Ontario Man Admits To Defrauding Elderly Parents; Looted Bank Account, Used Forged POA To Pilfer Profits From Sale Of Home

In Peterborough, Ontario, The Peterborough Examiner reports:

• A 44-year-old man pleaded guilty [...] to defrauding his parents of about $140,000 in a series of crimes that involved forging a power of attorney, selling his parents' home behind their back and racking up thousands of dollars in credit card debt in his father's name. David Edwardes-Evans pleaded guilty to 10 charges in Ontario Court of Justice including fraud, uttering a forged document and breaching court orders.

• Edwardes-Evans began to defraud his parents after they both became permanent residents of a retirement home in June 2007, court heard. He shared power of attorney over his parents' finances with his sister, Crown attorney Paula Thompson said, and managed their accounts on their behalf.

• About a month after his father moved to the retirement home, Edwardes-Evans began taking out credit cards in his father's name, using his father's own credit cards without permission and made withdrawals from his parents' joint bank account, Thompson said. He then tricked them into signing away their Oriole Dr. home and forged a power of attorney to sell the house, court heard. "The document had been forged ... in order to facilitate the liquidation of the home," Thompson said.

• Police arrested Edwardes-Evans [...] after his sister discovered irregularities in her parents' accounts. By then, Edwardes-Evans had racked up $15,000 to $20,000 in credit card debt and had pilfered the profits from the sale of the home, Thompson said.

Source: Man guilty of defrauding parents. FinancialAbuseOfElderlyAlpha DeedContraTheft

Conn. AG Puts Kibosh On Shaky "Option To Buy" Obtained By Pair From Hospitalized Dying Woman; Deal Would Have Allowed Purchase For Less Than 50% FMV

From the Office of the Connecticut Attorney General:

• Attorney General Richard Blumenthal [...] announced that his office has successfully challenged a questionable agreement to sell the home of a deceased Greenwich woman, securing at least $300,000 more for charities named in the woman's will. [...] Probate Judge Daniel F. Caruso voided an agreement under which Mona Lee Johnson of Greenwich granted her neighbor Mark L. Lovallo and her long time accountant, David Alfano, an option to buy her home for $500,000 after her death. In fact, the home was estimated to be worth more than twice as much -- about $1.2 million -- when she died in 2005. Johnson signed the agreement at Lovallo's urging a month before she died when she was in the hospital.(1)(2)

For the entire AG's press release, see Attorney General Successfully Challenges Questionable Agreement To Sell Greenwich Home, Secures At Least $300,000 More For Charities.

(1) According to the press release, because real estate values have fallen since Johnson's death, it's unlikely the home's fair market value is still the $1.2 million estimated in 2005. In the current market, Blumenthal's office expects the house to fetch at least $800,000. It seems to me that these two characters should be hammered for the damages suffered by the estate and the beneficiaries of the will for the home's $400,000 diminution in value during the time they improperly clouded the title to the deceased woman's home with this bogus deal.

(2) Attorney General Bloomenthal said:

• "The net result in this long legal battle is at least $300,000 more for good causes, particularly educational institutions, for a total of about $1.5 million or more. I fought successfully to stop this suspect agreement denying hundreds of thousands of dollars to charities intended to benefit from the home's sale. In charity law, the donor's wishes are paramount, and this extraordinarily generous donor sought to benefit charities, not these two men. This donor never wished to sell her home at a bargain basement price, less than half its estimated value at the time, significantly slashing proceeds to charities named in her will."

• "Ill and infirm -- this woman supposedly signed papers while hospitalized and in the last month of her life -- raising grave doubt the agreement reflected her true wishes. This decision restores moneys rightfully belonging charities -- as well as charitable intentions. My office will continue to carefully monitor estates, intervening when appropriate to assure that the wishes of the deceased are respected and realized."

LA Man Charged With Stealing, Flipping House; Girlfriend Accused Of Notarizing Falsified Documents Used In Deed Theft

In El Monte, California, KTTV-TV Channel 11 reports:

• A Los Angeles city firefighter who works as a part-time real estate broker and his ex-girlfriend pleaded not guilty [...] in connection with an alleged real estate scam. Brent Lamont Mathews, 43, is charged with six counts of forgery, three counts of attempt to file a false or forged instrument and two counts of grand theft, according to the Los Angeles County District Attorney's Office. Joi Rochelle Smith, 33, a notary public who was Mathews' girlfriend at the time of the alleged crimes, faces the same charges.

• Prosecutors allege that Mathews put himself on the title of a Hacienda Heights property without the owner's knowledge or consent through a series of forgeries and false filings. Mathews allegedly went on in 2008 to defraud two investors he had solicited as partners to flip the house and who collectively lost $146,000, according to the District Attorney's Office. Smith is accused of notarizing key documents, enabling the illegal transactions, according to prosecutors. Mathews sold the property for $699,000 and netted $203,969, though none of the proceeds from the sale were used to satisfy the trust deeds or to benefit the property owner, according to the District Attorney's Office.

Source: LA Firefighter Facing Scam Allegations (Man, ex-girlfriend charged in real estate case).

Minnesota Man Dodges Add'l Jail Time For Swindling Dying Mom; Pocketing Proceeds Of Home That Subsequently Fell Into Foreclosure Among Bad Acts

In Duluth, Minnesota, the Duluth News Tribune reports:

• A Twin Cities man has been sentenced to time served and nearly $10,000 in fines and restitution after pleading guilty to swindling his dying mother in Duluth, including draining her bank accounts of more than $170,000. Errol John Gilbertson II, 31, of Woodbury, Minn., told police he used his mother's money because of his addictions to methamphetamine and gambling, according to the criminal complaint.

• His mother, Vicki Gilbertson, was diagnosed in January 2007 with brain cancer and suffered from dementia and aphasia. At the time of her cancer diagnosis, she had more than $160,000 in bank accounts, according to the complaint. When she died at age 58 on July 22, 2007, Vicki Gilbertson's bank accounts had negative balances totaling nearly $11,000.

***

• [Among his bad acts,] Gilbertson refinanced his mother's home and received an equity check for about $30,000. The home was refinanced for $112,000 and payments were not made. The home is in foreclosure.

For more, see No prison for swindler of dying mom. DeedContraTheft

Minister, Wife Charged Of Duping Elderly Man Into Signing Over Home; Subsequent Refinancing, Failure To Make Payments Leave House In Foreclosure

In Ventura, California, the Ventura County Star reports:

• The pastor of the Solid Rock Christian Center in Ventura and his wife were arrested Thursday for allegedly duping an elderly man into signing over the deed to his home. Alonzo Gene McCowan, commonly known as the Rev. Lonnie McCowan, 49, was charged with two counts of theft from an elderly person and two counts of money laundering in an amount that surpassed $500,000, according to a felony complaint. His wife, Kimberly Ann Oglesby McCowan, 45, is charged with one count of grand theft and one count of money laundering in the same complaint.

***

• Alonzo Gene McCowan is accused of taking advantage of Leo Gilmond, now 86, by getting him to sign over the deed to his Ventura house in October 2004. In exchange, the pastor promised to pay Gilmond $460,000. McCowan told Gilmond “he wanted to buy the home so he could use it as a rental for church dignitaries and students,” according to an affidavit filed by Frank Huber, investigating officer for the Ventura County District Attorney’s Office.

• When negotiating the purchase, McCowan told Gilmond he needed a signed grant deed that “would be held in the church office solely for the purpose of verifying the purchase of the property to church leaders and to demonstrate his authority to rent the property,” the affidavit states. It adds that Gilmond “knew signing a grant deed was risky but he trusted (A. McCowan) because he represented himself as a religious man; it was these religious representations that made Gilmond more trusting of (A. McCowan).”

• In the years that followed, the McCowans made installment payments totaling $10,000 according to the agreement, said investigators. A balloon payment of $450,000 was due in January 2008. When Gilmond tried to collect it, he found his home was in foreclosure, according to court records. According to the investigator, “Gilmond was in disbelief. (A. McCowan) admitted to Gilmond that he had taken out a $420,000 loan on the property and had lost the money in the stock market.”

• McCowan offered to continue the monthly payments while he worked with the bank but Gilmond went to his son, Gary Gilmond, and attorney Greg Jones to find out how McCowan was able to take out the $420,000 loan, according to the affidavit. They learned the McCowans had withdrawn $420,000 in equity by refinancing the property in Kimberly McCowan’s name.(1)

For more, see Pastor arrested in bilking of senior (Deed to Ventura home signed over).

For story update, see Judge cuts bail for the Rev. McCowan, who is charged in theft.

(1) For the McCowans to have obtained $420,000 in refinancing proceeds, the $450,000 payment the elderly homeowner was due to receive on the purported home sale was either unsecured by a mortgage/trust deed on the home he sold, or, if secured, the security agreement may have contained some form of subordination clause making it inferior in priority to any future mortgage/trust deed (thereby enabling the McCowans to refinance out $420,000 with a first mortgage and leaving the unwitting elderly homeowner in second position). DeedContraTheft

Jury Finds Central Florida Couple Guilty Of Grand Theft For Tricking Elderly Widow Into Signing Away Title To Her Home

In New Port Richey, Florida, the St. Petersburg Times reports:

• To Cynthia and Joseph Clancy, it wasn't enough to spend Eloise Mudway's savings, take her home and isolate the elderly widow from her friends. Mudway didn't die fast enough for the couple, Assistant State Attorney Mike Halkitis told jurors on Monday. He said Cynthia Clancy told Mudway's new caretakers: "If she gets ill, don't call EMS. Let her die."

• After hearing a week's worth of testimony and deliberating an hour and a half, a jury convicted the Clancys on Monday afternoon of grand theft of a person aged 65 or older. During a six-day trial that included emotional testimony from Mudway, now 92, the prosecution said the Clancys tricked Mudway into signing over the deed to her Hilltop Drive home. The couple also emptied Mudway's bank account, then sent her to live with friend Jeff Kores and his wife after the elderly widow had a heart attack in 2004.

For more, see Pasco County couple convicted of stealing from elderly woman.

See also The Tampa Tribune: Pasco couple face up to 30 years for bilking elderly woman. DeedContraTheft FinancialAbuseOfElderlyAlpha

New Jersey Landlord Beats Back RICO Suit Charge That Renting To Illegal Immigrants Constitutes "Harboring"

In Plainfield, New Jersey, myCentralJersey.com reports:

• A federal judge has denied an appeal of an earlier decision to dismiss part of a landmark lawsuit that challenged the rights of landlords to rent apartments to illegal immigrants. The suit, brought last July against the city-based Connolly Properties Inc., alleged that the company systematically marketed and rented apartments to illegal immigrants and kept them generally separate from other tenants. Citing RICO (Racketeer Influenced and Corrupt Organizations) statutes, which most commonly are used to target organized crime, the suit alleged that the practice constituted "harboring" aliens or helping them avoid detection by federal authorities.(1)

***

• Presiding Judge William J. Martini, sitting in Newark, last week said in a decision letter to counsel that to be considered harboring, an entity's activities must "prevent government authorities from detecting (an) alien's unlawful presence." He said the activities alleged in the suit do not meet that description. "The only behavior that even comes close ... (is) segregating the illegal aliens from the other residents," Martini wrote, "but even this falls short of the overt types of behavior that the case law has recognized as preventing the government from detecting the presence of illegal aliens."

For more, see Appeal denied in landmark suit involving Connolly Properties.

(1) Reportedly, the case drew direct involvement from two national law groups, as the Washington, D.C.-based Immigration Reform Law Institute, or IRLI, sided with the plaintiffs in the case and the New York City-based LatinoJustice PRLDEF (formerly the Puerto Rican Legal Defense and Education Fund) sided with the defendants.

Title Agent Cops Plea To Illegally Dipping Into Escrow Funds From Real Estate Closings; "Katrina" Credited For Slamming Brakes On Ponzi-Style Scam

In New Orleans, Louisiana, the Times Picayune reports:

• A 68-year-old Metairie man pleaded guilty Wednesday in federal court to wire fraud for his role in a local refinancing scheme, authorities said. Hubert Edward Ellzey Jr. acknowledged that, as an independent title agent for Commonwealth Land Title Insurance Company of Louisiana, he wired money from the refinanced properties to a special escrow fund, court records show. He dipped into this account and used the money for personal use [...], according to a news release from U.S. Attorney Jim Letten's office. Ellzey also used the company money from future home closings to pay off some of the previous loans he should have canceled.

• The scheme was unearthed shortly after Hurricane Katrina because all the closings came to a halt and Ellzey was unable to account for the money he had taken, Letten's office said. In all, Ellzey defrauded his employer of about $775,000. He is scheduled to be sentenced in January.

Source: Title agent pleads guilty to misusing money in wire fraud case. EscrowRipOffKappa

Title Agent Admits To Stiffing Existing Lienholders In Real Estate Closings; Pocketed Cash Due Lenders, Wrote & Sold Phony Secured Notes, Kited Checks

From the Office of the FBI (Louisville, Kentucky Field Office):

• Candace Hill, United States Attorney for the Western District of Kentucky, announced that Wavy Curtis Shain, age 26, of Louisville, Kentucky, pled guilty on September 18, 2009, to nine counts of wire fraud, and one count of bank fraud.

• Shain pled guilty to using businesses he owned and operated, Derby City Title and Capital Distribution, LLC, to perpetrate fraudulent schemes on various lending institutions and mortgage companies. The schemes perpetrated by Shain included misappropriating substantial amounts of loan proceeds received by him on behalf of borrowers using Derby City Title to obtain loans to purchase homes or to refinance existing home loans, and, by doing so, failing to pay off existing loans and mortgages held by previous lenders.

• Additionally, Shain pled guilty to preparing false and fraudulent notes and mortgages purportedly associated with the purchase of houses and selling these instruments to willing buyers. Lastly, Shain plead guilty to perpetrating a check kiting scheme using business accounts maintained with US Bank and BB&T Bank.

For the entire FBI press release, see Louisville Man Pleads Guilty to Defrauding Loan Companies and Banks. EscrowRipOffKappa

Attorney/Ex-Georgia Lawmaker Gets Six Years In Sale Of Forged Title Insurance Policies To Unwitting Homebuyers; 180 Files Involved, Says Underwriter

In Carroll County, Georgia, the Times Georgian reports:

• A Carroll County attorney was sentenced [last week] to six years in prison after he pleaded guilty to 57 counts of theft by taking and forgery. Charles A. Thomas Jr., who at one time represented the city of Temple and the Carroll County Board of Education and formerly served in the Georgia House of Representatives, had been under investigation by the Georgia Bureau of Investigation since June 2008. That’s when agents received information that he had sold forged title insurance under the guise that he was an agent for Stewart Title Guaranty Co.

***

• According to investigative reports, Thomas had the authority to sell insurance under Stewart Title until March 2004 when that right was terminated for undisclosed reasons. Thomas then continued selling title insurance through forged Stewart documents and collected the premiums himself.

• In one of the 11 felony counts, Thomas reportedly sold fraudulent title insurance to Jack and Susan Waller of Alma in February 2006. “We had been living in our new home for several months when the mortgage company notified us that we didn’t have title insurance. They were blaming us, so we were very frustrated and it took several days for everyone to figure out what was going on,” Susan Waller said. “He was so relaxed the day of the closing and while we were signing the papers he was very chatty. I think he probably is going where he needs to be and I’m just glad he pleaded guilty.”

***

• Carol V. Clark, who represented Stewart Title during the case, said that there was no way that Thomas simply made a mistake. “He was sent notification by certified mail detailing the fact that he had no right to sell title insurance,” Clark said. “So far, we have identified 180 different files involved in the case and we are working diligently to resolve all of the claims.”

For the story, see Attorney sentenced to 6 years for theft, forgery.

Just Showing Up Buys Financially Troubled Homeowners Three Extra Months On Sarasota's Foreclosure "Rocket Docket"

In Sarasota County, Florida, the Sarasota Herald Tribune reports:

• Florida "rocket dockets" have earned the reputation as a cold, heartless place where a lender can retake someone's home in less than two minutes. And in most cases, that's true: The judge orders the house sold in 30 days in a rapid-fire proceeding designed to speed through thousands of uncontested foreclosures clogging the court system. But in Sarasota County, the judge has started cutting a break to troubled homeowners who simply show up at the courthouse, giving them an extra three months to try to save their home or prepare to move out.

***

• [Judge Harry] Rapkin can only do so much. By this point in the legal process, the homeowners have not raised any defense to the foreclosure suit for months. "If they've got their ducks lined up, I can't deny" the lenders, Rapkin told one homeowner Friday morning. Rapkin still gives the lender a final judgment. But instead of setting the sale 30 days out, like in those cases where the homeowner does not show, Rapkin gives more time to those who show up in court. "I can give you 120 days," Rapkin told one woman who came to court Friday. "In the meantime, hire an attorney."

***

• The attorneys for lenders are not complaining about the extension, because many of the banks are in no hurry to retake homes, 12th Circuit Chief Judge Lee Haworth said.

For more, see Homeowners can slow down 'Rocket Docket'.

Veteran Fraudster Gets 97 Months For Running Realty Scams; Bogus Sale Leaseback Foreclosure Rescue Deals Among Rackets Resulting In $1M+ In Losses

From the Office of the U.S. Attorney (New Jersey):

• A Phoenixville, Pa., man was sentenced to 97 months in prison [...] for his leadership role in operating two Ponzi schemes upon members of a Toms River church, which resulted in total losses of more than $1 million, Acting U.S. Attorney Ralph J. Marra, Jr., announced. U.S. District Judge Joseph H. Rodriguez also ordered Terence Mayfield, 47, to serve three years of supervised release upon the completion of his prison term.

***

• According to the Information, Mayfield operated two frauds from November 2006 through July 2008. In Count One, Mayfield is charged with mail fraud in connection with his scheme to defraud numerous members of The Church of Grace and Peace of more than $1 million through a phony real estate investment scheme.

• Count Two charges Mayfield with wire fraud relating to his scheme to defraud three sets of homeowners, who participated in three “foreclosure bailouts” purportedly involving two properties in Georgia and one in Pennsylvania, of more than $75,000.(1)

For the entire U.S. Attorney press release, see Phoenixville, Pa., Man Sentenced to 97 Months in Federal Prison for Operating Ponzi Schemes Upon Members of a Toms River Church.

See also, The Philadelphia Inquirer: Pa. man sentenced to prison for Ponzi scheme at church:

• This was not Mayfield's first fraudulent venture. In 2005, he was sentenced to two years' probation for a Ponzi scheme in Philadelphia in which eight victims reported losing $198,000, Smith said. In October, he was indicted on securities-fraud charges in Delaware, accused of taking money from two investors who had trusted him with a combined $225,000, state Deputy Attorney General Greg Strong said.

(1) The press release states that, in regards the foreclosure rescue scam, Mayfield admitted that he solicited potential investors to invest in the program he referred to as “foreclosure bailouts.” To induce these individuals to invest in this program, Mayfield explained that the investor would buy the home of a homeowner who was at risk of foreclosure and then lease the home back to the homeowner for a two-year period. The homeowner would then use a portion of the proceeds to pay the investor an “investment fee” and Mayfield a “broker’s fee.” Additionally, the homeowner would place two years’ worth of rent payments into an escrow account, which would be maintained by Mayfield, as a security deposit. At the end of the two-year period, Mayfield explained, the homeowner would have the opportunity to repurchase the home from the investor.

Mayfield made substantially the same representations to homeowners with a significant exception: That the escrow account funds would not serve as security for the investor, but rather would be “drawn down” on a monthly basis and used to pay the homeowner’s monthly rent payments. Mayfield admitted he did not maintain the funds in escrow, but instead pocketed the funds for his own benefit.

A Cautionary Tale On Assumed Mortgages

Ever wonder what the risks are of selling your home in a deal that allows the buyer to take over the payments on your existing mortgage?

A Philadelphia Inquirer opinion columnist and editorial page editor recently detailed a personal situation involving a mortgage he had on a home that he sold back in 1994 that came back to bite him some 15 years later.

For the story, see A cautionary tale about assumed mortgages (Or, Why Americans get so angry when there's a bank in the mix).

Blanket Receiverships Coming To Florida's Treasure Coast?

In Stuart, Florida, TC Palm reports on another financially strapped condominium association being screwed over by rent skimming, deadbeat landlords who are pocketing rents paid to them by their tenants and refusing to pay the monthly maintenance fees for their units:

• The Whitemarsh Reserve Homeowner’s Association in Martin County is now facing this grim scenario with some of its owners, who are under foreclosure by the association, owing it more than $10,000 in delinquent fees. So its members are following the lead of dozens of other associations across the state and trying a new legal approach to solve this problem.

• The Whitemarsh association is the first on the Treasure Coast to ask a judge for a court order to force delinquent landlords to turn over rent payments to the association. The association filed a petition [...] seeking what’s being dubbed as a “blanket receivership.” If approved, this would require tenants of these delinquent landlords to pay their rent to a court-approved, third-party receiver instead of the landlord. The association itself would not be in receivership, only those units that are under foreclosure by the association and occupied by a tenant paying rent.

***

• In the past, solving this problem would have been cost-prohibitive for most associations because the receivership approach was used mainly on a unit-by-unit basis, [association attorney Ben] Soloman said. But the [Miami Beach-based] Association Law Group pioneered the group, or “blanket,” approach allowing a receiver to collect rent on an ongoing basis from all owners who fail to pay maintenance fees. “It’s not a new law, but we’ve reinterpreted the existing law to get a practical remedy for our clients,” he said.

• More than 11 different lower courts across the state have approved this method, granting blanket receiverships to more than 30 associations. And one of Florida’s appellate courts also has upheld this method.(1)

For the story, see Homeowners association first in area trying to force those delinquent in paying fees to turn over rent instead.

Go here for other stories on blanket receiverships.

(1) Reportedly, the first of these receiverships was granted in March to a condo association in Miami Gardens. Officials said in the first month of the receivership program, that association more than doubled its monthly income. By 60 days, it was restored to its regular assessment receivable level.

Use Of "Blanket Receivership" By Florida Condo Associations In Struggle To Stay Afloat Continues; Rent Skimming, Deadbeat Landlords Left Furious

In Tampa, Florida, The Tampa Tribune reports:

• Each month, Judd Tyler, the president of his townhome association, discovers his community doesn't have enough money to pay all of its bills.(1) So the townhome board took action. It is among the first in the area to obtain a court order to force delinquent landlords to turn over rent payments to them. [...] The court order, signed late last month, grants what's called a blanket receivership. It requires many of the tenants to pay their rent to a court-approved, third-party receiver instead of the landlord. In fact, it's against the law for the landlord to collect rent until all past-due fees and legal costs are paid.

• The blanket receivership method is catching on, and at least 25 other associations in Florida are using them. Legal experts expect many more to follow suit. In some cases, associations are owed hundreds of thousands of dollars. "When a good idea begins to work, others tend to follow," said Peter Dunbar, a Tallahassee lawyer and former Bay area legislator.

***

• The blanket receivership method is spreading through the legal community, although it is unclear how many associations have asked for or received such an order. Ben Solomon, at attorney with Association Law Group in south Florida, said his firm came up with the new legal tool by "reinterpreting" existing statues. [...] With the blanket receivership method, a homeowner's association can file one petition to cover every unit with past-due assessments, as long as the association has already filed for foreclosure. "It's affordable for the condo association because one petition covers all the units that qualify," Solomon said. "Every time the association files another foreclosure, it's eligible for receivership."

• Solomon said his firm wasn't sure how judges would interpret their petitions and have been pleased so far. Landlords, however, are furious to learn about the court order. One even tried to have the decision overturned.

For more, see Some deadbeat landlords must forfeit rents to condo associations.

Go here for other stories on blanket receiverships.

(1) Reportedly, more than half of the 84 unit owners are stiffing their association out of the $300 monthly maintenance fee.

Florida Bar To Consider Review Process For Ethics Breaches By Attorneys Bringing Foreclosure Actions Filed w/ Errors, False Statements

The Sarasota Herald Tribune reports:

• The state group that disciplines lawyers is debating how to deal with reports of attorneys using errors and false statements to retake property in foreclosure cases.(1) [...] A section of The Florida Bar that seeks to give everyone equal access to the courts says stories like those prompted it to push for a special committee to review any ethical violations in foreclosure cases.

• The Equal Opportunity Law section will present its case Friday at the Board of Governor's meeting that letting the behavior go will hurt the image of attorneys. And the resolution will be reviewed and a committee that looks at attorney discipline.

For more, see Foreclosure lawyers scrutinized for ethical violations.

(1) Reportedly, a study this summer that looked at the Sarasota County civil courts system found three of four foreclosure cases that went forward without the proper paperwork. And one Sarasota judge, after the attorney for a foreclosing lender assured her everything was in order, happened to glance at foreclosure paperwork and realized the two properties were in Miami, a few hundred miles outside her jurisdiction, according to the story.

Lack Of Resources, Capabilities, Knowledge Or Manpower Doesn't Stop Some Operators From Pocketing Upfront Fees For Bogus Loan Modification Services

ABC News reports:

• The housing crisis has left millions of homeowners desperately trying to avoid foreclosure, but their plight is only made worse by schemers who promise help but instead seek only to scam. Now the Obama administration is highlighting its multi-agency effort to stop these scams.

***

• One such company targeted by authorities is Nation's Housing Modification Center,(1) a California loan modification company that had civil charges filed against it Wednesday. The company was the subject of a recent ABC News investigation. Former employees of the company told ABC News that it was little more than a "boiler room" operation filled with telemarketers reading from a special script targeted at anxious homeowners facing foreclosure. "They're convincing people to give money to them in advance, promising to do something that they're not doing, that they don't even have the resources, capabilities, knowledge or manpower to do," said former employee Tom Fatica, who said he was fired from NHMC after he questioned the absence of the attorneys and accountants who were supposed to help homeowners.

• Civil charges were also filed against another California company, Infinity Group Services of Orange County.(2)

For more, see Fighting Mortgage Scams: Governments Team Up (State and Federal Officials Try to Stop Scammers Who Prey on Those Facing Foreclosure).

For the FTC press release announcing the two recent lawsuits against these loan modification outfits, and updates on previous suits filed against other firms, see FTC Announces New Enforcement Actions In Continuing Crackdown On Mortgage Relief Services Scams.

(1) For the lawsuit, see FTC v. Federal Housing Modification Department, Inc. (doing business as Nations Housing Modification Center and Loan Modification Reform Association; other defendants: Michael A. Trap, Glenn Rosofsky, and Bryan Rosenberg).

(2) For the lawsuit, see FTC v. Infinity Group Services (d/b/a IGS, Hope to Homeowners, ASKIGS, and ASKIGS, Inc.; other defendants: Kahrami Zamani, individually and as an officer of Infinity Group Services).

Effort To Reign In Loan Modification Rackets "A Giant Game Of Whack-A-Mole"?

Pro Publica reports on the difficulties authorities around the country are having reigning in loan modification rackets, and shines light on one firm that continues peddling its services, despite a flood of homeowner complaints and a number of legal actions brought by various state authorities:

• In a giant game of whack-a-mole, law enforcement agencies at all levels across the country have filed suit against 150 such companies, but they continue to proliferate, and the number of consumer complaints continues to rise. “This is a very big scam,” says California Attorney General Jerry Brown. “They’re all over the place, and as soon as you get one, they migrate to somewhere else.”

• The case of one particularly aggressive firm, 21st Century Legal Services, shows just how ineffective authorities’ moves against the companies often are. Four states have sued 21st Century, and at least three more have open investigations. Over 150 consumers from more than 30 states have filed complaints against 21st Century with the Better Business Bureau. No active firm has more complaints.

• Yet the company forges on. Operating under a new name, Fidelity National Legal Services, it continues to solicit consumers nationwide, even in states where authorities have won court injunctions.

For more, see Why Authorities Haven’t Stopped the Foreclosure ‘Rescue’ Boom.

Oregon AG Indicts Mtg Broker/Loan Modification Firm Owner For Allegedly Cheating Homeowners In Foreclosure; Aggravated Theft, Forgery Among Charges

From the Oregon Department of Justice:

• Attorney General John Kroger [...] announced the indictment of a Salem mortgage broker on charges of mortgage fraud, aggravated theft, forgery and identity theft. It is is the first indictment by the Attorney General's Mortgage Fraud Task Force. "We intend to prosecute mortgage fraud aggressively. If you cheat vulnerable Oregonians facing foreclosure, we will hold you accountable," said Attorney General Kroger.

• Julian James Ruiz III, 38, is the manager and owner of American Home Modifications, a Salem-based loan modification company. He faces 17 counts of first degree aggravated theft, mortgage fraud, identity theft, aggravated identity theft, forgery in the first degree and criminal possession of a forged instrument in the first degree.

For the entire press release, see Mortgage Broker Indicted For Fraud (First indictment by the Attorney General's Mortgage Fraud Task Force).

Mortgage Servicers Drifting Into Upfront Fee Loan Modification Scam Racket??? Media Intervention Helps Undo Screwing Over Of Two Arizona Homeowners

In Phoenix, Arizona, KPHO-TV Channel 5 reports:

• Many homeowners say their banks won't call them back regarding a loan modification; however, some homeowners are paying hundreds of dollars for a loan modification only to have the bank foreclose on them.

• Valley resident Miguel Lozania said he was approved for a loan modification, so he signed his paperwork and sent the bank the $900 fee. "It sounded like it was going to work," he said. "I even got a letter from IndyMac Bank saying they were going to do a modification." IndyMac foreclosed on his house anyway, selling the home for $70,000. Lozania's original loan was for $205,000.

• Another Valley resident, Joan Hoyt, said she wanted to refinance her loan before the interest rate on her current mortgage reset. Her lender, Washington Mutual, said it just needed a $750 application fee; Hoyt paid it. As it turned out, Washington Mutual did not offer the type of loan Hoyt applied for. The bank did not offer a refund of the application fee.

• Homeowners across Arizona have written to 5 Investigates to complain about lenders losing modification documents, changing requirements for modifications and being unable to answer basic questions about the process. Arizona Attorney General Terry Goddard stopped short of saying the banks' behavior is criminal; however, he called the complaints "very troubling." "It may constitute deception on the part of the individual company that's leading these people along," he said.

• Goddard said his office is swamped with complaints that he believes many of the larger banks should have been prepared for. "What we're seeing is a financial industry that doesn't want to handle this problem," he said. He also encouraged people who are having trouble with their modifications to contact his office.

• As for Lozania, five hours before the story was set to air Monday, a spokeswoman for IndyMac's new owner One West Bank called 5 Investigates to say the company had made a mistake, and they are rescinding Lozania's foreclosure. Washington Mutual refunded $750 to Hoyt after 5 Investigates contacted the bank about the investigation.

Source: More Loan Mod Problems Reported (Ariz. AG Terry Goddard: Complaints 'Very Troubling').

Connecticut Law Now Bans Upfront Fees, Requires Licensing & Bonding When Offering Loan Modification Services

In Hartford, Connecticut, The Day reports:

• For the first time in Connecticut, firms and individuals offering debt relief they negotiate with a consumer's creditors will need to be licensed and will be prohibited from charging upfront fees.(1) A new law that goes into effect Thursday is designed to stop a growing number of scams by so-called “debt negotiators” who fraudulently claim to help consumers repay household debt, or credit card or mortgage debt, but instead charge hefty upfront fees, never reduce the debt and sometimes disappear - leaving the already-burdened consumer with even more expenses, and at times an even bigger debt load.

• Attorney General Richard Blumenthal, who authored the new consumer-based legislation, said he's handled more than 100 complaints involving debt negotiators within the past year alone. And he said he's investigating as many as 10 firms for allegedly fraudulently promising to help consumers repay household or credit card debt or a delinquent home mortgage. He declined to name the companies.

For more, see Connecticut clamps down on 'debt relief' companies.

(1) Among other protections and reuirements are: Filing a surety bond, Not refer to state licensing or bonding as an endorsement, Disclose 10-year criminal history on license application, Evaluate likelihood of success in reducing debt or saving a home before contracting with the consumer, Sign a written agreement with the consumer, Provide complete list of services, costs and results to be achieved, Perform services outlined in contract before charging fees, Adhere to fees regulated by the state banking commissioner, Allow a 3-day right of rescission for the consumer to cancel the contract, Comply with state law or have the contract voided and subject to enforcement.

Calif. Bar Official: "The Number Of Attorneys Using Their Law Licenses To Essentially Take Money From Unwary But Trusting Consumers Is Astounding!"

From a recent press release from The State Bar of California:

• The State Bar of California, alarmed by the number of lawyers preying on vulnerable homeowners, [last week] identified 16 attorneys who are under investigation for misconduct related to loan modification. “In my 21 years in attorney discipline, I have not seen a crisis of this magnitude. It is truly unprecedented,” said Interim Chief Trial Counsel Russell Weiner, who is waiving investigation confidentiality in favor of public protection. The waiver, allowed by law, is used only occasionally, but Weiner said the seriousness of the problem demanded a strong reaction by the bar in order to protect consumers. This is the first time the names of more than a few lawyers being investigated have been made public.

• “The number of attorneys using their law licenses to essentially take money from unwary but trusting consumers is astounding,” Weiner added. “There are literally thousands of victims who have lost money they could not afford to lose. Under the circumstances, the need for public information and protection is paramount.”(1)

For more, including the list of the 16 attorneys and their law firms currently the target of a State Bar probe into homeowner complaints about loan modification services, see State Bar takes action to aid homeowners in foreclosure crisis.

For more on the efforts of The State Bar of California in fighting loan modification foreclosure rescue scams engaged in by its members and others, see:

• Punishing Attorneys Offering Bogus Loan Modification Help To Financially Strapped Homeowners A Priority For Incoming State Bar President,
• ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications.

(1) The State Bar suggests that consumers be wary of attorneys offering loan modification services under any of the following circumstances:

• Advertisements of the office do not expressly identify by name the attorney who is responsible for the business;
• Office staff will not readily identify by name the attorney responsible for oversight of the business;
• The attorney in charge of the office is too busy or not willing to meet personally with prospective clients;
• The firm advises a consumer to stop paying the existing mortgage;
• The business, through its advertisements or claims of its representatives, makes claims that sound too good to be true, such as claims of a 90 or 100 percent rate of success in obtaining loan modifications, or claims that a reduction in the mortgage principal is likely to be achieved;
• The business demands payment of a large fee, even before obtaining a prospective client’s basic income and expense information, and information about the existing mortgage and present home value;
• The attorney responsible for the business is not licensed to practice law in the state where the consumer resides.

Nevada AG Calls For More Criminal Prosecutions & Jail Time For Loan Modification Scammers

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

• Nevada ranks number one in the nation for mortgage modification scams. Most of the resources in the Nevada Attorney General's Office have been dedicated to tracking down and prosecuting fraudulent loan modification companies. [...] Right now, the AG's office in Las Vegas has complaints against 128 loan modification companies and has dozens more under investigation.

• Chief Deputy AG John Kelleher says each company has anywhere from 20 to 200 loan modification victims each. [...] Kelleher says he now spends 90-percent of his time putting together complaints against loan modification scammers. He says in one case they served search warrants and the company owner flew to the Philippines. The FBI is tracking that person down right now.

• Attorney General Catherine Cortez Masto wants the scammers to know there is nowhere in the world they can hide. "We are going to hold them accountable. It's a crime to come into this state and take advantage of people who are already victimized because of the economy," she said. The AG wants to charge these companies on anything from theft to mortgage fraud to racketeering. If convicted, the people doing loan modification scams could spent two to 20 years in prison per count. There are an estimated 14,000 victims in Las Vegas. "If you are working in this industry and you are defrauding people, we are going to find you. We are going to prosecute you and we are going to seek jail time," said Kelleher.(1)

For the story, see Nevada AG Targeting Mortgage Modification Scams.

(1) Up until now, the vast majority of prosecutions of loan modification scammers by the various state attorneys general around the country, as well as by the Federal government, have been in the form of civil lawsuits. Civil suits, while easier to bring and win in court for the prosecuting agency than criminal actions (due to the lessened burden of proof in presenting a case), offer no threat of felony conviction and jail time for the scammer.

Michigan AG Criminal Prosecution Yields Guilty Pleas From Three Outfits For Bogus Loan Modification Services

In Lansing, Michigan, The Bay City Times reports:

• Victims of foreclosure fraud schemes by three Michigan companies will be able to receive refunds, state Attorney General Mike Cox announced [...]. SaveMyHome USA, Payment Doctors and the Michigan Economic Reinstatement Program each pleaded guilty to one count of violating the Michigan Credit Services Protection Act, Cox said in a press release.

• According to an undercover investigation by the Attorney General's office, the three companies charged borrowers upfront fees as part of mortgage modification assistance to homeowners facing foreclosure. Charging the fees upfront is prohibited by law, Cox said. The companies claimed they would help homeowners keep their homes by working with their lenders, but in many cases, were unable to do so, and the victims could not get their money back. The companies, which are based in southeast Michigan, had customers all around the state.

Source: State Attorney General seeks to refund victims of foreclosure fraud.

For the related Michigan AG press releases, see:

• Victims of Foreclosure Rescue Fraud to Receive Refunds,
• Cox Charges Five for Foreclosure Rescue Fraud.

Long Island-Based Loan Modification Firm Faces Attack From Both NY AG & Homeowner Class Action Suit For Allegedly Peddling Bogus Foreclosure Help

In New York City, Fox 5 News recently ran a story on Amerimod, a Long Island-based loan modification operator whose activities have prompted a lawsuit in August by New York Attorney General Andrew Cuomo's office, as well as a class-action lawsuit by homeowners in July.

For the story, see Foreclosure Rescue Company Lawsuits.

For the lawsuits filed against Amerimod, see:

• New York AG lawsuit: People v. Amerimod, Inc., The American Modification Agency Inc., and Salvatore Pane, Jr.,
• Class action lawsuit: Joseph, et al. v. The American Modification Agency Inc., et al.

Go here for Amerimod's Answer To Amended Complaint in homeowners' class action lawsuit.

Slumbering Foreclosing Lenders Unable To Document Loan Ownership Beginning To Face Complete Wipeout Of Mortgage Interests Thru "Quiet Title" Actions?

A recent story in The Huffington Post on the "Produce The Note" strategy of defending against foreclosure actions contained the following tidbit:

• In Florida, Jacksonville Area Legal Aid attorney April Charney has been using the missing-note argument since she first identified the lenders' weakness in 2004. She began arguing that those initiating foreclosure proceedings on behalf of securitized pools of mortgage loans had no right to do so, because they couldn't prove they actually owned the debt.

• Five years later, some of those homeowners are still in their homes, she says. Because of the missing ownership documentation, Charney is now starting to file quiet title actions, hoping to get her homeowner clients full title to their homes (a quiet title action "quiets" all other claims).(1)

Source: Who Owns Your Mortgage? "Produce The Note" Movement Helps Stall Foreclosures.

Go here for other posts referencing the work of attorney April Charney.

(1) An earlier post (see Using Statute Of Limitations To Wipe Out Lenders' Right To Foreclose A Mortgage?) referred to a December, 2008 story reported on msnbc.com which alluded to Charney's intent to apply the Florida statute of limitations (see Sec. 95.11(2)(c), 95.281(1)(a), Florida Statutes) to terminate a foreclosing lender's right to foreclose when her clients' cases became ripe for such an attack:

• Charney said that in a number of her cases, once there is no longer an ability for the loan servicer to profit, the foreclosure “just goes to sleep, and unless I’m going to pursue it, nobody’s setting hearings, nobody’s pursuing anything to get it to trial.”

• After five years, which is the statute of limitations to enforce a contract in Florida, she can try to help her clients own their homes mortgage-free, Charney said. The first opportunity for her to help clients do that may arise next year.

• And that legal limbo is where the lion’s share of her cases stand now, Charney said. So far this year, she has achieved two “workouts” and lost two cases. “Many, many, many” of the rest are in sleep mode or getting a single filing each year by plaintiffs’ attorneys just to keep them alive.

For the msnbc.com story, see 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers) (for the entire story on one web page, try here). EpsilonMissingDocsMtg

Some In Congress Seek To Make "Produce The Note" Strategy Mandatory To Level Playing Field In Defending Against Sloppy Foreclosing Lenders, Servicers

The Huffington Post reports:

• Modern-day home mortgages have been so sliced and diced by rapacious financiers that some homeowners are successfully delaying -- or even blocking -- foreclosures through the simple tactic of demanding that banks produce the original mortgage note, which amazingly enough is often not so easy for them to do. As the foreclosure rate continues to set new highs, a little-noticed legal provision that requires bankers, if challenged, to prove they hold the original mortgage documents before getting possession has spawned a minor homeowner rebellion, alternately called "produce the note" or "show me the note". For homeowners trying desperately to keep their homes, the tactic is one way to buy some time -- and maybe even get the upper hand on the lender.

***

• The fouled-up paperwork or other lack of legal compliance "has resulted in a much higher rate of negotiated [mortgage] modifications" [...], said [North Carolina congressman and House Financial Services Committee member Rep. Brad] Miller. "It gave the homeowner additional defenses and counterclaims that strengthened their hands substantially."

***

• Some in Congress are trying to make it easier for homeowners. Rep. Marcy Kaptur, an Ohio Democrat, introduced a bill in February with Rep. John Conyers (D-Mich.) that would actually prohibit foreclosures unless lenders produced necessary documentation in court, including the note and evidence that the homeowner was, in fact, notified each time the note was transferred.

• "I am encouraging [homeowners] to stay in their homes [and] go through the court proceedings until the institution in question can produce [the] note, because chances are, they can't," Kaptur said in an interview Monday. "Somehow the playing field has to be leveled here, and [the bill] provides a very strong means of doing that." The bill is languishing in the House Financial Services Committee, headed by Rep. Barney Frank (D-Mass.), she said.

For more, see Who Owns Your Mortgage? "Produce The Note" Movement Helps Stall Foreclosures. EpsilonMissingDocsMtg

Connecticut AG: Foreclosures Might Be Void Where Unauthorized Process Servers Are Used To Deliver Legal Papers To Delinquent Homeowners

In Hartford, Connecticut, The Hartford Courant recently reported on state Attorney General Richard Blumenthal slamming some state marshals for charging inflated fees when engaged in process serving in foreclosure actions. Another issue of concern raised by the AG was whether non-marshals were being subcontracted out to deliver the legal papers on the delinquent homeowners.

• Blumenthal also said that [...] state law does not allow the use of non-marshals to deliver most legal papers,(1) comparing the practice to a police officer delegating arrest powers to a non-officer.

***

• [U]nclear is whether any foreclosure actions might be in jeopardy. Blumenthal said that overcharging would not invalidate a lawsuit, but that if legal papers were served on a homeowner by someone other than the marshal who attested that the papers were delivered, then that service might be deemed defective, and that could jeopardize the underlying suit.

For the story, see Blumenthal: Some State Marshals Broke Law By Double-Billing.

(1) According to a recently-issued legal opinion by Attorney General Blumenthal:

• State statutes direct that State Marshals serve legal process without the use of indifferent persons except in narrowly defined circumstances. The sole exceptions to this general rule are for matters where there is express statutory authority for an indifferent person to make service, such as subpoenas, service of notices of lis pendens on a property owner, and service of notices to quit.

• Where there is express statutory authority (such as for service of a subpoena, service of a notice to quit, or service of a notice of lis pendens on a property owner) for use of an indifferent person to make service, the use of an indifferent person is permissible. It is not permissible under any other circumstances.

See: Connecticut AG Legal Opinion issued to Herbert J. Shepardson, Esq., Chairperson, State Marshal Commission (p.19). SewerServiceAlpha

Mortgage Servicer Threatens Foreclosure, Initiates Debt Collection Proceedings Despite Valid Loan Mod Being In Effect, Says Ohio Homeowner In Lawsuit

In Hamilton County, Ohio, The Cincinnati Enquirer reports:

• Carolyn S. Cable thought she had worked out a deal with her mortgage company to save her home from foreclosure after she had multiple brain surgeries and suffered a stroke that made her unable to work. But in a lawsuit filed in Hamilton County Common Pleas Court Friday, the Colerain Township woman alleges that Bank of America reneged on the deal and threatened foreclosure - even sending debt collectors after her. [...] In [her] case, she said a Bank of America representative told her that her loan modification was lost in the computer system.

***

• When she fell behind on her payments in 2008, Countrywide Home Loans - under pressure from the Ohio Attorney General to offer loan modifications - lowered her interest rate and extended the loan term. Her payment went from $524 a month to $401 a month - which Cable said she paid. But then Countrywide went out of business, and Bank of America bought its mortgages. Cable's lawsuit says Bank of America told her the loan modification agreement was still in effect, but then initiated debt collection proceedings against her anyway.

• Cable is represented by the Legal Aid Society of Southwest Ohio. Lawyer Noel M. Morgan also represents a Clinton County couple in an almost identical situation, and said Bank of America's actions have become part of a growing practice by the bank to breach its agreements.

For the story, see Lawsuits: Bank reneged on loan deals.

Conn. AG Slams State Marshals For Double Billing When Process Serving In Foreclosures; Practice Coincided With Possible Attorney Kickback Arrangement

In Hartford, Connecticut, The Hartford Courant reports:

• Attorney General Richard Blumenthal, in a sweeping action against some of the highest-earning state marshals, has concluded that a handful of marshals broke the law when they double-billed for the delivery of papers in foreclosure actions. In a 21-page legal opinion, Blumenthal called on the State Marshal Commission to seek restitution from marshals who overcharged, and he said that his investigation was continuing and could lead to legal action. A Courant story last month reported that marshals collected as much as $1 million in unnecessary fees in foreclosure cases, before the practice was halted this summer. "Piling unlawful fees on property owners facing foreclosure adds both insult and injury," Blumenthal said. "There is a clear and unequivocal message going forward that multiple fees for a single action are illegal and improper and cannot be charged."

***

• The double-billing began in early 2007, with a small group of marshals who regularly worked for the state's two large foreclosure law firms, Hunt Leibert and Bendett & McHugh. The marshals included a three-page lien document known as a lis pendens each time they delivered legal papers in a foreclosure suit, but treated the delivery of that document as an entirely separate action, charging a second service fee and even double-charging for mileage. The practice typically added $30 to $150 to each service. After the fee increases, the firms filed about 30,000 foreclosure suits before abandoning the practice following reports in The Courant and questions from Blumenthal's office. Blumenthal said that not only were the extra fees excessive, but that state law does not even require that the document be served on defendants in a foreclosure suit.

***

• The extra fees in foreclosure cases coincided with an attempt by principals of the two large law firms to set up a separate company, called Connecticut Service Network, that would collect money every time a marshal served a foreclosure suit.(1) In 2007, Blumenthal declared that arrangement illegal. Neither the firms nor the marshals have said why they began charging extra for delivering the lis pendens.

For thr story, see Blumenthal: Some State Marshals Broke Law By Double-Billing.

From the Office of the Connecticut AG:

• Press release: Attorney General Finds Marshals Who Bill Extra For Certain Foreclosure Documents Violate State Law,
• Conn. AG's formal legal opinion to the Chairperson of the State Marshal Commission.

(1) In an earlier story (see Courant Probe: Marshals Charged Unnecessary Fees From 2007 Until Recently), The Hartford Courant reported:

• Principals of the state's two main foreclosure law firms — Hunt Leibert Jacobson and Reiner, Reiner — had quietly set up a private bookkeeping company and were asking marshals to pay money to the new business for every foreclosure suit they served. Marshals working for those firms stood to lose at least half a million dollars a year in payments to the new business, called Connecticut Service Network. But by the time the company started operating, the marshals were offsetting those costs with the extra fees they were charging, The Courant found. SewerServiceAlpha

Final Conspirator In Maryland Sale Leaseback Foreclosure Rescue Scam Gets 46 Months

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

• U.S. District Judge Deborah K. Chasanow sentenced Cheryl Brooke, age 52, of Upper Marlboro, Maryland [...] to 46 months in prison, followed by three years of supervised release, for conspiracy to commit wire fraud in connection with a scheme in which she and her conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

According to Brooke's plea agreement:

• [Miachael K.] Lewis, Brooke, and co-conspirator Winston Thomas specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The goal of the conspirators was to steal the homeowners’ equity out of their property by inducing the homeowners to sell their property to co-conspirator Earnest Lewis and converting sale proceeds to the use of the conspirators. Lewis and his co-conspirators did this by fraudulently representing to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes.

For the entire U.S. Attorney press release, see Final Conspirator Sentenced in Mortgage Fraud Scheme That Targeted Victims Through Local TV Ads (Defendants Ordered to Forfeit Over $2 Million).

For the earlier press releases announcing the sentencing of the three other conspirators, see:

• Winston Thomas: Senior Loan Officer Sentenced in Mortgage Fraud Scheme That Targeted Victims Through Local TV Ads,
• Michael K. Lewis: Leader of Mortgage Fraud Scheme Sentenced to 6 ½ Years in Prison - Targeted Victims with TV Ads,
• Earnest Lewis: Fourth Conspirator Pleads Guilty and Agrees to Forfeit $2 Million in Mortgage Fraud Scheme Targeting Victims with TV Ads.

Loan Officer Gets 37 Months For Role In Maryland Foreclosure Rescue Equity Stripping Scam Peddling Bogus Sale Leaseback Deals To Desperate Homeowners

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

• U.S. District Judge Deborah K. Chasanow sentenced Winston Thomas, age 43, of New Carrollton, Maryland today to 37 months in prison, followed by three years of supervised release, for failure to file federal tax returns and for conspiracy to commit wire fraud in connection with a scheme in which he and his conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

Thomas was one of the participants in the foreclosure rescue, equity stripping conspiracy headed by Michael K. Lewis, and included Cheryl Brooke and Earnest Lewis.(1)

• [Michael K.] Lewis and Thomas, a senior loan officer with a mortgage lender, told the homeowners that the “good credit” of Earnest Lewis would be used to temporarily refinance their homes, that they had to sign their homes over to Earnest Lewis and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes only by paying inflated “rent” and fees, which payments were directly debited from their bank accounts to an account belonging to co-conspirator Cheryl Brooke’s company “In the House Technologies.” Brooke then made payments to Earnest Lewis and Thomas, with the remaining funds being used by Michael K. Lewis and Brooke for their personal benefit.

For the entire press release, see Senior Loan Officer Sentenced in Mortgage Fraud Scheme That Targeted Victims Through Local TV Ads.

(1) For an earlier press release on the sentencing of both Lewis brothers, see Leader of Mortgage Fraud Scheme Sentenced to 6 ½ Years in Prison - Targeted Victims with TV Ads.

Washington Man Gets Two Months For Abusing POA, Leaving Mentally Impaired 78-Year Old Woman Homeless

In Kitsap County, Washington, the Kitsap Sun reports:

• A Bremerton man has been sentenced to two months in jail for a mortgage theft scheme that left an elderly woman without a home, according to documents filed in Kitsap County Superior Court. Tony Thomas, 55, pleaded guilty to second-degree theft Sept. 4. He’s serving 30 days in the county jail, and then must serve another month of jail alternatives, according to the sentence handed down by Judge Anna Laurie.

• Thomas and the elderly woman, who he had power of attorney over, received a $100,000 mortgage in December 2007 for the purposes of remodeling the woman’s home, court documents said.(1) But criminal charges were filed in September 2008 when at least $60,000 of the money came up missing, and the woman lost her home. The woman had decreased mental capacity, the documents said.

Source: Man Sentenced to 2 Months in Mortgage Scam.

(1) According to an earlier story, Bremerton Police detectives said the elderly woman's home had long since been paid for at the time the mortgage was obtained. see Mortgage Scam Costs Elderly Bremerton Woman Her Home.

Illegal Use Of POA To Rip Off Homes, Other Assets Of The Elderly & Vulnerable Now Tougher To Pull Off In NYS ... Hopefully

In New York City, Time Magazine reports:

• Misappropriation of an elderly person's assets by someone legally authorized to oversee them may now be a lot tougher to pull off in the State of New York. New legislation that went into effect Sept. 1 — in the form of a radically changed power-of-attorney (POA) document — couldn't have come at a better time. "Financial abuse is one of the fastest growing areas of elder abuse," says Andrea Lowenthal, an elder-law and estate-planning attorney in New York.

***

• In [some] instances, a health-care aide or housekeeper with ulterior motives might procure a POA and persuade a gullible senior to sign it. The signature of the principal was basically all that mattered then. Now things are different.

For more, see New Legal Protections for the Elderly. FinancialAbuseOfElderlyAlpha

Oregon Regulators To Crack Down On Self-Titled "Specialists" & "Advisers" Having Little Or No Professional Training

In Portland, Oregon, The Oregonian reports:

• State regulators are trying to clamp down on the use of misleading financial services and insurance credentials that they say leave seniors vulnerable to abuse and fraud. The Oregon Department of Consumer and Business Services is proposing new rules that would ban the use of "specialist," "adviser" or similar titles by salespeople who lack legitimate professional training. Salespeople could face fines as much as $20,000 for using designations that aren't backed by organizations with stringent requirements.

***

• "People call themselves all kinds of things they really aren't," said Kevin Anselm, head of enforcement at the department's Division of Finance and Corporate Securities. "It's been more of a problem on the insurance side than the securities side." Among the troubling designations: special senior adviser, real estate specialist and foreclosure specialist.

For more, see Oregon regulators take aim at financial services designations (if link expires, try here). FinancialAbuseOfElderlyAlpha

Calgary Woman Faces Sentencing For Using POA To Sell, Rip Off Proceeds Of, Hospitalized Disabled Cousin's Home & Vehicle

In Calgary, Alberta, the Calgary Herald reports:

• A city woman, ordered by the court last year to repay $180,000 after she bilked her disabled cousin of all his valuable assets, now faces jail time. Joy Marie Barkley, 54, was scheduled to be sentenced [...] on one count of theft over $5,000, but the case was adjourned [...] when a forensic report was not ready.

• Court heard Ron Kaake had given power of attorney to Barkley in 2006 when he was placed in a long-term care facility with complications from multiple sclerosis. But when the bed-ridden man's condition improved after a year in Dr. Vernon Fanning Centre [...], he discovered Barkley had sold his vehicle and condo and then gambled away the proceeds.(1)

For more, see Calgary woman faces jail time after robbing disabled cousin.

(1) According to the story, Crown prosecutor Susan Kennedy told the court that Barkley sold Kaake's 2004 Toyota Sienna to a Calgary dealership just a week after Kaake was hospitalized with serious complications stemming from his chronic illness. Four days later, the woman sold her cousin's home in Cochrane and deposited the proceeds into his bank account, but withdrew the entire amount during the next 12 months and spent the money for personal use. DeedContraTheft