Foreclosed, Now Ex-Homeowner Shines Light On Bankster, Local Authorities For Allowing Vacant Meth-Infected Home To Go Back On The Market

In Holden, Louisiana, WAFB-TV Channel 9 reports:

• A house in Livingston Parish that has tested positive for meth is back on the market. The bank foreclosed on the house, but bought it back. Now, the previous owner is taking some serious action to make potential buyers aware.
  
  The small wood-framed house in Holden has been at the center of attention for more than a year.
  
  The graffiti on the front claims the house is being condemned because the soil won't support the house, it is contaminated by meth and mold, has bad electric and a bad foundation. It also lists a YouTube address where anyone can view video of its interior.
  
  Katherine Doughty, the former owner of the house, said she is behind the brazen warnings. "We had our fireplace lit this winter and the doors blew out at 2 a.m., glass shattered all over our living room," Doughty said.
  
  That's what Doughty said last August after learning the house she said she bought from HUD had been exposed to crystal meth and other dangerous chemicals.
  
  Doughty and her family stayed in the house, but have since been taking steps to get it condemned. She said Citi Mortgage suddenly stopped accepting her payments, the house went through foreclosure and she and her family were evicted in July. The house is back on the market.
  
  "I was shocked. I could not believe that they would want somebody else to live in that house. It needs to be torn down," Doughty said.
  
  Last year, Chuck Vincent the building director for Livingston Parish, sent the Doughty family a letter regarding his inspection of the house. He wrote, "There appears to be mold/mildew...the flooring in several of the rooms is rotten to the point of falling in. He added, "after he left his eyes started watering and burning and I developed a headache."
  
  Doughty said she thought the parish was working on getting the house demolished. But now, she is not so sure. "We are not getting our calls returned anymore. We were told to let it go and let someone else deal with the problem," Doughty said.
  
  Doughty said the last letter she got was on April 13, 2012. Sam Digirolamo, Livingston Parish Planning director, wrote, "The house was to be condemned, demolished and disposed of."
  
  Six months later, the house is for sale.
  
  "It's a three-bedroom, two-bath in the Livingston Parish school district. I know it's going to sell to a family and I don't want another family to go through what my family's been through," Doughty explained.
  
  Parish President Layton Ricks said the house was never demolished because the complaint never went to the full council for a vote. He added, the parish is in the process of reworking how it condemns property to speed up the process.
  
  A spokesman for Citi Mortgage, the current owner, said the company is looking into the history of the property.

Source: Previous homeowner warns buyers of meth house.

Ambushed Locksmith's Widow Files Wrongful Death Claim; Says Cops Should Have Done More To Protect Him From Armed F'closed Homeowner Resisting The Boot

In Modesto, California, The Modesto Bee reports:

• Authorities should have done more to protect a locksmith from a distraught, armed homeowner who gunned down the man and a deputy sheriff, the locksmith's widow says in a wrongful death claim against Stanislaus County.
  
  Before they tried to carry out the April eviction, deputies were warned that the homeowner had weapons, the claim says, contradicting Sheriff Adam Christianson's statements since that the men walked into an ambush with no idea that danger lurked inside.
  
  Also, locksmith Glendon Engert paused while disabling the lock on a metal security door when he heard something inside, but deputies directed him to keep drilling, the claim says.
  
  "Mr. Engert was lulled into a false sense of security," the document reads. Moments later, Engert, 35, and deputy Bob Paris, 53, were killed by armor-piercing bullets from an assault rifle fired through the screen door. Deputy Mike Glinskas, 51, was not hit and was honored for bravery last month.
  
  The shooting deaths started an 11-hour standoff that ended as flames engulfed the Chrysler Drive fourplex. The body of Jim Richard Ferrario, who committed suicide, was found inside with an arsenal of weapons.
  
  The deputies "owed (Engert) a duty to protect him," says the claim, filed Aug. 24 by San Francisco lawyers on behalf of Irina Engert and made public by the county Monday. "It's unspeakably sad," said attorney Richard Schoenberger. "She remains devastated. Glendon was her life."

For more, see Modesto locksmith's widow files claim, says deputies didn't protect him.

Go here for Irina Engert's Claim Against Stanislaus County.

Chicago-Area Man Charged With Felony Hate Crime After Allegedly Hurling Racial Slurs, Beer Can, Brick At Man Hired By Bank To Maintain Foreclosed Home

In Chicago, Illinois, the Chicago Tribune reports:

• A Tinley Park man was charged with a felony hate crime for allegedly attacking a man who had been hired by a bank to maintain a neighbor's foreclosed home earlier this month.
  
  Joseph Berndt, 47, allegedly shouted racial slurs at the 51-year-old African-American man as he was working outside a house in the 6200 block of West 179th Street, then threw a beer can and a brick at the man, chased him through the yard while brandishing a pipe and attempted to strangle him, prosecutors said.
  
  The victim said Berndt approached him as he was checking the gas and electric meters at the house, which he had been hired to maintain and had visited several times during the week prior, according to a Tinley Park Police report on the Sept. 1 incident.
  
  "Hey, what are you doing? You are probably breaking in you (expletive)," Berndt said, the report states.
  
  The victim explained he had permission to be at the house, and resumed working in the yard. Berndt left his house, which was adjacent to the foreclosed home, threw a beer can at the man and said "I'm gonna kill your (expletive)," the report states. The man ran behind a fence, but said Berndt threw a "large landscaping brick at him."

For more, see Tinley Park man charged with hate crime for alleged attack (Police say victim had been hired by a bank to maintain a neighbor's foreclosed home and was attacked while at house).

State Bar Files Administrative Charges Against Lawyer Who Allegedly Screwed Over Elderly, Grieving Client Out Of $400K & Left Her With $1.4M Tax Bill

From The State Bar of California:

• The State Bar of California has charged a Glendale attorney with 18 counts of misconduct for his part in a scheme in which an elderly widow was charged excessive legal fees and left with $1.4 million tax bill.
  
  According to the notice of disciplinary charges filed Friday, Joseph Bernard McHugh Jr. (Bar. No. 128665) billed the victim more than $407,000 for bogus estate planning services and worked alongside a convicted felon, who had taken over the woman’s financial affairs.
  
  McHugh is accused of misconduct including charging illegal and unconscionable fees, defrauding the Internal Revenue Service, failing to disclose a conflict of interest to his client and numerous counts of moral turpitude.
  
  McHugh and Naomi Campbell, a self-styled financial adviser who had prior convictions for defrauding the elderly, met with 88-year-old Helen Sprinkle on Oct. 8, 2005, just three days after the death of Sprinkle’s only child, Donna. Sprinkle had also recently lost her sister and pet dog.
  
  Over the course of four months, McHugh, 59, charged Sprinkle thousands of dollars for work he claimed was done to update her estate plan, including $363,882 for supposed paralegal services, much of which went to Campbell and her husband, Ron, neither of whom had any paralegal training.
  
  The following May, according to prosecutors, McHugh made changes to one of the Sprinkle family’s trusts to list the Church of God of the Twin Cities Inc., based in Illinois, as a charitable beneficiary. McHugh also failed to disclose to Sprinkle that Campbell’s relatives served as the church’s president and head pastor, the treasurer and secretary.
  
  McHugh also authorized the sale of stocks and liquidation of other assets in the Sprinkle family trusts to purchase three annuities totaling roughly $5.5 million. The annuities, purchased from Campbell’s husband Ron, who received large commissions, were inappropriate investments for Sprinkle due to her age. As a result of McHugh’s actions, Sprinkle incurred $1,409,809 in federal and state taxes.

For the State Bar press release, see Glendale Attorney Charged With Elder Fraud Misconduct.

North Las Vegas City Manager Allegedly Pocketed 'Cash For Keys' Deal As A Tenant In Foreclosure Home While Concurrently Stiffing Landlord Out Of Rent

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

• The city of North Las Vegas may be drowning in red ink but the man in charge knows how to save a buck, or in this case, make one.
  
  Earlier this year News 3 reported on City Manager Tim Hacker failing to pay rent for several months while living in this house he said he planned to buy while he was actually in escrow to buy another home.
  
  Now News 3 has obtained an email from the broker who sold the house confirming Hacker received assistance known as “Cash for Keys” to move out of the home, which was in foreclosure.
  
  The woman who says Hacker owes her rent tells News 3 she's attempting to serve the Hackers with a summons to appear in North Las Vegas court. News 3 attempted to reach Hacker but the city of North Las Vegas is closed on Fridays.

Source: NLV city manager found in 'cash for keys' scheme.

NFL QB Victimized By Abused POA Seeks To Vacate Judgment Obtained By Lender w/ History Of Preying On Football Players By Loaning Cash On Onerous Terms

In New York City, Courthouse News Service reports:

• NFL quarterback Vince Young claims in court that his former financial adviser and sports agent fraudulently took out a nearly $1.9 million loan in his name from a predatory lender.
  
  Young is suing the lender, Pro Player Loan, in New York County Supreme Court in an effort to get the lender off his back.
  
  "Young has never received a penny from the purported Pro Player 'loan' proceeds, nor has he ever communicated with anyone from Pro Player or knowingly executed any loan agreements with Pro Player," the lawsuit states.
  
  Young says the loan was fraudulently obtained by his former financial adviser, Ronnie Peoples, and his former agent, Major Adams II, neither of whom are defendants in the lawsuit. Young says he gave Peoples and his company, Peoples Financial Services, power of attorney to act on his behalf financially.
  
  Peoples and Adams allegedly took out a nearly $1.9 million from Pro Player Funding, which the lawsuit describes as "a predatory lender with a history of loaning funds to football players on extraordinarily onerous terms."
  
  Under the terms of the loan, Pro Player disbursed just 59 percent of the total loan amount after prepaid interest and fees, and demanded 30 percent interest when the loan went into default in June, according to the lawsuit.
  
  Despite Young's insistence that he never took out the loan, "Pro Player has subjected Young -- and his former football team, the Buffalo Bills -- to a barrage of threats and excessive and needless discovery requests in an effort to enforce its judgment."
  
  He says the lender even tried to serve him with papers at the Buffalo Bills' training camp in early August.
  
  Pro Player allegedly won a judgment by confession in July, requiring Young to pay $1.69 million in outstanding principal plus 9 percent interest until the judgment has been paid in full.

***

• The athlete wants the court to vacate the judgment, claiming Pro Player failed to take "reasonable steps to ensure that Young was aware of the transaction, that he authorized it, or that he would benefit from it."
  
  "Indeed, the circumstances of this loan should have given rise to grave suspicions on the part of Pro Player as to whether the transaction was legitimate," Young claims. "Pro Player, however, turned a blind eye to those circumstances, motivated by its rapacious desire to earn the exorbitant profits on the loan."
  
  Young was released from the Buffalo Bills on Aug. 27 and is now a free agent.

For the story, see QB Says He's Not Liable for Bogus $1.9M Loan.

For the lawsuit, see Young v. Pro Player Funding LLC.

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

HOA Prez/Developer Accused Of Creating "Well-Oiled Machine" To Rip Off Homeowners Out Of $500K+ In Dues, Fines Gets The Pinch On Felony Fraud Charges

In Polk County, Florida, the Orlando Sentinel reports:

• Orlando area developer David Meadows was arrested [] on four felony fraud charges after authorities said he stole hundreds of thousands of dollars from owners of his Bimini Bay vacation resort in Davenport.
  
  The Orlando Sentinel in December detailed a wide array of problems at the community just a few miles from Walt Disney World, which was marketed to international investors and others who wanted to be near Orlando's tourist attractions.
  
  The management fees Meadows collected for overseeing the Bimini Bay community had increased tenfold during a time when owners complained about poorly maintained public areas, a condemned clubhouse, illegal trash piles and above-ground cable wiring that failed to meet building codes.
  
  Meadows blanketed owners of Bimini Bay's 200 homes with $100-a-day fines for infractions such as using vertical blinds instead of horizontal ones, the Sentinel reported.
  
  On Tuesday, state investigators reported that the revenues he collected padded Meadows' development company and that he "maintained a dictatorial control" over the homeowners association.
  
  "Meadows made his development company the HOA's primary vendor and engaged in self-dealing contracts for personal benefit," the state attorney's investigative report reads.
  
  A 17-page investigation report released Tuesday by the economic crimes division of the State Attorney's Office for Polk County also charged Meadows with double billing the association for management fees.
  
  The report stated that Meadows transferred $511,538 from the homeowner association into his development company from March 2010 through July 2011 and a "significant portion" of that became evidence of his "scheme to defraud."

***

• Construction started on Bimini Bay in 2000 and proceeded slowly until it halted with the real estate crash of 2007. The project was originally slated to have about 500 townhome-style units. Ultimately fewer than half that amount were built.
  
  Once development stopped, "revenues needed to be generated to cover up expenses," Deanna Meixner, accountant for Meadows from 2002 to 2009, told investigators. During a 3.5-year period that started in April 2008, Meadows' operations filed 509 liens on the 200 units in the development.
  
  And since 2008, the developer failed to pay association fees for his own units and should not have had a position on the association board, but he disregarded bylaws, investigators reported.
  
  One of Meadows' employees told investigators that Meadows created a "well-oiled machine" dedicated to cranking out estoppels letters, foreclosure notices, attorney fees, utility charges and association dues and fees. One owner, Sandra Friedle, faced $31,612 in liens for infractions such as a bent window screen.
  
  Another accountant who worked for Meadows, Sandra Andrews, told authorities that transferring funds from the homeowner association to Meadows companies "occurred on a routine basis." She is quoted in the investigation report saying she felt as though there was a "shell game going on."

For the story, see Bimini Bay developer charged with fraud.

See also, The Lakeland Ledger: HOA president accused of $500,000 theft.

Some City Residents Accuse Key West Of Giving 'Bailout' To Greedy Bankster In Code Compliance Dispute

In Key West, Florida, the Florida Keys Keynoter reports:

• After rejecting a $20,000 code compliance settlement from the Bank of New York Mellon, the Key West City Commission on Wednesday agreed to take $30,000.
  
  Mellon bank via foreclosure bought the house at 923 Eaton Street from the mortgage holder, JP Morgan Chase in 2009. The property fell into disrepair, eventually becoming the subject of action from the city's Code Compliance Department, leading to a $186,750 accrued fine.
  
  Although commissioners on Aug. 21 voted 5-2 to reject the $20,000 offer, City Attorney Shawn Smith said this week he had done more research on the property and found the city's lien on the property could be invalidated.
  
  "The current offer of $30,000 is something the city should accept given the fact there are questions to the validity of the lien," Smith said. "$30,000 certainly is far in excess of the actual cost the city has in this particular issue."
  
  Smith also pointed out that the $30,000 figure equates to the fines related to the 120 days that Mellon owned the house and it was not in compliance with municipal code.
  
  Residents opposing continued to frame their objection in terms of little Key West giving a bailout to a greedy financial giant.

Source: City accepts $30,000 bank settlement.

Possible Influx Of Section 8 Renters Into High-End Community Has One HOA, Some Neighbors 'Running Around With Their Hair On Fire'

In Broward County, Florida, the South Florida Sun Sentinel reports:

• Here's an odd side effect of South Florida's foreclosure crisis: Some immense homes with pools and three-car garages in gated communities are being rented out to unlikely tenants — poor people paying with Section 8 aid.
  
  Among the properties are homes with up to 4,500 square feet of space in private communities with guardhouses and regal names such as "Monarch Lakes" and "Bellagio at Vizcaya."
  
  Some of the owners are teetering on foreclosure and gambling they can earn enough money from the federal housing vouchers to stave off the banks. Others bought the properties cheap in foreclosure auctions and want the guaranteed rental income.
  
  Housing advocates and the government view the turnabout as a win-win for homeowners and the poor, who have access to safer communities and better schools.
  
  But some neighbors are aghast.
  
  After a single mother and her nine children rented a house in the exclusive Isles neighborhood of Coral Springs, the homeowners association adopted an amendment to its governing documents stating: "No Section 8 or government leasing assistance is permitted."
  
  The association is threatening eviction.
  
  Federal law does not expressly outlaw such bans. But the prohibition can't be used as a pretext for other illegal acts, such as denying housing to people because of their race, gender, national origin, disability or number of children.
  
  The owner of the Coral Springs house, Henri-Claude Marcellus, has hired a lawyer to challenge the restriction, claiming his mostly white neighbors are discriminating against him because he is Haitian and his tenants are African-American.
  
  A retired software engineer, real estate investor and radio show host, Marcellus said he confronted the association's officers, demanding to know: "What do you have against blacks?" "I hit a very sensitive nerve," he said in a recent interview.
  
  The association's lawyer and directors did not respond to requests for comment.(1)

For more, see Some fancy neighborhoods open gates to Section 8 tenants.

(1) While Federal law may not prohibit it, the state law of at least one state, Massachusetts, prohibits discrimination against prospective renters on the basis of their receiving public assistance. See, for example:

• Attorney General Martha Coakley's Office Obtains Consent Judgment Against Cambridge Realtor Accused of Discriminating Against Section 8 Recipient.

Closing Agent Admits To Ripping Off Escrow Cash From Real Estate Deals; Failed To Pay Off Existing Mortgages, Leaving Title Insurer On Hook For $1.5M+

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

• Harriet M. Taylor, age 56, of Ellicott City, Maryland, pleaded guilty [] to wire fraud in connection with a scheme to use over $1.5 million in mortgage closing funds for her personal use or to operate her title companies.

***

• According to her plea agreement, Taylor co-owned and managed two title insurance companies, Regal Title Company, LLC and Loyalty Title Company, LLC, located in Columbia, Maryland. Taylor entered into an agreement with a national title insurance underwriter to establish escrow accounts for Regal and Loyalty, separate from company operating accounts, for the purpose of holding and disbursing funds received from lenders for real estate closings.
  
  Beginning in 2009, however, Taylor caused mortgage lenders to wire their funds entrusted for real estate settlements to Regal’s operating account, rather than to the escrow accounts. Taylor also caused funds in Regal’s and Loyalty’s escrow accounts to be transferred back and forth between their respective operating accounts. By using commingled funds throughout 2009, Taylor kept her two businesses afloat, while enriching herself with both company and escrow funds. From January through December 2009, Taylor paid herself $477,877.50 from three company operating accounts.
  
  As shortfalls in the escrow accounts increased, Taylor failed to remit insurance premiums to the title insurance underwriter, Old Republic National Title Insurance Company (Old Republic), pay recording fees for deeds and pay off prior liens, including four of which belonged to the government sponsored entities, Fannie Mae and Freddie Mac.
  
  Old Republic learned of the misuse of settlement funds from a 2009 audit of Regal and an early January 2010 audit of Loyalty. Old Republic terminated its agency relationship with the two companies, but was obligated to satisfy the prior liens against the properties affected by the misuse of settlement funds and to complete other transactions Regal and Loyalty failed to perform.
  
  Accordingly, in January 2010, Old Republic incurred a total loss of $1,518,532 which resulted from paying off prior liens, paying recording fees, and for insurance premiums collected by Regal and Loyalty but not forwarded to Old Republic.

For the U.S. Attorney press release, see Title Company Owner Pleads Guilty in $1.5 Million Fraud Scheme.

Private Company's Attempt To Invoke Eminent Domain Power To Wrestle Property Away From SE Texas Landowners Again At Issue

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

• Southeast Texas landowners will have to wait two weeks before learning if a Jefferson County judge will grant a foreign company’s petition to condemn land for the construction of a crude oil pipeline.
  
  TransCanada Keystone Pipeline filed the petition for condemnation against Texas Rice Land Partners, James and David Holland and Mike and Walter Latta on June 28, 2011. According to its website, TransCanada seeks to build a pipeline to carry crude from Alberta to the Gulf Coast.
  
  A hearing on whether to grant the petition was held Wednesday, Sept. 12, before Judge Tom Rugg, Jefferson County Court at Law No. 1. Rugg did not rule on the matter, but gave the parties until Sept. 21 to reply to a recently filed legal brief.
  
  While the hearing was in progress, several protestors stood outside the Jefferson County Courthouse to show their objection to the overuse of eminent domain. “It’s a concern of this court that the rights of landowners not be trampled,” Rugg said during the hearing. Rugg said he would craft a ruling on Sept. 24.
  
  During the hearing, Terry Wood, the attorney for the rice farmers, attempted to link the TransCanda case to a ruling made by the Texas Supreme Court last August denying Denbury Green common carrier status in a pipeline project of its own.
  
  In that opinion, the court stated “Private property is constitutionally protected, and a private enterprise cannot acquire condemnation power merely by checking boxes on a one page form.”
  
  TransCanada argued that the high court ruling did not apply, since Denbury Green’s pipeline would not have carried crude oil, but would have transported carbon dioxide (CO2) to be injected into oil reservoirs to recover additional crude oil.

Source: Judge to decide fate of eminent domain pipeline dispute by Sept. 24.

Foreclosed Homeowner Who Used Sovereign Citizen Racket In Attempt To Reclaim Title & Possession To Home Cops Plea To Georgia RICO Charges

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

• One of a dozen so-called sovereign citizens indicted on racketeering charges for essentially stealing 18 high-end homes in eight counties pleaded guilty Monday in court. "I plead guilty because I’m tired,” David B. Graham told DeKalb County Superior Court Judge Courtney L. Johnson. “I’m guilty because I’m guilty.”
  
  Graham was accused of moving back into the Gwinnett County home he lost to foreclosure by illegally using the quit claim process to transfer the deed back into his own name. Graham pleaded guilty to violating Georgia's RICO or influenced and Corrupt Organizations Act, and to conspiracy to violate the RICO Act.
  
  He was one of many in a group that, between January and July 2010, exploited loopholes in the legal property deeding system to gum up an already tedious process. Graham said he was directed to a loosely organized sovereign citizen group to help him save his home.

***

• That scheme, prosecutors say, involved members of the group breaking into more than a dozen properties in DeKalb, Gwinnett, Henry, Spaulding, Fulton, Fayette, Richmond and Newton counties, including a Buckhead strip mall, forging notarized deeds for themselves and one another to file with the respective county clerks, then threatening litigation against the rightful owners if those owners tried to evict the sovereigns or sell the properties. Prosecutors called it putting “a cloud on the title.”

For more, see Gwinnett man pleads guilty to stealing foreclosed home (Attorney: ‘He bought into sovereign citizen scheme’).

Rent Skimming Racket, Use Of Forged Lien Releases To Illegally Pull Cash From Properties Lead To 10-Year Prison Stay For One, Six Years For Another

From the Office of the U.S. Attorney (District of Columbia):

• Bryan W. Talbott, 49, the president of a property management company, was sentenced [] to 10 years in prison for defrauding his clients, mortgage lenders, and the government of more than $2.8 million.

***

• Along with business partner Chester D. Ransom, Jr., 45, Talbott pleaded guilty in January 2012 in the U.S. District Court for the District of Columbia to charges of conspiracy to commit bank fraud, conspiracy to commit mail fraud, and conspiracy to defraud the government. [...] As part of their plea agreements, Talbott and Ransom agreed to criminal forfeiture of the proceeds of their crimes and restitution of more than $2.8 million.
  
  Ransom was sentenced in June 2012 to a six-year prison term.

Rent Skimming:

• As part of their fraudulent scheme, the defendants frequently collected rental payments from tenants but did not pay the bills for the properties, despite falsely representing to the property owners that the bills had been paid.
  
  Instead, the defendants used these funds for their own benefit. In addition, the defendants also sent forged bank statements to some of their clients, misstating the balances in their clients’ accounts. Through this fraudulent scheme, the defendants defrauded at least 54 clients out of a total of $1,269,278.

Use Of Forged Satisfactions Of Mortgages To Pocket Mortgage Proceeds:

• On June 30, 2004, Ransom purchased the property on North Portal Drive NW for $975,000, financing the purchase, in part, with two loans in the total amount of $731,250 from WMC Mortgage Corp., a mortgage lender. Ransom executed two deeds of trust on the property, granting WMC a security interest in the property.
  
  On December 29, 2005, Ransom filed with the District of Columbia Recorder of Deeds two forged Certificates of Satisfaction, purporting to release the WMC liens on the Portal property.
  
  Then, on January 13, 2006, Ransom sold the Portal property to Talbott for $1,110,000. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan in the amount of $750,000 from Fremont Investment and Loan. Talbott executed a deed of trust on the property, granting Fremont a security interest in the property. Ransom received a check in the amount of $515,034 from the settlement.
  
  Less than a month later, on February 2, 2006, Ransom again “sold” the Portal property to Talbott, this time for $1,250,000, despite the fact that Talbott was already the legal owner. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan of $890,000 from First National Bank of Arizona. Talbott executed a deed of trust on the property, granting First National Bank of Arizona a security interest in the property. Ransom received a check in the amount of $801,280 from the settlement.

For the U.S. Attorney press release, see President of Property Management Company Sentenced To 10-Year Prison Term For Defrauding Clients, Mortgage Lenders and Government (Scheme Involved More Than $2.8 Million).

L.A. Feds Indict 11 For Roles In Alleged Loan Mod Scam That Screwed 4,000+ Homeowners Out Of At Least $7M; Many Lost Homes To Foreclosure Anyway

From the Office of the U.S. Attorney (Los Angeles, California):

• Federal agents [...] arrested 10 defendants who worked at a Rancho Cucamonga-based business that allegedly offered bogus loan modification programs to financially distressed homeowners. As a result of the scheme allegedly run out of 21st Century Real Estate Investment Corp. and several related companies, more than 4,000 financially distressed homeowners lost at least $7 million in fees they paid to the company, and many homeowners lost their homes to foreclosure.
  
  Those taken into custody [...] were among 11 defendants named in a federal indictment unsealed today following an investigation by the Federal Bureau of Investigation; IRS-Criminal Investigation; the United States Postal Inspection Service; the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and the Federal Housing Finance Agency, Office of Inspector General.
  
  According to the indictment, during an 18-month period that began in June 2008, a Rancho Cucamonga woman – Andrea Ramirez – operated 21st Century and several other companies.
  
  According to the indictment, 21st Century “defrauded financially distressed homeowners by making false promises and guarantees regarding 21st Century’s ability to negotiate loan modifications from the homeowners’ mortgage lenders, falsely representing that 21st Century was operating a loan modification program sponsored by the United States government, instructing homeowners to cease communication with their mortgage lenders and to cease making their mortgage payments.”

***

• Ramirez and the other 21st Century employees contacted distressed homeowners through cold calls, newspaper ads and mailings, and various 21st Century-controlled websites that advertised loan modification services.
  
  Once they contacted the distressed homeowners, according to the indictment, Ramirez and other 21st Century employees often falsely told clients that the company was operating through a federal government program, that they would be able to obtain new mortgages with specific interest rates and reduced payments, and that attorneys would negotiate loan modifications with their lenders.
  
  Ramirez and other 21st Century employees regularly instructed financially distressed homeowners to cease making mortgage payments to their lenders and to cut off all contact with their lenders because they were being represented by 21st Century.
  
  On some occasions, Ramirez and other 21st Century employees would tell homeowners that 21st Century was using the fees paid by the homeowner to make mortgage payments, when in fact Ramirez and 21st Century simply were keeping the homeowner’s money.
  
  Christy Romero, Special Inspector General at SIGTARP, stated: “Ramirez and her co-conspirators are charged with fraudulently operating 21st Century to exploit the hardships of homeowners fighting to keep a roof over their head. As alleged, these con artists swindled distressed homeowners by lying about their affiliation with federal housing programs and giving money-back guarantees that the homeowners would get a lower mortgage payment if they paid an advance fee. SIGTARP and our law enforcement partners are committed to shutting down schemes that prey on those who can least afford it by falsely claiming an affiliation with TARP’s housing programs.”
  
  Leslie P. DeMarco, Special Agent in Charge of the IRS-Criminal Investigation’s Los Angeles Field Office, said: “Using the guise of a federally sponsored loan modification program, and the assurance of a qualified legal team, the defendants preyed on financially distressed homeowners allegedly depriving them of much needed money and property. Those who find ways to fraudulently benefit from government programs meant to help struggling homeowners keep their homes will be brought to justice.”
  
  The 11 defendants named in the indictment are:
  
  Andrea Ramirez, who also used the names Andrea Parker and Lisa Evans, 44, of Rancho Cucamonga; Christopher Paul George, 42, Rancho Cucamonga, who surrendered [...] to authorities; Michael Bruce Bates, who also used the names Michael Bruce Myers and Robert Allen Castro, 61, of Moreno Valley; Crystal Taiwana Buck, 37, of Long Beach; Michael Lewis Parker, 34, of Pomona, who is currently a fugitive being sought by federal authorities; Catalina Deleon, 35, of Glendora; Hamid Reza Shalviri, 50, Montebello, who self-surrendered [...] after being contacted by federal agents; Yadira Garcia Padilla, 35, of Rancho Cucamonga; Mindy Sue Holt, 53, of San Bernardino; Iris Melissa Pelayo, 42, of Upland; and Albert DiRoberto, 59, of Fullerton.

For the U.S. Attorney press release, see Grand Jury Indicts Eleven Linked To An Inland Empire Loan Modification Scam That Targeted Financially Distressed Homeowners.

Ventura County Jacks Up Recording Fees For Certain Docs To $10 To Continue Funding For Law Enforcement Efforts Targeting Local Real Estate Ripoffs

In Ventura County, California, the Ventura County Star reports:

• Recording a deed of trust, lease, lien, reconveyance or other real estate transaction now will cost $10 in Ventura County.
  
  The Ventura County Board of Supervisors this week raised the fee from $3 on certain "real estate instruments" filed with the Ventura County Clerk and Recorder's Office.
  
  County officials said the fee increase will help raise funds to deter, investigate and prosecute real estate fraud. The potential revenue from the $10 fee is estimated at about $1 million a year.
  
  "Our homes are the single biggest investment in life, and (real estate fraud) is a crime that many people have suffered and will continue to suffer," County Clerk-Recorder Mark Lunn said. "I think it's a great step to move forward in terms of law enforcement."
  
  California leads the nation in residences pending foreclosure, with almost 40,000. About 2.2 million people, or one-third of all California homeowners, are "upside down" on their mortgages, or owe more than the value of their homes. Fifty percent of nonprofit housing counselors have reported that fraud is "very common."
  
  In a report to the supervisors, District Attorney Greg Totten said foreclosure rescue and related schemes are the most prevalent type of real estate fraud and that older people and those who only speak Spanish are frequently targeted.
  
  In 2005, supervisors authorized a $2 fee for recording of real estate instruments for the fraud deterrent program. The fee later was increased to $3.
  
  The District Attorney's Office also received an approximately $1.6 million federal grant providing money for two prosecutors, two investigators, a legal processing assistant and an investigative assistant for two years. In addition, the California Attorney General's Office awarded $423,573 to the District Attorney's Office.
  
  While the grant and award will temporarily fund some of the real estate fraud program's annual budget of $974,093, "It is abundantly clear that recent annual fee revenue falls well short of this mark" to address more than 100 criminal investigations pending at any time, Totten said.
  
  Assemblyman Jeff Gorell, R-Camarillo, co-authored SB 1342, which gives county supervisors in California the authority to raise real estate transaction fees to $10 to provide a consistent funding stream for law enforcement to fight real estate fraud.
  
  Some of the money also goes to the county Clerk-Recorder's Office to support fraud prevention programs. Totten said the District Attorney's Office would like to hire another investigator for the program.
  
  "Literally, tens of millions of dollars have been stolen in this county from homeowners, sellers. We're trying to do our best to end that," Totten said.
  
  State law mandates that the $10 fee return to the Board of Supervisors for an annual review. The fee does not apply to documents associated with "point of sale" or transfers, such as grant deeds.
  
  Local real estate groups, including the Ventura County Coastal Association of Realtors, support the increase.
  
  Supervisor Peter Foy said the district attorney's approach to tackling the real estate fraud problem in the county is a "model program for the entire state."

Source: County increases real estate filing fees to combat fraud.

'Borrower Fatigue' May Cause Some Homeowners To Trash Legit Bankster Loan Mod Offers; "If It Looks Too Good To Be True, It Actually Might Be True!"

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:

• Some Nevada homeowners may be ignoring valid offers from banks to reduce their mortgages because of "borrower fatigue." Real estate attorneys say many Nevadans are so used to hearing no from lending banks, they might miss out on a valid offer from a bank.
  
  Charmagne Balean didn't like checking her mail for four years because it usually meant bad news from the bank. For four years, her family attempted to get their bank to agree to a loan modification. "This is my pile of hard labor and heartaches," homeowner Charmagne Balean said.
  
  This family of electrical contractors bought their home in 1999. When their bank finally agreed to cut their monthly payments nearly in half, they almost didn't believe it. "You get so confused, you don't even know what to believe, or what not to believe," Balean said.
  
  "The bank, they didn't have an answer. It was confusing at best," homeowner Mark Stuhmer said. He said the bank reduced the amount he owed on his home/office by more than $300,000. He initially thought the offer was fraudulent.
  
  "Oddly enough, today, if it looks too good to be true, it actually might be true," attorney Tisha Black said.
  
  Black deals with homeowners trying to save their homes from foreclosure. She said there are often scams targeting those desperate homeowners.
  
  "There's literally businesses that have copied the stationary of some of the big banks and offer reductions in principal or things like that if they forward some money."

For the story, see 'Borrower Fatigue' Causes Homeowners to Ignore Real Offers.

Arizona AG, Out-Of-State Law Firm Settle Suit Alleging Upfront Fee Ripoffs In Racket That Peddled Loan Mods, Legal Services To Strapped Homeowners

From the Office of the Arizona Attorney General:

• Arizona Attorney General Tom Horne has reached a settlement with The Mortgage Law Group a/k/a Macey Aleman & Searns, a Chicago-based law firm that the State accused, in a consumer fraud lawsuit, of participating in a deceptive scheme designed to collect advance fees from consumers looking for assistance in obtaining mortgage loan modifications. In nearly all cases, it is illegal for businesses to charge consumers upfront fees for loan modifications.

***

• The State alleged that, along with co-defendant, Scottsdale, Arizona- based Underwater Property Solutions, The Mortgage Law Group (“TMLG”) marketed mortgage modification services to consumers as legal services that they represented would be performed by TMLG’s attorneys, including local "partners" in the states where TMLG's clients resided.
  
  The State alleged that Underwater Property Solutions’ non-lawyer employees did nearly all of the substantive work for consumers who paid "retainer fees" to TMLG.

***

• The settlement permanently prohibits TMLG from engaging in any consumer debt or loan modification activities in Arizona or on behalf of Arizona consumers and requires TMLG to pay $39,280 in restitution and $60,000 in attorney's fees.
  
  In entering into the settlement with the State, TMLG did not admit that it violated the law nor did the court make findings that it did so. A consent judgment with co-defendant Underwater Property Solutions was approved in May, 2012.

For the Arizona AG press release, see AG Horne Announces Settlement With Law Firm That Advertised Mortgage Modification Services.

Now-Disbarred Lawyer Agrees To Cough Up $32K+ In Restitution For Pocketing Upfront Fees, Then Failing Provide Services In Nine Loan Mod-Related Cases

From the California Bar Journal (August 2012):

• Kent C. Wilson [#58652], 66, of San Diego was disbarred June 16, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.
  
  Wilson stipulated to 30 counts of misconduct in nine cases. Most of the cases involved loan modifications or potential lawsuits against lenders. He did not do the work he was hired to do, closed his office without notifying his clients and did not account for or refund their unearned fees.

***

• In mitigation, Wilson has no prior discipline record, cooperated with the bar and tried to resign from practice when he was overwhelmed by work. He agreed to make restitution totaling $32,600.

Source: California Bar Journal (August 2012): Disbarments.

Court Rejects Bankster 'Buy Off' Of Ch 7 Trustee w/ $10K In Exchange For F'closure Defense Waiver; Homeowner's Defenses Not Waivable By Trustee: Judge

From the National Consumer Bankruptcy Rights Center blog:

• In an action comparable to two wolves and a sheep voting on what to have for dinner, the Bankruptcy Court for the Southern District of Florida stepped in on behalf of the sheep and disapproved a settlement agreement under which the trustee sought to waive the debtor’s defenses in an underlying state court foreclosure action. In re Larkin, 468 B.R. 431 (Bankr. S.D. Fla. 2012).
  
  Approximately one year prior to debtor’s filing her chapter 7 bankruptcy petition, Wells Fargo instituted foreclosure proceedings on the debtor’s home. The debtor counterclaimed in that action and raised defenses to Wells Fargo’s claims. The chapter 7 trustee sought to allow the foreclosure to go forward and to dismiss the debtor’s counterclaim and waive her defenses in the underlying foreclosure action, in exchange for Wells Fargo paying $10,000 to the estate.
  
  The court disapproved the settlement agreement finding that while the counterclaim was property of the estate, (citing Parker v. Wendy’s Int’l, Inc., 365 F.3d 1268,1272 (11th Cir.2004)), the defenses to the foreclosure action were not and, therefore, could not be waived by the trustee.
  
  The issue of whether the debtor’s defenses were property of the estate turned on interpretation of section 558 which provides:
  
  The estate shall have the benefit of any defense available to the debtor as against any entity other than the estate, including statutes of limitation, statutes of frauds, usury, and other personal defenses. A waiver of any such defense by the debtor after the commencement of the case does not bind the estate.
  
  The court correctly found that this provision permits the trustee to avail himself of debtor’s defenses but does not authorize the trustee to deprive the debtor of those defenses.
  
  The court did caution that defenses that seek monetary damages may be more akin to counterclaims and could, therefore, be waived by the trustee, but that defenses that seek to reduce potential recovery by the claimant do not fall into that category and are not waivable by the trustee as to the debtor.

Source: Trustee May Not Waive Debtor’s Defenses to Foreclosure Action. rogue

WV AG Scores $15M Win Against Internet Lender Accused Of Using Sham Deal With South Dakota Bank To Evade Usury Law, Abusive Collection Tactics

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

• Kanawha County Circuit Court Judge Louis "Duke" Bloom has ordered a California Internet lender to pay $15 million in civil penalties, refunds and cancelled debts to the nearly 300 West Virginia consumers who obtained loans and to the State.
  
  Bloom entered two lengthy orders Monday finding in favor of the State on all of its claims against Anaheim-based CashCall.
  
  West Virginia Attorney General Darrell McGraw filed a lawsuit against CashCall in 2008.
  
  In the suit, McGraw's office alleged that CashCall entered into a "sham" relationship with the First Bank and Trust of Milbank, S.D., for the purpose of using the bank's charter to evade West Virginia's usury laws.
  
  The attorney general alleged that although the loans obtained by West Virginia consumers were made to appear as if they were issued by the South Dakota bank, in fact, CashCall was the "true lender" because it bore the entire economic risk of the loans. In his orders, Bloom agreed.
  
  McGraw's office also alleged that CashCall engaged in a wide range of abusive debt collection practices, including severe telephone harassment -- calling some consumers 20-25 times a day -- and calling and sometimes disclosing alleged debts to various third parties, including friends, family members, co-workers and persons that consumers listed as "references" on their loan applications.
  
  The attorney general also alleged that CashCall repeatedly contacted consumers at work, subjecting them to embarrassment and humiliation -- even after the consumers had asked that the calls stop.
  
  McGraw's suit against the California company garnered national attention earlier this year after it was learned that CashCall's founder and owner, J. Paul Reddam, also owned the race horse "I'll Have Another."
  
  The horse was in line to be the first Triple Crown winner in 34 years after it won the Kentucky Derby and the Preakness Stakes. However, on the day before the Belmont Stakes, he was scratched due to tendonitis and was retired from racing.
  
  "I am proud of my consumer protection staff for making West Virginia the only state to successfully challenge CashCall's 'sham' business model that was designed to evade laws intended to protect West Virginia consumers from excessive interest rates," McGraw said in a statement Tuesday.
  

Source: W.Va. judge finds Calif. Internet lender CashCall engaged in 'sham'.

For Judge Bloom's rulings, see:

• State of West Virginia v. Cashcall, Inc. (Phase I): Debt Collection Claims,
• State of West Virginia v. Cashcall, Inc. (Phase II): Usury and Lending Claims.

Discharging Student Loan In Bankruptcy May Be Hopeless Cause, But Telling Borrower That She Can't In Effort To Collect Debt Violates FDCPA: Appeals Ct

In New York City, The New York Times reports:

• For borrowers struggling to pay off their student loans, getting rid of the debt in bankruptcy is difficult because they need to convince a judge that it constitutes an “undue hardship.”
  
  But it is not impossible. And [last month], the United States Court of Appeals for the Second Circuit, based in Manhattan, ruled that a debt collection agency working to collect loans backed by the Education Department misled borrowers by telling them their debt was not dischargeable in bankruptcy.
  
  In doing so, the appellate court reversed a lower-court ruling and allowed a lawsuit brought against Collecto, the collection agency, to proceed in Federal District Court.
  
  “They were giving incorrect legal advice in an attempt to coerce money out of these people,” said Brian L. Bromberg, appellate lawyer for the plaintiff, a Buffalo woman. He said that while debt collectors often told borrowers that they could not discharge their students loans in bankruptcy, Collecto “was foolish enough to put it in writing.” Collecto officials declined to comment Friday afternoon, as did the Education Department.
  
  There is a common misperception that student loans cannot be discharged in bankruptcy, in part because it is so difficult to do so. Debtors must demonstrate that repaying the loan “would impose an undue hardship on the debtor,” showing that they cannot maintain a minimal living standard, that their dismal state of affairs is likely to continue and that they have made a good-faith effort to repay.
  
  Though hard numbers are difficult to come by, it appears that fewer than 1,000 borrowers each year even try to make the “undue hardship” case.(1) There are 37 million borrowers with federal student loans.
  
  The appellate case dates back to 2001, when the Buffalo woman, Berlincia Easterling, filed a bankruptcy petition. At that time, she owed the Education Department $2,460 for a student loan. Mr. Bromberg did not know where Ms. Easterling attended college, and she could not be reached for comment.
  
  In her bankruptcy petition, Ms. Easterling did not try to pursue an undue hardship claim and listed her student loan debt as “not dischargeable.”
  
  Seven years later, she received a letter from Collecto about her student loan balance, which had grown to $3,359.76 with accrued interest. “Account ineligible for bankruptcy discharge,” the letter said. “Your account is NOT eligible for bankruptcy discharge and must be resolved.”
  
  According to the appellate opinion, when Collecto learned that a debtor had filed for bankruptcy, it stopped collection activity until it could determine if the student debt was discharged. In the unlikely event that it was, Collecto would send the debt back to the Education Department as uncollectable.
  
  If the debt was not discharged, Collecto would resume trying to collect it by sending a letter like the one Ms. Easterling received. Ms. Easterling brought the lawsuit on behalf of herself and 181 other debtors in New York State who received the same collection letter.

Source: Debt Collector Misled Borrowers, Court Says.

For the ruling, see Easterling v. Collecto, Inc., Docket No. 11-3209-cv (2d Cir. August 30, 2012).

(1) See Discharging Student Loan In Bankruptcy: Proving "Certainty Of Hopelessness" May Be Hopeless Cause.

Discharging Student Loan In Bankruptcy: Proving "Certainty Of Hopelessness" May Be Hopeless Cause

The New York Times reports:

• It isn’t easy to stand up in an open courtroom and bear witness to the abject wretchedness of your financial situation, but by the time Doug Wallace Jr. was 31 years old, he had little to lose by trying.
  
  Diabetes had rendered him legally blind and unemployed just a few years after graduating from Eastern Kentucky University. He filed for bankruptcy protection and quickly got rid of thousands of dollars of medical and other debt.
  
  But his $89,000 in student loans were another story. Federal bankruptcy law requires those who wish to erase that debt to prove that repaying it will cause an “undue hardship.” And one component of that test is often convincing a federal judge that there is a “certainty of hopelessness” to their financial lives for much of the repayment period.
  
  “It’s like you’re not worth much in society,” Mr. Wallace said.
  
  Nevertheless, Mr. Wallace made his case. And on Wednesday, nearly six years after he first filed for bankruptcy, he may finally get a signal as to whether his situation is sufficiently bleak to merit the cancellation of his loans.
  
  The gantlet he has run so far is so forbidding that a large majority of bankrupt people do not attempt it. Yet for a small number of debtors like Mr. Wallace who persist, some academic research shows there may be a reasonable shot at shedding at least part of their debt. So they try.
  
  Before the mid-1970s, debtors were able to get rid of student loans in bankruptcy court just as they could credit card debt or auto loans. But after scattered reports of new doctors and lawyers filing for bankruptcy and wiping away their student debt, resentful members of Congress changed the law in 1976.
  
  In an effort to protect the taxpayer money that is on the line every time a student or parent signs for a new federal loan, Congress toughened the law again in 1990 and again in 1998. In 2005, for-profit companies that lend money to students persuaded Congress to extend the same rules to their private loans.
  
  But with each change, lawmakers never defined what debtors had to do to prove that their financial hardship was “undue.” Instead, federal bankruptcy judges have spent years struggling to do it themselves.
  
  Most have settled on something called the Brunner test, named after a case that laid out a three-pronged standard for judges to use when determining whether they should discharge someone’s student loan debt [see Brunner v. New York State Higher Educ. Services, 831 F. 2d 395 (2d Cir., 1987].
  
  It calls on judges to examine whether debtors have made a good-faith effort to repay their debt by trying to find a job, earning as much as they can and minimizing expenses. Then comes an examination of a debtor’s budget, with an allowance for a “minimal” standard of living that generally does not allow for much beyond basics like food, shelter and health insurance, and some inexpensive recreation.
  
  The third prong, which looks at a debtor’s future prospects during the loan repayment period, has proved to be especially squirm-inducing for bankruptcy judges because it puts them in the prediction business. This has only been complicated by the fact that many federal judicial circuits have established the “certainty of hopelessness” test that Mr. Wallace must pass in Ohio.

For more, see Last Plea on School Loans: Proving a Hopeless Future.

Bkrptcy Judge To Servicer: Cough Up $25K In Punitives For Ripping Off Homeowner w/ Phony Fees; Court Rejects Convoluted Records, Slippery Explanations

From the National Consumer Bankruptcy Rights Center blog:

• In a victory for consumer debtors, the Bankruptcy Court for the Eastern District of Kentucky disallowed Ocwen’s proof of claim for late fees and charges, and awarded judgment, including punitive damages in the amount of $25,000.00, in favor of the debtor due to Ocwen’s “gross reckless[ness]” in accounting and servicing her mortgage. In re Tolliver, No. 09-21742, Adv. Proc. No. 09-2076 (Bankr. E.D. Ky. July 19, 2012).
  
  In reaching its decision, the court held Ocwen’s feet to the fire demanding adequate explanation of Ocwen’s convoluted and contradictory accounting records. After finding Ocwen’s explanations just as slippery and unreliable as the records themselves, the court turned to the expert testimony of Margot Saunders from the National Consumer Rights Center.
  
  She sifted through the dust heap and offered the only reliable evidence as to the history of the loan, revealing a litany of mismanagement including collecting “unsubstantiated interest arrearage balance,” and “systematically assessing late charges, fees and costs in complete disregard of the terms of the [loan documents.]”
  
  Ocwen’s attempt to justify the charges with evidence of forbearance agreements was roundly rejected. The court found the debtor had been “bullied” into signing those agreements by repeated false representations that the debtor was in default and that foreclosure was imminent even though she had completely paid off the underlying loan.
  
  Ocwen’s outrageous conduct was found to violate state common laws including breach of contract, breach of implied covenant of good faith and fraud.

Source: Expert Testimony by NCLC Results in Debtor Victory Against Mortgage Servicer.

New Federal Watchdog's Demand For Information May Be Catching Banksters Flat-Footed As Agency Launches Dozens Of Enforcement Probes

The Associated Press reports:

• The new federal agency charged with enforcing consumer finance laws is emerging as an ambitious sheriff, taking on companies for deceptive fees and marketing and unmoved by protests that its tactics go too far.
  
  In the 14 months it has existed, the Consumer Financial Protection Bureau has launched dozens of enforcement probes and issued more than 100 subpoenas demanding data, testimony and marketing materials -- sometimes amounting to millions of pages -- from companies that include credit card lenders, for-profit colleges and mortgage servicers.
  
  More than two dozen interviews with agency officials and industry executives offered sweeping insight into the new agency's behind-the-scenes efforts, which have taken the financial industry off guard and have been far more aggressive than previously known.
  
  The number of subpoenas and probes was confirmed by agency, industry and trade group officials who spoke to The Associated Press on condition of anonymity because the subpoenas bar both sides from discussing them.
  
  The bureau's actions have many banks, payday lenders and credit card companies racing to adjust. They're tightening their record-keeping and budgeting for defense lawyers, according to attorneys and trade group executives who work with them. The companies themselves are reluctant to discuss the bureau because they don't want to be seen as criticizing a regulator that is still choosing its battles.

For more, see Consumer regulator barks; an industry shudders.

CFPB Raid May Be Sign Of Things To Come As Federal Consumer Watchdog Gets Off To Aggressive Start

The Associated Press reports:

• As it announced its first big enforcement action against Capital One Financial this summer, the Consumer Financial Protection Bureau was preparing to raid a California company that had offered to help lower at-risk homeowners' monthly payments.
  
  In court papers, the government accused Chance Gordon and Abraham Michael Pessar of misleading homeowners about their chances of negotiating reduced payments. It said the two charged illegal, upfront fees and did little to help clients who signed up.
  
  Homeowners who paid the steep fees often ended up in foreclosure, while Gordon and Pessar used their money to "to fund a lavish lifestyle, including expensive cars, dinners and nightclubs," the government said. Among the company's assets is a 2004 Lamborghini Gallardo with an original cost of $88,321.
  
  A federal district court in central California allowed the consumer bureau to raid the men's offices, freeze their assets and investigate claims that homeowners in at least 25 states were misled about the company's services.
  
  On his Facebook page, Gordon described officials storming into his offices on the morning of July 19 and disconnecting the phones. The bureau had used details from Gordon's bank statements and earlier investigations by the California State Bar to make its case, he said in the Facebook account, which is part of the court record.
  
  Agents were aggressive, obtaining a restraining order in secret, raiding the offices without warning and freezing defendants' assets even before confirming that they had done anything wrong. Now officials are in settlement talks with Pessar, he said last week. He has agreed not to dispute many of the allegations, court papers show.
  
  Gordon maintains his innocence. His lawyer, Gary Kurtz, said the upfront fees actually were for "pre-litigation services," a claim the government disputes. Kurtz said Pessar was responsible for the communications with homeowners that the government criticized.
  
  Gordon and Pessar marketed their service to struggling homeowners with mailed flyers and phone marketing, the government said in its complaint. Some of the flyers included the logos of government agencies and a Washington, D.C., mailbox address. It is illegal to imply falsely that a loan modification service is endorsed by the government.
  
  The businesses' phone operators sometimes suggested that people should stop paying their mortgages in order to qualify for lower payments, the government said. That also would violate consumer protection laws.
  
  The action grabbed fewer headlines than the Capital One Financial case, which required the card issuer to refund millions in fees charged for add-on products like identity-theft protection and credit protection.
  
  The two cases are early examples of how the bureau will enforce federal consumer protections at both ends of the spectrum for one of the biggest card issuers, and for a small operation that the government says existed only to prey on consumers.
  
  Both cases are seen as bellwethers of its approach to enforcing consumer laws. Companies, lawyers and advocates are dissecting them for hints about how tough the new regulator will be and what practices it will target.

For the story, see How the consumer protection bureau raided one firm.

For the lawsuit, see Consumer Financial Protection Bureau v. Gordon.

Crooked Banksters & Their Immunity From Criminal Prosecution

Richard (RJ) Eskow writes in The Huffington Post:

• If a recent report is true the Justice Department will need a new name - and some of us will have to step up and admit we were wrong.
  
  It was clear that the foreclosure fraud settlement which the Administration and most states reached with major US banks was a great deal for the big banks - and a lousy deal for the public. But some of us found reason to hope against hope that the settlement would be accompanied by real investigation of crooked bankers, after years of flim-flammery and disgraceful inaction by the Justice Department.
  
  Not that we were entirely naïve. The Administration's track record was poor. and even had a slight resonance of bad faith. when it came to prosecuting Wall Street criminality. So, speaking only for myself, that cautious support came with renewed pressure on the Administration to back its words with action.
  
  Some of us knew that, pace Pete Townshend, we very well might get fooled again.

For more, see When It Comes To The DoJ And Wall Street, Don't Call It "Justice".

Alleged Scammer Charged w/ Peddling Phony Real Estate Adverse Possession Claims, Rent-To-Own Ripoffs Pinched Again On Income Tax Refund Fraud Charges

In Land O' Lakes, Florida, the Tampa Bay Times reports:

• A 37-year-old Land O'Lakes man faces several fraud charges after, authorities say, he cashed fraudulent tax refund checks worth $58,732. Demetrius Antonio Lewis was booked into the Pasco County Jail on one count of organized fraud and eight counts of criminal use of personal identification, according to the Florida Department of Law Enforcement.

***

• FDLE Commissioner Gerald Bailey said in a statement the agency is pursuing similar cases. Tax refund fraud is a billion-dollar national problem, and the Tampa area is at the forefront. Last year, Tampa thieves stole $468 million from the IRS, according to a federal watchdog.(1) Authorities often take months to investigate and build a case.
  
  Last November, Lewis was charged with organized fraud in a different crime, authorities say. He ran a business named Help is Here Foreclosure Prevention and Credit Repair. Under that business name, he would gather the addresses of vacant homes and for $1,000 teach anyone how to occupy them using an obscure loophole called "adverse possession," according to the FDLE.

For the story, see Land O'Lakes man accused of tax refund fraud.

See also, the Tampa Tribune: Land O' Lakes man now faces tax fraud charges:

• In th[e real estate] scam, the FDLE said that between December 2008 and May 2011, Lewis and a codefendant found properties listed for sale, in default or in foreclosure.
  
  Without the knowledge or consent of the property owners, the two entered the vacant houses, changed the locks and rented the properties to tenants who paid the defendants and thought they were participating in a "lease to own" program, officials said.

(1) See U.S. Treasury Department Inspector General Report: There Are Billions of Dollars in Undetected Tax Refund Fraud Resulting From Identity Theft (July 19, 2012).

Calif. Lt. Gov Calls For Federal Probe Into Threats Targeting Local Communities Considering Use Of Eminent Domain To Restructure Underwater Mortgages

Reuters reports:

• California Lieutenant Governor Gavin Newsom says he wants the U.S. Department of Justice to investigate "threats" against local communities that are considering using eminent domain to seize and restructure poorly performing mortgages to benefit cash-strapped homeowners.
  
  Newsom sent a letter on Monday to U.S. Attorney General Eric Holder asking federal prosecutors to investigate any attempts by Wall Street investors and government agencies to "boycott" California communities that are considering such moves.
  
  "I am most disturbed by threats leveled by the mortgage industry and some in the federal government who have coercively urged local governments to reject consideration" of eminent domain," he wrote in a letter that was also sent to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.

For more, see California urges fed probe of eminent domain "threats".

More On Banksters' Big Win In Foreclosure Fraud Mess

David Dayen at Firedoglake writes:

• I don’t need a source to tell me that there will be no criminal charges arising from the Residential Mortgage Backed Securities working group, the task force set up to “hold accountable” those financial institutions who crashed the economy through misdeeds in the securitization process.
  
  Take only this piece of evidence: all of the subpoenas so far issued by the RMBS working group have been civil in nature, not criminal. That’s about all the evidence I need.

For more, see Criminal Prosecutions Not Happening from New Financial Fraud Task Force.