Saturday, December 22, 2012

Massachusetts AG Suit: Unlicensed Contractor Abandoned Projects After Pocketing Upfront Cash From Homeowners

From the Office of the Massachusetts Attorney General:

  • A Framingham man has been sued and ordered to stop any contracting services without a license after allegedly engaging in home improvement projects without proper registration, failing to complete the work, and misappropriating tens of thousands of dollars from a consumer, Attorney General Martha Coakley announced today.

    The lawsuit filed against Kyle Buckminster last week in Suffolk Superior Court seeks civil penalties and consumer restitution for violations of the Massachusetts Consumer Protection Act, due to allegations he misrepresented himself as a licensed home improvement contractor and abandoned projects for which he had received payment.
For the Massachusetts AG press release, see Framingham Man Sued for Illegal Home Improvement Practices (AG Coakley Obtains Injunction Prohibiting Defendant from Operating Without a License).

Milwaukee-Area Real Estate Operator Pinched For Allegedly Running Straw Buyer/Short Sale Scam; Accused Of Illegally Pocketing $1M+

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:

  • Three of the key figures in a 2007 deal in which a learning disabled man was duped into buying an inner city home are facing unrelated federal mortgage fraud charges.

    Randez Long this week pleaded not guilty to charges that he collected more than $1 million by leading a crew of people who scammed lenders into writing inflated mortgage loans during a three-year period when the housing market was booming.

    Unlike mortgage fraud schemes that involve one loan, Long is charged with using fraudulent information to have lenders provide two loans for the same property - one when it was initially purchased by one of his associates and a second when the property was later sold to different Long associates.

    Long, 33, is charged with money laundering, bank and wire fraud. He is scheduled for trial in February.
  • In the Long indictment, the grand jury charged that he recruited individuals, including his mother and sister, to buy properties in Milwaukee and to obtain inflated mortgages by providing lenders with false information about the buyer's finances and employment. The buyers would quickly default on the loans and arrange for the properties to be sold in a "short sale."

    In a short sale, the property is sold for less than the amount owed on the mortgage, and the lender agrees to accept that sale amount.

    "In fact, these 'short sales' were fictitious and never occurred," the indictment states.

    Instead, the properties were sold to others at a price greater than the amount told to the lenders and new mortgages - again based on fraudulent applications - were received from other lenders, the indictment charges, noting that "Long again received a substantial portion of the sale proceeds."

    The case was investigated by the Internal Revenue Service criminal investigation division and the FBI. Though the indictment describes transactions involving two north side properties, a source familiar with the case said Long was involved in the purchase and sale of at least 30 area properties.

Feds Confirm Bad Holiday News To Family Facing Foreclosure: She's Been Victimized By Nationwide Loan Modification Scam

In Omaha, Nebraska, WOWT-TV Channel 6 reports:

  • An Omaha mother of five opened something that was hardly a holiday gift. It was an email from federal authorities confirming she's a victim of a mortgage scam. Now the family is fighting to keep their home.

    Estes family members are victims of a bad call by a loan modification company. “They've taken our money and not done anything they said they would do,” says Melissa Estes.

    The family paid 1st American Law Center of Oceanside, California $3,500 to negotiate a lower monthly rate with their lender and advised Melissa to stop mortgage payments until that was done. It was bad advice because the lender never agreed and is threatening foreclosure. “I just hope and pray they will let us slowly pay so we would be able to remain in this house.”

    The 1st American Law Center has been exposed by consumer advocates and busted by federal authorities. “It’s justice to know they won't be dong that to anyone else." But justice doesn't pay the mortgage.

    The victims of this loan scam are now getting threatening calls from their mortgage company. Still, they don't want their children to feel victimized as well so they promise gifts will be under the Christmas tree this year.

Friday, December 21, 2012

Another Assistance Pooch Sinks Fangs Into Landlord's Wallet; Property Owners To Cough Up $15K To Tenant, Bay State To Settle Fair Housing Charges Surrounding Renter's Care-Canine

From the Office of the Massachusetts Attorney General:

  • A property owner from Newton has agreed to pay $15,000 and make extensive policy changes at his businesses, settling allegations that a manager at one of his apartment complexes discriminated against a disabled tenant with an assistance dog, Attorney General Martha Coakley announced [].

    According to the assurance of discontinuance, filed Thursday in Suffolk Superior Court, Kevin Regan, the property manager at the Lord Baron Apartments in Burlington, allegedly refused to rent to a prospective tenant because she requested permission to reside with an assistance dog. Regan later agreed to rent to the tenant after being contacted by the AG’s Office and informed that his refusal to rent violated fair housing laws. Subsequent to the AG Coakley’s involvement, Regan allegedly threatened the victim with eviction if he received any complaints about her assistance dog.
  • The other defendants named in the assurance are the L.B. Nominee Trust, doing business as the Lord Baron Apartments, and its trustees, Kosow Construction Corporation and owner Marvin P. Kosow, both located in Newton. Regan is a resident of Westwood.

    The assurance requires the defendants to pay a total of $15,000 in restitution and penalties to the tenant and the Commonwealth.(1)
For the Massachusetts AG press release, see Property Owner Settles Claims of Housing Discrimination Against Tenant with Assistance Dog (Owner to Pay $15,000 and Implement New Policies to Avoid Violation of Fair Housing Laws).

(1) The inability or refusal to make the distinction between a household pet and either a service animal or an emotional support/assistance animal can give rise to a very costly legal problem for landlords, homeowner associations, municipalities purporting to enforce code restrictions, etc. Both the Housing Feds, the Civil Rights Feds, and others have shown a high degree of interest when these situations arise. See, for example:
See, generally, A Comparative Study: Service Animals and Emotional Support Animals under the Fair Housing Act and the Americans with Disabilities Act & An Overview of Assistance Animal Laws of Select States.

Feds, County, Planning & Zoning Commission Settle Fair Housing Allegations That Denial Of Land Use Approval Was Based Partly On Race, Color, National Origin

From the U.S. Department of Justice (Washington, D.C.):

  • The Justice Department announced [] that it has settled a lawsuit against Sussex County, Del., and the Planning and Zoning Commission of Sussex County for race and national origin discrimination in violation of the Fair Housing Act.

    The lawsuit, filed [] in the U.S. District Court for the District of Delaware, alleges that the county’s planning and zoning commission denied land use approval for a 50-lot affordable housing subdivision proposed by Diamond State Community Land Trust, a Delaware affordable housing developer, in southwestern Sussex County near the town of Laurel, Del.

    The suit alleges that the Sussex County Council later affirmed the denial of the proposed development.  The suit alleges that opposition to the proposal was based partly on the assumption that the subdivision’s residents would be Latino and African-American and on stereotypes based on race, color and national origin. The lawsuit arose from a complaint to the U.S. Department of Housing and Urban Development (HUD) that was referred to the Department of Justice.(1)

Massachusetts Landlord Pinched In Connection With Alleged Racial Harassment Charges Directed Against Mom, Infant Child; Behavior Constitutes Violation Of Earlier-Issued Civil Rights Injunction: State AG

From the Office of the Massachusetts Attorney General:

  • A Holyoke man has been indicted in connection with the racial harassment of his tenant in violation of a civil rights injunction obtained by the Attorney General’s Office in 2009, Attorney General Martha Coakley announced [].

    Jesse Jedrzejczyk, 57, of Holyoke, has been indicted on charges of Violation of a Permanent Injunction, Criminal Harassment, and Civil Rights Violation.

    In 2009, the Attorney General’s Office filed a Superior Court civil action against Jedrzejczyk pursuant to the Massachusetts Civil Rights Act and obtained a permanent injunction against him based on allegations that he threatened, intimidated, and harassed a neighbor and her young daughters because of their perceived race.

    Despite being subject to the Superior Court order, authorities allege that Jedrzejczyk recently engaged in substantially similar behavior toward another neighbor and her infant child because of their perceived race. Authorities allege that Jedrzejczyk regularly used racial slurs and physical harassment to intimidate his tenant and create concern for her infant’s safety.
For the Massachusetts AG press release, see Holyoke Man Indicted in Connection with Violating Permanent Civil Rights Injunction (Defendant Allegedly Continues to Engage in Race-Based Harassment of Neighbors).

Settlement Of Race-Based Discrimination Complaint To Cost Wisconsin Landlord $57,500; Manager Allegedly Told Black Renters No Apartments Were Available While Telling Whites Otherwise

From the U.S. Department of Justice (Washington, D.C.):

  • The Justice Department announced [] that the manager and owner of the Geneva Terrace Apartments Inc. in La Crosse, Wis., have agreed to pay $57,500 to settle a lawsuit alleging they violated the Fair Housing Act by discriminating against African-Americans who were seeking to rent apartments at the complex.

    The complaint, filed in the U.S. District Court for the Western District of Wisconsin on Oct. 26, 2011, alleged that Nicolai Quinn, the manager of the apartment complex, told prospective African-American renters that apartments were not available when they were, while telling prospective white renters that there were apartments available.
  • As alleged in the complaint, in 2009 and 2010, Quinn told an African-American couple who were interested in renting an apartment in Geneva Terrace that there were no apartments available, even though the complex had posted a sign advertising vacancies.

    The couple found it suspicious and asked a white friend to contact the complex. Quinn told the white friend that he had available apartments.

    The couple then reported their experience to the Metropolitan Milwaukee Fair Housing Council (MMFHC),(1) a nonprofit fair housing organization. MMFHC conducted fair housing tests, which confirmed that Quinn was telling African Americans that apartments were not available while showing available apartments to white persons.

    The couple also filed a complaint with HUD, which conducted an investigation and, after issuing a charge of discrimination, referred the matter to the Department of Justice.

    Under the terms of the settlement, which is subject to approval by the U.S. District Court, the defendants will pay the complainants $47,500 in damages.(2)   Defendants will also pay a civil penalty of $10,000 to the United States. Defendant Geneva Terrace Apartments LLC will also develop and maintain non-discrimination housing policies and attend fair housing training.
For the Justice Department press release, see Justice Department Settles Lawsuit Against Wisconsin Landlord and Former Manager for Discriminating on the Basis of Race.

For the lawsuit, see U.S. v. Geneva Terrace Apartments, Inc. (go here for the settlement agreement).

(1) The Metropolitan Milwaukee Fair Housing Council is a private, non-profit, membership-based organization that promotes fair housing throughout the State of Wisconsin by combating illegal housing discrimination

(2) This amount is inclusive of the couple's attorney fees.

Thursday, December 20, 2012

Vegas Real Estate Operator Gets 37 Months For Screwing Over Underwater Homeowners By Taking Upfront Fees In Exchange For False TARP-Associated Debt Reduction Promises

From the U.S. Department of Justice (Washington, D.C.):

  • A Las Vegas man was sentenced [] to 37 months in prison for operating a foreclosure rescue scam that defrauded distressed homeowners who were struggling to pay their mortgages, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.

    Alex P. Soria, 65, was sentenced [] by U.S. District Judge Lloyd D. George in the District of Nevada. In addition to his prison term, Soria was sentenced to serve three years of supervised release and ordered to pay $320,266 in restitution.
  • According to court documents, Soria identified homeowners whose mortgage debt exceeded the value of their homes and charged them a fee purportedly to reduce the principal balance of their mortgages using money from the Department of the Treasury’s Troubled Asset Relief Program (TARP).

    Soria admitted in court that he lied to homeowners about his affiliation with several mortgage lenders and that he provided victims with fraudulent letters stating they had been approved for loans. Soria also admitted he falsely told victims that his loan program had been successful in the past and charged homeowners for loan modifications he knew he could not deliver. Court documents show that Soria concealed from homeowners the fact that the state of Nevada had issued a cease and desist order which legally prohibited him from working in the mortgage industry.

    Soria collected over $100,000 in fees from distressed homeowners, many of whom lost their homes to foreclosure after Soria failed to deliver the loan modifications he promised.

Feds Score Asset Freeze, Temporary Halt Of Operations Of Two Outfits Alleged To Be Running Nationwide Loan Modification Racket

From the Consumer Financial Protection Bureau (Washington, D.C.):

  • The Consumer Financial Protection Bureau [] announced actions to halt two alleged mortgage loan modification scams it believes ripped-off thousands of struggling homeowners across the country. In total, these operations took in more than $10 million by charging consumers for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.
  • At the request of the CFPB, U.S. District Court Judges in the State of California have ordered a halt to both operations, the Gordon Law Firm and the National Legal Help Center, and frozen their assets while the CFPB moves forward with the cases. The case involving the National Legal Help Center was initially referred to the CFPB by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and Treasury’s Office of Financial Stability, which have coordinated closely with the Bureau throughout the investigation.

    “It is absolutely unacceptable for unscrupulous con artists to take advantage of our nation’s housing crisis by targeting homeowners looking for help from TARP’s Home Affordable Modification Program,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “We thank the CFPB for protecting homeowners. SIGTARP will continue to stop these scams and educate homeowners that mortgage modifications through HAMP are free.”

    The CFPB is targeting loan modification operations that attempt to disguise their false promises of relief for struggling homeowners with claims that they are performing legal work or are a law firm. The Bureau is also particularly concerned with schemes that attract victims with false claims that they are endorsed by or represent the government. These tactics are used by mortgage relief scams to attract victims, add credibility to their schemes, or exploit certain legal exemptions for the practice of law.
For more, see Consumer Financial Protection Bureau halts alleged nationwide mortgage loan modification scams (Operations targeted financially distressed consumers in danger of losing their homes).

Scammer Gets 12 Years For Running Mortgage Elimination Racket That Purported To Invalidate Loans Through Lawsuits Against Lienholders

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

  • Sergio Gutierrez was sentenced [] to twelve years in federal prison after a jury convicted him of running a scheme in which he defrauded victims by telling them to stop paying their mortgages, United States Attorney Melinda Haag announced.
  • Gutierrez defrauded investors by falsely telling them that they would be able to own their homes outright if they paid him for documents that he claimed would dispute the validity of their mortgages that various banks held on their properties.

    The lawsuits filed by the victims were dismissed by various courts throughout California, and most of the victims ended up losing their homes through foreclosure. Gutierrez’s purported mortgage elimination program specifically targeted victims who had little or no ability to read or write English. From 2008 to 2009, Gutierrez received more than $89,000 from individual victims who paid him for this program.

Wednesday, December 19, 2012

Foreign Outfit Armed With Eminent Domain Power Scores Favorable Appeals Court Ruling In Effort To Grab Property From Texas Landowners For Pipeline Construction

In Beaumont, Texas, The Southeast Texas Record reports:

  • The Ninth Court of Appeals affirmed on Nov. 29 a ruling that denied summary judgment against TransCanada Keystone Pipeline – a foreign company armed with the power of eminent domain.

    TransCanada had filed a petition for condemnation against Rhinoceros Ventures Group Inc. and Batson Corridor, asserting that it is the owner and economic operator of the Keystone Pipeline System, which includes the Keystone Gulf Coast Section, court papers say.

    According to TransCanada, Gulf Coast is a common carrier pipeline that, upon completion, will extend from across Texas from Fannin County to Nederland in Jefferson County. The entity claims it enjoys common carrier status, giving it the right to take land from landowners for the construction of its pipeline.

Detroit Couple Finds Their Recently-Purchased Home Reduced To Rubble As County Auctioned Tax-Foreclosed Real Estate To Public Despite Knowing Properties Were Slated For Demo

In Detroit, Michigan, the Motor City Muckraker reports:

  • Artists Kristine Diven and Micho Detronik thought they found the perfect home in Detroit. The fixer-upper was spacious with a second-floor balcony, a new roof and beautiful fireplaces. The east-side house needed a little work – new bathtubs, doors and electrical wiring.

    But less than a month after getting the house at a Wayne County foreclosure auction, the couple were shocked Thursday when they found rubble in the place of their two-story brick house on Berkshire.

    Turns out, the Michigan Land Bank, an economic development engine for the state, has demolished an estimated 20 houses that were purchased at the recent auction. It planned to raze even more.

    Even worse, the Michigan Land Bank and Wayne County Treasurer’s Office knew homes were being auctioned off even though they were slated for demolition, the Motor City Muckraker has discovered.
  • What’s also disturbing about the demolition is the quality of houses that have been razed or are on the demo list. Many are large, gorgeous homes that only need a few repairs.

    With more than 40,000 vacant houses, the city is rife with homes that have been burned or are falling over. It’s unclear why the state would target homes that can be fixed up, rather razing houses that are a danger to the public.

Antitrust Feds Score Two More Guilty Pleas In Probe Into Foreclosure Sale Bid Rigging Rackets

From the U.S. Department of Justice (Washington, D.C.):

  • Two Alabama real estate investors and their company pleaded guilty [] for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced.

    Robert M. Brannon, of Laurel, Miss.; his son, Jason R. Brannon, of Mobile, Ala.; and their Mobile-based company, J & R Properties LLC, pleaded guilty [] to an indictment originally returned on June 28, 2012 in the U.S. District Court for the Southern District of Alabama charging each of them with one count of bid rigging and one count of conspiracy to commit mail fraud.

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

    The Brannons and their company were also charged with conspiring to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators, and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. The Brannons and their company are charged with participating in the bid-rigging and mail fraud conspiracies from as early as October 2004 until at least August 2007.

    “The conspirators subverted the competitive bidding process by engaging in a collusive scheme to artificially depress prices at real estate foreclosure auctions and to defraud financial institutions and homeowners out of money and property,” said Renata B. Hesse, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.(1)
For the Justice Department press release, see Two Alabama Real Estate Investors and Their Company Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions (Investigation Has Yielded 10 Guilty Pleas to Date).

(1) Real estate operators and others who have gotten themselves pinched on charges alleging participation in an illegal bid rigging scam at a public auction may wish to consider whether to mount a defense before deciding to 'race to the prosecutor's office' and spill their guts about the racket (and, in the process, throwing their co-conspirators under the bus in an attempt to beat the rap, or at least reduce any anticipated prison sentence). For more, see:

Tuesday, December 18, 2012

Retired Cowboys Watch Ex-Gridiron Teammate "Mean Gene, The Hitting Machine" Get Sacked For 54 Months After Guilty Plea For Quarterbacking Dallas-Area Equity Stripping Straw Buyer Ripoff Of Financially Strapped Homeowners

From the Office of the U.S. Attorney (Dallas, Texas):

  • Eugene Lockhart, Jr. was sentenced [...] to 54 months in federal prison and ordered to pay approximately $2.4 million in restitution following his guilty plea to one count of conspiracy to commit wire fraud, stemming from his leadership role in a massive mortgage fraud scheme that he and others ran in the Dallas area from approximately 2002 to 2005.

    Lockhart, of Carrollton, Texas, is the last of 10 defendants who were convicted in the scheme to be sentenced.

    Lockhart played for the Dallas Cowboys from 1984 to 1990 and used his name and fame, according to evidence in the case, to get business and further the scheme.
  • Lockhart was involved with real estate entities, some formed by him and Tisdale, which had names that were often derived in some fashion from a reference to the Dallas Cowboys, including America’s Team Mortgage; America’s Team Realty; America’s Team Funding Group; Ace Mortgage; Cowboys Realty; Cowboys Mortgage; and KLT Properties. Tisdale was involved with Pinnacle Development and Realty Corporation; Atilla Capital Corporation; and KLT Properties. Jones was involved with Pinnacle Development and Realty Corporation and Atilla Capital Corporation.

    The defendants ran a scheme in which they located single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They created surplus loan proceeds by inflating the sales price to an arbitrary amount substantially more than the fair market value of the residence.

    Generally, they recruited individuals to act as nominee or “straw purchasers” or “straw borrowers,” promising to pay them a bonus or commission of between $10,000 and $20,000 for their participation in a particular real estate transaction. The conspirators caused the loan applications for each straw borrower to include false financial information, often including inflated false income figures to conceal the borrower’s true financial condition so that the lender would more likely approve the loan. The conspirators concealed from the lenders the true status, financial conditions, and intentions of the named borrowers, knowing that loans would not likely be approved if the lender knew the true role, credit worthiness, and risk of each straw borrower.

    The conspirators falsely represented in loan documents that the straw purchaser intended to use the property as their primary residence, intentionally concealing from the lender that each straw borrower viewed himself as an “investor,” who never intended to occupy the home.

    Some of the conspirators also caused bogus and fraudulent “marketing fees” to be listed on loan closing documents to provide a means for the conspirators to receive surplus/excess loan proceeds.

    The scope of the conspiracy involved approximately 54 fraudulent residential property loan closings resulting in the funding of approximately $20.5 million in fraudulent loans. The actual loss to lenders is nearly $3 million.
For the U.S. Attorney press release, see All Defendants Sentenced in More Than $20 Million Mortgage Fraud Scheme Led by Former Dallas Cowboy Eugene Lockhart.

See also, Bloomberg: Ex-Dallas Cowboy Lockhart Gets 4 1/2 Years for Scam:
  • U.S. District Judge Jorge A. Solis in Dallas handed down the punishment [] as several one-time Cowboys players, including Hall of Fame defensive lineman Randy White, looked on. Lockhart, once known as “Mean Gene the Hitting Machine,” pleaded guilty last year to one count of conspiracy to commit wire fraud, days before the scheduled start of his trial.
  • Appearing with White at the sentencing [] were fellow defensive lineman Ed “Too Tall” Jones, receiver Drew Pearson and defensive back Everson Walls.

    White, who in 1994 was inducted into the Pro Football Hall of Fame in Canton, Ohio, and is a member of the Cowboys’ Ring of Honor, testified for Lockhart at [] sentencing. "I don’t think him having to go to jail is going to help anyone,” White told the court. He called his former teammate “an honest guy.”

Newark Feds Tag Another With Sale Leaseback-Peddling Equity Stripping Racket As Guilty-Pleaded Son Awaits Sentencing For Role In Same Ripoff

From the Office of the U.S. Attorney (Newark, New Jersey):

  • An Ocean County, N.J., man was indicted [Thursday] for his alleged role in a phony foreclosure rescue scheme that was part of a $4.4 million mortgage fraud, U.S. Attorney Paul J. Fishman announced.

    Vito C. Grippo, 58, of Jackson, N.J., the president of Morgan Financial Equity Shares and Vanick Holdings LLC, was indicted by a federal grand jury on one count of conspiracy to commit wire fraud and three counts of filing a false tax return for the years 2006 through 2008.

    According to the Indictment:

    Between January 2008 and February 2010, Vito Grippo held Morgan Financial out to the public as a company that could help homeowners in financial distress who faced foreclosure on their homes through something Grippo called the “Equity Share Program.” As described by Grippo and his associates, the Equity Share Program involved creating a limited liability company (“LLC”) in the name of the homeowner’s house in which LLC the homeowner would supposedly own a 90 percent interest with the rest to be owned by one or two private investors.

    In reality, the so-called investors invested nothing and were instead straw buyers recruited by Vito Grippo or his son, Frederick “Freddie” Grippo because they had good credit. The Grippos and their associates then made out mortgage loan applications in the names of the “investors” for the purchase of the properties owned by the homeowners in distress. Freddie Grippo pleaded guilty before Judge McNulty on Nov. 28, 2012, to conspiracy to commit wire fraud.(1)

    A homeowner in distress would come to a closing in Vito Grippo’s office and be given a stack of documents to sign. The homeowners would be led to believe the documents would prevent foreclosure and frequently did not understand that they would be transferring title to their homes to the “investor.”

    The so-called investor was, in reality, a straw buyer of the homeowner’s house. The new mortgage loan applications filled out by the Grippos or their associates in the name of one of the investors contained materially false information about the loan applicant’s monthly income, his assets and whether the residence to be bought would be his primary residence.

    The new loan application would be submitted to Worldwide Financial Resources for processing, where Freddie Grippo, a loan officer at Worldwide, would see to it that the loan was approved. The loan money was wired to the settlement agent for a given transaction and Vito Grippo would direct the settlement agent to forward a portion of those loan proceeds to bank accounts that Vito Grippo controlled.

    Properties whose original owners fell victim to the Equity Share Program were found throughout the metropolitan area, including homes in Rutherford, N.J., Monroe, N.J. and Brooklyn, N.Y.(2)
For the U.S. Attorney Press release, see Ocean County, N.J., Man Indicted In Mortgage Fraud Scheme.

For the Indictment, see U.S v. Grippo.

(1) See Newark Feds Score Another Foreclosure Rescue Guilty Plea; Suspect Admits Role In Peddling Sale Leaseback Ripoffs To High Equity, No-Cash, Financially Distressed Homeowners.

Inasmuch as the younger Grippo has yet to be sentenced (March 6, 2013, according to this press release), I wonder if he has already sung to the Feds against his old man, throwing Dad under the bus to score a more lenient sentence for himself while allowing prosecutors to squeeze a guilty plea out of senior Grippo and quickly wrap this case up:
  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring).

(2) Both father and son were also recently tagged by the Office of the New Jersey Attorney General on state charges relating to the allegedly illegal sale leaseback-peddling racket. See Theft By Deception/Failure To Make Required Disposition Of Property Received Among Charges Facing Pair Pinched By NJ AG In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Peddling Racket.

Foreclosure Rescue Operator Gets 40 Months For 13 Felonies In Connection With $120K Homeowner Ripoff

In Monterey County, California, The Californian reports:

  • A woman was sentenced [] to prison for scamming homeowners in foreclosure, the Monterey County District Attorney’s Office said. Blanca Sanchez, also known as Blanca Maciel, received three years and four months in prison, the District Attorney’s Office said. Sanchez was found guilty by a jury Sept. 28 of 13 felonies, they said.

    During the trial, the District Attorney’s Office said, jurors heard testimony from eight homeowners who testified that they believed Sanchez was a licensed professional who could help save their homes from foreclosure.

    They said the homeowners were persuaded to pay Sanchez thousands of dollars to negotiate a lesser monthly mortgage payment. One homeowner paid more than $40,000 in fees, the District Attorney’s Office said, but lost her home in foreclosure anyway. Only one homeowner did not lose their home, they said.

    At the sentencing, the District Attorney’s Office said, Sanchez sought for felony probation, stating that she deserved a second chance and would work to pay back the money she took - which came to more than $120,000.

    Superior Court Judge Mark Hood agreed with the prosecution of Sanchez’s terrible conduct and reprimanded her for not accepting responsibility over her actions.

Monday, December 17, 2012

Angelo Mozilo Depo: Underwater Homeowners' Borrower Ruthlesness At Fault For Mortgage Crisis; Has "No Regrets About How ... Countrywide Was Run, It Was A World-Class Company!"

From CNBC's blog, NetNet with John Carney:

  • The Big Picture [...] posted the transcript of the deposition of Angelo Mozilo taken in connection with MBIA's lawsuit against Bank of America over loans Countrywide originated.

    Perhaps the most jarring moment in the deposition is when Mozilo lays out a completely self-serving and bonkers theory of the financial crisis.


    [from the deposition:]

    This is a matter of record. The cause of the problems of foreclosures is not created by Countrywide, nor MBIA. This is all about an unprecedented, cataclysmic situation, unprecedented in the history of this country. Values in this country dropped 50 percent.

    ...And for the first time in the history of this country people decided that they were going to leave their homes because the value of their home was below the mortgage amount. Never in the history of this country did that ever happen,and that could never have been assessed in the risk profile.

    These people didn't lose their jobs. They didn't lose their health. They didn't lose their marriage. Those are the three factors that cause foreclosure. They left their home because the values went below the mortgage. That's what caused the problem.So I have no regrets about how I -- how Countrywide was run. It was a world-class company.


    Bravo to the attorney for MBIA who managed to provoke Mozilo into this rant. It really is revealing to see that the events of the financial crisis have not introduced even a sliver of doubt into his mind about the lending practices of Countrywide.

Moving From Robo-Signers To Robo Witnesses: The Recent Shift In Foreclosure Fraud Practices

David Dayen at Firedoglake writes:

  • Last week, Thomas Cox, the Maine lawyer who performed the deposition that basically exposed robo-signing, won the $100,000 Purpose Prize for his work on behalf of homeowners at risk of foreclosure. I spoke with Cox this week to get a ground-level picture of what is happening in the courts in the post-settlement landscape. Have banks cleaned up their foreclosure practices? Are homeowners still getting the shaft?

    Sadly, Cox told me that very little has changed with regards to foreclosures.
  • [W]hile Cox believes that the mass signing of foreclosure documents by “limited signing officers” with no underlying knowledge of the loan file has generally stopped, he has encountered in his cases in Maine a more subtle problem.

    Now the servicers have litigation departments with specialists,” Cox said. “They are trained as trial witnesses to say certain things in court. But they still don’t have the experience level. The Maine Supreme Court said witnesses had to have personal knowledge of the loan documents, to be intimately involved with the details. These people in these departments are not intimately involved.”

    Basically, we’ve moved from robo-signers to robo-witnesses, at least from Cox’ experience.

WV Supremes: OK To Include $600K In Court-Awarded Legal Fees, Litigation Costs Before Tripling Total Damages When Calculating Punitives Under State UDAP Statute

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

  • An attorney involved in a recent state Supreme Court decision is pleased the court decided attorneys fees can be applied when calculating punitive damages.

    Jim Bordas, of the Wheeling firm Bordas and Bordas, said the court was right to affirm Ohio County Circuit Court Judge Arthur Recht’s 2011 decision. Recht awarded almost $600,000 in attorneys fees and litigation costs, then used that amount to help determine the amount of punitive damages owed to Lourie Brown.

    “We… consider it to be a significant victory for the Browns and consumers throughout the State of West Virginia that the Supreme Court found that the attorneys fees that the Browns were awarded as a result of the tremendous amount of work done by their attorneys can be considered as part of the ratio when analyzing the appropriate amount of punitive damages to be awarded,” Bordas said.

    On Feb. 17, 2011, Recht awarded more than $2.1 million in punitive damages – an amount that represented three times the amount of compensatory damages, attorneys fees and litigation costs combined. He had awarded almost $500,000 in attorneys fees and $100,000 in litigation costs.

    He followed a 1991 decision to calculate the amount of punitive damages. Recht wrote the Quicken Loans case was “one of the more confusing, confounding and complex cases both factually and legal that has ever been before” him. Quicken Loans did not challenge the amount of attorneys fees.

    On Nov. 21, the state Supreme Court, in an opinion authored by Justice Thomas McHugh, found that Quicken Loans committed fraud and violated various provisions of the West Virginia Consumer Credit and Protection Act in a mortgage loan with Brown,(1) an Ohio County resident.

    Brown had responded to a pop-up advertisement on her computer in May 2006 and submitted an online application in an effort to consolidate debt and lower monthly payments. She was contacted by Quicken Loans.

    Brown alleged the company gave her a larger loan than necessary after an inflated appraisal and lied about refinancing after the loan was in place. Eventually, she defaulted on the loan.

    Recht agreed with her argument, and he added attorneys fees and costs in with the compensatory damages awarded to arrive at the $2.1 million figure. The Supreme Court affirmed that decision, with McHugh writing that attorneys fees and costs awarded under the WVCCPA should be included in the formula.

    With a $700,000 settlement from two other defendants, Brown’s total recovery was nearly $3.7 million – a figure that didn’t sit well with Quicken Loans given the cost of the loan was $145,000.

    The court, though, found Quicken did not disclose an “enormous” balloon payment of more than $100,000.

    The case was remanded for a new calculation of damages.

    The court agreed with Quicken that it should receive a $700,000 credit for the settlement between Brown and the other defendants – the appraiser and appraisal company. Most likely, the credit will offset the compensatory damages awarded, leaving a balance of zero.

    That credit, however, will not apply to any punitive damages. As to the punitive damages issue, the court ruled Recht did not conduct a “meaningful and adequate” analysis under the 1991 decision.
For the story, see Bordas: Quicken Loans ruling a win for consumers.

For the court ruling, see Quicken Loans, Inc. v. Brown, No. 11-0190 (WV. November 21, 2012).

For an earlier post, see WV High Court Says Quicken Loan Terms "Unconscionable", Violate State UDAP Statute, But Nixes Mortgage Cancellation & Directs Lower Court To Reconsider Screwed Over Homeowners' $2.8M Damages Award.

(1) The Consumer Credit and Protection Act is West Virginia's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (generically referred to as state UDAP statutes).

For more on UDAP statutes across the U.S., see Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

Sunday, December 16, 2012

Detroit Law Students Make Last Ditch Effort To Kibosh Court Order Obtained Without Notice To Victims Essentially Stripping 70+ Local Residents Of Their Homes Bought Using Land Contracts

In Detroit, Michigan, the University of Detroit Mercy School of Law recently announced:

  • University of Detroit Mercy School of Law Mortgage Foreclosure Defense Clinic(1) is set to argue a motion to set aside an order effectively stripping over 70 Wayne County homeowners of ownership interests, leaving them faced with wrongful eviction from their homes. A large number of the affected homeowners are expected to be present for the motion hearing scheduled for Monday, December 17, 2012 at 9:00 a.m. at the Wayne County Circuit Court, Rm. #1901.

    Paramount Land Holdings, locally funded by the Detroit Police and Fire Pension Fund, purchased foreclosed properties for as little as $10. Through land contracts, it sold them for inflated prices to buyers who were assured that Paramount had paid all back taxes. Homeowners learned otherwise when Wayne County began foreclosure proceedings for back taxes. As a result, many homeowners stopped making their monthly payments to Paramount.

    The Receiver, appointed by the Wayne County Circuit Court to maintain Paramount properties, obtained a Court Order to Terminate Land Contract Interests, to gain exclusive possession, and to quiet title.

    Essentially, the Order seeks to strip the homeowners from their property and evict them from their homes.

    Shockingly, the Receiver obtained the order without providing the homeowners any opportunity to contest the motion. The Receiver failed to serve notice on the affected homeowners stating that their rights would be affected through the motion. The Receiver seeks to take the properties without filing a complaint, obtaining a summons, or even adding the homeowners as parties to the proceeding.

    The Mortgage Foreclosure Defense Clinic represents some of the homeowners who face loss of their homes, eviction, and homelessness as a result of the Receiver's hasty actions. The Clinic seeks to correct this injustice through its motion to set aside the Court's Order to strip the homeowner's property rights and give exclusive possession to the Receiver.

    Media are invited to attend the hearing and UDM representatives can speak about the case over the phone or before/after the hearing (Contacts: Gary D. Lichtman, UDM Media Relations, 313-993-1254; Joon Sung, Mortgage Foreclosure Defense Clinic, office 313.596.9847, mobile 734-718-9794).
  • Students represent victims of predatory lending practices in federal and state courts to stop homeowners from losing their homes due to foreclosure. Clinic students handle cases involving mortgage fraud, foreclosure rescue scams, and loan servicing errors. They have the opportunity to interview clients, argue motions, negotiate settlements, and conduct trials. In addition, students engage in community outreach through presentations and development of written materials to educate homeowners on foreclosure remedy options and rescue scams.

NJ Closing Attorney Admits To Ripping Off Clients, Law Partners Of $885K+; Handiwork Left Several Clients With Double Mortgages, Leaving Insurers Holding The Bag

From the Office of the U.S. Attorney (Trenton, New Jersey):

  • A former partner of a law firm based in Freehold, N.J., admitted [] to defrauding the firm and its clients by improperly diverting more than $885,000 from the law firm, U.S. Attorney Paul J. Fishman announced.

    Timothy Provost, 57, of Millstone Township, N.J., pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to an Information charging him with one count of mail fraud.

    According to documents filed in this case and statements made in court:

    Provost admitted that between April 2004 and January 2011, he embezzled from the law firm, referred to in court documents simply as “Law Firm,” by wrongfully writing checks from the law firm’s attorney trust and business accounts to himself and his personal creditors to pay for his and his family’s personal expenses, including his mortgage, his children’s tuition, and horse stable expenses. Provost then mailed some of the checks to his personal creditors. He further admitted to attempting to hide his theft by using the stolen funds to purchase cashier’s checks payable to his creditors or to himself.

    Provost, who was a partner at the firm, had access to the law firm’s bank accounts in order to conduct real estate transactions on behalf of clients, including closings and refinancings.

    Provost’s embezzlement left several clients with double mortgages, which insurance then stepped in to cover. In total, Provost stole more than $885,000 from the attorney trust and business accounts for his personal benefit.(1)
For the U.S. Attorney press release, see Former New Jersey Lawyer Admits Embezzling More Than $885,000 In Law Firm Funds.

For the formal charges, see U.S. v. Provost.

(1) The New Jersey Lawyers' Fund for Client Protection  was established to reimburse clients who have suffered a loss due to dishonest conduct of a member of the New Jersey Bar. According to the Fund's website, for loss claims that are determined to be eligible for a reimbursement there currently is a limit of $400,000 per claimant for claims arising after January 1, 2007 and an aggregate maximum for claims against a single attorney of $1,500,000. Lower per claimant maximums apply to claims arising prior to January 1, 2007, its website states.
For similar funds established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in other states and Canada, see:

Referral From Bay State High Court's Attorney Ripoff Reimbursement Fund Leads To Indictments For Now-Twice Disbarred Attorney Accused Of Ripping Off Client Cash Intended For Mortgage Loan Payoffs

From the Office of the Massachusetts Attorney General:

  • A former Tewksbury attorney has been arraigned in connection with stealing more than $400,000 from multiple clients, one of whom is disabled, Attorney General Martha Coakley announced []. The defendant allegedly stole money which had been entrusted to him by clients seeking help to pay off mortgages or as part of the probate of an estate.

    Raymond Paczkowski, Jr., age 77, of Tewksbury, was arraigned [] in Middlesex Superior Court on one count of Larceny over $250 from a Disabled Person and seven counts of Larceny over $250 (7 counts). At the arraignment, Paczkowski pleaded not guilty and was released on personal recognizance, with the condition that he have no contact with the victims.

    In 2010, the AG’s Office began an investigation after the matter was referred from the Tewksbury Police Department and the Massachusetts Clients' Security Board of the Supreme Judicial Court, which manages a fund that is supported, in part, by annual fees paid by members of the bar.

    The Clients’ Security Board distributes fund money to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the bar acting as an attorney or a fiduciary.(1)

    Paczkowski worked as an attorney specializing in conveyancing and probate work, and also did some work with insurance claims and litigation. In 2008, authorities allege that Paczkowski began stealing from several of his clients.

    According to investigators, Paczkowski received $75,000 in 2008 from a disabled client in order to pay off a mortgage on her home. Several months later, however, the client received a letter indicting that the loan was still outstanding. It is alleged that Paczkowski never gave the money to the lender and instead stole it for his personal use.

    Authorities further allege that Paczkowski took money from several other clients who had sought help in paying off their mortgages. In one case, a client gave Paczkowski $175,000, with the intent that Paczkowski immediately use those funds to pay off the existing mortgage on his property. The client, however, continued to receive monthly mortgage statements and it is alleged that Paczkowski stole the money instead of paying off the clients’ mortgage.

    In other instances, Paczkowski allegedly stole money from clients who had hired him to assist with the handling or disposing of estate property after experiencing a death in the family.

    In one case, a client who assumed the full title to his mother’s property after she passed sought Paczkowski’s assistance in paying off a mortgage in order to refinance. The client’s mother owed roughly $109,000 to the company that held a mortgage on the property and Paczkowski allegedly received $158,100 from a new lender. According to investigators, Paczkowski forwarded the proceeds to the client, but failed to pay off the original mortgage company. Authorities allege that the client realized the theft when he received multiple late notices on his mother’s mortgage statement.
  • On November 24, 2010 Paczkowski was disbarred, after having been administratively suspended that October. Paczkowski had previously been disbarred in August 1985 for conduct similar to the present allegations.
For the Massachusetts AG press release, see Former Tewksbury Attorney Arraigned in Connection with Stealing More Than $400,000 from Clients (Defendant Allegedly Stole Money Entrusted to Him by Clients for His Personal Use; Also Allegedly Stole from Disabled Client).

(1) For similar "attorney ripoff reimbursement funds" established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in other states and Canada, see:

Florida Supremes Spank Four Lawyers For Playing Fast & Loose With Clients' Trust Account Cash; Belt Another For Actions Related To Loan Modification/Foreclosure Litigation Cases

The Florida Bar News reports that the Florida Supreme Court in recent court orders disciplined the following five attorneys for allegedly either playing fast and loose with their clients' trust account money, or for conduct in connection with loan modification/foreclosure litigation cases:

  • Delaila Jannette Estefano, 3850 Bird Road, Suite 901, Miami, suspended for 90 days, effective retroactive to March 9, 2009, following an October 24 court order. (Admitted to practice: 1999) From January 2007 through September 2008, due to a lack of timely deposits, there were some instances in which Estefano’s trust account had insufficient funds. Estefano also failed to maintain proper trust account records, and she failed to follow proper trust accounting procedures. (Case No. SC12-1676);
  • Howard Joseph Milchman, 9900 W. Sample Road, Suite 300, Coral Springs, suspended until further order, effective 30 days from an October 17 court order. (Admitted to practice: 1987) According to a petition for emergency suspension, Milchman appeared to be causing great public harm by misappropriating trust funds or property. In one matter, Milchman used the estate of one client as a source of funds to make a restitution disbursement of more than $45,000 to another client, similar to a Ponzi scheme. In multiple instances, he has not applied funds entrusted to him for specific purposes. (Case No. SC12-2106);
  • Clarence Edward Porch, Jr., 2674 S.E. Willoughby Blvd., Stuart, suspended for 91 days, effective 30 days from an October 9 court order. (Admitted to practice: 1969) For three months, Porch accepted clients from a nonlawyer company that he knew was not an approved lawyer referral service. Porch failed to supervise nonlawyer employees and failed to review any work they did regarding loan modification and foreclosure litigation cases. Porch also purchased leads of prospective clients’ names and paid an employee to call those prospective clients. (Case No. SC12-1674);
  • Gene Stuart Rosen, 1550 N.E. Miami Gardens Drive, North Miami Beach, suspended until further order, effective 30 days from an October 9 court order. (Admitted to practice: 1974) According to a petition for emergency suspension, Rosen appeared to be causing great public harm by misappropriating and/or diverting funds entrusted to him and by breaching his fiduciary duties with respect to the handling of those funds held in trust. (Case No. SC12-2003);
  • Kelly Earlise Speer, P.O. Box 172067, Tampa, suspended until further order effective immediately, following an October 11 court order. (Admitted to practice: 2006) Speer was held in contempt for failing to comply with the terms of a December 14, 2011, court order. Speer was ordered to respond to The Florida Bar regarding a trust account overdraft inquiry of September 8, 2011. (Case No. SC11-1866).
Source: The Florida Bar News: Disciplinary Actions (December 15, 2012).