Saturday, September 8, 2012

LA City Attorney Tags Bankster With Suit Saying It Illegally Booted Hundreds Of Low-Income Tenants From Their Homes, Failed To Maintain Properties

In Los Angeles, California, United Press International reports:

  • The Los Angeles city attorney said Wednesday prosecutors have filed a civil enforcement action against US Bank for alleged foreclosure violations.

    The complaint by City Attorney Carmen A. Trutanich alleges US Bank, the fifth-largest commercial bank in the United States, allowed hundreds of foreclosed properties to fall into disrepair and facilitated the illegal eviction of hundreds of low-income tenants.

    If found liable, the bank faces tens of millions of dollars in damages, the city attorney's office said.

    The office said during the past four years, US Bank acquired more than 1,500 properties in Los Angeles through foreclosure. In some instances, the properties were vacant at the time of foreclosure, and US Bank either failed to make the necessary repairs to remedy nuisance conditions, or caused or permitted nuisance conditions to develop, the office said.

    Using real estate agents and attorneys, "US Bank engaged in numerous deceptive and dishonest tactics to evict tenants, including serving notices requiring unreasonable demands, demanding occupants leave in an extremely short time in exchange for small amounts of money, causing or allowing utilities to be shut off, charging excessive rent in excess of the amounts under the Rent Stabilization Ordinance, and threatening legal action," a statement from the city attorney's office alleged.
Source: US Bank foreclosure tactics targeted.

For the Los Angeles City Attorney press release, see City Attorney's Office Files Law Enforcement Action Against U.S. Bank For Failure To Maintain Foreclosed Properties And For Illegal Evictions (National Bank Faces Hundreds of Millions of Dollars in Potential Liability and Injunction to Clean Up Foreclosed Properties and Stop Illegal Evictions).

Good News For California Tenants Impacted By Landlords In Foreclosure & Related Problems With Unscrupulous Banksters, Investors, Real Estate Agents

In Sacramento, California, Beyond Chron reports:

  • [D]espite realtor and landlord campaign contributions and the undue influence they bring, a number of good renters’ rights bills have made it through the minefield of the California State Legislature and are now on the Governor’s desk. Governor Jerry Brown has 30 days to sign or veto the bills.

    AB 1953Protecting Tenants from Unfair Evictions after Ownership Changes

    Authored by Assemblymember Tom Ammiano (D-San Francisco), AB 1953 plugs a loophole in California law which has allowed successor landlords, especially after foreclosure, to wait months before notifying tenants of an ownership change and where to send rent. AB 1953 passed the Legislature this week and is now in the Governor’s hands.

    Existing California law in theory requires new owners to notify tenants within 15 days of an ownership change, where to pay rent, and whom to contact for repairs, but does not say what happens when the new owner fails to comply.

    Under AB 1953, a new owner who delays in notifying a tenant where to pay rent would not be permitted later to evict the tenant for nonpayment of rent that accrued during the period of the owner’s noncompliance. By creating a consequence for failing to properly notify tenants of ownership changes, the bill seeks to increase compliance with existing notification requirements and protect tenants from unnecessary confusion and evictions.
Reportedly, three other bills protecting tenants in foreclosure situations that await the governor's signature:
  • place the burden of disputing leases on the post-foreclosure owner,

  • amend “pre-judgment claim” rules to plug a loophole banks and investors have used to evict tenants without ever naming them in eviction proceedings,

  • prohibit a landlord from requiring online payment as the exclusive form of rent payment. The bill responds to “online only” rent schemes that are designed to force out long-term, rent-controlled tenants,

  • create a statutory duty to disclose notices of default to prospective renters, an effort to safeguard unwitting tenants from learning of an upcoming foreclosure after they have shelled out money for rent, deposits, and moving costs, and moved into their new home. This bill specifies remedies in the event of nondisclosure by the landlord. Specifically, the bill would provide tenants the option to void lease and sue for damages (twice rent or twice actual damages), or elect to stay in possession and deduct one month’s rent. The bill is limited to 1-4 unit buildings.

Lawsuit: 'Co-Op Board Booted My Application To Buy Apartment, Saying My Yet-To-Be-Born Baby Might Be Too Noisy For Neighbors!'

In New York City, the New York Post reports:

  • They don’t mean maybe when they say: “No babies!” A Manhattan woman trying to buy a Staten Island co-op claims she was booted as a buyer because she’s with child.

    Elena Slukina, who is “visibly pregnant,” says she put in the winning bid for apartment 5N at 36 Hamilton Ave. in July. Still facing board approval, the current Murray Hill resident went to an interview with the co-op board earlier this month — and allegedly got a grilling on her family planning.

    Board President Maria Civille and other members “expressed their concern that a child growing up in the building might affect other tenants’ peace and quiet,” according to Manhattan Supreme Court papers filed by Slukina last week.

    Although there are a few families with kids already living there, Civille claimed that thin walls and floors mean noise travels easily and that she was reluctant to approve an application “that would bring a potentially noisy child in [an] otherwise quiet co-op,” according to Slukina’s complaint.

    The next day, the board rejected Slukina’s application. It has since tried to find another buyer for the co-op shares that Slukina won at auction.

    A judge has approved Slukina’s request for a temporary restraining order. Civille did not return a message seeking comment.

Financial Planner/Attorney Who Beat Insurance Companies At Their Own Game Now Faces 66-Count Indictment

A recent story in ProPublica tells the tale of Rhode Island financial planner Joseph Caramadre, a trained lawyer and certified public accountant who was resourceful enough to find loopholes in variable annuity contracts peddled by insurance companies and employed an approach in purchasing these contracts that enabled him to beat the insurance companies' brains in at their own game.

He has been the target of civil lawsuits by the bully insurance companies a number of times and keeps on prevailing against them in court, as this excerpt reflects:

  • There have been at least eight lawsuits filed in Rhode Island's federal district court relating to Caramadre's scheme. Insurance companies Nationwide, Transamerica and Western Reserve have all sued. The companies have not fared well in civil court.

    United States District Court Judge William Smith keeps knocking out claims. The companies then re-file new ones. As of this writing, Western Reserve has filed five successive complaints against Caramadre in the same case. When he dismissed Nationwide's complaint, Judge Smith questioned whether the company ignored its own contracts.

    In the Western Reserve case, Judge Smith wrote, "It is a bit ironic for Plaintiffs [the insurance companies] to suggest that they did not know the true nature of contracts that they themselves drafted."(1)
Despite their absymal results in bringing these suits, the sore loser insurance companies apparently succeeded in bellyaching to the right people because the Rhode Island Feds saw fit to present the case to a federal grand jury. According to the story, in November 2011, after almost two years of work, a Rhode Island grand jury issued a 66-count indictment against Caramadre and another. Their criminal trial is scheduled to begin in November.

After reading the story, one can easily conclude that the only thing Caramadre may be guilty of is being a little greedy.

For the story, see
Death Takes a Policy: How a Lawyer Exploited the Fine Print and Found Himself Facing Federal Charges.

(1) Western Reserve Life Assurance Co. of Ohio v. Caramadre, Case Nos. 09-470 S, etc. (D. R.I. February 7, 2012).

Friday, September 7, 2012

Illinois Congressional Candidate Bagged For Improper R/E Tax Exemption Claims On Two Homesteads; Says It Was Inadvertent, Coughs Up Unpaid Cash

In Chicago, Illinois, The Daily Herald reports:

  • A suburban congressional candidate improperly claimed two homeowner exemptions at once over a period of several years, a Daily Herald investigation has found. But after the Daily Herald pointed out the error, Tammy Duckworth says she paid $1,928 in taxes she saved because of the extra exemption, plus an added $612 in penalties.

    They didn't think about it,” Duckworth spokesman Kaitlin Fahey said of the issue. “Taxes were paid out of escrow. This wasn't like beating the system.”

    County records show Duckworth claimed homestead exemptions in both DeKalb and Cook counties from 2007 to 2010. The Hoffman Estates Democrat is running against Republican Congressman Joe Walsh, of McHenry, in the 8th Congressional District.

    By law, Illinois residents can only claim the exemption on the property that is their primary residence. The exemption reduces the amount of property taxes owed by lowering a property's assessed value.

    The DeKalb exemption was filed first, after Duckworth and her husband Bryan Bowlsbey purchased the property in 1997. In DeKalb County, Chief County Assessment Officer Robin Brunschon said, exemptions are automatically renewed each year unless residents notify the assessor's office that they have changed their primary address.

    Duckworth and Bowlsbey purchased a Hoffman Estates home in 2002. They now rent out the DeKalb property, receiving between $5,000 and $15,000 annually in income from it, according to the Financial Disclosure Statement that candidates, office holders, and high-level government employees are required to submit to the United States House of Representatives.
  • The four years of claiming the benefit in DeKalb County saved Duckworth $1,928, Brunschon said. Duckworth has sent a check to DeKalb County to cover what she would have paid without the exemption, plus an added $612 in late fees, Sullivan said.
For more, see Duckworth claimed two homeowner exemptions (Duckworth to pay more than $2,000 after Daily Herald investigation).

Tax Shelter Blows Up In Investor's Face As Penn. Court OKs $160K+ Income Tax Bill Despite Fact He Lost Entire Investment In U.S. Steel Tower F'closure

CPA Peter J. Reilly writes in Forbes magazine:

  • Mr. Marshall, a Texas resident, invested [$148,889, on or about January 24, 1985] in a Connecticut partnership that purchased [for approximately $360 million] the U.S. Steel Tower, an iconic building in Pittsburgh. The building was financed with a note [for $308 million] that required interest of over 14%, which could be added to principal.

    Over about 20 years Mr. Marshall received a few thousand dollars [$6,184] in distributions on his investment of around $150,000. The building did not provide enough cash to cover the interest payments causing the mortgage balance to balloon from roughly 300 million to over $2 billion [the liability grew to more than $2.6 billion, of which only $308 million represented principal and approximately $2.32 billion represented accrued but unpaid interest].

    The building was foreclosed [on June 30, 2005]. Mr. Marshall’s foray into Pennsylvania was rather unrewarding, he lost about $143,000, so it is understandable the he is perturbed that Pennsylvania wants him to pay a tax of over $160,000 on hisgain”.

    How is there a gain? Well when that big mortgage balance, including all that unpaid interest is deemed to be proceeds of the foreclosure sale, so you can see how there would be a gain.

    But Mr. Marshall didn’t get any benefit in Pennsylvania from all the deductions that built up that balance. Well if he had had other Pennsylvania income he would have gotten a benefit from the deduction, it is not Pennsylvania’s fault he put all his Pennsylvania eggs into a single steel basket.

  • Mr. Marshall would probably not have had this particular problem in most other states. Pennsylvania is peculiar in that it does not allow any carryovers and it divides income into five classes. A loss in one class cannot offset income in a different class. So even if the deduction for all that unpaid interest were allowed in the same year as the disposition of the building, Mr. Marshall would still have the tax to pay even though he got nothing.

    Judge Patricia McCullough, who dissented, noted the absurdity of the outcome:

    The rationale for the Majority’s decision, which is reiterated in its denial of all of Marshall’s exceptions, is that, by virtue of the foreclosure of the property, “Marshall is in the same position he would have been had the Partnership sold the property in 2006 for $2,628,497,551.” The fact of the matter is that the property was not sold and Marshall is not in the same position as he would be if it had been – he has completely lost his investment. Had the property sold for this amount, Marshall would have received a return of about $4 million on his investment and, hence, he would have ample funds to pay the PIT [Pennsylvania personal income tax], the imposition of which, under those circumstances, would be without dispute.
For the story, see Pennsylvania Court Gives No Relief To Investor In Tax Shelter From Hell.

For the court ruling, see Marshall v. Commonwealth, No. 933 F.R. 2008 (Pa. Cmwlth. August 16, 2012) (en banc) (Marshall II).

Unwitting Landlords Left To Deal With Wreckage As Raid On Extensive Indoor Grow House Operation Bags Two Dozen Vietnamese Nationals, 14,000 Pot Plants

In Spring, Texas, the Houston Chronicle reports:

  • Large holes cut into the ceiling of almost every room of the 3,200-square-foot house on Mandarin Glen Circle in Spring were the first clue. Blowers were installed to push suspiciously pungent air into the attic.

    Then there was the potting soil covering floors, the makeshift electrical panels powering hundreds of 600-watt lights, the bathrooms converted into watering stations.

    They were all signs of a suburban dream home turned into a nightmare for its owners, a house in a quiet neighborhood transformed into a sophisticated grow house for a major Houston-area marijuana trafficking operation taken down by agents last week.

    Owners Court Riddle and his wife, Candace, could not believe the damage the marijuana cultivators wreaked on their two-story rental. "This is like a bad movie," said Candace, 32, as she and her two sons pulled down wire racks used to dry the marijuana.

    It was a heart-breaking scene being repeated for property owners at 40 rental homes targeted in raids in Harris, Montgomery and Fort Bend counties. Two dozen Vietnamese nationals were arrested, and nearly 14,000 marijuana plants confiscated in the raid.
  • The ring stole electricity from local utilities by digging trenches and tapping directly into underground power lines running to the home. This not only saves large amounts of money, but made it harder to detect their 24/7 power use because they wired around the house meter.
  • The raids last week targeted 60 locations, including two commercial sites where the organization was storing and packaging the marijuana. Of the 60 addresses, they found active cultivation in 40. Earlier seizures of 14 other grow houses the Vietnamese organization operated turned up 5,000 more plants, although details of those operations were not disclosed.
  • The Riddles learned that the young Vietnamese woman with two children - who in January signed a two-year lease and were paying $1,850 a month - never lived in their home. Court Riddle, a 35-year-old minister, figures the cleanup to his property will cost $15,000.

    The brick home-turned-marijuana greenhouse suffered through 120-degree temperatures that softened the walls. Mold also was starting to grow.

    "Now we're left with trying to get it ready to lease it out or sell, and you know what the market is like," he said. "We may have to go into foreclosure."
  • From the outside, they look like upscale homes in the suburbs, but inside criminals were hard at work. Now the people who own the rental houses in Harris, Montgomery and Fort Bend Counties are learning the real details about who signed the lease.

Thursday, September 6, 2012

Texas-Based 'Burger & Fries Peddler' Files FDCPA Suit; Says Collector's Phone Calls Seeking To Squeeze Debt-Delinquent Employee Disrupted Operations

The Houston Chronicle reports:

  • Everyone hates harassing calls from unrelenting debt collectors, even the folks at Whataburger Restaurants. Exasperated officials at the San Antonio-based burger chain have gone to court in an attempt to stop persistent collections calls made to its corporate headquarters to get an unidentified employee to pay up on a debt allegedly owed.

    Whataburger last week sued NCO Financial Systems, saying the collection efforts of one of the nation's largest debt collectors "amount to a campaign of harassment against Whataburger that is unreasonable ... and reckless."

    H. Anthony Hervol, a San Antonio lawyer who defends individuals in debt-collection disputes, called Whataburger's action "very unusual."

    "I guess the word I would use is refreshing," Hervol said when asked for a reaction. "It's good to see that an employer would step in, rather than blame the employee - which is what debt collectors want them to do."

    In an email, Whataburger General Counsel Mike Gibbs would neither comment on the lawsuit nor share any information on the case or the unidentified employee. There were no details in the lawsuit about the type of debt or the amount allegedly owed.

    Privately held Whataburger employs 400 people at its headquarters. Overall, it employs more than 22,000. Calls to NCO in Horsham, Pa., were not returned.

    In the lawsuit, Whataburger claims the calls from NCO have kept coming despite a July 16 cease-and-desist letter to the company. More than 50 calls from NCO have been made to the restaurant company's toll-free number since June, the suit says.

    NCO's "disruptive conduct causes phone lines to ring, keeping the phone lines as well as Whataburger employees occupied and prohibiting (them) from performing their respective duties," the suit claims.

    It's common for collection companies to call debtors at their workplace, Hervol said.

    "One of the problems with debtor collectors is that they know if they try to collect at your place of employment, that you're going to worry about your job and somehow that's going to help them collect the debt," he said.

    Whataburger seeks unspecified actual damages - toll charges for long-distance calls to its headquarters - and punitive damages from NCO.

    Whataburger alleges NCO made at least 27 calls after the chain issued its cease-and-desist letter, violating the federal Fair Debt Collection Practices Act. For that, Whataburger says in the suit, the debt collector is liable for damages of up to $1,000 for each violation.

    NCO also is accused by Whataburger of violating the Texas Debt Collection Act, which carries a minimum $100 penalty for each violation. The suit was filed Aug. 16 in Bexar County District Court.

    NCO also has landed in authorities' cross hairs. Earlier this year, it agreed to change its collection practices as part of a settlement with 19 state attorneys general. It agreed to set aside $950,000, or $50,000 for each state, in restitution for eligible consumers.

    Texas was not part of that settlement. But in 2008, NCO resolved an enforcement action brought by the state over charges it "unlawfully made harassing and threatening phone calls to purported debtors," according to the attorney general's office.

    NCO, which has operations in San Antonio, is part of Expert Global Solutions, a publicly traded company that generated about $1.5 billion in revenue in 2011.

TX High Court Again Nixes Pipeline Outfit's Claim Of Eminent Domain Right To Take Farmer's Land; Checking Box On Gov't Form Not Enough To Invoke Power

The Southeast Texas Record reports:

  • [Texas] rice farmers and landowners breathed a collective sigh of relief [...], after the Texas Supreme Court denied a pipeline company’s second motion on rehearing in a case over its common carrier status.

    In 2009, Denbury Green Pipeline-Texas, claiming it was armed with the power of eminent domain, obtained a permanent injunction in Jefferson County District Court that stopped Texas Rice Land Partners from delaying construction of a pipeline running through private famers’ lands.

    Texas Rice Land Partners appealed the ruling, arguing that Denbury has its own interest at heart and not the public’s, court records show.

    Nonetheless, the Ninth Court of Appeals found that Denbury meets all the requirements of a common carrier, granting the company the right to take private lands for public use at below market prices.

    The case was appealed to the Texas Supreme Court and on Aug. 26, 2011, justices removed Denbury’s common carrier status and remanded the case, court records show.

    On Aug. 17, nearly a year later, the Supreme Court denied Denbury’s second motion on rehearing.

    The Court holds that to be a ‘common carrier’ carbon dioxide pipeline, and endowed by the Natural Resources Code with the power to exercise eminent domain for public use, it must do more than check a box on a government form,” wrote Justice Dale Wainwright in his concurring opinion.

    The right of private property is a fundamental right expressly protected in the constitution. The Court also holds that for a carbon dioxide pipeline owner to be a common carrier engaged in transporting the resource to or for the public, the pipeline’s only users must be more than a ‘corporate parent or affiliate.’

    Justice Wainwright was joined by Justice Phil Johnson.

    Denbury filed the second motion for rehearing solely on the issue of the breadth of the court’s use of the term “affiliate” under sections 111.002(6) and 111.019 of the Texas Natural Resources Code, the opinion states.

    Case background

    As the Record reported in June 2008, shortly after being informed that the police would be called if the pipeline company’s surveyors came anywhere near a rice paddy, Denbury Green filed its petition for an injunction against TRLP and Mike Latta in Jefferson County.

    That same day, Judge Donald Floyd, Jefferson County 172nd Judicial District, approved the TRO.

    On Jan. 5, 2009, Judge Floyd approved Denbury Green’s motion for summary judgment, granting the company full access to the farmer’s lands.

    Shortly afterwards, TRLP and Latta appealed, arguing that “the trial court erred … since TRLP showed proof that Denbury Green’s pipeline is a private carrier,” court papers say.

    Denbury Green has planned a 314 mile, 24-inch pipeline starting near the Texas-Louisiana border and ending at the Hastings Field located in Brazoria and Galveston counties. The pipeline will transport carbon dioxide (CO2), which will be injected into oil reservoirs to recover additional crude oil.

Scammer Who Pocketed $1,276, Failed To Deliver Promised Debt Management Services Gets 20-60 Months For Felony Embezzlement

In Petoskey, Michigan, the Petoskey News reports:

  • A 53-year-old Traverse City woman who pleaded no contest last year to an embezzlement charge was sentenced to prison Monday in Emmet County's 57th Circuit Court.

    In September, Toni Lavonne Avery pleaded no contest to one count of embezzlement — agent or trustee $1,000 or more but less than $20,000, a felony offense, which carries a maximum penalty of five years in prison and/or a $10,000 fine, or three times the amount embezzled, whichever is greater, Emmet County prosecutor Jim Linderman previously told the News-Review.

    During Monday's delayed sentencing hearing, judge Charles Johnson sentenced Avery to serve not less than one year and eight months and not more than five years with the Michigan Department of Corrections, with credit for one day served. She must also pay at least $1,276 in restitution.

    The Emmet County Sheriff's Office arrested Avery in April 2011 for embezzling money from a Petoskey couple who hired her to work as their financial adviser, according to a sheriff's office news release issued last year. Linderman said the couple hired Avery as a financial adviser in September of 2007. Her company was named BEST Financial Services Inc.

    Linderman explained that Avery was subsequently given two checks, one for $826 and one for $450, for services that ultimately were not rendered. It wasn't until about a year later that the couple was confronted by attorneys and debt collectors for the work Avery had been paid to do, according to the sheriff's office news release.

    On Monday, Avery's attorney, Bob Engel, asked the court to "look at the good in Toni Avery" and to consider probation and tether rather than sentence her to time in prison.

    "My client has helped a number of people over the years, clearing up their debt problems," including the victims in this case, Engel said.

Maryland Operation Uses 'Special Weapon' To Offer Free Foreclosure Rescue Help; Leads Banksters To Set Up Special Lines To Field Inquiries

In Timonium, Maryland, The Baltimore Sun reports:

  • Inside a small cubicle in Timonium, Jessica Gatton Facini is saving homes. The 26-year-old sorts through foreclosure and lien documents from Baltimore homeowners, identifies a problem and then navigates the bureaucracy of big banks and government agencies in search of a solution.

    It's a challenging task — some homeowners would say impossible — but Facini wields a weapon most Marylanders do not. When she contacts a bank, her caller I.D. says "U.S. Congress."

    As part of a little-known effort, congressional staffers across the country have been calling banks relentlessly to bargain for help for homeowners. In response, some of the country's biggest financial entities, such as Wells Fargo and Bank of America, have even set up special lines to field the congressional staffer members' calls.
  • Facini works for U.S. Rep. C. A. Dutch Ruppersberger, one of several Maryland congressmen who meet with area residents about preventing foreclosures. Sometimes hundreds of people pack the rooms, looking for advice.

    "With this terrible economy, people that need help, they don't know where to go," Ruppersberger says. "They're calling us because they need help."

    Facini says she has worked on nearly 600 cases personally. Rep. Elijah Cummings' office, which coverages a larger swath of Baltimore, has averaged about 2,000 foreclosure cases a year since 2009.
For more, see Congressional staffers fight banks, City Hall over foreclosures ('They would have took my house,' Baltimore homeowner says).

Wednesday, September 5, 2012

So. Cal. Coupled Booked On $2.3M Bail After Pinch For Allegedly Hijacking Homes By Forging, Filing False Deeds; I.D./Grand Theft Charges Also Pending

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

  • A Fontana couple has been arrested and charged with 20 felony counts in connection with a real estate fraud scheme. Nick C. Lee, 42, and his wife, Chang-Li Wang, 45, both of Fontana, are charged with multiple counts of Forgery, Procuring and Offering False or Forged Instrument, Identity Theft, and Grand Theft of Personal Property.

    After receiving a fraud referral from the Los Angeles County Sheriff's Department, investigators from the San Bernardino County District Attorney's Office determined that in 2007, the suspects fraudulently filed false Deeds of Trust and Grant Deeds for properties in the cities of Fontana and Baldwin Park.

    Lee, a licensed real estate agent, and his wife Wang, are also suspected of assuming the identities of unsuspecting victims and using their credit profiles to obtain the residences and multiple credit cards. "They would use the fraudulent credit cards to initially pay mortgage payments prior to renting the homes out," said Senior Investigator Jamie Samaniego.

    Both Lee and Wang were arrested without incident on August 22, 2012, at their Fontana residence and booked at the West Valley Detention Center on $2.3 million each.
For the San Bernardino County DA press release, see Husband and Wife Charged with Real Estate Fraud and Identity Theft.

Joint So. Cal. Local/Federal Probe Ends With Bagging Of Suspect Alleged To Have Forged, Filed False Docs To Hijack Title To Recently-Foreclosed Homes

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

  • A 56-year-old man has been arrested and charged for defrauding banks and financial businesses by illegally filing fraudulent Grant Deeds on properties throughout San Bernardino County.

    David Alan Boucher is charged with 63 felony counts of Filing False Documents, Forgery and Identity Theft. If convicted as charged, he faces a maximum sentence of 16 years and 4 months in state prison.

    On the morning of July 28, 2012, Boucher was arrested at his Upland residence without incident by investigators from the San Bernardino County District Attorney’s Office Real Estate Fraud Unit. Other agencies involved in the arrest include the FBI, Riverside County District Attorney’s Office, and the Los Angeles Sheriff’s Department.

    Boucher locates properties that have been sold at foreclosure auction and currently belong to a lending institution. He then fraudulently signs Grant Deeds as the “Authorized Representative” of the bank, which has acquired the foreclosure home.

    After having the documents notarized, Boucher or one of his representative then records the Grant Deeds at the San Bernardino County Recorder’s Office. In some instances, after the fraudulent transfer of title, hard money loans are obtained on the properties. Boucher has fraudulently transferred approximately 20 properties in San Bernardino County, representing a property value of approximately $4.5 million dollars.

    District Attorney Investigators believe there may be additional victims. Members of the media are asked to share the following information: If you suspect that you been victimized by David Alan Boucher, or any of his associates, please contact the District Attorney’s Real Estate Fraud Unit at (909) 891-3519.

Sovereign Citizen Pair Among 4 Targeted By Indianapolis-Area Prosecutor In 3 Separate Cases Involving Alleged Vacant Home Title/Possession Hijackings

In Marion County, Indiana, WRTV-TV Channel 6 reports:

  • Four people have been charged in a real estate fraud scheme involving bad checks and renting out homes already in foreclosure. The Marion County Prosecutor's Office filed charges [] in connection with three separate cases in which suspects are accused of taking possession of homes that they did not own, and then renting them out for profit, Call 6 Investigator Rafael Sanchez reported.

    Shela Amos and Beverly Cannedy, who both worked with the Tertius Malachi & James Youth Foundation, claimed to own six homes and collected $19,000 from victims they purported to sell or rent the homes, according to the probable cause affidavit.

    Both Amos and Cannedy identified themselves as so-called sovereign citizens, a growing group of people who consider themselves exempt from obeying state and federal laws.

    Amos and Cannedy are each charged with two counts of corrupt business influence, two counts of burglary, six counts of forgery and six counts of theft.

    "The individuals who were duped into buying properties, not only are they out the money that they have provided to these defendants, but in the cases where these individuals believed they were buying a home, they actually moved in to the properties, put some work and improvements into the homes and obviously had that emotional investment as well," Marion County Prosecutor Terry Curry said. "So clearly, they're victimized."

    The second case Willie Hawkins, the former head of the Budget Property Group, who took possession of homes in foreclosure without the owners' consent, according to the affidavit.

    Hawkins rented out the homes and told his victims that he would negotiate with the banks to help them purchase the homes, although he never contacted the banks, investigators said. Seven people paid Hawkins nearly $40,000 as part of the scheme involving seven properties, according to the affidavit.

    Hawkins is charged with corrupt business influence, two counts of burglary, 10 counts of theft and three counts of evasion of tax.

    The third case involves Wendell Brown, also known as Menes Ankh-El, who produced fake deeds and claimed ownership of homes that were vacant, including one he was found living in, investigators said. Brown is charged with five counts of forgery, one count of theft and five counts of intimidation.

    "We also have reason to believe that other individuals have been victimized by these schemes, and we encourage citizens who believe they have been victims of fraud to come forward and report it to law enforcement or the Marion County Prosecutor's Office, so we can help prevent future crimes like these from occurring," Curry said.
Source: 4 Accused Of Illegally Renting Out Foreclosed Homes (Families Paid Thousands To Rent Bank-Owned Homes).

Vegas Scammer Pleads Guilty To Screwing Distressed Homeowners Out Of Upfront Fees In Exchange For Phony Loan Mod, Refinance Promises

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

  • A Las Vegas man accused of defrauding distressed homeowners trying to refinance or adjust their home mortgages pleaded guilty [] in federal court.

    Alex Soria, 65, pleaded guilty to wire fraud in the mortgage scheme, which occurred between May 2008 and January 2010. He also pleaded guilty to theft of government funds in a separate scheme to illegally collect $208,106 in disability benefits from the U.S. Social Security Administration between 1990 and 2010.
  • Soria, who had worked in the mortgage lending business since about 1970, was indicted in April 2011. The indictment charged Soria with falsely telling homeowners that he was a loan officer with Amwest Capital and that he could help them get relief with their mortgages through two federal programs.

    He acknowledged in his plea agreement that he provided homeowners with phony letters sayng they were pre-qualified for a new loan and concealed from his clients that he was not licensed to act as a mortgage agent.

    When he applied for federal disability benefits in 1990, Soria indicated that cataracts and a kidney condition kept him from working. He acknowledged in his agreement that he continued to collect the benefits long after he returned to work in the mortgage business.

    Soria also is facing state charges in a mortgage and foreclosure scam.

Feds Pinch Operator Of Alleged Scam That Peddled Mortgage, Consumer Debt Reduction Services On Various Felony Fraud, Money Laundering Charges

In Las Vegas, Nevada, KSNV-TV Channel 3 reports:

  • A former Las Vegas resident who operated two companies in Las Vegas during 2009 and 2010 which claimed they could help persons obtain loans and reduce their credit card, student loan, vehicle and mortgage debts, has pleaded not guilty to numerous felony fraud and money laundering charges.

    Marilyn Stewart, 39, of Philadelphia, was arraigned on Wednesday and pleaded not guilty to one count of conspiracy to commit mail and wire fraud, 15 counts of mail fraud, 12 counts of wire fraud, six counts of money laundering, and one count of making a false statement to the FBI.

    Stewart was released on a personal recognizance bond with supervision and conditions pending trial, currently scheduled for Oct. Stewart was indicted in Las Vegas on July 25 and arrested on Aug. 1 in Philadelphia. She was released on a $25,000 personal recognizance bond by a federal magistrate in Philadelphia, and the indictment remained under seal pending Stewart’s initial appearance yesterday before Magistrate Judge Hoffman.

    According to the court records, Stewart and a co-conspirator, Henry Lee Stuckey, 41, of Las Vegas, owned and operated Pureasset Investment Corporation in 2009 and Reviving American Dreams in 2010. Stewart and Stuckey allegedly told customers that the companies could assist them pay down their credit card, vehicle and mortgage debts, make loans, and reduce the principal balance on their mortgages.

    In exchange for this service, the customers were required to pay an advance fee for each debt program they participated in, and were told that they would receive a refund if the debt reduction was successful. Stewart and Stuckey also paid commissions to customers to refer other individuals to the programs.
  • Stewart and Stuckey received over $200,000 in advance fees from approximately 66 victims who lived in various states, including Nevada, and who were primarily recruited by Stuckey, sales staff and customers who were promised commissions to enroll additional customers.

Tuesday, September 4, 2012

Outcome In Recent Florida Appeals Court Case Underscores Importance Of Obtaining Title Insurance When Buying (Or Lending Against) Real Estate

A recent news release from the law firm Trenam Kemker comments on a recent ruling by a Florida appeals court (Mayfield v. First City Bank of Florida, Case No. 1D11-3681 (Fla. 1st DCA, August 2, 2012)) that essentially said that a deed recorded for only 73 minutes before being 'erased' by the office of the local county recording office was enough to impart constructive notice to the public as to the ownership and lien status of a particular piece of real estate, notwithstanding the fact that anyone checking the public record after the erasure would never know of the documents' existence.

The news release makes the following three points that underscore the importance of a buyer obtaining a title insurance policy when buying real estate, thereby placing a title insurance company on the hook for a possible loss on account of a local county recorder's office screw-up:
  1. The Mayfields’ loss is exactly the kind of result that title insurance is designed to cover. Along with the risks of forgery, fraud, and other problems not disclosed by the public records, the title insurance company assumes the risk that a recording clerk will make a mistake in recording your documents, leaving the priority of your transaction unprotected. Don’t forego title insurance because you think you have a simple or routine transaction — such was the Mayfields’ transaction.

  2. Make sure that your title insurance commitment is marked or endorsed at closing to insure that your ownership is insured through the date and time of the closing. Thankfully, Florida has a statute that effectively requires the title insurance company to provide coverage as of this date if it is disbursing funds in connection with closing a transaction, but most real estate lawyers require the update notation or endorsement anyway.

  3. As a double check on the title insurance company, learn to use the online Official Records of the local clerk of circuit court, which, within a few days of closing in most counties, will enable you to see your recorded documents online in the county Official Records over the internet. In view of the Mayfield case, it may be a good idea to check the records again a few days or weeks later, to be sure that the recording hasn’t been cancelled. No kidding.

Logjam Over Title Issue Coming To Georgia For Banksters Unloading Foreclosed Homes?

In Atlanta, Georgia, The Atlanta Journal Constitution reports:

  • A company providing services to lenders and home buyers says a recent Georgia court case that tightened the enforcement of foreclosure laws will raise questions about the ownership of thousands of homes, create uncertainty in the housing market and result in many lawsuits.

    The July court ruling says foreclosure documents and public foreclosure notices need clear identification of the loan owner or those legally able to negotiate for the owner, which many recent documents lacked because of the complex ways in which loans were created and sold to investors.

    "...the Court of Appeals' decision will cause great uncertainty in Georgia foreclosures as to the validity of a foreclosure, particularly those foreclosures that have occurred since 2008..." said attorney William Brown in a brief filed to encourage the Georgia Supreme Court to review the ruling.

    He filed it on behalf of Old Republic National Title Insurance Company which was not involved in the case but could be affected because it insures home titles. The brief gives the latest hint at the broad impact a July state Court of Appeals ruling could have. Georgia has one of the highest foreclosure rates in the nation. Ball park guesses at how many homes could be affected by the ruling range from thousands to tens of thousands.
  • The state Court of Appeals ruled in Reese vs. Provident Funding last July that the Reese family of Cobb County were improperly foreclosed upon because the notice they got was improper.

Title Insurance Issue Arising From 2-Year Old Rhode Island Law Leads To Logjam For Banksters Looking To Unload Previously Foreclosed Homes

In Providence, Rhode Island, Providence Business News reports:

  • As lenders across the country struggle to sort out confused, sloppy or abusive foreclosure practices, a 2-year-old state mortgage-counseling law in Rhode Island has turned into a stumbling block for many banks trying to move distressed properties off their books.

    Mortgage bankers and real estate attorneys across the state say pending sales of homes that went through foreclosure are being stopped by concerns that the counseling requirement has not been satisfied and the title to the property might not be good.

    The concerns have prompted title-insurance companies, which investigate land records and write one-time policies guaranteeing clean title, to deny insurance for many previously foreclosed properties.

    It is creating a huge backlog of files of houses that are sitting there in foreclosure status, empty, vacant and not being sold or moved off the inventory of lending institutions,” said attorney James Caruolo, who practices real estate law in Warwick. “This leads to problems with the condition of the homes and unpaid taxes. It ends up hurting the city and neighbors because you are not moving it on to a new buyer.”

    The volume and extent of title issues connected with the Rhode Island foreclosure mortgage-counseling law is difficult to estimate. There is no central clearinghouse for pending foreclosure sales or properties caught in legal limbo because of title problems.

    Caruolo said he has been personally involved with a couple of sales that have been held up over the past two months.

    The statute is a mistake and a disaster. … It has not saved any homeowners from losing their homes,” said Joseph Vitullo, underwriting counsel for Stewart Guaranty Title Company in Warwick, who added that the law had been copied badly from federal foreclosure law. “It is so poorly drafted that title companies are erroneously reading many requirements into the statute that have no basis in the law. The result is that hundreds of titles have been rendered unmarketable.”
For more, see Distressed home sales hit snag (Hundreds of foreclosures have been deemed defective by the title-insurance company) (requires subscription).

Monday, September 3, 2012

Ex-NH Insurance Agent Dodges Prison For Preparing Two Sets Of Policies Used To Dupe Banks Into Financing Sale Leaseback Equity Stripping Ripoffs

In Concord, New Hampshire, The Associated Press reports:

  • A former insurance agent who said he believed he was helping financially distressed homeowners remain in their homes but who lied to federal investigators about insurance policies was placed on probation and fined $5,000 in federal court on Tuesday.

    Robert Hayden operated the State Farm Insurance Agency in Goffstown when he was recruited at a business networking meeting by the organization’s president, Michael Prieto, to assist him in a new venture in 2005.

    Prosecutors in their indictment of Prieto, formerly of Nashua, say his venture, which he touted as a “rescue plan” for financially distressed homeowners, was fraudulent. They say Prieto, who’s scheduled to stand trial in November, persuaded homeowners to sell their homes to his associates for below-market prices in exchange for low rent payments and the promise they could repurchase their homes later for reasonable prices.

    Prosecutors say Prieto then stripped whatever equity there was in the homes and refinanced them for much larger sums to pull more money out of the deals.

    Hayden, of Lyndeborough, pleaded guilty to initially lying to federal agents when he was questioned about two sets of insurance policies he drew up for each of Prieto’s acquisitions – the rental insurance policy that he filed with his agency and the owner’s policy that enabled Prieto to secure the inflated mortgages.

    I thought I was helping people stay in their homes, their lives and their dreams, and it wasn’t the case,” Hayden, 54, told U.S. District Judge Joseph Laplante in Concord.

    Prosecutors say Prieto ultimately defaulted on the mortgages he had orchestrated, with the principle amount exceeding $13 million.

    Assistant U.S. Attorney William Morse told the judge he has no evidence Hayden knew about the extent of the scheme or benefited beyond the small commissions he received for writing the policies.

    Attorney Michael Connelly, who represents Hayden, emphasized in court and in briefs filed in the case that Prieto pitched his venture at a meeting of the Business Networking International group meeting in Nashua.

    The openness with which Mr. Prieto announced the program, among a group of reputable professionals, and the benevolent stated purpose behind the program made it seem to Mr. Hayden like a legitimate arrangement,” Connelly said.

    Hayden has agreed to testify against Prieto.

As Bay State Homeowner Watches Auctioneer Sell Her Home In Foreclosure, She Vows To Fight On With Suit; Says Bank Can't Prove It Had Proper Paperwork

In South Orleans, Massachusetts, the Cape Cod Times reports:

  • The best intentions and the vocal support of the local Occupy movement couldn’t stop Sandy Schaefer-Ung’s home from being auctioned on Wednesday – but the South Orleans woman still holds out hope that a lawsuit will let her keep her home.
  • Schaefer-Ung’s lawyer, Jamie Ranney of Nantucket, filed a lawsuit in Land Court earlier in the day, arguing that U.S. Bank couldn’t prove it was the proper mortgagee.

    In the filing, Schaefer-Ung “denies that U.S. Bank or any other respondent possesses or can establish a lawful and valid chain of title to any mortgage, note, or any other interests in the premises that may have been originally granted” by her. Ranney said the promissory note he received was a photocopy which, he said, the line sayingpay to the order ofis blank.

    According to a recent decision by the Massachusetts Supreme Judicial Court, the lender trying to foreclose must hold both the mortgage and promissory note, which is proof of the debt.

WV Ass't AG: “We’re Having A Border War Here With Virginia!” Issues Arise In Mid-Atlantic States Over Car Title Lending Racket

The Washington Post reports:

  • [V]irginia’s car title-lending business is booming, but consumer advocates say it’s nothing to celebrate. Since a change in Virginia law last year, the commonwealth has become a magnet for people who need cash but live in the District, Maryland or another neighboring jurisdiction where laws capping interest rates have effectively driven such lenders out of business.

    In 2010, Virginia lawmakers — led by Sen. Richard L. Saslaw (D-Fairfax), who received more campaign donations from the consumer finance industry than anyone else in the Virginia General Assembly — imposed new regulations on car-title lenders but allowed them to operate in the commonwealth.

    A year later, legislation sponsored by Saslaw ensured that car-title lenders could extend credit to nonresidents. Since then, the number of licensed car-title lenders has almost doubled in Virginia, along with complaints about high costs and collection tactics.

    But some are pushing back against the industry, including West Virginia’s attorney general and a Roanoke County borrower. After investigating complaints from people who said debt collectors for Fast Auto Loans Inc. pestered them in the hospital or used other aggressive tactics, West Virginia Attorney General Darrell V. McGraw Jr. sought to block the firm from writing new loans to West Virginians or seizing their cars, court documents say.

    Fast Auto Loans and its Atlanta-based parent, Community Loans of America Inc., denied wrongdoing and, in any case, ceased making loans to West Virginians a year ago, court papers say. Norman A. Googel, a West Virginia assistant attorney general handling the case, said his office is investigating additional Virginia car-title lenders.

    It’s really unbelievable,” Googel said. “We’re having a border war here with Virginia.”
  • 250 percent interest

    Consumer advocates view car-title lending as a form of predatory lending. Like short-term payday loans, car-title loans often carry exorbitant interest rates that trap people in a cycle of debt. A typical 12-month car-title loan of $1,000, for example, can come with an effective annual interest rate of 250 percent.

    Car-title loans may even be worse than payday loans, consumer advocates say, because borrowers risk losing their vehicles. That can put them at risk of losing their jobs, especially in rural or suburban areas with limited mass transit.

    Once you get in, it’s very hard to get out,” said Dana Wiggins, director of outreach and financial advocacy at the Virginia Poverty Law Center in Richmond.
  • Consumer advocates [] hammered Saslaw, saying he is too close to the industry. Between 2010 and 2012, Saslaw received nearly $73,000 in campaign donations from payday lenders, car-title lenders and consumer finance firms, according to records collected by the nonpartisan Virginia Public Access Project.

Sunday, September 2, 2012

Homeowner Makes $69K+ In Loan Payments, Then Finds Out Lawyer Who Handled Closing Never Recorded Deed, Mtge; Title Insurer To Victim: 'Take A Hike!'

In Scranton, Pennsylvania, The Scranton Times-Tribune reports:

  • For more than three years, Shelia M. Layo made $69,594 in mortgage payments on a property she did not own.

    The Scranton woman is living in the house, which she still doesn't own, and is suing Peoples Neighborhood Bank, closing agent Richard Hallock and others in a bizarre case involving the failure to record a deed and a mortgage.

    The Hallstead-based bank didn't tell her about the incomplete closing or remedy the situation. Yet the bank wanted her to continue to make payments, noting that she is still personally liable for the note. Frustrated, she stopped paying. The bank sent her a notice of intention to foreclose in May, even though it couldn't foreclose without a mortgage and without her being the owner.

    An attorney, Mr. Hallock has since pleaded guilty to felony theft in an unrelated matter and was suspended from practicing law for three years. He has moved out of the area - leaving in his wake a flurry of escrow and financial irregularities - and could not be located for comment.

    Ms. Layo is suing the bank for possession of the townhouse and $397,725 which includes her 42 months of mortgage payments, Mr. Hallock's fee, other closing costs and losses, plus her legal fees. She is asking for other damages from Mr. Hallock and the firm he was an agent of, Ohio Bar Title Insurance.
  • Ohio Bar Title [] declined to help, denying her coverage through its errors and omissions insurance, even though Mr. Hallock was acting as its agent.

    There's another cost to Ms. Layo. The condo is in a Keystone Opportunity Zone, so she's supposed to receive tax benefits. Because she has no evidence that she owns the property, she was never able to take advantage of the benefits, which include exemptions from some property and income taxes.

Winning Bidders At Foreclosed Home Auction Invest Time, Money Into Fix-Up Only To Then Find Out They Bought Wrong Property

In Spartanburg, South Carolina, the Spartanburg Herald Journal reports:

  • A local couple hopes their misfortunes with the purchase of a foreclosed property will serve as a cautionary tale for anyone seeking to buy a home cheap.

    Earlier this year, Benjamin and Railynn Spence saw what they thought was an available house in the city at 777 Hayne St. listed with the Spartanburg County Forfeited Land Commission.

    The couple made a bid on the property for $601.64 on March 2. The Spences said they were informed by the county auditor's office on March 28 that they had the winning bid, and they needed to come down and fill out some final paperwork.

    At the signing, the couple said an official told them it would take two to six weeks for them to receive their deed. They said the official also handed them a docket that contained pictures of the house and other documentation that confirmed the home's address, and they walked away with the understanding that the home was theirs.

    By the end of May, the Spences, who had been keeping an eye on the property, said they still had not yet received their deed. But they were anxious to move in, so the couple began working on the house — painting, scraping and re-installing wiring and plumbing that was missing from the structure. On July 14, they moved all of their belongings from their hotel room to the home and continued fixing up the place.

    I had people pull up in the front yard telling me ‘You're doing such a good job,' ” Benjamin Spence said. “They told me that it was such an eyesore before and to keep up the good work.”

    Last Tuesday, the couple was at home when a city inspector and Spartanburg Public Safety Department officers came knocking on their front door. The inspector told them that the property's owner wanted them out of the house, and they had two weeks to vacate.

    We were like ‘what?' ” Railynn Spence said. “We said, ‘We're the owners. We bought it out of an FLC sale.' ”

    The Spences said they went up to the county's Delinquent Tax Office. There, an official showed them that the parcel number for the home at 777 Hayne St. ended in the digits 156.00, and paperwork showed that the Spences had made their bid on a parcel ending in 157.00, which was the empty lot.

    I told them, why would we buy a property with no house?” Benjamin Spence said. “Why would we do all of the work on a house that wasn't ours? Even one of the policemen said that squatters don't fix up houses, so we couldn't be squatters. The paperwork clearly showed the address on the house was 777. How else would we have found the place?

    Frustrated, the Spences decided to pack their bags. The county mailed them a refund for their bid on Aug. 17, and the couple was busy this week moving into a temporary home provided by one of Benjamin's friends.

    We would've still been in the dark about this had (the inspector) not come by to tell us,” Railynn Spence said.

    According to officials, the cause of the confusion over the address was caused by the renumbering of lots along the west side of Hayne Street near the intersection of Williams Street that was conducted in early March.

    The restructuring was done to make sure that the addresses matched up with the parcel numbers on file with the assessor's office. The Spences' lot was given the address of 757 Hayne St. and the house remained at 777 Hayne St.

    A county official said the Spences won their bid while the addresses were in the process of being updated. The photos of the home were included in the information docket likely as a point of reference for the address.

    On the tax records, that (empty) lot was given the same address as the house. A lot of times that happens when the lot is at one point tied to the house,” said Steve Ford, with the auditor's office. “In this case, the property had the correct address when it was sold even though the map numbers were different. By the time they realized it, the address was different.”
  • The Spences estimated that they have put $3,500 to $4,000 of work, including materials and man hours, into the house. [...] Benjamin Spence said he is facing a $350 fine from Spartanburg Water System for turning on the home's water to inspect for leaks in the plumbing prior to moving in.
For more, see Spartanburg couple finds home isn't theirs (Buyers need to be wary).

Suit Claims Granite State Couple Had Fully Paid For Policy When BofA Forced Them Into Default By Misapplying Loan Payments To Force Placed Insurance

In Manchester, New Hampshire, the New Hampshire Union Leader reports:

  • Joel and Roberta Bergquist of Rindge allege it was their mortgage servicer’s failure to credit them with buying their own homeowners’ insurance that unleashed a storm that is still unabated.
  • For nearly two years, the Bergquists say, they’ve been trying to win back control of their lives after Bank of America forced its own property insurance on them, confiscated mortgage payments to cover it, then refused to accept their monthly payments.

    The Bergquists, who are in their 60s, say Bank of America’s actions hurt their quilting business, Quilters Treasure, and ruined their ability to get credit. “They’ve destroyed us both personally as well as financially for our own personal names as well as the business,” Roberta Bergquist said in a telephone interview this month.

    The bank also defamed them, the Bergquists said in a lawsuit originally filed in Cheshire Superior Court.

    Attorney Jason A. Czekalski of Rindge, who represents the Bergquists, said in a telephone interview: “These people did nothing wrong. They were making their payments, they were paying their insurance, they had proof of insurance.”

    The bank, based in North Carolina, had the case moved to U.S. District Court in Concord on July 27. Judge Steven J. McAuliffe on Aug. 13 gave the bank until Oct. 1 to file an answer to the complaint.

    The Bergquists are seeking up to $635,000 from the bank, which includes a payoff of their mortgages, damages and attorneys fees, according to the bank’s attorneys: Jennifer Turco Beaudet and Thomas J. Pappas of Primmer Piper Eggleston & Cramer’s Manchester office. The parties are discussing a possible resolution, according to a court filing submitted by the bank.
  • According to the Bergquists’ suit, Bank of America’s mortgage servicing unit in March 2011 seized two monthly payments the Bergquists made toward principal and interest on their primary mortgage for 47 Monadnock Road and placed its own homeowners insurance on the property retroactively. That action violated the Bergquists’ mortgage with the bank, the suit asserted.
For more, see Rindge couple face off with BOA over mortgage (Like the wrath of nature which can wreak havoc in the form of hurricane, tornado or flood, the mortgage and foreclosure crisis has his American families in many forms).