Saturday, November 5, 2011

S. Calif. Man Who Scammed Hundreds With Deed-Retrieval Racket Using Correspondence Simulating That Of Official Government Agency Gets Six Months

In Riverside County, California, The Desert Sun reports:

  • A Los Angeles man who stole tens of thousands of dollars from Riverside County property owners he deceived in a money-for-deeds scam was sentenced Tuesday to six months in jail and three years probation.

  • Pablo Alfonso Fourquet, 37, was also ordered by Superior Court Judge Richard Fields to pay $417,000 in restitution to his victims. Fourquet pleaded guilty on Oct. 11 to grand theft by false pretenses.

  • The defendant was originally charged with three other felonies and a misdemeanor count, along with sentence-enhancing allegations, including one for committing a white-collar crime in excess of $100,000. Fields dismissed those charges as part of the plea agreement the defense reached with the district attorney's office earlier this month.

  • Between April 2010 and April 2011, Fourquet operated a business called Title Compliance Office that used official-looking stationary, making it appear to be a government agency, according to prosecutors.

  • The defendant distributed letters to property owners in the county, as well as in the Los Angeles area, Phoenix and Las Vegas, stating that the recipients needed certified copies of their grant deeds to prove ownership of their homes, according to the D.A.'s office.

  • The letters played on the victims' fears of foreclosure, indicating there could be problems with loan modifications, and offered to obtain copies of deeds for a sum of $167 each, prosecutors said. A certified copy of a deed, which is rarely required, can be obtained from the county assessor's office for $10. According to the DA's office, 2,500 people fell victim to the scam and sent payments to Fourquet.

Source: Man gets jail, probation for deeds-copy scam.

Attorney Targeted By Calif. AG For Allegedly Misleading Strapped Homeowners Into Joining Mass Joinder Lawsuits Fires Back With His Own Legal Action

California Watch reports:

  • Los Angeles-area attorney Mitchell J. Stein refers to himself as "The Doberman" and his website advertises, "You Hold The Leash."

  • In August, California Attorney General Kamala Harris raided Stein's offices and accused him and other lawyers of fraudulently misleading thousands of struggling homeowners into paying to be part of mass lawsuits against mortgage lenders like Bank of America.

  • But Stein sued back, after warning on his Twitter account that "The Doberman is about to take a large bite out of Kamala Harris." Stein has accused the attorney general of being "the pawn of America’s most powerful banks,” claiming that Bank of America "corruptly funneled money" to Harris, according to one of his lawsuits. As the legal sparring continues, the alleged fraud victims are running out of time.


  • [T]he State Bar of California obtained a court order stating that Stein "has become incapable of devoting the time and attention to ... his law practice" and authorizing the bar to seize his files and freeze his bank accounts.

  • Stein, however, maintains the order doesn't apply because it names Mitchell J. Stein and Associates and not his newer partnership, Mitchell J. Stein & Associates LLP. For the same reason, Stein's website states, "this law Firm has never been sued by the State of California."

  • Stein is also trying to stop seizure of his assets through his Florida bankruptcy proceeding.

For more, see Lawyer accused of mortgage-related fraud sues Kamala Harris.

FBI: Mortgage Fraud, I.D. Theft Among More Popular Rackets Attracting Street Gangs

Daily Finance reports:

  • Violent street gangs that have historically focused on drug trafficking and gun running are expanding into white collar crime. According to a report released last Friday by the Federal Bureau of Investigation, members from a slew of gangs, including the Bloods, Crips, Gangster Disciples, Vice Lords and Latin Kings are branching out into mortgage fraud, identity theft, the manufacturing of counterfeit checks, and bank fraud, among other crimes.


  • According to National Public Radio, in the last four years in Chicago alone, members of the Black Disciples gang participated in mortgage fraud totaling $70 million, while the Vice Lords engaged in similar mortgage scams totaling $80 million. In Los Angeles, the Long Beach chapter of the Crips, as well as members of the Mexican mafia, have been involved with identity theft, reports the Los Angeles Times.

For more, see Street Gangs Clean Up on White Collar Crime.

Receiver For Hotels In F'closure Wants To Sell Bldgs Vacant, Boot 71 Low Income Renters In Process Despite Improvements Already Made By Advocacy Group

In Vancouver, British Columbia, CBC News reports:

  • Dozens of low-income tenants in two hotels in Vancouver's Downtown Eastside are facing an uncertain future, as their new homes might soon be sold out from under them, CBC News has learned.

  • The owner of the Palace Hotel and Wonder Rooms has run into serious financial problems and his buildings have been placed into receivership and the receiver wants the tenants evicted.


  • The hotels are owned by George Wolsey, who has battled with the city for years over building code violations. In September, Wolsey agreed to hand over operations of the hotels to the Community Builders Group, a local non-profit organization.

  • The group has tried to get the building up to code, cleaned up rooms that were once unlivable and then moved dozens of tenants in, unaware of the financial challenge Wolsey faces. “We had no idea this was close to receivership,” said Julie Roberts, of Community Builders Benevolence Group.(1)

  • The receiver is talking about selling the building empty and evicting all 71 tenants and having an empty building in two months. And that obviously causes a lot of anxiety for our tenants who have nowhere else to go." [...] The fate of the tenants could be decided as early as a foreclosure hearing Nov. 3.

For more, see 71 tenants on Downtown Eastside facing eviction.

(1) See Communiy Builders affadavit for the non-profit organization's account detailing the improvements they made to the reportedly dilapidated, below-code hotels and the screwing over they will be taking if the tenants get evicted despite having made all the improvements.

Friday, November 4, 2011

HUD Brings Housing Discrimination Charges Against Two Landlords In Separate Actions For Allegedly Hassling Tenants Over Support Animals

From press releases from the U.S. Department of Housing and Urban Development:


  • According to HUD’s charge, two tenants residing at the apartments in Reno, NV, were visited by a friend accompanied by his medically authorized emotional support dog. After seeing a dog in the building, the landlord of the property told one of the tenants that the building's “no-pets” policy barred their visitors from bringing animals into the unit.

    The tenant explained that her visitor’s dog is an emotional support animal and said she could provide documentation that the animal was necessary because of a disability. Nonetheless, one day after the tenants’ friend and his support animal visited again, DeAngeli served the tenants with an eviction notice, and later posted a note near their unit stating, “If harassed or bothered by tenants of these apartments call 911 immediately.”

HUD: Landlord Drove Elderly Couple Out Of Rented Home Because Of Manager’s Perception That They Were Unable To Care For Themselves

From a U.S. Department of Housing and Urban Development press release:

  • HUD CHARGES MINNESOTA PROPERTY OWNER, MANAGER WITH DISCRIMINATING AGAINST ELDERLY COUPLE (Manager pressured couple to move to assisted living even though they were able to live independently):

    The U.S. Department of Housing and Urban Development (HUD) is charging a Foley, Minnesota property owner, manager, and management company with violating the Fair Housing Act for forcing an elderly couple to vacate their apartment because of the manager’s perception that they were unable to care for themselves.

    HUD brings the charge on behalf of the couple, alleging that Big Norway, LLC, Northern Management Real Estate Services, Inc., and its employee, Laura Schroden, pressured the couple to move to an assisted living facility even though there was no evidence that the couple was a safety threat to themselves or to others.


  • According to HUD’s charge, Northern Management’s Vice President of Operations, Laura Schroden, contacted the couple’s children and grandchildren multiple times in a campaign to pressure the couple to move out of the building.

    Big Norway, Northern Management, and Schroden cited the couple’s “forgetfulness” and how easily they “would get agitated when involved in different situations” as evidence of management’s belief that the couple “should be in assisted living.”

    Schroden described the couple as “handicapped” even though there had been no incidents involving the couple’s health or safety in their more than three years of tenancy at the apartment complex. The family, who visited frequently, maintained that the couple was still active and capable of living on their own: they managed their own bills, shopping, and laundry, and frequently babysat for their great-grandchildren. After one of the couple’s complaints to management, Schroden allegedly told their grandson that they should moveright away or they may find themselves without housing.”

    Although the couple repeatedly informed management that they did not want to move and did not need help, after more than three months of pressure they moved to a townhouse in a senior community 20 miles away, where they could no longer visit frequently with their family. The couple continues to live independently. (lawsuit here).

Recent HUD Charges May Indicate Race Discrimination In Housing Remains Alive & Well

From recent press releases from the U.S. Department of Housing and Urban Development:

  • HUD CHARGES WISCONSIN LANDLORD WITH REFUSING TO RENT TO AFRICAN AMERICAN COUPLE (La Crosse property manager encouraged whites to apply while telling blacks no apartments were available):

    HUD brings the charge on behalf of the couple, alleging that Geneva Terrace, Inc. and Victoria Gerrard, the owner of Geneva Terrace Apartments, and property manager Nicolai Quinn refused to show an apartment to the complainants. Additionally, they falsely represented to the couple and other black applicants that no units were available, while informing white applicants of available units and encouraging them to apply. (lawsuit here);


    The U.S. Department of Housing and Urban Development (HUD) today announced that it is charging Merline and Clifton Hylton, the owner and manager of a rental home in Windsor Locks, Connecticut with violating the Fair Housing Act for denying a request by biracial tenants to sublease their home to an African American family. The current tenants allege that Mr. Hylton told them he was rejecting the prospective sub-tenants because he “did not want too many blacks at the property.” (lawsuit here);


    According to the charge, HOME conducted two sets of paired tests in response to allegations that Valley Woods Apartments was rapidly changing from being predominantly black to predominantly Hispanic. The first African American tester called three times in four days, and was given different reasons each time for the manager being unable to schedule an appointment to view an apartment.

    The final time the tester called, the apartment manager allegedly informed him that she was waiting for another applicant to pay the deposit on the only available unit and suggested he call back in a week.

    In contrast, on the next day when a Hispanic tester called to inquire about an available apartment, the apartment manager allegedly offered to show him the unit that day. The Hispanic tester followed up with two more phone calls, during which the apartment manager provided him with information about the unit and suggested how he could reserve it for himself. The Hispanic tester then scheduled an appointment and was able to tour a two-bedroom apartment.

    Two weeks later, the same two-bedroom apartment was still available when a second African American tester called the apartment complex to inquire about available units. The apartment manager returned his call and informed him that the two-bedroom apartment had been rented and that she did not know when any other unit would be available, and advised him to call back in two weeks. According to the Charge, when the second Hispanic tester called the next day, the apartment manager offered to show him the two-bedroom apartment immediately. (lawsuit here).

HUD Continues Battle Against Landlord Housing Discrimination Against Families With Children

From various press releases from the U.S. Department of Housing and Urban Development:

Thursday, November 3, 2011

Indiana AG: Fla. Outfits Fleeced Homeowners Seeking F'closure Assistance Out Of Upfront Fees By Failing To Provide Services, Stiffing Them On Refunds

In Indianapolis, Indiana, Legal Newsline reports:

  • Indiana Attorney General Greg Zoeller announced a lawsuit on Thursday against two Florida-based foreclosure assistance companies that allegedly promised to stop home foreclosures and failed to deliver.

  • Community One Law Center and National Law Partners allegedly charged exorbitant fees for their services, with some Indiana residents paying the companies more than $2,500 and obtaining nothing in return.

  • "The lawsuit alleges both companies collected money up front and failed to provide refunds to customers after services were not provided," Zoeller said. "These companies are separate entities, but both worked interchangeably on files and shared employees."(1)


  • Zoeller is also focusing on Legal Home Loan Solutions, which allegedly promised to help consumers avoid foreclosure and charged Indiana residents more than $2,000 in fees.

Source: Ind. AG sues Fla. businesses.

(1) Reportedly, Zoeller alleges that by deceiving these consumers, the companies are in violation of a number of laws, including the Deceptive Consumer Sales Act, the Credit Services Organization Act, the Mortgage Rescue Protection Act and the Home Loan Practices Act.

Pinched Home Hijacking Suspect: 'I Didn't Mean To Commit Crime; I Filed All Proper Paperwork I Learned About At 'Adverse Possession' Seminar'

In Fort Bend County, Texas, KHOU-TV Channel 11 reports:

  • A woman who is facing criminal charges for squatting in a Fort Bend County home said she never intended to break the law. “I work hard every day and I didn’t do this from a criminal standpoint at all,” said Chinyere Ngwu outside her family’s southeast Houston restaurant. Ngwu spoke out a day after a Fort Bend County grand jury indicted her on charges of burglary.

  • The case involves a home located in the 4400 block of Everhart Terrace Circle near Missouri City. Ngwu attempted to assume possession of the property, which she believed was in foreclosure. “I followed all of the proper procedures and filed all of the paperwork,” she said.

  • Ngwu said she learned about the practice called adverse possessionat a seminar in Houston. But not long after she began to move her belongings into the house, neighbors discovered that the property had not been foreclosed on.

  • We contacted the owner,” said Pam Foster. “We knew this individual wasn’t supposed to be there and had broken into the house.” Confrontations between Ngwu and the neighbors followed.

  • Eventually, the Fort Bend County Sheriff’s Office started to investigate, and the district attorney decided to pursue charges. Ngwu said all she wanted was a good place to raise her three children. “We all live and learn,” she said.

Source: Woman charged with squatting in vacant house says it’s a misunderstanding.

Cops Nab Renter In Alleged Vacant Foreclosed Home Hijacking Racket; Suspect Invokes 'Unwitting Dupe' Defense; 'I Had No Idea!'

In DeKalb County, Georgia, WSB-TV Channel 2 reports:

  • A man, who told Channel 2 Action News he was an unsuspecting victim, is now under arrest. Prosecutors said Matthew Lowery posed as a renter, in a scheme to steal empty houses.

  • DeKalb County deputies had been looking for Lowery since a grand jury indicted him three weeks ago. They found him Monday night living at a Staybridge Suites motel in Sandy Springs. "I'm worried. I mean yeah I've invested money in this and this is my home," Lowery told investigative reporter Jodie Fleischer in August. Fleischer found Lowery living in a $600,000 home on Shade Tree Way in Cumming. The home was owned by a bank, and prosecutors said it was vacant until a woman named Susan Weidman took it over.

  • An indictment alleges she created a bogus lease for Lowery to live there. A DeKalb grand jury indicted Weidman, Lowery, and another renter, Ian Greye, for racketeering. "If you know someone has stolen a house, has misappropriated property, then you should not participate by staying there even if they tell you that it's okay," DeKalb County District Attorney Robert James said.


  • Prosecutors said Weidman was the ringleader and filed bogus paperwork to take over the houses, before placing Greye and Lowery in them.

For more, see Man who claimed he was victim, arrested in house-stealing scheme.

Nevada AG Pinches Suspected Vacant Home Hijacker On Charges Of Obtaining Money Under False Pretenses, Theft, Burglary

From the Office of the Nevada Attorney General:

  • The Office of the Nevada Attorney General announced the arrest of Steven Patrick Nohrden, 36, of Las Vegas, on two counts of burglary, two counts of theft, and two counts of obtaining money under false pretenses.

  • The criminal complaint alleges that Nohrden operated a property rental scam in Las Vegas by identifying and gaining access to certain vacant homes in the Las Vegas area and - without the knowledge or consent of the true home owners – falsely claimed that he was authorized to rent those homes to unsuspecting renters.

  • Relying upon Nohrden’s alleged misrepresentations, individuals then moved into these homes and made rent payments to Nohrden. The true home owners eventually discovered that these individuals were living in their home without their consent, bringing the scam to light.

For the Nevada AG press release, see Nevada Attorney General Announces Arrest Of Steven Patrick Nohrden In Property Rental Scam.

Wednesday, November 2, 2011

Cobb County Cops Ramp Up Heat In Probe Into Suspected Vacant Foreclosed Home Hijacking Racket; Say There Could Be Hundreds Of Victims

In Cobb County, Georgia, WSB-TV Channel 2 reports:

  • Cobb County police say there could be hundreds of victims involved in a foreclosure leasing business first uncovered by Channel 2 Action News. Investigators said John Harris broke into homes across metro Atlanta, changed the locks and then leased them.

  • Channel 2's Craig Lucie broke the story and detectives told him this could be a massive investigation. Lucie has tracked down 12 victims, including Kimber Taylor of Austell. Taylor told Lucie she just found out about Harris' arrest and said things seem odd from the beginning.


  • Cobb County police said that's how many people who have done business with New Life Granted find out they're not a customer, but a victim. Investigators said Harris and New Life's staff would find homes before they went into foreclosure, change the locks, lease them, pocket thousands and they have been doing it for months.

  • "We believe that there are going to be possibly hundreds of victims," Sgt. Larry White with the Cobb County Police Department told Lucie. The victims are in DeKalb, Gwinnett, Henry, Fulton, Cobb, Clayton and Carol counties.

For more, see Police: Man renting foreclosed home could have hundreds of victims.

Las Vegas Cops: Scam Artists Seeking Free Housing Now Pose As Victims In Effort To Hijack Possession Of Vacant Foreclosed Homes

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:

  • Metro police say rental scams are on the rise and what makes it difficult to stop is that the fraud can come from many different directions. The classic rental scam works by somebody posing as a landlord and illegally leasing out someone else's property. Now, some scam artists are posing as victims, hoping to con property managers into letting them stay.


  • Metro Police say this is the latest in a growing number of rental scams. "They drive around, they look at the foreclosure list. They just move in. They simply just move in and they'll dummy up a receipt or create a receipt to make it look like they're the victim," Lt. Susan Shingleton of Metro said.

  • Metro Police adds the majority of rental scams usually involve fake landlords preying on families looking for a rental deal.

For the story, see Police Warn of Growing Rental Scams on Foreclosed Properties.

Nevada AG Pinches Three In Alleged Foreclosure Rescue Racket That Filed Phony Land Documents Purporting To Eliminate Mortgages From Homes

From the Office of the Nevada Attorney General:

  • Nevada Attorney General Catherine Cortez Masto announced [] the arrest of three individuals in connection with the operation of a local mortgage scam. Alex Soria, Sonia Rodis, and Hans Johns have all been charged with two counts of Mortgage Fraud and two counts of Theft in an amount in excess of $2500 for their part in the operation of BioGreen Teck, LLC, a local business which dealt with eliminating mortgages on residential homes.


  • Soria and Rodis, as owners and operators of BioGreen Teck, LLC, conducted a mortgage and foreclosure fraud scam known as the Zero Mortgage Program, which promised to eliminate mortgage obligations and maintain the borrower as title holder of the property.

  • Their scam preyed on homeowners facing foreclosure by their banks and lenders. The scam issued two documents, ‘Affidavits of Fact’ and ‘Deeds of Full Reconveyance’, which the victim homeowners were instructed to file at the Clark County Recorder’s Office.

  • The issued documents were notarized by Johns, an in-house notary. After several months, the banks and lenders would not recognize the legitimacy of this process and moved forward with the foreclosure process, leaving customers worse off than before.

  • Soria was previously advised by the Clark County District Attorney that these documents would have no legal effect but he continued to charge victims to prepare them. Soria is currently in federal custody awaiting trial on similar charges. While in custody, Soria has continued to conduct the scam through Rodis and Johns using the alternate business name, ‘Good Government League’, at the same office location where BioGreen Teck, LLC initiated these fraudulent practices.

For the Nevada AG press release, see Attorney General Announces Arrests In Connection With Mortgage And Foreclosure Fraud.

Another Title Agency Owner Goes Down For Illegally Pocketing Real Estate Escrow Account Cash While Stiffing Mortgage Lenders On Lien Payoffs

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

  • U.S. District Judge Ellen L. Hollander sentenced Michael A. Gmeinwieser, age 38, of Severn, Maryland, [] to 41 months in prison followed by three years of supervised release for wire fraud in a scheme to divert over $3 million in settlement funds intended to pay off the previous mortgage on the properties to himself and his company. Judge Hollander also ordered Gmeinwieser to pay restitution of $3,041,497.


  • According to Gmeinwieser’s plea, he was the sole owner of Innovative Title LLC (“Innovative”) located in Odenton, Maryland, and was responsible for preparing settlement statements, issuing title insurance, disbursing mortgage proceeds and other funds, and ensuring that relevant paperwork was properly completed for real estate closings. Gmeinwieser arranged real estate purchase or refinancing transactions that entailed temporarily depositing funds from a mortgage lender into Innovative’s escrow account to pay off the lien secured against the property by a prior lender.

  • From 2005 to 2009, instead of transferring the funds held in escrow to the prior lender as promised, Gmeinwieser diverted the funds to other uses for himself and Innovative. Gmeinwieser’s misappropriation of funds occurred during real estate transactions involving third party borrowers as well as transactions in which he refinanced mortgages secured by properties he owned.

  • After carrying out refinancing transactions involving third party borrowers, Gmeinwieser made monthly mortgage payments on the borrower’s behalf in an effort to decrease the likelihood that the borrower would discover that their original loan had not been paid in full as agreed.

For the U.S. Attorney press release, see Title Company Owner Sentenced for Wire Fraud in Scheme to Divert over $3 Million Intended to Pay off Previous Mortgages.

Tuesday, November 1, 2011

NYS F'closure Mill Sweatshop Denies That Employees Came To Holloween Party Dressed In Attire Mocking Booted Homeowners; Pictures Tell Different Story

Author and opinion columnist Joe Nocera writes in The New York Times:

  • On Friday, the law firm of Steven J. Baum threw a Halloween party. The firm, which is located near Buffalo, is what is commonly referred to as a “foreclosure mill” firm, meaning it represents banks and mortgage servicers as they attempt to foreclose on homeowners and evict them from their homes. Steven J. Baum is, in fact, the largest such firm in New York; it represents virtually all the giant mortgage lenders, including Citigroup, JPMorgan Chase, Bank of America and Wells Fargo.

  • The party is the firm’s big annual bash. Employees wear Halloween costumes to the office, where they party until around noon, and then return to work, still in costume. I can’t tell you how people dressed for this year’s party, but I can tell you about last year’s.

  • That’s because a former employee of Steven J. Baum recently sent me snapshots of last year’s party. In an e-mail, she said that she wanted me to see them because they showed an appalling lack of compassion toward the homeowners — invariably poor and down on their luck — that the Baum firm had brought foreclosure proceedings against.

  • When we spoke later, she added that the snapshots are an accurate representation of the firm’s mind-set. “There is this really cavalier attitude,” she said. “It doesn’t matter that people are going to lose their homes.” Nor does the firm try to help people get mortgage modifications; the pressure, always, is to foreclose. I told her I wanted to post the photos on The Times’s Web site so that readers could see them. She agreed, but asked to remain anonymous because she said she fears retaliation.

  • Let me describe a few of the photos. In one, two Baum employees are dressed like homeless people. One is holding a bottle of liquor. The other has a sign around her neck that reads: “3rd party squatter. I lost my home and I was never served.” My source said that “I was never served” is meant to mock “the typical excuse” of the homeowner trying to evade a foreclosure proceeding.

  • A second picture shows a coffin with a picture of a woman whose eyes have been cut out. A sign on the coffin reads: “Rest in Peace. Crazy Susie.” The reference is to Susan Chana Lask, a lawyer who had filed a class-action suit against Steven J. Baum — and had posted a YouTube video denouncing the firm’s foreclosure practices. “She was a thorn in their side,” said my source.

  • A third photograph shows a corner of Baum’s office decorated to look like a row of foreclosed homes. Another shows a sign that reads, “Baum Estates” — needless to say, it’s also full of foreclosed houses. Most of the other pictures show either mock homeless camps or mock foreclosure signs — or both.

  • My source told me that not every Baum department used the party to make fun of the troubled homeowners they made their living suing. But some clearly did. The adjective she’d used when she sent them to me — “appalling” — struck me as exactly right.

  • These pictures are hardly the first piece of evidence that the Baum firm treats homeowners shabbily — or that it uses dubious legal practices to do so. It is under investigation by the New York attorney general, Eric Schneiderman.

  • It recently agreed to pay $2 million to resolve an investigation by the Department of Justice into whether the firm had “filed misleading pleadings, affidavits, and mortgage assignments in the state and federal courts in New York.” (In the press release announcing the settlement, Baum acknowledged only that “it occasionally made inadvertent errors.”)

  • MFY Legal Services, which defends homeowners, and Harwood Feffer, a large class-action firm, have filed a class-action suit claiming that Steven J. Baum has consistently failed to file certain papers that are necessary to allow for a state-mandated settlement conference that can lead to a modification.

  • Judge Arthur Schack of the State Supreme Court in Brooklyn once described Baum’s foreclosure filings as “operating in a parallel mortgage universe, unrelated to the real universe.”(1) (My source told me that one Baum employee dressed up as Judge Schack at a previous Halloween party.)

  • I saw the firm operate up close when I wrote several columns about Lilla Roberts, a 73-year-old homeowner who had spent three years in foreclosure hell. Although she had a steady income and was a good candidate for a modification, the Baum firm treated her mercilessly.

  • When I called a press spokesman for Steven J. Baum to ask about the photographs, he sent me a statement a few hours later. “It has been suggested that some employees dress in ... attire that mocks or attempts to belittle the plight of those who have lost their homes,” the statement read. “Nothing could be further from the truth.” It described this column as “another attempt by The New York Times to attack our firm and our work.”

  • I encourage you to look at the photographs with this column on the Web. Then judge for yourself the veracity of Steven J. Baum’s denial.

For the story and the appalling pictures, see What the Costumes Reveal.

Editor's Note: Baum's foreclosure mill sweatshop has since issued an apology for the tasteless party. See Buffalo News: Law firm says party was ‘poor taste’.

(1) HSBC Bank USA, N.A. v Yeasmin, 27 Misc 3d 1227, 2010 NY Slip Op 50927 (NYS Sup. Ct. Kings County, May 24, 2010).

See also Brooklyn Judge Journeys Through "The Twilight Zone" In Recent Ruling Slamming Standing Lacking Lender, Notorious Foreclosure Mill Law Firm.

Closing Attorney Found Liable In Civil Suit For Role In Sale Leaseback Peddling, Equity Stripping Ripoff Targeting High-Equity, Low Cash Homeowners

In Marblehead, Massachusetts, The Salem News reports:

  • A suspended Marblehead attorney has been ordered to pay a $70,000 civil penalty and barred from working as a closing attorney or title agent in any real estate transaction, as a result of his role in a fraudulent foreclosure "rescue" scheme, the attorney general's office announced [].(1)

  • James Alberino, who also received a separate 18-month suspension from practicing law last January, was found by a Suffolk Superior Court judge to have "knowingly and willfully engaged in unfair and deceptive conduct."

  • Judge Janet Sanders found, after a trial, that Alberino, 60, who had a law office in Salem, had acted as the closing attorney on two "sham" property transfers, concealing the true nature of the transfers from lenders he represented. The state Supreme Judicial Court also cited a third "sham" transaction by Alberino in its order last January that suspended him.

  • The scheme was orchestrated by a mortgage broker, Leo Desire Sr., who ran a company called Primary Mortgage Resources, prosecutors said. According to court papers, the scheme, called The Trust Program, solicited homeowners facing foreclosure and unable to obtain a refinance by proposing that they transfer their property into a newly created trust in the name of a "straw" buyer.

  • The homeowners were told they could "temporarily" transfer title to their homes to the straw buyer chosen by Desire, and were also told they would actually be made beneficiaries of the trust and would be allowed to remain in their homes while they rebuilt their credit enough to obtain new financing and buy their house back.(2)

For more, see Attorney liable in mortgage fraud.

For the Massachusetts Attorney General press release, see Marblehead Real Estate Attorney Found Liable for Facilitating Illegal Foreclosure Rescue Scheme (Banned from Acting as Closing Attorney in Real Estate Transactions).

(1) It may be that Alberino's victims in this racket could seek reimbursement for some of their losses due to his handiwork from the Massachusetts Clients' Security Board of the Supreme Judicial Court, which manages and distributes monies in their recovery fund to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the Massachusetts bar acting as an attorney or a fiduciary. Go here for Case Summaries for Claims Decided by the Massachusetts Clients' Security Board of the Supreme Judicial Court.

For similar "attorney ripoff reimbursement funds" that sometimes help 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.

(2) The target here should feel fortunate that criminal charges weren't brought against him. Not all participants in these sale leaseback rackets share the same good fortune.

See, for example, Sale Leaseback Equity Stripping Peddler 'Scores' Guilty Verdict In Equity Stripping Ripoff; Grand Larceny, Scheme To Defraud, Conspiracy, Says Jury.

See generally, Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals.

Sale Leaseback Equity Stripping Peddler 'Scores' Guilty Verdict In Equity Stripping Ripoff; Grand Larceny, Scheme To Defraud, Conspiracy, Says Jury

In White Plains, New York, The Journal News reports:

  • The last defendant in a multimillion-dollar mortgage fraud case that officials say swindled four Westchester County families out of their homes was convicted of theft, fraud and conspiracy Tuesday.

  • A jury found Mildred Didio of Manhattan guilty of four felony counts of second-degree grand larceny and one each of first-degree scheme to defraud and fourth-degree conspiracy. She faces a maximum of 15 years in state prison when she is sentenced Jan. 25. She also could be sentenced to a minimum of five years' probation.

  • Prosecutors said she was involved with a group of eight who stripped homes from families in Croton-on-Hudson, Yorktown, Cortlandt and Mount Vernon; and scammed two mortgage lenders out of $1.4 million. All were arrested in 2009.

  • The group told victims, who they found through notices of public auction and foreclosure, that they could transfer their deeds to an investor, who would hold the titles while they saved money to reclaim their homes.

  • But once the "investor" took title, the group's members got inflated mortgages, which they used to pay off the original mortgage and kept the remainder for themselves. The former owners have filed lawsuits to try to reclaim their losses.

  • Didio, 46, represented the straw buyers or acted as a settlement agents for the lenders. Hubert "Phil" Hall, a former editor at a precursor to The Journal News, and his wife, Doreen Swenson, are serving two to six years in prison after pleading guilty to grand larceny and fraud. Prosecutors said the Tarrytown couple helped set up the phony mortgages.

  • David Reback, an attorney from Rye Brook, and Amerigo DiPietro of Brewster, who owned Interstate Monetary Concepts in Briarcliff Manor, pleaded guilty to their roles in the scam. Prosecutors said they were the principal players. They were sentenced to a year in jail. Eileen Potash of Queens was convicted at trial of fourth-degree conspiracy, a felony, but acquitted of second-degree grand larceny and first-degree scheme to defraud. She was sentenced to five years probation.

  • Frank Corigliano, a lawyer from Newtown, Conn., was acquitted of all charges by the jury that convicted Potash. Wilma Shkreli of Westwood, N.J., who posed as an investor, pleaded guilty to grand larceny. She is to be sentenced Nov. 22. This was Didio's second trial for her role in the scam. Her first ended in a hung jury.(1)

Source: Last of 8 defendants convicted in multimillion dollar mortgage scam.

For more on these sale leaseback foreclsoure rescue ripoffs, see:

(1) Apparently, the jury agreed with the prosecutor that all the sophisticated paperwork in the world (ie. business/purchase contracts, leases, closing statements, etc.) aren't enough to permit scammers to insulate themselves from criminal prosecution when targeting their victims simply by entering into legitimate-looking business contracts when screwing them over in an attempt to disguise a blatant criminal ripoff as a common, legitimate business deal.

This is not the first time that prosecutors (at least those with some guts) and courts have been asked to pierce through the acrobatics involved in creating the 'business-deal disguise' when the scammers argue that the arrangement was just a civil transaction that, if challenged, should be done with a civil lawsuit, not a criminal prosecution. See:

  • People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

    The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (
    People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)

  • People v. Jones, (1943) 61 Cal.App.2d 608, 620 [143 P.2d 726]:

    Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.


    Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.

    The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

Third Participant In Maryland Real Estate Escrow Account Ripoff Goes Down; Scam Left Title Insurance Underwriter Holding The Bag, Cleaning Up The Mess

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

  • Stephen J. Troese, Sr., age 72, of Davidsonville, Maryland, pleaded guilty [] to wire fraud arising from a scheme to defraud lenders and a title insurance company of at least $937,183. The government contends the loss is between $2.5 million and $7 million. The exact amount of the loss will be determined at sentencing.(1)

For the entire U.S. Attorney press release, see Owner of Title Companies Pleads Guilty in Mortgage Fraud Scheme.

(1) For earlier posts on the recent guilty pleas of two other participants in this ripoff, see:

Monday, October 31, 2011

Eight More Taken Down In Northern California Foreclosure Sale Bid-Rigging Conspiracies; Feds Run Score Up To 18 & Counting In Continuing Probe

From the U.S. Department of Justice:

  • Eight Northern California real estate investors have agreed to plead guilty [Thursday] for their roles in two separate conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.(1)

  • Charges were filed [Thursday] in U.S. District Court for the Northern District of California in San Francisco against Gary Anderson of Saratoga, Calif.; Patrick Campion of San Francisco; James Doherty of Hillsborough, Calif.; Keith Goodman of San Francisco; Troy Kent of San Mateo, Calif.; Craig Lipton of San Francisco; Henry Pessah of Burlingame, Calif.; and Laith Salma of San Francisco.

  • According to the felony charges, the real estate investors participated in a conspiracy to rig bids by agreeing to refrain from bidding against one another at public real estate foreclosure auctions in San Francisco County and San Mateo County. Doherty, Goodman and Lipton participated in the conspiracy in San Francisco, and Anderson, Campion, Kent, Pessah and Salma participated in the conspiracy in San Mateo.

  • The collusion taking place at these auctions allowed the conspirators to line their pockets with funds that otherwise would have gone to lenders and, at times, financially distressed homeowners,” said Sharis Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.

  • The investigation into collusion at these foreclosure auction markets is ongoing, and the Antitrust Division will continue to pursue the perpetrators of these fraudulent schemes until they are brought to justice.”

For the U.S. Justice Department press release, see Eight Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 18 Plea Agreements to Date).

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

Go here for links to more from the U.S. Justice Department on bid-rigging prosecutions.

Bellyaching BofA Bankster Wails To Employees In Effort To Whitewash Negative Public Image

Bloomberg reports:

  • Bank of America Corp. Chief Executive Officer Brian T. Moynihan said he’s “incensed” by public criticism of his company and is pushing back by reminding local leaders of its contributions to their economies. Moynihan, 52, told employees in a global town hall meeting last week from the firm’s Charlotte, North Carolina, headquarters that the “place to win the battle” over the bank’s battered public image is at the state and municipal level.


  • I, like you, get a little incensed when you think about how much good all of you do, whether it’s volunteer hours, charitable giving we do, serving clients and customers well,” Moynihan said during the Oct. 18 gathering. To the bank’s critics, he said, “You ought to think a little about that before you start yelling at us.”

For more, see ‘Incensed’ Moynihan Fights BofA Critics in Letter Campaign.

NY, Delaware AG 'Tag Team' Partners Begin Firing At MERS With Civil Lawsuit, Subpoena Request In Foreclosure Fraud Probe

Reuters reports:

  • MERS, the electronic mortgage registry used by the banking industry, was sued by Delaware on Thursday and accused of deceptive practices that led to unlawful shortcuts in dealing with the foreclosure crisis.

  • New York's attorney general also took action against MERS, subpoenaing the registry this week for information about how it is used by major banks and a foreclosure law firm, a person familiar with the matter said on Thursday.

  • The suit and subpoena were part of a joint New York-Delaware mortgage probe, the person told Reuters.

For more, see MERS subpoenaed by New York, sued by Delaware.

Proposed Class Action Tags Loan Servicer, Law Firm Sweatshop With Charges Of Piling On Bogus Fees On Homeowners During Sloppy Or Fraudulent F'closures

From a BHN Law Firm press release:

  • On behalf of a proposed class of distressed homeowners residing in New Jersey and Pennsylvania, BHN Law Firm filed a Complaint in the United States District Court for the District of New Jersey against Wells Fargo Bank, N.A. (Wells Fargo) and one of its principal foreclosure law firms. The caption of the Complaint, filed on October 24, 2011, is Giles v. Phelan Hallinan & Schmieg, LLP, 1:11-cv-06239 (D.N.J.).

  • The Complaint alleges that Wells Fargo and Phelan, Hallinan & Schmieg (Phelan), a high-volume foreclosure law firm in Pennsylvania and New Jersey, engaged in a fraudulent scheme to "pile on" unlawful foreclosure fees from financially troubled families on the brink of losing their homes. The lawsuit contends that, to carry out the scheme, defendants systematically filed falsified complaints, affidavits and mortgage assignments to bring foreclosure actions in the name of parties without legal standing to sue.


  • The Complaint alleges that, during th[e] process [of foreclosing on one homeowner], Phelan and Wells Fargo

    (1) identified the wrong financial institution as plaintiff,
    (2) recorded bogus mortgage assignments,
    (3) filed court documents containing untrue statements of material fact,
    (4) included multiple versions of the same lawyer's "signature" in different documents filed in the same case;
    (5) charged vastly overstated foreclosure fees and
    (6) despite a formal warning by the misidentified bank, heedlessly continued to file later foreclosure actions against other homeowners "on behalf" of the same improperly named bank.

For the press release, see PA and NJ Homeowners File Foreclosure Fraud Class Action Against Wells Fargo and Phelan Hallinan & Schmieg (Wrongful Foreclosures by Mortgage Servicer and Law Firm Allegedly Drive Systematic Scheme to Impose Foreclosure Fee Overcharges).

For the lawsuit, see Complaint - Giles v. Phelan Hallinan & Schmieg, LLP, 1:11-cv-06239 (D.N.J.).

Florida Appeals Court: Defect In Stipulation Agreement Left Judge Without Jurisdiction To Summarily Enter Foreclosure Judgment Upon Subsequent Default

A Florida appeals court recently ruled that a trial judge improperly overstepped his bounds and exceeded his jurisdiction(1) by summarily entering a foreclosure judgment on a property owner who, after entering a stipulation agreement with the lender in an effort to cure an earlier default, subsequently found himself unable to make the payments on the stipulation agreement.

According to the appeals court, the basis for their reversal was simply the fact that the stipulation did not include a provision authorizing the trial court to summarily enter a final judgment of foreclosure upon a default.(2)

For the ruling, see Sarhan v. H & H Investors, Inc., No. 3D10-3394 (Fla. App. 3d DCA, October 19, 2011).

(1) See generally:

  • The Florida Bar Journal: Enforcement of Settlements: A Jurisdictional Perspective, for a discussion on the jurisdictional issues that arise when reopening a case for the purpose of enforcing a settlement which "have troubled the courts of Florida and vexed litigants and their attorneys for decades."

  • The Florida Bar Journal: Florida’s Third Species of Jurisdiction, for a discussion on the confusion that has arisen in the Florida courts over the years over what exactly is meant by the term “jurisdiction.”
(2) From the court ruling:
  • When a trial court approves a settlement agreement by order and retains jurisdiction to enforce its terms, the trial court’s continuing jurisdiction to enforce the terms of the settlement agreement is circumscribed by the terms of the agreement. See Paulucci v. Gen. Dynamics Corp., 842 So. 2d 797, 803 (Fla. 2003).

    In this case, the parties agreed in their stipulation to modify the terms of the note and mortgage. The stipulation did not include a provision authorizing the trial court to summarily enter a final judgment of foreclosure upon a default. In so doing, the trial court exceeded the jurisdiction it reserved for itself in the order of dismissal. Compare Zimmerman v. Olympus Fid. Trust, LLC, 847 So. 2d 1101, 1102 n.2 (Fla. 4th DCA 2003) (“Although the settlement agreement provided that the Zimmermans . . . ‘agree[d]’ to waive any defenses to the foreclosure of the mortgage, . . . [t]he agreement fell short of providing that if the payments were not made when due, a final judgment of foreclosure could be entered against the Zimmermans.”), with BAC Int’l Credit Corp. v. Macia, 626 So. 2d 1037, 1038 (Fla. 3d DCA 1993) (finding the settlement should have been enforced in accordance with its terms, which “provided that if the payments were not made when due, an agreed final judgment of foreclosure would be entered against the borrowers”).

    Reversed and remanded for further proceedings.

Sunday, October 30, 2011

Washington State AG Cautions Homeowners Against Rackets Peddling So-Called 'Securitization Audits' & Other Loan Modification Scams

From the Office of the Washington State Attorney General:

  • Attorney General Rob McKenna today reminded homeowners needing assistance to avoid companies selling “foreclosure rescue,” “securitization audits” and other home loan modification schemes.

  • Free or reduced fee housing counselors are available nationwide to assist homeowners in working with their lenders, so there really isn’t any reason for a consumer to pay hundreds or thousands of dollars for these services,” said McKenna. “Unfortunately, we continue to hear from homeowners who have lost their money after paying large, up-front fees to companies who ultimately did not deliver on their ‘foreclosure rescue’ promises.”

  • In recent years, new companies have cropped up across the country aiming to take advantage of vulnerable homeowners and capitalize on all of the conflicting and confusing news and information relating to the mortgage crisis.

For the Washington State AG press release, see Attorney General reminds homeowners to avoid new foreclosure rescue scammers.

NY AG: Joint Criminal Probe With Delaware Counterpart Into Banksters' Foreclosure Fraud Role Ongoing

Bloomberg reports:

  • New York Attorney General Eric Schneiderman is working with his Delaware counterpart, Beau Biden, to investigate what he called possible “criminal acts” by financial institutions tied to the foreclosure crisis.

  • This was a man-made crisis -- it was created by regulatory neglect and greed,” Schneiderman said last night in a TV interview.

  • Beau Biden, who is the attorney general of Delaware, and I thought we really needed to dig in a little bit deeper,” Schneiderman told MSNBC’s Rachel Maddow. “We’re also looking at the conduct of individual institutions and individuals to see if there were misrepresentations made, to see if there was any fraud committed, to see if criminal acts were also a part of this.”

For more, see New York Working With Delaware on Criminal Foreclosure Probe.

FHA Targets 'Scratch-And-Dent' Investors In Effort To Unload Discounted Federally Insured Home Loans In Default; Some Have Dubious 'Subprime' Past

Bloomberg reports:

  • [T]he Federal Housing Administration is auctioning thousands of defaulted mortgages at prices marked down by as much as 65 percent. If the pilot works as planned, the government mortgage insurer will cut its losses by avoiding foreclosures while giving borrowers a better chance of remaining in their homes.

  • This pilot program is a potential win-win-win,” Acting FHA Commissioner Carol Galante said in an e-mail.

  • Still, as the program joins other small-scale government housing initiatives, it illustrates the challenges policy makers face as they try to revive the housing market. So far, investors in the loans are scratch-and-dent specialists who buy less-than-perfect debt and try to squeeze a profit out of it.

  • In the long run, they might have little interest in continuing to work to keep troubled borrowers from losing their homes. In some cases, the investors are the same people who originated subprime loans in the run-up to the 2008 credit collapse or later ran afoul of regulators.


  • Borrower advocates say they are troubled by the participation of companies whose principals were subprime lenders or who have drawn scrutiny from regulators in the past. The FHA program “is a way to continue to line the pockets of the predators who created this mortgage crisis,” said Bruce Marks, chief executive officer of the Neighborhood Assistance Corporation of America, a Boston-based non-profit that aids and counsels troubled borrowers.

    Consent Order

  • One of the four firms that have bought notes through the program is Bethesda, Maryland-based MCM Capital LLC. MCM Capital employs Steven Trowern, a former director of Dynamic Capital Mortgage Inc. in Brookline, Massachusetts.

  • According to a 2009 consent order and state officials, Dynamic was found to have falsified loan documents and misled borrowers. Without admitting wrongdoing, Trowern signed an agreement that he wouldn’t own or manage a mortgage company in the state for three years.

For more, see Vulture Investors Buy Discounted FHA Loans.

Arizona Regulators Seize Insolvent Underwriter; Downfall Atttributed To Insuring Too Many Crappy Home Mortgages That Ended In Foreclosure

In Phoenix, Arizona, The Associated Press reports:

  • Insurance regulators in Arizona have seized the main subsidiary of private mortgage insurer PMI Group, which will begin paying claims at just 50%. The seizure follows heavy losses at PMI since the housing market bubble burst.

  • Two months ago, state regulators ordered the Arizona-based subsidiary, PMI Mortgage Insurance Co., to stop selling new policies after it came under scrutiny because it didn't have enough money on hand to meet the requirements of regulations in that state.

  • A statement on PMI's website says a court order, signed by an Arizona Superior Court judge on Thursday, gives Arizona's Department of Insurance full possession and control of the subsidiary. Beginning Monday, PMI says claims will be paid at just 50%, in lieu of a moratorium on claim payments. Meanwhile, PMI said it will "continue to support our customers' ongoing policy servicing needs, and loss mitigation programs."

  • Private mortgage insurance protects lenders and investors from losses if a homeowner defaults and the lender doesn't recoup costs through foreclosure. The insurance costs the borrower a monthly fee, typically a set percentage of the total mortgage loan.

  • Like other mortgage insurers, PMI has been able to sell profitable policies in recent years, but the gains from those sales hasn't outpaced losses from policies sold before the housing market collapsed. As flagging home prices have strapped borrowers, the company has had to pay more claims.

For more, see Ariz. regulators seize PMI Mortgage Insurance Co.