Saturday, March 3, 2012

'Insurer Stiffed Me On My Property Damages Claim!' Says Lightning-Victimized Homeowner In Lawsuit

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

  • A woman claims her insurance company failed to pay her an adequate amount for damages caused to her home after it was struck by lightning. Valetta Cartwright filed a lawsuit Feb. 9 in Jefferson County District Court against Texas Farm Bureau Underwriters and Jared Carter.

  • In her complaint, Cartwright alleges her home [...] in Beaumont was struck by lightning on Sept. 29. As a result, a large number of her electronics, including her computer, television, DVD player and hot water heater, were destroyed, according to the complaint. In addition, a pipe burst because of the lightning strike, the suit states.

  • Following the incident, Cartwright submitted a claim to Texas Farm Bureau Underwriters for contents, structural and water damages, the complaint says. The insurance company then sent an adjuster, Carter, to inspect Cartwright's home. It subsequently failed to pay Cartwright an adequate amount for her damages, she claims.

  • Cartwright seeks an unspecified judgment, plus costs, pre- and post-judgment interest and other relief the court deems just.

Source: Woman sues insurer over payment for lightning strike to home.

Operating License Revocation, Foreclosure Force Frail Residents Out From Assisted Living Facilities

In Hayden, Idaho, the Coeur D'Alene Press reports:

  • The operator of the two Autumn Haven assisted living facilities in Hayden has been notified by the state of Idaho that its operating license has been revoked. A bank is foreclosing on the properties and taking them over in March, said Idaho Department of Health and Welfare spokesman Tom Shanahan. The properties will be auctioned off by the bank, he said.

  • Twenty residents had been living at the facility when the bank began foreclosure action. About half have already moved out. The bank contacted the state in December to notify officials of the foreclosure.

  • Shanahan said an official from the department visited the facilities last week, and determined all residents currently living there have at least one option for alternative housing. "Many are probably in the process of moving out," Shanahan said.

For the story, see Assisted living facility loses license (Tenants moving out; bank forecloses on two Hayden facilities).

Foreclosed Homeowner Charged With Felony Theft After Appliances, Fixtures, Etc. Found Missing From Home One Day After Move-Out

In Oakdale, Minnesota, the Oakdale Patch reports:

  • The owner of an Oakdale home was charged with stealing more than $1,000 worth of items from a home that she had agreed to vacate after it fell into foreclosure. Jennifer L. Schiemann, 32, had agreed to move out of the home by June 5 of last year as part of a settlement agreement, according to the Washington County District Court complaint.

  • The man who was taking ownership of the home (he was not identified in the court complaint) took photographs there on June 1, which showed that all of the fixtures and appliances were present, the complaint says.

  • On June 5 Schiemann called him and asked for one more day to move out of the home, which he said was OK, the complaint says. On June 6, when he went to the home, he discovered that a doorbell, fan and light kit, deadbolt, storm door, light fixtures, chandelier, thermostat, doorknobs, kitchen and bathroom cabinet drawers, a refrigerator, a shower head and other items totaling $3,699 in replacement value had been stolen from the home.

  • Schiemann is charged with felony level theft, which carries a maximum sentence of five years in prison and $10,000 in fines.

Source: Homeowner Charged With Stripping House Before Vacating (Woman allegedly stole items including a refrigerator, light fixtures and even doorknobs from the home).

Friday, March 2, 2012

Florida Congressman/Senate Candidate To Face Questions Over 'Double Homestead' Tax Exemptions On Two Homes; County Official: Claim Probably OK

In Lee County, Florida, The Tampa Tribune reports:

  • Lee County Property Appraiser Ken Wilkinson said Wednesday he probably will investigate whether Rep. Connie Mack and his wife, Rep. Mary Bono of California, are entitled to two separate homestead exemptions in their home states, although his "first blush" opinion is that they are.

  • "My impression is they'll probably be all right," Wilkinson said. Wilkinson said his senior staff members will discuss the matter []; he expects the decision will be to conduct an investigation.

  • He said the office likely will ask Mack and Bono for financial documentation, possibly including tax filings and records of their homestead properties, mortgage and insurance bills.

  • Asked about an anti-fraud posting on his office's website that appears to suggest the dual exemptions aren't allowed, Wilkinson responded, "Semantics is an interesting science; the wordage could be better on the site."

  • Mack has a homestead exemption on his Fort Myers condo, and Bono has one on her Palm Springs home, even though the Florida Constitution says a single "family unit," which usually includes a married couple, can have only one.

  • Mack's attorney has said it is appropriate because the two are financially independent of each other.(2)

For more, see Mack could face scrutiny over exemption.

(1) Florida law and prior opinions issued by the state Attorney General appear to make pretty clear that, provided they otherwise qualify, there is nothing necessarily illegal or otherwise improper about a husband and a wife each claiming a homestead exemption on separate residences ('double homesteads') (while formal opinions issued by the Florida Attorney General are not binding on any court, the Florida case law set forth therein is). See:

  • Florida Administrative Code Rule 12D-7.007(7):

    "A married woman and her husband may establish separate permanent residences without showing “impelling reasons” or “just ground” for doing so. If it is determined by the property appraiser that separate permanent residences and separate “family units” have been established by the husband and wife, and they are otherwise qualified, each may be granted homestead exemption from ad valorem taxation under Article VII, Section 6, 1968 State Constitution. The fact that both residences may be owned by both husband and wife as tenants by the entireties will not defeat the grant of homestead ad valorem tax exemption to the permanent residence of each."
  • Florida Attorney General Opinion 75 Op. Att'y Gen. 146 (1975), Husband And Wife Maintaining Separate Residences May Both Qualify For Homestead Exemption;
  • Florida Attorney General Opinion 05 Op. Att'y Gen. 60 (2005), Homestead Exemption -- separate residences and homestead exemption. Art. VII, s. 6, Fla. Const.
  • Wells v. Haldeos, Case No. 2D09-4250 (Fla. App. 2d DCA, October 22, 2010).

(2) While the fact that the two spouses are financially independent of each other certainly adds weight to the legitimacy of the claim, the rule is clear that said financial independence is not required. Florida Administrative Code Rule 12D-7.007(7):

  • "A married woman and her husband may establish separate permanent residences without showing “impelling reasons” or “just ground” for doing so. [...]"

Ohio AG: Contractor Grabbed Cash Upfront, Failed To Deliver Promised Work; Homeowners Say Vendors Either Never Showed Up Or Installed Leaky Windows

From the Office of the Ohio Attorney General:

  • Ohio Attorney General Mike DeWine [] announced a lawsuit against basement window seller Best Choice Industries LLC, operating as Best Choice Egress Windows, for multiple violations of Ohio consumer law, including failure to deliver.


  • In complaints filed with the Ohio Attorney General’s Office, consumers say they paid the company for windows they never received, or that the company installed windows that leak when it rains. In some cases consumers paid in full or made large down payments, but never heard from the company again.


  • The lawsuit charges the business and its owner Daniel Perley with multiple violations of Ohio’s Consumer Sales Practices Act, including failure to deliver, providing shoddy services, making misrepresentations about its services, and violating the Deposits Rule. It also charges the business with violating the Home Solicitation Sales Act by failing to provide notice of consumers’ right to cancel. The lawsuit seeks injunctive relief, consumer restitution, and civil penalties.

For the Ohio AG press release, see Attorney General DeWine Sues Columbus Window Company for Failure to Deliver.

For the lawsuit, see State of Ohio v. Best Choice Industries LLC.

Ohio AG: Contractor Pocketed Thousand$ In Upfront Payments From Homeowners For Roof Improvements, Then Performed Either No Or Substandard Work

From the Office of the Ohio Attorney General:

  • Ohio Attorney General Mike DeWine [] announced a lawsuit against Hamilton-based roofing company Salyers Complete Contracting LLC for multiple violations of Ohio consumer law, including failure to deliver.


  • In complaints filed with the Ohio Attorney General’s Office, consumers report paying Salyers Complete Contracting $1,350 to $13,000 to install, repair, or replace their roof. After making the payment, consumers said the business either did no work at all or did a poor job.

  • The lawsuit charges Joshua Salyers and Salyers Complete Contracting LLC with multiple violations of Ohio’s Consumer Sales Practices Act, including failure to deliver, performing shoddy work, making misrepresentations, and falsely stating work was covered by a warranty. In the lawsuit, the Attorney General seeks injunctive relief, consumer restitution, and civil penalties.

For the Ohio AG press release, see Attorney General DeWine Sues Roofing Company for Failure to Deliver.

For the lawsuit, see State of Ohio v. Salyers.

Thursday, March 1, 2012

Granite State Scam Peddler Saves Butt With 'Squeal Deal'; Gets 6 Months House Arrest, Leaving Victimized Homeowners To Pocket $0 Restitution

In Nashua, New Hampshire, the Nashua Telegraph reports:

  • When Tony DiSessa says “unbelievable,” he doesn’t sound all that disbelieving. Prosecutors say DiSessa is one of dozens of New Hampshire homeowners – or former owners – who were duped by a conspiracy that purported to save their homes but actually stripped their homes of equity and saddled the homes in thousands of dollars in extra debt.

  • One of the three people who have pleaded guilty to taking part in the scheme, Richard Winefield, was sentenced to probation and restitution in federal court recently.

  • That was my kids’ home. They grew up there,” DiSessa said of his former home at 22 Apple Blossom Drive in Londonderry. “Basically, it makes me want to cry. It’s pretty pathetic.”

  • Winefield, a licensed real estate agent, pleaded guilty to one count of aiding and abetting in mail fraud in U.S. District Court and, after several delays, was sentenced to three years of probation and six months of house arrest, and ordered to pay restitution, according to court documents.

  • He is still allowed to work in real estate with approval from his probation officer, according to the terms of his supervision.

  • Two other people – Walter Bressler and Sadie Stanhope Ng – have also pleaded guilty and are scheduled to be sentenced in April, according to court documents.

  • Winefield was part of a long-running criminal conspiracy whose members defrauded lenders and homeowners across New Hampshire, Assistant U.S. Attorney Michael Gunnison told Judge Steven Mc-Auliffe. Winefield joined the scheme, already in progress, in 2006, Gunnison said.

  • Winefield has since cooperated with investigators, which was a factor in his sentence, Gunnison said.(1)

  • The scam targeted a number of homeowners in addition to DiSessa. “The prospective investigation focuses on more than 50 transactions involving New Hampshire homeowners,” Gunnison said. That isn’t much solace to DiSessa, who moved his family into a condominium in Londonderry after losing his home in 2007.

  • I feel like the homeowners who were trying to save their homes totally got screwed,” he said. “I blame the federal government for not looking out and trying to help the homeowners.”

  • Homeowners won’t see any of the $407,500 in restitution Winefield was ordered to pay. That money will be paid to Citibank, First Franklin Division of National City Bank and Fannie Mae, according to court documents. Bressler and Ng are also liable for that amount, according to the documents. If Winefield had to pay the restitution himself, at the court-ordered amount of $300 a month, it would take about 113 years to pay off.

  • I’ll never recover from this, financially or emotionally,” DiSessa said. “My credit rating is just through the floor.”

For more, see Conspiracy duped homeowners, stripping equity and saddling them with debt.

Go here for the court documents on Richard Winefield's sentencing.

(1) "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 'race to the prosecutor's office' that breaks out among participants in an 'about-to-fall-apart' criminal conspiracy).

Trio Pinched In Alleged R/E Fraud; Racket Purportedly Peddling Deals In F'closed, Tax-Distressed Properties Used To Pocket Cash From Duped Investors

In Miami, Florida, Miami New Times reports:

  • It was an Only-In-Miami scam first reported by New Times. Three women promised local and out-of-state investors luxurious homes in foreclosure at super awesome discounted prices by claiming they had inside sources at the Miami-Dade County Clerk's Office that could get them the properties before going to auction.

  • They also claimed they could secure tax certificates for homes with delinquent property taxes. Ayda Young, Yohany Garcia, and Zoraida Abreu collected $2.4 million from at least 10 victims.

  • But in reality, the women never had any rights to the homes and just stole the money, according to an multi-count indictment announced by the Miami-Dade State Attorney's Office [...].

  • The trio, and a fourth accomplice, Johnny Bou-Nassar, have been criminally charged with racketeering, grand theft, forgery, and criminal use of personal information.

For more, see Ayda Young and Cronies Go Down For Pulling a $2.4M Foreclosure Scam.

"Amazing Opportunity" In Detroit Real Estate Peddled To European Investors Nothing More Than 'Motown Money Pit' Of Looted Homes, Squatters, Tax Bills

In Detroit, Michigan, The Detroit News reports:

  • The sales pitch resonated during the depths of the recession: Detroit's dirt-cheap housing represented "an amazing opportunity" and "an ethical investment." So said brochures sent to European investors by Assetz International, an English firm specializing in international real estate investments, whose chief executive often is quoted in the British media. The sales pitches said the houses would be renovated, thanks to an alliance with Home Depot, and "quickly" filled by low-income residents.

  • But now at least a dozen overseas investors say their more than $2 million in investments have become a trans-Atlantic money pit. They are left with empty, unrepaired houses in Detroit and have tried to convince local law enforcement officials to take action. To date, none have.

  • Several investors said they have compiled evidence to show as many as 30 investors and 60 Detroit properties are involved in the alleged scam.

  • "It's ruined my life," said Les Young, 53, a disabled British military veteran, who bought two homes for $90,000 in July 2010 that are in foreclosure. He has spent an added $12,000, evicting a tenant and for other costs. "These were the investments meant to allow me to live a basic life. Now, I can't even afford all my medicine."

  • Assetz International blames British resident Mark Demby and local businessman Tom Smith, who was supposed to renovate the houses, for the problems. Smith said in an email through his lawyer that Demby is to blame. A Swiss couple have filed a lawsuit in Wayne County Circuit Court against Nuevo Skye/NSUK, a firm with offices in Detroit and England run by Demby.


  • The investors contend they are left with property tax bills, squatters and looted homes, according to the lawsuit and information provided to the Wayne County Prosecutor's Office.

  • At least 11 of the 13 houses for which the investors provided addresses appeared to be empty when The Detroit News viewed them during the past month. Between 400 and 600 Detroit properties were sold to European investors since 2008, said Stuart Law, chief executive of Assetz International.

For more, see Foreign investors upset by Detroit home sales.

Wednesday, February 29, 2012

NJ Trial Court Ruling Slams Foreclosure Rescue Operators With $470K Bill For Predatory Sale Leaseback-Peddling Racket Targeting Deep-Debted Homeowners

In Union City, New Jersey, The Jersey Journal reports:

  • Two former Union City firms and two former city residents have been ordered to pay $470,000 in fines and restitution for defrauding struggling homeowners through deceptive mortgage foreclosure "rescue" schemes, officials said [].

  • "These defendants promised struggling homeowners help, but in the end only helped themselves," said state Attorney General Jeffrey S. Chiesa of PSRE Holding Company, Property Solutions, Edward Toledo and Raymond Vega. "For their callous exploitation of people in need, they are now, appropriately, being held accountable," said Chiesa.

  • The defendants typically contacted homeowners in foreclosure shortly after their homes were auctioned off and within the 10-day period the homeowners could keep the home by paying outstanding liens.

  • The defendants promised to save the homes by paying off the mortgages within the 10-day period and they promised to help the victims get financing that would allow them to keep their homes.

  • In this way, the defendants were able to buy the homes for the amount owed on the mortgage, usually far lower than what the properties would have sold for. As a result, the victim lost the right to keep the difference, which in one case was more than $150,000, officials said.

  • The defendants would then enter into a sale-leaseback agreement with the victims, giving them a chance to repurchase their homes on very unfavorable terms. Consumers who entered these agreements were able to remain in their homes for a period, but the arrangement typically did not last.

  • In some cases the monthly use and occupancy payments made by the victims were higher than the mortgage payments they had not been able to afford. In the end, three victims in the state's case either vacated or were evicted by the defendants -- even when they had remained current with the higher monthly payments.

  • In several cases, the defendants made false sworn statements that the victims had failed to make any of their use and occupancy payments, officials said.

Source: 2 men, Union City businesses fined for $470,000 in mortgage foreclosure rescue scam, authorities say.

For the New Jersey Attorney General press release, see Attorney General Announces $469,500 Mortgage Fraud Trial Decision (Defendants Must Pay Civil Penalties to State, Restitution to Consumers).

Two Nabbed In Alleged Schemes Taking Upfront Cash From Homeowners Seeking Foreclosure Help, Investors Looking For Distressed Real Estate Deals

In Westminister, California, The Orange County Register reports:

  • Two women arrested Wednesday morning have been charged with stealing more than $2 million from victims in what is described as a real-estate scheme targeting Vietnamese Americans who were investing in foreclosed properties or those in the process, authorities said.

  • Loan Thituong Nguyen, 43, of Westminster and Lynn Eichenberger, 42, of Chatsworth were each charged with 15 felony counts of grand theft, two felony counts of money laundering, and one felony count of conspiracy to commit grand theft with sentencing enhancements for property loss of more than $1.3 million, aggravated white collar crime over $500,000, and money laundering of more than $1 million.

  • Nguyen, a real estate broken who managed Suncoast Mortgage and Suncoast Investment Realty, faces one additional felony count each of forgery and the false recording of documents.


  • Prosecutors accused the women of conspiring to defraud 17 investors using two different schemes, between August and December 2009.

  • In one, Loan Thituong Nguyen is accused of soliciting investors interested in properties in foreclosure. Nguyen would claim to have investment opportunities of foreclosed properties and would take 50 percent of the cost of the homes upfront from the victims, prosecutors said.

  • In the second, prosecutors say, Nguyen collected 50 percent of the mortgage balance from the victims who were in foreclosure with the promise of fixing the foreclosure and reducing the loan payments, prosecutors said. The victims borrowed money from friends and relatives in order to pay Nguyen.

For more, see 2 charged in $2 million real-estate fraud (The women were arrested Wednesday morning and are accused of targeting Vietnamese Americans).

For the Orange County District Attorney press release, see Two Women Charged With $2 Million Real Estate Investment Fraud Scheme Targeting Vietnamese-Americans.

Cops Bag Two In Alleged Mortgage Refinance Scam Involving Use Of Forged, Fraudulently Notarized Deeds Of Trust To Pocket Cash

From the Office of the Ventura County, California District Attorney:

  • The felony complaint charges Pena with two counts of grand theft and one count of money laundering. Pena is also charged with excessive taking enhancements for stealing over $65,000 in one transaction, and stealing over $200,000 in a second transaction. Pena is also charged with an aggravated white-collar crime enhancement for having stolen more than $100,000 while committing two or more related felonies.


  • The felony complaint charges Gil with three counts of forgery and two counts of fraud related to a deed of trust.


  • The charges arose out of a fraudulent real estate transaction that closed escrow in 2005 concerning a home located at 4855 Penrose Avenue in Moorpark. Pena used a straw borrower to obtain two mortgage loans totaling over $500,000 in the course of refinancing the debt on the Penrose Avenue property. After the loans funded, Pena took the excess proceeds from the refinance transaction and caused a portion of these monies to be deposited into a financial institution.

  • Gil forged the signatures of multiple individuals involved in this real estate transaction and fraudulently notarized signatures on deeds of trust that were recorded at the Ventura County Recorder's Office.

Go here for the Ventura County DA press release.

Tuesday, February 28, 2012

Garden State Duo Strike Plea Deal In Advance Of Being Charged In Municipal Tax Lien Auction Bid Rigging Scam; Agree To 'Sing' To Feds In Ongoing Probe

From the U.S. Department of Justice:

  • Two financial investors who purchased municipal tax liens at auctions in New Jersey pleaded guilty [February 23] for conspiring to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

  • A felony charge was filed [February 23] in U.S. District Court for the District of New Jersey in Newark, N.J., against Robert W. Stein of Huntington Valley, Pa., and David M. Farber of Cherry Hill, N.J. Under the plea agreements, which are subject to court approval, Stein and Farber have both agreed to cooperate with the department’s ongoing investigation.(1)

  • According to the felony charge against Stein, from as early as 1998 until approximately spring 2009, Stein participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid.

  • According to the felony charge against Farber, from as early as the beginning of 2005 through approximately February 2009, Farber also participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. The department said that both Stein and Farber proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.(2)


  • The department said that the primary purpose of the conspiracies was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates.


  • Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation 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.

  • Today’s pleas are the result of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions.(3) On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey municipal tax lien auctions.

For the U.S. Justice Department press release, see Two Financial Investors Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey.

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.

(1) "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 'race to the prosecutor's office' that breaks out among participants in an 'about-to-fall-apart' criminal conspiracy).

(2) The DOJ press release describes the nature of the bidding process on municipal tax liens in New Jersey:

  • When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption.

    By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

    According to the court documents, Stein conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Farber also agreed not bid against certain bidders at tax lien auctions. Because the conspiracies permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate.

    Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

(3) The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

Another One Bites The Dust As Feds Continue Clean-Up In Probe Into Northern California Foreclosure Sale Bid Rigging Racket

In Sacramento, California, the Central Valley Business Times reports:

  • A Lodi real estate investor pleaded guilty Friday in U.S. District Court in Sacramento to conspiring to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County.

  • Wiley Chandler, 47, of Lodi, pleaded guilty to conspiring with a group of real estate speculators who agreed to rig bids and commit mail fraud when purchasing selected properties at public real estate foreclosure auctions in San Joaquin County, says U.S. Attorney Benjamin Wagner.

  • The goals of the conspiracies were to suppress and restrain competition, to fraudulently obtain selected real estate at noncompetitive prices and to divert money to coconspirators that would have gone to the beneficiaries, the department said in court papers, says Sharis Pozen, acting assistant attorney general of the Department of Justice’s Antitrust Division.


  • Public auctions are meant for the public, not for an elite group conspiring together for their own profit,” says Mr. Wagner. Specifically, Mr. Chandler pleaded guilty to bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either of those amounts is greater than the statutory maximum fine.

For more, see Another guilty plea in massive Central Valley foreclosure fraud (Lodi man is tenth to plead guilty to bid rigging and fraud; ‘Public auctions are meant for the public, not for an elite group conspiring together’).

For the U.S. Department of Justice press release, see Two Financial Investors Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey.

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.

Feds, Colorado AG Form Tag Team In Civil Suit Targeting Outfit Allegedly Peddling Bogus Sale Leaseback Arrangements To Homeowners Facing Foreclosure

From the Office of the Colorado Attorney General:

  • Colorado Attorney General John Suthers and U.S. Attorney John Walsh announced today that they have filed a joint lawsuit against Georgia-based Bella Homes and its principals(1) on suspicion that they ran a nationwide foreclosure-rescue scam between March 2010 and February 2012.

  • According to the joint lawsuit, filed in U.S. District Court in Denver, Bella Homes preyed on homeowners facing foreclosure by accepting more than $3 million in fees disguised as “rent” while they did little to actually help homeowners avoid foreclosure.

  • Bella Homes is accused of asking homeowners to give the company the titles to their homes and then to enter into a lease agreement with Bella Homes where they would “rent” their homes while Bella Homes allegedly worked to halt the foreclosure and purchase their mortgages.


  • According to the complaint, the promises made by Bella Homes were false and Bella Homes did not provide any meaningful assistance to homeowners to avoid foreclosure and remain in their homes.(2)


  • Bella Homes accepted money from more than 450 consumers, including five in Colorado. Bella Homes’ suspected activities affected consumers living in more than two dozen states.

For the Colorado AG press release, see Attorney General, U.S. Attorney announce joint lawsuit, injunction to end national foreclosure-rescue scam.

Go here for:

(1) The individual defendants named in the lawsuit are:

  • Daniel David Delpiano,
  • David Delpiano,
  • Mark Stephen Diamond,
  • Michael Terrell, and
  • Laura C. Tabrizipour.

(2) According to the complaint, Bella Homes told consumers they would:

  • Avoid foreclosure;
  • Allow Bella Homes to purchase or settle their mortgages;
  • Be protected under federal law from eviction during the terms of the lease agreements;
  • Be able to repurchase their homes in three years for 90 percent of its fair market value and receive credit for 60 percent of the rent paid to Bella Homes;
  • Enjoy a mortgage payment following their repurchase that is 40 percent to 60 percent lower than previous payments; and
  • Not have foreclosures noted on their credit reports.

Trustee Screw-Up In California F'closure Sale Allowing Property Worth $220K To Be Sold To Investor For $22K To Be Decided By State High Court

In Santa Cruz, California, the San Jose Mercury News reports:

  • The state Supreme Court has agreed to review a civil case first filed in Santa Cruz County Court in 2009. The case, Biancalana v. T.D. Service Co., deals with issues surrounding the sale of a foreclosed property.

  • Plaintiff David Biancala purchased a property at a foreclosure sale in 2008, but the defendants allege that the wrong opening bid was announced and therefore the sale is void.

  • Attorneys for Biancala claim that the trustee for the property did not have the discretionary authority to set aside the foreclosure sale due to that error, and the property rightfully belongs to the purchaser.

  • An appeals court eventually overturned a Santa Cruz County judge's judgment in favor of the defendant. The defendant, T.D. Service Co., filed the petition for review of the case by the State Supreme Court. The state's highest court announced last week that it had accepted the case for review.(1)

Source: State's highest court to review foreclosure case.

For the California appeals court ruling to be taken up by the state high court, see Biancalana v. TD Service Co. (2011) 200 Cal. App. 4th 527 [132 Cal. Rptr. 3d 719].

(1) The events surrounding the foreclosure sale follow, as set forth in the appeals court ruling:

  • On or about July 22, 2008, TD was substituted in as trustee under a deed of trust securing real property located at 434 Winchester Drive in Watsonville, California (the subject property). TD subsequently provided notice that the subject property would be sold at a foreclosure sale scheduled to take place on September 10, 2008. The beneficiary submitted a specified credit bid in the amount of $219,105 for TD to use as the opening bid for the sale. However, TD erroneously submitted the delinquency amount of $21,894.17 to the auctioneer as the opening credit bid on the subject property.

    While researching upcoming foreclosure sales, Biancalana learned of the scheduled sale of the subject property and, on the day of the sale, called the telephone number TD listed on the sales notice to inquire about the opening bid. The recording advised that the opening bid for the property was $21,894.17. After checking comparable property values and asking a colleague to physically view the property, Biancalana again called the recording. The amount of the opening bid was unchanged.

    Biancalana decided to bid on the property, so he obtained a cashier's check in the amount of $22,000 and proceeded to the auction site. Having arrived before the scheduled start of the sale, Biancalana discussed this property and other foreclosures with the auctioneer. The auctioneer called TD twice before the start of the sale and spoke to two different employees, both of whom advised him the opening bid for the property was $21,894.17. The auctioneer was not instructed by TD to make any further bids on the property over and above the opening bid.

    The sale commenced and the auctioneer, as instructed, announced that the opening bid on the subject property was $21,894.17. Biancalana submitted a bid of $21,896 and, when no other bids were forthcoming, the auctioneer declared this as the high bid. The auctioneer accepted a cashier's check in the amount of $22,000 from Biancalana.

    TD discovered the mistake when it reviewed sales figures from September 10, 2008. On September 11 or 12, 2008, TD notified Biancalana that the opening bid it submitted was incorrect, that the sale was void and that a new foreclosure sale would be scheduled. TD did not issue a trustee's deed upon sale and returned Biancalana's cashier's check. Biancalana rejected the check and sent it back to TD. When TD refused to issue the deed, Biancalana sued TD, among other defendants, for quiet title, specific performance, declaratory and injunctive relief.

Operator In Foreclosure Rescue Racket Involving Unwitting Homeowners, Forged Deeds, Rent Skimming Frog-Marched Off To State Prison For 12-Year Stay

In San Diego, California, KGTV Channel 10 reports:

  • A man was sentenced on Tuesday to 12 years in state prison for participating in a multimillion-dollar foreclosure fraud scheme in which notaries' identities were stolen and hundreds of deeds forged across California.

  • John Zepeda, 60, pleaded guilty last year to multiple felony charges, including rent skimming, forgery, identity theft and conspiracy to commit grand theft. Zepeda agreed to pay $6 million in restitution, but further hearings are needed to verify the loss amount.

  • Zepeda's 59-year-old brother, David, is charged in a related case with co-defendants Carlos M. Torres and Patricia Torres.

  • The conspiracy, which prosecutors called "huge" and "brazen," involved hundreds of victims in San Diego, Santa Barbara, San Bernardino, Orange, Ventura, Riverside and Los Angeles counties, as well as Nevada's Clark County.

  • According to prosecutors, the defendants would hold seminars for people hoping to save their homes from foreclosure. Authorities allege the Zepeda brothers identified properties in foreclosure and acquired title either by forging a quitclaim deed – which transfers the property into a trust – or convincing homeowners to transfer the property to them by promising the homeowner they would help avoid foreclosure. Once they had acquired the title, the Zepedas would rent out the property, prosecutors said.

For more, see Man Sentenced For Foreclosure Fraud Scheme (John Zepeda Sentenced To 12 Years In Prison).

Monday, February 27, 2012

NYS High Court: No Due Process Violation Where Municipality Fails To Inform Property Owners Of Buyback Rights In Tax Foreclosure

The New York Law Journal reports:

  • [O]n Feb. 21, a unanimous Court agreed that a couple's due process rights were not violated when Orange County took possession of two acres without informing the couple directly of a local law allowing them to buy back the land if all taxes, interest and penalties were paid.

  • The Court determined that Jeanette and Ola Helseth had proper knowledge that a tax lien foreclosure was pending on the property and that a municipality is not obligated to give proper notice during every stage of the foreclosure process.

  • "We agree with the County and hold that it was only obligated to give singular notice of the foreclosure action as that was the underlying governmental action threatening the Helseth's property interests," Judge Jones wrote for the 7-0 Court in Matter of the Foreclosure of Tax Liens by Proceeding in Rem Pursuant to Article Eleven of the Real Property Tax Law, by Orange County Commissioner of Finance v. Helseth, 9.

  • The Helseths had argued that repeated notice during a foreclosure is needed to satisfy property owners' due process guarantees, citing Jones v. Flowers, 547 U.S. 220 (2006). But Judge Jones said the county's notification that a repurchase option for the property might be available—the county legislature would have had to sign off on such a transaction—"was not the underlying taking or an extension of such action, but a subsequent, optional measure."

  • The county had argued that upholding two lower court rulings allowing the Helseths to move for repurchase after the option had expired would impose a new burden on foreclosing municipalities and conflict with case law in tax foreclosure matters.

Source: Tax Lien Foreclosure Notice (2nd story from the top).

Bay State High Court Ruling Expected Soon On Need To Hold Note In Order To Foreclose Mortgage

Bloomberg reports:

  • The highest court in Massachusetts is poised to rule as soon as this month on a foreclosure case that could lead to a surge in claims from home owners seeking to overturn seizures.

  • The justices are deciding whether to uphold a lower court ruling that gave a Boston home back to Henrietta Eaton after Sam Levine, a 25-year-old Harvard Law School student, argued in front of the nation’s oldest appellate court that the loan servicer made mistakes when it foreclosed because it didn’t hold the note proving she was obliged to pay the mortgage.


  • A ruling in favor of Eaton would show how a $25 billion settlement reached this month with state and federal officials still leaves banks exposed to liabilities tied to home repossessions. It also underscores the challenge of resolving a foreclosure process that Federal Reserve Chairman Ben S. Bernanke said in a study last month is plaguing the housing recovery.

  • At issue in Eaton v. Federal National Mortgage Association,(1) also known as Fannie Mae, are two documents borrowers sign to get a home loan. The first is the mortgage establishing the right to seize a property. The second is the promissory note that creates an obligation to pay the debt. While the servicer had the mortgage when it foreclosed, it didn’t have the note. One without the other is known as a naked mortgage.


  • The Massachusetts Supreme Judicial Court justices signaled last month they may rule in favor of Eaton when they asked parties in the case to submit briefs arguing whether such a decision should be applied retroactively or only to future lending. If retroactive, it would cloud the titles of the 40,000 Massachusetts properties seized in the last five years and while the ruling only applies to the state, it could serve as a model for homeowners trying to overturn foreclosures in other states.


  • Copies of promissory notes aren’t enough to establish rights, just as copies of dollar bills wouldn’t be honored by a bank, said Kathleen Engel, a professor at Suffolk University Law School in Boston. If an original note can’t be found, attorneys must file a lost-note affidavit and provide evidence to establish a claim.

  • In last year’s decision, the lower Massachusetts court said it wasn’t troubled by the separation of the two documents after homeowners signed them. The problem was the failure to rejoin them before foreclosing on a property.

  • Massachusetts courts have historically held that one must hold both the mortgage and the mortgage note before initiating foreclosure,” Superior Court Justice Frances McIntyre in Boston wrote in a June 17 decision. “This rule flows from the fact that a mortgage, by definition, is simply a security for the note.”


  • The Massachusetts Supreme Judicial Court last year ruled on two other foreclosure cases. Both handed properties back to owners because of botched foreclosures. In each case, the servicers didn’t hold the mortgages when they seized the properties.

  • In an October decision on Bevilacqua v. Rodriguez, the Massachusetts Supreme Judicial Court handed a foreclosed apartment building back to a prior owner five years after its sale to an investor who turned it into condominiums. The high court’s ruling meant people who bought the condo units lost their homes with no compensation. The brick building now stands vacant, its front door blocked with piles of old mail.

  • In a January 2011 case, U.S. Bank v. Ibanez, the high court handed back two other properties to former owners.

For more, see Seizures Threatened in Massachusetts With Naked Loans Challenge: Mortgages.

(1) Go here for links to the briefs filed in this case.

Prison Time Buy-Down Possible As Defendants In Loan Mod/Forensic Loan Audit-Peddling Racket Agree To Cough Up $30K Each In Pre-Sentencing Restitution

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

  • Three individuals charged with conspiracy to commit wire fraud and mail fraud for their roles in operating a fraudulent mortgage loan modification business pled guilty [] in federal court in San Diego, [...].

  • According to the plea agreements, Ziad Nabil Mohammed Al Saffar and Sara Beth Bushore Rosengrant admitted that they operated the fraudulent loan audit and modification business, located in San Diego, California, under the names "Compliance Audit Solutions, Inc." ("CAS") and CAS Group, Inc., ("CAS Group"). Daniel Al Saffar admitted that he worked as a sales representative in connection with the operation.

  • According to court documents, the defendants targeted homeowners who were unable to afford their mortgage payments and falsely advertised to them that CAS and CAS Group were affiliated with the federal government.

  • The defendants admitted to using false and fraudulent statements and representations to induce customers to purchase an "audit" of their home mortgage loans, supposedly to identify "violations" in the loan documents that could then be used to force banks to renegotiate their loans. The audit fees ranged from $995 to $3,500.(1)


  • As part of their plea agreements, defendants agreed to pay restitution to the victims of their criminal conduct to be determined by the Court. Each defendant also agreed to make a restitution payment in an amount of $30,000 prior to the sentencing hearing.

For the U.S. Attorney press release, see Operators of Mortgage Loan Modification Business Plead Guilty To Conspiracy To Commit Fraud.

(1) More from the press release:

  • According to court records, among the misrepresentations made to customers were claims that CAS and CAS Group were affiliated with the United States Department of Housing and Urban Development (HUD), that they were participating in a federal program called "Hope for Homeowners," that the audit fees were tax deductible, and that CAS and CAS Group had an "attorney" on staff who could finalize negotiations with banks on behalf of homeowners. The indictment further alleged that, as part of the conspiracy, the defendants fraudulently induced certain homeowners to make payments to CAS or CAS Group by falsely promising that such "good faith" payments were necessary to reduce their loan balance and interest rate, and that those payments would be kept in an "escrow account" by CAS or CAS Group. The false representations also included telling homeowners that banks demanded a "settlement fee" in order to modify a first mortgage and eliminate a second mortgage; that a one-time payment to cover taxes and insurance on the property was needed; and that the homeowners should make their monthly mortgage payments to CAS or CAS Group, instead of to their lender, and that the funds would be held in an escrow account for the benefit of a new lender.

Sunday, February 26, 2012

Robosigning Scandal To Surface With Commercial Real Estate Mortgage Securitizations?

CBS News Moneywatch reports:

  • The nation's banks are looking at a robo-signing problem with commercial real estate which may dwarf the one for home mortgages, according to a new study.

  • Research by Harbinger Analytics Group shows the widespread use of inaccurate, fraudulent documents for land title underwriting of commercial real estate financing.

  • According to the report:

    This fraud is accomplished through inaccurate and incomplete filings of statutorily required records (commercial land title surveys detailing physical boundaries, encumbrances, encroachments, etc.) on commercial properties in California, many other western states and possibly throughout most of the United States.

For more, see Banks face crisis in bungled commercial mortgages.

Central Florida Adverse Possession-Claiming Vacant Home Hijacker Dodges Prison Time With Plea Deal; Gets Two Years House Arrest, Five Years Probation

In Tampa, Florida, News Channel 8 reports:

  • During the past few years, George Williams and his company, Brevkam Ventures, laid claim to several vacant homes throughout Hillsborough County. He said Florida's adverse possession law allowed him to break into the houses, move in tenants and collect rent without the knowledge or permission of the property owners.

  • He was wrong. Williams, 42, was arrested a year ago, and this week he pleaded guilty to organized fraud, six counts of grand theft and five counts of burglary. His plea deal with the State Attorney's Office calls for two years of house arrest and five years probation, but no jail time.

  • "We thought it was a fair resolution," Assistant State Attorney Mark Cox said. Cox said this was not an easy case. "A lot of tenants and homeowners had no interest in being involved in this case anymore," he said.

  • The Hillsborough County Sheriff's Office, which poured resources and time into the investigation, had no comment on the plea deal. An investigator said he is disappointed Williams did not go to prison.


  • An 8 On Your Side investigation found Williams' Brevkam Ventures was one of three companies gobbling up vacant properties in the Tampa Bay area. The others were Chateau Lan, run by Chris McDonald, 47, of Plant City, and Homes for Americans, run by Joel McNair of Sarasota.

  • McDonald and McNair both claimed that by taking over vacant houses, their companies were helping neighbors, property owners, banks and people looking for low-cost housing. McNair, facing multiple charges of organized fraud, committed suicide in May.

  • The Florida Attorney General's office filed organized fraud charges against McDonald last December. McDonald told News Channel 8 he had taken possession of at least 20 houses in Hillsborough County. McDonald failed to show up for a January hearing. An arrest warrant was issued. A squad of detectives located him in Valrico on Thursday morning and arrested him.

For the story, see Man pleads guilty in vacant homes plot.

State AGs Take 'Robosigner' Approach To Reaching Foreclosure Fraud Settlement: Rushing To Bulldoze Through Incomplete, Flawed Document

The New York Post reports:

  • It looks like the US regulators are taking their cue from the robo-signers. More than a year after the scandal broke over the rapid signing of thousands of foreclosure documents without reviewing their accuracy, New York Attorney General Eric Schneiderman and his cohorts, along with the Justice Department and the Department of Housing and Urban Development, are crowing. They claim they’ve clinched a $25 billion deal to punish five big banks for robo-signing and other wrongdoing in the foreclosure mess.

  • Trouble is, the regulators don’t have a final deal, just a provisional one. Important elements could change — likely for the worse for homeowners and investors — before the army of bank and government lawyers involved signs off.

  • This means the regulators essentially rushed to push through an incomplete and flawed document, just like robo-signers did, without all the critical facts at hand. Instead of a detailed term sheet, there’s only a “coming soon” tag on the National Mortgage Settlement Web site.

  • The shocking thing is, there is no written agreement at this point,” said North Carolina attorney O. Max Gardner III. “That creates so many more questions than answers.”

For more, see AGs foreclosure deal still being tweaked.