Cranky HOA's Complaints To Cops Regarding Missing Elderly Mom Leads To Son's Conviction For Pocketing Nearly 20 Years Of Her Social Security Benefits

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

• U.S. Chief District Judge Anne C. Conway [] sentenced James T. Parker to 4 years in federal prison for social security fraud. As part of his sentence, the court also ordered Parker to pay restitution in the amount of $158,992.80. James T. Parker pled guilty to the indictment on March 7, 2012.
  
  According to court documents, on December 24, 1992, two employees of the Bombardier Corporation were testing jet skis on the Indian River, in Brevard County, Florida. In the vicinity of the Spoil Islands, they found remains of a human body floating in the river.
  
  On December 28, 1992, the Brevard County medical examiner completed a post mortem examination and noted that the remains were those of an elderly, white female. The remains consisted of five sections and showed evidence of separation by incision.
  
  According to the medical examiner's report, the cause of death was undetermined and the probable manner of death listed as a homicide. The human remains were unidentified and Brevard County Sheriff’s Office closed the case on February 19, 1993.
  
  In January 2007, the Brevard County Sheriff’s Office received complaints from a local homeowner’s association regarding James T. Parker, including the whereabouts of his elderly mother, Bertha R. Parker.
  
  Based on the deputies’ meeting with Mr. Parker, Brevard County Sheriff’s Office re-opened the cold case file on the human remains that were found in the Indian River, in December 1992. DNA results confirmed that the remains found in the river was a 99.995% probable match to the mother of Mr. Parker, Bertha S. Parker.
  
  Mr. Parker never accounted for the whereabouts of his mother, who lived with him in December 1992, and admitted to receiving her monthly social security checks that were deposited directly into a joint Wachovia Bank account that they both shared since her disappearance in December 1992. Mr. Parker further admitted to withdrawing her social security money and using the money for himself.

For the U.S. Attorney press release, see Brevard County Man Sentenced For Collection Of Deceased Mother's Social Security Benefits.

Attorney Ordered To Return Excessive Fees To Screwed Over Client Fails To Show Up To Court, Becomes Target Of Bench Warrant

In Miami, Florida, the South Florida Sun Sentinel reports:

• A federal judge [...] ordered the arrest of a New York lawyer accused of bilking a South Florida client out of $275,800 then abandoning him after a guilty plea.
  
  Emmanuel Roy didn't show up at the federal courthouse in Miami for Friday afternoon's contempt hearing, an absence that was not taken lightly by U.S. Magistrate Judge William Turnoff. Although he stopped short of finding Roy in contempt of court, Turnoff issued a bench warrant for the wayward attorney. "He is going to be arrested and brought before me," Turnoff said.
  
  Roy and another attorney, Peter Mayas of Plantation, were ordered earlier this year to return the excessive legal fees to the family of Patrick Coulton, a Coconut Creek man who was arrested in March 2008 on federal drug and money laundering charges. With the attorneys present, Coulton pleaded guilty four months after his arrest. He is serving a seven-year sentence.
  
  The payments came in the form of cash, jewelry, a Porsche and a Coconut Creek townhouse. After the guilty plea, according to court documents, the attorneys ditched the client.

For more, see Miami federal judge orders arrest of NY lawyer (Pair of attorneys accused of bilking, then abandoning Broward client).

Mortgage Payoff A Memorable Experience For One Bay State Homeowner, Lender

In Milford, Massachusetts, The Milford Daily News reports:

• A penny saved is a penny earned, but for one Milford man, a lot of pennies saved is a mortgage payment. Thomas Daigle delivered a pair of boxes to the steps of Milford Federal Savings and Loan Association this April that contained more than 62,000 pennies, which he had collected for the past 35 years.
  
  In 1977, he and his wife Sandra married and moved into their current Milford home. After he purchased the home with a mortgage from Milford Federal, Daigle made it his mission to make the final payment in pennies.
  
  He said that he just wanted to make his last payment “memorable.” “It was something I wanted to do,” he said. “I always follow through.” “I was just praying I didn’t die first.”

For more, see Pennies add up for Milford man.

Booted Tenants In Bronx Building Begin Return As Landlord Replaces Improperly Removed Fire Escapes; Some Think Act Was Intentional To Dodge Rent Regs

In The Bronx, New York, the New York Daily News reports:

• The tenants of the fire escape fiasco building got two reasons last week to be hopeful that the end of their nightmare is in sight. Two new lines of fire escapes were installed at 2400 Webb Ave., allowing 24 units on the second through seventh floors to be occupied, according to Buildings Department spokesman Tony Sclafani. That brings to 35 the number of apartments that residents can return to, out of 75 total.
  
  And Bronx Housing Court Judge Jerald Klein last Friday presided over a consent order agreeing that landlord Goldfarb Properties will complete the re-installation of fire escapes by July 31st or face penalties up to $150 a day per violation. All parties signed the stipulation.
  
  “It went rather well,” said Michael Staton, the tenant representative. "The judge seemed to be very affable and instructive and helpful in terms of leading us through this process," noted Staton. "He really explained and clarified everything."
  
  More than 200 tenants were evacuated on June 4, after a contractor removed all the fire escapes in May without a permit, turning the University Heights building into a firetrap. Staton, who was able to move back into his apartment nearly two weeks ago, expressed hope that more of his neighbors would return soon.
  
  Though there were many violations, the consent order only concerned those that kept tenants out of their apartments. "The violations of concern are the removal of the fire escapes and the lack of a fire proof door separating the garage from the basement," said Staton. "The other violations that have to be corrected would not necessitate that we are out of the apartments."
  
  The tenants seems content with this decision, Staton said, but they are still upset over the predicament. The building is home to many city employes, as well as many elderly residents and tenants with young children.
  
  Some tenants have said they believe the evacuation was intentional, to get rid of longtime tenants with low rents.
  
  Sclafani said the investigation of the landlord and engineer Roland Draper to determine whether they purposely skirted the law is ongoing, and both could face more severe penalties.

For the story, see Tenants of Bronx building displaced by fire escape fiasco see light at end of tunnel; half can return (Consent order hammered out last Friday in Bronx Housing Court).

Sparks From Renter Rent Strike Against Landlord From Hell Ignite, Begin To Spread; Protester: “In The Winter We Freeze & In The Summer We Roast!"

In Sunset Park, Brooklyn, AlterNet reports:

• The electrical box in the basement of multifamily brownstone on 46th Street in Sunset Park, Brooklyn, looks like a middle-school science fair project gone horribly wrong. The door to the box is ajar and a cheap plastic fan, positioned only inches from the fuses, desperately tries to keep the wiring from catching fire when it sparks and overheats, plunging the building’s 51 apartments into darkness and threatening to set the entire structure ablaze.
  
  “Last night was so bad, the lights were going on and off every ten minutes,” said 20-year-old Riccey Trelles, a recent college graduate who lives with her family on the first floor. “It was pitch-black; I couldn’t see the person across from me.”
  
  Despite the darkness, Trelles was up until almost two a.m. making posters and banners for the following day’s protest to expose her building’s slumlord, Orazio Petito, and implore city officials to intervene in a case of housing violations that tenants are now describing as human rights abuses.
  
  As foreclosures continue to displace millions and put historic pressure on the nation’s rental market, slumlords now have more opportunity than ever to prey on the most vulnerable of tenants.
  
  The problem is especially bad in an owner’s market like New York City, where average rent price increased more in the second quarter of 2012 than in any other city in the country, sending landlords into a frenzy to evict old tenants--especially those with stabilized rent--and jack up the prices for newcomers.

***

• “We are people,” said Sara Lopez, a retired public employee who was the first to begin withholding rent payments almost two years ago. “We deserve to live with dignity. We pay for our apartments, so we deserve our rights as tenants.”
  
  After months of door knocking by Lopez and Trelles’ mother, Sue, the rent strike now includes 80 families across three of Petito’s buildings—and Lopez hopes to spread the movement to his other properties.
  
  Petito, for his part, is a classic exploitative building owner. Ranking 51 on city’s watch list of worst slumlords, he owns approximately twenty buildings across the boroughs and dozens of small real estate corporations that flit in and out of existence like fireflies and list PO Boxes for addresses.
  
  He’s frequently fined and issued court dates, which he rarely shows up to, and he seems quick to take out million-dollar mortgages that he never repays. The only time his tenants see him is when rent is due, or—more recently—when he knocks on the doors of striking families and tries to intimidate them into paying.
  
  “So many threats, so much abuse,” said an elderly resident who asked not to be named. “He said he was going to evict me; he told me that he was going to call immigration on me.”
  
  As a newer resident, she was paying $1,600 a month for an apartment that rarely has heat, hot water or electricity before she joined the strike despite the barrage of threats. Many of the building’s tenants lack residency papers, and Petito is more than willing to wave forged eviction notices in front of tenants who speak little English.

***

• On Thursday, residents invited television crews into the buildings and testified to Petito’s many abuses. Then, just in case the city still didn’t get the message, dozens of tenants paraded through the blistering heat—signs, canes, sun umbrellas and all—to Assemblyman Felix Ortiz’s office, where they occupied the building.
  
  One resident’s sign read in Spanish, “In the winter we freeze and in the summer we roast." An hour later, the group emerged victorious, having scheduled a sit-down meeting with Ortiz for the coming Monday.

For more, see Major Rent Strike Against Millionaire Slumlord Catches Fire in Brooklyn (As foreclosures continue to put historic pressure on the nation’s rental market, slumlords now have more opportunity than ever to prey on the most vulnerable of tenants).

Woman Cops Plea For Pocketing $30K+ In Section 8 Rental Housing Benefits While Purporting To Be Tenant In House She Actually Owned

From the Office of the U.S. Attorney (Rochester, New York):

• U.S. Attorney William J. Hochul, Jr. announced [] that Lavonya Bess, 59, of Jacksonville, Florida, pleaded guilty to theft of public money before U.S. District Judge Charles J. Siragusa. The charge carries a maximum penalty of 10 years in prison and a fine of $250,000.
  
  Assistant U.S. Attorney Tiffany H. Lee, who is handling the case, stated that between October 2006 and October 2010, while she was residing in the Western District of New York, the defendant applied for and received United States Department of Housing and Urban Developement (HUD) Section 8 benefits to assist her with rent.
  
  In her application, Bess claimed to be the tenant of a residence located on Flanders Street in the City of Rochester when in fact, she was the owner of the residence.
  
  The defendant converted over $30,000 in Section 8 housing benefits for her own use to which she was not entitled.

For the U.S. Attorney press release, see Former Rochester Woman Pleads Guilty To Theft Of Funds.

Wisconsin AG, Local DA Bag Closing Agent For Allegedly Pocketing Approximately $1M In Loan Proceeds Intended For Existing Mortgage Payoffs

From the Office of the Wisconsin Attorney General:

• Attorney General J.B. Van Hollen and Marathon County District Attorney Kenneth J. Heimerman announced the filing of a complaint [], charging Jay Fischer with racketeering, embezzlement, fraud, and tax crimes. The complaint filed in Marathon County included twenty-one felony and four misdemeanor counts.
  
  According to the complaint, Fischer operated a business, known as Valley Title, previously located on 17th Street in Wausau. Valley Title served as a closing agent for real estate transactions. Homeowners utilized Valley Title as a title agent when refinancing a mortgage or purchasing a house.
  
  According to the complaint, Fischer received more than one million dollars from ten real estate transactions in 2009 and 2010. Fischer reportedly failed to pay off the old mortgages resulting in dual active mortgages on the homes. Fischer later satisfied two of the mortgages after the homeowners discovered dual mortgages on their properties. The complaint alleges that Fischer kept approximately one million dollars from the remaining eight mortgages.
  
  The charge of racketeering alleges that Fischer used his business, Valley Title, to embezzle money and obtain signatures on the closing documents by fraud. The complaint also charges Fischer with failing to file individual and corporate tax returns in 2009 and 2010. Fischer no longer actively operates Valley Title, according to the investigation.

For the Wisconsin AG press release, see Wisconsin Man Charged with Racketeering, Embezzlement, Fraud and Tax Crimes in Million-Dollar Mortgage Fraud Investigation.

Go here for the Warrant and Criminal Complaint.

Ex-Chapter 7 Trustee Gets 18 Months For Ripping Off Bankruptcy Estates He Oversaw

From the Office of the U.S. Attorney (New Haven, Connecticut):

• David B. Fein, United States Attorney for the District of Connecticut, announced that Michael J. Daly, 55, of West Simsbury, was sentenced [] by Chief United States District Judge Alvin W. Thompson in Hartford to 18 months of imprisonment, followed by three years of supervised release, for stealing from several bankruptcy estates that he oversaw as a trustee. Daly also was fined $15,000.

***

• On July 12, 2011, Daly pleaded guilty to one count of embezzlement by a court officer, a charge that stemmed from his embezzlement of $11,100 from the bankruptcy estate of Lehman Brothers Inc., a Connecticut-based print shop.
  
  According to court documents and statements made in court, on May 13, 2004, a voluntary Chapter 11 bankruptcy petition was filed on behalf of Lehman Brothers. On December 5, 2008, the Lehman Brothers bankruptcy was converted from a Chapter 11 to a Chapter 7 case, and the U.S. Bankruptcy Court for the District of Connecticut appointed Daly trustee of the estate. As trustee, Daly was responsible for closing the company’s “Debtor-in-Possession” account, or “DIP,” as soon as possible.
  
  Daly left Lehman Brothers’ DIP account open for more than six months, until June 29, 2009. During that period, the account received $11,584.31 in customer deposits for previously completed print jobs. Daly made a series of withdrawals from the account, totaling $11,100, which he deposited into his business account or converted to cash. Daly then transferred the stolen money to his private bank account and spent it on personal expenses.
  
  The FBI’s investigation of this matter further revealed that, while serving as a bankruptcy trustee, Daly embezzled $16,500 from two other estates, stole approximately $22,100 in jewelry from another estate, and attempted to submit approximately $73,650 in false time records in association with his work on behalf of another estate.
  
  Daly has surrendered his license to practice law and resigned as a panel trustee in the bankruptcy court.

For the U.S. Attorney press release, see Former Bankruptcy Trustee Sentenced to 18 Months in Federal Prison for Stealing from Estates.

(1) To the extent the any victims can't collect any money from this attorney, they might consider pursuing a claim with the Connecticut Client Security Fund, which is a fund established by the rules of the Connecticut Superior Court to provide reimbursement to individuals who have lost money or property as a result of the dishonest conduct of an attorney practicing law in the State of Connecticut, in the course of the attorney-client relationship. The fund provides a remedy for clients who are unable to obtain reimbursement for their loss from any other source. Go here to obtain a copy of form JD-GC-15 - "Application for Reimbursement - Client Security Fund" (PDF). rogue

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

• Directory Of Lawyers' Funds For Client Protection (now includes Canada Client Protection Funds, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

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

New California Law Puts Kibosh On Deficiency Judgments On Mortgage Refinances That Subsequently 'Go Underwater' & End With Foreclosure Sale

In Sacramento, California, the Los Angeles Times reports:

• Homeowners who default on refinanced mortgages won't be liable for debts that exceed the market value of their lost properties. Late Monday, Gov. Jerry Brown signed into law legislation to close a legal loophole that could make defaulting borrowers responsible for paying back money they took out of previously more valuable homes when they refinanced their loans.
  
  The lingering debt, said the author of the bill, Sen. Ellen M. Corbett (D-San Leandro) adds a second punishment to people who already have lost their biggest possession. "Many Californians have suffered the heartbreak of home loss since the economy soured, and none should owe more on their homes than the market value," Corbett said. "This legislation prevents borrowers from getting caught in an unfair and little-known trap simply because they refinanced their homes."
  
  The bill is somewhat similar to a 2010 Corbett measure that was vetoed by then-Gov. Arnold Schwarzenegger. This year's version was modified significantly to garner support from divergent groups, including the California Bankers Assn., the California Assn. of Realtors and the Center for Responsible Lending, a consumer advocacy group.
  
  Corbett's bill, SB 1069, passed the Senate on a bipartisan 39-0 vote and the Assembly on a 79-0 vote.

Source: Governor signs homeowner foreclosure limit.

Idaho Regulator Imposes Cease & Desist Order On 'Phantom' Unlicensed Online Escrow Outfit Involved In Timeshare Peddling

From the Idaho Department of Finance:

• Gavin Gee, director of the Idaho Department of Finance, [] announced the issuance of a cease-and-desist order against All Net Escrow, a purported online escrow company engaged in timeshare escrow transactions. All Net Escrow was the subject of a department consumer alert less than two weeks ago because the company claimed to be located at an Eagle, Idaho, address that actually houses an unrelated business.
  
  
• That business has no knowledge of All Net Escrow and became concerned after an individual came into its business inquiring about escrow services. All Net Escrow is not licensed by the department as an escrow company or as any other financial service provider. An Idaho “escrow company license” provided by All Net Escrow to one customer is phony.
  
  
• [The] cease-and-desist order alleges violations by All Net Escrow of the Idaho Escrow Act for its actions purporting to operate as a licensed Idaho escrow company. The order also alleges violations of the Idaho Financial Institutions Fraud Prevention Act, which prohibits leading the public to believe you are a financial institution, such as an escrow company, for the purpose of obtaining money.
  
  As noted in the earlier alert, All Net Escrow appears to be working with a company called Castle Wealth Management, purportedly located in Oklahoma City, Oklahoma. The department has confirmed that no business by that name is located at the Oklahoma City address used by Castle Wealth. (Please note there is a legitimate investment advisory firm located in Florida called Castle Wealth Management that has no relationship to this investigation.)

For the press release, see Unlicensed Internet Company Ordered to Cease and Desist (Purported escrow company, All Net Escrow, said to have violated Idaho laws).

Victimized Shareholders Get Judicial Green Light To Pursue Suit Against BofA, MERS For Allegedly Duping Them About Exposure To Crappy Mortgages

In New York City, Reuters reports:

• A federal judge refused to dismiss a lawsuit accusing Bank of America Corp of misleading shareholders about its exposure to risky mortgage securities and its dependence on an electronic mortgage registry known as MERS.
  
  U.S. District Judge William Pauley in Manhattan said shareholders led by a Pennsylvania school pension fund may pursue securities fraud claims against the second-largest U.S. bank to recover billions of dollars of alleged losses.
  
  Pauley said the allegations raised a "strong inference" that Bank of America intended to mislead about its reliance on the registry, vulnerability to mortgage buyback claims, internal controls and compliance with accounting and securities rules.
  
  But the judge dismissed a variety of claims against current and former Bank of America executives and directors, including current Chief Executive Brian Moynihan and his predecessor, Kenneth Lewis, and dozens of underwriters.

For more, see BofA shareholders may pursue lawsuit over MERS, mortgages.

Mom Left w/ No Place To Live While State Seeks To Take Kids After She Falls Victim To Rent Scam Involving Vacant Home Belonging To Out-Of-State Owner

In Atlanta, Georgia, WGCL-TV Channel 46 reports:

• Tocco Collins calls the place where she used to live a house of horrors. "Look at this sinking floor right here. It's a dangerous situation," Collins said.
  
  The Southwest Atlanta home in the 1000 block of Sims Street has holes in the wall, broken windows and no hot water. Collins said she paid a company called the Real Estate Connection $600 a month to a stay in the home. "I had promises that they were going to come and fix whatever needed to be fixed in the house," Collins said.
  
  The single mother of 12 said she waited seven months, but nothing was repaired. Collins said shortly thereafter, disaster struck. "My biggest nightmare came of August 2011 when my light box caught on fire. Georgia Power disconnected my service because it was too dangerous," Collins said.
  
  Collins and her family have been using a generator for the last 10 months. She said she stopped paying rent when her supposed landlord refused to make repairs. They took Collins to court in an attempt to get her evicted and that is when she said she discovered the shocking truth.
  
  "No one could provide the deed to the house. The people renting me the house don't own it," Collins said. Now the "fake" landlords have disappeared, Collins has no place to live and she said the state is trying to take her children.
  
  "The phony landlords should be paying the money back to my mom and they should also go to jail for it," Octavious Collins said. "I am trying to make some effort right now to work something out, but I am lost," Collins said.
  
  Collins said the home is actually owned by a woman in New York state who claims she had no idea the home was being rented out. Occupy Atlanta is working with Collins and her family. The group said it hopes the public will help the family buy a home, which will be renovated by volunteer plumbers electricians and carpenters.

Source: Family of 11 homeless after falling victim to fake landlord.

Feds Pinch Home Inspector In Alleged F'closure Service Report Fraud; Freddie, Fannie Among Unwitting Dupes Snookered Into Footing BofA-Authorized Tab

In Tampa, Florida, The Tampa Tribune reports:

• As the real estate market plunged in Florida, a Brooksville company that inspected foreclosed homes had trouble keeping up with the work. American Mortgage Field Services was contracted by Bank of America to perform upward of 100,000 inspections a month for $6.50 each.
  
  So the company started fabricating reports for follow-up inspections, using re-dated photographs taken at the first visit, according to documents filed in U.S. District Court in Tampa.
  
  Altogether, the company defrauded the bank of nearly $12.8 million out of the $23.5 million paid for inspection services on properties in various states of foreclosure or resale between 2007 and 2012, according to court documents.
  
  Although Bank of America paid for the inspections, it billed the entities that owned or insured the mortgages, including taxpayer-funded Fannie Mae, Freddie Mac and FHA.
  
  Company owner Dean Counce, 42, of Spring Hill, has agreed to plead guilty to a federal charge of wire fraud, which carries up to 20 years in prison, although he is likely to receive less. He is required under his plea agreement to cooperate with authorities and pay restitution.
  
  Counce's lawyer, John Fitzgibbons, suggested there will be more prosecutions. "Mr. Counce has admitted that he participated in wrongdoing in his business, and he is very remorseful for some of the things that happened," Fitzgibbons said. "I anticipate that there will be others who will reach the same conclusion as Mr. Counce, that it is in their best interest to admit their wrongdoing and move forward."(1)

***

• [Stacie] Gearhart said she was paid $9 an hour and never received her final paycheck for 68 hours of pay. Gearhart said she knows of about 15 other employees who also lost their last paycheck, although Counce did write personal checks to some. One co-worker who didn't get paid, she said, lost her home. Fitzgibbons said Counce is trying to pay the employees he owes.
  
  "Since the time that the federal authorities raided the business, which basically shut it down," Fitzgibbons said, "Mr. Counce has made many, many employees whole. Mr. Counce has paid almost all of his employees. There are a few that are still left and he is hopeful that eventually everyone will be paid." Gearhart said Counce generally treated employees well, buying them food when they had to work overtime.
  
  According to Counce's plea agreement, employees who created large amounts of fraudulent inspection reports were often given cash bonuses.

For the story, see Home inspector to plead guilty in fraud case.

(1) In essence, by making this indirect 'announcement' that his client is 'singing' to the Feds with the view of taking down as many other people as possible and 'throwing them under the bus' to save his ass and keep any time he spends behind bars to a minimum, I suspect that this is Counce's defense counsel's less-than-subtle way of persuading others to just come forward and admit their guilt. After all, the more scores the Feds ring up that can be credited to Counce's cooperation, the lighter the 'judicial hammer' he'll be belted with when his sentencing day arrives:

• "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).

Georgia Appeals Court: Failure To Include Name Of Actual Owner Of Mortgage Loan Sinks Foreclosure; Ruling Could Affect Tens Of Thousands Of Cases

In Cobb County, Georgia, The Atlanta Journal Constitution reports:

• An appeals court ruling this week in favor of a Cobb County couple could leave mortgage companies liable for damages for not following state law in an unknown number of Georgia foreclosures.
  
  The 4-3 ruling probably won't undo the result of past foreclosures, lawyers say, but could open another avenue for borrowers to sue mortgage firms.
  
  "This could breathe new life into the challenges of foreclosures that took place in late 2008 and throughout 2009," said Frank Alexander, a real estate law professor at Emory University. The number of cases where the ruling might be applicable was not immediately clear, but could be in the tens of thousands.
  
  The issue involves the many lenders who sell their loans to other parties such as investment trusts, but serve as stand-ins handling the paperwork in the foreclosure process and act as if they still own the loans.
  
  The Georgia Court of Appeals held Thursday that the name of the actual owner of a mortgage must be present in foreclosure filings and notices sent to delinquent borrowers.
  
  State law was modified in 2008 to require that foreclosure notices and legal advertisements include the name and contact information of the mortgage owner and of organizations that could negotiate a modification, short sale or other relief on lender's behalf.
  
  "A debtor has a right to know which entity has the authority to foreclose, and there should be no confusion about the identity of that entity. The practical ramifications are troubling if it were otherwise," the court majority agreed in its opinion.(1)
  
  The court said that if a debtor knows a mortgage servicer no longer holds the loan, for instance, he could be "misled or confused, or simply disregard, a notice of foreclosure" that doesn't correctly identify the loan's proper owner.
  
  David Ates, an attorney for plaintiffs Izell and Raven Reese, said mortgage servicers, stand-ins for investors who buy mortgages the original lenders have sold, often have an incentive to foreclose because of potential fee revenue.

***

• Alexander said the ruling is significant as an affirmation of the 2008 amendment to Georgia's foreclosure statutes. In addition to helping borrowers under threat of foreclosure know where to turn for help, the principle of the 2008 amendment was to help ensure that the true holder of the mortgage was foreclosing.
  
  "Even a dog in Georgia has a right to know who's kicking them," Alexander said. "Before you lose your home you have a right to know who's taking it from you."

For more, see Ruling could have impact on foreclosure suits.

For the court ruling, see Reese v. Provident Funding Associates, LLC., A12A0619 (Ga. App. July 12, 2012).

(1) The state court of appeals made these, among other, observations in reaching its conclusion:

• A persuasive discussion of the legislature's intent is set out by the Northern District of Georgia in Stubbs v. Bank of America, No. 1:11-CV-1367-AT, 2012 WL 516972, at *1, 5 (N.D. Ga. Feb. 16, 2012) (originally filed in state court and removed to the Northern District of Georgia based on diversity jurisdiction), which held as follows:
  
  While it may be of no consequence who actually sends the notice, and that task may properly be delegated to a servicing agent (or, as is often the case, an attorney), the amendments of sections [OCGA § 44-14-]162 and [OCGA § 44-14-]162.2 in 2008 make clear that the identity of the secured creditor conducting the sale is a material element of that notice.
  
  ***
  
  The Northern District's analysis in Stubbs is compelling, and although not controlling, is persuasive authority in analyzing the very same Georgia statute that we interpret in this case. Notably, the circumstances in this case are nearly identical to those presented in Stubbs, where
  
  the actual "secured creditor" did not provide notice of the foreclosure sale as required by OCGA § 44-14-162.2. Nor did the servicer, acting as agent for the secured creditor, send a foreclosure notice that properly identified the secured creditor. Rather, the loan servicer sent a notice of foreclosure identifying itself as the secured creditor when it was not.
  
  (Punctuation omitted.) Id. at *4. Like the notice in Stubbs, the notice in this case was sent by the loan servicer, rather than the secured creditor. While a loan servicer may be permitted to send the notice on behalf of the secured creditor,[6] Provident's fatal mistake was in sending a notice that failed to properly identify the secured creditor. Although the notice disclosed that Provident had the "authority to negotiate, amend and modify all terms of the Note and Security Deed[,]" such "is materially different from disclosing that [the loan servicer] has full authority to modify on behalf of a creditor, . . . within whatever guidelines that creditor may have imposed." (Citations and punctuation omitted.) Id. at *5. This is especially so when the notice fails to ever identify the true secured creditor. The notice in this case contained material misrepresentations, and we agree with the federal court's sentiment that "[s]ending a foreclosure notice that misidentifies the secured creditor violates the spirit and intent of OCGA § 44-14-162.2." (Punctuation and emphasis omitted.) Id.[7]
  
  Indeed, a debtor has a right to know which entity has the authority to foreclose, and there should be no confusion about the identity of that entity. The practical ramifications are troubling if it were otherwise. For example, in a case such as the instant one, where the debtor knows that the loan servicer is no longer the holder of the note or the security deed, it is certainly conceivable that the debtor could be misled or confused by, or simply disregard, a notice of foreclosure which is sent by an entity different from the secured creditor, and which fails to properly identify the secured creditor. The misrepresentation in this case illustrates how transparency can be obfuscated in the Georgia foreclosure process.
  
  Finally, a notice that discloses the true identity of the secured creditor is a simple requirement, and one that does not impose an undue burden upon the banks or other entities authorized to send the notice of foreclosure sale.
  

Fed Appeals Court: Loan Servicer's Failure To Respond To Homeowner's Request To Modify Loan Payments Does Not Violate TILA Where It Originated M'tgage

In Las Vegas, Nevada, the Las Vegas Review Journal reports:

• A federal appeals court has foreclosed on one avenue for financially distressed homeowners to challenge lenders.
  
  Banquet server Richard Gale defaulted on his home loan payments four years ago when paychecks from his various Strip employers started to shrink. He sent letters to First Franklin Loan Services asking it to rework the terms of his $250,000 mortgage and to find out which entity owned the loan at that point but never heard back.
  
  In its ruling on Thursday, the Ninth U.S. Circuit Court of Appeals denied Gale's bid to sue First Franklin, a subsidiary of Bank of America, under the Truth in Lending Act. Under its intricate interpretation of the act, the court excused First Franklin because it was the original lender and kept the servicing rights even though the loan was later resold. Many banks continue the collection work as a source of steady income even if they want certain loans off the books.
  
  However, if a servicer attained the position through a legal assignment from another company, then it must tell homeowners who holds the loan.
  
  The court designated the case as a published opinion, meaning that it sets a precedent for the lower courts to follow.
  
  "We are not unsympathetic to the frustration that resulted from Franklin's failure to respond to Gale's inquiry regarding his home," according to the opinion by the three-judge panel. "The service is often the only entity that the consumer is in contact with after the loan issues - unless the servicer is forthcoming, the homeowner may not know with whom to negotiate to stave off foreclosure ... ."

For more, see Appeals court rejects bid to sue under lending act.

For the court ruling, see Gale v. First Franklin Loan Services, No. 09-16498 (9th Cir. July 12, 2012).

Feds, Wells Fargo Reach $125M Deal To Settle 'Ghetto Loan' Peddling Allegations

From the U.S. Department of Justice:

• The Department of Justice [] filed the second largest fair lending settlement in the department’s history to resolve allegations that Wells Fargo Bank, the largest residential home mortgage originator in the United States, engaged in a pattern or practice of discrimination against qualified African-American and Hispanic borrowers in its mortgage lending from 2004 through 2009.
  
  The settlement provides $125 million in compensation for wholesale borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin. Wells Fargo will also provide $50 million in direct down payment assistance to borrowers in communities around the country where the department identified large numbers of discrimination victims and which were hard hit by the housing crisis.

For the Justice Department press release, see Justice Department Reaches Settlement with Wells Fargo Resulting in More Than $175 Million in Relief for Homeowners to Resolve Fair Lending Claims (African-American and Hispanic Borrowers Who Qualified for Loans and Were Charged Higher Fees or Rates or Were Improperly Placed into Subprime Loans Are Eligible for Compensation).

Go here for the consent order.

The Other Foreclosure Crisis: Real Estate Tax Lien Foreclosure Process

From a press release from the National Consumer Law Center:

• Outdated state laws that permit local governments to sell property through a tax lien foreclosure process if the owner falls behind on property taxes (owing as little as $400) are fueling a second nationwide foreclosure crisis, according to a report from the National Consumer Law Center (NCLC).
  
  “Homeowners throughout the nation, particularly elderly and people with cognitive challenges, have lost or stand to lose family homes along with long-term equity which may represent their sole savings and security for retirement,” said National Consumer Law Center Attorney John Rao and author of The Other Foreclosure Crisis: Property Tax Lien Sales.
  
  “Our report is a wake-up call for states to reform tax sale laws to keep speculators from reaping huge windfalls at the expense of fragile citizens while still ensuring local governments receive much needed tax revenue.”

For the entire press release, see Tax Lien Sales: Elderly Are Losing Homes While Investors Reap Big Profits (Report Documents a Growing National Crisis; States Urged to Reform Tax Laws).

For the full report, see: The Other Foreclosure Crisis: Property Tax Lien Sales.

Go here for more links from the National Consumer Law Center on "The Other Foreclosure Crisis."

Some Financially Strapped Courts Lean On Bill Collectors To Help Fund Operations By Squeezing The Poor

From the American Civil Liberties Union's Blog Of Rights:

• Across the country, cash-strapped cities and counties are throwing poor defendants in jail for failing to pay legal debts that they can never hope to manage. On Monday, the New York Times told the story of Gina Ray, whose $179 speeding ticket mushroomed into $3,170 in fines and fees and 40 days in jail when she couldn’t afford to pay it. Gina is one of many swept up in America’s new debtors’ prisons, a growing problem nationwide.
  
  Also this week, the ABA Journal told the story of the Philadelphia courts’ aggressive efforts to collect unpaid fines and fees, many of which are decades old. Ameen Muqtadir was billed nearly $41,000 for two failures to appear in court dating back to 1991 and 1997—even though he’d been incarcerated at the time of each hearing.
  
  Meanwhile, Hakim Waliyyudin spent 12 days in jail while he raised the money to post a $1,000 bond with the court; after the criminal charges against him were dismissed, the court clerk told him that he owed another $9,000 plus $1,500 in collection fees because of a missed court date.
  
  Although a free attorney from Community Legal Services ultimately convinced the court to waive the judgment and collection charges against Hakim, many other indigent defendants around the country face further jail time when they cannot pay court-ordered fines and fees.

For more, see Courts Should Stop Jailing People for Being Poor.

See also:

• The New York Times: Poor Land in Jail as Companies Add Huge Fees for Probation,
• ABA Journal: Get Out of Jail—But Not Free: Courts Scramble to Fill Their Coffers by Billing Ex-Cons,
• American Civil Liberties Union: In For a Penny: The Rise of America's New Debtors' Prisons.

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

Bill Collector Accused Of Making Arrest Threats, Harassing Family Members When Squeezing Consumers Over Fabricated Debts Settles With WV AG For $1.7M

From the Office of the West Virginia Attorney General:

• West Virginia Attorney General Darrell McGraw [] announced an agreement with DP & Associates of Irvine, CA, that requires the debt collection company to pay a total $1.7 million in refunds and cancelled debts. The company engaged in unlawful and threatening debt collection practices and attempted to collect debts without a license.
  
  An investigation by the Attorney General’s Office led to the signing of an "Assurance of Discontinuance" in which DP agrees to close all West Virginia accounts with a zero balance, notify credit-reporting bureaus to delete references to the debts, refund all amounts it collected, and release any judgments obtained against the state’s consumers. The agreement secures $1,714,553 in refunds and cancelled debts for 124 West Virginians.
  
  "In these difficult economic times, it is especially heinous for companies to bully and exploit financially strapped consumers with false threats and phony debts," McGraw said. "Our Office will continually strive to protect West Virginians from these coercive, unlawful, and threatening debt collection techniques."
  
  In January, McGraw’s Consumer Protection Division received a complaint against DP asserting that the company made telephone calls falsely threatening arrest and harassing family members regarding a debt allegedly owed by a consumer. Upon investigating the complaint, the Attorney General’s Office discovered that DP did not have a license to collect debts in West Virginia. McGraw’s investigation also revealed a pattern of abusive collection methods by DP in which consumers were deceitfully threatened with arrest for non-payment of fabricated debts.
  
  In one case, a Grafton, WV, consumer was mislead to believe that if she did not pay $3,000 to DP by the end of the day a warrant would be issued for her arrest. DP also contacted the consumer’s mother-in-law and falsely stated that representatives were waiting at the Taylor County Courthouse for the arrest of her daughter-in-law. The company also inflated the alleged amount owed, upping it to $8,000 after specifying it as $5,987.10 in an email.

Source: Attorney General Darrell McGraw’s Settlement with DP Nets $1.7 Million in Refunds and Cancelled Debts for WV Consumers.

Virginia Man Gets Six Months 'Soft Time' For Role In Sale Leaseback Peddling Racket That Ripped Off High-Equity, No Cash Homeowners Facing Foreclosure

In Norfolk, Virginia, The Virginian Pilot reports:

• A Chesapeake man received six months' home detention Monday for his part in a foreclosure-rescue scam, according to a spokesman for the U.S. Attorney's Office.
  
  Ray D. Gata also was placed on probation for five years and ordered to pay $189,185 in restitution. He must pay $500 a month, the spokesman said. In February, Gata pleaded guilty in U.S. District Court in Norfolk to one count of conspiracy to commit wire fraud.
  
  According to court documents, he helped his nephew, Philip Villasis, scam four homeowners in 2006 and 2007. Villasis promised the homeowners they could remain in their homes after they sold them to him or Gata, paying one of them rent while they repaired their credit.(1)
  
  After the homeowners fell behind in rent, however, Villasis would evict them and sometimes keep their possessions. Villasis pleaded guilty to wire fraud and was sentenced to 33 months in prison.

Source: Chesapeake man gets house arrest for scam.

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

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Buffalo Feds Charge 33 In Alleged Upfront Fee Foreclosure Rescue Ripoff That Screwed 2,000 Homeowners Out Of $2.7M

In Buffalo, New York, The Buffalo News reports:

• A cross-border loan fraud scheme victimizing 2,000 people and resulting in $2.7 million in losses was uncovered in Buffalo thanks to the initial tips of two suspicious grocery store clerks.
  
  Prosecutors said the clerks' tips began an investigation that on Tuesday resulted in a 62-count indictment charging 33 defendants with taking part in an international scam directed at people facing home foreclosure.
  
  "It's exploitation," John Morton, director of U.S. Immigration and Customs Enforcement, said a news conference in Buffalo. "It's targeting the vulnerable." Morton said the scheme was directed at people at the lower rungs of the economic ladder, especially those at risk of losing their home to foreclosure.
  
  Victims were lured into the scam by newspaper or web advertisements offering loans to anyone having trouble getting a loan or trying to get out of debt. The red flag, according to prosecutors, came at a point early in the loan review process when people were asked to make a security deposit or insurance payment to ensure their loan would be approved.
  
  "There was a request for an upfront payment," said U.S. Attorney William J. Hochul Jr. "That should have been a warning sign of sorts." All of the defendants - 23 from Canada and 10 from the United States - are charged with conspiracy to commit wire fraud and conspiracy to launder money.

Source: Cross-border loan fraud scheme uncovered here.

Calif. Appeals Court: Bank's Failure To Contact Borrower Before Foreclosure Triggers Private Right Of Action That Is Not Preempted By Federal Law

From a news alert from the law firm Ballard Spahr LLP:

• A residential lender’s failure to contact a borrower prior to initiating nonjudicial foreclosure proceedings triggers a private right of action under California law, the California Court of Appeal has ruled.
  
  In its July 3, 2012, opinion in Skov v. U.S. Bank National Association, the California Court of Appeal, Sixth District, held that a borrower could assert a cause of action against a residential lender under California Civil Code Section 2923.5 for failure to contact the borrower prior to recording a notice of default.

***

• The borrower filed suit to prevent the foreclosure from going forward. Among other things, the borrower alleged that the lender did not comply with Section 2923.5 because the lender did not contact the borrower until after it recorded the notice of default. The trial court dismissed the action and the borrower appealed.
  
  In reversing the dismissal, the appellate court held that the question of whether the lender properly complied with Section 2923.5 was an issue of fact that could not be resolved at the pleading stage.
  
  The appellate court further held, relying on an earlier California appellate decision,(1) that Section 2923.5 necessarily confers an individual right of action because the statute’s purpose is to force the lender and borrower to communicate about the specific borrower’s situation and the specific borrower’s options to avoid foreclosure.
  
  Finally, the appellate court held that the National Bank Act—which “vests national banks … with authority to exercise ‘all such incidental powers as shall be necessary to carry on the business of banking’”—does not preempt Section 2923.5.

For more, see Borrower May Sue Over Lender’s Failure To Contact Prior to Foreclosure, California Appellate Court Rules.

(1) Mabry v. Superior Court, 185 Cal.App. 4th 208 (2010), 110 Cal. Rptr. 3d 201 (Cal. App. 4th Dist. Div. 3).

Sale Leaseback Peddler Gets 12 Years In Equity Stripping, Foreclosure Rescue Ripoff That Victimized Homeowners Of $1M+

In Los Angeles, California, The Orange County Register reports:

• An Anaheim Hills man was sentenced to 12 years in federal prison Monday for his role in a mortgage fraud conspiracy and for evading taxes. Gregory Flores was also ordered to pay more than $1 million in restitution to homeowner victims and more than $98,000 to the IRS, the U.S. Attorney's Office in Los Angeles said. Flores pleaded guilty in February to one count each of wire fraud conspiracy and tax evasion.
  
  According to the plea agreement, Flores, along with co-conspirators Sheri Gale, a realtor in La Mesa, and Amy Hall, also of Anaheim Hills, a loan processor, executed an illegal scheme to defraud distressed homeowners facing foreclosure and lenders who made mortgage and home equity loans, the U.S. Attorney said.
  
  From May 2003 through June 2006, Flores managed the satellite offices in Anaheim Hills and Murrieta of All Fund Mortgage, based in Tacoma, Wash. He and the others falsely claimed they could save the homeowners from foreclosure. Homeowners with typically poor credit were solicited through mailings, prosecutors said. At least 21 homeowners were victimized for a total of $1.04 million.
  
  As part of the conspiracy, Flores and others convinced homeowners to allow an investor, who was really a "straw buyer" with good credit to be added to the title of their homes, and told them they could then refinance under more favorable terms.
  
  In most cases, title was never transferred back to the homeowner, essentially stealing the equity out of the property, prosecutors said. Few if any payments were ever made and the properties were eventually sold during foreclosure proceedings.
  
  Most of the time homeowners and their families were evicted without the knowledge they had no title to the property, Assistant U.S. Attorney Ami Sheth said.(1) Gale and Hall were charged with wire fraud; Gale has pleaded guilty, Hall's case is still pending, Sheth said.

Source: O.C. man sentenced in foreclosure scam.

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

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

More On The Growing Wall Street 'Panic' On Underwater Home Mortgage 'Cramdown' Proposal Involving Use Of Eminent Domain

Congressman Brad Miller (D-NC) writes in American Banker:

• There is a great disturbance in the force. Wall Street's political operatives — the American Bankers Association, American Securitization Forum, the Securities Industry and Financial Markets Association, and the Financial Services Roundtable — wrote a panicked letter to the Supervisors of San Bernardino County in California to express "strong objection" to a proposal by a startup mortgage company. The letter conveys the unmistakable threat that Wall Street will sic its lawyers on the county and will "likely be reluctant to provide future funding to borrowers in these areas."
  
  The proposal is that the county use eminent domain to buy underwater mortgages, almost half the mortgages in the county. The mortgage company, working with the county, would then negotiate new mortgages with the homeowners that they could afford. If the proposal worked as planned, the county would get relief from the foreclosure crisis, the mortgage company would make a profit, and the idea would spread to other counties and towns.
  
  A legal challenge by Wall Street might be expensive to fight, but the arguments are pretty flimsy.
  
  Eminent domain is commonly used to buy land for projects like roads and schools. Existing law allows the use of eminent domain to buy any kind of property, however, including even intangible property like trade secrets. There is no apparent reason that eminent domain could not be used to purchase mortgages.
  
  The Constitution requires only that the county pay fair market value and that there be a public purpose. Deciding a fair price would not be hard. There are frequent auctions of mortgages with a sufficient number of informed, sophisticated buyers. The auctions are an almost perfect pricing mechanism. There would be comparable sales to determine almost any mortgage's fair market value.
  
  Showing a public purpose would not be hard either. A public purpose can be cleaning up contaminated land, renewing a "blighted" neighborhood, or even stimulating economic growth by replacing residential neighborhoods with commercial development.

***

• [T]he real losers from the program would be the biggest banks, the holders of second liens, not investors in first mortgages. And even for the biggest banks, eminent domain would not cause losses but reveal losses.
  
  The biggest banks have delayed recognizing losses on seconds for years while paying dividends and lavish executive bonuses. Involuntary sales of seconds at fair market value would end fictitious valuations and require an immediate accounting loss, making dividends and executive bonuses much harder to justify and perhaps even revealing some banks to be insolvent.

For more, see No Wonder Eminent Domain Mortgage Seizures Scare Wall Street.

Low Contingency Fee, High Success Rate Makes Software Tool Big Hit In Crackdown On Tax-Cheating Property Owners Making Fraudulent Homestead Claims

In Miami, Florida, Government Technology reports:

• A new software tool is turning up the heat on property tax fraudsters in Southern Florida.
  
  Called Government Revenue Management (GRM) Insight, the program is helping investigators in Miami-Dade County to mine and analyze national databases to find individuals who may be improperly claiming tax exemptions. Initial efforts have been fruitful, unearthing approximately $5 million in back taxes owed by county residents.
  
  The violations primarily deal with fraudulent claiming of homestead exemptions, which allow a tax break for individuals who own multiple homes. In Florida, the exemption caps the increase of a property’s assessed value by 3 percent year to year and allows a homeowner to deduct $50,000 from the assessed value of the home for county tax purposes.
  
  Under Florida law, a person is allowed to claim only one homestead exemption on his or her property taxes. But determining eligibility was difficult. Lazaro Solis, deputy property appraiser for Miami-Dade County, said investigators had limited ability to track property ownership outside of Florida. This blind spot led to a number of illegal homestead claims.
  
  With 67 counties in Florida, Solis said it was virtually impossible for his team to accumulate and analyze all the needed information. “We would need an army of investigators to go nationwide and pull all the information,” Solis said. “It’d be like a needle in a haystack.”
  
  The new software is giving investigators a wealth of cross-referenced nationwide data at their fingertips. The simply enter a person’s name and Social Security number. Designed by Manatron Inc., the technology also prioritizes cases by weighting the evidence. The software attempts to weed out false positives that otherwise would be flagged for investigation.
  
  The software also contains a case management function that essentially handles all the paperwork associated with placing a lien on a homeowner’s property when an illegal exemption is confirmed. Almost every clerical function is performed, except for providing the official signatures required for the documentation.
  

***

• The basic agreement is that Manatron receives 10 percent of the penalties and interest assessed to the back taxes owed by a property owner, but only after the funds are recovered. The only caveat is if the property owner doesn’t pay within 30 months the county is still on the hook for the percentage owed to Manatron.
  
  For example, if a property owner has back taxes of $10,000 due to an improper exemption claim, Florida law requires the county to impose a flat 50 percent penalty — bringing the total to $15,000 — plus an accrual of 15 percent interest for each year in question.
  
  “In terms of cost to the county, there really is none because the taxes are going 100 percent back to each taxing authority,” Solis said. “So [the money goes] not just to the county, but the school board and cities as well. What the vendor recovers is 10 percent of the penalties and interest only.”

For more, see Fraud Tech Uncovers $5 Million in South Florida.

In another story on tax scams using fraudulent homestead exemption claims, see County Uses Fraud Solution to Unearth $1.5 Million:

• A fraud solution that combines analytics technology and investigative research has helped Delaware County, Ind., uncover $1.5 million in lost property tax revenue.

Scammer Who Ran Short Sale Ripoff By Recycling Homes Earlier Used In Straw Buyer Racket Cops Plea, Then Points Prosecutorial Spotlight Onto Cohorts

In New Haven, Connecticut, the New Haven Independent reports:

• A young entrepreneur who struck it rich in New Haven real estate in his early 20s only to land in federal investigators’ crosshairs admitted to a judge that he broke the law—as Part II of a massive mortgage fraud case begins to take center stage. Menachem Joseph “Yossi” Levitin made the guilty plea [last week] in U.S. District Court in Bridgeport. He copped to committing mail fraud, wire fraud and bank fraud.
  
  He faces up to 30 years in jail and $20 million in fines for helping arrange to bilk lenders out of $10 million while leaving a trail of rundown New Haven properties. As part of Thursday’s plea deal, Levitin will give up ownership in 19 properties and forfeit about $160,000.
  
  The feds arrested him in 2010. They seized 51 of his properties—properties he and allies bought with the proceeds from alleged mortgage scams on 40 other properties perpetrated between October 2006 and November 2008.
  
  However, since then Levitin has remained in business as the feds have continued building a case against his alleged co-conspirators, two of whom were subsequently indicted last October.

***

• A New Haven Realtor, Charles Lesser, also pleaded guilty to the same charges in the case Thursday. Lesser, who’s 30, acted as a broker in “at least 20 fraudulent transactions” connected to at least $2.8 million in lender losses, according to the government.
  
  How long Levitin and Lesser might have to spend in jail may depend on whether, and to what extent, they have been cooperating with the federal investigation.(1) Levitin’s case, and those of the others indicted, will come before U.S. District Court Judge Janet Hall. Hall is scheduled to sentence Levitin on Sept. 26.
  
  Which means months of waiting—and pressure—in the meantime. Levitin is believed to face enormous pressure, both from government prosecutors making cases against other targets, and from the tight-knit New Haven Chasidic community in which he was raised.

***

• According to the federal complaint in the Levitin case, he and his partners ran two alleged scams, according to the feds: “seller assistance scams” and “short sale scams.”
  
  Here’s how the former allegedly worked: Levitin found owners eager to unload rundown properties. He allegedly acted as a middleman—agreeing on a sales price; finding a buyer; arranging for the appraisal. He got an appraiser to prepare an appraisal document for $30,000 to $145,000 more than the value of the house. He allegedly had a sale document drawn up to reflect the higher, pretend price.
  
  The fraudulent documents, plus fake leases and rent payment records, were used to obtain mortgages at the inflated price. The alleged schemers allegedly pocketed the difference between the real sales price and the inflated price.
  
  Meanwhile, the new owner wouldn’t pay the mortgage. The lender would foreclose; it wouldn’t be able to sell the house for the inflated value of the mortgage.
  
  That problem—a house with a mortgage higher than its value—has plagued properties throughout New Haven neighborhoods, leaving them empty and deteriorating. The situation opened the door for another scam the Levitin crew allegedly undertook: the short sales.
  
  Levitin would allegedly step in and offer to take the property off the lender’s hands for less money than the mortgage was worth. The lender, wishing to cut its losses, would agree, unaware that Levitin had allegedly orchestrated the whole deal.

***

• Much of the case is built around secret recordings and other information provided by an unidentified undercover “cooperating witness” who allegedly bought properties through Levitin.

For the story, see Scammer Pleads Guilty.

For the U.S. Attorney press release, see New Haven Man Pleads Guilty To Role In $10 Million Mortgage Fraud Scheme.

(1) Another example of squealing schemers abandoning a 'sinking conspiratorial ship', winning the race to the prosecutor's office and seeking to take down fellow co-conspirators by 'throwing them under the bus' to score a better break on a plea deal. As noted by one learned Federal judge in referring to the not-uncommon 'race to the prosecutor's office' that breaks out among participants in an 'about-to-fall-apart' criminal conspiracy:

• "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).

More Homeowner Casualties From The Frontlines Of Banksters' Force-Placed Insurance Racket

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

• Florida led the country in its share of force-placed insurance premiums the past three years, including 35 percent, or $1.2 billion, in 2011 — more than three times the amount sold in the next-largest state, California.
  
  That's according to sworn testimony provided last month for the United States Judicial Panel on Multidistrict Litigation.
  
  Florida has one of the country's highest numbers of foreclosures, and most people stop paying insurance premiums when they default on mortgage payments. That means a lot of policies are imposed on consumers without coverage.

***

• The policies should cost less because they typically exclude coverage offered by most homeowners and the insurers don't have to pay agent commissions and advertising or customer service costs to attract and keep policies, said David "Birny" Birnbaum, a former insurance regulator in Texas who is now an economist and consumer advocate with the Center for Economic Justice in Texas.
  
  Birnbaum provided the testimony on Florida and other states' shares of force-placed insurance policies, calculating the numbers using thousands of records from the National Association of Insurance Commissioners. "Some of these charges are so outrageous that they push people into default and foreclosure," Birnbaum said.
  
  Just how much are South Floridians paying?
  
  Lord Toussaint said he's being charged a whopping $90,000 a year for coverage that used to cost $5,600 for his home in Coral Gables. Toussaint, owner of an electronics business, said he has been trying to get the mortgage servicer to reduce the coverage since he was notified last year of the higher cost.
  
  The problem, he said, is the imposed policy covers the home for $3 million — what may be considered the new value of the home since he made major renovations — instead of the $560,000 amount of the loan.
  
  Christina Ulbrich, of Fort Lauderdale, was allegedly billed $12,787 and $9,708 for a year of force-placed hazard insurance and windstorm insurance, respectively, when she already had hazard coverage for the same period. Nationwide Insurance had charged her $892, and her mortgage doesn't require windstorm, according to a lawsuit she filed in November in U.S. District Court for the Southern District of Florida. The policies were backdated up to 17 months, and the windstorm policy had expired months before the mortgage company purchased it on her behalf, the suit alleges.
  
  Hilda Sultan, of Davie, was charged $33,199, including a $7,138 commission for an insurance agency that is a subsidiary of her mortgage servicer, according to 2009 court documents in a lawsuit pending against the mortgage company.
  
  She "always maintained appropriate insurance coverage," but the servicer imposed the policy anyway — costing her eight times more than the roughly $4,000 it should have cost, according to the suit. "I had no awareness whatsoever that anything lapsed. I thought it was coming out of my mortgage payment and the escrow [account]. They didn't notify me. I didn't know until I was refinancing my loan ... during my divorce," said Sultan, a full-time mother who said she spends her spare time working on child advocacy legislation. "I felt devastated, absolutely devastated. I was counting on that money for my children's education."
  
  Jeff Golant, an attorney representing borrowers in about 20 lawsuits over force-placed coverage, including Sultan's, said even when companies provide notice, it doesn't give them the right "to rip people off."

For the story, see Florida tops the nation in force-placed insurance.