Another Sale Leaseback Peddler Feels The Pinch As Norfolk Feds Bag Foreclosure Rescue Operator To Face Equity Stripping Allegations

In Norfolk, Virginia, The Virginian Pilot reports:

• Kathleen Harps of Chesapeake was arrested Friday by the FBI after she was indicted by a federal grand jury Tuesday, according to a news release from the U.S. Attorney’s office. Harps, 51, is being charged with one count of conspiracy to commit mail and wire fraud, three counts of mail fraud and three counts of engaging in unlawful monetary transactions.



• The indictment says that Harp operated a business named the New Beginnings Group in Hampton Roads that specialized in “foreclosure rescue” during 2006. Harps and others solicited homeowners facing home foreclosure and agreed to sell their homes to Harps or other buyers.



• Harps promised them that during a one-year period after the sale, the homeowners would remain in their homes without having to pay the mortgage so they could buy back their homes at the end of the year. This didn’t happen, the indictment said.



• Instead, the indictment says Harps and other property buyers lied to fraudulently obtain mortgage loans, which later defaulted. Foreclosures soon followed and the homeowners lost their homes and equity they built up, which they paid to Harps’ business, according to the indictment.



• Harps faces a maximum of twenty years in jail for each of the conspiracy and mail fraud counts, and ten years in jail for the unlawful monetary transaction count.(1)

For the story, see Chesapeake woman charged with foreclosure fraud.

(1) In a recent case with reported similarities:

• the perpetrator of the scam was recently convicted (see Foreclosure Rescue Equity Stripping Victims Burst Into Courtroom Applause As Feds 'Frog-March' Sale Leaseback Peddler To Prison For 13+ Years); and



• in at least one case, one homeowner brought and won a civil lawsuit (a lawsuit that probably serves a good template for those looking to undo these types of real estate swindles) where the victim successfully voided the sale leaseback transaction. Included in the voided conveyances was the (presumably unwitting) lender's mortgage that financed the scam because the latter failed to physically inspect the premises and inquire into the rights and equities of the occupants in possession before providing the loan to finance the ripoff. Said failure resulted in the lender being found to have 'notice' of the scam, even though it may not necessarily have had any actual knowledge (and may have been completely clueless) thereof. See:
  
  (1) Pennsylvania B'kruptcy Court Voids Sale Leaseback Scam; Victimized Homeowners' Continued Possession Leads To Invalidation Of Subsequent Deed, Mortgage,
  
  (2) Fowler v. Rauso (aka In re Fowler), 425 B.R. 157 (Bankr. E.D. Pa. 2010).

See Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals for links to some earlier posts on government prosecutions involving these deals.

See National Consumer Law Center, Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-Stripping Foreclosure 'Rescue' Scams for more on this type of scam (which, by the way, is just the latest mutation of a real estate equity ripoff that's been around for centuries, as any student of the old common law cases from states around the U.S. (which, in turn, are based on the pre-1787 English common law) addressing the equitable mortgage doctrine (involving a conveyance of a 'deed absolute' in exchange for a loan) will attest to).