L.A. Feds Pinch Texas Man In Alleged Fractional Interest Deed Transfer Foreclosure Rescue Scam; Suspect Intends To Cop Guilty Plea

From the Office of the U.S. Attorney (Los Angeles, California):

• Federal authorities have charged an Austin, Texas man with having operated a foreclosure-rescue scam in Los Angeles and elsewhere that falsely promised the owners of more than a thousand distressed properties that they could indefinitely postpone foreclosure sales.



• Frederic Alan Gladle, of Austin, Texas, was charged late this morning in United States District Court with one count of bankruptcy fraud and one count of aggravated identity theft. He stated in court in Austin that he intends to plead guilty to the charges, as part of a plea agreement. The defendant used five aliases to avoid detection in the scheme, including stealing the identity of at least one person and setting up a cell phone account in that victim’s name. As a result of the four-year scheme, which continued through Gladle’s arrest in October of 2011, Gladle and his associates collected more than $1.6 million in fees from distressed homeowners.



• According to the charges, Gladle was involved in a scheme that recruited homeowners whose properties were in danger of imminent foreclosure and falsely promised to delay the foreclosures for homeowners for up to six months.



• Once a homeowner paid a fee of around $750 per month, Gladle, either directly or through salespersons, had the homeowner sign a deed granting a 1/100th interest in the house to a debtor in a bankruptcy whose name Gladle had found by searching bankruptcy records.



• The debtors had no idea that their names and bankruptcy cases were being used by Gladle in his scheme. Gladle would print out the unsuspecting debtor’s bankruptcy petition, attach the petition to the 1/100th deed in the debtor’s name, and fax the two documents to a homeowner’s lender to stop foreclosure proceedings.



• Because the filing of a bankruptcy gives rise to an “automatic stay” that protects a debtor’s property, the receipt of the bankruptcy petitions and 1/100th deeds in the debtor’s name forced lenders to cancel foreclosure sales.



• The lenders – which included banks who received government funds under the Troubled Asset Relief Program (TARP) – could not move forward to collect money that was owed to them until getting permission from the bankruptcy court, thereby repeatedly delaying the lenders’ recovery of their money.



• When homeowners wanted to void the 1/100th deeds to the unsuspecting debtors, Gladle would forge the debtors’ signatures on papers voiding the 1/100th deeds.

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• Peter Anderson, United States Trustee for the Central District of California (Region 16), stated: "Criminal bankruptcy fraud and, in particular, foreclosure rescue fraud schemes threaten the integrity of the bankruptcy system, as well as public confidence in that system. We deeply appreciate the strong commitment of U.S. Attorney André Birotte Jr., the Federal Bureau of Investigation and SIGTARP to combating bankruptcy fraud and abuse, as demonstrated by this case."(1)

For the U.S. Attorney press release, see Austin, Texas Man Charged with Fraud and Identity Theft in Nationwide Foreclosure-Rescue Scheme (Defendant Agrees to Plead Guilty; Collected $1.6 million from 1,100 Distressed Homeowners).

(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the bankruptcy courts.