Monday, November 14, 2011

Miami Sale Leaseback Equity Stripping Victim Reaches End Of The Road In Fight To Keep Home As Scammer Awaits Trial On RICO, Grand Theft, Etc. Charges

In Miami, Florida, The Miami Herald reports:

  • On Friday, Imogene Hall fought against tears as she boxed up her belongings and shut the door at her Miami Gardens home for the last time, closing the chapter on a five-year homeownership nightmare.

  • Hall’s account of her housing experience involves a harrowing combination of mortgage fraud, foreclosure rescue scams, title fraud, predatory lending and unscrupulous foreclosure attorneys.


  • Hall’s ordeal began in 2006, when she lost her job as a home health nursing aide and looked to tap into the equity in her home to help pay the bills while she looked for work. Her plan was to take out a home equity loan for about $50,000 on the three-bedroom home, which had nearly doubled in value since she purchased it for $80,000 in 1997.

  • As her bills began to pile up, a well-dressed man showed up on her doorstep unannounced, pitching just what she thought she needed: a no-stress cash-out refinance. What Hall didn’t know was that the man, Johnson Cuffy, was a convicted felon who investigators say was running an elaborate mortgage fraud scheme. Through his Tamarac-based company BlueKap Financial, Cuffy allegedly duped Hall into signing over the property to a straw buyer who later took out an outsized mortgage on the property, according to court documents and Hall’s account.

  • Unlicensed title agents helped Cuffy and his associates siphon off more than $180,000 from the mortgage loan, leaving Hall with $50,000 and what she thought was a simple second mortgage. In reality, she had sold the home to a straw buyer, wiping out her equity.

  • Subprime lender Argent Mortgage approved a $230,000 mortgage loan to the straw buyer, even though he listed employment at a non-existent video store in New York, and a county property appraiser valued the home at only about $140,000.

  • The more we learn about this the more incredibly amazing it is that mortgage servicers and banks allowed this to happen,” state mortgage fraud investigator R. Scott Palmer told The Miami Herald when briefed about Hall’s case last year.

  • Hall began making monthly mortgage payments of $1,500 to Cuffy’s BlueKap Financial firm. The money — about $12,000 — never made it to the lender, and the home went into default.

  • Hall’s house fell into foreclosure in 2006, sparking a five-year court battle that involved allegations of mortgage fraud and predatory lending. The case began to shift against Hall last year when it was transferred to Miami-Dade’s Section 50 court, a so-called “rocket docket” created to quickly dispose of old foreclosure cases. In a matter of weeks, the bank foreclosure was approved.

  • While Hall, 50, has been living rent-free during the legal ordeal, she said much of her limited income went to attorneys who charged her more than $20,000 while assuring her they would save the home.

  • Court records show that many of the attorneys did not follow through on their promises, failing to show up at court hearings, avoiding her phone calls and collecting thousands of dollars in fees. One lawyer billed her $2,800 for work he did trying to withdraw himself from the case. Another is being investigated by the attorney general for foreclosure rescue fraud.

  • None of the attorneys did anything for me but take my money,” said Hall, who had heart surgery during the foreclosure process and now lives on a disability check.

  • Deutsche Bank, a trustee for Argent Mortgage, took title to the home on the Tuesday before Christmas last year. After several attempts by pro-bono lawyers to stave off eviction and work out a mortgage modification, a judge in October ordered Hall to vacate her house within 30 days.

  • John Spittler, an attorney that took over Hall’s case on a pro-bono basis earlier this year, said he tried to halt the bank foreclosure, but the case had gone too far by the time he came along. “Everything was exhausted that we could possibly do to keep her in the home,” he said. “We kept her in there another seven months.”

  • Cuffy is currently serving an 11-year sentence for grand theft in an unrelated case and is charged with defrauding unsuspecting homeowners like Hall. His trial is set to begin in January, said John Swope, a Department of Financial Services agent who has been investigating Cuffy for the last four years. Cuffy faces charges for violating the Racketeer Influenced and Corrupt Organizations Act, grand theft and scheme to defraud.

  • He’s refused to take a plea agreement,” Swope said. “He’s being charged under the Habitual Offender Act and he [faces] 65 years.”(1)


  • The mortgage scheme stripped her of the equity she had built in her home, tarnished her credit and forced her out of the humble Miami Gardens neighborhood where she raised her four children and three grandkids.

  • In what she describes as a final effort to save a bit of dignity, Hall decided to move out a week before the court-ordered eviction date. “I don’t want them to throw me out,” she said. “I want to take my time and move out.”(2)

For the story, see Mortgage fraud victim ends up losing her house.

(1) At one time, many in state and local law enforcement (particularly those with untrained eyes and who were otherwise clueless in handling 'semi-sophisticated' white collar crimes - for some, anything more complex than investigating a 'rubber check' case is 'semi-sophisticated') once passed on prosecuting these sale leaseback equity stripping ripoffs that under the flimsy pretense that these cases were merely 'civil matters.' Over the last couple of years, it's been primarily the Feds (U.S. Attorneys, FBI, Secret Service, etc.) that have been bringing prosecutions in these equity stripping ripoffs. However, more and more local (state court) prosecutors now appear to be stepping up to the plate and showing some guts by bringing criminal charges against these scammers. See, for example:

See generally:

(2) One may wonder why the homeowner/victim of this ripoff was forced out of her home before the criminal prosecution of the scammer was completed. After all, if the ripoff of the title to the homeowner's residence was perpetrated as a result of an act that is determined to be a crime, it is at least arguable that any contract founded upon such act is absolutely void. The case law, at least in the State of Florida, appears to support this view, as the Florida Supreme Court appears to make pretty clear in one case. See:

  • Town of Boca Raton v. Raulerson, 146 So. 576, 577 (Fla. 1933):

    where a statute pronounces a penalty for an act, a contract founded upon such act is void, although the statute does not pronounce it void or expressly prohibit it."

See also:

Chen v. Whitney National Bank, 65 So. 3d 1170 (Fla. App. 1st DCA, July 22, 2011) ([alteration added] - not in the original text):

  • [T]he Florida Supreme Court has expressed that "where a statute pronounces a penalty for an act, a contract founded upon such act is void, although the statute does not pronounce it void or expressly prohibit it." Town of Boca Raton v. Raulerson, 146 So. 576, 577 (Fla. 1933).

Hooten v. Lake County, 177 So. 2d 696 (Fla. App. 2nd DCA, 1965):

  • As we have indicated, the supreme court in the Town of Boca Raton case approved the principle that where a statute pronounces a penalty for an act, a contract founded on such act is void, although the statute does not pronounce it void nor expressly prohibit it.

Jaylene, Inc. v. Steuer, 22 So. 3d 711 (Fla. App. 2nd DCA, 2009) (Northcutt, J. concurring):

  • One well-established defense to the enforcement of a contract is that the contract violates public policy. See E. Allan Farnsworth, Unenforceability on Grounds of Public Policy, in Contracts ch. 5 (2d ed. 1990).

    This defense is firmly rooted in common law, and because it protects the interests of society at large as well as—and sometimes contrary to—those of the contracting parties, it is an important aspect of the courts' authority. As far back as 1775, Lord Mansfield was expressing the view that an agreement may be void on grounds of public policy, stating: "No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act." Id. § 5.1 at 347 (quoting Holman v. Johnson
    , 1 Cowp. 341, 343, 98 Eng. Rep. 1120, 1121 (1775)).

    An early Florida case recognized this defense to contract enforcement, citing the principle "ex turpi causa non oritur actio" to explain the law's reluctance to enforce contracts in violation of public policy. Town of Boca Raton v. Raulerson
    , 146 So. 576, 577 (Fla. 1933). Translated, the maxim means "`from an immoral consideration an action does not arise,'" which "expresses the principle that a party does not have a right to enforce performance of an agreement founded on a consideration that is contrary to the public interest." Black's Law Dictionary 607 (7th ed. 1999).

Who knows, but it may very well be that if the lowlife who perpetrated the ripoff is convicted of a crime, said conviction could give rise to a cause of action for the victimized homeowner (ie. possibly a quiet title action) in an effort to reclaim the title to her home on the basis that the contract entered into as part of perpetrating the ripoff, and every contract, conveyance, etc. subsequently made in connection therewith (or devolving therefrom) is absolutely void/void ab initio.

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