Saturday, June 27, 2009

Mass. Family With Young Children Pockets $10K Settlement From Real Estate Agents Accused Of Violating State Anti-Discrimination, Lead-Based Paint Laws

From the Office of the Massachusetts Attorney General:

  • Attorney General Martha Coakley’s Office obtained a consent judgment against Geoffrey Wells, doing business as (d/b/a) Harvard Real Estate of Brookline, and one of his employees, David Ravalli, accused of violating state antidiscrimination and lead paint laws by refusing to show a property to a family because they had young children. The judgment, [...] requires the brokers to pay the family $10,000 and prohibits them from discriminating against any person who seeks or applies for housing because they have children or otherwise discriminating against any person in violation of state and federal fair housing laws.


  • The consent judgment resolves a complaint filed in October 2007 in Norfolk Superior Court, alleging that Geoffrey Wells, d/b/a Harvard Real Estate of Brookline, through its agent David Ravalli, refused to show an advertised unit to a mother of two young children and tried to steer her to other properties. The complaint alleges that the discriminatory treatment was confirmed by two testers from the Fair Housing Center of Greater Boston.(1)

For the entire press release, see AG Reaches $10,000 Settlement with Brookline Real Estate Brokers for Discrimination.

(1) Information for Massachusetts residents who believe they've been discriminated against in any way in violation of federal and state anti-discrimination laws in connection with housing sales or rentals or in housing lending and insurance is made available online by the Fair Housing Center of Greater Boston in the following languages:

Over A Dozen Tenants Put Out Onto Street Without Notice As Landlord Is Accused Of Housing Violations & Suspected Of Stealing Electric & Water Service

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

  • At least 15 residents of a west Oldsmar apartment building were evicted Friday morning with no prior notice after Pinellas County sheriff's deputies said their landlord violated housing codes. The residents, who said they first learned of the eviction about 9:30 a.m., had to pack their things in the morning heat without lights or air conditioning after a TECO employee cut off what deputies said was stolen electricity. Many said they knew nothing about the allegations of power and water theft leveled against landlord Lawrence Ayers, who charged them $125 weekly to cover rent and utilities.

  • Electrical connections at 3616 Meriden Ave. were jerry-rigged to bypass meters, causing "imminent danger to the residents," said Safety Harbor Fire Marshal Richard Brock. Though the eviction notices allowed residents 30 days to vacate, officials would not let people stay or delay the disconnection of power lines due to "personal safety concerns" like the potential for a fire, Brock said.


  • Ayers has not been arrested and utility-theft charges have been referred to the State Attorney's Office. [...] Ayers was arrested three times in the past five years for failing to appear in court on housing violation charges dealing with electricity and accumulation of trash, according to Pinellas jail records. He has entered into 11 mortgage foreclosure cases with seven different companies, court records show.

For the story, see Residents evicted from Oldsmar apartment building; landlord accused of code violations. RentSigmaSkimming

WV Non-Profit Law Firm Expands Assistance For State Predatory Mortgage Victims In Foreclosure By Launching New Office

In Charles Town, West Virginia, The Journal reports:

  • Mountain State Justice Inc., a Charleston-based agency, has opened a new office in Clarksburg in an attempt to better serve clients in the state's eastern and northern counties. The nonprofit group opened its first office in 1996, to help provide legal assistance to low-income individuals facing problems related to consumer issues, health care and other matters, said attorney Nathan Fetty. Recently though, the focus has changed, as calls flooded in from people hoping to keep their home out of foreclosure.

  • "The foreclosure work has really picked up since all the economic troubles have broken loose," Fetty said. "The vast bulk of our work right now is foreclosure work. It's 95 percent of what we do right now."

  • Potential clients, especially those who believe they have fallen prey to predatory lending practices, phone in to Mountain Justice. If the agency representatives think they might be able to provide assistance, Fetty said the individuals are asked to come in for an in-person meeting. Until now, he said that meant a five- to six-hour drive to Charleston for clients living in the eastern and northern portions of the state.


For more, see Nonprofit law firm expands state’s service (Mountain State Justice says bulk of caseload foreclosure assistance).

Friday, June 26, 2009

Stiffed Condo Associations Now Target Deadbeat Lenders With "Unpaid Maintenance Fee" Lien Foreclosures On Units Already Seized By Banks

In Sunny South Florida, The Wall Street Journal reports:

  • As more condominium owners default on home loans, the amount of unpaid dues owed to condo associations is piling up. To collect the arrears, some condo boards have begun foreclosures on units already seized by banks. While it is common for banks to foreclose on properties, any entity with a lien on a property can do the same. That includes condo associations, which have used the tactic to collect from owners who don't pay dues -- or to oust them.

For more, see Condo Boards Take On Lenders (Chasing Unpaid Dues, Associations Are Foreclosing on Units Seized by Banks) (requires subscription; if no subscription, try here, then click link for the story).

In related posts on the legal battles being waged by condominium associations in buildings loaded with foreclosures and non-maintenance-fee-paying unit owners, see:

Cleveland Housing Court Judge Begins Belting Lenders With Contempt Citations For Failing To Answer For Code Violations On Dilapidated Foreclosures

In Cleveland, Ohio, The Plain Dealer reports:

  • One day last month, Cleveland Housing Court Judge Raymond Pianka waited for absentee owners facing charges that they neglected their property to come and explain why they shouldn't be held in contempt. The mostly out-of-town companies had been no-shows at previous hearings, and now it looked as if they would be missing again, despite Pianka's summons.

  • Court staff checked the hallway and called the companies' names. But nobody answered. Pianka found them in contempt of court and fined them $1,000 a day until they appeared before him, ratcheting up the financial stakes for far-flung owners in a city scarred by vacant and dilapidated housing. For Cleveland's lone housing judge, this contempt hearing was an unprecedented legal move during an unprecedented housing crisis that is further eroding neighborhoods across the city.

For more, see Cleveland Housing Court judge gets tough, holds absentee landlords in contempt who fail to appear.

Go here for other posts on Judge Pianka's hammering of deadbeat lenders in Cleveland Housing Court. BetaVacantForeclosure

Unwitting Tenant Rents Foreclosed Home, Then Gets Evicted Days After Moving In; Full Rent Refund Obtained After Local Media Reporter Intervenes

In West Palm Beach, Florida, WPBF-TV Channel 25 reports:

  • It's not what Marie Jean-Pierre envisioned for the week she took off work. She planned to be moving in, not moving out, too. Jean-Pierre rented a four-bedroom home in the gated Terracina community from a woman named Micki O'Callaghan. Jean-Pierre knew it was in the beginning stage of foreclosure. But she said O'Callaghan promised it would all be OK and that maybe the Jean-Pierre family could even buy the home. [...] She said the notice went up on the front door the day after she moved in.


  • [WPBF-TV Channel 25 reporter Cathleen] O'Toole tried to ask O'Callaghan about Jean-Pierre's $800 in rent Thursday. Instead, O'Callaghan shut the door on her. [...] The pre-school teacher did get her rent back and a lesson she never wanted. "Don't just go anywhere, saying you got the place, here take it, like that, because I learned a big lesson from this. Believe me," said Jean-Pierre.

For the story, see Renter Forced Out Same Week She Moved In (Eviction Notice Plastered On Door Day After Woman Moved In).

For other posts involving the problems tenants face in homes in foreclosure, go here, go here, go here, go here, and go here. RentSigmaSkimming

Thursday, June 25, 2009

Condo Living Begins To Get Ugly In Some Complexes Where Non-Delinquent Unit Owners Are Left On The Financial Hook By Their Deadbeat Neighbors

In Miami, Florida, The Miami Herald reports:

  • Well into the second year of South Florida's foreclosure crisis, deadbeat condo owners are taking a heavy toll on associations [...]. Owners in or facing foreclosure often stop paying their condo fees that are needed to pay for essential utilities and services. That leaves other residents on the hook to pay the difference. Some can't cover the shortfall. As a result, the water has been shut off. And the lights. Trash is piling up and lawns are ragged. Many are going without property insurance in the depths of hurricane season.

  • In condos, those who pay their bills and those who don't live cheek to jowl, fraying nerves throughout the building. Some condo owners are acting out. It's getting ugly. The frustration is fed by a legal system that affords considerable protections to delinquent owners -- too many protections, in the eyes of some of those who are current with their payments. And so, some associations are meting out their own punishment. Public humiliation is in vogue. At least two condominiums -- The Collins in Miami Beach and Island Place in North Bay Village -- and probably far more, post lists bearing the names of owners who are behind on fees. "I don't see it as a bad practice, myself,'' said Jenny Huertas, a resident of The Collins who hopes it will keep her assessments from going up. "I guess it's a way to embarrass them and get their attention that they need to take action.''(1) After appealing to nonpayers' sense of fairness failed, Eduard Sotolongo, a board member at Island Shores condo, said he started aggressively calling the towing service to haul away their cars when parked in guest spots or other unauthorized spaces.

For more, see Condos squeeze deadbeat residents (It's a mad, mad world in condo land, where those who pay their maintenance fees and those who don't live cheek to jowl, harboring bitter resentment).

See also, WFOR-TV Channel 4: Condo Associations Fight Back Against Deadbeats.

(1) While it may seem like a good idea to some to post "deadbeat lists" to embarrass unit owners into paying their delinquent maintenance fees, such a practice, when targeting owner-occupants (either full-time or part-time residents) appears to be a violation of the Florida Consumer Collection Practices Act (Sections 559.55-559.785, Florida Statutes, which provides, in pertinent part:

  • Prohibited practices generally.--In collecting consumer debts, no person shall [... p]ublish or post, threaten to publish or post, or cause to be published or posted before the general public individual names or any list of names of debtors, commonly known as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts [...]. F.S. 559.72(14).

It is arguable whether this statute prohibits posting a deadbeat list of unit owners who rent out their units as investments in that this statute only applies to the collection of "consumer debts" (as opposed to debts incurred in connection with "business" or "investment" transactions), which the Florida Statute defines as follows:

  • "Debt" or "consumer debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment. F.S. 559.55(1).

Florida Man Accused Of Using Bogus Deeds, Adverse Possession Claims In Alleged Massive Foreclosed Home Hijacking Scam Faces New Charges

In West Palm Beach, Florida, The Palm Beach Post reports:

  • Carl Heflin, 51, of suburban West Palm Beach was arrested June 4 and charged with organized scheme to defraud and committing a criminal process under color of law. [Wednesday] morning he was marched back into a courtroom at the Palm Beach County Jail to face burglary and grand theft charges related to his "elaborate scheme," which authorities said affected dozens of foreclosed homes in the Westgate neighborhood and surrounding areas.

  • Heflin, who worked a short stint as a West Palm Beach police officer in the 1980s, used bogus warrant deeds and a junk legal justification he called "adverse possession" to seize and plunder as many as 30 houses, which he then would rent out to unsuspecting tenants, said Detective Michael Antinoro of the Palm Beach County Sheriff's Office. The scheme netted about $6,000 a month in rent, Antinoro said.

Reportedly, there are at least 25 victims in this alleged massive house-stealing scam west of West Palm Beach.

For more, see West Palm Beach ex-cop charged with hijacking foreclosed homes, now charged with burglary, too.

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

New Jersey Man Accused Of Fraudulently Pocketing $75K+ In Mortgage Loan Proceeds Secured By Unwitting Father-In-Law's Vacation Home

In Bergen County, New Jersey, reports:

  • A 68-year-old car salesman ripped off his father-in-law to the tune of $150,000 by impersonating him, authorities said [...]. Besides obtaining more than $75,000 through various accounts and leases, Jerome A. Singer of Ridgewood also took out a $75,000 mortgage on his father-in-law's Long Beach Island vacation home by posing as him, Bergen County Prosecutor John L. Molinelli said. Singer of Ridgewood was arrested [...] after the victim notified detectives of what was going on, the prosecutor said. The thievery began sometime in 2003 and ended last year, he said. Singer, who worked at Ramsey Mazda, is charged with theft by deception and criminal impersonation.

Source: Posing as father-in-law, he rips off $150,000.

Go here, Go here, 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. TheftOfDeedMeta

New Orleans Feds Convict Local Woman Accused Of Using Forged Deed To Apply For & Obtain SBA Disaster Loan, HUD Grant

A recent press release by the Office of the U.S Attorney in New Orleans, Louisiana announced the conviction of Barbara Simmons Dowl on a five-count indictment by a Federal jury for theft of government funds, false statements and wire fraud.

Dowl was accused of filing a bogus quit claim deed, naming her as owner to property she once owned but lost to the City of New Orleans for failure to pay real estate taxes, and then applying for and obtaining a Small Business Administration disaster loan of $75,000, and a $132,000 federal grant under the Road Home Program from the United States Department of Housing and Urban Development.

For the press release, see New Orleans Woman Convicted For defrauding Louisiana Road Home And Small Business Administration. TheftOfDeedMeta

Wednesday, June 24, 2009

Title Insurance Heavyweight Forks Over $300K, Drops NJ Malpractice Suit Against Buyer's Lawyer For Allegedly Failing To Unearth $2.7M Federal Tax Lien

The New Jersey Law Journal reports:

  • A venerable title insurance company has done something unusual in New Jersey, and lawyers aren't likely to applaud. Chicago Title Insurance Co. filed a malpractice claim against a homebuyer's attorney, saying he acted without diligence and owes a piece of the $300,000 the company paid to save a policyholder's home. The Bergen County suit charged Albert Birchwale, of Basile, Birchwale & Pellino in Ridgefield, N.J., failed to investigate a previous sale in the chain of ownership to make sure there was no potential federal estate tax lien.


  • On Friday, Chicago Title said through its lawyer that the company had decided to voluntarily dismiss the case, Chicago Title Insurance Company v. Birchwale, Ber-L-483-09, but didn't backtrack from the position that the claim has merit.

  • The case reminds lawyers that rubber-stamping title commitments can be dangerous, particularly in northern New Jersey, where buyers' attorneys often act as title companies' proxies. It also raises the question of whether title insurers should be added to the list of potential malpractice plaintiffs to be feared by attorneys and their legal malpractice carriers.

The problem started when the executor of a deceased prior owner of the property in question falsely certified that no estate taxes were due when it sold to a subsequent purchaser ("Danton"). The issue reared its head when the IRS filed suit seeking $2.7 million in back taxes against the estate and sought to enforce its lien against the subject property. At the time, it was valuing the property at more than $500,000, and the current owner ("Jhang") (who acquired his ownership from Danton) had only $310,000 of title insurance (presumably equal to the purchase price that Jhang paid Danton for the property). There was concern that the $310,000 title insurance policy wouldn't cover the lien. Ultimately, however, the IRS reportedly settled the lien for $300,000.

For the rest of the story, including what the title insurer and the buyer's attorney say what they should and shouldn't have done to avoid this near-miss of a horror story for the unwitting real estate purchaser, see Insurer Blames N.J. Lawyer for Blot on Title (Suit shows that rubber-stamping title commitments can be dangerous).

Go here for other posts involving legal issues related to title insurance. title insurance legal issues

Free Legal Help For Washington State Low & Middle Income Homeowners In Danger Of Foreclosure Available Thru State Bar Association

In Seattle, Washington, The Seattle Times reports:

  • The Washington State Bar Association has launched a program to provide free legal help to low- and middle-income people in danger of losing their homes to foreclosure. Homeowners who call a toll-free number will be referred to volunteer attorneys in their communities who are trained to deal with foreclosure-related issues.

  • The bar association started recruiting and training lawyers for the program May 1, said Judy Berrett, director of member and community relations. So far, more than 270 have signed up. The statewide program began accepting clients this week.


  • Free foreclosure legal aid already is available to homeowners whose annual incomes fall below 200 percent of the federal poverty level through the nonprofit, government-funded Northwest Justice Project, a partner in the bar association's initiative. The new program will serve homeowners with incomes as high as 400 percent of the poverty level, or about $88,000 for a family of four.

  • But Lily Sotelo, of the Northwest Justice Project said the program will indirectly help homeowners of all income levels, by boosting the number of lawyers with expertise in such areas as predatory lending and foreclosure-rescue scams.

For the story, see Free legal aid available for low-, middle-income homeowners facing foreclosure (Many homeowners facing foreclosure can get free legal help from a program launched this week by the Washington State Bar Association).

Information for Lawyers:

Minnesota Woman Charged With Pocketing $1.1M+ In Real Estate Sale Proceeds Belonging To Her 89-Year Old Dementia-Suffering Mom, Leaving Her Destitute

From the Office of the Minnesota Attorney General:

  • The Office of Minnesota Attorney General Lori Swanson [...] filed a criminal complaint in Rice County District Court charging a Dakota County woman, Connie Ruth Rott, with nine felony counts of theft by swindle and five felony counts of financial exploitation of a vulnerable adult for diverting over $1.1 million held in trust for the benefit of Rott’s elderly mother, D.S. Because of Rott’s depletion of D.S.’s assets, the State’s taxpayer-funded Medical Assistance program is now paying for the 89-year-old D.S.’s nursing home and medical bills, at a monthly cost of $4,200.

  • The sad thing about this case is that, unlike many senior citizens, the 89-year-old victim started out with plenty of money to pay for her nursing home and medical care. Because of the daughter’s exploitive self-dealing, the mother’s assets have been substantially depleted, and the taxpayer-financed Medical Assistance program is now paying for her care,” said Attorney General Lori Swanson.

  • In 2000, D.S. placed real estate she owned in Northfield, Minnesota that she originally farmed with her late husband into a revocable trust to be used for her care, comfort, support, and maintenance, naming her daughter Rott as Trustee. D.S. also signed a durable power of attorney that year naming Rott as her attorney-in-fact, and in 2003, Rott was named D.S.’s legal guardian. In 2004, D.S. was admitted to the dementia unit of the Three Links Care Center, a Northfield nursing home. D.S. requires total assistance with activities of daily living. Rott agreed to make timely payments to Three Links using D.S.’s income and assets.

  • The complaint alleges that, between 2004 and 2007, Rott sold three pieces of the real estate D.S. placed into trust, for a net amount of over $1.3 million, and then diverted over $1.1 million in proceeds from the sale of the real estate to her own benefit or for the benefit of persons other than D.S.

For the entire press release, see Attorney General Charges Woman With Felony Theft and Financial Exploitation for Depleting $1.1 Million In Assets Held In Trust For Elderly Mother (Taxpayer-Funded Medical Assistance Is Now Paying for 89 Year Old’s Nursing Home Care).

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

Tuesday, June 23, 2009

Brooklyn Man Accused Of Dressing In Drag To Impersonate Dead Mom To Collect Her Benefits Checks & Steal Back Brownstone Previously Lost To Foreclosure

In Brooklyn, New York, the New York Daily News reports:

  • He may be the ultimate mama's boy. A Brooklyn man is accused of donning a wig, nail polish and dresses to impersonate his dead mom and collect $115,000 in Social Security and rent subsidies. For six years, Thomas Prusik-Parkin hoodwinked a stunning array of government agencies with his elaborate charade - using a cane, heavy makeup, fake ID and a phony "nephew," law enforcement sources said. The 49-year-old was busted late Monday and will be arraigned [Wednesday] on grand larceny, forgery and conspiracy charges linked to a deed and mortgage fraud scheme.


  • In 1996, Irene Prusik deeded the [family] home at 492 Sixth Ave. to her son, according to city records. He took out a $200,000 mortgage to bankroll a real estate investment business that failed. He stopped making mortgage payments, the house went into foreclosure and it was bought by Samir Chopra in 2003.

  • To hold onto the brownstone and avoid eviction, Prusik-Parkin posed as his mother to file a suit alleging that he had forged the 1996 deed transfer, investigators allege. He even filed an affidavit from a nonexistent son. In essence, investigators say, he sued himself to prove that he didn't have the title to the home and that Chopra - who also thought Irene Prusik was still alive - couldn't have legally bought it.

  • Prusik-Parkin deeded the house back to his mother last year. Then he took out a mortgage for almost a million dollars in her name in April, collecting some $300,000 of the loan. That same month, Chopra convinced a Brooklyn judge the home really did belong to him, and the Prusik "family" was evicted in May.

For the story, see Cops: Brooklyn man impersonates dead mother to collect $115,000 in Social Security, rent subsidies.

See also:

Utah AG Prosecution Of Foreclosure Rescue Operator Accused In Dubious Equity Stripping, Sale Leaseback Deals Hits Another Delay

In Farmington, Utah, the Standard Examiner reports:

  • One of the oldest foreclosure-rescue fraud cases in the state against a Morgan businessman has hit another road block. The Attorney General’s Office charged Jeffery Q. Wangsgard, 57, with three counts of communications fraud and two counts of exploitation. The charges were filed in February of 2008 and stem from dealings Wangsgard’s Layton company, Residential Resolve, had with three Top of Utah families who wanted to save their homes from foreclosure. Wangsgard was ruled indigent and Dee Smith was appointed as his defense attorney. However, Smith recently was appointed as a Deputy Weber County Attorney. The case is now under defense attorney Rich Gallegos. [...] Gallegos said the earliest he could proceed with a trial will be in six months.

For more, see Fraud case hits another roadblock.

See also, How A Utah Couple Was Kicked Out Of Their Home By Mortgage "Helper."

Go here for earlier posts on this story.

Two Miami Men Face Charges Of "Hijacking" Vacant, Foreclosed Homes & Renting Them Out; Used Craigslist To Reel In Unsupecting Tenants, Say Cops

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

  • Miami-Dade Police have arrested two men who they say scoured neighborhoods for vacant and foreclosed homes, broke in to them, removed and changed the locks and then used a popular website to rent them to unsuspecting tenants. [...] Police said 34-year-old Benjamin Sandora not only confessed to the crimes, but he also added, "Times are rough and I took advantage." Sandora, who's from Fort Lauderdale, and 38-year-old Melchised Martinez, face felony charges including organized scheme to defraud, burglary of an unoccupied dwelling, grand theft and uttering a forged instrument or lease. [...] Detectives say the men broke into three homes and then advertised them on Craigslist and provided tenants with fraudulent leases.

For more, see Police Arrest 2 Men In Foreclosed Home Scam.

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

Monday, June 22, 2009

75-Year Old Chicago Woman Fights To Get Back Home Ripped Off In Straw Buyer, Equity Stripping Foreclosure Rescue Scam

In Chicago, Illinois, WLS-TV Channel 7 reports:

  • A Chicago woman is battling to keep the home she has owned for 40 years. Lessie Towns is a victim of mortgage fraud, and she could lose her home, despite the fact she has never missed a mortgage payment. Towns, who is 75 years old, raised five children as a single mother in her South Side home. Four years ago, she was astonished to discover that her home was in foreclosure. She says she was current with her payments, although her lender had changed hands. Then came a cold-call visit from a lender who knew about the pending foreclosure.


  • She signed what she thought was a refinancing agreement with Oak Brook based Trust One Mortgage. She was regularly making payments until she found the company's south suburban office empty and padlocked. Then, Lessie Towns discovered she no longer owned her home. It had been sold, investigators say, at least twice to straw buyers who made a profit.


  • Last month, [the Illinois Dept. of Financial and Professional Regulation] revoked the licenses of Trust One Mortgage and its owner, Paul Shelton, saying the alleged fraud scheme involved Lessie Towns and at least 13 other homeowners. Towns was back in court Friday in the fight to keep her home. [...] Her attorney is optimistic Towns will win the fight to keep her home, but it's been a very emotional fight for the homeowner who technically does not own her home. [...] Lessie Towns' effort to stay in her home is set for a court ruling July 14.(1)

For the story, see Chicago owner loses home in mortgage scam.

(1) Any attempt by the financially strapped homeowner to successfully void the her unwitting title transfer, as well as the subsequent title transfers (and any mortgage liens created incident thereto) to subsequent purchasers and encumbrancers could turn on whether the subsequent purchasers and encumbrancers can be charged with inquiry notice of the alleged fraud and/or any other unrecorded rights (ie. equitable mortgage) the scammed homeowners can establish that they had at the time of the relevant conveyances.

Under Illinois law, the continued open and visible possession of the home by the scammed homeowners after being duped by the foreclosure rescue operator may be sufficient to charge those subsequently acquiring title and security interests in the home with notice of the fraud, and thereby disqualifying them from bona fide purchaser status. An Illinois appeals court ruling in Life Savings & Loan Association v. Bryant, 125 Ill. App. 3d 1012, 81 Ill. Dec. 577, 467 N.E.2d 277 (1st Dist. 1984) addresses this point:

  • Illinois courts have uniformly held that the actual occupation of land is equivalent to the recording of the instrument under which the occupant claims interest in the property. (Bullard v. Turner (1934), 357 Ill. 279, 192 N.E. 223; Beals v. Cryer (1981), 99 Ill. App. 3d 842, 426 N.E.2d 253). The open and visible possession of land by the equitable owner is sufficient to charge a mortgagee with notice of the rights of such owner, and the mortgagee will take subject to the rights of the person in possession. Williams v. Spitzer (1903), 203 Ill. 505, 68 N.E. 49.

Likewise, citing heavily to the Illinois state case law, a Federal bankruptcy court in In re Cutty's-Gurnee, Inc., 133 B.R. 934 (Bankr. N.D. Ill. 1991) made this observation on the effect of continued possession on subsequent purchasers and encumbrancers:

  • It is clear that where a physical inspection of the property would reveal an adverse interest or where there is a party in possession other than the record title owner, the subsequent lien claimant has a duty to inquire of the possessor as to his interest and is charged with knowledge of the facts discoverable from such an inquiry or inspection. Miller [v. Bullington], 381 Ill. [238] at 244, 44 N.E.2d [850] at 853; Burnex Oil Co. v. Floyd, 106 Ill. App. 2d 16, 23, 245 N.E.2d 539, 544 (1st Dist. 1969); In re Ehrlich, 59 Bankr. 646, 650 (Bankr. N.D. Ill. 1986).

Go here for more on the effect of continued possesion on bona fide purchaser/encumbrancer in Illinois.

For cases that support the proposition that possession of real estate by one other than the seller is enough to trigger this imposition of the duty to inquire as to possible unrecorded rights of the possessor, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Brooklyn Family Scammed Out Of Home In Foreclosure Rescue Scam

In Brooklyn, New York, WNYC Radio 93.9 reports on the story of Robert Pascall, a local homeowner who accuses three men of milking his two-family Brownsville home out of its equity and tricking him out of the deed in a foreclosure rescue, equity stripping sale leaseback scam. The home had been in the family for decades. In all, 13 family members were evicted and the home currently is vacant. They are all bow packed into a one room basement apartment in the Bronx.

The non-profit legal services firms are overwhelmed and can’t take on too many deed scams because the cases are complicated and time consuming. Robert Pascall said he was turned way from the few agencies he approached for help. He says the Brooklyn District Attorney also rejected his case.

For the story, see Housing Scam Artists Defraud Brownsville Residents.

L.A. Feds Charge Man With Filing Fraudulent Bankruptcy Petitions As Part Of Foreclosure Rescue Scam Targeting Financially Strapped Homeowners

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

  • A Los Angeles man was taken into federal custody last [week] on charges that he has been defrauding homeowners by falsely promising them that he could prevent foreclosures and evictions from their property. Gilfert Welton Jackson, 64, [...] was indicted on June 4, and charged with six counts of making false representations and filing documents in bankruptcy proceedings in furtherance of a scheme to defraud. According to the indictment, which was unsealed after his arrest, Jackson’s scheme was designed to bilk distressed homeowners, as well as banks and other creditors by fraudulently obstructing lawful foreclosure and eviction actions.

The indictment alleges that Jackson falsely passed himself off as an attorney, collecting money from property owners and tenants in exchange for promises that he could prevent foreclosure and eviction actions. Jackson is also alleged to have filed bankruptcy petitions, identfying himself as the attorney for the debtors, in order to obtain “automatic stays” to stall foreclosures and evictions. He is also alleged to have collected rent from those living in the the homes during the period of time that the legal actions were stalled, based on the false representation that he was the rightful landlord of the properties.

For the entire press release, see Los Angeles Man Arrested On Charges Of Abusing Bankruptcy System To Defraud Those In Foreclosure.

For a report issued by a California Federal Bankruptcy Court task force detailing the types of foreclosure scams involving the abuse of the bankruptcy court system, see Final Report Of The Bankruptcy Foreclosure Scam Task Force.

DeKalb District Attorney's White Collar Unit Takes Aggressive Approach When Prosecuting Elder Exploitation Cases

In DeKalb County, Georgia, the Atlanta Journal Constitution reports on how the county district attorney's white collar crime unit head Jeanne Canavan deals with the problem of the inability of elder exploitation victims(1) to testify (ie. due to death or infirmity) at the criminal trial of the alleged perpetrator:

  • Once a defendant is indicted, Canavan moves quickly to secure the elderly victims’ testimony out of concern they may be unable to testify by the time the case goes to trial. She takes a novel approach, filing court motions that cite a 2004 U.S. Supreme Court precedent(2) that requires pre-trial testimony to be admitted only if the witness had previously been subject to cross-examination.

  • Canavan obtains a judge’s approval for a hastily called hearing, where the victim testifies before a prosecutor, the defendant and the defense attorney, who is allowed to cross examine the witness. The testimony, if needed, can be used later at trial.

  • Canavan said she will not forget her first elderly exploitation case in 2004 involving 89-year-old widower Leonard Stewart. Stewart was dining alone at a DeKalb restaurant when he was approached by Nicholas Marks. Marks befriended the elderly man, falsely identifying himself as a lawyer. Over time, Marks got Stewart to sign over possession of his car and his home. He also charged more than $22,000 on Stewart’s credit cards.

  • By the time of trial, Leonard was dead. But because he testified at a pre-trial bond hearing —- during which he was subject to cross-examination — Leonard’s testimony was admitted into evidence. Marks was convicted and sentenced to five years in prison.

For the story, see Elderly victims find help to fight fraud (Many targeted by very people claiming to care. DeKalb creates task force to combat rise in crime against seniors).

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

(1) Canavan commented: “We are seeing elderly victims with their life savings wiped out, their homes taken away. They take everything they have. We’ve seen this happen over and over and over.”

(2) See Crawford v. Washington, 541 U.S. 36; 124 S. Ct. 1354; 158 L. Ed. 2d 177 (2004). In addressing a criminal defendant's federal constitutional right to be confronted with the witnesses against him, the court stated:

  • According to our description of that right in Ohio v. Roberts, 448 U.S. 56, 65 L. Ed. 2d 597, 100 S. Ct. 2531 (1980), it does not bar admission of an unavailable witness's statement against a criminal defendant if the statement bears "adequate 'indicia of reliability.'" Id., at 66, 65 L. Ed. 2d 597, 100 S. Ct. 2531. To meet that test, evidence must either fall within a "firmly rooted hearsay exception" or bear "particularized guarantees of trustworthiness." Ibid. FinancialAbuseOfElderlyAlpha

Sunday, June 21, 2009

Massachusetts AG Obtains Temporary Restraining Orders Against Two Firms For Allegedly Soliciting Illegal Upfront Fees For Loan Modification Services

In Boston, Massachusetts, Legal Newsline reports:

  • Attorney General Martha Coakley has obtained temporary restraining orders against a Wyoming and Florida company, and a Florida man for soliciting unlawful fees from homeowners facing foreclosure.The defendants, H.O.P.E. Alliance, Inc., (H.O.P.E. Alliance) Law & Associates, LLC and Thomas E. Law, II, allegedly solicited unlawful advance fees for foreclosure-related services, and unnecessarily delayed negotiations regarding loan modifications.

  • The complaint also alleges that H.O.P.E. Alliance, with the help of the co-defendants sent letters that directed them to a toll-free number and to the Web site, which fraudulently claimed that the company was a non-profit and H.O.P.E. Alliance deceptively used a similar name to the government-sponsored non-profit organization, HOPE NOW Alliance.(1)

For more, see Coakley gets temporary restraining orders over fraudulent foreclosure-related services.

For the Massachusetts Attorney General's press release, see AG Obtains Temporary Restraining Order Against WY and FL Companies and FL Man for Soliciting Unlawful Fees From Homeowners Facing Foreclosure.

(1) According to the Massachusetts Attorney General, the website also states that H.O.P.E. Alliance is a 501(c)(3) non-profit organization. H.O.P.E. Alliance is not registered with the IRS or the Attorney General’s Office as a non-profit.

Minnesota Couple Sentenced In Mortgage Scam Involving Recording Phony Lien Satisfaction Before Selling Home, Pocketing Entire Sale Proceeds

From the Office of the U.S. Attorney (Minnesota):

  • An Oak Grove couple was sentenced yesterday in federal court in connection with a scheme to defraud several mortgage lending companies and to obtain money from them by means of false and fraudulent pretenses. [...] According to their respective plea agreements, both [Robert G.] Bock [10 months of confinement in a half-way house and three years of supervised release] and [Michelle M.] Niska [36 months in prison and three years of supervised release] admitted that they devised a scheme to defraud certain mortgage lenders.

The allegations are as follows:

  1. On Sept. 21, 2005, the couple borrowed $593,740 from Bravo Credit Corp., and granted Bravo a mortgage on their jointly-owned Oak Grove home.
  2. On April 7, 2006, Niska filed a document with the Anoka County Recorder’s Office purporting to be a satisfaction of the mortgage the defendants had granted to Bravo, even though the defendants had not paid off the loan and even though most of the principal balance was still due.
  3. On May 5, 2006, the couple sold the home to a third party for $675,000, $540,000 of which was financed by Equifirst Corp.
  4. Bock and Niska each admitted that they knew the title company that closed the home’s sale should have used the third-party buyer’s loan proceeds to pay off the Bravo loan, but instead allowed the title company to believe that the Bravo loan had been repaid, as reflected by the false mortgage satisfaction document.

The press release continues:

  • As a result of the scheme, the defendants pocketed proceeds from the sale in the amount of $510,000, all of which should have been paid to Bravo. Bock and Niska each admitted that the scheme was executed, in part, by sending certain items by commercial carrier, specifically a $35,000 lulling payment sent to Bravo on May 8, 2006, for the specific purpose of forestalling foreclosure efforts by Bravo and for the general purpose of executing the scheme to defraud.

For the press release, see Oak Grove couple sentenced for mail fraud. TheftOfDeedMeta

ATIF Refuses To Issue Title Insurance On Controversial Short Sale Deals Involving Simultaneous Investor "Flips"

In Tampa, Florida, The Tampa Tribune reports:

  • It may now be a bit tougher for investors to flip short sales for big profits. Attorneys' Title Insurance Fund(1) notified its 6,000 member attorneys [last] week that it will not insure deals made with a popular – but controversial – method for closing flips of short sales.


  • In a letter to attorneys, the fund said it has become aware of short sale programs advertised on the Internet that promise to make investors lots of money with little or no work. The programs, the letter says, involve investors entering into option contracts with homeowners for "the exclusive right to purchase their property for a period of time."

  • The investor negotiates a short sale with the lender by convincing the lender that the price it is offering is the market value of the property. The investor then finds a buyer for a much higher price. The sales happen simultaneously, and the investor pockets the difference.

  • The problem is that "the original lender is not told that the buyer is flipping the property on the same day for thousands more than the lender has been told is the market value of the property," the letter states. [...] Critics say lenders are misled and don't realize they could be selling the home for more money. [...] Some attorneys have raised concerns that sellers could have to pay the difference later.(2)

For more, see Title insurance group's move could stymie short sale flips (Attorneys' Title Insurance Fund notified its 6,000 member attorneys this week that it will not insure deals made with a popular – but controversial – method for closing flips of short sales).

(1) The Orlando-based fund is a major underwriter for attorneys who write title insurance in Florida.

(2) If the simultaneous transactions are consummated as part of one closing (as opposed to two separate closings occurring back-to-back, using different closing agents - usually carried out in two separate conference rooms at the same location), the closing agent, as a fiduciary for the lender agreeing to the short sale (as well as to all other parties to the transaction), could also find itself having to pay the difference if the lender can establish that:

  • it was defrauded in this type of transaction and,
  • the closing agent either knew or should have known what was going on. title insurance legal issues