Saturday, September 26, 2009

Mom Accuses Bankrupt Daughter Of Wiping Out Life Savings, Using Unwittingly Signed Deed To Sell Home & Pocket Proceeds

In Nashville, Tennessee, reports:

  • Donna Jones, a former employee of admitted embezzler and Ponzi scheme operator Michael J. Park of Brentwood, appeared before the U.S. Bankruptcy Court [last week]. [...] As to claims by Jones that she had not transferred assets in the last three years, that [...] is in dispute.

  • Martha Stinson, Jones' mother, says her daughter regularly deposited checks into her and her late husband's checking account only to move it back out within 24 hours. Stinson says that her daughter did not have power of attorney and that she trusted her daughter at the time. [...] Stinson, who now lives in a trailer home in Burns, was dealing with her husband's brain cancer, which proved fatal, at the time and did not question what her daughter told her. She now regrets that as her life savings has been completely wiped out.

  • Another issue within the family, and questioned in U.S. Bankruptcy Court, is a quitclaim deed placed by Jones on her parents' home. Jones gained $25,000 from the sale of the house in 2008, but her mother states that her husband signed the quitclaim deed while undergoing intensive chemotherapy and did not know what he was signing.

For the story, see Perjury suspected in alleged Ponzi conspirator case (Central figure in investment scheme gave answers under oath that others aren't buying). DeedContraTheft

Use Of Phony POA To Sell Murdered Retiree's $1M Home, Loot Bank Accounts Among Charges Facing Slay Suspects

In Palm Springs, California, The Desert Sun reports:

  • Five men accused in the stabbing death of a Palm Springs retiree to steal his identity and his financial assets [...] were ordered to stand trial on murder and other charges. Kaushal Niroula, 27, San Francisco attorney David Replogle, 60, Miguel Bustamante, 26, Daniel Garcia, 26, and Craig McCarthy, 29, face charges of murder, conspiracy to commit murder and conspiracy to commit a robbery in connection with the Dec. 5 slaying of 74-year-old Clifford Lambert. Niroula, Replogle and Garcia also face several charges stemming from the alleged fraudulent sale of Lambert's home and the emptying of his bank accounts. [...] Following Lambert's death, [attorney] Replogle allegedly created a false power of attorney document that allowed the co-defendants to empty the victim's bank accounts and sell his $1 million home for less than $300,000. A judge subsequently halted the sale.

For more, see Suspects in Palm Springs retiree's murder to stand trial. DeedContraTheft FinancialAbuseOfElderlyAlpha

In-Home Health Care Aide Facing Foreclosure Sentenced For Ripping Off $15K+ From 93-Year Old Patient

In Martinez, California, the Contra Costa Times reports:

  • An Oakley woman has been sentenced to jail and probation for stealing more than $15,000 from a 93-year-old Rossmoor woman who employed her to provide in-home care. Teresa Bryant pleaded no contest [...] to felony financial abuse by a caretaker and was sentenced in Contra Costa County's court dedicated to crimes involving elderly victims to 60 days in jail and three year's probation. [...] Bryant told the court that she was in financial straits and facing foreclosure on her home when she forged 42 checks from the victim's account between May and August, [prosecutor Jason] Peck said.

For the story, see Oakley woman sentenced for theft from Rossmoor women. FinancialAbuseOfElderlyAlpha

Financially Strapped Real Estate Operators Charged With Torching Their $1M Home; Roof Collapse Nearly Kills Firefighters

In Tracy, California, the Tracy Press reports:

  • A husband and wife are suspected of burning down their $1 million home in Tracy last summer — a blaze that almost killed several firefighters. Police [...] arrested 31-year-old William “Billy” Tipton Jr. and issued an arrest warrant for his wife, 37-year-old Frayba Tipton, on suspicion of arson, forgery and insurance fraud. Billy Tipton faces additional charges of grand theft and two more counts of defrauding an insurance company. [...] Not only did the fire destroy many of the family’s possessions, it also nearly killed several firefighters when it weakened the beams supporting a heavy slate roof that collapsed just 30 seconds after a fire chief ordered his crew out of the burning house.


  • Billy Tipton — who used to own a branch of West Coast Realty and Mortgage in Tracy without a real estate or broker’s license — was taken into custody Friday night. [...] Frayba Tipton — owner of A+ Realty and Mortgage — is free of her own recognizance, but was ordered to appear in court with her husband on Thursday.

  • The charges filed against the pair come as no surprise to several people who knew them. For the past few years, an architect, a graphic designer, several banks and at least two insurance companies were looking for the Tracy family for either money or an explanation. Public record paints a picture of a couple so dependent on the housing market that they lost virtually all of their property wealth when the economy tanked. They let several properties lapse into foreclosure as their income as real estate agents and brokers suffered from a dearth of buyers. Lawsuits demanding payment from Frayba and Billy Tipton show that the couple has had trouble keeping up with the bills for the past year or so.

For more, see Husband and wife suspected of Fagin Drive arson.

Friday, September 25, 2009

Obama Administration Meets With 12 State AGs In Effort To Squash Foreclosure Rescue Scams; FTC Considers Nationwide Ban On Upfront Fees For Loan Help

The Washington Post reports:

  • The Obama administration vowed Thursday to squash scams targeting homeowners on the brink of foreclosure, reviving a five-month-old pledge as millions of borrowers remain at risk of losing their homes. A group of high-ranking government officials, including Treasury Secretary Timothy F. Geithner, Attorney General Eric H. Holder Jr. and attorneys general from 12 states, met privately in Washington on the issue. It was a first meeting of its kind on the matter for federal and state authorities, who discussed methods for coordinating crackdown efforts, government officials said.


  • The Federal Trade Commission is considering rules banning firms from charging upfront fees for such services. Some states already prohibit that practice.

For more, see Administration Pledges to End Housing Scams. loan modification

California AG Bags Three Suspects In Refinancing Scam; Allegedly Fleeced 70+ Borrowers Of $950K+; Victims Left With $30M In Loans w/ Unwanted Terms

From the Office of the California Attorney General:

  • Continuing his fight against mortgage scams, Attorney General Edmund G. Brown Jr. [...] announced that agents from his office have arrested Michael McConville, and two of his associates(1) for their roles in a "criminal conspiracy" to steal nearly $1 million from borrowers seeking to refinance their homes.(2)

  • McConville and his co-conspirators lured dozens of borrowers into refinancing home loans by falsely promising low interest rates and brokers' fees, and other attractive terms. They then negotiated different terms with lenders, forged the victims' signatures on the final loan documents and collected hefty brokers fees - ranging from $20,000 to $57,000 - that were never disclosed. Only when the borrowers received true copies of the loan documents after the refinance did they discover that their names had been forged. In total, defendants stole over $950,000 from more than 70 borrowers, leaving victims holding $30 million in loans with terms they did not agree to.


  • McConville and his associates provided homeowners closing documents bearing terms promised, but which the lender never approved. After homeowners signed those documents, key pages were removed and replaced with pages bearing the terms that the lender had actually agreed to. The homeowners' signatures were forged on the replacement pages, and ALG forwarded the forged documents to the escrow company.


  • As a result of this scheme, homeowners suffered devastating financial losses. Some were forced to sell their homes, come out of retirement, or tap into retirement savings. Others paid significant prepayment penalties -- in one case, over $21,000. Borrowers often never received the significant amounts of cash-out they were promised.

For more, see Brown Arrests Three Mortgage Brokers for Stealing Nearly $1 Million from Borrowers.

(1) The alleged conspiracy was made up of:

  • Michael McConville, 31, of Simi Valley, sales manager of ALG, Inc, a Los Angeles based mortgage company. He is being held on $2 million bail;
  • Garrett Holdridge, 23, of Palmdale, California and Texas, loan officer for ALG, Inc. Holdridge is being held on $2 million bail;
  • Alan Ruiz, 28, of Huntington Beach, a loan officer for ALG, Inc. He is being held on $2 million bail.

The charges include:

  • 28 counts of grand theft, by violating Penal Code section 487, subdivision (a);
  • 14 counts of forgery, by violating Penal Code section 470, subdivision (d);
  • 1 count of elder abuse, by violating Penal Code section 368, subdivision (d);
  • 1 count of conspiracy to commit grand theft, by violating Penal Code section 182, subdivision (a)(1);
  • 3 special allegations of aggravated white-collar crime in excess of $500,000, by violating Penal Code section 186.11, subdivision (a)(2); and
  • Taking in excess of $3,200,000, by violating Penal Code section 12022.6, subdivision (a)(4) and (b).

(2) According to the press release, AG Brown recently sued Michael McConville and his brother Sean for their part in the "Property Tax Reassessment" scam which targeted Californians looking to lower their property taxes. Tens of thousands of mailers were sent out that featured official-looking logos and demanded hundreds of dollars in payments for property tax reassessment and reassessment appeal services. The statements warned homeowners that if payments were not received by the "due date" they faced late fees or would have their file marked "non-responsive" or "ineligible for future tax reassessments." See Brown Sues to Block Property Tax Rip-Off .

Maine Regulators Warn Of Scammers Posing As State Agency Employees To Target Homeowners With Foreclosure Help

In Augusta, Maine, WBZ-TV Channel 38 reports:

  • The Maine State Housing Authority says homeowners who've been receiving recorded phone messages from someone using its name should be wary of a scam. Callers tell homeowners to call the "Maine Housing Authority" to help with foreclosures or to refinance their mortgage. Housing Authority Director Dale McCormick says the calls are not coming from the state agency, which does not make automated calls offering foreclosure assistance. McCormick says scam artists using sophisticated computer software can make it appear a call is coming from a legitimate organization. State officials say anyone receiving these calls should not give out any personal information such as Social Security number or credit information.

Source: Maine Agency Warns Of Possible Scam. loan modification

Thursday, September 24, 2009

Ex-L.I. Lawmaker Accused In $82M Mortgage Scam Now Charged w/ Forging Lender Endorsement On Check To Illegally Pocket Insuance Cash For Burned Home

In Suffolk County, New York, The Southampton Press reports:

  • Former Suffolk County Legislator George O. Guldi was indicted for a second time this year Thursday, September 17, in a Riverhead courtroom, on unrelated felony insurance fraud charges stemming from a fire that destroyed his Westhampton Beach home nearly a year ago. Mr. Guldi was indicted in August for his alleged role in a $82 million mortgage fraud scheme.


  • Prosecutors said that Mr. Guldi submitted a claim to the insurance company after his house burned down and received a check for $853,000, money that was supposed to be used to rebuild the home, which is now in foreclosure. If the home was not rebuilt, Countrywide Home Loans would have applied the insurance money to the outstanding mortgage. Prosecutors said that about $163,000 is now left in the bank account in which Mr. Guldi had deposited the $853,000 check. They also said that he forged the endorsement of Countrywide Home Loans when he deposited the check. Prosecutors froze the account.

For more, see Prosecutors charge Guldi with insurance fraud.

Maryland Accountant Cops Plea To Ripping Off $1M+ From Escrow Account, Then Torching Offices Of Employer/Law Firm After Getting Canned

In Dundalk, Maryland, WBAL-TV Channel 11 reports:

  • Federal prosecutors said a former accountant for a Dundalk real estate law firm pleaded guilty to stealing more than $1 million and burning the firm's offices. George Perez, 33, of Dundalk pleaded guilty Wednesday to theft and arson charges. Prosecutors said the April 2007 fire caused $800,000 in damage to the law firm six days after it fired Perez.(1) Federal prosecutors said Perez was hired in January 2004 to track money from foreclosure sales and disbursements in the firm's escrow account. From December 2005 to April 2007, Perez was accused of transferring $1,044,309 into personal accounts, using the money to pay gambling debts and buy real estate.

Source: Fired Accountant Guilty Of $1M Theft, Arson.

For the U.S. Attorney (Maryland) press release, see Former Accountant of Dundalk Law Firm Admits to Stealing over $1 Million and Arson (Defendant Disappeared for Almost a Year After Failing to Appear in Court).

(1) According to the U.S. Attorney press release, the fire caused substantial damage not only to the law firm’s offices, but also to other businesses that occupied the building, including offices of a physician, an accounting firm and a pharmacy. A firefighter who responded to the fire was injured and taken to the hospital to be treated for burns he suffered. He was released after treatment. EscrowRipOffKappa

Tenants Stripped Of Community Privileges As Rent Skimming Landlord Pockets Cash, Stiffs Condo Association Out Of $10K+ In Monthly Maintenance Fees

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

  • The home has everything Xavier Melendez could want for his young family. "Really quiet, really peaceful," he said about the West Palm Beach community. He finds the rent fair and he said he paid it faithfully for two years. Then something strange happened. "I couldn't have a pizza. I can't use the facility. I can't go to the pool," Melendez said. No one, not even a relative, can visit them in the Terracina community. It's all because the owner, Micki O'Callaghan, is in foreclosure.

  • WPBF 25 News first reported on O'Callaghan in June.(1) The Homeowner's Association Security Chairperson, Doug Prince, said she's more than $10,000 behind in dues. [...] "She's just putting the money in her back pocket and not paying her bills," said Prince, who said O'Callaghan is renting out five houses in the community which are in foreclosure.(2)

For the story, see Renters Of Homes In Foreclosure Lose Privileges (More Tenants Come Forward Against Landlord).

(1) For earlier WPBF-TV Channel 25 stories on Micki O'Callaghan, see:

(2) Rent skimming (referred to as equity skimming in Florida), as defined in Section 697.08, Florida Statutes, constitutes a felony of the third degree, punishable as provided in Sections 775.082, 775.083, or 775.084, Florida Statutes. RentSigmaSkimming

Wednesday, September 23, 2009

Illinois AG Brings Civil Suit Alleging Deceptive Practices In Equity Stripping, Home Repair Scam That Duped 36 Chicago Homeowners

In Chicago, Illinois, the Chicago Tribune reports:

  • The Illinois attorney general's office filed suit in Cook County Circuit Court on Tuesday against a Chicago man and five home repair and mortgage companies for allegedly defrauding 36 Chicago homeowners, including two who lost homes to foreclosure. The complaint charges Mark Diamond and several companies to which he is linked with coordinating a scheme to strip almost $1.3 million in equity from the homes of elderly and African-American homeowners on the city's West and South Sides.(1) The actions allegedly violated the state's consumer fraud act.


  • The suit charged that Diamond offered to refinance mortgages at lower interest rates or lower monthly payments and encouraged homeowners to take equity out of their homes for repairs, with the work performed by the affiliated companies. After persuading homeowners to sign the checks over to Diamond, he pocketed a portion of the funds instead of completing the repairs, the state said. The state also accused Diamond of putting homeowners into mortgages they could not afford and, in some cases, forging consumers' signatures on loan documents. As a result, 12 consumers have defaulted on their mortgages and two people have lost their homes to foreclosure, the state said.

Source: Chicago man and five companies are sued in consumer fraud case (Lawsuit says Mark Diamond defrauded elderly and African-American homeowners on the city's West and South Sides).

For the Illinois Attorney General press release, see Madigan Cracks Down On Chicago Mortgage And Home Repair Fraud Scheme ($1.3 Million Swindled from Elderly, African-American Homeowners in Subprime Loan Scam).

(1) According to the story, also named in the suit were three home repair and remodeling companies, United Construction of America Inc., United Residential Services and Real Estate Inc., and Skyway Builders #1 Inc.; and two finance companies, OSI Financial Services Inc. and Harbor Financial Group Ltd. Diamond is president of United Residential Services and OSI Financial Services and "fronts for all the companies," the lawsuit reportedly said. StiffingContractorsTheta

Miami Man Gets 88 Months For Role In Impersonating Unwitting Homeowners & Ripping Off Their HELOC Accounts

From the Office of the U.S. Attorney (Alexandria, Virginia):

  • Henry “Uche” Obilo, age 30, of Miami, Fl., was sentenced to 88 months in prison, followed by three years of supervised release, for his role as a leader in a home equity line of credit fraud scheme(1) that has been linked to more than $36 million in attempted fraud and almost $11 million in actual losses. To date, investigators have identified more than 180 victims. Obilo was ordered to pay restitution of $577,149.33.


  • According to court records, Obilo and other co-conspirators used fee-based web databases to search for potential victim account holders with large balances in home equity line of credit (HELOC) accounts. This information included name, address, date of birth, and social security number. [...] Armed with a victim’s personal information, the conspirators, [...] called the victim’s financial institution, impersonated the victim, and transferred the majority of the available money from the HELOC account into an account from which a wire transfer could be sent. The conspirators would then wire transfer hundreds of thousands of dollars to domestic or overseas accounts controlled by members of the conspiracy.(2)

For the U.S. Attorney press release, see Miami Man Sentenced to 88 Months in $11 Million Bank-Fraud Conspiracy.

(1) Others involved in the scheme include: Abel Nnabue, age 34, of Dallas, who was sentenced to 54 months on Jan. 30, 2009; Precious Matthews, age 27, of Miami, who was sentenced 51 months on Feb. 13, 2009; Brandy Anderson, age 31, of Dallas, who was sentenced to 2 years of supervised probation and 40 days of community confinement on Feb. 20, 2009; Ezenwa Onyedebelu, age 21, of Dallas, who was sentenced to 37 months on Feb. 27, 2009; Daniel Orjinta, age 43, of Nigeria, who was sentenced to 42 months on March 6, 2009; Paula Gipson, age 34, of Dallas, Texas, who was sentenced to 15 months on Sept. 4, 2009. The conspiracy’s ringleader, Tobechi Onwuhara, age 30, of Dallas, has an outstanding warrant for his arrest and remains a fugitive. Information about Onwuhara is available on the America’s Most Wanted website:

(2) The conspirators used caller-ID spoofing services, prepaid cell phones and PC wireless Internet access cards, and transferred victims’ home telephone numbers in order to impersonate the victim and avoid identifying themselves, according to the U.S. Attorney's office.

City Concerned About Effect On Tenants From Unwinding $5.4B Purchase Of 11,000+ Unit Apartment Complexes Gone Bad

In New York City, The New York Times reports:

  • Three years ago, the sale of the 110 red-brick apartment buildings at Stuyvesant Town and Peter Cooper Village in Manhattan represented the most expensive American real estate deal in history.(1) Now the buyers are running out of time and money. Jerry I. and Rob Speyer and their partner, BlackRock Realty, who paid $5.4 billion for the quiet middle-class redoubt near the East River, have seen the property lose more than half of its value, and the income from rent — down 25 percent from its peak — covers less than half of their debt payments. Real estate analysts say they expect that by December, the partnership will run out of an additional $890 million set aside for apartment renovations, landscaping and interest payments, and that the owners are at “high risk” of default on $4.4 billion in loans.(2)


  • Stuyvesant Town and Peter Cooper Village are in trouble. City officials have been monitoring the looming crisis and how it might affect a complex that has served as an oasis of affordability in Manhattan for middle-class New Yorkers. Some 6,875 of the 11,227 apartments at the complexes are rent regulated. “We are absolutely keeping an eye on it,” said Rafael E. Cestero, the city’s housing commissioner. “It’s an iconic complex.” Referring to the people who were part of the original real estate transaction, he went on, “Those folks are going to take their lumps. We are looking at how we can ensure that the rent-stabilized units and the families that live there and families that could live there in the future could be insulated from the unwinding of this deal.”(3)(4)

For the story, see Buyers of Huge Manhattan Complex Face Default Risk.

(1) The residential complex, the largest of its kind in New York City, covers approximately 80 acres, or a full 10 city blocks, between First Avenue and Avenue C, and 14th Street and 23rd Street, and consists of 110 apartment buildings comprising 11,200 units, which house at least 20,000 people.

(2) The purchase of Stuyvesant Town and Peter Cooper Village was one of the more scrutinized of its deals in recent years, the story states. The winning bid presumed the partnership could increase profits by renovating and deregulating apartments, but the owners have been unable to quickly convert apartments to market rates.

(3)Residents are increasingly concerned that the maintenance of the buildings is slipping, even as they are getting hit with a flurry of potential charges for major capital improvements,” said Daniel R. Garodnick, a city councilman who lives in Peter Cooper Village.

(4) The underwater landlords in this story have gone to the New York Court of Appeals (the state's highest court) to appeal a recent state intermediate appellate court ruling that could result in them having to pay more than $200 million to repay the tenants in these complexes for illegal rent increases over the last four years in connection with improperly deregulating more than 3,000 apartments while receiving special property tax breaks from the city. See:

Tuesday, September 22, 2009

NC AG On Loan Modification Foreclosure Rescue Scammers: "These Creeps Are Out There, Crawling Out From Under Rocks & Taking People's Money"

In Greenville, North Carolina, The Daily Reflector reports:

  • State Attorney General Roy Cooper on Tuesday warned local homeowners and business leaders to be wary of home mortgage assistance scams, one of several topics he covered at a luncheon hosted by the Greenville-Pitt County Chamber of Commerce at the Brook Valley Country Club.


  • His office is trying to push buyers and lenders to work complicated financial issues out together through the use of qualified counselors, he said. [...] However, since scammers know counselors are being used, they are presenting themselves as such to borrowers, getting money up front and not helping them, Cooper said. His office has tackled about 130 foreclosure scams, he said.

  • You know that these creeps are out there, crawling out from under rocks and taking people's money,” Cooper said. The attorney general's office received seven scam complaints in 2007, 82 in 2008 and 353 scam complaints this year, he said. North Carolina was one of the first states to make it illegal to take money up front for home mortgage foreclosure counseling, and state attorneys are using the law in courts now to try to end the scams, Cooper said.

Source: AG Cooper visits with chamber, Boys & Girls Club.

Queens Co-Op Board Of Directors Accused Of Taking Out $12M In Mortgages On Building Without Unit Owners' Consent

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

  • Shareholders of an Elmhurst co-op are locked in a legal tug of war with its board of directors, accusing it of taking out $12 million in mortgages without their knowledge. Shareholders of the Continental, at 87-10 51st Ave., said they only found out about the two $6 million loans when they got court papers in June warning that the co-op was heading into foreclosure because of an unpaid bill. "We didn't know about either mortgage," a shareholder told the Daily News, speaking on condition of anonymity. "There have been no financial statements and no meetings."

For more, see Legal battle looms at Continental co-op over 12M in mortgages: Shareholders say without approval.

Vegas Man Claims "Adverse Possession" In Attempt To Justify Hijacking, Then Renting, Vacant Home In Foreclosure

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:

  • The foreclosure captial of the country is becoming a hot bed for scam artists, but one family in the Valley is taking action to try to take back its home from a man who may have rented it out illegally. You could liken it to squatting without the tenants knowing they're squatting.


  • Steven Humes thought he had found a great deal on Craigslist to rent a house when he moved to Las Vegas a couple of months ago, but what he really found may have been a great scam. "They gave us a key; we went inside; we looked at the property, and decided 'oh this is great, loving it, 735 a month, loving it, great,'" says Steven.

  • John Bartlett also had a key, as well he should. He owns the home, even though it's going into default, but much to his surprise, when he went with a real estate agent to show it, his key didn't work. That's because a so-called property manager had changed the locks and rented out a home he didn't have rights to. [...] Action News went to the property manager's office, but he wasn't there, and the secretary wouldn't call him. Days later, he did call, then e-mailed, saying the house was abandoned, and that he claimed it under an old law known as adverse possession.

For the story, see Foreclosure flim-flam, or right to rent? KappaPhonyLandlordScam

Wells Fargo Cans Squatting Senior VP For Using $12M Beachfront REO As Party House

In Malibu, California, The Los Angeles Times reports:

  • Moving to contain a public relations mess, Wells Fargo & Co. fired a top executive accused of using a bank-owned Malibu beach house to entertain her family and friends. Cheronda Guyton, a senior vice president responsible for commercial foreclosed properties, broke company rules barring personal use of bank property, Wells Fargo said in a statement Monday. The Times reported last week that Guyton had been spotted by neighbors spending time at the Malibu Colony home with her family this summer. At a party in August, guests were ferried to the beach house from a yacht, residents of the enclave said.


  • Wells Fargo's quick action after The Times' report last week reflects the bank's recognition that the case could become a liability, especially in light of its acceptance of federal bailout money, ethics experts said.


  • Wealthy real estate shoppers who had gotten wind of the house being held by the bank said they were frustrated they could not offer to buy it. Local real estate agents said they began to get calls from eager would-be buyers -- but the house wasn't for sale.

For more, see Wells Fargo fires executive accused of using bank-owned Malibu home (Cheronda Guyton, a senior vice president responsible for commercial foreclosed properties, had been seen by neighbors using the Malibu Colony house lost by victims of Bernard Madoff's Ponzi scheme).

See also:

Monday, September 21, 2009

Sentencing Continues For Participants In Maryland-Based Equity Stripping Foreclosure Rescue Scams Peddling Bogus Sale Leaseback Arrangements

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

  • U.S. District Judge Roger W. Titus sentenced Richard Allison, age 38, of Camp Springs, Maryland, an attorney and employee of the U.S. Census Bureau, [...] to 18 months in prison followed by five years of supervised release for conspiracy to commit mail and wire fraud, in connection with a mortgage fraud scheme(1) which 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. Judge Titus also sentenced co-conspirator Carlisha Dixon, age 32, of Hyattsville, Maryland [...] to five months in prison and five months home detention, followed by five years of supervised release for the conspiracy. Judge Titus also entered an order of restitution against Dixon of $180,000 and deferred restitution for Allison pending a hearing on October 7th to determine the amount and allocation of restitution among the victims.


  • Using the [victimized] homeowners’ properties, the conspirators applied for mortgages to extract the maximum available equity from the homes. They prepared and submitted fraudulent loan applications to mortgage lenders to obtain fraudulently inflated loans on the target properties in the straw buyers’ names. At settlements, the conspirators imposed numerous fees and required “seller contributions” which were far in excess of industry standards; they imposed fees for services which were not performed, disclosed or explained to the homeowners; and they transferred the sale proceeds out of the escrow accounts into the conspirators’ business and personal bank accounts and converted a substantial portion of those funds to their personal use.

For the entire U.S. Attorney press release, see Lawyer and Conspirator Sentenced in Metropolitan Money Store Mortgage Fraud Scheme.

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

With regard to the ongoing civil class action lawsuits involving Metropolitan Money Store and its associates:

(1) Ten defendants, including a lawyer, mortgage broker, real estate agent, loan processor, company officers and family members have pleaded guilty in this scheme. Kurt Fordham, age 39, of Fort Washington, Maryland was sentenced on July 10, 2009 to 10 years in prison for his participation in the scheme. Fordham was personally responsible for over $13.5 million of losses to mortgage lenders and used over $800,000 of fraudulently obtained proceeds to pay for his wedding. The remaining defendants are scheduled to be sentenced within the next three months.

Punishing Attorneys Offering Bogus Loan Modification Help To Financially Strapped Homeowners A Priority For Incoming State Bar President

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

  • Crooked lawyers have long besmirched the profession's image, but the scale of their involvement in the loan modification scandals plaguing California homeowners has taken an unprecedented toll, the incoming president of the State Bar of California says. The proliferation of complaints against lawyers who said they could help rescue clients threatened with foreclosure has hurt tens of thousands of people and confronted the bar with a mounting and costly disciplinary burden, said Howard Miller, a partner with the Los Angeles plaintiffs' firm of Girardi & Keese. "There are at least hundreds, and perhaps more, perhaps thousands, of lawyers in California who deliberately reached out to obtain money from people at the most vulnerable point in their lives and, as near as anyone can tell, did nothing to help them," Miller said, vowing to make a priority of punishing such misdeeds during his yearlong tenure.


  • Miller was a key supporter of a new rule of professional conduct requiring attorneys to tell clients if they don't carry malpractice insurance. [...] The estimated tens of thousands who lost nonrefundable deposits to unscrupulous lawyers advertising their loan-modification services could have benefited from the knowledge that those attorneys were, for the most part, uninsured, Miller said.

For more, see New head of State Bar of California assails mortgage modification scammers (Los Angeles attorney Howard Miller lambastes lawyers who claimed to be offering help to homeowners facing foreclosure but did nothing except take their money).

Kansas Supreme Court Leaves MERS, 2nd Mortgage Holder Holding The Bag; OK's Foreclosure Sale By First Mortgagee Despite Lack Of Notice To Either Firm

Housing Wire reports:

  • A ruling by the Kansas Supreme Court determined Mortgage Electronic Registration Systems (MERS)(1) was not a “necessary party” in a mortgage foreclosure proceeding initiated by a first lien holder. [...] The court’s ruling involves a case where MERS was listed as the mortgagee of a second-lien mortgage originated by Millenia Mortgage Corp. When the primary lien holder, Landmark National Bank went to court to seek foreclosure action, MERS wasn’t notified. Although Millenia was notified, it already sold its interest in the loan to Sovereign Bank.

  • Representatives from the second lien loan were not present at the hearing. The lower court allowed Landmark to proceed with the foreclosure and sell the property at sheriff’s sale. In response, Sovereign and MERS attempted to vacate the judgment, which was denied by the trial court. The ruling to deny the motion was upheld by the state’s court of appeals and later, its supreme court. In its ruling, the supreme court said that MERS was not a “contingently necessary party.”

  • It added since Sovereign Bank didn’t register its interest with the county’s register of deeds, it had no rights in the foreclosure proceeding.(2)

For more, see Court Ruling Upholds Foreclosure Sale Despite MERS’ Appeal.

For the Kansas Supreme Court ruling, see Landmark Nat'l Bank v. Kesler, No. 98,489, 2009 Kan. LEXIS 834 (August 28, 2009), affirming Kansas Court of Appeals in Landmark Nat'l Bank v. Kesler, 40 Kan. App. 2d 325, 192 P.3d 177, 2008 Kan. App. LEXIS 138 (2008).

(1) MERS acts as the representative for lenders and services in county land records for mortgages registered with the company. MERS keeps track of the loan, even when servicing rights are traded or sold, and notifies lender and servicer clients of action against the property.

(2) The proceeds of the foreclosure sale in this case exceeded the amount owed to the foreclosing first mortgage holder. The balance of the proceeds, after distribution of the amount owed to the foreclosing lender (generally referred to as the surplus funds or the overage, among other descriptive references), is then typically distributed to any subordinate lienholders in an amount not to exceed the balance of their claims; the remainder, if any, then goes to the foreclosed upon homeowner. Interestingly, according to the facts as laid out in the Kansas Supreme Court’s ruling, it appears that the foreclosed upon homeowner walked off with the entire foreclosure sale surplus; neither MERS nor the second mortgage holder participated in the distribution of these proceeds. EpsilonMissingDocsMtg

Bogus Loan Fees, Failure To Act In Good Faith Among Allegations In Elderly Ohio Couple's Attempt To Fight Foreclosure Of Home Of 40+ Years

In Stark County, Ohio, The Canton Repository reports:

  • A mediator has been asked to resolve a foreclosure dispute that has come close to chasing a North Canton couple in their mid-80s from their home. Stark County Common Pleas Court Judge Taryn Heath referred a foreclosure against William and Bette Hammen to the Community Mediation Center. Representatives for the Hammens and their mortgage company are scheduled for an Oct. 29 hearing. The couple has been on the verge of losing their house several times during the past 18 months.


  • CitiMortgage launched foreclosure proceedings in February 2008 because the Hammens hadn’t paid their mortgage. [...] Since then, the couple has been declared incompetent, assigned a guardian and received legal aid. That has helped them begin to turn the tables on the foreclosure process.

  • Heath moved the Hammens’ case to mediation after lawyers argued that lenders broke federal lending laws, assessed “illegal, improper or excessive” loan fees, and failed to act in good faith when creating a $100,000 mortgage and a home-equity loan for the couple in 2006. The Hammens have lived in the house since 1965. They didn’t have a mortgage until 2002, according to court filings. But since 2002, the couple has entered into three standard mortgages and three open-ended mortgages.

For the story, see North Canton couple’s foreclosure referred to mediator.

Home Lost To Foreclosure Despite Loan Servicer's Failure To Complete HAMP Review, Says New Hampshire Couple

In Franklin, New Hampshire, New Hampshire Public Radio reports:

  • About a month ago, homeowners Sharon Gagnon and her husband were facing foreclosure. But they sought help from a HUD certified housing counselor, and got a modification with Chase Bank under the federal Making Home Affordable Program. Gagnon had recently sent in her signed authorization with a check when a real estate agent came by and told her she didn’t own her house anymore.


  • According to Gagnon and her counselor, Chase bank, a unit of JP Morgan Chase, accepted the modification and the check that Gagnon sent. But the bank then sent the check back with no explanation of why they were doing it. In the meantime, Sharon Gagnon got another surprise in early August. And the next thing I know is there’s an eviction notice on the door, from the sheriff, telling us we need to be out by September 15th.


  • Under the HAMP [Home Affordable Modification Program] regulations you’re not allowed to proceed on a HAMP eligible family on a foreclosure or scheduled sale date without having the HAMP review completed and foreclosures have continued to proceed as if everything is normal and there’s no need to do the HAMP review. A spokesman for JP Morgan Chase says the company won’t comment on this story, except to say the Gagnon case is under investigation. Gagnon’s attorney, Peter Wright at Franklin Pierce Law Center, says his team is already working on trying to keep the family in their home.

For more, see A Franklin Family Facing Eviction Thought They Had Saved Their House.

Sunday, September 20, 2009

92-Year Old Victim Of Alleged C. Florida House Swindle Gives Emotional Testimony In Criminal Trial; Says She Unwittingly Signed Deed To Her Home

In New Port Richey, Florida, The Tampa Tribune reports:

  • Time has taken away some of Eloise Mudway's physical and mental abilities. She has difficulty recalling names, dates and times; struggles to hear and gets around only with the help of a wheelchair. Fortunately, she has retained a healthy sense of humor. Eloise Mudway, 92, needed it [Thursday] as she spent more than three hours on the witness stand answering a barrage of questions from Assistant State Attorney Mike Halkitis and defense attorneys Dean Livermore and Mark Goettel. "God help me," she said during one break in her testimony. Livermore and Goettel represent Cynthia and Joseph Clancy, a local couple prosecutors contend swindled Mudway out of her $370,000 house and other assets between 2001 and 2005.(1)


  • Mudway answered with an emphatic "no" when asked if Cynthia Clancy ever explained to her that she was signing a quit-claim deed to save the house from default. "I never heard tell of a quit-claim deed," Mudway testified. "She just brought the paper out, shoved it in front of me and said, 'Sign this. I'm getting mad.'" The Clancys continue to live in the house while Mudway lives with another local couple.

For more, see Elderly woman testifies in Pasco grand theft case.


See also, the St. Petersburg Times: Elderly victim gives emotional testimony in Pasco County grand theft trial:

  • The prosecutor handed Eloise Mudway the quit claim deed with her signature transferring her home to someone else. Sitting in her wheelchair, Mudway looked at the paper and fought back the tears. "Do you remember Cyndy Clancy taking you to Wachovia Bank?" asked Assistant State Attorney Mike Halkitis. "A piece of paper was put in front of me," replied the 92-year-old woman, whose voice cracked as she blotted her eyes with tissue, "and old dumb me signed it and didn't have a house anymore." [...] After her testimony, Mudway was wheeled out of the courtroom by a victim's advocate.

(1) The Clancys are each charged with one count of grand theft from a person over 65 and both face a maximum penalty of 30 years in prison. FinancialAbuseOfElderlyAlpha DeedContraTheft

Housing Discrimination Based On Race, National Origin, Familial Status All On Massachusetts AG Radar

From the Office of the Massachusetts Attorney General:

  • Attorney General Martha Coakley’s Office filed a housing discrimination complaint against two Somerville property owners for allegedly refusing to rent an apartment to a prospective tenant and his family on the basis of their race and national origin. The complaint [...] alleges that Jardelina and Olivero Costa of Somerville violated state anti-discrimination and consumer protection laws by refusing to rent to a prospective tenant and his family because they are of Indian national origin. [...] The complaint alleges that in September 2008, the prospective tenant and his cousin inquired at a local real estate company about a Somerville apartment, owned by the Costas, advertised for rent on the Internet. After viewing the apartment with the real estate agent, the prospective tenant returned to the real estate office to provide the deposit required by the owners to secure the rental property. The complaint alleges that at this time the real estate agent relayed a conversation she had with the Costas, in which they told the agent that they did not want to rent to the family because they were of Indian national origin and “their food stinks.”

For the AG's press release, see AG Coakley Files Suit Against Somerville Property Owners in Housing Discrimination Case.


  • Attorney General Martha Coakley’s Office reached a settlement with a Dedham real estate company and one of its employees, resolving allegations that they unfairly discriminated against a prospective homebuyer, causing her proposed home purchase not to go forward. The Assurance of Discontinuance [...] against Discover Real Estate Corporation and its employee, Virginia E. Bethoney, alleges that the company and the employee violated state anti-discrimination laws by denying an African-American woman the opportunity to negotiate the purchase of a home in Dedham. “It is against the law to deny someone the opportunity to purchase a home because of their race,” said Attorney General Martha Coakley. [...] According to the allegations in the prospective buyer’s complaint filed with the Massachusetts Commission Against Discrimination, the real estate company failed to communicate the seller's response to the prospective buyer's offer and refused to negotiate with the prospective buyer's broker. Under Massachusetts law, it is illegal to refuse to negotiate the sale of property with a person due to the person’s race.

In addition to other sanctions contained in the settlement, the alleged violator agreed to pay the victim $2,500 in damages.

For the AG's press release, see AG Coakley Reaches Settlement with Dedham Real Estate Company Resolving Allegations of Unlawful Real Estate Broker Practices.


  • Attorney General Martha Coakley’s office obtained a consent judgment against ABG Residential, a Cambridge-based realty company, and its agent, Georgina Zala, resolving claims that the company refused to rent an apartment to a couple because they had a nine-month old child whose presence would require abatement of lead paint hazards under state law. The consent judgment [...] orders the defendants to pay $3,500 to the couple and bars the defendants from future acts of discrimination. [...] It is illegal [in Massachusetts] to discriminate against families with children in order to avoid compliance with the lead paint law.

For the AG's press release, see AG Coakley Settles with Cambridge Real Estate Company That Discriminated Against Family with Young Child.


  • Attorney General Martha Coakley’s Office has filed a lawsuit against Cornerstone Corporation, a for-profit property management company that manages the Roxse Homes residential housing development in Boston, alleging that the company and one of its employees discriminated against a tenant because she is a foster parent. Under state and federal law, it is illegal to discriminate against a person based on his or her familial status which can include foster parent relationships. “It is a violation of state and federal law to discriminate against foster parents because of the familial status or composition of their family,” said Attorney General Coakley. “Foster parents serve a critical need in supporting the care, welfare and safety of children across the Commonwealth.”

  • According to the complaint, the tenant had been a licensed foster parent for the Massachusetts Department of Children and Families for many years and had lived in Roxse Homes with her family, including foster children, since 2006. The complaint alleges that despite knowing that the tenant was a licensed foster parent, the defendants falsely accused the tenant of operating a day-care center in her apartment in violation of the lease and later twice threatened to evict her and her family unless she ceased such activity.

For the AG's press release, see AG Coakley Sues Boston Property Management Company and its Manager for Discrimination Against Foster Parent.

Florida AG, Developer Settle Civil Rights Allegations Of Violating State Fair Housing Act Accessibility Standards

From the Office of the Florida Attorney General:

  • Attorney General Bill McCollum [...] announced that his office has obtained a settlement for a Central Florida couple resolving allegations of civil rights violations related to their condominium. Under the settlement, Brevard County developer Tricon Development Corporation paid $15,000 in civil damages to Josephine and Dominic DeRusso, which included the cost of retrofitting the couple’s home. [...] The lawsuit alleged that Tricon had failed to meet the Florida Fair Housing Act’s accessibility standards when it developed the DeRusso’s condominium in Indiatlantic, Florida. Mrs. DeRusso is disabled and needed her home and certain common areas made accessible.


  • The DeRussos asked the Attorney General to file the lawsuit to enforce the provisions of the Fair Housing Act following an investigation and reasonable cause determination by the Florida Commission on Human Relations. In addition to paying civil damages to the DeRussos and retrofitting their home, Tricon will make several modifications to the common areas at Topaz Oceanfront Condominium. The modifications include installing grab bars in the appropriate locations at the pool area and adapting the threshold at a door connecting the pool area and the pool restrooms.

For the Florida AG press release, see McCollum Obtains Civil Rights Settlement for Central Florida Couple.

Home-Based Meth Labs A Threat To Health & Pocketbook

From the Rim Country of Central Arizona, The Payson Roundup reports:

  • Health and law enforcement officials across the country are becoming increasingly alarmed at the number of homes being sold that were once used as meth houses or laboratories. The problem developing is that former homes where meth was either used or manufactured are in fact health hazards to anyone currently residing in them due to the residual poisons that were soaked into the walls, window treatments and flooring.(1)


  • In 2005, nearly 17,000 homes were seized by authorities (many ending up in foreclosure) and unknown to those subsequently purchasing these homes, the families inhabiting them are exposed to the dangers of the toxic chemical waste left behind. While at this time there are no federal guidelines for cleanup of these materials, in 12 states (Arizona included), it is illegal to occupy a dwelling before it’s been decontaminated. However, in most states there are few protections in place.

  • Fourteen states (including Arizona) require property owners to disclose if the property offered was a former drug house and 13 states (Arizona being one of them) have actually established a guideline for cleanup. The cost of cleaning and decontaminating a former meth lab is astronomical. It can cost anywhere from $30,000 to $100,000 to complete. Unfortunately, with no federal assistance in place, the price tag is up to the property owner to absorb.

  • Right now there are literally tens of thousands of contaminated residences across the United States. Living in one of these former drug houses can very easily cause a family to face financial ruin between having to pay for any possible cleanup, developing health-related illnesses and having to throw away any personal possessions that can’t be cleaned. Add to that the cost of acquiring another residence and then moving. It is a nationwide nightmare.

For the story, see Meth houses need to be decontaminated.

In a related story, see The National Law Journal: Meth Lab Residue in Homes Triggers Litigation (Lawsuits over contaminated homes focus on failure to disclose issue).

(1) Reportedly, for every pound of meth that is cooked in a home, five to seven pounds of chemical waste products are created. From this waste, a variety of long term health problems can occur including but not limited to: headaches, blisters, damaged lungs, liver or kidneys. meth lab yak