Sacramento Feds Score Another Guilty Plea As 5th Defendant Goes Down In Foreclosure Sale Bid Rigging Conspiracy

In Sacramento, California, the San Jose Mercury News reports:

• Federal prosecutors say a Northern California man has pleaded guilty to conspiring to rig bids at foreclosure auctions in a county among the hardest hit by the real estate bust. The U.S. Attorney's Office for the Eastern District of California says 38-year-old Yama Marifat of Pleasanton pleaded guilty Friday to the conspiracy.

• Prosecutors say Marifat and a group of real estate speculators agreed not to bid against each other at San Joaquin County public foreclosure auctions to keep prices down. The group would then hold a private auction where the property went to the conspirator willing to pay the most above the public price. The speculators would split the difference between the prices at public and private auction as a payoff among themselves.

• Marifat faces up to 10 years in prison for bid rigging and 30 years for mail fraud, plus fines up to at least $2 million. The U.S. Attorney's Office says Marifat is the fifth person to plead guilty in connection with the conspiracy, which was uncovered as part of an ongoing federal investigation into fraud and bid-rigging in real estate auctions in San Joaquin County.(1)

Source: Calif man pleads guilty to foreclosure bid rigging.

For the U.S. Attorney press release, see Real Estate Investor Pleads Guilty to Bid Rigging at Public Foreclosure Auctions.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

(1) Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm, the United States Attorney’s Office for the Eastern District of California at 916-554-2700 or the FBI’s Sacramento Division at 916-481-9110.

Attorney, Two Law Partners Admit To Bid-Rigging MD Real Estate Tax Lien Sales; Dodge Criminal Charges By Winning "Race To the Prosecutor's Office"

The Center for Public Integrity reports:

• A key witness in a federal probe of corruption in Maryland property tax-lien sales has stated under oath that he rigged bids for years while representing a Florida bank and other firms that bought liens at annual sales auctions, newly unsealed court records show.

• Baltimore real estate attorney John Reiff said he and two law partners helped fix bids for the purchase of “large numbers” of property tax debts, called tax liens, sold by tax assessors at auctions in Baltimore and several other Maryland counties between 2003 and 2007, according to court filings made public for the first time last month.

***

• An investigation published in December by the Center for Public Integrity showed how lien buyers can tack on double-digit interest rates, legal fees and other costs that can add thousands of dollars to a homeowner’s bill. In some states, lien holders can seize homes from those who fail to pay. The bid rigging cost the city of Baltimore and surrounding counties money by artificially holding down bids, local officials say, although they could not determine how much.

***

• Though the tax-lien industry has long been controversial, the Baltimore lawyer’s sworn declaration appears to be the first to mention a bank, or a tax-lien portfolio manager, in connection with allegations of criminal conduct in the bidding process.

• Reiff stated that a firm formed with his law partners acted to “suppress competition for tax liens by refraining from full competitive bidding.” [...] U.S. District Judge J. Frederick Motz in Baltimore unsealed Reiff’s declaration and some other records at the request of the Huffington Post Investigative Fund, now part of the Center for Public Integrity.

***

• Reiff and his partners, Anthony DeLaurentis and Richard Turer, were one of three investment groups that participated in the five-year scheme to dominate the tax lien auctions, according to prosecutors.

• Three other participants have pleaded guilty to bid rigging in the case. In May, Baltimore County attorney Harvey M. Nusbaum, 73, was sentenced to a year-and-a-day in prison and an $800,000 fine. His partner, Jack W. Stollof, 75, was sentenced to 12 months of house arrest and an $800,000 fine. A third man, Steven L. Berman , 53, received two years probation and a $750,000 fine.

• “Bid rigging is typically a clandestine effort made to line the pockets of unscrupulous businessmen at the expense of unsuspecting consumers — in this case, at the expense of homeowners and county and city governments,” Justice Department prosecutors wrote in a sentencing memorandum about Nusbaum.

• “In principle, bid rigging is no different from any other common theft of money or property. It is criminal fraud, pure and simple.”

• The unsealed records describe in detail how the well-financed investment groups illegally dominated the process in Maryland through collusion — and how they made millions of dollars off homeowners as a result. The three groups, according to Reiff, decided in advance which liens each would bid on.

***

• Reiff has been a key witness in the federal probe that has resulted in three convictions. He and his two partners cooperated with the government and were not charged.(1)

• In many cases, homeowners who owed only a few hundred dollars in taxes or municipal bills saw their debt soar into thousands because of the fees and interest. A Baltimore woman lost the home her family had owned for nearly three decades over what began as an unpaid water bill of $362, for instance.

For more, see Witness Says He Rigged Bids in Property Tax Lien Auctions in Maryland.

Go here for the recently-unsealed court filings referred to in this story.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

(1) This is another example of how scammers in criminal conspiracies can buy their way out of jail time (and, in this case, can avoid prosecution altogether) by winning the "race to the prosecutor's office" (possibly better described as the "rat-race to the prosecutor's office"), where once they learn they are the subject of a probe, they can run to the prosecutor's office (with the best criminal defense attorney they can afford in tow) and start ratting out their friends and colleagues in exchange for the best deal available. See United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) for one Federal judge's observation, made in the context of drug conspiracy cases, involving the so-called "race to the courthouse/prosecutor's office" which seems equally suited to other types of major, multi-defendant felony cases:

• In practical terms, drug conspiracy cases have become a race to the courthouse. When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed.

Sale Of Tax Liens To Speculators & Proliferation Of Vacant, Rundown Real Estate

In Fulton County, Georgia, a recent story in The Atlanta Journal Constitution on the proliferation of vacant and rundown properties highlights the role that the sale of tax liens plays in the physical deterioration of some neighborhoods:

• A contributing factor, [community development groups and tax officials] say, is the sale of tax liens. It burdens such properties with debt that exceeds their value and puts them in the hands of speculators who may sit on property as it deteriorates. As a result, many municipalities have stopped selling liens.

• Fulton County, however, still relies on the sale of tax liens as its primary method of collecting delinquent county and Atlanta city taxes, despite concerns over sometimes outrageous costs for property owners, questions about whether the practice saves the county money and negative effects on community revitalization. To a much lesser extent, Gwinnett County also sells tax liens.

• Fulton County Tax Commissioner Arthur Ferdinand continues to decline to discuss the county’s sales of tax liens or release property tax data that would support analysis of the practice. The Atlanta Journal-Constitution has sought his input since late last year. He has not returned phone calls.

• Fulton sold a lien for 2005 taxes on 55 Chester Ave. and, since 2006, taxes totaling $2,767 have not been paid. Tax liens and overdue taxes are not the only reason Chester Avenue and similar properties remain vacant and decrepit. But community development experts say liens in private hands discourage development by adding costs and legal complications to clearing land for construction.

• In Georgia, unless a property owner receives notice of a lien sale and settles the debt sooner, the legal process after a lien is sold drags out a year or more. Private companies may hold liens longer because they accumulate fees and interest, and once a property is sold, they can wait for a development project that needs the land. In the interim, the companies often don’t pay taxes on vacant properties or maintain them.

For the story, see In tax-lien limbo.

In a related Atlanta Journal Constitution story, see Senate bill tackles sales of tax liens:

• Legislation introduced in the [Georgia] Senate on Friday is meant to curb abuses of the sale of property tax liens, but broad language in the bill would obstruct tax collection by counties that do not sell liens, according to tax experts.

• Senate Majority Leader Chip Rogers, R-Woodstock, who introduced the bill, said the language will be changed to affect only the practice of selling tax liens to private companies and not the collection of taxes by the counties.

***

• A series of stories by The Atlanta Journal-Constitution over the past two months(1) detailed how the sale of tax liens can
create outrageous costs for property owners and stall community revitalization efforts. The stories also raised questions about whether selling tax liens saves the county money as Fulton County Tax Commissioner Arthur Ferdinand has said.

(1) See:

• AJC Shines More Light On Fulton County Tax Lien Inflating Rackets; Investors Who May Not Be Responsible Players An Important Public Policy Concern,
• Private Investors Score Big Profits In Tax Lien Ripoffs As County Process Allows For One Homeowner's $291 Delinquent Tax Bill To Grow To $8,200.

West Virginia Court Voids Mortgage, Costs Bankster Over $3M+ With Punitive Damages, Legal Fees To Mom, Daughter Screwed Over By Predatory Practices

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

• An Ohio County judge has ruled against Quicken Loans in a $3 million predatory lending case. Circuit Court Judge Arthur M. Recht concluded an eight-day trial that spanned 17 months by awarding punitive damages, attorney fees and costs to mother and daughter Wheeling residents Lourie Jefferson and Monique Brown.

• The award of more than $2.1 million in punitive damages, along with attorney fees and costs, brought the total verdict in the case against Quicken Loans to more than $3 million. Jefferson and Brown also had previously reached a settlement for a confidential amount with the loan appraiser.

• Bordas & Bordas attorneys were representing Jefferson and Brown in foreclosure proceedings initiated by Quicken Loans, their mortgage lender. They alleged abusive and predatory conduct on Quicken Loans' part and filed a 12-count complaint on behalf of Jefferson and Brown, detailing predatory lending practices against Quicken Loans and its appraiser in Ohio Circuit Court.

• At the first phase of the trial, the Court ruled in favor of Jefferson and Brown on numerous counts. The court found the lending practices of Quicken Loans unconscionable, based in part on Quicken's utilization of a highly inflated appraisal in making the loan.

• The court also found that Quicken Loans defrauded the homeowners by misleading them into paying excessive loan origination fees; falsely promising to favorably refinance the loan in the near future; and concealing an enormous balloon payment from its own borrowers.

• As a result, the court ruled the $144,800 loan that grew to $227,000 was unenforceable as a matter of law and would not have to be repaid and that Quicken Loans must return $17,000 in payments to Jefferson.

• The second phase of the trial resulted in the punitive damage award and an order that Quicken Loans must pay Jefferson and Brown's attorney fees and costs. Jim Bordas said the major verdict was justified and that the case encapsulated much of what led to the collapse of the housing market and economy as a whole.

• "Ms. Jefferson and Ms. Brown fought very hard for justice against a large national lender," Bordas said. Bordas said he hoped the award would send a message to other struggling homeowners.

Source: Quicken Loans on losing end of $3 million predatory lending verdict.

Go here for the court's Findings of Facts, and here for the Punitive Damages/Attorneys Fee Award.

Role (Or Lack Thereof) Of Class Action Lawsuits When Exercising Rescission Rights Under TILA

The apparent lack of a role of class action lawsuits when enforcing rescission rights under the Federal Truth In Lending Act is the subject of a recent law review article in the Loyola of Los Angeles Law Review. From the synopsis:

• The Truth in Lending Act (TILA) provides two primary civil remedies for aggrieved borrowers who received misleading loan disclosures: damages and rescission. While the damages remedy expressly caps class-action damages recoveries, TILA’s rescission remedy is completely silent as to class-action treatment.

• Despite a split on the district-court level regarding the applicability of the class-action device to TILA rescission, the only two federal Circuit Courts of Appeal to consider the issue have foreclosed the right of borrowers to seek class-wide rescissory relief for TILA disclosure errors.(1)

• This Article examines the judicial analysis in these two cases and finds that both courts erroneously construed TILA rescission in favor of lender rights and overstepped their constitutionally delegated power by completely foreclosing a right absent clear congressional intent.

For the article, see Class Retreat From Mass Deceit: Assessing Class Action Compatibility With Truth In Lending Act Rescission.

(1) See:

• Andrews v. Chevy Chase Bank, 545 F.3d 570 (7th Cir. 2008),
• McKenna v. First Horizon Home Loan Corp., 475 F.3d 418 (1st Cir. 2007).

See also, James v. Home Constr. Co. of Mobile, Inc., 621 F.2d 727 (5th Cir. 1980), in which the 5th Circuit Court of Appeals, without much of a discussion or analysis, agreed with a lower court ruling finding that class actions were not warranted by the language of Section 1635, that the rescission remedy was a "purely personal remedy" and that an obligor could not start a class action, merely by filing an individual claim.

Wells Fargo Backs Down In Attempt To Bully Elderly Georgia Woman From Home After Feds Express Interest In Dubious Documents Filed In Bankruptcy Case

In Decatur, Georgia, The New York Times reports:

• WHEN Zella Mae Green of Georgia filed for bankruptcy to save her home from foreclosure in 2004, she and her lawyer wanted to know two things: Did she actually owe any back payments on her mortgage? And, if so, to whom? It didn’t seem like a lot to ask. But until last week, those questions had been unanswered for seven years.

***

• But how Ms. Green’s case became her personal version of Jarndyce and Jarndyce, the endless lawsuit at the center of the Charles Dickens novel “Bleak House,” is a story for our times. The conflicting claims made over the years by employees and representatives of Wells Fargo, which says it holds the note on her property, are enough to make your head spin.

• Wells Fargo and Ms. Green didn’t exactly agree on how much she owes on her mortgage. Ms. Green took out a $40,250 mortgage in 1988, never refinanced and figured she is four payments behind. Wells Fargo contended that she owes 113 back payments, totaling more than $48,000.

• Ms. Green said she would have given up years ago if it weren’t for her lawyer. She would have forfeited her two-bedroom home in Decatur to one of the three institutions that have claimed — at the same time, mind you — to hold title to it. “It’s been a big mess for a long time,” she said in a recent interview.

• Howard Rothbloom, a foreclosure defense lawyer in Marietta, Ga., represents Ms. Green. “The point of this whole case is that inaccurate, incomplete and conflicting information has been provided to Ms. Green over the course of seven years,” he said. “Determining the balance due on her loan should not have to be so difficult.”

• THE whole episode makes you wonder, yet again, how many of the millions of foreclosures in recent years might have been based on questionable accounting or improper practices by loan servicers.

***

• Over almost seven years, Wells Fargo employees swore to three different stories about the note on Ms. Green’s property. When asked two weeks ago how this could be, a spokeswoman for the bank said: “We regret any difficulties our customer experienced in this circumstance. This is the kind of situation we seek to avoid, and we are working on this customer’s situation to reach a solution.”

• Late last week, Wells Fargo agreed to a settlement with Ms. Green. The terms are confidential. The deal came shortly after the United States Trustee, the unit of the Justice Department that oversees the nation’s bankruptcy courts, indicated it was interested in the facts of the case. Fascinating how quickly these things get resolved when some daylight shines in.

For the story, see Waiting Seven Years for Two Answers.

Thanks to Lisa E. for the heads-up on the story.

HSBC Suspends All U.S. Foreclosures After Regulators Note Use Of Crappy Paperwork In Processing Legal Actions

Bloomberg reports:

• HSBC Holdings Plc, Europe’s biggest bank, has suspended U.S. foreclosures following a joint examination by the Federal Reserve and the Office of the Comptroller of the Currency. The regulators issued letters noting “certain deficiencies” in the processing, preparation and signing of affidavits and “other documents supporting foreclosures” at HSBC Finance Corp. and HSBC Bank USA, the London-based lender said yesterday in its annual report.

For more, see HSBC Halts U.S. Foreclosures After Joint Examination by Fed, OCC.

Loan Servicer Drives Homeowner Into Foreclosure After Clipping Her With Excessive Force-Placed Hazard Insurance

In Nassau County, Florida, The Florida Times Union reports:

• Myrtle Harrison has lived in her mobile home for more than 25 years. For the first 20 years, she owned the home outright, free from any mortgage. But in a series of developments that began six years ago, Harrison has become ensnared in circumstances - partly due to bad decisions, partly due to being taken advantage of - that make it likely she will lose that home and its 1.4 acres near the south bank of the Nassau River.

***

• The tipping point for Harrison - that triggered a recent foreclosure notice - was force-placed insurance added on top of her mortgage payments. [...] So what is force-placed insurance?

• "This is a big scam," says April Charney, an attorney with Jacksonville Legal Aid, who counsels homeowners battling foreclosure.(1) A lucrative revenue stream for financial institutions, force-placed insurance often comes as a surprise to homeowners who are ill-prepared to pay its excessive premiums.

• How Harrison got to force-placed insurance, which bills her at $200 per month on a home and property valued at $57,000, is not uncommon, Charney said. [...] Harrison said she wonders why the insurance for a mobile home valued at about $19,000 is costing her $200 a month. The land is valued at $42,000, according to a Duval County Property Appraiser's website.

• Force-placed insurance sometimes actually covers more than just the value of the home, Charney said. Homeowner's insurance is supposed to insure only a home, not the land, although a mortgage finances both. That's because although a home can burn down or be destroyed in a storm, but land generally can't.

• But force-placed insurance often is imposed for the full value of the loan, not just the home, Charney said. That means the force-placed insurance is debt insurance, not just homeowner's insurance. "They have the right to force-place property insurance, but not debt insurance," Charney said.

For the story, see Insurance required by mortgage company leaves owner of Nassau mobile home facing foreclosure (Myrtle Harrison will likely lose her $19,000 mobile home to foreclosure. Among the reasons: She must pay $2,400 a year in "force-placed" insurance required by her mortgage company).

(1) Jacksonville Area Legal Aid is a law firm of 30 attorneys specializing in providing civil legal assistance to low-income persons in Duval, Nassau, St. John's and Clay Counties in Florida.

Utah Homeowner Acknowledges Gullibility By Trusting BofA In Applying For Loan Modification

In Layton, Utah, KSL-TV Channel 5 reports:

• More than 32,000 homes in Utah received a foreclosure notice last year. A lot of those foreclosure notices went to people who thought they were meeting all of the lender's demands while they were following the procedures to apply for a loan modification. One of those people is Steve Curtis, the mayor of Layton.

• Two weeks before Christmas, Curtis came home and found a foreclosure notice taped to his door. It said his home would soon be put up for auction -- even though he had never missed a mortgage payment. This was just one of the many nightmares Curtis encountered by applying for a trial loan modification.

• "Naturally our trust was with the bank," he said. "We saw no reason why not to trust. Call it gullibility or whatever." Curtis says he was stunned to see the foreclosure notice on the home he has lived in for 14 years. "It was very painful," he said. "Nobody should have to go through that. Nobody."

***

• To further illustrate what a mess the whole process has been for the Curtis family -- just two weeks ago they received an e-mail stating that they are not eligible for a loan modification because their loan is in active litigation. But the only reason the loan is in litigation is because Bank of America wrongly foreclosed.

For more, see Layton mayor shares story of wrongful foreclosure.

The Double Standard Of Stategic Defaults - OK For Businesses, Unethical For Homeowners, Say Financial Industry Apologists

A recent story in The Palm Beach Post on the use of strategic defaults by homeowners who are underwater on their homes (where the money owed on their mortgage loan exceeds their home value) had this excerpt highlighting the apparent hypocrisy by those whose arguments against the manuever are limited to the context involving homeowners, and not businesses:

• In the business world, strategic default is a common tactic - considered a savvy move for financially troubled companies. However, "consumers have been browbeaten and trained to believe that it's not honorable to not pay your debts," said Margery Golant, a Boca Raton attorney who represents the Pompano Beach couple in default. "Why should it be any different for consumers?"

• Last year, Morgan Stanley walked away from a $1.5 billion mortgage on five buildings in San Francisco despite record-breaking profits in 2009.

• Real estate giant Tishman Speyer Properties strategically defaulted on $4.4 billion in loans on two housing developments in New York after the properties lost $2.2 billion in value. The company had billions of dollars in assets, including Rockefeller Center and the Chrysler Building, which it could have leveraged to meet its loan obligations.

• Even the Mortgage Bankers Association, whose president chastised homeowners who strategically default for the "message" it would send to their "family, kids and friends," dumped its Washington headquarters in a short sale. After working out a deal with its lender, the MBA sold the building for $41.3 million last year. In 2007, the group purchased it for $79 million .

• "No, it's not wrong," said Randy Cohen, author of the weekly Ethicist column in The New York Times. Although homeowners are emotionally attached to their property, a house is still an investment. "I don't understand why you would be asked to make a decision on this investment any differently than you would on any other," Cohen said. "Why should homeowners be held to a higher ethical standard?"

For the story, see Some homeowners, who can afford the mortgage, still default as a strategy.

Cops Hunt Man For Allegedly Scamming Two Unwitting Families In Rent Ripoff Involving Vacant Home In Foreclosure

In Marietta, Georgia, WSB-TV Channel 2 reports:

• Two Cobb County families are searching for a man who collected thousands of dollars for a rented home and disappeared. It turns out the two-story Marietta home was in foreclosure. Local investigators have since joined the hunt for the man.

• "Unfortunately, lost $1,100,” victim Laura Price told Channel 2 Action News reporter Ross Cavitt. [...] After seeing a roadside ad, she contacted the advertised real estate agent, Celyon “Lonnie” Barclay, who she said took the deposit and told her to move in. “For the first month’s rent, I tried to meet him and he never showed up,” Price said.

• After filing a report, Price, and Cavitt, discovered that Barclay has been in and out of jail on various charges and has a list of companies he’s incorporated that don’t seem to exist, with phone numbers that go nowhere.

• To top it off, the home was rented to another family who found the ad on Craigslist and moved in a few weeks ago. “I found out since then the house was in bankruptcy, and I can no longer get in contact with him,” resident Jeff Germany told Cavitt. Germany said Barclay apparently has no rights to the house, and the property will be sold on the courthouse steps in a few weeks.

Source: Man Accused In Rental Rip-Off.

Southern California Attorney Arrested For Threatening "Armed Confrontation" In Defending Client From Losing Home To Purportedly Illegal Foreclosure

In La Costa, California, KGTV Channel 10 reports:

• A local attorney known for going to extreme measures to save his clients' homes was arrested on Wednesday and an exclusive video obtained by 10News reveals the threat that led to one of the attorney's arrests.

• Encinitas attorney Michael Pines was arrested on Wednesday for violating a restraining order against him. Before he was arrested, Pines was in the process of fighting for clients who he said were illegally evicted from their La Costa home.

• Wednesday's arrest was Pines' third arrest in less than a week. On Saturday, Pines was arrested when Carlsbad police said he became violent with a security guard at a La Costa home. Pines was also arrested the day before for trespassing and threatening the security guard, which was caught on video.

• "I'm going to precipitate an armed confrontation … Want me to say it again? I'm going to force an armed confrontation," Pines said on the video.

For more, and the link to the video, see Local Anti-Foreclosure Attorney Arrested After Threat (Michael Pines Arrested While Trying To Save Clients' La Costa Home).

Rockland County DA: Phony Mortgage Broker Clipped Couple For $26K For Purported Assistance In Getting Loan To Buy Home

From the Office of the Rockland County, New York District Attorney:

• Rockland County District Attorney Thomas P. Zugibe today announced that Andre Tolentino (DOB 10/17/58) of 8 Whitewood Drive, New City, New York has been charged with one count of Grand Larceny in the Third Degree, a class "D" Felony.

• Tolentino, an employee of the Bravo supermarket in Hillcrest, held himself out as a legitimate mortgage broker to a couple that frequented the grocery store. In 2007, the defendant offered the victims help in securing a mortgage to purchase the home, which they were renting at the time.

• According to the charges, Tolentino introduced the couple to a mortgage broker in New York City, to whom the family paid $10,000. Several months later, the victims paid an additional $15,000 dollars to the defendant - money he claimed was needed to finalize the loan. In this sham transaction, the couple was told to make the check payable to Tolentino’s wife.

• During subsequent months, other payments were made to the defendant after the victims were told additional monies were needed to complete their loan.

• Tolentino is not a licensed mortgage broker. The victims never received the mortgage.

For the press release, see New City Man Charged In $26,000 Mortgage Fraud Scheme.

Buying 'Inexpensive' Foreclosed Homes May Come Loaded With Major Hidden Costs

In Charlotte, North Carolina, WSOC-TV Channel 9 reports:

• A lot of people are looking to cash in by buying foreclosed homes, but some of those foreclosed homes may not be such a good deal. Action Nine Reporter Don Griffin rode along with a professional home inspector.

• Griffin found a foreclosed home for sale at $108,000 that he described as a babydoll, which is an industry slang term for a good deal. “No sir. It’s not a babydoll. Not now,” said Butch Upton, a licensed inspector with Housemaster. Upton said anyone buying a house like this or any foreclosed home without getting an inspection is asking for trouble.

• He found extensive termite damage in the basement. “It’s all the way down that back wall," he said. There is also water damage, mold issues and cancer-causing radon gas with readings high enough to require expensive corrections. "This house could cost anywhere from $2,000 to $5,000 to mitigate,” Upton said.

• Griffin climbed into the attic, where Upton showed him other hidden problems like leaks around the chimney and a cut board on a roof support. Outside, Upton showed Griffin where the deck was separating and unsafe and also the heat pump is missing. "It’s obviously been stolen and cut away," Upton said.

• Upton said to fix all these things would cost $30,000 making this foreclosed home not a good deal and because foreclosed homes are sold as is and that extra cost falls to the buyer. "That's why it’s important to have an inspection to know what you're buying,” said Upton. But before hiring any inspector, verify they are licensed and insured. Griffin said the bottom line is you can't assume that because it's a foreclosure that it's the best price.

Source: Foreclosed Homes Could Pose Heavy Hidden Costs.

Realtor With Vacant Foreclosed Home For Sale Walks In On Unexpected 'Show'

In Albuquerque, New Mexico, KRQE-TV Channel 13 reports:

• A local realtor who was trying to show a home over the weekend said she walked into a show she did not want to see. Police said April Espinosa was inside the Southwest Albuquerque home having sex with an unnamed man.

• Espinosa told the realtor it used to be her grandparent’s home but they had recently lost it to foreclosure. Police said they found a stolen car in the backyard with Espinosa’s things inside. She is charged with breaking and entering and car theft.

Source: Realtor finds unwanted guests in home.

GC Tagged For Grand Larceny In Alleged $50K Scam; DA Invokes NYS Lien Law, Treats Payments Pocketed For Home Improvements As Trust Fund Ripoff

From the Office of the Rockland County, New York District Attorney:

• Rockland County District Attorney Thomas P. Zugibe [] announced that John J. DiGiacomo (DOB 08/27/58) of [...] New City, New York has been charged with one count of Grand Larceny in the Third Degree, a class "D" Felony. DiGiacomo, a general contractor who conducted business under the company name of "Olivia Rose Landscaping Contractors, Inc." is alleged to have stolen $50,000 from a homeowner with whom he had contracted to perform approximately $134,000 worth of home renovations.

***

• According to the charges, between October and December, 2008, the victim contracted with DiGiacomo to perform major renovations on his home. The customer gave the defendant more than $50,000 as a down payment for the project. District Attorney Zugibe said that DiGiacomo and Olivia Rose Landscaping performed minimal work for the victim before abandoning the uncompleted project. The victim was forced to hire new contractors to finish the project.

• The defendant will be prosecuted for Grand Larceny through application of the New York State Lien Law, which mandates that, upon acceptance of funds in connection with a contract for improvement of real property or home improvement, those funds become a trust, which can be used only to pay for costs incurred in the performance of that homeowner’s project.

• The use of that money for any other purpose is a larceny under the Lien Law. Further, the contractor must maintain separate ledgers for each job for which he has contracted.

• DiGiacomo is accused of walking away from the job and failing to provide an accounting or return of the victim’s money.

For the Rockland County DA press release, see Rockland County Home Improvement Contractor Charged In $50,000 Customer Swindle.

Plumber Allegedly Pocketing $5K From Homeowner w/out Doing Any Work Is No 'Civil Matter'; DA Treats Transaction As Home Improvement Trust Fund Ripoff

From the Office of the Rockland County, New York District Attorney:

• Rockland County District Attorney Thomas P. Zugibe [] announced that Jerry Cioffi (DOB 02/21/69) of [...] Thiells, New York has been charged with one count of Grand Larceny in the Third Degree, a class "D" Felony. Cioffi, a plumbing contractor who conducts his business under the company name of Cioffi Services, Inc., is alleged to have stolen $5,000 from a Nyack homeowner with whom he had contracted to construct a sewer connection from her home to a main sewer line.

***

• According to the charges, the victim contracted with Cioffi in April, 2010 to construct the sewer line. The customer gave the defendant a down payment of $5,000, which represented half of the $10,000 total cost of the project.

• The defendant allegedly assured the victim that he would procure the applicable permits and complete the work on or about May 1, 2010. In reality, Cioffi applied for no permits and performed none of the work by the time the victim contacted the County Department of Consumer Protection in late September.

• Cioffi is accused of walking away from the job and failing to provide an accounting or return of the victim’s money.(1)

For the Rockland County DA press release, see Home Improvement Contractor Arrested For Scamming Nyack Resident Out Of Thousands Of Dollars.

(1) According to the press release, the defendant will be prosecuted for Grand Larceny through application of the New York State Lien Law, which mandates that, upon acceptance of funds in connection with a contract for improvement of real property or home improvement, those funds become a trust, which can be used only to pay for costs incurred in the performance of that homeowner’s project. The use of that money for any other purpose is a larceny under the Lien Law. Further, the contractor must maintain separate ledgers for each job for which he has contracted. By failing to provide an accounting of how the money had been used and by not returning the money upon the demand of the consumer, the contractor violated both the Penal Law and the Lien Law.

Cops Pinch Former Councilman On Deed Theft Charges; Allegedly Forged & Notarized Title Conveyance To Unwitting Owners' Property

In Russell County, Alabama, the Montgomery Advertiser reports:

• Authorities say a longtime member of the Phenix City Council has turned himself in to authorities on for­gery and perjury charges. WTVM-TV reported that 70-year-old Arthur Sumbry Sr. turned himself in to the Russell County Sheriff's Office Friday after being indicted by a grand jury.

• Russell County Sheriff Heath Taylor said the charges stem from an incident in 2008 when Sumbry was serving as a no­tary public. Authorities said Sumbry forged signatures on a deed to a house that he notarized and lat­er lied about it in court under oath. Taylor said the people whose names were forged real­ized they never signed the doc­ument.

Source: Former Phenix City councilman charged with forgery, perjury.

Wells Fargo Dodges Sheriff's Sale Of Its Office Furniture As Bank, Judgment-Holding Philadelphia Homeowner Resolve Legal Dispute

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:

• Wells Fargo, the banking Goliath, apparently met its David in Philadelphia music promoter Patrick Rodgers. On Monday, Rodgers declared victory and put away his sling. When we first met Rodgers a week ago, he was a man with a complaint about Wells Fargo Home Mortgage. He'd even volunteered his own headline: "Philadelphia homeowner 'forecloses' on Wells Fargo."

• It was a slight exaggeration, but Rodgers had indeed taken Wells Fargo to Municipal Court and won a $1,000 default judgment when the mighty bank didn't bother to have anyone show up. When Wells Fargo didn't pay, Rodgers obtained a sheriff's levy to enforce the judgment.

• The result was a "Sheriff Sale" poster almost guaranteed to make his story go viral on the Internet: To satisfy the judgment, furniture and other contents of a Wells Fargo office on North Delaware Avenue were scheduled for sale next month.

For more, see Consumer 11.0: Borrower-bank dispute is settled; borrower wins.

Stress, Nerves, Depression Caused By Foreclosing On Friends, Neighbors Forces Metro Atlanta Tax Commissioner Into Premature Retirement

In Cherokee County, Georgia, The Atlanta Journal Constitution reports:

• Acid reflux gnawed at David Fields’ gut. Sleep came in fits. The waking hours were worse, as he battled depression with medications. Inevitably, the antidepressants failed to temper the toll taken by a job he once loved and now feared would kill him: Cherokee County tax commissioner.

• “My doctor told me, ‘If you don’t quit, you’re going to have a stroke or heart attack,' ” Fields said Monday, explaining why, after 28 years, he resigned from his post with two years left on his term.

• Fields, 62, became a poignant reminder of the housing bust’s impact on thousands of lives across metro Atlanta, where almost 100,000 properties were foreclosed on in 2010. Property owners are not the only ones hurt; so are people, such as Fields, at the end of a ruinous process set in motion by recession.

• “I was foreclosing on the homes of people I have known my entire life,” Fields said Monday, two weeks after he walked away from his job but still carrying its burden. “I tried to do all I could to help them. But there’s only so much you can do. Your job is to collect taxes.”

***

• Fields said he didn't feel he could do the job he was elected to do. “I felt like I was letting everybody down," he said, "the people who were losing their homes and the county I was supposed to represent."

• Doctors, specialists, did all kinds of tests on Fields. “They checked the lining of my stomach, and it was so irritated, they did biopsies," he said. "They concluded it was a combination of stress, nerves and depression. My job was getting to me.”

• Too many “hardworking people” he’d known his entire life, out of work and out of savings, were asking for more time to pay their property taxes, he said. “There was nothing I could do.”

For the story, see Cherokee tax chief quits to avoid foreclosing on more friends.

Church Pastor Cops Guilty Plea In Home Equity Ripoff; Conned Home-Selling Senior Into Holding Unrecorded Mortgage, Then Pocketed $420K Refi Proceeds

In Ventura County, California, the Camarillo Acorn reports:

• A Camarillo man who is the pastor of a Christian church in Ventura has pleaded guilty to three felony charges, including stealing the home equity of a Ventura man in his 80s. Alonzo Gene McCowan, 50, pastor of Solid Rock Christian Center, pleaded guilty Feb. 17 before Superior Court Judge Bruce Young to charges of theft of real property from an elder, money laundering and grand theft related to a series of real estate transactions.

• The Ventura County district attorney’s office said it reached a plea agreement with McCowan that provides for a year of jail time, extended probation and payments of restitution to the victim, Leo Gilmond, now 87. The agreement provides for dismissal of all felony charges against McCowan’s wife, Kimberly Ann McCowan, 47.

***

• Senior Dep. District Attorney Miles Weiss said securing restitution payments to Gilmond weighed heavily in the prosecutor’s decision to reach a plea agreement. “One of the main components of the agreement was the district attorney’s main concern on behalf of the elderly victim of receiving actual money at this stage of his life,” Weiss said. “That was one of his primary requests in the handling of the case.”

***

• The transaction with the elderly Ventura man dates to October 2004 when Gilmond sold his home to McCowan for $460,000 so it could be used by church visitors and students.

• Weiss, outlining the case, said Gilmond carried the loan for McCowan, expecting monthly installments and a balloon payment for the balance in three years. Weiss said McCowan made payments totaling $10,000 but never had the deed of trust recorded after the title was signed over to him.

• He instead gained access to $ 420,000 of the property’s equity by later taking out a separate loan in his wife’s name from a commercial lender. “And thus Mr. Gilmond was left without getting paid and now with a property that was encumbered by not one but two very sizable mortgages, now over $800,000 combined,” Weiss said.

• The house went into foreclosure shortly before the balloon payment was due. According to court records, McCowan said that he had lost the money in the stock market. McCowan had faced up to 16 years and eight months in jail and $1.74 million in fines and restitution if he were convicted of all charges in a trial.

• Weiss said that under the plea agreement, McCowan has already paid $75,000 in restitution from a verified source and owes a balance of $349,100. McCowan is required to pay $1,000 a month at 10 percent interest during a probation that could last up to 13 years. If he pays the full restitution balance before 13 years, he can request termination of probation, but he must serve a minimum of five years of probation, Weiss said.

• Gilmond’s heirs will receive the balance of the restitution if he dies before it is paid in full, the prosecutor noted. [...] Weiss said that Gilmond sued McCowan based on essentially the same facts and won a civil judgment in excess of $500,000. When restitution is made in the criminal case, those funds will be subtracted from the civil judgment, Weiss said.

For the story, see Pastor pleads guilty to felony charges (Agreement allows case against his wife to be dropped).

Wisconsin Appeals Court OKs Debt Recovery Approach For Foreclosing Lender Holding Two Mortgages On Same Property, Despite Waiving Deficiency Rights

The State Bar of Wisconsin News reports:

• A foreclosing party [in Wisconsin] can cut short a mortgagor’s right to redeem property from 12 months to six if the foreclosing party waives a right to seek a deficiency judgment. When two mortgages exist, foreclosing on one and seeking money damages on the other won’t impact the foreclosing party’s rights to a six-month redemption period.

***

• The District III Wisconsin Court of Appeals in Harbor Credit Union v. Samp, 2010AP974 (Feb. 17, 2011), affirmed [a lower court ruling], concluding that “there is no reasonable way to read Wis. Stat. sections 846.04(1) and 846.101 to mean that the money judgment obtained on the second mortgage and note should count as a deficiency judgment for purposes of the foreclosure action.”

For more, see Appeals court clarifies redemption rights when two mortgages, one foreclosed.

Woman Accused Of Running $50M Mortgage Fraud, Rent-To-Own Racket Extradited Back To Virginia After Fleeing To Turkey; Most Homes Ended In Foreclosure

In Loudon County, Virginia, the Washington Examiner reports:

• An Ashburn woman who fled the United States amid accusations of running a $50 million mortgage fraud scheme has been extradited back to Virginia to face charges of money laundering and making false statements. Diane Atari, 43, is accused of inflating her clients' credit scores and incomes in order to qualify them for homes they could not afford, causing them to go into foreclosure, according to the Loudoun County Sheriff's Office.

• The Virginia Attorney General's Office and Loudoun authorities say Atari pocketed more than $1 million from the scheme, and the total loss on the fraudulent mortgages is estimated at $50 million.

• Authorities say Atari fled the country after she was indicted in July 2009. She was apprehended in Turkey in October 2009 and had been awaiting extradition in a Turkish prison until she was flown back to the United States on Friday night. Atari made an initial court appearance Tuesday.

***

• According to Loudoun authorities, Atari owned and operated two businesses in the county, ACR Consulting Co. and Atari Management Co. Through those, she offered rent-to-own services for people who wanted to buy a home but didn't have enough income or strong enough credit scores to qualify for a mortgage. [...] Atari received commissions when properties sold and fees for the credit repair services, the sheriff's office said. The office said most of the homes ended up in foreclosure.

For the story, see Va. woman accused in $50m mortgage fraud scheme extradited.

Houston Woman Accuses Duo Of Filing Forged Deed In Attempt To Steal Her Property

In Houston, Texas, Ultimate Aldine reports:

• A woman is suing after, she says, two men conspired to file a forged deed with the courts. Julie Fanner filed a lawsuit on Feb. 14 in the Harris County District Court against Larry Jackson of Aldine and Hosea Harris Jr., alleging fraudulent claim against real property and conspiracy to defraud.

• Fanner says that the defendants unlawfully conspired to forge and to file a deed regarding her property, located at 207 E. 38th St. in Houston. According to the brief, the deed filed by the defendants is void and should be set aside, clearing title for Fanner.

• Fanner is seeking a decree quieting title in her name, actual, punitive and statutory damages, as well as attorney’s fees and court costs. She is being represented in the case by Pasadena attorney Jason Castaneda. Harris County District Court Case No. 2011-09369.

Source: Aldine resident named in cloudy title suit.

Florida AG Adds Another Foreclosure Mill To Its Target List In Ongoing Probe Into Allegedly Sloppy, Fraudulent Filings

The Tampa Tribune reports:

• The Florida Attorney General's Office opened a formal investigation this week into another south Florida foreclosure law firm it says presented false and misleading court documents. The firm, Ben-Ezra & Katz, is based in and processes thousands of foreclosures for lenders.

• The attorney general already is investigating four other firms for sloppy or fraudulent documentation used to take back homes. Earlier this month, the office said it had launched preliminary investigations into three more firms, including two in Tampa.(1)

• The investigation into Ben-Ezra & Katz joins the Plantation-based Law Offices of David J. Stern; Florida Default Law Group in Tampa; Shapiro & Fishman, which has offices in Boca Raton and Tampa; and Marshall C. Watson in Fort Lauderdale. The Attorney General's Office has called these firms "foreclosure mills."

For the story, see Another law firm gets attention of Attorney General.

(1) According to the story, the Tampa firms under preliminary investigation are Daniel C. Consuegra and Albertelli Law. Those two firms, along with Plantation-based Kahane & Associates, received letters of inquiry in early December from the Economic Crimes Division of the attorney general's office, the story states.

Lawsuit: Home Foreclosed Out From Under Metro Detroit Couple Despite Being Told By Mortgage Servicer That Loan Modification Process Was Ongoing

In Detroit, Michigan, Bloomberg reports:

• Chuck and Alicia Krantz fell behind on their mortgage payments last year and sought to modify the loan to save their three-bedroom ranch home in Westland, Michigan, just outside Detroit, from foreclosure.

• Two payments in April brought them current, they said in a lawsuit filed in Detroit federal court. In May, CitiMortgage Inc., a unit of Citigroup Inc., told them they were in foreclosure and would be refunded the $3,129.96 they sent the month before. While the foreclosure proceeded, they continued to pursue a modification, Chuck Krantz said in an interview.

• CitiMortgage sent a modification package in May, requesting documents. Even as they discussed the modification with CitiMortgage, an ad announcing the foreclosure was published, said Adam Alexander, the Krantzes’ lawyer. The home was sold at a sheriff’s auction in June.

• “We sent all the paperwork via e-mail,” Chuck Krantz, 39, a disabled former casino dealer, said in an interview. “On the phone, they told us everything was all right.” He said he and his wife, who works for a transport company, were never formally denied a modification.

For more, see Michigan Foreclosure Method Catches Homeowners as They Seek New Financing.

BofA Stiffs Couple On Loan Modification Request, Forcing Them To Vacate Premises; Then Refuses To Complete 3-Year Old Foreclosure Process

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

• Linda and Mike Cirillo are seeing their old house for the first time in years. "Wow!" Linda says as she walks up to the front door. "They've been here." The "they" she's talking about is Bank of America. And it's obvious they have been here tacking notice after notice on the door announcing the foreclosure of the property. But this is not how Linda remembers her dream house.

***

• The dream started to sour quickly when they were hit with job loss and some medical issues. "And I called the bank to tell them I couldn't make the payment and at that time they told me to wait three months, and I called them back and said, but I don't want to be late on my payments. I want to work with you." But she says the bank wouldn't work with them.

• In February, 2008 B of A started foreclosure proceedings and sent the Cirillos a notice that they'd set a sale date. "We decided to go ahead and move before that because we didn't want to have to deal with waiting for that to happen and people pounding on our door and telling us to pack and move."

• So on June 12, 2008, they moved out, having no idea their name would stay behind. "It's financially ruined us. Our credit rating... they report us as being delinquent every month so our credit rating is completely gone. It's made it very difficult for us to do anything."

• B of A has set eight sale dates on the Cirillo's home over the last three years. The most recent note says, "Your home will sell on February 3rd at 10:00 a.m." But like all the others, the date came and went, but the house never changed hands. In the meantime, the Cirillos are being pursued from all angles.

For the rest of the story, see Contact 13 Investigates: Foreclosed but not forgotten.

BofA Calls Off Foreclosure Of Atlanta Woman's Home As BofA Caves To Pressure From Local Media

In Atlanta, Georgia, WSB-TV Channel 2 reports:

• Channel 2 Action News got results for a southeast Atlanta widow threatened with foreclosure even though her mortgage was nearly paid off. "They do need to call me back really quickly because like I said, Channel 2 is already here," said housing advocate Simone Griffin. She was on the phone with a vice president of Bank of America.

• In a subsequent call, Griffin learned 64-year-old Mary Dixon's home would not be put up for sale March 1 after all. "I pray God make a way, … don't let me lose my home," Dixon said prior to the news that her home wouldn’t be put up for foreclosure.

• Channel 2 Action News consumer investigator Jim Strickland joined counselors from HomeFree-USA, digging through paperwork on Dixon's application for a reverse mortgage. Since the program would help her turn her equity into cash, Dixon said the bank advised not to bother making any more payments. "I didn't hear anything, so I figured I'd better see what's going on with my house," she recalled. Dixon said she found out months later that the house had declined in value and that the deal was off.

• That's when she tried to make the payments the bank had advised her to skip. "I got the money to pay my note up, but they wouldn't let me pay my note up," Dixon said. Instead, foreclosure notices came.

• With fees and penalties, her balance of $13,300 was up to more than $16,000 by December. Weeks later, a second letter from a foreclosure attorney placed the balance at more than $19,000. "To me, they are trying to take away from me, trying to take my house," Dixon said. Strickland found a receipt for the last payment Dixon made, and overheard the bank vice president admit they had no record of it.

• Moments later, the bank official vowed to stop the sale. Dixon's confident it will get straightened out. "I'm not nervous about it because if it's wrong, it's wrong," she said. Messages for the loan officer and bank representatives were not returned.

Source: Foreclosure Halted After Channel 2 Gets Involved.

Loan Officer Gets 12 Months Prison Time For Swindling Victims' Home Equity In Sale Leaseback Foreclosure Rescue Ripoff

From the Office of the U.S. Attorney (Baltimore, Maryland):

• U.S. District Judge J. Frederick Motz sentenced James Dan, age 46, of Annapolis, Maryland [] to a year and a day in prison followed by three years of supervised release for conspiracy to commit wire fraud in connection with a mortgage fraud scheme which promised to help homeowners facing foreclosure keep their homes, but left them homeless and with no equity. Judge Motz also ordered that Dan pay restitution but withheld determination of the amount until receiving further submissions from counsel.

***

• James Dan met James Fox in Annapolis when both were loan officers for a mortgage lender. Although Dan left the mortgage company in 2005, Dan and Fox stayed in contact with each other.

• According to their plea agreements, beginning in 2006, Fox began to identify prospective borrowers who owned and had equity in their homes, but who could not afford their mortgage payments and were at risk of losing their homes because they were either in foreclosure, bankruptcy or financial distress. Fox, and sometimes Fox and Dan, told potential victims that they could "rescue" them and save their houses.

• The promises involved transferring the home to Dan or Fox, who would obtain a new mortgage loan. Dan and Fox promised to make the payments on the new mortgage loan for six months or a year, during which time the individual would "repair" their credit, refinance the property and reacquire it. During this six month or one-year period, the individual was to continue living in the house.

***

• None of the victims is in title of their homes. Three victims are trying to regain title to their homes through civil law suits. Five victims have lost their homes.

• Dan, as a mortgage loan officer, was aware of the implications of the sale: that the seller who deeded away his or her home lost control of their home; that the person who was facing foreclosure today would not likely be able to afford a mortgage loan at a higher amount a year from now; that the individual who could not qualify for re-financing today would not qualify for a mortgage loan in a year and could not re-purchase their home; that Dan and his associate could not likely afford to make the mortgage payments for more than six months or a year and might default on the new mortgage; and that the house had equity which Dan and his associate were taking out at settlement for their own uses.

• Judge Motz sentenced James William Fox II, age 40, of Crofton, Maryland to 27 months in prison on January 28, 2011 for his participation in the conspiracy and ordered that Fox pay restitution in an amount yet to be determined.

For the U.S. Attorney press release, see Annapolis Loan Officer Sentenced to Prison For Mortgage Fraud.

See Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals for other incidents that led to criminal prosecutions in sale leaseback deals.

Scammer Pleads Guilty To Eight Felonies For Running Upfront Fee Loan Modification Ripoff Fleecing Thousand$ From Homeowners Facing Foreclosure

In Ventura, California, the Ventura County Star reports:

• A Ventura woman will have to pay $76,000 in restitution after pleading guilty this week to grand theft and unlawful acts by a foreclosure consultant stemming from a real estate case, authorities said.

• Maria Victoria Santos, 55, pleaded guilty to eight felony charges for her involvement in a foreclosure-rescue operation she ran out of an office at 1701 W. Fifth St. in Oxnard, the District Attorney's Office reported Thursday. Prosecutors said Santos victimized predominantly Spanish-speaking residents by promising to save their homes from foreclosure and collecting thousands of dollars in upfront fees.

• Under terms of her plea agreement, Santos will have to pay $76,000 in restitution to 15 victims, prosecutors said. She paid $15,000 of it when she pleaded Tuesday. She is scheduled for sentencing on May 24. Prosecutors said residents should never pay an upfront fee to an individual or business claiming they will rescue them from a pending foreclosure.

Source: Woman pleads guilty to 8 felonies (Will have to pay $76K in restitution).

Mastermind In "Land Patent" Foreclosure Rescue Scam Gets 20+ Years; Conned Victims Into Believing That They Could Save Homes By Declaring Sovereignty

In San Diego, California, KGTV Channel 10 reports:

• The "brains" behind a scam in which hundreds of homeowners were falsely told that "land patents" would protect their properties from foreclosure was sentenced Friday to 20 years and four months in state prison.

• Larry Smith, 63, was found guilty last June of 21 felony counts, including grand theft and unlawful practices by a foreclosure consultant. Deputy District Attorney Marlene Coyne told jurors that Smith and 17 co-defendants had homeowners shell out thousands of dollars for "land patents" under a false promise that their homes would be protected from foreclosure.

• The 10News I-team investigated Smith years ago, showing how he convinced people that Spanish land patents from the 1800s could be used to keep the banks and government at bay during foreclosure proceedings. Authorities said all of it was a lie but beautifully presented by Smith and his team of co-conspirators at well-attended seminars.

***

• Smith -- who has prior convictions for second-degree murder, robbery and burglary -- and 17 co-defendants put on seminars that convinced people that declaring sovereignty would help them avoid foreclosure on their homes. The sovereignty concept was "nonsense," according to Coyne.

For more, see Man Who Led Foreclosure Scam Sentenced (Larry Smith, 63, To Serve 20 Years, 4 Months In State Prison).

Go here for prior posts on this prosecution.

California Regulator Continues Filing Record Number Of Enforcement Actions Against Upfront Fee Loan Modification Rackets

In Sacramento, California, the Centre Daily Times reports:

• The California State Department of Real Estate (DRE) warns consumers to be wary of promises for loan modification and mortgage relief as scammers continue to prey on vulnerable, financially stressed homeowners.

• The DRE, whose mission is to protect the public interests in real estate matters, continues to file record numbers of actions against persons illegally offering loan modification and loan mortgage relief services. The typical scam involves the assurance of a loan modification in exchange for an upfront fee, but once the fee is paid little or nothing is done to obtain a loan modification.

For more, see California Department of Real Estate Continues to Fight Loan Modification and Mortgage Relief Scams (Consumers warned not to pay upfront fees).

Sacramento Feds Squeeze Guilty Plea From Foreclosure Rescue Peddler Who Abused Bankruptcy Process To Fraudulently Delay Trustees' Sales

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

• United States Attorney Benjamin B. Wagner announced [last week] that Charles C. Jamison, 30, of Rancho Cordova, pleaded guilty this week to bankruptcy fraud charges. [...] According to court documents, Jamison engaged in a scheme to, for a fee, use the bankruptcy process to fraudulently delay foreclosures pending on the residential properties of clients he solicited through a program called "Stop Now."(1)

• Through blind mailings, distressed homeowners in the Sacramento area received a flyer in which Jamison, using a fictitious identity, falsely promised homeowners facing a trustee sale that he could help them save their homes.

For the U.S. Attorney press release, see Sacramento Man Pleads Guilty To Fraudulent Bankruptcy Filings In Foreclosure Delay Scheme.

(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of various foreclosure scams involving the abuse of the bankruptcy courts:

• In recent years, the Central District has witnessed the emergence of a new phenomenon on a substantial scale: some people have apparently created whole businesses out of the delay possibilities provided by the automatic stay. Advertising themselves as “foreclosure services” or “mortgage consultants,” these opportunists know that, once a foreclosure trustee learns that a bankruptcy petition has been filed, the sale will be delayed until relief from stay is obtained from the bankruptcy court. They also know that title companies will not insure foreclosure title without a lift stay order. Most make false promises or misrepresentations to the homeowners. For the period from petition filing to stay termination, the opportunity exists for these services to collect partial mortgage payments or rent in exchange for stalling the foreclosure. In addition, some individuals indulge in serial filings on their own or with relatives.

(available online courtesy of the Loyola of Los Angeles Law Review).

Chicago Feds Squeeze Attorney With Dubious Past For Allegedly Screwing Over Clients Who Sought Help Saving Their Homes From Foreclosure

In Chicago, Illinois, the Chicago Tribune reports:

• A Chicago attorney who has been in trouble before now has been indicted for allegedly defrauding clients who sought his help in saving their homes from foreclosure.

• Philip Igoe, 61, promised clients facing foreclosure that he could help them by filing bankruptcy petitions or through loan modifications with lenders, according to the U.S. attorney's office. He then collected funds from clients by falsely representing that he would use the money to make payments on their mortgages or for Chapter 13 bankruptcy plan payments.

• Instead, he used all or most of the money for his own benefit, the indictment charged. He was charged with one count of mail fraud, six counts of bankruptcy fraud and one count of obstruction of justice. Igoe's wife, Stacy, 45, also an attorney, also was indicted in connection with a part of the scheme.(1)

• This is not the first time Igoe's actions as an attorney have been questioned. In 2002, a federal judge granted a new sentencing hearing to a Death Row inmate, saying Igoe did almost nothing during sentencing to save his client's life.

• And in 1989 he was censured by the Illinois Attorney Registration and Disciplinary Commission after it was alleged he took a $45,000 payment from a private attorney in return for resigning from his job at the Illinois secretary of state's office so someone else could take it.(2)

Source: Foreclosure attorney indicted for cheating clients.

For the indictment, see U.S. v. Igoe.

For the U.S. Attorney press release, see Attorney Indicted for Defrauding Clients Seeking Help Saving Their Homes From Foreclosure.

(1) An excerpt from the U.S. Attorney press release:

• With respect to Stacy Igoe, the indictment alleges that she filed a bankruptcy petition on behalf of one client without the client’s consent or authorization, in an effort to make it appear that Philip Igoe had done work to justify the payment of at least $17,500. The indictment also alleges that Stacy Igoe lied under oath at two bankruptcy proceedings when asked about whether she had authorization to file this bankruptcy on the behalf of the client and about when the bankruptcy petition was prepared. Also alleged is that Philip Igoe and Stacy Igoe filed a false document in this bankruptcy case reflecting that the client had completed a credit counseling course, when he had not.

(2) If the charges are proven true, and the victimized homeowners can't recover any of their money from the attorney on account of the alleged ripoff, they might consider filing a claim with the Client Protection Program of the Attorney Registration and Disciplinary Commission, which was established by the Supreme Court of Illinois to provide reimbursement to eligible clients who have lost money or property because of dishonest conduct by lawyers admitted to practice law in the State of Illinois. The Program reimburses eligible clients who cannot get reimbursement from the lawyers who caused their losses, or from other sources such as insurance.

According to its website, the Program may reimburse losses up to a maximum of $75,000 for each loss, and payouts arising from the conduct of any one lawyer shall not exceed $750,000.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (now includes listing of Canadian client compensation funds, by province, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

Ongoing Nevada AG Criminal Probe Has 200+ Possible Foreclosure Rescue, Loan Modification Rackets On Prosecutorial Radar

In Carson City, Nevada, the Las Vegas Sun reports:

• More than 200 companies are under criminal investigation for mortgage fraud with ties to such things as identity theft and prostitution, Attorney General Catherine Cortez Masto says. Edith Cartwright of the attorney general’s office said many of those companies have 50 to 100 complaints against them.

***

• Masto said the investigations center on mortgage foreclosure rescue scams or loan modification scams. “They are looking at various ways to scam people,” the attorney general said. “This is the easiest to set up shop and try to start taking dollars from mortgage fraud. But they are organized and they engage in other types of crime besides the mortgage fraud."

For more, see AG: 200 companies under investigation for mortgage fraud.

Lawsuit: Foreclosure Defense Racket Did Nothing But File An "Ill-Assembled Compilation Of Plagiarized Pleadings" That Operators Have "Bastardized"

In Marietta, Georgia, Courthouse News Service reports:

• A homeowner claims Home Savers USA and the two people who run it defrauded him of $2,000 and one of them forged his name on an "utterly incoherent" federal complaint, which they promised would save his home from foreclosure. But neither Rawlins Hinton, Helen Hinton nor anyone else affiliated with Home Savers USA is an attorney, and the documents they filed were "nonsensical," the homeowner says.(1)

• Donald Coleman sued the Hintons and their company for fraud, forgery, negligence, and practicing law without a license, in Cobb County Superior Court.

For more, see 'Home Savers USA' is Bogus, Client Says.

For the lawsuit, see Coleman v. Home Savers Inc., et al.

(1) According to the lawsuit:

• "Defendants' entire business model and operation is founded on the idea of defrauding unwitting homeowners, including plaintiff, of significant sums of money for purporting to do legal work on said homeowners' behalf, when in fact the 'legal work' being done by defendants is simply the filing of an ill-assembled compilation of plagiarized pleadings which defendants bastardized in order to defraud banks of monies rightfully owed and create undue delay and expense to all parties involved in the lawsuits filed by defendants."