Pair Cop Guilty Pleas For Peddling Foreclosure Rescue Program That Used Fractional Interest Deed Transfers & Bogus Bankruptcy Petitions To Scam Upfront, Monthly Fees Out Of Unwitting Homeowners While Dragging Out Repo Process
In Sacramento, California, The Sacramento Bee reports:
- Two men have pleaded guilty to bankruptcy fraud in connection with a foreclosure rescue scheme.
Jesse Wheeler, 36, of Roseville and Brent Medearis, 46, of Modesto entered guilty pleas today in U.S. District Court in Sacramento, according to a federal Department of Justice news release.
On Dec. 1, 2011, a federal grand jury indicted Wheeler and Medearis along with Jewel L. Hinkles, also known as Cydney Sanchez, 63, of Los Angeles, and Cynthia Corn, 60, of Oakland, for a scheme allegedly run by Hinkles. According to court documents, Wheeler operated JW Financial Solutions in Roseville, and Medearis worked out of a Modesto office, both as affiliates of programs that Hinkles created.
Hinkles was the founder and general manager of Horizon Property Holdings LLC, in Beverly Hills, according to court documents. From 2008 through 2010, Hinkles offered a service called "Save My Home" or "Homesaver" that promised to rescue financially distressed homeowners from foreclosure and reduce the principal on their mortgages. Horizon offered the program directly to clients and also through "affiliates", who promoted and sold the program to clients, mostly in Northern California. Corn sold the program through Property Relief!, a South San Francisco affiliate, authorities said.
The defendants allegedly told homeowners that they would save their homes from foreclosure by arranging for investors to purchase their existing mortgage at a discounted price, thereby reducing the homeowner's principal and monthly mortgage payment.
To prevent foreclosure and to defraud the existing lenders, the defendants allegedly filed fraudulent deeds transferring an interest in the homeowner's property to a fictitious entity called Pacifica Group 49/II.
In many instances, the defendants also filed fraudulent petitions in bankruptcy court, often naming both the homeowner and Pacific Group 49/II as the debtor. The purpose of these petitions, authorities said, was to invoke the automatic provisions of federal bankruptcy law and bring an immediate halt to any foreclosure actions against a debtor's property.
Because the fraudulent deeds and bankruptcy petitions delayed foreclosure proceedings, the defendants were able to pretend that they were providing a legitimate service and continue to collect fees from defrauded homeowners, according to federal authorities. To enroll in the Save My Home program, clients were required to make an initial payment of approximately $3,500 and pay monthly fees of up to $1,500. The Homesaver program required an initial payment ranging from $1,750 to $6,500 and monthly fees up to $850.(1)
In all, the scheme collected at least $5 million from more than 1,000 clients.
According to court documents, the defendants never arranged for the purchase of a mortgage from any of the clients' lenders and never negotiated a mortgage principal reduction for any of Horizon's clients.
Wheeler and Medearis are to be sentenced Sept. 16 by U.S. District Judge William B. Shubb.
Hinkles and Corn are scheduled for trial Aug. 6.
For the U.S. Attorney (Sacramento, California) press release, see Two Plead Guilty To Foreclosure Rescue Scheme.
(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the bankruptcy courts.