Back Mortgage Fraud; Accused Of Using Stolen I.D. To Finance Purchase Of Two Homes

From the San Bernardino County, California District Attorney's Office:

• [I]nvestigators with San Bernardino County District Attorney’s Real Estate Fraud Unit arrested Michael Moon Park, 60, and his wife, Bu Yun Park, 60, of Helendale, on felony charges of identity theft, forgery, grand theft, money laundering, and conspiracy. Three additional suspects remain outstanding and are currently being sought. They are: Kenneth Sung Park, Jason S. Kim, and Duk Sung Jin.

• Jason Kim obtained a fictitious driver’s license in the name of the victim in order to steal the victim's identity and purchase two homes [...]. Michael Park, who is a licensed real estate agent, represented himself as the broker and his wife as the seller during the fraudulent transactions. After the homes were sold, proceeds were wired into the Parks’ bank account and then some of the proceeds were electronically transferred to another account in Vancouver, Canada. The homes subsequently went into foreclosure with the estimated loss of over 1.2 million dollars.

For the San Bernardino DA's press release, see Couple Arrested for ID Theft, Forgery, Grand Theft and Conspiracy.