Jury Says St. Pete-Area Foreclosure Rescue Operator Liable For Duping Financially Strapped Homeowner Into Signing Over Home Under Guise Of Help

In Sarasota, Florida, the St. Petersburg Times reports:

• In a "groundbreaking'' case that could be the first of its kind in the nation, a jury this week found that the owner of a St. Petersburg foreclosure rescue company scammed a 60-year-old Port Charlotte woman out of her home. The Sarasota County jury awarded $93,467 to Wanda Costa, who unwittingly sold the house to Gideon Rechnitz for nothing in 2006 even though she had substantial equity at the time. Under the guise of helping her, Costa's lawyers said, Rechnitz and associate Thomas Cook duped her into signing over the deed without making it clear she would still be responsible for the mortgage and thousands of dollars in "commissions.''(1)

• "What the jury did in this case was say 'No' to that kind of behavior,'' said attorney Elizabeth Boyle of Gulfcoast Legal Services, which represented Costa for free. "I hope other people will come forward because they may get some relief, too.''

***

• As fraud proliferates, there has been a growing number of cases nationwide in which judges ruled in favor of homeowners who claimed they were cheated out of their property.(2) Boyle said her research indicated that Costa's case may the first in which a verdict was rendered by a jury. The nonprofit National Consumer Law Center said it did not know if there have been jury verdicts elsewhere.

For more, see Jury finds Rechnitz defrauded widow of her home in a foreclosure scam.

(1) According to the story, Rechnitz, the subject of several St. Petersburg Times articles, is among scores of individuals and foreclosure prevention companies under investigation by Florida Attorney General Bill McCollum.

(2) After a six day bench trial, the Office of the Washington State Attorney General similarly secured a significant award (nearly $4.2 million) from a foreclosure rescue operator peddling sale leaseback deals to, and running "foreclosure surplus" scams on, financially strapped homeowners. The operator entered into transactions with more than 300 property owners, and no one ever successfully regained their home from him, according to the state AG's office [see Pay time for notorious foreclosure rescue scammer (Attorney General announces major victory in state’s case with Washington man who promised help but took homes)].

• “Kaiser’s victims were elderly, disabled or low-income individuals – people who trusted him to solve their foreclosure problems and were betrayed,” [Prosecuting attorney James] Sugarman said. “Kaiser portrayed himself to these people as an expert in saving homes facing foreclosure, when he is actually an expert in taking homes facing foreclosure.”

For more, see Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M.

Cops: Land Grabber Hijacked Vacant Homes, Rented Them To Unwitting Tenants; Used Bogus Adverse Possession Claims, Quiet Title Suits To Swipe Deeds: AG

In North Las Vegas, Nevada, the Las Vegas Review Journal reports:

• Former real estate agent Eric Alpert, whose nefarious business practices were brought to light by the Las Vegas Review-Journal in 2003, has been arrested by North Las Vegas police for renting homes he did not own or have permission from the owner to rent. [...] Alpert, 54, has been charged with four counts of burglary; four counts of theft; four counts of obtaining money under false pretenses; and seven counts of forgery. The district attorney's office said it also plans charges on three counts of offering a false instrument.

• Alpert identified properties that appeared to be abandoned or in foreclosure, cleaned them up and changed the locks, then rented them cheaply to people who had no suspicion of his wrongdoings. He had about 20 homes in Las Vegas, some of them titled to living trusts and under the name of his former business, Sherlock Homes, according to Clark County Assessor records.

***

• Court filings reveal that Alpert apparently continued to engage in real estate activity that's at least similar to what he was doing a few years ago, attorney Mark Connot of Hutchison & Steffen law firm said. Alpert appears to file an action to quiet title on properties, and if the owner does not appear to contest the action, he receives title to the property, the lawyer said. He claimed at that time to be legally taking homes by "adverse possession" under Nevada law, but the attorney general's affidavit notes that NRS 11.150 specifically states that "requirements for adverse possession is occupation continuously for five years" and payment of taxes, which Alpert did not do.

For the story, see: Ex-agent arrested for renting homes he didn't own (Victims lured by cheap rent soon evicted).

For a follow-up story, see Victims of rental scam speak out. KappaPhonyLandlordScam

Minn. Man Charged With Leaving 95-Year Old, Dementia-Suffering Mom Behind In Rent; Accused Of Looting Bank Accounts, Persuading Her To Buy Him House

In Ramsey County, Minnesota, the Pioneer Press reports:

• A 95-year-old Roseville woman, who suffers from dementia, had her bank account frozen and fell behind on rent after her son cashed thousands of dollars in checks from her account, a criminal complaint stated. Joel Allen Berntsen, 58, of Minneapolis, was charged with financial exploitation of a vulnerable adult.

According to the criminal complaint:

• Berntsen told police he borrowed $290,000 from his mother in 2006 to buy a house in North Oaks. She also gave him $2,000 a month for house payments. But in 2008, the home — which was in his mother's name — went into foreclosure. The IRS later notified his mother that she owed $12,928 in back taxes on the home.

***

• In March, Ramsey County Adult Protection said the woman qualified as a vulnerable adult, after a health care worker who took care of her called police because the woman's bank accounts were overdrawn because of the large amount of checks Berntsen cashed. In June 2006, the community organization Lifetrack Resources found the woman to be a vulnerable adult at risk of mental or financial exploitation.

***

• Roseville police discovered that the woman was behind on her rent and that several of her checks had bounced because of insufficient funds. A review of her checking account at North Star Bank disclosed that between April 1, 2008, and March 1, 2009, Berntsen cashed 26 checks — 25 of them payable to himself.

For more, see Man charged with financially exploiting 95-year-old mother (Son, 58, charged with exploiting vulnerable adult).

See also, the Star Tribune: Son accused of duping his mom, 95, out of thousands (The charges say he wrote checks on her account and persuaded her to buy him a $290,000 house in North Oaks). FinancialAbuseOfElderlyAlpha

Stranger Pays Back Taxes On Nursing Home-Bound 92-Year Old Alzheimers Patient's Vacant House, Then Rents It Out In Attempt To Lay Claim To Property

In Boise, Idaho, the Idaho Statesman reports:

• On May 16, 2007, David Foldesi walked into the Ada County Courthouse and paid $8,875.62 in delinquent property taxes on [92-year old Marcella] Boylan's house. Both Boylan and her husband, Dudley, who died in 2005, had faced serious health problems - and the costs added up. When the taxes weren't paid on the house, the county started the steps toward putting it up for public auction - a process called a tax deed sale. The online auction was scheduled for May 19-21, 2007.

• Once the county starts the tax-deed process, the county takes ownership of the property until it is sold or the delinquent taxes are paid, whichever comes first. In Boylan's case, the delinquent taxes were paid, by Foldesi, just three days before the auction. Once the delinquent taxes were paid, the county canceled the auction and granted a "redemption deed" to Boylan. Foldesi is named in the redemption deed as the person who paid the delinquent taxes.

• But a redemption deed does not convey ownership of, or access to, a property - and neither does paying somebody's property taxes, county officials say. When Foldesi paid the taxes, that did "nothing more in this case than cancel the tax deed and all related proceedings," Ada County Treasurer Cecil Ingram said.

• Foldesi thinks differently. When asked who gave him permission to rent out Boylan's house, he said: "The owners. Who are the owners? The tax deed holder." But neither Foldesi nor anyone else can hold a tax deed to the house, because there is no tax deed for this property, according to the county.(1) Only if the house had gone to auction could someone have bought the tax deed, which would have given that person ownership over the home. Some states do sell tax deeds or tax liens without an auction giving ownership to the person who pays off the tax bills. That may be part of the confusion.

For more, see Stranger rents out Boise woman's home without her permission (A Boise house belongs to a nursing-home resident, officials say, but a man profits from renting it out).

(1) Not surprisingly, Foldesi reportedly spoke only briefly to the Statesman before hanging up. He has not returned subsequent calls, including requests to see a tax deed for the house or a certificate of sale from the county, according to the story. DeedContraTheft hijack

Cops: Wife Used Improperly Notarized POA In Sale Leaseback Of Home Without Hubby's Consent; Subsequent Use Of "Rubber" Rent Checks Gets Them The Boot

In Bantam, Connecticut, The Register News reports:

• A Bethlehem woman is facing criminal charges for allegedly selling her marital home without her husband’s knowledge. Shelley Ciriello, 55, [...] is scheduled to appear in Bantam Superior Court Oct. 5.

***

• Ciriello reportedly sold the house to Lurlyn Seigler of Boston, Mass. and agreed to rent it from the woman for $3,767 per month. But when the rent checks started to bounce, the woman filed a complaint at the Bethlehem Resident Trooper’s office in July. The couple was evicted in June, according to court records.

• But even though his wife had been to court and making deals with Seigler, the eviction came as a surprise to James Ciriello. The husband didn’t know he was renting the house he purchased with his wife in 1974. Shelley Ciriello maintained the family finances and books for his business. “I never knew what she was doing with the accounts and the money,” James Ciriello told police in his statement. Ciriello reportedly used a power of attorney to negotiate the sale of the house and subsequent court actions.

• A woman Ciriello worked with at a physician’s office in Waterbury notarized the power of attorney on Ciriello’s word that it was for her disabled brother-in-law. When police talked to the notary, she admitted she executed the document and added Ciriello was fired from the job for stealing co-payments from the office, according to the warrant. Ciriello admitted her husband was not involved in the sale of the house.

• The couple owned the house free-and-clear after purchasing it from her husband’s parents. But Ciriello reportedly abused a line of credit, using the three-bedroom Cape as collateral.

For more, see Wife sold house, husband clueless.

Pressure On State Bar To Implement Special Review Process To Discipline Florida Attorneys That Play Fast & Loose When Representing Foreclosing Lenders

In Sarasota, Florida, Sarasota Herald Tribune columnist Tom Lyons comments on the recent news from The Florida Bar, which will reportedly look into implementing a special review process to specifically discipline attorneys for foreclosing mortgage lenders guilty of playing fast and loose with their court filings in, and representations to judges presiding over, foreclosure actions:

• Lawyer jokes aside, the legal system only functions as well as it does because most lawyers are honest. That is, most don't make flat-out lies and forgeries a routine part of their work. They spin the facts, yes, and they are adept at dodging and weaving around troublesome features of reality while presenting a case.

• But filing fake documents to establish the right to take possession of someone's home? That's not something a lawyer should do. So what if that were suddenly happening in cases all over the nation? What if some law firms that specialize in bulk handling of mortgage foreclosures for the lending industry were having so much trouble finding original loan documents, and documents showing the ownership trail as debts were packaged and resold, that many started filing forged documents in their place?

• That seems to be the fact, according to a study by a Florida Bar group. And Harley Herman, a lawyer who is part of a Florida Bar group pushing for a special review of ethics violations in foreclosure cases, says this is a serious problem.

For the story, see Foreclosure chicanery not a funny lawyer joke.

MD AG Wins "Rescue" Scam Civil Suit; Settles w/ Lenders Who Financed Bogus Sale Leasebacks, Saves Homes For Some, Clips Closing Agent For $100K

In Baltimore, Maryland, The Real Estate Wonk Blog in The Baltimore Sun reports:

• Stop me if you've heard this one before: Borrower needs help. Borrower goes to foreclosure-rescue business to get help. Borrower signs documents to get or start the process of getting the mortgage refinanced, only to discover later that the foreclosure-rescue specialists were really getting the home signed over to them. Such fraud has happened across the country, both before and after the housing market went downhill.

• One local case just wrapped up in Baltimore City Circuit Court with a judgment ordering the defendants to pay just over $1 million in restitution and penalties. The business associates, Michael K. Lewis, brother Earnest Lewis, Cheryl Brooke and Winston Thomas, pleaded guilty earlier in the year to criminal charges related to dozens of foreclosure rescue scams. Michael Lewis was sentenced to 6 1/2 years in prison, Earnest Lewis to 4 1/2 years, Brooke to almost four years and Thomas to just over three years.

• The Baltimore civil case, brought by the Consumer Protection Division of the Maryland Attorney General's Office, covered 13 properties, most in the Baltimore area. Once the homeowners unwittingly signed over their properties, Earnest Lewis pulled all their equity out with a new loan and split the money with the defendants, said Bill Gruhn, chief of the Consumer Protection Division. "Some of the homeowners have moved," he said. "Other homeowners are in their homes and we were able to facilitate settlements" with the lenders.(1)

For more, see Homeowner beware.

See also, Maryland Attorney General press release: Attorney General Gansler Announces Judgment of More Than One Million Dollars in Restitution and Penalties in Foreclosure Rescue Scam:

• The [Consumer Protection] Division also entered into a consent order with Cornerstone Title & Escrow, Inc., a real estate settlement company, that the Division sued for participating in the scheme and for using practices that violated the Consumer Protection Act. Cornerstone denied the Division’s allegations and has not admitted any wrongdoing. [...] The consent order entered with Cornerstone requires the company to pay $100,100, [among other things].

(1) Last year, Massachusetts Attorney General Martha Coakley similarly reached a settlement with ten lenders and loan servicers who financed equity stripping ripoffs for a foreclosure rescue group who peddled bogus sale leasebacks to financially strapped Massachusetts homeowners facing foreclosure. The settlement impacted 26 residential properties, was designed to return homeowners to their financial position before they were screwed over in transactions that stripped their home equity, and provided an opportunity for the victims to reacquire the legal title to their homes. The victims' mortgage liens were to be reduced to the lower of the actual amount paid for prior mortgage loans on the property, subtracting any beneficial payments to the homeowners; or 80% of the then-current value of the properties, resulting in approximately $1.8 million in reduced mortgage obligations. See Court Approves Massachusetts Settlement With Lenders In Bogus Foreclosure Rescue; Case Involved AG Claims Of Equitable Mortgage, Usury, Etc.

Include Arkansas Supreme Court On List Of Legal Authorities Having A Problem With MERS' Business Model

Attorney Kathleen E. Kraft, with the Washington, D.C. law firm Thompson Coburn LLP, writes:

• On March 19, 2009, the Supreme Court of Arkansas determined that Mortgage Electronic Registration Systems, Inc. (“MERS”) was not a necessary party to a foreclosure action involving the foreclosure of a junior mortgage, where MERS was not the true beneficiary of the senior deed of trust nor was specifically authorized by the lender to act on the lender’s behalf in the foreclosure proceedings. Mortgage Electronic Registration Systems, Inc. v. Southwest Homes of Arkansas, -- S.W.3d --, 2009 Ark. 152, 2009 WL 723182 (Mar. 19, 2009). Coming in on the heels of Landmark National Bank v. Kesler, 40 Kan. App. 2d 325, 192 P.3d 177 (2008)(1) (also finding that MERS was not a necessary party to a foreclosure action), Mortgage Electronic Registration Systems, Inc. v. Southwest Homes of Arkansas places MERS on unstable ground in mortgage foreclosure actions.(2)

For more, see Another Nail in the MERS Coffin: Arkansas Court Rules That MERS Was Not A Necessary Party To A Foreclosure Action In Which MERS Served As Lender’s Nominee On The Senior Deed Of Trust.

(1) This 2008 ruling of the Kansas Court of Appeals was recently affirmed by the Kansas Supreme Court. See Landmark Nat'l Bank v. Kesler, No. 98,489, 2009 Kan. LEXIS 834 (August 28, 2009).

(2) In a separate, unrelated lawsuit, the following all star lineup of mortgage lenders have been named and identified as allegedly the controlling shareholders of MERS:

• Citigroup, Inc., the now-deceased Countrywide Financial Corporation (now owned by Bank of America), Fannie Mae & Freddie Mac (both of which are sucking wind financially, and are currently operating under the control of the Federal government), GMAC-RFC Holding Company, LLC, (doing business as GMAC Residential Funding Corporation), HSBC Finance Corporation, JP Morgan Chase & Co., the late Washington Mutual Bank (now owned by JP Morgan Chase & Co.), and alleged "ghetto loans" peddler, Wells Fargo & Company.

See Homeowners In Foreclosure Being Clipped For Illegally Inflated Legal & Appraisal Fees, Says Lawsuit. EpsilonMissingDocsMtg

FBI Probe Forces Shutdown Of Loan Modification Racket?

ProPublica earlier this week published a follow-up to a story (see Why Authorities Haven’t Stopped the Foreclosure ‘Rescue’ Boom) which focused on the antics of one loan modification outfit, Southern California-based 21st Century Legal Services (also known as Fidelity National Legal Services):

• As we reported, four states obtained court injunctions barring the company from operating there, but those actions did little to slow the company down. Since then, however, we’ve learned that the company is under investigation by the FBI.

• Last Wednesday, the FBI executed search warrants at eight locations in the Rancho Cucamonga area, said Laura Eimiller, spokeswoman for the FBI’s Los Angeles office. Both business and residential addresses were searched, she said, but she would provide no other details about the continuing investigation. Kathleen Moreno, the lawyer for 21st Century president Andrea Ramirez, confirmed that Ramirez’s residence was among those searched.

• The FBI searches seem to have finally stopped the company from operating. Its Web site is down, and no one answers the phone. But as for whether its unhappy customers can hope to recoup their money, it’s far too early to tell.

For the story, see The Foreclosure ‘Rescue’ Boom on Marketplace.

Mass AG Obtains Indictments Against Foreclosure Rescue Operators Alleging Equity Stripping Ripoffs That Defrauded Homeowners, Banks, Investors

From the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office announces that a Worcester County Grand Jury returned indictments [...] against an Oxford man, a real estate lawyer, a real estate paralegal and a notary public for their roles in a complex scheme in which fraudulent documents were used to defraud homeowners and mortgage lenders in numerous real estate transactions involving distressed properties in the Worcester County area. Allen Seymour, age 41, of Oxford, Raymond A. Desautels III, age 43, also of Oxford, Jason Passell, age 51, of Worcester, and Judith Piette, age 44, of Worcester, are charged [...].

***

• According to authorities, Seymour targeted properties in danger of foreclosure. He personally approached the owners of these properties and presented a variety of rescue options. [...] Simultaneously, Seymour found individuals with good credit who were looking to begin investing in real estate. Many of these “investors” were told they would be helping homeowners in danger of foreclosure. [...] None of the proposals made to these “investors” matched the transactions presented to the homeowner.

According to the Massachusetts AG, Raymond Desautels, III, conducted all of the real estate closings and allegedly prepared fraudulent closing statements. Notary public Judith Piette allegedly notarized closing documents stating the homeowner had personally appeared before her and acknowledged they had signed the document voluntarily and for its intended purpose when, in fact, she never actually saw the homeowner. Jason Passell's involvement allegedly centered around the use of bogus powers of attorney to facillitate the scams.

For the entire Massachusetts AG press release, see AG Coakley’s Office Announces Indictments Against Four People in Complex Mortgage Rescue Scheme.

Lender Knowingly Wrote Millions Of Dollars In Crappy Loans, Abandoning Prudent Underwriting Standards, Says Mortgage Insurer In Lawsuit

In Los Angeles, California, Courthouse News Service reports:

• MBIA Insurance Corp. says IndyMac Bank knowingly loaned millions of dollars to borrowers who could not afford to repay the loans, leaving the stock insurance company to pay out more than $487 million on its guarantees with an expected $566 million more to come, MBIA claims in Superior Court.(1)

• MBIA says IndyMac "abandoned any reasonable and prudent underwriting standards" in an "effort to expand its market share during the mortgage lending boom," according to the complaint. MBIA also says IndyMac encouraged its workers to inflate borrowers' incomes on loan applications to get them loans for which they wouldn't have qualified. MBIA says the thousands of mortgage loans in default or foreclosure "would not have occurred if IndyMac had followed the loan-origination practices that it represented to investors it was following."

***

• In May, 20 banks and financial services companies sued MBIA with allegations that it fraudulently restructured itself to strip it of $5 billion in cash and securities and to start a new insurance business to duck its obligations to the banks.

For the story, see MBIA Insurance Sues IndyMac.

(1) MBIA provided financial guaranty insurance in the form of guarantees of the trust obligations to make principal and interest payments on the loans.

Kansas Supreme Court Ruling Unfavorable To MERS Getting National Attention?

In Topeka, Kansas, The Lawrence Journal World reports:

• Some are touting a recent Kansas Supreme Court decision as a major development in the protection of people facing foreclosures. In Landmark National Bank v. Kesler, the court ruled unanimously that Mortgage Electronic Registration Systems had no standing to bring action in a foreclosure case.(1) According to some reports MERS holds some 60 million mortgages, over half of all new U.S. mortgages. While the case applies only to Kansas, folks who defend homeowners are saying courts in other states could take note of the ruling.

For more, see Kansas court ruling in foreclosure case getting national attention.

(1) While some (see, for example, Waking up to discover the mortgage market was a giant criminal enterprise) have apparently interpreted this case as holding that MERS had no standing to bring action in a foreclosure case, this is simply an incorrect interpretation. Nowhere in the court's ruling did it "hold" or "find" that MERS lacked standing in the case. It simply ruled that the lower court did not abuse its discretion in denying the motions to vacate a default judgment entered in the case and for joinder in a foreclosure action brought by a prior mortgage holder, and in holding that MERS (putatively representing, and asserting the legal rights of, the 2nd mortgage holder) was not denied due process when a foreclosing 1st mortgage holder failed to serve it with notice of the foreclosure action.

In order for MERS to vacate the default judgment entered in this case, it would have to demonstrate to the court that it had a tangible interest in the mortgage, and demonstrate any injury it suffered because it did not receive service of the foreclosure action from the first mortgage holder. In this regard, the court observed:

• Counsel for MERS explicitly declined to demonstrate to the trial court a tangible interest in the mortgage. Parties are bound by the formal admissions of their counsel in an action. Dick v. Drainage District No. 2, 187 Kan. 520, 525, 358 P.2d 744 (1961). Counsel for MERS made no attempt to show any injury to MERS resulting from the lack of service; in fact, counsel insisted that it did not have to show a financial or property interest.

Given that the attorney for MERS made no attempt to either establish a tangible interest in the second mortgage, or show any injury suffered due to the lack of service, there was no need for the court to make any finding that MERS, generally, lacks standing, is a real party in interest, or (in cases like this one where it is a defendant as a putative second mortgage holder in a foreclosure action brought by the first mortgagee) is a necessary party in foreclosure actions. The court simply made the following finding, explicitly leaving unanswered the question of whether or not MERS was entitled to notice of the foreclosure action from the 1st mortgage holder:

• Even if MERS was technically entitled to notice and service in the initial foreclosure action--an issue that we do not decide at this time--we are not compelled to conclude that the trial court abused its discretion in denying the motions to vacate default judgment and require joinder of MERS and Sovereign. The record lacks evidence supporting a claim that MERS suffered prejudice and would have had a meritorious defense had it been joined as a defendant to the foreclosure action. We find that the trial court did not abuse its discretion and did not commit reversible error in ruling on the postdefault motions.

***

• We find that the district court did not abuse its discretion in denying the motions to vacate and for joinder and in holding that MERS was not denied due process.

Presumably, the next time MERS finds itself in a foreclosure action like this one in Kansas in which it seeks to vacate a default judgment, its legal counsel won't fail to make a vigorous attempt to demonstrate that MERS has a tangible interest in the second mortgage, and attempt to establish the injury it suffered by failing to receive service of a first mortgagee's foreclosure action. Only at that point will a Kansas court have the opportunity to consider whether or not MERS, generally, has a sufficient interest in the mortgages it attempts to foreclose so as to make it a real party in interest in the litigation, and whether it has legal standing to be heard in said litigation.

NY Times On MERS' Ruling From The Kansas Supreme Court

The New York Times reports:

• WITH the mortgage bust approaching Year Three, it is increasingly up to the nation’s courts to examine the dubious practices that guided the mania. A ruling that the Kansas Supreme Court issued last month(1) has done precisely that, and it has significant implications for both the mortgage industry and troubled borrowers.

• The opinion spotlights a crucial but obscure cog in the nation’s lending machinery: a privately owned loan tracking service known as the Mortgage Electronic Registration System. This registry, created in 1997 to improve profits and efficiency among lenders, eliminates the need to record changes in property ownership in local land records.
  Dotting i’s and crossing t’s can be a costly bore, of course. And eliminating the need to record mortgage assignments helped keep the lending machine humming during the boom.

• Now, however, this clever setup is coming under fire. Legal experts say the fact that the most recent assault comes out of Kansas, a state not known for radical jurists, makes the ruling even more meaningful.

For more, see The Mortgage Machine Backfires.

(1) 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).

Scammer Stripped Of House & Vehicle, Gets 36 Months; Abused POA In $250K+ Ripoff Of Dementia-Suffering Senior

From the Office of the U.S. Attorney (Covington, Kentucky):

• The United States Attorney’s Office and the Postal Inspection Service jointly announced [...] that a Ludlow, Ky. man was sentenced yesterday to 36 months in prison for financially exploiting a wealthy elderly woman out of more than $250,000. United States District Court Judge Danny C. Reeves also ordered 45-year-old Gordon Powell to forfeit a house [...] in Fort Wright, Ky. and a Cadillac Escalade both of which Powell purchased with a portion of the proceeds from his fraud.

• Powell pleaded guilty to one count of wire fraud in May of 2009 and admitted that in 2006 he befriended an elderly Kenton County woman in her eighties who had no apparent family and suffered from dementia like symptoms. After learning she was wealthy, Powell persuaded the woman to make him her power-of-attorney which gave him the authority to make decisions on her behalf. After obtaining this authority, he liquidated hundreds of thousands of dollars of assets and transferred over $250,000 of the proceeds of the liquidation to his personal accounts. Powell then used money from these accounts to purchase the house and the car.

For the U.S. Attorney press release, see Ludlow Resident Sentenced 3 Years for Financially Exploiting a Wealthy Elderly Woman.

Indiana Cop Cops Plea To Ripping Off Now-Deceased 89-Year Old Alzheimer's Victim Of Home, Cash

In Gary, Indiana, the Post Tribune reports:

• Gary police Sgt. Joshua Wiley admitted he stole money and a home from his former neighbor who suffered from Alzheimer's disease and dementia and has agreed to repay $116,765 to the woman's estate. On the day his jury trial was scheduled to begin, Wiley pleaded guilty [...] to two felony charges -- theft and exploitation of an endangered adult.(1)

***

• In court, Wiley admitted he knew that his former neighbor, Helen Chentnik, who died Dec. 22, 2006, at age 89, was an endangered adult who was not competent to make financial decisions on her own behalf. [...] Wiley obtained a fraudulent quit claim deed to Chentnik's home at 3630 E. 12th Ave., Gary and recorded the deed, knowing that it was signed by him while claiming to have Chentnik's power of attorney.(2)

For the story, see Gary police officer says he stole home, money of Helen Chentnik who suffered from Alzheimer's.

(1) Reportedly, under terms of the plea agreement, which Lake Superior Court Judge Diane Ross Boswell took under advisement, Wiley will be sentenced to eight years -- three years in the Lake County Community Correction Kimbrough Work Program and five years suspended and served on probation. The plea agreement calls for Wiley to serve his probation and Kimbrough Center sentence simultaneously. Wiley, 51, also must pay $53,255 within 30 days and the remaining $62,765 in monthly installments of $1,000, also starting within 30 days.

(2) According to the story, Wiley also looted Chentnik's credit union account "by using his influence on the victim or by using an ATM-debit card issued to the victim" to withdraw cash or buy items and services for his personal use without Chentnik's consent, according to the plea agreement. Wiley then reportedly opened a joint checking account for Chentnik and himself at Mercantile National Bank, deposited the woman's monthly Social Security and pension checks and funds from her credit union account, and then made withdrawals in cash and wrote checks for goods and services, the majority of which were for his personal use. FinancialAbuseOfElderlyAlpha DeedContraTheft

Minnesota AG Targets Three Outfits In Civil Suits Alleging Upfront Fee Rackets Promising Help With Credit Card Debt

From the Office of the Minnesota Attorney General:

• Minnesota Attorney General Lori Swanson [...] filed three lawsuits against separate companies that promised consumers they would lower the interest rates on their credit cards in exchange for payments of up to $1,995 but then failed to provide the promised services.(1)

***

• [The] lawsuits were filed against Priority Direct Marketing, a Washington corporation charging consumers fees of up to $1,590, Clear Financial Solutions, a Florida corporation that charged consumers fees of up to $999, and Moneyworks LLC, based in Georgia, which charged consumers fees of up to $1,995.

For the entire Minnesota AG press release, see AG Swanson Files Three Lawsuits Against Companies Claiming To Help Consumers Lower Their Credit Card Interest Rates (Swanson Warns Minnesotans To Be On Guard Against “Here Today, Gone Tomorrow” Companies That Charge High Fees for Supposed Debt Assistance Services During These Tough Economic Times Then Disappear).

(1) Swanson warned the public to be on guard against fly-by-night companies seeking high payments from consumers in exchange for supposed financial help. She said that many companies are aggressively seeking out struggling citizens to exploit during these tough economic times--in which people face record high levels of credit card debt and high credit card interest rates. After the citizen pays the money, however, the companies often disappear, fail to return phone calls, file bankruptcy, or go out of business, driving consumers even deeper into debt.

Owner In Foreclosure Loses Personal Possessions; Contents Seized & Auctioned Off As Alleged Drug Dealer Holding 3rd Mortgage Moves Into $2M+ Home

In Vancouver, British Columbia, The Vancouver Sun reports:

• The owner of a Shaughnessy heritage home was in tears after learning that all her worldly possessions had been seized by a bailiff and sold at auction. Gail Hewitt is also angry that the man who has taken possession of her $2-million-plus home is an accused drug dealer, Robert Luigi Poloni. Poloni holds a $600,000 third mortgage on Hewitt's house, [...] which is in the midst of foreclosure proceedings. Hewitt, who is living in California, said her neighbours called her about three weeks ago and told her someone had moved into her house.(1)

***

• Hewitt said the contents of her home were worth about $400,000. "I had about $100,000 worth of clothes, fur coats, at least $50,000 worth of jewelry, furniture, a $40,000 grand piano and five oriental rugs, some worth $15,000," she said in an interview. [...] "I can't believe it's all gone and it's all sold," Hewitt said, crying. "There's nothing I can do. Everything I own has been taken away from me."

For more, see Shaughnessy homeowner stunned by sale of possessions (Says she did not know she was dealing with an accused drug trafficker).

For story update, see Judge rules against Shaughnessy homeowner who sought more time to sell home.

(1) According to the story, Hewitt's neighbors took photos of two men on the property and she recognized them as Poloni and Robbie Della Penna, who were jointly charged with cocaine trafficking offences but were acquitted by B.C. Supreme Court Justice Peter Leask. The Crown has filed a notice to appeal those acquittals. Neighbours called Hewitt again Sept. 10 to tell her that trucks had arrived on her property and were taking out her furniture and personal property.

Mortgage Servicer Sued For Wrongful Death For Allegedly Making Caustic Collection Calls That Lead To Delinquent Homeowner's Fatal Heart Attack

In Tampa, Florida, The Associated Press reports:

• A widow claims that debt collectors hounded her husband to death with as many as nine caustic calls per day, causing stress that contributed to his fatal heart attack. She's suing the Florida couple's mortgage company in a unique wrongful death case.

• Dianne McLeod wants Green Tree Servicing to pay damages for what she said are illegal collection practices that led to her husband's heart failure on Dec. 4, 2005. Her 57-year-old husband, Stanley, was already in poor health from a heart attack years earlier that also had left him on disability. An executive at Green Tree Servicing called the claim "outrageous and meritless."

• Lawsuits against debt collectors alleging illegal practices are common. But McLeod's Tampa attorney, William Howard, believes it's the first time one has ever been sued for wrongful death. [...] Some of the calls were recorded on the family's answering machine, and Howard said he is eager to play them for a jury.

***

• Howard sued Green Tree on the family's behalf in 2005, then added the wrongful death count in 2006 after Stanley McLeod died. The case has been winding its way through courts since. Earlier this month, the 2nd District Court of Appeal in Florida again ruled against Green Tree in the company's efforts to force the case into arbitration. Howard said he will ask a judge to set the case for trial soon. He hasn't decided yet how much he will seek.

• "What happened to Stanley McLeod happened to a lot of people," said Howard, who has about 500 pending cases that claim undue harassment by debt collectors. "To be held hostage in your own home is a terrible thing. It's a helpless feeling." Howard works for the law firm of Morgan & Morgan, which has offices around the state, heading a division that sues debt collectors for unfair collection practices.

For the story, see Widow: Debt collectors hounded husband to death.

Justice Department Obtains Guilty Pleas In Cross Burning Incidents; Race-Based Harassment, Intimidation Used To Drive Families From Homes, Say Feds

In two separate incidents, the U.S. Department of Justice recently announced:
.
#1: Two Indiana Men Plead Guilty to Cross Burning:

• Richard LaShure, 41, and Aaron Latham, 20, both of Muncie, Ind., pleaded guilty to conspiring to violate the civil rights of an African American family and to interfering with their housing rights by burning a cross in the family’s yard. According to the charging document, on July 25, 2008, the two men, acting with the assistance of a third participant, built a cross and poured gasoline on it, then set it on fire in the yard of an African-American family who lived in the neighborhood. They will be sentenced on Nov. 5, 2009.

• This is the second case in two years in which the Civil Rights Division has brought charges for a cross burning that occurred in Muncie, Ind. Two men were convicted in 2008 for burning a cross at the home of a woman who had biracial children. "These two men used a despicable and unmistakable symbol of hatred, the burning cross, to intimidate a family because they are African American," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division will continue to prosecute this type of illegal, hateful behavior to the fullest extent of the law."

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#2: Four Arkansas Men Convicted of Civil Rights Charges in Cross Burning Conspiracy:

• The Justice Department announced that Jacob A. Wingo, Richard W. Robbins, Clayton D. Morrison and Darren E. McKim pleaded guilty [...] to conspiring to drive a woman and her children from their home in Donaldson, Ark., because they associated with African Americans. A fifth defendant, Dustin Nix, 21, pleaded guilty to similar charges in July 2009.

• All defendants pleaded guilty in federal court in Hot Springs, Ark., to civil rights charges and charges of making a false statement to a federal law enforcement officer. Each admitted and pleaded guilty to a felony civil rights charge for conspiring with each other to force a woman and her young children from their home by threats and intimidation because she associated with African Americans. Wingo and Morrison also pleaded guilty to an additional civil rights charge related to their direct involvement in an attempt to burn a cross at the victims’ home to intimidate the victims into leaving. All four defendants also pleaded guilty to a related charge of lying to agents of the FBI in an attempt to cover their conduct.(1)

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(1) In other related press releases from the U.S. Justice Department in connection with those charged with the use of fire to interfere with housing rights of others, a felony:

• (4-27-2009) Anderson County Man Indicted for Cross-Burning: Steven D. Archer, 49, Heiskell, Tennessee, has been indicted by a federal grand jury on charges of willfully interfering with a couple's federal housing rights because of their race by burning a wooden cross, in violation of Title 42, U.S. Code § 3631(a), outside the residence in Anderson County that the victims were occupying.

• (11-26-2008) West Virginia Man Indicted on Federal Civil Rights Charges for Allegedly Burning a Home: Daryl Lee Fierce, 69, of Charleston, W.Va., was indicted by a federal grand jury for using fire to intimidate and interfere with a person’s housing rights because African-American and biracial individuals visited the person in her home.

• (11-21-2008) Rutherford County Man Sentenced In U.S. District Court In Asheville In Connection With Cross Burning Incident (Defendant to Serve More Than Two Years in Federal Prison): Curtis Gene Worley, 51, of Spindale, North Carolina, was sentenced Wednesday to serve 28 months in federal prison, followed by two years of supervised release. Worley was indicted in October 2007 on one count alleging use of fire to injure, intimidate, and interfere with rights to occupy a dwelling because of race or color. According to information presented in open court during the hearings, Worley built and burned a cross on or near the property occupied by his neighbor, an adult African American female. See also: (10-25-2007) North Carolina Man Indicted In Cross-Burning Case: The indictment charged that Worley used a burning cross to intimidate and interfere with an African-American family because of race and because the family was occupying a dwelling. The indictment charges that Worley violated Title 42, U.S. Code § 3631(a), which provides criminal penalties for interference with the rights of citizens under the Fair Housing Act. Since 2001 and up through and including this prosecution, the Civil Rights Division brought 41 cross-burning prosecutions and convicted 60 defendants for these crimes.
  (6-6-2008) Muncie, Indiana, Man Sentenced to 121 Months in Cross Burning Case: Kyle Milbourn of Muncie, Ind., was sentenced by a federal judge [...] for a hate crime stemming from a cross burning last year that was directed at a woman and her three biracial children. Milbourn was convicted by a jury of one count of interfering with the housing rights of another person; one count of conspiring to interfere with civil rights; one count of using fire during the commission of a felony; and one count of tampering with a witness.

• (4-23-2007) Two Men Plead Guilty In Lassen County Cross Burning: Kevin William Ridenour, 21, and Nicholas Edward Craig, 18, both of Westwood, California, each pleaded guilty in Sacramento to interference with housing rights, a felony. The crime relates to the burning of a cross outside the rectory of a Catholic church in Westport, California. The Priest who resides in the rectory is from Rwanda, central Africa, and was assigned to Westport by the Catholic Archdiocese of Sacramento in October, 2006. The defendants admitted that they did so in order to threaten and intimidate the Priest because of his race, and the fact that he was occupying the rectory building. They also admitted that, while building the cross, they discussed the fact that the "KKK" had used burning crosses to intimidate black persons.

• (1-31-2007) Florida Man Sentenced in Cross Burning: Neal Chapman Coombs, a 50-year-old resident of Hastings, Fla., was sentenced to 14 months in prison, to be followed by three years of supervised release. Coombs pleaded guilty to a racially-motivated civil rights crime involving a cross burning. Coombs was charged with knowingly and willfully intimidating an African-American family that was negotiating for the purchase of a house in Hastings, Fla., by threat of force and the use of fire. Specifically, it was alleged that Coombs’ actions were motivated by the family’s race and that he burned a cross on property adjacent to the house. According to the press release, the plea agreement indicatedt that Coombs, who is Caucasian, made a remark about having a “house-warming,” and also made derogatory remarks about the visiting family.

• (9-26-2006): Federal Jury Convicts Two for Cross Burning: A federal jury convicted Christopher Mitchell and James Bradley Weems of burning a cross in front of the home of an African-American man in Fouke, Ark. The jury convicted each defendant of one count of conspiracy to violate the victim’s civil rights. The evidence at trial established that Mitchell and Weems, attended a party where they discussed an African-American man who lived nearby, using racial slurs to describe him. The defendants, along with a third man, Christopher Baird, who had pleaded guilty to his role in the offense, used wooden boards to erect a cross. The defendants then planted the cross near the home of the African-American man and lit it on fire. Witnesses testified that as a result of the cross burning, the African-American victim and the family he lived with all moved from their home because they were too frightened to remain in the town.

• (9-2-2004) Two Men Plead Guilty In Kentucky Cross Burning Case: Matthew Scudder, of Florence, Kentucky, who was 18 at the time the crime was committed, and James Foster, of Independence, Kentucky, who was 19, admitted to conspiring to threaten and intimidate an African-American couple and their two children in order to drive them from their Burlington home. Scudder admitted that on July 2, 2004 he burned a wooden cross on the family's lawn. Foster admitted that he helped carry out the plan.

• (6-15-2004) Indianapolis Man Sentenced For Cross Burning: The Justice Department announced the sentencing of Jerry Dean Landis, of Indianapolis, Indiana, to 18 months in prison for his role in a July 2000 cross burning. Landis participated in the building and burning of a cross in the front yard of an African-American family in Indianapolis. Landis admitted that he and his associates took part in the cross burning in order to “send a message” to the family. Since 2001 and up through and including this 2004 prosecution, the Department prosecuted 29 cross burning cases, filing criminal civil rights charges against 46 defendants.

• (2-9-2004) Macomb, Illinois Man Sentenced For Cross Burning Targeting Interracial Couple: Charles Lambert was sentenced to thirty-seven months in prison for his role in a July 2001 cross burning targeting an interracial couple. Forest Hatley, a co-defendant in this case, was previously sentenced to forty-one months imprisonment and three years of supervised release. Lambert and Hatley each admitted that they agreed to burn a cross at a home in Macomb, Illinois where an interracial couple lived. The defendants constructed a cross and doused it with gasoline. The two men then transported the cross to the victims’ yard, planted it in front of the home and ignited it. Lambert and Hatley also admitted this action was taken to intimidate the couple because of the male’s race and because he was living with a person of another race.

• (1-29-2004) Georgia Man Sentenced For Cross Burning In Moultrie: The Justice Department announced the sentencing of Moultrie, Georgia resident Michael Craig Jordan for his role in an April 2002 cross-burning. Jordan pled guilty to criminal civil rights violations in November 2003. He admitted to participating in the April 2002 burning of a wooden cross with the purpose of preventing a biracial African-American and Hispanic couple - as well as their two young children - from moving into the house next door.

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.

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• 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.

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• 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.