Saturday, May 5, 2012

Cops Pinch Suspect In Foreclosed Home Rent Ripoff That Left Single Mom, Three Kids Homeless, Out $3K

In Naples, Florida, the Naples Daily News reports:

  • Earlier this month, Emanoel Thermitus packed up her family's things, paid her new landlord and moved into a rental house in Golden Gate Estates. With three young sons, Thermitus was looking to get out of a town house community where she said children as young as 12 and 13 often were arrested for drugs. "I got scared," she said. "I didn't want my kids to go through that, you know? Let me do whatever I can to get them out of there."

  • But about a week after the family of four moved into the three-bedroom house on Third Avenue Northwest, a Collier County sheriff's deputy called and told her she'd have to move out. Her landlord, 21-year-old Yoandry Leiva, didn't actually own the house and had no authority to rent it out, he said.

  • Deputies arrested Leiva, of the 8600 block of Wheat Lane, East Naples, on Thursday, charging him with three counts of burglary, one count of grand theft and one count of manufacturing marijuana. He also is a suspect in the fraudulent rental of a house at 5921 Green Blvd., where a marijuana plant and a stolen Yamaha motorcycle were found in the backyard.

  • Lt. Chad Parker, who works financial crimes at the Sheriff's Office, said the agency had only recently begun to see [this type of scam]. In those cases, renters must leave the property even if they've paid rent to someone because they are legally considered to be trespassing. "It's unfortunate because they have to get kicked out of a house," Parker said. "They're being victimized twice."

  • Out $3,000 and with no leftover savings, Thermitus said she and her sons now stay at a public park until 10 o'clock every night, when they have to look somewhere else for a place to sleep.

  • "I spent all the money I had," she said. "I don't know how, but I know if I pray, God will listen and I will be safe, but I don't feel safe alone with the kids."
For the story, see Man accused of renting house he didn't own; family left homeless.

For story update, see Good Samaritan offers home to single mother evicted from fraudulently-rented house (North Naples resident Paul Conti read about the family in the Daily News and thought about a home of his own. The property he'd bought in a foreclosure sale years earlier would be perfect for them, he thought, and so on Monday, Conti handed a key to a stranger and let her move into his empty house).

Calif Rent Scam Suspect Bagged In Nevada; Used Craigslist To Rip Off Off Tenants By Renting Out Parents' Now-Foreclosed Home: Cops; Awaits Extradition

In Porterville, California, KMPH-TV Channel 26 reports:

  • It's a scam happening across the nation and right here in the Valley. Crooks rent out foreclosed homes and get away with thousands of dollars. The latest report popped up in Porterville.

  • Currently, Porterville police are looking for 39-year-old Scott Crowder. Police say Crowder has scammed several families out of thousands of dollars. Detectives say he's trying to rent a home that once belonged to his parents, but is currently in foreclosure. Detectives say he takes people's security deposit, gives them fake keys, and then splits.

  • Keri Dunning paid him one–thousand dollars. She says, "He walked us through the place, and made it sound pretty legit. He said we could do whatever we wanted with the place, we could fix it up and paint it. He then took our money and left." Crowder is not returning their phone calls, and they aren't the only the ones.

  • Stephanie Leyva says, "I gave him $2,850; that was first month's rent, last month's rent, and a security deposit of $950."

  • The families saw the house advertised on Craigslist. The ad states the house in a good neighborhood, close to schools and shopping. Stephanie says while trying to find Crowder, she stopped another woman from giving a security deposit for the same house.

  • Investigators with the Porterville Police Department are asking anyone with information on his whereabouts to give them a call.
For a story update, see Rental Scam In Porterville; Man Arrested (Porterville Police say a man suspected of scamming several families out of thousands of dollars is behind bars. 39-year-old Scott Crowder was arrested in Las Vegas, Nevada. Crowder remains in custody in Nevada pending extradition to California).

Rent Scams Promoted On Craigslist Continue To Reel In Unwitting, Would-Be Renters

In Jacksonville, Florida, Action News reports:

  • People do it every day. But this time when a couple found a Westside home on Craigslist for rent, appearances were deceiving. According to the police report, the couple met the so-called landlord at a public place. He gave them keys. They signed a lease agreement agreeing to buy a refrigerator, pay $1,000 a month for rent, and another $800 for a security deposit. They had no idea the house they were renting for the last couple of weeks was actually in foreclosure.

  • "It's very frustrating because law enforcement doesn't want to have to intervene in cases like that, but when they cross a line and it becomes criminal, then we will intervene,” said State Attorney Angela Corey.

  • The homeowner notified police when she realized people were living in her foreclosed home. [...] So far no arrests have been made. This case is still under investigation.

Foreclosed Couple Cop Guilty Pleas On Charges Of Removing, Vandalizing $20K+ In Fixtures From Former Home

In Stockton, California, The Record reports:

  • A Stockton couple pleaded guilty to stealing and vandalizing more than $20,000 worth of fixtures from the home they lost in foreclosure. Greg Alan Wright, 41, and his wife, Sandy Wright, 48, were in default on their two mortgages for nearly two years and were unable to sell their home in a short sale, selling the home for less than the loan amount.

  • Greg Wright was sentenced to five years' felony probation and 270 hours of community service after pleading no contest to removal of attachments or fixtures from mortgaged or encumbered real property, a felony that carries a maximum prison term of three years. He also pleaded guilty to a vandalism misdemeanor.

  • Sandy Wright was sentenced to three years' probation and 270 hours of community service after pleading no contest to a vandalism misdemeanor.

  • Real estate fraud prosecutor James Lewis said homeowners risk criminal prosecution if they vandalize the home or take the fixtures once it is no longer theirs.

Friday, May 4, 2012

Closing Agent Cops Guilty Plea For Illegally Diverting Escrow Funds From Real Estate Closings

From the Office of the U.S. Attorney (Miami, Florida):

  • [D]efendant Linda Irene Rovetto, 69, of Lake County, pled guilty [] in connection with her participation in a bank fraud conspiracy scheme. More specifically, Rovetto pled guilty to converting and misdirecting more than $3.5 million of real estate escrow funds, in violation of Title 18, United States Code, Sections 1344 and 1349.
  • On December 9, 2010, defendant Rovetto and three others were indicted on bank fraud, conspiracy, and related mortgage fraud charges. According to the charges, Rovetto, through her company Florida Lakes Title & Closing, LLC, along with various co-defendants, were diverting escrowed mortgaged funds from real estate closings.

  • In this way, the defendants diverted more than $3.5 million in mortgage loans to Raviworld New Homes, Inc., a company managed by codefendant Bhaardwaj Seecharan. Bhaardwaj Seecharan pled guilty on April 2, 2012 to the same charges as Rovetto.
For the U.S. Attorney press release, see Lake County Woman Pleads Guilty to Bank Fraud Conspiracy Charges.

Real Estate Agent Pinched For Allegedly Using Client's Personal Information To Score $412K Mortgage

In East Orange, New Jersey, The Star Ledger reports:

  • Authorities have charged a real estate agent with fraud for illegally using a client’s personal information to secure a mortgage on a property, then operate her business and collect rent from the same location.

  • Sylvia Sexius, 46, was arrested [], charged with theft by deception, forgery and theft by unlawful taking, the Essex County Prosecutor’s Office announced. Authorities were alerted to the alleged crime in October, when a Newark woman reported she had been receiving foreclosure notices for an East Orange property she did not own.

  • The prosecutor’s office financial crimes unit investigated and discovered that Sexius, an East Orange-based real estate agent, had completed a fraudulent mortgage on the property for $412,000 using the Newark woman’s personal information, authorities said. Sexius, of Orange, had allegedly obtained the information after having earlier refinanced the woman’s home.

  • Sexius took possession of the property at 520-524 Prospect St., then began operating her real estate business there while also collecting rental income from commercial and residential units in the same building, the prosecutor’s office said.

Banksters Prohibited By Local Law From Evictions Apply Pressure Anyway In Effort To Drive Tenants From Foreclosed Homes: Bay Area Renter Advocates

In San Francisco, California, the San Francisco Bay Guardian reports:

  • Alma Sierra has been living in her home at 490 Athens for three years. Sierra, her nine year old son, and two other mothers with their children share a rental unit. They have diligently paid their rent, and her son goes to school across the street. But last year, US Bank foreclosed on the small-time landlords that owned the property- now, the tenants face eviction.

  • We’re three single mothers with children. We don’t have the means to just up and leave,” Sierra, a part-time domestic worker, told me through a translator from Causa Justa, an organization that works for tenants’ rights. Their worked helped pass the Just Cause eviction policy for which the organization is named last year.

  • Under city law, a landlord needs one of 14 reasons to justly evict a tenant. The reasons include failure to pay rent and trashing the property, as well as owner move-in and Ellis Act evictions. But the foreclosure crisis has brought on a wave of bank-owned properties. These are tricky situations legally; banks generally want to sell the property, a task made more difficult if there are pesky tenants living there.

  • The banks want to get rid of the tenants. The realtors for the banks always tell them they can get more money if there aren’t any tenants in it. Because that way they would have to do an owner move-in eviction,” said Tommi Mecca, a long-time tenants’ rights advocate in the city.

  • According to Mecca, US Bank has been pressuring the three families to leave the building, although no eviction papers have been filed yet. The Guardian is awaiting calls back from US Bank representatives.

  • It can take many months, in some cases longer, to actually sell property,” said Sarah Shortt, an organizer with the SFHRC. So in the meantime the bank is the landlord and they haven’t been responsible in lending or as landlords. They tend to disregard tenants’ rights and trample over the needs and concerns of renters.”

  • Even when tenants are made aware that the property they live in has been sold back to bank, it can often be difficult to determine who to turn to for repairs, complaints, or even the right address for rent checks. One of the things we see a lot of is, the bank acquires the property and then they’re just MIA. Tenants come to us and say, we don’t know who owns our building, where to pay rent, who to ask to fix leaky ceiling. We help them research to find who owner is,” said Shortt.

  • These situations often end with buy-outs, in which the bank pays the tenants to leave the property. The amount ranges, but according to Mecca, it can often be insubstantial. They start at $1,000, $3,000, something really insulting. And it’s only if tenants walk in somewhere like [the SFHRC] that we tell them, wait a minute, your tenancy is worth so much more than that.

  • A U.S. Bank branch in the Mission District was the site of a different kind of anti-foreclosure protest April 26, as three families who are tenants in a foreclosed building, accompanied by some 100 supporters, demanded the bank collect their rent and let them stay in their homes.

San Bernardino DA: Scammer Used Forged Signatures To Record 'Dirty' Deeds On Homes In F'closure, Then Renting To Tenants, Borrowing From Duped Lenders

From the Office of the San Bernardino, California District Attorney:

  • An Upland man who was arrested [...] by investigators with the San Bernardino County District Attorney’s Office has been charged with real estate fraud, identity theft, forgery, and preparing fraudulent credit applications. Thirty-eight-year-old Eric Lamonte Smith was arraigned [] in San Bernardino Superior Court. He pleaded not guilty to all counts.

  • The investigation began after investigators received a fraud complaint from a Notary Public who alleged that her signature and seal had been forged on a Grant Deed. As a result, investigators opened a criminal investigation which eventually revealed that Smith had been part of a suspected real estate fraud ring operating in San Bernardino, San Diego and Los Angeles counties since 2006.

  • The suspects allegedly filed fraudulent Grant Deeds on properties that were in the process of being foreclosed, causing the process to be delayed. The suspects would then rent the property to unsuspecting renters.

  • The suspects would also fraudulently obtain Home Equity Lines of credit on the properties, as well as use false information on credit applications to purchase luxury automobiles.
For the San Bernardino County DA press release, see DA Charges Upland Man With Real Estate Fraud.

Son: 'BofA's Breaking Law By Giving My Elderly Mom The Boot From F'closed Home!' Bankster Accused Of Ceasing Rent Collection, Sending Eviction Notice

In Porterville, California KSEE-TV Channel 24 reports:

  • On a typical morning, you can find Eve Ball outside her Porterville home, sitting on the porch, sipping coffee, listening to wind chimes. Eve Ball said, "It's been my home ever since my husband past away."

  • That was 11 years ago. Her son Barry bought the home for her. Three years later he sold it and negotiated a 10 year lease for his mom with the new owner.

  • In October, the owner foreclosed. Bank of America took over, stopped accepting rent and sent Eve an eviction notice. Barry Ball said, "It's somewhat ironic that we as taxpayers bailed Bank of America out in the first place and now they're not keeping up to their end of the bargain as promised."

  • Eve took the fight. Her attorney, Alex Reed-Krase claims the bank is breaking federal law. The Protecting Tenants at Foreclosure Act of 2009 to be exact. "Tenants have a senior interest and banks can't just kick them out...they have to live out their lease," he said.

  • In court, bank attorneys said the law shouldn't apply in this case. The judge heard both sides and said he'll make a decision soon. Until that happens, Eve says she's not going anywhere, "I think this may help someone else going through this I hope."

Thursday, May 3, 2012

Mobile Feds, Antitrust Cops Pinch Guilty Plea Out Of Another Alabama R/E Investor In Ongoing Probe Into Foreclosure Sale Bid Rigging Activity

From the U.S. Department of Justice (Mobile, Alabama):

  • An Alabama real estate investor has agreed to plead guilty and to serve one year in prison for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced today [Friday, April 27, 2012]. To date, as a result of the ongoing investigation, four individuals and one company have pleaded guilty.

  • Charges were filed yesterday in the U.S. District Court for the Southern District of Alabama in Mobile, Ala., against Steven J. Cox of Mobile. Cox was charged with one count of bid rigging and one count of conspiracy to commit mail fraud. According to the plea agreement, which is subject to court approval, Cox has agreed to serve one year in prison, to pay a $10,000 criminal fine and to cooperate with the department’s ongoing investigation.

  • According to court documents, Cox conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at the public auctions, which typically take place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.

  • Cox was also charged with conspiring to use the U.S. mail to carry out a scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. Cox participated in the bid-rigging and mail fraud conspiracies from as early as January 2004 until at least May 2010.

Northern California Foreclosure Sale Bid Rigging Suspects Continue Going Down As Two More Cop Guilty Pleas In Ongoing Probe

In Sacramento, California, The Daily Journal reports:

  • Two real estate investors who do business in San Mateo County have pleaded guilty to mail fraud and rigging public foreclosure auctions outside the Redwood City courthouse by agreeing not to bid against each other, according to the Department of Justice.

  • Lydia Fong and Matthew Worthing, both of San Francisco, were charged yesterday in the case, joining 20 other individuals throughout four Bay Area counties who have pleaded guilty or agreed to plead guilty in similar bid rigging and public auction fraud cases.
  • According to federal prosecutors, Fong and Worthing conspired with others for varied stretches between October 2009 and January 2011. Worthing is also charged with participating in a similar San Francisco County conspiracy in September 2010.

  • During the scheme, those involved agree not to bid against each other for foreclosed properties auctioned off outside the county courthouse. Instead, they kept the winning price low which, in turn, federal prosecutors say, damaged the real estate market and defrauded those expecting a level playing field.

  • When property is auctioned, the proceeds pay off the mortgage and debt with any remaining money going to the homeowner. Squelching competitive bids limits how much money is available for both.

  • Fong and Worthing used the postal service to send title documents to others in the conspiracy, make and receive payoffs and divert money, leading to the mail fraud charges.
For the U.S. Attorney press release, see Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 22 Plea Agreements to Date).

Ohio AG Scores Win In Suit Against Cleveland-Area Loan Mod Racket That Clipped Homeowners For Upfront Fees, Then Stiffed Them On Promised Services

In Cleveland, Ohio, News Channel 5 reports:

  • A Cleveland-area foreclosure rescue company has been shut down and its owner ordered to repay consumers hundreds of thousands of dollars in upfront fees for services they never received.

  • A 5 On Your Side investigation first exposed complaints against the Broadview Heights company known as The Modification Group or "TMG" in an exclusive report in May 2011.

  • Ohio Attorney General Mike DeWine filed a lawsuit against the company and its owner, Robert Walker, just one day after our report aired.

  • In an agreed consent judgment, the company was shut down, ordered to pay a $100,000 fine and repay consumers $338,000 in fees for services never performed. Walker has been barred from operating foreclosure rescue and credit services in Ohio.
For more, see Cuyahoga court shuts down foreclosure rescue company following exclusive 5 On Your Side report (Ohio Attorney General says consumers ripped off).

'Good Morning, Vietnam' DJ Targeted By Consumer Group With Administrative Complaints Alleging Illegal Upfront Fees For Loan Mods, F'closure Prevention

The Consumerist reports:

  • Though he bears little resemblance to the record-slinging, Nixon-impersonating prankster played by Robin Williams in Good Morning, Vietnam, former Air Force radio DJ Adrian Cronauer is still closely associated with the 1987 comedy. Now, Cronauer is making a different sort of headline after the National Community Reinvestment Coalition has filed a pair of complaints against the law firm that bears his name.

  • According to the NCRC complaints, filed last week with both the Federal Trade Commission and the Consumer Financial Protection Bureau, the Washington, D.C., based Cronauer Law Center have allegedly been misleading troubled mortgage-borrowers into paying costly — and possibly illegal — upfront fees to modify loans and prevent foreclosures.

  • In the dual complaints, the NCRC alleges that Cronauer Center mailings intended to attract new clients bear a "striking resemblance to the legitimate 'Independent Foreclosure Review' letter that is routinely sent to consumers as part of enforcement actions taken by the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency," and that the average consumer could mistakenly believe "that he or she is receiving an actual bargained for service or benefit."
Go here for the NCRC's:

Nevada Foreclosure Investors File Massive Federal False Claims Act Suit Targeting HOAs That Allegedly Squeezed Them For Improper Charges

In Las Vegas, Nevada, Vegas, Inc. reports:

  • Attorneys for investors in Nevada foreclosed homes have filed yet another massive lawsuit challenging homeowner association assessments and collection costs. The latest suit was filed secretly in April 2011 in federal court in Las Vegas and it was unsealed on Wednesday.

  • In the suit, investors’ attorneys Puoy Premsrirut and James Adams represent the United States government with their suit filed under the False Claims Act. It was initially filed secretly so the government could review it to see if it wanted to participate in the action.

  • Under the False Claims Act, citizens can sue on behalf of the government when they become aware of alleged wrongdoing causing harm to the government. They can then share any damages collected with the government.In this case, the U.S. Justice Department specifically chose not to intervene in the suit and it chose not to seek dismissal of the suit.

Wednesday, May 2, 2012

Victimized Consumer Battles Deadbeat Zombie Debt Buyer In Effort To Collect $10.8M Judgment Over Harassing Phone Calls, Illegal Collection Practices

In Wheeling, West Virginia, ABC News Nightline reports:

  • [T]wo years ago, a debt collector with a company called Reliant Financial Associates, or RFA, left a message [for Diana Mey] implying that her house was in jeopardy if she didn't pay a debt. The message stated:

  • "I'm calling in regards to a preliminary asset liability investigation. They are in the process of serving some court documents in regards to case 29369... They have some information now pending questions at the property,... Springdale Avenue, in Wheeling, West Virginia. It is in your best interests to contact the department. You are required to contact 866-764-9779."

  • It is illegal for debt collectors to make empty threats about serving people with a lawsuit or seizing their home. And it was especially galling to Mey, who says she is debt-free. "They threatened to take legal action against our property and it wasn't even our debt," Mey said.

  • Millions of Americans are victims of this kind of mistaken debtor identity, partly because of a new breed of collectors called "debt buyers." They purchase old debts for pennies that the original creditors have given up on and then try to collect them for a big profit. Critics say debt buyers sometimes use outrageous tactics to get the money where others have failed. RFA is a debt buyer.

  • Mey wrote RFA a cease and desist letter, telling the company not to contact her anymore, and sent it certified mail. Postal records show exactly when RFA signed for it. Precisely 23 minutes later, Mey started getting mysterious hang-up calls that showed up on her caller ID as coming from her local county government.

  • "So I called the number back and it was the sheriff's department. And I asked if someone there was trying to reach me. And they said, no - nobody there was trying to reach me," Mey said. After two days of hang-up calls from that sheriff's department number, Mey picked up another one with that same caller ID. The man on the line repeatedly called her a vulgar name for the female anatomy. He described violent sexual acts he would like to subject her to and asked if she liked to be "gang banged."

  • "I was so frightened. I felt violated, but then I realized, you know, I'm taping this call,." Mey said. "I pulled myself together and I thought, I can get through this. Just keep on talking buddy because we're gonna get plenty of your voice on tape." The verbal assault went on for nearly two minutes before the man hung up.

  • Mey said she immediately called 911 to report that someone had threatened to sexually assault her. She says she was terrified because she believed the call was from a local number. Mey said she then bolted the door and got her husband's gun out of the dresser and hung it on the bedpost in her bedroom.

  • At the time, Mey said she didn't make a connection between that call and the collectors. But then she learned the call hadn't come from the local sheriff's office after all. The caller ID had been manipulated to look like it did, a practice called spoofing. That's when she went online and discovered complaints about RFA debt collectors pretending to call from sheriff's offices, including a male collector who called women vulgar names. "He picked the wrong person," Mey said.
  • Last May, Mey sued RFA for harassment and illegal collection practices. In August, RFA's lawyer failed to show up in court, so Mey testified unopposed. The judge called RFA's actions "malicious" and ruled that all of the allegations were true. And then he awarded that record judgment of $10,860,000.

  • When "Nightline" went to RFA's Orange County, Calif., office to ask about the case, it was abandoned. RFA is actually a fictitious business name for a company called Global AG, LLC. Records show it is just one of several collection companies run by the same people that often change names and move. "Nightline" also visited other offices registered to people named in Mey's suit, but employees refused to talk and asked us to leave.
See Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration for an FTC report on dealing with bill collectors and zombie debt buyers.

'Debtors' Prisons' Flourishing? Despite 2+ Decades-Old Supreme Court Ruling To The Contrary, More Find Themselves Canned For Failure To Pay Bills

CBS MoneyWatch reports:

  • How did breast cancer survivor Lisa Lindsay end up behind bars? She didn't pay a medical bill -- one the Herrin, Ill., teaching assistant was told she didn't owe. "She got a $280 medical bill in error and was told she didn't have to pay it," The Associated Press reports. "But the bill was turned over to a collection agency, and eventually state troopers showed up at her home and took her to jail in handcuffs."

  • Although the U.S. abolished debtors' prisons in the 1830s, more than a third of U.S. states allow the police to haul people in who don't pay all manner of debts, from bills for health care services to credit card and auto loans. In parts of Illinois, debt collectors commonly use publicly funded courts, sheriff's deputies, and country jails to pressure people who owe even small amounts to pay up, according to the AP.

  • Under the law, debtors aren't arrested for nonpayment, but rather for failing to respond to court hearings, pay legal fines, or otherwise showing "contempt of court" in connection with a creditor lawsuit.

  • That loophole has lawmakers in the Illinois House of Representatives concerned enough to pass a bill in March that would make it illegal to send residents of the state to jail if they can't pay a debt. The measure awaits action in the senate.

  • Yet Illinois isn't the only state where residents get locked up for owing money. A 2010 report by the American Civil Liberties Union that focused on only five states -- Georgia, Louisiana, Michigan, Ohio, and Washington -- found that people were being jailed at "increasingly alarming rates" over legal debts.

  • Cases ranged from a woman who was arrested four separate times for failing to pay $251 in fines and court costs related to a fourth-degree misdemeanor conviction, to a mentally ill juvenile jailed by a judge over a previous conviction for stealing school supplies.

  • According to the ACLU: "The sad truth is that debtors' prisons are flourishing today, more than two decades after the Supreme Court prohibited imprisoning those who are too poor to pay their legal debts. In this era of shrinking budgets, state and local governments have turned aggressively to using the threat and reality of imprisonment to squeeze revenue out of the poorest defendants who appear in their courts."
For the American Civil Liberties Union report, see In For A Penny (The Rise of America’s New Debtors’ Prisons).
In related stories, see:

West Virginia Tags Seven Alleged Debt Collection Rackets With Suits In Connection With Potentially Illegal Dunning Practices

In Charleston, West Virginia, The West Virginia Record reports:

  • West Virginia Attorney General Darrell McGraw is suing seven unlicensed collection agencies, and their owners, to enforce investigative subpoenas and stop them from engaging in unlawful practices in the state. On Tuesday, McGraw's office said it began investigating the companies after receiving complaints alleging they engaged in "abusive" and "unlawful" debt collection practices.

  • The attorney general said the practices included repeated harassing phone calls, impersonating law enforcement and judicial officers, making false threats that non-payment will result in arrest or criminal prosecution, and collecting non-existent debts or debts that have already been paid.

  • Spokesman Norman Googel said McGraw's office received at least one complaint, if not a few, for each company. "When we receive even one complaint, we investigate," he explained. "From that one complaint, we can tell if they are a licensed company or if they are violating the law." Googel said unlicensed debt collection agencies tend to operate in a similar, systematic way. "If a certain type of threat was made to one person, we find that that's what they do to everybody."
The companies and individuals sued by McGraw's office include:
  1. County Filing Services Inc. and owner Todd Loop;
  2. Portfolio Investment Financial and owner Todd Loop;
  3. Investment Management and Recoveries Inc. and Randall Ray Goins;
  4. Rosenthal, Stein and Associates LLC and Sharisse Williams;
  5. Vision Credit Solutions LLC and James P. Belstadt;
  6. National Capital Management Inc., and Ryan Daniel Todora and Natalie Lynn Rowe; and
  7. Dorsey Thornton and Associates LLC, and Wyteria Dorsey and Michael Thornton.
All seven of the companies are from out of state, Googel noted.

Mass. AG's New Regs Puts Tighter Squeeze On Anyone Engaging In Dubious Practices When Collecting Debts From Consumers Residing In Bay State

Lexology reports:

  • On March 2, 2012, the Massachusetts Attorney General published onerous new consumer debt collection practice regulations, deeming their violation to be an unfair trade practice.

  • These regulations, which became effective upon publication, purport to govern every business and person nationwide who engages in collecting a consumer debt (defined as any debt resulting from a purchase, lease or loan of goods, services or real or personal property or for a loan of money obtained for personal, family or household purposes, whether or not reduced to a judgment) from a person located within Massachusetts.

  • A copy of the regulations is available here. They are extraordinary in that, among other things, they impose validation and verification requirements on creditors collecting their own debts, rather than just on third party debt collectors or purchasers of defaulted debt as under the federal Fair Debt Collection Practices Act.
For more, see Massachusetts first state to require creditors to validate consumer debt (requires subscription; if no subscription, TRY HERE).

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

Tuesday, May 1, 2012

LA Sale Leaseback Peddler 'Strikes Out'; Gets 25 To Life For Equity Stripping Ripoffs That Targeted Poor, Elderly With Promises Of Foreclosure Rescue

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

  • An Orange County man who swindled elderly people out of their homes after promising to help them avoid foreclosure was sentenced to 25 years to life in prison under California's tough three-strikes law. Defense lawyers and prosecutors across the state could not recall any other case in which a white-collar offender received such a lengthy sentence under a statute typically applied in violent crime cases.

  • The sentencing of Timothy Barnett was unusual because his entire criminal record involved fraud. The 49-year-old was convicted last month of 17 felonies for tricking five people into unknowingly granting him title to their homes. He had been convicted of similar charges in the 1990s.

  • "The worst thing you can do is take somebody's home," Los Angeles County Superior Court Judge Stephen A. Marcus said Friday in explaining the lengthy sentence. "Instead of helping people, he stripped the equity from their homes and left five people homeless," the judge said. "Even Bernie Madoff didn't take people's homes from them."
  • Barnett's latest crimes occurred between 2005 and 2007. The victims were older residents of poor South Los Angeles communities who had used the explosion of real estate values to borrow against their equity, only to fall behind on the payments.

  • That's when Barnett appeared. Victims testified that he went to their homes and prayed with them, saying he could help keep their homes, bring loans current and reduce monthly payments. What Barnett didn't make clear enough was that he would end up owning the homes, Marcus said. Along with their homes, the victims cumulatively lost nearly $900,000 of equity to Barnett.(1)
  • Many people across the country have been accused of victimizing desperate homeowners since the real estate market collapsed in 2008, without facing a potential life sentence. What set Barnett's case apart was two prior "strikes" he received after pleading guilty to two burglary charges in the 1990s. That made him eligible for a life sentence if convicted of a new felony, as he was in March.

  • Under California law, a person can be convicted of burglary if he or she enters someone's home with the intent to commit a crime, as Barnett did. Burglary is one of the dozens of serious or violent crimes considered strikes under state law. "He's a career criminal who specializes in real estate fraud," Marcus said. "He preys on the weakest people in our society."

  • Among the most recent victims was an 85-year-old blind widow named Dorothy King. Her niece, Angenetta Allen, said Barnett deserved the harsh punishment. "Mr. Barnett did prison time for the very same thing, and as soon as he got out he did the same thing," Allen said. When the judge announced Barnett's sentence, some victims and their families cried out in approval(2).
For more, see Housing scam brings up to life sentence under three-strikes law (An Orange County man who swindled elderly people out of their homes is sentenced to 25 years to life in prison under California's three-strikes law, which is typically applied in violent crime cases).

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

(2) At one time, many in state and local law enforcement once passed on prosecuting these sale leaseback equity stripping ripoffs that under the flimsy pretense that these cases were merely 'civil matters.'

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

Virginia Supreme Court: Lender's Failure To Have Face-To-Face Meeting With FHA-Financed Homeowner Before Starting Enforcement Process Sinks F'closure

In Lynchburg, Virginia, The News & Advance reports:

  • The Supreme Court of Virginia ruled in favor of a Lovingston-area couple in their fight against the foreclosure of their property. On April 20, the court decided the lender failed to comply with terms of the mortgage taken out by Richard M. and Karin L. Mathews that required a face-to-face meeting before beginning the foreclosure process.

  • It also overturned Circuit Court Judge Michael Gamble’s ruling the meeting wasn’t required under U.S. Department of Housing and Urban Development regulations because the mortgage company’s offices were too far away.

  • Court records show the Mathewses fell behind on their loan payments and the holder of their note, PHH Mortgage Corp., appointed another company to begin foreclosure. A foreclosure sale was set for early November 2009. The day before the sale, the couple filed a complaint in Nelson County Circuit Court to stop it, noting PHH representatives were required to meet with them at least 30 days before beginning foreclosure but did not.

  • The mortgage company responded under Virginia common law, the person who first breaks a contract cannot sue to enforce it. It also said it was excluded from the meeting requirement because HUD had determined it was only required if the lender had a servicing office within 200 miles of the mortgaged property. The company had no such office. Gamble agreed, and dismissed the Mathews’ complaint in February 2011.

  • The Supreme Court of Virginia agreed in October to hear an appeal. An opinion rendered by Justice William Mims reverses both of the circuit-court rulings and sends the case back to be reheard.

  • The Mathewses and the attorney for PHH Mortgage Corp. could not be reached for comment. The Mathews’ attorney declined to comment about the decision. Although the couple could not be reached, Nelson County records show they still own a home in the Lovingston area.

  • The justices opined that under a similar 2008 case,(1) lenders must comply with all terms in a contract leading up to foreclosure and nonpayment of a mortgage is not the sort of material breach precluding borrowers from seeking to enforce the terms.

  • The HUD meeting requirements were incorporated into the couple’s loan because it was backed by the Federal Housing Administration. Under the regulation, the meetings are not required if the mortgaged property is not within 200 miles of a lender’s branch office. HUD, however, attempted to limit the definition of “branch” office to be a servicing office with staff trained to discuss options with the borrower behind on his payments. Department interpretations noted many “branch” offices are not staffed with properly trained employees.

  • The regulation itself does not support this limitation,” Mims wrote. “To accept HUD’s interpretation would amount to allowing it to create a new regulation or tacitly amend (the regulation) without following the proper statutory procedure.” The court noted borrowers should be able to travel to a lender’s branch office and meet with properly trained employees via tele- or video-conference.

  • A re-hearing of the issue in NelsonCountyhas not yet been set. A HUD spokeswoman had no comment about the ruling except to say the department is studying it.
For the ruling, see Mathews v. PHH Mortgage Corp., No. 110967 (Va. April 20, 2012).
(1) Bayview Loan Servicing, LLC v. Simmons, 275 Va. 114, 654 S.E.2d 898 (2008).

Sacramento Feds Score 3 Convictions Centering On Equity Stripping Racket That Peddled Sale Leaseback Ripoffs To High-Equity Homeowners In Foreclosure

In Sacramento, California, The Record Searchlight reports:

  • Two Redding residents indicted by a federal grand jury in 2010 for their roles in what prosecutors have described as a fraudulent foreclosure recovery scheme pleaded guilty [] in U.S. District Court, a spokeswoman with the U.S. attorney's office said. A Redding woman also indicted in the same case has rejected a plea bargain offer and is scheduled to stand trial next month.

  • Lauren Horwood, a spokeswoman for the U.S. attorney's office, said Darrin Arthur Johnston, 47, and Todd Allen Smith, 49, both of Redding, as well as Jeremiah Allen Martin, 34, of San Antonio, pleaded guilty Tuesday and are scheduled to be sentenced on Sept. 25. But she said the terms of the plea bargains, as well as the specific counts to which the trio admitted guilt, won't be released until then.

  • Prosecutors have said the alleged fraud scheme resulted in financially distressed homeowners signing over the deeds to their homes with the understanding that they could lease them and buy them back in two years. But, prosecutors have said, Johnston, Smith and Martin allegedly pocketed the lease-rental payments instead of paying off the loans.

  • Peterson, who was an escrow officer, used her notary status to give the appearance of legitimacy to the scheme, the federal indictment claims. Many homeowners lost their homes in the course of the alleged fraud, and lenders suffered losses in excess of $1 million, prosecutors have said.
  • According to the federal jury's indictment, the so-called foreclosure recovery program was based on their false representations that the homeowners could lease back their homes for a low rent and that they would help them repair their credit.

  • After obtaining titles to the homes, however, prosecutors said, Martin, Johnston and Smith allegedly extracted equity from them by inflating their values and obtaining additional loans, keeping the rent payments rather than making payments to lenders, and then allowed the homes to be lost in foreclosure.(1)
For the story, see Three plead guilty to federal charges in Redding foreclosure recovery scheme (Fourth person will stand trial next month).

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

Criminal Prosecutions Related To New Jersey Municipal Tax Lien Bid Rigging Probe Lead To Property Owner's Civil Suit Making Similar Charges

In Trenton, New Jersey, Courthouse News Service reports:

  • A federal class action claims that 26 people, banks and corporations, "who are among the largest purchasers of tax sale certificates in the State of New Jersey," rigged bids at municipal tax lien auctions to assure that interest rates on property tax obligations would stay at the maximum 18 percent. The named plaintiff is MSC, LLC, of Cherry Hill.

  • "A Tax Sale Certificate was issued with respect to plaintiff's property, and such Tax Sale Certificate was purchased by one of the defendants pursuant to the conspiracy alleged herein," the complaint states.

  • "As a result of the defendants' conduct alleged herein, the interest rate associated with plaintiff's delinquent tax obligation was artificially inflated and plaintiff was damaged thereby. Plaintiff is currently facing the prospect of foreclosure on its property by one of the defendants due to the TSC associated with its property."
For the lawsuit, see MSC LLC v. Collins et al.

Antitrust Feds Pinch Another In Ongoing Probe Into Bid Rigging At New Jersey Tax Lien Auctions

From the U.S. Department of Justice::::;:;

  • A financial investor who purchased municipal tax liens at auctions in New Jersey, as well as a company in which he was a partner, pleaded guilty [] for their roles in a conspiracy 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 [] in the U.S. District Court for the District of New Jersey in Newark, N.J., against David Butler of Cherry Hill, N.J. A charge was also filed against DSBD LLC, a New Jersey company responsible for managing tax lien investments in which Butler had a partnership interest. Under the plea agreements, which are subject to court approval, Butler and DSBD have each agreed to cooperate with the department’s ongoing investigation.

  • According to the felony charges, from at least as early as the beginning of 2005 until approximately February 2009, Butler and his company 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.
  • The department said that both Butler and DSBD proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

Monday, April 30, 2012

MERS, Others File Responses To NY AG Charges Relating To Banksters' Dubious Foreclosure Filings

In Brooklyn, New York, the New York Law Journal reports:

  • MERS and several banks who were sued by New York's attorney general for allegedly initiating faulty foreclosure actions have struck back in the high-profile litigation by strongly defending their practices and discounting the office's assertions as factually and legally deficient.

  • In February, Attorney General Eric Schneiderman sued MERS—Mortgage Electronic Registration Systems—and several major banks and mortgage servicers, including JPMorgan Chase, Bank of America and Wells Fargo.

  • The action contended the defendants' use of the MERS system resulted "in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially created clouds of title on properties" across the state (NYLJ, Feb. 6).

  • Defendants fired back on April 20, seeking dismissal of the suit and claiming that their practices—such as having MERS commence a foreclosure or using a private registry to track loan ownership rights—were not deceptive and stressed that the attorney general never pointed to a single case where an action was initiated against a homeowner who was not in default.
  • The case has been assigned to Brooklyn Supreme Court Justice David Schmidt and the attorney general's response is due June 22.

Go here for the New York Attorney General lawsuit filed Feb. 3 describing MERS Inc. of Virginia, a digital mortgage tracking service, as "a shell company" established as a stealth mortgagee for banks, particularly JPMorgan Chase, the Bank of America and Wells Fargo Bank.