Saturday, February 18, 2012

Use Of Arrest Warrants By Bill Collectors To Squeeze Consumers For Cash Probed By Some Lawmakers, Government Regulators

Lexology reports:

  • Some lawmakers and regulators are probing the use of arrest warrants by the U.S. debt collection industry to recover money owed by borrowers behind on loans, credit card payments, and other bills.

  • Warrants are generally issued for contempt of court after the borrower fails to comply with a court order to repay a debt or to appear in court. Although U.S. statistics are unknown because many courts do not track the number of warrants issued by offense, judges interviewed by the Wall Street Journal reported that the number of borrowers threatened with arrest has vastly increased since the beginning of the financial crisis.

For more, see Lawmakers investigating use of arrest warrants against debtors (may require subscription; if no subscription, TRY HERE; or GO HERE - then click the appropriate link for the story).

Suit: Bill Collector For 'America's Stagecoach To Hell' Falsely Reports Suicide Threat By 85-Year Old Debtor; Leads To 'Forced Trip' To Emergency Room

In Lane County, Oregon, ABC News reports:

  • When Anne Sessions, 85, of Lane County, Ore., fell behind in her credit card payments, she said an aggressive debt collector harassed her to the point of calling the police with a phony claim she threatened to commit suicide, costing her $1,055 in medical bills. Now she is suing for $250,000 over the incident, which led to an involuntary hospital visit.

  • Sessions fell behind on her credit card payments in 2010 after unanticipated financial setbacks, potentially facing foreclosure. As she survived on a fixed income from Social Security and a "very modest" pension, she was strapped.

  • Wells Fargo began calling Sessions "numerous times" and threatened legal action if she did not make payments, the suit said. [...] Sessions says she worked out a payment plan with Wells Fargo, and the calls had stopped until February 2011, when a Wells Fargo employee called her on a Sunday.


  • Within 30 minutes of the call, Sessions said three police officers arrived at her home and told her that the employee had called 911 and reported she had made "multiple suicide threats" during the collection call, requesting police be sent to her home.

  • The police then "forcibly" took her to the local hospital emergency room, "over her objections," then told the hospital personnel that she was suicidal. She was held at the hospital for "several hours," and seen by a doctor and the hospital's crisis staff. She was released after they reported they felt "strongly" she was not a threat to herself or others, the suit states.

  • One week later, she received a bill from the hospital for $712, and a few days later $343 for physician charges. Without medical or other insurance, she now owed $1,055 for the unnecessary hospital visit, in addition to her credit card debt.

  • When she called Wells Fargo to complain, she asked to speak to the same employee and his co-worker told her he was not there. When Sessions told the co-worker about the 911 call, "the employee laughed loudly and plaintiff could hear her calling out something like 'Hey Chuck ... that woman you called the police on got taken to the hospital by the police,'" according to the suit.

  • Sessions said she heard "loud laughter in the collections center and the female employee proceeded to congratulate defendant Gajewski on how effective his call had been in a way that [Sessions] was certain to hear."

  • She said the incident caused her extreme anxiety, embarrassment, depression, feelings of worthlessness, and loss of sleep, among other effects, causing non-economic damages in the amount of $250,000.

For more, see Debt Collector Allegedly Makes Bogus 911 Suicide Call on Elderly Oregon Woman.

Cleveland Negligently Boards Up Local Man's Home; Leaves Victim With Unaffordable Repairs Costing Thousand$; City Says It's Not Liable To Undo Mess

In Cleveland, Ohio, WKYC-TV Channel 3 reports:

  • Steven Saric has lived in his home on Vineyard Avenue for seven years. One morning last July, he pulled into his driveway to find nails in his windows, his gutters stripped from the sides and his doors boarded up.

  • The City of Cleveland received a complaint that a door was swaying open and grass was overgrown. Saric is paid up on taxes and was working to make improvements to the property, he says. When a city inspector went out to look, he deemed the home vacant and a demolition company was hired to board it up.

  • Building and Housing Director Ed Rybka says to stay atop of the foreclosure crisis, the city boards up thousands of vacant homes for security reasons. The boards hammered into Saric's home were a mistake, Rybka said. "To respond to a report that a property is open and vacant -- a danger, an attractive nuisance for kids or others -- we take that very seriously," Rybka said. "In this case our inspector went out, but didn't come to the proper conclusion."

  • Saric says the damage has cost him thousands of dollars and he can not afford the repairs. "A mistake was made. I'm not at fault. This has ruined my life for seven months already. Who is liable?" Saric said.

  • Not the City of Cleveland. Interim Law Director Barbara Langhenry says that because the boarding up of structures is a "governmental function," the city is immune from liability. Saric's only option at this point is to appeal to the Moral Claims Commission.

  • The commission meets three times a year and hears claims that they, by law, are not liable for. The commission includes the mayor, city council leaders and the law director. If the Commission deems the claim valid, the citizen will be reimbursed. Even if his claim is approved, it could still be a few months before Saric is reimbursed.

Source: Cleveland: City mistakenly boards up man's home.

Friday, February 17, 2012

Pastor Pleads No-Contest To Charges He Targeted Congregation Members In Loan Modification Ripoffs, Home Improvement Scam

In Sacramento, California, The Sacramento Bee reports:

  • An Elk Grove man has entered a no-contest plea in a case involving the illegal collection of upfront fees for loan modification services. Rodney Andrews, 57, pleaded no contest to two felony violations of embezzlement, two felony violations of theft by false pretenses, one felony violation of diversion of construction funds and one felony violation of unlawful use of personal identifying information, according to a Sacramento County District Attorney's Office news release.

  • At the time he committed the offenses, Andrews operated a company known as Andrews Investment Group, which offered loan modification services. He also was a pastor at the Comeback Christian Church, where he solicited congregation members and low income property owners to refinance their homes, lower their mortgages or stall out their foreclosures, officials said.

  • Andrews collected upfront fees in violation of a statute passed by the California Legislature to prevent individuals from preying on vulnerable home owners facing foreclosure or mortgage payments they couldn't afford. He also failed to provide proper notifications as required by law, did not provide the services he promised and did not use the funds he obtained for the represented purposes, according to the news release.

  • In addition, Andrews obtained from one home owner money that was supposed to be used on a project to improve her home. Andrews represented to the victim that he had a business known as Low Cost Construction. Officials said there is a company by that name, but it is owned by another contractor.

  • Andrews hired a subcontractor to remodel the property but paid him with insufficient funds checks. The subcontractor stopped working before the project was completed. Andrews never finished the remodel, leaving the victim's home in an inhabitable condition. Officials said Andrews spent the money and did not use it on the project.

Source: Elk Grove man pleads no contest to illegal conduct in loan modification.

Indiana AG Continues 'Civil' Assault On Alleged Loan Modification Rackets With 'Non-Criminal' Charges Brought Against Four More Outfits

In Indianapolis, Indiana, Legal Newsline reports:

  • Indiana Attorney General Greg Zoeller announced four lawsuits on Wednesday against mortgage rescue companies that allegedly scammed Indiana consumers out of thousands of dollars.

  • LA Strattan Law Firm and Strategic Alliance of California, National Financial Services of Texas and United Capital of Maryland allegedly violated Indiana's consumer protection laws by taking more than $4,300 from customers.


  • The lawsuits allege that the companies also violated the Deceptive Consumer Sales Act, the Home Loan Practices Act, the Mortgage Rescue Protection Fraud Act and the Credit Services Organization Act. The defendants allegedly failed to register a $25,000 surety bond with Zoeller's office to conduct business officially as Indiana foreclosure consultants.

  • The four lawsuits bring the total number of actions taken by Zoeller's office against foreclosure rescue companies up to 95 since 2006.

For the story, see Ind. AG sues mortgage rescue companies.

Loan Mod Scam Artist Dodges Major Jail Time; Gets Year & Day For Ripping Off Homeowners Of Monthly Payments After Making 'Home-Saver' Promises

In Fort Lauderdale, Florida, Broward/Palm Beach New Times reports:

  • Marlon Baugh's federal court documents are practically a how-to guide on money laundering and mortgage fraud. The guy was a scam artist. He worked in Hallandale Beach for National Foreclosure Centers, a business that also went by the name Home Savers.

  • He helped run a scheme in which he promised to help families whose homes were in danger of foreclosure. Then he'd bail and let the homes go into foreclosure anyway -- not before taking $800 to $2,000 per month from his victims.

  • Federal mail-fraud penalties max out at 30 years in prison and a $1 million fine when financial institutions are involved. Late last week, though, Baugh switched his plea to guilty. His sentence? Just a year and a day in federal prison.

  • Baugh's scheme was two-pronged.


  • If you need to supplement your fraud income, you might want to consider writing a wildly overpriced ebook too: Since the investigation started several years ago, O'Donnell said Baugh "turned his live around the past four or five years" and has several books in the works. While we can't say for sure it's the same guy, there's a "Marlon Baugh" in the Fort Lauderdale area pimping himself online as a "nationally known mortgage expert" and selling a book of "insider load modification secrets" for 50 bucks.

For more, see Marlon Baugh Fakes Documents, Bails on Scam Mortgages, Gets a Single Year in Prison.

Scammer Gets Six Years In $300K Loan Counseling Ripoff; Insurer Stiffs Unwitting Housing Agency On Damage Claims Relating To Thefts Of Victims' Cash

In Buffalo, New York, The Buffalo News reports:

  • The woman who earned their trust and then turned around and betrayed it is going to federal prison. Lori J. Macakanja, the former West Side housing counselor who stole from clients and then gambled away their money, was sentenced Thursday to six years in prison.

  • Macakanja admitted stealing nearly $300,000 from 136 people who came to her looking for help. Many of them were on the verge of losing their homes to foreclosure.


  • Macakanja worked as a counselor at HomeFront, a West Side housing agency, and over the course of 18 months in 2009 and 2010 defrauded the very people she was supposed to help.


  • Outside the courtroom Thursday, Macakanja's victims reacted with mixed feelings to her sentence. They're pleased that she's spending time in prison but wonder if they'll ever see a penny of the restitution she was ordered to make as part of her sentence.


  • Investigators found no evidence that HomeFront, as an organization, was intentionally involved in the fraud. Nevertheless, victims believe it needs to ensure that former clients are compensated.

  • HomeFront has stopped short of accepting responsibility for the thefts but sued its insurance carriers in state court after they denied its initial claims. So far, the insurance companies are balking, leaving the victims to wonder if they'll ever get their money back.

  • "This case is a tragedy for many people," James P. Harrington, a lawyer for HomeFront, said in a statement. He said the organization is addressing a number of claims filed by victims in Buffalo Small Claims Court as part of its suit against the insurance carriers. "Other victims may want to follow this procedure or contact their attorneys about it," he said.

For more, see Counselor who stole gets six-year sentence.

Thursday, February 16, 2012

Scam Artist To Spend 180 Days In Pokey, Five Years Probation For Hijacking Vacant Homes In Foreclosure, Renting Them Out To Unwitting Tenants

In Fresno, California, KFSN-TV Channel 30 reports:

  • The man behind a foreclosure scam gave a public apology in court, then went to jail for ripping off dozens of people desperate for homes. Police uncovered the scam when a homeowner found someone living in her house. Prosecutors say Sam Haley is a scam artist who's still trying to scam people. But Haley claims he's just a military veteran suffering from post-traumatic stress disorder.

  • Haley was expecting leniency in court because of his military service, and the mental troubles he says he's suffering. But while the judge acknowledged Haley's PTSD, he said that wasn't what caused Haley to commit grand theft.


  • The foreclosure crisis has crushed thousands of Valley families, but Sam Haley found opportunity in the troubles of others. The former real estate agent lost his license to practice in the business in 1979, but using his insider's knowledge, he found a way to profit on lost homes.

  • Haley found empty homes in the foreclosure process and rented them out to desperate families. Police caught him in 2008, but only after dozens of people gave Haley money. Four years later, the 69-year-old is headed to jail for his crimes, despite a plea for leniency because of some serious health issues.


  • The judge sentenced Haley to 180 days in jail, plus five years of probation. He also ordered Haley to pay the victims more than $35,000 in restitution.

For the story, see Sam Haley heads to jail in foreclosure scam.

Spokane-Area Man Pinched For Allegedly Running Rental Scam On Craigslist; Pocketed Upfront Cash Promising Lease-To-Own Deals On Houses He Didn't Own

In Spokane, Washington, Northwest Cable News reports:

  • Spokane Valley Property Crimes Detectives arrested 35 yr. old Eric Pittsley of Newman Lake, WA on February 1st. The investigation started when several victims called in to report being “scammed” by Pittsley. During the investigation, numerous other victims reported similar instances of being swindled out of money by Pittsley. To date, there have been at least seventeen different victims.

  • Some of the reports were from victims who would meet Pittsley and were told he was an auto repo man who could get various makes and models of vehicles.


  • Numerous other victims were scammed when they responded to a Craigslist ad that Pittsley had posted regarding homes for rent or homes he was offering on a Rent-to-Own program.

  • Pittsley did not own any of the homes he would advertise for rent. There were times when he would contact a victim directly from a Craigslist ad they themselves had posted whereby they were seeking a place to rent.

  • Pittsley would tell the victims he was a property manager who had several homes they could look at in different neighborhoods throughout Spokane County. He would give addresses of homes that were being lived in and some of the homes were in various stages of foreclosure.

  • He would tell the victims not to “bother” the existing tenants and to call him back once they looked at the homes if they were interested. When they called him back, he would tell them he is waiting for the existing tenants to move out. He would meet them at various locations such as hotels or coffee shops to get the victims to complete an application he had printed out and collect a small application fee.

  • Pittsley would later call them back and advise them they have been approved to move-in and that he needed to meet with them again to get the 1st month’s rent and a security deposit. Sometimes he would ask for additional months of rent be paid up front and would sweeten the deal by telling them, if they paid for several months in advance, they could get one month free. Many of the victims paid him in cash or money orders and often would get a signed lease agreement and a house key.

For the story, see Spokane man arrested in Craigslist scam.

Vacant F'closed Home Snatcher Pleads Not Guilty To Burglary, Filing False Instruments After Allegedly Recording 50+ False Deeds, Then Renting Them Out

In San Diego, California, KGTV Channel 10 reports:

  • A woman accused of filing more than 50 false deeds on foreclosed homes that didn't belong to her and then scamming people out of thousands of dollars by renting out the houses pleaded not guilty on Tuesday to 61 felony charges, including burglary and filing a false instrument.

  • Dianne "Harmony" Brown, 45, was ordered held in lieu of $300,000 bail. If convicted of all charges, she faces nearly 40 years in state prison, prosecutors said.

  • "This defendant was taking advantage of the fact that families have lost their homes to foreclosure and are now sitting vacant," District Attorney Bonnie Dumanis said. "Our Economic Crimes Division worked closely with the Chula Vista Police Department to investigate this scam and hold the defendant accountable for her actions."

  • Prosecutors said Brown targeted more than 30 homes in South Bay, claiming to be the owner of fake businesses called Prudent Constituents Association and Peerless Property Management.

  • After recording the false deeds, the defendant would cut off Realtor lock boxes, break into the homes and have them re-keyed before renting them to victims, prosecutors said. Brown allegedly listed the homes on Craigslist and collected tens of thousands of dollars in rent during the course of the scam.

For more, see Woman Accused In Alleged Housing Scam Pleads Not Guilty (Dianne 'Harmony' Brown Faces 61 Felony Counts, Including Burglary, Filing False Instrument).

Adverse Possession-Claiming Squatters Gain Attention In Colorado; Media Outlet Probe Finds At Least A Dozen Homes Occupied Under Dubious Circumstances

In Denver, Colorado, CBS 4 reports:

  • People are moving into vacant houses under foreclosure in some cases they are then sold or leased to unsuspecting buyers. A 4 On Your Side Investigation has uncovered at least a dozen homes in which this appears to have happened. In some cases the people living in the homes claim they have a right to the property under a little known law called Adverse Possession.

  • One such property is a luxury home in Castle Rock assessed at nearly $1 million. No one legally bought it or rented it while it was available as a short sale and under foreclosure, but 4 On Your Side Investigator Rick Sallinger found people living in it.

  • The Douglas County Sheriff’s Department had opened an investigation. A sign on the window of the property claims the house now belongs to Sergio Hernandez. Police have now arrested Hernandez on charges related to the illegal occupation of the Castle Rock residence. He is accused of burglary, attempted theft, criminal trespass and violation of bond.

  • Hernandez had already been arrested on charges of trespassing and filing false documents on another home in Larkspur.


  • 4 On Your Side started looking into this, when Aurora neighbors of Larry Asbery called to say someone had “sold” his house without his knowledge. Asbery had been in the hospital for several month, when he got out of the hospital, strangers were living in his home.

  • Asbery called Aurora police to try to get the people out of his house, but finally had to turn to a lawyer to file for an eviction. The Adams County Sheriff’s Department carried out the eviction order at the beginning of January. “I thought it was my house and all I had to do was come down and say, ‘This is my house. Get out.’ And it didn’t turn out that way,” Asbery told CBS4.

  • Asbery won back his house, but unfortunately passed away recently from natural causes.

For more, see Scheme To Steal Homes Far Reaching Across Colorado Communities.

Wednesday, February 15, 2012

Utah Foreclosures By BofA-Controlled Confederate To Be Governed By Texas State Law: Federal Trial Judge; State AG Seeks To Intervene

In Salt Lake City, Utah, The Salt Lake Tribune reports:

  • A federal judge has ruled that Texas laws, and not those of Utah, govern foreclosures by a unit of Bank of America. The ruling by U.S. District Judge Ted Stewart is the second to go that way in federal courts in this state, and the Utah Attorney General’s Office is asking to intervene to protect Utah’s ability to set its own laws regarding foreclosures.

  • Stewart handed down the decision this week in dismissing a proposed class-action lawsuit against BofA and its foreclosure arm, ReconTrust, as well as an attorney who performs the foreclosures in Utah for the bank. Stewart adopted the reasoning of Judge David Sam, who reached the same conclusion in a ruling handed down in December.

  • But Deputy Utah Attorney General John Swallow said his office intends to defend the state law that says only Utah attorneys and title companies with offices in the state can act as a trustee and foreclose on property.

  • Stewart held that ReconTrust performs its duties related to foreclosures in Texas, where it is headquartered. That means that under the National Bank Act that state’s laws govern foreclosures in Utah, the judge wrote.

  • "Foreclosures are personal, and foreclosure laws should be set by the state where the foreclosure is actually done," Swallow said. "We jealously guard our right to dictate how foreclosures work in Utah. I think they’re dead wrong when they try to rule otherwise."

For the story, see Federal judge: Texas law governs Utah foreclosures (State A.G. seeks to intervene in case to preserve state’s standing).

Out-Of-State Homeowner Calls Cops After Returning Home, Finding Grenade-Bearing Squatters, Pig On Premises; Nearby Homes Evacuated, Pair Arrested

In Miami, Florida, WPLG-TV Channel 10 reports:

  • A bomb squad was called to a Miami neighborhood Tuesday evening after a man found squatters with drugs, a handgun, grenades, and a pig inside his home.

  • Miami police said an out-of-state homeowner arrived to his Miami home at 2021 SW 37th Ave. and discovered two people, who police said were squatting, inside. When police arrived, they found cocaine, marijuana, a handgun, ten grenades, and a pig inside the house.

  • Nearby homes were evacuated after the discovery, police said. At 7:40 p.m., the bomb squad went into the home to remove the grenades. Police weren't sure if they grenades were live. The grenades are being taken to a lab for analysis.

  • Southwest 37th Avenue was closed while police investigated. Traffic was backed up for about four hours near the scene. The two suspects, a man and a woman in their mid-30s, were arrested. Both face weapons and narcotics charges, and could also face federal charges. Their names were not released.

Source: Police find squatters, grenades in home (Police: Squatters had drugs, handgun, 10 grenades, pig).

Squatting, Adverse Possession-Claiming Crackpot To Get Boot From '$16 Home'; Can Either Pay $8,900 Bond To Appeal Court Ruling Or Take A Hike: Judge

In Flower Mound, Texas, WFAA-TV Channel 8 reports:

  • Kenneth Robinson felt comfortable laying claim to an abandoned house, but he wasn't comfortable in court. He was a no show Monday in Denton County court, and the bank won its case for eviction. "The court has ruled in the bank's favor. Mr. Robinson has six days to appeal, but he must pay an $8,900 — approximately $8,900 bond — to appeal," said David Orvand, attorney for Bank of America.

  • Bank of America said it took ownership of the house in Flower Mound through a foreclosure sale in January. It says it paid more than $400,000 for the home that Robinson claimed with a $16 affidavit of adverse possession.

  • His original claim set off a frenzy of cases in North Texas. Eight of Robinson's followers were charged with theft or burglary in Tarrant County. Robinson does not face charges, but Tarrant County constables continue their investigation.

  • "Anybody that goes around teaching about this — what we consider to be a crime — in frauding, whether it is a bank or homeowner, it is definitely a concern to us," said Constable Clint Burgess.


  • In July, Robinson told News 8 foreclosure and eviction were a possibility for all adverse possession claims, but he expected a settlement from the bank for what he called "maintaining the property."


  • Justice of the Peace J.W. Hand told attorneys for the bank that unless Robinson pays the $8,900 in what amounts to rent, the judge will end Robinson's adverse possession with a final eviction next week.

For more, see Flower Mound squatter avoids hearing, faces eviction.

Home Hijacking Suspect Pinched For Commandeering Vacant Homes, Renting Them Out To Unwitting Tenants

In Destin, Florida, the Northwest Florida Daily News reports:

  • A 40-year-old man has been charged with racketeering after he rented out vacant homes without the owners’ authorization, according to the Okaloosa County Sheriff’s Office.

  • William ‘Bill’ Richard Slattery III of Destin posed as a real estate agent to rent out at least five homes in Destin since last Nov. 23, according to his arrest report. The homes [...] either were abandoned and in foreclosure or were vacant, with the owners in other cities.

  • One renter said she met Slattery at the home on Harborwind Court and that he changed the locks and took her inside to look around before she signed a lease, the Sheriff’s Office reported. The home had been vacant for a long time and its owners were filing for bankruptcy.

  • Slattery was renting the homes for between $900 and $1,200 a month, his arrest report said. He was arrested Jan. 27 and charged with five counts of racketeering and five counts of posing as an unlicensed real estate broker, according to the report. He was released from the Okaloosa County Jail the next day. Sheriff’s Office spokeswoman Michele Nicholson said deputies are still investigating the case. Additional charges are pending.

Source: Man charged with renting vacant homes illegally.

Georgia Grand Jury Indicts Five In Foreclosed Home-Hijacking Scam; Racketeering, Forgery, Burglary Among Allegations

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

  • A Cobb County grand jury indicted five people accused of breaking into soon-to-be foreclosed homes then illegally renting them to unsuspecting tenants. John Harris, the CEO of New Life Granted, and four others were named in the racketeering, forgery and burglary indictments.

  • Detectives said the investigation lasted more than four months and involved ten different metro Atlanta counties. They believe there are more than 20 victims in the case, including renters and home owners.

  • "These individuals were basically taking over homes in various states of foreclosure and renting them out without the permission of the owners," said Cobb County Police Sgt. Larry White. "It's been a very, very manpower intensive investigation but we're very happy where we are at this point."

  • In October, Harris told Channel 2's Craig Lucie that what his company was doing was perfectly legal. "I think it's ethical to do anything legal," Harris said. Police arrested him shortly afterwards. "I can't say that a reasonable person would think that what he was doing was legal," said Sgt. Harris.


  • Harris remains in the Cobb County Jail. A judge ordered him and the others held on $75,000 bond.

For the story, see: Man accused of renting foreclosed homes indicted.

Tuesday, February 14, 2012

Attorney Pinched Again For Alleged Role In Another Dubious Real Estate Deal; Accused Of Pocketing Homebuyer's $75K Escrow Deposit From Trust Account

On Staten Island, New York, the Staten Island Advance reports:

  • A real estate lawyer already facing prosecution in a Brooklyn mortgage fraud scheme now stands accused of stealing a $75,000 down payment from a Staten Island woman who was selling her house.

  • Prosecutors say Jarrett Haber, 45, of Hicksville, had already been indicted in Brooklyn -- alongside a disgraced rabbi who would later be accused of arranging two murders -- when he helped himself to the money in 2010. Haber was representing a friend of his who was selling her Bentley Street home for $475,000, and the buyer had placed $75,000 in an escrow account as a down payment, prosecutors allege.

  • On July 29, 2010, the date of the closing, the money wasn't there, authorities allege. Haber told investigators the money was stolen from him, a law enforcement source said. Nevertheless, the source said, "The money came out of the account that he was in control over."

  • A grand jury returned an indictment against Haber last month, charging him with second-degree grand larceny and second-degree criminal possession of stolen property.(1)


  • Haber had been arrested back in Feb. 2010, accused of running a mortgage fraud scheme alongside Rabbi Victor Koltun of Brooklyn. That case is still pending.(2) [...] The two are accused of taking out a $225,000 mortgage on the home of a Brooklyn woman who was living in a nursing home. She got a call in October 2009 demanding payment on the mortgage, prosecutors said, which came as a surprise because she and her husband had owned the home since 1975, and hadn't had a mortgage on it since 1987.

  • Investigators found out that Haber and Koltun fraudulently used several properties to secure a $225,000 mortgage, which they used to pay down a debt from another real estate scam in Long Island.

For the story, see Real estate lawyer charged in 2010 fraud scheme now accused of stealing $75,000 from Staten Island woman.

(1) To the extent Haber is found guilty or otherwise responsible for the 'disappearance' of the homebuyer's $75,000 deposit, the victim may have some recourse if Haber fails to cough up and return the missing cash that a court may order he (Haber) pay in the form of restitution.

The Lawyers’ Fund For Client Protection Of the State of New York exists to protect legal consumers from dishonest conduct in the practice of law in the state, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, and to promote public confidence in the administration of justice in the Empire State. It attempts to secure these goals by, among other things, reimbursing client money that is misused in the practice of law.

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

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

(2) See New York Daily News: 3 lawyers and correction officer among 12 charged with real estate fraud.

Closing Attorney Gets Year & Day For Role In Escrow Account Ripoffs In Real Estate Deals; Losses Total $2.8M+; Title Insurer Left Holding $1.7M Bag

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

  • U.S. District Judge William M. Nickerson sentenced Stephen J. Troese, Sr., age 72, of Davidsonville, Maryland, [] to a year and a day in prison followed by three years of supervised release for wire fraud arising from a scheme to defraud lenders and a title insurance company of $2,838,231.


  • According to his plea, Troese practiced as a title attorney and was variously an owner, part owner, or the controlling figure of a number of title companies that did business in the Baltimore, Annapolis and Washington, D.C. metropolitan areas, including Troese Title Services, Inc. (Troese Title), located in Camp Springs, Maryland; and [other entities].


  • Troese Title and Troese/Hughes, which Troese formed in 1994 with co-defendant James Kevin Hughes, shared a joint escrow account for the receipt and disbursement of funds in connection with real estate closings carried out by both title companies.


  • By 2005, the joint escrow account had developed a shortfall of more than $2 million, partly as a result of several major employee errors and embezzlements. [...] In approximately 2006, the real estate industry started to slow, resulting in a steep decline in business for Troese Title and Troese/Hughes, further aggravating the problem of the shortfall in the escrow accounts.

  • In 1994, Troese had refinanced his home, claiming that the $655,000 loan would be used to pay off the previous first and second mortgages. In fact, the mortgages were not paid off. In February 2006, Troese again refinanced his home, representing that the loan of $964,533.26, would be used to pay off the two existing mortgages. Again, the mortgages were not paid off, but instead the funds were used to help cover the existing shortfall in the Troese Title escrow account.

  • Troese concealed the fact that the mortgages were not paid off by continuing to make the monthly mortgage payments on all three loans. The resulting loss to Chicago Title was $937,183.47, which it was required to pay to satisfy the two previous mortgages and pass clear title to the new lender.

For more of Troese's handiwork, and the entire U.S. Attorney press release, see Owner of Troese Title Companies Sentenced to Prison In $2.838 Million Mortgage Fraud Scheme.

Couple Face Foreclosure After Falling For Mortgage Payment Hijacking Scam; Signed Up For $1700/mo Bogus 'Auto-Pay' Deal While Home Loan Went Unpaid

In Portland, Oregon, KATU-TV Channel 2 reports:

  • A year and a half worth of mortgage payments were stolen from a local couple in a phishing scheme. he money went to an offshore bank account operated by someone pretending to be a Bank of America employee. A person calling herself Lisa McNaughton sent the Schelhaas family an automatic payment agreement that looked legitimate but it wasn't from Bank of America at all.

  • The family bought the home 18 years ago and refinanced about five years ago. A couple years later they got a letter in their mailbox asking if they wanted to start automatic withdrawals.

  • The family thought it was making payments on their Southeast Portland home after agreeing to those electronic transfers. More than $1,700 was coming out of their checking account per month.

  • And then in May 2010 they received a foreclosure notice posted on their front door that they were 18 months behind on payments. They were shocked and said they had every reason to believe the payments were being made."Yeah, no reason not to," said Dan Schelhaas. "Like I say when the letter is coming on Bank of America letterhead, with our account number, property address and all of that kind of stuff."

  • Schelhaas said he knows the $31,000 did not go to Bank of America but to someone living in a foreign country. He and his wife learned recently their home will go on the auction block March 30. According to a Bank of America representative, the bank normally communicates by mail and phone and the contact is more frequent as someone becomes more delinquent.

For the story, see Family gets ripped off in mortgage phishing scam.

Title Agency Abruptly Shuts Down As Criminal Probers, Auditors From State Regulator, Insurance Underwiter Look For Million$ In Missing R/E Escrow Loot

In Farmington, New Mexico, The Daily Times reports:

  • Several million dollars appear to be missing from title and escrow accounts at New Mexico Title Co., a police detective said Tuesday, as the investigation widens into possible wrongdoing at the Farmington business. "It's going to be a pretty large and complex investigation," said Farmington Police Sgt. Brandon Lane.

  • The New Mexico Division of Insurance is auditing the business with the help of the title company's insurance underwriter, First American Title Insurance Co. A report is expected as soon as this week. Once that report is completed, Farmington police will determine if criminal charges are warranted, Lane said. Investigators are working to discover the extent of funds missing, but the initial investigation suggests it could be more than $10 million, he said.


  • On Friday, the state's Financial Institutions Division obtained a restraining and enforcement order to prevent documents at the business from being destroyed or altered. First American Title Insurance won a similar court order giving auditors access to the business. In its complaint seeking the court order, the Santa Ana, Calif.-based insurance company said its auditors were barred from entering the business and examining documents on Feb. 1.


  • New Mexico Title Co. closed abruptly on Jan. 30 when it stopped accepting title work and interim manager Quentin Smith sent employees home. For days afterward, a phone message said that the business was closed. Customers began to stream in to inquire about their escrow accounts and the status of their real estate transactions.

  • Several New Mexico Title Co. customers told The Daily Times they had not received expected disbursements from escrow accounts, or that their payments to escrow accounts were not properly credited.

For more, see Millions missing: Investigation widens into NM Title Co.

Thanks to Deontos for the heads-up on the story.

Suit: Unwitting Man Loses Home To F'closure After Scammer Sells Residence Out From Under Him, Allows Subsequently-Obtained Mortgage To Go Into Default

In Madison County, Wisconsin, The Madison/St.Clair Record reports:

  • An Alton man claims he lost his home after a notary authenticated a fraudulent signature that conveyed his home to another owner.

  • Stephen R. Evans filed a lawsuit Jan. 20 in Madison County Circuit Court against Robert Albert Burns, David C. Davis and Nicholas P. Terry. In his complaint, Evans alleges Burns notarized a quit claim deed on Aug. 30, 2005. The deed conveyed Evans's home [...] in Alton to Terry. Evans's signature on the deed, however, was fraudulent, according to the complaint.

  • Evans claims he was not aware of the quit claim deed until May 2008 when a foreclosure judgment was entered on his property. Because of the deed, Evans lost ownership of his home resulting in a loss of more than $50,000 but less than $75,000, the complaint says.

  • Evans blames Burns for contributing to the loss of his home, alleging Burns negligently failed to perform his duties and failed to obtain identification for Evans before notarizing his signature.

  • "The defendant knew or reasonably should have known that the plaintiff was not present before him on August 30, 2005, or any other date and did not sign the purported Quit Claim Deed," the suit states.

  • In addition to Burns, Evans names Davis as a defendant, saying he negligently prepared a mortgage on Terry's behalf even though he should have known Evans's signature to be fraudulent. Terry is also named as a defendant because he allegedly forged Evans's signature on the quit claim deed, according to the complaint.

  • In his five-count complaint, Evans seeks a judgment of more than $239,000 but less than $300,000, plus punitive damages, attorney's fees, interest and costs.

Source: Alton man claims he lost home in fraudulent conveyance.

Monday, February 13, 2012

Feds Bag Three More Northern California Real Estate Operators On Charges Of Bid Rigging At Public/Courthouse Foreclosure Sales

From the U.S. Department of Justice:

  • Three Northern California real estate investors have agreed to plead guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced. To date, as a result of the ongoing investigation, 20 individuals have agreed to plead guilty.

  • Charges were filed [] in U.S. District Court for the Northern District of California in Oakland, Calif., against Barry Heisner of Brentwood, Calif.; Dominic Leung of Alameda, Calif.; and Hilton Wong of San Ramon, Calif.

  • According to court documents, for various lengths of time between August 2008 and January 2011, Heisner, Leung and Wong conspired with others not to bid against one another at public real estate foreclosure auctions. Instead, the investors designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County.


  • Heisner, Leung and Wong also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.

  • The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions took place at or near the courthouse steps where the public auctions were held. According to court documents, a forfeiture allegation was also included in the charges against Heisner.

  • The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Contra Costa County public foreclosure auctions at noncompetitive prices.

  • When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.

  • Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.

  • The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.(1)

For the U.S. Justice Department press release, see Three Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 20 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, generally.

(1) According to the press release, [these] charges are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties, Calif. The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Field Office and the FBI’s San Francisco office.

Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit or call the FBI tip line at 415-553-7400.

By the way, by agreeing to plead guilty, these defendants (at least implicitly) have acknowledged that their 'arrangement' at the foreclosure sales was not an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Nationwide Federal/State Robosigning Settlement Not Yet Final?

American Banker reports:

  • More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren't public. The website created for the national settlement lists the document as "coming soon."

  • That's because a fully authorized, legally binding deal has not been inked yet. The implication of this is hard to say. Spokespersons for both the Iowa attorney general's office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court.

  • A representative for the North Carolina attorney general downplayed the significance of the document's non-final status, saying that the terms were already fixed. "Once the documents are finalized, they'll be posted to," the representative said in an email to American Banker.

  • Other sources who spoke with American Banker raised doubts that everything is yet in place.


  • Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.

  • Whatever the reason for the document's continued non-appearance, the lack of a public final settlement is already the cause for disgruntlement among those who closely follow the banking industry. Quite simply, the actual terms of a settlement matter.

  • "The devil's in the details," says Ron Glancz, chairman of law firm Venable LLP's Financial Services Group. "Until you see the document you're never quite sure what your rights are."

For more, see Missing Settlement Document Raises Doubts on $25B Deal.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage:

  • [I]t can't go far enough, because it can't address one of the most confounding problems the banks have created: the millions of properties nationwide that now have "clouded" titles. To put it plainly: Because of these bad titles, property owners can't prove they own the properties they think they bought, and banks can't prove the had the right to sell them.

Banksters' Big Win In Robosigning Scandal: Were America's Prosecutors Outgunned, Wilting Before Prospect Of Battling High-Priced, White Shoe Lawyers?

Rolling Stone columnist Matt Taibbi writes:

  • So the foreclosure settlement is through. A few weeks back, I was optimistic about it – I had been worried that it was going to contain broad liability waivers for all sorts of activities, and I was pleasantly surprised when I heard that its scope had essentially been narrowed to robosigning offenses.(1)

  • However, now that the settlement is finalized, and I've had time to think about it and talk to people who know far more than I do about this, I'm feeling pretty queasy.

  • It feels an awful lot like what happened here is the nation's criminal justice honchos collectively realized that a thorough investigation of the problem would require resources they simply do not have, or are reluctant to deploy, and decided to accept a superficially face-saving peace offer rather than fight it out.

  • So they settled the case in a way that reads in headlines like it's a bite out of the banks, but in fact is barely even that.


  • Really this looks like America's public prosecutors just wilted before the prospect of a long, drawn-out conflict with an army of highly-paid, determined white-shoe banker lawyers. The message this sends is that if you commit crimes on a large enough scale, and have enough high-priced legal talent sitting at the negotiating table after you get caught, the government will ultimately back down, conceding the inferiority of its resources.

For more, see Why the Foreclosure Deal May Not Be So Hot After All.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage.

(1) In his earlier column, Taibbi emphasizes that he is not minimizing the significance of the robosigning scandal with the following observation:

  • Robosigning is not a small offense. It's not a "clerical" issue. It's a mass-perjury issue, a tax evasion issue, a contractual fraud issue, and it's a criminal conspiracy issue (the banks' highest executives were engaged in planning it) and it resulted in millions of errors that resulted in untold numbers of premature foreclosures.

The Top 12 Reasons Why The Nationwide Federal/State Mortgage Settlement Deal Stinks!

From Naked Capital blogger Yves Smith:

  • As readers likely know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen's overview at Firedoglake the best thus far.

  • The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they'll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.

  • The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

For more, including a list of the top twelve reasons why this deal stinks, see The Top 12 Reasons Why You Should Hate the Mortgage Settlement.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage.

Sunday, February 12, 2012

Manufacturer Of Dubious Foreclosure Documents, Ex-Company President Face Criminal Charges Alleging Forgery Of Robosigned Mortgage-Related Documents

The New York Times reports:

  • One of the largest companies that provided home foreclosure services to lenders across the nation, DocX, has been indicted on forgery charges by a Missouri grand jury — one of the few criminal actions to follow reports of widespread improprieties against homeowners.

  • A grand jury in Boone County, Mo., handed up an indictment Friday accusing DocX of 136 counts of forgery in the preparation of documents used to evict financially strained borrowers from their homes. Lorraine O. Brown, the company’s founder and former president, was indicted on the same charges.

  • Employees of DocX, a unit of Lender Processing Services of Jacksonville, Fla., executed and notarized millions of mortgage documents for big banks and loan servicers over the years. Lender Processing closed the company in April 2010, after evidence emerged of apparent forgeries in these documents, a practice now called robo-signing.

  • Chris Koster, the Missouri attorney general, will prosecute the case. “The grand jury indictment alleges that mass-produced fraudulent signatures on notarized real estate documents constitutes forgery,” Mr. Koster said in a statement. “Today’s indictment reflects our firm conviction that when you sign your name to a legal document, it matters.”

  • Mr. Koster said his office’s investigation was continuing. This suggests he may hope to persuade Ms. Brown to cooperate in his investigation of the parent company. If convicted, Ms. Brown could face up to seven years in prison for each forgery count. DocX could be fined up to $10,000 for each forgery conviction.

For more, see Company Faces Forgery Charges in Mo. Foreclosures.

Fannie: 'UBS Peddled Mortgage Packages Loaded With Crappy Loans!'

Legal Newsline reports:

  • Summaries of 24 mortgage loans paint a heart-breaking picture of routine dishonesty that brought down America's house of cards. Conservators of Federal National Mortgage Association filed the summaries in federal court in December, to support a claim that "Fannie Mae" relied on bad information from lenders when guaranteeing packages of loans.

  • "A forensic review of loan files has revealed pervasive failure to adhere to underwriting guidelines," conservators wrote. Conservators wrote that in a random review of 996 loans that UBS Securities packaged, 78 percent were not underwritten in accordance with applicable guidelines.

  • They also wrote that a review of 363 defaults revealed that 99 percent were not underwritten according to guidelines. Fannie Mae sued UBS and other big lenders last year, seeking to recover billions it lost in the mortgage meltdown that started in 2008.

  • Lenders deny responsibility, claiming they didn't know that loan originators loaded mortgage applications with lies. What no one could see a few years ago appears monstrous in hindsight.

For more, see Fannie Mae offers examples of routine dishonesty in its fight against lenders.

Florida Bar Score On Attorney Misconduct In Foreclosure Fraud: Not Guilty: 139; Guilty: 0

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

  • The Florida Bar's investigations into foreclosure fraud by its members jumped 63 percent in the past year, but no disciplinary actions against attorneys have been levied since complaints began to mount in the fall of 2010.

  • The responsibility to hold lawyers accountable for foreclosure misconduct now rests solely with the Florida Bar after the state attorney general's investigation into high-volume foreclosure law firms collapsed this week.

  • Since March of last year, the number of foreclosure fraud investigations of attorneys by the Bar grew from 222 cases to 362. During the same time period, about 130 cases were closed with no findings of fault. There are 229 pending cases.


  • "We're putting a lot of resources into this," Vanstrum said Friday, a day after Florida Attorney General Pam Bondi announced an unfavorable court ruling that effectively shut down her foreclosure mill investigations. "These cases are unique in that it's very widespread, not just in Florida but nationwide."

For more, see Foreclosure lawyer probes left up to Florida Bar.

Florida AG Probe Into Sleazy Foreclosure Mills, Sweatshops Ends With A Dull Thud

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

  • Florida's once-heralded foreclosure mill investigations have fizzled as the attorney general's office has failed to find the right strategy to continue its pursuit and three law firms call for the cases to be dismissed.

  • [Last] week, an attempt to have the Florida Supreme Court weigh in on whether the state has the authority to subpoena the Law Offices of David J. Stern was denied by the 4th District Court of Appeal. The decision effectively ends the investigations into complaints that the firms doctored court paperwork in an attempt to speed foreclosures.

For more, see Florida attorney general's attempt to subpoena foreclosure mills stalls.