Saturday, May 8, 2010

School District Treasurer Charged With Clipping $14K From Till; Recently Convicted Of Pocketing $50K By Forging Loan Docs Secured By In-Laws' Home

In Northampton, Pennsylvania, the Bucks County Courier Times reports:

  • The treasurer of a Centennial School District Home and School Association has been charged with stealing $14,860 from the group. Christina Lynn Troy, 32, of Colonial Drive in Warminster, allegedly stole the money from Fred J. Stackpole Elementary Home and School Association.

  • Members of the association would not talk Thursday about whether they knew the mother of three was charged with forging $50,000 worth of mortgage documents when she was elected group treasurer in September. They also wouldn't comment on whether they knew she was convicted of the forgery in mid-March.


  • According to police, in 2008 Troy forged her in-laws' names on mortgage documents, essentially stealing $50,000. She pleaded guilty to the forgery charges in March and was sentenced to two years of probation. By then, Troy had stolen $14,850 in cash and checks from the home and school account, according to court records.

For more, see Treasurer charged in theft of thousands.

Woman Charged w/ Using POA To Rip Off Ailing Elderly Dad Of $98K+ In Life Insurance Cash From Mom's Death; Fails To Turn Over Proceeds To Nursing Home

From the Office of the Monmouth County, New Jersey Prosecutor:

  • On April 22, 2010, Lorie Langridge, 47, of Jackson Township, N.J., was arrested by Detectives from the Monmouth County Prosecutor’s Office on a complaint charging her with second degree Theft. [...] The investigation revealed that Langridge’s mother died on May 9, 2009, and that at the time of her death Langridge’s mother possessed a life insurance policy and was also receiving a State of New Jersey pension. Langridge’s father was the named beneficiary on both the life insurance policy and the State pension.

  • Following Langridge’s mother’s death, two death benefit checks were issued. The first, in the amount of $66,300, was issued by Prudential Financial as a result of the group life insurance policy. The second check, in the amount of $32,549.65, was from the pension system. Both checks were made payable to Langridge’s father, but they were delivered to Langridge because she possessed a power-of-attorney for her father, who is elderly and resides in a nursing home in Monmouth County.

  • Langridge’s father was receiving medical benefits through Medicaid as an institutionalized patient. Pursuant to Medicaid rules and regulations, any assets that are generated on behalf of a recipient of Medicaid benefits must be provided to the health care facility so that they can be used to offset the healthcare and living expenses of the recipient. The investigation revealed that Langridge, rather than turning the funds over to the nursing facility, instead deposited the funds into her own personal bank account. The total amount of the theft is approximately $98,849.65.

  • The investigation into Langridge’s activities began after Langridge’s brother notified the Wall Township Police Department that some of his father’s funds were missing.

For the Monmouth County Prosecutor's press release, see Jackson Woman Arrested For Theft Of Approximately $98,849.65 From Elderly Father.

Daughter Of Now-Deceased, Dementia-Suffering Couple Claim Court-Appointed Lawyer Made Easy Pickings Of Parents

In London, England, the Daily Mail reports:

  • An elderly, frail couple were charged a swingeing £44,400 by lawyers who handled their simple finances for four years when they were no longer capable of looking after themselves. Their case exposes a gaping loophole in the legal system, which leaves the elderly at the mercy of greedy solicitors who, relatives fear, can charge what they liked, while the family is powerless to intervene.

  • Feliks and Rosemary Zakrzewski developed Alzheimer's disease in 2005. They went to live with their daughter Antoinette Tricker and her family in Suffolk. But because there was no Power of Attorney set up allowing her to act for them, the Court of Protection appointed a solicitor as their receiver to take charge of their financial affairs.

  • The family was then helpless because the solicitor is answerable only to their client - in this case, a couple with Alzheimer's - who did not understand what was happening.


  • In the Zakrzewskis' case, the solicitor's first act was to take away their savings book, leaving them with only £100 each as spending money for four months. Mrs Tricker, 58, says: 'The loss of independence nearly drove my father over the edge. He took to offering his asthma nebuliser to passing strangers to raise cash.'

  • Meanwhile, for handling their simple affairs, the solicitor ran up charges of nearly £19,000 in just ten months, charging £200 an hour, while giving Mrs Tricker just £70 a week to pay for her parents' living costs. All they had were their savings and a flat in Dorset to sell.

  • Guidance on Court of Protection costs states that general management costs are 'unlikely to exceed' £3,000 a year. Since Mrs Tricker was not the client, her complaints to the solicitor and requests to see the bill could be ignored, while her parents' estate was being drained. [...] Her father died in 2007 aged 88 and her mother died last year aged 89.

For more, see Lawyers charged frail Alzheimer's couple £44,400.

Another Residential Apartment Complex In Foreclosure Leads To Health, Safety Risks For 30 Families; Local Officials Declare State Of Emergency

In Leflore County, Mississippi, The Greenwood Commonwealth reports:

  • The Leflore County Board of Supervisors voted Tuesday to declare a state of emergency at the Delta Apartments, where grass growth and trash build-up have begun to pose a health risk. Joyce Chiles, attorney for the board, told the supervisors that the complex’s management group lacks the funds to maintain the grounds there. The complex is in foreclosure.

  • Their subsidies just aren’t enough to keep them going,” Chiles said. District 2 Supervisor Robert Moore, whose district includes Delta Apartments, said he wanted to declare an emergency so the county could act immediately to minimize the health risks at the complex. About 30 families live there.“We’ve got to get the grass cut and the weeds cut. We’ve got kids out there,” Moore said.

For more, see County declares emergency at complex.

Friday, May 7, 2010

Texas Man Sues Homebuilder For Allegedly Filing Invalid Mechanics Lien, Stiffing Three Subs, Giving Bogus "No Lien" Affidavit To Title Insurer

In Jefferson County, Texas, The Southeast Texas Record reports:

  • A man claims a Beaumont contractor wrongly filed a mechanic's and material man's lien against him, and he fears he will lose his property. Clifford D. Hardeman filed a lawsuit April 15 in Jefferson County District Court against Elton James Senegal, doing business as Elton's Construction. Hardeman claims Senegal filed a mechanic's and material man's lien on Nov. 20, 2009, but Hardeman contends the lien should be considered invalid.

  • "The plaintiff will show that the contract for construction of the residence to be built by defendant for the plaintiff, [...] was for $225,000, and as of this date, the plaintiff has executed checks payable to defendant totaling $247,440, and in addition to this, the plaintiff has paid $19,095 to vendors in order to complete the home," the suit states.

  • "In addition to this, three sub-contractors have made claims with First American Title totaling $20,637.58 for work on the residence and not paid by the defendant, even though the original construction contract provided an All Bills Paid Affidavit signed by defendant."

For the story, see Man files suit to stop lien from contractor.

82-Year Old, Blind, Diabetic, Wheelchair-Bound Mom Accuses Son In Lawsuit Of Using POA To Sell $650K Home Out From Under Her

In Brooklyn, New York, Courthouse News Service reports:

  • A blind, wheelchair-bound 82-year-old mother claims her adult son sold her $650,000 home out from under her for nothing - taking only a $6,000 kickback for himself. There was "no contract ... no closing, no closing statement ... nor did plaintiff receive a single dollar ... the only money that was exchanged in this transaction was $6,000" that Bapaz Aderet Properties Corp. ["BAP"] paid her son, Evelyn Popalardo claims in Kings County Court.

  • Evelyn Popalardo is 82, diabetic, "legally blind, requires a wheelchair to move around and is housebound." She says that in March 2009 her son Andrew, 52, "acting without [her] knowledge or consent and pursuant to an alleged durable power of attorney allegedly 'sold' - but in reality gave - her house to BAP."


  • She says that when her attorney called Bapaz Aderet Properties, the company had the brass to try to sell her house back to her for $80,000. She seeks declaratory judgment, return of title, and punitive damages fraud, breach of fiduciary duty, deceptive trade and aiding and abetting. She sued her son, BAP, and Yuval Golan.(1)

For more, see Son of the Year.

For the lawsuit, see Popalardo v. Bapaz Aderet Properties Corp., et al.

(1) She is represented by Diane Lutwak, Steven Banks, and Roger J. Hawke, Of Counsel, with the non-profit law firm, The Legal Aid Society - Brooklyn Office for the Aging.

Oregon Man Accused Of Using POA To Pocket $122K+ In Proceeds From Sale Of Ailing Mom's Home After Getting Medicaid To Foot Her Nursing Home Bills

In Multnomah County, Oregon, The Oregonian reports:

  • A 52-year-old man is accused of defrauding his elderly mother, who suffered from dementia and was placed in an adult foster home, and fraudulently applying for Medicaid to cover his mother's nursing home bill while he spent his mother's savings. Richard Dean Stone faces 21 counts of first-degree criminal mistreatment, 14 counts of first-degree theft and 8 counts of second-degree theft.


  • Stone is accused of spending $122,962 from the sale of his mother's home for his own benefit, according to a court affidavit. He used the money for gambling, trips, shopping and to pay his own bills, Portland police say. His mother had given her son her power of attorney in 2003. She lived on her own until October 2006, when she was placed in an adult foster home due to dementia and her risk of falling. The woman had less then $1,000 in cash assets when she entered the home, according to police.


  • Police say Stone failed to notify authorities that the home was sold and his mother had access to the money to help pay for her care. "He allowed Medicaid to continue paying his mother's expenses not covered by Social Security and insurance until her death on Oct. 10, 2008," a probable cause affidavit says.

For the story, see Portland man accused of pocketing his elderly mother's assets and fraudulently applying for Medicaid.

Homeowner May Be Victim Of Fraudulent Title Transfer & Wants To Know What To Do

In Washington, D.C., syndicated columnist and attorney Benny L. Kass recently addessed the following question:

  • My father is in his 90s and in frail health. He owns a house in the District [of Columbia], free and clear of any debt, and my cousin just told me that she now owns it. I am concerned that my cousin forged my dad's name on the deed. My father has always assured me that I would inherit the house, and he does not remember signing any documents. What should I do?

For his response, see Addressing concerns about fraudulent property deed transfers.

Federal Appeals Court Gives Indian Tribes The "Go-Ahead" To Buy Real Estate, Stiff Counties On Lawfully-Owed Property Taxes & Get Away With It

In Verona, New York, The Oneida Daily Dispatch reports:

  • A three-judge panel in the Second Court of Appeals ruled Tuesday that counties cannot foreclose on property owned by the Oneida Indian Nation ["OIN"] for non-payment of taxes and reaffirmed the Nation’s immunity.(1).


  • The ruling, by Judge Jose Cabranes, Robert Sack and Peter Hall, concludes that the OIN is immune from foreclosure unless Congress authorizes the lawsuit or the Nation waives its immunity.

  • The holding in this case comes down to this: An Indian tribe can purchase land — including land that was never part of a reservation; refuse to pay lawfully-owed taxes; and suffer no consequences because the taxing authority cannot sue to collect the taxes owed,” Cabranes said. “This rule of decision defies common sense. But absent action by our highest court, or by Congress, it is the law.”


  • While Madison County Attorney John Campanie said he was still reviewing the details of the court’s decision, he said it was clear that the court intends for the case to be heard before the Supreme Court. “It is probable that Madison County will act on the judges’ words and seek action to, as the judges put it, reunite law and logic,” he said. “Further, referring to the right to tax but the absence of the right to foreclose, these judges characterized this result as being ‘so anomalous’ that it ‘calls out’ for the Supreme Court action.”

For more, see Court rules that Madison and Oneida counties can’t foreclose on Oneida Indian Nation land.

For the ruling, see Oneida Indian Nation of New York v. Madison County and Oneida County, New York (2nd Cir. April 27, 2010).

(1) According to the story, the same decision was made in 2005 by U.S. District Judge David Hurd in the lawsuit between the Nation and Madison and Oneida counties. Tuesday’s ruling was a result of a 2007 appeal of the lower court’s decision.

Thursday, May 6, 2010

Admitted Home Improvement Scam Artist Wastes No Time Getting Back Into Hot Water, Allegedly Pocketing Cash For Another Project He Failed To Complete

In Danville, Pennsylvania, The Daily Item reports:

  • One day after pleading guilty to scamming two Montour County couples, a Riverside contractor accepted payment for a job he never completed, a Columbia-Montour judge said [] while sending Wayne Lee Biddinger to jail on a total $150,000 cash bail. Judge Thomas James [...] allowed Biddinger to revoke a Dec. 14 guilty plea for scamming a Narehood Road resident, but denied a similar request in a case involving an elderly Mahoning Township couple.

  • On Dec. 15, Biddinger accepted the second of three payments from a Watsontown man for a project he never completed. "This raises it to the level of violation of bail," James said during a 2½-hour hearing. "Look at the record," James said of Biddinger, 54, who has pleaded guilty to theft by services; unauthorized use, forgery, theft by deception; worthless checks and serving one to five years in a state prison for a Milton burglary. Biddinger's adult criminal record extends dates to 1979, with his pleading guilty five times to theft by deception and-or services [...]

For more, see Scam artist jailed (Area man faces trial for thefts by deception).

Contractor Accused Of Unloading Condemned Home Acquired At Foreclosure Sale To Unwitting Single Mom, Leaving Her Homeless

In Scranton, Pennsylvania, WNEP-TV Channel 16 reports:

  • A single mom in our area saved for years to make a down payment on a dream house. Ten months later, she was forced out when she learned the home she bought was condemned. Of all the houses on Eynon Street the one Teresa Shelp bought last summer appeared to her to be the newest and the nicest, outside and inside.

  • Shelp said she saw the first sign of something wrong in her daughter's bedroom a month after she moved into the home. "The room the leak was in, there was a lot of water damage, a lot of drywall, ceiling damage. The carpet had to come out," Shelp recounted. Then the bathroom plumbing sprung major leaks needing expensive repairs. "And it just gets worse and worse, and bigger and bigger," said Shelp. Wiring shorted out causing smoke detectors to blare in the middle of the night for no reason.

  • Shelp blames Dunmore contractor Rich Pennell who bought the home at a 2008 foreclosure sale. It was condemned at the time. Pennell made several repairs and later sold it to Shelp. Last week she learned the roofing, plumbing and electrical repairs were never inspected or permitted by the city. Her home was still condemned. "And I was the sucker that bought it," Shelp said. She could not go back to her condemned home to spend the night, if she did she'd be breaking the law.

  • So for one day, she actually lived out of her car and then began hitting up friends for help. "And then you figure what am I going to do? It's getting dark, now I have to figure out where I'm staying and then you call somebody. Can I stay there tonight?," said Shelp.

  • "I have been sick over this, honestly and I will do whatever I have to do at this point," said contractor Pennell. He is on the hot seat. The city fined him a year before he sold the house for doing plumbing work on the house without a license and real estate records show just before he sold the home Pennell signed paperwork claiming the city approved all final inspections.(1)

For the story, see Woman Blames Contractor for Condemned Home (A woman feels taken after buying a condemned home in Lackawanna County).

(1) This story should be a cautionary tale for all novice homebuyers and rookie real estate investors who, either knowingly or unwittingly, may be purchasing a home that was the subject of a recent foreclosure sale. In addition to the standard concerns one should have about any property that may have recently sat vacant during a foreclosure proceeding (ie. possible toxic mold, meth lab or indoor pot farm / marijuana grow house residue, "Chinese drywall" problems if the property was built within the last 5-7 years), checking that the certificate of occupancy has not been revoked and assuring oneself that any recent renovations were not performed without first obtaining the proper building permits (plumbing, electrical, etc.) should be added to the list of concerns for a would-be buyer of one of these properties (in some places, doing something as seemingly benign as replacing a kitchen countertop requires a permit).

Also, beware of a real estate investor looking to unload a recently-acquired foreclosure pursuant to a "seller financing" or under a rent-to-own / lease-option arrangement. This could be a sign that conventional bank financing may not be available because there might be a defect with the title to the property, and the investor is trying to recover his money by offering an arrangement where a novice homebuyer could be dissuaded from obtaining a title insurance policy (to this point, also beware of a seller of a recently foreclosed property (either a real estate investor looking to flip the property, or the foreclosing lender itself) who offers to obtain and pay for a title insurance policy on behalf of the homebuyer - you never know if the investor could be in cohoots with the title insurance agent to issue a policy on a defective title). Always obtain and pay for your own title policy from a company you find on your own when buying a recently-foreclosed house - even when dealing directly with the foreclosing lender (who, hopefully for the buyer, did not lack legal standing when filing the foreclosure action).

Also, take caution when hiring a home inspector to inspect a premises you might be interested in buying. For one story of a California home inspector who is now getting sued left and right for allegedly conducting crappy inspections that have left recent homebuyers none too happy, see Contra Costa Times: Brentwood leader's company crumbles in wake of questionable home inspections.

Fort Worth Feds Invoke Mail Fraud Statute To Bag Suspect For Allegedly Using Forged Deeds To Acquire, Convey Interests In 100+ Properties

In Fort Worth, Texas, the Star Telegram reports:

  • A federal grand jury returned an indictment for mail fraud against an Arlington man accused of stealing houses. The indictment alleges that between January 2007 to Feb. 26, 2010, when he was arrested, Norris Fisher, 62, illegally acquired real estate that did not belong to him by creating and filing forged warranty deeds with the Tarrant County clerk's office.

  • The properties were often vacant lots with unpaid back taxes due or they had weed liens filed against them by the city of Fort Worth. After identifying a property, Fisher would often file a forged warranty deed transferring the property to a fictitious buyer, forging the signature of the true property owner, and forging the signature and notary stamp affixed to the documents, according to the U.S. attorney's office.

  • After fraudulently transferring the stolen property several times, Fisher identified real buyers and sold the property to them. These buyers were unaware that Fisher had stolen the properties by forging warranty deeds and had sold or leased the properties' mineral rights. According to the affidavit filed with the criminal complaint, Fisher acquired more than 100 real properties in Tarrant County, valued at more than $1 million.

Source: Arlington man indicted on mail fraud charge.

For the U.S. Attorney (Fort Worth) press release, see Federal Grand Jury Indicts Fort Worth, Texas Man For Mail Fraud.

NY Alleged Multi-Billion $ Bogus Lien Racket Used In Intimidation, Extortion, Racket Against Local Officials, Say Plaintiffs In RICO Lawsuit

In Albany, New York, Courthouse News Service reports:

  • Ulster County and three towns in New York say they're the targets of a multibillion-dollar revenge and extortion plot aimed at "disrupting the administration of local government," because a town issued two traffic tickets to the plot's alleged ringleader.


  • The towns say the plot is revenge for two tickets that lead defendant Richard Enrique Ulloa received at a traffic stop in Rosendale, a rural town in Ulster County, in the Hudson Valley. Ulloa was sent to Ulster County Jail after failing to provide identification to Rosendale Town Justice Robert Vosper, a plaintiff in the case.(1)

  • "Shortly thereafter, defendant Richard Ulloa began a pattern of harassment and attempted extortion towards plaintiffs, including, but not limited to, filing purported maritime liens and UCC statements containing fraudulent statements asserting that plaintiffs owed defendants amounts totaling several billion dollars," the complaint states. "The liens and UCC statements were not only fraud, but part of a course of intimidation by defendant Richard Ulloa" and others.(2)


  • They demanded more than $2.8 billion from the plaintiffs through a myriad of phony criminal complaints and invoices, according to the complaint. Adding to Richard Ulloa's fury was the fact that "property owned by defendant Richard was the subject of a foreclosure proceeding venued in Ulster County," according to the complaint. "Ulloa attempted to file a purported 'deed' removing the foreclosing party's interest in his property. The Ulster County Clerk rejected the 'deed' offering."

For more, see Towns, Judges Say They're Being Extorted.

For the lawsuit, see County of Ulster, New York, et al. v. Ulloa, et al.

(1) The plaintiffs in this federal RICO lawsuit include: Ulster County, the Towns of Lloyd, Rosendale and Ulster, and 15 people, including judges, municipal attorneys, and a chief of police.

(2) Sara Ulloa, Jeffrey-Charles Burfeindt, Ed-Charles Parenteau, Raymond Tompkins, Katherine A. Cairo Davis and Kathy Steinhilber are the other defendants.

Consumer Resistance Continues To Mount Against Bill Collectors, Zombie Debt Buyers

The New York Times reports:

  • Even as collectors try to recoup debts from millions of Americans struggling to pay their bills, a small but growing number of lawyers and consumers are fighting back against what they describe as harassment, unscrupulous practices — and, most important to their litigiousness, violations of the Fair Debt Collection Practices Act.

  • In fact, 8,287 federal lawsuits were filed citing violations of the act in 2009, a 60 percent rise over the previous year, according to WebRecon, a site that tracks collection-related litigation and the most litigious consumers and lawyers on behalf of debt collectors.(1)


  • Debt collectors and debt buyers are the targets of litigious consumers, since the debt collection law primarily applies to third-party collectors. Peter Barry, a Minneapolis trial lawyer, is so bullish on the future of debt collection litigation that he holds several “boot camps” each year to share his secrets with other lawyers who want in on the action. If the debtor wins a court case under the act, the debt collector must pay the lawyer’s fees.


  • [58-year-old accountant and ex-bill collector Steven] Katz can also claim some credit for the increase in lawsuits. For six years, he has run a free Web site called, where people share tips on topics like keeping a paper trail and recording calls from collectors. He said the site received two million hits in 2009, a 60 percent increase over the previous year.

  • Debtorboards is geared to help people use the laws as they are on the books as both a shield and a sword,” said Mr. Katz, who says he has won $36,000 from his own litigation against collection agencies. (Since many of the settlements are confidential, it is difficult to prove the claims of Mr. Katz and others). Of course, debt collectors are hardly pleased with the litigation trend.

For more, see Learning How to Fight the Collector.

(1) The story points out that the U.S. Supreme Court made it even easier for consumers to use the courts to fight debt collectors, ruling that collectors cannot be shielded from suits by claiming they made a mistake in interpreting the law. See Supremes Reverse Lower Courts; Say Attorney Screw-Up When Pursuing Foreclosure Action Is Indefensible As "Bona Fide Error" Under FDCPA.

Wednesday, May 5, 2010

NJ Woman Indicted In Alleged Theft Of $274K From Her Now-Defunct Law Firm/Employer's Trust Account

From the Office of the Monmouth County, New Jersey Prosecutor:

  • [A] Monmouth County Grand Jury returned an indictment charging Kimberly Dehl, 33, of Toms River, N.J., with one count of second degree Theft and one count of second degree Misapplication of Entrusted Property. The charges relate to Dehl’s former role as the office manager of a Howell Township, N.J., law firm. The indictment follows an investigation which was conducted by the Monmouth County Prosecutor’s Office.

  • Dehl worked for the law firm of Bongiovanni & Pavliv from 1998 until she resigned in November 2007. The investigation revealed that from January 2002 through November 2007, Dehl misappropriated more than $274,000 in funds which were in the law firm’s trust account. Dehl accessed the funds by writing checks from the firm’s trust account which she then issued in order to make her mortgage payments and to pay her personal credit card bills. Dehl also issued checks to herself which she then deposited into her own personal bank accounts. The theft was not discovered until after Dehl’s resignation from the law firm.

  • The law firm of Bongiovanni & Pavliv dissolved in December 2007. The funds which were stolen from the law firm’s trust account were reimbursed by the law firm and the law firm’s insurance carrier.

For the Monmouth County Prosecutor's press release, see Toms River Woman Indicted For Theft From Howell Township Law Firm.

Phoenix Media Outlet Conducts Hidden Camera Probe Into Valley Outfit Offering Allegedly Bogus Assistance For Consumers Seeking Home Loan Help

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

  • A 5 Investigates hidden camera investigation has been examining a Valley company that promises to devote billions of dollars to reduce mortgage payments for desperate homeowners. It was the combination of a slick website and desperation that Cheryl Van Berkum said led her to a company called the Guardian Group.


  • 5 Investigates discovered that the plan was laid out in a power point presentation the company sent to Van Berkum and other desperate homeowners. (Download: Principal Reduction Presentation). The company also e-mailed documents from a recent success story as proof that the program works. [...] However, two months later, Van Berkum said she lost her home to foreclosure, and is out the $1,595 she said she paid Guardian Group.


  • 5 Investigates sent one of its producers into the company's Scottsdale office with a hidden camera. [...] When a representative of the company spoke to the producer on the video, it was a familiar story. "We negotiate with the lender," the representative said. "We go and buy, just in simple terms, we go and buy the note -- which is your loan." The Guardian Group representative added, "Actually, they settle for 5-cents on the dollar, 10-cents on the dollar." On the video, the representative said Guardian Group could buy the house and sell it back to the 5 Investigates producer below market value.


  • One former Guardian Group employee told 5 Investigates the company signed up more than 2,000 clients at $1,595 each, and that he didn't know of one success story.

For more, see 5 Investigates Mortgage Fraud Claim (Guardian Group Accused Of Swindling Desperate Homeowners).

Alleged Rent-To-Own Scam Artist Gets 37 Months For Leaving Would-Be Homeowners, Straw Buyers, Lenders Holding The Bag On Fraudulently Obtained Loans

In Portland, Oregon, The Columbian reports:

  • A Vancouver man was sentenced Tuesday in U.S. District Court in Portland to 37 months in prison for mortgage fraud. Jeremy Richardson, 33, pleaded guilty in September 2008 to money laundering. As part of his sentence, Richardson must pay more than $496,000 in restitution to four title companies and a number of victims affected by his fraud scheme. He also must serve three years of community supervision upon his release, according to a press release from the U.S. Attorney’s Office.

  • At his plea hearing, Richardson had admitted he solicited people to buy real estate as an investment and that if they didn’t qualify for a loan he would falsify documents to send to lenders. [...] Prosecutors said Richardson handled financial transactions on 90 to 100 residential properties in the metro area. Many of those homes then went into foreclosure.

For the story, see Vancouver man to serve 37 months for fraud scheme.

For the U.S. Attorney (Portland) press release, see Mortgage Fraud Defendant Sentenced to 37 Months in Federal Prison.

For an earlier post, see Alleged Oregon "Rent-To-Own" Scam Artist Flees To Mexico, Leaving Tenants, Straw Buyers Holding The Bag.

BofA Accused Of Jerking Around 91-Year Old WW II Vet On Mortgage Payments

In Martinsburg, West Virginia, The Huffington Post reports:

  • Peter Ruplenas, a 91-year-old combat photographer who served in World War II, Korea, and Vietnam, is now battling Bank of America in federal court. The bank pretended not to receive Ruplenas' mortgage payments, which he made through a bankruptcy trustee, and tricked Ruplenas into thinking that he himself had to make the payments directly, the lawsuit alleges.

  • Additionally, Ruplenas had applied for a modification under the Obama administration's Making Home Affordable program -- but for months, he received foreclosure notices at his house in Gerrardstown, W.V., causing "extreme emotional distress."


  • Ruplenas told the American Forces Press Service in 2003 that being a combat photographer in three wars was "a beautiful job." He earned a Purple Heart after being shot in the Korean War.

For more, see Peter Ruplenas, 91-Year-Old Vet, Sues Bank Of America Over Mortgage Malfeasance.

Foot-Dragging Mortgage Lender Yields To HOA Demand; Abandons Foreclosure On Unwanted Collateral, Releases Security Interest In Condo Unit

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

  • A new tactic in dealing with foreclosed condo units is being used by one attorney in South Florida. [...] Attorney Ben Solomon of the Association Law Group explained, "The bottom line is the banks don't want to assume the liability associated with the unit, including the obligation to pay maintenance assessments to the association."

  • Solomon is now challenging the banks to foreclose or get out of the way. "The bank has to make a decision as to if they are going to take title to the financially upside down unit, or release their mortgage," said Solomon. He calls it a mortgage terminator.

  • He demanded Citibank to foreclose on unit 14 in [one] building. Surprisingly, instead of an 18 month legal fight, Citibank wrote off the debt, and handed the title over. [...] Solomon believes this case will set a precedent for more cases. "They can't sit on the sidelines anymore. And that's this legal strategy. It's to force them into making a decision," said Solomon.

  • Either way the association wins collecting dues or now title from the bank. Solomon says he plans to use this tactic on 12 more properties. It's an interesting concept. Forget foreclosure or refinance. Just ask the bank for the title. Who knows, maybe they'll give it to you.(1)

For the story, see Condos Demanding Foreclosure On Abandoned Units (Condo Associations Plagued With Abandoned Units Demanding Banks To Foreclose Or Give Up Title), (or go here for the video).

See also, Forget Short Sales, Just Hand Over Title:

  • In the case of this Miami Beach condo the unit owner actually moved out in 2007 when the association foreclosed on the unit. [...] The association has waited patiently for the bank to foreclose but three years later nothing has happened. Citibank knew they were going to take a bath on the unit mortgaged at $166,000 ... Appraised today under $60k.

(1) Based on the WFOR-TV Channel 4 video report, it appears that, after waiting around for a couple of years after it took title to the unit as a result of conducting its own lien foreclosure action, the condo association filed an action to quiet title against Citibank demanding, essentially, the lender to either "fish or cut bait" with respect to its foreclosure rights (assuming, of course, Citibank had any foreclosure rights in the first place by establishing that it had legal standing to foreclose).

Tuesday, May 4, 2010

Media Coverage On Alleged Fraudulent Court Filings By Florida Foreclosure Mills Continues

In Central Florida, the Bradenton Herald Tribune recently weighed in with their report on the ongoing probe by the Florida Attorney General's office into what it says "appears to be [the] fabricating and/or presenting false and misleading documents in foreclosure cases."

  • Foreclosure defense attorneys who have long complained about false documents in Florida foreclosure cases said judges should pursue claims of possible wrongdoing. "You see all these documents time and time again which on their face are not possible," Tampa attorney Matthew Weidner said. "The judges cannot just ignore this. They cannot ignore blatant fraud in front of their faces." The Attorney General's office opened its investigation into Florida Default in October, but it only became public after the target of the investigation was told about it.


  • Twelfth Judicial Circuit Chief Judge Lee Haworth said news of the investigation could prompt judges in Sarasota and Manatee counties to look more closely at filings. But Haworth said the judges do not have the ability to check documents as thoroughly as they would like.(1) "I would be very skeptical they're the only ones," Haworth said of the Florida Default Law Group investigation. "Our anecdotal experience are it's pretty widespread."

For the story, see Paperwork puts foreclosure firm in hot seat (Group suspected of falsifying records to retake homes).

(1) It appears that, at this point, the national and local media coverage on this issue has placed the entire State of Florida on notice of this problem. I wonder how long it will take for Judge Haworth (and other chief judges of the lower courts throughout Florida) to recognize that they really have no choice but to thoroughly scrutinize the court filings by any attorney filing a foreclosure action. Anything less would appear to demonstrate a reckless indifference for the truth on the part of the judiciary, to put it nicely.

"Sovereign Squatter" Movement Running Bogus "Home Adoption" Rackets By Using Phony Deed Filings Spreading Around Country?

In Polson, Montana, the Missoulian reports on the so-called "home adoption" racket being run by self-proclaimed "sovereign squatters" that recently hit locally and is apparently hitting other spots around the country:

  • What’s occurred in Montana is evidently more prevalent elsewhere. In California, according to the Southern Poverty Law Center ["SPLC"], “sovereign squatters” are filing bogus deeds on luxury homes from San Diego to Sacramento. They’ve even got a name for it – “home adoptions.”


  • “Sovereign squatters” justify their actions, according to the SPLC’s quarterly Intelligence Report, “with a mix of ‘common law’ theory, so-called sovereign immunity and references to the Old Testament.” The most brazen attempt at a property takeover by the sovereign citizen movement may have occurred last year in a Miami suburb. There, one Angel Cruz showed up with 20 black-clad followers and 10 hired – and armed – security guards, to take over a strip mall branch of the Bank of America.


  • Wearing counterfeit U.S. Treasury badges, according to a story by Casey Sanchez in the SPLC’s Intelligence Report, the 30 blocked the bank’s entrance, parking lot and drive-through lanes. Cruz apparently believed what he was doing was legitimate. A week earlier, Sanchez reported, the 49-year-old had stopped by the Palmetto Bay Police Department and asked that officers back him up during his “eviction” of the Bank of America.

  • To an incredulous police officer,” SPLC’s Intelligence Report said, “Cruz handed over a ‘court order’ signed and sealed by a ‘judge’ from ‘The United Cities Private Court’” – United Cities being a company Cruz started.

For more, see 'Home adoptions' in Lolo, Polson: Sovereign squatters a national movement.

Feds Obtain Judgment Against Southern California Loan Modification Racket For Clipping Homeowners With Upfront Fees & Failing To Deliver On Promises

The Federal Trade Commission recently announced:

  • The Federal Trade Commission has put a permanent stop to another mortgage foreclosure “rescue” operation that allegedly promoted bogus loan modification and foreclosure relief services. The case is one of 17 lawsuits the FTC has brought in the past 11 months in a crackdown on mortgage relief frauds that target financially strapped homeowners, and more cases are being investigated. In February 2009, the FTC charged National Foreclosure Relief, Inc. and three of its principals with falsely claiming they would stop foreclosure or fully refund consumers’ money. [...] Many people paid the company up-front fees as high as $1,000, but still ultimately lost their homes to foreclosure. Others avoided foreclosure only through their own efforts. After paying the fee, consumers who contacted the company were often either ignored or falsely told that negotiations with their lenders were under way.


  • The settlements impose a $12 million judgment, approximately $500,000 of which will be paid from company funds frozen by the court. The full judgment against [former director Chele] Stone [also known as Chele Medina] will become due immediately if she is found to have misrepresented her financial condition. Litigation will continue against the remaining two defendants in the case.(1)

For the FTC press release, see FTC Puts Mortgage Foreclosure "Rescue" Company Out of Business.

(1) For the related court documents, see:

  • Stipulated Final Order for Permanent Injunction and Settlement of Claims as to Defendant Chele Stone, a/k/a/ Chele Medina,
  • Stipulated Final Order for Permanent Injunction and Settlement of Claims as to Defendant National Foreclosure Relief, Inc.,
  • Temporary Restraining Order With Asset Freeze, Appointment of Temporary Receiver and Other Equitable Relief, and Order to Show Cause Why a Preliminary Injunction Should Not Issue and a Permanent Receiver Should Not Be Appointed,
  • Complaint for Permanent Injunction and Other Equitable Relief.

NJ AG Gets $11M+ Judgment Against Foreclosure Rescue Operator Who Screwed Financially Strapped Homeowners With Bogus Loan Modification Services

From the Office of the New Jersey Attorney General:

  • Attorney General Paula T. Dow and Division of Law Director Robert Hanna announced today that a New Jersey loan modification company and its owners have agreed to an $11.45 million judgment to settle civil charges they defrauded homeowners who sought help in staving off mortgage foreclosure.(1)

  • Defendant New Hope Property, LLC, of Bellmawr, Camden County, has agreed to a judgment of $10 million to settle allegations its company, New Hope Modifications, took money up front from customers in return for promised mortgage rescue help – a prohibited business in New Jersey. In addition, New Hope is permanently barred under the settlement from selling debt adjustment, loan modification or foreclosure relief services in New Jersey.(2)


  • This is an important outcome, one that should send a clear message to anyone who may be tempted to seek profit in the financial misery of others during these tough times,” said Attorney General Dow. “We are committed to identifying and investigating this type of fraud, and we will take appropriate action where we find it.” “This company, and these individuals, made money by selling false hope to trusting people during their darkest financial hour,” Dow added. “It is appropriate that their professional licenses are revoked, and that they will never again be permitted to operate in our state.”

For the New Jersey AG press release, see Attorney General, DOL Director Announce Settlement in Mortgage Fraud Case; Loan Modification Company, Individuals Agree to $11.4 Million Judgment.

For the consent judgment, see Dow, et al. v. New Hope Property, LLC, et al.

For the original lawsuit, see Milgram v. New Hope Property LLC d/b/a New Hope Modifications.

(1) Filed in March 2009 in New Jersey Superior Court in Camden County, the state’s original four-count lawsuit charged New Hope with violations of the Consumer Fraud Act, state advertising regulations and the Debt Adjustment and Credit Counseling Act. The state’s investigation revealed thousands of victims nationwide.

(2) According to the press release, Brian Mammoccio, identified as a registered agent of New Hope in New Jersey, agreed to a $1.2 million judgment to settle allegations against him. Mammoccio, of Mullica Hill, Gloucester County, has also consented to the revocation of his mortgage solicitor’s registration, and has agreed to never again apply for any license, registration or authority from the state Department of Banking. Donna Fisher, also identified as a registered agent of New Hope, must pay the state $250,000 and has consented to revocation of both her individual lender’s license and her mortgage solicitor’s registration. Fisher, also of Mullica Hill, has agreed to never again apply for any licensure from the Department of Banking.

Colorado AG Targets Foreclosure Rescue Outfit With Lawsuit Alleging Illegal Upfront Fee Loan Modification Racket

From the Office of the Colorado Attorney General:

  • Colorado Attorney General John Suthers announced today that his office has filed a consumer protection lawsuit against American Mortgage Consultants ["AMC"], its owner, Oliver Paul Maldonado, and its principal employee, Santiago Fabian Pineda, on suspicion that they defrauded consumers seeking loan modifications and foreclosure relief.

  • According to the complaint, filed in Denver District Court, American Mortgage Consultants used deceptive advertisements to attract approximately 170 consumers to the loan modification company from January 2009 through March 2010.(1) [...] Maldonado and American Mortgage Consultants are suspected of charging these consumers $2,500 in upfront fees for its services, which is illegal under Colorado law. According to the complaint, American Mortgage Consultants did little if anything to help its customers renegotiate or modify their home loans beyond shipping off their loan modification applications to an Ohio-based company.

For the Colorado AG press release, see Attorney General announces consumer-protection lawsuit against Colorado loan modification company.

For other documents on this case from the Colorado AG:

(1) According to the press release, the company and Maldonado are suspected of using deceptive telephone marketing, direct mail, radio advertisements and Web marketing to attract consumers. According to the complaint, Maldonado also used video of President Barack Obama and materials from the Federal Deposit Insurance Corporation to give consumers the impression that American Mortgage Consultants was affiliated with or partnering with the federal government.

Monday, May 3, 2010

Florida AG Directs Attention To One Of Its Own Employees In Ongoing Foreclosure Mill Probe Into Possible Manufacturing, Filing Of Bogus Court Docs

In Tampa, Florida, The Tampa Tribune reports:

  • The Florida Attorney General's Office said Friday that it is investigating the involvement one of its attorneys had with one of the state's largest foreclosure firms. This comes a day after the office said it is investigating the firm, Tampa-based Florida Default Law Group, for what "appears to be fabricating and/or presenting false and misleading documents in foreclosure cases." The investigation is a civil action, rather than a criminal probe.


  • Erin Cullaro, a former employee of the foreclosure firm, now works as an assistant attorney general in Tampa for the Economic Crimes Division of the attorney general's office. While working for the attorney general's office, Cullaro was approved to work as a notary for the foreclosure firm, the state law enforcement agency said. Her conduct in that role is now being questioned in connection with an ongoing foreclosure lawsuit that alleges her role was a conflict of interest and that her notarized signatures were inconsistent. Court documents assert that she signed off on documents while out of town on business with the attorney general's office.

  • "Any suggestion that one of our attorneys might have been involved in improper activities while engaged as a notary outside of her scope of employment with this office is troubling," said Ryan Wiggins, a spokeswoman for the attorney general's office. "The attorney general has asked his inspector general to thoroughly investigate this matter."


  • Meanwhile, the lawyer who raised the questions about Cullaro said he is pleased the matter is being taken seriously. "This is shocking that one of the attorney general's own attorneys was helping to execute documents on behalf of the very company it is now investigating," said Tom Ice of Ice Legal in West Palm Beach.

  • Ice detailed his questions in court documents filed in the 7th Judicial Circuit in Volusia County.(2) Ice said Cullaro worked as a lawyer with Florida Default Group before she worked for the attorney general's office. When she left the firm, she continued to serve as an expert witness for the firm, signing affidavits to establish that the firm's fees were reasonable. Her sister-in-law, Lisa Cullaro, notarized the affidavits, according to court documents. When Erin started work for the attorney general's office, the Cullaros changed roles: Lisa Cullaro served as the expert witness, and Erin Cullaro notarized the documents.
    Ice said both Lisa and Erin Cullaro's signatures varied in appearance, and he wants to question the two about it. The Cullaros, through lawyers, protested, but a Volusia County judge agreed in early April to allow Ice to ask the two limited questions. This has not yet happened.(3)

For more, see State AG investigates its own.

(1) According to the story, Florida Default Law Group represents lenders and mortgage servicing companies in foreclosure lawsuits and other real estate matters. Such firms, which frequently process hundreds or thousands of foreclosure cases a month, are sometimes referred to as "foreclosure mills" in the legal field.

(2) Go here for Ice's court documents, and here for a transcript of a related court hearing.

(3) Go here for more on the Cullaro sisters.

Federal Judge Clobbers Sobbing Sale Leaseback Peddler With 270 Months For Victimizing 17 Minn. Homeowners In Equity Stripping, F'closure Rescue Ripoff

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

  • A 41-year-old Prior Lake man was sentenced [] in federal court in St. Paul on charges connected to an equity-skimming scheme that targeted vulnerable homeowners. United States District Court Judge Patrick J. Schiltz sentenced Michael Fiorito to 270 months in prison on one count of conspiracy to commit mail fraud and six counts of mail fraud.(1)


  • According to court documents and evidence presented at trial, Fiorito was a mortgage broker at three different Minnesota mortgage companies between 2004 and 2007. During that time, he worked with his assistant, Kristin Louise Jerde, to devise a scheme to defraud homeowners who were in foreclosure or behind on their mortgage payments. Specifically, Fiorito and Jerde caused those homeowners to refinance their home loans or sell their homes outright to Fiorito. Then, he stole their money, either taking the equity checks produced during the refinancing process or the closing checks intended for the sellers of the homes he supposedly purchased.


  • Between January 2005 and March 2007, Fiorito fraudulently converted to his own use almost $500,000 in equity as a result of his illegal activity. His victims included 17 people from Janesville, Mound, Duluth, Mankato, Prior Lake, Spring Lake Park, Austin, Golden Valley, Vadnais Heights, and Shoreview, Minnesota.(2)


  • In connection to this crime, Fiorito’s assistant, Kristin Louise Jerde, pleaded guilty to one count of conspiracy to commit mail fraud. On September 9, 2009, she was sentenced to serve three years of probation and ordered to pay $364,092.24 in restitution.

For the U.S. Attorney press release, see Former mortgage broker sentenced to nearly 23 years in prison for defrauding vulnerable homeowners.

See also the Minneapolis Star Tribune: Felon sentenced to 23 years for home schemes (Former mortgage broker Michael Fiorito "will victimize" others again, the judge predicted):

  • After much was said and done -- after he spent years blaming victims, filing motions and feigning various ailments -- Michael Fiorito turned to the only tactic he had left Thursday to avoid a long federal prison sentence. He started sobbing. It didn't work.

(1) The press release goes on to say that Fiorito was indicted on June 19, 2007, and was convicted by a federal jury on May 20, 2009, following a three-week trial. At sentencing, Judge Schiltz described Fiorito as a “troubled and dishonest” individual who is “incapable of empathizing” with his victims and who “refuses to accept responsibility” for his actions. Judge Schiltz went on to impose a prison sentence greater than called for under the U.S. Sentencing Guidelines. In doing so, he said, “Never before have I varied an upward sentence, but in this case, I find it justified because of the need to protect the public. I have no doubt that upon his release from prison, Mr. Fiorito will return to victimize others, and the sole way to limit that is to keep him locked up. He’s spent most of his life lying and stealing, and I do not believe it’s possible to deter him.”

(2) According to the press release, witnesses testified at trial that they were unaware they had signed documents granting Fiorito permission to handle their money. In addition, they often times failed to realize they had actually sold their homes to Fiorito. According to them, Fiorito routinely misrepresented the papers he gave them for signature, which led them, unknowingly, to award Fiorito power over their money and title to their property. Court documents also indicate that under certain circumstances, even after Fiorito had fraudulently acquired title to the homes of these unsuspecting people, he sent them monthly “mortgage” bills.

Philly U.S. Attorney Warns Against Sale Leaseback, Foreclosure Rescue Scams

In Philadelphia, Pennsylvania, Michael L. Levy, U.S. Attorney for the Eastern District of Pennsylvania writes in the Philadelphia Daily News, warning financially strapped homeowners and investors alike against sale leaseback, foreclosure rescue scams:

  • SOMETIMES it begins as a telephone call or mailing that offers help. Even though it may be an obvious solicitation, to the homeowner desperate to avoid foreclosure, it sounds like a hopeful way out. The caller may be offering to have an "investor" buy the home so the current owner can remain and perhaps even buy it back.


  • This type of foreclosure rescue scam is perpetrated far too frequently. Our office has prosecuted a wide range of scammers, including lawyers, mortgage brokers and authority figures we normally trust.(1)

Levy gives the following examples of how unwitting individuals get sucked into this type of scam:

  • David is one victim. He lost his job in the economic downturn. When he found work, the pay wasn't enough to afford his $742 monthly mortgage. He fell behind. Foreclosure notices soon followed, as did fliers offering to help distressed homeowners. He called. The mortgage "rescue" company told him the only way out was to sell his house and rent it back. David's rental payments started at $1,000, but kept increasing with no explanation. He was soon evicted and now lives in a motel.


  • Sally's troubles began with her divorce. She had to take a second mortgage and it wasn't long before the foreclosure notice came. Because she fell behind on her payments, her credit suffered and no bank would help her refinance. She sought help from a "foreclosure relief specialist" who told her that investors would buy her house for half the equity and use the other half for her down payment to help her eventually buy back the house. But at settlement, Sally received nothing despite having $150,000 in equity in the home, and her monthly payments went from $1,800 a month to $2,800.

  • Investors also fall victim to these scams. The victims are led to believe they're making an investment in real estate and that they're helping to save someone's home.
    They are recruited as worthy investors because of their good credit and steady income. Tom and his wife are just one example. They purchased three homes believing they would help the former homeowner remain while making a small profit. The mortgage broker told them that some of the equity in the house would be put aside as a cushion in the event that the tenant couldn't make a payment. But the broker lied, the money wasn't put aside, the adjustable-rate mortgages kept adjusting upward, and the original owner couldn't afford to buy back the house. Tom and his wife are now in bankruptcy and are likely to lose their own home as a result of trying to help someone in need through a crooked broker.

For the column, see Warning: Mortgage Fraud Ahead.

(1) For an example, see:

Assembly Line, F'closure Mill Law Firm Targeted In Fla. AG Civil Probe Into Allegations Of Manufacturing False, Misleading Documents In Legal Actions

In Fort Lauderdale, Florida, The Wall Street Journal reports:

  • The Florida attorney general's office is investigating possible misconduct by a large law firm that files foreclosures for banks, according to a posting on its Web site.(1) The Web site said the office is looking at whether Florida Default Law Group, based in Tampa, was involved in "fabricating and/or presenting false and misleading documents in foreclosure cases."

  • Mortgage documents that are used to prove a bank has a right to foreclose "have later been shown to be legally inadequate and/or insufficient," the Web site said. A spokeswoman for Florida Default declined to comment. Ryan Wiggins, a spokeswoman for Attorney General Bill McCollum, said the investigation began last fall.

  • The civil probe comes as some judges and federal prosecutors in Florida are paying close attention to how banks—and so-called foreclosure-mill law firms that work for banks—are attempting to take control of homes from borrowers in default. Judges across the country have chastised banks and their attorneys for attempting to seize properties they can't prove they own. Last month, a Florida judge said that a mortgage document filed by a bank in a foreclosure case was part of an "intentional effort to mislead" the court.

  • The attorney general's office said on its Web site that Florida Default "appears to be" a client of Lender Processing Services Inc., a Jacksonville company that has said it is being investigated by the federal criminal prosecutors. LPS, which processes and sometimes produces documents needed by banks to prove they own the mortgages, has acknowledged errors with documents they processed that were filed in foreclosure cases and said they have been fixed. An LPS spokeswoman said on Thursday the company is "willing to cooperate with any regulatory body that contacts us." Ms. Wiggins said the attorney general's office recently began investigating conduct by LPS in foreclosures.

  • Faulty bank paperwork has been an issue in foreclosure proceedings across the U.S. since the housing crisis took hold a few years ago. It is sometimes difficult for banks, which act on behalf of mortgage-securities investors in most foreclosure cases, to prove they own the loans.

For the story, see Florida Probing Law Firm in Foreclosures (requires paid subscription; if no subscription, TRY HERE, then click link for the story).

Thanks to Michael at 4closureFraud and Deontos .is for the heads up on the story.

(1) For the Florida AG posting, see Active Public Consumer-Related Investigation of Florida Default Law Group, PL - Case # L10-3-1095:

  • Appears to be fabricating and/or presenting false and misleading documents in foreclosure cases. These documents have been presented in court before judges as actual assignments of mortgages and have later been shown to be legally inadequate and/or insufficient. Presenting faulty bank paperwork due to the mortgage crisis and thousands of foreclosures per month. This firm is one of the largest foreclosure firms in the State. This firm appears to be one of Docx, LLC a/k/a Lender Processing Services' clients, who this office is also investigating.

Legal Non-Profits Get Go-Ahead To Claim Prevailing Party Attorney Fees In Successful Civil Lawsuits

Courthouse News Service reports:

  • Legal Services Corporation may claim attorneys' fees under federal and state law allowing the fees to be awarded, according to an announcement(1) that an interim rule is final as written. The Feb. 11 interim rule was based on the elimination of the statutory prohibition on attorney's fees for the nonprofit in its fiscal year 2010 appropriate legislation.

Source: It's Final: Nonprofit Keeps Attorney Fees.

(1) For the announcement in the Federal Register (April 26, 2010), see Fee-Generating Cases; Use of Non-LSC Funds, Transfers of LSC Funds, Program Integrity; Attorneys' Fees:

  • [LSC] agrees that the restriction [on claiming prevailing party attorney fees] imposes unnecessary burdens on recipients and places clients at a disadvantage with respect to other litigants. Specifically, the ability to make a claim for attorneys' fees is often a strategic tool in the lawyers' arsenal to obtain a favorable settlement from the opposing side. Restricting a recipient's ability to avail itself of this strategic tool puts clients at a disadvantage and undermines clients' ability to obtain equal access to justice. The attorneys' fees restriction can also be said to undermine one of the primary purposes of fee-shifting statutes, namely to punish those who have violated the rights of persons protected under such statutes. In addition, in a time of extremely tight funding, the inability of a recipient to obtain otherwise legally available attorneys' fees places an unnecessary financial strain on the recipient. If a recipient could collect and retain attorneys' fees, it would free up other funding of the recipient to provide services to additional clients and help close the justice gap. More fundamental, the restriction results in clients of grantees being treated differently and less advantageously than all other private litigants, which LSC believes is unwarranted and fundamentally at odds with the Corporation's Equal Justice mission.


  • With the repeal of the restriction, recipients are permitted to claim and collect and retain attorneys' fees with respect to any work they have performed for which fees are available to them, without regard to when the legal work for which fees are claimed or awarded was performed. LSC considered whether recipients should be limited seek or obtain attorneys fees related to ``new'' work; that is, work done only as of the date of the statutory change or the effective date of the Interim Final Rule. LSC rejected that position because the attorneys' fees prohibition applies to the particular activity of seeking and receiving attorneys' fees, but is irrelevant to the permissibility of the underlying legal work. [...] LSC [] believes that not limiting the work for which recipients may now seek or obtain attorneys' fees will best afford recipients the benefits of the lifting of the restriction. There may well be a number of ongoing cases where the newly available option of the potentiality of attorneys' fees will still be effective to level the playing field and afford recipients additional leverage with respect to opposing counsel in those cases.

Sunday, May 2, 2010

Lender Accused Of Improper Trash-Out After Selling Former REO To Michigan Homebuyer In All-Cash Deal

In Grand Rapids, Michigan, WOOD-TV Channel 8 reports:

  • A Gowen couple is filing a federal suit against Deutsche Bank National Trust Company, saying the bank not only stole their belongings, but also, their sense of security. Rick and Sherry Rought say the same bank that sold them a home for their adult daughter is breaking into the house and treating it as a foreclosure.

  • The family's plan was simple. The Roughts bought the foreclosed home in cash and fixed it up, then commuted from their primary home, moving in little by little. But six months after the purchase from Deutsche Bank, things started to get complicated.

  • "We just went up there one day and there was a note on the door from this company -- a trash-out company," Rick Rought said. "The doors were broken into." The defendants not only changed the locks on the home, but stole some possessions, the Roughts said. All kinds of things were taken -- from a dining room set to the American flag mounted outside the home. "We looked and the curtains were gone, then we started to panic and when we went in, there was virtually nothing left," Sherry Rought said. "Everything was swept out and gone."

  • The couple got the Michigan State Police involved, but the investigation led to dead ends: unreturned messages at Deutsche Bank and a third-party company, Field Asset Services, hired by the bank to maintain the property during foreclosure. Field Asset Services broke into the home two other times, the Rought family said, treating the property as though it was still foreclosed.

For the story, see 'Bank acts like home is a foreclosure' (Gowen couple files lawsuit against Deutsche Bank).

See also, WZZM-TV Channel 13: Family's recently purchased home, gutted by property removal service:

  • The Roughts are telling their story with help from Massachusetts attorney's Joseph DeMello and Carlin Phillips. "They have suffered what many people throughout the United States have been suffering and that is unconscionable conduct at the hands of these multi-billion dollar banks," says DeMello.(1)

(1) DeMello currently represents a Massachusetts couple who got similarly screwed when they bought a foreclosing lender's REO on an all-cash basis, only to have the premises trashed out shortly thereafter. See ABC News: No Mortgage, Still Foreclosed? Bank of America Sued for Seizing Wrong Homes (In the Last Four Months, Three Homeowners Have Sued Bank of America for Mistakenly Foreclosing on Their Homes).

Testimony Of MERS CEO, Senior VP Available Online

Available at are depositions of Mortgage Electronic Registration System (MERS) CEO R.K. Arnold and Senior VP and Corporate Secretary William Hultman which were taken in recent litigation, as well as a hearing transcript from Dalton et al v. Citimortgage et al. These documents may be helpful to every borrower with loans involving MERS and should pass along to their legal counsel.

Go here for the links to the above-referenced documents.

Documents available online courtesy of Mike Dillon at

Judge Gives Go-Ahead To F'closing Lender Despite Lack Of Conclusive Evidence Of Standing As Ch. 11 Debtors Refuse To Make Adequate Protection Payments

A recent ruling by a U.S. Bankruptcy Court in Northern California allowed for a foreclosure action to continue, despite the lenders' failure to conclusively establish that it had standing to foreclose, where a Chapter 11 debtor/couple adamantly refused to make "adequate protection payments" as apparently required by the bankruptcy law, pending full adjudication of the standing issues. In allowing the lenders to go ahead with foreclosure actions, the court made the following comments (bold text is my emphasis, not in the original text):

  • In this chapter 11 case the pro se debtors have steadfastly and repeatedly resisted motions for relief from stay, while at the same time steadfastly and repeatedly refusing to make payments pending resolution of their disputes about the standing of those secured creditors to seek such relief.

  • The court is sympathetic with any debtor who finds it difficult, if not sometimes seemingly impossible, to wade through the maze of transferred notes, assigned deeds of trust, ethereal beneficiaries, and information and belief allegations about what some predecessor loan servicing agent did with the original note and deed of trust.

  • But it is equally unsympathetic with debtors shedding crocodile tears about making adequate protection payments while at the same time claiming all the benefits the bankruptcy law provides them. If you want to gamble in the casino and hope to hit the jackpot, you can't expect to win by using house money. You've got to put a "little skin in the game". Because these debtors have refused to do so, relief from stay could hardly be more appropriate.

For the ruling, see In Re Aniel, Bankruptcy Case No. 09-30452DM (Bankr. N.D. Cal. April 21, 2010).

(1) The court when on to give this rationale for its ruling (bold text is my emphasis, not in the original text):

  • Here, Creditor has made a colorable claim that it has standing by showing that it holds the note, endorsed in blank. Debtors do not dispute that they executed the note and deed of trust which are the subject of the MRS [motion for relief from stay]. If Debtors wish to maintain the status quo pending resolution of matters that require more plenary proceedings than relief from stay motions (e.g., adversary proceedings for declaratory relief to determine the proper holder of a note; objections to the claim of the creditor; confirmation of a Chapter 11 reorganization plan that restructures the claim of the creditor, etc.), the conventional way to do so is to make adequate protection payments in the meantime.

  • Because of Debtors' adamant refusal to make such payments the court is less tolerant than the Wilhelm, Jacobson, and Hwang courts in one material respect: whether debtors should provide adequate protection payments to the Creditor until the standing issues are fully adjudicated. They have not made any payment on this note (or the notes secured by the six other properties in which Debtors assert an ownership interest) in over a year while they have been in bankruptcy. They failed to make at least five prepetition payments on the note secured by the Property. They have no equity in the Property. They have used cash collateral without permission.

  • Under such circumstances, justice dictates that Debtors make adequate protection payments pending resolution of the standing issues. The court will not continue the stay with all of the risk being borne by the creditor. In circumstances where there is no doubt that the Debtors signed the note that is the subject of the motion, (and, frankly, not much doubt that ultimately Creditor will be able to "connect the dots" by showing the chain of title of the note and deed of trust), denial of relief from stay when adequate protection payments could be made would be patently unfair to Creditor and impose on it all of the risk of further deterioration of its security without protection.

  • Since Debtors have no inclination to make payments, it is abundantly clear that once the Creditor (and other similarly situated secured creditors on other properties of Debtors) proves its standing, Debtors will allow the Property to be foreclosed. There is simply no point in delaying the inevitable.

  • Debtors were not unprotected or left without remedy if they had made the adequate protection payments as ordered by the court. As the December 31 order provides, the adequate protection payments consist of the monthly payments due under the note undisputedly executed by them, and Creditor's counsel was to hold such payments in trust pending resolution of the standing challenge. If Debtors had ultimately prevailed, the payments (plus interest) would have been returned to Debtors. Moreover, the order granting relief from the automatic stay does not preclude Debtors from challenging in state court the legitimacy of Creditor's right to foreclose.

  • Debtors chose not to comply with this court's December 31 order. They chose not to make the adequate protection payments. They must accept the consequences of their decision. Under the circumstances described in this memorandum decision, the court questions whether the Debtors' challenges to standing are made in good faith. The court therefore did not and will not vacate the order granting relief from stay.