Saturday, May 22, 2010

Homeless Shelter Housing Hundreds Each Night & Facing Foreclosure Files Civil Rights Suit Against City Of Atlanta, Two Civic Groups

In Atlanta, Georgia, the Atlanta Journal Constitution reports:

  • Leaders of an Atlanta homeless shelter fighting foreclosure announced during a Thursday rally they filed a complaint against the city and two civic groups, accusing them of violating their clients' civil rights. Civil rights advocates, residents and other supporters joined hands and surrounded the Metro Atlanta Task Force for the Homeless Peachtree-Pine shelter, vowing to keep the center open.

  • "We have to save this building," Anita Beaty, the task force's executive director, said during the protest. "This building is our emergency respite and home." The complaint, filed May 6, accuses the city of discriminatory practices that violate federal fair housing rules. It asks the U.S. Department of Housing and Urban Development to withhold about $20 million in federal housing and community development funds. Peachtree-Pine houses hundreds of people each night.

Source: Homeless shelter announces civil rights complaint during rally.

Massachusetts AG Hammers Three Landlords In Separate Cases For Using Craigslist To Publish Discriminatory "No Section 8" Rental Ads

From the Office of the Massachusetts Attorney General:

In each case, the landlord allegedly placed an advertisement on Craigslist listing a residential unit for rent but stating “no Section 8,” referring to a Federal housing program that provides rent subsidies for low-income tenants. The Massachusetts Anti-Discrimination Act prohibits real estate companies, agents, landlords and others involved in property rentals, from discriminating against people who use state or federal housing subsidies to pay for all or a portion of their rent, according to the Massacusetts AG's press releases.

Since taking office in January 2007, Attorney General Coakley’s office has obtained judgments in 86 housing discrimination cases brought against landlords, property managers, and/or real estate companies. In October, 2009, the Attorney General’s Office reached 20 settlements and filed six complaints against landlords and real estate agents across the Commonwealth accused of violating state anti-discrimination laws on Craigslist.

Friday, May 21, 2010

Woman Faces Felony Charges For Allegedly Pocketing $80K+ In Monthly Mortgage Payments Received From Trusting Co-Owner, Leaving Home In Foreclosure

In Stamford, Connecticut, the Stamford Advocate reports:

  • Peter Scrofani trusted Wendy Greco. For the past five years, they lived in the same house, shared a mortgage, and their families raised each other's children. In police reports, he refers to her as his aunt.

  • Three years ago, the two families bought a house in Glenbrook. They split the mortgage payments. Peter and his mother, Rose Scrofani-Guitton, would pay $2,955 per month. Greco and her husband, Dan, would pay $1,500 per month. Greco was in charge of transferring the monthly payments.


  • Three years later, the house is under foreclosure, the Scrofanis are buried in debt and Greco faces criminal larceny charges. Greco, a 40-year-old former city employee, is accused of stealing more than $80,000 from her family friends and house-mates, allegedly keeping more than two years of mortgage payments for herself, court documents allege. She was arrested Monday and charged with first-degree larceny and two counts of felony forgery.

For more, see Their trust breached, a family fights for their home.

Income Tax Hit Bites Some Underwater Homeowners

The Wall Street Journal reports:

  • [Homeowner] Maxine McDaniel has a message for Americans considering walking away from an unaffordable mortgage: Beware of taxes. Though not every homeowner who's underwater on a mortgage need worry, many are finding that a foreclosure or other form of housing loss can lead to a big tax obligation.


  • In many of those instances, say Treasury officials, homeowners used mortgage money to fund everything from tuition and medical bills to vacations and cars and even the down payment on a second home or investment property. That debt, however, isn't eligible for exemption. Sometimes the tax bills are so high that people can't afford to pay. In such a situation, the IRS will allow taxpayers to apply for an installment-payment plan.

  • Some homeowners can avoid the taxes completely if they can prove insolvency, in which the total value of debt exceeds total assets. But even that could leave some owing taxes. IRS rules stipulate that a taxpayer can escape taxes up to the extent of insolvency, meaning that if one's liabilities are $500,000 and assets are $300,000, the $200,000 difference is the extent of the insolvency. But if the person has $250,000 in debt canceled, then $50,000 is taxable income.(1)

For more, see A Surprise Tax Hit on Foreclosures (For People Who Lose or Walk Away From Their Homes, A Big Tax Bill May Loom).

(1) The following information from the Internal Revenue Service may come in handy in determining how much income tax may be owed to the Feds, and more importantly, whether a homeowner can qualify for one of the law's exceptions from taxation (ie. exception for taxpayers for acquisition or home improvement debt forgiven on their principal residence if the balance of their loan was $2 million or less, insolvency exception, & bankruptcy exception are the three most common) that will allow him/her to dodge the tax either entirely, or at least partially:

Homeowners finding themselves owing Federal income tax and having no cash to pay it may want to check out one of the following two separate approaches the IRS offers for dealing with the delinquent taxes:

BofA's "Property Preservation" Contractor Accused Of Stiffing Subs Around The Country Out Of Tens Of Thousand$; Lender Says It's Not Their Problem

In Denver, Colorado, CBS4 reports:

  • It sounded like the ideal business during a recession -- fixing up foreclosed homes for banks. But contractors in Colorado and around the country say they have been bilked. They asked CBS4 investigator Rick Sallinger to look into the company that's supposed to be paying them for their work.

  • The contractors say they're struggling just to stay afloat now. The work they perform is called "property preservation." When a bank forecloses on a home they hire people to lock it up then later fix it up to be sold. Each home has a story, but sometimes not the story one would expect.


  • Contractors like [Ricardo & Venita] Curcurella have to put up their own money to maintain and fix up the homes to be sold. They document their work with photos then get reimbursed. "At first it was as simple as bookkeeping," Ricardo Curcurella said.

  • Most of their business at the start came through a company acting as a middle man. It's now called Nomad Preservation Service. Nomad received payment from the Bank of America to preserve the homes. But the Curcurellas still haven't been paid all of their money. In fact, CBS4 found subcontractors around the country who claim Nomad owes them tens of thousands of dollars each. In the Cucurella's case, at least $40,000. "It's caused great financial hardship. We ourselves have been at the brink of eviction, which is kind of ironic," Ricardo said.


  • They are not alone. "We would change the door lock, disable the deadbolt," Mike Elder said. Elder is another of the Colorado contractors who did work for Nomad. He figures he secured or fixed up 1,000 homes with $25,000 of his own money. "It's been hard based on the income of this house. I bought a new house, moved, got married. I was questioning whether I was going to lose my home," Elder said.

  • The primary owner of Momad is "Sam" Hussein Farouk Elhaje. CBS4 found he has a criminal record that includes robbery. Elder said he received a threatening phone message from him when he tried to recover the money he says he is owed. "Really, I can fly to Colorado if you actually want to f---ing meet me. But all these threats and b.s. you are throwing around you can give this to you and whoever you want to. I'll beat the living f--- out of you b-----!" Elhaje told Elder. "I was shocked at first then I was quite happy because then I can report a threat," Elder said.

  • CBS4 repeatedly tried to reach Nomad and Elhaje through phone calls and also through e-mails. While contractors say they have not been paid, Elhaje has been busy obtaining expensive cars, according to those CBS4 talked to -- cars like a Viper, Lamborghini, Hummer and two Corvettes. In the end, it could be up to the courts. The Cucurellas and others have taken legal action against Elhaje and Nomad.


  • It doesn't sound like help is on the way. Bank of America Field Services wrote CBS4 that it "has met its financial obligations to Nomad. We expect our vendors to fulfill any obligations they have to their subcontractors.' CBS4 spoke to one man who says he is owed $200,000. Lawyers suing Elhaje and Nomad say he recently failed to show up for depositions.(1)

Source: Contractors Say They've Been Bilked By Company.

(1) The story is silent as to whether the subcontractors are slapping BofA with mechanics liens on the properties for the work they're performing, and the payments therefor that they're being stiffed on.

Thursday, May 20, 2010

Failure To Provide Proper Notice Of Foreclosure Leads To Improper Loss Of Home, Say Homeowners In Lawsuit

In Grtena, Louisiana, WWL-TV Channel 4 reports:

  • While serving as Jefferson Parish president, Aaron Broussard had a lucrative side business as a court curator, appointed by judges to find missing parties in lawsuits. Now Broussard himself is the subject of a lawsuit for allegedly dropping the ball in one of his many curatorships.

  • In a lawsuit filed [] in the 24th Judicial District court, the embattled ex-parish president is accused of failing to take proper steps to locate the owners of a house in foreclosure. According to the suit, Ronald and Judy Bruzeau lost their Danny Park home in Metairie, in a sheriff's sale last month.

  • In his role as a curator, Broussard was supposed to mail a certified letter to the couple, something the Bruzeaus' say never happened. Broussard submitted a certified mail receipt he says he obtained when he notified the couple about the foreclosure. However, the U.S. Postal Service shows no record of any mail delivered under that receipt number, the lawsuit says.

  • The Bruzeaus are asking for damages from Broussard equal to the value of their home unless they can successfully annul the sheriff's sale.

Source: Aaron Broussard sued by couple involved in court curatorship case.

(1) Reportedly, Broussard has come under fire for handling 185 curatorships during his six years as parish president, adding more than $90,000 to his six-figure parish salary. Broussard resigned from office in January amid an ongoing federal investigation into his administration, and has quietly resumed practicing law in Kenner, the story states.

Court Orders Partial Disgorgement Of Legal Fees Where Attorney Fails To List Prior Filing In Client's Subsequent Bankruptcy Petition

In a recent ruling by a U.S. Bankruptcy Court in Alexandria Virginia, a bankruptcy attorney was ordered to pay back some of his $1,500 in legal fees after screwing up a bankruptcy petition filed on behalf of a client. The matter occurred in the context of a homeowner first approaching the attorney at the "eleventh hour" to file a bankruptcy petition to stave off a foreclosure sale, the attorney filing two petitions with the court within a two month period, the client being somewhat negligent in providing all the required information, and some apparently non-egregious but nevertheless sloppy handling of the matter by counsel.

For the ruling, see In re: OhPark, Case No. 10-10194-SSM (Bankr. E.D. Va. Alexandria Div., May 12, 2010).

(1) The following excerpt is taken from the ruling:

  • As the U.S. Trustee correctly points out, it is improper for an attorney to fail to list a debtor's prior bankruptcy filing on the bankruptcy petition. The omission of a previous filing is particularly troublesome because the disclosure is important to many aspects of the administration of a bankruptcy case. A previous filing may determine whether a debtor is eligible for a discharge in a subsequent case. See §§ 727(a)(8), (9), 1328(f)(1), (2), Bankruptcy Code. It also determines whether the automatic stay is subject to early termination or even arises at all. Id. § 362(c)(3), (4). Moreover, disclosure of a prior filing assists the clerk's office in assigning the new case to the same judge as a previous case.

  • This court has previously held that "where the petition and schedules filed on behalf of the debtor contain discrepancies, omissions, and inaccuracies, fee disgorgement is appropriate under § 329." In re De Molina, No. 09-14158 (Bankr. E.D. Va. Dec. 15, 2009) (citing In re Nickerson, No. 08-35234, 2009 WL 1587160 (Bankr. N.D. Ohio, April 16, 2009)).

  • This is true whether the mistakes in the documents were intentional or inadvertent, although the amount of fees to be disgorged will obviously vary depending on the seriousness of the omission or error and the efforts made by the attorney to verify the accuracy of the documents. Here Mr. Eisner clearly filed a petition that contained a material inaccuracy. Although he was the attorney who filed the prior petition for the debtor, he failed to list the prior filing on the petition in the second case. Even if there was some copy of the petition floating around his office that listed the prior filing, an attorney who files documents electronically with the court is responsible for ensuring that the electronically-filed version conforms to the paper original and is accurate. Because Mr. Eisner was at the very least negligent in filing a petition that failed to disclose the debtor's prior filing, the court concludes that disgorgement of some portion of the fees he was paid is appropriate.

  • Were it not that the debtor was also materially at fault in failing to provide Mr. Eisner with the information needed to complete the schedules and statement of financial affairs, the court would be inclined to order disgorgement of the entire fee. And certainly, having failed once to receive the information that would enable timely schedules to be prepared, a cautious attorney might have been concerned that the client had no real intent to follow through and was simply seeking to invoke the automatic stay for the purposes of delay, and for that reason would not have taken the second case without some reasonable assurance that timely schedules could be filed in the second case.

  • In any event, taking into account that schedules were never prepared in either case, and that the sole document (the petition) that counsel did prepare contained a material inaccuracy that was wholly within the attorney's power to prevent, the court concludes that $500.00 is the maximum fee that is reasonable. Accordingly, counsel will be required to disgorge the remaining $1,000.00 of the fee he received.

Attorney Convicted Of Advising Client To Transfer Home, Land Out Of Their Names Prior To Filing Bankruptcy In Attempt To Screw Creditors

In Huntington, West Virginia, The West Virginia Record reports:

  • A Putnam County attorney has been found guilty of committing fraud in a former client's bankruptcy case. Following a two-day trial in U.S. District Court, Patrick B. Anderson was convicted on April 29 on one count each of bankruptcy fraud, and fraudulent transfer and concealment of assets.


  • During trial, prosecutors presented evidence that Anderson in February 2007 advised Herman and Peggy Matney of Poca to transfer the mobile home and one acre of property they owned on Harmons Branch Road out of their names before filing bankruptcy to conceal their ownership interest from their creditors.

  • On April 30, 2007, Anderson filed a deed at the Putnam County Clerk's Office transferring the property to the Matney's daughter, Melissa Davis.The next day, Anderson filed a Chapter 7 petition in U. S. Bankruptcy Court. Records show not only did Anderson fail to disclose the transfer, but also list any real property they owned.

  • In a letter dated May 2,2007, Peggy Matney alerted the U.S. Trustee's Office to incorrect information contained in the petition. In her letter, she averred that the erroneous information was all Anderson's doing, and it was not their intention to have the petition with the incorrect information filed.(1)
For the story, see Putnam attorney convicted for bankruptcy fraud.

(1) The clients in this case may be well advised to request that the court order the attorney to disgorge himself of any legal fees pocketed for his services, and if he can't pay it, file an Application For Relief with The West Virginia State Bar's Lawyers Fund for Client Protection for possible reimbursement.

Homeowner Sues Lender For Foreclosing On Home After Saying Sale Was Postponed

In Charleston, West Virginia, The West Virginia Record reports:

  • A Rivesville couple is suing Wells Fargo and Federal Home Loan Mortgage Corporation after they claim the defendants have proceeded to foreclose their home, despite their ability to make payments. Alan and Sandra Rosenberger purchased their home in 1994 and their home mortgage loan eventually was transferred to the defendant, according to a complaint filed April 20 in Kanawha Circuit Court.

  • The Rosenbergers claim in early 2009 Wells Fargo offered a loan modification and they accepted the modification. They claim they still struggled to make payments and Wells Fargo would call their home four and five times each day to demand payment. On Jan. 5, Mr. Rosenberger contacted Wells Fargo about another loan modification and was accepted.

  • The defendant advised they would postpone foreclosure on the Rosenberger's home, according to the suit. The Rosenbergers claim Wells Fargo continued with the foreclosure anyway. They claim Wells Fargo owed a duty to them to exercise reasonable care and provide accurate information about the status of the loan account and breached its duty. The Rosenbergers are seeking actual damages and civil penalties.

Source: Rivesville couple sues for mortgage firms for breach of contract, negligence.

BofA "Despicable" With Approach To Loan Mods & Foreclosures, Say Frustrated Customers; Lender Calls Class Action Suit A Series Of "Sob Stories"

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

  • Nearly 100 angry homeowners took to the streets Monday, protesting what they call unfair treatment by Bank of America, the nation's biggest bank. They marched from a local law office to the federal courthouse, to show the judge that they mean business. Nevada leads the nation in foreclosures and Bank of America holds more of our mortgages than any other lender. Action News regularly field phone calls and emails from frustrated customers who call Bank of America despicable when it comes to loan modifications and foreclosures. The customer service they describe as slow, lazy and downright incompetent.


  • Those are the words of average Nevada homeowners facing foreclosure. They're so fed up, they've filed a class action lawsuit against Bank of America. They call their lender's conduct fraudulent, malicious and egregiously in bad faith. [...] Bank of America is trying to get it thrown out, calling the case a series of "sob stories." Their lawyers warn if the case goes forward, it'll be the "tip of the iceberg" and "floodgates will open" across the country.

For more, see Contact 13 investigates Bank of America.

Wednesday, May 19, 2010

80-Year Old Mom Left "Heartbroken" Over Daughter's Attempt To Give Her The Boot Out Of Her Own Home

In Worcester, Massachusetts, the Worcester Telegram reports:

  • Elayne Gilbert took the witness stand in Worcester Housing Court and said she was “heartbroken” over efforts to evict her from the Shrewsbury condo she’s inhabited since 2002. [...] Ms. Gilbert is 80 and living on Social Security. Throughout her testimony, she never once glanced at the plaintiff, the woman trying to evict her, the woman who, pathetically, happens to be her own daughter.


  • Surprisingly, the dysfunctional family train wreck careening through the Housing Court isn’t unusual. According to James Bisceglia, clerk magistrate, a “significant number” of their cases involve litigation between family members — parents versus kids, kids versus parents, sibling against sibling. All very Springeresque. “When it comes to family members, things can turn very ugly very fast,” Mr. Bisceglia said.

  • In the ugliness now under way, Ms. Gilbert, who had been living in New Mexico, wanted to move back here to be closer to her daughter and family. So in 2002 she mailed a check for $210,000 to her daughter and son-in-law and asked them to buy her a home. They bought a condo for $230,000 at 107 Harrington Farms Way in Shrewsbury. But they wrote “gift” on the check and put the condo in their own name. And they didn’t establish a life estate or a trust so that Ms. Gilbert could live there until she died. Now, after eight years, they want her out.


  • I thought I’d have a place to live for the rest of my life,” Ms. Gilbert said. “I trusted them.” Referring to her daughter, she said, “She told me if I don’t get out of the house, she’ll throw my furniture out the door.”

  • Ms. Gilbert’s lawyer, Peter Heintzelman, has asked Judge Timothy J. Sullivan to dismiss the eviction claim, arguing that Ms. Gilbert wasn’t a tenant because she paid no rent. He’s asked the judge to allow her to stay in the condo and he’s seeking damages. “I think we have a good argument,” Mr. Heintzelman said. Maybe. But regardless of which way the judge rules, this case is one big loser.

For the story, see She’s neither a borrower nor a lender.

Massachusetts AG Settles w/ Real Estate Brokerage For Allegedly Using Deceptive Notices To Bully Tenants Out Of Homes In Illegal Foreclosure Evictions

In Boston, Massachusetts, South Coast Today reports:

  • A Fairhaven real estate firm must pay thousands of dollars in penalties after Attorney General Martha Coakley busted an alleged foreclosure scheme that involved attempts to force tenants out of their homes. RE/MAX Classic of Fairhaven and real estate broker Simone Schettino must provide relief and preventive measures to ensure their future compliance with state and federal consumer protection laws after reaching a settlement with Coakley's office. RE/MAX Classic did not immediately return a phone call Wednesday.

  • According to Coakley's office, last spring, housing advocates unearthed a company notice given to New Bedford residents that threatened to change the locks on the property if those who lived there did not call the broker within 24 hours — a move that is illegal. The housing advocates provided Coakley's office with the document.

  • Soon thereafter, similar notices sent by Schettino to Roxbury residents who were living in a foreclosed property were found by a housing and tenants' rights organization in Jamaica Plain, the Attorney General's Office said. Those notices also threatened to remove all property of the residents if the agent was not contacted.

  • It is illegal to deliver notices or communicate statements to residents if the notices contain unfair or deceptive statements or threaten an illegal act. Under law, tenants with a valid lease are permitted to continue living in a foreclosed property for the term of the lease and both landlords or their brokers cannot alter the lease terms, Coakley's office said.

  • Now, RE/MAX Classic must pay $2,500 up front, while another $7,500 penalty hovers over the firm should it not comply with conditions of the settlement, according to the attorney general. South Coastal Counties Legal Services(1) will receive $1,000 of the payment, while Local Consumer Aid Fund will receive $1,500. The company must also provide six free seminars that are open to the public and will provide information highlighting tenants and homeowners' rights in cases where their homes and properties face foreclosure.

Source: Real estate firm fined for foreclosure scheme.

For the Massachusetts AG press release, see AG Coakley Reaches Settlements with Real Estate Company and Broker for Serving Alleged Deceptive and Threatening Notices to Tenants of Foreclosed Properties.

(1) South Coastal Counties Legal Services is a non-profit corporation which provides free civil legal services to low-income and elderly residents in Barnstable, Bristol, Dukes, Nantucket, and Plymouth Counties, and the towns of Avon and Stoughton.

FTC Adds Forensic Mortgage Loan Audit Scams To Its Watch List Of Foreclosure Rescue Rackets

The Federal Trade Commission recently announced:

  • Fraudulent foreclosure “rescue” professionals use half-truths and outright lies to sell services that promise relief to homeowners in distress. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, the latest foreclosure rescue scam to exploit financially strapped homeowners pitches forensic mortgage loan audits.

  • In exchange for an upfront fee of several hundred dollars, so-called forensic loan auditors, mortgage loan auditors, or foreclosure prevention auditors backed by forensic attorneys offer to review your mortgage loan documents to determine whether your lender complied with state and federal mortgage lending laws. The “auditors” say you can use the audit report to avoid foreclosure, accelerate the loan modification process, reduce your loan principal, or even cancel your loan.

For more, see Forensic Mortgage Loan Audit Scams: A New Twist on Foreclosure Rescue Fraud.

Tuesday, May 18, 2010

Queens County District Attorney Scores $100K In Federal Cash To Fight Deed & Mortgage Scams

In Kew Gardens, Queens, The Queens Gazette reports:


  • With a combination of high property values and vulnerable elderly and immigrant populations, Queens is especially at risk for mortgage fraud. We need to do everything we can to stop this growing epidemic, and these funds will help us in this ongoing battle,” Weiner said.

  • Brown also cited elderly homeowners, “whose properties go from being owned free and clear to being sold out from under them”. The DA added that while we have made some headway in prosecuting these cases, the problem is just too large to be addressed sufficiently with our current resources.

The following are among the mortgage fraud cases that have occurred, according to Brown:

  • Hundreds of thousands of dollars were stolen from a 93-year-old Queens man suffering from Alzheimer’s disease by a man who fraudulently refinanced a property that he owned in Bayside to steal its equity,

  • A St. Albans man convicted of stealing the identity of a 68-year-old Jamaica, Queens man who had been disabled as a result of a stroke and secretly selling his house out from under him and pocketing the profits,

  • A Texas man was charged with allegedly using a fraudulent power of attorney to transfer his elderly aunt’s Corona house to himself and taking two mortgages out on the property,

  • Two attorneys charged with selling the house out from under a Rosedale woman who was experiencing financial difficulties by engaging in an elaborate real estate foreclosure bailout scheme,

  • A Far Rockaway woman charged with allegedly forging the signature of her stepfather in an effort to transfer his house to herself,

  • The indictment of five individuals in connection with an approximately $2 million mortgage fraud scheme in which stolen identities were allegedly used to buy and sell three properties in Queens,

  • A Brooklyn man convicted in connection with the fraudulent sale of the Cambria Heights home of a retired New York City correction officer suffering from dementia.

Any Queens residents who feel that they may be a victim of or are aware of mortgage fraud should contact his office’s Economic Crimes Bureau at 718-286-6673.

For the story, see DA Brown Gets $100 G Grant From Weiner To Fight Mortgage Fraud.

For the Queens DA press release, see Queens District Attorney's Office Receives $100,000 Federal Grant To Combat Mortgage Fraud (Federal Funds Obtained by Congressman Anthony Weiner Will Enhance Office’s Efforts).

Implied Duty Of Good Faith, Fair Dealing & The Collection Of Deficiency Judgments In Foreclosure Actions

Lexology reports:

  • Yet, in Harvest Homebuilders LLC v. Commonwealth Bank and Trust Company, 2008-CA-001897 (01/29/2010), the Kentucky Court of Appeals affirmed a judgment of the Oldham Circuit Court awarding Commonwealth Bank a deficiency judgment against the borrower and an individual guarantor. The Court held that the trial court did not err by awarding the deficiency judgment as the record clearly established that the bank did not breach the implied covenant of good faith and fair dealing imposed in every contract, which “impose[s] on the parties … a duty to do everything necessary to carry” out the contract.

For more, see Must a bank forgo its right of deficiency if it refuses to release its obligors who want to pursue a short sale during a foreclosure action? No. (requires paid subscription; if no subscription, TRY HERE - then click link for the story.)

More On Central Florida Foreclosure Mill Operation

In Fort Lauderdale, Florida, The National Law Journal recently ran a story on the state attorney general's investigation into Tampa-based Florida Default Law Group, one of the nation's largest foreclosure mill law firm operators over allegations it "appears to be fabricating and/or presenting false and misleading documents in foreclosure cases," according to the AG's Economic Crimes Division in Fort Lauderdale, which is leading the investigation. A couple of tidbits from the story:

  • Florida Default has paid for improper filings. In October 2008, U.S. Bankruptcy Judge John Olson fined Florida Default $95,130 for "repeated misrepresentations" to the court. The firm had submitted documents claiming that Fort Lauderdale homeowner Fazlul Haque owed his lender, Wells Fargo, $2,114 in prepayment penalties even though the mortgage, while in arrears, was still on its books. Olson realized the fee was illegal since Haque had yet to pay off the delinquent loan. "The notion that the debtor paid off his loan in full to the creditor is absurd," Olson wrote. "It is utterly perplexing to me how the creditor or its law firm could or did assert such claim." In a recent interview with the Daily Business Review, Olson attributed the misrepresentations to "sloppiness" by the foreclosure firm rather than fraud.

  • In 2004, the Florida Bar reprimanded Florida Default president [Michael J.] Echevarria [see Conditional Guilty Plea For Consent Judgment] for not properly supervising lawyers at his prior firm, Echevarria & Associates, according to the Florida Bar. Among the issues in the case, a lawyer at his firm notarized foreclosure-related documents without reviewing the foreclosure files despite signing affidavits affirming he had done so.

For the story, see Law Firm Probed Over 'False' Documents Filed in Foreclosure Cases (Fla. AG's office has received dozens of homeowner complaints about questionable court documents filed by firm's lawyers, according to a source).

Monday, May 17, 2010

Queens DA Bags Seventeen Suspects In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket

From the Office of the Queens District Attorney's Office:

  • Queens District Attorney Richard A. Brown, joined by New York State Banking Superintendent Richard H. Neiman(1) and Acting New York State Police Superintendent John P. Melville, [] announced that 17 individuals – including two Queens attorneys – have been charged with defrauding legitimate homeowners and various lending institutions out of more than $3 million in equity that had been stripped from 26 refinanced residential properties valued at $13 million.(2)


  • The investigation further allegedly revealed that [Roger] Huggins and [Inderpaul] Sookraj targeted homeowners in Queens, Brooklyn and the Bronx who had substantial equity in their residences but either faced foreclosure due to their inability to make monthly mortgage payments or were simply behind in their mortgage payments and looking to refinance or modify their loans with their lenders. It is alleged that Huggins and Sookraj offered to help the homeowners by instructing them to permit title to their homes be put in the name of a third-party purchaser (a “straw buyer”) for one year, during which time the two defendants promised to improve the homeowners’ credit rating, help them obtain more favorable mortgages on their homes and ultimately, return to them the title to their homes. What allegedly occurred at the closings, however, was that Huggins and Sookraj – in order to keep as much of the mortgage proceeds as possible – fabricated reasons why they needed to hold the homeowners’ funds in escrow – such as that the equity withdrawn from the properties would be used to pay the mortgages and expenses on the homes and to repair the homeowners’ credit.(3)

For the Queens DA press release, see Seventeen Individuals - Including Two Attorneys Charged in Massive Multi-Million Dollar Real Estate Fraud (Ringleaders Allegedly Targeted Distressed Homeowners in Mortgage Rescue Scams; 26 Refinanced Residential Properties Stripped Of More Than $3 Million In Equity).

Go here for a Queens DA flowchart of how the alleged racket worked.

Thanks to Catherine Isobe of Bedford Stuyvesant Community Legal Services, Brooklyn, NY (a part of the Legal Services NYC network of organizations providing free legal services for low income people throughout NYC) for the heads-up on the press release.

(1) State Banking Superintendent Neiman said, “The fact that these defendants took advantage of homeowners in distress, and in the guise of helping, actually stripped them of their equity and ownership, is compounded by the fact that some of these defendants were licensed professionals – attorneys, mortgage brokers and real estate advisors. Instead of acting as the gatekeepers whose function it is to protect the interests of vulnerable homeowners, they abused their positions in order to steal millions of dollars. [...]"

(2) The defendants are variously charged with first- and second-degree grand larceny, first degree criminal possession of stolen property, first-degree money laundering, first-degree identity theft, second-degree forgery, second-degree criminal possession of a forged instrument, first-degree falsifying business records, first-degree offering a false instrument for filing, first-degree scheme to defraud and fourth-degree criminal facilitation. If convicted, the defendants face as much as 25 years in prison. For the entire "honor roll":


  • ROGER HUGGINS, 34, of 92-06 Springfield Boulevard, Queens Village, New York, is the co-owner of Home Solutions, located at 127-16 Liberty Avenue in Richmond Hill, Queens. He is also the owner of Huggins Realty, LLC (an alleged shell corporation) and a loan officer with DMV Mortgage.
  • INDERPAUL SOOKRAJ, 44, of 116-01 Sutter Avenue, South Ozone Park, New York, is the co-owner of Home Solutions, located at 127-16 Liberty Avenue in Richmond Hill, Queens. He is also the owner of Marlon Brando Construction Company (an alleged shell corporation). (Fugitive)


  • SHAWN D. CHAND, 34, of 248 Mill Road, Valley Stream, New York, maintains a law office at 110-13 Jamaica Avenue, Richmond Hill, Queens.
  • TREVOR RUPNARAIN, 48, of 114-28 149th Avenue, South Ozone Park, maintains a law office at 131-02 Liberty Avenue and previously at 117-15 101st Avenue, both in Richmond Hill, Queens. He is also the registered real estate broker and owner of Remax Xcel Realty located at 131-02 Liberty Avenue.


  • ANAND BHARAT, 54, of 94-38 216th Street, Queens Village, was a licensed real estate salesperson with defendant Rupnerain’s company, Remax Xcel Realty, and owned A&T Realty, a non-licensed real estate brokerage company (an alleged shell corporation), and Signature Management Company (also an alleged shell corp oration).
  • * PRAHALAD MAHADEO, 32, of 89-15 205th Street, South Richmond Hill, New York, was a licensed real estate salesperson with defendant Rupnerain’s company, Remax Xcel Realty, and owned Reliance Realty, a non-licensed real estate brokerage company, and New Liberty Construction.
  • MANGAL SINGH, 57, whose last known address was 774 Regent Drive, Westbury, New York, was the principal founder and owner of DMV Mortgage, located at 127-18 Liberty Avenue. The company is presently out of business and the defendant is believed to be in India. (Fugitive)


  • ** ARIEL HUGGINS, 36, of 92-06 Springfield Boulevard, Queens Village, New York.
  • MOHAMMAD ABDALLAH,37, of 106-19 Guy R. Brewer Boulevard, Jamaica, New York. (Fugitive)


  • MICHAEL ABDUL, 44, whose last known address was 107-12 129th Street, South Richmond Hill, New York, is believed to be in Florida. (Fugitive)
  • FAIZ ALI, 46, of 101-67 121st Street, South Richmond Hill, Queens.
  • JAGDESH KULDIP, 31, of 245-28 147th Road, Rosedale, New York.
  • PURNIMA MAHAMMED, 29, of 102-12 135th Street, South Richmond Hill, New York.
  • ANEESA MOHAMMED, 30, is believed to be in Florida. (Fugitive)
  • KRISHNA RAMROOP, 56, of 102-12 135th Street, South Richmond Hill, New York.
  • VADIANUTH SANICHAR, 44, of 97-14 129th Street, Richmond Hill, New York.
  • DAVID SOOKDEO, 29, of 144-07 168th Street, Jamaica, New York.

* was also a recruiter
** was also a straw buyer

(3) According to the DA's press release, investigators believe that this alleged racket also engaged in using forged documents to steal homes out from under homeowners, one of whom was already dead, according to this excerpt:

  • In another instance, it is alleged, Huggins and Sookraj drafted and filed fraudulent documents which purported that they had purchased a home from a homeowner who, in fact, had died a year prior to the closing. The defendants subsequently flipped the property to a straw buyer at an inflated price ($420,000), thus allowing them to keep and split the entire loan proceeds between themselves and their co-defendants as there was no actual seller of the property. To date, the Jamaica, Queens, property remains vacant and the loan has gone into default.
  • It is additionally charged that Huggins and Sookraj stole the property deeds of at least two homes outright by fraudulently creating documents – complete with such identifying information of the homeowners as their social security numbers, dates of birth and driver’s licenses – which purported that the homeowner had sold their homes to Huggins and Sookraj, who then turned around and sold the properties to straw buyers. The homeowners neither had any knowledge of the fraudulent transactions, nor did they realize that their home had been stolen. In both instances, the original homeowners allegedly had met Huggins when he offered to assist them with the “short sale” of their properties. In one case, the homeowner had gone to Huggins because he had lost his job and his wife was stricken with cancer.

Two Phoenix Cops Face Internal Police Probe After Financially Strapped Homeowners' Complaints About Off-Duty Business Peddling Sale-Leaseback Programs

In Phoenix, Arizona, The Arizona Republic reports:

  • Two Phoenix police lieutenants are under investigation after residents complained that some of the 120 real-estate purchases conducted by their off-duty business were unethical or illegal. Lts. Mark Tallman and Lee Brent Shaw have been involved in several lawsuits, each of which were dismissed or settled for small amounts, court records show.

  • The lieutenants' Better Choice LLC focused between 2002 and 2006 on buying distressed homes where owners were on the brink of foreclosure. In many cases, they developed lease-buyback options where residents could remain in the homes with the option to buy. Another company, Taken Care of Investments, identified the at-risk homeowners and worked with the lieutenants - who are accused of charging exorbitant fees to manage the properties in various trusts.

  • The Phoenix Police Professional Standards Bureau is looking into allegations against Tallman and Shaw, though police on Thursday could not confirm the full nature of the allegations.(1)

For the story, see Phoenix lieutenants face probe over real-estate business.

(1) The story is silent as to how, if at all, these sale leaseback transactions differed from those involved in the foreclosure rescue, equity stripping racket that the Arizona Attorney General's Office prosecuted in a civil lawsuit last year. See:

Judge Sticks Sale Leaseback Peddler With Tab For Victim's Interim Attorney's Fee Even Though NJ Consumer Fraud Act Lawsuit Is Still In Discovery

In Newark, New Jersey, the New Jersey Law Journal reports:

  • In a case of first impression, an Essex County, N.J., judge has awarded counsel fees during a pending Consumer Fraud Act suit, brought by a couple who claim they were scammed by two foreclosure-rescue companies.

  • Superior Court Judge Kenneth Levy made the award after granting preliminary injunctive relief for the plaintiffs, saying "the question is ... can the court award counsel fees at this stage in the proceeding, and there is really no case law that's been presented to me that says I cannot do that."

  • In his motion for the pre-judgment fee award, plaintiffs lawyer Abraham Borenstein, who heads a firm in Springfield, N.J., said there is precedent for interim awards in other fee-shifting cases though none under the applicable Consumer Fraud Act section, N.J.S.A. 56:8-19. Ruling on April 23 from the bench, Levy found the preliminary injunction -- based on a probability of success on the merits -- was sufficient to trigger that section, which provides for fees and costs to anyone granted equitable relief under the Act.

  • "Although I'm not in a position to order a final judgment, I think that the plaintiffs should be awarded counsel fees for at least the work that they had to do through obtaining the preliminary injunction," the judge said in Pena v. Newell Funding, LLC, ESX-C-16-09.

  • The case is still in discovery, but Levy cited strong evidence of fraud already uncovered, which probably will result in the court imposing an equitable mortgage: a remedy that returns title to people who have been defrauded out of their property by an illegal mortgage scheme.(1)

  • In the suit, plaintiffs Juan Miguel and Iluminada Pena of Newark, N.J., claim that when they sought help from Newell Funding, a New York mortgage company, to forestall foreclosure of their home, Newell devised a scheme that purported to give them a $125,000 mortgage loan but actually had them execute a deed to a newly formed company, 376 Broad Street LLC, for little or no consideration. The suit charges Newell and other defendants -- including another mortgage company, Multi Solutions LLC -- used confusing documents to turn the loan into a sale without the plaintiffs' knowledge.

  • In January of this year, Levy entered a temporary restraining order barring the defendants from selling, encumbering or transferring the home, and in March he granted the preliminary injunction.

  • Levy awarded fees incurred from the outset of the case, filed in August 2008, to the entry of the injunction in March 2009. The award was made jointly and severally against the two mortgage company defendants and five other defendants. Borenstein calls the fee award "groundbreaking" and says it means that "litigants -- who previously could not afford to initiate a lawsuit -- are now empowered to fight and expose mortgage fraudsters."

  • Borenstein is preparing his certification of time spent on the case, saying he will seek his customary hourly rate of $500 and will renew his fee application periodically as the case proceeds. "The right to attorneys' fees, in my estimation, is not dependent on winning the entire case," he says. "It's dependent on winning relief. We have won relief already."

  • Newell was represented by Raphael Jacobs, of Jacobs & Bell in Tenafly, N.J., but on April 23, Levy approved a plaintiff's motion to disqualify him and add him as a defendant, says Borenstein's associate, Massimo D'Angelo. Jacobs declines to comment. The attorney for Multi Solutions, Scotch Plains, N.J., solo Richard Friedman, says, "I don't believe there's any support for the award of attorney's fees." He adds that the allegations against his client are "without foundation."

Source: Interim Attorney Fees Awarded in Consumer Fraud Suit Over Mortgage.

(1) In another recent New Jersey case in which, among other things, the attorney for the victim of another sale leaseback, foreclosure rescue equity stripping ripoff reportedly filed a request with the court to order the scammer to pick up the bill for his attorney's fees, see:

The underlying story in these posts, originally reported in the New Jersey Law Journal (see Real Estate Lawyer Liable for Damages for Role in Client's Mortgage Scam) contained the following excerpt in this regard:

  • [Gabriel] Halpern, of PinilisHalpern in Morristown, N.J., has already filed an application for $33,932 in fees and asked U.S. Bankruptcy Judge Raymond Lyons Jr. to multiply the amount by three, for an enhanced fee of $101,797.

(By the way, the appication of a "lodestar multiplier" in calculating the amount of enhanced plaintiff's attorney fees a court will impose on a losing defendant is not unheard of in foreclosure rescue scam cases. For example, in affirming a lower court judgment against a foreclosure rescue operator for violations of the state's Consumer Protection Act in operating a sale leaseback scam, the Nebraska Supreme Court in Eicher v. Mid America Financial Investment Corp., 270 Neb. 370, 702 N.W.2d 792 (2005) ok'd use of a multiplier of 1.3 in calculating the total tab of $375,000+ for plaintiff's attorney's fees that the operator was responsible for paying. Plaintiffs’ lead counsel requested fees based on 2,589 hours of billable time by various persons in his law firm.)

Bay Area Foreclosure Help, Rent Skimming Racket Pocketed $2K Both From Homeowners To Sign Away Deed & Tenants To Lease Home Subsequently Auctioned Off

In Northern California, KGO-TV Channel 7 reports:

  • Dozens of distressed Bay Area homeowners say they have been lured into signing away their homes to a company offering to help them. A seven-month 7 On Your Side investigation has uncovered what happens to many of these homeowners after they sign on the dotted line.

  • This story shows just how vulnerable people can become when they are facing a foreclosure. Many of these people have not only signed away their homes, they paid a company to take it from them.

  • Arnel Reyes remembers the day he signed over the deed to his house to United Investments of Hayward. His wife had just lost her job and the couple was facing the foreclosure of their home in Bay Point. "I couldn't afford a mortgage plus the other bills that we had, at that point I just wanted to save my credit," said Reyes.

  • United Investments charged Reyes $2,000 to take possession of his home. He claims the company told him it had a potential buyer and could do a short sale. The contract made no guarantees a foreclosure could be prevented, but Reyes figured by signing up he could save his credit, if not his house. "They said if they couldn't save it, they would foreclose on it under their name and not our name," said Reyes.

  • Hayward resident Lorenzo Lawson answered an ad on Craigslist from United Investment offering to rent out the Reyes home. Lawson said the company told him he might eventually be able to buy it. "If they want to have me stay there, maybe I could rent to own," said Lawson. He paid $2,000 to United Investments before moving in and before he knew it, he found a foreclosure notice on his door. Lawson was forced to leave the home and the lender foreclosed on the Reyes' property. Reyes says he felt deceived.(1)

For the rest of the story, see People sign away their homes in foreclosure scam.

(1) Reportedly, four of the five transactions 7 On Your Side tracked, ended in foreclosure. The fifth house belonged to a couple who, while avoiding foreclosure, were surprised when they found out United Investments wasn't paying off their mortgage, the story states. The company's president is Carl Renowitzsky, the man both Reyes and Lawson say they dealt with the story states. 7 On Your Side reportedly showed up at his office several times in an attempt to see Renowitzsky and was nowhere to be found, but 7 On Your Side did find a cease and desist order against Renowitzky in 1999 from the state Department of Real Estate. The Alameda County District Attorney's Office has reportedly launched an investigation of United Investments.

Brooklyn Judge Strikes Again; Dismisses Foreclosure With Prejudice Where Assignment Of Mortgage Fails To Transfer Title To Promissory Note

In Brooklyn, New York, State Supreme Court Justice Arthur M. Schack has, in a recent ruling, added to the list of foreclosing lenders he has booted from his courtroom for filing lawsuits without having legal standing to do so.(1) According to Justice Schack:

  • The instant June 16, 2009 assignment [of mortgage] from MERS, as nominee for FREMONT, to U.S. BANK is a nullity, because MERS, as nominee for FREMONT, did not assign the note, but only assigned "said Mortgage, and the full benefit of all the powers and of all the covenants and Provisions therein contained and the said Assignor hereby grants and conveys until the said Assignee, the Assignors beneficial interest under the Mortgage."
In addition, he cited upstate New York foreclosure mill operator Steven J. Baum, P.C. for an apparent conflict of interest in that it appears to be in violation of 22 NYCRR § 1200.0 (Rules of Professional Conduct, effective April 1, 2009) Rule 1.7, "Conflict of Interest: Current Clients." According to the court ruling, the Baum firm represents both MORTGAGE ELECTRONIC REGISTRATION SYSTEMS [MERS], as nominee for FREMONT INVESTMENT AND LOAN [FREMONT], the ineffective assignor of the instant mortgage, and plaintiff U.S. BANK, the ineffective assignee of the instant mortgage.

For Justice Schack's ruling, see U.S. Bank, N.A. v Emmanuel, 2010 NY Slip Op 50819 (NYS Supreme Court, Kings County, May 11, 2010).

(1) For links to over 30 of Justice Schack's court rulings in which he bounced unprepared foreclosing lenders and their lawyers out of his courtroom for sloppy an/or non-existent paperwork, see Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced.

Go here for other posts on Justice Schack.

Sunday, May 16, 2010

Massachusetts AG Obtains Indictment Of Attorney Accused Of Using Forged Mortgage Assignments In Attempt To Hijack Payoff Proceeds In R/E Closings

From the Office of the Massachusetts Attorney General:

  • A Marblehead attorney has been indicted by a statewide Grand Jury for allegedly attempting to retrieve over $1.3 million dollars in mortgage funds in connection with a sophisticated mortgage fraud scheme. Leon Gelfgatt, age 49, allegedly used false documents to create the appearance that mortgages on several Massachusetts properties which were scheduled for impending sale had been transferred to a fake company created by Gelfgatt. Gelfgatt allegedly did this in order to obtain the payoff funds sent by real estate closing attorneys when the properties were sold.(1)

For the Massachusetts AG press release, see Marblehead Attorney Indicted in Connection with Orchestrating Multi-Million Dollar Forged Mortgage Assignment Scheme.

(1) According to authorities, between August and November of 2009, Gelfgatt allegedly identified and targeted fourteen high-end properties which were scheduled for an imminent sale. Gelfgatt then recorded seventeen forged mortgage assignments at the Registries of Deeds in Suffolk, Norfolk, and Middlesex Counties. These false mortgage assignments appeared to transfer the mortgage from the correct mortgage company to either Baylor Holdings, Ltd., or Puren Ventures, Inc., which were inactive corporations being offered for sale on the Internet. Gelfgatt created an elaborate system of email addresses, phone numbers, and electronic fax numbers to give the impression that these were functioning and legitimate businesses.

Gelfgatt then waited for attorneys responsible for clearing the title to the properties to reach out to these sham companies to request a “payoff statement”. A payoff statement is a document used by mortgage companies to state the precise amount necessary to pay a mortgage in full. Authorities allege that on two occasions Gelfgatt, in the guise of Baylor Holdings, Ltd., allegedly provided these closing attorneys with false payoff statements. The payoff statements instructed the closing attorneys to overnight the funds required to pay off the mortgages to an office address in Boston. Gelfgatt was arrested after he attempted to retrieve these payoff funds.

Lender Allegedly OK'd Loan Modification, Then Carried Out Foreclosure Sale Anyway, Says West Virginia Homeowner In Lawsuit

In Charleston, West Virginia, The West Virginia Record reports:

  • A Cross Lanes man is suing Countrywide Home Loans, Bac Home Loans Servicing and Federal National Mortgage Association after he claims the companies participated in predatory lending and loan servicer abuse that resulted in the wrongful foreclosure of his home.

  • Bradford Corder purchased a home in September 2002 for $185,000, according to a complaint filed April 13 in Kanawha Circuit Court. Following a divorce, Corder submitted loan modification information to the defendants in January 2010 and was informed on March 11 that he had been approved, according to the suit. Corder claims he spoke with the defendants on March 16 and was told foreclosure on his home was postponed until the loan modification package was provided to the defendants, but on March 17 the defendants proceeded with the foreclosure anyway.

  • As a result, Corder as suffered economic loss, property loss, considerable stress, worry and fear, according to the suit. Corder is seeking actual damages and appropriate civil penalties. He is being represented by Daniel F. Hedges.

Source: Cross Lanes man sues Countrywide, others for wrongful foreclosure.

Couple Forced To Pay Twice For Home Construction Bills After Contractor Pockets Their Payments & Stiffs Subs, Building Material Suppliers

In South Lake Tahoe, California, KGO-TV Channel 7 reports:

  • If you ever have to hire a contractor, you could end up paying twice for the same bill. It's happening to more and more people. [...] Images of the devastating Angora Fire in South Lake Tahoe are still etched in the minds of Howard and Joann Manning. The fire destroyed their home three years ago, but they're still living with the consequences today.


  • The couple decided to rebuild their home and in December 2008, the home was completed. They made their final payment to HR Construction and owner Jack Aleshire that month. But then, the Mannings life took an abrupt turn.

  • Within days, Meeks Lumber contacted them demanding money. So did Doug Bolton's Floor Show and Ponderosa Glass. In all, the couple heard from six subcontractors that HR Construction hired to either work on or supply materials for their home. All six said Jack Aleshire of HR Construction left town without paying them. All six held the Mannings responsible for making those payments and all six placed liens on the Manning home.


  • [T]here are things you can do to protect yourself. Pay with a two party check made out to both the contractor and subcontractor -- that way you know the subcontractor will get paid. Ask the contractor for a lien release.(1) That releases you from all liens; by law the contractor has to give it to you if you request it. It's something the Mannings are only learning about now.(2)

For the story, see Couple's home in jeopardy due to contractor.

(1) Lien releases should also be obtained from all subcontractors and suppliers, as well as from the general contractor.

(2) According to the story, the California Contractors State License Board received 648 complaints in the 2006-2007 fiscal year about contractors not paying their subcontractors. That number increased more than 3.5 times in the last fiscal year, the story states.