Saturday, September 12, 2009

Ex-Met, Philly "Nailed" With Accusation By Creditor Of "Foreclosure Stripping" Home

In Los Angeles, California, Bloomberg News reports:

  • Lenny Dykstra, who helped the New York Mets win the World Series in 1986, was accused of taking goods from his home including a $40,000 French stove two weeks before a bankruptcy judge appointed a trustee to oversee his finances. Fixtures and furniture were “removed and presumably sold” by the former Major League Baseball All-Star, who filed for bankruptcy in July, according to court papers filed by the mortgage lender Index Investors LLC, a creditor in the case.


  • Dykstra was “apparently in the process of stripping furnishings, fixtures and equipment from the estate property,” Index Investors said in an Aug. 19 court memorandum, “doubtlessly to fuel his lifestyle at the expense of his creditors.”


  • He filed for bankruptcy to stop Index Investors from holding “a scheduled illegal foreclosure sale,” he said. The lender subsequently asked the court to let it start foreclosing, and to convert Dykstra’s Chapter 11 proceedings to a Chapter 7 liquidation.


  • Dykstra, 46, known as “Nails” by fans for his aggressive playing style, became an entrepreneur after injuries ended his career, opening a chain of car washes, a subscription Web site that offered stock picks and The Players Club.

For more, see Ex-Met Dykstra Accused of Taking $40,000 French Stove. foreclosure fixture stripping apple

Sarasota House Flipper Faces Grand Theft Charge In Alleged "Foreclosure Stripping" Incident

In Sarasota, Florida, the Sarasota Herald Tribune reports:

  • Mark P. Riley, one of the Sarasota area's most successful property flippers, was arrested Friday, accused of gutting a home that he could no longer afford. Riley, 48, and his domestic partner, Richard Waid, 49, were arrested on charges of grand theft related to the disappearance of appliances from their former Lakewood Ranch home.

  • For years during the real estate boom, Riley and Waid traded in million-dollar houses and condos and drove a $300,000 Mercedes. But when the real estate market cooled and Riley and Waid stopped paying their mortgages, they gutted their home and left the bank to foreclose on a multimillion-dollar house stripped bare, according to a Manatee County Sheriff's Office incident report.(1)

For the story, see Housing flipper facing charges (One of the Sarasota area's most successful property flippers is accused of gutting a home that he could no longer afford).

Go here for Mark Riley arrest report.

(1) Officials with First Bank of Florida, which bought the house out of foreclosure, discovered the items missing in April. Granite counter tops and cabinets had been taken from the kitchen. In the bathrooms, toilets were stripped from the floor. Ceiling fans, a wet bar and a kitchen island were missing. Thieves took doorknobs off doors, tore the trim off the walls and walked away with the carpet. Bank officials filed an incident report in April saying about $150,000 in appliances and other items were stolen. The men were arrested Friday.

Phoenix-Area Authorities Get Serious About "Foreclosure Stripping" As Probes, Prosecutions Begin To Pile Up

In Phoenix, Arizona, KNXV-TV Channel 15 reports:

  • Maricopa County Attorney Andrew Thomas announced Tuesday that there has been a significant increase in the number of people charged with gutting vacant or foreclosed homes in Maricopa County. The act, known as “home stripping,” has been on the rise in neighborhoods and dramatically reduces property values, according to Thomas. Multiple cases of home stripping are currently undergoing prosecution and some have led to hefty jail time.(1) [...] "The real estate market is tough enough without neighborhoods having to contend with this new form of blight,” says Thomas. “These prosecutions are important to hold these offenders accountable and to protect property owners in the affected neighborhoods."

Source: County attorney cracks down on 'home stripping' crimes.

(1) Alonzo Patterson, 48, was arrested in February after police reportedly caught him stealing copper piping out of a vacant Phoenix home and intending to sell it as scrap. Patterson was convicted on charges of burglary and possession of burglary tools in July and was sentenced to about 10 years in prison. Police reportedly caught Phillip Mora, 33, after he stripped copper wires and tubing from an empty home in Phoenix. According to authorities, Mora caused more than $14,000 in damage to the home and is facing charges of burglary and aggravated damage. Mark Sydnor, 54, was arrested in April by the FBI Mortgage Task Force after he was reportedly accused of selling countertops, cabinets, and plumbing fixtures on Craigslist from a foreclosed Scottsdale home. According to authorities, Sydnor told undercover police that he frequently removed and sold items from homes and gave the homeowner two-thirds of the proceeds. Sydnor pleaded guilty to defrauding a secured creditor and awaits sentencing. Realtor Kailash Bhatt, 43, was also arrested by the FBI in April and charged with defrauding a secured creditor and theft. Bhatt allegedly sold kitchen fixtures from an Anthem home on Craigslist. And Randolph Guzman, 42, was arrested in April, charged with theft, after offering two air conditioning units on Craigslist from a home in foreclosure in Surprise. Guzman allegedly told the FBI that the house was in foreclosure and he was trying to recoup his losses.T homas said these are only the tip of the iceberg when it comes to the piling amount of cases involving home stripping. foreclosure fixture stripping apple

Friday, September 11, 2009

Nebraska Couple Loses Home After Being Duped By Nationwide Loan Modification Racket

In Lincoln, Nebraska, the Lincoln Journal Star reports:

  • One night in February, [Denise and Kevin Barret] saw a television ad for the Federal Loan Modification Law Center, a very official-sounding entity that promised it could reduce homeowners' payments while saving their homes from foreclosure. So the Barrets called the number and were told that for an initial payment of $995 the company could renegotiate the couple's delinquent mortgage and get them a better interest rate and more affordable payments. It sounded like a good deal, and the company at the time had a reasonable rating with the Better Business Bureau, Denise Barret said. So the Barrets signed up.


  • While purporting to be helping the Barrets, the Federal Loan Modification Law Center was racking up complaints all over the country. In April, the Federal Trade Commission filed a federal lawsuit against the company, alleging it misrepresented that it could obtain a loan modification or stop foreclosure in all cases. The complaint also alleged that the company falsely claimed in radio and TV ads to be affiliated with the federal government.(1)

  • Nabile "Bill" Anz, managing attorney for Federal Loan Modification and one of the people named in the FTC's complaint, told the Orange County Register in April that the company may have been aggressive, but it had obeyed the law. Since then, Anz seems to have changed his tune. On Aug. 4 he voluntarily resigned from the California State Bar Association, with charges pending against him.

  • According to a news release, the bar filed an application in July to have Anz declared "involuntarily inactive," alleging he failed to perform for clients of the Federal Loan Modification Law Center and failed to refund fees to clients of the business. The news release said Anz admitted the misconduct that was alleged in the application. Some states have also taken action against Anz and his company.

For more, see Caught in foreclosure relief scam, a couple loses their home.

(1) Go here for links to the FTC press release and some of the relevant court documents filed in the lawsuit against Federal Loan Modification Law Center. Reportedly, Mike Cameron, an attorney with the Nebraska Department of Banking and Finance, said the department has fielded a couple of complaints about the Federal Loan Modification Law Center. Cameron said that because the company is already the subject of an FTC investigation, he refers complaints to the federal government.

Vacant Land Affinity Fraud Fleeces 1,000+ Miami-Area Haitians Out Of $10.6M, Say Feds; Bogus Deeds, Closing Docs Used To Make Phony Sales Look Legit

In Miami, Florida, the South Florida Business Journal reports on a recent federal indictment in an alleged affinity fraud targeting members of the local Haitian community:

  • Three South Floridians have been indicted in a land scheme that authorities say defrauded more than 1,000 mostly Haitian victims out of some $10.6 million. Daniel Stephen, 42, of Miami Shores; Clotilde Jean, 43, of Miramar; and Patricia DePons, 53, of Miami Shores, were charged with conspiracy to commit mail fraud and mail fraud for their participation in a scheme to sell vacant land, according to a news release from the acting U.S. attorney for the Southern District of Florida. The case involved the sale of property in North Florida and Georgia by First Loan Solution, a company owned and operated by Stephen and his partner, Jean.

  • According to the indictment, Stephen, Jean and other First Loan Solution employees sold land to members of the Haitian community in Miami-Dade County using advertisements on Haitian radio, leaflets in the community, bus trips to North Florida and direct solicitations of the buyers. In some cases, neither Stephen nor First Solution owned the land that was being sold. In other cases, buyers were told they were purchasing individual parcels of land on which they could build when, in fact, they were purchasing land with other buyers through a limited liability company, and could not build individually on the property, according to the news release.

  • DePons is alleged to have conducted the closings on the sales, and collected money from the buyers. At the closings, DePons allegedly issued fraudulent warranty deeds and closing [statements]. The buyers never received title to the land nor, in most cases, refunds.

Source: South Floridians charged in land scam.

For the U.S. Attorney press release, see Three Charged In Multi-Million Dollar Vacant Land Fraud Scheme.

Thursday, September 10, 2009

Texas AG Seeks $4.6M From "Debt Settlement" Outfit For Allegedly Ripping Off Consumers, Violating State Registration & Bond Requirements

From the Office of the Texas Attorney General:

  • Texas Attorney General Greg Abbott [...] took legal action to recover $4.6 million that a bankrupt “debt settlement” company wrongly withheld from its clients in Texas and other states. In June, Debt Relief USA Inc. of Addison filed for bankruptcy protection in the Northern District of Texas. As a result, more than 2,500 financially distressed customers did not receive the debt relief they were promised. In fact, debtors’ problems were exacerbated by the bankruptcy because some of Debt Relief USA’s clients received no assistance and are now being pursued by collection companies.

For the entire Texas AG press release, see Attorney General Abbott Pursues Restitution for Texans from ‘Debt Settlement’ Company in Bankruptcy Court (Bankrupt Debt Relief USA said to hold $4.6 million in client funds).

For the Texas AG lawsuit, see State of Texas v. Debt Relief USA Inc.

Daughter, Son-In-Law Convicted Of Scamming Alzheimer's-Afflicted Widowed Mom Into Borrowing $350K Against Home & Using It Towards Luxury Home Purchase

In Clackamas County, Oregon, The Oregonian reports:

  • Ask Clara Philpot how she's doing, and she'll answer with a beaming smile and a hearty "Fantastic." Ask the 87-year-old who is president or the name of the dog napping in her lap and she can't say. Philpot, who was diagnosed with Alzheimer's disease in 2002, also can't explain how or why she borrowed almost $1 million to finance a luxury home in Sherwood and immediately deeded half to Gayla and Jeff Ross, a daughter and son-in-law who took care of her.(1) After looking at the evidence, however, a Clackamas County jury took less than two hours to find Gayla Ross guilty of aggravated theft and first-degree criminal mistreatment.

  • Ross now faces prison. She will be sentenced Sept. 8 along with her husband, Jeff Ross, a former Washington County sheriff's deputy who was convicted of first-degree criminal mistreatment. Philpot's net worth now is zero -- she gets by on Social Security -- and she could soon be homeless. The debt on the Molalla house she and her husband bought 43 years ago, and once owned free and clear, now exceeds the property's value, and she hasn't made a mortgage payment for two years.

For more, see Stealing from mom and dad in Oregon (if link expires, try here).

(1) Under Gayla Ross' direction, Clara Philpot took out a $352,000 mortgage on her Molalla home. Ross used that money as a down payment on a home in Sherwood and obtained a $609,000 mortgage in Philpot's name, the story states. The day after the deal closed, Philpot reportedly transferred a 50 percent interest to the Rosses. Legally, Philpot had sole responsibility for mortgage payments that exceeded $5,600 a month -- more than four times her monthly income. Within a week, one of Philpot's relatives anonymously notified state welfare workers about the deals, and the Sherwood house was lost to foreclosure. FinancialAbuseOfElderlyAlpha

Wednesday, September 9, 2009

California AG Obtains $1M Judgment Against "Fast Cash" Lender Accused Of Loan Shark Tactics

From the Office of the California Attorney General:

  • Attorney General Edmund G. Brown Jr. [...] forced CashCall, Inc., an Anaheim-based fast-money lender, to stop using "loan shark tactics" in collecting debt, including abusive calls at all hours of the day and night and empty threats of law enforcement action.(1) The court-ordered judgment also forces CashCall to stop misleading consumers with deceptive advertising and pay $1 million in civil penalties and legal expenses. CashCall used former child actor Gary Coleman as its television spokesman. "CashCall preyed on consumers desperate for cash, charging triple digit interest rates and using loan shark tactics to collect on their debts," Brown said. "This judgment forces CashCall to stop harassing its customers and should serve as a warning to consumers to be wary of fast-money lenders."

For the entire Cailfornia AG press release, see Brown Forces Predatory Lender to End Illegal and Abusive Debt Collection Practices.

For the lawsuit & judgment, see:

(1) Brown contends that CashCall used illegal and abusive debt collection practices when customers were unable to make on-time payments, in violation of California Business and Professions Code Section 17200. These practices included:

  • Making excessive and verbally abusive telephone calls at all hours of the day and night;
  • Causing borrowers to incur bank fees by repeatedly trying to collect payments despite knowing there were insufficient funds in the borrowers' accounts;
  • Threatening to initiate law enforcement and wage garnishment proceedings against borrowers without any basis for doing so;
  • Improperly discussing private financial information with borrowers' friends, colleagues and neighbors;
  • Failing to honor borrowers' requests to cancel automatic withdrawals from checking accounts; and
  • Continuing to contact borrowers by phone after receiving requests to only contact them in writing.

Posing As Cops, Threatening Arrest Or Physical Harm, Abuse & Humiliation All In A Day's Work For Debt Collection Group, Says NY AG In Lawsuit

From the Office of the New York Attorney General:

  • Attorney General Andrew M. Cuomo [...] announced that his office has filed a lawsuit seeking to shut down a Buffalo-based debt collection operation consisting of 13 debt collection companies run by Buffalo residents Omar Smith, Narvell Benning and Keith Marshall (collectively, the "Benning-Smith Group”).(1) [...] According to the more than 850 consumer complaints filed with the Office of the Attorney General, the Federal Trade Commission and the Better Business Bureau, the Benning-Smith Group's employees violated state and federal law by routinely posing as law enforcement officials and threatening to arrest or to physically harm consumers unless they made arrangements to pay the company immediately. Additionally, the Benning-Smith Group made abuse and humiliation a trademark of their collection practices by verbally abusing consumers and, in some instances, sexually harassing them. To date, the Attorney General’s investigation has identified more than a thousand instances in which the Benning-Smith Group breached state and federal statutes.(2)

For the New York AG press release, see Attorney General Cuomo Sues To Shut Down Buffalo-Based Debt Collection Operation That Illegally Harassed And Threatened Consumers Nationwide (Employees Used Verbal Abuse and Sexual Harassment to Intimidate Consumers Into Paying Debts; Latest Action in Cuomo's Ongoing Probe into Unlawful Debt Collection Practices).

(1) According to the NY AG, the Benning-Smith Group operated under several names, including: Abrams, Burke & Associates; Benning and Smith Acquisitions, Inc.; Brady and Caruso, LLC;;, LLC; Fredericks, Goldstein & Zoe; Graham, Noble & Associates Bookkeeping; Graham, Noble & Associates LLC; Graham, Beagle & Associates LLC; Kingman, Cole and Associates, LCC; Marshall and Ziolkowski Enterprise, LLC; Marshall Ziolkowski Acquisitions, LLC; Lansky, Goldstein, Zoe; OLS Payment Services; and University Debt Collection.

(2) According to the press release, Attorney General Cuomo’s investigation revealed that collectors regularly demanded payment for non-existent debts or substantially inflated the amount owed on an actual debt. Using their false law enforcement identities, collectors coerced and cajoled terrified consumers into agreeing to make payments. Frightened at the prospect of arrest and humiliation, consumers authorized withdrawals from their checking accounts, sent Western Union moneygrams and/or money orders out of fear. In one instance, a Benning-Smith collector kept repeating the name of a consumer’s daughter, describing various sexual things he would do to her unless the debt was paid. Another collector told a female consumer that if both she and her husband would engage in sexual acts with him, he would pay their debt himself. Collectors routinely called consumers “drunks,” “scumbags,” “deadbeats,” and, in one instance, “a low-life piece of trash.”

Relatives Charged w/ Selling Home From Out From Under Elderly Oregon Widow; Used POA To Pocket $235K Sale Proceeds, Cash Out Bank Accounts, Annuities

In Portland, Oregon, The Oregonian reports:

  • Shortly after two women gained power of attorney from a dying 83-year-old relative, they took all of her possessions and sold her house of 56 years, police said. The pair pocketed the $235,000 from the house sale and cleaned out the elderly woman's bank accounts and savings, sharing the money among themselves and family members, police and prosecutors say.(1) They also arranged and pre-paid for her funeral. However, Evelyn Roth made an amazing recovery and had no idea what her relatives were up to.

  • Now the two suspects, Roth's cousin Virginia Ann Kuehn, 66, and her niece Kathleen Sue Jingling, 53, face a 35-count felony indictment charging them with first-degree criminal mistreatment, aggravated theft and first-degree theft. They've pleaded not guilty. [...] "They robbed me blind," Roth said. "Everything was for money, just to get money, money, money. That's not the way it should be." Roth said she pursued criminal charges because she's lost her savings and all her possessions to relatives who betrayed her trust.

For more, see Dying woman recovers, says relatives "robbed me blind" (if link expires, try here).

(1) Police said the two women cleaned out $35,000 in Evelyn Roth's checking account and also cashed her two annuities totaling $88,000. FinancialAbuseOfElderlyAlpha

Two Sentenced For Roles In Theft Of $126M In Client Funds Held In Connection With Real Estate Tax Free Exchange Transactions

From the U.S. Department of Justice:

  • Two former employees of Edward H. Okun, who was sentenced to 100 years in prison on Aug. 4, 2009, after a three-week jury trial, were sentenced [...] for their roles in a scheme to defraud and obtain approximately $126 million in client funds held by The 1031 Tax Group LLP (1031TG).


  • According to the plea agreement and statement of facts, [Lara] Coleman and others(1) used 1031TG and its subsidiaries in a scheme to obtain millions of dollars of client funds by false pretenses. [...] In the plea agreement and statement of facts, Coleman admitted that 1031TG falsely represented that it would hold client funds solely to complete the clients' [Section] 1031 exchanges.(2) Coleman admitted that after obtaining clients’ exchange proceeds with that false promise, she and others misappropriated approximately $132 million in client funds to support the lavish lifestyle of the owner of 1031TG, pay operating expenses for the owner’s various companies, invest in commercial real estate and purchase additional qualified intermediary companies to obtain access to additional client funds. In addition, Coleman admitted that she lied to federal investigators about statements she made in 2006 to internal attorneys for Investment Properties of America about the amount of money she and others had misappropriated.

For the Justice Department press release, see Two Virginia Residents Sentenced for Their Role in Scheme to Defraud Clients of Funds Allegedly Held in Trust.

(1) Coleman was sentenced to 10 years in prison and ordered to pay full restitution. In addition, Robert D. Field II was sentenced to five years in prison and was ordered to pay full restitution for his participation in the conspiracy.

(2) Section 1031 of the Internal Revenue Code allows investment property owners to defer the capital gains tax that would otherwise be due on properties sold, if the proceeds are used to purchase new property in a specified time frame. To facilitate such exchanges, investment property owners deposit the proceeds from the sale of their property with qualified intermediaries and sign exchange agreements, which include various promises by the qualified intermediaries to clients regarding the safekeeping of exchange funds in trust. EscrowRipOffKappa

Tuesday, September 8, 2009

More On The City Of Baltimore v. Wells Fargo "Ghetto Loans" Predatory Lending Case

In a recent interview with Democracy Now!, Wells Fargo whistleblower and ex-subprime loan officer and sales manager Elizabeth Jacobson speaks out on some of the predatory lending practices allegedly engaged in by her former employer.(1)

I) On the incentives for Wells Fargo loan officers to allegedly bulldoze every would-be borrower into a subprime loan:

  • I was at Wells Fargo for nine years, and I originated loans. Wells Fargo had two separate divisions: the prime division and the subprime division. And you could not originate prime loans if you were in the subprime division. So that’s what I did for nine years at Wells Fargo, is originate the subprime loans.

  • In the beginning years at Wells Fargo when I started, there was no filter system. So, if you had somebody come into your office and you could sell them a subprime loan, even if they qualified for a prime loan, that’s what you did. The compensation worked out that you had a huge incentive to put people into a subprime loan. Even the prime loan officers would make as much money on a [...] subprime loan, referring it over to the subprime division, that they would make doing a prime loan. So there was an incentive for the prime loan officers to refer the business to the subprime side.

II) On her company training putting borrowers into exploding adjustable rate mortgages:

  • Well, when I was hired by Wells Fargo, I had never worked in the mortgage industry at all. I had been a paralegal. So I took everything that Wells Fargo was telling me, that this is the way things were done. I didn’t question the fact that we were putting people in a 55 percent debt-to-income ratio and that we were only qualifying them based on the two years at the lower interest rate. The whole goal was, every two years you’re going to refinance that loan. So, it was sold as a two-year loan. These people were never intended to be in the loan for thirty years.

III) On her experience on the question of allegedly seeking the assistance of African American churches in Baltimore to target their members for subprime loans:

  • A lot of this was information that I would receive on conference calls as a sales manager. And people on the call, the management there, would encourage the loan officers, the subprime loan officers, to go into Baltimore city and target the churches, the African American churches, to get a relationship going with the minister or the reverend at the church and try to get that person to schedule some sort of meeting. They would call it a “wealth-building seminar” to get the parishioners of the church to attend. And any loan that was funded by Wells Fargo, whether a purchase or a refinance, $350 would then be donated to the church. And so, that was the incentive for the church to want to have these seminars there.

  • But what would happen is the only loan officers that would attend these seminars were generally the subprime loan officers. And on these conference calls, at one point, somebody made a joke who happened to be a white loan officer and said, “Well, will I be able to go to these seminars?” And they were told right there on the conference call, unless you were of color, you could not attend these conferences, these wealth-building conferences. So it seemed me—Wells Fargo didn’t come right out and say this; this is just what I saw—is that they wanted the African American Wells Fargo loan officers to sell loans to the African American community.

IV) On her resignation from her position as sales manager and top producer in the subprime division at Wells Fargo (originating approximately $55 million a year in subprime loans):

  • I happened to see a news report with the CFO of Wells Fargo, and he was questioned about the subprime division and denied at that point that Wells Fargo even had a subprime division. So here he is, the chief financial officer, where the subprime loans were supposed to be paying for the fixed costs of the company, and he’s denying that Wells Fargo even did subprime loans. That was just the final straw of total disillusionment, and then I put my resignation in.

For the transcript of the interview, and link to view the television interview, see Former Wells Fargo Subprime Loan Officer: Bank Targeted Black Churches as Part of Predatory Subprime Lending Scheme.

(1) Earlier this summer, Jacobson filed a sworn affidavit with a federal court in support of the city of Baltimore’s lawsuit against Wells Fargo for pushing high-interest, subprime loans onto African Americans in Baltimore and the Maryland suburbs, leading hundreds into foreclosure. She and another whistleblower allege Wells Fargo targeted African Americans for subprime loans and routinely steered customers qualified for prime loans toward subprime loans.

The Federal lawsuit and earlier media reports on the Baltimore City predatory lending action against Wells Fargo indicate that Jacobson and fellow whistleblower Tony Paschal allege, in sworn affidavits filed in Federal court, that:

  • Wells' "Subprime managers joked that Prince George's County was the 'subprime capitol of Maryland'" (see Jacobson Declaration, at paragraph 26), Wells' loan officers targeted black ZIP codes (see Paschal Declaration, at paragraph 10) and churches (see Jacobson Declaration, at paragraph 27), used software to “translate” marketing materials into African-American vernacular (see Paschal Declaration, at paragraph 11), referred to subprime loans in minority communities as “ghetto loans” and to borrowers as “mud people” (see Paschal Declaration, at paragraph 8), use of the words "nigger" in referring to African Americans and "'hoods" and "slums" in speaking on how African Americans live (see Paschal Declaration, at paragraph 16; see also Paschal Declaration - Exhibits B and C for email exchange in which Tony Paschal addresses these points with two Wells Fargo higher-ups - one supervisor actually acknowledged in one of the emails the use of the racial slur), and loan officers joked that, in making these subprime loans, they were “riding the stagecoach to Hell” (see Jacobson Declaration, at paragraph 31).

For the Federal lawsuit (including affidavits, evidence, and other court filings ) and earlier media reports, see:

Florida Judge Removes Himself From Foreclosure Case After Making Intemperate Remarks To Lender's Attorney Who Missed Several Court Hearings

In Volusia County, Florida, the Daytona Beach News Journal reports:

  • Tensions over how some lawyers from far and wide are handling large numbers of foreclosures for banks came to a head in DeLand on Monday when a veteran judge removed himself from a case after complaints about his comments [to bank attorney Farzad Milani].(1) Circuit Judge John Doyle, who has been hearing a growing number of foreclosures in West Volusia since he was assigned the mortgage dispute cases in January, was asked to step aside from [one] case [...].


  • The judge explained Monday about 20 percent of those losing their homes were showing up in court, but some attorneys representing the banks weren't. The result would be canceled or delayed hearings. [...] Like other local judges, Doyle was allowing attorneys representing banks from across the state the option to "appear" by telephone, but sometimes they wouldn't answer his calls. [...] He said many of the firms representing banks, which he called "foreclosure mills," hire young attorneys fresh out of law school who handle cases for a flat fee. "They are being trained that it's not a big deal to miss a hearing," the judge said. "Well it is, and if you miss one, relief will be granted against your client."

  • After the incident with Milani last month, the judge decided to stop allowing hearings by telephone in the 3,000 pending foreclosure cases before him. [...] Milani missed several hearings and could not be reached by phone when called, Doyle said. "He was the fellow that broke the camel's back." [...] It will be up to another judge to decide whether Milani should be held in contempt for not showing in court.

For the story, see Judge steps down in foreclosure case.

(1) At an earlier hearing, the judge told attorney Farzad Milani, who was representing the bank, "that he would not do his work while (Milani) sits in his office in Fort Lauderdale smoking his Cohiba cigars and drinking his lattes," according to court records. Doyle also told Milani, according to motion for the judge's recusal filed in court, that he was going to "make an example of him and do whatever he could to have him disbarred." Attorneys for Milani said the judge made "inferences of a racial or ethnic bias" against Milani.

New York Times Profiles Brooklyn Trial Judge Known For Holding Lenders' Feet To The Fire When Seeking Mortgage Foreclosure

The New York Times recently ran a profile on Brooklyn, New York trial judge Arthur M. Schack, a jurist who has developed a reputation for being a thorn in the side of those foreclosing lenders and their attorneys who, in cases over which he presides, persist on filing court papers that are filled with errors and omissions, and who otherwise come to court unprepared to prove that they actually own the promissory note secured by the mortgage they seek to foreclose.

  • [Justice Schack] has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.


  • Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage. Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.

For more, see A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style.

In a somewhat related story, see New York Magazine: Brooklyn Judge’s Influences Include Obscure Bruce Willis Movies.

For an earlier post on Justice Schack, with links to over 30 of his court rulings in which he bounced unprepared foreclosing lenders and their lawyers out of his courtroom, see Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced.

Monday, September 7, 2009

Enabling "Buy & Bail" Scams, Breaking Into Foreclosed Homes All In A Day's Work For Las Vegas Real Estate Agents??? Everybody's Doing It, Says One

In Las Vegas, Nevada, the Las Vegas Sun reports:

  • A Las Vegas real estate agent who landed a prominent role in a Time magazine cover story is being scrutinized by state licensing officials because of her comments, has left her employer and is lying low. The story by Joel Stein in the Aug. 24 issue, “Less Vegas,” is a high-spirited and high-altitude view of the troubles facing Las Vegas, which he calls both “our most American city” and “an entire city of John Dillingers.

  • In the story, Brooke Boemio — “a bouncy, sweet, recently remarried 31-year-old mom” — is cast as one of the Dillingers. She helps Stein break into a foreclosed home and brags about helping clients who are underwater on their mortgages buy a second house on the cheap and stop making payments on their first mortgages, pressuring the bank into selling the houses for a loss.

  • Everybody’s doing it, she says in the story. In fact, she said, she did it herself. Since the story appeared, Boemio and her employer have, in the words of Coldwell Banker Wardley Real Estate President Jeff Sommers, “parted ways.”


  • The buy-and-bail tactics described in the story, he said, are serious allegations and “really just in direct opposition to everything in our policies.” [...] When the story was published, it referenced a video on Time’s Web site titled “Breaking and Entering,” of Stein and Boemio entering an unoccupied home on the west side of town. Since then, the video has been removed from the Web site for what Time spokeswoman Betsy Burton described as “some sensitivity with various issues.”

For more, see Unflattering Time magazine story puts agent in hot water (Since bragging to magazine about unethical practices she’s off job, under scrutiny).

For the Time magazine article, see Less Vegas: The Casino Town Bets on a Comeback (the description of the above referenced scams begins on page 2 of the story).

For more on "Buy & Bail" real estate scams, see:

Florida Closing Agent Admits Pocketing Client's Refi Proceeds, Leaving Retiree Facing Foreclosure; Scammer Moved To State After NY Fraud Conviction

In Archer, Florida, The Wall Street Journal reports:

  • Last summer, Lawrence Ford jumped into the fast-growing market for so-called reverse mortgages. The retired auto mechanic and horse trainer used the money he received to pay off his existing $70,000 mortgage and "piddled away" the remaining $24,000 on things like restaurant meals for his four girlfriends, he says. Or so Mr. Ford thought. Last month, the owner of the Orlando, Fla., title company that handled his loan admitted to stealing more than $1 million from several reverse-mortgage holders, including Mr. Ford. Bank of America Home Loans, a unit of Bank of America Corp., says the title agent never sent it the money required to pay off Mr. Ford's mortgage. As a result, Mr. Ford says, the bank recently threatened to foreclose on his seven-acre ranch in Archer, Fla. "That will put me on the streets with my cars and horses and tools," says the 68-year-old Mr. Ford. Bank of America, which says there is no immediate danger of foreclosure, adds that it is working with Mr. Ford "to find a home-retention solution."


  • Before moving to Orlando in 2008, Garry Martin, 37, the title agent on Mr. Ford's reverse mortgage, was convicted of mortgage fraud in New York. In Florida, Mr. Martin orchestrated about 10 reverse-mortgage schemes,(1) pocketing about $1 million, prosecutors say. As title agent, Mr. Martin was obligated to distribute funds from his victims' reverse mortgages to retire their conventional mortgage loans. But according to prosecutors, he kept much of the money. To prevent his victims from catching on, he arranged for their monthly mortgage statements to be mailed to an address he controlled. The scheme unraveled when the banks contacted the victims about their missed mortgage payments.

  • Mr. Martin, who pleaded guilty to stealing over $5 million from more than 50 victims of mortgage-related frauds, faces up to 20 years in prison. His attorney declined to comment. Mr. Ford, meanwhile, fears he may be running out of options. Unless the bank agrees to modify his loan, he says, "I don't see a way out."

For the story, see Mortgage Fraud: A Classic Crime's Latest Twists (As 'Reverse' Loans Grow More Popular, Scams Put Older Adults at Risk).

(1) Referring to this ripoff as a "reverse mortgage scheme" is somewhat misleading. What was done in this case was simply nothing more than a flat out theft of escrow funds by a corrupt closing agent, where the refinancing proceeds that were derived just happened to come from a reverse mortgage. There is nothing inherent about a reverse mortgage that makes pulling off this scam any easier than if a conventional mortgage was involved. EscrowRipOffKappa

Sunday, September 6, 2009

Iowa Woman Fights Foreclosure Claiming Estranged Hubby Forged Her Signature On Loan Documents; Files Quiet Title Action In Attempt To Void Mortgage

In Hamilton County, Iowa, The Daily Freeman Journal reports:

  • Diana Messerly claims she didn't sign most of the loan documents that First State Bank of Webster City holds against her home, implying in a countersuit to the bank's foreclosure measures that her estranged husband, Doug Messerly, forged her signature on at least five separate occasions. She's also is claiming, in a suit filed in the Iowa District Court for Hamilton County, that Linda Cormaney, a First State Bank vice president and notary, notarized the loan documents against the Messerly home [...] even though they had not been signed by Diana Messerly in Cormaney's presence.


  • But, perhaps more importantly, Messerly's countersuit also seeks an action of quiet title to end the dispute over who has a right to the property - First State Bank, which holds mortgage liens that amount to nearly $200,000 against the $170,790 home and property, or Diana Messerly, who lives there. An action of quiet title in Diana Messerly's favor would "quiet" any challenges or claims to her right to the title of the home and property, effectively freeing her - forever - of any claims against it.(1)

For more, see Accountant’s estranged wife fights foreclosure (Diana Messerly’s countersuit claims she didn’t sign loans against her home).

(1) In a separate matter, the article reports that a settlement is imminent in a lawsuit filed this spring in Webster County alleging Messerly, a former Webster City accountant, forged longtime client Margaret Stark's signature to documents selling off $260,000 in her investments, which he then deposited into his personal bank account at First State Bank, according to an attorney for the bank. DeedContraTheft

"Greek" Alumni Seek To Void Dubious Sale Leaseback Of College Fraternity House Now Facing Imminent Foreclosure; Criminal Probe Possible

In Springfield, Missouri, the Springfield News Leader reports:

  • Seven months after a group of Alpha Gamma Sigma alumni sued over what they said was the illegal sale of their fraternity house, the property is threatened with foreclosure. Should that come true, the eight students in the house must find a new place to live. It would also mean the 38-year-old organization would lose its place on the Greek Row. [... T]he agriculture fraternity's house is set for a trustee sale Tuesday, said Leland Gannaway, an attorney for Citizens National Bank of Springfield. The bank has loaned nearly $200,000 on the house. Officials at Missouri State University said they'll find space for the eight fraternity members should they be evicted.


  • Meanwhile, the Springfield Police Department is looking into the matter. "Based on preliminary reports, we believe there is enough information to start a criminal investigation," Lt. David Millsap said.

  • The disputes apparently stem from a 2005 sale of the house to two individuals, who at the time were on the board of directors of Alpha Gamma Sigma of Springfield, Inc. The corporation owned and managed the assets of the fraternity. [... Charles] Marshall, then the president of Alpha Gamma Sigma of Springfield Inc., said no formal vote was taken [approving the sale]. Interested members agreed to the sale over phone calls.

  • Other alumni, nearly four years later, now argue the sale was invalid because the deal was not authorized by the corporation's board of directors, according to the petition they have filed in the Greene County Circuit Court. Since the sale, Marshall said he and [co-owner Robert] Ferber remodeled the property and leased it [back] to the fraternity. County records show the duo soon refinanced the initial note with a $120,000 loan from Citizens National Bank and, in 2006, borrowed another $78,895 against the fraternity house from the same bank.

For more, see Fraternity house faced with foreclosure.

For story update (9-2-2009), see Bank buys fraternity house at auction (Members will be able to work out lease arrangement).