Saturday, January 28, 2012

21 Residents Driven From Homes Into Frigid Cold As Frozen, Bursting Water Pipes, Electricity Short Out Spell Shut Down For Building In Foreclosure

In Cicero, Illinois, NBC Chicago Channel 5 reports:

  • The town of Cicero stepped in Friday after 21 residents, including 12 children, were displaced from their home because of bursting water pipes amid a foreclosure battle.

  • Ahead of the coldest morning of the year, several frozen pipes burst Thursday night in the building in the 5100 block of 30th Street, causing the electricity to short out. For the past year, the residents have been caught in foreclosure proceedings between the building's owner and the city.

  • The owner, who city officials said couldn't be found Friday, is accused of owing thousands in water bills to the city. The town of Cicero paid for hotel rooms for the displaced families. Because of the foreclosure, it's not clear who will pay for repairs in the building.

  • One thing's for sure. The residents can't go home right now. A community service car blocked the building, which has been closed by the town.

  • The fire department said the building is currently a safety hazard for residents.

Source: 21 Cicero Residents Displaced on Frigid Day (The town stepped in to pay for hotel rooms).

Texas Man Files Suit To Dodge Boot From Home Owned By Another That He's Lived In, Maintained For 35 Years

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

  • A Nome man who has lived on a Jefferson County property for 35 years is asking the court to overturn a woman's eviction orders.

  • Charles Malveaux filed a lawsuit Jan. 5 in Jefferson County District Court against Mary E. Jackson. In his complaint, Malveaux claims he has lived on and maintained a property in Nome for more than 35 years.

  • However, Jackson is now attempting to evict him from the property, claiming she was given 100 percent ownership of it following the death of Sarah Parker, according to the complaint.

  • Malveaux maintains that Parker gave him permission to occupy the land and says he should be granted the right to remain on the property because of the work he has performed for the past 35 years.

For the story, see Nome man sues property owner to stop eviction.

L.A. City Tags Scofflaw Landlord For $322K In Relo Funds For Dozens Of Low-Income Tenants To Assist In Forced Move From 3-Unit Health/Safety/Fire Trap

In Los Angeles, California, the Los Angeles Times reports:

  • The Los Angeles City Council voted [] to provide up to $322,000 in relocation money to dozens of low-income tenants who must move from a South Los Angeles apartment building deemed unsafe by city inspectors.

  • Tenants were given eviction notices last month after housing officials concluded that owner John Callaghan had illegally converted what was supposed to have been a three-unit apartment building [...] into as many as 44 separate living spaces — a warren of narrow hallways; tiny, shared bathrooms; and communal kitchens, much of it laced with unpermitted electrical and plumbing work.


  • The payments, which will range from $7,300 to $18,300, will come from a fund established by the Housing Department for tenants who must move out because of hazardous conditions. Those who receive the maximum must have lived in the apartment for more than three years and qualify as low income.

  • The payments are designed to cover the first month's rent, a rental deposit, moving costs and the likelihood that tenants will be charged a higher rent at their next apartment, said Sonia Pflaster, a lawyer with the Inner City Law Center.(1) Some renters have been paying as little as $350 per month and are finding that similarly sized apartments are now going for $700 to $900, said Pflaster, who represents 35 tenants at the 49th Street property.

  • Although the city's action goes a long way toward helping the tenants, council members still want to know why it took inspectors so long to figure out what had happened at the building — and how many other similar properties might exist.


  • In recent weeks, city officials have required that the owner pay for an around-the-clock security guard on the property to make sure the unpermitted electrical work doesn't spark a fire.

For the story, see Tenants get relocation funds after eviction from illegal units (The l.A. City Council approves up to $322,000 for dozens of people who were living in an illegally remodeled apartment building. Lawmakers are still trying to determine what went wrong with inspections).

(1) Headquartered on Skid Row, Inner City Law Center provides free legal representation and social service advocacy in Los Angeles County to over 2,000 homeless and working poor clients each year.

F'closures Also Affect Dearly Departed; Loved Ones' Final Resting Place Anything But Peaceful As Pending Sale Of Troubled Cemetary Worries Families

In Madison, Indiana, WDRB-TV Channel 41 reports:

  • Grandview Memorial Gardens Cemetery gained attention for water-logged graves and will now go to the highest bidder. The auction is just the latest problem for Grandview, that has many folks wondering what will happen to all of their loved ones.

  • Pictures are all Hazel Wilkerson has of her late husband Fred who died October 22nd. "It will be three months Sunday," says Wilkerson, a secretary at the Madison Airport. She worked alongside her husband, a pilot, for many years. "We'd been married 45 years when he passed away."

  • He is buried next to his mother at Grandview. Hazel already has her plot next to Fred. But their final resting place is anything put peaceful. "I just wonder what's going to happen," wonders Wilkerson.

  • She's wondering because next month the cemetery is going on the auctioning block. Grandview's history is bogged down in controversy. Bodies were exhumed several years ago to fix problems with water logged graves. The actual owner is still in dispute with lawsuits dating back to 2006.

  • "I just don't know. That's up to a judge to decide," says Jim Holt. He thought he sold the cemetery years ago to Keith Mefford and wants nothing to do with it now as it goes up for auction. "When Mefford stopped making his payments to me, then I stopped making the payments to the bank."

  • The bank then filed foreclosure against the cemetery. Holt says he knows of two interested parties.

  • Hazel Wilkerson just hopes the highest bidder holds this sacred ground in high regard. "Somebody's going have to take it over that's going to take care of it cause it's not really been taken care of like it should be." "The sheriff plans to auction off the cemetery on February 23rd.

Source: Troubled Madison cemetery will go to the highest bidder.

Friday, January 27, 2012

Suit: Judgment Debtor Played 'Keep-Away' With Creditor By Fraudulently Transferring Real Estate Ownership To Complicit Mom To Avoid Collection Efforts

In Galveston, Texas, The Southeast Texas Record reports:

  • Claiming fellow Galvestonians Daniel and Rita Higgins committed a fraudulent property transfer, Leslie and Sandra Bartosh have a filed a lawsuit. The lawsuit, filed Dec. 30 in Galveston County District Court, accuses Daniel P. Higgins of turning two pieces of real property on the farther West End of Galveston over to his mother "with the intent to hinder, delay or defraud the plaintiffs."

  • Recent court documents explain that the Bartoshes pursued legal action against the younger Higgins in 2009 and eventually won a settlement in the amount of $67,704 on June 14. "The plaintiffs allege that the foregoing judgment was a valid and subsisting judgment and that the plaintiffs obtained an abstract of judgment," the original petition says.

  • The suit shows the properties in question had a fair market value that was in excess of $67,704 when Danny P. Higgins transferred them by way of quitclaim deed to Rita Higgins on Oct. 25.

  • According to the complainants, said transfer occurred to prevent the defendant transferor's creditors and the plaintiffs from obtaining collection of the claim.

  • They additionally claim Rita Higgins had notice of her son's alleged actions and was aware he was experiencing "serious financial difficulty" at the time of the transfer in question. "The defendant Rita Higgins did not pay adequate or any consideration for the properties," the suit says.

Source: Suit claims property transfer was fraudulent.

Property Owner Sues Sibling/Co-Owner Over Alleged Failure To Cough Up Her Share Of Real Estate Tax Bill; Asks Judge To Order Forced Sale Of Land

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

  • A woman claims her sister failed to pay her half of the property taxes on a piece of Jefferson County real estate the siblings jointly owned. As a result, the property has settled into disrepair, according to recently filed court documents.

  • Susan Manuel filed a lawsuit Dec. 30 in Jefferson County District Court against Gwendolyn Lejunie. In her complaint, Manuel alleges she and Lejunie owned the property at 2010 Seventh St. in Port Neches. They inherited the land from their mother, Bonita Manuel, on Aug. 1, 2005, according to the complaint.

  • Despite her 50 percent share of the property, however, Lejunie has refused to pay property taxes on it, the suit states. She has also failed to keep the property in a "liveable and marketable" condition, the complaint says.

  • Manuel wants the court to order sale of the property. She wants to receive 60 percent of the proceeds as compensation for the loss of market value of the property.

Source: Siblings in dispute over property taxes.

Federal Judge 'Green-Lights' Embattled Foreclosure Sweatshop Operator's Lawsuit Alleging BofA Stiffed Him Out Of $11M In Legal Fees

In Miami, Florida, Courthouse News Service reports:

  • A Plantation, Fla., law firm can seek $11 million in unpaid legal fees for its work on Bank of America foreclosure cases, a federal judge ruled.

  • The Law Offices of David J. Stern says it was the legal counsel for Bank of America's Florida residential foreclosure cases across the state, employing some 1,200 attorneys and support staff at its peak. [...] Stern's 11-count complaint claims that Bank of America and its corporate parent owe more than $1.9 million, while BAC Home Loans Servicing owes more than $8.7 million.

For more, see Bank of America May Owe Lawyers $11 Million.

For the order denying BofA's Motion to Dismiss, see The Law Offices of David J. Stern, P.A. v. Bank of America Corp. et al.

Thursday, January 26, 2012

Media Intervention Saves Another Homeowner From Sloppy Servicer's Handiwork; Bankster Ran Up Late Charges, Threatened F'closure Over Bookkeeping Gaffe

In Caldwell County, North Carolina, WSOC-TV Channel 9 reports:

  • A Caldwell County woman was threatened with foreclosure over a missing payment she said she made to her loan company. Sherry Story is a hard-working single mother and does not have money to waste. For the last two months she has been trying to chase down the $400 payment she made on her second mortgage to Litton Loan Servicing just as her loan was being sold to Ocwen Loan.


  • Story said she sent Ocwen a copy of the payment that came through her bank and has called Ocwen 15 times, but still cannot get credit for the payment. Now the company has tacked on additional charges totaling nearly $1,200. “I’m fearful they’re going to get away with what they’re doing and they will foreclose. I have been threatened with foreclosure,” Story said.

  • That’s when Story went online and discovered the company has an ‘F’ rating with the Better Business Bureau and more than 900 complaints. Some of the complaints are similar to hers.

  • So Action 9 called Ocwen Loan, was put in contact with someone in their overseas research department and asked them to investigate. Action 9 waited on the line for 45 minutes.

  • Finally, Ocwen said they credited the $400 payment and removed the additional fees. Story demanded they send proof. Story said she will be able to sleep at night when she gets proof her mortgage payment was properly credited.

  • I don’t think I could have done it if you hadn’t helped me with it. I just wasn’t getting anywhere with them,” she said.

For the story, see Woman's home loan sold, payment lost.

Insurance Squeeze Continues For Florida Homeowners; 'Backdoor' Rate Increases, Industry Campaign Cash To Business-Friendly Governor Pinch Pocketbooks

In West Palm Beach, Florida, The Palm Beach Post reports:

  • Linda Sapp's reaction to her insurance bill was sticker shock: The annual premium doubled to $4,800, adding hundreds to her monthly mortgage payment. Her first thought: "There's no way I can afford my house."


  • In Boynton Beach, retiree Thomas Spatafora is on a fixed income and said he has never filed a property claim. But annual premium increases just keep on coming from the state's insurer of last resort, Citizens. "How the hell much is enough?" Spatafora said. "They keep increasing the cotton-picking premiums. Are they going to price us out of existence so we can't afford it?"

  • Affordability is not as popular a word as it once was in Tallahassee, where the emphasis these days is on encouraging insurance rates to rise. That is particularly true with Citizens [Florida's property/casualty insurer of last resort], the state's biggest carrier with 1.5 million policyholders.

  • "The true cost of living close to the coast, where hurricanes are most destructive, is much higher than Citizens policyholders have been paying," said Lane Wright, spokesman for Gov. Rick Scott. "That's because the rates have been held artificially low by politicians who've postponed the inevitable and kicked this can down the road. [...]"

  • Insurance interests gave more than $94,000 to Scott's campaign in the 2010 cycle, among the four industries most generous to him, according to online data compiled by the National Institute on Money in State Politics.

  • Private insurers stand to benefit as Citizens' bills climb, influencing the market as a whole. Scott wants legislators to consider letting Citizens raise rates beyond the 10 percent a year currently allowed.

  • For many customers, bigger hikes are already coming through what consumer advocates characterize as backdoor rate increases.

  • One way to boost premiums is to raise the projected cost of rebuilding homes, though existing home prices in many parts of Florida continue to fall and the construction industry has struggled. Software that Citizens uses to determine replacement costs is under review in South Florida and Tampa this month following consumer complaints.

  • Then there are reinspections that overwhelmingly tend to find homeowners no longer qualify for storm-resistant features that bring discounts, despite protests from homeowners they followed the rules the state set and later repeatedly changed. Reinspections raised Citizens premiums an average of 24 percent, or $718 a year, for 63 percent of 78,000 homes visited through Nov. 30. In 2012, reinspections are scheduled for 209,000 homes - adding $94 million to premiums at 130,000 homes statewide if trends hold.

For more, see Wind-less storm brews over skyrocketing premiums.

NM Homeowner Seeks State High Court Review Of Subprime Refinance Involving No Appriasal, Income Check That Left Couple With Unaffordable Payments

In Santa Fe, New Mexico, NewsOK reports:

  • A Chimayo, N.M., couple remain in their home into the new year as their 2007 default on their refinanced mortgage wends its way to the New Mexico Supreme Court.

  • Their attorney, Joshua Simms of Albuquerque, N.M., said Joseph and Mary Romero continue to make minimal payments to the Bank of New York to stay in their family home until the legal fight is concluded.

  • They haven't had much success so far in the court system with their case, which has gotten the support of such groups as the Santa Fe Neighborhood Law Center, Somos Un Pueblo Unido and the Roman Catholic Archdiocese of Santa Fe.

  • The law center, in a court brief, called the Romeros' loan “a wild home mortgage refinancing loan based on no appraisal and no income verification.” The groups supporting the Romeros hope the case can lead to more support from the court system for those enticed into risky home mortgages.

For more, see New Mexico Supreme Court will rule on foreclosure case (A Chimayo, N.M., couple remain in their home into the new year as their 2007 default on their refinanced mortgage wends its way to the New Mexico Supreme Court).

Wednesday, January 25, 2012

More On Borrower Squeeze By Banksters' Force-Placed Homeowners' Insurance Racket

The New York Times reports:

  • New York State financial services agency is investigating several large banks to see whether they fraudulently steered homeowners into overpriced insurance policies. The investigation centers on so-called force-placed insurance that has become increasingly common since the downturn of the housing market began and homeowners had trouble keeping up with payments on their home insurance.

  • JPMorgan Chase, Bank of America, Citigroup and Wells Fargo are among the major companies involved in the inquiry by the office of Benjamin M. Lawsky, the superintendent of New York State’s Department of Financial Services, according to a person briefed on the investigation who asked to remain unidentified because the matter was private.


  • In general, mortgage servicers are allowed to take out insurance policies on homes after a homeowner allows existing coverage to lapse. Though homeowners have little choice and sometimes little notice about the new plans, they often end up shouldering the costs of the insurance through their mortgage payments.

  • The increased cost is to be expected to some degree because homeowners who missed insurance payments on old policies are risky customers. However, Mr. Lawsky’s office views some of the increases as exorbitant. For instance, in one case his office is examining, a homeowner who paid $2,000 a year to State Farm ended up paying $6,000 a year to a new insurer.

  • Potential wrongdoing may occur when both mortgage servicing and insurance units are within the same company or affiliated in some way. That introduces a potential conflict because companies may have an incentive to place homeowners in policies offered by their affiliates rather than looking for the best rates on the open market.

For the story, see Big Banks Face Inquiry Over Home Insurance.

Homeowner/Couple Claims Russian Mob Electronically Stole Refinance Proceeds; Title Insurer To Victims: 'Get Lost - We Ain't Payin' Your Claim!'

In Parker, Colorado, KMGH-TV Channel 7 reports:

  • A simple refinance more than two years ago has a Parker family fighting for their home after the Russian mafia allegedly stole money during a wire transfer. Now the family’s home faces foreclosure again, with a hearing scheduled for Jan. 25.


  • In September of 2009, [Kim & Tim Canning] refinanced their home with Ryan Rodenbeck of Classic Title. At some point when the funds were being transferred online to Chase Bank, $900,000 disappeared. Rodenbeck said nine $100,000 transfers were stolen -- $277,000 of that was part of the Cannings refinancing.

  • In 2010, Rodenbeck said he did nothing wrong and that the money was intercepted by the Russian mafia. Classic Title has since gone out of business.

  • Tuesday, a representative from Chase Bank said they determined Rodenbeck transferred the money without using a secure site with encryption.


  • Bank of America held the Cannings first mortgage. It was supposed to be paid off during the transfer. Since the money never made it to them, the Cannings basically have two mortgages on their home. Bank of America wants its money back so it’s foreclosing on their home.


  • But trying to get the foreclosure to stop is only half of the problem according to the Cannings.

  • Rodenbeck was working as an agent for Attorneys’ Title Guaranty, a title insurance company. “They could make the whole thing go away today and they chose not to,” said Kim Canning.

  • She said Attorneys’ Title refuses to pay their claim. Cedars asked isn’t that what insurance is for? “Correct,” said Tim Canning. “And that is the question every attorney that has looked at this (case) and every person who has any experience in this industry has asked -- why is the title company not stepped up on this?” “I want them to tell me to my face, why they are doing this, because this is a choice, they are choosing to do this to us,” said Kim Canning. No one from Attorneys’ Title would return phone calls from 7NEWS [].

  • The Cannings went to the state Department of Regulatory Agency, known as DORA for help. “We've been told that is what DORA is there for," said Kim Canning. She said DORA should be able to force them to pay the claim.

  • In a statement to 7NEWS, DORA said, “We continue to monitor the situation to ensure the title company is fulfilling its obligation.”

For the story, see Stolen Wire Transfer Leaves Family In Foreclosure (Russian Mob Allegedly Stole Refinance Money).

Bay State Regulator Strips Sticky-Fingered Broker Of Real Estate License; Writing Rubber Check, Failure To Return Buyer's Deposit Among Dirty Deeds

In Marblehead, Massachusetts, The Salem News reports:

  • The state board that oversees real estate brokers has revoked the license of a Marblehead man who allegedly failed to turn over deposits to a seller and a buyer, as well as a commission owed to another broker, in real estate transactions he handled in 2010.

  • Barry A. Rosenberg's license was revoked effective Oct. 8, the Board of Registration of Real Estate Brokers and Salespersons announced in a press release yesterday, after Rosenberg failed to respond to requests for information or documentation concerning the complaints.

  • According to findings issued by the board, Rosenberg handled the sale of a property on Sayward Street in Gloucester, as well as two properties in Chelsea, during the summer and fall of 2010.

  • The board found that in the first Chelsea transaction, Rosenberg sent the seller's attorney a check for $9,665 that later bounced.

  • He then allegedly handled the sale of the Gloucester property but failed to pay a commission to another broker that was spelled out under the Multiple Listing Service agreement.

  • In October 2010, he was given a deposit to put in escrow by the buyer of another Chelsea property, but when the seller backed out of the deal and took the property off the market, Rosenberg failed to return the $10,600 deposit to the potential buyer.

For more, see Marblehead real estate broker loses license.

Pair Cop Guilty Pleas in Scams Involving Use Of Forged Mortgage Satisfactions, Rent Skimming To Screw Over Banks, Landlords

From the Office of the U.S. Attorney (District of Columbia):

  • The owners of a property management company, Bryan W. Talbott, 48, and Chester D. Ransom, Jr., 44, have pleaded guilty to defrauding their clients, mortgage lenders, and the government out of more than $2.8 million.


  • According to the government’s evidence, Talbott was the president and Ransom was the vice president of a property management company located in Washington, D.C., that operated under multiple names, including Esquire LLC, Federal City Mowbray, and Private Properties Inc. (collectively referred to as “Esquire”). The defendants also lived together at a residence on North Portal Drive NW, Washington, D.C.

  • From 2004 to the present, the defendants engaged in three separate fraudulent schemes, resulting in more than $2.8 million in losses to the victims.

  • As part of [one of] their fraudulent scheme[s], the defendants frequently collected rental payments from tenants but did not pay the bills for the properties, despite falsely representing to the property owners that the bills had been paid. Instead, the defendants used these funds for their own benefit. In addition, the defendants also sent forged bank statements to some of their clients, misstating the balances in their clients’ accounts.

  • Through this fraudulent scheme, the defendants defrauded at least 54 clients out of a total of $1,269,278.

  • [In another fraudulent scheme,] On June 30, 2004, Ransom purchased the property on North Portal Drive NW for $975,000, financing the purchase, in part, with two loans in the total amount of $731,250 from WMC Mortgage Corp. , a mortgage lender. Ransom executed two deeds of trust on the property, granting WMC a security interest in the property.

  • On December 29, 2005, Ransom filed with the District of Columbia Recorder of Deeds two forged Certificates of Satisfaction, purporting to release the WMC liens on the Portal property.

  • Then, on January 13, 2006, Ransom sold the Portal property to Talbott for $1,110,000. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan in the amount of $750,000 from Fremont Investment and Loan. Talbott executed a deed of trust on the property, granting Fremont a security interest in the property. Ransom received a check in the amount of $515,034 from the settlement.

  • Less than a month later, on February 2, 2006, Ransom again “sold” the Portal property to Talbott, this time for $1,250,000, despite the fact that Talbott was already the legal owner.

  • The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan of $890,000 from First National Bank of Arizona. Talbott executed a deed of trust on the property, granting First National Bank of Arizona a security interest in the property. Ransom received a check in the amount of $801,280 from the settlement.

For the U.S. Attorney press release, see Owners of Property Management Company Plead Guilty To Defrauding Clients, Mortgage Lenders and Government (Scheme Involved More Than $2.8 Million).

Tuesday, January 24, 2012

Illinois AG Tags Two With Criminal Charges For Allegedly Promising To Save Homeowners From Foreclosure By Peddling Sale Leaseback Schemes

From the Office of the Illinois Attorney General:

  • Attorney General Lisa Madigan announced the arrest of a Chicago man who stole more than $350,000 in a wide-reaching mortgage fraud scheme in which they promised to help desperate homeowners avoid foreclosure.

  • Madigan said defendant Warren Jackson, 41, of Chicago, was arrested late Thursday and is being held in Cook County jail. Yolanda King, 46, of Chicago, who was also charged in the scheme, was arrested on Jan. 10. Both were formally indicted earlier this month.

  • Jackson was charged with one count of organizing a continuing financial crimes enterprise, four counts of financial institution fraud and three counts of theft by deception, one count of criminal mortgage rescue fraud, one count of forgery by delivery, and one count of false impersonation of an attorney. King was charged with two counts of financial institution fraud and one count of forgery by delivery.


  • Jackson and King are facing six to 30 years and four to 15 years in the Illinois Department of Corrections, respectively.

  • Madigan alleges that Jackson orchestrated two mortgage-related schemes involving Chicago homeowners. King was charged for her role in helping Jackson perpetuate these schemes. The first scam targeted homeowners at risk of foreclosure, promising to save their homes by negotiating lower mortgage payments. Madigan alleges that after collecting upfront fees, Jackson failed to negotiate or perform any services on behalf of the homeowners, placing their victims at even greater risk of foreclosure.

  • In the second scheme, called a sale-leasebackto purportedly save the homeowner’s home,(1) Jackson used straw buyers to purchase homes from distressed homeowners, sometimes falsely promising them that they could pay rent for a year and then could potentially buy back the property. Jackson also tricked homeowners into unknowingly selling their homes to straw buyers by leading them to believe that they were signing paperwork for a new loan to help them avoid foreclosure.

  • Madigan alleges that Jackson used the sale-leaseback scheme to transfer title from homeowners to straw buyers for the purpose of stripping the remaining equity from the home. Individual homeowners lost from $70,000 to $150,000 of equity in their homes as a result of the schemes.(2)

For the Illinois AG press release, see Madigan: Two Chicago Con Artists Arrested In Criminal Mortgage Scheme.

(1) For more on this type of foreclosure rescue ripoff, see:

(2) At one time, many in state and local law enforcement (particularly those with untrained eyes and who were otherwise clueless in handling 'semi-sophisticated' white collar crimes - for some, anything more complex than investigating a 'rubber check' case is 'semi-sophisticated') once passed on prosecuting these sale leaseback equity stripping ripoffs that under the flimsy pretense that these cases were merely 'civil matters.'

Over the last couple of years, it's been primarily the Feds (U.S. Attorneys, FBI, Secret Service, etc.) that have been bringing prosecutions in these equity stripping ripoffs. However, as this story reflects, more and more state court prosecutors now appear to be stepping up to the plate and showing some guts by bringing criminal charges against these scammers. See, for example:

Disgraced Ex-Lawyer Gets 15 Years For Role In At Least 102 Chicago-Area Sale Leaseback-Peddling, Equity Stripping Ripoffs

From the Office of the U.S. Attorney (Chicago, Illinois):

  • A former Chicago lawyer was sentenced to 15 years in federal prison for engaging in mortgage and bankruptcy fraud schemes involving a so-called “mortgage bailout” program that purported to “rescue” financially distressed homeowners but instead tricked victims into relinquishing title to their homes and declaring bankruptcy.

  • The defendant, Norton Helton, participated in at least 102 fraudulent mortgage bailout transactions and more than a dozen fraudulent bankruptcies in 2004 and 2005. He was ordered to pay more than $3.2 million in mandatory restitution to various lenders and financial institutions that were not repaid by the borrowers or fully recovered through subsequent foreclosure sales, federal law enforcement officials announced [].

  • Helton, 50, of Atlanta and formerly of Chicago, was sentenced Wednesday by U.S. District Judge Samuel Der-Yeghiayan in federal court in Chicago. He was ordered to begin serving his sentence in June.

  • Helton and two co-defendants, Charles White and Felicia Ford, were convicted of multiple fraud counts following a five-week trial in June and July 2010. White, 43, of Chicago, was sentenced late last year to more than 22 years in prison, while Ford, 39, of Chicago, is awaiting sentencing next month.

  • White owned and operated Eyes Have Not Seen (EHNS), which purported to offer insolvent homeowners mortgage bailout services that would prevent them from losing their homes in foreclosure by selling their property to third-party investors for whom the defendants fraudulently obtained mortgage financing.

  • The victim-clients were assured they could continue living in their homes rent and mortgage-free for a year while they attempted to eliminate their debt and repair their credit.

  • EHNS misled clients concerning the operation of the purported program. In particular, victim-clients were not told that their homes were, in fact, being sold to third parties and that ENHS would strip their homes of any available equity at the time of sale, which EHNS did.

  • Instead, ENHS clients were told that they were only temporarily transferring their homes and would preserve their ownership rights.

  • Helton was recruited by White to represent ENHS participants at the real estate transactions it orchestrated. The victim-clients typically met Helton for the first time at the closings at which they sold their homes. Helton worked to placate individuals who questioned the program and to dissuade them from retaining independent legal advice.

  • He received above-market legal fees for appearing at closings at which he did little more than guide victim-clients through the paperwork that sold their homes with EHNS receiving all of the profits from the sale. Helton further used the ENHS real estate closings to recruit prospective bankruptcy clients, informing them that bankruptcy would serve as a component of the bailout program. Helton subsequently filed more than a dozen bankruptcy petitions for victim-clients that omitted any reference to their recent EHNS property sales.

  • In addition to participating in ENHS’s bailout program, Helton attempted to implement his own mortgage bailout program through Diamond Management of Chicago, Inc., a foreclosure avoidance company comparable to EHNS. Helton marketed Diamond’s bailout program and his bankruptcy services as part of a “credit repair” system.(1)

For the U.S. Attorney press release, see Former Chicago Lawyer Sentenced to 15 Years in Prison for Mortgage Fraud Involving At Least 102 Fraudulent “Bailouts.”

(1) For more on this type of foreclosure rescue ripoff, see:

Feds Continue 'Pinch' On F'closure Rescue, Sale Leaseback Peddlers As Pair Get Tagged w/ Indictment In Equity Stripping Racket That Fleeced Homeowners

In Norfolk, Virginia, The Virginian Pilot reports:

  • Two Chesapeake men have been indicted by a Norfolk federal grand jury on nine charges related to an alleged foreclosure rescue scheme, federal officials announced Thursday. The charges against Philip Villasis, 41, and Ray D. Gata, 56, include conspiracy to commit wire fraud, wire fraud and money laundering.


  • From November 2006 until February 2011, “Villasis and Gata engaged in a foreclosure rescue scheme that defrauded homeowners and mortgage lenders,” according to the indictment as cited in the government announcement.

  • Villasis allegedly “promised homeowners that he could save them from foreclosure by arranging a sale of their homes to Gata and other straw borrowers.”

  • Homeowners were promised that they could stay in their homes after the sale and pay rent, and Villasis would resell their homes back to them once they weremore financially secure,” according to the government’s announcement.

  • Villasis and Gata profited from this scheme by taking all of the proceeds from the home sales,” it states.

  • The pair are alleged to have “executed false closing documents that showed the proceeds of the sale going back to the homeowners when, in fact, the proceeds were going to Villasis, Gata and the other straw borrowers.”

  • Homeowners, according to the government, “received nothing from the sale of their homes while Villasis, Gata and others received in excess of $170,000.”

  • In almost every case, Villasis required the homeowners to pay more in rent to cover a larger mortgage, and he ultimately evicted these homeowners from their homes,” the government’s release states.(1)

For the story, see Two Chesapeake men indicted in alleged foreclosure scam.

For the U.S. Attorney (Norfolk, Virginia) press release, see Chesapeake Men Indicted for Foreclosure Rescue Scheme.

(1) For more on this type of foreclosure rescue ripoff, see:

F'closure Sale Bid-Rigging Outfit Gets Break On Paying Fines After Guilty Plea For Sherman Act Violations; Aid To Feds Helps Bag 2 Add'l Confederates

In Mobile, Alabama, the Press Register reports:

  • A local company will pay a $250,000 fine plus restitution for rigging real estate foreclosure auctions, a federal judge ruled this afternoon. U.S. District Judge Ginny Granade endorsed the deal worked out between prosecutors and attorneys for M&B Builders. Company co-owner Harold H. Buchman, who appeared on behalf of the corporation [], faces 6 months in jail and a $21,141 fine at his sentencing hearing in April.

  • Defense attorney Donald Briskman said in an interview that M&B Builders will take a hit. “It’s not a positive effect, but it’s something they are going to work towards satisfying,” he said.

  • Buchman, along with his firm and Allen K. French pleaded guilty in October to violating the Sherman Anti-Trust Act in a scheme dating to May 2001.


  • The company’s fine could have been worse under advisory sentencing guidelines, which laid out a range of more than $300,000 to more than $500,000.

  • But attorneys from the U.S. Department of Justice recommended the lower amount because of the company’s cooperation, which officials indicated led to the prosecution of 2 other real estate investors or participated in the fixed auctions.(1)

  • In addition to French, Bobby Threlkeld Jr., pleaded guilty in December.

For more, see Mobile company fined $250,000, ordered to pay restitution for fixing foreclosure auctions.

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, generally.

(1) The more confederates a 'squealing' defendant can 'throw under the bus', the better the break on the plea deal he can expect a prosecutor to cut (and a judge might approve).

  • "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." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon phenomenon some refer to as the 'race to the courthouse' (or 'race to the prosecutor's office') that breaks out among participants in an 'about-to-collapse' criminal conspiracy).

Monday, January 23, 2012

Brooklyn Judge Voids Foreclosure Forbearance Agreement; Sneaky Bankster Slicked Unrepresented Homeowner Into Signing One-Sided Deal

In Brooklyn, New York, Reuters reports:

  • A Brooklyn judge has voided what she deemed an "unconscionable" forbearance agreement that required a mortgage holder to drop his legal defense against foreclosure proceedings in exchange for reduced payments that the judge said provided him "little, if any benefit."

  • In a ruling dated January 6, Kings County Supreme Court Justice Marsha Steinhardt slammed the forbearance agreement struck between Brooklyn homeowner Jaime Arroyo and the company that bought his mortgage, Rossrock Fund II LP, saying the company and its counsel took advantage of the unrepresented homeowner to draft a one-sided deal.


  • "An examination of the terms of the agreement and the circumstances of its execution reveal a transaction which is ostensibly designed to ease the foreclosure process in favor of the plaintiff while affording virtually no benefit to Arroyo," Steinhardt wrote. "Under these circumstances, the court finds that the subject agreement is unconscionable and employs its equitable powers to rescind the agreement."

  • Sara Manaugh, a staff attorney in the Foreclosure Prevention Project at South Brooklyn Legal Services,(1) said she had rarely encountered an agreement "so plainly calculated to divest the homeowner or his or her home."

For more, see Brooklyn judge rescinds unfair forebearance deal.

For the court ruling, see Rossrock Fund II LP v Arroyo, 2012 NY Slip Op 50048(U) (NY Sup. Ct. Kings Cty., January 9, 2012).

(1) South Brooklyn Legal Services is a non-profit law firm that provides a range of legal advocacy and information for low-income people in Brooklyn. SBLS is a program of Legal Services NYC.

Mich. Woman Gets Up To 12 Months, Ordered To Pay $36K+ Restitution For Running Loan Mod Racket; Employee Gets 45 Days To Be Served Three Days/Week

In Allegan County, Michigan, The Allegan County News reports:

  • A former Fennville woman will spend up to one year in jail after defrauding several dozen homeowners through her foreclosure rescue company. Tonya Raisbeck, 36, stood before Allegan Circuit Court Judge Margaret Zuzich Bakker on Friday, Jan. 13, and said she knew people questioned her intentions.


  • Through her business, Mobile Modification Inc., Raisbeck accepted payments from homeowners in exchange for what they were told would be help in adjusting the terms of their mortgages; many faced foreclosure and were hoping to keep ownership of their homes. Raisbeck has been self-employed since 1999 and had been a real estate agent.

  • Representing the state attorney general’s office was Scott Teter, who said 43 victims contacted his office; he said 35 lost their homes. The attorney general’s office announced the charges against Raisbeck and her company and eight others in July 2010.


  • Bakker sentenced Raisbeck to one year in Allegan County Jail with credit for one day served for false pretenses, $1,000 to $20,000. Raisbeck will be on probation for five years and, in addition to court costs and fees, will also have to pay $36,417 in restitution.

  • She received similar, concurrent sentences for one other count of false pretenses and one count of conspiracy to commit false pretenses.

  • Bakker also sentenced Raisbeck to concurrent sentences of 90 days jail with credit for one day served for each of five violations of the Credit Services Act.

  • Bakker said Raisbeck economically destroyed her victims. “The extensive, ongoing victimization that’s phenomenal,” Bakker said. She said property crimes like this can trigger a chain of events that can ruin families. “To take away a family’s funds...results in so many ongoing effects; they can lose their mortgage, their home, their job, sometimes their spouse—sometimes their lives (through suicide).”


  • Also on Jan. 13, Bakker sentenced Raisbeck’s one employee at Mobile Modification to 45 days jail to be served Tuesday through Thursday at Allegan County Jail. Jessica Sheldon, 32, pleaded no contest to one count of false pretenses in exchange for the prosecution dropping the remaining charges. Sheldon was also sentenced to three years probation and must pay court costs and fees along with $6,559 in restitution, joint and several with Raisbeck.

For the story, see ‘One-woman crime wave’ sentenced.

Lawsuit: Bankster Played "Hide & Seek" With Debtors, Judges, Others In Battling Tens Of Thousands Of Bankrupt Homeowners; Action Seeks Class Status

In Los Angeles, California, Courthouse News Service reports:

  • JPMorgan Chase routinely fabricated documents to deceive bankruptcy judges, going so far as to Photoshop documents to "create the illusion" of standing "in tens of thousands of bankruptcy cases," according to a federal class action.

  • Lead plaintiff Ernest Michael Bakenie claims that Chase's "pattern and practice of playing 'hide-and-seek' with debtors, judges and other bankruptcy players" bore rich fruit: that Chase secured motions for relief of stay and proofs of claim in 95 percent of its cases.

  • "Through the use of fabricated assignments, endorsements and affidavits that purport to transfer deeds of trust, notes and the rights to all monies due under the terms of tens of thousands of non-negotiable promissory notes (the 'MLNs'); Chase has demonstrated a pattern and practice of playing 'hide-and-seek' with debtors, judges and other bankruptcy players," the complaint states.

For more, see Chase Accused of Brazen Bankruptcy Fraud.

For the lawsuit, see Bakenie v. JPMorgan Chase Bank, et al.

Recent Michigan Appeals Court Foreclosure Ruling Expected To Affect Similar Suits Impacting On Lenders' Failure To Record Mortgage Assignments

In Shelby Township, Michigan, The Oakland Press reports:

  • A Shelby Township couple won a state Court of Appeals precedent-setting ruling that stops a foreclosure and allows them for now to keep their home that was once worth $650,000.

  • Husband-and-wife Eui H. and In Sook Kim gained a reversal of a Macomb County judge’s dismissal of their lawsuit against JP Morgan Chase Bank. The couple won because the bank failed to publicly record its interest in the mortgage after buying it from another bank, and before the sheriff’s sale.

  • The Kims’ attorney, Flint-based Bernhardt “Chris” Christenson, said the “for publication” decision likely will affect the outcome of other similar lawsuits and force banks to reveal it owns a mortgage before it can foreclose on a property. “Somebody will know who’s foreclosing on their house,” Christenson said. “Things (mortgages) change hands so frequently nowadays. You could be talking to one bank and they aren’t even the ones that have the mortgage.”

  • JP Morgan’s acquiring and interest in the property should have been recorded with the Macomb County Register of the Deeds, Christenson said. He said the bank likely avoided recording its interest to save filing costs, which could add up to a large sum of money if done on thousands of foreclosures.

For more, see Precedent-setting ruling that stops foreclosure could help other homeowners.

For the court ruling, see Kim v. JP Morgan Chase Bank, No. 302528 (Mich. Ct. of App., January 12, 2012).

Sunday, January 22, 2012

Another Homeowner Driven Into F'closure Over Misapplied Mortgage Payments; Bankster Refuses To Admit Error Until Media, State AG, US Senator Intervene

In East Pennsboro Township, Pennsylvania, The Patriot News reports:

  • Citimortgage received a $20 billion government bailout on grounds it’s “too big to fail.” Fortunately, Citi isn’t too big to admit a mistake — although not fast enough to impress Myrna Hoke, whose daughter nearly lost her East Pennsboro Twp. home over an error by Citi.

  • "It’s been unbelievably stressful,” said Hoke, 65, who spent months untangling the situation and sweated until minutes before a planned Jan. 4 sheriff’s sale.

  • Hoke’s daughter, Christina May, went through a divorce and bankruptcy several years ago, and Hoke and her husband took over the $880 monthly mortgage.

  • In 2010, Citi mistakenly applied mortgage payments to bankruptcy-related legal costs that had already been paid and declared the mortgage in default over missed payments.

  • Hoke didn’t know anything was amiss until a foreclosure noticed arrived in late 2010. She spent months figuring out what went wrong, proving the mistake to Citi, and fending off sheriff’s sale of the house where her daughter and three grandchildren have lived for 11 years.

  • It took the involvement of the Pennsylvania Attorney General’s Office, which helped obtain a refund of the five mortgage payments Citi had mistakenly applied to legal fees.

  • Still, in order to reinstate the mortgage and call off a sheriff’s sale scheduled for early December, Citi wanted an immediate lump sump payment covering all missed payments since Citi stopped accepting them in 2010, plus late charges. That amount eventually topped $14,000.

  • Citi turned down requests from The Patriot-News to discuss the situation. Hoke said she wouldn’t pay the fees, on the grounds the situation was Citi’s fault. Hoke, who has a mortgage of her own, further argued Citi should tack the missed payments onto the end of the loan, rather than require her to pay so much at once.

  • Citi called off a sheriff’s sale scheduled for early December at the last minute as Hoke frantically argued her case and The Patriot-News also pressed for information.

  • After reading about the situation in The Patriot-News, the staff of U.S. Sen. Bob Casey Jr. also contacted Citi, which eventually said it would waive late charges and accept $12,481 to reinstate the mortgage and call off the sale, now scheduled for Jan. 4.

  • But Citi wanted the money immediately, and told Hoke that, otherwise, the home would be sold on Jan. 4. Hoke had to cash in an investment and use much of the Christmas bonus of her husband, an electrician who supervises trades workers at a nuclear power plant in Mississippi, where he spends much of the year.

  • After agreeing on the $12,481, Citi called almost daily to ask when she would pay, Hoke said. She said she wired payment to Citi late on Friday, Dec. 31 — just before the New Year’s holiday. But she said she was surprised to call the Cumberland County Courthouse early on Jan. 4 and find the house still scheduled for sheriff’s sale.

  • That prompted another round of panic for Hoke, along with calls to Citi and Casey’s office. It turned out Citi had tried to inform the Cumberland County sheriff’s department by fax the previous day, but the fax hadn’t gone through, said Jody Smith, the chief deputy. However, a lawyer who arrived to represent Citi on several properties said Citi had informed her the sale of the East Pennsboro home was called off.

  • Meanwhile, Hoke said she was appalled by such behavior on the part of a company that received so much taxpayer aid. She contends Citi should have taken more aggressive steps to resolve the problem, and removed the threat of sheriff’s sale as soon as it realized its error caused the foreclosure “They should have said, ‘We were totally wrong, we have to do what we need to do to stop this foreclosure and do what we need to do to correct this,’” she said.

  • In responding to one of The Patriot-News’ requests to discuss the matter, a Citi spokesman said it would require Hoke’s permission. But after Hoke granted permission, the spokesman said it was Citi’s policy not to discuss such cases.

For the story, see East Pennsboro Township woman nearly loses her home over error made by Citimortgage.

Foreclosure Sweatshop Operator Takes Scolding From Judge Over Sloppy Work; Ordered To Continue Personal Court Appearances Until Each File Is Corrected

In Poughkeepsie, New York, the New York Post reports:

  • Take that, Steven Baum! The 50-year-old lawyer, who owns New York’s largest home-foreclosure mill, made a rare appearance in a courtroom [recently] — and was promptly ripped by a Bankruptcy Court judge frustrated by his firm’s sloppy work.

  • Baum, whose eponymous firm has filed more than 25,000 foreclosure actions across the state over the past three years — many of which have been attacked for containing bogus documents — was lectured by Judge Cecilia Morris to correct his way of practicing law.

  • How many times do I have to tell you, you didn’t do it right,” Morris said during the afternoon hearing. “Do you not understand ‘do it right’?” she asked Baum.

  • Morris had ordered Baum to appear in her courtroom personally after a steady stream of his firm’s lawyers mucked up several of the 180 foreclosure cases he has before the New York federal courts.

  • The judge accused Baum of “slowing down the court” by failing to properly transfer his cases to other lawyers as he prepared to shutter his Buffalo-area firm. [...] “Please don’t make me angry,” Morris warned.

  • The hearing in the Poughkeepsie courtroom was attended by several bankruptcy lawyers who have sparred with Baum in the past, who said afterwards that they were there just to see Baum sweat.


  • Apparently not happy with his responses to questions, Morris ordered Baum to make repeat appearances in her courtroom until “each file” is corrected. “I’m telling you, you are walking on bad faith,” Morris said.

For the story, see He’s losing his appeal (Judge gives foreclosure king the Baum’s rush).

State AG Jumps Into Utah Homeowner's Foreclosure Case; Moves To Intervene, Contesting Adverse Court Ruling Holding Federal, Texas Law Trumps Local Law

In Salt Lake City, Utah, KCSG-TV Channels 14/16 report:

  • The Utah Attorney General has moved to intervene in a case filed by St. George attorney John Christian Barlow on behalf of Utah homeowner Garry Franklin Garrett in which senior Federal Judge David Sam ruled the Bank of America's foreclosure arm, ReconTrust Company, N.A. is operating under the National Bank Act regulated by the Office of the Comptroller of the Currency, is a trustee under the Texas law where ReconTrust is located, rendering Utah Code 57-1-21(3) inapplicable.

  • The Attorney General's Motion to Intervene and Memorandum of Support of Intervention written by Assistant Attorney General Jerrold Jensen said, "Utah is a non-judicial foreclosure State and that most real estate foreclosures in Utah never see the inside of a courtroom."

  • The pleading says that "in the last couple of years, as the number of foreclosures has escalated, there has been an increasing interest among homeowners who believe they have been wronged by their lender or mortgage servicer to challenge these foreclosure actions in court."

For more, see Utah Attorney General Moves to Intervene in Federal Judge's Ruling Utah Foreclosure Trustee Law Inapplicable.

Homeowner In Foreclosure Has Possession Of Vacated Home Swiped Out From Under; Cops Refuse Help, Say It's A Civil Matter

In Bakersfield, California, KGET-TV Channel 17 reports:

  • A viewer e-mailed 17 News, saying squatters have taken over his southwest Bakersfield home. He says no one will help get them out. "I was very naive, foolish you might say. I wanted to help them," said Juan Medina.

  • Juan Medina is packing up for a new life in Tehachapi. A messy divorce in 2008 left him with a house payment he could no longer afford. While trying to modify his loan, his southwest Bakersfield home was empty. Two months ago, he says he returned and discovered people living there.

  • "I went to the garage and the garage was locked with a different padlock, went to the front door and my keys did not work. I felt really bad for them. I had heard so many families get in trouble because they had been lied to. My first thought wasn't to kick them out. My first thought was to help," explained Medina.

  • The family told Medina they have a rental agreement with a local relator, but has yet to show him the document. Medina showed 17 News the deed to his home. He is the legal owner. But, he is trying to turn it over to the bank to avoid foreclosure.

  • However, that can't happen because Medina says the bank requires it to be empty and clean. "There's an unaccountable amount of dogs and cats running through the house, in the backyard, large dogs. It smells like feces and urine inside," he continued.

  • We followed Medina to his home. A man told us his sister lives in the home and has a rental agreement. "The cops were here yesterday and she showed cops. It has nothing to do with you guys," he said. A woman inside the home wouldn't come out and no one showed us the rental agreement. "I just want to speak to you for two minutes," Medina told the woman through the door. "Serve me a 30-day notice. Please leave me alone," she responded.

  • Medina said Bakersfield police officers came to the home, but they couldn't kick the family out. "Unless we can prove that the proclaimed renter knew that the situation was fraudulent from the very beginning, our hands are tied. It's a civil situation," said Sgt. Mary DeGeare, Bakersfield Police Department.

For the story, see 17 News investigation: Man says squatters have taken over his home.