Saturday, March 12, 2011

Failure To Pay Mortgage On Headquarters Leaves 31,000+ Florida Boy Scouts Facing The Boot

In Palm Beach Gardens, Florida, the South Florida Business Journal reports:

  • Forget tying knots and building campfires. The Boy Scouts need to start working on their foreclosure defense. TD Bank wants to boot the Boy Scouts organization for the Palm Beaches and the Treasure Coast out of its headquarters. It filed a foreclosure lawsuit Feb. 25 against the Gulf Stream Council of Boy Scouts of America.

  • According to its website, this nonprofit serves more than 31,000 scouts and 3,100 volunteers in seven counties, including Palm Beach, Martin, St. Lucie and Indian River. Unfortunately, those scouts could get a lesson in how the legal system treats debtors unless somebody comes to their aid.

  • This could be another loss for the children of Palm Beach County. Big Brothers Big Sisters of Palm Beach County filed Chapter 7 bankruptcy last year after shuttering its operations.

  • Gulf Stream Council CEO Jeff Isaac was not immediately available for comment. The lawsuit involves a $777,000 mortgage issued in 2007 by Riverside National Bank of Florida, which later failed and had its assets acquired by TD Bank.(1) It targets the 10,368-square-foot office building at 8335 N. Military Trail, in Palm Beach Gardens.

For the story, see Bank aims to boot Boy Scouts.

(1) Another mortgage foreclosure where the loan was originated by a now-defunct bank. I wonder what the chances are that there is some paperwork screw-up that the now-foreclosing bank is going to have to address where the originating lender is no longer around.

Foreclosure Sale Buyer Finds Recent Purchase Comes Filled With Four Dumpsters Of Rotting Garbage; Stench Gives Interior Designer Vomit Attack

In Mesa, Arizona, KPHO-TV Channel 5 reports:

  • Home buyers have seen some pretty nasty foreclosed homes – but one in Mesa just might be the worst. Justin Christman makes his living buying foreclosed homes, fixing them up and selling them months later. He picked up one in Mesa on the auction steps without seeing the inside until after the deal was done. Christman now realizes he might have bitten off a little more than he could stomach.


  • Crews with vacant home rescue have been collecting the rotting garbage in the home for three days --- filling four industrial-size Dumpsters. "The smell is just the most rancid smell you could ever imagine," Christman said.

  • Kay Christman, Interior Designer with TDG Designs, said, "We went upstairs and it was so repulsive that I had to come back out and throw up." "Speechless is the only adequate adjective I could use to describe it," Kay added.

  • This investment might not pay out like the Christmans originally hoped, but in the end, this neighborhood just lost another distressed property. Christman paid $93,000 for the home, which was a great investment on paper compared to assessments of the other homes in the neighborhood.

For the story, see Buyer Stuck With Rancid Foreclosure Home (Garbage From 1988 Litters House; Smell Repulses Interior Designer).

Go here for video, and here for slideshow.

Nursing Home Facing Foreclosure, Company Official Found Guilty Of Illegally Dipping Into Patient's Bank Account

In Selinsgrove, Pennsylvania, WNEP-TV Channel 16 reports:

  • A nursing home has been ordered to pay a big fine after an administrator stole from patients. Now, the president of the place said another state investigation could force the nursing home out of business. A nursing home in Snyder County was found guilty for stealing from its residents. Monday the corporation learned its punishment for the crime and Newswatch 16 learned of a state investigation into the place.

  • In December Loving Care Nursing Center in Selinsgrove was found guilty of misusing one resident's bank account. The vice president of the nursing home was also found guilty of using nearly $30,000 of that resident's money for the nursing home.

  • Monday a judge ordered the company to pay $100,000 in fines and the president, Thomas Pregant, said in court the nursing home is now in jeopardy of closing. "I hope that nursing homes, personal care homes, assisted living homes will take heart that the DPW regulations in place the protection that we have for the residents actually mean something," said Snyder County District Attorney Mike Piecuch.

  • Pregant refused to speak to Newswatch 16. "We are appealing the conviction and of course we'll be appealing the sentencing," said defense attorney Ted Seeber. The president of the company said the nursing home has been in Selinsgrove since 1999 and serves about 40 residents. The property is in foreclosure and the business is up for sale.

  • District Attorney Piecuch said the business is getting what it deserves. "What they did is took advantage of the one person who had money in his bank account," Piecuch added. The vice president of the company, who, by the way, is the wife of the president, is expected to be sentenced soon. Piecuch said Loving Care Nursing Center is under investigation by the department of public welfare for violating regulations and its license could be revoked.

Source: Nursing Home Fined for Theft.

Vegas Fire Officials: Disgruntled Tenant Foiled In Attempt To Torch House After Being Told He Was Getting The Boot Because Landlord Was In Foreclosure

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

  • A 40-year-old Las Vegas man who was angry about being evicted from a house going into foreclosure allegedly attempted to burn the home down Saturday, fire officials said. Las Vegas Fire and Rescue spokesman Tim Szymanski said officials arrested James Edwards St. John in connection with attempted fourth-degree arson and booked him in the Clark County Detention Center.

  • The situation unfolded Saturday afternoon at a home in the 6200 block of Garwood Ave. St. John's roommates called 911 when he began dousing a room of the house in gasoline, Szymanski said. Police arrived minutes later and detained St. John before he was able to light the fire, Szymanski said. No one was injured.

  • St. John, who rented the house with several other people, had been notified by the owner that he needed to move out of the home because it was going into foreclosure, Szymanski said.

  • Officials said St. John was apparently upset about the situation, which prompted him to attempt to set the home on fire. A fire investigator arrested St. John after questioning him at the scene, Szymanski said. He is scheduled to appear in court Monday.

Source: Las Vegas man arrested for attempted arson.

Friday, March 11, 2011

Lawsuit: Scamming Romeo Conned Texas Woman Into Borrowing Against Home Credit Line To Finance His Personal Lifetstyle

In Jefferson County, Texas, The Southeast Texas Record reports:

  • A Jefferson County woman has filed suit against the man she claims is making a living by romancing women and then borrowing money from them. Beverly Hickman claims she lent defendant Robert Horowitz tens of thousands of dollars in 2009 after he wooed her and claimed to need money for himself and for his business, defendant Senior's Choice.

  • "He (Horowitz) has developed, and utilizes, a business practice for himself and for his business, Senior's Choice, in which he romances middle-aged, single women and borrows money from them to float his business, maintain his cash flow, and maintain his personal lifestyle," the suit filed Feb. 18 in Jefferson County District Court states.


  • "In order to loan this money to Mr. Horowitz, Mrs. Hickman drew on a home mortgage line of credit, making herself vulnerable to foreclosure on her home and loss of her residence in the event of Mr. Horowitz's default," the suit states. Horowitz failed to repay Hickman after he developed a new romantic interest, she claims.

For the story, see Suit says man romances, rips off women.

Campground Operator Pleads No Contest, Gets 7 Years Probation For Torching Premises After Elderly, Mortgage-Holding Prior Owners Begin Foreclosure

In Susquehanna County, Pennsylvania, WNEP-TV Channel 16 reports:

  • A woman was sentenced in Susquehanna County on Thursday, accused of setting several fires at a campground. Tamara Santarelli, formerly of Wilkes-Barre and now living in New York, was sentenced to seven years probation. She will also have to pay back nearly $100,000 to insurance companies, money that was paid out after two fires at the Shady Rest Campground near Gibson.

  • The couple who used to own the campground and sold it to Santarelli said they were just glad the ordeal is over and that they were able to get that property back. [...] Arnold and Alice Manning owned the Shady Rest Campground and sold it to Tammy Santarelli and her husband, even financing the property for them.

  • The Mannings said after the Santarelli's failed to make mortgage payments, they had started the foreclosure process. That was when the second fire nearly destroyed their decades of hard work. "We've been married for 60 years and we've worked together hard for all of our lives for what we have and it just seems a shame that people like Tamara can scam away from you what you've worked all your life for," said Alice Manning. "We trusted these people. We figured they were all right and it didn't take long," added Arnold Manning.


  • As part of Tammy Santarelli's plea agreement, she handed over the deed to the Shady Rest Campground, giving it back to Arnold and Alice Manning. The Mannings said they now plan to keep the campground in the family.

For the story, see Owner Sentenced for Campground Arson.

Disbarred Attorney Gets 48 Months For Looting $3.9M Of Client Cash From Trust Account

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

  • A federal judge sentenced a former Fort Lauderdale attorney accused of ripping off clients to 48 months in prison and ordered him to pay $3.9 million in restitution. Joseph Sindaco, 63, accepted a plea deal in December in which he pleaded guilty to a mail fraud charge.

  • The mail fraud charge against Sindaco arose from his handling of the estate of Werner Clauss, an 82-year-old who died at a Lauderdale Lakes nursing home in 2008. Sindaco liquidated Clauss' investment account and transferred the money to his law firm's trust account, according to federal court records.

  • Sindaco, who practiced law in South Florida for three decades, also stole from three other clients' trust funds and used the money to pay personal expenses. He had specialized in estate and trust cases and real estate closings. Sindaco was disbarred last year.(1)

Source: Former Fort Lauderdale attorney who stole from clients sentenced to prison (Broward Lawyer Sentenced For Stealing Trust Funds).

(1) From the U.S. Attorney press release: Broward Lawyer Sentenced For Stealing Trust Funds:

If they haven't already, the victims in this story may be able to turn to the The Florida Bar's Clients' Security Fund (which was created to help reimburse clients for money they may have lost because of misappropriation or embezzle­ment by their attorneys) to recover some, if not all, of the swindled money.

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:

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

Thursday, March 10, 2011

Judge Slams F'closure Defense Lawyer w/ $12K Fine After Refusing To Recuse Himself In Case Involving Bank From Whom He Received Three Loan Mods

In Detroit, Michigan, The Michigan Citizen reports:

  • Third District Court Judge Robert J. Colombo recently received three home loan modifications from Charter One Bank. Colombo ruled, however, he did not need to recuse himself from a mortgage foreclosure case involving the same bank. Nor did it stop him from levying a $12,000 fine on the attorney and client fighting the bank’s foreclosure when the attorney attempted to link the foreclosure case to a discrimination lawsuit now pending against Charter One.

  • Attorney Vanessa Fluker has devoted her legal career to defending victims of foreclosure and predatory lending in Detroit. On March 1, Fluker’s colleague, Jerry Goldberg, defended her against a court sanction handed down by Colombo. Colombo’s decision included the $12,000 judgment against Fluker and foreclosure victim Asha Tyson.


  • During opening statements, Goldberg emphasized the effects of unfairly sanctioning one of the few attorneys who defend homeowners victimized by predatory lending and subsequent evictions. “To put a damper on attorneys to even raise these issues has a negative impact on society,” Goldberg said.

For more, see Judge fines anti-foreclosure lawyer (Court sanctions attorney for linking foreclosure to Charter One discrimination case).

Profile Of A Vacant Foreclosed Home Hijacker

In South Florida, Broward/Palm Beach New Times recently ran a lengthy story on Mark Guerette, a local real estate "entrepeneur" of sorts who recently copped a plea to a racket involving the hijacking of vacant foreclosed homes under a claim of adverse possession, and then renting them out to unwitting tenants.

For his story, and the stories of a couple of tenants who did business with him, see The Lord of Squat: Mark Guerette Got Busted for Putting Families in Foreclosed Homes (for the entire story on a single web page, go here.)

Business As Usual At Chase-Owned EMC Mortgage As Banksters Refuse Comment On Possible Violations Of 2008 Court Order In Conduct Towards AZ Homeowners

In Phoeniz, Arizona, KNXV-TV Channel 15 reports on the trouble local homeowners Jason and Katherine Miller have been getting from Chase-owned EMC Mortgage in trying to work out payment arrangements on their home mortgage after initially being granted a trial modification:

  • We were ecstatic. We were happy. We (thought) this is the best thing that could happen to us,” said Jason. The deal allowed them to pay about $460 less per month. Then in about three months, EMC would decide if they could keep the lower interest rate. “We thought it was great; it was going to save us a lot of money,” said Jason.

  • But, months went by without a decision. Then last September, 15 months after submitting their application, the family got a trustee sale notice in the mail. Their house was going to be sold at auction. The next day, they received dozens of notices. Jason told ABC15 he thought, “They have set us up to fail.”

  • The ABC15 Investigators did some digging and found the Millers' mortgage company, EMC, is accused of doing the same thing to other homeowners across the country. In 2008, the Federal Trade Commission settled a lawsuit against EMC for $28 million, claiming the company violated Fair Debt Collection Practices, the Fair Credit Reporting Act and Truth in Lending Act.

  • The Millers immediately called EMC. They said the company told them they would have to repay all the money saved over the previous 15 months and bring the mortgage up to date. That would cost the Millers a total of $8,822.14. The Millers thought they could handle that until EMC said they would also have to pay $10,000 in fees. They would have to pay a total of $18,822.14 or lose the house.


  • The federal lawsuit specifically states EMC cannot collect fees that are not authorized. And the lawsuit states, the company can't give misleading information about the debt or services. [...] The ABC15 Investigators asked EMC for an on-camera interview. The company is now owned by Chase, which turned down our request. In an email, Chase would not address whether EMC violated the court order.

For the story, see Valley family fights back after loan modification fees pile up.

Wednesday, March 9, 2011

Florida Court Sets 2,700 Foreclosure Cases Set Dismissal After Lying Dormant For A Year

AOL's Daily Finance reports:

  • If you sue someone in Florida but then stop pursuing your case for a year, the court can clear its case load by dismissing your suit for "failure to prosecute." Across Florida, courts are starting to clear their overwhelmed dockets by dismissing foreclosure cases the banks have failed to prosecute. In one division of one of Florida's 20 judicial districts, perhaps as many as 2,700 cases have been set for dismissal in one week.

  • When Allison Albert of the Jacksonville Area Legal Aid went to foreclosure court in Duval County, part of the Fourth Judicial Circuit, on Tuesday, hundreds of "failure to prosecute" cases were on the docket. While waiting for her client's case to be called, she heard the court's staff talking about how the court had sent out notices, scheduling hearings for about 2,700 foreclosure actions -- and noting that if the bank didn't take action within 60 days of the notice, the case could be dismissed at the hearing for failure to prosecute. All of the cases were scheduled to be heard over the next eight court days.

For more, see Are Banks Abandoning Foreclosures in Florida?

Guilford Cnty Register Of Deeds Says MERS Is Screwing Up Chains Of Local Real Estate Titles, Stiffing It Out Of $1.3M In Recording Fees In The Process

In Greensboro, North Carolina, the News & Record reports:

  • Guilford County Register of Deeds Jeff Thigpen wants an investigation into a service used by major mortgage companies who may have made false statements to avoid fees that cost the county $1.3 million in lost revenue.

  • According to Thigpen, the Mortgage Electronic Registration System (MERS), a system established by mortgage lending heavy hitters like Wells Fargo, Countrywide Home Loans, Inc. and Bank of America, has allowed these companies to re-package and sell loans without filing with offices like his to maintain a publicly available chain of ownership. Thigpen said $1.3 million is a "conservative estimate" of what his office may have lost in recording fees since 2005.


  • "As register of deeds I have two primary responsibilities in land records," Thigpen wrote in the release. "A sworn durty to protect the chain of title and a fiduciary responsibility to collect recording fees. Quite frankly, MERS has undermined both. Through their own 'private-for-profit' Register of Deeds mortgage tracking office, MERS has created a dangerous centralization of power whose sole purpose is to protect and serve the interests of major banking conglomerates and undermine public recording officers."


  • In a Wednesday interview Thigpen said North Carolina law doesn't currently require the reassignment of mortgages to be filed in local register of deeds offices like his. But Thigpen said it has been common practice in Guilford County for 300 years and the creeping privatization of such information keeps the public from being able to see who owns what and follow a clear chain of title.

  • "Owning property is a foundational principle of our democracy," Thigpen said. "People who buy and sell property should be able to do that and have confidence that as part of living in the United States if America, the people and the laws mean something. Who really owns my property? Who am I really buying property from? For 300 years people have been able to walk into their local register of deeds office and find that out. They should be able to."

For the story, see Register of Deeds wants investigation into major mortgage companies.

FTC Efforts Yield 24 Cents On The Dollar Recovery For Victims Of Nationwide Loan Modification/Foreclosure Defense Scam

The Federal Trade Commision recently announced:

  • An administrator working for the Federal Trade Commission is mailing 1,455 refund checks to consumers defrauded by a mortgage loan modification and foreclosure rescue scam. The FTC alleged, and the court found, that operators of the scam falsely told consumers they would prevent their homes from being foreclosed and negotiate lower mortgage interest rates, monthly payments, and principal balances. The court also found that homeowners got few, if any, loan modifications, and many people lost their homes to foreclosure after paying up to $5,500.

  • At the request of the FTC, in April 2010, a federal court issued an $11.4 million contempt order against the defendants, Bryan D’Antonio, The Rodis Law Group, Inc., America’s Law Group, and The Financial Group, Inc., for operating the scam, which violated a 2001 order that banned D’Antonio from telemarketing and misleading consumers about goods or services. The FTC obtained the 2001 order against D’Antonio and his former company, Data Medical Capital, Inc., for operating a work-at-home medical billing opportunity scheme.

  • Consumers who receive the checks should cash them, and they will have 60 days to do so before the checks become void. Those who submitted a valid claim form will receive about 24 percent of their total claim loss.

For the press release, see FTC Mails Redress Checks to Victims of Foreclosure Rescue Scam.

Tuesday, March 8, 2011

MERS Gets Hammered In Recent Oregon Federal Court Rulings As 100s Of F'closures Stall; Resulting Crappy Titles Will Be Uninsurable, Warns Underwriter

The Oregonian reports:

  • Sales of hundreds of foreclosed homes in Oregon have been halted or withdrawn in recent weeks after federal judges repeatedly questioned their legality, according to a number of real estate attorneys in the state. Lenders have withdrawn more than 300 foreclosure sales since February in Deschutes County alone, one of the Oregon area's hardest hit by the housing collapse. About 130 of those notices were filed in the past week, attorneys say.


  • And, in a potential deal breaker for other foreclosure cases, one of the nation's largest title-insurance companies is warning lenders that it might not guarantee title in some cases.


  • The legal concerns revolve around Mortgage Electronic Registration Systems Inc., a Reston, Va., corporation set up in the mid-1990s by the mortgage banking industry to rapidly record the ownership of mortgages so they could be packaged and sold as securities.


  • Since October, federal judges in five separate Oregon cases have halted foreclosures involving MERS, saying its participation caused lenders to violate the state's recording law.(1) Three of those decisions came last month, the key one in U.S. Bankruptcy Court in Eugene.


  • In response to that ruling, First American Financial Corp., one of the nation's largest title insurers, began warning lenders and buyers in title documents that it wouldn't insure titles with a cloudy public record in Oregon, company attorney Alan Brickley said. "It's simply saying we have a concern, and you should have a concern," said Brickley, who's based in Portland.

Fotr more, see Hundreds of Oregon foreclosure sales stopped after judges' rulings.

(1) For these Oregon federal court decisions, which raise questions about the legality of hundreds of foreclosures in the state, see

The Stench Left By MERS After Swallowing Your Loan

Mortgage Electronic Registration Systems, also known as MERS, "whose private mortgage registry has all but replaced the nation’s public land ownership records," takes a heavy hammering in a recent article in The New York Times for the central role it's played in creating the quagmire in the foreclosure process as it and lenders (real and purported) attempt to enforce delinquent promissory notes secured by mortgages on people's homes.

For the story, see MERS? It May Have Swallowed Your Loan.

Two Ongoing Florida Cases Show HSBC's Purported Foreclosure Moratorium May Be BS; Inquiries To Lenders' Attorneys Yield No Explanations

AOL's Daily Finance reports:

  • In HSBC's 2010 annual report, the bank asserted that it had stopped "processing foreclosures" and that it "suspended foreclosures" in December, even though the information wasn't made public until Feb. 28, when HSBC filed the report with the SEC.

  • But based on at least two cases still working their way through Florida's courts, that delay in disclosure apparently also meant that HSBC didn't tell attorneys bringing foreclosure actions in the bank's name to put their cases on hold. Indeed, if HSBC had systematically put its many pending foreclosure cases on hold in December, the news surely would have come out before now. So it's appropriate to ask: What does the moratorium announcement really mean?


  • In two active Florida cases, Wells Fargo is trying to foreclose as the loan servicer for HSBC, which is the plaintiff and will, if the foreclosures are successful, get the properties. The case names reflect HSBC's role: HSBC v. Harley, and HSBC v. Shinneman. Both are set for trial later this month, and as of March 3, had not been not affected by HSBC's foreclosure moratorium.

  • Jacksonville Legal Aid attorney April Charney represents Harley, while attorney Todd Allen represents Shinneman. Both reached out to their opposing counsels repeatedly after the HSBC moratorium became public. Both opposing counsels told them on Thursday that the cases were going forward. (When I contacted the attorney for HSBC in the Shinneman case, Travis Harvey, his response was "no comment." HSBC's attorney in Harley, Michael Winston, didn't reply to my email.)

For more, see What Do HSBC's Foreclosure Moratorium and Robo-Signing Claims Really Mean?

Sale Leaseback Peddler Starts "Singing" To NH Feds After Copping Guilty Plea In Equity Stripping, Foreclosure Rescue Conspiracy

In Concord, New Hampshire, the Nashua Telegraph reports:

  • Having lost their home to a refinancing swindle several years ago, Jonathan and Jan May came to U.S. District Court on Tuesday to see whether the criminal justice system might offer any consolation or, better yet, restitution. What they found was a judge and lawyers who see banks and mortgage companies as the scam’s principal victims.

  • However, the Mays were able to see and hear the Nashua real estate agent to whom they had entrusted their financial future declare himself a convicted felon. Richard Winefield, 32, of 6 Short Ave., Nashua, attained that status shortly after 10 a.m. Tuesday, with three words: “Guilty, your honor.”

  • Winefield was part of broader criminal conspiracy, whose members defrauded lenders and homeowners around New Hampshire, Assistant U.S. Attorney Michael Gunnison told Judge Steven McAuliffe.

  • They sought out homeowners who were having trouble making mortgage payments and offered a deal: Winefield and his cohorts would buy the property and take over the payments. The homeowners would pay rent and would contract to buy back their homes at a higher price a few years hence, when they regained financial footing.

  • What the homeowners didn’t know is that Winefield and his co-conspirators were then flipping the properties. They would use inflated appraisals and bogus buyers and take out much larger mortgage loans, helping themselves to the difference after paying off the original mortgage.

  • It’s commonly referred to as an equity-stripping scheme,” Gunnison said, and not one of the homeowners ever got the chance to buy back his or her property.


  • Winefield admitted Tuesday to a single count of mail fraud, for using the mail to send fraudulent loan applications. It is clear that Winefield is but the first to fall: Gunnison has said the Winefield joined a scheme that was already in progress for at least a year, and before the hearing, Gunnison was heard to mention the name “Prieto” while speaking with an investigator in the courtroom.

  • Winefield set up limited liability companies in association with both Michael Prieto and Walter Bressler III, both of whom were named in a 2007 “cease and desist” order by the New Hampshire banking commissioner. Winefield was not named in that case, but it involved similar allegations, and Prieto and Bressler were ordered to repay eight different homeowners and refrain from any further involvement in home financing.

  • After Winefield pleaded guilty, he and his lawyer, Peter McGrath of Concord, cloistered themselves in a conference room with Gunnison and several investigators.(1) No charges have been made public against anyone else in the scheme.

  • Gunnison declined to comment later Tuesday on the scope of the scheme, saying the FBI and U.S. Postal Inspectors are still working on the investigation, along with the joint state and federal Mortgage Fraud Task Force. “It’s an ongoing investigation. There is a strong likelihood that others will be charged,” Gunnison said.(2)

For the story, see Real estate agent admits to mail fraud.

For the criminal complaint, see U.S. v. Winefield (go here for the Plea Agreement).

(1) Since it's only been about three weeks since the criminal complaint was lodged against him, it doesn't take an excess of genius to surmise that Winefield has decided win the "race to the prosecutor's office", "bellying-up" to investigators and spill his guts in an attempt to take down as many of his co-conspirators and "buy-out" of as much prison time as possible. 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.

(2) 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.

$550K Payout OK'd To 2 Homebuyers, Landowners In RICO Suit Revolving Around Filing Of Unauthorized Lien Release; Judgment May Affect 100s Of Others

In Corpus Christi, Texas, the Corpus Christi Times Caller reports:

  • A final judgment has been issued against one of the nation's largest mobile homebuilders related to a jury trial last year that found the company liable for civil racketeering and fraud in a South Texas case. A federal jury in November found Vanderbilt Mortgage and Finance Inc. liable for collecting payments on a home for four years after it filed a release of the lien on the home.

  • The jury found the company engaged in unfair debt collection practices, committed common law fraud and violated the Racketeer Influenced Corrupt Organizations Act, also known as RICO. On Friday, U.S. District Judge Janis Graham Jack confirmed the jury's findings against that company and Clayton Homes Inc. and CMH Homes Inc. in a 13-page judgment. The companies plan to fight the judgment, their attorney said.

  • The judge also reduced some of the plaintiffs' monetary damages to comply with state laws that bar double recovery and limit exemplary damages. The jury decision had ordered Vanderbilt to pay the two homeowners $327,000 each. Under the final judgment, Vanderbilt Mortgage was ordered to pay about $216,000 in damages and prejudgment interest to each of the two men who had purchased the mobile home, for a total of $432,000.

  • The judge also awarded a couple that owned the land for the men's house more than $127,000 because she found all three companies were responsible for statutory damages, similar to a civil fine. The jury originally awarded no damages to the couple, Maria and Arturo Trevino.


  • Flores' and King's attorneys found a release of the lien that was filed with the county clerk in 2005 without the homeowners' knowledge. The company filed that release after it settled a round of lawsuits that alleged homebuyers' paperwork was fraudulently notarized.

  • The two men sued the companies alleging they had continued to make mortgage payments for four years after the loan had been declared fully paid.

  • They also faced foreclosure along with the landowners, the Trevinos, who alleged that their signatures were forged on documents to fraudulently use their land as collateral for the home.

  • "We think a lot of Clayton Homes customers will be affected by the precedent that this case sets," said attorney Javier Gutierrez, who represents King and Flores. Gutierrez says there is evidence that the companies filed hundreds of the release of lien documents in South Texas without their customers' knowledge. That would entitle those people to a refund of all their payments since 2005 and a discharge of their mortgage loan, he said.

  • The Trevinos' attorney, David Rumley, in a news release accused Clayton Homes of also misleading its investors by using fraudulent mortgages to raise more money because the loans were backed by real property. He estimated the judgment could expose Clayton Homes to more than $500 million in losses.


  • CMH Homes Inc. is the retail arm of Clayton Homes, Inc., which is owned by Berkshire Hathaway Inc. of Omaha.

For the story, see Federal judge finalizes judgment in Clayton Homes fraud case (A federal jury in November found Vanderbilt Mortgage and Finance Inc. liable for collecting payments on a home for four years after it filed a release of the lien on the home).

Monday, March 7, 2011

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, 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:

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:

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.

Sunday, March 6, 2011

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 deficienciesin the processing, preparation and signing of affidavits andother 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.